POTOMAC GURNEE FINANCE CORP.
Depositor
AMRESCO MANAGEMENT, INC.
Servicer
ABN AMRO BANK N.V.
Fiscal Agent
and
LASALLE NATIONAL BANK
Trustee
TRUST AND SERVICING AGREEMENT
Dated as of December 1, 1996
Commercial Mortgage Pass-Through Certificates
TABLE OF CONTENTS
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ARTICLE ONE
DEFINITIONS
Section 1.01. Definitions................................................. 1
Section 1.02. Calculations................................................ 30
Section 1.03. Interpretation.............................................. 31
ARTICLE TWO
DECLARATION OF TRUST FUND;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01. Creation and Declaration of Trust Fund;
Conveyance of Mortgage Loan......................... 32
Section 2.02. Acceptance by Trustee....................................... 36
Section 2.03. Representations and Warranties of the
Servicer and the Depositor............................... 38
ARTICLE THREE
ADMINISTRATION AND SERVICING OF THE MORTGAGE LOAN
Section 3.01. Servicer to Act as Servicer................................. 44
Section 3.02. Sub-Servicing Agreements.................................... 45
Section 3.03. Collection of Certain Mortgage Loan
Payments................................................. 46
Section 3.04. Establishment of the Central Account,
the Servicer Collection Account,
the Certificate Account, the Rent Accounts
and the Default Interest Account......................... 47
Section 3.05. Collection of Impositions, etc.;
Escrow Account........................................... 54
Section 3.06. Maintenance of Insurance and Errors
and Omissions and Fidelity Coverage...................... 55
Section 3.07. "Due-on-Sale" Clauses; Assumption
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Agreements............................................... 57
Section 3.08. Realization Upon Mortgaged Properties....................... 58
Section 3.09. Trustee to Cooperate; Release of Items
in Mortgage File.................................... 61
Section 3.10. Title and Management of Foreclosed Property................. 61
Section 3.11. Sale of Foreclosed Properties............................... 63
Section 3.12. Servicing Compensation...................................... 64
Section 3.13. Reports to the Trustee; Central
Account Statements....................................... 65
Section 3.14. Annual Statement as to Compliance........................... 67
Section 3.15. Annual Independent Public Accountants'
Servicing Report......................................... 67
Section 3.16. Access to Certain Documentation Regarding
the Mortgage Loan................................... 68
Section 3.17. Inspections................................................. 68
Section 3.18. Advances.................................................... 68
Section 3.19. Reports of Foreclosures of Mortgaged
Property................................................. 72
Section 3.20. Realization on Collateral Security
Instruments.............................................. 72
Section 3.21. Preparation of Tax Returns and
Other Reports............................................ 73
Section 3.22. Administration of the Mortgage Loan.................... 74
Section 3.23. [Intentionally left blank].................................. 74
Section 3.24. Appointment of Special Servicer............................. 74
Section 3.25. Advance Procedures.......................................... 75
ARTICLE FOUR
PAYMENTS AND STATEMENTS TO CERTIFICATEHOLDERS
Section 4.01. Distributions............................................... 77
Section 4.02. Statements to Certificateholders............................ 81
Section 4.03. Reports by each Mortgagors.................................. 84
ARTICLE FIVE
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THE CERTIFICATES
Section 5.01. The Certificates............................................ 85
Section 5.02. Registration of Transfer and Exchange
of Certificates.......................................... 88
Section 5.03. Mutilated, Destroyed, Lost or Stolen
Certificates............................................. 93
Section 5.04. Persons Deemed Owners....................................... 93
Section 5.05. Maintenance of Office or Agency............................. 93
Section 5.06. Appointment of Paying Agent................................. 94
Section 5.07. Definitive Certificates..................................... 94
Section 5.08. Access to List of Certificateholders'
Names and Addresses...................................... 95
Section 5.09. Notices to Depository....................................... 96
Section 5.10. Certificates Owned by the Mortgagors
and Depositor Deemed Not Outstanding..................... 96
ARTICLE SIX
THE DEPOSITOR AND THE SERVICER
Section 6.01. Liabilities of the Depositor and
the Servicer............................................. 97
Section 6.02. Merger or Consolidation of the
Depositor or the Servicer................................ 97
Section 6.03. Limitation on Liability of the Depositor,
the Servicer and Others.................................. 97
Section 6.04. Servicer Not to Resign......................................100
Section 6.05. Rights of the Depositor in Respect of
the Servicer.............................................100
ARTICLE SEVEN
DEFAULT
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Section 7.01. Events of Default...........................................102
Section 7.02. Remedies of Trustee......................................105
Section 7.03. Directions by Certificateholders and
Duties of Trustee During Event of Default................106
Section 7.04. Trustee to Act; Appointment of Successor.................106
Section 7.05. Notification to Certificateholders.......................108
Section 7.06. Waiver of Past Events of Default.........................108
Section 7.07. Action upon Certain Failures of the
Servicer and upon the Occurrence of
an Event of Default......................................108
Section 7.08. Limitations on Suits by Certificateholders...............109
Section 7.09. Unconditional Right of Certificateholders
to Receive Distributions and to Institute
Certain Suits............................................109
ARTICLE EIGHT
CONCERNING THE TRUSTEE AND FISCAL AGENT
Section 8.01. Duties of Trustee...........................................111
Section 8.02. Certain Matters Affecting Trustee and
Fiscal Agent.............................................113
Section 8.03. Trustee and Fiscal Agent Not Liable for
Certificates or the Mortgage Loan...................116
Section 8.04. Trustee or Fiscal Agent May Own
Certificates.............................................118
Section 8.05. Trustee's Fees and Expenses.................................118
Section 8.06. Eligibility Requirements for Trustee
and Successor Fiscal Agent...............................119
Section 8.07. Resignation and Removal of Trustee
and Fiscal Agent.........................................119
Section 8.08. Successor Trustee and Fiscal Agent..........................121
Section 8.09. Merger or Consolidation of Trustee and
of Fiscal Agent..........................................122
Section 8.10. Appointment of Co-Trustee or Separate
Trustee; Appointment of Fiscal Agent.....................122
Section 8.11. Appointment of Authenticating Agent.........................124
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Section 8.12. Fiscal Agent Appointed; Concerning
the Fiscal Agent.........................................125
ARTICLE NINE
TERMINATION
Section 9.01. Termination.................................................127
Section 9.02. Additional Termination Requirements.........................128
Section 9.03. Trusts Irrevocable..........................................129
ARTICLE TEN
REMIC ADMINISTRATION
Section 10.01. REMIC Administration.......................................130
Section 10.02. Foreclosed Property........................................133
Section 10.03. Modifications of Mortgage Loan........................135
Section 10.04. Prohibited Transactions and Activities.....................136
Section 10.05. Indemnification with Respect to Certain
Taxes and Loss of REMIC Status..........................136
Section 10.06. Grantor Trust Reporting....................................137
ARTICLE ELEVEN
MISCELLANEOUS PROVISIONS
Section 11.01. Amendment..................................................138
Section 11.02. Recordation of Agreement...................................139
Section 11.03. Governing Law...........................................140
Section 11.04. Notices.................................................140
Section 11.05. Notices to the Rating Agency...............................140
Section 11.06. ▇▇▇▇▇▇ Act.................................................141
Section 11.07. Severability of Provisions.................................142
Section 11.08. Limitation on Rights of Certificateholders.................142
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Section 11.09. Certificates Nonassessable and Fully Paid..................143
Section 11.10. Reproduction of Documents..................................143
Section 11.11. No Partnership.............................................143
Section 11.12. Actions of Certificateholders..............................143
Section 11.13. Successors and Assigns.....................................144
Section 11.14. Officer's Certificates and Opinions
of Counsel; Statements to Be Contained
Therein.................................................144
Section 11.15. Counterparts...............................................145
Section 11.16. Rule 144A Information......................................145
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EXHIBITS
Exhibit A - Form of Class A Certificate
Exhibit B - Form of Class B Certificate
Exhibit C - Form of Class C Certificate
Exhibit D - Form of Class D Certificate
Exhibit E - Form of Class R Certificate
Exhibit F - Form of Representation Letter
Exhibit G - Form of Class R Affidavit
Exhibit H - Form of Class R Transferee's Letter
Exhibit I - Form of Trust Receipt
Exhibit J - [Intentionally left blank]
Exhibit K - Servicer's Report to the Trustee
Exhibit L - Schedule of Required Insurance Policies
THIS TRUST AND SERVICING AGREEMENT (the "Agreement"), dated as of
December 1, 1996, among Potomac Gurnee Finance Corp., in its capacity as
depositor of the Mortgage Loan (the "Depositor"), AMRESCO Management,
Inc., as servicer (the "Servicer"), LaSalle National Bank, as trustee (the
"Trustee"), and ABN AMRO Bank N.V., as fiscal agent (the "Fiscal Agent"),
W I T N E S S E T H:
In consideration of the mutual agreements herein contained, the
parties hereto agree as follows:
ARTICLE ONE
DEFINITIONS
Section 1.01. Definitions. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the following meanings, and such meanings shall be equally applicable to the
singular and plural forms of such terms, as the context may require. Capitalized
terms used but not defined herein shall have the meanings assigned such terms in
the applicable Mortgage:
A Component: With respect to the Mortgage Note, that portion
of the principal balance thereof corresponding to the Certificate Principal
Balance of the Class A Certificates. The portion of the Closing Date Mortgage
Loan Principal Balance allocable to the A Component is $212,000,000.
Accepted Servicing Practices: As defined in Section 3.01.
Acquisition Date: The date upon which, under the Code (and in
particular the REMIC Provisions and Section 856(e) of the Code) the Trust REMIC
is deemed to have acquired a Mortgaged Property.
Additional Interest: As to any Class of Certificates and any
Distribution Date after the month in which the Balloon
Anticipated Repayment Date falls, interest accrued at a rate of 2% (200 basis
points) per annum on the Certificate Principal Balance of such Class during the
Interest Accrual Period related to such Distribution Date, which interest shall
be in addition to, and shall not include, any interest calculable at the related
Certificate Interest Rate or any Default Rate Interest.
Additional Interest Shortfall: On any Distribution Date with respect
to any Class of Regular Certificates, the amount, if any, by which the amount of
Additional Interest accruing on the Certificate Principal Balance of such Class
during the related Interest Accrual Period exceeds the amount distributed on
such Class in respect of such Additional Interest on such Distribution Date.
Adjusted Certificate Rate: As to any Class of Certificates, the per
annum rate equal to the sum of the related Certificate Interest Rate and 2% (200
basis points) per annum.
Adjusted Component Rate: As to any Component, the per annum rate
equal to the sum of the related Component Rate and 2% (200 basis points) per
annum.
Adjusted NOI: As "Net Operating Income" is defined in each
Mortgage.
Advance: A P&I Advance or a Carrying Costs Advance, as applicable.
Advance Rate: A per annum rate equal to the sum of (i) the rate of
interest reported as the prime rate in the Money Rates section of The Wall
Street Journal and (ii) 1% (100 basis points) per annum.
Affiliate: With respect to any specified Person, any other Person
directly or indirectly controlling or controlled by or under direct or indirect
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, relation to
individuals or otherwise, and the terms
2
"controlling" and "controlled" have meanings correlative to the foregoing.
Aggregate Certificate Principal Balance: The aggregate of the
Certificate Principal Balances at any time of determination.
Agreement: This Trust and Servicing Agreement and all amendments and
supplements hereto.
Allocated Loan Amount: As defined in each Mortgage.
ALTA: American Land Title Association, or any successor thereto.
Applicable State Law: For purposes of Article Ten and ▇▇▇▇▇▇▇ ▇.▇▇,
(▇) ▇▇▇ ▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇, (▇) the law of the State of Illinois, (c)
the tax law of the Commonwealth of Virginia and (d) any other state law whose
applicability shall have been brought to the attention of the Trustee by either
(i) an opinion of counsel delivered to it, or (ii) written notice from the
appropriate taxing authority as to the applicability of such state law.
Appraisal Reduction Amount: With respect to P&I Advance Appraisals
performed with respect to both Mortgaged Properties pursuant to Section 3.18,
the amount, if any, by which (a) the sum, as of the Distribution Date
immediately succeeding the date of determination referred to in the fifth
sentence of Section 3.18(f), of (i) the Aggregate Certificate Principal Balance
prior to any distributions made on such Distribution Date, (ii) the aggregate of
the Unpaid Interest Shortfall Amounts for all Classes of Regular Certificates,
(iii) all accrued fees then owed and unpaid to the Servicer, the Trustee, the
Fiscal Agent and the Special Servicer, and any additional unpaid Trust Fund
expenses in respect of the Mortgage Loan, (iv) all unreimbursed Advances
(together with interest thereon at the Advance Rate) made by or on behalf of the
Servicer, the Fiscal Agent or the Trustee and (v) all currently due and unpaid
real estate taxes and assessments and insurance premiums in respect of the
Mortgaged Properties exceeds (b) an amount equal to 90% of
3
the appraised value (net of any prior liens) of both Mortgaged Properties as
determined by such P&I Advance Appraisals.
Appraiser: An Independent nationally recognized MAI appraisal firm
reasonably acceptable to the Servicer, with at least ten years' experience in
providing appraisals for super-regional mall properties.
Assignment of Collateral Security Instruments: With respect to
the Mortgage Loan, an instrument or instruments duly executed and in a
form suitable for recordation or filing, assigning to the Trustee any
Collateral Security Instruments securing the Mortgage Note, legally
sufficient under the law of the jurisdiction governing the valid perfection
of security interests in the rights and property that are the subject of such
Collateral Security Instruments to vest in the Trustee a valid perfected
first priority security interest in such rights and property subject to such
Collateral Security Instruments.
Assignment of Gurnee Mortgage: The Assignment of Mortgage
dated the Closing Date from the Depositor to the Trustee pursuant to
which the Depositor assigns its right, title and interest in the Gurnee ▇▇▇▇▇
Mortgage to the Trustee.
Assignment of Leases and Rents and Security Deposits: With
respect to each of the Mortgages, the Assignment of Leases and Rents and
Security Deposits dated as of the Closing Date from the related Mortgagor, as
assignor, to CS First Boston Mortgage Capital Corp., as assignee, with
respect to the related Mortgaged Property assigning to CS First Boston Mortgage
Capital Corp. such Mortgagor's interest in the Leases and the Rents (each as
defined in the related Mortgage) and other amounts payable thereunder as
additional security for the payment of the Mortgage Loan as the same may
be supplemented, modified or extended.
Assignment of Potomac Mortgage: The Assignment of Deed of Trust
dated the Closing Date from the Depositor to the Trustee pursuant to
which the Depositor assigns its right, title and interest in the Potomac
▇▇▇▇▇ Mortgage to the Trustee.
Authenticating Agent: Any authenticating agent appointed pursuant
to Section 8.11.
4
Available Distribution Amount: As to any Distribution Date, the
sum of (i) the amount received as payments on the Mortgage Note on the
related Payment Date (other than any Default Rate Interest), (ii) net
collections from any foreclosed Mortgaged Property and net liquidation
proceeds from any liquidated Mortgaged Property, in each case received by the
Servicer on or prior to such Payment Date and (iii) any P&I Advance made by
the Servicer, the Trustee or the Fiscal Agent with respect to such
Distribution Date, less funds described in (i), (ii) and (iii) used to (A)
reimburse Advances, plus interest thereon, and (B) pay fees and other amounts
due or reimbursable from such funds, to the Servicer, the Trustee, the Fiscal
Agent, the Special Servicer and any other Person (as applicable) specified in
this Agreement.
B Component: With respect to the Mortgage Note, that portion
of the principal balance thereof corresponding to the Certificate Principal
Balance of the Class B Certificates. The portion of the Closing Date Deed of
Trust Loan Principal Balance allocable to the B Component is $27,000,000.
Balloon Anticipated Repayment Date: December 18, 2003.
Basic Carrying Costs: With respect to each Mortgage, the sum of
the following costs associated with the related Mortgaged Property (computed
on a monthly basis): (i) all Impositions (excluding those Impositions that
may be assessed or imposed on or constitute a lien upon a Mortgagor only, as
opposed to any Mortgaged Property or any part thereof or interest therein),
(ii) insurance premiums for Required Insurance Policies, (iii) all costs and
expenses identified as costs or expenses of the Trust Fund under the terms of
this Agreement and all other costs and expenses reimbursable to the Trustee,
the Fiscal Agent, the Servicer and any Special Servicer pursuant to this
Agreement and (iv) the costs and expenses of the Servicer (including, without
limitation, reasonable attorneys' fees and expenses) incurred in connection
with a release of either or both Mortgaged Properties from the lien of the
related Mortgage. In no event shall Basic Carrying Costs include the
Servicing Fee, the Special Servicing Fee, the Liquidation Fee, the
Modification Fee or the Trustee Fee.
5
Basic Carrying Costs Sub-Account: That certain Sub- Account
established and maintained as a separate Eligible Account and a part of the
Central Account pursuant to each Mortgage for the purposes described therein.
Beneficial Owner: With respect to any Book-Entry Certificate, the
Person who is the beneficial owner thereof as reflected on the books of the
Depository, or on the books of a Person maintaining an account with the
Depository (directly or as an indirect participant, in accordance with the
rules of the Depository), as the case may be.
Book-Entry Certificate: Any of the Regular Certificates,
beneficial ownership and transfers of which shall be evidenced by, and made
through, book entries by the Depository, as described in Section 5.01.
Business Day: Any day other than (i) a Saturday or a Sunday or
(ii) a day on which federally insured depository institutions in the states
of New York, Virginia, Georgia or Illinois or the state in which the
Corporate Trust Office is located are authorized or obligated by law,
governmental decree or executive order to be closed.
C Component: With respect to the Mortgage Note, that portion of
the principal balance thereof corresponding to the Certificate Principal
Balance of the Class C Certificates. The portion of the Closing Date Deed of
Trust Loan Principal Balance allocable to the C Component is $15,000,000.
Carrying Costs Advance: As to any Distribution Date, all
customary, reasonable and necessary "out of pocket" costs and expenses
incurred by the Servicer during the related Interest Accrual Period in the
performance of its servicing obligations, including, but not limited to, the
costs and expenses incurred in connection with (i) the preservation,
restoration and protection of any Mortgaged Property, (ii) the payment of
Basic Carrying Costs if unpaid by the Mortgagors and any other amounts
necessary to preserve the priority of the liens created by the Mortgages
(iii) any enforcement or judicial proceedings, including foreclosures and
including, but not limited to the court costs,
6
attorneys' fees and expenses, costs for third-party experts, including
environmental and engineering consultants and (iv) the management and
liquidation of a Mortgaged Property if such Mortgaged Property is acquired by
the Trustee, or the Servicer in the name of the Trustee, in full or partial
satisfaction of the Mortgage Loan. In no event shall the term Carrying Costs
Advance include (a) any loss due to an Uninsured Cause, (b) any amounts
required to cure a failure of a Mortgaged Property to comply with any
applicable environmental law, or to investigate, test, monitor, contain,
clean up or remedy an environmental condition present at a Mortgaged Property
or (c) any amounts to pay the cost of capital improvements to a Mortgaged
Property other than those to preserve, restore and protect such Mortgaged
Property.
Central Account: The separate Eligible Account established and
maintained by the Servicer at the Mortgagors' expense pursuant to Section
3.04(a), entitled "Central Account -AMRESCO Management, Inc., as Servicer, in
trust for Potomac ▇▇▇▇▇-Phase III (MLP) Limited Partnership, Washington
Outlet Mall (MLP) Limited Partnership and Gurnee ▇▇▇▇▇ (MLP) Limited
Partnership, as pledgors to LaSalle National Bank, as Trustee for the benefit
of the holders of Potomac Gurnee Finance Corp. Commercial Mortgage
Pass-Through Certificates" pursuant to the Mortgages. The Central Account
(including all Sub-Accounts therein) shall, for federal income tax purposes,
be beneficially owned by the Mortgagors, which shall be taxed on all
reinvestment income and gain thereon. The Central Account shall not be an
asset of the Trust Fund or the Trust REMIC, but the Trust Fund shall have a
security interest in funds from time to time on deposit therein.
CERCLA: The Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended.
Certificate: Any one of the Class A Certificates, the Class B
Certificates, the Class C Certificates, the Class D Certificates or the Class
R Certificates.
Certificate Account: The separate Eligible Account established
and maintained by the Trustee, pursuant to Section 3.04(c), which account
shall be entitled "Certificate Account -LaSalle National Bank, as Trustee for
the benefit of the holders
7
of Potomac Gurnee Finance Corp. Commercial Mortgage Pass-Through
Certificates." Funds in the Certificate Account shall be held in trust for
the Certificateholders for the uses and purposes set forth in this Agreement.
The Certificate Account shall be an asset of the Trust Fund and the Trust
REMIC.
Certificate Interest Rate: The Class A Certificate Interest Rate,
the Class B Certificate Interest Rate, the Class C Certificate Interest Rate
or the Class D Certificate Interest Rate, as the case may be, each of which
shall be calculated on the basis of a 360-day year of twelve 30-day months.
Certificate Interest Shortfall: As to any Distribution Date and
any Class of Regular Certificates, the amount, if any, by which the amount of
interest accrued on the Certificate Principal Balance of such Class during
the related Interest Accrual Period at the Certificate Interest Rate for such
Class exceeds the amount distributed on such Class in respect of such
interest on such Distribution Date. The term "Certificate Interest Shortfall"
will not include any unpaid Default Rate Interest or Additional Interest.
Certificate Principal Balance: As of any date of determination,
the Class A Certificate Principal Balance, the Class B Certificate Principal
Balance, the Class C Certificate Principal Balance or the Class D Certificate
Principal Balance, as the case may be.
Certificate Register and Certificate Registrar: The register
maintained pursuant to and the registrar provided for in Section 5.02.
Certificateholder or Holder: The Person in whose name a
Certificate is registered in the Certificate Register, except that, solely
for the purposes of taking any action under Article Eight or giving any
consent, waiver, request or demand pursuant to this Agreement, (i) any
Certificate registered in the name of the Depositor, the Manager or the
Mortgagors, or any of their respective Affiliates, shall be deemed not to be
outstanding and the Percentage Interest evidenced thereby shall not be taken
into account in determining whether the requisite amount of Percentage
Interests necessary to take any such action or effect any such
8
consent, waiver, request or demand has been obtained and (ii) any Certificate
registered in the name of the Servicer or registered in the name of any
Person known to a Responsible Officer to be a Sub-Servicer, or any of their
respective Affiliates shall be deemed not to be outstanding and the
Percentage Interest evidenced thereby shall not be taken into account in
determining whether the requisite amount of Percentage Interests necessary to
take any such action or effect any such consent, waiver, request or demand
has been obtained, if such action, consent, waiver, request or demand
concerns matters hereunder affecting the interests of the Servicer in such
capacity. The Trustee and the Certificate Registrar may obtain and
conclusively rely upon a certificate of the Depositor, the Manager, the
Servicer, the Mortgagors or any Sub-Servicer to determine whether a
Certificate is registered in the name of an Affiliate of any of them.
Class: Each group of Certificates whose form is identical except
for variations in Percentage Interest and registration, such groups being
denominated as Class A, Class B, Class C, Class D and Class R.
Class A Certificate: Any one of the Certificates executed and
authenticated by or on behalf of the Trustee in substantially the form set
forth in Exhibit A hereto.
Class A Certificate Interest Rate: A rate of 6.8870% per annum.
Class A Certificate Principal Balance: As of any date of
determination, the Original Class A Certificate Principal Balance less the
sum of all amounts distributed to Holders of Class A Certificates on previous
Distribution Dates and allocable to principal.
Class A Percentage: With respect to any Distribution Date, a
fraction, the numerator of which is the Class A Certificate Principal Balance
on the day preceding such Distribution Date and the denominator of which is
the Aggregate Certificate Principal Balance on such date.
9
Class B Certificate: Any one of the Certificates executed and
authenticated by or on behalf of the Trustee in substantially the form set
forth in Exhibit B hereto.
Class B Certificate Interest Rate: A rate of 7.0030% per annum.
Class B Certificate Principal Balance: As of any date of
determination, the Original Class B Certificate Principal Balance less all
amounts distributed to Holders of Class B Certificates on previous
Distribution Dates and allocable to principal.
Class B Percentage: With respect to any Distribution Date, a
fraction, the numerator of which is the Class B Certificate Principal Balance
on the day preceding such Distribution Date and the denominator of which is
the Aggregate Certificate Principal Balance on such date.
Class C Certificate: Any one of the Certificates executed and
authenticated by or on behalf of the Trustee in substantially the form set
forth in Exhibit C hereto.
Class C Certificate Interest Rate: A rate of 7.2170% per annum.
Class C Certificate Principal Balance: As of any date of
determination, the Original Class C Certificate Principal Balance less the
sum of all amounts distributed to Holders of Class C Certificates on previous
Distribution Dates and allocable to principal.
Class C Percentage: With respect to any Distribution Date, a
fraction, the numerator of which is the Class C Certificate Principal Balance
on the day preceding such Distribution Date and the denominator of which is
the Aggregate Certificate Principal Balance on such date.
Class D Certificate: Any one of the Certificates executed and
authenticated by or on behalf of the Trustee in substantially the form set
forth in Exhibit D hereto.
10
Class D Certificate Interest Rate: A rate of 7.6830% per annum.
Class D Certificate Principal Balance: As of any date of
determination, the Original Class D Certificate Principal Balance less all
amounts distributed to Holders of Class D Certificates on previous
Distribution Dates and allocable to principal.
Class D Percentage: With respect to any Distribution Date, a
fraction, the numerator of which is the Class D Certificate Principal Balance
on the day preceding such Distribution Date and the denominator of which is
the Aggregate Certificate Principal Balance on such date.
Class R Certificate: Any one of the Certificates executed and
authenticated by or on behalf of the Trustee in substantially the form set
forth in Exhibit E hereto. The Class R Certificates have no Certificate
Interest Rate or principal balance. For purposes of this Agreement, each
beneficial owner of a Percentage Interest in a Class R Certificate registered
in accordance with Section 5.02 shall be deemed to hold (and shall be
entitled to receive upon request) a separate Class R Certificate as the owner
of a specified Percentage Interest therein.
Closing Date: December 17, 1996.
Closing Date Fractional Interest: As to each Class of Regular
Certificates, a fraction whose numerator is the Certificate Principal Balance
of such Class as of the Closing Date and whose denominator is the aggregate
Certificate Principal Balance of all Classes of Regular Certificates as of
the Closing Date.
Closing Date Mortgage Loan Principal Balance: The original
principal balance of the Mortgage Loan on the Closing Date, which is
$284,000,000.
Code: The Internal Revenue Code of 1986, as amended, and as it
may be further amended from time to time, any successor statutes thereto, and
applicable U.S. Department of Treasury
11
regulations issued pursuant thereto in temporary or final form and proposed
regulations thereunder, to the extent that, by reason of their proposed
effective date, such proposed regulations would apply to the Trust Fund.
Collateral Security Instruments: Any right, document or
instrument, other than the Mortgages, given as security for the Mortgage
Note (including, without limitation, the Mortgage Assignments, the
Assignments of Leases and Rents and Security Deposits, each other Loan
Document (other than the Mortgages) and UCC-1 and UCC-3 financing statements
or equivalent documents with evidence of their filing and the Assignments of
Leases and Rents and Security Deposits or equivalent document), together with
any rider, addendum or amendment thereto, as amended from time to time.
Component: That portion of the principal balance of the Deed of
Trust Note corresponding to the Certificate Principal Balance of a particular
Class of Regular Certificates. The Components corresponding to the
Certificate Principal Balance of each of the Class A, Class B, Class C and
Class D Certificates are sometimes referred to herein as the A Component, the
B Component, the C Component and the D Component, respectively. As used in
the plural, the A Component, the B Component, the C Component and the D
Component, collectively.
Component Rate: As to any Component, the initial per annum rate
at which interest accrues on such Component without giving effect to any
increase that reflects Default Rate Interest or Additional Interest accruing
thereon, as specified in the Mortgage Note.
Condemnation Proceeds: As to any Mortgaged Property, all of the
proceeds in respect of any Taking or purchase in lieu thereof.
Control Person: With respect to any Person, any other Person that
controls such Person within the meaning of the Securities Act or the Exchange
Act.
Corporate Trust Office: The principal office of the Trustee at
which at any particular time its corporate trust
12
business shall be principally administered, which office at the date of the
execution of this instrument is located at LaSalle National Bank, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ Attention: Asset
Backed Securities Trust Services Group-Potomac Gurnee Certificates.
CS First Boston: CS First Boston Corporation, or its successor in
interest.
Curtailment Reserve Sub-Account: That certain SubAccount
established and maintained as a separate Eligible Account and a part of the
Central Account pursuant to each Mortgage for the purpose of holding
certain payments of principal on the Mortgage Loan.
D Component: With respect to the Mortgage Note, that portion
of the principal balance thereof corresponding to the Certificate Principal
Balance of the Class D Certificates. The portion of the Closing Date Deed of
Trust Loan Principal Balance allocable to the D Component is $30,000,000.
Debt Service Coverage: As defined in each Mortgage.
Debt Service Payment Sub-Account: That certain Sub- Account
established and maintained as a separate Eligible Account and a part of the
Central Account pursuant to each Mortgage for the purpose of holding
payments of debt service on the Mortgage Loan.
Default Interest Account: The separate Eligible Account
established and maintained by the Trustee, pursuant to Section 3.04(d), which
account shall be entitled "Default Interest Account -- LaSalle National Bank,
as Trustee for the benefit of the holders of Potomac Gurnee Finance Corp.
Commercial Mortgage Pass-Through Certificates." Funds in the Default
Interest Account shall be held in trust for the Certificateholders for the
uses and purposes set forth in this Agreement. The Default Interest Account
shall be an asset of the Trust Fund, but shall not be an asset of the Trust
REMIC.
Default Interest Distribution Amount: As to any Distribution
Date, the amount of Default Rate Interest, if any,
13
paid on the Mortgage Loan on the related Payment Date less all amounts
thereof applied by the Servicer to the repayment of interest on P&I Advances.
Default Rate Interest in excess of amounts thereof applied by the Servicer to
the repayment of interest on P&I Advances will not be due and payable under
the Mortgage Note until the Mortgage Loan Principal Balance has
been reduced to zero and all other amounts due under the Mortgage Note
(other than Late Charges) have been paid.
Default Rate: As to each Component, the related Component Rate
plus four percent (4%) per annum or, after the Balloon Anticipated Repayment
Date, the related Adjusted Component Rate plus four percent (4%) per annum.
Default Rate Interest: For any period of determination, that
portion of interest on each Component equal to the difference between (i)
interest accrued on such Component during such period at the Default Rate and
(ii) interest accrued on the Mortgage Loan during such period at the
Component Rate (or, for any portion of such period falling after the Balloon
Anticipated Repayment Date, the Adjusted Component Rate) for such Component.
Definitive Certificates: As defined in Section 5.01.
Depositor: Potomac Gurnee Finance Corp., a Delaware corporation,
or any successor thereto.
Depository: The Depository Trust Company or a successor appointed
by the Trustee. Any successor to the Depository shall be an organization
registered as a "clearing agency" pursuant to Section 17A of the Securities
Exchange Act of 1934, as amended, and the regulations of the Securities and
Exchange Commission thereunder.
Depository Participant: A Person for whom, from time to time, the
Depository effects book-entry transfers and pledges of securities deposited
with the Depository.
Directly Operate: With respect to any Foreclosed Property, the
furnishing or rendering of services to the tenants thereof, the management or
operation of such Foreclosed Property,
14
the holding of such Foreclosed Property primarily for sale, the performance
of any construction work thereon or any use of such Foreclosed Property in a
trade or business conducted by the Trust Fund, in each case other than
through an Independent Contractor; provided, however, that the Trust Fund (or
the Servicer on behalf of the Trust Fund) shall not be considered to Directly
Operate a Foreclosed Property solely because the Trust Fund (or the Servicer
on behalf of the Trust Fund) 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
Foreclosed Property.
Disqualified Organization: Either (i) the United States, (ii) any
State or political subdivision thereof, (iii) any foreign government, (iv)
any international organization, (v) any agency or instrumentality of any of
the foregoing, (vi) any tax-exempt organization (other than a cooperative
described in Section 521 of the Code) that is exempt from the tax imposed by
Chapter 1 of the Code unless such organization is subject to the tax imposed
by Section 511 of the Code, (vii) any organization described in Section
1381(a)(2)(C) of the Code, (viii) any other entity designated as a
Disqualified Organization by relevant legislation amending the REMIC
Provisions and in effect at or proposed to be effective as of the time of the
determination, or (ix) any other entity designated by the Trustee based upon
an Opinion of Counsel to the effect that any transfer of a Class R
Certificate to such person may cause the Trust REMIC to fail to qualify as a
REMIC at any time that the Certificates are outstanding. In addition, a
corporation will not be treated as an instrumentality of the United States or
of any state or political subdivision thereof if all of its activities are
subject to the tax imposed by Chapter 1 of the Code and, except in the case
of FHLMC, a majority of its board of directors is not selected by such
governmental unit. The terms "United States," "State" and "international
organization" shall have the meanings set forth in Section 7701 of the Code.
Distribution Date: The 20th day of each calendar month, beginning
in January 1997 or, if such 20th day is not a Business Day, the next
succeeding Business Day with the same force and effect as if actions to be
taken thereon were taken as of such 20th day.
15
Eligible Account: A segregated account that is either (i) an
account or accounts maintained with a depository institution or trust company
the long-term unsecured debt obligations of which are rated by the Rating
Agency (or the Rating Agency has confirmed in writing that such account would
not, in and of itself, result in a downgrade, qualification or withdrawal of
the then current ratings assigned to any Class of Regular Certificates) in
one of its two highest rating categories at all times or, if the funds in
such account are to be held in such account for less than 30 days, the
short-term obligations of which are rated by the Rating Agency (or, if not
rated by the Rating Agency, the Rating Agency has confirmed in writing that
such account would not, in and of itself, result in a downgrade,
qualification or withdrawal of the then current ratings assigned to any Class
of Regular Certificates) in its highest rating category at all times or (ii)
a segregated trust account or accounts maintained with a federal or state
chartered depository institution or trust company acting in its fiduciary
capacity that, in the case of a state chartered depository institution is
subject to regulations substantially similar to 12 C.F.R. ss. 9.10(b), having
in either case a combined capital and surplus of at least $100,000,000 and
subject to supervision or examination by federal and state authority, or the
Rating Agency has confirmed in writing that such account would not, in and of
itself, cause a downgrade, qualification or withdrawal of the then current
ratings assigned to any Class of Regular Certificates) to the Rating Agency
or (iii) an account in any other insured depository institution reasonably
acceptable to the Trustee and as to which the Rating Agency has confirmed in
writing that such account would not, in and of itself, cause a downgrade,
qualification or withdrawal of the then current ratings assigned to any Class
of Regular Certificates. Eligible Accounts may bear interest. The title of
each Eligible Account shall indicate that the funds held therein are held in
trust for the uses and purposes set forth herein.
Environmental Law: Any and all present and future federal, state
and local laws, rules or regulations, any judicial or administrative orders,
decrees or judgments thereunder, and any permits, approvals, licenses,
registrations, filings and authorizations, in each case as now or hereafter
in effect,
16
relating to the environment, human health or safety, or the Release or
threatened Release of Hazardous Materials into the indoor or outdoor
environment including, without limitation, ambient air, soil, surface water,
ground water, wetlands, land or subsurface strata or otherwise relating to
the Release of Hazardous Materials.
Environmental Report: As to each Mortgaged Property, the
environmental audit report or reports with respect to such Mortgaged Property
prepared and delivered to the Depositor in connection with the related Deed
of Trust.
ERISA: The Employee Retirement Income Security Act of 1974, as
amended.
Escrow Account: An account established and maintained by the
Servicer as provided in Section 3.05 hereof.
Event of Default: As defined in Section 7.01.
Excess Cash Flow Amount: As to any Distribution Date, the amount
available in the Central Account (other than Loss Proceeds) on the related
Payment Date reduced by the Required Debt Service Payment, and further
reduced by the amounts, if any, to be allocated to the Basic Carrying Costs
Monthly Installment (as defined in each Mortgage), the Recurring
Replacement Reserve Monthly Installment (as defined in each Mortgage)
and the Operation and Maintenance Expense Monthly Installment (as defined in
each Mortgage).
Exchange Act: The Securities Exchange Act of 1934, as amended.
FDIC: Federal Deposit Insurance Corporation, or any successor
thereto.
FHA: The Federal Housing Administration, or any successor thereto.
FHLMC: Federal Home Loan Mortgage Corporation, or any successor
thereto.
17
Final Distribution Date: The Distribution Date on which the final
distribution in respect of the Certificates will be made pursuant to Section
9.01.
Final Scheduled Certificate Distribution Date: With respect to
each Class of Certificates, December 21, 2026.
Fiscal Agent: ABN AMRO Bank N.V., a Netherlands banking
corporation.
Fiscal Year: As to each Mortgagor, the 12-month period commencing
on January 1 and ending on December 31 during each year of the term of each
Mortgage, or such other fiscal year of the related Mortgagor as such
Mortgagor may select from time to time with the prior written consent of the
Servicer. For the calendar year in which the Closing Date occurred, each
Mortgagor's Fiscal Year shall be deemed to have commenced on the Closing Date
and shall end on December 31, 1996.
FNMA: Federal National Mortgage Association, or any successor
thereto.
Foreclosed Property: Any Mortgaged Property acquired by the Trust
Fund by foreclosure or acceptance of a deed in lieu of foreclosure or
otherwise, or with respect to which an Acquisition Date has occurred.
Grantor Trust: The portion of the Trust Fund consisting of
Default Rate Interest and the Default Interest Account.
Grantor Trust Provisions. Subpart E, Part 1 of Subchapter J,
Chapter 1 of Subtitle A of the Code.
Gurnee ▇▇▇▇▇ Mortgage: The Mortgage, Security Agreement,
Assignment of Leases and Rents, and Fixture Filing relating to the Gurnee
▇▇▇▇▇ Mortgaged Property, dated as of the Closing Date, between the Gurnee
▇▇▇▇▇ Mortgagor, as mortgagor, and CS First Boston Mortgage Capital Corp., as
mortgagee, as amended, supplemented or otherwise modified from time to time.
18
Gurnee ▇▇▇▇▇ Mortgaged Property: The "Mortgaged Property", as such
term is defined in the Gurnee ▇▇▇▇▇ Mortgage.
Gurnee ▇▇▇▇▇ Mortgagor: Gurnee ▇▇▇▇▇ (MLP) Limited Partnership, an
Illinois limited partnership, one of the obligors on the Mortgage Note.
Hazardous Material: As defined in each Mortgage.
Impositions: As defined in each Mortgage.
Independent: With respect to any specified Person, a Person that
(a) does not have any direct financial interest or any material indirect
financial interest in the Depositor, the Manager, either Mortgagor or the
Servicer or in any of their respective Affiliates in excess of 5% of the
outstanding capital shares of any such Person and (b) is not connected with
the Manager, either Mortgagor, the Depositor or the Servicer or any of their
respective Affiliates as an officer, employee, promoter, underwriter,
trustee, partner, director or person performing similar functions. Whenever
it is provided that any Independent Person's opinion or certificate shall be
furnished, such opinion or certificate shall state that the signer thereof
has read this definition and that such signer is Independent within the
meaning hereof.
Independent Contractor: Either (i) any Person (other than the
Servicer) that would be an "independent contractor" with respect to the Trust
Fund within the meaning of Section 856(d)(3) of the Code if the Trust Fund
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 Regular Certificates),
provided that the Trust Fund does not receive or derive any income from such
Person and the relationship between such Person and the Trust Fund is at
arm's length, all within the meaning of Treasury Regulation Section
1.856-4(b)(5), or (ii) any other Person (including the Servicer) with regard
to which the Trustee has received an Opinion of Counsel (which Opinion of
Counsel shall be at no expense to the Trustee or the Trust Fund) to the
effect that the taking of any action in respect of any Foreclosed Property by
such Person, subject to any conditions therein
19
specified, that is otherwise herein contemplated to be taken by an
Independent Contractor will not cause such Foreclosed Property to cease to
qualify as "foreclosure property" within the meaning of Section 860G(a)(8) of
the Code (determined without regard to the exception applicable for purposes
of Section 860D(a) of the Code) or cause any income realized in respect of
such Foreclosed Property to fail to qualify as Rents from Real Property.
Initial Purchasers: CS First Boston and ▇▇▇▇▇▇▇ ▇▇▇▇▇.
Insurance Proceeds: As to any Mortgaged Property, all of the
proceeds received under the insurance policies required to be maintained by
the related Mortgagor pursuant to the related Mortgage.
Insured Expenses: Expenses covered by any insurance policy.
Interest Accrual Period: With respect to a Distribution Date, the
period commencing on and including the prior Distribution Date (or, in the
case of the first Distribution Date, the Closing Date) and ending on and
including the day immediately preceding such Distribution Date. Each Interest
Accrual Period (other than the initial Interest Accrual Period, which shall
be deemed to consist of 33 days) shall be treated as one 30-day month for
purposes of accrual of interest.
Interested Person: As of any date of determination, either a
Mortgagor, the Manager, any Successor Manager, the Depositor, the Servicer, any
Holder of a Certificate or, in each such case, any of their respective
Affiliates.
IRS: The Internal Revenue Service.
Late Charges: As defined in Section 13.09 of each Mortgage.
Lien: Any mortgage, deed of trust, lien, pledge, hypothecation,
assignment, security interest, or any other encumbrance, charge or transfer
of, on or affecting a Mortgaged Property or any portion thereof or the related
Mortgagor, or any interest therein, including, without limitation, any
conditional
20
sale or other title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, the filing of
any financing statement, and mechanic's, materialman's and other similar liens
and encumbrances.
Liquidated Mortgaged Property: Any Mortgaged Property (including any
Foreclosed Property) that has been liquidated and as to which the Servicer has
determined that all amounts that it expects to recover from or on account of
such liquidated Mortgaged Property have been recovered.
Liquidation Expenses: Reasonable and customary expenses (other than
Insured Expenses) incurred by the Servicer or the Trustee in connection with the
liquidation of any Mortgaged Property or the sale or other disposition of the
Mortgage Loan, such expenses to include, without limitation, legal fees and
expenses, appraisal fees, Environmental Reports, receivership fees, brokerage
fees, trustee fees, and co-trustee fees (if any) fees and expenses in connection
with the maintenance and preservation of such Mortgaged Property, any
unreimbursed amount expended by the Servicer pursuant to Section 3.06(a) or 3.10
(to the extent such amount is reimbursable under such Sections) and any
unreimbursed expenditures for Basic Carrying Costs or for property restoration
or preservation relating to such Mortgaged Property. Liquidation Expenses shall
not include any previously incurred expenses that have been previously
reimbursed to the Servicer or that were netted against income from any
Foreclosed Property and were considered in the calculation of the amount of REO
Proceeds pursuant to the definition thereof.
Liquidation Fee: As defined in Section 3.12(a).
Liquidation Proceeds: Cash received by the Servicer in connection
with the liquidation of a Mortgaged Property or the sale or disposition of the
Mortgage Loan whether through judicial foreclosure, sale or otherwise,
other than amounts required to be paid to the related Mortgagor pursuant to law
or the terms of the related Mortgage.
Loan Documents: The Mortgage Note, the Mortgages, the
Assignments of Leases and Rents and Security Deposits and all
21
other agreements, instruments, certificates and documents delivered by or on
behalf of the Mortgagors or any of their respective Affiliates to evidence or
secure the Mortgage Loan or otherwise in satisfaction of the
requirements of the Mortgages or the other documents identified above.
Loss Proceeds: Collectively, all Insurance Proceeds and all
Condemnation Proceeds.
Management Fee: As to any Mortgaged Property that has become a
Foreclosed Property, a fee payable out of the Trust Fund to the Successor
Manager for managing such property while it is owned by the Trust Fund, which
shall be reasonable and customary in the market in which such Mortgaged Property
is located.
Manager: Management Associates Limited Partnership, a Delaware
limited partnership, or any other entity then serving as manager of the
Mortgaged Properties as permitted under the Mortgages.
▇▇▇▇▇▇▇ ▇▇▇▇▇: ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated,
or its successor in interest.
Modification Fee: As defined in Section 3.03.
Monthly Payment: With respect to any Distribution Date, the
payment of interest (excluding Default Rate Interest and Additional Interest)
and scheduled principal due on the Mortgage Loan on the related Payment
Date, in accordance with the terms of the Mortgage Note.
Monthly Statement: As defined in Section 4.02.
Mortgage: The Gurnee ▇▇▇▇▇ Mortgage or the Potomac
▇▇▇▇▇ Mortgage, as the case may be. As used in the plural, both the
Gurnee ▇▇▇▇▇ Mortgage and the Potomac ▇▇▇▇▇ Mortgage.
Mortgage Assignment: The Assignment of Potomac Mortgage
or the Assignment of Gurnee Mortgage, as the case may be.
22
Mortgage File: The documents listed in Section 2.01
pertaining to the Mortgage Loan and any additional documents required to
be added to the Mortgage File pursuant to this Agreement.
Mortgage Insurance Proceeds: Insurance Proceeds as defined
in each Mortgage.
Mortgage Loan: The mortgage loan obtained by the Mortgagors
and evidenced by the Mortgage Note, the Mortgages, the other Loan
Documents and related documents transferred and assigned to the Trustee
pursuant to Section 2.01.
Mortgage Loan Event of Default: As to either Mortgage,
an "Event of Default" as defined therein.
Mortgage Loan Principal Balance: As to any date of
determination, the Closing Date Mortgage Loan Principal Balance less the
sum of (i) the aggregate amount of the principal portion of all Monthly
Payments received on or prior to the Payment Date immediately preceding such
date of determination and (ii) all Unscheduled Payments allocable to
principal and received by the Servicer through such Payment Date and applied
to reduce the principal balance of the Mortgage Loan in accordance with
the terms of the Loan Documents.
Mortgage Note or Note: The original executed promissory
note, dated the Closing Date, evidencing, in the aggregate, the indebtedness
of the Mortgagors under the Mortgage Loan.
Mortgage Note Allonge: The allonge to the Mortgage Note
containing the endorsement thereof by the Depositor to the Trustee.
Mortgaged Property: Either the Gurnee ▇▇▇▇▇ Mortgaged Property or
the Potomac ▇▇▇▇▇ Mortgaged Property, as the case may be.
Mortgagor: Either the Gurnee ▇▇▇▇▇ Mortgagor or the Potomac ▇▇▇▇▇
Mortgagor, as the case may be.
23
Net Operating Income or NOI: As "Net Operating Income" is defined in
each Mortgage.
Net Proceeds: With respect to any Mortgaged Property that has
become a Liquidated Mortgaged Property, or with respect to the sale or
disposition of the Mortgage Loan, the excess of Liquidation Proceeds over
Liquidation Expenses.
New Lease: Any lease of Foreclosed Property entered into by the
Servicer in the name of the Trustee on behalf of the Trust Fund, including any
lease renewed, modified or extended by the Servicer in the name of the Trustee
on behalf of the Trust Fund if the Trust Fund has the right to renegotiate the
terms of such lease.
Nondisqualification Opinion: An opinion of Independent counsel,
prepared at the expense of the Person seeking a contemplated action (or, if
such action is for the benefit of the Certificateholders and this Agreement
does not provide that such opinion is to be at the expense of a Person other
than the Trust Fund, then at the Trust Fund's expense, payable from the
Certificate Account), that such action will not cause (i) the Trust REMIC to
fail to qualify as a REMIC, (ii) the Grantor Trust to be treated as a taxable
mortgage pool (under Section 7701(i) of the Code) or (iii) a "prohibited
transaction" tax or "prohibited contribution" tax to be imposed on the Trust
REMIC, at any time that any Certificates are outstanding.
Nonrecoverable Advance: Any portion of an Advance previously made
or proposed to be made which, in the case of an Advance previously made, has
not been previously reimbursed to the Servicer, the Trustee or the Fiscal
Agent, as applicable, and which in the good faith business judgment of the
Servicer, the Trustee or the Fiscal Agent, as applicable, taking into account
amounts that may be collected or realized on the Mortgaged Properties prior
to final liquidation and Liquidation Proceeds, will not, or, in the case of a
proposed Advance, would not, be ultimately recoverable (together with
interest thereon at the Advance Rate) from subsequent payments or collections
(including Loss Proceeds or Net Proceeds) with respect to the Mortgage
Loan and the Mortgaged Properties. An Advance shall be conclusively deemed to
be nonrecoverable to the extent such Advance, together
24
with all unreimbursed Advances and all accrued but unpaid interest thereon,
exceeds the excess of the fair market value of the Mortgaged Properties, as
determined by an appraisal as provided in Section 3.18, over the principal
balance of the Mortgage Loan. Any determination by the Servicer, the
Trustee or the Fiscal Agent, as applicable, not to make an Advance because it
would, in its good faith judgment, constitute a Nonrecoverable Advance shall
be accompanied by an Officer's Certificate described in and delivered
pursuant to Section 3.18(d). In determining whether an Advance will be
recoverable, the Servicer shall take into account amounts that may be
realized from Loss Proceeds and Net Proceeds on all of the Mortgaged
Properties. The Servicer's good faith determination as to the recoverability
of an Advance shall be conclusive and binding on the Certificateholders and
the Trustee.
Offering Circular: The Confidential Offering Circular dated
December 11, 1996 relating to the Regular Certificates.
Officer's Certificate: With respect to the Depositor or the
Mortgagors, a certificate signed by the Manager, or by the Chairman of the
Board, the Vice Chairman of the Board, the President, a Vice President, the
Treasurer, the Secretary, the Assistant Treasurer or an Assistant Secretary of
the Depositor or by a general partner of the Mortgagors and delivered to the
Trustee. With respect to the Servicer, a certificate signed by a Servicing
Officer and delivered to the Trustee or, if such certificate is delivered for
the purpose of identifying persons who shall be deemed as Servicing Officers
under this Agreement, signed by a Vice President, the Treasurer, the Secretary,
an Assistant Treasurer or an Assistant Secretary of the Servicer. With respect
to the Trustee, a certificate signed by a Responsible Officer and delivered to
the Depositor. With respect to the Fiscal Agent, a certificate signed by an
officer of the Fiscal Agent and delivered to the Trustee.
Operating Expenses: With respect to each Mortgaged Property, as
defined in the applicable Mortgage.
Operating Income: With respect to each Mortgaged Property, as
defined in the applicable Mortgage.
25
Opinion of Counsel: A written opinion of counsel acceptable to the
Trustee and to any other party hereto to whom such opinion is to be delivered
pursuant to the applicable terms of this Agreement, who may be counsel for the
Servicer, the Mortgagors, the Manager or the Depositor, as the case may be,
except that any Nondisqualification Opinion or any opinion of counsel relating
to the qualification of the Trust REMIC as a REMIC, compliance with the REMIC
Provisions, or qualification of the Grantor Trust must be an opinion of counsel
that is Independent.
Original Class A Certificate Principal Balance: $212,000,000.
Original Class B Certificate Principal Balance: $27,000,000.
Original Class C Certificate Principal Balance: $15,000,000.
Original Class D Certificate Principal Balance: $30,000,000.
P&I Advance: With respect to any Distribution Date and any Class of
Regular Certificates, an advance made by the Servicer, the Trustee or the Fiscal
Agent, as applicable, of then-delinquent interest at the applicable Component
Rate, and of due and unpaid scheduled principal, with respect to the Component
corresponding to such Class.
P&I Advance Appraisal: An appraisal that is an Original Appraisal, a
Second Appraisal or a Third Appraisal, as defined in Section 3.18(f).
Paying Agent: The paying agent appointed pursuant to Section 5.06.
If no such paying agent has been appointed or if such paying agent has been so
appointed but the Trustee shall have terminated such appointment, then the
Trustee shall be the Paying Agent.
Payment Date: With respect to each Interest Accrual Period, the
second Business Day preceding the Distribution Date
26
occurring in the month in which such Interest Accrual Period ends.
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
thereof is derived by dividing the denomination of such Certificate by the
aggregate denominations of all Certificates of the same Class as such
Certificate. With respect to any Class R Certificate, the Percentage Interest is
set forth on the face thereof.
