As filed with the Securities and Exchange Commission on December 30, 1996
Registration No. 333-______
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------
CHASE COMMERCIAL MORTGAGE SECURITIES CORP.
(formerly known as Chemical Commercial Mortgage Securities Corp.)
(Exact name of registrant as specified in its charter)
New York
(State or other jurisdiction of incorporation or organization)
13-3728743
(I.R.S. employer identification number)
380 Madison Avenue
New York, New York 10017-2951
(212) 622-3510
(Address, including zip code, and telephone number,
including area code, of registrant's principal
executive offices)
CT Corporation System
1633 Broadway
New York, New York 10019
(212) 664-1666
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
--------------
Copies to:
Jacqueline R. Slater Michael S. Gambro, Esq.
Chase Commercial Mortgage Securities Corp. Cadwalader, Wickersham & Taft
380 Madison Avenue 100 Maiden Lane
New York, New York 10017-2951 New York, New York 10038
================================================================================
Approximate date of commencement of proposed sale to the public: From time
to time on or after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
plans, please check the following box. [ X ]
CALCULATION OF REGISTRATION FEE
================================================================================
Proposed Proposed
Maximum Maximum
Offering Aggregate Amount of
Title of Securities Amount to be Price Per Offering Registration
Being Registered(1) Registered Unit Price(2) Fee
- --------------------------------------------------------------------------------
Mortgage Pass-Through
Certificates $2,123,119,455 100% $2,123,119,455 $643,370
================================================================================
(1) This Registration Statement and the registration fee pertain to the
initial offering of the Mortgage Pass-Through Certificates registered hereunder
by the Registrant and to offers and sales relating to market-making transactions
by Chase Securities Inc., an affiliate of the Registrant. The amount of Mortgage
Pass-Through Certificates that may be initially offered hereunder and the
registration fee shall not be affected by any offers and sales relating to any
such market-making transactions.
(2) Estimated solely for the purpose of calculating the registration fee.
PURSUANT TO RULE 429 OF THE SECURITIES AND EXCHANGE COMMISSION'S RULES AND
REGULATIONS UNDER THE SECURITIES ACT OF 1933, AS AMENDED, THE PROSPECTUS AND
PROSPECTUS SUPPLEMENT CONTAINED IN THIS REGISTRATION STATEMENT ALSO RELATE TO
THE REGISTRANT'S REGISTRATION STATEMENT ON FORM S-3 (REGISTRATION NO. 333-05271)
AND THE REGISTRANT'S REGISTRATION STATEMENT ON FORM S-3 (REGISTRATION NO.
33-67742) (FILED UNDER THE REGISTRANT'S FORMER NAME CHEMICAL COMMERCIAL MORTGAGE
SECURITIES CORP.).
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
PROSPECTUS SUPPLEMENT
(To Prospectus dated ________, 1996)
CHASE COMMERCIAL MORTGAGE SECURITIES CORP.
Multifamily Mortgage Pass-Through Certificates
Series 199__-__
$_________________ Class A Certificates
$_________________ Class B Certificates
The Series 199___-__ Multifamily Mortgage Pass-Through Certificates (the
"Certificates") will consist of four classes (each, a "Class") of Certificates,
designated as the Class A Certificates, the Class B Certificates, the Class C
Certificates and the Class R Certificates. As and to the extent described
herein, the Class B, Class C and Class R Certificates will be subordinate to the
Class A Certificates; and the Class C and Class R Certificates will be
subordinate to the Class B Certificates. Only the Class A and Class B
Certificates (collectively, the "Offered Certificates") are offered hereby. It
is a condition of their issuance that the Class A and Class B Certificates be
rated not lower than "____" and "____", respectively, by ______________________.
The Certificates will represent in the aggregate the entire beneficial
ownership interest in a trust fund (the "Trust Fund"), to be established by
Chase Commercial Mortgage Securities Corp. (the "Depositor"), that will consist
primarily of a segregated pool (the "Mortgage Pool") of ____ conventional,
multifamily, balloon mortgage loans (the "Mortgage Loans"). As of ____________,
199___ (the "Cut-off Date"), the Mortgage Loans had an aggregate principal
balance (the "Initial Pool Balance") of $___________________, after application
of all payments of principal due on or before such date, whether or not
received. The initial principal balance of the Class A Certificates will be
$__________________, which represents _____% of the Initial Pool Balance; and
the initial principal balance of the Class B Certificates will be
$_____________, which represents ___% of the Initial Pool Balance.
See "Risk Factors" beginning on page S-__ of this Prospectus Supplement
and "Risk Factors" beginning on page 17 of the Prospectus for certain factors to
be considered in purchasing the Offered Certificates.
(cover continued on next page)
----------------
PROCEEDS OF THE ASSETS IN THE TRUST FUND ARE THE SOLE SOURCE OF PAYMENTS ON
THE OFFERED CERTIFICATES. THE OFFERED CERTIFICATES DO NOT REPRESENT AN
INTEREST IN OR OBLIGATION OF THE DEPOSITOR OR ANY OF ITS AFFILIATES.
NEITHER THE OFFERED CERTIFICATES NOR THE MORTGAGE LOANS ARE
INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY OR
INSTRUMENTALITY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
----------------
The Offered Certificates will be purchased by [Chase Securities Inc.] (the
"Underwriter") from the Depositor and will be offered by the Underwriter from
time to time in negotiated transactions or otherwise at varying prices to be
determined at the time of sale. Proceeds to the Depositor from the sale of the
Offered Certificates, before deducting expenses payable by the Depositor
estimated to be approximately $_____________, will be ______% of the initial
aggregate Certificate Balance of the Offered Certificates, plus accrued
interest.
<PAGE>
(cover continued)
[If and to the extent required by applicable law or regulation, this
Prospectus Supplement and the Prospectus will also be used by the Underwriter
after the completion of the offering in connection with offers and sales related
to market-making transactions in the Offered Certificates in which the
Underwriter acts as principal. The Underwriter may also act as agent in such
transactions. Sales will be made at negotiated prices determined at the time of
sale.]
The Offered Certificates are offered by the Underwriter when, as and if
delivered to and accepted by the Underwriter and subject to prior sale and to
its right to reject any order in whole or in part. It is expected that the Class
A Certificates will be delivered in book-entry form through the Same-Day Funds
Settlement System of The Depository Trust Company and that the Class B
Certificates will be delivered at the offices of the Underwriter,
_________________________ _________________________________, on or about
_____________, 199__ (the "Delivery Date"), against payment therefor in
immediately available funds.
The Mortgage Loans provide for monthly payments of principal and/or
interest ("Monthly Payments"), in all cases based on amortization schedules that
are significantly longer than their remaining terms, thereby leaving substantial
principal amounts due and payable on their respective maturity dates. As more
fully described herein, (i) ___ of the Mortgage Loans (the "ARM Loans"), which
represent ______% of the Initial Pool Balance, provide for periodic adjustments
(which may occur monthly, semi-annually or annually) to the respective
annualized rates at which they accrue interest (their "Mortgage Rates") based on
fluctuations in a base index (an "Index") and subject to the limitations
described herein, and (ii) the remaining Mortgage Loans (the "Fixed Rate Loans")
bear interest at fixed Mortgage Rates. [Describe Index]
All of the Mortgage Loans are currently held by _____________ (the
"Mortgage Loan Seller"), which either originated the Mortgage Loans or acquired
them from their respective originators. On or before the date of initial
issuance of the Certificates, the Depositor will acquire the Mortgage Loans from
the Mortgage Loan Seller and will transfer them to the Trustee in exchange for
the Certificates.
Distributions of interest on and principal of the Certificates will be
made, to the extent of available funds, on the 25th day of each month or, if any
such 25th day is not a business day, then on the next succeeding business day,
beginning in _____________ 199____ (each, a "Distribution Date"). As more fully
described herein, distributions allocable to interest accrued on each Class of
Offered Certificates will be made on each Distribution Date based on the
variable pass-through rate (the "Pass-Through Rate") then applicable to such
Class and the stated principal amount (the "Certificate Balance") of such Class
outstanding immediately prior to such Distribution Date. The Pass-Through Rate
for the Class A and Class B Certificates applicable to the first Distribution
Date will be _________% per annum. Subsequent to the initial Distribution Date,
the Pass-Through Rate for the Class A and Class B Certificates will equal from
time to time the weighted average of, subject to certain adjustments described
herein, the Net Mortgage Rates on the Mortgage Loans. The Net Mortgage Rate for
any Mortgage Loan is its Mortgage Rate less _____ basis points. Distributions
allocable to principal of each Class of Offered Certificates will be made in the
amounts and in accordance with the priorities described herein. See "Description
of the Certificates--Distributions" herein.
The yield to maturity on each Class of Offered Certificates will depend
on, among other things, fluctuations in its respective Pass-Through Rate and the
rate and timing of principal payments (including by reason of prepayments,
defaults and liquidations) on the Mortgage Loans. See "Yield and Maturity
Considerations" herein and "Yield and Maturity Considerations" and "Risk
Factors--Prepayments; Average Life of Certificates; Yields" in the Prospectus.
[The following disclosure is applicable to Stripped Interest Certificates
("Class S Certificates")... The yield to maturity on the Class S Certificates
will be extremely sensitive to the rate and timing of principal payments
(including by reasons of prepayments, defaults and liquidations) on the Mortgage
Loans, which may fluctuate significantly from time to time. A rate of principal
prepayments on the Mortgage Loans that is more rapid than expected by investors
will have a material negative effect on the yield to maturity of the Class S
Certificates. Investors in the Class S Certificates should carefully consider
the associated risks, including the risk that a rapid rate of principal
prepayments on the Mortgage Loans could result in the failure of investors in
such Certificates to recover fully their initial investments. See "Risk
Factors--Yield Sensitivity of the Class S Certificates" and "Yield and Maturity
Considerations" herein and "Yield Considerations" and "Risk Factors--Average
Life of Certificates; Prepayments; Yields" in the Prospectus.]
S-3
<PAGE>
An election will be made to treat the Trust Fund as a "real estate
mortgage investment conduit" (a "REMIC") for federal income tax purposes. The
Offered Certificates and the Class C Certificates (collectively, the "Regular
Certificates") will constitute "regular interests", and the Class R Certificates
will constitute the sole class of "residual interests", in the Trust Fund. See
"Certain Federal Income Tax Consequences" herein and in the Prospectus.
There is currently no secondary market for the Offered Certificates and
there can be no assurance a secondary market for the Offered Certificates will
develop. The Underwriter expects to establish a market in the Offered
Certificates, but is not obligated to do so. There is no assurance that any such
market, if established, will continue. See "Risk Factors--Limited Liquidity"
herein.
[Chase Securities Inc.]
The date of this Prospectus Supplement is __________, 199__.
S-4
<PAGE>
[inside front cover]
THE PROSPECTUS THAT ACCOMPANIES THIS PROSPECTUS SUPPLEMENT CONTAINS
IMPORTANT INFORMATION REGARDING THIS OFFERING THAT IS NOT CONTAINED HEREIN,
AND PROSPECTIVE INVESTORS ARE URGED TO READ BOTH THE PROSPECTUS AND THIS
PROSPECTUS SUPPLEMENT IN FULL TO OBTAIN MATERIAL INFORMATION CONCERNING THE
OFFERED CERTIFICATES. SALES OF THE OFFERED CERTIFICATES MAY NOT BE
CONSUMMATED UNLESS THE PURCHASER HAS RECEIVED BOTH THE PROSPECTUS AND THIS
PROSPECTUS SUPPLEMENT.
-----------
UNTIL [NINETY DAYS AFTER THE DATE OF THIS PROSPECTUS SUPPLEMENT], ALL
DEALERS EFFECTING TRANSACTIONS IN THE OFFERED CERTIFICATES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS
SUPPLEMENT AND PROSPECTUS. THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE
OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS SUPPLEMENT AND PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
S-5
<PAGE>
TABLE OF CONTENTS
Page
----
SUMMARY OF PROSPECTUS SUPPLEMENT.............................................8
RISK FACTORS................................................................21
The Certificates......................................................21
Limited Liquidity...............................................21
Variability in Yield; Priority of Payments......................21
Yield Sensitivity of the Class S Certificates...................22
The Mortgage Loans....................................................22
Nature of the Mortgaged Properties..............................22
Limited Recourse................................................22
Environmental Law Considerations................................22
Geographic Concentration........................................23
Concentration of Mortgage Loans and Borrowers...................23
Adjustable Rate Mortgage Loans..................................23
Balloon Payments................................................23
DESCRIPTION OF THE MORTGAGE POOL............................................23
General...............................................................23
Certain Payment Characteristics.......................................24
The Index.............................................................25
Additional Mortgage Loan Information..................................25
The Mortgage Loan Seller..............................................31
General.........................................................31
Delinquency and Foreclosure Experience..........................31
Underwriting Standards................................................32
Assignment of the Mortgage Loans; Repurchase..........................32
Representations and Warranties; Repurchases...........................33
Changes in Mortgage Pool Characteristics..............................34
SERVICING OF THE MORTGAGE LOANS.............................................34
General...............................................................34
The Master Servicer...................................................35
Servicing and Other Compensation and Payment of Expenses..............35
Modifications, Waivers and Amendments.................................36
Inspections; Collection of Operating Information......................36
Additional Obligations of the Master Servicer with Respect to ARM
Loans..............................................................37
DESCRIPTION OF THE CERTIFICATES.............................................37
General...............................................................37
Distributions.........................................................38
Method, Timing and Amount.......................................38
Priority........................................................39
Pass-Through Rates..............................................40
Distributable Certificate Interest..............................40
Scheduled Principal Distribution Amount and Unscheduled
Principal Distribution Amount................................41
Certain Calculations with Respect to Individual Mortgage
Loans........................................................41
Subordination.........................................................42
P&I Advances..........................................................42
S-6
<PAGE>
Reports to Certificateholders; Certain Available Information..........43
Voting Rights.........................................................44
Termination...........................................................44
The Trustee...........................................................45
YIELD AND MATURITY CONSIDERATIONS...........................................45
Yield Considerations..................................................45
General.........................................................45
Pass-Through Rate...............................................45
Rate and Timing of Principal Payments...........................45
Losses and Shortfalls...........................................46
Certain Relevant Factors........................................46
Delay in Payment of Distributions...............................47
Unpaid Distributable Certificate Interest.......................47
Weighted Average Life.................................................47
Yield Sensitivity of the Class S Certificates.........................50
USE OF PROCEEDS.............................................................51
CERTAIN FEDERAL INCOME TAX CONSEQUENCES.....................................51
ERISA CONSIDERATIONS........................................................52
LEGAL INVESTMENT............................................................54
METHOD OF DISTRIBUTION......................................................54
LEGAL MATTERS...............................................................55
RATING......................................................................55
INDEX OF PRINCIPAL DEFINITIONS..............................................57
S-7
<PAGE>
SUMMARY OF PROSPECTUS SUPPLEMENT
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus Supplement and in
the accompanying Prospectus. Certain capitalized terms used in this Summary may
be defined elsewhere in this Prospectus Supplement or in the Prospectus. An
"Index of Principal Definitions" is included at the end of both this Prospectus
Supplement and the Prospectus. Terms that are used but not defined in this
Prospectus Supplement will have the meanings specified in the Prospectus.
Title of Certificates ........Chase Commercial Mortgage Securities Corp.,
Multifamily Mortgage Pass-Through Certificates,
Series 199__-__ (the "Certificates"), to be issued
in four Classes, designated as the Class A, Class
B, Class C and Class R Certificates. The Class A,
Class B and Class C Certificates are herein
collectively referred to from time to time as the
"Regular Certificates". Only the Class A and Class
B Certificates (collectively, the "Offered
Certificates") are offered hereby. The Class C and
Class R Certificates are herein collectively
referred to from time to time as the "Private
Certificates".
Depositor.....................Chase Commercial Mortgage Securities Corp., a
New York corporation. The Depositor is a
wholly-owned subsidiary of The Chase Manhattan
Bank, a New York bank [and an affiliate of
Chase Securities Inc. (the "Underwriter")]. See
"The Depositor" in the Prospectus. Neither the
Depositor nor any of its affiliates has insured
or guaranteed the Offered Certificates.
Master Servicer...............______________________________, a _______________.
See "Servicing of the Mortgage Loans-The Master
Servicer" herein.
Trustee ......................_____________________, a ________________. See
"Description of the Certificates-The Trustee"
herein.
Mortgage Loan Seller .........________________________, a _________________. See
"Description of the Mortgage Pool-The Mortgage
Loan Seller" herein.
Cut-off Date..................___________________, 199__.
Delivery Date ___________________, 199__.
Registration of the
Class A Certificates ......The Class A Certificates will be represented by
one or more global Certificates registered in the
name of Cede & Co., as nominee of The Depository
Trust Company ("DTC"). No person acquiring an
interest in the Class A Certificates (any such
person, a "Class A Certificate Owner") will be
entitled to receive a Class A Certificate in fully
registered, certificated form (a "Definitive Class
A Certificate"), except under the limited
circumstances described in the Prospectus under
"Description of the Certificates--Book Entry
Registration and Definitive Certificates".
Instead, DTC will effect payments and transfers in
respect of the Class A Certificates by means of
its electronic recordkeeping services, acting
through certain participating organizations
("Participants"). This may result in certain
delays in receipt of payments by an investor and
may restrict an investor's ability to pledge its
securities. Unless and until Definitive Class A
Certificates are issued, all references herein to
the rights of holders of the Class A Certificates
are to the rights of Class A Certificate Owners as
they may be exercised through DTC and its
S-8
<PAGE>
Participants, except as otherwise specified
herein. See "Description of the
Certificates--General" herein and "Description of
the Certificates--Book-Entry Registration and
Definitive Certificates" in the Prospectus.
Denominations.................The Class A Certificates will be issued,
maintained and transferred on the book-entry
records of DTC and its Participants in
denominations of $1,000 and in integral multiples
thereof. The Class B Certificates will be issuable
in fully registered, certificated form in
denominations of $____________ and in integral
multiples of $1,000 in excess thereof, with one
Class B Certificate evidencing an additional
amount equal to the remainder of the initial
Certificate Balance of such Class.
The Mortgage Pool ...........The Mortgage Pool will consist of _____
conventional, balloon Mortgage Loans with an
Initial Pool Balance of $_________________. On or
prior to the Delivery Date, the Depositor will
acquire the Mortgage Loans from the Mortgage Loan
Seller pursuant to a Mortgage Loan Purchase
Agreement, dated [the date hereof], between the
Depositor and the Mortgage Loan Seller (the
"Mortgage Loan Purchase Agreement"). In the
Mortgage Loan Purchase Agreement, the Mortgage
Loan Seller has made certain representations and
warranties to the Depositor regarding the
characteristics and quality of the Mortgage Loans
and, as more particularly described herein, has
agreed to cure any material breach thereof or
repurchase the affected Mortgage Loan. In
connection with the assignment of its interests in
the Mortgage Loans to the Trustee, the Depositor
will also assign its rights under the Mortgage
Loan Purchase Agreement insofar as they relate to
or arise out of the Mortgage Loan Seller's
representations and warranties regarding the
Mortgage Loans. See "Description of the Mortgage
Pool--Representations and Warranties; Repurchases"
herein.
Each Mortgage Loan is secured by a first mortgage
lien on a fee simple estate in a multifamily
rental property (each, a "Mortgaged Property").
________ of the Mortgage Loans, which represent
_____% of the Initial Pool Balance, are secured by
liens on Mortgaged Properties located in
_______________. The remaining Mortgaged
Properties are located throughout ___________
other states. See "Description of the Mortgage
Pool--Additional Mortgage Loan Information"
herein.
___________ of the Mortgage Loans, which represent
______% of the Initial Pool Balance, provide for
scheduled payments of principal and/or interest
("Monthly Payments") to be due on the first day of
each month; the remainder of the Mortgage Loans
provide for Monthly Payments to be due on the
____, _____, _____ or _____ day of each month (the
date in any month on which a Monthly Payment on a
Mortgage Loan is first due, the "Due Date"). The
annualized rate at which interest accrues (the
"Mortgage Rate") on ____ of the Mortgage Loans
(the "ARM Loans"), which represent _____% of the
Initial Pool Balance, is subject to adjustment on
specified Due Dates (each such date of adjustment,
an "Interest Rate Adjustment Date") by adding a
fixed number of basis points (a "Gross Margin") to
the value of a base index (an "Index"), subject,
in ______ cases, to lifetime maximum and/or
minimum Mortgage Rates, and in _____ cases, to
periodic maximum and/or minimum Mortgage Rates, in
each case as described herein; and the remaining
Mortgage Loans (the "Fixed Rate Loans") bear
interest at fixed Mortgage Rates. ____ of the ARM
Loans, which represent ___% of the Initial Pool
Balance, provide for Interest Rate Adjustment
Dates that occur monthly,
S-9
<PAGE>
while the remainder of the ARM Loans provide for
adjustments of the Mortgage Rate to occur
semi-annually or annually. [Identify Mortgage Loan
Index] See "Description of the Mortgage
Pool--Certain Payment Characteristics" herein.
The amount of the Monthly Payment on all of the
ARM Loans is subject to adjustment on specified
Due Dates (each such date, a "Payment Adjustment
Date") to an amount that would amortize the
outstanding principal balance of the Mortgage Loan
over its then remaining amortization schedule and
pay interest at the then applicable Mortgage Rate.
The ARM Loans provide for Payment Adjustment Dates
that occur on the Due Date following each related
Interest Rate Adjustment Date.
All of the Mortgage Loans provide for monthly
payments of principal based on amortization
schedules significantly longer than the remaining
terms of such Mortgage Loans, thereby leaving
substantial principal amounts due and payable
(each such payment, a "Balloon Payment") on their
respective maturity dates, unless prepaid prior
thereto.
As of the Cut-off Date, the Mortgage Loans had the
following additional characteristics:
(i) Mortgage Rates ranging from ____% per annum
to ____% per annum, and a weighted average
Mortgage Rate of _____% per annum;
(ii) in the case of the ARM Loans, Gross Margins
ranging from _____ basis points to _____
basis points, and a weighted average Gross
Margin of _____ basis points;
(iii) for those ___ ARM Loans as to which such
characteristic applies, minimum lifetime
Mortgage Rates ranging from ___% per annum
to ___% per annum, and a weighted average
minimum lifetime Mortgage Rate of ____% per
annum;
(iv) for those ___ ARM Loans as to which such
characteristic applies, maximum lifetime
Mortgage Rates ranging from ___% per annum
to ___% per annum, and a weighted average
maximum lifetime Mortgage Rate of ___% per
annum;
(v) Cut-off Date Balances ranging from
$____________ to $____________, and an
average Cut-off Date Balance of
$____________;
(vi) original terms to scheduled maturity
ranging from ___ months to ____ months, and
a weighted average original term to
scheduled maturity of ___ months;
(vii) remaining terms to scheduled maturity
ranging from ___ months to ____ months, and
a weighted average remaining term to
scheduled maturity of ____ months;
(viii) Cut-off Date LTV Ratios (that is, in each
case, a loan-to-value ratio based upon (a)
the Cut-off Date Balance of the Mortgage
Loan, and (b) the appraised value of the
related Mortgaged Property determined at
the time of origination of such loan),
S-10
<PAGE>
ranging from _____% to ____%, and a
weighted average Cut-off Date LTV Ratio of
_____%; and
(ix) for those ___ Mortgage Loans as to which
such characteristic was determinable, Debt
Service Coverage Ratios (calculated as more
particularly described under "Description
of the Mortgage Pool--Additional Mortgage
Loan Information") ranging from _______x to
______x, and a weighted average Debt
Service Coverage Ratio of _______x.
The Mortgage Loans were originated between 19__
and 19__.
Description of the
Certificates...............The Certificates will be issued pursuant to a
Pooling and Servicing Agreement, to be dated as of
the Cut-off Date, among the Depositor, the Master
Servicer and the Trustee (the "Pooling and
Servicing Agreement"), and will represent in the
aggregate the entire beneficial ownership interest
in a trust fund (the "Trust Fund") consisting of
the Mortgage Pool and certain related assets.
A. Certificate Balance....The aggregate Certificate Balance of the
Certificates as of the Delivery Date will equal
the Initial Pool Balance. The Class A
Certificates will have an initial Certificate
Balance of $_______________, which represents
_____% of the Initial Pool Balance; the Class B
Certificates will have an initial Certificate
Balance of $___________, which represents ___%
of the Initial Pool Balance; the Class C
Certificates will have an initial Certificate
Balance of $____________, which represents ___%
of the Initial Pool Balance; and the Class R
Certificates will have a Certificate Balance of
zero. The Certificate Balance of each Class of
Certificates outstanding at any time represents
the maximum amount that the holders thereof are
entitled to receive as distributions allocable
to principal from the cash flow on the Mortgage
Loans and other assets in the Trust Fund. As
more specifically described herein, the
Certificate Balance of each Class of Regular
Certificates will be adjusted from time to time
on each Distribution Date to reflect any
reductions therein resulting from the
distribution of principal of such Class. See
"Description of the Certificates--General"
herein.
Losses experienced with respect to the Mortgage
Loans or otherwise with respect to the Trust Fund
will not be applied to reduce either the
Certificate Balance or the absolute entitlement to
interest of any Class of Regular Certificates,
even though such losses may cause one or more of
such Classes to receive less than the full amount
of principal and interest to which it is entitled.
As a result, the aggregate Stated Principal
Balance of the Mortgage Pool at any time
subsequent to the initial Distribution Date may be
less than the aggregate Certificate Balance of the
Regular Certificates. Such deficit will be
allocated to the respective Classes of Regular
Certificates (in each case to the extent of its
Certificate Balance) in reverse alphabetical order
of their Class designations (i.e., C, B, A). Such
allocation will not reduce the Certificate Balance
of any such Class and is intended solely to
identify the portion (the "Uncovered Portion") of
the Certificate Balance of each such Class for
which there is at such time no corresponding
principal amount of Mortgage Loans. See
"Description of the Certificates--Subordination"
herein.
S-11
<PAGE>
The "Stated Principal Balance" of each Mortgage
Loan outstanding at any time represents the
principal balance of such Mortgage Loan ultimately
due and payable to the Certificateholders. As more
particularly described herein, the Stated
Principal Balance of each Mortgage Loan initially
will equal the Cut-off Date Balance thereof and,
on each Distribution Date, will be reduced by any
payments or other collections (or advances in lieu
thereof) of principal of such Mortgage Loan that
are distributed on the Certificates on such date.
See "Description of the
Certificates--Distributions--Certain Calculations
with Respect to Individual Mortgage Loans" herein.
B. Pass-Through Rates.....The Pass-Through Rate applicable to the Class A
and Class B Certificates for the initial
Distribution Date will equal _____% per annum.
With respect to any Distribution Date
subsequent to the initial Distribution Date,
the Pass-Through Rate for the Class A
Certificates and the Class B Certificates will
equal the Weighted Average Effective Net
Mortgage Rate for such Distribution Date.
[The Pass-Through Rate applicable to the Class C
Certificates for any Distribution Date will equal
the Weighted Average Effective Net Mortgage Rate
for such Distribution Date. The Class R
Certificates will have no specified Pass-Through
Rate.]
The "Weighted Average Effective Net Mortgage Rate"
for each Distribution Date is the weighted average
of the applicable Effective Net Mortgage Rates for
the Mortgage Loans, weighted on the basis of their
respective Stated Principal Balances immediately
prior to such Distribution Date. For purposes of
calculating the Weighted Average Effective Net
Mortgage Rate for any Distribution Date, the
"applicable Effective Net Mortgage Rate" for each
Mortgage Loan is an annualized rate equal to the
Mortgage Rate in effect for such Mortgage Loan as
of the commencement of the related Due Period, (a)
reduced by ___ basis points (the Mortgage Rate, as
so reduced, the "Net Mortgage Rate"), and (b) if
the accrual of interest on such Mortgage Loan is
computed other than on the basis of a 360-day year
consisting of twelve 30-day months (which is the
basis of accrual for interest on the Regular
Certificates), then adjusted to reflect that
difference in computation.
The "Due Period" for each Distribution Date will
be the period that begins on the ____ day of the
month preceding the month in which such
Distribution Date occurs and ends on the ____ day
of the month in which such Distribution Date
occurs. See "Description of the
Certificates--Distributions--Pass-Through Rates"
herein.
C. Distributions..........Distributions on the Certificates will be made
by the Master Servicer, to the extent of
available funds, on the 25th day of each month
or, if any such 25th day is not a business day,
then on the next succeeding business day,
beginning in __________ 199__ (each, a
"Distribution Date"), to the holders of record
as of the close of business on the last
business day of the month preceding the month
of each such distribution (each, a "Record
Date"). Notwithstanding the above, the final
distribution on any Certificate will be made
after due notice by the Master Servicer of the
pendency of such distribution and only upon
presentation and surrender of such Certificates
at the location to be specified in such
notice. The total of all payments or other
collections (or advances in lieu thereof) on or
in respect of the Mortgage Loans that are
available for distribution to.
S-12
<PAGE>
Certificateholders on any Distribution Date is
herein referred to as the "Available Distribution
Amount" for such date. See "Description of the
Certificates--Distributions--Method, Timing and
Amount" herein.
On each Distribution Date, for so long as the
Class A and/or Class B Certificates remain
outstanding, the Master Servicer will (except as
otherwise described under "Description of the
Certificates--Termination" herein) apply the
Available Distribution Amount for such date for
the following purposes and in the following order
of priority, in each case to the extent of
remaining available funds:
(1) to distributions of interest to the holders
of the Class A Certificates in an amount
equal to all Distributable Certificate
Interest in respect of the Class A
Certificates for such Distribution Date and,
to the extent not previously paid, for all
prior Distribution Dates;
(2) to distributions of principal to the holders
of the Class A Certificates in an amount
equal to the sum of (a) the product of (i)
the Class A Certificates' Ownership
Percentage (as calculated immediately prior
to such Distribution Date), multiplied by
(ii) the Scheduled Principal Distribution
Amount for such Distribution Date, plus (b)
the entire Unscheduled Principal
Distribution Amount for such Distribution
Date (but not more than would be necessary
to reduce the Certificate Balance of the
Class A Certificates to zero);
(3) to distributions of principal to the holders
of the Class A Certificates in an amount
equal to any Uncovered Portion of the
Certificate Balance of the Class A
Certificates immediately prior to such
Distribution Date;
(4) to distributions of interest to the holders
of the Class B Certificates in an amount
equal to all Distributable Certificate
Interest in respect of the Class B
Certificates for such Distribution Date and,
to the extent not previously paid, for all
prior Distribution Dates;
(5) to distributions of principal to the holders
of the Class B Certificates in an amount
equal to the sum of (a) the product of (i)
the Class B Certificates' Ownership
Percentage (as calculated immediately prior
to such Distribution Date), multiplied by
(ii) the Scheduled Principal Distribution
Amount for such Distribution Date, plus (b)
if the Class A Certificates have been
retired, then to the extent not distributed
in retirement thereof on such Distribution
Date, the entire Unscheduled Principal
Distribution Amount for such Distribution
Date (but not more than would be necessary
to reduce the Certificate Balance of the
Class B Certificates to zero);
(6) to distributions of principal to the holders
of the Class A Certificates in an amount
equal to any Uncovered Portion of the
Certificate Balance of the Class B
Certificates immediately prior to such
Distribution Date (but not more than would
be necessary to reduce the Certificate
Balance of the Class A Certificates to
zero);
S-13
<PAGE>
(7) to distributions of principal to the holders
of the Class B Certificates in an amount
equal to any Uncovered Portion of the
Certificate Balance of the Class B
Certificates immediately prior to such
Distribution Date, net of any distributions
of principal made on such Distribution Date
in respect of the Class A Certificates as
described in the immediately preceding
clause (6);
(8) to distributions of interest to the holders
of the Class C Certificates in an amount
equal to all Distributable Certificate
Interest in respect of the Class C
Certificates for such Distribution Date and,
to the extent not previously distributed,
for all prior Distribution Dates;
(9) to distributions of principal to the holders
of the Class C Certificates in an amount
equal to the product of (a) the Class C
Certificates' Ownership Percentage (as
calculated immediately prior to such
Distribution Date), multiplied by (b) the
Scheduled Principal Distribution Amount for
such Distribution Date;
(10) to distributions of principal to the holders
of the respective Classes of Regular
Certificates, in alphabetical order of their
Class designations (i.e., A, B, C), in an
aggregate amount equal to any Uncovered
Portion of the Certificate Balance of the
Class C Certificates immediately prior to
such Distribution Date (but, in each case,
not more than would be necessary to reduce
the related Certificate Balance to zero);
and
(11) to distributions to the holders of the Class
R Certificates in an amount equal to the
remaining balance, if any, of the Available
Distribution Amount. See "Description of the
Certificates--Distributions--Priority" here-
in.
The "Distributable Certificate Interest" in
respect of any Class of Regular Certificates for
any Distribution Date will equal 30 days' interest
at the applicable Pass-Through Rate accrued on the
Certificate Balance of such Class of Regular
Certificates immediately prior to such
Distribution Date, reduced (to not less than zero)
by such Class of Regular Certificates' allocable
share (in each case, calculated as described
herein) any Net Aggregate Prepayment Interest
Shortfall (as described below) for such
Distribution Date. The "Net Aggregate Prepayment
Interest Shortfall" for any Distribution Date will
be the amount, if any, by which (a) the aggregate
of any Prepayment Interest Shortfalls incurred
during the related Due Period exceeds (b) the
aggregate of any Prepayment Interest Excesses and
prepayment premiums collected during the related
Due Period. A "Prepayment Interest Shortfall" is a
shortfall in the collection of a full month's
interest (net of related servicing fees) on any
Mortgage Loan by reason of a full or partial
principal prepayment made prior to its Due Date in
any Due Period. A "Prepayment Interest Excess" is
a payment of interest (net of related servicing
fees) made in connection with any full or partial
prepayment of a Mortgage Loan subsequent to its
Due Date in any Due Period, which payment of
interest is intended to cover the period on and
after such Due Date. See "Description of the
Certificates--Distributions--Distributable
Certificate Interest" herein.
The "Scheduled Principal Distribution Amount" for
any Distribution Date will equal the aggregate of
all scheduled payments of principal (including
S-14
<PAGE>
the principal portion of any Balloon Payments) due
on the Mortgage Loans during or, if and to the
extent not previously received or advanced and
distributed on prior Distribution Dates, prior to
the related Due Period that were either received
from the borrowers as of the ___ day of the month
in which such Distribution Date occurs or advanced
by the Master Servicer in respect of such
Distribution Date. The "Unscheduled Principal
Distribution Amount" for any Distribution Date
will, in general, equal the aggregate of (i) all
prepayments of principal of the Mortgage Loans
received from the borrowers during the related Due
Period, and (ii) any other unscheduled collections
on or in respect of the Mortgage Loans and any
Mortgaged Properties acquired in respect of
defaulted Mortgage Loans through foreclosure, deed
in lieu of foreclosure or otherwise (each, an "REO
Property"), which other unscheduled collections
were received during the related Due Period and
were identified and applied by the Master Servicer
as recoveries of previously unadvanced principal
of the related Mortgage Loans. The respective
amounts which constitute the Scheduled Principal
Distribution Amount and Unscheduled Principal
Distribution Amount for any Distribution Date are
herein collectively referred to from time to time
as the "Distributable Principal". The "Ownership
Percentage" evidenced by any Class of Certificates
as of any date of determination will equal a
fraction, expressed as a percentage, the numerator
of which is the then Certificate Balance of such
Class of Certificates, net (in the case of a Class
of Regular Certificates) of any Uncovered Portion
of such Certificate Balance, and the denominator
of which is the then aggregate Stated Principal
Balance of the Mortgage Pool. See "Description of
the Certificates--Distributions--Scheduled Prin-
cipal Distribution Amount and Unscheduled
Principal Distribution Amount" herein.
Certain Investment Considerations; Mortgage Loan
Prepayments ..The yield on the Offered
Certificates of either class will depend on, among
other things, the Pass-Through Rate for such
Certificates. The yield on any Offered Certificate
that is purchased at a discount or premium will
also be affected by the rate and timing of
distributions in respect of principal on such
Certificate, which in turn will be affected by (i)
the rate and timing of principal payments
(including principal prepayments) on the Mortgage
Loans, (ii) the availability from time to time of
an amount other than Distributable Principal to
amortize the Class Balances of such Certificates
and (iii) the extent to which the items described
in subclauses (i) and (ii) are applied on any
Distribution Date in reduction of the Certificate
Balance of the Class to which such Certificate
belongs, which will be dependent, in part, on the
nature of such amounts. See "Description of the
Certificates--Distributions--Priority" and "--Dis-
tributions--Calculation of Principal Distrib-
utions" herein.
Mortgage Loan Prepayments. The actual rate of
prepayment of principal on the Mortgage Loans
cannot be predicted. The Mortgage Loans may be
prepaid at any time, subject, in the case of ____
Mortgage Loans, to payment of a Prepayment
Premium. The investment performance of the Offered
Certificates may vary materially and adversely
from the investment expectations of investors due
to prepayments on the Mortgage Loans being higher
or lower than anticipated by investors. The actual
yield to the holder of an Offered Certificate may
not be equal to the yield anticipated at the time
of purchase of the Certificate or, notwithstanding
that the actual yield is equal to the yield
anticipated at that time, the total return on
investment expected by the investor or the
expected weighted
S-15
<PAGE>
average life of the Certificate may not be
realized. These effects are summarized below. For
a discussion of certain factors affecting
prepayment of the Mortgage Loans, including the
effect of Prepayment Premiums, see "Risk Factors"
and "Yield and Maturity Considerations" herein and
"Yield Considerations" in the Prospectus. In
deciding whether to purchase any Offered
Certificates, an investor should make an
independent decision as to the appropriate
prepayment assumptions to be used.
Yield. If an investor purchases an Offered
Certificate at an amount equal to its unpaid
principal balance (that is, at "par"), the
effective yield to that investor (assuming that
there are no interest shortfalls and assuming the
full return of the purchaser's investment
principal) will approximate the pass-through rate
on that Certificate. If an investor pays less or
more than the unpaid principal balance of the
Certificate (that is, buys the Certificate at a
"discount" or "premium", respectively), then,
based on the assumptions set forth in the
preceding sentence, the effective yield to the
investor will be higher or lower, respectively,
than the pass-through rate on that Certificate,
because such discount or premium will be amortized
over the life of the Certificate. Any deviation in
the actual rate of prepayments on the Mortgage
Loans from the rate assumed by the investor will
affect the period of time over which, or the rate
at which, the discount or premium will be
amortized and, consequently, will change the
investor's actual yield from that anticipated. An
investor that purchases an Offered Certificate at
a discount should carefully consider the risk that
a slower than anticipated rate of principal
payments on the Mortgage Loans will result in an
actual yield that is lower than such investor's
expected yield. An investor that purchases any
Offered Certificate at a premium should consider
the risk that a faster than anticipated rate of
principal payments on the Mortgage Loans will
result in an actual yield that is lower than such
investor's expected yield. Insofar as an
investor's initial investment in any Offered
Certificate is returned in the form of payments of
principal thereon, there can be no assurance that
such amounts can be reinvested in a comparable
alternative investment with a comparable yield.
Reinvestment Risk. As stated above, if an Offered
Certificate is purchased at par, fluctuations in
the rate of distributions of principal will
generally not affect the yield to maturity of that
Certificate. However, the total return on any
purchaser's investment, including an investor who
purchases at par, will be reduced to the extent
that principal distributions received on its
Certificate cannot be reinvested at a rate as high
as the pass-through rate of the Certificate.
Investors in the Offered Certificates should
consider the risk that rapid rates of prepayments
on the Mortgage Loans may coincide with periods of
low prevailing market interest rates. During
periods of low prevailing market interest rates,
mortgagors may be expected to prepay or refinance
Mortgage Loans that carry interest rates
significantly higher than then-current interest
rates for mortgage loans. Consequently, the amount
of principal distributions available to an
investor for reinvestment at such low prevailing
interest rates may be relatively large.
Conversely, slow rates of prepayments on the
Mortgage Loans may coincide with periods of high
prevailing market interest rates. During such
periods, it is less likely that mortgagors will
elect to prepay or refinance Mortgage Loans and,
therefore, the amount of principal distributions
available to an investor for reinvestment at such
high prevailing interest rates may be relatively
small.
S-16
<PAGE>
Weighted Average Life Volatility. One indication
of the effect of varying prepayment rates on a
security is the change in its weighted average
life. The "weighted average life" of an Offered
Certificate is the average amount of time that
will elapse between the date of issuance of the
Certificate and the date on which each dollar in
reduction of the principal balance of the
Certificate is distributed to the investor. Low
rates of prepayment may result in the extension of
the weighted average life of a Certificate; high
rates, in the shortening of such weighted average
life. In general, if the weighted average life of
a Certificate purchased at par is extended beyond
that initially anticipated, such Certificate's
market value may be adversely affected, even
though the yield to maturity on the Certificate is
unaffected. The weighted average lives of the
Offered Certificates, under various prepayment
scenarios, are displayed in the table appearing
under the heading "Yield and Maturity
Considerations--Weighted Average Life" herein.
[The following disclosure is applicable to
Stripped Interest Certificates... The Stripped
Interest Certificates. The Class S Certificates
are interest-only Certificates and are not
entitled to any distributions in respect of
principal. The yield to maturity of the Class S
Certificates will be especially sensitive to the
prepayment, repurchase and default experience on
the Mortgage Loans, which may fluctuate
significantly from time to time. A rate of
principal payments that is more rapid than
expected by investors will have a material
negative effect on the yield to maturity of the
Class S Certificates. See "Risk Factors--Yield
Sensitivity of the Class S Certificates" and
"Yield and Maturity Considerations--Yield
Sensitivity of the Class S Certificates" herein.]
P&I Advances .................[Subject to a recoverability determination as
described herein, the Master Servicer is required
to make advances (each, a "P&I Advance") with
respect to each Distribution Date in an amount
that is generally equal to the aggregate of: (i)
all delinquent payments of principal and interest
(net of related servicing fees) on the Mortgage
Loans, other than delinquent Balloon Payments,
scheduled to be due during the related Due Period;
(ii) in the case of each Mortgage Loan delinquent
in respect of its Balloon Payment, an amount equal
to 30 days' interest thereon (net of related
servicing fees), but only to the extent that the
related borrower has not made a payment sufficient
to cover such amount under any forbearance
arrangement or otherwise, which payment has been
included in the Available Distribution Amount for
such Distribution Date; and (iii) in the case of
each REO Property, an amount equal to 30 days'
imputed interest with respect thereto (net of
related servicing fees), but only to the extent
that such amount is not covered by any net income
from such REO Property included in the Available
Distribution Amount for such Distribution Date.
As more fully described herein, the Master
Servicer will be entitled to interest on any P&I
Advances made, and certain servicing expenses
incurred, by it or on its behalf. Such interest
will accrue from the date any such P&I Advance is
made or such servicing expense is incurred at an
annualized rate equal to ____% (the "Master
Servicer Reimbursement Rate") and will be paid,
contemporaneously with the reimbursement of such
P&I Advance or such servicing expense, out of
general collections on the Mortgage Pool then on
deposit in the Certificate Account. See
"Description of the Certificates--P&I Advances"
herein and "Description of the Certifi-
cates--Advances in Respect of Delinquencies" and
S-17
<PAGE>
"Description of the Pooling Agree-
ments--Certificate Account" in the Prospectus.]
Subordination.................The rights of holders of the Class B Certificates
and each Class of the Private Certificates
(collectively, the "Subordinate Certificates") to
receive distributions of amounts collected or
advanced on the Mortgage Loans will, in each case,
be subordinated, to the extent described herein,
to the rights of holders of the Class A
Certificates and each other Class of Subordinate
Certificates, if any, with an earlier alphabetical
Class designation. This subordination is intended
to enhance the likelihood of timely receipt by the
holders of the Class A Certificates of the full
amount of Distributable Certificate Interest
payable in respect of such Certificates on each
Distribution Date, and the ultimate receipt by
such holders of principal equal to the entire
Certificate Balance of the Class A Certificates.
Similarly, but to a lesser degree, this
subordination is also intended to enhance the
likelihood of timely receipt by the holders of the
Class B Certificates of the full amount of
Distributable Certificate Interest payable in
respect of such Certificates on each Distribution
Date, and the ultimate receipt by such holders of
principal equal to the entire Certificate Balance
of the related Class of Certificates. The
protection afforded to the holders of each Class
of Offered Certificates by means of the
subordination of each other Class of Certificates
with a later alphabetical Class designation will
be accomplished by the application of the
Available Distribution Amount on each Distribution
Date in the order described above in this Summary
under "Description of the
Certificates--Distributions". No other form of
Credit Support will be available for the benefit
of the holders of the Offered Certificates.
OptionalTermination ..........At its option, the Master Servicer may purchase
all of the Mortgage Loans and REO Properties, and
thereby effect termination of the Trust Fund and
early retirement of the then outstanding
Certificates, on any Distribution Date on which
the remaining aggregate Stated Principal Balance
of the Mortgage Pool is less than ___% of the
Initial Pool Balance. See "Description of the
Certificates--Termination" herein and in the
Prospectus.
Certain Federal Income
Tax Consequences ..........Beneficial owners of the Offered Certificates will
be required to report income thereon in accordance
with the accrual method of accounting. [It is
anticipated that the Class _____ Certificates will
be issued with original issue discount in an
amount equal to the excess of the initial Class
Certificate Balances thereof (plus _____ days of
interest at the pass-through rates thereon) over
their respective issue prices (including accrued
interest). It is further anticipated that the
Class _____ Certificates will be issued at a
premium and that the Class _____ Certificates will
be issued with de minimis original issue discount
for federal income tax purposes. Although not free
from doubt, it is anticipated that the Class _____
Certificates will be treated as issued with
original issue discount in an amount equal to the
excess of all distributions of principal and
interest thereon over their issue price (including
accrued interest), and the Company intends to
report income in respect of such Class of
Certificates in this manner.] See "Certain Federal
Income Tax Consequences" in the Prospectus.
S-18
<PAGE>
ERISA Considerations .........A fiduciary of any employee benefit plan or other
retirement arrangement subject to Title I of the
Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), or Section 4975 of the Code
(a "Plan") should review carefully with its legal
advisors whether the purchase or holding of
Offered Certificates could give rise to a
transaction that is prohibited or is not otherwise
permitted either under ERISA or Section 4975 of
the Code or whether there exists any statutory or
administrative exemption applicable to an
investment therein.
[The U.S. Department of Labor has issued to The
Chase Manhattan Corporation (formerly known as
Chemical Banking Corporation) an individual
prohibited transaction exemption, Prohibited
Transaction Exemption 90-33, that generally
exempts from the application of certain of the
prohibited transaction provisions of Section 406
of ERISA and the excise taxes imposed on such
prohibited transactions by Section 4975(a) and (b)
of the Internal Revenue Code of 1986, as amended
(the "Code"), transactions relating to the
purchase, sale and holding of pass-through
certificates underwritten by the Underwriter, as
an affiliate of The Chase Manhattan Corporation,
and the servicing and operation of related asset
pools, provided that certain conditions are
satisfied.]
[The Depositor expects that Prohibited Transaction
Exemption 90-33 will generally apply to the Class
A Certificates, but it will not apply to the Class
B Certificates. As a result,] no transfer of a
[Class B] Certificate or any interest therein may
be made to a Plan or to any person who is directly
or indirectly purchasing such [Class B]
Certificate or interest therein on behalf of, as
named fiduciary of, as trustee of, or with assets
of a Plan, unless the prospective transferee (at
its own expense) provides the Certificate
Registrar (as identified herein) with a
certification and an opinion of counsel which
establish to the Certificate Registrar's
satisfaction that such transfer will not result in
a violation of Section 406 of ERISA or Section
4975 of the Code or cause the Master Servicer or
the Trustee to be deemed a fiduciary of such Plan
or result in the imposition of an excise tax under
Section 4975 of the Code. See "ERISA
Considerations" herein and in the Prospectus.
Rating........................It is a condition of their issuance that the
Class A and Class B Certificates be rated not
lower than "___" and "___", respectively, by
_______________________ ([collectively,] the
"Rating Agenc[ies]"). A security rating is not
a recommendation to buy, sell or hold
securities and may be subject to revision or
withdrawal at any time by the assigning rating
organization. A security rating does not
address the frequency of prepayments of
Mortgage Loans, or the corresponding effect on
yield to investors. [The following disclosure
is applicable to Stripped Interest
Certificates... A security rating does not
address the frequency or likelihood of
prepayments (whether voluntary or involuntary)
of Mortgage Loans, or the possibility that, as
a result of prepayments, investors in the Class
S Certificates may realize a lower than
anticipated yield or may fail to recover fully
their initial investment.] See "Rating" herein
and "Risk Factors--Limited Nature of Ratings" in
the Prospectus.
Legal Investment .............[The Class A Certificates will constitute
"mortgage related securities" for purposes of the
Secondary Mortgage Market Enhancement Act of 1984,
as amended ("SMMEA"), for so long as they are
rated in one of the two highest ratings categories
by one or more nationally recognized statistical
rating organizations and, as such, are legal
investments for certain entities
S-19
<PAGE>
to the extent provided in SMMEA. Such investments,
however, will be subject to general regulatory
considerations governing investment practices
under state and federal law. In addition,
institutions whose investment activities are
subject to review by federal or state regulatory
authorities may be or may become subject to
restrictions, which may be retroactively imposed
by such regulatory authorities, on the investment
by such institutions in certain forms of mortgage
related securities.
[The Class B Certificates will not be "mortgage
related securities" within the meaning of the
Secondary Mortgage Market Enhancement Act of 1984.
As a result, the appropriate characterization of
the Class B Certificates under various legal
investment restrictions, and thus the ability of
investors subject to these restrictions to
purchase the Class B Certificates, may be subject
to significant interpretative uncertainties.]
Investors should consult their own legal advisors
to determine whether and to what extent the
Offered Certificates constitute legal investments
for them. See "Legal Investment" herein and in the
Prospectus.
S-20
<PAGE>
RISK FACTORS
Prospective purchasers of Offered Certificates should consider, among
other things, the following risk factors (as well as the risk factors set forth
under "Risk Factors" in the Prospectus) in connection with an investment
therein.
The Certificates
Limited Liquidity. There is currently no secondary market for the Offered
Certificates. The Depositor has been advised by the Underwriter that it
currently intends to make a secondary market in the Offered Certificates;
however, it has no obligation to do so and any market making may be discontinued
at any time. There can be no assurance that a secondary market for the Offered
Certificates will develop or, if it does develop, that it will provide holders
of Offered Certificates with liquidity of investment or that it will continue
for the life of the Offered Certificates. The Offered Certificates will not be
listed on any securities exchange. See "Risk Factors--Secondary Market" in the
Prospectus.
Variability in Yield; Priority of Payments. The yield on any Offered
Certificate will depend on, among other things, the Pass-Through Rate in effect
from time to time for such Certificate, which, for any Distribution Date, will
equal the Weighted Average Effective Net Mortgage Rate for such date.
Accordingly, the yield on the Offered Certificates will be sensitive to
adjustments to the Mortgage Rates on the ARM Loans and to changes in the
relative composition of the Mortgage Pool as a result of scheduled amortization,
voluntary prepayments and involuntary liquidations of Mortgage Loans. See
"Description of the Certificates--Distributions--Pass-Through Rate" herein.
The yield on any Offered Certificate that is purchased at a discount or
premium will also be affected by the rate and timing of principal payments on
such Certificate, which in turn will be affected by (i) the rate and timing of
principal payments (including principal prepayments) and other principal
collections on the Mortgage Loans, (ii) the availability from time to time of
amounts other than Distributable Principal to amortize the Certificate Balances
of the respective Classes of Certificates, and (iii) the extent to which the
items described in subclauses (i) and (ii) are applied on any Distribution Date
in reduction of the Certificate Balance of the Class to which such Certificate
belongs. As and to the extent described herein, the holders of each Class of
Offered Certificates will be entitled to receive on each Distribution Date their
allocable share (calculated on the basis of the Ownership Percentage evidenced
by such Class of Certificates immediately prior to such date) of the Scheduled
Principal Distribution Amount for such Distribution Date; however, the
Unscheduled Principal Distribution Amount for each Distribution Date will be
distributable entirely to the holders of the Class A Certificates, until the
Certificate Balance thereof is reduced to zero, and will thereafter be
distributable entirely to the holders of the Class B Certificates, until the
Certificate Balance thereof is reduced to zero. The amount of the Unscheduled
Principal Distribution Amount for any Distribution Date will be dependent in
part upon the amount of principal prepayments received during the related Due
Period. See "--The Mortgage Loans--Prepayments" herein. In addition, as and to
the extent described herein, distributions in respect of an Uncovered Portion of
the Certificate Balance of any Class of Regular Certificates will be applied, to
the extent of such Uncovered Portion, in reduction of the Certificate Balance(s)
of such Class of Regular Certificates and each other Class of Regular
Certificates, if any, with an earlier alphabetical Class designation, in
alphabetical order of such Class designations. See "Description of the
Certificates--Distributions--Priority" and "--Distributions--Scheduled Principal
Distribution Amount and Unscheduled Principal Distribution Amount" herein.
Because it is impossible to predict accurately the timing and amount of
principal prepayments and other unscheduled recoveries of principal, if any,
that will be received, or the availability from time to time of any amounts
other than Distributable Principal to amortize the Certificate Balances of the
respective Classes of Certificates, investors may find it difficult to analyze
the effect that such items might have on the yield and weighted average lives of
the Offered Certificates.
Furthermore, the yield on any Offered Certificate also will be affected by
the rate and timing of delinquencies and defaults on the Mortgage Loans and the
severity of ensuing losses. As and to the extent described herein, the Private
Certificates are subordinate in right and time of payment to the Offered
Certificates and will bear shortfalls in collections and losses incurred in
respect of the Mortgage Loans prior to the Offered Certificates; and the Class B
Certificates are subordinate in right and time of payment to the Class A
Certificates and will bear shortfalls in collections and losses incurred in
respect of the Mortgage Loans prior to the Class A Certificates. See
"Description of the Mortgage Pool", "Description of the
Certificates--Distributions" and "--Subordination" and "Yield and Maturity
Considerations" herein and "Yield and Maturity Considerations" in the
Prospectus.
S-21
<PAGE>
[The following disclosure is applicable to Stripped Interest Certificates...
Yield Sensitivity of the Class S Certificates. The yield to maturity of
the Class S Certificates will be especially sensitive to the prepayment,
repurchase and default experience on the Mortgage Loans, which may fluctuate
significantly from time to time. A rate of principal payments that is more rapid
than expected by investors will have a material negative effect on the yield to
maturity of the Class S Certificates. There can be no assurance that the
Mortgage Loans will prepay at any particular rate. Further, because the Notional
Amount of the Class S Certificates is equal to the Certificate Balance of the
Class A Certificates, any amount distributable in respect of principal of the
Class A Certificates will have a negative effect on the yield to maturity of the
Class S Certificates. Prospective investors in the Class S Certificates should
fully consider the associated risks, including the risk that such investors may
not fully recover their initial investment. See "Yield and Maturity
Considerations--Yield Sensitivity of the Class S Certificates" herein.]
The Mortgage Loans
Nature of the Mortgaged Properties. The Mortgaged Properties consist
solely of multifamily rental properties. Lending on the security of multifamily
residential property is generally viewed as exposing the lender to a greater
risk of loss than lending upon the security of one- to four-family residences.
In contrast to lending on the security of single-family residences, multifamily
residential lending typically involves larger loans to a single obligor or group
of related obligors. Furthermore, the repayment of loans secured by income
producing properties is typically dependent upon the successful operation of the
related real estate project, which in turn is dependent upon, in the case of
multifamily rental properties, among other things, the supply and demand for
rental units in the relevant locale and the performance of the managing agent.
If the cash flow from the project is reduced (for example, if leases are not
obtained or renewed), the obligor's ability to repay the loan may be impaired
and the resale value of the particular property may decline. In addition, the
successful operation of a multifamily rental property may be affected by
circumstances outside the control of the borrower or lender, such as the
deterioration of the surrounding neighborhood, the imposition of rent control or
changes in the tax laws. See "Risk Factors--Risks Associated with Certain
Mortgage Loans and Mortgaged Properties" in the Prospectus.
Limited Recourse. The Mortgage Loans are not insured or guaranteed by any
governmental entity or private mortgage insurer. The Depositor has not
undertaken any evaluation of the significance of the recourse provisions of any
of a number of the Mortgage Loans that provide for recourse against the related
borrower or another person in the event of a default. Accordingly, investors
should consider all of the Mortgage Loans to be non-recourse loans as to which
recourse in the case of default will be limited to the specific property and
such other assets, if any, as were pledged to secure a Mortgage Loan.
Environmental Law Considerations. [The Mortgage Loan Seller has
represented and warranted in the Mortgage Loan Purchase Agreement that an
environmental site assessment was conducted in connection with the origination
of each Mortgage Loan. Furthermore, the Mortgage Loan Seller has agreed that, in
the event of a material breach of such representation and warranty, it will
either cure the breach or repurchase the affected Mortgage Loan. The Mortgage
Loan Seller's representations and warranties regarding the Mortgage Loans set
forth in the Mortgage Loan Purchase Agreement will be assigned, together with
the related cure and repurchase obligations, by the Depositor to the Trustee in
connection with the Depositor's assignment of its interests in the Mortgage
Loans. Furthermore, the Mortgage Loan Seller's repurchase obligation will
constitute the sole remedy to Certificateholders and the Trustee for any
material breach of such representation and warranty, and neither the Depositor
nor any of its affiliates will be obligated to repurchase the affected Mortgage
Loan if the Mortgage Loan Seller defaults on its obligation to do so. See
"Description of the Mortgage Pool--Representations and Warranties; Repurchases"
herein.]
The Pooling and Servicing Agreement requires that the Master Servicer
obtain an environmental site assessment of a Mortgaged Property prior to
acquiring title thereto or assuming its operation. Such prohibition effectively
precludes enforcement of the security for the related Mortgage Note until a
satisfactory environmental site assessment is obtained (or until any required
remedial action is thereafter taken), but will decrease the likelihood that the
Trust Fund will become liable for a material adverse environmental condition at
the Mortgaged Property. However, there can be no assurance that the requirements
of the Pooling and Servicing Agreement will effectively insulate the Trust Fund
from potential liability for a materially adverse environmental condition at any
Mortgaged Property. Given the limited scope of environmental site assessments,
an environmental condition that may affect or exist on or around a
S-22
<PAGE>
particular Mortgaged Property may not have been discovered during the course of
such environmental site assessment (including regulatory file reviews).
Moreover, the severity of an environmental condition discovered during an
environmental site assessment may not have been revealed fully because of the
limited nature of the investigation. In addition, environmental conditions may
develop after completion of the environmental site assessments, by operation of
the property or otherwise. See "Description of the Pooling
Agreements--Realization Upon Defaulted Mortgage Loans", "Risk
Factors--Environmental Risks" and "Certain Legal Aspects of Mortgage
Loans--Environmental Legislation" in the Prospectus.
Geographic Concentration. ______ Mortgage Loans, which represent ____% of
the Initial Pool Balance, are secured by liens on Mortgaged Properties located
in _____________. In general, that concentration increases the exposure of the
Mortgage Pool to any adverse economic or other developments that may occur in
_________. In recent periods, _____________ (along with other regions of the
United States) has experienced a significant downturn in the market value of
real estate.
Concentration of Mortgage Loans and Borrowers. Several of the Mortgage
Loans have Cut-off Date Balances that are substantially higher than the average
Cut-off Date Balance. In general, concentrations in a mortgage pool of loans
with larger-than-average balances can result in losses that are more severe,
relative to the size of the pool, than would be the case if the aggregate
balance of the pool were more evenly distributed. Concentration of borrowers
also poses increased risks. For instance, if a borrower that owns several
Mortgaged Properties experiences financial difficulty at one Mortgaged Property,
or at another income-producing property that it owns, it could attempt to avert
foreclosure by filing a bankruptcy petition that might have the effect of
interrupting Monthly Payments for an indefinite period on all of the related
Mortgage Loans.
Adjustable Rate Mortgage Loans. ________ of the Mortgage Loans, which
represent ____% of the Initial Pool Balance, are ARM Loans. Increases in the
required Monthly Payments on ARM Loans in excess of those assumed in the
original underwriting of such loans may result in a default rate higher than
that on mortgage loans with fixed mortgage rates.
Balloon Payments. None of the Mortgage Loans is fully amortizing over its
term to maturity. Thus, each Mortgage Loan will have a substantial payment (that
is, a Balloon Payment) due at its stated maturity unless prepaid prior thereto.
Loans with Balloon Payments involve a greater risk to the lender than
self-amortizing loans because the ability of a borrower to make a balloon
payment typically will depend upon its ability either to refinance the loan or
to sell the related mortgaged property. See "Risk Factors--Balloon Payments" in
the Prospectus.
In order to maximize recoveries on defaulted Mortgage Loans, the Pooling
and Servicing Agreement enables the Master Servicer to extend and modify
Mortgage Loans that are in material default or as to which a payment default
(including the failure to make a Balloon Payment) is imminent; subject, however,
to the limitations described under "Servicing of the Mortgage
Loans--Modifications, Waivers and Amendments" herein. There can be no assurance,
however, that any such extension or modification will increase the present value
of recoveries in a given case. Any delay in collection of a Balloon Payment that
would otherwise be distributable in respect of a Class of Offered Certificates,
whether such delay is due to borrower default or to modification of the related
Mortgage Loan by the Master Servicer, will likely extend the weighted average
life of such Class of Offered Certificates. See "Yield and Maturity
Considerations" herein and in the Prospectus.
DESCRIPTION OF THE MORTGAGE POOL
General
The Trust Fund will consist primarily of ___ conventional, balloon
Mortgage Loans with an Initial Pool Balance of $_______________. Each Mortgage
Loan is evidenced by a promissory note (a "Mortgage Note") and secured by a
mortgage, deed of trust or other similar security instrument (a "Mortgage") that
creates a first mortgage lien on a fee simple estate in a multifamily rental
property (a "Mortgaged Property"). All percentages of the Mortgage Loans, or of
any specified group of Mortgage Loans, referred to herein without further
description are approximate percentages by aggregate Cut-off Date Balance.
S-23
<PAGE>
The Mortgage Loans will be acquired by the Depositor on or before the
Delivery Date from __________________ (the "Mortgage Loan Seller"), which either
originated the Mortgage Loans or acquired them from their respective
originators. See "--The Mortgage Loan Seller" herein.
The Mortgage Loans were originated between 19__ and 19__. [While the
Depositor has caused to be undertaken a limited review of the records and files
related to the Mortgage Loans in connection with the issuance of the
Certificates, none of the Mortgage Loans was "re-underwritten" or subjected to
the type of review that would typically be made in respect of a newly originated
mortgage loan. All of the Mortgaged Properties were inspected by or on behalf of
the Depositor within the ____ month period preceding the Cut-off Date to assess
their general condition, which in virtually all cases was determined to be
average or better. However, no Mortgaged Property was re-appraised by or on
behalf of the Depositor to assess its current value, and no evaluation was made
as to the extent of deferred maintenance at any Mortgaged Property or whether
adequate reserves, if any, have been escrowed to cover such.]
Certain Payment Characteristics
___ of the Mortgage Loans, which represent ___% of the Initial Pool
Balance, have Due Dates that occur on the first day of each month. The remaining
Mortgage Loans have Due Dates that occur on the ______ (____% of the Mortgage
Loans), _____ (____% of the Mortgage Loans), _____ (____% of the Mortgage
Loans), and _______ (____% of the Mortgage Loans) day of each month.
____________ of the Mortgage Loans (the "ARM Loans"), which represent
____% of the Initial Pool Balance, bear interest at Mortgage Rates that are
subject to adjustment on periodically occurring Interest Rate Adjustment Dates
by adding the related Gross Margin to the value of a base index (an "Index"),
subject in ______ cases to rounding conventions and lifetime minimum and/or
maximum Mortgage Rates and, in the case of ________ Mortgage Loans, which
represent ____% of the Initial Pool Balance, to periodic minimum and/or maximum
Mortgage Rates. The remaining Mortgage Loans (the "Fixed Rate Loans") bear
interest at fixed Mortgage Rates. None of the ARM Loans is convertible into a
Fixed Rate Loan.
[Identify Mortgage Loan Index] The adjustments to the Mortgage Rates on
the ARM Loans may in each case be based on the value of the related Index as
available a specified number of days prior to an Interest Rate Adjustment Date,
or may be based on the value of the related Index as most recently published as
of an Interest Rate Adjustment Date or as of a designated date preceding an
Interest Rate Adjustment Date. ____ of the ARM Loans, which represent ___% of
the Initial Pool Balance, provide for Interest Rate Adjustment Dates that occur
monthly; ____ of the ARM Loans, which represent ___% of the Initial Pool
Balance, provide for Interest Rate Adjustment Date that occur semi-annually; and
the remaining ARM Loans provide for Interest Rate Adjustment Dates that occur
annually.
The Monthly Payments on each ARM Loan are subject to adjustment on each
Payment Adjustment Date to an amount that would amortize fully the principal
balance of the Mortgage Loan over its then remaining amortization schedule and
pay interest at the Mortgage Rate in effect during the one month period
preceding such Payment Adjustment Date. The ARM Loans provide for Payment
Adjustment Dates that occur on the Due Date following each related Interest Rate
Adjustment Date.
All of the Mortgage Loans provide for monthly payments of principal based
on amortization schedules significantly longer than the remaining terms of such
Mortgage Loans, thereby leaving substantial principal amounts due and payable
(each such payment, a "Balloon Payment") on their respective maturity dates,
unless prepaid prior thereto.
No Mortgage Loan currently prohibits principal prepayments; however,
[certain] of the Mortgage Loans impose fees or penalties ("Prepayment Premiums")
in connection with full or partial prepayments. Prepayment Premiums are payable
to the Master Servicer as additional servicing compensation, to the extent not
otherwise applied to offset Prepayment Interest Shortfalls, and may be waived by
the Master Servicer in accordance with the servicing standard described under
"Servicing of the Mortgage Loans--General" herein.
[The Index]
Describe Index and include 5 year history.
S-24
<PAGE>
Additional Mortgage Loan Information
The following tables set forth the specified characteristics of, in each
case as indicated, the ARM Loans, the Fixed Rate Loans or all the Mortgage
Loans. The sum in any column may not equal the indicated total due to rounding.
The following table sets forth the range of Mortgage Rates on the Mortgage
Loans as of the Cut-off Date:
Mortgage Rates as of the Cut-off Date
Number Percent by
of Aggregate Aggregate
Range of Mortgage Mortgage Cut-off Percent by Cut-off
Rates(%) Loans Date Balance Number Date Balance
- -------------------------- -------- ------------ --------- ------------
-------- ------------ --------- ------------
Total...................
======== ============ ========= ============
Weighted Average
Mortgage Rate (All Loans): ______% per annum
Weighted Average
Mortgage Rate (ARM Loans): ____% per annum
Weighted Average
Mortgage Rate (Fixed Rate Loans): _____% per annum
The following table sets forth the range of Gross Margins for the ARM
Loans:
Gross Margins for the ARM Loans
Number Percent by
of Aggregate Aggregate
Range of Gross ARM Cut-off Percent by Cut-off
Margins(%) Leases Date Balance Number Date Balance
- -------------------------- -------- ------------ --------- ------------
-------- ------------ --------- ------------
Total...................
======== ============ ========= ============
Weighted Average
Gross Margin: ______%
The following table sets forth the frequency of adjustments to the
Mortgage Rates and Monthly Payments of the ARM Loans.
Frequency of Adjustments to Mortgage Rates and Monthly Payments for the ARM
Loans
Percent
Mortgage Monthly Number by
Rate Payment of Aggregate Percent Aggregate
Adjustment Adjustment Mortgage Cut-off by Cut-off
S-25
<PAGE>
Date Date
Frequency Frequency Loans Balance Number Balance
--------- --------- ----- ------- ------ -------
--------- --------- ----- ------- ------ -------
Total .....
========= ========= ===== ======= ====== =======
The following table sets forth the range of maximum lifetime Mortgage
Rates for the ARM Loans to which such characteristic applies:
Maximum Lifetime Mortgage Rates for the ARM Loans
Number Percent by
of Aggregate Aggregate
Range of Maximum ARM Cut-off Percent by Cut-off
Mortgage Rates(%) Loans Date Balance Number Date Balance
- -------------------------- -------- ------------ --------- ------------
-------- ------------ --------- ------------
Total...................
======== ============ ========= ============
Weighted Average Maximum Lifetime
Mortgage Rate (ARM Loans): ______% per annum (A)
- -----------------
(A) This calculation does not include the __________ ARM Loans without maximum
lifetime Mortgage Rates.
The following table sets forth the range of minimum lifetime Mortgage
Rates for the ARM Loans to which such characteristic applies:
Minimum Lifetime Mortgage Rates for the ARM Loans
Number Percent by
of Aggregate Aggregate
Range of Minimum ARM Cut-off Percent by Cut-off
Mortgage Rates(%) Loans Date Balance Number Date Balance
- -------------------------- -------- ------------ --------- ------------
-------- ------------ --------- ------------
Total...................
======== ============ ========= ============
Weighted Average Minimum Lifetime
Mortgage Rate (ARM Loans): ______% per annum (A)
S-26
<PAGE>
- -----------------
(A) This calculation does not include the _____ ARM Loans without minimum
lifetime Mortgage Rates.
The following table sets forth the range of Cut-off Date Balances of the
Mortgage Loans:
Cut-off Date Balances
Number Percent by
of Aggregate Aggregate
Cut-off Date Mortgage Cut-off Percent by Cut-off
Balance Range (%) Loans Date Balance Number Date Balance
- -------------------------- -------- ------------ --------- ------------
-------- ------------ --------- ------------
Total...................
======== ============ ========= ============
Average Cut-off Date
Balance (All Loans): $___________
Average Cut-off Date
Balance (ARM Loans): $___________
Average Cut-off Date
Balance (Fixed Rate Loans): $___________
The following tables set forth the original and remaining terms to stated
maturity (in months) of the Mortgage Loans:
Original Term to Stated Maturity (in Months)
Number Percent by
of Aggregate Aggregate
Range of Original Mortgage Cut-off Percent by Cut-off
Term (In Months) Loans Date Balance Number Date Balance
- -------------------------- -------- ------------ --------- ------------
-------- ------------ --------- ------------
Total...................
======== ============ ========= ============
Weighted Average Original
Term to Stated Maturity
(All Loans): _____ months
Weighted Average Original
Term to Stated Maturity
(ARM Loans): _____ months
Weighted Average Original
Term to Stated Maturity
(Fixed Rate Loans): _____ months
S-27
<PAGE>
Remaining Term to Stated Maturity (in Months)
as of the Cut-off Date
Number Percent by
of Aggregate Aggregate
Range of Original Mortgage Cut-off Percent by Cut-off
Term (In Months) Loans Date Balance Number Date Balance
- -------------------------- -------- ------------ --------- ------------
-------- ------------ --------- ------------
Total...................
======== ============ ========= ============
Weighted Average Remaining
Term to Stated Maturity
(All Loans): _____ months
Weighted Average Remaining
Term to Stated Maturity
(ARM Loans): _____ months
Weighted Average Remaining
Term to Stated Maturity
(Fixed Rate Loans): _____ months
The following table sets forth the respective years in which the Mortgage
Loans were originated:
Year of Origination
Number Percent by
of Aggregate Aggregate
Mortgage Cut-off Percent by Cut-off
Year Loans Date Balance Number Date Balance
---- -------- ------------ --------- ------------
-------- ------------ --------- ------------
Total...................
======== ============ ========= ============
The following table sets forth the respective years in which the Mortgage
Loans are scheduled to mature. The table provides an indication (which does not
account for any scheduled amortization or prepayments), of the concentration of
Balloon Payments that will be due in those years with respect to the Mortgage
Loans. See "Risk Factors--Balloon Payments" herein.
Year of Scheduled Maturity
Number Percent by
of Aggregate Aggregate
Mortgage Cut-off Percent by Cut-off
Year Loans Date Balance Number Date Balance
---- -------- ------------ --------- ------------
S-28
<PAGE>
-------- ------------ --------- ------------
Total...................
======== ============ ========= ============
The following table sets forth the range of Cut-off Date LTV Ratios of the
Mortgage Loans. A "Cut-off Date LTV Ratio" is a fraction, expressed as a
percentage, the numerator of which is the Cut-off Date Balance of a Mortgage
Loan, and the denominator of which is the appraised value of the related
Mortgaged Property as determined by an appraisal thereof obtained in connection
with the origination of such Mortgage Loan. A Cut-off Date LTV Ratio, because it
is based on the value of a Mortgaged Property determined as of loan origination,
is not necessarily a reliable measure of the borrower's current equity in that
Mortgaged Property. In a declining real estate market, the fair market value of
the Mortgaged Property could have decreased from the value determined at
origination, and the actual loan-to-value ratio of a Mortgage Loan may be higher
than its Cut-off Date LTV Ratio.
Cut-off Date LTV Ratios
Number Percent by
of Aggregate Aggregate
Range of Cut-off Date Mortgage Cut-off Percent by Cut-off
LTV Ratios (%) Loans Date Balance Number Date Balance
- -------------------------- -------- ------------ --------- ------------
-------- ------------ --------- ------------
Total...................
======== ============ ========= ============
Weighted Average Cut-off
Date LTV Ratio
(All Loans): _____%
Weighted Average Cut-off
Date LTV Ratio
(ARM Loans): _____%
Weighted Average Cut-off
Date LTV Ratio
(Fixed Rate Loans): _____%
The following table sets forth the range of Debt Service Coverage Ratios
for the Mortgage Loans as of the Cut-off Date. The "Debt Service Coverage Ratio"
for any Mortgage Loan is the ratio of Net Operating Income produced by the
related Mortgaged Property for the period (annualized if the period was less
than one year) covered by an operating statement to the amount of the Monthly
Payment in effect as of the Cut-off Date multiplied by 12. "Net Operating
Income" is the revenue derived from the use and operation of a Mortgaged
Property (consisting primarily of rental income and deposit forfeitures), less
operating expenses (such as utilities, general administrative expenses,
management fees, advertising, repairs and maintenance), and further less fixed
expenses (such as insurance and real estate taxes). Net Operating Income
generally does not reflect capital expenditures. The following table was
prepared using operating statements obtained from the respective mortgagors. In
each case, the information contained in such operating statements was unaudited,
and the Depositor has made no attempt to verify its accuracy. In the case of
_____ Mortgage Loans (____ ARM Loans and ____ Fixed Rate Loans), operating
statements could not be obtained, and accordingly, Debt Service Coverage Ratios
for those Mortgage Loans were not calculated. The last day of the period (which
may not correspond to the end of the calendar year most recent to the Cut-off
Date) covered by each operating statement from which a Debt Service Coverage
Ratio was calculated is set forth in Annex A with respect to the related
Mortgage Loan.
Debt Service Coverage Ratios
as of the Cut-off Date
S-29
<PAGE>
Number Percent by
of Aggregate Aggregate
Range of Debt Service Mortgage Cut-off Percent by Cut-off
Coverage Ratios Loans Date Balance Number Date Balance
- -------------------------- -------- ------------ --------- ------------
-------- ------------ --------- ------------
Total...................
======== ============ ========= ============
Weighted Average
Debt Service Coverage Ratio
(All Loans): _______x(B)
Weighted Average
Debt Service Coverage Ratio
(ARM Loans): _______x(C)
Weighted Average
Debt Service Coverage Ratio
(Fixed Rate Loans): _______x(D)
- -------------------
(A) The Debt Service Coverage Ratios for these Mortgage Loans were not
calculated due to a lack of available operating statements.
(B) This calculation does not include the ________ Mortgage Loans as to which
Debt Service Coverage Ratios were not calculated.
(C) This calculation does not include the ________ ARM Loans as to which Debt
Service Coverage Ratios were not calculated.
(D) This calculation does not include the ________ Fixed Rate Loans as to which
Debt Service Coverage Ratios were not calculated.
The Mortgage Loans are secured by Mortgaged Properties located in _____
different states. The following table sets forth the states in which the
Mortgaged Properties are located:
Geographic Distribution
Number Percent by
of Aggregate Aggregate
Mortgage Cut-off Percent by Cut-off
State Loans Date Balance Number Date Balance
----- -------- ------------ --------- ------------
-------- ------------ --------- ------------
Total...................
======== ============ ========= ============
Specified in Annex A to this Prospectus Supplement are the foregoing
and certain additional characteristics of the Mortgage Loans set forth on a
loan-by-loan basis. Certain additional information regarding the Mortgage
Loans is contained herein under "--Underwriting Standards", "--Assignment of
the Mortgage Loans; Repurchases" and "--Representations and Warranties;
Repurchases" and in the Prospectus under "Description of the Trust Funds" and
"Certain Legal Aspects of Mortgage Loans".
S-30
<PAGE>
The Mortgage Loan Seller
General. On or prior to the Delivery Date, the Depositor will acquire the
Mortgage Loans from ____________ (the "Mortgage Loan Seller") pursuant to a
Mortgage Loan Purchase Agreement, dated [the date hereof], between the Depositor
and the Mortgage Loan Seller (the "Mortgage Loan Purchase Agreement"). [The
Mortgage Loan Seller originated ___ of the Mortgage Loans, which represent ___%
of the Initial Pool Balance, and acquired the remaining Mortgage Loans from the
respective originators thereof, generally in accordance with the underwriting
criteria described below under "--Underwriting Standards".]
[The Mortgage Loans Seller [, a wholly-owned subsidiary of __________,] is
a _________________ organized in ____ under the laws of __________________. As
of December 31, 199_, the Mortgage Loan Seller had a net worth of approximately
$_________________, and currently holds and services for its own account a total
residential and commercial mortgage loan portfolio of approximately
$__________________, of which approximately $__________________ constitutes
multifamily mortgage loans.]
The information set forth herein concerning the Mortgage Loan Seller, the
delinquency, foreclosure and loss experience of its mortgage loan portfolio and
its underwriting standards has been provided by the Mortgage Loan Seller, and
neither the Depositor nor the Underwriter makes any representation or warranty
as to the accuracy or completeness of such information.
[Delinquency and Foreclosure Experience. The following table sets forth
certain information concerning the delinquency experience (including pending
foreclosures) on the Mortgage Loan Seller's portfolio of multifamily mortgage
loans held and serviced for its own account. The indicated periods of
delinquency are based on the number of days past due on a contractual basis. No
mortgage loan is considered delinquent for these purposes until 30 days past due
on a contractual basis.
As of December As of December As of ,
31, 199 31, 199 199
---------------- ---------------- -----------------
By By By
Dollar Dollar Dollar
By Amount By Amount By Amount
Number of Number of Number of
of Loans Loans of Loans Loans of Loans Loans
-------- ----- -------- ----- -------- -----
(Dollar Amounts in Millions)
Total Multifamily
Mortgage Loans...... $ $ $
-------- ----- -------- ----- -------- -----
Period of Delinquency
30 to 59 days....
60 to 89 days....
90 days or more..
-------- ----- -------- ----- -------- -----
Total Delinquent
Loans...............
======== ===== ======== ===== ======== =====
Foreclosures
pending(1)..........
Real Estate Owned...
- ------------------------------
(1) Includes bankruptcies which stay foreclosure.
The following table presents, for the Mortgage Loan Seller's portfolio of
multifamily mortgage loans held and serviced for its own account, the net gains
(losses) resulting from foreclosures and the disposition of properties acquired
in foreclosure or by deed in lieu of foreclosure during the periods indicated.
Year Ended December 31, Months Ended
------------------------ ------------
199 199 199 199
-------- -------- -------- --------
S-31
<PAGE>
Net gains (losses)(1)
- ----------------------------
(1) Gains (losses) are defined as proceeds from sale less outstanding
principal balance less certain capitalized costs related to the
foreclosure and/or disposition of the related property (exclusive of
accrued interest).
There can be no assurance that the delinquency and foreclosure experience
of the Mortgage Loans comprising the Mortgage Pool will correspond to the
delinquency, foreclosure and loss experience of the Mortgage Loan Seller's total
multifamily mortgage loan portfolio set forth in the foregoing tables. The
aggregate delinquency, foreclosure and loss experience on the Mortgage Loans
comprising the Mortgage Pool will depend on the results obtained over the life
of the Mortgage Pool.]
Underwriting Standards
[All of the Mortgage Loans were originated or acquired by the Mortgage
Loan Seller, generally in accordance with the underwriting criteria described
herein.
[Description of underwriting standards.]
The Depositor believes that the Mortgage Loans selected for inclusion in
the Mortgage Pool from the Mortgage Loan Seller's portfolio were not so selected
on any basis which would have a material adverse effect on the
Certificateholders.]
Assignment of the Mortgage Loans; Repurchase
On or prior to the Delivery Date, the Depositor will assign its interests
in the Mortgage Loans, without recourse, to the Trustee for the benefit of the
Certificateholders. In connection with such assignment, the Depositor will
require the Mortgage Loan Seller to deliver to the Trustee or to a document
custodian appointed by the Trustee (a "Custodian"), among other things, the
following documents with respect to each Mortgage Loan (collectively, as to such
Mortgage Loan, the "Mortgage File"): [(i) the original Mortgage Note, endorsed
(without recourse) to the order of Trustee; (ii) the original Mortgage or a
certified copy thereof, together with originals or certified copies of any
intervening assignments of such document, in each case with evidence of
recording thereon; (iii) the original or a certified copy of any related
assignment of leases, rents and profits (if such item is a document separate
from the Mortgage), together with originals or certified copies of any
intervening assignments of such document, in each case with evidence of
recording thereon; (iv) the original or a certified copy of any related security
agreement (if such item is a document separate from the Mortgage), together with
originals or certified copies of any intervening assignments of such document;
(v) an assignment of the Mortgage in favor of the Trustee, in recordable form;
(vi) an assignment of any related assignment of leases, rents and profits (if
such item is a document separate from the Mortgage) in favor of the Trustee, in
recordable form; (vii) an assignment of any related security agreement (if such
item is a document separate from the Mortgage) in favor of the Trustee; (viii)
originals or certified copies of all assumption, modification and substitution
agreements in those instances where the terms or provisions of the Mortgage or
Mortgage Note have been modified or the Mortgage or Mortgage Note has been
assumed; (ix) the original lender's title insurance policy issued on the date of
the origination of such Mortgage Loan or, with respect to each Mortgage Loan as
to which a lender's title insurance policy has not yet been issued, a
preliminary title report or a title insurance commitment or binder or, with
respect to each Mortgage Loan not covered by a lender's title insurance policy,
an attorney's opinion of title given by an attorney licensed to practice law in
the jurisdiction where the Mortgaged Property is located; and (x) the original
of any guaranty of the borrower's obligations under the related Mortgage Note.]
The Trustee or a Custodian on its behalf will be required to review each
Mortgage File within a period of ___ days of the receipt thereof, and the
Trustee or a Custodian on its behalf will hold such documents in trust for the
benefit of the Certificateholders. If any of the above-described documents is
found during the course of such review to be missing from any Mortgage File or
defective, and in either case such omission or defect materially and adversely
affects the value of any Mortgage Loan or the interests of Certificateholders
therein, the Trustee will be required to notify the Master Servicer, the
Depositor and the Mortgage Loan Seller. In any such case, and if the Mortgage
Loan Seller cannot deliver the document or cure the defect within a period of
___ days following its receipt of such notice, then, except as otherwise
provided below, the Mortgage Loan Seller will be obligated pursuant to the
Mortgage Loan Purchase
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Agreement (the relevant rights under which will be assigned, together with its
interests in the Mortgage Loans, by the Depositor to the Trustee) to repurchase
the affected Mortgage Loan within such ___-day period at a price (the "Purchase
Price") equal to the sum of (i) the unpaid principal balance of such Mortgage
Loan, (ii) unpaid accrued interest on such Mortgage Loan at the Mortgage Rate
from the date to which interest was last paid to the Due Date in the Due Period
in which the purchase is to occur, (iii) certain servicing expenses that are
reimbursable to the Master Servicer, and (iv) any unpaid accrued interest at the
Master Servicer Reimbursement Rate that may be payable to the Master Servicer in
respect of related unreimbursed P&I Advances and servicing expenses as described
under "Description of the Certificates P&I Advances" herein. This repurchase
obligation will constitute the sole remedy available to the Certificateholders
and the Trustee for any defect in or omission from a Mortgage File, and neither
the Depositor nor any of its affiliates will be obligated to repurchase the
affected Mortgage Loan if the Mortgage Loan Seller defaults on its obligation to
do so. Notwithstanding the foregoing, if a document is missing from any Mortgage
File because it has been submitted for recording, and neither such document nor
a certified copy thereof, in either case with evidence of recording thereon, can
be obtained because of delays on the part of the applicable recording office,
then the Mortgage Loan Seller will not be required to repurchase the affected
Mortgage Loan on the basis of such missing document so long as it continues in
good faith to obtain such document or such certified copy.
The Pooling and Servicing Agreement will require the Master Servicer
promptly (and in any event within ___ days of the Delivery Date) to cause each
assignment of a Mortgage described in clause (v) of the second preceding
paragraph and each assignment of an assignment of leases, rents and profits
described in clause (vi) of the second preceding paragraph to be submitted for
recording in the real property records of the jurisdiction in which the related
Mortgaged Property is located except in states where, in the written opinion of
local counsel acceptable to the Depositor and the Trustee, such recordation is
not required to protect the Trustee's interests in the related Mortgage Loans
against sale, further assignment, satisfaction or discharge by the Mortgage Loan
Seller, the Master Servicer, any sub-servicers or the Depositor. See
"Description of the Pooling Agreements--Assignment of Mortgage Loans;
Repurchases" in the Prospectus.
Representations and Warranties; Repurchases
In the Mortgage Loan Purchase Agreement, the Mortgage Loan Seller has
represented and warranted with respect to each Mortgage Loan, as of [the
Delivery Date], or as of such other date specifically provided in the
representation and warranty, among other things, that:
[Specify significant representations and warranties.]
If the Master Servicer, the Trustee or the Depositor discovers a breach of
any of the foregoing representations and warranties, and such breach materially
and adversely affects the value of any Mortgage Loan or the interests of
Certificateholders therein, the party making such discovery will be required to
so notify each of the other parties and the Mortgage Loan Seller. In any such
case, and if the Mortgage Loan Seller cannot cure such breach within a period of
____ days following its receipt of such notice, then the Mortgage Loan Seller
will be obligated pursuant to the Mortgage Loan Purchase Agreement (the relevant
rights under which will be assigned, together with its interests in the Mortgage
Loans, by the Depositor to the Trustee) to repurchase the affected Mortgage Loan
within such ___-day period at the applicable Purchase Price.
The foregoing repurchase obligation will constitute the sole remedy
available to the Certificateholders and the Trustee for any breach of the
Mortgage Loan Seller's representations and warranties regarding the Mortgage
Loans. [Thus, if the Mortgage Loan Seller were found to have breached its
representation set forth in clause __ above regarding environmental matters, it
would have no obligation to indemnify the Trust Fund for any consequent
liability that the Trust Fund might have incurred for clean-up costs at the
affected Mortgaged Property. However, because of the restrictions imposed by the
Pooling and Servicing Agreement upon the ability of the Master Servicer to
acquire title to a Mortgaged Property or to assume control of its operations,
the Depositor believes that it is unlikely that the Trust Fund will incur any
such liability. See "Risk Factors--Environmental Law Considerations" herein and
"Description of the Pooling Agreements--Realization Upon Defaulted Mortgage
Loans", "Risk Factors--Environmental Risks" and "Certain Legal Aspects of
Mortgage Loans--Environmental Legislation" in the Prospectus.]
The Mortgage Loan Seller will be the sole Warranting Party in respect of
the Mortgage Loans, and neither the Depositor nor any of its affiliates will be
obligated to repurchase any affected Mortgage Loan in connection with a
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breach of the Mortgage Loan Seller's representations and warranties if the
Mortgage Loan Seller defaults on its obligation to do so. However, the Depositor
will not include any Mortgage Loan in the Mortgage Pool if anything has come to
the Depositor's attention that would cause it to believe that the
representations and warranties made by the Mortgage Loan Seller regarding such
Mortgage Loan will not be correct in all material respects. See "Description of
the Pooling Agreements--Representations and Warranties; Repurchases" in the
Prospectus.
Changes in Mortgage Pool Characteristics
The description in this Prospectus Supplement of the Mortgage Pool and the
Mortgaged Properties is based upon the Mortgage Pool as expected to be
constituted at the time the Offered Certificates are issued, as adjusted for the
scheduled principal payments due on or before the Cut-off Date. Prior to the
issuance of the Offered Certificates, a Mortgage Loan may be removed from the
Mortgage Pool if the Depositor deems such removal necessary or appropriate or if
it is prepaid. A limited number of other mortgage loans may be included in the
Mortgage Pool prior to the issuance of the Offered Certificates, unless
including such Mortgage Loans would materially alter the characteristics of the
Mortgage Pool as described herein. The Depositor believes that the information
set forth herein will be representative of the characteristics of the Mortgage
Pool as it will be constituted at the time the Offered Certificates are issued,
although the range of Mortgage Rates and maturities and certain other
characteristics of the Mortgage Loans in the Mortgage Pool may vary.
A Current Report on Form 8-K (the "Form 8-K") will be available to
purchasers of the Offered Certificates on or shortly after the Delivery Date and
will be filed, together with the Pooling and Servicing Agreement, with the
Securities and Exchange Commission within fifteen days after the initial
issuance of the Offered Certificates. In the event Mortgage Loans are removed
from or added to the Mortgage Pool as set forth in the preceding paragraph, such
removal or addition will be noted in the Form 8-K.
SERVICING OF THE MORTGAGE LOANS
General
The Master Servicer will be required to service and administer the
Mortgage Loans, either directly or through sub-servicers, on behalf of the
Trustee and in the best interests of and for the benefit of the
Certificateholders (as determined by the Master Servicer in its good faith and
reasonable judgment), in accordance with applicable law, the terms of the
Pooling and Servicing Agreement, the terms of the respective Mortgage Loans and,
to the extent consistent with the foregoing, in the same manner as would prudent
institutional mortgage lenders and loan servicers servicing mortgage loans
comparable to the Mortgage Loans in the jurisdictions where the Mortgaged
Properties are located, and with a view to the maximization of timely and
complete recovery of principal and interest, but without regard to: (i) any
relationship that the Master Servicer or any affiliate of the Master Servicer
may have with the related mortgagor; (ii) the ownership of any Certificate by
the Master Servicer or any affiliate of the Master Servicer; (iii) the Master
Servicer's obligation to make P&I Advances and advances to cover certain
servicing expenses; and (iv) the Master Servicer's right to receive compensation
for its services under the Pooling and Servicing Agreement or with respect to
any particular transaction.
Set forth below, following the subsection captioned "--The Master
Servicer", is a description of certain pertinent provisions of the Pooling and
Servicing Agreement relating to the servicing of the Mortgage Loans. Reference
is also made to the Prospectus, in particular to the section captioned
"Description of the Pooling Agreements", for important information in addition
to that set forth herein regarding the terms and conditions of the Pooling and
Servicing Agreement as they relate to the rights and obligations of the Master
Servicer thereunder.
The Master Servicer
[__________________________________, a ___________________, will act as
Master Servicer with respect to the Mortgage Pool. Founded in ____ as a
____________, the Master Servicer today furnishes a variety of wholesale banking
services. As of December 31, 19__, the Master Servicer had a net worth of
approximately $__________, and a total mortgage loan servicing portfolio of
approximately $___________, of which approximately $_____________ represented
multifamily mortgage loans.
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The offices of the Master Servicer that will be primarily responsible for
servicing and administering the Mortgage Pool are located at
- ----------------------------.
For so long as the long-term unsecured debt obligations of the Master
Servicer are rated ___ or better by _____________________, the Master Servicer
will not be required to maintain the errors and omissions policy described in
the Prospectus under "Description of the Pooling Agreements--Certain Matters
Regarding the Master Servicer and the Depositor".]
The information set forth herein concerning the Master Servicer has been
provided by the Master Servicer, and neither the Depositor nor the Underwriter
makes any representation or warranty as to the accuracy or completeness of such
information.
Servicing and Other Compensation and Payment of Expenses
The principal compensation to be paid to the Master Servicer in respect of
its master servicing activities will be the Servicing Fee. The "Servicing Fee"
will be payable monthly on a loan-by-loan basis from amounts received in respect
of interest on each Mortgage Loan, will accrue in accordance with the terms of
the related Mortgage Note at a rate equal to ________% per annum (the "Servicing
Fee Rate") and will be computed on the basis of the same principal amount and
for the same period respecting which any related interest payment on the related
Mortgage Loan is computed. As additional servicing compensation, the Master
Servicer will be entitled to retain all assumption and modification fees, late
charges and penalty interest and, as and to the extent described below,
Prepayment Premiums and Prepayment Interest Excesses collected from mortgagors.
In addition, the Master Servicer is authorized but not required to invest or
direct the investment of funds held in the Certificate Account in certain
short-term United States government securities and other obligations acceptable
to the Rating Agencies ("Permitted Investments"), and the Master Servicer will
be entitled to retain any interest or other income earned on such funds.
Although the Master Servicer is required to service and administer the Mortgage
Pool in accordance with the general servicing standard described under
"--General" above and, accordingly, without regard to its right to receive
compensation under the Pooling and Servicing Agreement, additional servicing
compensation in the nature of assumption and modification fees, Prepayment
Premiums and Prepayment Interest Excesses may under certain circumstances
provide the Master Servicer with an economic disincentive to comply with such
standard.
[If a borrower voluntarily prepays a Mortgage Loan in whole or in part
during any Due Period on a date that is prior to its Due Date in such Due
Period, the amount of interest (net of related Servicing Fees) that accrues on
the amount of such principal prepayment will be less (such shortfall, a
"Prepayment Interest Shortfall") than the corresponding amount of interest
accruing on the Certificates. If such a principal prepayment occurs during any
Due Period after the Due Date for such Mortgage Loan in such Due Period, the
amount of interest (net of related Servicing Fees) that accrues on the amount of
such principal prepayment will exceed (such excess, a "Prepayment Interest
Excess") the corresponding amount of interest accruing on the Certificates. As
to any Due Period, to the extent Prepayment Interest Excesses and Prepayment
Premiums collected for all Mortgage Loans are greater than Prepayment Interest
Shortfalls incurred, such excess will be paid to the Master Servicer as
additional servicing compensation.]
[As and to the extent described herein under "Description of the
Certificates--P&I Advances", the Master Servicer will be entitled to receive
interest on P&I Advances and reimbursable servicing expenses, such interest to
be paid, contemporaneously with the reimbursement of the related P&I Advance or
servicing expense, out of any other collections on the Mortgage Loans.]
The Master Servicer generally will be required to pay all expenses incurred
by it in connection with its servicing activities under the Pooling and
Servicing Agreement, and will not be entitled to reimbursement therefor except
as expressly provided in the Pooling and Servicing Agreement. However, the
Master Servicer will be permitted to pay certain such expenses directly out of
the Certificate Account and at times without regard to the relationship between
the expense and the funds from which it is being paid. In connection therewith,
the Master Servicer will be responsible for all fees of any sub-servicers, other
than management fees earned in connection with the operation of an REO Property,
which management fees the Master Servicer will be authorized to pay out of
revenues received from such property (thereby reducing the portion of such
revenues that would otherwise be available for distribution to
Certificateholders). See "Description of the Certificates--Distributions--
Method, Timing and Amount" herein and
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"Description of the Pooling Agreements--Certificate Account" and "--Servicing
Compensation and Payment of Expenses" in the Prospectus.
Modifications, Waivers and Amendments
The Master Servicer may agree to modify, waive or amend any term of any
Mortgage Loan in a manner consistent with the servicing standard described
herein, provided that such modification, waiver or amendment will not (i) affect
the amount or timing of any scheduled payments of principal or interest on the
Mortgage Loan or (ii) in its judgment, materially impair the security for the
Mortgage Loan or reduce the likelihood of timely payment of amounts due thereon.
The Master Servicer also may agree to any other modification, waiver or
amendment of the terms of a Mortgage Loan, but only if, in its judgment, a
material default on the Mortgage Loan has occurred or a payment default is
imminent, and such modification, waiver or amendment is reasonably likely to
produce a greater recovery with respect to the Mortgage Loan, taking into
account the time value of money, than would liquidation.
To the extent consistent with the foregoing, the Master Servicer will
be permitted: [describe permitted modification standards]
The Master Servicer is required to notify the Trustee of any modification,
waiver or amendment of any term of any Mortgage Loan, and must deliver to the
Trustee or the related Custodian, for deposit in the related Mortgage File, an
original counterpart of the agreement related to such modification, waiver or
amendment, promptly (and in any event within [10] business days) following the
execution thereof. Copies of each agreement whereby any such modification,
waiver or amendment of any term of any Mortgage Loan is effected are to be
available for review during normal business hours at the offices of the Master
Servicer. See "Description of the Certificates--Reports to Certificateholders;
Available Information" herein.
Inspections; Collection of Operating Information
The Master Servicer is required to perform a physical inspection of each
Mortgaged Property at such times and in such manner as are consistent with the
servicing standard set forth herein, but in any event (i) at least once per
calendar year, commencing in the calendar year _______, and (ii), if any
scheduled payment becomes more than 60 days delinquent on the related Mortgage
Loan, as soon as practicable thereafter. The Master Servicer will be required to
prepare a written report of each such inspection describing the condition of the
Mortgaged Property and specifying the existence of any material vacancies in the
Mortgaged Property, of any sale, transfer or abandonment of the Mortgaged
Property, of any material change in the condition or value of the Mortgaged
Property, or of any waste committed thereon.
With respect to each Mortgage Loan that requires the borrower to deliver
such statements, the Master Servicer is also required to collect and review the
annual operating statements of the related Mortgaged Property. [Most] of the
Mortgages obligate the related borrower to deliver annual property operating
statements. However, there can be no assurance that any operating statements
required to be delivered will in fact be delivered, nor is the Master Servicer
likely to have any practical means of compelling such delivery in the case of an
otherwise performing Mortgage Loan.
Copies of the inspection reports and operating statements referred to
above are to be available for review by Certificateholders during normal
business hours at the offices of the [Trustee]. See "Description of the
Certificates--Reports to Certificateholders; Available Information" herein.
Additional Obligations of the Master Servicer with Respect to ARM Loans
The Master Servicer is responsible for calculating adjustments in the
Mortgage Rate and the Monthly Payment for each ARM Loan and for notifying the
related borrower of such adjustments. If the base index for any ARM Loan is not
published or is otherwise unavailable, then the Master Servicer is required to
select a comparable alternative index over which it has no direct control, that
is readily verifiable and that is acceptable under the terms of the related
Mortgage Note. If the Mortgage Rate or the Monthly Payment with respect to any
ARM Loan is not properly adjusted by the Master Servicer pursuant to the terms
of such Mortgage Loan and applicable law, the Master Servicer is required to
deposit in the Certificate Account on or prior to the Due Date of the affected
Monthly Payment, an amount equal to the excess, if any, of (i) the amount that
would have been received from the borrower if the Mortgage Rate or Monthly
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Payment had been properly adjusted, over (ii) the amount of such improperly
adjusted Monthly Payment, subject to reimbursement only out of such amounts as
are recovered from the borrower in respect of such excess.
DESCRIPTION OF THE CERTIFICATES
General
The Certificates will be issued pursuant to a Pooling and Servicing
Agreement, to be dated as of the Cut-off Date, among the Depositor, the Master
Servicer and the Trustee (the "Pooling and Servicing Agreement"), and will
represent in the aggregate the entire beneficial ownership interest in a Trust
Fund consisting of: (i) the Mortgage Loans and all payments under and proceeds
of the Mortgage Loans received after the Cut-off Date (exclusive of payments of
principal and interest due on or before the Cut-off Date); (ii) any Mortgaged
Property acquired on behalf of the Trust Fund through foreclosure, deed in lieu
of foreclosure or otherwise (upon acquisition, an "REO Property"); (iii) such
funds or assets as from time to time are deposited in the Certificate Account;
(iv) the rights of the mortgagee under all insurance policies with respect to
the Mortgage Loans; and (v) certain rights of the Depositor under the Mortgage
Loan Purchase Agreement relating to Mortgage Loan document delivery requirements
and the representations and warranties of the Mortgage Loan Seller regarding the
Mortgage Loans.
The Certificates will consist of four classes to be designated as the
Class A Certificates, the Class B Certificates, the Class C Certificates and the
Class R Certificates. The Class A Certificates will have an initial Certificate
Balance of $____________, which represents ____% of the Initial Pool Balance;
the Class B Certificates will have an initial Certificate Balance of
$____________, which represents ____% of the Initial Pool Balance; the Class C
Certificates will have an initial Certificate Balance of $____________, which
represents ___% of the Initial Pool Balance; and the Class R Certificates will
have a Certificate Balance of zero. The Certificate Balance of any Class of
Certificates outstanding at any time represents the maximum amount which the
holders thereof are entitled to receive as distributions allocable to principal
from the cash flow on the Mortgage Loans and the other assets in the Trust Fund.
On each Distribution Date, the respective Certificate Balances of the Class A,
Class B and Class C Certificates (the "Regular Certificates") will in each case
be reduced by any amounts actually distributed on such Class of Certificates on
such Distribution Date that are allocable to principal.
Only the Class A and Class B Certificates (the "Offered Certificates") are
offered hereby. The Class C and Class R Certificates (the "Private
Certificates") have not been registered under the Securities Act of 1933 and are
not offered hereby. [___________________________________, has agreed with the
Depositor to purchase the Class C and, except for a nominal interest therein,
the Class R Certificates.]
The Class A Certificates will be issued, maintained and transferred on the
book-entry records of DTC and its Participants in denominations of $1,000 and in
integral multiples thereof. The Class B Certificates will be issuable in fully
registered, certificated form in denominations of $____________ and integral
multiples of $1,000 in excess thereof, with one Class B Certificate evidencing
an additional amount equal to the remainder of the initial Certificate Balance
of such Class.
The Class A Certificates will initially be represented by one or more
global Certificates registered in the name of the nominee of DTC. The Depositor
has been informed by DTC that DTC's nominee will be Cede & Co. No Class A
Certificate Owner will be entitled to receive a Definitive Class A Certificate
representing its interest in such Class, except under the limited circumstances
described in the Prospectus under "Description of the Certificates--Book-Entry
Registration and Definitive Certificates". Unless and until Definitive Class A
Certificates are issued, all references to actions by holders of the Class A
Certificates will refer to actions taken by DTC upon instructions received from
Class A Certificate Owners through its Participants, and all references herein
to payments, notices, reports and statements to holders of the Class A
Certificates will refer to payments notices, reports and statements to DTC or
Cede & Co., as the registered holder of the Class A Certificates, for
distribution to Class A Certificate Owners through its Participants in
accordance with DTC procedures. See "Description of the Certificates--Book-Entry
Registration and Definitive Certificates" in the Prospectus.
Until Definitive Class A Certificates are issued, interests in such Class
will be transferred on the book-entry records of DTC and its Participants. The
Class B Certificates may be transferred or exchanged, subject to certain
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restrictions on the transfer of such Certificates to Plans (see "ERISA
Considerations" herein), at the offices of ___________________________ located
at ______________________________________________, without the payment of any
service charges, other than any tax or other governmental charge payable in
connection therewith. ________________________ will initially serve as registrar
(in such capacity, the "Certificate Registrar") for purposes of recording and
otherwise providing for the registration of the Offered Certificates and of
transfers and exchanges of the Class B and, if issued, the Definitive Class A
Certificates.
Distributions
Method, Timing and Amount. Distributions on the Certificates will be made
by the Master Servicer, to the extent of available funds, on the 25th day of
each month or, if any such 25th day is not a business day, then on the next
succeeding business day, commencing in _________ 199__ (each, a "Distribution
Date"). All such distributions (other than the final distribution on any
Certificate) will be made to the persons in whose names the Certificates are
registered at the close of business on each Record Date, which will be the last
business day of the month preceding the month in which the related Distribution
Date occurs. Each such distribution will be made by wire transfer in immediately
available funds to the account specified by the Certificateholder at a bank or
other entity having appropriate facilities therefor, if such Certificateholder
will have provided the Master Servicer with wiring instructions [no less than
five business days prior to the related Record Date (which wiring instructions
may be in the form of a standing order applicable to all subsequent
distributions) and is the registered owner of Certificates with an aggregate
initial principal amount of at least $5,000,000], or otherwise by check mailed
to such Certificateholder. The final distribution on any Certificate will be
made in like manner, but only upon presentation and surrender of such
Certificate at the location that will be specified in a notice of the pendency
of such final distribution. All distributions made with respect to a Class of
Certificates will be allocated pro rata among the outstanding Certificates of
such Class based on their respective Percentage Interests. The "Percentage
Interest" evidenced by any Offered Certificate is equal to the initial
denomination thereof as of the Delivery Date, divided by the initial Certificate
Balance of the Class to which it belongs.
The aggregate amount available for distribution to Certificateholders on
each Distribution Date (the "Available Distribution Amount") will, in general,
equal the sum of the following amounts:
(a) the total amount of all cash received on the Mortgage Loans and
any REO Properties that is on deposit in the Certificate Account as of the
related Determination Date, exclusive of:
(i) all Monthly Payments collected but due on a Due Date
subsequent to the related Due Period,
(ii) all principal prepayments (together with related
payments of the interest thereon and related Prepayment
Premiums), Liquidation Proceeds, Insurance Proceeds and
other unscheduled recoveries received subsequent to the
related Due Period, and
(iii) all amounts in the Certificate Account that are due
or reimbursable to any person other than the
Certificateholders; and
(b) all P&I Advances made by the Master Servicer with respect to
such Distribution Date. See "Description of the Pooling
Agreements--Certificate Account" in the Prospectus.
The "Due Period" for each Distribution Date will be the period that begins
on the ______ day of the month preceding the month in which such Distribution
Date occurs and ends on the _____ day of the month in which such Distribution
Date occurs. For purposes of the discussion in the Prospectus, the Due Period is
also the Prepayment Period. The "Determination Date" for each Distribution Date
is the _______ day of the month in which such Distribution Date occurs or, if
any such ________ day is not a business day, then the next preceding business
day.
Priority. On each Distribution Date, for so long as the Class A and/or
Class B Certificates are outstanding, the Master Servicer will (except as
otherwise described under "--Termination" below) apply amounts on deposit in the
Certificate Account, to the extent of the Available Distribution Amount, in the
following order of priority:
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(1) to distributions of interest to the holders of the Class A
Certificates in an amount equal to all Distributable
Certificate Interest in respect of the Class A Certificates
for such Distribution Date and, to the extent not previously
paid, for all prior Distribution Dates;
(2) to distributions of principal to the holders of the Class A
Certificates in an amount equal to the sum of (a) the product
of (i) the Class A Certificates' Ownership Percentage (as
calculated immediately prior to such Distribution Date),
multiplied by (ii) the Scheduled Principal Distribution Amount
for such Distribution Date, plus (b) the entire Unscheduled
Principal Distribution Amount for such Distribution Date (but
not more than would be necessary to reduce the Certificate
Balance of the Class A Certificates to zero);
(3) to distributions of principal to the holders of the Class A
Certificates in an amount equal to any Uncovered Portion of
the Certificate Balance of the Class A Certificates
immediately prior to such Distribution Date;
(4) to distributions of interest to the holders of the Class B
Certificates in an amount equal to all Distributable
Certificate Interest in respect of the Class B Certificates
for such Distribution Date and, to the extent not previously
paid, for all prior Distribution Dates;
(5) to distributions of principal to the holders of the Class B
Certificates in an amount equal to the sum of (a) the product
of (i) the Class B Certificates' Ownership Percentage (as
calculated immediately prior to such Distribution Date),
multiplied by (ii) the Scheduled Principal Distribution Amount
for such Distribution Date, plus (b) if the Class A
Certificates have been retired, then to the extent not
distributed in retirement thereof on such Distribution Date,
the entire Unscheduled Principal Distribution Amount for such
Distribution Date (but not more than would be necessary to
reduce the Certificate Balance of the Class B Certificates to
zero);
(6) to distributions of principal to the holders of the Class A
Certificates in an amount equal to any Uncovered Portion of
the Certificate Balance of the Class B Certificates
immediately prior to such Distribution Date (but not more than
would be necessary to reduce the Certificate Balance of the
Class A Certificates to zero);
(7) to distributions of principal to the holders of the Class B
Certificates in an amount equal to any Uncovered Portion of
the Certificate Balance of the Class B Certificates
immediately prior to such Distribution Date, net of any
distributions of principal made on such Distribution Date in
respect of the Class A Certificates as described in the
immediately preceding clause (6);
(8) to distributions of interest to the holders of the Class C
Certificates in an amount equal to all Distributable
Certificate Interest in respect of the Class C Certificates
for such Distribution Date and, to the extent not previously
distributed, for all prior Distribution Dates;
(9) to distributions of principal to the holders of the Class C
Certificates in an amount equal to the product of (a) the
Class C Certificates' Ownership Percentage (as calculated
immediately prior to such Distribution Date), multiplied by
(b) the Scheduled Principal Distribution Amount for such
Distribution Date;
(10) to distributions of principal to the holders of the respective
Classes of Regular Certificates, in alphabetical order of
their Class designations (i.e., A, B, C), in an aggregate
amount equal to any Uncovered Portion of the Certificate
Balance of the Class C Certificates immediately prior to such
Distribution Date (but, in each case, not more than would be
necessary to reduce the related Certificate Balance to zero);
and
(11) to distributions to the holders of the Class R Certificates in
an amount equal to the remaining balance, if any, of the
Available Distribution Amount.
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Pass-Through Rates. The Pass-Through Rate applicable to the Class A and
Class B Certificates for the initial Distribution Date will equal _______% per
annum. With respect to any Distribution Date subsequent to the initial
Distribution Date, the Pass-Through Rate for the Class A Certificates and the
Class B Certificates will equal the Weighted Average Effective Net Mortgage Rate
for such Distribution Date.
[The Pass-Through Rate applicable to the Class C Certificates for any
Distribution Date will equal the Weighted Average Effective Net Mortgage Rate
for such Distribution Date. The Class R Certificates will have no specified
Pass-Through Rate.]
The "Weighted Average Effective Net Mortgage Rate" for each Distribution
Date is the weighted average of the applicable Effective Net Mortgage Rates for
the Mortgage Loans, weighted on the basis of their respective Stated Principal
Balances immediately prior to such Distribution Date. For purposes of
calculating the Weighted Average Effective Net Mortgage Rate for any
Distribution Date, the "applicable Effective Net Mortgage Rate" for each
Mortgage Loan is: (a) if such Mortgage Loan accrues interest on the basis of a
360-day year consisting of twelve 30-day months (a "360/360 basis", which is the
basis of accrual for interest on the Regular Certificates), the Net Mortgage
Rate in effect for such Mortgage Loan as of the commencement of the related Due
Period; and (b) if such Mortgage Loan does not accrue interest on a 360/360
basis, the annualized rate at which interest would have to accrue during the one
month period preceding the Due Date for such Mortgage Loan during the related
Due Period on a 360/360 basis in order to produce the aggregate amount of
interest (adjusted to the actual Net Mortgage Rate) accrued during such period.
The "Net Mortgage Rate" for each Mortgage Loan is equal to the related Mortgage
Rate in effect from time to time less the Servicing Fee Rate.
Distributable Certificate Interest. The "Distributable Certificate
Interest" in respect of each Class of Regular Certificates for each Distribution
Date represents that portion of the Accrued Certificate Interest in respect of
such Class of Certificates for such Distribution Date that is net of such
Class's allocable share (calculated as described below) of the aggregate of any
Prepayment Interest Shortfalls resulting from voluntary principal prepayments
made on the Mortgage Loans during the related Due Period that are not offset by
Prepayment Interest Excesses and Prepayment Premiums collected during the
related Due Period (the aggregate of such Prepayment Interest Shortfalls that
are not so offset or covered, as to such Distribution Date, the "Net Aggregate
Prepayment Interest Shortfall").
The "Accrued Certificate Interest" in respect of each Class of Regular
Certificates for each Distribution Date is equal to 30 days' interest at the
Pass-Through Rate applicable to such Class of Certificates for such Distribution
Date accrued on the related Certificate Balance outstanding immediately prior to
such Distribution Date.
The portion of the Net Aggregate Prepayment Interest Shortfall for any
Distribution Date that is allocable to each Class of Regular Certificates will
equal the product of (a) such Net Aggregate Prepayment Interest Shortfall,
multiplied by (b) a fraction, the numerator of which is equal to 30 days'
interest at the Pass-Through Rate applicable to such Class of Regular
Certificates for such Distribution Date accrued on the related Certificate
Balance (net of any Uncovered Portion thereof) outstanding immediately prior to
such Distribution Date, and the denominator of which is equal to 30 days'
interest at the Weighted Average Effective Net Mortgage Rate for such
Distribution Date accrued on the aggregate Stated Principal Balance of the
Mortgage Pool outstanding immediately prior to such Distribution Date.
Scheduled Principal Distribution Amount and Unscheduled Principal
Distribution Amount. The "Scheduled Principal Distribution Amount" for each
Distribution Date will equal the aggregate of the principal portions of all
Monthly Payments, including Balloon Payments, due during or, if and to the
extent not previously received or advanced and distributed to Certificateholders
on a preceding Distribution Date, prior to the related Due Period, in each case
to the extent paid by the related borrower or advanced by the Master Servicer
and included in the Available Distribution Amount for such Distribution Date.
The Scheduled Principal Distribution Amount from time to time will include all
late payments of principal made by a borrower, including late payments in
respect of a delinquent Balloon Payment, regardless of the timing of such late
payments, except to the extent such late payments are otherwise reimbursable to
the Master Servicer for prior P&I Advances.
The "Unscheduled Principal Distribution Amount" for each Distribution Date
will equal the aggregate of: (a) all voluntary prepayments of principal received
on the Mortgage Loans during the related Due Period; and (b) any other
collections (exclusive of payments by borrowers) received on the Mortgage Loans
and any REO Properties during the related Due Period, whether in the form of
Liquidation Proceeds, Insurance Proceeds, net income from REO Property or
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otherwise, that were identified and applied by the Master Servicer as recoveries
of previously unadvanced principal of the related Mortgage Loan.
The respective amounts which constitute the Scheduled Principal
Distribution Amount and Unscheduled Principal Distribution Amount for any
Distribution Date are herein collectively referred to from time to time as
the "Distributable Principal".
The "Ownership Percentage" evidenced by any Class of Certificates as of
any date of determination will equal a fraction, expressed as a percentage, the
numerator of which is the then Certificate Balance of such Class of
Certificates, net (in the case of a Class of Regular Certificates) of any
Uncovered Portion of such Certificate Balance, and the denominator of which is
the then aggregate Stated Principal Balance of the Mortgage Pool.
Certain Calculations with Respect to Individual Mortgage Loans. The
"Stated Principal Balance" of each Mortgage Loan outstanding at any time
represents the principal balance of such Mortgage Loan ultimately due and
payable to the Certificateholders. The Stated Principal Balance of each Mortgage
Loan will initially equal the Cut-off Date Balance thereof and, on each
Distribution Date, will be reduced by the portion of the Distributable Principal
for such date, which in either case is attributable to such Mortgage Loan. The
Stated Principal Balance of a Mortgage Loan may also be reduced in connection
with any forced reduction of the actual unpaid principal balance thereof imposed
by a court presiding over a bankruptcy proceeding wherein the related borrower
is the debtor. See "Certain Legal Aspects of Mortgage
Loans--Foreclosure--Bankruptcy Laws" in the Prospectus.
For purposes of calculating distributions on the Certificates, as well as
the amount of Servicing Fees payable each month, each REO Property will be
treated as if there exists with respect thereto an outstanding mortgage loan (an
"REO Loan"), and all references to "Mortgage Loan", "Mortgage Loans" and
"Mortgage Pool" herein and in the Prospectus, when used in such context, will be
deemed to also be references to or to also include, as the case may be, any "REO
Loans". Each REO Loan will generally be deemed to have the same characteristics
as its actual predecessor Mortgage Loan, including the same adjustable or fixed
Mortgage Rate (and, accordingly, the same Net Mortgage Rate and Effective Net
Mortgage Rate) and the same unpaid principal balance and Stated Principal
Balance. Amounts due on such predecessor Mortgage Loan, including any portion
thereof payable or reimbursable to the Master Servicer, will continue to be
"due" in respect of the REO Loan; and amounts received in respect of the related
REO Property, net of payments to be made, or reimbursement to the Master
Servicer for payments previously advanced, in connection with the operation and
management of such property, generally will be applied by the Master Servicer as
if received on the predecessor Mortgage Loan. However, notwithstanding the terms
of the predecessor Mortgage Loan, the Monthly Payment "due" on an REO Loan will
in all cases, for so long as the related Mortgaged Property is part of the Trust
Fund, equal one month's interest thereon at the applicable Mortgage Rate.
Subordination
The rights of holders of the Class B Certificates and each Class of the
Private Certificates (collectively, the "Subordinate Certificates") to receive
distributions of amounts collected or advanced on the Mortgage Loans will be
subordinated, to the extent described herein, to the rights of holders of the
Class A Certificates and each other Class of Subordinate Certificates with an
earlier alphabetical Class designation. This subordination is intended to
enhance the likelihood of timely receipt by the holders of the Class A
Certificates of the full amount of all Distributable Certificate Interest
payable in respect of such Certificates on each Distribution Date, and the
ultimate receipt by such holders of principal in an amount equal to the entire
Certificate Balance of the Class A Certificates. Similarly, but to a lesser
degree, this subordination is also intended to enhance the likelihood of timely
receipt by the holders of the Class B Certificates of the full amount of all
Distributable Certificate Interest payable in respect of such Certificates on
each Distribution Date, and the ultimate receipt by such holders of principal in
an amount equal to the entire Certificate Balance of the Class B Certificates.
The protection afforded to the holders of each Class of Offered Certificates by
means of the subordination of each other Class of Certificates with a later
alphabetical Class designation, will be accomplished by the application of the
Available Distribution Amount on each Distribution Date in accordance with the
order of priority described under "--Distributions--Priority" above. No other
form of Credit Support will be available for the benefit of the holders of the
Offered Certificates.
Allocation to the Class A Certificates, for so long as they are
outstanding, of the entire Unscheduled Principal Distribution Amount for each
Distribution Date will generally accelerate the amortization of the Class A
Certificates
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relative to the actual amortization of the Mortgage Loans. To the extent that
the Class A Certificates are amortized faster than the Mortgage Loans, the
percentage interest evidenced by the Class A Certificates in the Trust Fund will
be decreased (with a corresponding increase in the interest in the Trust Fund
evidenced by the Subordinate Certificates), thereby increasing, relative to
their respective Certificate Balances, the subordination afforded the Class A
Certificates by the Subordinate Certificates. Following retirement of the Class
A Certificates, allocation to the Class B Certificates, for so long as they are
outstanding, of the entire Unscheduled Principal Distribution Amount for each
Distribution Date will provide a similar benefit to such Class of Certificates
as regards the relative amount of subordination afforded thereto by the Private
Certificates.
Losses and other shortfalls experienced with respect to the Mortgage Loans
will not, with the exception of any Net Aggregate Prepayment Interest
Shortfalls, be applied to reduce either the Certificate Balance or the absolute
entitlement to interest of any Class of Regular Certificates, even though such
losses and shortfalls may cause one or more of such Classes to receive less than
the full amount of principal and interest to which it is entitled. As a result,
the aggregate Stated Principal Balance of the Mortgage Pool at any time may be
less than the aggregate Certificate Balance of the Regular Certificates. Such
deficit will be allocated to the respective Classes of Regular Certificates (in
each case to the extent of its Certificate Balance) in reverse alphabetical
order of their Class designations (i.e., C, B, A). Such allocation will not
reduce the Certificate Balance of any such Class and is intended solely to
identify the portion (the "Uncovered Portion") of the Certificate Balance of
each such Class for which there is at such time no corresponding principal
amount of Mortgage Loans.
P&I Advances
[On the business day immediately preceding each Distribution Date, the
Master Servicer will be obligated, subject to the recoverability determination
described in the next paragraph, to make advances (each, a "P&I Advance") out of
its own funds or, subject to the replacement thereof as provided in the Pooling
and Servicing Agreement, funds held in the Certificate Account that are not
required to be part of the Available Distribution Amount for such Distribution
Date, in an amount equal to the aggregate of: (i) all Monthly Payments (net of
the related Servicing Fee), other than Balloon Payments, which were due on the
Mortgage Loans during the related Due Period and delinquent as of the related
Determination Date; (ii) in the case of each Mortgage Loan delinquent in respect
of its Balloon Payment as of the related Determination Date, an amount equal to
30 days' interest thereon at the related Mortgage Rate in effect as of the
commencement of the related Due Period (net of the related Servicing Fee), but
only to the extent that the related mortgagor has not made a payment sufficient
to cover such amount under any forbearance arrangement or otherwise that has
been included in the Available Distribution Amount for such Distribution Date;
and (iii) in the case of each REO Property, an amount equal to thirty days'
imputed interest with respect thereto at the related Mortgage Rate in effect as
of the commencement of the related Due Period (net of the related Servicing
Fee), but only to the extent that such amount is not covered by any net income
from such REO Property included in the Available Distribution Amount for such
Distribution Date. The Master Servicer's obligations to make P&I Advances in
respect of any Mortgage Loan or REO Property will continue through liquidation
of such Mortgage Loan or disposition of such REO Property, as the case may be.
The Master Servicer will be entitled to recover any P&I Advance made out
of its own funds from any amounts collected in respect of the Mortgage Loan as
to which such P&I Advance was made, whether in the form of late payments,
Insurance Proceeds, Liquidation Proceeds or otherwise ("Related Proceeds").
Notwithstanding the foregoing, the Master Servicer will not be obligated to make
any P&I Advance that it determines in its reasonable good faith judgment would,
if made, not be recoverable out of Related Proceeds (a "Nonrecoverable P&I
Advance"), and the Master Servicer will be entitled to recover any P&I Advance
that it so determines to be a Nonrecoverable P&I Advance out of general funds on
deposit in the Certificate Account. See "Description of the
Certificates--Advances in Respect of Delinquencies" and "Description of the
Pooling Agreements--Certificate Account" in the Prospectus.
In connection with its recovery of any P&I Advance or reimbursable
servicing expense (each, an "Advance"), the Master Servicer will be entitled to
retain, out of any amounts then on deposit in the Certificate Account, interest
at a per annum rate equal to ________________ (the "Master Servicer
Reimbursement Rate"), accrued on the amount of such Advance from the date made
to but not including the date of reimbursement.
To the extent not offset or covered by amounts otherwise payable on the
Private Certificates, interest accrued on outstanding Advances will result in a
reduction in amounts payable on the Class B Certificates; and to the extent not
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offset or covered by amounts otherwise payable on the Class B and the Private
Certificates, interest accrued on outstanding Advances will result in a
reduction in amounts payable on the Class A Certificates. To the extent that any
holder of an Offered Certificate must bear the cost of the Master Servicer's
Advances, the benefits of such Advances to such holder will be contingent on the
ability of such holder to reinvest the amounts received as a result of such
Advances at a rate of return equal to or greater than the Master Servicer
Reimbursement Rate.]
Reports to Certificateholders; Certain Available Information
On each Distribution Date, the [Master Servicer] [Trustee] will be
required to forward by mail to each holder of an Offered Certificate a statement
(a "Distribution Date Statement") providing various items of information
relating to distributions made on such date with respect to the relevant Class
and the recent status of the Mortgage Pool. For a more detailed discussion of
the particular items of information to be provided in each Distribution Date
Statement, as well as a discussion of certain annual information reports to be
furnished by the [Master Servicer] [Trustee] to persons who at any time during
the prior calendar year were holders of the Offered Certificates, see
"Description of the Certificates--Reports to Certificateholders" in the
Prospectus.
The Pooling and Servicing Agreement requires that the [Master Servicer]
[Trustee] make available at its offices primarily responsible for servicing the
Mortgage Loans, during normal business hours, for review by any holder of an
Offered Certificate, originals or copies of, among other things, the following
items: (a) the Pooling and Servicing Agreement and any amendments thereto, (b)
all Distribution Date Statements delivered to holders of the relevant Class of
Offered Certificates since the Delivery Date, (c) all officer's certificates
delivered to the Trustee since the Delivery Date as described under "Description
of the Pooling Agreements--Evidence as to Compliance" in the Prospectus, (d) all
accountants' reports delivered to the Trustee since the Delivery Date as
described under "Description of the Pooling Agreements--Evidence as to
Compliance" in the Prospectus, (e) the most recent property inspection report
prepared by or on behalf of the Master Servicer in respect of each Mortgaged
Property, (f) the most recent Mortgaged Property annual operating statements, if
any, collected by or on behalf of the Master Servicer, and (g) any and all
modifications, waivers and amendments of the terms of a Mortgage Loan entered
into by the Master Servicer. Copies of any and all of the foregoing items will
be available from the [Master Servicer] [Trustee] upon request; however, the
[Master Servicer] [Trustee] will be permitted to require payment of a sum
sufficient to cover the reasonable costs and expenses of providing such copies.
Until such time as Definitive Class A Certificates are issued, the
foregoing information will be available to Class A Certificate Owners only to
the extent it is forwarded by or otherwise available through DTC and its
Participants. Conveyance of notices and other communications by DTC to
Participants, and by Participants to Class A Certificate Owners, will be
governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time. The Master Servicer, the
Trustee, the Depositor and the Certificate Registrar are required to recognize
as Certificateholders only those persons in whose names the Certificates are
registered on the books and records of the Certificate Registrar. The initial
registered holder of the Class A Certificates will be Cede & Co. as nominee for
DTC.
Voting Rights
At all times during the term of the Pooling and Servicing Agreement, the
Voting Rights for the series offered hereby shall be allocated among the
respective Classes of Certificateholders in proportion to the Certificate
Balances of their Certificates (net, in the case of a Class of Regular
Certificates, of any Uncovered Portion of the related Certificate Balance).
Voting Rights allocated to a Class of Certificateholders shall be allocated
among such Certificateholders in proportion to the Percentage Interests
evidenced by their respective Certificates. See "Description of the
Certificates--Voting Rights" in the Prospectus.
Termination
The obligations created by the Pooling and Servicing Agreement will
terminate following the earliest of (i) the final payment (or advance in respect
thereof) or other liquidation of the last Mortgage Loan or REO Property subject
thereto, and (ii) the purchase of all of the assets of the Trust Fund by the
Master Servicer. Written notice of termination of the Pooling and Servicing
Agreement will be given to each Certificateholder, and the final distribution
will be made
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only upon surrender and cancellation of the Certificates at the office of the
Certificate Registrar or other location specified in such notice of termination.
Any such purchase by the Master Servicer of all the Mortgage Loans and
other assets in the Trust Fund is required to be made at a price equal to the
excess of (a) the sum of (i) the aggregate Purchase Price of all the Mortgage
Loans then included in the Trust Fund and (ii) the fair market value of all REO
Properties then included in the Trust Fund, as determined by an appraiser
mutually agreed upon by the Master Servicer and the Trustee, over (b) the
aggregate of amounts payable or reimbursable to the Master Servicer under the
Pooling and Servicing Agreement. Such purchase will effect early retirement of
the then outstanding Offered Certificates, but the right of the Master Servicer
to effect such termination is subject to the requirement that the then aggregate
Stated Principal Balance of the Mortgage Pool be less than __% of the Initial
Pool Balance.
On the final Distribution Date, the aggregate amount paid by the Master
Servicer for the Mortgage Loans and other assets in the Trust Fund (if the Trust
Fund is to be terminated as a result of the purchase described in the preceding
paragraph), together with all other amounts on deposit in the Certificate
Account and not otherwise payable to a person other than the Certificateholders
(see "Description of the Pooling Agreements--Certificate Account" in the
Prospectus), will be applied: first, to distributions of interest to the holders
of the Class A Certificates in an amount equal to all Distributable Certificate
Interest in respect of the Class A Certificates for such Distribution Date and,
to the extent not previously paid, for all prior Distribution Dates; second, to
distributions of principal to the holders of the Class A Certificates in an
amount equal to the sum of the Certificate Balance of the Class A Certificates
outstanding immediately prior to such Distribution Date; third, to distributions
of interest to the holders of the Class B Certificates in an amount equal to all
Distributable Certificate Interest in respect of the Class B Certificates for
such Distribution Date and, to the extent not previously paid, for all prior
Distribution Dates; fourth, to distributions of principal to the holders of the
Class B Certificates in an amount equal to the sum of the Certificate Balance of
the Class B Certificates outstanding immediately prior to such Distribution
Date; and thereafter, to distributions to holders of the Private Certificates.
The Trustee
____________, a _____________________, will act as Trustee on behalf of
the Certificateholders. [The Master Servicer will be responsible for the fees
and normal disbursements of the Trustee.] The offices of the Trustee primarily
responsible for the administration of the Trust Fund are located at
_____________________________. See "Description of the Pooling Agreements--the
Trustee", "--Duties of the Trustee", "--Certain Matters Regarding the Trustee"
and "--Resignation and Removal of the Trustee" in the Prospectus.
YIELD AND MATURITY CONSIDERATIONS
Yield Considerations
General. The yield on any Offered Certificate will depend on: (i) the
Pass-Through Rate in effect from time to time for such Certificate; (ii) the
price paid for such Certificate and, if the price was other than par, the rate
and timing of payments of principal on such Certificate; and (iii) the aggregate
amount of distributions on such Certificate.
Pass-Through Rate. The Pass-Through Rate applicable to the Class A
Certificates and the Class B Certificates for any Distribution Date will equal
the Weighted Average Effective Net Mortgage Rate for such date. Accordingly, the
yield on the Offered Certificates will be sensitive to (x) adjustments to the
Mortgage Rates on the ARM Loans and (y) changes in the relative composition of
the Mortgage Pool as a result of scheduled amortization, voluntary prepayments
and involuntary liquidations of the Mortgage Loans. See "Description of the
Mortgage Pool" herein and "--Yield Considerations--Rate and Timing of Principal
Payments" below.
Rate and Timing of Principal Payments. The yield to holders of Offered
Certificates that are purchased at a discount or premium will be affected by the
rate and timing of principal payments on such Certificates. As and to the extent
described herein, the holders of each Class of Offered Certificates will be
entitled to receive on each Distribution Date their allocable share (calculated
on the basis of the Ownership Percentage evidenced by such Class of Certificates
immediately prior to such date) of the Scheduled Principal Distribution Amount
for such Distribution Date; however, the Unscheduled Principal Distribution
Amount for each Distribution Date will be distributable entirely in respect of
the
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Class A Certificates, until the Certificate Balance thereof is reduced to zero,
and will thereafter be distributable entirely in respect of the Class B
Certificates. See "Description of the Certificates--Distributions--Priority" and
"--Distributions--Scheduled Principal Distribution Amount and Unscheduled
Principal Distribution Amount" herein. Consequently, the rate and timing of
principal payments on the Offered Certificates will be directly related to the
rate and timing of principal payments on or in respect of the Mortgage Loans
(including principal prepayments on the Mortgage Loans resulting from both
voluntary prepayments by the mortgagors and involuntary liquidations). The rate
and timing of principal payments on the Mortgage Loans will in turn be affected
by the amortization schedules thereof, the dates on which Balloon Payments are
due and the rate and timing of principal prepayments and other unscheduled
collections thereon (including for this purpose, collections made in connection
with liquidations of Mortgage Loans due to defaults, casualties or condemnations
affecting the Mortgaged Properties, or purchases of Mortgage Loans out of the
Trust Fund). Prepayments and, assuming the respective stated maturity dates
therefor have not occurred, liquidations and purchases of the Mortgage Loans,
will result in distributions on the Offered Certificates of amounts that would
otherwise be distributed over the remaining terms of the Mortgage Loans.
Defaults on the Mortgage Loans, particularly at or near their stated maturity
dates, may result in significant delays in payments of principal on the Mortgage
Loans (and, accordingly, on the Offered Certificates) while work-outs are
negotiated or foreclosures are completed. See "Servicing of the Mortgage
Loans--Modifications, Waivers and Amendments" herein and "Description of the
Pooling Agreements--Realization Upon Defaulted Mortgage Loans" and "Certain
Legal Aspects of Mortgage Loans--Foreclosure" in the Prospectus.
The extent to which the yield to maturity of any Class of Offered
Certificates may vary from the anticipated yield will depend upon the degree to
which they are purchased at a discount or premium and when, and to what degree,
payments of principal on the Mortgage Loans are in turn distributed on such
Certificates. An investor should consider, in the case of any Offered
Certificate purchased at a discount, the risk that a slower than anticipated
rate of principal payments on the Mortgage Loans could result in an actual yield
to such investor that is lower than the anticipated yield and, in the case of
any Offered Certificate purchased at a premium, the risk that a faster than
anticipated rate of principal payments could result in an actual yield to such
investor that is lower than the anticipated yield. In general, the earlier a
payment of principal on the Mortgage Loans is distributed on an Offered
Certificate purchased at a discount or premium, the greater will be the effect
on an investor's yield to maturity. As a result, the effect on an investor's
yield of principal payments (to the extent distributable on such investor's
Offered Certificates) occurring at a rate higher (or lower) than the rate
anticipated by the investor during any particular period would not be fully
offset by a subsequent like reduction (or increase) in the rate of principal
payments. Because the rate of principal payments on the Mortgage Loans will
depend on future events and a variety of factors (as described more fully
below), no assurance can be given as to such rate or the rate of principal
prepayments in particular. The Depositor is not aware of any relevant publicly
available or authoritative statistics with respect to the historical prepayment
experience of a large group of mortgage loans comparable to the Mortgage Loans.
The yield to maturity of Offered Certificates that are purchased at a
discount or premium will be similarly affected by payments of principal thereon
made with funds in excess of the Distributable Principal to which the holders of
such Certificates may be then entitled. As described herein under "Description
of the Certificates--Distributions--Priority", if there exists an Uncovered
Portion of the Certificate Balance of any Class of Regular Certificates
outstanding immediately prior to a Distribution Date, distributions will be
made, to the extent of the lesser of available funds and such Uncovered Portion,
in reduction of the Certificate Balance(s) of such Class of Regular Certificates
and each other Class of Regular Certificates, if any, with an earlier
alphabetical Class designation, in alphabetical order of such Class
designations. Accordingly, losses incurred in respect of the Mortgage Pool, to
the extent creating an Uncovered Portion of the Certificate Balance of the Class
C Certificates, could speed amortization of the Offered Certificates, to the
extent described above, beyond any positive effect on such amortization that
would generally result from liquidations of Mortgage Loans prior to their
maturity.
Losses and Shortfalls. The yield to holders of the Offered Certificates
will also depend on the extent to which such holders are required to bear the
effects of any losses or shortfalls on the Mortgage Loans. Losses and other
shortfalls on the Mortgage Loans will, with the exception of any Net Aggregate
Prepayment Interest Shortfalls, generally be borne: first, by the holders of the
Private Certificates, to the extent of amounts otherwise distributable in
respect of their Certificates; second, by the holders of the Class B
Certificates, to the extent of amounts otherwise distributable in respect of
their Certificates; and last, by the holders of the Class A Certificates. As
more fully described herein under "Description of the
Certificates--Distributions--Distributable Certificate Interest", Net Aggregate
Prepayment Interest Shortfalls will generally be borne by the respective Classes
of Certificateholders on a pro rata basis.
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Certain Relevant Factors. The rate and timing of principal payments and
defaults and the severity of losses on the Mortgage Loans may be affected by a
number of factors, including, without limitation, prevailing interest rates, the
terms of the Mortgage Loans (for example, Prepayment Premiums, adjustable
Mortgage Rates and amortization terms that require balloon payments), the
demographics and relative economic vitality of the areas in which the Mortgaged
Properties are located and the general supply and demand for rental units in
such areas, the quality of management of the Mortgaged Properties, the servicing
of the Mortgage Loans, possible changes in tax laws and other opportunities for
investment. See "Risk Factors--The Mortgage Loans" and "Description of the
Mortgage Pool" herein and "Yield and Maturity Considerations--Principal
Prepayments" in the Prospectus.
The rate of prepayment on the Mortgage Pool is likely to be affected by
prevailing market interest rates for mortgage loans of a comparable type, term
and risk level. When the prevailing market interest rate is below a mortgage
coupon, a borrower may have an increased incentive to refinance its mortgage
loan. Although most of the Mortgage Loans are ARM Loans, adjustments to the
Mortgage Rates thereon will generally be limited by lifetime and/or periodic
caps and floors and, in each case, will be based on the related Index (which may
not rise and fall consistently with mortgage interest rates then available) plus
the related Gross Margin (which may be different from margins then offered on
adjustable rate mortgage loans). See "Description of the Mortgage Pool--Certain
Payment Characteristics" and "--The Index" herein. As a result, the Mortgage
Rates on the ARM Loans at any time may not be comparable to prevailing market
interest rates. In addition, as prevailing market interest rates decline, and
without regard to whether the Mortgage Rates on the ARM Loans decline in a
manner consistent therewith, related borrowers may have an increased incentive
to refinance for purposes of either (i) converting to a fixed rate loan and
thereby "locking in" such rate, or (ii) taking advantage of a different index,
margin or rate cap or floor on another adjustable rate mortgage loan. The
Mortgage Loans may be prepaid at any time and, in ____ cases (approximately
_____% of the Initial Pool Balance), may be prepaid in whole or in part without
payment of a Prepayment Premium.
Depending on prevailing market interest rates, the outlook for market
interest rates and economic conditions generally, some borrowers may sell
Mortgaged Properties in order to realize their equity therein, to meet cash flow
needs or to make other investments. In addition, some borrowers may be motivated
by Federal and state tax laws (which are subject to change) to sell Mortgaged
Properties prior to the exhaustion of tax depreciation benefits.
The Depositor makes no representation as to the particular factors that
will affect the rate and timing of prepayments and defaults on the Mortgage
Loans, as to the relative importance of such factors, as to the percentage of
the principal balance of the Mortgage Loans that will be prepaid or as to which
a default will have occurred as of any date or as to the overall rate of
prepayment or default on the Mortgage Loans.
Delay in Payment of Distributions. Because monthly distributions will not
be made to Certificateholders until a date that is scheduled to be at least
_____ days and as many as ______ days following the Due Dates for the Mortgage
Loans during the related Due Period, the effective yield to the holders of the
Offered Certificates will be lower than the yield that would otherwise be
produced by the applicable Pass-Through Rates and purchase prices (assuming such
prices did not account for such delay).
Unpaid Distributable Certificate Interest. As described under "Description
of the Certificates--Distributions--Priority" herein, if the portion of the
Available Distribution Amount distributable in respect of interest on either
Class of Offered Certificates on any Distribution Date is less than the
Distributable Certificate Interest then payable for such Class, the shortfall
will be distributable to holders of such Class of Certificates on subsequent
Distribution Dates, to the extent of available funds. Any such shortfall will
not bear interest, however, and will therefore negatively affect the yield to
maturity of such Class of Certificates for so long as it is outstanding.
Weighted Average Life
The weighted average life of an Offered Certificate refers to the average
amount of time that will elapse from the date of its issuance until each dollar
allocable to principal of such Certificate is distributed to the investor. The
weighted average life of an Offered Certificate will be influenced by, among
other things, the rate at which principal on the Mortgage Loans is paid or
otherwise collected or advanced and by the availability of any amounts other
than Distributable Principal to amortize the Certificate Balance of its Class.
As and to the extent described herein, the holders of each Class of Offered
Certificates will be entitled to receive on each Distribution Date their
allocable share (calculated on the basis of the Ownership Percentage evidenced
by such Class of Certificates immediately prior to such
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date) of the Scheduled Principal Distribution Amount for such Distribution Date;
however, the Unscheduled Principal Distribution Amount for each Distribution
Date will be distributable entirely in respect of the Class A Certificates,
until the Certificate Balance thereof is reduced to zero, and will thereafter be
distributable entirely in respect of the Class B Certificates. In addition, as
and to the extent described herein, distributions in respect of an Uncovered
Portion of the Certificate Balance of any Class of Regular Certificates will be
applied, to the extent of such Uncovered Portion, in reduction of the
Certificate Balance(s) of such Class of Regular Certificates and each other
Class of Regular Certificates, if any, with an earlier alphabetical Class
designation, in alphabetical order of such Class designations. See "Description
of the Certificates--Distributions--Priority" and "--Distributions--Scheduled
Principal Distribution Amount and Unscheduled Principal Distribution Amount"
herein. As a consequence of the foregoing, the weighted average life of the
Class A Certificates will be shorter, and the weighted average life of the Class
B Certificates may be longer, than would otherwise be the case if Distributable
Principal and any other amounts being applied in reduction of the Certificate
Balances of the Regular Certificates were being distributed on a pro rata basis
among the respective Classes thereof.
Prepayments on mortgage loans may be measured by a prepayment standard or
model. The model used in this Prospectus Supplement is the ["Constant Prepayment
Rate" or "CPR" model. The CPR model represents an assumed constant annual rate
of prepayment each month, expressed as a per annum percentage of the then
scheduled principal balance of the pool of mortgage loans. As used in each of
the following tables, the column headed "0%" assumes that none of the Mortgage
Loans is prepaid before maturity. The columns headed "___%", "___%", "___%" and
"___%" assume that prepayments on the Mortgage Loans are made at those CPRs.
There is no assurance, however, that prepayments of the Mortgage Loans will
conform to any level of CPR, and no representation is made that the Mortgage
Loans will prepay at the CPRs shown or at any other prepayment rate. ]
The following tables indicate the percentage of the initial Certificate
Balance of each Class of Offered Certificates that would be outstanding after
each of the dates shown at various CPRs and the corresponding weighted average
life of each such Class of Offered Certificates. The tables have been prepared
on the basis of the following assumptions, among others: (i) scheduled monthly
payments of principal and interest on the Mortgage Loans will be timely received
(with no defaults) and will be distributed on the 25th day of each month
commencing in ________ 199___; (ii) the Mortgage Rate in effect for each
Mortgage Loan as of the Cut-off Date will remain in effect (a) in the case of
each Fixed Rate Loan, to maturity and, (b) in the case of each ARM Loan, until
its next Interest Rate Adjustment Date, when a new Mortgage Rate that is to
remain in effect to maturity will be calculated reflecting the value of the
related Index as of ________, 199__, subject to such Mortgage Loan's lifetime
and/or periodic rate caps and floors, if any; (iii) all Mortgage Loans accrue
and pay interest on a 360/360 basis; (iv) the monthly principal and interest
payment due for each Mortgage Loan on the first Due Date following the Cut-off
Date will continue to be due (a) in the case of each Fixed Rate Loan, on each
Due Date until maturity and (b) in the case of each ARM Loan, until its next
Payment Adjustment Date, when a new payment that is to be due on each Due Date
until maturity will be calculated reflecting the appropriate Mortgage Rate and
remaining amortization term; (v) principal prepayments on the Mortgage Loans
will be received on their respective Due Dates at the respective CPRs set forth
in the tables, and there will be no Net Aggregate Prepayment Interest Shortfalls
in connection therewith; and (vi) the Mortgage Loan Seller will not be required
to repurchase any Mortgage Loan, and the Master Servicer will not exercise its
option to purchase all the Mortgage Loans and thereby cause an early termination
of the Trust Fund. To the extent that the Mortgage Loans have characteristics
that differ from those assumed in preparing the tables set forth below, each
Class of the Offered Certificates may mature earlier or later than indicated by
the tables. It is highly unlikely that the Mortgage Loans will prepay at any
constant rate until maturity or that all the Mortgage Loans will prepay at the
same rate. In addition, variations in the actual prepayment experience and the
balance of the Mortgage Loans that prepay may increase or decrease the
percentages of initial Certificate Balances (and weighted average lives) shown
in the following tables. Such variations may occur even if the average
prepayment experience of the Mortgage Loans were to equal any of the specified
CPR percentages.
Investors are urged to conduct their own analyses of the rates at which
the Mortgage Loans may be expected to prepay.
Based on the foregoing assumptions, the following table indicates the
resulting weighted average lives of the Class A Certificates and sets forth the
percentage of the initial Certificate Balance of the Class A Certificates that
would be outstanding after each of the dates shown at the indicated CPRs.
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<PAGE>
Percent of the Initial Certificate Balance of the
Class A Certificates at the Respective CPRs
Set Forth Below:
Date 0% % % % %
---- -- - - - -
Delivery Date................... 100.0 100.0 100.0 100.0 100.0
_________ 25, 1996..............
_________ 25, 1997..............
_________ 25, 1998..............
_________ 25, 1999..............
_________ 25, 2000..............
_________ 25, 2001..............
_________ 25, 2002..............
_________ 25, 2003..............
Weighted Average Life (years)(A)
- ----------
(A) The weighted average life of a Class A Certificate is determined by (i)
multiplying the amount of each principal distribution thereon by the
number of years from the date of issuance of the Class A Certificates to
the related Distribution Date, (ii) summing the results and (iii) dividing
the sum by the aggregate amount of the reductions in the principal balance
of such Class A Certificate.
Based on the foregoing assumptions, the following table indicates the
resulting weighted average lives of the Class B Certificates and sets forth the
percentage of the initial Certificate Balance of the Class B Certificates that
would be outstanding after each of the dates shown at the indicated CPRs.
Percent of the Initial Certificate Balance of the
Class B Certificates at the Respective CPRs
Set Forth Below:
Date 0% % % % %
---- -- - - - -
Delivery Date................... 100.0 100.0 100.0 100.0 100.0
_________ 25, 1996..............
_________ 25, 1997..............
_________ 25, 1998..............
_________ 25, 1999..............
_________ 25, 2000..............
_________ 25, 2001..............
_________ 25, 2002..............
_________ 25, 2003..............
_________ 25, 2004..............
Weighted Average Life (years)(A)
- ----------
(A) The weighted average life of a Class B Certificate is determined by (i)
multiplying the amount of each principal distribution thereon by the
number of years from the date of issuance of the Class B Certificates to
the related Distribution Date, (ii) summing the results and (iii) dividing
the sum by the aggregate amount of the reductions in the principal balance
of such Class B Certificate.
[The following disclosure is applicable to Stripped Interest Certificates...
S-48
<PAGE>
Yield Sensitivity of the Class S Certificates
The yield to maturity of the Class S Certificates will be especially
sensitive to the prepayment, repurchase and default experience on the Mortgage
Loans, which may fluctuate significantly from time to time. A rapid rate of
principal payments will have a material negative effect on the yield to maturity
of the Class S Certificates. There can be no assurance that the Mortgage Loans
will prepay at any particular rate. Prospective investors in the Class S
Certificates should fully consider the associated risks, including the risk that
such investors may not fully recover their initial investment.
The following table indicates the sensitivity to various rates of
prepayment on the Mortgage Loans of the annual aggregate payments of interest on
the Class S Certificates and the pre-tax yields to maturity on a corporate bond
equivalent basis of the Class S Certificates. Such calculations are based on the
assumptions described on page __ hereof and that the Class S Certificates are
purchased on _____________, at an assumed aggregate purchase price equal to
$____________ (which includes accrued interest from ______________________).
Projected Annual Aggregate Payments of Interest and
Pre-Tax Yield on the Class S Certificates
(in thousands)
Twelve consecutive Percentages of [Prepayment speed model]
Distribution Dates ----------------------------------------------------
ending % % % % %
-------- -------- -------- --------- ------- --------
________ 25, 1996 ..
________ 25, 1997 ..
________ 25, 1998 ..
________ 25, 1999 ..
________ 25, 2000 ..
________ 25, 2001 ..
________ 25, 2002 ..
________ 25, 2003 ..
________ 25, 2004 ..
________ 25, 2005 ..
________ 25, 2006 ..
________ 25, 2007 ..
Total Payments .....
Pre-Tax Yield ......
The pre-tax yields set forth in the preceding table were calculated by
determining the monthly discount rates that, when applied to the assumed streams
of cash flows to be paid on the Class S Certificates, would cause the discounted
present value of such assumed stream of cash flows to equal the assumed
aggregate purchase price of such Certificates and by converting such monthly
rates to corporate bond equivalent rates. Such calculation does not take into
account shortfalls in collection of interest due to prepayments (or other
liquidations) on the Mortgage Loans or the interest rates at which investors may
be able to reinvest funds received by them as distributions on the Class S
Certificates and consequently does not purport to reflect the return on any
investment in the Class S Certificates when such reinvestment rates are
considered. Such calculation does not presume receipt of any distributions in
respect of Prepayment Premiums.
The characteristics of the Mortgage Loans may differ from those assumed in
preparing the table above. There can be no assurance that the Mortgage Loans
will prepay at any of the rates shown in the table or at any other particular
rate, that the cash flows on the Class S Certificates will correspond to the
cash flow shown herein or that the aggregate purchase price of the Class S
Certificates will be as assumed. [Describe prepayment speed model] In addition,
it is unlikely that any Mortgage Loan will prepay at the specified percentages
of [Prepayment speed model] until maturity or that all of the Mortgage Loans
will prepay at the same rate. The timing of changes in the rate of prepayments
may significantly affect the actual yield to maturity to investors, even if the
average rate of principal prepayments is
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<PAGE>
consistent with the expectations of investors. Investors must make their own
decisions as to the appropriate prepayment assumptions to be used in deciding
whether to purchase the Class S Certificates.]
USE OF PROCEEDS
Substantially all of the proceeds from the sale of the Offered
Certificates will be used by the Depositor to purchase the Mortgage Loans and to
pay certain expenses in connection with the issuance of the Certificates.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
Upon the issuance of the Offered Certificates, Cadwalader, Wickersham &
Taft, counsel to the Depositor, will deliver its opinion generally to the effect
that, assuming compliance with all provisions of the Pooling and Servicing
Agreement, for federal income tax purposes, the Trust Fund will qualify as a
REMIC under the Code.
For federal income tax purposes, the Class R Certificates will be the sole
class of "residual interests" in the REMIC and the Class A, Class B and Class C
Certificates will be the "regular interests" in the REMIC and will be treated as
debt instruments of the REMIC.
See "Certain Federal Income Tax Consequences--Federal Income Tax
Consequences for REMIC Certificates" in the Prospectus.
The Class _____ Certificates [may] [will not] be treated as having been
issued with original issue discount for federal income tax purposes. The
prepayment assumption that will be used in determining the rate of accrual of
original issue discount, market discount and premium, if any, for federal income
tax purposes will be based on the assumption that subsequent to the date of any
determination the Mortgage Loans will prepay at a rate equal to ___% [CPR]
[SPA]. No representation is made that the Mortgage Loans will prepay at that
rate or at any other rate. See "Certain Federal Income Tax Consequences--Federal
Income Tax Consequences for REMIC Certificates--Taxation of Regular
Certificates--Original Issue Discount" in the Prospectus.
The Class _____ Certificates may be treated for federal income tax
purposes as having been issued at a premium. Whether any holder of such a class
of Certificates will be treated as holding a certificate with amortizable bond
premium will depend on such Certificateholder's purchase price and the
distributions remaining to be made on such Certificate at the time of its
acquisition by such Certificateholder. Holders of such class of Certificates
should consult their own tax advisors regarding the possibility of making an
election to amortize such premium. See "Certain Federal Income Tax
Consequences--Federal Income Tax Consequences for REMIC Certificates--Taxation
of Regular Certificates--Premium" in the Prospectus.
The Offered Certificates will be treated as [, assets described in Section
7701(a)(19)(C) of the Code] and "real estate assets" within the meaning of
Section 856(c)(5)(A) of the Code generally in the same proportion that the
assets of the REMIC underlying such Certificates would be so treated. [In
addition, the Offered Certificates will be "obligation(s) ... which ... [are]
principally secured by an interest in real property" within the meaning of
Section 860G(a)(3)(C) of the Code generally to the extent that such Offered
Certificates are treated as "real estate assets" under Section 856(c)(5)(A) of
the Code. Moreover, the Offered Certificates will be "obligation[s] ... which
... [are] principally secured by an interest in real property" within the
meaning of Section 860G(a)(3)(C) of the Code.] [The Offered Certificates will
not be considered to represent an interest in "loans ... secured by an interest
in real property" within the meaning of Section 7701(a)(19)(C)(v) of the Code.]
See "Certain Federal Income Tax Consequences--Federal Income Tax Consequences
for REMIC Certificates--Status of REMIC Certificates" in the Prospectus.
For further information regarding the federal income tax consequences of
investing in the Class A Certificates, see "Certain Federal Income Tax
Consequences--Federal Income Tax Consequences for REMIC Certificates" in the
Prospectus.
ERISA CONSIDERATIONS
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<PAGE>
A fiduciary of any employee benefit plan or other retirement plan or
arrangement, including individual retirement accounts and annuities, Keogh plans
and collective investment funds and insurance company general and separate
accounts in which such plans, accounts or arrangements are invested, that is
subject to Title I of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or Section 4975 of the Code (each, a "Plan") should carefully
review with its legal advisors whether the purchase or holding of Offered
Certificates could give rise to a transaction that is prohibited or is not
otherwise permitted either under ERISA or Section 4975 of the Code or whether
there exists any statutory or administrative exemption applicable thereto.
[The U.S. Department of Labor issued to The Chase Manhattan Corporation
(formerly known as Chemical Banking Corporation) an individual prohibited
transaction exemption, Prohibited Transaction Exemption 90-33 (the "Exemption"),
which generally exempts from the application of the prohibited transaction
provisions of Section 406 of ERISA, and the excise taxes imposed on such
prohibited transactions pursuant to Sections 4975(a) and (b) of the Code,
certain transactions, among others, relating to the servicing and operation of
mortgage pools, such as the Mortgage Pool, and the purchase, sale and holding of
mortgage pass-through certificates, such as the Class A Certificates,
underwritten by an Underwriter (as hereinafter defined), provided that certain
conditions set forth in the Exemption are satisfied. For purposes of this
Section "ERISA Considerations", the term "Underwriter" shall include (a) The
Chase Manhattan Corporation, (b) any person directly or indirectly, through one
or more intermediaries, controlling, controlled by or under common control with
The Chase Manhattan Corporation [(such as Chase Securities Inc.)], and (c) any
member of the underwriting syndicate or selling group of which a person
described in (a) or (b) is a manager or co-manager with respect to the Class A
Certificates.
The Exemption sets forth six general conditions which must be satisfied
for a transaction involving the purchase, sale and holding of the Class A
Certificates to be eligible for exemptive relief thereunder. First, the
acquisition of the Class A Certificates by a Plan must be on terms that are at
least as favorable to the Plan as they would be in an arm's-length transaction
with an unrelated party. Second, the rights and interests evidenced by the Class
A Certificates must not be subordinated to the rights and interests evidenced by
the other certificates of the same trust. Third, the Class A Certificates at the
time of acquisition by the Plan must be rated in one of the three highest
generic rating categories by Standard & Poor's ("Standard & Poor's"), Moody's
Investors Service, Inc. ("Moody's"), Duff & Phelps Credit Rating Co. ("Duff &
Phelps") or Fitch Investors Service, Inc. ("Fitch"). Fourth, the Trustee cannot
be an affiliate of any other member of the "Restricted Group", which consists of
any Underwriter, the Depositor, the Master Servicer, the Trustee, any
sub-servicer, and any mortgagor with respect to Mortgage Loans constituting more
than 5% of the aggregate unamortized principal balance of the Mortgage Loans as
of the date of initial issuance of the Class A Certificates. Fifth, the sum of
all payments made to and retained by the Underwriter must represent not more
than reasonable compensation for underwriting the Class A Certificates; the sum
of all payments made to and retained by the Depositor pursuant to the assignment
of the Mortgage Loans to the Trust Fund must represent not more than the fair
market value of such obligations; and the sum of all payments made to and
retained by the Master Servicer and any sub-servicer must represent not more
than reasonable compensation for such person's services under the Pooling and
Servicing Agreement and reimbursement of such person's reasonable expenses in
connection therewith. Sixth, the investing Plan must be an accredited investor
as defined in Rule 501(a)(1) of Regulation D of the Securities and Exchange
Commission under the Securities Act of 1933, as amended.
Because the Class A Certificates are not subordinated to any other Class
of Certificates, the second general condition set forth above is satisfied with
respect to such Certificates. It is a condition of the issuance of the Class A
Certificates that they be rated not lower than "__" by
_______________________________________. As of the Delivery Date, the fourth
general condition set forth above will be satisfied with respect to the Class A
Certificates. A fiduciary of a Plan contemplating purchasing a Class A
Certificate in the secondary market must make its own determination that, at the
time of such purchase, the Class A Certificates continue to satisfy the third
and fourth general conditions set forth above. A fiduciary of a Plan
contemplating purchasing a Class A Certificate, whether in the initial issuance
of such Certificates or in the secondary market, must make its own determination
that the first, fifth and sixth general conditions set forth above will be
satisfied with respect to such Class A Certificate.
The Exemption also requires that the Trust Fund meet the following
requirements: (i) the Trust Fund must consist solely of assets of the type that
have been included in other investment pools; (ii) certificates in such other
investment pools must have been rated in one of the three highest categories of
Standard & Poor's, Moody's, Duff & Phelps or Fitch for at least one year prior
to the Plan's acquisition of Class A Certificates; and (iii) certificates in
such other investment pools must have been purchased by investors other than
Plans for at least one year prior to any Plan's
S-51
<PAGE>
acquisition of Class A Certificates. [The Depositor has confirmed to its
satisfaction that such requirements have been satisfied as of the date hereof.]
If the general conditions of the Exemption are satisfied, the Exemption
may provide an exemption from the restrictions imposed by Sections 406(a) and
407(a) of ERISA (as well as the excise taxes imposed by Sections 4975(a) and (b)
of the Code by reason of Sections 4975(c)(1) (A) through (D) of the Code) in
connection with (i) the direct or indirect sale, exchange or transfer of Class A
Certificates in the initial issuance of Certificates between the Depositor or an
Underwriter and a Plan when the Depositor, the Underwriter, the Trustee, the
Master Servicer, a sub-servicer or a mortgagor is a Party in Interest with
respect to the investing Plan, (ii) the direct or indirect acquisition or
disposition in the secondary market of the Class A Certificates by a Plan and
(iii) the holding of Class A Certificates by a Plan. However, no exemption is
provided from the restrictions of Sections 406(a)(1)(E), 406(a)(2) and 407 of
ERISA for the acquisition or holding of a Class A Certificate on behalf of an
"Excluded Plan" by any person who has discretionary authority or renders
investment advice with respect to the assets of such Excluded Plan. For purposes
hereof, an Excluded Plan is a Plan sponsored by any member of the Restricted
Group.
