LTC REMIC IV CORPORATION,
DEPOSITOR
GMAC COMMERCIAL MORTGAGE CORPORATION,
MASTER SERVICER
LTC PROPERTIES, INC.,
SPECIAL SERVICER AND ORIGINATOR
and
LASALLE NATIONAL BANK,
TRUSTEE
________________________________________________
POOLING AND SERVICING AGREEMENT
Dated as of April 20, 1998
________________________________________________
LTC Commercial Mortgage Pass-Through Certificates
Series 1998-1
TABLE OF CONTENTS
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PAGE
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ARTICLE I
DEFINITIONS
SECTION 1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 1.2 Certain Calculations.. . . . . . . . . . . . . . . . . . . . . 33
ARTICLE II
DECLARATION OF TRUST FUND;
CONVEYANCE OF MORTGAGE LOANS AND MORTGAGE CERTIFICATES;
ORIGINAL ISSUANCE OF CERTIFICATES
SECTION 2.1 Creation and Declaration of Trust Fund; Conveyance of
Mortgage Loans, Conveyance of Mortgage Certificates,
Conveyance of Other Collateral . . . . . . . . . . . . . . . . 35
SECTION 2.2 Acceptance by Custodian and Trustee; Repurchase or
Substitution for Defective Documentation or other Failure to
Validly Assign Mortgage Loans and Mortgage
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 2.3 Representations and Warranties and Covenants of the
Depositor. . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 2.4 Execution and Delivery of Certificates; Issuance of
Uncertified Lower-Tier Interests . . . . . . . . . . . . . . . 43
SECTION 2.5 Representations, Warranties and Covenants of the Master
Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 2.6 Representations, Warranties and Covenants of the Special
Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 2.7 [RESERVED] . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 2.8 Miscellaneous REMIC Provisions.. . . . . . . . . . . . . . . . 46
SECTION 2.9 Transfer Agreement . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE III
ADMINISTRATION AND SERVICING OF THE
MORTGAGE LOANS
SECTION 3.1 Master Servicer to Act as Master Servicer; Special Servicer
to Act as Special Servicer; Administration of the Mortgage
Loans and the Mortgage Certificates. . . . . . . . . . . . . . 48
SECTION 3.2 Liability of the Master Servicer and the Special Servicer. . . 52
SECTION 3.3 Collection of Certain Mortgage Loan Payments.. . . . . . . . . 52
SECTION 3.4 Payment of Taxes, Assessments and Similar Items. . . . . . . . 53
SECTION 3.5 Collection Account, Distribution Account and Upper-Tier
Distribution Account . . . . . . . . . . . . . . . . . . . . . 54
SECTION 3.6 Permitted Withdrawals from the Collection Account. . . . . . . 55
SECTION 3.7 Investment of Funds in the Collection Account, REO Account,
the Distribution
Account and the Upper-Tier Distribution Account. . . . . . . . 57
SECTION 3.8 Maintenance of Insurance Policies and Errors and Omissions
and Fidelity
Coverage.. . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 3.9 Enforcement of Due-On-Sale Clauses; Assumption Agreements. . . 61
SECTION 3.10 Realization Upon Defaulted Mortgage Loans. . . . . . . . . . . 62
SECTION 3.11 Trustee to Cooperate; Release of Mortgage Files and Mortgage
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 3.12 Servicing Compensation . . . . . . . . . . . . . . . . . . . . 66
SECTION 3.13 Reports to the Trustee; Collection Account Statements. . . . . 66
SECTION 3.14 Annual Statement as to Compliance. . . . . . . . . . . . . . . 67
SECTION 3.15 Annual Independent Public Accountants' Servicing Report. . . . 67
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SECTION 3.16 Actions with Respect to the Mortgage Certificates. . . . . . . 68
SECTION 3.17 Title and Management of REO Properties and REO Account
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 3.18 Sale of Defaulted Mortgage Loans and REO Properties. . . . . . 71
SECTION 3.19 Inspections. . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 3.20 Modifications, Waivers, Amendments and Consents. . . . . . . . 72
SECTION 3.21 Transfer of Servicing Between Master Servicer and Special
Servicer;
Record-Keeping . . . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 3.22 P&I Advances . . . . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 3.23 Access to Certain Documentation. . . . . . . . . . . . . . . . 78
SECTION 3.24 Authenticating Agent . . . . . . . . . . . . . . . . . . . . . 78
SECTION 3.25 Appointment of Custodians. . . . . . . . . . . . . . . . . . . 79
ARTICLE IV
DISTRIBUTIONS TO CERTIFICATEHOLDERS
SECTION 4.1 Distributions from Lower-Tier REMIC. . . . . . . . . . . . . . 80
SECTION 4.2 Distributions from Upper-Tier REMIC. . . . . . . . . . . . . . 85
SECTION 4.3 Statements to Certificateholders . . . . . . . . . . . . . . . 90
SECTION 4.4 Compliance with Withholding Requirements . . . . . . . . . . . 92
SECTION 4.5 REMIC Compliance . . . . . . . . . . . . . . . . . . . . . . . 93
SECTION 4.6 Imposition of Tax on the Upper-Tier REMIC or Lower-Tier
REMIC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
SECTION 4.7 Appraisal Reductions . . . . . . . . . . . . . . . . . . . . . 95
SECTION 4.8 Adjustment of Servicing Fees . . . . . . . . . . . . . . . . . 95
ARTICLE V
THE CERTIFICATES
SECTION 5.1 The Certificates.. . . . . . . . . . . . . . . . . . . . . . . 97
SECTION 5.2 Certificate Registrar. . . . . . . . . . . . . . . . . . . . . 99
SECTION 5.3 Registration of Transfer and Exchange of Certificates. . . . . 99
SECTION 5.4 Mutilated, Destroyed, Lost or Stolen Certificates. . . . . . .102
SECTION 5.5 Persons Deemed Owners. . . . . . . . . . . . . . . . . . . . .102
SECTION 5.6 Appointment of Paying Agent. . . . . . . . . . . . . . . . . .102
SECTION 5.7 Access to Certificateholders' Names and Addresses. . . . . . .103
SECTION 5.8 Actions of Certificateholders. . . . . . . . . . . . . . . . .103
ARTICLE VI
THE DEPOSITOR, THE MASTER SERVICER AND THE SPECIAL SERVICER
SECTION 6.1 Liability of the Depositor, the Master Servicer and the
Special Servicer . . . . . . . . . . . . . . . . . . . . . . .104
SECTION 6.2 Merger or Consolidation of the Special Servicer or the
Master Servicer. . . . . . . . . . . . . . . . . . . . . . . .104
SECTION 6.3 Limitation on Liability of the Depositor, the Master
Servicer, the Special Servicer and Others . . . . . . . .104
SECTION 6.4 Limitation on Resignation of the Master Servicer and the
Special Servicer . . . . . . . . . . . . . . . . . . . . . . .105
SECTION 6.5 Rights of the Depositor and the Trustee in Respect of the
Master Servicer and the Special Servicer . . . . . . . . . . .106
SECTION 6.6 Certain Rights of the Master Servicer and Special Servicer . .106
SECTION 6.7 Not Responsible for Recitals or Issuance of Certificates . . .108
SECTION 6.8 Depositor, Special Servicer, Master Servicer, and Trustee to
Cooperate. . . . . . . . . . . . . . . . . . . . . . . . . . .108
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ARTICLE VII
DEFAULT
SECTION 7.1 Events of Default. . . . . . . . . . . . . . . . . . . . . . .109
SECTION 7.2 Trustee and Master Servicer to Act; Appointment of Successor .111
SECTION 7.3 Notification to Certificateholders . . . . . . . . . . . . . .112
SECTION 7.4 Other Remedies of Trustee. . . . . . . . . . . . . . . . . . .112
SECTION 7.5 Waiver of Past Events of Default . . . . . . . . . . . . . . .112
SECTION 7.6 Effects of Transfer. . . . . . . . . . . . . . . . . . . . . .112
SECTION 7.7 Trustee as Maker of Advances . . . . . . . . . . . . . . . . .112
ARTICLE VIII
CONCERNING THE TRUSTEE
SECTION 8.1 Duties of Trustee. . . . . . . . . . . . . . . . . . . . . . .114
SECTION 8.2 Certain Matters Affecting the Trustee. . . . . . . . . . . . .115
SECTION 8.3 Trustee Not Liable for Certificates, Mortgage Loans or
Mortgage Certificates. . . . . . . . . . . . . . . . . . . . .117
SECTION 8.4 Trustee May Own Certificates . . . . . . . . . . . . . . . . .118
SECTION 8.5 Limitation on Liability of Trustee . . . . . . . . . . . . . .118
SECTION 8.6 Eligibility Requirements for Trustee . . . . . . . . . . . . .118
SECTION 8.7 Resignation and Removal of the Trustee . . . . . . . . . . . .119
SECTION 8.8 Representations and Warranties of the Trustee. . . . . . . . .119
SECTION 8.9 Successor Trustee. . . . . . . . . . . . . . . . . . . . . . .120
SECTION 8.10 Merger or Consolidation of Trustee . . . . . . . . . . . . . .121
SECTION 8.11 Appointment of Co-Trustee or Separate Trustee. . . . . . . . .121
SECTION 8.12 [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . .122
ARTICLE IX
TERMINATION
SECTION 9.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . . .123
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . .126
SECTION 10.2 Limitation on Rights of Certificateholders . . . . . . . . . .126
SECTION 10.3 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . .126
SECTION 10.4 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . .126
SECTION 10.5 Severability of Provisions.. . . . . . . . . . . . . . . . . .128
SECTION 10.6 Notice to the Rating Agency. . . . . . . . . . . . . . . . . .128
SECTION 10.7 Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . .129
SECTION 10.8 Limitation of Liability of Certain Persons . . . . . . . . . .131
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EXHIBITS
Exhibit A-1 Form of Class A Certificate
Exhibit A-2 Form of Class B Certificate
Exhibit A-3 Form of Class C Certificate
Exhibit A-4 Form of Class D Certificate
Exhibit A-5 Form of Class E Certificate
Exhibit A-6 Form of Class F Certificate
Exhibit A-7 Form of Class G Certificate
Exhibit A-8 Form of Class X-1 Certificate
Exhibit A-9 Form of Class X-2 Certificate
Exhibit A-10 Form of Class R Certificate
Exhibit A-11 Form of Class LR Certificate
Exhibit B Information Regarding the Mortgage Loans and the Certificate
Mortgage Loans
Exhibit C Fees and Expenses of Trust Fund
Exhibit D Form of Custodial Agreement
Exhibit E Form of Subservicing Agreement
Exhibit F Form of Memorandum Regarding Mortgage Loan Modifications
Exhibit G Form of Memorandum Regarding Foreclosure and REO Properties
Exhibit H-1 Form of Transfer Affidavit for Residual Certificate(s)
Exhibit H-2 Form of Transferor Acknowledgement for Residual
Certificate(s)
Exhibit I Form of Request for Release
Exhibit J Form of Custodian's Exception Report
Exhibit K Information Regarding the Mortgaged Properties Related to
the Mortgage Loans and the Certificate Mortgage Loans
Exhibit L Form of Investment Letter
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This POOLING AND SERVICING AGREEMENT, dated and effective as of April
20, 1998 among LTC REMIC IV Corporation, a Delaware corporation, as Depositor
(the "Depositor"), GMAC Commercial Mortgage Corporation, a California
corporation, as Master Servicer (the "Master Servicer"), LTC Properties, Inc.
("LTC"), a Maryland corporation, as a Special Servicer (a "Special Servicer"),
and LaSalle National Bank, a nationally chartered bank, as Trustee (the
"Trustee").
PRELIMINARY STATEMENT:
Terms used but not defined in this Preliminary Statement shall have the meanings
specified in Article I hereof.
The Depositor intends to sell pass-through certificates to be issued
hereunder in multiple classes which in the aggregate will evidence the entire
beneficial ownership interest in the Trust Fund consisting primarily of the
Mortgage Loans and Mortgage Certificates. As provided herein, the Trustee will
elect that the Trust Fund be treated for federal income tax purposes as two
separate real estate mortgage investment conduits within the meaning of the
Code. The Class A, Class B, Class C, Class D, Class E, Class F, Class G, Class
X-1 and Class X-2 Certificates will be designated as the "regular interests,"
and the R Certificate will be designated as the "residual interest," in the
Upper-Tier REMIC for purposes of the REMIC Provisions under federal income tax
law. The Class AL, Class BL, Class CL, Class DL, Class EL, Class FL, Class GL,
Class AR-L and Class X-1L Interests will be designated as the "regular
interests" in the Lower-Tier REMIC and the Class LR Certificate will be
designated as the "residual interest" in the Lower-Tier REMIC for purposes of
the REMIC Provisions under federal income tax law.
The following table sets forth, to the extent applicable, the Class
designation, initial Certificate Principal Amount and Pass-Through Rate for each
Class of Certificates comprising the interests in the Upper-Tier REMIC created
hereunder.
Initial
Certificate Pass-Through
Designation Principal Amount Rate
----------- ---------------- ------------
Class A $ 82,491,000 6.029%
Class B $ 6,226,000 6.170%
Class C $ 10,896,000 6.314%
Class D $ 9,338,000 6.960%
Class E $ 12,452,000 7.792%
Class F $ 7,783,000 7.910%
Class G $ 26,460,541 7.910%
Class R $ 1,000 6.029%
Class X-1 (1) (2)
Class X-2 (1) (3)
(1) The Class X-1 and X-2 Certificates do not have, and are not
denominated in, a Certificate Principal Amount, but rather have Notional
Amounts and are entitled to interest distributions as provided herein.
(2) Class X-1 Accrued Interest.
(3) Class X-2 Accrued Interest.
The following table sets forth the designation, initial Certificate
Principal Amount and Pass-Through Rate for each Class of Lower-Tier Interests.
Initial
Certificate Pass-Through
Designation Principal Amount Rate
----------- ---------------- ------------
Class AL $ 82,491,000 7.910%
Class BL $ 6,226,000 7.910%
Class CL $ 10,896,000 7.910%
Class DL $ 9,338,000 7.910%
Class EL $ 12,452,000 7.910%
Class FL $ 7,783,000 7.910%
Class GL $ 26,460,541 7.910%
Class AR-L $ 1,000 7.910%
Class X-1L (1) (2)
Class LR $ 1,000 7.910%
(1) The Class X-1L Certificates do not have, and are not denominated
in, Certificate Principal Amounts, but rather have Notional Amounts and are
entitled to interest distributions as provided herein.
(2) Class X-1L Accrued Interest.
As of the Cut-Off Date, the Mortgage Loans and Mortgage Certificates
have an aggregate Scheduled Principal Balance equal to $155,648,540.83.
In consideration of the mutual agreements herein contained, the
Depositor, the Master Servicer, the Special Servicer and the Trustee agree as
follows:
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ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINED TERMS.
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the meanings specified in this
Article.
"ACCREDITED INVESTOR": As defined in Section 5.3(c).
"ACCRUED CERTIFICATE INTEREST": With respect to each Distribution
Date for any Class of Regular Certificates, other than the Class X Certificates,
and the Class R and Class LR Certificates, interest for the related Interest
Accrual Period, calculated on the basis of a 360-day year consisting of twelve
30-day months, at the applicable Pass-Through Rate for such Class on the
Certificate Principal Amount of such Class; PROVIDED that solely for such
purpose any distribution to be made in reduction of the Certificate Principal
Amount of such Class of Certificates (and any Realized Losses of principal
allocated to the principal balance of each such Class) shall be deemed to have
been made as of the end of the preceding Interest Accrual Period rather than on
the Distribution Date when it is actually so made. With respect to each
Distribution Date for the Class X-1L Interests, the Class X-1 Certificates, and
Class X-2 Certificates, the "Accrued Certificate Interest" shall mean the Class
X-1L Accrued Interest, the Class X-1 Accrued Interest, or the Class X-2 Accrued
Interest, as applicable.
"ACQUISITION DATE": The date as of which beneficial ownership of a
Mortgaged Property has been acquired by the Special Servicer or the Trustee on
behalf of the Trust Fund through foreclosure, deed in lieu of foreclosure or
otherwise.
"ACT": The Securities Act of 1933, as it may be amended from time to
time.
"ADVANCE": A P&I Advance or a Servicing Advance.
"ADVANCE INTEREST": Interest accrued and unpaid on any Advance, at a
rate per annum equal to the Advance Rate.
"ADVANCE RATE": An annual rate, as such rate may be adjusted from
time to time during the term of the Advance, equal to the Prime Rate per annum.
"AFFILIATE": With respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, and the terms "controlling" and
"controlled" have meanings correlative to the foregoing. The Trustee may obtain
and rely on an Officer's Certificate of the Master Servicer, the Special
Servicer or the Depositor to determine whether any Person is an Affiliate of
such party.
"AGREEMENT": This Pooling and Servicing Agreement and all amendments
hereof and supplements hereto.
"AMOUNT HELD FOR FUTURE DISTRIBUTION": With respect to any
Distribution Date, the portion of any amount in the Collection Account
consisting of (a) all Monthly Payments received in respect of the Mortgage Loans
deposited in the Collection Account on or prior to the related Determination
Date but due during any Due Period relating to a subsequent Distribution Date,
but excluding a Monthly Payment if the principal portion thereof is
3
distributable on such Distribution Date in connection with the payment of a
Balloon Payment or a Principal Prepayment and (b) any Principal Prepayment
received after the end of the related Prepayment Period.
"ANTICIPATED TERMINATION DATE": The Distribution Date on which it is
anticipated that the Trust Fund, the Upper-Tier REMIC and the Lower-Tier REMIC
will be terminated pursuant to Section 9.1(b), Section 9.1(c) or Section 9.1(d).
"APPRAISAL REDUCTION" means for any Mortgage Loan with respect to
which an appraisal or estimated valuation is performed pursuant to Section 4.7,
an amount equal to the excess of (a) the Scheduled Principal Balance of such
Mortgage Loan (or of all Mortgage Loans secured by the same Mortgaged Property,
if applicable) or the related REO Mortgage Loan (or REO Mortgage Loans, if
applicable), as the case may be, as of the related Determination Date over (b)
(i) 90% of the Appraised Value of such Mortgaged Property or REO Account
Property (or REO Account Properties, if applicable) as determined by such
appraisal less (ii) the sum of (A) to the extent not previously advanced by the
Master Servicer, the Trustee or the Special Servicer, all accrued and unpaid
interest on such Mortgage Loan (or Mortgage Loans, if applicable) at a per annum
rate equal to the Mortgage Interest Rate, (B) all unreimbursed Advances and
interest thereon in respect of such Mortgage Loan (or Mortgage Loans, if
applicable) and (C) all currently due and unpaid real estate taxes and
assessments, insurance premiums and, if applicable, ground rents of such
Mortgaged Property (or Mortgaged Properties, if applicable) or the REO Account
Property (or REO Account Properties, if applicable), as the case may be
(PROVIDED, that if the Scheduled Principal Balance of the Mortgage Loan (or
Mortgage Loans, if applicable) or REO Mortgage Loan (or REO Mortgage Loans, if
applicable), as the case may be, is less than or equal to $1,000,000, the
Special Servicer may, at its option, rely on an internal valuation of such
Mortgaged Property (or Mortgaged Properties, if applicable) rather than on its
Appraised Value). For Mortgage Loans with a Scheduled Principal Balance equal
to or less than $1,000,000, the Appraisal Reduction will be the lesser of that
calculated above or 40% of the Scheduled Principal Balance of such Mortgage
Loan. The aggregate Appraisal Reduction related to a Mortgage Loan will be
reduced to zero as of the date such Mortgage Loan (i) is paid in full,
liquidated, repurchased or otherwise disposed of, or (ii) in the case of a
Specially Serviced Mortgage Loan, when such Mortgage Loan is no longer a
Specially Serviced Mortgage Loan; PROVIDED that this exception does not apply in
the case of a Modified Mortgage Loan the payment terms of which have been
modified more than once since the Cut-Off Date.
"APPRAISAL REDUCTION ESTIMATE" As defined in Section 4.7.
"APPRAISED VALUE" means, with respect to any Mortgaged Property, the
appraised value thereof determined by an Independent MAI appraisal of the
Mortgaged Property securing such Mortgage Loan made by an Independent appraiser
selected by the Master Servicer or the Special Servicer, as applicable.
"ASSIGNMENT OF LEASES, RENTS AND PROFITS": With respect to any
Mortgaged Property, any assignment of leases, rents and profits or similar
agreement executed by the related Borrower, assigning to the mortgagee all of
the income, rents and profits derived from the ownership, operation, leasing or
disposition of all or a portion of such Mortgaged Property, in the form which
was duly executed, acknowledged and delivered, as amended, modified, renewed or
extended through the date hereof and from time to time hereafter.
"ASSIGNMENT OF MORTGAGE": An assignment of Mortgage without recourse,
notice of transfer or equivalent instrument from the related Borrower, in
recordable form, which is sufficient under the laws of the jurisdiction in which
the related Mortgaged Property is located to reflect of record the sale of the
Mortgage; PROVIDED, HOWEVER, that the Trustee or the Custodian shall not be
responsible for determining whether any assignment is legally sufficient or in
recordable form.
"ASSUMED SCHEDULED PAYMENT": With respect to any Balloon Mortgage
Loan that is delinquent in respect of its Balloon Payment (including any REO
Mortgage Loan for which the related Note provided for a Balloon Payment), an
amount deemed to be due for such Mortgage Loan with respect to each Due Period
ending on
4
or after the Due Date for the Balloon Payment, which will be equal to
the Monthly Payment (or Modified Monthly Payment, in the case of a Modified
Mortgage Loan) that would otherwise have been due on such Mortgage Loan during
such Due Period had such Balloon Payment not become due, but instead such
Mortgage Loan had been restructured to provide for amortization of its Scheduled
Principal Balance immediately prior to the Due Date such Balloon Payment was due
(without taking into account any payment due on such Due Date) on a monthly
level payment basis beginning on the Due Date such Balloon Payment was due and
ending on the last day of the original amortization period for such Balloon
Mortgage Loan. The original amortization period for a Balloon Mortgage Loan is
the period over which the Mortgage Loan would have been fully amortized,
assuming that no Balloon Payment was due and that the Borrower continued to make
monthly payments equal to the Monthly Payment (or Modified Monthly Payment, in
the case of a Modified Mortgage Loan) in effect immediately prior to the Due
Date of the Balloon Payment.
"AUTHENTICATING AGENT": As defined in Section 3.24.
"AVAILABLE DISTRIBUTION AMOUNT": With respect to any Distribution
Date, Available Funds with respect to such Distribution Date plus all P&I
Advances actually made for such Distribution Date.
"AVAILABLE FUNDS": With respect to any Distribution Date, an amount
equal to (a) the sum of (i) the amount on deposit in the Collection Account as
of the close of business on the related Determination Date (after giving effect
to any withdrawals therefrom on such Determination Date pursuant to Section 3.6)
and (ii) the portion of the Net REO Proceeds deposited in the Collection Account
by the Special Servicer pursuant to Section 3.17(d) for such Distribution Date
MINUS (b) the sum of (i) the portion of the amount described in clause (a)
hereof that represents the Amount Held for Future Distribution, (ii) to the
extent not previously withdrawn, all other amounts not required to be deposited
by the Master Servicer in the Collection Account, and (iii) any other amounts
the Master Servicer is permitted to withdraw from the Collection Account
pursuant to this Agreement.
"BALLOON MORTGAGE LOAN": A Mortgage Loan which will not fully
amortize itself based on the fixed Monthly Payments by its original Maturity
Date.
"BALLOON PAYMENT": With respect to any Balloon Mortgage Loan, a final
scheduled monthly payment of principal and interest which is due under the terms
of the related Note.
"BANKRUPTCY CODE": The Bankruptcy Code, 11 U.S.C. Section 101 et
seq., as amended from time to time and any successor statute thereto.
"BASIC FEE": With respect to each Specially-Serviced Mortgage Loan
and for any Due Period, an amount equal to the product of one-twelfth of the
Basic Fee Rate and the Scheduled Principal Balance of each such Specially-
Serviced Mortgage Loan outstanding immediately prior to the application of the
Monthly Payment due on the Due Date occurring in such Due Period.
"BASIC FEE RATE": With respect to each Mortgage Loan, a per annum
rate equal to 0.01%.
"BENEFICIAL OWNER": With respect to a Class A, Class B, Class C,
Class D or Class E Certificate maintained on the book-entry records of the
Depository, the Person who is the beneficial owner of such Certificate as
reflected on the books of the Depository or on the books of a Person maintaining
an account with such Depository (directly as a Depository Participant or
indirectly through a Depository Participant, in accordance with the rules of
such Depository).
"BORROWER": Any obligor on a Note.
"BUSINESS DAY": Any day other than a Saturday, a Sunday or a day on
which banking institutions in the city of Chicago, Illinois (for so long as
LaSalle National Bank is the Trustee) or Philadelphia, Pennsylvania or
▇
▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ (so long as GMAC Commercial Mortgage Corporation is
the Master Servicer) are authorized or obligated by law, executive order or
governmental decree to be closed, or LTC Properties, Inc., the Master
Servicer or the Trustee is closed.
"CERTIFICATE": Any Class A Certificate, Class B Certificate, Class C
Certificate, Class D Certificate, Class E Certificate, Class F Certificate,
Class G Certificate, Class X-1 Certificate, Class X-2 Certificate, Class R
Certificate or Class LR Certificate issued, authenticated and delivered
hereunder, and, unless the context clearly requires otherwise, any Class AL,
Class BL, Class CL, Class DL, Class EL, Class FL, Class GL, Class AR-L or Class
X-1L Interest.
"CERTIFICATE FACTOR": With respect to each Class of Certificates
(other than the Class X Certificates) and as of any Distribution Date, a
fraction, expressed as a decimal carried to eight places, the numerator of which
is the Certificate Principal Amount of such Class of Certificates on such
Distribution Date (less any distributions or allocations of Realized Losses in
reduction of the Certificate Principal Amount of such Class of Certificates made
on such Distribution Date) and the denominator of which is the initial
Certificate Principal Amount of such Class of Certificates set forth in the
Preliminary Statement hereto.
"CERTIFICATE MORTGAGE LOANS": The mortgage loans underlying the
Mortgage Certificates.
"CERTIFICATE PRINCIPAL AMOUNT": With respect to any Class of
Certificates (other than any Class X-1 and Class X-2 Certificates), or any Class
of Lower-Tier Interests (other than the Class X-1L Interest) (i) on or prior to
the first Distribution Date, an amount equal to the initial Certificate
Principal Amount of the related Class of Certificates, as specified in the
Preliminary Statement hereto, and (ii) thereafter as of any date of
determination, the Certificate Principal Amount of such Class at the beginning
of the Distribution Date immediately prior to such date of determination, after
giving effect to (x) the distributions of principal made thereon on such prior
Distribution Date and (y) any reductions made in connection with a Realized Loss
of principal allocable on such prior Distribution Date to such Class. The Class
X-1L Interest, the Class X-1 Certificates, and Class X-2 Certificates do not
have a Certificate Principal Amount.
"CERTIFICATE REGISTER" and "CERTIFICATE REGISTRAR": The register
maintained and the registrar appointed pursuant to Sections 5.2 and 5.3.
"CERTIFICATEHOLDER" or "HOLDER": The Person in whose name an
Outstanding Certificate is registered in the Certificate Register.
"CLASS": All of the Certificates bearing the same alphabetical and
numerical class designation.
"CLASS A CERTIFICATE": A certificate designated as "Class A" on the
face thereof, in the form of Exhibit A-1 hereto.
"CLASS A PASS-THROUGH RATE": With respect to any Interest Accrual
Period, a per annum rate equal to 6.029%.
"CLASS A SPREAD RATE": With respect to each Interest Accrual Period,
a per annum rate equal to the difference between (i) 7.910% and (ii) the Class A
Pass-Through Rate.
"CLASS AL INTEREST": An uncertificated Lower-Tier Interest having an
initial Certificate Principal Amount and Pass-Through Rate set forth in the
Preliminary Statement hereto, and which will be designated as a regular interest
in the Lower-Tier REMIC.
6
"CLASS AR-L INTEREST": An uncertificated Lower-Tier Interest having
an initial Certificate Principal Amount and Pass-Through Rate set forth in the
Preliminary Statement hereto, and which will be designated as a regular interest
in the Lower-Tier REMIC.
"CLASS AR-L PRINCIPAL DISTRIBUTION AMOUNT": With respect to any
Distribution Date, an amount equal to the product of (a) the Principal
Distribution Amount for such Distribution Date reduced by the Class LR Principal
Distribution Amount for such Distribution Date and (b) a fraction, the numerator
of which is the Certificate Principal Amount on the Class AR-L Interest on the
first day of the related Interest Accrual Period and the denominator of which is
the Certificate Principal Amount of all Classes of Certificates (other than the
Class LR Certificates) on the first day of the related Interest Accrual Period.
"CLASS B CERTIFICATE": A Certificate designated as "Class B" on the
face thereof, in the form of Exhibit A-2 hereto.
"CLASS B PASS-THROUGH RATE": With respect to any Interest Accrual
Period, a per annum rate equal to 6.170%.
"CLASS B SPREAD RATE": With respect to each Interest Accrual Period,
a per annum rate equal to the difference between (i)7.910% and (ii) the Class B
Pass-Through Rate.
"CLASS BL INTEREST": An uncertificated Lower-Tier Interest having an
initial Certificate Principal Amount and Pass-Through Rate set forth in the
Preliminary Statement hereto, and which will be designated as a regular interest
in the Lower-Tier REMIC.
"CLASS C CERTIFICATE": A Certificate designated as "Class C" on the
face thereof, in the form of Exhibit A-3 hereto.
"CLASS C PASS-THROUGH RATE": With respect to any Interest Accrual
Period, a per annum rate equal to 6.314%.
"CLASS C SPREAD RATE": With respect to each Interest Accrual Period,
a per annum rate equal to the difference between (i) 7.910% and (ii) the Class C
Pass-Through Rate.
"CLASS CL INTEREST": An uncertificated Lower-Tier Interest having an
initial Certificate Principal Amount and Pass-Through Rate set forth in the
Preliminary Statement hereto, and which will be designated as a regular interest
in the Lower-Tier REMIC.
"CLASS D CERTIFICATE": A Certificate designated as "Class D" on the
face thereof, in the form of Exhibit A-4 hereto.
"CLASS D PASS-THROUGH RATE": With respect to any Interest Accrual
Period, a per annum rate equal to 6.960%.
"CLASS D SPREAD RATE": With respect to each Interest Accrual Period,
a per annum rate equal to the difference between (i) 7.910% and (ii) the Class D
Pass-Through Rate.
"CLASS DL INTEREST": An uncertificated Lower-Tier Interest having an
initial Certificate Principal Amount and Pass-Through Rate set forth in the
Preliminary Statement hereto, and which will be designated as a regular interest
in the Lower-Tier REMIC.
"CLASS E CERTIFICATE": A Certificate designated as "Class E" on the
face thereof, in the form of Exhibit A-5 hereto.
7
"CLASS E PASS-THROUGH RATE": With respect to any Interest Accrual
Period, a per annum rate equal to 7.792%.
"CLASS EL INTEREST": An uncertificated Lower-Tier Interest having an
initial Certificate Principal Amount and Pass-Through Rate set forth in the
Preliminary Statement hereto, and which will be designated as a regular interest
in the Lower-Tier REMIC.
"CLASS F CERTIFICATE": A Certificate designated as "Class F" on the
face thereof, in the form of Exhibit A-6 hereto.
"CLASS F PASS-THROUGH RATE": With respect to any Interest Accrual
Period, a per annum rate equal to 7.910%.
"CLASS FL INTEREST": An uncertificated Lower-Tier Interest having an
initial Certificate Principal Amount and Pass-Through Rate set forth in the
Preliminary Statement hereto, and which will be designated as a regular interest
in the Lower-Tier REMIC.
"CLASS G CERTIFICATE": A Certificate designated as "Class G" on the
face thereof, in the form of Exhibit A-7 hereto.
"CLASS G PASS-THROUGH RATE": With respect to any Interest Accrual
Period, a per annum rate equal to 7.910%.
"CLASS GL INTEREST": An uncertificated Lower-Tier Interest having an
initial Certificate Principal Amount and Pass-Through Rate set forth in the
Preliminary Statement hereto, and which will be designated as a regular interest
in the Lower-Tier REMIC.
"CLASS LR CERTIFICATE": The residual interest in the Lower-Tier
REMIC, represented by a Certificate designated as "Class LR" on the face
thereof, in the form of Exhibit A-11 hereto.
"CLASS LR PASS-THROUGH RATE": With respect to any Interest Accrual
Period, a per annum rate equal to 6.029%.
"CLASS LR PRINCIPAL DISTRIBUTION AMOUNT": With respect to any
Distribution Date, an amount equal to the product of (a) the Principal
Distribution Amount for such Distribution Date and (b) a fraction, the numerator
of which is the Certificate Principal Amount of the Class LR Certificates on the
first day of the related Interest Accrual Period and the denominator of which is
the Certificate Principal Amount of all Classes of Certificates on the first day
of the related Interest Accrual Period.
"CLASS R CERTIFICATE": The residual interest in the Upper-Tier REMIC,
which shall be represented by a certificate designated as "Class R" on the face
thereof, in the form of Exhibit A-10 hereto.
"CLASS R PASS-THROUGH RATE": With respect to any Interest Accrual
Period, a per annum rate equal to 6.029%.
"CLASS R PRINCIPAL DISTRIBUTION AMOUNT": With respect to any
Distribution Date, an amount equal to the Class AR-L Principal Distribution
Amount for such Distribution Date.
"CLASS X CERTIFICATES": Collectively, the Class X-1L Interest, the
Class X-1 Certificates and the Class X-2 Certificates.
8
"CLASS X-1 ACCRUED INTEREST": With respect to each Interest Accrual
Period, 100% of the interest accrued on the Class X-1L Interest.
"CLASS X-1 CERTIFICATE": A Certificate designated as "Class X-1" on
the face thereof, in the form of Exhibit A-8 hereto.
"CLASS X-1L ACCRUED INTEREST": With respect to each Distribution Date
and each Mortgage Loan and Mortgage Certificate, a portion of the interest
accrued on such Mortgage Loan or Mortgage Certificate during the related
Mortgage Loan Due Period or Mortgage Certificate Due Period equal to interest
accrued on such Mortgage Loan or Mortgage Certificate during such period at a
rate per annum equal to the excess of the Net Mortgage Interest Rate of such
Mortgage Loan or Mortgage Certificate, as applicable, over 7.910% (the "Class
X-1L Strip Rate"), calculated on the basis of the actual number of days for
which interest accrues on such Mortgage Loan or Mortgage Certificate during the
related Due Period according to the terms of such Mortgage Loan or Mortgage
Certificate and a 360-day year.
"CLASS X-1L INTEREST": An uncertificated Lower-Tier Interest having a
Pass-Through Rate equal to the aggregate Class X-1L Accrued Interest, and which
will be designated as a regular interest in the Lower-Tier REMIC.
"CLASS X-2 ACCRUED INTEREST": With respect to each Interest Accrual
Period, an amount equal to the aggregate of the interest accrued, (on the basis
of a 360-day year consisting of twelve 30-day months), on the Certificate
Principal Amount of the Class AL Interest at the Class A Spread Rate, on the
Certificate Principal Amount of the Class BL Interest at the Class B Spread
Rate, on the Certificate Principal Amount of the Class CL Interest at the Class
C Spread Rate, on the Certificate Principal Amount of the Class DL Interest at
the Class D Spread Rate.
"CLASS X-2 CERTIFICATE": A Certificate designated as "Class X-2" on
the face thereof, in the form of Exhibit A-9 hereto.
"CLOSING DATE": May 14, 1998.
"CODE": The Internal Revenue Code of 1986, any successor statute
thereto, and any temporary or final regulations of the United States Department
of the Treasury from time to time promulgated thereunder.
"COLLECTION ACCOUNT": The trust account or accounts created and
maintained by the Master Servicer pursuant to Section 3.5(a), which shall be
entitled "LaSalle National Bank, as Trustee, in trust for Holders of LTC
Commercial Mortgage Pass-Through Certificates, Series 1998-1," and which must be
an Eligible Account.
"CORPORATE TRUST OFFICE": The corporate trust office of the Trustee
at which at any particular time its corporate trust business relating to the
Certificates shall be administered, which office at the date of the execution of
this Agreement is located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: Asset-Backed Securities Trust Services Group --
LTC Commercial Mortgage Pass-Through Certificates, Series 1998-1.
"CORRESPONDING UPPER-TIER CLASS": As to each of the following
Lower-Tier Interests, the corresponding Upper-Tier Certificates, are as follows:
Uncertificated Lower-Tier
Corresponding Upper-Tier
INTEREST CLASS
------------------------- -------------
9
Class AL Interest. . . . . . . . . . . Class A Certificates
Class BL Interest. . . . . . . . . . . Class B Certificates
Class CL Interest. . . . . . . . . . . Class C Certificates
Class DL Interest. . . . . . . . . . . Class D Certificates
Class EL Interest. . . . . . . . . . . Class E Certificates
Class FL Interest. . . . . . . . . . . Class F Certificates
Class GL Interest. . . . . . . . . . . Class G Certificates
Class AR-L Interest. . . . . . . . . . Class R Certificates
Class X-1L Interest. . . . . . . . . . Class X-1 Certificates
In addition, to the extent of the applicable Spread Rate on each of the Class
AL, Class BL, Class CL, Class DL, Class EL, Class FL, Class GL, the Class X-1
Certificates and the Class X-2 Certificates are a Corresponding Upper-Tier
Class; PROVIDED, HOWEVER, that the Class X-1 Certificates and the Class X-2
Certificates do not have a Certificate Principal Amount and shall not be taken
into consideration when comparing the Certificate Principal Amount of the
Lower-Tier Interests and the Corresponding Upper-Tier Certificates.
"CURRENT LOAN BALANCE-TO-ORIGINAL VALUE RATIO": With respect to any
Mortgage Loan, as of any date of determination, the fraction, expressed as a
percentage, the numerator of which is the outstanding principal balance of such
Mortgage Loan at such date and the denominator of which is the Value of the
related Mortgaged Property, PROVIDED, HOWEVER, that for purposes of any such
calculation relating to the REMIC Provisions of the Code, the Value of the
related Mortgaged Property shall not include any non-real property assets within
the meaning of such REMIC Provisions.
"CUSTODIAL AGREEMENT": An agreement that may be entered into among
the Trustee, the Master Servicer and a Custodian, substantially in the form of
Exhibit D hereto.
"CUSTODIAN": A custodian, which shall not be the Originator, the
Depositor or any Affiliate of any of the foregoing, appointed by the Trustee.
The initial Custodian shall be the Trustee.
"CUSTODIAN'S EXCEPTION REPORT": As defined in Section 2.2.
"CUT-OFF DATE": April 20, 1998 in the case of each Mortgage Loan and
each Mortgage Certificate. In the case of each Mortgage Loan or Mortgage
Certificate, references to outstanding principal balance "as of the Cut-Off
Date" of such Mortgage Loan or Mortgage Certificate will mean its principal
balance at the close of business on the Cut-Off Date.
"DEBT SERVICE COVERAGE RATIO": With respect to any Mortgage Loan, as
of any date of determination and for any period, the ratio of the Net Operating
Income with respect to the related Mortgaged Property or Properties for the
previous twelve months, as set forth in the most recent available operating
statements of the Borrower for the Mortgaged Property or Mortgaged Properties
delivered to the Master Servicer pursuant to Section 3.1(e), to the aggregate
Monthly Payments on the Mortgage Loan for such period. Solely for purposes of
Section 3.20(c) hereof, Debt Service Coverage Ratio shall mean, with respect to
any Mortgage Loan, the ratio of Net Operating Income for the twelve months ended
on the date of extension of a Mortgage Loan pursuant to Section
10
3.20(c) to the amount of principal and interest to become due and payable on
the related Note during the twelve month period following such extension.
"DEBT SERVICE REDUCTION": With respect to any Mortgage Loan and any
Due Date, the amount of any reduction (other than a reduction resulting from a
Deficient Valuation) in the Monthly Payment for such Mortgage Loan which the
Borrower is obligated to pay on such Due Date as a result of any proceeding
under bankruptcy law or any similar proceeding; PROVIDED, HOWEVER, that in the
case of an amount that is deferred, but not forgiven, such reduction will
include only the net present value of the reduction (calculated at the Mortgage
Interest Rate).
"DEFAULTED MORTGAGE LOAN": As of any Determination Date, a Mortgage
Loan as to which a material default has occurred under the terms thereof;
PROVIDED, HOWEVER, that a Mortgage Loan shall be deemed not to be a Defaulted
Mortgage Loan unless an amount equal to at least two Monthly Payments, or any
Balloon Payment, are past due.
"DEFICIENT VALUATION": With respect to any Mortgage Loan, the excess
of (a) the then outstanding principal balance of the Mortgage Loan over (b) the
outstanding principal balance of such Mortgage Loan after a valuation by a court
of competent jurisdiction of the Mortgaged Property which reduces the amount due
on such Mortgage Loan to an amount less than the then outstanding principal
balance of and accrued interest on the Mortgage Loan plus expenses reimbursable
under the terms of the related Note, which valuation results from a proceeding
initiated under the Bankruptcy Code. If the terms of a court order in respect
of any Deficient Valuation are retroactive and provide for a reduction in the
indebtedness of a Mortgage Loan and the earlier maturity thereof, the term
Deficient Valuation shall include an additional amount equal to the excess, if
any, of (a) the amount of principal that was due on such Mortgage Loan for each
month retroactively affected (i.e., each month occurring after the effective
date of such Deficient Valuation but before the distribution of amounts in
respect of such Deficient Valuation to Certificateholders pursuant to this
Agreement), based on the original payment terms and amortization schedule of
such Mortgage Loan, over (b) the amount of principal due on such Mortgage Loan
for each such retroactive month (assuming the effect of such retroactive
application according to such Mortgage Loan's revised amortization schedule).
"DEPOSITOR": LTC REMIC IV Corporation and its successors in interest
and assigns.
"DEPOSITORY": The Depository Trust Company or a successor appointed
by the Depositor. 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, and any such successor must be treated as
maintaining a book entry system for purposes of Section 163(f) of the Code.
"DETERMINATION DATE": With respect to any Distribution Date, the
twentieth day of the month in which such Distribution Date occurs (or if such
twentieth day is not a Business Day, the immediately succeeding Business Day),
commencing in May 1998.
"DIRECTLY OPERATE": With respect to any REO Property, the furnishing
or rendering of services to the tenants thereof, the management or operation of
such REO Property, the holding of such REO Property primarily for sale to
customers, or the performance of any construction work thereon or any use of
such REO Property in a trade or business conducted by the Trust Fund, in each
case, other than through an Independent Contractor; PROVIDED, HOWEVER, that the
Trustee (or the Special Servicer on behalf of the Trust Fund) shall not be
considered to Directly Operate an REO Property solely because the Trustee (or
the Special 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
REO Property or undertakes any ministerial action incidental thereto.
11
"DISQUALIFIED ORGANIZATION": Either (a) the United States, a State or
any political subdivision thereof, any possession of the United States, or any
agency or instrumentality of any of the foregoing (other than an instrumentality
that is a corporation if all of its activities are subject to tax and a majority
of its board of directors is not selected by any such governmental unit), (b) a
foreign government, International Organization (as defined in the Code) or
agency or instrumentality of either of the foregoing (other than an
instrumentality that is a corporation if all of its activities are subject to
tax and a majority of its board of directors is not selected by any such
governmental unit), (c) an organization that is exempt from tax imposed by
Chapter 1 of the Code (including the tax imposed by Code Section 511 on
unrelated business taxable income) on any excess inclusions (as defined in Code
Section 860E(c) (1)) with respect to the Class R or Class LR Certificates
(except certain farmers' cooperatives described in Code Section 521), (d) rural
electric and telephone cooperatives described in Code Section 1381(a)(2)(c), or
(e) any other Person so designated by the Certificate Registrar based upon
relevant legislation amending the REMIC Provisions or an Opinion of Counsel to
the effect that any Transfer to such Person may cause either the Upper-Tier
REMIC or Lower-Tier REMIC to fail to qualify as a REMIC at any time that the
Certificates are outstanding. The terms "United States," "State" and
"International Organization" shall have the meanings set forth in Code Section
7701 or any successor provisions.
"DISQUALIFYING CONDITION": A condition or circumstance existing as a
result of, or arising from, the presence of Hazardous Materials on a Mortgaged
Property such that the Mortgage Loan secured by the affected Mortgaged Property
would be ineligible, solely by reason of such condition, for purchase by FNMA
under the terms of Section 501.04 of the Guide (assuming such Mortgage Loan were
secured by multifamily residential property), including a condition or
circumstance that would constitute, solely by reason of such condition or
circumstance, a material violation of applicable federal, state or local law in
effect as of the Closing Date.
"DISTRIBUTION ACCOUNT": The separate Eligible Account or Eligible
Accounts created and maintained by the Paying Agent pursuant to Section 3.5(b),
which shall be entitled "LaSalle National Bank, as Trustee, in trust for
registered Holders of LTC Commercial Mortgage Pass-Through Certificates, Series
1998-1".
"DISTRIBUTION DATE": The twenty-eighth day of any month, or if such
twenty-eighth day is not a Business Day, the following Business Day, commencing
in May 1998.
"DUE DATE": With respect to any Distribution Date and any Mortgage
Loan or Mortgage Certificate, as the case may be, the date during the related
Due Period on which the related Monthly Payment or Balloon Payment is first due
(without giving effect to any grace period).
"DUE PERIOD": With respect to each Mortgage Loan and each Mortgage
Certificate and relating to any Distribution Date or Determination Date, the
period beginning on and including the twenty-first day of the calendar month
preceding such Distribution Date or Determination Date, and ending on and
including the twentieth day of the calendar month in which such Distribution
Date or Determination Date occurs.
"EARLY TERMINATION DETERMINATION DATE": The Determination Date in the
month in which the Anticipated Termination Date is expected to occur.
"EARLY TERMINATION NOTICE DATE": Any date as of which the aggregate
Certificate Principal Amount of the Certificates is less than 10% of the initial
aggregate Certificate Principal Amount of the Certificates.
"ELIGIBLE ACCOUNT": Either (i) an account or accounts (A) maintained
with either a federal or state chartered depository institution or trust company
(x) if the deposits are to be held in such account 30 days or more, the
long-term unsecured debt obligations of which are rated by the Rating Agency in
one of its two highest rating categories (without regard to pluses or minuses)
at all times, or (y) if the deposits are to be held in such account less than 30
days, the short-term unsecured debt obligations or commercial paper of which are
rated by the Rating Agency in one of its two highest rating categories (without
regard to pluses or minuses) or (B) if the obligations of any such institution
are not rated by the Rating Agency, or if they are rated in a category lower
than required herein,
12
as to which the Master Servicer or the Trustee, as applicable, has received
written confirmation from the Rating Agency that holding funds in such account
would not cause the Rating Agency to qualify, withdraw or downgrade any of its
ratings on the Certificates or (ii) a segregated trust account or accounts
maintained with the corporate trust department of a federal depository
institution or state chartered depository institution or trust company which
is subject to regulations regarding fiduciary funds on deposit substantially
similar to 12 C.F.R. Section 9.10(b), which, in each case, has corporate trust
powers, acting in its fiduciary capacity, or (iii) any other account that, as
evidenced by a written confirmation from the Rating Agency, would not, in and
of itself, cause a downgrade, qualification or withdrawal of the then current
ratings assigned to the Certificates, which may be an account maintained with
the Trustee or the Master Servicer.
"ENVIRONMENTAL ASSESSMENT": A "Phase I assessment" as described in,
and meeting the criteria of, Chapter 5 of the Guide.
"ERISA": The Employee Retirement Income Security Act of 1974, as it
may be amended from time to time.
"ERISA PLAN": As defined in Section 5.3(b)
"EVENT OF DEFAULT": As defined in Section 7.1.
"FDIC": The Federal Deposit Insurance Corporation, or any successor
thereto.
"FHLMC": The Federal Home Loan Mortgage Corporation, or any successor
thereto.
"FNMA": The Federal National Mortgage Association, or any successor
thereto.
"FINAL RECOVERY DETERMINATION": With respect to any Defaulted
Mortgage Loan, as evidenced by a certificate of a Special Servicer Officer
delivered to the Master Servicer and the Trustee, (i) the actual recovery of the
full amount of all Insurance Proceeds, Liquidation Proceeds and other payments
due or collectible in respect of such Defaulted Mortgage Loan or (ii) all
recoveries (including proceeds of the final sale of any REO Property) which the
Special Servicer, in its reasonable judgment, expects to be finally recoverable,
without regard to any obligation of the Special Servicer or the Master Servicer
to make payments from its own funds pursuant to Section 3.8(a) or 3.8(b). The
Special Servicer shall maintain records, prepared by a Special Servicer Officer,
of each Final Recovery Determination until the earlier of (i) its termination as
Special Servicer hereunder and the transfer of such records to a successor
special servicer and (ii) five years following the termination of the Trust
Fund.
"FINAL SCHEDULED DISTRIBUTION DATE": May 28, 2030.
"GUIDE": The FNMA Multifamily Seller/Servicer Guide (i) in effect as
of the Closing Date, for purposes of the definition of "Disqualifying Condition"
and (ii) as amended from time to time, for all other purposes of this Agreement.
"HAZARDOUS MATERIALS": Any dangerous, toxic or hazardous pollutants,
chemicals, wastes, medical wastes, or substances, including, without limitation,
those so identified pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. Section 9601 et seq., or any other
environmental laws or regulations now existing, and specifically including,
without limitation, asbestos and asbestos-containing materials, polychlorinated
biphenyls ("PCBs"), radon gas, petroleum and petroleum products, urea
formaldehyde and any substances classified as being "in inventory," "usable work
in process" or similar classification which would, if classified as unusable, be
included in the foregoing definition.
"HOLDER": A Certificateholder.
13
"INDEPENDENT": When used with respect to any specified Person, any
such Person who (i) does not have any direct financial interest, or any material
indirect financial interest, in any of the Originator, the Depositor, the
Trustee, the Master Servicer, the Special Servicer, or any Affiliate thereof,
and (ii) is not connected with the Originator, the Depositor, the Trustee, the
Master Servicer, the Special Servicer or any Affiliate thereof as an officer,
employee, promoter, underwriter, trustee, partner, director or Person performing
similar functions; PROVIDED, HOWEVER, that a Person shall not fail to be
Independent of the Originator, the Depositor, the Trustee, the Master Servicer,
the Special Servicer or any Affiliate thereof merely because such Person is the
beneficial owner of 5% or less of any Class of securities issued by the
Originator, the Depositor, the Master Servicer, the Special Servicer or any
Affiliate thereof, as the case may be.