Permitted Encumbrances: As defined in each Mortgage.
Permitted Investments: Any one or more of the following obligations
or securities payable on demand or having a scheduled maturity (x) in the case
of the Central Account and the Servicer Collection Account, no later than the
Business Day preceding the date upon which funds in such account are required to
be withdrawn and (y) in the case of the Certificate Account and the Default
Interest Account, no later than the Business Day preceding each Distribution
Date, and in each case having at all times the required ratings, if any,
provided for in this definition, unless the Rating Agency shall have confirmed
in writing to the Trustee that a lower rating would not, in and of itself,
result in a downgrade, qualification or withdrawal of the then current ratings
assigned to any Class of Regular Certificates:
(i) obligations of, or obligations fully guaranteed as to payment of
principal and interest by, the United States of America or any agency or
instrumentality thereof provided such obligations are backed by the full
faith and credit of the United States of America including, without
limitation, obligations of: the U.S. Treasury (all direct or fully
guaranteed obligations), the Farmers Home Administration (certificates of
beneficial ownership), the General Services Administration (participation
certificates), the U.S. Maritime Administration (guaranteed Title XI
financing), the Small Business Administration (guaranteed participation
certificates and guaranteed pool certificates), the U.S. Department of
Housing and Urban
27
Development (local authority bonds) and the Washington Metropolitan Area
Transit Authority (guaranteed transit bonds); provided, however, that the
investments described in this clause must (A) have a predetermined fixed
dollar of principal due at maturity that cannot vary or change, (B) if
such investments have a variable rate of interest, such interest rate must
be tied to a single interest rate index plus a fixed spread (if any) and
must move proportionately with that index, and (C) such investments must
not be subject to liquidation prior to their maturity;
(ii) obligations of the following United States of America
government sponsored agencies: Federal Home Loan Mortgage Corp. (debt
obligations), the Farm Credit System (consolidated systemwide bonds and
notes), the Federal Home Loan Banks (consolidated debt obligations), the
Federal National Mortgage Association (debt obligations), the Student Loan
Marketing Association (debt obligations), the Financing Corp. (debt
obligations), and the Resolution Funding Corp. (debt obligations);
provided, however, that the investments described in this clause must (A)
have a predetermined fixed dollar of principal due at maturity that cannot
vary or change, (B) if such investments have a variable rate of interest,
such interest rate must be tied to a single interest rate index plus a
fixed spread (if any) and must move proportionately with that index, and
(C) such investments must not be subject to liquidation prior to their
maturity;
(iii) federal funds, unsecured certificates of deposit, time
deposits, bankers' acceptances and repurchase agreements with maturities
of not more than 365 days of any bank, the short term obligations of which
are rated in the highest short term rating category by the Rating Agency;
provided, however, that the investments described in this clause must (A)
have a predetermined fixed dollar of principal due at maturity that cannot
vary or change, (B) if such investments have a variable rate of interest,
such interest rate must be tied to a single interest rate index plus a
fixed spread (if any) and must move proportionately with that index, and
(C) such investments must not be subject to liquidation prior to their
maturity;
28
(iv) fully Federal Deposit Insurance Corporationinsured demand
and time deposits in, or certificates of deposit of, or bankers'
acceptances issued by, any bank or trust company, savings and loan
association or savings bank, the short term obligations of which are rated
in the highest short term rating category by the Rating Agency; provided,
however, that the investments described in this clause must (A) have a
predetermined fixed dollar of principal due at maturity that cannot vary
or change, (B) if such investments have a variable rate of interest, such
interest rate must be tied to a single interest rate index plus a fixed
spread (if any) and must move proportionately with that index, and (C)
such investments must not be subject to liquidation prior to their
maturity;
(v) debt obligations with maturities of not more than 365 days
and rated by the Rating Agency in its highest long-term unsecured rating
category (or, if not rated by the Rating Agency, the Rating Agency has
confirmed in writing that such investment would not, in and of itself,
result in a downgrade, qualification or withdrawal of the then current
ratings assigned to any Class of Regular Certificates); provided, however,
that the investments described in this clause must (A) have a
predetermined fixed dollar of principal due at maturity that cannot vary
or change, (B) if such investments have a variable rate of interest, such
interest rate must be tied to a single interest rate index plus a fixed
spread (if any) and must move proportionately with that index, and (C)
such investments must not be subject to liquidation prior to their
maturity;
(vi) commercial paper (including both non-interest-bearing
discount obligations and interest-bearing obligations payable on demand or
on a specified date not more than one year after the date of issuance
thereof) with maturities of not more than 270 days and that is rated by
the Rating Agency in its highest short-term unsecured debt rating;
provided, however, that the investments described in this clause must (A)
have a
29
predetermined fixed dollar of principal due at maturity that cannot vary
or change, (B) if such investments have a variable rate of interest, such
interest rate must be tied to a single interest rate index plus a fixed
spread (if any) and must move proportionately with that index, and (C)
such investments must not be subject to liquidation prior to their
maturity;
(vii) the Federated Prime Obligation Money Market Fund (the "Fund")
so long as the Fund is rated "AAA" by the Rating Agency;
(viii) any other demand, money market or time deposit, demand
obligation or any other obligation, security or investment, provided that
the Rating Agency has confirmed in writing to the Trustee, that such
investment would not, in and of itself, result in a downgrade,
qualification or withdrawal of the then current ratings assigned to any
Class of Regular Certificates); and
(ix) such other obligations as would not, in and of themselves,
result in a downgrade, qualification or withdrawal of the then current
ratings assigned to any Class of Regular Certificates, as confirmed in
writing by the Rating Agency to the Servicer and the Trustee;
provided, however, that, in the judgment of the party directing such investment,
such instrument continues to qualify as a "cash flow investment" pursuant to
Code Section 860G(a)(6) earning a passive return in the nature of interest and
that no instrument or security shall be a Permitted Investment if (i) such
instrument or security evidences a right to receive only interest payments or
(ii) the right to receive principal and interest payments derived from the
underlying investment provides a yield to maturity in excess of 120% of the
yield to maturity at par of such underlying investment.
Person: Any individual, limited liability company, corporation,
partnership, joint venture, association, bank, joint-stock company, trust,
unincorporated organization or government, or any agency or political
subdivision thereof.
▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇: The Deed of Trust, Security Agreement,
Assignment of Leases and Rents, and Fixture Filing relating to the Potomac ▇▇▇▇▇
Mortgaged Property, dated as of the Closing Date, among the Potomac ▇▇▇▇▇
Mortgagor, as grantor, R. ▇▇▇▇ ▇▇▇▇▇▇, as deed of trust trustee, and CS First
Boston Mortgage Capital Corp., as beneficiary, as amended, supplemented or
otherwise modified from time to time.
Potomac ▇▇▇▇▇ Mortgaged Property: The "Mortgaged Property", as such
term is defined in the Potomac ▇▇▇▇▇ Mortgage.
Potomac ▇▇▇▇▇ Mortgagor: Collectively, Potomac ▇▇▇▇▇-Phase III
(MLP) Limited Partnership and Washington Outlet Mall (MLP) Limited Partnership.
Prepayment Premium: With respect to each Mortgage, the
Prepayment Premium specified therein.
Principal Prepayment: Any payment of principal by the Mortgagor or
other recovery of principal on the Mortgage Loan that is received or
recovered in advance of its scheduled Payment Date and is applied to reduce
the Mortgage Loan Principal Balance in advance of its scheduled Payment
Date, excluding any such payment or recovery resulting from the application
of Loss Proceeds or Net Proceeds.
Rating Agency: Fitch Investors Service, L.P. or its successor in
interest.
Record Date: As to any Distribution Date, the close of business on
the last Business Day of the calendar month immediately preceding the month in
which such Distribution Date occurs.
Regular Certificate: Any Class A, Class B, Class C or Class D
Certificate.
Release: Any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration
into the indoor or outdoor environment, including, without limitation, the
movement of Hazardous
31
Materials through ambient air, soil, surface water, ground water, wetlands,
land or subsurface strata.
REMIC: A "real estate mortgage investment conduit" within the
meaning of Section 860D of the Code.
REMIC Provisions: Provisions of the federal income tax law
relating to REMICs, which appear at Sections 860A through 860G of Subchapter
M of Chapter 1 of the Code, and related provisions and regulations and
rulings promulgated thereunder, as the foregoing may be in effect from time
to time and including any proposed legislation or regulation which, as
proposed, would apply to the Trust REMIC.
Rent Account: The separate Eligible Account established and
maintained by the Servicer at each Mortgagor's expense pursuant to Section
3.04(e) for each Mortgaged Property, entitled "Rent Account -- AMRESCO
Management, Inc., as Servicer, in trust for [Mortgagor], as pledgor to LaSalle
National Bank, as Trustee for the benefit of the holders of Potomac Gurnee
Finance Corp. Commercial Mortgage Pass-Through Certificates" pursuant to
the Mortgages. Each Rent Account shall for federal income tax purposes be
beneficially owned by the related Mortgagor which shall be taxed on all
reinvestment income and gain thereon. The Rent Accounts shall not be assets
of the Trust Fund or the Trust REMIC, but the Trust Fund shall have a
security interest in funds from time to time on deposit therein.
Rents from Real Property: With respect to any Foreclosed Property,
gross income of the character described in Section 856(d) of the Code.
REO Proceeds: Proceeds, net of any related costs and expenses
(including attorneys' fees) related to a Foreclosed Property received in
respect thereof (including, without limitation, proceeds from the rental of
such Foreclosed Property) prior to the final liquidation of such Foreclosed
Property.
Required Debt Service Payment: As to any Distribution Date, the
amount of interest and scheduled principal then due (or past due) and payable
pursuant to the Mortgage Note on the related Payment Date, together with
any other sums due and
32
payable thereunder, including, without limitation, any optional prepayments for
which notice has been given under the Mortgages, and any Prepayment Premiums to
be paid in accordance therewith.
Required Insurance Policy: As to any Mortgaged Property, any
insurance policy that is required to be maintained from time to time under
each Mortgage or any other Loan Document, this Agreement or any related
Sub-Servicing Agreement in respect of such Mortgaged Property which shall, as
of the Closing Date, be those insurance policies identified in Exhibit L
hereto.
Responsible Officer: When used with respect to the Trustee, any
officer assigned to the Asset-Backed Securities Trust Services Group, including
any Vice President, any Senior Trust Officer, any Trust Officer, any Assistant
Trust Officer, any Secretary or any Assistant Secretary, in each case having
direct responsibility for the administration of this Agreement.
Scheduled Loan Maturity Date: The date on which the final payment
of principal of, and premium, if any, on the Mortgage Note becomes due
and payable as provided in the Mortgage Note, which date is December 17,
2026.
Securities Act: The Securities Act of 1933, as amended.
Servicer: AMRESCO Management, Inc., a Texas corporation, or its
successor in interest, or if any successor servicer is appointed as herein
provided, such successor servicer.
Servicer Advance Date: With respect to each Distribution Date, the
Business Day immediately preceding such Distribution Date.
Servicer Collection Account: The separate Eligible Account
established and maintained by the Servicer at the expense of the Trust Fund
pursuant to Section 3.04(b), entitled "Servicer Collection Account -- AMRESCO
Management, Inc., as Servicer, in trust for LaSalle National Bank, as Trustee
for the benefit of the holders of Potomac Gurnee Finance Corp. Commercial
Mortgage Pass-Through Certificates." Funds in the Servicer Collection
33
Account shall be held in trust for the Trustee for the benefit of the
Certificateholders for the uses and purposes set forth in this Agreement. The
Servicer Collection Account shall be an asset of the Trust Fund and the Trust
REMIC.
Servicing Fee: As to any Distribution Date, the product of (i)
one-twelfth of the Servicing Fee Rate multiplied by (ii) the Mortgage Loan
Principal Balance as of the beginning of the related Interest Accrual Period.
Servicing Fee Rate: 0.0175% per annum.
Servicing Officer: Any officer of the Servicer involved in, or
responsible for, the administration and servicing of the Mortgage Loan
whose name and specimen signature appear on a list of servicing officers
furnished to the Trustee on the Closing Date by the Servicer in the form of
an Officer's Certificate, as such list may be amended from time to time.
Special Servicer: As defined in Section 3.24.
Special Servicing Fee: As defined in Section 3.24.
Startup Day: As defined in Section 10.01(c).
Sub-Account: Any one of the sub-accounts established as a separate
Eligible Account and a part of the Central Account created pursuant to each
Mortgage.
Sub-Servicer: Any Person with whom the Servicer has entered into a
Sub-Servicing Agreement and who satisfies the requirements set forth therein and
herein.
Sub-Servicing Agreement: The written contract between the
Servicer and any Sub-Servicer relating to servicing and/or the administration
of the Mortgage Loan as provided in Section 3.02, in such form as is
approved by the Servicer provided that the sub-servicing of the Mortgage
Loan pursuant to the terms of such Sub-Servicing Agreement will not result in
a downgrade, qualification or withdrawal of the rating then assigned to the
Regular Certificates by the Rating Agency as confirmed by it in writing to
the Trustee.
34
Successor Manager: Any Independent Contractor selected or retained
by the Servicer, in the name of and on behalf of the Trustee, to serve as
Manager of the Foreclosed Property.
Tax Matters Person: The person designated as the "tax matters
person" of the Trust REMIC pursuant to Treasury Regulations Section 1.860F-4(d).
Taking: A condemnation or taking pursuant to the lawful exercise of
the power of eminent domain.
Title Company: On the Closing Date, Chicago Title Insurance Company,
and thereafter, any title insurance company selected by the Mortgagors and
acceptable to the Servicer or its successor.
Title Insurance Policy: The ALTA form mortgagee title insurance
policy or policies issued with respect to each Mortgaged Property and insuring
the first priority mortgage lien in favor of the Depositor pursuant to the
related Mortgage, subject only to encumbrances permitted pursuant to
such Mortgage and containing such endorsements and affirmative
assurances as are required by the Loan Documents.
Trustee: LaSalle National Bank, a national banking association, or
its successor in interest, or if any successor trustee is appointed as herein
provided, such successor trustee.
Trustee Fee: As set forth in a certain letter agreement, dated
November 6, 1996 between the Servicer and the Trustee.
Trust Fund: The corpus of the trust created by this Agreement,
consisting of the assets referred to in Section 2.01, including the Deed of
Trust Loan, all payments on or collections in respect of the Mortgage
Loan due on or after the Closing Date, all Net Proceeds and Loss Proceeds
received after the Closing Date, such amounts as shall from time to time be
held in the Servicer Collection Account, Certificate Account, and the Default
Interest Account, all rights under the Mortgages, the Collateral
Security Instruments and the other Loan Documents assigned to the
35
Trustee, the insurance policies for which the Trustee is beneficiary or loss
payee, if any, relating to the Mortgaged Properties, any Foreclosed Property,
and proceeds of all of the foregoing. Neither the Rent Accounts nor the Central
Account (or any Sub-Account thereof), nor any funds on deposit therein, are part
of the Trust Fund or the Trust REMIC.
Trust REMIC: The segregated pool of assets in the Trust Fund
designated as a REMIC pursuant to Section 10.01(b) hereof.
Uninsured Cause: Any cause of damage to property subject to a
Mortgage such that the complete restoration of such property is not fully
reimbursable (but without regard to any applicable deductible provisions) by any
insurance policy required to be maintained with respect thereto, and any
uninsured losses arising from a defect in title to the related Mortgaged
Property.
Unpaid Additional Interest Shortfall: As to any Distribution Date
and any Class of Regular Certificates, the sum of (i) the amount, if any, by
which the aggregate of the Additional Interest Shortfalls for such Class for
prior Distribution Dates exceeds the aggregate of the amounts distributed on
prior Distribution Dates to Holders of Certificates of such Class in respect of
such Additional Interest Shortfalls pursuant to Section 4.01 and (ii) accrued
interest at the applicable Adjusted Certificate Interest Rate for such Class on
the amount in clause (i).
Unscheduled Payment: Any and all of the following: (a) all Loss
Proceeds that the Mortgagors have elected or are required to apply to the
repayment of the indebtedness under the Mortgages, the Mortgage Note and the
other Loan Documents pursuant to the terms of such documents, (b) any funds
representing Voluntary Prepayments or involuntary principal prepayments other
than scheduled principal payments made pursuant to the terms of the Deed of
Trust Note, (c) any Net Proceeds and (d) any amounts paid from the
Curtailment Reserve Sub-Account pursuant to Section 5.11 of each Deed of
Trust.
36
Voluntary Prepayment: A voluntary prepayment of principal made on
the Mortgage Note pursuant to one or both of the Mortgages.
Voluntary Prepayment Amount: As to any Distribution Date, the amount
deposited in the Certificate Account pursuant to Section 3.04(c) in respect of
any Voluntary Prepayments made on the related Payment Date.
Voluntary Prepayment Premium Amount: As to any Distribution Date,
the aggregate amount, if any, of Prepayment Premiums deposited in the
Certificate Account pursuant to Section 3.04(c) in connection with Voluntary
Prepayments made on the related Payment Date.
Voting Rights: With respect to any provisions hereof providing for
the action, consent or approval of the Holders of all Certificates evidencing
specified Voting Rights in the Trust Fund, voting rights that are to be
allocated to the Holders of each Class of the Regular Certificates in proportion
to the ratio obtained by dividing the Certificate Principal Balance of such
Class by the Aggregate Certificate Principal Balance. Each Holder of Regular
Certificates of a particular Class will have Voting Rights equal to the product
of the Voting Rights to which such Class is collectively entitled and the ratio
obtained by dividing the principal balance of such Certificates held by the
Certificateholder by the Certificate Principal Balance of such Class.
Section 1.02. Calculations. All calculations of interest hereunder
that are made in respect of each Component and each Class of Certificates shall
be made with respect to each Interest Accrual Period and calculated on the basis
of a 360-day year consisting of twelve 30-day months (with each Interest Accrual
Period other than the initial Interest Accrual Period representing one such
30-day month) and shall be carried out to seven decimal places, rounded up. All
dollar amounts calculated hereunder shall be rounded to the nearest cent.
Section 1.03. Interpretation. (a) Whenever the Agreement refers to a
Distribution Date and a "related" Interest Accrual Period or Payment Date, such
reference shall be to the
37
Interest Accrual Period or Payment Date, as applicable, immediately preceding
such Distribution Date.
(b) As used herein and in any certificate or other document made or
delivered pursuant hereto or thereto, accounting terms not defined in Section
1.01 shall have the respective meanings given to them under generally accepted
accounting principles or regulatory accounting principles, as applicable.
(c) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section and
Exhibit references contained in this Agreement are references to Sections and
Exhibits in or to this Agreement unless otherwise specified.
38
ARTICLE TWO
DECLARATION OF TRUST FUND;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01. Creation and Declaration of Trust Fund; Conveyance
of Mortgage Loan. The Depositor hereby irrevocably sells, transfers,
assigns, delivers, sets over and otherwise conveys or causes to be conveyed
to the Trustee for the benefit of Certificateholders, without recourse, the
Depositor's right, title and interest, whether now owned or hereafter
acquired, now existing or hereafter arising, wherever located, in and to (i)
the Mortgage Loan, the Mortgage Note, each Mortgage and all
other Trust Fund property, (ii) all property that secures payment of the Deed
of Trust Loan, including all reserves created and required to be maintained
under the terms of each Mortgage, all property that has been acquired by
foreclosure, deed-in-lieu of foreclosure or otherwise, and the Depositor's
interest as pledgee in all funds in the Rent Accounts and the Central Account
(including all Sub-Accounts thereof), (iii) all accounts and funds
established by the Servicer and the Trustee pursuant hereto, including the
Servicer Collection Account, the Certificate Account and the Default Interest
Account and all amounts deposited therein pursuant to the applicable
provisions of this Agreement, (iv) any insurance policies obtained with
respect to the Mortgage Loan, (v) all of the Depositor's right and title
and interest in each Mortgage to the extent such Mortgage relates
to representations and warranties made by the related Mortgagor in respect of
such Mortgage and any remedies provided thereunder for any breach of
such representation and warranties and (vi) all proceeds of the conversion,
voluntary or involuntary, of any of the foregoing into cash, instruments,
securities or other property, including without limitation all amounts from
time to time held in and credited to the Servicer Collection Account, the
Certificate Account and the Default Interest Account, whether in the form of
cash or invested in instruments, securities or other property, to have and to
hold, in trust, and the Trustee declares that, subject to the review provided
for in Section 2.02, it has received the documents specified in clauses (a)
through (m) below and shall hold the Trust Fund as the Trustee, in trust, for
the benefit and use of the Holders of the Certificates and for the purposes
and subject
39
to the terms and conditions set forth in this Agreement, and, concurrently with
such receipt, the Trustee has caused to be executed, authenticated and delivered
to or upon the order of the Depositor, in exchange for the Trust Fund,
Certificates in the authorized denominations evidencing the entire ownership of
the Trust Fund.
In connection with such transfer and assignment, the Depositor does
hereby deliver to, and deposit with, the Trustee (with copies to the Servicer),
the following documents or instruments with respect to the Mortgage Loan:
(a) the original Mortgage Note, together with the Deed of
Trust Note Allonge evidencing the endorsement by the Depositor without
recourse to the order of the Trustee, with all intervening endorsements that
show a complete chain of endorsement from CS First Boston Mortgage Capital
Corp., as originator of the Mortgage Loan to the Depositor.
(b) each original Mortgage, in form suitable for recording;
(c) a Mortgage Assignment of each original Mortgage, in
form suitable for recording, from the Depositor to the Trustee, together with
all interim assignments of such Mortgage;
(d) each original Assignment of Leases and Rents and Security
Deposits, in form suitable for recording;
(e) an assignment of each original Assignment of Leases and Rents
and Security Deposits, in form suitable for recording, from the Depositor to the
Trustee, together with all interim assignments of such Assignment of Leases and
Rents and Security Deposits;
(f) originals of all other Collateral Security Instruments, which,
to the extent applicable, shall be in form suitable for recording;
(g) originals of the Assignments of Collateral Security Instruments
from the Depositor in favor of the Trustee,
40
in form suitable for recording or filing in all applicable jurisdictions,
together with all related interim assignments;
(h) all Required Insurance Policies or certificates issued by the
insurers thereof showing such insurance to be in effect on the Closing Date,
together with proof of payment of premiums relating thereto (which may
consist of such policies or certificates);
(i) the original Title Insurance Policies, or in the event such
original Title Insurance Policies are unavailable, "marked-up" title reports
which insure title as of the Closing Date and the lender's recording
instructions, with the originals to be delivered by the Depositor as soon as
available;
(j) the original surveys referred to in the above-referenced
Title Insurance Policies made in connection with origination of the Deed of
Trust Loan;
(k) a copy of the original engineer's report with respect to the
improvements on the Mortgaged Properties obtained in connection with
origination of the Mortgage Loan;
(l) the original Environmental Reports in respect of the Mortgaged
Properties made in connection with origination of the Mortgage Loan; and
(m) as to each Mortgage, copies of each UCC-1 financing
statement showing the related Grantor as debtor and CS First Boston Mortgage
Capital Corp. as secured party, each with evidence of filing thereon,
together with a copy of each UCC-3 financing statement showing a complete
chain of assignment from the secured party named in such UCC-1 financing
statement to the Trustee. If in connection with the Mortgage Loan the
Depositor cannot deliver any such financing statement(s) with evidence of
filing thereon because such financing statement(s) has not yet been returned
by the public filing office where such financing statement(s) has been
submitted for filing, then the Depositor shall deliver or cause to be
delivered a photocopy of such financing statement(s) together with an
Officer's Certificate stating that such financing statement(s) has been
dispatched to the appropriate public filing office for filing.
41
The Mortgages, Mortgage Assignments, Assignments of Leases
and Rents and Security Deposits, UCC-1 financing statements, other Collateral
Security Instruments and Assignments of Collateral Security Instruments to be
filed in the appropriate filing offices or record depositories shall be
delivered by the Depositor to the Title Company for filing on or before the
Closing Date, with instructions to complete all such filings promptly and
return all such recorded documents, or other evidences of filing issued by
the applicable governmental offices, to the Trustee. The Depositor shall
monitor the status of such filings and use its best efforts to cause the
Title Company to comply with all filing instructions. Delivery of such
instruments to the Title Company shall constitute delivery to the Trustee for
purposes of this Section 2.01. The Depositor shall deliver or cause to be
delivered to the Trustee a duplicate original of each Mortgage, Deed of
Trust Assignment, Assignment of Leases and Rents and Security Deposits, UCC-1
financing statement, each other Collateral Security Instrument and
Assignments of Collateral Security Instruments. Any party hereto shall
promptly deliver or cause to be delivered to the Trustee such original
Mortgages, Mortgage Assignments, Assignments of Leases and Rents and
Security Deposits, UCC-1 financing statements, other Collateral Security
Instruments and Assignments of Collateral Security Instruments with evidence
of recording indicated thereon upon receipt thereof by such party from the
public recording official.
The Trustee shall hold legal title to the Mortgage Loan as
trustee for the benefit of the Certificateholders.
The Trustee shall be the secured party under the Collateral
Security Instruments for the benefit of the Certificateholders. The Servicer
shall file such continuation statements or other instruments as may be
necessary to maintain the perfection of the security interests granted by the
Collateral Security Instruments.
The ownership of the Mortgage Note, the Mortgages and the
contents of the Mortgage File is vested in the Trustee for the benefit
of the Certificateholders. The Depositor and the Servicer agree to take no
action inconsistent with the Trustee's
42
ownership of the Mortgage Loan and to promptly indicate to all inquiring
parties that the Mortgage Loan has been sold and to claim no ownership
interest in the Mortgage Loan or any other property, interests or rights
assigned to the Trustee pursuant to the first sentence of this Section 2.01.
It is the express intent of the Depositor that the conveyance by
the Depositor to the Trustee as provided for in this Section 2.01 be, and be
construed as, a sale by the Depositor to the Trustee for the benefit of the
Certificateholders. Further, it is not intended that such conveyance be
deemed to be a pledge of the Trust Fund by the Depositor to the Trustee to
secure a loan or other obligation of the Depositor. However, in the event
that the Trust Fund is held to be property of the Depositor, or if for any
reason this Agreement is held or deemed to create a security interest, then
it is intended that the Depositor hereby grants, and shall be deemed to have
granted, to the Trustee for the benefit of the Certificateholders a first
priority security interest, in all the Depositor's right, title and interest
in and to the Trust Fund and (a) this Agreement shall be a security agreement
within the meaning of Articles 8 and 9 of the New York, Illinois and Virginia
Uniform Commercial Codes and the Uniform Commercial Code of any other
applicable jurisdiction to secure the Certificates; (b) each of the
conveyances provided for in this Section 2.01 is hereby a grant by the
Depositor to the Trustee for the benefit of the Certificateholders of a first
priority security interest in all of the Depositor's right, title and
interest, whether now owned or hereafter acquired, now existing or hereafter
arising, wherever located, in and to (i) the Mortgage Loan, the Deed of
Trust Note, each Mortgage and all other Trust Fund property, (ii) all
property that secures payment of the Mortgage Loan, including all
reserves created and required to be maintained under the terms of each
Mortgage, and all property that has been acquired by foreclosure,
deed-in-lieu of foreclosure or otherwise, and the Depositor's interest as
pledgee in all funds in the Rent Accounts and the Central Account (including
all Sub-Accounts thereof), (iii) all accounts and funds established by the
Servicer and the Trustee pursuant hereto, including the Servicer Collection
Account, the Certificate Account and the Default Interest Account and all
amounts deposited therein pursuant to the applicable provisions of this
Agreement, (iv) any insurance policies
43
obtained with respect to the Mortgage Loan, (v) all of the Depositor's
right and title and interest in each Mortgage to the extent such Mortgage
relates to representations and warranties made by the related Grantor
in respect of such Mortgage and any remedies provided thereunder for any
breach of such representation and warranties and (vi) all proceeds of the
conversion, voluntary or involuntary, of any of the foregoing into cash,
instruments, securities or other property, including without limitation all
amounts from time to time held in and credited to the Servicer Collection
Account, the Certificate Account and the Default Interest Account, whether in
the form of cash or invested in instruments, securities or other property;
(c) the possession by the Trustee, or any agent of the Trustee, of the Deed
of Trust Note or such other items of property as constitute instruments,
money, negotiable documents or chattel paper is a "possession by the secured
party", or possession by a purchaser or a person designated by such secured
party, for purposes of perfecting the security interest pursuant to the
Uniform Commercial Code (including, without limitation, Sections 9-305, 8-313
or 8-321 thereof); and (d) notifications to persons holding such property,
and acknowledgments, receipts or confirmations from persons holding such
property, shall be deemed notifications to, or acknowledgments, receipts or
confirmations from, financial intermediaries, bailees or agents (as
applicable) of the Trustee for the purpose of perfecting such security
interest under applicable law. Each of the Depositor, the Servicer and the
Trustee shall, to the extent consistent with this Agreement and within its
power, take such actions as may be necessary to ensure that, if this
Agreement were deemed to create a security interest in the Mortgage
Loan, such security interest would be deemed to be a perfected security
interest of first priority under applicable law. The Servicer shall prepare
and file any UCC continuation statements necessary to continue the security
interest as a perfected first priority security interest.
If the conveyance referred to in the first sentence of the preceding
paragraph is deemed to be a loan and the trust created by this Agreement
terminates prior to the satisfaction of the claims of any Person holding any
Certificates, the security interest created hereby shall continue in full force
and effect and the Trustee shall be deemed to be the collateral agent for
44
the benefit of such Person, and all proceeds shall be distributed as herein
provided.
Section 2.02. Acceptance by Trustee. (a) The Trustee shall, upon
actual receipt and subject to the provisions of Section 2.01 and the review
procedures provided for in Section 2.02(b), (i) acknowledge receipt in
writing of the Mortgage File and (ii) hold such documents and any other
documents constituting a part of the Mortgage File in trust and subject
to the conditions herein set forth, for the use and benefit of all present
and future Certificateholders and the Servicer. The Trustee has no actual
knowledge of any adverse claims, liens or encumbrances on any of the assets
to be so delivered, including without limitation, federal tax liens or liens
arising under ERISA. The Trustee may remove the Trust Fund from New York
without need of approval or consent of any person, court or party.
(b) The Trustee agrees, for the benefit of the
Certificateholders, to review the Mortgage File within 45 days (or with
respect to each document that is not delivered on the Closing Date because of
the delay at the recording office, within the later of such 45 days or seven
days after the delivery thereof to the Trustee) after the Closing Date to
ascertain that all required documents have been executed and received and
that such documents relate to the Mortgage Loan, and in so doing the
Trustee may rely on the purported due execution and genuineness of any such
document and on the purported genuineness of any signature thereon. The
Trustee shall have no responsibility for reviewing any document included in
the Mortgage File except as expressly set forth in this Section 2.02(b).
The Trustee shall be under no duty or obligation to inspect, review or
examine any such documents, instruments or certificates to determine
independently that they are genuine, enforceable, legally sufficient or
appropriate for the represented purpose, whether the text of any assignment
or endorsement is in proper or recordable form (except to determine whether
such assignment or endorsement conforms to the requirements of Section
2.01(a)), whether any document has been filed or recorded (or is required to
be filed or recorded) in accordance with the requirements of any applicable
jurisdiction, or to independently determine that any document has actually
been filed or recorded in the
45
appropriate office or that any document is other than what it purports to be
on its face. The Trustee shall be under no obligation to review the
Mortgages, this Agreement or any other Loan Document or any Sub-Servicing
Agreement to determine whether any Required Insurance Policies have been
delivered or whether the Title Insurance Policy has the characteristics
specified in the definition thereof. If the Trustee finds any document
constituting a part of the Mortgage File not to have been executed or
received or to be unrelated to the Mortgage Loan or to be otherwise
missing or defective (that is, mutilated, damaged, defaced, containing
blanks, incomplete, improperly dated, clearly forged or otherwise physically
altered) in any material respect, the Trustee shall, as part of its review
conducted pursuant to the first sentence of this Section 2.02(b), notify the
Servicer, the Depositor and the Rating Agency of such fact. In addition, the
Trustee shall notify the Servicer, the Depositor and the Rating Agency if, in
the examination of the Mortgage File as specified in this Section
2.02(b) or through any other means, a Responsible Officer of the Trustee
obtains notice or knowledge (i) of any adverse claim, lien or encumbrance,
(ii) that the Mortgage Note is overdue or has been dishonored, (iii) of
evidence on the face of the Mortgage Note or the Deed of Trust of any
security interest or other right or interest therein, or (iv) of any defense
against or claim to the Mortgage Note by any party. The Depositor shall
promptly correct or cure such omission or defect within 60 days from the date
it is notified of such omission or defect to the extent the same was caused
by any act or omission of the Depositor or the Mortgagors. To the extent the
omission or defect was caused by any act or omission of a Grantor, the
Servicer shall enforce such Grantor's obligations under Section 2.03 of the
related Mortgage.
Section 2.03. Representations and Warranties of the Servicer and
the Depositor. (a) The Servicer hereby represents and warrants to the other
parties hereto, and for the benefit of each Certificateholder, that, as of
the date hereof:
(i) the Servicer is duly organized, validly existing and in good
standing under the laws of the State of Texas, with full corporate power
and authority to own its property, to carry out its business as presently
conducted and to enter into and perform its obligations under this
Agreement;
46
the Servicer is either exempt under applicable law from effecting
any such authorization or qualification or is duly authorized and
qualified to transact any and all business contemplated by this
Agreement in any state in which a Mortgaged Property is located or in
any state in which, acting as Servicer, the Servicer is otherwise
required under applicable law to effect such qualification and, in
any event, is in compliance with the doing business laws of any
such state, to the extent necessary to ensure the enforceability of
the Mortgage Loan and the servicing of the Mortgage Loan,
and to perform its obligations, in accordance with the terms of
this Agreement;
(ii) the Servicer has the full power and authority to service
the Mortgage Loan, and to execute, deliver and perform, and to
enter into and consummate the transactions contemplated by, this
Agreement and has duly authorized by all necessary corporate action
on the part of the Servicer the execution, delivery and performance
of this Agreement; and this Agreement, assuming the due
authorization, execution and delivery thereof by the other parties
hereto, constitutes a legal, valid and binding obligation of the
Servicer, enforceable against the Servicer in accordance with its
terms, subject to applicable bankruptcy, reorganization,
insolvency, moratorium and other laws of general applicability
relating to or affecting the enforcement of creditors' rights
generally, and to general principles of equity (regardless of
whether enforcement of such remedies is considered in a proceeding
in equity or at law);
(iii) the execution and delivery of this Agreement by the
Servicer, the servicing of the Mortgage Loan by the Servicer,
the consummation by the Servicer of any other of the transactions
herein contemplated, and the fulfillment of or compliance with the
terms hereof, by the Servicer are in the ordinary course of
business of the Servicer and will not (1) result in a breach of any
term or provision of the charter or by-laws of the Servicer or (2)
materially conflict with, result in a material breach, violation or
acceleration of, or result in a material default under, the terms
of any other material agreement or instrument to which
47
the Servicer is a party or by which it may be bound, or any law,
governmental rule, regulation, or judgment, decree or order
applicable to the Servicer of any court, regulatory body,
administrative agency or governmental body having jurisdiction over
the Servicer, and the Servicer is not a party to, bound by, or in
breach or violation of any material indenture or other material
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, in any such case, materially and adversely affects, or,
to the Servicer's knowledge may in the future materially and
adversely affect, (A) the ability of the Servicer to perform its
obligations under this Agreement or (B) the business, operations,
financial condition, properties or assets of the Servicer taken as
a whole;
(iv) the Servicer is an approved conventional seller/servicer
for FNMA or FHLMC in good standing;
(v) there are no actions, suits or proceedings pending or, to
the best of the Servicer's knowledge, threatened against or
affecting the Servicer that would materially and adversely affect
the enforceability of this Agreement or the ability of the Servicer
to service the Mortgage Loan or to perform any of its other
obligations hereunder in accordance with the terms hereof;
(vi) no certificate of an officer delivered to the Depositor or the
Trustee and prepared by the Servicer pursuant to this Agreement contains
any untrue statement or material error; 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 Servicer of, or compliance by the Servicer with, this
Agreement or the consummation of the transactions contemplated hereby, or
if any such consent, approval, authorization or order is required, the
Servicer has obtained the same.
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The representations and warranties of the Servicer set forth in
this Section 2.03(a) shall survive the transfer and assignment of the Mortgage
Loan to the Trustee. Upon discovery by the Trustee or any Servicing
Officer of the Servicer of a breach of any representation or warranty of
Servicer in this Section 2.03(a), the party discovering such a breach shall
promptly notify the other parties hereto and the Rating Agency. Within 60
days of the earlier of discovery by the Servicer or receipt of notice by the
Servicer of the breach of any representation or warranty of the Servicer set
forth in this Section 2.03(a), the Servicer shall cure such breach in all
material respects. The Servicer shall indemnify the Depositor and the Trustee
and hold them harmless against any loss, damages, penalties, fines,
forfeitures, legal fees and related costs, judgments, and other costs and
expenses resulting from any claim, demand, loss, defense or assertion based
on or grounded upon, or resulting from, a breach of the Servicer's
representations and warranties contained in this Section 2.03(a). Except as
set forth in Article Seven hereof, it is understood and agreed that the
enforcement of the obligation of the Servicer set forth in this Section
2.03(a) to indemnify the Depositor and the Trustee as provided in this
Section 2.03(a) constitutes the sole remedy of the Depositor and the Trustee
respecting a breach by the Servicer of the representations and warranties in
this Section 2.03(a). Such right of indemnification shall survive any
termination, resignation or removal of the Trustee as trustee, or the
Servicer as servicer hereunder, and any termination of this Agreement.
(b) The Depositor hereby represents and warrants to the other
parties hereto that, as of the date hereof:
(i) the Depositor is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, with full
power and authority to own its property, to carry on its business as
presently conducted, to enter into and perform its obligations under this
Agreement, and to create the trust pursuant hereto;
(ii) the Depositor has duly authorized by all necessary corporate
action on the part of the Depositor the execution, delivery and
performance of this Agreement; and this
49
Agreement, assuming the due authorization, execution and delivery
thereof by the other parties hereto, constitutes a legal, valid and
binding obligation of the Depositor, enforceable against the
Depositor in accordance with its terms, subject to applicable
bankruptcy, reorganization, insolvency, moratorium and other laws
of general applicability relating to or affecting the enforcement
of creditors rights generally, and to general principles of equity
(regardless of whether enforcement of such remedies is considered
in a proceeding in equity or at law);
(iii) the execution and delivery of this Agreement by the
Depositor and the consummation by the Depositor of the transactions
herein contemplated, and the fulfillment of or compliance with the
terms hereof, will not (1) result in a material breach of any term
or provision of the charter or by-laws of the Depositor or (2)
materially conflict with, result in a material breach, violation or
acceleration of, or result in a material default under, the terms
of any other material agreement or instrument to which the
Depositor is a party or by which it may be bound, or any law,
governmental rule, regulation, or judgment, decree or order
applicable to the Depositor of any court, regulatory body,
administrative agency or governmental body having jurisdiction over
the Depositor, and the Depositor is not a party to, bound by, or in
breach or violation of any material indenture or other material
agreement or instrument, or subject to or in violation of any
statute, order or regulation of any court, regulatory body,
administrative agency or governmental body having jurisdiction over
it, which materially and adversely affects, or, to the Depositor's
knowledge would in the future materially and adversely affect, (A)
the ability of the Depositor to perform its obligations under this
Agreement or (B) the business, operations, financial condition,
properties or assets of the Depositor taken as a whole;
(iv) there are no actions, suits or proceedings pending or, to
the Depositor's knowledge, threatened, against or affecting the
Depositor that would materially and adversely affect the execution,
delivery or enforceability of this
50
Agreement, the transfer of the Mortgage Loan or the ability of the
Depositor to perform any of its other obligations hereunder in accordance
with the terms hereof;
(v) no certificate of an officer or statement furnished in
writing or written report delivered to the Servicer or the Trustee
and prepared by the Depositor pursuant to this Agreement contains
any untrue statement of a material fact or omits to state a
material fact necessary to make the information, certificate,
statement or report not misleading;
(vi) no consent, approval, authorization or order of any court
or governmental agency or body is required for the execution,
delivery and performance by the Depositor of, or compliance by the
Depositor with, this Agreement or the consummation of the
transactions contemplated hereby, or if any such consent, approval,
authorization or order is required, the Depositor has obtained the
same;
(vii) the Depositor has the full corporate power, authority and
legal right to sell, assign and transfer the Mortgage Loan,
and is transferring the Mortgage Loan, to the Trustee as
designee free and clear of any and all liens, pledges, charges or
security interests of any nature encumbering the Mortgage Loan
which were created by it or which to its knowledge were created; and
(viii) immediately prior to the consummation of the transactions
contemplated in this Agreement, the Depositor had good title to and
was the sole owner of the Mortgage Loan free and clear of any
and all adverse claims, charges or security interests (including
liens arising under the federal tax laws or the Employee Retirement
Income Security Act of 1974, as amended) created by the Depositor.
The representations and warranties of the Depositor set forth in
this Section 2.03(b) shall survive the transfer and assignment of the Mortgage
Loan to the Trustee. Upon discovery by the Servicer or any Responsible
Officer of the Trustee of the breach of any representation or warranty of the
Depositor herein which adversely affects the interests of the
Certificateholders
51
in the Mortgage Loan, the party discovering such breach shall promptly
notify the other parties hereto and the Rating Agency. If within 60 days
after delivery of such notice to the Depositor, the Depositor shall not have
caused such breach to be cured in all material respects, the Servicer, on
behalf of the Trustee, shall prosecute any legal action as may, in its
judgment, be necessary to protect the interest of the Trust Fund in
connection therewith. The Servicer shall be indemnified by the Trust Fund for
any costs and expenses incurred by it relating thereto only to the extent
such costs and expenses (including attorneys' fees) are not paid by the
Depositor as a result of such legal action, and except to the extent such
costs and expenses result from negligence or willful misconduct of the
Servicer. Any action by the Trustee, or by the Servicer on behalf of the
Trustee, against the Depositor pursuant to this Section 2.03(b) shall
constitute the sole recourse to the Trustee and the Certificateholders
against the Depositor in respect of such breach of representation or warranty.
(c) Upon discovery by any of the Depositor, the Servicer or any
Responsible Officer of the Trustee of a breach of any of the representations,
warranties and covenants of a Grantor in the related Mortgage that
materially and adversely affects the value of the Mortgage Loan or the
interests of the Certificateholders in the Mortgage Loan, the party
discovering such breach shall give prompt written notice to the other parties
hereto, the related Grantor and the Rating Agency. If within the period
prescribed in the related Mortgage, such Grantor shall not have cured
such breach in all material respects, the Servicer on behalf of the Trustee
shall prosecute any legal action as may, in its judgment, be necessary to
protect the interest of the Trust Fund in connection therewith. The Servicer
shall be indemnified by the Trust Fund for any costs and expenses incurred by
it relating to actions taken by it in the preceding sentences only to the
extent such costs and expenses (including attorneys' fees) are not paid by
the Mortgagors as a result of such legal action.
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ARTICLE THREE
ADMINISTRATION AND SERVICING OF THE MORTGAGE LOAN
Section 3.01. Servicer to Act as Servicer. For and on behalf of
the Trustee and the Certificateholders, the Servicer shall service and
administer the Mortgage Loan (including the monitoring of the Grantor's
compliance with the terms of each Mortgage, as set forth in Section 3.22
hereof) on behalf of the Trustee and in the best interests and for the
benefit of the Certificateholders (as determined by the Servicer in its
reasonable judgment) in accordance with the terms of this Agreement and the
Mortgage Loan and, to the extent consistent with such terms, in
accordance with prudent commercial mortgage loan servicing standards and
procedures generally accepted in the commercial mortgage banking industry and
generally in a manner consistent with the servicing of similar loans serviced
by the Servicer or an affiliate in its own portfolio and with a view to the
maximization of timely recovery of principal of and interest on the Mortgage
Loan but without regard to:
(i) any relationship that the Servicer, any Sub-Servicer or any
Affiliate of the Servicer or any Sub-Servicer may have with the Grantor
or any Affiliate of the Grantor, or with the Manager or any Affiliate
thereof;
(ii) the ownership of any Certificate by the Servicer or any
Affiliate of the Servicer;
(iii) the Servicer's obligations to make Advances or to incur
servicing expenses with respect to the Mortgage Loan; or
(iv) the Servicer's right to receive compensation for its services
hereunder or with respect to any particular transaction.
Subject to the above-described servicing standards (hereinafter referred to
as "Accepted Servicing Practices") and the terms of this Agreement and of the
Mortgage Loan, the Servicer shall have full power and authority, acting
alone and/or through one or more Sub-Servicers as provided in Section 3.02,
to do or cause to be
53
done any and all things in connection with such servicing and administration
that it may deem necessary or desirable; provided, however, that the Servicer
shall take no action that is materially inconsistent with or materially
prejudices the interest of the Trustee or the Certificateholders in the
Mortgage Loan or the rights and interest of the Depositor, the Trustee and
the Certificateholders under this Agreement. The Servicer shall service and
administer the Mortgage Loan in accordance with applicable state and federal
law. Subject to Section 3.09, at the written request of the Servicer,
accompanied by the form of powers or other documents being requested, the
Trustee shall furnish to the Servicer and any Sub-Servicer any powers of
attorney and other documents necessary or appropriate to enable the Servicer
and any Sub-Servicer to carry out their respective servicing and
administrative duties hereunder, and the Trustee shall not be held
responsible for any acts by either the Servicer or any Sub-Servicer in their
respective uses of any such powers of attorney or other document. The
Servicer shall indemnify the Trustee and hold it harmless against any loss,
damages, penalties, fines, forfeitures, legal fees and related costs,
judgments and other costs and expenses resulting from any claim, demand,
loss, defense or assertion based on or grounded on, or resulting from the
willful misfeasance, bad faith or negligence of the Servicer with respect to
actions taken by it pursuant to any such powers of attorney or other document.
Section 3.02. Sub-Servicing Agreements. (a) The Servicer, at its
own expense without a right of reimbursement under this Agreement or
otherwise, may enter into Sub-Servicing Agreements (provided such agreements
would not result in a downgrade, qualification or withdrawal of the
then-current rating on the Regular Certificates, as evidenced by a letter to
such effect from the Rating Agency delivered to the Trustee prior to entering
into any Sub-Servicing Agreement and provided such agreements require the
Sub-Servicer to comply with all of the conditions of this Agreement) with
Sub-Servicers for the servicing and administration of all or a part of the
Mortgaged Properties. References in this Agreement to actions taken or to be
taken, and limitations on actions permitted to be taken, by the Servicer in
servicing the Mortgaged Properties include actions taken or to be taken by a
Sub-Servicer on behalf of the Servicer. Each Sub-Servicer shall be (i)
authorized to transact
54
business in the State of Illinois and the Commonwealth of Virginia if and to
the extent required by applicable law to enable the Sub-Servicer to perform
its obligations hereunder and under the applicable Sub-Servicing Agreement
and (ii) qualified to service mortgage loans in accordance with FHA, FHLMC or
FNMA servicing standards. Each Sub-Servicing Agreement will be upon such
terms and conditions as are not inconsistent with this Agreement and as the
Servicer and the Sub-Servicer have agreed; provided, that any such agreement
shall, at the option of the Trustee, terminate in the event the Trustee
succeeds to the rights of the Servicer hereunder. The Servicer shall remain
solely responsible for the payment of all fees and expenses payable to any
such Sub-Servicer and such fees and expenses shall not be an expense of the
Trust Fund. For purposes of this Agreement, the Servicer shall be deemed to
have received any payment when the Sub-Servicer receives such payment. The
Servicer shall notify the Trustee and the Depositor in writing promptly upon
the appointment of any Sub-Servicer.
(b) As part of its servicing activities hereunder, the Servicer,
for the benefit of the Trustee and the Certificateholders, shall enforce the
obligations of each Sub-Servicer under the related Sub-Servicing Agreement,
including, without limitation, the obligation to make Advances in respect of
delinquent payments as required by the related Sub-Servicing Agreement. Such
enforcement, including, without limitation, the legal prosecution of claims,
termination of Sub-Servicing Agreements 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, in its good faith business judgment, would require were
it the owner of the Mortgage Loan. The Servicer shall pay the costs of
such enforcement at its own expense and shall be reimbursed therefor only (i)
from a general recovery resulting from such enforcement only to the extent,
if any, that such recovery exceeds all amounts due in respect of the Mortgage
Loan or (ii) from a specific recovery of costs, expenses or attorneys'
fees against the party against whom such enforcement is directed.
(c) Notwithstanding any Sub-Servicing Agreement, any of the
provisions of this Agreement relating to agreements or arrangements between the
Servicer and a Sub-Servicer or reference
55
to actions taken through a Sub-Servicer or otherwise, the Servicer shall
remain obligated and liable to the Trustee and Certificateholders for
servicing and administering the Mortgage Loan in accordance with the
provisions of Section 3.01 without diminution of such obligation or liability
by virtue of such Sub-Servicing Agreement or arrangements or by virtue of
indemnification from a Sub-Servicer and to the same extent and under the same
terms and conditions as if the Servicer alone were servicing and
administering the Mortgage Loan.
Section 3.03. Collection of Certain Mortgage Loan Payments.
Continuously from the date hereof until the principal of and interest on the
Mortgage Loan and all other amounts thereunder are paid in full, the
Servicer shall use its best efforts to collect all payments called for under
the terms and provisions of the Mortgage Loan and shall follow such
collection procedures as it follows with respect to commercial mortgage loans
held in its own portfolio that are comparable to the Mortgage Loan, to
the extent such procedures shall be consistent with this Agreement and the
terms of the Mortgage Loan and in accordance with Accepted Servicing
Practices. In the event that a payment default with respect to the Mortgage
Loan has occurred, if the Servicer determines that a modification,
waiver or amendment of the terms of the Mortgage Loan is reasonably
likely to produce a greater recovery on a present value basis than
liquidation of the Mortgaged Properties, then the Servicer may, but is not
required to, agree to a modification, waiver or amendment of any of the terms
of the Mortgage Loan; provided, however, that the Servicer shall not
consent to any modification with respect to the Mortgage Loan that would
change the Component Rate (including the Default Rate, as defined in the
Mortgage Note) on any Component (except that the Servicer in its sole
discretion may waive or reduce the Mortgagors' obligation to pay Additional
Interest on the Mortgage Note, provided that the Servicer has obtained a
Nondisqualification Opinion with respect to any such waiver or reduction),
change the amortization requirement, extend the maturity date of the Mortgage
Loan beyond the Scheduled Loan Maturity Date (except to the extent
provided, if at all, in the applicable Mortgage), forgive any principal
thereof or interest thereon or (except as expressly provided in each Mortgage)
modify the applicable Grantor's obligations to fund the Sub-Accounts,
unless the Servicer has notified the
56
Trustee and the Certificateholders of such proposed modification, such
modification has been approved by 100% of the Certificateholders affected by
such modification or amendment and the Servicer has obtained a
Nondisqualification Opinion with respect to such modification or amendment.
In connection with any Mortgage Loan modification that is described in
the preceding sentence, following a Mortgage Loan Event of Default, the
Servicer shall be entitled to receive a fee (a "Modification Fee") equal to
the product of (i) the principal balance of the Mortgage Loan as of the
immediately preceding Distribution Date and (ii) 0.25%.
Section 3.04. Establishment of the Central Account, the Servicer
Collection Account, the Certificate Account, the Rent Accounts and the
Default Interest Account. (a)(i) On or before the Closing Date, the Servicer
shall establish the Central Account pursuant to the Mortgages. The Servicer
shall make deposits to and withdrawals from the Central Account in accordance
with each Mortgage. The Central Account shall relate solely to the
Certificates issued by the Trust Fund hereunder, and funds in the Central
Account shall not be commingled with any other moneys. The Servicer shall
take all required action to assure that the Trustee shall have the right to
withdraw funds from such account if the Servicer shall fail to make a timely
withdrawal required pursuant to the terms of this Agreement. The Servicer
shall notify the Trustee and the Depositor in writing of the location and
account number of the Central Account and shall not change such location or
account number until prior written notice of the new location or account
number has been delivered to the Trustee and the Depositor. Neither the
Central Account (or any Sub-Account thereof) nor any funds on deposit therein
shall be part of the Trust Fund or the Trust REMIC. The rights of the Trustee
under the Loan Documents with respect to funds on deposit in the Central
Account shall not be part of the Trust REMIC but shall be part of the Trust
Fund.