If certain specific conditions of the Exemption are also satisfied, the
Exemption may provide an exemption from the restrictions imposed by Sections
406(b)(1) and (b)(2) of ERISA and the taxes imposed by Section 4975(c)(1)(E) of
the Code in connection with (1) the direct or indirect sale, exchange or
transfer of Class A Certificates in the initial issuance of Certificates between
the Depositor or an Underwriter and a Plan when the person who has discretionary
authority or renders investment advice with respect to the investment of Plan
assets in such Certificates is (a) a mortgagor with respect to 5% or less of the
fair market value of the Mortgage Loans or (b) an affiliate of such a person,
(2) the direct or indirect acquisition or disposition in the secondary market of
Class A Certificates by a Plan and (3) the holding of Class A Certificates by a
Plan. Further, if certain specific conditions of the Exemption are satisfied,
the Exemption may provide an exemption from the restrictions imposed by Sections
406(a), 406(b) and 407(a) of ERISA, and the taxes imposed by Sections 4975(a)
and (b) of the Code by reason of Section 4975(c) of the Code for transactions in
connection with the servicing, management and operation of the Mortgage Pool.
Before purchasing a Class A Certificate, a fiduciary of a Plan should
itself confirm that (i) the Class A Certificates constitute "certificates" for
purposes of the Exemption and (ii) the specific and general conditions and the
other requirements set forth in the Exemption would be satisfied. In addition to
making its own determination as to the availability of the exemptive relief
provided in the Exemption, the Plan fiduciary should consider the availability
of any other prohibited transaction exemptions. See "ERISA Considerations" in
the Prospectus. A purchaser of a Class A Certificate should be aware, however,
that even if the conditions specified in one or more exemptions are satisfied,
the scope of relief provided by an exemption may not cover all acts which might
be construed as prohibited transactions.]
[Because the characteristics of the Class B Certificates do not meet the
requirements of the Exemption, the purchase or holding of such Certificates by a
Plan may result in prohibited transactions or the imposition of excise taxes or
civil penalties. As a result,] no transfer of a [Class B] Certificate or any
interest therein may be made to a Plan or to any person who is directly or
indirectly purchasing such [Class B] Certificate or interest therein on behalf
of, as named fiduciary of, as trustee of, or with assets of a Plan, unless the
prospective transferee provides the Certificate Registrar with a certification
of facts and an opinion of counsel which establish to the 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 cause the Master Servicer or
the Trustee to be deemed a fiduciary of such Plan or result in the imposition of
an excise tax under Section 4975 of the Code. See "ERISA Considerations" in the
Prospectus.
[The Small Business Job Protection Act of 1996 added a new Section 401(c)
to ERISA, which provides certain exemptive relief from the provisions of Part 4
of Title I of ERISA and Section 4975 of the Code, including the prohibited
transaction restrictions imposed by ERISA and the related excise taxes imposed
by the code, for transactions involving an insurance company general account.
Pursuant to Section 401(c) of ERISA, the DOL, is required to issue final
regulations ("401(c) Regulations") no later than December 31, 1997 which are to
provide guidance for the purpose of determining, in cases where insurance
policies supported by an insurer's general account are issued to or for the
benefit of a Plan on or before December 31, 1998, which general account assets
continue Plan assets. Section 401(c) of ERISA generally provides that, until the
date which is 18 months after the 401(c) Regulations become final, no person
shall be subject to liability under Part 4 of Title I of ERISA and Section 4975
of the Code on the basis of a claim that the assets of an insurance company
general account constitute Plan assets, unless (i) as otherwise provided by the
Secretary of Labor in the 401(c) Regulations to prevent avoidance of the
regulations or (ii) an action is brought by the Secretary of
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<PAGE>
Labor for certain breaches of fiduciary duty which would also constitute a
violation of federal or state criminal law. Any assets of an insurance company
general account which support insurance policies issued to a Plan after December
31, 1998, or issued to Plans on or before December 31, 1998 for which the
insurance company does not comply with the 401(c) Regulations may be treated as
Plan assets. In addition, because Section 401(c) does not relate to insurance
company separate accounts, separate account assets are still treated as Plan
assets of any Plan invested in such separate account. Insurance companies
contemplating the investment of general account assets in the Offered
Certificates should consult with their legal counsel with respect to the
applicability of Section 401(c) of ERISA, including the general account's
ability to continue to hold the Offered Certificates after the date which is 18
months after the date the 401(c) Regulations become final.]
Any Plan fiduciary considering whether to purchase an Offered Certificate
on behalf of a Plan should consult with its counsel regarding the applicability
of the fiduciary responsibility and prohibited transaction provisions of ERISA
and the Code to such investment.
A governmental plan as defined in Section 3(32) of ERISA is not subject to
Title I of ERISA or Section 4975 of the Code. However, such a governmental plan
may be subject to a federal, state or local law which is, to a material extent,
similar to the foregoing provisions of ERISA of the Code ("Similar Law"). A
fiduciary of a governmental plan should make its own determination as to the
need for and the availability of any exemptive relief under Similar Law.
The sale of Certificates to a Plan is in no respect a representation by
the Depositor or Underwriter that this investment meets all relevant legal
requirements with respect to investments by Plans generally or any particular
Plan, or that this investment is appropriate for Plans generally or any
particular Plan.
LEGAL INVESTMENT
[As long as the Class A Certificates are rated in one of the two highest
rating categories by at least one nationally recognized statistical rating
organization, the Class A Certificates will constitute "mortgage related
securities" within the meaning of the Secondary Mortgage Market Enhancement Act
of 1984 ("SMMEA").
[The Class B Certificates will not be "mortgage related securities" for
purposes of SMMEA. As a result, the appropriate characterization of the Class B
Certificates under various legal investment restrictions, and thus the ability
of investors subject to these restrictions to purchase the Class B Certificates,
is subject to significant interpretive uncertainties.]
[Except as to the status of the Class A Certificates as "mortgage related
securities," no] [No] representation is made as to the proper characterization
of the Offered Certificates for legal investment purposes, financial institution
regulatory purposes, or other purposes, or as to the ability of particular
investors to purchase the Offered Certificates under applicable legal investment
or other restrictions. All institutions whose investment activities are subject
to legal investment laws and regulations, regulatory capital requirements or
review by regulatory authorities should consult with their own legal advisors in
determining whether and to what extent the Offered Certificates constitute legal
investments for them or are subject to investment, capital or other
restrictions.
See "Legal Investment" in the Prospectus.
METHOD OF DISTRIBUTION
Subject to the terms and conditions set forth in the Underwriting
Agreement between the Depositor and the Underwriter, the Offered Certificates
will be purchased from the Depositor by the Underwriter, an affiliate of the
Depositor, upon issuance. Proceeds to the Depositor from the sale of the Offered
Certificates, before deducting expenses payable by the Depositor estimated to be
approximately $_______, will be _______% of the initial aggregate Certificate
Balance thereof, plus accrued interest.
Distribution of the Offered Certificates will be made by the Underwriter
from time to time in negotiated transactions or otherwise at varying prices to
be determined at the time of sale. The Underwriter may effect such transactions
by selling the Offered Certificates to or through dealers, and such dealers may
receive compensation in the
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<PAGE>
form of underwriting discounts, concessions or commissions from the Underwriter.
In connection with the purchase and sale of the Offered Certificates, the
Underwriter may be deemed to have received compensation from the Depositor in
the form of underwriting discounts. The Underwriter and any dealers that
participate with the Underwriter in the distribution of the Offered Certificates
may be deemed to be underwriters and any profit on the resale of the Offered
Certificates positioned by them may be deemed to be underwriting discounts and
commissions under the Securities Act of 1933, as amended (the "Securities Act").
Purchasers of the Offered Certificates, including dealers, may, depending
on the facts and circumstances of such purchases, be deemed to be "underwriters"
within the meaning of the Securities Act in connection with reoffers and sales
by them of Offered Certificates. Certificateholders should consult with their
legal advisors in this regard prior to any such reoffer or sale.
The Depositor also has been advised by the Underwriter that it, through
one or more of its affiliates, currently intends to make a market in the Offered
Certificates; however, it has no obligation to do so, any market making may be
discontinued at any time and there can be no assurance that an active public
market for the Offered Certificates will develop. See "Risk Factors--Limited
Liquidity" herein and "Risk Factors--Secondary Market" in the Prospectus.
[If and to the extent required by applicable law or regulation, this
Prospectus Supplement and the Prospectus will be used by the Underwriter in
connection with offers and sales related to market-making transactions in the
Offered Certificates in which the Underwriter acts as principal. The Underwriter
may also act as agent in such transactions. Sales may be made at negotiated
prices determined at the time of sale.]
The Depositor has agreed to indemnify the Underwriter and each person, if
any, who controls the Underwriter within the meaning of Section 15 of the
Securities Act against, or make contributions to the Underwriter and each such
controlling person with respect to, certain liabilities, including liabilities
under the Securities Act.
LEGAL MATTERS
Certain legal matters will be passed upon for the Depositor and the
Underwriter by Cadwalader, Wickersham & Taft, New York, New York.
RATING
It is a condition to issuance that the Class A Certificates be rated not
lower than "__", and the Class B Certificates be rated not lower than "__", by
____________________________________.
A securities rating on mortgage pass-through certificates addresses the
likelihood of the receipt by holders thereof of payments to which they are
entitled. The rating takes into consideration the credit quality of the mortgage
pool, structural and legal aspects associated with the certificates, and the
extent to which the payment stream from the mortgage pool is adequate to make
payments required under the certificates. The ratings on the Offered
Certificates do not, however, constitute a statement regarding the likelihood or
frequency of prepayments (whether voluntary or involuntary) on the Mortgage
Loans, [The following disclosure is applicable to Stripped Interest
Certificates... or the possibility that as a result of prepayments investors in
the Class S Certificates may realize a lower than anticipated yield or may fail
to recover fully their initial investment.]
There can be no assurance as to whether any rating agency not requested to
rate the Offered Certificates will nonetheless issue a rating to either or both
Classes thereof and, if so, what such rating or ratings would be. A rating
assigned to either Class of Offered Certificates by a rating agency that has not
been requested by the Depositor to do so may be lower than the rating assigned
thereto by ___________________________.
The ratings on the Offered Certificates should be evaluated independently
from similar ratings on other types of securities. A security rating is not a
recommendation to buy, sell or hold securities and may be subject to revision or
withdrawal at any time by the assigning rating agency. See "Risk
Factors--Limited Nature of Ratings" in the Prospectus.
S-54
<PAGE>
INDEX OF PRINCIPAL DEFINITIONS
360/360 basis ........................................ S-40
Accrued Certificate Interest ......................... S-41
Advance .............................................. S-43
ARM Loans ............................................ S-2, S-8, S-23
Available Distribution Amount ........................ S-12, S-39
Balloon Payment ...................................... S-9, S-23
Certificate Balance .................................. S-2
Certificate Registrar ................................ S-38
Certificates ......................................... S-1, S-7
Class ................................................ S-1
Class A Certificate Owner ............................ S-7
Class S Certificate .................................. S-2
Code ................................................. S-18
Constant Prepayment Rate ............................. S-47
CPR .................................................. S-47
Custodian ............................................ S-33
Cut-off Date ......................................... S-1, S-7
Cut-off Date LTV Ratio ............................... S-29
Debt Service Coverage Ratio .......................... S-29
Definitive Class A Certificate ....................... S-7
Delivery Date ........................................ S-2, S-7
Depositor ............................................ S-1, S-7
Determination Date ................................... S-39
Distributable Certificate Interest ................... S-14, S-41
Distributable Principal .............................. S-13, S-41
Distribution Date .................................... S-2, S-11, S-38
Distribution Date Statement .......................... S-43
DTC .................................................. S-7
Due Date ............................................. S-8
Due Period ........................................... S-11, S-39
Effective Net Mortgage Rate .......................... S-11, S-40
ERISA ................................................ S-18, S-52
ERISA Considerations ................................. S-38
Exemption ............................................ S-52
Fixed Rate Loans ..................................... S-2, S-8, S-23
Form 8-K ............................................. S-34
Gross Margin ......................................... S-8
Index ................................................ S-2, S-8, S-23
Initial Pool Balance ................................. S-1
Interest Rate Adjustment Date ........................ S-8
Master Servicer ...................................... S-7
Master Servicer Reimbursement Rate ................... S-16, S-43
Monthly Payments ..................................... S-2, S-8
Mortgage ............................................. S-22
Mortgage File ........................................ S-33
Mortgage Loan Purchase Agreement ..................... S-8, S-31
Mortgage Loan Seller ................................. S-2, S-7, S-23, S-31
Mortgage Loans ....................................... S-1
Mortgage Note ........................................ S-22
Mortgage Pool ........................................ S-1
Mortgage Rate ........................................ S-2, S-8
Mortgaged Property ................................... S-8, S-22
Net Aggregate Prepayment Interest Shortfall .......... S-13, S-41
Net Mortgage Rate .................................... S-11, S-40
Net Operating Income ................................. S-29
Nonrecoverable P&I Advance ........................... S-43
Offered Certificates ................................. S-1, S-7, S-38
Ownership Percentage ................................. S-14, S-41
P&I Advance .......................................... S-16, S-43
Participants ......................................... S-7
Pass-Through Rate .................................... S-2
Payment Adjustment Date .............................. S-9
Percentage Interest .................................. S-39
Permitted Investments ................................ S-36
Plan ................................................. S-18, S-52
Pooling and Servicing Agreement ...................... S-10, S-37
Prepayment Interest Excess ........................... S-13, S-36
Prepayment Interest Shortfall ........................ S-13, S-36
Prepayment Premiums .................................. S-23
Private Certificates ................................. S-7, S-38
Purchase Price ....................................... S-33
Rating Agencies ...................................... S-18
Record Date .......................................... S-11
Related Proceeds ..................................... S-43
REMIC ................................................ S-3
Regular Certificates ................................. S-3, S-7, S-38
REO Loan ............................................. S-42
REO Property ......................................... S-14, S-37
Scheduled Principal Distribution Amount .............. S-13, S-41
Securities Act ....................................... S-54
Servicing Fee ........................................ S-35
Servicing Fee Rate ................................... S-35
SMMEA ................................................ S-18, S-54
Stated Principal Balance ............................. S-11, S-41
Subordinate Certificates ............................. S-17, S-42
Trustee .............................................. S-7
Trust Fund ........................................... S-1, S-10
Uncovered Portion .................................... S-10, S-42
Underwriter .......................................... S-1
Unscheduled Principal Distribution Amount ............ S-14, S-41
Weighted Average Effective Net Mortgage Rate ......... S-11, S-40
ANNEX A
CERTAIN CHARACTERISTICS OF THE MORTGAGE LOANS
S-55
<PAGE>
No dealer, salesman or other person has been authorized to give any
information or to make any representations not contained in this Prospectus
Supplement and the accompanying Prospectus and, if given or made, such
information or representations must not be relied upon as having been authorized
by the Depositor or by the Underwriter. This Prospectus Supplement and the
accompanying Prospectus do not constitute an offer to sell, or a solicitation of
an offer to buy, the securities offered hereby to anyone in any jurisdiction in
which the person making such offer or solicitation is not qualified to do so or
to anyone to whom it is unlawful to make any such offer or solicitation. Neither
the delivery of this Prospectus Supplement and the accompanying Prospectus nor
any sale made hereunder shall, under any circumstances, create an implication
that information herein or therein is correct as of any time since the date of
this Prospectus Supplement or the accompanying Prospectus.
TABLE OF CONTENTS
Page
Prospectus Supplement
Summary .............................................................. S-7
Risk Factors ......................................................... S-20
Description of the Mortgage Pool ..................................... S-22
Servicing of the Mortgage Loans ...................................... S-35
Description of the Certificates ...................................... S-37
Yield and Maturity Considerations .................................... S-45
Use of Proceeds ...................................................... S-51
Certain Federal Income Tax Consequences .............................. S-51
ERISA Considerations ................................................. S-52
Legal Investment ..................................................... S-54
Method of Distribution ............................................... S-54
Legal Matters ........................................................ S-55
Rating ............................................................... S-55
Prospectus
Available Information ................................................ 3
Incorporation of Certain Information by Reference .................... 4
Summary of Prospectus ................................................ 9
Risk Factors ......................................................... 17
Description of the Trust Funds ....................................... 24
Yield and Maturity Considerations .................................... 29
The Depositor ........................................................ 35
Use of Proceeds ...................................................... 35
Description of the Certificates ...................................... 35
Description of the Pooling Agreements ................................ 43
Description of Credit Support ........................................ 58
Certain Legal Aspects of Mortgage Loans .............................. 60
Certain Federal Income Tax Consequences .............................. 70
State Tax Considerations ............................................. 96
ERISA Considerations ................................................. 96
Legal Investment ..................................................... 98
Method of Distribution ............................................... 99
Legal Matters ........................................................ 101
Financial Information ................................................ 101
Rating ............................................................... 101
Index of Principal Definitions ....................................... 102
CHASE COMMERCIAL MORTGAGE
SECURITIES CORP.
$___________
Class A and Class B
Multifamily Mortgage Pass-Through
Certificates
Series 199_-_
Variable Pass-Through Rate
___________
PROSPECTUS SUPPLEMENT
__________, 199_
___________
[Chase Securities Inc.]
<PAGE>
PROSPECTUS
Mortgage Pass-Through Certificates
(Issuable in Series)
Chase Commercial Mortgage Securities Corp.
(Depositor)
-----------
The mortgage pass-through certificates (the "Offered Certificates")
offered hereby and by the supplements hereto (each, a "Prospectus Supplement")
will be offered from time to time in series. The Offered Certificates of any
series, together with any other mortgage pass-through certificates of such
series, are collectively referred to herein as the "Certificates".
Each series of Certificates will represent in the aggregate the
entire beneficial ownership interest in a trust fund (with respect to any
series, the "Trust Fund") consisting primarily of a segregated pool (a "Mortgage
Asset Pool") of various types of multifamily or commercial mortgage loans (the
"Mortgage Loans"), mortgage-backed securities ("MBS") that evidence interests
in, or that are secured by pledges of, one or more of various types of
multifamily or commercial mortgage loans, or a combination of Mortgage Loans and
MBS (collectively, "Mortgage Assets"). If so specified in the related Prospectus
Supplement, the Trust Fund for a series of Certificates may include letters of
credit, insurance policies, guarantees, reserve funds or other types of credit
support, or any combination thereof (with respect to any series, collectively,
"Credit Support"), and currency or interest rate exchange agreements and other
financial assets, or any combination thereof (with respect to any series,
collectively, "Cash Flow Agreements"). See "Description of the Trust Funds",
"Description of the Certificates" and "Description of Credit Support".
The Depositor does not intend to list any of the Offered
Certificates on any securities exchange and has not made any other arrangement
for secondary trading of the Offered Certificates. There will have been no
public market for the Certificates of any series prior to the offering thereof.
No assurance can be given that such a market will develop as a result of such an
offering. See "Risk Factors".
See "Risk Factors" beginning on page 17 of this Prospectus for
certain factors to be considered in purchasing the Offered Certificates.
(cover continued on next page)
-----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
-----------
The Offered Certificates of any series may be offered through one or
more different methods, including offerings through underwriters, which may
include Chase Securities Inc., an affiliate of the Depositor, as more fully
described under "Method of Distribution" and in the related Prospectus
Supplement.
This Prospectus may not be used to consummate sales of the Offered
Certificates of any series unless accompanied by the Prospectus Supplement for
such series.
The date of this Prospectus is December__, 1996
<PAGE>
(cover continued)
As described in the related Prospectus Supplement, the Certificates
of each series, including the Offered Certificates of such series, may consist
of one or more classes of Certificates that: (i) provide for the accrual of
interest thereon based on a fixed, variable or adjustable interest rate; (ii)
are senior or subordinate to one or more other classes of Certificates in
entitlement to certain distributions on the Certificates; (iii) are entitled to
distributions of principal, with disproportionately small, nominal or no
distributions of interest; (iv) are entitled to distributions of interest, with
disproportionately small, nominal or no distributions of principal; (v) provide
for distributions of interest thereon or principal thereof that commence only
following the occurrence of certain events, such as the retirement of one or
more other classes of Certificates of such series; (vi) provide for
distributions of principal thereof to be made, from time to time or for
designated periods, at a rate that is faster (and, in some cases, substantially
faster) or slower (and, in some cases, substantially slower) than the rate at
which payments or other collections of principal are received on the Mortgage
Assets in the related Trust Fund; or (vii) provide for distributions of
principal thereof to be made, subject to available funds, based on a specified
principal payment schedule or other methodology. See "Description of the
Certificates".
Distributions in respect of the Certificates of each series will be
made on a monthly, quarterly, semi-annual, annual or other periodic basis as
specified in the related Prospectus Supplement. Unless otherwise specified in
the related Prospectus Supplement, such distributions will be made only from the
assets of the related Trust Fund.
No series of Certificates will represent an obligation of or
interest in the Depositor or any of its affiliates, except to the limited extent
described herein and in the related Prospectus Supplement. Neither the
Certificates of any series nor the assets in any Trust Fund will be guaranteed
or insured by any governmental agency or instrumentality or by any other person,
unless otherwise provided in the related Prospectus Supplement. The assets in
each Trust Fund will be held in trust for the benefit of the holders of the
related series of Certificates (the "Certificateholders") pursuant to a Pooling
Agreement, as more fully described herein.
The yield on each class of Certificates of a series will be affected
by, among other things, the rate of payment of principal (including prepayments)
on the Mortgage Assets in the related Trust Fund and the timing of receipt of
such payments as described herein and in the related Prospectus Supplement. See
"Yield and Maturity Considerations". A Trust Fund may be subject to early
termination under the circumstances described herein and in the related
Prospectus Supplement. See "Description of the Certificates".
If so provided in the related Prospectus Supplement, one or more
elections may be made to treat the related Trust Fund or a designated portion
thereof as a "real estate mortgage investment conduit" (a "REMIC") for federal
income tax purposes. See "Certain Federal Income Tax Consequences".
-6-
<PAGE>
PROSPECTUS SUPPLEMENT
As more particularly described herein, the Prospectus Supplement
relating to each series of Offered Certificates will, among other things, set
forth, as and to the extent appropriate: (i) a description of the class or
classes of such Offered Certificates, including the payment provisions with
respect to each such class, the aggregate principal amount of each such class
(the "Certificate Balance"), the rate at which interest accrues from time to
time, if at all, with respect to each such class (the "Pass-Through Rate") or
the method of determining such rate, and whether interest with respect to each
such class will accrue from time to time on its aggregate principal amount or a
specified notional amount, if at all; (ii) information with respect to any other
classes of Certificates of the same series; (iii) the respective dates on which
distributions are to be made; (iv) information as to the assets constituting the
related Trust Fund, including the general characteristics of the assets included
therein, including the Mortgage Assets and any Credit Support and Cash Flow
Agreements (with respect to the Certificates of any series, the "Trust Assets");
(v) the circumstances, if any, under which the related Trust Fund may be subject
to early termination; (vi) additional information with respect to the method of
distribution of such Offered Certificates; (vii) whether one or more REMIC
elections will be made and the designation of the "regular interests" and
"residual interests" in each REMIC to be created; (viii) the initial percentage
ownership interest in the related Trust Fund to be evidenced by each class of
Certificates of such series; (ix) information concerning the trustee (as to any
series, the "Trustee") of the related Trust Fund; (x) if the related Trust Fund
includes Mortgage Loans, information concerning the master servicer (as to any
series, the "Master Servicer") and any special servicer (as to any series, the
"Special Servicer") of such Mortgage Loans; (xi) information as to the nature
and extent of subordination of any class of Certificates of such series,
including a class of Offered Certificates; and (xii) whether such Offered
Certificates will be initially issued in definitive or book-entry form.
AVAILABLE INFORMATION
The Depositor has filed with the Securities and Exchange Commission
(the "Commission") a Registration Statement (of which this Prospectus forms a
part) under the Securities Act of 1933, as amended, with respect to the Offered
Certificates. This Prospectus and the Prospectus Supplement relating to each
series of Offered Certificates contain summaries of the material terms of the
documents referred to herein and therein, but do not contain all of the
information set forth in the Registration Statement pursuant to the rules and
regulations of the Commission. For further information, reference is made to
such Registration Statement and the exhibits thereto. Such Registration
Statement and exhibits can be inspected and copied at prescribed rates at the
public reference facilities maintained by the Commission at its Public Reference
Section, 450 Fifth Street, N.W., Washington, D.C. 20549, and at its Regional
Offices located as follows: Chicago Regional Office, 500 West Madison, 14th
Floor, Chicago, Illinois 60661; and New York Regional Office, Seven World Trade
Center, New York, New York 10048. The Commission also maintains a World Wide Web
site which provides on-line access to reports, proxy and information statements
-7-
<PAGE>
and other information regarding registrants that file electronically with the
Commission at the address "http://www.sec.gov."
No person has been authorized to give any information or to make any
representation not contained in this Prospectus and any related Prospectus
Supplement and, if given or made, such information or representation must not be
relied upon. This Prospectus and any related Prospectus Supplement do not
constitute an offer to sell or a solicitation of an offer to buy any securities
other than the Offered Certificates, or an offer of the Offered Certificates to
any person in any state or other jurisdiction in which such offer would be
unlawful. The delivery of this Prospectus at any time does not imply that
information herein is correct as of any time subsequent to its date; however, if
any material change occurs while this Prospectus is required by law to be
delivered, this Prospectus will be amended or supplemented accordingly.
The Master Servicer or Trustee for each series will be required to
mail to holders of the Offered Certificates of each series periodic unaudited
reports concerning the related Trust Fund. If beneficial interests in a class of
Offered Certificates are being held and transferred in book-entry format through
the facilities of The Depository Trust Company ("DTC") as described herein, then
unless otherwise provided in the related Prospectus Supplement, such reports
will be sent on behalf of the related Trust Fund to a nominee of DTC as the
registered holder of such Offered Certificates. Conveyance of notices and other
communications by DTC to its participating organizations, and directly or
indirectly through such participating organizations to the beneficial owners of
the applicable Offered Certificates, will be governed by arrangements among
them, subject to any statutory or regulatory requirements as may be in effect
from time to time. See "Description of the Certificates--Reports to
Certificateholders" and "--Book-Entry Registration and Definitive Certificates"
and "Description of the Pooling Agreements--Evidence as to Compliance". The
Depositor will file or cause to be filed with the Commission such periodic
reports with respect to each Trust Fund as are required under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations of the Commission thereunder.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
There are incorporated herein by reference all documents and reports
filed or caused to be filed by the Depositor with respect to a Trust Fund
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the
termination of an offering of Offered Certificates evidencing interests therein.
The Depositor will provide or cause to be provided without charge to each person
to whom this Prospectus is delivered in connection with the offering of one or
more classes of Offered Certificates, upon written or oral request of such
person, a copy of any or all documents or reports incorporated herein by
reference, in each case to the extent such documents or reports relate to one or
more of such classes of such Offered Certificates, other than the exhibits to
such documents (unless such exhibits are specifically incorporated by reference
in such documents). Requests to the Depositor should be directed in writing to
its principal executive offices at 380 Madison Avenue, New York, New York
10017-2951, Attention: President, or by telephone at (212) 622-3510. The
Depositor has determined that its financial statements will not be material to
the offering of any Offered Certificates.
-8-
<PAGE>
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT........................................................7
AVAILABLE INFORMATION........................................................7
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE............................8
SUMMARY OF PROSPECTUS.......................................................14
RISK FACTORS................................................................24
Secondary Market......................................................24
Limited Assets........................................................25
Prepayments; Average Life of Certificates; Yields.....................25
Limited Nature of Ratings.............................................27
Risks Associated with Certain Mortgage Loans and Mortgaged
Properties.........................................................28
Balloon Payments; Borrower Default....................................29
Credit Support Limitations............................................29
Leases and Rents......................................................30
Environmental Risks...................................................30
Special Hazard Losses.................................................31
ERISA Considerations..................................................32
Certain Federal Tax Considerations Regarding Residual Certificates....32
Certain Federal Tax Considerations Regarding Original Issue
Discount...........................................................33
Book-Entry Registration...............................................33
Delinquent and Non-Performing Mortgage Loans..........................33
DESCRIPTION OF THE TRUST FUNDS..............................................33
General...............................................................33
Mortgage Loans........................................................34
General.........................................................34
Default and Loss Considerations with Respect to the
Mortgage Loans...............................................35
Payment Provisions of the Mortgage Loans........................37
Mortgage Loan Information in Prospectus Supplements.............37
MBS...................................................................38
Certificate Accounts..................................................39
Credit Support........................................................39
Cash Flow Agreements..................................................40
YIELD AND MATURITY CONSIDERATIONS...........................................40
General...............................................................40
Pass-Through Rate.....................................................40
Payment Delays........................................................41
Certain Shortfalls in Collections of Interest.........................41
Yield and Prepayment Considerations...................................41
Weighted Average Life and Maturity....................................43
Controlled Amortization Classes and Companion Classes.................44
Other Factors Affecting Yield, Weighted Average Life and Maturity.....46
Balloon Payments; Extensions of Maturity........................46
Negative Amortization...........................................46
Foreclosures and Payment Plans..................................47
Losses and Shortfalls on the Mortgage Assets....................47
-9-
<PAGE>
Additional Certificate Amortization.............................48
Optional Early Termination......................................48
THE DEPOSITOR...............................................................48
USE OF PROCEEDS.............................................................49
DESCRIPTION OF THE CERTIFICATES.............................................49
General...............................................................49
Distributions.........................................................50
Distributions of Interest on the Certificates.........................50
Distributions of Principal on the Certificates........................52
Distributions on the Certificates in Respect of Prepayment
Premiums or in Respect of Equity Participations....................53
Allocation of Losses and Shortfalls...................................53
Advances in Respect of Delinquencies..................................53
Reports to Certificateholders.........................................54
Voting Rights.........................................................56
Termination...........................................................57
Book-Entry Registration and Definitive Certificates...................57
DESCRIPTION OF THE POOLING AGREEMENTS.......................................59
General...............................................................59
Assignment of Mortgage Loans; Repurchases.............................60
Representations and Warranties; Repurchases...........................61
Collection and Other Servicing Procedures.............................62
Sub-Servicers.........................................................63
Special Servicers.....................................................64
Certificate Account...................................................64
General.........................................................64
Deposits........................................................64
Withdrawals.....................................................66
Modifications, Waivers and Amendments of Mortgage Loans...............68
Realization Upon Defaulted Mortgage Loans.............................68
Hazard Insurance Policies.............................................71
Due-on-Sale and Due-on-Encumbrance Provisions.........................72
Servicing Compensation and Payment of Expenses........................72
Evidence as to Compliance.............................................73
Certain Matters Regarding the Master Servicer and the Depositor.......73
Events of Default.....................................................74
Rights Upon Event of Default..........................................75
Amendment.............................................................76
List of Certificateholders............................................77
The Trustee...........................................................77
Duties of the Trustee.................................................77
Certain Matters Regarding the Trustee.................................77
Resignation and Removal of the Trustee................................78
DESCRIPTION OF CREDIT SUPPORT...............................................78
General...............................................................78
Subordinate Certificates..............................................79
Cross-Support Provisions..............................................79
Insurance or Guarantees with Respect to Mortgage Loans................80
Letter of Credit......................................................80
-10-
<PAGE>
Certificate Insurance and Surety Bonds................................80
Reserve Funds.........................................................81
Credit Support with respect to MBS....................................81
CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS.....................................81
General...............................................................82
Types of Mortgage Instruments.........................................82
Leases and Rents......................................................82
Personalty............................................................83
Foreclosure...........................................................83
General.........................................................83
Judicial Foreclosure............................................84
Equitable Limitations on Enforceability of Certain
Provisions...................................................84
Non-Judicial Foreclosure/Power of Sale..........................84
Public Sale.....................................................85
Rights of Redemption............................................86
Anti-Deficiency Legislation.....................................86
Leasehold Risks.................................................87
Cooperative Shares..............................................87
Bankruptcy Laws.......................................................88
Environmental Risks...................................................91
Due-on-Sale and Due-on-Encumbrance....................................93
Subordinate Financing.................................................93
Default Interest and Limitations on Prepayments.......................93
Applicability of Usury Laws...........................................94
Soldiers' and Sailors' Civil Relief Act of 1940.......................94
CERTAIN FEDERAL INCOME TAX CONSEQUENCES.....................................95
Federal Income Tax Consequences for REMIC Certificates................95
General.........................................................95
Status of REMIC Certificates....................................96
Qualification as a REMIC........................................97
Taxation of Regular Certificates................................99
General..................................................99
Original Issue Discount..................................99
Acquisition Premium.....................................102
Variable Rate Regular Certificates......................103
Deferred Interest.......................................104
Market Discount.........................................104
Premium.................................................106
Election to Treat All Interest Under the
Constant Yield Method.................................106
Sale or Exchange of Regular Certificates................106
Treatment of Losses.....................................107
Taxation of Residual Certificates..............................108
Taxation of REMIC Income................................108
Basis and Losses........................................110
Treatment of Certain Items of REMIC Income and Expense..111
Limitations on Offset or Exemption of REMIC Income......112
Tax-Related Restrictions on Transfer of
Residual Certificates.................................113
Sale or Exchange of a Residual Certificate..............116
Mark to Market Regulations..............................117
Taxes That May Be Imposed on the REMIC Pool....................117
Prohibited Transactions.................................117
Contributions to the REMIC Pool After the Startup Day...117
-11-
<PAGE>
Net Income from Foreclosure Property....................118
Liquidation of the REMIC Pool..................................118
Administrative Matters.........................................118
Limitations on Deduction of Certain Expenses...................119
Taxation of Certain Foreign Investors..........................119
Regular Certificates....................................119
Residual Certificates...................................120
Backup Withholding.............................................121
Reporting Requirements.........................................121
Federal Income Tax Consequences For Certificates as to Which No
REMIC Election Is Made.............................................122
Standard Certificates..........................................122
General.................................................122
Tax Status..............................................123
Premium and Discount....................................123
Recharacterization of Servicing Fees....................124
Sale or Exchange of Standard Certificates...............125
Stripped Certificates..........................................125
General.................................................126
Status of Stripped Certificates.........................127
Taxation of Stripped Certificates.......................127
Reporting Requirements and Backup Withholding.......................129
Taxation of Certain Foreign Investors...............................130
STATE AND OTHER TAX CONSIDERATIONS.........................................130
ERISA CONSIDERATIONS.......................................................130
General..............................................................130
Plan Asset Regulations...............................................131
Administrative Exemptions............................................132
Unrelated Business Taxable Income; Residual Certificates.............132
LEGAL INVESTMENT...........................................................133
METHOD OF DISTRIBUTION.....................................................135
LEGAL MATTERS..............................................................137
FINANCIAL INFORMATION......................................................137
RATING.....................................................................137
INDEX OF PRINCIPAL DEFINITIONS.............................................138
-12-
<PAGE>
- --------------------------------------------------------------------------------
SUMMARY OF PROSPECTUS
The following summary of certain pertinent information is qualified
in its entirety by reference to the more detailed information appearing
elsewhere in this Prospectus and by reference to the information with respect to
each series of Certificates contained in the Prospectus Supplement to be
prepared and delivered in connection with the offering of Offered Certificates
of such series. An Index of Principal Definitions is included at the end of this
Prospectus.
Title of Certificates........ Mortgage Pass-Through Certificates,issuable in
series (the "Certificates").
Depositor.................... Chase Commercial Mortgage Securities Corp., a
wholly-owned subsidiary of The Chase Manhattan
Bank, a New York banking corporation. On July 14,
1996, The Chase Manhattan Bank (National
Association) was merged with and into Chemical
Bank and Chemical Bank then changed its name to
The Chase Manhattan Bank. See "The Depositor".
Master Servicer.............. The master servicer (the "Master Servicer"), if
any, for a series of Certificates will be named in
the related Prospectus Supplement. The Master
Servicer for any series of Certificates may be an
affiliate of the Depositor or a Special Servicer.
See "Description of the Pooling
Agreements--Collection and Other Servicing
Procedures".
Special Servicer............. One or more special servicers (each, a "Special
Servicer"), if any, for a series of Certificates
will be named, or the circumstances under which a
Special Servicer will be appointed will be
described, in the related Prospectus Supplement. A
Special Servicer for any series of Certificates
may be an affiliate of the Depositor or the Master
Servicer. See "Description of the Pooling
Agreements--Special Servicers".
Trustee...................... The trustee (the "Trustee") for each series of
Certificates will be named in the related
Prospectus Supplement. See "Description of the
Pooling Agreements--The Trustee".
The Trust Assets............. Each series of Certificates will represent in the
aggregate the entire beneficial ownership interest
in a Trust Fund consisting primarily of:
A. Mortgage Assets.......... The Mortgage Assets with respect to each series of
Certificates will, in general, consist of a pool
of loans (collectively, the "Mortgage Loans")
secured by liens on, or security interests in, (i)
residential properties consisting of five or more
rental or cooperatively-owned dwelling units or by
shares allocable to a number of such units and
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proprietary leases appurtenant thereto (the
"Multifamily Properties") or (ii) office
buildings, shopping centers, retail stores and
establishments, hotels or motels, nursing homes,
hospitals or other health-care related facilities,
mobile home parks, warehouse facilities,
mini-warehouse facilities, self-storage
facilities, industrial plants, parking lots, mixed
use or various other types of income-producing
properties or unimproved land (the "Commercial
Properties"). If so specified in the related
Prospectus Supplement, a Trust Fund may include
Mortgage Loans secured by liens on real estate
projects under construction. The Mortgage Loans
will not be guaranteed or insured by the Depositor
or any of its affiliates or, unless otherwise
provided in the related Prospectus Supplement, by
any governmental agency or instrumentality or by
any other person. If so specified in the related
Prospectus Supplement, some Mortgage Loans may be
delinquent or non-performing as of the date the
related Trust Fund is formed.
As and to the extent described in the related
Prospectus Supplement, a Mortgage Loan (i) may
provide for no accrual of interest or for accrual
of interest thereon at an interest rate (a
"Mortgage Rate") that is fixed over its term or
that adjusts from time to time, or that may be
converted at the borrower's election from an
adjustable to a fixed Mortgage Rate, or from a
fixed to an adjustable Mortgage Rate, (ii) may
provide for level payments to maturity or for
payments that adjust from time to time to
accommodate changes in the Mortgage Rate or to
reflect the occurrence of certain events, and may
permit negative amortization, (iii) may be fully
amortizing or partially amortizing or
non-amortizing, with a balloon payment due on its
stated maturity date, (iv) may prohibit over its
term or for a certain period prepayments and/or
require payment of a premium or a yield
maintenance penalty in connection with certain
prepayments and (v) may provide for payments of
principal, interest or both, on due dates that
occur monthly, quarterly, semi-annually or at such
other interval as is specified in the related
Prospectus Supplement. Unless otherwise provided
in the related Prospectus Supplement, each
Mortgage Loan will have had a principal balance at
origination of not less than $25,000 and an
original term to maturity of not more than 40
years. Unless otherwise provided in the related
Prospectus Supplement, no Mortgage Loan will have
been originated by the Depositor; however, some or
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all of the Mortgage Loans in any Trust Fund may
have been originated by an affiliate of the
Depositor. See "Description of the Trust
Funds--Mortgage Loans". If and to the extent
specified in the related Prospectus Supplement,
the Mortgage Assets with respect to a series of
Certificates may also include, or consist of, (i)
private mortgage participations, mortgage
pass-through certificates or other mortgage-backed
securities or (ii) certificates insured or
guaranteed by the Federal Home Loan Mortgage
Corporation ("FHLMC"), the Federal National
Mortgage Association ("FNMA"), the Governmental
National Mortgage Association ("GNMA") or the
Federal Agricultural Mortgage Corporation ("FAMC")
(collectively, the mortgage-backed securities
referred to in clauses (i) and (ii), "MBS"),
provided that each MBS will evidence an interest
in, or will be secured by a pledge of, one or more
mortgage loans that conform to the descriptions of
the Mortgage Loans contained herein. See
"Description of the Trust Funds--MBS".
B. Certificate Account...... Each Trust Fund will include one or more accounts
(collectively, the "Certificate Account")
established and maintained on behalf of the
Certificateholders into which the person or
persons designated in the related Prospectus
Supplement will, to the extent described herein
and in such Prospectus Supplement, deposit all
payments and other collections received or
advanced with respect to the Mortgage Assets and
other assets in such Trust Fund. A Certificate
Account may be maintained as an interest bearing
or a non-interest bearing account, and funds held
therein may be held as cash or invested in certain
obligations acceptable to each Rating Agency (as
defined below) rating one or more classes of the
related series of Offered Certificates. See
"Description of the Trust Funds--Certificate
Accounts" and "Description of the Pooling
Agreements--Certificate Account".
C. Credit Support............ If so provided in the related Prospectus
Supplement, partial or full protection against
certain defaults and losses on the Mortgage Assets
in the related Trust Fund may be provided to one
or more classes of Certificates of the related
series in the form of subordination of one or more
other classes of Certificates of such series,
which other classes may include one or more
classes of Offered Certificates, or by one or more
other types of credit support, such as a letter of
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credit, insurance policy, guarantee, reserve fund
or another type of credit support, or a
combination thereof (any such coverage with
respect to the Certificates of any series, "Credit
Support"). The amount and types of any Credit
Support, the identification of the entity
providing it (if applicable) and related
information will be set forth in the Prospectus
Supplement for a series of Offered Certificates.
See "Risk Factors--Credit Support Limitations",
"Description of the Trust Funds--Credit Support"
and "Description of Credit Support".
D. Cash Flow Agreements...... If so provided in the related Prospectus
Supplement, a Trust Fund may include guaranteed
investment contracts pursuant to which moneys held
in the funds and accounts established for the
related series will be invested at a specified
rate. The Trust Fund may also include certain
other agreements, such as interest rate exchange
agreements, interest rate cap or floor agreements,
currency exchange agreements or other agreements
designed to reduce the effects of interest rate or
currency exchange rate fluctuations on the
Mortgage Assets or on one or more classes of
Certificates. The principal terms of any such
guaranteed investment contract or other agreement
(any such agreement, a "Cash Flow Agreement"),
including, without limitation, provisions relating
to the timing, manner and amount of payments
thereunder and provisions relating to the
termination thereof, will be described in the
Prospectus Supplement for the related series. In
addition, the related Prospectus Supplement will
contain certain information that pertains to the
obligor under any such Cash Flow Agreement. See
"Description of the Trust Funds--Cash Flow
Agreements".
Description of Certificates.. Each series of Certificates will be issued in one
or more classes pursuant to a pooling and
servicing agreement or other agreement specified
in the related Prospectus Supplement (in either
case, a "Pooling Agreement") and will represent in
the aggregate the entire beneficial ownership
interest in the related Trust Fund. As described
in the related Prospectus Supplement, the
Certificates of each series, including the Offered
Certificates of such series, may consist of one or
more classes of Certificates that, among other
things: (i) are senior (collectively, "Senior
Certificates") or subordinate
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(collectively, "Subordinate Certificates") to one
or more other classes of Certificates in
entitlement to certain distributions on the
Certificates; (ii) are entitled to distributions
of principal, with disproportionately small,
nominal or no distributions of interest
(collectively, "Stripped Principal Certificates");
(iii) are entitled to distributions of interest,
with disproportionately small, nominal or no
distributions of principal (collectively,
"Stripped Interest Certificates"); (iv) provide
for distributions of interest thereon or principal
thereof that commence only after the occurrence of
certain events, such as the retirement of one or
more other classes of Certificates of such series;
(v) provide for distributions of principal thereof
to be made, from time to time or for designated
periods, at a rate that is faster (and, in some
cases, substantially faster) or slower (and, in
some cases, substantially slower) than the rate at
which payments or other collections of principal
are received on the Mortgage Assets in the related
Trust Fund; (vi) provide for distributions of
principal thereof to be made, subject to available
funds, based on a specified principal payment
schedule or other methodology; or (vii) provide
for distribution based on collections on the
Mortgage Assets in the related Trust Fund
attributable to prepayment premiums, yield
maintenance penalties or equity participations.
Each class of Certificates, other than certain
classes of Stripped Interest Certificates and
certain classes of Residual Certificates (as
defined herein), will have a stated principal
amount (a "Certificate Balance"); and each class
of Certificates, other than certain classes of
Stripped Principal Certificates and certain
classes of Residual Certificates, will accrue
interest on its Certificate Balance or, in the
case of certain classes of Stripped Interest
Certificates, on a notional amount (a "Notional
Amount") based on a fixed, variable or adjustable
interest rate (a "Pass-Through Rate"). The related
Prospectus Supplement will specify the Certificate
Balance, Notional Amount and/or Pass-Through Rate
(or, in the case of a variable or adjustable
Pass-Through Rate, the method for determining such
rate), as applicable, for each class of Offered
Certificates.
The Certificates will not be guaranteed or insured
by the Depositor or any of its affiliates, by any
governmental agency or instrumentality or by any
other person or entity,
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unless otherwise provided in the related
Prospectus Supplement. See "Risk Factors--Limited
Assets" and "Description of the Certificates".
Distributions of Interest
on the Certificates........ Interest on each class of Offered Certificates
(other than certain classes of Stripped Principal
Certificates and certain classes of Residual
Certificates) of each series will accrue at the
applicable Pass-Through Rate on the Certificate
Balance or, in the case of certain classes of
Stripped Interest Certificates, the Notional
Amount thereof outstanding from time to time and
will be distributed to Certificateholders as
provided in the related Prospectus Supplement
(each of the specified dates on which
distributions are to be made, a "Distribution
Date"). Distributions of interest with respect to
one or more classes of Certificates (collectively,
"Accrual Certificates") may not commence until the
occurrence of certain events, such as the
retirement of one or more other classes of
Certificates, and interest accrued with respect to
a class of Accrual Certificates prior to the
occurrence of such an event will either be added
to the Certificate Balance thereof or otherwise
deferred. Distributions of interest with respect
to one or more classes of Certificates may be
reduced to the extent of certain delinquencies,
losses and other contingencies described herein
and in the related Prospectus Supplement. See
"Risk Factors--Prepayments; Average Life of
Certificates; Yields", "Yield and Maturity
Considerations" and "Description of the
Certificates--Distributions of Interest on the
Certificates".
Distributions of Principal
of the Certificates........ Each class of Certificates of each series (other
than certain classes of Stripped Interest
Certificates and certain classes of Residual
Certificates) will have a Certificate Balance. The
Certificate Balance of a class of Certificates
outstanding from time to time will represent the
maximum amount that the holders thereof are then
entitled to receive in respect of principal from
future cash flow on the assets in the related
Trust Fund. Unless otherwise specified in the
related Prospectus Supplement, the initial
aggregate Certificate Balance of all classes of
Certificates of a series will not be greater than
the outstanding principal balance of the related
Mortgage Assets as of a specified date (the
"Cut-off Date"), after application of scheduled
payments due on or before such date, whether or
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not received. As and to the extent described in
each Prospectus Supplement, distributions of
principal with respect to the related series of
Certificates will be made on each Distribution
Date to the holders of the class or classes of
Certificates of such series entitled thereto until
the Certificate Balances of such Certificates have
been reduced to zero. Distributions of principal
with respect to one or more classes of
Certificates may be made at a rate that is faster
(and, in some cases, substantially faster) than
the rate at which payments or other collections of
principal are received on the Mortgage Assets in
the related Trust Fund. Distributions of principal
with respect to one or more classes of
Certificates may not commence until the occurrence
of certain events, such as the retirement of one
or more other classes of Certificates of the same
series, or may be made at a rate that is slower
(and, in some cases, substantially slower) than
the rate at which payments or other collections of
principal are received on the Mortgage Assets in
the related Trust Fund. Distributions of principal
with respect to one or more classes of
Certificates (each such class, a "Controlled
Amortization Class") may be made, subject to
certain limitations, based on a specified
principal payment schedule. Distributions of
principal with respect to one or more classes of
Certificates (each such class, a "Companion
Class") may be contingent on the specified
principal payment schedule for a Controlled
Amortization Class of the same series and the rate
at which payments and other collections of
principal on the Mortgage Assets in the related
Trust Fund are received. Unless otherwise
specified in the related Prospectus Supplement,
distributions of principal of any class of Offered
Certificates will be made on a pro rata basis
among all of the Certificates of such class. See
"Description of the Certificates--Distributions of
Principal of the Certificates".
Advances..................... If and to the extent provided in the related
Prospectus Supplement, if a Trust Fund includes
Mortgage Loans, the Master Servicer, a Special
Servicer, the Trustee, any provider of Credit
Support and/or any other specified person may be
obligated to make, or have the option of making,
certain advances with respect to delinquent
scheduled payments of principal and/or interest on
such Mortgage Loans. Any such advances made with
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respect to a particular Mortgage Loan will be
reimbursable from subsequent recoveries in respect
of such Mortgage Loan and otherwise to the extent
described herein and in the related Prospectus
Supplement. If and to the extent provided in the
Prospectus Supplement for a series of
Certificates, any entity making such advances may
be entitled to receive interest thereon for the
period that such advances are outstanding, payable
from amounts in the related Trust Fund. See
"Description of the Certificates--Advances in
Respect of Delinquencies". If a Trust Fund
includes MBS, any comparable advancing obligation
of a party to the related Pooling Agreement, or of
a party to the related MBS Agreement, will be
described in the related Prospectus Supplement.
Termination.................. If so specified in the related Prospectus
Supplement, a series of Certificates may be
subject to optional early termination through the
repurchase of the Mortgage Assets in the related
Trust Fund by the party or parties specified
therein, under the circumstances and in the manner
set forth therein. If so provided in the related
Prospectus Supplement, upon the reduction of the
Certificate Balance of a specified class or
classes of Certificates by a specified percentage
or amount, a party specified therein may be
authorized or required to solicit bids for the
purchase of all of the Mortgage Assets of the
related Trust Fund, or of a sufficient portion of
such Mortgage Assets to retire such class or
classes, under the circumstances and in the manner
set forth therein. See "Description of the
Certificates--Termination".
Registration of Book-Entry
Certificates............... If so provided in the related Prospectus
Supplement, one or more classes of the Offered
Certificates of any series will be offered in
book-entry format (collectively, "Book-Entry
Certificates") through the facilities of The
Depository Trust Company ("DTC"). Each class of
Book-Entry Certificates will be initially
represented by one or more Certificates registered
in the name of a nominee of DTC. No person
acquiring an interest in a class of Book-Entry
Certificates (a "Certificate Owner") will be
entitled to receive Certificates of such class in
fully registered, definitive form ("Definitive
Certificates"), except under the limited
circumstances described herein. See "Risk
Factors--Book-Entry Registration" and "Description
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of the Certificates--Book-Entry Registration and
Definitive Certificates".
Certain Federal Income
Tax Consequences.......... The federal income tax consequences to
Certificateholders will vary depending on whether
one or more elections are made to treat the Trust
Fund or specified portions thereof as one or more
"real estate mortgage investment conduits" (each,
a "REMIC") under the provisions of the Internal
Revenue Code of 1986, as amended (the "Code"). The
Prospectus Supplement for each series of
Certificates will specify whether one or more such
elections will be made. See "Certain Federal
Income Tax Consequences".
ERISA Considerations......... Fiduciaries of employee benefit plans and certain
other retirement plans and arrangements, including
individual retirement accounts, annuities, Keogh
plans, and collective investment funds and
insurance company general and separate accounts in
which such plans, accounts, annuities or
arrangements are invested, that are subject to the
Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), or Section 4975 of the Code,
should carefully review with their legal advisors
whether the purchase or holding of Offered
Certificates could give rise to a transaction that
is prohibited or is not otherwise permissible
either under ERISA or Section 4975 of the Code.
See "ERISA Considerations" herein and in the
related Prospectus Supplement.
Legal Investment............. The Offered Certificates will constitute "mortgage
related securities" for purposes of the Secondary
Mortgage Market Enhancement Act of 1984, as
amended ("SMMEA,") only if so specified in the
related Prospectus Supplement. Investors whose
investment authority is subject to legal
restrictions should consult their own legal
advisors to determine whether and to what extent
the Offered Certificates constitute legal
investments for them. See "Legal Investment"
herein and in the related Prospectus Supplement.
Rating....................... At their respective dates of issuance, each class
of Offered Certificates will be rated not lower
than investment grade by one or more nationally
recognized statistical rating agencies (each, a
"Rating Agency"). See "Rating" herein and in the
related Prospectus Supplement.
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RISK FACTORS
In considering an investment in the Offered Certificates of any
series, investors should consider, among other things, the following risk
factors and any other factors set forth under the heading "Risk Factors" in the
related Prospectus Supplement. In general, to the extent that the factors
discussed below pertain to or are influenced by the characteristics or behavior
of Mortgage Loans included in a particular Trust Fund, they would similarly
pertain to and be influenced by the characteristics or behavior of the mortgage
loans underlying any MBS included in such Trust Fund.
Secondary Market
There can be no assurance that a secondary market for the Offered
Certificates of any series will develop or, if it does develop, that it will
provide holders with liquidity of investment or will continue for as long as
such Certificates remain outstanding. The Prospectus Supplement for any series
of Offered Certificates may indicate that an underwriter specified therein
intends to make a secondary market in such Offered Certificates; however, no
underwriter will be obligated to do so. Any such secondary market may provide
less liquidity to investors than any comparable market for securities that
evidence interests in single-family mortgage loans.
The primary source of ongoing information regarding the Offered
Certificates of any series, including information regarding the status of the
related Mortgage Assets and any Credit Support for such Certificates, will be
the periodic reports to Certificateholders to be delivered pursuant to the
related Pooling Agreement as described herein under the heading "Description of
the Certificates--Reports to Certificateholders". There can be no assurance that
any additional ongoing information regarding the Offered Certificates of any
series will be available through any other source. The limited nature of such
information in respect of a series of Offered Certificates may adversely affect
the liquidity thereof, even if a secondary market for such Certificates does
develop.
Insofar as a secondary market does develop with respect to any
series of Offered Certificates or class thereof, the market value of such
Certificates will be affected by several factors, including the perceived
liquidity thereof, the anticipated cash flow thereon (which may vary widely
depending upon the prepayment and default assumptions applied in respect of the
underlying Mortgage Loans) and prevailing interest rates. The price payable at
any given time in respect of certain classes of Offered Certificates (in
particular, a class with a relatively long average life, a Companion Class or a
class of Stripped Interest Certificates or Stripped Principal Certificates) may
be extremely sensitive to small fluctuations in prevailing interest rates; and
the relative change in price for an Offered Certificate in response to an upward
or downward movement in prevailing interest rates may not necessarily equal the
relative change in price for such Offered Certificate in response to an equal
but opposite movement in such rates. Accordingly, the sale of Offered
Certificates by a holder in any secondary market that may develop may be at a
discount from the price paid by such holder. The Depositor is not aware of any
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source through which price information about the Offered Certificates will be
generally available on an ongoing basis.
Except to the extent described herein and in the related Prospectus
Supplement, Certificateholders will have no redemption rights, and the Offered
Certificates of each series are subject to early retirement only under certain
specified circumstances described herein and in the related Prospectus
Supplement. See "Description of the Certificates--Termination".
Limited Assets
Unless otherwise specified in the related Prospectus Supplement,
neither the Offered Certificates of any series nor the Mortgage Assets in the
related Trust Fund will be guaranteed or insured by the Depositor or any of its
affiliates, by any governmental agency or instrumentality or by any other person
or entity; and no Offered Certificate of any series will represent a claim
against or security interest in the Trust Funds for any other series.
Accordingly, if the related Trust Fund has insufficient assets to make payments
on a series of Offered Certificates, no other assets will be available for
payment of the deficiency. Additionally, certain amounts on deposit from time to
time in certain funds or accounts constituting part of a Trust Fund, including
the Certificate Account and any accounts maintained as Credit Support, may be
withdrawn under certain conditions, as described in the related Prospectus
Supplement, for purposes other than the payment of principal of or interest on
the related series of Certificates. If and to the extent so provided in the
Prospectus Supplement for a series of Certificates consisting of one or more
classes of Subordinate Certificates, on any Distribution Date in respect of
which losses or shortfalls in collections on the Mortgage Assets have been
incurred, all or a portion of the amount of such losses or shortfalls will be
borne first by one or more classes of the Subordinate Certificates, and,
thereafter, by the remaining classes of Certificates in the priority and manner
and subject to the limitations specified in such Prospectus Supplement.
Prepayments; Average Life of Certificates; Yields
As a result of, among other things, prepayments on the Mortgage
Loans in any Trust Fund, the amount and timing of distributions of principal
and/or interest on the Offered Certificates of the related series may be highly
unpredictable. Prepayments on the Mortgage Loans in any Trust Fund will result
in a faster rate of principal payments on one or more classes of the related
series of Certificates than if payments on such Mortgage Loans were made as
scheduled. Thus, the prepayment experience on the Mortgage Loans in a Trust Fund
may affect the average life of one or more classes of Certificates of the
related series, including a class of Offered Certificates. The rate of principal
payments on pools of mortgage loans varies among pools and from time to time is
influenced by a variety of economic, demographic, geographic, social, tax, legal
and other factors. For example, if prevailing interest rates fall significantly
below the Mortgage Rates borne by the Mortgage Loans included in a Trust Fund,
then, subject to, among other things, the particular terms of the Mortgage Loans
(e.g., provisions that prohibit voluntary prepayments during specified periods
or impose penalties in connection therewith) and the ability of borrowers to get
new financing, principal prepayments on such Mortgage Loans are likely to be
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higher than if prevailing interest rates remain at or above the rates borne by
those Mortgage Loans. Conversely, if prevailing interest rates rise
significantly above the Mortgage Rates borne by the Mortgage Loans included in a
Trust Fund, then principal prepayments on such Mortgage Loans are likely to be
lower than if prevailing interest rates remain at or below the rates borne by
those Mortgage Loans. There can be no assurance as to the actual rate of
prepayment on the Mortgage Loans in any Trust Fund or that such rate of
prepayment will conform to any model described herein or in any Prospectus
Supplement. As a result, depending on the anticipated rate of prepayment for the
Mortgage Loans in any Trust Fund, the retirement of any class of Certificates of
the related series could occur significantly earlier or later than expected.
The extent to which prepayments on the Mortgage Loans in any Trust
Fund ultimately affect the average life of any class of Certificates of the
related series will depend on the terms of such Certificates. A class of
Certificates, including a class of Offered Certificates, may provide that on any
Distribution Date the holders of such Certificates are entitled to a pro rata
share of the prepayments on the Mortgage Loans in the related Trust Fund that
are distributable on such date, to a disproportionately large share (which, in
some cases, may be all) of such prepayments, or to a disproportionately small
share (which, in some cases, may be none) of such prepayments. A class of
Certificates that entitles the holders thereof to a disproportionately large
share of the prepayments on the Mortgage Loans in the related Trust Fund
increases the likelihood of early retirement of such class ("call risk") if the
rate of prepayment is relatively fast; while a class of Certificates that
entitles the holders thereof to a disproportionately small share of the
prepayments on the Mortgage Loans in the related Trust Fund increases the
likelihood of an extended average life of such class ("extension risk") if the
rate of prepayment is relatively slow. As and to the extent described in the
related Prospectus Supplement, the respective entitlements of the various
classes of Certificateholders of any series to receive payments (and, in
particular, prepayments) of principal of the Mortgage Loans in the related Trust
Fund may vary based on the occurrence of certain events (e.g., the retirement of
one or more classes of Certificates of such series) or subject to certain
contingencies (e.g., prepayment and default rates with respect to such Mortgage
Loans).
A series of Certificates may include one or more Controlled
Amortization Classes, which will entitle the holders thereof to receive
principal distributions according to a specified principal payment schedule.
Although prepayment risk cannot be eliminated entirely for any class of
Certificates, a Controlled Amortization Class will generally provide a
relatively stable cash flow so long as the actual rate of prepayment on the
Mortgage Loans in the related Trust Fund remains relatively constant at the
rate, or within the range of rates, of prepayment used to establish the specific
principal payment schedule for such Certificates. Prepayment risk with respect
to a given Mortgage Asset Pool does not disappear, however, and the stability
afforded to a Controlled Amortization Class comes at the expense of one or more
Companion Classes of the same series, any of which Companion Classes may also be
a class of Offered Certificates. In general, and as more specifically described
in the related Prospectus Supplement, a Companion Class may entitle the holders
thereof to a disproportionately large share of prepayments on the Mortgage Loans
in the related Trust Fund when the rate of prepayment is relatively fast, and/or
may entitle the holders thereof to a disproportionately small share of
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prepayments on the Mortgage Loans in the related Trust Fund when the rate of
prepayment is relatively slow. As and to the extent described in the related
Prospectus Supplement, a Companion Class absorbs some (but not all) of the "call
risk" and/or "extension risk" that would otherwise belong to the related
Controlled Amortization Class if all payments of principal of the Mortgage Loans
in the related Trust Fund were allocated on a pro rata basis.
A series of Certificates may include one or more classes of Offered
Certificates offered at a premium or discount. Yields on such classes of
Certificates will be sensitive, and in some cases extremely sensitive, to
prepayments on the Mortgage Loans in the related Trust Fund and, where the
amount of interest payable with respect to a class is disproportionately large,
as compared to the amount of principal, as with certain classes of Stripped
Interest Certificates, a holder might fail to recover its original investment
under some prepayment scenarios. The extent to which the yield to maturity of
any class of Offered Certificates may vary from the anticipated yield will
depend upon the degree to which they are purchased at a discount or premium and
the amount and timing of distributions thereon. An investor should consider, in
the case of any Offered Certificate purchased at a discount, the risk that a
slower than anticipated rate of principal payments on the Mortgage Loans could
result in an actual yield to such investor that is lower than the anticipated
yield and, in the case of any Offered Certificate purchased at a premium, the
risk that a faster than anticipated rate of principal payments could result in
an actual yield to such investor that is lower than the anticipated yield. See
"Yield and Maturity Considerations" herein.
Limited Nature of Ratings
Any rating assigned by a Rating Agency to a class of Offered
Certificates will reflect only its assessment of the likelihood that holders of
such Offered Certificates will receive payments to which such Certificateholders
are entitled under the related Pooling Agreement. Such rating will not
constitute an assessment of the likelihood that principal prepayments on the
related Mortgage Loans will be made, the degree to which the rate of such
prepayments might differ from that originally anticipated or the likelihood of
early optional termination of the related Trust Fund. Furthermore, such rating
will not address the possibility that prepayment of the related Mortgage Loans
at a higher or lower rate than anticipated by an investor may cause such
investor to experience a lower than anticipated yield or that an investor that
purchases an Offered Certificate at a significant premium might fail to recover
its initial investment under certain prepayment scenarios.
The amount, type and nature of Credit Support, if any, provided with
respect to a series of Certificates will be determined on the basis of criteria
established by each Rating Agency rating classes of the Certificates of such
series. Those criteria are sometimes based upon an actuarial analysis of the
behavior of mortgage loans in a larger group. However, there can be no assurance
that the historical data supporting any such actuarial analysis will accurately
reflect future experience, or that the data derived from a large pool of
mortgage loans will accurately predict the delinquency, foreclosure or loss
experience of any particular pool of Mortgage Loans. In other cases, such
criteria may be based upon determinations of the values of the Mortgaged
Properties that provide security for the Mortgage Loans. However, no assurance
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can be given that those values will not decline in the future. See "Description
of Credit Support" and "Rating".
Risks Associated with Certain Mortgage Loans and Mortgaged Properties
A description of risks associated with investments in mortgage loans
is included herein under "Certain Legal Aspects of Mortgage Loans". Mortgage
loans made on the security of multifamily or commercial property may entail
risks of delinquency and foreclosure, and risks of loss in the event thereof,
that are greater than similar risks associated with loans made on the security
of an owner-occupied single-family property. See "Description of the Trust
Funds--Mortgage Loans". The ability of a borrower to repay a loan secured by an
income-producing property typically is dependent primarily upon the successful
operation of such property rather than upon the existence of independent income
or assets of the borrower; thus, the value of an income-producing property is
directly related to the net operating income derived from such property. If the
net operating income of the property is reduced (for example, if rental or
occupancy rates decline or real estate tax rates or other operating expenses
increase), the borrower's ability to repay the loan may be impaired. A number of
the Mortgage Loans may be secured by liens on owner-occupied Mortgaged
Properties or on Mortgaged Properties leased to a single tenant or a small
number of significant tenants. Accordingly, a decline in the financial condition
of the borrower or a significant tenant, as applicable, may have a
disproportionately greater effect on the net operating income from such
Mortgaged Properties than would be the case with respect to Mortgaged Properties
with multiple tenants. Furthermore, the value of any Mortgaged Property may be
adversely affected by risks generally incident to interests in real property,
including changes in general or local economic conditions and/or specific
industry segments; declines in real estate values; declines in rental or
occupancy rates; increases in interest rates, real estate tax rates and other
operating expenses; changes in governmental rules, regulations and fiscal
policies, including environmental legislation; acts of God; and other factors
beyond the control of a Master Servicer.
In addition, additional risk may be presented by the type and use of
a particular Mortgaged Property. For instance, Mortgaged Properties that operate
as hospitals and nursing homes may present special risks to lenders due to the
significant governmental regulation of the ownership, operation, maintenance and
financing of health care institutions. Hotel and motel properties are often
operated pursuant to franchise, management or operating agreements that may be
terminable by the franchisor or operator. Moreover, the transferability of a
hotel's operating, liquor and other licenses upon a transfer of the hotel,
whether through purchase or foreclosure, is subject to local law requirements.
The ability of a borrower to repay a Mortgage Loan secured by shares allocable
to one or more cooperative dwelling units may be dependent upon the ability of
the dwelling units to generate sufficient rental income, which may be subject to
rent control or stabilization laws, to cover both debt service on the loan as
well as maintenance charges to the cooperative. Further, a Mortgage Loan secured
by cooperative shares is subordinate to the mortgage, if any, on the cooperative
apartment building.
It is anticipated that some or all of the Mortgage Loans included in
any Trust Fund will be nonrecourse loans or loans for which recourse may be
restricted or unenforceable. As to any such Mortgage Loan, recourse in the event
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of borrower default will be limited to the specific real property and other
assets, if any, that were pledged to secure the Mortgage Loan. However, even
with respect to those Mortgage Loans that provide for recourse against the
borrower and its assets generally, there can be no assurance that enforcement of
such recourse provisions will be practicable, or that the assets of the borrower
will be sufficient to permit a recovery in respect of a defaulted Mortgage Loan
in excess of the liquidation value of the related Mortgaged Property. See
"Certain Legal Aspects of Mortgage Loans--Foreclosure".
Further, the concentration of default, foreclosure and loss risks in
individual Mortgage Loans in a particular Trust Fund will generally be greater
than for pools of single-family loans because Mortgage Loans in a Trust Fund
will generally consist of a smaller number of higher balance loans than would a
pool of single-family loans of comparable aggregate unpaid principal balance.
Balloon Payments; Borrower Default
Certain of the Mortgage Loans included in a Trust Fund may be
non-amortizing or only partially amortizing over their terms to maturity and,
thus, will require substantial principal payments (that is, balloon payments) at
their stated maturity. Mortgage Loans of this type involve a greater degree of
risk than self-amortizing loans because the ability of a borrower to make a
balloon payment typically will depend upon its ability either to refinance the
loan or to sell the related Mortgaged Property. The ability of a borrower to
accomplish either of these goals will be affected by a number of factors,
including the value of the related Mortgaged Property, the level of available
mortgage rates at the time of sale or refinancing, the borrower's equity in the
related Mortgaged Property, the financial condition and operating history of the
borrower and the related Mortgaged Property, tax laws, rent control laws (with
respect to certain residential properties), Medicaid and Medicare reimbursement
rates (with respect to hospitals and nursing homes), prevailing general economic
conditions and the availability of credit for loans secured by multifamily or
commercial, as the case may be, real properties generally. Neither the Depositor
nor any of its affiliates will be required to refinance any Mortgage Loan.
If and to the extent described herein and in the related Prospectus
Supplement, in order to maximize recoveries on defaulted Mortgage Loans, the
Master Servicer or a Special Servicer will be permitted (within prescribed
limits) to extend and modify Mortgage Loans that are in default or as to which a
payment default is imminent. While a Master Servicer or a Special Servicer
generally will be required to determine that any such extension or modification
is reasonably likely to produce a greater recovery, taking into account the time
value of money, than liquidation, there can be no assurance that any such
extension or modification will in fact increase the present value of receipts
from or proceeds of the affected Mortgage Loans.
Credit Support Limitations
The Prospectus Supplement for a series of Certificates will describe
any Credit Support provided with respect thereto. Use of Credit Support will be
subject to the conditions and limitations described herein and in the related
Prospectus Supplement. Moreover, such Credit Support may not cover all potential
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losses or risks; for example, Credit Support may or may not cover fraud or
negligence by a mortgage loan originator or other parties.
A series of Certificates may include one or more classes of
Subordinate Certificates (which may include Offered Certificates), if so
provided in the related Prospectus Supplement. Although subordination is
intended to reduce the risk to holders of Senior Certificates of delinquent
distributions or ultimate losses, the amount of subordination will be limited
and may decline under certain circumstances. In addition, if principal payments
on one or more classes of Certificates of a series are made in a specified order
of priority, any limits with respect to the aggregate amount of claims under any
related Credit Support may be exhausted before the principal of the later paid
classes of Certificates of such series has been repaid in full. As a result, the
impact of losses and shortfalls experienced with respect to the Mortgage Assets
may fall primarily upon those classes of Certificates having a later right of
payment. Moreover, if a form of Credit Support covers more than one series of
Certificates, holders of Certificates of one series will be subject to the risk
that such Credit Support will be exhausted by the claims of the holders of
Certificates of one or more other series.
The amount of any applicable Credit Support supporting one or more
classes of Offered Certificates, including the subordination of one or more
classes of Certificates, will be determined on the basis of criteria established
by each Rating Agency rating such classes of Certificates based on an assumed
level of defaults, delinquencies and losses on the underlying Mortgage Assets
and certain other factors. There can, however, be no assurance that the loss
experience on the related Mortgage Assets will not exceed such assumed levels.
See "--Limited Nature of Ratings", "Description of the Certificates" and
"Description of Credit Support".
Leases and Rents
Each Mortgage Loan included in any Trust Fund secured by Mortgaged
Property that is subject to leases typically will be secured by an assignment of
leases and rents pursuant to which the borrower assigns to the lender its right,
title and interest as landlord under the leases of the related Mortgaged
Property, and the income derived therefrom, as further security for the related
Mortgage Loan, while retaining a license to collect rents for so long as there
is no default. If the borrower defaults, the license terminates and the lender
is entitled to collect rents. Some state laws may require that the lender take
possession of the Mortgaged Property and obtain a judicial appointment of a
receiver before becoming entitled to collect the rents. In addition, if
bankruptcy or similar proceedings are commenced by or in respect of the
borrower, the lender's ability to collect the rents may be adversely affected.
See "Certain Legal Aspects of Mortgage Loans--Leases and Rents".
Environmental Risks
Under the laws of certain states, contamination of real property may
give rise to a lien on the property to assure the costs of cleanup. In several
states, such a lien has priority over an existing mortgage lien on such
property. In addition, under various federal, state and local laws, ordinances
and regulations, an owner or operator of real estate may be liable for the costs
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of removal or remediation of hazardous substances or toxic substances on, in or
beneath such property. Such liability may be imposed without regard to whether
the owner knew of, or was responsible for, the presence of such hazardous or
toxic substances. The cost of any required remediation and the owner or
operator's liability therefor as to any property is generally not limited under
such laws, ordinances and regulations and could exceed the value of the
mortgaged property and the aggregate assets of the owner or operator. In
addition, as to the owners or operators of mortgaged properties that generate
hazardous substances that are disposed of at "off-site" locations, such owners
or operators may be held strictly, jointly and severally liable if there are
releases or threatened releases of hazardous substances at the off-site
locations where such person's hazardous substances were disposed.
Although the federal Comprehensive Environmental Response
Compensation and Liability Act of 1980, as amended ("CERCLA"), provides an
exemption from the definition of "owner" for lenders whose primary indicia of
ownership in a particular property is the holding of a security interest,
lenders may forfeit, as a result of their actions with respect to particular
borrowers, their secured creditor exemption and be deemed an owner or operator
of property such that they are liable for remediation costs. See "Certain Legal
Aspects of Mortgage Loans--Environmental Risks" herein. A lender also risks such
liability on foreclosure of the mortgage. Unless otherwise specified in the
related Prospectus Supplement, if a Trust Fund includes Mortgage Loans, then the
related Pooling Agreement will contain provisions generally to the effect that
the Master Servicer, acting on behalf of the Trust Fund, may not acquire title
to a Mortgaged Property or assume control of its operation unless the Master
Servicer, based upon a report prepared by a person who regularly conducts
environmental audits, has made the determination that it is appropriate to do
so, as described under "Description of the Pooling Agreements--Realization Upon
Defaulted Mortgage Loans". See "Certain Legal Aspects of Mortgage
Loans--Environmental Risks". There can be no assurance that any such
requirements of a Pooling Agreement will effectively insulate the related Trust
Fund from potential liability for a materially adverse environmental condition
at a Mortgaged Property.
Special Hazard Losses
Unless otherwise specified in a Prospectus Supplement, the Master
Servicer for the related Trust Fund will be required to cause the borrower on
each Mortgage Loan in such Trust Fund to maintain such insurance coverage in
respect of the related Mortgaged Property as is required under the related
Mortgage, including hazard insurance; provided that, as and to the extent
described herein and in the related Prospectus Supplement, the Master Servicer
may satisfy its obligation to cause hazard insurance to be maintained with
respect to any Mortgaged Property through acquisition of a blanket policy. In
general, the standard form of fire and extended coverage policy covers physical
damage to or destruction of the improvements of the property by fire, lightning,
explosion, smoke, windstorm and hail, and riot, strike and civil commotion,
subject to the conditions and exclusions specified in each policy. Although the
policies covering the Mortgaged Properties will be underwritten by different
insurers under different state laws in accordance with different applicable
state forms, and therefore will not contain identical terms and conditions, most
such policies typically do not cover any physical damage resulting from war,
revolution, governmental actions, floods and other water-related causes, earth
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movement (including earthquakes, landslides and mudflows), wet or dry rot,
vermin, domestic animals and certain other kinds of risks. Unless the related
Mortgage specifically requires the mortgagor to insure against physical damage
arising from such causes, then, to the extent any consequent losses are not
covered by Credit Support, such losses may be borne, at least in part, by the
holders of one or more classes of Offered Certificates of the related series.
See "Description of the Pooling Agreements--Hazard Insurance Policies".
ERISA Considerations
Generally, ERISA applies to investments made by employee benefit
plans and transactions involving the assets of such plans. Due to the complexity
of regulations that govern such plans, prospective investors that are subject to
ERISA are urged to consult their own counsel regarding consequences under ERISA
of acquisition, ownership and disposition of the Offered Certificates of any
series. See "ERISA Considerations".
Certain Federal Tax Considerations Regarding Residual Certificates
Holders of Residual Certificates will be required to report on their
federal income tax returns as ordinary income their pro rata share of the
taxable income of the REMIC, regardless of the amount or timing of their receipt
of cash payments, as described in "Certain Federal Income Tax
Consequences--Federal Income Tax Consequences for REMIC Certificates".
Accordingly, under certain circumstances, holders of Offered Certificates that
constitute Residual Certificates may have taxable income and tax liabilities
arising from such investment during a taxable year in excess of the cash
received during such period. The requirement that holders of Residual
Certificates report their pro rata share of the taxable income and net loss of
the REMIC will continue until the Certificate Balances of all classes of
Certificates of the related series have been reduced to zero, even though
holders of Residual Certificates have received full payment of their stated
interest and principal. A portion (or, in certain circumstances, all) of such
Certificateholder's share of the REMIC taxable income may be treated as "excess
inclusion" income to such holder which (i) generally, will not be subject to
offset by losses from other activities, (ii) for a tax-exempt holder, will be
treated as unrelated business taxable income and (iii) for a foreign holder,
will not qualify for exemption from withholding tax. Individual holders of
Residual Certificates may be limited in their ability to deduct servicing fees
and other expenses of the REMIC. In addition, Residual Certificates are subject
to certain restrictions on transfer. Because of the special tax treatment of
Residual Certificates, the taxable income arising in a given year on a Residual
Certificate will not be equal to the taxable income associated with investment
in a corporate bond or stripped instrument having similar cash flow
characteristics and pre-tax yield. Therefore, the after-tax yield on the
Residual Certificate may be significantly less than that of a corporate bond or
stripped instrument having similar cash flow characteristics.
Certain Federal Tax Considerations Regarding Original Issue Discount
Accrual Certificates will be, and certain of the other Classes of
Certificates of a series may be, issued with "original issue discount" for
federal income tax purposes, which generally will result in recognition of some
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taxable income in advance of the receipt of cash attributable to such income.
See "Certain Federal Income Tax Consequences--Federal Income Tax Consequences
for REMIC Certificates--Taxation of Regular Certificates".
Book-Entry Registration
If so provided in the related Prospectus Supplement, one or more
classes of the Offered Certificates of any series will be issued as Book-Entry
Certificates. Each class of Book-Entry Certificates will be initially
represented by one or more Certificates registered in the name of a nominee for
DTC. As a result, unless and until corresponding Definitive Certificates are
issued, the Certificate Owners with respect to any class of Book-Entry
Certificates will be able to exercise the rights of Certificateholders only
indirectly through DTC and its participating organizations ("Participants"). In
addition, the access of Certificate Owners to information regarding the
Book-Entry Certificates in which they hold interests may be limited. Conveyance
of notices and other communications by DTC to its Participants, and directly and
indirectly through such Participants to Certificate Owners, will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time. Furthermore, as described herein,
Certificate Owners may suffer delays in the receipt of payments on the
Book-Entry Certificates, and the ability of any Certificate Owner to pledge or
otherwise take actions with respect to its interest in the Book-Entry
Certificates may be limited due to the lack of a physical certificate evidencing
such interest. See "Description of the Certificates--Book-Entry Registration and
Definitive Certificates".
Delinquent and Non-Performing Mortgage Loans
If so provided in the related Prospectus Supplement, the Trust Fund
for a particular series of Certificates may include Mortgage Loans that are past
due or are non-performing. If so specified in the related Prospectus Supplement,
the servicing of such Mortgage Loans may be performed by a Special Servicer.
Credit Support provided with respect to a particular series of Certificates may
not cover all losses related to such delinquent or non-performing Mortgage
Loans, and investors should consider the risk that the inclusion of such
Mortgage Loans in the Trust Fund may adversely affect the rate of defaults and
prepayments on the Mortgage Assets in such Trust Fund and the yield on the
Offered Certificates of such series. See "Description of the Trust
Funds--Mortgage Loans--General".
DESCRIPTION OF THE TRUST FUNDS
General
The primary assets of each Trust Fund will consist of (i) various
types of multifamily or commercial mortgage loans (the "Mortgage Loans"), (ii)
mortgage participations, pass-through certificates or other mortgage-backed
securities ("MBS") that evidence interests in, or that are secured by pledges
of, one or more of various types of multifamily or commercial mortgage loans or
(iii) a combination of Mortgage Loans and MBS (collectively, "Mortgage Assets").
Each Trust Fund will be established by Chase Commercial Mortgage Securities
Corp. (the "Depositor"). Each Mortgage Asset will be selected by the Depositor
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for inclusion in a Trust Fund from among those purchased, either directly or
indirectly, from a prior holder thereof (a "Mortgage Asset Seller"), which prior
holder may or may not be the originator of such Mortgage Loan or the issuer of
such MBS and may be an affiliate of the Depositor. The Mortgage Assets will not
be guaranteed or insured by the Depositor or any of its affiliates or, unless
otherwise provided in the related Prospectus Supplement, by any governmental
agency or instrumentality or by any other person. The discussion below under the
heading "--Mortgage Loans", unless otherwise noted, applies equally to mortgage
loans underlying any MBS included in a particular Trust Fund.
Mortgage Loans
General. The Mortgage Loans will be evidenced by promissory notes
(the "Mortgage Notes") secured by mortgages, deeds of trust or similar security
instruments (the "Mortgages") that create liens on fee or leasehold estates in
properties (the "Mortgaged Properties") consisting of (i) residential properties
consisting of five or more rental or cooperatively-owned dwelling units in
high-rise, mid-rise or garden apartment buildings or other residential
structures ("Multifamily Properties") or (ii) office buildings, retail stores
and establishments, hotels or motels, nursing homes, hospitals or other
health-care related facilities, mobile home parks, warehouse facilities,
mini-warehouse facilities, self-storage facilities, industrial plants, parking
lots, mixed use or various other types of income-producing properties or
unimproved land ("Commercial Properties"). The Multifamily Properties may
include mixed commercial and residential structures, apartment buildings owned
by private cooperative housing corporations ("Cooperatives"), and shares of the
Cooperative allocable to one or more dwelling units occupied by non-owner
tenants or to vacant units. Unless otherwise specified in the related Prospectus
Supplement, each Mortgage will create a first priority mortgage lien on a
borrower's fee estate in a Mortgaged Property. If a Mortgage creates a lien on a
borrower's leasehold estate in a property, then, unless otherwise specified in
the related Prospectus Supplement, the term of any such leasehold will exceed
the term of the Mortgage Note by at least two years. Unless otherwise specified
in the related Prospectus Supplement, each Mortgage Loan will have been
originated by a person (the "Originator") other than the Depositor; however, the
Originator may be or may have been an affiliate of the Depositor.
If so specified in the related Prospectus Supplement, Mortgage
Assets for a series of Certificates may include Mortgage Loans made on the
security of real estate projects under construction. In that case, the related
Prospectus Supplement will describe the procedures and timing for making
disbursements from construction reserve funds as portions of the related real
estate project are completed. In addition, the Mortgage Assets for a particular
series of Certificates may include Mortgage Loans that are delinquent or
non-performing as of the date such Certificates are issued. In that case, the
related Prospectus Supplement will set forth, as to each such Mortgage Loan,
available information as to the period of such delinquency or non-performance,
any forbearance arrangement then in effect, the condition of the related
Mortgaged Property and the ability of the Mortgaged Property to generate income
to service the mortgage debt.
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Default and Loss Considerations with Respect to the Mortgage Loans.
Mortgage loans secured by liens on income-producing properties are substantially
different from loans made on the security of owner-occupied single-family homes.
The repayment of a loan secured by a lien on an income-producing property is
typically dependent upon the successful operation of such property (that is, its
ability to generate income). Moreover, some or all of the Mortgage Loans
included in a particular Trust Fund may be non-recourse loans, which means that,
absent special facts, recourse in the case of default will be limited to the
Mortgaged Property and such other assets, if any, that were pledged to secure
repayment of the Mortgage Loan.
Lenders typically look to the Debt Service Coverage Ratio of a loan
secured by income-producing property as an important factor in evaluating the
risk of default on such a loan. Unless otherwise defined in the related
Prospectus Supplement, the "Debt Service Coverage Ratio" of a Mortgage Loan at
any given time is the ratio of (i) the Net Operating Income derived from the
related Mortgaged Property for a twelve-month period to (ii) the annualized
scheduled payments on the Mortgage Loan and any other loans senior thereto that
are secured by the related Mortgaged Property. Unless otherwise defined in the
related Prospectus Supplement, "Net Operating Income" means, for any given
period, the total operating revenues derived from a Mortgaged Property during
such period, minus the total operating expenses incurred in respect of such
Mortgaged Property during such period other than (i) non-cash items such as
depreciation and amortization, (ii) capital expenditures and (iii) debt service
on the related Mortgage Loan or on any other loans that are secured by such
Mortgaged Property. The Net Operating Income of a Mortgaged Property will
fluctuate over time and may or may not be sufficient to cover debt service on
the related Mortgage Loan at any given time. As the primary source of the
operating revenues of a non-owner occupied, income-producing property, rental
income (and, with respect to a Mortgage Loan secured by a Cooperative apartment
building, maintenance payments from tenant-stockholders of a Cooperative) may be
affected by the condition of the applicable real estate market and/or area
economy. In addition, properties typically leased, occupied or used on a
short-term basis, such as certain health-care related facilities, hotels and
motels, and mini-warehouse and self-storage facilities, tend to be affected more
rapidly by changes in market or business conditions than do properties typically
leased for longer periods, such as warehouses, retail stores, office buildings
and industrial plants. Commercial Properties may be owner-occupied or leased to
a small number of tenants. Thus, the Net Operating Income of such a Mortgaged
Property may depend substantially on the financial condition of the borrower or
a tenant, and Mortgage Loans secured by liens on such properties may pose
greater risks than loans secured by liens on Multifamily Properties or on
multi-tenant Commercial Properties.
Increases in operating expenses due to the general economic climate
or economic conditions in a locality or industry segment, such as increases in
interest rates, real estate tax rates, energy costs, labor costs and other
operating expenses, and/or to changes in governmental rules, regulations and
fiscal policies, may also affect the risk of default on a Mortgage Loan. As may
be further described in the related Prospectus Supplement, in some cases leases
of Mortgaged Properties may provide that the lessee, rather than the
borrower/landlord, is responsible for payment of operating expenses ("Net
Leases"). However, the existence of such "net of expense" provisions will result
in stable Net Operating Income to the borrower/landlord only to the extent that
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the lessee is able to absorb operating expense increases while continuing to
make rent payments.
Lenders also look to the Loan-to-Value Ratio of a mortgage loan as a
factor in evaluating risk of loss if a property must be liquidated following a
default. Unless otherwise defined in the related Prospectus Supplement, the
"Loan-to-Value Ratio" of a Mortgage Loan at any given time is the ratio
(expressed as a percentage) of (i) the then outstanding principal balance of the
Mortgage Loan and any other loans senior thereto that are secured by the related
Mortgaged Property to (ii) the Value of the related Mortgaged Property. The
"Value" of a Mortgaged Property is generally its fair market value determined in
an appraisal obtained by the Originator at the origination of such loan. The
lower the Loan-to-Value Ratio, the greater the percentage of the borrower's
equity in a Mortgaged Property, and thus (a) the greater the incentive of the
borrower to perform under the terms of the related Mortgage Loan (in order to
protect such equity) and (b) the greater the cushion provided to the lender
against loss on liquidation following a default.
Loan-to-Value Ratios will not necessarily constitute an accurate
measure of the risk of liquidation loss in a pool of Mortgage Loans. For
example, the value of a Mortgaged Property as of the date of initial issuance of
the related series of Certificates may be less than the Value determined at loan
origination, and will likely continue to fluctuate from time to time based upon
changes in economic conditions, the real estate market and other factors
described herein. Moreover, even when current, an appraisal is not necessarily a
reliable estimate of value. Appraised values of income-producing properties are
generally based on the market comparison method (recent resale value of
comparable properties at the date of the appraisal), the cost replacement method
(the cost of replacing the property at such date), the income capitalization
method (a projection of value based upon the property's projected net cash
flow), or upon a selection from or interpolation of the values derived from such
methods. Each of these appraisal methods can present analytical difficulties. It
is often difficult to find truly comparable properties that have recently been
sold; the replacement cost of a property may have little to do with its current
market value; and income capitalization is inherently based on inexact
projections of income and expense and the selection of an appropriate
capitalization rate and discount rate. Where more than one of these appraisal
methods are used and provide significantly different results, an accurate
determination of value and, correspondingly, a reliable analysis of default and
loss risks, is even more difficult.
While the Depositor believes that the foregoing considerations are
important factors that generally distinguish loans secured by liens on
income-producing real estate from single-family mortgage loans, there can be no
assurance that all of such factors will in fact have been prudently considered
by the Originators of the Mortgage Loans, or that, for a particular Mortgage
Loan, they are complete or relevant. See "Risk Factors--Risks Associated with
Certain Mortgage Loans and Mortgaged Properties" and "--Balloon Payments;
Borrower Default".
Payment Provisions of the Mortgage Loans. Unless otherwise specified
in the related Prospectus Supplement, all of the Mortgage Loans will (i) have
had individual principal balances at origination of not less than $25,000, (ii)
have had original terms to maturity of not more than 40 years and (iii) provide
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for scheduled payments of principal, interest or both, to be made on specified
dates ("Due Dates") that occur monthly, quarterly, semi-annually or annually. A
Mortgage Loan (i) may provide for no accrual of interest or for accrual of
interest thereon at an interest rate (a "Mortgage Rate") that is fixed over its
term or that adjusts from time to time, or that may be converted at the
borrower's election from an adjustable to a fixed Mortgage Rate, or from a fixed
to an adjustable Mortgage Rate, (ii) may provide for level payments to maturity
or for payments that adjust from time to time to accommodate changes in the
Mortgage Rate or to reflect the occurrence of certain events, and may permit
negative amortization, (iii) may be fully amortizing or partially amortizing or
non-amortizing, with a balloon payment due on its stated maturity date, and (iv)
may prohibit over its term or for a certain period prepayments (the period of
such prohibition, a "Lock-out Period" and its date of expiration, a "Lock-out
Date") and/or require payment of a premium or a yield maintenance penalty (a
"Prepayment Premium") in connection with certain prepayments, in each case as
described in the related Prospectus Supplement. A Mortgage Loan may also contain
a provision that entitles the lender to a share of appreciation of the related
Mortgaged Property, or profits realized from the operation or disposition of
such Mortgaged Property or the benefit, if any, resulting from the refinancing
of the Mortgage Loan (any such provision, an "Equity Participation"), as
described in the related Prospectus Supplement. If holders of any class or
classes of Offered Certificates of a series will be entitled to all or a portion
of an Equity Participation in addition to payments of interest on and/or
principal of such Offered Certificates, the related Prospectus Supplement will
describe the Equity Participation and the method or methods by which
distributions in respect thereof will be made to such holders.
Mortgage Loan Information in Prospectus Supplements. Each Prospectus
Supplement will contain certain information pertaining to the Mortgage Loans in
the related Trust Fund, which will generally be current as of a date specified
in the related Prospectus Supplement and which, to the extent then applicable
and specifically known to the Depositor, will include the following: (i) the
aggregate outstanding principal balance and the largest, smallest and average
outstanding principal balance of the Mortgage Loans, (ii) the type or types of
property that provide security for repayment of the Mortgage Loans, (iii) the
earliest and latest origination date and maturity date of the Mortgage Loans,
(iv) the original and remaining terms to maturity of the Mortgage Loans, or the
respective ranges thereof, and the weighted average original and remaining terms
to maturity of the Mortgage Loans, (v) the original Loan-to-Value Ratios of the
Mortgage Loans, or the range thereof, and the weighted average original
Loan-to-Value Ratio of the Mortgage Loans, (vi) the Mortgage Rates borne by the
Mortgage Loans, or range thereof, and the weighted average Mortgage Rate borne
by the Mortgage Loans, (vii) with respect to Mortgage Loans with adjustable
Mortgage Rates ("ARM Loans"), the index or indices upon which such adjustments
are based, the adjustment dates, the range of gross margins and the weighted
average gross margin, and any limits on Mortgage Rate adjustments at the time of
any adjustment and over the life of the ARM Loan, (viii) information regarding
the payment characteristics of the Mortgage Loans, including, without
limitation, balloon payment and other amortization provisions, Lock-out Periods
and Prepayment Premiums, (ix) the Debt Service Coverage Ratios of the Mortgage
Loans (either at origination or as of a more recent date), or the range thereof,
and the weighted average of such Debt Service Coverage Ratios, and (x) the
geographic distribution of the Mortgaged Properties on a state-by-state basis.
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In appropriate cases, the related Prospectus Supplement will also contain
certain information available to the Depositor that pertains to the provisions
of leases and the nature of tenants of the Mortgaged Properties. If the
Depositor is unable to tabulate the specific information described above at the
time Offered Certificates of a series are initially offered, more general
information of the nature described above will be provided in the related
Prospectus Supplement, and specific information will be set forth in a report
which will be available to purchasers of those Certificates at or before the
initial issuance thereof and will be filed as part of a Current Report on Form
8-K with the Commission within fifteen days following such issuance.
MBS
MBS may include (i) private (that is, not guaranteed or insured by
the United States or any agency or instrumentality thereof) mortgage
participations, mortgage pass-through certificates or other mortgage-backed
securities or (ii) certificates insured or guaranteed by FHLMC, FNMA, GNMA or
FAMC provided that, unless otherwise specified in the related Prospectus
Supplement, each MBS will evidence an interest in, or will be secured by a
pledge of, mortgage loans that conform to the descriptions of the Mortgage Loans
contained herein.
Any MBS will have been issued pursuant to a participation and
servicing agreement, a pooling and servicing agreement, an indenture or similar
agreement (an "MBS Agreement"). The issuer of the MBS (the "MBS Issuer") and/or
the servicer of the underlying mortgage loans (the "MBS Servicer") will have
entered into the MBS Agreement, generally with a trustee (the "MBS Trustee") or,
in the alternative, with the original purchaser or purchasers of the MBS.
The MBS may have been issued in one or more classes with
characteristics similar to the classes of Certificates described herein.
Distributions in respect of the MBS will be made by the MBS Issuer, the MBS
Servicer or the MBS Trustee on the dates specified in the related Prospectus
Supplement. The MBS Issuer or the MBS Servicer or another person specified in
the related Prospectus Supplement may have the right or obligation to repurchase
or substitute assets underlying the MBS after a certain date or under other
circumstances specified in the related Prospectus Supplement.
Reserve funds, subordination or other credit support similar to that
described for the Certificates under "Description of Credit Support" may have
been provided with respect to the MBS. The type, characteristics and amount of
such credit support, if any, will be a function of the characteristics of the
underlying mortgage loans and other factors and generally will have been
established on the basis of the requirements of any Rating Agency that may have
assigned a rating to the MBS, or by the initial purchasers of the MBS.
The Prospectus Supplement for a series of Certificates that evidence
interests in MBS will specify, to the extent available, (i) the aggregate
approximate initial and outstanding principal amount and type of the MBS to be
included in the Trust Fund, (ii) the original and remaining term to stated
maturity of the MBS, if applicable, (iii) the pass-through or bond rate of the
MBS or the formula for determining such rates, (iv) the payment characteristics
of the MBS, (v) the MBS Issuer, MBS Servicer and MBS Trustee, as applicable,
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(vi) a description of the credit support, if any, (vii) the circumstances under
which the related underlying mortgage loans, or the MBS themselves, may be
purchased prior to their maturity, (viii) the terms on which mortgage loans may
be substituted for those originally underlying the MBS, (ix) the type of
mortgage loans underlying the MBS and, to the extent available to the Depositor
and appropriate under the circumstances, such other information in respect of
the underlying mortgage loans described under "--Mortgage Loans--Mortgage Loan
Information in Prospectus Supplements", and (x) the characteristics of any cash
flow agreements that relate to the MBS.
Certificate Accounts
Each Trust Fund will include one or more accounts (collectively, the
"Certificate Account") established and maintained on behalf of the
Certificateholders into which the person or persons designated in the related
Prospectus Supplement will, to the extent described herein and in such
Prospectus Supplement, deposit all payments and collections received or advanced
with respect to the Mortgage Assets and other assets in the Trust Fund. A
Certificate Account may be maintained as an interest bearing or a non-interest
bearing account, and funds held therein may be held as cash or invested in
certain obligations acceptable to each Rating Agency rating one or more classes
of the related series of Offered Certificates.
Credit Support
If so provided in the Prospectus Supplement for a series of
Certificates, partial or full protection against certain defaults and losses on
the Mortgage Assets in the related Trust Fund may be provided to one or more
classes of Certificates of such series in the form of subordination of one or
more other classes of Certificates of such series or by one or more other types
of credit support, such as a letter of credit, insurance policy, guarantee or
reserve fund, among others, or a combination thereof (any such coverage with
respect to the Certificates of any series, "Credit Support"). The amount and
types of Credit Support, the identification of the entity providing it (if
applicable) and related information with respect to each type of Credit Support,
if any, will be set forth in the Prospectus Supplement for a series of
Certificates. See "Risk Factors--Credit Support Limitations" and "Description of
Credit Support".
Cash Flow Agreements
If so provided in the Prospectus Supplement for a series of
Certificates, the related Trust Fund may include guaranteed investment contracts
pursuant to which moneys held in the funds and accounts established for such
series will be invested at a specified rate. The Trust Fund may also include
certain other agreements, such as interest rate exchange agreements, interest
rate cap or floor agreements, currency exchange agreements or other agreements
designed to reduce the effects of interest rate or currency exchange rate
fluctuations on the Mortgage Assets on one or more classes of Certificates. The
principal terms of any such guaranteed investment contract or other agreement
(any such agreement, a "Cash Flow Agreement"), and the identity of the Cash Flow
Agreement obligor, will be described in the Prospectus Supplement for a series
of Certificates.
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YIELD AND MATURITY CONSIDERATIONS
General
The yield on any Offered Certificate will depend on the price paid
by the Certificateholder, the Pass-Through Rate of the Certificate and the
amount and timing of distributions on the Certificate. See "Risk
Factors--Prepayments; Average Life of Certificates; Yields". The following
discussion contemplates a Trust Fund that consists solely of Mortgage Loans.
While the characteristics and behavior of mortgage loans underlying an MBS can
generally be expected to have the same effect on the yield to maturity and/or
weighted average life of a class of Certificates as will the characteristics and
behavior of comparable Mortgage Loans, the effect may differ due to the payment
characteristics of the MBS. If a Trust Fund includes MBS, the related Prospectus
Supplement will discuss the effect that the MBS payment characteristics may have
on the yield to maturity and weighted average lives of the Offered Certificates
of the related series.
Pass-Through Rate
The Certificates of any class within a series may have a fixed,
variable or adjustable Pass-Through Rate, which may or may not be based upon the
interest rates borne by the Mortgage Loans in the related Trust Fund. The
Prospectus Supplement with respect to any series of Certificates will specify
the Pass-Through Rate for each class of Offered Certificates of such series or,
in the case of a class of Offered Certificates with a variable or adjustable
Pass-Through Rate, the method of determining the Pass-Through Rate; the effect,
if any, of the prepayment of any Mortgage Loan on the Pass-Through Rate of one
or more classes of Offered Certificates; and whether the distributions of
interest on the Offered Certificates of any class will be dependent, in whole or
in part, on the performance of any obligor under a Cash Flow Agreement.
Payment Delays
With respect to any series of Certificates, a period of time will
elapse between the date upon which payments on the Mortgage Loans in the related
Trust Fund are due and the Distribution Date on which such payments are passed
through to Certificateholders. That delay will effectively reduce the yield that
would otherwise be produced if payments on such Mortgage Loans were distributed
to Certificateholders on or near the date they were due.
Certain Shortfalls in Collections of Interest
When a principal prepayment in full or in part is made on a Mortgage
Loan, the borrower is generally charged interest on the amount of such
prepayment only through the date of such prepayment, instead of through the Due
Date for the next succeeding scheduled payment. However, interest accrued on any
series of Certificates and distributable thereon on any Distribution Date will
generally correspond to interest accrued on the Mortgage Loans to their
respective Due Dates during the related Due Period. Unless otherwise specified
in the Prospectus Supplement for a series of Certificates, a "Due Period" is a
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specified time period generally corresponding in length to the time period
between Distribution Dates, and all scheduled payments on the Mortgage Loans in
the related Trust Fund that are due during a given Due Period will, to the
extent received by a specified date (the "Determination Date") or otherwise
advanced by the related Master Servicer or other specified person, be
distributed to the holders of the Certificates of such series on the next
succeeding Distribution Date. Consequently, if a prepayment on any Mortgage Loan
is distributable to Certificateholders on a particular Distribution Date, but
such prepayment is not accompanied by interest thereon to the Due Date for such
Mortgage Loan in the related Due Period, then the interest charged to the
borrower (net of servicing and administrative fees) may be less (such shortfall,
a "Prepayment Interest Shortfall") than the corresponding amount of interest
accrued and otherwise payable on the Certificates of the related series. If and
to the extent that any such shortfall is allocated to a class of Offered
Certificates, the yield thereon will be adversely affected. The Prospectus
Supplement for each series of Certificates will describe the manner in which any
such shortfalls will be allocated among the classes of such Certificates. If so
specified in the Prospectus Supplement for a series of Certificates, the Master
Servicer for such series will be required to apply some or all of its servicing
compensation for the corresponding period to offset the amount of any such
shortfalls. The related Prospectus Supplement will also describe any other
amounts available to offset such shortfalls. See "Description of the Pooling
Agreements--Servicing Compensation and Payment of Expenses".
Yield and Prepayment Considerations
A Certificate's yield to maturity will be affected by the rate of
principal payments on the Mortgage Loans in the related Trust Fund and the
allocation thereof to reduce the principal balance (or notional amount, if
applicable) of such Certificate. The rate of principal payments on the Mortgage
Loans in any Trust Fund will in turn be affected by the amortization schedules
thereof (which, in the case of ARM Loans, may change periodically to accommodate
adjustments to the Mortgage Rates thereon), the dates on which any balloon
payments are due, and the rate of principal prepayments thereon (including for
this purpose, prepayments resulting from liquidations of Mortgage Loans due to
defaults, casualties or condemnations affecting the Mortgaged Properties, or
purchases of Mortgage Loans out of the related Trust Fund). Because the rate of
principal prepayments on the Mortgage Loans in any Trust Fund will depend on
future events and a variety of factors (as described more fully below), no
assurance can be given as to such rate.
The extent to which the yield to maturity of a class of Offered
Certificates of any series may vary from the anticipated yield will depend upon
the degree to which they are purchased at a discount or premium and when, and to
what degree, payments of principal on the Mortgage Loans in the related Trust
Fund are in turn distributed on such Certificates (or, in the case of a class of
Stripped Interest Certificates, result in the reduction of the Notional Amount
thereof). An investor should consider, in the case of any Offered Certificate
purchased at a discount, the risk that a slower than anticipated rate of
principal payments on the Mortgage Loans in the related Trust Fund could result
in an actual yield to such investor that is lower than the anticipated yield
and, in the case of any Offered Certificate purchased at a premium, the risk
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that a faster than anticipated rate of principal payments on such Mortgage Loans
could result in an actual yield to such investor that is lower than the
anticipated yield. In addition, if an investor purchases an Offered Certificate
at a discount (or premium), and principal payments are made in reduction of the
principal balance or notional amount of such investor's Offered Certificates at
a rate slower (or faster) than the rate anticipated by the investor during any
particular period, the consequent adverse effects on such investor's yield would
not be fully offset by a subsequent like increase (or decrease) in the rate of
principal payments.
A class of Certificates, including a class of Offered Certificates,
may provide that on any Distribution Date the holders of such Certificates are
entitled to a pro rata share of the prepayments on the Mortgage Loans in the
related Trust Fund that are distributable on such date, to a disproportionately
large share (which, in some cases, may be all) of such prepayments, or to a
disproportionately small share (which, in some cases, may be none) of such
prepayments. As and to the extent described in the related Prospectus
Supplement, the respective entitlements of the various classes of Certificates
of any series to receive distributions in respect of payments (and, in
particular, prepayments) of principal of the Mortgage Loans in the related Trust
Fund may vary based on the occurrence of certain events (e.g., the retirement of
one or more classes of Certificates of such series) or subject to certain
contingencies (e.g., prepayment and default rates with respect to such Mortgage
Loans).
In general, the Notional Amount of a class of Stripped Interest
Certificates will either (i) be based on the principal balances of some or all
of the Mortgage Assets in the related Trust Fund or (ii) equal the Certificate
Balances of one or more of the other classes of Certificates of the same series.
Accordingly, the yield on such Stripped Interest Certificates will be inversely
related to the rate at which payments and other collections of principal are
received on such Mortgage Assets or distributions are made in reduction of the
Certificate Balances of such classes of Certificates, as the case may be.
Consistent with the foregoing, if a class of Certificates of any
series consists of Stripped Interest Certificates or Stripped Principal
Certificates, a lower than anticipated rate of principal prepayments on the
Mortgage Loans in the related Trust Fund will negatively affect the yield to
investors in Stripped Principal Certificates, and a higher than anticipated rate
of principal prepayments on such Mortgage Loans will negatively affect the yield
to investors in Stripped Interest Certificates. If the Offered Certificates of a
series include any such Certificates, the related Prospectus Supplement will
include a table showing the effect of various assumed levels of prepayment on
yields on such Certificates. Such tables will be intended to illustrate the
sensitivity of yields to various assumed prepayment rates and will not be
intended to predict, or to provide information that will enable investors to
predict, yields or prepayment rates.
The Depositor is not aware of any relevant publicly available or
authoritative statistics with respect to the historical prepayment experience of
a group of multifamily or commercial mortgage loans. However, the extent of
prepayments of principal of the Mortgage Loans in any Trust Fund may be affected
by a number of factors, including, without limitation, the availability of
mortgage credit, the relative economic vitality of the area in which the
Mortgaged Properties are located, the quality of management of the Mortgaged
Properties, the servicing of the Mortgage Loans, possible changes in tax laws
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and other opportunities for investment. In addition, the rate of principal
payments on the Mortgage Loans in any Trust Fund may be affected by the
existence of Lock-out Periods and requirements that principal prepayments be
accompanied by Prepayment Premiums, and by the extent to which such provisions
may be practicably enforced.
The rate of prepayment on a pool of mortgage loans is also affected
by prevailing market interest rates for mortgage loans of a comparable type,
term and risk level. When the prevailing market interest rate is below a
mortgage coupon, a borrower may have an increased incentive to refinance its
mortgage loan. Even in the case of ARM Loans, as prevailing market interest
rates decline, and without regard to whether the Mortgage Rates on such ARM
Loans decline in a manner consistent therewith, the related borrowers may have
an increased incentive to refinance for purposes of either (i) converting to a
fixed rate loan and thereby "locking in" such rate or (ii) taking advantage of a
different index, margin or rate cap or floor on another adjustable rate mortgage
loan.
Depending on prevailing market interest rates, the outlook for
market interest rates and economic conditions generally, some borrowers may sell
Mortgaged Properties in order to realize their equity therein, to meet cash flow
needs or to make other investments. In addition, some borrowers may be motivated
by federal and state tax laws (which are subject to change) to sell Mortgaged
Properties prior to the exhaustion of tax depreciation benefits. The Depositor
will make no representation as to the particular factors that will affect the
prepayment of the Mortgage Loans in any Trust Fund, as to the relative
importance of such factors, as to the percentage of the principal balance of
such Mortgage Loans that will be paid as of any date or as to the overall rate
of prepayment on such Mortgage Loans.
Weighted Average Life and Maturity
The rate at which principal payments are received on the Mortgage
Loans in any Trust Fund will affect the ultimate maturity and the weighted
average life of one or more classes of the Certificates of such series. Weighted
average life refers to the average amount of time that will elapse from the date
of issuance of an instrument until each dollar allocable as principal of such
instrument is repaid to the investor.
The weighted average life and maturity of a class of Certificates of
any series will be influenced by the rate at which principal on the related
Mortgage Loans, whether in the form of scheduled amortization or prepayments
(for this purpose, the term "prepayment" includes voluntary prepayments,
liquidations due to default and purchases of Mortgage Loans out of the related
Trust Fund), is paid to such class. Prepayment rates on loans are commonly
measured relative to a prepayment standard or model, such as the Constant
Prepayment Rate ("CPR") prepayment model or the Standard Prepayment Assumption
("SPA") prepayment model. CPR represents an assumed constant rate of prepayment
each month (expressed as an annual percentage) relative to the then outstanding
principal balance of a pool of loans for the life of such loans. SPA represents
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an assumed variable rate of prepayment each month (expressed as an annual
percentage) relative to the then outstanding principal balance of a pool of
loans, with different prepayment assumptions often expressed as percentages of
SPA. For example, a prepayment assumption of 100% of SPA assumes prepayment
rates of 0.2% per annum of the then outstanding principal balance of such loans
in the first month of the life of the loans and an additional 0.2% per annum in
each month thereafter until the thirtieth month. Beginning in the thirtieth
month, and in each month thereafter during the life of the loans, 100% of SPA
assumes a constant prepayment rate of 6% per annum each month.
Neither CPR nor SPA nor any other prepayment model or assumption
purports to be a historical description of prepayment experience or a prediction
of the anticipated rate of prepayment of any particular pool of loans. Moreover,
the CPR and SPA models were developed based upon historical prepayment
experience for single-family loans. Thus, it is unlikely that the prepayment
experience of the Mortgage Loans included in any Trust Fund will conform to any
particular level of CPR or SPA.
The Prospectus Supplement with respect to each series of
Certificates will contain tables, if applicable, setting forth the projected
weighted average life of each class of Offered Certificates of such series and
the percentage of the initial Certificate Balance of each such class that would
be outstanding on specified Distribution Dates based on the assumptions stated
in such Prospectus Supplement, including assumptions that prepayments on the
related Mortgage Loans are made at rates corresponding to various percentages of
CPR or SPA, or at such other rates specified in such Prospectus Supplement. Such
tables and assumptions will illustrate the sensitivity of the weighted average
lives of the Certificates to various assumed prepayment rates and will not be
intended to predict, or to provide information that will enable investors to
predict, the actual weighted average lives of the Certificates.
Controlled Amortization Classes and Companion Classes
A series of Certificates may include one or more Controlled
Amortization Classes, which will entitle the holders thereof to receive
principal distributions according to a specified principal payment schedule,
which schedule is supported by creating priorities, as and to the extent
described in the related Prospectus Supplement, to receive principal payments
from the Mortgage Loans in the related Trust Fund. Unless otherwise specified in
the related Prospectus Supplement, each Controlled Amortization Class will
either be a Planned Amortization Class (a "PAC") or a Targeted Amortization
Class (a "TAC"). In general, a PAC has a "prepayment collar" (that is, a range
of prepayment rates that can be sustained without disruption) that determines
the principal cash flow of such Certificates. Such a prepayment collar is not
static, and may expand or contract after the issuance of the PAC depending on
the actual prepayment experience for the underlying Mortgage Loans.
Distributions of principal on a PAC would be made in accordance with the
specified schedule so long as prepayments on the underlying Mortgage Loans
remain at a relatively constant rate within the prepayment collar and, as
described below, Companion Classes exist to absorb "excesses" or "shortfalls" in
principal payments on the underlying Mortgage Loans. If the rate of prepayment
on the underlying Mortgage Loans from time to time falls outside the prepayment
collar, or fluctuates significantly within the prepayment collar, especially for
any extended period of time, such an event may have material consequences in
respect of the anticipated weighted average life and maturity for a PAC. A TAC
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is structured so that principal distributions generally will be payable thereon
in accordance with its specified principal payments schedule so long as the rate
of prepayments on the related Mortgage Assets remains relatively constant at the
particular rate used in establishing such schedule. A TAC will generally afford
the holders thereof some protection against early retirement or some protection
against an extended average life, but not both.
Although prepayment risk cannot be eliminated entirely for any class
of Certificates, a Controlled Amortization Class will generally provide a
relatively stable cash flow so long as the actual rate of prepayment on the
Mortgage Loans in the related Trust Fund remains relatively constant at the
rate, or within the range of rates, of prepayment used to establish the specific
principal payment schedule for such Certificates. Prepayment risk with respect
to a given Mortgage Asset Pool does not disappear, however, and the stability
afforded to a Controlled Amortization Class comes at the expense of one or more
Companion Classes of the same series, any of which Companion Classes may also be
a class of Offered Certificates. In general, and as more particularly described
in the related Prospectus Supplement, a Companion Class will entitle the holders
thereof to a disproportionately large share of prepayments on the Mortgage Loans
in the related Trust Fund when the rate of prepayment is relatively fast, and
will entitle the holders thereof to a disproportionately small share of
prepayments on the Mortgage Loans in the related Trust Fund when the rate of
prepayment is relatively slow. A class of Certificates that entitles the holders
thereof to a disproportionately large share of the prepayments on the Mortgage
Loans in the related Trust Fund enhances the risk of early retirement of such
class ("call risk") if the rate of prepayment is relatively fast; while a class
of Certificates that entitles the holders thereof to a disproportionately small
share of the prepayments on the Mortgage Loans in the related Trust Fund
enhances the risk of an extended average life of such class ("extension risk")
if the rate of prepayment is relatively slow. Thus, as and to the extent
described in the related Prospectus Supplement, a Companion Class absorbs some
(but not all) of the "call risk" and/or "extension risk" that would otherwise
belong to the related Controlled Amortization Class if all payments of principal
of the Mortgage Loans in the related Trust Fund were allocated on a pro rata
basis.
Other Factors Affecting Yield, Weighted Average Life and Maturity
Balloon Payments; Extensions of Maturity. Some or all of the
Mortgage Loans included in a particular Trust Fund may require that balloon
payments be made at maturity. Because the ability of a borrower to make a
balloon payment typically will depend upon its ability either to refinance the
loan or to sell the related Mortgaged Property, there is a risk that Mortgage
Loans that require balloon payments may default at maturity, or that the
maturity of such a Mortgage Loan may be extended in connection with a workout.
In the case of defaults, recovery of proceeds may be delayed by, among other
things, bankruptcy of the borrower or adverse conditions in the market where the
property is located. In order to minimize losses on defaulted Mortgage Loans,
the Master Servicer or a Special Servicer, to the extent and under the
circumstances set forth herein and in the related Prospectus Supplement, may be
authorized to modify Mortgage Loans that are in default or as to which a payment
default is imminent. Any defaulted balloon payment or modification that extends
the maturity of a Mortgage Loan may delay distributions of principal on a class
of Offered Certificates and thereby extend the weighted average life of such
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Certificates and, if such Certificates were purchased at a discount, reduce the
yield thereon.
Negative Amortization. The weighted average life of a class of
Certificates can be affected by Mortgage Loans that permit negative amortization
to occur. A Mortgage Loan that provides for the payment of interest calculated
at a rate lower than the rate at which interest accrues thereon would be
expected during a period of increasing interest rates to amortize at a slower
rate (and perhaps not at all) than if interest rates were declining or were
remaining constant. Such slower rate of Mortgage Loan amortization would
correspondingly be reflected in a slower rate of amortization for one or more
classes of Certificates of the related series. In addition, negative
amortization on one or more Mortgage Loans in any Trust Fund may result in
negative amortization on the Certificates of the related series. The related
Prospectus Supplement will describe, if applicable, the manner in which negative
amortization in respect of the Mortgage Loans in any Trust Fund is allocated
among the respective classes of Certificates of the related series. The portion
of any Mortgage Loan negative amortization allocated to a class of Certificates
may result in a deferral of some or all of the interest payable thereon, which
deferred interest may be added to the Certificate Balance thereof. Accordingly,
the weighted average lives of Mortgage Loans that permit negative amortization
(and that of the classes of Certificates to which any such negative amortization
would be allocated or that would bear the effects of a slower rate of
amortization on such Mortgage Loans) may increase as a result of such feature.
Negative amortization also may occur in respect of an ARM Loan that
limits the amount by which its scheduled payment may adjust in response to a
change in its Mortgage Rate, provides that its scheduled payment will adjust
less frequently than its Mortgage Rate or provides for constant scheduled
payments notwithstanding adjustments to its Mortgage Rate. Accordingly, during a
period of declining interest rates, the scheduled payment on such a Mortgage
Loan may exceed the amount necessary to amortize the loan fully over its
remaining amortization schedule and pay interest at the then applicable Mortgage
Rate, thereby resulting in the accelerated amortization of such Mortgage Loan.
Any such acceleration in amortization of its principal balance will shorten the
weighted average life of such Mortgage Loan and, correspondingly, the weighted
average lives of those classes of Certificates entitled to a portion of the
principal payments on such Mortgage Loan.
The extent to which the yield on any Offered Certificate will be
affected by the inclusion in the related Trust Fund of Mortgage Loans that
permit negative amortization, will depend upon (i) whether such Offered
Certificate was purchased at a premium or a discount and (ii) the extent to
which the payment characteristics of such Mortgage Loans delay or accelerate the
distributions of principal on such Certificate (or, in the case of a Stripped
Interest Certificate, delay or accelerate the amortization of the notional
amount thereof). See "--Yield and Prepayment Considerations" above.
Foreclosures and Payment Plans. The number of foreclosures and the
principal amount of the Mortgage Loans that are foreclosed in relation to the
number and principal amount of Mortgage Loans that are repaid in accordance with
their terms will affect the weighted average lives of those Mortgage Loans and,
accordingly, the weighted average lives of and yields on the Certificates of the
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related series. Servicing decisions made with respect to the Mortgage Loans,
including the use of payment plans prior to a demand for acceleration and the
restructuring of Mortgage Loans in bankruptcy proceedings, may also have an
effect upon the payment patterns of particular Mortgage Loans and thus the
weighted average lives of and yields on the Certificates of the related series.
Losses and Shortfalls on the Mortgage Assets. The yield to holders
of the Offered Certificates of any series will directly depend on the extent to
which such holders are required to bear the effects of any losses or shortfalls
in collections arising out of defaults on the Mortgage Loans in the related
Trust Fund and the timing of such losses and shortfalls. In general, the earlier
that any such loss or shortfall occurs, the greater will be the negative effect
on yield for any class of Certificates that is required to bear the effects
thereof.
The amount of any losses or shortfalls in collections on the
Mortgage Assets in any Trust Fund (to the extent not covered or offset by draws
on any reserve fund or under any instrument of Credit Support) will be allocated
among the respective classes of Certificates of the related series in the
priority and manner, and subject to the limitations, specified in the related
Prospectus Supplement. As described in the related Prospectus Supplement, such
allocations may be effected by a reduction in the entitlements to interest
and/or Certificate Balances of one or more such classes of Certificates, or by
establishing a priority of payments among such classes of Certificates.
The yield to maturity on a class of Subordinate Certificates may be
extremely sensitive to losses and shortfalls in collections on the Mortgage
Loans in the related Trust Fund.
Additional Certificate Amortization. In addition to entitling the
holders thereof to a specified portion (which may during specified periods range
from none to all) of the principal payments received on the Mortgage Assets in
the related Trust Fund, one or more classes of Certificates of any series,
including one or more classes of Offered Certificates of such series, may
provide for distributions of principal thereof from (i) amounts attributable to
interest accrued but not currently distributable on one or more classes of
Accrual Certificates, (ii) Excess Funds or (iii) any other amounts described in
the related Prospectus Supplement. Unless otherwise specified in the related
Prospectus Supplement, "Excess Funds" will, in general, represent that portion
of the amounts distributable in respect of the Certificates of any series on any
Distribution Date that represent (i) interest received or advanced on the
Mortgage Assets in the related Trust Fund that is in excess of the interest
currently accrued on the Certificates of such series, or (ii) Prepayment
Premiums, payments from Equity Participations or any other amounts received on
the Mortgage Assets in the related Trust Fund that do not constitute interest
thereon or principal thereof.
The amortization of any class of Certificates out of the sources
described in the preceding paragraph would shorten the weighted average life of
such Certificates and, if such Certificates were purchased at a premium, reduce
the yield thereon. The related Prospectus Supplement will discuss the relevant
factors to be considered in determining whether distributions of principal of
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any class of Certificates out of such sources would have any material effect on
the rate at which such Certificates are amortized.
Optional Early Termination. If so specified in the related
Prospectus Supplement, a series of Certificates may be subject to optional early
termination through the repurchase of the Mortgage Assets in the related Trust
Fund by the party or parties specified therein, under the circumstances and in
the manner set forth therein. If so provided in the related Prospectus
Supplement, upon the reduction of the Certificate Balance of a specified class
or classes of Certificates by a specified percentage or amount, a party
specified therein may be authorized or required to solicit bids for the purchase
of all of the Mortgage Assets of the related Trust Fund, or of a sufficient
portion of such Mortgage Assets to retire such class or classes, under the
circumstances and in the manner set forth therein. In the absence of other
factors, any such early retirement of a class of Offered Certificates would
shorten the weighted average life thereof and, if such Certificates were
purchased at premium, reduce the yield thereon.
THE DEPOSITOR
Chase Commercial Mortgage Securities Corp., the Depositor, is a New
York corporation organized on August 2, 1993 as a wholly-owned subsidiary of
Chemical Bank (now known as The Chase Manhattan Bank). On July 14, 1996, The
Chase Manhattan Bank (National Association) merged with and into Chemical Bank,
a New York bank, and Chemical Bank then changed its name to The Chase Manhattan
Bank. The Depositor maintains its principal office at 380 Madison Avenue, New
York, New York 10017-2951. Its telephone number is (212) 622-3510. The Depositor
does not have, nor is it expected in the future to have, any significant assets.
USE OF PROCEEDS
The net proceeds to be received from the sale of the Certificates of
any series will be applied by the Depositor to the purchase of Trust Assets or
will be used by the Depositor for general corporate purposes. The Depositor
expects to sell the Certificates from time to time, but the timing and amount of
offerings of Certificates will depend on a number of factors, including the
volume of Mortgage Assets acquired by the Depositor, prevailing interest rates,
availability of funds and general market conditions.
DESCRIPTION OF THE CERTIFICATES
General
Each series of Certificates will represent the entire beneficial
ownership interest in the Trust Fund created pursuant to the related Pooling
Agreement. As described in the related Prospectus Supplement, the Certificates
of each series, including the Offered Certificates of such series, may consist
of one or more classes of Certificates that, among other things: (i) provide for
the accrual of interest thereon at a fixed, variable or adjustable rate; (ii)
are senior (collectively, "Senior Certificates") or subordinate (collectively,
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"Subordinate Certificates") to one or more other classes of Certificates in
entitlement to certain distributions on the Certificates; (iii) are entitled to
distributions of principal, with disproportionately small, nominal or no
distributions of interest (collectively, "Stripped Principal Certificates");
(iv) are entitled to distributions of interest, with disproportionately small,
nominal or no distributions of principal (collectively, "Stripped Interest
Certificates"); (v) provide for distributions of interest thereon or principal
thereof that commence only after the occurrence of certain events, such as the
retirement of one or more other classes of Certificates of such series; (vi)
provide for distributions of principal thereof to be made, from time to time or
for designated periods, at a rate that is faster (and, in some cases,
substantially faster) or slower (and, in some cases, substantially slower) than
the rate at which payments or other collections of principal are received on the
Mortgage Assets in the related Trust Fund; (vii) provide for distributions of
principal thereof to be made, subject to available funds, based on a specified
principal payment schedule or other methodology; or (viii) provide for
distributions based on collections on the Mortgage Assets in the related Trust
Fund attributable to Prepayment Premiums and Equity Participations.
Each class of Offered Certificates of a series will be issued in
minimum denominations corresponding to the principal balances or, in case of
certain classes of Stripped Interest Certificates or Residual Certificates,
notional amounts or percentage interests, specified in the related Prospectus
Supplement. As provided in the related Prospectus Supplement, one or more
classes of Offered Certificates of any series may be issued in fully registered,
definitive form (such Certificates, "Definitive Certificates") or may be offered
in book-entry format (such Certificates, "Book-Entry Certificates") through the
facilities of The Depository Trust Company ("DTC"). The Offered Certificates of
each series (if issued as Definitive Certificates) may be transferred or
exchanged, subject to any restrictions on transfer described in the related
Prospectus Supplement, at the location specified in the related Prospectus
Supplement, without the payment of any service charges, other than any tax or
other governmental charge payable in connection therewith. Interests in a class
of Book-Entry Certificates will be transferred on the book-entry records of DTC
and its participating organizations. See "Risk Factors--Limited Liquidity" and
"--Book-Entry Registration".
Distributions
Distributions on the Certificates of each series will be made by or
on behalf of the related Trustee or Master Servicer on each Distribution Date as
specified in the related Prospectus Supplement from the Available Distribution
Amount for such series and such Distribution Date. Unless otherwise provided in
the related Prospectus Supplement, the "Available Distribution Amount" for any
series of Certificates and any Distribution Date will refer to the total of all
payments or other collections (or advances in lieu thereof) on, under or in
respect of the Mortgage Assets and any other assets included in the related
Trust Fund that are available for distribution to the holders of Certificates of
such series on such date. The particular components of the Available
Distribution Amount for any series on each Distribution Date will be more
specifically described in the related Prospectus Supplement.
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Except as otherwise specified in the related Prospectus Supplement,
distributions on the Certificates of each series (other than the final
distribution in retirement of any such Certificate) will be made to the persons
in whose names such Certificates are registered at the close of business on the
last business day of the month preceding the month in which the applicable
Distribution Date occurs (the "Record Date"), and the amount of each
distribution will be determined as of the close of business on the date (the
"Determination Date") specified in the related Prospectus Supplement. All
distributions with respect to each class of Certificates on each Distribution
Date will be allocated pro rata among the outstanding Certificates in such
class. Payments will be made either by wire transfer in immediately available
funds to the account of a Certificateholder at a bank or other entity having
appropriate facilities therefor, if such Certificateholder has provided the
person required to make such payments with wiring instructions (which may be
provided in the form of a standing order applicable to all subsequent
distributions) no later than the date specified in the related Prospectus
Supplement (and, if so provided in the related Prospectus Supplement, such
Certificateholder holds Certificates in the requisite amount or denomination
specified therein), or by check mailed to the address of such Certificateholder
as it appears on the Certificate Register; provided, however, that the final
distribution in retirement of any class of Certificates (whether Definitive
Certificates or Book-Entry Certificates) will be made only upon presentation and
surrender of such Certificates at the location specified in the notice to
Certificateholders of such final distribution.
Distributions of Interest on the Certificates
Each class of Certificates of each series (other than certain
classes of Stripped Principal Certificates and certain classes of Residual
Certificates that have no Pass-Through Rate) may have a different Pass-Through
Rate, which in each case may be fixed, variable or adjustable. The related
Prospectus Supplement will specify the Pass-Through Rate or, in the case of a
variable or adjustable Pass-Through Rate, the method for determining the
Pass-Through Rate, for each class. Unless otherwise specified in the related
Prospectus Supplement, interest on the Certificates of each series will be
calculated on the basis of a 360-day year consisting of twelve 30-day months.
Distributions of interest in respect of any class of Certificates
(other than certain classes of Certificates that will be entitled to
distributions of accrued interest commencing only on the Distribution Date, or
under the circumstances, specified in the related Prospectus Supplement
("Accrual Certificates"), and other than any class of Stripped Principal
Certificates or Residual Certificates that is not entitled to any distributions
of interest) will be made on each Distribution Date based on the Accrued
Certificate Interest for such class and such Distribution Date, subject to the
sufficiency of the portion of the Available Distribution Amount allocable to
such class on such Distribution Date. Prior to the time interest is
distributable on any class of Accrual Certificates, the amount of Accrued
Certificate Interest otherwise distributable on such class will be added to the
Certificate Balance thereof on each Distribution Date. With respect to each
class of Certificates (other than certain classes of Stripped Interest
Certificates and certain classes of Residual Certificates), the "Accrued
Certificate Interest" for each Distribution Date will be equal to interest at
the applicable Pass-Through Rate accrued for a specified period (generally equal
to the time period between Distribution Dates) on the outstanding Certificate
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Balance of such class of Certificates immediately prior to such Distribution
Date. Unless otherwise provided in the related Prospectus Supplement, the
Accrued Certificate Interest for each Distribution Date on a class of Stripped
Interest Certificates will be similarly calculated except that it will accrue on
a notional amount (a "Notional Amount") that is either (i) based on the
principal balances of some or all of the Mortgage Assets in the related Trust
Fund or (ii) equal to the Certificate Balances of one or more other classes of
Certificates of the same series. Reference to a Notional Amount with respect to
a class of Stripped Interest Certificates is solely for convenience in making
certain calculations and does not represent the right to receive any
distributions of principal. If so specified in the related Prospectus
Supplement, the amount of Accrued Certificate Interest that is otherwise
distributable on (or, in the case of Accrual Certificates, that may otherwise be
added to the Certificate Balance of) one or more classes of the Certificates of
a series will be reduced to the extent that any Prepayment Interest Shortfalls,
as described under "Yield and Maturity Considerations--Certain Shortfalls in
Collections of Interest", exceed the amount of any sums (including, if and to
the extent specified in the related Prospectus Supplement, all or a portion of
the Master Servicer's servicing compensation) that are applied to offset the
amount of such shortfalls. The particular manner in which such shortfalls will
be allocated among some or all of the classes of Certificates of that series
will be specified in the related Prospectus Supplement. The related Prospectus
Supplement will also describe the extent to which the amount of Accrued
Certificate Interest that is otherwise distributable on (or, in the case of
Accrual Certificates, that may otherwise be added to the Certificate Balance of)
a class of Offered Certificates may be reduced as a result of any other
contingencies, including delinquencies, losses and deferred interest on or in
respect of the Mortgage Assets in the related Trust Fund. Unless otherwise
provided in the related Prospectus Supplement, any reduction in the amount of
Accrued Certificate Interest otherwise distributable on a class of Certificates
by reason of the allocation to such class of a portion of any deferred interest
on or in respect of the Mortgage Assets in the related Trust Fund will result in
a corresponding increase in the Certificate Balance of such class. See "Risk
Factors--Prepayments; Average Life of Certificates; Yields" and "Yield and
Maturity Considerations".
Distributions of Principal on the Certificates
Each class of Certificates of each series (other than certain
classes of Stripped Interest Certificates and certain classes of Residual
Certificates) will have a "Certificate Balance" which, at any time, will equal
the then maximum amount that the holders of Certificates of such class will be
entitled to receive in respect of principal out of the future cash flow on the
Mortgage Assets and other assets included in the related Trust Fund. The
outstanding Certificate Balance of a class of Certificates will be reduced by
distributions of principal made thereon from time to time and, if so provided in
the related Prospectus Supplement, further by any losses incurred in respect of
the related Mortgage Assets allocated thereto from time to time. In turn, the
outstanding Certificate Balance of a class of Certificates may be increased as a
result of any deferred interest on or in respect of the related Mortgage Assets
being allocated thereto from time to time, and will be increased, in the case of
a class of Accrual Certificates prior to the Distribution Date on which
distributions of interest thereon are required to commence, by the amount of any
Accrued Certificate Interest in respect thereof (reduced as described above).
Unless otherwise provided in the related Prospectus Supplement, the initial
aggregate Certificate Balance of all classes of a series of Certificates will
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not be greater than the aggregate outstanding principal balance of the related
Mortgage Assets as of the applicable Cut-off Date, after application of
scheduled payments due on or before such date, whether or not received. The
initial Certificate Balance of each class of a series of Certificates will be
specified in the related Prospectus Supplement. As and to the extent described
in the related Prospectus Supplement, distributions of principal with respect to
a series of Certificates will be made on each Distribution Date to the holders
of the class or classes of Certificates of such series entitled thereto until
the Certificate Balances of such Certificates have been reduced to zero.
Distributions of principal with respect to one or more classes of Certificates
may be made at a rate that is faster (and, in some cases, substantially faster)
than the rate at which payments or other collections of principal are received
on the Mortgage Assets in the related Trust Fund. Distributions of principal
with respect to one or more classes of Certificates may not commence until the
occurrence of certain events, such as the retirement of one or more other
classes of Certificates of the same series, or may be made at a rate that is
slower (and, in some cases, substantially slower) than the rate at which
payments or other collections of principal are received on the Mortgage Assets
in the related Trust Fund. Distributions of principal with respect to one or
more classes of Certificates (each such class, a "Controlled Amortization
Class") may be made, subject to available funds, based on a specified principal
payment schedule. Distributions of principal with respect to one or more classes
of Certificates (each such class, a "Companion Class") may be contingent on the
specified principal payment schedule for a Controlled Amortization Class of the
same series and the rate at which payments and other collections of principal on
the Mortgage Assets in the related Trust Fund are received. Unless otherwise
specified in the related Prospectus Supplement, distributions of principal of
any class of Offered Certificates will be made on a pro rata basis among all of
the Certificates of such class.
Distributions on the Certificates in Respect of Prepayment Premiums or in
Respect of Equity Participations
If so provided in the related Prospectus Supplement, Prepayment
Premiums or payments in respect of Equity Participations received on or in
connection with the Mortgage Assets in any Trust Fund will be distributed on
each Distribution Date to the holders of the class of Certificates of the
related series entitled thereto in accordance with the provisions described in
such Prospectus Supplement.
Allocation of Losses and Shortfalls
The amount of any losses or shortfalls in collections on the
Mortgage Assets in any Trust Fund (to the extent not covered or offset by draws
on any reserve fund or under any instrument of Credit Support) will be allocated
among the respective classes of Certificates of the related series in the
priority and manner, and subject to the limitations, specified in the related
Prospectus Supplement. As described in the related Prospectus Supplement, such
allocations may be effected by a reduction in the entitlements to interest
and/or Certificate Balances of one or more such classes of Certificates, or by
establishing a priority of payments among such classes of Certificates.
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Advances in Respect of Delinquencies
If and to the extent provided in the related Prospectus Supplement,
if a Trust Fund includes Mortgage Loans, the Master Servicer, a Special
Servicer, the Trustee, any provider of Credit Support and/or any other specified
person may be obligated to advance, or have the option of advancing, on or
before each Distribution Date, from its or their own funds or from excess funds
held in the related Certificate Account that are not part of the Available
Distribution Amount for the related series of Certificates for such Distribution
Date, an amount up to the aggregate of any payments of principal (other than any
balloon payments) and interest that were due on or in respect of such Mortgage
Loans during the related Due Period and were delinquent on the related
Determination Date.
Advances are intended to maintain a regular flow of scheduled
interest and principal payments to holders of the class or classes of
Certificates entitled thereto, rather than to guarantee or insure against
losses. Accordingly, all advances made out of a specific entity's own funds will
be reimbursable out of related recoveries on the Mortgage Loans (including
amounts received under any instrument of Credit Support) respecting which such
advances were made (as to any Mortgage Loan, "Related Proceeds") and such other
specific sources as may be identified in the related Prospectus Supplement,
including in the case of a series that includes one or more classes of
Subordinate Certificates, collections on other Mortgage Loans in the related
Trust Fund that would otherwise be distributable to the holders of one or more
classes of such Subordinate Certificates. No advance will be required to be made
by a Master Servicer, Special Servicer or Trustee if, in the good faith judgment
of the Master Servicer, Special Servicer or Trustee, as the case may be, such
advance would not be recoverable from Related Proceeds or another specifically
identified source (any such advance, a "Nonrecoverable Advance"); and, if
previously made by a Master Servicer, Special Servicer or Trustee, a
Nonrecoverable Advance will be reimbursable thereto from any amounts in the
related Certificate Account prior to any distributions being made to the related
series of Certificateholders.
If advances have been made by a Master Servicer, Special Servicer,
Trustee or other entity from excess funds in a Certificate Account, such Master
Servicer, Special Servicer, Trustee or other entity, as the case may be, will be
required to replace such funds in such Certificate Account on any future
Distribution Date to the extent that funds in such Certificate Account on such
Distribution Date are less than payments required to be made to the related
series of Certificateholders on such date. If so specified in the related
Prospectus Supplement, the obligation of a Master Servicer, Special Servicer,
Trustee or other entity to make advances may be secured by a cash advance
reserve fund or a surety bond. If applicable, information regarding the
characteristics of, and the identity of any obligor on, any such surety bond,
will be set forth in the related Prospectus Supplement.
If and to the extent so provided in the related Prospectus
Supplement, any entity making advances will be entitled to receive interest
thereon for the period that such advances are outstanding at the rate specified
in such Prospectus Supplement, and such entity will be entitled to payment of
such interest periodically from general collections on the Mortgage Loans in the
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related Trust Fund prior to any payment to the related series of
Certificateholders or as otherwise provided in the related Pooling Agreement and
described in such Prospectus Supplement.
The Prospectus Supplement for any series of Certificates evidencing
an interest in a Trust Fund that includes MBS will describe any comparable
advancing obligation of a party to the related Pooling Agreement or of a party
to the related MBS Agreement.
Reports to Certificateholders
On each Distribution Date, together with the distribution to the
holders of each class of the Offered Certificates of a series, a Master Servicer
or Trustee, as provided in the related Prospectus Supplement, will forward to
each such holder, a statement (a "Distribution Date Statement") that, unless
otherwise provided in the related Prospectus Supplement, will set forth, among
other things, in each case to the extent applicable:
(i) the amount of such distribution to holders of such class of
Offered Certificates that was applied to reduce the Certificate Balance thereof;
(ii) the amount of such distribution to holders of such class of
Offered Certificates that is allocable to Accrued Certificate Interest;
(iii) the amount, if any, of such distribution to holders of such
class of Offered Certificates that is allocable to (A) Prepayment Premiums and
(B) payments on account of Equity Participations;
(iv) the amount, if any, by which such distribution is less than the
amounts to which holders of such class of Offered Certificates are entitled;
(v) if the related Trust Fund includes Mortgage Loans, the
aggregate amount of advances included in such distribution;
(vi) if the related Trust Fund includes Mortgage Loans, the amount
of servicing compensation received by the related Master Servicer (and, if
payable directly out of the related Trust Fund, by any Special Servicer and any
Sub-Servicer) and such other customary information as the reporting party deems
necessary or desirable, or that a Certificateholder reasonably requests, to
enable Certificateholders to prepare their tax returns;
(vii) information regarding the aggregate principal balance of
the related Mortgage Assets on or about such Distribution Date;
(viii) if the related Trust Fund includes Mortgage Loans,
information regarding the number and aggregate principal balance of such
Mortgage Loans that are delinquent in varying degrees;
(ix) if the related Trust Fund includes Mortgage Loans, information
regarding the aggregate amount of losses incurred and principal prepayments made
with respect to such Mortgage Loans during the related Prepayment Period (that
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is, the specified period, generally equal in length to the time period between
Distribution Dates, during which prepayments and other unscheduled collections
on the Mortgage Loans in the related Trust Fund must be received in order to be
distributed on a particular Distribution Date);
(x) the Certificate Balance or Notional Amount, as the case may be,
of each class of Certificates (including any class of Certificates not offered
hereby) at the close of business on such Distribution Date, separately
identifying any reduction in such Certificate Balance or Notional Amount due to
the allocation of any losses in respect of the related Mortgage Assets, any
increase in such Certificate Balance or Notional Amount due to the allocation of
any negative amortization in respect of the related Mortgage Assets and any
increase in the Certificate Balance of a class of Accrual Certificates, if any,
in the event that Accrued Certificate Interest has been added to such balance;
(xi) if such class of Offered Certificates has a variable
Pass-Through Rate or an adjustable Pass-Through Rate, the Pass-Through Rate
applicable thereto for such Distribution Date and, if determinable, for the next
succeeding Distribution Date;
(xii) the amount deposited in or withdrawn from any reserve fund on
such Distribution Date, and the amount remaining on deposit in such reserve fund
as of the close of business on such Distribution Date;
(xiii) if the related Trust Fund includes one or more instruments of
Credit Support, such as a letter of credit, an insurance policy and/or a surety
bond, the amount of coverage under each such instrument as of the close of
business on such Distribution Date; and
(xiv) to the extent not otherwise reflected through the information
furnished pursuant to subclauses (viii) and (x) above, the amount of Credit
Support being afforded by any classes of Subordinate Certificates.
In the case of information furnished pursuant to subclauses
(i)-(iii) above, the amounts will be expressed as a dollar amount per minimum
denomination of the relevant class of Offered Certificates or per a specified
portion of such minimum denomination. The Prospectus Supplement for each series
of Certificates may describe additional information to be included in reports to
the holders of the Offered Certificates of such series.
Within a reasonable period of time after the end of each calendar
year, the Master Servicer or Trustee for a series of Certificates, as the case
may be, will be required to furnish to each person who at any time during the
calendar year was a holder of an Offered Certificate of such series a statement
containing the information set forth in subclauses (i)-(iii) above, aggregated
for such calendar year or the applicable portion thereof during which such
person was a Certificateholder. Such obligation will be deemed to have been
satisfied to the extent that substantially comparable information is provided
pursuant to any requirements of the Code as are from time to time in force. See,
however, "Description of the Certificates--Book-Entry Registration and
Definitive Certificates".
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If the Trust Fund for a series of Certificates includes MBS, the
ability of the related Master Servicer or Trustee, as the case may be, to
include in any Distribution Date Statement information regarding the mortgage
loans underlying such MBS will depend on the reports received with respect to
such MBS. In such cases, the related Prospectus Supplement will describe the
loan-specific information to be included in the Distribution Date Statements
that will be forwarded to the holders of the Offered Certificates of that series
in connection with distributions made to them.
Voting Rights
The voting rights evidenced by each series of Certificates (as to
such series, the "Voting Rights") will be allocated among the respective classes
of such series in the manner described in the related Prospectus Supplement.
Certificateholders will generally not have a right to vote, except
with respect to required consents to certain amendments to the related Pooling
Agreement and as otherwise specified in the related Prospectus Supplement. See
"Description of the Pooling Agreements--Amendment". The holders of specified
amounts of Certificates of a particular series will have the right to act as a
group to remove the related Trustee and also upon the occurrence of certain
events which if continuing would constitute an Event of Default on the part of
the related Master Servicer. See "Description of the Pooling Agreements--Events
of Default", "--Rights Upon Event of Default" and "--Resignation and Removal of
the Trustee".
Termination
The obligations created by the Pooling Agreement for each series of
Certificates will terminate following (i) the final payment or other liquidation
of the last Mortgage Asset subject thereto or the disposition of all property
acquired upon foreclosure of any Mortgage Loan subject thereto and (ii) the
payment to the Certificateholders of that series of all amounts required to be
paid to them pursuant to such Pooling Agreement. Written notice of termination
of a Pooling Agreement will be given to each Certificateholder of the related
series, and the final distribution will be made only upon presentation and
surrender of the Certificates of such series at the location to be specified in
the notice of termination.
If so specified in the related Prospectus Supplement, a series of
Certificates may be subject to optional early termination through the repurchase
of the Mortgage Assets in the related Trust Fund by the party or parties
specified therein, under the circumstances and in the manner set forth therein.
If so provided in the related Prospectus Supplement, upon the reduction of the
Certificate Balance of a specified class or classes of Certificates by a
specified percentage or amount, a party designated therein may be authorized or
required to solicit bids for the purchase of all the Mortgage Assets of the
related Trust Fund, or of a sufficient portion of such Mortgage Assets to retire
such class or classes, under the circumstances and in the manner set forth
therein.
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Book-Entry Registration and Definitive Certificates
If so provided in the Prospectus Supplement for a series of
Certificates, one or more classes of the Offered Certificates of such series
will be offered in book-entry format through the facilities of The Depository
Trust Company ("DTC"), and each such class will be represented by one or more
global Certificates registered in the name of DTC or its nominee.
DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking corporation" within the meaning of the New York Banking
Law, a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
was created to hold securities for its participating organizations
("Participants") and facilitate the clearance and settlement of securities
transactions between Participants through electronic computerized book-entry
changes in their accounts, thereby eliminating the need for physical movement of
securities certificates. "Direct Participants", which maintain accounts with
DTC, include securities brokers and dealers, banks, trust companies and clearing
corporations and may include certain other organizations. DTC is owned by a
number of its Direct Participants and by the New York Stock Exchange, Inc., the
American Stock Exchange, Inc. and the National Association of Securities
Dealers, Inc. Access to the DTC system also is available to others such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a Direct Participant, either directly or indirectly
("Indirect Participants"). The rules applicable to DTC and its Participants are
on file with the Commission.
Purchases of Book-Entry Certificates under the DTC system must be
made by or through Direct Participants, which will receive a credit for the
Book-Entry Certificates on DTC's records. The ownership interest of each actual
purchaser of a Book-Entry Certificate (a "Certificate Owner") is in turn to be
recorded on the Direct and Indirect Participants' records. Certificate Owners
will not receive written confirmation from DTC of their purchases, but
Certificate Owners are expected to receive written confirmations providing
details of such transactions, as well as periodic statements of their holdings,
from the Direct or Indirect Participant through which each Certificate Owner
entered into the transaction. Transfers of ownership interest in the Book-Entry
Certificates are to be accomplished by entries made on the books of Participants
acting on behalf of Certificate Owners. Certificate Owners will not receive
certificates representing their ownership interests in the Book-Entry
Certificates, except in the event that use of the book-entry system for the
Book-Entry Certificates of any series is discontinued as described below.
DTC has no knowledge of the actual Certificate Owners of the
Book-Entry Certificates; DTC's records reflect only the identity of the Direct
Participants to whose accounts such Certificates are credited, which may or may
not be the Certificate Owners. The Participants will remain responsible for
keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Certificate Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
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Distributions on the Book-Entry Certificates will be made to DTC.
DTC's practice is to credit Direct Participants' accounts on the related
Distribution Date in accordance with their respective holdings shown on DTC's
records unless DTC has reason to believe that it will not receive payment on
such date. Disbursement of such distributions by Participants to Certificate
Owners will be governed by standing instructions and customary practices, as is
the case with securities held for the accounts of customers in bearer form or
registered in "street name", and will be the responsibility of each such
Participant (and not of DTC, the Depositor or any Trustee or Master Servicer),
subject to any statutory or regulatory requirements as may be in effect from
time to time. Under a book-entry system, Certificate Owners may receive payments
after the related Distribution Date.
Unless otherwise provided in the related Prospectus Supplement, the
only "Certificateholder" (as such term is used in the related Pooling Agreement)
will be the nominee of DTC, and the Certificate Owners will not be recognized as
Certificateholders under the Pooling Agreement. Certificate Owners will be
permitted to exercise the rights of Certificateholders under the related Pooling
Agreement only indirectly through the Participants who in turn will exercise
their rights through DTC. The Depositor is informed that DTC will take action
permitted to be taken by a Certificateholder under a Pooling Agreement only at
the direction of one or more Participants to whose account with DTC interests in
the Book-Entry Certificates are credited.
Because DTC can act only on behalf of Participants, who in turn act
on behalf of Indirect Participants and certain Certificate Owners, the ability
of a Certificate Owner to pledge its interest in Book-Entry Certificates to
persons or entities that do not participate in the DTC system, or otherwise take
actions in respect of its interest in Book-Entry Certificates, may be limited
due to the lack of a physical certificate evidencing such interest.
Unless otherwise specified in the related Prospectus Supplement,
Certificates initially issued in book-entry form will be issued as Definitive
Certificates to Certificate Owners or their nominees, rather than to DTC or its
nominee, only if (i) the Depositor advises the Trustee in writing that DTC is no
longer willing or able to discharge properly its responsibilities as depository
with respect to such Certificates and the Depositor is unable to locate a
qualified successor or (ii) the Depositor, at its option, elects to terminate
the book-entry system through DTC with respect to such Certificates. Upon the
occurrence of either of the events described in the preceding sentence, DTC will
be required to notify all Participants of the availability through DTC of
Definitive Certificates. Upon surrender by DTC of the certificate or
certificates representing a class of Book-Entry Certificates, together with
instructions for registration, the Trustee for the related series or other
designated party will be required to issue to the Certificate Owners identified
in such instructions the Definitive Certificates to which they are entitled, and
thereafter the holders of such Definitive Certificates will be recognized as
Certificateholders under the related Pooling Agreement.
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DESCRIPTION OF THE POOLING AGREEMENTS
General
The Certificates of each series will be issued pursuant to a pooling
and servicing agreement or other agreement specified in the related Prospectus
Supplement (in either case, a "Pooling Agreement"). In general, the parties to a
Pooling Agreement will include the Depositor, the Trustee, the Master Servicer
and, in some cases, a Special Servicer appointed as of the date of the Pooling
Agreement. However, a Pooling Agreement may include a Mortgage Asset Seller as a
party, and a Pooling Agreement that relates to a Trust Fund that consists solely
of MBS may not include a Master Servicer or other servicer as a party. All
parties to each Pooling Agreement under which Certificates of a series are
issued will be identified in the related Prospectus Supplement. If so specified
in the related Prospectus Supplement, an affiliate of the Depositor, or the
Mortgage Asset Seller or an affiliate thereof, may perform the functions of
Master Servicer or Special Servicer. Any party to a Pooling Agreement may own
Certificates issued thereunder; however, except with respect to required
consents to certain amendments to a Pooling Agreement, Certificates issued
thereunder that are held by the Master Servicer or Special Servicer for the
related series will not be allocated Voting Rights.
A form of a pooling and servicing agreement has been filed as an
exhibit to the Registration Statement of which this Prospectus is a part.
However, the provisions of each Pooling Agreement will vary depending upon the
nature of the Certificates to be issued thereunder and the nature of the related
Trust Fund. The following summaries describe certain provisions that may appear
in a Pooling Agreement under which Certificates that evidence interests in
Mortgage Loans will be issued. The Prospectus Supplement for a series of
Certificates will describe any provision of the related Pooling Agreement that
materially differs from the description thereof contained in this Prospectus
and, if the related Trust Fund includes MBS, will summarize all of the material
provisions of the related Pooling Agreement. The summaries herein do not purport
to be complete and are subject to, and are qualified in their entirety by
reference to, all of the provisions of the Pooling Agreement for each series of
Certificates and the description of such provisions in the related Prospectus
Supplement. As used herein with respect to any series, the term "Certificate"
refers to all of the Certificates of that series, whether or not offered hereby
and by the related Prospectus Supplement, unless the context otherwise requires.
The Depositor will provide a copy of the Pooling Agreement (without exhibits)
that relates to any series of Certificates without charge upon written request
of a holder of a Certificate of such series addressed to Chase Commercial
Mortgage Securities Corp., 380 Madison Avenue, New York, New York 10017-2951,
Attention: President.
Assignment of Mortgage Loans; Repurchases
At the time of issuance of any series of Certificates, the Depositor
will assign (or cause to be assigned) to the designated Trustee the Mortgage
Loans to be included in the related Trust Fund, together with, unless otherwise
specified in the related Prospectus Supplement, all principal and interest to be
received on or with respect to such Mortgage Loans after the Cut-off Date, other
than principal and interest due on or before the Cut-off Date. The Trustee will,
concurrently with such assignment, deliver the Certificates to or at the
direction of the Depositor in exchange for the Mortgage Loans and the other
assets to be included in the Trust Fund for such series. Each Mortgage Loan will
be identified in a schedule appearing as an exhibit to the related Pooling
Agreement. Such schedule generally will include detailed information that
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pertains to each Mortgage Loan included in the related Trust Fund, which
information will typically include the address of the related Mortgaged Property
and type of such property; the Mortgage Rate and, if applicable, the applicable
index, gross margin, adjustment date and any rate cap information; the original
and remaining term to maturity; the original amortization term; and the original
and outstanding principal balance.
With respect to each Mortgage Loan to be included in a Trust Fund,
the Depositor will deliver (or cause to be delivered) to the related Trustee (or
to a custodian appointed by the Trustee) certain loan documents which, unless
otherwise specified in the related Prospectus Supplement, will include the
original Mortgage Note endorsed, without recourse, to the order of the Trustee,
the original Mortgage (or a certified copy thereof) with evidence of recording
indicated thereon and an assignment of the Mortgage to the Trustee in recordable
form. Unless otherwise provided in the Prospectus Supplement for a series of
Certificates, the related Pooling Agreement will require that the Depositor or
another party thereto promptly cause each such assignment of Mortgage to be
recorded in the appropriate public office for real property records.
The Trustee (or a custodian appointed by the Trustee) for a series
of Certificates will be required to review the Mortgage Loan documents delivered
to it within a specified period of days after receipt thereof, and the Trustee
(or such custodian) will hold such documents in trust for the benefit of the
Certificateholders of such series. Unless otherwise specified in the related
Prospectus Supplement, if any such document is found to be missing or defective,
and such omission or defect, as the case may be, materially and adversely
affects the interests of the Certificateholders of the related series, the
Trustee (or such custodian) will be required to notify the Master Servicer and
the Depositor, and one of such persons will be required to notify the relevant
Mortgage Asset Seller. In that case, and if the Mortgage Asset Seller cannot
deliver the document or cure the defect within a specified number of days after
receipt of such notice, then, except as otherwise specified below or in the
related Prospectus Supplement, the Mortgage Asset Seller will be obligated to
repurchase the related Mortgage Loan from the Trustee at a price that will be
specified in the related Prospectus Supplement. If so provided in the Prospectus
Supplement for a series of Certificates, a Mortgage Asset Seller, in lieu of
repurchasing a Mortgage Loan as to which there is missing or defective loan
documentation, will have the option, exercisable upon certain conditions and/or
within a specified period after initial issuance of such series of Certificates,
to replace such Mortgage Loan with one or more other mortgage loans, in
accordance with standards that will be described in the Prospectus Supplement.
Unless otherwise specified in the related Prospectus Supplement, this repurchase
or substitution obligation will constitute the sole remedy to holders of the
Certificates of any series or to the related Trustee on their behalf for missing
or defective loan documentation and neither the Depositor nor, unless it is the
Mortgage Asset Seller, the Master Servicer will be obligated to purchase or
replace a Mortgage Loan if a Mortgage Asset Seller defaults on its obligation to
do so. Notwithstanding the foregoing, if a document has not been delivered to
the related Trustee (or to a custodian appointed by the Trustee) because such
document has been submitted for recording, and neither such document nor a
certified copy thereof, in either case with evidence of recording thereon, can
be obtained because of delays on the part of the applicable recording office,
then, unless otherwise specified in the related Prospectus Supplement, the
Mortgage Asset Seller will not be required to repurchase or replace the affected
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Mortgage Loan on the basis of such missing document so long as it continues in
good faith to attempt to obtain such document or such certified copy.
Representations and Warranties; Repurchases
Unless otherwise provided in the Prospectus Supplement for a series
of Certificates, the Depositor will, with respect to each Mortgage Loan in the
related Trust Fund, make or assign, or cause to be made or assigned, certain
representations and warranties (the person making such representations and
warranties, the "Warranting Party") covering, by way of example: (i) the
accuracy of the information set forth for such Mortgage Loan on the schedule of
Mortgage Loans appearing as an exhibit to the related Pooling Agreement; (ii)
the enforceability of the related Mortgage Note and Mortgage and the existence
of title insurance insuring the lien priority of the related Mortgage; (iii) the
Warranting Party's title to the Mortgage Loan and the authority of the
Warranting Party to sell the Mortgage Loan; and (iv) the payment status of the
Mortgage Loan. It is expected that in most cases the Warranting Party will be
the Mortgage Asset Seller; however, the Warranting Party may also be an
affiliate of the Mortgage Asset Seller, the Depositor or an affiliate of the
Depositor, the Master Servicer, a Special Servicer or another person acceptable
to the Depositor. The Warranting Party, if other than the Mortgage Asset Seller,
will be identified in the related Prospectus Supplement.
Unless otherwise provided in the related Prospectus Supplement, each
Pooling Agreement will provide that the Master Servicer and/or Trustee will be
required to notify promptly any Warranting Party of any breach of any
representation or warranty made by it in respect of a Mortgage Loan that
materially and adversely affects the interests of the Certificateholders of the
related series. If such Warranting Party cannot cure such breach within a
specified period following the date on which it was notified of such breach,
then, unless otherwise provided in the related Prospectus Supplement, it will be
obligated to repurchase such Mortgage Loan from the Trustee at a price that will
be specified in the related Prospectus Supplement. If so provided in the
Prospectus Supplement for a series of Certificates, a Warranting Party, in lieu
of repurchasing a Mortgage Loan as to which a breach has occurred, will have the
option, exercisable upon certain conditions and/or within a specified period
after initial issuance of such series of Certificates, to replace such Mortgage
Loan with one or more other mortgage loans, in accordance with standards that
will be described in the Prospectus Supplement. Unless otherwise specified in
the related Prospectus Supplement, this repurchase or substitution obligation
will constitute the sole remedy available to holders of the Certificates of any
series or to the related Trustee on their behalf for a breach of representation
and warranty by a Warranting Party and neither the Depositor nor the Master
Servicer, in either case unless it is the Warranting Party, will be obligated to
purchase or replace a Mortgage Loan if a Warranting Party defaults on its
obligation to do so.
In some cases, representations and warranties will have been made in
respect of a Mortgage Loan as of a date prior to the date upon which the related
series of Certificates is issued, and thus may not address events that may occur
following the date as of which they were made. However, the Depositor will not
include any Mortgage Loan in the Trust Fund for any series of Certificates if
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anything has come to the Depositor's attention that would cause it to believe
that the representations and warranties made in respect of such Mortgage Loan
will not be accurate in all material respects as of the date of issuance. The
date as of which the representations and warranties regarding the Mortgage Loans
in any Trust Fund were made will be specified in the related Prospectus
Supplement.
Collection and Other Servicing Procedures
The Master Servicer for any Trust Fund, directly or through
Sub-Servicers, will be required to make reasonable efforts to collect all
scheduled payments under the Mortgage Loans in such Trust Fund, and will be
required to follow such collection procedures as it would follow with respect to
mortgage loans that are comparable to the Mortgage Loans in such Trust Fund and
held for its own account, provided such procedures are consistent with (i) the
terms of the related Pooling Agreement and any related instrument of Credit
Support included in such Trust Fund, (ii) applicable law and (iii) the servicing
standard specified in the related Pooling Agreement and Prospectus Supplement
(the "Servicing Standard").
The Master Servicer for any Trust Fund, directly or through
Sub-Servicers, will also be required to perform as to the Mortgage Loans in such
Trust Fund various other customary functions of a servicer of comparable loans,
including maintaining escrow or impound accounts, if required under the related
Pooling Agreement, for payment of taxes, insurance premiums, ground rents and
similar items, or otherwise monitoring the timely payment of those items;
attempting to collect delinquent payments; supervising foreclosures; negotiating
modifications; conducting property inspections on a periodic or other basis;
managing (or overseeing the management of) Mortgaged Properties acquired on
behalf of such Trust Fund through foreclosure, deed-in-lieu of foreclosure or
otherwise (each, an "REO Property"); and maintaining servicing records relating
to such Mortgage Loans. Unless otherwise specified in the related Prospectus
Supplement, the Master Servicer will be responsible for filing and settling
claims in respect of particular Mortgage Loans under any applicable instrument
of Credit Support. See "Description of Credit Support".
Sub-Servicers
A Master Servicer may delegate its servicing obligations in respect
of the Mortgage Loans serviced thereby to one or more third-party servicers
(each, a "Sub-Servicer"); provided that, unless otherwise specified in the
related Prospectus Supplement, such Master Servicer will remain obligated under
the related Pooling Agreement. A Sub-Servicer for any series of Certificates may
be an affiliate of the Depositor or Master Servicer. Unless otherwise provided
in the related Prospectus Supplement, each sub-servicing agreement between a
Master Servicer and a Sub-Servicer (a "Sub-Servicing Agreement") will provide
that, if for any reason the Master Servicer is no longer acting in such
capacity, the Trustee or any successor Master Servicer may assume the Master
Servicer's rights and obligations under such Sub-Servicing Agreement. A Master
Servicer will be required to monitor the performance of Sub-Servicers retained
by it and will have the right to remove a Sub-Servicer retained by it at any
time it considers such removal to be in the best interests of
Certificateholders.
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Unless otherwise provided in the related Prospectus Supplement, a
Master Servicer will be solely liable for all fees owed by it to any
Sub-Servicer, irrespective of whether the Master Servicer's compensation
pursuant to the related Pooling Agreement is sufficient to pay such fees. Each
Sub-Servicer will be reimbursed by the Master Servicer that retained it for
certain expenditures which it makes, generally to the same extent the Master
Servicer would be reimbursed under a Pooling Agreement. See "--Certificate
Account" and "--Servicing Compensation and Payment of Expenses".