"INDEPENDENT CONTRACTOR": Either (i) any Person that would be an
"independent contractor" with respect to the Trust 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 tests set forth in that section shall be
considered to be met by any Person that owns, directly or indirectly, 35% or
more of any Class of Certificates or 35% or more of the aggregate value of all
Classes of 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) (except that the Master Servicer, the Trustee, or the
Special Servicer shall not be considered to be an Independent Contractor under
the definition in this clause (i) unless an Opinion of Counsel has been
delivered to the Master Servicer and the Trustee to that effect) or (ii) any
other Person (including the Master Servicer, the Trustee, and the Special
Servicer) if the Master Servicer on behalf of itself and the Trustee has
received an Opinion of Counsel to the effect that the taking of any action in
respect of any REO Property by such Person, subject to any conditions therein
specified, that is otherwise herein contemplated to be taken by an Independent
Contractor will not cause such REO Property to cease to qualify as "foreclosure
property" within the meaning of Section 860G(a)(8) of the Code (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 REO Property to fail
to qualify as Rents from Real Property.
"INITIAL PURCHASER": ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.
"INSURANCE PROCEEDS": Proceeds of any fire and hazard insurance
policy, title policy or other insurance policy relating to a Mortgage Loan or
the related Mortgaged Property (including any amounts paid by the Master
Servicer or the Special Servicer pursuant to Section 3.8), to the extent such
proceeds are not to be applied to the restoration of the related Mortgaged
Property or released to the Borrower in accordance with the express requirements
of the related Mortgage or Note or other documents included in the related
Mortgage File or in accordance with prudent and customary servicing practices.
"INTEREST ACCRUAL PERIOD": (i) With respect to any Distribution Date,
and any Class of Certificates other than the Class X-1L Interests and the Class
X-1 Certificates, the one-month period from and including the twenty-first day
of the month preceding such Distribution Date, to and including the twentieth
day of the month in which such Distribution Date occurs and (ii) with respect to
any Distribution Date and any of the Mortgage Certificates, the one-month period
from and including the twenty-first day of the month preceding such Distribution
Date to and including the twentieth day of the month in which such Distribution
Date occurs. With respect to the Class X-1L Interests and the Class X-1
Certificates, the Due Period for each Mortgage Loan and Mortgage Certificate.
Interest payable for an Interest Accrual Period for each Class of Certificates
shall be calculated on the basis of twelve 30-day months (other than the Class
X-1 Certificates which shall be calculated on the same basis as the underlying
Mortgage Loans and Mortgage Certificates) and a 360-day year.
"INTERESTED PERSON": As of any date of determination, the Master
Servicer, the Special Servicer, any Independent Contractor engaged by the
Special Servicer pursuant to Section 3.17 or any Person known to a Responsible
Officer of the Trustee to be an Affiliate of any of them.
"INVESTMENT ACCOUNT": As defined in Section 3.7(a).
14
"LIQUIDATION EXPENSES": Expenses incurred by the Special Servicer in
connection with the liquidation of, enforcement of or as a result of the default
of any Defaulted Mortgage Loan or property acquired in respect thereof
(including, without limitation, legal fees and expenses, committee or referee
fees, and, if applicable, brokerage commissions and conveyance taxes) and any
Servicing Advances (and interest thereon) incurred with respect to such Mortgage
Loan or such property not previously reimbursed from collections or other
proceeds therefrom.
"LIQUIDATION PROCEEDS": The amount (other than Insurance Proceeds)
received in connection with (i) the taking of a Mortgaged Property by exercise
of the power of eminent domain or condemnation, (ii) the liquidation of a
Defaulted Mortgage Loan through a trustee's sale, foreclosure sale or otherwise,
(iii) a purchase or sale of a Mortgage Loan or an REO Property in accordance
with Section 3.18 or 9.1, or (iv) the repurchase of a Mortgage Certificate by
the Depositor pursuant to the Transfer Agreement or pursuant to Section 9.1 of
this Agreement.
"LOAN NUMBER": With respect to any Mortgage Loan, the loan number by
which such Mortgage Loan is identified on the books and records of the
Originator as set forth in the Mortgage Loan Schedule.
"LOAN-TO-VALUE RATIO": With respect to any Mortgage Loan, the
fraction, expressed as a percentage, the numerator of which is the outstanding
principal balance of such Mortgage Loan at the time of origination and the
denominator of which is the Value of the related Mortgaged Property, PROVIDED,
HOWEVER, that for purposes of any such calculation relating to the REMIC
Provisions of the Code the Value of the related Mortgaged Property shall not
include any non-real property assets within the meaning of such REMIC
Provisions.
"LOWER-TIER INTEREST": Any of the Class AL, Class BL, Class CL, Class
DL, Class EL, Class FL, Class GL, Class AR-L and Class X-1L Interests and the
Class LR Certificates.
"LOWER-TIER REMIC": One of two segregated pools of assets for which a
REMIC election has been made comprising the Trust Fund which shall consist of
(i) such Mortgage Loans as from time to time are subject to this Agreement,
together with the Mortgage Files relating thereto and the Mortgage Certificates;
(ii) all payments due on or collections in respect of the Mortgage Loans and
Mortgage Certificates due after the dates specified in Section 2.1; (iii) any
REO Property; (iv) all revenues received in respect of any REO Property; (v) the
rights of the Trustee, Master Servicer, and the Special Servicer under the
insurance policies with respect to the Mortgage Loans required to be maintained
pursuant to this Agreement and any proceeds thereof; (vi) any Assignments of
Leases, Rents and Profits and any security agreements and assignments thereof;
(vii) all Assignments of Mortgages and assignments thereof; (viii) any
guaranties given as additional security for any Mortgage Loans and any real or
personal property acquired by foreclosure or deed in lieu of foreclosure upon
enforcement thereof; (ix) such amounts as shall from time to time be held in the
Collection Account, the Distribution Account and the REO Account including
reinvestment income; and (x) the proceeds of any of the foregoing (including the
cash proceeds of the sale or other disposition of any real or personal property
excluded in the foregoing clause (iv)). However, any environmental indemnity
agreements relating to the Mortgaged Properties shall not be part of the Trust
Fund or the Lower-Tier REMIC. Any such environmental indemnity shall be held by
the Custodian as security for the related Mortgage Loan on behalf of the
Certificateholders and for the benefit of the Master Servicer and the Trustee,
provided that the Master Servicer, consistent with accepted servicing practices,
shall enforce any such environmental indemnities on behalf of the Trustee and
the Certificateholders.
"LTC": LTC Properties, Inc., the Originator and Special Servicer
under this Agreement.
"MASTER SERVICER": GMAC Commercial Mortgage Corporation, a California
corporation, or any successor master servicer approved as herein provided.
"MASTER SERVICER REMITTANCE DATE": With respect to any Distribution
Date, the Business Day preceding such date.
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"MATURITY DATE": With respect to any Mortgage Certificate, November
28, 2012, and, with respect to any Mortgage Loan, the date on which the last
payment of principal is due and payable under the related Note (including any
such date which shall have been extended by the Special Servicer), as set forth
in the Mortgage Loan Schedule, but without giving effect to (i) any acceleration
of the principal of such Mortgage Loan or (ii) any grace period permitted by the
related Note or any other document in the Mortgage File.
"MEDICAID": Title XIX of the Social Security Act.
"MEDICARE": Title XVIII of the Social Security Act.
"MODIFIED MORTGAGE LOAN": Any Mortgage Loan the terms of which have
been modified, waived, or amended in accordance with the provisions hereof.
"MODIFIED MONTHLY PAYMENT": The Monthly Payment due under the
modified terms of any Modified Mortgage Loan.
"MONTHLY PAYMENT": With respect to (i) any Mortgage Loan and any Due
Period, the scheduled monthly payment of principal and interest at the Mortgage
Interest Rate, excluding any Balloon Payment, on such Mortgage Loan that is
payable by a Borrower in such Due Period under the related Note; PROVIDED, that
with respect to an REO Mortgage Loan, the Monthly Payment is the scheduled
monthly payment of principal and interest that would otherwise have been payable
in the related Due Period had the related Note not been discharged, determined
as set forth above and on the assumption that all other amounts, if any, due
thereunder are paid when due; and, PROVIDED, FURTHER, that in the case of a
Mortgage Loan the terms of which have been modified in accordance herewith, the
Monthly Payment shall be the Modified Monthly Payment, and (ii) the Mortgage
Certificates and any Due Period, the actual payments of interest and principal,
including principal prepayments, that are received on the Mortgage Certificates
in such Due Period.
"MORTGAGE": The mortgage, deed of trust or other instrument creating
a first lien on, or first priority security interest in, one or more Mortgaged
Properties securing a Note, together with any rider, addendum or amendment
thereto, as amended from time to time.
"MORTGAGE CERTIFICATES": The Series 1993-1 LTC Commercial Mortgage
Pass-Through Certificates, Class E, with a pass-through rate of 9.78% per annum
and an outstanding principal balance as of the Cut-Off Date of $26,382,110.83.
"MORTGAGE CERTIFICATE INTEREST ACCRUAL PERIOD": For the Mortgage
Certificates, the period for which interest included in each Monthly Payment
accrues.
"MORTGAGE FILE": With respect to any Mortgage Loan, the mortgage
documents listed in Section 2.1(i)-(ix), (xi)-(xvi), (xviii) and (xix)
pertaining to such particular Mortgage Loan and any additional documents
required to be added to such Mortgage File pursuant to this Agreement.
"MORTGAGE INTEREST RATE": (i) With respect to any Mortgage Loan, for
any Interest Accrual Period, the per annum rate at which interest accrues on
such Mortgage Loan for such period, as determined pursuant to the related Note,
and (ii) with respect to the Mortgage Certificates for any Mortgage Certificate
Interest Accrual Period, the pass-through rate at which interest accrues on such
Mortgage Certificates for such period.
"MORTGAGE LOAN": Any of the commercial mortgage loans transferred and
assigned to the Trustee pursuant to Section 2.1 to the extent set forth in such
Section 2.1 and from time to time held in the Trust Fund, the Mortgage Loans
originally so transferred, assigned and held being identified on the Mortgage
Loan Schedule as of the Closing Date. Such term shall also include any Mortgage
Loan so transferred after it becomes a REO Mortgage Loan and any related REO
Account Mortgage Loan.
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"MORTGAGE LOAN SCHEDULE": As of any date, the list of Mortgage Loans
on such date, such list as of the Closing Date being attached hereto as Exhibit
B, which list shall set forth information with respect to each Mortgage Loan,
including, but not limited to the following:
(a) the name of the Borrower;
(b) the Loan Number;
(c) ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇ and zip code in which the
related Mortgaged Property or Properties are located;
(d) the type of underlying Mortgaged Properties;
(e) the Mortgage Interest Rate as of the Cut-Off Date, and in the
event such Mortgage Loan provides for one or more resets of
such rate, the date or dates of such reset and such reset rate
or rates;
(f) the date of origination;
(g) the original term and the original amortization term;
(h) the Maturity Date;
(i) the original principal balance;
(j) the current loan balance per Mortgaged Property;
(k) the Due Date of each Monthly Payment on each Mortgage Loan;
(l) the Monthly Payment;
(m) the Scheduled Principal Balance as of the Cut-Off Date;
(n) the Loan-to-Value Ratio in effect as of the Cut-Off Date;
(o) the occupancy information relating to the Mortgaged Properties
securing the Mortgage Loans, as of the date of the most recent
year end financial statements of the related Borrower;
(p) the Debt Service Coverage Ratio;
(q) the Net Debt Service Coverage Ratio;
(r) the result of a fraction, the numerator of which is the
outstanding principal balance of such Mortgage Loan as of the
Cut-Off Date and the denominator of which is the number of
beds available in the related Mortgaged Properties; and
(s) the periods during which optional prepayment is not permitted.
The Mortgage Loan Schedule shall also set forth the total of the
amounts described under clause (j) above for all the Mortgage Loans. The
Mortgage Loan Schedule may be in the form of more than one list,
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collectively setting forth all of the information required. The Mortgage
Loan Schedule shall be amended from time to time in accordance with the
provisions of this Agreement.
"MORTGAGED PROPERTY" OR "MORTGAGED PROPERTIES": An underlying
property or properties securing a Mortgage Loan, including any REO Property or
REO Account Property, consisting of a fee simple estate (with the exception of
one mortgaged property which is secured in whole by the interest of the related
Borrower as a lessee or sub-lessee under a ground lease of real estate but not
by the related fee interest in such Mortgaged Property) in a parcel of land,
together with all improvements thereon, each of which operates as a facility
that offers long-term nursing home care together with any personal property,
fixtures, leases, and other property or rights pertaining thereto.
"NET DEBT SERVICE COVERAGE RATIO": With respect to any Mortgage Loan,
as of any date of determination and for any period, the ratio of Net Operating
Income produced by the related Mortgaged Property or Properties for such period
(annualized if such period is less than one year) MINUS an assumed management
fee equal to 5% of the net revenues of the related facility, divided by the
aggregate Monthly Payments on the Mortgage Loan for such period.
"NET LIQUIDATION PROCEEDS": The excess of Liquidation Proceeds
received with respect to any Mortgage Loan or Mortgage Certificate over the
amount of Liquidation Expenses incurred with respect thereto.
"NET MORTGAGE INTEREST RATE": (i) With respect to any Mortgage Loan
for any Due Period, the Mortgage Interest Rate for such Mortgage Loan less the
Servicing Fee Rate, the Trustee Fee Rate, and (ii) with respect to any Mortgage
Certificate for any Mortgage Certificate Interest Accrual Period, the pass-
through rate for the Mortgage Certificates minus the Servicing Fee Rate and the
Trustee Fee Rate.
"NET OPERATING INCOME": The net revenue derived from the use and
operation of a Mortgaged Property or Mortgaged Properties less operating
expenses (such as utilities, administrative expenses, repairs, maintenance and,
if applicable, labor and food, medical and laundry supplies) excluding fixed
expenses (defined as interest, depreciation, amortization, rent and management
fees).
"NET PREPAYMENT INTEREST EXCESSES": With respect to any Due Period
and with respect to the Mortgage Loans, the excess of the aggregate Prepayment
Interest Excesses for such Due Period over the aggregate Prepayment Interest
Shortfalls for such Due Period.
"NET PREPAYMENT INTEREST SHORTFALL": With respect to any Due Period
and with respect to the Mortgage Loans, the excess of the aggregate Prepayment
Interest Shortfalls for such Due Period over the sum of the aggregate Prepayment
Interest Excesses for such Due Period and the portion of the Servicing Fee
available to offset such Prepayment Interest Shortfalls pursuant to Section
4.8(b) hereof.
"NET REO PROCEEDS": Subject to Section 1.2 (iii)(B) and 1.2(v), with
respect to each REO Account Property and any Prepayment Period, any amount
withdrawn from the REO Account and deposited into the Collection Account
pursuant to Section 3.17(d) with respect to such REO Account Property and such
Prepayment Period.
"NEW LEASE": Any lease of REO Property entered into on behalf of the
Trust Fund, including any lease renewed or extended on behalf of the Trust Fund,
if the Trust Fund has the right to renegotiate the terms of such lease.
"NONRECOVERABLE ADVANCE": Any Servicing Advance or P&I Advance, plus
interest accrued thereon at the Advance Rate, made or proposed to be made in
respect of a Mortgage Loan, which, if made, in the
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reasonable business judgment of the Master Servicer or the Trustee, as
applicable, will not or would not, as applicable, be ultimately recoverable,
together with all unreimbursed Advances (plus interest accrued thereon at the
Advance Rate) made prior to such date with respect to the related Mortgage Loan
(or the related REO Property) from future payments and collections on the
related Mortgage Loan or from proceeds from the operation or sale of the
related Mortgaged Property or REO Property. The determination by the Master
Servicer or the Trustee, as applicable, that an Advance is a Nonrecoverable
Advance shall be evidenced by an Officer's Certificate to that effect delivered
to the Trustee no later than the second Business Day preceding each
Distribution Date in the case of the Master Servicer and delivered to the
Depositor in the case of the Trustee, setting forth such determination of
nonrecoverability and the procedure and considerations of the Master Servicer
or any subservicer, as applicable, forming the basis of such determination
(which may include but shall not be limited to information, to the extent
available, such as related income and expense statements, occupancy status
property inspections, Master Servicer or Special Servicer inquiries, and may
include an internal or external appraisal performed in accordance with MAI
standards and methodologies on the related Mortgage Loan or Mortgaged Property,
and which may include, without limitation, considerations relating to any
environmental conditions with respect to the related Mortgaged Property).
"NON-U.S. PERSON": A Person that is not (i) a citizen or resident of
the United States, (ii) a corporation, partnership or other entity created or
organized in or under the laws of the United States or any political subdivision
thereof, (iii) an estate whose income from sources without the United States is
includable in gross income for United States federal income tax purposes
regardless of the source of its income, or (iv) a trust with respect to which a
court within the United States is able to exercise primary supervision over its
administration and one or more United States fiduciaries have the authority to
control all of its substantial decisions..
"NOTE": With respect to any Mortgage Loan as of any date of
determination, the note or other evidence of indebtedness of a Borrower under
such Mortgage Loan, including any amendments or modifications, or any renewal or
substitution notes, as of such date.
"NOTICE OF TERMINATION": Any of the notices given to the Trustee by
the Master Servicer or any Holder of a Class LR Certificate pursuant to Section
9.1(b), 9.1(c) or 9.1(d).
"NOTIONAL AMOUNT": For purposes of the definition of the term
"Outstanding" with respect to the Class X-1L Interest and the Class X-1
Certificates, an amount equal to the then aggregate Scheduled Principal Balance
of the Mortgage Loans and Mortgage Certificates and with respect to the Class
X-2 Certificates, an amount equal to the sum of the Certificate Principal
Amounts of the Class AL, Class BL, Class CL and the Class DL Interests.
"OFFICER'S CERTIFICATE": A certificate signed by the Chairman of the
Board, the Vice Chairman of the Board, the President, a Vice President, an
Assistant Vice President, the Treasurer, the Secretary, one of the Assistant
Treasurers or Assistant Secretaries, any Trust Officer or other officer of the
Master Servicer, the Trustee or the Special Servicer, as the case may be,
customarily performing functions similar to those performed by any of the above
designated officers and also with respect to a particular matter, any other
officer to whom such matter is referred because of such officer's knowledge of
and familiarity with the particular subject, or an authorized officer of the
Depositor, and delivered to the Depositor, the Trustee, the Master Servicer
and/or the Special Servicer, as the case may be.
"OPINION OF COUNSEL": A written opinion of counsel, who may, without
limitation, be counsel for the Depositor, the Master Servicer or the Special
Servicer, as the case may be, acceptable to the Trustee, except that any opinion
of counsel relating to (a) qualification of the Lower-Tier REMIC and the
Upper-Tier REMIC as two separate REMICs or the imposition of tax under the REMIC
Provisions on any income or property of the Upper-Tier REMIC or Lower-Tier
REMIC, (b) compliance with the REMIC Provisions (including application of the
definition of "Independent Contractor") or (c) a resignation of the Master
Servicer or the Special Servicer pursuant
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to Section 6.4 must be an opinion of counsel who is Independent of the
Originator, the Depositor, the Trustee, the Master Servicer and the Special
Servicer (without giving effect to the proviso to the definition of the term
"Independent").
"OPTIMAL WIND-DOWN DATE": With respect to (i) any Mortgage Loan, two
years prior to the Final Scheduled Distribution Date, and (ii) with respect to
the Mortgage Certificates two years prior to the Maturity Date of the Mortgage
Certificates.
"ORIGINATOR": LTC and its successors in interests and assigns.
"OUTSTANDING": A Class of Certificates (other than the Class X, Class
R and Class LR Certificates), for which the Certificate Principal Amount thereof
is greater than zero. Each Class of Class X Certificates is "Outstanding" when
the Notional Amount thereof is greater than zero. The Class R and Class LR
Certificates will be "Outstanding" until the Trust Fund is terminated pursuant
to this Agreement. Solely for the purpose of giving any consent or taking any
action pursuant to this Agreement, any Certificate registered in the name of the
Depositor, the Master Servicer, or the Special Servicer or any Person known to a
Responsible Officer of the Trustee to be an Affiliate of any thereof shall be
deemed not to be Outstanding, and the Voting Rights to which it is entitled
shall not be taken into account in determining whether the requisite percentage
of Voting Rights necessary to effect any such consent or take any such action
has been obtained, except that any such Certificates shall be deemed to be
Outstanding and shall have Voting Rights with respect to any matter requiring
consent or action on a Class-by-Class basis if and to the extent that all of the
Certificates of the particular Class are registered in the name of any such
Person or Persons.
"OUTSTANDING CLASS INTEREST SHORTFALL": As to any Distribution Date
subsequent to the initial Distribution Date and any Class of Certificates, the
sum of (a) the excess, if any, of (i) the sum of (A) the Accrued Certificate
Interest in respect of such Class for the preceding Distribution Date and (B)
the Outstanding Class Interest Shortfall of such Class as of such preceding
Distribution Date (in both cases before giving effect to any distributions made
thereon on such Distribution Date) over (ii) the aggregate amount in respect of
interest distributed to such Class on such preceding Distribution Date, and (b)
one month's interest accrued on the amount of such excess at the then applicable
Pass-Through Rate of such Class (except in the case of the Class X-1L Interest,
the Class X-1 Certificates or the Class X-2 Certificates), to the extent
permitted by applicable law. The Outstanding Class Interest Shortfall with
respect to any Class of Certificates as of the initial Distribution Date is
zero.
"OWNERSHIP INTEREST": Any record or beneficial interest in a Class R
or Class LR Certificate.
"P&I ADVANCE": With respect to any Mortgage Loan, any amount required
to be advanced by the Master Servicer or the Trustee pursuant to Section 3.22 in
respect thereof.
"PASS-THROUGH RATE" OR "PASS-THROUGH RATES": The rate identified in
the Preliminary Statement hereto as the "Pass-Through Rate" for any Class of
Lower-Tier Interests or Certificates except that in the case of the Class X-1L
Interest, the Class X-1 Certificates and the Class X-2 Certificates, the Pass-
Through Rate shall refer to the Class X-1L Accrued Interest, the Class X-1
Accrued Interest or the Class X-2 Accrued Interest, as the case may be.
"PAYING AGENT": Initially, the Trustee and any other paying agent
appointed pursuant to Section 5.6.
"PERCENTAGE INTEREST": With respect to a Class A, Class B, Class C,
Class D, Class E, Class F, Class G, Class R or Class LR Certificate, the
fraction of the Class evidenced by such Certificate, expressed as a percentage
(carried to thousandths of a percent, if necessary), the numerator of which is
the initial Certificate
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Principal Amount represented by such Certificate and the denominator of which
is the aggregate initial Certificate Principal Amount of all of the Certificates
of such Class. With respect to a Class X-1 or Class X-2 Certificate, the
fraction of the Class evidenced thereby, expressed as a percentage (carried
to thousandths of a percent, if necessary), as stated on the face of such
Certificate.
"PERMITTED INVESTMENTS": Any one or more of the following obligations
or securities, regardless of whether issued by the Depositor, the Master
Servicer, the Special Servicer, the Trustee or any of their respective
Affiliates and having at the time of purchase, or at such other time as may be
specified, the required ratings, if any, provided for in this definition:
(i) direct obligations of, or guaranteed as to timely payment of
principal and interest by, the United States or any agency or
instrumentality thereof, provided that such obligations are backed
by the full faith and credit of the United States of America;
(ii) direct obligations of, or guaranteed as to timely payment of
principal and interest by, FHLMC, FNMA or the Federal Farm Credit
System, provided that any such obligation is qualified by the
Rating Agency as an investment of funds backing securities having a
rating equal to the highest long-term debt ratings, or such lower
rating as will not result in the qualification, downgrade or
withdrawal of the rating or ratings then assigned by the Rating
Agency to the then rated Classes of Certificates, as evidenced in
writing by the Rating Agency;
(iii) 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, provided that, in the case of
obligations that are not fully FDIC-insured deposits, the
commercial paper and/or long-term unsecured debt obligations of
such depository institution or trust company (or in the case of the
principal depository institution in a holding company system, the
commercial paper or long-term unsecured debt obligations of such
holding company) is rated by the Rating Agency in its highest
long-term rating categories (or, in the case of demand and time
deposits, a rating of A-1+ by S&P), or such lower rating as will
not result in the qualification, downgrade or withdrawal of the
rating or ratings then assigned by the Rating Agency to the
then-rated Classes of Certificates, as evidenced in writing by the
Rating Agency;
(iv) general obligations of or obligations guaranteed by any state of
the United States or the District of Columbia receiving the highest
long-term debt ratings by the Rating Agency, or such lower rating
as will not result in the qualification, downgrade or withdrawal of
the rating or ratings then assigned by the Rating Agency to the
then-rated classes of Certificates, as evidenced in writing by the
Rating Agency;
(v) commercial or finance company 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) that is rated by the Rating
Agency in its highest short-term unsecured rating category and is
issued by a corporation the outstanding senior long-term debt
obligations of which are then rated by the Rating Agency in its
highest long-term unsecured rating categories or such lower rating
as will not result in the qualification, downgrade or withdrawal of
the rating or ratings then assigned by the Rating Agency to the
then rated Classes of Certificates as evidenced in writing by the
Rating Agency;
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(vi) certain qualified guaranteed investment contracts which are
obligations of an insurance company or other corporation having an
insurance claims paying ability or long-term unsecured debt rating
in the highest categories for such securities by the Rating Agency
or such lower rating as will not result in the qualification,
downgrade or withdrawal of any rating or ratings then assigned by
the Rating Agency to the then-rated Classes of Certificates as
evidenced in writing by the Rating Agency;
(vii) repurchase obligations with respect to any security described in
clause (i) or (ii) above entered into with a depository institution
or trust company (acting as principal) meeting the rating standards
described in clause (iii) above;
(viii) securities bearing interest or sold at a discount that are issued
by any corporation incorporated under the laws of the United States
of America or any state thereof and rated by the Rating Agency in
its highest long-term unsecured rating categories; PROVIDED,
HOWEVER, that securities issued by any such corporation will not be
Permitted Investments to the extent that investment therein would
cause the then outstanding principal amount of securities issued by
such corporation that are then held as part of the Collection
Account, the Distribution Account or the REO Account to exceed 20%
of the aggregate principal amount of all Permitted Investments then
held in the Collection Account, the Distribution Account and the
REO Account;
(ix) units of taxable money market funds which funds are regulated
investment companies and seek to maintain a constant net asset
value per share and have been rated "AAA" by S&P or have been
designated in writing by the Rating Agency as Permitted Investments
with respect to this definition;
(x) if previously confirmed in writing to the Master Servicer by the
Rating Agency, any other demand, money market or time deposit, or
any other obligation, security or investment that will not result
in a qualification, downgrade or withdrawal of the rating then
assigned to the Certificates, provided that such investment is a
"cash flow investment" for purposes of the REMIC Provisions of the
Code (as evidenced by an Opinion of Counsel); and
(xi) such other obligations as are acceptable as Permitted Investments
to the Rating Agency as confirmed in writing to the Master Servicer
by the Rating Agency, that will not result in a qualification,
downgrade or withdrawal of rating or ratings then assigned to the
Certificates;
PROVIDED, that (A) such obligation or security qualifies as a "cash flow
investment" pursuant to Code Section 860G(a) (6); (B) no obligation or security
shall be a Permitted Investment if (i) such instrument or security evidences a
right to receive only interest payments or (ii) for instruments which are
prepayable or callable, the stated interest rate on such investment is in excess
of 120% of the yield to maturity produced by the price at which such investment
was purchased (iii) such investment shall not be purchased at a price greater
than par; PROVIDED, FURTHER, if rated, the obligation should not have an "r"
highlighter affixed to its rating and its terms should include a predetermined
fixed dollar amount of principal due at maturity that cannot vary or change.
Interest may either be fixed or variable. Interest should be tied to a single
interest rate index plus a single fixed spread (if any), and move
proportionately with that index; and (C) no such Permitted Investment shall have
a maturity of greater than 365 days.
"PERMITTED TRANSFEREE": With respect to a Class R Certificate or
Class LR Certificate, any Person or agent thereof other than (a) a Disqualified
Organization, (b) any other Person so designated by the Certificate
22
Registrar based upon an Opinion of Counsel to the effect that the Transfer of
an Ownership Interest to such Person may cause the Upper-Tier REMIC or
Lower-Tier REMIC to fail to qualify as a REMIC at any time that the
Certificates or uncertificated Lower-Tier Interests are outstanding, and (c)
a Person that is a Non-U.S. Person, unless such Non-U.S. Person (i) holds the
Class R Certificate or Class LR Certificate in connection with the conduct of
a trade or business within the United States and has furnished the transferor
and the Certificate Registrar with an effective Internal Revenue Service Form
4224 or (ii) has delivered to both the transferor and the Certificate Registrar
an opinion of a nationally recognized tax counsel to the effect that the
Transfer of the Class R Certificate or Class LR Certificate to it is in
accordance with the requirements of the Code and the regulations promulgated
thereunder and that such Transfer of the Class R Certificate or Class LR
Certificate will not be disregarded for federal income tax purposes.
"PERSON": Any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"PREPAYMENT INTEREST EXCESS": With respect to any Mortgage Loan that
was subject to a full or partial Principal Prepayment during any Prepayment
Period, which Principal Prepayment was applied to such Mortgage Loan following
the Due Date for such Mortgage Loan occurring during such Prepayment Period, the
amount of interest received on such Principal Prepayment at the Mortgage
Interest Rate for such Mortgage Loan from such Due Date, to the extent
collected.
"PREPAYMENT INTEREST SHORTFALL": With respect to any Mortgage Loan
that was subject to a Principal Prepayment during any Prepayment Period, which
Principal Prepayment was applied to such Mortgage Loan prior to the Due Date for
such Mortgage Loan occurring during such Prepayment Period, the amount of such
interest that would have accrued at the Mortgage Interest Rate then in effect
for such Mortgage Loan on the amount of such Principal Prepayment during the
period from and including the date as of which such Principal Prepayment was
applied to such Mortgage Loan to and excluding such Due Date.
"PREPAYMENT PERIOD": With respect to any Distribution Date or
Determination Date, the period beginning on and including the twenty-first day
of the calendar month preceding such Distribution Date or Determination Date and
ending on and including the twentieth day of the calendar month in which such
Distribution Date or Determination Date occurs.
"PREPAYMENT PREMIUM": With respect to any Mortgage Loan, any premium,
penalty or yield maintenance payment paid or payable, as the context requires,
by the related Borrower in connection with any Principal Prepayment.
"PRIME RATE": With respect to any applicable Distribution Date, the
prime lending rate in effect from time to time and published in The Wall Street
Journal on such Distribution Date.
"PRINCIPAL BALANCE": At the time of any determination, the principal
balance of a Mortgage Loan or Mortgage Certificate remaining to be paid at the
close of business on the Cut-Off Date after deduction of all principal payments
or distributions, as applicable, due or distributable on or before the Cut-Off
Date whether or not paid (or, in the case of a Substitute Mortgage Loan included
in the Trust Fund pursuant to Section 2.2(b), at the close of business as of the
date of substitution) reduced by all amounts previously distributed to
Certificateholders that are allocable to payments in respect of principal or
distributions in respect of principal, as applicable, on such Mortgage Loan or
Mortgage Certificate (including the principal portion of Advances).
"PRINCIPAL DISTRIBUTION AMOUNT": For any Distribution Date, the sum,
for all the Mortgage Loans or Mortgage Certificates, as applicable, of:
23
(i) the principal component of all Monthly Payments (other than
Balloon Payments) and Assumed Scheduled Payments which become
due during the related Due Period on the Mortgage Loans
(ii) to the extent not included in the preceding clause, the
Scheduled Principal Balance of any Mortgage Loan that, as of
the Due Date in the month preceding the month in which such
Distribution Date occurs, except in the case of Mortgage Loans
having a Due Date on the first day of a month, in which case
the relevant date shall be the Due Date in the month in which
the Distribution Date occurs (or as of the Cut-Off Date, in
the case of the first Distribution Date), either was purchased
or repurchased from the Trust Fund pursuant to Section 2.2,
2.3(d), 4.5(b) or 9.1, or as to which a Final Recovery
Determination was made during the related Prepayment Period,
reduced by the amount of Realized Losses realized in the
related Prepayment Period,
(iii) to the extent not included in the preceding clauses, the
principal component of all Balloon Payments on any Mortgage
Loan, to the extent received during the related Prepayment
Period (reduced by the principal component of all Assumed
Scheduled Payments previously advanced with respect to such
Mortgage Loan),
(iv) to the extent not included in the preceding clauses, all other
Principal Prepayments received during the related Prepayment
Period on any Mortgage Loan, net of any portion thereof
required to reimburse a P&I Advance, and
(v) the amount received by the Master Servicer during the related
Due Period in respect of principal on the Mortgage
Certificates.
"PRINCIPAL PREPAYMENT": With respect to any Mortgage Loan (other than
an REO Mortgage Loan) (i) any payment of principal made by or on behalf of the
Borrower on such Mortgage Loan which is received in advance of its scheduled Due
Date and which is not accompanied by an amount of interest representing the full
amount of scheduled interest due on any date or dates in any month or months
subsequent to the month of prepayment, (ii) the principal component of any
Insurance Proceeds or Liquidation Proceeds received with respect to such
Mortgage Loan as to which a Final Recovery Determination has not been made to
the extent not applied to pay amounts payable pursuant to Sections 1.2(ii)(a)
and 1.2(ii)(b) and (iii) the principal component of the Repurchase Price of any
Mortgage Loan that is purchased or repurchased pursuant to Section 2.2, 2.3(d),
4.5 or 9.1, but in no case in excess of the Scheduled Principal Balance thereof
(except to the extent that advances were made for the difference between the
actual Principal Balance and the Scheduled Principal Balance of a Mortgage
Loan). With respect to any REO Mortgage Loan, the Net REO Proceeds received in
any prepayment period to the extent not applied to pay amounts payable pursuant
to Sections 1.2(iii)(B)(a) and 1.2(iii)(B)(b) to the extent such amount is in
excess of the sum of the scheduled Monthly Payments or Assumed Scheduled
Payments on the related REO Mortgage Loan and the applicable Workout Fee but in
no case in excess of the Scheduled Principal Balance thereof.
"PROPERTY PROTECTION EXPENSES": Any costs and expenses incurred
pursuant to Sections 3.1(d), 3.10(a), 3.10(d), 3.10(e) and 3.17(c).
"QUALIFIED INSTITUTIONAL BUYER": The meaning given by Rule 144A under
the Act.
"QUALIFIED INSURER": An insurance company or security or bonding
company qualified to write the related insurance policy in the relevant
jurisdiction which, in the case of a hazard or flood insurance policy, shall (i)
have a "Claims Paying Rating" no less than "A", (ii) be an insurer whose
obligations are guaranteed or backed by a company having a Claims-Paying Rating
no less than "A", or (iii) have the highest rating then assigned to the most
24
senior Class of Certificates outstanding at the time by the Rating Agency or
otherwise be acceptable as a Qualified Insurer to the Rating Agency as confirmed
in writing by the Rating Agency; PROVIDED HOWEVER that at no time shall such
rating be less than "BBB".
"QUALIFIED MORTGAGE": A Mortgage Loan that is a "qualified mortgage"
within the meaning of Code Section 860G(a)(3) (but without regard to the rule in
Treasury Regulation Section 1.860G-2(f)(2) that treats a defective obligation as
a qualified mortgage, or any substantially similar successor provision) and
applicable Treasury Regulations promulgated pursuant thereto.
"RATING AGENCY": S&P and successors thereto. If such agencies or
successors thereto are no longer in existence, "Rating Agency" shall be such
nationally recognized statistical rating agency or other comparable Person
designated by the Trustee, notice of which designation shall be given to the
Depositor, Master Servicer and Special Servicer. References herein to the
second highest rating category of a Rating Agency shall mean A or better in the
case of S&P and in the case of any other Rating Agency shall mean such second
highest rating category or better without regard to any plus or minus or any
numerical qualifier.
"REAL PROPERTY": Land or improvements thereon such as buildings or
other inherently permanent structures thereon (including items that are
structural components of the buildings or structures), in each such case as such
terms are used in the REMIC Provisions.
"REALIZED LOSS": With respect to (a) each Mortgage Certificate, a
realized loss of principal or interest allocated thereto pursuant to the Pooling
and Servicing Agreement, dated as of July 20, 1993, among LTC REMIC Corporation,
Bankers Trust Company, LTC, and Union Bank, as amended and supplemented from
time to time; (b) with respect to each Mortgage Loan as to which a Final
Recovery Determination has been made during a Prepayment Period, an amount (not
less than zero) equal to:
(i) the unpaid principal balance of such Mortgage Loan; PLUS
(ii) unpaid accrued interest (exclusive of interest included in
such principal balance) at the Mortgage Interest Rate from
time to time applicable, from the Due Date as to which
interest was last paid by the Borrower up to the Due Date
occurring in such Prepayment Period, on the unpaid principal
balance of such Mortgage Loan; PLUS
(iii) any outstanding Servicing Advances and Advance Interest
payable with respect to such Mortgage Loan; MINUS
(iv) any Net REO Proceeds from the operation of any related REO
Property and the Net Liquidation Proceeds or Insurance
Proceeds, if any, received during the Prepayment Period in
which such Final Recovery Determination was made and applied
to reduce the amounts specified in clauses (i) to (iii) above
pursuant to Section 1.2; and
(c) with respect to each Mortgage Loan the terms of which were modified pursuant
to Section 3.20 hereof, the amount of any reduction in the Scheduled Principal
Balance of such Mortgage Loan.
Realized Losses on a Mortgage Loan will be allocated first to the principal
balance of that Mortgage Loan and then to interest.
"REASSIGNMENT OF ASSIGNMENT OF LEASES, PROFITS AND RENTS": As defined
in Section 2.1.
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"RECORD DATE": With respect to the first Distribution Date, the
Closing Date, and, with respect to each subsequent Distribution Date, the close
of business on the last Business Day of the month preceding the month in which
such Distribution Date occurs.
"REGULAR CERTIFICATES": Collectively, the Class AL, Class BL, Class
CL, Class DL, Class EL, Class FL, Class GL, Class AR-L and Class X-1L Interests
and the Class A, Class B, Class C, Class D, Class E, Class F, Class G, Class X-1
and Class X-2 Certificates.
"REMAINING PRINCIPAL DISTRIBUTION AMOUNT": For any Distribution Date,
the Principal Distribution Amount for such Distribution Date, MINUS the Class LR
Principal Distribution and the Class R Principal Distribution for such
Distribution Date.
"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 real estate mortgage investment conduits, which appear at Sections 860A
through 860G of Subchapter M of Chapter 1 of the Code, and related provisions,
and temporary, final (or, when consistent with market practice, proposed)
regulations promulgated thereunder, as the foregoing are in effect (or, in the
case of proposed regulations, are proposed to be in effect) from time to time.
"RENTS FROM REAL PROPERTY": With respect to any REO Property, gross
income of the character described in Section 856(d) of the Code, which income,
subject to the terms and conditions of that Section of the Code in its present
form, does not include:
(i) except as provided in Section 856(d)(4) or (6) of the Code,
any amount received or accrued, directly or indirectly, with
respect to such REO Property, if the determination of such
amount depends in whole or in part on the income or profits
derived by any Person from such property (unless such amount
is a fixed percentage or percentages of receipts or sales and
otherwise constitutes Rents from Real Property);
(ii) any amount received or accrued, directly or indirectly, from
any Person if the Trust Fund owns directly or indirectly
(including by attribution) a 10% or greater interest in such
Person determined in accordance with Sections 856(d)(2)(B) and
(d)(5) of the Code;
(iii) any amount received or accrued, directly or indirectly, with
respect to such REO Property if any Person Directly Operates
such REO Property, other than by providing services that are
not considered to be rendered to the occupants of such REO
Property within the meaning of Treasury Regulation Section
1.512(b)-1(c)(5);
(iv) any amount charged for services that are not customarily
furnished in connection with the rental of property to tenants
in buildings of a similar class in the same geographic market
as such REO Property (whether or not such charges are
separately stated); and
(v) rent attributable to personal property unless such personal
property is leased under, or in connection with, the lease of
such REO Property and, for any taxable year of the Trust Fund
or the Upper-Tier REMIC or Lower-Tier REMIC, such rent is no
greater than 15 percent of the total rent received or accrued
under, or in connection with, the lease.
"REO ACCOUNT": As defined in Section 3.17(b).
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"REO ACCOUNT MORTGAGE LOAN": A Mortgage Loan as to which the related
Mortgaged Property is an REO Account Property.
"REO ACCOUNT PROPERTY": An REO Property or a property of which the
Special Servicer has acquired possession or is operating or that has been
abandoned by the Borrower under the related Mortgage Loan.
"REO MORTGAGE LOAN": A Mortgage Loan as to which the related
Mortgaged Property is an REO Property.
"REO PROPERTY": A Mortgaged Property as to which an Acquisition Date
has occurred.
"REPURCHASE PRICE": With respect to (a) any Mortgage Loan to be
purchased or repurchased during any Prepayment Period pursuant to Section 2.2,
2.3(d) 4.5 or 9.1, or any Defaulted Mortgage Loan or any Mortgage Loan related
to an REO Property to be sold or repurchased during any Prepayment Period
pursuant to Section 3.18, an amount, calculated by the Master Servicer, or, with
respect to any REO Property, an amount, calculated by the Special Servicer,
equal to:
(i) the unpaid Principal Balance of such Mortgage Loan as of the
Due Date as to which a payment of principal was last made by
the Borrower; PLUS
(ii) unpaid accrued interest from the Due Date as to which interest
was last paid by the Borrower up to the Due Date in the Due
Period related to the same Determination Date as the
Prepayment Period in which the purchase or repurchase is to
occur at a rate equal to the Mortgage Interest Rate applicable
from time to time on the unpaid Principal Balance of such
Mortgage Loan; PLUS
(iii) any unreimbursed Advances on such Mortgage Loan, plus interest
thereon at the Advance Rate; PLUS
(iv) expenses reasonably incurred or to be incurred by the Master
Servicer, the Special Servicer or the Trustee in respect of
the breach or defect giving rise to the repurchase obligation,
including any expenses arising out of the enforcement of the
repurchase obligation; and
(b) any Mortgage Certificate to be purchased or repurchased during
any Prepayment Period pursuant to Section 2.3(d), an amount to be calculated by
the Master Servicer equal to the unpaid principal amount of such Mortgage
Certificate on the date such repurchase occurs plus accrued and unpaid interest
through the last day of the Interest Accrual Period in which such repurchase
occurs, plus unpaid and outstanding expenses for such Mortgage Certificates.
"REQUEST FOR RELEASE": A release signed by a Servicing Officer or a
Special Servicer Officer, as the case may be, substantially in the form of
Exhibit I hereto, which shall refer to the Loan Number of the applicable
Mortgage Loan as set forth in the Mortgage Loan Schedule.
"RESPONSIBLE OFFICER": Any officer of the Trustee assigned to the
Trustee's Asset-Backed Securities Trust Services Group with direct
responsibility for the administration of this Agreement and also, with respect
to a particular matter, any other officer to whom such matter is referred
because of such officer's knowledge of and familiarity with the particular
subject, and, in the case of any certification required to be signed by a
Responsible Officer, such an officer whose name and specimen signature appears
on a list of corporate trust officers
27
furnished to the Master Servicer and the Special Servicer by the Trustee,
as such list may from time to time be amended.
"RULE 144A": Rule 144A promulgated under the Act.
"S&P": Standard & Poor's Ratings Services or any successor nationally
recognized rating organization.
"SCHEDULED PRINCIPAL BALANCE": The Scheduled Principal Balance of (i)
any Mortgage Certificate as of the Cut-Off Date or any Determination Date means
the outstanding principal balance of such Mortgage Certificate as of the Cut-off
Date reduced by (a) any distribution of principal, (b) any allocation of
Realized Losses of principal and (c) any other reduction of principal on the
Mortgage Certificates, made prior thereto; and (ii) any Mortgage Loan (a) as of
the Cut-Off Date means the principal balance of such Mortgage Loan as of the
Cut-Off Date, after giving effect to any payment in respect of principal due on
or before the Cut-Off Date, irrespective of any delinquency in payment by the
related Borrower and after giving effect to any Principal Prepayments received
on or before the Cut-Off Date, and (b) as of any Determination Date, the
Scheduled Principal Balance of such Mortgage Loan as of the Cut-Off Date reduced
by (1) any Principal Prepayments and/or other unscheduled recoveries of
principal and Balloon Payments received after the Cut-Off Date and on or prior
to the last day of the related Prepayment Period, (2) any payment in respect of
principal, if any, due after the Cut-Off Date and on or before the last day of
the related Due Period, to the extent paid by the Borrower or advanced by the
Master Servicer (other than a Balloon Payment, but including the principal
portion of any Assumed Scheduled Payment that actually was advanced),
irrespective of any delinquency in payment by the Borrower, and (3) any
adjustment thereto in the amount of a Deficient Valuation (if allocable to
principal) occurring on or before the last day of the related Prepayment Period
resulting from any bankruptcy or similar proceeding. In the event that a Final
Recovery Determination with respect to a Mortgage Loan has been made during a
Prepayment Period, the Scheduled Principal Balance of such Mortgage Loan with
respect to the immediately succeeding Determination Date shall be zero.
"SERVICING ADVANCES": Advances, other than P&I Advances, with respect
to the Mortgage Loans made by the Master Servicer or the Trustee, as applicable
with respect to taxes, insurance premiums and certain other expenses to the
extent required by this Agreement to be advanced and identified herein as a
"Servicing Advance."
"SERVICING FEE": (i) With respect to each Mortgage Loan and for any
Due Period, an amount equal to the product of one-twelfth the Servicing Fee Rate
applicable to the Mortgage Loans and the Scheduled Principal Balance of each
Mortgage Loan outstanding immediately prior to the application of the Monthly
Payment due on the Due Date in such Due Period, and (ii) with respect to the
Mortgage Certificates and for any Due Period, an amount equal to the product of
one-twelfth the Servicing Fee Rate applicable to the Mortgage Certificates and
the Scheduled Principal Balance of the Mortgage Certificates outstanding
immediately prior to the application of the Monthly Payment due on the Due Date
in such Due Period.
"SERVICING FEE ADJUSTMENT" means, for any Due Period, the sum of the
differences (each of which may be a negative number), one for each Mortgage Loan
listed on Exhibit B hereto, of (i) the interest that accrued on such Mortgage
Loan at the applicable Mortgage Interest Rate (net of the Class X-1L Strip Rate)
for the related Mortgage Loan Due Period and (ii) the interest that would have
accrued on such Mortgage Loan for such Mortgage Loan Due Period if interest had
accrued on such Mortgage Loan at the applicable Mortgage Interest Rate (net of
the Class X-1L Strip Rate) based on a year consisting of twelve thirty-day
months.
"SERVICING FEE RATE": With respect to each Mortgage Loan, a rate
equal to 0.065% per annum, and with respect to the Mortgage Certificates, a rate
equal to 0.020% per annum on the Scheduled Principal Balance of the Mortgage
Certificates.
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"SERVICING OFFICER": Any officer or employee of the Master Servicer
involved in, or responsible for, the administration and servicing of the
Mortgage Loans and Mortgage Certificates whose name and specimen signature
appear on a list of servicing officers or employees of the Master Servicer
furnished to the Trustee and the Special Servicer on the Closing Date by the
Master Servicer as such list may from time to time be amended.
"SERVICING TRANSFER EVENT": With respect to any Mortgage Loan, the
occurrence of any of the following events:
(i) (a) a Balloon Payment with respect to such Mortgage Loan
becomes or has become past due (taking into account any grace
period), or (b) at least two monthly payments become past due,
or (c) during the three month period ending on the Maturity
Date of the Mortgage Loan, the Borrower notifies the Master
Servicer that it will not pay the Balloon Payment on or prior
to the Maturity Date and the Master Servicer determines, in
its reasonable business judgment, as evidenced by an Officer's
Certificate, that a payment default on the Mortgage Loan is
imminent (and will not be cured within 60 days); or
(ii) a decree or order of a court or agency or supervisory
authority having jurisdiction in the premises in an
involuntary case under any present or future federal or state
bankruptcy, insolvency or similar law (A) for the appointment
of a trustee, conservator or receiver or liquidator in any
bankruptcy, insolvency, readjustment of debt, marshalling of
assets and liabilities or similar proceedings or (B) for the
winding-up or liquidation of its affairs, shall have been
entered against the related Borrower and such decree or order
shall have remained in force undischarged or unstayed for a
period of 60 days; or
(iii) the related Borrower consents to the appointment of a trustee,
conservator or receiver or liquidator in any similar
insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings of or relating to the
Borrower or of or relating to all or substantially all of its
property; or
(iv) the related Borrower admits in writing its inability to pay
its debts generally as they become due, files a petition to
take advantage of any applicable bankruptcy, insolvency or
reorganization statute, makes an assignment for the benefit of
its creditors, or voluntarily suspends payment of its
obligations; or
(v) the Master Servicer receives notice of the foreclosure or
proposed foreclosure of any other lien on the related
Mortgaged Property; or
(vi) the related Mortgaged Property becomes an REO Account
Property; or
(vii) (1) the license or certificate of need to operate the related
Mortgaged Property as a nursing home, (2) the certificate of
the related Mortgaged Property to participate as a nursing
home provider in Medicare or Medicaid (and their successor
programs) or (3) the right to admit patients under Medicare or
Medicaid (and their successor programs) has been terminated,
revoked, surrendered, limited or suspended, and the Master
Servicer determines, in its reasonable business judgment as
evidenced by an Officer's Certificate, that a payment default
on such Mortgage Loan is imminent; or
(viii) the related Mortgaged Property has been cited for a material
deficiency for which its license or certification can be
revoked and which is not cured within the earlier of the time
permitted by the applicable regulatory authority or 60 days
and in connection
29
therewith, the Master Servicer determines, in its reasonable
business judgment as evidenced by an Officer's Certificate,
that a payment default on such Mortgage Loan is imminent; or
(ix) the first mortgage lien and security interest granted in the
related Mortgaged Property by the related Mortgage becomes
junior to an intervening lien (other than a second lien
granted in any related Mortgaged Property, if any) that is not
removed or bonded-off within 30 days after written notice to
the related Borrower; or
(x) the related Borrower has entered into any merger,
consolidation or similar transaction, or has sold all or
substantially all of its assets (whether now or hereinafter
acquired) in violation of the related Mortgage Loan documents;
or
(xi) any of the events or conditions described in clauses (ii),
(iii), (iv) and (x) above shall have occurred with respect to
the lessee of any lease or the manager under any management
contract of the related Mortgaged Property, and in connection
therewith, the Master Servicer determines, in its reasonable
business judgment as evidenced by an Officer's Certificate,
that a payment default on such Mortgage Loan is imminent;
(xii) the Master Servicer determines that events or conditions exist
that (A) impair the ability of the Borrower to make timely
payments under such Mortgage Loan when due, (B) impair the
first lien and security interest granted by the related
Mortgage (except for the second lien in the case of the
Mortgage Loan relating to the Lexington Mortgaged Property
(Loan #85), (C) impair the use of the related Mortgaged
Property for the use intended, and in the case of each of (A),
(B), or (C), the Master Servicer determines, in its reasonable
business judgment as evidenced by an Officer's Certificate,
that a payment default on such Mortgage Loan is imminent.