(ii) Funds in the Central Account shall be invested by the
Servicer in Permitted Investments in accordance with the provisions of each
Mortgage. Any fees charged for cash management services by the
institution where the Central Account is maintained will be paid by each
Grantor pursuant to the related Mortgage.
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(iii) To the extent the Servicer receives any funds described in
clauses (A) through (D) below, after receipt thereof, the Servicer shall
deposit such amounts into the Central Account and allocate them to the Debt
Service Payment Sub-Account (x) on the Business Day following receipt (in the
case of items (A), (B) and (C) below), or (y) in the case of item (D) below
or unscheduled remittances of principal or interest, on the Business Day
following identification of the proper application of such amounts:
(A) amounts received from a Grantor to be applied to
payments on account of principal, including Principal Prepayments and the
principal component of Monthly Payments, on the Mortgage Loan;
(B) amounts received from a Grantor to be applied to
payments on account of interest on the Mortgage Loan;
(C) all Loss Proceeds (other than proceeds required to be
applied to the restoration of a Mortgaged Property or released to the
related Grantor in accordance with the related Mortgage); and
(D) amounts received from a Grantor to be applied to
Prepayment Premiums.
(iv) The Servicer may at any time withdraw from the Central Account
the following amounts for the following purposes (except that the Servicer may
withdraw such amounts from funds already allocated to a Sub-Account (other than
the Debt Service Payment Sub-Account or the Curtailment Reserve Sub-Account) to
the extent, but only to the extent, any of such following amounts constitutes a
Nonrecoverable Advance and may in no event withdraw any such amounts from the
Basic Carrying Costs Sub-Account):
(A) to reimburse the Fiscal Agent, the Trustee and itself, in
that order, for any Advance made by any of them that has not previously
been reimbursed to them, including any Advance previously made that the
Person that
58
made such Advance determines to be a Nonrecoverable Advance, plus
interest thereon accrued at the Advance Rate;
(B) to reimburse itself for expenses advanced pursuant
to this Agreement that are reimbursable from payments by either
Grantor, including, but not limited to, insurance premiums,
appraisal fees and collection fees previously due and unpaid, plus
interest on each of the foregoing amounts accrued at the Advance
Rate;
(C) to reimburse the Fiscal Agent, the Trustee and
itself, in that order, for any amounts reimbursable pursuant to the
terms of the Mortgage Loan and not previously reimbursed
pursuant to subsection (A) or (B) above, including interest at the
Advance Rate;
(D) in the event that a Special Servicer has been
appointed hereunder, to pay to the Special Servicer the Special
Servicing Fee;
(E) to pay itself any Servicing Fee (other than the
Servicing Fee for the current month) previously due and unpaid,
plus interest thereon accrued at the Advance Rate; and
(F) to pay itself or the Special Servicer, as the case
may be, any Modification Fees and Liquidation Fees owed to such
Person.
(v) On each Payment Date with respect to the amounts set forth in
clauses (a)(v)(A), (a)(v)(B) and (a)(v)(C) below, and on the Business Day
prior to the related Distribution Date with respect to all other amounts set
forth below in this clause (a)(v), the Servicer shall withdraw from the
Central Account, in the following order of priority, the following amounts
for the following purposes (provided that no amount shall be counted more
than once), in each case to the extent of the amounts on deposit therein
after withdrawal therefrom of all amounts payable pursuant to clause (a)(iv)
above (except that the Servicer may in no event withdraw any such amounts
from the Basic Carrying Costs Sub-Account):
59
(A) to pay to Persons entitled thereto any sums deposited in
error in the Central Account;
(B) to pay to itself the Servicing Fee for the related
Distribution Date from funds on deposit in the Debt Service Payment
Sub-Account;
(C) to pay or reimburse the Servicer, the Fiscal Agent, the
Trustee and the Depositor for any other amounts reimbursable pursuant to
the terms of the Mortgage Loan and not previously paid or reimbursed
pursuant to subsection (iv) above, including all Advances and interest
thereon at the Advance Rate;
(D) to pay (or set aside for eventual payment) any and all
taxes imposed on the Trust REMIC by federal or state governmental
authorities to the extent such taxes have not been paid pursuant to
Article X;
(E) following the appointment of a Successor Manager, to pay
to the Successor Manager the Management Fee;
(F) to make payment to the Trustee, for deposit into
the Certificate Account, of all funds on deposit in the Debt
Service Payment Sub-Account and the Curtailment Reserve Sub-Account
(excluding any Default Rate Interest) remaining after giving effect
to any withdrawals therefrom pursuant to clause (a)(iv) and any
withdrawals therefrom pursuant to this clause (a)(v) of this
Section 3.04;
(G) to make payment to the Trustee, for deposit into
the Default Interest Account, of all funds on deposit in the Debt
Service Payment Sub-Account representing payments on the Mortgage
Note applied to Default Rate Interest during the related
Interest Accrual Period less amounts thereof retained by the
Servicer for payment of accrued and unpaid interest on P&I
Advances. Notwithstanding any other provisions in this Agreement,
Default Rate Interest paid under the Mortgage Note shall be
applied by the Servicer only to the payment of interest on P&I
Advances or for transfer to the Default Interest Account; and
60
(H) to clear and terminate the Central Account pursuant to
Section 9.01.
Amounts withdrawn from the Central Account to make the payments
set forth in clauses (a)(v)(B) through (a)(v)(F) above shall be withdrawn,
first from amounts allocated to the Debt Service Payment Sub-Account, second,
after the Balloon Anticipated Repayment Date, from amounts allocated to the
Curtailment Reserve Sub-Account to the extent funds on deposit therein are
made available to make payments on the Mortgage Loan Principal Balance
and other amounts payable on the Mortgage Note after the Mortgage
Loan Principal Balance has been reduced to zero, or are required to be made
so available pursuant to Section 5.11 of each Mortgage and, third, from
any other amounts on deposit in the Central Account including amounts
allocated to any Sub-Account (other than the Basic Carrying Costs
Sub-Account) at the discretion of the Servicer but, in the case of this
clause third, only to the extent funds withdrawn pursuant to clauses first
and second above, plus any P&I Advance to be made as of the close of business
on the related Servicer Advance Date with respect to such Payment Date, are
less than the Required Debt Service Payment for the related Payment Date.
The Servicer shall keep and maintain separate accounting, on a
Mortgaged-Property-by-Mortgaged-Property basis, for the purpose of justifying
any withdrawal from the Central Account and determining any shortfall or
overpayment of any amounts due from or on behalf of each Mortgagor or each
Mortgaged Property. All Advances shall be repaid in the order in which
originally advanced, and Advances owed to any prior Servicer shall be repaid in
full, with interest, prior to the repayment of Advances made by the successor
Servicer.
(b)(i) If a Mortgage Loan Event of Default occurs, the Servicer
shall establish the Servicer Collection Account. The Servicer Collection Account
shall at all times be an Eligible Account and shall relate solely to the
Certificates, and funds in the Servicer Collection Account shall not be
commingled with any other moneys. The Servicer shall take all required action to
assure that the Trustee shall have the right to withdraw funds
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from such account if the Servicer fails to make a timely withdrawal required
pursuant to the terms of this Agreement. The Servicer shall notify the Trustee
and the Depositor in writing of the location and account number of the Servicer
Collection Account and shall not change such location or account number until
prior written notice of the new location or account number has been delivered to
the Trustee and the Depositor. The Servicer Collection Account and all funds on
deposit therein shall be part of the Trust Fund and the Trust REMIC. The
Servicer shall deposit into the Servicer Collection Account on the Business Day
following receipt the following amounts received by it:
(A) all Liquidation Proceeds net of applicable Servicing
Fees;
(B) all amounts received by it as rental income on any
Foreclosed Property; and
(C) all amounts required to be deposited by the Servicer
pursuant to Sections 3.06(a) and 3.06(b).
(ii) The Servicer shall make withdrawals from the Servicer Collection
Account only for the following purposes and to the extent withdrawals of the
same amounts have not previously been made from the Central Account:
(A) to withdraw amounts deposited therein in error and to pay
such amounts to the Persons entitled thereto;
(B) to make payment to the Trustee, for deposit into the
Certificate Account, of all funds on deposit in the Servicer Collection
Account remaining after giving effect to any withdrawals therefrom
pursuant to clauses (A), (C), (D) and (E) of this Section 3.04(b)(ii);
(C) in the event that a Special Servicer has been appointed
hereunder, to pay to the Special Servicer the Special Servicing Fee (to
the extent not paid pursuant to Section 3.04(a)(iv)(D));
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(D) to pay itself or the Special Servicer, as the case may be,
any Modification Fees and Liquidation Fees owed to it (to the extent not
paid pursuant to Section 3.04(a)(iv)(F)) and to reimburse itself or the
Special Servicer, as the case may be, from Liquidation Proceeds with
respect to a Mortgaged Property for Liquidation Expenses or other expenses
of disposing of such Mortgaged Property, including interest thereon at the
Advance Rate, incurred in connection with such Mortgaged Property;
(E) to pay or reimburse the Servicer, the Fiscal Agent, the
Trustee and the Depositor for any other amounts reimbursable pursuant to
the terms of the Mortgage Loan and not previously paid or reimbursed
pursuant to Section 3.04(a), including all Advances and interest thereon
at the Advance Rate; and
(F) to clear and terminate the Servicer Collection Account
pursuant to Section 9.01.
Funds in the Servicer Collection Account may be invested by the
Servicer in Permitted Investments maturing or redeemable no later than the
Business Day preceding the Distribution Date upon which such amounts are to be
distributed. All income and gain (net of any losses) shall be held in such
account for distribution to the Servicer pursuant to Section 3.12. The Trustee
shall not be liable for any losses incurred on such Permitted Investments.
(c) On or before the Closing Date, the Trustee shall establish the
Certificate Account. The Certificate Account shall at all times be an Eligible
Account and shall relate solely to the Certificates, and the Paying Agent and
the Trustee shall have the exclusive right to withdraw funds therefrom. The
Certificate Account shall be part of both the Trust REMIC and the Trust Fund.
The Trustee shall deposit into the Certificate Account, on the Business Day
received, all moneys remitted by the Servicer pursuant to Section 3.04(a)(v)(F)
(other than collections on the Mortgage Loan in respect of Default Rate
Interest) and Section 3.04(b)(ii)(B) on each Servicer Advance Date all Advances
with respect to the related Distribution Date. The Paying Agent and
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Trustee shall make withdrawals from the Certificate Account only for the
following purposes:
(i) to withdraw amounts deposited in the Certificate Account
in error and pay such amounts to the Persons entitled thereto;
(ii) to pay to itself the Trustee Fee for the related
Distribution Date to the extent not remitted to it by the Servicer
pursuant to Section 8.05;
(iii) to reimburse the Trustee for the cost of any
Nondisqualification Opinion reimbursable pursuant to this Agreement as a
Trust Fund expense and not previously reimbursed;
(iv) to make distributions to the Certificateholders pursuant
to Section 4.01 (other than in respect of Default Rate Interest); and
(v) to clear and terminate the Certificate Account pursuant to
Section 9.01.
Funds in the Certificate Account shall be retained therein by the
Trustee and shall not be invested.
(d) On or before the Closing Date, the Trustee shall establish the
Default Interest Account. The Default Interest Account shall at all times be an
Eligible Account and shall relate solely to the Regular Certificates, and the
Trustee shall have the exclusive right to withdraw funds therefrom. The Default
Interest Account shall be an asset of the Trust Fund but not of the Trust REMIC.
The Trustee shall deposit into the Default Interest Account, on the Business Day
received, all moneys remitted from the Debt Service Payment Sub-Account by the
Servicer pursuant to Section 3.04(a)(v)(G), representing Default Rate Interest
payable under the Mortgage Loan less amounts retained by the Servicer for
payment of accrued and unpaid interest on P&I Advances. The Trustee shall make
withdrawals from the Default Interest Account only for the following purposes:
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(i) to withdraw amounts deposited in the Default Interest
Account in error and to pay such amounts to the Person entitled thereto;
and
(ii) to make distributions to the holders of Regular
Certificates pursuant to Section 4.01(b).
Funds in the Default Interest Account shall be retained therein by the
Trustee and shall not be invested.
(e) On or before the Closing Date, the Servicer shall establish the
Rent Accounts pursuant to the Mortgages. Funds in each Rent Account shall be
transferred to the Central Account in accordance with the terms of the
Mortgages. The Rent Accounts shall relate solely to the Certificates issued by
the Trust Fund hereunder, and funds in the Rent Accounts shall not be commingled
with any other moneys. The Servicer shall take all required action to assure
that the Trustee shall have the right to withdraw funds from the Rent Accounts
if the Servicer fails to cause timely transfers to be made from the Rent
Accounts to the Central Account pursuant to the terms of the Mortgages. The
Servicer shall notify the Trustee and the Depositor in writing of the location
and account number of the Rent Accounts and shall not change such location or
account number until prior written notice of the new location or account number
has been delivered to the Trustee and the Depositor. Neither the Rent Accounts
nor any funds on deposit therein shall be part of the Trust Fund or
the Trust REMIC. The rights of the Trustee under the Loan Documents with respect
to funds on deposit in the Rent Accounts shall not be part of the Trust REMIC
but shall be part of the Trust Fund.
(f) The foregoing requirements for deposit in the Central Account
(including the Debt Service Payment Sub-Account therein), the Servicer
Collection Account, the Certificate Account and the Default Interest Account
shall be exclusive, it being understood and agreed that, without limiting the
generality of the foregoing, payments in the nature of charges for beneficiary
statements, demand fees and other similar charges payable by the Mortgagors need
not be deposited by the Servicer in the Servicer Collection Account, the
Certificate Account or the Default Interest Account. All funds deposited by the
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Servicer in the Central Account (including the Debt Service Payment Sub-Account
therein), the Servicer Collection Account, the Certificate Account or the
Default Interest Account shall be held in trust for the benefit of the
Mortgagors or the Certificateholders, as their interests may appear, until
disbursed or withdrawn in accordance herewith or in accordance with each
Mortgage. Except as expressly permitted or required hereunder, the Servicer
shall not sell, transfer or assign to any Person any interest (including any
security interest) in amounts credited or to be credited to the Central Account
(including the Debt Service Payment Sub-Account therein), the Servicer
Collection Account, the Certificate Account or the Default Interest Account, or
take any action towards that end, and shall maintain such amounts free of all
liens, claims and encumbrances of any nature (other than liens created pursuant
to this Agreement and the Loan Documents).
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Section 3.05. Collection of Impositions, etc.; Escrow Account.
(a) If under the terms of the Loan Documents the Servicer shall be required
to establish escrow or impound accounts in addition to the Basic Carrying
Costs Sub-Account and any other fund or account expressly created under the
Mortgages, the Servicer shall, in addition to the Central Account, and
pursuant to any Sub-Servicing Agreement with a Sub-Servicer, the Sub-Servicer
will be required to, establish and maintain one or more custodial accounts,
each of which shall be an Eligible Account, or an account designated by the
Mortgagor if the Mortgage Loan so requires (each, an "Escrow Account") and
shall deposit therein any collections of amounts received with respect to
costs due for the account of the Mortgagor and in respect of which such account
was established. Subject to the terms of the Mortgage Note and the
Mortgages and further subject to applicable law, any funds in any Escrow
Account shall be invested in Permitted Investments that mature prior to the
date on which payments have to be made out of the related Escrow Account and
any such Permitted Investment shall not be sold or disposed of prior to its
maturity. Withdrawals from any Escrow Account may be made (to the extent
permitted by the Loan Documents) only (i) to effect timely payment of such
costs in connection with the Mortgage Loan, (ii) to reimburse the
Servicer or a Sub-Servicer out of related collections for advances with
respect to such costs, (iii) to refund to the Mortgagor any sums determined to
be overages, (iv) to pay interest, if any, owed to Mortgagor on such accounts
to the extent required by law or the Mortgage Loan or (v) to clear and
terminate such Escrow Accounts on the termination of this Agreement.
(b) The Servicer shall maintain accurate records with respect to
each Mortgaged Property reflecting the status of Basic Carrying Costs and other
similar items that are or may become a lien thereon and the status of
insurance premiums payable in respect of Required Insurance Policies, and, if
applicable, ground rent, payable in respect thereof. The Servicer shall
obtain, from time to time, all bills for the payment of such items (including
renewal premiums). The Servicer shall effect payment of all such bills prior
to the applicable penalty or termination date, employing for such purpose
amounts available in any account established for such purpose under either
Mortgage or in the Escrow Account as allowed under the terms of the Deed
of Trust
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Loan. If such bills are not paid either by the Mortgagors or from amounts on
deposit in any such account, as the case may be, the Servicer shall advance from
its own funds amounts payable with respect to all such items related to any
Mortgaged Property when and as the same shall become due and payable, which
advance shall constitute a Carrying Costs Advance. Nothing in this Section shall
be deemed to require the Servicer to make a Nonrecoverable Advance.
Section 3.06. Maintenance of Insurance and Errors and Omissions and
Fidelity Coverage. (a) The Servicer shall cause to be maintained for each
Mortgaged Property all insurance required by the terms of each Mortgage in the
amounts set forth therein. The Servicer shall also cause all such insurance to
be maintained on any Foreclosed Property. Pursuant to Section 3.04, any amounts
collected by the Servicer under any such policies (other than amounts to be
applied to the restoration or repair of the related Mortgaged Property or
Foreclosed Property or amounts released to the related Mortgagor in accordance
with the terms of the related Mortgage) shall be deposited in the Central
Account (or the Servicer Collection Account, in the case of amounts collected
under policies covering Foreclosed Property). All costs for premiums for
insurance coverage obtained by the Servicer shall be reimbursable to the
Servicer as a Carrying Costs Advance. All policies required hereunder shall be
endorsed with standard mortgagee clauses with loss payable to the Trustee and to
the Servicer for the benefit of the Trustee, and shall provide for at least 30
days' prior written notice of any cancellation, reduction in amount or material
change in coverage to the Trustee and the Servicer. The Servicer shall not
interfere with the Mortgagors' freedom of choice in selecting either its
insurance carrier or agent; provided, however, that if permitted by applicable
State law, as applicable, the Servicer shall not accept any such insurance
policies from insurance companies unless such companies, at the time of
selection of such companies and at the time of renewal of such insurance
policies, are acceptable under Accepted Servicing Practices and the Mortgages.
Nothing in this Section shall be deemed to require the Servicer to make a
Nonrecoverable Advance.
(b) In the event that the Servicer shall obtain and maintain a
blanket policy insuring against hazard losses on all
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of the Mortgaged Properties with an insurer (i) that is rated by A.M Best
Company A+:X or higher and (ii) (A) the claims paying ability of which has been
rated at least "AA" by the Rating Agency or (B) the use of which would not, in
and of itself, cause a downgrade, qualification or withdrawal of the then
current ratings assigned to any Class of Regular Certificates, the Servicer
shall conclusively be deemed to have satisfied its obligations as set forth in
Section 3.06(a), it being understood and agreed that such policy may contain a
deductible clause, in which case the Servicer shall, in the event a policy
complying with Section 3.06(a) shall not have been maintained on the related
Mortgaged Property and a loss shall occur that would have been covered by such
policy, deposit in the Servicer Collection Account out of its own funds the
amount not otherwise payable under the blanket policy because such deductible
clause is in excess of the deductible clause contained in a policy obtained
under Section 3.06(a). Any such deposit by the Servicer shall be made on the
Servicer Advance Date preceding the Distribution Date upon which the proceeds
represented by such deposit are required to be distributed to
Certificateholders. In connection with its activities as administrator and
servicer of the Mortgage Loan, the Servicer agrees to present, on behalf of
itself, the Trustee and Certificateholders, claims under any such blanket
policy.
(c) The Servicer (or, if a subsidiary of the Servicer is acting as
Sub-Servicer, such Sub-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 covering its
officers and employees and other persons acting on its behalf in connection with
its activities under this Agreement. Such insurance shall be maintained with an
insurer (A) the claims paying ability of which has been rated at least "AA" by
the Rating Agency or (B) the use of which would not, in and of itself, cause a
downgrade, qualification or withdrawal of the then current ratings assigned to
any Class of Regular Certificates. The amount of coverage shall be at least
equal to the coverage that is required by FNMA or FHLMC, whichever is greater,
with respect to the Servicer or the Sub-Servicer if the Servicer or the
Sub-Servicer were servicing and administering the Mortgage Loan for FNMA or
FHLMC in addition to other mortgage loans then being serviced and administered
by the Servicer. In
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the event that any such bond or policy ceases to be in effect, the Servicer
shall obtain a comparable replacement bond or policy. Coverage of the Servicer
under a policy or bond that is obtained by an Affiliate of the Servicer and that
provides the coverage and continues for the term required by this Section shall
satisfy the requirements of this Section. No provision of this Section requiring
such fidelity bond and errors and omissions insurance shall diminish or relieve
the Servicer from its duties and obligations as set forth in this Agreement. The
Servicer shall deliver or cause to be delivered to the Trustee, upon its
reasonable request, a certificate of insurance from the surety, insurer or
insurance broker and Servicer covenants that it will not terminate or materially
modify any such bond or policy without 30 days' prior written notice to the
Trustee. Notwithstanding the foregoing, the Servicer shall be entitled to
provide self insurance with respect to its obligation to maintain the blanket
fidelity bond and, only so long as the long-term unsecured debt obligations of
the Servicer are rated at least "AA" by the Rating Agency, the Servicer shall be
entitled to provide self-insurance with respect to its obligation to maintain an
errors and omissions insurance policy.
Section 3.07. "Due-on-Sale" Clauses; Assumption Agreements. (a) To
the extent the Mortgage Loan contains enforceable "due-on-sale" or
"due-on-encumbrance" clauses, the Servicer shall enforce such clauses upon
receipt of knowledge by a Servicing Officer of any such sale or encumbrance.
(b) Notwithstanding the foregoing or any other provision of this
Agreement, the Servicer shall not be deemed to be in default, breach or any
other violation of its obligations hereunder by reason of any conveyance by a
Mortgagor of the related Mortgaged Property or any assumption of the Mortgage
Loan by operation of law which the Servicer in good faith determines it may be
restricted by law from preventing.
(c) If the "due-on-sale" or "due-on-encumbrance" clause will not be
exercised pursuant to Section 3.07(a) above, the Servicer shall make reasonable
efforts to enter into an assumption and modification agreement with the Person
to whom the related Mortgaged Property has been or is about to be conveyed,
pursuant to which such Person becomes liable under the Mortgage
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Note, and, unless prohibited by applicable state law, the related Mortgagor
remains liable thereon. If the continued liability of such Mortgagor is
prohibited by applicable state law, the Servicer is hereby authorized to enter
into a substitution of liability agreement with such Person pursuant to which
such Mortgagor is released from liability and such Person is substituted as
mortgagor with respect to such Mortgaged Property and becomes liable under the
Mortgage Note.
Section 3.08. Realization Upon Mortgaged Properties. (a) The
Servicer shall, consistent with Accepted Servicing Practices and the
provisions of each Mortgage, and in the name of and on behalf of the
Trustee, promptly and diligently exercise the Trustee's remedies under such
Mortgage upon the occurrence of a Mortgage Loan Event of Default
thereunder, as permitted under such Mortgage. Notwithstanding the
foregoing, the Servicer shall promptly commence foreclosure following the
Scheduled Loan Maturity Date, unless prior to that time the term of the
Mortgage Loan has been extended with approval of Certificateholders holding
100% of the Voting Rights and the Servicer has received a Nondisqualification
Opinion with respect to such extension. In connection with such foreclosure
or other conversion, the Servicer shall follow such practices and procedures
as it shall deem necessary or advisable and as shall be normal and usual in
its general commercial mortgage loan servicing activities for third parties
and as are consistent with Accepted Servicing Practices. The foregoing is
subject to the provision that the Servicer shall be required to make a
Carrying Costs Advance to restore property damaged by an Uninsured Cause only
if the Servicer determines that such restoration will increase the
Liquidation Proceeds to the Certificateholders after reimbursement to itself
for such expenses and such Carrying Costs Advance would not be a
Nonrecoverable Advance. The Servicer shall advance all other costs and
expenses incurred by it in any such proceedings as a Carrying Costs Advance.
(b) Notwithstanding the foregoing, the Servicer shall not acquire
for the benefit of the Trust Fund any personal property pursuant to this Section
3.08 unless either:
(i) such personal property is incidental to real property
(within the meaning of Section 856(e)(1) of the
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Code) so acquired by the Servicer for the benefit of the Trust Fund; or
(ii) the Servicer shall have requested and received a
Nondisqualification Opinion, the cost of which shall be advanced as a
Carrying Costs Advance, with respect to the holding of such property.
(c) The Servicer shall not, on behalf of the Trust Fund, obtain
title to either Mortgaged Property as a result or in lieu of foreclosure or
otherwise, and shall not otherwise acquire possession of, or take any other
action with respect to, such Mortgaged Property, if, as a result of any such
action, the Trustee, on behalf of the Trust Fund, 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
applicable comparable federal, state or local law, or a "discharger" or
"responsible party" thereunder, unless the Servicer has also previously
determined in accordance with Accepted Servicing Practices, based on a report
prepared by an Independent Person who regularly conducts environmental site
assessments in accordance with the standards of FNMA for environmental
assessments, that:
(i) such Mortgaged Property is in compliance with applicable
Environmental Laws or, if not, that taking such actions as are necessary
to bring such 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) such report has identified no circumstances present at such
Mortgaged Property relating to the use, management or disposal of any
Hazardous Materials, hazardous substances, hazardous wastes or
petroleum-based materials for which investigation, testing, monitoring,
containment, clean-up or remediation could be required under any federal,
state or local law or regulation, or that, if any such conditions exist,
taking such actions with respect to the affected Mortgaged Property is
reasonably likely to produce a greater recovery on a present value basis
than not taking such actions.
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If the Servicer has so determined based on satisfaction of the
criteria in this Section 3.08(c) that it would be in the best economic interest
of the Trust Fund to take any such actions, the Servicer shall notify the
Trustee in writing setting forth in reasonable detail the reasons for its
determination, and the Trustee, in turn, shall send a copy of such report to the
Certificateholders and the Rating Agency notifying them of their right to object
to such proposed action. Such proposed action shall be taken unless the Trustee
shall have received and delivered to the Servicer, within 30 days after the
Trustee shall have sent such report to the Certificateholders, written
instructions from the Holders evidencing, in the aggregate, at least a majority
of the Voting Rights of the Regular Certificates, directing the Servicer not to
take such action. If the Servicer determines that taking such actions as are
necessary to bring the Mortgaged Properties into compliance with applicable
environmental laws, or taking such actions with respect to the containment,
clean-up, removal or remediation of hazardous substances, hazardous materials,
hazardous wastes, or petroleumbased materials affecting the Mortgaged
Properties, is not reasonably likely to produce a greater recovery on a present
value basis than not taking such actions, the Servicer shall notify the Trustee
in writing setting forth in reasonable detail the reasons for its determination
and any action that it determines to take, and the Trustee, in turn, shall
notify the Certificateholders of their right to give contrary direction;
provided, however, that the Servicer will not be obligated to advance from its
own funds the cost of any such compliance, containment, clean-up or remediation.
The Servicer shall take such alternative action as it deems to be in the best
economic interests of the Trust Fund, consistent with Accepted Servicing
Practices, including, without limitation, releasing the lien of the Mortgages
with respect to the Mortgaged Properties, unless the Trustee has received and
delivered to the Servicer within 30 days after such notification to the
Certificateholders, contrary directions from the Certificateholders evidencing,
in the aggregate, at least a majority of the Voting Rights.
(d) The environmental site assessments contemplated by Section
3.08(c) shall be prepared by any Independent Person who regularly conducts
environmental site assessments for purchasers
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of comparable properties, as determined by the Servicer in a manner consistent
with Accepted Servicing Practices. The cost of preparation of any environmental
assessment shall be advanced by the Servicer as a Carrying Costs Advance,
subject to the provisions of Section 3.18(d).
(e) If the Servicer determines, pursuant to Section 3.08(c), that
taking such actions as are necessary to bring any Mortgaged Property into
compliance with applicable Environmental Laws or taking such actions with
respect to the containment, clean-up, removal or remediation of Hazardous
Materials, hazardous substances, hazardous wastes or petroleum-based
materials affecting any such Mortgaged Property is not reasonably likely to
produce a greater recovery on a present value basis than not taking such
actions, and the Trustee has not received contrary directions from
Certificateholders as set forth in the last paragraph of Section 3.08(c),
then the Servicer shall take such action as it deems to be in the best
economic interests of the Trust Fund, including without limitation releasing
the lien of the Mortgage with respect to the affected Mortgaged Property.
Section 3.09. Trustee to Cooperate; Release of Items in Mortgage
File. From time to time and as appropriate for the servicing or
foreclosure of any Mortgaged Property, the Trustee shall, upon request of the
Servicer and delivery to the Trustee of a trust receipt in the form of
Exhibit I hereto executed by a Servicing Officer, release or cause to be
released any items from the Mortgage File to the Servicer. The Trustee,
upon receipt of written instructions executed by a Servicing Officer and
satisfactory to the Trustee, shall execute such documents furnished to it as
shall be necessary to the prosecution of any such proceedings. Such trust
receipt shall obligate the Servicer to return such items to the Trustee when
the need therefor by the Servicer no longer exists.
Section 3.10. Title and Management of Foreclosed Property. (a) In
the event that title to any Mortgaged Property is acquired by the Servicer for
the benefit of Certificateholders in foreclosure or by deed in lieu of
foreclosure or otherwise, the deed or certificate of sale shall be taken in the
name of the Trustee, or its nominee, on behalf of the Certificateholders. The
Servicer shall consult with counsel to determine when an
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Acquisition Date shall be deemed to occur under the REMIC Provisions with
respect to any Mortgaged Property and shall notify the Trustee in writing of the
date so determined. The Servicer, on behalf of the Trust Fund, shall sell any
Foreclosed Property as expeditiously as possible, but in all events within the
time period and subject to the conditions set forth in Section 10.02. Subject to
Section 10.02, the Servicer shall manage, conserve, protect and operate each
Foreclosed Property for the Certificateholders solely for the purpose of its
prompt disposition and sale, including acting as or appointing a Successor
Manager. In connection with such management, the Successor Manager shall be
entitled to the related Management Fee solely from the Trust Fund. The Servicer
shall not be liable for the acts or omissions of the Successor Manager.
(b) If the Trust Fund acquires any Foreclosed Property, the Servicer
shall have full power and authority, subject only to the specific requirements
and prohibitions of this Agreement and Accepted Servicing Practices, to do any
and all things in connection therewith for the benefit of the Trust Fund, all on
such terms and for such period as the Servicer deems to be in the best interest
of Certificateholders, and shall pay from funds on deposit in the Servicer
Collection Account or, to the extent such funds are insufficient, shall advance
as a Carrying Costs Advance:
(i) all insurance premiums due and payable in respect of such
Foreclosed Property;
(ii) all Impositions in respect of such Foreclosed Property
that could result or have resulted in the imposition of a lien thereon;
(iii) all ground rental payments, if applicable, with respect
to the Foreclosed Property; and
(iv) all costs and expenses necessary to maintain such
Foreclosed Property,
if, but only if, such advance would not be a Nonrecoverable Advance.
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(c) The Servicer, in the name of the Trustee, may contract with any
Successor Manager for the operation and management of any Foreclosed Property,
provided that no such contract shall impose individual liability on the Trustee
or the Servicer, and provided further that:
(i) the terms and conditions of any such contract shall not be
inconsistent herewith (including those set forth in the definition of
Management Fee);
(ii) any such contract shall require, or be administered to
require, that the Successor Manager (A) pay from revenues of the
Foreclosed Property all Operating Expenses incurred in connection with the
operation and management of the Foreclosed Property and (B) deposit on a
daily basis all Net Operating Income into the Servicer Collection Account;
(iii) none of the provisions of this Section 3.10(c) relating to
any such contract or to actions taken by any such Successor Manager shall
be deemed to relieve the Servicer of any of its duties and obligations to
the Trustee on behalf of Certificateholders with respect to the operation
and management of any such Foreclosed Property; and
(iv) the 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 Foreclosed Property.
The Servicer in the name of the Trustee on behalf of the Trust Fund shall be
entitled to enter into an agreement with any Successor Manager performing
services for it related to its duties and obligations hereunder for
indemnification of the Servicer by such Successor Manager, and nothing in this
Agreement shall be deemed to limit or modify such indemnification. All
Management Fees shall be an expense of the Trust Fund subject to reimbursement
pursuant to Section 3.04(a)(v)(E). The Servicer agrees to monitor the
performance of the Successor Manager and to enforce the obligations of the
Successor Manager on behalf of the Trustee in accordance with Accepted Servicing
Practices.
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Expenses incurred by the Servicer in connection herewith shall qualify as
Carrying Costs Advances. The Successor Manager shall not be deemed to be a
subservicer or agent of the Servicer. The agreement with the Successor Manager
may also provide for the indemnification of the Successor Manager by the Trust
Fund for any losses, claims or expenses suffered or incurred by the Successor
Manager other than such losses, claims or expenses resulting from the willful
misfeasance, bad faith or negligence of the Successor Manager.
Section 3.11. Sale of Foreclosed Properties. (a) At the time of
acquisition of any Foreclosed Property by the Trust Fund, the Servicer, as a
Carrying Costs Advance, shall on behalf of the Trust Fund obtain an appraisal of
the Foreclosed Property from an Appraiser approved by the Trustee in order to
determine the fair market value of the Foreclosed Property, shall provide copies
of such appraisal to the Trustee, the Depositor and the Rating Agency. The
Servicer may offer to sell to any Person any Foreclosed Property, if and when
the Servicer determines, consistent with Accepted Servicing Practices, and the
Trustee, consistent with Section 9.01, agrees, that such a sale would be in the
best economic interests of the Trust Fund, but shall, in any event, so offer to
sell any Foreclosed Property no later than the time determined by the Servicer
to be sufficient to result in the sale of such Foreclosed Property on or prior
to the date specified in Section 10.02. The Servicer shall give the Trustee
not less than five days' prior notice of its intention to sell any Foreclosed
Property and shall accept the highest bid received from any Person (which Person
shall certify in its bid as to whether it is an Interested Person) for any
Foreclosed Property in an amount at least equal to the sum of:
(i) the Allocated Loan Amount with respect to the related
Mortgaged Property; and
(ii) all unpaid interest accrued thereon at the highest
Component Rate in effect from time to time through the date of sale with
respect to each Component.
In the absence of any such bid, the Servicer shall take the following actions,
so long as, in each case, such actions taken by the Servicer are consistent with
Accepted Servicing Practices,
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the Servicer shall accept the highest cash bid received from any Person that is
not less than the fair market value of the Foreclosed Property as set forth in
the appraisal obtained under this Section. In the absence of any such bid, the
Servicer shall offer the Foreclosed Property for sale to any Person other than
an Interested Person, in the discretion of the Servicer in accordance with
Accepted Servicing Practices, and shall accept the highest cash bid received
therefor. If no such bid is received, any Interested Person may resubmit its
original bid (or a new bid), and the Servicer shall accept the highest
outstanding cash bid, regardless of from whom received. No Interested Person
shall be obligated to submit a bid to purchase any Foreclosed 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
Foreclosed Property pursuant hereto.
(b) In determining the fair market value of the Foreclosed Property,
the Appraiser shall take into account, as applicable, among other factors, the
financial standing of the tenants of the Foreclosed Property, the physical
condition of the Foreclosed Property, the state of the local economy and the
Trust Fund's obligation to dispose of any Foreclosed Property within the time
period specified in Section 10.02.
(c) Subject to the provisions of Sections 3.10 and 10.02, the
Servicer shall act on behalf of the Trust Fund in negotiating and taking any
other action necessary or appropriate in connection with the sale of any
Foreclosed Property, including the collection of all amounts payable in
connection therewith. Any sale of any Foreclosed Property shall be without
warranty by, or recourse to, the Trustee, the Depositor, the Servicer, the Trust
Fund, the Certificateholders or any other Person and if consummated in
accordance with the terms of this Agreement, none of the Servicer, the Depositor
or the Trustee shall have any liability to any Certificateholder with respect to
the purchase price thereof. The Trustee and the Servicer shall not be liable for
any losses incurred on such Permitted Investments.
(d) The proceeds of any sale effected pursuant to Section 3.11(c),
after deducting the expenses incurred in
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connection therewith, shall be deposited as Net Proceeds in the Servicer
Collection Account.
Section 3.12. Servicing Compensation. (a) On the Payment Date of
each month, commencing in January 1997, the Servicer shall be entitled to
retain from payments made on the Mortgage Loan (or from Liquidation
Proceeds), as servicing compensation, its Servicing Fee for the related
Distribution Date. Additional servicing compensation in the form of
Modification Fees, interest on Advances, Special Servicing Fees, Liquidation
Fees, assumption fees (to the extent paid by the related Mortgagor or assuming
party) and other similar charges and the investment earnings on amounts in
the Servicer Collection Account shall be paid to the Servicer (to the extent
not paid to or retained by a Sub-Servicer). Late Charges shall be paid to the
Servicer pursuant to Section 4.01. The Servicer shall be required to pay all
expenses incurred by it in connection with its servicing activities hereunder
(including, but not limited to, the fees and expenses of any Sub-Servicer
required to be paid by the Servicer pursuant to any Sub-Servicing Agreement,
premiums for the blanket hazard insurance policy and, if applicable, the
blanket fidelity bond and errors and omissions policy required by Section
3.06) and shall not be entitled to reimbursement therefor except as
specifically provided in this Agreement or the Loan Documents. With respect
to any liquidation of the Mortgaged Properties by the Servicer or any sale or
disposition of the Mortgage Loan by the Servicer following a Deed of
Trust Loan Event of Default, the Servicer will receive a "Liquidation Fee"
equal to the product of (i) the net proceeds received on the Mortgaged
Properties or the Mortgage Loan in connection with such liquidation,
sale or disposition and (ii)(a) 0.50% if such liquidation, sale or
disposition occurs within twelve months after the date on which the Mortgage
Loan has been accelerated and (b) 0.25% if such liquidation, sale or
disposition occurs following the end of such twelve-month period.
(b) No transfer, sale, pledge or other disposition of the Servicer's
right to receive all or any portion of the Servicing Fee or any Special
Servicing Fee, Modification Fee or Liquidation Fee shall be made, and any such
attempted transfer, sale, pledge or other disposition shall be void, unless such
transfer is made to a successor servicer in connection with the
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assumption by such successor servicer of the Servicer's duties hereunder
pursuant to Section 7.04 and all (and not a portion) of the Servicing Fees,
Special Servicing Fees, Modification Fees and Liquidation Fees are transferred
to such successor servicer.
Section 3.13. Reports to the Trustee; Rent Account, Central Account
and Servicer Collection Account Statements. (a) Not later than 15 days after
each Distribution Date, the Servicer shall forward to the Manager, the Rating
Agency, the Depositor and the Trustee, and the Trustee upon request shall
forward to the Initial Purchasers and the Depositor a statement, certified by a
Servicing Officer, setting forth the status of the Rent Accounts, the Central
Account and the Servicer Collection Account and of any funds or accounts
established under the Mortgages as of the close of business on the Business Day
immediately preceding such Distribution Date showing, for the period covered by
such statement, (i) the aggregate of deposits into and withdrawals from each
Rent Account, (ii) the aggregate of deposits into and withdrawals from the
Central Account, the Debt Service Payment Sub-Account and any other Sub-Account
for each category specified in Sections 3.04(a)(iii), (iv) and (v) and the
aggregate of deposits into and withdrawals from the Central Account (and the
Sub-Accounts therein) in accordance with the Mortgages and (iii) the aggregate
of deposits into and withdrawals from the Servicer Collection Account. Copies of
such statement provided by the Servicer to the Trustee shall be provided by the
Trustee to Certificateholders and to any Beneficial Owner of Certificates upon
written request to the Trustee, in each case, free of charge. The Trustee shall
not be liable for its failure to forward such statement to the extent it has not
received such statement from the Servicer in a timely manner.
(b) No later than five Business Days prior to any Distribution
Date, if the Mortgagors have provided notice of an optional principal
prepayment of all or a portion of the Mortgage Loan, the Servicer shall
deliver to the Trustee and the Rating Agency by electronic transmission (or
such other medium as to which the Servicer and the Trustee may agree from
time to time) a report which shall contain all information then in the
Servicer's possession required to be delivered by the Servicer in Section
3.13(c).
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(c) Not later than 10:00 a.m., New York time, two Business Days
prior to each Distribution Date, the Servicer shall deliver to the Trustee, in
electronic media and hard copy, a report setting forth the amount of funds to be
remitted to the Trustee on the Business Day preceding each Distribution Date and
all other final information required to be provided to the Trustee to enable it
to prepare the statement to Certificateholders described in Section 4.02 and any
other related information as the Trustee may reasonably require substantially in
the form of Exhibit K. The Trustee may conclusively rely on information provided
by the Servicer and shall have no obligation to recompute, recalculate, or
verify the accuracy of such information. The Servicer shall also provide such
information in writing and computer readable magnetic tape or diskette upon
written request in writing to the Initial Purchasers or the Rating Agency.
(d) After a Mortgage Loan Event of Default, the Servicer shall
(i) furnish to the Trustee the originals of all agreements entered into by
the Servicer in the name of the Trustee relating to the Mortgage Loan, (ii)
advise the Trustee in writing of any event or circumstance materially
affecting the related Turst Property or the interests of the
Certificateholders therein, and (iii) furnish, and request the Manager or any
Successor Manager, as applicable, to furnish, to the Trustee such other
reports with respect to such Mortgaged Property, its condition, tenants, and
the income resulting therefrom as the Trustee may reasonably request in
writing to the extent available to the Servicer.
Section 3.14. Annual Statement as to Compliance. The Servicer will
deliver to the Trustee, the Initial Purchasers, the Rating Agency and the
Depositor on or before March 31 of each year beginning March 31, 1997, an
Officer's Certificate stating as to each signer thereof that (a) a review of the
activities of the Servicer or Depositor, as the case may be (and, in the case of
any such Officer's Certificate required to be delivered hereunder by the
Servicer, of the Servicer's performance under this Agreement), during the
preceding calendar year (or since the Closing Date in the case of the first such
Officer's Certificate), has been made under such officer's supervision; (b)
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in the case of any such Officer's Certificate required to be delivered hereunder
by the Servicer, to the best of such officer's knowledge, based on such review,
the Servicer has fulfilled all of its obligations under this Agreement
throughout such period, or if there has been a default in the fulfillment of any
such obligations, specifying each such default known to such officer and the
nature and status thereof; and (c) whether the Servicer or the Depositor, as the
case may be, has received any notice regarding qualification or challenging the
status of the Trust REMIC as a REMIC from the IRS or any other governmental
agency or body. Copies of such statements provided to the Trustee by the
Servicer and Depositor shall also be provided by the Trustee to the Manager, the
Initial Purchasers and to any Certificateholder or any Beneficial Owner of
Certificates upon written request to the Trustee.
Section 3.15. Annual Independent Public Accountants' Servicing
Report. On or before March 31 of each year beginning March 31, 1997, the
Servicer, at its expense, shall cause a firm of independent public
accountants that is a member of the American Institute of Certified Public
Accountants to furnish a statement to the Trustee, the Depositor, the Initial
Purchasers and the Rating Agency to the effect that such firm has examined
certain documents and records relating to the servicing of the Mortgage
Loan for the preceding calendar year (or since the Closing Date in the case
of the first such statement) and that, on the basis of such examination
conducted substantially in compliance with generally accepted auditing
standards and the Uniform Single Attestation Program for Mortgage
Bankers or the Audit Program for Mortgages serviced for FHLMC, such firm is
of the opinion that such servicing during such period has been conducted in
compliance with this Agreement except for such exceptions that, in the
opinion of such firm, generally accepted auditing standards and the Uniform
Single Attestation Program for Mortgage Bankers or the Audit Program for
Mortgages serviced for FHLMC requires it to report, in which case such
exceptions shall be set forth in such statement. Copies of such statement
provided to the Trustee by the Servicer shall be also provided by the Trustee
to Certificateholders or any Beneficial Owner of Certificates upon written
request to the Trustee.
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Section 3.16. Access to Certain Documentation Regarding the
Mortgage Loan. Upon reasonable advance notice, the Servicer shall provide
reasonable access during its normal business hours at its offices to the
Trustee and the Rating Agency to any information in its possession relating
to its servicing of the Mortgage Loan and, to each Certificateholder
that is a savings and loan association, bank or insurance company, such
reports, information and documentation regarding the Mortgage Loan as
are sufficient to permit such Certificateholder, the Office of Thrift
Supervision, the FDIC, the supervisory agents and the examiners of any such
entity to comply with applicable regulations of the Office of Thrift
Supervision or other regulatory authorities with respect to investment in the
Certificates or, in the case of the Trustee and the Rating Agency, as it may
reasonably request.
The Servicer shall provide any inquiring savings and loan
association, bank or insurance company desiring to purchase a Certificate, or a
beneficial ownership therein, at the reasonable request of such association,
bank or insurance company, to the extent reasonably available to the Servicer,
the specific information as requested; provided that, the institution making
such request agrees to pay the Servicer's reasonable fees and out-of-pocket
expenses incurred by the Servicer in connection therewith.
Section 3.17. Inspections. The Servicer shall, at its expense,
inspect or cause to be inspected each Mortgaged Property, once each year and
shall furnish the Trustee and the Rating Agency with a copy of the related
inspection report promptly upon completion thereof. If, based on information
required to be supplied by the Mortgagors within 60 days after the end of
each of the first three quarters of each calendar year and within 120 days
after the end of each calendar year, the Debt Service Coverage for the
preceding twelve-month period is less than 125%, or if the Mortgagors fail to
pay any sums due under the Mortgage Note or the Mortgages on or before
their due date and such failure is not remedied within five days, or if an
inspection is otherwise warranted in accordance with Accepted Servicing
Practices, the Mortgaged Properties shall be inspected by the Servicer as
soon as practicable at the expense of the Mortgagors (or, if not paid
thereby, at the expense of the Trust
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Fund). The cost of any such additional inspection shall constitute a Carrying
Costs Advance, and the Servicer shall furnish the Rating Agency with a copy
of the additional inspection report promptly upon completion thereof.
Section 3.18. Advances. (a) P&I Advances shall be made pursuant
to Section 3.25. All Carrying Costs Advances shall be made in a timely manner
as necessary and in accordance with Accepted Servicing Practices.
(b) It is understood that the obligation of the Servicer to make
such Advances is mandatory, subject to the limitations set forth in this
Agreement, and shall continue to apply after any modification of the Mortgage
Loan pursuant to Section 3.03 hereof, beyond the Scheduled Loan
Maturity Date if a payment default shall have occurred on such date, and
through any court-appointed stay period or similar payment delay resulting
from any insolvency of the Mortgagors or related bankruptcy, notwithstanding
any other provision of this Agreement, other than the requirement of
recoverability, and shall continue, subject to the requirement of
recoverability until the earlier of (i) the date on which the Regular
Certificates are retired and (ii) the date on which the Mortgaged Properties
have been completely liquidated; provided, however, that the obligations of
the Servicer to make Advances hereunder are limited to providing a liquidity
facility with respect to the Mortgage Loan and making certain advances
with respect to the preservation of the Mortgaged Properties as expressly set
forth in this Agreement and do not constitute insurance or any similar credit
enhancement with respect to the Mortgage Loan or the Regular
Certificates and in no event shall the Servicer be required to advance any
Nonrecoverable Advance. Upon the Servicer's failure to make any required
Advance, the Trustee shall be required to do so, and if the Trustee fails to
make such Advance, the Fiscal Agent shall be required to do so, except to the
extent the Trustee or the Fiscal Agent, as applicable, determines such
Advance to be a Nonrecoverable Advance.
(c) Interest on each Advance shall accrue for each day that such
Advance is outstanding at the Advance Rate for such day on the basis of a year
of 360 days consisting of twelve 30-day months. The Servicer (or, if applicable,
the Trustee or the
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Fiscal Agent) shall be entitled to reimbursement for Advances (including
Nonrecoverable Advances) and interest thereon at the Advance Rate by
retaining amounts paid on the Mortgage Loan or other collections or
recoveries with respect to the Mortgage Loan (including Loss Proceeds
and Net Proceeds and withdrawals from any of the Sub-Accounts, other than the
Basic Carrying Costs SubAccount). Such rights of reimbursement shall be
senior to the rights of Certificateholders to receive any amounts recovered
with respect to the Mortgage Loan.
(d) Subject to Section 3.18(f), the Servicer shall be obligated
to make an Advance only to the extent that the Servicer has determined, in
its good faith judgment, that such Advance, together with interest thereon at
the Advance Rate, would not constitute a Nonrecoverable Advance if made. The
determination by the Servicer that it has made a Nonrecoverable Advance or
that any proposed Advance, if made, would constitute a Nonrecoverable
Advance, shall be evidenced by a certificate of a Servicing Officer,
delivered on or before the related Servicer Advance Date in the case of a P&I
Advance or on or before the following Servicer Advance Date in the case of
any other Advance, to the Trustee and the Rating Agency, and detailing the
reasons for such determination, which Certificate in each case shall be
accompanied by copies of an appraisal of each of the Mortgaged Properties
performed within the preceding 12 months by an Appraiser in accordance with
MAI standards and methodologies and, if such reports are to be used by the
Servicer to determine that any Advance would be nonrecoverable, any
engineers' reports, environmental surveys or other information relevant
thereto which support such determination by the Servicer. The costs of any
such appraisals, reports or surveys used by the Servicer in making the
determination that an Advance is or would be a Nonrecoverable Advance shall
qualify as Carrying Costs Advances. In determining whether an Advance with
respect to the Mortgage Loan will be recoverable, the Servicer shall
take into account amounts that may be realized from Loss Proceeds and Net
Proceeds on all of the Mortgaged Properties. The Servicer's good faith
determination as to the recoverability of an Advance shall be conclusive and
binding on the Certificateholders and the Trustee.
(e) None of the Servicer, the Trustee or the Fiscal Agent is
obligated to advance or pay (i) any principal amount due
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under the Mortgage Loan other than scheduled principal payments then due
and unpaid, (ii) any loss due to an Uninsured Cause or not otherwise covered
by insurance, (iii) any loss with respect to defects in the title to either
of the Mortgaged Properties, (iv) any amounts to pay the cost of capital
improvements to the Mortgaged Properties other than those to preserve,
restore and protect the Mortgaged Properties, (v) any amounts required to
cure any failure of the Mortgaged Properties to comply with any environmental
laws, or to investigate, test, monitor, contain, clean up or remedy an
environmental condition present at the Mortgaged Properties or (vi) any
Prepayment Premiums, Additional Interest or Default Rate Interest or (vii)
any other payments not specified in this Agreement.