Special Servicers
To the extent so specified in the related Prospectus Supplement, one
or more special servicers (each, a "Special Servicer") may be a party to the
related Pooling Agreement or may be appointed by the Master Servicer or another
specified party. A Special Servicer for any series of Certificates may be an
affiliate of the Depositor or the Master Servicer. A Special Servicer may be
entitled to any of the rights, and subject to any of the obligations, described
herein in respect of a Master Servicer. The related Prospectus Supplement will
describe the rights, obligations and compensation of any Special Servicer for a
particular series of Certificates. The Master Servicer will be liable for the
performance of a Special Servicer only if, and to the extent, set forth in the
related Prospectus Supplement.
Certificate Account
General. The Master Servicer, the Trustee and/or a Special Servicer
will, as to each Trust Fund that includes Mortgage Loans, establish and maintain
or cause to be established and maintained one or more separate accounts for the
collection of payments on or in respect of such Mortgage Loans (collectively,
the "Certificate Account"), which will be established so as to comply with the
standards of each Rating Agency that has rated any one or more classes of
Certificates of the related series. A Certificate Account may be maintained as
an interest-bearing or a non-interest-bearing account and the funds held therein
may be invested pending each succeeding Distribution Date in United States
government securities and other obligations that are acceptable to each Rating
Agency that has rated any one or more classes of Certificates of the related
series ("Permitted Investments"). Unless otherwise provided in the related
Prospectus Supplement, any interest or other income earned on funds in a
Certificate Account will be paid to the related Master Servicer, Trustee or
Special Servicer (if any) as additional compensation. A Certificate Account may
be maintained with the related Master Servicer, Special Servicer or Mortgage
Asset Seller or with a depository institution that is an affiliate of any of the
foregoing or of the Depositor, provided that it complies with applicable Rating
Agency standards. If permitted by the applicable Rating Agency or Agencies and
so specified in the related Prospectus Supplement, a Certificate Account may
contain funds relating to more than one series of mortgage pass-through
certificates and may contain other funds representing payments on mortgage loans
owned by the related Master Servicer or Special Servicer (if any) or serviced by
either on behalf of others.
Deposits. Unless otherwise provided in the related Pooling Agreement
and described in the related Prospectus Supplement, a Master Servicer, Trustee
or Special Servicer will be required to deposit or cause to be deposited in the
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Certificate Account for each Trust Fund that includes Mortgage Loans, within a
certain period following receipt (in the case of collections on or in respect of
the Mortgage Loans) or otherwise as provided in the related Pooling Agreement,
the following payments and collections received or made by the Master Servicer,
the Trustee or any Special Servicer subsequent to the Cut-off Date (other than
payments due on or before the Cut-off Date):
(i) all payments on account of principal, including principal
prepayments, on the Mortgage Loans;
(ii) all payments on account of interest on the Mortgage Loans,
including any default interest collected, in each case net of any portion
thereof retained by the Master Servicer or any Special Servicer as its servicing
compensation or as compensation to the Trustee;
(iii) all proceeds received under any hazard, title or other
insurance policy that provides coverage with respect to a Mortgaged Property or
the related Mortgage Loan or in connection with the full or partial condemnation
of a Mortgaged Property (other than proceeds applied to the restoration of the
property or released to the related borrower in accordance with the customary
servicing practices of the Master Servicer (or, if applicable, a Special
Servicer) and/or the terms and conditions of the related Mortgage)
(collectively, "Insurance and Condemnation Proceeds") and all other amounts
received and retained in connection with the liquidation of defaulted Mortgage
Loans or property acquired in respect thereof, by foreclosure or otherwise
("Liquidation Proceeds"), together with the net operating income (less
reasonable reserves for future expenses) derived from the operation of any
Mortgaged Properties acquired by the Trust Fund through foreclosure or
otherwise;
(iv) any amounts paid under any instrument or drawn from any fund
that constitutes Credit Support for the related series of Certificates as
described under "Description of Credit Support";
(v) any advances made as described under "Description of the
Certificates--Advances in Respect of Delinquencies";
(vi) any amounts paid under any Cash Flow Agreement, as described
under "Description of the Trust Funds--Cash Flow Agreements";
(vii) all proceeds of the purchase of any Mortgage Loan, or property
acquired in respect thereof, by the Depositor, any Mortgage Asset Seller or any
other specified person as described under "--Assignment of Mortgage Loans;
Repurchases" and "--Representations and Warranties; Repurchases", all proceeds
of the purchase of any defaulted Mortgage Loan as described under "--Realization
Upon Defaulted Mortgage Loans", and all proceeds of any Mortgage Asset purchased
as described under "Description of the Certificates--Termination" (all of the
foregoing, also "Liquidation Proceeds");
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(viii) any amounts paid by the Master Servicer to cover Prepayment
Interest Shortfalls arising out of the prepayment of Mortgage Loans as described
under "--Servicing Compensation and Payment of Expenses";
(ix) to the extent that any such item does not constitute additional
servicing compensation to the Master Servicer or a Special Servicer, any
payments on account of modification or assumption fees, late payment charges,
Prepayment Premiums or Equity Participations with respect to the Mortgage Loans;
(x) all payments required to be deposited in the Certificate Account
with respect to any deductible clause in any blanket insurance policy described
under "--Hazard Insurance Policies";
(xi) any amount required to be deposited by the Master Servicer or
the Trustee in connection with losses realized on investments for the benefit of
the Master Servicer or the Trustee, as the case may be, of funds held in the
Certificate Account; and
(xii) any other amounts required to be deposited in the Certificate
Account as provided in the related Pooling Agreement and described in the
related Prospectus Supplement.
Withdrawals. Unless otherwise provided in the related Pooling
Agreement and described in the related Prospectus Supplement, a Master Servicer,
Trustee or Special Servicer may make withdrawals from the Certificate Account
for each Trust Fund that includes Mortgage Loans for any of the following
purposes:
(i) to make distributions to the Certificateholders on each
Distribution Date;
(ii) to pay the Master Servicer, the Trustee or a Special Servicer
any servicing fees not previously retained thereby, such payment to be made out
of payments on the particular Mortgage Loans as to which such fees were earned;
(iii) to reimburse the Master Servicer, a Special Servicer, the
Trustee or any other specified person for any unreimbursed amounts advanced by
it as described under "Description of the Certificates--Advances in Respect of
Delinquencies", such reimbursement to be made out of amounts received that were
identified and applied by the Master Servicer or a Special Servicer, as
applicable, as late collections of interest on and principal of the particular
Mortgage Loans with respect to which the advances were made or out of amounts
drawn under any form of Credit Support with respect to such Mortgage Loans;
(iv) to reimburse the Master Servicer, the Trustee or a Special
Servicer for unpaid servicing fees earned by it and certain unreimbursed
servicing expenses incurred by it with respect to Mortgage Loans in the Trust
Fund and properties acquired in respect thereof, such reimbursement to be made
out of amounts that represent Liquidation Proceeds and Insurance and
Condemnation Proceeds collected on the particular Mortgage Loans and properties,
and net income collected on the particular properties, with respect to which
such fees were earned or such expenses were incurred or out of amounts drawn
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under any form of Credit Support with respect to such Mortgage Loans and
properties;
(v) to reimburse the Master Servicer, a Special Servicer, the
Trustee or other specified person for any advances described in clause (iii)
above made by it and/or any servicing expenses referred to in clause (iv) above
incurred by it that, in the good faith judgment of the Master Servicer, Special
Servicer, Trustee or other specified person, as applicable, will not be
recoverable from the amounts described in clauses (iii) and (iv), respectively,
such reimbursement to be made from amounts collected on other Mortgage Loans in
the same Trust Fund or, if and to the extent so provided by the related Pooling
Agreement and described in the related Prospectus Supplement, only from that
portion of amounts collected on such other Mortgage Loans that is otherwise
distributable on one or more classes of Subordinate Certificates of the related
series;
(vi) if and to the extent described in the related Prospectus
Supplement, to pay the Master Servicer, a Special Servicer, the Trustee or any
other specified person interest accrued on the advances described in clause
(iii) above made by it and the servicing expenses described in clause (iv) above
incurred by it while such remain outstanding and unreimbursed;
(vii) to pay for costs and expenses incurred by the Trust Fund for
environmental site assessments performed with respect to Mortgaged Properties
that constitute security for defaulted Mortgage Loans, and for any containment,
clean-up or remediation of hazardous wastes and materials present on such
Mortgaged Properties, as described under "--Realization Upon Defaulted Mortgage
Loans";
(viii) to reimburse the Master Servicer, the Special Servicer, the
Depositor, or any of their respective directors, officers, employees and agents,
as the case may be, for certain expenses, costs and liabilities incurred
thereby, as and to the extent described under "--Certain Matters Regarding the
Master Servicer and the Depositor";
(ix) if and to the extent described in the related Prospectus
Supplement, to pay the fees of Trustee;
(x) to reimburse the Trustee or any of its directors, officers,
employees and agents, as the case may be, for certain expenses, costs and
liabilities incurred thereby, as and to the extent described under "--Certain
Matters Regarding the Trustee";
(xi) if and to the extent described in the related Prospectus
Supplement, to pay the fees of any provider of Credit Support;
(xii) if and to the extent described in the related Prospectus
Supplement, to reimburse prior draws on any form of Credit Support;
(xiii) to pay the Master Servicer, a Special Servicer or the
Trustee, as appropriate, interest and investment income earned in respect of
amounts held in the Certificate Account as additional compensation;
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(xiv) to pay (generally from related income) for costs incurred in
connection with the operation, management and maintenance of any Mortgaged
Property acquired by the Trust Fund by foreclosure or otherwise;
(xv) if one or more elections have been made to treat the Trust Fund
or designated portions thereof as a REMIC, to pay any federal, state or local
taxes imposed on the Trust Fund or its assets or transactions, as and to the
extent described under "Certain Federal Income Tax Consequences--Federal Income
Tax Consequences for REMIC Certificates--Taxes That May Be Imposed on the REMIC
Pool";
(xvi) to pay for the cost of an independent appraiser or other
expert in real estate matters retained to determine a fair sale price for a
defaulted Mortgage Loan or a property acquired in respect thereof in connection
with the liquidation of such Mortgage Loan or property;
(xvii) to pay for the cost of various opinions of counsel
obtained pursuant to the related Pooling Agreement for the benefit of
Certificateholders;
(xviii) to make any other withdrawals permitted by the
related Pooling Agreement and described in the related Prospectus Supplement;
and
(xix) to clear and terminate the Certificate Account upon the
termination of the Trust Fund.
Modifications, Waivers and Amendments of Mortgage Loans
A Master Servicer may agree to modify, waive or amend any term of
any Mortgage Loan serviced by it in a manner consistent with the applicable
Servicing Standard; provided that, unless otherwise set forth in the related
Prospectus Supplement, the modification, waiver or amendment (i) will not affect
the amount or timing of any scheduled payments of principal or interest on the
Mortgage Loan, (ii) will not, in the judgment of the Master Servicer, materially
impair the security for the Mortgage Loan or reduce the likelihood of timely
payment of amounts due thereon and (iii) will not adversely affect the coverage
under any applicable instrument of Credit Support. Unless otherwise provided in
the related Prospectus Supplement, a Master Servicer also may agree to any other
modification, waiver or amendment if, in its judgment, (i) a material default on
the Mortgage Loan has occurred or a payment default is imminent, (ii) such
modification, waiver or amendment is reasonably likely to produce a greater
recovery with respect to the Mortgage Loan, taking into account the time value
of money, than would liquidation and (iii) such modification, waiver or
amendment will not adversely affect the coverage under any applicable instrument
of Credit Support.
Realization Upon Defaulted Mortgage Loans
A borrower's failure to make required Mortgage Loan payments may
mean that operating income is insufficient to service the mortgage debt, or may
reflect the diversion of that income from the servicing of the mortgage debt. In
addition, a borrower that is unable to make Mortgage Loan payments may also be
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unable to make timely payment of taxes and insurance premiums and to otherwise
maintain the related Mortgaged Property. In general, the Master Servicer for a
series of Certificates will be required to monitor any Mortgage Loan in the
related Trust Fund that is in default, evaluate whether the causes of the
default can be corrected over a reasonable period without significant impairment
of the value of the related Mortgaged Property, initiate corrective action in
cooperation with the borrower if cure is likely, inspect the related Mortgaged
Property and take such other actions as are consistent with the Servicing
Standard. A significant period of time may elapse before the Master Servicer is
able to assess the success of any such corrective action or the need for
additional initiatives.
The time within which the Master Servicer can make the initial
determination of appropriate action, evaluate the success of corrective action,
develop additional initiatives, institute foreclosure proceedings and actually
foreclose (or accept a deed to a Mortgaged Property in lieu of foreclosure) on
behalf of the Certificateholders may vary considerably depending on the
particular Mortgage Loan, the Mortgaged Property, the borrower, the presence of
an acceptable party to assume the Mortgage Loan and the laws of the jurisdiction
in which the Mortgaged Property is located. If a borrower files a bankruptcy
petition, the Master Servicer may not be permitted to accelerate the maturity of
the related Mortgage Loan or to foreclose on the related Mortgaged Property for
a considerable period of time, and such Mortgage Loan may be restructured in the
resulting bankruptcy proceedings. See "Certain Legal Aspects of Mortgage Loans".
A Pooling Agreement may grant to the Master Servicer, a Special
Servicer, a provider of Credit Support and/or the holder or holders of certain
classes of the related series of Certificates a right of first refusal to
purchase from the Trust Fund, at a predetermined purchase price (which, if
insufficient to fully fund the entitlements of Certificateholders to principal
and interest thereon, will be specified in the related Prospectus Supplement),
any Mortgage Loan as to which a specified number of scheduled payments are
delinquent. In addition, unless otherwise specified in the related Prospectus
Supplement, the Master Servicer may offer to sell any defaulted Mortgage Loan if
and when the Master Servicer determines, consistent with the applicable
Servicing Standard, that such a sale would produce a greater recovery, taking
into account the time value of money, than would liquidation of the related
Mortgaged Property. Unless otherwise provided in the related Prospectus
Supplement, the related Pooling Agreement will require that the Master Servicer
accept the highest cash bid received from any person (including itself, the
Depositor or any affiliate of either of them or any Certificateholder) that
constitutes a fair price for such defaulted Mortgage Loan. In the absence of any
bid determined in accordance with the related Pooling Agreement to be fair, the
Master Servicer will generally be required to proceed against the related
Mortgaged Property, subject to the discussion below.
If a default on a Mortgage Loan has occurred or, in the Master
Servicer's judgment, a payment default is imminent, the Master Servicer, on
behalf of the Trustee, may at any time institute foreclosure proceedings,
exercise any power of sale contained in the related Mortgage, obtain a deed in
lieu of foreclosure, or otherwise acquire title to the related Mortgaged
Property, by operation of law or otherwise, if such action is consistent with
the Servicing Standard. Unless otherwise specified in the related Prospectus
Supplement, the Master Servicer may not, however, acquire title to any Mortgaged
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Property, have a receiver of rents appointed with respect to any Mortgaged
Property or take any other action with respect to any Mortgaged Property that
would cause the Trustee, for the benefit of the related series of
Certificateholders, or any other specified person to be considered to hold title
to, to be a "mortgagee-in-possession" of, or to be an "owner" or an "operator"
of such Mortgaged Property within the meaning of certain federal environmental
laws, unless the Master Servicer has previously determined, based on a report
prepared by a person who regularly conducts environmental audits (which report
will be an expense of the Trust Fund), that either:
(i) the Mortgaged Property is in compliance with applicable
environmental laws and regulations or, if not, that taking such actions as are
necessary to bring the Mortgaged Property into compliance therewith is
reasonably likely to produce a greater recovery, taking into account the time
value of money, than not taking such actions; and
(ii) there are no circumstances or conditions present at the
Mortgaged Property that have resulted in any contamination for which
investigation, testing, monitoring, containment, clean-up or remediation could
be required under any applicable environmental laws and regulations or, if such
circumstances or conditions are present for which any such action could be
required, taking such actions with respect to the Mortgaged Property is
reasonably likely to produce a greater recovery, taking into account the time
value of money, than not taking such actions. See "Certain Legal Aspects of
Mortgage Loans--Environmental Risks".
Unless otherwise provided in the related Prospectus Supplement, if
title to any Mortgaged Property is acquired by a Trust Fund as to which one or
more REMIC elections have been made, the Master Servicer, on behalf of the Trust
Fund, will be required to sell the Mortgaged Property within two years of
acquisition, unless (i) the Internal Revenue Service grants an extension of time
to sell such property or (ii) the Trustee receives an opinion of independent
counsel to the effect that the holding of the property by the Trust Fund for
more than two years after its acquisition will not result in the imposition of a
tax on the Trust Fund or cause the Trust Fund (or any designated portion
thereof) to fail to qualify as a REMIC under the Code at any time that any
Certificate is outstanding. Subject to the foregoing, the Master Servicer will
generally be required to solicit bids for any Mortgaged Property so acquired in
such a manner as will be reasonably likely to realize a fair price for such
property. If the Trust Fund acquires title to any Mortgaged Property, the Master
Servicer, on behalf of the Trust Fund, may retain an independent contractor to
manage and operate such property. The retention of an independent contractor,
however, will not relieve the Master Servicer of its obligation to manage such
Mortgaged Property in a manner consistent with the Servicing Standard.
If Liquidation Proceeds collected with respect to a defaulted
Mortgage Loan are less than the outstanding principal balance of the defaulted
Mortgage Loan plus interest accrued thereon plus the aggregate amount of
reimbursable expenses incurred by the Master Servicer in connection with such
Mortgage Loan, the Trust Fund will realize a loss in the amount of such
shortfall. The Master Servicer will be entitled to reimbursement out of the
Liquidation Proceeds recovered on any defaulted Mortgage Loan, prior to the
distribution of such Liquidation Proceeds to Certificateholders, amounts that
represent unpaid servicing compensation in respect of the Mortgage Loan,
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unreimbursed servicing expenses incurred with respect to the Mortgage Loan and
any unreimbursed advances of delinquent payments made with respect to the
Mortgage Loan.
If any Mortgaged Property suffers damage such that the proceeds, if
any, of the related hazard insurance policy are insufficient to restore fully
the damaged property, the Master Servicer will not be required to expend its own
funds to effect such restoration unless (and to the extent not otherwise
provided in the related Prospectus Supplement) it determines (i) that such
restoration will increase the proceeds to Certificateholders on liquidation of
the Mortgage Loan after reimbursement of the Master Servicer for its expenses
and (ii) that such expenses will be recoverable by it from related Insurance and
Condemnation Proceeds or Liquidation Proceeds.
Hazard Insurance Policies
Unless otherwise specified in the related Prospectus Supplement,
each Pooling Agreement will require the Master Servicer to cause each Mortgage
Loan borrower to maintain a hazard insurance policy that provides for such
coverage as is required under the related Mortgage or, if the Mortgage permits
the holder thereof to dictate to the borrower the insurance coverage to be
maintained on the related Mortgaged Property, such coverage as is consistent
with the requirements of the Servicing Standard. Unless otherwise specified in
the related Prospectus Supplement, such coverage generally will be in an amount
equal to the lesser of the principal balance owing on such Mortgage Loan and the
replacement cost of the related Mortgaged Property. The ability of a Master
Servicer to assure that hazard insurance proceeds are appropriately applied may
be dependent upon its being named as an additional insured under any hazard
insurance policy and under any other insurance policy referred to below, or upon
the extent to which information concerning covered losses is furnished by
borrowers. All amounts collected by a Master Servicer under any such policy
(except for amounts to be applied to the restoration or repair of the Mortgaged
Property or released to the borrower in accordance with the Master Servicer's
normal servicing procedures and/or to the terms and conditions of the related
Mortgage and Mortgage Note) will be deposited in the related Certificate
Account. The Pooling Agreement may provide that the Master Servicer may satisfy
its obligation to cause each borrower to maintain such a hazard insurance policy
by maintaining a blanket policy insuring against hazard losses on all of the
Mortgage Loans in a Trust Fund. If such blanket policy contains a deductible
clause, the Master Servicer will be required, in the event of a casualty covered
by such blanket policy, to deposit in the related Certificate Account all sums
that would have been deposited therein but for such deductible clause.
In general, the standard form of fire and extended coverage policy
covers physical damage to or destruction of the improvements of the property by
fire, lightning, explosion, smoke, windstorm and hail, and riot, strike and
civil commotion, subject to the conditions and exclusions specified in each
policy. Although the policies covering the Mortgaged Properties will be
underwritten by different insurers under different state laws in accordance with
different applicable state forms, and therefore will not contain identical terms
and conditions, most such policies typically do not cover any physical damage
resulting from war, revolution, governmental actions, floods and other
water-related causes, earth movement (including earthquakes, landslides and
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mudflows), wet or dry rot, vermin, domestic animals and certain other kinds of
risks. Accordingly, a Mortgaged Property may not be insured for losses arising
from any such cause unless the related Mortgage specifically requires, or
permits the holder thereof to require, such coverage.
The hazard insurance policies covering the Mortgaged Properties will
typically contain co-insurance clauses that in effect require an insured at all
times to carry insurance of a specified percentage (generally 80% to 90%) of the
full replacement value of the improvements on the property in order to recover
the full amount of any partial loss. If the insured's coverage falls below this
specified percentage, such clauses generally provide that the insurer's
liability in the event of partial loss does not exceed the lesser of (i) the
replacement cost of the improvements less physical depreciation and (ii) such
proportion of the loss as the amount of insurance carried bears to the specified
percentage of the full replacement cost of such improvements.
Due-on-Sale and Due-on-Encumbrance Provisions
Certain of the Mortgage Loans may contain a due-on-sale clause that
entitles the lender to accelerate payment of the Mortgage Loan upon any sale or
other transfer of the related Mortgaged Property made without the lender's
consent. Certain of the Mortgage Loans may also contain a due-on-encumbrance
clause that entitles the lender to accelerate the maturity of the Mortgage Loan
upon the creation of any other lien or encumbrance upon the Mortgaged Property.
Unless otherwise provided in the related Prospectus Supplement, the Master
Servicer will determine whether to exercise any right the Trustee may have under
any such provision in a manner consistent with the Servicing Standard. Unless
otherwise specified in the related Prospectus Supplement, the Master Servicer
will be entitled to retain as additional servicing compensation any fee
collected in connection with the permitted transfer of a Mortgaged Property. See
"Certain Legal Aspects of Mortgage Loans--Due-on-Sale and Due-on-Encumbrance".
Servicing Compensation and Payment of Expenses
Unless otherwise specified in the related Prospectus Supplement, a
Master Servicer's primary servicing compensation with respect to a series of
Certificates will come from the periodic payment to it of a specified portion of
the interest payments on each Mortgage Loan in the related Trust Fund. Because
that compensation is generally based on a percentage of the principal balance of
each such Mortgage Loan outstanding from time to time, it will decrease in
accordance with the amortization of the Mortgage Loans. The Prospectus
Supplement with respect to a series of Certificates may provide that, as
additional compensation, the Master Servicer may retain all or a portion of late
payment charges, Prepayment Premiums, modification fees and other fees collected
from borrowers and any interest or other income that may be earned on funds held
in the Certificate Account. Any Sub-Servicer will receive a portion of the
Master Servicer's compensation as its sub-servicing compensation.
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In addition to amounts payable to any Sub-Servicer, a Master
Servicer may be required, to the extent provided in the related Prospectus
Supplement, to pay from amounts that represent its servicing compensation
certain expenses incurred in connection with the administration of the related
Trust Fund, including, without limitation, payment of the fees and disbursements
of independent accountants and payment of expenses incurred in connection with
distributions and reports to Certificateholders. Certain other expenses,
including certain expenses related to Mortgage Loan defaults and liquidations
and, to the extent so provided in the related Prospectus Supplement, interest on
such expenses at the rate specified therein, and the fees of any Special
Servicer, may be required to be borne by the Trust Fund.
If and to the extent provided in the related Prospectus Supplement,
a Master Servicer may be required to apply a portion of the servicing
compensation otherwise payable to it in respect of any period to Prepayment
Interest Shortfalls. See "Yield and Maturity Considerations--Certain Shortfalls
in Collections of Interest".
Evidence as to Compliance
Unless otherwise provided in the related Prospectus Supplement, each
Pooling Agreement will require, on or before a specified date in each year, the
Master Servicer to cause a firm of independent public accountants to furnish to
the Trustee a statement to the effect that, on the basis of the examination by
such firm conducted substantially in compliance with either the Uniform Single
Audit Program for Mortgage Bankers or the Audit Program for Mortgages serviced
for FHLMC, the servicing by or on behalf of the Master Servicer of mortgage
loans under pooling and servicing agreements substantially similar to each other
(which may include such Pooling Agreement) was conducted through the preceding
calendar year or other specified twelve month period in compliance with the
terms of such agreements except for any significant exceptions or errors in
records that, in the opinion of the firm, either the Audit Program for Mortgages
serviced for FHLMC, or paragraph 4 of the Uniform Single Audit Program for
Mortgage Bankers, requires it to report.
Each Pooling Agreement will also require, on or before a specified
date in each year, the Master Servicer to furnish to the Trustee a statement
signed by one or more officers of the Master Servicer to the effect that the
Master Servicer has fulfilled its material obligations under such Pooling
Agreement throughout the preceding calendar year or other specified twelve month
period.
Certain Matters Regarding the Master Servicer and the Depositor
The entity serving as Master Servicer under a Pooling Agreement may
be an affiliate of the Depositor and may have other normal business
relationships with the Depositor or the Depositor's affiliates. Unless otherwise
specified in the Prospectus Supplement for a series of Certificates, the related
Pooling Agreement will permit the Master Servicer to resign from its obligations
thereunder only upon (a) the appointment of, and the acceptance of such
appointment by, a successor thereto and receipt by the Trustee of written
confirmation from each applicable Rating Agency that such resignation and
appointment will not have an adverse effect on the rating assigned by such
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Rating Agency to any class of Certificates of such series or (b) a determination
that such obligations are no longer permissible under applicable law or are in
material conflict by reason of applicable law with any other activities carried
on by it. No such resignation will become effective until the Trustee or a
successor servicer has assumed the Master Servicer's obligations and duties
under the Pooling Agreement. Unless otherwise specified in the related
Prospectus Supplement, the Master Servicer for each Trust Fund will be required
to maintain a fidelity bond and errors and omissions policy or their equivalent
that provides coverage against losses that may be sustained as a result of an
officer's or employee's misappropriation of funds or errors and omissions,
subject to certain limitations as to amount of coverage, deductible amounts,
conditions, exclusions and exceptions permitted by the related Pooling
Agreement.
Unless otherwise specified in the related Prospectus Supplement,
each Pooling Agreement will further provide that none of the Master Servicer,
the Depositor or any director, officer, employee or agent of either of them will
be under any liability to the related Trust Fund or Certificateholders for any
action taken, or not taken, in good faith pursuant to the Pooling Agreement or
for errors in judgment; provided, however, that none of the Master Servicer, the
Depositor or any such person will be protected against any breach of a
representation, warranty or covenant made in such Pooling Agreement, or against
any expense or liability that such person is specifically required to bear
pursuant to the terms of such Pooling Agreement, or against any liability that
would otherwise be imposed by reason of willful misfeasance, bad faith or gross
negligence in the performance of obligations or duties thereunder or by reason
of reckless disregard of such obligations and duties. Unless otherwise specified
in the related Prospectus Supplement, each Pooling Agreement will further
provide that the Master Servicer, the Depositor and any director, officer,
employee or agent of either of them will be entitled to indemnification by the
related Trust Fund against any loss, liability or expense incurred in connection
with any legal action that relates to such Pooling Agreement or the related
series of Certificates; provided, however, that such indemnification will not
extend to any loss, liability or expense (i) that such person is specifically
required to bear pursuant to the terms of such agreement, or is incidental to
the performance of obligations and duties thereunder and is not otherwise
reimbursable pursuant to such Pooling Agreement; (ii) incurred in connection
with any breach of a representation, warranty or covenant made in such Pooling
Agreement; (iii) incurred by reason of misfeasance, bad faith or gross
negligence in the performance of obligations or duties under such Pooling
Agreement, or by reason of reckless disregard of such obligations or duties; or
(iv) incurred in connection with any violation of any state or federal
securities law. In addition, each Pooling Agreement will provide that neither
the Master Servicer nor the Depositor will be under any obligation to appear in,
prosecute or defend any legal action that is not incidental to its respective
responsibilities under the Pooling Agreement and that in its opinion may involve
it in any expense or liability. However, each of the Master Servicer and the
Depositor will be permitted, in the exercise of its discretion, to undertake any
such action that it may deem necessary or desirable with respect to the
enforcement and/or protection of the rights and duties of the parties to the
Pooling Agreement and the interests of the related series of Certificateholders
thereunder. In such event, the legal expenses and costs of such action, and any
liability resulting therefrom, will be expenses, costs and liabilities of the
related series of Certificateholders, and the Master Servicer or the Depositor,
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as the case may be, will be entitled to charge the related Certificate Account
therefor.
Any person into which the Master Servicer or the Depositor may be
merged or consolidated, or any person resulting from any merger or consolidation
to which the Master Servicer or the Depositor is a party, or any person
succeeding to the business of the Master Servicer or the Depositor, will be the
successor of the Master Servicer or the Depositor, as the case may be, under the
related Pooling Agreement.
Events of Default
Unless otherwise provided in the Prospectus Supplement for a series
of Certificates, "Events of Default" under the related Pooling Agreement will
include (i) any failure by the Master Servicer to distribute or cause to be
distributed to the Certificateholders of such series, or to remit to the Trustee
for distribution to such Certificateholders, any amount required to be so
distributed or remitted, which failure continues unremedied for five days after
written notice thereof has been given to the Master Servicer by the Trustee or
the Depositor, or to the Master Servicer, the Depositor and the Trustee by
Certificateholders entitled to not less than 25% (or such other percentage
specified in the related Prospectus Supplement) of the Voting Rights for such
series; (ii) any failure by the Master Servicer duly to observe or perform in
any material respect any of its other covenants or obligations under the related
Pooling Agreement, which failure continues unremedied for sixty days after
written notice thereof has been given to the Master Servicer by the Trustee or
the Depositor, or to the Master Servicer, the Depositor and the Trustee by
Certificateholders entitled to not less than 25% (or such other percentage
specified in the related Prospectus Supplement) of the Voting Rights for such
series; and (iii) certain events of insolvency, readjustment of debt,
marshalling of assets and liabilities, or similar proceedings in respect of or
relating to the Master Servicer and certain actions by or on behalf of the
Master Servicer indicating its insolvency or inability to pay its obligations.
Material variations to the foregoing Events of Default (other than to add
thereto or shorten cure periods or eliminate notice requirements) will be
specified in the related Prospectus Supplement.
Rights Upon Event of Default
If an Event of Default occurs with respect to the Master Servicer
under a Pooling Agreement, then, in each and every such case, so long as the
Event of Default remains unremedied, the Depositor or the Trustee will be
authorized, and at the direction of Certificateholders of the related series
entitled to not less than 51% (or such other percentage specified in the related
Prospectus Supplement) of the Voting Rights for such series, the Trustee will be
required, to terminate all of the rights and obligations of the Master Servicer
as master servicer under the Pooling Agreement, whereupon the Trustee will
succeed to all of the responsibilities, duties and liabilities of the Master
Servicer under the Pooling Agreement (except that if the Master Servicer is
required to make advances thereunder regarding delinquent Mortgage Loans, but
the Trustee is prohibited by law from obligating itself to do so, or if the
related Prospectus Supplement so specifies, the Trustee will not be obligated to
make such advances) and will be entitled to similar compensation arrangements.
Unless otherwise specified in the related Prospectus Supplement, if the Trustee
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is unwilling or unable so to act, it may (or, at the written request of
Certificateholders of the related series entitled to not less than 51% (or such
other percentage specified in the related Prospectus Supplement) of the Voting
Rights for such series, it will be required to) appoint, or petition a court of
competent jurisdiction to appoint, a loan servicing institution that (unless
otherwise provided in the related Prospectus Supplement) is acceptable to each
applicable Rating Agency to act as successor to the Master Servicer under the
Pooling Agreement. Pending such appointment, the Trustee will be obligated to
act in such capacity.
No Certificateholder will have the right under any Pooling Agreement
to institute any proceeding with respect thereto unless such holder previously
has given to the Trustee written notice of default and unless Certificateholders
of the same series entitled to not less than 25% (or such other percentage
specified in the related Prospectus Supplement) of the Voting Rights for such
series shall have made written request upon the Trustee to institute such
proceeding in its own name as Trustee thereunder and shall have offered to the
Trustee reasonable indemnity, and the Trustee for sixty days (or such other
period specified in the related Prospectus Supplement) shall have neglected or
refused to institute any such proceeding. The Trustee, however, will be under no
obligation to exercise any of the trusts or powers vested in it by any Pooling
Agreement or to make any investigation of matters arising thereunder or to
institute, conduct or defend any litigation thereunder or in relation thereto at
the request, order or direction of any of the holders of Certificates of the
related series, unless such Certificateholders have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
which may be incurred therein or thereby.
Amendment
Each Pooling Agreement may be amended by the respective parties
thereto, without the consent of any of the holders of the related series of
Certificates, (i) to cure any ambiguity, (ii) to correct a defective provision
therein or to correct, modify or supplement any provision therein that may be
inconsistent with any other provision therein, (iii) to add any other provisions
with respect to matters or questions arising under the Pooling Agreement that
are not inconsistent with the provisions thereof, (iv) to comply with any
requirements imposed by the Code, or (v) for any other purpose; provided that
such amendment (other than an amendment for the specific purpose referred to in
clause (iv) above) may not (as evidenced by an opinion of counsel to such effect
satisfactory to the Trustee) adversely affect in any material respect the
interests of any such holder; and provided further that such amendment (other
than an amendment for one of the specific purposes referred to in clauses (i)
through (iv) above) must be acceptable to each applicable Rating Agency. Unless
otherwise specified in the related Prospectus Supplement, each Pooling Agreement
may also be amended by the respective parties thereto, with the consent of the
holders of the related series of Certificates entitled to not less than 51% (or
such other percentage specified in the related Prospectus Supplement) of the
Voting Rights for such series allocated to the affected classes, for any
purpose; provided that, unless otherwise specified in the related Prospectus
Supplement, no such amendment may (i) reduce in any manner the amount of, or
delay the timing of, payments received or advanced on Mortgage Loans that are
required to be distributed in respect of any Certificate without the consent of
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the holder of such Certificate, (ii) adversely affect in any material respect
the interests of the holders of any class of Certificates, in a manner other
than as described in clause (i), without the consent of the holders of all
Certificates of such class or (iii) modify the provisions of the Pooling
Agreement described in this paragraph without the consent of the holders of all
Certificates of the related series. However, unless otherwise specified in the
related Prospectus Supplement, the Trustee will be prohibited from consenting to
any amendment of a Pooling Agreement pursuant to which one or more REMIC
elections are to be or have been made unless the Trustee shall first have
received an opinion of counsel to the effect that such amendment will not result
in the imposition of a tax on the related Trust Fund or cause the related Trust
Fund (or designated portion thereof) to fail to qualify as a REMIC at any time
that the related Certificates are outstanding.
List of Certificateholders
Unless otherwise specified in the related Prospectus Supplement,
upon written request of three or more Certificateholders of record made for
purposes of communicating with other holders of Certificates of the same series
with respect to their rights under the related Pooling Agreement, the Trustee or
other specified person will afford such Certificateholders access during normal
business hours to the most recent list of Certificateholders of that series held
by such person. If such list is of a date more than 90 days prior to the date of
receipt of such Certificateholders' request, then such person, if not the
registrar for such series of Certificates, will be required to request from such
registrar a current list and to afford such requesting Certificateholders access
thereto promptly upon receipt.
The Trustee
The Trustee under each Pooling Agreement will be named in the
related Prospectus Supplement. The commercial bank, national banking
association, banking corporation or trust company that serves as Trustee may
have typical banking relationships with the Depositor and its affiliates and
with any Master Servicer or Special Servicer and its affiliates.
Duties of the Trustee
The Trustee for each series of Certificates will make no
representation as to the validity or sufficiency of the related Pooling
Agreement, the Certificates or any underlying Mortgage Loan or related document
and will not be accountable for the use or application by or on behalf of the
Master Servicer for such series of any funds paid to the Master Servicer or any
Special Servicer in respect of the Certificates or the underlying Mortgage
Loans, or any funds deposited into or withdrawn from the Certificate Account or
any other account for such series by or on behalf of the Master Servicer or any
Special Servicer. If no Event of Default has occurred and is continuing, the
Trustee for each series of Certificates will be required to perform only those
duties specifically required under the related Pooling Agreement. However, upon
receipt of any of the various certificates, reports or other instruments
required to be furnished to it pursuant to the related Pooling Agreement, a
Trustee will be required to examine such documents and to determine whether they
conform to the requirements of such agreement.
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Certain Matters Regarding the Trustee
As and to the extent described in the related Prospectus Supplement,
the fees and normal disbursements of any Trustee may be the expense of the
related Master Servicer or other specified person or may be required to be borne
by the related Trust Fund.
Unless otherwise specified in the related Prospectus Supplement, the
Trustee for each series of Certificates will be entitled to indemnification,
from amounts held in the Certificate Account for such series, for any loss,
liability or expense incurred by the Trustee in connection with the Trustee's
acceptance or administration of its trusts under the related Pooling Agreement;
provided, however, that such indemnification will not extend to any loss,
liability or expense that constitutes a specific liability imposed on the
Trustee pursuant to the related Pooling Agreement, or to any loss, liability or
expense incurred by reason of willful misfeasance, bad faith or gross negligence
on the part of the Trustee in the performance of its obligations and duties
thereunder, or by reason of its reckless disregard of such obligations or
duties, or as may arise from a breach of any representation, warranty or
covenant of the Trustee made therein.
Unless otherwise specified in the related Prospectus Supplement, the
Trustee for each series of Certificates will be entitled to execute any of its
trusts or powers under the related Pooling Agreement or perform any of its
duties thereunder either directly or by or through agents or attorneys, and the
Trustee will not be responsible for any willful misconduct or gross negligence
on the part of any such agent or attorney appointed by it with due care.
Resignation and Removal of the Trustee
A Trustee will be permitted at any time to resign from its
obligations and duties under the related Pooling Agreement by giving written
notice thereof to the Depositor. Upon receiving such notice of resignation, the
Depositor (or such other person as may be specified in the related Prospectus
Supplement) will be required to use its best efforts to promptly appoint a
successor trustee. If no successor trustee shall have accepted an appointment
within a specified period after the giving of such notice of resignation, the
resigning Trustee may petition any court of competent jurisdiction to appoint a
successor trustee.
If at any time a Trustee ceases to be eligible to continue as such
under the related Pooling Agreement, or if at any time the Trustee becomes
incapable of acting, or if certain events of (or proceedings in respect of)
bankruptcy or insolvency occur with respect to the Trustee, the Depositor will
be authorized to remove the Trustee and appoint a successor trustee. In
addition, holders of the Certificates of any series entitled to at least 51% (or
such other percentage specified in the related Prospectus Supplement) of the
Voting Rights for such series may at any time (with or without cause) remove the
Trustee under the related Pooling Agreement and appoint a successor trustee.
Any resignation or removal of a Trustee and appointment of a
successor trustee will not become effective until acceptance of appointment by
the successor trustee.
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DESCRIPTION OF CREDIT SUPPORT
General
Credit Support may be provided with respect to one or more classes
of the Certificates of any series, or with respect to the related Mortgage
Assets. Credit Support may be in the form of a letter of credit, the
subordination of one or more classes of Certificates, the use of a pool
insurance policy or guarantee insurance, the establishment of one or more
reserve funds or another method of Credit Support described in the related
Prospectus Supplement, or any combination of the foregoing. If so provided in
the related Prospectus Supplement, any form of Credit Support may provide credit
enhancement for more than one series of Certificates to the extent described
therein.
Unless otherwise provided in the related Prospectus Supplement for a
series of Certificates, the Credit Support will not provide protection against
all risks of loss and will not guarantee payment to Certificateholders of all
amounts to which they are entitled under the related Pooling Agreement. If
losses or shortfalls occur that exceed the amount covered by the related Credit
Support or that are not covered by such Credit Support, Certificateholders will
bear their allocable share of deficiencies. Moreover, if a form of Credit
Support covers more than one series of Certificates, holders of Certificates of
one series will be subject to the risk that such Credit Support will be
exhausted by the claims of the holders of Certificates of one or more other
series before the former receive their intended share of such coverage.
If Credit Support is provided with respect to one or more classes of
Certificates of a series, or with respect to the related Mortgage Assets, the
related Prospectus Supplement will include a description of (i) the nature and
amount of coverage under such Credit Support, (ii) any conditions to payment
thereunder not otherwise described herein, (iii) the conditions (if any) under
which the amount of coverage under such Credit Support may be reduced and under
which such Credit Support may be terminated or replaced and (iv) the material
provisions relating to such Credit Support. Additionally, the related Prospectus
Supplement will set forth certain information with respect to the obligor under
any instrument of Credit Support, including (i) a brief description of its
principal business activities, (ii) its principal place of business, place of
incorporation and the jurisdiction under which it is chartered or licensed to do
business, (iii) if applicable, the identity of regulatory agencies that exercise
primary jurisdiction over the conduct of its business and (iv) its total assets,
and its stockholders' equity or policyholders' surplus, if applicable, as of a
date that will be specified in the Prospectus Supplement. See "Risk
Factors--Credit Support Limitations".
Subordinate Certificates
If so specified in the related Prospectus Supplement, one or more
classes of Certificates of a series may be Subordinate Certificates. To the
extent specified in the related Prospectus Supplement, the rights of the holders
of Subordinate Certificates to receive distributions from the Certificate
Account on any Distribution Date will be subordinated to the corresponding
rights of the holders of Senior Certificates. If so provided in the related
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Prospectus Supplement, the subordination of a class may apply only in the event
of (or may be limited to) certain types of losses or shortfalls. The related
Prospectus Supplement will set forth information concerning the method and
amount of subordination provided by a class or classes of Subordinate
Certificates in a series and the circumstances under which such subordination
will be available.
Cross-Support Provisions
If the Mortgage Assets in any Trust Fund are divided into separate
groups, each supporting a separate class or classes of Certificates of the
related series, Credit Support may be provided by cross-support provisions
requiring that distributions be made on Senior Certificates evidencing interests
in one group of Mortgage Assets prior to distributions on Subordinate
Certificates evidencing interests in a different group of Mortgage Assets within
the Trust Fund. The Prospectus Supplement for a series that includes a
cross-support provision will describe the manner and conditions for applying
such provisions.
Insurance or Guarantees with Respect to Mortgage Loans
If so provided in the Prospectus Supplement for a series of
Certificates, Mortgage Loans included in the related Trust Fund will be covered
for certain default risks by insurance policies or guarantees. To the extent
deemed by the Depositor to be material, a copy of each such instrument will
accompany the Current Report on Form 8-K to be filed with the Commission within
15 days of issuance of the Certificates of the related series.
Letter of Credit
If so provided in the Prospectus Supplement for a series of
Certificates, deficiencies in amounts otherwise payable on such Certificates or
certain classes thereof will be covered by one or more letters of credit, issued
by a bank or financial institution specified in such Prospectus Supplement (the
"L/C Bank"). Under a letter of credit, the L/C Bank will be obligated to honor
draws thereunder in an aggregate fixed dollar amount, net of unreimbursed
payments thereunder, generally equal to a percentage specified in the related
Prospectus Supplement of the aggregate principal balance of the Mortgage Assets
on the related Cut-off Date or of the initial aggregate Certificate Balance of
one or more classes of Certificates. If so specified in the related Prospectus
Supplement, the letter of credit may permit draws only in the event of certain
types of losses and shortfalls. The amount available under the letter of credit
will, in all cases, be reduced to the extent of the unreimbursed payments
thereunder and may otherwise be reduced as described in the related Prospectus
Supplement. The obligations of the L/C Bank under the letter of credit for each
series of Certificates will expire at the earlier of the date specified in the
related Prospectus Supplement or the termination of the Trust Fund. A copy of
any such letter of credit will accompany the Current Report on Form 8-K to be
filed with the Commission within 15 days of issuance of the Certificates of the
related series.
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Certificate Insurance and Surety Bonds
If so provided in the Prospectus Supplement for a series of
Certificates, deficiencies in amounts otherwise payable on such Certificates or
certain classes thereof will be covered by insurance policies and/or surety
bonds provided by one or more insurance companies or sureties. Such instruments
may cover, with respect to one or more classes of Certificates of the related
series, timely distributions of interest and/or full distributions of principal
on the basis of a schedule of principal distributions set forth in or determined
in the manner specified in the related Prospectus Supplement. The related
Prospectus Supplement will describe any limitations on the draws that may be
made under any such instrument. A copy of any such instrument will accompany the
Current Report on Form 8-K to be filed with the Commission within 15 days of
issuance of the Certificates of the related series.
Reserve Funds
If so provided in the Prospectus Supplement for a series of
Certificates, deficiencies in amounts otherwise payable on such Certificates or
certain classes thereof will be covered (to the extent of available funds) by
one or more reserve funds in which cash, a letter of credit, Permitted
Investments, a demand note or a combination thereof will be deposited, in the
amounts specified in such Prospectus Supplement. If so specified in the related
Prospectus Supplement, the reserve fund for a series may also be funded over
time by a specified amount of the collections received on the related Mortgage
Assets.
Amounts on deposit in any reserve fund for a series, together with
the reinvestment income thereon, if any, will be applied for the purposes, in
the manner, and to the extent specified in the related Prospectus Supplement. If
so specified in the related Prospectus Supplement, reserve funds may be
established to provide protection only against certain types of losses and
shortfalls. Following each Distribution Date, amounts in a reserve fund in
excess of any amount required to be maintained therein may be released from the
reserve fund under the conditions and to the extent specified in the related
Prospectus Supplement.
If so specified in the related Prospectus Supplement, amounts
deposited in any reserve fund will be invested in Permitted Investments. Unless
otherwise specified in the related Prospectus Supplement, any reinvestment
income or other gain from such investments will be credited to the related
reserve fund for such series, and any loss resulting from such investments will
be charged to such reserve fund. However, such income may be payable to any
related Master Servicer or another service provider as additional compensation
for its services. The reserve fund, if any, for a series will not be a part of
the Trust Fund unless otherwise specified in the related Prospectus Supplement.
Credit Support with respect to MBS
If so provided in the Prospectus Supplement for a series of
Certificates, any MBS included in the related Trust Fund and/or the related
underlying mortgage loans may be covered by one or more of the types of Credit
Support described herein. The related Prospectus Supplement will specify, as to
each such form of Credit Support, the information indicated above with respect
thereto, to the extent such information is material and available.
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CERTAIN LEGAL ASPECTS OF MORTGAGE LOANS
The following discussion contains general summaries of certain legal
aspects of loans secured by commercial and multifamily residential properties.
Because such legal aspects are governed by applicable state law (which laws may
differ substantially), the summaries do not purport to be complete, to reflect
the laws of any particular state, or to encompass the laws of all states in
which the security for the Mortgage Loans (or mortgage loans underlying any MBS)
is situated. Accordingly, the summaries are qualified in their entirety by
reference to the applicable laws of those states. See "Description of the Trust
Funds--Mortgage Loans". For purposes of the following discussion, "Mortgage
Loan" includes a mortgage loan underlying an MBS.
General
Each Mortgage Loan will be evidenced by a note or bond and secured
by an instrument granting a security interest in real property, which may be a
mortgage, deed of trust or a deed to secure debt, depending upon the prevailing
practice and law in the state in which the related Mortgaged Property is
located. Mortgages, deeds of trust and deeds to secure debt are herein
collectively referred to as "mortgages". A mortgage creates a lien upon, or
grants a title interest in, the real property covered thereby, and represents
the security for the repayment of the indebtedness customarily evidenced by a
promissory note. The priority of the lien created or interest granted will
depend on the terms of the mortgage and, in some cases, on the terms of separate
subordination agreements or intercreditor agreements with others that hold
interests in the real property, the knowledge of the parties to the mortgage
and, generally, the order of recordation of the mortgage in the appropriate
public recording office. However, the lien of a recorded mortgage will generally
be subordinate to later-arising liens for real estate taxes and assessments and
other charges imposed under governmental police powers.
Types of Mortgage Instruments
There are two parties to a mortgage: a mortgagor (the borrower and
usually the owner of the subject property) and a mortgagee (the lender). In
contrast, a deed of trust is a three-party instrument, among a trustor (the
equivalent of a borrower), a trustee to whom the real property is conveyed, and
a beneficiary (the lender) for whose benefit the conveyance is made. Under a
deed of trust, the trustor grants the property, irrevocably until the debt is
paid, in trust and generally with a power of sale, to the trustee to secure
repayment of the indebtedness evidenced by the related note. A deed to secure
debt typically has two parties. The grantor (the borrower) conveys title to the
real property to the grantee (the lender) generally with a power of sale, until
such time as the debt is repaid. In a case where the borrower is a land trust,
there would be an additional party because legal title to the property is held
by a land trustee under a land trust agreement for the benefit of the borrower.
At origination of a mortgage loan involving a land trust, the borrower executes
a separate undertaking to make payments on the mortgage note. The mortgagee's
authority under a mortgage, the trustee's authority under a deed of trust and
the grantee's authority under a deed to secure debt are governed by the express
provisions of the related instrument, the law of the state in which the real
property is located, certain federal laws (including, without limitation, the
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Soldiers' and Sailors' Civil Relief Act of 1940) and, in some deed of trust
transactions, the directions of the beneficiary.
Leases and Rents
Mortgages that encumber income-producing property often contain an
assignment of rents and leases, pursuant to which the borrower assigns to the
lender the borrower's right, title and interest as landlord under each lease and
the income derived therefrom, while (unless rents are to be paid directly to the
lender) retaining a revocable license to collect the rents for so long as there
is no default. If the borrower defaults, the license terminates and the lender
is entitled to collect the rents. Local law may require that the lender take
possession of the property and/or obtain a court-appointed receiver before
becoming entitled to collect the rents.
In most states, hotel and motel room rates are considered accounts
receivable under the Uniform Commercial Code ("UCC"); in cases where hotels or
motels constitute loan security, the rates are generally pledged by the borrower
as additional security for the loan. In general, the lender must file financing
statements in order to perfect its security interest in the rates and must file
continuation statements, generally every five years, to maintain perfection of
such security interest. Even if the lender's security interest in room rates is
perfected under the UCC, it may be required to commence a foreclosure action or
otherwise take possession of the property in order to collect the room rates
following a default. See "--Bankruptcy Laws".
Personalty
In the case of certain types of mortgaged properties, such as
hotels, motels and nursing homes, personal property (to the extent owned by the
borrower and not previously pledged) may constitute a significant portion of the
property's value as security. The creation and enforcement of liens on personal
property are governed by the UCC. Accordingly, if a borrower pledges personal
property as security for a mortgage loan, the lender generally must file UCC
financing statements in order to perfect its security interest therein, and must
file continuation statements, generally every five years, to maintain that
perfection.
Foreclosure
General. Foreclosure is a legal procedure that allows the lender to
recover its mortgage debt by enforcing its rights and available legal remedies
under the mortgage. If the borrower defaults in payment or performance of its
obligations under the note or mortgage, the lender has the right to institute
foreclosure proceedings to sell the real property at public auction to satisfy
the indebtedness.
Foreclosure procedures vary from state to state. Two primary methods
of foreclosing a mortgage are judicial foreclosure, involving court proceedings,
and non-judicial foreclosure pursuant to a power of sale granted in the mortgage
instrument. Other foreclosure procedures are available in some states, but they
are either infrequently used or available only in limited circumstances.
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A foreclosure action is subject to most of the delays and expenses
of other lawsuits if defenses are raised or counterclaims are interposed, and
sometimes requires several years to complete. Moreover, as discussed below, even
a non-collusive, regularly conducted foreclosure sale may be challenged as a
fraudulent conveyance, regardless of the parties' intent, if a court determines
that the sale was for less than fair consideration and such sale occurred while
the borrower was insolvent and within a specified period prior to the borrower's
filing for bankruptcy protection.
Judicial Foreclosure. A judicial foreclosure proceeding is conducted
in a court having jurisdiction over the mortgaged property. Generally, the
action is initiated by the service of legal pleadings upon all parties having a
subordinate interest of record in the real property and all parties in
possession of the property, under leases or otherwise, whose interests are
subordinate to the mortgage. Delays in completion of the foreclosure may
occasionally result from difficulties in locating defendants. When the lender's
right to foreclose is contested, the legal proceedings can be time-consuming.
Upon successful completion of a judicial foreclosure proceeding, the court
generally issues a judgment of foreclosure and appoints a referee or other
officer to conduct a public sale of the mortgaged property, the proceeds of
which are used to satisfy the judgment. Such sales are made in accordance with
procedures that vary from state to state.
Equitable Limitations on Enforceability of Certain Provisions.
United States courts have traditionally imposed general equitable principles to
limit the remedies available to lenders in foreclosure actions. These principles
are generally designed to relieve borrowers from the effects of mortgage
defaults perceived as harsh or unfair. Relying on such principles, a court may
alter the specific terms of a loan to the extent it considers necessary to
prevent or remedy an injustice, undue oppression or overreaching, or may require
the lender to undertake affirmative actions to determine the cause of the
borrower's default and the likelihood that the borrower will be able to
reinstate the loan. In some cases, courts have substituted their judgment for
the lenders and have required that lenders reinstate loans or recast payment
schedules in order to accommodate borrowers who are suffering from a temporary
financial disability. In other cases, courts have limited the right of the
lender to foreclose in the case of a non-monetary default, such as a failure to
adequately maintain the mortgaged property or an impermissible further
encumbrance of the mortgaged property. Finally, some courts have addressed the
issue of whether federal or state constitutional provisions reflecting due
process concerns for adequate notice require that a borrower receive notice in
addition to statutorily-prescribed minimum notice. For the most part, these
cases have upheld the reasonableness of the notice provisions or have found that
a public sale under a mortgage providing for a power of sale does not involve
sufficient state action to trigger constitutional protections.
Non-Judicial Foreclosure/Power of Sale. Foreclosure of a deed of
trust is generally accomplished by a non-judicial trustee's sale pursuant to a
power of sale typically granted in the deed of trust. A power of sale may also
be contained in any other type of mortgage instrument if applicable law so
permits. A power of sale under a deed of trust allows a non-judicial public sale
to be conducted generally following a request from the beneficiary/lender to the
trustee to sell the property upon default by the borrower and after notice of
sale is given in accordance with the terms of the mortgage and applicable state
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law. In some states, prior to such sale, the trustee under the deed of trust
must record a notice of default and notice of sale and send a copy to the
borrower and to any other party who has recorded a request for a copy of a
notice of default and notice of sale. In addition, in some states the trustee
must provide notice to any other party having an interest of record in the real
property, including junior lienholders. A notice of sale must be posted in a
public place and, in most states, published for a specified period of time in
one or more newspapers. The borrower or junior lienholder may then have the
right, during a reinstatement period required in some states, to cure the
default by paying the entire actual amount in arrears (without regard to the
acceleration of the indebtedness), plus the lender's expenses incurred in
enforcing the obligation. In other states, the borrower or the junior lienholder
is not provided a period to reinstate the loan, but has only the right to pay
off the entire debt to prevent the foreclosure sale. Generally, state law
governs the procedure for public sale, the parties entitled to notice, the
method of giving notice and the applicable time periods.
Public Sale. A third party may be unwilling to purchase a mortgaged
property at a public sale because of the difficulty in determining the value of
such property at the time of sale, due to, among other things, redemption rights
which may exist and the possibility of physical deterioration of the property
during the foreclosure proceedings. Potential buyers may be reluctant to
purchase property at a foreclosure sale as a result of the 1980 decision of the
United States Court of Appeals for the Fifth Circuit in Durrett v. Washington
National Insurance Company and other decisions that have followed its reasoning.
The court in Durrett held that even a non-collusive, regularly conducted
foreclosure sale was a fraudulent transfer under the federal Bankruptcy Code, as
amended from time to time (11 U.S.C.) and, therefore, could be rescinded in
favor of the bankrupt's estate, if (i) the foreclosure sale was held while the
debtor was insolvent and not more than one year prior to the filing of the
bankruptcy petition and (ii) the price paid for the foreclosed property did not
represent "fair consideration" ("reasonably equivalent value" under the
Bankruptcy Code). Although the reasoning and result of Durrett in respect of the
Bankruptcy Code was rejected by the United States Supreme Court in May 1994, the
case could nonetheless be persuasive to a court applying a state fraudulent
conveyance law which has provisions similar to those construed in Durrett. For
these reasons, it is common for the lender to purchase the mortgaged property
for an amount equal to the lesser of fair market value and the underlying debt
and accrued and unpaid interest plus the expenses of foreclosure. Generally,
state law controls the amount of foreclosure costs and expenses which may be
recovered by a lender. Thereafter, subject to the mortgagor's right in some
states to remain in possession during a redemption period, if applicable, the
lender will become the owner of the property and have both the benefits and
burdens of ownership of the mortgaged property. For example, the lender will
have the obligation to pay debt service on any senior mortgages, to pay taxes,
obtain casualty insurance and to make such repairs at its own expense as are
necessary to render the property suitable for sale. Frequently, the lender
employs a third party management company to manage and operate the property. The
costs of operating and maintaining a commercial or multifamily residential
property may be significant and may be greater than the income derived from that
property. The costs of management and operation of those mortgaged properties
which are hotels, motels or restaurants or nursing or convalescent homes or
hospitals may be particularly significant because of the expertise, knowledge
and, with respect to nursing or convalescent homes or hospitals, regulatory
compliance, required to run such operations and the effect which foreclosure and
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a change in ownership may have on the public's and the industry's (including
franchisors') perception of the quality of such operations. The lender will
commonly obtain the services of a real estate broker and pay the broker's
commission in connection with the sale of the property. Depending upon market
conditions, the ultimate proceeds of the sale of the property may not equal the
amount of the mortgage against the property. Moreover, a lender commonly incurs
substantial legal fees and court costs in acquiring a mortgaged property through
contested foreclosure and/or bankruptcy proceedings. Furthermore, a few states
require that any environmental contamination at certain types of properties be
cleaned up before a property may be resold. In addition, a lender may be
responsible under federal or state law for the cost of cleaning up a mortgaged
property that is environmentally contaminated. See "--Environmental Risks".
Generally state law controls the amount of foreclosure expenses and costs,
including attorneys' fees, that may be recovered by a lender.
The holder of a junior mortgage that forecloses on a mortgaged
property does so subject to senior mortgages and any other prior liens, and may
be obliged to keep senior mortgage loans current in order to avoid foreclosure
of its interest in the property. In addition, if the foreclosure of a junior
mortgage triggers the enforcement of a "due-on-sale" clause contained in a
senior mortgage, the junior mortgagee could be required to pay the full amount
of the senior mortgage indebtedness or face foreclosure.
Rights of Redemption. The purposes of a foreclosure action are to
enable the lender to realize upon its security and to bar the borrower, and all
persons who have interests in the property that are subordinate to that of the
foreclosing lender, from exercise of their "equity of redemption". The doctrine
of equity of redemption provides that, until the property encumbered by a
mortgage has been sold in accordance with a properly conducted foreclosure and
foreclosure sale, those having interests that are subordinate to that of the
foreclosing lender have an equity of redemption and may redeem the property by
paying the entire debt with interest. Those having an equity of redemption must
generally be made parties and joined in the foreclosure proceeding in order for
their equity of redemption to be terminated.
The equity of redemption is a common-law (non-statutory) right which
should be distinguished from post-sale statutory rights of redemption. In some
states, after sale pursuant to a deed of trust or foreclosure of a mortgage, the
borrower and foreclosed junior lienors are given a statutory period in which to
redeem the property. In some states, statutory redemption may occur only upon
payment of the foreclosure sale price. In other states, redemption may be
permitted if the former borrower pays only a portion of the sums due. The effect
of a statutory right of redemption is to diminish the ability of the lender to
sell the foreclosed property because the exercise of a right of redemption would
defeat the title of any purchaser through a foreclosure. Consequently, the
practical effect of the redemption right is to force the lender to maintain the
property and pay the expenses of ownership until the redemption period has
expired. In some states, a post-sale statutory right of redemption may exist
following a judicial foreclosure, but not following a trustee's sale under a
deed of trust.
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Anti-Deficiency Legislation. Some or all of the Mortgage Loans may
be nonrecourse loans, as to which recourse in the case of default will be
limited to the Mortgaged Property and such other assets, if any, that were
pledged to secure the Mortgage Loan. However, even if a mortgage loan by its
terms provides for recourse to the borrower's other assets, a lender's ability
to realize upon those assets may be limited by state law. For example, in some
states a lender cannot obtain a deficiency judgment against the borrower
following foreclosure or sale under a deed of trust. A deficiency judgment is a
personal judgment against the former borrower equal to the difference between
the net amount realized upon the public sale of the real property and the amount
due to the lender. Other statutes may require the lender to exhaust the security
afforded under a mortgage before bringing a personal action against the
borrower. In certain other states, the lender has the option of bringing a
personal action against the borrower on the debt without first exhausting such
security; however, in some of those states, the lender, following judgment on
such personal action, may be deemed to have elected a remedy and thus may be
precluded from foreclosing upon the security. Consequently, lenders in those
states where such an election of remedy provision exists will usually proceed
first against the security. Finally, other statutory provisions, designed to
protect borrowers from exposure to large deficiency judgments that might result
from bidding at below-market values at the foreclosure sale, limit any
deficiency judgment to the excess of the outstanding debt over the fair market
value of the property at the time of the sale.
Leasehold Risks. Mortgage Loans may be secured by a mortgage on the
borrower's leasehold interest in a ground lease. Leasehold mortgage loans are
subject to certain risks not associated with mortgage loans secured by a lien on
the fee estate of the borrower. The most significant of these risks is that if
the borrower's leasehold were to be terminated upon a lease default, the
leasehold mortgagee would lose its security. This risk may be lessened if the
ground lease requires the lessor to give the leasehold mortgagee notices of
lessee defaults and an opportunity to cure them, permits the leasehold estate to
be assigned to and by the leasehold mortgagee or the purchaser at a foreclosure
sale, and contains certain other protective provisions typically included in a
"mortgageable" ground lease.
Cooperative Shares. Mortgage Loans may be secured by a security
interest on the borrower's ownership interest in shares, and the proprietary
leases appurtenant thereto, allocable to cooperative dwelling units that may be
vacant or occupied by non-owner tenants. Such loans are subject to certain risks
not associated with mortgage loans secured by a lien on the fee estate of a
borrower in real property. Such a loan typically is subordinate to the mortgage,
if any, on the Cooperative's building which, if foreclosed, could extinguish the
equity in the building and the proprietary leases of the dwelling units derived
from ownership of the shares of the Cooperative. Further, transfer of shares in
a Cooperative are subject to various regulations as well as to restrictions
under the governing documents of the Cooperative, and the shares may be
cancelled in the event that associated maintenance charges due under the related
proprietary leases are not paid. Typically, a recognition agreement between the
lender and the Cooperative provides, among other things, the lender with an
opportunity to cure a default under a proprietary lease.
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Under the laws applicable in many states, "foreclosure" on
Cooperative shares is accomplished by a sale in accordance with the provisions
of Article 9 of the UCC and the security agreement relating to the shares.
Article 9 of the UCC requires that a sale be conducted in a "commercially
reasonable" manner, which may be dependent upon, among other things, the notice
given the debtor and the method, manner, time, place and terms of the sale.
Article 9 of the UCC provides that the proceeds of the sale will be applied
first to pay the costs and expenses of the sale and then to satisfy the
indebtedness secured by the lender's security interest. A recognition agreement,
however, generally provides that the lender's right to reimbursement is subject
to the right of the Cooperative to receive sums due under the proprietary
leases.
Bankruptcy Laws
Operation of the Bankruptcy Code and related state laws may
interfere with or affect the ability of a secured lender to realize upon
collateral and/or to enforce a deficiency judgment. For example, under the
Bankruptcy Code, virtually all actions (including foreclosure actions and
deficiency judgment proceedings) to collect a debt are automatically stayed upon
the filing of the bankruptcy petition and, often, no interest or principal
payments are made during the course of the bankruptcy case. The delay and the
consequences thereof caused by such automatic stay can be significant. Also,
under the Bankruptcy Code, the filing of a petition in bankruptcy by or on
behalf of a junior lienor may stay the senior lender from taking action to
foreclose out such junior lien.
Under the Bankruptcy Code, provided certain substantive and
procedural safeguards protective of the lender are met, the amount and terms of
a mortgage loan secured by a lien on property of the debtor may be modified. For
example, the lender's lien may be transferred to other collateral and/or the
outstanding amount of the secured loan may be reduced to the then-current value
of the property (with a corresponding partial reduction of the amount of
lender's security interest) pursuant to a confirmed plan or lien avoidance
proceeding, thus leaving the lender a general unsecured creditor for the
difference between such value and the outstanding balance of the loan. Other
modifications may include the reduction in the amount of each scheduled payment,
by means of a reduction in the rate of interest and/or an alteration of the
repayment schedule (with or without affecting the unpaid principal balance of
the loan), and/or by an extension (or shortening) of the term to maturity. The
priority of a mortgage loan may also be subordinated to bankruptcy
court-approved financing. Some bankruptcy courts have approved plans, based on
the particular facts of the reorganization case, that effected the cure of a
mortgage loan default by paying arrearages over a number of years. Also, a
bankruptcy court may permit a debtor, through its rehabilitative plan, to
reinstate a loan mortgage payment schedule even if the lender has obtained a
final judgment of foreclosure prior to the filing of the debtor's petition.
The bankruptcy court can also reinstate accelerated indebtedness and
also, in effect, invalidate due-on-sale clauses through confirmed Chapter 11
plans of reorganization. Under Section 363(b) and (f) of the Bankruptcy Code, a
trustee for a lessor, or a lessor as debtor-in-possession, may, despite the
provisions of the related Mortgage Loan to the contrary, sell the Mortgaged
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Property free and clear of all liens, which liens would then attach to the
proceeds of such sale.
The Bankruptcy Code provides that a lender's perfected pre-petition
security interest in leases, rents and hotel revenues continues in the
post-petition leases, rents and hotel revenues, unless a bankruptcy court orders
to the contrary "based on the equities of the case." Thus, unless a court orders
otherwise, revenues from a Mortgaged Property generated after the date the
bankruptcy petition is filed will constitute "cash collateral" under the
Bankruptcy Code. Debtors may only use cash collateral upon obtaining the
lender's consent or a prior court order finding that the lender's interest in
the Mortgaged Properties and the cash collateral is "adequately protected" and
such term is defined and interpreted under the Bankruptcy Code. It should be
noted, however, that the court may find that the lender has no security interest
in either pre-petition or post-petition revenues if the court finds that the
loan documents do not contain language covering accounts, room rents, or other
forms of personalty necessary for a security interest to attach to hotel
revenues.
Lessee bankruptcies at the Mortgaged Properties could have an
adverse impact on the Mortgagors' ability to meet their obligations. For
example, Section 365(e) of the Bankruptcy Code provides generally that rights
and obligations under an unexpired lease may not be terminated or modified at
any time after the commencement of a case under the Bankruptcy Code solely
because of a provision in the lease conditioned upon the commencement of a case
under the Bankruptcy Code or certain other similar events. In addition, Section
362 of the Bankruptcy Code operates as an automatic stay of, among other things,
any act to obtain possession of property of or from a debtor's estate, which may
delay the Trustee's exercise of such remedies in the event that a lessee becomes
the subject of a proceeding under the Bankruptcy Code.
Section 365(a) of the Bankruptcy Code generally provides that a
trustee or a debtor-in-possession in a case under the Bankruptcy Code has the
power to assume or to reject an executory contract or an unexpired lease of the
debtor, in each case subject to the approval of the bankruptcy court
administering such case. If the trustee or debtor-in-possession rejects an
executory contract or an unexpired lease, such rejection generally constitutes a
breach of the executory contract or unexpired lease immediately before the date
of the filing of the petition. As a consequence, the other party or parties to
such executory contract or unexpired lease, such as the lessor or Mortgagor, as
lessor under a lease, would have only an unsecured claim against the debtor for
damages resulting from such breach, which could adversely affect the security
for the related Mortgage Loan. Moreover, under Section 502(b)(6) of the
Bankruptcy Code, the claim of a lessor for such damages from the termination of
a lease of real property will be limited to the sum of (i) the rent reserved by
such lease, without acceleration, for the greater of one year or 15 percent, not
to exceed three years, of the remaining term of such lease, following the
earlier of the date of the filing of the petition and the date on which such
lender repossessed, or the lessee surrendered, the leased property, and (ii) any
unpaid rent due under such lease, without acceleration, on the earlier of such
dates.
Under Section 365(f) of the Bankruptcy Code, if a trustee or
debtor-in-possession assumes an executory contract or an unexpired lease of the
debtor, the trustee or debtor-in-possession generally may assign such executory
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contract or unexpired lease, notwithstanding any provision therein or in
applicable law that prohibits, restricts or conditions such assignment, provided
that the trustee or debtor-in-possession provides "adequate assurance of future
performance" by the assignee. The Bankruptcy Code specifically provides,
however, that adequate assurance of future performance for purposes of a lease
of real property in a shopping center includes adequate assurance of the source
of rent and other consideration due under such lease, and in the case of an
assignment, that the financial condition and operating performance of the
proposed assignee and its guarantors, if any, shall be similar to the financial
condition and operating performance of the debtor and its guarantors, if any, as
of the time the debtor became the lessee under the lease, that any percentage
rent due under such lease will not decline substantially, that the assumption
and assignment of the lease is subject to all the provisions thereof, including
(but not limited to) provisions such as a radius location, use or exclusivity
provision, and will not breach any such provision contained in any other lease,
financing agreement, or master agreement relating to such shopping center, and
that the assumption or assignment of such lease will not disrupt the tenant mix
or balance in such shopping center. Thus, an undetermined third party may assume
the obligations of the lessee under a lease in the event of commencement of a
proceeding under the Bankruptcy Code with respect to the lessee.
Under Section 365(h) of the Bankruptcy Code, if a trustee for a
lessor as a debtor-in-possession, rejects an unexpired lease of real property,
the lessee may treat such lease as terminated by such rejection or, in the
alternative, may remain in possession of the leasehold for the balance of such
term and for any renewal or extension of such term that is enforceable by the
lessee under applicable nonbankruptcy law. The Bankruptcy Code provides that if
a lessee elects to remain in possession after such a rejection of a lease, the
lessee may offset against rents reserved under the lease for the balance of the
term after the date of rejection of the lease, and any such renewal or extension
thereof, any damages occurring after such date caused by the nonperformance of
any obligation of the lessor under the lease after such date.
In a bankruptcy or similar proceeding, action may be taken seeking
the recovery as a preferential transfer of any payments made by the mortgagor
under the related Mortgage Loan to the Trust Fund. Payments on long-term debt
may be protected from recovery as preferences if they are payments in the
ordinary course of business made on debts incurred in the ordinary course of
business. Whether any particular payment would be protected depends upon the
facts specific to a particular transaction.
A trustee in bankruptcy, in some cases, may be entitled to collect
its costs and expenses in preserving or selling the mortgaged property ahead of
payment to the lender. In certain circumstances, a debtor in bankruptcy may have
the power to grant liens senior to the lien of a mortgage, and analogous state
statutes and general principles of equity may also provide a mortgagor with
means to halt a foreclosure proceeding or sale and to force a restructuring of a
mortgage loan on terms a lender would not otherwise accept. Moreover, the laws
of certain states also give priority to certain tax liens over the lien of a
mortgage or deed of trust. Under the Bankruptcy Code, if the court finds that
actions of the mortgagee have been unreasonable, the lien of the related
mortgage may be subordinated to the claims of unsecured creditors.
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Pursuant to the federal doctrine of "substantive consolidation" or
to the (predominantly state law) doctrine of "piercing the corporate veil", a
bankruptcy court, in the exercise of its equitable powers, also has the
authority to order that the assets and liabilities of a related entity be
consolidated with those of an entity before it. Thus, property ostensibly the
property of one entity may be determined to be the property of a different
entity in bankruptcy, the automatic stay applicable to the second entity
extended to the first and the rights of creditors of the first entity impaired
in the fashion set forth above in the discussion of ordinary bankruptcy
principles. Depending on facts and circumstances not wholly in existence at the
time a loan is originated or transferred to the Trust Fund, the application of
any of these doctrines to one or more of the mortgagors in the context of the
bankruptcy of one or more of their affiliates could result in material
impairment of the rights of the Certificateholders.
For each mortgagor that is described as a "special purpose entity",
"single purpose entity" or "bankruptcy-remote entity" in the Prospectus
Supplement, the activities that may be conducted by such mortgagor and its
ability to incur debt are restricted by the applicable Mortgage or the
organizational documents of such mortgagor in such manner as is intended to make
the likelihood of a bankruptcy proceeding being commenced by or against such
mortgagor remote, and such mortgagor has been organized and is designed to
operate in a manner such that its separate existence should be respected
notwithstanding a bankruptcy proceeding in respect of one or more affiliated
entities of such mortgagor. However, the Depositor makes no representation as to
the likelihood of the institution of a bankruptcy proceeding by or in respect of
any mortgagor or the likelihood that the separate existence of any mortgagor
would be respected if there were to be a bankruptcy proceeding in respect of any
affiliated entity of a mortgagor.
Environmental Risks
A lender may be subject to unforeseen environmental risks with
respect to loans secured by real or personal property, such as the Mortgage
Loans. Under the laws of many states, contamination on a property may give rise
to a lien on the property for cleanup costs. In several states, such a lien has
priority over all existing liens (a "superlien"), including those of existing
mortgages; in these states, the lien of the mortgage for any Mortgage Loan may
lose its priority to such a superlien.
Under the federal Comprehensive Response Compensation and Liability
Act ("CERCLA"), a lender may be liable either to the government or to private
parties for cleanup costs on a property securing a loan, even if the lender does
not cause or contribute to the contamination. CERCLA imposes strict, as well as
joint and several, liability on several classes of potentially responsible
parties ("PRPs"), including current owners and operators of the property who did
not cause or contribute to the contamination. Many states have laws similar to
CERCLA.
Lenders may be held liable under CERCLA as owners or operators
unless they qualify for the secured creditor exemption to CERCLA. On April 29,
1992, the United States Environmental Protection Agency ("EPA") issued a final
rule intended to protect lenders from liability under CERCLA. This rule was in
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response to a 1990 decision of the United States Court of Appeals for the
Eleventh Circuit, United States v. Fleet Factors Corp., which narrowly construed
the security interest exemption under CERCLA to hold lenders liable if they had
the capacity to influence their borrower's management of hazardous waste. On
February 4, 1994, the United States Court of Appeals for the District of
Columbia Circuit in Kelley v. Environmental Protection Agency invalidated this
EPA rule. As a result of the Kelley case, the state of the law with respect to
the secured creditor exemption and the scope of permissible activities in which
a lender may engage to protect its security interest remain uncertain. EPA and
the Department of Justice ("DOJ"), however, issued a joint policy memorandum in
which these agencies announced that they would continue to follow the "Lender
Liability Rule" vacated by the Kelley case. These agencies indicated that prior
to its invalidation, several courts adhered to the terms of the "Lender
Liability Rule" or interpreted CERCLA in a manner consistent with the "Lender
Liability Rule." EPA and DOJ indicated in the September 22, 1995 memorandum that
they intend to follow this line of cases. This EPA/DOJ policy, however, would
not necessarily affect the potential for lender liability in actions by parties
other than EPA or under laws or legal theories other than CERCLA. If a lender is
or becomes liable, it can bring an action for contribution against the owner or
operator who created the environmental hazard, but that person or entity may be
bankrupt or otherwise judgment proof.
Environment clean-up costs may be substantial. It is possible that
such costs could become a liability of the Trust and occasion a loss to
Certificateholders if such remedial costs were incurred.
In a few states, transfers of some types of properties are
conditioned upon cleanup of contamination prior to transfer. It is possible that
a property securing a Mortgage Loan could be subject to such transfer
restrictions. In such a case, if the lender becomes the owner upon foreclosure,
it may be required to clean up the contamination before selling the property.
The cost of remediating hazardous substance contamination at a
property can be substantial. If a lender is or becomes liable, it can bring an
action for contribution against the owner or operator that created the
environmental hazard, but that person or entity may be without substantial
assets. Accordingly, it is possible that such costs could become a liability of
a Trust Fund and occasion a loss to Certificateholders of the related series.
To reduce the likelihood of such a loss, and unless otherwise
provided in the related Prospectus Supplement, the related Pooling Agreement
will provide that the Master Servicer may, on behalf of the Trust Fund, acquire
title to a Mortgaged Property or take over its operation unless the Master
Servicer, based on a report prepared by a person who regularly conducts
environmental site assessments, has made the determination that it is
appropriate to do so, as described under "Description of the Pooling
Agreements--Realization Upon Defaulted Mortgage Loans".
Even when a lender is not directly liable for cleanup costs on
property securing loans, if a property securing a loan is contaminated, the
value of the security is likely to be affected. In addition, a lender bears the
risk that unanticipated cleanup costs may jeopardize the borrower's repayment.
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Neither of these two issues is likely to pose risks exceeding the amount of
unpaid principal and interest of a particular loan secured by a contaminated
property, particularly if the lender declines to foreclose on a mortgage secured
by the property.
If a lender forecloses on a mortgage secured by a property the
operations of which are subject to environmental laws and regulations, the
lender will be required to operate the property in accordance with those laws
and regulations. Compliance may entail some expense.
In addition, a lender may be obligated to disclose environmental
conditions on a property to government entities and/or to prospective buyers
(including prospective buyers at a foreclosure sale or following foreclosure).
Such disclosure may decrease the amount that prospective buyers are willing to
pay for the affected property and thereby lessen the ability of the lender to
recover its investment in a loan upon foreclosure.
Due-on-Sale and Due-on-Encumbrance
Certain of the Mortgage Loans may contain "due-on-sale" and
"due-on-encumbrance" clauses that purport to permit the lender to accelerate the
maturity of the loan if the borrower transfers or encumbers the related
Mortgaged Property. In recent years, court decisions and legislative actions
placed substantial restrictions on the right of lenders to enforce such clauses
in many states. By virtue, however, of the Garn-St Germain Depository
Institutions Act of 1982 (the "Garn Act"), effective October 15, 1982 (which
purports to preempt state laws that prohibit the enforcement of due-on-sale
clauses by providing among other matters, that "due-on-sale" clauses in certain
loans made after the effective date of the Garn Act are enforceable, within
certain limitations as set forth in the Garn Act and the regulations promulgated
thereunder), a Master Servicer may nevertheless have the right to accelerate the
maturity of a Mortgage Loan that contains a "due-on-sale" provision upon
transfer of an interest in the property, regardless of the Master Servicer's
ability to demonstrate that a sale threatens its legitimate security interest.
Subordinate Financing
Certain of the Mortgage Loans may not restrict the ability of the
borrower to use the Mortgaged Property as security for one or more additional
loans. Where a borrower encumbers a mortgaged property with one or more junior
liens, the senior lender is subjected to additional risk. First, the borrower
may have difficulty servicing and repaying multiple loans. Moreover, if the
subordinate financing permits recourse to the borrower (as is frequently the
case) and the senior loan does not, a borrower may have more incentive to repay
sums due on the subordinate loan. Second, acts of the senior lender that
prejudice the junior lender or impair the junior lender's security may create a
superior equity in favor of the junior lender. For example, if the borrower and
the senior lender agree to an increase in the principal amount of or the
interest rate payable on the senior loan, the senior lender may lose its
priority to the extent any existing junior lender is harmed or the borrower is
additionally burdened. Third, if the borrower defaults on the senior loan and/or
any junior loan or loans, the existence of junior loans and actions taken by
junior lenders can impair the security available to the senior lender and can
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interfere with or delay the taking of action by the senior lender. Moreover, the
bankruptcy of a junior lender may operate to stay foreclosure or similar
proceedings by the senior lender.
Default Interest and Limitations on Prepayments
Notes and mortgages may contain provisions that obligate the
borrower to pay a late charge or additional interest if payments are not timely
made, and in some circumstances, may prohibit prepayments for a specified period
and/or condition prepayments upon the borrower's payment of prepayment fees or
yield maintenance penalties. In certain states, there are or may be specific
limitations upon the late charges which a lender may collect from a borrower for
delinquent payments. Certain states also limit the amounts that a lender may
collect from a borrower as an additional charge if the loan is prepaid. In
addition, the enforceability of provisions that provide for prepayment fees or
penalties upon an involuntary prepayment is unclear under the laws of many
states.
Applicability of Usury Laws
Title V of the Depository Institutions Deregulation and Monetary
Control Act of 1980 ("Title V") provides that state usury limitations shall not
apply to certain types of residential (including multifamily) first mortgage
loans originated by certain lenders after March 31, 1980. Title V authorized any
state to reimpose interest rate limits by adopting, before April 1, 1983, a law
or constitutional provision that expressly rejects application of the federal
law. In addition, even where Title V is not so rejected, any state is authorized
by the law to adopt a provision limiting discount points or other charges on
mortgage loans covered by Title V. Certain states have taken action to reimpose
interest rate limits and/or to limit discount points or other charges.
No Mortgage Loan originated in any state in which application of
Title V has been expressly rejected or a provision limiting discount points or
other charges has been adopted, will (if originated after that rejection or
adoption) be eligible for inclusion in a Trust Fund unless (i) such Mortgage
Loan provides for such interest rate, discount points and charges as are
permitted in such state or (ii) such Mortgage Loan provides that the terms
thereof are to be construed in accordance with the laws of another state under
which such interest rate, discount points and charges would not be usurious and
the borrower's counsel has rendered an opinion that such choice of law provision
would be given effect.
Soldiers' and Sailors' Civil Relief Act of 1940
Under the terms of the Soldiers' and Sailors' Civil Relief Act of
1940, as amended (the "Relief Act"), a borrower who enters military service
after the origination of such borrower's mortgage loan (including a borrower who
was in reserve status and is called to active duty after origination of the
Mortgage Loan), may not be charged interest (including fees and charges) above
an annual rate of 6% during the period of such borrower's active duty status,
unless a court orders otherwise upon application of the lender. The Relief Act
applies to individuals who are members of the Army, Navy, Air Force, Marines,
National Guard, Reserves, Coast Guard and officers of the U.S. Public Health
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Service assigned to duty with the military. Because the Relief Act applies to
individuals who enter military service (including reservists who are called to
active duty) after origination of the related mortgage loan, no information can
be provided as to the number of loans with individuals as borrowers that may be
affected by the Relief Act. Application of the Relief Act would adversely
affect, for an indeterminate period of time, the ability of any servicer to
collect full amounts of interest on certain of the Mortgage Loans. Any
shortfalls in interest collections resulting from the application of the Relief
Act would result in a reduction of the amounts distributable to the holders of
the related series of Certificates, and would not be covered by advances or,
unless otherwise specified in the related Prospectus Supplement, any form of
Credit Support provided in connection with such Certificates. In addition, the
Relief Act imposes limitations that would impair the ability of the servicer to
foreclose on an affected Mortgage Loan during the borrower's period of active
duty status, and, under certain circumstances, during an additional three-month
period thereafter.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a general discussion of the anticipated material
federal income tax consequences of the purchase, ownership and disposition of
Certificates. The discussion below does not purport to address all federal
income tax consequences that may be applicable to particular categories of
investors, some of which may be subject to special rules. The authorities on
which this discussion is based are subject to change or differing
interpretations, and any such change or interpretation could apply
retroactively. This discussion reflects the applicable provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), as well as regulations
(the "REMIC Regulations") promulgated by the U.S. Department of Treasury (the
"Treasury") on December 23, 1992. Investors should consult their own tax
advisors in determining the federal, state, local and other tax consequences to
them of the purchase, ownership and disposition of Certificates.
For purposes of this discussion, (i) references to the Mortgage
Loans include references to the mortgage loans underlying MBS included in the
Mortgage Assets and (ii) where the applicable Prospectus Supplement provides for
a fixed retained yield with respect to the Mortgage Loans underlying a series of
Certificates, references to the Mortgage Loans will be deemed to refer to that
portion of the Mortgage Loans held by the Trust Fund which does not include the
Retained Interest. References to a "holder" or "Certificateholder" in this
discussion generally mean the beneficial owner of a Certificate.
Federal Income Tax Consequences for REMIC Certificates
General
With respect to a particular series of Certificates, an election may
be made to treat the Trust Fund or one or more segregated pools of assets
therein as one or more REMICs within the meaning of Code Section 860D. A Trust
Fund or a portion thereof as to which a REMIC election will be made will be
referred to as a "REMIC Pool". For purposes of this discussion, Certificates of
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a series as to which one or more REMIC elections are made are referred to as
"REMIC Certificates" and will consist of one or more Classes of "Regular
Certificates" and one Class of "Residual Certificates" in the case of each REMIC
Pool. Qualification as a REMIC requires ongoing compliance with certain
conditions. With respect to each series of REMIC Certificates, Cadwalader,
Wickersham & Taft, counsel to the Depositor, has advised the Depositor that in
the firm's opinion, assuming (i) the making of such an election, (ii) compliance
with the Pooling Agreement and (iii) compliance with any changes in the law,
including any amendments to the Code or applicable Treasury regulations
thereunder, each REMIC Pool will qualify as a REMIC. In such case, the Regular
Certificates will be considered to be "regular interests" in the REMIC Pool and
generally will be treated for federal income tax purposes as if they were newly
originated debt instruments, and the Residual Certificates will be considered to
be "residual interests" in the REMIC Pool. The Prospectus Supplement for each
series of Certificates will indicate whether one or more REMIC elections with
respect to the related Trust Fund will be made, in which event references to
"REMIC" or "REMIC Pool" herein shall be deemed to refer to each such REMIC Pool.
If so specified in the applicable Prospectus Supplement, the portion of a Trust
Fund as to which a REMIC election is not made may be treated as a grantor trust
for federal income tax purposes. See "--Federal Income Tax Consequences for
Certificates as to Which No REMIC Election Is Made".
Status of REMIC Certificates
REMIC Certificates held by a domestic building and loan
association will constitute "a regular or residual interest in a REMIC"
within the meaning of Code Section 7701(a)(19)(C)(xi), but only in the same
proportion that the assets of the REMIC Pool would be treated as "loans . . .
secured by an interest in real property which is . . . residential real
property" (such as single family or multifamily properties, but not
commercial properties) within the meaning of Code Section 7701(a)(19)(C)(v)
or as other assets described in Code Section 7701(a)(19)(C), and otherwise
will not qualify for such treatment. REMIC Certificates held by a real estate
investment trust will constitute "real estate assets" within the meaning of
Code Section 856(c)(5)(A), and interest on the Regular Certificates and
income with respect to Residual Certificates will be considered "interest on
obligations secured by mortgages on real property or on interests in real
property" within the meaning of Code Section 856(c)(3)(B) in the same
proportion that, for both purposes, the assets of the REMIC Pool would be so
treated. If at all times 95% or more of the assets of the REMIC Pool qualify
for each of the foregoing respective treatments, the REMIC Certificates will
qualify for the corresponding status in their entirety. For purposes of Code
Section 856(c)(5)(A), payments of principal and interest on the Mortgage
Loans that are reinvested pending distribution to holders of REMIC
Certificates qualify for such treatment. Where two REMIC Pools are a part of
a tiered structure they will be treated as one REMIC for purposes of the
tests described above respecting asset ownership of more or less than 95%. In
addition, if the assets of the REMIC include Buy-Down Mortgage Loans, it is
possible that the percentage of such assets constituting "qualifying real
property loans" or "loans . . . secured by an interest in real property which
is . . . residential real property" for purposes of Code Section
7701(a)(19)(C)(v) may be required to be reduced by the amount of the related
Buy-Down Funds. REMIC Certificates held by a regulated investment company
will not constitute "Government Securities" within the meaning of Code
Section 851(b)(4)(A)(i). REMIC Certificates held by certain financial
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institutions will constitute an "evidence of indebtedness" within the meaning
of Code Section 582(c)(1). The Small Business Job Protection Act of 1996 (the
"SBJPA of 1996") repealed the reserve method for bad debts of domestic
building and loan associations and mutual savings banks, and thus has
eliminated the asset category of "qualifying real property loans" in former
Code Section 593(d) for taxable years beginning after December 31, 1995. The
requirement in the SBJPA of 1996 that such institutions must "recapture" a
portion of their existing bad debt reserves is suspended if a certain portion
of their assets are maintained in "residential loans" under Code Section
7701(a)(19)(C)(v), but only if such loans were made to acquire, construct or
improve the related real property and not for the purpose of refinancing.
However, no effort will be made to identify the portion of the Mortgage Loans
of any Series meeting this requirement, and no representation is made in this
regard.
Qualification as a REMIC
In order for the REMIC Pool to qualify as a REMIC, there must be
ongoing compliance on the part of the REMIC Pool with the requirements set forth
in the Code. The REMIC Pool must fulfill an asset test, which requires that no
more than a de minimis portion of the assets of the REMIC Pool, as of the close
of the third calendar month beginning after the "Startup Day" (which for
purposes of this discussion is the date of issuance of the REMIC Certificates)
and at all times thereafter, may consist of assets other than "qualified
mortgages" and "permitted investments". The REMIC Regulations provide a safe
harbor pursuant to which the de minimis requirement is met if at all times the
aggregate adjusted basis of the nonqualified assets is less than 1% of the
aggregate adjusted basis of all the REMIC Pool's assets. An entity that fails to
meet the safe harbor may nevertheless demonstrate that it holds no more than a
de minimis amount of nonqualified assets. A REMIC also must provide "reasonable
arrangements" to prevent its residual interest from being held by "disqualified
organizations" and must furnish applicable tax information to transferors or
agents that violate this requirement. See "Taxation of Residual
Certificates--Tax-Related Restrictions on Transfer of Residual
Certificates--Disqualified Organizations".
A qualified mortgage is any obligation that is principally secured
by an interest in real property and that is either transferred to the REMIC Pool
on the Startup Day or is purchased by the REMIC Pool within a three-month period
thereafter pursuant to a fixed price contract in effect on the Startup Day.
Qualified mortgages include whole mortgage loans, such as the Mortgage Loans,
certificates of beneficial interest in a grantor trust that holds mortgage
loans, including certain of the MBS, regular interests in another REMIC, such as
MBS in a trust as to which a REMIC election has been made, loans secured by
timeshare interests and loans secured by shares held by a tenant stockholder in
a cooperative housing corporation, provided, in general, (i) the fair market
value of the real property security (including buildings and structural
components thereof) is at least 80% of the principal balance of the related
Mortgage Loan or mortgage loan underlying the Mortgage Certificate either at
origination or as of the Startup Day (an original loan-to-value ratio of not
more than 125% with respect to the real property security) or (ii) substantially
all the proceeds of the Mortgage Loan or the underlying mortgage loan were used
to acquire, improve or protect an interest in real property that, at the
origination date, was the only security for the Mortgage Loan or underlying
mortgage loan. If the Mortgage Loan has been substantially modified other than
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in connection with a default or reasonably foreseeable default, it must meet the
loan-to-value test in (i) of the preceding sentence as of the date of the last
such modification or at closing. A qualified mortgage includes a qualified
replacement mortgage, which is any property that would have been treated as a
qualified mortgage if it were transferred to the REMIC Pool on the Startup Day
and that is received either (i) in exchange for any qualified mortgage within a
three-month period thereafter or (ii) in exchange for a "defective obligation"
within a two-year period thereafter. A "defective obligation" includes (i) a
mortgage in default or as to which default is reasonably foreseeable, (ii) a
mortgage as to which a customary representation or warranty made at the time of
transfer to the REMIC Pool has been breached, (iii) a mortgage that was
fraudulently procured by the mortgagor, and (iv) a mortgage that was not in fact
principally secured by real property (but only if such mortgage is disposed of
within 90 days of discovery). A Mortgage Loan that is "defective" as described
in clause (iv) that is not sold or, if within two years of the Startup Day,
exchanged, within 90 days of discovery, ceases to be a qualified mortgage after
such 90-day period.
Permitted investments include cash flow investments, qualified
reserve assets, and foreclosure property. A cash flow investment is an
investment, earning a return in the nature of interest, of amounts received on
or with respect to qualified mortgages for a temporary period, not exceeding 13
months, until the next scheduled distribution to holders of interests in the
REMIC Pool. A qualified reserve asset is any intangible property held for
investment that is part of any reasonably required reserve maintained by the
REMIC Pool to provide for payments of expenses of the REMIC Pool or amounts due
on the regular or residual interests in the event of defaults (including
delinquencies) on the qualified mortgages, lower than expected reinvestment
returns, prepayment interest shortfalls and certain other contingencies. The
reserve fund will be disqualified if more than 30% of the gross income from the
assets in such fund for the year is derived from the sale or other disposition
of property held for less than three months, unless required to prevent a
default on the regular interests caused by a default on one or more qualified
mortgages. A reserve fund must be reduced "promptly and appropriately" as
payments on the Mortgage Loans are received. Foreclosure property is real
property acquired by the REMIC Pool in connection with the default or imminent
default of a qualified mortgage and generally held for not more than two years,
with extensions granted by the Internal Revenue Service (the "Service").
In addition to the foregoing requirements, the various interests in
a REMIC Pool also must meet certain requirements. All of the interests in a
REMIC Pool must be either of the following: (i) one or more classes of regular
interests or (ii) a single class of residual interests on which distributions,
if any, are made pro rata. A regular interest is an interest in a REMIC Pool
that is issued on the Startup Day with fixed terms, is designated as a regular
interest, and unconditionally entitles the holder to receive a specified
principal amount (or other similar amount), and provides that interest payments
(or other similar amounts), if any, at or before maturity either are payable
based on a fixed rate or a qualified variable rate, or consist of a specified,
nonvarying portion of the interest payments on qualified mortgages. Such a
specified portion may consist of a fixed number of basis points, a fixed
percentage of the total interest, or a fixed or qualified variable or inverse
variable rate on some or all of the qualified mortgages minus a different fixed
or qualified variable rate. The specified principal amount of a regular interest
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that provides for interest payments consisting of a specified, nonvarying
portion of interest payments on qualified mortgages may be zero. A residual
interest is an interest in a REMIC Pool other than a regular interest that is
issued on the Startup Day and that is designated as a residual interest. An
interest in a REMIC Pool may be treated as a regular interest even if payments
of principal with respect to such interest are subordinated to payments on other
regular interests or the residual interest in the REMIC Pool, and are dependent
on the absence of defaults or delinquencies on qualified mortgages or permitted
investments, lower than reasonably expected returns on permitted investments,
unanticipated expenses incurred by the REMIC Pool or prepayment interest
shortfalls. Accordingly, the Regular Certificates of a series will constitute
one or more classes of regular interests, and the Residual Certificates with
respect to that series will constitute a single class of residual interests on
which distributions are made pro rata.
If an entity, such as the REMIC Pool, fails to comply with one or
more of the ongoing requirements of the Code for REMIC status during any taxable
year, the Code provides that the entity will not be treated as a REMIC for such
year and thereafter. In this event, an entity with multiple classes of ownership
interests may be treated as a separate association taxable as a corporation
under Treasury regulations, and the Regular Certificates may be treated as
equity interests therein. The Code, however, authorizes the Treasury Department
to issue regulations that address situations where failure to meet one or more
of the requirements for REMIC status occurs inadvertently and in good faith, and
disqualification of the REMIC Pool would occur absent regulatory relief.
Investors should be aware, however, that the Conference Committee Report to the
Tax Reform Act of 1986 (the "1986 Act") indicates that the relief may be
accompanied by sanctions, such as the imposition of a corporate tax on all or a
portion of the REMIC Pool's income for the period of time in which the
requirements for REMIC status are not satisfied.
Taxation of Regular Certificates
General
In general, interest, original issue discount and market discount on
a Regular Certificate will be treated as ordinary income to a holder of the
Regular Certificate (the "Regular Certificateholder") as they accrue, and
principal payments on a Regular Certificate will be treated as a return of
capital to the extent of the Regular Certificateholder's basis in the Regular
Certificate allocable thereto. Regular Certificateholders must use the accrual
method of accounting with regard to Regular Certificates, regardless of the
method of accounting otherwise used by such Regular Certificateholders.
Original Issue Discount
Accrual Certificates and principal-only Certificates will be, and
other Classes of Regular Certificates may be, issued with "original issue
discount" within the meaning of Code Section 1273(a). Holders of any Class of
Regular Certificates having original issue discount generally must include
original issue discount in ordinary income for federal income tax purposes as it
accrues, in accordance with the constant yield method that takes into account
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the compounding of interest, in advance of receipt of the cash attributable to
such income. The following discussion is based in part on temporary and final
Treasury regulations issued on February 2, 1994, as amended on June 14, 1996,
(the "OID Regulations") under Code Sections 1271 through 1273 and 1275 and in
part on the provisions of the 1986 Act. Regular Certificateholders should be
aware, however, that the OID Regulations do not adequately address certain
issues relevant to prepayable securities, such as the Regular Certificates. To
the extent such issues are not addressed in such regulations, the Depositor
intends to apply the methodology described in the Conference Committee Report to
the 1986 Act. No assurance can be provided that the Service will not take a
different position as to those matters not currently addressed by the OID
Regulations. Moreover, the OID Regulations include an anti-abuse rule allowing
the Service to apply or depart from the OID Regulations where necessary or
appropriate to ensure a reasonable tax result in light of the applicable
statutory provisions. A tax result will not be considered unreasonable under the
anti-abuse rule in the absence of a substantial effect on the present value of a
taxpayer's tax liability. Investors are advised to consult their own tax
advisors as to the discussion herein and the appropriate method for reporting
interest and original issue discount with respect to the Regular Certificates.
Each Regular Certificate (except to the extent described below with
respect to a Regular Certificate on which principal is distributed by random lot
("Random Lot Certificates")) will be treated as a single installment obligation
for purposes of determining the original issue discount includible in a Regular
Certificateholder's income. The total amount of original issue discount on a
Regular Certificate is the excess of the "stated redemption price at maturity"
of the Regular Certificate over its "issue price". The issue price of a Class of
Regular Certificates offered pursuant to this Prospectus generally is the first
price at which a substantial amount of Regular Certificates of that Class is
sold to the public (excluding bond houses, brokers and underwriters). Although
unclear under the OID Regulations, the Depositor intends to treat the issue
price of a Class as to which there is no substantial sale as of the issue date
or that is retained by the Depositor as the fair market value of that Class as
of the issue date. The issue price of a Regular Certificate also includes the
amount paid by an initial Regular Certificateholder for accrued interest that
relates to a period prior to the issue date of the Regular Certificate, unless
the Regular Certificateholder elects on its federal income tax return to exclude
such amount from the issue price and to recover it on the first Distribution
Date. The stated redemption price at maturity of a Regular Certificate always
includes the original principal amount of the Regular Certificate, but generally
will not include distributions of stated interest if such interest distributions
constitute "qualified stated interest". Under the OID Regulations, qualified
stated interest generally means interest payable at a single fixed rate or a
qualified variable rate (as described below) provided that such interest
payments are unconditionally payable at intervals of one year or less during the
entire term of the Regular Certificate. Because there is no penalty or default
remedy in the case of nonpayment of interest with respect to a Regular
Certificate, it is possible that no interest on any Class of Regular
Certificates will be treated as qualified stated interest. However, except as
provided in the following three sentences or in the applicable Prospectus
Supplement, because the underlying Mortgage Loans provide for remedies in the
event of default, the Depositor intends to treat interest with respect to the
Regular Certificates as qualified stated interest. Distributions of interest on
an Accrual Certificate, or on other Regular Certificates with respect to which
deferred interest will accrue, will not constitute qualified stated interest, in
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which case the stated redemption price at maturity of such Regular Certificates
includes all distributions of interest as well as principal thereon. Likewise,
the Depositor intends to treat an "interest only" class, or a class on which
interest is substantially disproportionate to its principal amount (a so-called
"super-premium" class) as having no qualified stated interest. Where the
interval between the issue date and the first Distribution Date on a Regular
Certificate is shorter than the interval between subsequent Distribution Dates,
the interest attributable to the additional days will be included in the stated
redemption price at maturity.
Under a de minimis rule, original issue discount on a Regular
Certificate will be considered to be zero if such original issue discount is
less than 0.25% of the stated redemption price at maturity of the Regular
Certificate multiplied by the weighted average maturity of the Regular
Certificate. For this purpose, the weighted average maturity of the Regular
Certificate is computed as the sum of the amounts determined by multiplying the
number of full years (i.e., rounding down partial years) from the issue date
until each distribution is scheduled to be made by a fraction, the numerator of
which is the amount of each distribution included in the stated redemption price
at maturity of the Regular Certificate and the denominator of which is the
stated redemption price at maturity of the Regular Certificate. The Conference
Committee Report to the 1986 Act provides that the schedule of such
distributions should be determined in accordance with the assumed rate of
prepayment of the Mortgage Loans (the "Prepayment Assumption") and the
anticipated reinvestment rate, if any, relating to the Regular Certificates. The
Prepayment Assumption with respect to a Series of Regular Certificates will be
set forth in the related Prospectus Supplement. Holders generally must report de
minimis original issue discount pro rata as principal payments are received, and
such income will be capital gain if the Regular Certificate is held as a capital
asset. However, under the OID Regulations, Regular Certificateholders may elect
to accrue all de minimis original issue discount as well as market discount and
market premium under the constant yield method. See "Election to Treat All
Interest Under the Constant Yield Method".
A Regular Certificateholder generally must include in gross income
for any taxable year the sum of the "daily portions," as defined below, of the
original issue discount on the Regular Certificate accrued during an accrual
period for each day on which it holds the Regular Certificate, including the
date of purchase but excluding the date of disposition. The Depositor will treat
the monthly period ending on the day before each Distribution Date as the
accrual period. With respect to each Regular Certificate, a calculation will be
made of the original issue discount that accrues during each successive full
accrual period (or shorter period from the date of original issue) that ends on
the day before the related Distribution Date on the Regular Certificate. The
Conference Committee Report to the 1986 Act states that the rate of accrual of
original issue discount is intended to be based on the Prepayment Assumption.
Other than as discussed below with respect to a Random Lot Certificate, the
original issue discount accruing in a full accrual period would be the excess,
if any, of (i) the sum of (a) the present value of all of the remaining
distributions to be made on the Regular Certificate as of the end of that
accrual period that are included in the Regular Certificate's stated redemption
price at maturity and (b) the distributions made on the Regular Certificate
during the accrual period that are included in the Regular Certificate's stated
redemption price at maturity, over (ii) the adjusted issue price of the Regular
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Certificate at the beginning of the accrual period. The present value of the
remaining distributions referred to in the preceding sentence is calculated
based on (i) the yield to maturity of the Regular Certificate at the issue date,
(ii) events (including actual prepayments) that have occurred prior to the end
of the accrual period and (iii) the Prepayment Assumption. For these purposes,
the adjusted issue price of a Regular Certificate at the beginning of any
accrual period equals the issue price of the Regular Certificate, increased by
the aggregate amount of original issue discount with respect to the Regular
Certificate that accrued in all prior accrual periods and reduced by the amount
of distributions included in the Regular Certificate's stated redemption price
at maturity that were made on the Regular Certificate in such prior periods. The
original issue discount accruing during any accrual period (as determined in
this paragraph) will then be divided by the number of days in the period to
determine the daily portion of original issue discount for each day in the
period. With respect to an initial accrual period shorter than a full accrual
period, the daily portions of original issue discount must be determined
according to an appropriate allocation under any reasonable method.
Under the method described above, the daily portions of original
issue discount required to be included in income by a Regular Certificateholder
generally will increase to take into account prepayments on the Regular
Certificates as a result of prepayments on the Mortgage Loans that exceed the
Prepayment Assumption, and generally will decrease (but not below zero for any
period) if the prepayments are slower than the Prepayment Assumption. An
increase in prepayments on the Mortgage Loans with respect to a Series of
Regular Certificates can result in both a change in the priority of principal
payments with respect to certain Classes of Regular Certificates and either an
increase or decrease in the daily portions of original issue discount with
respect to such Regular Certificates.
In the case of a Random Lot Certificate, the Depositor intends to
determine the yield to maturity of such Certificate based upon the anticipated
payment characteristics of the Class as a whole under the Prepayment Assumption.
In general, the original issue discount accruing on each Random Lot Certificate
in a full accrual period would be its allocable share of the original issue
discount with respect to the entire Class, as determined in accordance with the
preceding paragraph. However, in the case of a distribution in retirement of the
entire unpaid principal balance of any Random Lot Certificate (or portion of
such unpaid principal balance), (a) the remaining unaccrued original issue
discount allocable to such Certificate (or to such portion) will accrue at the
time of such distribution, and (b) the accrual of original issue discount
allocable to each remaining Certificate of such Class (or the remaining unpaid
principal balance of a partially redeemed Random Lot Certificate after a
distribution of principal has been received) will be adjusted by reducing the
present value of the remaining payments on such Class and the adjusted issue
price of such Class to the extent attributable to the portion of the unpaid
principal balance thereof that was distributed. The Depositor believes that the
foregoing treatment is consistent with the "pro rata prepayment" rules of the
OID Regulations, but with the rate of accrual of original issue discount
determined based on the Prepayment Assumption for the Class as a whole.
Investors are advised to consult their tax advisors as to this treatment.
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Acquisition Premium
A purchaser of a Regular Certificate at a price greater than its
adjusted issue price but less than its stated redemption price at maturity will
be required to include in gross income the daily portions of the original issue
discount on the Regular Certificate reduced pro rata by a fraction, the
numerator of which is the excess of its purchase price over such adjusted issue
price and the denominator of which is the excess of the remaining stated
redemption price at maturity over the adjusted issue price. Alternatively, such
a subsequent purchaser may elect to treat all such acquisition premium under the
constant yield method, as described below under the heading "Election to Treat
All Interest Under the Constant Yield Method".
Variable Rate Regular Certificates
Regular Certificates may provide for interest based on a variable
rate. Under the OID Regulations, interest is treated as payable at a variable
rate if, generally, (i) the issue price does not exceed the original principal
balance by more than a specified amount and (ii) the interest compounds or is
payable at least annually at current values of (a) one or more "qualified
floating rates", (b) a single fixed rate and one or more qualified floating
rates, (c) a single "objective rate", or (d) a single fixed rate and a single
objective rate that is a "qualified inverse floating rate". A floating rate is a
qualified floating rate if variations in the rate can reasonably be expected to
measure contemporaneous variations in the cost of newly borrowed funds, where
such rate is subject to a fixed multiple that is greater than 0.65, but not more
than 1.35. Such rate may also be increased or decreased by a fixed spread or
subject to a fixed cap or floor, or a cap or floor that is not reasonably
expected as of the issue date to affect the yield of the instrument
significantly. An objective rate (other than a qualified floating rate) is a
rate that is determined using a single fixed formula and that is based on
objective financial or economic information, provided that such information is
not (i) within the control of the issuer or a related party or (ii) unique to
the circumstances of the issuer or a related party. A qualified inverse floating
rate is a rate equal to a fixed rate minus a qualified floating rate that
inversely reflects contemporaneous variations in the cost of newly borrowed
funds; an inverse floating rate that is not a qualified floating rate may
nevertheless be an objective rate. A Class of Regular Certificates may be issued
under this Prospectus that does not have a variable rate under the OID
Regulations, for example, a Class that bears different rates at different times
during the period it is outstanding such that it is considered significantly
"front-loaded" or "back-loaded" within the meaning of the OID Regulations. It is
possible that such a Class may be considered to bear "contingent interest"
within the meaning of the OID Regulations. The OID Regulations, as they relate
to the treatment of contingent interest, are by their terms not applicable to
Regular Certificates. However, if final regulations dealing with contingent
interest with respect to Regular Certificates apply the same principles as the
OID Regulations, such regulations may lead to different timing of income
inclusion than would be the case under the OID Regulations. Furthermore,
application of such principles could lead to the characterization of gain on the
sale of contingent interest Regular Certificates as ordinary income. Investors
should consult their tax advisors regarding the appropriate treatment of any
Regular Certificate that does not pay interest at a fixed rate or variable rate
as described in this paragraph.
Under the REMIC Regulations, a Regular Certificate (i) bearing a
rate that qualifies as a variable rate under the OID Regulations that is tied to
current values of a variable rate (or the highest, lowest or average of two or
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more variable rates), including a rate based on the average cost of funds of one
or more financial institutions, or a positive or negative multiple of such a
rate (plus or minus a specified number of basis points), or that represents a
weighted average of rates on some or all of the Mortgage Loans, including such a
rate that is subject to one or more caps or floors, or (ii) bearing one or more
such variable rates for one or more periods or one or more fixed rates for one
or more periods, and a different variable rate or fixed rate for other periods
qualifies as a regular interest in a REMIC. Accordingly, unless otherwise
indicated in the applicable Prospectus Supplement, the Depositor intends to
treat Regular Certificates that qualify as regular interests under this rule in
the same manner as obligations bearing a variable rate for original issue
discount reporting purposes.
The amount of original issue discount with respect to a Regular
Certificate bearing a variable rate of interest will accrue in the manner
described above under "Original Issue Discount" with the yield to maturity and
future payments on such Regular Certificate generally to be determined by
assuming that interest will be payable for the life of the Regular Certificate
based on the initial rate (or, if different, the value of the applicable
variable rate as of the pricing date) for the relevant Class. Unless otherwise
specified in the applicable Prospectus Supplement, the Depositor intends to
treat such variable interest as qualified stated interest, other than variable
interest on an interest-only or super-premium Class, which will be treated as
non-qualified stated interest includible in the stated redemption price at
maturity. Ordinary income reportable for any period will be adjusted based on
subsequent changes in the applicable interest rate index.
Although unclear under the OID Regulations, unless required
otherwise by applicable final regulations, the Depositor intends to treat
Regular Certificates bearing an interest rate that is a weighted average of the
net interest rates on Mortgage Loans or Mortgage Certificates having fixed or
adjustable rates, as having qualified stated interest, except to the extent that
initial "teaser" rates cause sufficiently "back-loaded" interest to create more
than de minimis original issue discount. The yield on such Regular Certificates
for purposes of accruing original issue discount will be a hypothetical fixed
rate based on the fixed rates, in the case of fixed rate Mortgage Loans, and
initial "teaser rates" followed by fully indexed rates, in the case of
adjustable rate Mortgage Loans. In the case of adjustable rate Mortgage Loans,
the applicable index used to compute interest on the Mortgage Loans in effect on
the pricing date (or possibly the issue date) will be deemed to be in effect
beginning with the period in which the first weighted average adjustment date
occurring after the issue date occurs. Adjustments will be made in each accrual
period either increasing or decreasing the amount of ordinary income reportable
to reflect the actual Pass-Through Rate on the Regular Certificates.
Deferred Interest
Under the OID Regulations, all interest on a Regular Certificate as
to which there may be Deferred Interest is includible in the stated redemption
price at maturity thereof. Accordingly, any Deferred Interest that accrues with
respect to a Class of Regular Certificates may constitute income to the holders
of such Regular Certificates prior to the time distributions of cash with
respect to such Deferred Interest are made.
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Market Discount
A purchaser of a Regular Certificate also may be subject to the
market discount rules of Code Section 1276 through 1278. Under these Code
sections and the principles applied by the OID Regulations in the context of
original issue discount, "market discount" is the amount by which the
purchaser's original basis in the Regular Certificate (i) is exceeded by the
then-current principal amount of the Regular Certificate or (ii) in the case of
a Regular Certificate having original issue discount, is exceeded by the
adjusted issue price of such Regular Certificate at the time of purchase. Such
purchaser generally will be required to recognize ordinary income to the extent
of accrued market discount on such Regular Certificate as distributions
includible in the stated redemption price at maturity thereof are received, in
an amount not exceeding any such distribution. Such market discount would accrue
in a manner to be provided in Treasury regulations and should take into account
the Prepayment Assumption. The Conference Committee Report to the 1986 Act
provides that until such regulations are issued, such market discount would
accrue either (i) on the basis of a constant interest rate or (ii) in the ratio
of stated interest allocable to the relevant period to the sum of the interest
for such period plus the remaining interest as of the end of such period, or in
the case of a Regular Certificate issued with original issue discount, in the
ratio of original issue discount accrued for the relevant period to the sum of
the original issue discount accrued for such period plus the remaining original
issue discount as of the end of such period. Such purchaser also generally will
be required to treat a portion of any gain on a sale or exchange of the Regular
Certificate as ordinary income to the extent of the market discount accrued to
the date of disposition under one of the foregoing methods, less any accrued
market discount previously reported as ordinary income as partial distributions
in reduction of the stated redemption price at maturity were received. Such
purchaser will be required to defer deduction of a portion of the excess of the
interest paid or accrued on indebtedness incurred to purchase or carry a Regular
Certificate over the interest distributable thereon. The deferred portion of
such interest expense in any taxable year generally will not exceed the accrued
market discount on the Regular Certificate for such year. Any such deferred
interest expense is, in general, allowed as a deduction not later than the year
in which the related market discount income is recognized or the Regular
Certificate is disposed of. As an alternative to the inclusion of market
discount in income on the foregoing basis, the Regular Certificateholder may
elect to include market discount in income currently as it accrues on all market
discount instruments acquired by such Regular Certificateholder in that taxable
year or thereafter, in which case the interest deferral rule will not apply. See
"Election to Treat All Interest Under the Constant Yield Method" below regarding
an alternative manner in which such election may be deemed to be made.
Market discount with respect to a Regular Certificate will be
considered to be zero if such market discount is less than 0.25% of the
remaining stated redemption price at maturity of such Regular Certificate
multiplied by the weighted average maturity of the Regular Certificate
(determined as described above in the third paragraph under "Original Issue
Discount") remaining after the date of purchase. It appears that de minimis
market discount would be reported in a manner similar to de minimis original
issue discount. See "Original Issue Discount" above. Treasury regulations
implementing the market discount rules have not yet been issued, and therefore
investors should consult their own tax advisors regarding the application of
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these rules. Investors should also consult Revenue Procedure 92-67 concerning
the elections to include market discount in income currently and to accrue
market discount on the basis of the constant yield method.
Premium
A Regular Certificate purchased at a cost greater than its remaining
stated redemption price at maturity generally is considered to be purchased at a
premium. If the Regular Certificateholder holds such Regular Certificate as a
"capital asset" within the meaning of Code Section 1221, the Regular
Certificateholder may elect under Code Section 171 to amortize such premium
under the constant yield method. The Conference Committee Report to the 1986 Act
indicates a Congressional intent that the same rules that will apply to the
accrual of market discount on installment obligations will also apply to
amortizing bond premium under Code Section 171 on installment obligations such
as the Regular Certificates, although it is unclear whether the alternatives to
the constant yield method described above under "Market Discount" are available.
Amortizable bond premium will be treated as an offset to interest income on a
Regular Certificate rather than as a separate deduction item. See "Election to
Treat All Interest Under the Constant Yield Method" below regarding an
alternative manner in which the Code Section 171 election may be deemed to be
made.
Election to Treat All Interest Under the Constant Yield Method
A holder of a debt instrument such as a Regular Certificate may
elect to treat all interest that accrues on the instrument using the constant
yield method, with none of the interest being treated as qualified stated
interest. For purposes of applying the constant yield method to a debt
instrument subject to such an election, (i) "interest" includes stated interest,
original issue discount, de minimis original issue discount, market discount and
de minimis market discount, as adjusted by any amortizable bond premium or
acquisition premium and (ii) the debt instrument is treated as if the instrument
were issued on the holder's acquisition date in the amount of the holder's
adjusted basis immediately after acquisition. It is unclear whether, for this
purpose, the initial Prepayment Assumption would continue to apply or if a new
prepayment assumption as of the date of the holder's acquisition would apply. A
holder generally may make such an election on an instrument by instrument basis
or for a class or group of debt instruments. However, if the holder makes such
an election with respect to a debt instrument with amortizable bond premium or
with market discount, the holder is deemed to have made elections to amortize
bond premium or to report market discount income currently as it accrues under
the constant yield method, respectively, for all debt instruments acquired by
the holder in the same taxable year or thereafter. The election is made on the
holder's federal income tax return for the year in which the debt instrument is
acquired and is irrevocable except with the approval of the Service. Investors
should consult their own tax advisors regarding the advisability of making such
an election.
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Sale or Exchange of Regular Certificates
If a Regular Certificateholder sells or exchanges a Regular
Certificate, the Regular Certificateholder will recognize gain or loss equal to
the difference, if any, between the amount received and its adjusted basis in
the Regular Certificate. The adjusted basis of a Regular Certificate generally
will equal the cost of the Regular Certificate to the seller, increased by any
original issue discount or market discount previously included in the seller's
gross income with respect to the Regular Certificate and reduced by amounts
included in the stated redemption price at maturity of the Regular Certificate
that were previously received by the seller, by any amortized premium and by
previously recognized losses.
Except as described above with respect to market discount, and
except as provided in this paragraph, any gain or loss on the sale or exchange
of a Regular Certificate realized by an investor who holds the Regular
Certificate as a capital asset will be capital gain or loss and will be
long-term or short-term depending on whether the Regular Certificate has been
held for the long-term capital gain holding period (currently more than one
year). Such gain will be treated as ordinary income (i) if a Regular Certificate
is held as part of a "conversion transaction" as defined in Code Section
1258(c), up to the amount of interest that would have accrued on the Regular
Certificateholder's net investment in the conversion transaction at 120% of the
appropriate applicable Federal rate under Code Section 1274(d) in effect at the
time the taxpayer entered into the transaction minus any amount previously
treated as ordinary income with respect to any prior distribution of property
that was held as a part of such transaction, (ii) in the case of a non-corporate
taxpayer, to the extent such taxpayer has made an election under Code Section
163(d)(4) to have net capital gains taxed as investment income at ordinary
rates, or (iii) to the extent that such gain does not exceed the excess, if any,
of (a) the amount that would have been includible in the gross income of the
holder if its yield on such Regular Certificate were 110% of the applicable
Federal rate as of the date of purchase, over (b) the amount of income actually
includible in the gross income of such holder with respect to the Regular
Certificate. In addition, gain or loss recognized from the sale of a Regular
Certificate by certain banks or thrift institutions will be treated as ordinary
income or loss pursuant to Code Section 582(c). Capital gains of certain
non-corporate taxpayers are subject to a lower maximum tax rate than ordinary
income of such taxpayers. The maximum tax rate for corporations is the same with
respect to both ordinary income and capital gains.
Treatment of Losses
Holders of Regular Certificates will be required to report income
with respect to Regular Certificates on the accrual method of accounting,
without giving effect to delays or reductions in distributions attributable to
defaults or delinquencies on the Mortgage Loans allocable to a particular class
of Regular Certificates, except to the extent it can be established that such
losses are uncollectible. Accordingly, the holder of a Regular Certificate may
have income, or may incur a diminution in cash flow as a result of a default or
delinquency, but may not be able to take a deduction (subject to the discussion
below) for the corresponding loss until a subsequent taxable year. In this
regard, investors are cautioned that while they may generally cease to accrue
interest income if it reasonably appears that the interest will be
uncollectible, the Internal Revenue Service may take the position that original
issue discount must continue to be accrued in spite of its uncollectibility
until the debt instrument is disposed of in a taxable transaction or becomes
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worthless in accordance with the rules of Code Section 166. To the extent the
rules of Code Section 166 regarding bad debts are applicable, it appears that
holders of Regular Certificates that are corporations or that otherwise hold the
Regular Certificates in connection with a trade or business should in general be
allowed to deduct as an ordinary loss any such loss sustained during the taxable
year on account of any such Regular Certificates becoming wholly or partially
worthless, and that, in general, holders of Regular Certificates that are not
corporations and do not hold the Regular Certificates in connection with a trade
or business will be allowed to deduct as a short-term capital loss any loss with
respect to principal sustained during the taxable year on account of a portion
of any class or subclass of such Regular Certificates becoming wholly worthless.
Although the matter is not free from doubt, non-corporate holders of Regular
Certificates should be allowed a bad debt deduction at such time as the
principal balance of any class or subclass of such Regular Certificates is
reduced to reflect losses resulting from any liquidated Mortgage Loans. The
Service, however, could take the position that non-corporate holders will be
allowed a bad debt deduction to reflect such losses only after all Mortgage
Loans remaining in the Trust Fund have been liquidated or such class of Regular
Certificates has been otherwise retired. The Service could also assert that
losses on the Regular Certificates are deductible based on some other method
that may defer such deductions for all holders, such as reducing future cash
flow for purposes of computing original issue discount. This may have the effect
of creating "negative" original issue discount which would be deductible only
against future positive original issue discount or otherwise upon termination of
the Class. Holders of Regular Certificates are urged to consult their own tax
advisors regarding the appropriate timing, amount and character of any loss
sustained with respect to such Regular Certificates. While losses attributable
to interest previously reported as income should be deductible as ordinary
losses by both corporate and non-corporate holders, the Internal Revenue Service
may take the position that losses attributable to accrued original issue
discount may only be deducted as short-term capital losses by non-corporate
holders not engaged in a trade or business. Special loss rules are applicable to
banks and thrift institutions, including rules regarding reserves for bad debts.
Such taxpayers are advised to consult their tax advisors regarding the treatment
of losses on Regular Certificates.
Taxation of Residual Certificates
Taxation of REMIC Income
Generally, the "daily portions" of REMIC taxable income or net loss
will be includible as ordinary income or loss in determining the federal taxable
income of holders of Residual Certificates ("Residual Certificateholders"), and
will not be taxed separately to the REMIC Pool. The daily portions of REMIC
taxable income or net loss of a Residual Certificateholder are determined by
allocating the REMIC Pool's taxable income or net loss for each calendar quarter
ratably to each day in such quarter and by allocating such daily portion among
the Residual Certificateholders in proportion to their respective holdings of
Residual Certificates in the REMIC Pool on such day. REMIC taxable income is
generally determined in the same manner as the taxable income of an individual
using the accrual method of accounting, except that (i) the limitations on
deductibility of investment interest expense and expenses for the production of
income do not apply, (ii) all bad loans will be deductible as business bad debts
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and (iii) the limitation on the deductibility of interest and expenses related
to tax-exempt income will apply. The REMIC Pool's gross income includes
interest, original issue discount income and market discount income, if any, on
the Mortgage Loans, reduced by amortization of any premium on the Mortgage
Loans, plus income from amortization of issue premium, if any, on the Regular
Certificates, plus income on reinvestment of cash flows and reserve assets, plus
any cancellation of indebtedness income upon allocation of realized losses to
the Regular Certificates. The REMIC Pool's deductions include interest and
original issue discount expense on the Regular Certificates, servicing fees on
the Mortgage Loans, other administrative expenses of the REMIC Pool and realized
losses on the Mortgage Loans. The requirement that Residual Certificateholders
report their pro rata share of taxable income or net loss of the REMIC Pool will
continue until there are no Certificates of any class of the related series
outstanding.
The taxable income recognized by a Residual Certificateholder in any
taxable year will be affected by, among other factors, the relationship between
the timing of recognition of interest and original issue discount or market
discount income or amortization of premium with respect to the Mortgage Loans,
on the one hand, and the timing of deductions for interest (including original
issue discount) on the Regular Certificates or income from amortization of issue
premium on the Regular Certificates, on the other hand. In the event that an
interest in the Mortgage Loans is acquired by the REMIC Pool at a discount, and
one or more of such Mortgage Loans is prepaid, the Residual Certificateholder
may recognize taxable income without being entitled to receive a corresponding
amount of cash because (i) the prepayment may be used in whole or in part to
make distributions in reduction of principal on the Regular Certificates and
(ii) the discount on the Mortgage Loans which is includible in income may exceed
the deduction allowed upon such distributions on those Regular Certificates on
account of any unaccrued original issue discount relating to those Regular
Certificates. When there is more than one class of Regular Certificates that
distribute principal sequentially, this mismatching of income and deductions is
particularly likely to occur in the early years following issuance of the
Regular Certificates when distributions in reduction of principal are being made
in respect of earlier classes of Regular Certificates to the extent that such
classes are not issued with substantial discount. If taxable income attributable
to such a mismatching is realized, in general, losses would be allowed in later
years as distributions on the later classes of Regular Certificates are made.
Taxable income may also be greater in earlier years than in later years as a
result of the fact that interest expense deductions, expressed as a percentage
of the outstanding principal amount of such a series of Regular Certificates,
may increase over time as distributions in reduction of principal are made on
the lower yielding classes of Regular Certificates, whereas to the extent that
the REMIC Pool includes fixed rate Mortgage Loans, interest income with respect
to any given Mortgage Loan will remain constant over time as a percentage of the
outstanding principal amount of that loan. Consequently, Residual
Certificateholders must have sufficient other sources of cash to pay any
federal, state or local income taxes due as a result of such mismatching or
unrelated deductions against which to offset such income, subject to the
discussion of "excess inclusions" below under "Limitations on Offset or
Exemption of REMIC Income". The timing of such mismatching of income and
deductions described in this paragraph, if present with respect to a series of
Certificates, may have a significant adverse effect upon the Residual
Certificateholder's after-tax rate of return. In addition, a Residual
Certificateholder's taxable income during certain periods may exceed the income
reflected by such Residual Certificateholder for such periods in accordance with
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generally accepted accounting principles. Investors should consult their own
accountants concerning the accounting treatment of their investment in Residual
Certificates.
Basis and Losses
The amount of any net loss of the REMIC Pool that may be taken into
account by the Residual Certificateholder is limited to the adjusted basis of
the Residual Certificate as of the close of the quarter (or time of disposition
of the Residual Certificate if earlier), determined without taking into account
the net loss for the quarter. The initial adjusted basis of a purchaser of a
Residual Certificate is the amount paid for such Residual Certificate. Such
adjusted basis will be increased by the amount of taxable income of the REMIC
Pool reportable by the Residual Certificateholder and will be decreased (but not
below zero), first, by a cash distribution from the REMIC Pool and, second, by
the amount of loss of the REMIC Pool reportable by the Residual
Certificateholder. Any loss that is disallowed on account of this limitation may
be carried over indefinitely with respect to the Residual Certificateholder as
to whom such loss was disallowed and may be used by such Residual
Certificateholder only to offset any income generated by the same REMIC Pool.
A Residual Certificateholder will not be permitted to amortize
directly the cost of its Residual Certificate as an offset to its share of the
taxable income of the related REMIC Pool. However, that taxable income will not
include cash received by the REMIC Pool that represents a recovery of the REMIC
Pool's basis in its assets. Such recovery of basis by the REMIC Pool will have
the effect of amortization of the issue price of the Residual Certificates over
their life. However, in view of the possible acceleration of the income of
Residual Certificateholders described above under "Taxation of REMIC Income",
the period of time over which such issue price is effectively amortized may be
longer than the economic life of the Residual Certificates.
A Residual Certificate may have a negative value if the net present
value of anticipated tax liabilities exceeds the present value of anticipated
cash flows. The REMIC Regulations appear to treat the issue price of such a
residual interest as zero rather than such negative amount for purposes of
determining the REMIC Pool's basis in its assets. The preamble to the REMIC
Regulations states that the Service may provide future guidance on the proper
tax treatment of payments made by a transferor of such a residual interest to
induce the transferee to acquire the interest, and Residual Certificateholders
should consult their own tax advisors in this regard.
Further, to the extent that the initial adjusted basis of a Residual
Certificateholder (other than an original holder) in the Residual Certificate is
greater that the corresponding portion of the REMIC Pool's basis in the Mortgage
Loans, the Residual Certificateholder will not recover a portion of such basis
until termination of the REMIC Pool unless future Treasury regulations provide
for periodic adjustments to the REMIC income otherwise reportable by such
holder. The REMIC Regulations currently in effect do not so provide. See
"Treatment of Certain Items of REMIC Income and Expense--Market Discount" below
regarding the basis of Mortgage Loans to the REMIC Pool and "Sale or Exchange of
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a Residual Certificate" below regarding possible treatment of a loss upon
termination of the REMIC Pool as a capital loss.
Treatment of Certain Items of REMIC Income and Expense
Although the Depositor intends to compute REMIC income and expense
in accordance with the Code and applicable regulations, the authorities
regarding the determination of specific items of income and expense are subject
to differing interpretations. The Depositor makes no representation as to the
specific method that it will use for reporting income with respect to the
Mortgage Loans and expenses with respect to the Regular Certificates, and
different methods could result in different timing of reporting of taxable
income or net loss to Residual Certificateholders or differences in capital gain
versus ordinary income.
Original Issue Discount and Premium. Generally, the REMIC Pool's
deductions for original issue discount and income from amortization of issue
premium will be determined in the same manner as original issue discount income
on Regular Certificates as described above under "Taxation of Regular
Certificates--Original Issue Discount" and "--Variable Rate Regular
Certificates", without regard to the de minimis rule described therein, and
"--Premium".
Deferred Interest. Any Deferred Interest that accrues with respect
to any adjustable rate Mortgage Loans held by the REMIC Pool will constitute
income to the REMIC Pool and will be treated in a manner similar to the Deferred
Interest that accrues with respect to Regular Certificates as described above
under "Taxation of Regular Certificates--Deferred Interest".
Market Discount. The REMIC Pool will have market discount income in
respect of Mortgage Loans if, in general, the basis of the REMIC Pool allocable
to such Mortgage Loans is exceeded by their unpaid principal balances. The REMIC
Pool's basis in such Mortgage Loans is generally the fair market value of the
Mortgage Loans immediately after the transfer thereof to the REMIC Pool. The
REMIC Regulations provide that such basis is equal in the aggregate to the issue
prices of all regular and residual interests in the REMIC Pool (or the fair
market value thereof at the Closing Date, in the case of a retained Class). In
respect of Mortgage Loans that have market discount to which Code Section 1276
applies, the accrued portion of such market discount would be recognized
currently as an item of ordinary income in a manner similar to original issue
discount. Market discount income generally should accrue in the manner described
above under "Taxation of Regular Certificates--Market Discount".
Premium. Generally, if the basis of the REMIC Pool in the Mortgage
Loans exceeds the unpaid principal balances thereof, the REMIC Pool will be
considered to have acquired such Mortgage Loans at a premium equal to the amount
of such excess. As stated above, the REMIC Pool's basis in Mortgage Loans is the
fair market value of the Mortgage Loans, based on the aggregate of the issue
prices (or the fair market value of retained Classes) of the regular and
residual interests in the REMIC Pool immediately after the transfer thereof to
the REMIC Pool. In a manner analogous to the discussion above under "Taxation of
Regular Certificates--Premium", a REMIC Pool that holds a Mortgage Loan as a
capital asset under Code Section 1221 may elect under Code Section 171 to
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amortize premium on whole mortgage loans or mortgage loans underlying MBS that
were originated after September 27, 1985 or MBS that are REMIC regular interests
under the constant yield method. Amortizable bond premium will be treated as an
offset to interest income on the Mortgage Loans, rather than as a separate
deduction item. To the extent that the mortgagors with respect to the Mortgage
Loans are individuals, Code Section 171 will not be available for premium on
Mortgage Loans (including underlying mortgage loans) originated on or prior to
September 27, 1985. Premium with respect to such Mortgage Loans may be
deductible in accordance with a reasonable method regularly employed by the
holder thereof. The allocation of such premium pro rata among principal payments
should be considered a reasonable method; however, the Service may argue that
such premium should be allocated in a different manner, such as allocating such
premium entirely to the final payment of principal.
Limitations on Offset or Exemption of REMIC Income
A portion or all of the REMIC taxable income includible in
determining the federal income tax liability of a Residual Certificateholder
will be subject to special treatment. That portion, referred to as the "excess
inclusion", is equal to the excess of REMIC taxable income for the calendar
quarter allocable to a Residual Certificate over the daily accruals for such
quarterly period of (i) 120% of the long-term applicable Federal rate that would
have applied to the Residual Certificate (if it were a debt instrument) on the
Startup Day under Code Section 1274(d), multiplied by (ii) the adjusted issue
price of such Residual Certificate at the beginning of such quarterly period.
For this purpose, the adjusted issue price of a Residual Certificate at the
beginning of a quarter is the issue price of the Residual Certificate, plus the
amount of such daily accruals of REMIC income described in this paragraph for
all prior quarters, decreased by any distributions made with respect to such
Residual Certificate prior to the beginning of such quarterly period.
Accordingly, the portion of the REMIC Pool's taxable income that will be treated
as excess inclusions will be a larger portion of such income as the adjusted
issue price of the Residual Certificates diminishes.
The portion of a Residual Certificateholder's REMIC taxable income
consisting of the excess inclusions generally may not be offset by other
deductions, including net operating loss carryforwards, on such Residual
Certificateholder's return. However, net operating loss carryovers are
determined without regard to excess inclusion income. Further, if the Residual
Certificateholder is an organization subject to the tax on unrelated business
income imposed by Code Section 511, the Residual Certificateholder's excess
inclusions will be treated as unrelated business taxable income of such Residual
Certificateholder for purposes of Code Section 511. In addition, REMIC taxable
income is subject to 30% withholding tax with respect to certain persons who are
not U.S. Persons (as defined below under "Tax-Related Restrictions on Transfer
of Residual Certificates--Foreign Investors"), and the portion thereof
attributable to excess inclusions is not eligible for any reduction in the rate
of withholding tax (by treaty or otherwise). See "Taxation of Certain Foreign
Investors--Residual Certificates" below. Finally, if a real estate investment
trust or a regulated investment company owns a Residual Certificate, a portion
(allocated under Treasury regulations yet to be issued) of dividends paid by the
real estate investment trust or a regulated investment company could not be
offset by net operating losses of its shareholders, would constitute unrelated
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business taxable income for tax-exempt shareholders, and would be ineligible for
reduction of withholding to certain persons who are not U.S. Persons. The SBJPA
of 1996 has eliminated the special rule permitting Section 593 institutions
("thrift institutions") to use net operating losses and other allowable
deductions to offset their excess inclusion income from Residual Certificates
that have "significant value" within the meaning of the REMIC Regulations,
effective for taxable years beginning after December 31, 1995, except with
respect to Residual Certificates continuously held by thrift institutions since
November 1, 1995.
In addition, the SBJPA of 1996 provides three rules for determining
the effect of excess inclusions on the alternative minimum taxable income of a
Residual Certificateholder. First, alternative minimum taxable income for a
Residual Certificateholder is determined without regard to the special rule,
discussed above, that taxable income cannot be less than excess inclusions.
Second, a Residual Certificateholder's alternative minimum taxable income for a
taxable year cannot be less than the excess inclusions for the year. Third, the
amount of any alternative minimum tax net operating loss deduction must be
computed without regard to any excess inclusions. These rules are effective for
taxable years beginning after December 31, 1996, unless a Residual
Certificateholder elects to have such rules apply only to taxable years
beginning after August 20, 1996.
Tax-Related Restrictions on Transfer of Residual Certificates
Disqualified Organizations. If any legal or beneficial interest in a
Residual Certificate is transferred to a Disqualified Organization (as defined
below), a tax would be imposed in an amount equal to the product of (i) the
present value of the total anticipated excess inclusions with respect to such
Residual Certificate for periods after the transfer and (ii) the highest
marginal federal income tax rate applicable to corporations. The REMIC
Regulations provide that the anticipated excess inclusions are based on actual
prepayment experience to the date of the transfer and projected payments based
on the Prepayment Assumption. The present value rate equals the applicable
Federal rate under Code Section 1274(d) as of the date of the transfer for a
term ending with the last calendar quarter in which excess inclusions are
expected to accrue. Such a tax generally would be imposed on the transferor of
the Residual Certificate, except that where such transfer is through an agent
(including a broker, nominee or other middleman) for a Disqualified
Organization, the tax would instead be imposed on such agent. However, a
transferor of a Residual Certificate would in no event be liable for such tax
with respect to a transfer if the transferee furnishes to the transferor an
affidavit that the transferee is not a Disqualified Organization and, as of the
time of the transfer, the transferor does not have actual knowledge that such
affidavit is false. The tax also may be waived by the Treasury Department if the
Disqualified Organization promptly disposes of the residual interest and the
transferor pays income tax at the highest corporate rate on the excess
inclusions for the period the Residual Certificate is actually held by the
Disqualified Organization.
In addition, if a "Pass-Through Entity" (as defined below) has
excess inclusion income with respect to a Residual Certificate during a taxable
year and a Disqualified Organization is the record holder of an equity interest
in such entity, then a tax is imposed on such entity equal to the product of (i)
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the amount of excess inclusions on the Residual Certificate that are allocable
to the interest in the Pass-Through Entity during the period such interest is
held by such Disqualified Organization, and (ii) the highest marginal federal
corporate income tax rate. Such tax would be deductible from the ordinary gross
income of the Pass-Through Entity for the taxable year. The Pass-Through Entity
would not be liable for such tax if it has received an affidavit from such
record holder that it is not a Disqualified Organization or stating such
holder's taxpayer identification number and, during the period such person is
the record holder of the Residual Certificate, the Pass-Through Entity does not
have actual knowledge that such affidavit is false.
For these purposes, (i) "Disqualified Organization" means the United
States, any state or political subdivision thereof, any foreign government, any
international organization, any agency or instrumentality of any of the
foregoing (provided, that such term does not include an instrumentality if all
of its activities are subject to tax and a majority of its board of directors is
not selected by any such governmental entity), any cooperative organization
furnishing electric energy or providing telephone service to persons in rural
areas as described in Code Section 1381(a)(2)(C), and any organization (other
than a farmers' cooperative described in Code Section 521) that is exempt from
taxation under the Code unless such organization is subject to the tax on
unrelated business income imposed by Code Section 511, and (ii) "Pass-Through
Entity" means any regulated investment company, real estate investment trust,
common trust fund, partnership, trust or estate and certain corporations
operating on a cooperative basis. Except as may be provided in Treasury
regulations, any person holding an interest in a Pass-Through Entity as a
nominee for another will, with respect to such interest, be treated as a
Pass-Through Entity.
The Pooling Agreement with respect to a series of Certificates will
provide that no legal or beneficial interest in a Residual Certificate may be
transferred unless (i) the proposed transferee provides to the transferor and
the Trustee an affidavit providing its taxpayer identification number and
stating that such transferee is the beneficial owner of the Residual
Certificate, is not a Disqualified Organization and is not purchasing such
Residual Certificates on behalf of a Disqualified Organization (i.e., as a
broker, nominee or middleman thereof), and (ii) the transferor provides a
statement in writing to the Depositor and the Trustee that it has no actual
knowledge that such affidavit is false. Moreover, the Pooling Agreement will
provide that any attempted or purported transfer in violation of these transfer
restrictions will be null and void and will vest no rights in any purported
transferee. Each Residual Certificate with respect to a series will bear a
legend referring to such restrictions on transfer, and each Residual
Certificateholder will be deemed to have agreed, as a condition of ownership
thereof, to any amendments to the related Pooling Agreement required under the
Code or applicable Treasury regulations to effectuate the foregoing
restrictions. Information necessary to compute an applicable excise tax must be
furnished to the Service and to the requesting party within 60 days of the
request, and the Depositor or the Trustee may charge a fee for computing and
providing such information.
Noneconomic Residual Interests. The REMIC Regulations would
disregard certain transfers of Residual Certificates, in which case the
transferor would continue to be treated as the owner of the Residual
Certificates and thus would continue to be subject to tax on its allocable
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portion of the net income of the REMIC Pool. Under the REMIC Regulations, a
transfer of a "noneconomic residual interest" (as defined below) to a Residual
Certificateholder (other than a Residual Certificateholder who is not a U.S.
Person, as defined below under "Foreign Investors") is disregarded for all
federal income tax purposes if a significant purpose of the transferor is to
impede the assessment or collection of tax. A residual interest in a REMIC
(including a residual interest with a positive value at issuance) is a
"noneconomic residual interest" unless, at the time of the transfer, (i) the
present value of the expected future distributions on the residual interest at
least equals the product of the present value of the anticipated excess
inclusions and the highest corporate income tax rate in effect for the year in
which the transfer occurs, and (ii) the transferor reasonably expects that the
transferee will receive distributions from the REMIC at or after the time at
which taxes accrue on the anticipated excess inclusions in an amount sufficient
to satisfy the accrued taxes. The anticipated excess inclusions and the present
value rate are determined in the same manner as set forth above under
"Disqualified Organizations". The REMIC Regulations explain that a significant
purpose to impede the assessment or collection of tax exists if the transferor,
at the time of the transfer, either knew or should have known that the
transferee would be unwilling or unable to pay taxes due on its share of the
taxable income of the REMIC. A safe harbor is provided if (i) the transferor
conducted, at the time of the transfer, a reasonable investigation of the
financial condition of the transferee and found that the transferee historically
had paid its debts as they came due and found no significant evidence to
indicate that the transferee would not continue to pay its debts as they came
due in the future, and (ii) the transferee represents to the transferor that it
understands that, as the holder of the noneconomic residual interest, the
transferee may incur tax liabilities in excess of cash flows generated by the
interest and that the transferee intends to pay taxes associated with holding
the residual interest as they become due. The Pooling Agreement with respect to
each series of Certificates will require the transferee of a Residual
Certificate to certify to the matters in the preceding sentence as part of the
affidavit described above under the heading "Disqualified Organizations". The
transferor must have no actual knowledge or reason to know that such statements
are false.
Foreign Investors. The REMIC Regulations provide that the transfer
of a Residual Certificate that has "tax avoidance potential" to a "foreign
person" will be disregarded for all federal tax purposes. This rule appears
intended to apply to a transferee who is not a "U.S. Person" (as defined below),
unless such transferee's income is effectively connected with the conduct of a
trade or business within the United States. A Residual Certificate is deemed to
have tax avoidance potential unless, at the time of the transfer, (i) the future
value of expected distributions equals at least 30% of the anticipated excess
inclusions after the transfer, and (ii) the transferor reasonably expects that
the transferee will receive sufficient distributions from the REMIC Pool at or
after the time at which the excess inclusions accrue and prior to the end of the
next succeeding taxable year for the accumulated withholding tax liability to be
paid. If the non-U.S. Person transfers the Residual Certificate back to a U.S.
Person, the transfer will be disregarded and the foreign transferor will
continue to be treated as the owner unless arrangements are made so that the
transfer does not have the effect of allowing the transferor to avoid tax on
accrued excess inclusions.
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The Prospectus Supplement relating to a series of Certificates may
provide that a Residual Certificate may not be purchased by or transferred to
any person that is not a U.S. Person or may describe the circumstances and
restrictions pursuant to which such a transfer may be made. The term "U.S.
Person" means a citizen or resident of the United States, a corporation,
partnership or other entity created or organized in or under the laws of the
United States or any political subdivision thereof, an estate that is subject to
United States federal income tax regardless of the source of its income or a
trust if (A) for taxable years beginning after December 31, 1996 (or for taxable
years ending after August 20, 1996, if the trustee has made an applicable
election), a court within the United States is able to exercise primary
supervision over the administration of such trust, and one or more United States
fiduciaries have the authority to control all substantial decisions of such
trust, or (B) for all other taxable years, such trust is subject to United
States federal income tax regardless of the source of its income.
Sale or Exchange of a Residual Certificate
Upon the sale or exchange of a Residual Certificate, the Residual
Certificateholder will recognize gain or loss equal to the excess, if any, of
the amount realized over the adjusted basis (as described above under "Taxation
of Residual Certificates--Basis and Losses") of such Residual Certificateholder
in such Residual Certificate at the time of the sale or exchange. In addition to
reporting the taxable income of the REMIC Pool, a Residual Certificateholder
will have taxable income to the extent that any cash distribution to it from the
REMIC Pool exceeds such adjusted basis on that Distribution Date. Such income
will be treated as gain from the sale or exchange of the Residual Certificate.
It is possible that the termination of the REMIC Pool may be treated as a sale
or exchange of a Residual Certificateholder's Residual Certificate, in which
case, if the Residual Certificateholder has an adjusted basis in such Residual
Certificateholder's Residual Certificate remaining when its interest in the
REMIC Pool terminates, and if such Residual Certificateholder holds such
Residual Certificate as a capital asset under Code Section 1221, then such
Residual Certificateholder will recognize a capital loss at that time in the
amount of such remaining adjusted basis.
Any gain on the sale of a Residual Certificate will be treated as
ordinary income (i) if a Residual Certificate is held as part of a "conversion
transaction" as defined in Code Section 1258(c), up to the amount of interest
that would have accrued on the Residual Certificateholder's net investment in
the conversion transaction at 120% of the appropriate applicable Federal rate in
effect at the time the taxpayer entered into the transaction minus any amount
previously treated as ordinary income with respect to any prior disposition of
property that was held as a part of such transaction or (ii) in the case of a
non-corporate taxpayer, to the extent such taxpayer has made an election under
Code Section 163(d)(4) to have net capital gains taxed as investment income at
ordinary income rates. In addition, gain or loss recognized from the sale of a
Residual Certificate by certain banks or thrift institutions will be treated as
ordinary income or loss pursuant to Code Section 582(c).
The Conference Committee Report to the 1986 Act provides that,
except as provided in Treasury regulations yet to be issued, the wash sale rules
of Code Section 1091 will apply to dispositions of Residual Certificates where
the seller of the Residual Certificate, during the period beginning six months
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before the sale or disposition of the Residual Certificate and ending six months
after such sale or disposition, acquires (or enters into any other transaction
that results in the application of Section 1091) any residual interest in any
REMIC or any interest in a "taxable mortgage pool" (such as a non-REMIC owner
trust) that is economically comparable to a Residual Certificate.
Mark to Market Regulations
Prospective purchasers of the Residual Certificates should also be
aware that on January 3, 1995, the Service released proposed regulations (the
"Proposed Mark to Market Regulations") under Code Section 475 relating to the
requirement that a securities dealer mark to market securities held for sale to
customers. This mark-to-market requirement applies to all securities of a
dealer, except to the extent that the dealer has specifically identified a
security as held for investment. The Proposed Mark to Market Regulations provide
that, for purposes of this mark-to-market requirement, a Residual Certificate is
not treated as a security and thus may not be marked to market. The Proposed
Mark to Market Regulations would apply to all Residual Certificates acquired on
or after January 4, 1995.
Taxes That May Be Imposed on the REMIC Pool
Prohibited Transactions
Income from certain transactions by the REMIC Pool, called
prohibited transactions, will not be part of the calculation of income or loss
includible in the federal income tax returns of Residual Certificateholders, but
rather will be taxed directly to the REMIC Pool at a 100% rate. Prohibited
transactions generally include (i) the disposition of a qualified mortgage other
than for (a) substitution within two years of the Startup Day for a defective
(including a defaulted) obligation (or repurchase in lieu of substitution of a
defective (including a defaulted) obligation at any time) or for any qualified
mortgage within three months of the Startup Day, (b) foreclosure, default or
imminent default of a qualified mortgage, (c) bankruptcy or insolvency of the
REMIC Pool or (d) a qualified (complete) liquidation, (ii) the receipt of income
from assets that are not the type of mortgages or investments that the REMIC
Pool is permitted to hold, (iii) the receipt of compensation for services or
(iv) the receipt of gain from disposition of cash flow investments other than
pursuant to a qualified liquidation. Notwithstanding (i) and (iv), it is not a
prohibited transaction to sell REMIC Pool property to prevent a default on
Regular Certificates as a result of a default on qualified mortgages or to
facilitate a clean-up call (generally, an optional termination to save
administrative costs when no more than a small percentage of the Certificates is
outstanding). The REMIC Regulations indicate that the modification of a Mortgage
Loan generally will not be treated as a disposition if it is occasioned by a
default or reasonably foreseeable default, an assumption of the Mortgage Loan,
the waiver of a due-on-sale or due-on-encumbrance clause or the conversion of an
interest rate by a mortgagor pursuant to the terms of a convertible adjustable
rate Mortgage Loan.
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Contributions to the REMIC Pool After the Startup Day
In general, the REMIC Pool will be subject to a tax at a 100% rate
on the value of any property contributed to the REMIC Pool after the Startup
Day. Exceptions are provided for cash contributions to the REMIC Pool (i) during
the three months following the Startup Day, (ii) made to a qualified reserve
fund by a Residual Certificateholder, (iii) in the nature of a guarantee, (iv)
made to facilitate a qualified liquidation or clean-up call and (v) as otherwise
permitted in Treasury regulations yet to be issued.
Net Income from Foreclosure Property
The REMIC Pool will be subject to federal income tax at the highest
corporate rate on "net income from foreclosure property", determined by
reference to the rules applicable to real estate investment trusts. Generally,
property acquired by deed in lieu of foreclosure would be treated as
"foreclosure property" for a period of two years, with possible extensions. Net
income from foreclosure property generally means gain from the sale of a
foreclosure property that is inventory property and gross income from
foreclosure property other than qualifying rents and other qualifying income for
a real estate investment trust.
It is not anticipated that the REMIC Pool will receive income or
contributions subject to tax under the preceding three paragraphs, except as
described in the applicable Prospectus Supplement with respect to net income
from foreclosure property on a commercial or multifamily residential property
that secured a Mortgage Loan. In addition, unless otherwise disclosed in the
applicable Prospectus Supplement, it is not anticipated that any material state
income or franchise tax will be imposed on a REMIC Pool.
Liquidation of the REMIC Pool
If a REMIC Pool adopts a plan of complete liquidation, within the
meaning of Code Section 860F(a)(4)(A)(i), which may be accomplished by
designating in the REMIC Pool's final tax return a date on which such adoption
is deemed to occur, and sells all of its assets (other than cash) within a
90-day period beginning on the date of the adoption of the plan of liquidation,
the REMIC Pool will not be subject to the prohibited transaction rules on the
sale of its assets, provided that the REMIC Pool credits or distributes in
liquidation all of the sale proceeds plus its cash (other than amounts retained
to meet claims) to holders of Regular Certificates and Residual
Certificateholders within the 90-day period.
Administrative Matters
The REMIC Pool will be required to maintain its books on a calendar
year basis and to file federal income tax returns for federal income tax
purposes in a manner similar to a partnership. The form for such income tax
return is Form 1066, U.S. Real Estate Mortgage Investment Conduit Income Tax
Return. The Trustee will be required to sign the REMIC Pool's returns. Treasury
regulations provide that, except where there is a single Residual
Certificateholder for an entire taxable year, the REMIC Pool will be subject to
the procedural and administrative rules of the Code applicable to partnerships,
including the determination by the Service of any adjustments to, among other
things, items of REMIC income, gain, loss, deduction or credit in a unified
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administrative proceeding. The Residual Certificateholder owning the largest
percentage interest in the Residual Certificates will be obligated to act as
"tax matters person", as defined in applicable Treasury regulations, with
respect to the REMIC Pool. Each Residual Certificateholder will be deemed, by
acceptance of such Residual Certificates, to have agreed (i) to the appointment
of the tax matters person as provided in the preceding sentence and (ii) to the
irrevocable designation of the Master Servicer as agent for performing the
functions of the tax matters person.
Limitations on Deduction of Certain Expenses
An investor who is an individual, estate or trust will be subject to
limitation with respect to certain itemized deductions described in Code Section
67, to the extent that such itemized deductions, in the aggregate, do not exceed
2% of the investor's adjusted gross income. In addition, Code Section 68
provides that itemized deductions otherwise allowable for a taxable year of an
individual taxpayer will be reduced by the lesser of (i) 3% of the excess, if
any, of adjusted gross income over $100,000 ($50,000 in the case of a married
individual filing a separate return) (subject to adjustments for inflation) or
(ii) 80% of the amount of itemized deductions otherwise allowable for such year.
In the case of a REMIC Pool, such deductions may include deductions under Code
Section 212 for the servicing fee and all administrative and other expenses
relating to the REMIC Pool, or any similar expenses allocated to the REMIC Pool
with respect to a regular interest it holds in another REMIC. Such investors who
hold REMIC Certificates either directly or indirectly through certain
pass-through entities may have their pro rata share of such expenses allocated
to them as additional gross income, but may be subject to such limitation on
deductions. In addition, such expenses are not deductible at all for purposes of
computing the alternative minimum tax, and may cause such investors to be
subject to significant additional tax liability. Temporary Treasury regulations
provide that the additional gross income and corresponding amount of expenses
generally are to be allocated entirely to the holders of Residual Certificates
in the case of a REMIC Pool that would not qualify as a fixed investment trust
in the absence of a REMIC election. However, such additional gross income and
limitation on deductions will apply to the allocable portion of such expenses to
holders of Regular Certificates, as well as holders of Residual Certificates,
where such Regular Certificates are issued in a manner that is similar to
pass-through certificates in a fixed investment trust. In general, such
allocable portion will be determined based on the ratio that a REMIC
Certificateholder's income, determined on a daily basis, bears to the income of
all holders of Regular Certificates and Residual Certificates with respect to a
REMIC Pool. As a result, individuals, estates or trusts holding REMIC
Certificates (either directly or indirectly through a grantor trust,
partnership, S corporation, REMIC, or certain other pass-through entities
described in the foregoing temporary Treasury regulations) may have taxable
income in excess of the interest income at the pass-through rate on Regular
Certificates that are issued in a single Class or otherwise consistently with
fixed investment trust status or in excess of cash distributions for the related
period on Residual Certificates. Unless otherwise indicated in the applicable
Prospectus Supplement, all such expenses will be allocable to the Residual
Certificates.
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Taxation of Certain Foreign Investors
Regular Certificates
Interest, including original issue discount, distributable to
Regular Certificateholders who are non-resident aliens, foreign corporations, or
other Non-U.S. Persons (as defined below), will be considered "portfolio
interest" and, therefore, generally will not be subject to 30% United States
withholding tax, provided that such Non-U.S. Person (i) is not a "10-percent
shareholder" within the meaning of Code Section 871(h)(3)(B) or a controlled
foreign corporation described in Code Section 881(c)(3)(C) and (ii) provides the
Trustee, or the person who would otherwise be required to withhold tax from such
distributions under Code Section 1441 or 1442, with an appropriate statement,
signed under penalties of perjury, identifying the beneficial owner and stating,
among other things, that the beneficial owner of the Regular Certificate is a
Non-U.S. Person. If such statement, or any other required statement, is not
provided, 30% withholding will apply unless reduced or eliminated pursuant to an
applicable tax treaty or unless the interest on the Regular Certificate is
effectively connected with the conduct of a trade or business within the United
States by such Non-U.S. Person. In the latter case, such Non-U.S. Person will be
subject to United States federal income tax at regular rates. Prepayment
Premiums distributable to Regular Certificateholders who are Non-U.S. Persons
may be subject to 30% United States withholding tax. Investors who are Non-U.S.
Persons should consult their own tax advisors regarding the specific tax
consequences to them of owning a Regular Certificate. The term "Non-U.S. Person"
means any person who is not a U.S. Person.
Residual Certificates
The Conference Committee Report to the 1986 Act indicates that
amounts paid to Residual Certificateholders who are Non-U.S. Persons are treated
as interest for purposes of the 30% (or lower treaty rate) United States
withholding tax. Treasury regulations provide that amounts distributed to
Residual Certificateholders may qualify as "portfolio interest", subject to the
conditions described in "Regular Certificates" above, but only to the extent
that (i) the Mortgage Loans (including mortgage loans underlying MBS) were
issued after July 18, 1984 and (ii) the Trust Fund or segregated pool of assets
therein (as to which a separate REMIC election will be made), to which the
Residual Certificate relates, consists of obligations issued in "registered
form" within the meaning of Code Section 163(f)(1). Generally, whole mortgage
loans will not be, but MBS and regular interests in another REMIC Pool will be,
considered obligations issued in registered form. Furthermore, a Residual
Certificateholder will not be entitled to any exemption from the 30% withholding
tax (or lower treaty rate) to the extent of that portion of REMIC taxable income
that constitutes an "excess inclusion". See "Taxation of Residual
Certificates--Limitations on Offset or Exemption of REMIC Income". If the
amounts paid to Residual Certificateholders who are Non-U.S. Persons are
effectively connected with the conduct of a trade or business within the United
States by such Non-U.S. Persons, 30% (or lower treaty rate) withholding will not
apply. Instead, the amounts paid to such Non-U.S. Persons will be subject to
United States federal income tax at regular rates. If 30% (or lower treaty rate)
withholding is applicable, such amounts generally will be taken into account for
purposes of withholding only when paid or otherwise distributed (or when the
Residual Certificate is disposed of) under rules similar to withholding upon
disposition of debt instruments that have original issue discount. See
"Tax-Related Restrictions on Transfer of Residual Certificates--Foreign
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Investors" above concerning the disregard of certain transfers having "tax
avoidance potential". Investors who are Non-U.S. Persons should consult their
own tax advisors regarding the specific tax consequences to them of owning
Residual Certificates.
Backup Withholding
Distributions made on the Regular Certificates, and proceeds from
the sale of the Regular Certificates to or through certain brokers, may be
subject to a "backup" withholding tax under Code Section 3406 of 31% on
"reportable payments" (including interest distributions, original issue
discount, and, under certain circumstances, principal distributions) unless the
Regular Certificateholder complies with certain reporting and/or certification
procedures, including the provision of its taxpayer identification number to the
Trustee, its agent or the broker who effected the sale of the Regular
Certificate, or such Certificateholder is otherwise an exempt recipient under
applicable provisions of the Code. Any amounts to be withheld from distribution
on the Regular Certificates would be refunded by the Service or allowed as a
credit against the Regular Certificateholder's federal income tax liability.
Reporting Requirements
Reports of accrued interest, original issue discount and information
necessary to compute the accrual of any market discount on the Regular
Certificates will be made annually to the Service and to individuals, estates,
non-exempt and non-charitable trusts, and partnerships who are either holders of
record of Regular Certificates or beneficial owners who own Regular Certificates
through a broker or middleman as nominee. All brokers, nominees and all other
non-exempt holders of record of Regular Certificates (including corporations,
non-calendar year taxpayers, securities or commodities dealers, real estate
investment trusts, investment companies, common trust funds, thrift institutions
and charitable trusts) may request such information for any calendar quarter by
telephone or in writing by contacting the person designated in Service
Publication 938 with respect to a particular series of Regular Certificates.
Holders through nominees must request such information from the nominee.
The Service's Form 1066 has an accompanying Schedule Q, Quarterly
Notice to Residual Interest Holders of REMIC Taxable Income or Net Loss
Allocation. Treasury regulations require that Schedule Q be furnished by the
REMIC Pool to each Residual Certificateholder by the end of the month following
the close of each calendar quarter (41 days after the end of a quarter under
proposed Treasury regulations) in which the REMIC Pool is in existence.