With respect to Mortgage Loans #▇▇▇, #▇▇▇, #▇▇▇, #▇▇▇ and #216 only, in the
event that any of the above listed conditions exist, the Mortgage Loans shall
not be transferred to the Special Servicer, but shall be specially serviced by
the Master Servicer. With respect to items (vii), (viii), (ix), (x) and (xi)
above, the Depositor shall notify the Master Servicer of the occurrence of such
event.
"SPECIAL SERVICER": LTC, except with respect to Mortgage Loans #▇▇▇,
#▇▇▇, #▇▇▇, #▇▇▇ and #216, with respect to which the Special Servicer shall be
the Master Servicer or an eligible Special Servicer appointed by the Master
Servicer in compliance with Section 6.4, or any successor special servicer as
herein provided.
"SPECIAL SERVICER FEE": With respect to any Due Period, an amount
equal to the sum of the aggregate Basic Fees and the aggregate Workout Fees, if
any, with respect to such Due Period.
"SPECIAL SERVICER OFFICER": Any officer of the Special Servicer
involved in, or responsible for, the administration and servicing of the
Mortgage Loans whose name and specimen signature appear on a list of officers of
the Special Servicer furnished to the Trustee and the Master Servicer by the
Special Servicer on the Closing Date, as such list may from time to time be
amended.
"SPECIALLY SERVICED MORTGAGE LOAN": As defined in Section 3.1(a).
"SPREAD RATE": Any of the Class A Spread Rate, the Class B Spread
Rate, the Class C Spread Rate or the Class D Spread Rate.
30
"STARTUP DAY": The day designated as such pursuant to Section 2.8(a)
hereof.
"SUBSERVICER": LTC Properties, Inc., or any successor thereto, in its
capacity as a subservicer under a subservicing agreement with the Master
Servicer, pursuant to which such subservicer shall perform the Master Servicer's
obligations under this Agreement, as specified in such subservicing agreement.
"SUBSTITUTE MORTGAGE LOAN": As defined in Section 2.2(b).
"TAX RETURNS": The federal income tax return on Internal Revenue
Service Form 1066, U.S. Real Estate Mortgage Investment Conduit Income Tax
Return, including Schedule Q thereto, Quarterly Notice to Residual Interest
Holders of REMIC Taxable Income or Net Loss Allocation, or any successor forms,
to be filed on behalf of the Upper-Tier REMIC and Lower-Tier REMIC under the
REMIC Provisions, together with any and all other information, reports or
returns that may be required to be furnished to the Certificateholders or filed
with the Internal Revenue Service or any other governmental taxing authority
under any applicable provisions of federal, state or local tax laws.
"TERMINATION DATE": The Distribution Date on which the Upper-Tier
REMIC and Lower-Tier REMIC are terminated pursuant to Section 9.1.
"TERMINATION PRICE": As defined in Section 9.1(c).
"TRANSFER": Any direct or indirect transfer or other form of
assignment of any Ownership Interest.
"TRANSFER AFFIDAVIT": As defined in Section 5.3(d).
"TRANSFER AGREEMENT": The Transfer and Repurchase Agreement dated as
of April 20, 1998 between the Originator and the Depositor, pursuant to which
the Originator has sold the Mortgage Loans and Mortgage Certificates and other
related property to the Depositor.
"TREASURY REGULATIONS": Temporary or final (or, when consistent with
market practice, proposed) regulations of the United States Department of the
Treasury.
"TRUST FUND": The corpus of the trust created hereby and to be
administered hereunder, consisting of the Lower-Tier REMIC and the Upper-Tier
REMIC.
"TRUSTEE": LaSalle National Bank, a nationally chartered bank, in its
capacity as trustee, or its successor in interest, or any successor trustee
appointed as herein provided.
"TRUSTEE FEE": With respect to each Mortgage Loan and Mortgage
Certificate, and for any Due Period, an amount equal to the product of one-
twelfth of the Trustee Fee Rate and the Scheduled Principal Balance on each
Mortgage Loan and Mortgage Certificate outstanding immediately prior to the
application of the Monthly Payment due on the Due Date in such Due Period.
"TRUSTEE FEE RATE": With respect to each Mortgage Loan and Mortgage
Certificate, a rate equal to 0.025% per annum.
"UCC": The Uniform Commercial Code as in effect in the State of New
York.
"UPPER-TIER CERTIFICATE": Any of the Class A, Class B, Class C, Class
D, Class E, Class F, Class G, Class X-1, Class X-2 or Class R Certificates.
31
"UPPER-TIER DISTRIBUTION ACCOUNT": The separate Eligible Account
established and maintained by the Paying Agent pursuant to Section 3.5(b) which
shall be entitled "LaSalle National Bank, as Trustee, in trust for registered
Holders of LTC Commercial Mortgage Pass-Through Certificates, Series 1998-1."
"UPPER-TIER REMIC": One of two segregated pools of assets for which a
REMIC election has been made, which shall consist of the Lower-Tier Interests
(other than the Class LR Certificate) and such amounts as shall from time to
time be held in the Upper-Tier Distribution Account.
"VALUE": With respect to any Mortgaged Property, the appraised value
thereof as determined by the appraisal made for the Originator in connection
with the origination of the related Mortgage Loan.
"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, (a) the aggregate Voting Rights of
the Class A, Class B, Class C, Class D and Class E, Class F, Class G, Class R
and Class LR Certificates shall be equal to 95% of the aggregate Voting Rights,
(b) the aggregate Voting Rights of each of the Class A, Class B, Class C, Class
D, Class E, Class F, Class G, Class R and Class LR Certificates shall be equal
to the product of (i) 94% and (ii) the fraction obtained by dividing the
Certificate Principal Amount of such Class by the aggregate Certificate
Principal Amounts of the Class A, Class B, Class C, Class D, Class E, Class F,
Class G, Class R and Class LR Certificates, (c) the aggregate Voting Rights of
the Class X-1 and Class X-2 Certificates shall be 5% and (d) the aggregate
Voting Rights of each of the Class X-1 and Class X-2 Certificates shall be equal
to 21/2% for each such class. With respect to any provisions hereof providing
for action, consent or approval of each Class of Certificates or specified
Classes of Certificates, each Holder of an Outstanding Certificate of a Class
will have Voting Rights in such Class equal to such Holder's Percentage Interest
in such Class.
"WORKOUT FEE": With respect to any Due Period and any Mortgage Loan
that is, at the beginning of the related Prepayment Period, or at any time
during such Prepayment Period became, a Specially Serviced Mortgage Loan (other
than a Specially Serviced Mortgage Loan purchased by the Originator by reason of
breach of representation or defective documentation which has a material adverse
effect on Certificateholders), an amount equal to (a) in the case of each such
Mortgage Loan with respect to which a Final Recovery Determination has been made
or in the case of a Specially Serviced Mortgage Loan or related REO Property
that is sold or repurchased pursuant to any provision of this Agreement during
the related Prepayment Period, the product of the Workout Fee Rate and the Net
Liquidation Proceeds (reduced by the amount of unpaid accrued interest on such
Mortgage Loan) received on such Mortgage Loan during such Prepayment Period
times a fraction, the numerator of which is such Net Liquidation Proceeds and
the denominator of which is the Scheduled Principal Balance of such Mortgage
Loan at the time of liquidation, (b) in the case of each other Specially
Serviced Mortgage Loan, the product of the Workout Fee Rate and the amount of
collections and proceeds (including Net REO Proceeds) received with respect to
such Mortgage Loan during such Prepayment Period, less the aggregate amount of
Liquidation Expenses incurred with respect thereto and not deducted from
collections or proceeds received in a previous Prepayment Period pursuant to
this clause (b).
"WORKOUT FEE RATE" As to any Mortgage Loan for which a Workout Fee is
payable with respect to any Due Period pursuant to the definition of "Workout
Fee," a per annum rate of 1.50%.
SECTION 1.2 CERTAIN CALCULATIONS.
Unless otherwise specified herein, the following provisions shall
apply:
(i) All calculations of interest on the Certificates,
Lower-Tier Interests, Trustee Fee and servicing fees
provided for herein shall be made on the basis of a
360-day year consisting of twelve 30-day months, except
to the extent specified other-
32
wise. All calculations of interest with respect to any
Mortgage Loan provided for herein shall be made in
accordance with the terms of the related Note and
Mortgage or, if such documents do not specify the basis
upon which interest accrues thereon, on the basis of a
360-day year consisting of twelve 30-day months;
(ii) For purposes of this Agreement, as set forth in the
applicable Mortgage Loan, Insurance Proceeds and
Liquidation Proceeds in respect of a Mortgage Loan
shall be applied as follows: (a) first, to the
reimbursement of Servicing Advances with respect to the
related Mortgage Loan, plus Advance Interest thereon,
(b) second, to cover past due Monthly Payments (and, in
the case of Monthly Payments with respect to which a
P&I Advance was made, Advance Interest thereon), (c)
third, to the Monthly Payment or Assumed Scheduled
Payment, as applicable, for the Due Date occurring in
the Prepayment Period in which such proceeds are
received, and (d) fourth, after deduction of any
applicable Workout Fee, as a Principal Prepayment on
the related Mortgage Loan;
(iii) Notwithstanding the occurrence of the Acquisition Date
by or on behalf of the Trust Fund with respect to any
REO Property and cancellation of the related Mortgage
Loan, such Mortgage Loan shall (for purposes of all
calculations hereunder, including, without limitation,
the calculation of the Servicing Fee, except for
purposes of Section 9.1) be considered to be a Mortgage
Loan held in the Trust Fund until such time as the
related REO Property is sold by the Trust Fund.
Consistent with the foregoing, for purposes of all
calculations hereunder, so long as such Mortgage Loan
is considered to be a Mortgage Loan held in the Trust
Fund:
(A) It shall be assumed that, notwithstanding that the
indebtedness evidenced by the related Note shall
have been discharged, such Note remains
outstanding and, for purposes of determining the
Scheduled Principal Balance thereof and, in
connection with the calculation of any servicing
compensation and Trustee Fee, the unpaid principal
balance thereof, the Mortgage Interest Rate and
related amortization schedule in effect at the
time of any such acquisition of title remain in
effect, except that such schedule shall be
adjusted to reflect the application of Net REO
Proceeds received in any amount pursuant to clause
(B) below; and
(B) Net REO Proceeds with respect to a Specially
Serviced Mortgage Loan received in any Prepayment
Period shall be applied except as set forth in the
applicable Mortgage Loan as follows: (a) first,
to pay any taxes due on such Net REO Proceeds
under the REMIC Provisions, and (b) second, in the
manner set forth in clause 1.2(ii) above; and
(iv) In calculating Net REO Proceeds with respect to any REO
Account Property for any Prepayment Period, the
aggregate amount of expenses not allocable to
particular REO Account Properties charged against
amounts on deposit in the REO Account by the Special
Servicer, as permitted by the provisions of this
Agreement, since the last date on which amounts were
remitted from the REO Account to the Collection Account
shall be allocated to reduce the proceeds and
33
collections received in respect of particular REO
Account Properties on a PRO RATA basis based upon the
respective Monthly Payments of the related REO Account
Mortgage Loans.
34
ARTICLE II
DECLARATION OF TRUST FUND;
CONVEYANCE OF MORTGAGE LOANS
AND MORTGAGE CERTIFICATES;
ORIGINAL ISSUANCE OF CERTIFICATES
SECTION 2.1 CREATION AND DECLARATION OF TRUST FUND; CONVEYANCE OF
MORTGAGE LOANS, CONVEYANCE OF MORTGAGE CERTIFICATES,
CONVEYANCE OF OTHER COLLATERAL.
The Depositor, concurrently with the execution and delivery hereof,
does hereby irrevocably sell, transfer, assign, set over and otherwise convey
to the Trustee, without recourse, all of the right, title and interest of the
Depositor in and to the Trust Fund, to have and to hold, in trust, and the
Trustee declares that, subject to the review provided for in Section 2.2, the
Custodian on its behalf has received and shall hold the Trust Fund, as
Trustee, in trust, for the benefit and use of the Holders of the Certificates
which indirectly through the Lower-Tier Interests (or, in the case of the
Holders of the Class LR Certificates, directly) represent the entire
beneficial interest in the Trust Fund and for the purposes and subject to the
terms and conditions set forth in this Agreement, and, concurrently with such
receipt, the Trustee has caused to be authenticated and delivered to or upon
the order of the Depositor, Certificates in the authorized denominations
evidencing the entire ownership of the Lower-Tier Interests, which in turn
represent the entire ownership of the Trust Fund. The Depositor also hereby
assigns to the Trustee all of its right, title and interest in the Transfer
Agreement, the Mortgage Loans and the Mortgage Certificates, including all
rights to payment in respect thereof under the Notes and any and all related
agreements, and distributions thereon except as set forth below, and any
security interest thereunder (whether in real or personal property and
whether tangible or intangible), any guaranty relating thereto, any
environmental indemnity agreement relating to a Mortgaged Property and all
the right, title and interest of the Depositor in, to and under the Transfer
Agreement, and all other assets included or to be included in the Trust Fund
for the benefit of the Certificateholders, all without recourse and without
warranty of any kind except as specifically set forth herein. Such
assignment includes all interest and principal received or receivable by the
Depositor, the Master Servicer or the Special Servicer on or with respect to
the Mortgage Loans and Mortgage Certificates other than (i) scheduled
payments of principal and interest due on the Mortgage Loans or required to
be distributed in respect of the Mortgage Certificates on or prior to the
Cut-Off Date, (ii) Principal Prepayments received on or prior to the Cut-Off
Date and reflected in the initial Scheduled Principal Balance of the related
Mortgage Loan and (iii) any Prepayment Premiums, late fees and any other
penalties or charges.
In connection with such transfer and assignment, the Depositor does
hereby deliver to, and deposit with, the Custodian as the agent of the
Trustee (except in the case of items (x), (xiii), (xvi), (xvii) and (xviii)
below which are delivered to the Master Servicer) the following documents or
instruments with respect to each Mortgage Loan so assigned (with copies to
the Master Servicer and the Special Servicer):
(i) the original Note showing a complete chain of
endorsement from the Originator to the Depositor, and
endorsed by the Depositor without recourse and without
warranty of any kind except as specifically set forth
herein to the order of the Trustee in the following
form: "Pay to the order of LaSalle National Bank, a
nationally chartered bank, as Trustee under that
certain Pooling and Servicing Agreement dated as of
April 20, 1998 for LTC Commercial Mortgage Pass-Through
Certificates, Series 1998-1, without recourse and
without warranty of any kind, except for those
warranties made by LTC REMIC IV Corporation and set
forth in that certain Pooling and Servicing Agreement,
dated as of April 20, 1998, by and among LTC REMIC IV
Corporation, a Delaware corporation, GMAC Commercial
Mortgage Corporation, a California corporation, LTC
35
Properties, Inc., a Maryland corporation, and LaSalle
National Bank, a nationally chartered bank;
(ii) the original recorded Mortgage showing the Depositor as
mortgagee or accompanied by original recorded
assignments showing a complete chain of assignment from
the Originator to the Depositor or, if any such
original Mortgage or assignment has not been returned
from the applicable public recording office, a copy
thereof certified by the Depositor to be a true and
complete copy of the original thereof submitted or, in
the case of assignments to the Depositor, to be
submitted, for recording;
(iii) an executed Assignment of each Mortgage in form
suitable for recordation in the jurisdiction in which
the Mortgaged Property is located from (a) Bankers
Trust Company of California, as custodian for ▇▇▇▇▇▇▇
Sachs Mortgage Company under that certain Custodial
Agreement dated December 15, 1993, to the Originator,
if applicable, (b) Originator to the Depositor, and (c)
the Depositor to "LaSalle National Bank, as Trustee
under that certain Pooling and Servicing Agreement,
dated as of April 20, 1998, for LTC Commercial Mortgage
Pass-Through Certificates, Series 1998-1";
(iv) if the related security agreement is separate from the
related Mortgage, the original executed version of such
security agreement and any intervening assignments
thereof, including the assignment thereof to the
Depositor and the Trustee;
(v) a copy of the UCC-l financing statement or statements
and related continuation statements, if any, relating
to such Mortgage Loan each with evidence of filing
thereon, together with an original executed form UCC-2
or UCC-3, in a form suitable for filing in the
jurisdiction in which the related Mortgaged Property is
located, disclosing the assignment from (a) the
Originator to the Depositor and (b) the Depositor to
the Trustee of the Depositor's security interest in the
personal property (if any) constituting security for
repayment of such Mortgage Loan;
(vi) a copy, certified as a true and complete copy by the
Originator, of each Notice Pursuant to Section 9-302 of
the Uniform Commercial Code, signed by the Trustee and
the Originator, to be delivered to the bank in which a
deposit account, if any, securing such Mortgage Loan is
maintained;
(vii) an Assignment of the escrow deposit, if any, and a
copy, certified as a true and complete copy by the
Originator, of each notice of each escrow deposit and
the assignment of the Mortgage Loan to be delivered to
the escrow agent;
(viii) the original or copy of each assumption, modification,
written assurance or substitution agreement, if any,
relating to such Mortgage Loan;
(ix) the original lender's title insurance policy, together
with any endorsements thereto (the "TITLE POLICY") or,
with respect to each Mortgage Loan as to which a title
insurance policy has not yet been issued, a lender's
title insurance commit-
36
ment with a letter from the issuer of the policy
stating that all conditions to the issuance of the
policy have been satisfied;
(x) the original survey, or if the original is not
available, a copy thereof certified by the Depositor to
be a true copy thereof;
(xi) the original of any guaranty relating to such Mortgage
Loan;
(xii) if any related Assignment of Leases, Rents and Profits
is separate from the related Mortgage, the original
executed version thereof, together with an executed
reassignment of such instrument (a "Reassignment of
Assignment of Leases, Rents and Profits") in suitable
form for recordation in the jurisdiction in which the
related Mortgaged Property is located from the
Depositor to the Trustee (which reassignment, however,
may be included in the Assignment of Mortgage and need
not be a separate instrument);
(xiii) a copy, certified as a true and complete copy by the
Originator or, where available, an original of, each
lease and each management agreement affecting the
related Mortgaged Property and of any intervening
assignments thereof, and evidence of any recordings
thereof and any guarantees relating thereto, if
applicable;
(xiv) any subordination agreements relating to the Mortgage
Loan;
(xv) any and all amendments, modifications and supplements
to, and waivers related to, any of the foregoing;
(xvi) evidence of insurance with respect to the related
Mortgaged Property as described in Section 3.8;
(xvii) all Phase I environmental assessments, engineering
assessments, certificates of occupancy and appraisals
of the related Mortgaged Property in the possession or
prepared on behalf of the Originator or its agents or
on which the Originator is entitled to rely;
(xviii) all estoppel letters, financial statements and opinions
received from the related Borrower or tenant under the
related lease in the possession of such Seller or its
agents;
(xix) any other written agreements related to such Mortgage
Loan; and
(xx) the physical certificate representing the Mortgage
Certificates; any transferee certificates or the
documentation required to properly transfer the
Mortgage Certificates to the Trustee for the benefit of
the Certificateholders.
No later than ten (10) days following the Closing Date, the Depositor shall
cause each of the notices described in items (vi) and (vii) above to be
delivered to the addressee on such notice. No later than sixty (60) days
following the Closing Date, the Depositor shall cause to be issued (a) an
endorsement to be issued to each Title Policy, substantially in the form of a
CLTA Form 104.1 or a "Mortgage Assignment Add-On Endorsement" naming Trustee as
endorsee and, (b) with respect to any Mortgage Loan for which a Title Policy has
not yet been issued, a
37
supplement to the lender's title insurance commitment pursuant to which the
issuer thereof commits to issue the Title Policy with such an endorsement.
The Depositor hereby agrees that it shall take such further action as
is reasonably required to complete the conveyance of the Mortgage Loans and
Mortgage Certificates as contemplated by this Section 2.1. With respect to the
Mortgage Loans, the Depositor also hereby delivers to the Custodian as the agent
of the Trustee a list (the "Assignments of Mortgage List") that has been
prepared by the Depositor or its agent for each Mortgage Loan, by Loan Number,
indicating the jurisdiction in which the related Assignment of Mortgage will be
submitted for recording and escrow instructions to the title companies that will
be issuing the endorsements described above, instructing each such title company
to (1) record each Assignment of Mortgage, Reassignment of Assignment of Leases
and Rents (if not otherwise included in the related Assignment of Mortgage),
UCC-2 or UCC-3 and (2) issue the endorsements to the Title Policies.
No later than 45 days following the Closing Date, the Trustee or
Custodian, as applicable, shall, to the extent possession thereof has been
delivered to the Trustee or to the Custodian, deliver to the Depositor who shall
record or cause to be recorded,(1)(a) each original Assignment of Mortgage
referred to in Section 2.1 (iii) which has not yet been submitted for recording
and, (b) each Reassignment of Assignment of Leases, Rents and Profits referred
to in Section 2.1(xii) (if not otherwise included in the related Assignment of
Mortgage) which has not yet been submitted for recordation; and (2) for filing,
each UCC-2 or UCC-3 referred to in Section 2.1(v) which has not yet been
submitted for filing. The Depositor shall promptly (and in no event later than
five Business Days following the date the related document is received from the
Depositor, in the case of clause 1(a) above and 30 days following the date the
related document is received in the case of clauses 1(b) and 2 above) submit or
cause to be submitted for recording or filing, as the case may be, at the
expense of the Depositor, in the appropriate public recording office, each such
document. In the event that any such document is lost or returned unrecorded
because of a defect therein, the Depositor shall promptly prepare a substitute
document, and thereafter direct Chicago Title Insurance Company or the Trustee
or Custodian to cause each such document to be duly recorded. Notwithstanding
anything to the contrary contained in this Section 2.1, in those instances where
the public recording office retains the original Mortgage, Assignment of
Mortgage or Reassignment of Assignment of Leases, Rents and Profits, if
applicable, after any has been recorded, the obligations hereunder of the
Depositor, Trustee or Custodian, as applicable, shall be deemed to have been
satisfied upon delivery to the Trustee or the Custodian of a copy of such
Mortgage, Assignment of Mortgage or Reassignment of Assignment of Leases, Rents
and Profits, if applicable, certified by the public recording office to be a
true and complete copy of the recorded original thereof.
All original documents relating to the Mortgage Loans which are not
delivered to the Custodian are and shall be held by the Master Servicer in trust
for the benefit of the Trustee on behalf of the Certificateholders. In the
event that any such original document is required pursuant to the terms of this
Section to be a part of a Mortgage File, such document shall be delivered
promptly to the Custodian. Any original document delivered to or held by the
Depositor that is not required pursuant to the terms of this Section to be a
part of a Mortgage File shall be delivered promptly to the Master Servicer.
It is intended that the conveyance of the Depositor's right, title and
interest in and to the Trust Fund pursuant to this Agreement shall constitute,
and shall be construed as, a purchase and sale and not a loan. However, if such
conveyance is deemed to be a loan, it is intended that the rights and
obligations of the parties to such loan shall be established pursuant to the
terms of this Agreement. The Depositor hereby grants to the Trustee a first
priority security interest in all of the Depositor's right, title and interest
in, to and under the Mortgage Loans and Mortgage Certificates, together with any
related Mortgages and Assignments of Leases, Rents and Profits, other Trust Fund
property and the other property so conveyed, whether now existing or hereafter
acquired, and the accounts and funds established by the Master Servicer and the
Trustee pursuant hereto, all payments of principal of or interest on the
Mortgage Loans and Mortgage Certificates, all other payments made in respect of
the Mortgage Loans and Mortgage Certificates and all proceeds thereof for the
benefit of the Certificateholders, to secure payment
38
of the Certificates and authorizes the Trustee to make the REMIC Elections
with respect to the Trust Fund required hereunder; and this Agreement shall
constitute a security agreement under applicable law. If such conveyance 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 the collateral agent for the benefit of such Person, and
all proceeds shall be distributed as herein provided. The Depositor shall
take such actions as may be necessary to ensure that, if this Agreement were
deemed to create a security interest in the Mortgage Loans and Mortgage
Certificates, together with any related Mortgages and Assignments of Leases,
Rents and Profits, such security interest would be deemed to be a perfected
security interest of first priority under applicable law and will be
maintained as such throughout the term of this Agreement.
SECTION 2.2 ACCEPTANCE BY CUSTODIAN AND TRUSTEE; REPURCHASE OR
SUBSTITUTION FOR DEFECTIVE DOCUMENTATION OR OTHER
FAILURE TO VALIDLY ASSIGN MORTGAGE LOANS AND MORTGAGE
CERTIFICATES.
(a) If the Depositor cannot deliver or shall otherwise be unable
to assign (as set forth in an Officer's Certificate of the Depositor) validly
any Mortgage Loan to the Trustee pursuant to Section 2.1 or any other original
or certified recorded document described in Section 2.1 on the Closing Date (or
take such other action as is required in the aforesaid Officer's Certificate of
the Depositor) to the Custodian, the Depositor shall use its best efforts,
promptly upon receipt thereof and in any case not later than 45 days from the
Closing Date, to deliver such original or certified recorded documents to the
Custodian on behalf of the Trustee (unless the Depositor is delayed in making
such delivery by reason of the fact that such documents shall not have been
returned by the appropriate recording office in which case it shall notify the
Custodian and the Trustee in writing of such delay and shall deliver such
documents to the Custodian promptly upon the Depositor's receipt thereof). By
its execution and delivery of this Agreement, the Trustee acknowledges the
assignment to it of the Mortgage Loans and Mortgage Certificates in good faith
without actual notice or actual knowledge of adverse claims, liens, charges,
encumbrances or other security interests and declares that the Custodian holds
and will hold such documents and all others delivered to it constituting the
Mortgage File (to the extent the documents constituting the Mortgage File are
actually delivered to it) for any Mortgage Loan assigned to it as Trustee
hereunder in trust, upon the conditions herein set forth, for the use and
benefit of all present and future Certificateholders. The Custodian agrees, for
the benefit of the Certificateholders, to review each Mortgage File within 45
days after the later of (a) the Custodian's receipt of such Mortgage File or (b)
the execution and delivery of this Agreement, to ascertain that all documents
referred to in Section 2.1 above (in the case of the documents referred to in
Sections 2.1 (iv), (v), (vi), (vii), (viii), (ix) (in the case of any
endorsement thereto), (xi)-(xvi), (xviii) and (xix), as identified to it in
writing by the Depositor, which the Depositor hereby agrees to do promptly after
the Closing Date) and any original recorded documents referred to in the first
sentence of this Section included in the delivery of a Mortgage File have been
received, have been executed, appear to be what they purport to be, purport to
be recorded or filed (as applicable) and appear regular on their face, and that
such documents relate to the Mortgage Loans identified in the Mortgage Loan
Schedule. In so doing, the Custodian may rely on the purported due execution
and genuineness of any such document and on the purported genuineness of any
signature thereon. At the conclusion of such review, the Custodian shall
promptly notify the Depositor, with a copy to the Trustee, the Master Servicer
and the Special Servicer, by providing a written report in the form attached as
Exhibit J (the "Custodian's Exception Report") and, if the Custodian finds that
any document or documents constituting a part of a Mortgage File have not been
executed or received, have not been recorded or filed (if required), are
unrelated to the Mortgage Loans identified in the Mortgage Loan Schedule, appear
not to be regular on their face, such report shall set forth for each affected
Mortgage Loan, with particularity, the nature of the defective or missing
document or the lack of evidence of recordation. The provisions of Section
2.3(c) shall apply to each document so identified. The Trustee and the Master
Servicer shall not be responsible for any loss, cost, damage or expense to the
Trust Fund resulting from any failure to receive any document constituting a
portion of a Mortgage File noted on the Custodian's Exception Report or for any
failure by the Depositor to use its best efforts to deliver any such document.
39
The Custodian shall have no responsibility for reviewing any
Mortgage File except as expressly provided above and in Section 2.1 hereof.
Without limiting the effect of the preceding sentence, in reviewing any
Mortgage File pursuant to the preceding paragraph or Section 2.1, the
Custodian shall have no responsibility for determining whether any document
or opinion is valid and binding, whether the text of any deed, assignment or
endorsement is in proper or recordable form (except, if applicable, to
determine if the Trustee is the grantee, assignee or endorsee), whether any
document has been recorded in accordance with the requirements of any
applicable jurisdiction, whether a blanket assignment is permitted in any
applicable jurisdiction, or whether any Person executing any document or
rendering any opinion is authorized to do so or whether any signature thereon
is genuine.
The Custodian holds (or in the case of the Mortgage Certificates,
will hold upon delivery thereof) that portion of the Trust Fund delivered to
the Trustee consisting of "instruments" in the case of the Mortgage Loans (as
such term is defined in Section 9-105(i) of the Uniform Commercial Code as in
effect in Illinois on the date hereof), and "certificated securities" in the
case of the Mortgage Certificates (as such term is defined in Section
8-102(a)(A4) of the Uniform Commercial Code as in effect in the State of
Illinois on the date hereof) and, except as otherwise specifically provided
in this Agreement, shall not remove such instruments or certificated
securities from Illinois unless it receives an Opinion of Counsel (obtained
and delivered at the expense of the Person requesting the removal of such
instruments from Illinois) that in the event the transfer of the Mortgage
Loans or the Mortgage Certificates to the Custodian is deemed not to be a
sale, after such removal, the Custodian on behalf of the Trustee will possess
a first priority perfected security interest in such instruments and
certificated securities.
The Trustee may enter into a Custodial Agreement pursuant to which
the Trustee will appoint a Custodian to hold the Mortgage Files in trust for
the benefit of all present and future Certificateholders; PROVIDED, HOWEVER,
that the Custodian so appointed shall in no event be the Originator, the
Depositor or any Person known to a Responsible Officer of the Trustee to be
an Affiliate of any of them; PROVIDED, FURTHER that the Trustee need not
enter into a Custodial Agreement for so long as the Trustee is the Custodian.
Prior to appointing a Custodian, the Trustee shall cause a Responsible
Officer of the Trustee to make a reasonable inquiry of appropriate officers
of the Custodian as to whether such prospective Custodian is an Affiliate of
the Originator or the Depositor. The Trustee appoints itself as the initial
Custodian hereunder.
(b) Upon discovery by the Depositor, the Master Servicer, the
Special Servicer, the Custodian (if any) or a Responsible Officer of the
Trustee that any documentation described in Section 2.1 hereof is missing or
defective in any respect and such defect has a material adverse effect on the
Mortgage Loans or the Mortgage Certificates, then pursuant to the Transfer
Agreement, the Originator shall cure such omission or defect identified on
the Custodian's Exception Report as provided in the Transfer Agreement. The
Depositor shall enforce such obligation of the Originator. In the event the
Originator fails to effect such cure within the allotted period, and such
omission or defect has materially and adversely affected the interests of the
Certificateholders, the Originator shall, as required under the Transfer
Agreement, within 90 days of discovery of the omission or defect, at its
option, (i) repurchase the affected Mortgage Certificates at a price equal to
the Repurchase Price applicable to the Mortgage Certificates upon the terms
and conditions and in the manner described in the Transfer Agreement, and
(ii) either (1) repurchase the affected Mortgage Loan at a price equal to the
Repurchase Price applicable to the Mortgage Loans upon the terms and
conditions and in the manner described in the Transfer Agreement or (2) if
within two years of the Startup Day, or such other period as may be permitted
by the REMIC Provisions, substitute for any Mortgage Loan to which such
omission or defect relates, a new mortgage loan (a "Substitute Mortgage
Loan") having such characteristics so that no repurchase or substitution
event set forth in Section 3.2 of the Transfer Agreement (other than Section
3.2(xii)) would have existed had such Substitute Mortgage Loan originally
been a Mortgage Loan. The Originator shall effect any such substitution of a
Mortgage Loan pursuant to the Transfer Agreement; PROVIDED, HOWEVER, that no
such substitution will be permitted (and accordingly a repurchase will be
required) unless the Originator receives written confirmation from the Rating
Agency that the substitution will not result in the qualification, downgrade
or withdrawal of the rating or ratings then assigned by the Rating Agency to
the then-rated
40
Classes of Certificates as evidenced in writing by the Rating Agency. Any
such substitution of a Mortgage Loan shall be effected only if the Originator
shall have furnished the Trustee and the Custodian, if any, with an Opinion
of Counsel, at the expense of the Originator, that such substitution of a
Mortgage Loan shall not (i) cause a loss of the REMIC status with respect to
either the Upper-Tier REMIC or the Lower-Tier REMIC, (ii) result in the
imposition of any tax on "prohibited transactions" (imposed by Section
860F(a)(1) of the Code) or on prohibited contributions (imposed by Section
860G(d) of the Code) upon either the Upper-Tier REMIC or the Lower-Tier
REMIC, or (iii) otherwise subject either the Upper-Tier REMIC or Lower-Tier
REMIC to any federal tax, and that the Substitute Mortgage Loan is a
"qualified replacement mortgage" within the meaning of Section 860G(a)(4) of
the Code. In no event shall any Substitute Mortgage Loan have an unpaid
principal balance, as of the date of substitution, greater than the Scheduled
Principal Balance (reduced by the scheduled payment of principal due on the
Due Date in the month of substitution) of the Mortgage Loan for which it is
substituted. In addition, such Substitute Mortgage Loan shall (i) have a
Loan-to-Value Ratio less than or equal to, that of the Mortgage Loan for
which it is substituted, (ii) have a Mortgage Interest Rate no less than, and
no more than, 1% percent per annum above or below, as the case may be, the
Mortgage Interest Rate for the Mortgage Loan for which it is substituted,
(iii) have a remaining term to stated maturity not later than, and not more
than one year less than, the remaining term to stated maturity of the
substituted Mortgage Loan and (iv) be, in the reasonable determination of the
Originator, of the same type, quality and character as the substituted
Mortgage Loan as if the documentation was not defective or missing in any
material respect. If the Substitute Mortgage Loan has an unpaid principal
balance, as of the date of substitution, lower than the Scheduled Principal
Balance (reduced by the scheduled payment of principal due on the Due Date in
the month of substitution) of the Mortgage Loan for which it is substituted,
the Originator shall concurrently with such substitution deposit in the
Collection Account the amount of such difference, plus interest on such
amount at the Mortgage Interest Rate of the Mortgage Loan being replaced from
the substitution date through the last day of the Interest Accrual Period in
which such substitution date occurs.
In the case of a repurchased Mortgage Loan, property or Mortgage
Certificate pursuant to the preceding paragraph, the applicable Repurchase
Price shall be deposited by the Originator in the Collection Account pursuant
to the Transfer Agreement. In the case of a Substitute Mortgage Loan, the
Mortgage File relating thereto shall be delivered to the Custodian. The
Monthly Payment on the Substitute Mortgage Loan for the Due Date in the month
of substitution shall not be part of the Trust Fund. Upon receipt by the
Custodian and the Trustee of written notification of any required deposit
into the Collection Account signed by an officer of the Originator, and, in
the case of a Substitute Mortgage Loan, upon receipt of the new Mortgage File
and required payment, as the case may be, the Custodian shall release to the
Originator the related Mortgage File and the Trustee shall execute and
deliver or cause to be executed and delivered such instrument of transfer or
assignment furnished to it by the Originator, in each case without recourse,
as shall be necessary to vest in the Originator legal and beneficial
ownership of such substituted or repurchased Mortgage Loan or property. It
is understood and agreed that the obligation of the Originator to substitute
a new Mortgage Loan for or repurchase any Mortgage Loan, property or Mortgage
Certificate as to which such a material omission or defect in a constituent
document exists shall constitute the sole remedy respecting such omission,
defect or breach available to the Certificateholders or the Trustee on behalf
of the Certificateholders. The failure of the Custodian or the Trustee to
give any notice contemplated herein shall not affect or relieve the
Originator's obligation to repurchase any Mortgage Loan, property or Mortgage
Certificate pursuant to this Section 2.2 and the Transfer Agreement. Pursuant
to the Transfer Agreement, in the case of a Substitute Mortgage Loan, the
Originator shall provide the Rating Agency with an Environmental Assessment
prepared in accordance with Section 3.10(d) with respect to the Mortgaged
Property or Mortgaged Properties securing such Substitute Mortgage Loan. The
Custodian shall review the Mortgage File delivered to it relating to the
Substitute Mortgage Loan, within the time period and in the manner and with
the remedies specified in this Section 2.2.
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SECTION 2.3 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
DEPOSITOR.
(a) The Depositor hereby represents and warrants to the Master
Servicer and the Trustee on behalf of itself and the
Certificateholders that as of the Cut-Off Date:
(i) the Depositor is duly organized, validly existing and
in good standing in the jurisdiction of its
incorporation and has taken all necessary action to
authorize the execution, delivery and performance of
this Agreement by it, and has the power and authority
to execute, deliver and perform this Agreement and all
the transactions contemplated hereby, including, but
not limited to, the power and authority to sell, assign
and transfer the Mortgage Loans and Mortgage
Certificates in accordance with this Agreement;
(ii) assuming the due authorization, execution and delivery
of this Agreement by each other party hereto, this
Agreement and all of the obligations of the Depositor
hereunder are the legal, valid and binding obligations
of the Depositor, enforceable in accordance with the
terms of this Agreement, except as such enforcement may
be limited by bankruptcy, fraudulent conveyance,
insolvency, reorganization, receivership, moratorium or
other laws relating to or affecting the rights of
creditors generally, or by general principles of equity
(regardless of whether such enforceability is
considered in a proceeding in equity or at law);
(iii) the execution and delivery of this Agreement and the
performance of its obligations hereunder by the
Depositor will not conflict with the charter or bylaws
of the Depositor, any provision of any law or
regulation to which the Depositor is subject, or
conflict with, result in a breach of or constitute a
default under any of the terms, conditions or
provisions of any material agreement or instrument to
which the Depositor is a party or by which it is bound,
or any order or decree applicable to the Depositor, or
result in the creation or imposition of any lien on any
of the Depositor's assets or property other than the
lien created pursuant to this Agreement. The Depositor
has obtained any consent, approval, authorization or
order of any court or governmental agency or body
required for the execution, delivery and performance by
the Depositor of this Agreement;
(iv) there is no action, suit or proceeding pending or, to
the best of the Depositor's knowledge, threatened
against the Depositor in any court or by or before any
other governmental agency or instrumentality which
would materially and adversely affect the ability of
the Depositor to carry out the transactions
contemplated by this Agreement; and
(v) upon the transfer of the Mortgage Loans and Mortgage
Certificates by the Depositor to the Trustee, the
Trustee shall either be the owner of the Mortgage Loans
and Mortgage Certificates or shall have a valid and
perfected security interest of first priority in all of
the Depositor's right, title and interest in the
Mortgage Loans and Mortgage Certificates and any
proceeds thereof.
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(b) The Depositor hereby covenants that:
(i) it will maintain books and records separate from any
other Person or entity;
(ii) it will not commingle assets with those of any other
person or entity;
(iii) it will conduct its own business in its own name;
(iv) it will maintain separate corporate, financial and
accounting records and statements;
(v) it will pay its own liabilities out of its own funds;
(vi) it will pay all fees and expenses of the Rating Agency
incurred in connection with services provided by the
Rating Agency in connection with this Agreement until
the termination hereof;
(vii) it will observe all corporate formalities;
(viii) it will maintain an arm's length relationship with its
Affiliates;
(ix) it will pay the salaries of its own employees;
(x) it will not guarantee or become obligated for the debts
of any other Person or entity or hold out its credit as
being available to satisfy the obligations of others;
(xi) it will allocate fairly and reasonably any overhead for
shared office space;
(xii) it will use separate stationery, invoices, and checks
from any other Person or entity;
(xiii) it will not pledge its assets for the benefit of any
other Person or entity;
(xiv) it will hold itself out as a separate entity;
(xv) it will not dissolve, liquidate, merge or consolidate
with, or transfer substantially all of its assets to,
any entity, unless (1) the reconstituted company is a
substantially similar entity which assumes all of the
outstanding obligations and liabilities of the
Depositor, and (2) prior written confirmation has been
obtained from the Rating Agency that such dissolution,
merger, consolidation or asset transfer will not result
in a qualification, downgrade or withdrawal of the then
current ratings assigned by the Rating Agency to the
outstanding Classes of the Certificates;
(xvi) it will not incur or assume any indebtedness, except as
permitted under this Agreement or any other agreement
executed in connection with the issuance of the
Certificates;
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(xvii) at least one of the directors of the Depositor shall at
all times be an "Independent Director," meaning a
person who shall at no time be, or have been for a
period commencing five years prior to such director's
selection to the Board of Directors, a director,
officer, supplier, direct customer or employee of, the
holder of any beneficial interest in, or a person who
has served as a trustee in bankruptcy for, the
Depositor or any Affiliate thereof;
(xviii) without the unanimous affirmative vote of all of its
directors (including the Independent Director), the
Depositor shall not (1) institute or consent to the
institution of bankruptcy or insolvency proceedings
against it, (2) dissolve, liquidate, merge or
consolidate with, or transfer substantially all of its
assets to, any entity, or (3) engage in any other
actions that bear upon whether the separate identity of
the Depositor and its Affiliates will be respected or
whether the assets of the Depositor and its Affiliates
will be consolidated; and
(xix) the purposes of the Depositor are limited to (1)
acquiring, owning, holding, selling, transferring,
assigning, pledging, financing, refinancing or
reinvesting any distributions or payments on, and
otherwise dealing with, and to form and hold, the
Mortgage Loans and the Mortgage Certificates, and (2)
establishing the Trust Fund and issuing the
Certificates.
(c) It is understood and agreed that the representations and
warranties set forth in this Section 2.3 shall survive delivery of the
respective Mortgage Files and Mortgage Certificates to the Trustee or to the
Custodian, as the case may be, until the termination of this Agreement, and
shall inure to the benefit of the Trustee. Upon discovery by the Depositor, the
Master Servicer, the Special Servicer, the Custodian or a Responsible Officer of
the Trustee (or upon written notice thereof from any Certificateholder) of a
breach of any of the representations and warranties set forth in this Section
2.3 that materially and adversely affects the Certificateholders, the Master
Servicer, the Special Servicer, the Custodian, the Trustee or the party
discovering such breach shall give prompt written notice to the other parties.
(d) Pursuant to Section 2.1, the Depositor has hereby assigned,
transferred and conveyed to the Trustee the Depositor's rights under the
Transfer Agreement, including without limitation, the representations,
warranties and covenants of the Originator therein, together with all rights
of the Depositor to require the Originator to cure any breach thereof or, at
its option, either (i) to repurchase any affected Mortgage Loan or Mortgage
Certificate or (ii) if within two years of the Startup Day, or such other
period permitted by the REMIC Provisions, substitute a new mortgage loan for
such Mortgage Loan, in either case, in the manner described in the Transfer
Agreement. The Master Servicer shall enforce such obligation of the
Originator. Any such cure, repurchase or substitution shall be made in a
manner consistent with the REMIC Provisions and shall not result in the
imposition of any tax upon either the Upper-Tier or Lower-Tier REMIC. The
Repurchase Price with respect to any repurchase described in this paragraph
and the substitute principal balance, if any, plus accrued interest thereon
and the other amounts referred to in Section 2.2(d), shall be deposited in
the Collection Account. It is understood and agreed that the obligation of
the Originator to repurchase any Mortgage Loan or Mortgage Certificate or
substitute for any Mortgage Loan or property as to which a repurchase or
substitution event has occurred and is continuing shall constitute the sole
remedy respecting such event available to Certificateholders, or to the
Trustee on behalf of Certificateholders, and such obligation shall survive
until termination of the Trust Fund hereunder.
SECTION 2.4 EXECUTION AND DELIVERY OF CERTIFICATES; ISSUANCE
OF UNCERTIFIED LOWER-TIER INTERESTS.
44
The Trustee acknowledges the assignment to it of the Mortgage Loans
and of the Mortgage Certificates transferred to it and the delivery of the
Mortgage Files to the Custodian on its behalf, subject to the provisions of
Section 2.1 and Section 2.2, and, concurrently with such delivery, (i)
acknowledges the issuance of the uncertificated Lower-Tier Interests to the
Depositor in exchange for the Mortgage Loans and Mortgage Certificates and all
other assets included in the definition of the "Lower-Tier REMIC," receipt of
which is hereby acknowledged, and hereby declares that it holds the Lower-Tier
Interests (other than the Class LR Certificates) on behalf of the Upper-Tier
REMIC and Certificateholders (other than the holders of Class LR Certificates),
and (ii) has executed and delivered to or upon the order of the Depositor, in
exchange for the Lower-Tier Interests (other than the Class LR Certificates),
the Certificates (other than the Class LR Certificates) in authorized
denominations which, together with the Class LR Certificates, evidence ownership
of the entire Trust Fund.
SECTION 2.5 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE MASTER
SERVICER.
(a) The Master Servicer, in its capacity as the Master Servicer
and as Special Servicer with respect to Mortgage Loans #▇▇▇, #▇▇▇, #▇▇▇, #▇▇▇
and #216, hereby represents, warrants and covenants that as of the Closing Date:
(i) the Master Servicer (A) is a corporation duly
organized, validly existing and in good standing under
the laws of the State of California, (B) is or will be
in compliance with the laws of each state in which any
Mortgaged Property is located to the extent necessary
to perform its obligations under this Agreement, and
(C) has the requisite corporate power and authority to
execute, deliver and perform its obligations under this
Agreement;
(ii) the execution and delivery of this Agreement by the
Master Servicer and its performance and compliance with
the terms of this Agreement will not violate the Master
Servicer's articles of incorporation or by-laws or
constitute a material default (or an event which, with
notice or lapse of time, or both, would constitute a
material default) under, or result in the material
breach of, any material contract, agreement or other
instrument to which the Master Servicer is a party or
which may be applicable to the Master Servicer or any
of its material assets;
(iii) this Agreement, assuming due authorization, execution
and delivery by each other party hereto, constitutes a
legal, valid and binding obligation of the Master
Servicer, enforceable against it in accordance with the
terms of this Agreement, except as such enforcement may
be limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, receivership, moratorium or
other laws relating to or affecting the rights of
creditors generally or of creditors of savings or
banking institutions the accounts of which are insured
by the FDIC and by general principles of equity
including principles of commercial reasonableness, good
faith, independence and fair dealing (regardless of
whether such enforcement is considered in a proceeding
in equity or at law);
(iv) the Master Servicer is not in violation of, and the
execution and delivery of this Agreement by the Master
Servicer and its performance and compliance with the
terms of this Agreement will not constitute a violation
with respect to, any order or decree of any court or
any order or regulation of any federal, state,
municipal or governmental agency having jurisdiction,
which violation could, in the Master Servicer's
good-faith and reasonable judgment, reasonably be
expected
45
to have consequences that would materially adversely
affect the performance of its duties hereunder; and
(v) no litigation is pending or, to the best of the Master
Servicer's knowledge, threatened against the Master
Servicer the outcome of which, in the Master Servicer's
good faith and reasonable judgment, could reasonably be
expected to prohibit its entering into or performing
its obligations in any material respect under this
Agreement.
(b) It is understood and agreed that the representations and
warranties set forth in this Section 2.5 shall survive delivery of the
respective Mortgage Files and Mortgage Certificates to the Trustee or to the
Custodian, as the case may be, until the termination of this Agreement, and
shall inure to the benefit of the Trustee and the Depositor. Upon discovery by
the Depositor, the Master Servicer, the Special Servicer or a Responsible
Officer of the Trustee (or upon written notice thereof from any
Certificateholder) of a breach of any of the representations and warranties set
forth in this Section 2.5, the party discovering such breach, shall give prompt
written notice to the other parties.
(c) Within 90 days of the earlier of its discovery or its receipt
of notice of breach of the representation and warranty contained in clause
(a)(i)(B) above, the Master Servicer shall cure such breach in all material
respects; PROVIDED, HOWEVER, that if the Master Servicer is diligently
attempting to cure such breach and is unable to do so within 90 days for reasons
beyond its control, the 90-day period shall be extended for so long as the
Master Servicer is diligently attempting to cure such breach in accordance with
the provisions of this Section but, in no event, shall such extended period
exceed an additional 90 days or have a material adverse effect on
Certificateholders. If the Master Servicer does not or cannot cure such breach
within the applicable period, it shall, consistent with Section 3.1, appoint a
subservicer that is in compliance with the laws of the requisite states and vest
in such entity such rights, powers, duties or obligations as are necessary under
this Agreement to permit enforcement of each affected Mortgage Loan or Mortgage
Certificate. In the event of any such extension, on or before the expiration of
the initial 90-day period, the Master Servicer shall provide an Officer's
Certificate to the Trustee setting forth the efforts being taken to cure such
breach. If the Master Servicer fails to cure a breach of the representation and
warranty contained in clause (a)(i)(B) above or appoint a subservicer within the
applicable cure period, as such period may be extended pursuant to this
paragraph, such failure shall constitute an Event of Default under Section 7.1
hereof.
SECTION 2.6 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
SPECIAL SERVICER.
(a) LTC, as Special Servicer, hereby represents, warrants and
covenants that as of the Closing Date or by the date it is appointed Special
Servicer, as the case may be:
(i) it (A) is a corporation organized, validly existing and
in good standing under the laws of the state of its
incorporation, (B) is or will be in compliance with the
laws of each state in which any Mortgaged Property is
located to the extent necessary to perform its
obligations under this Agreement, and (C) has the
requisite corporate power and authority to execute,
deliver and perform its obligations under this
Agreement;
(ii) the execution and delivery of this Agreement by it and
its performance and compliance with the terms of this
Agreement will not violate its charter or by-laws or
constitute a default (or an event which, with notice or
lapse of time, or both, would constitute a default)
under, or result in the breach of (i) any material
contract, agreement or other instrument to which it is
a party, or (ii) to the best of
46
the Special Servicer's knowledge, any material
contract, agreement or other instrument to which the
Special Servicer is not a party, but which may be
applicable to it or any of its assets;
(iii) this Agreement, assuming due authorization, execution
and delivery by each other party hereto, constitutes
its legal, valid and binding obligation, enforceable
against it in accordance with the terms of this
Agreement, except as such enforcement may be limited by
bankruptcy, fraudulent conveyance, insolvency,
reorganization, receivership, moratorium or other laws
relating to or affecting the rights of creditors
generally, and by general principles of equity
including principles of commercial reasonableness, good
faith, independence and fair dealing (regardless of
whether such enforcement is considered in a proceeding
in equity or at law);
(iv) it is not in violation of, and its execution and
delivery of this Agreement and its performance and
compliance with the terms of this Agreement will not
constitute a violation with respect to, any order or
decree of any court or any order or regulation of any
federal, state, municipal or governmental agency having
jurisdiction, which violation could, in the Special
Servicer's good-faith and reasonable judgment,
reasonably be expected to have consequences that would
materially affect the performance of its duties
hereunder;
(v) no litigation is pending or, to the best of its
knowledge, threatened against it the course of which
could, in the Special Servicer's good-faith and
reasonable judgment, reasonably be expected to prohibit
its entering into or performing its obligations under
this Agreement.