(f)(i) In the event that a P&I Advance has been made by the
Servicer, the Trustee or the Fiscal Agent, the Servicer shall make
reasonable efforts to obtain from an Appraiser (the "Original Appraiser")
an appraisal of the Mortgaged Properties (the "Original Appraisal") within
45 days following the date on which such P&I Advance was made. Such
Original Appraisal shall be based upon an assumed sale of the Mortgaged
Properties within the immediately succeeding 24 months; provided that no
P&I Advance Appraisal shall be so required if an appraisal satisfying the
requirements of this sentence and the immediately preceding sentence had
previously been obtained within the prior six months before the first
Original Appraisal was required to be performed or, thereafter, within the
prior twelve months. The obligation of the Servicer, the Trustee and the
Fiscal Agent to make P&I Advances shall continue at least until the P&I
Advance Appraisal is obtained. The cost of any Original Appraisal shall be
advanced by the Servicer as a Carrying Costs Advance. The Servicer shall
be required to determine, within 10 days after obtaining such P&I Advance
Appraisal, whether an Appraisal Reduction Amount exists with respect to
the Mortgage Loan. If the Servicer determines that an Appraisal
Reduction Amount exists, then, with respect to the Distribution Date
immediately following the date of such determination and with respect to
each subsequent Distribution Date for so long as such Appraisal Reduction
Amount exists, any P&I Advance otherwise payable to a Class of Class B,
Class C or Class D Certificates to which all or
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a portion of such Appraisal Reduction Amount has been allocated shall be
reduced by the product of (i) the portion of such Appraisal Reduction
Amount allocated to such Class divided by the outstanding Certificate
Principal Balance of such Class and (ii) the P&I Advance otherwise
applicable to such Class. For purposes of determining P&I Advances to be
made on each Distribution Date, the aggregate Appraisal Reduction Amount
shall be allocated on such Distribution Date, first, to the outstanding
principal balance of the Class D Certificates, then to the outstanding
principal balance of the Class C Certificates, and then to the outstanding
principal balance of the Class B Certificates. Prior to each Servicer
Advance Date, the Trustee shall furnish the Servicer with any information
regarding the Certificates reasonably requested by the Servicer to enable
it to determine the P&I Advance for each Class of Certificates pursuant to
this Section 3.18(f).
(ii) The Certificateholders of any Classes as to which an Appraisal
Reduction Amount has been allocated shall be entitled, by a majority of
the aggregate Voting Rights represented by such Classes, to commission a
second appraisal (the "Second Appraisal") of the Mortgaged Properties, to
be performed by an Appraiser (the "Second Appraiser") meeting the same
requirements as the Original Appraiser. The cost of any Second Appraisal
shall be borne by such Classes. If the appraised value of the Mortgaged
Properties determined by the Second Appraisal is within 10% of the
appraised value of the Mortgaged Properties determined by the Original
Appraisal, the determination of the Original Appraisal shall govern. If
the values determined by the Original Appraisal and the Second Appraisal
are more than 10% apart, the Original Appraiser and the Second Appraiser
shall select a third Appraiser (the "Third Appraiser") meeting the same
requirements as the Original Appraiser and the Second Appraiser. The Third
Appraiser shall perform a third appraisal (the "Third Appraisal") to
determine the value of the Mortgaged Properties and shall present its
determination to the Servicer. The cost of any Third Appraisal shall be
borne by the Trust Fund. The Servicer shall compare the appraised values
in the three P&I Advance Appraisals, discard the
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value furthest from the other two, and average the two remaining values.
The resulting average shall constitute the appraised value of the
Mortgaged Properties for purposes of re-computing the P&I Advance to be
made on the Regular Certificates. The Servicer shall be entitled to rely
on any Original Appraisal, Second Appraisal or Third Appraisal performed
pursuant to this Section 3.18(f) without independent investigation or
verification in respect thereof.
(iii) A determination by the Servicer that an Appraisal Reduction
Amount will reduce the amount of a P&I Advance to the Class B, Class C or
Class D Certificates shall bar any future P&I Advance with respect to such
Class to the extent of such reduction. If, after having determined an
Appraisal Reduction Amount pursuant to a P&I Advance Appraisal (which is
not superseded by another P&I Appraisal in the following twelve months),
the Servicer nevertheless makes a P&I Advance that it is not permitted to
make to any Class of Class B, Class C or Class D Certificates, the
Servicer's right to reimbursement for such P&I Advance and interest
thereon shall be subordinate to the rights of Certificateholders of each
senior Class of Regular Certificates to be paid all related Certificate
Rate Interest and the entire Certificate Principal Balance of such Class,
but prior to the rights of Certificateholders holding the Regular
Certificates that received such prohibited P&I Advance, and of each Class
junior thereto, to receive any amounts in respect of the Mortgaged
Properties.
Section 3.19. Reports of Foreclosures of Mortgaged Property. Not
later than January 31 of each year, beginning in 1997, the Servicer
shall make the reports of foreclosures and abandonments of any
Mortgaged Property required by Section 6050J of the Code and the
reports of discharges of indebtedness income in respect of the Mortgage
Loan required by Section 6050P of the Code and shall send a copy of
such reports to the Trustee.
Section 3.20. Realization on Collateral Security Instruments. In
connection with the enforcement of the rights of the Trustee and the
Servicer nder the Mortgage Note and the Mortgages in, to and under any
of the Collateral Security
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Instruments (other than the Assignments of Leases and Rents and Security
Deposits), the Servicer and the Trustee shall consult with counsel to determine
how best to enforce such rights in a manner consistent with the REMIC Provisions
and shall not, based on a Nondisqualification Opinion, take any action that
could result in the failure of the Trust REMIC to qualify as a REMIC while any
Regular Certificates are outstanding, unless such action has been approved by a
vote of 100% of each Class of Certificateholders.
Section 3.21. Preparation of Tax Returns and Other Reports. (a)
Subject to Section 10.01, the Trustee shall prepare or cause to be prepared on
behalf of the Trust REMIC, in reliance upon the information, if any, furnished
by the Servicer in accordance with this Agreement, and shall sign and file, at
the expense of the Trust Fund payable from the Central Account, federal income
tax and information returns and Virginia, New York, Georgia and Illinois income
tax and information returns, if required, or such other returns as to the actual
knowledge of one of its Responsible Officers may be required by Applicable State
Law relating to the Trust REMIC. The Trustee shall forward to the Depositor and
the Servicer copies of such federal and state income tax and information returns
and of quarterly and annual REMIC tax returns and such other information within
the control of the Trustee as the Depositor may reasonably request in writing.
Moreover, the Trustee shall (i) forward to each Certificateholder such forms and
furnish such information within the control of the Trustee or Servicer as are
required by the Code to be furnished to them, (ii) prepare and file annual
reports required by the applicable state authorities, and (iii) prepare and
disseminate to Certificateholders Forms 1099 (or otherwise furnish information
within the control of the Trustee) to the extent required by applicable law.
Each of the Servicer and the Depositor (but not the Trust Fund) shall indemnify
the Trustee for any liability of or assessment against the Trustee and any
expenses incurred in connection with such liability or assessment (including
attorneys' fees) resulting from any error in any tax or information return
resulting from errors in the information provided by the Servicer and the
Depositor, respectively caused by the Servicer's or the Depositor's own
negligence, bad faith or willful misconduct. The Trustee shall indemnify the
Servicer, the Depositor and the Trust Fund for any
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liability of or assessment against the Servicer, the Depositor or the Trust Fund
and any expenses incurred in connection with such liability or assessment
(including attorneys' fees) resulting from any error in any of such tax or
information returns resulting from errors in the preparation of such returns by
the Trustee caused by its own negligence, bad faith or willful misconduct. Any
such indemnification described in this Section 3.21(a) shall survive the
termination of this Agreement.
(b) The Trustee shall prepare, sign and file with the IRS, on
behalf of the Trust REMIC, an application for a taxpayer identification
number for the Trust REMIC on IRS Form SS-4. The Trustee, upon receipt from
the IRS of the Notice of Taxpayer Identification Number Assigned, shall
promptly forward a copy of such notice to the Servicer and the Depositor. The
Trustee shall prepare and file Form 8811 on behalf of the Trust REMIC and
shall designate an appropriate Person to respond to inquiries by or on behalf
of Certificateholders for original issue discount and related information in
accordance with applicable provisions of the Code.
Section 3.22. Administration of the Mortgage Loan. (a) The
Servicer shall review the insurance policies or certificates of insurance
required to be delivered by the Mortgagors pursuant to Section 3.06 of the
related Mortgage to determine compliance with such Section.
(b) The Servicer shall, on behalf of the Trustee, take all
actions reasonable and necessary to enforce the rights of the Trustee as
assignee under each of the Collateral Security Instruments pursuant to the
Assignments of Collateral Security Instruments. Without in any way limiting
the foregoing, the Servicer shall, on behalf of the Trustee, perform all the
acts and assume and carry out all of the duties assigned to the Trustee under
each Mortgage. The Servicer shall take all actions as reasonable and
necessary to enforce the rights of the Trustee on behalf of the
Certificateholders under the Mortgages as referenced herein under Section
2.02(b).
Section 3.23. [Intentionally left blank]
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Section 3.24. Appointment of Special Servicer. Within fifteen
Business Days of the occurrence of a Mortgage Loan Event of Default with
respect to a Mortgaged Property, the Servicer shall appoint a special servicer
(the "Special Servicer"), which may be itself (or which shall be itself, if
AMRESCO Management, Inc. is the Servicer); provided that, the appointment of
any Person (excluding the Servicer) to act as Special Servicer shall be
subject to the Rating Agency's then-current rating of each Class of Regular
Certificates not being reduced or withdrawn as a result thereof (as evidenced
by a letter of such effect from the Rating Agency delivered to the Trustee).
During the period of time that the Mortgaged Properties are being serviced by
the Special Servicer, the Special Servicer shall be entitled to monthly
servicing compensation equal to one-twelfth of the product of (i) 0.10% per
annum and (ii) the outstanding principal balance of the Mortgage Loan
(the "Special Servicing Fee"). Such Special Servicing Fee shall be payable on
each Payment Date in addition to the Servicing Fee out of the Central Account
as provided in Section 3.04(a)(iv) or the Servicer Collection Account as
provided in Section 3.04(b)(ii). The Special Servicer shall have all the
rights and remedies of the Servicer with respect to the Mortgaged Properties.
The decision to continue to use or terminate a Special Servicer with respect
to the Mortgaged Properties is in the sole discretion of the Servicer. All
expenses incurred by the Special Servicer relating to the Mortgaged
Properties are immediately reimbursable to the Special Servicer from any
funds in the Central Account, the Sub-Accounts or otherwise from the Mortgagor.
Section 3.25. Advance Procedures. (a) On the Payment Date
immediately preceding the related Distribution Date, the Servicer shall
determine whether and to what extent the Mortgagor has failed to make any
payment of principal or any interest in respect of scheduled installments of
principal and interest that were due on the Payment Date and whether such
deficiencies, if advanced by the Servicer, would be a Nonrecoverable Advance.
(b) On or before 2 p.m., Chicago time, on the Servicer Advance Date,
the Servicer shall make any required P&I Advance by depositing in the
Certificate Account the amount, if any, by which the amount on deposit in the
Debt Service Payment SubAccount on the Business Day immediately preceding the
Servicer
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Advance Date is less than the Monthly Payment for the related Payment Date less
the portion of any such amount that the Servicer determines, in its good faith
judgment, would, if advanced, constitute a Nonrecoverable Advance.
(c) In the event that the Servicer fails to make a required P&I
Advance on or before 2 p.m., Chicago time, on the Servicer Advance Date, the
Trustee shall on or before 4 p.m., Chicago time, on such Servicer Advance Date
provide to the Servicer, with a copy to the Fiscal Agent, by telecopy, written
notice of such failure and the amount of such failure and that continuance of
such failure until the close of business on such Business Day will be an Event
of Default. If the Servicer fails to make such P&I Advance by 4 p.m., Chicago
time, on such Servicer Advance Date, the Trustee, as successor Servicer, shall
deposit the amount of such P&I Advance in the Certificate Account by 6 p.m.,
Chicago time, on such Servicer Advance Date. The Trustee shall be entitled to
reimbursement for such P&I Advance from the same sources as the Servicer would
have been entitled to be reimbursed had the Servicer made such P&I Advance (and
with priority over amounts then or thereafter reimbursable to the Servicer). If
the Trustee fails to make such P&I Advance by 6 p.m., Chicago time, on such
Servicer Advance Date, the Fiscal Agent shall make such P&I Advance on the
immediately following Distribution Date before the Paying Agent is required to
make distributions under Section 4.01 on such Distribution Date and, in such
event, shall be entitled to the same reimbursement as the Trustee or Servicer.
Notwithstanding the foregoing obligations of the Trustee and the Fiscal Agent to
make any P&I Advance required to have been made by the Servicer but not so made,
the Trustee and the Fiscal Agent shall have the same right as the Servicer under
Sections 3.18(d) and 3.18(e) to determine that such P&I Advance, if made, would
constitute, or any P&I Advance theretofore made constitutes, a Nonrecoverable
Advance, and the right to refuse to make such a Nonrecoverable Advance and to
reimbursement of any such Nonrecoverable Advance (to the extent made) with
interest thereon at the Advance Rate. Upon making any P&I Advance, the
provisions of Section 3.18(f)(iii) shall apply to the Trustee and the Fiscal
Agent to the same extent as the Servicer.
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(d) In the event that the Servicer fails to fulfill its obligations
hereunder to make any P&I Advances, the Trustee shall perform such obligations
as provided in paragraph (c) above, and, with respect to any such P&I 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 rights to make the determination that an
Advance is a Nonrecoverable Advance, in accordance with the provisions of
Section 3.18(d) and 3.18(e) hereof (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 amounts of interest thereon
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
Trustee, until such Advances shall have been repaid in full, together with all
amounts of interest accrued thereon, before any repayment to the Servicer. The
Trustee shall be entitled to conclusively rely on any Officer's Certificate
regarding a Nonrecoverable Advance in connection with making any Advances
hereunder.
(e) In the event that the Trustee fails to fulfill its obligations
hereunder to make any P&I Advances following the failure of the Servicer to make
a P&I Advance, the Fiscal Agent shall perform such obligations within one
Business Day following such failure by the Servicer and on the same day of such
Trustee failure, and, with respect to any such P&I Advance made by the Fiscal
Agent, the Fiscal Agent shall succeed to all of the Trustee's rights with
respect to any such P&I Advance hereunder, including, without limitation, the
Trustee's rights of reimbursement and rights to make the determination that an
Advance is a Nonrecoverable Advance, in accordance with the provisions of
Section 3.18(d) and 3.18(e) hereof. Upon making any P&I Advance, the provisions
of Section 3.18(f) shall apply to the Fiscal Agent to the same extent as the
Servicer. The Fiscal Agent shall be entitled to conclusively rely on any
Responsible Officer's Certificate regarding a Nonrecoverable Advance in
connection with making any Advances hereunder. The making of a P&I Advance by
the Fiscal Agent shall cure the Trustee's failure to make such advance.
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ARTICLE FOUR
PAYMENTS AND STATEMENTS TO CERTIFICATEHOLDERS
Section 4.01. Distributions. (a) On each Distribution Date, the
Paying Agent shall make distributions to Certificateholders in the following
order of priority from funds on deposit in the Certificate Account, the amount
of such distributions to be determined by the Trustee on the basis of
information provided by the Servicer pursuant to its report to the Trustee
pursuant to Section 3.13(c):
(i) to the extent of the Available Distribution Amount:
(A) to the Class A Certificates, interest at the Class A
Certificate Interest Rate on the Class A Certificate Principal
Balance for the related Interest Accrual Period, together with any
related Unpaid Certificate Interest Shortfall for such Distribution
Date;
(B) to the Class A Certificates, in respect of principal of
such Class, all scheduled payments of principal due or past due on
the A Component of the Mortgage Loan on the related Payment
Date, until the Certificate Principal Balance of the Class A
Certificates is reduced to zero;
(C) to the Class B Certificates, interest at the Class B
Certificate Interest Rate on the Class B Certificate Principal
Balance for such Interest Accrual Period, together with any related
Unpaid Certificate Interest Shortfall for such Distribution Date;
(D) to the Class B Certificates, in respect of principal of
such Class, all scheduled payments of principal due or past due on
the B Component of the Mortgage Loan on such Payment Date,
until the Certificate Principal Balance of the Class B Certificates
is reduced to zero;
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(E) to the Class C Certificates, interest at the Class C
Certificate Interest Rate on the Class C Certificate Principal
Balance for such Interest Accrual Period, together with any
related Unpaid Certificate Interest Shortfall for such Distribution
Date;
(F) to the Class C Certificates, in respect of principal of
such Class, all scheduled payments of principal due or past due on
the C Component of the Mortgage Loan on such Payment Date,
until the Certificate Principal Balance of the Class C Certificates
is reduced to zero;
(G) to the Class D Certificates, interest at the Class D
Certificate Interest Rate on the Class D Certificate Principal
Balance for such Interest Accrual Period, together with any related
Unpaid Certificate Interest Shortfall for such Distribution Date;
(H) to the Class D Certificates, in respect of principal of
such Class, all scheduled payments of principal due or past due on
the D Component of the Mortgage Loan on such Payment Date,
until the Certificate Principal Balance of the Class D Certificates
is reduced to zero;
provided that no portion of such Available Distribution Amount
representing Unscheduled Payments, Prepayment Premiums or the Excess Cash
Flow Amount shall be distributed pursuant to this clause (i);
(ii) to the extent of that portion of such Available Distribution
Amount that represents, without duplication, the sum of (x) all
Unscheduled Payments, if any, received by such Payment Date, (y) the
Voluntary Prepayment Premium Amount, if any, for such Distribution Date
and (z) on each Distribution Date after the Balloon Anticipated Repayment
Date, the Excess Cash Flow Amount:
(A) to the Class A Certificates, interest at the Class A
Certificate Interest Rate on the Class A Certificate Principal
Balance for such Interest Accrual
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Period, to the extent unpaid, together with any related Unpaid
Certificate Interest Shortfall for such Distribution Date;
(B) to the Class A Certificates, (x) in respect of principal
of such Class, until the Certificate Principal Balance of such Class
has been reduced to zero and (y) in the case of any Voluntary
Prepayments distributed to such Class pursuant to this subclause
(B), a share of any such Voluntary Prepayment Premium Amount, to the
extent provided in Section 4.01(c);
(C) to the Class B Certificates, interest at the Class B
Certificate Interest Rate on the Class B Certificate Principal
Balance for such Interest Accrual Period, to the extent unpaid,
together with any related Unpaid Certificate Interest Shortfall for
such Distribution Date;
(D) to the Class B Certificates, (x) in respect of principal
of such Class, until the Certificate Principal Balance of such Class
has been reduced to zero and (y) in the case of any Voluntary
Prepayments distributed to such Class pursuant to this subclause
(D), a share of any such Voluntary Prepayment Premium Amount, to the
extent provided in Section 4.01(c);
(E) to the Class C Certificates, interest at the Class C
Certificate Interest Rate on the Class C Certificate Principal
Balance for such Interest Accrual Period, to the extent unpaid,
together with any related Unpaid Certificate Interest Shortfall for
such Distribution Date;
(F) to the Class C Certificates, (x) in respect of principal
of such Class, until the Certificate Principal Balance of such Class
has been reduced to zero and (y) in the case of any Voluntary
Prepayments distributed to such Class pursuant to this subclause
(F), a share of any such Voluntary Prepayment Premium Amount, to the
extent provided in Section 4.01(c);
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(G) to the Class D Certificates, interest at the Class D
Certificate Interest Rate on the Class D Certificate Principal
Balance for such Interest Accrual Period, to the extent unpaid,
together with any related Unpaid Certificate Interest Shortfall for
such Distribution Date; and
(H) to the Class D Certificates, (x) in respect of principal
of such Class, until the Certificate Principal Balance of such Class
has been reduced to zero and (y) in the case of any Voluntary
Prepayments distributed to such Class pursuant to this subclause
(H), a share of any such Voluntary Prepayment Premium Amount, to the
extent provided in Section 4.01(c);
(iii) after the Certificate Principal Balance of all of the Regular
Certificates has been reduced to zero, sequentially, to the Class A
Certificates, the Class B Certificates, the Class C Certificates and the
Class D Certificates, in that order, to the extent of any remaining
portion of such Available Distribution Amount after the distributions in
clauses (i) and (ii) of this Section 4.01(a), applied to pay to each such
Class the sum of the amount of Additional Interest with respect thereto
and the related Unpaid Additional Interest Shortfall for such Distribution
Date;
(iv) after the Certificate Principal Balance of all of the Regular
Certificates has been reduced to zero, and all Additional Interest and
Unpaid Additional Interest Shortfalls have been paid to the Regular
Certificates, sequentially, to the Class A Certificates, the Class B
Certificates, the Class C Certificates and the Class D Certificates, in
that order, to the extent of any remaining portion of such Available
Distribution Amount after the distributions in clauses (i), (ii) and (iii)
of this Section 4.01(a), applied to pay all unpaid Prepayment Premiums
payable to such Classes (other than those payable pursuant to clause
(a)(ii) above in connection with Voluntary Prepayments);
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(v) after the Certificate Principal Balance of all of the Regular
Certificates has been reduced to zero, and all Additional Interest and
Unpaid Additional Interest Shortfalls have been paid to the Regular
Certificates, and all unpaid Prepayment Premiums payable to the Regular
Certificates have been paid thereto, to the Servicer, to the extent of any
remaining portion of such Available Distribution Amount, applied to pay
accrued and unpaid Late Charges (and any other amounts owed to the
Servicer not theretofore paid to the Servicer); and
(vi) to the Class R Certificates, the balance, if any, of such
Available Distribution Amount.
(b) On each Distribution Date, the Paying Agent shall withdraw the
Default Interest Distribution Amount from the Default Interest Account and
distribute it among the Regular Certificates, pro rata, based on the Closing
Date Fractional Interest of each Class of Regular Certificates. The
distributions of any such Default Interest Distribution Amount shall not result
in a reduction in the Certificate Principal Balance of any Class of Certificates
as to which such distribution is made and shall not be counted toward unpaid
interest on such Class accrued at the related Certificate Interest Rate or
Adjusted Certificate Interest Rate.
(c) The Voluntary Prepayment Premium Amount for any Distribution
Date shall be distributed to Holders of the Regular Certificates pursuant to
Section 4.01(a)(ii) in the same proportions in which the Regular Certificates
actually receive distributions, pursuant to clauses (B), (D), (F) and (H) of
Section 4.01(a)(ii), of the Voluntary Prepayment Amount for such Distribution
Date. No distribution of any Prepayment Premium shall result in a reduction in
the Certificate Principal Balance of any Class of Certificates as to which such
distribution is made or be counted toward accrued and unpaid interest on such
Class.
(d) Distributions on each Distribution Date shall be made to each
Certificateholder of record on the related Record Date (other than as provided
in Section 9.01 respecting the final distribution), by check mailed to such
Certificateholder at the
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address appearing in the Certificate Register, or upon written request by a
Certificateholder holding Certificates of any Class exceeding $5,000,000 initial
Certificate Principal Balance delivered at least five Business Days prior to the
related Record Date, by wire transfer to a bank account maintained in the United
States, or by such other means of payment as such Certificateholder and the
Paying Agent shall agree. Distributions on each Class of Certificates shall be
made pro rata among all Holders of Certificates of such Class based on each such
Holder's Percentage Interest.
Section 4.02. Statements to Certificateholders. The Trustee shall
prepare, or cause to be prepared, and mail not later than each Distribution Date
to the Depositor, the Servicer, the Rating Agency, the Manager, the Initial
Purchasers and each Certificateholder of each Class and, upon written request to
the Trustee, Beneficial Owners of the Regular Certificates a statement (the
"Monthly Statement") in respect of such Distribution Date setting forth to the
extent applicable to such Class:
(a) the amount of the distribution from the Certificate
Account allocable to principal, separately identifying the aggregate
amount of any Unscheduled Payments and any Voluntary Prepayments, Loss
Proceeds and Net Proceeds included therein and specifying the source
thereof;
(b) the aggregate amount of the distribution from the
Certificate Account and the Default Interest Account allocable to interest
for each Class, separately identifying the amount paid in respect of (w)
interest at the applicable Certificate Interest Rates, (x) the amount of
any Additional Interest, (y) any Unpaid Additional Interest Shortfalls and
(z) any Default Rate Interest;
(c) the aggregate amount of the distribution from the
Certificate Account allocable to Prepayment Premiums;
(d) if the distribution to the Certificateholders of any Class
in respect of scheduled principal and interest at the applicable
Certificate Interest Rate is less than the full amount thereof that would
be distributable to such Holders if there were a sufficient Available
Distribution
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Amount, the amount of such shortfall for each Class and the allocation
thereof between interest and principal;
(e) separately identified, the amount of accrued and unpaid
Additional Interest and Default Rate Interest, if any, for each Class of
Regular Certificates;
(f) the amount of any P&I Advance by the Servicer, the
Trustee or the Fiscal Agent included in the amounts distributed to the
Certificateholders;
(g) the Class A, Class B, Class C and Class D Certificate
Principal Balances after giving effect to the distribution of principal
on the Certificates on such Distribution Date;
(h) the Mortgage Loan Principal Balance and the
Allocated Loan Amount for each of the Mortgaged Properties for such
Distribution Date;
(i) identification of any Mortgage Loan Event of
Default or any Event of Default under this Agreement, as of the close
of business on the last day of the immediately preceding calendar month;
(j) the Class A, Class B, Class C and Class D Percentages for
the following Distribution Date;
(k) the amount of servicing compensation paid to the Servicer
and any Special Servicer with respect to such Distribution Date,
including the Servicing Fee, the Special Servicing Fee, any Liquidation
Fee, any Modification Fee and any Late Charges and other Mortgagor charges
retained by, or payable to, the Servicer pursuant to this Agreement; and
(l) the amount in each of the Sub-Accounts established
pursuant to Section 5.02 of each Mortgage;
(m) The aggregate Adjusted NOI for the Mortgaged Properties
during the preceding twelve-month period, and the current Debt Service
Coverage for the Mortgage Loan. For purposes of each Monthly
Statement, these items shall be
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calculated by the Servicer using the scheduled debt service payments
applicable to the Mortgage Loan during the succeeding twelve-month
period;
(n) if a P&I Advance Appraisal has been completed by an
Appraiser with respect to any Foreclosed Property and is available to the
Servicer or has otherwise been completed by or at the direction of the
Servicer in accordance with MAI standards and methodologies, the appraised
value of such Foreclosed Property as of the date of any such P&I Advance
Appraisal (and the Servicer shall also provide the Rating Agency with a
copy of all such appraisals); and
(o) any material modifications, waivers or amendments of any
of the terms of the Mortgage Loan.
Each amount set forth pursuant to clauses (a) through (f) above will
be expressed as a dollar amount per $1,000 of original principal amount of each
Class of Certificates.
Each report to Certificateholders will indicate whether and to what
extent, to the actual knowledge of a Responsible Officer of the Trustee, there
exist material deviations in the servicing procedures from those specified in
this Agreement. The Servicer shall provide the Trustee the information needed in
clauses (a), (b), (c), (e), (f), (h), (i), (k), (l), (m), (n) and (o) above to
the extent such information relates to the Mortgage Loan or the Mortgaged
Properties, and the Trustee's obligation to furnish such information to others
as set forth herein is contingent upon its receipt of such information from the
Servicer. To the extent the information required to be furnished by the Servicer
is based on information required to be provided by the Mortgagors, the
Servicer's obligation to furnish such information to the Trustee is contingent
on the receipt of such information from the Mortgagors. The Servicer shall be
entitled to rely on information supplied by the Mortgagors without independent
verification to the extent such reliance is consistent with Accepted Servicing
Practices. The Trustee shall be entitled to rely on information supplied by the
Servicer without independent verification. The Trustee shall furnish the Rating
Agency with any other reports the Rating Agency shall
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reasonably request to the extent the Trustee has or can obtain the requested
information without unreasonable effort or expense.
Within 60 days following the end of the first three quarters of each
calendar year and on an annual basis, and within 120 days following the end of
the calendar year, the Mortgagors are required to forward by mail to the
Servicer, the Trustee, the Depositor, the Initial Purchasers, the Rating Agency
and the Manager a report summarizing the operating performance of the Mortgaged
Properties, including in such report the net operating income for the Mortgaged
Properties, the rent roll, each tenant's total sales and sales per square foot,
to the extent reported by tenants under the terms of the Leases, the
cost-of-occupancy reports, the average and period-end occupancy rate of the
Mortgaged Properties (by gross leasable area and in-line space) and the current
Debt Service Coverage for the quarter just completed and year-to-date, and each
as compared to the preceding year. The report made with respect to the fourth
quarter of any year will be based upon the audited financial statements of the
Mortgagors for that year. Upon the written request of a Beneficial Owner of a
Certificate, the Trustee shall provide such reports to such Owner at the expense
of the Trust Fund. The Trustee shall not be liable for its failure to deliver
such report to the extent such failure is a result of the Servicer's failure to
deliver such report to the Trustee in a timely manner.
Within 60 days following the end of each calendar year, the Trustee
shall prepare, or cause to be prepared, and mail to each Person who at any time
during the calendar year was a Certificateholder (i) a statement containing the
aggregate information set forth in subclauses (a) and (b) above for such
calendar year or applicable portion thereof during which such person was a
Certificateholder and (ii) such other customary information as the Trustee deems
necessary or desirable for Certificateholders to prepare their federal, state
and local income tax returns. Such obligation of the Trustee shall be
deemed to have been satisfied to the extent that substantially comparable
information shall be provided by the Trustee pursuant to any requirements of the
Code.
Section 4.03. Reports by each Mortgagors. The Depositor will cause
each Mortgagor to covenant (a) to file with
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the Trustee within 15 days after such Mortgagor is required to file the same
with the Commission, copies of the annual reports and 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)
which such Mortgagor may be required to file with the Commission pursuant to
Section 13 or 15(d) of the Exchange Act;
(b) to file with the Trustee and the Commission, in accordance with
rules and regulations prescribed from time to time by the Commission, such
additional information, documents, and reports with respect to compliance by
such Mortgagor with the conditions and covenants provided for in this Agreement
as may be required from time to time by such rules and regulations; and
(c) to furnish the Trustee and the Rating Agency, on or before March
31 of each calendar year commencing 1997, a brief certificate from the principal
executive officer, principal financial officer or principal accounting officer
of any entity directly or indirectly serving as the general partner of such
Mortgagor as to his or her knowledge of such Mortgagor's compliance with all
conditions and covenants under this Agreement. For purposes of this Section
4.03(c) such compliance shall be determined without regard to any period of
grace or requirement of notice provided under this Agreement.
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ARTICLE FIVE
THE CERTIFICATES
Section 5.01. The Certificates. (a) The following table sets forth
the Class designations, Certificate Interest Rate and original Certificate
Principal Balances for each Class of Certificates comprising the interests in
the Trust Fund created hereunder:
Original
Certificate
Designation Certificate Interest Rate Balances
----------- ------------------------- --------
Class A Class A Certificate Interest Rate $212,000,000
Class B Class B Certificate Interest Rate $ 27,000,000
Class C Class C Certificate Interest Rate $ 15,000,000
Class D Class D Certificate Interest Rate $ 30,000,000
Class R(1)
In addition, following the Balloon Anticipated Repayment Date, each
Class of Regular Certificates shall begin to accrue interest at the related
Adjusted Certificate Rate. Holders of the Regular Certificates shall be entitled
to receive distributions of Default Rate Interest (net of amounts thereof
applied to repay interest on P&I Advances) paid on the Mortgage Note and
deposited in the Default Interest Account.
The Class A, Class B, Class C, Class D and Class R Certificates
shall be issued in registered form in substantially the respective forms set
forth as Exhibits A, B, C, D and E hereto. The Class A, Class B, Class C and
Class D Certificates shall be issuable in minimum denominations of $100,000 and
in integral multiples of $1 in excess thereof. The Class R Certificates shall be
issuable in Percentage Interests evidencing, in the aggregate, a 100.00%
Percentage Interest.
----------
(1) The Class R Certificates do not have a Certificate Interest Rate or a
Certificate Balance.
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On the Closing Date, the Certificates aggregating the initial
Certificate Principal Balances and Percentage Interests shall be executed and
delivered by the Certificate Registrar in such names and authorized
denominations as the Depositor shall direct in writing, and authenticated by the
Trustee, all as provided herein. The Certificates shall be executed by manual or
facsimile signatures on behalf of the Certificate Registrar by an authorized
officer. Certificates bearing the manual or facsimile signatures of individuals
who were, at the time when such signatures were affixed, authorized to sign on
behalf of the Certificate Registrar, shall bind the Trust Fund, notwithstanding
that such individuals or any of them have ceased to be so authorized prior to
the authentication and delivery of such Certificates or did not hold such
offices on the date of such Certificates. Each Certificate shall, on original
issue, be authenticated by the Trustee or the Authenticating Agent upon the
order of the Depositor upon delivery to the Trustee of the Mortgage File
described in Section 2.01. No Certificate shall be entitled to any benefit under
this Agreement or be valid for any purpose unless there appears on such
Certificate a certificate of authentication substantially in the form provided
for herein executed by an authorized officer of the Trustee or the
Authenticating Agent by manual signature, and such certification upon any
Certificate shall be conclusive evidence, and the only evidence, that such
Certificate has been duly authenticated and delivered hereunder. The
Certificates executed by the Certificate Registrar and authenticated and
delivered by the Trustee or the Authenticating Agent to or upon the order of the
Depositor on the Closing Date shall be dated the Closing Date. All other
Certificates that are authenticated after the Closing Date shall be dated the
date of their authentication.
Until such time as definitive fully registered certificates
("Definitive Certificates") are issued pursuant to Section 5.07, each Book-Entry
Certificate shall bear the following legend:
"Unless this certificate is presented by an authorized
representative of [the Depository] to the Trustee or its agent for registration
of transfer, exchange or payment, and any certificate issued is registered in
the name of [the Depository]
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or in such other name as requested by an authorized representative of [the
Depository] (and any payment is made to [the Depository] or to such other entity
as is requested by an authorized representative of [the Depository or its
nominee]), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, [the
Depository], has an interest herein."
(b) Upon original issuance, the Book-Entry Certificates shall be
issued in the form of one or more typewritten certificates, to be delivered to
The Depository Trust Company, the initial Depository, by, or on behalf of, the
Depositor. Such Certificates shall initially be registered on the Certificate
Register in the name of the nominee of The Depository Trust Company, and no
Beneficial Owner will receive a definitive certificate representing such
Beneficial Owner's interest in the Book-Entry Certificates, except as provided
in Section 5.07.
Unless and until Definitive Certificates have been issued to
Beneficial Owners pursuant to Section 5.07:
(i) the provisions of this Section 5.01(b) shall be in full
force and effect;
(ii) the Depositor, the Servicer, the Certificate Registrar
and the Trustee may deal with the related Depository for all purposes
(including the making of distributions on the Book-Entry Certificates and
the taking of actions by the Holders of Book-Entry Certificates) as the
authorized representative of the Beneficial Owners;
(iii) to the extent that the provisions of this Section
5.01(b) conflict with any other provisions of this Agreement, the
provisions of this Section 5.01(b) shall control; and
(iv) the rights of Beneficial Owners shall be exercised only
through such Depository and shall be limited to those established by law,
the rules, regulations and procedures of such Depository and agreements
between such Beneficial Owners and the Depository and/or the Depository
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Participants, and all references in this Agreement to actions by
Certificateholders shall, with respect to the Book-Entry Certificates,
refer to actions taken by such Depository upon instructions from the
Depository Participants, and all references in this Agreement to
distributions, notices, reports and statements to Certificateholders
shall, with respect to the Book-Entry Certificates, refer to
distributions, notices, reports and statements to such Depository or its
nominee, as registered holder of the Book-Entry Certificates, as the case
may be, for distribution to Beneficial Owners in accordance with the
procedures of such Depository.
For purposes of any provision of this Agreement requiring or
permitting actions with the consent of, or at the direction of, Holders of
Certificates evidencing specified Voting Rights, such direction or consent shall
be given by Beneficial Owners having the requisite Voting Rights, acting through
the related Depository, as authorized representative of Beneficial Owners.
Unless and until Definitive Certificates have been issued to
Beneficial Owners pursuant to Section 5.07, the reports or statements referred
to in Section 4.02 shall be furnished by the Trustee only to the related
Depository, which shall be solely responsible for furnishing copies thereof to
Beneficial Owners; provided, that the Trustee shall furnish such reports to any
person identifying himself or herself as a Beneficial Owner who makes a written
request for such reports.
Section 5.02. Registration of Transfer and Exchange of Certificates.
(a) The Certificate Registrar shall cause to be maintained in accordance with
the provisions of Section 5.05 a Certificate Register in which, subject to such
reasonable regulations as it may prescribe, the Trustee shall provide for the
registration of Certificates and of transfers and exchanges of Certificates as
herein provided. The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of the Certificateholders. The Trustee is hereby initially appointed
Certificate Registrar for the purpose of registering transfers and exchanges of
Certificates as herein provided. The office of
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the Certificate Registrar is located at the address of the Trustee set forth in
Section 11.04.
(b) No registration of transfer of any Certificate shall be made
unless (i) such transfer is made pursuant to an effective registration statement
under the Securities Act or (ii) (A) such transfer is made pursuant to Rule 144A
under the Securities Act or another exemption from the registration requirements
of the Securities Act and (B) either (x) the Certificate Registrar is notified
by any such transferee that such Certificate shall be registered in the name of
the Depository or its nominee and shall be held by such transferee in book-entry
form through the Depository or (y) the Certificate Registrar shall have received
a Representation Letter substantially in the form of Exhibit F hereto with
respect to such transfer made pursuant to such other exemption or, with respect
to any transfer made by the Initial Purchasers pursuant to Rule 144A, a copy of
a letter on file with the Initial Purchasers indicating the status of the
transferee as a "Qualified Institutional Buyer" under Rule 144A. Pursuant to
clause (B) above, if an election is made to hold a certificate in book-entry
form, the Certificate shall be registered in the name of a nominee designated by
the Depository (and may be aggregated as to denominations with other
Certificates of the same Class held by the Depository). With regard to
certificates held in book-entry form, (i) the Trustee may for all purposes
(including the making of distributions due on the Certificates) deal with the
Depository as the authorized representative of the Beneficial Owners with
respect to such Certificates for purposes of exercising the rights of Holders
thereunder; (ii) the rights of Beneficial Owners with respect to such
Certificates shall be limited to those established by law and agreements between
such Beneficial Owners and the Depository and Depository Participants; (iii)
requests and directions from, and votes of, the Depository as Holder shall not
be deemed inconsistent if they are made with respect to different Beneficial
Owners; (iv) the Trustee may establish a reasonable record date in connection
with solicitations of consents from or voting by Holders and give notice to the
Depository of such record date; and (v) without the consent of the Depositor and
the Trustee, no such Certificate may be transferred by the Depository except to
a successor Depository that agrees to hold such Certificate for the account of
the
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Beneficial Owners or except upon the election of the Beneficial Owner thereof or
a subsequent transferee to hold such Certificate in physical form. Neither the
Trustee nor the Certificate Registrar shall have any responsibility to monitor
or restrict the transfer of beneficial ownership in any Certificate an interest
in which is transferable through the facilities of a Depository.
In the event The Depository Trust Company resigns or is removed as
Depository, the Depositor may appoint a successor Depository. If no successor
Depository has been appointed within 30 days of the effective date of the
Depository's resignation or removal, each Beneficial Owner shall be entitled to
physical Certificates representing the Certificates it beneficially owns.
(c) Notwithstanding anything to the contrary contained herein, in no
event shall a Class B, Class C, Class D or Class R Certificate be transferred
unless the Depositor and the Certificate Registrar shall have received either
(i) a representation from the transferee of such Certificate acceptable to and
in form and substance satisfactory to the Depositor and the Certificate
Registrar (in the event such Certificate is a Class R Certificate, such
requirement is satisfied only by the Certificate Registrar's receipt of a
representation letter from the transferee), to the effect that such transferee
is not an employee benefit plan subject to Section 406 of ERISA or a plan
subject to Section 4975 of the Code, nor a Person acting on behalf of any such
plan or (ii) an Opinion of Counsel (which may be internal counsel) from the
prospective transferee of such Certificate reasonably satisfactory to the
Depositor and the Certificate Registrar to the effect that any such transfer (a)
will not result in a prohibited transaction under ERISA or the Code and (b) will
not result in the assets of the Trust Fund being "plan assets" for purposes of
ERISA. Any such Opinion of Counsel shall be obtained at the expense of the
prospective transferor or transferee, and not at the expense of the Depositor,
the Servicer, the Trustee or the Certificate Registrar, and shall be delivered
to the Depositor, the Trustee and the Certificate Registrar prior to or
contemporaneously with any such transfer. Neither the Trustee nor the
Certificate Registrar will have a duty to monitor or restrict the transfer of
beneficial ownership of any Certificate transferred through the
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facilities of the Depository. Until the issuance of Definitive Certificates, the
representation in clause (i) of this Section 5.02(c) shall be deemed to have
been made to the Certificate Registrar by the purchaser's or transferee's
acceptance of a Class B, Class C or Class D Certificate, respectively.
Notwithstanding anything else to the contrary herein, any purported transfer of
a Class B, Class C, Class D, or Class R Certificate to or on behalf of an
employee benefit plan subject to ERISA or to the Code without the delivery to
the Certificate Registrar of an Opinion of Counsel satisfactory to the
Certificate Registrar as described above shall be void and of no effect.
To the extent permitted under applicable law (including, but not
limited to, ERISA), the Certificate Registrar shall be under no liability to any
Person for any registration of transfer of any Certificate that is in fact not
permitted by this Section 5.02(c) or for making any payments due on such
Certificate to the Holder thereof or taking any other action with respect to
such Holder under the provisions of this Agreement so long as the transfer was
registered by the Certificate Registrar in accordance with the foregoing
requirements.
(d) Notwithstanding anything to the contrary contained in this
Agreement, no Class R Certificate or any Percentage Interest therein may be
owned, pledged or transferred, directly or indirectly, by or to a Disqualified
Organization. Prior to and as a condition of the registration of any transfer,
sale or other disposition of a Class R Certificate or any Percentage Interest
therein, the proposed transferee shall deliver to the Certificate Registrar an
affidavit in substantially the form attached hereto as Exhibit G representing
and warranting that such transferee is neither a Disqualified Organization nor
an agent or nominee acting on behalf of a Disqualified Organization (any such
transferee, a "Permitted Transferee"). In addition, the Certificate Registrar
may (but shall have no obligation to) require, prior to and as a condition of
any such transfer, the delivery by the proposed transferee of an Opinion of
Counsel, satisfactory in form and substance to the Certificate Registrar, that
such proposed transferee or, if the proposed transferee is an agent or nominee,
the proposed beneficial owner, is not a Disqualified Organization.
Notwithstanding the registration in
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the Certificate Register of any transfer, sale or other disposition of a Class R
Certificate or any Percentage Interest therein to a Disqualified Organization or
an agent or nominee acting on behalf of a Disqualified Organization, such
registration shall be deemed to be of no legal force or effect whatsoever and
such Disqualified Organization (or such agent or nominee) shall not be deemed to
be a Certificateholder for any purpose hereunder, including, but not limited to,
the receipt of distributions on such Class R Certificate. The Certificate
Registrar shall not be under any liability to any person for any registration of
transfer of a Class R Certificate to a Disqualified Organization or for the
maturity of any payments due on such Class R Certificate to the Holder thereof
or for taking any other action with respect to such Holder under the provisions
of the Agreement so long as the transfer was effected in accordance with this
Section 5.02(d), unless the Certificate Registrar shall have actual knowledge at
the time of such transfer or the time of such payment or other action that the
transferee is a Disqualified Organization (or an agent or nominee thereof). The
Certificate Registrar shall be entitled to recover from any Holder of a Class R
Certificate or any Percentage Interest therein that was, at the time it became a
Holder or at any subsequent time it became a Disqualified Organization (or an
agent or nominee thereof), all payments made on such Class R Certificate at and
after either such times (and all costs and expenses, including but not limited
to attorneys' fees, incurred in connection therewith). Any payment (not
including any such costs and expenses) so recovered by the Certificate Registrar
shall be paid and delivered to the last preceding Holder of such Class R
Certificate or Percentage Interest therein. Any Percentage Interest in a Class R
Certificate shall be a pro rata individual interest.
In addition to the foregoing restrictions on transfer of a Class R
Certificate or any Percentage Interest therein, the Certificate Registrar shall
not register the transfer of a Class R Certificate unless it has received a
transferee letter in the form attached as Exhibit H, it has received written
evidence satisfactory to the Certificate Registrar that the transferor has paid
or provided for payment of all taxes (including all accrued taxes on excess
inclusion income) accrued on such Class R Certificate in accordance with the
provisions set forth in Sec-
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tion 10.01(j), which written evidence shall include a copy of the applicable
Forms 1066Q (or other applicable form prescribed by the IRS), to the extent that
any such form has been filed, evidencing the amount of excess inclusion income
for the periods during which the transferor held such Class R Certificate or any
Percentage Interest therein. Upon satisfaction of the foregoing requirements,
the Certificate Registrar shall register the Class R Certificate in the name of
the transferee on whose behalf the transferee letter is completed and delivered
(and not in the name of any nominee thereof) unless the Certificate Registrar
shall have actual knowledge that any information contained in any letter or
affidavit supplied in connection with such proposed transfer is false.
If any purported transferee shall become a registered Holder of a
Class R Certificate in violation of the provisions of this Section 5.02(d), then
upon receipt of written notice to the Certificate Registrar that the
registration of transfer of such Class R Certificate was not in fact permitted
by this Section 5.02(d), the last preceding Permitted Transferee shall be
restored to all rights as Holder thereof retroactive to the date of such
registration of transfer of such Class R Certificate. The Certificate Registrar
shall be under no liability to any Person for any registration of transfer of a
Class R Certificate that is in fact not permitted by this Section 5.02(d), for
making any payment due on such Certificate to the registered Holder thereof or
for taking any other action with respect to such Holder under the provisions of
this Agreement so long as the transfer was registered upon receipt of the
affidavit and the transferee letter described in this Section 5.02(d).
Each Holder of a Class R Certificate or any Percentage Interest
therein, by such Holder's acceptance thereof, shall be deemed for all purposes
to have consented to the provisions of this Section.
Each Class R Certificate shall bear a legend describing the
restrictions on transferability set forth in this Section 5.02(d).
(e) Every Certificate presented or surrendered for registration of
transfer or exchange shall (if so required by the
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Certificate Registrar or the Trustee) be duly endorsed by, or be accompanied by
a written instrument of transfer in form satisfactory to the Certificate
Registrar duly executed by, the Holder thereof or its attorney duly authorized
in writing. Subject to Sections 5.02(b), (c) and (d) above, upon surrender for
registration of transfer of any Certificate at the Corporate Trust Office or any
office or agency of the Trustee maintained for such purpose pursuant to Section
5.05, the Certificate Registrar shall execute and the Trustee or the
Authenticating Agent shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Certificates of a like
aggregate Percentage Interest of the same Class. At the option of the
Certificateholders, Certificates may be exchanged for other Certificates of a
like aggregate Percentage Interest of the same Class upon surrender of the
Certificates to be exchanged at any such office or agency. Whenever any
Certificates are so surrendered for exchange, the Certificate Registrar shall
execute and the Trustee or the Authenticating Agent shall authenticate, date and
deliver the Certificates that the Certificateholder making the exchange is
entitled to receive.
(f) No service charge shall be made to a Certificateholder for any
registration of transfer or exchange of Certificates, but the Certificate
Registrar may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any registration of
transfer or exchange of Certificates.
(g) All Certificates surrendered for registration of transfer or
exchange shall be cancelled by the Certificate Registrar or the Trustee in
accordance with their standard procedures.
(h) The Certificate Registrar (unless the Trustee is acting as
Certificate Registrar) will provide to the Trustee as requested an updated copy
of the Certificate Register.
Section 5.03. Mutilated, Destroyed, Lost or Stolen Certificates. If
(a) any mutilated Certificate is surrendered to the Trustee or the Certificate
Registrar, or the Trustee or the Certificate Registrar receives evidence to its
satisfaction of
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the destruction, loss or theft of any Certificate and (b) there is delivered to
the Certificate Registrar and the Trustee such security or indemnity as may be
required by them to save each of them harmless, then, in the absence of notice
to the Certificate Registrar or the Trustee that such Certificate has been
acquired by a bona fide purchaser, the Certificate Registrar shall execute and
the Trustee or 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 like tenor and Percentage Interest in the same
Class. Upon the issuance of any new Certificate under this Section, the Trustee
or 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 mutilated, lost, stolen or destroyed Certificate shall be found at any time.
Section 5.04. Persons Deemed Owners. Prior to the due presentation
of a Certificate for registration of transfer, the Servicer, the Trustee, the
Paying Agent, the Certificate Registrar and any agent of any of them may treat
the Person in whose name any Certificate is registered as the owner of such
Certificate for the purpose of receiving distributions pursuant to Section 4.01,
and for all other purposes whatsoever, and none of the Servicer, the Trustee,
the Paying Agent, the Certificate Registrar or any agent of any of them shall be
affected by notice to the contrary.
Section 5.05. Maintenance of Office or Agency. The Trustee will
maintain or cause to be maintained at its expense an office or offices or agency
or agencies where Certificates may be surrendered for registration of transfer
or exchange and presented for final distribution and where notices and demands
to or upon the Trustee in respect of the Certificates and this Agreement may be
served. The Trustee initially appoints the Certificate Registrar designated in
Section 5.02 for transfer and exchange of Certificates and designates the office
described in Section 5.02 as its office for purposes of receipt of such
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notices and demands. The Trustee will give prompt written notice to the
Certificateholders of any change in the location of the Certificate Register or
any such office of agency.
Section 5.06. Appointment of Paying Agent. The Trustee shall cause
such Paying Agent to execute and deliver to the Trustee an instrument in which
such Paying Agent shall agree with the Trustee that such Paying Agent will hold
all sums held by it for the payment to Certificateholders in trust for the
benefit of Certificateholders and the Trustee in the Certificate Account until
such sums have been paid to the Certificateholders and otherwise agree to be
bound by the terms of this Agreement applicable to it. All funds in the
Certificate Account shall be paid to Certificateholders on each Distribution
Date in accordance with the terms of this Agreement. Any Paying Agent shall be
either a bank or trust company or otherwise authorized under law to exercise
corporate trust powers and shall, if other than the Trustee, have a rating of at
least "AA" by the Rating Agency or be an entity whose appointment would not, in
and of itself, cause a downgrade, qualification or withdrawal of the then
current ratings assigned to any Class of Regular Certificates, as evidenced by a
written confirmation from the Rating Agency. The Trustee shall serve as the
initial Paying Agent. The Paying Agent, if other than the Trustee, shall give
the Trustee notice of any default in any payment due with respect to the
Certificates.
Section 5.07. Definitive Certificates. If (i)(A) the Depository advises
the Depositor and the Trustee in writing that the Depository is no longer
willing or able properly to discharge its responsibilities as depository with
respect to the Book-Entry Certificates and (B) and the Depositor fails to
appoint a successor Depository within 90 days, the Trustee shall notify the
Beneficial Owners, through the Depository, of the occurrence of such event and
of the availability of Definitive Certificates to Beneficial Owners requesting
the same. In such instance, an owner of a beneficial interest in a Book-Entry
Certificate will be entitled to physical delivery in definitive form of Regular
Certificates of the applicable Class represented by such BookEntry Certificate
equal in principal amount to such beneficial interest and to have such Regular
Certificates of the applicable Class registered in its name. Upon surrender to
the Trustee by
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the Depository of the Certificates held of record by its nominee, accompanied by
re-registration instructions and directions to execute and authenticate new
Certificates from the Depository, the Trustee shall execute and authenticate
Definitive Certificates for delivery at its Corporate Trust Office. Regular
Certificates so issued in definitive form will be issued in minimum
denominations of $100,000 and integral multiples of $1 in excess thereof as the
Depository, pursuant to instructions from its participants or otherwise, shall
direct. The Depositor shall arrange for, and will bear all costs of, the
printing and issuance of such Definitive Certificates. Neither the Depositor nor
the Trustee shall be liable for any delay in delivery of such instructions by
the Depository and may conclusively rely on, and shall be protected in relying
on, such instructions by the Depository. Any distribution made pursuant to
Section 4.01 to Holders of Definitive Certificates shall be made in accordance
with the payment procedures set forth in Section 4.01(d).