Treasury regulations require that, in addition to the foregoing
requirements, information must be furnished quarterly to Residual
Certificateholders, furnished annually, if applicable, to holders of Regular
Certificates, and filed annually with the Service concerning Code Section 67
expenses (see "Limitations on Deduction of Certain Expenses" above) allocable to
such holders. Furthermore, under such regulations, information must be furnished
quarterly to Residual Certificateholders, furnished annually to holders of
Regular Certificates, and filed annually with the Service concerning the
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percentage of the REMIC Pool's assets meeting the qualified asset tests
described above under "Status of REMIC Certificates".
Federal Income Tax Consequences For Certificates as
to Which No REMIC Election Is Made
Standard Certificates
General
In the event that no election is made to treat a Trust Fund (or a
segregated pool of assets therein) with respect to a series of Certificates that
are not designated as "Stripped Certificates", as described below, as a REMIC
(Certificates of such a series hereinafter referred to as "Standard
Certificates"), the Trust Fund will be classified as a grantor trust under
subpart E, Part 1 of subchapter J of the Code and not as an association taxable
as a corporation or a "taxable mortgage pool" within the meaning of Code Section
7701(i). Where there is no fixed retained yield with respect to the Mortgage
Loans underlying the Standard Certificates, the holder of each such Standard
Certificate (a "Standard Certificateholder") in such series will be treated as
the owner of a pro rata undivided interest in the ordinary income and corpus
portions of the Trust Fund represented by its Standard Certificate and will be
considered the beneficial owner of a pro rata undivided interest in each of the
Mortgage Loans, subject to the discussion below under "Recharacterization of
Servicing Fees". Accordingly, the holder of a Standard Certificate of a
particular series will be required to report on its federal income tax return
its pro rata share of the entire income from the Mortgage Loans represented by
its Standard Certificate, including interest at the coupon rate on such Mortgage
Loans, original issue discount (if any), prepayment fees, assumption fees, and
late payment charges received by the Master Servicer, in accordance with such
Standard Certificateholder's method of accounting. A Standard Certificateholder
generally will be able to deduct its share of the servicing fee and all
administrative and other expenses of the Trust Fund in accordance with its
method of accounting, provided that such amounts are reasonable compensation for
services rendered to that Trust Fund. However, investors who are individuals,
estates or trusts who own Standard Certificates, either directly or indirectly
through certain pass-through entities, will be subject to limitation with
respect to certain itemized deductions described in Code Section 67, including
deductions under Code Section 212 for the servicing fee and all such
administrative and other expenses of the Trust Fund, to the extent that such
deductions, in the aggregate, do not exceed two percent of an investor's
adjusted gross income. In addition, Code Section 68 provides that itemized
deductions otherwise allowable for a taxable year of an individual taxpayer will
be reduced by the lesser of (i) 3% of the excess, if any, of adjusted gross
income over $100,000 ($50,000 in the case of a married individual filing a
separate return) (subject to adjustments for inflation), or (ii) 80% of the
amount of itemized deductions otherwise allowable for such year. As a result,
such investors holding Standard Certificates, directly or indirectly through a
pass-through entity, may have aggregate taxable income in excess of the
aggregate amount of cash received on such Standard Certificates with respect to
interest at the pass-through rate on such Standard Certificates. In addition,
such expenses are not deductible at all for purposes of computing the
alternative minimum tax, and may cause such investors to be subject to
significant additional tax liability. Moreover, where there is fixed retained
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yield with respect to the Mortgage Loans underlying a series of Standard
Certificates or where the servicing fee is in excess of reasonable servicing
compensation, the transaction will be subject to the application of the
"stripped bond" and "stripped coupon" rules of the Code, as described below
under "Stripped Certificates" and "Recharacterization of Servicing Fees",
respectively.
Tax Status
Standard Certificates will have the following status for federal
income tax purposes:
1. A Standard Certificate owned by a "domestic building and loan
association" within the meaning of Code Section 7701(a)(19) will be
considered to represent "loans . . . secured by an interest in real property
which is . . . residential real property" within the meaning of Code Section
7701(a)(19)(C)(v), provided that the real property securing the Mortgage
Loans represented by that Standard Certificate is of the type described in
such section of the Code.
2. A Standard Certificate owned by a real estate investment trust
will be considered to represent "real estate assets" within the meaning of Code
Section 856(c)(5)(A) to the extent that the assets of the related Trust Fund
consist of qualified assets, and interest income on such assets will be
considered "interest on obligations secured by mortgages on real property" to
such extent within the meaning of Code Section 856(c)(3)(B).
3. A Standard Certificate owned by a REMIC will be considered to
represent an "obligation . . . which is principally secured by an interest in
real property" within the meaning of Code Section 860G(a)(3)(A) to the extent
that the assets of the related Trust Fund consist of "qualified mortgages"
within the meaning of Code Section 860G(a)(3).
Premium and Discount
Standard Certificateholders are advised to consult with their tax
advisors as to the federal income tax treatment of premium and discount arising
either upon initial acquisition of Standard Certificates or thereafter.
Premium. The treatment of premium incurred upon the purchase of a
Standard Certificate will be determined generally as described above under
"Certain Federal Income Tax Consequences for REMIC Certificates--Taxation of
Residual Certificates--Treatment of Certain Items of REMIC Income and
Expense--Premium".
Original Issue Discount. The original issue discount rules will be
applicable to a Standard Certificateholder's interest in those Mortgage Loans as
to which the conditions for the application of those sections are met. Rules
regarding periodic inclusion of original issue discount income are applicable to
mortgages of corporations originated after May 27, 1969, mortgages of
noncorporate mortgagors (other than individuals) originated after July 1, 1982,
and mortgages of individuals originated after March 2, 1984. Under the OID
Regulations, such original issue discount could arise by the charging of points
by the originator of the mortgages in an amount greater than a statutory de
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minimis exception, including a payment of points currently deductible by the
borrower under applicable Code provisions or, under certain circumstances, by
the presence of "teaser rates" on the Mortgage Loans.
Original issue discount must generally be reported as ordinary gross
income as it accrues under a constant interest method that takes into account
the compounding of interest, in advance of the cash attributable to such income.
Unless indicated otherwise in the applicable Prospectus Supplement, no
prepayment assumption will be assumed for purposes of such accrual. However,
Code Section 1272 provides for a reduction in the amount of original issue
discount includible in the income of a holder of an obligation that acquires the
obligation after its initial issuance at a price greater than the sum of the
original issue price and the previously accrued original issue discount, less
prior payments of principal. Accordingly, if such Mortgage Loans acquired by a
Standard Certificateholder are purchased at a price equal to the then unpaid
principal amount of such Mortgage Loans, no original issue discount attributable
to the difference between the issue price and the original principal amount of
such Mortgage Loans (i.e., points) will be includible by such holder.
Market Discount. Standard Certificateholders also will be subject to
the market discount rules to the extent that the conditions for application of
those sections are met. Market discount on the Mortgage Loans will be determined
and will be reported as ordinary income generally in the manner described above
under "Certain Federal Income Tax Consequences for REMIC Certificates--Taxation
of Regular Certificates--Market Discount", except that the ratable accrual
methods described therein will not apply and it is unclear whether a Prepayment
Assumption would apply. Rather, the holder will accrue market discount pro rata
over the life of the Mortgage Loans, unless the constant yield method is
elected. Unless indicated otherwise in the applicable Prospectus Supplement, no
prepayment assumption will be assumed for purposes of such accrual.
Recharacterization of Servicing Fees
If the servicing fee paid to the Master Servicer were deemed to
exceed reasonable servicing compensation, the amount of such excess would
represent neither income nor a deduction to Certificateholders. In this regard,
there are no authoritative guidelines for federal income tax purposes as to
either the maximum amount of servicing compensation that may be considered
reasonable in the context of this or similar transactions or whether, in the
case of the Standard Certificate, the reasonableness of servicing compensation
should be determined on a weighted average or loan-by-loan basis. If a
loan-by-loan basis is appropriate, the likelihood that such amount would exceed
reasonable servicing compensation as to some of the Mortgage Loans would be
increased. Service guidance indicates that a servicing fee in excess of
reasonable compensation ("excess servicing") will cause the Mortgage Loans to be
treated under the "stripped bond" rules. Such guidance provides safe harbors for
servicing deemed to be reasonable and requires taxpayers to demonstrate that the
value of servicing fees in excess of such amounts is not greater than the value
of the services provided.
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Accordingly, if the Service's approach is upheld, a servicer who
receives a servicing fee in excess of such amounts would be viewed as retaining
an ownership interest in a portion of the interest payments on the Mortgage
Loans. Under the rules of Code Section 1286, the separation of ownership of the
right to receive some or all of the interest payments on an obligation from the
right to receive some or all of the principal payments on the obligation would
result in treatment of such Mortgage Loans as "stripped coupons" and "stripped
bonds". Subject to the de minimis rule discussed below under "--Stripped
Certificates", each stripped bond or stripped coupon could be considered for
this purpose as a non-interest bearing obligation issued on the date of issue of
the Standard Certificates, and the original issue discount rules of the Code
would apply to the holder thereof. While Standard Certificateholders would still
be treated as owners of beneficial interests in a grantor trust for federal
income tax purposes, the corpus of such trust could be viewed as excluding the
portion of the Mortgage Loans the ownership of which is attributed to the Master
Servicer, or as including such portion as a second class of equitable interest.
Applicable Treasury regulations treat such an arrangement as a fixed investment
trust, since the multiple classes of trust interests should be treated as merely
facilitating direct investments in the trust assets and the existence of
multiple classes of ownership interests is incidental to that purpose. In
general, such a recharacterization should not have any significant effect upon
the timing or amount of income reported by a Standard Certificateholder, except
that the income reported by a cash method holder may be slightly accelerated.
See "Stripped Certificates" below for a further description of the federal
income tax treatment of stripped bonds and stripped coupons.
Sale or Exchange of Standard Certificates
Upon sale or exchange of a Standard Certificate, a Standard
Certificateholder will recognize gain or loss equal to the difference between
the amount realized on the sale and its aggregate adjusted basis in the Mortgage
Loans and the other assets represented by the Standard Certificate. In general,
the aggregate adjusted basis will equal the Standard Certificateholder's cost
for the Standard Certificate, increased by the amount of any income previously
reported with respect to the Standard Certificate and decreased by the amount of
any losses previously reported with respect to the Standard Certificate and the
amount of any distributions received thereon. Except as provided above with
respect to market discount on any Mortgage Loans, and except for certain
financial institutions subject to the provisions of Code Section 582(c), any
such gain or loss would be capital gain or loss if the Standard Certificate was
held as a capital asset. However, gain on the sale of a Standard Certificate
will be treated as ordinary income (i) if a Standard Certificate is held as part
of a "conversion transaction" as defined in Code Section 1258(c), up to the
amount of interest that would have accrued on the Standard Certificateholder's
net investment in the conversion transaction at 120% of the appropriate
applicable Federal rate in effect at the time the taxpayer entered into the
transaction minus any amount previously treated as ordinary income with respect
to any prior disposition of property that was held as a part of such transaction
or (ii) in the case of a non-corporate taxpayer, to the extent such taxpayer has
made an election under Code Section 163(d)(4) to have net capital gains taxed as
investment income at ordinary income rates. Capital gains of certain
non-corporate taxpayers are subject to a lower maximum tax rate than ordinary
income of such taxpayers. The maximum tax rate for corporations is the same with
respect to both ordinary income and capital gains.
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Stripped Certificates
General
Pursuant to Code Section 1286, the separation of ownership of the
right to receive some or all of the principal payments on an obligation from
ownership of the right to receive some or all of the interest payments results
in the creation of "stripped bonds" with respect to principal payments and
"stripped coupons" with respect to interest payments. For purposes of this
discussion, Certificates that are subject to those rules will be referred to as
"Stripped Certificates". Stripped Certificates include "Stripped Interest
Certificates" and "Stripped Principal Certificates" (as defined in this
Prospectus) as to which no REMIC election is made.
The Certificates will be subject to those rules if (i) the Depositor
or any of its affiliates retains (for its own account or for purposes of
resale), in the form of fixed retained yield or otherwise, an ownership interest
in a portion of the payments on the Mortgage Loans, (ii) the Master Servicer is
treated as having an ownership interest in the Mortgage Loans to the extent it
is paid (or retains) servicing compensation in an amount greater than reasonable
consideration for servicing the Mortgage Loans (see "Standard
Certificates--Recharacterization of Servicing Fees" above) and (iii)
Certificates are issued in two or more classes or subclasses representing the
right to non-pro-rata percentages of the interest and principal payments on the
Mortgage Loans.
In general, a holder of a Stripped Certificate will be considered to
own "stripped bonds" with respect to its pro rata share of all or a portion of
the principal payments on each Mortgage Loan and/or "stripped coupons" with
respect to its pro rata share of all or a portion of the interest payments on
each Mortgage Loan, including the Stripped Certificate's allocable share of the
servicing fees paid to the Master Servicer, to the extent that such fees
represent reasonable compensation for services rendered. See discussion above
under "Standard Certificates--Recharacterization of Servicing Fees". Although
not free from doubt, for purposes of reporting to Stripped Certificateholders,
the servicing fees will be allocated to the Stripped Certificates in proportion
to the respective entitlements to distributions of each class (or subclass) of
Stripped Certificates for the related period or periods. The holder of a
Stripped Certificate generally will be entitled to a deduction each year in
respect of the servicing fees, as described above under "Standard
Certificates--General", subject to the limitation described therein.
Code Section 1286 treats a stripped bond or a stripped coupon as an
obligation issued at an original issue discount on the date that such stripped
interest is purchased. Although the treatment of Stripped Certificates for
federal income tax purposes is not clear in certain respects at this time,
particularly where such Stripped Certificates are issued with respect to a
Mortgage Pool containing variable-rate Mortgage Loans, the Depositor has been
advised by counsel that (i) the Trust Fund will be treated as a grantor trust
under subpart E, Part 1 of subchapter J of the Code and not as an association
taxable as a corporation or a "taxable mortgage pool" within the meaning of Code
Section 7701(i), and (ii) each Stripped Certificate should be treated as a
single installment obligation for purposes of calculating original issue
discount and gain or loss on disposition. This treatment is based on the
interrelationship of Code Section 1286, Code Sections 1272 through 1275, and the
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OID Regulations. While under Code Section 1286 computations with respect to
Stripped Certificates arguably should be made in one of the ways described below
under "Taxation of Stripped Certificates--Possible Alternative
Characterizations," the OID Regulations state, in general, that two or more debt
instruments issued by a single issuer to a single investor in a single
transaction should be treated as a single debt instrument for original issue
discount purposes. The Pooling Agreement requires that the Trustee make and
report all computations described below using this aggregate approach, unless
substantial legal authority requires otherwise.
Furthermore, Treasury regulations issued December 28, 1992 provide
for the treatment of a Stripped Certificate as a single debt instrument issued
on the date it is purchased for purposes of calculating any original issue
discount. In addition, under these regulations, a Stripped Certificate that
represents a right to payments of both interest and principal may be viewed
either as issued with original issue discount or market discount (as described
below), at a de minimis original issue discount, or, presumably, at a premium.
This treatment suggests that the interest component of such a Stripped
Certificate would be treated as qualified stated interest under the OID
Regulations. Further, these final regulations provide that the purchaser of such
a Stripped Certificate will be required to account for any discount as market
discount rather than original issue discount if either (i) the initial discount
with respect to the Stripped Certificate was treated as zero under the de
minimis rule, or (ii) no more than 100 basis points in excess of reasonable
servicing is stripped off the related Mortgage Loans. Any such market discount
would be reportable as described under "Certain Federal Income Tax Consequences
for REMIC Certificates--Taxation of Regular Certificates--Market Discount,"
without regard to the de minimis rule therein, assuming that a prepayment
assumption is employed in such computation.
Status of Stripped Certificates
No specific legal authority exists as to whether the character of
the Stripped Certificates, for federal income tax purposes, will be the same as
that of the Mortgage Loans. Although the issue is not free from doubt, counsel
has advised the Depositor that Stripped Certificates owned by applicable holders
should be considered to represent "real estate assets" within the meaning of
Code Section 856(c)(5)(A), "obligation[s] principally secured by an interest in
real property" within the meaning of Code Section 860G(a)(3)(A), and "loans . .
. secured by an interest in real property which is . . . residential real
property" within the meaning of Code Section 7701(a)(19)(C)(v), and interest
(including original issue discount) income attributable to Stripped Certificates
should be considered to represent "interest on obligations secured by mortgages
on real property" within the meaning of Code Section 856(c)(3)(B), provided that
in each case the Mortgage Loans and interest on such Mortgage Loans qualify for
such treatment.
Taxation of Stripped Certificates
Original Issue Discount. Except as described above under "General",
each Stripped Certificate will be considered to have been issued at an original
issue discount for federal income tax purposes. Original issue discount with
respect to a Stripped Certificate must be included in ordinary income as it
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accrues, in accordance with a constant interest method that takes into account
the compounding of interest, which may be prior to the receipt of the cash
attributable to such income. Based in part on the OID Regulations and the
amendments to the original issue discount sections of the Code made by the 1986
Act, the amount of original issue discount required to be included in the income
of a holder of a Stripped Certificate (referred to in this discussion as a
"Stripped Certificateholder") in any taxable year likely will be computed
generally as described above under "Federal Income Tax Consequences for REMIC
Certificates--Taxation of Regular Certificates--Original Issue Discount" and
"--Variable Rate Regular Certificates". However, with the apparent exception of
a Stripped Certificate qualifying as a market discount obligation, as described
above under "General", the issue price of a Stripped Certificate will be the
purchase price paid by each holder thereof, and the stated redemption price at
maturity will include the aggregate amount of the payments, other than qualified
stated interest to be made on the Stripped Certificate to such Stripped
Certificateholder, presumably under the Prepayment Assumption.
If the Mortgage Loans prepay at a rate either faster or slower than
that under the Prepayment Assumption, a Stripped Certificateholder's recognition
of original issue discount will be either accelerated or decelerated and the
amount of such original issue discount will be either increased or decreased
depending on the relative interests in principal and interest on each Mortgage
Loan represented by such Stripped Certificateholder's Stripped Certificate.
While the matter is not free from doubt, the holder of a Stripped Certificate
should be entitled in the year that it becomes certain (assuming no further
prepayments) that the holder will not recover a portion of its adjusted basis in
such Stripped Certificate to recognize an ordinary loss equal to such portion of
unrecoverable basis.
As an alternative to the method described above, the fact that some
or all of the interest payments with respect to the Stripped Certificates will
not be made if the Mortgage Loans are prepaid could lead to the interpretation
that such interest payments are "contingent" within the meaning of the OID
Regulations. The OID Regulations, as they relate to the treatment of contingent
interest, are by their terms not applicable to prepayable securities such as the
Stripped Certificates. However, if final regulations dealing with contingent
interest with respect to the Stripped Certificates apply the same principles as
the OID Regulations, such regulations may lead to different timing of income
inclusion that would be the case under the OID Regulations. Furthermore,
application of such principles could lead to the characterization of gain on the
sale of contingent interest Stripped Certificates as ordinary income. Investors
should consult their tax advisors regarding the appropriate tax treatment of
Stripped Certificates.
Sale or Exchange of Stripped Certificates. Sale or exchange of a
Stripped Certificate prior to its maturity will result in gain or loss equal to
the difference, if any, between the amount received and the Stripped
Certificateholder's adjusted basis in such Stripped Certificate, as described
above under "Certain Federal Income Tax Consequences for REMIC
Certificates--Taxation of Regular Certificates--Sale or Exchange of Regular
Certificates". To the extent that a subsequent purchaser's purchase price is
exceeded by the remaining payments on the Stripped Certificates, such subsequent
purchaser will be required for federal income tax purposes to accrue and report
such excess as if it were original issue discount in the manner described above.
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It is not clear for this purpose whether the assumed prepayment rate that is to
be used in the case of a Stripped Certificateholder other than an original
Stripped Certificateholder should be the Prepayment Assumption or a new rate
based on the circumstances at the date of subsequent purchase.
Purchase of More Than One Class of Stripped Certificates. Where an
investor purchases more than one class of Stripped Certificates, it is currently
unclear whether for federal income tax purposes such classes of Stripped
Certificates should be treated separately or aggregated for purposes of the
rules described above.
Possible Alternative Characterizations. The characterizations of the
Stripped Certificates discussed above are not the only possible interpretations
of the applicable Code provisions. For example, the Stripped Certificateholder
may be treated as the owner of (i) one installment obligation consisting of such
Stripped Certificate's pro rata share of the payments attributable to principal
on each Mortgage Loan and a second installment obligation consisting of such
Stripped Certificate's pro rata share of the payments attributable to interest
on each Mortgage Loan, (ii) as many stripped bonds or stripped coupons as there
are scheduled payments of principal and/or interest on each Mortgage Loan or
(iii) a separate installment obligation for each Mortgage Loan, representing the
Stripped Certificate's pro rata share of payments of principal and/or interest
to be made with respect thereto. Alternatively, the holder of one or more
classes of Stripped Certificates may be treated as the owner of a pro rata
fractional undivided interest in each Mortgage Loan to the extent that such
Stripped Certificate, or classes of Stripped Certificates in the aggregate,
represent the same pro rata portion of principal and interest on each such
Mortgage Loan, and a stripped bond or stripped coupon (as the case may be),
treated as an installment obligation or contingent payment obligation, as to the
remainder. Final regulations issued on December 28, 1992 regarding original
issue discount on stripped obligations make the foregoing interpretations less
likely to be applicable. The preamble to those regulations states that they are
premised on the assumption that an aggregation approach is appropriate for
determining whether original issue discount on a stripped bond or stripped
coupon is de minimis, and solicits comments on appropriate rules for aggregating
stripped bonds and stripped coupons under Code Section 1286.
Because of these possible varying characterizations of Stripped
Certificates and the resultant differing treatment of income recognition,
Stripped Certificateholders are urged to consult their own tax advisors
regarding the proper treatment of Stripped Certificates for federal income tax
purposes.
Reporting Requirements and Backup Withholding
The Trustee will furnish, within a reasonable time after the end of
each calendar year, to each Standard Certificateholder or Stripped
Certificateholder at any time during such year, such information (prepared on
the basis described above) as the Trustee deems to be necessary or desirable to
enable such Certificateholders to prepare their federal income tax returns. Such
information will include the amount of original issue discount accrued on
Certificates held by persons other than Certificateholders exempted from the
reporting requirements. The amounts required to be reported by the Trustee may
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not be equal to the proper amount of original issue discount required to be
reported as taxable income by a Certificateholder, other than an original
Certificateholder that purchased at the issue price. In particular, in the case
of Stripped Certificates, unless provided otherwise in the applicable Prospectus
Supplement, such reporting will be based upon a representative initial offering
price of each class of Stripped Certificates. The Trustee will also file such
original issue discount information with the Service. If a Certificateholder
fails to supply an accurate taxpayer identification number or if the Secretary
of the Treasury determines that a Certificateholder has not reported all
interest and dividend income required to be shown on his federal income tax
return, 31% backup withholding may be required in respect of any reportable
payments, as described above under "Certain Federal Income Tax Consequences for
REMIC Certificates--Backup Withholding".
Taxation of Certain Foreign Investors
To the extent that a Certificate evidences ownership in Mortgage
Loans that are issued on or before July 18, 1984, interest or original issue
discount paid by the person required to withhold tax under Code Section 1441 or
1442 to nonresident aliens, foreign corporations, or other Non-U.S. Persons
generally will be subject to 30% United States withholding tax, or such lower
rate as may be provided for interest by an applicable tax treaty. Accrued
original issue discount recognized by the Standard Certificateholder or Stripped
Certificateholder on original issue discount recognized by the Standard
Certificateholder or Stripped Certificateholders on the sale or exchange of such
a Certificate also will be subject to federal income tax at the same rate.
Treasury regulations provide that interest or original issue
discount paid by the Trustee or other withholding agent to a Non-U.S. Person
evidencing ownership interest in Mortgage Loans issued after July 18, 1984 will
be "portfolio interest" and will be treated in the manner, and such persons will
be subject to the same certification requirements, described above under
"Certain Federal Income Tax Consequences for REMIC Certificates--Taxation of
Certain Foreign Investors--Regular Certificates".
STATE AND OTHER TAX CONSIDERATIONS
In addition to the federal income tax consequences described in
"Certain Federal Income Tax Consequences", potential investors should consider
the state and local tax consequences of the acquisition, ownership, and
disposition of the Offered Certificates. State tax law may differ substantially
from the corresponding federal law, and the discussion above does not purport to
describe any aspect of the tax laws of any state or other jurisdiction.
Therefore, prospective investors should consult their own tax advisors with
respect to the various tax consequences of investments in the Offered
Certificates.
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ERISA CONSIDERATIONS
General
The Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and the Code impose certain requirements on employee benefit plans,
and on certain other retirement plans and arrangements, including individual
retirement accounts and annuities, Keogh plans, collective investment funds,
insurance company and separate accounts and some insurance company general
accounts in which such plans, accounts or arrangements are invested that are
subject to the fiduciary responsibility provisions of ERISA and Section 4975 of
the Code (all of which are hereinafter referred to as "Plans"), and on persons
who are fiduciaries with respect to Plans, in connection with the investment of
Plan assets. Certain employee benefit plans, such as governmental plans (as
defined in ERISA Section 3(32)), and, if no election has been made under Section
410(d) of the Code, church plans (as defined in Section 3(33) of ERISA) are not
subject to ERISA requirements. Accordingly, assets of such plans may be invested
in Offered Certificates without regard to the ERISA considerations described
below, subject to the provisions of other applicable federal and state law. Any
such plan which is qualified and exempt from taxation under Sections 401(a) and
501(a) of the Code, however, is subject to the prohibited transaction rules set
forth in Section 503 of the Code.
ERISA generally imposes on Plan fiduciaries certain general
fiduciary requirements, including those of investment prudence and
diversification and the requirement that a Plan's investments be made in
accordance with the documents governing the Plan. In addition, ERISA and the
Code prohibit a broad range of transactions involving assets of a Plan and
persons ("Parties in Interest") who have certain specified relationships to the
Plan, unless a statutory or administrative exemption is available. Certain
Parties in Interest that participate in a prohibited transaction may be subject
to an excise tax imposed pursuant to Section 4975 of the Code, unless a
statutory or administrative exemption is available. These prohibited
transactions generally are set forth in Section 406 of ERISA and Section 4975 of
the Code. Special caution should be exercised before the assets of a Plan are
used to purchase a Certificate if, with respect to such assets, the Depositor,
the Master Servicer or the Trustee or an affiliate thereof, either: (a) has
investment discretion with respect to the investment of such assets of such
Plan; or (b) has authority or responsibility to give, or regularly gives
investment advice with respect to such assets for a fee and pursuant to an
agreement or understanding that such advice will serve as a primary basis for
investment decisions with respect to such assets and that such advice will be
based on the particular investment needs of the Plan.
Before purchasing any Offered Certificates, a Plan fiduciary should
consult with its counsel and determine whether there exists any prohibition to
such purchase under the requirements of ERISA, whether any prohibited
transaction class-exemption or any individual administrative prohibited
transaction exemption (as described below) applies, including whether the
appropriate conditions set forth therein would be met, or whether any statutory
prohibited transaction exemption is applicable, and further should consult the
applicable Prospectus Supplement relating to such Series of Certificates.
Plan Asset Regulations
A Plan's investment in Certificates may cause the Trust Assets to be
deemed Plan assets. Section 2510.3-101 of the regulations of the United States
Department of Labor ("DOL") provides that when a Plan acquires an equity
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interest in an entity, the Plan's assets include both such equity interest and
an undivided interest in each of the underlying assets of the entity, unless
certain exceptions not applicable to this discussion apply, or unless the equity
participation in the entity by "benefit plan investors" (that is, Plans and
certain employee benefit plans not subject to ERISA) is not "significant". For
this purpose, in general, equity participation in a Trust Fund will be
"significant" on any date if, immediately after the most recent acquisition of
any Certificate, 25% or more of any class of Certificates is held by benefit
plan investors.
Any person who has discretionary authority or control respecting the
management or disposition of Plan assets, and any person who provides investment
advice with respect to such assets for a fee, is a fiduciary of the investing
Plan. If the Trust Assets constitute Plan assets, then any party exercising
management or discretionary control regarding those assets, such as a Master
Servicer, a Special Servicer or any Sub-Servicer, may be deemed to be a Plan
"fiduciary" with respect to the investing Plan, and thus subject to the
fiduciary responsibility provisions and prohibited transaction provisions of
ERISA and the Code. In addition, if the Trust Assets constitute Plan assets, the
purchase of Certificates by a Plan, as well as the operation of the Trust Fund,
may constitute or involve a prohibited transaction under ERISA and the Code.
Administrative Exemptions
Several underwriters of mortgage-backed securities have applied for
and obtained individual administrative ERISA prohibited transaction exemptions
which can only apply to the purchase and holding of mortgage-backed securities
which, among other conditions, are sold in an offering with respect to which
such underwriter serves as the sole or a managing underwriter, or as a selling
or placement agent. If such an exemption might be applicable to a Series of
Certificates, the related Prospectus Supplement will refer to such possibility,
as well as provide a summary of the conditions to the applicability.
Unrelated Business Taxable Income; Residual Certificates
The purchase of a Residual Certificate by any employee benefit plan
qualified under Code Section 401(a) and exempt from taxation under Code Section
501(a), including most varieties of ERISA Plans, may give rise to "unrelated
business taxable income" as described in Code Sections 511-515 and 860E.
Further, prior to the purchase of Residual Certificates, a prospective
transferee may be required to provide an affidavit to a transferor that it is
not, nor is it purchasing a Residual Certificate on behalf of, a "Disqualified
Organization," which term as defined above includes certain tax-exempt entities
not subject to Code Section 511 including certain governmental plans, as
discussed above under the caption "Certain Federal Income Tax
Consequences--Federal Income Tax Consequences for REMIC Certificates--Taxation
of Residual Certificates--Tax-Related Restrictions on Transfer of Residual
Certificates--Disqualified Organizations."
Due to the complexity of these rules and the penalties imposed upon
persons involved in prohibited transactions, it is particularly important that
potential investors who are Plan fiduciaries consult with their counsel
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regarding the consequences under ERISA of their acquisition and ownership of
Certificates.
The sale of Certificates to an employee benefit plan is in no
respect a representation by the Depositor or the Underwriter that this
investment meets all relevant legal requirements with respect to investments by
plans generally or by any particular plan, or that this investment is
appropriate for plans generally or for any particular plan.
LEGAL INVESTMENT
The Offered Certificates will constitute "mortgage related
securities" for purposes of the Secondary Mortgage Market Enhancement Act of
1984, as amended ("SMMEA"), only if so specified in the related Prospectus
Supplement. The appropriate characterization of those Certificates not
qualifying as "mortgage related securities" ("Non-SMMEA Certificates") under
various legal investment restriction, and thus the ability of investors subject
to these restrictions to purchase such Certificates, may be subject to
significant interpretive uncertainties. Accordingly, investors whose investment
authority is subject to legal restrictions should consult their own legal
advisors to determine whether and to what extent the Non-SMMEA Certificates
constitute legal investments for them.
Generally, only classes of Offered Certificates that (i) are rated
in one of the two highest rating categories by one or more Rating Agencies and
(ii) are part of a series evidencing interests in a Trust Fund consisting of
loans originated by certain types of Originators as specified in SMMEA, will be
"mortgage related securities" for purposes of SMMEA. As "mortgage related
securities," such classes will constitute legal investments for persons, trusts,
corporations, partnerships, associations, business trusts and business entities
(including depository institutions, insurance companies, tustees and pension
funds) created pursuant to or existing under the laws of the United States or of
any state (including the District of Columbia and Puerto Rico) whose authorized
investments are subject to state regulation to the same extent that, under
applicable law, obligations issued by or guaranteed as to principal and interest
by the United States or any agency or instrumentality thereof constitute legal
investments for such entities. Under SMMEA, a number of states enacted
legislation on or prior to the October 3, 1991 cut-off for such enactments
limiting to various extents the ability of certain entities (in particular,
insurance companies) to invest in "mortgage related securities," secured by
liens on residential, or mixed residential and commercial properties, in most
cases by requiring the affected investors to rely solely upon existing state
law, and not SMMEA. Pursuant to Section 347 of the Riegle Community Development
and Regulatory Improvement Act of 1994, which amended the definition of
"mortgage related security" (effective December 31, 1996) to include, in
relevant part, Certificates satisfying the rating and qualified Originator
requirements for "mortgage related securities," but evidencing interests in a
Trust Fund consisting, in whole or in part, of first liens on one or more
parcels of real estate upon which are located one or more commercial structures,
states were authorized to enact legislation, on or before September 23, 2001,
specifically referring to Section 347 and prohibiting or restricting the
purchase, holding or investment by state regulated entities in such types of
Certificates. Accordingly, the investors affected by such legislation will be
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authorized to invest in Offered Certificates qualifying as "mortgage related
securities" only to the extent provided in such legislation.
SMMEA also amended the legal investment authority of
federally-chartered depository institutions as follows: federal savings and loan
associations and federal savings banks may invest in, sell or otherwise deal in
"mortgage related securities" without limitation as to the percentage of their
assets represented thereby, federal credit unions may invest in such securities,
and national banks may purchase such securities for their own account without
regard to the limitations generally applicable to investment securities set
forth in 12 U.S.C. Section 24 (Seventh), subject in each case to such
regulations as the applicable federal regulatory authority may prescribe. In
this connection, effective December 31, 1996, the Office of the Comptroller of
the Currency (the "OCC") has amended 12 C.F.R. Part 1 to authorize national
banks to purchase and sell for their own account, without limitation as to a
percentage of the bank's capital and surplus (but subject to compliance with
certain general standards in 12 C.F.R. ss.1.5 concerning "safety and soundness"
and retention of credit information), certain "Type IV securities," defined in
12 C.F.R. ss.1.2(1) to include certain "commercial mortgage-related securities"
and "residential mortgage-related securities." As so defined, "commercial
mortgage-related security" and "residential mortgage-related security" mean, in
relevant part, "mortgage related security" within the meaning of SMMEA, provided
that, in the case of a "commercial mortgage-related security," it "represents
ownership of a promissory note or certificate of interest or participation that
is directly secured by a first lien on one or more parcels of real estate upon
which one or more commercial structures are located and that is fully secured by
interests in a pool of loans to numerous obligors." In the absence of any rule
or administrative interpretation by the OCC defining the term "numerous
obligors," no representation is made as to whether any class of Certificates
will qualify as "commercial mortgage-related securities," and thus as "Type IV
securities," for investment by national banks. federal credit unions should
review NCUA Letter to Credit Unions No. 96, as modified by Letter to Credit
Unions No. 108, which includes guidelines to assist federal credit unions in
making investment decisions for mortgage related securities. The NCUA has
adopted rules, codified as 12 C.F.R. ss.ss.703.5(f)-(k), which prohibit federal
credit unions from investing in certain mortgage related securities (including
securities such as certain classes of the Offered Certificates), except under
limited circumstances.
All depository institutions considering an investment in the Offered
Certificates should review the "Supervisory Policy Statement on Securities
Activities" dated January 28, 1992, as revised April 15, 1994 (the "Policy
Statement") of the Federal Financial Institutions Examination Council. The
Policy Statement, which has been adopted by the Board of Governors of the
Federal Reserve System, the OCC, the Federal Depository Insurance Company and
the Office of Thrift Supervision, and by the NCUA (with certain modifications),
prohibits depository institutions from investing in certain "high-risk mortgage
securities" (including securities such as certain classes of the Offered
Certificates), except under limited circumstances, and sets forth certain
investment practices deemed to be unsuitable for regulated institutions.
Institutions whose investment activities are subject to regulation
by federal or state authorities should review rules, policies and guidelines
adopted from time to time by such authorities before purchasing any class of the
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Offered Certificates, as certain classes may be deemed unsuitable investments,
or may otherwise be restricted, under such rules, policies or guidelines (in
certain instances irrespective of SMMEA).
The foregoing does not take into consideration the applicability of
statutes, rules, regulations, orders, guidelines or agreements generally
governing investments made by a particular investor, including, but not limited
to, "prudent investor" provisions, percentage-of-assets limits, provisions which
may restrict or prohibit investment in securities which are not "interest
bearing" or "income paying," and, with regard to any class of the Offered
Certificates issued in book-entry form, provisions which may restrict or
prohibit investments in securities which are issued in book-entry form.
Except as to the status of certain classes of Offered Certificates
as "mortgage related securities," no representations are made as to the proper
characterization of any class of Offered Certificates for legal investment
purposes, financial institution regulatory purposes, or other purposes, or as to
the ability of particular investors to purchase any class of Offered
Certificates under applicable legal investment restrictions. These uncertainties
(and any unfavorable future determinations concerning legal investment or
financial institution regulatory characteristics of the Offered Certificates)
may adversely affect the liquidity of any class of Offered Certificates.
Accordingly, all investors whose investment activities are subject
to legal investment laws and regulations, regulatory capital requirements or
review by regulatory authorities should consult with their own legal advisors in
determining whether and to what extent the Offered Certificates of any class
constitute legal investments or are subject to investment, capital or other
restrictions.
METHOD OF DISTRIBUTION
The Offered Certificates offered hereby and by Prospectus
Supplements hereto will be offered in series through one or more of the methods
described below. The Prospectus Supplement prepared for each series will
describe the method of offering being utilized for that series and will state
the net proceeds to the Depositor from such sale.
The Depositor intends that Offered Certificates will be offered
through the following methods from time to time and that offerings may be made
concurrently through more than one of these methods or that an offering of a
particular series of Certificates may be made through a combination of two or
more of these methods. Such methods are as follows:
1. by negotiated firm commitment underwriting and public offering
by one or more underwriters specified in the related Prospectus Supplement;
2. by placements through one or more placement agents specified in
the related Prospectus Supplement primarily with institutional investors and
dealers; and
3. through direct offerings by the Depositor.
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If underwriters are used in a sale of any Offered Certificates
(other than in connection with an underwriting on a best efforts basis), such
Certificates will be acquired by the underwriters for their own account and may
be resold from time to time in one or more transactions, including negotiated
transactions, at fixed public offering prices or at varying prices to be
determined at the time of sale or at the time of commitment therefor. Such
underwriters may be broker-dealers affiliated with the Depositor whose
identities and relationships to the Depositor will be as set forth in the
related Prospectus Supplement. The managing underwriter or underwriters with
respect to the offer and sale of a particular series of Certificates will be set
forth in the cover of the Prospectus Supplement relating to such series and the
members of the underwriting syndicate, if any, will be named in such Prospectus
Supplement.
In connection with the sale of the Offered Certificates,
underwriters may receive compensation from the Depositor or from purchasers of
the Offered Certificates in the form of discounts, concessions or commissions.
Underwriters and dealers participating in the distribution of the Offered
Certificates may be deemed to be underwriters in connection with such Offered
Certificates, and any discounts or commissions received by them from the
Depositor and any profit on the resale of Offered Certificates by them may be
deemed to be underwriting discounts and commissions under the Securities Act of
1933, as amended (the "Securities Act").
It is anticipated that the underwriting agreement pertaining to the
sale of any series of Certificates will provide that the obligations of the
underwriters will be subject to certain conditions precedent, that the
underwriters will be obligated to purchase all Offered Certificates if any are
purchased (other than in connection with an underwriting on a best efforts
basis) and that the Depositor will indemnify the several underwriters, and each
person, if any, who controls any such underwriter within the meaning of Section
15 of the Securities Act, against certain civil liabilities, including
liabilities under the Securities Act, or will contribute to payments required to
be made in respect thereof.
The Prospectus Supplement with respect to any series offered by
placements through dealers will contain information regarding the nature of such
offering and any agreements to be entered into between the Depositor and
purchasers of Offered Certificates of such series.
The Depositor anticipates that the Offered Certificates offered
hereby will be sold primarily to institutional investors. Purchasers of Offered
Certificates, including dealers, may, depending on the facts and circumstances
of such purchases, be deemed to be "underwriters" within the meaning of the
Securities Act in connection with reoffers and sales by them of Offered
Certificates. Certificateholders should consult with their legal advisors in
this regard prior to any such reoffer or sale.
As to each series of Certificates, only those classes rated in an
investment grade rating category by any Rating Agency will be offered hereby.
Any unrated class may be initially retained by the Depositor, and may be sold by
the Depositor at any time to one or more institutional investors.
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If and to the extent required by applicable law or regulation, this
Prospectus will be used by Chase Securities Inc., an affiliate of the Depositor,
in connection with offers and sales related to market-making transactions in the
Offered Certificates previously offered hereunder in transactions in which Chase
Securities Inc. acts as principal. Chase Securities Inc. may also act as agent
in such transactions. Sales may be made at negotiated prices determined at the
time of sale.
LEGAL MATTERS
Unless otherwise specified in the related Prospectus Supplement,
certain legal matters in connection with the Certificates of each series,
including certain federal income tax consequences, will be passed upon for the
Depositor by Cadwalader, Wickersham & Taft, New York, New York.
FINANCIAL INFORMATION
A new Trust Fund will be formed with respect to each series of
Certificates, and no Trust Fund will engage in any business activities or have
any assets or obligations prior to the issuance of the related series of
Certificates. Accordingly, no financial statements with respect to any Trust
Fund will be included in this Prospectus or in the related Prospectus
Supplement.
RATING
It is a condition to the issuance of any class of Offered
Certificates that they shall have been rated not lower than investment grade,
that is, in one of the four highest rating categories, by at least one Rating
Agency.
Ratings on mortgage pass-through certificates address the likelihood
of receipt by the holders thereof of all collections on the underlying mortgage
assets to which such holders are entitled. These ratings address the structural,
legal and issuer-related aspects associated with such certificates, the nature
of the underlying mortgage assets and the credit quality of the guarantor, if
any. Ratings on mortgage pass-through certificates do not represent any
assessment of the likelihood of principal prepayments by borrowers or of the
degree by which such prepayments might differ from those originally anticipated.
As a result, certificateholders might suffer a lower than anticipated yield,
and, in addition, holders of stripped interest certificates in extreme cases
might fail to recoup their initial investments.
A security rating is not a recommendation to buy, sell or hold
securities and may be subject to revision or withdrawal at any time by the
assigning rating organization. Each security rating should be evaluated
independently of any other security rating.
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INDEX OF PRINCIPAL DEFINITIONS
<PAGE>
1986 Act ........................................................ 96
Accrual Certificates ............................................ 13, 39
Accrued Certificate Interest .................................... 39
ARM Loans ....................................................... 28
Available Distribution Amount ................................... 39
Book-Entry Certificates ......................................... 15, 38
call risk ....................................................... 19, 35
Cash Flow Agreement ............................................. 1, 12, 30
CERCLA .......................................................... 23, 74
Certificate ..................................................... 9, 47
Certificate Account ............................................. 11, 30, 50
Certificate Balance ............................................. 3, 13
Certificate Owner ............................................... 15, 45
Certificateholders .............................................. 2
Certificates .................................................... 1
Code ............................................................ 16, 77
Commercial Properties ........................................... 10, 25
Commission ...................................................... 3
Companion Class ................................................. 14, 41
Controlled Amortization Class ................................... 14, 41
Cooperatives .................................................... 26
CPR ............................................................. 34
Credit Support .................................................. 1, 11, 30
Cut-off Date .................................................... 14
Debt Service Coverage Ratio ..................................... 26
Definitive Certificates ......................................... 15, 38
Depositor ....................................................... 9, 25
Determination Date .............................................. 31, 39
Direct Participants ............................................. 45
Disqualified Organization ....................................... 93
Distribution Date ............................................... 13
Distribution Date Statement ..................................... 42
DOL ............................................................. 108
DTC ............................................................. 4,15,38,45
Due Dates ....................................................... 28
Due Period ...................................................... 31
EPA ............................................................. 74
Equity Participation ............................................ 28
ERISA ........................................................... 16, 107
Events of Default ............................................... 60
Excess Funds .................................................... 37
Exchange Act .................................................... 4
extension risk .................................................. 19, 35
FAMC ............................................................ 11
FHLMC ........................................................... 11
FNMA ............................................................ 11
Garn Act ........................................................ 75
GNMA ............................................................ 11
Indirect Participants ........................................... 45
Insurance and Condemnation Proceeds ............................. 51
L/C Bank ........................................................ 64
Liquidation Proceeds ............................................ 51, 52
Loan-to-Value Ratio ............................................. 27
Lock-out Date ................................................... 28
Lock-out Period ................................................. 28
Master Servicer ................................................. 3, 9
MBS ............................................................. 1, 11, 25
MBS Agreement ................................................... 29
MBS Issuer ...................................................... 29
MBS Servicer..................................................... 29
MBS Trustee ..................................................... 29
Mortgage ........................................................ 25
Mortgage Asset Pool.............................................. 1
Mortgage Asset Seller............................................ 25
Mortgage Assets.................................................. 1, 25
Mortgage Loans................................................... 1, 9, 25
Mortgage Notes................................................... 25
Mortgage Rate.................................................... 10, 28
Mortgaged Properties............................................. 25
Multifamily Properties........................................... 9, 25
Net Leases ...................................................... 27
Nonrecoverable Advance........................................... 42
Non-SMMEA Certificates........................................... 109
Non-U.S. Person.................................................. 98
Notional Amount.................................................. 13, 40
OCC ............................................................. 110
Offered Certificates............................................. 1
OID Regulations.................................................. 81
Originator ...................................................... 26
PAC ............................................................. 34
Participants..................................................... 24, 45
Parties in Interest.............................................. 107
Pass-Through Entity.............................................. 92
Pass-Through Rate................................................ 3, 13
Permitted Investments............................................ 51
Plans ........................................................... 107
Policy Statement................................................. 110
Pooling Agreement................................................ 12, 47
Prepayment Assumption............................................ 82
Prepayment Interest Shortfall.................................... 31
Prepayment Period................................................ 43
Prepayment Premium............................................... 28
Prospectus Supplement............................................ 1
PRPs ............................................................ 74
Rating Agency.................................................... 16
Record Date ..................................................... 39
Regular Certificateholder........................................ 80
Regular Certificates............................................. 77
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Related Proceeds................................................. 42
Relief Act ...................................................... 76
REMIC ........................................................... 2, 16
REMIC Certificates............................................... 77
REMIC Pool ...................................................... 77
REMIC Regulations................................................ 77
REO Property..................................................... 50
Residual Certificateholders...................................... 88
Residual Certificates............................................ 77
Securities Act................................................... 112
Senior Certificates.............................................. 12
Service ......................................................... 80
Servicing Standard............................................... 49
SMMEA ........................................................... 16, 109
SPA ............................................................. 34
Special Servicer................................................. 3, 9, 50
Standard Certificateholder....................................... 100
Standard Certificates............................................ 100
Startup Day ..................................................... 78
Stripped Certificateholder....................................... 105
Stripped Certificates............................................ 103
Stripped Interest Certificates................................... 12
Stripped Principal Certificates.................................. 12
Subordinate Certificates......................................... 12
Sub-Servicer..................................................... 50
Sub-Servicing Agreement.......................................... 50
TAC ............................................................. 34
Title V ......................................................... 76
Treasury ........................................................ 77
Trust Assets..................................................... 3
Trust Fund ...................................................... 1
Trustee ......................................................... 3, 9
UCC ............................................................. 67
Value ........................................................... 27
Voting Rights.................................................... 44
Warranting Party................................................. 48
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The expenses expected to be incurred in connection with the issuance and
distribution of the Certificates being registered, other than underwriting
compensation, are set forth below.
SEC Registration Fee................ $ 643,370.00
Printing and Engraving Fees......... 20,000.00*
Legal Fees and Expenses............. 200,000.00*
Accounting Fees and Expenses........ 50,000.00*
Trustee Fees and Expenses........... 20,000.00*
Rating Agency Fees.................. 75,000.00*
Miscellaneous....................... 15,000.00
--------------
Total $1,023,370.00
=============
- -------------
* Based on the offering of a single series of Certificates.
Item 15. Indemnification of Directors and Officers.
Under Section 7 of the proposed form of Underwriting Agreement, the
Underwriters are obligated under certain circumstances to indemnify certain
controlling persons of the Depositor against certain liabilities, including
liabilities under the Securities Act of 1933.
Sections 722 and 723 of the Business Corporation Law of New York empower
the Depositor to indemnify, subject to the limitations and standards set forth
therein, any person made or threatened to be made a party to an action or
proceeding brought or threatened by reason of the fact that such person is or
was a director or officer of the Depositor. Section 726 of the Business
Corporation Law of New York provides that the Depositor may purchase insurance
on behalf of any such director or officer. Article XIII of the Depositor's
By-Laws provides in effect for the indemnification by the Depositor of each
director, officer, employee or agent of the Depositor to the full extent
permitted by the Business Corporation Law of New York.
The By-Laws of the Depositor provide, in effect, that to the extent
permitted under the Business Corporation Law of New York, the Depositor shall
indemnify and advance the expenses of any person who is or was made or
threatened to be made a party to or is involved in any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, including an action by or in the right of the Depositor to
procure a judgment in its favor and an action by or in the right of any other
corporation of any type or kind, domestic or foreign, or any partnership, joint
venture, trust, employee benefit plan or any other entity which any director or
officer of the Depositor is serving, has served or has agreed to serve in any
capacity at the request of the Depositor, by reason of the fact that such person
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or such person's testator or intestate is or was or has agreed to become a
director or officer of the Depositor, or is or was serving or has agreed to
serve such other corporation, partnership, joint venture, trust, employee
benefit plan or other entity in any capacity, against judgments, fines, amounts
paid or to be paid in settlement, taxes or penalties, and costs, charges and
expenses, including attorneys' fees, incurred in connection with such action or
proceeding or any appeal therein.
The Pooling and Servicing Agreements will provide that no director,
officer, employee or agent of the Depositor is liable to the Trust Fund or the
Certificateholders, except for such person's own willful misfeasance, bad faith
or gross negligence in the performance of duties or reckless disregard of
obligations and duties. The Pooling and Servicing Agreements will further
provide that, with the exceptions stated above, a director, officer, employee or
agent of the Depositor is entitled to be indemnified against any loss, liability
or expense incurred in connection with legal action relating to such Pooling and
Servicing Agreements and related Certificates other than such expenses related
to particular Mortgage Loans.
Item 16. Exhibits.
1.1 Form of Underwriting Agreement.
4.1 Form of Pooling and Servicing Agreement.
5.1 Opinion of Cadwalader, Wickersham & Taft as to legality of
the Certificates.
8.1 Opinion of Cadwalader, Wickersham & Taft as to certain tax
matters (included in Exhibit 5.1).
24.1 Consent of Cadwalader, Wickersham & Taft (included as part of
Exhibit 5.1).
25.1 Powers of Attorney.
Item 17. Undertakings.
A. Undertaking Pursuant to Rule 415.
The Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement; (i) to include any
prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) to
reflect in the prospectus any facts or events arising after the effective date
of the Registration Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental change
in the information set forth in the Registration Statement; (iii) to include any
material information with respect to the plan of distribution not previously
disclosed in the Registration Statement or any material change of such
information in the Registration Statement; provided, however, that paragraphs
(i) and (ii) do not apply if the information required to be included in the
II-21-3
<PAGE>
post-effective amendment is contained in periodic reports filed by the
Registrant pursuant to Section 13 or Section 15(d) of the Securities Act of 1934
that are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
B. Undertaking in connection with incorporation by reference of certain
filings under the Securities Exchange Act of 1934.
The Registration hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of the Registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in the Registration
Statement shall be deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
C. Undertaking in respect of indemnification.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions described in Item 15 above,
or otherwise, the Registrant has advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted against the Registrant by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by its is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issues.
II-21-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Chase Commercial Mortgage Securities Corp. certifies that it has reasonable
grounds to believe that it meets all of the requirements for filing on Form S-3
and has duly caused this Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of New York, State of
New York, on the ___ day of December, 1996.
CHASE COMMERCIAL MORTGAGE SECURITIES CORP.
By:/s/ Jacqueline R. Slater
-------------------------------
Jacqueline R. Slater
Chairman
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<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Jacqueline R. Slater, Andrea S. Balkan, Steve Z.
Schwartz and Geoffrey A. Souter his true and lawful attorneys-in-fact and
agents, each acting alone, with full powers of substitution and resubstitution,
for and in his name, place and stead, in any and all capacities to sign any or
all amendments (including post-effective amendments) to this Registration
Statement and any or all other documents in connection therewith, and to file
the same, with all exhibits thereto, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, each acting alone,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as might or could be done in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or his substitute or
substitutes may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities indicated.
Signature Capacity Date
/s/ Jacqueline R. Slater Chairman and President December 27, 1996
- -------------------- (Principal Executive
Jacqueline R. Slater Officer and Principal
Financial Officer) and
Director
/s/ William T. Barry Treasurer (Principal December 27, 1996
- -------------------- Accounting Officer)
William T. Barry
/s/ Joseph A. DeLuca Director December 27, 1996
- --------------------
Joseph A. DeLuca
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<PAGE>
INDEX TO EXHIBITS
Exhibit Description Page
Number
1.1 Form of Underwriting Agreement
4.1 Form of Pooling and Servicing Agreement
5.1 Opinion of Cadwalader, Wickersham & Taft as to
legality of the Certificates.
8.1 Opinion of Cadwalader, Wickersham & Taft as to certain
tax matters (included in Exhibit 5.1).
24.1 Consent of Cadwalader, Wickersham & Taft (included as
part of Exhibit 5.1).
25.1 Powers of Attorney (included on page II-5).
CHASE COMMERCIAL MORTGAGE SECURITIES CORP.
$________ (Approximate)
Commercial Mortgage Pass-Through Certificates
Series 1997-__
UNDERWRITING AGREEMENT
New York, New York
________, 1997
[Name and Address of Underwriters]
Dear Sirs:
Chase Commercial Mortgage Securities Corp., a New York
corporation (the "Company"), proposes to issue its Mortgage
Pass-Through Certificates, Series 1997-__ (the "Certificates"),
consisting of __ classes designated as the Class [A-1], Class [A-2],
Class [X], Class [B], Class [C], Class [D], Class [E], Class [F],
Class [G], Class [H], Class [R] and Class [LR] Certificates under a
Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement"), dated as of________, 1997, among the Company, The Chase
Manhattan Bank, as servicer (in such capacity, the "Servicer"),
__________________, as special servicer (the "Special Servicer"),
______________, as fiscal agent (the "Fiscal Agent")
and____________________, as trustee (the "Trustee"), and proposes to
sell the Class [A-1], Class [A-2], Class [X], Class [B], Class [C],
Class [D] and Class [E] Certificates (collectively, the "Offered
Certificates") to the underwriters (the "Underwriters"). The
Certificates will represent in the aggregate the entire beneficial
ownership interest in a trust fund (the "Trust Fund") primarily
consisting of a segregated pool (the "Mortgage Pool") of multifamily
and mobile home community mortgage loans (the "Mortgage Loans"). The
Mortgage Loans will be acquired by the Company from The Chase
Manhattan Bank and____________________. (collectively, the "Mortgage
Loan Sellers") pursuant to ___ Mortgage Loan Purchase and Sale
Agreements (collectively, the "Purchase Agreements"), each by and
between the Company and each Mortgage Loan Seller, in exchange for
immediately available funds. The Offered Certificates are described
more fully in Schedule I hereto and in a registration statement which
the Company has furnished to you. This is to confirm the arrangements
with respect to your purchase of the Offered Certificates.
Capitalized terms used but not defined herein shall have
the meanings assigned thereto in the Final Prospectus (as hereinafter
defined).
1. Representations and Warranties. The Company represents and
warrants to, and agrees with, each Underwriter that:
(a) The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form
S-3 (the file numbers of which are set forth in Schedule I
hereto) for the registration of the Offered Certificates, among
other mortgage pass-through certificates, under the Securities
Act of 1933, as amended (the "1933 Act"), which registration
statement has become effective and copies of which have
heretofore been delivered to you. 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 pursuant to Rule 424 under the 1933 Act a supplement
to the form of prospectus included in such registration
statement relating to the Offered Certificates and the plan of
distribution thereof and has previously advised you of all
further information (financial and other) with respect to the
Offered Certificates and the Mortgage Pool to be set forth
therein. Such registration statement, including the exhibits
thereto, as amended at the date hereof, is hereinafter called
the "Registration Statement"; the prospectus included in the
Registration Statement, after the Registration Statement, as
amended, became effective, or as subsequently filed with the
Commission pursuant to Rule 424 under the 1933 Act, is
hereinafter called the "Basic Prospectus"; such form of
prospectus supplemented by the supplement to the form of
prospectus relating to the Offered Certificates, in the form in
which it shall be first filed with the Commission pursuant to
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<PAGE>
Rule 424 (including the Basic Prospectus as so supplemented) is
hereinafter called the "Final Prospectus." Any preliminary form
of the Final Prospectus 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 Final Prospectus." The Company will file
with the Commission within 15 days of the issuance of the
Certificates a report on Form 8-K (the "8-K") setting forth
specific information concerning the Offered Certificates and the
Mortgage Pool to the extent that such information is not set
forth in the Final Prospectus.
(b) (i) The Registration Statement, as of its effective
date or the effective date of any post-effective amendment
thereto filed prior to the Closing Date, and the Final
Prospectus, as of the date it is first filed pursuant to Rule
424 under the 1933 Act or, as amended or supplemented, as of the
date such amendment or supplement is filed pursuant to Rule 424
under the 1933 Act, complied or will comply, as applicable, in
all material respects with the applicable requirements of the
1933 Act and the rules and regulations thereunder, (ii) the
Registration Statement as of its effective date and as of the
date of this Agreement, and, as amended by any such
post-effective amendment, as of the effective date of such
amendment, did not and will not contain any untrue statement of
a material fact and did not omit and will not omit to state any
material fact required to be stated therein or necessary to make
the statements therein not misleading and (iii) the Final
Prospectus as of its issue date and as of the Closing Date, or
as amended or supplemented, as of the issue date of such
amendment or supplement and as of the Closing Date, will not
contain any untrue statement of a material fact or 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 the information contained
in or omitted from the Registration Statement or the Final
Prospectus or any amendment thereof or supplement thereto in
reliance upon and in conformity with the information furnished
in writing to the Company by or on behalf of any Underwriter
specifically for use in connection with the preparation of the
Registration Statement and the Final Prospectus.
(c) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
State of New York with full power and authority (corporate and
other) to own its properties and conduct its business, as now
conducted by it, and to enter into and perform its obligations
under this Agreement, the Purchase Agreements and the Pooling
and Servicing Agreement; and the Company has received no notice
of proceedings relating to the revocation or modification of any
license, certificate, authority or permit applicable to its
owning such properties or conducting such business which singly
or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would materially and adversely affect the
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<PAGE>
conduct of the business, operations, financial condition or
income of the Company.
(d) When the Final Prospectus is first filed pursuant to
Rule 424 under the 1933 Act, when, prior to the Closing Date (as
hereinafter defined), any amendment to the Registration
Statement becomes effective, when any supplement to the Final
Prospectus is filed with the Commission, and at the Closing
Date, there has not and will not have been (i) any request by
the Commission for any further amendment of the Registration
Statement or the Final 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 threatening of any proceeding for that
purpose or (iii) any notification with respect to the suspension
of the qualification of the Offered Certificates for sale in any
jurisdiction or the initiation or threatening of any proceeding
for such purpose.
(e) This Agreement and the Purchase Agreements have been,
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 each
constitutes, or will constitute when so executed and delivered,
a legal, valid and binding agreement of the Company, enforceable
against the Company in accordance with its terms, except as
enforceability may be limited by (i) bankruptcy, insolvency,
liquidation, receivership, moratorium, reorganization or other
similar laws affecting the enforcement of the rights of
creditors, (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 that
purport to provide indemnification from securities law
liabilities.
(f) The Offered Certificates and the Pooling and Servicing
Agreement will conform in all material respects to the
description thereof contained in the Final Prospectus, and the
Offered Certificates, when duly and validly authorized,
executed, authenticated and delivered in accordance with the
Pooling and Servicing Agreement and paid for by the Underwriters
as provided herein, will be entitled to the benefits of the
Pooling and Servicing Agreement.
(g) Neither the issuance and sale of the Certificates, nor
the execution and delivery by the Company of this Agreement, the
Purchase Agreements 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, 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 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, which,
in any such case, would materially and adversely affect the
ability of the Company to perform its obligations under this
Agreement, the Purchase Agreement or the Pooling and Servicing
Agreement. The Company is not a party to, bound by or in breach
or violation of any indenture or other agreement or instrument,
or subject to or in violation of any statute, order or
regulation of any court, regulatory body, administrative agency
or governmental body having jurisdiction over it, which
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<PAGE>
materially and adversely affects, or may in the future
materially and adversely affect, the ability of the Company to
perform its obligations under this Agreement, the Purchase
Agreements or the Pooling and Servicing Agreement.
(h) There are no actions or proceedings against, or
investigations of, the Company pending, or, to the knowledge of
the Company, threatened, before any court, administrative agency
or other tribunal (i) asserting the invalidity of this
Agreement, the Purchase Agreements, the Pooling and Servicing
Agreement or the Certificates, (ii) seeking to prevent the
issuance of the Certificates or the consummation of any of the
transactions contemplated by this Agreement, the Purchase
Agreements 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 Purchase Agreements, the
Pooling and Servicing Agreement or the Certificates or (iv)
seeking to affect adversely the federal income tax attributes of
the Certificates as described in the Final Prospectus.
(i) The Trust Fund created by the Pooling and Servicing
Agreement will not be required to be registered as an investment
company under the Investment Company Act of 1940, as amended
(the "Investment Company Act"), and the Pooling and Servicing
Agreement is not required to be qualified under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act").
(j) The transfer of the Mortgage Loans to the Trust Fund
at the Closing Date and the sale by the Company of the Offered
Certificates will be treated by the Company for financial
accounting and reporting purposes as a sale of assets and not as
a pledge of assets to secure debt.
2. Purchase and Sale. Subject to the terms and conditions and in
reliance upon the representations and warranties set forth herein, the Company
agrees to sell to each Underwriter, and each Underwriter agrees, severally and
not jointly, to purchase from the Company, at the applicable purchase price set
forth in Schedule I hereto, the respective portions of the Offered Certificates
set forth opposite such Underwriter's name in Schedule II hereto, plus accrued
interest at the related Pass-Through Rate from________, 1997 to but not
including the Closing Date.
3. Delivery and Payment. Delivery of and payment for the Offered
Certificates shall be made in the manner, on the date and at the time specified
in Schedule I hereto (or such later date not later than seven business days
after such specified date as the Underwriters
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<PAGE>
shall designate), which date and time may be postponed by agreement
between the Underwriters and the Company or as provided in Section 8
hereof (such date and time of delivery and payment for the Offered
Certificates being herein called the "Closing Date"). Delivery of the
Offered Certificates, as set forth on Schedule I hereto, shall be made
to the Underwriters for their respective accounts against payment by
wire transfer of immediately available funds by the several
Underwriters of the applicable purchase price. Unless delivery is made
through the facilities of The Depository Trust Company, the Offered
Certificates shall be registered in such names and in such authorized
denominations as the Underwriters may request not less than 3 full
business days in advance of the Closing Date.
The Company agrees to have the Offered Certificates
available for inspection, checking and packaging by the Underwriters
in New York, New York, not later than 1:00 P.M. on the business day
prior to the Closing Date.
4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Offered Certificates for sale to the public as
set forth in the Final Prospectus.
5. Agreements. The Company agrees with the several Underwriters
that:
(a) The Company will not file, on or prior to the Closing Date,
any amendment to the Registration Statement or file any supplement to
(including the supplement relating to the Offered Certificates
included in the Final Prospectus) the Basic Prospectus unless the
Company has furnished to you a copy 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 Final Prospectus to be transmitted to the Commission
for filing pursuant to Rule 424 under the 1933 Act. The Company will
promptly advise the Underwriters (i) when the Final Prospectus 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
for any amendment of the Registration Statement or the Final
Prospectus or for any additional information, (iv) of the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement or the institution or threatening of any
proceeding for that purpose and (v) of the receipt by the Company of
any notification with respect to the suspension of the qualification
of the Offered Certificates for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose. The
Company will 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 Offered
Certificates is required to be delivered under the 1933 Act, any event
occurs as a result of which the Final 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
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<PAGE>
Final Prospectus to comply with the 1933 Act or the rules and
regulations thereunder, the Company will promptly prepare and file
with the Commission, subject to paragraph (a) of this Section 5, an
amendment or supplement that will correct such statement or omission
or an amendment that will effect such compliance and, if such
amendment or supplement is required to be contained in a
post-effective amendment of the Registration Statement, will use its
best efforts to cause such amendment of the Registration Statement to
be made effective as soon as possible.
(c) The Company will (i) furnish to the Underwriters and counsel
for the Underwriters, without charge, signed copies of the
Registration Statement (including exhibits thereto) and each amendment
thereto that shall become effective on or prior to the Closing Date
and, so long as delivery of a prospectus by an Underwriter or dealer
in connection with the Offered Certificates may be required by the
1933 Act, as many copies of any Preliminary Final Prospectus and the
Final Prospectus and any amendments thereof and supplements thereto as
the Underwriters may reasonably request, and (ii) file promptly all
reports and any information statements required to be filed by the
Company with the Commission pursuant to Section 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934, as amended (the "1934
Act"), subsequent to the date of the Final Prospectus and for so long
as the delivery of a prospectus by an Underwriter or dealer in
connection with the Offered Certificates may be required under the
1933 Act.
(d) The Company agrees that, so long as the Certificates shall be
outstanding, it will make available to the Underwriters the annual
statement as to compliance delivered to the Trustee pursuant to
Section 3.13 of the Pooling and Servicing Agreement and the annual
statement of a firm of independent public accountants furnished to the
Trustee pursuant to Section 3.14 of the Pooling and Servicing
Agreement, as soon as such statements are furnished to the Company.
The Pooling and Servicing Agreement will provide that the Servicer and
the Special Servicer furnish to the Underwriters all reports compiled
by either of them pursuant to the Pooling and Servicing Agreement
under the same terms and conditions applicable to Certificateholders.
(e) The Company will furnish such information, execute such
instruments and take such action, if any, as may be required to
qualify the Offered Certificates for sale under the laws of such
jurisdictions as the Underwriters may designate and will maintain such
qualifications in effect so long as required for the distribution of
the Offered Certificates; provided, however, that the Company shall
not be required to qualify to do business in any jurisdiction where it
is not now so qualified or to take any action that would subject it to
general or unlimited service of process in any jurisdiction where it
is not now so subject.
(f) The Company will pay, to the extent not paid by the Mortgage
Loan Sellers pursuant to the Purchase Agreements, all costs and
expenses in connection with the transactions herein contemplated,
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<PAGE>
including, but not limited to: (i) the fees and disbursements of its
counsel; (ii) the costs and expenses of printing (or otherwise
reproducing) and delivering the Pooling and Servicing Agreement and
the Certificates; (iii) accounting fees and disbursements; (iv) the
costs and expenses in connection with the qualification or exemption
of the Offered Certificates under state securities or blue sky laws
not to exceed $10,000, including filing fees and reasonable fees and
disbursements of counsel in connection with the preparation of any
blue sky survey and in connection with any determination of the
eligibility of the Offered Certificates for investment by
institutional investors and the preparation of any legal investment
survey; (v) the expenses of printing any such blue sky survey and
legal investment survey; (vi) the costs and expenses in connection
with the preparation, printing and filing of the Registration
Statement (including exhibits thereto), the Basic Prospectus, the
Preliminary Final Prospectus and the Final Prospectus, the preparation
and printing of this Agreement and the furnishing to the Underwriters
of such copies of each Preliminary Final Prospectus and Final
Prospectus as the Underwriters may reasonably request and (vii) the
fees of each Rating Agency (as defined herein). The Underwriters shall
be responsible for paying all costs and expenses incurred by them in
connection with the offering of the Offered Certificates.
6. Conditions to the Obligations of the Underwriters. The
obligations of the Underwriters to purchase the Offered 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 after the
date hereof and prior to the Closing Date and as of the Closing Date, to the
accuracy of the statements of the Company made in any certificates pursuant to
the provisions hereof, to the performance by the Company of its obligations
hereunder and to the following additional conditions:
(a) 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 threatened; and the Final Prospectus shall
have been filed or transmitted for filing with the Commission in
accordance with Rule 424 under the 1933 Act.
(b) The Company shall have delivered to you a certificate of the
Company, signed by the Chairman, the President, a vice president or an
assistant vice president of the Company and dated the Closing Date, to
the effect that the signer of such certificate has carefully examined
the Registration Statement, the Final Prospectus and this Agreement
and 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; (ii) the Company has, in all material respects, complied with
all the agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to the Closing Date; (iii) no stop
order suspending the effectiveness of the Registration Statement has
been issued and no proceedings for that purpose have been instituted
or, to the Company's knowledge, threatened and (iv) nothing has come
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<PAGE>
to the attention of such officer that would lead such officer to
believe that the Final Prospectus contains any untrue statement of a
material fact or omits to state any material fact necessary in order
to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(c) The Underwriters shall have received from Cadwalader,
Wickersham & Taft, special counsel for the Company, a favorable
opinion, dated the Closing Date and satisfactory in form and substance
to counsel for the Underwriters, to the effect that:
(i) The Company is a corporation in good standing under
the laws of the State of New York with corporate power to
enter into and perform its obligations under this
Agreement, the Purchase Agreements and the Pooling and
Servicing Agreement;
(ii) The Registration Statement and any amendments
thereto have become effective under the 1933 Act; to the
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 Final
Prospectus and each amendment thereof or supplement
thereto as of their respective effective or issue dates
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 does not believe
that the Registration Statement (which, for purposes of
this clause, shall not be deemed to include any exhibits
thereto or any documents or other information incorporated
therein by reference), or any amendment thereof, at the
time it became effective and at the date of this
Agreement, contained any untrue statement of a material
fact or omitted to state any material fact required to be
stated therein or necessary to make the statements therein
not misleading or that the Final Prospectus as of its
issue date and as of the Closing Date, or as amended or
supplemented, as of the issue date of such amendment or
supplement and as of the Closing Date, contains any untrue
statement of a material fact or omits to state a material
fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made,
not misleading;
(iii) This Agreement, the Pooling and Servicing Agreement
and the Purchase Agreements have been duly authorized,
executed and delivered by the Company and each such
agreement constitutes a valid, legal and binding agreement
of the Company, enforceable against the Company in
accordance with its terms, except as enforceability may be
limited by (A) bankruptcy, insolvency, liquidation,
receivership, moratorium, reorganization or other similar
laws affecting the enforcement of the rights of creditors,
(B) general principles of equity, whether enforcement is
sought in a proceeding in equity or at law and (C) public
policy considerations underlying the securities laws, to
the extent that such public policy considerations limit
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<PAGE>
the enforceability of the provisions of such agreements
that purport to provide indemnification or contribution
from securities law liabilities;
(iv) The Offered Certificates, when duly and validly
executed, authenticated and delivered in accordance with
the Pooling and Servicing Agreement and paid for by the
Underwriters as provided herein, will be entitled to the
benefits of the Pooling and Servicing Agreement;
(v) The statements in the Basic Prospectus and the
Final Prospectus, as the case may be, under the headings
"Certain Federal Income Tax Consequences" and "ERISA
Considerations," to the extent that they constitute
matters of federal law or legal conclusions with respect
thereto, are correct in all material respects;
(vi) The Pooling and Servicing Agreement is not required
to be qualified under the Trust Indenture Act, and the
Trust Fund created by the Pooling and Servicing Agreement
is not required to be registered under the Investment
Company Act;
(vii) No consent, approval, authorization or order of any
New York or federal court or governmental agency or body
is required for the consummation by the Company of the
transactions contemplated herein, except such as may be
required under the blue sky laws of any jurisdiction in
connection with the purchase and distribution of the
Offered Certificates by the Underwriters, and any
recordation of the assignment of the Mortgage Loans to the
Trustee pursuant to the Pooling and Servicing Agreement
that have not yet been completed and such other approvals
as have been obtained; and
(viii) Neither the issuance and sale or transfer of the
Certificates, nor the consummation of any other of the
transactions herein contemplated nor the fulfillment of
the terms hereof or of the Purchase Agreements or the
Pooling and Servicing Agreement will conflict with or
result in a breach or violation of any term or provision
of, or constitute a default (or an event which with the
passing of time or notification, or both, would constitute
a default) under, 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 New York or federal statute or regulation applicable
to the Company or, to the knowledge of such counsel, any
order of any New York or federal court, regulatory body,
administrative agency or governmental body having
jurisdiction over the Company.
Such opinion may (x) 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, the Purchase Agreements and the Pooling and Servicing
Agreement, (y) assume the due authorization, execution and delivery of
the instruments and documents referred
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to therein by the parties thereto other than the Company and (z) be
qualified as an opinion only on the federal laws of the United States
of America and the laws of the State of New York. Additionally, if so
rendered, Cadwalader, Wickersham & Taft may rely on the opinion of
in-house counsel for the Company.
(d) The Underwriters shall have received from Price Waterhouse
L.L.P., certified public accountant, one or more letters, dated the
date hereof and satisfactory in form and substance to the Underwriters
and counsel for the Underwriters.
(e) The Certificates have been given the rating, if any, set
forth in Schedule I hereto by Standard & Poor's ("S&P") and Duff &
Phelps Credit Rating Co. ("DCR" and, together with S&P, the "Rating
Agencies").
(f) The Underwriters shall have received, from counsel for the
Trustee, a favorable opinion, dated the Closing Date, and in form and
substance satisfactory to the Underwriters and counsel for the
Underwriters.
(g) The Underwriters shall have received from counsel for each
Mortgage Loan Seller, a favorable opinion, dated the Closing Date, in
form and substance satisfactory to the Underwriters and counsel for
the Underwriters.
(h) The Underwriters shall have received from counsel for the
Servicer, a favorable opinion, dated the Closing Date, in form and
substance satisfactory to the Underwriters and counsel for the
Underwriters.
(i) The Underwriters shall have received copies of any opinions
of counsel to the Company, each Mortgage Loan Seller or the Servicer
supplied to the Rating Agencies or the Trustee relating to certain
matters with respect to the Certificates. Any such opinions shall be
dated the Closing Date and addressed to the Underwriters or
accompanied by the reliance letters to the Underwriters or shall state
that the Underwriters may rely upon them.
(j) All proceedings in connection with the transactions
contemplated by this Agreement and all documents incident hereto shall
be satisfactory in form and substance to the Underwriters and counsel
for the Underwriters, and the Underwriters and counsel for the
Underwriters shall have received such information, certificates and
documents as they may reasonably request.
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 mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Underwriters and counsel for the Underwriters, this
Agreement and all obligations of the Underwriters hereunder may be canceled at,
or at any time prior to, the Closing Date by the Underwriters. Notice of such
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cancellation shall be given to the Company in writing, or by telephone or
telegraph confirmed in writing.
7. Indemnification and Contribution. The Company and the several
Underwriters agree that:
(a) The Company will indemnify and hold harmless each
Underwriter, and each person who controls any Underwriter within
the meaning of either the 1933 Act or 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) arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement or in any amendment thereof, or in the
Basic Prospectus, any Preliminary Final Prospectus or the Final
Prospectus, or in any revision or amendment thereof or
supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under
which they were made, not misleading, and agrees to reimburse
each such indemnified party, as incurred, for any legal or other
expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company will
not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon (a)
any such untrue statement or alleged untrue statement or
omission or alleged omission made therein in reliance upon and
in conformity with written information furnished to the Company
as herein stated by or on behalf of any Underwriter specifically
for use in connection with the preparation thereof or (b) the
failure of any Underwriter to comply with any provision of
Section 9 hereof; provided, further, however, that with respect
to any untrue statement or alleged untrue statement or omission
or alleged omission made in the Registration Statement or in any
revision or amendment thereof, or in the Basic Prospectus, any
Preliminary Final Prospectus or the Final Prospectus, the
indemnity contained in this subsection (a) shall not inure to
the benefit of any Underwriter from whom the person asserting
any such losses, claims, damages or liabilities purchased the
Offered Certificates (or to the benefit of any person
controlling such Underwriter), to the extent that any such loss,
claim, damage or liability of such Underwriter or controlling
person results from the fact that a copy of the Basic Prospectus
or the Final Prospectus correcting such misstatement or omission
and previously delivered to such Underwriter was not sent or
given to such person at or prior to the written confirmation of
the sale of such Offered Certificates to such person or from the
fact that any revision or amendment of or supplement to the
registration statement for the registration of the Offered
Certificates, the Basic Prospectus, any Preliminary Final
Prospectus or the Final Prospectus correcting such misstatement
or omission and delivered to the Underwriters at least 24 hours
prior to the Closing Date was not sent or given to such person
prior to the settlement of the sale of the Offered Certificates
to such person (unless the Company shall have agreed that such
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revision, amendment or supplement need not be so sent or given).
This indemnity agreement will be in addition to any liability
which the Company may otherwise have; provided, however, that
the Company shall not be liable to any Underwriter for losses of
anticipated profits from the transactions covered by this
Agreement.
(b) Each Underwriter severally will indemnify and hold
harmless the Company, each of its directors, each of its
officers who signs the Registration Statement, and each person,
if any, who controls the Company within the meaning of either
the 1933 Act or the 1934 Act, against any and all losses,
claims, damages or liabilities, joint or several, to which the
Company 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)
arise out of or are based upon (i) any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement or in any amendment thereof, or in the
Basic Prospectus, any Preliminary Final Prospectus or the Final
Prospectus, or in any revision or amendment thereof or
supplement thereto, or 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 or (ii)
the failure of such Underwriter to comply with any provision of
Section 9 hereof, and each Underwriter agrees to reimburse each
such indemnified party, as incurred, for any legal or other
expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage,
liability or action, but, in the case of clause (i) above, only
with reference to written information furnished to the Company
by or on behalf of such Underwriter specifically for use in the
Registration Statement, or in any revision or amendment thereof,
or supplement thereto, or in the Basic Prospectus, any
Preliminary Final Prospectus or the Final Prospectus. This
indemnity agreement will be in addition to any liability that
any Underwriter may otherwise have.
The Company and each Underwriter acknowledges and agrees
that for all purposes of this Agreement the statements set forth
in the first, third and fourth sentences of the second to last
paragraph of the cover page of the Final Prospectus, the second
sentence of the third paragraph after the footnotes on page S-__
of the Final Prospectus and the first and third paragraphs and
the second sentence of the sixth paragraph commencing on page
S-__ under the heading "Method of Distribution" in the Final
Prospectus, together with the Underwriter Information (as
defined in Section 9) constitute the only information furnished
in writing by or on behalf of the several Underwriters for
inclusion in the documents referred to in the foregoing
indemnity, and each Underwriter confirms that such statements
are correct.
(c) Promptly after receipt by an indemnified party under
this Section 7 of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be
made against the indemnifying party under 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 the indemnifying party from any liability which it may
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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 reasonably 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 which
are different from or additional to those available to the
indemnifying party, the indemnified party or parties shall have
the right to select separate counsel (and one local counsel, if
it deems so necessary) 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 any
indemnified party of counsel, the indemnifying party will not be
liable to such indemnified party for expenses incurred by the
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 next preceding sentence (it being
understood, however, that the indemnifying party shall not be
liable for the expenses of more than one separate counsel and
one local counsel, approved by the Underwriters in the case of
subsection (a), representing the indemnified parties under
subsection (a) who are parties to such action), (ii) the
indemnifying party shall not have employed counsel reasonably
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 in writing the employment of counsel for the
indemnified party at the expense of the indemnifying party; and
except that, if clause (i) or (iii) is applicable, such
liability shall be only in respect of the counsel referred to in
such clause (i) or (iii).
(d) If the indemnification provided for in this Section 7
shall for any reason be unavailable in accordance with its terms
to an indemnified party under this Section 7, then the Company
and the Underwriters shall individually, to the extent of
underwriting discounts and commissions received by it,
contribute to the amount paid or payable by such indemnified
party as a result of the losses, claims, damages or liabilities
referred to in subsection (a) or (b) above, in such proportion
as is appropriate to reflect (i) the relative benefits received
by the Company on the one hand and the Underwriters on the other
from the offering of the Offered Certificates (taking into
account the portion of the proceeds of the offering realized by
each party) and (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits
referred to in clause (i) above, but also to reflect the
relative fault of the Company on the one hand and the
Underwriters on the other in connection with the statement or
omission or failure to comply that resulted in such losses,
claims, damages or liabilities, as well as any other relevant
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<PAGE>
equitable considerations (taking into account the parties
relative knowledge and access to information concerning the
matter with respect to which the claim was asserted, the
opportunity to correct and prevent any statement or omission or
failure to comply, and any other equitable consideration
appropriate under the circumstances). The relative benefits
received by the Company on the one hand and the Underwriters on
the other shall be in such proportion as the total net proceeds
from the offering of the underwritten certificates (before
deducting expenses) received by the Company bear to the total
underwriting discounts and commissions received by the
Underwriter with respect to such offering, and the Company shall
be responsible for the balance. The relative fault shall be
determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to
information supplied by the Company or the Underwriters and the
parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or
omission or failure to comply. Notwithstanding anything to the
contrary in this Section 7(d), if the losses, claims, damages or
liabilities (or actions in respect thereof) referred to in this
Section 7(d) arise out of an untrue statement or alleged untrue
statement of a material fact contained in any Underwriter 8-K
(as such term is defined in Section 9 hereof) or the failure of
any Underwriter to comply with any provision of Section 9
hereof, then each indemnifying party shall contribute to the
amount paid or payable by such indemnified party as a result of
such losses, claims, damages or liabilities (or actions in
respect thereof) in such proportion as is appropriate to reflect
the relative fault of the Company on the one hand and the
Underwriters on the other (determined in accordance with the
preceding sentence) in connection with the statements or
omissions in such Underwriter 8-K, or such failure to comply,
which resulted in such losses, claims, damages or liabilities
(or actions in respect thereof), as well as any other equitable
considerations. The Company and the Underwriters agree that it
would not be just and equitable if contribution pursuant to this
subsection (d) were to be determined by per capita allocation
(even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take
account of the equitable considerations referred to herein. The
amount paid or payable by an indemnified party as a result of
the losses, claims, damages or liabilities referred to in the
first sentence of this subsection (d) shall be deemed to include
any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending
against any action or claim which is the subject of this
subsection (d) subject to the limitations therein provided under
subsection (c). Notwithstanding the provisions of this
subsection (d), no Underwriter shall be required to contribute
any amount in excess of the amount by which the total price at
which the Offered Certificates underwritten and distributed by
it were offered to the public exceeds the amount of any damages
that such Underwriter has otherwise paid or become liable to pay
by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Act) or willful failure to comply with Section 9 hereof shall be
entitled to contribution from any person who was not also guilty
of such fraudulent misrepresentation or willful failure to
comply. The Underwriters' obligation in this subsection (d) to
contribute shall be several in proportion to their respective
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underwriting obligations and not joint. For purposes of this
Section 7(d), and notwithstanding anything to the contrary in
this Agreement, each Underwriter shall be deemed to have
received underwriting discounts and commissions equal to ____%
of the initial principal amount of the Offered Certificates
purchased by it.
(e) Each Underwriter will indemnify and hold harmless any
other Underwriter and each person, if any, who controls such
Underwriter within the meaning of either the 1933 Act or the
1934 Act (collectively, the "Non-Indemnifying Underwriter") from
and against any and all losses, claims, damages or liabilities,
joint or several, to which any Non-Indemnifying Underwriter
becomes subject under the 1933 Act, the 1934 Act or other
federal or state statutory law or regulation, common law or
otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are
based upon (i) any untrue statement of material fact contained
in any computational or other written materials developed by,
mailed or otherwise transmitted by such Underwriter in
connection with the Certificates or in any revision or amendment
thereof or supplement thereto or (ii) the failure of such
Underwriter to comply with any provision of Section 9 hereof,
and agrees to reimburse each such Non-Indemnifying Underwriter,
as incurred for any legal or other expenses reasonably incurred
by them in connection with investigating or defending any such
loss, claim, damage, liability or action. This indemnity
agreement will be in addition to any liability that any
Underwriter may otherwise have.
8. Default by an Underwriter. If any one or more
Underwriters shall fail to purchase and pay for any of the Offered
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 and the aggregate amount of such Offered Certificates not so
purchased does not exceed 10% of the total principal amount of the
Offered Certificates then the other Underwriters shall purchase such
amount in proportion to their existing allotments. If such amount does
exceed 10% of the total principal amount of the Offered Certificates,
and arrangements satisfactory to the remaining Underwriters and the
Company for the purchase of such Offered Certificates by other persons
are not made within 36 hours thereafter, this Agreement shall
terminate. In the event of any such termination, the Company shall be
under no liability to any Underwriter (except to the extent provided
in Section 5(f) and Section 7 hereof) nor shall any Underwriter (other
than an Underwriter who shall have failed, otherwise than for some
reason permitted under this Agreement, to purchase the amount of the
Certificates agreed by such Underwriter to be purchased hereunder) be
under any liability to the Company (except to the extent provided in
Section 7 hereof). Nothing contained in this Agreement shall relieve
any defaulting Underwriter of its liability, if any, to the Company
and to any non defaulting Underwriter for damages occasioned by its
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default hereunder.
9. Computational Materials and ABS Term
Sheets.
(a) The parties acknowledge that, subsequent to the date
on which the Registration Statement became effective and up to
and including the date on which the Final Prospectus with
respect to the Offered Certificates is first made available to
the Underwriters, the Underwriters may furnish to various
potential investors in Certificates, in writing: (i)
"Computational Materials," as defined in a no-action letter (the
"Kidder No-Action Letter") issued by the staff of the Commission
on May 20, 1994 to Kidder, Peabody Acceptance Corporation I, et
al., as modified by a no-action letter (the "First PSA No-Action
Letter") issued by the staff of the Commission on May 27, 1994
to the Public Securities Association (the "PSA") and as further
modified by a no-action letter (the "Second PSA No-Action
Letter," and together with the Kidder No-Action Letter and the
First PSA No-Action Letter, the "No-Action Letters") issued by
the staff of the Commission on February 17, 1995 to the PSA;
(ii) "Structural Term Sheets," as defined in the Second PSA
No-Action Letter and/or (iii) "Collateral Term Sheets," as
defined in the Second PSA No-Action Letter.
(b) In connection with the Offered Certificates, each
Underwriter shall furnish to the Company, at least 1 business
day prior to the time of filing of the Final Prospectus pursuant
to Rule 424 under the 1933 Act, all Computational Materials used
by such Underwriter and required to be filed with the Commission
in order for such Underwriter to avail itself of the relief
granted in the No-Action Letters (such Computational Materials,
the "Furnished Computational Materials").
(c) In connection with the Offered Certificates, each
Underwriter shall furnish to the Company, at least 1 business
day prior to the time of filing of the Final Prospectus pursuant
to Rule 424 under the Act, all Structural Term Sheets used by
such Underwriter and required to be filed with the Commission in
order for such Underwriter to avail itself of the relief granted
in the No-Action Letters (such Structural Term Sheets, the
"Furnished Structural Term Sheets").
(d) In connection with the Offered Certificates, each
Underwriter shall furnish to the Company, within 1 business day
after the first use thereof, all Collateral Term Sheets used by
such Underwriter and required to be filed with the Commission in
order for such Underwriter to avail itself of the relief granted
in the No-Action Letters (such Collateral Term Sheets, the
"Furnished Collateral Term Sheets") and shall advise the Company
of the date on which each such Collateral Term Sheet was first
used.
(e) Each Underwriter shall prepare for signature by the
Company and filing and (following signature by the Company)
cause to be filed with the Commission one or more current
reports on Form 8-K (collectively, together with any amendments
and supplements thereto, the "Underwriter 8-K," and each an
"Underwriter 8-K") such that such Underwriter may avail itself
of the relief granted in the No-Action Letter. In particular,
each Underwriter shall cause to be filed with the Commission (i)
all Furnished Computational Materials and all Furnished
Structural Term Sheets on an Underwriter 8-K prior to or
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concurrently with the filing of the Final Prospectus with
respect to the Offered Certificates pursuant to Rule 424 under
the 1933 Act; and (ii) all Furnished Collateral Term Sheets on
an Underwriter 8-K not later than 2 business days after the
first use thereof.
(f) Each Underwriter shall, if required by the Company,
reasonably cooperate with the Company and with Price Waterhouse
L.L.P. in obtaining a letter, in form and substance satisfactory
to the Company and the Underwriter, of Price Waterhouse L.L.P.
regarding the information in any Underwriter 8-K consisting of
Furnished Computational Materials and/or Furnished Structural
Term Sheets; provided, however, that the fee payable by each
Underwriter with respect to any such letter shall not exceed
$3,000 (severally and not in the aggregate). Any such letter
shall be obtained prior to the filing of any such Underwriter
8-K with the Commission.
(g) Each Underwriter represent and warrants to, and
covenants with, the Company that as presented in the Underwriter
8-K, the Underwriter Information (defined below) is not
misleading and not inaccurate in any material respect and that
any Pool Information (defined below) contained in any
Underwriter 8-K which is not otherwise inaccurate in any
material respect is not presented in the Underwriter 8-K in a
way that is either misleading or inaccurate in any material
respect. Each Underwriter further covenants with the Company
that if any Computational Materials or ABS Term Sheets (as such
term is defined in the Second PSA No-Action Letter) contained in
any Underwriter 8-K are found to include any information that is
misleading or inaccurate in any material respect, such
Underwriter promptly shall inform the Company of such finding,
provide the Company with revised and/or corrected Computational
Materials or ABS Term Sheets, as the case may be, and promptly
prepare for signature by the Company and filing and (following
signature by the Company) cause to be delivered for filing to
the Commission in accordance herewith, revised and/or corrected
Computational Materials or ABS Term Sheets, as the case may be.
(h) Each Underwriter covenants that all Computational
Materials and ABS Term Sheets used by it shall contain the
following legend:
"THIS INFORMATION IS FURNISHED TO YOU SOLELY BY [THE
UNDERWRITER] AND NOT BY CHASE COMMERCIAL MORTGAGE SECURITIES
CORP. ("CHASE") OR ANY OF ITS AFFILIATES (OTHER THAN CHASE
SECURITIES INC.)."
(i) Each Underwriter covenants that all Collateral Term
Sheets used by it shall contain the following additional legend:
"THE INFORMATION CONTAINED HEREIN WILL BE SUPERSEDED BY THE
DESCRIPTION OF THE MORTGAGE LOANS CONTAINED IN THE
PROSPECTUS SUPPLEMENT."
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<PAGE>
(j) Each Underwriter covenants that all Collateral Term
Sheets (other than the initial Collateral Term Sheet) shall
contain the following additional legend:
"THE INFORMATION CONTAINED HEREIN SUPERSEDES THE INFORMATION
IN ALL PRIOR COLLATERAL TERM SHEETS, IF ANY."
(k) Each Underwriter covenants that it shall cause the
following legend to be placed in capital letters at the top of
the cover page of each group of Computational Materials:
"IN ACCORDANCE WITH RULE 202 OF REGULATION S-T, THIS
[SPECIFY DOCUMENT] IS BEING FILED IN PAPER PURSUANT TO A
CONTINUING HARDSHIP EXEMPTION."
(1) Each Underwriter shall deliver to the Company a copy
of each Underwriter 8-K (including written evidence of filing)
promptly upon filing the same with the Commission (but in any
event not later than the earlier to occur of (i) the second
business day after filing and (ii) the Closing Date).
(m) For purposes of this Agreement, the term "Underwriter
Information" means such portion, if any, of the information
contained in the Underwriter 8-K that is not Pool Information or
Prospectus Information. "Pool Information" means the information
furnished to the Underwriters by the Company regarding the
Mortgage Loans and "Prospectus Information" means the
information contained in (but not incorporated by reference in)
any Preliminary Final Prospectus, however, that if any
information that would otherwise constitute Pool Information or
Prospectus Information is presented in the Underwriter 8-K in a
way that is either inaccurate or misleading in any material
respect, such information shall not be Pool Information or
Prospectus Information.
10. Termination. This Agreement shall be subject to termination
in the absolute discretion of the Underwriters, by notice given to the
Company prior to delivery of and payment for all Certificates if prior
to such time (i) trading in securities generally on the New York Stock
Exchange or the American Stock Exchange shall have been suspended or
materially limited, (ii) a general moratorium on commercial banking
activities in New York shall have been declared by either federal or
New York State authorities or (iii) there shall have occurred any
outbreak or material escalation of hostilities, declaration by the
United States of a national emergency or war or other calamity or
crisis, the effect of which on the financial markets of the United
States is such as to make it, in the reasonable judgment of the
Underwriters, impracticable to market the Certificates on the terms
specified herein.
11. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other
statements of the Company or its officers and the Underwriters set
forth in or made pursuant to this Agreement will remain in full force
and effect, regardless of any investigation made by or on behalf of
any Underwriter or the Company or any of the officers, directors or
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<PAGE>
controlling persons referred to in Section 7 hereof, and will survive
delivery of and payment for the Certificates. The provisions of
Section 7 hereof shall survive the termination or cancellation of this
Agreement.
12. Notices. All communications hereunder will be in writing and
effective only on receipt, and, if sent to the Underwriters, will be
mailed, hand delivered or sent by facsimile transmission and confirmed
to them at, in the case of ___________, to it at____________________,
Attention:__________, _________, fax number _________ and in the case
of_________________, to it at___________________________,
Attention:______________,________________; or, if sent to the Company,
will be mailed, hand delivered or sent by facsimile transmission and
confirmed to it at Chase Commercial Mortgage Securities Corp., 380
Madison Avenue, New York, New York 10017-2951, Attention: Jacqueline
R. Slater, President, fax number (212) 622-3584.
13. Successors. This Agreement will inure to the benefit of and
be binding upon the parties hereto and their respective successors and
the officers and directors and controlling persons referred to in
Section 7 hereof, and their successors and assigns, and no other
person will have any right or obligation hereunder.
14. Applicable Law. This Agreement will be governed by and
construed in accordance with the laws of the State of New York. 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.
[SIGNATURE PAGES FOLLOWS]
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,
CHASE COMMERCIAL
MORTGAGE
SECURITIES CORP.
By: ________________________________
Name:_______________________________
Title:______________________________
The foregoing Agreement is hereby confirmed
and accepted as of the date first above written.
By:____________________________________
Name:__________________________________
Title:_________________________________
-26-
<PAGE>
_____________________________
By:____________________________________
Name:__________________________________
Title:_________________________________
_____________________________
By:____________________________________
Name:__________________________________
Title:_________________________________
-27-
<PAGE>
SCHEDULE I
Underwriting Agreement, dated_______, 1997
As used in this Agreement, the term "Registration Statement" refers collectively
to the Company's registration statements on Form S-3 (File Nos. 33-67742,
333-05271 and 333._____). The term "Basic Prospectus" refers to the form of
Prospectus filed with the Commission pursuant to Rule 424 under the 1933 Act
after the Registration Statement became effective.
Title and Description of Certificates: Commercial Mortgage Pass-Through
Certificates, Series 1997-__.
Initial aggregate Certificate Balance of the Offered Certificates: $_______
(Approximate)
Initial
Certificate Pass-
Balance or Through S&P DCR
Certificates Notional Amount(1) Rate Rating Rating
------------ ----------------- ------ ------ ------
Class [A-1]
Class [A-2]
Class [X]
Class [B]
Class [C]
Class [D]
Class [E]
Class [F] (4) (5) (3)
Class [G] (4) (5) (3)
Class [H] (4) (5) (3) (3)
Class [R] (4) N/A N/A (3) (3)
Class [LR] (4) N/A N/A (3) (3)
- ---------------
(1) Approximate (subject to a permitted variance of plus or minus 5%)
(2) Notional Amount
I-1
<PAGE>
(3) Not Rated
(4) These Classes are not Offered Certificates
(5) The aggregate initial Certificate Balance of these Classes is
approximately $_______.
The aggregate purchase price for the Offered Certificates purchased from the
Depositor by _________will be equal to approximately ________% of the aggregate
initial Certificate Balance of the Offered Certificates purchased by
__________and the aggregate purchase price for the Offered Certificates
purchased from the Depositor by___________ will be equal to approximately
________% of the aggregate initial Certificate Balance of the Offered
Certificates purchased by ____________, plus, in each case, accrued interest
thereon at their respective Pass-Through Rates, if any, from the Cut-off Date.
Closing Time, Date and Location: 10:00 A.M. on_____________, 1997 at the
offices of Cadwalader, Wickersham & Taft, 100 Maiden Lane, New York, New York.
Issuance and Delivery of Certificates: The Offered Certificates will be
delivered in book-entry form through the Same-Day Funds Settlement System of
The Depository Trust Company.
I-2
<PAGE>
SCHEDULE II
Underwriters Percentage Interest
- ------------ -------------------
II-1
Exhibit 4.1
CHASE COMMERCIAL MORTGAGE SECURITIES CORP.,
Depositor
THE CHASE MANHATTAN BANK
Servicer
Special Servicer
Trustee
and
Fiscal Agent
POOLING AND SERVICING AGREEMENT
Dated as of __________1997
$
Commercial Mortgage Pass-Through Certificates
Series 1997-__
==============================================================================
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS
SECTION 1.01. Defined Terms...........................................4
SECTION 1.02. Certain Calculations...................................44
ARTICLE II CONVEYANCE OF MORTGAGE LOANS; ORIGINAL ISSUANCE OF
CERTIFICATES
SECTION 2.01. Conveyance of Mortgage Loans...........................46
SECTION 2.02. Acceptance by Trustee..................................48
SECTION 2.03. Representations, Warranties and Covenants of the
Depositor; Mortgage Loan Seller's Repurchase of Mortgage Loans
for Defects in Mortgage Files and Breaches of Representations
and Warranties.....................................................50
SECTION 2.04. Execution of Certificates..............................52
ARTICLE III ADMINISTRATION AND SERVICING OF THE TRUST FUND
SECTION 3.01. Servicer to Act as Servicer; Special Servicer to
Act as Special Servicer; Administration of the Mortgage Loans......53
SECTION 3.02. Collection of Mortgage Loan Payments...................54
SECTION 3.03. Collection of Taxes, Assessments and Similar
Items; Servicing Accounts..........................................55
SECTION 3.04. The Certificate Account and the Lower-Tier and
Upper-Tier Distribution Accounts...................................57
SECTION 3.05. Permitted Withdrawals From the Certificate Account
and the Distribution Account.......................................60
SECTION 3.06. Investment of Funds in the Certificate Account,
the Distribution Accounts and the REO Account......................64
SECTION 3.07. Maintenance of Insurance Policies; Errors and
Omissions and Fidelity Coverage....................................66
SECTION 3.08. Enforcement of Due-On-Sale Clauses; Assumption
Agreements.........................................................69
SECTION 3.09. Realization Upon Defaulted Mortgage Loans..............70
SECTION 3.10. Trustee to Cooperate; Release of Mortgage Files........73
SECTION 3.11. Servicing Compensation.................................74
SECTION 3.12. Inspections; Collection of Financial Statements........76
SECTION 3.13. Annual Statement as to Compliance......................77
SECTION 3.14. Reports by Independent Public Accountants..............78
SECTION 3.15. Access to Certain Information..........................78
SECTION 3.16. Title to REO Property; REO Account.....................79
SECTION 3.17. Management of REO Property.............................80
SECTION 3.18. Sale of Defaulted Mortgage Loans and REO
Properties.........................................................83
SECTION 3.19. [Intentionally Omitted]................................85
SECTION 3.20. Modifications, Waivers, Amendments and Consents........85
SECTION 3.21. Transfer of Servicing Between Servicer and Special
Servicer; Record Keeping; Asset Status Report......................88
SECTION 3.22. Sub-Servicing Agreements...............................91
SECTION 3.23. Representations and Warranties of the Servicer.........93
SECTION 3.24. Representations and Warranties of the Special
Servicer...........................................................95
SECTION 3.25. Duties of the Extension Adviser........................97
SECTION 3.26. Extension Adviser; Elections...........................98
SECTION 3.27. Limitation on Liability of Extension Adviser...........99
<PAGE>
ARTICLE IV PAYMENTS TO CERTIFICATEHOLDERS
SECTION 4.01. Distributions.........................................100
SECTION 4.02. Statements to Certificateholders; Collection
Reports...........................................................107
SECTION 4.03. P&I Advances..........................................110
SECTION 4.04. Allocation of Collateral Support Deficit..............112
SECTION 4.05. Appraisal Reductions..................................113
SECTION 4.06. Certificate Deferred Interest.........................113
ARTICLE V THE CERTIFICATES
SECTION 5.01. The Certificates......................................114
SECTION 5.02. Registration of Transfer and Exchange of
Certificates......................................................116
SECTION 5.03. Book-Entry Certificates...............................123
SECTION 5.04. Mutilated, Destroyed, Lost or Stolen Certificates.....125
SECTION 5.05. Persons Deemed Owners.................................126
SECTION 5.06. Appointment of Paying Agent...........................126
ARTICLE VI THE DEPOSITOR, THE SERVICER AND THE SPECIAL SERVICER
SECTION 6.01. Liability of the Depositor, the Servicer and the
Special Servicer..................................................127
SECTION 6.02. Merger, Consolidation or Conversion of the
Depositor, the Servicer or the Special Servicer...................127
SECTION 6.03. Limitation on Liability of the Depositor, the
Servicer, the Special Servicer and Others.........................128
SECTION 6.04. Depositor, Servicer and Special Servicer Not to
Resign............................................................129
SECTION 6.05. Rights of the Depositor in Respect of the Servicer
and the Special Servicer..........................................130
ARTICLE VII DEFAULT
SECTION 7.01. Events of Default; Servicer and Special Servicer
Termination.......................................................131
SECTION 7.02. Trustee to Act; Appointment of Successor..............133
SECTION 7.03. Notification to Certificateholders....................135
SECTION 7.04. Waiver of Events of Default...........................135
SECTION 7.05. Trustee and Fiscal Agent as Makers of Advances........135
ARTICLE VIII CONCERNING THE TRUSTEE AND FISCAL AGENT
SECTION 8.01. Duties of Trustee.....................................137
SECTION 8.02. Certain Matters Affecting the Trustee.................138
SECTION 8.03. Trustee and Fiscal Agent Not Liable for Validity
or Sufficiency of Certificates or Mortgage Loans..................139
SECTION 8.04. Trustee and Fiscal Agent May Own Certificates.........140
SECTION 8.05. Fees and Expenses of Trustee; Indemnification of
Trustee and Fiscal Agent.........................................140
SECTION 8.06. Eligibility Requirements for Trustee..................141
SECTION 8.07. Resignation and Removal of the Trustee and the
Fiscal Agent......................................................142
SECTION 8.08. Successor Trustee and Fiscal Agent....................143
SECTION 8.09. Merger or Consolidation of Trustee or Fiscal Agent....144
SECTION 8.10. Appointment of Co-Trustee or Separate Trustee.........144
SECTION 8.11. Appointment of Custodians.............................145
SECTION 8.12. Access to Certain Information.........................146
SECTION 8.13. Representations and Warranties of the Trustee and
the Fiscal Agent..................................................148
ARTICLE IX TERMINATION
SECTION 9.01. Termination Upon Repurchase or Liquidation of All
Mortgage Loans....................................................151
SECTION 9.02. Additional Termination Requirements...................153
<PAGE>
ARTICLE X ADDITIONAL REMIC PROVISIONS
SECTION 10.01. REMIC Administration.................................154
SECTION 10.02. Depositor, Special Servicer, Paying Agent and
Trustee to Cooperate with Servicer................................158
SECTION 10.03. Use of Agents........................................158
ARTICLE XI MISCELLANEOUS PROVISIONS
SECTION 11.01. Amendment............................................160
SECTION 11.02. Recordation of Agreement; Counterparts...............162
SECTION 11.03. Limitation on Rights of Certificateholders...........162
SECTION 11.04. Governing Law........................................163
SECTION 11.05. Notices..............................................163
SECTION 11.06. Severability of Provisions...........................164
SECTION 11.07. Grant of a Security Interest.........................164
SECTION 11.08. Successors and Assigns; Beneficiaries................165
SECTION 11.09. Article and Section Headings.........................165
SECTION 11.10. Notices to the Rating Agencies.......................165
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<PAGE>
EXHIBITS
Exhibit A-1 Form of Class [A-1] Certificate
Exhibit A-2 Form of Class [A-2] Certificate
Exhibit A-3 Form of Class [B] Certificate
Exhibit A-4 Form of Class [C] Certificate
Exhibit A-5 Form of Class [D] Certificate
Exhibit A-6 Form of Class [E] Certificate
Exhibit A-7 Form of Class [F] Certificate
Exhibit A-8 Form of Class [G] Certificate
Exhibit A-9 Form of Class [H] Certificate
Exhibit A-10 Form of Class [X] Certificate
Exhibit A-11 Form of Class [R] Certificate
Exhibit A-12 Form of Class [LR] Certificate
Exhibit B Mortgage Loan Schedule
Exhibit C Form of Investment Representation Letter
Exhibit D-1 Form of Transfer Affidavit
Exhibit D-2 Form of Transferor Letter
Exhibit E [Intentionally Omitted]
Exhibit F Form of Request for Release
Exhibit G Form of ERISA Representation Letter
Exhibit H Form of Distribution Date Statement
SCHEDULES
Schedule 1 Computerized Database Information
Schedule 2 Borrower Concentrations in Excess of 5%
Schedule 3 Mortgage Loans Containing Affiliate Debt
Schedule 4 Mortgage Loans Which Initially Pay Interest Only
-iv-
<PAGE>
This Pooling and Servicing Agreement (the "Agreement"), is dated and
effective as of ________1997, among Chase Commercial Mortgage Securities Corp.
as Depositor, The Chase Manhattan Bank as Servicer, ________, as Special
Servicer, ________as Fiscal Agent and __________as Trustee.
PRELIMINARY STATEMENT:
The Depositor intends to sell commercial 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 the trust fund (the "Trust Fund") to be
created hereunder, the primary assets of which will be a pool of multifamily and
mobile home community mortgage loans (the "Mortgage Loans"). As provided herein,
the Servicer shall elect or shall cause an election to be made that each of the
Upper-Tier REMIC and the Lower-Tier REMIC be treated for federal income tax
purposes as a real estate mortgage investment conduit (a "REMIC").
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<PAGE>
The following table sets forth the designation, the pass-through
rate (the "Pass-Through Rate"), the aggregate initial principal amount (the
"Original Certificate Balance") or Notional Amount ("Original Notional Amount"),
as applicable, and the initial ratings given each Class by the Rating Agencies
(the "Original Ratings") for each Class of Certificates comprising the interests
in the Upper-Tier REMIC created hereunder:
UPPER-TIER REMIC
Original
Class Original Rating
Designation Pass-Through Rate Certificate Balance ___ /___ 1)
- ----------- ----------------- ------------------- -----------
Class [A-1]
Class [A-2]
Class [B]
Class [C]
Class [D]
Class [E]
Class [F]
Class [G]
Class [H]
Class [X]
Class [R] None (4)
- ---------------------------------
(1) The Certificates marked with an asterisk have not been rated by the
applicable Rating Agency.
(2) The Class [X] Certificates will not have a Pass-Through Rate but will bear
interest in an amount for any Distribution Date equal to the sum of
one-month's interest at the then applicable Pass-Through Rates on the
Notional Amounts of the WAC Component and the [A-1] Component immediately
prior to such Distribution Date. The Pass-Through Rate for the WAC
Component for any Distribution Date will equal the excess, if any, of the
Weighted Average Net Mortgage Rate over ___%. The Pass-Through Rate of the
[WAC] Component for the first Distribution Date is expected to be
approximately ___% per annum. The Pass-Through Rate for the [A-1] Component
for any Distribution Date will equal ___% per annum.
(3) The Class [X] Certificates will not have a Certificate Balance and will not
be entitled to receive distributions of principal. Interest will accrue on
the Components of such Class at the Pass-Through Rates thereof on the
Notional Amounts thereof. The Notional Amount of the [WAC] Component for
any Distribution Date will be equal to the Notional Amount of the Class
[LWAC] Uncertificated Interest, which will be equal to the aggregate of the
Stated Principal Balances of the Mortgage Loans as of the preceding
Distribution Date (after giving effect to the distribution of principal on
such Distribution Date) or, in the case of the first Distribution Date, the
Cut-off Date. The original Notional Amount of the [WAC] Component is
$________. The Notional Amount of the [A-1] Component is equal to the
Lower-Tier Principal Amount of the Class [LA-1] Uncertificated Interest as
of the preceding Distribution Date (after giving effect to the distribution
of principal and allocation of Collateral Support Deficit on such
Distribution Date) or in the case of the first Distribution Date, the
original Lower-Tier Principal Amount of the Class [LA-1] Uncertificated
Interest. The Original Notional Amount of the [A-1] Component is $------.
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<PAGE>
(4) The Class [R] Certificates do not have a Certificate Balance or Notional
Amount, do not bear interest and will not be entitled to distributions of
Prepayment Premiums or Yield Maintenance Charges. Any Available
Distribution Amount remaining in the Upper-Tier Distribution Account, after
all required distributions under this Agreement have been made to each
other Class of Certificates, will be distributed to the Holders of the
Class [R] Certificates.
The Class [A-1], Class [A-2], Class [B], Class [C], Class [D],
Class [E], Class [F], Class [G], Class [H] and Class [X] Certificates will
evidence "regular interests" in the Upper-Tier REMIC created hereunder. The sole
Class of "residual interests" in the Upper-Tier REMIC created hereunder will be
evidenced by the Class R Certificates. The Class [LA-1], Class [LA-2], Class
[LB], Class [LC], Class [LD], Class [LE], Class [LF], Class [LG], Class [LH] and
Class [LWAC] Uncertificated Interests will evidence "regular interests" in the
Lower-Tier REMIC created hereunder. The sole Class of "residual interests" in
the Lower-Tier REMIC created hereunder will be evidenced by the Class [LR]
Certificates.
The following table sets forth the initial Lower-Tier Principal
Amounts and per annum rates of interest for the Uncertificated Lower-Tier
Interests:
LOWER-TIER REMIC
Class Original Lower-Tier Principal
Designation Interest Rate Amount or Notional Amount
- ----------- ------------- -----------------------------
Class [LA-1]
Class [LA-2]
Class [LB]
Class [LC]
Class [LD]
Class [LE]
Class [LF]
Class [LG]
Class [LH]
Class [LWAC] (5) (6)
Class [LR] None(7) None(7)
- ----------------------------------
(5) The interest rate of the Class [LWAC] Uncertificated Interest is the
Weighted Average Net Mortgage Rate minus ___%.
(6) The Class [LWAC] Uncertificated Interest has a Notional Amount as of any
Distribution Date equal to the aggregate Stated Principal Balances of the
Mortgage Loans as of the preceding Distribution Date (after giving effect
to the distribution of principal and realized losses on such Distribution
Date), or the Cut-off Date in the case of the first Distribution Date.
(7) The Class [LR] Certificates do not have a Certificate Balance or Notional
Amount, do not bear interest and will not be entitled to distributions of
Prepayment Premiums or Yield Maintenance Charges. Any Available
-3-
<PAGE>
Distribution Amount remaining in the Lower-Tier Distribution Account after
distributing the Lower-Tier Distribution Amount shall be distributed to the
Holders of the Class [LR] Certificates (but only to the extent of the
Available Distribution Amount for such Distribution Date remaining in the
Lower-Tier Distribution Account, if any).
As of close of business on the Cut-off Date, the Mortgage Loans had
an aggregate principal balance, after application of all payments of principal
due on or before such date, whether or not received, equal to $_______________.
In consideration of the mutual agreements herein contained, the
Depositor, the Servicer, the Special Servicer, the Fiscal Agent and the Trustee
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.
"A-1 Component": One of the two components comprising the Class [X]
Certificates representing a "specified portion" (within the meaning of Treasury
Regulations Section 1.860G-1(a)(2)(i)(C)) of the interest payments on the Class
[LA-1] Uncertificated Interest.
"A-1 Component Interest Accrual Amount": With respect to each
Distribution Date, an amount equal to interest for the related Interest Accrual
Period at the A-1 Component Pass-Through Rate, accrued on the A-1 Notional
Amount outstanding immediately prior to such Distribution Date commencing in the
month of the Closing Date.
"A-1 Component Pass-Through Rate": With respect to any Distribution
Date, 0.200% per annum.
"A-1 Notional Amount": With respect to any Distribution Date, an
amount equal to the Lower-Tier Principal Amount of the Class [LA-1]
Uncertificated Interest.
"Accrued Certificate Interest": With respect to each Distribution
Date and each Class of Certificates (other than Class [X] Certificates and the
Residual Certificates), an amount equal to interest for the related Interest
Accrual Period at the Pass-Through Rate applicable to such Class of Certificates
for such Distribution Date, accrued on the related Certificate Balance of such
Class outstanding immediately prior to such Distribution Date (i.e., such
Certificate Balance is to be used for accrual of interest during the related
Interest Accrual Period notwithstanding the fact that such Certificate Balance
may be different than the actual Certificate Balance at the start of such
Interest Accrual Period) commencing in the month of the Closing Date. With
respect to each Distribution Date and the Class [X] Certificates, the Class [X]
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<PAGE>
Interest Accrual Amount. Accrued Certificate 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 and
the Lower-Tier REMIC within the meaning of Treasury Regulation Section
1.856-6(b)(1), which is the first day on which the Lower-Tier REMIC is treated
as the owner of such REO Property for federal income tax purposes.
"Advance": Any P&I Advance or Servicing Advance.
"Adverse REMIC Event": As defined in Section 10.01(f).
"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.
"Affiliate Debt": With respect to any Mortgage Loan, any debt owed
by the related Mortgagor to an Affiliate of such Mortgagor as of the Closing
Date as set forth on Schedule 3 hereto.
"Agent": As defined in Section 5.02(d)(i)(A).
"Agreement": This Pooling and Servicing Agreement and all
amendments hereof and supplements hereto.
"Appraisal": An appraisal prepared by an Independent MAI appraiser
with at least five years experience in properties of like kind and in the same
area, prepared in accordance with 12 C.F.R. 225.64.
"Appraisal Reduction": For any Distribution Date and for any
Mortgage Loan as to which an Appraisal Reduction Event has occurred, an amount
equal to the excess, if any, of (a) the Stated Principal Balance of such
Mortgage Loan over (b) the excess of (i) 90% of the Appraised Value of the
related Mortgaged Property over (ii) the sum of (a) to the extent not previously
advanced by the Servicer or the Trustee, all unpaid interest on such Mortgage
Loan at a per annum rate equal to its Mortgage Rate, (b) all unreimbursed
Advances and interest thereon at the Reimbursement Rate in respect of such
Mortgage Loan and (c) all currently due and unpaid real estate taxes and
assessments and insurance premiums and all other amounts due and unpaid with
respect to such Mortgage Loan, net of any amounts currently escrowed for such
amounts (which taxes, premiums and other amounts have not been subject to an
Advance by the Servicer or the Trustee, as applicable). Within 60 days after the
Appraisal Reduction Event, the Special Servicer shall obtain an Appraisal (the
cost of which shall be paid as a Servicing Advance by the Servicer); provided,
-5-
<PAGE>
however, that with respect to an Appraisal Reduction Event as set forth in
clause (ii) of the definition of Appraisal Reduction Event, the Special Servicer
shall obtain such Appraisal within the 120 day period set forth in such clause
(ii), which Appraisal shall be delivered by the Special Servicer to the
Servicer, and the Servicer shall deliver such Appraisal to the Trustee, the
Paying Agent and each Holder of a Class [F], Class [G] and Class [H] Certificate
within 15 days of receipt by the Servicer of such Appraisal from the Special
Servicer.
With respect to each Mortgage Loan as to which an Appraisal
Reduction has occurred (unless such Mortgage Loan has become a Corrected
Mortgage Loan and has remained current for twelve consecutive Monthly Payments
(for such purposes taking into account any amendment or modification of such
Mortgage Loan)), the Special Servicer shall, within 30 days of each annual
anniversary of the related Appraisal Reduction Event, order an Appraisal (which
may be an update of a prior Appraisal), the cost of which shall be paid by the
Servicer as a Servicing Advance. Based upon such Appraisal, the Special Servicer
shall redetermine and report to the Paying Agent and the Trustee the amount of
the Appraisal Reduction with respect to such Mortgage Loan and such redetermined
Appraisal Reduction shall replace the prior Appraisal Reduction with respect to
such Mortgage Loan.
With respect to each Mortgage Loan as to which an Appraisal
Reduction has occurred and which has become a Corrected Mortgage Loan and has
remained current for twelve consecutive Monthly Payments (for such purposes
taking into account any amendment or modification of such Mortgage Loan), and
with respect to which no other Appraisal Reduction Event has occurred and is
continuing, the Special Servicer may within 30 days of the date of such twelfth
Monthly Payment, order an Appraisal (which may be an update of a prior
Appraisal), the cost of which shall be paid by the Servicer as a Servicing
Advance. Based upon such Appraisal, the Special Servicer shall redetermine and
report to the Paying Agent and the Trustee the amount of the Appraisal Reduction
with respect to such Mortgage Loan. Notwithstanding the foregoing, the Special
Servicer will not be required to obtain an Appraisal with respect to a Mortgage
Loan which is the subject of an Appraisal Reduction Event to the extent the
Special Servicer has obtained an Appraisal with respect to the related Mortgaged
Property within the 12-month period immediately prior to the occurrence of such
Appraisal Reduction Event. Instead, the Special Servicer may use such prior
Appraisal in calculating any Appraisal Reduction with respect to such Mortgage
Loan.
Notwithstanding anything herein to the contrary, the aggregate
Appraisal Reduction related to a Mortgage Loan or the related REO Property will
be reduced to zero as of the date such Mortgage Loan is paid in full,
liquidated, repurchased or otherwise removed from the Trust Fund.
"Appraisal Reduction Amount": With respect to any Distribution Date,
an amount equal to the product of (i) ___ % per annum, and (ii) the sum of all
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<PAGE>
Appraisal Reductions with respect to such Distribution Date.
"Appraisal Reduction Event": With respect to any Mortgage Loan, the
earliest of (i) the third anniversary of the date on which the first extension
of the Maturity Date of such Mortgage Loan becomes effective as a result of a
modification of such Mortgage Loan by the Special Servicer pursuant to the terms
hereof, which extension does not decrease the amount of Monthly Payments on the
Mortgage Loan, (ii) 120 days after an uncured delinquency (without regard to the
application of any grace period) occurs in respect of such Mortgage Loan, (iii)
the date on which a reduction in the amount of Monthly Payments on such Mortgage
Loan, or a change in any other material economic term of such Mortgage Loan
(other than an extension of the Maturity Date), becomes effective as a result of
a modification of such Mortgage Loan by the Special Servicer, (iv) 60 days after
a receiver has been appointed, (v) 60 days after a Mortgagor declares bankruptcy
and (vi) immediately after a Mortgage Loan becomes an REO Loan; provided,
however, that an Appraisal Reduction Event shall not occur at any time when the
aggregate Certificate Balances of all Classes of Certificates (other than the
Class [A] Certificates) has been reduced to zero. The Special Servicer shall
notify the Servicer promptly upon the occurrence of any of the foregoing events.
"Appraised Value": With respect to any Mortgaged Property, the
appraised value thereof as determined by an Appraisal of the Mortgaged Property
securing such Mortgage Loan made by an Independent MAI appraiser selected by the
Servicer or Special Servicer, as applicable.
"Asset Status Report": As defined in Section 3.21(e).
"Assignment of Leases": With respect to any Mortgaged Property, any
assignment of leases, rents and profits or similar instrument executed by the
Mortgagor, assigning to the mortgagee all of the income, rents and profits
derived from the ownership, operation, leasing or disposition of all or a
portion of such Mortgaged Property, in the form which was duly executed,
acknowledged and delivered, as amended, modified, renewed or extended through
the date hereof and from time to time hereafter.
"Assumed Scheduled Payment": For any Due Period and with respect to
any Mortgage Loan that is delinquent in respect of its Balloon Payment
(including any REO Loan as to which the Balloon Payment would have been past
due), an amount equal to the sum of (a) the principal portion of the Monthly
Payment that would have been due on such Mortgage Loan on the related Due Date
based on the constant payment required by the related Mortgage Note or the
original amortization schedule thereof (as calculated with interest at the
related Mortgage Rate), if applicable, assuming such Balloon Payment has not
become due, after giving effect to any modification of such Mortgage Loan, and
(b) interest on the Stated Principal Balance of such Mortgage Loan at the
applicable Mortgage Rate (net of interest at the Servicing Fee Rate).
"Authenticating Agent": Any agent of the Trustee appointed to
act as Authenticating Agent pursuant to Section 5.01.
-7-
<PAGE>
"Available Distribution Amount": With respect to any
Distribution Date, an amount equal to the sum of (without duplication):
(a) the aggregate amount relating to the Trust Fund on deposit in
the Certificate Account and the Lower-Tier Distribution
Account (exclusive of any investment income contained therein)
as of the close of business on the Business Day preceding the
related P&I Advance Date, exclusive of:
(i) all Monthly Payments paid by the Mortgagors that are
due on a Due Date following the end of the related
Due Period;
(ii) all Principal Prepayments (together with any related
payments of interest allocable to the period following
the Due Date for the related Mortgage Loan during the
related Due Period), Balloon Payments, Liquidation
Proceeds or Insurance and Condemnation Proceeds received
after the end of the related Due Period;
(iii) all amounts payable or reimbursable to any Person from
the Certificate Account pursuant to clauses (ii) -
(xvi), inclusive, of Section 3.05(a);
(iv) all amounts payable or reimbursable to any Person from
the Lower-Tier Distribution Account pursuant to clauses
(ii) - (v), inclusive, of Section 3.05(b);
(v) all Prepayment Premiums and Yield Maintenance
Charges; and
(vi) all amounts deposited in the Certificate Account or
the Lower-Tier Distribution Account, as the case may
be, in error;
(b) if and to the extent not already included in clause (a)
hereof, the aggregate amount transferred from the REO Account
to the Certificate Account for such Distribution Date pursuant
to Section 3.16(c); and
(c) the aggregate amount of any P&I Advances made by the Servicer,
the Trustee or the Fiscal Agent, as applicable, for such
Distribution Date pursuant to Section 4.03 or 7.05 (net of the
related Trustee Fee with respect to the Mortgage Loans for
which such P&I Advances are made).
Notwithstanding the investment of funds held in the Certificate Account or the
Lower-Tier Distribution Account pursuant to Section 3.06, for purposes of
calculating the Available Distribution Amount, the amounts so invested shall be
deemed to remain on deposit in such account.
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"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 Maturity Date.
"Balloon Payment": With respect to any Balloon Mortgage Loan as of
any date of determination, the Monthly Payment payable on the 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).
"Base Interest Fraction": With respect to any Principal Prepayment
on any Mortgage Loan and with respect to any of the Class [A], Class [B], Class
[C], Class [D] and Class [E] Certificates, a fraction (A) whose numerator is the
greater of (x) zero and (y) the difference between (i) the Pass-Through Rate on
such Class of Offered Certificates and (ii) the Yield Rate, with respect to
Mortgage Loans sold to the Depositor by The Chase Manhattan Bank, or the
Discount Rate, with respect to Mortgage Loans sold to the Depositor by
____________, used in calculating the Yield Maintenance Charge with respect to
such Principal Prepayment and (B) whose denominator is the difference between
(i) the Mortgage Rate on the related Mortgage Loan and (ii) the Yield Rate, with
respect to Mortgage Loans sold to the Depositor by The Chase Manhattan Bank, or
the Discount Rate, with respect to Mortgage Loans sold to the Depositor
by___________________________, used in calculating the Yield Maintenance Charge
with respect to such principal prepayment; provided however, that under no
circumstances shall the Base Interest Fraction be greater than one. If such
Yield Rate or Discount Rate, as the case may be, is greater than the Mortgage
Rate on the related Mortgage Loan, then the Base Interest Fraction shall equal
zero.
"Book-Entry Certificate": Any Certificate registered in the name
of the Depository or its nominee.
"Breach": As defined in Section 2.03(b).
"Business Day": Any day other than a Saturday, a Sunday or a day on
which banking institutions in New York, New York, or the city and state in which
the Corporate Trust Office of the Trustee or principal place of business of the
Servicer or the Special Servicer is located, are authorized or obligated by law
or executive order to remain closed.
"CERCLA": The Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended.
"Certificate": Any one of the Depositor's Commercial Mortgage
Pass-Through Certificates, Series 1997-__, as executed and delivered by the
Certificate Registrar and authenticated and delivered hereunder by the
Authenticating Agent.
"Certificate Account": The custodial account or accounts created and
maintained by the Servicer pursuant to Section 3.04(a) in the name of the
Trustee on behalf of the Certificateholders, into which the amounts set forth in
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Section 3.04(a) shall be deposited directly. Any such account or accounts shall
be an Eligible Account.
"Certificate Balance": With respect to any Class of Certificates
(other than the Residual Certificates and the Class [X] Certificates), (i) on or
prior to the first Distribution Date, an amount equal to the Original
Certificate Balance of such Class as specified in the Preliminary Statement
hereto, and (ii) as of any date of determination after the first Distribution
Date, the Certificate Balance of such Class on the Distribution Date immediately
prior to such date of determination (determined as adjusted pursuant to Section
1.02(iii)).
"Certificate Deferred Interest": For any Distribution Date with
respect to any Class of Certificates, the amount of Mortgage Deferred Interest
allocated to such Class pursuant to Section 4.06(a).
"Certificate Factor": With respect to any Class of Certificates, as
of any date of determination, a fraction, expressed as a decimal carried to 8
places, the numerator of which is the then related Certificate Balance, and the
denominator of which is the related Original Certificate Balance.
"Certificateholder" or "Holder": The Person in whose name a
Certificate is registered in the Certificate Register, provided, however, that
solely for the purposes of giving any consent, approval or waiver pursuant to
this Agreement, any Certificate registered in the name of the Servicer, the
Special Servicer, the Depositor or any Affiliate of either 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 has been
obtained, if such consent, approval or waiver sought from such party would in
any way increase its compensation or limit its obligations as Servicer, Special
Servicer or Depositor, as applicable, hereunder; provided, however, the Servicer
and Special Servicer shall be entitled to exercise such Voting Rights with
respect to any issue which could reasonably be believed to adversely affect such
party's compensation or increase its obligations or liabilities hereunder; and
provided further, however, that such restrictions will not apply to the exercise
of the Special Servicer's rights as a member of the Controlling Class. The
Trustee shall be entitled to request and rely upon a certificate of the
Servicer, the Special Servicer or the Depositor 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.
"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.
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"Certificate Rating": With respect to the long-term unsecured debt
of any institution, a long-term debt obligation rating by each Rating Agency not
lower than the highest rating by such Rating Agency of any Class of Certificates
then outstanding; provided, however, that the Certificate Rating will not be
lower than Investment Grade by such Rating Agency.
"Certificate Register" and "Certificate Registrar": The register
maintained and registrar appointed pursuant to Section 5.02.
"Class": With respect to any Certificates or Uncertificated
Lower-Tier Interests, all of the Certificates or Uncertificated Lower-Tier
Interests bearing the same alphabetical (and, if applicable, numerical) Class
designation.
"Class [A] Certificate": Any Class [A-1] or Class [A-2]
Certificate.
"Class [A-1] Certificate": A Certificate designated as
"Class [A-1]" on the face thereof, in the form of Exhibit A-1 hereto.
"Class [A-1] Pass-Through Rate": With respect to any
Distribution Date, a fixed rate per annum equal to___%.
"Class [A-2] Certificate": A Certificate designated as
"Class [A-2]" on the face thereof, in the form of Exhibit A-2 hereto.
"Class [A-2] Pass-Through Rate": With respect to any
Distribution Date, a fixed rate per annum equal to___%.
"Class [B] Certificate": A Certificate designated as "[Class B]"
on the face thereof, in the form of Exhibit A-3 hereto.
"Class [B] Pass-Through Rate": With respect to any Distribution
Date, a fixed rate per annum equal to ___%.
"Class [C] Certificate": A Certificate designated as "[Class C]"
on the face thereof, in the form of Exhibit A-4 hereto.
"Class [C] Pass-Through Rate": With respect to any Distribution
Date, a fixed rate per annum equal to ___%.
"Class D Certificate": A Certificate designated as "[Class D]"
on the face thereof, in the form of Exhibit A-5 hereto.
"Class [D] Pass-Through Rate": With respect to any Distribution
Date, a fixed rate per annum equal to ___%.
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"Class [E] Certificate": A Certificate designated as "[Class E]"
on the face thereof, in the form of Exhibit A-6 hereto.
"Class [E] Pass-Through Rate": With respect to any Distribution
Date, a fixed rate per annum equal to ___%.
"Class [F] Certificate": A Certificate designated as "[Class F]"
on the face thereof, in the form of Exhibit A-7 hereto.
"Class [F] Pass-Through Rate": With respect to any Distribution
Date, a fixed rate per annum equal to ___%.
"Class [G] Certificate": A Certificate designated as "[Class G]"
on the face thereof, in the form of Exhibit A-8 hereto.
"Class [G] Pass-Through Rate": With respect to any Distribution
Date, a fixed rate per annum equal to ___%.
"Class [H] Certificate": A Certificate designated as "[Class H]"
on the face thereof, in the form of Exhibit A-9 hereto.
"Class [H] Pass-Through Rate": With respect to any Distribution
Date, a fixed rate per annum equal to ___%.
"Class [LA-1] Interest Fraction": With respect to any Distribution
Date, a fraction, the numerator of which is the [A-1] Component Interest Accrual
Amount and the denominator of which is the sum of the [A-1] Component Interest
Accrual Amount and the WAC Component Interest Accrual Amount.
"Class [LA-1] Uncertificated Interest": A regular interest in the
Lower-Tier REMIC which is held as an asset of the Upper-Tier REMIC and having
the Original Lower-Tier Principal Amount and per annum rate of interest set
forth in the Preliminary Statement hereto.
"Class [LA-2] Uncertificated Interest": A regular interest in the
Lower-Tier REMIC which is held as an asset of the Upper-Tier REMIC and having
the Original Lower-Tier Principal Amount and per annum rate of interest set
forth in the Preliminary Statement hereto.
"Class [LB] Uncertificated Interest": A regular interest in the
Lower-Tier REMIC which is held as an asset of the Upper-Tier REMIC and having
the Original Lower-Tier Principal Amount and per annum rate of interest set
forth in the Preliminary Statement hereto.
"Class [LC] Uncertificated Interest": A regular interest in the
Lower-Tier REMIC which is held as an asset of the Upper-Tier REMIC and having
the Original Lower-Tier Principal Amount and per annum rate of interest set
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forth in the Preliminary Statement hereto.
"Class [LD] Uncertificated Interest": A regular interest in the
Lower-Tier REMIC which is held as an asset of the Upper-Tier REMIC and having
the Original Lower-Tier Principal Amount and per annum rate of interest set
forth in the Preliminary Statement hereto.
"Class [LE] Uncertificated Interest": A regular interest in the
Lower-Tier REMIC which is held as an asset of the Upper-Tier REMIC and having
the Original Lower-Tier Principal Amount and per annum rate of interest set
forth in the Preliminary Statement hereto.
"Class [LF] Uncertificated Interest": A regular interest in the
Lower-Tier REMIC which is held as an asset of the Upper-Tier REMIC and having
the Original Lower-Tier Principal Amount and per annum rate of interest set
forth in the Preliminary Statement hereto.
"Class [LG] Uncertificated Interest": A regular interest in the
Lower-Tier REMIC which is held as an asset of the Upper-Tier REMIC and having
the Original Lower-Tier Principal Amount and per annum rate of interest set
forth in the Preliminary Statement hereto.
"Class [LH] Uncertificated Interest": A regular interest in the
Lower-Tier REMIC which is held as an asset of the Upper-Tier REMIC and having
the Original Lower-Tier Principal Amount and per annum rate of interest set
forth in the Preliminary Statement hereto.
"Class [LR] Certificate": A Certificate designated as
"Class [LR]" on the face thereof, in the form of Exhibit A-12 hereto.
"Class [LWAC] Notional Amount": As of any Distribution Date, an
amount equal to the aggregate Stated Principal Balances of the Mortgage Loans as
of the preceding Distribution Date (after giving effect to the distribution of
principal and realized losses on such Distribution Date), or the Cut-off Date in
the case of the first Distribution Date.
"Class [LWAC] Pass-Through Rate": For any Distribution Date, the
Weighted Average Net Mortgage Rate for such Distribution Date minus ___%.
"Class [LWAC] Uncertificated Interest": A regular interest in the
Lower-Tier REMIC which is held as an asset of the Upper-Tier REMIC and having
the initial Notional Amount and per annum rate of interest set forth in the
Preliminary Statement hereto, representing a "specified portion" (within the
meaning of Treasury Regulations Section 1.860G-1(a)(2)(i)(C)) of the interest
payments on the Mortgage Loans.
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"Class [R] Certificate": A Certificate designated as "Class [R]" on
the face thereof, in the form of Exhibit A-11 hereto.
"Class Unpaid Interest Shortfall": As to any Distribution Date and
any Class of Regular Certificates, the excess, if any, of (a) the sum of (i) the
Distributable Certificate Interest in respect of such Class for the immediately
preceding Distribution Date and (ii) any outstanding Class Unpaid Interest
Shortfall payable to such Class on such preceding Distribution Date over (b) the
aggregate amount in respect of interest actually distributed to such Class on
such immediately preceding Distribution Date. The Class Unpaid Interest
Shortfall with respect to any Class of Certificates as of the initial
Distribution Date is zero. No interest shall accrue on Class Unpaid Interest
Shortfalls.
"Class [X] Certificate": A Certificate designated as "Class [X]" on
the face thereof, in the form of Exhibit A-10 hereto.
"Class [X] Interest Accrual Amount": With respect to any
Distribution Date, the sum of the A-1 Component Interest Accrual Amount and the
WAC Component Interest Accrual Amount.
"Closing Date":_________, 1997.
"Code": The Internal Revenue Code of 1986, as amended from time to
time, and applicable final or temporary regulations of the U.S. Department of
the Treasury issued pursuant thereto.
"Collateral Support Deficit": As defined in Section 4.04.
"Collection Report": The monthly report to be prepared by the
Servicer and delivered to the Trustee, the Paying Agent, the Special Servicer,
the Depositor and each Rating Agency pursuant to Section 4.02(b), in writing and
in electronic medium, in form reasonably acceptable to the Paying Agent,
containing such information as is set forth in Section 4.02(b) regarding the
Mortgage Loans and such other information as will permit the Paying Agent to
calculate the amounts to be distributed pursuant to Section 4.01 and to furnish
statements to Certificateholders pursuant to Section 4.02 and containing such
additional information as the Servicer, the Special Servicer and the Paying
Agent may from time to time agree.
"Commission": The Securities and Exchange Commission.
"Component": The A-1 Component or the WAC Component.
"Controlling Class": As of any date of determination, the most
subordinate Class of Regular Certificates then outstanding that has a then
aggregate Certificate Balance at least equal to the lesser of (a) 1% of the
outstanding aggregate principal balance of the Mortgage Loans as of the Closing
Date or (b) 20% of the initial Certificate Balance of such Class in the case of
Class [H] Certificates, or 25% of the initial Certificate Balance of such Class
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in the case of any other Class of Certificates. For purposes of determining the
identity of the Controlling Class, the Certificate Balance of each Class shall
be deemed to be reduced by the amount allocated to such Class of any Appraisal
Reductions relating to Mortgage Loans as to which Liquidation Proceeds or other
final payment has not yet been received. As of the Closing Date, the Controlling
Class will be the Class [H] Certificates.
"Controlling Class Certificateholders": Each Holder (or Certificate
Owner, if applicable) of a Certificate of the Controlling Class as certified by
the Certificate Registrar to the Trustee from time to time by such Holder (or
Certificate Owner).
"Corporate Trust Office": The principal corporate trust office of
the Trustee at which at any particular time its corporate trust business with
respect to this Agreement shall be administered, which office at the date of the
execution of this Agreement is located at _________________________,
Attention:____________________________, Chase Commercial Mortgage Securities
Corp., Series 1997-_ (telecopy number 312-904-2084).
"Corrected Mortgage Loan": Any Specially Serviced Mortgage Loan that
has become current and remained current for three consecutive Monthly Payments
(for such purposes taking into account any modification or amendment of such
Mortgage Loan) and (provided that no additional default is foreseeable in the
reasonable judgment of the Special Servicer) the Special Servicer has returned
servicing of such Mortgage Loan to the Servicer pursuant to Section 3.21(a).
"Credit File": Any documents, other than documents required to be
part of the related Mortgage File, in the possession of the Servicer and
relating to the origination and servicing of any Mortgage Loan.
"Custodian": A Person who is at any time appointed by the Trustee
pursuant to Section 8.11 as a document custodian for the Mortgage Files, which
Person shall not be the Depositor, either Mortgage Loan Seller or an Affiliate
of any of them. The Trustee shall be the initial Custodian.
"Cut-off Date": __________, 1997.
"Cut-off Date Principal Balance": With respect to any Mortgage Loan,
the outstanding principal balance of such Mortgage Loan as of the Cut-off Date,
after application of all payments of principal due on or before such date,
whether or not received.
"Debt Service Coverage Ratio": With respect to any Mortgage Loan
for any twelve month period covered by an annual operating statement for the
related Mortgaged Property, the ratio of (i) Net Operating Income produced by
the related Mortgaged Property during such period to (ii) the aggregate amount
of Monthly Payments (other than any Balloon Payment) due under such Mortgage
Loan during such period, provided, that with respect to the Mortgage Loans which
initially pay interest only, the related Monthly Payment will be calculated (for
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purposes of this definition only) to include principal (based upon a 25-year
amortization schedule) and interest payments from origination.
"Default Interest": With respect to any defaulted Mortgage Loan for
any related Due Period, all interest accrued in respect of such Mortgage Loan
during such Due Period provided for in the related Mortgage Note or Mortgage as
a result of the related default (exclusive of late payment charges) that is in
excess of interest at the related Mortgage Rate accrued on the unpaid principal
balance of such Mortgage Loan outstanding from time to time during such Due
Period.
"Defaulted Mortgage Loan": A Mortgage Loan that is delinquent at
least sixty days in respect of its Monthly Payments or more than thirty days
delinquent in respect of its Balloon Payment, if any, 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.
"Defaulting Party": As defined in Section 7.01(b).
"Defect": As defined in Section 2.02(e).
"Deficient Valuation": With respect to any Mortgage Loan, a
valuation by a court of competent jurisdiction of the Mortgaged Property in an
amount less than the then outstanding principal balance of the Mortgage Loan,
which valuation results from a proceeding initiated under the Bankruptcy Code.
"Definitive Certificate": As defined in Section 5.01(a).
"Denomination": As defined in Section 5.01(a).
"Depositor": Chase Commercial Mortgage Securities Corp., a New
York corporation, or its successor in interest.
"Depository": The Depository Trust Company, or any successor
Depository hereafter named. The nominee of the initial Depository for purposes
of registering those Certificates that are to be Book-Entry Certificates, is
Cede & Co. The Depository shall at all times be a "clearing corporation" as
defined in Section 8-102(3) of the Uniform Commercial Code of the State of New
York and a "clearing agency" registered pursuant to the provisions of Section
17A of the Exchange Act.
"Depository Participant": A broker, dealer, bank or other financial
institution or other Person for whom from time to time the Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
"Depository Rules": As defined in Section 5.02(b).
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"Determination Date": With respect to any Distribution Date, the
13th day of the month in which such Distribution Date occurs, or if such 13th
day is not a Business Day, the immediately preceding Business Day.
"Directing Certificateholder": The Controlling Class
Certificateholder selected by more than 50% of the Controlling Class
Certificateholders, by Certificate Balance, as certified by the Certificate
Registrar from time to time; provided, however, that (i) absent such selection,
or (ii) until a Directing Certificateholder is so selected or (iii) upon receipt
of a notice from a majority of the Controlling Class Certificateholders, by
Certificate Balance, that a Directing Certificateholder is no longer designated,
the Controlling Class Certificateholder that owns the largest aggregate
Certificate Balance of the Controlling Class will be the Directing
Certificateholder.
"Directly Operate": With respect to any REO Property, the furnishing
or rendering of services to the tenants thereof, the management or operation of
such REO Property, the holding of such REO Property primarily for sale to
customers, the performance of any construction work thereon or any use of such
REO Property in a trade or business conducted by the Trust Fund other than
through an Independent Contractor; provided, however, that the Trustee (or the
Special Servicer on behalf of the Trustee) shall not be considered to Directly
Operate an REO Property solely because the Trustee (or the Special 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": A rate which, when compounded monthly, is
equivalent to the Yield Rate when compounded semi-annually.
"Disqualified Organization": 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 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 (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(a)(2)(C) of the
Code and (v) any other Person so designated by the Servicer based upon an
Opinion of Counsel that the holding of an Ownership Interest in a Residual
Certificate by such Person may cause either the Upper-Tier REMIC or the
Lower-Tier REMIC to fail to qualify as a REMIC 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.
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"Distributable Certificate Interest": With respect to any
Distribution Date, as to any Class of Regular Certificates, the Accrued
Certificate Interest in respect of such Class of Regular Certificates for such
Distribution Date, reduced (to not less than zero) by any allocations to such
Class of Certificates (other than in the case of the Class [X] Certificates) of
any Certificate Deferred Interest for such Distribution Date.
"Distribution Accounts": Collectively, the Upper-Tier
Distribution Account and the Lower-Tier Distribution Account.
"Distribution Date": The __th day of any month, or if such __th day
is not a Business Day, the Business Day immediately following, commencing in
__________1997.
"Distribution Date Statement": As defined in Section 4.02(a).
"Due Date": With respect to (i) any Mortgage Loan on or prior to its
Maturity Date, the day of the month set forth in the related Mortgage Note on
which each Monthly Payment thereon is scheduled to be first due, (ii) any
Mortgage Loan after the Maturity Date therefor, 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.
"Due Period": With respect to any Distribution Date, the period
commencing on the second day of the month preceding the month in which such
Distribution Date occurs and ending on the first day of the month in which such
Distribution Date occurs. Notwithstanding the foregoing, in the event that the
last day of a Due Period is not a Business Day, any payments received with
respect to the Mortgage Loans relating to such Due Period on the Business Day
immediately following such day shall be deemed to have been received during such
Due Period and not during any other Due Period.
"Eligible Account": Either (i) an account or accounts maintained
with a federal or state chartered depository institution or trust company the
long-term unsecured debt obligations of which are rated at least "AA-" by ___
and ___, or, if not rated by ___, at least "A" or its equivalent by another
nationally recognized statistical rating agency, if the deposits are to be held
in such account for more than 30 days or the short-term debt obligations of
which have a short-term rating of not less than "A-1" from ___ and "D-1+" from
___ (if rated by ___) if the deposits are to be held in such account for less
than 30 days, or such other account or accounts with respect to which each of
the Rating Agencies shall have confirmed in writing that the then current rating
assigned to any of the Certificates that are currently being rated by such
Rating Agency will not be qualified, downgraded or withdrawn by reason thereof
or (ii) a segregated trust account or accounts maintained with the corporate
trust department of a federal or state chartered depository institution or trust
company that, in either case, has a combined capital and surplus of at least
$50,000,000 and has corporate trust powers, acting in its fiduciary capacity,
provided that any state chartered depository institution or trust company is
subject to regulation regarding fiduciary funds substantially similar to 12
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C.F.R. ss. 9.10(b). Eligible Accounts may bear interest. No Eligible Account
shall be evidenced by a certificate of deposit, passbook or other similar
instrument.
"Eligible Investor": Either (i) a Qualified Institutional Buyer that
is purchasing for its own account or for the account of a Qualified
Institutional Buyer to whom notice is given that the offer, sale or transfer is
being made in reliance on Rule 144A or (ii) an Institutional Accredited
Investor.
"Environmental Assessment": A "Phase I assessment" as described in,
and meeting the criteria of, (i) Chapter 5 of the FNMA Multifamily Guide or any
successor provisions covering the same subject matter, in the case of Specially
Serviced Mortgage Loans as to which the related Mortgaged Property is
multifamily property or (ii) the American Society for Testing and Materials in
the case of Specially Serviced Mortgage Loans as to which the related Mortgaged
Property is a non-multifamily property.
"ERISA": The Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Prohibited Holder": As defined in Section 5.02(d).
"Escrow Payment": Any payment received by the Servicer for the
account of any Mortgagor for application toward the payment of real estate
taxes, assessments, insurance premiums and similar items in respect of the
related Mortgaged Property, including amounts for deposit to any reserve
account.
"Event of Default": One or more of the events described in
Section 7.01(a).
"Exchange Act": The Securities Exchange Act of 1934, as amended
from time to time.
"Extension Adviser": As defined in Section 3.26(a).
"FDIC": Federal Deposit Insurance Corporation or any successor.
"FHLMC": Federal Home Loan Mortgage Corporation or any successor.
"Final Recovery Determination": A determination by the Special
Servicer with respect to any Defaulted Mortgage Loan or REO Property (other than
a Mortgage Loan or REO Property, as the case may be, that was purchased by a
Mortgage Loan Seller pursuant to Section 3 of the related Mortgage Loan Purchase
Agreement, by the Servicer or the Special Servicer pursuant to Section 3.18(b),
or by the Servicer, the Special Servicer, the Holders of the Controlling Class
or the Holders of the Class [LR] Certificates pursuant to Section 9.01) that
there has been a recovery of all Insurance and Condemnation Proceeds,
Liquidation Proceeds and other payments or recoveries that, in the Special
Servicer's judgment, exercised without regard to any obligation of the Special
Servicer to make payments from its own funds pursuant to Section 3.07(b), will
ultimately be recoverable.
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"FNMA": Federal National Mortgage Association or any successor
thereto.
"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, and specifically including, without limitation,
asbestos and asbestos-containing materials, polychlorinated biphenyls, radon
gas, petroleum and petroleum products, urea formaldehyde and any substances
classified as being "in inventory," "usable work in process" or similar
classification which would, if classified as unusable, be included in the
foregoing definition.
"Independent": When used with respect to any specified Person, any
such Person who (i) is in fact independent of the Depositor, the Servicer, the
Special Servicer and any and all Affiliates thereof, (ii) does not have any
material direct financial interest in or any material indirect financial
interest in any of the Depositor, the Servicer, the Special Servicer or any
Affiliate thereof and (iii) is not connected with the Depositor, the 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 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 Servicer, the Special Servicer or any
Affiliate thereof, as the case may be.
"Independent Contractor": Either (i) any Person that would be an
"independent contractor" with respect to the Trust within the meaning of Section
856(d)(3) of the Code if the Trust were a real estate investment trust (except
that the ownership test set forth in that Section shall be considered to be met
by any Person that owns, directly or indirectly, 35% or more of any Class of
Certificates, or such other interest in any Class of Certificates as is set
forth in an Opinion of Counsel, which shall be at no expense to the Trustee, the
Servicer or the Trust, delivered to the Trustee and the Servicer), so long as
the Trust does not receive or derive any income from such Person and provided
that the relationship between such Person and the Trust is at arm's length, all
within the meaning of Treasury Regulation Section 1.856-4(b)(5) (except that the
Servicer or the Special Servicer shall not be considered to be an Independent
Contractor under the definition in this clause (i) unless an Opinion of Counsel
has been delivered to the Trustee to that effect) or (ii) any other Person
(including the Servicer and the Special Servicer) upon receipt by the Trustee
and the Servicer of an Opinion of Counsel, which shall be at no expense to the
Trustee, the Servicer 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.
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"Institutional Accredited Investor": As defined in Section 5.02(b).
"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 and Condemnation Proceeds": All proceeds paid under any
Insurance Policy or in connection with the full or partial condemnation of a
Mortgaged Property, in either case, to the extent such proceeds are not applied
to the restoration of the related Mortgaged Property or released to the
Mortgagor, in either case, in accordance with the Servicing Standards.
"Interest Accrual Period": With respect to any Class of Regular
Certificates or Uncertificated Lower-Tier Interests and any Distribution Date,
the period beginning on the first day of the calendar month preceding the
calendar month in which the related Distribution Date occurs and ending on the
last day of the calendar month preceding the calendar month in which
such Distribution Date occurs.
"Interest Distribution Amount": With respect to any Class of Regular
Certificates for any Distribution Date, an amount equal to the sum of the
Distributable Certificate Interest and the Class Unpaid Interest Shortfall with
respect to such Class of Regular Certificates for such Distribution Date.
"Interested Person": The Depositor, the Servicer, the Special
Servicer, any Independent Contractor engaged by the Special Servicer, any Holder
of a Certificate or any Affiliate of any such Person.
"Investment Account": As defined in Section 3.06(a).
"Investment Grade": With respect to any Certificate, ratings
assigned to such Certificate by ___ and ___ no lower than "BBB-".
"Investment Representation Letter": As defined in Section 5.02(b).
"Issue Price": With respect to each Class of Certificates, the
"issue price" as defined in the REMIC Provisions.
"Late Collections": With respect to any Mortgage Loan, all amounts
received thereon during any Due Period, whether as payments, Insurance and
Condemnation Proceeds, Liquidation Proceeds or otherwise, which represent late
payments or collections of principal or interest due in respect of such Mortgage
Loan (without regard to any acceleration of amounts due thereunder by reason of
default) on a Due Date in a previous Due Period and not previously recovered.
With respect to any REO Loan, all amounts received in connection with the
related REO Property during any Due Period, whether as Insurance and
Condemnation Proceeds, Liquidation Proceeds, REO Revenues or otherwise, which
represent late collections of principal or interest due or deemed due in respect
of such REO Loan or the predecessor Mortgage Loan (without regard to any
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acceleration of amounts due under the predecessor Mortgage Loan by reason of
default) on a Due Date in a previous Due Period and not previously recovered.
The term "Late Collections" shall specifically exclude Penalty Charges.
"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 Section 3 of the
related Mortgage Loan Purchase Agreement; (iv) such Mortgage Loan is purchased
by the Servicer or the Special Servicer pursuant to Section 3.18(b); or (v) such
Mortgage Loan is purchased by the Servicer, the Special Servicer, the Holders of
the Controlling Class or the Holders of the Class [LR] Certificates 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 Servicer, the
Special Servicer, the Holders of the Controlling Class or the Holders of the
Class [LR] Certificates pursuant to Section 9.01.
"Liquidation Fee": A fee payable to the Special Servicer with
respect to each Specially Serviced Mortgage Loan as to which the Special
Servicer receives a full or discounted payoff with respect thereto from the
related Mortgagor or any Liquidation Proceeds with respect thereto, equal to the
product of the Liquidation Fee Rate and the proceeds of such full or discounted
payoff or the net Liquidation Proceeds (net of the related costs and expenses
associated with the related liquidation) related to such liquidated Specially
Serviced Mortgage Loan, as the case may be; provided, however, that no
Liquidation Fee shall be payable with respect to clauses (iii)-(v) of the
definition of Liquidation Proceeds.
"Liquidation Fee Rate": A rate equal to __%.
"Liquidation Proceeds": Cash amounts (other than Insurance and
Condemnation Proceeds and REO Revenues) received or paid by the Servicer in
connection with: (i) 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; (ii)
the realization upon any deficiency judgment obtained against a Mortgagor; (iii)
the purchase of a Defaulted Mortgage Loan by the Servicer or the Special
Servicer pursuant to Section 3.18(b) or any other sale thereof pursuant to
Section 3.18(c); (iv) the repurchase of a Mortgage Loan by a Mortgage Loan
Seller pursuant to Section 3 of the related Mortgage Loan Purchase Agreement; or
(v) the purchase of a Mortgage Loan or REO Property by the Servicer, Special
Servicer, the Holders of the Controlling Class or the Holders of the Class [LR]
Certificates pursuant to Section 9.01.
"Loan-to-Value Ratio": With respect to any Mortgage Loan, as of any
date of determination, the fraction, expressed as a percentage, the numerator of
which is the scheduled principal balance of such Mortgage Loan at the time of
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determination, and the denominator of which is the Original Value of the related
Mortgaged Property.
"Lower-Tier Distribution Account": The segregated account or
accounts created and maintained by the Paying Agent pursuant to Section 3.04(b)
in trust for the Certificateholders, which shall be entitled "The Chase
Manhattan Bank, as Paying Agent, in trust for the registered Holders of Chase
Commercial Mortgage Securities Corp., Commercial Mortgage Pass-Through
Certificates, Series 1997-_, Lower-Tier Distribution Account". Any such account
or accounts shall be an Eligible Account.
"Lower-Tier Distribution Amount": As defined in Section 4.01(b).
"Lower-Tier Principal Amount": With respect to any Class of
Uncertificated Lower-Tier Interests (other than the Class [LWAC] Uncertificated
Interest), (i) on or prior to the first Distribution Date, an amount equal to
the Original Lower-Tier Principal Amount of such Class as specified in the
Preliminary Statement hereto, and (ii) as of any date of determination after the
first Distribution Date, an amount equal to the Certificate Balance of the Class
of Related Certificates on the Distribution Date immediately prior to such date
of determination (determined as adjusted pursuant to Section 1.02(iii)).
"Lower-Tier REMIC": One of two separate REMICs comprising the Trust
Fund, the assets of which consist of the Mortgage Loans, any REO Property with
respect thereto, such amounts as shall from time to time be held in the
Certificate Account, the REO Account, if any, and the Lower-Tier Distribution
Account, and all other property included in the Trust Fund that is not in the
Upper-Tier REMIC.
"MAI": Member of the Appraisal Institute.
"Maturity Date": With respect to any Mortgage Loan as of any date of
determination, the date on which the last payment of principal is due and
payable under the related Mortgage Note, after taking into account all Principal
Prepayments received prior to such date of determination, but without giving
effect to (i) any acceleration of the principal of such Mortgage Loan by reason
of default thereunder, (ii) any grace period permitted by the related Mortgage
Note, or (iii) any modification, waiver or amendment of such Mortgage Loan
granted or agreed to by the Servicer or the Special Servicer pursuant to Section
3.20 occurring prior to such date of determination.
"Monthly Payment": With respect to any Mortgage Loan, the scheduled
monthly payment of principal and/or interest on such Mortgage Loan, including
any Balloon Payment, which is payable by a Mortgagor from time to time under the
related Mortgage Note and applicable law, without regard to any acceleration of
principal of such Mortgage Loan by reason of default thereunder or any
modification, waiver or amendment of such Mortgage Loan granted or agreed to by
the Servicer or the Special Servicer pursuant to Section 3.20.
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"Mortgage": With respect to any Mortgage Loan, the mortgage, deed of
trust or other instrument securing a Mortgage Note and creating a lien on the
related Mortgaged Property.
"Mortgage Deferred Interest": With respect to any Mortgage Loan as
of any Due Date that has been modified to reduce the rate at which interest is
paid currently below the Mortgage Rate, the excess, if any, of (a) interest
accrued on the Stated Principal Balance thereof during the one-month interest
accrual period set forth in the related Mortgage Note at the related Mortgage
Rate over (b) the interest portion of the related Monthly Payment or, if
applicable, Assumed Scheduled Payment due on such Due Date.
"Mortgaged Property": The real property subject to the lien of a
Mortgage.
"Mortgage File": With respect to any Mortgage Loan, collectively the
following documents:
(i) the original Mortgage Note, bearing, or accompanied by, all
prior and intervening endorsements or assignments showing a complete chain
of endorsement or assignment from the originator of the Mortgage Loan to
the Mortgage Loan Seller, and further endorsed (at the direction of the
Depositor given pursuant to the Mortgage Loan Purchase Agreement) by the
Mortgage Loan Seller, on its face or by allonge attached thereto, without
recourse, to the order of the Trustee in the following form: "Pay to the
order of_______, as trustee for the registered Holders of Chase Commercial
Mortgage Securities Corp., Commercial Mortgage Pass-Through Certificates,
Series 1997-__, without recourse, representation or warranty, express or
implied";
(ii) the original Mortgage (or a certified copy thereof from the
applicable recording office) and originals (or certified copies from the
applicable recording office) of any intervening assignments thereof
showing a complete chain of assignment from the originator of the Mortgage
Loan to the Mortgage Loan Seller, in each case with evidence of recording
indicated thereon;
(iii) an original (or a copy if the original has been sent by the
Servicer for recordation) assignment of the Mortgage, in recordable form,
from the Mortgage Loan Seller to "___________________, as trustee for the
registered Holders of Chase Commercial Mortgage Securities Corp.,
Commercial Mortgage Pass-Through Certificates, Series 1997-__";
(iv) an original or copy of any related Assignment of Leases (if
such item is a document separate from the Mortgage) and the originals or
copies of any intervening assignments thereof showing a complete chain of
assignment from the originator of the Mortgage Loan to the Mortgage Loan
Seller, in each case with evidence of recording thereon;
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(v) an original assignment of any related Assignment of Leases (if
such item is a document separate from the Mortgage), in recordable form,
executed by the Mortgage Loan Seller in favor of the Trustee (in such
capacity);
(vi) an original or copy of any related Security Agreement (if such
item is a document separate from the Mortgage) and the originals or copies
of any intervening assignments thereof showing a complete chain of
assignment from the originator of the Mortgage Loan to the Mortgage Loan
Seller;
(vii) an original assignment of any related Security Agreement (if
such item is a document separate from the Mortgage), in recordable form,
executed by the Mortgage Loan Seller in favor of the Trustee (in such
capacity);
(viii) originals or copies of all assumption, modification, written
assurance and substitution agreements, with evidence of recording thereon,
where appropriate, in those instances where the terms or provisions of the
Mortgage, Mortgage Note or any related security document have been
modified or the Mortgage Loan has been assumed;
(ix) the original lender's title insurance policy or a copy thereof
effective as of the date of the recordation of the Mortgage Loan, together
with all endorsements or riders that were issued with or subsequent to the
issuance of such policy, insuring the priority of the Mortgage as a first
lien on the Mortgagor's fee interest in the Mortgaged Property, or if the
policy has not yet been issued, a written commitment or interim binder,
dated as of the date the related Mortgage Loan was funded;
(x) the original or copy of any guaranty of the obligations of
the Mortgagor under the Mortgage Loan;
(xi) all UCC Financing Statements and continuation statements or
copies thereof sufficient to perfect (and maintain the perfection of) the
security interest held by the originator of the Mortgage Loan (and each
assignee prior to the Trustee) in and to the personalty of the Mortgagor
at the Mortgaged Property (in each case with evidence of filing thereon),
and to transfer such security interest to the Trustee;
(xii) the original power of attorney (with evidence of recording
thereon) granted by the Mortgagor if the Mortgage, Mortgage Note or other
document or instrument referred to above was not signed by the Mortgagor;
(xiii) with respect to any Mortgage Loans with Affiliate Debt, a
subordination agreement, pursuant to which such Affiliate Debt will be
fully subordinated to such Mortgage Loan; and
(xiv) any additional documents required to be added to the
Mortgage File pursuant to this Agreement;
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provided, however, that whenever the term "Mortgage File" is used to refer to
documents actually received by the Trustee, or a Custodian appointed thereby,
such term shall not be deemed to include such documents and instruments required
to be included therein unless they are actually so received.