(b) It is understood and agreed that the representations and
warranties set forth in this Section shall survive delivery of the respective
Mortgage Files and Mortgage Certificates to the Trustee or to the Custodian
until the termination of this Agreement, and shall inure to the benefit of the
Trustee and the Depositor. Upon discovery by the Depositor, the Master
Servicer, the Special Servicer or a Responsible Officer of the Trustee (or, if
earlier, upon written notice thereof from any Certificateholder) of a breach of
any of the representations and warranties set forth in this Section 2.6, the
party discovering such breach shall give prompt written notice to the other
parties.
(c) Within 90 days of the earlier of its discovery or its receipt
of notice of breach of the representation and warranty contained in clause
(a)(i)(B) above, the Special Servicer shall cure such breach in all material
respects; PROVIDED, HOWEVER, that if the Special Servicer is diligently
attempting to cure such breach and is unable to do so within 90 days for reasons
beyond its control, the 90-day period shall be extended for so long as the
Special Servicer is diligently attempting to cure such breach in accordance with
the provisions of this Section but, in no event, shall such extended period
exceed an additional 90 days or have a material adverse effect on
Certificateholders. If the Special Servicer does not or cannot cure such breach
within the applicable period, it shall, consistent with Section 3.1, appoint a
subservicer that is in compliance with the laws of the requisite states and vest
in such entity such rights, powers, duties or obligations as are necessary under
this Agreement to permit enforcement of each affected Mortgage Loan. In the
event of any such extension, on or before the expiration of the initial 90-day
period, the Special Servicer shall provide an Officer's Certificate to the
Trustee and the Master Servicer setting forth the efforts being taken to cure
such breach. If the Special Servicer fails to cure a breach of the
representation and warranty contained in clause (a)(i)(B) above or appoint a
subservicer within the applicable cure period, as such period may be extended
pursuant to this paragraph, such failure shall constitute an Event of Default
under Section 7.1 hereof.
SECTION 2.7 [RESERVED]
47
SECTION 2.8 MISCELLANEOUS REMIC PROVISIONS.
(a) The Class A, Class B, Class C, Class D, Class E, Class F,
Class G, Class X-1 and Class X-2 Certificates are hereby designated "regular
interests" in the Upper-Tier REMIC within the meaning of Section 860G(a)(1) of
the Code, and the Class R Certificates are hereby designated the single class of
"residual interest" in the Upper-Tier REMIC within the meaning of Section
860G(a)(2) of the Code. The Class AL Interest, Class BL Interest, Class CL
Interest, Class DL Interest, Class EL Interest, Class FL Interest, Class GL
Interest, Class AR-L Interest and Class X-1L Interest are hereby designated
"regular interests" in the Lower-Tier REMIC within the meaning of Section
860G(a)(l) of the Code and the Class LR Certificates are hereby designated the
single class of "residual interest" in the Lower-Tier REMIC within the meaning
of Section 860G(a)(2) of the Code. The Closing Date is hereby designated as the
"Startup Day" of the Upper-Tier REMIC and Lower-Tier REMIC within the meaning of
Section 860G(a)(9) of the Code. The "latest possible maturity date" of the
Class A, Class B, Class C, Class D, Class E, Class F, Class G, Class X-1 and
Class X-2 Certificates and the Class AL Interest, Class BL Interest, Class CL
Interest, Class DL Interest, Class EL Interest, Class FL Interest, Class GL
Interest, Class AR-L Interest and Class X-1L Interest for purposes of Code
Section 860G(a)(1) is two (2) years following the Final Scheduled Distribution
Date. If not previously paid, all amounts owing on the Certificates shall be
due and payable on the "latest possible maturity date."
(b) The Trustee shall, for federal income tax purposes, maintain
books and records with respect to each of the Upper-Tier REMIC and Lower-Tier
REMIC on a calendar year and on an accrual basis.
(c) None of the Originator, the Depositor, the Trustee, the
Special Servicer, nor the Master Servicer shall enter into any arrangement by
which the Upper-Tier REMIC or Lower-Tier REMIC will receive a fee or other
compensation for services other than as specifically contemplated herein.
SECTION 2.9 TRANSFER AGREEMENT.
Concurrently with the execution and delivery of this Agreement, the
Depositor and the Originator have entered into the Transfer Agreement. The
rights of the Depositor under the Transfer Agreement have been assigned by the
Depositor to the Trustee pursuant to Section 2.1 hereof.
In the event that the Originator fails to perform its obligations
under the Transfer Agreement, the Trustee shall enforce its rights, as assignee
of the Depositor, against the Originator under the terms of the Transfer
Agreement to require the repurchase or replacement of the applicable Mortgage
Loan or Mortgage Certificate. There shall be no recourse to the Depositor for
any such failure by the Originator.
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ARTICLE III
ADMINISTRATION AND SERVICING OF THE
MORTGAGE LOANS AND MORTGAGE CERTIFICATES
SECTION 3.1 MASTER SERVICER TO ACT AS MASTER SERVICER; SPECIAL
SERVICER TO ACT AS SPECIAL SERVICER; ADMINISTRATION OF
THE MORTGAGE LOANS.
(a) Each of the Master Servicer and the Special Servicer, as
independent contract servicers, shall service and administer the Mortgage Loans
and REO Properties it is obligated to service pursuant to this Agreement on
behalf of the Trust Fund in the best interests of and for the benefit of all of
the holders of Certificates (as determined by the Master Servicer or the Special
Servicer in the exercise of its good faith and reasonable judgment) in
accordance with applicable law, the terms of this Agreement and the Mortgage
Loans, and to the extent not inconsistent with the foregoing, in the same manner
in which, and with the same care, skill and diligence as is normal and usual in
its general mortgage servicing and REO property management activities on behalf
of third parties or on behalf of itself, whichever is higher, with respect to
mortgage loans and REO properties that are comparable to the Mortgaged Loans for
which the Master Servicer and the Special Servicer, as applicable, is
responsible, and in each event with a view to the timely collection of all
scheduled payments of principal and interest under the Mortgage Loans or, if a
Mortgage Loan is, and continues to be, in default and if, in the good faith and
reasonable judgment of the Master Servicer or the Special Servicer, no
satisfactory arrangements can be made for the collection of the delinquent
payments, the maximization of the recovery on such Mortgage Loan to the
Certificateholders (as a collective whole) on a present value basis (the
relevant discounting of anticipated collection that will be distributable to
Certificateholders to be performed at the related Net Mortgage Interest Rate),
but without regard to:
(i) any known relationship that the Master Servicer, or
the Special Servicer, any other subservicer or any
Affiliate of the Master Servicer or the Special
Servicer or any subservicer may have with the related
Borrower;
(ii) the ownership of any Certificate by the Master
Servicer or the Special Servicer or any Affiliate of
the Master Servicer or the Special Servicer;
(iii) the Master Servicer's, the Special Servicer's or any
of their respective Affiliate's right to receive
reimbursement of costs, or the sufficiency of any
compensation for its services hereunder or with
respect to any particular transaction; or
(iv) the Master Servicer's obligation, as applicable, to
make Advances.
In the event that the Master Servicer or the Special Servicer believes that
it is unable to comply with the requirements of this Section 3.1(a) with
respect to any particular Mortgage Loan or REO Property as a result of one or
more of the factors described in the foregoing clauses (i) through (iv), it
may enter into a subservicing agreement pursuant to Section 3.1(b) pursuant
to which a subservicer shall perform its duties with respect to such Mortgage
Loan or REO Property. In such event, so long as such subservicer performs
such duties on behalf of the Master Servicer or Special Servicer, as
applicable, in accordance with the requirements of this Section 3.1(a), then
the Master Servicer or Special Servicer shall be deemed to be in compliance
therewith.
Without limiting the foregoing, subject to Section 3.21, the
applicable Special Servicer shall only be obligated to service and administer
those Mortgage Loans or REO Account Properties, as the case may be, as to
which a Servicing Transfer Event has occurred and is continuing
(collectively, the "Specially Serviced Mortgage Loans"), including any REO
Properties related thereto, but the Master Servicer shall be required to
continue to make all calculations and prepare all reports required hereunder
with respect to such Specially Serviced Mortgage Loans as if
49
no Servicing Transfer Event had occurred and to render such incidental
services with respect to such Specially Serviced Mortgage Loans as are
specifically provided for herein; PROVIDED HOWEVER, the Master Servicer shall
be required to do so only if the Special Servicer provides the Master
Servicer with such information and assistance as is required by the Master
Servicer to enable it to perform its obligations pursuant to this sentence.
The Special Servicer hereby agrees to furnish such information and assistance
to the Master Servicer. Each Mortgage Loan that becomes a Specially Serviced
Mortgage Loan shall continue as such until satisfaction of the conditions
specified in Section 3.21(a). The Master Servicer shall not be required to
initiate extraordinary collection procedures or legal proceedings with
respect to any Mortgage Loan or to undertake any pre-foreclosure procedures
(including, without limitation, ordering an Environmental Assessment with
respect to any Mortgage Loan). To the extent consistent with the foregoing
and subject to any express limitations set forth in this Agreement, the
Master Servicer and the Special Servicer shall also seek to maximize the
timely and complete recovery of principal and interest on the Notes;
PROVIDED, HOWEVER, that nothing herein contained shall be construed as an
express or implied guarantee by the Master Servicer or the Special Servicer
of the collectibility of the Mortgage Loans. Subject only to the
above-described servicing standards and the terms of this Agreement and of
the respective Mortgage Loans, the Master Servicer and the Special Servicer
shall have full power and authority, acting alone or through subservicers
(subject to paragraph (c) of this Section 3.1 and to Section 3.2), to do or
cause to be done any and all things in connection with such servicing and
administration which it may deem necessary or desirable. Without limiting the
generality of the foregoing, the Master Servicer and the Special Servicer
may, and each is hereby authorized and empowered by the Trustee to, with
respect to each Mortgage Loan it is obligated to service pursuant to this
Agreement, prepare, execute and deliver, on behalf of the Certificateholders
and the Trustee or any of them, at the expense of the Trust Fund, any and all
financing statements, continuation statements and other documents or
instruments necessary to maintain the lien on each Mortgaged Property and
related collateral; and subject to Section 3.20 and the REMIC Provisions,
modifications, waivers, consents, amendments or consents to or with respect
to any documents contained in the related Mortgage File; substitutions of
collateral and any and all instruments of satisfaction or cancellation, or of
partial or full release or discharge, and all other comparable instruments,
with respect to the Mortgage Loans and the Mortgaged Properties if, in its
reasonable judgment, such action is in the best interests of the
Certificateholders in accordance with, or is required by, this Agreement.
The Master Servicer shall service and administer the Mortgage Loans it is
obligated to service pursuant to this Agreement and the applicable Special
Servicer shall service and administer the Mortgage Loans it is obligated to
service pursuant to this Agreement, in accordance with applicable law and
shall provide to the Borrowers any reports required to be provided to them
thereby. Subject to Section 3.11, the Trustee shall, upon the receipt of a
written request of a Servicing Officer of the Master Servicer or a Special
Servicer Officer, execute and deliver to the Master Servicer or the Special
Servicer any powers of attorney and other documents prepared by the Master
Servicer or the Special Servicer and necessary or appropriate (as certified
in such written request) to enable the Master Servicer or the Special
Servicer to carry out its servicing and administrative duties hereunder.
Prior to the institution of any proceeding or undertaking of any
other action by the Master Servicer or Special Servicer in the name of the
Trustee in any state, the Master Servicer or Special Servicer, as the case
may be, shall notify the Trustee in writing and not undertake any such action
or institute any such proceeding until being notified in writing by the
Trustee that such action or undertaking will not adversely affect the Trustee
under such state's "doing business" or tax laws. If the Trustee is so
adversely affected, the Trustee will appoint a co-trustee in whose name such
action or undertaking will be taken, and the cost of such co-trustee will be
an expense of the Trust Fund to the extent such cost is an "unanticipated
expense" as such term is defined in Section 1.860G-1(b)(3)(ii) of the Code,
and in all other situations shall be paid by the Trustee out of its own funds.
(b) The Trustee hereby acknowledges and accepts that the Master
Servicer and the Special Servicer may each enter into subservicing agreements
with third parties with respect to any of their respective obligations
hereunder, provided that (1) any such agreement shall be consistent with the
provisions of this Agreement in all material respects, (2) no subservicer
retained by the Master Servicer or the Special Servicer shall grant any
material modification, waiver, consent or amendment to any Mortgage Loan
unless such modification, waiver, consent, or amendment would be permitted by
this Agreement to be made by the Special Servicer pursuant to Section 3.20
and
50
the REMIC Provisions and the subservicer obtains the approval of the Special
Servicer or such modification waiver, consent or amendment of any Mortgage
Loan would not have a material adverse effect on the Certificateholders and
(3) any subservicer retained by the Special Servicer shall be subject to the
approval of the Master Servicer, which approval shall not be unreasonably
withheld.
Any subservicing agreement entered into by the Master Servicer or
the Special Servicer shall provide (1) that it may be assumed or terminated
by the Trustee if it has assumed the duties of the Master Servicer or the
Special Servicer or any successor Master Servicer or successor Special
Servicer, as the case may be, without cost or obligation to the assuming or
terminating party or the Trust Fund, upon the assumption by such party of the
obligations of the Master Servicer or the Special Servicer, as the case may
be, pursuant to Section 7.2 and (2) in the case of an agreement entered into
by the Special Servicer, that it shall relate to Mortgage Loans only for so
long as they are Specially Serviced Mortgage Loans.
Any subservicing agreement, and any other transactions or services
relating to the Mortgage Loans involving a subservicer, shall be deemed to be
between the Master Servicer or the Special Servicer, as applicable, and such
subservicer alone, and the Trustee and the Certificateholders shall not be
deemed parties thereto and shall have no claims, rights, obligations, duties
or liabilities with respect to the subservicer; and no such agreement shall
relieve the Master Servicer or the Special Servicer of any of its obligations
pursuant to this Agreement. Any subservicing agreement entered into by the
Master Servicer or the Special Servicer after the Closing Date shall require,
in addition to the provisions contained in this subsection (b), that:
(1) the subservicer deposit to the Collection Account only
those amounts which are monies collected by the subservicer with respect
to the Mortgage Loans serviced under the subservicing agreement and any
investment earnings on such deposited amounts, together with any Advances
the subservicer is required to make;
(2) the subservicer remit to the Master Servicer, or
Special Servicer, as applicable, not later than three Business Days after
receipt thereof, but in no case later than two Business Days before the
Master Servicer Remittance Date, all Principal Prepayments, Balloon
Prepayments and all other collections required to be submitted pursuant to
this Agreement, to the Collection Account (all such funds shall be held in
an Eligible Account); and
(3) if any subservicer fails to remit to the Master
Servicer or Special Servicer, as applicable, any collection required to be
remitted, such subservicer shall pay interest at the Advance Rate on the
amounts not remitted.
(c) If the Trustee or any successor Master Servicer or Special
Servicer assumes the obligations of the Master Servicer or the Special Servicer
in accordance with Section 7.2, the Trustee or such successor, to the extent
necessary to permit the Trustee or such successor to carry out the provisions of
Section 7.2, shall, without act or deed on the part of the Trustee or such
successor, succeed to all of the rights and obligations of the Master Servicer
or the Special Servicer, as applicable, under any subservicing agreement entered
into pursuant to Section 3.1(b). In such event, the Trustee or the successor
Master Servicer or Special Servicer shall be deemed to have assumed all of the
Master Servicer's or the Special Servicer's interest therein and to have
replaced the Master Servicer or the Special Servicer, as applicable, as a party
to such subservicing agreement to the same extent as if such subservicing
agreement had been assigned to the Trustee or such successor Master Servicer or
Special Servicer, except that (i) the Master Servicer and the Special Servicer
shall be entitled to all fees and expenses accrued during the time that such
party has been servicing as Master Servicer or Special Servicer, as applicable,
and (ii) the Master Servicer or the Special Servicer, as applicable, shall not
have any liability or obligation under such subservicing agreement in respect of
events that occur after such succession unless so provided in such subservicing
agreement or unless such events arise out of actions or events that occurred
prior to such succession.
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In the event that the Trustee or any successor Master Servicer or
Special Servicer assumes the servicing obligations of the Master Servicer or
the Special Servicer, upon request of the Trustee or such successor, the
Master Servicer or the Special Servicer, as applicable, shall at its own
expense deliver to the Trustee or such successor (as the case may be) all
documents and records relating to any subservicing agreement and the Mortgage
Loans, Mortgage Certificates and REO Properties then being serviced
thereunder and an accounting of amounts collected and held by it, if any, and
will otherwise use its best efforts to effect the orderly and efficient
transfer of any subservicing agreement to the Trustee or the successor Master
Servicer or Special Servicer, as applicable.
(d) If the Master Servicer or Special Servicer, as the case may
be, determines with respect to any Mortgaged Property that the expenditure of
funds by the Borrower for repair or replacement costs with respect thereto is
reasonably likely to cause a payment default under the related Mortgage Loan,
the Master Servicer may (but is not obligated to) advance the cost of such
repair or replacement to or for the benefit of the Borrower on terms
determined to be reasonable under the circumstances by the Master Servicer
if, prior to making any such advance, the Master Servicer (i) determines that
such advance is not a Nonrecoverable Advance and is reasonably likely to
produce a greater recovery on a present value basis than a modification,
amendment or waiver with respect to the terms of such Mortgage Loan or the
liquidation of such Mortgage Loan in the event of such a payment default and
(ii) delivers to the Trustee an Opinion of Counsel, which shall be obtained
at the expense of the Trust Fund, and may be applicable to more than one
transaction or generally to a class or classes of transactions described
therein, to the effect that such advance will not cause (A) a loss of REMIC
status with respect to either the Upper-Tier REMIC or Lower-Tier REMIC or (B)
the Upper-Tier REMIC or Lower-Tier REMIC to be subject to any tax under the
REMIC Provisions or equivalent provisions of federal, state, local law or
ordinance. Any such advance shall be a Servicing Advance. Any such advance
by the Master Servicer plus interest thereon at the Advance Rate shall be
reimbursed from (1) future payments and collections on the related Mortgage
Loan (or the related Mortgaged Property) and (2) upon a determination that
any such advance is a Nonrecoverable Advance, from any amounts on deposit in
the Collection Account. The Master Servicer shall have no liability to the
Trust Fund, the Certificateholders or any other Person if its analysis and
determination that such advance is reasonably likely to produce a greater
recovery on a present value basis than a modification, waiver or amendment or
liquidation proves to be wrong or incorrect, so long as such analysis and
determination was made in the reasonable business judgment of the Master
Servicer.
(e) The Special Servicer shall use its reasonable efforts to
collect operating statements which should be processed within thirty days
after receipt by the Special Servicer with respect to each Mortgaged Property
on an annual basis (to the extent required to be delivered pursuant to the
terms of the related Mortgage Loan documents). In addition, in the event of
the existence of a transfer and repurchase event set forth in Section 4.1(b)
of the Transfer Agreement relating to Disqualifying Conditions, the Special
Servicer shall deliver an Environmental Assessment at the expense of the
Trust Fund, and the Master Servicer and the Special Servicer shall deliver
such certifications as are required under the Transfer Agreement.
(f) The Master Servicer, on behalf of the Trustee, shall not, to
the extent permitted by applicable law, accept any Principal Prepayment from
a Borrower, if pursuant to the terms of the related Mortgage Loan, the
mortgagee's prior consent to such Principal Prepayment is a prerequisite for
the acceptance of such Principal Prepayment.
(g) Notwithstanding the foregoing, the responsibilities
hereunder of the Master Servicer, the Special Servicer and the Trustee with
respect to the Mortgage Certificates shall be governed by the provisions of
Section 3.16 hereof.
SECTION 3.2 LIABILITY OF THE MASTER SERVICER AND THE SPECIAL
SERVICER.
Notwithstanding any subservicing agreement, any of the provisions of
this Agreement relating to agreements or arrangements between the Master
Servicer or the Special Servicer, as applicable, and any other Person
52
acting as subservicer (or its agents or subcontractors) or any reference to
actions taken through the Depositor or any other Person acting as subservicer
or otherwise, each of the Master Servicer or the Special Servicer, as
applicable, shall remain obligated and primarily liable to the Trustee and
Certificateholders for the servicing and administering of the Mortgage Loans
and Mortgage Certificates it is obligated to service and administer pursuant
to this Agreement in accordance with the provisions of Section 3.1 without
diminution of such obligation or liability by virtue of such subservicing
agreements or arrangements or by virtue of indemnification from the Depositor
or any other Person acting as subservicer (or its agents or subcontractors)
to the same extent and under the same terms and conditions as if the Master
Servicer or the Special Servicer, as applicable, alone were servicing and
administering such Mortgage Loans or Mortgage Certificates; PROVIDED,
HOWEVER, that neither the Master Servicer nor the Special Servicer shall be
liable for any action taken that is not solely in the best interests of the
Certificateholders as a result of the existence or occurrence of one or more
of the factors described in clauses (i) through (iv) of the first paragraph
of Section 3.1(a) if (1) such action is taken by a subservicer appointed by
it with due care pursuant to the last sentence of such first paragraph and in
accordance with the requirements of Section 3.1(c) and (2) the Rating Agency
shall have confirmed in writing that the appointment of such subservicer will
not result in the qualification, downgrade or withdrawal of the ratings then
assigned to the Certificates. Neither the Master Servicer, nor the Special
Servicer shall be liable for actions taken or omitted to be taken with
respect to the Mortgage Certificates by the trustee, the master servicer or
the special servicer for the Mortgage Certificates, or the Trustee hereunder
pursuant to in Section 3.16 hereof. The Master Servicer and the Special
Servicer shall each be entitled to enter into an agreement with any
subservicer providing for indemnification of the Master Servicer or the
Special Servicer, as applicable, by such subservicer, and nothing contained
in this Agreement shall be deemed to limit or modify such indemnification,
but no such agreement for indemnification shall be deemed to limit or modify
this Agreement and no such indemnification shall be payable from amounts
collected with respect to the assets of the Trust Fund being subserviced
thereunder. For purposes of this section, payments made to and collections
received by subservicers with respect to a Mortgage Loan or a REO Property
shall be deemed to be received by the Master Servicer and the Special
Servicer, as applicable, when such payments and collections are received by
the related subservicer and the Master Servicer or the Special Servicer, as
applicable, shall remain liable for such payments and collections,
notwithstanding the fact that such payments and collections are not remitted
to the Master Servicer or the Special Servicer, as applicable.
It is acknowledged by the parties hereto that the Master Servicer
has been retained as contract servicer only, that the Master Servicer did not
originate or re-underwrite the Mortgage Loans, and that all information
available to the Master Servicer regarding the Mortgage Loans has been
supplied by the Originator or by others at the direction of the Originator.
As a consequence of the foregoing, the Master Servicer shall not be liable to
the Trust, the Depositor, or any Certificateholder for any loss resulting
from any deficiency or inaccuracies in the Mortgage Files as of the Cut-Off
Date or in any other information supplied to the Master Servicer.
SECTION 3.3 COLLECTION OF CERTAIN MORTGAGE LOAN PAYMENTS.
Each of the Master Servicer and the Special Servicer shall, in
accordance with the servicing standard set forth in Section 3.1(a), collect
all payments called for under the terms and provisions of the Mortgage Loans
that it is obligated to service hereunder, collect all distributions on the
Mortgage Certificates and follow such collection procedures as it generally
would follow with respect to mortgage loans comparable to the Mortgage Loans
and pass-through certificates comparable to the Mortgage Certificates held in
other portfolios or in its own portfolio, whichever servicing procedure is of
a higher standard, so long as such collection procedures are in accordance
with commercially reasonable standards and the applicable Mortgage Loan
documents. Consistent with the foregoing, the Master Servicer and the
Special Servicer may each in its discretion waive any late payment or
assumption or modification charge or penalty interest in connection with any
delinquent Monthly Payment or Balloon Payment with respect to any Mortgage
Loan which the Master Servicer or Special Servicer, respectively, is
obligated to service hereunder, but only to the extent that such waiver would
not adversely affect the REMIC status of the Upper-Tier REMIC or the
Lower-Tier REMIC, or result in the imposition of any tax upon either the
Upper-Tier or Lower-Tier REMIC under the REMIC Provisions or any similar
provisions of federal, state or local tax laws, as evidenced by an Opinion of
Counsel obtained
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at the expense of the Borrower requesting such waiver. All payments actually
made shall be applied first to the Monthly Payment and any overdue Monthly
Payments. The Master Servicer, on behalf of the Trustee, shall withhold any
consent required to be obtained by a Borrower from the mortgagee pursuant to
the related Mortgage Loan prior to making any partial or full Principal
Prepayment thereunder.
In the event that, during the three month period ending on the
Maturity Date, the related Borrower indicates an inability to pay such Balloon
Payment on or before the Maturity Date thereof, the Master Servicer may
determine that a Servicing Transfer Event as described in clause (i) of the
definition thereof has occurred if, in connection with such determination, the
Master Servicer determines, in its reasonable business judgment, that a payment
default on the Mortgage Loan is imminent.
SECTION 3.4 PAYMENT OF TAXES, ASSESSMENTS AND SIMILAR ITEMS.
(a) With respect to each Mortgage Loan other than an REO Account
Mortgage Loan, the Master Servicer shall maintain accurate records with
respect to each related Mortgaged Property reflecting the status of taxes,
assessments and other similar items that are or may become a lien on the
related Mortgaged Property and the status of insurance premiums payable with
respect thereto. With respect to each REO Account Mortgage Loan, the Special
Servicer shall maintain accurate records reflecting the status of taxes,
assessments and other similar items that are or may become a lien on the
related REO Account Property and the status of insurance premiums payable
with respect thereto (and copies of such items shall be forwarded to the
Master Servicer). From time to time as and when such bills become payable,
the Master Servicer (with respect to Mortgaged Properties other than REO
Account Properties) or the Special Servicer (with respect to REO Account
Properties) shall use its reasonable efforts consistent with the servicing
standard set forth in Section 3.1 (a) to cause the related Borrowers to
comply with the requirements of the related Mortgage Loans for payment of all
such bills with respect to such Mortgaged Properties as they first become
due. If a Borrower fails to make any such payment on a timely basis the
Master Servicer in accordance with the servicing standard set forth in
Section 3.1(a) herein and after obtaining knowledge of the Borrower's default
shall make a Servicing Advance in the amount of such shortfall unless the
Master Servicer makes a determination, in its reasonable business judgment,
that such advance, if made, would be a Nonrecoverable Advance. The Master
Servicer shall be entitled to reimbursement of the Advances made pursuant to
the preceding sentence plus Advance Interest thereon. Such Servicing Advance
shall be recovered (i) from future payments and collections with respect to
the related Mortgage Loan or REO Account Property or (ii) upon a
determination that any such advance is a Nonrecoverable Advance, from any
amounts on deposit in the Collection Account.
No costs incurred by the Special Servicer in effecting the payment
of taxes, insurance premiums and assessments on the Mortgaged Properties
shall be included in the Principal Amount of the related Mortgage Loan for
purposes of calculating distributions to Certificateholders.
SECTION 3.5 COLLECTION ACCOUNT, DISTRIBUTION ACCOUNT AND UPPER-TIER
DISTRIBUTION ACCOUNT.
(a) The Master Servicer shall establish and maintain the
Collection Account in the name of the Trustee in trust for the benefit of the
Certificateholders. The Collection Account shall be established and maintained
as an Eligible Account. The Master Servicer shall deposit into the Collection
Account, on a daily basis, or as otherwise required hereunder, and as and when
received, the following payments and collections received or made by it on or
with respect to the Mortgage Loans and Mortgage Certificates, other than
payments, if any, in respect of principal and interest on the Mortgage Loans
that are not assigned to the Trustee pursuant to Section 2.1:
(i) all payments on account of principal, including
Principal Prepayments, on the Mortgage Loans;
54
(ii) all payments on account of interest on the Mortgage
Loans other than Prepayment Premiums and amounts
payable to the Master Servicer or Special Servicer
pursuant to Section 3.12 hereof;
(iii) all Insurance Proceeds and Liquidation Proceeds;
(iv) any amounts required to be deposited pursuant to
Section 3.17(d) in connection with any REO Account
Property or other Mortgaged Property;
(v) any amounts received upon the sale or other disposition
of any real or personal property acquired upon the
enforcement of the rights of the Trustee relating to a
Mortgage Loan or under any guaranty relating to a
Mortgage Loan;
(vi) any amounts received from Borrowers which represent
recoveries of (x) Property Protection Expenses or (y)
payments of taxes, insurance premiums, assessments and
other payments made pursuant to Section 3.4;
(vii) all Prepayment Interest Excess;
(viii) any amounts required to be deposited in connection with
the application of co-insurance clauses, flood damage
to REO Properties and blanket policy deductibles; and
(ix) all payments of interest and principal received with
respect to the Mortgage Certificates.
All such amounts shall be transferred by the Master Servicer in
immediately available funds to the Collection Account not later than the
earlier of (i) two Business Days after receipt by the Master Servicer and
(ii) the day preceding each Master Servicer Remittance Date. The foregoing
requirements for deposits in the Collection Account shall be exclusive, it
being understood and agreed that, without limiting the generality of the
foregoing, payments in the nature of assumption or substitution fees and
modification fees with respect to all Mortgage Loans shall not be deposited
in the Collection Account by the Master Servicer and shall not be deposited
in the REO Account by the Special Servicer, and, in each case to the extent
permitted by applicable law and Section 3.12, the Master Servicer and the
Special Servicer shall be entitled to retain any such charges and fees
received with respect to such Mortgage Loans. In the event that the Master
Servicer deposits in the Collection Account any amount not required to be
deposited therein, it may at any time withdraw such amount from the
Collection Account, any provision herein to the contrary notwithstanding.
Upon receipt of any of the foregoing amounts with respect to any
Specially Serviced Mortgage Loans other than REO Account Mortgage Loans, the
Special Servicer shall immediately remit such amounts to the Master Servicer
for deposit into the Collection Account in accordance with the second
preceding paragraph. Such amounts received with respect to any REO Account
Mortgage Loans will be deposited by the Special Servicer into the REO Account
and remitted to the Master Servicer for deposit into the Collection Account
pursuant to Section 3.17.
With respect to any such amounts required to be remitted to the
Master Servicer that are paid by check to the order of the Special Servicer,
the Special Servicer shall endorse such check to the order of the Master
Servicer and shall promptly deliver any such check to the Master Servicer by
overnight courier or comply with other reasonable instructions of the Master
Servicer with respect thereto.
55
(b) The Paying Agent shall establish and maintain the
Distribution Account in the name of the Trustee in trust for the benefit of
the Lower-Tier Certificateholders. The Paying Agent shall also establish and
maintain the Upper-Tier Distribution Account in the name of the Trustee in
trust for the benefit of the Certificateholders. The Distribution Account and
the Upper-Tier Distribution Account shall be established and maintained as
Eligible Accounts. Notwithstanding anything in this Agreement to the
contrary, the Upper-Tier Distribution Account may be maintained by the Paying
Agent as a subaccount of the Distribution Account, and all distributions from
the Distribution Account to the Upper-Tier Distribution Account may consist
of deemed distributions effected by accounting entries. With respect to each
Distribution Date, the Master Servicer shall deposit into the Distribution
Account on or before the related Master Servicer Remittance Date an aggregate
amount of immediately available funds equal to the Available Funds for such
Distribution Date. In addition, on or prior to the related Master Servicer
Remittance Date, the Master Servicer shall deposit in the Distribution
Account any P&I Advances required pursuant to Section 3.22 to be so deposited
prior to the related Distribution Date. The Trustee shall notify the Master
Servicer by 3:00pm Central time on the Master Servicer Remittance Date in the
event the Trustee has not yet received such available funds ▇▇▇/▇▇ ▇&▇
Advances; PROVIDED, HOWEVER, that the Master Servicer shall pay the Trustee
interest on such payment at the Prime Rate from, BUT NOT INCLUDING, the
Master Servicer Remittance Date until such payment is received by the
Trustee. The Paying Agent shall make deposits and withdrawals from the
Upper-Tier Distribution Account pursuant to Section 4.2(b). In the event
that the Master Servicer or the Special Servicer, as applicable, fails to
deliver such amounts as required, the Master Servicer or the Special
Servicer, as applicable, shall deliver to the Trustee (and the Master
Servicer in the case of the Special Servicer) a written statement describing,
on a Mortgage Loan by Mortgage Loan basis, the amounts required pursuant to
Section 3.22 to be so delivered.
(c) Funds in the Collection Account, Distribution Account or
Upper-Tier Distribution Account may only be invested in Permitted Investments
in accordance with the provisions of Section 3.7. The Master Servicer shall
give written notice to the Trustee and the Special Servicer of the location
and account number of the Collection Account and shall notify the Trustee in
writing prior to any subsequent change thereof.
SECTION 3.6 PERMITTED WITHDRAWALS FROM THE COLLECTION ACCOUNT.
The Master Servicer may make withdrawals from the Collection
Account only as described below (the order set forth below not constituting
an order of priority for such withdrawals):
(i) to pay to the Trustee, the Trustee Fee;
(ii) to transfer on or before each Master Servicer
Remittance Date to the Lower-Tier Distribution
Account, the amount required to be deposited in the
Distribution Account pursuant to Section 3.5(a);
(iii) to pay or reimburse (a) the Trustee or the Master
Servicer, for Advances other than P&I Advances,
together with Advance Interest thereon, to the extent
and at the time payable or reimbursable pursuant to
this Agreement and (b) the Trustee for expenses,
disbursements and advances pursuant to Section 8.5(b)
of this Agreement;
(iv) on each Determination Date to reimburse the Trustee or
the Master Servicer, for ▇▇▇▇▇▇▇▇▇▇▇▇ ▇&▇ Advances in
accordance with the provisions of Section 3.22 together
with interest thereon at the Advance Rate to the extent
provided in that Section;
(v) to pay on each Determination Date (a) to the Master
Servicer, as adjusted pursuant to Section 4.8, the
aggregate unpaid Servicing Fees in respect of the
immediately
56
preceding Due Period; (b) to the Special Servicer, the
Basic Fee and the aggregate unpaid Workout Fee in
respect of such Due Period (but only out of
collections on and proceeds of the related Mortgage
Loans and REO Properties); and (c) to the Master
Servicer and the Special Servicer, any unpaid Servicing
Fees, Workout Fees in respect of any prior Due Period
plus interest thereon at the Advance Rate;
(vi) to pay on or before each Determination Date to the
Originator, the Master Servicer or the Special
Servicer, as the case may be, with respect to each
Mortgage Loan, Mortgage Certificate or REO Property
that has previously been purchased or repurchased from
the Trust Fund pursuant to Section 2.2, 2.3(d), 3.18,
4.6(b) or 9.1, all amounts received thereon during the
immediately preceding Prepayment Period and subsequent
to the date as of which the amount required to effect
such purchase or repurchase was determined;
(vii) at the direction of the Trustee to pay the expenses of
the Trust Fund as specified herein and not otherwise
provided for in this Section 3.6 and to pay, only from
amounts otherwise distributable to Holders of Class R
or Class LR Certificates, as the case may be, any
federal, state or local taxes imposed on the Upper-Tier
REMIC or Lower-Tier REMIC, respectively, pursuant to
Section 4.6;
(viii) to withdraw any amount deposited into the Collection
Account that was not required to be deposited therein,
including late fees and any other penalties or charges
to be retained by the Depositor;
(ix) to the extent not reimbursed pursuant to any other
clause of this Section 3.6, to reimburse the Trustee,
the Master Servicer and the Special Servicer for any
expenses or other amounts reimbursable or payable to
them under this Agreement, together with interest
thereon to the extent provided in this Agreement;
(x) to clear and terminate the Collection Account pursuant
to Section 9.1.; and
(xi) to make other payments authorized by this Agreement.
The Master Servicer shall keep and maintain separate accounting, on
a Mortgage Loan by Mortgage Loan basis, and Mortgage Certificate by Mortgage
Certificate basis, for the purpose of justifying any withdrawal from the
Collection Account pursuant to subclauses (iii), (iv), (v) and (viii) above.
The Master Servicer shall pay to the Special Servicer (or to third
party contractors at the direction of the Special Servicer) or the Trustee
from the Collection Account amounts permitted to be paid to the Special
Servicer or the Trustee therefrom promptly upon receipt of a certificate of a
Special Servicer Officer or a Responsible Officer of the Trustee, as the case
may be, describing the item and amount to which the Special Servicer or the
Trustee, as the case may be, is entitled. The Master Servicer may rely
conclusively on any such certificate and shall have no duty to re-calculate
the amounts stated therein. Each of the Special Servicer and the Master
Servicer shall keep and maintain separate accounting, on a Mortgage Loan by
Mortgage Loan basis, and Mortgage Certificate by Mortgage Certificate basis,
for the purpose of justifying any request made by it for any withdrawal from
the Collection Account.
The Trustee, the Master Servicer and the Special Servicer shall in
all cases have a right prior to the Certificateholders to any funds on
deposit in the Collection Account from time to time for the payment of the
Servicing Fee, the Trustee Fee, the Basic Fee and the Workout Fee, for the
reimbursement of P&I Advances and Servicing Advances plus interest thereon at
the Advance Rate, in each case to the extent such advances are determined to
be
57
Nonrecoverable Advances, and for reimbursement of their respective expenses
hereunder (plus interest thereon to the extent provided in this Agreement) to
the extent such expenses are to be reimbursed from amounts on deposit in the
Collection Account pursuant to this Agreement (and to have such amounts paid
directly to third party contractors for any invoices approved by the Trustee,
the Master Servicer or the Special Servicer, as applicable). Any funds in
the Collection Account which are not withdrawn in satisfaction of the amounts
described in this paragraph shall be disposed of in accordance with
subsection (ii) of this Section 3.6.
SECTION 3.7 INVESTMENT OF FUNDS IN THE COLLECTION ACCOUNT,
REO ACCOUNT, THE DISTRIBUTION ACCOUNT AND
THE UPPER-TIER DISTRIBUTION ACCOUNT.
(a) The Master Servicer may direct any depository institution
maintaining the Collection Account, REO Account, the Distribution Account or
the Upper-Tier Distribution Account (each, for purposes of this Section 3.7,
an "Investment Account") to invest the funds in such Investment Account in
one or more Permitted Investments that mature no later than the Business Day
preceding the date on which such funds are required to be withdrawn from such
Investment Account pursuant to this Agreement. Any direction by the Master
Servicer to invest funds on deposit in an Investment Account shall be in
writing and shall certify that the requested investment is a Permitted
Investment which matures at or prior to the time required hereby. All such
Permitted Investments shall be held to maturity, unless payable, without
penalty, on demand. Any investment of funds in an Investment Account shall
be made in the name of the Trustee (in its capacity as such) or in the name
of a nominee of the Trustee. The Trustee or its agent, initially LaSalle
National Bank, shall have sole control (except with respect to investment
direction) over each such investment and, subject to Section 3.7(b), the
income thereon, and any certificate or other instrument evidencing any such
investment shall be delivered directly to the Trustee or its agent, initially
LaSalle National Bank together with any document of transfer, if any,
necessary to transfer title to such investment to the Trustee or its nominee.
In the event amounts on deposit in an Investment Account are at any time
invested in a Permitted Investment payable on demand, the Paying Agent (in
the case of the Distribution Account and the Upper-Tier Distribution
Account), the Master Servicer (in the case of the Collection Account) or the
Special Servicer (in the case of the REO Account) shall:
(x) consistent with any notice required to be given
thereunder, demand that payment thereon be made on the last day such
Permitted Investment may otherwise mature hereunder in an amount equal to
the lesser of (1) all amounts then payable thereunder and (2) the amount
required to be withdrawn on such date in order to make the distributions
required by this Agreement; and
(y) consistent with any notice requirements thereunder,
demand payment of all amounts due thereunder promptly upon determination
by the Paying Agent (in the case of the Distribution Account and the
Upper-Tier Distribution Account) or the Master Servicer (in the case of
the Collection Account) or the Special Servicer (in the case of the REO
Account) that such Permitted Investment no longer constitutes a Permitted
Investment.
(b) All net income and gain realized from investment of funds in
Permitted Investments deposited in the REO Account, the Distribution Account,
the Upper-Tier Distribution Account and the Collection Account shall be for the
benefit of the Master Servicer, and all losses from any such investments shall
be borne by the Master Servicer.
(c) Except as otherwise expressly provided in this Agreement, if
any default occurs in the making of a payment due under any Permitted
Investment, or if a default occurs in any other performance required under
any Permitted Investment, the Trustee may (and, subject to Sections 8.1 and
8.2(a)(iii), upon the request of Holders of Certificates representing at
least 51% of the Voting Rights of any Class, shall) take such action as may
be appropriate to enforce such payment or performance, including the
institution and prosecution of appropriate proceedings; PROVIDED, HOWEVER,
that if such default occurs in respect of a Permitted Investment under which
the Trustee, in its corporate
58
capacity, is the obligor, the Trustee shall take no such action and the
Master Servicer shall be entitled to take such action as the Trustee would
otherwise be entitled to take pursuant to this Section 3.7(c). The Trustee
or the Master Servicer, as applicable, shall be entitled to reimbursement
from the Trust Fund for all costs and expenses incurred by it in the
performance of its duties under this subsection (c) promptly following its
request therefor in the form of a certificate of a Responsible Officer or
Servicing Officer, as applicable, describing such cost or expense and the
amount thereof.
SECTION 3.8 MAINTENANCE OF INSURANCE POLICIES AND ERRORS AND
OMISSIONS AND FIDELITY COVERAGE.
(a) The Master Servicer on behalf of the Trust Fund shall
maintain or cause the related Borrower to maintain for each Mortgage Loan
(other than REO Mortgage Loans) fire and hazard insurance with extended
coverage on the related Mortgaged Property with a Qualified Insurer in an
amount which is at least equal to the lesser of the then current Principal
Balance of such Mortgage Loan and the replacement cost of the improvements
which are a part of such property which would not give rise to co-insurance
requirements, but only to the extent such insurance is required to be
maintained by the Borrower pursuant to the terms of such Mortgage Loan or
such Mortgage Loan permits the mortgagee to require the Borrower to maintain
such insurance. The cost of any such insurance (as well as the amount of any
deductible, to the extent that the Trust Fund incurs a loss as a result
thereof), if not borne by the Borrower, shall be an expense of the Trust Fund
payable out of the Collection Account pursuant to Section 3.6 to the extent
such Borrower defaulted on its obligation to maintain such insurance or pay
such deductible. If any insurance required to be maintained by the Master
Servicer pursuant to this Section 3.8 is available (whether or not at
commercially reasonable rates) and is not maintained as required and any loss
which is of a type which is or which would have been covered under any such
policy occurs, (other than a loss occasioned by the termination of an
insurance policy (except at the maturity of such policy) on which the Master
Servicer, on behalf of the Trust Fund, is named as a loss payee and with
respect to which the insurer failed to notify the Master Servicer of such
termination in sufficient time prior to such termination to enable the Master
Servicer to obtain insurance conforming to such requirements), the Master
Servicer will deposit in the Collection Account from its own funds, without
right of reimbursement therefor, an amount equal to the amount of such loss
occasioned by the failure to maintain the required coverage. Any cost
incurred by the Master Servicer in maintaining the insurance required by this
paragraph to the extent that the Borrower defaults in its obligation to do so
shall be a Servicing Advance.
(b) The Special Servicer on behalf of the Trust Fund shall cause
to be maintained fire and hazard insurance with a Qualified Insurer with
extended coverage on each related REO Property in an amount which is at least
equal to the replacement cost of the improvements which are a part of such
property having a deductible not in excess of $200,000 per property. The
Special Servicer shall cause to be maintained with respect to each REO
Property public liability insurance with a Qualified Insurer providing such
coverage against such risks as the Special Servicer determines, consistent
with the servicing standard set forth in Section 3.1(a), to be in the best
interests of the Trust Fund. The cost of any such insurance with respect to
an REO Property (as well as the amount of any deductible) shall be an expense
of the Trust Fund payable out of the REO Account pursuant to Section 3.17(c)
or, if the amount on deposit therein is insufficient therefor, out of the
Collection Account pursuant to Section 3.6. Any Insurance Proceeds received
by the Special Servicer shall be deposited into the REO Account, and any
Insurance Proceeds received by the Master Servicer shall be deposited in the
Collection Account pursuant to Section 3.5, subject to withdrawal pursuant to
Section 3.6. Any cost incurred by the Special Servicer in maintaining the
insurance required by this paragraph shall be a Servicing Advance. It is
understood and agreed that no earthquake or other additional insurance other
than flood insurance is to be required of any Borrower or to be maintained by
the Master Servicer or the Special Servicer, as applicable, other than
pursuant to the terms of the related Note or Mortgage and pursuant to such
applicable laws and regulations as shall at any time be in force and as shall
require such additional insurance. If permitted by the related Note or
Mortgage, the Master Servicer shall maintain, if available, or may require
the related Borrower to maintain other forms of insurance including but not
limited to, loss of rents, endorsements, business interruption insurance and
comprehensive public liability insurance.
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If the Mortgaged Property was located at the time of origination of
the Mortgage Loan in a federally designated special flood hazard area, the
Master Servicer will cause the related Borrower to maintain or will itself
obtain flood insurance in respect thereof to the extent available and to the
extent the related Mortgage Loan requires the Borrower, or permits the
mortgagee to require the Borrower, to maintain such insurance. Such flood
insurance shall be in an amount equal to the lesser of (i) the unpaid
principal balance of the related Mortgage Loan and (ii) the greater of (a)
the maximum amount of such insurance required by the terms of the related
Note or Mortgage and (b) the maximum amount of such insurance as is available
for the related property under the national flood insurance program (assuming
that the area in which such property is located is participating in such
program). The cost of any insurance described above (as well as the amount
of any deductible), if not borne by the Borrower, shall be an expense of the
Trust Fund payable out of the Collection Account pursuant to Section 3.6. If
an REO Property was located at the time of origination of the related
Mortgage Loan in a federally designated special flood hazard area, the
Special Servicer will obtain and maintain, or shall cause to be obtained and
maintained, flood insurance in respect thereof providing substantially the
same coverage as described in the second preceding sentence. If a recovery
under a flood, fire and hazard or public liability insurance policy in
respect of an REO Property would have been available if such insurance were
available (whether or not at commercially reasonable rates) and were
maintained thereon in accordance with the standards applied to Mortgaged
Properties described herein, the Special Servicer shall either (i)
immediately remit to the Master Servicer for deposit into the Collection
Account from its own funds, without any right of reimbursement therefor, the
amount that would have been recovered or (ii) apply to the restoration and
repair of the property from its own funds, without any right of reimbursement
therefor, the amount that would have been recovered, if such application
would be consistent with the servicing standard set forth in Section 3.1(a).
Subject to customary servicing practices, each Special Servicer
agrees, with respect to the related Specially Serviced Mortgage Loans and the
Master Servicer agrees, with respect to other Mortgage Loans, to prepare and
present, on behalf of itself, the Trustee and the Certificateholders, claims
under each related insurance policy maintained pursuant to Sections 3.8(a)
and (b) in a timely fashion in accordance with the terms of such policy and
to take such reasonable steps as are necessary to receive payment or to
permit recovery thereunder. Notwithstanding anything contained herein to
the contrary, the Master Servicer and each Special Servicer shall be
obligated to present such claims only if they become aware that a claim has
not been presented by a Borrower and such insurance policies permit the
Master Servicer or the Special Servicer to present such claims.
All policies required hereunder shall name the Trustee, or the
Master Servicer on behalf of the Trustee, as loss payee.
(c) If the Master Servicer or the Special Servicer obtains and
maintains a blanket policy with a Qualified Insurer insuring against fire and
hazard losses on all or a significant portion of the Mortgaged Properties
which the Master Servicer or the Special Servicer, as applicable, services,
which blanket policy shall be maintained at the expense of the Master
Servicer or the Special Servicer, as the case may be, it shall conclusively
be deemed to have satisfied its obligations concerning the maintenance of
insurance coverage set forth in Sections 3.8(a) and (b) with respect to the
Mortgage Loans covered by such blanket policy, it being understood and agreed
that such policy may contain a deductible clause, in which case the Master
Servicer or the Special Servicer, as applicable, shall, in the event that
there shall not have been maintained on the related Mortgaged Property a
policy otherwise complying with the provisions of Sections 3.8(a) and (b),
and there shall have been one or more losses which would have been covered by
such a policy had it been maintained, immediately deposit into the Collection
Account from its own funds, without any right of reimbursement therefor, the
amount not otherwise payable under the blanket policy because of such
deductible clause to the extent that any such deductible exceeds the
deductible limitation pertaining to the policy, if any, maintained with
respect to the related Mortgage Property, or, in the absence of any such
deductible limitation, the deductible limitation which is consistent with the
servicing standard set forth in Section 3.1(a). In connection with their
respective activities as Master Servicer and Special Servicer hereunder, each
of the Master Servicer and the Special Servicer agrees to prepare and
present, on behalf of itself, the Trustee and Certificateholders, claims
under any such blanket policy
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which it maintains in a timely fashion in accordance with the terms of such
policy and to take such reasonable steps as are necessary to receive payment
or permit recovery thereunder.
(d) The Master Servicer and the Special Servicer shall each
maintain a fidelity bond in the form and amount equal to the coverage which
would be required by FNMA or FHLMC, whichever would be greater, if the Master
Servicer were servicing the Mortgage Loans for FNMA or FHLMC and, in the case
of LTC as Special Servicer, in the form and amount equal to coverage
maintained by managers managing portfolios similar to those managed by LTC,
as Special Servicer. Each of the Master Servicer and the Special Servicer
shall be deemed to have complied with this provision if one of its respective
Affiliates has such fidelity bond coverage and, by the terms of such fidelity
bond, the coverage afforded thereunder extends to the Master Servicer or the
Special Servicer, respectively. The Master Servicer and Special Servicer, as
the case may be, shall notify the Trustee as soon as practical of any
cancellation of such fidelity bond. In addition, the Master Servicer and the
Special Servicer shall each keep in force during the term of this Agreement a
policy or policies of insurance covering loss occasioned by the errors and
omissions of its officers, employees and agents in connection with its
obligations to service the Mortgage Loans hereunder. The Master Servicer
shall cause each and every subservicer for it, and the Special Servicer shall
cause each and every subservicer for it, to maintain a policy of insurance
covering errors and omissions and a fidelity bond which would meet such
requirements. Each such fidelity bond and errors and omissions policy shall
be issued by (i) an insurer having a claims-paying ability rating of at least
"A" by S&P, (ii) an insurer whose obligations are guaranteed or backed by a
company having such a claims-paying ability rating, or (iii) an insurer with
respect to which the written confirmation of the Rating Agency has been
obtained to the effect that the maintenance of a fidelity bond and errors and
omissions policy issued by such insurer will not result in the qualification,
downgrade or withdrawal of the then current ratings on the outstanding
Classes of Certificates; PROVIDED, HOWEVER, that so long as the long term
debt or deposit obligations of the Master Servicer or the Special Servicer
are rated at least "A" by S&P, the Master Servicer or the Special Servicer,
as applicable, shall be allowed to provide self-insurance with respect to an
errors and omissions insurance policy.