Section 5.08. Access to List of Certificateholders' Names and
Addresses. If the Trustee is not the Certificate Registrar, and the Trustee at
any time requests the Certificate Registrar in writing to provide a list of the
names and addresses of Certificateholders of the Trust Fund, the Certificate
Registrar shall furnish to the Trustee monthly not more than five days after
each Record Date, as of such Record Date, or at such other times as the Trustee
may request in writing within 15 days after receipt of such request, a list, in
such form and as of such date as the Trustee may reasonably require, containing
all the information in the possession or control of the Certificate Registrar,
as to the names and addresses of the Certificateholders and the amount of the
Certificates held by such Certificateholders. If three or more
Certificateholders (i) request such information in writing from the Trustee,
(ii) state that such Certificateholders desire to communicate with other
Certificateholders with respect to their rights under this Agreement or under
the Certificates and (iii) provide a copy of the communication which such
Certificateholders propose to transmit, then the Trustee shall, within ten
Business Days after the receipt of such request, afford such Certificateholders
access during normal business hours to the most recent Record Date list of the
Certificateholders held by the Trustee, if any. If such Record Date list is as
of a date more than 90 days prior
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to the date of receipt of such Certificateholders' request, the Trustee shall
promptly request from the Certificate Registrar a current list and shall afford
such Certificateholders access to such list promptly upon its receipt by the
Trustee. The expense of providing any such information requested by such
Certificateholders shall be borne by such Certificateholders and shall not be
borne by the Trustee or the Certificate Registrar. Each Certificateholder, by
receiving and holding a Certificate, agrees that neither the Certificate
Registrar nor the Trustee shall be held accountable by reason of the disclosure
of any such information as to the list of the Certificateholders hereunder,
regardless of the source from which such information was derived.
Section 5.09. Notices to Depository. Whenever notice or other
communication to the Holders of Book-Entry Certificates is required under this
Agreement, unless and until Definitive Certificates shall have been issued to
Beneficial Owners pursuant to Section 5.07, the Trustee shall give any such
notice or other communication to the Depository.
Section 5.10. Certificates Owned by the Mortgagors and Depositor
Deemed Not Outstanding. In determining whether the Certificateholders of the
requisite aggregate Voting Rights or principal balance have given or concurred
in any request, demand, authorization, direction, consent or waiver under this
Agreement, Certificates that are owned or held by or for the account of the
Mortgagors and Depositor or by any Affiliate of any of the foregoing shall be
disregarded and deemed not to be outstanding for the purpose of any such
determination; provided that for the purpose of determining whether the Trustee
shall be protected in relying on any such request, demand, authorization,
direction, consent or waiver, only if a Responsible Officer of the Trustee has
actual knowledge that certain Certificates are so owned shall such Certificates
be so disregarded. Upon request of the Trustee, the Depositor shall furnish to
the Trustee promptly an Officer's Certificate listing and identifying all
Certificates, if any, known by the Depositor to be owned or held by or for the
account of any of the above-described persons; and the Trustee
shall be entitled to accept such Officer's Certificates as conclusive evidence
of the facts set forth therein and of the fact that all Certificates not listed
therein are outstanding for the purpose of any such determination.
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ARTICLE SIX
THE DEPOSITOR AND THE SERVICER
Section 6.01. Liabilities of the Depositor and the Servicer.
The Depositor and the Servicer shall each be liable in accordance
herewith only to the extent of the obligations specifically and respectively
imposed upon and undertaken by the Depositor and the Servicer herein. By way
of illustration and not limitation, the Depositor is not liable for the
servicing and administration of the Mortgage Loan, nor is it obligated
by Section 7.01 or any other provision of this Agreement to assume any
obligations of the Servicer or to appoint a designee to assume such
obligations, nor is it liable for any other obligations hereunder that it
may, but is not obligated to, assume unless it elects to assume such
obligation in accordance herewith.
Section 6.02. Merger or Consolidation of the Depositor or the
Servicer. The Depositor and the Servicer will each do or cause to be done all
things necessary to preserve and keep in full force and effect their
respective existences, rights and franchises (charter and statutory) and will
each obtain and preserve their respective qualifications 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, or of the Mortgage Loan and to perform their respective
duties under this Agreement.
Any Person into which the Depositor or the Servicer may be merged or
consolidated, or any Person resulting from any merger or consolidation to which
the Depositor or the Servicer shall be a party, or any Person succeeding to the
business of the Depositor or the Servicer, shall be the successor of the
Depositor or the Servicer, as the case may be, hereunder, and shall be deemed to
have assumed all of the liabilities and obligations of the Depositor or the
Servicer hereunder, as applicable, without the execution or filing of any paper
or any further act on the part of any of the parties hereto, anything herein to
the contrary notwithstanding; provided, however, that
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(i) the successor or surviving Person to the Servicer shall be obligated to
service the Mortgage Loan in accordance with Accepted Servicing
Practices and (ii) such successor or surviving Person would not cause the
then current rating on any Class of the Regular Certificates to be lowered or
withdrawn by the Rating Agency.
Section 6.03. Limitation on Liability of the Depositor, the Servicer
and Others. (a) Neither the Depositor, the Servicer nor any of the directors,
officers, employees or agents of the Depositor or the Servicer shall be under
any liability to the Certificateholders for any action taken or for refraining
from taking any action in good faith pursuant to this Agreement, or for errors
in judgment; provided, however, that this provision shall not protect the
Depositor or the Servicer against any liability arising out of the breach of any
representations or warranties made by it herein or protect the Depositor or the
Servicer or any such person from any liability which would otherwise be imposed
by reasons of willful misfeasance, bad faith or negligence in the performance of
their respective duties or by reason of reckless disregard of their respective
obligations and duties hereunder. The Depositor, the Servicer and any director,
officer, employee or agent of the Depositor or the Servicer may rely in good
faith on any document of any kind prima facie properly executed and submitted by
any Person respecting any matters arising hereunder. The Depositor, the Servicer
and any director, officer, employee or agent of the Depositor or the Servicer
shall be indemnified by the Trust Fund and held harmless against any loss,
liability or unanticipated expense relating to this Agreement or the
Certificates, other than any loss, liability or expense incurred by reason of
willful misfeasance, bad faith or negligence in the performance of their
respective duties hereunder or by reason of reckless disregard of obligations
and duties hereunder. Neither the Depositor nor the Servicer shall be under any
obligation to appear in, prosecute or defend any legal action that is not
incidental to their duties hereunder and which in its opinion may involve it in
any expense or liability; provided, however, that either the Depositor or the
Servicer may in its discretion undertake any such action that it may deem
necessary or desirable in respect of this Agreement and the rights and duties of
the parties hereto and interests of the Certificateholders hereunder. In such
event, the legal expenses
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and costs of such action and any liability resulting therefrom shall be
expenses, costs and liabilities of the Trust Fund, and the Depositor or the
Servicer shall be entitled to be reimbursed therefor out of amounts on deposit
in the Central Account or the Certificate Account as provided by Section 3.04
hereof.
(b) Each of the Paying Agent (in such capacity), the Certificate
Registrar (in such capacity), the Authenticating Agent (in such capacity) and
the Servicer, respectively, agree, with respect to their own actions and
omissions and those of their respective agents (but, not with respect to the
actions or omissions of any other Person), to indemnify the Depositor, the
Trustee, and the Trust Fund, and hold them harmless against any and all claims,
losses, penalties, fines, forfeitures, legal fees and related costs, judgments,
and any other costs, liabilities, fees and expenses that the Depositor and/or
the Trustee and/or the Trust Fund may sustain in connection with this Agreement
related to the willful misconduct, bad faith and/or negligence by such
indemnifying party or its agents, in the performance of duties by the
indemnifying party or its agents hereunder or by reason of reckless disregard of
obligations and duties by the indemnifying party or its agents, as the case may
be, except that the Servicer shall not be liable for losses (i) that arise from
events occurring or conditions existing prior to the date of this Agreement; or
(ii) which were known to the Mortgagors, the Depositor or the Trustee but not
disclosed to the Servicer and as to which an employee or agent of the Servicer
performing the duties of the Servicer hereunder did not otherwise have knowledge
or as to which such persons would not, but for their negligence, bad faith or
misfeasance, have had knowledge; (iii) which are caused by the Servicer's
inability to perform because of the unavailability of funds in the Trust Fund or
because any Advance would be a Nonrecoverable Advance; or (iv) that arise as a
result of any action or inaction taken by the Servicer in accordance with the
express recommendation or at the direction of the Trustee or the
Certificateholders; provided, that such indemnity is limited to direct damages
and shall not cover consequential damages. The Depositor and the Trustee shall
immediately notify the Paying Agent, the Certificate Registrar, the
Authenticating Agent or the Servicer, as the case may be, if a claim is made by
a third party with respect to this Agreement or the Mortgage Loan entitling
the Depositor, the Trustee or the Trust Fund to
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indemnification hereunder, whereupon the Paying Agent, the Certificate
Registrar, the Authenticating Agent or the Servicer, as the case may be, shall
assume the defense of any such claim (with counsel reasonably satisfactory to
the Depositor and the Trustee, as the case may be) 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 Paying Agent, the
Certificate Registrar, the Authenticating Agent or the Servicer, as the case may
be, shall not affect any rights the Depositor, the Trustee or the Trust Fund may
have to indemnification under this Agreement or otherwise except to the extent
any such party is damaged by such delay. Such indemnity obligation shall survive
the termination of the Paying Agent, the Certificate Registrar, the
Authenticating Agent and the Servicer hereunder and the termination of this
Agreement.
(c) The Depositor shall defend, indemnify and hold harmless the
Trustee, its Affiliates, officers, directors, agents and employees against any
and all claims, losses, penalties, fines, forfeitures, legal fees and related
costs, judgments and any other costs, fees and expenses that the Trustee or its
Affiliates' officers, directors, agents, employees and Control Persons may
sustain in connection with lawsuits brought by the Mortgagors or third parties
based upon (a) actions taken by the Trustee pursuant to or in furtherance of,
this Agreement or (b) inaccurate or erroneous information contained in reports
or other documents prepared or furnished by other persons which are not
Affiliates of the Trustee, as the case may be, except to the extent that the
Trustee or its Affiliates obtain actual knowledge of such inaccuracy or error
and fail to use diligent efforts to remedy the same or to notify the Depositor;
provided, however, that in no event shall Servicer or the Trustee be indemnified
or held harmless under this Section 6.03(c) with respect to consequential
damages or from its own negligent actions or omissions or its willful
misconduct.
Section 6.04. Servicer Not to Resign. Subject to the provisions of
Section 6.02, the Servicer shall not resign from its obligations and duties
hereby imposed on it except (i) upon determination that performance of its
duties hereunder is no longer permissible under applicable law or is in material
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conflict by reason of applicable law with any other activities carried on by it,
the other activities of the Servicer so causing such a conflict being of a type
and nature carried on by it at the date of this Agreement, or (ii) upon the
withdrawal by Servicer from the business of servicing commercial mortgage loans
for third parties. Any such determination permitting the resignation of the
Servicer shall, in the case of clause (i), be evidenced by an Opinion of Counsel
to such effect delivered to the Trustee and the Depositor. Circumstances
permitting the resignation of the Servicer under clause (ii) shall be evidenced
by certificate from a Servicing Officer confirming such withdrawal. No
resignation by the Servicer under this Agreement shall become effective until
the Trustee, in accordance with Section 7.04 hereof, or a successor servicer
shall have assumed the Servicer's responsibilities and obligations hereunder. No
person other than the Trustee shall be appointed a successor servicer if such
appointment would cause a downgrade, qualification or withdrawal by the Rating
Agency of its then-current rating of any Class of Regular Certificates.
Section 6.05. Rights of the Depositor in Respect of the Servicer.
The Servicer shall afford the Depositor, upon reasonable notice, during normal
business hours access to all records, including those in electronic form,
maintained by the Servicer in respect of its rights and obligations hereunder
and access to officers of the Servicer responsible for such obligations. Upon
request, the Servicer shall furnish the Depositor and the Trustee with most
recent routinely publicly available financial statements of the Servicer's
parent, AMRESCO, INC. The Depositor may, but is not obligated to, enforce the
obligations of the Servicer hereunder and may, but is not obligated to, perform,
or cause a designee to perform, any defaulted obligation of the Servicer
hereunder which the Servicer has failed to cure and exercise the rights of the
Servicer hereunder. In the event the Depositor undertakes any such action it
shall be indemnified by the Trust Fund in accordance with the standard set forth
in Section 6.03. The Servicer shall not be relieved of any of its obligations
hereunder by virtue of such performance by the Depositor. The Depositor shall
not have any responsibility or liability for any action or failure to act by the
Servicer and is not obligated to supervise the performance of the Servicer under
this Agreement or otherwise.
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ARTICLE SEVEN
DEFAULT
Section 7.01. Events of Default. "Event of Default," wherever used
herein, means any one of the following events (whatever reason for such Event of
Default and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(a) any failure by the Servicer to deposit amounts in the
Servicer Collection Account, the Certificate Account, the Default Interest
Account, or, to the extent required pursuant to Section 3.04(a)(iii), the
Central Account, in the amount and manner provided for herein so as to
enable the Paying Agent to distribute or cause to be distributed to the
Certificateholders of any Class any payment required to be made under the
terms of the Certificates and this Agreement that continues unremedied for
a period of one day after the date upon which written notice of such
failure, requiring the same to be remedied, shall have been given to the
Servicer by the Trustee, the Paying Agent or the Depositor, or to the
Servicer and the Trustee or the Paying Agent by Certificateholders
evidencing, in the aggregate, not less than 25% of the Voting Rights of
the Regular Certificates;
(b) any failure on the part of the Servicer duly to observe or
perform in any material respect any other of the covenants or agreements
of the Servicer in this Agreement, which failure continues unremedied for
a period of 30 days (except that such number of days shall be 15 in the
case of a failure to pay the premium for any Required Insurance Policy)
after the date on which written notice of such failure, requiring the same
to be remedied, shall have been given to the Servicer by the Trustee, or
to the Servicer and the Trustee by Certificateholders evidencing, in the
aggregate, not less than 25% of the Voting Rights of the Regular
Certificates;
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(c) a representation or warranty of the Servicer set forth in
this Agreement shall prove to be incorrect as of the time made in any
respect that materially and adversely affects the interests of the
Certificateholders, and the circumstances or condition in respect of which
such representation or warranty was incorrect shall not have been
eliminated or cured within 30 days after the date on which written notice
thereof shall have been given to the Servicer by the Trustee or by the
Depositor, or to the Servicer and the Trustee by Certificateholders
evidencing, in the aggregate, not less than 25% of the Voting Rights of
the Regular Certificates;
(d) the entry of a decree or order of a court or agency or
supervisory authority having jurisdiction in the premises for the
appointment of a conservator, receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings against the Servicer, or for the winding-up or liquidation of
the Servicer's affairs, and such decree or order remains unstayed and in
effect for a period of 30 days;
(e) the consent by the Servicer to the appointment of a
conservator or receiver or liquidator or liquidating committee in any
insolvency, readjustment of debt, marshalling of assets and liabilities,
voluntary liquidation or similar proceedings of or relating to the
Servicer or of or relating to all or substantially all of its property;
(f) the 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 insolvency or reorganization statute, make an assignment
for the benefit of its creditors or voluntarily suspend payment of its
obligations;
(g) any failure of the Servicer to make any Advance from its own
funds when required to do so pursuant to this Agreement; or
(h) either (A) the Rating Agency shall lower or withdraw the
outstanding rating of any Class of the Regular
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Certificates solely because the existing or prospective financial
condition or mortgage loan servicing capability of the Servicer is
insufficient to maintain such outstanding rating or (B) the Rating Agency
shall provide notice that failure to replace the Servicer will result in a
lowering or withdrawal of the outstanding rating on any Class of Regular
Certificates.
If an Event of Default shall occur, then, so long as such Event of Default
shall not have been remedied, either (A) the Trustee may, or (B) upon the
written direction of the holders of Certificates evidencing, in the aggregate,
not less than 25% of the Voting Rights of the Regular Certificates, the Trustee
shall, by notice in writing to the Servicer (with a copy to the Rating Agency),
terminate all of the rights and obligations of the Servicer under this
Agreement, other than rights and obligations accrued prior to such termination,
and in and to the Mortgage Loan and the proceeds thereof. In the case of an
Event of Default relating to the Servicer under clauses (d), (e) or (f) above,
the Trustee will immediately succeed to the duties and obligations of the
Servicer (including the obligations with respect to the making of any required
Advance which has not been made as of such date). Upon any termination of the
Servicer or appointment of a successor to the Servicer, the Trustee shall, as
soon as practicable, give written notice thereof to the Certificateholders.
The Trustee shall appoint a successor Servicer selected by the Trustee and
approved by Certificateholders holding in the aggregate not less than 662/3% of
the Voting Rights of the Regular Certificates. The Servicer will receive any
amounts owed to it under this Agreement (other than unpermitted P&I Advances
described in Section 3.18(f)(iii)) through the date of its termination prior to
the recovery by the successor Servicer of any amounts owed to it hereunder. The
Servicer agrees that it will promptly (and in any event no later than five
Business Days subsequent to such notice) provide the successor Servicer with all
documents and records, including those in electronic form, requested by it to
enable it to assume the predecessor Servicer's obligations hereunder, and to
cooperate with the successor Servicer in effecting the termination of the
Servicer's responsibilities and rights hereunder, including without
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limitation, the transfer within one Business Day to the successor Servicer
or its duly appointed agent for administration by it of all cash received by
the predecessor Servicer under the Mortgage Loan and which shall at the time
have been or should have been credited by the predecessor Servicer to the
Rent Accounts, the Central Account, the Servicer Collection Account, the
Escrow Account, the Default Interest Account and the Certificate Account or
that thereafter is received with respect to the Mortgage Loan (provided,
however, that notwithstanding anything to the contrary in this Section 7.01,
the Servicer shall continue to be entitled to receive all amounts accrued or
owing to it under this Agreement on or prior to the date of such termination,
whether in respect of Advances, unpaid Servicing Fees, Modification Fees,
Liquidation Fees and Special Servicing Fees and interest thereon at the
Advance Rate or otherwise, less any sums owed the Trust Fund or otherwise in
accordance with the terms hereof). The Trustee shall not be deemed to have
breached any obligations hereunder as a result of a failure to make or delay
in making any distribution as and when required hereunder caused by the
failure of the Servicer to remit any amounts received by it or to deliver any
documents held by it with respect to the Mortgage Loan. All reasonable costs
and expenses (including attorneys' fees) incurred by the Trustee, the
Depositor or the Certificateholders in connection with the appointment of a
successor Servicer, including but not limited to, transferring the Deed of
Trust File to the successor Servicer and, if applicable, amending this
Agreement to reflect such succession as Servicer pursuant to this Section
7.01 shall be paid by the predecessor Servicer upon presentation of
reasonable documentation of such costs and expenses to the Trustee. For so
long as any amounts have not been paid to the predecessor Servicer, any
successor Servicer shall deliver to the predecessor Servicer on each
Distribution Date the following information: (i) any analysis made since the
then most recent Distribution Date as to whether any Advances are
Nonrecoverable Advances; (ii) any appraisals received since the last
Distribution Date; (iii) any environmental or engineering reports with
respect to the Mortgaged Property received since the last Distribution Date;
(iv) any reports or notices distributed to Certificateholders, the Initial
Purchasers or the Rating Agency; or (v) any other information reasonably
requested by such predecessor Servicer. If such amounts are not paid to the
Trustee by the predecessor Servicer within 30 days following delivery of
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an invoice therefor by the Trustee to such predecessor servicer, the Trustee
shall be reimbursed for such sums by the Trust Fund from amounts on deposit in
the Central Account, which reimbursement shall not diminish the obligation of
such predecessor servicer to pay such amounts to the Trust Fund.
If a Mortgage Loan Event of Default shall occur, the actions of Trustee
and Servicer with respect to the foreclosure upon the Mortgaged Property
shall be governed by Section 3.08 hereof. The occurrence of a Mortgage Loan
Event of Default shall not effect an acceleration of the Certificate
Principal Balance, and the rights of Certificateholders to receive
distributions shall continue to be governed by Section 4.01 hereof.
If a Responsible Officer of the Trustee shall obtain knowledge of any
Event of Default hereunder, the Trustee shall immediately notify the Servicer of
the occurrence of such Event of Default. Upon the occurrence of any Event of
Default hereunder known to a Responsible Officer of the Trustee, the Trustee
shall give the Rating Agency written notice of the occurrence thereof.
On or after the receipt by the Servicer of written notice of
termination, all authority and power of the Servicer under this Agreement,
whether with respect to the Certificates or the Mortgage Loan (other
than its capacity, if any, as Holder of a Certificate) or otherwise, shall
pass to and be vested in the Trustee pursuant to and under this Section 7.01.
Section 7.02. Remedies of Trustee. During the continuance of any
Event of Default, so long as such Event of Default shall not have been remedied,
the Trustee, in addition to the rights specified in Section 7.01, shall have the
right, in its own name as a trustee of an express trust, to take all actions now
or hereafter available at law, in equity or by statute to enforce its rights and
remedies and to protect the interests, and enforce the rights and remedies, of
the Certificateholders (including the institution and prosecution of all
judicial, administrative and other proceedings and the filing of proofs of
claim, debt and other papers in connection therewith). Except as otherwise
expressly provided in this Agreement, no remedy provided for by this Agreement
shall be exclusive of any other remedy, and each and every remedy shall be
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cumulative and in addition to any other remedy, and no delay or omission to
exercise any right or remedy shall impair any such right or remedy or shall be
deemed to be a waiver of any such right or remedy with respect to any Event of
Default.
Section 7.03. Directions by Certificateholders and Duties of Trustee
During Event of Default. During the continuance of any Event of Default, Holders
of Certificates evidencing, in the aggregate, not less than 25% of the Voting
Rights of the Certificates, may direct the time, method and place for conducting
any proceeding for any remedy available to the Trustee, or for exercising any
trust or power conferred upon the Trustee under this Agreement; provided,
however, that the Trustee shall be under no obligation to pursue any such remedy
or to exercise any of the trusts or powers vested in it by this Agreement
(including, without limitation, (i) conducting or defending any administrative
action or litigation hereunder or in relation hereto, and (ii) terminating the
Servicer or any successor servicer hereunder) at the request, order or direction
of any of the Certificateholders, unless such Certificateholders shall have
offered to the Trustee security or indemnification satisfactory to the Trustee
against the costs, expenses and liabilities which may be incurred therein or
thereby and, provided, further, that the Trustee shall have the right to decline
to follow any such direction if the Trustee, in accordance with an Opinion of
Counsel, determines that the action or proceeding so directed may not lawfully
be taken or if the Trustee in good faith determines that the action or
proceeding so directed would involve it in personal liability or be unjustly
prejudicial to the non-assenting Certificateholders. In the event that the
Trustee receives instructions or directions from two groups of Holders of
Certificates, each group evidencing not less than 25% of the Voting Rights of
Certificates, the Trustee shall follow the instructions or directions of the
group with the greater percentage of Voting Rights, subject to provisions in the
preceding sentence.
Section 7.04. Trustee to Act; Appointment of Successor. (a) On and
after the time the Servicer receives a notice of termination pursuant to Section
7.01 or the Trustee receives the resignation of the Servicer in accordance with
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clause (i) of the first sentence of Section 6.04 accompanied by an Opinion of
Counsel pursuant to Section 6.04, the Trustee shall be the successor in all
respects to the Servicer in its capacity as servicer under this Agreement and
the transactions set forth or provided for herein and shall have all the rights
and powers and be subject to all the responsibilities, duties and liabilities
relating thereto placed on the Servicer that have accrued after such termination
other than those responsibilities, duties and liabilities of the Servicer
arising under Section 2.03; provided, however, that any failure to perform such
duties or responsibilities caused by the Servicer's failure to comply with
Section 7.01 shall not be considered a default by the Trustee hereunder. In its
capacity as such successor, the Trustee shall have the same limitation of
liability herein granted to the Servicer. As compensation for serving as the
successor to the Servicer, the Trustee shall be entitled to such compensation as
the Servicer would have been entitled to hereunder if no such notice of
termination or resignation had been given, including, without limitation, the
Servicing Fee, the Special Servicing Fee and the Liquidation Fee and the
Modification Fee. Notwithstanding anything contained herein, the Trustee may, if
it is unwilling to so act, or shall, if it is unable to so act, appoint, or
petition a court of competent jurisdiction to appoint, as the successor to the
Servicer hereunder in the assumption of all or any part of the responsibilities,
duties or liabilities of the Servicer hereunder, any established finance
institution or mortgage loan servicing institution whose appointment would not
result in a downgrade, qualification or withdrawal by the Rating Agency of its
then-current rating of any Class of Regular Certificates; provided, however,
that until such appointment and assumption, the Trustee, or the Servicer in the
case of its resignation pursuant to clause (ii) of the first sentence of Section
6.04, will continue to perform the servicing obligations pursuant to this
Agreement to the extent set forth above. In the case of the resignation of the
Servicer pursuant to clause (ii) of the first sentence of Section 6.04, the
Trustee shall appoint any institution meeting the foregoing requirements
selected by the Servicer and reasonably acceptable to the Trustee. In connection
with any such appointment and assumption, the Trustee may make such arrangements
for the compensation of such successor as it and such successor shall agree;
provided, however, that no such
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compensation shall be in excess of that permitted the Servicer hereunder. The
Trustee, the Depositor, the Servicer and such successor shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession. Neither the Trustee nor any successor servicer shall be deemed to be
in default of any of its obligations under this Section 7.04 if and to the
extent that such default arises from failure of the Servicer to timely provide
all applicable books, records and other documents necessary to effectuate the
sale, transfer or assignment of servicing rights to the Trustee or a successor
servicer in accordance with this Section 7.04.
(b) Any successor to the Servicer, including the Trustee, as servicer
hereunder shall during the term of its service as servicer maintain in force (i)
a policy or policies of insurance covering errors and omissions in the
performance of its obligations as servicer hereunder and (ii) a fidelity bond in
respect of its officers, employees and agents to the same extent required of the
predecessor Servicer pursuant to Section 3.06(c).
(c) Notwithstanding any other provision of this Agreement, no Person shall
be appointed as a successor servicer if such appointment would adversely affect
the then current rating of any Class of the Regular Certificates as evidenced in
writing by the Rating Agency.
Section 7.05. Notification to Certificateholders. (a) Upon any
termination of the Servicer or appointment of a successor to the Servicer, in
each case as provided herein, the Trustee shall as soon as practicable give
written notice thereof to the Rating Agency and to the Certificateholders at
their respective addresses appearing in the Certificate Register.
(b) Any notification to Certificateholders of an Event of Default shall
advise the Certificateholders of their rights pursuant to item (B) of the second
paragraph of Section 7.01, if applicable.
Section 7.06. Waiver of Past Events of Default. The Holders of
Certificates evidencing, in the aggregate, not less than a majority of the
Voting Rights of the Certificates may, on behalf of all Holders of Certificates,
waive any Event of Default
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hereunder and its consequences; provided, that in the absence of (i) written
instructions from all Certificateholders and (ii) the reimbursement to the
Trustee and the Fiscal Agent of all costs and expenses (including attorneys'
fees) incurred by the Trustee and the Fiscal Agent in connection with such Event
of Default, the Trustee shall not waive any Event of Default (a) consisting of
the failure to remit to the Trustee any principal of or interest on, or other
amounts due under, the Mortgage Note and received by the Servicer, or the
failure of the Servicer to make any required Advance hereunder or (b) in respect
of a covenant or provision hereunder that under Article Eleven hereof cannot be
modified or amended without the consent of such Certificateholder. Upon any such
waiver of a past default, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
Section 7.07. Action upon Certain Failures of the Servicer and upon
the Occurrence of an Event of Default. In the event that a Responsible Officer
of the Trustee learns of any failure of the Servicer specified in Section
7.01(a) or (b) that would become an Event of Default if the Servicer, upon
receipt of notice of such failure, does not remedy the same, the Trustee may,
but need not if the Trustee deems it not in the Certificateholders' best
interest, give notice thereof to the Servicer. For all purposes of this
Agreement, in the absence of actual knowledge by a Responsible Officer of the
Trustee, the Trustee shall not be deemed to have knowledge of any facts or
circumstances that constitute, or with notice and/or the passage of time would
constitute an Event of Default, or of any Event of Default.
Section 7.08. Limitations on Suits by Certificateholders. No
Certificateholder shall have any right by virtue or by availing of any provision
hereof to institute any action or proceeding at law or in equity or in
bankruptcy or otherwise upon or under or with respect to the Trust, or for the
appointment of a trustee, receiver, liquidator, custodian or other similar
official or for any other remedy thereunder, unless: (i) such Certificateholder
previously has notified the Trustee in writing of an Event of Default and of the
continuance
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thereof, as provided herein; (ii) the Certificateholders representing in the
aggregate not less than 25% of the Voting Rights have requested in writing that
the Trustee institute such action or proceedings in its own name as trustee
hereunder; (iii) such Certificateholders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request; and (iv) the Trustee for 60 days after its receipt
of such notice, request and offer of indemnity has failed to institute any such
action or proceedings, it being understood and intended, and being expressly
covenanted by each Certificateholder with every other Certificateholder and the
Trustee, that no one or more Certificateholders shall have any right in any
manner whatever to affect, disturb or prejudice the rights of any other
Certificateholder or to obtain or seek to obtain priority over or preference to
any other Certificateholder or to enforce any right hereunder or under the
Certificates, except in the manner provided herein and therein and for the
equal, ratable and common benefit of all Certificateholders, subject to the
priorities among Classes of Certificates set forth in this Agreement. For the
protection and enforcement of the provisions of this Section 7.08, each and
every Certificateholder and the Trustee shall be entitled to such relief as can
be given either at law or in equity.
Section 7.09. Unconditional Right of Certificateholders to Receive
Distributions and to Institute Certain Suits. Notwithstanding any other
provision in this Agreement or any Certificate issued pursuant hereto, the right
of any Certificateholder to receive distributions on such Certificate pursuant
to Article Four on or after the respective due dates set forth herein, or, to
institute suit for the enforcement of any such distribution on or after such
respective dates as provided herein, or therein shall not be impaired or
affected without the consent of such Certificateholder.
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ARTICLE EIGHT
CONCERNING THE TRUSTEE AND FISCAL AGENT
Section 8.01. Duties of Trustee. The Trustee, prior to the
occurrence of an Event of Default and after the curing or waiver of all Events
of Default that may have occurred, undertakes with respect to the Trust Fund to
perform such duties and only such duties as are specifically set forth in this
Agreement. The Depositor shall not be obligated to monitor or supervise the
performance by the Trustee of its duties hereunder. In case an Event of Default
has occurred (which has not been cured or waived), the Trustee, subject to the
provisions of Sections 7.01, 7.03, 7.04 and 7.07, 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 person would exercise or use under
the circumstances in the conduct of such person's own affairs. Any permissive
right of the Trustee set forth in this Agreement shall not be construed as a
duty.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee that are specifically required to be furnished pursuant to any provision
of this Agreement shall examine them to determine whether they conform to the
requirements of this Agreement; provided, however, that 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
Servicer, Mortgagors or any other person hereunder. If any such instrument is
found on its face not to conform to the requirements of this Agreement in a
material manner, the Trustee shall take such action as it deems appropriate to
have the instrument corrected, and if the instrument is not corrected to the
Trustee's reasonable satisfaction, the Trustee shall provide notice thereof to
the Certificateholders.
No provision of this Agreement shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act or
its own misconduct, its negligent failure to perform its obligations in
compliance with this
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Agreement, or any liability which would be imposed by reason of its willful
misfeasance or bad faith; provided, however, that:
(a) 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 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 which it reasonably believed in good faith to be genuine and to have
been duly executed by the proper authorities respecting any matters arising
hereunder;
(b) none of the Trustee, the Fiscal Agent or any of their respective
directors, officers, employees, agents employees, agents or Control Persons
shall be personally liable for an error of judgment made in good faith by a
Responsible Officer of the Trustee; and
(c) none of the Trustee, the Fiscal Agent or any of their respective
directors, officers, employees, agents employees, agents or Control Persons
shall be personally liable with respect to any action taken, suffered or omitted
to be taken by it in good faith in accordance with this Agreement or at the
direction of Holders of Certificates evidencing, in the aggregate, not less than
25% of the Voting Rights of the Certificates, relating to the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this Agreement;
and
(d) the Trustee shall not be charged with knowledge of any failure
by the Servicer to comply with the obligations of the Servicer referred to in
Section 7.01 or any other act or circumstance upon the occurrence of which the
Trustee may be required to take action unless a Responsible Officer of the
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Trustee obtains actual knowledge of such failure, act, or circumstance or the
Trustee receives written notice of such failure from the Servicer, the Depositor
or Holders of the Certificates evidencing, in the aggregate, not less than 25%
of the Voting Rights of the Certificates; and
(e) the execution by the Trustee of any forms or plans of
liquidation in connection with the Trust Fund shall not constitute a
representation by the Trustee as to the adequacy of such form or plan of
liquidation other than that such plan of liquidation meets the requirements
outlined in Sections 9.01 and 9.02; and
(f) the Trustee and the Fiscal Agent shall not be under any
obligation to appear in, prosecute or defend any legal action which is not
incidental to their respective duties as Trustee and Fiscal Agent in accordance
with this Agreement. In such event, all legal expense of such action shall be
expenses and costs of the Trust Fund and the Trustee and the Fiscal Agent shall
be entitled to be reimbursed therefor from the Central Account pursuant to
Section 3.04(a)(iv).
None of the provisions contained in this Agreement shall in any
event (i) require the Trustee or the Fiscal Agent to expend or risk its own
funds or otherwise incur personal financial liability in the performance of any
of its duties as Trustee or as Fiscal Agent hereunder or in the exercise of any
of its rights or powers as Trustee or as Fiscal Agent hereunder if the Trustee
or the Fiscal Agent has reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it, or (ii) to perform, or be responsible for the manner of
performance of, any of the obligations of the Servicer under this Agreement,
except during such time, if any, as the Trustee shall be the successor to, and
be vested with the rights, duties, powers and privileges of, the Servicer in
accordance with the terms of this Agreement (other than investments made with
the Trustee in its commercial capacity). Subject to any express requirement of
this Agreement and until such time as the Trustee shall be the successor to the
Servicer and without otherwise limiting the generality of this Section, the
Trustee shall have no duty (A) to see to any recording, filing, or depositing of
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this Agreement or any agreement referred to herein or any financing statement or
continuation statement evidencing a security interest, or to see to the
maintenance of any such recording or filing or depositing or to any rerecording,
refiling or redepositing of any thereof, (B) to see to any insurance, (C)
subject to Section 3.21 and Article Ten, to see to the payment or discharge of
any tax, assessment, or other governmental charge or any lien or encumbrance of
any kind owing with respect to, assessed or levied against, any part of the
Trust Fund, (D) to confirm or verify the contents of any reports or certificates
of any Servicer delivered to the Trustee pursuant to this Agreement believed by
the Trustee to be genuine and to have been signed or presented by the proper
party or parties. Notwithstanding anything contained herein, the Trustee shall
not be responsible and shall have no liability in connection with the duties
assumed by the Paying Agent, the Authenticating Agent and the Certificate
Registrar hereunder, unless the Trustee is acting in any such capacity
hereunder; provided further that in any such capacity the Trustee shall have all
of the rights, protections and indemnities provided to it as Trustee hereunder.
Section 8.02. Certain Matters Affecting Trustee and Fiscal Agent.
(a) Except as otherwise provided in Section 8.01:
(i) the Trustee and the Fiscal Agent may request and 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, approval, bond or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party or
parties;
(ii) the Trustee and the Fiscal Agent may consult with counsel
and 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 with such Opinion of Counsel;
(iii) neither the Trustee nor the Fiscal Agent shall be under
any obligation to exercise any of the trusts or powers vested in it by
this Agreement or to institute,
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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 and the Fiscal Agent reasonable security or
indemnity against the costs, expenses and liabilities, including
reasonable legal fees, which may be incurred therein or thereby; provided,
except in those cases in which the Trustee is required by the terms of
this Agreement to follow the directions of a requisite number or
percentage of Certificateholders, nothing contained herein shall relieve
the Trustee of the obligation, upon the occurrence of an Event of Default
(which has not been cured or waived), 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 person would exercise or use
under the circumstances in the conduct of such person's own affairs. The
Trustee's and the Fiscal Agent's reasonable costs and expenses (including
attorneys' fees) in connection with the foregoing shall be paid by the
requesting Certificateholders;
(iv) neither the Trustee nor the Fiscal Agent nor any of their
respective directors, officers, employees, agents or Control Persons shall
be personally liable for any action reasonably taken, suffered or omitted
by it in good faith and reasonably 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 or waiver of all Events of Default that may have
occurred, the Trustee shall not be bound to ascertain or inquire as to the
performance or observance of any of the terms, conditions, covenants or
agreements herein (except as specifically required by this Agreement) or
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 so to do by Holders of Certificates
evidencing, in the aggregate, not less than 25% of the
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Voting Rights of the Certificates; 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 costs, expenses
or liabilities as a condition to taking any such action. The reasonable
expense of every such investigation shall be paid by the Trust Fund in the
event that such investigation relates to an Event of Default, if an Event
of Default shall have occurred and is continuing, and otherwise by the
Certificateholders requesting the investigation;
(vi) the Trustee and the Fiscal Agent may execute any of the
trusts or powers hereunder or perform any duties hereunder either directly
or by or through agents or attorneys and shall not be liable for the
actions or omissions of any such agents or attorneys selected with due
care or the actions or omissions of the Servicer (except during the time
it is acting as Servicer), or any sub-servicer or the actions or omissions
of the Depositor;
(vii) neither the Trustee nor the Fiscal Agent shall be required
to give any bond or surety in respect of the execution of the Trust
created hereby or the powers granted hereunder;
(viii) the right of the Trustee to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the
Trustee shall not be answerable for other than its negligence, bad faith
or willful misconduct in the performance of such act; and
(ix) neither the Trustee nor the Fiscal Agent shall be liable
for any loss on any investment of funds made by it pursuant to the terms
of this Agreement (other than investments made with the Trustee in its
commercial capacity).
(b) Following the Closing Date, the Trustee shall not accept any
contribution of assets to the Trust Fund not
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specifically contemplated by this Agreement unless the Trustee shall have
received a Nondisqualification Opinion at the expense of the Person desiring to
contribute such assets with respect to such contribution.
(c) All rights of action under this Agreement or under any of the
Certificates, enforceable by the Trustee, may be enforced by it without the
possession of any of the Certificates, or the production thereof at the trial or
other proceeding relating thereto, and any such suit, action or proceeding
instituted by the Trustee shall be brought in its name for the benefit of all
the Holders of such Certificates, subject to the provisions of this Agreement.
Section 8.03. Trustee and Fiscal Agent Not Liable for
Certificates or the Mortgage Loan. The recitals contained herein and in
the Certificates (other than the authentication and execution of the
Certificates) shall be taken as the statements of the Depositor or the
Servicer, as the case may be, and neither the Trustee nor the Fiscal Agent
assumes any responsibility for their correctness. The Trustee and the Fiscal
Agent make no representations as to the validity or sufficiency of this
Agreement, the Certificates or the Mortgage Loan or related documents
(including any documents comprising parts of the Mortgage File), except
as expressly set forth herein. The Trustee and the Fiscal Agent shall not be
liable for any action or failure of any action by the Depositor or the
Servicer hereunder. The Trustee and the Fiscal Agent shall at no time have
any responsibility or liability for or with respect to the legality, validity
or enforceability of the Mortgages or the Mortgage Loan, or the
perfection and priority of the Mortgages or the maintenance of any such
perfection and priority, or for or with respect to the efficacy of the Trust
Fund or its ability to generate the payments to be distributed to
Certificateholders under this Agreement, including, without limitation, the
existence, condition and ownership of any Mortgaged Property; the existence and
enforceability of any hazard insurance thereon; the validity of the
assignment of the Mortgage Loan to the Trust Fund; the performance or
enforcement of the Mortgage Loan (other than if the Trustee shall assume
the duties of the Servicer pursuant to Section 7.02); the compliance by the
Depositor, the Mortgagors or the Servicer with any warranty or representation
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made under this Agreement or in any related document or the accuracy of any
such warranty or representation made under this Agreement or in any related
document prior to the Trustee's receipt of notice or other discovery of any
noncompliance therewith or any breach thereof; any investment of monies by or
at the direction of the Servicer or any loss resulting therefrom (other than
investments made with the Trustee in its commercial capacity); the failure of
the Servicer or any Sub-Servicer to act or perform any duties required of it
hereunder; or any action by the Trustee taken at the instruction of the
Servicer (other than if the Trustee shall assume the duties of the Servicer
pursuant to Section 7.02); provided, however, that the foregoing shall not
relieve each of the Trustee or Fiscal Agent of its obligations to perform its
duties under this Agreement. Except with respect to a claim based on the
failure of the Trustee or Fiscal Agent to perform their duties under this
Agreement or based on the Trustee's or the Fiscal Agent's negligent action,
negligent failure to act or willful misconduct (or other such standard of
care as may be provided herein with respect to any particular matter), no
recourse shall be had for any claim based on any provisions of this
Agreement, the Certificates, or the Mortgage Loan or assignment thereof
against the Trustee in its individual capacity or the Fiscal Agent, each of
the Trustee and the Fiscal Agent shall not have any personal obligation,
liability or duty whatsoever to any Certificateholder or any other Person
with respect to any such claim, and any such claim shall be asserted solely
against the Trust Fund or any indemnitor who shall furnish indemnity as
provided in this Agreement. The Trustee and Fiscal Agent shall have no
responsibility for filing any financing or continuation statements in any
public office at any time or to otherwise perfect or maintain the perfection
of any security interest or lien granted to it hereunder or to prepare or
file any Securities and Exchange Commission filing for the Trust Fund or to
record this Agreement (unless the Trustee shall have become the successor
Servicer). The Trustee and Fiscal Agent shall not be accountable for the use
or application by the Depositor of any of the Regular Certificates or of the
proceeds of such Certificates or for the use or application of any funds paid
to the Depositor in respect of the transfer and assignment of the Deed of
Trust Loan.
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Neither the Trustee or the Fiscal Agent, by reason of the action or
inaction of a responsible officer or officers of the Trustee or the Fiscal
Agent, nor any of their respective directors, officers, employees, agents or
Control Persons shall be under any liability to the Trust Fund or the
Certificateholders for any action taken or for refraining from the taking of any
action in good faith pursuant to this Agreement, or for errors in judgment;
provided, however, that this provision shall not protect the Trustee or any such
person against any liability which would otherwise be imposed by reason of
willful misconduct, bad faith, negligence in the performance of duties or
negligent failure to act. The Trustee, Fiscal Agent and any director, officer,
employee, agent and Control Person of the Trustee and the Fiscal Agent shall be
indemnified by amounts on deposit in the Central Account, and held harmless
against any loss, liability or expense incurred in connection with or related to
the Trustee's or Fiscal Agent's performance of their duties under this Agreement
(including, without limitation, performance under Section 8.01 hereof). The
indemnification provided hereunder shall survive the resignation or removal of
the Trustee or Fiscal Agent and the termination of this Agreement. Anything
herein to the contrary notwithstanding, the Trustee shall be responsible for the
acts or failures to act of the Servicer during the time it is serving as
Servicer to the same extent that the Servicer would be liable for its acts or
failure to act under this Agreement.
Section 8.04. Trustee or Fiscal Agent May Own Certificates. Each of
the Trustee and the Fiscal Agent in its individual or any other capacity may
become the owner or pledgee of Certificates with the same rights as it would
have if it were not the Trustee or Fiscal Agent.
Section 8.05. Trustee's Fees and Expenses. The Servicer shall pay
the Trustee Fee out of the Servicing Fee. To the extent the Trustee Fee is not
paid by the Servicer, the Trustee shall be entitled to pay itself pursuant to
Section 3.04(c)(ii) out of funds on deposit in the Certificate Account. The
Servicer shall pay or reimburse the Trustee from funds on deposit in the Central
Account upon the Trustee's request for all reasonable expenses, disbursements
and advances incurred or made by the Trustee (other than in the normal course of
the business
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of the Trustee) in its capacity as Trustee hereunder in the performance of
its duties, in accordance with any of the provisions of this Agreement
(including the reasonable fees and expenses of its counsel and of all Persons
not regularly in its employ) except any such expense, disbursement or advance
as may arise from its negligence or bad faith or which is expressly the
responsibility of a Certificateholder or Certificateholders hereunder, all of
which payments and reimbursements are to be made by the Servicer by
withdrawing amounts on deposit in the Central Account pursuant to Section
3.04 hereof to the extent permitted by the Loan Documents. The Trustee shall
provide the Servicer with an invoice, on or prior to each Payment Date,
setting forth the actual expenses incurred in connection with the performance
of its duties hereunder for which it seeks payment or reimbursement on the
next withdrawal from the Central Account pursuant to Section 3.04 hereof,
provided, however, that the failure by the Trustee to provide such invoice
shall not constitute a waiver of its right to reimbursement of such claims.
Notwithstanding the first sentence of this Section 8.05, the Servicer will
not be obligated to pay any successor trustee any fee in excess of the amount
paid to the Trustee on the Closing Date. Any such excess fee (as well as any
excess fee required to be paid to a successor servicer) shall be payable out
of payments made by the Mortgagors on the Mortgage Loan. The obligations
of the Servicer under this Section 8.05 shall survive termination of the
initial Servicer and payment of the Certificates and shall extend to any
co-trustee or separate trustee appointed pursuant to this Article Eight.
Section 8.06. Eligibility Requirements for Trustee and Successor
Fiscal Agent. The Trustee hereunder shall not be an Affiliate of the Manager,
the Mortgagors, the Depositor or the Servicer (unless the Trustee succeeds to
the obligations of the Servicer pursuant to Article Seven) and shall at all
times be a corporation or association organized and doing business under the
laws of any State, the United States of America, or the District of Columbia,
authorized under such laws to exercise corporate trust powers, having a combined
capital and surplus of at least $100,000,000 (or shall be a member of a bank
holding system, the aggregate combined capital and surplus of which is at least
$100,000,000, and shall be subject to supervision or examination by Federal,
State, or District of Columbia authority and which,
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as confirmed by the Rating Agency, will not adversely affect the then current
rating of any Class of the Regular Certificates. If such corporation or
association publishes reports of condition at least annually, pursuant to law or
to the requirements of the aforesaid supervising or examining authority, then
for the purposes of this Section the combined capital and surplus of such
corporation or association shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. The
Trustee or Fiscal Agent hereunder must at all times be an institution whose
long-term senior unsecured debt is rated not less than "AA" by the Rating Agency
or whose appointment would not, in and of itself, cause a downgrade,
qualification or withdrawal of the then current ratings assigned to any Class of
Regular Certificates by the Rating Agency, as evidenced by a written
confirmation to such effect from the Rating Agency. In case at any time the
Trustee shall cease to be eligible in accordance with the provisions of this
Section, the Trustee shall resign immediately in the manner and with the effect
specified in Section 8.07. The appointment of any successor Fiscal Agent shall
not be permitted to cause a downgrade, qualification or withdrawal of the then
current ratings assigned to any Class of Regular Certificates, as evidenced by a
written confirmation to such effect from the Rating Agency.
Section 8.07. Resignation and Removal of Trustee and Fiscal Agent.
The Trustee may at any time resign and be discharged from the trusts hereby
created by giving written notice of resignation to the Depositor, the Servicer,
the Certificate Registrar (if other than the Trustee), and the Rating Agency and
by mailing notice of resignation by first class mail, postage prepaid, to the
Certificateholders at their addresses appearing on the Certificate Register, not
less than 60 days before the date specified in such notice when, subject to
Section 8.08, such resignation is to take effect, provided that a successor
trustee meeting the qualifications set forth in Section 8.06 must have been
appointed by the Depositor in accordance with Section 8.08 and must have
accepted such appointment before such resignation can take effect, and provided
further that the appointment of such successor trustee would not cause a
downgrade, qualification or withdrawal by the Rating Agency of its then-current
rating of any Class of Regular Certificates. If
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no successor trustee has accepted appointment within 30 days after such notice
of resignation is given, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor trustee.
If at any time any of the following occur: (x) the Trustee shall cease to
be eligible in accordance with the provisions of Section 8.06 and shall fail to
resign after written request for the Trustee's resignation by the Depositor or
the Servicer; or (y) if at any time the Trustee and Fiscal Agent shall become
incapable of acting, or shall be adjudged a bankrupt or insolvent, or a receiver
of the Trustee or Fiscal Agent or of any of their property shall be appointed,
or any public officer shall take charge or control of the Trustee or Fiscal
Agent or of their property or affairs for the purpose of rehabilitation,
conservation or liquidation; then, in any such case, the Depositor or the
Servicer may remove the Trustee or Fiscal Agent and appoint a successor Trustee
or successor Fiscal Agent by written instrument, in duplicate, executed by any
duly authorized officer or Servicing Officer of the Depositor or the Servicer,
as applicable, one copy of which instrument shall be delivered to the Trustee or
Fiscal Agent so removed and one copy to the successor Trustee or successor
Fiscal Agent (with a copy to the Depositor and the Servicer). Except as
otherwise provided in the following paragraph, Holders of Certificates
evidencing, in the aggregate, not less than 66-2/3% of the Voting Rights of the
Certificates, may at any time remove the Trustee and the Fiscal Agent 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 instrument or instruments shall be delivered to the Depositor (with
a copy to the Servicer), one complete set to the Trustee and the Fiscal Agent so
removed and one complete set to the successor so appointed. Notice of any
removal of the Trustee and the Fiscal Agent and acceptance of appointment by the
successor trustee shall be given to the Rating Agency by the successor trustee.
Additionally, (i) if the Fiscal Agent or the Trustee fails to remit to the
Certificateholders, the Paying Agent or the Trustee any payment required to be
made or remitted by it under the terms of this Agreement, (ii) if the Trustee or
the Paying
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Agent fails to duly observe or perform in any material respect any other of the
covenants or agreements on the part of such Person contained in the Certificates
or this Agreement, which failure shall continue unremedied for a period of 30
days (except that such number of days shall be 15 in the case of a failure to
pay the premium for any Required Insurance Policy) after the date on which
written notice of such failure shall have been given to the Person required to
observe or perform such covenants or agreements by the Depositor or the Trustee,
or, if such Person is the Trustee, to the Trustee by the Certificateholders
evidencing, in the aggregate, not less than 25% of the Voting Rights of the
Regular Certificates, or (iii) the Trustee or the Fiscal Agent fails to make any
Advance required to be made from its own funds when required pursuant to Section
3.25(c), then in each such case, holders of Certificates evidencing, in the
aggregate, not less than 25% of the Voting Rights of the Certificates, may at
any time remove the Trustee, the Fiscal Agent or the Paying Agent, as
applicable, in accordance with the last two sentences of the preceding
paragraph.
Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section shall not
become effective until acceptance of the appointment by the successor trustee as
provided in Section 8.08 and unless the appointment of such successor trustee
would not cause a downgrade, qualification or withdrawal by the Rating Agency of
the then-current rating of any Class of Regular Certificates. Any resignation or
removal of the Trustee shall cause the simultaneous resignation or removal of
the Fiscal Agent.
Section 8.08. Successor Trustee and Fiscal Agent. Any successor
Trustee or Fiscal Agent appointed as provided in Section 8.07 shall execute,
acknowledge and deliver to the Depositor, the Servicer and to its predecessor
trustee or fiscal agent an instrument accepting such appointment hereunder and
thereupon the resignation or removal of the predecessor Trustee or Fiscal Agent
shall become effective and such successor Trustee or Fiscal Agent, without any
further act, deed or conveyance, shall become fully vested with all the rights,
powers, duties and obligations of its predecessor hereunder, with the like
effect as if originally named as trustee herein. The predecessor Trustee
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or Fiscal Agent shall deliver or cause to be delivered to the successor
Trustee or Fiscal Agent the Mortgage File and related documents and
statements held by it hereunder, and the Depositor, the Servicer and the
predecessor Trustee or Fiscal Agent shall execute and deliver such
instruments and do such other things as may reasonably be required for more
fully and certainly vesting and confirming in the successor trustee all such
rights, powers, duties, and obligations.
No successor trustee or fiscal agent shall accept appointment as provided
in this Section unless at the time of such acceptance such successor trustee or
fiscal agent shall be eligible under the provisions of Section 8.06 and its
appointment shall not adversely affect the then current rating of any Class of
the Regular Certificates.
Upon acceptance of appointment by a successor trustee or fiscal agent as
provided in this Section, the successor trustee or fiscal agent shall mail
notice of the succession of such trustee hereunder to all Holders of
Certificates at their addresses as shown in the Certificate Register and the
Rating Agency. If the successor Trustee or Fiscal Agent fails to mail such
notice within 10 days after acceptance of appointment by the successor Trustee
or Fiscal Agent, the Servicer shall cause such notice to be mailed at the
expense of the successor Trustee or Fiscal Agent.