"Mortgage Loan": Each of the mortgage loans transferred and assigned
to the Trustee pursuant to Section 2.01 and from time to time held in the Trust
Fund. As used herein, the term "Mortgage Loan" includes the related Mortgage
Note, Mortgage and other documents contained in the related Mortgage File and
any related agreements.
"Mortgage Loan Purchase Agreement": Either of the agreements between
the Depositor and each Mortgage Loan Seller, relating to the transfer of all of
such Mortgage Loan Seller's right, title and interest in and to the related
Mortgage Loans.
"Mortgage Loan Schedule": The list of Mortgage Loans transferred on
the Closing Date to the Trustee as part of the Trust Fund, attached hereto as
Exhibit B, which list sets forth the following information with respect to each
Mortgage Loan:
(i) the loan i.d. number (as specified in Exhibit A to the
Prospectus);
(ii) the Mortgagor's name;
(iii)the street address (including city, state and zip code) of the
related Mortgaged Property;
(iv) the Mortgage Rate in effect at origination;
(v) the Net Mortgage Rate in effect at the Cut-off Date;
(vi) the original principal balance;
(vii) the Cut-off Date Principal Balance;
(viii) the (a) original term to stated maturity, (b) remaining term
to stated maturity and (c) Maturity Date;
(ix) the original and remaining amortization terms;
(x) the amount of the Monthly Payment due on the first Due Date
following the Cut-off Date;
(xi) the Original Value of the related Mortgaged Property;
(xii) the Loan-to-Value Ratio at the Cut-off Date;
(xiii) the Underwritten Debt Service Coverage Ratio; and
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(xiv) the applicable Servicing Fee Rate.
Such Mortgage Loan Schedule shall also set forth the aggregate of
the amounts described under clause (vii) above for all of the Mortgage Loans.
Such list may be in the form of more than one list, collectively setting forth
all of the information required.
"Mortgage Loan Seller": Each of (i) The Chase Manhattan Bank, a New
York banking corporation, and (ii) _____________________., a Delaware
corporation, or their respective successors 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.
"Mortgage Rate": With respect to: (i) any Mortgage Loan on or prior
to its Maturity 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 Maturity Date, the annualized rate described in clause (i) above
determined without regard to the passage of such Maturity Date and (iii) any REO
Loan, the annualized rate described in clause (i) or (ii), as applicable, above
determined as if the predecessor Mortgage Loan had remained outstanding.
"Mortgagor": The obligor or obligors on a Mortgage Note, including
without limitation, any Person that has acquired the related Mortgaged Property
and assumed the obligations of the original obligor under the Mortgage Note.
"Net Investment Earnings": With respect to either the Certificate
Account, the Distribution Accounts or the REO Account for any period from any
Distribution Date to the immediately succeeding P&I Advance Date, the amount, if
any, by which the aggregate of all interest and other income realized during
such period on funds relating to the Trust Fund held in such account, exceeds
the aggregate of all losses, if any, incurred during such period in connection
with the investment of such funds in accordance with Section 3.06.
"Net Investment Loss": With respect to either the Certificate
Account, the Distribution Accounts or the REO Account for any period from any
Distribution Date to the immediately succeeding P&I Advance Date, the amount by
which the aggregate of all losses, if any, incurred during such period in
connection with the investment of funds relating to the Trust Fund held in such
account in accordance with Section 3.06, exceeds the aggregate of all interest
and other income realized during such period on such funds.
"Net Mortgage Rate": With respect to any Mortgage Loan or REO Loan,
as of any date of determination, a rate per annum equal to the related Mortgage
Rate then in effect, minus the sum of (x) the Servicing Fee Rate and (y) the
Trustee Fee Rate.
"Net Operating Income": With respect to any Mortgaged Property, for
any Mortgagor's fiscal year end, the total operating revenues derived from such
Mortgaged Property during such period, minus the total operating expenses
incurred in respect of such Mortgaged Property during such period and capital
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expenditure reserves, other than (i) non-cash items such as depreciation, (ii)
amortization, (iii) actual capital expenditures and (iv) debt service on the
related Mortgage Loan.
"New Lease": Any lease of REO Property entered into at the direction
of the Special Servicer on behalf of the Trust, including any lease renewed,
modified or extended on behalf of the Trust, if the Trust has the right to
renegotiate the terms of such lease.
"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 a Mortgage Loan or REO Loan which, in the
judgment of the Servicer, the Trustee or the Fiscal Agent, as applicable, will
not be ultimately recoverable, together with any accrued and unpaid interest
thereon, from Late Collections or any other recovery on or in respect of such
Mortgage Loan or REO Loan. The determination by the Servicer, the Trustee or the
Fiscal Agent, as applicable, that it has made a Nonrecoverable P&I Advance or
that any proposed P&I Advance, if made, would constitute a Nonrecoverable P&I
Advance, shall be evidenced by an Officer's Certificate delivered to the
Trustee, the Paying Agent and the Depositor, in the case of the Servicer or the
Fiscal Agent, and to the Depositor and the Paying Agent, in the case of the
Trustee. The Officer's Certificate shall set forth such determination of
nonrecoverability and the considerations of the Servicer, the Trustee or Fiscal
Agent, as applicable, forming the basis of such determination (which shall
include but shall not be limited to information, to the extent available, such
as related income and expense statements, rent rolls, occupancy status, property
inspections, and shall include an Appraisal of the related Mortgage Loan or
Mortgaged Property, the cost of which Appraisal shall be advanced by the
Servicer as a Servicing Advance). The Trustee shall be entitled to conclusively
rely on the Servicer's determination that a P&I Advance is nonrecoverable and
the Fiscal Agent shall be entitled to conclusively rely on the Servicer's and/or
Trustee's determination that a P&I Advance is nonrecoverable.
"Nonrecoverable Servicing Advance": Any Servicing Advance previously
made or proposed to be made in respect of a Mortgage Loan or REO Property which,
in the judgment of the Servicer, the Trustee or the Fiscal Agent, as the case
may be, will not be ultimately recoverable, together with any accrued and unpaid
interest thereon, from Late Collections or any other recovery on or in respect
of such Mortgage Loan or REO Property. The determination by the Servicer, the
Trustee or the Fiscal Agent, as the case may be, that it has made a
Nonrecoverable Servicing Advance or that any proposed Servicing Advance, if
made, would constitute a Nonrecoverable Servicing Advance, shall be evidenced by
an Officer's Certificate delivered to the Trustee, the Paying Agent and the
Depositor, in the case of the Servicer and the Fiscal Agent, and to the
Depositor and the Paying Agent, in the case of the Trustee. The Officer's
Certificate shall set forth such determination of nonrecoverability and the
considerations of the Servicer, the Trustee or the Fiscal Agent, as applicable,
forming the basis of such determination (which shall include but shall not be
limited to information, to the extent available, such as related income and
expense statements, rent rolls, occupancy status and property inspections, and
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shall include an Appraisal of the related Mortgage Loan or Mortgaged Property,
the cost of which Appraisal shall be advanced by the Servicer as a Servicing
Advance). The Trustee will be entitled to conclusively rely on the Servicer's
determination that a Servicing Advance is nonrecoverable and the Fiscal Agent
shall be entitled to conclusively rely on the Servicer's and/or the Trustee's
determination that a Servicing Advance is nonrecoverable.
"Non-Registered Certificate": Unless and until registered under the
Securities Act, any Class [F], Class [G], Class [H], Class [R] or Class [LR]
Certificate.
"Non-U.S. Person": Any person other than a U.S. Person, unless, with
respect to the Transfer of a Residual Certificate, (i) such person holds such
Residual Certificate in connection with the conduct of a trade or business
within the United States and furnishes the Transferor and the Certificate
Registrar with an effective Internal Revenue Service Form 4224 or (ii) the
Transferee delivers to both the Transferor and the Certificate Registrar an
opinion of a nationally recognized tax counsel to the effect that such Transfer
is in accordance with the requirements of the Code and the regulations
promulgated thereunder and that such Transfer of the Residual Certificate will
not be disregarded for federal income tax purposes.
"Notional Amount": The Class [LWAC] Notional Amount, the A-1
Component Notional Amount or the WAC Component Notional Amount, as the case may
be.
"Offered Certificates": The Class [A], Class [B], Class [C], Class
[D], Class [E] and Class [X] Certificates.
"Officer's Certificate": A certificate signed by a Servicing Officer
of the Servicer or the Special Servicer, as the case may be, or a Responsible
Officer of the Trustee or the Fiscal Agent, as the case may be.
"Opinion of Counsel": A written opinion of counsel, who may, without
limitation, be salaried counsel for the Depositor, the Servicer or the Special
Servicer, acceptable in form and delivered to the Trustee, except that any
opinion of counsel relating to (a) the qualification of the Upper-Tier REMIC or
Lower-Tier REMIC as a REMIC, (b) compliance with the REMIC Provisions, or (c)
the resignation of the Servicer, the Special Servicer or the Depositor pursuant
to Section 6.04, must be an opinion of counsel who is in fact Independent of the
Depositor, the Servicer or the Special Servicer, as applicable.
"Original Certificate Balance": With respect to any Class of Regular
Certificates (other than the Class [X] Certificates), the initial aggregate
principal amount thereof as of the Closing Date, in each case as specified in
the Preliminary Statement.
"Original Lower-Tier Principal Amount": With respect to any Class of
Uncertificated Lower-Tier Interest (other than the Class [LWAC] Uncertificated
Interest), the initial principal amount thereof as of the Closing Date, in each
case as specified in the Preliminary Statement.
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"Original Notional Amount": With respect to the LWAC Uncertificated
Interest, the A-1 Component or the WAC Component, the respective initial
aggregate Notional Amount thereof as of the Closing Date, in each case as
specified in the Preliminary Statement.
"Original Value": The Appraised Value of a Mortgaged Property based
upon the Appraisal conducted in connection with the origination of the related
Mortgage Loan.
"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": Any of the Class [A-1] Pass-Through Rate, the
Class [A-2] Pass-Through Rate, the Class [B] Pass-Through Rate, the Class [C]
Pass-Through Rate, the Class [D] Pass-Through Rate, the Class [E] Pass-Through
Rate, the Class [F] Pass-Through Rate, the Class [G] Pass-Through Rate, the
Class [H] Pass-Through Rate, the [A-1] Component Pass-Through Rate and the WAC
Component Pass-Through Rate.
"Paying Agent": Any agent of the Servicer appointed to act as Paying
Agent pursuant to Section 5.06.
"Penalty Charges": With respect to any Mortgage Loan (or successor
REO Loan), any amounts actually collected thereon from the Mortgagor that
represent late payment charges or Default Interest, other than a Prepayment
Premium or Yield Maintenance Charge.
"Percentage Interest": As to any Certificate, the percentage
interest evidenced thereby in distributions required to be made with respect to
the related Class. With respect to any Regular Certificate, the percentage
interest is equal to the Denomination of such Certificate divided by the initial
Certificate Balance or Notional Amount, as applicable, of such Class of
Certificates as of the Closing Date. With respect to a Residual Certificate, the
percentage interest is set forth on the face thereof.
"Permitted Investments": Any one or more of the following
obligations or securities, regardless whether issued by the Depositor, the
Servicer, the Special Servicer, the Trustee or any of their respective
Affiliates and having the required ratings, if any, provided for in this
definition:
(i) direct obligations of, and obligations fully guaranteed as to
timely payment of principal and interest by, the United States of America,
FNMA, FHLMC or any agency or instrumentality of the United States of
America, the obligations of which are backed by the full faith and credit
of the United States of America; provided that any obligation of, or
guarantee by, FNMA or FHLMC, other than an unsecured senior debt
obligation of FNMA or FHLMC, shall be a Permitted Investment only if such
investment would not result in the downgrading, withdrawal or
qualification of the then-current rating assigned by each Rating Agency to
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any Certificate as evidenced in writing;
(ii) demand and time deposits, certificates of deposit, or bankers'
acceptances that mature in 1 year or less after the date of issuance and
are issued or held by any depository institution or trust company
incorporated or organized under the laws of the United States of America
or any State thereof and subject to supervision and examination by federal
or state banking authorities, so long as the commercial paper or other
short-term debt obligations of such depository institution or trust
company are rated at least "A-1+" by ___ and "D-1+" by ___ or would not
result in the downgrading, withdrawal or qualification of the then-current
rating assigned by each Rating Agency to any Certificate or the long-term
debt obligations of such depository institution or trust company have the
Certificate Rating;
(iii) repurchase agreements or obligations with respect to any
security described in clause (i) above where such security has a remaining
maturity of 1 year or less and where such repurchase obligation has been
entered into with a depository institution or trust company (acting as
principal) described in clause (ii) above;
(iv) debt obligations bearing interest or sold at a discount issued
by any corporation incorporated under the laws of the United States of
America or any state thereof, which securities have ratings from ___ and
___ at least equal to the highest long-term credit ratings assigned by ___
and ___, unless otherwise specified in writing by each of the Rating
Agencies; provided, however, that securities issued by any particular
corporation will not be Permitted Investments to the extent that
investment therein will cause the then-outstanding principal amount of
securities issued by such corporation and held in the accounts established
hereunder to exceed 10% of the sum of the aggregate principal balance and
the aggregate principal amount of all Permitted Investments in such
accounts;
(v) commercial paper (including both non-interest-bearing discount
obligations and interest-bearing obligations) payable on demand or on a
specified date maturing in 1 year or less after the date of issuance
thereof and which is rated at least "A-1+" by ___ and "D-1+" by ___;
(vi) units of investment funds that maintain a constant net asset
value, including money market funds, rated "AAAm" by ___ and in the
highest category by ___;
(vii) certificates or receipts representing ownership interests in
future interest or principal payments on obligations described in clause
(i) above and the Rating Agencies have confirmed in writing that such
investments will not lead to the downgrading, withdrawal or qualification
of any rating then assigned by the Rating Agencies to any Certificate; and
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(viii) any other demand, money market or time deposit, obligation,
security or investment, (a) with respect to which each Rating Agency shall
have confirmed in writing that such investment will not result in a
downgrade, qualification or withdrawal of the then-current rating of the
Certificates that are currently being rated by such Rating Agency and (b)
which qualifies as a "cash flow investment" pursuant to Section 860G(a)(6)
of the Code;
provided, however, that in each case, if the investment is rated by ___, (a) it
shall not have an "r" highlighter affixed to its rating from ___, (b) it shall
have a predetermined fixed dollar of principal due at maturity that cannot vary
or change and (c) any such investment that provides for a variable rate of
interest must have an interest rate that is tied to a single interest rate index
plus a fixed spread, if any, and move proportionately with such index; and
provided, further, however, that no such instrument shall be a Permitted
Investment (a) if such instrument evidences principal and interest payments
derived from obligations underlying such instrument and the interest payments
with respect to such instrument provide a yield to maturity at the time of
acquisition of greater than 120% of the yield to maturity at par of such
underlying obligations or (b) if such instrument may be redeemed at a price
below the purchase price; and provided, further, however, that no amount
beneficially owned by either the Upper-Tier REMIC or the Lower-Tier REMIC (even
if not yet deposited in the Trust) may be invested in investments (other than
money market funds) treated as equity interests for federal income tax purposes,
unless the Servicer receives an Opinion of Counsel, at its own expense, to the
effect that such investment will not adversely affect the status of either the
Upper-Tier REMIC or the Lower-Tier REMIC as a REMIC under the Code or result in
imposition of a tax on such Upper-Tier REMIC or Lower-Tier REMIC. Permitted
Investments that are subject to prepayment or call may not be purchased at a
price in excess of par.
"Person": Any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock 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 Servicer, the Trustee or the Fiscal Agent, as applicable, pursuant to
Section 4.03 or Section 7.05.
"P&I Advance Date": The Business Day immediately prior to each
Distribution Date.
"P&I Advance Determination Date": With respect to any Distribution
Date, the 14th day of the month in which such Distribution Date occurs, or if
such 14th day is not a Business Day, the Business Day immediately succeeding
such date.
"Placement Agents": Any of (i) Chase Securities Inc., (ii) or
(iii) Chase Real Estate Finance Securitization Group, a division of The Chase
Manhattan Bank.
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"Plan": As defined in Section 5.02(c).
"Prepayment Assumption": A CPR (as defined in the Prospectus) of 0%
used for determining the accrual of original issue discount, market discount and
premium, if any, on the Certificates for federal income tax purposes.
"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.
"Principal Distribution Amount": With respect to any Distribution
Date, an amount equal to the sum of (a) the Principal Shortfall for such
Distribution Date, (b) the Scheduled Principal Distribution Amount for such
Distribution Date and (c) the Unscheduled Principal Distribution
Amount for such Distribution Date.
"Principal Prepayment": Any payment of principal made by the
Mortgagor on a Mortgage Loan which is received in advance of its scheduled Due
Date and which is not accompanied by an amount of interest representing
scheduled interest due on any date or dates in any month or months subsequent to
the month of prepayment.
"Principal Shortfall": For any Distribution Date after the initial
Distribution Date, the amount, if any, by which (a) the related Principal
Distribution Amount for the preceding Distribution Date, exceeded (b) the
aggregate amount distributed in respect of principal on the Class [A], the Class
[B], Class [C], Class [D], Class [E], Class [F], Class [G] and Class [H]
Certificates for such preceding Distribution Date pursuant to Section 4.01(a) on
such preceding Distribution Date. The Principal Shortfall for the initial
Distribution Date will be zero.
"Prospectus": The Prospectus dated________, 1997, as supplemented by
the Prospectus Supplement dated__________, 1997, relating to the offering of the
Offered Certificates.
"Purchase Price": With respect to any Mortgage Loan to be purchased
by a Mortgage Loan Seller pursuant to Section 3 of the related Mortgage Loan
Purchase Agreement, by the Servicer or the Special Servicer pursuant to Section
3.18(b), or by the Servicer, the Special Servicer, the Holders of the
Controlling Class or the Holders of the Class [LR] Certificates pursuant to
Section 9.01 or to be otherwise sold pursuant to Section 3.18(c), a price equal
to:
(i) the outstanding principal balance of such Mortgage Loan as
of the date of purchase; plus
(ii) all accrued and unpaid interest on such Mortgage Loan at the
related Mortgage Rate in effect from time to time to but not including the
Due Date in the Due Period of purchase; plus
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(iii) all related unreimbursed Servicing Advances and accrued and
unpaid interest on related Advances at the Reimbursement Rate, and unpaid
Special Servicing Fees allocable to such Mortgage Loan; plus
(iv) if such Mortgage Loan is being purchased by a Mortgage Loan
Seller pursuant to Section 3 of the related Mortgage Loan Purchase
Agreement, all reasonable out-of-pocket expenses reasonably incurred or to
be incurred by the Servicer, the Special Servicer, the Depositor and the
Trustee in respect of the Breach or Defect giving rise to the repurchase
obligation, including any expenses arising out of the enforcement of the
repurchase obligation.
With respect to any REO Property to be sold pursuant to Section 3.18(c), the
amount calculated in accordance with the preceding sentence in respect of the
related REO Loan.
"Qualified Institutional Buyer": As defined in Section 5.02(b).
"Qualified Insurer": (i) With respect to any Mortgage Loan, REO Loan
or REO Property, an insurance company or security or bonding company qualified
to write the related Insurance Policy in the relevant jurisdiction with a
minimum claims paying ability rating of at least "A" by ___ and ___, or, if not
rated by ___, at least "A" or its equivalent by two other nationally recognized
statistical rating agencies and (ii) with respect to the fidelity bond and
errors and omissions Insurance Policy required to be maintained pursuant to
Section 3.07(c), an insurance company that has a claims paying ability rated no
lower than two ratings below the rating assigned to the then highest rated
outstanding Certificate, but in no event lower than "A" by ___ and ___, or, in
the case of clauses (i) and (ii), such other rating as each Rating Agency shall
have confirmed in writing will not cause such Rating Agency to downgrade,
qualify or withdraw the then-current rating assigned to any of the Certificates
that are then currently being rated by such Rating Agency.
"Rated Final Distribution Date": As to each Class of
Certificates,________ __, 20__, the first Distribution Date after the 24th month
following the end of the amortization term for the Mortgage Loan that, as of the
Cut-off Date, has the longest remaining amortization term.
"Rating Agency": Each of ___ and ___ or their successors in
interest. If neither such rating agency nor any successor remains in existence,
"Rating Agency" 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 and the
Servicer, and specific ratings of ___ and ___ herein referenced shall be deemed
to refer to the equivalent ratings of the party so designated.
"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.
"Registrar Office": As defined in Section 5.02(a).
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"Regular Certificate": Any of the Class [A], Class [B], Class [C],
Class [D], Class [E], Class [F], Class [G], Class [H] and Class [X]
Certificates.
"Reimbursement Rate": The rate per annum applicable to the accrual
of interest on Servicing Advances in accordance with Section 3.03(d) and P&I
Advances in accordance with Section 4.03(d), which rate per annum shall equal
the "Prime Rate" published in the "Money Rates" section of The Wall Street
Journal (or, if such section or publication is no longer available, such other
comparable publication as determined by the Trustee in its reasonable
discretion) as may be in effect from time to time, or, if the "Prime Rate" no
longer exists, such other comparable rate (as determined by the Trustee in its
reasonable discretion) as may be in effect from time to time.
"Related Certificates" and "Related Uncertificated Lower-Tier
Interest": For the following Classes of Uncertificated Lower-Tier Interests, the
related Class of Certificates set forth below and for the following Classes of
Certificates, the related Class of Uncertificated Lower-Tier Interests set forth
below:
Related Uncertificated
Related Certificate Lower-Tier Interest
------------------- -------------------
Class [A-1] Certificate Class [LA-1] Uncertificated Interest
Class [A-2] Certificate Class [LA-2] Uncertificated Interest
Class [B] Certificate Class [LB] Uncertificated Interest
Class [C] Certificate Class [LC] Uncertificated Interest
Class [D] Certificate Class [LD] Uncertificated Interest
Class [E] Certificate Class [LE] Uncertificated Interest
Class [F] Certificate Class [LF] Uncertificated Interest
Class [G] Certificate Class [LG] Uncertificated Interest
Class [H] Certificate Class [LH] Uncertificated Interest
"REMIC": A "real estate mortgage investment conduit" as defined
in Section 860D of the Code (or any successor thereto).
"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
rulings promulgated thereunder, as the foregoing may be in effect from time to
time.
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"Rents from Real Property": With respect to any REO Property, gross
income of the character described in Section 856(d) of the Code.
"REO Account": A segregated custodial 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 "_______,
Inc. as Special Servicer, in trust for registered Holders of Chase Commercial
Mortgage Securities Corp., Commercial Mortgage Pass-Through Certificates, Series
1997-__, REO Account." Any such account or accounts shall be an Eligible
Account.
"REO Acquisition": The date of acquisition for federal income
tax purposes of any REO Property pursuant to Section 3.09.
"REO Disposition": The sale or other disposition of the 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
be outstanding for so long as the related REO Property remains part of the Trust
Fund as providing for Assumed Scheduled Payments on each Due Date therefor, and
otherwise as having the same terms and conditions as its predecessor Mortgage
Loan, including, without limitation, with respect to the calculation of the
Mortgage Rate in effect from time to time (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 outstanding principal balance and
Stated Principal Balance equal to the outstanding principal balance and Stated
Principal Balance, respectively, of its predecessor Mortgage Loan as of the date
of the related REO Acquisition. All amounts due and owing in respect of the
predecessor Mortgage Loan as of the date of the related REO Acquisition,
including, without limitation, accrued and unpaid interest, shall continue to be
due and owing in respect of an REO Loan. All amounts payable or reimbursable to
the Servicer, the Special Servicer, the Fiscal Agent or the Trustee, as
applicable, in respect of the predecessor Mortgage Loan as of the date of the
related REO Acquisition, including, without limitation, any unpaid Special
Servicing Fees and Servicing Fees and any unreimbursed Advances, together with
any interest accrued and payable to the Servicer, the Fiscal Agent or the
Trustee in respect of such Advances in accordance with Section 3.03(d) or
Section 4.03(d), shall continue to be payable or reimbursable to the Servicer,
the Trustee or the Fiscal Agent in respect of an REO Loan. Collections in
respect of each REO Loan (exclusive of amounts to be applied to the payment of,
or to be reimbursed to the Servicer or the Special Servicer for the payment of,
the costs of operating, managing and maintaining the related REO Property) shall
be treated: first, as a recovery of accrued and unpaid interest on such REO Loan
at the related Mortgage Rate in effect from time to time to but not including
the Due Date in the Due 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 Servicing Standards of the Servicer, as a recovery of any
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other amounts due and owing in respect of such REO Loan, including, without
limitation, Yield Maintenance Charges, Prepayment Premiums and Penalty Charges.
"REO Loan Accrual Period": With respect to any REO Loan and any Due
Date therefor, the one-month period immediately preceding such Due Date.
"REO Property": A Mortgaged Property acquired by the Special
Servicer on behalf of, and in the name of, the Trustee for the benefit of the
Certificateholders through foreclosure, acceptance of a deed-in-lieu of
foreclosure or otherwise in accordance with applicable law in connection with
the default or imminent default of a Mortgage Loan.
"REO Revenues": All income, rents and profits derived from the
ownership, operation or leasing of any REO Property.
"Request for Release": A release signed by a Servicing Officer of
the Servicer or the Special Servicer, as applicable, in the form of Exhibit F
attached hereto.
"Residual Certificate": Any Class [R] Certificate or Class [LR]
Certificate issued, authenticated and delivered hereunder.
"Responsible Officer": When used with respect to the initial Trustee
or Fiscal Agent, any Vice President, Assistant Vice President, corporate trust
officer or assistant corporate trust officer in the Asset-Backed Securities
Trust Services Group of _________________or________________, as the case may be,
and with respect to any successor Trustee or Fiscal Agent, any officer or
assistant officer in the corporate trust department of the Trustee or Fiscal
Agent, as the case may be, or any other 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 Principal Distribution Amount": With respect to any
Distribution Date, the aggregate of the principal portions of (a) all Monthly
Payments (excluding Balloon Payments) due in respect of the Mortgage Loans
during or, if and to the extent not previously received or advanced pursuant to
Section 4.03 in respect of a preceding Distribution Date, prior to the related
Due Period, and all Assumed Scheduled Payments for the related Due Period, in
each case to the extent either (i) paid by the Mortgagor as of the Business Day
preceding the related P&I Advance Date (and not previously distributed to
Certificateholders) or (ii) advanced by the Servicer, the Trustee or the Fiscal
Agent, as applicable, pursuant to Section 4.03 in respect of such Distribution
Date, and (b) all Balloon Payments to the extent received during the related Due
Period, and to the extent not included in clause (a) above.
"Securities Act": The Securities Act of 1933, as amended.
"Security Agreement": With respect to any Mortgage Loan, any
security agreement or equivalent instrument, whether contained in the related
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Mortgage or executed separately, creating in favor of the holder of such
Mortgage a security interest in the personal property constituting security for
repayment of such Mortgage Loan.
"Servicer": The Chase Manhattan Bank, CCMB Servicing Division,
380 Madison Avenue, 11th Floor, New York, New York 10017 (Attention: Janice
Smith, V.P.) and its successor in interest and assigns, or any successor
Servicer appointed as herein provided.
"Servicing Account": The account or accounts created and
maintained pursuant to Section 3.03.
"Servicing Advances": All customary, reasonable and necessary "out
of pocket" costs and expenses (including attorneys' fees and expenses and fees
of real estate brokers) incurred by the Servicer in connection with the
servicing and administering of (a) a Mortgage Loan in respect of which a
default, delinquency or other unanticipated event has occurred or as to which a
default is reasonably foreseeable or (b) an REO Property, including, but not
limited to, the cost of (i) compliance with the Servicer's obligations set forth
in Section 3.03(c), (ii) the preservation, restoration and protection of a
Mortgaged Property, (iii) obtaining any Insurance and Condemnation Proceeds or
any Liquidation Proceeds of the nature described in clauses (i) - (iv) of the
definition of "Liquidation Proceeds", (iv) any enforcement or judicial
proceedings with respect to a Mortgaged Property, including foreclosures, and
(v) the operation, leasing, management, maintenance and liquidation of any REO
Property.
"Servicing Fee": With respect to each Mortgage Loan and REO Loan,
the fee payable to the Servicer pursuant to the first paragraph of Section
3.11(a).
"Servicing Fee Rate": A rate equal to___% per annum with respect to
Mortgage Loans sold to the Depositor by The Chase Manhattan Bank, and ___% per
annum with respect to Mortgage Loans sold to the Depositor by
______________________, in each case computed on the basis of the Stated
Principal Balance of the related Mortgage Loan and for the same period for which
any related interest payment on the related Mortgage Loan is computed.
"Servicing Officer": Any officer and/or employee of the 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 the Servicer to the Trustee and the
Depositor on the Closing Date as such list may be amended from time to time
thereafter.
"Servicing Standards": As defined in Section 3.01(a).
"Servicing Transfer Event": With respect to any Mortgage Loan,
the occurrence of any of the following events:
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(i) a payment default shall have occurred on such Mortgage Loan at
its original maturity date, or if the maturity date of such Mortgage Loan
has been extended, a payment default occurs on such Mortgage Loan at its
extended maturity date; or
(ii) any Monthly Payment (other than a Balloon Payment) is 60
days or more delinquent; or
(iii) the date upon which the Servicer determines that a payment
default has occurred or is imminent and is not likely to be cured by the
related Mortgagor within 60 days; or
(iv) the date upon which 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 being entered against the related Mortgagor;
provided that if such decree or order is discharged or stayed within 60
days of being entered, such Mortgage Loan shall not be a Specially
Serviced Mortgage Loan (and no Special Servicing Fees, Workout Fees or
Liquidation Fees will be payable with respect thereto); or
(v) 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
(vi) 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
(vii) the Servicer has received notice of the foreclosure or
proposed foreclosure of any lien on the related Mortgaged Property.
"Similar Law": As defined in Section 5.02 (c).
"Special Servicer":___________., a ________corporation, or any
successor special servicer appointed as herein provided.
"Special Servicing Fee": With respect to each Specially Serviced
Mortgage Loan and REO Loan, the fee payable to the Special Servicer pursuant to
the first paragraph of Section 3.11(b).
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"Special Servicing Fee Rate": With respect to each Specially
Serviced Mortgage Loan and each REO Loan, ______% per annum computed on the
basis of the Stated Principal Balance of the related Mortgage Loan and for the
same period for which any related interest payment on the related Specially
Serviced Mortgage Loan is computed.
"Specially Serviced Mortgage Loan": As defined in Section 3.01(a).
"Startup Day": The day designated as such in Section 10.01(b).
"Stated Principal Balance": With respect to any Mortgage Loan, as of
any date of determination, an amount equal to (x) the Cut-off Date Principal
Balance of such Mortgage Loan, plus (y) any Mortgage Deferred Interest added to
the principal balance of such Mortgage Loan on or before the end of the
immediately preceding Due Period minus (z) the sum of:
(i) the principal portion of each Monthly Payment due on such
Mortgage Loan after the Cut-off Date, to the extent received from the
Mortgagor or advanced by the Servicer and distributed to
Certificateholders on or before such date of determination;
(ii) all Principal Prepayments received with respect to such
Mortgage Loan after the Cut-off Date, to the extent distributed to
Certificateholders on or before such date of determination;
(iii) the principal portion of all Insurance and Condemnation
Proceeds and Liquidation Proceeds received with respect to such Mortgage
Loan after the Cut-off Date, to the extent distributed to
Certificateholders on or before such date of determination; and
(iv) any reduction in the outstanding principal balance of such
Mortgage Loan resulting from a Deficient Valuation that occurred prior to
the end of the Due Period for the most recent Distribution Date.
With respect to any REO Loan, as of any date of determination, an
amount equal to (x) the Stated Principal Balance of the predecessor Mortgage
Loan as of the date of the related REO Acquisition, minus (y) the sum of:
(i) the principal portion of any P&I Advance made with respect to
the predecessor Mortgage Loan on or after the date of the related REO
Acquisition, to the extent distributed to Certificateholders on or before
such date of determination; and
(ii) the principal portion of all Insurance and Condemnation
Proceeds, Liquidation Proceeds and REO Revenues received with respect to
such REO Loan, to the extent distributed to Certificateholders on or
before such date of determination.
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A Mortgage Loan or an REO Loan shall be deemed to be part of the
Trust Fund and to have an outstanding Stated Principal Balance until the
Distribution Date on which the payments or other proceeds, if any, received in
connection with a Liquidation Event in respect thereof are to be (or, if no such
payments or other proceeds are received in connection with such Liquidation
Event, would have been) distributed to Certificateholders.
"Subordinate Certificate": Any Class [B], Class [C], Class [D],
Class [E], Class [F], Class [G] or Class [H] Certificate.
"Sub-Servicer": Any Person with which the Servicer or the Special
Servicer has entered into a Sub-Servicing Agreement.
"Sub-Servicing Agreement": The written contract between the Servicer
or the Special Servicer, as the case may be, and any Sub-Servicer relating to
servicing and administration of Mortgage Loans as provided in Section 3.22.
"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 the Upper-Tier REMIC and the Lower-Tier REMIC
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
or any other governmental taxing authority under any applicable provisions of
federal, state or local tax laws.
"The Chase Manhattan Bank": The Chase Manhattan Bank, a commercial
bank chartered and existing under the laws of the State of New York, or any
corporation into which it may be merged, consolidated or converted or any
corporation resulting from any merger, consolidation or conversion to which it
shall be a party, or any corporation succeeding to its business.
"Transfer": Any direct or indirect transfer, sale, pledge,
hypothecation, or other form of assignment of any Ownership Interest in a
Certificate.
"Transfer Affidavit": As defined in Section 5.02(d).
"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.
"Transferor Letter": As defined in Section 5.02(d).
"Trust": The trust created hereby and to be administered hereunder.
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"Trust Fund": The segregated pool of assets subject hereto,
constituting the Trust, 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 Cut-off Date (other than payments of principal
and interest due and payable on such Mortgage Loans on or before the Cut-off
Date), together with all documents included in the related Mortgage Files; (ii)
such funds or assets as from time to time are deposited in the Certificate
Account, the Distribution Accounts, any Servicing Accounts, and, if established,
the REO Account; (iii) any REO Property; (iv) the rights of the mortgagee under
all Insurance Policies with respect to the Mortgage Loans and (v) the rights of
the Depositor under Sections 2, 3, 9, 11 and 13 of the Mortgage Loan Purchase
Agreements.
"Trustee":______________, a national banking association, in its
capacity as trustee and its successors in interest, or any successor trustee
appointed as herein provided.
"Trustee Exception Report": As defined in Section 2.02(e).
"Trustee Fee": The fee to be paid to the Trustee as compensation
for the Trustee's activities under this Agreement.
"Trustee Fee Rate": A rate equal to ______% per annum computed on
the basis of the Stated Principal Balance of the related Mortgage Loan.
"UCC": The Uniform Commercial Code, as enacted in each
applicable state.
"UCC Financing Statement": A financing statement executed and
filed pursuant to the UCC, as in effect in the relevant jurisdiction.
"Uncertificated Lower-Tier Interests": Any of the Class [LA-1],
Class [LA-2], Class [LB], Class [LC], Class [LD], Class [LE], Class [LF], Class
[LG], Class [LH] and Class [LWAC] Uncertificated Interests.
"Underwritten Debt Service Coverage Ratio": With respect to any
Mortgage Loan, the ratio of (i) Underwritten Net Cash Flow produced by the
related Mortgaged Property to (ii) the aggregate amount of the Monthly Payments
due for the 12-month period immediately following the Cut-off Date (except with
respect to those Mortgage Loans identified on Schedule 4 where Monthly Payments
initially pay interest only, but, for purposes of this definition only, shall be
assumed to include principal (based upon a 25-year amortization schedule) and
interest payments from origination).
"Underwritten Net Cash Flow": With respect to any Mortgage Loan, the
estimated annual revenue derived from the use and operation of such Mortgaged
Property, less estimated annual expenses, including operating expenses (such as
utilities, administrative expenses, repairs and maintenance, management fees and
advertising), fixed expenses (such as insurance and real estate taxes) and
replacement reserves.
"Underwriter": Either of (i) [Chase Securities Inc.] or
(ii)_____________.
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"Uninsured Cause": Any cause of damage to property subject to a
Mortgage such that the complete restoration of such property is not fully
reimbursable by the hazard insurance policies or flood insurance policies
required to be maintained pursuant to Section 3.07.
"Unscheduled Principal Distribution Amount": With respect to any
Distribution Date, the aggregate of:
(a) all Principal Prepayments received on the Mortgage Loans
during the related Due Period; and
(b) the principal portions of all Liquidation Proceeds, Insurance
and Condemnation Proceeds and, if applicable, REO Revenues received with
respect to the Mortgage Loans and any REO Loans during the related Due
Period, but in each case only to the extent that such principal portion
represents a recovery of principal for which no advance was previously
made pursuant to Section 4.03 in respect of a preceding Distribution Date.
"Upper-Tier Distribution Account": The segregated account or
accounts created and maintained by the Paying Agent pursuant to Section 3.04(b)
in trust for the Certificateholders, which shall be entitled "The Chase
Manhattan Bank, as Paying Agent, in trust for the registered Holders of Chase
Commercial Mortgage Securities Corp., Commercial Mortgage Pass-Through
Certificates, Series 1997-__, Upper-Tier Distribution Account". Any such account
or accounts shall be an Eligible Account.
"Upper-Tier REMIC": One of the two separate REMICs comprising the
Trust Fund, the assets of which consist of the Uncertificated Lower-Tier
Interests and such amounts as shall from time to time be held in the Upper-Tier
Distribution Account.
"U.S. Person": A citizen or resident of the United States, a
corporation, partnership or other entity created or organized in, or under the
laws of, the United States or any political subdivision thereof, or an estate or
trust whose income is subject to United States federal income tax regardless of
its source.
"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, the Voting Rights shall be allocated among the various
Classes of Certificateholders as follows: (i) 4% in the case of the Class [X]
Certificates, and (ii) in the case of any other Class of Regular Certificates a
percentage equal to the product of 96% and a fraction, the numerator of which is
equal to the aggregate Certificate Balance of such Class, in each case,
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determined as of the Distribution Date immediately preceding such time, and the
denominator of which is equal to the aggregate Certificate Balance of the
Regular Certificates, each determined as of the Distribution Date immediately
preceding such time. Neither the Class [R] Certificates nor the Class [LR]
Certificates will be entitled to any Voting Rights. For purposes of determining
Voting Rights, the Certificate Balance of any Class shall be deemed to be
reduced by the amount allocated to such Class of any Appraisal Reductions
related to Mortgage Loans as to which Liquidation Proceeds or other final
payment has not yet been received. Voting Rights allocated to a Class of
Certificateholders shall be allocated among such Certificateholders in
proportion to the Percentage Interests evidenced by their respective
Certificates.
"WAC Component": One of the two components comprising the Class [X]
Certificates, representing a "specified portion" (within the meaning of Treasury
Regulations Section 1.860G-(1)(a)(2)(i)(C)) of the interest payments on the
Class [LWAC] Uncertificated Interest.
"WAC Component Interest Accrual Amount": With respect to each
Distribution Date, 100% of the interest payable on the Class [LWAC]
Uncertificated Interest, equal to the WAC Component Pass-Through Rate multiplied
by the WAC Component Notional Amount.
"WAC Component Notional Amount": With respect to any
Distribution Date, an amount equal to the Class [LWAC] Notional Amount.
"WAC Component Pass-Through Rate": A rate equal to the excess, if
any, of (i) the Weighted Average Net Mortgage Rate with respect to such
Distribution Date of the Mortgage Loans over (ii) ____ %.
"Weighted Average Net Mortgage Rate": The weighted average of the
applicable Net Mortgage Rates of the Mortgage Loans, weighted on the basis of
their respective Stated Principal Balances as of the preceding Distribution Date
(after giving effect to the distribution of principal on such Distribution
Date), or, in the case of the first Distribution Date, the Cut-off Date.
"Workout Fee": The fee paid to the Special Servicer with respect
to each Corrected Mortgage Loan.
"Workout Fee Rate": A fee of ___% of each collection of interest and
principal, including (i) Monthly Payments, (ii) Balloon Payments and (iii)
payments (other than those included in clause (i) or (ii) of this definition) at
maturity, received on each Corrected Mortgage Loan for so long as it remains a
Corrected Mortgage Loan.
"Yield Maintenance Charge": With respect to any Mortgage Loan, the
yield maintenance charge set forth in the related Mortgage Loan Documents.
"Yield Rate": With respect to any Mortgage Loan, the yield rate
set forth in the related Mortgage Loan documents.
SECTION 1.02. Certain Calculations.
Unless otherwise specified herein, for purposes of determining
amounts with respect to the Certificates and the rights and obligations of the
parties hereto, the following provisions shall apply:
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(i) All calculations of interest provided for herein shall be made
on the basis of a 360-day year consisting of twelve 30-day months.
(ii) Any Mortgage Loan payment is deemed to be received on the date
such payment is actually received by the Servicer, the Special Servicer or the
Trustee; provided, however, that for purposes of calculating distributions on
the Certificates, Principal Prepayments with respect to any Mortgage Loan are
deemed to be received on the date they are applied in accordance with the
Servicing Standards consistent with the terms of the related Mortgage Note and
Mortgage to reduce the outstanding principal balance of such Mortgage Loan on
which interest accrues.
(iii) Any reference to the Certificate Balance of any Class of
Certificates on or as of a Distribution Date shall refer to the Certificate
Balance of such Class of Certificates on such Distribution Date after giving
effect to (a) any distributions made on such Distribution Date pursuant to
Section 4.01(a), (b) any Collateral Support Deficit allocated to such Class on
such Distribution Date pursuant to Section 4.04 and (c) the addition of any
Certificate Deferred Interest allocated to such Class and added to such
Certificate Balance pursuant to Section 4.06(b).
[End of Article I]
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ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
SECTION 2.01. Conveyance of Mortgage Loans.
(a) The Depositor, concurrently with the execution and delivery
hereof, does hereby assign to the Trustee, without recourse, for the benefit of
the Certificateholders all the right, title and interest of the Depositor,
including any security interest therein for the benefit of the Depositor, in, to
and under (i) the Mortgage Loans identified on the Mortgage Loan Schedule, (ii)
Sections 2, 3, 9, 11 and 13 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 (other than payments of principal and interest due and
payable on the Mortgage Loans on or before 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
subsection (a) above, the Depositor shall direct, and hereby represents and
warrants that it has directed, the Mortgage Loan Sellers pursuant to each
Mortgage Loan Purchase Agreement to deliver to and deposit with, or cause to be
delivered to and deposited with, the Trustee or a Custodian appointed thereby,
on or before the Closing Date, the Mortgage File for each Mortgage Loan so
assigned. If a Mortgage Loan Seller cannot deliver, or cause to be delivered as
to any Mortgage Loan, the original Mortgage Note, such Mortgage Loan Seller
shall deliver a copy or duplicate original of such Mortgage Note, together with
an affidavit certifying that the original thereof has been lost or destroyed. If
a Mortgage Loan Seller cannot deliver, or cause to be delivered, as to any
Mortgage Loan, any of the documents and/or instruments referred to in clauses
(ii), (iv), (vii), (viii), (xi) and (xii) of the definition of "Mortgage File,"
with evidence of recording thereon, solely because of a delay caused by the
public recording office where such document or instrument has been delivered for
recordation, the delivery requirements of the related Mortgage Loan Purchase
Agreement and this Section 2.01(b) shall be deemed to have been satisfied as to
such non-delivered document or instrument, and such non-delivered document or
instrument shall be deemed to have been included in the Mortgage File, provided
that a photocopy of such non-delivered document or instrument (certified by such
Mortgage Loan Seller to be a true and complete copy of the original thereof
submitted for recording) is delivered to the Trustee or a Custodian appointed
thereby on or before the Closing Date, and either the original of such
non-delivered document or instrument, or a photocopy thereof (certified by the
appropriate county recorder's office to be a true and complete copy of the
original thereof submitted for recording), with evidence of recording thereon,
is delivered to the Trustee or such Custodian within 120 days of the Closing
Date (or within such longer period after the Closing Date as the Trustee may
consent to, which consent shall not be unreasonably withheld so long as such
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Mortgage Loan Seller is, as certified in writing to the Trustee no less often
than monthly, in good faith attempting to obtain from the appropriate county
recorder's office such original or photocopy). If a Mortgage Loan Seller cannot
deliver, or cause to be delivered, as to any Mortgage Loan, any of the documents
and/or instruments referred to in clauses (ii), (iv), (vii), (viii), (xi) and
(xii) of the definition of "Mortgage File," with evidence of recording thereon,
for any other reason, including, without limitation, that such non-delivered
document or instrument has been lost, the delivery requirements of the related
Mortgage Loan Purchase Agreement and this Section 2.01(b) shall be deemed to
have been satisfied as to such non-delivered document or instrument, and such
non-delivered document or instrument shall be deemed to have been included in
the Mortgage File, provided that a photocopy of such non-delivered document or
instrument (with evidence of recording thereon and certified by the appropriate
county recorder's office to be a true and complete copy of the original thereof
submitted for recording) is delivered to the Trustee or a Custodian appointed
thereby on or before the Closing Date. Neither the Trustee nor any Custodian
shall in any way be liable for any failure by any Mortgage Loan Seller or the
Depositor to comply with the delivery requirements of the Mortgage Loan Purchase
Agreements and this Section 2.01(b). Notwithstanding the foregoing, in the event
that a Mortgage Loan Seller fails to deliver a UCC-3 on or before the Closing
Date as required above solely because the related UCC-1 has not been returned to
such Mortgage Loan Seller by the applicable filing office, the Mortgage Loan
Seller shall not be in breach of its obligations with respect to such delivery,
provided that such Mortgage Loan Seller promptly forwards such UCC-1 to the
Trustee upon its return. The Trustee shall cause such UCC-3 to be filed within
60 days of its receipt of the related UCC-1.
(c) Except under the circumstances provided for in the last sentence
of this subsection (c), the Trustee shall, as to each Mortgage Loan, promptly
(and in any event within 90 days of the Closing Date) cause to be submitted for
recording or filing, as the case may be, in the appropriate public office for
real property records or UCC Financing Statements, as appropriate, each
assignment to the Trustee referred to in clauses (ii), (iii), (iv), (v), (vii)
and (xii) of the definition of "Mortgage File" and each UCC-1, UCC-2 and UCC-3
to the Trustee referred to in clause (xi) of the definition of "Mortgage File."
Each such assignment shall reflect that it should be returned by the public
recording office to the Trustee following recording, and each such UCC-1, UCC-2
and UCC-3 shall reflect that the file copy thereof should be returned to the
Trustee following filing. If any such document or instrument is lost or returned
unrecorded or unfiled, as the case may be, because of a defect therein, the
Trustee shall prepare or cause to be prepared a substitute therefor or cure such
defect, as the case may be, and thereafter the Trustee shall upon receipt
thereof cause the same to be duly recorded or filed, as appropriate.
Notwithstanding the foregoing, there shall be no requirement to record any
assignment to the Trustee referred to in clause (iii) or (v) of the definition
of "Mortgage File," or to file any UCC-1, UCC-2 or UCC-3 to the Trustee referred
to in clause (xi) of the definition of "Mortgage File," in those jurisdictions
where, in the written opinion of local counsel (which opinion shall not be an
expense of the Trust Fund) acceptable to the Depositor and the Trustee, such
recordation and/or filing is not required to protect the Trustee's interest in
the related Mortgage Loans against sale, further assignment, satisfaction or
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discharge by the related Mortgage Loan Seller, the Servicer, the Special
Servicer, any Sub-Servicer or the Depositor.
(d) All documents and records in the Depositor's or any Mortgage
Loan Seller's possession relating to the Mortgage Loans (including financial
statements, operating statements and any other information provided by the
respective Mortgagor from time to time) that are not required to be a part of a
Mortgage File in accordance with the definition thereof shall be delivered to
the Servicer on or before the Closing Date and shall be held by the Servicer on
behalf of the Trustee in trust for the benefit of the Certificateholders.
(e) In connection with the Depositor's assignment pursuant to
subsection (a) above, the Depositor shall deliver, and hereby represents and
warrants that it has delivered, to the Trustee and the Servicer, on or before
the Closing Date, a fully executed original counterpart of each Mortgage Loan
Purchase Agreement, as in full force and effect, without amendment or
modification, on the Closing Date.
(f) The Depositor shall use its best efforts to require that,
promptly after the Closing Date, but in all events within three Business Days
after the Closing Date, each Mortgage Loan Seller shall cause all funds on
deposit in escrow accounts maintained with respect to the Mortgage Loans in the
name of such Mortgage Loan Seller or any other name to be transferred to the
Servicer (or a Sub-Servicer) for deposit into Servicing Accounts.
SECTION 2.02. Acceptance by Trustee.
(a) The Trustee, by the execution and delivery of this Agreement,
acknowledges receipt by it or a Custodian on its behalf, subject to the
provisions of Section 2.01 and to any exceptions noted on the Trustee Exception
Report, of the documents specified in clauses (i)-(v), (viii), (ix) and (xiii)
of the definition of "Mortgage File" with respect to each Mortgage Loan, of a
fully executed original counterpart of each Mortgage Loan Purchase Agreement and
of all other assets included in the Trust Fund, in good faith and without notice
of any adverse claim, and declares that it or a Custodian on its behalf holds
and will hold such documents and the other documents delivered or caused to be
delivered by the Mortgage Loan Seller constituting the Mortgage Files, and that
it holds and will hold such other assets included in the Trust Fund, in trust
for the exclusive use and benefit of all present and future Certificateholders.
(b) Within 60 days of the Closing Date, the Trustee or a Custodian
on its behalf shall review each of the Mortgage Loan documents delivered or
caused to be delivered by the Mortgage Loan Seller constituting the Mortgage
Files; and, promptly following such review (but in no event later than 90 days
after the Closing Date), the Trustee shall certify in writing to each of the
Depositor, the Servicer, the Special Servicer and each Mortgage Loan Seller
that, as to each Mortgage Loan listed in the Mortgage Loan Schedule (other than
any Mortgage Loan paid in full or any Mortgage Loan specifically identified in
any exception report annexed thereto as not being covered by such
certification), (i) all documents specified in clauses (i) -(v), (viii), (ix),
(xi), (xii) and (xiii) of the definition of "Mortgage File" are in its
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possession, (ii) all documents delivered or caused to be delivered by the
Mortgage Loan Sellers constituting the Mortgage Files have been reviewed by it
or by a Custodian on its behalf and appear regular on their face and relate to
such Mortgage Loan, and (iii) based on such examination and only as to the
foregoing documents, the information set forth in the Mortgage Loan Schedule
with respect to the items specified in clauses (i), (iv), (vi), (viii)(a) and
(viii)(c) of the definition of "Mortgage Loan Schedule" is correct.
(c) The Trustee or a Custodian on its behalf shall review each of
the Mortgage Loan documents received thereby subsequent to the Closing Date;
and, on or about the first anniversary of the Closing Date, the Trustee shall
certify in writing to each of the Depositor, the Servicer, the Special Servicer
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) all
documents specified in clauses (i) - (v), (viii), (ix), (xi), (xii) and (xiii)
of the definition of "Mortgage File" are in its possession, (ii) it or a
Custodian on its behalf has received either a recorded original of each of the
assignments specified in clause (iii) and, insofar as an unrecorded original
thereof had been delivered or caused to be delivered by the related Mortgage
Loan Seller, pursuant to clause (v) of the definition of "Mortgage File" or a
copy of such recorded original certified by the applicable public recording
office to be true and complete, (iii) all Mortgage Loan documents received by it
or any Custodian have been reviewed by it or by such Custodian on its behalf and
appear regular on their face and relate to such Mortgage Loan and (iv) based on
the examinations referred to in subsection (b) above and this subsection (c) and
only as to the foregoing documents, the information set forth in the Mortgage
Loan Schedule with respect to the items specified in clauses (i), (iv), (vi),
(viii) (a) and (viii) (c) of the definition of "Mortgage Loan Schedule" is
correct.
(d) It is herein acknowledged that neither the Trustee nor any
Custodian is under any duty or obligation (i) to determine whether any of the
documents specified in clauses (iv) - (viii), (x) and (xiv) of the definition of
"Mortgage File" exist or are required to be delivered by the Depositor, the
Mortgage Loan Sellers or any other Person or (ii) 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 genuine,
enforceable or appropriate for the represented purpose or that they are other
than what they purport to be on their face.
(e) If, in the process of reviewing the Mortgage Files or at any
time thereafter, the Trustee or any Custodian finds any document or documents
constituting a part of a Mortgage File not to have been properly executed or,
subject to Section 2.01(b), not to have been delivered, to contain information
that does not conform in any material respect with the corresponding information
set forth in the Mortgage Loan Schedule or to be defective on its face (each, a
"Defect" in the related Mortgage File), the Trustee shall promptly so notify the
Depositor, the Servicer, the Special Servicer and the applicable Mortgage Loan
Seller (and in no event later than 90 days after the Closing Date), by providing
a written report (the "Trustee Exception Report") setting forth for each
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affected Mortgage Loan, with particularity, the nature of such Defect.
SECTION 2.03. Representations, Warranties and Covenants of the
Depositor; Mortgage Loan Seller's Repurchase of
Mortgage Loans for Defects in Mortgage Files and
Breaches of Representations and Warranties.
(a) The Depositor hereby represents and warrants that:
(i) The Depositor is a corporation duly organized, validly existing
and in good standing under the laws of the State of New York, and the
Depositor has taken all necessary corporate action to authorize the
execution, delivery and performance of this Agreement by it, and has the
power and authority to execute, deliver and perform this Agreement and all
the transactions contemplated hereby, including, but not limited to, the
power and authority to sell, assign and transfer the Mortgage Loans in
accordance with this Agreement;
(ii) Assuming the due authorization, execution and delivery of this
Agreement by each other party hereto, this Agreement and all of the
obligations of the Depositor hereunder are the legal, valid and binding
obligations of the Depositor, enforceable against the Depositor in
accordance with the terms of this Agreement, 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 enforceability is
considered in a proceeding in equity or at law);
(iii) The execution and delivery of this Agreement and the
performance of its obligations hereunder by the Depositor will not
conflict with any provisions of any law or regulations to which the
Depositor is subject, or conflict with, result in a breach of or
constitute a default under any of the terms, conditions or provisions of
the certificate of incorporation or the by-laws of the Depositor or any
indenture, agreement or instrument to which the Depositor is a party or by
which it is bound, or any order or decree applicable to the Depositor, or
result in the creation or imposition of any lien on any of the Depositor's
assets or property, which would materially and adversely affect the
ability of the Depositor to carry out the transactions contemplated by
this Agreement; the Depositor has obtained any consent, approval,
authorization or order of any court or governmental agency or body
required for the execution, delivery and performance by the Depositor of
this Agreement;
(iv) There is no action, suit or proceeding pending or, to the
Depositor's knowledge, threatened against the Depositor in any court or by
or before any other governmental agency or instrumentality which would
materially and adversely affect the validity of the Mortgage Loans or the
ability of the Depositor to carry out the transactions contemplated by
this Agreement; and
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(v) The Depositor is the lawful owner of the Mortgage Loans with the
full right to transfer the Mortgage Loans to the Trust and the Mortgage
Loans have been validly transferred to the Trust.
(b) If any Certificateholder, the Servicer, the Special Servicer or
the Trustee discovers or receives notice of a Defect in any Mortgage File or a
breach of any representation or warranty set forth in, or required to be made
with respect to a Mortgage Loan by a Mortgage Loan Seller pursuant to, the
related Mortgage Loan Purchase Agreement (a "Breach"), which Defect or Breach,
as the case may be, materially and adversely affects the value of any Mortgage
Loan or the interests of the Certificateholders therein, such Certificateholder,
the Servicer, the Special Servicer or the Trustee, as applicable, shall give
prompt written notice of such Defect or Breach, as the case may be, to the
Depositor, the Servicer, the Special Servicer and the related Mortgage Loan
Seller and shall request that such Mortgage Loan Seller, not later than the
earlier of 90 days from such Mortgage Loan Seller's receipt of such notice or
such Mortgage Loan Seller's discovery of such Breach, cure such Defect or
Breach, as the case may be, in all material respects or repurchase the affected
Mortgage Loan at the applicable Purchase Price or in conformity with the related
Mortgage Loan Purchase Agreement. Any Defect or Breach which causes any Mortgage
Loan not to be a "qualified mortgage" (within the meaning of Section 860G(a)(3)
of the Code) shall be deemed to materially and adversely affect the interest of
Certificateholders therein. If the affected Mortgage Loan is to be repurchased,
the Trustee shall designate the Certificate Account as the account into which
funds in the amount of the Purchase Price are to be deposited by wire transfer.
(c) In connection with any repurchase of a Mortgage Loan
contemplated by this Section 2.03, the Trustee, the Servicer and the Special
Servicer shall each tender to the applicable Mortgage Loan Seller, upon delivery
to each of the Trustee, the Servicer and the Special Servicer of a trust 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 that was endorsed or
assigned to the Trustee shall be endorsed or assigned, as the case may be, to
such Mortgage Loan Seller in the same manner as provided in Section 3 of the
related Mortgage Loan Purchase Agreement.
(d) Section 3 of each Mortgage Loan Purchase Agreement provides the
sole remedy available to the Certificateholders, or the Trustee on behalf of the
Certificateholders, respecting any Defect in a Mortgage File or any Breach of
any representation or warranty set forth in or required to be made pursuant to
Section 2 of such Mortgage Loan Purchase Agreement.
(e) The Trustee and the Special Servicer (in the case of Specially
Serviced Mortgage Loans) shall, for the benefit of the Certificateholders,
enforce the obligations of each Mortgage Loan Seller under Section 3 of the
Mortgage Loan Purchase Agreements. Such enforcement, including, without
limitation, the legal prosecution of claims, shall be carried out in such form,
to such extent and at such time as the Trustee or the Special Servicer, as the
case may be, would require were it, in its individual capacity, the owner of the
affected Mortgage Loan(s). The Trustee and the Special Servicer, as the case may
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be, shall be reimbursed for the reasonable costs of such enforcement: first,
from a specific recovery of costs, expenses or attorneys' fees against the
applicable Mortgage Loan Seller; second, pursuant to Section 3.05(a)(vii) out of
the related Purchase Price, to the extent that such expenses are a specific
component thereof; and third, if at the conclusion of such enforcement action it
is determined that the amounts described in clauses first and second are
insufficient, then pursuant to Section 3.05(a)(viii) out of general collections
on the Mortgage Loans on deposit in the Certificate Account.
SECTION 2.04. Execution of Certificates.
The Trustee hereby acknowledges the assignment to it of the Mortgage
Loans and, subject to Sections 2.01 and 2.02, the delivery to it or a Custodian
on its behalf of the Mortgage Files and a fully executed original counterpart of
each Mortgage Loan Purchase Agreement, together with the assignment to it of all
other assets included in the Trust Fund. Concurrently with such assignment and
delivery and in exchange therefor, the Trustee acknowledges the issuance of the
Uncertificated Lower-Tier Interests to the Depositor and the authentication and
delivery of the Class [LR] Certificates to or upon the order of the Depositor,
in exchange for the Mortgage Loans, receipt of which is hereby acknowledged, and
immediately thereafter, the Trustee acknowledges that it has executed and caused
the Authenticating Agent to authenticate and to deliver to or upon the order of
the Depositor, in exchange for the Uncertificated Lower-Tier Interests, the
Regular Certificates and the Class [R] Certificates, and the Depositor hereby
acknowledges the receipt by it or its designees, of such Certificates in
authorized Denominations evidencing the entire beneficial ownership of the
Upper-Tier REMIC.
[End of Article II]
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ARTICLE III
ADMINISTRATION AND
SERVICING OF THE TRUST FUND
SECTION 3.01. Servicer to Act as Servicer; Special Servicer to
Act as Special Servicer; Administration of the
Mortgage Loans.
(a) Each of the Servicer and the Special Servicer shall diligently
service and administer the Mortgage Loans it is obligated to service pursuant to
this Agreement on behalf of the Trustee and in the best interests of and for the
benefit of the Certificateholders (as determined by the Servicer or the Special
Servicer, as the case may be, in its good faith and reasonable judgment) in
accordance with applicable law, the terms of this Agreement and the terms of the
respective Mortgage Loans and, to the extent consistent with the foregoing, and
in accordance with the higher of the following standards of care: (1) the same
manner in which, and with the same care, skill, prudence and diligence with
which the Servicer or Special Servicer, as the case may be, services and
administers similar mortgage loans for other third-party portfolios, giving due
consideration to the customary and usual standards of practice of prudent
institutional multifamily and mobile home community mortgage lenders servicing
their own mortgage loans and (2) the same care, skill, prudence and diligence
with which the Servicer or Special Servicer, as the case may be, services and
administers mortgage loans owned by the Servicer or Special Servicer, as the
case may be, if applicable, in either case exercising reasonable business
judgment and acting in accordance with applicable law, the terms of this
Agreement, the respective Mortgage Loans or Specially Serviced Mortgage Loans,
as applicable, and with a view to the maximization of timely recovery of
principal and interest on a present value basis on the Mortgage Loans or
Specially Serviced Mortgage Loans, as applicable, and the best interests of the
Trust and the Certificateholders, as determined by the Servicer or Special
Servicer, as the case may be, in its reasonable judgment, but without regard to:
(i) any relationship that the Servicer or the Special Servicer, as the case may
be, or any Affiliate thereof may have with the related Mortgagor or any other
party to this Agreement; (ii) the ownership of any Certificate by the Servicer
or the Special Servicer, as the case may be, or any Affiliate thereof; (iii) the
Servicer's obligation to make Advances; (iv) the Servicer's or Special
Servicer's, as the case may be, right to receive compensation for its services
hereunder or with respect to any particular transaction and (v) any obligation
of the Servicer (in its capacity as a Mortgage Loan Seller) to cure a breach of
a representation or warranty or repurchase a Mortgage Loan (the foregoing,
collectively referred to as the "Servicing Standards"). Without limiting the
foregoing, subject to Section 3.21, the Special Servicer shall be obligated to
service and administer (i) any Mortgage Loans as to which a Servicing Transfer
Event has occurred and is continuing (the "Specially Serviced Mortgage Loans")
and (ii) any REO Properties; provided, that the Servicer shall continue to make
all calculations, and prepare, or cause to be prepared, all reports to the
Certificateholders, required hereunder with respect to the Specially Serviced
Mortgage Loans as if no Servicing Transfer Event had occurred and with respect
to the REO Properties (and the related REO Loans) as if no REO Acquisition had
occurred, and to render such incidental services with respect to such Specially
Serviced Mortgage Loans and REO Properties as are specifically provided for
herein; provided, further, however, that the Servicer shall not be liable for
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failure to comply with such duties insofar as such failure results from a
failure of the Special Servicer to provide sufficient information to the
Servicer to comply with such duties. Each Mortgage Loan that becomes a Specially
Serviced Mortgage Loan shall continue as such until satisfaction of the
conditions specified in Section 3.21(a). Without limiting the foregoing, subject
to Section 3.21, the Servicer shall be obligated to service and administer all
Mortgage Loans which are not Specially Serviced Mortgage Loans; provided, that
the Special Servicer shall make the inspections, use its reasonable best efforts
to collect the statements and shall prepare the reports in respect of the
related Mortgaged Properties with respect to Specially Serviced Mortgage Loans
in accordance with Section 3.12.
(b) Subject only to the Servicing Standards and the terms of this
Agreement and of the respective Mortgage Loans, the Servicer and the Special
Servicer each shall have full power and authority, acting alone, to do or cause
to be done any and all things in connection with such servicing and
administration which it may deem necessary or desirable. Without limiting the
generality of the foregoing, each of the Servicer and the Special Servicer, in
its own name, is hereby authorized and empowered by the Trustee and obligated to
execute and deliver, on behalf of the Certificateholders and the Trustee or any
of them, with respect to each Mortgage Loan it is obligated to service under
this Agreement, any and all financing statements, continuation statements and
other documents or instruments necessary to maintain the lien created by the
related Mortgage or other security document in the related Mortgage File on the
related Mortgaged Property and related collateral; 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 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
furnish, or cause to be furnished, to the Servicer or the Special Servicer any
powers of attorney and other documents necessary or appropriate to enable the
Servicer or the Special Servicer, as the case may be, to carry out its servicing
and administrative duties hereunder; provided, however, that the Trustee shall
not be held liable for any negligence with respect to, or misuse of, any such
power of attorney by the Servicer or the Special Servicer.
(c) The relationship of the Servicer to the Trustee under this
Agreement is intended by the parties to be that of an independent contractor and
not that of a joint venturer, partner or agent.
SECTION 3.02. Collection of Mortgage Loan Payments.
(a) Each of the Servicer and the Special Servicer shall make
reasonable efforts to collect all payments called for under the terms and
provisions of the Mortgage Loans it is obligated to service hereunder, and shall
follow such collection procedures as are consistent with this Agreement
(including, without limitation, the Servicing Standards). Consistent with the
foregoing, the Servicer or the Special Servicer each may in its discretion waive
any Penalty Charge in connection with any delinquent payment on a Mortgage Loan
it is obligated to service hereunder.
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(b) All amounts collected on any Mortgage Loan in the form of
payments from Mortgagors, Insurance and Condemnation Proceeds or Liquidation
Proceeds shall be applied to amounts due and owing under the related Mortgage
Note and Mortgage (including, without limitation, for principal and accrued and
unpaid interest) in accordance with the express provisions of the related
Mortgage Note and Mortgage and, in the absence of such express provisions, shall
be applied (after reimbursement to the Servicer, the Trustee and/or the Fiscal
Agent for any related Servicing Advances and interest thereon as provided
herein): first, as a recovery of accrued and unpaid interest on such Mortgage
Loan at the related Mortgage Rate in effect from time to time to but not
including the Due Date in the Due Period of receipt; second, as a recovery of
principal of such Mortgage Loan to the extent of its entire unpaid principal
balance and third, in accordance with the Servicing Standards, as a recovery of
any other amounts due and owing on such Mortgage Loan, including, without
limitation, Prepayment Premiums, Yield Maintenance Charges and Penalty Charges.
Amounts collected on any REO Loan shall be deemed to be applied in accordance
with the definition thereof.
(c) To the extent consistent with the terms of the Mortgage Loans
and applicable law, the Servicer shall apply all Insurance and Condemnation
Proceeds it receives on a day other than the the first day of a month to amounts
due and owing under the related Mortgage Loan as if such Insurance and
Condemnation Proceeds were received on the first day of the calendar month
immediately succeeding the month in which such Insurance and Condemnation
Proceeds were received.
SECTION 3.03. Collection of Taxes, Assessments and Similar
Items; Servicing Accounts.
(a) The Servicer shall establish and maintain one or more accounts
(the "Servicing Accounts"), into which all Escrow Payments shall be deposited
and retained, and shall administer such Servicing Accounts in accordance with
the Mortgage Loan documents. Servicing Accounts shall be Eligible Accounts.
Withdrawals of amounts so deposited from a Servicing Account may be made only
to: (i) effect payment of real estate taxes, assessments, insurance premiums,
ground rents (if applicable) and comparable items; (ii) reimburse the Servicer,
the Trustee or the Fiscal Agent for any Servicing Advances; (iii) refund to
Mortgagors any sums as may be determined to be overages; (iv) pay interest to
Mortgagors on balances in the Servicing Account, if required by applicable law
or the terms of the related Mortgage Loan and as described below or, if not so
required, to the Servicer; (v) withdraw amounts deposited in error or (vi) clear
and terminate the Servicing Account at the termination of this Agreement in
accordance with Section 9.01. As part of its servicing duties, the Servicer
shall pay or cause to be paid to the Mortgagors interest on funds in Servicing
Accounts, to the extent required by law or the terms of the related Mortgage
Loan.
(b) The Special Servicer, in the case of REO Loans, and the
Servicer, in the case of all other Mortgage Loans, shall maintain accurate
records with respect to each 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
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in respect thereof. The Special Servicer, in the case of REO Loans, and the
Servicer, in the case of all other Mortgage Loans, shall obtain, from time to
time, all bills for the payment of such items (including renewal premiums) and
shall effect payment thereof from the REO Account or by the Servicer as
Servicing Advances prior to the applicable penalty or termination date,
employing for such purpose Escrow Payments (which shall be so applied by the
Servicer at the written direction of the Special Servicer in the case of REO
Loans) as allowed under the terms of the related Mortgage Loan. The Servicer or,
with respect to any Mortgage Loan that is a Specially Serviced Mortgage Loan,
the Special Servicer shall service and administer any reserve accounts
(including monitoring, maintaining or changing the amounts of required escrows)
in accordance with the terms of such Mortgage Loan and the Servicing Standards.
To the extent that a Mortgage Loan does not require a Mortgagor to escrow for
the payment of real estate taxes, assessments, insurance premiums, ground rents
(if applicable) and similar items, the Special Servicer, in the case of REO
Loans, and the Servicer, in the case of all other Mortgage Loans, shall require
that payments in respect of such items be made by the Mortgagor at the time they
first become due.
(c) In accordance with the Servicing Standards and for all Mortgage
Loans, the Servicer shall advance with respect to each related Mortgaged
Property (including any REO Property) all such funds as are necessary for the
purpose of effecting the payment of (i) real estate taxes, assessments and other
similar items that are or may become a lien thereon, (ii) ground rents (if
applicable) and (iii) premiums on Insurance Policies, in each instance if and to
the extent Escrow Payments collected from the related Mortgagor are insufficient
to pay such item when due and the related Mortgagor has failed to pay such item
on a timely basis, and provided, however, that the particular advance would not,
if made, constitute a Nonrecoverable Servicing Advance and provided, further,
however, that with respect to the payment of taxes and assessments, the Servicer
shall not be required to make such advance until the earlier of five Business
Days after the Servicer has received confirmation that such item has not been
paid or the date prior to the date after which any penalty or interest would
accrue in respect of such taxes or assessments. The Special Servicer shall give
the Servicer, the Trustee and the Fiscal Agent not less than five Business Days'
notice before the date on which the Servicer is requested to make any Servicing
Advance with respect to a given Mortgage Loan or REO Property; provided,
however, that only two Business Days' notice shall be required in respect of
Servicing Advances required to be made on an urgent or emergency basis (which
may include, without limitation, Servicing Advances required to make tax or
insurance payments). In addition, the Special Servicer shall provide the
Servicer, the Trustee and the Fiscal Agent with such information in its
possession as the Servicer, the Trustee or the Fiscal Agent, as applicable, may
reasonably request to enable the Servicer, the Trustee or the Fiscal Agent, as
applicable, to determine whether a requested Servicing Advance would constitute
a Nonrecoverable Advance. All such advances shall be reimbursable in the first
instance from related collections from the Mortgagors and further as provided in
Section 3.05. No costs incurred by the Servicer or the Special Servicer in
effecting the payment of real estate taxes, assessments and, if applicable,
ground rents on or in respect of the Mortgaged Properties shall, for purposes
hereof, including, without limitation, calculating monthly distributions to
Certificateholders, be added to the unpaid principal balances of the related
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Mortgage Loans, notwithstanding that the terms of such Mortgage Loans so permit.
The failure by the Servicer to make any required Servicing Advance as and when
due shall constitute an Event of Default under Section 7.01(a)(i) and, to the
extent the Trustee has knowledge that such Servicing Advance is necessary, the
Trustee shall make such Servicing Advance pursuant to Section 7.05. If the
Trustee fails to make such Servicing Advance, to the extent the Fiscal Agent has
knowledge that such Servicing Advance is necessary, the Fiscal Agent shall make
such Servicing Advance pursuant to Section 7.05.
(d) In connection with its recovery of any Servicing Advance out of
the Certificate Account pursuant to Section 3.05(a), each of the Servicer, the
Trustee and the Fiscal Agent, as the case may be, shall be entitled to receive,
out of any amounts then on deposit in the Certificate Account, interest at the
Reimbursement Rate in effect from time to time, accrued on the amount of such
Servicing Advance from the date made to, but not including, the date of
reimbursement. The Servicer shall reimburse itself, the Trustee or the Fiscal
Agent, as the case may be, for any outstanding Servicing Advance as soon as
practically possible after funds available for such purpose are deposited in the
Certificate Account.
(e) To the extent an operations and maintenance plan is required to
be established and executed pursuant to the terms of a Mortgage Loan, the
Servicer shall request from the Mortgagor written confirmation thereof within a
reasonable time after the later of the Closing Date and the date as of which
such plan is required to be established or completed. To the extent any repairs,
capital improvements, actions or remediations are required to have been taken or
completed pursuant to the terms of the Mortgage Loan, the Servicer shall request
from the Mortgagor written confirmation of such actions and remediations within
a reasonable time after the later of the Closing Date and the date as of which
such action or remediations are required to be or to have been taken or
completed. To the extent a Mortgagor shall fail to promptly respond to any
inquiry described in this Section 3.03(e), the Servicer shall determine whether
the related Mortgagor has failed to perform its obligations under the related
Mortgage Loan and report any such failure to the Special Servicer within a
reasonable time after the later of ________, 1998 and the date as of which such
actions or remediations are required to be or to have been taken or completed.
SECTION 3.04. The Certificate Account and the Lower-Tier and
Upper-Tier Distribution Accounts.
(a) The Servicer shall establish and maintain, or cause to be
established and maintained, a Certificate Account in which the Servicer shall
deposit or cause to be deposited on a daily basis (and in no event later than
the Business Day following receipt of available funds), except as otherwise
specifically provided herein, the following payments and collections received or
made by or on behalf of it 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), 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, including Principal
Prepayments, on the Mortgage Loans;
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(ii) all payments on account of interest (including, without
limitation, Default Interest) on the Mortgage Loans (net of the Servicing
Fees), late payment charges, Prepayment Premiums and Yield Maintenance
Charges;
(iii) all Insurance and Condemnation Proceeds and Liquidation
Proceeds received in respect of any Mortgage Loan or REO Property (other
than Liquidation Proceeds that are received in connection with the
Servicer, the Special Servicer, the Holders of the Controlling Class, or
the purchase by Holders of the Class [LR] Certificates of all the Mortgage
Loans and any REO Properties in the Trust Fund and that are to be
deposited in the Lower-Tier Distribution Account pursuant to Section
9.01);
(iv) any amounts required to be transferred from the REO Account
pursuant to Section 3.16(c);
(v) any amounts required to be deposited by the Servicer pursuant to
Section 3.06 in connection with losses incurred with respect to Permitted
Investments of funds held in the Certificate Account; and
(vi) any amounts required to be deposited by the 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.
The foregoing requirements for deposit in the Certificate Account
shall be exclusive, it being understood and agreed that, without limiting the
generality of the foregoing, actual payments from Mortgagors in the nature of
Escrow Payments, charges for beneficiary statements or demands, assumption fees,
modification fees, extension fees or amounts collected for mortgagor checks
returned for insufficient funds need not be deposited by the Servicer in the
Certificate Account. If the 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. Assumption, extension and modification fees actually received
from Mortgagors on Mortgage Loans or Specially Serviced Mortgage Loans shall be
promptly delivered to the Special Servicer as additional servicing compensation,
but only to the extent the payment of such fees are in accordance with the
second paragraph of Section 3.11(b) and any other terms hereof.
Upon receipt of any of the foregoing amounts with respect to any
Specially Serviced Mortgage Loans, the Special Servicer shall remit within 1
Business Day such amounts to the Servicer for deposit into the Certificate
Account in accordance with the second preceding paragraph. 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
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 without recourse or warranty such
check to the order of the Servicer and shall promptly deliver any such check to
the Servicer by overnight courier.
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Funds in the Certificate Account may be invested in Permitted
Investments in accordance with the provisions of Section 3.06. The Servicer
shall give notice to the Trustee, the Special Servicer and the Depositor 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.
(b) The Paying Agent, on behalf of the Trustee, shall establish and
maintain the Lower-Tier Distribution Account and the Upper-Tier Distribution
Account in trust for the benefit of the Certificateholders. The Trustee hereby
authorizes the Paying Agent to make deposits in and withdrawals from the
Distribution Accounts in accordance with the terms of this Agreement. The
Servicer shall deliver to the Paying Agent each month on or before the P&I
Advance Date therein, for deposit in the Lower-Tier Distribution Account, that
portion of the Available Distribution Amount (calculated without regard to
clause (a)(iv), (a)(v), (a)(vi) and (c) of the definition thereof) for the
related Distribution Date then on deposit in the Certificate Account.
In addition to the amounts required to be deposited in the
Lower-Tier Distribution Account pursuant to the foregoing paragraph, the
Servicer shall, as and when required hereunder, deliver to the Paying Agent for
deposit in the Lower-Tier Distribution Account:
(i) any amounts required to be deposited by the Servicer pursuant to
Section 3.06 in connection with losses incurred with respect to Permitted
Investments of funds held in the Lower-Tier Distribution Account;
(ii) any P&I Advances required to be made by the Servicer in
accordance with Section 4.03;
(iii) any Liquidation Proceeds paid by the Servicer, the Holders of
the Controlling Class, the Holders of the Class [LR] Certificates or the
Depositor in connection with the purchase of all of the Mortgage Loans and
any REO Properties in the Trust Fund pursuant to Section 9.01 (exclusive
of that portion thereof required to be deposited in the Certificate
Account pursuant to Section 9.01);
(iv) any Yield Maintenance Charges or Prepayment Premiums; and
(v) any other amounts required to be so delivered for deposit in the
Lower-Tier Distribution Account pursuant to any provision of this
Agreement.
The Paying Agent shall, upon receipt, deposit in the Lower-Tier
Distribution Account any and all amounts received by the Paying Agent that are
required by the terms of this Agreement to be deposited therein. In the event
the Trustee receives any amounts required to be remitted to the Paying Agent or
the Lower-Tier Distribution Account pursuant to the terms hereof, the Trustee
shall remit such amounts as soon as possible, but in no event later than 1
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Business Day following receipt. The Trustee shall remit to the Paying Agent for
deposit in the Lower-Tier Distribution Account any P&I Advances required to be
made by it or the Fiscal Agent, as the case may be, in accordance with Section
7.05.
Immediately after the deposit of all funds in the Lower-Tier
Distribution Account and prior to the close of business on such P&I Advance
Date, the Paying Agent shall deposit in the Upper-Tier Distribution Account an
aggregate amount of immediately available funds equal to the Lower-Tier
Distribution Amount and the amount of any Prepayment Premiums and Yield
Maintenance Charges for such Distribution Date allocated in payment of the
Uncertificated Lower-Tier Interests as specified in Sections 4.01(b) and
4.01(d), respectively.
Pursuant to Section 3.06, the Servicer shall deliver to the Paying
Agent for deposit in the Upper-Tier Distribution Account any amounts required to
be deposited therein in connection with losses incurred with respect to
Permitted Investments of funds held in the Upper-Tier Distribution Account.
Funds on deposit in the Upper-Tier Distribution Account, the
Lower-Tier Distribution Account and/or the Certificate Account may be invested
in Permitted Investments in accordance with the provisions of Section 3.06. As
of the Closing Date, the Certificate Account shall be located at the offices of
the Servicer. The Servicer shall give notice to the Trustee, the Paying Agent,
the Special Servicer and the Depositor of the location of the Certificate
Account and of any new location of the Certificate Account prior to any change
thereof. As of the Closing Date, the Upper-Tier Distribution Account and the
Lower-Tier Distribution Account shall be located at the offices of the Paying
Agent. The Paying Agent shall give notice to the Trustee, the Servicer and the
Depositor of the location of the Upper-Tier Distribution Account and the
Lower-Tier Distribution Account and of the new location of the Distribution
Accounts prior to any change thereof.
SECTION 3.05. Permitted Withdrawals From the Certificate Account
and the Distribution Accounts.
(a) The Servicer may, from time to time, make withdrawals from the
Certificate Account for any of the following purposes:
(i) to remit to the Paying Agent for deposit in the Lower-Tier
Distribution Account the amounts required to be remitted pursuant to the
first paragraph of Section 3.04(b) or that may be applied to make P&I
Advances pursuant to Section 4.03(a);
(ii) to pay itself unpaid Servicing Fees and the Special Servicer
unpaid Special Servicing Fees, Liquidation Fees and Workout Fees in
respect of each Mortgage Loan, Specially Serviced Mortgage Loan and REO
Loan, as applicable, the Servicer's rights to payment pursuant to this
clause (ii) with respect to any Mortgage Loan, Specially Serviced Mortgage
Loan or REO Loan, as applicable, being limited to amounts received on or
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in respect of such Mortgage Loan (whether in the form of payments,
Liquidation Proceeds or Insurance and Condemnation Proceeds) or such REO
Loan (whether in the form of REO Revenues, Liquidation Proceeds or
Insurance and Condemnation Proceeds) that are allocable as a recovery of
interest thereon;
(iii) to reimburse itself, the Trustee or the Fiscal Agent, as
applicable (in reverse of such order with respect to any Mortgage Loan),
for unreimbursed P&I Advances, the Servicer's, the Trustee's or the Fiscal
Agent's right to reimburse itself pursuant to this clause (iii) being
limited to amounts received which represent Late Collections of interest
(net of the related Servicing Fees) on and principal of the particular
Mortgage Loans and REO Loans with respect to which such P&I Advances were
made;
(iv) to reimburse itself, the Trustee or the Fiscal Agent, as
applicable (in reverse of such order with respect to any Mortgage Loan),
for unreimbursed Servicing Advances, the Servicer's, the Trustee's or the
Fiscal Agent's respective rights to receive payment pursuant to this
clause (iv) with respect to any Mortgage Loan or REO Property being
limited to, as applicable, related payments, Liquidation Proceeds,
Insurance and Condemnation Proceeds and REO Revenues;
(v) to reimburse itself, the Trustee or the Fiscal Agent, as
applicable (in reverse of such order with respect to any Mortgage Loan),
for Nonrecoverable Advances out of general collections on the Mortgage
Loans and REO Properties;
(vi) at such time as it reimburses itself, the Trustee or the Fiscal
Agent, as applicable (in reverse of such order with respect to any
Mortgage Loan), for (a) any unreimbursed P&I Advance pursuant to clause
(iii) above, to pay itself, the Trustee or the Fiscal Agent, as
applicable, any interest accrued and payable thereon in accordance with
Section 4.03(d), (b) any unreimbursed Servicing Advances pursuant to
clause (iv) above, to pay itself, the Trustee or the Fiscal Agent, as the
case may be, any interest accrued and payable thereon in accordance with
Section 3.03(d) or (c) any Nonrecoverable Advances pursuant to clause (v)
above, to pay itself, the Trustee or the Fiscal Agent, as the case may be,
any interest accrued and payable thereon;
(vii) to reimburse itself, the Special Servicer, the Depositor or
the Trustee, as the case may be, for any unreimbursed expenses reasonably
incurred by such Person in respect of any Breach or Defect giving rise to
a repurchase obligation of any Mortgage Loan Seller under Section 3 of the
related Mortgage Loan Purchase Agreement, including, without limitation,
any expenses arising out of the enforcement of the repurchase obligation,
each such Person's right to reimbursement pursuant to this clause (vii)
with respect to any Mortgage Loan being limited to that portion of the
Purchase Price paid for such Mortgage Loan that represents such expense in
accordance with clause (iv) of the definition of Purchase Price;
(viii) in accordance with Section 2.03(d), to reimburse itself or
the Trustee, as the case may be, out of general collections on the
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Mortgage Loans and REO Properties for any unreimbursed expense reasonably
incurred by such Person in connection with the enforcement of any Mortgage
Loan Seller's obligations under Section 3 of the Mortgage Loan Purchase
Agreements, but only to the extent that such expenses are not reimbursable
pursuant to clause (vii) above or otherwise;
(ix) to pay for costs and expenses incurred by the Trust Fund
pursuant to Section 3.09(c) out of general collections on the Mortgage
Loans and REO Properties;
(x) to pay itself, as additional servicing compensation in
accordance with Section 3.11(a), (a) interest and investment income earned
in respect of amounts relating to the Trust Fund 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 period
from any Distribution Date to the immediately succeeding P&I Advance Date)
and (b) Penalty Charges on Mortgage Loans (other than Specially Serviced
Mortgage Loans), but only to the extent collected from the related
Mortgagor and to the extent that all amounts then due and payable with
respect to the related Mortgage Loan have been paid and are not needed to
pay interest on Advances; and to pay the Special Servicer, as additional
servicing compensation in accordance with the second paragraph of Section
3.11(b), Penalty Charges on Specially Serviced Mortgage Loans (but only to
the extent collected from the related Mortgagor and to the extent that all
amounts then due and payable with respect to the related Specially
Serviced Mortgage Loan have been paid);
(xi) to recoup any amounts deposited in the Certificate Account
in error;
(xii) to pay itself, the Special Servicer, the Depositor, the
Extension Adviser or any of their respective directors, officers,
employees and agents, as the case may be, any amounts payable to any such
Person pursuant to Sections 6.03(a) or 6.03(b);
(xiii) to pay for (a) the cost of the Opinions of Counsel
contemplated by Section 10.01(f) to the extent payable out of the Trust
Fund, (b) the cost of any Opinion of Counsel contemplated by Sections
11.01(a) or 11.01(c) in connection with an amendment to this Agreement
requested by the Trustee or the Servicer, which amendment is in
furtherance of the rights and interests of Certificateholders and (c) the
cost of obtaining the REO Extension contemplated by Section 3.16(a);
(xiv) to pay out of general collections on the Mortgage Loans and
REO Properties any and all federal, state and local taxes imposed on the
Upper-Tier REMIC, the Lower-Tier REMIC or either of their assets or
transactions, together with all incidental costs and expenses, to the
extent that none of the Servicer, the Special Servicer, the Fiscal Agent
or the Trustee is liable therefor pursuant to Section 10.01(g);
(xv) to reimburse the Servicer out of general collections on the
Mortgage Loans and REO Properties for expenses incurred by and
reimbursable to it by the Trust Fund pursuant to Section 10.01(c);
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(xvi) to pay itself, the Special Servicer, or the Mortgage Loan
Sellers, 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
(xvii) to clear and terminate the Certificate Account at the
termination of this Agreement pursuant to Section 9.01.
The Servicer shall keep and maintain separate accounting records, on
a loan-by-loan and property-by-property basis when appropriate, for the purpose
of justifying any withdrawal from the Certificate Account.
(b) The Paying Agent, on behalf of the Trustee, may, from time to
time, make withdrawals from the Lower-Tier Distribution Account for any of the
following purposes:
(i) to make deposits of the Lower-Tier Distribution Amount pursuant
to Section 4.01(b) and the amount of any Prepayment Premium and Yield
Maintenance Charges distributable pursuant to Section 4.01(d) in the
Upper-Tier Distribution Account;
(ii) to pay the Servicer, as additional servicing compensation in
accordance with the second paragraph of Section 3.11(a), interest and
investment income earned in respect of amounts relating to the Trust Fund
held in the Lower-Tier Distribution Account as provided in Section 3.06(b)
(but only to the extent of the Net Investment Earnings with respect to the
Lower-Tier Distribution Account for any period from any Distribution Date
to the immediately succeeding P&I Advance Date);
(iii) to pay the Trustee accrued but unpaid Trustee Fees;
(iv) to pay to the Trustee, the Fiscal Agent or any of their
directors, officers, employees and agents, as the case may be, any amounts
payable or reimbursable to any such Person pursuant to Section 8.05(b);
(v) to pay for the cost of the Opinion of Counsel contemplated
by Section 11.01(c) in connection with any amendment to this Agreement
requested by the Trustee; and
(vi) to clear and terminate the Lower-Tier Distribution Account at
the termination of this Agreement pursuant to Section 9.01.
(c) The Paying Agent, on behalf of the Trustee, may make withdrawals
from the Upper-Tier Distribution Account for any of the following purposes:
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(i) to make distributions to Certificateholders (other than Holders
of the Class [LR] Certificates) on each Distribution Date pursuant to
Section 4.01 or 9.01, as applicable;
(ii) to pay the Servicer, as additional servicing compensation in
accordance with the second paragraph of Section 3.11(a), interest and
investment income earned in respect of amounts held in the Upper-Tier
Distribution Account as provided in Section 3.06(b) (but only to the
extent of the Net Investment Earnings with respect to the Upper-Tier
Distribution Account for any period from any Distribution Date to the
immediately succeeding P&I Advance Date); and
(iii) to clear and terminate the Upper-Tier Distribution Account at
the termination of this Agreement pursuant to Section 9.01.
(d) Notwithstanding anything herein to the contrary, if amounts on
deposit in the Certificate Account and the Lower-Tier Distribution Account are
not sufficient to pay all of the amounts listed in Sections 3.05(a) and (b),
then the items (iii) and (iv) of Section 3.05(b) shall be paid in full prior to
the payment of any fees or reimbursement of any expenses of the Servicer payable
under Section 3.05(a).
SECTION 3.06. Investment of Funds in the Certificate
Account, the Distribution Accounts and the REO
Account.
(a) The Servicer may direct any depository institution maintaining
the Certificate Account, the Upper-Tier Distribution Account or the Lower-Tier
Distribution Account (each, for purposes of this Section 3.06, an "Investment
Account") and the Special Servicer may direct any depository institution
maintaining the REO Account (also for purpose 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,
(i) 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, if a Person other than the depository institution maintaining
such account is the obligor thereon and (ii) no later than the date on which
such funds are required to be withdrawn from such account pursuant to this
Agreement, if the depository institution maintaining such account is the obligor
thereon. All such Permitted Investments shall be held to maturity, unless
payable on demand. Any investment of funds in an Investment Account shall be
made in the name of the Trustee (in its capacity as such). The Servicer (in the
case of the Certificate Account) or the Special Servicer (in the case of the REO
Account), on behalf of the Trustee, shall maintain continuous possession of any
Permitted Investment of amounts in the Certificate Account or REO Account that
is either (i) a "certificated security," as such term is defined in the UCC or
(ii) other property in which a secured party may perfect its security interest
by possession under the UCC or any other applicable law. Possession of any such
Permitted Investment by the 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
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Section 9-305 of the UCC and any other applicable law. Except as otherwise
provided herein, the Trustee shall have sole control (except with respect to
investment direction) over Permitted Investments of amounts in the Distribution
Accounts. In the event amounts on deposit in an Investment Account are at any
time invested in a Permitted Investment payable on demand, the Servicer (in the
case of the Certificate Account), the Special Servicer (in the case of the REO
Account) or the Paying Agent (in the case of the Distribution Accounts) shall:
(i) 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 (a) all amounts then payable thereunder and (b) the amount required to
be withdrawn on such date; and
(ii) demand payment of all amounts due thereunder promptly upon
determination by the Servicer, the Special Servicer or the Trustee, 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) Interest and investment income realized on funds deposited in
each of the Certificate Account and the Distribution Accounts, to the extent of
the Net Investment Earnings, if any, with respect to such account for each
period from any Distribution Date to the immediately succeeding P&I Advance
Date, shall be for the sole and exclusive benefit of the Servicer and shall be
subject to its withdrawal, or withdrawal at its direction, in accordance with
Section 3.05(a), 3.05(b) or 3.05(c), as the case may be. Interest and investment
income realized on funds deposited in the REO Account, to the extent of the Net
Investment Earnings, if any, with respect to such account for each period from
any Distribution Date to the immediately succeeding P&I Advance Date, shall be
for the sole and exclusive benefit of the Trust Fund and shall be subject to its
withdrawal in accordance with Section 3.16(c). In the event that any loss shall
be incurred in respect of any Permitted Investment on deposit in any of the
Certificate Account, the Distribution Accounts or the REO Account, the Servicer
(in the case of the Certificate Account and the Distribution Accounts) or the
Special Servicer (in the case of the REO Account) shall deposit therein, no
later than the P&I Advance Date, without right of reimbursement, the amount of
the Net Investment Loss, if any, with respect to such account for the period
from the immediately preceding Distribution Date to such P&I Advance Date.
(c) Except as otherwise expressly provided in this Agreement, if any
default occurs in the making of a payment due under any Permitted Investment, or
if a default occurs in any other performance required under any Permitted
Investment, the Trustee may and, subject to Section 8.02, upon the request of
Holders of Certificates entitled to a majority of the Voting Rights allocated to
any Class shall, take such action as may be appropriate to enforce such payment
or performance, including the institution and prosecution of appropriate
proceedings.
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SECTION 3.07. Maintenance of Insurance Policies; Errors and
Omissions and Fidelity Coverage.
(a) The Servicer shall use its reasonable best efforts to cause the
Mortgagor to maintain, to the extent required by the terms of the related
Mortgage Note, or if the Mortgagor does not so maintain, shall itself maintain,
for each Mortgage Loan all Insurance Policy coverage as is required under the
related Mortgage (to the extent that the Trustee has an insurable interest and
such Insurance Policy coverage is available at commercially reasonable rates,
consistent with the Servicing Standard); provided, however, that if any Mortgage
permits the holder thereof to dictate to the Mortgagor the Insurance Policy
coverage to be maintained on such Mortgaged Property, the Servicer shall impose
such insurance requirements as are consistent with the Servicing Standards.
Subject to Section 3.17(a), the Special Servicer shall maintain for each REO
Property no less Insurance Policy coverage than was previously required of the
Mortgagor under the related Mortgage Loan. All such Insurance Policies shall (i)
contain a "standard" mortgagee clause, with loss payable to the Servicer on
behalf of the Trustee (in the case of insurance maintained in respect of
Mortgage Loans other than REO Properties), (ii) be in the name of the Special
Servicer (in the case of insurance maintained in respect of REO Properties) on
behalf of the Trustee, (iii) include coverage in an amount not less than the
lesser of the full replacement cost of the REO Property or the outstanding
principal balance owing on the related REO Loan, (iv) include a replacement cost
endorsement providing no deduction for depreciation (unless such endorsement is
not permitted under the related Mortgage Loan documents) and (v) be issued by a
Qualified Insurer authorized under applicable law to issue such Insurance
Policies. Any amounts collected by the Servicer or the Special Servicer under
any such Insurance Policies (other than amounts to be applied to the restoration
or repair of the related Mortgaged Property or REO Property or amounts to be
released to the related Mortgagor, in each case in accordance with the Servicing
Standards and the provisions of the related Mortgage Loan) shall be deposited in
the Certificate Account, subject to withdrawal pursuant to Section 3.05(a). Any
costs incurred by the Servicer in maintaining any such Insurance Policies in
respect of Mortgage Loans (other than REO Properties) (i) if the Mortgagor
defaults on its obligation to do so, shall be advanced by the Servicer as a
Servicing Advance and will be charged to the related Mortgagor and (ii) shall
not, for purposes thereof, 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 Mortgage Loan
so permit. Any cost incurred by the Special Servicer in maintaining any such
Insurance Policies with respect to REO Properties shall be an expense of the
Trust payable out of the related REO Account pursuant to Section 3.16(c) or, if
the amount on deposit therein is insufficient therefor, advanced by the Servicer
as a Servicing Advance.
(b)(i) If the Servicer or the Special Servicer shall obtain and
maintain a blanket Insurance Policy with a Qualified Insurer insuring against
fire and hazard losses on all of the Mortgage Loans or REO Properties, as the
case may be, required to be serviced and administered hereunder, then, to the
extent such Insurance Policy provides protection equivalent to the individual
policies otherwise required, the Servicer or the Special Servicer shall
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conclusively be deemed to have satisfied its obligation to cause fire and hazard
insurance to be maintained on the related Mortgaged Properties or REO
Properties. Such Insurance Policy may contain a deductible clause, in which case
the Servicer or the Special Servicer shall, if there shall not have been
maintained on the related Mortgaged Property or REO Property a fire and hazard
Insurance Policy complying with the requirements of Section 3.07(a), and there
shall have been one or more losses which would have been covered by such
Insurance Policy, promptly deposit into the Certificate Account from its own
funds the amount of such loss or losses that would have been covered under the
individual policy but are not covered under the blanket Insurance Policy because
of such deductible clause to the extent that any such deductible exceeds the
deductible limitation that pertained to the related Mortgage Loan, or in the
absence of such deductible limitation, the deductible limitation which is
consistent with the Servicing Standard. In connection with its activities as
administrator and servicer of the Mortgage Loans, the Servicer agrees to prepare
and present, on behalf of itself, the Trustee and Certificateholders, claims
under any such blanket Insurance Policy in a timely fashion in accordance with
the terms of such policy. The Special Servicer, to the extent consistent with
the Servicing Standards, may maintain, at its own expense, earthquake insurance
on REO Properties, provided coverage is available at commercially reasonable
rates.
(ii) If the Servicer or the Special Servicer shall cause any
Mortgaged Property or REO Property to be covered by a master single interest
insurance policy with a Qualified Insurer naming the Servicer or the Special
Servicer on behalf of the Trustee as the loss payee, then to the extent such
Insurance Policy provides protection equivalent to the individual policies
otherwise required, the Servicer or the Special Servicer shall conclusively be
deemed to have satisfied its obligation to cause such insurance to be maintained
on the related Mortgage Properties and REO Properties. In the event the Servicer
or the Special Servicer shall cause any Mortgaged Property or REO Property to be
covered by such master single interest insurance policy, the incremental costs
of such insurance applicable to such Mortgaged Property or REO Property (i.e.,
other than any minimum or standby premium payable for such policy whether or not
any Mortgaged Property or REO Property is covered thereby) shall be paid by the
Servicer as a Servicing Advance. Such master single interest policy may contain
a deductible clause, in which case the Servicer or the Special Servicer shall,
in the event that there shall not have been maintained on the related Mortgaged
Property or REO Property a policy otherwise complying with the provisions of
Section 3.07(a), and there shall have been one or more losses which would have
been covered by such policy had it been maintained, deposit into the Certificate
Account from its own funds the amount not otherwise payable under the master
single interest policy because of such deductible clause, to the extent that any
such deductible exceeds the deductible limitation that pertained to the related
Mortgage Loan, or, in the absence of any such deductible limitation, the
deductible limitation which is consistent with the Servicing Standard.
(c) Each of the Servicer and the Special Servicer shall obtain and
maintain at its own expense and keep in full force and effect throughout the
term of this Agreement a blanket fidelity bond and an errors and omissions
Insurance Policy with a Qualified Insurer covering the Servicer's and the
Special Servicer's, as applicable, officers and employees and other persons
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acting on behalf of the Servicer and the Special Servicer in connection with its
activities under this Agreement with a deductible clause that in no event
exceeds the greater of (i) $100,000 or (ii) 5% of the face amount of the
Fidelity Bond or errors and omission policy as the case may be. The Servicer or
the Special Servicer, as applicable, shall cause the Trustee, on behalf of the
Trust, to be named as a loss payee on each such fidelity bond and errors and
omissions policy. Notwithstanding the foregoing, so long as the long term debt
or the deposit obligations or claims-paying ability of the Servicer (or its
immediate or remote parent) is rated at least "A" by ___ and "A" by ___ (if
rated by ___), the Servicer shall be allowed to provide self-insurance with
respect to a fidelity bond. The amount of coverage shall be at least equal to
the coverage that would be required by FNMA or FHLMC, whichever is greater, with
respect to the Servicer or the Special Servicer if the Servicer or the Special
Servicer, as applicable, were servicing and administering the Mortgage Loans or
Specially Serviced Mortgage Loans, as applicable, for FNMA or FHLMC. Coverage of
the Servicer or the Special Servicer under a policy or bond obtained by an
Affiliate of the Servicer or the Special Servicer and providing the coverage
required by this Section 3.07(c) shall satisfy the requirements of this Section
3.07(c). The Special Servicer and the Servicer will promptly report in writing
to the Trustee any material changes that may occur in their respective fidelity
bonds, if any, and/or their respective errors and omissions Insurance Policies,
as the case may be, and will furnish to the Trustee copies of all binders and
policies or certificates evidencing that such bonds, if any, and insurance
policies are in full force and effect.
(d) During all such times as any Mortgaged Property shall be in a
federally designated special flood hazard area (and such flood insurance has
been made available), the Servicer will use its reasonable best efforts to cause
the related Mortgagor (in accordance with applicable law and the terms of the
Mortgage Loan documents) to maintain, and, if the related Mortgagor shall
default in its obligation to so maintain, shall itself maintain to the extent
available at commercially reasonable rates (as determined by the Servicer in
accordance with the Servicing Standards), flood insurance in respect thereof,
but only to the extent the related Mortgage Loan permits the mortgagee to
require such coverage and the maintenance of such coverage is consistent with
the Servicing Standards. Such flood insurance shall be in an amount equal to the
lesser of (i) the unpaid principal balance of the related Mortgage Loan, and
(ii) the maximum amount of insurance which is available under the Flood Disaster
Protection Act of 1973, as amended. If the cost of any insurance described above
is not borne by the Mortgagor, the Servicer shall promptly make a Servicing
Advance for such costs, subject to Section 3.03(c).
(e) During all such times as any REO Property shall be located in a
federally designated special flood hazard area, the Special Servicer will cause
to be maintained, to the extent available at commercially reasonable rates (as
determined by the Special Servicer in accordance with the Servicing Standards),
a flood insurance policy meeting the requirements of the current guidelines of
the Federal Insurance Administration in an amount representing coverage not less
than the maximum amount of insurance which is available under the Flood Disaster
Protection Act of 1973, as amended. The cost of any such flood insurance with
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respect to an REO Property shall be an expense of the Trust payable out of the
related REO Account pursuant to Section 3.16(c) or, if the amount on deposit
therein is insufficient therefor, paid by the Servicer as a Servicing Advance.
SECTION 3.08. Enforcement of Due-On-Sale Clauses; Assumption
Agreements.
(a) As to each Mortgage Loan which contains a provision in the
nature of a "due-on-sale" clause, which by its terms:
(i) provides that such Mortgage Loan shall (or may at the
mortgagee's option) become due and payable upon the sale or other transfer
of an interest in the related Mortgaged Property; or
(ii) provides that such Mortgage Loan may not be assumed without the
consent of the mortgagee in connection with any such sale or other
transfer,
then, for so long as such Mortgage Loan is included in the Trust Fund, the
Special Servicer, on behalf of the Trustee as the mortgagee of record, shall
exercise (or waive its right to exercise) any right it may have with respect to
such Mortgage Loan (x) to accelerate the payments thereon or (y) to withhold its
consent to any such sale or other transfer, in a manner consistent with the
Servicing Standards.
(b) As to each Mortgage Loan which contains a provision in the
nature of a "due-on-encumbrance" clause, which by its terms:
(i) provides that such Mortgage Loan shall (or may at the
mortgagee's option) become due and payable upon the creation of any
additional lien or other encumbrance on the related Mortgaged Property; or
(ii) requires the consent of the mortgagee to the creation of
any such additional lien or other encumbrance on the related Mortgaged
Property,
then, for so long as such Mortgage Loan is included in the Trust Fund, the
Special Servicer, on behalf of the Trustee as the mortgagee of record, shall
exercise (or waive its right to exercise) any right it may have with respect to
such Mortgage Loan (x) to accelerate the payments thereon or (y) to withhold its
consent to the creation of any such additional lien or other encumbrance, in a
manner consistent with the Servicing Standards.
(c) Nothing in this Section 3.08 shall constitute a waiver of the
Trustee's right, as the mortgagee of record, to receive notice of any assumption
of a Mortgage Loan, any sale or other transfer of the related Mortgaged Property
or the creation of any additional lien or other encumbrance with respect to such
Mortgaged Property.
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(d) Except as otherwise permitted by Section 3.20, neither the
Servicer nor the Special Servicer shall agree to modify, waive or amend any term
of any Mortgage Loan in connection with the taking of, or the failure to take,
any action pursuant to this Section 3.08.
(e) Notwithstanding the foregoing, the Special Servicer shall not
waive any rights under a "due-on-encumbrance" clause with respect to any
Mortgage Loan, or under any "due-on-sale" clause with respect to any of the
Mortgage Loans set forth on Schedule 2 hereto unless it obtains from each Rating
Agency a written confirmation that such waiver would not cause a downgrading,
qualification or withdrawal of the rating then assigned to any of the
Certificates; provided, however, that so long as all Holders of each Class of
Certificates the ratings of which would otherwise be downgraded, qualified or
withdrawn consent to such waiver, such Rating Agency confirmation will not be
required.
(f) Notwithstanding any other provisions of this Section 3.08, the
Servicer may grant, without any Rating Agency confirmation as provided in clause
(e) above or Special Servicer approval, a Mortgagor's request for consent to
subject the related Mortgaged Property to an easement or right-of-way for
utilities, access, parking, public improvements or another purpose, and may
consent to subordination of the related Mortgage Loan to such easement or
right-of-way provided the Servicer shall have determined in accordance with the
Servicing Standards that such easement or right-of-way shall not materially
interfere with the then-current use of the related Mortgaged Property, or the
security intended to be providing such Mortgage, or materially or adversely
affect the value of such Mortgaged Property.
SECTION 3.09. Realization Upon Defaulted Mortgage Loans.
(a) The Special Servicer shall, subject to subsections (b) through
(d) of this Section 3.09, exercise reasonable efforts, consistent with the
Servicing Standards, to foreclose upon or otherwise comparably convert (which
may include an REO Acquisition) the ownership of property securing such Mortgage
Loans, as come into and continue in default as to which no satisfactory
arrangements can be made for collection of delinquent payments, and which are
not released from the Trust Fund pursuant to any other provision hereof. The
foregoing is subject to the provision that, in any case in which a Mortgaged
Property shall have suffered damage from an Uninsured Cause, the Servicer shall
not be required to make a Servicing Advance and expend funds toward the
restoration of such property unless the Special Servicer has determined in its
reasonable discretion that such restoration will increase the net proceeds of
liquidation of such Mortgaged Property to Certificateholders after reimbursement
to the Servicer for such Servicing Advance, and the Servicer has determined that
such Servicing Advance together with accrued and unpaid interest thereon will be
recoverable by the Servicer out of the proceeds of liquidation of such Mortgaged
Property, as contemplated in Section 3.05(a)(iv). The Special Servicer shall be
responsible for all other costs and expenses incurred by it in any such
proceedings (such costs and expenses to be advanced by the Servicer to the
Special Servicer), provided that, in each case, such cost or expense would not,
if incurred, constitute a Nonrecoverable Servicing Advance. Nothing contained in
this Section 3.09 shall be construed so as to require the Servicer or the
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Special Servicer, on behalf of the Trust, to make a bid on any Mortgaged
Property at a foreclosure sale or similar proceeding that is in excess of the
fair market value of such property, as determined by the Servicer or the Special
Servicer in its reasonable and good faith judgment taking into account the
factors described in Section 3.18(d) 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 Standards. If and when the Special Servicer or the
Servicer deems it necessary and prudent for purposes of establishing the fair
market value of any Mortgaged Property securing a Defaulted Mortgage Loan,
whether for purposes of bidding at foreclosure or otherwise, the Special
Servicer or the Servicer, as the case may be, is authorized to have an Appraisal
performed with respect to such property by an Independent MAI-designated
appraiser the cost of which shall be paid by the Servicer as a Servicing
Advance.
(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 shall be a Servicing Advance) to the effect that the
holding of such personal property by the Trust Fund will not cause the
imposition of a tax on the Lower-Tier REMIC or the Upper-Tier REMIC under
the REMIC Provisions or cause the Lower-Tier REMIC or the Upper-Tier REMIC
to fail to qualify as a REMIC at any time that any Uncertificated
Lower-Tier Interest or Certificate is outstanding.
(c) Notwithstanding the foregoing provisions of this Section 3.09,
neither the Special Servicer nor the Servicer shall, on behalf of the Trustee,
obtain title to a Mortgaged Property 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, would be
considered to hold title to, to be a "mortgagee-in-possession" of, or to be an
"owner" or "operator" of such Mortgaged Property within the meaning of CERCLA or
any comparable law, unless (as evidenced by an Officer's Certificate to such
effect delivered to the Trustee) the Special Servicer has previously determined
in accordance with the Servicing Standards, based on an Environmental Assessment
of such Mortgaged Property performed by an Independent Person who regularly
conducts Environmental Assessments, that:
(i) the Mortgaged Property is in compliance with applicable
environmental laws and regulations or, if not, that taking such actions as
are necessary to bring the Mortgaged Property in compliance therewith is
reasonably likely to produce a greater recovery on a present value basis
than not taking such actions; and
(ii) there are no circumstances or conditions present 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
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applicable environmental laws and regulations or, if such circumstances or
conditions are present for which any such action could be required, that
taking such actions with respect to such Mortgaged Property is reasonably
likely to produce a greater recovery on a present value basis than not
taking such actions.
The cost of any such Environmental Assessment shall be paid by the
Servicer as a Servicing Advance, and the cost of any remedial, corrective or
other further action contemplated by clause (i) and/or clause (ii) of the
preceding sentence may be withdrawn from the Certificate Account at the
direction of the Special Servicer as an expense of the Trust Fund pursuant to
Section 3.05(a)(ix); and if any such Environmental Assessment so warrants, the
Special Servicer shall, at the expense of the Trust Fund, perform such
additional environmental testing as it deems necessary and prudent to determine
whether the conditions described in clauses (i) and (ii) of the preceding
sentence have been satisfied.
(d) If (i) the environmental testing contemplated by subsection (c)
above establishes that either 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 and (ii) there has been no
breach of any of the representations and warranties set forth in or required to
be made pursuant to Section 2 of the Mortgage Loan Purchase Agreements for which
either Mortgage Loan Seller could be required to repurchase such Defaulted
Mortgage Loan pursuant to Section 3 of the Mortgage Loan Purchase Agreements,
then the Special Servicer shall take such action as it deems to be in the best
economic interest of the Trust Fund (other than proceeding to acquire title to
the Mortgaged Property) and is hereby authorized at such time as it deems
appropriate to release such Mortgaged Property from the lien of the related
Mortgage.
(e) The Special Servicer shall provide written reports and a copy of
any Environmental Assessments to the Trustee, the Paying Agent and the Servicer
monthly regarding any actions taken by the Special Servicer with respect to any
Mortgaged Property securing a defaulted Mortgage Loan as to which the
environmental testing contemplated in subsection (c) above has revealed that
either of the conditions set forth in clauses (i) and (ii) of the first sentence
thereof has not been satisfied, in each case until the earlier to occur of
satisfaction of both such conditions, repurchase of the related Mortgage Loan by
the Mortgage Loan Seller or release of the lien of the related Mortgage on such
Mortgaged Property. The Trustee shall forward all such reports to the
Certificateholders and each Rating Agency promptly following the receipt
thereof. In addition, the Servicer will deliver to the Class [F], Class [G] and
Class [H] Certificateholders a copy of any such written reports and any
Environmental Assessments within 15 days after receipt of such written reports
and Environmental Assessments from the Special Servicer.
(f) The Servicer shall report to the Internal Revenue Service and
the related Mortgagor, in the manner required by applicable law, the information
required to be reported regarding any Mortgaged Property which is abandoned or
foreclosed and the Servicer shall report, via Form 1099C, all forgiveness of
indebtedness. The Special Servicer shall provide the Servicer with such
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information or reports that the Servicer deems necessary to fulfill its
obligations under this paragraph (f) promptly upon the Servicer's request
therefor. The Servicer shall deliver a copy of any such report to the Trustee
and the Special Servicer.
(g) The Special Servicer shall have the right to determine, in
accordance with the Servicing Standards, the advisability of the maintenance of
an action 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.
(h) The Special Servicer shall maintain accurate records, prepared
by one of its Servicing Officers, of each Final Recovery Determination in
respect of a Defaulted Mortgage Loan or REO Property and the basis thereof. Each
Final Recovery Determination shall be evidenced by an Officer's Certificate
delivered to the Trustee and the Servicer no later than the next succeeding P&I
Advance Determination Date.
SECTION 3.10. Trustee to Cooperate; Release of Mortgage Files.
(a) Upon the payment in full of any Mortgage Loan, or the receipt by
the Servicer or the Special Servicer, as the case may be, of a notification that
payment in full shall be escrowed in a manner customary for such purposes, the
Servicer or Special Servicer, as the case may be, will immediately notify the
Trustee and request delivery of the related Mortgage File. Any such notice and
request shall be in the form of a Request for Release signed by a Servicing
Officer 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) or remitted to
the Servicer to enable such deposit, have been or will be so deposited. Within
seven Business Days (or within such shorter period as release can reasonably be
accomplished if the Servicer notifies the Trustee of an exigency) of receipt of
such notice and request, the Trustee shall release, or cause any related
Custodian to release, the related Mortgage File to the Servicer or Special
Servicer, as the case may be. No expenses incurred in connection with any
instrument of satisfaction or deed of reconveyance shall be chargeable to the
Certificate Account.
(b) From time to time as is appropriate for servicing or foreclosure
of any Mortgage Loan, the Servicer or the Special Servicer shall deliver to the
Trustee a Request for Release signed by a Servicing Officer. Upon receipt of the
foregoing, the Trustee shall deliver or cause the related Custodian to deliver,
the Mortgage File or any document therein to the Servicer or the Special
Servicer (or a designee), as the case may be. Upon return of such Mortgage File
or such document to the Trustee or the related Custodian, or the delivery to the
Trustee of a certificate of a Servicing Officer of the Servicer or the Special
Servicer, as the case may be, stating that such Mortgage Loan was liquidated and
that all amounts received or to be received in connection with such liquidation
which are required to be deposited into the Certificate Account pursuant to
Section 3.04(a) have been or will be so deposited, or that such Mortgage Loan
has become an REO Property, a copy of the Request for Release shall be released
by the Trustee to the Servicer or the Special Servicer (or a designee), as the
case may be, with the original being released upon termination of the Trust.
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(c) Within seven Business Days (or within such shorter period as
delivery can reasonably be accomplished if the Special Servicer notifies the
Trustee of an exigency) of receipt thereof, the Trustee shall execute and
deliver to the Special Servicer any court pleadings, requests for trustee's sale
or other documents necessary to the foreclosure or trustee's sale in respect of
a Mortgaged Property or to any legal action brought to obtain judgment against
any Mortgagor on the Mortgage Note or Mortgage or to obtain a deficiency
judgment, or to enforce any other remedies or rights provided by the Mortgage
Note or Mortgage or otherwise available at law or in equity. The Special
Servicer shall be responsible for the preparation of all such documents and
pleadings. When submitted to the Trustee for signature, such documents or
pleadings shall be accompanied by 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 Servicer shall
be entitled to receive the Servicing Fee with respect to each Mortgage Loan and
REO Loan. As to each Mortgage Loan and REO Loan, the Servicing Fee shall accrue
from time to time at the Servicing Fee Rate (in accordance with the same terms
of the related Mortgage Note as are applicable to the accrual of interest at the
Mortgage Rate) and shall be computed on the basis of the Stated Principal
Balance of such Mortgage Loan and for the same period respecting which any
related interest payment due on such Mortgage Loan or deemed to be due on such
REO Loan is computed. The Servicing Fee with respect to any Mortgage Loan or REO
Loan shall cease to accrue if a Liquidation Event occurs in respect thereof. The
Servicing Fee 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 Servicer shall be entitled to recover unpaid Servicing Fees in
respect of any Mortgage Loan or REO Loan out of that portion of related
payments, Insurance and Condemnation Proceeds, Liquidation Proceeds and REO
Revenues (in the case of an REO Loan) allocable as recoveries of interest, to
the extent permitted by Section 3.05(a). The right to receive the Servicing Fee
may not be transferred in whole or in part except in connection with the
transfer of all of the Servicer's responsibilities and obligations under this
Agreement. The Servicer shall pay, from its own funds, the annual fees of each
Rating Agency.
Additional servicing compensation in the form of one-half of all
assumption and modification fees paid by the Mortgagor on Mortgage Loans that
are not Specially Serviced Mortgage Loans and only to the extent that all
amounts then due and payable with respect to the related Mortgage Loan
(including interest on Advances) have been paid, and charges for beneficiary
statements or demands and amounts collected for checks returned for insufficient
funds, in each case only to the extent actually paid by the related Mortgagor,
shall be retained by the Servicer and shall not be required to be deposited in
the Certificate Account pursuant to Section 3.04(a). The Servicer shall also be
entitled to additional servicing compensation in the form of: (i) Penalty
Charges received on the Mortgage Loans (other than Specially Serviced Mortgage
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Loans), but only to the extent actually paid by the related Mortgagor and to the
extent that all amounts then due and payable with respect to the related
Mortgage Loan (including interest on Advances) have been paid; (ii) interest or
other income earned on deposits relating to the Trust Fund in the Certificate
Account and the Distribution Accounts 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 period from any Distribution Date to the immediately
succeeding P&I Advance Date); and (iii) interest earned on deposits in the
Servicing Account which are not required by applicable law or the related
Mortgage Loan to be paid to the Mortgagor. The Servicer shall be required to pay
out of its own funds all expenses incurred by it in connection with its
servicing activities hereunder (including, without limitation, payment of any
amounts due and owing to any of its Sub-Servicers and the premiums for any
blanket Insurance Policy insuring against hazard losses pursuant to Section
3.07), if and to the extent such expenses are not payable directly out of the
Certificate Account, and the Servicer shall not be entitled to reimbursement
therefor except as expressly provided in this Agreement.
(b) 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 REO Loan. As to each Specially
Serviced Mortgage Loan and REO Loan, the Special Servicing Fee shall accrue from
time to time at the Special Servicing Fee Rate (in accordance with the same
terms of the related Mortgage Note as are applicable to the accrual of interest
at the Mortgage Rate) and shall be computed on the basis of the Stated Principal
Balance of such Specially Serviced Mortgage Loan and for the same period
respecting which any related interest payment due on such Specially Serviced
Mortgage Loan or deemed to be due on such REO Loan is computed. The Special
Servicing Fee with respect to any Specially Serviced Mortgage Loan or REO Loan
shall cease to accrue if a Liquidation Event occurs in respect thereof. The
Special Servicing Fee shall be payable monthly, on a loan-by-loan basis, to the
extent permitted by Section 3.05(a). The right to receive the Special Servicing
Fee may not be transferred in whole or in part except in connection with the
transfer of all of the Special Servicer's responsibilities and obligations under
this Agreement.
Additional servicing compensation in the form of one-half of all
assumption and modification fees and all extension fees received on or with
respect to any Mortgage Loan and all modification, assumption and extension fees
received on Specially Serviced Mortgage Loans, but only to the extent actually
collected from the related Mortgagor and only to the extent that all amounts
then due and payable with respect to the related Mortgage Loan (including those
payable to the Servicer pursuant to Section 3.11(a)) have been paid, shall be
promptly paid to the Special Servicer by the 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 a Workout Fee with respect to each Corrected Mortgage Loan at the
Workout Fee Rate on such Mortgage Loan for so long as it remains a Corrected
Mortgage Loan. The Workout Fee with respect to any Corrected Mortgage Loan will
cease to be payable if such loan again becomes a Specially Serviced Mortgage
Loan; provided that a new Workout Fee will become payable if and when such
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Mortgage Loan again becomes a Corrected Mortgage Loan. If the Special Servicer
is terminated (other than for cause or by resignation), it shall retain the
right to receive any and all Workout Fees payable with respect to Mortgage Loans
that became Corrected Mortgage Loans during the period that it acted as Special
Servicer and were Corrected Mortgage Loans at the time of such termination (and
the successor Special Servicer shall not be entitled to any portion of such
Workout Fees), in each case until the Workout Fee for any such loan ceases to be
payable in accordance with the terms hereof. A Liquidation Fee will be payable
with respect to each Specially Serviced Mortgage Loan as to which the Special
Servicer receives any Liquidation Proceeds subject to the exceptions set forth
in the definition of Liquidation Fee. Notwithstanding anything to the contrary
described above, no Liquidation Fee will be payable based on, or out of,
Liquidation Proceeds received in connection with the repurchase of any Mortgage
Loan by the Mortgage Loan Seller for a breach of representation or warranty or
for defective or deficient Mortgage Loan documentation, the purchase of any
Specially Serviced Mortgage Loan by the Servicer or the Special Servicer or the
purchase of all of the Mortgage Loans and REO Properties in connection with an
optional termination of the Trust Fund pursuant to Section 9.01. If, however,
Liquidation Proceeds are received with respect to any Corrected Mortgage Loan
and the Special Servicer is properly entitled to a Workout Fee, such Workout Fee
will be payable based on and out of the portion of such Liquidation Proceeds
that constitute principal and/or interest on such Mortgage Loan. The Special
Servicer will also be entitled to additional fees in the form of Penalty Charges
on Specially Serviced Mortgage Loans (but only to the extent actually collected
from the related Mortgagor and to the extent that all amounts then due and
payable with respect to the related Mortgage Loan (including interest on
Advances) have been paid). 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,
other than management fees in respect of REO Properties, due and owing to any of
its Sub-Servicers and the premiums for any blanket Insurance Policy obtained by
it insuring against hazard losses pursuant to Section 3.07), if and to the
extent such expenses are not payable directly out of the Certificate Account or
the REO Account, and the Special Servicer shall not be entitled to reimbursement
therefor except as expressly provided in this Agreement.
SECTION 3.12. Inspections; Collection of Financial Statements.
(a) The Servicer shall perform (at its own expense), or shall cause
to be performed (at its own expense), a physical inspection of each Mortgaged
Property at such times and in such manner as are consistent with the Servicing
Standards, but in any event shall inspect each Mortgaged Property securing a
Mortgage Note with a Stated Principal Balance of (a) $2,000,000 or more at least
once every 12 months and (b) less than $2,000,000 at least once every 24 months,
in each case commencing in the calendar year 1997; provided, however, that if
the Servicer has a reasonable basis to believe that the Debt Service Coverage
Ratio with respect to any Mortgaged Property has decreased by 25% or more from
the Debt Service Coverage Ratio as of the Cut-off Date, the Servicer shall
inspect the related Mortgaged Property as soon as practicable thereafter (the
cost of which inspection shall be at the expense of the Trust Fund); provided,
further, however, that if any scheduled payment becomes more than 60 days
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delinquent on the related Mortgage Loan, the Special Servicer shall inspect the
related Mortgaged Property as soon as practicable thereafter. The cost of such
inspection by the Special Servicer shall be an expense of the Trust Fund. The
Special Servicer or the Servicer, as applicable, shall prepare a written report
of each such inspection detailing the condition of the Mortgaged Property and
specifying the existence of (i) any vacancy in the Mortgaged Property that the
preparer of such report deems material, (ii) any sale, transfer or abandonment
of the Mortgaged Property, (iii) any adverse change in the condition of the
Mortgaged Property that the preparer of such report deems material, (iv) any
visible waste committed on the Mortgaged Property, (v) a report setting forth
the three most recent years operating statements, and (vi) photographs of each
inspected Mortgaged Property. The Special Servicer shall deliver each such
report to the Servicer within 40 days of its preparation. The Servicer shall
deliver to the Trustee, the Paying Agent, each Rating Agency, the Underwriters,
the Placement Agents and each Holder of a Class [F], Class [G] and Class [H]
Certificate, a copy of each such written report that it prepared or received
from the Special Servicer within 20 days of its receipt from the Special
Servicer or 60 days of its preparation by the Servicer.
(b) The Special Servicer or Servicer, as applicable, shall make
reasonable efforts to collect promptly from each Mortgagor annual operating
statements and rent rolls of the related Mortgaged Property, financial
statements of such Mortgagor and any other reports required to be delivered
under the terms of the Mortgage Loans, if delivery of such items is required
pursuant to the terms of the related Mortgage. The Special Servicer or Servicer,
as applicable, shall promptly: (i) review all such items as may be collected and
(ii) prepare written reports based on such reviews identifying the Debt Service
Coverage Ratios for the related Mortgage Loans. The Special Servicer shall
deliver copies of the collected items, and of the written reports prepared by
the Special Servicer in respect thereof, to the Servicer, via diskette or other
electronic transmission and by written report to follow, in each case within 20
days of its receipt or preparation, as applicable, but in no event less than
annually by June 1st of each year. The Servicer shall deliver copies of the
collected items, and of the written reports prepared in respect thereof or
received from the Special Servicer, to the Trustee, the Paying Agent, the Rating
Agencies, the Underwriters, the Placement Agents and each Holder of a Class [F],
Class [G] and Class [H] Certificate, via diskette or other electronic
transmission and by written report to follow, in each case within 30 days of its
receipt or preparation, as applicable, but in no event less frequently than
annually by June 30th of each year. In addition, the Servicer shall, upon
written request, deliver to each Rating Agency copies of any quarterly operating
statements received by the Servicer.
SECTION 3.13. Annual Statement as to Compliance.
Each of the Servicer and the Special Servicer will deliver to the
Trustee, with a copy to the Paying Agent and Depositor, on or before _______ of
each year, beginning______, 1997, an Officer's Certificate stating, as to each
signer thereof, that (i) a review of the activities of the 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 Servicer or the Special Servicer, as the case may be, has maintained an
effective internal control system relating to its servicing of the Mortgage
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Loans serviced by it and has fulfilled in all material respects its obligations
under this Agreement throughout such year, or, if there has been a default in
the fulfillment of any such obligation, specifying each such default known to
such officer and the nature and status thereof and (iii) the Servicer or the
Special Servicer, as the case may be, has received no notice regarding
qualification, or challenging the status, of either the Lower-Tier REMIC or the
Upper-Tier REMIC 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. A copy of such Officer's Certificate may be obtained by
Certificateholders upon written request to the Paying Agent pursuant to Section
8.12 hereof.
SECTION 3.14. Reports by Independent Public Accountants.
Each of the Servicer and the Special Servicer at their own expense
shall cause a nationally recognized firm of independent certified public
accountants to furnish to the Servicer or the Special Servicer, as the case may
be, the Trustee, the Paying Agent and each Rating Agency, on or before ____ of
each year, commencing with___________, 1997, a report stating that (i) it has
obtained from the Servicer or the Special Servicer, as the case may be, a letter
of representation regarding certain matters from the management of the Servicer
or the Special Servicer, as the case may be, which includes an assertion that
the Servicer or the Special Servicer, as the case may be, has maintained an
effective internal control system with respect to the servicing of the Mortgage
Loans and has complied with certain minimum mortgage loan servicing standards
(to the extent applicable to multifamily and mobile home community mortgage
loans), identified in the Uniform Single Attestation Program for Mortgage
Bankers established by the Mortgage Bankers Association of America, with respect
to the Servicer's or the Special Servicer's, as the case may be, servicing of
multifamily and mobile home community mortgage loans during the most recently
completed calendar year and (ii) on the basis of an examination conducted by
such firm in accordance with standards established by the American Institute of
Certified Public Accountants, such assertion is fairly stated in all material
respects, subject to such exceptions and other qualifications that, in the
opinion of such firm, such standards require it to report. In rendering its
report such firm may rely, as to the matters relating to the direct servicing of
multifamily and mobile home community mortgage loans by Sub-Servicers, upon
comparable reports of firms of independent certified public accountants rendered
on the basis of examinations conducted in accordance with the same standards
(rendered within 1 year of such statement) with respect to those Sub-Servicers.
SECTION 3.15. Access to Certain Information.
Each of the Servicer and the Special Servicer shall provide or cause
to be provided to any Certificateholder or Certificate Owner that is, or is
affiliated with, a federally insured financial institution, the Trustee, the
Depositor, each Rating Agency, to the Servicer, or to the Special Servicer, as
applicable, and to the OTS, the FDIC, the Federal Reserve Board and the
supervisory agents and examiners of such boards and such corporations, and any
other federal or state banking or insurance regulatory authority that may
exercise authority over any Certificateholder, and each Holder of a Class [F],
Class [G] and Class [H] Certificate, access to any documentation regarding the
Mortgage Loans and the Trust Fund within its control which may be required 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 Servicer or the Special Servicer, as the case may
be, designated by it; provided, however, that the Class [F], Class [G] and Class
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[H] Certificateholders shall be required to pay a reasonable and customary fee
for access to the aforementioned information, shall pay their own photocopying
costs and execute a reasonable and customary confidentiality agreement with
respect to such information. Nothing in this Section 3.15 shall detract from the
obligation of the Servicer and the Special Servicer to observe any applicable
law prohibiting disclosure of information with respect to the Mortgagors, and
the failure of the Servicer or the Special Servicer to provide access as
provided in this Section 3.15 as a result of such obligation shall not
constitute a breach of this Section 3.15. The Servicer and the Special Servicer
may each deny any of the foregoing persons access to confidential information or
any intellectual property which the Servicer or the Special Servicer is
restricted by license or contract from disclosing. Notwithstanding the
foregoing, the Servicer and the Special Servicer shall maintain separate from
such confidential information and intellectual property, all documentation
regarding the Mortgage Loans that is not confidential.
SECTION 3.16. Title to REO Property; REO Account.
(a) If title to any REO Property is acquired, the deed or
certificate of sale shall be issued to the Trustee on behalf of the
Certificateholders. The Special Servicer, on behalf of the Trust Fund, shall
sell any REO Property within two years after the Trust Fund acquires ownership
of such REO Property for purposes of Section 860G(a)(8) of the Code, unless the
Special Servicer either (i) 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 and the Servicer an Opinion of Counsel (the cost of which shall be
paid as a Servicing Advance), addressed to the Trustee and the Servicer, to the
effect that the holding by the Trust Fund of such REO Property subsequent to the
second anniversary of such acquisition will not result in the imposition of
taxes on "prohibited transactions" of the Trust Fund or the Lower-Tier REMIC or
the Upper-Tier REMIC constituted thereby as defined in Section 860F of the Code
or cause either the Lower-Tier REMIC or the Upper-Tier REMIC to fail to qualify
as a REMIC at any time that any Uncertificated Lower-Tier Interests or
Certificates are outstanding. If the Special Servicer is granted the REO
Extension contemplated by clause (i) of the immediately preceding sentence or
obtains the Opinion of Counsel contemplated by clause (ii) of the immediately
preceding sentence, the Special Servicer shall sell such REO Property within
such period longer than two years as is permitted by such REO Extension or such
Opinion of Counsel, as the case may be. Any expense incurred by the Special
Servicer in connection with its being granted the REO Extension contemplated by
clause (i) of the second preceding sentence or its obtaining the Opinion of
Counsel contemplated by clause (ii) of the second preceding sentence, shall be
an expense of the Trust Fund payable out of the Certificate Account pursuant to
Section 3.05(a).
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(b) The Special Servicer shall segregate and hold all funds
collected and received in connection with any REO Property separate and apart
from its own funds and general assets. If an REO Acquisition shall occur, the
Special Servicer shall establish and maintain one or more REO Accounts, 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, within 1 Business Day after receipt,
all REO Revenues, Insurance and Condemnation 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 give notice to the Trustee and the 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, leasing, maintenance and
disposition of any REO Property, but only to the extent of amounts on deposit in
the REO Account relating to such REO Property. On each Determination Date, the
Special Servicer shall withdraw from the REO Account and deposit into the
Certificate Account the aggregate of all amounts received in respect of each REO
Property during the most recently ended Due Period, net of any withdrawals made
out of such amounts pursuant to the preceding sentence; provided, however, that
the Special Servicer may retain in such REO Account, in accordance with the
Servicing Standards, such portion of such balance as may be necessary to
maintain a reasonable reserve for repairs, replacements, leasing, management and
tenant improvements and other related expenses for the related REO Property. In
addition, on each Determination Date, the Special Servicer shall provide the
Servicer with a written accounting of amounts deposited in the Certificate
Account on such date.
(d) The Special Servicer shall keep and maintain separate records,
on a property-by-property basis, for the purpose of accounting for all deposits
to, and withdrawals from, the REO Account pursuant to Section 3.16(b) or (c).
SECTION 3.17. Management of REO Property.
(a) If title to any REO Property is acquired, the Special Servicer
shall manage, conserve, protect, operate and lease such REO Property for the
benefit of the Certificateholders solely for the purpose of its timely
disposition and sale in a manner that does not cause such REO Property to fail
to qualify as "foreclosure property" within the meaning of Section 860G(a)(8) of
the Code or result in the receipt by the Trust Fund of any "income from
non-permitted assets" within the meaning of Section 860F(a)(2)(B) of the Code.
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 in the
best interests of and for the benefit of the Certificateholders (as determined
by the Special Servicer in its good faith and reasonable judgment) and,
consistent therewith, shall withdraw from the REO Account, to the extent of
amounts on deposit therein with respect to such REO Property, funds necessary
for the proper operation, management, leasing and maintenance of such REO
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Property, including, without limitation:
(i) all insurance premiums due and payable in respect of such
REO Property;
(ii) all real estate taxes and assessments in respect of such REO
Property that may result in the imposition of a lien thereon;
(iii) any ground rents in respect of such REO Property, if
applicable; and
(iv) all costs and expenses necessary to maintain and lease 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 Servicer shall advance from
its own funds such amount as is necessary for such purposes unless (as evidenced
by an Officer's Certificate delivered to the Trustee, the Paying Agent and the
Depositor) if such advances would, if made, constitute Nonrecoverable Servicing
Advances. The Special Servicer shall give the Servicer, the Trustee and the
Fiscal Agent not less than five Business Days' notice, together with all
information reasonably requested by the Servicer (upon which the Servicer may
conclusively rely) to the extent in the possession of the Special Servicer or
readily obtainable by the Special Servicer before the date on which the Servicer
is requested to make any Servicing Advance with respect to an REO Property;
provided, however, that only two Business Days' notice shall be required in
respect of Servicing Advances required to be made on an urgent or emergency
basis (which may include, without limitation, Servicing Advances required to
make tax or insurance payments).
(b) Without limiting the generality of the foregoing, the
Special Servicer shall not:
(i) permit the Trust Fund to enter into, renew or extend any New
Lease with respect to any REO Property, if the New Lease by its terms will
give rise to any income that does not constitute Rents from Real Property;
(ii) permit any amount to be received or accrued under any New Lease
other than amounts that will constitute Rents from Real Property;
(iii) authorize or permit any construction on any REO Property,
other than the completion of a building or other improvement thereon, and
then only if more than 10% of the construction of such building or other
improvement was completed before default on the related Mortgage Loan
became imminent, all within the meaning of Section 856(e)(4)(B) of the
Code; or
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(iv) Directly Operate, or allow any other Person, other than an
Independent Contractor, to Directly Operate, any REO Property on any date
more than 90 days after its Acquisition Date;
unless, in any such case, the Special Servicer has obtained an Opinion of
Counsel (the cost of which shall be paid by the Servicer as a Servicing Advance)
to the effect that such action will not cause such REO Property to fail to
qualify as "foreclosure property" within the meaning of Section 860G(a)(8) of
the Code at any time that it is held by the Trust Fund, in which case the
Special Servicer may take such actions as are specified in such Opinion of
Counsel. Except as limited above in this Section 3.17 and by Section 3.17(c),
the Special Servicer shall be permitted to cause the Trust Fund to earn "net
income from foreclosure property," subject to the standard of Section 3.01(a).
(c) The Special Servicer shall contract with any Independent
Contractor for the operation and management of any REO Property within 90 days
of the Acquisition Date thereof, 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 an
expense of the Trust Fund) shall be reasonable and customary in light of
the nature and locality of the Mortgaged Property;
(iii) any such contract shall require, or shall be administered to
require, that the Independent Contractor (A) pay all costs and expenses
incurred in connection with the operation and management of such REO
Property, including, without limitation, those listed in subsection (a)
hereof, and (B) remit all related revenues collected (net of its fees and
such costs and expenses) to the Special Servicer upon receipt;
(iv) none of the provisions of this Section 3.17(c) relating to any
such contract or to actions taken through any such Independent Contractor
shall be deemed to relieve the Special Servicer of any of its duties and
obligations hereunder with respect to the operation and management of any
such REO Property; and
(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.
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SECTION 3.18. Sale of Defaulted Mortgage Loans and REO Properties.
(a) Each of the Servicer and the Special Servicer 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 Section 2.03(b) and
Section 9.01.
(b) In the event that any Mortgage Loan becomes a Defaulted Mortgage
Loan and the Special Servicer has determined in good faith that such Defaulted
Mortgage Loan will become subject to foreclosure proceedings, the Special
Servicer shall promptly so notify in writing the Trustee and the Servicer. The
Special Servicer or the Servicer may at its option purchase such Defaulted
Mortgage Loan from the Trust Fund, at a price equal to the Purchase Price. The
Purchase Price for any Defaulted Mortgage Loan purchased hereunder shall be
deposited into the Certificate Account, and the Trustee, upon receipt of an
Officer's Certificate from the Special Servicer to the effect that such deposit
has been made, shall release or cause to be released to the Special Servicer or
the Servicer, as the case may be, the related Mortgage File, and shall execute
and deliver such instruments of transfer or assignment, in each case without
recourse, as shall be necessary to vest in the Special Servicer or the Servicer
(in that order), as the case may be, ownership of such Defaulted Mortgage Loan.
(c) The Special Servicer may offer to sell any Defaulted Mortgage
Loan not otherwise purchased by the Special Servicer or the Servicer pursuant to
subsection (b) above, if and when the Special Servicer determines, consistent
with the Servicing Standards, that such a sale would produce a greater recovery
on a present value basis than would liquidation of the related Mortgaged
Property. Such offering shall be made in a commercially reasonable manner for a
period of not less than 20 days or more than 90 days. The Special Servicer shall
accept the highest cash bid received from any Person for such Defaulted Mortgage
Loan in an amount at least equal to the Purchase Price therefor; provided, that
in the absence of any such bid, the Special Servicer shall accept the highest
cash bid received from any Person that is determined by the Special Servicer to
be a fair price for such Defaulted 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 reasonable efforts to solicit bids
for each REO Property in such manner as will be reasonably likely to realize a
fair price within the time period provided for by Section 3.16(a). Such
solicitation shall be made in a commercially reasonable manner for a period of
not less than 90 days or more than 270 days. The Special Servicer shall accept
the highest cash bid received from any Person for such REO Property in an amount
at least equal to the Purchase Price therefor; provided that in the absence of
any such bid, the Special Servicer shall accept the highest cash bid received
from any Person that is determined by the Special Servicer to be a fair price
for such REO Property. If the Special Servicer reasonably believes that it will
be unable to realize a fair price for any REO Property within the time
constraints imposed by Section 3.16(a), then 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
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cash bid, regardless of from whom received. Notwithstanding the foregoing, the
Special Servicer shall not be obligated by the foregoing or otherwise to accept
the highest bid if the Special Servicer determines, in accordance with the
Servicing Standards, that rejection of such bid would be in the best interests
of the Certificateholders. In the event that the Special Servicer determines
with respect to any REO Property that the offers being made with respect thereto
are not in the best interests of the Certificateholders and that the end of the
two-year period referred to in Section 3.16(a) with respect to such REO Property
is approaching, the Special Servicer shall seek an extension of such two-year
period in the manner described in Section 3.16(a); provided, however, that the
Special Servicer shall use its best efforts, consistent with the Servicing
Standards, to sell any REO Property prior to two years prior to the Rated Final
Distribution Date.
The Special Servicer shall give the Trustee and the Servicer not
less than three Business Days' prior written notice of its intention to sell any
Defaulted Mortgage Loan or REO Property. No Interested Person shall be obligated
to submit a bid to purchase any Defaulted 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.
(d) 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(c), shall be determined by the Special Servicer, if the highest bidder is a
Person other than an Interested Person, and by the Trustee, if the highest
bidder is an Interested Person. In determining whether any bid received from an
Interested Person represents a fair price for any Defaulted Mortgage Loan or any
REO Property, the Trustee may conclusively rely on the opinion of an Independent
MAI-designated appraiser or other expert in real estate matters retained by the
Special Servicer at the expense of the Trust Fund. In determining whether any
bid constitutes a fair price for any Defaulted Mortgage Loan or any REO
Property, such 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 Defaulted Mortgage Loan, the
occupancy level and physical condition of the Mortgaged Property or REO
Property, the state of the local economy and the obligation to dispose of any
REO Property within the time period specified in Section 3.16(a). The Purchase
Price for any Defaulted Mortgage Loan or REO Property shall in all cases be
deemed a fair price.
(e) Subject to subsections (a) through (d) 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. Any sale of a Defaulted Mortgage Loan or any REO Property
shall be final and without recourse to the Trustee or the Trust Fund, and if
such sale is consummated in accordance with the terms of this Agreement, neither
the Special Servicer nor the Trustee shall have any liability to any
Certificateholder with respect to the purchase price therefor accepted by the
Special Servicer or the Trustee.
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SECTION 3.19. [Intentionally Omitted]
SECTION 3.20. Modifications, Waivers, Amendments and Consents.
(a) Except as set forth in this Section 3.20(a) and Section 3.08,
the Servicer shall not agree to any modification, waiver or amendment of a
Mortgage Loan, and, except as provided in the following paragraph and in Section
3.20(d), no Mortgage Loan that is not a Specially Serviced Mortgage Loan may be
modified, waived or amended, provided, that the Special Servicer may agree to
extend the maturity date of a Mortgage Loan that is not a Specially Serviced
Mortgage Loan, provided, further, that no such extension entered into pursuant
to this Section 3.20(a) shall be for a period of more than twelve months from
the original maturity date of such Mortgage Loan or shall extend the maturity
date beyond the earlier of (i) two years prior to the Rated Final Distribution
Date and (ii) in the case of a Mortgage Loan secured by a leasehold estate, the
date ten years prior to the expiration of such leasehold estate. If such
extension would extend the Maturity Date of a Mortgage Loan for more than twelve
months from and after the original maturity date of such Mortgage Loan, the
Special Servicer must provide the Trustee with an opinion of counsel that such
extension would not constitute a "significant modification" of the Mortgage Loan
within the meaning of Treasury Regulations Section 1.860G-2(b). Any substitution
of collateral shall be treated hereunder as a modification or amendment of the
applicable Mortgage Loan.
Notwithstanding the foregoing, the Servicer may modify or amend the
terms of any Mortgage Loan without the consent of the Special Servicer in order
to (i) cure any ambiguity therein or (ii) correct or supplement any provisions
therein which may be inconsistent with any other provisions therein or correct
any error, provided that such modification or amendment would not be a
"significant modification" of the Mortgage Loan within the meaning of Treasury
Regulations Section 1.860G-2(b), and provided further that the proposed
modification or amendment will not cause (x) either the Upper-Tier REMIC or the
Lower-Tier REMIC to fail to qualify as a REMIC for purposes of the Code or (y)
either the Upper-Tier REMIC or the Lower-Tier REMIC to be subject to any tax
under the REMIC Provisions.
Notwithstanding the foregoing, the Special Servicer shall not permit
the substitution of any Mortgaged Property (or any portion thereof) pursuant to
the terms of the related Mortgage Loan documents unless it has received an
Opinion of Counsel to the effect that (i) such substitution will not cause the
related Mortgage Loan to fail to qualify as a "qualified mortgage" for REMIC
purposes, (ii) such substitution will not affect the status as a REMIC of either
the Upper-Tier REMIC or the Lower-Tier REMIC, and (iii) such substitution will
not subject the Trust Fund, the Upper-Tier REMIC or the Lower-Tier REMIC to any
tax.
(b) If, but only if, the Special Servicer determines that a
modification, waiver or amendment (including, without limitation, the
forgiveness or deferral of interest or principal or the substitution of
collateral pursuant to the terms of the Mortgage Loan or otherwise, the release
of collateral or the pledge of additional collateral) of the terms of a
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Specially Serviced Mortgage Loan with respect to which a payment default or
other material default has occurred or a payment default is, in the Special
Servicer's judgment, reasonably foreseeable (as evidenced by an Officer's
Certificate of the Special Servicer), is reasonably likely to produce a greater
recovery on a present value basis (the relevant discounting to be performed at
the related Mortgage Rate) than liquidation of such Specially Serviced Mortgage
Loan, then the Special Servicer may, but is not required to, with the approval
or deemed approval of the Extension Adviser, in the case of an extension of the
maturity of a Specially Serviced Mortgage Loan beyond the third anniversary of
such Mortgage Loan's original maturity date, agree to a modification, waiver or
amendment of such Specially Serviced Mortgage Loan, subject to the provisions of
this Section 3.20(b) and Section 3.20(c).
The Special Servicer shall use its best efforts to the extent
possible to cause each Specially Serviced Mortgage Loan to fully amortize prior
to the Rated Final Distribution Date and shall not agree to a modification,
waiver or amendment of any term of any Specially Serviced Mortgage Loan if such
modification, waiver or amendment would:
(i) extend the maturity date of any such Specially Serviced Mortgage
Loan to a date occurring later than the earlier of (a) two years prior to
the Rated Final Distribution Date and (b) if such Specially Serviced
Mortgage Loan is secured by a leasehold estate, the date occurring ten
years prior to the expiration of such leasehold; or
(ii) reduce the related Net Mortgage Rate on any such Specially
Serviced Mortgage Loan to less than the lesser of (a) the original Net
Mortgage Rate and (b) ___% per annum; or
(iii) provide for the deferral of interest unless (a) interest
accrues thereon, generally, at the related Mortgage Rate and (b) the
aggregate amount of such deferred interest does not exceed 10% of the
unpaid principal balance of the Specially Serviced Mortgage Loan.
(c) Any provision of this Section 3.20 to the contrary
notwithstanding, no fee described in this paragraph shall be collected by any
Servicer or Special Servicer from a Mortgagor (or on behalf of the Mortgagor) in
conjunction with any consent or any modification, waiver or amendment of a
Mortgage Loan (unless the amount thereof is specified in the related Mortgage
Note) if the collection of such fee would cause such consent, modification,
waiver or amendment to be a "significant modification" of the Mortgage Note
within the meaning of Treasury Regulations Section 1.860G-2(b).
(d) Notwithstanding anything to the contrary in this Agreement, the
Special Servicer may agree to any waiver, modification or amendment of a
Mortgage Loan that is not in default or as to which default is not reasonably
foreseeable only to the extent that it would not be a "significant modification"
of the Mortgage Loan within the meaning of Treasury Regulations Section
1.860G-2(b), provided that the proposed modification, amendment or waiver will
not cause (x) either the Lower-Tier REMIC or the Upper-Tier REMIC to fail to
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qualify as a REMIC for purposes of the Code or (y) either the Lower-Tier REMIC
or the Upper-Tier REMIC to be subject to any tax under the REMIC Provisions.
With respect to all modifications, amendments and waivers entered into by the
Special Servicer pursuant to this Section 3.20(d), the Special Servicer shall
provide the Trustee with an Opinion of Counsel (at the expense of the related
Mortgagor or such other Person requesting such modification or, if such expense
cannot be collected from the related Mortgagor or such other Person, to be paid
by the Servicer as a Servicing Advance) to the effect that the contemplated,
waiver, modification or amendment (i) will not be a "significant modification"
of the Mortgage Loan within the meaning of Treasury Regulations Section
1.860G-2(b) and (ii) will not cause either clause (x) or (y) of this Section
3.20(d) to occur. Notwithstanding the foregoing, the Special Servicer may not
waive the payment of any Prepayment Premiums or Yield Maintenance Charge with
respect to any Mortgage Loan that is not a Specially Serviced Mortgage Loan.
(e) In the event of a modification which creates Mortgage Deferred
Interest, such Mortgage Deferred Interest will be allocated to reduce the
Distributable Certificate Interest of the Class or Classes of Certificates
pursuant to Section 4.06.
(f) Subject to Section 3.20(c), the Servicer and the Special
Servicer each may, as a condition to its granting any request by a Mortgagor for
consent, modification, waiver or indulgence or any other matter or thing, the
granting of which is within the Servicer's or the Special Servicer's, as the
case may be, discretion pursuant to the terms of the instruments evidencing or
securing the related Mortgage Loan and is permitted by the terms of this
Agreement, require that such Mortgagor pay to the Servicer or the Special
Servicer, as the case may be, as additional servicing compensation, a reasonable
or customary fee, for the additional services performed in connection with such
request.
(g) All modifications, waivers and amendments of the Mortgage Loans
entered into pursuant to this Section 3.20 shall be in writing, signed by the
Servicer or the Special Servicer, as the case may be, and the related Mortgagor
(and by any guarantor of the related Mortgage Loan, if such guarantor's
signature is required by the Special Servicer in accordance with the Servicing
Standards).
(h) Each of the Servicer and the Special Servicer shall notify the
Rating Agencies, the Trustee, the Paying Agent and each other in writing of any
modification, waiver or amendment of any term of any Mortgage Loan and the date
thereof, and shall deliver to the Trustee or the related Custodian for deposit
in the related Mortgage File, an original counterpart of the agreement relating
to such modification, waiver or amendment, promptly (and in any event within 10
Business Days) following the execution thereof. In addition, the Special
Servicer shall promptly send a copy of such a modification, waiver or amendment
to the Servicer. Within 15 days of the Servicer's delivery of the aforesaid
modification, waiver or amendment to the Trustee or its receipt from the Special
Servicer, as applicable, the Servicer shall forward a copy thereof to each
Holder of a Class [F], Class [G] and Class [H] Certificate.
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SECTION 3.21. Transfer of Servicing Between Servicer and Special
Servicer; Record Keeping; Asset Status Report.
(a) Upon determining that a Servicing Transfer Event has occurred
with respect to any Mortgage Loan, the Servicer shall immediately give notice
thereof, and shall deliver the related Mortgage File and Credit File to the
Special Servicer and shall use its best efforts to provide the Special Servicer
with all information, documents and records (including records stored
electronically on computer tapes, magnetic discs and the like) relating to the
Mortgage Loan and reasonably requested by the Special Servicer to enable it to
assume its functions hereunder with respect thereto. The Servicer shall use its
best efforts to comply with the preceding sentence within 5 Business Days of the
occurrence of each related Servicing Transfer Event and in any event shall
continue to act as Servicer and administrator of such Mortgage Loan until the
Special Servicer has commenced the servicing of such Mortgage Loan. The Servicer
shall deliver to the Trustee, the Paying Agent, the Underwriters, the Placement
Agents and to each Holder of a Class [F], Class [G] and Class [H] Certificate a
copy of the notice of such Servicing Transfer Event provided by the Servicer to
the Special Servicer pursuant to this Section.
Upon determining that a Specially Serviced Mortgage Loan (other than
an REO Loan) has become current and has remained current for three consecutive
Monthly Payments (provided no additional Servicing Transfer Event is foreseeable
in the reasonable judgment of the Special Servicer), and that no other Servicing
Transfer Event is continuing with respect thereto, the Special Servicer shall
immediately give notice thereof, and shall return the related Mortgage File and
Credit File to the Servicer and upon giving such notice, and returning such
Mortgage File and Credit File to the Servicer, the Special Servicer's obligation
to service such Corrected Mortgage Loan shall terminate and the obligations of
the Servicer to service and administer such Mortgage Loan shall re-commence.
(b) In servicing any Specially Serviced Mortgage Loans, the Special
Servicer will provide to the Trustee originals of documents included within the
definition of "Mortgage File" for inclusion in the related Mortgage File (with a
copy of each such original to the Servicer), and provide the Servicer with
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 Servicer and Paying Agent a written statement (upon which the
Servicer and the Paying Agent may conclusively rely) describing, on a
loan-by-loan and property-by-property basis, (1) the information described in
clause (vii) of Section 4.02(a) with respect to each Specially Serviced Mortgage
Loan and the information described in clause (viii) of Section 4.02(a) with
respect to each REO Property, (2) the amount of all payments, Insurance and
Condemnation Proceeds and Liquidation Proceeds received with respect to each
Specially Serviced Mortgage Loan during the related Due Period, and the amount
of all REO Revenues, Insurance and Condemnation Proceeds and Liquidation
Proceeds received with respect to each REO Property during the related Due
Period, (3) the amount, purpose and date of all Servicing Advances made by the
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Servicer with respect to each Specially Serviced Mortgage Loan and REO Property
during the related Due Period, (4) the information described in clauses (v),
(vii)(c), (vii)(d), (viii), (xi), (xvi) and (xvii) of Section 4.02(a) and (5)
such additional information relating to the Specially Serviced Mortgage Loans
and REO Properties as the Servicer reasonably requests to enable it to perform
its responsibilities under this Agreement which is in the Special Servicer's
possession or is reasonably obtainable by the Special Servicer.
(d) Notwithstanding the provisions of the preceding clause (c), the
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 in its possession required by the Special
Servicer to perform its duties under this Agreement.
(e) No later than 30 days after a Servicing Transfer Event for a
Mortgage Loan, the Special Servicer shall deliver to each Rating Agency and the
Directing Certificateholder a report (the "Asset Status Report") with respect to
such Mortgage Loan and the related Mortgaged Property. Such Asset Status Report
shall set forth the following information to the extent reasonably determinable:
(i) summary of the status of such Specially Serviced Mortgage
Loan and any negotiations with the related Mortgagor;
(ii) a discussion of the legal and environmental considerations
reasonably known to the Special Servicer, consistent with the Servicing
Standards, that are applicable to the exercise of remedies as aforesaid
and to the enforcement of any related guaranties or other collateral for
the related Mortgage Loan and whether outside legal counsel has been
retained;
(iii) the most current rent roll and income or operating
statement available for the related Mortgaged Property;
(iv) the Special Servicer's recommendations on how such Specially
Serviced Mortgage Loan might be returned to performing status and returned
to the Servicer for regular servicing or otherwise realized upon;
(v) the Appraised Value of the Mortgaged Property together with
the assumptions used in the calculation thereof; and
(vi) such other information as the Special Servicer deems relevant
in light of the Servicing Standards.
If within 10 Business Days of receiving an Asset Status Report, the
Directing Certificateholder does not disapprove such Asset Status Report in
writing, the Special Servicer shall implement the recommended action as outlined
in such Asset Status Report; provided, however, that the Special Servicer may
not take any action that is contrary to applicable law or the terms of the
applicable Mortgage Loan documents. If the Directing Certificateholder
disapproves such Asset Status Report, the Special Servicer will revise such
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Asset Status Report and deliver to the Directing Certificateholder, the Rating
Agencies and the Servicer a new Asset Status Report as soon as practicable, but
in no event later than 30 days after such disapproval. The Special Servicer
shall revise such Asset Status Report as described above in this Section 3.21(e)
until the Directing Certificateholder shall fail to disapprove such revised
Asset Status Report in writing within 10 Business Days of receiving such revised
Asset Status Report or until the Special Servicer makes one of the
determinations described below. The Special Servicer may, from time to time,
modify any Asset Status Report it has previously delivered and implement such
report, provided such report shall have been prepared, reviewed and not rejected
pursuant to the terms of this Section. Notwithstanding the foregoing, the
Special Servicer (i) may, following the occurrence of an extraordinary event
with respect to the related Mortgaged Property, take any action set forth in
such Asset Status Report before the expiration of a 10 Business Day period if
the Special Servicer has reasonably determined that failure to take such action
would materially and adversely affect the interests of the Certificateholders
and it has made a reasonable effort to contact the Directing Certificateholder
and (ii) in any case, shall determine whether such affirmative disapproval is
not in the best interest of all the Certificateholders pursuant to the Servicing
Standards. Upon making such determination, the Special Servicer shall notify the
Paying Agent and the Trustee of such rejection and deliver to the Paying Agent
and the Trustee a proposed notice to Certificateholders which shall include a
copy of the Asset Status Report, and the Paying Agent shall send such notice to
all Certificateholders. If the majority of such Certificateholders, as
determined by Voting Rights, fail, within 5 days of the Paying Agent's sending
such notice, to reject such Asset Status Report, the Special Servicer shall
implement the same. If the Asset Status Report is rejected by the
Certificateholders, the Special Servicer shall revise such Asset Status Report
as described above in this Section 3.21(e). The Paying Agent shall be entitled
to reimbursement from the Trust Fund for the reasonable expenses of providing
such notices.
The Special Servicer shall have the authority to meet with the
Mortgagor for any Specially Serviced Mortgage Loan and take such actions
consistent with the Servicing Standards and the related Asset Status Report. The
Special Servicer shall not take any action inconsistent with the related Asset
Status Report, unless such action would be required in order to act in
accordance with the Servicing Standards.
No direction of the Directing Certificateholder shall (a) require or
cause the Special Servicer to violate the terms of a Specially Serviced Mortgage
Loan, applicable law or any provision of this Agreement, including the Special
Servicer's obligation to act in accordance with the Servicing Standards and to
maintain the REMIC status of each of the Lower-Tier REMIC and the Upper-Tier
REMIC, or (b) result in the imposition of a "prohibited transaction" or
"prohibited contribution" tax under the REMIC Provisions, or (c) expose the
Servicer, the Special Servicer, the Depositor, the Mortgage Loan Seller, the
Trust Fund, the Trustee, the Fiscal Agent or their officers, directors,
employees or agents to any claim, suit or liability or (d) materially expand the
scope of the Special Servicer's or the Servicer's responsibilities under this
Agreement.
(f) Upon receiving notice of (i) the filing of a case under any
present or future federal or state bankruptcy, insolvency or similar law or the
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commencing of any insolvency, readjustment of debt, marshaling of assets and
liabilities or similar proceedings with respect to a Mortgage Loan or the
related Mortgagor, (ii) the existence of a material non-payment default or (iii)
the request by a Mortgagor for the amendment or modification of a Mortgage Loan
other than an amendment or modification provided for in the second paragraph in
Section 3.20(a), the Servicer shall immediately give notice thereof, and shall
deliver copies of the related Mortgage File and Credit File to the Special
Servicer and shall use its reasonable best efforts to provide the Special
Servicer with all information relating to the Mortgage Loan and reasonably
requested by the Special Servicer to enable it to negotiate with the related
Mortgagor and prepare for any such proceedings. The Servicer shall use its
reasonable best efforts to comply with the preceding sentence within 5 Business
Days of the occurrence of each such event, and upon receiving such documents and
information, the Special Servicer shall use its reasonable best efforts to cause
the related Mortgagor to cure any default and/or remedy any such event, work out
or modify the Mortgage Loan consistent with the terms of this Agreement, and/or
prepare for such proceedings. Notwithstanding the foregoing, the occurrence of
any of the above-referenced events shall not in and of itself be considered a
Servicing Transfer Event and, unless a Servicing Transfer Event has occurred
with respect to a related Mortgage Loan, the Servicer shall continue to act as
Servicer and administrator of such Mortgage Loan and no fees shall be payable to
the Special Servicer with respect to such Mortgage Loan other than any related
modification, assumption or extension fees provided for herein.
SECTION 3.22. Sub-Servicing Agreements.