SECTION 3.9 ENFORCEMENT OF DUE-ON-SALE CLAUSES; ASSUMPTION
AGREEMENTS.
(a) If any Mortgage Loan contains a provision in the nature of a
"due-on-sale" clause, which by its terms:
(i) provides that such Mortgage Loan shall (or may at the
mortgagee's option) become due and payable upon the
sale or other transfer of an interest in the related
Mortgaged Property, or
(ii) provides that such Mortgage Loan may not be assumed
without the consent of the related mortgagee in
connection with any such sale or other transfer,
then, for so long as such Mortgage Loan is included in the Trust Fund, the
Master Servicer or, if such Mortgage Loan is a Specially Serviced Mortgage
Loan, the Special Servicer, on behalf of the Trust Fund, in a manner
consistent with the servicing standards set out in Section 3.1(a), may waive
or enforce any due-on-sale clause contained in the related Note or Mortgage
in a manner consistent with the servicing standards set out in Section 3.1(a)
and in the case of a waiver shall provide the Rating Agency with written
notice of such proposed waiver and obtain prior written confirmation from the
Rating Agency the taking of such action will not result in the qualification,
downgrade or withdrawal of the then current ratings assigned by the Rating
Agency to the outstanding Classes of the Certificates; PROVIDED, HOWEVER,
that such prior written confirmation of a waiver shall only be required for a
Mortgage Loan, a group of cross-collateralized Mortgage Loans, or one or more
Mortgage Loans to related Borrowers, if the aggregate outstanding principal
balance of such Mortgage Loan or groups of Mortgage Loans exceeds 5% of the
outstanding principal balance of all Mortgage Loans. The Master Servicer or
the Special Servicer, as applicable, is also authorized to take or enter into
an assumption agreement from or with the Person to whom such property has
been or is about to be conveyed, or to release the original Borrower from
liability upon the Mortgage Loan and substitute the new Borrower
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as obligor thereon; PROVIDED HOWEVER that (i) if a new Borrower is
substituted for Mortgage Loans #▇▇▇, #▇▇▇, #▇▇▇, #▇▇▇ ▇▇▇ #▇▇▇, ▇▇ (▇▇) if
the Originator or any of its affiliates becomes the Borrower for any other
Mortgage Loan by assuming the obligations for such Mortgage Loan, the Master
Servicer or Special Servicer, as applicable, shall receive written
confirmation from the Rating Agency that such substitution or assumption
shall not result in a downgrade or withdrawal or qualification of the rating
then assigned to any Class of Certificates; PROVIDED, FURTHER, that except as
otherwise permitted by Section 3.20 and the REMIC Provisions, the terms of
any such assumption or substitution agreement shall not be materially
different from those in the original Note or Mortgage. To the extent
permitted by law, the Master Servicer or the Special Servicer, as applicable,
shall enter into an assumption or substitution agreement only if the credit
status of the prospective new borrower is in compliance with the servicing
standards set forth in Section 3.1. The Master Servicer or the Special
Servicer, as applicable, shall notify the Trustee that any such assumption or
substitution agreement has been completed and forward to the Custodian the
original of such agreement, which original shall be added by the Custodian to
the related Mortgage File, and shall, for all purposes, be considered a part
of such Mortgage File to the same extent as all other documents and
instruments constituting a part thereof. In connection with any such
assumption or substitution agreement, the Mortgage Interest Rate, principal
amount and other material payment terms of the Mortgage Loan pursuant to the
related Note shall not be changed, except as otherwise permitted by Section
3.20. Any fee collected by the Master Servicer or Special Servicer for
entering into an assumption or substitution agreement will be retained by the
Master Servicer or the Special Servicer, as applicable, pursuant to Section
3.12 hereof.
(b) If any Mortgage Loan contains a provision in the nature of a
"due-on-encumbrance" clause, which by its terms:
(i) provides that such Mortgage Loan shall (or may at the
mortgagee's option) become due and payable upon the
creation of any lien or other encumbrance on the
related Mortgaged Property or
(ii) requires the consent of the related mortgagee to the
creation of any such lien or other encumbrance on the
related Mortgaged Property,
then, for so long as such Mortgage Loan is included in the Trust Fund, the
Master Servicer or, if such Mortgage Loan is a Specially Serviced Mortgage Loan,
the Special Servicer, on behalf of the Trust Fund, shall exercise (or decline to
exercise) any right the Trustee may have as the mortgagee of record with respect
to such Mortgage Loan (x) to accelerate the payments thereon, or (y) to withhold
its consent to the creation of any such lien or other encumbrance, in a manner
consistent with the servicing standards set forth in Section 3.1(a); PROVIDED,
HOWEVER, that the Special Servicer has obtained written confirmation from the
Rating Agency that any such action will not result in the qualification,
downgrade or withdrawal of the then current ratings assigned by the Rating
Agency to the outstanding Classes of the Certificates. If the Special Servicer
decides to not exercise any such right which the Trustee may have under this
Section, it shall provide the Rating Agency with written notice of such
decision.
(c) Nothing in this Section 3.9 shall constitute a waiver of the
Trustee's right, as the mortgagee of record, to receive notice of any assumption
of a Mortgage Loan, any sale or other transfer of the related Mortgaged Property
or the creation of any lien or other encumbrance with respect to such Mortgaged
Property.
(d) Except as otherwise permitted by Section 3.20 and the REMIC
Provisions, in connection with the taking of, or the failure to take, any action
pursuant to this Section 3.9, the Master Servicer and the Special Servicer shall
not agree to modify, waive or amend, and no assumption or substitution agreement
entered into pursuant to Section 3.9(a) shall contain any terms that are
different from, any term of any Mortgage Loan or the related Note.
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SECTION 3.10 REALIZATION UPON DEFAULTED MORTGAGE LOANS.
(a) Subject to Section 3.18(a), the related Special Servicer
shall foreclose upon or otherwise comparably convert (which may include
acquisition of an REO Property) the ownership of properties securing such of
the Mortgage Loans as come into and continue in default and as to which no
satisfactory arrangements can be made for collection of delinquent payments
pursuant to Sections 3.3 or 3.20, and which are not released from the Trust
Fund pursuant to any other provision hereof, if the Special Servicer
determines, in a manner consistent with the servicing standard set forth in
Section 3.1(a), that such action would be in the best economic interest of
the Trust Fund. The Master Servicer shall advance the costs and expenses of
any such proceeding as a Servicing Advance unless the Master Servicer makes a
determination, in its reasonable business judgment, that such advance, if
made, would be a Nonrecoverable Advance. The Master Servicer shall be
entitled to reimbursement of advances made pursuant to the preceding sentence
plus interest thereon at the Advance Rate from (i) future payments and
collections with respect to the related Mortgage Loan (or the related
Mortgaged Property) and, (ii) upon a determination that such advance is a
Nonrecoverable Advance, from amounts on deposit in the Collection Account.
If the Special Servicer elects to proceed with a foreclosure in
accordance with the laws of the state where the Mortgaged Property is
located, the Special Servicer shall not be required to pursue a deficiency
judgment against the related Borrower or any other liable party if the laws
of the state do not permit such a deficiency judgment after such foreclosure
or if the Special Servicer determines, in its best judgment, that the likely
recovery if a deficiency judgment is obtained will not be sufficient to
warrant the cost, time, expense and/or exposure of pursuing the deficiency
judgment.
In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of
sale shall be issued to the Trustee, or to its nominee on behalf of
Certificateholders. Notwithstanding any such acquisition of title and
cancellation of the related Mortgage Loan, the provisions of Section 1.2
shall apply with respect to such Mortgage Loan.
(b) The Special Servicer shall not acquire for the benefit of
the Trust Fund any personal property pursuant to this Section 3.10 unless
either:
(i) such personal property is incidental to real property
(within the meaning of Section 856(e)(1) of the Code)
so acquired by the Special Servicer for the benefit of
the Trust Fund; or
(ii) the Special Servicer shall have requested and received
an Opinion of Counsel (obtained at the expense of the
Trust Fund) to the effect that the holding of such
personal property by the Trust Fund will not cause the
imposition of a tax on the Upper-Tier REMIC or Lower-
Tier REMIC under the REMIC Provisions or cause either
the Upper-Tier REMIC or Lower-Tier REMIC to fail to
qualify as a REMIC at any time that any Certificate or
uncertificated Lower-Tier Interest is outstanding.
(c) Notwithstanding any provision to the contrary contained in
this Agreement, the Special Servicer shall not, on behalf of the Trust Fund,
obtain title to a Mortgaged Property as a result of or in lieu of foreclosure
or otherwise, and shall not otherwise acquire possession of, or take any
other action with respect to, any Mortgaged Property if, as a result of any
such action, the Trustee, the Master Servicer, the Depositor, the Originator
or the Certificateholders, would be considered to hold title to, to be a
"mortgagee-in-possession" of or to be an "owner" or "operator" of such
Mortgaged Property within the meaning of the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended from time to
time, or any comparable law, unless the Special Servicer has previously
determined in accordance with the servicing standard set forth in Section
3.1(a), based on an
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Environmental Assessment report prepared by an Independent Person satisfying
the requirements set forth in the first sentence of Section 3.10(d), that:
(A) such Mortgaged Property is in compliance with
applicable environmental laws (in the reasonable judgment of such
Independent Person based upon all available information) or, if not, that
it would be in the best economic interest of the Trust Fund and there would
be no adverse effect on the Master Servicer, Special Servicer, Trustee,
Depositor, or Originator to take such actions as are necessary to bring
such Mortgaged Property in compliance therewith, and
(B) there are no circumstances present at such Mortgaged
Property relating to the use, management or disposal of any Hazardous
Materials for which investigation, testing, monitoring, containment,
clean-up or remediation could be required under any currently effective
federal, state or local law or regulation (in the reasonable judgment of
such Independent Person based upon all available information), or that,
if any such Hazardous Materials are present for which such action could be
required, it would be in the best economic interest of the Trust Fund and
there would be no adverse effect on the Master Servicer, Special Servicer,
Trustee, Depositor, or Originator, to take such actions with respect to the
affected Mortgaged Property.
In the event that the Environmental Assessment first obtained by
the Special Servicer with respect to a Mortgaged Property indicates that such
Mortgaged Property may not be in compliance with applicable environmental
laws or that Hazardous Materials may be present but does not definitively
establish such fact, the Special Servicer shall cause such further
environmental tests to be conducted by an Independent Person who regularly
conducts such tests as the Special Servicer shall deem prudent to protect the
interests of Certificateholders. Any such tests shall be deemed part of the
Environmental Assessment obtained by the Special Servicer for purposes of
this Section 3.10.
(d) The Environmental Assessment contemplated by Section 2.2,
3.10(c), and 3.20(h) shall have been prepared not earlier than the
twelve-month period preceding the events giving rise to the applicability of
Section 2.2, 3.10(c) or 3.20(h) by any Independent Person who regularly
conducts environmental audits for purchasers of commercial property, as
determined by the Special Servicer in a manner consistent with the servicing
standard set forth in Section 3.01(a). The Special Servicer shall advise the
Master Servicer by delivery of a certificate of a Special Servicer Officer of
the cost of preparation of an Environmental Assessment, and the Master
Servicer shall pay such cost from amounts on deposit in the Collection
Account. The Master Servicer may rely conclusively on such certificate and
shall have no duty or obligation to re-calculate the amounts stated therein.
To the extent that amounts on deposit in the Collection Account are
insufficient, the Master Servicer shall advance the amount of such
insufficiency as a Servicing Advance unless the Master Servicer makes a
determination, in its reasonable business judgment, that such advance would
be a Nonrecoverable Advance. In the event that the Master Servicer fails to
make any Servicing Advance referred to in this Section 3.10(d) other than due
to a determination that such advance would be a Nonrecoverable Advance), the
Trustee shall make such advance to the extent provided in Section 7.7.
(e) If the applicable Special Servicer determines pursuant to
Section 3.10(c)(A) that a Mortgaged Property securing a Defaulted Mortgage
Loan is not in compliance with applicable environmental laws but that it is
in the best economic interest of the Trust Fund to take such actions as are
necessary to bring such Mortgaged Property in compliance therewith, or if the
applicable Special Servicer determines pursuant to Section 3.10(c)(B) that
the circumstances referred to therein relating to Hazardous Materials are
present on a Mortgaged Property securing a Defaulted Mortgage Loan but that
it is in the best economic interest of the Trust Fund to take such action
with respect to the containment, clean-up or remediation of Hazardous
Materials affecting such Mortgaged Property as is required by law or
regulation, such Special Servicer shall take such action as it deems to be in
the best economic interest of the Trust Fund and that would not have an
adverse effect on the Master Servicer, Special Servicer, Depositor, Trustee
or Originator, but only if the Trustee has obtained an Opinion of Counsel (at
the expense of the Trust Fund) to the effect that such proposed action will
not cause (A) a loss of REMIC status with respect to either the Upper-Tier
REMIC or the Lower-Tier REMIC or (B) the Upper-Tier REMIC or the Lower-Tier
REMIC to be subject to any tax under the
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REMIC Provisions or equivalent provisions of federal, state, local law or
ordinance, and if the Trustee has mailed notice to the Certificateholders of
such proposed action, which notice shall be prepared by the Special Servicer,
and has not received, within 30 days of such notification, instructions from
the Holders of at least 25% of the aggregate Voting Rights of such
Certificates directing such Special Servicer not to take such action. Such
Special Servicer shall advise the Master Servicer by delivery of a
certificate of a Special Servicer Officer of the cost of any such compliance,
containment, clean-up or remediation, and the Master Servicer shall pay such
cost from amounts on deposit in the Collection Account. To the extent that
amounts on deposit in the Collection Account are insufficient, the Master
Servicer shall advance the amount of such shortfall unless the Master
Servicer makes a determination, in its reasonable business judgment, that
such advance, if made, would be a Nonrecoverable Advance. Such Servicing
Advance shall be made on the Master Servicer Remittance Date. The Master
Servicer shall be entitled to reimbursement of Servicing Advances made
pursuant to the preceding sentence plus interest thereon at the Advance Rate
until paid, from amounts subsequently deposited in the Collection Account.
(f) The Special Servicer shall report to the Internal Revenue
Service and to the related Borrower, in the manner required by applicable
law, the information required to be reported regarding any Mortgaged Property
that is abandoned or foreclosed. The Special Servicer shall deliver a copy
of any such report to the Master Servicer and the Trustee.
SECTION 3.11 TRUSTEE TO COOPERATE; RELEASE OF MORTGAGE FILES AND
MORTGAGE CERTIFICATES.
Upon the payment in full of any Mortgage Loan, receipt of notice of
a termination date with respect to the Mortgage Certificates, or the receipt
by the Master Servicer or the Special Servicer, as the case may be, of a
notification that payment in full has been escrowed in a manner customary for
such purposes, the Master Servicer or the Special Servicer, as the case may
be, shall immediately notify the Trustee or the Custodian by a certification
(which certification shall include a statement to the effect that all amounts
received or to be received in connection with such payment which are required
to be deposited in the Collection Account pursuant to Section 3.5 have been
remitted for deposit in the Collection Account) and shall request (i) in the
case of a Mortgage Loan, delivery to it of the related Mortgage File and (ii)
in the case of a Mortgage Certificate, delivery to the trustee under the
Mortgage Certificate underlying documents, of the physical certificate
representing the interest in the Mortgage Certificates. Upon receipt of such
certification and request, the Trustee shall promptly release or cause the
Custodian to release the related Mortgage File or physical certificates as
applicable, to the Master Servicer, the Special Servicer or the trustee under
the Mortgage Certificate underlying documents, as the case may be. If the
Master Servicer, the Special Servicer or the Trustee incurs any expenses in
connection with any instrument of satisfaction, assignment or deed of
reconveyance and is unable after reasonable attempts to obtain repayment for
such expenses from the related Borrower, it shall be entitled to
reimbursement for such expenses from the Collection Account upon
certification of the amount thereof.
From time to time upon request of the Master Servicer or the Special
Servicer and delivery to the Trustee of a Request for Release, the Trustee shall
promptly release or cause the Custodian to promptly release the related Mortgage
File (or any portion thereof) designated in such Request for Release to the
Master Servicer or the Special Servicer, as applicable. Upon (a) the return of
such Mortgage File (or portion thereof) from the Master Servicer or the Special
Servicer, as applicable, or (b) the receipt, in the event of a liquidation or
the loan becoming an REO Property, of a certificate of a Special Servicer
Officer stating that such Mortgage Loan was liquidated and that all amounts
received or to be received in connection with such liquidation which are
required to be deposited into the Collection Account or Distribution Account
have been remitted to the Master Servicer for such deposit or that such Mortgage
Loan has become an REO Property, the Trustee shall release, or cause the
Custodian to release, a true and correct copy of the Request for Release to the
Master Servicer or the Special Servicer, as applicable, with a notation thereon
acknowledging receipt of the related Mortgage File or the certificate of the
Special Servicer specified in clause (b) above.
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Upon written request of either the Master Servicer or the Special
Servicer, the Custodian shall timely furnish to the requesting Person copies of
any documents in any Mortgage File in the Custodian's possession, at the expense
of the Trust Fund.
Upon written certification of a Special Servicer Officer, the
Trustee shall, at the expense of the Trust Fund, execute and deliver to the
Special Servicer, or the Special Servicer may, pursuant to its powers and
obligations hereunder, execute and file, any court pleadings, requests for
trustee's sale or other documents prepared by the Special Servicer, its
agents or attorneys, necessary to the foreclosure or trustee's sale in
respect of a Mortgaged Property or to any legal action brought to obtain
judgment against any Borrower on the related Note or Mortgage or to obtain a
deficiency judgment, or to enforce any other remedies or rights provided by
the related Note or Mortgage or otherwise available at law or in equity.
Each such certification shall include a request that such pleadings or
documents be executed by the Trustee and a statement as to the reason such
documents or pleadings are required, and that the execution and delivery
thereof by the Trustee will not invalidate or otherwise affect the lien of
the related Mortgage except for the termination of such lien upon completion
of the foreclosure or trustee's sale.
SECTION 3.12 SERVICING COMPENSATION.
As compensation for its activities hereunder, the Master Servicer
shall be entitled to the Servicing Fee, which shall be payable from amounts
on deposit in the Collection Account as set forth in Section 3.6(v) or, in
the alternative, the Master Servicer may retain the Servicing Fee from
proceeds or collections on or with respect to Mortgage Loans and Mortgage
Certificates prior to deposit of such proceeds in the Collection Account. In
addition, the Master Servicer shall retain any late payment charges, penalty
interest, substitution, assumption or modification fees and other similar
fees. The Master Servicer's rights to the Servicing Fees (except for fees
paid to the Subservicer pursuant to a Subservicing Agreement) may not be
transferred in whole or in part except in connection with the permitted
transfer of all of the Master Servicer's responsibilities and obligations
under this Agreement.
As compensation for its activities hereunder, the applicable
Special Servicer shall be entitled to the Special Servicer Fee, and any late
payment charges, penalty interest, substitution, assumption or modification
fees and similar items with respect to such Specially Serviced Mortgaged
Loans as each such Special Servicer shall be responsible for. The applicable
Special Servicer's rights to the Special Servicer Fee may not be transferred
in whole or in part except in connection with the permitted transfer of all
of such Special Servicer's responsibilities and obligations under this
Agreement.
The Master Servicer shall pay out of its Servicing Fee any
subservicing fee payable to any subservicer, and fees payable to any other
person retained by the Master Servicer. The Master Servicer and the Special
Servicer shall each be entitled to be reimbursed from the Collection Account
for all fees and expenses of third parties incurred by it, plus interest
thereon at the Advance Rate to the date of reimbursement (including recording
fees and expenses related to financing statements, continuation statements
and other documents and instruments necessary to maintain the lien on each
Mortgaged Property) in connection with its servicing activities hereunder
(other than any subservicing fee payable to any subservicer and fees and
expenses set forth in Exhibit C, which shall be paid by the Subservicer as
long as the Subservicer is LTC, or the Depositor if any other party is the
Subservicer) including, without limitation, fees and expenses of attorneys,
appraisers, Environmental Assessment firms, third party property managers and
others (who shall have been retained by the Master Servicer or the Special
Servicer, as applicable, in accordance with the servicing standard set forth
in Section 3.1(a)) in connection with enforcement, collection, foreclosure,
management and operation of assets of the Trust Fund and fees and expenses
incurred in prosecuting and defending any litigation or adverse claims
against the Trust Fund or the assets thereof, subject to the provisions of
Section 6.3.
The Trustee, the Master Servicer, the Subservicer and the Special
Servicer, as applicable, shall be entitled to receive reimbursement of all
P&I Advances and Servicing Advances, in each case plus interest thereon at
the Advance Rate from the date such advance is made until the date of
reimbursement.
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SECTION 3.13 REPORTS TO THE TRUSTEE; COLLECTION ACCOUNT STATEMENTS.
(a) No later than thirty days following the month in which such
Distribution Date occurs the Master Servicer shall forward to the Trustee and
the Special Servicer a statement prepared by the Master Servicer setting
forth the status of the Collection Account as of the close of business on the
last day of the month related to such distribution for the preceding calendar
month, with (i) a memorandum in substantially the form of Exhibit F attached
hereto describing Mortgage Loan modifications in the related Due Period and
(ii) a memorandum substantially in the form of Exhibit G attached hereto
describing Mortgaged Properties for which a foreclosure or similar action has
been commenced or was in progress during the related Due Period; PROVIDED,
HOWEVER, that to the extent that the preparation of such reports and
memoranda is dependent upon information to be provided by the Originator, the
trustee for the Mortgage Certificates or the Special Servicer (if other than
the Master Servicer), the Master Servicer will be obligated to prepare such
reports and memoranda only to the extent that the Originator, the trustee for
the Mortgage Certificates or the Special Servicer, as applicable, provides
the Master Servicer with the information necessary to do so. The Special
Servicer and the Originator hereby agree to furnish such information to the
Master Servicer. The Trustee and its agents and attorneys may at any time
during normal business hours, upon reasonable notice, inspect and copy the
books, records and accounts of the Master Servicer with respect to the
Mortgage Loans and the performance of its duties hereunder.
(b) At or prior to 12:00 noon, New York time, on the third
Business Day prior to each Distribution Date, the Master Servicer shall
deliver to the Trustee, in CSSA format and hard copy, or such other format as
may be agreed upon by the Trustee and the Master Servicer from time to time,
a report containing information necessary to make the distributions described
in Article 4.
(c) The Master Servicer shall periodically update the
information contained in Exhibit B hereto relating to the Mortgage Loans and
the Certificate Mortgage Loans and the information contained in Exhibit K
hereto relating to the Mortgaged Properties and the mortgaged properties
related to the Certificate Mortgage Loans based on data received from the
Originator; PROVIDED, HOWEVER, that to the extent that the updating of such
information is dependent upon data to be provided by the Originator, the
Master Servicer will be obligated to update such information only to the
extent that the Originator provides the Master Servicer with the information
necessary to do so. The Originator hereby agrees to furnish such data to the
Master Servicer as such data becomes available.
SECTION 3.14 ANNUAL STATEMENT AS TO COMPLIANCE.
Each of the Master Servicer and the Special Servicer shall deliver
to the Trustee, to the Depositor and to each other on or before April 30 of
each year, beginning April 30, 1999, an Officer's Certificate stating, as to
each signatory thereof, (i) that a review of the activities of the Master
Servicer or the Special Servicer, as the case may be, during the preceding
calendar year (or such longer period from the Closing Date to the end of the
subsequent calendar year) and of its performance under this Agreement has
been made under such officer's supervision, (ii) that, to the best of such
officer's knowledge, based on such review, it has fulfilled all of its
obligations under this Agreement in all material respects throughout such
year (or such longer period), or, if there has been a default in the
fulfillment of any such obligation in any material respect, specifying each
such default known to such officer, the nature and status thereof and what
action it proposes to take with respect thereto, (iii) that, to the best of
such officer's knowledge, each subservicer retained by it has fulfilled its
obligations under its subservicing agreement in all material respects, or, if
there has been a material default in the fulfillment of such obligations,
specifying each such default known to such officer and the nature and status
thereof, and (iv) whether it has received any notice regarding qualification,
or challenging the status, of either the Upper-Tier REMIC or Lower-Tier REMIC
as a REMIC from the Internal Revenue Service or any other governmental agency
or body.
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SECTION 3.15 ANNUAL INDEPENDENT PUBLIC ACCOUNTANTS' SERVICING
REPORT.
On or before April 30 of each year, beginning April 30, 1999, each
of the Master Servicer and the Special Servicer, at its expense, shall cause
a firm of Independent public accountants (who may also render other services
to the Master Servicer or the Special Servicer, as the case may be) which is
a member of the American Institute of Certified Public Accountants to furnish
a statement to the Trustee, to the Depositor and to the Special Servicer or
the Master Servicer, as applicable, to the effect that (i) it has obtained a
letter of representation regarding certain matters from the management of
each of the Master Servicer and the Special Servicer, as applicable, which
includes an assertion that the Master Servicer and the Special Servicer has
complied with certain minimum mortgage loan servicing standards (to the
extent applicable to commercial and multifamily mortgage loans), identified
in the Uniform Single Attestation Program for Mortgage Bankers established by
the Mortgage Bankers Association of America, with respect to the servicing of
commercial and multifamily mortgage loans during the most recently completed
calendar year and (ii) on the basis of an examination conducted by such firm
in accordance with standards established by the American Institute of
Certified Public Accountants, such representation is fairly stated in all
material respects, subject to such exceptions and other qualifications that
may be appropriate. In rendering its report such firm may rely, as to
matters relating to the direct servicing of commercial and multifamily
mortgage loans by Subservicers, upon comparable reports of firms of
independent certified public accountants rendered on the basis of
examinations conducted in accordance with the same standards (rendered within
one year of such report) with respect to those Subservicers.
SECTION 3.16 ACTIONS WITH RESPECT TO THE MORTGAGE CERTIFICATES.
(a) Notwithstanding any other provisions herein to the contrary:
(i) With respect to the Mortgage Certificates, the Trustee
shall:
(A) direct the trustee for the Mortgage Certificates
to make all payments of interest and principal
with respect to the Mortgage Certificates to the
Master Servicer for deposit in the Collection
Account;
(B) remit to the Master Servicer for deposit in the
Collection Account any payments of principal and
interest with respect to the Mortgage Certificates
which the Trustee may receive from any party other
than the Master Servicer; and
(C) in the event of any default with respect to the
Mortgage Certificates by the trustee, the master
servicer or any special servicer having
responsibility therefor, including, without
limitation, any failure to make payments or submit
reports with respect thereto, take action as
provided in paragraph (b) below of this Section
3.16, and neither the Master Servicer nor the
Special Servicer shall have any responsibility
with respect thereto;
(ii) The Master Servicer's responsibility with respect to
the Mortgage Certificates shall be to:
(A) deposit in the Collection Account all funds
received from the trustee for the Mortgage
Certificates; and
(B) forward to the Trustee all reports which the
Master Servicer receives from the trustee for the
Mortgage Certificates;
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(iii) No subservicer shall be engaged with respect to the
Mortgage Certificates;
(iv) The Special Servicer shall have no responsibility with
respect to the Mortgage Certificates; and
(v) Neither the Master Servicer, the Special Servicer nor
the Trustee shall have any obligation to make P&I
Advances or Servicing Advances or have any
responsibility with regards to prepayment interest
shortfalls with respect to the Mortgage Certificates.
(b) In the event that any action is required to be taken, or any
right is to be exercised, by the Trustee as the holder of the Mortgage
Certificates under the Pooling and Servicing Agreement, dated as of July 20,
1993, among LTC REMIC Corporation, LTC, Bankers Trust and Union Bank (as
amended and supplemented from time to time) pursuant to which the Mortgage
Certificates were issued, the Trustee shall so notify the Certificateholders of
the most subordinate Class of Certificates then outstanding and, acting upon the
direction of the majority of the Certificateholders of such Class who have
furnished instructions to the Trustee no later than three Business Days prior to
the date by which the Trustee is required to take any proposed action, and so
long as the Trustee has been indemnified to its reasonable satisfaction by such
Certificateholders with respect to such action, the Trustee shall, at the
expense of the Trust Fund, act with respect to the Mortgage Certificates in
accordance with such instructions.
SECTION 3.17 TITLE AND MANAGEMENT OF REO PROPERTIES AND REO ACCOUNT
PROPERTIES.
(a) In the event that title to any Mortgaged Property is
acquired for the benefit of Certificateholders, by foreclosure, by deed in
lieu of foreclosure or upon abandonment or reclamation from bankruptcy, the
deed or certificate of sale shall be taken in the name of the Trustee, or its
nominee, on behalf of the Trust Fund. The Special Servicer, on behalf of the
Trust Fund, shall dispose of any REO Property within three years or such
other period permitted by the Code after the Trust Fund acquires ownership of
such REO Property for purposes of Section 860G(a)(8) of the Code, unless (i)
the Special Servicer on behalf of the Lower-Tier REMIC has applied for and
received an extension of such period pursuant to Code Sections 856(e)(3) and
860G(a)(8)(A), in which case the Special Servicer shall sell such REO
Property within the applicable extension period or (ii) the Special Servicer
seeks and subsequently receives within such period permitted by the Code, at
the expense of the Trust Fund, an Opinion of Counsel, addressed to the
Trustee and the Special Servicer, to the effect that the holding by the Trust
Fund of such REO Property subsequent to two years after its acquisition or
other period permitted by the Code will not result in the imposition of taxes
on "prohibited transactions" of the Upper-Tier REMIC or Lower-Tier REMIC as
defined in Section 860F of the Code or cause the Upper-Tier REMIC or
Lower-Tier REMIC to fail to qualify as a REMIC at any time that any
Certificates or uncertificated Lower-Tier Interests are outstanding. The
Special Servicer shall manage, conserve, protect and operate each REO
Property for the Certificateholders solely for the purpose of its prompt
disposition and sale in a manner which does not cause such REO Property to
fail 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 result in the receipt by the
REMIC of any "income from nonpermitted assets" within the meaning of Section
860F(a)(2)(B) of the Code or any "net income from foreclosure property" under
Section 860G(c) of the Code, which is subject to taxation under the REMIC
Provisions (other than income from the operation and management of an REO
Property in a trade or business conducted by the Trust Fund through an
Independent Contractor).
(b) The Special Servicer shall segregate and hold all funds
collected and received in connection with the operation of any REO Account
Property (including among other things, rent, insurance proceeds and
liquidation proceeds) separate and apart from its own funds and general
assets and shall establish and maintain with respect to any REO Account
Properties an account held in trust for the Trust Fund for the benefit of the
Certificateholders (the "REO Account"), which shall be an Eligible Account,
and will account separately for funds received or expended with respect to
each REO Account Property. The Special Servicer shall notify the Trustee and
the Master Servicer in writing of the
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location and account number of the REO Account and shall notify the Trustee
and Master Servicer prior to any subsequent change thereof. Amounts on
deposit in the REO Account shall be invested in Permitted Investments in
accordance with the provisions of Section 3.7.
(c) The Special Servicer shall have full power and authority,
subject only to the servicing standard set forth in Section 3.1(a) and any
other specific requirements and prohibitions of this Agreement, to do any and
all things in connection with any REO Account Property as are consistent with
the manner in which the Special Servicer manages and operates similar
property owned or managed by the Special Servicer or any of its Affiliates,
all on such terms and for such period as the Special Servicer deems to be in
the best interests of Certificateholders. In connection therewith, the
Special Servicer shall deposit or cause to be deposited on a daily basis in
the REO Account all revenues received by it with respect to any REO Account
Property and any related REO Account Mortgage Loan, and shall withdraw
therefrom funds necessary for the proper operation, management and
maintenance of any REO Account Property and for other Property Protection
Expenses, including:
(i) all insurance premiums due and payable in respect of
any REO Account Property;
(ii) all real estate taxes and assessments in respect of
any REO Account Property that may result in the
imposition of a lien thereon; and
(iii) all costs and expenses necessary to maintain, manage
or operate any REO Account Property.
To the extent that amounts on deposit in the REO Account are insufficient for
the purposes set forth in clauses (i) through (iii) above, the Master Servicer
shall advance such insufficiency unless the Master Servicer makes a
determination, in its reasonable business judgment, that such advance is not
reasonably recoverable from future payments and collections on the related
Mortgage Loan (or the related Mortgaged Property) out of Insurance Proceeds,
Liquidation Proceeds or otherwise. The Master Servicer shall be entitled to
reimbursement of advances made pursuant to the preceding sentence, together with
interest thereon at the Advance Rate, until paid, from (i) future payments and
collections on the related REO Account Property and (ii) upon a determination
that any such advance is a Nonrecoverable Advance, from amounts on deposit in
the Collection Account.
Notwithstanding the foregoing, the Special Servicer shall not:
(i) permit the Trust Fund to enter into, renew or extend
any New Lease, if the New Lease by its terms will give
rise to any income that does not constitute Rents from
Real Property;
(ii) permit any amount to be received or accrued under any
New Lease, other than amounts that will constitute
Rents from Real Property;
(iii) authorize or permit any construction on any REO Account
Property, other than the repair or maintenance thereof
or 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 related Mortgage Loan
became imminent, all within the meaning of Section
856(e)(4)(B) of the Code; or
(iv) to the extent possible, allow any Person to Directly
Operate any REO Property on any date more than 90 days
after its date of acquisition by the Trust Fund, unless
such Person is an Independent Contractor;
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unless, in any such case, the Special Servicer has requested and received an
Opinion of Counsel at the expense of the Trust Fund to the effect that such
action will not cause such REO Account Property to fail 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) at any time that it is held by the Lower-Tier REMIC, in
which case the Special Servicer may take such actions as are specified in such
Opinion of Counsel.
The Special Servicer shall use its best efforts to (and to the
extent required by the REMIC Provisions shall) contract with any Independent
Contractor for the operation and management of any REO Account Property,
provided that:
(i) the terms and conditions of any such contract shall not
be inconsistent herewith;
(ii) any such contract shall require that the Independent
Contractor pay all costs and expenses incurred in
connection with the operation and management of such
REO Account Property, including those listed above,
and return all related revenues (net of such costs and
expenses);
(iii) none of the provisions of this Section 3.17(c) relating
to any such contract or to actions taken through any
such Independent Contractor shall be deemed to relieve
the Special Servicer of any of its duties and
obligations to the Trust Fund, the Master Servicer or
the Trustee on behalf of the Certificateholders with
respect to the operation and management of any such REO
Account Property; and
(iv) the Special Servicer shall be obligated with respect
thereto to the same extent as if it alone were
performing all duties and obligations in connection
with the operation and management of such REO Account
Property.
The Special Servicer shall be entitled to enter into any agreement with any
Independent Contractor performing services for it related to its duties and
obligations hereunder for indemnification of the Special Servicer by such
Independent Contractor, and nothing in this Agreement shall be deemed to
limit or modify such indemnification. Fees owed by the Special Servicer to
any Independent Contractor other than the Special Servicer or an Affiliate of
the Special Servicer shall be payable from amounts on deposit in the REO
Account or, if the amount on deposit therein is insufficient therefor,
provided in each case that the Special Servicer determines that such fees are
reasonable and customary in the area where such REO Account Property is
located for independent contractors providing services similar to those being
provided by such Independent Contractor, the Master Servicer shall advance
such any fees unless such advance is a Nonrecoverable Advance. The Master
Servicer shall be entitled to reimbursement of such advances plus interest
thereon at the Advance Rate until paid from (i) future proceeds from the
operation or sale of the related REO Account Property and (ii) upon a
determination that any such advance is a Nonrecoverable Advance, from amounts
on deposit in the Collection Account.
(d) At least two Business Days before each Master Servicer
Remittance Date, the Special Servicer shall withdraw from the REO Account and
deposit into the Collection Account the proceeds and collections received or
collected during the related Prepayment Period and reinvestment income
thereon, net of expenses; PROVIDED, HOWEVER, the Special Servicer may retain
in the REO Account such portion of such proceeds and collections as may be
necessary to maintain in the REO Account sufficient funds for the proper
operation, management and maintenance of the REO Account Properties,
including without limitation the creation of reasonable reserves for repairs,
replacements and necessary capital improvements and other related expenses.
On the first Business Day prior to each Determination Date, the Special
Servicer shall notify the Master Servicer of the amount of all such deposits
(and the REO Account Mortgage Loans to which the deposits relate) to be made
into the Collection Account prior to the related Master Servicer Remittance
Date.
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(e) Promptly following any acquisition by the Trust Fund of an REO
Property, the Special Servicer shall determine the fair market value of such REO
Property based on an appraisal, conducted within sixty days of such acquisition
by an MAI appraiser; PROVIDED, HOWEVER that if an appraisal with respect to
such REO Property as been conducted within six months of such acquisition by the
Trust Fund, then no appraisal shall be required. The cost of such appraisal
shall be an expense of the Trust Fund. The appraisal shall be conducted by an
Independent appraiser familiar with the area in which such REO Property is
located, and shall notify the other parties hereto of such fair market value.
SECTION 3.18 SALE OF DEFAULTED MORTGAGE LOANS AND REO PROPERTIES.
(a) The Special Servicer may offer to sell to any Person
(including the Special Servicer) any Defaulted Mortgage Loan or any REO
Property, if and when the Special Servicer determines, consistent with the
servicing standard set forth in Section 3.1(a), 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 REO Property no later than the time determined by the
Special Servicer to be sufficient to result in the sale of such REO Property
on or prior to the date specified in Section 3.17(a). The Special Servicer
shall give the Trustee and the Master Servicer not less than five days' prior
written notice of its intention to (i) purchase any Defaulted Mortgage Loan
or REO Property at the Repurchase Price therefor or (ii) sell any Defaulted
Mortgage Loan or REO Property, in which case the Special Servicer shall
accept the highest bid received from any Person for any Defaulted Mortgage
Loan or any REO Property in an amount at least equal to the Repurchase Price
therefor.
In the absence of any such bid, the Special Servicer shall accept
the highest bid received from any Person that is determined by the Special
Servicer to be a fair price for such Defaulted Mortgage Loan or REO Property,
if the highest bidder is a Person other than an Interested Person, or is
determined to be such a price by the Trustee, if the highest bidder is an
Interested Person. Notwithstanding anything to the contrary herein, neither
the Trustee, in its individual capacity, nor any of its Affiliates may bid
for or purchase any Defaulted Mortgage Loan or any REO Property pursuant
hereto.
The Special Servicer shall not be obligated by either of the
foregoing paragraphs or otherwise to accept the highest bid if the Special
Servicer determines, in accordance with the servicing standard stated in
Section 3.1(a), that rejection of such bid would be in the best interests of
the Certificateholders. In addition, the Special Servicer may accept a lower
bid if it determines, in accordance with the servicing standard stated in
Section 3.1(a), that acceptance of such bid would be in the best interests of
the Certificateholders (for example, if the prospective buyer making the
lower bid is more likely to perform its obligations, or the terms offered by
the prospective buyer making the lower bid are more favorable). In the event
that the Special Servicer determines with respect to any REO Property that
the bids being made with respect thereto are not in the best interests of the
Certificateholders and that the end of the two-year period or such other
period permitted by the Code referred to in Section 3.17(a) with respect to
such REO Property is approaching, the Special Servicer shall seek an
extension of such period in the manner described in Section 3.17(a).
(b) In determining whether any bid received from an Interested
Person represents a fair price for any Defaulted Mortgage Loan or any REO
Property, the Trustee may conclusively rely on the opinion of an Independent
appraiser or other expert in real estate matters retained by the Trustee at
the expense of the Trust Fund. In determining whether any bid constitutes a
fair price for any Defaulted Mortgage Loan or any REO Property, the Special
Servicer or the Trustee (or, if applicable, such appraiser) shall take into
account, and any appraiser or other expert in real estate matters shall be
instructed to take into account, as applicable, among other factors, the
period and amount of any delinquency on the affected Defaulted Mortgage Loan,
the physical condition of the related Mortgaged Property or such REO
Property, the state of the local economy and the Trust Fund's obligation to
dispose of any REO Property within the time period specified in Section
3.17(a).
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(c) Subject to the provisions of Section 3.17, the Special
Servicer and the Trustee 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 Defaulted Mortgage Loan or REO Property, including the collection of all
amounts payable in connection therewith. Any sale of a Defaulted Mortgage Loan
or any REO Property shall be without recourse to, or representation or warranty
by, the Trustee, the Depositor, the Master Servicer, the Special Servicer, the
Originator or the Trust Fund (except that any contract of sale and assignment
and conveyance documents may contain customary warranties of title, so long as
the only recourse for breach thereof is to the Trust Fund), and, if consummated
in accordance with the terms of this Agreement, none of the Master Servicer, the
Special Servicer, the Depositor or the Trustee shall have any liability to the
Trust Fund or any Certificateholder with respect to the purchase price therefor
accepted by the Special Servicer or the Trustee.
(d) The proceeds of any sale after deduction of the expenses of
such sale incurred in connection therewith shall be promptly deposited in the
Collection Account in accordance with Section 3.5(a)(iii).
SECTION 3.19 INSPECTIONS.
The Master Servicer shall, at its own expense, inspect or cause to be
inspected each Mortgaged Property other than those related to Specially Serviced
Mortgage Loans, and the Special Servicer shall, at its own expense, inspect or
cause to be inspected each Mortgaged Property related to a Specially Serviced
Mortgage Loan, at such times and in such manner as are consistent with the
servicing standard set forth in Section 3.1(a), provided that (i) in each case,
at least one half of the Mortgaged Properties securing Mortgage Loans having
outstanding principal balances of $1,000,000 or higher shall be inspected
beginning twelve months after the Closing Date (ii) in each case all Mortgage
Loans not inspected pursuant to clause (i) above shall be inspected in the
succeeding twelve months and at least once every two years thereafter and (iii)
if any Monthly Payment or Balloon Payment becomes more than 60 days delinquent
or the Debt Service Coverage Ratio falls below 1.0 times, the related Mortgaged
Property shall be inspected by the Special Servicer as soon as practicable
thereafter.
SECTION 3.20 MODIFICATIONS, WAIVERS, AMENDMENTS AND CONSENTS.
(a) The Special Servicer shall have no right to agree to any
modification, waiver or amendment of any term of any Mortgage Loan, or to any
substitution of collateral, except as provided in this Section 3.20. The
Special Servicer may agree to any modification, waiver or amendment of any term
of any Defaulted Mortgage Loan, or to any substitution of collateral securing a
Defaulted Mortgage Loan, without the consent of the Trustee, Master Servicer or
any Certificateholder, to the extent permitted by paragraphs (b) through (j) of
this Section 3.20, and in each case, subject to subparagraph (g) of this Section
3.20. All modifications, waivers or amendments of any such Mortgage Loan shall
(i) be in writing and shall be consistent with the servicing standard set forth
in Section 3.1 and (ii) the Special Servicer shall have received the written
confirmation by the Rating Agency that such substitution will not result in the
qualification, downgrade or withdrawal of the then current ratings assigned to
the Certificates.
(b) The Special Servicer shall not agree to any modification,
waiver (other than a waiver referred to in Section 3.3 or Section 3.9, which
waiver, if any, shall be governed by Section 3.3 or Section 3.9, as applicable)
or amendment of any term of any Mortgage Loan if such modification, waiver or
amendment would:
(i) affect the amount or timing of any related payment of
principal, interest or other amount payable thereunder;
or
(ii) result in a release of the lien of the Mortgage on any
material portion of the related Mortgaged Property
without a corresponding principal prepayment in an
amount not less than the fair market value (as
determined by an appraisal delivered to the Special
Servicer) of the property to be released, or would in
the Special Servicer's
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judgment, otherwise materially impair the security for
such Mortgage Loan or reduce the likelihood of timely
payment of amounts due thereon,
unless, in any such case, and subject to paragraphs (c) and (d) of this
Section 3.20, in the Special Servicer's judgment, as evidenced by an
Officer's Certificate , a material default on such Mortgage Loan has occurred
or a default in respect of payment on such Mortgage Loan is imminent, and in
either case, such modification, waiver or amendment will, in the Special
Servicer's judgment, be in the best interests of the Certificateholders and
has determined it would maximize the net present value of recoveries on the
related Mortgage Loan; provided, however, that the Special Servicer shall not
grant any modification or waiver, or permit any amendment of any Mortgage
Loan.
(c) Subject to subsection (b) above, the Special Servicer may
extend the date on which any Balloon Payment is scheduled to be due, without
the consent of the Trustee, the Master Servicer, or any Certificateholder if,
but only if:
(i) any such extension shall be for a period not later
than the Optimal Wind-Down Date and each Modified
Monthly Payment shall be in an amount at least
sufficient to pay interest accrued and principal
payments sufficient to meet the amortization schedule
on the related Mortgage Loan since the immediately
preceding Due Date;
(ii) not more than two delinquencies of 30 days or more
(without regard to any grace period provided for in
the related Note) in respect of any Monthly Payment on
such Mortgage Loan (other than the Balloon Payment)
shall have occurred within the preceding 12 months,
and any such delinquency shall have been cured; and
(iii) the Special Servicer has previously determined in its
reasonable business judgment (and shall furnish an
Officer's Certificate to the Rating Agency certifying
that it has so determined) that (A) such extension is
reasonably likely to produce a greater recovery than
liquidation of the related Mortgage Loan, (B) no
material damage or deferred maintenance exists at the
related Mortgaged Property, (C) the pro forma Debt
Service Coverage Ratio for such Mortgage Loan for the
twelve-month period following such extension is not
less than 1.15, net of the 5% management fee, and (D)
the Borrower is in material compliance with all
applicable federal and state regulations governing the
operation of the related Mortgaged Property.
(d) The Special Servicer must provide that any interest deferred
shall be added to the principal balance of the related Mortgage Loan (and shall
be due on the Maturity Date of such Mortgage Loan, or such earlier date as the
Special Servicer may deem appropriate), and such deferred interest shall accrue
interest at the related Mortgage Interest Rate.
(e) The Special Servicer may, as a condition to granting any
request by a Borrower for consent, modification, waiver or indulgence or any
other matter or thing, the granting of which is not prohibited by the terms of
this Agreement, require that such Borrower pay to the Special Servicer, as
additional servicing compensation, a reasonable or customary fee for the
additional services performed in connection with such request, together with any
related costs and expenses incurred by the Special Servicer, and shall require
that the Borrower reimburse, with Advance Interest, any Servicing Advances made
in connection with such Mortgage Loan. The Special Servicer may collect any
such fee from the Borrower only to the extent the collection of such fee shall
not cause the related consent, modification, waiver or indulgence to be treated
as a "significant modification" of the related Mortgage Note that would be
treated as an exchange under Treas. Reg sec. 1.860g-2(b).
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(f) The Special Servicer shall notify the Trustee, the Rating
Agency and the Master Servicer of any modification, waiver or amendment of
any term of any Mortgage Loan and the date thereof, and shall deliver to the
Custodian for deposit in the related Mortgage File, an original counterpart
of the agreement relating to such modification, waiver or amendment, promptly
following the execution thereof.
(g) Notwithstanding anything to the contrary contained in this
Agreement, the Special Servicer shall not agree to any modification, waiver
or amendment of any term of any Mortgage Loan or any substitution of
collateral unless (x) it has first obtained and delivered to the Trustee and
the Master Servicer an Opinion of Counsel, which shall be obtained at the
expense of the Borrower requesting the modification, and which may be
applicable to more than one transaction or generally to a class or classes of
transactions described therein, to the effect that the proposed modification,
waiver, amendment or substitution will not cause (i) a loss of REMIC status
with respect to either the Upper-Tier REMIC or Lower-Tier REMIC, or (ii) a
gain on the disposition of a Qualified Mortgage which would be subject to the
100% tax on prohibited transactions imposed by Section 860F(a) of the Code
(or equivalent provision of federal, state or local law or ordinance) or
(iii) the Upper-Tier REMIC or Lower-Tier REMIC to be subject to any tax under
the REMIC Provisions or equivalent provisions of federal, state or local law
or ordinance or (y) the Trustee and Special Servicer have received a
Nondisqualification Opinion or ruling from the Internal Revenue Service (at
the expense of the party making the request that the Special Servicer modify
the Mortgage Loan or a Specially Serviced Mortgage Loan) to the effect that
such modification would not be treated as an exchange pursuant to Section
1001 of the Code (or, if it would be so treated, would not be treated as a
"significant modification" for purposes of Treas. Reg. Sec. 1.860G-2(b) of
the Code); PROVIDED HOWEVER, that no such Opinion of Counsel shall be
required for a modification, waiver, amendment or substitution made pursuant
to Section 3.20(c).
(h) The Special Servicer may from time to time permit a Borrower
to substitute collateral for all or a portion of the related Mortgaged
Property or pledge additional collateral for the related Mortgage Loan, or
may release part of the related Mortgaged Property from the lien of the
related Mortgage; PROVIDED, HOWEVER, that the Special Servicer shall have
requested and received an Opinion of Counsel addressed to the Trustee
(obtained at the expense of the Borrower requesting the modification) to the
effect that any such substitution, additional pledge or release of collateral
is permitted hereby and will not cause the related Mortgage Loan to cease to
be a Qualified Mortgage, will not result in the loss of REMIC status with
respect to, or the imposition of any tax upon either the Upper-Tier or the
Lower-Tier REMIC and will not cause the Trust Fund to be required to be
registered under the Investment Company Act of 1940, as amended; and PROVIDED
FURTHER, that (i) such substitution, additional pledge or release is
consistent with the related Mortgage Loan, (ii) the Special Servicer shall
have obtained the prior written confirmation from the Rating Agency that such
substitution, additional pledge or release shall not result in the downgrade,
qualification or withdrawal of the then current ratings assigned to the
outstanding Classes of the Certificates, and (iii) the Special Servicer shall
not permit the Borrower to substitute any collateral pursuant to this Section
3.20 unless the Special Servicer shall have first determined in accordance
with the servicing standard set forth in Section 3.1(a), based upon an
Environmental Assessment prepared by an Independent Person satisfying the
requirements set forth in the first sentence of Section 3.10(d), at the
expense of the Borrower, that such substitute collateral is in compliance
with applicable environmental laws and that there are no circumstances
present at such substitute collateral relating to the use, management or
disposal of any Hazardous Materials for which investigation, testing,
monitoring, containment, clean-up or remediation would be required under any
then effective federal, state or local law or regulation, or, if any such
containment, clean-up or remediation is required, that adequate funds
therefor have been placed in escrow with the Special Servicer by or on behalf
of the Borrower. In the event the Special Servicer intends to permit a
Borrower to substitute collateral for all or any portion of a Mortgaged
Property or pledge additional collateral for the related Mortgage Loan as
permitted hereunder, if the security interest of the Trust Fund in such
collateral would be perfected by possession, or if such collateral requires
special care or protection, then prior to agreeing to such substitution or
addition of collateral, the Special Servicer shall make arrangements for such
possession, care or protection, and prior to agreeing to such substitution or
addition of collateral (or such arrangement for possession, care or
protection) shall obtain the prior written consent of the Trustee, the Master
Servicer (which consent shall not be unreasonably withheld, delayed or
conditioned) and the written confirmation by the Rating Agency with respect
thereto such written confirmation shall
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state that such substitution or addition of collateral shall not result in
the downgrade, qualification or withdrawal of the ratings then assigned to
the Certificates.