Section 8.09. Merger or Consolidation of Trustee and of Fiscal
Agent. Any Person into which the Trustee 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 shall be a party, or any Person succeeding
to all or substantially all of the corporate trust business of the Trustee,
shall be the successor of the Trustee hereunder, provided that such Person shall
be eligible under the provisions of Section 8.06, without the execution or
filing of any paper or further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding. Any Person into which the
Fiscal Agent may be merged or converted or with which it may be consolidated or
any corporation or bank resulting from any merger, conversion or consolidation
to which the Fiscal Agent shall be a party, or any corporation or banking
association succeeding to all or
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substantially all of the corporate trust business of the Fiscal Agent, shall be
the successor of the Fiscal Agent hereunder, provided that such corporation or
banking association shall be eligible under the provisions of Section 8.06,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding.
Section 8.10. Appointment of Co-Trustee or Separate Trustee;
Appointment of Fiscal Agent. (a) At any time or times, for the purpose of
meeting any legal requirements of any jurisdiction in which any part of the
Mortgaged Property of the Trust may at the time be located or in which any
action of the Trustee may be required to be performed or taken, the Trustee, the
Depositor or the Holders of Certificates evidencing, in the aggregate, more than
a majority of the Voting Rights, by an instrument in writing signed by it or
them, may appoint one or more individuals or corporations to act as separate
trustee or separate trustees or co-trustee, acting jointly with the Trustee, of
all or any part of such Mortgaged Property, to the full extent that local law
makes it necessary for such separate trustee or separate trustees or co-trustee
acting jointly with the Trustee to act.
(b) The Trustee, and at the request of the Trustee, the Mortgagors
shall execute, acknowledge and deliver all such instruments as may be required
by the legal requirements of any jurisdiction or by any such separate trustee or
separate trustees or co-trustee for the purpose of more fully confirming such
title, rights or duties to such separate trustee or separate trustees or
co-trustee. Upon the acceptance in writing of such appointment by any such
separate trustee or separate trustees or co-trustee, it, he, she or they shall
be vested with such title to the Mortgaged Property or any part thereof, and
with such rights, powers, duties and obligations as shall be specified in the
instrument of appointment, and such rights, powers, duties and obligations shall
be conferred or imposed upon and exercised or performed by the Trustee, or the
Trustee and such separate trustee or separate trustees or co-trustees jointly
with the Trustee subject to all the terms of this Agreement, except to the
extent that under any law of any jurisdiction in which any particular act or
acts are to be performed the Trustee shall be
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incompetent or unqualified to perform such act or acts, in which event such
rights, powers, duties and obligations shall be exercised and performed by such
separate trustee or separate trustees or co-trustee, as the case may be. Any
separate trustee or separate trustees or co-trustee may, at any time by an
instrument in writing, constitute the Trustee its attorney-in-fact and agent
with full power and authority to do all acts and things and to exercise all
discretion on its behalf and in its, her or his name. In any case any such
separate trustee or co-trustee shall die, become incapable of acting, resign or
be removed, the title to the Mortgaged Property and all assets, property,
rights, powers, obligations and duties of such separate trustee or co-trustee
shall, so far as permitted by law, vest in and be exercised by the Trustee,
without the appointment of a successor to such separate trustee or co-trustee
unless and until a successor is appointed.
(c) All provisions of this Agreement which are for the benefit of
the Trustee shall extend to and apply to each separate trustee or co-trustee
appointed pursuant to the foregoing provisions of this Section 8.10.
(d) Every additional trustee and separate trustee hereunder shall,
to the extent permitted by law, be appointed and act and the Trustee shall act,
subject to the following provisions and conditions: (i) all powers, duties,
obligations and rights conferred upon the Trustee in respect of the receipt,
custody, investment and payment of moneys shall be exercised solely by the
Trustee; (ii) all other rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed and exercised or
performed by the Trustee and such additional trustee or trustees and separate
trustee or trustees jointly except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed, 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 Mortgaged Property in any such jurisdiction) shall be exercised
and performed by such additional trustee or trustees or separate trustee or
trustees; (iii) no power hereby given to, or exercisable by, any such additional
trustee or
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separate trustee shall be exercised hereunder by such additional trustee or
separate trustee except jointly with, or with the consent of, the Trustee; and
(iv) no trustee hereunder shall be personally liable by reason of any act or
omission of any other trustee hereunder. If at any time the Trustee shall deem
it no longer necessary or prudent in order to conform to any such law, the
Trustee shall execute and deliver all instruments and agreements necessary or
proper to remove any additional trustee or separate trustee.
(e) Any request, approval or consent in writing by Trustee to any
additional trustee or separate trustee shall be sufficient warrant to such
additional trustee or separate trustee, as the case may be, to take such action
as may be so requested, approved or consented to.
(f) Notwithstanding any other provision of this Section 8.10, the
powers of any additional trustee or separate trustee shall not exceed those of
the Trustee hereunder.
Section 8.11. Appointment of Authenticating Agent. (a) At any time
when any of the Certificates remain outstanding, the Trustee may appoint an
Authenticating Agent or Agents which shall be authorized to act on behalf of the
Trustee to authenticate Certificates, and Certificates so authenticated shall be
entitled to the benefits of this Agreement and shall be valid and obligatory for
all purposes as if authenticated by the Trustee hereunder. Wherever reference is
made in this Agreement to the authentication and delivery of Certificates by the
Trustee or the Trustee's certificate of authentication, such reference shall be
deemed to include authentication and delivery on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent. Each Authenticating Agent shall be
acceptable to the Servicer and shall at all times be a corporation or
association organized and doing business under the laws of the United States of
America, any State thereof or the District of Columbia, authorized under such
laws to act as Authenticating Agent, having a combined capital and surplus of
not less than $15,000,000, authorized under such laws to do trust business and
subject to supervision or examination by federal or state authorities. If such
Authenticating Agent publishes reports of condition at least annually, pursuant
to law or to the requirements of said supervising or examining authority, then
for
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the purposes of this Section, the combined capital and surplus of such
Authenticating Agent shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time an
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, such Authenticating Agent shall resign immediately
in the manner and with the effect specified in this Section. The initial
Authenticating Agent shall be the Trustee.
(b) Any Person into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any Person resulting from any
merger, conversion or consolidation to which such Authenticating Agent shall be
a party, or any Person succeeding to the corporate agency business of an
Authenticating Agent, shall continue to be an Authenticating Agent, provided
such Person shall be otherwise eligible under this Section, without the
execution or filing of any paper or any further act on the part of the Trustee
or the Authenticating Agent.
(c) An Authenticating Agent may resign at any time by giving at
least 30 days' advance written notice thereof to the Trustee, the Servicer and
the Depositor. The Trustee may at any time terminate the agency of an
Authenticating Agent by giving written notice thereof to such Authenticating
Agent, the Servicer and the Depositor. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section 8.11, the Trustee may appoint a successor
Authenticating Agent which shall be acceptable to the Servicer and the Depositor
and shall mail written notice of such appointment by first-class mail, postage
prepaid to all Certificateholders as their names and addresses appear in the
Certificate Register. Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all the rights, powers and duties
of its predecessor hereunder, with like effect as if originally named as
Authenticating Agent herein. No successor Authenticating Agent shall be
appointed unless eligible under the provisions of this Section. Any reasonable
compensation paid to an Authenticating Agent for its services under this Section
shall be a reimbursable expense pursuant to Section 8.05 if paid by the Trustee.
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Section 8.12. Fiscal Agent Appointed; Concerning the Fiscal Agent.
(a) The Trustee hereby appoints ABN AMRO Bank N.V. as the initial Fiscal Agent
hereunder for the purposes of exercising and performing the obligations and
duties imposed upon the Fiscal Agent by Section 3.25(c) of this Agreement.
(b) The Fiscal Agent undertakes to perform such duties and only such
duties as are specifically set forth in Section 3.25(c) of this Agreement.
(c) No provision of this Agreement shall be construed to relieve the
Fiscal Agent from liability for its own negligence, bad faith or willful
misfeasance; provided, however, that (i) the duties and obligations of the
Fiscal Agent shall be determined solely by the express provisions of Section
3.25(c) of this Agreement, the Fiscal Agent shall not be liable except for the
performance of such duties and obligations, no implied covenants or obligations
shall be read into this Agreement against the Fiscal Agent and, in the absence
of bad faith on the part of the Fiscal Agent, the Fiscal Agent may conclusively
rely, as to the truth and correctness of the statements or conclusions expressed
therein, upon any resolutions, certificates, statements, opinions, reports,
documents, orders or other instruments furnished to the Fiscal Agent by the
Depositor or any Servicer and which on their face do not contradict the
requirements of this Agreement, and (ii) the provisions of clauses (b) and (c)
of Section 8.01 shall apply to the Fiscal Agent.
(d) The Fiscal Agent also shall have the benefit of provisions of
clauses (i), (ii), (iii) (other than the proviso thereto), (iv), (v) (other than
the proviso thereto) and (vi), (vii) and (ix) of Section 8.02(a) of this
Agreement.
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ARTICLE NINE
TERMINATION
Section 9.01. Termination. (a) Subject to Section 9.02, the
respective obligations and responsibilities of the Servicer, the Depositor,
the Paying Agent, the Fiscal Agent and the Trustee created hereby (other than
the obligation of the Trustee to make certain payments to Certificateholders
after the Final Distribution Date and other than the indemnification
obligations of the parties hereto) shall terminate upon the last action
required to be taken by the Trustee on the Final Distribution Date pursuant
to this Article Nine following the later of (i) the final payment on the Deed
of Trust Loan and (ii) the liquidation of the last Foreclosed Property, if
any, remaining in the Trust Fund; provided, however, that in no event shall
the trust created hereby continue beyond the earlier of (i) the expiration of
twenty-one years from the death of the last survivor of the descendants of
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the late ambassador of the United States to the Court of
St. James's, living on the date hereof and (ii) the latest possible maturity
date set forth in Section 10.01(c).
(b) Notice of any termination, specifying the Final Distribution
Date (which shall be a date that would otherwise be a Distribution Date) upon
which the Certificateholders of any Class may surrender their Certificates to
the Trustee for payment of the final distribution and cancellation, shall be
given promptly by the Paying Agent by letter to the Rating Agency and the
Certificateholders preceding such final distribution and shall specify (A) the
Final Distribution Date upon which final payment of the Certificates will be
made upon presentation and surrender of Certificates at the office or agency of
the Trustee therein designated, (B) the amount of any such final payment and (C)
that the Record Date otherwise applicable to such Distribution Date is not
applicable, payments being made only upon presentation and surrender of the
Certificates at the office or agency of the Trustee therein specified.
(c) Upon presentation and surrender of the Certificates, the Paying
Agent shall cause to be distributed to Certificateholders on the Final
Distribution Date the Available
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Distribution Amount for such Final Distribution Date in accordance with Section
4.01. Upon any such distribution that would result in the surrender of all
Certificates, the Paying Agent shall terminate, or request the Servicer to
terminate, the Rent Accounts, the Central Account, the Servicer Collection
Account, the Certificate Account, the Default Interest Account and any other
account or fund maintained with respect to the Certificates, subject to the
Paying Agent's obligation hereunder to hold all amounts payable to
Certificateholders in trust without interest pending such payment.
(d) In the event that all of the Certificateholders required to
surrender their Certificates shall not surrender their Certificates for final
payment and cancellation on or before the Final Distribution Date, the Paying
Agent shall on such date cause all funds in the Certificate Account not
distributed in the final distribution to Certificateholders to be withdrawn from
the Certificate Account and credited to the remaining Certificateholders by
depositing such funds in a separate trust account held uninvested for the
benefit of such Certificateholders who failed to surrender their Certificates
and the Paying Agent shall give a second written notice to the remaining
Certificateholders to surrender their Certificates for cancellation and receive
the final distribution with respect thereto. If within one year after the second
notice all the Certificates required to be surrendered shall not have been
surrendered for cancellation, the Trustee may take appropriate steps, or may
appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates, and the cost
thereof shall be paid out of the funds on deposit in such trust account. If the
remaining Certificateholders do not surrender their Certificates for
cancellation and receipt of the final distribution with respect thereto within
two years after the Final Distribution Date, the Paying Agent shall pay the
amount of such unclaimed final distribution to the Class R Certificateholder and
no other Certificateholders shall have any further claim to such amounts.
Section 9.02. Additional Termination Requirements. (a) In connection
with any termination pursuant to Section 9.01, the Trust Fund shall be
terminated in accordance with the following additional requirements, unless the
Trustee has been
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furnished with an Opinion of Counsel to the effect that the failure of the Trust
Fund to comply with the requirements of this Section 9.02 will not (i) result in
the imposition of taxes on "prohibited transactions" of the Trust Fund as
defined in Section 860F of the Code, or (ii) cause the Trust REMIC to fail to
qualify as a REMIC or cause the Grantor Trust to be treated as a taxable
mortgage pool at any time that any Regular Certificate is outstanding:
(i) Within 89 days prior to the Final Distribution Date set
forth in the notice given by the Paying Agent under Section 9.01, the
Trustee shall prepare and adopt a plan of complete liquidation of the
Trust REMIC, which in an Opinion of Counsel obtained by the Trustee at the
expense of the Trust Fund, meets the requirements of a qualified
liquidation under the REMIC Provisions;
(ii) At or after the time of adoption of such a plan of complete
liquidation and at or prior to the Final Distribution Date, the Trustee or
the Servicer on behalf of the Trustee, shall sell any remaining assets of
the Trust Fund;
(iii) At the time of making the final payment on the
Certificates other than the Class R Certificates, the Paying Agent shall
distribute or credit, or cause to be distributed or credited, to the
Holder of the Class R Certificate all cash on hand after such final
payment (other than cash retained to meet claims), and the Trust Fund
shall terminate at that time; and
(iv) In no event may the final payment on the Certificates
(except to the extent permitted in Section 9.01 with respect to
Certificateholders who fail to surrender their Certificates) be made after
the 89th day from the date on which the plan of complete liquidation is
adopted.
(b) By acceptance of a Class R Certificate, each Holder thereof
hereby authorizes the Trustee to adopt such a plan of complete liquidation upon
the written request of the Servicer and to take such other action in connection
therewith as may be
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reasonably requested by the Servicer, which authorization shall be binding upon
all successor Class R Certificateholders.
Section 9.03. Trusts Irrevocable. Except as expressly provided
herein, all trusts created hereby are irrevocable.
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ARTICLE TEN
REMIC ADMINISTRATION
Section 10.01. REMIC Administration. (a) The parties intend that the
Trust REMIC shall constitute, and that the affairs of the Trust REMIC shall be
conducted so as to qualify it as, a REMIC, and the provisions hereof shall be
interpreted consistently with this intention.
(b) An election will be made by the Trustee on behalf of the Trust
Fund to treat the segregated pool of assets consisting of the Mortgage Note
(other than the right to receive Default Rate Interest with respect thereto),
the Mortgages, the other Loan Documents, the Servicer Collection Account and the
Certificate Account as a REMIC under the Code (the "Trust REMIC"). Such election
will be made on Form 1066 or other appropriate federal tax or information return
for the taxable year ending on the last day of the calendar year in which the
Certificates are issued. For purposes of such election, the Class A, Class B,
Class C and Class D Certificates shall be designated as representing, in part,
beneficial interests in the "regular interests" in the Trust REMIC, and the
Class R Certificates shall be designated as the "residual interest" in the Trust
REMIC.
(c) The Closing Date is hereby designated as the "Startup Day" of
the Trust REMIC within the meaning of Section 860G(a)(9) of the Code. The
"latest possible maturity date" of the Regular Certificates for purposes of
Section 860G(a)(9) of the Code is December 20, 2029.
(d) Except as provided in Section 3.21, the Trustee shall pay
without any right of reimbursement the ordinary and usual expenses in connection
with the preparation, filing and mailing of tax information reports and returns
that are incurred by it in the ordinary course of its business, but
extraordinary or unusual expenses, costs or liabilities incurred in connection
with its tax-related duties under this Agreement, including without limitation
any expenses, costs or liabilities associated with audits or any administrative
or judicial proceedings with respect to the Trust REMIC that involve the IRS or
state tax
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authorities, shall be expenses of the Holder of the Class R Certificate to be
reimbursed to the Trustee by such Holder or, if not reimbursed by such Holder
within 45 days after invoice, from the Central Account.
(e) Subject to Section 3.21, the Trustee shall prepare and file all
of the Trust REMIC's federal, state and local income or franchise or other tax
and information returns as the Trust REMIC's direct representative. Except as
provided in Sections 3.21 and 10.01(d), the expenses of preparing and filing
such returns shall be borne by the Trustee. Each of the Servicer and the
Depositor shall provide on a timely basis to the Trustee or its designee such
information with respect to the Trust REMIC as is in its possession, which the
Servicer has received or prepared by virtue of its activities as Servicer
hereunder and is reasonably requested by the Trustee to enable it to perform its
obligations under this subsection, and the Trustee shall be entitled to rely on
such information in the performance of its obligations hereunder.
(f) Subject to Section 3.21, the Trustee shall perform on behalf of
the Trust REMIC all reporting and other tax compliance duties that are the
responsibility of the Trust REMIC under the Code, REMIC Provisions, or other
compliance guidance issued by the Internal Revenue Service or any New York,
Illinois or Virginia taxing authority. Among its other duties, the Trustee shall
provide (i) to the Internal Revenue Service or other Persons (including, but not
limited to, the transferor of a Class R Certificate, to a Disqualified
Organization or to an agent that has acquired a Class R Certificate on behalf of
a Disqualified Organization) such information as is necessary for the
application of any tax relating to the transfer of a Class R Certificate to any
Disqualified Organization and (ii) to the Certificateholders such information or
reports as are required by the Code or REMIC Provisions. Each of the Depositor
and the Servicer shall provide on a timely basis (and in no event later than 10
days after the Trustee's request) to the Trustee or its designee such
information with respect to the Trust REMIC as is in its possession and
reasonably requested in writing by the Trustee to enable it to perform its
obligations under this subsection.
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(g) The Holder of the largest Percentage Interest of the Class R
Certificates shall be the Trust REMIC's Tax Matters Person. The duties of the
Tax Matters Person for the Trust REMIC are hereby delegated to the Trustee, and
each Class R Certificateholder, by acceptance of its Class R Certificate,
agrees, on behalf of itself and all successor holders of such Class R
Certificate, to such delegation to the Trustee as their agent and attorney in
fact. The Trustee shall take whatever action is necessary for the signing of
such documents and designation of a Tax Matters Person, including the
designation of such Class R Certificateholder.
(h) The Trustee, the Holders of the Class R Certificates and the
Servicer shall perform their obligations under this Agreement and the REMIC
Provisions in a manner consistent with the status of the Trust REMIC as a REMIC
or, as appropriate, adopt a plan of complete liquidation.
(i) The Trustee, the Holders of the Class R Certificates and the
Servicer shall not take any action or cause the Trust REMIC to take any action,
within their respective control and the scope of their specific respective
duties under this Agreement that, under the REMIC Provisions, could (i) endanger
the status of the Trust REMIC as a REMIC or (ii) result in the imposition of a
tax upon the Trust REMIC (including but not limited to the tax on prohibited
transactions as defined in Code Section 860F(a)(2) and the tax on prohibited
contributions as defined in Code Section 860G(d)) unless the Trustee has
received a Nondisqualification Opinion (at the expense of the party seeking to
take such action or of the Trust Fund if taken for the benefit of the
Certificateholders) with respect to such action.
(j) The Holders of the Class R Certificates shall pay when due any
and all federal, state and local taxes imposed on the Trust REMIC or its assets
or transactions, including, without limitation, "prohibited transaction" taxes,
as defined in Section 860F of the Code, any tax on contributions imposed by
Section 860G(d) of the Code, and any tax on "net income from foreclosure
property" as defined in Section 860G(c) of the Code. If the Class R Certificates
are owned by more than one Holder, such Holders shall pay their pro rata share
of the foregoing taxes.
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To the extent that such Trust REMIC taxes are not paid by the Class R
Certificateholders, the Trustee shall pay any remaining Trust REMIC taxes out of
current or future amounts otherwise distributable to the Holders of the Class R
Certificates or, if no such amounts are available, out of other amounts held by
the Servicer in the Central Account pursuant to Section 3.04.
(k) The Trustee and, to the extent that records are maintained by
the Servicer in the normal course of its businesses, the Servicer, shall, for
federal income tax purposes, maintain books and records with respect to the
Trust REMIC and the Grantor Trust on a calendar year and on an accrual basis.
The books and records must be sufficient concerning the nature and amount of the
Trust Fund's investments to show that the Trust REMIC has complied with the
REMIC Provisions and that the Trust REMIC and the Grantor Trust have at all
times, for federal income tax purposes, accounted for items of income and
ownership of assets of the Trust Fund in a manner that respects the separate
existence of the two entities.
(l) Neither the Trustee nor the Servicer shall enter into any
arrangement by which the Trust REMIC will receive a fee or other compensation
for services.
(m) In order to enable the Trustee to perform its duties as set
forth herein, the Depositor shall provide, or cause to be provided, to the
Trustee within 10 days after the Closing Date all information or data that the
Trustee reasonably determines to be relevant for tax purposes on the valuations
and offering prices of the Certificates, including, without limitation, the
yield, issue prices, pricing prepayment assumption and projected cash flows of
the Regular Certificates and the Class R Certificates, as applicable, and the
projected cash flows on the Mortgage Loan. Thereafter, the Depositor shall
provide to the Trustee, promptly upon request therefor, any such additional
information or data that the Trustee, may, from time to time, reasonably request
in order to enable the Trustee to perform its duties as set forth herein. The
Trustee is hereby directed to use any and all such information or data provided
by the Depositor in the preparation of all federal, state and local income or
franchise or other tax and information returns and reports for the Trust REMIC
to Certificateholders as required
160
herein. The Depositor hereby indemnifies the Trustee for any losses,
liabilities, damages, claims or expenses of the Trustee arising from any errors
or miscalculations of the Trustee pursuant to this Section that result from any
failure of the Depositor to provide, or to cause to be provided, accurate
information or data to the Trustee (but not resulting from the methodology
employed by the Trustee) on a timely basis and such indemnifications shall
survive the termination of this Agreement.
The Trustee agrees that all such information or data so obtained by
it are to be regarded as confidential information and agrees that it shall use
its best reasonable efforts to retain in confidence, and shall ensure that its
officers, employees and representatives retain in confidence, and shall not
disclose, without the prior written consent of the Depositor, any or all of such
information or data, or make any use whatsoever (other than for the purposes
contemplated by this Agreement) of any such information or data without the
prior written consent of the Depositor, unless such information is generally
available to the public (other than as a result of a breach of this Section
10.01(m)) or is required by law or applicable regulations to be disclosed.
Section 10.02. Foreclosed Property. (a) Notwithstanding any other
provision of this Agreement, the Servicer, acting on behalf of the Trustee
hereunder, shall not rent, lease, or otherwise earn income on behalf of the
Trust Fund with respect to the Foreclosed Property which might cause the
Foreclosed 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
REMIC of any "income from nonpermitted assets" within the meaning of Section
860F(a)(2) of the Code or any "net income from foreclosure property" which is
subject to tax under the REMIC Provisions unless the Trustee and Servicer have
been furnished with an Opinion of Counsel (at the Trust Fund's expense) to the
effect that under the REMIC Provisions, any income generated for the Trust REMIC
by the Foreclosed Property in the manner contemplated would not result in the
imposition of a tax upon the Trust REMIC. The Trustee and Servicer shall be
entitled to rely on such opinion and neither shall have liability hereunder for
adopting any course of action consistent with such opinion.
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Without limiting the generality of the foregoing, neither the
Servicer nor the Trustee shall, to the extent within its power:
(i) permit the Trust Fund to enter into, renew or extend any New
Lease with respect to the Foreclosed 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 the Foreclosed
Property, other than the completion of a building or other improvement
thereon, and then only if more than ten percent of the construction of
such building or other improvement was completed before default on the
Mortgage Loan became imminent, all within the meaning of Section
856(e)(4)(B) of the Code; or
(iv) Directly Operate, or allow any other Person to Directly
Operate, any Foreclosed Property on any date more than 90 days after its
acquisition date unless, in any such case, the Servicer has requested and
received an Opinion of Counsel at the Trust Fund's expense to the effect
that such action will not cause such Foreclosed 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 REMIC, in which case
the Servicer may take such actions as are specified in such Opinion of
Counsel.
(b) The Servicer, acting on behalf of the Trustee hereunder, shall
make reasonable efforts to sell the Foreclosed Property for its fair market
value in accordance with Section 3.11. In any event, however, the Trustee, or
the Servicer, acting on behalf of the Trustee hereunder, may in its discretion
request an extension of time from the IRS at least 61 days prior to the
expiration of the two-year period beginning on the date such Foreclosed Property
was acquired and shall dispose of such
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Foreclosed Property within two years of its acquisition by the Trust Fund unless
the Trustee or the Servicer, on behalf of the Trustee, is entitled to an
extension of time (an "Extension") to sell such Foreclosed Property without
causing such property to cease to qualify as "foreclosure property" within the
meaning of Code Section 860G(a)(8), with the expenses of obtaining any such
extension of time being advanced by the Servicer as a Carrying Costs Advance. If
the Trustee or the Servicer, on behalf of the Trustee, has received such an
Extension, then the Trustee, the Servicer, acting on behalf of the Trustee
hereunder, shall continue to attempt to sell the Foreclosed Property for its
fair market value for such period longer than two years as such Extension
permits (the "Extended Period"). If the Trustee or the Servicer, on behalf of
the Trustee, has not received such an Extension and the Servicer, acting on
behalf of the Trustee hereunder, is unable to sell the Foreclosed Property
within the two year period or if the Trustee or the Servicer, acting on behalf
of the Trustee hereunder, has received such an Extension, and the Servicer,
acting on behalf of the Trustee hereunder, is unable to sell the Foreclosed
Property within the Extended Period, the Servicer shall, before the end of the
two-year period or the Extended Period, as the case may be, auction the
Foreclosed Property to the highest bidder (which may be the Trustee in its
corporate capacity or the Servicer on behalf of itself, in each case to the
extent of amounts owed to it under this Agreement) in accordance with Accepted
Servicing Practices.
(c) Within 30 days of the sale of a Foreclosed Property, the
Servicer shall provide to the Trustee a statement of accounting for the
Foreclosed Property, including without limitation, (i) the date the Mortgaged
Property was acquired in foreclosure or by deed in lieu of foreclosure, (ii) the
date of disposition of such Foreclosed Property, (iii) the gross sale price and
related selling and other expenses, (iv) accrued interest calculated from the
date of acquisition to the disposition date, and (v) such other information as
the Trustee may reasonably request.
Section 10.03. Modifications of Mortgage Loan. Notwithstanding
anything to the contrary in this Agreement, neither the Trustee nor the Servicer
shall permit any modification of, or take any action with respect to, the
Mortgage Loan or any
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Component (including the interest rate, the principal balance, the
amortization schedule, or any other term affecting the amount or timing of
payments on the Mortgage Loan) that would result in an exchange within
the meaning of Section 1001 of the Code unless (i) the Trustee and the
Servicer have received a Nondisqualification Opinion or a ruling from the IRS
(at the expense of the party making the request of the Servicer or the
Trustee to modify the Mortgage Loan) to the same effect as a
Nondisqualification Opinion with respect to such modification or (ii) such
modification meets the requirements set forth in the second sentence of
Section 3.03.
Section 10.04. Prohibited Transactions and Activities. The Servicer,
on behalf of the Trustee, shall not permit the sale, disposition or substitution
of the Mortgage Loan or the substitution of a property for the Mortgaged
Property (except in a disposition pursuant to (i) the bankruptcy or insolvency
of the Mortgagors or (ii) the termination of the Trust REMIC in a "qualified
liquidation" as defined in Section 860F(a)(4) of the Code), nor acquire any
assets for the Trust REMIC (other than Foreclosed Property), nor sell or dispose
of any investments in the Certificate Account for gain, nor accept any
contributions to the Trust REMIC (other than a cash contribution during the
three-month period beginning on the Startup Day), unless it has received an
Opinion of Counsel (at the expense of the Person requesting it to take such
action) to the effect that such disposition, acquisition, substitution, or
acceptance will not (a) affect adversely the status of the Trust REMIC as a
REMIC or of the Certificates, other than the Class R Certificate, as the regular
interests therein or (b) cause the Trust REMIC to be subject to a tax on
"prohibited transactions" or "prohibited contributions" pursuant to the REMIC
Provisions. Nothing in this Section 10.04 shall be construed to authorize the
Servicer or the Trustee to take any action not otherwise authorized by this
Agreement.
Section 10.05. Indemnification with Respect to Certain Taxes and
Loss of REMIC Status. (a) In the event that the Trust REMIC fails to qualify as
a REMIC, loses its status as a REMIC, or incurs state or local taxes, or a tax
as a result of a prohibited transaction or contribution or the receipt of "net
income from foreclosure property" subject to taxation under the
164
REMIC Provisions due to the willful misfeasance, bad faith or negligent
performance by the Trustee of its duties and obligations specifically set forth
herein, or by reason of the Trustee's reckless disregard of its obligations and
duties thereunder, the Trustee shall indemnify the Trust Fund against any and
all losses, claims, damages, liabilities or expenses ("Losses") resulting
therefrom; provided, however, that the Trustee shall not be liable for any such
Losses attributable to the action or inaction of the Servicer, the Depositor or
the Holders of the Class R Certificates nor for any such Losses resulting from
misinformation provided by the Servicer, the Depositor or the Holders of the
Class R Certificates on which the Trustee has relied. The foregoing shall not be
deemed to limit or restrict the rights and remedies of successor Holders of the
Class R Certificates at law or in equity. Such indemnity shall be limited to
direct Losses and shall not extend to consequential damages.
(b) In the event that the Trust REMIC fails to qualify as a REMIC,
loses its status as a REMIC, or incurs state or local taxes, or a tax as a
result of a prohibited transaction or contribution or the receipt of "net income
from foreclosure property" subject to taxation under the REMIC Provisions due to
directly and solely the willful misfeasance, bad faith or negligent performance
of the Servicer in the performance of its duties and obligations set forth
herein, or by reason of the Servicer's reckless disregard of its obligations and
duties thereunder, the Servicer shall indemnify the Trust Fund against any and
all Losses resulting therefrom; provided, however, that the Servicer shall not
be liable for any such Losses attributable to the action or inaction of the
Trustee, the Depositor or the Holders of the Class R Certificates nor for any
such Losses resulting from misinformation provided by the Trustee, the Depositor
or the Holders of the Class R Certificates on which the Servicer has relied. The
foregoing shall not be deemed to limit or restrict the rights and remedies of
any successor Holders of the Class R Certificates at law or in equity. Such
indemnity shall be limited to direct Losses and shall not extend to
consequential damages.
Section 10.06. Grantor Trust Reporting. The parties intend that the
Grantor Trust shall constitute, and that the
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affairs of the Grantor Trust be conducted so as to qualify as, a "grantor trust"
under the Grantor Trust Provisions, and the provisions hereof shall be
interpreted consistently with this intention. In furtherance of such intention,
the Trustee shall furnish or cause to be furnished to holders of Regular
Certificates, and shall file or cause to be filed with the IRS together with
Form 1041 or such other form as may be applicable, a report setting forth their
applicable share of Default Rate Interest at the times and in the manner
required by the Code.
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ARTICLE ELEVEN
MISCELLANEOUS PROVISIONS
Section 11.01. Amendment. (a) This Agreement may be amended from
time to time by the mutual agreement of the Depositor, the Servicer, the Trustee
and the Fiscal Agent, without the consent of any of the Certificateholders, (i)
to cure any ambiguity, (ii) to correct or supplement any provision(s) herein
which may be inconsistent with any other provision(s) herein, (iii) to maintain
the qualification of the Trust REMIC as a REMIC, or (iv) to make any other
provisions with respect to matters or questions arising under this Agreement,
provided that such action shall not adversely affect in any material respect the
interests of any Certificateholder without the consent of each Certificateholder
adversely affected thereby in the case of an amendment pursuant to clauses (i),
(ii) or (iv) of this sentence or adversely affect the status of the Trust REMIC
as a REMIC or the Grantor Trust as a grantor trust (under the Grantor Trust
Provisions). Prior to entering into any amendment without the consent of Holders
pursuant to this paragraph, the Trustee shall require an Opinion of Counsel (in
the case of clauses (i), (ii) and (iii), at the expense of the Depositor, and
otherwise at the expense of the party requesting such amendment) to the effect
that such amendment is permitted under this paragraph. The Rating Agency shall
be given prior notice of any material amendment to this Agreement pursuant to
this Section 11.01(a). Any amendment of this Agreement pursuant to this Section
11.01(a) shall be deemed not to adversely affect in any material respect the
interests of any Certificateholder if the Trustee receives written confirmation
from the Rating Agency that such amendment will not cause the Rating Agency to
reduce or withdraw the then current rating assigned to any Class of the Regular
Certificates (and any opinion requested by the Trustee in connection with any
such amendment may rely expressly on such confirmation as the basis therefor).
(b) This Agreement may be amended from time to time by the
Depositor, the Servicer, the Trustee and the Fiscal Agent with the written
consent of the Holders of Certificates evidencing, in the aggregate, not less
than 66 2/3% of the Voting Rights of the Certificates for the purpose of adding
any
167
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
the Certificates; provided, however, that no such amendment shall (i) reduce
in any manner the amount of or delay the timing of payments received on or
with respect to the Mortgage Loan that are required to be distributed
with respect to any Regular Certificate, or change the manner in which such
payments are required to be distributed, without the consent of the Holder of
such Certificate, (ii) adversely affect in any material respect the interests
of the Holders of a Class of the Certificates in a manner other than as set
forth in (i) above without the consent of the Holders of such Class
evidencing, in the aggregate, not less than 100% of the Voting Rights of such
Class, (iii) reduce the aforesaid percentages of Voting Rights of the
Certificates, the Holders of which are required to consent to any such
amendment without the consent of 100% of the Certificateholders of the
affected Class, (iv) alter the obligations of the Servicer to make an Advance
or alter the servicing standards set forth herein, or (v) amend any
provisions hereof relating to the administration of the Trust REMIC as a
REMIC without the consent of the Class R Certificateholders. The Rating
Agency shall be given prior notice of any amendment to this Agreement
pursuant to this Section 11.01(b).
It shall not be necessary for the consent of Certificateholders
under this Section 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.
Notwithstanding any contrary provisions of this Agreement, the
Trustee shall not consent to any amendment to this Agreement pursuant to this
Section 11.01(b) unless it shall have first been furnished with an Opinion of
Counsel to the effect that such amendment is authorized hereunder and will not
cause the Trust Fund to fail to qualify as a REMIC or cause the Grantor Trust to
fail to qualify as a grantor trust under the Grantor Trust Provisions at any
time that any Certificates are outstanding.
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(c) Promptly after the execution of any amendment to this Agreement,
the Trustee shall furnish written notification of the substance of such
amendment to each Certificateholder and the Rating Agency.
(d) In the event that neither Depositor nor any successor thereto is
in existence, any amendment under this Section shall be effected with the
consent of the Servicer, the Trustee, and the Fiscal Agent, and, to the extent
required hereby, the Certificateholders.
Section 11.02. Recordation of Agreement. This Agreement (or an
abstract hereof, if acceptable by the applicable recording office) 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 Trust Fund upon its receipt of an Opinion of
Counsel to the effect that such recordation materially and beneficially affects
the interests of the Certificateholders.
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. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN THE STATE OF NEW YORK AND
THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HERETO AND THE
CERTIFICATEHOLDERS SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 11.04. Notices. All demands, notices and communications to
any party hereunder shall be in writing, U.S. mail, fax and overnight mail
service and shall be deemed to have been duly given when delivered to (i) in the
case of the Depositor, c/o The ▇▇▇▇▇ Corporation, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, (ii) in the case of the Servicer, AMRESCO
Management, Inc., ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇;, Attention:
Legal Counsel; and (iii) in the case of the Trustee, LaSalle National Bank, ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Asset-Backed
Securities Trust Services Group-Potomac/Gurnee ▇▇▇▇▇ Securitization; (iv) in the
case of the Fiscal Agent, ABN AMRO Bank N.V. ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇; Attn: Group-Potomac/Gurnee ▇▇▇▇▇
Securitization; (v) in the case of the Manager, Management Associates Limited
Partnership, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇; or in
each case such other address as may hereafter be furnished to the other parties
hereto in writing. Any notice required or permitted to be mailed to a
Certificateholder shall be given by first class mail, postage prepaid, at the
address of such Holder as shown in the Certificate Register. Any notice mailed
to a Certificateholder within the time prescribed in this Agreement shall be
conclusively presumed to have been duly given, whether or not the addressee
receives such notice. The Trustee shall furnish copies of all notices given or
received by it hereunder to CS First Boston Corporation, Eleven ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇; and ▇▇▇▇▇▇▇ ▇▇▇▇▇ &
Co., World Financial Center, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇,
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇.
Section 11.05. Notices to the Rating Agency. The Servicer shall
deliver written notice of the following events to Fitch Investors Service, L.P.,
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attn: Commercial Mortgage
Surveillance, promptly following the occurrence thereof, of any of the following
events: a material amendment to any documents included in the Trust Fund; any
Event of Default; any change in or the termination of the Trustee; the removal,
merger or consolidation of the Servicer or any successor Servicer as servicer;
the result of any inspection (whether structural, environmental or otherwise) of
the Mortgaged Property, and final payment to Certificateholders. In addition,
the Trustee shall deliver copies of the following documents to the Rating Agency
at the time such documents are required to be delivered pursuant to this
Agreement: monthly reports to Certificateholders pursuant to Section 4.02,
annual Servicer's compliance report pursuant to Section 3.14, annual report of
170
independent accountants pursuant to Section 3.15 and copies of any
notifications received by any Mortgagor pursuant to Section 16.01(h) of the
related Mortgage. The Servicer and Trustee also shall furnish such other
information regarding the Trust Fund as may be reasonably requested by the
Rating Agency to the extent such party has or can obtain such information
without unreasonable effort or expense. The Trustee shall furnish copies of
all notices given or received by it hereunder to CS First Boston Corporation,
Eleven ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇; and ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., World Financial Center, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇. Notwithstanding the
foregoing, the failure to deliver such notices and copies shall not
constitute an Event of Default under this Agreement, and the Trustee shall
not be liable for the failure to deliver any report hereunder if such report
is to be furnished to the Trustee by another Person and such Person has
failed to furnish such report to the Trustee in a timely manner. Any
confirmation of the rating by the Rating Agency required hereunder shall be
in writing.
Section 11.06. ▇▇▇▇▇▇ Act. Any provisions required to be contained
in this Agreement by Section 126 of Article 4-A of the New York Real Property
Law are hereby incorporated herein, and such provisions shall be in addition to
those conferred or imposed by this Agreement; provided, however, that to the
extent that such Section 126 shall not have any effect, and if said Section 126
should at any time be repealed or cease to apply to this Agreement, or be
construed by judicial decision to be inapplicable, said Section 126 shall cease
to have any further effect upon the provisions of this Agreement. In case of a
conflict between the provisions of this Agreement and any mandatory provisions
of Article 4-A of the New York Real Property Law, such mandatory provisions of
said Article 4-A shall prevail, provided that if said Article 4-A shall not
apply to this Agreement, should at any time be repealed, or cease to apply to
this Agreement, or be construed by judicial decision to be inapplicable, such
mandatory provisions of such Article 4-A shall cease to have any further effect
upon the provisions of this Agreement.
171
Section 11.07. 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 11.08. Limitation on Rights of Certificateholders. The death
or incapacity of any Certificateholder shall not operate to terminate this
Agreement or the Trust Fund or entitle such Certificateholder's legal
representatives or heirs to claim an accounting or take any action or commence
any proceeding in any court for a partition or winding-up of the Trust Fund, or
otherwise affect the rights, obligations and liabilities of the parties hereto
or any of them.
Except as otherwise expressly provided herein, no Certificateholder,
solely by virtue of its status as a Certificateholder, shall have any right to
vote (except as provided herein) or in any manner otherwise control the
operation and management of the Trust Fund or the obligations of the parties
hereto, nor shall anything herein set forth or contained in the terms of the
Certificates be construed so as to constitute the Certificateholders from time
to time as partners or members of an association, nor shall any
Certificateholder be under any liability to any third party by reason of any
action taken by the parties to this Agreement pursuant to any provision hereof.
No Certificateholder, solely by virtue of its status as a
certificateholder, shall have any right by virtue or by availing 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 unless such
Holder previously shall have given to the Trustee a written notice of an Event
of Default and of the continuance thereof, as hereinbefore provided, and unless
also Holders of Certificates of any Class affected thereby evidencing, as to
such Class, Percentage Interests aggregating not less than 25% 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
172
such reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby, and the Trustee, for 60 days
after its receipt of such notice, request and offer of indemnity, shall have
neglected or refused to institute any such action, suit or proceeding; it being
understood and intended, and being expressly covenanted by each
Certificateholder with every other Certificateholder of the same Class and the
Trustee, that no one or more Holders of Certificates shall have any right in any
manner whatever by virtue or by availing of any provision of this Agreement to
affect, disturb or prejudice the rights of the Holders of any other of such
Certificates of the same Class, or to obtain or seek to obtain priority over or
preference to any other such Holder, or to enforce any right under this
Agreement, except in the manner herein provided and for the benefit of all
Certificateholders of the same Class. For the protection and enforcement of the
provisions of this Section, each and every Certificateholder and the Trustee
shall be entitled to such relief as can be given either at law or in equity.
Section 11.09. Certificates Nonassessable and Fully Paid. It is the
intention of the Depositor that Certificateholders shall not be personally
liable for obligations of the Trust Fund, that the interests in the Trust Fund
represented by the Certificates shall be nonassessable for any reason
whatsoever, and that the Certificates, upon due authentication thereof by the
Trustee pursuant to this Agreement, are and shall be deemed fully paid.
Section 11.10. Reproduction of Documents. This Agreement and all
documents relating thereto, including, without limitation, (i) consents, waivers
and modifications which may hereafter be executed, (ii) documents received by
any party at the closing, and (iii) financial statements, certificates and other
information previously or hereafter furnished, may be reproduced by any
photographic, photostatic, microfilm, microcard, miniature photographic or other
similar process. The parties agree that any such reproduction shall be
admissible in evidence as the original itself in any judicial or administrative
proceeding, whether or not the original is in existence and whether or not such
reproduction was made by a party in the regular course of business, and that any
enlargement, facsimile
173
or further reproduction of such reproduction shall likewise be admissible in
evidence.
Section 11.11. No Partnership. Nothing herein contained shall be
deemed or construed to create a partnership or joint venture between the parties
hereto and the services of the Servicer shall be rendered as an independent
contractor and not as agent for the Trustee or the Depositor.
Section 11.12. Actions of Certificateholders. (a) Any request,
demand, authorization, direction, notice, consent, waiver or other action
provided by this Agreement to be given or taken by Certificateholders may be
embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Certificateholders in person or by agent duly appointed in
writing; and except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments are delivered to the
Trustee and, where required, to the Depositor or the Servicer. Proof of
execution of any such instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Agreement and conclusive in favor of the
Trustee, the Depositor and the Servicer, if made in the manner provided in this
Section.
(b) The fact and date of the execution by any Certificateholder of
any such instrument or writing may be proved in any reasonable manner which the
Trustee deems sufficient.
(c) Any request, demand, authorization, direction, notice, consent,
waiver, or other act by a Certificateholder shall bind every Holder of every
Certificate issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof, in respect of anything done or omitted to be done
by the Trustee, the Depositor or the Servicer in reliance thereon, whether or
not notation of such action is made upon such Certificate.
(d) The Trustee may require additional proof of any matter referred
to in this Section 11.12 as it shall deem reasonably necessary.
174
Section 11.13. Successors and Assigns. The rights and obligations of
any party hereto shall not be assigned (except pursuant to Sections 6.02 or 8.09
hereof) by such party without the prior written consent of the other parties
hereto. This Agreement shall inure to the benefit of and be binding upon the
Depositor, the Servicer, the Fiscal Agent and the Trustee and their respective
permitted successors and assigns.
Section 11.14. Officer's Certificates and Opinions of Counsel;
Statements to Be Contained Therein. Upon any application or demand by the
Depositor or Mortgagors to the Trustee, or the Servicer on behalf of the
Trustee, to take any action, the Depositor or Mortgagors shall furnish to the
Trustee (i) an Officer's Certificate stating that all conditions precedent, if
any, provided for in this Agreement relating to the proposed action have been
complied with and that the proposed action is in conformity with the
requirements of this Agreement, and (ii) an Opinion of Counsel stating that in
the opinion of such counsel all such conditions precedent, if any, have been
complied with, except that in the case of any such application or demand as to
which the furnishing of such documents is specifically required by any provision
of this Agreement relating to such particular application or demand, no
additional certificate or opinion need be furnished.
Each certificate or opinion required by this Agreement and delivered to
the Trustee with respect to compliance with a condition or covenant provided for
in this Agreement, except for the certificates of compliance required by Section
4.03(c) and Section 3.14, shall include (i) a statement that the person making
such certificate or opinion has read such covenant or condition, (ii) a brief
statement as to the nature and scope of the examination or investigation upon
which the statements or opinions contained in such certificate or opinion are
based, (iii) a statement that, in the opinion of such person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with, and (iv) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with.
175
Any certificate, statement or opinion of counsel may be based, insofar as
it relates to factual matters, on information which is in the possession of the
Depositor or Mortgagors, upon the certificate, statement or opinion of or
representations by one or more officers, or managers or general partners of the
Depositor or Mortgagors unless such counsel knows that the certificate,
statement or opinion or representations with respect to the matters upon which
his certificate, statement or opinion may be based as aforesaid are erroneous,
or in the exercise of reasonable care should know that the same are erroneous.
Any certificate, statement or opinion of an officer, manager or general
partner of the Depositor or Mortgagors or of counsel thereto may be based,
insofar as it relates to accounting matters, upon a certificate or opinion of or
representations by an accountant or firm of accountants employed by the
Depositor or Mortgagors unless such certifying Person or counsel, as the case
may be, knows that the certificate or opinion or representations with respect to
the accounting matters upon which his certificate, statement or opinion may be
based as aforesaid are erroneous, or in the exercise of reasonable care should
know that the same are erroneous.
Any certificate or opinion of any independent firm of public accountants
filed with the Trustee shall contain a statement that such firm is independent.
Section 11.15. Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed to be an original, and all
of which together shall constitute one and the same instrument.
Section 11.16. Rule 144A Information. For so long as any of the
Certificates are "restricted securities" within the meaning of Rule 144A under
the Securities Act, the Trustee agrees to provide to any Certificateholder and
to any prospective purchaser of Certificates designated by such a
Certificateholder, upon the request of such Certificateholder or prospective
purchaser, any information prepared by the Trustee or the Servicer that may be
required to be provided to such holder or prospective purchaser to satisfy the
condition set forth in Rule 144A(d)(4) under the Securities Act. Any recipient
of informa-
176
tion provided pursuant to this Section 11.16 shall agree that such information
shall not be disclosed or used for any purpose other than the evaluation of the
Certificates by the prospective purchaser.
* * * * * * * * *
177
IN WITNESS WHEREOF, the parties hereto have caused their names
to be signed hereto by their respective officers thereunto duly authorized, all
as of the day and year first above written.
POTOMAC GURNEE FINANCE CORP.,
as Depositor
By _________________________________
Name:
Title:
AMRESCO MANAGEMENT, INC.,
as Servicer
By _________________________________
Name:
Title:
LASALLE NATIONAL BANK,
as Trustee
By _________________________________
Name:
Title:
ABN AMRO BANK N.V.,
as Fiscal Agent
By _________________________________
Name:
178
Title:
▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ )
: ss.:
COUNTY OF NEW YORK )
On this ______ day of December, 1996, before me personally appeared
_____________, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person who executed the within instrument as an
officer of Potomac Gurnee Finance Corp. and acknowledged to me that s/he
executed it.
___________________________
NOTARY PUBLIC
NOTARIAL SEAL
▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ )
: ss.:
COUNTY OF NEW YORK )
On this ______ day of December, 1996, before me personally appeared
_____________, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person who executed the within instrument as an
officer of AMRESCO Management, Inc. and acknowledged to me that s/he executed
it.
___________________________
NOTARY PUBLIC
NOTARIAL SEAL
▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ )
: ss.:
COUNTY OF NEW YORK )
On this ______ day of December, 1996, before me personally appeared
_____________, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person who executed the within instrument as an
officer of LaSalle National Bank and acknowledged to me that s/he executed it.
___________________________
NOTARY PUBLIC
NOTARIAL SEAL
▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ )
: ss.:
COUNTY OF NEW YORK )
On this ______ day of December, 1996, before me personally appeared
_____________, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person who executed the within instrument as an
officer of ABN AMRO Bank N.V. and acknowledged to me that s/he executed it.
___________________________
NOTARY PUBLIC
NOTARIAL SEAL
183
EXHIBIT A
FORM OF CLASS A CERTIFICATE
THIS CERTIFICATE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER ▇▇▇▇▇▇▇ ▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND THIS CERTIFICATE MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS CERTIFICATE IS HEREBY
NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF
SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS CERTIFICATE AGREES FOR THE BENEFIT OF THE DEPOSITOR THAT (i)
SUCH CERTIFICATE MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (a)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (b) TO
A PERSON WHO THE SELLER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER"
(AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, OR (c) PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), IN EACH
CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION, (ii) THE HOLDER WILL, AND
EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THIS
CERTIFICATE OF THE RESALE RESTRICTIONS SET FORTH IN (i) ABOVE, AND (iii) THE
CERTIFICATE REGISTRAR FOR THE OFFERED CERTIFICATES WILL NOT BE REQUIRED TO
ACCEPT THIS CERTIFICATE FOR REGISTRATION OF TRANSFER, EXCEPT UPON PRESENTATION
OF EVIDENCE SATISFACTORY TO THE TRUSTEE AND THE CERTIFICATE REGISTRAR THAT THE
RESTRICTIONS ON TRANSFER SET FORTH IN (i) ABOVE HAVE BEEN COMPLIED WITH.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN POTOMAC
GURNEE FINANCE CORP., THE SERVICER, THE TRUSTEE OR THE FISCAL AGENT REFERRED TO
BELOW OR ANY OF THEIR AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING
MORTGAGE LOAN IS GUARANTEED OR INSURED BY POTOMAC GURNEE FINANCE CORP. OR BY ANY
OF ITS AFFILIATES OR BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY OR BY ANY
OTHER PERSON OR ENTITY.
A-1
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT 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.]
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS BOTH
(i) A BENEFICIAL INTEREST IN A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT" AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G
AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") AND (ii)
A BENEFICIAL OWNERSHIP INTEREST IN A "GRANTOR TRUST" (AS THAT TERM IS DEFINED IN
SUBPART E, PART 1 OF SUBCHAPTER J, CHAPTER 1 OF SUBTITLE A OF THE CODE).
POTOMAC GURNEE FINANCE CORP.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
POTOMAC GURNEE FINANCE CORP., as Depositor
evidencing a percentage beneficial interest in all distributions allocable
to the Class A Certificates with respect to a Trust Fund consisting
primarily of a single mortgage loan with an initial principal balance of
approximately $284,000,000 (the "Deed of Trust Loan"), secured by two
cross-collateralized, cross-defaulted first priority liens on
substantially all of the properties known as Potomac ▇▇▇▇▇, a
value-oriented, super-regional shopping mall located in ▇▇▇▇ City,
Virginia and Gurnee ▇▇▇▇▇, a value-oriented, super-regional shopping mall
located in Gurnee, Illinois.