(a) The Servicer may enter into Sub-Servicing Agreements to provide
for the performance by third parties of any or all of its respective obligations
under Articles III and IV hereof; provided that 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 Servicer 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 shall thereupon assume all of the rights
and, except to the extent they arose prior to the date of assumption,
obligations of the Servicer under such agreement, or, alternatively, may act in
accordance with Section 7.02 hereof under the circumstances described therein;
(iii) provides that the Trustee for the benefit of the Certificateholders shall
be a third party beneficiary under such Sub-Servicing Agreement, but that
(except to the extent the Trustee or its designee assumes the obligations of the
Servicer thereunder as contemplated by the immediately preceding clause (ii))
none of the Trust Fund, the Trustee, any successor Servicer or any
Certificateholder shall have any duties under such Sub-Servicing Agreement or
any liabilities arising therefrom; (iv) permits any purchaser of a Mortgage Loan
pursuant to this Agreement to terminate such Sub-Servicing Agreement with
respect to such purchased Mortgage Loan at its option and without penalty and
(v) does not permit the Sub-Servicer any direct rights of indemnification that
may be satisfied out of assets of the Trust Fund. Any successor Servicer
hereunder shall, upon becoming successor Servicer, be assigned and shall assume
any Sub-Servicing Agreements from the predecessor Servicer. In addition, each
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Sub-Servicing Agreement entered into by the Servicer may provide that the
obligations of the Sub-Servicer thereunder shall terminate with respect to any
Mortgage Loan serviced thereunder at the time such Mortgage Loan becomes a
Specially Serviced Mortgage Loan; provided, however, that the Sub-Servicing
Agreement may provide that the Sub-Servicer will continue to make all Advances
and calculations and prepare all reports required under the Sub-Servicing
Agreement with respect to Specially Serviced Mortgage Loans as if no Servicing
Transfer Event had occurred and with respect to REO Properties (and the related
REO Loans) as if no REO Acquisition had occurred and to render such incidental
services with respect to such Specially Serviced Mortgage Loans and REO
Properties as are specifically provided for in such Sub-Servicing Agreement. The
Servicer shall deliver to the Trustee and the Paying Agent 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 Servicer
include actions taken or to be taken by a Sub-Servicer on behalf of the
Servicer; and, in connection therewith, all amounts advanced by any Sub-Servicer
to satisfy the obligations of the Servicer hereunder to make Advances shall be
deemed to have been advanced by the Servicer out of its own funds and,
accordingly, such Advances shall be recoverable by such Sub-Servicer in the same
manner and out of the same funds as if such Sub-Servicer were the Servicer, and,
for so long as they are outstanding, such Advances shall accrue interest in
accordance with Section 3.03(d), such interest to be allocable between the
Servicer and such Sub-Servicer pursuant to the terms of the Sub-Servicing
Agreement. For purposes of this Agreement, the Servicer shall be deemed to have
received any payment when a Sub-Servicer retained by it receives such payment.
The Servicer shall notify the Special Servicer, the Trustee and the Depositor in
writing promptly of the appointment by it of any Sub-Servicer. Except as
otherwise provided herein, the Special Servicer may not enter into Sub-Servicing
Agreements and may not assign any of its servicing obligations hereunder.
(b) Each Sub-Servicer shall be authorized to transact business in
the state or states in which the related Mortgaged Properties it is to service
are situated, if and to the extent required by applicable law.
(c) As part of its servicing activities hereunder, the 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 each Sub-Servicer under the related Sub-Servicing
Agreement. 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
Servicer would require were it the owner of the Mortgage Loans. The Servicer
shall have the right to remove a Sub-Servicer retained by it in accordance with
the terms of the related Sub-Servicing Agreement.
(d) In the event the Trustee or its designee becomes successor
Servicer and assumes the rights and obligations of the Servicer under any
Sub-Servicing Agreement, the Servicer, at its expense, shall deliver to the
assuming party all documents and records relating to such Sub-Servicing
Agreement and the Mortgage Loans then being serviced thereunder and an
accounting of amounts collected and held on behalf of it thereunder, and
otherwise use reasonable efforts to effect the orderly and efficient transfer of
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the Sub-Servicing Agreement to the assuming party.
(e) Notwithstanding the provisions of any Sub-Servicing Agreement,
the Servicer represents and warrants that it shall remain obligated and liable
to the Trustee and the Certificateholders for the performance of its 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 it alone were
servicing and administering the Mortgage Loans for which it is responsible, and
the Servicer shall pay the fees of any Sub-Servicer thereunder from its own
funds. In no event shall the Trust Fund bear any termination fee required to be
paid to any Sub-Servicer as a result of such Sub-Servicer's termination under
any Sub-Servicing Agreement.
(f) The Trustee shall furnish to any Sub-Servicer any powers of
attorney and other documents necessary or appropriate to enable such
Sub-Servicer to carry out its servicing and administrative duties under any
Sub-Servicing Agreement; provided, however, that the Trustee shall not be held
liable for any negligence, and shall be indemnified by the Sub-Servicer, with
respect to, or misuse of, any such power of attorney by a Sub-Servicer.
(g) Each Sub-Servicing Agreement shall provide that, in the event
the Trustee or any other Person becomes successor Servicer, the Trustee or such
successor Servicer shall have the right to terminate such Sub-Servicing
Agreement without a fee. Notwithstanding the foregoing, the Trustee and any
successor Servicer shall assume the Sub-Servicing Agreement with
___________dated as of the date hereof, provided that _________________
maintains an "acceptable" servicer rating from ___, and an approved Servicer
ranking of at least average from ___.
(h) Promptly (but in no event later than 5 Business Days) after the
execution of any Sub-Servicing Agreement, the Servicer shall forward a copy of
such Sub-Servicing Agreement to the Special Servicer. The Special Servicer shall
comply with the terms of each such Sub-Servicing Agreement to the extent the
terms thereof are not inconsistent with the terms of this Agreement and the
Special Servicer's obligations hereunder. With respect to Mortgage Loans subject
to a Sub-Servicing Agreement, the Special Servicer shall, among other things,
remit amounts, deliver reports and information, and afford access to facilities
and information to the related Sub-Servicer that would be required to be
remitted, delivered or afforded, as the case may be, to the Servicer pursuant to
the terms hereof within a sufficient period of time to allow the Sub-Servicer to
fulfill its obligations under such Sub-Servicing Agreement and in no event later
than 1 Business Day prior to the applicable Determination Date (or such other
date as specified herein).
SECTION 3.23. Representations and Warranties of the Servicer.
(a) The Servicer hereby represents and warrants to the Trustee, for
its own benefit and the benefit of the Certificateholders, and to the Depositor,
the Special Servicer and the Fiscal Agent, as of the Closing Date, that:
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(i) The Servicer is a banking corporation duly organized, validly
existing and in good standing under the laws of the State of New York, and
the 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 Servicer,
and the performance and compliance with the terms of this Agreement by the
Servicer, will not violate the Servicer's charter 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, or result in the violation of any
law, rule, regulation, order, judgment or decree to which the Servicer or
its property is subject;
(iii) This Agreement, assuming due authorization, execution and
delivery by the Trustee and the Depositor, constitutes a valid, legal and
binding obligation of the Servicer, enforceable against the Servicer in
accordance with the terms hereof, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and other laws affecting the
enforcement of creditors' rights generally, and general principles of
equity, regardless of whether such enforcement is considered in a
proceeding in equity or at law;
(iv) The Servicer is not in default with respect to any law, any
order or decree of any court, or any order, regulation or demand of any
federal, state, municipal or governmental agency, which default might have
consequences that would materially and adversely affect the condition
(financial or other) or operations of the Servicer or its properties or
might have consequences that would materially and adversely affect its
ability to perform its duties and obligations hereunder;
(v) No litigation is pending or, to the best of the Servicer's
knowledge, threatened against the Servicer which would prohibit the
Servicer from entering into this Agreement or, in the Servicer's good
faith and reasonable judgment, is likely to materially and adversely
affect either the ability of the Servicer to perform its obligations under
this Agreement or the financial condition of the Servicer;
(vi) The Servicer will examine each Sub-Servicing Agreement and
will be familiar with the terms thereof. Any Sub-Servicing Agreements
will comply with the provisions of Section 3.22;
(vii) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Servicer, or compliance by the Servicer with, this
Agreement or the consummation of the transactions contemplated by this
Agreement, except for any consent, approval, authorization or order which
has not been obtained or cannot be obtained prior to the actual
performance by the Servicer of its obligations under this Agreement, and
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which, if not obtained would not have a materially adverse effect on the
ability of the Servicer to perform its obligations hereunder; and
(viii) The Servicer has full power and authority to enter into and
consummate all transactions contemplated by this Agreement, has duly
authorized the execution, delivery and performance of this Agreement, and
has duly executed and delivered this Agreement.
(b) The representations and warranties set forth in paragraph (a)
above shall survive the execution and delivery of the Agreement. The Servicer
shall indemnify the Trustee, the Fiscal Agent and the Trust Fund and hold each
of them harmless against any losses, damages, penalties, fines, forfeitures, and
legal fees and related costs, judgments, and other costs and expenses resulting
from any claim, demand, defense or assertion arising from, or resulting from a
material breach of the Servicer's representations and warranties contained in
paragraph (a) above. Such indemnification shall survive any termination or
resignation of the Servicer, and any termination of the Agreement.
SECTION 3.24. Representations and Warranties of the Special
Servicer.
(a) The Special Servicer hereby represents and warrants to the
Trustee, for its own benefit and the benefit of the Certificateholders, and to
the Depositor, the Servicer and the Fiscal Agent, as of the Closing Date, that:
(i) The Special Servicer is a corporation duly organized, validly
existing and in good standing under the laws of the State of_______, and
the Special Servicer is in compliance with the laws of each State in which
any Mortgaged Property is located to the extent necessary to 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
charter 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, or
result in the violation of any law, rule, regulation, order, judgment or
decree to which the Special Servicer or its property is subject;
(iii) The Special Servicer has the full power and authority to enter
into and consummate all transactions contemplated by this Agreement, has
duly authorized the execution, delivery and performance of this Agreement,
and has duly executed and delivered this Agreement;
(iv) This Agreement, assuming due authorization, execution and
delivery by each of the other parties hereto, constitutes a valid, legal
and binding obligation of the Special Servicer, enforceable against the
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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 which 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 or employee of the Special Servicer
that has or, following the occurrence of a Servicing Transfer Event, would
have responsibilities concerning the servicing and administration of
Mortgage Loans is covered by errors and omissions insurance in the amounts
and with the coverage required by Section 3.07(c). Neither the Special
Servicer nor any of its officers, directors or employees that is or,
following the occurrence of a Servicing Transfer Event, would be involved
in the servicing or administration of Mortgage Loans has been refused such
coverage or insurance; and
(viii) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Special Servicer, or compliance by the Special Servicer
with, this Agreement or the consummation of the transactions contemplated
by this Agreement, except for any consent, approval, authorization or
order which has not been obtained or cannot be obtained prior to the
actual performance by the Special Servicer of its obligations under this
Agreement, and which, if not obtained would not have a materially adverse
effect on the ability of the Special Servicer to perform its obligations
hereunder.
(b) The representations and warranties set forth in paragraph (a)
above shall survive the execution and delivery of the Agreement. The Special
Servicer shall indemnify the Trustee, the Fiscal Agent and the Trust Fund and
hold them harmless against any losses, damages, penalties, fines, forfeitures,
legal fees and related costs, judgments and other costs and expenses resulting
from any claim, demand, defense or assertion based on or grounded upon, or
resulting from a material breach of the Special Servicer's representations and
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warranties contained in paragraph (a) above. Such indemnification shall survive
any termination or resignation of the Special Servicer, and any termination of
the Agreement.
SECTION 3.25. Duties of the Extension Adviser.
(a) The Special Servicer may not extend the maturity of any
Specially Serviced Mortgage Loan beyond the third anniversary of such Mortgage
Loan's original maturity date, unless the Extension Adviser elected pursuant to
Section 3.26 shall have approved such extension in writing within 10 days after
receiving from the Special Servicer the information, analysis and certification
required by Section 3.25(b). If a written objection to such extension from the
Extension Adviser has not been received by the Special Servicer within said
10-day period, then the Extension Adviser's approval shall be deemed to have
been given.
(b) The Special Servicer shall, with respect to any proposed
extension of a Specially Serviced Mortgage Loan beyond the third anniversary of
such Mortgage Loan's original maturity date, prepare and deliver to the
Extension Adviser, a summary of such proposed extension and an analysis
summarizing the basis of its conclusion that such extension is reasonably likely
to produce a greater recovery on a present value basis (the relevant discounting
to be performed at the related Net Mortgage Rate) than liquidation of such
Mortgage Loan. Such analysis shall specify the basis on which the Special
Servicer has made such determination, including the status of any existing
material default or the grounds for concluding that a payment default is
imminent. The Special Servicer shall promptly provide the Extension Adviser with
such information as is reasonably requested by the Extension Adviser (including,
without limitation, operating statements, rents rolls, appraisals, environmental
reports, inspection reports and financial statements of the applicable
Mortgagor) in connection with any proposed extension that is in the Special
Servicer's possession or is reasonably obtainable by the Special Servicer. The
Extension Adviser shall be entitled to rely on the information provided by the
Special Servicer without any independent investigation or verification on the
part of the Extension Adviser. In addition, the Special Servicer, in connection
with each request for extension, shall provide to the Extension Adviser an
Officer's Certificate confirming that all conditions precedent to the granting
of any such extension set forth in this Agreement (other than the approval of
the Extension Adviser) have been satisfied.
(c) No direction of the Extension Adviser shall (i) require or cause
the Special Servicer to violate the terms of a Specially Serviced Mortgage Loan,
applicable law or any provision of this Agreement, including the Special
Servicer's obligation to act in accordance with the Servicing Standards and to
maintain the REMIC status of the Lower-Tier REMIC and the Upper-Tier REMIC, or
(ii) result in the imposition of a "prohibited transaction" or "prohibited
contribution" tax under the REMIC Provisions, or (iii) expose the Servicer, the
Special Servicer, the Depositor, the Mortgage Loan Seller, the Trust Fund, the
Trustee, the Fiscal Agent or their officers, directors, employees or agents to
any claim, suit or liability or (iv) materially expand the scope of the Special
Servicer's or the Servicer's responsibilities under this Agreement.
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SECTION 3.26. Extension Adviser; Elections.
(a) The Class [A], Class [B], Class [C], Class [D] and Class [E]
Certificateholders will be entitled to elect, and shall be deemed to have
elected, the Trustee or a designee of the Trustee as their representative (the
"Extension Adviser") as provided in this Section 3.26. The Trustee (or any other
Person duly elected as Extension Adviser) may resign as Extension Adviser at any
time for any reason or no reason upon not less than five Business Days' written
notice to the Depositor, the Trustee, the Special Servicer, the Servicer and
each Class [A], Class [B], Class [C], Class [D] and Class [E] Certificateholder.
Promptly after the Closing Date (but in no event later than 30 days after the
Closing Date), the Trustee shall hold an election to determine the Extension
Adviser. In addition, upon (i) the receipt by the Trustee of written requests
for an election of an Extension Adviser from such Certificateholders
representing more than 50% of the Voting Rights of all the Class [A], Class [B],
Class [C], Class [D] and Class [E] Certificates or (ii) the resignation or
removal of the Person acting as Extension Adviser, an election of a successor
Extension Adviser shall be held commencing as soon as practicable thereafter.
The Extension Adviser shall be elected for the purpose of approving certain
actions of the Special Servicer specified herein in respect of extending the
maturity of any Specially Serviced Mortgage Loan beyond the third anniversary of
its original maturity date. The Extension Adviser shall not be entitled to
receive a fee for acting in such capacity.
(b) Promptly after the Closing Date and after any such receipt,
resignation, removal or determination contemplated by Section 3.26(a), the
Trustee shall call a meeting of the Holders of the Class [A], Class [B], Class
[C], Class [D] and Class [E] Certificates, if any, for the purpose of electing
an Extension Adviser. Notice of any such meeting of such Holders shall be mailed
or delivered to each Holder not less than 10 days nor more than 60 days prior to
the meeting; provided, however, that notice of the initial election shall be
mailed or delivered no later than 3 days after the Closing Date. The notice
shall state the place and the time of the meeting, which may be held by
telephone. Certificateholders representing a majority (by Certificate Balance)
of the Certificates of the applicable Class or Classes, present in person or
represented by proxy, shall constitute a quorum for the nomination of an
Extension Adviser. At the meeting, each such Holder shall be entitled to
nominate one Person to act as Extension Adviser. The Trustee shall cause the
election of the Extension Adviser to be held as soon thereafter as convenient.
(c) Each Holder of a Class [A], Class [B], Class [C], Class [D] and
Class [E] Certificate shall be entitled to vote in each election of the
Extension Adviser. The voting in each election of the Extension Adviser shall be
in writing mailed, delivered or sent by courier and actually received by the
Trustee on or prior to the date of such election. Immediately upon receipt by
the Trustee of votes (which have not been rescinded) from the Holders of such
Certificates representing more than 50% of the Voting Rights of all the Class
[A], Class [B], Class [C], Class [D] and Class [E] Certificates, which votes are
cast for a single Person, such Person shall be, upon such Person's acceptance,
the Extension Adviser. In the event that after the Closing Date an Extension
Adviser shall have resigned or been removed and a successor Extension Adviser
shall not have been elected, there shall be no Extension Adviser.
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Notwithstanding anything to the contrary contained herein, the Special Servicer
shall not have any right or obligation to consult with or to seek and/or obtain
approval or direction from an Extension Adviser, and provisions of this
Agreement relating thereto shall be of no effect, in any event during any such
period that there is no Extension Adviser.
(d) The Extension Adviser may be removed at any time by the written
vote, copies of which must be delivered to the Trustee, of Holders of such
Certificates representing more than 50% of the Voting Rights of all the Class
[A], Class [B], Class [C], Class [D] and Class [E] Certificates.
(e) The Trustee shall act as judge of each election of an Extension
Adviser, and, absent manifest error, the determination of the results of any
such election by the Trustee shall be conclusive. Notwithstanding any other
provisions of this Section 3.26, the Trustee may make such reasonable
regulations as it may deem advisable for any such election. Upon election of a
successor Extension Adviser, the Trustee shall promptly mail notice thereof by
first class mail to the Depositor, the Servicer, the Special Servicer, the
Mortgage Loan Seller, the Directing Certificateholder, the Underwriters, the
Placement Agents, the Holders of the Class [F], Class [G] and Class [H]
Certificates and each of the Rating Agencies.
SECTION 3.27. Limitation on Liability of Extension Adviser.
The Extension Adviser will be acting solely as a representative of
the interests of the Class [A], Class [B], Class [C], Class [D] and Class [E]
Certificateholders, and shall not have any responsibility or liability to the
Trust Fund or any other Class or Classes of Certificateholders for any action
taken, or for refraining from the taking of any action, in good faith pursuant
to this Agreement, or for errors in judgment; provided, however, that this
provision shall not protect the Extension Adviser against any liability which
would otherwise be imposed by reason of willful misfeasance, bad faith or
negligence in the performance of duties or by reason of negligent disregard of
obligations or duties hereunder. By its acceptance of a Certificate, each
Certificateholder confirms its understanding that the Extension Adviser may take
actions that favor the interests of one or more Classes of the Certificates over
other Classes of the Certificates and that the Extension Adviser may have
special relationships and interests that conflict with those of Holders of some
Classes of the Certificates and, absent willful misfeasance, bad faith,
negligence or negligent disregard of obligations or duties on the part of the
Extension Adviser, agrees to take no action against the Extension Adviser or any
of its officers, directors, employees, principals or agents as a result of such
a special relationship or conflict.
[End of Article III]
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ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS
SECTION 4.01. Distributions.
(a) On each Distribution Date, to the extent of the Available
Distribution Amount for such Distribution Date, the Paying Agent shall transfer
the Lower-Tier Distribution Amount from the Lower-Tier Distribution Account to
the Upper-Tier Distribution Account in the amounts and priorities set forth in
Section 4.01(b) with respect to each class of Uncertificated Lower-Tier
Interests, and immediately thereafter, shall make distributions thereof from the
Upper-Tier Distribution Account in the following order of priority, satisfying
in full, to the extent required and possible, each priority before making any
distribution with respect to any succeeding priority:
(i) first, to the Holders of the Class [A-1] Certificates, the Class
[A-2] Certificates and the Class [X] Certificates, pro rata (based upon
their respective entitlements to interest for such Distribution Date), in
respect of interest, up to an amount equal to the aggregate Interest
Distribution Amount in respect of such Classes of Certificates for such
Distribution Date;
(ii) second, (A) to the Holders of the Class [A-1] Certificates, in
reduction of the Certificate Balance thereof, an amount equal to the
Principal Distribution Amount, until the outstanding Certificate Balance
of such Class has been reduced to zero and (B) after the Certificate
Balance of the Class [A-1] Certificates has been reduced to zero, to the
Holders of the Class [A-2] Certificates, in reduction of the Certificate
Balance thereof, an amount equal to the Principal Distribution Amount (or
the portion thereof remaining after any distributions in respect of the
Class [A-1] Certificates on such Distribution Date), until the outstanding
Certificate Balance of such Class has been reduced to zero;
(iii) third, to the Holders of the Class [A-1] Certificates and the
Class [A-2] Certificates, pro rata (based upon the aggregate unreimbursed
Collateral Support Deficit allocated to each such Class), until all
amounts of Collateral Support Deficit previously allocated to such
Classes, but not previously reimbursed, have been reimbursed in full;
(iv) fourth, to the Holders of the Class [B] Certificates, in
respect of interest, up to an amount equal to the aggregate Interest
Distribution Amount in respect of such Class of Certificates for such
Distribution Date;
(v) fifth, after the Certificate Balances of the Class [A-1] and
Class [A-2] Certificates have been reduced to zero, to the Holders of the
Class [B] Certificates, in reduction of the Certificate Balance thereof,
an amount equal to the Principal Distribution Amount (or the portion
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thereof remaining after any distributions in respect of the Class [A]
Certificates on such Distribution Date), until the outstanding Certificate
Balance of the Class [B] Certificates has been reduced to zero;
(vi) sixth, to the Holders of the Class [B] Certificates, until all
amounts of Collateral Support Deficit previously allocated to the Class
[B] Certificates, but not previously reimbursed, have been reimbursed in
full;
(vii) seventh, to the Holders of the Class [C] Certificates, in
respect of interest, up to an amount equal to the aggregate Interest
Distribution Amount in respect of such Class of Certificates for such
Distribution Date;
(viii) eighth, after the Certificate Balances of the Class [A-1],
Class [A-2] and Class [B] Certificates have been reduced to zero, to the
Holders of the Class [C] Certificates, in reduction of the Certificate
Balance thereof, an amount equal to the Principal Distribution Amount (or
the portion thereof remaining after any distributions in respect of the
Class [A] and Class [B] Certificates on such Distribution Date), until the
outstanding Certificate Balance of the Class [C] Certificates has been
reduced to zero;
(ix) ninth, to the Holders of the Class [C] Certificates, until all
amounts of Collateral Support Deficit previously allocated to the Class
[C] Certificates, but not previously reimbursed, have been reimbursed in
full;
(x) tenth, to the Holders of the Class [D] Certificates, in respect
of interest, up to an amount equal to the aggregate Interest Distribution
Amount in respect of such Class of Certificates for such Distribution
Date;
(xi) eleventh, after the Certificate Balances of the Class [A-1],
Class [A-2], Class [B] and Class [C] Certificates have been reduced to
zero, to the Holders of the Class [D] Certificates, in reduction of the
Certificate Balance thereof, an amount equal to the Principal Distribution
Amount (or the portion thereof remaining after any distributions in
respect of the Class [A], Class [B] and Class [C] Certificates on such
Distribution Date), until the outstanding Certificate Balance of the Class
[D] Certificates has been reduced to zero;
(xii) twelfth, to the Holders of the Class [D] Certificates, until
all amounts of Collateral Support Deficit previously allocated to the
Class [D] Certificates, but not previously reimbursed, have been
reimbursed in full;
(xiii) thirteenth, to the Holders of the Class [E] Certificates, in
respect of interest, up to an amount equal to the aggregate Interest
Distribution Amount in respect of such Class of Certificates for such
Distribution Date;
(xiv) fourteenth, after the Certificate Balances of the Class [A-1],
Class [A-2], Class [B], Class [C] and Class [D] Certificates have been
reduced to zero, to the Holders of the Class [E] Certificates, in
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reduction of the Certificate Balance thereof, an amount equal to the
Principal Distribution Amount (or the portion thereof remaining after any
distributions in respect of the Class [A], Class [B], Class [C] and Class
[D] Certificates on such Distribution Date), until the outstanding
Certificate Balance of the Class [E] Certificates has been reduced to
zero;
(xv) fifteenth, to the Holders of the Class [E] Certificates, until
all amounts of Collateral Support Deficit previously allocated to the
Class [E] Certificates, but not previously reimbursed, have been
reimbursed in full;
(xvi) sixteenth, to the Holders of the Class [F] Certificates, in
respect of interest, up to an amount equal to the aggregate Interest
Distribution Amount in respect of such Class of Certificates for such
Distribution Date;
(xvii) seventeenth, after the Certificate Balances of the Class
[A-1], Class [A-2], Class [B], Class [C], Class [D] and Class [E]
Certificates have been reduced to zero, to the Holders of the Class [F]
Certificates, in reduction of the Certificate Balance thereof, an amount
equal to the Principal Distribution Amount (or the portion thereof
remaining after any distributions in respect of the Class [A], Class [B],
Class [C], Class [D] and Class [E] Certificates on such Distribution
Date), until the outstanding Certificate Balance of the Class [F]
Certificates has been reduced to zero;
(xviii) eighteenth, to the Holders of the Class [F] Certificates,
until all amounts of Collateral Support Deficit previously allocated to
the Class [F] Certificates, but not previously reimbursed, have been
reimbursed in full;
(xix) nineteenth, to the Holders of the Class [G] Certificates in
respect of interest, up to an amount equal to the aggregate Interest
Distribution Amount in respect of such Class of Certificates for such
Distribution Date;
(xx) twentieth, after the Certificate Balances of the Class [A-1],
Class [A-2], Class [B], Class [C], Class [D], Class [E] and Class [F]
Certificates have been reduced to zero, to the Holders of the Class [G]
Certificates, in reduction of the Certificate Balance thereof, an amount
equal to the Principal Distribution Amount (or the portion thereof
remaining after any distributions in respect of the Class [A], Class [B],
Class [C], Class [D], Class [E] and Class [F] Certificates on such
Distribution Date), until the outstanding Certificate Balance of the Class
[G] Certificates has been reduced to zero;
(xxi) twenty-first, to the Holders of the Class [G] Certificates,
until all amounts of Collateral Support Deficit previously allocated to
the Class [G] Certificates, but not previously reimbursed, have been
reimbursed in full;
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(xxii) twenty-second, to the Holders of the Class [H] Certificates
in respect of interest, up to an amount equal to the aggregate Interest
Distribution Amount in respect of such Class of Certificates for such
Distribution Date;
(xxiii) twenty-third, after the Certificate Balances of the Class
[A-1], Class [A-2], Class [B], Class [C], Class [D], Class [E], Class [F]
and Class [G] Certificates have been reduced to zero, to the Holders of
the Class [H] Certificates, in reduction of the Certificate Balance
thereof, an amount equal to the Principal Distribution Amount (or the
portion thereof remaining after any distributions in respect of the Class
[A], Class [B], Class [C], Class [D], Class [E], Class [F] and Class [G]
Certificates on such Distribution Date), until the outstanding Certificate
Balance of the Class [H] Certificates has been reduced to zero;
(xxiv) twenty-fourth, to the Holders of the Class [H] Certificates,
until all amounts of Collateral Support Deficit previously allocated to
the Class [H] Certificates, but not previously reimbursed, have been
reimbursed in full; and
(xxv) twenty-fifth, to the Holders of the Class [R] Certificates,
the amount, if any, of the Available Distribution Amount remaining in the
Upper-Tier Distribution Account with respect to such Distribution Date.
(b) On each Distribution Date, each Uncertificated Lower-Tier
Interest shall receive distributions in respect of principal or reimbursement of
Collateral Support Deficit in an amount equal to the amount of principal or
reimbursement of Collateral Support Deficit distributable to its respective
Related Certificates as provided in Sections 4.01(a) and (c). On each
Distribution Date, each Uncertificated Lower-Tier Interest (other than the Class
[LA-1] Uncertificated Interest and the Class [LWAC] Uncertificated Interest)
shall receive distributions in respect of interest in an amount equal to the
Interest Distribution Amount in respect of its Related Certificates, in each
case to the extent actually distributable thereon as provided in Section
4.01(a). On each Distribution Date, the Class [LA-1] Uncertificated Interest
shall receive distributions in respect of interest in an amount equal to the sum
of (i) the amount of interest distributable on the Class [A-1] Certificates and
(ii) an amount equal to the product of the Class [LA-1] Interest Fraction and
the amount of interest distributable on the Class [X] Certificates. On each
Distribution Date, the Class [LWAC] Uncertificated Interest shall receive
distributions in respect of interest for the related Interest Accrual Period in
an amount equal to one-twelfth of the product of (i) the Class [LWAC]
Pass-Through Rate and (ii) the Class [LWAC] Notional Amount. Such amounts
distributed to the Uncertificated Lower-Tier Interests in respect of principal
and interest with respect to any Distribution Date are referred to herein
collectively as the "Lower-Tier Distribution Amount," and shall be made by the
Paying Agent by depositing such Lower-Tier Distribution Amount in the Upper-Tier
Distribution Account.
As of any date, the principal balance of each Uncertificated
Lower-Tier Interest (other than the Class [LWAC] Uncertificated Interest) equals
the Certificate Balance of the Related Certificates with respect thereto. The
initial principal balance of each Uncertificated Lower-Tier Interest equals the
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respective Original Lower-Tier Principal Amount. The pass-through rate with
respect to each Uncertificated Lower-Tier Interest will be the rate per annum
set forth in the Preliminary Statement hereto.
Any amount that remains in the Lower-Tier Distribution Account on
each Distribution Date after distribution of the Lower-Tier Distribution Amount
shall be distributed to the Holders of the Class [LR] Certificates (but only to
the extent of the Available Distribution Amount for such Distribution Date
remaining in the Lower-Tier Distribution Account, if any).
(c) On and after the Distribution Date on which the Certificate
Balances of the Subordinate Certificates have all been reduced to zero (without
regard to any amounts of Collateral Support Deficit remaining unreimbursed), the
Principal Distribution Amount will be distributed, pro rata (based upon
Certificate Balances), among the Class [A] Certificates without regard to the
priorities set forth in Section 4.01(a)(ii).
(d) On each Distribution Date, the Paying Agent shall withdraw from
the Lower-Tier Distribution Account an aggregate amount equal to all Prepayment
Premiums and Yield Maintenance Charges actually collected on the Mortgage Loans
or any REO Loans during the related Due Period and shall distribute such amount
in respect of the Class [LA-1] Uncertificated Interest by depositing such amount
in the Upper-Tier Distribution Account (notwithstanding that all principal and
interest distributable with respect to the Class [LA-1] Uncertificated Interest
has been paid in full).
(e) On each Distribution Date, until the Certificate Balances of the
Class [A-1], Class [A-2], Class [B], Class [C], Class [D] and Class [E]
Certificates have each been reduced to zero, the Paying Agent shall withdraw any
amounts on deposit in the Upper-Tier Distribution Account that represent
Prepayment Premiums actually collected on Mortgage Loans or REO Loans during the
related Due Period and remitted in respect of the Class [LA-1] Uncertificated
Interest pursuant to Section 4.01(d), and shall distribute to each of the Class
[A], Class [B], Class [C], Class [D] and Class [E] Certificates, for each such
Class an amount equal to the product of (a) a fraction, the numerator of which
is the amount of principal distributed with respect to such Class pursuant to
Section 4.01(a) on such Distribution Date, and the denominator of which is the
total amount of principal distributed to all Classes of Certificates pursuant to
Section 4.01(a) on such Distribution Date, (b) 25% and (c) the total amount of
Prepayment Premiums collected during the related Due Period. Any Prepayment
Premiums received during the related Due Period with respect to such Mortgage
Loans or REO Loans and remitted in respect of the Class [LA-1] Uncertificated
Interest pursuant to Section 4.01(d), remaining after such distributions shall
be distributed on the Class [X] Certificates.
On each Distribution Date, until the Certificate Balances of the
Class [A-1], Class [A-2], Class [B], Class [C], Class [D] and Class [E]
Certificates have each been reduced to zero, the Paying Agent shall withdraw any
amounts on deposit in the Upper-Tier Distribution Account that represent Yield
Maintenance Charges actually collected on Mortgage Loans or REO Loans during the
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related Due Period and remitted in respect of the Class [LA-1] Uncertificated
Interest pursuant to Section 4.01(d), and shall distribute to each of the Class
[A], Class [B], Class [C], Class [D] and Class [E] Certificates, for each such
Class an amount equal to the product of (a) a fraction, the numerator of which
is the amount of principal distributed with respect to such Class pursuant to
Section 4.01(a) on such Distribution Date, and the denominator of which is the
total amount of principal distributed to all Classes of Certificates pursuant to
Section 4.01(a) on such Distribution Date, (b) the Base Interest Fraction for
the related principal prepayment and such Class of Certificates and (c) the
aggregate amount of Yield Maintenance Charges collected on such principal
prepayment during the related Due Period. Any Yield Maintenance Charges received
during the related Due Period with respect to such Mortgage Loans and remitted
in respect of the Class [LA-1] Uncertificated Interest pursuant to Section
4.01(d) remaining after such distributions shall be distributed on the Class [X]
Certificates.
Following the reduction of the Certificate Balances of the Class
[A-1], Class [A-2], Class [B], Class [C], Class [D] and Class [E] Certificates
to zero, the Paying Agent shall distribute 100% of any Yield Maintenance Charges
and Prepayment Premiums actually received during the related Due Period with
respect to such Mortgage Loans and remitted in respect of the Class [LA-1]
Uncertificated Interest pursuant to Section 4.01(d), to the Class [X]
Certificates.
(f) 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 specifically provided in Sections 4.01(g), 4.01(h) and 9.01, all such
distributions with respect to each Class on each Distribution Date shall be made
to the Certificateholders of the respective Class of record at the close of
business on the related Record Date and shall be made by wire transfer of
immediately available funds to the account of any such Certificateholder at a
bank or other entity having appropriate facilities therefor, if such
Certificateholder shall have provided the Trustee and the Paying Agent with
wiring instructions no less than 5 Business Days prior to the related Record
Date (which wiring instructions may be in the form of a standing order
applicable to all subsequent Distribution Dates) and is the registered owner of
Certificates with an aggregate initial Certificate Balance or Notional Amount,
as applicable, of at least $5,000,000, or otherwise by check mailed to the
address of such Certificateholder as it appears in the Certificate Register. The
final distribution on each Certificate (determined without regard to any
possible future reimbursement of Collateral Support Deficit previously allocated
to such Certificate) will be made in like manner, but only upon presentation and
surrender of such Certificate at the offices of the Certificate Registrar or
such other location specified in the notice to Certificateholders of such final
distribution.
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 Certificate Owners that it represents and to each indirect participating
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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 Certificate Owners that it represents. None of the Paying Agent, the
Trustee, the Certificate Registrar, the Depositor, the Servicer, the Special
Servicer, the Underwriters, the Placement Agents or the Fiscal Agent shall have
any responsibility therefor except as otherwise provided by this Agreement or
applicable law.
(g) Except as otherwise provided in Section 9.01, whenever the
Paying Agent expects that the final distribution with respect to any Class of
Certificates (determined without regard to any possible future reimbursement of
any amount of Collateral Support Deficit previously allocated to such Class of
Certificates) will be made on the next Distribution Date, the Paying Agent
shall, no later than the related P&I Advance Determination Date, mail to each
Holder 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
offices of the Certificate Registrar or such other location therein
specified; and
(ii) no interest shall accrue on such Certificates from and after
such Distribution Date.
Any funds not distributed to any Holder or Holders of Certificates of such Class
on such Distribution Date because of the failure of such Holder or Holders to
tender their Certificates shall, on such date, be set aside and held uninvested
in trust and credited to the account or accounts of the appropriate
non-tendering Holder or Holders. If any Certificates as to which notice has been
given pursuant to this Section 4.01(g) 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 Certificateholder on any
amount held in trust hereunder by the Trustee or the Paying Agent as a result of
such Certificateholder's failure to surrender its Certificate(s) for final
payment thereof in accordance with this Section 4.01(g).
(h) Distributions in reimbursement of Collateral Support Deficit
previously allocated to the Regular Certificates shall be made in the amounts
and manner specified in Section 4.01(a) to the Holders of the respective Class
otherwise entitled to distributions of interest and principal on such Class on
the relevant Distribution Date; provided, that all distributions in
reimbursement of Collateral Support Deficit previously allocated to a Class of
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Certificates which has since been retired shall be to the prior Holders that
surrendered the Certificates of such Class upon retirement thereof and shall be
made by check mailed to the address of each such prior Holder last shown in the
Certificate Register. Notice of any such distribution to a prior Holder shall be
made in accordance with Section 11.05 at such last address. The amount of the
distribution to each such prior Holder shall be based upon the aggregate
Percentage Interest evidenced by the Certificates surrendered thereby. If the
check mailed to any such prior Holder is returned uncashed, then the amount
thereof shall be set aside and held uninvested in trust for the benefit of such
prior Holder, and the Paying Agent shall attempt to contact such prior Holder in
the manner contemplated by Section 4.01(g) as if such Holder had failed to
surrender its Certificates.
SECTION 4.02. Statements to Certificateholders; Collection Reports.
(a) On each Distribution Date, the Paying Agent shall forward by
mail to all of the Holders of each Class of Certificates, the Trustee, the
Underwriters, the Placement Agents, the Servicer, the Special Servicer and a
financial market publisher (which initially shall be Bloomberg, L.P.) a
statement (substantially in the form set forth as Exhibit H hereto) as to the
distributions made on such Distribution Date (each, a "Distribution Date
Statement") setting forth:
(i) the amount of the distribution on such Distribution Date to
the Holders of such Class of Certificates in reduction of the
Certificate Balance thereof;
(ii) the amount of the distribution on such Distribution Date to the
Holders of such Class of Certificates allocable to Distributable
Certificate Interest;
(iii) the aggregate amount of P&I Advances made in respect of
such Distribution Date;
(iv) the aggregate amount of compensation paid to the Trustee and
servicing compensation paid to the Servicer during the Due Period for such
Distribution Date;
(v) the aggregate Stated Principal Balance of the Mortgage Loans and
any REO Loans outstanding immediately before and immediately after such
Distribution Date;
(vi) the number, aggregate principal balance, weighted average
remaining term to maturity and weighted average Mortgage Rate of the
Mortgage Loans as of the end of the related Due Period for such
Distribution Date;
(vii) the number and aggregate principal balance 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;
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(viii) the value of any REO Property included in the Trust Fund as
of the end of the related Due Period for such Distribution Date, based on
the most recent Appraisal or valuation;
(ix) the Available Distribution Amount for such Distribution
Date;
(x) the Accrued Certificate Interest in respect of such Class of
Certificates for such Distribution Date, separately identifying any
Certificate Deferred Interest for such Distribution Date allocated to such
Class of Certificates;
(xi) the amount of the distribution on such Distribution Date to the
Holders of such Class of Certificates allocable to Prepayment Premiums and
Yield Maintenance Charges;
(xii) the Pass-Through Rate for such Class of Certificates (other
than the Class [X] Certificates) and the [A-1] Component Pass-Through
Rate, and the WAC Component Pass-Through Rate in the case of the Class [X]
Certificates for such Distribution Date and the next succeeding
Distribution Date;
(xiii) the Scheduled Principal Distribution Amount and the
Unscheduled Principal Distribution Amount for such Distribution Date;
(xiv) the Certificate Balance or Notional Amount, as the case may
be, of each Class of Certificates immediately before and immediately after
such Distribution Date, separately identifying any reduction therein as a
result of the allocation of any Collateral Support Deficit on such
Distribution Date;
(xv) the Certificate Factor for each Class of Regular
Certificates immediately following such Distribution Date;
(xvi) the amount of any Appraisal Reductions effected in connection
with such Distribution Date on a loan-by-loan basis, the total Appraisal
Reduction effected in connection with such Distribution Date and the total
Appraisal Reduction Amounts as of such Distribution Date on a loan-by-loan
basis;
(xvii) the number and related Stated Principal Balance of
any Mortgage Loans extended or modified during the related Due Period;
(xviii) the amount of any remaining Class Unpaid Interest
Shortfall for such Class as of such Distribution Date;
(xix) a loan-by-loan listing of each Mortgage Loan which was the
subject of a Principal Prepayment during the related Due Period and the
amount and the type of Principal Prepayment occurring; and
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(xx) in the case of the Residual Certificates, the amount of any
distributions on such Certificates pursuant to Sections 4.01(a) and (b).
In the case of information furnished pursuant to clauses (i), (ii),
(xi), (xviii) and (xix) above, the amounts shall be expressed as a dollar amount
in the aggregate for all Certificates of each applicable Class and per
Definitive Certificate.
Within a reasonable period of time after the end of each calendar
year, the Paying Agent shall furnish to the Trustee and each Person who at any
time during the calendar year was a Holder of a Certificate, a statement
containing the information set forth in clauses (i), (ii) and (xi) above as to
the applicable Class, aggregated for such calendar year or applicable portion
thereof during which such person was a Certificateholder, together with such
other information as the Paying Agent deems necessary or desirable, or that a
Certificateholder or Certificate Owner reasonably requests, to enable
Certificateholders to prepare their tax returns for such calendar year. Such
obligation of the Paying Agent shall be deemed to have been satisfied to the
extent that substantially comparable information shall be provided by the Paying
Agent pursuant to any requirements of the Code as from time to time are in
force.
On each Distribution Date, the Paying Agent shall forward to the
Depositor, to each Rating Agency, to each Holder of a Residual Certificate, to
the Servicer, to the Special Servicer, to the Trustee, to the Fiscal Agent, to
an agent designated by the Directing Certificateholder (such agent shall
initially be the____________________________________), and to any other party
that the Depository may designate, a copy of the Distribution Date Statement
forwarded to the Holders of the Regular Certificates on such Distribution Date.
(b) With respect to each Distribution Date, the Servicer shall
furnish to the Paying Agent, Trustee, the Depositor, the Special Servicer and
each Rating Agency (i) a preliminary Collection Report no later than the
Business Day immediately following the related P&I Advance Determination Date
and (ii) an accurate and complete Collection Report no later than the related
P&I Advance Date, in each case containing the following information:
(i) the information to be provided to Certificateholders on
such Distribution Date pursuant to clauses (iii) through (viii) of
Section 4.02(a); and
(ii) such other information in the Servicer's possession regarding
the Mortgage Loans and any REO Properties as the Paying Agent or the
Trustee may reasonably request to perform their respective duties
hereunder or that any Rating Agency requests.
The Collection Report may be in the form of more than one report (if
necessary and appropriate), and shall be provided by the Servicer to the Paying
Agent and the Trustee in such format(s) as the Servicer, the Paying Agent and
the Trustee may agree. None of the Paying Agent, the Trustee or the Depositor
shall have any obligation to recompute, verify or recalculate the information
provided thereto by the Servicer in the Collection Report. Unless the Paying
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Agent has actual knowledge that any Collection Report contains erroneous
information, the Paying Agent is authorized to rely thereon in calculating and
making distributions to Certificateholders in accordance with Section 4.01,
preparing the statements to Certificateholders required by Section 4.02(a) and
allocating Collateral Support Deficit to the Certificates in accordance with
Section 4.04.
(c) As soon as reasonably practicable, upon the written request of
any Certificateholder, the Servicer shall provide the requesting
Certificateholder with such information that is in the Servicer's possession or
can reasonably be obtained by the Paying Agent or the Trustee as is requested by
such Certificateholder, for purposes of satisfying applicable reporting
requirements under Rule 144A under the Securities Act. In addition, pursuant to
Section 8.12(b), the Servicer shall provide a financial market publisher (which
shall initially be Bloomberg, L.P.) certain current information with respect to
the Mortgaged Properties as set forth on Schedule I hereto.
(d) The Paying Agent shall file with the Commission, in respect of
the Trust Fund, the Uncertificated Lower-Tier Interests and the Certificates,
copies of the information, documents and other reports (or copies of such
portions of any of the foregoing as the Commission may from time to time by
rules and regulations prescribe) required to be filed with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act (including Distribution Date
Statements issued pursuant to Section 4.02(a) by means of a Current Report on
Form 8-K and an Annual Report on Form 10-K). In the event that the Depositor
determines that electronic filing through the EDGAR System is required for any
reports, the Depositor may either (x) request that the Paying Agent process such
filing or (y) cause the filing to be processed by the Depositor or its designee
upon receipt from the Paying Agent of the reports, documents and other
information described above. Notwithstanding the foregoing, the Depositor shall
file with the Commission, within fifteen days after the Closing Date, a Current
Report on Form 8-K together with this Agreement.
SECTION 4.03. P&I Advances.
(a) On or before 12:30 p.m., New York City time, on each P&I Advance
Date, the Servicer shall either (i) deposit into the Distribution Account from
its own funds 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 Servicer's records and replaced by the
Servicer by deposit in the Certificate Account on or before the next succeeding
P&I Advance Determination Date (to the extent not previously replaced through
the deposit of Late Collections of the delinquent principal and/or interest in
respect of which such P&I Advances were made). The Servicer shall notify the
Trustee and the Fiscal Agent by a certificate of the Servicing Officer of (i)
the aggregate amount of P&I Advances for a Distribution Date and (ii) the amount
of any Nonrecoverable P&I Advances for such Distribution Date, on or before 3
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Business Days prior to such Distribution Date. If the Servicer fails to make a
required P&I Advance by 12:30 p.m., New York City time, on any P&I Advance Date,
an Event of Default as set forth in clause (a)(i) of Section 7.01 shall occur
and the Trustee shall make such P&I Advance pursuant to Section 7.05, and if the
Trustee fails to make such P&I Advance by the close of business, New York City
time, on such P&I Advance Date, the Fiscal Agent shall make such P&I Advance
pursuant to Section 7.05 by 10:00 a.m., New York City time, on the immediately
succeeding Business Day. In the event that the Servicer fails to make a required
P&I Advance hereunder, the Paying Agent shall notify the Trustee and the Fiscal
Agent of such circumstances by 1:00 p.m. (New York City time) on the related P&I
Advance Date.
(b) Subject to Section 4.03(c) and (e) below, the aggregate amount
of P&I Advances to be made by the Servicer with respect to any Distribution Date
shall equal the aggregate of: (i) all Monthly Payments (in each case, net of
related Servicing Fees) other than Balloon Payments, that were due during the
related Due Period and delinquent as of the close of business on the Business
Day preceding the related P&I Advance Date (or not advanced by any Sub-Servicer
on behalf of the Servicer) and (ii) with respect to each Mortgage Loan as to
which the related Balloon Payment was due during or prior to the related Due
Period and was delinquent as of the end of the related Due Period (including any
REO Loan as to which the Balloon Payment would have been past due), an amount
equal to the Assumed Scheduled Payment therefor. Subject to subsection (c)
below, the obligation of the Servicer to make such P&I Advances is mandatory,
and with respect to any Mortgage Loan or REO Loan, shall continue until the
Distribution Date on which the proceeds, if any, received in connection with a
Liquidation Event with respect thereto are to be distributed.
(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.
(d) In connection with the recovery of any P&I Advance out of the
Certificate Account pursuant to Section 3.05(a), the Servicer shall be entitled
to pay itself, the Trustee or the Fiscal Agent, as the case may be (in reverse
of such order with respect to any Mortgage Loan), out of any amounts then on
deposit in the Certificate Account, interest at the Reimbursement Rate in effect
from time to time, accrued on the amount of such P&I Advance from the date made
to but not including the date of reimbursement. The Servicer shall reimburse
itself, the Trustee or the Fiscal Agent, as the case may be, for any outstanding
P&I Advance as soon as practicably possible after funds available for such
purpose are deposited in the Certificate Account.
(e) Notwithstanding the foregoing, (i) none of the Servicer, the
Trustee and the Fiscal Agent shall be required to make an advance for Penalty
Charges, Prepayment Premiums or Yield Maintenance Charges and (ii) the amount
required to be advanced in respect of delinquent Monthly Payments or Assumed
Scheduled Payments on Mortgage Loans that have been subject to an Appraisal
Reduction Event will equal, with respect to any Distribution Date and any
Mortgage Loan, the amount that would be required to be advanced by the Servicer
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without giving effect to the Appraisal Reduction less any Appraisal Reduction
Amount with respect to such Mortgage Loan for such Distribution Date.
SECTION 4.04. Allocation of Collateral Support Deficit.
(a) On each Distribution Date, immediately following the
distributions to be made on such date pursuant to Section 4.01 and the
allocation of Certificate Deferred Interest pursuant to Section 4.06, the Paying
Agent shall calculate the amount, if any, by which (i) the aggregate Stated
Principal Balance of the Mortgage Loans and any REO Loans expected to be
outstanding immediately following such Distribution Date, is less than (ii) the
then aggregate Certificate Balance of the Regular Certificates after giving
effect to distributions of principal on such Distribution Date and the
allocation of Certificate Deferred Interest pursuant to Section 4.06 (any such
deficit, the "Collateral Support Deficit"). Any allocation of Collateral Support
Deficit to a Class of Regular Certificates shall be made by reducing the
Certificate Balance thereof by the amount so allocated. Any Collateral Support
Deficit 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. The allocation of Collateral Support Deficit shall
constitute an allocation of losses and other shortfalls experienced by the Trust
Fund. Reimbursement of previously allocated Collateral Support Deficit will not
constitute distributions of principal for any purpose and will not result in an
additional reduction in the Certificate Balance of the Class of Certificates in
respect of which any such reimbursement is made.
(b) On each Distribution Date, the Certificate Balances of the
Regular Certificates will be reduced without distribution as a write-off to the
extent of any Collateral Support Deficit, if any, allocable to such Certificates
with respect to such Distribution Date. Any such write-off shall be allocated
among the respective Certificates as follows: first, to the Class [H]
Certificates; second, to the Class [G] Certificates; third, to the Class [F]
Certificates; fourth, to the Class [E] Certificates; fifth, to the Class [D]
Certificates; sixth, to the Class [C] Certificates; seventh, to the Class [B]
Certificates, in each case, until the remaining Certificate Balance of each such
Class of Certificates has been reduced to zero and eighth, to the Class [A-1]
Certificates and the Class [A-2] Certificates, pro rata (based upon Certificate
Balance), until the remaining Certificate Balances of such Classes of
Certificates have been reduced to zero.
(c) With respect to any Distribution Date, any Collateral Support
Deficit allocated to a Class of Certificates pursuant to Section 4.04(b) with
respect to such Distribution Date shall reduce the Lower-Tier Principal Amounts
of the Related Uncertificated Lower-Tier Interest with respect thereto as a
write-off.
SECTION 4.05. Appraisal Reductions.
The aggregate Appraisal Reduction will be allocated by the Paying
Agent on each Distribution Date, only for purposes of determining the identity
of the Controlling Class and Voting Rights and the amount of P&I Advances with
respect to the related Mortgage Loan, to the Certificate Balance of the Class
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[H], Class [G], Class [F], Class [E], Class [D], Class [C] and Class [B]
Certificates, in that order, up to the amount of their respective Certificate
Balances. On any Distribution Date, an Appraisal Reduction that otherwise would
be allocated to a Class of Certificates will be allocated to the next most
subordinate Class to the extent that the Certificate Balance on such
Distribution Date for such Class of Certificates (prior to taking the Appraisal
Reduction into account) is less than the Appraisal Reduction for such
Distribution Date.
SECTION 4.06. Certificate Deferred Interest.
(a) On each Distribution Date, the amount of interest distributable
to a Class of Certificates (other than the Class [X] Certificates) shall be
reduced by an amount equal to the amount of Mortgage Deferred Interest for all
Mortgage Loans for the Due Dates occurring in the related Due Period allocated
to such Class of Certificates, such Mortgage Deferred Interest to be allocated
first to the Class [H] Certificates, second to the Class [G] Certificates, third
to the Class [F] Certificates, fourth to the Class [E] Certificates, fifth to
the Class [D] Certificates, sixth to the Class [C] Certificates, seventh to the
Class [B] Certificates and eighth, pro rata (based upon Accrued Certificate
Interest), to the Class [A-1] and Class [A-2] Certificates, in each case up to
the respective Accrued Certificate Interest for each such Class of Certificates
for such Distribution Date.
(b) On each Distribution Date, the Certificate Balances of the Class
[A-1], Class [A-2], Class [B], Class [C], Class [D], Class [E], Class [F], Class
[G] and Class [H] Certificates shall be increased by the amount of the
Certificate Deferred Interest allocated to such Class of Certificates on such
Distribution Date pursuant to Section 4.06(a) above.
(c) With respect to any Distribution Date, any Certificate Deferred
Interest with respect to such Distribution Date allocated pursuant to Section
4.06(a) to a Class of Certificates shall be allocated in reduction of the amount
of interest distributable to the Related Uncertificated Lower-Tier Interest with
respect thereto. On each Distribution Date, to the extent provided in Section
4.06(b), Certificate Deferred Interest will be added to the Lower-Tier Principal
Amount of the Uncertificated Lower-Tier Interests in the same manner as the
interest thereon was reduced pursuant to the preceding sentence.
[End of Article IV]
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ARTICLE V
THE CERTIFICATES
SECTION 5.01. The Certificates.
(a) The Certificates will be substantially in the respective forms
annexed hereto as Exhibits A-1 through and including A-12. The Certificates will
be issuable in registered form only; provided, however, that in accordance with
Section 5.03 beneficial ownership interests in the Regular Certificates shall
initially be held and transferred through the book-entry facilities of the
Depository. The Class [R] and Class [LR] Certificates will each be issuable in
one or more registered, definitive physical certificates (each, a "Definitive
Certificate") substantially in the form of Certificates of each Class and with
such applicable legends as are set forth in the Exhibits hereto corresponding to
such Class. Each Certificate will share ratably in all rights of the related
Class. The Class [X] Certificates will be issuable only in minimum Denominations
of authorized initial Notional Amount of not less than $1,000,000 and in
integral multiples of $1,000 in excess thereof. The Offered Certificates (other
than the Class [X] Certificates) will be issuable only in minimum Denominations
of authorized initial Certificate Balance of not less than $25,000, and in
integral multiples of $1,000 in excess thereof. The Non-Registered Certificates
(other than the Residual Certificates) will be issuable in minimum Denominations
of authorized initial Certificate Balance of not less than $250,000, and in
integral multiples of $1,000 in excess thereof. If the Original Certificate
Balance or initial Notional Amount, as applicable, of any Class does not equal
an integral multiple of $1,000, then a single additional Certificate of such
Class may be issued in a minimum denomination of authorized initial Certificate
Balance or initial Notional Amount, as applicable, that includes the excess of
(i) the Original Certificate Balance or initial Notional Amount, as applicable,
of such Class over (ii) the largest integral multiple of $1,000 that does not
exceed such amount. The Class [R] and Class [LR] Certificates will be issuable
only in one or more Definitive Certificates in denominations representing
Percentage Interests of not less than 20%. With respect to any Certificate or
any beneficial interest in a Certificate, the "Denomination" thereof shall be
(i) the amount (a) set forth on the face thereof or, (b) set forth on a schedule
attached thereto or (c) in the case of any beneficial interest in a Book-Entry
Certificate, the interest of the related Certificate Owner in the applicable
Class of Certificates as reflected on the books and records of the Depository or
related Participants, as applicable, (ii) expressed in terms of initial
Certificate Balance or initial Notional Amount, as applicable, and (iii) be in
an authorized denomination, as set forth above. The Book-Entry Certificates will
be issued as one or more certificates registered in the name of a nominee
designated by the Depository, and Certificate Owners will hold interests in the
Book-Entry Certificates through the book-entry facilities of the Depository in
the minimum Denominations and aggregate Denominations as set forth in the above.
No Certificate Owner of a Book-Entry Certificate of any Class thereof will be
entitled to receive a Definitive Certificate representing its interest in such
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Class, except as provided in Section 5.03 herein. Unless and until Definitive
Certificates are issued in respect of a Class of Book-Entry Certificates,
beneficial ownership interests in such Class of Certificates will be maintained
and transferred on the book-entry records of the Depository and Depository
Participants, and all references to actions by Holders of such Class of
Certificates will refer to action taken by the Depository upon instructions
received from the related registered Holders of Certificates through the
Depository Participants in accordance with the Depository's procedures and,
except as otherwise set forth herein, all references herein to payments,
notices, reports and statements to Holders of such Class of Certificates will
refer to payments, notices, reports and statements to the Depository or its
nominee as the registered Holder thereof, for distribution to the related
registered Holders of Certificates through the Depository Participants in
accordance with the Depository's procedures.
(b) The Certificates shall be executed by manual or facsimile
signature on behalf of the Certificate Registrar by an authorized officer.
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. The Chase
Manhattan Bank, 450 West 33rd Street, 15th Floor, New York, New York 10001, is
hereby initially appointed Authenticating Agent with power to act on the
Trustee's behalf in the authentication and delivery of the Certificates in
connection with transfers and exchanges as herein provided. If The Chase
Manhattan Bank resigns or is removed as Servicer in accordance with the terms
hereof, The Chase Manhattan Bank shall be entitled to immediately resign as
Authenticating Agent by giving written notice thereof to the Trustee and the
Servicer. If The Chase Manhattan Bank is removed as Servicer pursuant to an
Event of Default described in Section 7.01(a)(v), (vi) or (vii), then The Chase
Manhattan Bank shall be terminated as Authenticating Agent. If the
Authenticating Agent resigns or is terminated, the Trustee shall appoint a
successor Authenticating Agent which may be the Trustee or an Affiliate thereof.
(c) 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.
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SECTION 5.02. Registration of Transfer and Exchange of
Certificates.
(a) At all times during the term of this Agreement, there shall be
maintained at the office of the Certificate Registrar a Certificate Register in
which, subject to such reasonable regulations as the Certificate Registrar may
prescribe, the Certificate Registrar shall provide for the registration of
Certificates and of transfers and exchanges of Certificates as herein provided.
The Chase Manhattan Bank, 450 West 33rd Street, 15th Floor, New York, New York
10001 is hereby initially appointed 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, the Servicer and
the Fiscal Agent, 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 Servicer resigns or is removed in accordance with the terms
hereof, and The Chase Manhattan Bank resigns as Certificate Registrar, the
Trustee shall immediately succeed to its predecessor's duties as Certificate
Registrar. If The Chase Manhattan Bank is removed as Servicer pursuant to an
Event of Default described in Section 7.01(a)(v), (vi) or (vii), then The Chase
Manhattan Bank shall be terminated as Certificate Registrar and, with respect to
its duties as Certificate Registrar, shall immediately be succeeded by the
Trustee. The Depositor, the Trustee, the Paying Agent, the 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. The names and addresses of all Certificateholders and the
names and addresses of the transferees of any Certificates shall be registered
in the Certificate Register; provided, however, in no event shall the
Certificate Registrar be required to maintain in the Certificate Register the
names of Certificate Owners. The Person in whose name any Certificate is so
registered shall be deemed and treated as the sole owner and Holder thereof for
all purposes of this Agreement and the Certificate Registrar, the Servicer, the
Trustee, the Fiscal Agent, the Paying Agent, the Special Servicer and any agent
of any of them shall not be affected by any notice or knowledge to the contrary.
A Definitive Certificate is transferable or exchangeable only upon the surrender
of such Certificate to the Certificate Registrar at its office maintained at 450
West 33rd Street, New York, New York 10001 or at the Corporate Trust Office, if
the Trustee is the Certificate Registrar (the "Registrar Office") together with
an assignment and transfer (executed by the Holder or his duly authorized
attorney). Subject to the requirements of Sections 5.02(b), (c) and (d), the
Certificate Registrar shall execute and the Authenticating Agent shall duly
authenticate in the name of the designated transferee or transferees, one or
more new Certificates in Denominations of a like aggregate Denomination as the
Definitive Certificate being surrendered. Such Certificates shall be delivered
by the Certificate Registrar in accordance with Section 5.02(e). Each
Certificate surrendered for registration of transfer shall be canceled, and the
Certificate Registrar shall hold such canceled Certificates in accordance with
its standard procedures.
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(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 which does not
require such registration or qualification. If a transfer (other than one by the
Depositor to an Affiliate thereof) is to be made in reliance upon an exemption
from the Securities Act, and under the applicable state securities laws, then
either: (i) the Certificate Registrar shall require that the transferee deliver
to the Certificate Registrar an investment representation letter (the
"Investment Representation Letter") substantially in the form of Exhibit C
attached hereto, which Investment Representation Letter shall certify, among
other things, that the transferee is an institutional "accredited investor" as
defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities
Act (an "Institutional Accredited Investor") or a "qualified institutional
buyer" as defined in Rule 144A under the Securities Act (a "Qualified
Institutional Buyer"), and the Certificate Registrar may also require that the
transferee deliver to the Certificate Registrar an Opinion of Counsel if such
transferee is not a Qualified Institutional Buyer or (ii) if the certifications
described in the preceding clause (i) cannot be provided, (a) the Certificate
Registrar shall require an Opinion of Counsel reasonably satisfactory to the
Certificate Registrar and the Depositor that such transfer may be made pursuant
to an exemption, describing the applicable exemption and the basis therefor,
from registration or qualification under the Securities Act, applicable state
securities laws and other relevant laws, which Opinion of Counsel shall not be
an expense of the Trust Fund, the Certificate Registrar, the Depositor or the
Trustee and (b) the Certificate Registrar shall require the transferor to
execute a certification in form and substance satisfactory to the Certificate
Registrar setting forth the facts surrounding such transfer; provided, however,
that a transfer of a Non-Registered Certificate of any such Class may be made to
a trust if the transferor provides to the Certificate Registrar and to the
Trustee a certification that interests in such trust may only be transferred
subject to requirements substantially to the effect set forth in this Section
5.02. The Servicer will furnish, or cause to be furnished, upon the request of
any Holder of Non-Registered Certificates, to a prospective purchaser of such
Non-Registered Certificates who is a Qualified Institutional Buyer, such
information as is specified in paragraph (d)(4) of Rule 144A with respect to the
Trust Fund, unless, at the time of such request, the entity with respect to
which such information is to be provided is subject to the reporting
requirements of Section 15(d) of the Exchange Act. None of the Depositor, the
Trustee, the Fiscal Agent, the Servicer 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 does
hereby agree to, indemnify the Depositor, the Trustee, the Servicer and the
Certificate Registrar 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.
Unless the Certificate Registrar determines otherwise in accordance with
applicable law and the rules and procedures of, or applicable to, the Depository
(the "Depository Rules"), transfers of a beneficial interest in a Book-Entry
Certificate representing an interest in a Non-Registered Certificate that is not
rated in one of the top four categories by a nationally recognized statistical
rating organization to (i) an Institutional Accredited Investor will require
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delivery in the form of a Definitive Certificate and the Certificate Registrar
shall register such transfer only upon compliance with the foregoing provisions
of this Section 5.02(b) or (ii) a Qualified Institutional Buyer may only be
effectuated by means of an "SRO Rule 144A System" approved for such purpose by
the Commission.
Unless the Non-Registered Certificates have been registered under
the Securities Act, each of the Non-Registered Certificates shall bear a legend
substantially to the following effect:
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES
LAWS. NEITHER THIS CERTIFICATE NOR ANY INTEREST OR PARTICIPATION
HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION UNDER THE SECURITIES ACT.
THE HOLDER OF THIS CERTIFICATE BY ITS ACCEPTANCE HEREOF AGREES NOT
TO OFFER, SELL OR OTHERWISE TRANSFER SUCH CERTIFICATE EXCEPT IN
ACCORDANCE WITH ALL APPLICABLE STATE SECURITIES LAWS AND (a)
PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (b) FOR SO LONG AS THIS
CERTIFICATE IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A"), TO A PERSON WHO THE SELLER REASONABLY
BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE
144A IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (c) TO
AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE
501 (a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT
IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS UNDER THE
SECURITIES ACT, OR (d) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT IN EACH
OF THE FOREGOING CASES TO THE COMPLETION AND DELIVERY BY THE
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TRANSFEROR TO THE CERTIFICATE REGISTRAR OF A CERTIFICATE OF TRANSFER
IN THE FORM APPEARING ON THE LAST PAGE OF THIS CERTIFICATE.
THE INITIAL INVESTOR IN THIS CERTIFICATE, AND EACH SUBSEQUENT
PURCHASER OF THIS CERTIFICATE, BY PURCHASING THIS CERTIFICATE OR AN
INTEREST HEREIN, IS DEEMED TO HAVE AGREED TO COMPLY WITH CERTAIN
TRANSFER REQUIREMENTS SET FORTH IN THE POOLING AND SERVICING
AGREEMENT. A TRANSFEREE IS ALSO REQUIRED TO DELIVER AN INVESTMENT
REPRESENTATION LETTER SUBSTANTIALLY IN THE FORM OF EXHIBIT C TO THE
POOLING AND SERVICING AGREEMENT IF SUCH TRANSFEREE IS A QUALIFIED
INSTITUTIONAL BUYER OR AN INSTITUTIONAL ACCREDITED INVESTOR, AND MAY
ALSO BE REQUIRED TO DELIVER AN OPINION OF COUNSEL IF SUCH TRANSFEREE
IS NOT A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE
144A.
(c) With respect to the Subordinate Certificates, no sale, transfer,
pledge or other disposition by any Holder of any such Certificate shall be made
unless the Certificate Registrar shall have received either (i) a representation
letter from the proposed purchaser or transferee of such Certificate
substantially in the form of Exhibit G attached hereto, to the effect that such
proposed purchaser or transferee is not (a) an employee benefit plan subject to
the fiduciary responsibility provisions of ERISA or Section 4975 of the Code, or
a governmental plan (as defined in Section 3(32) of ERISA) subject to any
federal, state or local law ("Similar Law") which is, to a material extent,
similar to the foregoing provisions of ERISA or the Code (each a "Plan") or (b)
a person acting on behalf of or using the assets of any such Plan (including an
entity whose underlying assets include Plan assets by reason of investment in
the entity by such Plan and the application of Department of Labor Regulation
ss. 2510.3-101), other than an insurance company using the assets of its general
account under circumstances whereby the purchase and holding of such
Certificates by such insurance company would be exempt from the prohibited
transaction provisions of ERISA and the Code under Prohibited Transaction Class
Exemption 95-60 or (ii) if such Certificate is presented for registration in the
name of a purchaser or transferee that is any of the foregoing, an Opinion of
Counsel in form and substance satisfactory to the Certificate Registrar and the
Depositor to the effect that the acquisition and holding of such Certificate by
such purchaser or transferee will not result in the assets of the Trust Fund
being deemed to be "plan assets" and subject to the fiduciary responsibility
provisions of ERISA, the prohibited transaction provisions of the Code or the
provisions of any Similar Law, will not constitute or result in a "prohibited
transaction" within the meaning of ERISA, Section 4975 of the Code or any
Similar Law, and will not subject the Trustee, the Certificate Registrar, the
Servicer, the Special Servicer, the Fiscal Agent, the Paying Agent, the
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Extension Adviser, the Underwriters, the Placement Agents or the Depositor to
any obligation or liability (including obligations or liabilities under ERISA,
Section 4975 of the Code or any such Similar Law) in addition to those set forth
in the Agreement. The Certificate Registrar shall not register the sale,
transfer, pledge or other disposition of any such Certificate unless the
Certificate Registrar has received either the representation letter described in
clause (i) above or the Opinion of Counsel described in clause (ii) above. The
costs of any of the foregoing representation letters or Opinions of Counsel
shall not be borne by any of the Depositor, the Servicer, the Special Servicer,
the Fiscal Agent, the Trustee and the Trust Fund. Each Certificate Owner of a
Subordinate Certificate shall be deemed to represent that it is not a Person
specified in clauses (a), or (b) above. Any transfer, sale, pledge or other
disposition of any such Certificates that would constitute or result in a
prohibited transaction under ERISA, Section 4975 of the Code or any Similar Law,
or would otherwise violate the provisions of this Section 5.02(c) shall be
deemed absolutely null and void ab initio, to the extent permitted under
applicable law.
So long as any of the Class of Certificates remains outstanding, the
Servicer will make available, or cause to be made available, upon request, to
any Holder and any Person to whom any such Certificate of any such Class of
Certificates may be offered or sold, transferred, pledged or otherwise disposed
of by such Holder, information with respect to the Servicer, the Special
Servicer or the Mortgage Loans necessary to the provision of an Opinion of
Counsel described in this Section 5.02(c).
(d) (i) Each Person who has or who acquires any Ownership Interest
in a Residual Certificate shall be deemed by the acceptance or acquisition
of such Ownership Interest to have agreed to be bound by the following
provisions and to have irrevocably authorized the Paying Agent under
clause (ii) below to deliver payments to a Person other than such Person.
The rights of each Person acquiring any Ownership Interest in a Residual
Certificate are expressly subject to the following provisions:
(A) No Person holding or acquiring any Ownership Interest in a
Residual Certificate shall be a Disqualified Organization or agent
thereof (including a nominee, middleman or similar person) (an
"Agent"), a Plan or a Person acting on behalf of or investing the
assets of a Plan (such Plan or Person, an "ERISA Prohibited Holder")
or a Non-U.S. Person and shall promptly notify the Servicer, the
Trustee and the Certificate Registrar of any change or impending
change to such status;
(B) In connection with any proposed Transfer of any Ownership
Interest in a Residual Certificate, the Certificate Registrar shall
require delivery to it, and no Transfer of any Residual Certificate
shall be registered until the Certificate Registrar receives, an
affidavit substantially in the form attached hereto as Exhibit D-1
(a "Transfer Affidavit") from the proposed Transferee, in form and
substance satisfactory to the Certificate Registrar, representing
and warranting, among other things, that such Transferee is not a
Disqualified Organization or Agent thereof, an ERISA Prohibited
Holder or a Non-U.S. Person, and that it has reviewed the provisions
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of this Section 5.02(d) and agrees to be bound by them;
(C) Notwithstanding the delivery of a Transfer Affidavit by a
proposed Transferee under clause (b) above, if the Certificate
Registrar has actual knowledge that the proposed Transferee is a
Disqualified Organization or Agent thereof, an ERISA Prohibited
Holder or a Non-U.S. Person, no Transfer of an Ownership Interest in
a Residual Certificate to such proposed Transferee shall be
effected; and
(D) Each Person holding or acquiring any Ownership Interest in
a Residual Certificate shall agree (1) to require a Transfer
Affidavit 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 letter substantially in the form attached hereto as Exhibit D-2 (a
"Transferor Letter") certifying that, among other things, it has no
actual knowledge that such prospective Transferee is a Disqualified
Organization or Agent thereof, an ERISA Prohibited Holder or a
Non-U.S. Person.
(ii) 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 Servicer, the Authenticating Agent
and 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; provided,
however, that the Certificate Registrar shall be under such liability for
a registration of Transfer of a Residual Certificate if it has actual
knowledge that the proposed Transferee is a Disqualified Organization or
Agent thereof, an ERISA Prohibited Holder or a Non-U.S. Person in
violation of Section 5.02(d)(i)(C) above.
(iii) The Servicer shall make available to the Internal Revenue
Service and those Persons specified by the REMIC Provisions, upon written
request of the Trustee, all information in its possession and necessary to
compute any tax imposed as a result of the Transfer of an Ownership
Interest in a Residual Certificate to any Person who is a Disqualified
Organization or Agent thereof, 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.
(e) Subject to the restrictions on transfer and exchange set forth
in this Section 5.02, the Holder of any Definitive Certificate may transfer or
exchange the same in whole or in part (with a Denomination equal to any
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authorized denomination) by surrendering such Certificate at the Registrar
Office or at the office of any successor Certificate Registrar or transfer agent
appointed by the Certificate Registrar, together with an instrument of
assignment or transfer (executed by the Holder or its duly authorized attorney),
in the case of transfer, and a written request for exchange in the case of
exchange. Subject to the restrictions on transfer set forth in this Section 5.02
and Depository Rules, any Certificate Owner owning a beneficial interest in a
Non-Registered Certificate may cause the Certificate Registrar to request that
the Depository exchange such Certificate Owner's beneficial interest in a
Book-Entry for a Definitive Certificate or Certificates. Following a proper
request for transfer or exchange, the Certificate Registrar shall, within 5
Business Days of such request if made at such Registrar Office, or within 10
Business Days if made at the office of a transfer agent (other than the
Certificate Registrar), execute and deliver at such Registrar Office or at the
office of such transfer agent, as the case may be, to the transferee (in the
case of transfer) or Holder (in the case of exchange) or send by first class
mail (at the risk of the transferee in the case of transfer or Holder in the
case of exchange) to such address as the transferee or Holder, as applicable,
may request, a Definitive Certificate or Certificates, as the case may require,
for a like aggregate Denomination and in such Denomination or Denominations as
may be requested. The presentation for transfer or exchange of any Definitive
Certificate shall not be valid unless made at the Registrar Office or at the
office of a transfer agent by the registered Holder in person, or by a duly
authorized attorney-in-fact. The Certificate Registrar may decline to accept any
request for an exchange or registration of transfer of any Certificate during
the period of 15 days preceding any Distribution Date.
(f) In the event a Responsible Officer of the Certificate Registrar
becomes aware that a Definitive Certificate (other than a Definitive Certificate
issued in exchange for a Certificate representing an interest in the Class
[A-1], Class [A-2], Class [B], Class [C], Class [D], Class [E] or Class [X]
Certificates) or a beneficial interest in a Book-Entry Certificate representing
a Non-Registered Certificate is being held by or for the benefit of a Person who
is not an Eligible Investor, or that such holding is unlawful under the laws of
a relevant jurisdiction, then the Certificate Registrar shall have the right to
void such transfer, if permitted under applicable law, or to require the
investor to sell such Definitive Certificate or beneficial interest in such
Book-Entry Certificate to an Eligible Investor within 14 days after notice of
such determination and each Certificateholder by its acceptance of a Certificate
authorizes the Certificate Registrar to take such action.
(g) The Certificate Registrar shall provide notice to the Trustee,
the Servicer, the Special Servicer, the Paying Agent and the Depositor of each
transfer of a Certificate and to provide each such Person with an updated copy
of the Certificate Register on or about ______ and ______ of each year,
commencing______, 1997.
(h) No fee or service charge shall be imposed by the Certificate
Registrar for its services in respect of any registration of transfer or
exchange referred to in this Section 5.02 except as provided below. In
connection with any transfer to an Institutional Accredited Investor, the
transferor shall reimburse the Trust Fund for any costs (including the cost of
the Certificate Registrar's counsel's review of the documents and any legal
opinions, submitted by the transferor or transferee to the Certificate Registrar
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as provided herein) incurred by the Certificate Registrar in connection with
such transfer. With respect to any transfer or exchange of any Certificate, the
Certificate Registrar may require payment by each transferor of a sum sufficient
to cover any tax, expense or other governmental charge payable in connection
with any such transfer or exchange.
(i) All Certificates surrendered for transfer and exchange shall be
physically canceled by the Certificate Registrar, and the Certificate Registrar
shall hold such canceled Certificates in accordance with its standard
procedures.
SECTION 5.03. Book-Entry Certificates.
(a) The Regular 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 subsection (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 5.02(e) above or subsection (c) below, shall not be entitled
to Definitive Certificates in respect of such Ownership Interests. All transfers
by Certificate Owners of their respective Ownership Interests in the Book-Entry
Certificates shall be made in accordance with the procedures established by the
Depository Participant or brokerage firm representing 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 Servicer, the Special Servicer, the Paying
Agent, the Fiscal Agent, 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, the Paying Agent
and the Certificate Registrar in writing that the Depository is no longer
willing or able to properly discharge its responsibilities with respect to 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, the Paying
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Agent and the Certificate Registrar in writing that it elects to terminate the
book-entry system through the Depository, the Paying Agent shall notify the
affected Certificate Owners, through the Depository with respect to all, any
Class or any portion of any Class of the Certificates or (iii) the Trustee
determines that Definitive Certificates are required in accordance with the
provisions of Section 5.03(e), of the occurrence of any such event and of the
availability of Definitive Certificates to Certificate Owners requesting the
same. Upon surrender to the Certificate Registrar of the Book-Entry Certificates
by the Depository or any custodian acting on behalf of the Depository,
accompanied by registration instructions from the Depository for registration of
transfer, the Certificate Registrar shall execute, and the Authenticating Agent
shall authenticate and deliver, within 5 Business Days of such request if made
at the Registrar Office, or within 10 Business Days if made at the office of a
transfer agent (other than the Certificate Registrar), the Definitive
Certificates to the Certificate Owners identified in such instructions. None of
the Depositor, the Fiscal Agent, the Paying Agent, the Servicer, the Trustee,
the Special Servicer, the Authenticating Agent and 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 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) The Book-Entry Certificates (i) shall be delivered by the
Certificate Registrar to the Depository, or pursuant to the Depository's
instructions, and shall be registered in the name of Cede & Co. and (ii) shall
bear a legend substantially to the following effect:
Unless this certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to
the Certificate Registrar 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.
The Book-Entry Certificates may be deposited with such other
Depository as the Certificate Registrar may from time to time designate, and
shall bear such legend as may be appropriate.
(e) If the Trustee has instituted or has been directed to institute
any judicial proceeding in a court to enforce the rights of the
Certificateholders under the Certificates, and the Trustee has been advised by
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counsel that in connection with such proceeding it is necessary or appropriate
for the Trustee to obtain possession of all or any portion of the Certificates
evidenced by Book-Entry Certificates, the Trustee may in its sole discretion
determine that such Certificates shall no longer be represented by such
Book-Entry Certificates. In such event, the Certificate Registrar will execute,
the Authenticating Agent will authenticate and the Certificate Registrar will
deliver, in exchange for such Book-Entry Certificates, Definitive Certificates
in a Denomination equal to the aggregate Denomination of such Book-Entry
Certificates to the party so requesting such Definitive Certificates. In such
event, the Trustee shall notify the affected Certificate Owners and make
appropriate arrangements for the effectuation of the purpose of this clause.
(f) Upon acceptance for exchange or transfer of a beneficial
interest in a Book-Entry Certificate for a Definitive Certificate, as provided
herein, the Certificate Registrar shall endorse on a schedule affixed to the
related Book-Entry Certificate (or on a continuation of such schedule affixed to
such Book-Entry Certificate and made a part thereof) an appropriate notation
evidencing the date of such exchange or transfer and a decrease in the
Denomination of such Book-Entry Certificate equal to the Denomination of such
Definitive Certificate issued in exchange therefor or upon transfer thereof.
(g) If a Holder of a Definitive Certificate wishes at any time to
transfer such Certificate to a Person who wishes to take delivery thereof in the
form of a beneficial interest in the Book-Entry Certificate, such transfer may
be effected only in accordance with Depository Rules and this Section 5.03(g).
Upon receipt by the Certificate Registrar at the Registrar Office of (i) the
Definitive Certificate to be transferred with an assignment and transfer
pursuant to Section 5.02(a), (ii) written instructions given in accordance with
Depository Rules directing the Certificate Registrar to credit or cause to be
credited to another account a beneficial interest in the related Book-Entry
Certificate, in an amount equal to the Denomination of the Definitive
Certificate to be so transferred, (iii) a written order given in accordance with
the Depository Rules containing information regarding the account to be credited
with such beneficial interest and (iv) if the affected Certificate is a
Non-Registered Certificate an Investment Representation Letter from the
transferee to the effect that such transferee is a Qualified Institutional
Buyer, the Certificate Registrar shall cancel such Definitive Certificate,
execute and deliver a new Definitive Certificate for the Denomination of the
Definitive Certificate not so transferred, registered in the name of the Holder
or the Holder's transferee (as instructed by the Holder), and the Certificate
Registrar shall instruct the Depository or the custodian holding such Book-Entry
Certificate on behalf of the Depository to increase the Denomination of the
related Book-Entry Certificate by the Denomination of the Definitive Certificate
to be so transferred, and to credit or cause to be credited to the account of
the Person specified in such instructions a corresponding Denomination of such
Book-Entry Certificate.
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
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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 of 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 Trust Fund, 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 presentation of a Certificate for registration of
transfer, the Depositor, the Servicer, the Special Servicer, the Trustee, the
Paying Agent, the Fiscal Agent, the Certificate Registrar and any agents of any
of them may treat the person in whose name such 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, except as and to the extent
provided in the definition of "Certificateholder," and none of the Depositor,
the Servicer, the Special Servicer, the Trustee, the Fiscal Agent, the Paying
Agent, the Certificate Registrar and any agent of any of them shall be affected
by notice to the contrary except as provided in Section 5.02(d).
SECTION 5.06. Appointment of Paying Agent.
The Chase Manhattan Bank, 450 West 33rd Street, 15th Floor, New
York, New York 10001 is hereby initially appointed Paying Agent to act on the
Servicer's behalf in accordance with the terms of this Agreement. If The Chase
Manhattan Bank resigns or is removed as Servicer in accordance with the terms
hereof, The Chase Manhattan Bank shall be entitled to immediately resign as
Paying Agent by giving written notice thereof to the Trustee and the Servicer.
If The Chase Manhattan Bank is removed as Servicer pursuant to an Event of
Default described in Section 7.01(a)(v), (vi) or (vii), then The Chase Manhattan
Bank shall be terminated as Paying Agent. If the Paying Agent resigns or is
terminated, the Trustee shall appoint a successor Paying Agent which may be the
Trustee or an Affiliate thereof.
[End of Article V]
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ARTICLE VI
THE DEPOSITOR, THE
SERVICER AND THE SPECIAL SERVICER
SECTION 6.01. Liability of the Depositor, the Servicer and the
Special Servicer.
The Depositor, the 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 Servicer and the
Special Servicer herein.
SECTION 6.02. Merger, Consolidation or Conversion of the
Depositor, the Servicer or the Special Servicer.
(a) Subject to subsection (b) below, the Depositor, the Servicer and
the Special Servicer each will 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.
(b) The Depositor, the Servicer and the Special Servicer each 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 Servicer or the Special
Servicer shall be a party, or any Person succeeding to the business of the
Depositor, the Servicer or the Special Servicer, shall be the successor of the
Depositor, the Servicer and the Special Servicer, as the case may be, hereunder,
without the execution or filing of any paper (other than an assumption agreement
wherein the successor shall agree to perform the obligations of and serve as the
Depositor, the Servicer or the Special Servicer, as the case may be, in
accordance with the terms of this Agreement) or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding;
provided, however, that such merger, consolidation or succession will not result
in a withdrawal, downgrading or qualification of the then-current ratings of the
Classes of Certificates that have been so rated (as evidenced by a letter to
such effect from each Rating Agency).
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SECTION 6.03. Limitation on Liability of the Depositor, the
Servicer, the Special Servicer and Others.
(a) Neither the Depositor, the Servicer (whether acting in such
capacity or as the Paying Agent, the Authenticating Agent or the Certificate
Registrar), the Special Servicer, the Extension Adviser nor any of the
directors, officers, employees or agents of any of the foregoing shall be under
any liability to the Trust or the Certificateholders for any action taken or for
refraining from the taking of any action in good faith pursuant to this
Agreement, or for errors in judgment; provided, however, that this provision
shall not protect the Depositor, the Servicer, the Special Servicer, the
Extension Adviser or any such Person against any breach of warranties or
representations made herein or 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 negligent disregard of obligations and duties hereunder.
The Depositor, the Servicer, the Special Servicer, the Extension Adviser and any
director, officer, employee or agent of the Depositor, the Servicer, the Special
Servicer or the Extension Adviser 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 Servicer, the
Special Servicer, the Extension Adviser and any director, officer, employee or
agent of any of the foregoing shall be indemnified and held harmless by the
Trust against any loss, liability or expense incurred in connection with any
legal action relating to this Agreement or the Certificates, other than any
loss, liability or expense: (i) specifically required to be borne thereby
pursuant to the terms hereof; (ii) incurred in connection with any breach of a
representation, warranty or covenant made by it herein; (iii) incurred by reason
of bad faith, willful misconduct or negligence in the performance of its
obligations or duties hereunder, or by reason of negligent disregard of such
obligations or duties or (iv) in the case of the Depositor and any of its
directors, officers, employees and agents, incurred in connection with any
violation by any of them of any state or federal securities law.
(b) None of the Depositor, the Servicer (whether acting in such
capacity or as the Paying Agent, the Authenticating Agent or the Certificate
Registrar), the Special Servicer and the Extension Adviser shall be under any
obligation to appear in, prosecute or defend any legal or administrative action,
proceeding, hearing or examination that is not incidental to its respective
duties under this Agreement and which in its opinion may involve it in any
expense or liability; provided, however, that the Depositor, the Servicer, the
Special Servicer or the Extension Adviser may in its discretion undertake any
such action, proceeding, hearing or examination that it may deem necessary or
desirable in respect to this Agreement and the rights and duties of the parties
hereto and the interests of the Certificateholders hereunder. In such event, the
legal expenses and costs of such action, proceeding, hearing or examination and
any liability resulting therefrom shall be expenses, costs and liabilities of
the Trust Fund, and the Depositor, the Servicer, the Special Servicer and the
Extension Adviser shall be entitled to be reimbursed therefor out of amounts
attributable to the Mortgage Loans on deposit in the Certificate Account as
provided by Section 3.05(a).
(c) Each of the Servicer and the Special Servicer agrees to
indemnify the Depositor, the Trustee, the Fiscal Agent and the Trust and any
director, officer, employee or agent thereof, and hold them harmless, from and
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against any and all claims, losses, penalties, fines, forfeitures, legal fees
and related costs, judgments, and any other costs, liabilities, fees and
expenses that any of them may sustain arising from or as a result of any willful
misfeasance, bad faith or negligence of the Servicer or the Special Servicer, as
the case may be, in the performance of its obligations and duties under this
Agreement (including acts or omissions occurring in their capacity as agent for
the Trustee) or by reason of reckless disregard by the Servicer or the Special
Servicer, as the case may be, of its duties and obligations hereunder or by
reason of breach of any representations or warranties made herein. The Trustee,
the Depositor or the Fiscal Agent, as the case may be, shall immediately notify
the Servicer or the Special Servicer, as applicable, if a claim is made by a
third party with respect to this Agreement or the Mortgage Loans entitling it to
indemnification hereunder, whereupon the Servicer or the Special Servicer, as
the case may be, shall assume the defense of such claim (with counsel reasonably
satisfactory to the Trustee, the Depositor or the Fiscal Agent) and pay all
expenses in connection therewith, including counsel fees, and promptly pay,
discharge and satisfy any judgment or decree which may be entered against it or
them in respect of such claim. Any failure to so notify the Servicer or the
Special Servicer, as the case may be, shall not affect any rights any of the
foregoing Persons may have to indemnification under this Agreement or otherwise,
unless the Servicer's, or the Special Servicer's, as the case may be, defense of
such claim is materially prejudiced thereby. The indemnification provided herein
shall survive the termination of this Agreement and the termination or
resignation of the Servicer, the Trustee, the Fiscal Agent and the Special
Servicer.
SECTION 6.04. Depositor, Servicer and Special Servicer Not to
Resign.
Subject to the provisions of Section 6.02, none of the Depositor,
the Servicer and the Special Servicer shall resign from their respective
obligations and duties hereby imposed on each of them except upon (a)
determination that such party's duties hereunder are no longer permissible under
applicable law or (b) in the case of the Servicer, upon the appointment of, and
the acceptance of such appointment by, a successor Servicer and receipt by the
Trustee of written confirmation from each applicable Rating Agency that such
resignation and appointment will not cause such Rating Agency to downgrade,
withdraw or qualify any of the ratings assigned by such Rating Agency to any
Class of Certificates. Only the Servicer shall be permitted to resign pursuant
to clause (b) above. Any such determination permitting the resignation of the
Depositor, the Servicer or the Special Servicer pursuant to clause (a) above
shall be evidenced by an Opinion of Counsel (at the expense of the resigning
party) to such effect delivered to the Trustee. Notwithstanding anything set
forth herein to the contrary, The Chase Manhattan Bank may transfer and assign
its rights and obligations hereunder to an affiliate of The Chase Manhattan
Bank, provided, that The Chase Manhattan Bank receives written confirmation from
each Rating Agency that such assignment will not, in and of itself, cause the
downgrading, withdrawal or qualification of any of the ratings on any Class of
Certificates then-rated by the Rating Agencies. No such resignation by the
Servicer or the Special Servicer shall become effective until the Trustee or a
successor Servicer shall have assumed the Servicer's or Special Servicer's, as
applicable, responsibilities and obligations in accordance with Section 7.02.
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SECTION 6.05. Rights of the Depositor in Respect of the Servicer
and the Special Servicer.
The Depositor may, but is not obligated to, enforce the obligations
of the 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
Servicer and the Special Servicer hereunder or exercise the rights of the
Servicer or Special Servicer, as applicable, hereunder; provided, however, that
the Servicer and the Special Servicer shall not be relieved of any of their
respective obligations hereunder by virtue of such performance by the Depositor
or its designee. The Depositor shall not have any responsibility or liability
for any action or failure to act by the Servicer or the Special Servicer and is
not obligated to supervise the performance of the Servicer or the Special
Servicer under this Agreement or otherwise.
[End of Article VI]
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ARTICLE VII
DEFAULT
SECTION 7.01. Events of Default; Servicer and Special Servicer
Termination.
(a) "Event of Default", wherever used herein, means any one of
the following events:
(i) any failure by the Servicer to make any remittance required to
be made by the Servicer to the Certificate Account, Escrow Account or
either Distribution Account on the day and by the time such remittance is
required to be made under the terms of this Agreement; or
(ii) any failure by the Special Servicer to deposit into, or to
remit to the Servicer for deposit into, or the Servicer to make a required
deposit into the Certificate Account or the REO Account, or to deposit
into, or to remit to the Paying Agent for deposit into, the Lower-Tier
Distribution Account any amount required to be so deposited or remitted by
the Servicer or the Special Servicer, as the case may be, pursuant to, and
at the time specified by, the terms of this Agreement; or
(iii) any failure on the part of the 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 Servicer or the Special
Servicer contained in this Agreement which continues unremedied for a
period of 30 days (15 days in the case of a failure to pay the premium for
any insurance policy required to be maintained hereunder) after the date
on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Servicer or the Special Servicer,
as the case may be, by any other party hereto, or to the Servicer, the
Special Servicer, the Depositor and the Trustee by the Holders of
Certificates of any Class evidencing, as to such Class, Percentage
Interests aggregating not less than 25%; or
(iv) any breach on the part of the Servicer or the Special Servicer
of any representation or warranty contained in Section 3.23 or Section
3.24, as applicable, which 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 Servicer or the
Special Servicer, as the case may be, by the Depositor or the Trustee, or
to the Servicer, the Special Servicer, the Depositor and the Trustee by
the Holders of Certificates of any Class evidencing, as to such Class,
Percentage Interests aggregating not less than 25%; 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
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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 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 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 the
Servicer or the Special Servicer or of or relating to all or substantially
all of its property; or
(vii) the 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) any Trustee shall have received written notice from either
Rating Agency that the continuation of the Servicer or Special Servicer,
as the case may be, has resulted, or would result, in and of itself, in a
downgrading, qualification or withdrawal of the then-current rating on any
Class of Certificates that are rated by a Rating Agency if the Servicer or
Special Servicer, as the case may be, is not replaced.
(b) If any Event of Default with respect to the Servicer or the
Special Servicer (in either case, for purposes of this Section 7.01(b), the
"Defaulting Party") shall occur and be continuing, then, and in each and every
such case, so long as 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 51% of the Voting Rights, shall, terminate, by notice in
writing to the Defaulting Party, with a copy of such notice to the Depositor,
all of the rights and obligations of the Defaulting Party under this Agreement
and in and to the Mortgage Loans and the proceeds thereof; provided, however,
that the Defaulting Party shall be entitled to the payment of accrued and unpaid
compensation and reimbursement through the date of such termination as provided
for under this Agreement for services rendered and expenses incurred. From and
after the receipt by the Defaulting Party of such written notice, all authority
and power of the Defaulting Party under this Agreement, whether with respect to
the Certificates (other than as a Holder of any Certificate) or the Mortgage
Loans or otherwise, shall pass to and be vested in the Trustee pursuant to and
under this Section, and, without limitation, the Trustee is hereby authorized
and empowered to execute and deliver, on behalf of and at the expense of the
Defaulting Party, as attorney-in-fact or otherwise, any and all documents and
other instruments, and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement or assignment of the Mortgage Loans and
related documents, or otherwise. The Servicer and Special Servicer each agree
that if it is terminated pursuant to this Section 7.01(b), it shall promptly
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(and in any event no later than 20 Business Days subsequent to its receipt of
the notice of termination) provide the Trustee with all documents and records
requested by it to enable it to assume the Servicer's or the Special Servicer's,
as the case may be, functions hereunder, and shall cooperate with the Trustee in
effecting the termination of the Servicer's or the Special Servicer's, as the
case may be, responsibilities and rights hereunder, including, without
limitation, the transfer within 5 Business Days to the Trustee for
administration by it of all cash amounts which shall at the time be or should
have been credited by the Servicer to the Certificate Account or any Servicing
Account (if it is the Defaulting Party) or by the Special Servicer to the REO
Account (if it is the Defaulting Party) or thereafter be received with respect
to the Mortgage Loans or any REO Property (provided, however, that the 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 (in the case of the Servicer) or otherwise, and it and its
directors, officers, employees and agents shall continue to be entitled to the
benefits of Section 6.03 notwithstanding any such termination).
(c) The Holder or Holders of more than 50% of the aggregate
Certificate Balance of the then Controlling Class shall be entitled to terminate
the rights and obligations of the Special Servicer under this Agreement, with or
without cause, upon 10 Business Days notice to the Special Servicer, the
Servicer and the Trustee, and to appoint a successor Special Servicer; provided,
however, that (i) such successor will meet the requirements set forth in Section
7.02 and (ii) as evidenced in writing by each of the Rating Agencies, the
proposed successor of such Special Servicer will not, in and of itself, result
in a downgrading, withdrawal or qualification of the then-current ratings
provided by the Rating Agencies in respect to any Class of then outstanding
Certificates that is rated. No penalty or fee shall be payable to the Special
Servicer with respect to any termination pursuant to this Section 7.01(c).
(d) The Servicer and Special Servicer shall, from time to time, take
all such actions as are required by them in order to maintain their respective
status as an approved servicer and special servicer, as applicable and as
pertains to this transaction, with each of the Rating Agencies.
SECTION 7.02. Trustee to Act; Appointment of Successor.
On and after the time the Servicer or the Special Servicer, as the
case may be, either resigns pursuant to the first sentence of Section 6.04 or
receives a notice of termination for cause pursuant to Section 7.01(a), and
provided that no acceptable successor has been appointed, the Trustee shall be
the successor to the Servicer or Special Servicer, as the case may be, in all
respects in its capacity as Servicer or Special Servicer under this Agreement
and the transactions set forth or provided for herein and shall be subject to
all the responsibilities, duties, liabilities and limitations on liability
relating thereto and that arise thereafter placed on or for the benefit of the
Servicer or Special Servicer by the terms and provisions hereof; provided,
however, that any failure to perform such duties or responsibilities caused by
the terminated party's failure under Section 7.01 to provide information or
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moneys required hereunder shall not be considered a default by such successor
hereunder. The appointment of a successor Servicer shall not affect any
liability of the predecessor Servicer which may have arisen prior to its
termination as Servicer, and the appointment of a successor Special Servicer
shall not affect any liability of the predecessor Special Servicer which may
have arisen prior to its termination as Special Servicer. The Trustee in its
capacity as successor to the Servicer or the Special Servicer, as the case may
be, shall not be liable for any of the representations and warranties of the
Servicer or the Special Servicer, respectively, herein or in any related
document or agreement, for any acts or omissions of the predecessor Servicer or
Special Servicer or for any losses incurred by the Servicer pursuant to Section
3.06 hereunder, nor shall the Trustee be required to purchase any Mortgage Loan
hereunder. As compensation therefor, the Trustee as successor Servicer shall be
entitled to the Servicing Fees and all fees relating to the Mortgage Loans which
the Servicer would have been entitled to if the Servicer had continued to act
hereunder, including but not limited to any income or other benefit from any
Permitted Investment pursuant to Section 3.06, and as successor to the Special
Servicer shall be entitled to the Special Servicing Fees to which the Special
Servicer would have been entitled if the Special Servicer had continued to act
hereunder. Should the Trustee succeed to the capacity of the Servicer or the
Special Servicer, the Trustee shall be afforded the same standard of care and
liability as the Servicer or the Special Servicer, as applicable, hereunder
notwithstanding anything in Section 8.01 to the contrary, but only with respect
to actions taken by it in its role as successor Servicer or successor Special
Servicer, as the case may be, and not with respect to its role as Trustee
hereunder. Notwithstanding the above, the Trustee may, if it shall be unwilling
to act as successor to the Servicer or Special Servicer, or shall, if it is
unable to so act, or if the Trustee is not approved as a servicer or special
servicer, as applicable, by each Rating Agency 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 which meets the
criteria set forth herein, as the successor to the Servicer or the Special
Servicer, as applicable, hereunder in the assumption of all or any part of the
responsibilities, duties or liabilities of the Servicer or Special Servicer
hereunder. No appointment of a successor to the Servicer or the Special Servicer
hereunder shall be effective until the assumption in writing by the successor to
the Servicer or the Special Servicer of all its responsibilities, duties and
liabilities hereunder that arise thereafter. Pending appointment of a successor
to the Servicer or the Special Servicer hereunder, unless the Trustee shall be
prohibited by law from so acting, the Trustee shall act in such capacity as
herein above provided. In connection with such appointment and assumption of a
successor to the Servicer or Special Servicer as described herein, the Trustee
may make such arrangements for the compensation of such successor out of
payments on Mortgage Loans as it and such successor shall agree; provided,
however, that no such compensation with respect to a successor Servicer or
successor Special Servicer, as the case may be, shall be in excess of that
permitted the terminated Servicer or Special Servicer, as the case may be,
hereunder. The Trustee, the Servicer or the Special Servicer (whichever is not
the terminated party) and such successor shall take such action, consistent with
this Agreement, as shall be necessary to effectuate any such succession. Any
costs and expenses associated with the transfer of the servicing function (other
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than with respect to a termination without cause) under this Agreement shall be
borne by the predecessor Servicer.
SECTION 7.03. Notification to Certificateholders.
(a) Upon any resignation of the Servicer or the Special Servicer
pursuant to Section 6.04, any termination of the Servicer or the Special
Servicer pursuant to Section 7.01 or any appointment of a successor to the
Servicer or the Special Servicer pursuant to Section 7.02, 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) 5 days after the Trustee would be deemed
to have notice of the occurrence of such an event in accordance with Section
8.02(vii), the Trustee shall transmit by mail to the Depositor and all
Certificateholders notice of such occurrence, unless such default shall have
been cured.
SECTION 7.04. Waiver of Events of Default.
The Holders of Certificates representing at least 662/3% of the
Voting Rights allocated to each Class of Certificates affected by any Event of
Default hereunder may waive such Event of Default within 20 days of the receipt
of notice from the Trustee of the occurrence of such Event of Default; provided,
however, that an Event of Default under clause (i) of Section 7.01(a) may be
waived only by all of the Certificateholders of the affected Classes. Upon any
such waiver of an Event of Default, such Event of Default shall cease to exist
and shall be deemed to have been remedied for every purpose hereunder. No such
waiver shall extend to any subsequent or other Event of Default or impair any
right consequent thereon except to the extent expressly so waived.
Notwithstanding any other provisions of this Agreement, for purposes of waiving
any Event of Default pursuant to this Section 7.04, Certificates registered in
the name of the Depositor or any Affiliate of the Depositor shall be entitled to
the same Voting Rights with respect to the matters described above as they would
if any other Person held such Certificates.
SECTION 7.05. Trustee and Fiscal Agent as Makers of Advances.
(a) In the event that the Servicer fails to fulfill its obligations
hereunder to make any Advances, the Trustee shall immediately notify the Fiscal
Agent of such circumstances in writing, and the Trustee shall perform such
obligations (x) within one Business Day of such failure by the Servicer with
respect to Servicing Advances to the extent the Trustee has actual knowledge of
such failure with respect to such Servicing Advances and (y) by the close of
business, New York City time, on the related P&I Advance Date with respect to
P&I Advances. With respect to any such Advance made by the Trustee, the Trustee
shall succeed to all of the Servicer's rights with respect to Advances
hereunder, including, without limitation, the Servicer's rights of reimbursement
and interest on each Advance at the Reimbursement Rate, and rights to determine
that a proposed Advance is a Nonrecoverable P&I Advance or Servicing Advance, as
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the case may be, (without regard to any impairment of any such rights of
reimbursement caused by such Servicer's default in its obligations hereunder);
provided, however, that if Advances made by both the Trustee and the Servicer
shall at any time be outstanding, or any interest on any Advance shall be
accrued and unpaid, all amounts available to repay such Advances and the
interest thereon hereunder shall be applied entirely to the Advances outstanding
to the Trustee, until such Advances shall have been repaid in full, together
with all interest accrued thereon, prior to reimbursement of the Servicer for
such Advances. The Trustee shall be entitled to conclusively rely on any notice
given with respect to a Nonrecoverable Advance hereunder. In the event the
Fiscal Agent is not the initial Fiscal Agent, with respect to any Distribution
Date that the Trustee is required to make any P&I Advances, immediately upon
making such P&I Advances the Trustee shall notify the Fiscal Agent by facsimile
that such P&I Advances have been made.
(b) In the event that the Trustee fails to fulfill its obligations
hereunder to make any Advances following the failure of the Servicer to make an
Advance, the Fiscal Agent shall perform such obligations (x) within one Business
Day of such failure by the Trustee with respect to Servicing Advances and (y) by
no later than 10:00 a.m., New York City time, on the related Distribution Date
with respect to P&I Advances, and, with respect to any such Advance made by the
Fiscal Agent, the Fiscal Agent shall succeed to all of the Trustee's rights with
respect to any such Advance hereunder; provided, however, that if Advances made
by the Servicer, the Trustee and the Fiscal Agent shall at any time be
outstanding, or any interest on any Advance shall be accrued and unpaid, all
amounts available to repay such Advances and interest hereunder shall be applied
entirely to the Advances outstanding to the Fiscal Agent, until such Advances
shall have been repaid in full, together with all interest accrued thereon. The
Fiscal Agent shall be entitled to conclusively rely on any notice given with
respect to a Nonrecoverable Advance hereunder.
[End of Article VII]
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ARTICLE VIII
CONCERNING THE TRUSTEE AND FISCAL AGENT
SECTION 8.01. Duties of Trustee.
(a) The Trustee, prior to the occurrence of an Event of Default and
after the curing or waiving of all Events of Default which may have occurred,
undertakes to perform such duties and only such duties as are specifically set
forth in this Agreement. If an Event of Default occurs and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Agreement, and use the same degree of care and skill in their exercise as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs. Any permissive right of the Trustee contained in this Agreement
shall not be construed as a duty.
(b) The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement (other than the Mortgage Files, the review of which
is specifically governed by the terms of Article II), shall examine them to
determine whether they conform to the requirements of this Agreement. If any
such instrument is found not to conform to the requirements of this Agreement in
a material manner, the Trustee shall take such action as it deems appropriate to
have the instrument corrected. The Trustee shall not be responsible for the
accuracy or content of any resolution, certificate, statement, opinion, report,
document, order or other instrument furnished by the Depositor, the 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 willful misconduct; provided, however, that:
(i) Prior to the occurrence of an Event of Default, and after the
curing of all such Events of Default which may have occurred, the duties
and obligations of the Trustee shall be determined solely by the express
provisions of this Agreement, the Trustee shall not be liable except for
the performance of such duties and obligations as are specifically set
forth in this Agreement, no implied covenants or obligations shall be read
into this Agreement against the Trustee and, in the absence of bad faith
on the part of the Trustee, the Trustee may conclusively rely, as to the
truth of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Trustee and
conforming to the requirements of this Agreement;
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(ii) The Trustee shall not be personally liable for an error of
judgment made in good faith by a Responsible Officer or Responsible
Officers of the Trustee, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(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 (unless a higher percentage of Voting Rights is required for
such action).
SECTION 8.02. Certain Matters Affecting the Trustee.
Except as otherwise provided in Section 8.01:
(i) The Trustee may rely upon and shall be protected in acting or
refraining from acting upon any resolution, Officer's Certificate,
certificate of auditors or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, Appraisal, bond or other
paper or document reasonably believed by it to be genuine and to have been
signed or presented by the proper party or parties;
(ii) The Trustee may consult with counsel and the written advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken or suffered or
omitted by it hereunder in good faith and in accordance therewith;
(iii) The Trustee shall be under no obligation to exercise any of
the trusts or powers vested in it by this Agreement or to make any
investigation of matters arising hereunder or 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 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;
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(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 50% 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. The reasonable expense of every such reasonable examination shall
be paid by the Servicer or, if paid by the Trustee, shall be repaid by the
Servicer upon demand;
(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 appointment of such agents or
attorneys shall not relieve the Trustee of its duties or obligations
hereunder;
(vii) For all purposes under this Agreement, the Trustee shall not
be deemed to have notice of any Event of Default unless a Responsible
Officer of the Trustee has actual knowledge thereof or unless written
notice of any event which is in fact such a default is received by the
Trustee at the Corporate Trust Office, and such notice references the
Certificates or this Agreement; and
(viii) The Trustee shall not be responsible for any act or omission
of the Servicer, the Special Servicer or the Extension Adviser (unless the
Trustee is acting as Servicer, Special Servicer or the Extension Adviser,
as the case may be) or of 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 acknowledgments of the Trustee in Sections 2.02 and 2.04 and the signature,
if any, of the Trustee set forth on any outstanding Certificate, shall be taken
as the statements of the Depositor, the Servicer or the Special Servicer, as the
case may be, and the Trustee assumes no responsibility for their correctness.
Neither the Trustee nor the Fiscal Agent makes any representations as to the
validity or sufficiency of this Agreement or of any Certificate (other than as
to the signature, if any, of the Trustee set forth thereon) or of any Mortgage
Loan or related document. Neither the Trustee nor the Fiscal Agent shall be
accountable for the use or application by the Depositor of any of the
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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 Servicer, the Special Servicer, the Extension Adviser or the
Paying Agent (unless the Trustee or the Fiscal Agent is acting as Paying Agent).
Neither the Trustee nor the Fiscal Agent shall be responsible for the accuracy
or content of any resolution, certificate, statement, opinion, report, document,
order or other instrument furnished by the Depositor, the Servicer, the Special
Servicer or the Extension Adviser, and accepted by the Trustee or the Fiscal
Agent, as applicable, in good faith, pursuant to this Agreement.
SECTION 8.04. Trustee and Fiscal Agent May Own Certificates.
Each of the Trustee and the Fiscal Agent in its individual capacity,
not as Trustee or Fiscal Agent, may become the owner or pledgee of Certificates,
and may deal with the Depositor, the Servicer, the Special Servicer, the
Placement Agents and the Underwriters in banking transactions, with the same
rights it would have if it were not Trustee or the Fiscal Agent, as applicable.
SECTION 8.05. Fees and Expenses of Trustee; Indemnification of
Trustee and Fiscal Agent.
(a) As compensation for the performance of its duties, the Trustee
will be paid the Trustee Fee, equal to one month's interest at the Trustee Fee
Rate, which shall cover recurring and otherwise reasonably anticipated expenses
of the Trustee (including in the Trustee's capacity as the initial Extension
Adviser). The Trustee Fee shall be paid monthly on a Mortgage Loan-by-Mortgage
Loan basis. As to each Mortgage Loan and REO Loan, the Trustee Fee shall accrue
from time to time at the Trustee Fee Rate and shall be computed on the basis of
the Stated Principal Balance of such Mortgage Loan and for the same period of
time which any interest payment due on such Mortgage Loan or deemed due on such
REO Loan is computed. The Trustee Fee (which shall not be limited to any
provision of law in regard to the compensation of a trustee of an express trust)
shall constitute the Trustee's sole form of compensation for all services
rendered by it 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 shall pay, at its own expense, the fees and expenses of the Fiscal
Agent.
(b) The Trustee, the Fiscal Agent and any director, officer,
employee or agent of the Trustee or the Fiscal Agent shall be entitled to be
indemnified and held harmless by the Trust Fund (to the extent of amounts on
deposit in the Lower-Tier Distribution Account from time to time) against any
loss, liability or expense (including, without limitation, costs and expenses of
litigation, and of investigation, counsel fees, damages, judgments and amounts
paid in settlement, and expenses incurred in becoming successor servicer, to the
extent not otherwise paid hereunder) arising out of, or incurred in connection
with, any act or omission of the Trustee or the Fiscal Agent, as applicable,
relating to the exercise and performance of any of the powers and duties of the
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Trustee or the Fiscal Agent, as applicable, hereunder; provided, however, that
neither the Trustee, the Fiscal Agent nor any of the other above specified
Persons shall be entitled to indemnification pursuant to this Section 8.05(b)
for (i) allocable overhead, (ii) expenses or disbursements incurred or made by
or on behalf of the Trustee or the Fiscal Agent, as applicable, in the normal
course of the Trustee's performing its duties in accordance with any of the
provisions hereof, which are not "unanticipated expenses of the REMIC" within
the meaning of Treasury Regulations Section 1.860G-1(b)(3)(ii), (iii) any
expense or liability specifically required to be borne thereby pursuant to the
terms hereof or (iv) any loss, liability or expense incurred by reason of
willful misfeasance, bad faith or negligence in the performance of the Trustee's
or the Fiscal Agent's obligations and duties hereunder, or by reason of
negligent disregard of such obligations or duties, or as may arise from a breach
of any representation, warranty or covenant of the Trustee or the Fiscal Agent
made herein. The provisions of this Section 8.05(b) shall survive any
resignation or removal of the Trustee and/or Fiscal Agent and appointment of a
successor thereto.
SECTION 8.06. Eligibility Requirements for Trustee.
The Trustee hereunder shall at all times be, and will be required to
resign if it fails to be, (i) a corporation, national bank or national banking
association, organized and doing business under the laws of any state or the
United States of America, authorized under such laws to exercise corporate trust
powers and to accept the trust conferred under this Agreement, having a combined
capital and surplus of at least $50,000,000 and subject to supervision or
examination by federal or state authority and shall not be an Affiliate of the
Servicer or the Special Servicer (except during any period when the Trustee is
acting as, or has become successor to, the Servicer or the Special Servicer, as
the case may be, pursuant to Section 7.02), (ii) an institution insured by the
Federal Deposit Insurance Corporation and (iii) an institution whose long-term
senior unsecured debt is rated either (a) if a Fiscal Agent is then currently in
place, not less than (1) "BBB" by ___ and (2) "BBB" by ___ (provided that the
Fiscal Agent is not an entity that in and of itself would result in the
downgrading, withdrawal or qualification of ___'s rating of any of the
then-rated Certificates) or (b) if a Fiscal Agent is not then in place, "AA" by
each Rating Agency (or such entity as would not, as evidenced in writing by such
Rating Agency, result in the qualification, downgrading or withdrawal of any of
the ratings then assigned thereby to the Certificates).
If such corporation, national bank or national banking association
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purposes of this Section the combined capital and surplus of such corporation,
national bank or national banking association shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. In the event the place of business from which the Trustee administers
the Upper-Tier REMIC and the Lower-Tier REMIC is in a state or local
jurisdiction that imposes a tax on the Trust Fund on the net income of a REMIC
(other than a tax corresponding to a tax imposed under the REMIC Provisions),
the Trustee shall elect either to (i) resign immediately in the manner and with
the effect specified in Section 8.07, (ii) pay such tax at no expense to the
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Trust or (iii) administer the Upper-Tier REMIC and the Lower-Tier REMIC from a
state and local jurisdiction that does not impose such a tax.
SECTION 8.07. Resignation and Removal of the Trustee and the
Fiscal Agent.
(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
Servicer, the Special Servicer and to all Certificateholders. Upon receiving
such notice of resignation, the Depositor shall promptly appoint a successor
trustee acceptable to the Servicer by written instrument, in duplicate, which
instrument shall be delivered to the resigning Trustee and to the successor
trustee. A copy of such instrument shall be delivered to the Servicer, the
Special Servicer and the Certificateholders by the Depositor. If no successor
trustee shall have been so appointed and have accepted appointment within 30
days after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
trustee.
(b) If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 8.06 and shall fail to resign after
written request therefor by the Depositor or the Servicer, or if at any time the
Trustee shall become incapable of acting, or shall be adjudged bankrupt or
insolvent, or a receiver of the Trustee or of its property shall be appointed,
or any public officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Depositor may remove the Trustee and appoint a successor
trustee acceptable to the 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 Servicer, the
Special Servicer and the Certificateholders by the Depositor.
(c) The Holders of Certificates entitled to at least 51% of the
Voting Rights may at any time remove the Trustee and appoint a successor trustee
by written instrument or instruments, in triplicate, signed by such Holders or
their attorneys-in-fact duly authorized, one complete set of which instruments
shall be delivered to the Servicer, one complete set to the Trustee so removed
and one complete set to the successor so appointed. A copy of such instrument
shall be delivered to the Depositor, the Special Servicer and the remaining
Certificateholders by the Servicer.
(d) Subject to the last sentence of the last paragraph of this
Section 8.07(d), the Fiscal Agent shall not be entitled to resign, except under
a determination that it may no longer perform its obligations and duties under
applicable law or such obligations and duties are in material conflict by reason
of applicable law with any other activities carried on by it. Any such
determination is required to be evidenced by an Opinion of Counsel to such
effect delivered to the Depositor and the Trustee. The Fiscal Agent may also
resign from its obligations and duties under this Agreement at any time upon
reasonable notice to the Trustee, provided that (i) a successor fiscal agent is
willing to assume the obligations, responsibilities, and covenants to be
performed by the Fiscal Agent on substantially the same terms and conditions,
and for not more than equivalent compensation, (ii) the Fiscal Agent bears all
costs associated with such resignation, (iii) the successor fiscal agent has a
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long-term debt rating of at least "AA" from each Rating Agency or, as confirmed
in writing by each Rating Agency, is an entity that in and of itself would not
result in a downgrading, withdrawal or qualification of any rating of any
then-rated Certificate, (iv) the successor fiscal agent is approved by the
Depositor and the Trustee and (v) the Rating Agencies shall have confirmed in
writing that the appointment of such successor fiscal agent will not adversely
affect or result in a withdrawal, downgrading, or qualification of the ratings
on the Certificates that are then-rated.
Upon any resignation or removal of the Fiscal Agent, the Trustee
will be required to designate a successor Fiscal Agent whose appointment will
not adversely affect the ratings on the Certificates then rated, unless (i)
there is a successor Fiscal Agent already provided for in accordance with the
proviso to the last sentence of the preceding paragraph in this Section 8.07(d)
or (ii) the long-term senior unsecured debt of the Trustee is rated "AA" by each
Rating Agency (or such other rating by either Rating Agency as would not, as
evidenced in writing by such Rating Agency, adversely affect any of the ratings
then assigned thereby to the Certificates).
Any resignation or removal of the Trustee and the Fiscal Agent and
appointment of a successor Trustee and 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 Fiscal Agent as provided in Section
8.08, except that the resignation or removal of the Fiscal Agent shall become
effective immediately if, at the time of such resignation or removal, the
long-term senior unsecured debt of the Trustee is rated "AA" by each Rating
Agency (or such other rating by either Rating Agency as would not, as evidenced
in writing by such Rating Agency, adversely affect any of the ratings then
assigned thereby to the Certificates).
Upon any succession of the Trustee under this Agreement, the
predecessor Trustee shall be entitled to the payment of accrued and unpaid
compensation and reimbursement as provided for under this Agreement for services
rendered and expenses incurred. No Trustee or Fiscal Agent shall be personally
liable for any action or omission of any successor Trustee or successor Fiscal
Agent. Notwithstanding anything to the contrary herein, resignation or removal
of the initial Trustee shall automatically result in the simultaneous
resignation or removal of the initial Fiscal Agent.
SECTION 8.08. Successor Trustee and Fiscal Agent.
(a) Any successor Trustee or Fiscal Agent appointed as provided in
Section 8.07 shall execute, acknowledge and deliver to the Depositor, the
Servicer, the Special Servicer and to its predecessor Trustee or Fiscal Agent,
as applicable, an instrument accepting such appointment hereunder, and thereupon
the resignation or removal of the predecessor Trustee or Fiscal Agent, as
applicable, shall become effective and such successor Trustee or Fiscal Agent,
as applicable, 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 or Fiscal
Agent herein. The predecessor Trustee shall deliver to the successor trustee all
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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 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 or Fiscal
Agent as provided in this Section 8.08, the Servicer shall mail notice of the
succession of such Trustee or Fiscal Agent hereunder to the Depositor and the
Certificateholders. If the Servicer fails to mail such notice within 10 days
after acceptance of appointment by the successor Trustee or Fiscal Agent, such
successor Trustee or Fiscal Agent, as applicable, shall cause such notice to be
mailed at the expense of the Servicer.
SECTION 8.09. Merger or Consolidation of Trustee or Fiscal Agent.
Any Person into which the Trustee or the Fiscal 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 the Trustee or the Fiscal Agent
shall be a party, or any Person succeeding to all or substantially all of the
corporate trust business of the Trustee or the Fiscal Agent, shall be the
successor of the Trustee or the Fiscal Agent, respectively, hereunder; provided,
that, in the case of the Trustee, such successor Person 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. The Trustee or the Fiscal Agent, as the case may be,
will provide notice of such event to the Servicer, the Special Servicer, the
Depositor and the Rating Agencies.
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 Servicer and the Trustee acting jointly shall have the power and shall
execute and deliver all instruments to appoint one or more Persons approved by
the Trustee to act as co-trustee or co-trustees, jointly with the Trustee, or
separate trustee or separate trustees, of all or any part of the Trust Fund, and
to vest in such Person or Persons, in such capacity, such title to the Trust
Fund, or any part thereof, and, subject to the other provisions of this Section
8.10, such powers, duties, obligations, rights and trusts as the Servicer and
the Trustee may consider necessary or desirable. If the 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 shall have occurred and be continuing,
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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 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.
SECTION 8.11. Appointment of Custodians.
The Trustee may, with the consent of the Servicer, appoint 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 subject to supervision
by federal or state authority, shall have combined capital and surplus of at
least $15,000,000 and 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
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of the Depositor. Each Custodian shall be subject to the same obligations and
standard of care as would be imposed on the Trustee hereunder in connection with
the retention of Mortgage Files directly by the Trustee. The appointment of one
or more Custodians shall not relieve the Trustee from any of its obligations
hereunder, and the Trustee shall remain responsible for all acts and omissions
of any Custodian. Any Custodian appointed hereunder must maintain a fidelity
bond and errors and omissions policy in an amount customary for Custodians which
serve in such capacity in commercial mortgage loan securitization transactions.
SECTION 8.12. Access to Certain Information.
(a) On or prior to the date of the first sale of any Non-Registered
Certificate to an Independent third party, the Depositor shall provide to the
Trustee a copy of any private placement memorandum or other disclosure document
used by the Depositor or its Affiliate in connection with the offer and sale of
the Class of Certificates to which such Non-Registered Certificate relates. In
addition, if any such private placement memorandum or disclosure document is
revised, amended or supplemented at any time following the delivery thereof to
the Trustee and the Paying Agent, the Depositor promptly shall inform the
Trustee of such event and shall deliver to the Trustee a copy of the private
placement memorandum or disclosure document, as revised, amended or
supplemented. The Paying Agent (or with respect to item (ii)(j) below, the
Trustee) shall maintain at its offices primarily responsible for administering
the Trust Fund and shall, upon reasonable advance notice, make available during
normal business hours for review by any Holder of a Certificate, the Depositor,
the Servicer, the Special Servicer, the Extension Adviser, any Rating Agency or
any other Person to whom the Paying Agent believes such disclosure is
appropriate, originals or copies of the following items: (i) in the case of a
Holder or prospective transferee of a Non-Registered Certificate, any private
placement memorandum or other disclosure document relating to the Class of
Certificates to which such Non-Registered Certificate belongs, in the form most
recently provided to the Paying Agent and (ii) in all cases, (a) this Agreement
and any amendments hereto entered into pursuant to Section 11.01, (b) all
statements required to be delivered to Certificateholders of the relevant Class
pursuant to Section 4.02 since the Closing Date, (c) all Officer's Certificates
delivered to the Paying Agent since the Closing Date pursuant to Section 3.13,
(d) all accountants' reports delivered to the Paying Agent since the Closing
Date pursuant to Section 3.14, (e) any inspection report prepared by the
Servicer, Sub-Servicer or Special Servicer, as applicable, and delivered to the
Paying Agent and Servicer in respect of each Mortgaged Property pursuant to
Section 3.12(a), (f) as to each Mortgage Loan pursuant to which the related
Mortgagor is required to deliver such items or the Special Servicer has
otherwise acquired such items, the most recent annual operating statement and
rent roll of the related Mortgaged Property and financial statements of the
related Mortgagor and any other reports of the Mortgagor collected by the
Servicer, Sub-Servicer or Special Servicer, as applicable, and delivered to the
Paying Agent pursuant to Section 3.12(b), together with the accompanying written
reports to be prepared by the Special Servicer and delivered to the Paying Agent
pursuant to Section 3.12(b), (g) any and all notices, reports and Environmental
Assessments delivered to the Paying Agent with respect to any Mortgaged Property
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securing a Defaulted Mortgage Loan as to which the environmental testing
contemplated by Section 3.09(c) revealed that either of the conditions set forth
in clauses (i) and (ii) of the first sentence thereof was not satisfied (but
only for so long as such Mortgaged Property or the related Mortgage Loan are
part of the Trust Fund), (h) any and all modifications, waivers and amendments
of the terms of a Mortgage Loan entered into by the Servicer or the Special
Servicer and delivered to the Paying Agent pursuant to Section 3.20 (but only
for so long as the affected Mortgage Loan is part of the Trust Fund), (i) any
and all Officer's Certificates delivered to the Paying Agent to support the
Servicer's determination that any P&I Advance or Servicing Advance was or, if
made, would be a Nonrecoverable P&I Advance or Nonrecoverable Servicing Advance,
as the case may be, (j) any and all of the Mortgage Loan documents contained in
the Mortgage File, (k) any and all Appraisals obtained pursuant to the
definition of "Appraisal Reduction" herein, (l) information regarding the
occurrence of Servicing Transfer Events as to the Mortgage Loans and (m) any and
all Sub-Servicing Agreements and any amendments thereto and modifications
thereof. Copies of any and all of the foregoing items will be available from the
Paying Agent upon request; provided, however, that the Paying Agent shall be
permitted to require payment of a sum sufficient to cover the reasonable costs
and expenses of providing such copies, except in the case of copies provided to
the Rating Agencies, which shall be free of charge. In addition, without
limiting the generality of the foregoing, any Class [F], Class [G] and Class [H]
Certificateholder may upon request from the Paying Agent obtain a copy of any
factual report (other than the Asset Status Report) delivered to the Rating
Agencies under this Agreement.
(b) The Servicer shall provide a financial market publisher, which
initially shall be Bloomberg, L.P., on a quarterly basis, current information
regarding the items listed on Schedule 1 hereto with respect to the Mortgaged
Properties, to the extent such information due from Mortgagors has been received
from the Mortgagors. If any such information is provided on or
before___________, 1997, the Servicer shall provide the Prospectus to Bloomberg,
L.P.
(c) Notwithstanding anything to the contrary herein, in addition to
the reports and information made available and distributed pursuant to the terms
of this Agreement, the Servicer and the Paying Agent shall, in accordance with
such reasonable rules and procedures as each may adopt (which may include the
requirement that an agreement that provides that such information shall be used
solely for purposes of evaluating the investment characteristics of the
Certificates be executed), also provide the reports available to
Certificateholders pursuant to Section 4.02, as well as certain additional
information received by the Servicer or the Paying Agent, as the case may be, to
any Certificateholder, the Underwriters, the Placement Agents, any Certificate
Owner or any prospective investor identified as such by a Certificate Owner or
Underwriter, that requests such reports or information; provided that the
Servicer or the Paying Agent, as the case may be, shall be permitted to require
payment of a sum sufficient to cover the reasonable costs and expenses of
providing copies of such reports or information.
(d) With respect to any information furnished by the Paying Agent or
the Servicer pursuant to this Section 8.12, the Paying Agent or Servicer, as the
case may be, shall be entitled to indicate the source of such information and
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the Paying Agent or Servicer, as applicable, may affix thereto any disclaimer it
deems appropriate in its discretion. The Paying Agent or the Servicer, as
applicable, shall notify Certificateholders of the availability of any such
information in any manner as it, in its sole discretion, may determine. In
connection with providing access to or copies of the items described in the
preceding paragraph, the Paying Agent or the Servicer, as the case may be, may
require (a) in the case of Certificate Owners, a confirmation executed by the
requesting Person substantially in form and substance reasonably acceptable to
the Servicer or Paying Agent, as applicable, generally to the effect that such
Person is a beneficial holder of Certificates, is requesting the information
solely for use in evaluating such Person's investment in the Certificates and
will otherwise keep such information confidential and (b) in the case of a
prospective purchaser, confirmation executed by the requesting Person in form
and substance reasonably acceptable to the Paying Agent or the Servicer, as the
case may be, generally to the effect that such Person is a prospective purchaser
of a Certificate or an interest therein, is requesting the information solely
for use in evaluating a possible investment in Certificates and will otherwise
keep such information confidential. Neither the Servicer nor the Paying Agent
shall be liable for the dissemination of information in accordance with this
Agreement.
SECTION 8.13. Representations and Warranties of the Trustee and
the Fiscal Agent.
(a) The Trustee hereby represents and warrants to the Depositor, the
Servicer and the Special Servicer 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 charter 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) The Trustee has the full power and authority to enter into and
consummate all transactions contemplated by this Agreement, has duly
authorized the execution, delivery and performance of this Agreement, and
has duly executed and delivered this Agreement;
(iv) This Agreement, assuming due authorization, execution and
delivery by each of the other parties hereto, constitutes a valid, legal
and binding obligation of the Trustee, enforceable against the Trustee in
accordance with the terms hereof, subject to (a) applicable bankruptcy,
insolvency, reorganization, moratorium and other laws affecting the
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enforcement of creditors' rights generally and the rights of creditors of
national banking associations specifically and (b) general principles of
equity, regardless of whether such enforcement is considered in a
proceeding in equity or at law;
(v) The Trustee is not in violation of, and its execution and
delivery of this Agreement and its performance and compliance with the
terms of this Agreement will not constitute a violation of, any law, any
order or decree of any court or arbiter, or any order, 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 which 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; and
(vii) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Trustee, or compliance by the Trustee with, this
Agreement or the consummation of the transactions contemplated by this
Agreement, except for any consent, approval, authorization or order which
has not been obtained or cannot be obtained prior to the actual
performance by the Trustee of its obligations under this Agreement, and
which, if not obtained would not have a materially adverse effect on the
ability of the Trustee to perform its obligations hereunder.
(b) The Fiscal Agent hereby represents and warrants to the
Depositor, the Servicer and the Special Servicer and for the benefit of the
Certificateholders, as of the Closing Date, that:
(i) The Fiscal Agent is a foreign banking corporation, duly
organized, validly existing and in good standing under the laws governing
its creation;
(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 charter 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) 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;
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(iv) This Agreement, assuming due authorization, execution and
delivery by each of the other parties hereto, constitutes a valid, legal
and binding obligation of the 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 the rights of
creditors of national banking associations specifically 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 which 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; and
(vii) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Fiscal Agent, or compliance by the Fiscal Agent with,
this Agreement or the consummation of the transactions contemplated by
this Agreement, except for any consent, approval, authorization or order
which has not been obtained or cannot be obtained prior to the actual
performance by the Fiscal Agent of its obligations under this Agreement,
and which, if not obtained would not have a materially adverse effect on
the ability of the Fiscal Agent to perform its obligations hereunder.
[End of Article VIII]
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ARTICLE IX
TERMINATION
SECTION 9.01. Termination Upon Repurchase or Liquidation of All
Mortgage Loans.
Subject to Section 9.02, the Trust Fund and the respective
obligations and responsibilities under this Agreement of the Depositor, the
Servicer, the Special Servicer and the Trustee (other than the obligations of
the Trustee to provide for and make payments to Certificateholders as hereafter
set forth) shall terminate upon payment (or provision for payment) to the
Certificateholders of all amounts held by or on behalf of the Trustee and
required hereunder to be so paid on the Distribution Date following the earlier
to occur of (i) the purchase by the Servicer, the Special Servicer, the Holders
of the Controlling Class or the Holders of the Class [LR] Certificates of all
the Mortgage Loans and each REO Property remaining in the Trust Fund at a price
equal to (a) the sum of (1) the aggregate Purchase Price of all the Mortgage
Loans (exclusive of REO Loans) included in the Trust Fund and (2) the Appraised
Value of each REO Property, if any, included in the Trust Fund (such Appraisals
in clause (a)(2) to be conducted by an Independent MAI-designated appraiser
selected and mutually agreed upon by the Servicer and the Trustee, and approved
by more than 50% of the Voting Rights of the Classes of Certificates then
outstanding (other than the Controlling Class unless the Controlling Class is
the only Class of Certificates then outstanding)), minus (b) solely in the case
where the Servicer is effecting such purchase, the aggregate amount of
unreimbursed Advances, together with any interest accrued and payable to the
Servicer in respect of such Advances in accordance with Sections 3.03(d) and
4.03(d) and any unpaid Servicing Fees, remaining outstanding (which items shall
be deemed to have been paid or reimbursed to the Servicer in connection with
such purchase) and (ii) the final payment or other liquidation (or any advance
with respect thereto) of the last Mortgage Loan or REO Property remaining in the
Trust Fund; provided, however, that in no event shall the trust created hereby
continue beyond the expiration of 21 years from the death of the last survivor
of the descendants of Joseph P. Kennedy, the late ambassador of the United
States to the Court of St. James's, living on the date hereof.
The Servicer, the Special Servicer, the Holders of the Controlling
Class or the Holders of the Class [LR] Certificates may, at its option, elect to
purchase all of the Mortgage Loans and each REO Property remaining in the Trust
Fund as contemplated by clause (i) of the preceding paragraph by giving written
notice to the Trustee, the Paying Agent and the other parties hereto no later
than 60 days prior to the anticipated date of purchase; provided, however, that
the Servicer, the Special Servicer, the Holders of the Controlling Class or the
Holders of the Class [LR] Certificates may so elect to purchase all of the
Mortgage Loans and each REO Property remaining in the Trust Fund only on or
after the first Distribution Date on which the aggregate Stated Principal
Balances of the Mortgage Loans and any REO Loans remaining in the Trust Fund is
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less than 4% of the aggregate Cut-off Date Principal Balance of the Mortgage
Loans set forth in the Preliminary Statement. In the event that the Servicer,
the Special Servicer, the Holders of the Controlling Class or the Holders of the
Class [LR] Certificates purchases all of the Mortgage Loans and each REO
Property remaining in the Trust Fund in accordance with the preceding sentence,
the Servicer, the Special Servicer, the Holders of the Controlling Class or the
Holders of the Class [LR] Certificates, as applicable, shall deposit in the
Lower-Tier 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 or Termination Price, as applicable (exclusive of any portion
thereof payable to any Person other than the Certificateholders pursuant to
Section 3.05(a), which portion shall be deposited in the Certificate Account).
In addition, the Servicer shall transfer to the Lower-Tier 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
deposits have been made, the Trustee shall release or cause to be released to
the Servicer, the Special Servicer, the Holders of the Controlling Class or the
Holders of the Class [LR] Certificates, as applicable, the Mortgage Files for
the remaining Mortgage Loans and shall execute all assignments, endorsements and
other instruments furnished to it by the Servicer, the Special Servicer, the
Holders of the Controlling Class or the Holders of the Class [LR] Certificates,
as applicable, as shall be necessary to effectuate transfer of the Mortgage
Loans and REO Properties remaining in the Trust Fund.
For purposes of this Section 9.01, the Special Servicer shall have
the first option to terminate the Trust Fund, then the Servicer, than the
Holders of the Controlling Class and then the Holders of the Class [LR]
Certificates. For purposes of this Section 9.01, the Directing
Certificateholder, with the consent of the Holders of the Controlling Class,
shall act on behalf of the Holders of the Controlling Class in purchasing the
assets of the Trust Fund and terminating the Trust.
Notice of any termination pursuant to this Section 9.01 shall be
given promptly by the Paying Agent by letter to Certificateholders and each
Rating Agency and, if not previously notified pursuant to this Section 9.01, to
the other parties hereto mailed (a) in the event such notice is given in
connection with the purchase of all of the Mortgage Loans and each REO Property
remaining in the Trust Fund, 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 P & I Advance 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.
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After transferring the Lower-Tier Distribution Amount and the amount
of any Prepayment Premiums and Yield Maintenance Charges distributable pursuant
to Section 4.01(d) to the Upper-Tier Distribution Account pursuant to Section
3.04(b) and 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 Upper-Tier Distribution Account that are
allocable to payments on the Class of Certificates so presented and surrendered.
Amounts on deposit in the Upper-Tier Distribution Account as of the final
Distribution Date (exclusive of any portion of such amounts payable or
reimbursable to any Person pursuant to clause (ii) of Section 3.05(c)) shall be
allocated for the purposes, in the amounts and in accordance with the priority
set forth in Sections 4.01(a) and 4.01(e) and shall be distributed in
termination and liquidation of the Uncertificated Lower-Tier Interests and the
Class [LR] Certificates in accordance with Sections 4.01(b) and (d). Any funds
not distributed on such Distribution Date shall be set aside and held uninvested
in trust for the benefit of Certificateholders not presenting and surrendering
their Certificates in the aforesaid manner and shall be disposed of in
accordance with this Section 9.01 and Section 4.01(g).
SECTION 9.02. Additional Termination Requirements.
In the event the Servicer, the Special Servicer, the Holders of the
Controlling Class or the Holders of the Class [LR] Certificates purchases all of
the Mortgage Loans and each REO Property remaining in the Trust Fund as provided
in Section 9.01, the Trust Fund shall be terminated in accordance with the
following additional requirements, which are intended to meet the definition of
a "qualified liquidation" in Section 860F(a)(4) of the Code:
(i) the Servicer shall specify the first day in the 90-day
liquidation period in a statement attached to each of the Upper-Tier
REMIC's and the Lower-Tier REMIC's final Tax Return 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;
(ii) during such 90-day liquidation period and at or prior to the
time of the making of the final payment on the Certificates, the Trustee
shall sell all of the assets of the Trust Fund to the Servicer, the
Special Servicer, the Holders of the Controlling Class or the Holders of
the Class [LR] Certificates, as applicable, for cash; and
(iii) immediately following the making of the final payment on the
Uncertificated Lower-Tier Interests and the Certificates, the Paying Agent
shall distribute or credit, or cause to be distributed or credited, to the
Holders of the Class [LR] Certificates (in the case of the Lower-Tier
REMIC) and the Class [R] Certificates (in the case of the Upper-Tier
REMIC) all cash on hand (other than cash retained to meet claims), and the
Trust Fund and each of the Lower-Tier REMIC and the Upper-Tier REMIC shall
terminate at that time.
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[End of Article IX]
ARTICLE X
ADDITIONAL REMIC PROVISIONS
SECTION 10.01. REMIC Administration.
(a) The Servicer shall make an election to treat each of the
Lower-Tier REMIC and the Upper-Tier REMIC 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 tax or information return (including Form 8811) or
any appropriate state return for the taxable year ending on the last day of the
calendar year in which the Uncertificated Lower-Tier Interests and the
Certificates are issued. For the purposes of the REMIC election in respect of
the Upper-Tier REMIC, each Class of the Regular Certificates shall be designated
as the "regular interests" and the Class [R] Certificates shall be designated as
the sole class of "residual interests" in the Upper-Tier REMIC. For purposes of
the REMIC election in respect of the Lower-Tier REMIC, each Class of
Uncertificated Lower-Tier Interests shall be designated as the "regular
interests" and the Class [LR] Certificates shall be designated as the sole class
of "residual interests" in the Lower-Tier REMIC. None of the Special Servicer,
the Servicer and the Trustee shall permit the creation of any "interests"
(within the meaning of Section 860G of the Code) in the Lower-Tier REMIC or the
Upper-Tier REMIC other than the foregoing interests.
(b) The Closing Date is hereby designated as the "startup day" of
each of the Lower-Tier REMIC and the Upper-Tier REMIC within the meaning of
Section 860G(a)(9) of the Code.
(c) The Servicer shall act on behalf of each REMIC in relation to
any tax matter or controversy involving either REMIC and shall represent each
REMIC in any administrative or judicial proceeding relating to an examination or
audit by any governmental taxing authority with respect thereto. The legal
expenses, including without limitation attorneys' or accountants' fees, and
costs of any such proceeding and any liability resulting therefrom shall be
expenses of the Trust Fund and the Servicer shall be entitled to reimbursement
therefor out of amounts attributable to the Mortgage Loans and any REO
Properties on deposit in the Certificate Account as provided by Section 3.05(a)
unless such legal expenses and costs are incurred by reason of the Servicer's
willful misfeasance, bad faith or gross negligence. The Holder of the largest
Percentage Interest in each of the Class [R] and Class [LR] Certificates shall
be designated, in the manner provided under Treasury Regulations Section
1.860F-4(d) and temporary Treasury Regulations Section 301.6231(a)(7)-IT, as the
"tax matters person" of the Upper-Tier REMIC and the Lower-Tier REMIC,
respectively. By their acceptance thereof, the Holders of the largest Percentage
Interest in each of the Class [R] and Class [LR] Certificates hereby agrees to
irrevocably appoint the Servicer as their agent to perform all of the duties of
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the "tax matters person" for Upper-Tier REMIC and the Lower-Tier REMIC,
respectively.
(d) The Servicer shall prepare or cause to be prepared and shall
file, or cause to be filed, all of the Tax Returns that it determines are
required with respect to each of the Lower-Tier REMIC and the Upper-Tier REMIC
created hereunder and deliver such Tax Returns in a timely manner to the Trustee
and the Trustee shall sign such Tax Returns in a timely manner. The expenses of
preparing such returns shall be borne by the Servicer without any right of
reimbursement therefor. The Servicer agrees to indemnify and hold harmless the
Trustee with respect to any tax or liability arising from the Trustee's signing
of Tax Returns that contain errors or omissions.
(e) The Servicer shall provide or cause to be provided (i) to any
Transferor of a Class [R] Certificate or Class [LR] Certificate such information
as is necessary for the application of any tax relating to the transfer of such
Class [R] Certificate or Class [LR] Certificate to any Person who is a
Disqualified Organization, or in the case of a Transfer to an Agent thereof, to
such Agent, (ii) to the Trustee and the Trustee shall forward to the
Certificateholders such information or reports as are required by the Code or
the REMIC Provisions including reports relating to interest, original issue
discount and market discount or premium (using the Prepayment Assumption) and
(iii) to the Internal Revenue Service the name, title, address and telephone
number of the "tax matters person" who will serve as the representative of each
of the Lower-Tier REMIC and the Upper-Tier REMIC created hereunder.
(f) The Servicer shall take such actions and shall cause the Trust
Fund to take such actions as are reasonably within the Servicer's control and
the scope of its duties more specifically set forth herein as shall be necessary
to maintain the status of each of the Lower-Tier REMIC and the Upper-Tier REMIC
as a REMIC under the REMIC Provisions (and the Trustee shall assist the
Servicer, to the extent reasonably requested by the Servicer to do so). Neither
the Servicer nor the Special Servicer shall knowingly or intentionally take any
action, cause the Trust Fund to take any action or fail to take (or fail to
cause to be taken) any action reasonably within its control and the scope of
duties more specifically set forth herein, that, under the REMIC Provisions, if
taken or not taken, as the case may be, could (i) endanger the status of either
the Lower-Tier REMIC or the Upper-Tier REMIC as a REMIC or (ii) result in the
imposition of a tax upon either the Lower-Tier REMIC or the Upper-Tier REMIC or
the Trust Fund (including but not limited to the tax on "prohibited
transactions" as defined in Section 860F(a)(2) of the Code and the tax on
contributions to a REMIC set forth in Section 860G(d) of the Code, but not
including the tax on "net income from foreclosure property") (either such event,
an "Adverse REMIC Event") unless the Servicer receives an Opinion of Counsel (at
the expense of the party seeking to take such action or, if such party fails to
pay such expense, and the Servicer determines that taking such action is in the
best interest of the Trust Fund and the Certificateholders, at the expense of
the Trust Fund, but in no event at the expense of the Servicer or the Trustee)
to the effect that the contemplated action will not, with respect to the Trust
Fund, the Lower-Tier REMIC or the Upper-Tier REMIC created hereunder, endanger
such status or, unless the Servicer determines in its sole discretion to
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indemnify the Trust Fund against such tax, result in the imposition of such a
tax (not including a tax on "net income from foreclosure property"). The Trustee
shall not take or fail to take any action (whether or not authorized hereunder)
as to which the Servicer has advised it in writing that it has received an
Opinion of Counsel to the effect that an Adverse REMIC Event could occur with
respect to such action. In addition, prior to taking any action with respect to
the Trust Fund, either the Lower-Tier REMIC or the Upper-Tier REMIC or any of
its assets, or causing the Trust Fund or either the Lower-Tier REMIC or the
Upper-Tier REMIC to take any action, which is not expressly permitted under the
terms of this Agreement, the Trustee will consult with the Servicer or its
designee, in writing, with respect to whether such action could cause an Adverse
REMIC Event to occur with respect to the Trust Fund or either the Lower-Tier
REMIC or the Upper-Tier REMIC and the Trustee shall not take any such action or
cause the Trust Fund or either the Lower-Tier REMIC or the Upper-Tier REMIC to
take any such action as to which the Servicer has advised it in writing that an
Adverse REMIC Event could occur. The Servicer 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 expressly permitted by this Agreement, but in no event at
the expense of the Servicer or the Trustee. At all times as may be required by
the Code, the Servicer will to the extent within its control and the scope of
its duties more specifically set forth herein, maintain substantially all of the
assets of each of the Lower-Tier REMIC and the Upper-Tier REMIC as "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.
(g) In the event that any applicable federal, state or local tax,
including interest, penalties or assessments, additional amounts or additions to
tax, is imposed on either the Lower-Tier REMIC or the Upper-Tier REMIC, such tax
shall be charged against amounts otherwise distributable to the Holders of the
Certificates, except as provided in the last sentence of this Section 10.01(g);
provided, that with respect to the estimated amount of tax imposed on any "net
income from foreclosure property" pursuant to Code Section 860G(d) or any
similar tax imposed by a state or local tax authority, the Special Servicer
shall retain in the related REO Account a reserve for the payment of such taxes
in such amounts and at such times as it shall deem appropriate (or as advised by
the Servicer in writing), and shall remit to the Servicer such reserved amounts
as the Servicer shall request in order to pay such taxes. Except as provided in
the preceding sentence, the Servicer shall withdraw from the Certificate Account
sufficient funds to pay or provide for the payment of, and to actually pay, such
tax as is estimated to be legally owed by either the Lower-Tier REMIC or the
Upper-Tier REMIC (but such authorization shall not prevent the Servicer from
contesting, at the expense of the Trust Fund (other than as a consequence of a
breach of its obligations under this Agreement), any such tax in appropriate
proceedings, and withholding payment of such tax, if permitted by law, pending
the outcome of such proceedings). The Servicer is hereby authorized to and shall
segregate, into a separate non-interest bearing account, the net income from any
"prohibited transaction" under Code Section 860F(a) or the amount of any taxable
contribution to the Lower-Tier REMIC or the Upper-Tier REMIC after the Startup
Day that is subject to tax under Code Section 860G(d) and use such income or
amount, to the extent necessary, to pay such prohibited transactions tax. To the
extent that any such tax (other than any such tax paid in respect of "net income
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from foreclosure property") is paid to the Internal Revenue Service or
applicable state or local tax authorities, the Servicer shall retain an equal
amount from future amounts otherwise distributable to the Holders of Residual
Certificates (as applicable) and shall distribute such retained amounts, (x) in
the case of the Lower-Tier REMIC, to the Holders of the Uncertificated
Lower-Tier Interests to the extent they are fully reimbursed for any Collateral
Support Deficit arising therefrom and then to the Holders of the Class [LR]
Certificates in the manner specified in Section 4.01(b) and (y) in the case of
the Upper-Tier REMIC, to the Holders of Class [A], Class [B], Class [C], Class
[D], Class [E], Class [F], Class [G], Class [H] and Class [X] Certificates, as
applicable, in the manner specified in Section 4.01(a), to the extent they are
fully reimbursed for any Collateral Support Deficit arising therefrom and then
to the Holders of the Class [R] Certificates. None of the Trustee, the Fiscal
Agent, the Servicer or the Special Servicer shall be responsible for any taxes
imposed on either the Lower-Tier REMIC or the Upper-Tier REMIC except to the
extent such taxes arise as a consequence of a breach of their respective
obligations under this Agreement.
(h) The Trustee (to the extent required to maintain books and
records hereunder) and the Servicer shall, for federal income tax purposes,
maintain books and records with respect to each of the Lower-Tier REMIC and the
Upper-Tier REMIC on a calendar year and on an accrual basis or as otherwise may
be required by the REMIC Provisions.
(i) Following the Startup Day, neither the Servicer nor the Trustee
shall accept any contributions of assets to the Lower-Tier REMIC and the
Upper-Tier REMIC unless the Servicer and the Trustee shall have received an
Opinion of Counsel (at the expense of the party seeking to make such
contribution) to the effect that the inclusion of such assets in the Lower-Tier
REMIC or the Upper-Tier REMIC will not (i) cause either the Lower-Tier REMIC or
the Upper-Tier REMIC to fail to qualify as a REMIC at any time that any
Uncertificated Lower-Tier Interests or Certificates are outstanding or (ii)
subject either the Trust Fund, the Lower-Tier REMIC or the Upper-Tier REMIC to
any tax under the REMIC Provisions or other applicable provisions of federal,
state and local law or ordinances.
(j) Neither the Servicer nor the Trustee shall enter into any
arrangement by which the Trust Fund or either the Lower-Tier REMIC or the
Upper-Tier REMIC will receive a fee or other compensation for services nor
permit the Trust Fund or either the Lower-Tier REMIC or the Upper-Tier REMIC 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.
(k) Solely for the purposes of Section 1.860G-1(a)(4)(iii) of the
Treasury Regulations, the "latest possible maturity date" by which the
Certificate Balance of each Class of Certificates representing a "regular
interest" in the Upper-Tier REMIC and by which the Lower-Tier Principal Amount
of each Class of Uncertificated Lower-Tier Interests representing a "regular
interest" in the Lower-Tier REMIC would be reduced to zero is December 19, 2006
which is the Distribution Date immediately following the latest scheduled
maturity of any Mortgage Loan.
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(l) Within 30 days after the Closing Date, the Servicer 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 Lower-Tier REMIC and the Upper-Tier
REMIC.
(m) Neither the Trustee nor the Servicer shall sell, dispose of or
substitute for any of the Mortgage Loans (except in connection with (i) the
default, imminent default or foreclosure of a Mortgage Loan, including but not
limited to, the acquisition or sale of a Mortgaged Property acquired by deed in
lieu of foreclosure, (ii) the bankruptcy of the Trust Fund, (iii) the
termination of the Trust Fund pursuant to Article IX of this Agreement or (iv) a
purchase of Mortgage Loans pursuant to Article II or III of this Agreement) or
acquire any assets for the Trust Fund or either the Lower-Tier REMIC or the
Upper-Tier REMIC or sell or dispose of any investments in the Certificate
Account, the Distribution Accounts or the REO Account for gain unless it has
received an Opinion of Counsel that such sale, disposition or substitution will
not (a) affect adversely the status of either the Lower-Tier REMIC or the
Upper-Tier REMIC as a REMIC or (b) unless the Servicer has determined in its
sole discretion to indemnify the Trust Fund against such tax, cause the Trust
Fund or either the Lower-Tier REMIC or the Upper-Tier REMIC to be subject to a
tax on "prohibited transactions" pursuant to the REMIC Provisions.
SECTION 10.02. Depositor, Special Servicer, Paying Agent and
Trustee to Cooperate with Servicer.
(a) The Depositor shall provide or cause to be provided to the
Servicer, within 10 days after the Closing Date, all information or data that
the Servicer reasonably determines to be relevant for tax purposes as to the
valuations and Issue Prices of the Certificates, including, without limitation,
the price, yield, Prepayment Assumption and projected cash flow of the
Certificates.
(b) The Servicer, the Special Servicer, the Paying Agent and the
Trustee shall each furnish such reports, certifications and information, and
access to such books and records maintained thereby, as may relate to the
Certificates or the Trust Fund and as shall be reasonably requested by the
Servicer in order to enable it to perform its duties hereunder.
SECTION 10.03. Use of Agents.
The Servicer shall execute all of its obligations and duties under
this Article X through its corporate trust department located at 450 West 33rd
Street, 15th Floor, New York, New York 10001. The Servicer may execute any of
its obligations and duties under this Article X either directly or by or through
agents or attorneys. The Servicer shall not be relieved of any of its duties or
obligations under this Article X by virtue of the appointment of any such agents
or attorneys.
[End of Article X]
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ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.01. Amendment.
(a) This Agreement may be amended from time to time by the parties
hereto, without the consent of any of the Certificateholders:
(i) to cure any ambiguity;
(ii) to correct or supplement any provisions herein or therein,
which may be inconsistent with any other provisions herein or therein or
to correct any error;
(iii) to modify, eliminate or add to any of its provisions to such
extent as shall be necessary to maintain the qualification of the Trust
Fund or either the Lower-Tier REMIC or the Upper-Tier REMIC as a REMIC at
all times that any Certificate is outstanding or to avoid or minimize the
risk of the imposition of any tax on the Trust Fund or either the
Lower-Tier REMIC or the Upper-Tier REMIC pursuant to the Code that would
be a claim against the Trust Fund or either the Lower-Tier REMIC or the
Upper-Tier REMIC, provided that the Trustee has received an Opinion of
Counsel to the effect that (a) such action is necessary or desirable to
maintain such qualification or to avoid or minimize the risk of the
imposition of any such tax, (b) such action will not adversely affect in
any material respect the interests of any Certificateholder, and (c) such
change shall not result in the withdrawal, downgrade or qualification of
the then-current rating assigned to any Class of Certificates, as
evidenced by a letter from each Rating Agency to such effect;
(iv) to change the timing and/or nature of deposits into the
Certificate Account, the Distribution Accounts or REO Account or to change
the name in which the Certificate Account is maintained, provided that (a)
the P&I Advance Date shall in no event be later than the related
Distribution Date, (b) such change shall not, as evidenced by an Opinion
of Counsel, adversely affect in any material respect the interests of any
Certificateholder and (c) such change shall not result in the withdrawal,
downgrade or qualification of the then-current rating assigned to any
Class of Certificates, as evidenced by a letter from each Rating Agency to
such effect;
(v) to modify, eliminate or add to the provisions of Section 5.02(d)
or any other provision hereof restricting transfer of the Residual
Certificates by virtue of their being the REMIC "residual interests,"
provided that (a) such change shall not result in the withdrawal,
downgrade or qualification of the then-current rating assigned to any
Class of Certificates, as evidenced by a letter from each Rating Agency to
such effect, and (b) such change shall not, as evidenced by an Opinion of
Counsel, cause the Trust Fund, the Lower-Tier REMIC, the Upper-Tier REMIC
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or any of the Certificateholders (other than the Transferor) to be subject
to a federal tax caused by a Transfer to a Person that is a Disqualified
Organization or a Non-U.S.
Person;
(vi) to make any other provisions with respect to matters or
questions arising under this Agreement which shall not be materially
inconsistent with the provisions of this Agreement, provided that such
action shall not, as evidenced by an Opinion of Counsel, adversely affect
in any material respect the interests of any Certificateholder not
consenting thereto; and
(vii) to amend or supplement any provision hereof to the extent
necessary to maintain the rating or ratings assigned to each Class of
Certificates by each Rating Agency.
(b) This Agreement may also be amended from time to time by the
parties hereto with the consent of the Holders of Certificates evidencing in the
aggregate not less than 662/3% of the Percentage Interests of each Class of
Certificates affected thereby 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 of such
Class; provided, however, that no such amendment shall:
(i) reduce in any manner the amount of, or delay the timing of,
payments which are required to be distributed on any Certificate without
the consent of the Holder of such Certificate; or
(ii) reduce the aforesaid percentage of Certificates of any Class
the Holders of which are required to consent to any such amendment, in any
such case without the consent of the Holders of all Certificates of such
Class then outstanding; or
(iii) adversely affect the Voting Rights of any Class of
Certificates without the consent of the Holders of all Certificates of
such Class then outstanding; or
(iv) amend this Section 11.01.
(c) Notwithstanding the foregoing, the Trustee will not be entitled
to consent to any amendment hereto without having first received an Opinion of
Counsel (at the Trust Fund's expense) to the effect that such amendment or the
exercise of any power granted to the Servicer, the Depositor, the Special
Servicer, the Trustee or any other specified person in accordance with such
amendment will not result in the imposition of a tax on the Trust Fund, the
Lower-Tier REMIC or the Upper-Tier REMIC or cause the Lower-Tier REMIC or the
Upper-Tier REMIC to fail to qualify as a REMIC.
(d) Promptly after the execution of any such amendment, the Trustee
shall furnish a statement describing the amendment to each Certificateholder and
the Paying Agent and a copy of such amendment to each Rating Agency.
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(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) The Trustee may, but shall not be obligated to, enter into any
amendment pursuant to this Section that affects its rights, duties and
immunities under this Agreement or otherwise.
(g) The cost of any Opinion of Counsel to be delivered pursuant to
Section 11.01(a) or (c) shall be borne by the Person seeking the related
amendment, except that if the Servicer or the Trustee requests any amendment of
this Agreement 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.
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 Servicer at the expense of the Depositor on direction by the
Trustee, but only upon direction accompanied by an Opinion of Counsel (the cost
of which shall be paid by the Depositor) to the effect that such recordation
materially and beneficially affects the interests of the Certificateholders.
(b) For the purpose of facilitating the recordation of this
Agreement as herein provided and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and such counterparts shall
constitute but one and the same instrument.
SECTION 11.03. Limitation on Rights of Certificateholders.
(a) The death or incapacity of any Certificateholder shall not
operate to terminate this Agreement or the Trust 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
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partners or members of an association; nor shall any Certificateholder be under
any liability to any third party by reason of any action taken by the parties to
this Agreement pursuant to any provision hereof.
(c) No Certificateholder shall have any right by virtue of any
provision of this Agreement to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Agreement or any Mortgage
Loan, unless, with respect to any suit, action or proceeding upon or under or
with respect to this Agreement, such Holder previously shall have given to the
Trustee a written notice of default hereunder, and of the continuance thereof,
as hereinbefore provided, and unless also (except in the case of a default by
the Trustee) the Holders of Certificates of any Class evidencing not less than
25% of the related Percentage Interests in such Class shall have made written
request upon the Trustee to institute such action, suit or proceeding in its own
name as Trustee hereunder and shall have offered to the Trustee such reasonable
indemnity as it may require against the costs, expenses and liabilities to be
incurred therein or thereby, and the Trustee, for 60 days after its receipt of
such notice, request and offer of indemnity, shall have neglected or refused to
institute any such action, suit or proceeding. The Trustee shall be under no
obligation to exercise any of the trusts or powers vested in it hereunder or to
institute, conduct or defend any litigation hereunder or in relation hereto at
the request, order or direction of any of the Holders of Certificates unless
such Holders have offered to the Trustee reasonable security against the costs,
expenses and liabilities which may be incurred therein or hereby. 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 11.03(c), 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 if personally delivered at or mailed by registered mail, postage
prepaid (except for notices to the Trustee which shall be deemed to have been
duly given only when received), to: (i) in the case of the Depositor, Chase
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Commercial Mortgage Securities Corp., 380 Madison Avenue, New York, New York
10017, Attention: Jacqueline R. Slater, with a copy to Jeanne M. Mininall, Esq.,
telecopy number: (212) 270-7481; (ii) in the case of the Servicer, The Chase
Manhattan Bank, CCMB Servicing Division, 380 Madison Avenue, 11th Floor, New
York, New York 10017 Attention: Janice Smith, V.P. telecopy number: (212)
622-3553; (iii) in the case of the Special Servicer__________________________,
Attention:________, telecopy number:________, with a copy to_____, Esq.,
__________________________, telecopy number:_______; (iv) in the case of the
Trustee and the Fiscal Agent, _______________________,
Attention:________________, Chase Commercial Mortgage Securities Corp., Series
1997-_, telecopy number:________; (v) in the case of the initial Paying Agent,
the initial Certificate Registrar and the initial Authenticating Agent, The
Chase Manhattan Bank, 450 West 33rd Street, 15th Floor, New York, New York
10001, Attention: Structured Finance Services (MBS), telecopy number: (212)
946-8302; (vi) in the case of the Rating Agencies, (a)
_________________________________________________ and (b) ,
Attention:__________________, telecopy number:________; and (vii) in the case of
the Mortgage Loan Sellers, (a) The Chase Manhattan Bank, CCMB, 380 Madison
Avenue, 11th Floor, New York, New York 10017, Attention: Patricia A. Micka,
Managing Director, telecopy number (212) 622-3584 and
(b)_______________________________________, Attention:___________________,
telecopy number________________; or as to each such Person such other address as
may hereafter be furnished by such Person to the parties hereto in writing. Any
communication required or permitted to be delivered to a Certificateholder shall
be deemed to have been duly given when mailed first class, postage prepaid, to
the address of such Holder as shown in the Certificate Register. Any notice so
mailed within the time prescribed in this Agreement shall be conclusively
presumed to have been duly given, whether or not the Certificateholder receives
such notice.
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 comprising the Trust Fund,
including without limitation, the Mortgage Loans, all principal and interest
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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 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. This
Section 11.07 shall constitute notice to the Trustee pursuant to any of the
requirements of the applicable UCC.
SECTION 11.08. Successors and Assigns; Beneficiaries.
The provisions of this Agreement shall be binding upon and inure to
the benefit of the respective successors and assigns of the parties hereto, and
all such provisions shall inure to the benefit of the Certificateholders. No
other person, including, without limitation, any Mortgagor, shall be entitled to
any benefit or equitable right, remedy or claim under this Agreement.
SECTION 11.09. Article and Section Headings.
The article and section headings herein are for convenience of
reference only, and shall not limit or otherwise affect the meaning hereof.
SECTION 11.10. Notices to the Rating Agencies.
(a) The Trustee shall use reasonable efforts promptly to provide
notice to each Rating Agency with respect to each of the following of which it
has actual knowledge:
(i) any material change or amendment to this Agreement;
(ii) the occurrence of any Event of Default that has not been
cured;
(iii) the resignation or termination of the Servicer or the
Special Servicer;
(iv) any change in the location of either of the Distribution
Accounts;
(v) the repurchase of Mortgage Loans by a Mortgage Loan Seller
pursuant to Section 3 of the Mortgage Loan Purchase Agreement; and
(vi) the final payment to any Class of Certificateholders.