(i) The Special Servicer shall have no liability to the Trust
Fund, the Certificateholders or any other Person if its analysis and
determination that the modification, waiver or amendment is reasonably likely
to produce a greater recovery on a present-value basis than liquidation
proves to be wrong or incorrect, so long as the analysis and determination
was made in the good faith reasonable business judgment of the Special
Servicer.
(j) Notwithstanding any other provision of this Agreement (other
than Section 3.20(f) and the last paragraph of Section 10.7), if either the
Special Servicer, the Master Servicer or Certificateholders representing at
least 25% of the Voting Rights submit to the Trustee a proposed amendment of
the provisions of Section 3.20(c) (subject to the written confirmation by the
Rating Agency that such modification, waiver or amendment will not result in
the qualification, downgrade or withdrawal of the rating then assigned to any
Class of Certificates), the Trustee shall submit such proposal to a vote of
the Certificateholders. If submitted to a vote of the Certificateholders,
such proposal shall be deemed to be adopted, and the provisions of Sections
3.20(c) and 3.20(d) shall be amended accordingly, if such proposal receives
the affirmative vote of Certificateholders representing 100% of the Voting
Rights and the Person submitting such proposal shall have obtained at its own
expense and delivered to the Trustee an Opinion of Counsel that neither the
proposed amendments nor the operation of the Trust Fund in accordance
therewith could cause a loss of REMIC status with respect to the Upper-Tier
or Lower-Tier REMIC or any imposition of tax on the Upper-Tier REMIC or
Lower-Tier REMIC under the REMIC Provisions or equivalent provisions of
federal, state or local law or ordinance.
SECTION 3.21 TRANSFER OF SERVICING BETWEEN MASTER SERVICER AND
SPECIAL SERVICER; RECORD KEEPING.
(a) Upon determining that a Servicing Transfer Event has
occurred with respect to any Mortgage Loan, and, to the extent practicable
prior to acceleration of any related Note or commencement of any foreclosure
or similar proceedings, the Master Servicer shall use its best efforts to
provide the Special Servicer with all information, documents (but excluding
the original documents constituting the related Mortgage File) and records
(including records stored electronically on computer tapes, magnetic discs
and the like) in its possession relating to such Mortgage Loan and reasonably
requested by the Special Servicer to enable it to assume its duties hereunder
with respect thereto. The Master Servicer shall use its best efforts to
comply with the preceding sentence within five Business Days of the
occurrence of each related Servicing Transfer Event and in any event shall
continue to act as Master Servicer and administrator of such Mortgage Loan
until the Special Servicer has commenced the servicing of such Mortgage Loan,
which shall occur upon the receipt by the Special Servicer of the
information, documents and records referred to in the preceding sentence.
Notwithstanding anything herein to the contrary, the Special Servicer shall
accept for servicing any Mortgage Loan transferred to it by the Master
Servicer pursuant to this Section 3.21. With respect to each Mortgage Loan
that becomes a Specially Serviced Mortgage Loan, the Master Servicer shall
also instruct the related Borrower to remit all payments in respect of such
Mortgage Loan to the Special Servicer, provided that the payee in respect of
such payments shall remain the Master Servicer.
Upon determining that the Servicing Transfer Event that caused a
Mortgage Loan to become a Specially Serviced Mortgage Loan (other than an REO
Mortgage Loan) has been remedied and has remained remedied for three
consecutive months and no other Servicing Transfer Event has occurred and is
continuing with respect thereto, the Special Servicer shall immediately give
notice thereof to the Master Servicer and upon giving such notice, such
Mortgage Loan shall cease to be a Specially Serviced Mortgage Loan, the
Special Servicer's obligation to service such Mortgage Loan, and its right to
receive the Workout Fee shall terminate and the obligations of the Master
Servicer to service and administer such Mortgage Loan shall resume. In
addition, upon such determination, the Special Servicer shall instruct the
related Borrower to remit all payments in respect of such Specially Serviced
Mortgage Loan directly to the Master Servicer.
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(b) In servicing any Specially Serviced Mortgage Loan, the
Special Servicer shall provide to the Custodian originals, and to the Master
Servicer copies, of documents included within the definition of "Mortgage
File" for inclusion in the related Mortgage File (with a copy of each such
original to the Master Servicer), and copies of any additional related
Mortgage Loan information, including correspondence with the related Borrower.
(c) On or before each Determination Date, the Special Servicer
shall deliver to the Master Servicer a written statement describing, on a
Mortgage Loan by Mortgage Loan basis, (l) the information described in
clauses (v) (c), (vi), (vii), (xi), (xiv), (xv) and (xviii) of Section 4.3 as
to each Specially Serviced Mortgage Loan, (2) the amount of all payments on
account of interest received on each Specially Serviced Mortgage Loan, the
amount of all payments on account of principal, including Principal
Prepayments, received on each Specially Serviced Mortgage Loan, and the
amount of Insurance Proceeds and Liquidation Proceeds received with respect
to each Specially Serviced Mortgage Loan, (3) the amount of net income or net
loss, as determined for federal income tax purposes, resulting from the
operation or management of a trade or business on, or the furnishing or
rendering of a non-customary service to the tenants of, the REO Property
relating to each applicable Specially Serviced Mortgage Loan, in each case in
accordance with Section 3.17(a); and (4) such additional information relating
to the Specially Serviced Mortgage Loans as the Master Servicer reasonably
requests to enable it to perform its duties under this Agreement.
(d) Notwithstanding the provisions of the preceding subsection
(c), the Master Servicer shall maintain ongoing payment records with respect
to each of the Specially Serviced Mortgage Loans and shall provide the
Special Servicer with any information in its possession reasonably required
by the Special Servicer to perform its duties under this Agreement.
SECTION 3.22 P&I ADVANCES.
(a) With respect to any Mortgage Loan (other than a Mortgage
Loan which only has an overdue Balloon Payment), if on any Determination Date
the Special Servicer or the Master Servicer, as applicable, shall not have
received all or any part of the Monthly Payment, unless funded by the
Subservicer, (or Modified Monthly Payment, in the case of a Modified Mortgage
Loan) for the related Due Period with respect to such Mortgage Loan (after
application of all payments and collections on such Mortgage Loan pursuant to
Section 1.2), then, on the Master Servicer Remittance Date, the Master
Servicer shall advance, subject to subsection (c) of this Section 3.22, the
amount of such shortfall with respect to each such Mortgage Loan, unless the
Master Servicer makes a determination, in its reasonable business judgment,
that such P&I Advance (plus interest accrued thereon at the Advance Rate) if
made, would be a Nonrecoverable Advance PROVIDED, HOWEVER, that the Master
Servicer shall reduce any advance of interest with respect to any such
Mortgage Loan as to which an Appraisal Reduction exists by an amount equal to
the amount which would otherwise have been advanced under this sentence but
for the application of this Section 3.22 times a fraction the numerator of
which is the related Appraisal Reduction and the denominator of which is the
Scheduled Principal Balance of such Mortgage Loan (or, if applicable, a
comparable fraction based upon the Appraisal Reduction Estimate).
(b) With respect to any Mortgage Loan (including a Modified
Mortgage Loan which pursuant to its modified terms provides for a Balloon
Payment) which has an overdue Balloon Payment, if on any Determination Date
the Special Servicer or the Master Servicer, as applicable, shall not have
received all or any part of the Assumed Scheduled Payment for the related Due
Period with respect to such Mortgage Loan (after application of all payments
and collections on such Mortgage Loan pursuant to Section 1.2), then, on the
Master Servicer Remittance Date, the Master Servicer shall, subject to
subsection (c) of this Section, advance the amount of such shortfall with
respect to each such Mortgage Loan, unless the Master Servicer makes a
determination, in its reasonable business judgment, that such P&I Advance
(plus interest accrued thereon at the Advance Rate) if made, would be a
Nonrecoverable Advance PROVIDED, HOWEVER, that the Master Servicer shall
reduce any advance payments of interest with respect to any such Mortgage
Loan as to which an Appraisal Reduction exists, an amount equal to the amount
which would otherwise have been advanced under this sentence but for the
application of this clause times a fraction the numerator of which is the
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related Appraisal Reduction and the denominator of which is the Scheduled
Principal Balance of such Mortgage Loan (or, if applicable, a comparable
fraction based upon the Appraisal Reduction Estimate).
(c) [Reserved]
(d) P&I Advances shall be deposited in the Distribution Account
by the Master Servicer not later than the Master Servicer Remittance Date.
(e) The Master Servicer shall be entitled to reimbursement for
any P&I Advances made pursuant to this Section 3.22, plus interest thereon at
the Advance Rate from the date the P&I Advance is made to the date the P&I
Advance is reimbursed.
(f) With respect to any Distribution Date and each Mortgage
Loan, the "Available Advance Reimbursement Amount" shall equal the amount
collected and applied as recoveries of principal and interest (or treated as
recovery of a cost that is or otherwise is an amount that is available to
fund the payment of Advance Interest) due in a Due Period prior to the Due
Period relating to such Distribution Date with respect to such Mortgage Loan,
whether paid by the Mortgagor or otherwise recovered from Late Collections,
Net Liquidation Proceeds, Insurance Proceeds, Condemnation Proceeds, or Net
Income from the related REO Property, or otherwise collected with respect to
the Mortgage Loan or REO Property and applied as a recovery of overdue
principal or interest or reimbursement of the costs of the lender on the
Mortgage Loan or REO Property or, upon a Final Recovery Determination, from
amounts on deposit in the Collection Account.
On each Determination Date, the Master Servicer shall calculate the
outstanding ▇▇▇▇▇▇▇▇▇▇▇▇ ▇&▇ Advance Amount and the Available Advance
Reimbursement Amount for such Determination Date and the related Distribution
Date. On each Distribution Date, the Master Servicer shall be reimbursed in
an amount up to aggregate outstanding ▇▇▇▇▇▇▇▇▇▇▇▇ ▇&▇ Advances and Advance
Interest to the extent of the sum of the Available Advance Reimbursement
Amount for all Mortgage Loans.
(g) Subject to determining that an Advance is a Nonrecoverable
Advance, the Master Servicer or the Trustee shall make P&I Advances or
Servicing Advances required by this Agreement irrespective of any bankruptcy,
insolvency or similar proceedings affecting the Borrower under the related
Mortgage Loan and irrespective of whether such Mortgage Loan has been
foreclosed upon and has become REO Property. Any determination made by the
Master Servicer pursuant to this Section 3.22 that an advance is a
Nonrecoverable Advance shall be evidenced by an Officer's Certificate
delivered to the Trustee two Business Days prior to the related Distribution
Date setting forth the determination of nonrecoverability and the procedure
and considerations of the Master Servicer forming the basis of such
determination.
SECTION 3.23 ACCESS TO CERTAIN DOCUMENTATION.
The Master Servicer shall provide to any Certificateholders that
are federally insured financial institutions, the Federal Reserve Board, the
FDIC and the OTS and the supervisory agents and examiners of such boards and
such corporations, and any other governmental or regulatory body to the
jurisdiction of which any Certificateholder is subject, access to the
documentation regarding the Mortgage Loans required by applicable regulations
of the Federal Reserve Board, FDIC, OTS or any such governmental or
regulatory body and all information forwarded to the Master Servicer
regarding the Mortgage Certificates, such access being afforded without
charge but only upon reasonable request and during normal business hours at
the offices of the Master Servicer. Nothing in this Section 3.23 shall
detract from the obligation of the Master Servicer to observe any applicable
law prohibiting disclosure of information with respect to the Borrowers, and
the failure of the Master Servicer to provide access as provided in this
Section 3.23 as a result of such obligation shall not constitute a breach of
this Section 3.23.
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SECTION 3.24 AUTHENTICATING AGENT.
The Trustee shall appoint an authenticating agent to execute and to
authenticate Certificates, which authenticating agent must be an entity that
is acceptable to the Depositor and the Master Servicer and, further, must
(i) be organized and doing business under the laws of the United States of
America or any state, (ii) have a principal office and place of business in a
state and city acceptable to the Depositor and the Master Servicer, (iii)
have a combined capital and surplus of at least $15,000,000, (iv) be
authorized under the laws of the United States or any state to do a trust
business, and (v) be subject to supervision or examination by federal or
state authorities (such entity, an "Authenticating Agent"). The Trustee
hereby appoints itself as the initial Authenticating Agent.
Any corporation into which the Authenticating Agent may be merged
or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which the
Authenticating Agent shall be party, or any corporation succeeding to the
corporate agency business of the Authenticating Agent, shall be the
Authenticating Agent without the execution or filing of any paper or any
further act on the part of the Trustee or the Authenticating Agent.
The Authenticating Agent may at any time resign by giving at least
30 days' advance written notice of resignation to the Trustee, the Depositor
and the Master Servicer. The Trustee may at any time terminate the agency of
the Authenticating Agent by giving written notice of termination to the
Authenticating Agent, the Depositor and the Master Servicer. Upon receiving
a notice of resignation or upon such a termination, or in case at any time
the Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section 3.24, the Trustee promptly shall appoint a
successor Authenticating Agent, which shall be acceptable to the Master
Servicer and the Depositor, and shall mail notice of such appointment to all
Certificateholders. Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all the rights, powers, duties
and responsibilities of its predecessor hereunder, with like effect as if
originally named as Authenticating Agent herein. No successor Authenticating
Agent shall be appointed unless eligible under the provisions of this Section
3.24.
The Authenticating Agent shall have no responsibility or liability
for any action taken by it as such at the direction of the Trustee. Any
reasonable compensation paid to the Authenticating Agent shall be an
unreimbursable expense of the Trustee and shall not be payable out of the
Trust Fund.
SECTION 3.25 APPOINTMENT OF CUSTODIANS.
The Trustee may appoint one or more Custodians to hold all or a
portion of the Mortgage Files and Mortgage Certificates as agent for the
Trustee. LaSalle National Bank shall serve in the capacity of Custodian
hereunder upon the terms set forth hereby or in a Custodial Agreement and is
hereby appointed as the initial Custodian. The Custodian shall segregate and
maintain continuous custody of all documents constituting the Custodian's
Mortgage File and Mortgage Certificates received in secure and fire resistant
facilities located in the State of Illinois in accordance with customary
standards for such custody. The Trustee agrees to comply with the terms of
this Agreement and any Custodial Agreement and to enforce the terms and
provisions thereof against the Custodian for the benefit of the
Certificateholders. Each Custodian shall be a depository institution subject
to supervision by federal or state authority and shall be qualified to do
business in the jurisdiction in which it holds any Mortgage File or Mortgage
Certificate. Each Custodial Agreement may be amended only as provided in
Section 10.7. Any reasonable compensation paid to the Custodian shall be an
unreimbursable expense of the Trustee and shall not be payable out of the
Trust Fund. Each Custodian shall be required to maintain a fidelity bond and
an errors and omissions insurance policy conforming, in each case, to the
requirements for such fidelity bond and such insurance policy set forth in
Section 3.8(d).
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ARTICLE IV
DISTRIBUTIONS TO CERTIFICATEHOLDERS
SECTION 4.1 DISTRIBUTIONS FROM LOWER-TIER REMIC.
(a) On each Distribution Date, the Trustee shall calculate the
Available Distribution Amount, and the Paying Agent shall distribute such
amount from the Distribution Account (after deducting and paying to the
Trustee the Trustee Fee from amounts on deposit therein) in payment of each
Class of Lower-Tier Interests, subject to Sections 4.1(b), 4.1(c), 4.1(d) and
4.1(e), in the amounts (to the extent sufficient therefor), and in the order
of priority, set forth below:
(i) to the Class AL, Class LR and Class AR-L Interests,
the Accrued Certificate Interest for each such
Class, PRO RATA, based on the respective Accrued
Certificate Interest for each such Class for such
Distribution Date;
(ii) to the Class AL, Class LR and Class AR-L Interests,
PRO RATA, based on the respective Outstanding Class
Interest Shortfall for such Distribution Date, interest
equal to the Outstanding Class Interest Shortfall for
each such Class (for the purpose of this clause, such
amounts shall not include interest at the Class A
Spread Rate on the Certificate Principal Amounts of the
Class AL Interests);
(iii) except as set forth in clause (iv) below, to the Class
AR-L and Class LR Interests, pro rata, the Class AR-L
and Class LR Principal Distribution Amount for such
Distribution Date;
(iv) to the Class AL and Class LR Interest, PRO RATA,
principal equal to the Remaining Principal Distribution
Amount for such Distribution Date, until the
Certificate Principal Amount of the Class AL and Class
LR Interest has been reduced to zero; PROVIDED,
HOWEVER, that if the Available Distribution Amount
remaining after distributions pursuant to clauses (i)
and (ii) is less than the Principal Distribution
Amount, then payments made pursuant to this clause (iv)
and clause (iii) shall be PRO RATA;
(v) until the Certificate Principal Amounts of the Class
AL, Class LR and Class AR-L Interests have been reduced
to zero, to the Class AL, Class LR and Class AR-L
Interests, PRO RATA, to reimburse the Holders of such
Lower-Tier Interests for the unreimbursed amounts of
Realized Losses of principal, if any, previously
allocated thereto, together with interest thereon at
the applicable Pass-Through Rate from the date such
Realized Loss was allocated thereto through the close
of the Interest Accrual Period related to the
Distribution Date on which such Realized Loss is
reimbursed (for the purpose of this clause, such
amounts shall not include interest at the Class A
Spread Rate on the unreimbursed amounts of such
Realized Losses previously allocated to the Class AL,
Class LR and Class AR-L Interests, respectively);
(vi) to the Class BL Interest, interest equal to the Accrued
Certificate Interest thereon;
(vii) to the Class BL Interest, interest equal to the
Outstanding Class Interest Shortfall of such Class (for
the purpose of this clause, such amount shall not
include interest
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at the Class B Spread Rate on the Certificate
Principal Amount of the Class BL Interest);
(viii) after the aggregate Certificate Principal Amount of the
Class AL Interest has been reduced to zero, to the
Class BL Interest, principal equal to the Remaining
Principal Distribution Amount for such Distribution
Date (less the portion thereof distributed on such
Distribution Date pursuant to any preceding clause)
until the Certificate Principal Amount of the Class BL
Interest has been reduced to zero;
(ix) until the Certificate Principal Amount thereof has been
reduced to zero, to the Class BL Interest, to reimburse
the Holder of the Class BL Interest for the
unreimbursed amounts of Realized Losses of principal,
if any, previously allocated thereto, together with
interest thereon at the applicable Pass-Through Rate
from the date such Realized Loss was allocated thereto
through the close of the Interest Accrual Period
related to the Distribution Date on which such Realized
Loss is reimbursed (for the purpose of this clause,
such amount shall not include interest at the Class B
Spread Rate on the unreimbursed amounts of such
Realized Losses previously allocated to the Class BL
Interest);
(x) to the Class CL Interest, interest equal to the Accrued
Certificate Interest for such Distribution Date;
(xi) to the Class CL Interest, interest equal to the
Outstanding Class Interest Shortfall of such Class (for
the purpose of this clause, such amount shall not
include interest at the Class C Spread Rate on the
Certificate Principal Amount of the Class CL Interest);
(xii) after the aggregate Certificate Principal Amount of the
Class AL and Class BL Interest have been reduced to
zero, to the Class CL Interest, principal equal to the
Remaining Principal Distribution Amount for such
Distribution Date (less the portion thereof distributed
on such Distribution Date pursuant to any preceding
clause) until the Certificate Principal Amount of the
Class CL Interest has been reduced to zero;
(xiii) until the Certificate Principal Amount thereof has been
reduced to zero, to the Class CL Interest, to reimburse
the Holder of the Class CL Interest for the
unreimbursed amounts of Realized Losses of principal,
if any, previously allocated thereto, together with
interest thereon at the applicable Pass-Through Rate
from the date such Realized Loss was allocated thereto
through the close of the Interest Accrual Period
related to the Distribution Date on which such Realized
Loss is reimbursed (for the purpose of this clause,
such amount shall not include interest at the Class C
Spread Rate on the unreimbursed amounts of such
Realized Losses previously allocated to the Class CL
Interest);
(xiv) to the Class DL Interest, interest equal to the Accrued
Certificate Interest for such Distribution Date;
(xv) to the Class DL Interest, interest equal to the
Outstanding Class Interest Shortfall of such Class (for
the purpose of this clause, such amount shall not
include interest
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at the Class D Spread Rate on the Certificate
Principal Amount of the Class DL Interest);
(xvi) after the aggregate Certificate Principal Amount of the
Class AL, Class BL and Class CL Interests have been
reduced to zero, to the Class DL Interest, principal
equal to the Remaining Principal Distribution Amount
for such Distribution Date (less the portion thereof
distributed on such Distribution Date pursuant to any
preceding clause) until the Certificate Principal
Amount of the Class DL Interest has been reduced to
zero;
(xvii) until the Certificate Principal Amount thereof has been
reduced to zero, to the Class DL Interest, to reimburse
the Holder of the Class DL Interest for the
unreimbursed amounts of Realized Losses of principal,
if any, previously allocated thereto, together with
interest thereon at the applicable Pass-Through Rate
from the date such Realized Loss was allocated thereto
through the close of the Interest Accrual Period
related to the Distribution Date on which such Realized
Loss is reimbursed (for the purpose of this clause,
such amount shall not include interest at the Class D
Spread Rate on the unreimbursed amounts of such
Realized Losses previously allocated to the Class DL
Interest);
(xviii) to the Class EL Interest, interest equal to the Accrued
Certificate Interest for such Distribution Date;
(xix) to the Class EL Interest, interest equal to the
Outstanding Class Interest Shortfall of such Class;
(xx) after the aggregate Certificate Principal Amount of the
Class AL, Class BL, Class CL and Class DL Interests
have been reduced to zero, to the Class EL Interest,
principal equal to the Remaining Principal Distribution
Amount for such Distribution Date (less the portion
thereof distributed on such Distribution Date pursuant
to any preceding clause) until the Certificate
Principal Amount of the Class EL Interest has been
reduced to zero;
(xxi) until the Certificate Principal Amount thereof has been
reduced to zero, to the Class EL Interest, to reimburse
the Holder of the Class EL Interest for the
unreimbursed amounts of Realized Losses of principal,
if any, previously allocated thereto, together with
interest thereon at the applicable Pass-Through Rate
from the date such Realized Loss was allocated thereto
through the close of the Interest Accrual Period
related to the Distribution Date on which such Realized
Loss is reimbursed;
(xxii) to the Class FL Interest, interest equal to the Accrued
Certificate Interest of such Distribution Date;
(xxiii) to the Class FL Interest, interest equal to the
Outstanding Class Interest Shortfall of such Class;
(xxiv) after the aggregate Certificate Principal Amount of the
Class AL, Class BL, Class CL, Class DL and Class EL
Interests have been reduced to zero, to the Class FL
Interest, principal equal to the Remaining Principal
Distribution Amount for such Distribution Date (less
the portion thereof distributed on such Distribution
Date
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pursuant to any preceding clause) until the Certificate
Principal Amount of the Class FL Interest has been
reduced to zero;
(xxv) until the Certificate Principal Amount thereof has been
reduced to zero, to the Class FL Interests, to
reimburse Holders of the Class FL Interests for the
unreimbursed amounts of Realized Losses of principal,
if any, previously allocated thereto, together with
interest thereon at the applicable Pass-Through Rate
from the date such Realized Loss was allocated thereto
through the close of the Interest Accrual Period
related to the Distribution Date on which such Realized
Loss is reimbursed;
(xxvi) to the Class GL and Class X-1L Interests, interest
equal to the Accrued Certificate Interest of such
Distribution Date and to the Class AL, Class BL, Class
CL and Class DL Interests an amount of accrued interest
equal to the applicable Spread Rate times the
Certificate Principal Amount of such Certificates, PRO
RATA, for such Distribution Date;
(xxvii) to the Class GL and Class X-1L Interests, interest
equal to the Outstanding Class Interest Shortfall of
such Classes and to the Class AL, Class BL, Class CL,
Class DL and Class EL Interests, interest equal to the
portion of the Outstanding Class Interest Shortfall
equal to any accrued interest distributable pursuant to
clause (xxvi) that was not distributed pursuant to such
clause or this clause on previous Distribution Dates;
(xxviii) after the aggregate Certificate Principal Amount of the
Class AL, Class BL, Class CL, Class DL, Class EL and
Class FL Interests have been reduced to zero, to the
Class GL Interest, principal equal to the Remaining
Principal Distribution Amount for such Distribution
Date (less the portion thereof distributed on such
Distribution Date pursuant to any preceding clause)
until the Certificate Principal Amount of the Class GL
Interest has been reduced to zero;
(xxix) until the Certificate Principal Amount thereof has been
reduced to zero, to the Class GL Interests, to
reimburse Holders of the Class GL Interests for the
unreimbursed amount of Realized Losses of principal, if
any, previously allocated thereto, together with
interest thereon at the applicable Pass-Through Rate
from the date such Realized Loss was allocated thereto
through the close of the Interest Accrual Period
related to the Distribution Date on which such Realized
Loss is reimbursed; and
(xxx) to the extent of any remaining funds, to the Class AL
and Class AR-L Interests and the Class LR Certificates,
PRO RATA and then to the Class BL, Class CL, Class DL,
Class EL, Class FL and Class GL Interests, in that
order of priority, in payment of any amounts remaining
due thereon.
(b) The Holders of the Class LR Certificates will be entitled to
receive distributions, pro rata, on each Distribution Date, equal to any
funds remaining in the Distribution Account after payment in full of the
other Classes of Lower-Tier Interests. Amounts payable to the Holders of the
Class LR Certificates shall rank PARI PASSU with distributions to the Holder
of the Class AL and Class AR-L Interests. Accordingly, in the case of any
shortfall in amounts available to make payments to all such classes the
Holder of the Class AL Interest will share on a pari passu basis with both
the Class LR Certificates and the Class AR-L Interest.
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(c) On each Distribution Date, the Paying Agent shall, from
funds on deposit in the Distribution Account, (i) deposit, in immediately
available funds, by wire transfer or otherwise, into the Upper-Tier
Distribution Account the Lower-Tier distribution amount (other than amounts
distributable to the Holders of the Class LR Certificates) and (ii)
distribute to the Holders of the Class LR Certificates (other than as
provided in Section 9.1 respecting the final distributions to
Certificateholders) by check mailed to such Holders at the addresses of such
Holders appearing in the Certificate Register, the amount distributable with
respect to the Class LR Certificates pursuant to Section 4.1(b). All amounts
distributable to Holders of the Class LR Certificates pursuant to clause (ii)
of the preceding sentence on each Distribution date shall be allocated PRO
RATA among the outstanding Certificates of such Class based on the Percentage
Interests of each Holder of Class LR Certificates.
(d) On any Distribution Date on which there is a Net Prepayment
Interest Shortfall, or with respect to any Certificate Mortgage Loan, the
portion of any prepayment interest shortfalls related to Certificate Mortgage
Loans which have been allocated to the Mortgage Certificates and which
occurred during the prepayment period applicable to the Mortgage
Certificates, or a Realized Loss of interest, such Net Prepayment Interest
Shortfall or Realized Loss of interest shall be allocated, in each case to
the extent of amounts otherwise distributable thereon on such Distribution
Date, first, to the Class GL and Class X-1L Interests, then to the Class FL
Interest (but only to the extent of the Spread Rate thereon), then to the
Class EL Interest (but only to the extent of the Spread Rate thereon), then
to the Class DL Interest (but only to the extent of the Spread Rate thereon),
then to the Class CL Interest (but only to the extent of the Spread Rate
thereon), then to the Class BL Interest (but only to the extent of the Spread
Rate thereon), PRO RATA, in proportion to the related Accrued Certificate
Interest otherwise payable thereon; second, to the Class FL Interest (to the
extent of the remaining related Accrued Certificate Interest); third, to the
Class EL Interest (to the extent of the remaining related Accrued Certificate
Interest); fourth, to the Class DL Interest (to the extent of the remaining
related Accrued Certificate Interest); fifth, to the Class CL Interest (to
the extent of the remaining related Accrued Certificate Interest); sixth to
the Class BL Interest (to the extent of the remaining related Accrued
Certificate Interest); and seventh, to the Class AL and Class AR-L Interests
and the Class LR Certificates, PRO RATA in proportion to the remaining
related Accrued Certificate Interest otherwise payable thereon.
(e) On each Distribution Date, Realized Losses of principal
shall be allocated in the following order of priority:
(i) to reduce the Certificate Principal Amount of the Class
GL Interest to zero;
(ii) to reduce the Certificate Principal Amount of the Class
FL Interest to zero;
(iii) to reduce the Certificate Principal Amount of the Class
EL Interest to zero;
(iv) to reduce the Certificate Principal Amount of the Class
DL Interest to zero;
(v) to reduce the Certificate Principal Amount of the Class
CL Interest to zero;
(vi) to reduce the Certificate Principal Amount of the Class
BL Interest to zero; and
(vii) to reduce the Certificate Principal Amount of the Class
AL and Class AR-L Interests and the Class LR
Certificates, PRO RATA in proportion to their original
Certificate Principal Amounts, to zero.
(f) Any Realized Losses or Net Prepayment Interest Shortfalls
allocated to a Class of Lower-Tier Interests pursuant to Section 4.1(d) or
4.1(e) shall reduce the amount payable to such Class pursuant to Section
4.1(a) or 4.1(b). As of any date, the Certificate Principal Amount of each
Lower-Tier Interest is intended to equal the
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Certificate Principal Amount of the respective Corresponding Upper-Tier
Class, and it is intended that allocations of Realized Losses of principal
shall cause such Certificate Principal Amounts to remain equal.
SECTION 4.2 DISTRIBUTIONS FROM UPPER-TIER REMIC.
(a) On each Distribution Date, the amounts distributed on the
Lower-Tier Interests (other than the Class LR Certificates) will be distributed
by the Paying Agent to the holders of the Upper-Tier Certificates, subject to
Sections 4.2(d), 4.2(e), 4.2(f) and 4.2(g), in respect of each Class of
Certificates in the amounts (to the extent sufficient therefor), and in the
order of priority, set forth below:
(i) to the Class A and Class R Certificates, the Accrued
Certificate Interest for each such Class, PRO RATA,
based on the respective Accrued Certificate Interest
for each such Class for such Distribution Date;
(ii) to the Class A and Class R Certificates, PRO RATA,
based on the respective Outstanding Class Interest
Shortfall for such Distribution Date, interest equal to
the Outstanding Class Interest Shortfall for each such
Class;
(iii) except as set forth in clause (iv) below, to the Class
R Certificates, pro rata, the Class R Principal
Distribution Amount for such Distribution Date;
(iv) to the Class A Certificates, principal equal to the
Remaining Principal Distribution Amount for such
Distribution Date, until the Certificate Principal
Amount of the Class A Certificates has been reduced to
zero; PROVIDED, HOWEVER, that if the Available
Distribution Amount remaining after distributions
pursuant to clauses (i) and (ii) is less than the
Principal Distribution Amount, then payments made
pursuant to this clause (iv) and clause (iii) shall be
PRO RATA;
(v) until the Certificate Principal Amount of the Class A
and Class R Certificates have been reduced to zero, to
the Class A Certificates and Class R Certificates, PRO
RATA, to reimburse the Holders of such Certificates for
the unreimbursed amounts of Realized Losses of
principal, if any, previously allocated thereto,
together with interest thereon at the applicable Pass-
Through Rate from the date such Realized Loss was
allocated thereto through the close of the Interest
Accrual Period related to the Distribution Date on
which such Realized Loss is reimbursed;
(vi) to the Class B Certificates, interest equal to the
Accrued Certificate Interest thereon;
(vii) to the Class B Certificates, interest equal to the
Outstanding Class Interest Shortfall of such Class;
(viii) after the aggregate Certificate Principal Amount of the
Class A Certificates has been reduced to zero, to the
Class B Certificates, principal equal to the Remaining
Principal Distribution Amount for such Distribution
Date (less the portion thereof distributed on such
Distribution Date pursuant to any preceding clause)
until the Certificate Principal Amount of the Class B
Certificates has been reduced to zero;
(ix) until the Certificate Principal Amount thereof has been
reduced to zero, to the Class B Certificates, to
reimburse the Holders of the Class B Certificates for
the
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unreimbursed amounts of Realized Losses of principal,
if any, previously allocated thereto, together with
interest thereon at the applicable Pass-Through Rate
from the date such Realized Loss was allocated thereto
through the close of the Interest Accrual Period
related to the Distribution Date on which such Realized
Loss is reimbursed;
(x) to the Class C Certificates, interest equal to the
Accrued Certificate Interest for such Distribution
Date;
(xi) to the Class C Certificates, interest equal to the
Outstanding Class Interest Shortfall of such Class;
(xii) after the aggregate Certificate Principal Amount of the
Class A and Class B Certificates have been reduced to
zero, to the Class C Certificates, principal equal to
the Remaining Principal Distribution Amount for such
Distribution Date (less the portion thereof distributed
on such Distribution Date pursuant to any preceding
clause) until the Certificate Principal Amount of the
Class C Certificates has been reduced to zero;
(xiii) until the Certificate Principal Amount thereof has been
reduced to zero, to the Class C Certificates, to
reimburse Holders of the Class C Certificates for the
unreimbursed amounts of Realized Losses of principal,
if any, previously allocated thereto, together with
interest thereon at the applicable Pass-Through Rate
from the date such Realized Loss was allocated thereto
through the close of the Interest Accrual Period
related to the Distribution Date on which such Realized
Loss is reimbursed;
(xiv) to the Class D Certificates, interest equal to the
Accrued Certificate Interest for such Distribution
Date;
(xv) to the Class D Certificates, interest equal to the
Outstanding Class Interest Shortfall of such Class;
(xvi) after the aggregate Certificate Principal Amount of the
Class A, Class B and Class C Certificates have been
reduced to zero, to the Class D Certificates, principal
equal to the Remaining Principal Distribution Amount
for such Distribution Date (less the portion thereof
distributed on such Distribution Date pursuant to any
preceding clause) until the Certificate Principal
Amount of the Class D Certificates has been reduced to
zero;
(xvii) until the Certificate Principal Amount thereof has
previously been reduced to zero, to the Class D
Certificates, to reimburse Holders of the Class D
Certificates for the unreimbursed amounts of Realized
Losses of principal, if any, previously allocated
thereto, together with interest thereon at the
applicable Pass-Through Rate from the date such
Realized Loss was allocated thereto through the close
of the Interest Accrual Period related to the
Distribution Date on which such Realized Loss is
reimbursed;
(xviii) to the Class E Certificates, interest equal to the
Accrued Certificate Interest for such Distribution
Date;
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(xix) to the Class E Certificates, interest equal to the
Outstanding Class Interest Shortfall of such Class;
(xx) after the aggregate Certificate Principal Amount of the
Class A, Class B, Class C and Class D Certificates have
been reduced to zero, to the Class E Certificates,
principal equal to the Remaining Principal Distribution
Amount for such Distribution Date (less the portion
thereof distributed on such Distribution Date pursuant
to any preceding clause) until the Certificate
Principal Amount of the Class E Certificates has been
reduced to zero;
(xxi) until the Certificate Principal Amount thereof has been
reduced to zero, to the Class E Certificates, to
reimburse Holders of the Class E Certificates for the
unreimbursed amounts of Realized Losses of principal,
if any, previously allocated thereto, together with
interest thereon at the applicable Pass-Through Rate
from the date such Realized Loss was allocated thereto
through the close of the Interest Accrual Period
related to the Distribution Date on which such Realized
Loss is reimbursed;
(xxii) to the Class F Certificates, interest equal to the
Accrued Certificate Interest for such Distribution
Date;
(xxiii) to the Class F Certificates, interest equal to the
Outstanding Class Interest Shortfall of such Class;
(xxiv) after the aggregate Certificate Principal Amount of the
Class A, Class B, Class C, Class D and Class E
Certificates have been reduced to zero, to the Class F
Certificates, principal equal to the Remaining
Principal Distribution Amount for such Distribution
Date (less the portion thereof distributed on such
Distribution Date pursuant to any preceding clause)
until the Certificate Principal Amount of the Class F
Certificates has been reduced to zero;
(xxv) until the Certificate Principal Amount of the Class F
Certificates has been reduced to zero, to the Class F
Certificates, to reimburse Holders of the Class F
Certificates for the unreimbursed amounts of Realized
Losses of principal, if any, previously allocated
thereto, together with interest thereon at the
applicable Pass-Through Rate from the date such
Realized Loss was allocated thereto through the close
of the Interest Accrual Period related to the
Distribution Date on which such Realized Loss is
reimbursed;
(xxvi) to the Class G, Class X-1 and Class X-2 Certificates,
PRO RATA, interest equal to the Accrued Certificate
Interest for such Distribution Date;
(xxvii) to the Class G, Class X-1 and Class X-2 Certificates,
PRO RATA, interest equal to the Outstanding Class
Interest Shortfall of such Class;
(xxviii) after the aggregate Certificate Principal Amount of the
Class A, Class B, Class C, Class D, Class E and Class F
have been reduced to zero, to the Class G Certificates,
principal equal to the Remaining Principal Distribution
Amount of such Distribution Date (less the portion
thereof distributed on such Distribution Date
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pursuant to any preceding clause) until the Certificate
Principal Amount of the Class G Certificates has been
reduced to zero;
(xxix) until the Certificate Principal Amount of the Class G
Certificates has been reduced to zero, to the Class G,
Class X-1 and Class X-2 Certificates, PRO RATA, to
reimburse Holders of the Class G, Class X-1 and Class
X-2 Certificates for the unreimbursed amounts of
Realized Losses of principal, if any, previously
allocated thereto, together with interest thereon at
the applicable Pass-Through Rate from the date such
Realized Loss was allocated thereto through the close
of the Interest Accrual Period related to the
Distribution Date on which such Realized Loss is
reimbursed;
(xxx) to the extent of any remaining funds, to the Class A
and Class R Certificates PRO RATA, and then to the
Class B, Class C, Class D, Class E, Class F and Class G
Certificates, in that order of priority, in payment of
any amounts remaining due thereon; and
(xxxi) to the extent of any remaining funds, to the Class R
Certificates, pro rata, any funds remaining in the
Upper-Tier Distribution Account.
(b) On each Distribution Date, the Paying Agent shall, from
funds available on deposit in the Upper-Tier Distribution Account, distribute
to each Certificateholder of record (other than the Holders of Class LR
Certificates) on the preceding Record Date such Holder's PRO RATA share
(based on the aggregate of the Percentage Interests represented by
Certificates held by such Holder) of the amount distributable with respect to
such Certificates. Any amount remaining in the Upper-Tier Distribution
Account on a Distribution Date after all other distributions to the Holders
of the Upper-Tier Certificates have been made shall be distributed on a PRO
RATA basis to the Holders of the Class R Certificates.
All amounts distributable to a Class of Certificates pursuant to
this Section 4.2(b) on each Distribution Date shall be allocated PRO RATA
among the outstanding Certificates of each such Class based on their
respective Percentage Interests. Such distributions shall be made on each
Distribution Date other than the Termination Date to each Certificateholder
of record on the related Record Date by check mailed by first-class mail to
the address set forth therefor in the Certificate Register or, provided that
such Certificateholder has provided the Paying Agent with wire instructions
in writing at least five Business Days prior to the related Record Date, by
wire transfer of immediately available funds to the account of such
Certificateholder at a bank or other entity located in the United States and
having appropriate facilities therefor. The final distribution on each
Certificate shall be made in like manner, but only upon presentment and
surrender of such Certificate at the Corporate Trust Office or such other
location specified in the notice to Certificateholders of such final
distribution. The Trustee or its agent may clear and terminate the Upper-Tier
Distribution Account pursuant to Section 9.1.
(c) Notwithstanding the foregoing, in no event shall
distributions of principal be made to the Holders of Class A, Class R, Class
B, Class C, Class D, Class E, Class F and Class G Certificates after the
respective Certificate Principal Amounts thereof have been reduced to zero,
unless such reduction resulted from the allocation of Realized Losses of
principal, in which case principal distributions shall continue to be made to
the applicable Class or Classes of Certificates until such Realized Losses
have been reimbursed.
(d) Except as otherwise provided in Section 9.1(f) with respect
to an Anticipated Termination Date, the Trustee shall, no later than the
fifth Business Day following the Determination Date in the month preceding
the month in which the final distribution with respect to any Class of
Certificates is expected to be made, mail to each Holder of such Class of
Certificates and the Rating Agency on such date a notice to the effect that:
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(A) the Trustee reasonably expects, based upon information
previously provided to it, that the final distribution with respect to such
Class of Certificates will be made on such Distribution Date, but only upon
presentation and surrender of such Certificates at the office or agency of
the Trustee therein specified, and
(B) if such final distribution is made on such Distribution
Date, no interest shall accrue on such Certificates from and after the end
of the Interest Accrual Period immediately preceding such Distribution
Date.
Any funds not distributed to any Holder or Holders of Certificates of such
Class on such Distribution Date because of the failure of such Holder or
Holders to tender their Certificates shall, on such date, be set aside and
held in trust for the benefit of the appropriate nontendering Holder or
Holders. If any Certificates as to which notice has been given pursuant to
this Section 4.2(d) shall not have been surrendered for cancellation within
six months after the date specified in such notice, the Trustee shall mail a
second notice to the remaining nontendering Certificateholders to surrender
their Certificates for cancellation to receive the final distribution with
respect thereto. The costs and expenses of holding such funds in trust and
of contacting such Certificateholders shall be paid out of such funds. If
after the second notice any such Certificates shall not have been surrendered
for cancellation, the Trustee shall continue to hold such amounts for the
benefit of such Holders until the earlier of (i) its termination as Trustee
hereunder and the transfer of such amounts to a successor Trustee or (ii) the
termination of the Trust Fund, which termination shall occur six months after
the mailing of the second notice (or such later time as might be required by
applicable state law). Any funds not distributed to Certificateholders
pursuant to this Section 4.2(d) upon the termination of the Trust Fund shall
become the property of the Class R Certificateholder. No interest shall
accrue or be payable to any Certificateholder on any amount held in trust
hereunder as a result of such Certificateholder's failure to surrender its
Certificate(s) for final payment thereof in accordance with this Section
4.2(d). Any such amounts held by the Trustee shall not be invested.
(e) On any Distribution Date on which there is a Net Prepayment
Interest Shortfall or Realized Loss of interest allocated to any Class of
Lower-Tier Interests, such Net Prepayment Interest Shortfall or Realized Loss
of interest shall be allocated to the Corresponding Class or Classes of
Upper-Tier Certificates, in each case to the extent of amounts otherwise
distributable thereon on such Distribution Date. For purposes of such
calculation the Class X-2 Certificates shall be the "Corresponding Class" to
the Class AL, Class BL, Class CL and Class DL Interests to the extent of the
portion of the Accrued Certificate Interest equal to the applicable Spread
Rate times the Certificate Principal Amount of such Certificates.
(f) On any Distribution Date on which there is a Realized Loss
of principal allocated to any Class of Lower-Tier Interests, such Realized
Loss of principal shall be allocated to the Corresponding Class or Classes of
Upper-Tier Certificates to the extent of amounts otherwise distributable
thereon on such Distribution Date and to the extent of the Certificate
Principal Amount of such Class.
(g) Any Realized Losses or Net Prepayment Interest Shortfalls
allocated to a Class of Upper-Tier Certificates pursuant to Section 4.2(e) or
4.2(f) shall reduce the amount payable to such Class pursuant to Section
4.2(a). As of any date, the Certificate Principal Amount of each Upper-Tier
Certificate is intended to equal the Certificate Principal Amount of the
respective Corresponding Lower-Tier Interest, and it is intended that
allocations of Realized Losses of principal cause such Certificate Principal
Amounts to remain equal.
(h) On each Distribution Date, the Trustee (or the Paying Agent
on behalf of the Trustee) shall withdraw from the Upper-Tier Distribution
Account all amounts then on deposit therein that represent Prepayment
Premiums collected on Mortgage Loans during the Prepayment Period for such
Distribution Date, and shall distribute such Prepayment Premiums, in addition
to the Available Distribution Amount for such Distribution Date, to the
Holders of the Class X-1 Certificates.
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SECTION 4.3 STATEMENTS TO CERTIFICATEHOLDERS.
On each Distribution Date, the Trustee shall, based upon the
information set forth in the report prepared by the Master Servicer and Special
Servicer with respect to such Distribution Date, prepare and forward by mail to
each Certificateholder, with copies to the Depositor, the Special Servicer, the
Paying Agent and the Initial Purchaser, a statement as to such distribution
setting forth:
(i) the amount, if any, of such distribution to the Holders
of Class A, Class R, Class LR, Class B, Class C,
Class D, Class E, Class F and Class G Certificates
applied to reduce the respective Certificate Principal
Amounts thereof and the amount, if any, of Realized
Losses allocated to the Holders of each such Class and
applied to reduce the respective Certificate Principal
Amounts thereof;
(ii) the amount of such distribution to Holders of
Certificates of each Class, allocable to (a) Accrued
Certificate Interest and (b) any Outstanding Class
Interest Shortfall for each such Class;
(iii) the amount of Realized Losses and Net Prepayment
Interest Shortfalls, if any, allocated to each Class;
(iv) the aggregate Scheduled Principal Balance of the
Mortgage Loans and outstanding principal balance of the
Mortgage Certificates as of the Determination Date
preceding such Distribution Date;
(v) the number and aggregate Scheduled Principal Balance of
Mortgage Loans as of the Determination Date preceding
such Distribution Date (a) delinquent one month, (b)
delinquent two or more months and (c) as to which
foreclosure proceedings have been commenced;
(vi) with respect to any Mortgage Loan that became an REO
Mortgage Loan during the related Prepayment Period, the
principal balance of such Mortgage Loan as of the date
it became an REO Mortgage Loan;
(vii) as of the Determination Date preceding such
Distribution Date (a) the book value of any REO Account
Property, (b) as to any REO Property sold during the
related Prepayment Period, the date of the related
Final Recovery Determination, the amount of the
proceeds of such sale deposited into the REO Account
and the amount of Net REO Proceeds from such sale
deposited to the Collection Account, and (c) the
aggregate amount of other revenues collected by the
Special Servicer with respect to each REO Account
Property during the related Prepayment Period and
credited to the REO Account and Collection Account for
each such REO Account Property, in each case
identifying such REO Property by the Loan Number of the
related Mortgage Loan;
(viii) the aggregate Certificate Principal Amounts of the
Class A, Class R, Class LR, Class B, Class C, Class D,
Class E, Class F, Class G Certificates, before and
after giving effect to the distribution in respect of
principal and allocation of Realized Losses in
reduction of Certificate Principal Amounts on such
Distribution Date;
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(ix) the aggregate amount of Principal Prepayments received
during the related Prepayment Period;
(x) the Certificate Factor with respect to each Class of
Certificates applicable to such Distribution Date;
(xi) a description prepared by the Special Servicer and
forwarded to the Master Servicer of any modifications,
waivers, amendments or consents with respect to the
Mortgage Loans during the related Prepayment Period and
the bases therefor, including descriptions for any
Balloon Mortgage Loan whose maturity date has been
extended;
(xii) the number of outstanding Mortgage Loans as of the
related Determination Date;
(xiii) the aggregate amount of Servicing Fees retained by or
paid to the Master Servicer in respect of the related
Due Period;
(xiv) the aggregate amount of the Special Servicer Fee
retained by or paid to the Special Servicer in respect
of the related Due Period as the Basic Fee and as the
Workout Fee, as the case may be;
(xv) the amount of Realized Losses, if any, incurred during
the related Prepayment Period with respect to the
Mortgage Loans and the Mortgage Certificates;
(xvi) the aggregate Outstanding Class Interest Shortfall, if
any, for each Class of Certificates after giving effect
to the distributions made on such Distribution Date for
each Class of Certificates;
(xvii) with respect to each Mortgage Loan that is a Specially
Serviced Mortgage Loan, the Loan Number, the name of
the related Mortgaged Property;
(xviii) the amount of any Appraisal Reductions effected during
the related Due Period and the total Appraisal
Reductions as of such Distribution Date on a Mortgage
Loan-by-Mortgage Loan basis identifying each such
Mortgage Loan by Loan Number; and
(xix) any monthly report prepared with respect to the
Mortgage Certificates that the Trustee receives as the
holder of the Mortgage Certificates.
In the case of information furnished pursuant to subclauses (i),
(ii), (iii), (viii) and (xvi) above, the amounts shall be expressed as a
dollar amount in the aggregate for all Certificates of each applicable Class
and for each Class A, Class R, Class LR, Class B, Class C, Class D, Class E,
Class F or Class G Certificate with an initial Certificate Principal Amount
(or notional principal amount) of $1,000.
In addition, the Trustee shall forward to any Certificateholder
within five Business Days following a request therefor by such
Certificateholder, a copy of the most recent update of the information
contained in Exhibit B hereto with respect to the Mortgage Loan Schedule and
Exhibit K hereto with respect to the Mortgaged Property Schedule.
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The Trustee shall make available to Persons who have obtained an
account number on the Trustee's ASAP (Automatic Statements Accessed by Phone)
System (or similar system), the reports described above in this Section 4.3
and a summary report of Certificate Factors via automated facsimile. The
Trustee shall make available, upon request, to Certificateholders,
Certificate Owners identified to the reasonable satisfaction of the Trustee,
the Depositor, the Initial Purchaser, the Master Servicer, the Special
Servicer and the Rating Agency account numbers on the Trustee's ASAP System
(or a similar system). In addition, if the Depositor so directs the Trustee
and on terms acceptable to the Trustee, the Trustee will make available
through its electronic bulletin board system, on a confidential basis, such
information related to the Mortgage Loans as the Depositor may reasonably
request. A directory has been set up on the bulleting board in which an
electronic file is stored containing monthly servicer data. All files shall
be password protected. Passwords to each file will be released by the
Trustee, upon request, to Certificateholders and Certificate Owners
identified to the reasonable satisfaction of the Trustee, the Depositor, the
Initial Purchaser, the Master Servicer, the Special Servicer and the Rating
Agency. The Trustee also maintains a site on the Internet at ▇▇▇.▇▇▇▇▇▇.▇▇▇
at which certain of the above information will be available.