CERTIFICATE NUMBER: INITIAL PRINCIPAL BALANCE
A-2
OF THIS CERTIFICATE:
$___________________
DATE OF TRUST AND INITIAL CLASS A CERTIFICATE
SERVICING AGREEMENT: PRINCIPAL BALANCE:
December 1, 1996 $212,000,000
FIRST DISTRIBUTION DATE: CUSIP NUMBER: 737688 AA 9
January 21, 1997
THIS CERTIFIES THAT [CEDE & CO.] is the registered owner of a
Percentage Interest evidenced by this Certificate (obtained by dividing the
denomination of this Certificate by the aggregate of the denominations of all
Class A Certificates) in certain monthly distributions with respect to a Trust
Fund consisting primarily of the Deed of Trust Loan deposited by Potomac Gurnee
Finance Corp. (the "Depositor"). The Trust Fund was created pursuant to a Trust
and Servicing Agreement, dated as specified above (the "Agreement"), among the
Depositor, AMRESCO Management, Inc., as servicer (the "Servicer"), LaSalle
National Bank, as trustee (the "Trustee"), and ABN AMRO Bank N.V., as fiscal
agent (the "Fiscal Agent"), a summary of certain of the pertinent provisions of
which is set forth below. To the extent not defined herein, the capitalized
terms used herein have the meanings assigned to them in the Agreement.
This Certificate is one of a duly authorized issue of Certificates,
designated as Potomac Gurnee Finance Corp., Commercial Deed of Trust
Pass-ThroughCertificates, Class A (the "Class A Certificates"), Class B (the
"Class B Certificates"), Class C (the "Class C Certificates"), Class D (the
"Class D Certificates") and Class R (the "Class R Certificates" and together
with the Class A, Class B, Class C and Class D Certificates, the
"Certificates"), and is issued under and is subject to the terms, provisions
and conditions of the Agreement, to which Agreement the Holder of this
Certificate by virtue of the acceptance hereof assents and by which such Holder
is bound. The Class R Certificates are subordinate to each Class of Regular
Certificates in right of payment, the Class D Certificates are subordinate to
the Class C, Class B and Class A Certificates in right of payment, the Class
C Certificates are
A-3
subordinate to the Class B and Class A Certificates in right of payment and the
Class B Certificates are subordinate to the Class A Certificates in right of
payment, each to the extent described in the Agreement.
During each Interest Accrual Period until the Balloon Anticipated
Repayment Date, interest on the Class A Certificate will accrue at a rate per
annum (the "Class A Certificate Rate") equal to 6.8870%. During each Interest
Accrual Period after the Balloon Anticipated Repayment Date, interest on the
Class A Certificate will accrue at a rate per annum (the "Class A Adjusted
Certificate Rate") equal to 8.8870%. Interest on the Class A Certificates will
be computed for each Interest Accrual Period on the basis of a year of 360 days
composed of twelve 30-day months. Pursuant to the terms of the Agreement, the
Trustee or its designated paying agent will distribute from funds in the
Certificate Account on the 20th day of each month or, if such 20th day is not a
Business Day, the first Business Day immediately following (the "Distribution
Date"), commencing on January 21, 1997, to the Person in whose name this
Certificate is registered at the close of business on the last Business Day of
the calendar month immediately preceding the month in which such Distribution
Date occurs (the "Record Date"), payments of principal and interest on this
Certificate in the amounts and in the priorities set forth in the Agreement for
such Distribution Date.
Upon the occurrence and during the continuance of a Deed of Trust
LoanEvent of Default, the rate of interest to be paid on the entire principal
balance of each Component of the Deed of Trust Loan will be increased by 4% per
annum in excess of the interest rate on such Component at the time of such Deed
of Trust Loan Event of Default (such excess interest, "Default Rate
Interest"), until such Deed of Trust Loan Event of Default has been cured, by
payment or otherwise. Default Rate Interest paid on the Deed of Trust Loan, net
of amounts thereof applied by the Servicer to reimburse interest on P&I
Advances, will be passed through on the Class A Certificates in the manner,
and to the extent, provided in the Agreement but will not be payable on such
Certificates until the principal balance of each Class of Regular Certificates
has been reduced to zero.
A-4
Optional prepayments of principal with respect to the A Component of
the Deed of Trust Note are not permitted in whole or in part for the first
three years of the Deed of Trust Loan term. Thereafter, subject to certain
conditions described in the Agreement, optional prepayments of principal of
the Deed of Trust Loan are permitted in whole or in part, provided that any
such prepayment made prior to the date that is six months prior to the Balloon
Anticipated Repayment Date is accompanied by a Prepayment Premium equal to the
greater of (x) a Yield Maintenance Premium (as described in the Agreement)
and (y) one percent (1%) of that portion of the Deed of Trust Loan principal
balance to be prepaid. Such optional payments of principal and premium, if any,
will be distributed on the next succeeding Distribution Date in the manner set
forth in the Agreement. Prepayment Premiums are also payable in the case of
all other prepayments on the Deed of Trust Loan, whether voluntary or
involuntary, except for prepayments from Loss Proceeds required by the terms of
the Mortgages and except for prepayments made on or after the date that is six
months prior to the Balloon Anticipated Repayment Date.
Distributions on this Certificate will be made on each Distribution
Date by the Trustee or its designated paying agent either by check mailed to the
address of the Holder hereof, as such name and address shall appear on the
Certificate Register, or, upon written request, containing all necessary wiring
instructions, by a Holder hereof holding in excess of $5,000,000 in initial
Certificate Principal Balance, delivered at least five Business Days prior to
the related Record Date, by wire transfer in immediately available funds to the
account of such Holder maintained at a bank in the United States, or if this
Certificate is held by a Clearing Agency, by wire transfer in immediately
available funds to a bank account maintained in the United States, or by such
other means of payment as the Holder hereof and the Paying Agent shall agree
upon. Notwithstanding the above, the final distribution on this Certificate will
be made after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose and specified in such notice of final
distribution.
The Depositor intends to cause an election to be made to treat
certain assets in the Trust Fund as a real estate
A-5
mortgage investment conduit ("REMIC"). The Class A Certificates, Class B
Certificates, Class C Certificates and Class D Certificates will constitute, in
part, beneficial interests in the "regular interests" in the REMIC and the Class
R Certificate will constitute the "residual interest" in the REMIC. The Class A
Certificates, Class B Certificates, Class C Certificates and Class D
Certificates will also constitute beneficial interests in a grantor trust
consisting of that part of the Trust Fund representing the Default Rate Interest
and the Default Interest Account. Each Holder of this Certificate, by acceptance
hereof, and each beneficial owner of this Certificate, agrees to treat, and to
take no action inconsistent with the treatment of, this Certificate in
accordance with this paragraph for purposes of federal income taxes, state and
local income and franchise taxes and other taxes imposed on or measured by
income.
The Trustee will cause to be kept at the Corporate Trust Office or
at the office of its designated agent, a Certificate Register in which, subject
to such reasonable regulations as it may prescribe, the Trustee will provide for
the registration of the Certificates and of transfers and exchanges of the
Certificates. Upon surrender for registration of transfer of any Certificate at
any office or agency of the Trustee maintained for such purposes, the Trustee or
a designated Authenticating Agent will, subject to the limitations set forth in
the Agreement, authenticate and deliver, in the name of the designated
transferee or transferees, a Certificate of a like Class and aggregate
Percentage Interest and dated the date of authentication.
No service charge will be made for any transfer or exchange of the
Certificate, but the Trustee or its designated agent may require payment of a
sum sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of the Certificate. The Servicer, the
Trustee, the Paying Agent and the Certificate Registrar may treat the person in
whose name any Certificate is registered as the owner of such Certificate and
the Percentage Interest in the Trust Fund evidenced thereby for the purpose of
receiving distributions pursuant to the Agreement and for all other purposes
whatsoever, and neither the Servicer nor the Trustee,
A-6
the Paying Agent and the Certificate Registrar will be affected by notice to the
contrary.
The Agreement may be amended from time to time by the Depositor, the
Servicer, the Trustee and the Fiscal Agent, without the consent of any of the
Certificateholders, (i) to cure any ambiguity, (ii) to correct or supplement any
provisions therein which may be inconsistent with any other provisions therein,
(iii) to maintain the qualification of the Trust REMIC as a REMIC or to maintain
the qualification of the Grantor Trust as a Grantor Trust (under the Grantor
Trust Provisions), or (iv) to make any other provisions with respect to matters
or questions arising under the Agreement, provided that such action shall not
adversely affect in any material respect the interests of any Holder without the
consent of each Holder adversely affected thereby in the case of an amendment
pursuant to (i), (ii) or (iv) or adversely affect the status of the Trust REMIC
as a REMIC or the status of the Grantor Trust as a Grantor Trust (under the
Grantor Trust Provisions).
The Agreement may also be amended from time to time by the
Depositor, the Servicer, the Trustee and the Fiscal Agent with the consent of
Certificateholders evidencing, in the aggregate, not less than 66-2/3% of the
Voting Rights of the Certificates, for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of the Agreement
or of modifying in any manner the rights of Certificateholders; provided,
however, that no such amendment shall (i) reduce in any manner the amount of,
delay the timing of, or change the manner in which payments received on or with
respect to the Deed of Trust Loan are required to be distributed in respect of
any Certificate without the consent of the Holder of such Certificate, (ii)
adversely affect in any material respect the interests of the Holders of a
Class of the Certificates in a manner other than as set forth in (i) above
without the consent of the Certificateholders of such Class evidencing, in the
aggregate, not less than 100% of the Voting Rights of the Certificates of such
Class, (iii) reduce the aforesaid percentages of the Certificates, the Holders
of which are required to consent to any such amendment without the consent of
100% of the Certificateholders of the affected Class, (iv) alter the
obligations of the Servicer to make an Advance or alter the
A-7
servicing standards set forth in the Agreement, or (v) amend any provisions of
the Agreement relating to the administration of the Trust REMIC as a REMIC
without the consent of the Class R Certificateholders.
The respective obligations and responsibilities of the Servicer, the
Depositor, the Paying Agent, the Trustee and the Fiscal Agent created under the
Agreement (other than the obligation of the Trustee or its designated paying
agent to make certain payments to Certificateholders after the Final
Distribution Date) shall terminate upon the last action required to be taken by
the Trustee or its designated paying agent on the Final Distribution Date
pursuant to Article X of the Agreement upon the later of (i) the final payment
on the Deed of Trust Loan or (ii) the liquidation of the Foreclosed Property;
provided, however, that in no event shall the trust created pursuant to the
terms of the Agreement continue beyond the expiration of twenty-one years from
the death of the last survivor of the descendants of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the late
ambassador of the United States to the Court of St. James's, living on the date
hereof.
THIS CERTIFICATE AND THE AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH, AND BE GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK.
Unless the certificate of authentication hereon has been executed by
the Trustee or by its designated Authenticating Agent, by manual signature, this
Certificate shall not be entitled to any benefit under the Agreement or be valid
for any purpose.
A-8
IN WITNESS WHEREOF, the Trustee has caused this Class A Certificate
to be duly executed.
LASALLE NATIONAL BANK, as
Trustee
By:________________________
Name:
Title:
Dated __________ ____, 199__
CERTIFICATE OF AUTHENTICATION
THIS IS ONE OF THE CLASS A CERTIFICATES REFERRED TO IN THE
WITHIN-MENTIONED AGREEMENT.
LASALLE NATIONAL BANK,
as Authenticating Agent
By: _________________________
Authorized Signatory
A-9
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
________________________________________________________________________________
(Please Print or Typewrite Name and Address of Assignee)
________________________________________________________________________________
the undivided interest in the Trust Fund evidenced by the within Certificate,
and all rights thereunder, and hereby authorizes the transfer of registration of
such interest to the assignee on the Certificate Register.
I further direct the Trustee to issue a new Certificate of the same Class and of
a like Certificate Principal Balance and undivided interest in the Trust Fund to
the above-named assignee and to deliver such certificate to the following
address
________________________________________________________________________________
Date: _____________________ ______________________________________
Signature by or on behalf of
assignor (signature must be
signed as registered)
(PLEASE INSERT SOCIAL SECURITY* OR U.S. TAXPAYER IDENTIFICATION
NUMBER OF ASSIGNEE)
____________________________
____________________________
(Signature Guaranteed)
A-10
(*This information, which is voluntary, is being requested to ensure that the
assignee will not be subject to backup withholding under Section 3406 of the
Code.)
A-11
EXHIBIT B
FORM OF CLASS B CERTIFICATE
THIS CERTIFICATE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER ▇▇▇▇▇▇▇ ▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND THIS CERTIFICATE MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS CERTIFICATE IS HEREBY
NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF
SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS CERTIFICATE AGREES FOR THE BENEFIT OF THE DEPOSITOR THAT (i)
SUCH CERTIFICATE MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (a)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (b) TO
A PERSON WHO THE SELLER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER"
(AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, OR (c) PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), IN EACH
CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION, (ii) THE HOLDER WILL, AND
EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THIS
CERTIFICATE OF THE RESALE RESTRICTIONS SET FORTH IN (i) ABOVE, AND (iii) THE
CERTIFICATE REGISTRAR FOR THE OFFERED CERTIFICATES WILL NOT BE REQUIRED TO
ACCEPT THIS CERTIFICATE FOR REGISTRATION OF TRANSFER, EXCEPT UPON PRESENTATION
OF EVIDENCE SATISFACTORY TO THE TRUSTEE AND THE CERTIFICATE REGISTRAR THAT THE
RESTRICTIONS ON TRANSFER SET FORTH IN (i) ABOVE HAVE BEEN COMPLIED WITH.
EITHER (i) THE HOLDER OF THIS CERTIFICATE IS NOT AN EMPLOYEE BENEFIT OR OTHER
PLAN THAT IS SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED ("ERISA"), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED (THE "CODE"), AND THE FUNDS APPLIED TO THE PURCHASE OF THIS CERTIFICATE
DO NOT INCLUDE THE "PLAN ASSETS" OF ANY SUCH PLAN OR
B-1
(ii) THE PURCHASE OF THIS CERTIFICATE BY THE HOLDER WILL NOT CONSTITUTE OR
RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR
SECTION 4975 OF THE CODE.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN POTOMAC
GURNEE FINANCE CORP., THE SERVICER, THE TRUSTEE OR THE FISCAL AGENT REFERRED TO
BELOW OR ANY OF THEIR AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING
MORTGAGE LOAN IS GUARANTEED OR INSURED BY POTOMAC GURNEE FINANCE CORP. OR BY ANY
OF ITS AFFILIATES OR BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY OR BY ANY
OTHER PERSON OR ENTITY.
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES TO THE EXTENT
DESCRIBED IN THE TRUST AND SERVICING AGREEMENT REFERRED TO HEREIN.
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT 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.]
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS BOTH
(i) A BENEFICIAL INTEREST IN A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT" AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G
AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") AND (ii)
A BENEFICIAL OWNERSHIP INTEREST IN A "GRANTOR TRUST" (AS THAT TERM IS DEFINED IN
SUBPART E, PART 1 OF SUBCHAPTER J, CHAPTER 1 OF SUBTITLE A OF THE CODE).
POTOMAC GURNEE FINANCE CORP.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
POTOMAC GURNEE FINANCE CORP., as Depositor
B-2
evidencing a percentage beneficial interest in all distributions allocable
to the Class B Certificates with respect to a Trust Fund consisting
primarily of a single mortgage loan with an initial principal balance of
approximately $284,000,000 (the "Deed of Trust Loan"), secured by two
cross-collateralized, cross-defaulted first priority liens on
substantially all of the properties known as Potomac ▇▇▇▇▇, a
value-oriented, super-regional shopping mall located in ▇▇▇▇ City,
Virginia and Gurnee ▇▇▇▇▇, a value-oriented, super-regional shopping mall
located in Gurnee, Illinois.
B-3
CERTIFICATE NUMBER: INITIAL PRINCIPAL BALANCE
OF THIS CERTIFICATE:
$________________________
DATE OF TRUST AND INITIAL CLASS B CERTIFICATE
SERVICING AGREEMENT: PRINCIPAL BALANCE:
December 1, 1996 $27,000,000
FIRST DISTRIBUTION DATE: CUSIP NUMBER: 737688 AB 7
January 21, 1997
THIS CERTIFIES THAT [CEDE & CO.] is the registered owner of a
Percentage Interest evidenced by this Certificate (obtained by dividing the
denomination of this Certificate by the aggregate of the denominations of all
Class B Certificates) in certain monthly distributions with respect to a Trust
Fund consisting primarily of the Deed of Trust Loan deposited by Potomac Gurnee
Finance Corp. (the "Depositor"). The Trust Fund was created pursuant to a Trust
and Servicing Agreement, dated as specified above (the "Agreement"), among the
Depositor, AMRESCO Management, Inc., as servicer (the "Servicer"), LaSalle
National Bank, as trustee (the "Trustee"), and ABN AMRO Bank N.V., as fiscal
agent (the "Fiscal Agent"), a summary of certain of the pertinent provisions of
which is set forth below. To the extent not defined herein, the capitalized
terms used herein have the meanings assigned to them in the Agreement.
This Certificate is one of a duly authorized issue of Certificates,
designated as Potomac Gurnee Finance Corp., Commercial Deed of Trust
Pass-Through Certificates, Class A (the "Class A Certificates"), Class B
(the "Class B Certificates"), Class C (the "Class C Certificates"), Class D
(the "Class D Certificates") and Class R (the "Class R Certificates" and
together with the Class A, Class B, Class C and Class D Certificates, the
"Certificates"), and is issued under and is subject to the terms, provisions
and conditions of the Agreement, to which Agreement the Holder of this
Certificate by virtue of the acceptance hereof assents and by which such Holder
is bound. The Class R Certificates are subordinate to each Class of Regular
Certificates in right of payment, the Class D Certificates are subordinate to
the Class C, Class B and Class A
B-4
Certificates in right of payment, the Class C Certificates are subordinate to
the Class B and Class A Certificates in right of payment and the Class B
Certificates are subordinate to the Class A Certificates in right of payment,
each to the extent described in the Agreement.
During each Interest Accrual Period until the Balloon Anticipated
Repayment Date, interest on the Class B Certificate will accrue at a rate per
annum (the "Class B Certificate Rate") equal to 7.0030%. During each Interest
Accrual Period after the Balloon Anticipated Repayment Date, interest on the
Class B Certificate will accrue at a rate per annum (the "Class B Adjusted
Certificate Rate") equal to 9.0030%. Interest on the Class B Certificates will
be computed for each Interest Accrual Period on the basis of a year of 360 days
composed of twelve 30-day months. Pursuant to the terms of the Agreement, the
Trustee or its designated paying agent will distribute from funds in the
Certificate Account on the 20th day of each month or, if such 20th day is not a
Business Day, the first Business Day immediately following (the "Distribution
Date"), commencing on January 21, 1997, to the Person in whose name this
Certificate is registered at the close of business on the last Business Day of
the calendar month immediately preceding the month in which such Distribution
Date occurs (the "Record Date"), payments of principal and interest on this
Certificate in the amounts and in the priorities set forth in the Agreement for
such Distribution Date.
Upon the occurrence and during the continuance of a Deed of Trust
Loan Event of Default, the rate of interest to be paid on the entire principal
balance of each Component of the Deed of Trust Loan will be increased by 4% per
annum in excess of the interest rate on such Component at the time of such
Deed of Trust Loan Event of Default (such excess interest, "Default Rate
Interest"), until such Deed of Trust Loan Event of Default has been cured, by
payment or otherwise. Default Rate Interest paid on the Deed of Trust Loan,
net of amounts thereof applied by the Servicer to reimburse interest on P&I
Advances, will be passed through on the Class B Certificates in the manner,
and to the extent, provided in the Agreement but will not be payable on such
Certificates until the principal balance of each Class of Regular Certificates
has been reduced to zero.
B-5
Optional prepayments of principal with respect to the B Component
of the Deed of Trust Note are not permitted in whole or in part for the first
three years of the Deed of Trust Loan term. Thereafter, subject to certain
conditions described in the Agreement, optional prepayments of principal of
the Deed of Trust Loan are permitted in whole or in part, provided that any
such prepayment made prior to the date that is six months prior to the Balloon
Anticipated Repayment Date is accompanied by a Prepayment Premium equal to
the greater of (x) a Yield Maintenance Premium (as described in the Agreement)
and (y) one percent (1%) of that portion of the Deed of Trust Loan principal
balance to be prepaid. Such optional payments of principal and premium, if any,
will be distributed on the next succeeding Distribution Date in the manner set
forth in the Agreement. Prepayment Premiums are also payable in the case of
all other prepayments on the Deed of Trust Loan, whether voluntary or
involuntary, except for prepayments from Loss Proceeds required by the terms
of the Mortgages and except for prepayments made on or after the date that is
six months prior to the Balloon Anticipated Repayment Date.
Distributions on this Certificate will be made on each Distribution
Date by the Trustee or its designated paying agent either by check mailed to the
address of the Holder hereof, as such name address shall appear on the
Certificate Register, or, upon written request, containing all necessary wiring
instructions, by a Holder hereof holding in excess of $5,000,000 in initial
Certificate Principal Balance, delivered at least five Business Days prior to
the related Record Date, by wire transfer in immediately available funds to the
account of such Holder maintained at a bank in the United States, or if this
Certificate is held by a Clearing Agency, by wire transfer in immediately
available funds to a bank account maintained in the United States, or by such
other means of payment as the Holder hereof and the Paying Agent shall agree
upon. Notwithstanding the above, the final distribution on this Certificate will
be made after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose and specified in such notice of final
distribution.
B-6
The Depositor intends to cause an election to be made to treat
certain assets in the Trust Fund as a real estate mortgage investment conduit
("REMIC"). The Class A Certificates, Class B Certificates, Class C Certificates
and Class D Certificates will constitute, in part, beneficial interests in the
"regular interests" in the REMIC and the Class R Certificate will constitute the
"residual interest" in the REMIC. The Class A Certificates, Class B
Certificates, Class C Certificates and Class D Certificates will also constitute
beneficial interests in a grantor trust consisting of that part of the Trust
Fund representing the Default Rate Interest and the Default Interest Account.
Each Holder of this Certificate, by acceptance hereof, and each beneficial owner
of this Certificate, agrees to treat, and to take no action inconsistent with
the treatment of, this Certificate in accordance with this paragraph for
purposes of federal income taxes, state and local income and franchise taxes and
other taxes imposed on or measured by income.
The Trustee will cause to be kept at the Corporate Trust Office or
at the office of its designated agent, a Certificate Register in which, subject
to such reasonable regulations as it may prescribe, the Trustee will provide for
the registration of the Certificates and of transfers and exchanges of the
Certificates. Upon surrender for registration of transfer of any Certificate at
any office or agency of the Trustee maintained for such purposes, the Trustee or
a designated Authenticating Agent will, subject to the limitations set forth in
the Agreement, authenticate and deliver, in the name of the designated
transferee or transferees, a Certificate of a like Class and aggregate
Percentage Interest and dated the date of authentication.
No service charge will be made for any transfer or exchange of the
Certificate, but the Trustee or its designated agent may require payment of a
sum sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of the Certificate. The Servicer, the
Trustee, the Paying Agent and the Certificate Registrar may treat the person in
whose name any Certificate is registered as the owner of such Certificate and
the Percentage Interest in the Trust Fund evidenced thereby for the purpose of
receiving distributions pursuant to the Agreement and for all other
B-7
purposes whatsoever, and neither the Servicer nor the Trustee, the Paying Agent
and the Certificate Registrar will be affected by notice to the contrary.
The Agreement may be amended from time to time by the Depositor, the
Servicer, the Trustee and the Fiscal Agent, without the consent of any of the
Certificateholders, (i) to cure any ambiguity, (ii) to correct or supplement any
provisions therein which may be inconsistent with any other provisions therein,
(iii) to maintain the qualification of the Trust REMIC as a REMIC or to maintain
the qualification of the Grantor Trust as a Grantor Trust (under the Grantor
Trust Provisions), or (iv) to make any other provisions with respect to matters
or questions arising under the Agreement, provided that such action shall not
adversely affect in any material respect the interests of any Holder without the
consent of each Holder adversely affected thereby in the case of an amendment
pursuant to (i), (ii) or (iv) or adversely affect the status of the Trust REMIC
as a REMIC or the status of the Grantor Trust as a Grantor Trust (under the
Grantor Trust Provisions).
The Agreement may also be amended from time to time by the
Depositor, the Servicer, the Trustee and the Fiscal Agent, with the consent of
Certificateholders evidencing, in the aggregate, not less than 66-2/3% of the
Voting Rights of the Certificates, for the purpose of adding any provisions to
or changing in any manner or eliminating any of the provisions of the Agreement
or of modifying in any manner the rights of Certificateholders; provided,
however, that no such amendment shall (i) reduce in any manner the amount of,
delay the timing of, or change the manner in which payments received on or with
respect to the Deed of Trust Loan are required to be distributed in respect of
any Certificate without the consent of the Holder of such Certificate: (ii)
adversely affect in any material respect the interests of the Holders of a
Class of the Certificates in a manner other than as set forth in (i) above
without the consent of the Certificateholders of such Class evidencing, in
the aggregate, not less than 100% of the Voting Rights of the Certificates of
such Class, (iii) reduce the aforesaid percentages of the Certificates, the
Holders of which are required to consent to any such amendment without the
consent of 100% of the Certificateholders of the affected Class, (iv) alter
B-8
the obligations of the Servicer to make an Advance or alter the servicing
standards set forth in the Agreement, or (v) amend any provisions of the
Agreement relating to the administration of the Trust REMIC as a REMIC without
the consent of the Class R Certificateholders.
The respective obligations and responsibilities of the Servicer, the
Depositor, the Paying Agent, the Trustee and the Fiscal Agent created under the
Agreement (other than the obligation of the Trustee or its designated paying
agent to make certain payments to Certificateholders after the Final
Distribution Date) shall terminate upon the last action required to be taken by
the Trustee or its designated paying agent on the Final Distribution Date
pursuant to Article X of the Agreement upon the later of (i) the final payment
on the Deed of Trust Loan or (ii) the liquidation of the Foreclosed Property;
provided, however, that in no event shall the trust created pursuant to the
terms of the Agreement continue beyond the expiration of twenty-one years from
the death of the last survivor of the descendants of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the late
ambassador of the United States to the Court of St. James's, living on the date
hereof.
THIS CERTIFICATE AND THE AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH, AND BE GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK.
Unless the certificate of authentication hereon has been executed by
the Trustee or by its designated Authenticating Agent, by manual signature, this
Certificate shall not be entitled to any benefit under the Agreement or be valid
for any purpose.
B-9
IN WITNESS WHEREOF, the Trustee has caused this Class B Certificate
to be duly executed.
LASALLE NATIONAL BANK, as
Trustee
By: ______________________________
Name:
Title:
Dated: _________ ___, 199__
CERTIFICATE OF AUTHENTICATION
THIS IS ONE OF THE CLASS B CERTIFICATES REFERRED TO IN THE
WITHIN-MENTIONED AGREEMENT.
LASALLE NATIONAL BANK,
as Authenticating Agent
By: ______________________________
Authorized Signatory
B-10
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
________________________________________________________________________________
(Please Print or Typewrite Name and Address of Assignee)
________________________________________________________________________________
the undivided interest in the Trust Fund evidenced by the within Certificate,
and all rights thereunder, and hereby authorizes the transfer of registration of
such interest to the assignee on the Certificate Register.
I further direct the Trustee to issue a new Certificate of the same Class and of
a like Certificate Principal Balance and undivided interest in the Trust Fund to
the above-named assignee and to deliver such certificate to the following
address
________________________________________________________________________________
Date: _____________________ ______________________________________
Signature by or on behalf of
assignor (signature must be
signed as registered)
(PLEASE INSERT SOCIAL SECURITY* OR U.S. TAXPAYER IDENTIFICATION
NUMBER OF ASSIGNEE)
___________________________
___________________________
(Signature Guaranteed)
B-11
(*This information, which is voluntary, is being requested to ensure that the
assignee will not be subject to backup withholding under Section 3406 of the
Code.)
B-12
EXHIBIT C
FORM OF CLASS C CERTIFICATE
THIS CERTIFICATE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER ▇▇▇▇▇▇▇ ▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND THIS CERTIFICATE MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS CERTIFICATE IS HEREBY
NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF
SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS CERTIFICATE AGREES FOR THE BENEFIT OF THE DEPOSITOR THAT (i)
SUCH CERTIFICATE MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (a)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (b) TO
A PERSON WHO THE SELLER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER"
(AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, OR (c) PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), IN EACH
CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION, (ii) THE HOLDER WILL, AND
EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THIS
CERTIFICATE OF THE RESALE RESTRICTIONS SET FORTH IN (i) ABOVE, AND (iii) THE
CERTIFICATE REGISTRAR FOR THE OFFERED CERTIFICATES WILL NOT BE REQUIRED TO
ACCEPT THIS CERTIFICATE FOR REGISTRATION OF TRANSFER, EXCEPT UPON PRESENTATION
OF EVIDENCE SATISFACTORY TO THE TRUSTEE AND THE CERTIFICATE REGISTRAR THAT THE
RESTRICTIONS ON TRANSFER SET FORTH IN (i) ABOVE HAVE BEEN COMPLIED WITH.
EITHER (i) THE HOLDER OF THIS CERTIFICATE IS NOT AN EMPLOYEE BENEFIT OR OTHER
PLAN THAT IS SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED ("ERISA"), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED (THE "CODE"), AND THE FUNDS APPLIED TO THE PURCHASE OF THIS CERTIFICATE
DO NOT INCLUDE THE "PLAN ASSETS" OF ANY SUCH PLAN OR
C-1
(ii) THE PURCHASE OF THIS CERTIFICATE BY THE HOLDER WILL NOT CONSTITUTE OR
RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR
SECTION 4975 OF THE CODE.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN POTOMAC
GURNEE FINANCE CORP., THE SERVICER, THE TRUSTEE OR THE FISCAL AGENT REFERRED TO
BELOW OR ANY OF THEIR AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING
MORTGAGE LOAN IS GUARANTEED OR INSURED BY POTOMAC GURNEE FINANCE CORP. OR BY ANY
OF ITS AFFILIATES OR BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY OR BY ANY
OTHER PERSON OR ENTITY.
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A AND CLASS B CERTIFICATES TO THE
EXTENT DESCRIBED IN THE TRUST AND SERVICING AGREEMENT REFERRED TO HEREIN.
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT 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.]
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS BOTH
(i) A BENEFICIAL INTEREST IN A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT" AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G
AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") AND (ii)
A BENEFICIAL OWNERSHIP INTEREST IN A "GRANTOR TRUST" (AS THAT TERM IS DEFINED IN
SUBPART E, PART 1 OF SUBCHAPTER J, CHAPTER 1 OF SUBTITLE A OF THE CODE).
POTOMAC GURNEE FINANCE CORP.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
POTOMAC GURNEE FINANCE CORP., as Depositor
C-2
evidencing a percentage beneficial interest in all distributions allocable
to the Class C Certificates with respect to a Trust Fund consisting
primarily of a single mortgage loan with an initial principal balance of
approximately $284,000,000 (the "Mortgage Loan"), secured by two
cross-collateralized, cross-defaulted first priority liens on
substantially all of the properties known as Potomac ▇▇▇▇▇, a
value-oriented, super-regional shopping mall located in ▇▇▇▇ City,
Virginia and Gurnee ▇▇▇▇▇, a value-oriented, super-regional shopping mall
located in Gurnee, Illinois.
C-3
CERTIFICATE NUMBER: INITIAL PRINCIPAL BALANCE
OF THIS CERTIFICATE:
$________________________
DATE OF TRUST AND INITIAL CLASS C CERTIFICATE
SERVICING AGREEMENT: PRINCIPAL BALANCE:
December 1, 1996 $15,000,000
FIRST DISTRIBUTION DATE: CUSIP NUMBER: 737688 AC 5
January 21, 1997
THIS CERTIFIES THAT [CEDE & CO.] is the registered owner of a
Percentage Interest evidenced by this Certificate (obtained by dividing the
denomination of this Certificate by the aggregate of the denominations of all
Class C Certificates) in certain monthly distributions with respect to a Trust
Fund consisting primarily of the Mortgage Loan deposited by Potomac Gurnee
Finance Corp. (the "Depositor"). The Trust Fund was created pursuant to a Trust
and Servicing Agreement, dated as specified above (the "Agreement"), among the
Depositor, AMRESCO Management, Inc., as servicer (the "Servicer"), LaSalle
National Bank, as trustee (the "Trustee"), and ABN AMRO Bank N.V., as fiscal
agent (the "Fiscal Agent"), a summary of certain of the pertinent provisions of
which is set forth below. To the extent not defined herein, the capitalized
terms used herein have the meanings assigned to them in the Agreement.
This Certificate is one of a duly authorized issue of
Certificates, designated as Potomac Gurnee Finance Corp., Commercial Deed of
Trust Pass-Through Certificates, Class A (the "Class A Certificates"), Class
B (the "Class B Certificates"), Class C (the "Class C Certificates"), Class D
(the "Class D Certificates") and Class R (the "Class R Certificates" and
together with the Class A, Class B, Class C and Class D Certificates, the
"Certificates"), and is issued under and is subject to the terms, provisions
and conditions of the Agreement, to which Agreement the Holder of this
Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound. The Class R Certificates are subordinate to each Class of
Regular Certificates in right of payment, the Class D Certificates are
subordinate to the Class C, Class B and Class A
C-4
Certificates in right of payment, the Class C Certificates are subordinate to
the Class B and Class A Certificates in right of payment and the Class B
Certificates are subordinate to the Class A Certificates in right of payment,
each to the extent described in the Agreement.
During each Interest Accrual Period until the Balloon Anticipated
Repayment Date, interest on the Class C Certificate will accrue at a rate per
annum (the "Class C Certificate Rate") equal to 7.2170%. During each Interest
Accrual Period after the Balloon Anticipated Repayment Date, interest on the
Class C Certificate will accrue at a rate per annum (the "Class C Adjusted
Certificate Rate") equal to 9.2170%. Interest on the Class C Certificates will
be computed for each Interest Accrual Period on the basis of a year of 360 days
composed of twelve 30-day months. Pursuant to the terms of the Agreement, the
Trustee or its designated paying agent will distribute from funds in the
Certificate Account on the 20th day of each month or, if such 20th day is not a
Business Day, the first Business Day immediately following (the "Distribution
Date"), commencing on January 21, 1997, to the Person in whose name this
Certificate is registered at the close of business on the last Business Day of
the calendar month immediately preceding the month in which such Distribution
Date occurs (the "Record Date"), payments of principal and interest on this
Certificate in the amounts and in the priorities set forth in the Agreement for
such Distribution Date.
Upon the occurrence and during the continuance of a Mortgage
Loan Event of Default, the rate of interest to be paid on the entire
principal balance of each Component of the Mortgage Loan will be
increased by 4% per annum in excess of the interest rate on such Component at
the time of such Mortgage Loan Event of Default (such excess interest,
"Default Rate Interest"), until such Mortgage Loan Event of Default has
been cured, by payment or otherwise. Default Rate Interest paid on the Deed
of Trust Loan, net of amounts thereof applied by the Servicer to reimburse
interest on P&I Advances, will be passed through on the Class C Certificates
in the manner, and to the extent, provided in the Agreement but will not be
payable on such Certificates until the principal balance of each Class of
Regular Certificates has been reduced to zero.
C-5
Optional prepayments of principal with respect to the C Component
of the Mortgage Note are not permitted in whole or in part for the first
three years of the Mortgage Loan term. Thereafter, subject to certain
conditions described in the Agreement, optional prepayments of principal of
the Mortgage Loan are permitted in whole or in part, provided that any
such prepayment made prior to the date that is six months prior to the
Balloon Anticipated Repayment Date is accompanied by a Prepayment Premium
equal to the greater of (x) a Yield Maintenance Premium (as described in the
Agreement) and (y) one percent (1%) of that portion of the Mortgage Loan
principal balance to be prepaid. Such optional payments of principal and
premium, if any, will be distributed on the next succeeding Distribution Date
in the manner set forth in the Agreement. Prepayment Premiums are also
payable in the case of all other prepayments on the Mortgage Loan,
whether voluntary or involuntary, except for prepayments from Loss Proceeds
required by the terms of the Mortgages and except for prepayments made on or
after the date that is six months prior to the Balloon Anticipated Repayment
Date.
Distributions on this Certificate will be made on each Distribution
Date by the Trustee or its designated paying agent either by check mailed to the
address of the Holder hereof, as such name and address shall appear on the
Certificate Register, or, upon written request, containing all necessary wiring
instructions, by a Holder hereof holding in excess of $5,000,000 in initial
Certificate Principal Balance, delivered at least five Business Days prior to
the related Record Date, by wire transfer in immediately available funds to the
account of such Holder maintained at a bank in the United States, or if this
Certificate is held by a Clearing Agency, by wire transfer in immediately
available funds to a bank account maintained in the United States, or by such
other means of payment as the Holder hereof and the Paying Agent shall agree
upon. Notwithstanding the above, the final distribution on this Certificate will
be made after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose and specified in such notice of final
distribution.
C-6
The Depositor intends to cause an election to be made to treat
certain assets in the Trust Fund as a real estate mortgage investment conduit
("REMIC"). The Class A Certificates, Class B Certificates, Class C Certificates
and Class D Certificates will constitute, in part, beneficial interests in the
"regular interests" in the REMIC and the Class R Certificate will constitute the
"residual interest" in the REMIC. The Class A Certificates, Class B
Certificates, Class C Certificates and Class D Certificates will also constitute
beneficial interests in a grantor trust consisting of that part of the Trust
Fund representing the Default Rate Interest and the Default Interest Account.
Each Holder of this Certificate, by acceptance hereof, and each beneficial owner
of this Certificate, agrees to treat, and to take no action inconsistent with
the treatment of, this Certificate in accordance with this paragraph for
purposes of federal income taxes, state and local income and franchise taxes and
other taxes imposed on or measured by income.
The Trustee will cause to be kept at the Corporate Trust Office or
at the office of its designated agent, a Certificate Register in which, subject
to such reasonable regulations as it may prescribe, the Trustee will provide for
the registration of the Certificates and of transfers and exchanges of the
Certificates. Upon surrender for registration of transfer of any Certificate at
any office or agency of the Trustee maintained for such purposes, the Trustee or
a designated Authenticating Agent will, subject to the limitations set forth in
the Agreement, authenticate and deliver, in the name of the designated
transferee or transferees, a Certificate of a like Class and aggregate
Percentage Interest and dated the date of authentication.
No service charge will be made for any transfer or exchange of the
Certificate, but the Trustee or its designated agent may require payment of a
sum sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of the Certificate. The Servicer, the
Trustee, the Paying Agent and the Certificate Registrar may treat the person in
whose name any Certificate is registered as the owner of such Certificate and
the Percentage Interest in the Trust Fund evidenced thereby for the purpose of
receiving distributions pursuant to the Agreement and for all other
C-7
purposes whatsoever, and neither the Servicer nor the Trustee, the Paying Agent
and the Certificate Registrar will be affected by notice to the contrary.
The Agreement may be amended from time to time by the Depositor, the
Servicer, the Trustee and the Fiscal Agent, without the consent of any of the
Certificateholders, (i) to cure any ambiguity, (ii) to correct or supplement any
provisions therein which may be inconsistent with any other provisions therein,
(iii) to maintain the qualification of the Trust REMIC as a REMIC or to maintain
the qualification of the Grantor Trust as a Grantor Trust (under the Grantor
Trust Provisions), or (iv) to make any other provisions with respect to matters
or questions arising under the Agreement, provided that such action shall not
adversely affect in any material respect the interests of any Holder without the
consent of each Holder adversely affected thereby in the case of an amendment
pursuant to (i), (ii) or (iv) or adversely affect the status of the Trust REMIC
as a REMIC or the status of the Grantor Trust as a Grantor Trust (under the
Grantor Trust Provisions).
The Agreement may also be amended from time to time by the
Depositor, the Servicer, the Trustee and the Fiscal Agent with the consent of
Certificateholders evidencing, in the aggregate, not less than 66-2/3% of the
Voting Rights of the Certificates, for the purpose of adding any provisions
to or changing in any manner or eliminating any of the provisions of the
Agreement or of modifying in any manner the rights of Certificateholders;
provided, however, that no such amendment shall (i) reduce in any manner the
amount of, delay the timing of, or change the manner in which payments
received on or with respect to the Mortgage Loan are required to be
distributed in respect of any Certificate without the consent of the Holder
of such Certificate; (ii) adversely affect in any material respect the
interests of the Holders of a Class of the Certificates in a manner other
than as set forth in (i) above without the consent of the Certificateholders
of such Class evidencing, in the aggregate, not less than 100% of the Voting
Rights of the Certificates of such Class, (iii) reduce the aforesaid
percentages of the Certificates, the Holders of which are required to consent
to any such amendment without the consent of 100% of the Certificateholders
of the affected Class, (iv) alter
C-8
the obligations of the Servicer to make an Advance or alter the servicing
standards set forth in the Agreement, or (v) amend any provisions of the
Agreement relating to the administration of the Trust REMIC as a REMIC without
the consent of the Class R Certificateholders.
The respective obligations and responsibilities of the Servicer, the
Depositor, the Paying Agent, the Trustee and the Fiscal Agent created under the
Agreement (other than the obligation of the Trustee or its designated paying
agent to make certain payments to Certificateholders after the Final
Distribution Date) shall terminate upon the last action required to be taken by
the Trustee or its designated paying agent on the Final Distribution Date
pursuant to Article X of the Agreement upon the later of (ii) the final payment
on the Mortgage Loan or (ii) the liquidation of the Foreclosed Property;
provided, however, that in no event shall the trust created pursuant to the
terms of the Agreement continue beyond the expiration of twenty-one years from
the death of the last survivor of the descendants of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the late
ambassador of the United States to the Court of St. James's, living on the date
hereof.
THIS CERTIFICATE AND THE AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH, AND BE GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK.
Unless the certificate of authentication hereon has been executed by
the Trustee or by its designated Authenticating Agent, by manual signature, this
Certificate shall not be entitled to any benefit under the Agreement or be valid
for any purpose.
C-9
IN WITNESS WHEREOF, the Trustee has caused this Class C Certificate
to be duly executed.
LASALLE NATIONAL BANK, as
Trustee
By:_______________________________
Name:
Title:
Dated _________ ___, 199__
CERTIFICATE OF AUTHENTICATION
THIS IS ONE OF THE CLASS C CERTIFICATES REFERRED TO IN THE
WITHIN-MENTIONED AGREEMENT.
LASALLE NATIONAL BANK,
as Authenticating Agent
By: _________________________
Authorized Signatory
C-10
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns
and transfers unto
________________________________________________________________________________
(Please Print or Typewrite Name and Address of Assignee)
________________________________________________________________________________
the undivided interest in the Trust Fund evidenced by the within Certificate,
and all rights thereunder, and hereby authorizes the transfer of registration of
such interest to the assignee on the Certificate Register.
I further direct the Trustee to issue a new Certificate of the same Class and of
alike Certificate Principal Balance and undivided interest in the Trust Fund to
the above-named assignee and to deliver such certificate to the following
address
________________________________________________________________________________
Date: _____________________ ______________________________________
Signature by or on behalf of
assignor (signature must be
signed as registered)
(PLEASE INSERT SOCIAL SECURITY* OR U.S. TAXPAYER IDENTIFICATION
NUMBER OF ASSIGNEE)
______________________________
______________________________
(Signature Guaranteed)
C-11
(*This information, which is voluntary, is being requested to ensure that the
assignee will not be subject to backup withholding under Section 3406 of the
Code.)
C-12
EXHIBIT D
FORM OF CLASS D CERTIFICATE
THIS CERTIFICATE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER ▇▇▇▇▇▇▇ ▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND THIS CERTIFICATE MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS CERTIFICATE IS HEREBY
NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF
SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS CERTIFICATE AGREES FOR THE BENEFIT OF THE DEPOSITOR THAT (i)
SUCH CERTIFICATE MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (a)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, (b) TO
A PERSON WHO THE SELLER REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER"
(AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, OR (c) PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), IN EACH
CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION, (ii) THE HOLDER WILL, AND
EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THIS
CERTIFICATE OF THE RESALE RESTRICTIONS SET FORTH IN (i) ABOVE, AND (iii) THE
CERTIFICATE REGISTRAR FOR THE OFFERED CERTIFICATES WILL NOT BE REQUIRED TO
ACCEPT THIS CERTIFICATE FOR REGISTRATION OF TRANSFER, EXCEPT UPON PRESENTATION
OF EVIDENCE SATISFACTORY TO THE TRUSTEE AND THE CERTIFICATE REGISTRAR THAT THE
RESTRICTIONS ON TRANSFER SET FORTH IN (i) ABOVE HAVE BEEN COMPLIED WITH.
EITHER (i) THE HOLDER OF THIS CERTIFICATE IS NOT AN EMPLOYEE BENEFIT OR OTHER
PLAN THAT IS SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED ("ERISA"), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED (THE "CODE"), AND THE FUNDS APPLIED TO THE PURCHASE OF THIS CERTIFICATE
DO NOT INCLUDE THE "PLAN ASSETS" OF ANY SUCH PLAN OR
D-1
(ii) THE PURCHASE OF THIS CERTIFICATE BY THE HOLDER WILL NOT CONSTITUTE OR
RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR
SECTION 4975 OF THE CODE.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN POTOMAC
GURNEE FINANCE CORP., THE SERVICER, THE TRUSTEE OR THE FISCAL AGENT REFERRED TO
BELOW OR ANY OF THEIR AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING
MORTGAGE LOAN IS GUARANTEED OR INSURED BY POTOMAC GURNEE FINANCE CORP. OR BY ANY
OF ITS AFFILIATES OR BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY OR BY ANY
OTHER PERSON OR ENTITY.
UNLESS THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A, CLASS B AND CLASS C
CERTIFICATES TO THE EXTENT DESCRIBED IN THE TRUST AND SERVICING AGREEMENT
REFERRED TO HEREIN.
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT 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.]
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS BOTH
(i) A BENEFICIAL INTEREST IN A "REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE
INVESTMENT CONDUIT" AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G
AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") AND (ii)
A BENEFICIAL OWNERSHIP INTEREST IN A "GRANTOR TRUST" (AS THAT TERM IS DEFINED IN
SUBPART E, PART 1 OF SUBCHAPTER J, CHAPTER 1 OF SUBTITLE A OF THE CODE).
POTOMAC GURNEE FINANCE CORP.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
POTOMAC GURNEE FINANCE CORP., as Depositor
D-2
evidencing a percentage beneficial interest in all distributions allocable
to the Class D Certificates with respect to a Trust Fund consisting
primarily of a single mortgage loan with an initial principal balance of
approximately $284,000,000 (the "Mortgage Loan"), secured by two
cross-collateralized, cross-defaulted first priority liens on
substantially all of the properties known as Potomac ▇▇▇▇▇, a
value-oriented, super-regional shopping mall located in ▇▇▇▇ City,
Virginia and Gurnee ▇▇▇▇▇, a value-oriented, super-regional shopping mall
located in Gurnee, Illinois.
D-3
CERTIFICATE NUMBER: INITIAL PRINCIPAL BALANCE
D-1 OF THIS CERTIFICATE:
$30,000,000
DATE OF TRUST AND INITIAL CLASS D CERTIFICATE
SERVICING AGREEMENT: PRINCIPAL BALANCE:
December 1, 1996 $30,000,000
FIRST DISTRIBUTION DATE: CUSIP NUMBER: 737688 AD 3
January 21, 1997
THIS CERTIFIES THAT [CEDE & CO.] is the registered owner of a
Percentage Interest evidenced by this Certificate (obtained by dividing the
denomination of this Certificate by the aggregate of the denominations of all
Class D Certificates) in certain monthly distributions with respect to a Trust
Fund consisting primarily of the Mortgage Loan deposited by Potomac Gurnee
Finance Corp. (the "Depositor"). The Trust Fund was created pursuant to a Trust
and Servicing Agreement, dated as specified above (the "Agreement"), among the
Depositor, AMRESCO Management, Inc., as servicer (the "Servicer"), LaSalle
National Bank, as trustee (the "Trustee"), and ABN AMRO Bank N.V., as fiscal
agent (the "Fiscal Agent"), a summary of certain of the pertinent provisions of
which is set forth below. To the extent not defined herein, the capitalized
terms used herein have the meanings assigned to them in the Agreement.
This Certificate is one of a duly authorized issue of
Certificates, designated as Potomac Gurnee Finance Corp., Commercial Deed of
Trust Pass-Through Certificates, Class A (the "Class A Certificates"), Class
B (the "Class B Certificates"), Class C (the "Class C Certificates"), Class D
(the "Class D Certificates") and Class R (the "Class R Certificates" and
together with the Class A, Class B, Class C and Class D Certificates, the
"Certificates"), and is issued under and is subject to the terms, provisions
and conditions of the Agreement, to which Agreement the Holder of this
Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound. The Class R Certificates are subordinate to each Class of
Regular Certificates in right of payment, the Class D Certificates are
subordinate to the Class C, Class B and Class A Certificates in right of
payment, the Class C Certificates are
D-4
subordinate to the Class B and Class A Certificates in right of payment and the
Class B Certificates are subordinate to the Class A Certificates in right of
payment, each to the extent described in the Agreement.
During each Interest Accrual Period until the Balloon Anticipated
Repayment Date, interest on the Class D Certificate will accrue at a rate per
annum (the "Class D Certificate Rate") equal to 7.6830%. During each Interest
Accrual Period after the Balloon Anticipated Repayment Date, interest on the
Class D Certificate will accrue at a rate per annum (the "Class D Adjusted
Certificate Rate") equal to 9.6830%. Interest on the Class D Certificates will
be computed for each Interest Accrual Period on the basis of a year of 360 days
composed of twelve 30-day months. Pursuant to the terms of the Agreement, the
Trustee or its designated paying agent will distribute from funds in the
Certificate Account on the 20th day of each month or, if such 20th day is not a
Business Day, the first Business Day immediately following (the "Distribution
Date"), commencing on January 21, 1997, to the Person in whose name this
Certificate is registered at the close of business on the last Business Day of
the calendar month immediately preceding the month in which such Distribution
Date occurs (the "Record Date"), payments of principal and interest on this
Certificate in the amounts and in the priorities set forth in the Agreement for
such Distribution Date.
Upon the occurrence and during the continuance of a Mortgage
Loan Event of Default, the rate of interest to be paid on the entire
principal balance of each Component of the Mortgage Loan will be
increased by 4% per annum in excess of the interest rate on such Component at
the time of such Mortgage Loan Event of Default (such excess interest,
"Default Rate Interest"), until such Mortgage Loan Event of Default has
been cured, by payment or otherwise. Default Rate Interest paid on the Deed
of Trust Loan, net of amounts thereof applied by the Servicer to reimburse
interest on P&I Advances, will be passed through on the Class D Certificates
in the manner, and to the extent, provided in the Agreement but will not be
payable on such Certificates until the principal balance of each Class of
Regular Certificates has been reduced to zero.
D-5
Optional prepayments of principal with respect to the D Component
of the Mortgage Note are not permitted in whole or in part for the first
three years of the Mortgage Loan term. Thereafter, subject to certain
conditions described in the Agreement, optional prepayments of principal of
the Mortgage Loan are permitted in whole or in part, provided that any
such prepayment made prior to the date that is six months prior to the
Balloon Anticipated Repayment Date is accompanied by a Prepayment Premium
equal to the greater of (x) a Yield Maintenance Premium (as described in the
Agreement) and (y) one percent (1%) of that portion of the Mortgage Loan
principal balance to be prepaid. Such optional payments of principal and
premium, if any, will be distributed on the next succeeding Distribution Date
in the manner set forth in the Agreement. Prepayment Premiums are also
payable in the case of all other prepayments on the Mortgage Loan,
whether voluntary or involuntary, except for prepayments from Loss Proceeds
required by the terms of the Mortgages and except for prepayments made on or
after the date that is six months prior to the Balloon Anticipated Repayment
Date.
Distributions on this Certificate will be made on each Distribution
Date by the Trustee or its designated paying agent either by check mailed to the
address of the Holder hereof, as such name and address shall appear on the
Certificate Register, or, upon written request, containing all necessary wiring
instructions, by a Holder hereof holding in excess of $5,000,000 in initial
Certificate Principal Balance, delivered at least five Business Days prior to
the related Record Date, by wire transfer in immediately available funds to the
account of such Holder maintained at a bank in the United States, or if this
Certificate is held by a Clearing Agency, by wire transfer in immediately
available funds to a bank account maintained in the United States, or by such
other means of payment as the Holder hereof and the Paying Agent shall agree
upon. Notwithstanding the above, the final distribution on this Certificate will
be made after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee for that purpose and specified in such notice of final
distribution.