(b) The Servicer shall use reasonable efforts promptly to provide
notice to each Rating Agency with respect to each of the following of which it
has actual knowledge:
(i) the resignation or removal of the Trustee;
(ii) any change in the location of the Certificate Account; and
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(iii) any event that would result in the voluntary or involuntary
termination of any insurance of the accounts of the Paying Agent or the
Trustee.
(c) Each of the Servicer and the Special Servicer shall promptly
furnish to each Rating Agency copies of the following:
(i) each of its annual statements as to compliance described in
Section 3.13;
(ii) inspection reports and other items delivered to each of the
Servicer and Special Servicer pursuant to Sections 3.12(a) and 3.12(b);
(iii) each of its annual independent public accountants'
servicing reports described in Section 3.14;
(iv) a Collection Report with respect to each Distribution Date
required to be delivered pursuant to Section 4.02(b); and
(v) each waiver and consent provided pursuant to Section 3.08.
(d) The Paying Agent shall promptly furnish to each Rating Agency a
copy of the statement to Certificateholders distributed pursuant to Section
4.02(a).
[End of Article XI]
[SIGNATURES COMMENCE ON FOLLOWING PAGE]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused their names to be
signed hereto by their respective officers thereunto duly authorized, in each
case as of the day and year first above written.
CHASE COMMERCIAL MORTGAGE SECURITIES
CORP.
Depositor
By:_____________________________
Name:___________________________
Title:__________________________
THE CHASE MANHATTAN BANK
Servicer
By:_____________________________
Name:___________________________
Title:__________________________
[---------------------------]
Special Servicer
By:_____________________________
Name:___________________________
Title:__________________________
[---------------------]
Trustee
By:_____________________________
Name:___________________________
Title:__________________________
[-------------------------]
Fiscal Agent
By:_____________________________
Name:___________________________
Title:__________________________
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<PAGE>
By:_____________________________
Name:___________________________
Title:__________________________
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<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the ______ day of __________________, 1997 before me, a notary
public in and for said State, personally appeared ________________________ known
to me to be a ______________________ of Chase Commercial Mortgage Securities
Corp. one of the corporations that executed the within instrument, and also
known to me to be the person who executed it on behalf of such corporation, and
acknowledged to me that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
------------------------------
Notary Public
[Notarial Seal]
A-1-1
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the _______ day of ___________, 1997, before me, a notary public
in and for said State, personally appeared _____________________________ known
to me to be a ________________________ of______________, a national banking
association that executed the within instrument, and also known to me to be the
person who executed it on behalf of such national banking association, and
acknowledged to me that such national banking association executed the within
instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
------------------------------
Notary Public
[Notarial Seal]
A-1-2
<PAGE>
STATE OF ____________ )
) ss.:
COUNTY OF ____________ )
On the ______ day of ____________, 1997 before me, a notary public
in and for said State, personally appeared ___________________ known to me to be
a __________ of __________, a _________ corporation that executed the within
instrument, and also known to me to be the person who executed it on behalf of
such corporation, and acknowledged to me that such corporation executed the
within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
------------------------------
Notary Public
[Notarial Seal]
A-1-3
<PAGE>
STATE OF ____________ )
) ss.:
COUNTY OF ____________ )
On the ______ day of ____________, 1997 before me, a notary public
in and for said State, personally appeared ___________________ known to me to be
a _______ of The Chase Manhattan Bank, a New York banking corporation that
executed the within instrument, and also known to me to be the person who
executed it on behalf of such national banking association, and acknowledged to
me that such banking corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
------------------------------
Notary Public
[Notarial Seal]
A-1-4
<PAGE>
STATE OF ____________ )
) ss.:
COUNTY OF ____________ )
On the ______ day of ____________, 1997 before me, a notary public
in and for said State, personally appeared ___________________ and
___________________, both known to me to be a ________ and _________,
respectively, of___________________, a bank organized under the laws of the
_______that executed the within instrument, and also known to me to be the
person who executed it on behalf of such Netherlands bank, and acknowledged to
me that such Netherlands bank executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
------------------------------
Notary Public
[Notarial Seal]
A-1-5
<PAGE>
STATE OF ____________ )
) ss.:
COUNTY OF ____________ )
On the ______ day of ____________, 1997 before me, a notary public
in and for said State, personally appeared ___________________ and
___________________, both known to me to be a ________ and _________,
respectively, of ______________, a bank organized under the laws of the
_______that executed the within instrument, and also known to me to be the
person who executed it on behalf of such Netherlands bank, and acknowledged to
me that such Netherlands bank executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
------------------------------
Notary Public
[Notarial Seal]
A-1-6
<PAGE>
Schedule 1
Computerized Database Information
Field
Identification Number
Property Type
Property City and State
Year Built
Year Renovated
Occupancy Rate as Of ___
Total Square Feet
Number of units
Original Principal Balance
Prepayment Premium
Note Rate
Annual Debt Service
Current DSCR
Appraised Value (MAI)
Cut-off LTV (MAI)
LTV at Maturity (MAI)
Annual Reserves per Square Foot/Unit
Origination Date
Maturity Date
(Original) Loan Balance Per SF or Per Unit
Current Unpaid Principal Balance
1995 Actual or Rolling 12 Month NOI
Actual Current Annual Net Operating Income
A-1-7
<PAGE>
SCHEDULE 2
BORROWER CONCENTRATIONS IN EXCESS OF 5%
(IDENTIFIED BY LOAN ID NUMBER ON EXHIBIT A TO THE PROSPECTUS SUPPLEMENT)
A-1-8
<PAGE>
A-1-9
<PAGE>
EXHIBIT [A-1]
CHASE COMMERCIAL MORTGAGE SECURITIES CORP.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1997-_, CLASS [A-1]
THE PORTION OF THE CERTIFICATE BALANCE OF THE CERTIFICATES EVIDENCED BY THIS
CERTIFICATE WILL BE DECREASED BY THE PORTION OF PRINCIPAL DISTRIBUTIONS ON THE
CERTIFICATES AND THE PORTION OF COLLATERAL SUPPORT DEFICIT ALLOCABLE TO THIS
CERTIFICATE. ACCORDINGLY, THE CERTIFICATE BALANCE OF THIS CERTIFICATE MAY BE
LESS THAN THAT SET FORTH BELOW. ANYONE ACQUIRING THIS CERTIFICATE MAY ASCERTAIN
ITS CURRENT CERTIFICATE BALANCE BY INQUIRY OF THE PAYING AGENT. THIS CERTIFICATE
CONSTITUTES A REMIC REGULAR INTEREST UNDER THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED.
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE CERTIFICATE
REGISTRAR 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.]4
PASS-THROUGH RATE: ____% APPROXIMATE AGGREGATE SCHEDULED PRINCIPAL
BALANCE OF THE MORTGAGE LOANS AFTER
DENOMINATION: $____________ DEDUCTING PAYMENTS DUE AND PREPAYMENTS
RECEIVED ON OR BEFORE CUT-OFF DATE:
$________________
DATE OF POOLING AND SERVICING
AGREEMENT: AS OF________, 1997 SERVICER: THE CHASE MANHATTAN BANK
CUT-OFF DATE:____________, 1997 SPECIAL SERVICER:__________________
CLOSING DATE:____________, 1997 TRUSTEE:____________________________
FIRST DISTRIBUTION DATE: FISCAL AGENT:_______________________
____________, 1997
PAYING AGENT:______________________
APPROXIMATE AGGREGATE
CERTIFICATE BALANCE CUSIP NO._________
OF THE CLASS [A-1] CERTIFICATES
AS OF THE CLOSING DATE: $_______ CERTIFICATE NO.: _______
- ----------
4 If this Certificate represents a Book-Entry Certificate registered in the
name of Cede & Co. it shall have this legend.
A-1-1
<PAGE>
CLASS [A-1] CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund, consisting primarily
of a pool of fixed rate, balloon multifamily and mobile home community mortgage
loans (the "Mortgage Loans"), all payments on or collections in respect of the
Mortgage Loans due after the Cut-off Date, all REO Properties and revenues
received in respect thereof, the mortgagee's rights under the Insurance
Policies, any Assignment of Leases, and any guaranties, escrow accounts or other
collateral as security for the Mortgage Loans, and such amounts as shall from
time to time be held in the Certificate Account, the Distribution Accounts, and
the REO Accounts, formed and sold by
CHASE COMMERCIAL MORTGAGE SECURITIES CORP.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN CHASE
COMMERCIAL MORTGAGE SECURITIES CORP., THE SERVICER, THE SPECIAL SERVICER, THE
TRUSTEE, THE FISCAL AGENT OR ANY OF THEIR AFFILIATES. NEITHER THIS CERTIFICATE
NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR
INSTRUMENTALITY OF THE UNITED STATES.
THIS CERTIFIES THAT __________________
is the registered owner of the interest evidenced by this Certificate in the
Class [A-1] Certificates issued by the Trust Fund created pursuant to the
Pooling and Servicing Agreement, dated as of__________, 1997 (the "Pooling and
Servicing Agreement"), among Chase Commercial Mortgage Securities Corp.
(hereinafter called the "Depositor", which term includes any successor entity
under the Pooling and Servicing Agreement), the Trustee, the Special Servicer,
the Servicer and the Fiscal Agent. A summary of certain of the pertinent
provisions of the Pooling and Servicing Agreement is set forth hereafter. To the
extent not defined herein, the capitalized terms used herein shall have the
meanings assigned thereto in the Pooling and Servicing Agreement.
This Certificate is one of a duly authorized issue of Certificates
designated as Certificates of the series specified on the face hereof (herein
called the "Certificates") and representing an interest in the Class of
Certificates specified on the face hereof equal to the quotient expressed as a
percentage obtained by dividing the Denomination of this Certificate specified
on the face hereof, by the aggregate initial Certificate Balance of the Class
[A-1] Certificates. The Certificates are designated as the Chase Commercial
Mortgage Securities Corp., Commercial Mortgage Pass-Through Certificates, Series
1997-_ and are issued in twelve Classes as specifically set forth in the Pooling
and Servicing Agreement. The Certificates will evidence in the aggregate 100% of
the beneficial ownership of the Trust Fund.
This Certificate does not purport to summarize the Pooling and
Servicing Agreement and reference is made to that agreement for information with
respect to the interests, rights, benefits, obligations, proceeds, and duties
evidenced hereby and the rights, duties and obligations of the Trustee. This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Pooling and Servicing Agreement, to which Pooling and
Servicing Agreement, as amended from time to time, the Certificateholder by
virtue of the acceptance hereof assents and by which the Certificateholder is
bound. In the case of any conflict between terms specified in this Certificate
and terms specified in the Pooling and Servicing Agreement, the terms of the
Pooling and Servicing Agreement shall govern.
This Certificate is a "regular interest" in a "real estate mortgage
investment conduit," as those terms are defined, respectively, in Sections
860G(a)(1) and 860D of the Internal Revenue Code of 1986, as amended. Each
Holder of this Certificate, by acceptance hereof, agrees to treat, and take no
action inconsistent with the treatment of, this Certificate in accordance with
the preceding sentence for purposes of federal income taxes, state and local
income and franchise taxes and other taxes imposed on or measured by income.
Pursuant to the terms of the Pooling and Servicing Agreement, the
Paying Agent shall distribute to the Person in whose name this Certificate is
registered as of the related Record Date, an amount equal to such Person's pro
A-1-2
<PAGE>
rata share (based on the Percentage Interest represented by this Certificate) of
that portion of the aggregate amount of principal and interest then
distributable, if any, allocable to the Class of Certificates of the same Class
as this Certificate for such Distribution Date, all as more fully described in
the Pooling and Servicing Agreement. Holders of this Certificate may be entitled
to Prepayment Premiums and Yield Maintenance Charges as provided in the Pooling
and Servicing Agreement. All sums distributable on this Certificate are payable
in the coin or currency of the United States of America as at the time of
payment is legal tender for the payment of public and private debts.
Interest on this Certificate will accrue (computed as if each year
consisted of 360 days and each month consisted of 30 days) during the Interest
Accrual Period relating to such Distribution Date at the Class [A-1]
Pass-Through Rate specified above on the Certificate Balance of this Certificate
immediately prior to each Distribution Date. Principal and interest allocated to
this Certificate on any Distribution Date will be in an amount due to this
Certificate's pro rata share of the Available Distribution Amount to be
distributed on the Certificates of this Class as of such Distribution Date, with
a final distribution to be made upon retirement of this Certificate as set forth
in the Pooling and Servicing Agreement.
Collateral Support Deficit and Certificate Deferred Interest on the
Mortgage Loans shall be allocated on the applicable Distribution Date to
Certificateholders in the manner set forth in the Pooling and Servicing
Agreement. All Collateral Support Deficit or Certificate Deferred Interest on
the Mortgage Loans allocated to any Class of Certificates will be allocated pro
rata among the outstanding Certificates of such Class.
The Certificates are limited in right of payment to, among other
things, certain collections and recoveries respecting the Mortgage Loans, all as
more specifically set forth in the Pooling and Servicing Agreement. As provided
in the Pooling and Servicing Agreement, the Certificate Account and the
Distribution Account will be held in the name of the Servicer and Paying Agent,
respectively, on behalf of the holders of Certificates specified in the Pooling
and Servicing Agreement and the Servicer (with respect to the Certificate
Account) or the Paying Agent (with respect to the Distribution Account) will be
authorized to make withdrawals therefrom. Amounts on deposit in such accounts
may be invested in Permitted Investments. Interest or other income earned on
funds in the Certificate Account and Distribution Account will be paid to the
Servicer as set forth in the Pooling and Servicing Agreement. As provided in the
Pooling and Servicing Agreement, withdrawals from the Certificate Account shall
be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of certain expenses
incurred with respect to the servicing of the Mortgage Loans and administration
of the Trust Fund.
All distributions under the Pooling and Servicing Agreement to a
Class of Certificates shall be made on each Distribution Date (other than the
final distribution on any Certificate) to Certificateholders of record on the
related Record Date by check mailed to the address set forth therefor in the
Certificate Register or, provided that such Certificateholder (1) has provided
the Trustee and the Paying Agent with wire instructions in writing as least five
Business Days prior to the related Record Date and (2) is the Holder of
Certificates with an original Certificate Balance or Notional Amount, as
applicable, of at least $_________, by wire transfer of immediately available
funds to the account of such Certificateholder at a bank or other entity having
appropriate facilities therefor. The final distribution on this Certificate
shall be made in like manner, but only upon presentment and surrender of this
Certificate at the offices of the Certificate Registrar or such other location
specified in the notice to Certificateholders of such final distribution.
Any funds not distributed on the final Distribution Date because of
the failure of Certificateholders to tender their Certificates shall be set
aside and held uninvested in trust for the benefit of the non-tendering
Certificateholders, whereupon the Trust Fund shall terminate. If any
Certificates as to which notice has been given pursuant to Section 4.01(g) of
the Pooling and Servicing Agreement 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 to receive
the final distribution with respect thereto. If within one year after the second
notice not all of such Certificates shall have been surrendered for
cancellation, the Paying Agent may, directly or through an agent, take
appropriate steps to contact the remaining non-tendering Certificateholders
concerning surrender of their Certificates. The costs and expenses of holding
such funds in trust and of contacting such Certificateholders shall be paid out
A-1-3
<PAGE>
of such funds. No interest shall accrue or be payable to any Certificateholder
on any amount held in trust as a result of such Certificateholder's failure to
surrender its Certificate(s) for final payment thereof in accordance with
Section 4.01(g) of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, the transfer of this Certificate is
registerable in the Certificate Register only upon surrender of this Certificate
for registration of transfer at the office of the Certificate Registrar or at
the office of its transfer agent, duly endorsed by, or accompanied by an
assignment in the form below or other written instrument of transfer in form
satisfactory to the Certificate Registrar duly executed by the Holder hereof or
such Holder's attorney-in-fact duly authorized in writing, and thereupon one or
more new Certificates of the same Class in authorized Denominations will be
issued to the designated transferee or transferees.
Subject to the terms of the Pooling and Servicing Agreement, the
Class [X] Certificates will be issued in book-entry form through the facilities
of DTC in Denominations of not less than $______ initial Notional Amount and in
integral multiples of $_____ in excess thereof, with one Certificate of such
Class evidencing an additional amount equal to the remainder of the initial
Notional Amount of such Class. Subject to the terms of the Pooling and Servicing
Agreement, the Offered Certificates (other than the Class [X] Certificates) will
be issued in book-entry form through the facilities of DTC in Denominations of
$____initial Certificate Balance, and in integral multiples of $______in excess
thereof, with one Certificate of each such Class evidencing an additional amount
equal to the remainder of the initial Certificate Balance of such Class. Subject
to the terms of the Pooling and Servicing Agreement, the Non-Registered
Certificates (other than the Residual Certificates) will be issued in book-entry
form through the facilities of DTC in Denominations of $________ initial
Certificate Balance, and in integral multiples of $_______in excess thereof,
with one Certificate of each such Class evidencing an additional amount equal to
the remainder of the initial Certificate Balance of such Class. The Class [R]
and Class [LR] Certificates will be issued in fully registered, certificated
form, in Denominations representing Percentage Interests of not less than __%.
No fee or service charge shall be imposed by the Certificate
Registrar for its services in respect of any registration of transfer or
exchange referred to in Section 5.02 of the Pooling and Servicing Agreement
other than for transfers to Institutional Accredited Investors as provided in
Section 5.02(h) thereof. In connection with any transfer to an Institutional
Accredited Investor, the Transferor shall reimburse the Trust for any costs
(including the cost of the Certificate Registrar's counsel's review of the
documents and any legal opinions, submitted by the transferor or transferee to
the Certificate Registrar as provided in Section 5.02 of the Pooling and
Servicing Agreement) incurred by the Certificate Registrar in connection with
such transfer. The Certificate Registrar may require payment by each transferor
of a sum sufficient to cover any tax, expense or other governmental charge
payable in connection with any such transfer or exchange.
The Depositor, the Trustee, the Fiscal Agent, the Servicer, the
Special Servicer, the Paying Agent and the Certificate Registrar and any of
their agents may treat the Person in whose name this Certificate is registered
as the owner hereof for all purposes, and neither the Depositor, the Trustee,
the Servicer, the Special Servicer, the Fiscal Agent, the Certificate Registrar
nor any such agents shall be affected by any notice to the contrary.
The Pooling and Servicing Agreement may be amended from time to time
by the Depositor, the Servicer, the Special Servicer, the Fiscal Agent and the
Trustee, without the consent of any of the Certificateholders, to cure any
ambiguity, to correct or supplement any provisions herein or therein that may be
inconsistent with any other provisions herein or therein or to correct any
error; to maintain the rating or ratings assigned to each Class of Certificates
by each Rating Agency; to modify, eliminate or add to any provisions to such
extent as is necessary to maintain the qualification of either the Upper-Tier
REMIC or the Lower-Tier REMIC as a REMIC to avoid or minimize the imposition of
any tax, provided, however, an Opinion of Counsel is obtained to the effect that
such action shall not adversely affect in any material respect the interest of
A-1-4
<PAGE>
any Certificateholder and such action is necessary or desirable to avoid such
tax and such action will not result in the withdrawal, downgrade or
qualification of the then-current rating by any Rating Agency, as evidenced by a
letter from such Rating Agency to such effect; to change the timing and/or
nature of deposits into the Certificate Account or Distribution Account or REO
Account or to change the name in which the Certificate Account is maintained,
provided, however, that the P&I Advance Date shall not be later than the related
Distribution Date, an Opinion of Counsel is obtained to the effect that such
action shall not adversely affect in any material respect the interest of any
Certificateholder and that such action will not result in the withdrawal,
downgrade or qualification of the then-current rating by any Rating Agency, as
evidenced by a letter from such Rating Agency to such effect; to modify,
eliminate or add to the provisions of Section 5.02(d) of the Pooling and
Servicing Agreement or any other provision thereof restricting transfer of the
Residual Certificates by virtue of their being the REMIC "residual interests,"
provided that such change shall not result in the withdrawal, downgrade or
qualification of the then-current rating assigned to any Class of Certificates,
as evidenced by a letter from each Rating Agency to such effect, and such change
shall not, as evidenced by an Opinion of Counsel, cause either the Upper-Tier
REMIC or the Lower-Tier REMIC or any of the Certificateholders (other than the
Transferor) to be subject to a federal tax caused by a Transfer to a Person that
is a Disqualified Organization or a Non-U.S. Person; and to make any other
provisions with respect to matters or questions arising under the Pooling and
Servicing Agreement which shall not be materially inconsistent with the
provisions of the Pooling and Servicing Agreement, provided, however, that such
action shall not, as evidenced by an Opinion of Counsel, adversely affect in any
material respect the interest of any Certificateholder not consenting thereto.
The Pooling and Servicing Agreement may also be amended from time to
time by the Depositor, the Servicer, the Special Servicer, the Fiscal Agent and
the Trustee with the consent of the Holders of Certificates representing not
less than ______% of the aggregate Percentage Interests of each Class of
Certificates affected by the amendment for the purpose of adding any provisions
to or changing in any manner or eliminating any of the provisions of the Pooling
and Servicing Agreement or of modifying in any manner the rights of the
Certificateholders; provided, however, that no such amendment shall:
(i) reduce in any manner the amount of, or delay the timing of,
payments which are required to be distributed on any Certificate without
the consent of such Certificateholder; or
(ii) reduce the aforesaid percentage of Certificates of any Class
the Holders of which are required to consent to any such amendment,
without the consent of the Holders of all Certificates of such Class then
outstanding; or
(iii) adversely affect the Voting Rights of any Class of
Certificates without the consent of the Holders of such Class then
outstanding; or
(iv) amend Section 11.01.
No amendment shall be made to the Pooling and Servicing Agreement
unless the Trustee shall have received an Opinion of Counsel that such amendment
will not cause either the Upper-Tier REMIC or the Lower-Tier REMIC to fail to
qualify as a REMIC or result in the imposition of a tax on either the Upper-Tier
REMIC or the Lower-Tier REMIC.
Any of the Servicer, Special Servicer, the Holders of the
Controlling Class or the Holders of the Class [LR] Certificates (in that order)
will have the option, upon 60 days' prior notice given to the Trustee, Paying
Agent and each of the other parties to the Pooling and Servicing Agreement,
which notice the Paying Agent is required to promptly forward to
Certificateholders and Rating Agencies in the manner set forth in the Pooling
and Servicing Agreement, to purchase all, but not less than all, of the Mortgage
Loans and all property acquired in respect of any Mortgage Loan remaining in the
Trust Fund, and thereby effect termination of the Trust Fund and early
retirement of the then outstanding Certificates, on any Distribution Date on
which the aggregate Stated Principal Balances of the Mortgage Loans and any REO
Loans remaining in the Trust Fund is reduced to less than _% of the aggregate
Cut-off Date Principal Balance of all the Mortgage Loans.
The obligations created by the Pooling and Servicing Agreement and
the Trust Fund created thereby (other than the obligation of the Paying Agent to
make payments to Certificateholders as provided for in the Pooling and Servicing
Agreement), shall terminate upon reduction of the Certificate Balances of all
the Certificates to zero (including, without limitation, any such final payment
resulting from a termination of the Trust Fund due to a sale of its property)
pursuant to the terms of the Pooling and Servicing Agreement. In no event,
however, will the Trust created by the Pooling and Servicing Agreement continue
beyond the expiration of 21 years from the death of the last survivor of the
A-1-5
<PAGE>
descendants of Joseph P. Kennedy, the late Ambassador of the United States to
the Court of St. James, living on the date hereof.
Unless the certificate of authentication hereon has been executed by
the Authenticating Agent, by manual signature, this Certificate shall not be
entitled to any benefit under the Pooling and Servicing Agreement or be valid
for any purpose. The Certificate Registrar has executed this Certificate on
behalf of the Trust Fund as Certificate Registrar under the Pooling and
Servicing Agreement and makes no representation or warranty as to any of the
statements contained herein or the validity or sufficiency of the Certificates
or the Mortgage Loans.
THIS CERTIFICATE AND THE POOLING AND SERVICING AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES APPLIED IN NEW YORK.
IN WITNESS WHEREOF, the Certificate Registrar has caused this
Certificate to be duly executed under this official seal.
THE CHASE MANHATTAN BANK, not in its
individual capacity but solely as
Certificate Registrar under the
Pooling and Servicing Agreement.
By:___________________________
AUTHORIZED OFFICER
Dated:__________, 1997
CERTIFICATE OF AUTHENTICATION
THIS IS ONE OF THE CLASS [A-1] CERTIFICATES REFERRED TO IN THE
WITHIN-MENTIONED POOLING AND SERVICING AGREEMENT.
THE CHASE MANHATTAN BANK,
Authenticating Agent
By:___________________________
AUTHORIZED SIGNATORY
A-1-6
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this
Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenant in common UNIF GIFT MIN ACT __________ Custodian
(Cust)
TEN ENT - as tenants by the entireties Under Uniform Gifts to Minors
JT TEN - as joint tenants with
rights of survivorship and Act __________________________
not as tenants in common (State)
Additional abbreviations may also be used though not in the above list.
FORM OF TRANSFER
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto__________________________
- --------------------------------------------------------------------------------
(Please insert Social Security or other identifying number of Assignee)
- --------------------------------------------------------------------------------
(Please print or typewrite name and address of assignee)
the within Certificate and does hereby or irrevocably constitute and appoint to
transfer the said Certificate in the Certificate register of the within-named
Trust, with full power of substitution in the premises.
- ----------------------- ----------------------------------------
Dated: NOTICE: The signature to this
assignment must correspond with the
name as written upon the face of this
Certificate in every particular
without alteration or enlargement or
any change whatever.
- ----------------------
SIGNATURE GUARANTEED
The signature must be guaranteed by a commercial bank or trust company or by a
member firm of the New York Stock Exchange or another national securities
exchange. Notarized or witnessed signatures are not acceptable.
A-1-7
<PAGE>
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________ for the
account of __________________________________ account number _______________
or, if mailed by check, to _______________________________________.
Statements should be mailed to
_______________________________________________________________. This
information is provided by assignee named above, or
______________________________ , as its agent.
A-1-8
<PAGE>
EXHIBIT [A-2]
CHASE COMMERCIAL MORTGAGE SECURITIES CORP.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1997-_, CLASS [A-2]
THE PORTION OF THE CERTIFICATE BALANCE OF THE CERTIFICATES EVIDENCED BY THIS
CERTIFICATE WILL BE DECREASED BY THE PORTION OF PRINCIPAL DISTRIBUTIONS ON THE
CERTIFICATES AND THE PORTION OF COLLATERAL SUPPORT DEFICIT ALLOCABLE TO THIS
CERTIFICATE. ACCORDINGLY, THE CERTIFICATE BALANCE OF THIS CERTIFICATE MAY BE
LESS THAN THAT SET FORTH BELOW. ANYONE ACQUIRING THIS CERTIFICATE MAY ASCERTAIN
ITS CURRENT CERTIFICATE BALANCE BY INQUIRY OF THE PAYING AGENT. THIS CERTIFICATE
CONSTITUTES A REMIC REGULAR INTEREST UNDER THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED.
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE CERTIFICATE
REGISTRAR 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.]1
PASS-THROUGH RATE: ______% APPROXIMATE AGGREGATE SCHEDULED PRINCIPAL
BALANCE OF THE MORTGAGE LOANS AFTER
DENOMINATION: $____________ DEDUCTING PAYMENTS DUE AND PREPAYMENTS
RECEIVED ON OR BEFORE CUT-OFF DATE:
$____________
DATE OF POOLING AND SERVICING
AGREEMENT: AS OF__________, 1997 SERVICER: THE CHASE MANHATTAN BANK
CUT-OFF DATE:______________, 1997 SPECIAL SERVICER:
CLOSING DATE:______________, 1997 TRUSTEE:
FIRST DISTRIBUTION DATE: FISCAL AGENT:
______________, 1997
PAYING AGENT: THE CHASE MANHATTAN BANK
APPROXIMATE AGGREGATE
CERTIFICATE BALANCE CUSIP NO.___________
OF THE CLASS [A-2] CERTIFICATES
AS OF THE CLOSING DATE: $__________ CERTIFICATE NO.: _______
- ----------
1 If this Certificate represents a Book-Entry Certificate registered in the
name of Cede & Co., it shall have this legend.
A-2-1
<PAGE>
CLASS [A-2] CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund, consisting primarily
of a pool of fixed rate, balloon multifamily and mobile home community mortgage
loans (the "Mortgage Loans"), all payments on or collections in respect of the
Mortgage Loans due after the Cut-off Date, all REO Properties and revenues
received in respect thereof, the mortgagee's rights under the Insurance
Policies, any Assignment of Leases, and any guaranties, escrow accounts or other
collateral as security for the Mortgage Loans, and such amounts as shall from
time to time be held in the Certificate Account, the Distribution Accounts, and
the REO Accounts, formed and sold by
CHASE COMMERCIAL MORTGAGE SECURITIES CORP.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN CHASE
COMMERCIAL MORTGAGE SECURITIES CORP., THE SERVICER, THE SPECIAL SERVICER, THE
TRUSTEE, THE FISCAL AGENT OR ANY OF THEIR AFFILIATES. NEITHER THIS CERTIFICATE
NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR
INSTRUMENTALITY OF THE UNITED STATES.
THIS CERTIFIES THAT __________________
is the registered owner of the interest evidenced by this Certificate in the
Class [A-2] Certificates issued by the Trust Fund created pursuant to the
Pooling and Servicing Agreement, dated as of____________, 1997 (the "Pooling and
Servicing Agreement"), among Chase Commercial Mortgage Securities Corp.
(hereinafter called the "Depositor", which term includes any successor entity
under the Pooling and Servicing Agreement), the Trustee, the Special Servicer,
the Servicer and the Fiscal Agent. A summary of certain of the pertinent
provisions of the Pooling and Servicing Agreement is set forth hereafter. To the
extent not defined herein, the capitalized terms used herein shall have the
meanings assigned thereto in the Pooling and Servicing Agreement.
This Certificate is one of a duly authorized issue of Certificates
designated as Certificates of the series specified on the face hereof (herein
called the "Certificates") and representing an interest in the Class of
Certificates specified on the face hereof equal to the quotient expressed as a
percentage obtained by dividing the Denomination of this Certificate specified
on the face hereof, by the aggregate initial Certificate Balance of the Class
[A-2] Certificates. The Certificates are designated as the Chase Commercial
Mortgage Securities Corp., Commercial Mortgage Pass-Through Certificates, Series
1997-_ and are issued in twelve Classes as specifically set forth in the Pooling
and Servicing Agreement. The Certificates will evidence in the aggregate 100% of
the beneficial ownership of the Trust Fund.
This Certificate does not purport to summarize the Pooling and
Servicing Agreement and reference is made to that agreement for information with
respect to the interests, rights, benefits, obligations, proceeds, and duties
evidenced hereby and the rights, duties and obligations of the Trustee. This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Pooling and Servicing Agreement, to which Pooling and
Servicing Agreement, as amended from time to time, the Certificateholder by
virtue of the acceptance hereof assents and by which the Certificateholder is
bound. In the case of any conflict between terms specified in this Certificate
and terms specified in the Pooling and Servicing Agreement, the terms of the
Pooling and Servicing Agreement shall govern.
This Certificate is a "regular interest" in a "real estate mortgage
investment conduit," as those terms are defined, respectively, in Sections
860G(a)(1) and 860D of the Internal Revenue Code of 1986, as amended. Each
Holder of this Certificate, by acceptance hereof, agrees to treat, and take no
action inconsistent with the treatment of, this Certificate in accordance with
the preceding sentence for purposes of federal income taxes, state and local
income and franchise taxes and other taxes imposed on or measured by income.
Pursuant to the terms of the Pooling and Servicing Agreement, the
Paying Agent shall distribute to the Person in whose name this Certificate is
registered as of the related Record Date, an amount equal to such
<PAGE>
Person's pro rata share (based on the Percentage Interest represented by this
Certificate) of that portion of the aggregate amount of principal and interest
then distributable, if any, allocable to the Class of Certificates of the same
Class as this Certificate for such Distribution Date, all as more fully
described in the Pooling and Servicing Agreement. Holders of this Certificate
may be entitled to Prepayment Premiums and Yield Maintenance Charges as provided
in the Pooling and Servicing Agreement. All sums distributable on this
Certificate are payable in the coin or currency of the United States of America
as at the time of payment is legal tender for the payment of public and private
debts.
Interest on this Certificate will accrue (computed as if each year
consisted of 360 days and each month consisted of 30 days) during the Interest
Accrual Period relating to such Distribution Date at the Class [A-2]
Pass-Through Rate specified above on the Certificate Balance of this Certificate
immediately prior to each Distribution Date. Principal and interest allocated to
this Certificate on any Distribution Date will be in an amount due to this
Certificate's pro rata share of the Available Distribution Amount to be
distributed on the Certificates of this Class as of such Distribution Date, with
a final distribution to be made upon retirement of this Certificate as set forth
in the Pooling and Servicing Agreement.
Collateral Support Deficit and Certificate Deferred Interest on the
Mortgage Loans shall be allocated on the applicable Distribution Date to
Certificateholders in the manner set forth in the Pooling and Servicing
Agreement. All Collateral Support Deficit or Certificate Deferred Interest on
the Mortgage Loans allocated to any Class of Certificates will be allocated pro
rata among the outstanding Certificates of such Class.
The Certificates are limited in right of payment to, among other
things, certain collections and recoveries respecting the Mortgage Loans, all as
more specifically set forth in the Pooling and Servicing Agreement. As provided
in the Pooling and Servicing Agreement, the Certificate Account and the
Distribution Account will be held in the name of the Servicer and Paying Agent,
respectively, on behalf of the holders of Certificates specified in the Pooling
and Servicing Agreement and the Servicer (with respect to the Certificate
Account) or the Paying Agent (with respect to the Distribution Account) will be
authorized to make withdrawals therefrom. Amounts on deposit in such accounts
may be invested in Permitted Investments. Interest or other income earned on
funds in the Certificate Account and Distribution Account will be paid to the
Servicer as set forth in the Pooling and Servicing Agreement. As provided in the
Pooling and Servicing Agreement, withdrawals from the Certificate Account shall
be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of certain expenses
incurred with respect to the servicing of the Mortgage Loans and administration
of the Trust Fund.
All distributions under the Pooling and Servicing Agreement to a
Class of Certificates shall be made on each Distribution Date (other than the
final distribution on any Certificate) to Certificateholders of record on the
related Record Date by check mailed to the address set forth therefor in the
Certificate Register or, provided that such Certificateholder (1) has provided
the Trustee and the Paying Agent with wire instructions in writing as least five
Business Days prior to the related Record Date and (2) is the Holder of
Certificates with an original Certificate Balance or Notional Amount, as
applicable, of at least $_______, by wire transfer of immediately available
funds to the account of such Certificateholder at a bank or other entity having
appropriate facilities therefor. The final distribution on this Certificate
shall be made in like manner, but only upon presentment and surrender of this
Certificate at the offices of the Certificate Registrar or such other location
specified in the notice to Certificateholders of such final distribution.
Any funds not distributed on the final Distribution Date because of
the failure of Certificateholders to tender their Certificates shall be set
aside and held uninvested in trust for the benefit of the non-tendering
Certificateholders, whereupon the Trust Fund shall terminate. If any
Certificates as to which notice has been given pursuant to Section 4.01(g) of
the Pooling and Servicing Agreement 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 to receive
the final distribution with respect thereto. If within one year after the second
notice not all of such Certificates shall have been surrendered for
cancellation, the Paying Agent may, directly or through an agent, take
appropriate steps to contact the remaining non-tendering Certificateholders
concerning surrender of their Certificates. The costs and expenses of holding
such funds in trust and of contacting such Certificateholders shall be paid out
A-5-4
<PAGE>
of such funds. No interest shall accrue or be payable to any Certificateholder
on any amount held in trust as a result of such Certificateholder's failure to
surrender its Certificate(s) for final payment thereof in accordance with
Section 4.01(g) of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, the transfer of this Certificate is
registerable in the Certificate Register only upon surrender of this Certificate
for registration of transfer at the office of the Certificate Registrar or at
the office of its transfer agent, duly endorsed by, or accompanied by an
assignment in the form below or other written instrument of transfer in form
satisfactory to the Certificate Registrar duly executed by the Holder hereof or
such Holder's attorney-in-fact duly authorized in writing, and thereupon one or
more new Certificates of the same Class in authorized Denominations will be
issued to the designated transferee or transferees.
Subject to the terms of the Pooling and Servicing Agreement, the
Class [X] Certificates will be issued in book-entry form through the facilities
of DTC in Denominations of not less than $_____al Notional Amount and in
integral multiples of $______ excess thereof, with one Certificate of such Class
evidencing an additional amount equal to the remainder of the initial Notional
Amount of such Class. Subject to the terms of the Pooling and Servicing
Agreement, the Offered Certificates (other than the Class [X] Certificates) will
be issued in book-entry form through the facilities of DTC in Denominations of
$_______initial Certificate Balance, and in integral multiples of $_______in
excess thereof, with one Certificate of each such Class evidencing an additional
amount equal to the remainder of the initial Certificate Balance of such Class.
Subject to the terms of the Pooling and Servicing Agreement, the Non-Registered
Certificates (other than the Residual Certificates) will be issued in book-entry
form through the facilities of DTC in Denominations of $_______initial
Certificate Balance, and in integral multiples of $________in excess thereof,
with one Certificate of each such Class evidencing an additional amount equal to
the remainder of the initial Certificate Balance of such Class. The Class [R]
and Class [LR] Certificates will be issued in fully registered, certificated
form, in Denominations representing Percentage Interests of not less than __%.
No fee or service charge shall be imposed by the Certificate
Registrar for its services in respect of any registration of transfer or
exchange referred to in Section 5.02 of the Pooling and Servicing Agreement
other than for transfers to Institutional Accredited Investors as provided in
Section 5.02(h) thereof. In connection with any transfer to an Institutional
Accredited Investor, the Transferor shall reimburse the Trust for any costs
(including the cost of the Certificate Registrar's counsel's review of the
documents and any legal opinions, submitted by the transferor or transferee to
the Certificate Registrar as provided in Section 5.02 of the Pooling and
Servicing Agreement) incurred by the Certificate Registrar in connection with
such transfer. The Certificate Registrar may require payment by each transferor
of a sum sufficient to cover any tax, expense or other governmental charge
payable in connection with any such transfer or exchange.
The Depositor, the Trustee, the Fiscal Agent, the Servicer, the
Special Servicer, the Paying Agent and the Certificate Registrar and any of
their agents may treat the Person in whose name this Certificate is registered
as the owner hereof for all purposes, and neither the Depositor, the Trustee,
the Servicer, the Special Servicer, the Fiscal Agent, the Certificate Registrar
nor any such agents shall be affected by any notice to the contrary.
The Pooling and Servicing Agreement may be amended from time to time
by the Depositor, the Servicer, the Special Servicer, the Fiscal Agent and the
Trustee, without the consent of any of the Certificateholders, to cure any
ambiguity, to correct or supplement any provisions herein or therein that may be
inconsistent with any other provisions herein or therein or to correct any
error; to maintain the rating or ratings assigned to each Class of Certificates
by each Rating Agency; to modify, eliminate or add to any provisions to such
extent as is necessary to maintain the qualification of either the Upper-Tier
REMIC or the Lower-Tier REMIC as a REMIC to avoid or minimize the imposition of
any tax, provided, however, an Opinion of Counsel is obtained to the effect that
such action shall not adversely affect in any material respect the interest of
any Certificateholder and such action is necessary or desirable to avoid such
tax and such action will not result in the withdrawal, downgrade or
qualification of the then-current rating by any Rating Agency, as evidenced by a
letter from such Rating Agency to such effect; to change the timing and/or
nature of deposits into the Certificate Account or Distribution Account or REO
Account or to change the name in which the Certificate Account is maintained,
provided, however, that the P&I Advance Date shall not be later than the related
A-5-5
<PAGE>
Distribution Date, an Opinion of Counsel is obtained to the effect that such
action shall not adversely affect in any material respect the interest of any
Certificateholder and that such action will not result in the withdrawal,
downgrade or qualification of the then-current rating by any Rating Agency, as
evidenced by a letter from such Rating Agency to such effect; to modify,
eliminate or add to the provisions of Section 5.02(d) of the Pooling and
Servicing Agreement or any other provision thereof restricting transfer of the
Residual Certificates by virtue of their being the REMIC "residual interests,"
provided that such change shall not result in the withdrawal, downgrade or
qualification of the then-current rating assigned to any Class of Certificates,
as evidenced by a letter from each Rating Agency to such effect, and such change
shall not, as evidenced by an Opinion of Counsel, cause either the Upper-Tier
REMIC or the Lower-Tier REMIC or any of the Certificateholders (other than the
Transferor) to be subject to a federal tax caused by a Transfer to a Person that
is a Disqualified Organization or a Non-U.S. Person; and to make any other
provisions with respect to matters or questions arising under the Pooling and
Servicing Agreement which shall not be materially inconsistent with the
provisions of the Pooling and Servicing Agreement, provided, however, that such
action shall not, as evidenced by an Opinion of Counsel, adversely affect in any
material respect the interest of any Certificateholder not consenting thereto.
The Pooling and Servicing Agreement may also be amended from time to
time by the Depositor, the Servicer, the Special Servicer, the Fiscal Agent and
the Trustee with the consent of the Holders of Certificates representing not
less than ____% of the Percentage Interests of each Class of Certificates
affected by the amendment for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of the Pooling and
Servicing Agreement or of modifying in any manner the rights of the
Certificateholders; provided, however, that no such amendment shall:
(i) reduce in any manner the amount of, or delay the timing of,
payments which are required to be distributed on any Certificate without
the consent of such Certificateholder; or
(ii) reduce the aforesaid percentage of Certificates of any Class
the Holders of which are required to consent to any such amendment,
without the consent of the Holders of all Certificates of such Class then
outstanding; or
(iii) adversely affect the Voting Rights of any Class of
Certificates without the consent of the Holders of such Class then
outstanding; or
(iv) amend Section 11.01.
No amendment shall be made to the Pooling and Servicing Agreement
unless the Trustee shall have received an Opinion of Counsel that such amendment
will not cause either the Upper-Tier REMIC or the Lower-Tier REMIC to fail to
qualify as a REMIC or result in the imposition of a tax on either the Upper-Tier
REMIC or the Lower-Tier REMIC.
Any of the Servicer, Special Servicer, the Holders of the
Controlling Class or the Holders of the Class [LR] Certificates (in that order)
will have the option, upon 60 days' prior notice given to the Trustee, Paying
Agent and each of the other parties to the Pooling and Servicing Agreement,
which notice the Paying Agent is required to promptly forward to
Certificateholders and Rating Agencies in the manner set forth in the Pooling
and Servicing Agreement, to purchase all, but not less than all, of the Mortgage
Loans and all property acquired in respect of any Mortgage Loan remaining in the
Trust Fund, and thereby effect termination of the Trust Fund and early
retirement of the then outstanding Certificates, on any Distribution Date on
which the aggregate Stated Principal Balances of the Mortgage Loans and any REO
Loans remaining in the Trust Fund is reduced to less than __% of the aggregate
Cut-off Date Principal Balance of all the Mortgage Loans.
The obligations created by the Pooling and Servicing Agreement and
the Trust Fund created thereby (other than the obligation of the Paying Agent to
make payments to Certificateholders as provided for in the Pooling and Servicing
Agreement), shall terminate upon reduction of the Certificate Balances of all
the Certificates to zero (including, without limitation, any such final payment
resulting from a termination of the Trust Fund due to a sale of its property)
pursuant to the terms of the Pooling and Servicing Agreement. In no event,
however, will the Trust created by the Pooling and Servicing Agreement continue
beyond the expiration of 21 years from the death of
<PAGE>
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.
Unless the certificate of authentication hereon has been executed by
the Authenticating Agent, by manual signature, this Certificate shall not be
entitled to any benefit under the Pooling and Servicing Agreement or be valid
for any purpose. The Certificate Registrar has executed this Certificate on
behalf of the Trust Fund as Certificate Registrar under the Pooling and
Servicing Agreement and makes no representation or warranty as to any of the
statements contained herein or the validity or sufficiency of the Certificates
or the Mortgage Loans.
THIS CERTIFICATE AND THE POOLING AND SERVICING AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES APPLIED IN NEW YORK.
IN WITNESS WHEREOF, the Certificate Registrar has caused this
Certificate to be duly executed under this official seal.
THE CHASE MANHATTAN BANK, not in its
individual capacity but solely as
Certificate Registrar under the
Pooling and Servicing Agreement.
By:___________________________
AUTHORIZED OFFICER
Dated:_________________, 1997
CERTIFICATE OF AUTHENTICATION
THIS IS ONE OF THE CLASS [A-2] CERTIFICATES REFERRED TO IN THE
WITHIN-MENTIONED POOLING AND SERVICING AGREEMENT.
THE CHASE MANHATTAN BANK,
Authenticating Agent
By:___________________________
AUTHORIZED SIGNATORY
A-2-6
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this
Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenant in common UNIF GIFT MIN ACT __________ Custodian
(Cust)
TEN ENT - as tenants by the entireties Under Uniform Gifts to Minors
JT TEN - as joint tenants with
rights of survivorship and Act __________________________
not as tenants in common (State)
Additional abbreviations may also be used though not in the above list.
FORM OF TRANSFER
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto________________________________
- --------------------------------------------------------------------------------
(Please insert Social Security or other identifying number of Assignee)
- --------------------------------------------------------------------------------
(Please print or typewrite name and address of assignee)
the within Certificate and does hereby or irrevocably constitute and appoint to
transfer the said Certificate in the Certificate register of the within-named
Trust, with full power of substitution in the premises.
- ------------------------------- ----------------------------------------
Dated: NOTICE: The signature to this
assignment must correspond with the
name as written upon the face of this
Certificate in every particular
without alteration or enlargement or
any change whatever.
- -------------------------------
SIGNATURE GUARANTEED
The signature must be guaranteed by a commercial bank or trust company or by a
member firm of the New York Stock Exchange or another national securities
exchange. Notarized or witnessed signatures are not acceptable.
A-2-7
<PAGE>
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________ for the
account of __________________________________ account number _______________
or, if mailed by check, to _______________________________________.
Statements should be mailed to
_______________________________________________________________. This
information is provided by assignee named above, or
______________________________ , as its agent.
A-2-8
<PAGE>
EXHIBIT A-3
CHASE COMMERCIAL MORTGAGE SECURITIES CORP.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1997-_, CLASS [B]
THIS CLASS [B] CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO CERTAIN OTHER
CLASSES OF CERTIFICATES OF THIS SERIES TO THE EXTENT DESCRIBED IN THE POOLING
AND SERVICING AGREEMENT. THE PORTION OF THE CERTIFICATE BALANCE OF THE
CERTIFICATES EVIDENCED BY THIS CERTIFICATE WILL BE DECREASED BY THE PORTION OF
PRINCIPAL DISTRIBUTIONS ON THE CERTIFICATES AND THE PORTION OF COLLATERAL
SUPPORT DEFICIT ALLOCABLE TO THIS CERTIFICATE. ACCORDINGLY, THE CERTIFICATE
BALANCE OF THIS CERTIFICATE MAY BE LESS THAN THAT SET FORTH BELOW. ANYONE
ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CURRENT CERTIFICATE BALANCE BY
INQUIRY OF THE PAYING AGENT. THIS CERTIFICATE CONSTITUTES A REMIC REGULAR
INTEREST UNDER THE INTERNAL REVENUE CODE OF 1986, AS AMENDED.
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE CERTIFICATE
REGISTRAR 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.]1
- ----------
1 If this Certificate represents a Book-Entry Certificate registered in the
name of Cede & Co., it shall have this legend.
A-3-1
<PAGE>
THIS CERTIFICATE MAY NOT BE PURCHASED OR TRANSFERRED UNLESS THE CERTIFICATE
REGISTRAR SHALL HAVE RECEIVED EITHER (A) AN INVESTMENT REPRESENTATION LETTER
FROM THE PROPOSED PURCHASER OR TRANSFEREE OF SUCH CERTIFICATE, IN FORM AND
SUBSTANCE SATISFACTORY TO THE CERTIFICATE REGISTRAR AND THE DEPOSITOR, TO THE
EFFECT THAT SUCH PROPOSED PURCHASER OR TRANSFEREE IS NOT (i) AN EMPLOYEE BENEFIT
PLAN SUBJECT TO THE FIDUCIARY RESPONSIBILITY PROVISIONS OF THE EMPLOYEE
RETIREMENT SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), OR A GOVERNMENTAL PLAN
(AS DEFINED IN SECTION 3(32) OF ERISA) SUBJECT TO ANY FEDERAL, STATE OR LOCAL
LAW ("SIMILAR LAW") WHICH IS, TO A MATERIAL EXTENT, SIMILAR TO THE FOREGOING
PROVISIONS OF ERISA OR THE CODE (EACH A "PLAN") OR (ii) A PERSON ACTING ON
BEHALF OF OR USING THE ASSETS OF ANY SUCH PLAN (INCLUDING AN ENTITY WHOSE
UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF INVESTMENT IN THE ENTITY BY
SUCH PLAN AND THE APPLICATION OF DEPARTMENT OF LABOR REGULATION ss. 2510.3-101),
OTHER THAN AN INSURANCE COMPANY USING THE ASSETS OF ITS GENERAL ACCOUNT UNDER
CIRCUMSTANCES WHEREBY THE PURCHASE AND HOLDING OF SUBORDINATE CERTIFICATES BY
SUCH INSURANCE COMPANY WOULD BE EXEMPT FROM THE PROHIBITED TRANSACTION
PROVISIONS OF ERISA AND THE CODE UNDER PROHIBITED TRANSACTION CLASS EXEMPTION
95-60 OR (B) IF SUCH CERTIFICATE IS PRESENTED FOR REGISTRATION IN THE NAME OF A
PERSON DESCRIBED IN CLAUSES (i) OR (ii) ABOVE, AN OPINION OF COUNSEL IN FORM AND
SUBSTANCE SATISFACTORY TO THE CERTIFICATE REGISTRAR AND THE DEPOSITOR TO THE
EFFECT THAT SUCH ACQUISITION AND HOLDING OF SUCH CERTIFICATE BY SUCH PROPOSED
PURCHASER OR TRANSFEREE WILL NOT RESULT IN THE ASSETS OF THE TRUST FUND BEING
DEEMED TO BE "PLAN ASSETS" AND SUBJECT TO THE FIDUCIARY RESPONSIBILITY
PROVISIONS OF ERISA, THE PROHIBITED TRANSACTION PROVISIONS OF THE CODE OR THE
PROVISIONS OF ANY SIMILAR LAW, WILL NOT CONSTITUTE OR RESULT IN A "PROHIBITED
TRANSACTION" WITHIN THE MEANING OF ERISA, SECTION 4975 OF THE CODE OR ANY
SIMILAR LAW, AND WILL NOT SUBJECT THE TRUSTEE, THE CERTIFICATE REGISTRAR, THE
SERVICER, THE SPECIAL SERVICER, THE FISCAL AGENT, THE EXTENSION ADVISER, THE
PLACEMENT AGENTS OR THE DEPOSITOR TO ANY OBLIGATION OR LIABILITY (INCLUDING
OBLIGATIONS OR LIABILITIES UNDER ERISA, SECTION 4975 OF THE CODE OR ANY SUCH
SIMILAR LAW) IN ADDITION TO THOSE SET FORTH IN THE POOLING AND SERVICING
AGREEMENT. THE TRANSFEREE OF A BENEFICIAL INTEREST IN A CERTIFICATE THAT IS A
BOOK-ENTRY CERTIFICATE SHALL BE DEEMED TO REPRESENT THAT IT IS NOT A PERSON
DESCRIBED IN CLAUSES (i) OR (ii) ABOVE.
PASS-THROUGH RATE:_____% APPROXIMATE AGGREGATE SCHEDULED PRINCIPAL
BALANCE OF THE MORTGAGE LOANS AFTER
DENOMINATION: $___________ DEDUCTING PAYMENTS DUE AND PREPAYMENTS
RECEIVED ON OR BEFORE CUT-OFF DATE:
$___________
DATE OF POOLING AND SERVICING
AGREEMENT: AS OF__________, 1997 SERVICER: THE CHASE MANHATTAN BANK
CUT-OFF DATE:______________, 1997 SPECIAL SERVICER:______________
CLOSING DATE:______________, 1997 TRUSTEE:________________________
FIRST DISTRIBUTION DATE: FISCAL AGENT: _________________
_____________, 1997
PAYING AGENT: THE CHASE MANHATTAN BANK
APPROXIMATE AGGREGATE
CERTIFICATE BALANCE CUSIP NO._________
OF THE CLASS [B] CERTIFICATES
AS OF THE CLOSING DATE: $________ CERTIFICATE NO.: ______
A-3-2
<PAGE>
CLASS [B] CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund, consisting primarily
of a pool of fixed rate, balloon multifamily and mobile home community mortgage
loans (the "Mortgage Loans"), all payments on or collections in respect of the
Mortgage Loans due after the Cut-off Date, all REO Properties and revenues
received in respect thereof, the mortgagee's rights under the Insurance
Policies, any Assignment of Leases, and any guaranties, escrow accounts or other
collateral as security for the Mortgage Loans, and such amounts as shall from
time to time be held in the Certificate Account, the Distribution Accounts, and
the REO Accounts, formed and sold by
CHASE COMMERCIAL MORTGAGE SECURITIES CORP.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN CHASE
COMMERCIAL MORTGAGE SECURITIES CORP., THE SERVICER, THE SPECIAL SERVICER, THE
TRUSTEE, THE FISCAL AGENT OR ANY OF THEIR AFFILIATES. NEITHER THIS CERTIFICATE
NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR
INSTRUMENTALITY OF THE UNITED STATES.
THIS CERTIFIES THAT __________________
is the registered owner of the interest evidenced by this Certificate in the
Class [B] Certificates issued by the Trust Fund created pursuant to the Pooling
and Servicing Agreement, dated as of______________, 1997 (the "Pooling and
Servicing Agreement"), among Chase Commercial Mortgage Securities Corp.
(hereinafter called the "Depositor", which term includes any successor entity
under the Pooling and Servicing Agreement), the Trustee, the Special Servicer,
the Servicer and the Fiscal Agent. A summary of certain of the pertinent
provisions of the Pooling and Servicing Agreement is set forth hereafter. To the
extent not defined herein, the capitalized terms used herein shall have the
meanings assigned thereto in the Pooling and Servicing Agreement.
This Certificate is one of a duly authorized issue of Certificates
designated as Certificates of the series specified on the face hereof (herein
called the "Certificates") and representing an interest in the Class of
Certificates specified on the face hereof equal to the quotient expressed as a
percentage obtained by dividing the Denomination of this Certificate specified
on the face hereof, by the aggregate initial Certificate Balance of the Class
[B] Certificates. The Certificates are designated as the Chase Commercial
Mortgage Securities Corp., Commercial Mortgage Pass-Through Certificates, Series
1997-2 and are issued in twelve Classes as specifically set forth in the Pooling
and Servicing Agreement. The Certificates will evidence in the aggregate 100% of
the beneficial ownership of the Trust Fund.
This Certificate does not purport to summarize the Pooling and
Servicing Agreement and reference is made to that agreement for information with
respect to the interests, rights, benefits, obligations, proceeds, and duties
evidenced hereby and the rights, duties and obligations of the Trustee. This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Pooling and Servicing Agreement, to which Pooling and
Servicing Agreement, as amended from time to time, the Certificateholder by
virtue of the acceptance hereof assents and by which the Certificateholder is
bound. In the case of any conflict between terms specified in this Certificate
and terms specified in the Pooling and Servicing Agreement, the terms of the
Pooling and Servicing Agreement shall govern.
This Certificate is a "regular interest" in a "real estate mortgage
investment conduit," as those terms are defined, respectively, in Sections
860G(a)(1) and 860D of the Internal Revenue Code of 1986, as amended. Each
Holder of this Certificate, by acceptance hereof, agrees to treat, and take no
action inconsistent with the treatment of, this Certificate in accordance with
the preceding sentence for purposes of federal income taxes, state and local
income and franchise taxes and other taxes imposed on or measured by income.
Pursuant to the terms of the Pooling and Servicing Agreement, the
Paying Agent shall distribute to the Person in whose name this Certificate is
registered as of the related Record Date, an amount equal to such Person's pro
A-3-3
<PAGE>
rata share (based on the Percentage Interest represented by this Certificate) of
that portion of the aggregate amount of principal and interest then
distributable, if any, allocable to the Class of Certificates of the same Class
as this Certificate for such Distribution Date, all as more fully described in
the Pooling and Servicing Agreement. Holders of this Certificate may be entitled
to Prepayment Premiums and Yield Maintenance Charges as provided in the Pooling
and Servicing Agreement. All sums distributable on this Certificate are payable
in the coin or currency of the United States of America as at the time of
payment is legal tender for the payment of public and private debts.
Interest on this Certificate will accrue (computed as if each year
consisted of 360 days and each month consisted of 30 days) during the Interest
Accrual Period relating to such Distribution Date at the Class [B] Pass-Through
Rate specified above on the Certificate Balance of this Certificate immediately
prior to each Distribution Date. Principal and interest allocated to this
Certificate on any Distribution Date will be in an amount due to this
Certificate's pro rata share of the Available Distribution Amount to be
distributed on the Certificates of this Class as of such Distribution Date, with
a final distribution to be made upon retirement of this Certificate as set forth
in the Pooling and Servicing Agreement.
Collateral Support Deficit and Certificate Deferred Interest on the
Mortgage Loans shall be allocated on the applicable Distribution Date to
Certificateholders in the manner set forth in the Pooling and Servicing
Agreement. All Collateral Support Deficit or Certificate Deferred Interest on
the Mortgage Loans allocated to any Class of Certificates will be allocated pro
rata among the outstanding Certificates of such Class.
The Certificates are limited in right of payment to, among other
things, certain collections and recoveries respecting the Mortgage Loans, all as
more specifically set forth in the Pooling and Servicing Agreement. As provided
in the Pooling and Servicing Agreement, the Certificate Account and the
Distribution Account will be held in the name of the Servicer and Paying Agent,
respectively, on behalf of the holders of Certificates specified in the Pooling
and Servicing Agreement and the Servicer (with respect to the Certificate
Account) or the Paying Agent (with respect to the Distribution Account) will be
authorized to make withdrawals therefrom. Amounts on deposit in such accounts
may be invested in Permitted Investments. Interest or other income earned on
funds in the Certificate Account and Distribution Account will be paid to the
Servicer as set forth in the Pooling and Servicing Agreement. As provided in the
Pooling and Servicing Agreement, withdrawals from the Certificate Account shall
be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of certain expenses
incurred with respect to the servicing of the Mortgage Loans and administration
of the Trust Fund.
All distributions under the Pooling and Servicing Agreement to a
Class of Certificates shall be made on each Distribution Date (other than the
final distribution on any Certificate) to Certificateholders of record on the
related Record Date by check mailed to the address set forth therefor in the
Certificate Register or, provided that such Certificateholder (1) has provided
the Trustee and the Paying Agent with wire instructions in writing as least five
Business Days prior to the related Record Date and (2) is the Holder of
Certificates with an original Certificate Balance or Notional Amount, as
applicable, of at least $________, by wire transfer of immediately available
funds to the account of such Certificateholder at a bank or other entity having
appropriate facilities therefor. The final distribution on this Certificate
shall be made in like manner, but only upon presentment and surrender of this
Certificate at the offices of the Certificate Registrar or such other location
specified in the notice to Certificateholders of such final distribution.
Any funds not distributed on the final Distribution Date because of
the failure of Certificateholders to tender their Certificates shall be set
aside and held uninvested in trust for the benefit of the non-tendering
Certificateholders, whereupon the Trust Fund shall terminate. If any
Certificates as to which notice has been given pursuant to Section 4.01(g) of
the Pooling and Servicing Agreement 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 to receive
the final distribution with respect thereto. If within one year after the second
notice not all of such Certificates shall have been surrendered for
cancellation, the Paying Agent may, directly or through an agent, take
appropriate steps to contact the remaining non-tendering Certificateholders
concerning surrender of their Certificates. The costs and expenses of holding
such funds in trust and of contacting such Certificateholders shall be paid out
A-3-4
<PAGE>
of such funds. No interest shall accrue or be payable to any Certificateholder
on any amount held in trust as a result of such Certificateholder's failure to
surrender its Certificate(s) for final payment thereof in accordance with
Section 4.01(g) of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, the transfer of this Certificate is
registerable in the Certificate Register only upon surrender of this Certificate
for registration of transfer at the office of the Certificate Registrar or at
the office of its transfer agent, duly endorsed by, or accompanied by an
assignment in the form below or other written instrument of transfer in form
satisfactory to the Certificate Registrar duly executed by the Holder hereof or
such Holder's attorney-in-fact duly authorized in writing, and thereupon one or
more new Certificates of the same Class in authorized Denominations will be
issued to the designated transferee or transferees.
Subject to the terms of the Pooling and Servicing Agreement, the
Class [X] Certificates will be issued in book-entry form through the facilities
of DTC in Denominations of not less than $________initial Notional Amount and in
integral multiples of $________in excess thereof, with one Certificate of such
Class evidencing an additional amount equal to the remainder of the initial
Notional Amount of such Class. Subject to the terms of the Pooling and Servicing
Agreement, the Offered Certificates (other than the Class [X] Certificates) will
be issued in book-entry form through the facilities of DTC in Denominations of
$_______initial Certificate Balance, and in integral multiples of $_______in
excess thereof, with one Certificate of each such Class evidencing an additional
amount equal to the remainder of the initial Certificate Balance of such Class.
Subject to the terms of the Pooling and Servicing Agreement, the Non-Registered
Certificates (other than the Residual Certificates) will be issued in book-entry
form through the facilities of DTC in Denominations of $________initial
Certificate Balance, and in integral multiples of $________ in excess thereof,
with one Certificate of each such Class evidencing an additional amount equal to
the remainder of the initial Certificate Balance of such Class. The Class [R]
and Class [LR] Certificates will be issued in fully registered, certificated
form, in Denominations representing Percentage Interests of not less than __%.
No fee or service charge shall be imposed by the Certificate
Registrar for its services in respect of any registration of transfer or
exchange referred to in Section 5.02 of the Pooling and Servicing Agreement
other than for transfers to Institutional Accredited Investors as provided in
Section 5.02(h) thereof. In connection with any transfer to an Institutional
Accredited Investor, the Transferor shall reimburse the Trust for any costs
(including the cost of the Certificate Registrar's counsel's review of the
documents and any legal opinions, submitted by the transferor or transferee to
the Certificate Registrar as provided in Section 5.02 of the Pooling and
Servicing Agreement) incurred by the Certificate Registrar in connection with
such transfer. The Certificate Registrar may require payment by each transferor
of a sum sufficient to cover any tax, expense or other governmental charge
payable in connection with any such transfer or exchange.
The Depositor, the Trustee, the Fiscal Agent, the Servicer, the
Special Servicer, the Paying Agent and the Certificate Registrar and any of
their agents may treat the Person in whose name this Certificate is registered
as the owner hereof for all purposes, and neither the Depositor, the Trustee,
the Servicer, the Special Servicer, the Fiscal Agent, the Certificate Registrar
nor any such agents shall be affected by any notice to the contrary.
The Pooling and Servicing Agreement may be amended from time to time
by the Depositor, the Servicer, the Special Servicer, the Fiscal Agent and the
Trustee, without the consent of any of the Certificateholders, to cure any
ambiguity, to correct or supplement any provisions herein or therein that may be
inconsistent with any other provisions herein or therein or to correct any
error; to maintain the rating or ratings assigned to each Class of Certificates
by each Rating Agency; to modify, eliminate or add to any provisions to such
extent as is necessary to maintain the qualification of either the Upper-Tier
REMIC or the Lower-Tier REMIC as a REMIC to avoid or minimize the imposition of
any tax, provided, however, an Opinion of Counsel is obtained to the effect that
such action shall not adversely affect in any material respect the interest of
any Certificateholder and such action is necessary or desirable to avoid such
tax and such action will not result in the withdrawal, downgrade or
qualification of the then-current rating by any Rating Agency, as evidenced by a
letter from such Rating Agency to such effect; to change the timing and/or
nature of deposits into the Certificate Account or Distribution Account or REO
Account or to change the name in which the Certificate Account is maintained,
provided, however, that the P&I Advance Date shall not be later than the related
A-3-5
<PAGE>
Distribution Date, an Opinion of Counsel is obtained to the effect that such
action shall not adversely affect in any material respect the interest of any
Certificateholder and that such action will not result in the withdrawal,
downgrade or qualification of the then-current rating by any Rating Agency, as
evidenced by a letter from such Rating Agency to such effect; to modify,
eliminate or add to the provisions of Section 5.02(d) of the Pooling and
Servicing Agreement or any other provision thereof restricting transfer of the
Residual Certificates by virtue of their being the REMIC "residual interests,"
provided that such change shall not result in the withdrawal, downgrade or
qualification of the then-current rating assigned to any Class of Certificates,
as evidenced by a letter from each Rating Agency to such effect, and such change
shall not, as evidenced by an Opinion of Counsel, cause either the Upper-Tier
REMIC or the Lower-Tier REMIC or any of the Certificateholders (other than the
Transferor) to be subject to a federal tax caused by a Transfer to a Person that
is a Disqualified Organization or a Non-U.S. Person; and to make any other
provisions with respect to matters or questions arising under the Pooling and
Servicing Agreement which shall not be materially inconsistent with the
provisions of the Pooling and Servicing Agreement, provided, however, that such
action shall not, as evidenced by an Opinion of Counsel, adversely affect in any
material respect the interest of any Certificateholder not consenting thereto.
The Pooling and Servicing Agreement may also be amended from time to
time by the Depositor, the Servicer, the Special Servicer, the Fiscal Agent and
the Trustee with the consent of the Holders of Certificates representing not
less than___% of the Percentage Interests of each Class of Certificates affected
by the amendment for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of the Pooling and Servicing
Agreement or of modifying in any manner the rights of the Certificateholders;
provided, however, that no such amendment shall:
(i) reduce in any manner the amount of, or delay the timing of,
payments which are required to be distributed on any Certificate without
the consent of such Certificateholder; or
(ii) reduce the aforesaid percentage of Certificates of any Class
the Holders of which are required to consent to any such amendment,
without the consent of the Holders of all Certificates of such Class then
outstanding; or
(iii) adversely affect the Voting Rights of any Class of
Certificates without the consent of the Holders of such Class then
outstanding; or
(iv) amend Section 11.01.
No amendment shall be made to the Pooling and Servicing Agreement
unless the Trustee shall have received an Opinion of Counsel that such amendment
will not cause either the Upper-Tier REMIC or the Lower-Tier REMIC to fail to
qualify as a REMIC or result in the imposition of a tax on either the Upper-Tier
REMIC or the Lower-Tier REMIC.
Any of the Servicer, Special Servicer, the Holders of the
Controlling Class or the Holders of the Class [LR] Certificates (in that order)
will have the option, upon 60 days' prior notice given to the Trustee, Paying
Agent and each of the other parties to the Pooling and Servicing Agreement,
which notice the Paying Agent is required to promptly forward to
Certificateholders and Rating Agencies in the manner set forth in the Pooling
and Servicing Agreement, to purchase all, but not less than all, of the Mortgage
Loans and all property acquired in respect of any Mortgage Loan remaining in the
Trust Fund, and thereby effect termination of the Trust Fund and early
retirement of the then outstanding Certificates, on any Distribution Date on
which the aggregate Stated Principal Balances of the Mortgage Loans and any REO
Loans remaining in the Trust Fund is reduced to less than __% of the aggregate
Cut-off Date Principal Balance of all the Mortgage Loans.
The obligations created by the Pooling and Servicing Agreement and
the Trust Fund created thereby (other than the obligation of the Paying Agent to
make payments to Certificateholders as provided for in the Pooling and Servicing
Agreement), shall terminate upon reduction of the Certificate Balances of all
the Certificates to zero (including, without limitation, any such final payment
resulting from a termination of the Trust Fund due to a sale of its property)
pursuant to the terms of the Pooling and Servicing Agreement. In no event,
however, will the Trust created by the Pooling and Servicing Agreement continue
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<PAGE>
beyond the expiration of 21 years from the death of the last survivor of the
descendants of Joseph P. Kennedy, the late Ambassador of the United States to
the Court of St. James, living on the date hereof.
Unless the certificate of authentication hereon has been executed by
the Authenticating Agent, by manual signature, this Certificate shall not be
entitled to any benefit under the Pooling and Servicing Agreement or be valid
for any purpose. The Certificate Registrar has executed this Certificate on
behalf of the Trust Fund as Certificate Registrar under the Pooling and
Servicing Agreement and makes no representation or warranty as to any of the
statements contained herein or the validity or sufficiency of the Certificates
or the Mortgage Loans.
THIS CERTIFICATE AND THE POOLING AND SERVICING AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES APPLIED IN NEW YORK.
IN WITNESS WHEREOF, the Certificate Registrar has caused this
Certificate to be duly executed under this official seal.
THE CHASE MANHATTAN BANK, not in its
individual capacity but solely as
Certificate Registrar under the
Pooling and Servicing Agreement.
By:___________________________
AUTHORIZED OFFICER
Dated:_________________, 1997
CERTIFICATE OF AUTHENTICATION
THIS IS ONE OF THE CLASS [B] CERTIFICATES REFERRED TO IN THE
WITHIN-MENTIONED POOLING AND SERVICING AGREEMENT.
THE CHASE MANHATTAN BANK,
Authenticating Agent
By:___________________________
AUTHORIZED SIGNATORY
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<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this
Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenant in common UNIF GIFT MIN ACT __________ Custodian
(Cust)
TEN ENT - as tenants by the entireties Under Uniform Gifts to Minors
JT TEN - as joint tenants with
rights of survivorship and Act __________________________
not as tenants in common (State)
Additional abbreviations may also be used though not in the above list.
FORM OF TRANSFER
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto__________________________
- --------------------------------------------------------------------------------
(Please insert Social Security or other identifying number of Assignee)
- --------------------------------------------------------------------------------
(Please print or typewrite name and address of assignee)
the within Certificate and does hereby or irrevocably constitute and appoint to
transfer the said Certificate in the Certificate register of the within-named
Trust, with full power of substitution in the premises.
- ----------------------- ----------------------------------------
Dated: NOTICE: The signature to this
assignment must correspond with the
name as written upon the face of this
Certificate in every particular
without alteration or enlargement or
any change whatever.
- ----------------------
SIGNATURE GUARANTEED
The signature must be guaranteed by a commercial bank or trust company or by a
member firm of the New York Stock Exchange or another national securities
exchange. Notarized or witnessed signatures are not acceptable.
A-3-8
<PAGE>
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________ for the
account of __________________________________ account number _______________
or, if mailed by check, to _______________________________________.
Statements should be mailed to
_______________________________________________________________. This
information is provided by assignee named above, or
______________________________ , as its agent.
A-3-9
<PAGE>
EXHIBIT A-4
CHASE COMMERCIAL MORTGAGE SECURITIES CORP.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1997-_, CLASS [C]
THIS CLASS [C] CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO CERTAIN OTHER
CLASSES OF CERTIFICATES OF THIS SERIES TO THE EXTENT DESCRIBED IN THE POOLING
AND SERVICING AGREEMENT. THE PORTION OF THE CERTIFICATE BALANCE OF THE
CERTIFICATES EVIDENCED BY THIS CERTIFICATE WILL BE DECREASED BY THE PORTION OF
PRINCIPAL DISTRIBUTIONS ON THE CERTIFICATES AND THE PORTION OF COLLATERAL
SUPPORT DEFICIT ALLOCABLE TO THIS CERTIFICATE. ACCORDINGLY, THE CERTIFICATE
BALANCE OF THIS CERTIFICATE MAY BE LESS THAN THAT SET FORTH BELOW. ANYONE
ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CURRENT CERTIFICATE BALANCE BY
INQUIRY OF THE PAYING AGENT. THIS CERTIFICATE CONSTITUTES A REMIC REGULAR
INTEREST UNDER THE INTERNAL REVENUE CODE OF 1986, AS AMENDED.
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE CERTIFICATE
REGISTRAR 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.]1
- ----------
1 If this Certificate represents a Book-Entry Certificate registered in the
name of Cede & Co., it shall have this legend.
A-4-1
<PAGE>
THIS CERTIFICATE MAY NOT BE PURCHASED OR TRANSFERRED UNLESS THE CERTIFICATE
REGISTRAR SHALL HAVE RECEIVED EITHER (A) AN INVESTMENT REPRESENTATION LETTER
FROM THE PROPOSED PURCHASER OR TRANSFEREE OF SUCH CERTIFICATE, IN FORM AND
SUBSTANCE SATISFACTORY TO THE CERTIFICATE REGISTRAR AND THE DEPOSITOR, TO THE
EFFECT THAT SUCH PROPOSED PURCHASER OR TRANSFEREE IS NOT (i) AN EMPLOYEE BENEFIT
PLAN SUBJECT TO THE FIDUCIARY RESPONSIBILITY PROVISIONS OF THE EMPLOYEE
RETIREMENT SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), OR A GOVERNMENTAL PLAN
(AS DEFINED IN SECTION 3(32) OF ERISA) SUBJECT TO ANY FEDERAL, STATE OR LOCAL
LAW ("SIMILAR LAW") WHICH IS, TO A MATERIAL EXTENT, SIMILAR TO THE FOREGOING
PROVISIONS OF ERISA OR THE CODE (EACH A "PLAN") OR (ii) A PERSON ACTING ON
BEHALF OF OR USING THE ASSETS OF ANY SUCH PLAN (INCLUDING AN ENTITY WHOSE
UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF INVESTMENT IN THE ENTITY BY
SUCH PLAN AND THE APPLICATION OF DEPARTMENT OF LABOR REGULATION ss. 2510.3-101),
OTHER THAN AN INSURANCE COMPANY USING THE ASSETS OF ITS GENERAL ACCOUNT UNDER
CIRCUMSTANCES WHEREBY THE PURCHASE AND HOLDING OF SUBORDINATE CERTIFICATES BY
SUCH INSURANCE COMPANY WOULD BE EXEMPT FROM THE PROHIBITED TRANSACTION
PROVISIONS OF ERISA AND THE CODE UNDER PROHIBITED TRANSACTION CLASS EXEMPTION
95-60 OR (B) IF SUCH CERTIFICATE IS PRESENTED FOR REGISTRATION IN THE NAME OF A
PERSON DESCRIBED IN CLAUSES (i) OR (ii) ABOVE, AN OPINION OF COUNSEL IN FORM AND
SUBSTANCE SATISFACTORY TO THE CERTIFICATE REGISTRAR AND THE DEPOSITOR TO THE
EFFECT THAT SUCH ACQUISITION AND HOLDING OF SUCH CERTIFICATE BY SUCH PROPOSED
PURCHASER OR TRANSFEREE WILL NOT RESULT IN THE ASSETS OF THE TRUST FUND BEING
DEEMED TO BE "PLAN ASSETS" AND SUBJECT TO THE FIDUCIARY RESPONSIBILITY
PROVISIONS OF ERISA, THE PROHIBITED TRANSACTION PROVISIONS OF THE CODE OR THE
PROVISIONS OF ANY SIMILAR LAW, WILL NOT CONSTITUTE OR RESULT IN A "PROHIBITED
TRANSACTION" WITHIN THE MEANING OF ERISA, SECTION 4975 OF THE CODE OR ANY
SIMILAR LAW, AND WILL NOT SUBJECT THE TRUSTEE, THE CERTIFICATE REGISTRAR, THE
SERVICER, THE SPECIAL SERVICER, THE FISCAL AGENT, THE EXTENSION ADVISER, THE
PLACEMENT AGENTS OR THE DEPOSITOR TO ANY OBLIGATION OR LIABILITY (INCLUDING
OBLIGATIONS OR LIABILITIES UNDER ERISA, SECTION 4975 OF THE CODE OR ANY SUCH
SIMILAR LAW) IN ADDITION TO THOSE SET FORTH IN THE POOLING AND SERVICING
AGREEMENT. THE TRANSFEREE OF A BENEFICIAL INTEREST IN A CERTIFICATE THAT IS A
BOOK-ENTRY CERTIFICATE SHALL BE DEEMED TO REPRESENT THAT IT IS NOT A PERSON
DESCRIBED IN CLAUSES (i) OR (ii) ABOVE.
PASS-THROUGH RATE:___ % APPROXIMATE AGGREGATE SCHEDULED PRINCIPAL
BALANCE OF THE MORTGAGE LOANS AFTER
DENOMINATION: $___________ DEDUCTING PAYMENTS DUE AND PREPAYMENTS
RECEIVED ON OR BEFORE CUT-OFF DATE:
$___________
DATE OF POOLING AND SERVICING
AGREEMENT: AS OF_________, 1997 SERVICER: THE CHASE MANHATTAN BANK
CUT-OFF DATE:_____________, 1997 SPECIAL SERVICER:________________________
CLOSING DATE:_____________, 1997 TRUSTEE:__________________________________
FIRST DISTRIBUTION DATE: FISCAL AGENT:_______________________
________________, 1997
PAYING AGENT: THE CHASE MANHATTAN BANK
APPROXIMATE AGGREGATE
CERTIFICATE BALANCE CUSIP NO._______________
OF THE CLASS [C] CERTIFICATES
AS OF THE CLOSING DATE: $________ CERTIFICATE NO.: ______
A-4-2
<PAGE>
CLASS [C] CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund, consisting primarily
of a pool of fixed rate, balloon multifamily and mobile home community mortgage
loans (the "Mortgage Loans"), all payments on or collections in respect of the
Mortgage Loans due after the Cut-off Date, all REO Properties and revenues
received in respect thereof, the mortgagee's rights under the Insurance
Policies, any Assignment of Leases, and any guaranties, escrow accounts or other
collateral as security for the Mortgage Loans, and such amounts as shall from
time to time be held in the Certificate Account, the Distribution Accounts, and
the REO Accounts, formed and sold by
CHASE COMMERCIAL MORTGAGE SECURITIES CORP.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN CHASE
COMMERCIAL MORTGAGE SECURITIES CORP., THE SERVICER, THE SPECIAL SERVICER, THE
TRUSTEE, THE FISCAL AGENT OR ANY OF THEIR AFFILIATES. NEITHER THIS CERTIFICATE
NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR
INSTRUMENTALITY OF THE UNITED STATES.
THIS CERTIFIES THAT __________________
is the registered owner of the interest evidenced by this Certificate in the
Class [C] Certificates issued by the Trust Fund created pursuant to the Pooling
and Servicing Agreement, dated as of______________, 1997 (the "Pooling and
Servicing Agreement"), among Chase Commercial Mortgage Securities Corp.
(hereinafter called the "Depositor", which term includes any successor entity
under the Pooling and Servicing Agreement), the Trustee, the Special Servicer,
the Servicer and the Fiscal Agent. A summary of certain of the pertinent
provisions of the Pooling and Servicing Agreement is set forth hereafter. To the
extent not defined herein, the capitalized terms used herein shall have the
meanings assigned thereto in the Pooling and Servicing Agreement.
This Certificate is one of a duly authorized issue of Certificates
designated as Certificates of the series specified on the face hereof (herein
called the "Certificates") and representing an interest in the Class of
Certificates specified on the face hereof equal to the quotient expressed as a
percentage obtained by dividing the Denomination of this Certificate specified
on the face hereof, by the aggregate initial Certificate Balance of the Class
[C] Certificates. The Certificates are designated as the Chase Commercial
Mortgage Securities Corp., Commercial Mortgage Pass-Through Certificates, Series
1997-2 and are issued in twelve Classes as specifically set forth in the Pooling
and Servicing Agreement. The Certificates will evidence in the aggregate 100% of
the beneficial ownership of the Trust Fund.
This Certificate does not purport to summarize the Pooling and
Servicing Agreement and reference is made to that agreement for information with
respect to the interests, rights, benefits, obligations, proceeds, and duties
evidenced hereby and the rights, duties and obligations of the Trustee. This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Pooling and Servicing Agreement, to which Pooling and
Servicing Agreement, as amended from time to time, the Certificateholder by
virtue of the acceptance hereof assents and by which the Certificateholder is
bound. In the case of any conflict between terms specified in this Certificate
and terms specified in the Pooling and Servicing Agreement, the terms of the
Pooling and Servicing Agreement shall govern.
This Certificate is a "regular interest" in a "real estate mortgage
investment conduit," as those terms are defined, respectively, in Sections
860G(a)(1) and 860D of the Internal Revenue Code of 1986, as amended. Each
Holder of this Certificate, by acceptance hereof, agrees to treat, and take no
action inconsistent with the treatment of, this Certificate in accordance with
the preceding sentence for purposes of federal income taxes, state and local
income and franchise taxes and other taxes imposed on or measured by income.
Pursuant to the terms of the Pooling and Servicing Agreement, the
Paying Agent shall distribute to the Person in whose name this Certificate is
registered as of the related Record Date, an amount equal to such Person's pro
A-4-3
<PAGE>
rata share (based on the Percentage Interest represented by this Certificate) of
that portion of the aggregate amount of principal and interest then
distributable, if any, allocable to the Class of Certificates of the same Class
as this Certificate for such Distribution Date, all as more fully described in
the Pooling and Servicing Agreement. Holders of this Certificate may be entitled
to Prepayment Premiums and Yield Maintenance Charges as provided in the Pooling
and Servicing Agreement. All sums distributable on this Certificate are payable
in the coin or currency of the United States of America as at the time of
payment is legal tender for the payment of public and private debts.
Interest on this Certificate will accrue (computed as if each year
consisted of 360 days and each month consisted of 30 days) during the Interest
Accrual Period relating to such Distribution Date at the Class [C] Pass-Through
Rate specified above on the Certificate Balance of this Certificate immediately
prior to each Distribution Date. Principal and interest allocated to this
Certificate on any Distribution Date will be in an amount due to this
Certificate's pro rata share of the Available Distribution Amount to be
distributed on the Certificates of this Class as of such Distribution Date, with
a final distribution to be made upon retirement of this Certificate as set forth
in the Pooling and Servicing Agreement.
Collateral Support Deficit and Certificate Deferred Interest on the
Mortgage Loans shall be allocated on the applicable Distribution Date to
Certificateholders in the manner set forth in the Pooling and Servicing
Agreement. All Collateral Support Deficit or Certificate Deferred Interest on
the Mortgage Loans allocated to any Class of Certificates will be allocated pro
rata among the outstanding Certificates of such Class.
The Certificates are limited in right of payment to, among other
things, certain collections and recoveries respecting the Mortgage Loans, all as
more specifically set forth in the Pooling and Servicing Agreement. As provided
in the Pooling and Servicing Agreement, the Certificate Account and the
Distribution Account will be held in the name of the Servicer and Paying Agent,
respectively, on behalf of the holders of Certificates specified in the Pooling
and Servicing Agreement and the Servicer (with respect to the Certificate
Account) or the Paying Agent (with respect to the Distribution Account) will be
authorized to make withdrawals therefrom. Amounts on deposit in such accounts
may be invested in Permitted Investments. Interest or other income earned on
funds in the Certificate Account and Distribution Account will be paid to the
Servicer as set forth in the Pooling and Servicing Agreement. As provided in the
Pooling and Servicing Agreement, withdrawals from the Certificate Account shall
be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of certain expenses
incurred with respect to the servicing of the Mortgage Loans and administration
of the Trust Fund.
All distributions under the Pooling and Servicing Agreement to a
Class of Certificates shall be made on each Distribution Date (other than the
final distribution on any Certificate) to Certificateholders of record on the
related Record Date by check mailed to the address set forth therefor in the
Certificate Register or, provided that such Certificateholder (1) has provided
the Trustee and the Paying Agent with wire instructions in writing as least five
Business Days prior to the related Record Date and (2) is the Holder of
Certificates with an original Certificate Balance or Notional Amount, as
applicable, of at least $_________, by wire transfer of immediately available
funds to the account of such Certificateholder at a bank or other entity having
appropriate facilities therefor. The final distribution on this Certificate
shall be made in like manner, but only upon presentment and surrender of this
Certificate at the offices of the Certificate Registrar or such other location
specified in the notice to Certificateholders of such final distribution.
Any funds not distributed on the final Distribution Date because of
the failure of Certificateholders to tender their Certificates shall be set
aside and held uninvested in trust for the benefit of the non-tendering
Certificateholders, whereupon the Trust Fund shall terminate. If any
Certificates as to which notice has been given pursuant to Section 4.01(g) of
the Pooling and Servicing Agreement 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 to receive
the final distribution with respect thereto. If within one year after the second
notice not all of such Certificates shall have been surrendered for
cancellation, the Paying Agent may, directly or through an agent, take
appropriate steps to contact the remaining non-tendering Certificateholders
concerning surrender of their Certificates. The costs and expenses of holding
such funds in trust and of contacting such Certificateholders shall be paid out
A-4-4
<PAGE>
of such funds. No interest shall accrue or be payable to any Certificateholder
on any amount held in trust as a result of such Certificateholder's failure to
surrender its Certificate(s) for final payment thereof in accordance with
Section 4.01(g) of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, the transfer of this Certificate is
registerable in the Certificate Register only upon surrender of this Certificate
for registration of transfer at the office of the Certificate Registrar or at
the office of its transfer agent, duly endorsed by, or accompanied by an
assignment in the form below or other written instrument of transfer in form
satisfactory to the Certificate Registrar duly executed by the Holder hereof or
such Holder's attorney-in-fact duly authorized in writing, and thereupon one or
more new Certificates of the same Class in authorized Denominations will be
issued to the designated transferee or transferees.
Subject to the terms of the Pooling and Servicing Agreement, the
Class [X] Certificates will be issued in book-entry form through the facilities
of DTC in Denominations of not less than $_______initial Notional Amount and in
integral multiples of $_______in excess thereof, with one Certificate of such
Class evidencing an additional amount equal to the remainder of the initial
Notional Amount of such Class. Subject to the terms of the Pooling and Servicing
Agreement, the Offered Certificates (other than the Class [X] Certificates) will
be issued in book-entry form through the facilities of DTC in Denominations of
$_______initial Certificate Balance, and in integral multiples of $_______in
excess thereof, with one Certificate of each such Class evidencing an additional
amount equal to the remainder of the initial Certificate Balance of such Class.
Subject to the terms of the Pooling and Servicing Agreement, the Non-Registered
Certificates (other than the Residual Certificates) will be issued in book-entry
form through the facilities of DTC in Denominations of $_______initial
Certificate Balance, and in integral multiples of $______in excess thereof, with
one Certificate of each such Class evidencing an additional amount equal to the
remainder of the initial Certificate Balance of such Class. The Class [R] and
Class [LR] Certificates will be issued in fully registered, certificated form,
in Denominations representing Percentage Interests of not less than __%.
No fee or service charge shall be imposed by the Certificate
Registrar for its services in respect of any registration of transfer or
exchange referred to in Section 5.02 of the Pooling and Servicing Agreement
other than for transfers to Institutional Accredited Investors as provided in
Section 5.02(h) thereof. In connection with any transfer to an Institutional
Accredited Investor, the Transferor shall reimburse the Trust for any costs
(including the cost of the Certificate Registrar's counsel's review of the
documents and any legal opinions, submitted by the transferor or transferee to
the Certificate Registrar as provided in Section 5.02 of the Pooling and
Servicing Agreement) incurred by the Certificate Registrar in connection with
such transfer. The Certificate Registrar may require payment by each transferor
of a sum sufficient to cover any tax, expense or other governmental charge
payable in connection with any such transfer or exchange.
The Depositor, the Trustee, the Fiscal Agent, the Servicer, the
Special Servicer, the Paying Agent and the Certificate Registrar and any of
their agents may treat the Person in whose name this Certificate is registered
as the owner hereof for all purposes, and neither the Depositor, the Trustee,
the Servicer, the Special Servicer, the Fiscal Agent, the Certificate Registrar
nor any such agents shall be affected by any notice to the contrary.
The Pooling and Servicing Agreement may be amended from time to time
by the Depositor, the Servicer, the Special Servicer, the Fiscal Agent and the
Trustee, without the consent of any of the Certificateholders, to cure any
ambiguity, to correct or supplement any provisions herein or therein that may be
inconsistent with any other provisions herein or therein or to correct any
error; to maintain the rating or ratings assigned to each Class of Certificates
by each Rating Agency; to modify, eliminate or add to any provisions to such
extent as is necessary to maintain the qualification of either the Upper-Tier
REMIC or the Lower-Tier REMIC as a REMIC to avoid or minimize the imposition of
any tax, provided, however, an Opinion of Counsel is obtained to the effect that
such action shall not adversely affect in any material respect the interest of
any Certificateholder and such action is necessary or desirable to avoid such
tax and such action will not result in the withdrawal, downgrade or
qualification of the then-current rating by any Rating Agency, as evidenced by a
letter from such Rating Agency to such effect; to change the timing and/or
nature of deposits into the Certificate Account or Distribution Account or REO
Account or to change the name in which the Certificate Account is maintained,
provided, however, that the P&I Advance Date shall not be later than the related
A-4-5
<PAGE>
Distribution Date, an Opinion of Counsel is obtained to the effect that such
action shall not adversely affect in any material respect the interest of any
Certificateholder and that such action will not result in the withdrawal,
downgrade or qualification of the then-current rating by any Rating Agency, as
evidenced by a letter from such Rating Agency to such effect; to modify,
eliminate or add to the provisions of Section 5.02(d) of the Pooling and
Servicing Agreement or any other provision thereof restricting transfer of the
Residual Certificates by virtue of their being the REMIC "residual interests,"
provided that such change shall not result in the withdrawal, downgrade or
qualification of the then-current rating assigned to any Class of Certificates,
as evidenced by a letter from each Rating Agency to such effect, and such change
shall not, as evidenced by an Opinion of Counsel, cause either the Upper-Tier
REMIC or the Lower-Tier REMIC or any of the Certificateholders (other than the
Transferor) to be subject to a federal tax caused by a Transfer to a Person that
is a Disqualified Organization or a Non-U.S. Person; and to make any other
provisions with respect to matters or questions arising under the Pooling and
Servicing Agreement which shall not be materially inconsistent with the
provisions of the Pooling and Servicing Agreement, provided, however, that such
action shall not, as evidenced by an Opinion of Counsel, adversely affect in any
material respect the interest of any Certificateholder not consenting thereto.
The Pooling and Servicing Agreement may also be amended from time to
time by the Depositor, the Servicer, the Special Servicer, the Fiscal Agent and
the Trustee with the consent of the Holders of Certificates representing not
less than ____% of the Percentage Interests of each Class of Certificates
affected by the amendment for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of the Pooling and
Servicing Agreement or of modifying in any manner the rights of the
Certificateholders; provided, however, that no such amendment shall:
(i) reduce in any manner the amount of, or delay the timing of,
payments which are required to be distributed on any Certificate without
the consent of such Certificateholder; or
(ii) reduce the aforesaid percentage of Certificates of any Class
the Holders of which are required to consent to any such amendment,
without the consent of the Holders of all Certificates of such Class then
outstanding; or
(iii) adversely affect the Voting Rights of any Class of
Certificates without the consent of the Holders of such Class then
outstanding; or
(iv) amend Section 11.01.
No amendment shall be made to the Pooling and Servicing Agreement
unless the Trustee shall have received an Opinion of Counsel that such amendment
will not cause either the Upper-Tier REMIC or the Lower-Tier REMIC to fail to
qualify as a REMIC or result in the imposition of a tax on either the Upper-Tier
REMIC or the Lower-Tier REMIC.
Any of the Servicer, Special Servicer, the Holders of the
Controlling Class or the Holders of the Class [LR] Certificates (in that order)
will have the option, upon 60 days' prior notice given to the Trustee, Paying
Agent and each of the other parties to the Pooling and Servicing Agreement,
which notice the Paying Agent is required to promptly forward to
Certificateholders and Rating Agencies in the manner set forth in the Pooling
and Servicing Agreement, to purchase all, but not less than all, of the Mortgage
Loans and all property acquired in respect of any Mortgage Loan remaining in the
Trust Fund, and thereby effect termination of the Trust Fund and early
retirement of the then outstanding Certificates, on any Distribution Date on
which the aggregate Stated Principal Balances of the Mortgage Loans and any REO
Loans remaining in the Trust Fund is reduced to less than __% of the aggregate
Cut-off Date Principal Balance of all the Mortgage Loans.
The obligations created by the Pooling and Servicing Agreement and
the Trust Fund created thereby (other than the obligation of the Paying Agent to
make payments to Certificateholders as provided for in the Pooling and Servicing
Agreement), shall terminate upon reduction of the Certificate Balances of all
the Certificates to zero (including, without limitation, any such final payment
resulting from a termination of the Trust Fund due to a sale of its property)
pursuant to the terms of the Pooling and Servicing Agreement. In no event,
however, will the Trust created by the Pooling and Servicing Agreement continue
A-4-6
<PAGE>
beyond the expiration of 21 years from the death of the last survivor of the
descendants of Joseph P. Kennedy, the late Ambassador of the United States to
the Court of St. James, living on the date hereof.
Unless the certificate of authentication hereon has been executed by
the Authenticating Agent, by manual signature, this Certificate shall not be
entitled to any benefit under the Pooling and Servicing Agreement or be valid
for any purpose. The Certificate Registrar has executed this Certificate on
behalf of the Trust Fund as Certificate Registrar under the Pooling and
Servicing Agreement and makes no representation or warranty as to any of the
statements contained herein or the validity or sufficiency of the Certificates
or the Mortgage Loans.
THIS CERTIFICATE AND THE POOLING AND SERVICING AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES APPLIED IN NEW YORK.
IN WITNESS WHEREOF, the Certificate Registrar has caused this
Certificate to be duly executed under this official seal.
THE CHASE MANHATTAN BANK, not in its
individual capacity but solely as
Certificate Registrar under the
Pooling and Servicing Agreement.
By:___________________________
AUTHORIZED OFFICER
Dated:_____________, 1997
CERTIFICATE OF AUTHENTICATION
THIS IS ONE OF THE CLASS [C] CERTIFICATES REFERRED TO IN THE
WITHIN-MENTIONED POOLING AND SERVICING AGREEMENT.
THE CHASE MANHATTAN BANK,
Authenticating Agent
By:___________________________
AUTHORIZED SIGNATORY
A-4-7
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this
Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenant in common UNIF GIFT MIN ACT __________ Custodian
(Cust)
TEN ENT - as tenants by the entireties Under Uniform Gifts to Minors
JT TEN - as joint tenants with
rights of survivorship and Act __________________________
not as tenants in common (State)
Additional abbreviations may also be used though not in the above list.
FORM OF TRANSFER
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto__________________________
- --------------------------------------------------------------------------------
(Please insert Social Security or other identifying number of Assignee)
- --------------------------------------------------------------------------------
(Please print or typewrite name and address of assignee)
the within Certificate and does hereby or irrevocably constitute and appoint to
transfer the said Certificate in the Certificate register of the within-named
Trust, with full power of substitution in the premises.
- ----------------------- ----------------------------------------
Dated: NOTICE: The signature to this
assignment must correspond with the
name as written upon the face of this
Certificate in every particular
without alteration or enlargement or
any change whatever.
- ----------------------
SIGNATURE GUARANTEED
The signature must be guaranteed by a commercial bank or trust company or by a
member firm of the New York Stock Exchange or another national securities
exchange. Notarized or witnessed signatures are not acceptable.
A-4-8
<PAGE>
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________ for the
account of __________________________________ account number _______________
or, if mailed by check, to _______________________________________.
Statements should be mailed to
_______________________________________________________________. This
information is provided by assignee named above, or
______________________________ , as its agent.
A-4-9
<PAGE>
EXHIBIT A-5
CHASE COMMERCIAL MORTGAGE SECURITIES CORP.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1997-_, CLASS [D]
THIS CLASS [D] CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO CERTAIN OTHER
CLASSES OF CERTIFICATES OF THIS SERIES TO THE EXTENT DESCRIBED IN THE POOLING
AND SERVICING AGREEMENT. THE PORTION OF THE CERTIFICATE BALANCE OF THE
CERTIFICATES EVIDENCED BY THIS CERTIFICATE WILL BE DECREASED BY THE PORTION OF
PRINCIPAL DISTRIBUTIONS ON THE CERTIFICATES AND THE PORTION OF COLLATERAL
SUPPORT DEFICIT ALLOCABLE TO THIS CERTIFICATE. ACCORDINGLY, THE CERTIFICATE
BALANCE OF THIS CERTIFICATE MAY BE LESS THAN THAT SET FORTH BELOW. ANYONE
ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CURRENT CERTIFICATE BALANCE BY
INQUIRY OF THE PAYING AGENT. THIS CERTIFICATE CONSTITUTES A REMIC REGULAR
INTEREST UNDER THE INTERNAL REVENUE CODE OF 1986, AS AMENDED.
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE CERTIFICATE
REGISTRAR 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.]1
- ----------
1 If this Certificate represents a Book-Entry Certificate registered in the
name of Cede & Co., it shall have this legend.
A-5-1
<PAGE>
THIS CERTIFICATE MAY NOT BE PURCHASED OR TRANSFERRED UNLESS THE CERTIFICATE
REGISTRAR SHALL HAVE RECEIVED EITHER (A) AN INVESTMENT REPRESENTATION LETTER
FROM THE PROPOSED PURCHASER OR TRANSFEREE OF SUCH CERTIFICATE, IN FORM AND
SUBSTANCE SATISFACTORY TO THE CERTIFICATE REGISTRAR AND THE DEPOSITOR, TO THE
EFFECT THAT SUCH PROPOSED PURCHASER OR TRANSFEREE IS NOT (i) AN EMPLOYEE BENEFIT
PLAN SUBJECT TO THE FIDUCIARY RESPONSIBILITY PROVISIONS OF THE EMPLOYEE
RETIREMENT SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), OR A GOVERNMENTAL PLAN
(AS DEFINED IN SECTION 3(32) OF ERISA) SUBJECT TO ANY FEDERAL, STATE OR LOCAL
LAW ("SIMILAR LAW") WHICH IS, TO A MATERIAL EXTENT, SIMILAR TO THE FOREGOING
PROVISIONS OF ERISA OR THE CODE (EACH A "PLAN") OR (ii) A PERSON ACTING ON
BEHALF OF OR USING THE ASSETS OF ANY SUCH PLAN (INCLUDING AN ENTITY WHOSE
UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF INVESTMENT IN THE ENTITY BY
SUCH PLAN AND THE APPLICATION OF DEPARTMENT OF LABOR REGULATION ss. 2510.3-101),
OTHER THAN AN INSURANCE COMPANY USING THE ASSETS OF ITS GENERAL ACCOUNT UNDER
CIRCUMSTANCES WHEREBY THE PURCHASE AND HOLDING OF SUBORDINATE CERTIFICATES BY
SUCH INSURANCE COMPANY WOULD BE EXEMPT FROM THE PROHIBITED TRANSACTION
PROVISIONS OF ERISA AND THE CODE UNDER PROHIBITED TRANSACTION CLASS EXEMPTION
95-60 OR (B) IF SUCH CERTIFICATE IS PRESENTED FOR REGISTRATION IN THE NAME OF A
PERSON DESCRIBED IN CLAUSES (i) OR (ii) ABOVE, AN OPINION OF COUNSEL IN FORM AND
SUBSTANCE SATISFACTORY TO THE CERTIFICATE REGISTRAR AND THE DEPOSITOR TO THE
EFFECT THAT SUCH ACQUISITION AND HOLDING OF SUCH CERTIFICATE BY SUCH PROPOSED
PURCHASER OR TRANSFEREE WILL NOT RESULT IN THE ASSETS OF THE TRUST FUND BEING
DEEMED TO BE "PLAN ASSETS" AND SUBJECT TO THE FIDUCIARY RESPONSIBILITY
PROVISIONS OF ERISA, THE PROHIBITED TRANSACTION PROVISIONS OF THE CODE OR THE
PROVISIONS OF ANY SIMILAR LAW, WILL NOT CONSTITUTE OR RESULT IN A "PROHIBITED
TRANSACTION" WITHIN THE MEANING OF ERISA, SECTION 4975 OF THE CODE OR ANY
SIMILAR LAW, AND WILL NOT SUBJECT THE TRUSTEE, THE CERTIFICATE REGISTRAR, THE
SERVICER, THE SPECIAL SERVICER, THE FISCAL AGENT, THE EXTENSION ADVISER, THE
PLACEMENT AGENTS OR THE DEPOSITOR TO ANY OBLIGATION OR LIABILITY (INCLUDING
OBLIGATIONS OR LIABILITIES UNDER ERISA, SECTION 4975 OF THE CODE OR ANY SUCH
SIMILAR LAW) IN ADDITION TO THOSE SET FORTH IN THE POOLING AND SERVICING
AGREEMENT. THE TRANSFEREE OF A BENEFICIAL INTEREST IN A CERTIFICATE THAT IS A
BOOK-ENTRY CERTIFICATE SHALL BE DEEMED TO REPRESENT THAT IT IS NOT A PERSON
DESCRIBED IN CLAUSES (i) OR (ii) ABOVE.
PASS-THROUGH RATE:____ % APPROXIMATE AGGREGATE SCHEDULED PRINCIPAL
BALANCE OF THE MORTGAGE LOANS AFTER
DENOMINATION: $___________ DEDUCTING PAYMENTS DUE AND PREPAYMENTS
RECEIVED ON OR BEFORE CUT-OFF DATE:
$___________
DATE OF POOLING AND SERVICING
AGREEMENT: AS OF_________, 1997 SERVICER: THE CHASE MANHATTAN BANK
CUT-OFF DATE:______________, 1997 SPECIAL SERVICER:________________________
CLOSING DATE:______________, 1997 TRUSTEE:__________________________________
FIRST DISTRIBUTION DATE: FISCAL AGENT:_____________________________
______________, 1997
PAYING AGENT: THE CHASE MANHATTAN BANK
APPROXIMATE AGGREGATE
CERTIFICATE BALANCE CUSIP NO.__________
OF THE CLASS [D] CERTIFICATES
AS OF THE CLOSING DATE: $_______ CERTIFICATE NO.: ______
A-5-2
<PAGE>
CLASS [D] CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund, consisting primarily
of a pool of fixed rate, balloon multifamily and mobile home community mortgage
loans (the "Mortgage Loans"), all payments on or collections in respect of the
Mortgage Loans due after the Cut-off Date, all REO Properties and revenues
received in respect thereof, the mortgagee's rights under the Insurance
Policies, any Assignment of Leases, and any guaranties, escrow accounts or other
collateral as security for the Mortgage Loans, and such amounts as shall from
time to time be held in the Certificate Account, the Distribution Accounts, and
the REO Accounts, formed and sold by
CHASE COMMERCIAL MORTGAGE SECURITIES CORP.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN CHASE
COMMERCIAL MORTGAGE SECURITIES CORP., THE SERVICER, THE SPECIAL SERVICER, THE
TRUSTEE, THE FISCAL AGENT OR ANY OF THEIR AFFILIATES. NEITHER THIS CERTIFICATE
NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR
INSTRUMENTALITY OF THE UNITED STATES.
THIS CERTIFIES THAT __________________
is the registered owner of the interest evidenced by this Certificate in the
Class [D] Certificates issued by the Trust Fund created pursuant to the Pooling
and Servicing Agreement, dated as of________________, 1997 (the "Pooling and
Servicing Agreement"), among Chase Commercial Mortgage Securities Corp.
(hereinafter called the "Depositor", which term includes any successor entity
under the Pooling and Servicing Agreement), the Trustee, the Special Servicer,
the Servicer and the Fiscal Agent. A summary of certain of the pertinent
provisions of the Pooling and Servicing Agreement is set forth hereafter. To the
extent not defined herein, the capitalized terms used herein shall have the
meanings assigned thereto in the Pooling and Servicing Agreement.
This Certificate is one of a duly authorized issue of Certificates
designated as Certificates of the series specified on the face hereof (herein
called the "Certificates") and representing an interest in the Class of
Certificates specified on the face hereof equal to the quotient expressed as a
percentage obtained by dividing the Denomination of this Certificate specified
on the face hereof, by the aggregate initial Certificate Balance of the Class
[D] Certificates. The Certificates are designated as the Chase Commercial
Mortgage Securities Corp., Commercial Mortgage Pass-Through Certificates, Series
1997-2 and are issued in twelve Classes as specifically set forth in the Pooling
and Servicing Agreement. The Certificates will evidence in the aggregate 100% of
the beneficial ownership of the Trust Fund.
This Certificate does not purport to summarize the Pooling and
Servicing Agreement and reference is made to that agreement for information with
respect to the interests, rights, benefits, obligations, proceeds, and duties
evidenced hereby and the rights, duties and obligations of the Trustee. This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Pooling and Servicing Agreement, to which Pooling and
Servicing Agreement, as amended from time to time, the Certificateholder by
virtue of the acceptance hereof assents and by which the Certificateholder is
bound. In the case of any conflict between terms specified in this Certificate
and terms specified in the Pooling and Servicing Agreement, the terms of the
Pooling and Servicing Agreement shall govern.
This Certificate is a "regular interest" in a "real estate mortgage
investment conduit," as those terms are defined, respectively, in Sections
860G(a)(1) and 860D of the Internal Revenue Code of 1986, as amended. Each
Holder of this Certificate, by acceptance hereof, agrees to treat, and take no
action inconsistent with the treatment of, this Certificate in accordance with
the preceding sentence for purposes of federal income taxes, state and local
income and franchise taxes and other taxes imposed on or measured by income.
Pursuant to the terms of the Pooling and Servicing Agreement, the
Paying Agent shall distribute to the Person in whose name this Certificate is
registered as of the related Record Date, an amount equal to such Person's pro
A-5-3
<PAGE>
rata share (based on the Percentage Interest represented by this Certificate) of
that portion of the aggregate amount of principal and interest then
distributable, if any, allocable to the Class of Certificates of the same Class
as this Certificate for such Distribution Date, all as more fully described in
the Pooling and Servicing Agreement. Holders of this Certificate may be entitled
to Prepayment Premiums and Yield Maintenance Charges as provided in the Pooling
and Servicing Agreement. All sums distributable on this Certificate are payable
in the coin or currency of the United States of America as at the time of
payment is legal tender for the payment of public and private debts.
Interest on this Certificate will accrue (computed as if each year
consisted of 360 days and each month consisted of 30 days) during the Interest
Accrual Period relating to such Distribution Date at the Class [D] Pass-Through
Rate specified above on the Certificate Balance of this Certificate immediately
prior to each Distribution Date. Principal and interest allocated to this
Certificate on any Distribution Date will be in an amount due to this
Certificate's pro rata share of the Available Distribution Amount to be
distributed on the Certificates of this Class as of such Distribution Date, with
a final distribution to be made upon retirement of this Certificate as set forth
in the Pooling and Servicing Agreement.
Collateral Support Deficit and Certificate Deferred Interest on the
Mortgage Loans shall be allocated on the applicable Distribution Date to
Certificateholders in the manner set forth in the Pooling and Servicing
Agreement. All Collateral Support Deficit or Certificate Deferred Interest on
the Mortgage Loans allocated to any Class of Certificates will be allocated pro
rata among the outstanding Certificates of such Class.
The Certificates are limited in right of payment to, among other
things, certain collections and recoveries respecting the Mortgage Loans, all as
more specifically set forth in the Pooling and Servicing Agreement. As provided
in the Pooling and Servicing Agreement, the Certificate Account and the
Distribution Account will be held in the name of the Servicer and Paying Agent,
respectively, on behalf of the holders of Certificates specified in the Pooling
and Servicing Agreement and the Servicer (with respect to the Certificate
Account) or the Paying Agent (with respect to the Distribution Account) will be
authorized to make withdrawals therefrom. Amounts on deposit in such accounts
may be invested in Permitted Investments. Interest or other income earned on
funds in the Certificate Account and Distribution Account will be paid to the
Servicer as set forth in the Pooling and Servicing Agreement. As provided in the
Pooling and Servicing Agreement, withdrawals from the Certificate Account shall
be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of certain expenses
incurred with respect to the servicing of the Mortgage Loans and administration
of the Trust Fund.
All distributions under the Pooling and Servicing Agreement to a
Class of Certificates shall be made on each Distribution Date (other than the
final distribution on any Certificate) to Certificateholders of record on the
related Record Date by check mailed to the address set forth therefor in the
Certificate Register or, provided that such Certificateholder (1) has provided
the Trustee and the Paying Agent with wire instructions in writing as least five
Business Days prior to the related Record Date and (2) is the Holder of
Certificates with an original Certificate Balance or Notional Amount, as
applicable, of at least $__________, by wire transfer of immediately available
funds to the account of such Certificateholder at a bank or other entity having
appropriate facilities therefor. The final distribution on this Certificate
shall be made in like manner, but only upon presentment and surrender of this
Certificate at the offices of the Certificate Registrar or such other location
specified in the notice to Certificateholders of such final distribution.
Any funds not distributed on the final Distribution Date because of
the failure of Certificateholders to tender their Certificates shall be set
aside and held uninvested in trust for the benefit of the non-tendering
Certificateholders, whereupon the Trust Fund shall terminate. If any
Certificates as to which notice has been given pursuant to Section 4.01(g) of
the Pooling and Servicing Agreement 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 to receive
the final distribution with respect thereto. If within one year after the second
notice not all of such Certificates shall have been surrendered for
cancellation, the Paying Agent may, directly or through an agent, take
appropriate steps to contact the remaining non-tendering Certificateholders
concerning surrender of their Certificates. The costs and expenses of holding
such funds in trust and of contacting such Certificateholders shall be paid out
A-5-4
<PAGE>
of such funds. No interest shall accrue or be payable to any Certificateholder
on any amount held in trust as a result of such Certificateholder's failure to
surrender its Certificate(s) for final payment thereof in accordance with
Section 4.01(g) of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, the transfer of this Certificate is
registerable in the Certificate Register only upon surrender of this Certificate
for registration of transfer at the office of the Certificate Registrar or at
the office of its transfer agent, duly endorsed by, or accompanied by an
assignment in the form below or other written instrument of transfer in form
satisfactory to the Certificate Registrar duly executed by the Holder hereof or
such Holder's attorney-in-fact duly authorized in writing, and thereupon one or
more new Certificates of the same Class in authorized Denominations will be
issued to the designated transferee or transferees.
Subject to the terms of the Pooling and Servicing Agreement, the
Class [X] Certificates will be issued in book-entry form through the facilities
of DTC in Denominations of not less than $__________initial Notional Amount and
in integral multiples of $1_______in excess thereof, with one Certificate of
such Class evidencing an additional amount equal to the remainder of the initial
Notional Amount of such Class. Subject to the terms of the Pooling and Servicing
Agreement, the Offered Certificates (other than the Class [X] Certificates) will
be issued in book-entry form through the facilities of DTC in Denominations of
$_______initial Certificate Balance, and in integral multiples of $______ in
excess thereof, with one Certificate of each such Class evidencing an additional
amount equal to the remainder of the initial Certificate Balance of such Class.
Subject to the terms of the Pooling and Servicing Agreement, the Non-Registered
Certificates (other than the Residual Certificates) will be issued in book-entry
form through the facilities of DTC in Denominations of $_______initial
Certificate Balance, and in integral multiples of $_______in excess thereof,
with one Certificate of each such Class evidencing an additional amount equal to
the remainder of the initial Certificate Balance of such Class. The Class [R]
and Class [LR] Certificates will be issued in fully registered, certificated
form, in Denominations representing Percentage Interests of not less than __%.
No fee or service charge shall be imposed by the Certificate
Registrar for its services in respect of any registration of transfer or
exchange referred to in Section 5.02 of the Pooling and Servicing Agreement
other than for transfers to Institutional Accredited Investors as provided in
Section 5.02(h) thereof. In connection with any transfer to an Institutional
Accredited Investor, the Transferor shall reimburse the Trust for any costs
(including the cost of the Certificate Registrar's counsel's review of the
documents and any legal opinions, submitted by the transferor or transferee to
the Certificate Registrar as provided in Section 5.02 of the Pooling and
Servicing Agreement) incurred by the Certificate Registrar in connection with
such transfer. The Certificate Registrar may require payment by each transferor
of a sum sufficient to cover any tax, expense or other governmental charge
payable in connection with any such transfer or exchange.
The Depositor, the Trustee, the Fiscal Agent, the Servicer, the
Special Servicer, the Paying Agent and the Certificate Registrar and any of
their agents may treat the Person in whose name this Certificate is registered
as the owner hereof for all purposes, and neither the Depositor, the Trustee,
the Servicer, the Special Servicer, the Fiscal Agent, the Certificate Registrar
nor any such agents shall be affected by any notice to the contrary.
The Pooling and Servicing Agreement may be amended from time to time
by the Depositor, the Servicer, the Special Servicer, the Fiscal Agent and the
Trustee, without the consent of any of the Certificateholders, to cure any
ambiguity, to correct or supplement any provisions herein or therein that may be
inconsistent with any other provisions herein or therein or to correct any
error; to maintain the rating or ratings assigned to each Class of Certificates
by each Rating Agency; to modify, eliminate or add to any provisions to such
extent as is necessary to maintain the qualification of the Upper-Tier REMIC or
the Lower-Tier REMIC as a REMIC to avoid or minimize the imposition of any tax,
provided, however, an Opinion of Counsel is obtained to the effect that such
action shall not adversely affect in any material respect the interest of any
Certificateholder and such action is necessary or desirable to avoid such tax
and such action will not result in the withdrawal, downgrade or qualification of
the then-current rating by any Rating Agency, as evidenced by a letter from such
Rating Agency to such effect; to change the timing and/or nature of deposits
into the Certificate Account or Distribution Account or REO Account or to change
the name in which the Certificate Account is maintained, provided, however, that
the P&I Advance Date shall not be later than the related Distribution Date, an
A-5-5
<PAGE>
Opinion of Counsel is obtained to the effect that such action shall not
adversely affect in any material respect the interest of any Certificateholder
and that such action will not result in the withdrawal, downgrade or
qualification of the then-current rating by any Rating Agency, as evidenced by a
letter from such Rating Agency to such effect; to modify, eliminate or add to
the provisions of Section 5.02(d) of the Pooling and Servicing Agreement or any
other provision thereof restricting transfer of the Residual Certificates by
virtue of their being the REMIC "residual interests," provided that such change
shall not result in the withdrawal, downgrade or qualification of the
then-current rating assigned to any Class of Certificates, as evidenced by a
letter from each Rating Agency to such effect, and such change shall not, as
evidenced by an Opinion of Counsel, cause either the Upper-Tier REMIC or the
Lower-Tier REMIC or any of the Certificateholders (other than the Transferor) to
be subject to a federal tax caused by a Transfer to a Person that is a
Disqualified Organization or a Non-U.S. Person; and to make any other provisions
with respect to matters or questions arising under the Pooling and Servicing
Agreement which shall not be materially inconsistent with the provisions of the
Pooling and Servicing Agreement, provided, however, that such action shall not,
as evidenced by an Opinion of Counsel, adversely affect in any material respect
the interest of any Certificateholder not consenting thereto.
The Pooling and Servicing Agreement may also be amended from time to
time by the Depositor, the Servicer, the Special Servicer, the Fiscal Agent and
the Trustee with the consent of the Holders of Certificates representing not
less than ____% of the Percentage Interests of each Class of Certificates
affected by the amendment for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of the Pooling and
Servicing Agreement or of modifying in any manner the rights of the
Certificateholders; provided, however, that no such amendment shall:
(i) reduce in any manner the amount of, or delay the timing of,
payments which are required to be distributed on any Certificate without
the consent of such Certificateholder; or
(ii) reduce the aforesaid percentage of Certificates of any Class
the Holders of which are required to consent to any such amendment,
without the consent of the Holders of all Certificates of such Class then
outstanding; or
(iii) adversely affect the Voting Rights of any Class of
Certificates without the consent of the Holders of such Class then
outstanding; or
(iv) amend Section 11.01.
No amendment shall be made to the Pooling and Servicing Agreement
unless the Trustee shall have received an Opinion of Counsel that such amendment
will not cause either the Upper-Tier REMIC or the Lower-Tier REMIC to fail to
qualify as a REMIC or result in the imposition of a tax on the Upper-Tier REMIC
or the Lower-Tier REMIC.
Any of the Servicer, Special Servicer, the Holders of the
Controlling Class or the Holders of the Class [LR] Certificates (in that order)
will have the option, upon 60 days' prior notice given to the Trustee, Paying
Agent and each of the other parties to the Pooling and Servicing Agreement,
which notice the Paying Agent is required to promptly forward to
Certificateholders and Rating Agencies in the manner set forth in the Pooling
and Servicing Agreement, to purchase all, but not less than all, of the Mortgage
Loans and all property acquired in respect of any Mortgage Loan remaining in the
Trust Fund, and thereby effect termination of the Trust Fund and early
retirement of the then outstanding Certificates, on any Distribution Date on
which the aggregate Stated Principal Balances of the Mortgage Loans and any REO
Loans remaining in the Trust Fund is reduced to less than __% of the aggregate
Cut-off Date Principal Balance of all the Mortgage Loans.
The obligations created by the Pooling and Servicing Agreement and
the Trust Fund created thereby (other than the obligation of the Paying Agent to
make payments to Certificateholders as provided for in the Pooling and Servicing
Agreement), shall terminate upon reduction of the Certificate Balances of all
the Certificates to zero (including, without limitation, any such final payment
resulting from a termination of the Trust Fund due to a sale of its property)
pursuant to the terms of the Pooling and Servicing Agreement. In no event,
however, will the Trust created by the Pooling and Servicing Agreement continue
A-5-6
<PAGE>
beyond the expiration of 21 years from the death of the last survivor of the
descendants of Joseph P. Kennedy, the late Ambassador of the United States to
the Court of St. James, living on the date hereof.
Unless the certificate of authentication hereon has been executed by
the Authenticating Agent, by manual signature, this Certificate shall not be
entitled to any benefit under the Pooling and Servicing Agreement or be valid
for any purpose. The Certificate Registrar has executed this Certificate on
behalf of the Trust Fund as Certificate Registrar under the Pooling and
Servicing Agreement and makes no representation or warranty as to any of the
statements contained herein or the validity or sufficiency of the Certificates
or the Mortgage Loans.
THIS CERTIFICATE AND THE POOLING AND SERVICING AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES APPLIED IN NEW YORK.
IN WITNESS WHEREOF, the Certificate Registrar has caused this
Certificate to be duly executed under this official seal.
THE CHASE MANHATTAN BANK, not in its
individual capacity but solely as
Certificate Registrar under the
Pooling and Servicing Agreement.
By:___________________________
AUTHORIZED OFFICER
Dated:________________, 1997
CERTIFICATE OF AUTHENTICATION
THIS IS ONE OF THE CLASS [D] CERTIFICATES REFERRED TO IN THE
WITHIN-MENTIONED POOLING AND SERVICING AGREEMENT.
THE CHASE MANHATTAN BANK,
Authenticating Agent
By:___________________________
AUTHORIZED SIGNATORY
A-5-7
<PAGE>
ABBREVIATIONS
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this
Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenant in common UNIF GIFT MIN ACT __________ Custodian
(Cust)
TEN ENT - as tenants by the entireties Under Uniform Gifts to Minors
JT TEN - as joint tenants with
rights of survivorship and Act __________________________
not as tenants in common (State)
Additional abbreviations may also be used though not in the above list.
FORM OF TRANSFER
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto__________________________
- --------------------------------------------------------------------------------
(Please insert Social Security or other identifying number of Assignee)
- --------------------------------------------------------------------------------
(Please print or typewrite name and address of assignee)
the within Certificate and does hereby or irrevocably constitute and appoint to
transfer the said Certificate in the Certificate register of the within-named
Trust, with full power of substitution in the premises.
- ----------------------- ----------------------------------------
Dated: NOTICE: The signature to this
assignment must correspond with the
name as written upon the face of this
Certificate in every particular
without alteration or enlargement or
any change whatever.
- ----------------------
SIGNATURE GUARANTEED
The signature must be guaranteed by a commercial bank or trust company or by a
member firm of the New York Stock Exchange or another national securities
exchange. Notarized or witnessed signatures are not acceptable.
A-5-8
<PAGE>
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________ for the
account of __________________________________ account number _______________
or, if mailed by check, to _______________________________________.
Statements should be mailed to
_______________________________________________________________. This
information is provided by assignee named above, or
______________________________ , as its agent.
A-5-9
<PAGE>
EXHIBIT A-6
CHASE COMMERCIAL MORTGAGE SECURITIES CORP.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1997-_, CLASS [E]
THIS CLASS [E] CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO CERTAIN OTHER
CLASSES OF CERTIFICATES OF THIS SERIES TO THE EXTENT DESCRIBED IN THE POOLING
AND SERVICING AGREEMENT. THE PORTION OF THE CERTIFICATE BALANCE OF THE
CERTIFICATES EVIDENCED BY THIS CERTIFICATE WILL BE DECREASED BY THE PORTION OF
PRINCIPAL DISTRIBUTIONS ON THE CERTIFICATES AND THE PORTION OF COLLATERAL
SUPPORT DEFICIT ALLOCABLE TO THIS CERTIFICATE. ACCORDINGLY, THE CERTIFICATE
BALANCE OF THIS CERTIFICATE MAY BE LESS THAN THAT SET FORTH BELOW. ANYONE
ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CURRENT CERTIFICATE BALANCE BY
INQUIRY OF THE PAYING AGENT. THIS CERTIFICATE CONSTITUTES A REMIC REGULAR
INTEREST UNDER THE INTERNAL REVENUE CODE OF 1986, AS AMENDED.
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE CERTIFICATE
REGISTRAR 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.]1
- ----------
1 If this Certificate represents a Book-Entry Certificate registered in the
name of Cede & Co., it shall have this legend.
A-6-1
<PAGE>
THIS CERTIFICATE MAY NOT BE PURCHASED OR TRANSFERRED UNLESS THE CERTIFICATE
REGISTRAR SHALL HAVE RECEIVED EITHER (A) AN INVESTMENT REPRESENTATION LETTER
FROM THE PROPOSED PURCHASER OR TRANSFEREE OF SUCH CERTIFICATE, IN FORM AND
SUBSTANCE SATISFACTORY TO THE CERTIFICATE REGISTRAR AND THE DEPOSITOR, TO THE
EFFECT THAT SUCH PROPOSED PURCHASER OR TRANSFEREE IS NOT (i) AN EMPLOYEE BENEFIT
PLAN SUBJECT TO THE FIDUCIARY RESPONSIBILITY PROVISIONS OF THE EMPLOYEE
RETIREMENT SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), OR A GOVERNMENTAL PLAN
(AS DEFINED IN SECTION 3(32) OF ERISA) SUBJECT TO ANY FEDERAL, STATE OR LOCAL
LAW ("SIMILAR LAW") WHICH IS, TO A MATERIAL EXTENT, SIMILAR TO THE FOREGOING
PROVISIONS OF ERISA OR THE CODE (EACH A "PLAN") OR (ii) A PERSON ACTING ON
BEHALF OF OR USING THE ASSETS OF ANY SUCH PLAN (INCLUDING AN ENTITY WHOSE
UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF INVESTMENT IN THE ENTITY BY
SUCH PLAN AND THE APPLICATION OF DEPARTMENT OF LABOR REGULATION ss. 2510.3-101),
OTHER THAN AN INSURANCE COMPANY USING THE ASSETS OF ITS GENERAL ACCOUNT UNDER
CIRCUMSTANCES WHEREBY THE PURCHASE AND HOLDING OF SUBORDINATE CERTIFICATES BY
SUCH INSURANCE COMPANY WOULD BE EXEMPT FROM THE PROHIBITED TRANSACTION
PROVISIONS OF ERISA AND THE CODE UNDER PROHIBITED TRANSACTION CLASS EXEMPTION
95-60 OR (B) IF SUCH CERTIFICATE IS PRESENTED FOR REGISTRATION IN THE NAME OF A
PERSON DESCRIBED IN CLAUSES (i) OR (ii) ABOVE, AN OPINION OF COUNSEL IN FORM AND
SUBSTANCE SATISFACTORY TO THE CERTIFICATE REGISTRAR AND THE DEPOSITOR TO THE
EFFECT THAT SUCH ACQUISITION AND HOLDING OF SUCH CERTIFICATE BY SUCH PROPOSED
PURCHASER OR TRANSFEREE WILL NOT RESULT IN THE ASSETS OF THE TRUST FUND BEING
DEEMED TO BE "PLAN ASSETS" AND SUBJECT TO THE FIDUCIARY RESPONSIBILITY
PROVISIONS OF ERISA, THE PROHIBITED TRANSACTION PROVISIONS OF THE CODE OR THE
PROVISIONS OF ANY SIMILAR LAW, WILL NOT CONSTITUTE OR RESULT IN A "PROHIBITED
TRANSACTION" WITHIN THE MEANING OF ERISA, SECTION 4975 OF THE CODE OR ANY
SIMILAR LAW, AND WILL NOT SUBJECT THE TRUSTEE, THE CERTIFICATE REGISTRAR, THE
SERVICER, THE SPECIAL SERVICER, THE FISCAL AGENT, THE EXTENSION ADVISER, THE
PLACEMENT AGENTS OR THE DEPOSITOR TO ANY OBLIGATION OR LIABILITY (INCLUDING
OBLIGATIONS OR LIABILITIES UNDER ERISA, SECTION 4975 OF THE CODE OR ANY SUCH
SIMILAR LAW) IN ADDITION TO THOSE SET FORTH IN THE POOLING AND SERVICING
AGREEMENT. THE TRANSFEREE OF A BENEFICIAL INTEREST IN A CERTIFICATE THAT IS A
BOOK-ENTRY CERTIFICATE SHALL BE DEEMED TO REPRESENT THAT IT IS NOT A PERSON
DESCRIBED IN CLAUSES (i) OR (ii) ABOVE.
PASS-THROUGH RATE: ____% APPROXIMATE AGGREGATE SCHEDULED PRINCIPAL
BALANCE OF THE MORTGAGE LOANS AFTER
DENOMINATION: $___________ DEDUCTING PAYMENTS DUE AND PREPAYMENTS
RECEIVED ON OR BEFORE CUT-OFF DATE:
$___________
DATE OF POOLING AND SERVICING
AGREEMENT: AS OF___________1997 SERVICER: THE CHASE MANHATTAN BANK
CUT-OFF DATE:______________, 1997 SPECIAL SERVICER:________________________
CLOSING DATE:______________, 1997 TRUSTEE:__________________________________
FIRST DISTRIBUTION DATE: FISCAL AGENT:_____________________________
__________________, 1997
PAYING AGENT: THE CHASE MANHATTAN BANK
APPROXIMATE AGGREGATE
CERTIFICATE BALANCE CUSIP NO.____________
OF THE CLASS [E] CERTIFICATES
AS OF THE CLOSING DATE: $___________ CERTIFICATE NO.: ______
A-6-2
<PAGE>
CLASS [E] CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund, consisting primarily
of a pool of fixed rate, balloon multifamily and mobile home community mortgage
loans (the "Mortgage Loans"), all payments on or collections in respect of the
Mortgage Loans due after the Cut-off Date, all REO Properties and revenues
received in respect thereof, the mortgagee's rights under the Insurance
Policies, any Assignment of Leases, and any guaranties, escrow accounts or other
collateral as security for the Mortgage Loans, and such amounts as shall from
time to time be held in the Certificate Account, the Distribution Accounts, and
the REO Accounts, formed and sold by
CHASE COMMERCIAL MORTGAGE SECURITIES CORP.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN CHASE
COMMERCIAL MORTGAGE SECURITIES CORP., THE SERVICER, THE SPECIAL SERVICER, THE
TRUSTEE, THE FISCAL AGENT OR ANY OF THEIR AFFILIATES. NEITHER THIS CERTIFICATE
NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR
INSTRUMENTALITY OF THE UNITED STATES.
THIS CERTIFIES THAT __________________
is the registered owner of the interest evidenced by this Certificate in the
Class [E] Certificates issued by the Trust Fund created pursuant to the Pooling
and Servicing Agreement, dated as of____________, 1997 (the "Pooling and
Servicing Agreement"), among Chase Commercial Mortgage Securities Corp.
(hereinafter called the "Depositor", which term includes any successor entity
under the Pooling and Servicing Agreement), the Trustee, the Special Servicer,
the Servicer and the Fiscal Agent. A summary of certain of the pertinent
provisions of the Pooling and Servicing Agreement is set forth hereafter. To the
extent not defined herein, the capitalized terms used herein shall have the
meanings assigned thereto in the Pooling and Servicing Agreement.
This Certificate is one of a duly authorized issue of Certificates
designated as Certificates of the series specified on the face hereof (herein
called the "Certificates") and representing an interest in the Class of
Certificates specified on the face hereof equal to the quotient expressed as a
percentage obtained by dividing the Denomination of this Certificate specified
on the face hereof, by the aggregate initial Certificate Balance of the Class
[E] Certificates. The Certificates are designated as the Chase Commercial
Mortgage Securities Corp., Commercial Mortgage Pass-Through Certificates, Series
1997-2 and are issued in twelve Classes as specifically set forth in the Pooling
and Servicing Agreement. The Certificates will evidence in the aggregate 100% of
the beneficial ownership of the Trust Fund.
This Certificate does not purport to summarize the Pooling and
Servicing Agreement and reference is made to that agreement for information with
respect to the interests, rights, benefits, obligations, proceeds, and duties
evidenced hereby and the rights, duties and obligations of the Trustee. This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Pooling and Servicing Agreement, to which Pooling and
Servicing Agreement, as amended from time to time, the Certificateholder by
virtue of the acceptance hereof assents and by which the Certificateholder is
bound. In the case of any conflict between terms specified in this Certificate
and terms specified in the Pooling and Servicing Agreement, the terms of the
Pooling and Servicing Agreement shall govern.
This Certificate is a "regular interest" in a "real estate mortgage
investment conduit," as those terms are defined, respectively, in Sections
860G(a)(1) and 860D of the Internal Revenue Code of 1986, as amended. Each
Holder of this Certificate, by acceptance hereof, agrees to treat, and take no
action inconsistent with the treatment of, this Certificate in accordance with
the preceding sentence for purposes of federal income taxes, state and local
income and franchise taxes and other taxes imposed on or measured by income.
Pursuant to the terms of the Pooling and Servicing Agreement, the
Paying Agent shall distribute to the Person in whose name this Certificate is
registered as of the related Record Date, an amount equal to such Person's pro
A-6-3
<PAGE>
rata share (based on the Percentage Interest represented by this Certificate) of
that portion of the aggregate amount of principal and interest then
distributable, if any, allocable to the Class of Certificates of the same Class
as this Certificate for such Distribution Date, all as more fully described in
the Pooling and Servicing Agreement. Holders of this Certificate may be entitled
to Prepayment Premiums and Yield Maintenance Charges as provided in the Pooling
and Servicing Agreement. All sums distributable on this Certificate are payable
in the coin or currency of the United States of America as at the time of
payment is legal tender for the payment of public and private debts.
Interest on this Certificate will accrue (computed as if each year
consisted of 360 days and each month consisted of 30 days) during the Interest
Accrual Period relating to such Distribution Date at the Class [E] Pass-Through
Rate specified above on the Certificate Balance of this Certificate immediately
prior to each Distribution Date. Principal and interest allocated to this
Certificate on any Distribution Date will be in an amount due to this
Certificate's pro rata share of the Available Distribution Amount to be
distributed on the Certificates of this Class as of such Distribution Date, with
a final distribution to be made upon retirement of this Certificate as set forth
in the Pooling and Servicing Agreement.
Collateral Support Deficit and Certificate Deferred Interest on the
Mortgage Loans shall be allocated on the applicable Distribution Date to
Certificateholders in the manner set forth in the Pooling and Servicing
Agreement. All Collateral Support Deficit or Certificate Deferred Interest on
the Mortgage Loans allocated to any Class of Certificates will be allocated pro
rata among the outstanding Certificates of such Class.
The Certificates are limited in right of payment to, among other
things, certain collections and recoveries respecting the Mortgage Loans, all as
more specifically set forth in the Pooling and Servicing Agreement. As provided
in the Pooling and Servicing Agreement, the Certificate Account and the
Distribution Account will be held in the name of the Servicer and Paying Agent,
respectively, on behalf of the holders of Certificates specified in the Pooling
and Servicing Agreement and the Servicer (with respect to the Certificate
Account) or the Paying Agent (with respect to the Distribution Account) will be
authorized to make withdrawals therefrom. Amounts on deposit in such accounts
may be invested in Investments. Interest or other income earned on funds in the
Certificate Account and Distribution Account will be paid to the Servicer as set
forth in the Pooling and Servicing Agreement. As provided in the Pooling and
Servicing Agreement, withdrawals from the Certificate Account shall be made from
time to time for purposes other than distributions to Certificateholders, such
purposes including reimbursement of certain expenses incurred with respect to
the servicing of the Mortgage Loans and administration of the Trust Fund.
All distributions under the Pooling and Servicing Agreement to a
Class of Certificates shall be made on each Distribution Date (other than the
final distribution on any Certificate) to Certificateholders of record on the
related Record Date by check mailed to the address set forth therefor in the
Certificate Register or, provided that such Certificateholder (1) has provided
the Trustee and the Paying Agent with wire instructions in writing as least five
Business Days prior to the related Record Date and (2) is the Holder of
Certificates with an original Certificate Balance or Notional Amount, as
applicable, of at least $_______, by wire transfer of immediately available
funds to the account of such Certificateholder at a bank or other entity having
appropriate facilities therefor. The final distribution on this Certificate
shall be made in like manner, but only upon presentment and surrender of this
Certificate at the offices of the Certificate Registrar or such other location
specified in the notice to Certificateholders of such final distribution.
Any funds not distributed on the final Distribution Date because of
the failure of Certificateholders to tender their Certificates shall be set
aside and held uninvested in trust for the benefit of the non-tendering
Certificateholders, whereupon the Trust Fund shall terminate. If any
Certificates as to which notice has been given pursuant to Section 4.01(g) of
the Pooling and Servicing Agreement 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 to receive
the final distribution with respect thereto. If within one year after the second
notice not all of such Certificates shall have been surrendered for
cancellation, the Paying Agent may, directly or through an agent, take
appropriate steps to contact the remaining non-tendering Certificateholders
concerning surrender of their Certificates. The costs and expenses of holding
such funds in trust and of contacting such Certificateholders shall be paid out
A-6-4
<PAGE>
of such funds. No interest shall accrue or be payable to any Certificateholder
on any amount held in trust as a result of such Certificateholder's failure to
surrender its Certificate(s) for final payment thereof in accordance with
Section 4.01(g) of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, the transfer of this Certificate is
registerable in the Certificate Register only upon surrender of this Certificate
for registration of transfer at the office of the Certificate Registrar or at
the office of its transfer agent, duly endorsed by, or accompanied by an
assignment in the form below or other written instrument of transfer in form
satisfactory to the Certificate Registrar duly executed by the Holder hereof or
such Holder's attorney-in-fact duly authorized in writing, and thereupon one or
more new Certificates of the same Class in authorized Denominations will be
issued to the designated transferee or transferees.
Subject to the terms of the Pooling and Servicing Agreement, the
Class [X] Certificates will be issued in book-entry form through the facilities
of DTC in Denominations of not less than $_______initial Notional Amount and in
integral multiples of $_______ in excess thereof, with one Certificate of such
Class evidencing an additional amount equal to the remainder of the initial
Notional Amount of such Class. Subject to the terms of the Pooling and Servicing
Agreement, the Offered Certificates (other than the Class [X] Certificates) will
be issued in book-entry form through the facilities of DTC in Denominations of
$_______initial Certificate Balance, and in integral multiples of $_______in
excess thereof, with one Certificate of each such Class evidencing an additional
amount equal to the remainder of the initial Certificate Balance of such Class.
Subject to the terms of the Pooling and Servicing Agreement, the Non-Registered
Certificates (other than the Residual Certificates) will be issued in book-entry
form through the facilities of DTC in Denominations of $______initial
Certificate Balance, and in integral multiples of $______in excess thereof, with
one Certificate of each such Class evidencing an additional amount equal to the
remainder of the initial Certificate Balance of such Class. The Class [R] and
Class [LR] Certificates will be issued in fully registered, certificated form,
in Denominations representing Percentage Interests of not less than __%.
No fee or service charge shall be imposed by the Certificate
Registrar for its services in respect of any registration of transfer or
exchange referred to in Section 5.02 of the Pooling and Servicing Agreement
other than for transfers to Institutional Accredited Investors as provided in
Section 5.02(h) thereof. In connection with any transfer to an Institutional
Accredited Investor, the Transferor shall reimburse the Trust for any costs
(including the cost of the Certificate Registrar's counsel's review of the
documents and any legal opinions, submitted by the transferor or transferee to
the Certificate Registrar as provided in Section 5.02 of the Pooling and
Servicing Agreement) incurred by the Certificate Registrar in connection with
such transfer. The Certificate Registrar may require payment by each transferor
of a sum sufficient to cover any tax, expense or other governmental charge
payable in connection with any such transfer or exchange.
The Depositor, the Trustee, the Fiscal Agent, the Servicer, the
Special Servicer, the Paying Agent and the Certificate Registrar and any of
their agents may treat the Person in whose name this Certificate is registered
as the owner hereof for all purposes, and neither the Depositor, the Trustee,
the Servicer, the Special Servicer, the Fiscal Agent, the Certificate Registrar
nor any such agents shall be affected by any notice to the contrary.
The Pooling and Servicing Agreement may be amended from time to time
by the Depositor, the Servicer, the Special Servicer, the Fiscal Agent and the
Trustee, without the consent of any of the Certificateholders, to cure any
ambiguity, to correct or supplement any provisions herein or therein that may be
inconsistent with any other provisions herein or therein or to correct any
error; to maintain the rating or ratings assigned to each Class of Certificates
by each Rating Agency; to modify, eliminate or add to any provisions to such
extent as is necessary to maintain the qualification of either the Upper-Tier
REMIC or the Lower-Tier REMIC as a REMIC to avoid or minimize the imposition of
any tax, provided, however, an Opinion of Counsel is obtained to the effect that
such action shall not adversely affect in any material respect the interest of
any Certificateholder and such action is necessary or desirable to avoid such
tax and such action will not result in the withdrawal, downgrade or
qualification of the then-current rating by any Rating Agency, as evidenced by a
letter from such Rating Agency to such effect; to change the timing and/or
nature of deposits into the Certificate Account or Distribution Account or REO
Account or to change the name in which the Certificate Account is maintained,
provided, however, that the P&I Advance Date shall not be later than the related
Distribution Date, an Opinion of Counsel is obtained to the effect that such
action shall not adversely affect in any material respect the interest of any
A-6-5
<PAGE>
Certificateholder and that such action will not result in the withdrawal,
downgrade or qualification of the then-current rating by any Rating Agency, as
evidenced by a letter from such Rating Agency to such effect; to modify,
eliminate or add to the provisions of Section 5.02(d) of the Pooling and
Servicing Agreement or any other provision thereof restricting transfer of the
Residual Certificates by virtue of their being the REMIC "residual interests,"
provided that such change shall not result in the withdrawal, downgrade or
qualification of the then-current rating assigned to any Class of Certificates,
as evidenced by a letter from each Rating Agency to such effect, and such change
shall not, as evidenced by an Opinion of Counsel, cause either the Upper-Tier
REMIC or the Lower-Tier REMIC or any of the Certificateholders (other than the
Transferor) to be subject to a federal tax caused by a Transfer to a Person that
is a Disqualified Organization or a Non-U.S. Person; and to make any other
provisions with respect to matters or questions arising under the Pooling and
Servicing Agreement which shall not be materially inconsistent with the
provisions of the Pooling and Servicing Agreement, provided, however, that such
action shall not, as evidenced by an Opinion of Counsel, adversely affect in any
material respect the interest of any Certificateholder not consenting thereto.
The Pooling and Servicing Agreement may also be amended from time to
time by the Depositor, the Servicer, the Special Servicer, the Fiscal Agent and
the Trustee with the consent of the Holders of Certificates representing not
less than ___% of the Percentage Interests of each Class of Certificates
affected by the amendment for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of the Pooling and
Servicing Agreement or of modifying in any manner the rights of the
Certificateholders; provided, however, that no such amendment shall:
(i) reduce in any manner the amount of, or delay the timing of,
payments which are required to be distributed on any Certificate without
the consent of such Certificateholder; or
(ii) reduce the aforesaid percentage of Certificates of any Class
the Holders of which are required to consent to any such amendment,
without the consent of the Holders of all Certificates of such Class then
outstanding; or
(iii) adversely affect the Voting Rights of any Class of
Certificates without the consent of the Holders of such Class then
outstanding; or
(iv) amend Section 11.01.
No amendment shall be made to the Pooling and Servicing Agreement
unless the Trustee shall have received an Opinion of Counsel that such amendment
will not cause either the Upper-Tier REMIC or the Lower-Tier REMIC to fail to
qualify as a REMIC or result in the imposition of a tax on the Upper-Tier REMIC
or the Lower-Tier REMIC.
Any of the Servicer, Special Servicer, the Holders of the
Controlling Class or the Holders of the Class [LR] Certificates (in that order)
will have the option, upon 60 days' prior notice given to the Trustee, Paying
Agent and each of the other parties to the Pooling and Servicing Agreement,
which notice the Paying Agent is required to promptly forward to
Certificateholders and Rating Agencies in the manner set forth in the Pooling
and Servicing Agreement, to purchase all, but not less than all, of the Mortgage
Loans and all property acquired in respect of any Mortgage Loan remaining in the
Trust Fund, and thereby effect termination of the Trust Fund and early
retirement of the then outstanding Certificates, on any Distribution Date on
which the aggregate Stated Principal Balances of the Mortgage Loans and any REO
Loans remaining in the Trust Fund is reduced to less than _% of the aggregate
Cut-off Date Principal Balance of all the Mortgage Loans.
The obligations created by the Pooling and Servicing Agreement and
the Trust Fund created thereby (other than the obligation of the Paying Agent to
make payments to Certificateholders as provided for in the Pooling and Servicing
Agreement), shall terminate upon reduction of the Certificate Balances of all
the Certificates to zero (including, without limitation, any such final payment
resulting from a termination of the Trust Fund due to a sale of its property)
pursuant to the terms of the Pooling and Servicing Agreement. In no event,
however, will the Trust created by the Pooling and Servicing Agreement continue
beyond the expiration of 21 years from the death of the last survivor of the
A-6-6
<PAGE>
descendants of Joseph P. Kennedy, the late Ambassador of the United States to
the Court of St. James, living on the date hereof.
Unless the certificate of authentication hereon has been executed by
the Authenticating Agent, by manual signature, this Certificate shall not be
entitled to any benefit under the Pooling and Servicing Agreement or be valid
for any purpose. The Certificate Registrar has executed this Certificate on
behalf of the Trust Fund as Certificate Registrar under the Pooling and
Servicing Agreement and makes no representation or warranty as to any of the
statements contained herein or the validity or sufficiency of the Certificates
or the Mortgage Loans.
THIS CERTIFICATE AND THE POOLING AND SERVICING AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES APPLIED IN NEW YORK.
IN WITNESS WHEREOF, the Certificate Registrar has caused this
Certificate to be duly executed under this official seal.
THE CHASE MANHATTAN BANK, not in its
individual capacity but solely as
Certificate Registrar under the
Pooling and Servicing Agreement.
By:___________________________
AUTHORIZED OFFICER
Dated:_________________, 1997
CERTIFICATE OF AUTHENTICATION
THIS IS ONE OF THE CLASS [E] CERTIFICATES REFERRED TO IN THE
WITHIN-MENTIONED POOLING AND SERVICING AGREEMENT.
THE CHASE MANHATTAN BANK,
Authenticating Agent
By:___________________________
AUTHORIZED SIGNATORY
A-6-7
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this
Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenant in common UNIF GIFT MIN ACT __________ Custodian
(Cust)
TEN ENT - as tenants by the entireties Under Uniform Gifts to Minors
JT TEN - as joint tenants with
rights of survivorship and Act __________________________
not as tenants in common (State)
Additional abbreviations may also be used though not in the above list.
FORM OF TRANSFER
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto__________________________
- --------------------------------------------------------------------------------
(Please insert Social Security or other identifying number of Assignee)
- --------------------------------------------------------------------------------
(Please print or typewrite name and address of assignee)
the within Certificate and does hereby or irrevocably constitute and appoint to
transfer the said Certificate in the Certificate register of the within-named
Trust, with full power of substitution in the premises.
- ----------------------- ----------------------------------------
Dated: NOTICE: The signature to this
assignment must correspond with the
name as written upon the face of this
Certificate in every particular
without alteration or enlargement or
any change whatever.
- ----------------------
SIGNATURE GUARANTEED
The signature must be guaranteed by a commercial bank or trust company or by a
member firm of the New York Stock Exchange or another national securities
exchange. Notarized or witnessed signatures are not acceptable.
A-6-8
<PAGE>
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________ for the
account of __________________________________ account number _______________
or, if mailed by check, to _______________________________________.
Statements should be mailed to
_______________________________________________________________. This
information is provided by assignee named above, or
______________________________ , as its agent.
A-6-9
<PAGE>
EXHIBIT A-7
CHASE COMMERCIAL MORTGAGE SECURITIES CORP.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1997-_, CLASS [F]
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
CERTIFICATE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION UNDER THE SECURITIES ACT.
THE HOLDER OF THIS CERTIFICATE BY ITS ACCEPTANCE HEREOF AGREES NOT TO OFFER,
SELL OR OTHERWISE TRANSFER SUCH CERTIFICATE EXCEPT IN ACCORDANCE WITH ALL
APPLICABLE STATE SECURITIES LAWS AND (A) PURSUANT TO A REGISTRATION STATEMENT
WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (B) FOR SO LONG AS
THIS CERTIFICATE IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A"), TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS
A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (C) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" WITHIN THE MEANING OF RULE 501 (A)(1), (2), (3) OR (7) OF REGULATION D
UNDER THE SECURITIES ACT IN A TRANSACTION EXEMPT FROM THE REGISTRATION
REQUIREMENTS UNDER THE SECURITIES ACT, OR (D) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT IN
EACH OF THE FOREGOING CASES TO THE COMPLETION AND DELIVERY BY THE TRANSFEROR TO
THE TRUSTEE OF A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE LAST PAGE
OF THIS CERTIFICATE.
THIS CLASS [F] CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO CERTAIN OTHER
CLASSES OF CERTIFICATES OF THIS SERIES TO THE EXTENT DESCRIBED IN THE POOLING
AND SERVICING AGREEMENT. THE PORTION OF THE CERTIFICATE BALANCE OF THE
CERTIFICATES EVIDENCED BY THIS CERTIFICATE WILL BE DECREASED BY THE PORTION OF
PRINCIPAL DISTRIBUTIONS ON THE CERTIFICATES AND THE PORTION OF COLLATERAL
SUPPORT DEFICIT ALLOCABLE TO THIS CERTIFICATE. ACCORDINGLY, THE CERTIFICATE
BALANCE OF THIS CERTIFICATE MAY BE LESS THAN THAT SET FORTH BELOW. ANYONE
ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CURRENT CERTIFICATE BALANCE BY
INQUIRY OF THE PAYING AGENT. THIS CERTIFICATE CONSTITUTES A REMIC REGULAR
INTEREST UNDER THE INTERNAL REVENUE CODE OF 1986, AS AMENDED.
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE CERTIFICATE
REGISTRAR 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
A-7-1
<PAGE>
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]1
THIS CERTIFICATE MAY NOT BE PURCHASED OR TRANSFERRED UNLESS THE CERTIFICATE
REGISTRAR SHALL HAVE RECEIVED EITHER (A) AN INVESTMENT REPRESENTATION LETTER
FROM THE PROPOSED PURCHASER OR TRANSFEREE OF SUCH CERTIFICATE, IN FORM AND
SUBSTANCE SATISFACTORY TO THE CERTIFICATE REGISTRAR AND THE DEPOSITOR, TO THE
EFFECT THAT SUCH PROPOSED PURCHASER OR TRANSFEREE IS NOT (i) AN EMPLOYEE BENEFIT
PLAN SUBJECT TO THE FIDUCIARY RESPONSIBILITY PROVISIONS OF THE EMPLOYEE
RETIREMENT SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), OR A GOVERNMENTAL PLAN
(AS DEFINED IN SECTION 3(32) OF ERISA) SUBJECT TO ANY FEDERAL, STATE OR LOCAL
LAW ("SIMILAR LAW") WHICH IS, TO A MATERIAL EXTENT, SIMILAR TO THE FOREGOING
PROVISIONS OF ERISA OR THE CODE (EACH A "PLAN") OR (ii) A PERSON ACTING ON
BEHALF OF OR USING THE ASSETS OF ANY SUCH PLAN (INCLUDING AN ENTITY WHOSE
UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF INVESTMENT IN THE ENTITY BY
SUCH PLAN AND THE APPLICATION OF DEPARTMENT OF LABOR REGULATION ss. 2510.3-101),
OTHER THAN AN INSURANCE COMPANY USING THE ASSETS OF ITS GENERAL ACCOUNT UNDER
CIRCUMSTANCES WHEREBY THE PURCHASE AND HOLDING OF SUBORDINATE CERTIFICATES BY
SUCH INSURANCE COMPANY WOULD BE EXEMPT FROM THE PROHIBITED TRANSACTION
PROVISIONS OF ERISA AND THE CODE UNDER PROHIBITED TRANSACTION CLASS EXEMPTION
95-60 OR (B) IF SUCH CERTIFICATE IS PRESENTED FOR REGISTRATION IN THE NAME OF A
PERSON DESCRIBED IN CLAUSES (i) OR (ii) ABOVE, AN OPINION OF COUNSEL IN FORM AND
SUBSTANCE SATISFACTORY TO THE CERTIFICATE REGISTRAR AND THE DEPOSITOR TO THE
EFFECT THAT SUCH ACQUISITION AND HOLDING OF SUCH CERTIFICATE BY SUCH PROPOSED
PURCHASER OR TRANSFEREE WILL NOT RESULT IN THE ASSETS OF THE TRUST FUND BEING
DEEMED TO BE "PLAN ASSETS" AND SUBJECT TO THE FIDUCIARY RESPONSIBILITY
PROVISIONS OF ERISA, THE PROHIBITED TRANSACTION PROVISIONS OF THE CODE OR THE
PROVISIONS OF ANY SIMILAR LAW, WILL NOT CONSTITUTE OR RESULT IN A "PROHIBITED
TRANSACTION" WITHIN THE MEANING OF ERISA, SECTION 4975 OF THE CODE OR ANY
SIMILAR LAW, AND WILL NOT SUBJECT THE TRUSTEE, THE CERTIFICATE REGISTRAR, THE
SERVICER, THE SPECIAL SERVICER, THE FISCAL AGENT, THE EXTENSION ADVISER, THE
PLACEMENT AGENTS OR THE DEPOSITOR TO ANY OBLIGATION OR LIABILITY (INCLUDING
OBLIGATIONS OR LIABILITIES UNDER ERISA, SECTION 4975 OF THE CODE OR ANY SUCH
SIMILAR LAW) IN ADDITION TO THOSE SET FORTH IN THE POOLING AND SERVICING
AGREEMENT. THE TRANSFEREE OF A BENEFICIAL INTEREST IN A CERTIFICATE THAT IS A
BOOK-ENTRY CERTIFICATE SHALL BE DEEMED TO REPRESENT THAT IT IS NOT A PERSON
DESCRIBED IN CLAUSES (i) OR (ii) ABOVE.
[THE INITIAL INVESTOR IN THIS CERTIFICATE, AND EACH SUBSEQUENT PURCHASER OF THIS
CERTIFICATE, BY PURCHASING THIS CERTIFICATE OR AN INTEREST HEREIN, IS DEEMED TO
HAVE AGREED TO COMPLY WITH CERTAIN TRANSFER REQUIREMENTS SET FORTH IN THE
POOLING AND SERVICING AGREEMENT. A TRANSFEREE IS ALSO REQUIRED TO DELIVER AN
INVESTMENT REPRESENTATION LETTER SUBSTANTIALLY IN THE FORM OF EXHIBIT C TO THE
POOLING AND SERVICING AGREEMENT IF SUCH TRANSFEREE IS A QUALIFIED INSTITUTIONAL
BUYER OR AN INSTITUTIONAL ACCREDITED INVESTOR, AND MAY ALSO BE REQUIRED TO
- ----------
1 If this Certificate represents a Book-Entry Certificate registered in the
name of Cede & Co., it shall have this legend.
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<PAGE>
DELIVER AN OPINION OF COUNSEL IF SUCH TRANSFEREE IS NOT A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A.]5
PASS-THROUGH RATE: ___% APPROXIMATE AGGREGATE SCHEDULED PRINCIPAL
BALANCE OF THE MORTGAGE LOANS AFTER
DENOMINATION: Set Forth on Schedule A DEDUCTING PAYMENTS DUE AND PREPAYMENTS
RECEIVED ON OR BEFORE CUT-OFF DATE:
$_________
DATE OF POOLING AND SERVICING
AGREEMENT: AS OF___________, 1997 SERVICER: THE CHASE MANHATTAN BANK
CUT-OFF DATE:_______________, 1997 SPECIAL SERVICER:________________________
CLOSING DATE:_______________, 1997 TRUSTEE:_________________________________
FIRST DISTRIBUTION DATE: FISCAL AGENT:____________________________
___________________, 1997
PAYING AGENT:____________________________
APPROXIMATE AGGREGATE
CERTIFICATE BALANCE CUSIP NO._______________
OF THE CLASS [F] CERTIFICATES
AS OF THE CLOSING DATE: $________ CERTIFICATE NO.: ______
- ----------
5 If this Certificate represents a Book-Entry Certificate registered in the
name of Cede & Co., it shall have this legend.
A-7-3
<PAGE>
CLASS [F] CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund, consisting primarily
of a pool of fixed rate, balloon multifamily and mobile home community mortgage
loans (the "Mortgage Loans"), all payments on or collections in respect of the
Mortgage Loans due after the Cut-off Date, all REO Properties and revenues
received in respect thereof, the mortgagee's rights under the Insurance
Policies, any Assignment of Leases, and any guaranties, escrow accounts or other
collateral as security for the Mortgage Loans, and such amounts as shall from
time to time be held in the Certificate Account, the Distribution Accounts, and
the REO Accounts, formed and sold by
CHASE COMMERCIAL MORTGAGE SECURITIES CORP.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN CHASE
COMMERCIAL MORTGAGE SECURITIES CORP., THE SERVICER, THE SPECIAL SERVICER, THE
TRUSTEE, THE FISCAL AGENT OR ANY OF THEIR AFFILIATES. NEITHER THIS CERTIFICATE
NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR
INSTRUMENTALITY OF THE UNITED STATES.
THIS CERTIFIES THAT __________________
is the registered owner of the interest evidenced by this Certificate in the
Class [F] Certificates issued by the Trust Fund created pursuant to the Pooling
and Servicing Agreement, dated as of______________, 1997 (the "Pooling and
Servicing Agreement"), among Chase Commercial Mortgage Securities Corp.
(hereinafter called the "Depositor", which term includes any successor entity
under the Pooling and Servicing Agreement), the Trustee, the Special Servicer,
the Servicer and the Fiscal Agent. A summary of certain of the pertinent
provisions of the Pooling and Servicing Agreement is set forth hereafter. To the
extent not defined herein, the capitalized terms used herein shall have the
meanings assigned thereto in the Pooling and Servicing Agreement.
This Certificate is one of a duly authorized issue of Certificates
designated as Certificates of the series specified on the face hereof (herein
called the "Certificates") and representing an interest in the Class of
Certificates specified on the face hereof equal to the quotient expressed as a
percentage obtained by dividing the Denomination of this Certificate specified
on the face hereof, by the aggregate initial Certificate Balance of the Class
[F] Certificates. The Certificates are designated as the Chase Commercial
Mortgage Securities Corp., Commercial Mortgage Pass-Through Certificates, Series
1997-2 and are issued in twelve Classes as specifically set forth in the Pooling
and Servicing Agreement. The Certificates will evidence in the aggregate 100% of
the beneficial ownership of the Trust Fund.
This Certificate does not purport to summarize the Pooling and
Servicing Agreement and reference is made to that agreement for information with
respect to the interests, rights, benefits, obligations, proceeds, and duties
evidenced hereby and the rights, duties and obligations of the Trustee. This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Pooling and Servicing Agreement, to which Pooling and
Servicing Agreement, as amended from time to time, the Certificateholder by
virtue of the acceptance hereof assents and by which the Certificateholder is
bound. In the case of any conflict between terms specified in this Certificate
and terms specified in the Pooling and Servicing Agreement, the terms of the
Pooling and Servicing Agreement shall govern.
This Certificate is a "regular interest" in a "real estate mortgage
investment conduit," as those terms are defined, respectively, in Sections
860G(a)(1) and 860D of the Internal Revenue Code of 1986, as amended. Each
Holder of this Certificate, by acceptance hereof, agrees to treat, and take no
action inconsistent with the treatment of, this Certificate in accordance with
the preceding sentence for purposes of federal income taxes, state and local
income and franchise taxes and other taxes imposed on or measured by income.
Pursuant to the terms of the Pooling and Servicing Agreement, the
Paying Agent shall distribute to the Person in whose name this Certificate is
registered as of the related Record Date, an amount equal to such Person's pro
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<PAGE>
rata share (based on the Percentage Interest represented by this Certificate) of
that portion of the aggregate amount of principal and interest then
distributable, if any, allocable to the Class of Certificates of the same Class
as this Certificate for such Distribution Date, all as more fully described in
the Pooling and Servicing Agreement. Holders of this Certificate may be entitled
to Prepayment Premiums and Yield Maintenance Charges as provided in the Pooling
and Servicing Agreement. All sums distributable on this Certificate are payable
in the coin or currency of the United States of America as at the time of
payment is legal tender for the payment of public and private debts.
Interest on this Certificate will accrue (computed as if each year
consisted of 360 days and each month consisted of 30 days) during the Interest
Accrual Period relating to such Distribution Date at the Class [F] Pass-Through
Rate specified above on the Certificate Balance of this Certificate immediately
prior to each Distribution Date. Principal and interest allocated to this
Certificate on any Distribution Date will be in an amount due to this
Certificate's pro rata share of the Available Distribution Amount to be
distributed on the Certificates of this Class as of such Distribution Date, with
a final distribution to be made upon retirement of this Certificate as set forth
in the Pooling and Servicing Agreement.
Collateral Support Deficit and Certificate Deferred Interest on the
Mortgage Loans shall be allocated on the applicable Distribution Date to
Certificateholders in the manner set forth in the Pooling and Servicing
Agreement. All Collateral Support Deficit or Certificate Deferred Interest on
the Mortgage Loans allocated to any Class of Certificates will be allocated pro
rata among the outstanding Certificates of such Class.