Within 90 days after the end of each calendar year, the Trustee
shall furnish to each Person who at any time during the calendar year was a
Holder of a Class A, Class R, Class LR, Class B, Class C, Class D, Class E,
Class F, Class G, Class X-1 or X-2 Certificate a statement containing the
information set forth in subclauses (i), (ii), (iii) and (xvi) above, in
addition to information contained in Exhibit B and Exhibit K updated for such
period, aggregated for such calendar year or applicable portion thereof
during which such Person was a Certificateholder. Such obligation of the
Trustee shall be deemed to have been satisfied to the extent that
substantially comparable information shall be provided by the Trustee
pursuant to any requirements of the Code as from time to time in force.
On each Distribution Date, the Trustee shall forward to each Holder
of a Class R or Class LR Certificate and to the Master Servicer and the
Special Servicer a copy of the reports forwarded to the Class A, Class B,
Class C, Class D, Class E, Class F, Class G, Class X-1 and Class X-2
Certificateholders on such Distribution Date and a statement setting forth
the amounts, if any, actually distributed with respect to the Class R or
Class LR Certificates on such Distribution Date.
Within a reasonable period of time after the end of each calendar
year, the Trustee shall furnish to each Person who at any time during the
calendar year was a Holder of a Class R or Class LR Certificate a statement
containing the information provided pursuant to the previous paragraph
aggregated for such calendar year or applicable portion thereof during which
such Person was holding such Certificate.
SECTION 4.4 COMPLIANCE WITH WITHHOLDING REQUIREMENTS.
Notwithstanding any other provision of this Agreement, the Trustee
shall comply with all federal withholding requirements with respect to
payments to Certificateholders of interest or original issue discount that
the Trustee reasonably believes are applicable under the Code. The consent
of Certificateholders shall not be required for any such withholding.
Without limiting the foregoing, the Trustee agrees that it will not withhold
with respect to payments of interest or original issue discount in the case
of a Certificateholder that has furnished or caused to be furnished an
effective Form W-8 or an acceptable substitute form or a successor form and
who is not, as evidenced by a written certification from such
Certificateholder to the Trustee, a "10-percent shareholder" within the
meaning of Code Section 871(h)(3)(B) or a "controlled foreign corporation"
described in Code Section 881(c)(3)(C) with respect to the Upper-Tier REMIC,
the Lower-Tier REMIC, the Trust Fund or the Depositor. In the event the
Paying Agent withholds any amount from interest or original issue discount
payments or advances thereof to any Certificateholder pursuant to federal
withholding requirements, the Paying Agent shall indicate the amount withheld
to such Certificateholder.
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SECTION 4.5 REMIC COMPLIANCE.
(a) The parties intend that each of the Upper-Tier REMIC and
Lower-Tier REMIC shall constitute, and that the affairs of each of the
Upper-Tier REMIC and Lower-Tier REMIC shall be conducted so as to qualify it
as, a "real estate mortgage investment conduit" as defined in, and in
accordance with, the REMIC Provisions, and the provisions hereof shall be
interpreted consistently with this intention. In furtherance of such
intention, the Trustee shall, to the extent permitted by applicable law, act
as agent, and is hereby appointed to act as agent, of each of the Upper-Tier
REMIC and the Lower-Tier REMIC and shall on behalf of each of the Upper-Tier
REMIC and Lower Tier REMIC: (i) prepare or cause to be prepared and file all
required federal and state tax and information returns for each of the
Upper-Tier REMIC and Lower-Tier REMIC, including, but not limited to, Form
1066, using a calendar year as the taxable year for each of the Upper-Tier
REMIC and Lower-Tier REMIC when and as required by the REMIC Provisions and
other applicable federal income tax laws; (ii) make an election, on behalf of
each of the Upper-Tier REMIC and the Lower-Tier REMIC, to be treated as a
REMIC on Form 1066 for its first taxable year, in accordance with the REMIC
Provisions and any similar state or local laws or ordinances; (iii) prepare
and forward, or cause to be prepared and forwarded, to the Certificateholders
and the Internal Revenue Service (and other governmental agencies) all
information reports as and when required to be provided to them in accordance
with the REMIC Provisions and any similar state or local laws or ordinances;
(iv) if the filing or distribution of any documents of an administrative
nature not addressed in clauses (i) through (iii) of this Section 4.5(a) is
then required by (or is considered helpful to satisfying) the REMIC
Provisions in order to maintain the status of each of the Upper-Tier REMIC
and Lower-Tier REMIC as a REMIC or is otherwise required, prepare, file and
sign or distribute, or cause to be prepared and filed and signed or
distributed, such documents with or to such Persons when and as required by
(or is considered helpful to satisfying) the REMIC Provisions; (v) within
thirty days of the Closing Date, furnish or cause to be furnished to the
Internal Revenue Service, on Form 8811 or as otherwise may be required by the
Code, the name, title, address, and telephone number of the Person that the
Holders of the Certificates may contact for tax information relating thereto
(and the Trustee shall act as the representative of the Upper-Tier REMIC and
Lower-Tier REMIC for this purpose), together with such additional information
as may be required by such Form, and shall update such information at the
time or times and in the manner required by the Code; and (vi) maintain such
records relating to each of the Upper-Tier REMIC and Lower-Tier REMIC as may
be necessary to prepare the foregoing returns, schedules, statements or
information. The "tax matters person" for the Upper-Tier REMIC, pursuant to
Treasury Regulation Section 1.860F-4(d), shall be the Holder of the largest
Percentage Interest of the Class R Certificates or, if two or more Holders
have the same largest Percentage Interest, the first of such Holders to have
acquired such Class R Certificates. The tax matters person for the Lower-Tier
REMIC, pursuant to Treasury Regulation Section 1.860F-4(d) shall be the
Holder of the largest Percentage Interest of Class LR Certificates or, if two
or more Holders have the same largest Percentage Interest, the first of such
Holders to have acquired such Class LR Certificates. The Trustee shall serve
as attorney-in-fact and agent for any Person that is the tax matters person
of the Upper-Tier REMIC or Lower-Tier REMIC. The Holder of any Certificate,
by purchasing such Certificate, (A) shall be deemed to consent to the
appointment of the Trustee as attorney-in-fact and agent for any Person that
is the tax matters person of the Upper-Tier REMIC or Lower-Tier REMIC, and
(B) agrees to execute any documents required to give effect to (A) above.
Notwithstanding any other provision of this Agreement, none of the Master
Servicer or the Trustee shall intentionally take any action or intentionally
omit to take any action in connection with its obligations under this
Agreement if, in taking or omitting to take such action, such Person knows
that such action or omission (as the case may be) would cause the termination
of the REMIC status of the Upper-Tier REMIC or Lower-Tier REMIC or subject
the Upper-Tier REMIC or Lower-Tier REMIC to tax; PROVIDED, HOWEVER, that such
Person shall not be required to take any action in this regard that such
Person in good faith believes to be inconsistent with any other provision of
this Agreement. The Depositor, the Master Servicer and the Special Servicer
shall cooperate in a timely manner with the Trustee in supplying any
information within the Depositor's, the Master Servicer's or the Special
Servicer's control that is reasonably necessary to enable the Trustee to
perform its duties under this Section 4.5.
(b) Anything herein to the contrary notwithstanding, if at any
time the Master Servicer, the Special Servicer or a Responsible Officer of the
Trustee has actual knowledge that any Mortgage Loan is not a Qualified Mortgage
within the meaning of the REMIC Provisions, the party making such discovery
shall promptly so notify the
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Originator and the Depositor and furnish the Originator and the Depositor
with an Opinion of Counsel (at the expense of the Depositor) to such effect,
and pursuant to the Transfer Agreement, the Originator shall not later than
90 days after such discovery, (i) repurchase such Mortgage Loan at a price
equal to the Repurchase Price or (ii) if within two years of the Start-up
Day, at the Originator's option, substitute such Mortgage Loan with a new
Mortgage Loan, in each case, in the manner described in, and subject to the
conditions set forth in Section 2.2(b). Notwithstanding anything herein to
the contrary, the Master Servicer, Special Servicer and Trustee have no
obligation to determine whether or not a Mortgage Loan is a Qualified
Mortgage.
(c) Except as otherwise provided herein, the Trustee shall not
sell or modify (if such modification would constitute a deemed disposition of
the modified loan for federal income tax purposes) any Mortgage Loan
(including REO Property) or any other asset of either the Upper-Tier REMIC or
Lower-Tier REMIC unless it has received an Opinion of Counsel, at the expense
of the Trust Fund, to the effect that such sale will not result in the
imposition of taxes on prohibited transactions on the Upper-Tier REMIC or
Lower-Tier REMIC and will not cause a loss of REMIC status with respect to
the Upper-Tier REMIC or Lower-Tier REMIC.
(d) In order to enable the Trustee to perform its duties as set
forth herein, the Depositor shall provide, or cause to be provided to the
Trustee, within ten (10) days after the Closing Date, all information or data
that the Trustee determines to be relevant for tax purposes to the valuations
and offering prices of the Certificates, including, without limitation, the
price, yield, prepayment assumption and projected cash flows of the
Certificates, the Mortgage Loans and the Mortgage Certificates.
(e) In the event that the Trust Fund fails to qualify as a REMIC
or loses its status as a REMIC as a result of the negligent performance by
the Trustee of its duties herein the Trustee shall be liable to the Trust
Fund for any damages, including any tax related liabilities, resulting
therefrom; PROVIDED, HOWEVER, that the Trustee shall not be liable for such
liabilities attributable to the action or inaction of the Depositor, the
Master Servicer, the Special Servicer, any subservicer, the Holders of the
Class R and Class LR Certificates or for any liability resulting from
misinformation provided by the Master Servicer, the Special Servicer, any
subservicer, the Holders of the Class R or the Class LR Certificates on which
the Trustee has relied.
SECTION 4.6 IMPOSITION OF TAX ON THE UPPER-TIER REMIC OR
LOWER-TIER REMIC.
Except as provided in Section 1.2(iii)(B), in the event that any
tax, including interest, penalties or assessments, additional amounts or
additions to tax, is imposed on the Upper-Tier REMIC or Lower-Tier REMIC,
such tax shall be charged against amounts otherwise distributable to the
Holders of the Class R Certificates (in the case of any tax imposed on the
Upper-Tier REMIC) or the Class LR Certificates (in the case of any tax
imposed on the Lower-Tier REMIC) on a PRO RATA basis; provided that any taxes
imposed on any "net income from foreclosure property" received in accordance
with the exception in the last sentence of Section 3.17(a) shall instead be
charged against the related revenues with respect to each REO Property and
shall be paid therefrom (until such taxes are paid, the Trustee being
permitted to withdraw amounts in respect of such taxes from the Collection
Account from time to time and segregated by the Trustee in a separate
non-interest bearing account, to the extent necessary to pay such taxes, and
to remit to the Collection Account the excess from time to time of the amount
in such separate account over the amount necessary to pay such taxes). The
Paying Agent is hereby authorized to and shall retain from amounts otherwise
distributable to the Holders of the Class R or Class LR Certificates, as the
case may be, sufficient funds to pay or provide for the payment of, and to
actually pay, such tax as is legally owed by the Upper-Tier REMIC or
Lower-Tier REMIC (but such authorization shall not prevent the Trustee from
contesting any such tax in appropriate proceedings and withholding payment of
such tax, if permitted by law, pending the outcome of such proceedings). To
the extent that sufficient amounts cannot be so retained to pay or provide
for the payment of such tax, the Trustee is hereby authorized to and shall
segregate, into a separate non-interest bearing account, the net income from
any "prohibited transaction" and use such income, to the extent necessary, to
pay such tax, provided that, to the extent that any such income is paid to
the Internal Revenue Service, the Trustee shall retain an equal amount from
future amounts otherwise distributable
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to the Holders of Class R or Class LR Certificates and shall distribute such
retained amounts to the Holders of Class A, Class B, Class C, Class D, Class
E, Class F, Class G, Class X-1 and Class X-2 Certificates, as applicable, to
the extent they are fully reimbursed and then to the Holders of Class R or
Class LR Certificates, as the case may be. The Master Servicer or the
Special Servicer shall not be responsible for any taxes imposed on the
Upper-Tier REMIC or Lower-Tier REMIC provided that it acts in accordance with
the servicing standards and requirements of this Agreement; provided, that
the Master Servicer or the Special Servicer, as the case may be, shall
reimburse to the Holder of the Class R or Class LR Certificates the amount of
any such taxes retained from such Holders, or shall deposit to the Collection
Account any such amount not so retained, imposed on the Upper-Tier REMIC or
Lower-Tier REMIC as a result of its acting other than in accordance with the
servicing standards and requirements of this Agreement.
SECTION 4.7 APPRAISAL REDUCTIONS.
On the earliest of (i) the effective date of any modification of
the stated maturity (excluding an extension of the stated maturity on any
Mortgage Loan that has not been more than 90 days delinquent more than once
during the preceding 12 months), Payment Rate, Mortgage Interest Rate,
principal balance or amortization terms (each, a "Payment Term" of any
Mortgage Loan), (ii) 90 days after the occurrence of any delinquency in any
payment with respect to a Mortgage Loan if such delinquency continues uncured
for such 90 day period or remained uncured immediately prior to modification
of a Payment Term of such Mortgage Loan, (iii) the date 90 days after a
receiver is appointed in respect of such Mortgaged Property, (iv) the date a
Mortgaged Property becomes an REO Account Property, (v) the date 60 days
after the entry against the related Borrower under a Mortgaged Property in
an involuntary case, of a decree or order of a court, agency or supervisory
authority (1) for the appointment of a conservator, receiver or liquidator in
any insolvency, readjustment of debt, marshalling of assets and liabilities
or similar proceedings or (2) for the winding-up or liquidation of its
affairs, and (vi) upon the filing of a voluntary petition for bankruptcy or
the consent by the related Borrower under a Mortgaged Property to the
appointment of a conservator, receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings of or relating to such Borrower, or of or relating to all or
substantially all of its property, the Special Servicer (in the case of a
Mortgage Property relating to a Specially Serviced Mortgage Loan, except with
respect to Mortgage Loans #▇▇▇, #▇▇▇, #▇▇▇, #▇▇▇, and #216, for which the
Master Servicer will act as Special Servicer) or the Master Servicer (in the
case of any other Mortgaged Property) will, within 45 days after an event
described in clause (i), (ii), (iii), (iv), (v) and (vi) above has occurred,
obtain an appraisal of the related Mortgage Property or REO Account Property
from an Independent appraiser who is a member of the American Institute of
Real Estate Appraisers except with respect to Mortgage Loans with a principal
balance of less than $1,000,000. Such appraisal shall be on an "as is" basis
and shall be prepared in accordance with the Code of Ethics and Standards of
Professional Practice of the Appraisal Institute and the Uniform Standards of
Professional Appraisal Practice. Such appraisal shall be updated annually by
the Independent Appraiser for so long as the Mortgage Loan or REO Mortgage
Loan is outstanding; provided, that, such update may be in the form of a
letter from an Independent appraiser. The cost of any such appraisal or
update thereof shall be an expense of the Trust Fund. If no such appraisal
has been obtained prior to the later of (x) the first Distribution Date on or
after the date on which an event described in clause (i), (ii), (iii) or (iv)
above has occurred and (y) 30 days after the date on which such an event has
occurred, the Master Servicer or Special Servicer, as applicable, shall be
required to estimate the value of such Mortgaged Properties or REO Account
Properties (such estimate, the "Appraisal Reduction Estimate") and such
estimate shall be used for purposes of the Appraisal Reduction. The
Appraisal Reduction Estimate shall be based on the income approach calculated
using the formula in the most recent appraisal of the related Mortgaged
Property and the most recent operating statements provided by the Borrower
discounted by a capitalization rate of 16%. On the first Distribution Date
occurring on or after the delivery of such appraisal, the Master Servicer or
Special Servicer, as applicable, shall be required to adjust the Appraisal
Reduction to take into account such appraisal (regardless of whether such
appraisal is higher or lower than the Appraisal Reduction Estimate).
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SECTION 4.8 ADJUSTMENT OF SERVICING FEES.
(a) The total Servicing Fee payable to the Master Servicer for
any Due Period shall be increased or reduced, as the case may be, by the
Servicing Fee Adjustment for such Due Period. In the event that the
Servicing Fee Adjustment for any Due Period exceeds the Servicing Fee for
such Due Period, the Master Servicer shall advance the shortfall.
(b) The total Servicing Fee payable to the Master Servicer for
any Due Period shall be reduced by the amount of the Net Prepayment Interest
Shortfall, such reduction not to exceed up to 100% of the Servicing Fee or
shall be increased by the amount of any Net Prepayment Interest Excess, as
applicable.
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ARTICLE V
THE CERTIFICATES
SECTION 5.1 THE CERTIFICATES.
The Certificates consist of the Class A Certificates, the Class B
Certificates, the Class C Certificates, the Class D Certificates, the Class E
Certificates, the Class F Certificates, the Class G Certificates, the Class
X-1 Certificates, the Class X-2 Certificates, the Class R Certificates and
the Class LR Certificates. The Class A, Class B, Class C, Class D, Class E,
Class F, Class G, Class X-1, Class X-2, Class R and Class LR Certificates
will be substantially in the forms annexed hereto as Exhibits ▇-▇, ▇-▇, ▇-▇,
▇-▇, ▇-▇, ▇-▇, ▇-▇, ▇-▇, ▇-▇, ▇-▇▇ and A-11respectively. Except as otherwise
expressly provided herein, the Certificates of each Class will be issuable in
registered form only in dollar denominations as described in the following
three paragraphs. Each Certificate will share ratably in all rights of the
related Class.
The Class A, Class B, Class C, Class D and Class E Certificates
shall be issued as one or more certificates registered in the name of a
nominee designated by the Depository, and Beneficial Owners will hold
interests in the Class A, Class B, Class C, Class D and Class E Certificates
through the book-entry facilities of the Depository in one or more
registered, definitive physical certificates, the minimum denominations,
integral multiples in excess thereof and aggregate denominations (expressed
in each case in terms of initial Certificate Principal Amount) as set forth
in the following table.
The Class R, Class LR, Class F and Class G Certificates shall be
issued in one or more registered, definitive physical certificates in the
minimum denominations, integral multiples in excess thereof and aggregate
denominations per Class (expressed in each case in terms of initial
Certificate Principal Amount) as set forth in the following table.
Minimum Integral Multiples Aggregate Denominations
Class Denomination* in Excess of Minimum of all Certificates of Class
-------------------------------------------------------------------------------------
A $100,000 $1,000 $ 82,491,000
-----------------------------
B $100,000 $1,000 $ 6,226,000
-----------------------------
C $100,000 $1,000 $ 10,896,000
-----------------------------
D $100,000 $1,000 $ 9,338,000
-----------------------------
E $100,000 $1,000 $ 12,452,000
-----------------------------
F $100,000 $1,000 $ 7,783,000
-----------------------------
G $100,000 $1,000 $ 26,460,541
-----------------------------
R $ 1,000 $1,000 $ 1,000
LR $ 1,000 $1,000 $ 1,000
* Except that one Certificate for each Class may be issued in a different
denomination to accommodate the remainder of the initial Certificate
Principal Amount.
The Class X Certificates shall each be issuable in one or more
registered, definitive physical certificates in minimum Percentage Interests
of 1% and integral multiples thereof, aggregating the entire 100% Percentage
Interest in each such Class.
The rights of Beneficial Owners with respect to Class A
Certificates shall be limited to those established by law and agreements
between such Beneficial Owners and the Depository and Depository
Participants. Except under the circumstances set forth below, Beneficial
Owners of Class A Certificates shall not be entitled to
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physical certificates for such Certificates as to which they are the
Beneficial Owners. Requests and directions from, and votes of, the
Depository as the authorized representative of the Beneficial Owners with
respect to the Class A Certificates shall not be deemed inconsistent if they
are made with respect to different Beneficial Owners. The Certificate
Registrar may establish a reasonable record date in connection with
solicitations of consents from or voting by Certificateholders and give
notice to the Depository of such record date. Without the written consent of
the Depositor and the Certificate Registrar, no Class A Certificates may be
transferred by the Depository except to a successor Depository that agrees to
hold such Certificate for the account of the Beneficial Owners.
In the event The Depository Trust Company resigns or is removed as
Depository, the Trustee, with the approval of 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 definitive physical certificates
representing the Class A Certificates it beneficially owns.
No owner of a beneficial interest in a Class A Certificate will be
entitled to receive a certificate representing such owner's interest in such
Certificate except in the event that definitive certificates are issued for
the Class A Certificates only as provided herein. Class A Certificates
initially issued in book-entry form will be issued in fully registered,
certificated form to Certificateholders or their nominees ("definitive
certificates") (subject to the minimum denominations set forth in the table
in this Section 5.1 and the wire transfer restrictions set forth in Section
4.2(b)) rather than to the Depository or its nominee, if (i) the Depositor
advises the Certificate Registrar in writing that the Depository is no longer
willing or able to properly discharge its responsibilities as depository with
respect to the Certificates and the Depositor is unable to locate a qualified
successor or (ii) the Depositor, at its option, elects to terminate the
book-entry system through the Depository.
Upon the occurrence of either of the events described in clause (i)
or (ii) of the immediately preceding paragraph, the Depository pursuant to
its rules is required to notify all participants of the availability through
the Depository of definitive certificates for the Certificateholders. Upon
surrender by the Depository of the certificate or certificates representing
the Class A Certificates, together with instructions for re-registration, the
Trustee will issue (or cause to be issued) to the Certificateholders
identified in such instructions the definitive certificates to which they are
entitled, and thereafter the Trustee, the Paying Agent and the Certificate
Registrar will recognize the Holders of such definitive certificates as
Certificateholders under this Agreement.
Each Certificate may be printed or in typewritten or similar form,
and each Certificate shall, upon original issue, be executed and
authenticated by the Trustee or the Authenticating Agent and delivered to or
upon the order of the Depositor. All Certificates shall be executed by
manual or facsimile signature on behalf of the Trustee or the Authenticating
Agent by an authorized officer or signatory. Certificates bearing the
signatures of individuals who were at any time the proper officers or
signatories of the Trustee or the Authenticating Agent shall bind the Trustee
or the Authenticating Agent notwithstanding that such individuals or any of
them have ceased to hold such offices or positions prior to the delivery of
such Certificates or did not hold such offices or positions at the date of
such Certificates. 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 in the form set forth in Exhibits
▇-▇, ▇-▇, ▇-▇, ▇-▇, ▇-▇, ▇-▇, ▇-▇, ▇-▇, ▇-▇, ▇-▇▇ and A-11 executed by the
Trustee or the Authenticating Agent by manual signature, and such certificate
of authentication upon any Certificate shall be conclusive evidence, and the
only evidence, that such Certificate has been duly authenticated and
delivered hereunder. All Certificates shall be dated the date of their
authentication.
SECTION 5.2 CERTIFICATE REGISTRAR.
The Trustee shall be the Certificate Registrar.
SECTION 5.3 REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES.
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(a) The Certificate Registrar shall keep a Certificate Register
in which, subject to such reasonable regulations as it may prescribe, it
shall provide for the registration of transfers and exchanges of Certificates
as herein provided.
(b) As a condition to the registration of any transfer, sale,
pledge or other disposition of a Certificate, the prospective transferee of
such a Certificate shall be required to certify in the Investment Letter
which such transferee is required to deliver pursuant to Section 5.3(c)
below, that it is not (A) an employee benefit plan or other plan subject to
the fiduciary responsibility provisions of ERISA or Section 4975 of the Code,
(B) an entity whose underlying assets include plan assets by reason of a
plan's investment in such entity (within the meaning of The Department of
Labor Regulations, Section 2510.3-101), or (C) an entity acting on behalf of
such plan to acquire such Certificate (any entity described in (A), (B) or
(C), an "ERISA Plan") . No transfer, sale, pledge or other disposition of
such a Certificate shall be made to any ERISA Plan, and the Certificate
Registrar shall not register any such transfer, sale, pledge or other
disposition to an ERISA Plan.
(c) By acceptance of any Certificate, the Holder thereof
specifically agrees with the Depositor, the Certificate Registrar and the
Trustee that no transfer of such Certificate shall be made unless the
registration requirements of the Act and any applicable state securities laws
are complied with, or such transfer is exempt from the registration
requirements under the Act because the transfer satisfies one of the
following: (A) such transfer is in compliance with Rule 144A under the Act,
and has been made to a person whom the transferor reasonably believes to be a
Qualified Institutional Buyer that is purchasing for its own account or for
the account of a Qualified Institutional Buyer and to whom notice is given
that such transfer is being made in reliance upon Rule 144A under the Act,
(B) after the appropriate holding period, such transfer is pursuant to an
exemption from registration under the Act provided by Rule 144 under the Act
(if available), and (C) such transfer has been made to an institutional
accredited investor as defined in Rule 501(a)(1), (2), (3) or (7) of
Regulation D promulgated under the Act in a transaction exempt from the
registration requirements of the Act and such transfer is in accordance with
any applicable securities laws of any state of the United States or any other
jurisdiction. The Certificate Registrar and Trustee shall require each
transferee referred to in the preceding clause (A), (B) or (C) to execute
and deliver to the Certificate Registrar, the Trustee, the Depositor and the
Paying Agent an Investment Letter substantially in the form attached as
Exhibit L hereto.
The Trustee shall make available to the prospective transferor and
transferee information requested to satisfy the requirements of paragraph
(d)(4) of Rule 144A (the "Rule 144A Information") to the extent such
information is in the Trustee's possession. The Rule 144A Information shall
include any or all of the following items requested by the prospective
transferee:
(i) this Agreement and any amendments hereto;
(ii) with respect to the transfer of the Class A, Class B,
Class C, Class D and Class E Certificates, the Offering
Circular relating to such Certificates dated May 11,
1998 and any amendments or supplements thereto;
(iii) all prior Distribution Date statements prepared
pursuant to Section 4.3 hereof;
(iv) the Pooling and Servicing Agreement, dated as of July
20, 1993 among LTC REMIC Corporation, Bankers Trust
Company, LTC, and Union Bank, pursuant to which the
Mortgage Certificates and other classes of the Series
1993-1 certificates were issued, the Offering Circular,
dated as of July 28, 1993 pursuant to which certain
senior classes of the Series 1993-1 certificates were
offered, and any trustee and servicer reports prepared
with respect to the Mortgage Certificates and other
classes of the Series 1993-1 certificates; and
99
(v) such other information as is reasonably available to
the Trustee in order to comply with requests for
information pursuant to Rule 144A under the Act.
None of the Depositor, the Master Servicer, the Special Servicer, the
Certificate Registrar or the Trustee is under an obligation to register any
Certificate under the Act or any other securities law.
(d) Each Person who has or acquires any Ownership Interest shall
be deemed by the acceptance or acquisition of such Ownership Interest to have
agreed to be bound by the following provisions:
(i) Each Person acquiring or holding any Ownership Interest
shall be a Permitted Transferee and shall not acquire
or hold such Ownership Interest as agent (including a
broker, nominee or other middleman) on behalf of any
Person that is not a Permitted Transferee. Any such
Person shall promptly notify the Certificate Registrar
of any change or impending change in its status (or the
status of the beneficial owners of such Ownership
Interest) as a Permitted Transferee. Any acquisition
described in the first sentence of this Section
5.3(d)(i) by a Person who is not a Permitted Transferee
or by a Person who is acting as an agent of a Person
who is not a Permitted Transferee shall be void and of
no effect, and the immediately preceding owner who was
a Permitted Transferee shall be restored to registered
and beneficial ownership of the Ownership Interest as
fully as possible.
(ii) No Ownership Interest may be Transferred, and no such
Transfer shall be registered by the Certificate
Registrar in the Certificate Register, without the
express written consent of the Certificate Registrar,
and the Certificate Registrar shall not recognize the
Transfer, and such proposed Transfer shall not be
effective, without such consent with respect thereto.
In connection with any proposed Transfer of any
Ownership Interest, the Certificate Registrar shall, as
a condition to such consent, require delivery to it, in
form and substance satisfactory to it, and the proposed
transferee shall deliver to the Certificate Registrar,
an affidavit in substantially the form attached as
Exhibit H-2 (a "Transfer Affidavit") of the proposed
transferee (A) that such transferee is a Permitted
Transferee, (B) setting forth the statement of the
proposed transferee that (i) the proposed transferee
has historically paid its debts as they came due and
intends to pay its debts as they come due in the
future, (ii) the proposed transferee understands that
it may incur tax liabilities in excess of cash flows
generated by the Ownership Interest, (iii) the proposed
transferee intends to pay taxes associated with holding
the Ownership Interest as they become due and (iv) the
proposed transferee will not transfer the Ownership
Interest to any Person who does not provide a similar
affidavit, and (C) containing an express agreement by
the proposed transferee to be bound by and to abide by
the provisions of this Section 5.3, accompanied, except
upon initial issuance, by a letter in substantially the
form attached as Exhibit H-3 (a "Transferor
Acknowledgement") of the proposed transferor that the
transferor has reviewed the Transfer Affidavit and has
(i) no actual knowledge that such affidavit is not true
and (ii) no reason to know that the transferee has not
paid its debts as they come due or intends not to pay
taxes associated with holding the Class R or Class LR
Certificate, as the case may be, as they come due.
(iii) Notwithstanding the delivery of a Transfer Affidavit by
a proposed transferee under clause (ii) above, if a
responsible officer of the Certificate Registrar has
actual knowledge that the proposed transferee is not a
Permitted Transferee or has
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reason to know that the statement made by the proposed
transferee pursuant to clause (ii)(B) above is in any
respect false, no Transfer to such proposed transferee
shall be effected and such proposed Transfer shall not
be registered on the Certificate Register.
(iv) Each Person holding or acquiring any Ownership Interest
shall agree (A) to require a Transfer Affidavit from
any other Person to whom such Person attempts to
Transfer any Ownership Interest and (B) not to Transfer
any Ownership Interest or to cause the Transfer of any
Ownership Interest to any other Person if it has actual
knowledge that such Person is not a Permitted
Transferee or is an agent (including a broker, nominee
or other middleman) for, or will be holding any
Ownership Interest on behalf of, a Person that is not a
Permitted Transferee.
Upon notice to the Certificate Registrar that there has occurred a
Transfer to any Person that is a Disqualified Organization or an agent
thereof (including a broker, nominee, or middleman) in contravention of the
foregoing restrictions, the Certificate Registrar and the Trustee agree to
furnish to the Internal Revenue Service, the transferor of such Ownership
Interest or such agent such information necessary to the application of
Section 860E(e) of the Code as may be required by the Code, including but not
limited to, the present value of the total anticipated excess inclusion
income with respect to a Class R or Class LR Certificate (or portion thereof)
for periods after such Transfer. At the election of the Certificate Registrar
and the Trustee, the Certificate Registrar and the Trustee may charge a
reasonable fee for computing and furnishing such information to the
transferor or to such agent referred to above; PROVIDED, HOWEVER, that such
persons shall in no event be excused from furnishing such information to the
Internal Revenue Service and to the Transferor or agent thereof.
(e) Upon surrender for registration of transfer of any
Certificate (and, with respect to any Certificate subject to restrictions on
transfer pursuant to this Section 5.3, upon compliance with any provisions of
this Agreement relating to such transfer) held in physical certificate form
at the office of the Certificate Registrar, the Trustee or the Authenticating
Agent shall execute and authenticate, and the Certificate Registrar shall
deliver, in the name of the designated transferee or transferees, one or more
new Certificates of authorized denominations of a like aggregate Percentage
Interest and dated the date of authentication by the Authenticating Agent.
(f) At the option of the Certificateholders, Certificates may be
exchanged for other Certificates of the same class of authorized
denominations of a like aggregate Percentage Interest, upon surrender of the
Certificates to be exchanged at the office of the Certificate Registrar or
the office of its agent in the City of New York. In addition, any Class R or
Class LR Certificate issued on the Closing Date may thereafter be exchanged
for a new Class R or Class LR Certificate respectively upon surrender of such
initially issued Class R or Class LR Certificate at the office of the
Certificate Registrar or the office of its agent in the City of New York.
Whenever any Certificates are so surrendered for exchange, the Trustee or the
Authenticating Agent shall execute and authenticate and the Certificate
Registrar shall deliver the Certificates which the Certificateholder making
the exchange is entitled to receive.
(g) The Certificate Registrar shall require that every
Certificate presented or surrendered for registration of transfer or exchange
be duly endorsed by, or accompanied by a written instrument of transfer in
form satisfactory to the Certificate Registrar duly executed by, the Holder
thereof or such Person's attorney duly authorized in writing.
(h) 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.
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(i) The Certificate Registrar shall cancel and retain or destroy,
in accordance with the Certificate Registrar's retention policy then in effect,
all Certificates surrendered for registration of transfer or exchange and shall
upon written request certify to the Master Servicer or the Depositor as to such
retention or destruction.
Neither the Trustee nor the Certificate Registrar shall have any
obligation or duty to monitor, determine or inquire as to compliance with any
restriction or transfer imposed under Article 5 of this Agreement or under
applicable law with respect to any transfer of any Certificate, or any
interest therein, other than to require delivery of the certification(s)
and/or opinions of counsel described in Article 5 applicable with respect to
changes in registration of record ownership of Certificates in the
Certificate Register (without modification thereof). The Trustee and the
Certificate Registrar shall have no liability for transfers, including
transfers made through the book-entry facilities of the Depository or between
or among Depository participants or Beneficial Owners made in violation of
applicable restrictions.
SECTION 5.4 MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.
If (i) any mutilated Certificate is surrendered to the Certificate
Registrar, or the Certificate Registrar receives evidence to its satisfaction
of the destruction, loss or theft of any Certificate, and (ii) there is
delivered to the Trustee and the Certificate Registrar such security or
indemnity as may be required by them to save each of them and the Depositor,
the Master Servicer, the Special Servicer and the Originator harmless, then,
in the absence of actual knowledge by a Responsible Officer of the Trustee or
the Certificate Registrar that such Certificate has been acquired by a bona
fide purchaser, the Trustee or the Authenticating Agent shall execute and
authenticate and the Certificate Registrar shall deliver, in exchange for or
in lieu of any such mutilated, destroyed, lost or stolen Certificate, a new
Certificate of the same Class and of like tenor and Percentage Interest.
Upon the issuance of any new Certificate under this Section, 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 Certificate Registrar)
connected therewith. Any replacement Certificate issued pursuant to this
Section shall constitute complete and indefeasible evidence of ownership of
the corresponding interest in the Trust Fund, as if originally issued,
whether or not the lost, stolen or destroyed Certificate shall be found at
any time.
SECTION 5.5 PERSONS DEEMED OWNERS.
Prior to due presentation of a Certificate for registration of
transfer, the Master Servicer, the Trustee, the Certificate Registrar, the
Paying Agent, the Depositor, the Special Servicer 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 Sections 4.2 and for all other purposes whatsoever, and neither the Master
Servicer, the Trustee, the Certificate Registrar, any Paying Agent, the
Depositor, the Special Servicer nor any agent of any of them shall be
affected by notice to the contrary.
SECTION 5.6 APPOINTMENT OF PAYING AGENT.
The Trustee shall initially be the Paying Agent for the purpose of
making distributions to Certificateholders pursuant to Section 4.1. The
Trustee shall cause such Paying Agent, if other than the Trustee, 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 the
Certificateholders entitled thereto until such sums have been paid to the
Certificateholders or disposed of as otherwise provided herein. The Trustee
hereby accepts its appointment as Paying Agent and agrees to perform its
duties in accordance with the terms of this Agreement.
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SECTION 5.7 ACCESS TO CERTIFICATEHOLDERS' NAMES AND ADDRESSES.
(a) If any Certificateholder (for purposes of this Section 5.7,
an "Applicant") applies in writing to the Certificate Registrar, and such
application states that the Applicant desires to communicate with other
Certificateholders with respect to their rights under this Agreement or under
the Certificates and is accompanied by a copy of the communication which such
Applicant proposes to transmit, then the Certificate Registrar shall, at the
expense of such Applicant, within ten (10) Business Days after the receipt of
such application, furnish or cause to be furnished to such Applicant a list
of the names and addresses of the Certificateholders as of the most recent
Distribution Date.
(b) Every Certificateholder, by receiving and holding such list,
agrees with the Trustee that the Trustee and the Certificate Registrar shall
not be held accountable in any way by reason of the disclosure of any
information as to the names and addresses of the Certificateholders
hereunder, regardless of the source from which such information was derived.
SECTION 5.8 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, when required, to
the Depositor, the Master Servicer or the Special 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, the Master Servicer and the Special 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 Master Servicer in reliance
thereon, whether or not notation of such action is made upon such Certificate.
(d) The Trustee may require such additional proof of any matter
referred to in this Section 5.8 as it shall deem necessary.
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ARTICLE VI
THE DEPOSITOR, THE MASTER SERVICER AND
THE SPECIAL SERVICER
SECTION 6.1 LIABILITY OF THE DEPOSITOR, THE MASTER SERVICER AND THE
SPECIAL SERVICER.
The Depositor, the Master Servicer and the Special Servicer each shall
be liable in accordance herewith only to the extent of the obligations
specifically imposed by this Agreement.
SECTION 6.2 MERGER OR CONSOLIDATION OF THE SPECIAL SERVICER OR THE
MASTER SERVICER.
Subject to the following paragraph, each of the Special Servicer and
the Master Servicer will keep in full effect its existence, rights and good
standing as a corporation under the laws of the jurisdiction of its
incorporation and will be in compliance with the laws of each state in which any
Mortgaged Property is located to the extent such compliance is necessary to
perform its obligations in accordance with the terms of this Agreement. Any
successor Special Servicer or Master Servicer will keep in full effect its
existence, rights and good standing under the laws of its jurisdiction or
organization and will not jeopardize its ability to do business in each
jurisdiction in which the Mortgaged Properties are located to the extent such
compliance is necessary to perform its respective duties under this Agreement.
The Special Servicer or the Master Servicer, as the case may be, may,
upon notice to the Rating Agency and written confirmation as provided below, be
merged into or consolidated with any Person, or transfer all or substantially
all of its assets to any Person; PROVIDED, HOWEVER, that the Rating Agency's
rating or ratings of any outstanding rated Class of Certificates in effect
immediately prior to such merger or consolidation or transfer of assets will not
be qualified, downgraded or withdrawn as a result thereof (as evidenced by a
letter to such effect from the Rating Agency delivered to the Trustee). The
Master Servicer or the Special Servicer, as applicable, shall promptly inform
each other and the Trustee in writing of any such merger, consolidation or
transfer.
SECTION 6.3 Limitation on Liability of the Depositor, the Master
Servicer, THE SPECIAL SERVICER AND OTHERS.
Neither the Depositor, the Master Servicer, the Special Servicer nor
any of the directors, officers, employees or agents of them 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, or for any action taken or for refraining
from the taking of any action or for errors of judgment of the master servicer,
the special servicer or the trustee for the Mortgage Certificates; PROVIDED,
HOWEVER, that this provision shall not protect the Depositor, the Master
Servicer or the Special Servicer or any such Person against any breach of
warranties, representations or covenants made herein, or against any specific
liability imposed on the Depositor, the Master Servicer or the Special Servicer
pursuant to Section 3.1 or any other Section hereof, or against any liability
which would otherwise be imposed by reason of bad faith, willful misfeasance or
gross negligence in the performance of duties or by reason of reckless disregard
of obligations or duties hereunder. The Depositor, the Master Servicer, the
Special Servicer and any director, officer, employee or agent of the Depositor,
the Master Servicer or the Special Servicer may rely in good faith on any
document of any kind which, PRIMA FACIE, is properly executed and submitted by
any appropriate Person respecting any matters arising hereunder. The Trust
shall indemnify the Master Servicer and the Special Servicer and any director,
officer, employee or agent of the Master Servicer and the Special Servicer 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 incurred in connection with any pending or
threatened legal action relating to (i) this Agreement, the Mortgage Loans or
REO Property, if such legal action is incidental to, or arises from, the Master
Servicer or Special Servicer, as the case may be, serving in such capacity under
this Agreement, (ii) any defect in any Mortgage Loan or Mortgage Certificate or
related documents as of the Cut-Off Date, (iii) in the case of the Master
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Servicer, any action taken based on information provided by the Special
Servicer, and (iv) any action taken by the Master Servicer or the Special
Servicer, as the case may be, in accordance with instructions delivered in
writing to the Master Servicer or the Special Servicer, as the case may be, by
the Trustee or, in the case of the Special Servicer or by the Master Servicer,
pursuant to any provision of this Agreement, in each case other than any loss,
liability or expense incurred by reason of the Master Servicer's or the Special
Servicer's, as the case may be, breach of any representation, warranty or
covenant in this Agreement, by reason of the Master Servicer's or the Special
Servicer's, as the case may be, willful misfeasance, bad faith or negligence in
the performance of its obligations and duties under this Agreement or by reason
of the Master Servicer's or the Special Servicer's, as the case may be, reckless
disregard of its obligations and duties under this Agreement. Neither the
Depositor, the Master Servicer nor the Special Servicer shall be under any
obligation to appear in, prosecute or defend any legal action which is not
incidental to its respective duties under this Agreement and in its opinion does
not expose it to any material expense or liability for which it is not entitled
to reimbursement hereunder; PROVIDED, HOWEVER, that the Depositor, the Master
Servicer or the Special Servicer, as applicable, may in its sole discretion
undertake any such action which it may reasonably deem necessary or desirable in
order to protect the interests of the Certificateholders hereunder. In such
event, any reasonable legal expenses and costs of such action shall be expenses,
costs and liabilities of the Trust Fund, and the Depositor, the Master Servicer
and the Special Servicer shall be entitled to be reimbursed therefor from the
Collection Account as provided in Section 3.6 of this Agreement; PROVIDED,
HOWEVER, that the Master Servicer shall be under no duty to recalculate or
otherwise verify the amount of such reimbursement.
The right of each of the Master Servicer and the Special Servicer to
indemnification and reimbursement pursuant to this Section 6.3 shall survive any
resignation or termination of the Master Servicer or the Special Servicer,
respectively, pursuant to this Agreement.
SECTION 6.4 LIMITATION ON RESIGNATION OF THE MASTER SERVICER AND
THE SPECIAL SERVICER.
Each of the Master Servicer and the Special Servicer may assign its
respective rights and delegate its respective duties and obligations under this
Agreement provided that: (i) the purchaser or transferee accepting such
assignment and delegation (A) shall be reasonably satisfactory to the Trustee,
the Master Servicer (in the case of the Special Servicer) and the Depositor, (B)
shall be an established housing and home finance institution, bank, real estate
investment trust or mortgage servicing institution having a net worth of not
less than $20,000,000 organized and doing business under the laws of any state
of the United States or the District of Columbia, authorized under such laws to
perform the duties of a servicer of mortgage loans, and (C) shall execute and
deliver to the Trustee an agreement, in form and substance reasonably
satisfactory to the Trustee, which contains an assumption by such Person of the
due and punctual performance and observance of each covenant and condition to be
performed or observed by the Master Servicer or the Special Servicer, as the
case may be, under this Agreement from and after the date of such agreement;
(ii) the Master Servicer or the Special Servicer, as the case may be, shall not
be released from its obligations under this Agreement that arose prior to (or
out of acts or omissions prior to) the effective date of such assignment and
delegation under this Section 6.4; (iii) the rate at which the Servicing Fee and
the Special Servicer Fee, (or any component thereof) is calculated shall not
exceed the rate then in effect; and (iv) the Rating Agency shall have confirmed
in writing that such sale or transfer to the proposed purchaser or transferee
will not result in a qualification, downgrade or withdrawal of the then current
ratings assigned by the Rating Agency to the outstanding Classes of the
Certificates. Upon acceptance of such assignment and delegation, the purchaser
or transferee shall be the successor Master Servicer or Special Servicer
hereunder.
Except as provided in this Section 6.4, neither the Master Servicer
nor the Special Servicer shall resign from its respective obligations and duties
hereby imposed on it except (i) in the case of the Special Servicer, upon
appointment of a successor Special Servicer and receipt by the Trustee and the
Master Servicer of a letter from the Rating Agency that such resignation and
appointment will not, in and of itself, result in a qualification, downgrade or
withdrawal of the ratings of any outstanding rated Class of Certificates or (ii)
in the case of the Master Servicer or Special Servicer, upon determination that
its duties hereunder are no longer permissible under applicable law and in such
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case the Trustee, in the case of the Master Servicer, and the Master Servicer,
in the case of the Special Servicer, will use its best efforts to appoint a
successor that will not in and of itself, result in a qualification, downgrading
or withdrawal of the then current ratings of any outstanding rated class of
Certificates as evidenced in writing. Any such determination permitting the
resignation of the Master Servicer or the Special Servicer shall be evidenced by
an Opinion of Counsel (obtained at the resigning party's expense) to such effect
delivered to the Trustee. No such resignation shall become effective until the
Trustee or a successor Master Servicer shall have assumed the Master Servicer's
or the Special Servicer's, as applicable, responsibilities, duties, liabilities
and obligations hereunder.
SECTION 6.5 RIGHTS OF THE DEPOSITOR AND THE TRUSTEE IN RESPECT OF
THE MASTER SERVICER AND THE SPECIAL SERVICER.
Each of the Master Servicer and the Special Servicer shall afford the
Depositor, the Rating Agency and the Trustee, upon reasonable notice and during
normal business hours, access to all records maintained by it in respect of its
rights and obligations hereunder and access to its officers responsible for such
obligations. Upon request, each shall furnish to the Depositor and the Trustee
its most recent financial statements and such other information in its
possession regarding its business, affairs, property and condition, financial or
otherwise as the party requesting such information, in its reasonable judgment,
determines to be relevant to the performance of the obligations hereunder of the
Master Servicer or the Special Servicer, as the case may be. The Depositor may,
but is not obligated to, enforce the obligations of each of the Master Servicer
and the Special Servicer hereunder and may, but is not obligated to, perform, or
cause a designee to perform, any defaulted obligation of such Person hereunder
or exercise its rights hereunder, provided that the Master Servicer or the
Special Servicer, as the case may be, shall not be relieved of any of its
obligations hereunder by virtue of such performance by the Depositor or its
designee. The Depositor shall not have any responsibility or liability for any
action or failure to act by the Master Servicer or the Special Servicer and is
not obligated to supervise the performance of the Master Servicer or the Special
Servicer under this Agreement or otherwise.
SECTION 6.6 CERTAIN RIGHTS OF THE MASTER SERVICER AND SPECIAL
SERVICER.
Except as otherwise provided herein:
(a) the Master Servicer and the Special Servicer, and any
director, officer, employee or agent of the Master Servicer or the Special
Servicer, may rely and shall be protected in, and shall not be liable for,
acting or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
note or other paper or document believed by it to be genuine and to have been
signed or presented by the proper party or parties;
(b) any request or direction of the Originator, the Depositor, the
Master Servicer, the Special Servicer or the Trustee mentioned herein shall be
sufficiently evidenced in writing;
(c) the Master Servicer and the Special Servicer, and any
director, officer, employee or agent of the Master Servicer or the Special
Servicer, may at its own expense consult with counsel, and the advice of such
counsel shall be full and complete authorization and protection in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reasonable reliance thereon; and
(d) neither the Master Servicer nor the Special Servicer, nor any
of their respective directors, officers, employees or agents, shall be bound to
make any investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, note or other paper or document delivered to it by the
Originator, the Depositor, the Trustee, or the Master Servicer or the Special
Servicer, as applicable, but in its discretion may make such further inquiry or
investigation into such fact or matters as they may see fit.
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SECTION 6.7 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF
CERTIFICATES.
The recitals contained herein and in the Certificates, except any such
recitals relating to the Master Servicer, shall not be taken as statements of
the Master Servicer, and the Master Servicer assumes no responsibility for their
correctness. The Master Servicer makes no representation as to the validity
(other than as against it) or sufficiency of this Agreement or of the
Certificates.
SECTION 6.8 DEPOSITOR, SPECIAL SERVICER, MASTER SERVICER, AND
TRUSTEE TO COOPERATE.
Each of the Depositor, the Master Servicer, the Special Servicer and
the Trustee shall furnish such reports, certifications and information in its
possession to any other party hereto as such party reasonably requests to enable
it to perform its duties hereunder. Any party (other than the Rating Agency)
requesting information shall reimburse the party providing such information for
reasonable out-of-pocket costs incurred in providing such information, if such
information is not normally prepared as part of such party's duties under this
Agreement.
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ARTICLE VII
DEFAULT
SECTION 7.1 EVENTS OF DEFAULT.
"Event of Default", wherever used herein, means any one of the
following events:
(i) (a) with respect to the Master Servicer, any failure
by the Master Servicer to deposit in the Collection
Account or the Distribution Account for distribution to
Certificateholders any amount required to be remitted
by the Master Servicer no later than 10:00 am Central
Standard Time on the Distribution Date or, in the case
of a failure to make a required Servicing Advance or
P&I Advance (other than Nonrecoverable Advances), at
least one Business Day prior to the related
Distribution Date, which failure is not caused by a
failure of the Special Servicer, including a failure
specified in clause (b) of this Section 7.1(i), and (b)
with respect to the Special Servicer, any failure by
the Special Servicer to remit to the Master Servicer
for deposit in the Collection Account any remittance
required to be made by the Special Servicer on the day
such remittance is required to be made pursuant to this
Agreement, and which failure is not caused by a failure
of the Master Servicer, including a failure specified
in clause (a) of this Section 7.1(i); or
(ii) any failure on the part of the Master Servicer or the
Special Servicer, as applicable, duly to observe or
perform in any material respect any other of the
covenants or agreements on the part of the Master
Servicer or the Special Servicer, as applicable,
contained in this Agreement which failure continues
unremedied for a period of 30 days after the date which
written notice of such failure, requiring the same to
be remedied, shall have been given to the Master
Servicer or the Special Servicer, as applicable, by the
Depositor or the Trustee, and in each case, to the
Depositor and the Trustee, by the Holders of
Certificates entitled to at least 25% of the Voting
Rights of any Class affected thereby; PROVIDED,
HOWEVER, that if the Master Servicer or the Special
Servicer, as applicable, can demonstrate to the
reasonable satisfaction of the Trustee that the Master
Servicer or the Special Servicer, as applicable, is
diligently attempting to cure such breach, the cure
period may be extended by the Trustee for a reasonable
amount of time, which time period shall not exceed 30
days; or
(iii) a decree or order of a court or agency or supervisory
authority having jurisdiction in the premises in an
involuntary case under any present or future federal or
state bankruptcy, insolvency or similar law for the
appointment of a conservator or receiver or liquidator
in any insolvency, readjustment of debt, marshalling of
assets and liabilities or similar proceedings, or for
the winding-up or liquidation of its affairs, shall
have been entered against the Master Servicer or the
Special Servicer, as applicable, and such decree or
order shall have remained in force undischarged or
unstayed for a period of 60 days; or
(iv) the Master Servicer or the Special Servicer, as
applicable, shall consent to the appointment of a
conservator or receiver or liquidator in any
insolvency, readjustment of debt, marshalling of assets
and liabilities or similar proceedings of
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or relating to the Master Servicer or the Special
Servicer, as applicable, or of or relating to all or
substantially all of its property; or
(v) the Master Servicer or the Special Servicer, as
applicable, shall admit in writing its inability to pay
its debts generally as they become due, file a petition
to take advantage of any applicable insolvency or
reorganization statute, make an assignment for the
benefit of its creditors, or voluntarily suspend
payment of its obligations; or
(vi) any Event of Default as defined in the last sentence of
Section 2.5(c) or of Section 2.6(c), respectively,
shall have occurred and be continuing; or
(vii) the Trustee shall have received written notice from the
Rating Agency that the continuation of the Master
Servicer or the Special Servicer, as applicable, in
such capacity would result in the qualification,
downgrade or withdrawal of any rating then assigned by
the Rating Agency to any Class of Certificates,
then, so long as such Event of Default shall not have been remedied (such cure
period not to extend, with respect to clause (i) above only, beyond 10:00 a.m.