The Depositor intends to cause an election to be made to treat
certain assets in the Trust Fund as a real estate
D-6
mortgage investment conduit ("REMIC"). The Class A Certificates, Class B
Certificates, Class C Certificates and Class D Certificates will constitute, in
part, beneficial interests in the "regular interests" in the REMIC and the Class
R Certificate will constitute the "residual interest" in the REMIC. The Class A
Certificates, Class B Certificates, Class C Certificates and Class D
Certificates will also constitute beneficial interests in a grantor trust
consisting of that part of the Trust Fund representing the Default Rate Interest
and the Default Interest Account. Each Holder of this Certificate, by acceptance
hereof, and each beneficial owner of this Certificate, agrees to treat, and to
take no action inconsistent with the treatment of, this Certificate in
accordance with this paragraph for purposes of federal income taxes, state and
local income and franchise taxes and other taxes imposed on or measured by
income.
The Trustee will cause to be kept at the Corporate Trust Office or
at the office of its designated agent, a Certificate Register in which, subject
to such reasonable regulations as it may prescribe, the Trustee will provide for
the registration of the Certificates and of transfers and exchanges of the
Certificates. Upon surrender for registration of transfer of any Certificate at
any office or agency of the Trustee maintained for such purposes, the Trustee or
a designated Authenticating Agent will, subject to the limitations set forth in
the Agreement, authenticate and deliver, in the name of the designated
transferee or transferees, a Certificate of a like Class and aggregate
Percentage Interest and dated the date of authentication.
No service charge will be made for any transfer or exchange of the
Certificate, but the Trustee or its designated agent may require payment of a
sum sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of the Certificate. The Servicer, the
Trustee, the Paying Agent and the Certificate Registrar may treat the person in
whose name any Certificate is registered as the owner of such Certificate and
the Percentage Interest in the Trust Fund evidenced thereby for the purpose of
receiving distributions pursuant to the Agreement and for all other purposes
whatsoever, and neither the Servicer nor the Trustee,
D-7
the Paying Agent and the Certificate Registrar will be affected by notice to the
contrary.
The Agreement may be amended from time to time by the Depositor, the
Servicer, the Trustee and the Fiscal Agent, without the consent of any of the
Certificateholders, (i) to cure any ambiguity, (ii) to correct or supplement any
provisions therein which may be inconsistent with any other provisions therein,
(iii) to maintain the qualification of the Trust REMIC as a REMIC or to maintain
the qualification of the Grantor Trust as a Grantor Trust (under the Grantor
Trust Provisions), or (iv) to make any other provisions with respect to matters
or questions arising under the Agreement, provided that such action shall not
adversely affect in any material respect the interests of any Holder without the
consent of each Holder adversely affected thereby in the case of an amendment
pursuant to (i), (ii) or (iv) or adversely affect the status of the Trust REMIC
as a REMIC or the status of the Grantor Trust as a Grantor Trust (under the
Grantor Trust Provisions).
The Agreement may also be amended from time to time by the
Depositor, the Servicer, the Trustee and the Fiscal Agent with the consent of
Certificateholders evidencing, in the aggregate, not less than 66-2/3% of the
Voting Rights of the Certificates, for the purpose of adding any provisions
to or changing in any manner or eliminating any of the provisions of the
Agreement or of modifying in any manner the rights of Certificateholders;
provided, however, that no such amendment shall (i) reduce in any manner the
amount of, delay the timing of, or change the manner in which payments
received on or with respect to the Mortgage Loan are required to be
distributed in respect of any Certificate without the consent of the Holder
of such Certificate; (ii) adversely affect in any material respect the
interests of the Holders of a Class of the Certificates in a manner other
than as set forth in (i) above without the consent of the Certificateholders
of such Class evidencing, in the aggregate, not less than 100% of the Voting
Rights of the Certificates of such Class, (iii) reduce the aforesaid
percentages of the Certificates, the Holders of which are required to consent
to any such amendment without the consent of 100% of the Certificateholders
of the affected Class, (iv) alter the obligations of the Servicer to make an
Advance or alter the
D-8
servicing standards set forth in the Agreement, or (v) amend any provisions of
the Agreement relating to the administration of the Trust REMIC as a REMIC
without the consent of the Class R Certificateholders.
The respective obligations and responsibilities of the Servicer, the
Depositor, the Paying Agent, the Trustee and the Fiscal Agent created under the
Agreement (other than the obligation of the Trustee or its designated paying
agent to make certain payments to Certificateholders after the Final
Distribution Date) shall terminate upon the last action required to be taken by
the Trustee or its designated paying agent on the Final Distribution Date
pursuant to Article X of the Agreement upon the later of (i) the final payment
on the Mortgage Loan or (ii) the liquidation of the Foreclosed Property;
provided, however, that in no event shall the trust created pursuant to the
terms of the Agreement continue beyond the expiration of twenty-one years from
the death of the last survivor of the descendants of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the late
ambassador of the United States to the Court of St. James's, living on the date
hereof.
THIS CERTIFICATE AND THE AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH, AND BE GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK.
Unless the certificate of authentication hereon has been executed by
the Trustee or by its designated Authenticating Agent, by manual signature, this
Certificate shall not be entitled to any benefit under the Agreement or be valid
for any purpose.
D-9
IN WITNESS WHEREOF, the Trustee has caused this Class D Certificate
to be duly executed.
LASALLE NATIONAL BANK, as
Trustee
By:______________________________
Name:
Title:
Dated: ___________ ___, 199__
CERTIFICATE OF AUTHENTICATION
THIS IS ONE OF THE CLASS D CERTIFICATES REFERRED TO IN THE
WITHIN-MENTIONED AGREEMENT.
LASALLE NATIONAL BANK, as
Authenticating Agent
By: _________________________
Authorized Signatory
D-10
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
________________________________________________________________________________
(Please Print or Typewrite Name and Address of Assignee)
________________________________________________________________________________
the undivided interest in the Trust Fund evidenced by the within Certificate,
and all rights thereunder, and hereby authorizes the transfer of registration of
such interest to the assignee on the Certificate Register.
I further direct the Trustee to issue a new Certificate of the same Class and of
a like Certificate Principal Balance and undivided interest in the Trust Fund to
the above-named assignee and to deliver such certificate to the following
address
________________________________________________________________________________
Date:________________________ ______________________________________
Signature by or on behalf of
assignor (signature must be
signed as registered)
(PLEASE INSERT SOCIAL SECURITY* OR U.S. TAXPAYER IDENTIFICATION NUMBER OF
ASSIGNEE)
_____________________________
_____________________________
(Signature Guaranteed)
D-11
(*This information, which is voluntary, is being requested to ensure that the
assignee will not be subject to backup withholding under Section 3406 of the
Code.)
D-12
EXHIBIT E
FORM OF CLASS R CERTIFICATE
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN POTOMAC
GURNEE FINANCE CORP., THE SERVICER, THE TRUSTEE OR THE FISCAL AGENT REFERRED TO
BELOW OR ANY OF THEIR AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING
MORTGAGE LOAN IS GUARANTEED OR INSURED BY POTOMAC GURNEE FINANCE CORP. OR BY ANY
OF ITS AFFILIATES OR BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY OR BY ANY
OTHER PERSON OR ENTITY.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF
1986 (THE "CODE").
THIS CLASS R CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE RESOLD OR
TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO SUCH ACT OR LAWS OR IS SOLD OR
TRANSFERRED IN TRANSACTIONS WHICH ARE EXEMPT FROM REGISTRATION UNDER SUCH ACT OR
UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN ACCORDANCE WITH THE PROVISIONS
OF SECTION 5.02 OF THE TRUST AND SERVICING AGREEMENT REFERRED TO HEREIN.
EITHER (i) THE HOLDER OF THIS CERTIFICATE IS NOT AN EMPLOYEE BENEFIT OR OTHER
PLAN THAT IS SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED ("ERISA"), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED (THE "CODE"), AND THE FUNDS APPLIED TO THE PURCHASE OF THIS CERTIFICATE
DO NOT INCLUDE THE "PLAN ASSETS" OF ANY SUCH PLAN OR (ii) THE PURCHASE OF THIS
CERTIFICATE BY THE HOLDER WILL NOT CONSTITUTE OR RESULT IN A NON-EXEMPT
PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE.
ANY SALE, TRANSFER OR OTHER DISPOSITION OF THIS CLASS R CERTIFICATE MAY BE MADE
ONLY IF THE PROPOSED TRANSFEREE PROVIDES A TRANSFER AFFIDAVIT TO THE TRUSTEE TO
THE EFFECT THAT (1) SUCH TRANSFEREE AGREES TO BE BOUND BY THE TERMS OF THE
AGREEMENT AND
E-1
ALL RESTRICTIONS SET FORTH ON THE FACE HEREOF, (2) SUCH TRANSFEREE IS NOT EITHER
(A) THE UNITED STATES, ANY STATE OR POLITICAL SUBDIVISION THEREOF, ANY FOREIGN
GOVERNMENT, ANY INTERNATIONAL ORGANIZATION, OR ANY AGENCY OR INSTRUMENTALITY OF
ANY OF THE FOREGOING, (B) ANY ORGANIZATION (OTHER THAN A COOPERATIVE DESCRIBED
IN SECTION 521 OF THE CODE) THAT IS EXEMPT FROM THE TAX IMPOSED BY CHAPTER 1 OF
THE CODE UNLESS SUCH ORGANIZATION IS SUBJECT TO THE TAX IMPOSED BY SECTION 511
OF THE CODE, (C) ANY ORGANIZATION DESCRIBED IN SECTION 1381(a)(2)(C) OF THE CODE
OR (D) ANY OTHER ENTITY DESIGNATED A "DISQUALIFIED ORGANIZATION" BY RELEVANT
LEGISLATION AMENDING THE REMIC PROVISIONS AND IN EFFECT AT OR PROPOSED TO BE
EFFECTIVE AS OF THE TIME OF DETERMINATION (ANY SUCH PERSON DESCRIBED IN THE
FOREGOING CLAUSES (A), (B), (C) OR (D) BEING HEREINAFTER REFERRED TO AS A
"DISQUALIFIED ORGANIZATION"), (3) NO PURPOSE OF SUCH TRANSFER IS TO IMPEDE THE
ASSESSMENT OR COLLECTION OF TAX AND (4) SUCH TRANSFEREE SATISFIES CERTAIN
ADDITIONAL CONDITIONS RELATING TO THE FINANCIAL CONDITION OF SUCH TRANSFEREE.
NOTWITHSTANDING THE REGISTRATION IN THE CERTIFICATE REGISTER OF ANY TRANSFER,
SALE OR OTHER DISPOSITION OF THIS CLASS R CERTIFICATE TO A DISQUALIFIED
ORGANIZATION OR TO ANY OTHER PROHIBITED TRANSFEREE AS PROVIDED IN THE AGREEMENT,
SUCH REGISTRATION SHALL BE DEEMED TO BE OF NO LEGAL FORCE OR EFFECT WHATSOEVER
AND SUCH PERSON SHALL NOT BE DEEMED TO BE A CERTIFICATEHOLDER FOR ANY PURPOSE
HEREUNDER, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS ON THIS
CERTIFICATE. THE HOLDER OF THE CLASS R CERTIFICATE BY ACCEPTANCE OF THIS
CERTIFICATE SHALL BE DEEMED TO HAVE CONSENTED TO THE PROVISIONS OF THIS
PARAGRAPH.
POTOMAC GURNEE FINANCE CORP.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
POTOMAC GURNEE FINANCE CORP., as Depositor
evidencing a percentage beneficial interest in all distributions allocable
to the Class R Certificate with respect to a Trust Fund consisting
primarily of a single mortgage loan with an initial principal balance of
approximately $284,000,000 ("the Deed of Trust Loan"), secured by two
cross-collateralized, cross-defaulted first priority liens on
substantially all of the properties known as
E-2
Potomac ▇▇▇▇▇, a value-oriented, super-regional shopping mall located in
▇▇▇▇ City, Virginia and Gurnee ▇▇▇▇▇, a value-oriented, super-regional
shopping mall located in Gurnee, Illinois.
CERTIFICATE NUMBER:
DATE OF TRUST AND
SERVICING AGREEMENT:
December 1, 1996
FIRST DISTRIBUTION DATE:
January 21, 1997
THIS CERTIFIES THAT ________________________________ is the
registered owner of a beneficial interest in certain monthly distributions
with respect to a Deed of Trust Loan (the "Deed of Trust Loan") in an initial
principal balance of $284,000,000 secured by two cross-collateralized,
cross-defaulted first priority liens on substantially all of the properties
known as Potomac ▇▇▇▇▇, a value-oriented, super-regional shopping mall
located in ▇▇▇▇ City, Virginia, and Gurnee ▇▇▇▇▇, a value-oriented,
super-regional shopping mall located in Gurnee, Illinois. The Trust Fund was
created pursuant to a Trust and Servicing Agreement, dated as specified above
(the "Agreement"), among the Depositor, AMRESCO Management, Inc. as servicer
(the "Servicer"), LaSalle National Bank, as trustee (the "Trustee"), and ABN
AMRO Bank N.V., as fiscal agent (the "Fiscal Agent"), a summary of certain of
the pertinent provisions of which is set forth below. To the extent not
defined herein, the capitalized terms used herein have the meanings assigned
to them in the Agreement.
This Certificate is one of a duly authorized issue of
Certificates, designated as Potomac Gurnee Finance Corp., Commercial Deed of
Trust Pass-Through Certificates, Class A (the "Class A Certificates"), Class
B (the "Class B Certificates"), Class C (the "Class C Certificates"), Class D
(the "Class D Certificates"), and Class R (the "Class R Certificates" and
together with the Class A, Class B, Class C and Class D Certificates, the
"Certificates"), and is issued under and is subject to the terms, provisions
and conditions of the Agreement,
E-3
to which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound. The Class R Certificates are
subordinate to each Class of Regular Certificates in right of payment, the Class
D Certificates are subordinate to the Class C, Class B and Class A Certificates
in right of payment, the Class C Certificates are subordinate to the Class B and
Class A Certificates in right of payment and the Class B Certificates are
subordinate to the Class A Certificates in right of payment, each to the extent
described in the Agreement, and subject to the right of the Mortgagors to
designate the Class of Offered Certificates to which Optional Principal Payments
shall be applied.
The Class R Certificate has no interest rate or principal balance.
Pursuant to the terms of the Agreement, the Trustee or its designated paying
agent will distribute from funds in the Certificate Account on the 20th day of
each month or, if such 20th day is not a Business Day, the first Business Day
immediately following (the "Distribution Date"), after the Certificate Principal
Balance of each of the Class A Certificates, Class B Certificates, Class C
Certificates and Class D Certificates have been reduced to zero and the Holders
of each of the Class A Certificates, Class B Certificates, Class C Certificates
and Class D Certificates have received all amounts payable to them under the
Agreement, to the Person in whose name this Certificate is registered at the
close of business on the last Business Day of the calendar month immediately
preceding the month in which such Distribution Date occurs, an amount equal to
the balance, if any, of the Available Distribution Amount for such Distribution
Date.
The final distribution on this Certificate will be made after due
notice by the Trustee or its designated paying agent of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose and specified in such
notice of final distribution.
The Depositor intends to cause an election to be made to treat
certain assets in the Trust Fund as a real estate mortgage investment conduit
("REMIC"). The Class A Certificates, Class B Certificates, Class C Certificates
and Class D
E-4
Certificates will constitute, in part, beneficial interests in the "regular
interests" in the REMIC and the Class R Certificates will constitute the
"residual interest" in the REMIC.
The Trustee will cause to be kept at the Corporate Trust Office or
at the office of its designated agent, a Certificate Register in which, subject
to such reasonable regulations as it may prescribe, the Trustee will provide for
the registration of the Certificates and of transfers and exchanges of the
Certificates. Upon surrender for registration of transfer of any Certificate at
any office or agency of the Trustee maintained for such purposes, the Trustee or
a designated Authenticating Agent will, subject to the limitations set forth in
the Agreement, authenticate and deliver, in the name of the designated
transferee or transferees, a Certificate of a like Class and aggregate
Percentage Interest and dated the date of authentication.
No service charge will be made for any transfer or exchange of the
Certificate, but the Trustee or its designated agent may require payment of a
sum sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of the Certificate. Prior to the due
presentation of a Certificate for registration of transfer, the Depositor, the
Servicer and the Trustee may treat the person in whose name any Certificate is
registered as the owner of such Certificate and the Percentage Interest in the
Trust Fund evidenced thereby for the purpose of receiving distributions pursuant
to the Agreement and for all other purposes whatsoever, and neither the
Depositor, nor the Servicer nor the Trustee will be affected by notice to the
contrary.
No transfer of the Class R Certificate will be made unless such
transfer is exempt from the registration requirements of the Securities Act of
1933, as amended, and any applicable state securities laws or is made pursuant
to an effective registration statement under said Act or laws. The Certificate
Registrar or the Depositor may require an opinion of counsel acceptable to and
in form and substance satisfactory to the Depositor and the Certificate
Registrar that such transfer is exempt (describing the applicable exemption and
the basis therefor) from the registration requirements of the Securities
E-5
Act of 1933, as amended, and from any applicable securities statute of any
state, and the transferee shall execute an investment letter and an affidavit in
the respective forms described by the Agreement.
The Agreement may be amended from time to time by the Depositor, the
Servicer, the Trustee and the Fiscal Agent, without the consent of any of the
Certificateholders, (i) to cure any ambiguity, (ii) to correct or supplement any
provisions therein which may be inconsistent with any other provisions therein,
(iii) to maintain the qualification of the Trust REMIC as a REMIC or to maintain
the qualification of the Grantor Trust as a Grantor Trust (under the Grantor
Trust Provisions), or (iv) to make any other provisions with respect to matters
or questions arising under the Agreement, provided that such action shall not
adversely affect in any material respect the interests of any Holder without the
consent of each Holder adversely affected thereby in the case of an amendment
pursuant to (i), (ii) or (iv) or adversely affect that status of the Trust REMIC
as a REMIC or the status of the Grantor Trust as a Grantor Trust (under the
Grantor Trust Provisions).
The Agreement may also be amended from time to time by the
Depositor, the Servicer, the Trustee and the Fiscal Agent with the consent of
Certificateholders evidencing, in the aggregate, not less than 66-2/3% of the
Voting Rights of the Certificates, for the purpose of adding any provisions
to or changing in any manner or eliminating any of the provisions of the
Agreement or of modifying in any manner the rights of Certificateholders;
provided, however, that no such amendment shall (i) reduce in any manner the
amount of, delay the timing of, or change the manner in which payments
received on or with respect to the Deed of Trust Loan are required to be
distributed in respect of any Certificate without the consent of the Holder
of such Certificate; (ii) adversely affect in any material respect the
interests of the Holders of a Class of the Certificates in a manner other
than as set forth in (i) above without the consent of the Certificateholders
of such Class evidencing, in the aggregate, not less than 100% of the Voting
Rights of the Certificates of such Class, (iii) reduce the aforesaid
percentages of the Certificates, the Holders of which are required to consent
to any such amendment without the consent of
E-6
100% of the Certificateholders of the affected Class, (iv) alter the obligations
of the Servicer to make an Advance or alter the servicing standards set forth in
the Agreement, or (v) amend any provisions of the Agreement relating to the
administration of the Trust REMIC as a REMIC without the consent of the Class R
Certificateholders.
The respective obligations and responsibilities of the Servicer, the
Depositor, the Paying Agent, the Trustee and the Fiscal Agent created under the
Agreement (other than the obligation of the Trustee or its designated paying
agent to make certain payments to Certificateholders after the Final
Distribution Date) shall terminate upon the last action required to be taken by
the Trustee or its designated paying agent on the Final Distribution Date
pursuant to Article X of the Agreement upon the later of (i) the final payment
on the Deed of Trust Loan or (ii) the liquidation of the Foreclosed Property;
provided, however, that in no event shall the trust created pursuant to the
terms of the Agreement continue beyond the expiration of twenty-one years from
the death of the last survivor of the descendants of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the late
ambassador of the United States to the Court of St. James's, living on the date
hereof.
THIS CERTIFICATE AND THE AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH, AND BE GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK.
Unless the certificate of authentication hereon has been executed by
the Trustee or by its designated Authenticating Agent, by manual signature, this
Certificate shall not be entitled to any benefit under the Agreement or be valid
for any purpose.
E-7
IN WITNESS WHEREOF, the Trustee has caused this Class R Certificate
to be duly executed.
LASALLE NATIONAL BANK, as
Trustee
By:___________________________
Name:
Title:
Dated: ____________ ___, 199___
CERTIFICATE OF AUTHENTICATION
THIS IS ONE OF THE CLASS R CERTIFICATES REFERRED TO IN THE
WITHIN-MENTIONED AGREEMENT.
LASALLE NATIONAL BANK, as
Authenticating Agent
By: _________________________
Authorized Signatory
E-8
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
________________________________________________________________________________
(Please Print or Typewrite Name and Address of Assignee)
________________________________________________________________________________
the undivided interest in the Trust Fund evidenced by the within Certificate,
and all rights thereunder, and hereby authorizes the transfer of registration of
such interest to the assignee on the Certificate Register.
I further direct the Trustee to issue a new Certificate of the same Class and
undivided interest in the Trust Fund to the above-named assignee and to deliver
such Certificate to the following address
________________________________________________________________________________
Date:________________________ ______________________________________
Signature by or on behalf of
assignor (signature must be
signed as registered)
(PLEASE INSERT SOCIAL SECURITY* OR U.S. TAXPAYER IDENTIFICATION NUMBER OF
ASSIGNEE)
_____________________________
_____________________________
(Signature Guaranteed)
E-9
(*This information, which is voluntary, is being requested to ensure that the
assignee will not be subject to backup withholding under Section 3406 of the
Code.)
E-10
EXHIBIT F
"QUALIFIED INSTITUTIONAL BUYER" RULE 144A
REPRESENTATION LETTER
Description of Certificate, including number:
POTOMAC GURNEE FINANCE CORP., COMMERCIAL
MORTGAGE PASS-THROUGH CERTIFICATES
1. The undersigned transferee (the "Buyer") warrants and represents
to, and covenants with, the Trustee and the Trust Fund as follows:
a. The Buyer understands that the Certificates have not been
registered under the Securities Act of 1933, as amended (the "1933
Act"), or the securities laws of any state.
b. The Buyer is acquiring the Certificates for investment for
its own account only and not for any other person.
c. The Buyer considers itself a substantial, sophisticated
institutional investor having such knowledge and experience in
financial and business matters that it is capable of evaluating the
merits and risks of investment in the Certificates.
d. The Buyer has been furnished with all information regarding
the Certificates that it has requested from the Trustee or the Trust
Fund.
e. Neither the Buyer nor anyone acting on its behalf has
offered, transferred, pledged, sold or otherwise disposed of the
Certificates, any interest in the Certificates or any other similar
security to, or solicited any offer to buy or accept a transfer,
pledge or other disposition of the Certificates, any interest in the
Certificates or any other similar security from, or otherwise
approached or negotiated with respect to
F-1
the Certificates, any interest in the Certificates or any other
similar security with, any person in any manner, or made any general
solicitation by means of general advertising or in any other manner,
or taken any other action, that would constitute a distribution of
the Certificates under the 1933 Act or that would render the
disposition of the Certificates a violation of Section 5 of the 1933
Act or require registration pursuant thereto, nor will it act, nor
has it authorized or will it authorize any person to act, in such
manner with respect to the Certificates.
f. The Buyer is a "qualified institutional buyer" as that term
is defined in Rule 144A under the 1933 Act and has completed either
of the forms of certification to that effect attached hereto as
Annex 1 or Annex 2. The Buyer is aware that the sale of it is being
made in reliance on Rule 144A. The Buyer is acquiring the
Certificates for its own account or for the account of a qualified
institutional buyer, understands that such Certificates may be
resold, pledged or transferred only (i) to a person reasonably
believed to be a qualified institutional buyer that purchases for
its own account or for the account of a qualified institutional
buyer to whom notice is given that the resale, pledge or transfer is
being made in reliance on Rule 144A, or (ii) pursuant to another
exemption from registration under the 1933 Act.
2. With respect to the Class B, Class C or Class D Certificates,
either (a) the Buyer warrants and represents to, and covenants with, the Trustee
and the Trust Fund that the Buyer is not, and is not purchasing directly or
indirectly on behalf of, a "benefit plan investor" (within the meaning of
Department of Labor Regulation 29 C.F.R. ss. 2510.3-101) or (b) the Buyer has
furnished the Certificate Registrar with an Opinion of Counsel to the effect
that registration or transfer of any Certificates to any such benefit plan
investor, or to any Person acting on behalf of such an investor would not
constitute or result in a non-exempt prohibited transaction under Section 406 of
the Employee Retirement Income Security Act of 1974, as amended, or Section 4975
of the Internal Revenue Code of 1986, as amended.
F-2
3. If the Buyer is requesting that the Certificates being acquired
by it be registered in the name of a nominee on its behalf, the name of such
nominee is set forth below, and the Buyer has caused the form of Nominee
Acknowledgment, below, to be completed.
Name of Nominee, if any:
F-3
IN WITNESS WHEREOF, each of the parties has executed this document
as of the date set forth below.
________________________
Print Name of Buyer
By: ____________________
Name:
Title:
Date: __________________
Taxpayer Identification:
No._____________________
Nominee Acknowledgement
The undersigned as nominee for the Buyer referred to above does
hereby acknowledge and agree that Certificates being registered in its name
pursuant to the foregoing letter are and will be held by it solely for the
account of such Buyer and for no one else.
________________________
Nominee
F-4
ANNEX 1 TO EXHIBIT F
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER RULE 144A
[For Buyers Other Than Registered Investment Companies]
The Undersigned hereby certifies as follows in connection with the
Rule 144A Investment Representation to which this Certification is attached:
1. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
Buyer.
2. In connection with purchases by the Buyer, the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A ("Rule
144A") under the Securities Act of 1933, as amended, because (i) the Buyer owned
and/or invested on a discretionary basis $_________ (1) in securities (except
for the excluded securities referred to below) as of the end of the Buyer's most
recent fiscal year (such amount being calculated in accordance with Rule 144A)
and (ii) the Buyer satisfies the criteria in the category marked below.
--- Corporation, etc. The Buyer is a corporation (other than a
bank, savings and loan association or similar institution),
Massachusetts or similar business trust, partnership, or
charitable organization described in Section 501(c)(3) of the
Internal Revenue Code.
--- Bank. The Buyer (a) is a national bank or banking institution
organized under the laws of any State,
--------
(1) Buyer must own and/or invest on a discretionary basis at least
$100,000,000 in securities unless Buyer is a dealer, and, in that case,
Buyer must own and/or invest on a discretionary basis at least $10,000,000
in securities.
F-5
territory or the District of Columbia, the business of which
is substantially confined to banking and is supervised by the
State or territorial banking commission or similar official or
is a foreign bank or equivalent institution, and (b) has an
audited net worth of at least $25,000,000 as demonstrated in
its latest annual financial statements, a copy of which is
attached hereto.
--- Savings and Loan. The Buyer (a) is a savings and loan
association, building and loan association, cooperative bank,
homestead association or similar institution, which is
supervised and examined by a State or Federal authority having
supervision over any such institutions or is a foreign savings
and loan association or equivalent institution and (b) has an
audited net worth of at least $25,000,000 demonstrated in its
latest annual financial statements a copy of which is attached
hereto.
--- Broker-dealer. Buyer is a dealer registered pursuant to
Section 15 of the Securities Exchange Act of 1934, as amended.
--- Insurance Company. The Buyer is an insurance company whose
primary and predominant business activity is the writing of
insurance or the reinsuring of risks underwritten by insurance
companies and which is subject to supervision by the insurance
commissioner or a similar official or agency of a State,
territory or the District of Columbia.
--- State or Local Plan. The Buyer is a plan established and
maintained by a State, its political subdivisions, or any
agency or instrumentally of the State or its political
subdivisions, for the benefit of its employees.
--- ERISA Plan. The Buyer is an employee benefit plan within the
meaning of Title I of the Employee
F-6
Retirement Income Security Act of 1974, as amended.
--- Investment Adviser. The Buyer is an investment adviser
registered under the Investment Advisers Act of 1940, as
amended.
--- Small Business Investment Company. The Buyer is a small
business investment company licensed by the U.S. Small
Business Administration under Section 301(c) or (d) of the
Small Business Investment Act of 1958.
--- Business Development Company. The Buyer is a business
development company as defined in Section 202(a) (22) of the
Investment Advisors Act of 1940.
--- Trust Fund. The Buyer is a trust fund whose trustee is a bank
or trust company and whose participants are exclusively State
or Local Plans or ERISA Plans as defined above, and no
participant of the Buyer is an individual retirement account
or an H.R. 10 (▇▇▇▇▇) plan.
3. The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer, (ii) securities that
are part of an unsold allotment to or subscription by the Buyer, if the Buyer is
a dealer, (iii) bank deposit notes and certificates of deposit, (iv) loan
participations, (v) repurchase agreements, (vi) securities owned but subject to
a repurchase agreement and (vii) currency, interest rate and commodity swaps.
4. For purposes of determining the aggregate amount of securities
owned and/or invested on a discretionary basis by the Buyer, the Buyer used the
cost of such securities to the Buyer and did not include any of the securities
referred to in the preceding paragraph, except (i) where the Buyer reports its
securities holdings in its financial statements on the basis of their market
value, and (ii) no current information with respect to the cost of those
securities has been published. If clause
F-7
(ii) in the preceding sentence applies, the securities may be valued at market.
Further, in determining such aggregate amount, the Buyer may have included
securities owned by subsidiaries of the Buyer, but only if such subsidiaries are
consolidated with the Buyer in its financial statements prepared in accordance
with generally accepted accounting principles and if the investments of such
subsidiaries are managed under the Buyer's direction. However, such securities
were not included if the Buyer is a majority-owned, consolidated subsidiary of
another enterprise and the Buyer is not itself a reporting company under the
Securities Exchange Act of 1934, as amended.
5. The Buyer acknowledges that it is familiar with Rule 144A and
understands that the Seller to it and other parties related to the Certificates
are relying and will continue to rely on the statements made herein because one
or more sales to the Buyer may be in reliance on Rule 144A
Will the Buyer be purchasing the Rule 144A
securities
____ ____ only for the Buyer's own account?
Yes No
6. If the answer to the foregoing question is "no", the Buyer agrees
that, in connection with any purchase of securities sold to the Buyer for the
account of a third party (including any separate account) in reliance on Rule
144A, the Buyer will only purchase for the account of a third party that at the
time is a "qualified institutional buyer" within the meaning of Rule 144A. In
addition, the Buyer agrees that the Buyer will not purchase securities for a
third party unless the Buyer has obtained a current representation letter from
such third party or taken other appropriate steps contemplated by Rule 144A to
conclude that such third party independently meets the definition of "qualified
institutional buyer" set forth in Rule 144A.
F-8
7. The Buyer will notify each of the parties to which this
certification is made of any changes in the information and conclusions herein.
Until such notice is given, the Buyer's purchase of Certificates will constitute
a reaffirmation of this certification as of the date of each purchase. In
addition, if the Buyer is a bank or savings and loan as provided above, the
Buyer agrees that it will furnish to such parties updated annual financial
statements promptly after they become available.
_________________________
Print Name of Buyer
By: _____________________
Name:
Title:
Date: ___________________
F-9
ANNEX 2 TO EXHIBIT F
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER RULE 144A
[Buyers That Are Registered Investment companies]
The undersigned hereby certifies as follows in connection with the
Rule 144A Investment Representation to which this Certification is attached:
1. As indicated below, the undersigned is the President, Chief
Financial Officer, or Senior Vice President of the Buyer or, if the buyer is
a"qualified institutional buyer" as that term is defined in Rule 144A ("Rule
144") under the Securities Act of 1933, as amended, because Buyer is part of a
Family of Investment Companies (as defined below), is an officer of the related
investment adviser (the "Adviser").
2. In connection with purchases by the Buyer, the Buyer is a
"qualified institutional buyer" as defined in Rule 144A because (i) the Buyer is
an investment company registered under the Investment Company Act of 1940, and
(ii) as marked below, the Buyer alone, or the Buyer's Family of Investment
Companies, owned at least $100,000,000 in securities (other than the excluded
securities referred to below) as of the end of the Buyer's most recent fiscal
year. For purposes of determining the amount of securities owned by the Buyer or
the Buyer's Family of Investment Companies, the cost of such securities was
used, except (i) where the Buyer or the Buyer's Family of Investment Companies
reports its securities holdings in its financial statements on the basis of
their market value, and (ii) no current information with respect to the costs of
those securities has been published. If clause (ii) in the preceding sentence
applies, the securities may be valued at market.
--- The Buyer owned $________ in securities (other than the
excluded securities referred to below) as of the end of the
Buyer's most recent fiscal year (such amount being calculated
in accordance with Rule 144A).
F-10
--- The Buyer is part of a Family of Investment Companies which
owned in the aggregate $_______ in securities (other than the
excluded securities referred to below) as of the end of the
Buyer's most recent fiscal year (such amount being calculated
in accordance with Rule 144A).
3. The term "Family of Investment Companies" as used herein means
two or more registered investment companies (or series thereof) that have the
same investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).
4. The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer or are a part of the
Buyer's Family of Investment Companies, (ii) bank deposit notes and certificates
of deposit, (iii) loan participations, (iv) repurchase agreements, (v)
securities owned but subject to a repurchase agreement and (vi) currency,
interest rate and commodity swaps.
5. The Buyer is familiar with Rule 144A and understands that the
parties listed on the Rule 144A Transferee Certificate to which this
certification relates are relying and will continue to rely on the statements
made herein because one or more sales to the Buyer will be in reliance on Rule
144A. In addition, the Buyer will only purchase for the Buyer' sown account.
6. Until the date of purchase of the Certificates, the undersigned
will notify the parties listed in the "Qualified Institutional Buyer" Rule 144A
Representation Letter to which this certification relates of any changes in the
information and conclusions herein. Until such notice is given, the Buyer's
purchase of the Certificates will constitute a reaffirmation of this
certification by the undersigned as of the date of such purchase.
F-11
_________________________
Print Name of Buyer
By: _____________________
Name:
Title:
Date: ___________________
▇-▇▇
▇▇▇▇▇▇▇ ▇
▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ TO SECTION 860E(e)
OF THE INTERNAL REVENUE CODE OF 1986
Re: Potomac Gurnee Finance Corp., Commercial
Mortgage Pass-Through Certificates
STATE OF )
) ss.:
COUNTY OF )
I, _____________________, under penalties of perjury, declare that, to the
best of my knowledge and belief, the following representations are true and,
being first sworn, I depose and say:
1. I am the _________________ of ____________________ (the "Investor"),
whose taxpayer identification number is _______________, on behalf of which
entity I have the authority to make this affidavit.
2. The Investor is acquiring a ____% Percentage Interest in the Class R
Certificates. The Class R Certificates represent an interest in a portion of
the Trust Fund established by Potomac Gurnee Finance Corp. (the "Depositor")
and in which the Depositor's Commercial Mortgage Pass-Through
Certificates represent a beneficial ownership interest. A real estate
mortgage investment conduit ("REMIC") election has been made for certain
assets of the Trust Fund under Section 860D of the Internal Revenue Code of
1986, as amended (the "Code").
3. No purpose of the acquisition of the Class R Certificates by the
Investor is to avoid or impede the assessment or collection of federal income
tax.
4. The Investor is not a "Disqualified Organization" (as defined below)
and is not acquiring the Class R Certificates for the account of, or as agent or
nominee of, or with a view to the transfer of direct or indirect record or
beneficial ownership to,
G-1
a Disqualified Organization. For the purposes hereof, a Disqualified
Organization is any of the following: (i) the United States, any State or
political sub-division thereof, any foreign government, any international
organization, or any agency or instrumentality of any of the foregoing; (ii) any
organization (other than a ▇▇▇▇▇▇'▇ Cooperative as defined in Section 521 of the
Code) that is exempt from federal income taxation (including taxation under the
unrelated business taxable income provisions of Section 511 of the Code); (iii)
any rural telephone or electrical service cooperative described in Section
1381(a)(2)(C) of the Code or (iv) any other entity designated as a Disqualified
Organization by relevant legislation amending the REMIC Provisions and in effect
at or proposed to be effective as of the time of the determination.
5. The Investor acknowledges that Section 860E(e) of the Code imposes a
substantial tax on the transferor or, in certain circumstances, on an agent for
the transferee, with respect to any transfer of any interest in any Class R
Certificates to a Disqualified Organization.
6. The Investor is a "U.S. Person" as that term is defined in the
Transferee's Letter of even date herewith, and the Investor is the beneficial
owner of the Class R Certificates, and is not holding the Class R Certificates
as nominee for any other person.
7. The following information of the Investor is true and correct:
Address:______________________________________________; contact for tax matters
____________________________; phone number ____________________; form of
organization of Investor ________________________; and acquisition date
__________________.
8. Capitalized terms used herein without definition shall have the
meanings assigned such terms in the Trust and Servicing Agreement dated as of
December 1, 1996 among the Depositor, AMRESCO Management, Inc., as Servicer,
LaSalle National Bank, as Trustee, and ABN AMRO Bank N.V., as Fiscal Agent.
G-2
IN WITNESS WHEREOF, the Investor has caused this instrument to be duly
executed on its behalf, by its ____________________ and its seal to be hereunto
attached, this ______ day of _______________, _____.
[Name of Investor]
By: __________________________
Name:
Title:
Personally appeared before me ____________________________, known or
proved to me to be the same person who executed the foregoing instrument and to
be a ____________________ of the Investor, and acknowledged to me that he
executed the same as his free act and deed and as the free act and deed of the
Investor.
Subscribed and sworn before me
this ____ day of _______________, ______
________________________________
Notary Public
My commission expires the _____ day
of ___________________, _____.
G-3
EXHIBIT H
TRANSFEREE'S LETTER
[DATE]
Potomac Gurnee Finance Corp.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
LaSalle National Bank
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Ladies and Gentlemen:
We propose to purchase a ____% Percentage Interest in the Class R
Certificates issued under the Trust and Servicing Agreement, dated as of
December 1, 1996 (the "Trust and Servicing Agreement"), among Potomac Gurnee
Finance Corp., as Depositor, AMRESCO Management, Inc., as Servicer, LaSalle
National Bank, as Trustee, and ABN AMRO Bank N.V., as Fiscal Agent. Capitalized
terms used but not defined herein shall have the meanings set forth in the Trust
and Servicing Agreement. We are delivering this letter pursuant to Section
5.02(d) of the Trust and Servicing Agreement.
1. We certify that on the date hereof we have simultaneously
herewith delivered to you an affidavit certifying, among other things, that (i)
we are not a Disqualified Organization and (ii) we are not purchasing such Class
R Certificates on behalf of a Disqualified Organization. We understand that any
breach by us of this certification may cause us to be liable for a tax imposed
upon transfers to Disqualified Organizations.
2. We acknowledge that we will be the beneficial owner of the Class
R Certificates and that the Class R Certificates will be registered in our name
and not in the name of a nominee.
H-1
3. We certify that no purpose of our purchase of the Class R
Certificates is to avoid or impede the assessment or collection of tax.
4. We represent that:
(a) We understand that the Class R Certificates represent, for
federal income tax purposes, a "residual interest" in a "real estate mortgage
investment conduit" under the Internal Revenue Code of 1986, as amended (the
"Code");
(b) We understand that as the holder of the Class R
Certificates we will be required to take into account, in determining our
taxable income, our pro rata percentage interest of the taxable income of the
Trust REMIC in accordance with all applicable provisions of the Code.
(c) We understand that we may incur tax liabilities in excess
of any cash flows generated by the Class R Certificates and we intend to pay
taxes associated with holding the Class R Certificates as they become due.
5. We understand that if, notwithstanding the transfer restrictions,
the Class R Certificates are in fact transferred to a Disqualified Organization,
a tax may be imposed on the transferor of the Class R Certificates. We agree
that any breach by us of these representations shall render such transfer of the
Class R Certificates by us absolutely null and void and shall cause no rights in
the Class R Certificates to vest in the transferee.
6. The sale to us and our purchase of the Class R Certificates
constitutes a sale for tax and all other purposes and each party thereto has
received due and adequate consideration. In our view, the transaction represents
fair value, representing the results of arm's-length negotiations and taking
into account our analysis of the tax and other consequences of investment in the
Class R Certificates.
7. We expect that the purchase of the Class R Certificates, together
with the receipt of the price, if any,
H-2
therefor will be economically neutral or profitable to us overall, after all
related expenses (including taxes) have been paid and based on conservative
assumptions with respect to discount rates, prepayments and other factors
necessary to evaluate profitability.
8. We are 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 that
is subject to U.S. federal income tax regardless of the source of its income. We
are duly organized and validly existing under the jurisdiction of our
organization. We are neither bankrupt nor insolvent nor do we have reason to
believe that we will become bankrupt or insolvent. We have conducted and are
conducting our business so as to comply in all material respects with all
applicable statutes and regulations. The person executing and delivering this
letter on our behalf is duly authorized to do so, the execution and delivery by
us of this letter and the consummation of the transaction on the terms set forth
herein are within our corporate power and, upon such execution and delivery,
this letter will constitute our legal, valid and binding obligation, enforceable
against us in accordance with its terms, subject, as to the enforcement of
remedies, to applicable bankruptcy, reorganization, insolvency, moratorium and
other laws affecting the rights of creditors generally and to general principles
of equity and the discretion of the court (regardless of whether enforcement of
such remedies is considered in a proceeding in equity or at law).
9. Neither the execution and delivery by us of this letter, nor the
compliance by us with the provisions hereof, nor the consummation by us of the
transactions as set forth herein, will (i) conflict with or result in a breach
of, or constitute a default or result in the acceleration of any obligation
under, our articles or by-laws or after giving effect to the consents or the
taking of the actions contemplated by clause (ii) of this subparagraph, any of
the provisions of any law, governmental rule, regulation, judgment, decree or
order binding on us or our properties, or any of the provisions of any indenture
or mortgage or any other contract or instrument to which we are a party or by
which we or any of our properties is bound, or (ii) require the
H-3
consent of or notice to or any filing with, any person, entity or governmental
body, which has not been obtained or made by us.
10. We anticipate being a profit-making entity on an ongoing basis.
11. We have filed all required federal and state income tax returns
and have paid all federal and state income taxes due; we intend to file and pay
all such returns and taxes in the future.
12. We agree that in the event that at some future time we wish to
transfer the Class R Certificates, we will transfer the Class R Certificates
only to a transferee that:
(i) is not a Disqualified Organization and is not
purchasing such Class R Certificates on behalf of a Disqualified
Organization, and
(ii) has delivered to the Certificate Registrar a transferee
letter in the form of Exhibit H to the Trust and Servicing Agreement and
an affidavit in the form of Exhibit G to the Trust and Servicing Agreement
and, if requested by the Certificate Registrar, an opinion of counsel (in
form acceptable to the Certificate Registrar), that the proposed transfer
will not cause the Class R Certificates to be held by a Disqualified
Organization.
13. We are knowledgeable and experienced in financial, business and
tax matters generally and, in particular, with respect to the investment risks
and tax consequences of REMIC residuals that provide little or no cash flow and
are capable of evaluating the merits and risks of an investment in the Class R
Certificates; we are able to bear the economic risks of an investment in the
Class R Certificates.
14. In addition, we acknowledge that the Certificate Registrar will
not register the transfer of the Class R Certificates to a transferee that is a
non-U.S. Person.
15. We are acquiring the Class R Certificates for our own account
for the purpose of investment and not with a view to
H-4
or for sale in connection with any distribution thereof, subject nevertheless to
any requirement of law that the disposition of our property shall at all times
be and remain within our control.
16. We will comply with all applicable federal and state securities
laws in connection with any subsequent resale by us of the Class R Certificates.
17. We understand that none of the Depositor, CS First Boston
Corporation, ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇, the Servicer, the Trustee or
the Fiscal Agent is required to register the Class R Certificates under the
Securities Act of 1933.
18. We are either not a plan that is subject to the Department of
Labor regulation set forth in 29 C.F.R. Section 2510.3-101 or we have provided
to LaSalle National Bank, as Certificate Registrar, an Opinion of Counsel as
described in Section 5.02(c)(ii) of the Trust and Servicing Agreement.
19. "U.S. Person" shall mean 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 that is subject to U.S. federal income tax regardless of the
source of its income.
20. We hereby designate the Trustee as our fiduciary to perform the
duties of the Tax Matters Person for the Trust REMIC.
Very truly yours,
[Name of Transferee]
By: _________________________
Name:
Title:
H-5
EXHIBIT I
FORM OF TRUST RECEIPT
[Date]
LaSalle National Bank
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention:
Re: Potomac Gurnee Finance Corp., Commercial
Mortgage Pass-Through Certificates
Ladies and Gentlemen:
In connection with the administration of the Mortgage Loan held by
you as Trustee under the Trust and Servicing Agreement dated as of December
1, 1996 among Potomac Gurnee Finance Corp., as Depositor, AMRESCO Management,
Inc., as Servicer, LaSalle National Bank, as Trustee, and ABN AMRO Bank N.V.,
as Fiscal Agent (the "Agreement"), the undersigned, as Servicer under the
Agreement, requests the release, and acknowledges receipt, of the portion of
the Mortgage File held by you as Trustee relating to the Turst Property
for the reason indicated below.
REASON FOR REQUESTING DOCUMENTS:
_____ 1. Required for foreclosure or servicing.
Items requested:_________________________________________________
Upon our return of all of the above documents to you as Trustee, please
acknowledge your receipt by signing in the space indicated below, and returning
this form.
____________________________, DOCUMENTS RETURNED TO TRUSTEE
as Servicer
By:_________________________ By:___________________________
Name: Name:
I-1
Title: Title:
Date:_______________________ Date:_________________________
I-2
EXHIBIT J
[Intentionally left blank]
J-1
EXHIBIT K
POTOMAC GURNEE FINANCE CORP.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERVICER REMITTANCE REPORT
[Date]
Component A Component B Component C Component D Total
1. Principal
a) Beginning Scheduled Balance $[ ] $[ ] $[ ] $[ ] $[ ]
b) Ending Scheduled Balance [ ] [ ] [ ] [ ] [ ]
c) Scheduled Principal Payments [ ] [ ] [ ] [ ] [ ]
d) Unscheduled Payments [ ] [ ] [ ] [ ] [ ]
e) Balloon Payments [ ] [ ] [ ] [ ] [ ]
f) Net Liquidation Proceeds [ ] [ ] [ ] [ ] [ ]
g) Principal Prepayments [ ] [ ] [ ] [ ] [ ]
2. Interest
a) Scheduled Interest Payments [ ] [ ] [ ] [ ] [ ]
b) Additional Interest [ ] [ ] [ ] [ ] [ ]
c) Unpaid Additional Interest [ ] [ ] [ ] [ ] [ ]
Shortfalls
d) Default Rate Interest [ ] [ ] [ ] [ ] [ ]
e) Interest on P&I Advance [ ] [ ] [ ] [ ] [ ]
3. Prepayment Premiums
4. Principal and Interest Advance
a) By the Servicer [ ] [ ] [ ] [ ] [ ]
b) By the Trustee [ ] [ ] [ ] [ ] [ ]
5. Servicing Compensation
a) Servicer Fees [ ] [ ] [ ] [ ] [ ]
b) Trustee Fees [ ] [ ] [ ] [ ] [ ]
c) Special Servicer Fees [ ] [ ] [ ] [ ] [ ]
d) Liquidation Fees [ ] [ ] [ ] [ ] [ ]
e) Modification Fees [ ] [ ] [ ] [ ] [ ]
f) Late Charges [ ] [ ] [ ] [ ] [ ]
g) Other Mortgagor Fees [ ] [ ] [ ] [ ] [ ]
6. Net Available Distribution $[ ] $[ ] $[ ] $[ ] $[ ]
Amount
7. Principal Balance and Number of
Loans
a) Mortgage Loan Principal [ ] [ ] [ ] [ ] [ ]
Balance
[ ] [ ]
b) Default Mortgage Loans
1) Number of Loans [ ] [ ] [ ] [ ] [ ]
2) Principal Balance [ ] [ ] [ ] [ ] [ ]
c) Foreclosed Mortgage Loans
1) Number of Loans [ ] [ ] [ ] [ ] [ ]
2) Principal Balance [ ] [ ] [ ] [ ] [ ]
3) Book Value [ ] [ ] [ ] [ ] [ ]
8. Class Percentages [ ]% [ ]% [ ]% [ ]% [ ]%
Based upon Ending Scheduled
Balances
9. *NOI for preceding 12 months [ ] [ ] [ ] [ ] [ ]
10. Current Debt Service Coverage [ ] [ ] [ ] [ ] [ ]
Ratio
K-1
THE INFORMATION IN THIS REMITTANCE REPORT IS TAKEN FROM RECORDS OF OR
AVAILABLE TO AMRESCO MANAGEMENT, INC. AND IS BELIEVED BY AMRESCO TO BE
CORRECT IN ALL MATERIAL RESPECTS, BUT NO REPRESENTATION OR WARRANTY
IS MADE WITH RESPECT THERETO.
K-2
Allocated Loan Amount per Property
Addendum to Remittance Report
[Date]
Initial Allocated Loan Amt. (Gurnee) $[ ]
Total Debt $[ ]
% allocation [ ]%
Total Adjustment $[ ]
Gurnee ▇▇▇▇▇ adjustment $[ ]
Ending Allocated Loan Amt (Gurnee) $[ ]
Initial Allocated Loan Amt. $[ ]
(Potomac)
Total Debt $[ ]
% allocation [ ]%
Total Adjustment $[ ]
Gurnee ▇▇▇▇▇ adjustment $[ ]
Ending Allocated Loan Amt $[ ]
(Potomac)
Total Adjusted Debt $[ ]
K-3
Sub Account Balances
Addendum to Remittance Report
[Date]
Balances as of [Date]
Basic Carrying Costs Account [ ]
Debt Service Account [ ]
Replacement Reserve Account [ ]
------
[ ]
K-4
AMRESCO MANAGEMENT, INC.
POTOMAC GURNEE FINANCE CORP.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
COLLECTION ACCOUNT STATEMENT
FOR THE PERIOD: [DATE] THROUGH [DATE]
ACCOUNT #
BEGINNING BALANCE AT [DATE] $[ ]
DEPOSITS
MONTHLY PAYMENTS RECEIVED
(A) PRINCIPAL [ ]
(B) INTEREST [ ]
LOAN LEVEL UNAPPLIED FUNDS [ ]
PRINCIPAL PREPAYMENTS [ ]
CURTAILMENTS [ ]
LIQUIDATION PROCEEDS [ ]
CONDEMNATION PROCEEDS [ ]
PREPAYMENT PREMIUMS [ ]
P&I ADVANCES [ ]
LATE/ASSUMPTION FEES/OTHER FEES [ ]
NET INCOME [ ]
INVESTMENT LOSSES [ ]
INVESTMENT EARNINGS [ ]
TOTAL DEPOSITS: [ ]
WITHDRAWALS
DISTRIBUTION WIRE [ ]
TRUSTEE FEE [ ]
REVERSAL OF PAYMENT [ ]
EXPENSES OF TRUST [ ]
REIMBURSEMENT OF SERVICING ADVANCES [ ]
REIMBURSEMENT OF P&I ADVANCES [ ]
MASTER SERVICING FEES [ ]
WITHDRAWAL OF LATE/ASSUMPTION/OTHER FEES [ ]
WITHDRAWAL OF INVESTMENT EARNINGS [ ]
TOTAL WITHDRAWALS: [ ]
ENDING BALANCE AT [DATE] $[ ]
BALANCE FROM BANK STATEMENT $[ ]
VARIANCE $[ ]
EXPLANATION OF VARIANCE
K-5
EXHIBIT L
SCHEDULE OF REQUIRED INSURANCE POLICIES
K-6