The Certificates are limited in right of payment to, among other
things, certain collections and recoveries respecting the Mortgage Loans, all as
more specifically set forth in the Pooling and Servicing Agreement. As provided
in the Pooling and Servicing Agreement, the Certificate Account and the
Distribution Account will be held in the name of the Servicer and Paying Agent,
respectively, on behalf of the holders of Certificates specified in the Pooling
and Servicing Agreement and the Servicer (with respect to the Certificate
Account) or the Paying Agent (with respect to the Distribution Account) will be
authorized to make withdrawals therefrom. Amounts on deposit in such accounts
may be invested in Permitted Investments. Interest or other income earned on
funds in the Certificate Account and Distribution Account will be paid to the
Servicer as set forth in the Pooling and Servicing Agreement. As provided in the
Pooling and Servicing Agreement, withdrawals from the Certificate Account shall
be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of certain expenses
incurred with respect to the servicing of the Mortgage Loans and administration
of the Trust Fund.
All distributions under the Pooling and Servicing Agreement to a
Class of Certificates shall be made on each Distribution Date (other than the
final distribution on any Certificate) to Certificateholders of record on the
related Record Date by check mailed to the address set forth therefor in the
Certificate Register or, provided that such Certificateholder (1) has provided
the Trustee and the Paying Agent with wire instructions in writing as least five
Business Days prior to the related Record Date and (2) is the Holder of
Certificates with an original Certificate Balance or Notional Amount, as
applicable, of at least $________, by wire transfer of immediately available
funds to the account of such Certificateholder at a bank or other entity having
appropriate facilities therefor. The final distribution on this Certificate
shall be made in like manner, but only upon presentment and surrender of this
Certificate at the offices of the Certificate Registrar or such other location
specified in the notice to Certificateholders of such final distribution.
Any funds not distributed on the final Distribution Date because of
the failure of Certificateholders to tender their Certificates shall be set
aside and held uninvested in trust for the benefit of the non-tendering
Certificateholders, whereupon the Trust Fund shall terminate. If any
Certificates as to which notice has been given pursuant to Section 4.01(g) of
the Pooling and Servicing Agreement 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 to receive
the final distribution with respect thereto. If within one year after the second
notice not all of such Certificates shall have been surrendered for
cancellation, the Paying Agent may, directly or through an agent, take
appropriate steps to contact the remaining non-tendering Certificateholders
concerning surrender of their Certificates. The costs and expenses of holding
such funds in trust and of contacting such Certificateholders shall be paid out
A-7-5
<PAGE>
of such funds. No interest shall accrue or be payable to any Certificateholder
on any amount held in trust as a result of such Certificateholder's failure to
surrender its Certificate(s) for final payment thereof in accordance with
Section 4.01(g) of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, the transfer of this Certificate is
registerable in the Certificate Register only upon surrender of this Certificate
for registration of transfer at the office of the Certificate Registrar or at
the office of its transfer agent, duly endorsed by, or accompanied by an
assignment in the form below or other written instrument of transfer in form
satisfactory to the Certificate Registrar duly executed by the Holder hereof or
such Holder's attorney-in-fact duly authorized in writing, and thereupon one or
more new Certificates of the same Class in authorized Denominations will be
issued to the designated transferee or transferees.
Subject to the terms of the Pooling and Servicing Agreement, the
Class [X] Certificates will be issued in book-entry form through the facilities
of DTC in Denominations of not less than $________initial Notional Amount and in
integral multiples of $_______in excess thereof, with one Certificate of such
Class evidencing an additional amount equal to the remainder of the initial
Notional Amount of such Class. Subject to the terms of the Pooling and Servicing
Agreement, the Offered Certificates (other than the Class [X] Certificates) will
be issued in book-entry form through the facilities of DTC in Denominations of
$_______initial Certificate Balance, and in integral multiples of $______in
excess thereof, with one Certificate of each such Class evidencing an additional
amount equal to the remainder of the initial Certificate Balance of such Class.
Subject to the terms of the Pooling and Servicing Agreement, the Non-Registered
Certificates (other than the Residual Certificates) will be issued in book-entry
form through the facilities of DTC in Denominations of $_______initial
Certificate Balance, and in integral multiples of $_______in excess thereof,
with one Certificate of each such Class evidencing an additional amount equal to
the remainder of the initial Certificate Balance of such Class. The Class [R]
and Class [LR] Certificates will be issued in fully registered, certificated
form, in Denominations representing Percentage Interests of not less than __%.
No fee or service charge shall be imposed by the Certificate
Registrar for its services in respect of any registration of transfer or
exchange referred to in Section 5.02 of the Pooling and Servicing Agreement
other than for transfers to Institutional Accredited Investors as provided in
Section 5.02(h) thereof. In connection with any transfer to an Institutional
Accredited Investor, the Transferor shall reimburse the Trust for any costs
(including the cost of the Certificate Registrar's counsel's review of the
documents and any legal opinions, submitted by the transferor or transferee to
the Certificate Registrar as provided in Section 5.02 of the Pooling and
Servicing Agreement) incurred by the Certificate Registrar in connection with
such transfer. The Certificate Registrar may require payment by each transferor
of a sum sufficient to cover any tax, expense or other governmental charge
payable in connection with any such transfer or exchange.
The Depositor, the Trustee, the Fiscal Agent, the Servicer, the
Special Servicer, the Paying Agent and the Certificate Registrar and any of
their agents may treat the Person in whose name this Certificate is registered
as the owner hereof for all purposes, and neither the Depositor, the Trustee,
the Servicer, the Special Servicer, the Fiscal Agent, the Certificate Registrar
nor any such agents shall be affected by any notice to the contrary.
The Pooling and Servicing Agreement may be amended from time to time
by the Depositor, the Servicer, the Special Servicer, the Fiscal Agent and the
Trustee, without the consent of any of the Certificateholders, to cure any
ambiguity, to correct or supplement any provisions herein or therein that may be
inconsistent with any other provisions herein or therein or to correct any
error; to maintain the rating or ratings assigned to each Class of Certificates
by each Rating Agency; to modify, eliminate or add to any provisions to such
extent as is necessary to maintain the qualification of either the Upper-Tier
REMIC or the Lower-Tier REMIC as a REMIC to avoid or minimize the imposition of
any tax, provided, however, an Opinion of Counsel is obtained to the effect that
such action shall not adversely affect in any material respect the interest of
any Certificateholder and such action is necessary or desirable to avoid such
tax and such action will not result in the withdrawal, downgrade or
qualification of the then-current rating by any Rating Agency, as evidenced by a
letter from such Rating Agency to such effect; to change the timing and/or
nature of deposits into the Certificate Account or Distribution Account or REO
Account or to change the name in which the Certificate Account is maintained,
provided, however, that the P&I Advance Date shall not be later than the related
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<PAGE>
Distribution Date, an Opinion of Counsel is obtained to the effect that such
action shall not adversely affect in any material respect the interest of any
Certificateholder and that such action will not result in the withdrawal,
downgrade or qualification of the then-current rating by any Rating Agency, as
evidenced by a letter from such Rating Agency to such effect; to modify,
eliminate or add to the provisions of Section 5.02(d) of the Pooling and
Servicing Agreement or any other provision thereof restricting transfer of the
Residual Certificates by virtue of their being the REMIC "residual interests,"
provided that such change shall not result in the withdrawal, downgrade or
qualification of the then-current rating assigned to any Class of Certificates,
as evidenced by a letter from each Rating Agency to such effect, and such change
shall not, as evidenced by an Opinion of Counsel, cause either the Upper-Tier
REMIC or the Lower-Tier REMIC or any of the Certificateholders (other than the
Transferor) to be subject to a federal tax caused by a Transfer to a Person that
is a Disqualified Organization or a Non-U.S. Person; and to make any other
provisions with respect to matters or questions arising under the Pooling and
Servicing Agreement which shall not be materially inconsistent with the
provisions of the Pooling and Servicing Agreement, provided, however, that such
action shall not, as evidenced by an Opinion of Counsel, adversely affect in any
material respect the interest of any Certificateholder not consenting thereto.
The Pooling and Servicing Agreement may also be amended from time to
time by the Depositor, the Servicer, the Special Servicer, the Fiscal Agent and
the Trustee with the consent of the Holders of Certificates representing not
less than ___% of the Percentage Interests of each Class of Certificates
affected by the amendment for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of the Pooling and
Servicing Agreement or of modifying in any manner the rights of the
Certificateholders; provided, however, that no such amendment shall:
(i) reduce in any manner the amount of, or delay the timing of,
payments which are required to be distributed on any Certificate without
the consent of such Certificateholder; or
(ii) reduce the aforesaid percentage of Certificates of any Class
the Holders of which are required to consent to any such amendment,
without the consent of the Holders of all Certificates of such Class then
outstanding; or
(iii) adversely affect the Voting Rights of any Class of
Certificates without the consent of the Holders of such Class then
outstanding; or
(iv) amend Section 11.01.
No amendment shall be made to the Pooling and Servicing Agreement
unless the Trustee shall have received an Opinion of Counsel that such amendment
will not cause either the Upper-Tier REMIC or the Lower-Tier REMIC to fail to
qualify as a REMIC or result in the imposition of a tax on the Upper-Tier REMIC
or the Lower-Tier REMIC.
Any of the Servicer, Special Servicer, the Holders of the
Controlling Class or the Holders of the Class [LR] Certificates (in that order)
will have the option, upon 60 days' prior notice given to the Trustee, Paying
Agent and each of the other parties to the Pooling and Servicing Agreement,
which notice the Paying Agent is required to promptly forward to
Certificateholders and Rating Agencies in the manner set forth in the Pooling
and Servicing Agreement, to purchase all, but not less than all, of the Mortgage
Loans and all property acquired in respect of any Mortgage Loan remaining in the
Trust Fund, and thereby effect termination of the Trust Fund and early
retirement of the then outstanding Certificates, on any Distribution Date on
which the aggregate Stated Principal Balances of the Mortgage Loans and any REO
Loans remaining in the Trust Fund is reduced to less than _% of the aggregate
Cut-off Date Principal Balance of all the Mortgage Loans.
The obligations created by the Pooling and Servicing Agreement and
the Trust Fund created thereby (other than the obligation of the Paying Agent to
make payments to Certificateholders as provided for in the Pooling and Servicing
Agreement), shall terminate upon reduction of the Certificate Balances of all
the Certificates to zero (including, without limitation, any such final payment
resulting from a termination of the Trust Fund due to a sale of its property)
pursuant to the terms of the Pooling and Servicing Agreement. In no event,
however, will the Trust created by the Pooling and Servicing Agreement continue
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<PAGE>
beyond the expiration of 21 years from the death of the last survivor of the
descendants of Joseph P. Kennedy, the late Ambassador of the United States to
the Court of St. James, living on the date hereof.
Unless the certificate of authentication hereon has been executed by
the Authenticating Agent, by manual signature, this Certificate shall not be
entitled to any benefit under the Pooling and Servicing Agreement or be valid
for any purpose. The Certificate Registrar has executed this Certificate on
behalf of the Trust Fund as Certificate Registrar under the Pooling and
Servicing Agreement and makes no representation or warranty as to any of the
statements contained herein or the validity or sufficiency of the Certificates
or the Mortgage Loans.
THIS CERTIFICATE AND THE POOLING AND SERVICING AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES APPLIED IN NEW YORK.
IN WITNESS WHEREOF, the Certificate Registrar has caused this
Certificate to be duly executed under this official seal.
THE CHASE MANHATTAN BANK, not in its
individual capacity but solely as
Certificate Registrar under the
Pooling and Servicing Agreement.
By:___________________________
AUTHORIZED OFFICER
Dated:____________, 1997
CERTIFICATE OF AUTHENTICATION
THIS IS ONE OF THE CLASS [F] CERTIFICATES REFERRED TO IN THE
WITHIN-MENTIONED POOLING AND SERVICING AGREEMENT.
THE CHASE MANHATTAN BANK,
Authenticating Agent
By:___________________________
AUTHORIZED SIGNATORY
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<PAGE>
SCHEDULE A
Certificate Balance of
Definitive Certificates
exchanged or transferred
for, or issued in exchange
for or upon transfer of, an Remaining Principal
interest in this Book- Amount of Book-Entry Notation
Date Entry Certificate Certificate Made By
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<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this
Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenant in common UNIF GIFT MIN ACT __________ Custodian
(Cust)
TEN ENT - as tenants by the entireties Under Uniform Gifts to Minors
JT TEN - as joint tenants with
rights of survivorship and Act __________________________
not as tenants in common (State)
Additional abbreviations may also be used though not in the above list.
FORM OF TRANSFER
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto__________________________
- --------------------------------------------------------------------------------
(Please insert Social Security or other identifying number of Assignee)
- --------------------------------------------------------------------------------
(Please print or typewrite name and address of assignee)
the within Certificate and does hereby or irrevocably constitute and appoint to
transfer the said Certificate in the Certificate register of the within-named
Trust, with full power of substitution in the premises.
- ----------------------- ----------------------------------------
Dated: NOTICE: The signature to this
assignment must correspond with the
name as written upon the face of this
Certificate in every particular
without alteration or enlargement or
any change whatever.
- ----------------------
SIGNATURE GUARANTEED
The signature must be guaranteed by a commercial bank or trust company or by a
member firm of the New York Stock Exchange or another national securities
exchange. Notarized or witnessed signatures are not acceptable.
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<PAGE>
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________ for the
account of __________________________________ account number _______________
or, if mailed by check, to _______________________________________.
Statements should be mailed to
_______________________________________________________________. This
information is provided by assignee named above, or
______________________________ , as its agent.
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<PAGE>
EXHIBIT A-8
CHASE COMMERCIAL MORTGAGE SECURITIES CORP.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1997-_, CLASS [G]
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
CERTIFICATE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION UNDER THE SECURITIES ACT.
THE HOLDER OF THIS CERTIFICATE BY ITS ACCEPTANCE HEREOF AGREES NOT TO OFFER,
SELL OR OTHERWISE TRANSFER SUCH CERTIFICATE EXCEPT IN ACCORDANCE WITH ALL
APPLICABLE STATE SECURITIES LAWS AND (A) PURSUANT TO A REGISTRATION STATEMENT
WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (B) FOR SO LONG AS
THIS CERTIFICATE IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A"), TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS
A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (C) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" WITHIN THE MEANING OF RULE 501 (A)(1), (2), (3) OR (7) OF REGULATION D
UNDER THE SECURITIES ACT IN A TRANSACTION EXEMPT FROM THE REGISTRATION
REQUIREMENTS UNDER THE SECURITIES ACT, OR (D) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT IN
EACH OF THE FOREGOING CASES TO THE COMPLETION AND DELIVERY BY THE TRANSFEROR TO
THE TRUSTEE OF A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE LAST PAGE
OF THIS CERTIFICATE.
THIS CLASS [G] CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO CERTAIN OTHER
CLASSES OF CERTIFICATES OF THIS SERIES TO THE EXTENT DESCRIBED IN THE POOLING
AND SERVICING AGREEMENT. THE PORTION OF THE CERTIFICATE BALANCE OF THE
CERTIFICATES EVIDENCED BY THIS CERTIFICATE WILL BE DECREASED BY THE PORTION OF
PRINCIPAL DISTRIBUTIONS ON THE CERTIFICATES AND THE PORTION OF COLLATERAL
SUPPORT DEFICIT ALLOCABLE TO THIS CERTIFICATE. ACCORDINGLY, THE CERTIFICATE
BALANCE OF THIS CERTIFICATE MAY BE LESS THAN THAT SET FORTH BELOW. ANYONE
ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CURRENT CERTIFICATE BALANCE BY
INQUIRY OF THE PAYING AGENT. THIS CERTIFICATE CONSTITUTES A REMIC REGULAR
INTEREST UNDER THE INTERNAL REVENUE CODE OF 1986, AS AMENDED.
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE CERTIFICATE
REGISTRAR 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
A-8-1
<PAGE>
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]1
THIS CERTIFICATE MAY NOT BE PURCHASED OR TRANSFERRED UNLESS THE CERTIFICATE
REGISTRAR SHALL HAVE RECEIVED EITHER (A) AN INVESTMENT REPRESENTATION LETTER
FROM THE PROPOSED PURCHASER OR TRANSFEREE OF SUCH CERTIFICATE, IN FORM AND
SUBSTANCE SATISFACTORY TO THE CERTIFICATE REGISTRAR AND THE DEPOSITOR, TO THE
EFFECT THAT SUCH PROPOSED PURCHASER OR TRANSFEREE IS NOT (i) AN EMPLOYEE BENEFIT
PLAN SUBJECT TO THE FIDUCIARY RESPONSIBILITY PROVISIONS OF THE EMPLOYEE
RETIREMENT SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), OR A GOVERNMENTAL PLAN
(AS DEFINED IN SECTION 3(32) OF ERISA) SUBJECT TO ANY FEDERAL, STATE OR LOCAL
LAW ("SIMILAR LAW") WHICH IS, TO A MATERIAL EXTENT, SIMILAR TO THE FOREGOING
PROVISIONS OF ERISA OR THE CODE (EACH A "PLAN") OR (ii) A PERSON ACTING ON
BEHALF OF OR USING THE ASSETS OF ANY SUCH PLAN (INCLUDING AN ENTITY WHOSE
UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF INVESTMENT IN THE ENTITY BY
SUCH PLAN AND THE APPLICATION OF DEPARTMENT OF LABOR REGULATION ss. 2510.3-101),
OTHER THAN AN INSURANCE COMPANY USING THE ASSETS OF ITS GENERAL ACCOUNT UNDER
CIRCUMSTANCES WHEREBY THE PURCHASE AND HOLDING OF SUBORDINATE CERTIFICATES BY
SUCH INSURANCE COMPANY WOULD BE EXEMPT FROM THE PROHIBITED TRANSACTION
PROVISIONS OF ERISA AND THE CODE UNDER PROHIBITED TRANSACTION CLASS EXEMPTION
95-60 OR (B) IF SUCH CERTIFICATE IS PRESENTED FOR REGISTRATION IN THE NAME OF A
PERSON DESCRIBED IN CLAUSES (i) OR (ii) ABOVE, AN OPINION OF COUNSEL IN FORM AND
SUBSTANCE SATISFACTORY TO THE CERTIFICATE REGISTRAR AND THE DEPOSITOR TO THE
EFFECT THAT SUCH ACQUISITION AND HOLDING OF SUCH CERTIFICATE BY SUCH PROPOSED
PURCHASER OR TRANSFEREE WILL NOT RESULT IN THE ASSETS OF THE TRUST FUND BEING
DEEMED TO BE "PLAN ASSETS" AND SUBJECT TO THE FIDUCIARY RESPONSIBILITY
PROVISIONS OF ERISA, THE PROHIBITED TRANSACTION PROVISIONS OF THE CODE OR THE
PROVISIONS OF ANY SIMILAR LAW, WILL NOT CONSTITUTE OR RESULT IN A "PROHIBITED
TRANSACTION" WITHIN THE MEANING OF ERISA, SECTION 4975 OF THE CODE OR ANY
SIMILAR LAW, AND WILL NOT SUBJECT THE TRUSTEE, THE CERTIFICATE REGISTRAR, THE
SERVICER, THE SPECIAL SERVICER, THE FISCAL AGENT, THE EXTENSION ADVISER, THE
PLACEMENT AGENTS OR THE DEPOSITOR TO ANY OBLIGATION OR LIABILITY (INCLUDING
OBLIGATIONS OR LIABILITIES UNDER ERISA, SECTION 4975 OF THE CODE OR ANY SUCH
SIMILAR LAW) IN ADDITION TO THOSE SET FORTH IN THE POOLING AND SERVICING
AGREEMENT. THE TRANSFEREE OF A BENEFICIAL INTEREST IN A CERTIFICATE THAT IS A
BOOK-ENTRY CERTIFICATE SHALL BE DEEMED TO REPRESENT THAT IT IS NOT A PERSON
DESCRIBED IN CLAUSES (i) OR (ii) ABOVE.
[THE INITIAL INVESTOR IN THIS CERTIFICATE, AND EACH SUBSEQUENT PURCHASER OF THIS
CERTIFICATE, BY PURCHASING THIS CERTIFICATE OR AN INTEREST HEREIN, IS DEEMED TO
HAVE AGREED TO COMPLY WITH CERTAIN TRANSFER REQUIREMENTS SET FORTH IN THE
POOLING AND SERVICING AGREEMENT. A TRANSFEREE IS ALSO REQUIRED TO DELIVER AN
INVESTMENT REPRESENTATION LETTER SUBSTANTIALLY IN THE FORM OF EXHIBIT C TO THE
POOLING AND SERVICING AGREEMENT IF SUCH TRANSFEREE IS A QUALIFIED INSTITUTIONAL
BUYER OR AN INSTITUTIONAL ACCREDITED INVESTOR, AND MAY ALSO BE REQUIRED TO
- ----------
1 If this Certificate represents a Book-Entry Certificate registered in the
name of Cede & Co., it shall have this legend.
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<PAGE>
DELIVER AN OPINION OF COUNSEL IF SUCH TRANSFEREE IS NOT A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A.]2
PASS-THROUGH RATE: ___% APPROXIMATE AGGREGATE SCHEDULED PRINCIPAL
BALANCE OF THE MORTGAGE LOANS AFTER
DENOMINATION: Set Forth on Schedule A DEDUCTING PAYMENTS DUE AND PREPAYMENTS
RECEIVED ON OR BEFORE CUT-OFF DATE:
$______________
DATE OF POOLING AND SERVICING
AGREEMENT: AS OF____________, 1997 SERVICER: THE CHASE MANHATTAN BANK
CUT-OFF DATE:________________, 1997 SPECIAL SERVICER:________________________
CLOSING DATE:________________, 1997 TRUSTEE:_________________________________
FIRST DISTRIBUTION DATE: FISCAL AGENT:____________________________
_________________, 1997
PAYING AGENT: THE CHASE MANHATTAN BANK
APPROXIMATE AGGREGATE
CERTIFICATE BALANCE CUSIP NO.______________
OF THE CLASS [G] CERTIFICATES
AS OF THE CLOSING DATE: $_______ CERTIFICATE NO.: ______
- ----------
2 If this certificate represents a Book-Entry Certificate registered in the
name of Cede & Co., it shall have this legend.
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<PAGE>
CLASS [G] CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund, consisting primarily
of a pool of fixed rate, balloon multifamily and mobile home community mortgage
loans (the "Mortgage Loans"), all payments on or collections in respect of the
Mortgage Loans due after the Cut-off Date, all REO Properties and revenues
received in respect thereof, the mortgagee's rights under the Insurance
Policies, any Assignment of Leases, and any guaranties, escrow accounts or other
collateral as security for the Mortgage Loans, and such amounts as shall from
time to time be held in the Certificate Account, the Distribution Accounts, and
the REO Accounts, formed and sold by
CHASE COMMERCIAL MORTGAGE SECURITIES CORP.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN CHASE
COMMERCIAL MORTGAGE SECURITIES CORP., THE SERVICER, THE SPECIAL SERVICER, THE
TRUSTEE, THE FISCAL AGENT OR ANY OF THEIR AFFILIATES. NEITHER THIS CERTIFICATE
NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR
INSTRUMENTALITY OF THE UNITED STATES.
THIS CERTIFIES THAT __________________
is the registered owner of the interest evidenced by this Certificate in the
Class [G] Certificates issued by the Trust Fund created pursuant to the Pooling
and Servicing Agreement, dated as of_____________, 1997 (the "Pooling and
Servicing Agreement"), among Chase Commercial Mortgage Securities Corp.
(hereinafter called the "Depositor", which term includes any successor entity
under the Pooling and Servicing Agreement), the Trustee, the Special Servicer,
the Servicer and the Fiscal Agent. A summary of certain of the pertinent
provisions of the Pooling and Servicing Agreement is set forth hereafter. To the
extent not defined herein, the capitalized terms used herein shall have the
meanings assigned thereto in the Pooling and Servicing Agreement.
This Certificate is one of a duly authorized issue of Certificates
designated as Certificates of the series specified on the face hereof (herein
called the "Certificates") and representing an interest in the Class of
Certificates specified on the face hereof equal to the quotient expressed as a
percentage obtained by dividing the Denomination of this Certificate specified
on the face hereof, by the aggregate initial Certificate Balance of the Class
[G] Certificates. The Certificates are designated as the Chase Commercial
Mortgage Securities Corp., Commercial Mortgage Pass-Through Certificates, Series
1997-2 and are issued in twelve Classes as specifically set forth in the Pooling
and Servicing Agreement. The Certificates will evidence in the aggregate 100% of
the beneficial ownership of the Trust Fund.
This Certificate does not purport to summarize the Pooling and
Servicing Agreement and reference is made to that agreement for information with
respect to the interests, rights, benefits, obligations, proceeds, and duties
evidenced hereby and the rights, duties and obligations of the Trustee. This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Pooling and Servicing Agreement, to which Pooling and
Servicing Agreement, as amended from time to time, the Certificateholder by
virtue of the acceptance hereof assents and by which the Certificateholder is
bound. In the case of any conflict between terms specified in this Certificate
and terms specified in the Pooling and Servicing Agreement, the terms of the
Pooling and Servicing Agreement shall govern.
This Certificate is a "regular interest" in a "real estate mortgage
investment conduit," as those terms are defined, respectively, in Sections
860G(a)(1) and 860D of the Internal Revenue Code of 1986, as amended. Each
Holder of this Certificate, by acceptance hereof, agrees to treat, and take no
action inconsistent with the treatment of, this Certificate in accordance with
the preceding sentence for purposes of federal income taxes, state and local
income and franchise taxes and other taxes imposed on or measured by income.
Pursuant to the terms of the Pooling and Servicing Agreement, the
Paying Agent shall distribute to the Person in whose name this Certificate is
registered as of the related Record Date, an amount equal to such Person's pro
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<PAGE>
rata share (based on the Percentage Interest represented by this Certificate) of
that portion of the aggregate amount of principal and interest then
distributable, if any, allocable to the Class of Certificates of the same Class
as this Certificate for such Distribution Date, all as more fully described in
the Pooling and Servicing Agreement. Holders of this Certificate may be entitled
to Prepayment Premiums and Yield Maintenance Charges as provided in the Pooling
and Servicing Agreement. All sums distributable on this Certificate are payable
in the coin or currency of the United States of America as at the time of
payment is legal tender for the payment of public and private debts.
Interest on this Certificate will accrue (computed as if each year
consisted of 360 days and each month consisted of 30 days) during the Interest
Accrual Period relating to such Distribution Date at the Class [G] Pass-Through
Rate specified above on the Certificate Balance of this Certificate immediately
prior to each Distribution Date. Principal and interest allocated to this
Certificate on any Distribution Date will be in an amount due to this
Certificate's pro rata share of the Available Distribution Amount to be
distributed on the Certificates of this Class as of such Distribution Date, with
a final distribution to be made upon retirement of this Certificate as set forth
in the Pooling and Servicing Agreement.
Collateral Support Deficit and Certificate Deferred Interest on the
Mortgage Loans shall be allocated on the applicable Distribution Date to
Certificateholders in the manner set forth in the Pooling and Servicing
Agreement. All Collateral Support Deficit or Certificate Deferred Interest on
the Mortgage Loans allocated to any Class of Certificates will be allocated pro
rata among the outstanding Certificates of such Class.
The Certificates are limited in right of payment to, among other
things, certain collections and recoveries respecting the Mortgage Loans, all as
more specifically set forth in the Pooling and Servicing Agreement. As provided
in the Pooling and Servicing Agreement, the Certificate Account and the
Distribution Account will be held in the name of the Servicer and Paying Agent,
respectively, on behalf of the holders of Certificates specified in the Pooling
and Servicing Agreement and the Servicer (with respect to the Certificate
Account) or the Paying Agent (with respect to the Distribution Account) will be
authorized to make withdrawals therefrom. Amounts on deposit in such accounts
may be invested in Permitted Investments. Interest or other income earned on
funds in the Certificate Account and Distribution Account will be paid to the
Servicer as set forth in the Pooling and Servicing Agreement. As provided in the
Pooling and Servicing Agreement, withdrawals from the Certificate Account shall
be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of certain expenses
incurred with respect to the servicing of the Mortgage Loans and administration
of the Trust Fund.
All distributions under the Pooling and Servicing Agreement to a
Class of Certificates shall be made on each Distribution Date (other than the
final distribution on any Certificate) to Certificateholders of record on the
related Record Date by check mailed to the address set forth therefor in the
Certificate Register or, provided that such Certificateholder (1) has provided
the Trustee and the Paying Agent with wire instructions in writing as least five
Business Days prior to the related Record Date and (2) is the Holder of
Certificates with an original Certificate Balance or Notional Amount, as
applicable, of at least $_______, by wire transfer of immediately available
funds to the account of such Certificateholder at a bank or other entity having
appropriate facilities therefor. The final distribution on this Certificate
shall be made in like manner, but only upon presentment and surrender of this
Certificate at the offices of the Certificate Registrar or such other location
specified in the notice to Certificateholders of such final distribution.
Any funds not distributed on the final Distribution Date because of
the failure of Certificateholders to tender their Certificates shall be set
aside and held uninvested in trust for the benefit of the non-tendering
Certificateholders, whereupon the Trust Fund shall terminate. If any
Certificates as to which notice has been given pursuant to Section 4.01(g) of
the Pooling and Servicing Agreement 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 to receive
the final distribution with respect thereto. If within one year after the second
notice not all of such Certificates shall have been surrendered for
cancellation, the Paying Agent may, directly or through an agent, take
appropriate steps to contact the remaining non-tendering Certificateholders
concerning surrender of their Certificates. The costs and expenses of holding
such funds in trust and of contacting such Certificateholders shall be paid out
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<PAGE>
of such funds. No interest shall accrue or be payable to any Certificateholder
on any amount held in trust as a result of such Certificateholder's failure to
surrender its Certificate(s) for final payment thereof in accordance with
Section 4.01(g) of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, the transfer of this Certificate is
registerable in the Certificate Register only upon surrender of this Certificate
for registration of transfer at the office of the Certificate Registrar or at
the office of its transfer agent, duly endorsed by, or accompanied by an
assignment in the form below or other written instrument of transfer in form
satisfactory to the Certificate Registrar duly executed by the Holder hereof or
such Holder's attorney-in-fact duly authorized in writing, and thereupon one or
more new Certificates of the same Class in authorized Denominations will be
issued to the designated transferee or transferees.
Subject to the terms of the Pooling and Servicing Agreement, the
Class [X] Certificates will be issued in book-entry form through the facilities
of DTC in Denominations of not less than $_____initial Notional Amount and in
integral multiples of $_____in excess thereof, with one Certificate of such
Class evidencing an additional amount equal to the remainder of the initial
Notional Amount of such Class. Subject to the terms of the Pooling and Servicing
Agreement, the Offered Certificates (other than the Class [X] Certificates) will
be issued in book-entry form through the facilities of DTC in Denominations of
$_____initial Certificate Balance, and in integral multiples of $_____in excess
thereof, with one Certificate of each such Class evidencing an additional amount
equal to the remainder of the initial Certificate Balance of such Class. Subject
to the terms of the Pooling and Servicing Agreement, the Non-Registered
Certificates (other than the Residual Certificates) will be issued in book-entry
form through the facilities of DTC in Denominations of $_______initial
Certificate Balance, and in integral multiples of $_______in excess thereof,
with one Certificate of each such Class evidencing an additional amount equal to
the remainder of the initial Certificate Balance of such Class. The Class [R]
and Class [LR] Certificates will be issued in fully registered, certificated
form, in Denominations representing Percentage Interests of not less than __%.
No fee or service charge shall be imposed by the Certificate
Registrar for its services in respect of any registration of transfer or
exchange referred to in Section 5.02 of the Pooling and Servicing Agreement
other than for transfers to Institutional Accredited Investors as provided in
Section 5.02(h) thereof. In connection with any transfer to an Institutional
Accredited Investor, the Transferor shall reimburse the Trust for any costs
(including the cost of the Certificate Registrar's counsel's review of the
documents and any legal opinions, submitted by the transferor or transferee to
the Certificate Registrar as provided in Section 5.02 of the Pooling and
Servicing Agreement) incurred by the Certificate Registrar in connection with
such transfer. The Certificate Registrar may require payment by each transferor
of a sum sufficient to cover any tax, expense or other governmental charge
payable in connection with any such transfer or exchange.
The Depositor, the Trustee, the Fiscal Agent, the Servicer, the
Special Servicer, the Paying Agent and the Certificate Registrar and any of
their agents may treat the Person in whose name this Certificate is registered
as the owner hereof for all purposes, and neither the Depositor, the Trustee,
the Servicer, the Special Servicer, the Fiscal Agent, the Certificate Registrar
nor any such agents shall be affected by any notice to the contrary.
The Pooling and Servicing Agreement may be amended from time to time
by the Depositor, the Servicer, the Special Servicer, the Fiscal Agent and the
Trustee, without the consent of any of the Certificateholders, to cure any
ambiguity, to correct or supplement any provisions herein or therein that may be
inconsistent with any other provisions herein or therein or to correct any
error; to maintain the rating or ratings assigned to each Class of Certificates
by each Rating Agency; to modify, eliminate or add to any provisions to such
extent as is necessary to maintain the qualification of either the Upper-Tier
REMIC or the Lower-Tier REMIC as a REMIC to avoid or minimize the imposition of
any tax, provided, however, an Opinion of Counsel is obtained to the effect that
such action shall not adversely affect in any material respect the interest of
any Certificateholder and such action is necessary or desirable to avoid such
tax and such action will not result in the withdrawal, downgrade or
qualification of the then-current rating by any Rating Agency, as evidenced by a
letter from such Rating Agency to such effect; to change the timing and/or
nature of deposits into the Certificate Account or Distribution Account or REO
Account or to change the name in which the Certificate Account is maintained,
provided, however, that the P&I Advance Date shall not be later than the related
Distribution Date, an Opinion of Counsel is obtained to the effect that such
action shall not adversely affect in any material respect the interest of any
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<PAGE>
Certificateholder and that such action will not result in the withdrawal,
downgrade or qualification of the then-current rating by any Rating Agency, as
evidenced by a letter from such Rating Agency to such effect; to modify,
eliminate or add to the provisions of Section 5.02(d) of the Pooling and
Servicing Agreement or any other provision thereof restricting transfer of the
Residual Certificates by virtue of their being the REMIC "residual interests,"
provided that such change shall not result in the withdrawal, downgrade or
qualification of the then-current rating assigned to any Class of Certificates,
as evidenced by a letter from each Rating Agency to such effect, and such change
shall not, as evidenced by an Opinion of Counsel, cause either the Upper-Tier
REMIC or the Lower-Tier REMIC or any of the Certificateholders (other than the
Transferor) to be subject to a federal tax caused by a Transfer to a Person that
is a Disqualified Organization or a Non-U.S. Person; and to make any other
provisions with respect to matters or questions arising under the Pooling and
Servicing Agreement which shall not be materially inconsistent with the
provisions of the Pooling and Servicing Agreement, provided, however, that such
action shall not, as evidenced by an Opinion of Counsel, adversely affect in any
material respect the interest of any Certificateholder not consenting thereto.
The Pooling and Servicing Agreement may also be amended from time to
time by the Depositor, the Servicer, the Special Servicer, the Fiscal Agent and
the Trustee with the consent of the Holders of Certificates representing not
less than ___% of the Percentage Interests of each Class of Certificates
affected by the amendment for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of the Pooling and
Servicing Agreement or of modifying in any manner the rights of the
Certificateholders; provided, however, that no such amendment shall:
(i) reduce in any manner the amount of, or delay the timing of,
payments which are required to be distributed on any Certificate without
the consent of such Certificateholder; or
(ii) reduce the aforesaid percentage of Certificates of any Class
the Holders of which are required to consent to any such amendment,
without the consent of the Holders of all Certificates of such Class then
outstanding; or
(iii) adversely affect the Voting Rights of any Class of
Certificates without the consent of the Holders of such Class then
outstanding; or
(iv) amend Section 11.01.
No amendment shall be made to the Pooling and Servicing Agreement
unless the Trustee shall have received an Opinion of Counsel that such amendment
will not cause either the Upper-Tier REMIC or the Lower-Tier REMIC to fail to
qualify as a REMIC or result in the imposition of a tax on the Upper-Tier REMIC
or the Lower-Tier REMIC.
Any of the Servicer, Special Servicer, the Holders of the
Controlling Class or the Holders of the Class [LR] Certificates (in that order)
will have the option, upon 60 days' prior notice given to the Trustee, Paying
Agent and each of the other parties to the Pooling and Servicing Agreement,
which notice the Paying Agent is required to promptly forward to
Certificateholders and Rating Agencies in the manner set forth in the Pooling
and Servicing Agreement, to purchase all, but not less than all, of the Mortgage
Loans and all property acquired in respect of any Mortgage Loan remaining in the
Trust Fund, and thereby effect termination of the Trust Fund and early
retirement of the then outstanding Certificates, on any Distribution Date on
which the aggregate Stated Principal Balances of the Mortgage Loans and any REO
Loans remaining in the Trust Fund is reduced to less than __% of the aggregate
Cut-off Date Principal Balance of all the Mortgage Loans.
The obligations created by the Pooling and Servicing Agreement and
the Trust Fund created thereby (other than the obligation of the Paying Agent to
make payments to Certificateholders as provided for in the Pooling and Servicing
Agreement), shall terminate upon reduction of the Certificate Balances of all
the Certificates to zero (including, without limitation, any such final payment
resulting from a termination of the Trust Fund due to a sale of its property)
pursuant to the terms of the Pooling and Servicing Agreement. In no event,
however, will the Trust created by the Pooling and Servicing Agreement continue
beyond the expiration of 21 years from the death of the last survivor of the
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<PAGE>
descendants of Joseph P. Kennedy, the late Ambassador of the United States to
the Court of St. James, living on the date hereof.
Unless the certificate of authentication hereon has been executed by
the Authenticating Agent, by manual signature, this Certificate shall not be
entitled to any benefit under the Pooling and Servicing Agreement or be valid
for any purpose. The Certificate Registrar has executed this Certificate on
behalf of the Trust Fund as Certificate Registrar under the Pooling and
Servicing Agreement and makes no representation or warranty as to any of the
statements contained herein or the validity or sufficiency of the Certificates
or the Mortgage Loans.
THIS CERTIFICATE AND THE POOLING AND SERVICING AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES APPLIED IN NEW YORK.
IN WITNESS WHEREOF, the Certificate Registrar has caused this
Certificate to be duly executed under this official seal.
THE CHASE MANHATTAN BANK, not in its
individual capacity but solely as
Certificate Registrar under the
Pooling and Servicing Agreement.
By:___________________________
AUTHORIZED OFFICER
Dated:__________________, 1997
CERTIFICATE OF AUTHENTICATION
THIS IS ONE OF THE CLASS [G] CERTIFICATES REFERRED TO IN THE
WITHIN-MENTIONED POOLING AND SERVICING AGREEMENT.
THE CHASE MANHATTAN BANK,
Authenticating Agent
By:___________________________
AUTHORIZED SIGNATORY
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<PAGE>
SCHEDULE A
Certificate Balance of
Definitive Certificates
exchanged or transferred
for, or issued in exchange
for or upon transfer of, an Remaining Principal
interest in this Book- Amount of Book-Entry Notation
Date Entry Certificate Certificate Made By
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<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this
Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenant in common UNIF GIFT MIN ACT __________ Custodian
(Cust)
TEN ENT - as tenants by the entireties Under Uniform Gifts to Minors
JT TEN - as joint tenants with
rights of survivorship and Act __________________________
not as tenants in common (State)
Additional abbreviations may also be used though not in the above list.
FORM OF TRANSFER
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto__________________________
- --------------------------------------------------------------------------------
(Please insert Social Security or other identifying number of Assignee)
- --------------------------------------------------------------------------------
(Please print or typewrite name and address of assignee)
the within Certificate and does hereby or irrevocably constitute and appoint to
transfer the said Certificate in the Certificate register of the within-named
Trust, with full power of substitution in the premises.
- ----------------------- ----------------------------------------
Dated: NOTICE: The signature to this
assignment must correspond with the
name as written upon the face of this
Certificate in every particular
without alteration or enlargement or
any change whatever.
- ----------------------
SIGNATURE GUARANTEED
The signature must be guaranteed by a commercial bank or trust company or by a
member firm of the New York Stock Exchange or another national securities
exchange. Notarized or witnessed signatures are not acceptable.
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<PAGE>
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________ for the
account of __________________________________ account number _______________
or, if mailed by check, to _______________________________________.
Statements should be mailed to
_______________________________________________________________. This
information is provided by assignee named above, or
______________________________ , as its agent.
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<PAGE>
EXHIBIT A-9
CHASE COMMERCIAL MORTGAGE SECURITIES CORP.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1997-_, CLASS [H]
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
CERTIFICATE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION UNDER THE SECURITIES ACT.
THE HOLDER OF THIS CERTIFICATE BY ITS ACCEPTANCE HEREOF AGREES NOT TO OFFER,
SELL OR OTHERWISE TRANSFER SUCH CERTIFICATE EXCEPT IN ACCORDANCE WITH ALL
APPLICABLE STATE SECURITIES LAWS AND (A) PURSUANT TO A REGISTRATION STATEMENT
WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (B) FOR SO LONG AS
THIS CERTIFICATE IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A"), TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS
A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (C) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" WITHIN THE MEANING OF RULE 501 (A)(1), (2), (3) OR (7) OF REGULATION D
UNDER THE SECURITIES ACT IN A TRANSACTION EXEMPT FROM THE REGISTRATION
REQUIREMENTS UNDER THE SECURITIES ACT, OR (D) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT IN
EACH OF THE FOREGOING CASES TO THE COMPLETION AND DELIVERY BY THE TRANSFEROR TO
THE TRUSTEE OF A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE LAST PAGE
OF THIS CERTIFICATE.
THIS CLASS [H] CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO CERTAIN OTHER
CLASSES OF CERTIFICATES OF THIS SERIES TO THE EXTENT DESCRIBED IN THE POOLING
AND SERVICING AGREEMENT. THE PORTION OF THE CERTIFICATE BALANCE OF THE
CERTIFICATES EVIDENCED BY THIS CERTIFICATE WILL BE DECREASED BY THE PORTION OF
PRINCIPAL DISTRIBUTIONS ON THE CERTIFICATES AND THE PORTION OF COLLATERAL
SUPPORT DEFICIT ALLOCABLE TO THIS CERTIFICATE. ACCORDINGLY, THE CERTIFICATE
BALANCE OF THIS CERTIFICATE MAY BE LESS THAN THAT SET FORTH BELOW. ANYONE
ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CURRENT CERTIFICATE BALANCE BY
INQUIRY OF THE PAYING AGENT. THIS CERTIFICATE CONSTITUTES A REMIC REGULAR
INTEREST UNDER THE INTERNAL REVENUE CODE OF 1986, AS AMENDED.
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE CERTIFICATE
REGISTRAR 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
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OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.](1)
THIS CERTIFICATE MAY NOT BE PURCHASED OR TRANSFERRED UNLESS THE CERTIFICATE
REGISTRAR SHALL HAVE RECEIVED EITHER (A) AN INVESTMENT REPRESENTATION LETTER
FROM THE PROPOSED PURCHASER OR TRANSFEREE OF SUCH CERTIFICATE, IN FORM AND
SUBSTANCE SATISFACTORY TO THE CERTIFICATE REGISTRAR AND THE DEPOSITOR, TO THE
EFFECT THAT SUCH PROPOSED PURCHASER OR TRANSFEREE IS NOT (i) AN EMPLOYEE BENEFIT
PLAN SUBJECT TO THE FIDUCIARY RESPONSIBILITY PROVISIONS OF THE EMPLOYEE
RETIREMENT SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR SECTION 4975 OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), OR A GOVERNMENTAL PLAN
(AS DEFINED IN SECTION 3(32) OF ERISA) SUBJECT TO ANY FEDERAL, STATE OR LOCAL
LAW ("SIMILAR LAW") WHICH IS, TO A MATERIAL EXTENT, SIMILAR TO THE FOREGOING
PROVISIONS OF ERISA OR THE CODE (EACH A "PLAN") OR (ii) A PERSON ACTING ON
BEHALF OF OR USING THE ASSETS OF ANY SUCH PLAN (INCLUDING AN ENTITY WHOSE
UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF INVESTMENT IN THE ENTITY BY
SUCH PLAN AND THE APPLICATION OF DEPARTMENT OF LABOR REGULATION ss. 2510.3-101),
OTHER THAN AN INSURANCE COMPANY USING THE ASSETS OF ITS GENERAL ACCOUNT UNDER
CIRCUMSTANCES WHEREBY THE PURCHASE AND HOLDING OF SUBORDINATE CERTIFICATES BY
SUCH INSURANCE COMPANY WOULD BE EXEMPT FROM THE PROHIBITED TRANSACTION
PROVISIONS OF ERISA AND THE CODE UNDER PROHIBITED TRANSACTION CLASS EXEMPTION
95-60 OR (B) IF SUCH CERTIFICATE IS PRESENTED FOR REGISTRATION IN THE NAME OF A
PERSON DESCRIBED IN CLAUSES (i) OR (ii) ABOVE, AN OPINION OF COUNSEL IN FORM AND
SUBSTANCE SATISFACTORY TO THE CERTIFICATE REGISTRAR AND THE DEPOSITOR TO THE
EFFECT THAT SUCH ACQUISITION AND HOLDING OF SUCH CERTIFICATE BY SUCH PROPOSED
PURCHASER OR TRANSFEREE WILL NOT RESULT IN THE ASSETS OF THE TRUST FUND BEING
DEEMED TO BE "PLAN ASSETS" AND SUBJECT TO THE FIDUCIARY RESPONSIBILITY
PROVISIONS OF ERISA, THE PROHIBITED TRANSACTION PROVISIONS OF THE CODE OR THE
PROVISIONS OF ANY SIMILAR LAW, WILL NOT CONSTITUTE OR RESULT IN A "PROHIBITED
TRANSACTION" WITHIN THE MEANING OF ERISA, SECTION 4975 OF THE CODE OR ANY
SIMILAR LAW, AND WILL NOT SUBJECT THE TRUSTEE, THE CERTIFICATE REGISTRAR, THE
SERVICER, THE SPECIAL SERVICER, THE FISCAL AGENT, THE EXTENSION ADVISER, THE
PLACEMENT AGENTS OR THE DEPOSITOR TO ANY OBLIGATION OR LIABILITY (INCLUDING
OBLIGATIONS OR LIABILITIES UNDER ERISA, SECTION 4975 OF THE CODE OR ANY SUCH
SIMILAR LAW) IN ADDITION TO THOSE SET FORTH IN THE POOLING AND SERVICING
AGREEMENT. THE TRANSFEREE OF A BENEFICIAL INTEREST IN A CERTIFICATE THAT IS A
BOOK-ENTRY CERTIFICATE SHALL BE DEEMED TO REPRESENT THAT IT IS NOT A PERSON
DESCRIBED IN CLAUSES (i) OR (ii) ABOVE.
[THE INITIAL INVESTOR IN THIS CERTIFICATE, AND EACH SUBSEQUENT PURCHASER OF THIS
CERTIFICATE, BY PURCHASING THIS CERTIFICATE OR AN INTEREST HEREIN, IS DEEMED TO
HAVE AGREED TO COMPLY WITH CERTAIN TRANSFER REQUIREMENTS SET FORTH IN THE
POOLING AND SERVICING AGREEMENT. A TRANSFEREE IS ALSO REQUIRED TO DELIVER AN
INVESTMENT REPRESENTATION LETTER SUBSTANTIALLY IN THE FORM OF EXHIBIT C TO THE
POOLING AND SERVICING AGREEMENT IF SUCH TRANSFEREE IS A QUALIFIED INSTITUTIONAL
BUYER OR AN INSTITUTIONAL ACCREDITED INVESTOR, AND MAY ALSO BE REQUIRED TO
- ----------
(1) If this Certificate represents a Book-Entry Certificate registered in the
name of Cede & Co., it shall have this legend.
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<PAGE>
DELIVER AN OPINION OF COUNSEL IF SUCH TRANSFEREE IS NOT A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A.](2)
PASS-THROUGH RATE: ____% APPROXIMATE AGGREGATE SCHEDULED PRINCIPAL
BALANCE OF THE MORTGAGE LOANS AFTER
DENOMINATION: Set Forth on Schedule A DEDUCTING PAYMENTS DUE AND PREPAYMENTS
RECEIVED ON OR BEFORE CUT-OFF DATE:
$_________
DATE OF POOLING AND SERVICING
AGREEMENT: AS OF____________, 1997 SERVICER: THE CHASE MANHATTAN BANK
CUT-OFF DATE:_______________, 1997 SPECIAL SERVICER:________________________
CLOSING DATE:_______________, 1997 TRUSTEE:_________________________________
FIRST DISTRIBUTION DATE: FISCAL AGENT:____________________________
_____________, 1997
PAYING AGENT: THE CHASE MANHATTAN BANK
APPROXIMATE AGGREGATE
CERTIFICATE BALANCE CUSIP NO.____________
OF THE CLASS [H] CERTIFICATES
AS OF THE CLOSING DATE: $________ CERTIFICATE NO.: ______
- ----------
(2) If this Certificate represents a Book-Entry Certificate registered in the
name of Cede & Co., it shall have this legend.
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<PAGE>
CLASS [H] CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund, consisting primarily
of a pool of fixed rate, balloon multifamily and mobile home community mortgage
loans (the "Mortgage Loans"), all payments on or collections in respect of the
Mortgage Loans due after the Cut-off Date, all REO Properties and revenues
received in respect thereof, the mortgagee's rights under the Insurance
Policies, any Assignment of Leases, and any guaranties, escrow accounts or other
collateral as security for the Mortgage Loans, and such amounts as shall from
time to time be held in the Certificate Account, the Distribution Accounts, and
the REO Accounts, formed and sold by
CHASE COMMERCIAL MORTGAGE SECURITIES CORP.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN CHASE
COMMERCIAL MORTGAGE SECURITIES CORP., THE SERVICER, THE SPECIAL SERVICER, THE
TRUSTEE, THE FISCAL AGENT OR ANY OF THEIR AFFILIATES. NEITHER THIS CERTIFICATE
NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR
INSTRUMENTALITY OF THE UNITED STATES.
THIS CERTIFIES THAT __________________
is the registered owner of the interest evidenced by this Certificate in the
Class [H] Certificates issued by the Trust Fund created pursuant to the Pooling
and Servicing Agreement, dated as of____________, 1997 (the "Pooling and
Servicing Agreement"), among Chase Commercial Mortgage Securities Corp.
(hereinafter called the "Depositor", which term includes any successor entity
under the Pooling and Servicing Agreement), the Trustee, the Special Servicer,
the Servicer and the Fiscal Agent. A summary of certain of the pertinent
provisions of the Pooling and Servicing Agreement is set forth hereafter. To the
extent not defined herein, the capitalized terms used herein shall have the
meanings assigned thereto in the Pooling and Servicing Agreement.
This Certificate is one of a duly authorized issue of Certificates
designated as Certificates of the series specified on the face hereof (herein
called the "Certificates") and representing an interest in the Class of
Certificates specified on the face hereof equal to the quotient expressed as a
percentage obtained by dividing the Denomination of this Certificate specified
on the face hereof, by the aggregate initial Certificate Balance of the Class
[H] Certificates. The Certificates are designated as the Chase Commercial
Mortgage Securities Corp., Commercial Mortgage Pass-Through Certificates, Series
1997-2 and are issued in twelve Classes as specifically set forth in the Pooling
and Servicing Agreement. The Certificates will evidence in the aggregate 100% of
the beneficial ownership of the Trust Fund.
This Certificate does not purport to summarize the Pooling and
Servicing Agreement and reference is made to that agreement for information with
respect to the interests, rights, benefits, obligations, proceeds, and duties
evidenced hereby and the rights, duties and obligations of the Trustee. This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Pooling and Servicing Agreement, to which Pooling and
Servicing Agreement, as amended from time to time, the Certificateholder by
virtue of the acceptance hereof assents and by which the Certificateholder is
bound. In the case of any conflict between terms specified in this Certificate
and terms specified in the Pooling and Servicing Agreement, the terms of the
Pooling and Servicing Agreement shall govern.
This Certificate is a "regular interest" in a "real estate mortgage
investment conduit," as those terms are defined, respectively, in Sections
860G(a)(1) and 860D of the Internal Revenue Code of 1986, as amended. Each
Holder of this Certificate, by acceptance hereof, agrees to treat, and take no
action inconsistent with the treatment of, this Certificate in accordance with
the preceding sentence for purposes of federal income taxes, state and local
income and franchise taxes and other taxes imposed on or measured by income.
Pursuant to the terms of the Pooling and Servicing Agreement, the
Paying Agent shall distribute to the Person in whose name this Certificate is
registered as of the related Record Date, an amount equal to such Person's pro
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<PAGE>
rata share (based on the Percentage Interest represented by this Certificate) of
that portion of the aggregate amount of principal and interest then
distributable, if any, allocable to the Class of Certificates of the same Class
as this Certificate for such Distribution Date, all as more fully described in
the Pooling and Servicing Agreement. Holders of this Certificate may be entitled
to Prepayment Premiums and Yield Maintenance Charges as provided in the Pooling
and Servicing Agreement. All sums distributable on this Certificate are payable
in the coin or currency of the United States of America as at the time of
payment is legal tender for the payment of public and private debts.
Interest on this Certificate will accrue (computed as if each year
consisted of 360 days and each month consisted of 30 days) during the Interest
Accrual Period relating to such Distribution Date at the Class [H] Pass-Through
Rate specified above on the Certificate Balance of this Certificate immediately
prior to each Distribution Date. Principal and interest allocated to this
Certificate on any Distribution Date will be in an amount due to this
Certificate's pro rata share of the Available Distribution Amount to be
distributed on the Certificates of this Class as of such Distribution Date, with
a final distribution to be made upon retirement of this Certificate as set forth
in the Pooling and Servicing Agreement.
Collateral Support Deficit and Certificate Deferred Interest on the
Mortgage Loans shall be allocated on the applicable Distribution Date to
Certificateholders in the manner set forth in the Pooling and Servicing
Agreement. All Collateral Support Deficit or Certificate Deferred Interest on
the Mortgage Loans allocated to any Class of Certificates will be allocated pro
rata among the outstanding Certificates of such Class.
The Certificates are limited in right of payment to, among other
things, certain collections and recoveries respecting the Mortgage Loans, all as
more specifically set forth in the Pooling and Servicing Agreement. As provided
in the Pooling and Servicing Agreement, the Certificate Account and the
Distribution Account will be held in the name of the Servicer and Paying Agent,
respectively, on behalf of the holders of Certificates specified in the Pooling
and Servicing Agreement and the Servicer (with respect to the Certificate
Account) or the Paying Agent (with respect to the Distribution Account) will be
authorized to make withdrawals therefrom. Amounts on deposit in such accounts
may be invested in Permitted Investments. Interest or other income earned on
funds in the Certificate Account and Distribution Account will be paid to the
Servicer as set forth in the Pooling and Servicing Agreement. As provided in the
Pooling and Servicing Agreement, withdrawals from the Certificate Account shall
be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of certain expenses
incurred with respect to the servicing of the Mortgage Loans and administration
of the Trust Fund.
All distributions under the Pooling and Servicing Agreement to a
Class of Certificates shall be made on each Distribution Date (other than the
final distribution on any Certificate) to Certificateholders of record on the
related Record Date by check mailed to the address set forth therefor in the
Certificate Register or, provided that such Certificateholder (1) has provided
the Trustee and the Paying Agent with wire instructions in writing as least five
Business Days prior to the related Record Date and (2) is the Holder of
Certificates with an original Certificate Balance or Notional Amount, as
applicable, of at least $_________, by wire transfer of immediately available
funds to the account of such Certificateholder at a bank or other entity having
appropriate facilities therefor. The final distribution on this Certificate
shall be made in like manner, but only upon presentment and surrender of this
Certificate at the offices of the Certificate Registrar or such other location
specified in the notice to Certificateholders of such final distribution.
Any funds not distributed on the final Distribution Date because of
the failure of Certificateholders to tender their Certificates shall be set
aside and held uninvested in trust for the benefit of the non-tendering
Certificateholders, whereupon the Trust Fund shall terminate. If any
Certificates as to which notice has been given pursuant to Section 4.01(g) of
the Pooling and Servicing Agreement 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 to receive
the final distribution with respect thereto. If within one year after the second
notice not all of such Certificates shall have been surrendered for
cancellation, the Paying Agent may, directly or through an agent, take
appropriate steps to contact the remaining non-tendering Certificateholders
concerning surrender of their Certificates. The costs and expenses of holding
such funds in trust and of contacting such Certificateholders shall be paid out
A-9-5
<PAGE>
of such funds. No interest shall accrue or be payable to any Certificateholder
on any amount held in trust as a result of such Certificateholder's failure to
surrender its Certificate(s) for final payment thereof in accordance with
Section 4.01(g) of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, the transfer of this Certificate is
registerable in the Certificate Register only upon surrender of this Certificate
for registration of transfer at the office of the Certificate Registrar or at
the office of its transfer agent, duly endorsed by, or accompanied by an
assignment in the form below or other written instrument of transfer in form
satisfactory to the Certificate Registrar duly executed by the Holder hereof or
such Holder's attorney-in-fact duly authorized in writing, and thereupon one or
more new Certificates of the same Class in authorized Denominations will be
issued to the designated transferee or transferees.
Subject to the terms of the Pooling and Servicing Agreement, the
Class [X] Certificates will be issued in book-entry form through the facilities
of DTC in Denominations of not less than $________initial Notional Amount and in
integral multiples of $_______in excess thereof, with one Certificate of such
Class evidencing an additional amount equal to the remainder of the initial
Notional Amount of such Class. Subject to the terms of the Pooling and Servicing
Agreement, the Offered Certificates (other than the Class [X] Certificates) will
be issued in book-entry form through the facilities of DTC in Denominations of
$_______initial Certificate Balance, and in integral multiples of $______in
excess thereof, with one Certificate of each such Class evidencing an additional
amount equal to the remainder of the initial Certificate Balance of such Class.
Subject to the terms of the Pooling and Servicing Agreement, the Non-Registered
Certificates (other than the Residual Certificates) will be issued in book-entry
form through the facilities of DTC in Denominations of $_______initial
Certificate Balance, and in integral multiples of $______in excess thereof, with
one Certificate of each such Class evidencing an additional amount equal to the
remainder of the initial Certificate Balance of such Class. The Class [R] and
Class [LR] Certificates will be issued in fully registered, certificated form,
in Denominations representing Percentage Interests of not less than __%.
No fee or service charge shall be imposed by the Certificate
Registrar for its services in respect of any registration of transfer or
exchange referred to in Section 5.02 of the Pooling and Servicing Agreement
other than for transfers to Institutional Accredited Investors as provided in
Section 5.02(h) thereof. In connection with any transfer to an Institutional
Accredited Investor, the Transferor shall reimburse the Trust for any costs
(including the cost of the Certificate Registrar's counsel's review of the
documents and any legal opinions, submitted by the transferor or transferee to
the Certificate Registrar as provided in Section 5.02 of the Pooling and
Servicing Agreement) incurred by the Certificate Registrar in connection with
such transfer. The Certificate Registrar may require payment by each transferor
of a sum sufficient to cover any tax, expense or other governmental charge
payable in connection with any such transfer or exchange.
The Depositor, the Trustee, the Fiscal Agent, the Servicer, the
Special Servicer, the Paying Agent and the Certificate Registrar and any of
their agents may treat the Person in whose name this Certificate is registered
as the owner hereof for all purposes, and neither the Depositor, the Trustee,
the Servicer, the Special Servicer, the Fiscal Agent, the Certificate Registrar
nor any such agents shall be affected by any notice to the contrary.
The Pooling and Servicing Agreement may be amended from time to time
by the Depositor, the Servicer, the Special Servicer, the Fiscal Agent and the
Trustee, without the consent of any of the Certificateholders, to cure any
ambiguity, to correct or supplement any provisions herein or therein that may be
inconsistent with any other provisions herein or therein or to correct any
error; to maintain the rating or ratings assigned to each Class of Certificates
by each Rating Agency; to modify, eliminate or add to any provisions to such
extent as is necessary to maintain the qualification of either the Upper-Tier
REMIC or the Lower-Tier REMIC as a REMIC to avoid or minimize the imposition of
any tax, provided, however, an Opinion of Counsel is obtained to the effect that
such action shall not adversely affect in any material respect the interest of
any Certificateholder and such action is necessary or desirable to avoid such
tax and such action will not result in the withdrawal, downgrade or
qualification of the then-current rating by any Rating Agency, as evidenced by a
letter from such Rating Agency to such effect; to change the timing and/or
nature of deposits into the Certificate Account or Distribution Account or REO
Account or to change the name in which the Certificate Account is maintained,
provided, however, that the P&I Advance Date shall not be later than the related
Distribution Date, an Opinion of Counsel is obtained to the effect that such
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<PAGE>
action shall not adversely affect in any material respect the interest of any
Certificateholder and that such action will not result in the withdrawal,
downgrade or qualification of the then-current rating by any Rating Agency, as
evidenced by a letter from such Rating Agency to such effect; to modify,
eliminate or add to the provisions of Section 5.02(d) of the Pooling and
Servicing Agreement or any other provision thereof restricting transfer of the
Residual Certificates by virtue of their being the REMIC "residual interests,"
provided that such change shall not result in the withdrawal, downgrade or
qualification of the then-current rating assigned to any Class of Certificates,
as evidenced by a letter from each Rating Agency to such effect, and such change
shall not, as evidenced by an Opinion of Counsel, cause either the Upper-Tier
REMIC or the Lower-Tier REMIC or any of the Certificateholders (other than the
Transferor) to be subject to a federal tax caused by a Transfer to a Person that
is a Disqualified Organization or a Non-U.S. Person; and to make any other
provisions with respect to matters or questions arising under the Pooling and
Servicing Agreement which shall not be materially inconsistent with the
provisions of the Pooling and Servicing Agreement, provided, however, that such
action shall not, as evidenced by an Opinion of Counsel, adversely affect in any
material respect the interest of any Certificateholder not consenting thereto.
The Pooling and Servicing Agreement may also be amended from time to
time by the Depositor, the Servicer, the Special Servicer, the Fiscal Agent and
the Trustee with the consent of the Holders of Certificates representing not
less than ____% of the Percentage Interests of each Class of Certificates
affected by the amendment for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of the Pooling and
Servicing Agreement or of modifying in any manner the rights of the
Certificateholders; provided, however, that no such amendment shall:
(i) reduce in any manner the amount of, or delay the timing of,
payments which are required to be distributed on any Certificate without
the consent of such Certificateholder; or
(ii) reduce the aforesaid percentage of Certificates of any Class
the Holders of which are required to consent to any such amendment,
without the consent of the Holders of all Certificates of such Class then
outstanding; or
(iii) adversely affect the Voting Rights of any Class of
Certificates without the consent of the Holders of such Class then
outstanding; or
(iv) amend Section 11.01.
No amendment shall be made to the Pooling and Servicing Agreement
unless the Trustee shall have received an Opinion of Counsel that such amendment
will not cause either the Upper-Tier REMIC or the Lower-Tier REMIC to fail to
qualify as a REMIC or result in the imposition of a tax on the Upper-Tier REMIC
or the Lower-Tier REMIC.
Any of the Servicer, Special Servicer, the Holders of the
Controlling Class or the Holders of the Class [LR] Certificates (in that order)
will have the option, upon 60 days' prior notice given to the Trustee, Paying
Agent and each of the other parties to the Pooling and Servicing Agreement,
which notice the Paying Agent is required to promptly forward to
Certificateholders and Rating Agencies in the manner set forth in the Pooling
and Servicing Agreement, to purchase all, but not less than all, of the Mortgage
Loans and all property acquired in respect of any Mortgage Loan remaining in the
Trust Fund, and thereby effect termination of the Trust Fund and early
retirement of the then outstanding Certificates, on any Distribution Date on
which the aggregate Stated Principal Balances of the Mortgage Loans and any REO
Loans remaining in the Trust Fund is reduced to less than __% of the aggregate
Cut-off Date Principal Balance of all the Mortgage Loans.
The obligations created by the Pooling and Servicing Agreement and
the Trust Fund created thereby (other than the obligation of the Paying Agent to
make payments to Certificateholders as provided for in the Pooling and Servicing
Agreement), shall terminate upon reduction of the Certificate Balances of all
the Certificates to zero (including, without limitation, any such final payment
resulting from a termination of the Trust Fund due to a sale of its property)
pursuant to the terms of the Pooling and Servicing Agreement. In no event,
however, will the Trust created by the Pooling and Servicing Agreement continue
beyond the expiration of 21 years from the death of the last survivor of the
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<PAGE>
descendants of Joseph P. Kennedy, the late Ambassador of the United States to
the Court of St. James, living on the date hereof.
Unless the certificate of authentication hereon has been executed by
the Authenticating Agent, by manual signature, this Certificate shall not be
entitled to any benefit under the Pooling and Servicing Agreement or be valid
for any purpose. The Certificate Registrar has executed this Certificate on
behalf of the Trust Fund as Certificate Registrar under the Pooling and
Servicing Agreement and makes no representation or warranty as to any of the
statements contained herein or the validity or sufficiency of the Certificates
or the Mortgage Loans.
THIS CERTIFICATE AND THE POOLING AND SERVICING AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES APPLIED IN NEW YORK.
IN WITNESS WHEREOF, the Certificate Registrar has caused this
Certificate to be duly executed under this official seal.
THE CHASE MANHATTAN BANK, not in its
individual capacity but solely as
Certificate Registrar under the
Pooling and Servicing Agreement.
By: ___________________________
AUTHORIZED OFFICER
Dated:_______________, 1997
CERTIFICATE OF AUTHENTICATION
THIS IS ONE OF THE CLASS [H] CERTIFICATES REFERRED TO IN THE
WITHIN-MENTIONED POOLING AND SERVICING AGREEMENT.
THE CHASE MANHATTAN BANK,
Authenticating Agent
By: ___________________________
AUTHORIZED SIGNATORY
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SCHEDULE A
Certificate Balance of
Definitive Certificates
exchanged or transferred
for, or issued in exchange
for or upon transfer of, an Remaining Principal
interest in this Book- Amount of Book-Entry Notation
Date Entry Certificate Certificate Made By
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<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this
Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenant in common UNIF GIFT MIN ACT __________ Custodian
TEN ENT - as tenants by the entireties (Cust)
JT TEN - as joint tenants with Under Uniform Gifts to Minors
rights of survivorship and Act __________________________
not as tenants in common (State)
Additional abbreviations may also be used though not in the above list.
FORM OF TRANSFER
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto _________________________________________________________________
________________________________________________________________________________
(Please insert Social Security or other identifying number of Assignee)
________________________________________________________________________________
(Please print or typewrite name and address of assignee)
________________________________________________________________________________
the within Certificate and does hereby or irrevocably constitute and appoint to
transfer the said Certificate in the Certificate register of the within-named
Trust, with full power of substitution in the premises.
________________________________________
Dated: __________________ NOTICE: The signature to this
assignment must correspond with the
name as written upon the face of this
Certificate in every particular
without alteration or enlargement or
any change whatever.
_________________________
SIGNATURE GUARANTEED
The signature must be guaranteed by a commercial bank or trust company or by a
member firm of the New York Stock Exchange or another national securities
exchange. Notarized or witnessed signatures are not acceptable.
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<PAGE>
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________ for the account
of __________________________________ account number _______________ or, if
mailed by check, to _______________________________________. Statements should
be mailed to _______________________________________________________________.
This information is provided by assignee named above, or
______________________________ , as its agent.
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<PAGE>
EXHIBIT A-10
CHASE COMMERCIAL MORTGAGE SECURITIES CORP.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1997-_, CLASS [X]
THE NOTIONAL AMOUNT ON WHICH THE INTEREST PAYABLE TO THE HOLDERS OF THE CLASS
[X] CERTIFICATES IS BASED WILL BE REDUCED AS A RESULT OF PRINCIPAL PAYMENTS AND
LOSSES ON THE MORTGAGE LOANS. ACCORDINGLY, THE INTEREST PAYABLE PURSUANT TO THIS
CERTIFICATE MAY BE LESS THAN THAT SET FORTH BELOW. THIS CERTIFICATE CONSTITUTES
A REMIC REGULAR INTEREST UNDER THE INTERNAL REVENUE CODE OF 1986, AS AMENDED.
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE CERTIFICATE
REGISTRAR 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.](1)
[OID LEGEND]
- ----------
(1) If this Certificate represents a Book-Entry Certificate registered in the
name of Cede & Co., it shall have this legend.
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THE PASS-THROUGH RATE ON THE CLASS APPROXIMATE AGGREGATE SCHEDULED
X CERTIFICATES WILL BE EQUAL TO THE PRINCIPAL BALANCE OF THE MORTGAGE
EXCESS, IF ANY, OF (i) THE WEIGHTED LOANS AFTER DEDUCTING PAYMENTS DUE
AVERAGE NET MORTGAGE RATE OF THE AND PREPAYMENTS RECEIVED ON OR
MORTGAGE LOANS OVER (ii) THE BEFORE CUT-OFF DATE: $_________
WEIGHTED AVERAGE OF THE OTHER
CERTIFICATES (OTHER THAN THE SERVICER: THE CHASE MANHATTAN BANK
RESIDUAL CERTIFICATES)(6)
DENOMINATION: $___________ SPECIAL SERVICER:__________________
TRUSTEE:___________________________
DATE OF POOLING AND SERVICING
AGREEMENT: AS OF_____________, 1997 FISCAL AGENT:______________________
CUT-OFF DATE:_________________, 1997 PAYING AGENT: THE CHASE MANHATTAN BANK
CLOSING DATE:_________________, 1997
FIRST DISTRIBUTION DATE: CUSIP NO.__________
_________________, 1997
CERTIFICATE NO.: ________
APPROXIMATE AGGREGATE NOTIONAL AMOUNT
OF THE CLASS [X] CERTIFICATES AS OF
THE CLOSING DATE: $________
- ----------
(6) As more particularly described in the Pooling and Servicing Agreement,
interest on the Class X Certificates will based upon two separate components,
each with their own Pass-Through Rate and Notional Amount.
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CLASS [X] CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund, consisting primarily
of a pool of fixed rate, balloon multifamily and mobile home community mortgage
loans (the "Mortgage Loans"), all payments on or collections in respect of the
Mortgage Loans due after the Cut-off Date, all REO Properties and revenues
received in respect thereof, the mortgagee's rights under the Insurance
Policies, any Assignment of Leases, and any guaranties, escrow accounts or other
collateral as security for the Mortgage Loans, and such amounts as shall from
time to time be held in the Certificate Account, the Distribution Accounts, and
the REO Accounts, formed and sold by
CHASE COMMERCIAL MORTGAGE SECURITIES CORP.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN CHASE
COMMERCIAL MORTGAGE SECURITIES CORP., THE SERVICER, THE SPECIAL SERVICER, THE
TRUSTEE, THE FISCAL AGENT OR ANY OF THEIR AFFILIATES. NEITHER THIS CERTIFICATE
NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR
INSTRUMENTALITY OF THE UNITED STATES.
THIS CERTIFIES THAT __________________
is the registered owner of the interest evidenced by this Certificate in the
Class [X] Certificates issued by the Trust Fund created pursuant to the Pooling
and Servicing Agreement, dated as of_____________, 1997 (the "Pooling and
Servicing Agreement"), among Chase Commercial Mortgage Securities Corp.
(hereinafter called the "Depositor", which term includes any successor entity
under the Pooling and Servicing Agreement), the Trustee, the Special Servicer,
the Servicer and the Fiscal Agent. A summary of certain of the pertinent
provisions of the Pooling and Servicing Agreement is set forth hereafter. To the
extent not defined herein, the capitalized terms used herein shall have the
meanings assigned thereto in the Pooling and Servicing Agreement.
This Certificate is one of a duly authorized issue of Certificates
designated as Certificates of the series specified on the face hereof (herein
called the "Certificates") and representing an interest in the Class of
Certificates specified on the face hereof equal to the quotient expressed as a
percentage obtained by dividing the Denomination of this Certificate specified
on the face hereof, by the aggregate initial Notional Amount of the Class [X]
Certificates. The Certificates are designated as the Chase Commercial Mortgage
Securities Corp., Commercial Mortgage Pass-Through Certificates, Series 1997-2
and are issued in twelve Classes as specifically set forth in the Pooling and
Servicing Agreement. The Certificates will evidence in the aggregate 100% of the
beneficial ownership of the Trust Fund.
This Certificate does not purport to summarize the Pooling and
Servicing Agreement and reference is made to that agreement for information with
respect to the interests, rights, benefits, obligations, proceeds, and duties
evidenced hereby and the rights, duties and obligations of the Trustee. This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Pooling and Servicing Agreement, to which Pooling and
Servicing Agreement, as amended from time to time, the Certificateholder by
virtue of the acceptance hereof assents and by which the Certificateholder is
bound. In the case of any conflict between terms specified in this Certificate
and terms specified in the Pooling and Servicing Agreement, the terms of the
Pooling and Servicing Agreement shall govern.
This Certificate is a "regular interest" in a "real estate mortgage
investment conduit," as those terms are defined, respectively, in Sections
860G(a)(1) and 860D of the Internal Revenue Code of 1986, as amended. Each
Holder of this Certificate, by acceptance hereof, agrees to treat, and take no
action inconsistent with the treatment of, this Certificate in accordance with
the preceding sentence for purposes of federal income taxes, state and local
income and franchise taxes and other taxes imposed on or measured by income.
Pursuant to the terms of the Pooling and Servicing Agreement, the
Paying Agent shall distribute to the Person in whose name this Certificate is
registered as of the related Record Date, an amount equal to such Person's pro
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rata share (based on the Percentage Interest represented by this Certificate) of
that portion of the aggregate amount of interest then distributable, if any,
allocable to the Class of Certificates of the same Class as this Certificate for
such Distribution Date, all as more fully described in the Pooling and Servicing
Agreement. Holders of this Certificate will not be entitled to distributions in
respect of principal. Holders of this Certificate may be entitled to Prepayment
Premiums and Yield Maintenance Charges as provided in the Pooling and Servicing
Agreement. All sums distributable on this Certificate are payable in the coin or
currency of the United States of America as at the time of payment is legal
tender for the payment of public and private debts.
Interest on this Certificate will accrue (computed as if each year
consisted of 360 days and each month consisted of 30 days) during the Interest
Accrual Period relating to such Distribution Date in an amount equal to the sum
of one-month's interest at the then-applicable Pass-Through Rates on the
notional amounts of the WAC Component and the A-1 Component immediately prior to
such Distribution Date, as specified above. Interest allocated to this
Certificate on any Distribution Date will be in an amount due to this
Certificate's pro rata share of the Available Distribution Amount to be
distributed on the Certificates of this Class as of such Distribution Date, with
a final distribution to be made upon retirement of this Certificate as set forth
in the Pooling and Servicing Agreement.
The Certificates are limited in right of payment to, among other
things, certain collections and recoveries respecting the Mortgage Loans, all as
more specifically set forth in the Pooling and Servicing Agreement. As provided
in the Pooling and Servicing Agreement, the Certificate Account and the
Distribution Account will be held in the name of the Servicer and Paying Agent,
respectively, on behalf of the holders of Certificates specified in the Pooling
and Servicing Agreement and the Servicer (with respect to the Certificate
Account) or the Paying Agent (with respect to the Distribution Account) will be
authorized to make withdrawals therefrom. Amounts on deposit in such accounts
may be invested in Permitted Investments. Interest or other income earned on
funds in the Certificate Account and Distribution Account will be paid to the
Servicer as set forth in the Pooling and Servicing Agreement. As provided in the
Pooling and Servicing Agreement, withdrawals from the Certificate Account shall
be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of certain expenses
incurred with respect to the servicing of the Mortgage Loans and administration
of the Trust Fund.
All distributions under the Pooling and Servicing Agreement to a
Class of Certificates shall be made on each Distribution Date (other than the
final distribution on any Certificate) to Certificateholders of record on the
related Record Date by check mailed to the address set forth therefor in the
Certificate Register or, provided that such Certificateholder (1) has provided
the Trustee and the Paying Agent with wire instructions in writing as least five
Business Days prior to the related Record Date and (2) is the Holder of
Certificates with an original Certificate Balance or Notional Amount, as
applicable, of at least $________, by wire transfer of immediately available
funds to the account of such Certificateholder at a bank or other entity having
appropriate facilities therefor. The final distribution on this Certificate
shall be made in like manner, but only upon presentment and surrender of this
Certificate at the offices of the Certificate Registrar or such other location
specified in the notice to Certificateholders of such final distribution.
Any funds not distributed on the final Distribution Date because of
the failure of Certificateholders to tender their Certificates shall be set
aside and held uninvested in trust for the benefit of the non-tendering
Certificateholders, whereupon the Trust Fund shall terminate. If any
Certificates as to which notice has been given pursuant to Section 4.01(g) of
the Pooling and Servicing Agreement 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 to receive
the final distribution with respect thereto. If within one year after the second
notice not all of such Certificates shall have been surrendered for
cancellation, the Paying Agent may, directly or through an agent, take
appropriate steps to contact the remaining non-tendering Certificateholders
concerning surrender of their Certificates. The costs and expenses of holding
such funds in trust and of contacting such Certificateholders shall be paid out
of such funds. No interest shall accrue or be payable to any Certificateholder
on any amount held in trust as a result of such Certificateholder's failure to
surrender its Certificate(s) for final payment thereof in accordance with
Section 4.01(g) of the Pooling and Servicing Agreement.
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As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, the transfer of this Certificate is
registerable in the Certificate Register only upon surrender of this Certificate
for registration of transfer at the office of the Certificate Registrar or at
the office of its transfer agent, duly endorsed by, or accompanied by an
assignment in the form below or other written instrument of transfer in form
satisfactory to the Certificate Registrar duly executed by the Holder hereof or
such Holder's attorney-in-fact duly authorized in writing, and thereupon one or
more new Certificates of the same Class in authorized Denominations will be
issued to the designated transferee or transferees.
Subject to the terms of the Pooling and Servicing Agreement, the
Class [X] Certificates will be issued in book-entry form through the facilities
of DTC in Denominations of not less than $_______initial Notional Amount and in
integral multiples of $_______in excess thereof, with one Certificate of such
Class evidencing an additional amount equal to the remainder of the initial
Notional Amount of such Class. Subject to the terms of the Pooling and Servicing
Agreement, the Offered Certificates (other than the Class [X] Certificates) will
be issued in book-entry form through the facilities of DTC in Denominations of
$________initial Certificate Balance, and in integral multiples of $______in
excess thereof, with one Certificate of each such Class evidencing an additional
amount equal to the remainder of the initial Certificate Balance of such Class.
Subject to the terms of the Pooling and Servicing Agreement, the Non-Registered
Certificates (other than the Residual Certificates) will be issued in book-entry
form through the facilities of DTC in Denominations of $________initial
Certificate Balance, and in integral multiples of $_______in excess thereof,
with one Certificate of each such Class evidencing an additional amount equal to
the remainder of the initial Certificate Balance of such Class. The Class [R]
and Class [LR] Certificates will be issued in fully registered, certificated
form, in Denominations representing Percentage Interests of not less than __%.
No fee or service charge shall be imposed by the Certificate
Registrar for its services in respect of any registration of transfer or
exchange referred to in Section 5.02 of the Pooling and Servicing Agreement
other than for transfers to Institutional Accredited Investors as provided in
Section 5.02(h) thereof. In connection with any transfer to an Institutional
Accredited Investor, the Transferor shall reimburse the Trust for any costs
(including the cost of the Certificate Registrar's counsel's review of the
documents and any legal opinions, submitted by the transferor or transferee to
the Certificate Registrar as provided in Section 5.02 of the Pooling and
Servicing Agreement) incurred by the Certificate Registrar in connection with
such transfer. The Certificate Registrar may require payment by each transferor
of a sum sufficient to cover any tax, expense or other governmental charge
payable in connection with any such transfer or exchange.
The Depositor, the Trustee, the Fiscal Agent, the Servicer, the
Special Servicer, the Paying Agent, and the Certificate Registrar and any of
their agents may treat the Person in whose name this Certificate is registered
as the owner hereof for all purposes, and neither the Depositor, the Trustee,
the Servicer, the Special Servicer, the Fiscal Agent, the Certificate Registrar
nor any such agents shall be affected by any notice to the contrary.
The Pooling and Servicing Agreement may be amended from time to time
by the Depositor, the Servicer, the Special Servicer, the Fiscal Agent and the
Trustee, without the consent of any of the Certificateholders, to cure any
ambiguity, to correct or supplement any provisions herein or therein that may be
inconsistent with any other provisions herein or therein or to correct any
error; to maintain the rating or ratings assigned to each Class of Certificates
by each Rating Agency; to modify, eliminate or add to any provisions to such
extent as is necessary to maintain the qualification of either the Upper-Tier
REMIC or the Lower-Tier REMIC as a REMIC to avoid or minimize the imposition of
any tax, provided, however, an Opinion of Counsel is obtained to the effect that
such action shall not adversely affect in any material respect the interest of
any Certificateholder and such action is necessary or desirable to avoid such
tax and such action will not result in the withdrawal, downgrade or
qualification of the then-current rating by any Rating Agency, as evidenced by a
letter from such Rating Agency to such effect; to change the timing and/or
nature of deposits into the Certificate Account or Distribution Account or REO
Account or to change the name in which the Certificate Account is maintained,
provided, however, that the P&I Advance Date shall not be later than the related
Distribution Date, an Opinion of Counsel is obtained to the effect that such
action shall not adversely affect in any material respect the interest of any
Certificateholder and that such action will not result in the withdrawal,
downgrade or qualification of the then-current rating by any Rating Agency, as
evidenced by a letter from such Rating Agency to such effect; to modify,
eliminate or add to the provisions of Section 5.02(d) of the Pooling and
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Servicing Agreement or any other provision thereof restricting transfer of the
Residual Certificates by virtue of their being the REMIC "residual interests,"
provided that such change shall not result in the withdrawal, downgrade or
qualification of the then-current rating assigned to any Class of Certificates,
as evidenced by a letter from each Rating Agency to such effect, and such change
shall not, as evidenced by an Opinion of Counsel, cause either the Upper-Tier
REMIC or the Lower-Tier REMIC or any of the Certificateholders (other than the
Transferor) to be subject to a federal tax caused by a Transfer to a Person that
is a Disqualified Organization or a Non-U.S. Person; and to make any other
provisions with respect to matters or questions arising under the Pooling and
Servicing Agreement which shall not be materially inconsistent with the
provisions of the Pooling and Servicing Agreement, provided, however, that such
action shall not, as evidenced by an Opinion of Counsel, adversely affect in any
material respect the interest of any Certificateholder not consenting thereto.
The Pooling and Servicing Agreement may also be amended from time to
time by the Depositor, the Servicer, the Special Servicer, the Fiscal Agent and
the Trustee with the consent of the Holders of Certificates representing not
less than ____% of the Percentage Interests of each Class of Certificates
affected by the amendment for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of the Pooling and
Servicing Agreement or of modifying in any manner the rights of the
Certificateholders; provided, however, that no such amendment shall:
(i) reduce in any manner the amount of, or delay the timing of,
payments which are required to be distributed on any Certificate without
the consent of such Certificateholder; or
(ii) reduce the aforesaid percentage of Certificates of any Class
the Holders of which are required to consent to any such amendment,
without the consent of the Holders of all Certificates of such Class then
outstanding; or
(iii) adversely affect the Voting Rights of any Class of
Certificates without the consent of the Holders of such Class then
outstanding; or
(iv) amend Section 11.01.
No amendment shall be made to the Pooling and Servicing Agreement
unless the Trustee shall have received an Opinion of Counsel that such amendment
will not cause either the Upper-Tier REMIC or the Lower-Tier REMIC to fail to
qualify as a REMIC or result in the imposition of a tax on the Upper-Tier REMIC
or the Lower-Tier REMIC.
Any of the Servicer, Special Servicer, the Holders of the
Controlling Class or the Holders of the Class [LR] Certificates (in that order)
will have the option, upon 60 days' prior notice given to the Trustee, Paying
Agent and each of the other parties to the Pooling and Servicing Agreement,
which notice the Paying Agent is required to promptly forward to
Certificateholders and Rating Agencies in the manner set forth in the Pooling
and Servicing Agreement, to purchase all, but not less than all, of the Mortgage
Loans and all property acquired in respect of any Mortgage Loan remaining in the
Trust Fund, and thereby effect termination of the Trust Fund and early
retirement of the then outstanding Certificates, on any Distribution Date on
which the aggregate Stated Principal Balances of the Mortgage Loans and any REO
Loans remaining in the Trust Fund is reduced to less than __% of the aggregate
Cut-off Date Principal Balance of all the Mortgage Loans.
The obligations created by the Pooling and Servicing Agreement and
the Trust Fund created thereby (other than the obligation of the Paying Agent to
make payments to Certificateholders as provided for in the Pooling and Servicing
Agreement), shall terminate upon reduction of the Certificate Balances of all
the Certificates to zero (including, without limitation, any such final payment
resulting from a termination of the Trust Fund due to a sale of its property)
pursuant to the terms of the Pooling and Servicing Agreement. In no event,
however, will the Trust created by the Pooling and Servicing Agreement continue
beyond the expiration of 21 years from the death of the last survivor of the
descendants of Joseph P. Kennedy, the late Ambassador of the United States to
the Court of St. James, living on the date hereof.
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Unless the certificate of authentication hereon has been executed by
the Authenticating Agent, by manual signature, this Certificate shall not be
entitled to any benefit under the Pooling and Servicing Agreement or be valid
for any purpose. The Certificate Registrar has executed this Certificate on
behalf of the Trust Fund as Certificate Registrar under the Pooling and
Servicing Agreement and makes no representation or warranty as to any of the
statements contained herein or the validity or sufficiency of the Certificates
or the Mortgage Loans.
THIS CERTIFICATE AND THE POOLING AND SERVICING AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES APPLIED IN NEW YORK.
IN WITNESS WHEREOF, the Certificate Registrar has caused this
Certificate to be duly executed under this official seal.
THE CHASE MANHATTAN BANK, not in its
individual capacity but solely as
Certificate Registrar under the
Pooling and Servicing Agreement.
By: ___________________________
AUTHORIZED OFFICER
Dated:________________, 1997
CERTIFICATE OF AUTHENTICATION
THIS IS ONE OF THE CLASS [X] CERTIFICATES REFERRED TO IN THE
WITHIN-MENTIONED POOLING AND SERVICING AGREEMENT.
THE CHASE MANHATTAN BANK,
Authenticating Agent
By: ___________________________
AUTHORIZED SIGNATORY
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ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this
Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenant in common UNIF GIFT MIN ACT __________ Custodian
TEN ENT - as tenants by the entireties (Cust)
JT TEN - as joint tenants with Under Uniform Gifts to Minors
rights of survivorship and
not as tenants in common Act __________________________
(State)
Additional abbreviations may also be used though not in the above list.
FORM OF TRANSFER
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto _________________________________________________________________
________________________________________________________________________________
(Please insert Social Security or other identifying number of Assignee)
________________________________________________________________________________
(Please print or typewrite name and address of assignee)
________________________________________________________________________________
the within Certificate and does hereby or irrevocably constitute and appoint to
transfer the said Certificate in the Certificate register of the within-named
Trust, with full power of substitution in the premises.
________________________________________
Dated: __________________________ NOTICE: The signature to this
assignment must correspond with the
name as written upon the face of this
Certificate in every particular
without alteration or enlargement or
any change whatever.
_________________________________
SIGNATURE GUARANTEED
The signature must be guaranteed by a commercial bank or trust company or by a
member firm of the New York Stock Exchange or another national securities
exchange. Notarized or witnessed signatures are not acceptable.
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DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________ for the account
of __________________________________ account number _______________ or, if
mailed by check, to _______________________________________. Statements should
be mailed to _______________________________________________________________.
This information is provided by assignee named above, or
______________________________ , as its agent.
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EXHIBIT A-11
CHASE COMMERCIAL MORTGAGE SECURITIES CORP.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1997-_, CLASS [R]
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
CERTIFICATE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION UNDER THE SECURITIES ACT.
THE HOLDER OF THIS CERTIFICATE BY ITS ACCEPTANCE HEREOF AGREES NOT TO OFFER,
SELL OR OTHERWISE TRANSFER SUCH CERTIFICATE EXCEPT IN ACCORDANCE WITH ALL
APPLICABLE STATE SECURITIES LAWS AND (A) PURSUANT TO A REGISTRATION STATEMENT
WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (B) FOR SO LONG AS
THIS CERTIFICATE IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A"), TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS
A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (C) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" WITHIN THE MEANING OF RULE 501 (a)(1), (2), (3) OR (7) OF REGULATION D
UNDER THE SECURITIES ACT IN A TRANSACTION EXEMPT FROM THE REGISTRATION
REQUIREMENTS UNDER THE SECURITIES ACT, OR (D) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT IN
EACH OF THE FOREGOING CASES TO THE COMPLETION AND DELIVERY BY THE TRANSFEROR TO
THE TRUSTEE OF A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE LAST PAGE
OF THIS CERTIFICATE.
THE INITIAL INVESTOR IN THIS CERTIFICATE, AND EACH SUBSEQUENT PURCHASER OF THIS
CERTIFICATE, BY PURCHASING THIS CERTIFICATE OR AN INTEREST HEREIN, IS DEEMED TO
HAVE AGREED TO COMPLY WITH CERTAIN TRANSFER REQUIREMENTS SET FORTH IN THE
POOLING AND SERVICING AGREEMENT. A TRANSFEREE IS ALSO REQUIRED TO DELIVER AN
INVESTMENT REPRESENTATION LETTER SUBSTANTIALLY IN THE FORM OF EXHIBIT C TO THE
POOLING AND SERVICING AGREEMENT IF SUCH TRANSFEREE IS A QUALIFIED INSTITUTIONAL
BUYER OR AN INSTITUTIONAL ACCREDITED INVESTOR, AND MAY ALSO BE REQUIRED TO
DELIVER AN OPINION OF COUNSEL IF SUCH TRANSFEREE IS NOT A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A.
THIS CERTIFICATE MAY NOT BE PURCHASED BY OR TRANSFERED TO ANY PERSON WHICH IS AN
EMPLOYEE BENEFIT PLAN SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME
SECURITIY ACT OF 1974. AS AMENDED ("ERISA"), OR SECTION 4975 OF THE CODE OR ANY
GOVERNMENTAL PLAN, AS DEFINED IN SECTION 3(32) OF ERISA SUBJECT TO ANY FEDERAL,
STATE OR , LOCAL LAW WHICH IS, TO A MATERIAL EXTENT, SIMILAR TO THE FOREGOING
PROVISIONS OF ERISA OR THE CODE (EACH A "PLAN"), OR ANY PERSON INVESTING THE
ASSETS OF A PLAN.
THIS CERTIFICATE IS A "RESIDUAL INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G(A)(2) AND
860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED. EACH TRANSFEREE OF THIS
CERTIFICATE, BY ACCEPTANCE HEREOF, IS DEEMED TO HAVE ACCEPTED THIS CERTIFICATE
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SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFERABILITY, AS SET FORTH IN SECTION 5.02
OF THE POOLING AND SERVICING AGREEMENT.
PERCENTAGE INTEREST EVIDENCED BY APPROXIMATE AGGREGATE SCHEDULED PRINCIPAL
THIS CERTIFICATE: ____% BALANCE OF THE MORTGAGE LOANS AFTER
DEDUCTING PAYMENTS DUE AND PREPAYMENTS
DATE OF POOLING AND SERVICING RECEIVED ON OR BEFORE CUT-OFF DATE:
AGREEMENT: AS OF__________, 1997 $____________
CUT-OFF DATE:_____________, 1997 SERVICER: THE CHASE MANHATTAN BANK
CLOSING DATE:_____________, 1997 SPECIAL SERVICER:________________________
FIRST DISTRIBUTION DATE: TRUSTEE:_________________________________
__________________, 1997
FISCAL AGENT:____________________________
CLASS R PERCENTAGE INTEREST: ___%
PAYING AGENT: THE CHASE MANHATTAN BANK
CERTIFICATE NO.: ______
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CLASS [R] CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund, consisting primarily
of a pool of fixed rate, balloon multifamily and mobile home community mortgage
loans (the "Mortgage Loans"), all payments on or collections in respect of the
Mortgage Loans due after the Cut-off Date, all REO Properties and revenues
received in respect thereof, the mortgagee's rights under the Insurance
Policies, any Assignment of Leases, and any guaranties, escrow accounts or other
collateral as security for the Mortgage Loans, and such amounts as shall from
time to time be held in the Certificate Account, the Distribution Accounts, and
the REO Accounts, formed and sold by
CHASE COMMERCIAL MORTGAGE SECURITIES CORP.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN CHASE
COMMERCIAL MORTGAGE SECURITIES CORP., THE SERVICER, THE SPECIAL SERVICER, THE
TRUSTEE, THE FISCAL AGENT OR ANY OF THEIR AFFILIATES. NEITHER THIS CERTIFICATE
NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR
INSTRUMENTALITY OF THE UNITED STATES.
THIS CERTIFIES THAT __________________
is the registered owner of the interest evidenced by this Certificate in the
Class [R] Certificates issued by the Trust Fund created pursuant to the Pooling
and Servicing Agreement, dated as of______________, 1997 (the "Pooling and
Servicing Agreement"), among Chase Commercial Mortgage Securities Corp.
(hereinafter called the "Depositor", which term includes any successor entity
under the Pooling and Servicing Agreement), the Trustee, the Special Servicer,
the Servicer and the Fiscal Agent. A summary of certain of the pertinent
provisions of the Pooling and Servicing Agreement is set forth hereafter. To the
extent not defined herein, the capitalized terms used herein shall have the
meanings assigned thereto in the Pooling and Servicing Agreement.
This Certificate is one of a duly authorized issue of Certificates
designated as Certificates of the series specified on the face hereof (herein
called the "Certificates") and representing an interest in the Class of
Certificates specified on the face hereof equal to the quotient expressed as a
percentage obtained by dividing the Denomination of this Certificate specified
on the face hereof, by the aggregate initial Certificate Balance of the Class
[R] Certificates. The Certificates are designated as the Chase Commercial
Mortgage Securities Corp., Commercial Mortgage Pass-Through Certificates, Series
1997-2 and are issued in twelve Classes as specifically set forth in the Pooling
and Servicing Agreement. The Certificates will evidence in the aggregate 100% of
the beneficial ownership of the Trust Fund.
This Certificate does not purport to summarize the Pooling and
Servicing Agreement and reference is made to that agreement for information with
respect to the interests, rights, benefits, obligations, proceeds, and duties
evidenced hereby and the rights, duties and obligations of the Trustee. This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Pooling and Servicing Agreement, to which Pooling and
Servicing Agreement, as amended from time to time, the Certificateholder by
virtue of the acceptance hereof assents and by which the Certificateholder is
bound. In the case of any conflict between terms specified in this Certificate
and terms specified in the Pooling and Servicing Agreement, the terms of the
Pooling and Servicing Agreement shall govern.
This Class [R] Certificate is a "residual interest" in a "real
estate mortgage investment conduit," as those terms are defined, respectively,
in Sections 860G(a)(1) and 860D of the Internal Revenue Code of 1986, as
amended. Each Holder of this Certificate, by acceptance hereof, agrees to treat,
and take no action inconsistent with the treatment of, this Certificate in
accordance with the preceding sentence for purposes of federal income taxes,
state and local income and franchise taxes and other taxes imposed on or
measured by income. The Holder of the largest Percentage Interest in the Class
[R] Certificates shall be the "tax matters person" for the Upper-Tier REMIC
pursuant to Treasury Regulations Section 1.860F-4(d), and the Servicer is hereby
irrevocably designated and shall serve as attorney-in-fact and agent for any
such Person that is the "tax matters person".
A-11-3
<PAGE>
Pursuant to the terms of the Pooling and Servicing Agreement,
distributions, if any, on this Certificate shall be made by the Paying Agent to
the extent and subject to the limitations set forth in the Pooling and Servicing
Agreement, on the Distribution Date to the Person in whose name this Certificate
is registered as of the related Record Date. All sums distributable on this
Certificate are payable in the coin or currency of the United States of America
as at the time of payment is legal tender for the payment of public and private
debts.
The Certificates are limited in right of payment to, among other
things, certain collections and recoveries respecting the Mortgage Loans, all as
more specifically set forth in the Pooling and Servicing Agreement. As provided
in the Pooling and Servicing Agreement, the Certificate Account and the
Distribution Account will be held in the name of the Servicer and Paying Agent,
respectively, on behalf of the Holders of Certificates specified in the Pooling
and Servicing Agreement and the Servicer (with respect to the Certificate
Account) or the Paying Agent (with respect to the Distribution Account) will be
authorized to make withdrawals therefrom. Amounts on deposit in such accounts
may be invested in Permitted Investments. Interest or other income earned on
funds in the Certificate Account and Distribution Account will be paid to the
Servicer as set forth in the Pooling and Servicing Agreement. As provided in the
Pooling and Servicing Agreement, withdrawals from the Certificate Account shall
be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of certain expenses
incurred with respect to the servicing of the Mortgage Loans and administration
of the Trust Fund.
All distributions under the Pooling and Servicing Agreement to a
Class of Certificates shall be made on each Distribution Date (other than the
final distribution on any Certificate) to Certificateholders of record on the
related Record Date by check mailed to the address set forth therefor in the
Certificate Register or, provided that such Certificateholder (1) has provided
the Trustee and Paying Agent with wire instructions in writing as least five
Business Days prior to the related Record Date and (2) is the Holder of
Certificates with an original Certificate Balance or Notional Amount, as
applicable, of at least $________, by wire transfer of immediately available
funds to the account of such Certificateholder at a bank or other entity having
appropriate facilities therefor. The final distribution on this Certificate
shall be made in like manner, but only upon presentment and surrender of this
Certificate at the offices of the Certificate Registrar or such other location
specified in the notice to Certificateholders of such final distribution.
Any funds not distributed on the final Distribution Date because of
the failure of Certificateholders to tender their Certificates shall be set
aside and held uninvested in trust for the benefit of the non-tendering
Certificateholders, whereupon the Trust Fund shall terminate. If any
Certificates as to which notice has been given pursuant to Section 4.01(g) of
the Pooling and Servicing Agreement 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 to receive
the final distribution with respect thereto. If within one year after the second
notice not all of such Certificates shall have been surrendered for
cancellation, the Paying Agent may, directly or through an agent, take
appropriate steps to contact the remaining non-tendering Certificateholders
concerning surrender of their Certificates. The costs and expenses of holding
such funds in trust and of contacting such Certificateholders shall be paid out
of such funds. No interest shall accrue or be payable to any Certificateholder
on any amount held in trust as a result of such Certificateholder's failure to
surrender its Certificate(s) for final payment thereof in accordance with
Section 4.01(g) of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, the transfer of this Certificate is
registerable in the Certificate Register only upon surrender of this Certificate
for registration of transfer at the office of the Certificate Registrar or at
the office of its transfer agent, duly endorsed by, or accompanied by an
assignment in the form below or other written instrument of transfer in form
satisfactory to the Certificate Registrar duly executed by the Holder hereof or
such Holder's attorney-in-fact duly authorized in writing, and thereupon one or
more new Certificates of the same Class in authorized Denominations will be
issued to the designated transferee or transferees.
Each Person who has or who acquires any Ownership Interest in a
Class [R] 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 Section 5.02(d) of the
Pooling and Servicing Agreement to deliver payments to a Person other than such
A-11-4
<PAGE>
Person. The rights of each Person acquiring any Ownership Interest in a Class
[R] Certificate are expressly subject to the following provisions: (A) No Person
holding or acquiring any Ownership Interest in a Class [R] Certificate shall be
a Disqualified Organization or agent thereof (including a nominee, middleman or
similar person) (an "Agent"), a Plan or a Person acting on behalf of or
investing the assets of a Plan (such Plan or Person, an "ERISA Prohibited
Holder") or a Non-U.S. Person and shall promptly notify the Servicer, the
Trustee, Paying Agent and the Certificate Registrar of any change or impending
change to such status; (B) In connection with any proposed Transfer of any
Ownership Interest in a Class [R] Certificate, the Certificate Registrar shall
require delivery to it, and no Transfer of any Class [R] Certificate shall be
registered until the Certificate Registrar receives, an affidavit substantially
in the form attached to the Pooling and Servicing Agreement as Exhibit D-1 (a
"Transfer Affidavit") from the proposed Transferee, in form and substance
satisfactory to the Certificate Registrar, representing and warranting, among
other things, that such Transferee is not a Disqualified Organization or Agent
thereof, an ERISA Prohibited Holder or a Non-U.S. Person, and that it has
reviewed the provisions of Section 5.02(d) of the Pooling and Servicing
Agreement and agrees to be bound by them; (C) Notwithstanding the delivery of a
Transfer Affidavit by a proposed Transferee under clause (B) above, if the
Certificate Registrar has actual knowledge that the proposed Transferee is a
Disqualified Organization or Agent thereof, an ERISA Prohibited Holder or a
Non-U.S. Person, no Transfer of an Ownership Interest in a Class [R] Certificate
to such proposed Transferee shall be effected; and (D) Each Person holding or
acquiring any Ownership Interest in a Class [R] Certificate shall agree (1) to
require a Transfer Affidavit from any prospective Transferee to whom such Person
attempts to transfer its Ownership Interest in such Class [R] Certificate and
(2) not to transfer its Ownership Interest in such Class [R] Certificate unless
it provides to the Certificate Registrar a letter substantially in the form
attached to the Pooling and Servicing Agreement as Exhibit D-2 (a "Transferor
Letter") certifying that, among other things, it has no actual knowledge that
such prospective Transferee is a Disqualified Organization, an Agent thereof, an
ERISA Prohibited Holder or a Non-U.S. Person.
Subject to the terms of the Pooling and Servicing Agreement, the
Class [X] Certificates will be issued in book-entry form through the facilities
of DTC in Denominations of not less than $___________initial Notional Amount and
in integral multiples of $________in excess thereof, with one Certificate of
such Class evidencing an additional amount equal to the remainder of the initial
Notional Amount of such Class. Subject to the terms of the Pooling and Servicing
Agreement, the Offered Certificates (other than the Class [X] Certificates) will
be issued in book-entry form through the facilities of DTC in Denominations of
$________initial Certificate Balance, and in integral multiples of $______in
excess thereof, with one Certificate of each such Class evidencing an additional
amount equal to the remainder of the initial Certificate Balance of such Class.
Subject to the terms of the Pooling and Servicing Agreement, the Non-Registered
Certificates (other than the Residual Certificates) will be issued in book-entry
form through the facilities of DTC in Denominations of $__________initial
Certificate Balance, and in integral multiples of $_______in excess thereof,
with one Certificate of each such Class evidencing an additional amount equal to
the remainder of the initial Certificate Balance of such Class. The Class [R]
and Class [LR] Certificates will be issued in fully registered, certificated
form, in Denominations representing Percentage Interests of not less than __%.
No fee or service charge shall be imposed by the Certificate
Registrar for its services in respect of any registration of transfer or
exchange referred to in Section 5.02 of the Pooling and Servicing Agreement
other than for transfers to Institutional Accredited Investors as provided in
Section 5.02(h) thereof. In connection with any transfer to an Institutional
Accredited Investor, the Transferor shall reimburse the Trust for any costs
(including the cost of the Certificate Registrar's counsel's review of the
documents and any legal opinions, submitted by the transferor or transferee to
the Certificate Registrar as provided in Section 5.02 of the Pooling and
Servicing Agreement) incurred by the Certificate Registrar in connection with
such transfer. The Certificate Registrar may require payment by each transferor
of a sum sufficient to cover any tax, expense or other governmental charge
payable in connection with any such transfer or exchange.
The Depositor, the Trustee, the Fiscal Agent, the Servicer, the
Special Servicer, the Paying Agent and the Certificate Registrar and any of
their agents may treat the Person in whose name this Certificate is registered
as the owner hereof for all purposes, and neither the Depositor, the Trustee,
the Servicer, the Special Servicer, the Fiscal Agent, the Certificate Registrar
nor any such agents shall be affected by any notice to the contrary.
A-11-5
<PAGE>
The Pooling and Servicing Agreement may be amended from time to time
by the Depositor, the Servicer, the Special Servicer, the Fiscal Agent and the
Trustee, without the consent of any of the Certificateholders, to cure any
ambiguity, to correct or supplement any provisions herein or therein that may be
inconsistent with any other provisions herein or therein or to correct any
error; to maintain the rating or ratings assigned to each Class of Certificates
by each Rating Agency; to modify, eliminate or add to any provisions to such
extent as is necessary to maintain the qualification of either the Upper-Tier
REMIC or the Lower-Tier REMIC as a REMIC to avoid or minimize the imposition of
any tax, provided, however, an Opinion of Counsel is obtained to the effect that
such action shall not adversely affect in any material respect the interest of
any Certificateholder and such action is necessary or desirable to avoid such
tax and such action will not result in the withdrawal, downgrade or
qualification of the then-current rating by any Rating Agency, as evidenced by a
letter from such Rating Agency to such effect; to change the timing and/or
nature of deposits into the Certificate Account or Distribution Account or REO
Account or to change the name in which the Certificate Account is maintained,
provided, however, that the P&I Advance Date shall not be later than the related
Distribution Date, an Opinion of Counsel is obtained to the effect that such
action shall not adversely affect in any material respect the interest of any
Certificateholder and that such action will not result in the withdrawal,
downgrade or qualification of the then-current rating by any Rating Agency, as
evidenced by a letter from such Rating Agency to such effect; to modify,
eliminate or add to the provisions of Section 5.02(d) of the Pooling and
Servicing Agreement or any other provision thereof restricting transfer of the
Residual Certificates by virtue of their being the REMIC "residual interests,"
provided that such change shall not result in the withdrawal, downgrade or
qualification of the then-current rating assigned to any Class of Certificates,
as evidenced by a letter from each Rating Agency to such effect, and such change
shall not, as evidenced by an Opinion of Counsel, cause either the Upper-Tier
REMIC or the Lower-Tier REMIC or any of the Certificateholders (other than the
Transferor) to be subject to a federal tax caused by a Transfer to a Person that
is a Disqualified Organization or a Non-U.S. Person; and to make any other
provisions with respect to matters or questions arising under the Pooling and
Servicing Agreement which shall not be materially inconsistent with the
provisions of the Pooling and Servicing Agreement, provided, however, that such
action shall not, as evidenced by an Opinion of Counsel, adversely affect in any
material respect the interest of any Certificateholder not consenting thereto.
The Pooling and Servicing Agreement may also be amended from time to
time by the Depositor, the Servicer, the Special Servicer, the Fiscal Agent and
the Trustee with the consent of the Holders of Certificates representing not
less than ___% of the Percentage Interests of each Class of Certificates
affected by the amendment for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of the Pooling and
Servicing Agreement or of modifying in any manner the rights of the
Certificateholders; provided, however, that no such amendment shall:
(i) reduce in any manner the amount of, or delay the timing of,
payments which are required to be distributed on any Certificate without
the consent of such Certificateholder; or
(ii) reduce the aforesaid percentage of Certificates of any Class
the Holders of which are required to consent to any such amendment,
without the consent of the Holders of all Certificates of such Class then
outstanding; or
(iii) adversely affect the Voting Rights of any Class of
Certificates without the consent of the Holders of such Class then
outstanding; or
(iv) amend Section 11.01.
No amendment shall be made to the Pooling and Servicing Agreement
unless the Trustee shall have received an Opinion of Counsel that such amendment
will not cause either the Upper-Tier REMIC or the Lower-Tier REMIC to fail to
qualify as a REMIC or result in the imposition of a tax on the Upper-Tier REMIC
or Lower-Tier REMIC.
Any of the Servicer, Special Servicer, the Holders of the
Controlling Class or the Holders of the Class [LR] Certificates (in that order)
will have the option, upon 60 days' prior notice given to the Trustee, Paying
Agent and each of the other parties to the Pooling and Servicing Agreement,
which notice the Paying Agent is required to promptly forward to
A-11-6
<PAGE>
Certificateholders and Rating Agencies in the manner set forth in the Pooling
and Servicing Agreement, to purchase all, but not less than all, of the Mortgage
Loans and all property acquired in respect of any Mortgage Loan remaining in the
Trust Fund, and thereby effect termination of the Trust Fund and early
retirement of the then outstanding Certificates, on any Distribution Date on
which the aggregate Stated Principal Balances of the Mortgage Loans and any REO
Loans remaining in the Trust Fund is reduced to less than __% of the aggregate
Cut-off Date Principal Balance of all the Mortgage Loans.
The obligations created by the Pooling and Servicing Agreement and
the Trust Fund created thereby (other than the obligation of the Paying Agent to
make payments to Certificateholders as provided for in the Pooling and Servicing
Agreement), shall terminate upon reduction of the Certificate Balances of all
the Certificates to zero (including, without limitation, any such final payment
resulting from a termination of the Trust Fund due to a sale of its property)
pursuant to the terms of the Pooling and Servicing Agreement. In no event,
however, will the Trust created by the Pooling and Servicing Agreement continue
beyond the expiration of 21 years from the death of the last survivor of the
descendants of Joseph P. Kennedy, the late Ambassador of the United States to
the Court of St. James, living on the date hereof.
Unless the certificate of authentication hereon has been executed by
the Authenticating Agent, by manual signature, this Certificate shall not be
entitled to any benefit under the Pooling and Servicing Agreement or be valid
for any purpose. The Certificate Registrar has executed this Certificate on
behalf of the Trust Fund as Certificate Registrar under the Pooling and
Servicing Agreement and makes no representation or warranty as to any of the
statements contained herein or the validity or sufficiency of the Certificates
or the Mortgage Loans.
THIS CERTIFICATE AND THE POOLING AND SERVICING AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES APPLIED IN NEW YORK.
IN WITNESS WHEREOF, the Certificate Registrar has caused this
Certificate to be duly executed under this official seal.
THE CHASE MANHATTAN BANK, not in its
individual capacity but solely as
Certificate Registrar under the
Pooling and Servicing Agreement.
By: ___________________________
AUTHORIZED OFFICER
Dated______________, 1997
CERTIFICATE OF AUTHENTICATION
THIS IS ONE OF THE CLASS [R] CERTIFICATES REFERRED TO IN THE
WITHIN-MENTIONED POOLING AND SERVICING AGREEMENT.
A-11-7
<PAGE>
THE CHASE MANHATTAN BANK,
Authenticating Agent
By: ___________________________
AUTHORIZED SIGNATORY
A-11-8
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this
Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenant in common UNIF GIFT MIN ACT __________ Custodian
TEN ENT - as tenants by the entireties (Cust)
JT TEN - as joint tenants with Under Uniform Gifts to Minors
rights of survivorship and
not as tenants in common Act __________________________
(State)
Additional abbreviations may also be used though not in the above list.
FORM OF TRANSFER
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto _________________________________________________________________
________________________________________________________________________________
(Please insert Social Security or other identifying number of Assignee)
________________________________________________________________________________
(Please print or typewrite name and address of assignee)
________________________________________________________________________________
the within Certificate and does hereby or irrevocably constitute and appoint to
transfer the said Certificate in the Certificate register of the within-named
Trust, with full power of substitution in the premises.
________________________________________
Dated: _________________________ NOTICE: The signature to this
assignment must correspond with the
name as written upon the face of this
Certificate in every particular
without alteration or enlargement or
any change whatever.
_______________________________
SIGNATURE GUARANTEED
The signature must be guaranteed by a commercial bank or trust company or by a
member firm of the New York Stock Exchange or another national securities
exchange. Notarized or witnessed signatures are not acceptable.
A-11-9
<PAGE>
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________ for the account
of __________________________________ account number _______________ or, if
mailed by check, to _______________________________________. Statements should
be mailed to _______________________________________________________________.
This information is provided by assignee named above, or
______________________________ , as its agent.
A-11-10
<PAGE>
EXHIBIT A-12
CHASE COMMERCIAL MORTGAGE SECURITIES CORP.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1997-_, CLASS [LR]
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
CERTIFICATE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION UNDER THE SECURITIES ACT.
THE HOLDER OF THIS CERTIFICATE BY ITS ACCEPTANCE HEREOF AGREES NOT TO OFFER,
SELL OR OTHERWISE TRANSFER SUCH CERTIFICATE EXCEPT IN ACCORDANCE WITH ALL
APPLICABLE STATE SECURITIES LAWS AND (A) PURSUANT TO A REGISTRATION STATEMENT
WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (B) FOR SO LONG AS
THIS CERTIFICATE IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A"), TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS
A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (C) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" WITHIN THE MEANING OF RULE 501 (a)(1), (2), (3) OR (7) OF REGULATION D
UNDER THE SECURITIES ACT IN A TRANSACTION EXEMPT FROM THE REGISTRATION
REQUIREMENTS UNDER THE SECURITIES ACT, OR (D) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT IN
EACH OF THE FOREGOING CASES TO THE COMPLETION AND DELIVERY BY THE TRANSFEROR TO
THE TRUSTEE OF A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE LAST PAGE
OF THIS CERTIFICATE.
THE INITIAL INVESTOR IN THIS CERTIFICATE, AND EACH SUBSEQUENT PURCHASER OF THIS
CERTIFICATE, BY PURCHASING THIS CERTIFICATE OR AN INTEREST HEREIN, IS DEEMED TO
HAVE AGREED TO COMPLY WITH CERTAIN TRANSFER REQUIREMENTS SET FORTH IN THE
POOLING AND SERVICING AGREEMENT. A TRANSFEREE IS ALSO REQUIRED TO DELIVER AN
INVESTMENT REPRESENTATION LETTER SUBSTANTIALLY IN THE FORM OF EXHIBIT C TO THE
POOLING AND SERVICING AGREEMENT IF SUCH TRANSFEREE IS A QUALIFIED INSTITUTIONAL
BUYER OR AN INSTITUTIONAL ACCREDITED INVESTOR, AND MAY ALSO BE REQUIRED TO
DELIVER AN OPINION OF COUNSEL IF SUCH TRANSFEREE IS NOT A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A.
THIS CERTIFICATE MAY NOT BE PURCHASED BY OR TRANSFERED TO ANY PERSON WHICH IS AN
EMPLOYEE BENEFIT PLAN SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME
SECURITIY ACT OF 1974. AS AMENDED ("ERISA"), OR SECTION 4975 OF THE CODE OR ANY
GOVERNMENTAL PLAN, AS DEFINED IN SECTION 3(32) OF ERISA SUBJECT TO ANY FEDERAL,
STATE OR LOCAL LAW WHICH IS, TO A MATERIAL EXTENT, SIMILAR TO THE FOREGOING
PROVISIONS OF ERISA OR THE CODE (EACH A "PLAN"), OR ANY PERSON INVESTING THE
ASSETS OF A PLAN.
THIS CERTIFICATE IS A "RESIDUAL INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT
CONDUIT," AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G(A)(2) AND
860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED. EACH TRANSFEREE OF THIS
CERTIFICATE, BY ACCEPTANCE HEREOF, IS DEEMED TO HAVE ACCEPTED THIS CERTIFICATE
A-12-1
<PAGE>
SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFERABILITY, AS SET FORTH IN SECTION 5.02
OF THE POOLING AND SERVICING AGREEMENT.
PERCENTAGE INTEREST EVIDENCED BY APPROXIMATE AGGREGATE SCHEDULED PRINCIPAL
THIS CERTIFICATE: __% BALANCE OF THE MORTGAGE LOANS AFTER
DEDUCTING PAYMENTS DUE AND PREPAYMENTS
DATE OF POOLING AND SERVICING RECEIVED ON OR BEFORE CUT-OFF DATE:
AGREEMENT: AS OF____________, 1997 $____________
CUT-OFF DATE:_______________, 1997 SERVICER: THE CHASE MANHATTAN BANK
CLOSING DATE:_______________, 1997 SPECIAL SERVICER:________________________
FIRST DISTRIBUTION DATE: TRUSTEE:_________________________________
________________, 1997
FISCAL AGENT:____________________________
CLASS LR PERCENTAGE INTEREST: ___%
PAYING AGENT: THE CHASE MANHATTAN BANK
CERTIFICATE NO.: ______
A-12-2
<PAGE>
CLASS [LR] CERTIFICATE
evidencing a beneficial ownership interest in a Trust Fund, consisting primarily
of a pool of fixed rate, balloon multifamily and mobile home community mortgage
loans (the "Mortgage Loans"), all payments on or collections in respect of the
Mortgage Loans due after the Cut-off Date, all REO Properties and revenues
received in respect thereof, the mortgagee's rights under the Insurance
Policies, any Assignment of Leases, and any guaranties, escrow accounts or other
collateral as security for the Mortgage Loans, and such amounts as shall from
time to time be held in the Certificate Account, the Distribution Accounts, and
the REO Accounts, formed and sold by
CHASE COMMERCIAL MORTGAGE SECURITIES CORP.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN CHASE
COMMERCIAL MORTGAGE SECURITIES CORP., THE SERVICER, THE SPECIAL SERVICER, THE
TRUSTEE, THE FISCAL AGENT OR ANY OF THEIR AFFILIATES. NEITHER THIS CERTIFICATE
NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED BY ANY AGENCY OR
INSTRUMENTALITY OF THE UNITED STATES.
THIS CERTIFIES THAT __________________
is the registered owner of the interest evidenced by this Certificate in the
Class [LR] Certificates issued by the Trust Fund created pursuant to the Pooling
and Servicing Agreement, dated as of______________, 1997 (the "Pooling and
Servicing Agreement"), among Chase Commercial Mortgage Securities Corp.
(hereinafter called the "Depositor", which term includes any successor entity
under the Pooling and Servicing Agreement), the Trustee, the Special Servicer,
the Servicer and the Fiscal Agent. A summary of certain of the pertinent
provisions of the Pooling and Servicing Agreement is set forth hereafter. To the
extent not defined herein, the capitalized terms used herein shall have the
meanings assigned thereto in the Pooling and Servicing Agreement.
This Certificate is one of a duly authorized issue of Certificates
designated as Certificates of the series specified on the face hereof (herein
called the "Certificates") and representing an interest in the Class of
Certificates specified on the face hereof equal to the quotient expressed as a
percentage obtained by dividing the Denomination of this Certificate specified
on the face hereof, by the aggregate initial Certificate Balance of the Class
[LR] Certificates. The Certificates are designated as the Chase Commercial
Mortgage Securities Corp., Commercial Mortgage Pass-Through Certificates, Series
1997-2 and are issued in twelve Classes as specifically set forth in the Pooling
and Servicing Agreement. The Certificates will evidence in the aggregate 100% of
the beneficial ownership of the Trust Fund.
This Certificate does not purport to summarize the Pooling and
Servicing Agreement and reference is made to that agreement for information with
respect to the interests, rights, benefits, obligations, proceeds, and duties
evidenced hereby and the rights, duties and obligations of the Trustee. This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Pooling and Servicing Agreement, to which Pooling and
Servicing Agreement, as amended from time to time, the Certificateholder by
virtue of the acceptance hereof assents and by which the Certificateholder is
bound. In the case of any conflict between terms specified in this Certificate
and terms specified in the Pooling and Servicing Agreement, the terms of the
Pooling and Servicing Agreement shall govern.
This Class [LR] Certificate is a "residual interest" in a "real
estate mortgage investment conduit," as those terms are defined, respectively,
in Sections 860G(a)(1) and 860D of the Internal Revenue Code of 1986, as
amended. Each Holder of this Certificate, by acceptance hereof, agrees to treat,
and take no action inconsistent with the treatment of, this Certificate in
accordance with the preceding sentence for purposes of federal income taxes,
state and local income and franchise taxes and other taxes imposed on or
measured by income. The Holder of the largest Percentage Interest in the Class
[LR] Certificates shall be the "tax matters person" for the Lower-Tier REMIC
pursuant to Treasury Regulations Section 1.860F-4(d), and the Servicer is hereby
irrevocably designated and shall serve as attorney-in-fact and agent for any
such Person that is the "tax matters person".
A-12-3
<PAGE>
Pursuant to the terms of the Pooling and Servicing Agreement,
distributions, if any, on this Certificate shall be made by the Paying Agent to
the extent and subject to the limitations set forth in the Pooling and Servicing
Agreement, on the Distribution Date to the Person in whose name this Certificate
is registered as of the related Record Date. All sums distributable on this
Certificate are payable in the coin or currency of the United States of America
as at the time of payment is legal tender for the payment of public and private
debts.
The Certificates are limited in right of payment to, among other
things, certain collections and recoveries respecting the Mortgage Loans, all as
more specifically set forth in the Pooling and Servicing Agreement. As provided
in the Pooling and Servicing Agreement, the Certificate Account and the
Distribution Account will be held in the name of the Servicer and Paying Agent,
respectively, on behalf of the holders of Certificates specified in the Pooling
and Servicing Agreement and the Servicer (with respect to the Certificate
Account) or the Paying Agent (with respect to the Distribution Account) will be
authorized to make withdrawals therefrom. Amounts on deposit in such accounts
may be invested in Permitted Investments. Interest or other income earned on
funds in the Certificate Account and Distribution Account will be paid to the
Servicer as set forth in the Pooling and Servicing Agreement. As provided in the
Pooling and Servicing Agreement, withdrawals from the Certificate Account shall
be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of certain expenses
incurred with respect to the servicing of the Mortgage Loans and administration
of the Trust Fund.
All distributions under the Pooling and Servicing Agreement to a
Class of Certificates shall be made on each Distribution Date (other than the
final distribution on any Certificate) to Certificateholders of record on the
related Record Date by check mailed to the address set forth therefor in the
Certificate Register or, provided that such Certificateholder (1) has provided
the Trustee and Paying Agent with wire instructions in writing as least five
Business Days prior to the related Record Date and (2) is the Holder of
Certificates with an original Certificate Balance or Notional Amount, as
applicable, of at least $_________, by wire transfer of immediately available
funds to the account of such Certificateholder at a bank or other entity having
appropriate facilities therefor. The final distribution on this Certificate
shall be made in like manner, but only upon presentment and surrender of this
Certificate at the offices of the Certificate Registrar or such other location
specified in the notice to Certificateholders of such final distribution.
Any funds not distributed on the final Distribution Date because of
the failure of Certificateholders to tender their Certificates shall be set
aside and held uninvested in trust for the benefit of the non-tendering
Certificateholders, whereupon the Trust Fund shall terminate. If any
Certificates as to which notice has been given pursuant to Section 4.01(g) of
the Pooling and Servicing Agreement 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 to receive
the final distribution with respect thereto. If within one year after the second
notice not all of such Certificates shall have been surrendered for
cancellation, the Paying Agent may, directly or through an agent, take
appropriate steps to contact the remaining non-tendering Certificateholders
concerning surrender of their Certificates. The costs and expenses of holding
such funds in trust and of contacting such Certificateholders shall be paid out
of such funds. No interest shall accrue or be payable to any Certificateholder
on any amount held in trust as a result of such Certificateholder's failure to
surrender its Certificate(s) for final payment thereof in accordance with
Section 4.01(g) of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, the transfer of this Certificate is
registerable in the Certificate Register only upon surrender of this Certificate
for registration of transfer at the office of the Certificate Registrar or at
the office of its transfer agent, duly endorsed by, or accompanied by an
assignment in the form below or other written instrument of transfer in form
satisfactory to the Certificate Registrar duly executed by the Holder hereof or
such Holder's attorney-in-fact duly authorized in writing, and thereupon one or
more new Certificates of the same Class in authorized Denominations will be
issued to the designated transferee or transferees.
Each Person who has or who acquires any Ownership Interest in a
Class [LR] 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 Section 5.02(d) of the
Pooling and Servicing Agreement to deliver payments to a Person other than such
A-12-4
<PAGE>
Person. The rights of each Person acquiring any Ownership Interest in a Class
[LR] Certificate are expressly subject to the following provisions: (A) No
Person holding or acquiring any Ownership Interest in a Class [LR] Certificate
shall be a Disqualified Organization or agent thereof (including a nominee,
middleman or similar person) (an "Agent"), a Plan or a Person acting on behalf
of or investing the assets of a Plan (such Plan or Person, an "ERISA Prohibited
Holder") or a Non-U.S. Person and shall promptly notify the Servicer, the
Trustee, Paying Agent and the Certificate Registrar of any change or impending
change to such status; (B) In connection with any proposed Transfer of any
Ownership Interest in a Class [LR] Certificate, the Certificate Registrar shall
require delivery to it, and no Transfer of any Class [LR] Certificate shall be
registered until the Certificate Registrar receives, an affidavit substantially
in the form attached to the Pooling and Servicing Agreement as Exhibit D-1 (a
"Transfer Affidavit") from the proposed Transferee, in form and substance
satisfactory to the Certificate Registrar, representing and warranting, among
other things, that such Transferee is not a Disqualified Organization or Agent
thereof, an ERISA Prohibited Holder or a Non-U.S. Person, and that it has
reviewed the provisions of Section 5.02(d) of the Pooling and Servicing
Agreement and agrees to be bound by them; (C) Notwithstanding the delivery of a
Transfer Affidavit by a proposed Transferee under clause (B) above, if the
Certificate Registrar has actual knowledge that the proposed Transferee is a
Disqualified Organization or an Agent thereof, an ERISA Prohibited Holder or a
Non-U.S. Person, no Transfer of an Ownership Interest in a Class [LR]
Certificate to such proposed Transferee shall be effected; and (D) Each Person
holding or acquiring any Ownership Interest in a Class [LR] Certificate shall
agree (1) to require a Transfer Affidavit from any prospective Transferee to
whom such Person attempts to transfer its Ownership Interest in such Class [LR]
Certificate and (2) not to transfer its Ownership Interest in such Class [LR]
Certificate unless it provides to the Certificate Registrar a letter
substantially in the form attached to the Pooling and Servicing Agreement as
Exhibit D-2 (a "Transferor Letter") certifying that, among other things, it has
no actual knowledge that such prospective Transferee is a Disqualified
Organization, an Agent thereof, an ERISA Prohibited Holder or a Non-U.S. Person.
Subject to the terms of the Pooling and Servicing Agreement, the
Class [X] Certificates will be issued in book-entry form through the facilities
of DTC in Denominations of not less than $________initial Notional Amount and in
integral multiples of $_______in excess thereof, with one Certificate of such
Class evidencing an additional amount equal to the remainder of the initial
Notional Amount of such Class. Subject to the terms of the Pooling and Servicing
Agreement, the Offered Certificates (other than the Class [X] Certificates) will
be issued in book-entry form through the facilities of DTC in Denominations of
$_______initial Certificate Balance, and in integral multiples of $_______in
excess thereof, with one Certificate of each such Class evidencing an additional
amount equal to the remainder of the initial Certificate Balance of such Class.
Subject to the terms of the Pooling and Servicing Agreement, the Non-Registered
Certificates (other than the Residual Certificates) will be issued in book-entry
form through the facilities of DTC in Denominations of $_____initial Certificate
Balance, and in integral multiples of $_______in excess thereof, with one
Certificate of each such Class evidencing an additional amount equal to the
remainder of the initial Certificate Balance of such Class. The Class [R] and
Class [LR] Certificates will be issued in fully registered, certificated form,
in Denominations representing Percentage Interests of not less than __%.
No fee or service charge shall be imposed by the Certificate
Registrar for its services in respect of any registration of transfer or
exchange referred to in Section 5.02 of the Pooling and Servicing Agreement
other than for transfers to Institutional Accredited Investors as provided in
Section 5.02(h) thereof. In connection with any transfer to an Institutional
Accredited Investor, the Transferor shall reimburse the Trust for any costs
(including the cost of the Certificate Registrar's counsel's review of the
documents and any legal opinions, submitted by the transferor or transferee to
the Certificate Registrar as provided in Section 5.02 of the Pooling and
Servicing Agreement) incurred by the Certificate Registrar in connection with
such transfer. The Certificate Registrar may require payment by each transferor
of a sum sufficient to cover any tax, expense or other governmental charge
payable in connection with any such transfer or exchange.
The Depositor, the Trustee, the Fiscal Agent, the Servicer, the
Special Servicer, the Paying Agent and the Certificate Registrar and any of
their agents may treat the Person in whose name this Certificate is registered
as the owner hereof for all purposes, and neither the Depositor, the Trustee,
the Servicer, the Special Servicer, the Fiscal Agent, the Certificate Registrar
nor any such agents shall be affected by any notice to the contrary.
A-12-5
<PAGE>
The Pooling and Servicing Agreement may be amended from time to time
by the Depositor, the Servicer, the Special Servicer, the Fiscal Agent and the
Trustee, without the consent of any of the Certificateholders, to cure any
ambiguity, to correct or supplement any provisions herein or therein that may be
inconsistent with any other provisions herein or therein or to correct any
error; to maintain the rating or ratings assigned to each Class of Certificates
by each Rating Agency; to modify, eliminate or add to any provisions to such
extent as is necessary to maintain the qualification of either the Upper-Tier
REMIC or the Lower-Tier REMIC as a REMIC to avoid or minimize the imposition of
any tax, provided, however, an Opinion of Counsel is obtained to the effect that
such action shall not adversely affect in any material respect the interest of
any Certificateholder and such action is necessary or desirable to avoid such
tax and such action will not result in the withdrawal, downgrade or
qualification of the then-current rating by any Rating Agency, as evidenced by a
letter from such Rating Agency to such effect; to change the timing and/or
nature of deposits into the Certificate Account or Distribution Account or REO
Account or to change the name in which the Certificate Account is maintained,
provided, however, that the P&I Advance Date shall not be later than the related
Distribution Date, an Opinion of Counsel is obtained to the effect that such
action shall not adversely affect in any material respect the interest of any
Certificateholder and that such action will not result in the withdrawal,
downgrade or qualification of the then-current rating by any Rating Agency, as
evidenced by a letter from such Rating Agency to such effect; to modify,
eliminate or add to the provisions of Section 5.02(d) of the Pooling and
Servicing Agreement or any other provision thereof restricting transfer of the
Residual Certificates by virtue of their being the REMIC "residual interests,"
provided that such change shall not result in the withdrawal, downgrade or
qualification of the then-current rating assigned to any Class of Certificates,
as evidenced by a letter from each Rating Agency to such effect, and such change
shall not, as evidenced by an Opinion of Counsel, cause either the Upper-Tier
REMIC or the Lower-Tier REMIC or any of the Certificateholders (other than the
Transferor) to be subject to a federal tax caused by a Transfer to a Person that
is a Disqualified Organization or a Non-U.S. Person; and to make any other
provisions with respect to matters or questions arising under the Pooling and
Servicing Agreement which shall not be materially inconsistent with the
provisions of the Pooling and Servicing Agreement, provided, however, that such
action shall not, as evidenced by an Opinion of Counsel, adversely affect in any
material respect the interest of any Certificateholder not consenting thereto.
The Pooling and Servicing Agreement may also be amended from time to
time by the Depositor, the Servicer, the Special Servicer, the Fiscal Agent and
the Trustee with the consent of the Holders of Certificates representing not
less than ___% of the Percentage Interests of each Class of Certificates
affected by the amendment for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of the Pooling and
Servicing Agreement or of modifying in any manner the rights of the
Certificateholders; provided, however, that no such amendment shall:
(i) reduce in any manner the amount of, or delay the timing of,
payments which are required to be distributed on any Certificate without
the consent of such Certificateholder; or
(ii) reduce the aforesaid percentage of Certificates of any Class
the Holders of which are required to consent to any such amendment,
without the consent of the Holders of all Certificates of such Class then
outstanding; or
(iii) adversely affect the Voting Rights of any Class of
Certificates without the consent of the Holders of such Class then
outstanding; or
(iv) amend Section 11.01.
No amendment shall be made to the Pooling and Servicing Agreement
unless the Trustee shall have received an Opinion of Counsel that such amendment
will not cause either the Upper-Tier REMIC or the Lower-Tier REMIC to fail to
qualify as a REMIC or result in the imposition of a tax on the Upper-Tier REMIC
or the Lower-Tier REMIC.
Any of the Servicer, Special Servicer, the Holders of the
Controlling Class or the Holders of the Class [LR] Certificates (in that order)
will have the option, upon 60 days' prior notice given to the Trustee, Paying
Agent and each of the other parties to the Pooling and Servicing Agreement,
which notice the Paying Agent is required to promptly forward to
A-12-6
<PAGE>
Certificateholders and Rating Agencies in the manner set forth in the Pooling
and Servicing Agreement, to purchase all, but not less than all, of the Mortgage
Loans and all property acquired in respect of any Mortgage Loan remaining in the
Trust Fund, and thereby effect termination of the Trust Fund and early
retirement of the then outstanding Certificates, on any Distribution Date on
which the aggregate Stated Principal Balances of the Mortgage Loans and any REO
Loans remaining in the Trust Fund is reduced to less than __% of the aggregate
Cut-off Date Principal Balance of all the Mortgage Loans.
The obligations created by the Pooling and Servicing Agreement and
the Trust Fund created thereby (other than the obligation of the Paying Agent to
make payments to Certificateholders as provided for in the Pooling and Servicing
Agreement), shall terminate upon reduction of the Certificate Balances of all
the Certificates to zero (including, without limitation, any such final payment
resulting from a termination of the Trust Fund due to a sale of its property)
pursuant to the terms of the Pooling and Servicing Agreement. In no event,
however, will the Trust created by the Pooling and Servicing Agreement continue
beyond the expiration of 21 years from the death of the last survivor of the
descendants of Joseph P. Kennedy, the late Ambassador of the United States to
the Court of St. James, living on the date hereof.
Unless the certificate of authentication hereon has been executed by
the Authenticating Agent, by manual signature, this Certificate shall not be
entitled to any benefit under the Pooling and Servicing Agreement or be valid
for any purpose. The Certificate Registrar has executed this Certificate on
behalf of the Trust Fund as Certificate Registrar under the Pooling and
Servicing Agreement and makes no representation or warranty as to any of the
statements contained herein or the validity or sufficiency of the Certificates
or the Mortgage Loans.
THIS CERTIFICATE AND THE POOLING AND SERVICING AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES APPLIED IN NEW YORK.
IN WITNESS WHEREOF, the Certificate Registrar has caused this
Certificate to be duly executed under this official seal.
THE CHASE MANHATTAN BANK, not in its
individual capacity but solely as
Certificate Registrar under the
Pooling and Servicing Agreement.
By: ___________________________
AUTHORIZED OFFICER
Dated:________________, 1997
CERTIFICATE OF AUTHENTICATION
THIS IS ONE OF THE CLASS [LR] CERTIFICATES REFERRED TO IN THE
WITHIN-MENTIONED POOLING AND SERVICING AGREEMENT.
A-12-7
<PAGE>
THE CHASE MANHATTAN BANK,
Authenticating Agent
By: ___________________________
AUTHORIZED SIGNATORY
A-12-8
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this
Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenant in common UNIF GIFT MIN ACT __________ Custodian
TEN ENT - as tenants by the entireties (Cust)
JT TEN - as joint tenants with Under Uniform Gifts to Minors
rights of survivorship and
not as tenants in common Act __________________________
(State)
Additional abbreviations may also be used though not in the above list.
FORM OF TRANSFER
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto _________________________________________________________________
________________________________________________________________________________
(Please insert Social Security or other identifying number of Assignee)
________________________________________________________________________________
(Please print or typewrite name and address of assignee)
________________________________________________________________________________
the within Certificate and does hereby or irrevocably constitute and appoint to
transfer the said Certificate in the Certificate register of the within-named
Trust, with full power of substitution in the premises.
________________________________________
Dated: _________________________ NOTICE: The signature to this
assignment must correspond with the
name as written upon the face of this
Certificate in every particular
without alteration or enlargement or
any change whatever.
_______________________________
SIGNATURE GUARANTEED
The signature must be guaranteed by a commercial bank or trust company or by a
member firm of the New York Stock Exchange or another national securities
exchange. Notarized or witnessed signatures are not acceptable.
A-12-9
<PAGE>
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of
distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _________________________________ for the account
of __________________________________ account number _______________ or, if
mailed by check, to _______________________________________. Statements should
be mailed to _______________________________________________________________.
This information is provided by assignee named above, or
______________________________ , as its agent.
A-12-10
<PAGE>
EXHIBIT C
FORM OF INVESTMENT REPRESENTATION LETTER
The Chase Manhattan Bank,
as Certificate Registrar
450 West 33rd Street
Structured Finance Services (MBS)
New York, NY 10001
Attention:
Chase Commercial Mortgage Securities Corp.
380 Madison Avenue, 11th Floor
New York, New York 10017
Re: Transfer of Chase Commercial Mortgage Securities Corp.,
Commercial Mortgage Pass-Through Certificates, Series 1997-2
Ladies and Gentlemen:
This letter is delivered pursuant to Section 5.02 of the Pooling and
Servicing Agreement dated as of_____________, 1997 (the "Pooling and Servicing
Agreement"), by and among Chase Commercial Mortgage Securities Corp., as
Depositor, The Chase Manhattan Bank, as Servicer, __________________, as Special
Servicer, ________________, as Fiscal Agent and_______________, as Trustee on
behalf of the holders of Chase Commercial Mortgage Securities Corp., Commercial
Mortgage Pass-Through Certificates, Series 1997-_ (the "Certificates") in
connection with the transfer by _________________ (the "Seller") to the
undersigned (the "Purchaser") of $_______________ aggregate Certificate Balance
of Class ___ Certificates (the "Certificate"). Capitalized terms used and not
otherwise defined herein shall have the respective meanings ascribed to such
terms in the Pooling and Servicing Agreement.
In connection with such transfer, the Purchaser hereby represents
and warrants to you and the addressees hereof as follows:
1. Check one of the following:*
|_| The Purchaser is an institutional "accredited investor" (an
entity meeting the requirements of Rule 501(a)(1), (2), (3) or
(7) of Regulation D under the Securities Act of 1933, as
amended (the "1933 Act")) and has such knowledge and
experience in financial and business matters as to be capable
of evaluating the merits and risks of its investment in the
- ----------
* Purchaser must include one of the following two certifications.
C-1
<PAGE>
Certificates, and the Purchaser and any accounts for which it
is acting are each able to bear the economic risk of the
Purchaser's or such account's investment. The Purchaser is
acquiring the Certificates purchased by it for its own account
or for one or more accounts (each of which is an
"institutional accredited investor") as to each of which the
Purchaser exercises sole investment discretion. The Purchaser
hereby undertakes to reimburse the Trust Fund for any costs
incurred by it in connection with this transfer.
|_| The Purchaser is a "qualified institutional buyer" within the
meaning of Rule 144A ("Rule 144A") promulgated under the
Securities Act of 1933, as amended (the "1933 Act"). The
Purchaser is aware that the transfer is being made in reliance
on Rule 144A, and the Purchaser has had the opportunity to
obtain the information required to be provided pursuant to
paragraph (d)(4)(i) of Rule 144A.
2. The Purchaser's intention is to acquire the Certificate (a) for
investment for the Purchaser's own account or (b) for resale to (i) "qualified
institutional buyers" in transactions under Rule 144A, and not in any event with
the view to, or for resale in connection with, any distribution thereof, or (ii)
to institutional "accredited investors" meeting the requirements of Rule
501(a)(1), (2), (3) or (7) of Regulation D promulgated under the 1933 Act,
pursuant to any other exemption from the registration requirements of the 1933
Act, subject in the case of this clause (ii) to (w) the receipt by the
Certificate Registrar of a letter substantially in the form hereof, (x) the
receipt by the Certificate Registrar of an opinion of counsel acceptable to the
Certificate Registrar that such reoffer, resale, pledge or transfer is in
compliance with the 1933 Act, (y) the receipt by the Certificate Registrar of
such other evidence acceptable to the Certificate Registrar that such reoffer,
resale, pledge or transfer is in compliance with the 1933 Act and other
applicable laws, and (z) a written undertaking to reimburse the Trust for any
costs incurred by it in connection with the proposed transfer. The Purchaser
understands that the Certificate (and any subsequent Certificate) has not been
registered under the 1933 Act, by reason of a specified exemption from the
registration provisions of the 1933 Act which depends upon, among other things,
the bona fide nature of the Purchaser's investment intent (or intent to resell
to only certain investors in certain exempted transactions) as expressed herein.
3. The Purchaser has reviewed the Private Placement Memorandum
relating to the Certificates (the "Private Placement Memorandum") and the
agreements and other materials referred to therein and has had the opportunity
to ask questions and receive answers concerning the terms and conditions of the
transactions contemplated by the Private Placement Memorandum.
4. The Purchaser acknowledges that the Certificate (and any
Certificate issued on transfer or exchange thereof) has not been registered or
qualified under the 1933 Act or the securities laws of any State or any other
jurisdiction, and that the Certificate cannot be resold unless it is registered
C-2
<PAGE>
or qualified thereunder or unless an exemption from such registration or
qualification is available.
5. The Purchaser hereby undertakes to be bound by the terms and
conditions of the Pooling and Servicing Agreement in its capacity as an owner of
a Certificate or Certificates, as the case may be (each, a "Certificateholder"),
in all respects as if it were a signatory thereto. This undertaking is made for
the benefit of the Trust, the Certificate Registrar and all Certificateholders
present and future.
6. The Purchaser will not sell or otherwise transfer any portion of
the Certificate or Certificates, except in compliance with Section 5.02 of the
Pooling and Servicing Agreement.
7. Check one of the following:*
|_| The Purchaser is a U.S. Person (as defined below) and it has
attached hereto an Internal Revenue Service ("IRS") Form W-9 (or
successor form).
|_| The Purchaser is not a U.S. Person and under applicable law in
effect on the date hereof, no taxes will be required to be withheld
by the Trustee (or its agent) or the Paying Agent with respect to
distributions to be made on the Certificate. The Purchaser has
attached hereto either (i) a duly executed IRS Form W-8 (or
successor form), which identifies such Purchaser as the beneficial
owner of the Certificate and states that such Purchaser is not a
U.S. Person or (ii) two duly executed copies of IRS Form 4224 (or
successor form), which identify such Purchaser as the beneficial
owner of the Certificate and state that interest and original issue
discount on the Certificate and Permitted Investments is, or is
expected to be, effectively connected with a U.S. trade or business.
The Purchaser agrees to provide to the Certificate Registrar updated
IRS Forms W-8 or IRS Forms 4224, as the case may be, any applicable
successor IRS forms, or such other certifications as the Certificate
Registrar may reasonably request, on or before the date that any
such IRS form or certification expires or becomes obsolete, or
promptly after the occurrence of any event requiring a change in the
most recent IRS form of certification furnished by it to the
Certificate Registrar.
For this purpose, "U.S. Person" means a citizen or resident of the United States
for U.S. federal income tax purposes, a corporation, partnership or other entity
created or organized in or under the laws of the United States or any of its
political subdivisions, or an estate the income of which is subject to U.S.
federal income taxation regardless of its source or a trust if (A) for taxable
years beginning after______________, 1997 (or for taxable years ending after
August 20, 1997, if the trustee has made an application election), a court
within the United States is able to exercise primary supervision over the
administration of such trust, and one or more United States fiduciaries have the
- ----------
* Each Purchaser must include one of the two alternative certifications.
C-3
<PAGE>
authority to control all substantial decisions of such trust, or (B) for all
other taxable years, such trust is subject to United States federal income tax
regardless of the source of its income.
8. Please make all payments due on the Certificates:**
|_| (a) by wire transfer to the following account at a bank or entity in
New York, New York, having appropriate facilities therefore:
Bank: ___________________________________
ABA#: ___________________________________
Account #: _____________________________
Attention: _____________________________
|_| (b) by mailing a check or draft to the following address:
_________________________________________
_________________________________________
_________________________________________
Very truly yours,
_________________________________________
[The Purchaser]
By: _____________________________________
Name:
Title
Dated:
- ----------
** Only to be filled out by Purchasers of Definitive Certificates. Please select
(a) or (b). For holders of Definitive Certificates, wire transfers are only
available if such holder's Definitive Certificates have an aggregate Certificate
Balance or Notional Amount, as applicable, of at least U.S. $5,000,000.
C-4
<PAGE>
EXHIBIT D-1
FORM OF TRANSFER AFFIDAVIT
AFFIDAVIT PURSUANT TO
SECTION 860E(e)(4) OF THE
INTERNAL REVENUE CODE OF
1986, AS AMENDED
STATE OF )
) ss:
COUNTY OF )
[NAME OF OFFICER], being first duly sworn, deposes and says:
1. That [he] [she] is [Title of Officer] of [Name of Transferee]
(the "Transferee"), a [description of type of entity] duly organized and
existing under the laws of the [State of __________] [United States], on behalf
of which he makes this affidavit.
2. That the Transferee's Taxpayer Identification Number is
[ ].
3. That the Transferee of a Chase Commercial Mortgage Securities
Corp., Commercial Mortgage Pass-Through Certificate, Series 1997-_, Class [R]
[LR] Certificate (the "Class [R] [LR] Certificate") is not a Disqualified
Organization (as defined below) or an agent thereof (including nominee,
middleman or other similar person) (an "Agent"), an ERISA Prohibited Holder or a
Non-U.S. Person (as defined below). For these purposes, a "Disqualified
Organization" means 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, 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 (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(a)(2)(C) of the Code and (v)
any other Person so designated by the Servicer based upon an Opinion of Counsel
that the holding of an Ownership Interest in a Residual Certificate by such
Person may cause either the Upper-Tier REMIC or the Lower-Tier REMIC to fail to
qualify as a REMIC 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. For
these purposes, "ERISA Prohibited Holder" means an employee benefit plan subject
to Title I of the Employee Retirement Income Security Act of 1974, as amended
D-1-1
<PAGE>
("ERISA") or section 4975 of the Code or any governmental plan (as defined in
Section 3(32) of ERISA) subject to any federal, state or local law which is, to
a material extent, similar to the foregoing provisions of ERISA or the Code
(each, a "Plan") or a person investing in the assets of such a Plan. For these
purposes, "Non-U.S. Person" means any person other than a U.S. Person, unless,
with respect to the Transfer of a Residual Certificate, (i) such person holds
such Residual Certificate in connection with the conduct of a trade or business
within the United States and furnishes the Transferor and the Certificate
Registrar with an effective Internal Revenue Service Form 4224 or (ii) the
Transferee delivers to both the Transferor and the Certificate Registrar an
opinion of a nationally recognized tax counsel to the effect that such Transfer
is in accordance with the requirements of the Code and the regulations
promulgated thereunder and that such Transfer of the Residual Certificate will
not be disregarded for federal income tax purposes.
4. That the Transferee historically has paid its debts as they have
come due and intends to pay its debts as they come due in the future and the
Transferee intends to pay taxes associated with holding the Class [R] [LR]
Certificate as they become due.
5. That the Transferee understands that it may incur tax liabilities
with respect to the Class [R] [LR] Certificate in excess of any cash flow
generated by the Class [R] [LR] Certificate.
6. That the Transferee agrees not to transfer the Class [R] [LR]
Certificate to any Person or entity unless (a) the Transferee has received from
such Person or entity an affidavit substantially in the form of this Transfer
Affidavit and (b) the Transferee provides to the Certificate Registrar a letter
substantially in the form of Exhibit D-2 to the Pooling and Servicing Agreement
certifying that it has no actual knowledge that such Person or entity is a
Disqualified Organization or an Agent thereof, an ERISA Prohibited Holder or a
Non-U.S. Person and that it has no reason to know that such Person or entity
does not satisfy the requirements set forth in paragraph 4 hereof.
7. That the Transferee agrees to such amendments of the Pooling and
Servicing Agreement dated as of____________, 1997 among Chase Commercial
Mortgage Securities Corp., as Depositor, The Chase Manhattan Bank, as Servicer,
__________, as Special Servicer, ________________, as Trustee and
___________________, as Fiscal Agent (the "Pooling and Servicing Agreement"), as
may be required to further effectuate the restrictions on transfer of the Class
[R] [LR] Certificate to such a Disqualified Organization or an Agent thereof, an
ERISA Prohibited Holder or a Non-U.S. Person. To the extent not defined herein,
the capitalized terms used herein shall have the meanings assigned thereto in
the Pooling and Servicing Agreement.
8. That, if a "tax matters person" is required to be designated with
respect to the [Upper-Tier REMIC] [Lower-Tier REMIC], the Transferee agrees to
act as "tax matters person" and to perform the functions of "tax matters person"
of the [Upper-Tier REMIC] [Lower-Tier REMIC] pursuant to Section 10.01(c) of the
Pooling and Servicing Agreement, and agrees to the irrevocable designation of
D-1-2
<PAGE>
the Servicer as the Transferee's agent in performing the function of "tax
matters person."
9. The Transferee has reviewed, and agrees to be bound by and to
abide by, the provisions of Section 5.02(d) of the Pooling and Servicing
Agreement concerning registration of the transfer and exchange of Class [R] [LR]
Certificates.
IN WITNESS WHEREOF, the Transferee has caused this instrument to be
executed on its behalf, by its [Title of Officer] this _____ day of __________,
19__.
[NAME OF TRANSFEREE]
By: _______________________________
[Name of Officer]
[Title of Officer]
D-1-3
<PAGE>
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 the [Title of Officer] of the Transferee, and acknowledged
to me that he [she] executed the same as his [her] free act and deed and the
free act and deed of the Transferee.
Subscribed and sworn before me this ___ day of __________, 19__.
__________________________________
NOTARY PUBLIC
COUNTY OF ________________________
STATE OF _________________________
My commission expires the ___ day of __________, 19__.
D-1-4
<PAGE>
EXHIBIT D-2
FORM OF TRANSFEROR LETTER
[Date]
The Chase Manhattan Bank,
as Certificate Registrar
450 West 33rd Street
Structured Finance Services (MBS)
New York, NY 10001
Attention:
Re: Chase Commercial Mortgage Securities Corp., Commercial
Mortgage Pass-Through Certificates, Series 1997-_
Ladies and Gentlemen:
[Transferor] has reviewed the attached affidavit of [Transferee],
and has no actual knowledge that such affidavit is not true and has no reason to
know that the requirements set forth in paragraphs 3 and 4 thereof are not
satisfied or that the information contained in paragraphs 3 and 4 thereof is not
true.
Very truly yours,
[Transferor]
_______________________________
D-2-1
<PAGE>
EXHIBIT E
(INTENTIONALLY DELETED)
D-2-1
<PAGE>
EXHIBIT F
REQUEST FOR RELEASE
__________[Date]
[TRUSTEE]
Re: Chase Commercial Mortgage Securities Corp.
Commercial Mortgage Pass-Through Certificates, Series
1997-_,
REQUEST FOR RELEASE
Dear _______________________,
In connection with the administration of the Mortgage Files held by
or on behalf of you as Trustee under a certain Pooling and Servicing Agreement
dated as of_________, 1997 (the "Pooling and Servicing Agreement"), by and among
Chase Commercial Mortgage Securities Corp., as depositor, _______________, as
Fiscal Agent, [the undersigned, as servicer ("the
Servicer"),_______________________, as special servicer,] [The Chase Manhattan
Bank, as servicer, the undersigned, as special servicer (the "Special
Servicer"),] and you, as trustee, the undersigned hereby requests a release of
the Mortgage File (or the portion thereof specified below) held by or on behalf
of you as Trustee with respect to the following described Mortgage Loan for the
reason indicated below.
Mortgagor's Name:
Address:
Loan No.:
If only particular documents in the Mortgage File are requested, please specify
which:
Reason for requesting file (or portion thereof):
______1. Mortgage Loan paid in full. The [Servicer] [Special
Servicer] hereby certifies that all amounts received in
connection with the Mortgage Loan have been or will be
credited to the Certificate Account pursuant to the
Pooling and Servicing Agreement.
______2. The Mortgage Loan is being foreclosed.
______3. Other. (Describe)
F-1
<PAGE>
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, or 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.
[SERVICER][SPECIAL SERVICER]
By: __________________________________
Name: ____________________________
Title: ___________________________
F-2
<PAGE>
EXHIBIT G
FORM OF ERISA REPRESENTATION LETTER
The Chase Manhattan Bank,
as Certificate Registrar
450 West 33rd Street
Structured Finance Services (MBS)
15th Floor
New York, New York 10001
Attention:
Chase Commercial Mortgage Securities Corp.
380 Madison Avenue, 11th Floor
New York, New York 10017
Attention:
Re: Transfer of Chase Commercial Mortgage Securities
Corp., Commercial Mortgage Pass-Through Certificates,
Series 1997-_
Ladies and Gentlemen:
The undersigned (the "Purchaser") proposes to purchase $____________
initial Certificate Balance of Chase Commercial Mortgage Securities Corp.,
Commercial Mortgage Pass-Through Certificates, Series 1997-_, Class __ (the
"Certificate") issued pursuant to that certain Pooling and Servicing Agreement,
dated as of____________, 1997 (the "Pooling and Servicing Agreement"), by and
among Chase Commercial Mortgage Securities Corp., as depositor (the
"Depositor"), The Chase Manhattan Bank, as servicer (the
"Servicer"),______________, as special servicer (the "Special Servicer"),
________________, as fiscal agent (the "Fiscal Agent") and_________, as trustee
(the "Trustee"). Capitalized terms used and not otherwise defined herein have
the respective meanings ascribed to such terms in the Pooling and Servicing
Agreement.
In connection with such transfer, the undersigned hereby represents
and warrants to you as follows:
1. The Purchaser is not (a)(i) an employee benefit plan subject to
the fiduciary responsibility provisions of ERISA, (ii) or Section 4975 of the
Code or (iii) a governmental plan, as defined in Section 3(32) of ERISA, subject
to any federal, state or local law ("Similar Law") which is, to a material
extent, similar to the foregoing provisions of ERISA or the Code (each a "Plan")
or (b) a person acting on behalf of or using the assets of any such plan
(including an entity whose underlying assets include plan assets by reason of
investment in the entity by such Plan and the application of Department of Labor
Regulation ss. 2510.3-101, other than an insurance company using assets of its
general account under circumstances whereby the purchase and holding of such
G-1
<PAGE>
Certificates by such insurance company (i) would be exempt from the prohibited
transaction provisions of ERISA and the Code under Prohibited Transaction Class
Exemption 95-60.
2. The Purchaser understands that if the Purchaser is a Person
referred to in 1(a) or (b) above, an Opinion of Counsel in form and substance
satisfactory to the Certificate Registrar and the Depositor to the effect that
the acquisition and holding of such Certificate by such purchaser or transferee
will not result in the assets of the Trust Fund being deemed to be "plan assets"
and subject to the fiduciary responsibility provisions of ERISA, the prohibited
transaction provisions of the Code or the provisions of any Similar Law, will
not constitute or result in a "prohibited transaction" within the meaning of
ERISA, Section 4975 of the Code or any Similar Law, and will not subject the
Trustee, the Certificate Registrar, the Servicer, the Special Servicer, the
Fiscal Agent, the Extension Adviser, the Underwriter or the Depositor to any
obligation or liability (including obligations or liabilities under ERISA,
Section 4975 of the Code or any such Similar Law).
IN WITNESS WHEREOF, the Purchaser hereby executes this ERISA
Representation Letter on the ___th day of _____, ____.
Very truly yours,
__________________________________
[The Purchaser]
By: _____________________________
Name:
Title:
G-2
<PAGE>
EXHIBIT H
FORM OF DISTRIBUTION DATE STATEMENT
Exhibit 5.1
[Letterhead]
December __, 1996
Chase Commercial Mortgage Securities Corp.
380 Madison Avenue
New York, New York 10017-2951
Re: Mortgage Pass-Through Certificates
Gentlemen:
We have acted as your special counsel in connection the Registration
Statement on Form S-3 (the "Registration Statement"), which Registration
Statement is being filed with the Securities and Exchange Commission (the
"Commission"), pursuant to the Securities Act of 1933, as amended (the "Act").
The Prospectus describes Mortgage Pass-Through Certificates ("Certificates") to
be sold by Chase Commercial Mortgage Securities Corp. (the "Depositor") in one
of more series (each, a "Series") of Certificates. Each Series of Certificates
will be issued under a separate pooling and servicing agreement (each a "Pooling
and Servicing Agreement") among the Depositor, a master servicer (a "Servicer"),
a trustee (a "Trustee") and such other parties to be identified in the
Prospectus Supplement for such Series. The form of Pooling and Servicing
Agreement (the "Pooling and Servicing Agreement") is being filed as an exhibit
to the Registration Statement. Capitalized terms used and not otherwise defined
herein have the respective meanings given to such terms in the Registration
Statement.
In rendering the opinions set forth below, we have examined and
relied upon the following: (1) the Registration Statement, including the
Prospectus and the form of Prospectus Supplement constituting a part thereof,
each substantially in the form filed with the Commission; (2) the Pooling and
Servicing Agreement in the form filed with the Commission, and (3) such other
documents, materials and authorities as we have deemed necessary in order to
enable us to render our opinion set forth below. We express no opinion with
respect to any Series of Certificates for which we do not act as counsel to the
Depositor.
We express no opinion concerning the laws of any jurisdiction other
than the laws of the State of New York and, where expressly referred to below,
the federal income tax laws of the United States of America.
<PAGE>
Based on and subject to the foregoing, we are of the opinion that:
1. When a Pooling and Servicing Agreement for a Series of
Certificates has been duly and validly authorized, executed and
delivered by the Depositor, a Servicer, a Trustee and any other
party thereto, such Pooling and Servicing Agreement will constitute
a valid and legally binding agreement of Depositor, enforceable
against the Depositor in accordance with its terms, subject to
applicable bankruptcy, reorganization, insolvency, moratorium and
other laws affecting the enforcement of rights of creditors
generally and to general principles of equity and the discretion of
the court (regardless of whether enforceability is considered in a
proceeding in equity or at law).
2. When a Pooling and Servicing Agreement for a Series of
Certificates has been duly and validly authorized, executed and
delivered by the Depositor, a Servicer, a Trustee and any other
party thereto, and the Certificates of such Series have been duly
executed, authenticated, delivered and sold as contemplated in the
Registration Statement, such Certificates will be legally and
validly issued, fully paid and nonassessable, and the holders of
such Certificates will be entitled to the benefits of such Pooling
and Servicing Agreement.
3. The description of federal income tax consequences
appearing under the heading "Certain Federal Income Tax
Consequences" in the Prospectus accurately describes the material
federal income tax consequences to holders of Offered Certificates,
under existing law and subject to the qualifications and assumptions
stated therein.
We hereby consent to the filing of this letter as an exhibit to the
Registration Statement and to the reference to this firm under the headings
"Legal Matters" and "Certain Federal Income Tax Consequences" in the Prospectus,
which is a part of the Registration Statement. This consent is not to be
construed as an admission that we are a person whose consent is required to be
filed with the Registration Statement under the provisions of the Act.
Very truly yours,
/s/ Cadwalader, Wickersham & Taft
---------------------------------
Cadwalader, Wickersham & Taft