Central time on the Distribution Date), the Trustee, in the case of an Event of
Default by the Master Servicer or the Special Servicer, may, and at the written
direction of the Holders of Certificates entitled to at least 51% of the
aggregate Voting Rights of all Certificates the Trustee shall, by notice in
writing to the Master Servicer (if it is the defaulting party) or to the Special
Servicer (if it is the defaulting party), terminate all of the rights and
obligations of the Master Servicer or the Special Servicer, as applicable, under
this Agreement and in and to the Mortgage Loans and Mortgage Certificates and
the proceeds thereof, other than any rights it may have hereunder as a
Certificateholder and any rights or obligations that accrued prior to (or arose
out of an action or omission prior to) the date of such termination (including
the right to receive all amounts accrued or owing to it under this Agreement on
or prior to the date of such termination and the right to the benefits of
Section 6.3 notwithstanding any such termination). On or after the receipt by
the Master Servicer or the Special Servicer, as the case may be, of such written
notice, all of its authority and power under this Agreement, whether with
respect to the Certificates, the Mortgage Certificates or the Mortgage Loans or
otherwise, shall pass to and be vested in the Trustee in the case of the Master
Servicer and the Trustee or the Master Servicer in the case of the Special
Servicer pursuant to and under this Section, and, without limitation, the
Trustee in the case of the Master Servicer and the Trustee or the Master
Servicer in the case of the Special Servicer is hereby authorized and empowered
to execute and deliver, on behalf of and at the expense of the defaulting Master
Servicer or Special Servicer, as applicable, as attorney-in-fact or otherwise,
any and all documents and other instruments, and to do or accomplish all other
acts or things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement or assignment of
the Mortgage Loans and related documents, or otherwise. Each of the Master
Servicer and the Special Servicer agrees in the event it is terminated pursuant
to this Section 7.1 to promptly (and in any event no later than ten Business
Days subsequent to such notice) provide, at its own expense, the Trustee, in the
case of the Master Servicer, and the Master Servicer, in the case of the Special
Servicer, with all documents and records requested by the Trustee, in the case
of the Master Servicer, and the Trustee or the Master Servicer, in the case of
the Special Servicer, then in its possession to enable the Trustee in the case
of the Master Servicer and the Trustee or the Master Servicer in the case of the
Special Servicer to assume its functions hereunder, and to cooperate with the
Trustee and Master Servicer, as the case may be, and the successor in effecting
the termination of its responsibilities and rights hereunder, including, without
limitation, the transfer to the Master Servicer or the Trustee, as applicable,
for administration by it of all cash amounts which shall at the time be or
should have been credited by the Master Servicer to the Collection Account (if
it is then the defaulting party) and by the Special Servicer to any REO Account
(if it is then the defaulting party) or thereafter be received with respect to
the Mortgage Loans or any REO Account Property. All reasonable costs and
expenses of the successor Master Servicer or Special Servicer incurred in
connection with transferring the Mortgage Files and the Mortgage Certificates to
the successor Master Servicer or Special Servicer, as the case may be, and
amending this Agreement to reflect such
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succession as Master Servicer or Special Servicer, as the case may be, pursuant
to this Section 7.1 shall be paid by the predecessor Master Servicer or Special
Servicer, other than the Trustee as the case may be, upon presentation of
reasonable documentation of such costs and expenses.
SECTION 7.2 TRUSTEE AND MASTER SERVICER TO ACT; APPOINTMENT OF
SUCCESSOR.
On and after the time the Master Servicer or the Special Servicer, as
the case may be, receives a notice of termination pursuant to Section 7.1, the
Trustee or the Master Servicer, as applicable, shall be its successor in all
respects in its capacity as Master Servicer or Special Servicer, as applicable,
under this Agreement and the transactions set forth or provided for herein and
shall be subject to all the responsibilities, duties, limitations on liability
and liabilities relating thereto and arising thereafter placed on the Master
Servicer or Special Servicer by the terms and provisions hereof; provided,
however, that any failure to perform such duties or responsibilities caused by
the terminated party's failure to provide information or monies required by
Section 7.1 shall not be considered a default by such successor hereunder.
Without in any way limiting its other obligations as a successor Master
Servicer, the Trustee hereby acknowledges that, as successor to the Master
Servicer it shall make P&I Advances pursuant to Section 3.22 irrespective of any
bankruptcy, insolvency or similar proceedings affecting the predecessor Master
Servicer or the Borrower under the related Mortgage Loan subject to its
determination that such Advance is not a Nonrecoverable Advance. The appointment
of a successor Master Servicer or Special Servicer shall not affect any
liability of the predecessor Master Servicer or Special Servicer, as applicable,
which may have arisen (or which may relate to an act or omission which occurred)
prior to its termination as Master Servicer or Special Servicer, as applicable.
The Trustee or the Master Servicer, as applicable, shall not be liable for any
of the representations and warranties of the Master Servicer or the Special
Servicer, as applicable, herein or in any related document or agreement or for
any acts or omissions of the predecessor Master Servicer or Special Servicer nor
shall the Trustee or the Master Servicer, as applicable, be required to purchase
any Mortgage Loan or Mortgage Certificate hereunder. As compensation therefor,
the Trustee as successor Master Servicer pursuant to this Section 7.2 shall be
entitled to the Servicing Fees and all funds relating to the Mortgage Loans and
Mortgage Certificates which the Master Servicer would have been entitled to
charge to the Collection Account if the Master Servicer had continued to act
hereunder, and the Trustee or the Master Servicer, as applicable, as successor
to the Special Servicer shall be entitled to the Special Servicer Fees to which
the Special Servicer would have been entitled if the Special Servicer had
continued to act hereunder. Notwithstanding the above, the Trustee or the
Master Servicer, as applicable, if it shall be unwilling or unable to so act, or
if it is not approved by the Rating Agency as a Master Servicer or Special
Servicer, as applicable, may, if the Holders of the Certificates entitled to at
least 66 2/3% of the Voting Rights so request in writing to the Trustee,
promptly appoint, or petition a court of competent jurisdiction to appoint, any
established mortgage loan servicing institution which is not a Disqualified
Organization acceptable to the Rating Agency (such acceptance indicated by the
written confirmation from the Rating Agency that such appointment will not
result in a qualification, downgrade or withdrawal of the rating then assigned
to any Class of Certificates), and, in the case of an appointment of a Special
Servicer, the Trustee or the Master Servicer as the successor to the Master
Servicer or the Special Servicer, as applicable, hereunder in the assumption of
all or any part of the responsibilities, duties or liabilities of the Master
Servicer or the Special Servicer hereunder. No appointment of a successor to
the Master Servicer or the Special Servicer hereunder shall be effective until
the assumption by the successor to the Master Servicer or the Special Servicer
of all its responsibilities, duties and liabilities hereunder. Pending
appointment of a successor to the Master Servicer or the Special Servicer
hereunder, unless the Trustee or the Master Servicer, as applicable, shall be
prohibited by law from so acting (in which event the outgoing Master Servicer or
Special Servicer shall continue to act as such until a successor is appointed),
the Trustee or the Master Servicer, as applicable, shall act in such capacity as
herein provided above. In connection with such appointment and assumption
described herein, the Trustee or the Master Servicer, as applicable, may make
such arrangements for the compensation of such successor out of payments on
Mortgage Loans and distributions on Mortgage Certificates as it and such
successor shall agree; PROVIDED, HOWEVER, that no such compensation shall be in
excess of that permitted the terminated party hereunder. The Depositor, the
Trustee, the Custodian, if any, the Master Servicer or the Special Servicer
(whichever is not the terminated party) and such successor shall take such
action, consistent with this Agreement, as shall be necessary to effectuate any
such succession.
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SECTION 7.3 NOTIFICATION TO CERTIFICATEHOLDERS.
(a) Upon any termination pursuant to Section 7.1 above or
appointment of a successor to the Master Servicer or the Special Servicer, the
Trustee shall give prompt written notice thereof to Certificateholders at their
respective addresses appearing in the Certificate Register.
(b) Within 60 days after the occurrence of any Event of Default
known to a Responsible Officer of the Trustee (five days in the case of an Event
of Default under Section 7.1(i)), the Trustee shall transmit by mail to all
Holders of Certificates notice of such Event of Default, unless such Event of
Default shall have been cured or waived.
SECTION 7.4 OTHER 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 7.1, shall have the right, in its own name as trustee of an
express trust, to take all actions now or hereafter existing at law, in equity
or by statute to enforce its rights and remedies and protect the interests of,
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 and debt in connection therewith).
Except as otherwise expressly provided in this Agreement, no remedy provided for
by this Agreement shall be exclusive of any other remedy and each and every
remedy shall be cumulative and in addition to any other remedy and no delay or
omission or failure to exercise any right or remedy shall impair any such right
or remedy or shall be deemed to be a waiver of any Event of Default.
SECTION 7.5 WAIVER OF PAST EVENTS OF DEFAULT.
The Holders of Certificates evidencing not less than 66 2/3% of the
aggregate Voting Rights of the Certificates may, on behalf of all Holders of
Certificates, waive any default by the Master Servicer or the Special Servicer
in the performance of its obligations hereunder and its consequences, except a
default in making any required deposits to or payments from the Collection
Account in the case of the Master Servicer or the REO Account in the case of
Special Servicer, or in remitting payments as received to the Master Servicer by
the Special Servicer, in each case in accordance with this Agreement. 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 7.6 EFFECTS OF TRANSFER.
After the transfer of the duties of the Master Servicer or the Special
Servicer, pursuant to Section 6.2, 6.4, 7.1 or 7.2 of this Agreement, the
replaced Master Servicer or Special Servicer, as the case may be, shall have no
further obligations with respect to the management, administration or collection
of the Mortgage Loans or Mortgage Certificates, but shall remain entitled to
compensation or other amounts due under this Agreement to it that had already
accrued prior to such transfer.
SECTION 7.7 TRUSTEE AS MAKER OF ADVANCES.
(a) In the event that the Master Servicer or the Special Servicer,
as the case may be, fails to fulfill its obligations hereunder to make any P&I
Advances or Servicer Advances, the Trustee, or successor Master Servicer or
Special Servicer, as the case may be, shall, subject to a determination of
recoverability as described below, in the case of P&I Advances, perform such
obligations within one Business Day of such failure by the Master Servicer or
the Special Servicer, as the case may be, but in no event later than 12:00 noon
(Eastern Standard Time) on the related Distribution Date, and, in the case of
Servicer Advances, perform such obligations within five Business Days of (i)
receipt of notice of such failure by the Master Servicer or the Special
Servicer, as the case may be or (ii) the date on
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which a Responsible Officer has actual knowledge of such an advance not being
made and, with respect to any such P&I Advance or Servicer Advance made by the
Trustee, the Trustee shall succeed to all of the Master Servicer's or the
Special Servicer's rights with respect to P&I Advances and Servicer Advances
and the accrued and unpaid interest thereon at the Advance Rate hereunder,
including, without limitation, the Master Servicer's or the Special Servicer's,
as the case may be, rights of reimbursement (without regard to any impairment
of any such rights of reimbursement caused by such Master Servicer's or Special
Servicer's default in its obligations hereunder); PROVIDED, HOWEVER, that if P&I
Advances or Servicer Advances made by the Trustee, the Master Servicer and
Special Servicer, as the case may be, shall at any time be outstanding, or any
amounts of interest thereon at the Advance Rate shall be accrued and unpaid,
all amounts available to repay such P&I Advances or Servicer Advances and
interest thereon shall be applied entirely to the such P&I Advances or Servicer
Advances outstanding to the Trustee, until such P&I Advances or Servicer
Advances shall have been repaid in full, together with all amounts of interest
accrued thereon at the Advance Rate. In connection with making any P&I Advances
or Servicer Advances hereunder, the Trustee shall be entitled to conclusively
rely on any Officer's Certificate evidencing a determination by the Master
Servicer or the Special Servicer, as the case may be, that such P&I Advance or
Servicer Advance is a Nonrecoverable Advance or the Trustee may make its own
determination that such P&I Advance or Servicer Advance is a Nonrecoverable
Advance; provided, however, that such determination shall be evidenced by an
Officer's Certificate delivered to the Depositor.
(b) [Reserved]
(c) In the event the Trustee, as acting Master Servicer or Special
Servicer, as the case may be, makes any P&I Advance or Servicer Advance, the
successor Master Servicer or Special Servicer, as the case may be, shall upon
the effectiveness of its appointment reimburse the Trustee for any and all
outstanding P&I Advances and Servicer Advances made thereby, together with any
and all accrued and unpaid interest at the Advance Rate thereon, and the
successor Master Servicer or Special Servicer, as the case may be, shall succeed
to all of the rights of reimbursement of the Trustee with respect thereto.
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ARTICLE VIII
CONCERNING THE TRUSTEE
SECTION 8.1 DUTIES OF TRUSTEE.
The Trustee, prior to the occurrence of an Event of Default of which a
Responsible Officer of the Trustee has actual knowledge and after the curing or
waiver of all Events of Default which may have occurred or been waived,
undertakes to perform such duties and only such duties as are specifically set
forth in this Agreement. In case of an Event of Default of which a Responsible
Officer of the Trustee has actual knowledge shall have occurred (which has not
been cured or waived), the Trustee, subject to the provisions of Section 7.1,
7.2, 7.4 and 7.5, 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.
The Trustee, upon receipt of any resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform on their face to the requirements of this Agreement; PROVIDED, HOWEVER,
that prior to the occurrence of any Event of Default, the Trustee shall be under
no obligation to recalculate, verify or recompute any information provided to it
hereunder by the Depositor, the Master Servicer, the Special Servicer or others.
If any such instrument is found not to conform to the requirements of this
Agreement in a material manner, the Trustee shall take 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.
Subject to Section 8.2, no provision of this Agreement shall be
construed to relieve the Trustee from liability for its own negligent action,
its own negligent failure to act or its own misconduct; PROVIDED, HOWEVER, that:
(i) prior to the occurrence of an Event of Default, and
after the curing or waiver of all such Events of
Default which may have occurred, the duties and
obligations of the Trustee shall be determined solely
by the express provisions of this Agreement, the
Trustee shall not be liable except for the performance
of such duties and obligations as are specifically set
forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against
the Trustee and, in the absence of bad faith on part of
the Trustee, the Trustee may conclusively rely as to
the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates,
reports or opinions furnished to the Trustee that
conform to the requirements of this Agreement;
(ii) the Trustee shall not be personally liable for an error
of judgment made in good faith by a Responsible Officer
or Responsible Officers, unless it shall be proved that
the Trustee was negligent in ascertaining the pertinent
facts;
(iii) the Trustee shall not be personally liable with respect
to any action taken, suffered or omitted to be taken by
it in good faith in accordance with the direction of
Holders of Certificates entitled to at least 25% of the
Voting Rights (or such other percentage as is specified
herein) of each affected Class, or of the aggregate
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
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(iv) the Trustee shall not be charged with knowledge of any
failure by the Master Servicer or the Special Servicer
to comply with the obligations of the Master Servicer
or the Special Servicer referred to in clause (i) or
clause (ii) of Section 7.1, or of any breach referred
to in clause (vi) of Section 7.1, unless a Responsible
Officer of the Trustee obtains actual knowledge of such
failure or breach.
SECTION 8.2 CERTAIN MATTERS AFFECTING THE TRUSTEE.
(a) Except as otherwise provided in Section 8.1:
(i) the Trustee may request and/or conclusively rely upon
and shall be protected in acting or refraining from
acting upon any resolution, Officer's Certificate,
certificate of auditors or any other certificate,
statement, instrument, opinion, report, notice,
request, consent, order, appraisal, bond or other paper
or document reasonably believed by it to be genuine and
to have been signed or presented by the proper party or
parties;
(ii) the Trustee may consult with counsel and any written
advice or 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 advice or opinion of
counsel;
(iii) the Trustee shall be under no obligation to exercise
any of the trusts or powers vested in it by this
Agreement or to institute, conduct or defend any
litigation hereunder or in relation hereto at the
request, order or direction of any of the
Certificateholders pursuant to the provisions of this
Agreement, unless such Certificateholders shall have
offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which may
be incurred therein or thereby; the 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 or willful misconduct in the performance of
any such act; nothing contained herein shall, however,
relieve the Trustee of the obligations, upon the
occurrence of an Event of Default of which a
Responsible Officer of the Trustee has actual knowledge
(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;
(iv) neither the Trustee nor any of its directors, officers,
employees, Affiliates or agents shall be personally
liable for any action taken, suffered or omitted by the
Trustee in good faith and reasonably determined by the
Trustee to be authorized or within the discretion or
rights or powers conferred upon the Trustee 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 which may have occurred, the Trustee shall
not be bound to make any investigation into the facts
or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice,
request, consent, order, approval, bond or other paper
or document, unless requested in writing to do so by
Holders of Certificates entitled to at least 51% (or
such other percentage as is specified herein) of the
Voting Rights of any affected Class; PROVIDED, HOWEVER,
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that if the payment within a reasonable time to the
Trustee of the costs, expenses or liabilities likely to
be incurred by it in the making of such investigation
is, in the opinion of the Trustee, not reasonably
assured to the Trustee by the security afforded to it
by the terms of this Agreement, the Trustee may require
reasonable indemnity against such expense or liability
as a condition to taking any such action. The
reasonable expense of every such examination shall be
paid by the Master Servicer if an Event of Default
shall have occurred and be continuing relating to the
Master Servicer, and by the Special Servicer, if an
Event of Default shall have occurred and be continuing
relating to the Special Servicer, and otherwise by the
Certificateholders requesting the investigation; and
(vi) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either
directly or by or through agents or attorneys or a
custodian other than the Originator or the Depositor.
The Trustee shall not be liable or responsible for the
misconduct or negligence of any of the Trustee's agents
or attorneys or a custodian appointed with due care by
the Trustee hereunder consistent with the preceding
sentence or the actions of the Master Servicer, the
Special Servicer, any Subservicer or the Depositor.
(b) Following the Startup Day, the Trustee shall not, except as
expressly required by any provision of this Agreement, accept any contribution
of assets to the Trust Fund, the Upper-Tier REMIC or the Lower-Tier REMIC unless
the Trustee shall have received an Opinion of Counsel, at the expense of the
contributor of such assets to the Trust Fund, to the effect that the inclusion
of such assets in the Upper-Tier REMIC or Lower-Tier REMIC will not cause the
Upper-Tier REMIC or Lower-Tier REMIC to fail to qualify as a REMIC at any time
that any Certificates or Uncertificated Lower-Tier Interests are outstanding or
subject the Upper-Tier REMIC or Lower-Tier REMIC to any tax under the REMIC
Provisions or other applicable provisions of federal, state and local law or
ordinances.
(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.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if in the
Trustee's opinion repayment of such funds or adequate indemnity against such
risk or liability is not reasonably assured to it, and none of the provisions
contained in this Agreement shall in any event require the Trustee to perform or
be responsible for the manner of performance of, any of the obligations of the
Master Servicer or the Special Servicer under this Agreement, except during such
time, if any, as the Trustee shall be the successor to, and be vested with the
rights, duties, powers and privileges of, the Master Servicer or the Special
Servicer in accordance with the terms of this Agreement. Notwithstanding
anything contained herein, the Trustee shall not be responsible and shall have
no liability in connection with duties assumed by the Paying Agent, the
Custodian, the Authenticating Agent and the Certificate Registrar hereunder,
unless the Trustee is acting in any such capacity hereunder.
The Trustee shall have no duty to conduct any affirmative
investigation as to the occurrence of any condition requiring the repurchase or
substitution of any Mortgage Loan or Mortgage Certificate, as applicable, by the
Originator pursuant to this Agreement or the Transfer Agreement or the
eligibility of any Mortgage Loan or Mortgage Certificate for purposes of this
Agreement.
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(d) Monthly, the Trustee shall be entitled to receive the Trustee
Fee (which shall not be limited by any provision of law with respect to the
compensation of the trustee of an express trust), for all services rendered by
it in the execution of the trusts hereby created and in the exercise and
performance of any of the powers and duties hereunder of the Trustee. On or
before the Master Servicer Remittance Date in each month (commencing in May
1998), the Master Servicer shall, pursuant to Section 3.6, withdraw from the
Collection Account and pay to the Trustee that portion of funds then on deposit
in the Collection Account that are allocable to the Trustee Fee. The Master
Servicer shall also withdraw from the Collection Account the amount necessary to
reimburse the Trustee for all Advances, together with Advance Interest thereon,
and (at the direction of the Trustee) all expenses of the Trust Fund paid by the
Trustee and reimbursable under this Agreement. The provisions of this Section
8.2(d) shall survive any termination of this Agreement and the resignation or
removal of the Trustee.
SECTION 8.3 TRUSTEE NOT LIABLE FOR CERTIFICATES,
MORTGAGE LOANS OR MORTGAGE CERTIFICATES.
The recitals contained herein and in the Certificates (other than the
signature, if any, of the Trustee on the Certificates) and information contained
in any offering document for the Certificates, except to the extent provided by
the Trustee, shall not be taken as the statements of the Trustee and the Trustee
assumes no responsibility for their correctness. The Trustee makes no
representations or warranties as to the validity or sufficiency of this
Agreement or of the Certificates (other than the signature, if any, of the
Trustee on the Certificates) or of any Mortgage Loan or Mortgage Certificate or
related document. The Trustee shall not at any time have any responsibility or
liability for or with respect to the legality, validity and enforceability of
any Mortgage or any Mortgage Loan or the Mortgage Certificate, or the perfection
and priority of any Mortgage or the maintenance of any such perfection and
priority, or for or with respect to the sufficiency of the Trust Fund or its
ability to generate the payments to be distributed to Certificateholders, under
this Agreement, including, without limitation: the existence, condition and
ownership of any Mortgaged Property; the existence and enforceability of any
hazard or other insurance thereon (other than if the Trustee shall assume the
duties of the Master Servicer or the Special Servicer pursuant to Section 7.2);
the existence of any Mortgage Loan or the Mortgage Certificate or the contents
of the related Mortgage File on any computer or other record thereof (other than
if the Trustee shall assume the duties of the Master Servicer pursuant to
Section 7.2); the validity of the assignment of any Mortgage Loan or the
Mortgage Certificate to the Trust Fund or of any intervening assignment; the
completeness of any Mortgage File; the performance or enforcement of any
Mortgage Loan or Mortgage Certificate (other than if the Trustee shall assume
the duties of the Master Servicer or the Special Servicer pursuant to Section
7.2); the compliance by the Depositor, the Master Servicer or the Special
Servicer with any warranty or representation made under this Agreement or in any
related document or the accuracy of any such warranty or representation prior to
the Trustee's receipt of notice or other discovery of any non-compliance
therewith or any breach thereof; any investment of monies by or at the direction
of the Master Servicer or any loss resulting therefrom, it being understood that
the Trustee shall remain responsible for any Trust Fund property that it may
hold in its individual capacity; the acts or omissions of any of the Depositor,
the Master Servicer (other than if the Trustee shall assume the duties of the
Master Servicer pursuant to Section 7.2), the Special Servicer (other than if
the Trustee shall assume the duties of the Special Servicer pursuant to Section
7.2), any subservicer or any Borrower; any action of the Master Servicer (other
than if the Trustee shall assume the duties of the Master Servicer pursuant to
Section 7.2), or any other action taken by the Master Servicer in the name of
the Trustee, except to the extent such action is taken at the express written
direction of the Trustee; the failure of the Master Servicer, the Special
Servicer or any subservicer to act or perform any duties required of it as agent
of the Trustee hereunder; or any action by the Trustee taken at the instruction
of the Master Servicer (other than if the Trustee shall assume the duties of the
Master Servicer pursuant to Section 7.2) or the Special Servicer (other than if
the Trustee shall assume the duties of the Special Servicer pursuant to Section
7.2) unless the taking of such action is not permitted by the express terms of
this Agreement; PROVIDED, HOWEVER, that the foregoing shall not relieve the
Trustee of its obligation to perform its duties under this Agreement. The
Trustee shall not be accountable for the use or application by the Depositor or
the Master Servicer of any of the Certificates or of the proceeds of such
Certificates, or for the use or application of any funds paid to the Depositor,
the Master Servicer or the Special Servicer in respect of the Mortgage Loans or
Mortgage Certificates or deposited in or withdrawn from the Collection Account
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by the Depositor, the Master Servicer or the Special Servicer, other than any
funds held by the Trustee in accordance with Section 3.5(b). The Trustee shall
not have any responsibility for filing any financing or continuation statement
in any public office at any time or to otherwise perfect or maintain the
perfection of any security interest or lien granted to it hereunder (unless the
Trustee shall have become the successor Master Servicer) or to record this
Agreement. In making any calculation hereunder which includes as a component
thereof the payment or distribution of interest for a stated period at a stated
rate, to the extent permitted by applicable law, the Trustee shall assume that
such payment is so permitted unless a Responsible Officer of the Trustee has
actual knowledge, or receives an Opinion of Counsel to the effect, that such
payment is not permitted by applicable law.
The Trustee may request, and conclusively rely upon, an Officer's
Certificate of the Master Servicer or the Special Servicer, as to whether any
breach of a representation and warranty of the Master Servicer or the Special
Servicer in Section 2.5 or 2.6, as the case may be, is susceptible to cure in
all material respects.
SECTION 8.4 TRUSTEE MAY OWN CERTIFICATES.
The Trustee, in its individual capacity or any other capacity, may
become the owner or pledgee of Certificates, and may deal with the Depositor,
the Master Servicer and the Special Servicer in banking transactions, with the
same rights it would have if it were not Trustee.
SECTION 8.5 LIMITATION ON LIABILITY OF TRUSTEE.
(a) The Trustee, its affiliates and each of their respective
directors, officers, employees and agents in their corporate capacity, shall be
indemnified by amounts on deposit in the Collection Account and Distribution
Account and held harmless against any and all losses, liabilities, damages,
claims, penalties, fines, forfeitures or expenses (including reasonable
attorneys' fees) arising in respect of this Agreement (including, with respect
to the Trustee, performance under Section 8.1 hereof) or the Certificates other
than those resulting from bad faith or intentional misconduct, or negligence in
the performance of its duties.
(b) The Master Servicer agrees to indemnify each of the Trustee,
its affiliates, and each of their respective directors, officers, employees and
agents (each an "Indemnified Party") in its corporate capacity from, and hold it
harmless against, any and all losses, liabilities, damages, claims, penalties,
fines, forfeitures or expenses (including reasonable attorneys' fees) resulting
from the Master Servicer's negligence, bad faith or intentional misconduct in
the performance of its duties under this Agreement except to the extent the
Indemnified Party's own bad faith, willful misconduct or negligence is the cause
of the loss, liability, damage, claim or expense.
(c) The Special Servicer agrees to indemnify each of the Trustee,
its affiliates, and each of their respective directors, officers, employees and
agents in its corporate capacity from, and hold it harmless against, any and all
losses, liabilities, damages, claims, penalties, fines, forfeitures or expenses
(including reasonable attorneys' fees) arising in respect of the Special
Servicer's acts or omissions in connection with this Agreement or the
Certificates except to the extent the Trustee's own bad faith, willful
misconduct or negligence is the cause of the loss, liability, damage, claim or
expense.
(d) This Section 8.5 shall survive the termination or maturity of
this Agreement or the resignation or removal of the Trustee as regards rights
accrued prior to such resignation or removal.
SECTION 8.6 ELIGIBILITY REQUIREMENTS FOR TRUSTEE.
The Trustee hereunder shall at all times (i) be a corporation or
association organized and doing business under the laws of any state of the
United States of America or a nationally chartered bank, (ii) be authorized
under such laws to exercise corporate trust powers and to accept the trust
conferred under this Agreement, (iii) have a
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combined capital and surplus of at least $50,000,000 and be subject to
supervision or examination by federal or state authority, (iv) not be an
Affiliate of the Originator, the Depositor, the Master Servicer or the Special
Servicer (except during any period when the Trustee has assumed the duties of
the Master Servicer or the Special Servicer pursuant to Section 7.2) and
(v) have a long-term unsecured senior debt rating of at least "AA" from the
Rating Agency or written confirmation shall have been received from the Rating
Agency that the performance of such entity in the capacity of the Trustee shall
not result in the qualification, downgrade or withdrawal of the then current
ratings assigned by the Rating Agencies to the outstanding Classes of
Certificates (other than the initial Trustee, LaSalle National Bank, who is
hereby deemed to be acceptable to the Rating Agency); PROVIDED HOWEVER, that if
the Trustee does not have such long-term unsecured debt rating, either party
shall be eligible pursuant to this Section if the Master Servicer has a
long-term unsecured senior debt rating of at least "AA" from the Rating Agency.
Any successor Trustee shall at the time of its appointment have long-term
unsecured senior debt ratings of at least "AA" from the Rating Agency. If such
corporation publishes reports of condition at least annually, pursuant to law
or to the requirements of the aforesaid supervising or examining authority,
then for the purposes of this Section the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. 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 8.7.
SECTION 8.7 RESIGNATION AND REMOVAL OF THE TRUSTEE.
The Trustee may not resign until either (A) the Trust Fund has been
completely liquidated and the proceeds of the liquidation have been distributed
to the security holders of the trust, or (B) a successor trustee or custodian,
having the qualifications prescribed in Section 8.6, has been designated and has
accepted such trusteeship or custodianship. Subject to the preceding sentence,
the Trustee may resign and be discharged from the trusts hereby created by
giving written notice thereof to the Depositor, the Master Servicer and the
Special Servicer. Upon receiving such notice of resignation, the Depositor
shall, at the expense of the Trust Fund, promptly remove the Trustee and
promptly appoint a successor trustee by written instrument, which instrument
shall be delivered in original form to the resigning Trustee, the Master
Servicer, the Special Servicer and the successor trustee. If no successor
trustee shall have been so appointed and have accepted appointment within 90
days after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
trustee.
If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 8.6 and shall fail to resign after written
request therefor by the Depositor, or if at any time the Trustee shall become
incapable of acting, or shall be adjudged bankrupt or insolvent, or a receiver
of the Trustee or of its property shall be appointed, or any public officer
shall take charge or control of the Trustee or of its property or affairs for
the purpose of rehabilitation, conservation or liquidation, then the Depositor
may remove the Trustee. If it removes the Trustee under the authority of the
immediately preceding sentence, the Depositor shall promptly remove the appoint
a successor trustee by written instrument, which instrument shall be delivered
in original form to the Trustee so removed, to the Master Servicer, to the
Special Servicer and to such successor trustee.
The Holders of Certificates entitled to at least 66-2/3% of the Voting
Rights may at any time remove the Trustee and, in such event, shall promptly
appoint a successor trustee by written instrument or instruments, in five
originals, signed by such Holders or their attorneys-in-fact duly authorized,
one complete set of which instruments shall be delivered to the Depositor, one
complete set to the Master Servicer one complete set to the Special Servicer,
one complete set to the Trustee so removed and one complete set to the successor
so appointed.
Any resignation or removal of the Trustee and the appointment of a
successor trustee pursuant to any of the provisions of this Section shall not
become effective until acceptance of appointment by the successor Trustee as
provided in Section 8.9.
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SECTION 8.8 REPRESENTATIONS AND WARRANTIES OF THE TRUSTEE.
(a) The Trustee, in its capacity as the Trustee, hereby represents
and warrants as of the Closing Date that:
(i) The Trustee is a banking corporation, duly organized,
validly existing and in good standing under the laws
governing its creation and existence and has full
corporate power and authority, to own its property, to
carry on its business as presently conducted, and to
enter into and perform its obligations under this
Agreement;
(ii) The execution and delivery by the Trustee of this
Agreement have been duly authorized by all necessary
corporate action on the part of the Trustee; neither
the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated in this
Agreement, nor compliance with the provisions of this
Agreement, will conflict with or result in a breach of,
or constitute a default under, (i) any of the
provisions of any law, governmental rule, regulation,
judgment, decrees or order binding on the Trustee or
its properties that would materially and adversely
affect the Trustee's ability to perform its obligations
under this Agreement, (ii) the organizational documents
of the Trustee, or (iii) the terms of any material
agreement or instrument to which the Trustee is a party
or by which it is bound; the Trustee is not in default
with respect to any order or decree of any court or any
order, regulation or demand of any federal, state,
municipal or other governmental agency, which default
would materially and adversely affect its performance
under this Agreement;
(iii) The execution, delivery and performance by the Trustee
of this Agreement and the consummation of the
transactions contemplated by this Agreement do not
require the consent, approval, authorization or order
of, the giving of notice to or the registration with
any state, federal or other governmental authority or
agency, except such as has been or will be obtained,
given, effected or taken in order for the Trustee to
perform its obligations under this Agreement; provided,
however, that to the extent it may become necessary,
the Trustee may act pursuant to Section 8.11 hereof.
(iv) This Agreement has been duly executed and delivered by
the Trustee and, assuming due authorization, execution
and delivery by the other parties hereto, constitutes a
legal, valid and binding obligation of the Trustee,
enforceable against the Trustee in accordance with its
terms, subject, as to enforcement of remedies, to
applicable bankruptcy, reorganization, insolvency,
moratorium and other similar laws affecting creditors'
rights generally as from time to time in effect, and to
general principles of equity (regardless of whether
such enforceability is considered in a proceeding in
equity or at law); and
(v) There are no actions, suits or proceedings pending or,
to the best of the Trustee's knowledge, threatened,
against the Trustee that, either in any one instance or
in the aggregate, would draw into question the validity
of this Agreement, or which would be likely to impair
materially the ability of the Trustee to perform under
the terms of this Agreement.
(b) [Reserved]
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SECTION 8.9 SUCCESSOR TRUSTEE.
Any successor trustee appointed as provided in Section 8.7 shall
execute, acknowledge and deliver to the Depositor and to its predecessor trustee
an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the predecessor trustee shall become effective and
such successor trustee, without any further act, deed or conveyance, shall
become fully vested with all the rights, powers, duties and obligations of its
predecessor hereunder, with the like effect as if originally named as trustee
herein. The predecessor trustee shall deliver to the successor trustee all
Mortgage Files and Mortgage Certificates and related documents and statements
held by it hereunder (other than any Mortgage Files and Mortgage Certificates at
the time held by a Custodian, which shall become the agent of any successor
trustee hereunder), and the Depositor and the predecessor trustee 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
shall accept appointment as provided in this Section unless at the time of such
acceptance such successor trustee shall be eligible under the provisions of
Section 8.6.
Upon acceptance of appointment by a successor trustee as provided in
this Section, the Depositor shall mail notice of the succession of such trustee
hereunder to all Holders of Certificates at their addresses as shown in the
Certificate Register. If the Depositor fails to mail such notice within 10 days
after acceptance of appointment by the successor trustee, the successor trustee
shall cause such notice to be mailed at the expense of the Depositor.
SECTION 8.10 MERGER OR CONSOLIDATION OF TRUSTEE.
Any Person into which the Trustee may be merged or converted or with
which it may be consolidated or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation 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 corporation shall be eligible under the provisions of Section
8.6, 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 8.11 APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.
Notwithstanding any other provisions hereof, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust Fund or property securing the same may at the time be located, the
Depositor and the Trustee acting jointly shall have the power and shall execute
and deliver all instruments to appoint one or more Persons approved by the
Trustee to act as co-trustee or co-trustees, jointly with the Trustee, or
separate trustee or separate trustees, of all or any part of the Trust Fund, and
to vest in such Person or Persons, in such capacity, such title to the Trust
Fund, or any part thereof, and, subject to the other provisions of this Section
8.11, such powers, duties, obligations, rights and trusts as the Depositor and
the Trustee may consider necessary or desirable. If the Depositor shall no
longer be in existence or shall not have joined in such appointment within 15
days after the receipt by it of a request so to do, or in case an Event of
Default shall have occurred and be continuing, the Trustee alone shall have the
power to make such appointment. No co-trustee or separate trustee hereunder
shall be required to meet the terms of eligibility as a successor trustee under
Section 8.6 hereunder and no notice to Holders of Certificates of the
appointment of co-trustee(s) or separate trustee(s) shall be required under
Section 8.9 hereof. No appointment of a co-trustee shall relieve the Trustee of
its obligations hereunder; provided that the Trustee shall have no liability for
the actions of a co-trustee or separate trustee which exceed the express
authority of such co-trustee or separate trustee.
In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 8.11, all rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or co-trustee
jointly (it being understood that such separate trustee or co-trustee is not
authorized to act separately without the Trustee joining in such act), except to
the
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extent that under any law of any jurisdiction in which any particular act or
acts are to be performed (whether as Trustee hereunder or as successor to the
Master Servicer or the Special Servicer hereunder), the Trustee shall be
incompetent or unqualified to perform such act or acts, in which event such
rights, powers, duties and obligations (including the holding of title to the
Trust Fund or any portion thereof in any such jurisdiction) shall be exercised
and performed by such separate trustee or co-trustee solely at the direction of
the Trustee.
No trustee under this Agreement shall be personally liable by reason
of any act or omission of any other trustee under this Agreement. The Depositor
and the Trustee acting jointly may at any time accept the resignation of or
remove any separate trustee or co-trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article VIII. Every such instrument shall be filed with the Trustee.
Each separate trustee and co-trustee, upon its acceptance of the trusts
conferred, shall be vested with the estates or property specified in its
instrument of appointment, either jointly with the Trustee or separately, as may
be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee. The fees and expenses of any co-trustee or separate trustee
shall be paid by the Trustee (other than expenses, disbursements and advances
made by such co-trustees or separate trustees, which shall be paid out of the
Trust Fund to the extent, and in accordance with the procedures, specified in
this Agreement), unless the appointment of such co-trustee or separate trustee
is required due to changes in federal or state law occurring after the Closing
Date, in which case the reasonable compensation of, and expenses, disbursements
and expenses made by, such co-trustee or separate trustee shall be paid out of
the Trust Fund to the extent and in accordance with the standards specified in
this Agreement.
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ARTICLE IX
TERMINATION
SECTION 9.1 TERMINATION.
(a) The respective obligations and responsibilities of the Master
Servicer, the Depositor, the Special Servicer and the Trustee created hereby
with respect to the Certificates (other than the obligation to make certain
payments, to send certain notices to Certificateholders as hereinafter set forth
and to prepare and file certain tax reports) shall terminate immediately
following the occurrence of the last action required to be taken by the Trustee
pursuant to this Article IX on the Termination Date; PROVIDED, HOWEVER, that in
no event shall the Trust Fund created hereby 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
Saint ▇▇▇▇▇, living on the date hereof.
(b) The Trust Fund shall be terminated and the assets of the Trust
Fund shall be sold or otherwise disposed of in connection with Section 9.1(c) or
9.1(d), only pursuant to a "plan of complete liquidation" within the meaning of
Section 860F(a)(4) of the Code adopted on behalf of each of the Upper-Tier REMIC
and Lower-Tier REMIC. The plan of complete liquidation shall be adopted by
designating on each REMIC's final federal income tax return a day no more than
90 days prior to the Anticipated Termination Date specified in the Notice of
Termination (such date being deemed the date of adoption of the plan of complete
liquidation).
(c) Each of the Master Servicer, any Holder of a Class LR
Certificate and the Special Servicer may at its option, upon not less than 30
days' prior notice, given to the Trustee any time on or after the Early
Termination Notice Date, specifying the Anticipated Termination Date, purchase
on the Early Termination Determination Date all, but not less than all, of the
Mortgage Loans and Mortgage Certificates then included in the Trust Fund, all
property acquired in respect of any Mortgage Loan or Mortgage Certificate and
any assets conveyed to the Trust Fund, at a purchase price (the "Termination
Price"), payable in cash, equal to not less than the greater of:
(i) the sum of (without duplication of any amount in
clauses (A) through (E) below);
(A) 100% of the unpaid principal balance of each
Mortgage Loan and Mortgage Certificate included in
the Trust Fund as of such Early Termination
Determination Date; and
(B) all unpaid interest accrued on such principal
balance of each such Mortgage Loan and Mortgage
Certificate at the related Mortgage Interest Rate
to such Early Termination Determination Date; and
(C) the fair market value of all other property
included in the Trust Fund as of such Early
Termination Determination Date; and
(D) all ▇▇▇▇▇▇▇▇▇▇▇▇ ▇&▇ Advances, unreimbursed
Servicing Advances and interest thereon at the
Advance Rate; and
(E) all unreimbursed Servicing Fees, Special Servicing
Fees and Trustee Fees; and
(ii) the aggregate fair market value (determined in
accordance with Section 9.1(d)(ii)(B)) of the Mortgage
Loans and Mortgage Certificate, and all other
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property acquired in respect of any Mortgage Loan
in the Trust Fund, as of the date of purchase.
All costs and expenses incurred by any party to this Agreement or by the Trust
Fund in connection with the purchase of the Mortgage Loans and Mortgage
Certificates and other assets of the Trust Fund pursuant to this Section 9.1(c)
shall be borne by the party exercising its purchase rights hereunder. Such
party shall deposit the Termination Price into the Collection Account on or
prior to the Early Termination Determination Date.
(d) If the Trust Fund has not been previously terminated pursuant
to subsection (b) of this Section 9.1:
(i) the Trustee shall determine as soon as practicable the
Distribution Date on which the Trustee reasonably
anticipates based on information with respect to the
Mortgage Loans and Mortgage Certificates previously
provided to it that the amount of cash on deposit in
the Distribution Account will be sufficient (without
giving effect to the sales referred to in clause (ii)
below) to distribute in full the Certificate Principal
Amounts of all the Certificates as of such Distribution
Date, together with all amounts required to be
distributed on such Distribution Date pursuant to
Section 4.1; and
(ii) the Master Servicer shall, at the expense of the Trust
Fund, on the Early Termination Determination Date sell
for cash all, but not less than all, the Mortgage Loans
and Mortgage Certificates and other property included
in the Trust Fund on such date and deposit such cash
into the Collection Account:
(A) on the terms and to the Persons specified in a
notice given to the Master Servicer by the Holders
of 100% of the Percentage Interests of the Class
LR Certificates; or
(B) if no such notice is timely received, to any
Person at a purchase price equal to the aggregate
fair market value of all the Mortgage Loans and
Mortgage Certificates and other property included
in the Trust Fund on such date, as determined by
an Independent appraiser acceptable to the Master
Servicer as of a day not more than 30 days prior
to such date.
The costs and expenses of the Master Servicer incurred in connection with
subsection (c) of this Section 9.1 shall be reimbursed by the Trust Fund.
(e) If the Trust Fund has not been previously terminated pursuant
to subsection (c) or (d) of this Section 9.1, the Trustee shall determine as
soon as practicable the Distribution Date on which the Trustee reasonably
anticipates based on information with respect to the Mortgage Loans and Mortgage
Certificates previously provided to it, that the final distribution will be made
(i) to the Holders of outstanding Class R, Class B, Class C, Class D, Class E,
Class F, Class G, Class X-1 and Class X-2 Certificates, notwithstanding that
such distribution may be insufficient to distribute in full the Certificate
Principal Amount, if any, of each such Certificate, together with amounts
required to be distributed on such Distribution Date pursuant to Section 4.1, or
(ii) if no Class R, Class B, Class C, Class D, Class E, Class F, Class G, Class
X-1 and Class X-2 Certificates are then outstanding, to the Holders of the Class
LR Certificates, in each case, following the later to occur of (A) the receipt
or collection of the last payment due on any Mortgage Loan or Mortgage
Certificate included in the Trust Fund or (B) the liquidation or disposition
pursuant to Section 3.18 of the last asset held by the Trust Fund.
123
(f) Notice of any termination of the Trust Fund pursuant to this
Section 9.1 shall be mailed by the Trustee to affected Certificateholders at
their addresses shown in the Certificate Register as soon as practicable after
the Trustee shall have received a Notice of Termination but in any event not
more than thirty days, and not less than five days, prior to the Anticipated
Termination Date. The notice mailed by the Trustee to affected
Certificateholders shall:
(i) specify the Anticipated Termination Date on which the
final distribution is anticipated to be made to Holders
of Certificates of the Classes specified therein;
(ii) specify the amount of any such final distribution, if
known;
(iii) state that the final distribution to Certificateholders
will be made only upon presentation and surrender of
Certificates at the office of the Trustee or Paying
Agent therein specified; and
(iv) if such termination is to be made pursuant to Section
9.1(c), set forth the right of the Holders of the Class
LR Certificates to purchase all, but not less than all,
the Mortgage Loans and Mortgage Certificates and the
other property included in the Trust Fund on the Early
Termination Determination Date specified therein.
If the Trust Fund is not terminated on any Anticipated Termination Date for any
reason, the Trustee shall promptly mail notice thereof to each affected
Certificateholder.
(g) Any funds not distributed on the Termination Date because of
the failure of any Certificateholders to tender their Certificates shall be set
aside and held uninvested in trust for the account of the appropriate non-
tendering Certificateholders, whereupon the Trust Fund shall terminate. If any
Certificates as to which notice of the Termination Date has been given pursuant
to this Section 9.1 shall not have been surrendered for cancellation within six
months after the time specified in such notice, the Trustee shall mail a second
notice to the remaining Certificateholders, at their last addresses shown in the
Certificate Register, to surrender their Certificates for cancellation in order
to receive, from such funds held, the final distribution with respect thereto.
The costs and expenses of maintaining such funds and of contacting
Certificateholders shall be paid out of the assets which remain held. If after
the second notice any Certificates shall not have been surrendered for
cancellation, the Class R Certificates shall be entitled to all unclaimed funds
and other assets which remain subject hereto. No interest shall accrue or be
payable to any Certificateholder on any amount held as a result of such
Certificateholder's failure to surrender its Certificate(s) for final payment
thereof in accordance with this Section 9.1. Any such amounts held by the
Trustee shall not be invested.
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ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1 COUNTERPARTS.
This Agreement may be executed simultaneously in any number of
counterparts, each of which counterparts shall be deemed to be an original, and
such counterparts shall constitute but one and the same instrument.
SECTION 10.2 LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS.
The death or incapacity of any Certificateholder shall not operate to
terminate this Agreement, the Trust Fund or the Upper-Tier REMIC or Lower-Tier
REMIC, nor entitle such Certificateholder's legal representatives or heirs to
claim an accounting or to take any action or proceeding in any court for a
partition or winding up of the Trust Fund, nor otherwise affect the rights,
obligations and liabilities of the parties hereto or any of them.
No Certificateholder shall have any right to vote (except as expressly
provided for herein) or in any manner otherwise control the operation and
management of the Trust Fund, or the obligations of the parties hereto, nor
shall anything herein set forth, or contained in the terms of the Certificates,
be construed so as to constitute the Certificateholders from time to time as
partners or members of an association; nor shall any Certificateholder be under
any liability to any third person by reason of any action taken by the parties
to this Agreement pursuant to any provision hereof.
No Certificateholder shall have any right by virtue of any provision
of this Agreement to institute any suit, action or proceeding in equity or at
law upon or under or with respect to this Agreement, unless such Holder
previously shall have given to the Trustee a written notice of default and of
the continuance thereof, as hereinbefore provided, and unless also the Holders
of Certificates representing over 50% of the Voting Rights allocated to each
affected Class of Certificates shall have made written request upon the Trustee
to institute such action, suit or proceeding in its own name as Trustee
hereunder and shall have offered to the Trustee such reasonable indemnity as it
may require against the costs, expenses and liabilities to be incurred therein
or thereby, and the Trustee, for 15 days after its receipt of such notice,
request and offer of indemnity, shall have neglected or refused to institute any
such action, suit or proceeding. It is understood and intended, and expressly
covenanted by each Certificateholder with every other Certificateholder and the
Trustee, that no one or more Holders of Certificates of any Class shall have any
right in any manner whatever by virtue of any provision of this Agreement to
affect, disturb or prejudice the rights of the Holders of any other of such
Certificates, or to obtain or seek to obtain priority over or preference to any
other such Holder, or to enforce any right under this Agreement, except in the
manner herein provided and for the equal, ratable and common benefit of all
Holders of Certificates of such 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 10.3 GOVERNING LAW.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 10.4 NOTICES.
All demands, notices and communications hereunder shall be in writing,
shall be deemed to have been given upon receipt (except that notices to Holders
of any Class of Certificates shall be deemed to have been given upon
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being sent by first class mail, postage prepaid, to the Holders at the addresses
of such Holders as shown in the Certificate Register) as follows:
If to the Trustee, to:
LaSalle National Bank
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Asset-Backed Securities Trust
Services - LTC Series 1998-1
With a copy to:
Kennedy, Covington, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
If to the Depositor, to:
LTC REMIC IV Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
With a copy to:
Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
If to the Master Servicer, to:
GMAC Commercial Mortgage Corporation
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: LTC Commercial Pass-Through
Certificates, Series 1998-1
With a copy to:
GMAC Commercial Mortgage Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: General Counsel
126
If to the Special Servicer, to:
LTC Properties, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
If to the Originator, to:
LTC Properties, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
If to the Initial Purchaser, to:
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
If to any Certificateholder, to:
the address set forth in the
Certificate Register,
or, in the case of the parties to this Agreement, to such other address as such
party shall specify by written notice to the other parties hereto. All notices
required to be given from one Person to another Person shall be deemed to have
been given without actually delivering such notice, as long as both parties are
controlled by the same Person.
SECTION 10.5 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, to the
extent permitted by applicable law, 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 10.6 NOTICE TO THE RATING AGENCY.
(a) The Master Servicer, the Special Servicer and, in the event
that the Trustee is the only recipient thereof or party hereto who has actual
knowledge thereof, the Trustee shall use its best efforts to promptly provide
notice to the Rating Agency with respect to each of the following of which a
Servicing Officer has actual knowledge:
(i) any material change or amendment to this Agreement;
(ii) the occurrence of any Event of Default that has not
been cured;
127
(iii) the resignation or termination of the Master Servicer,
the Trustee or the Special Servicer;
(iv) the repurchase of Mortgage Loans pursuant to Section
4.5(b);
(v) the final payment to any Class of Certificateholders;
(vi) any change in the location of the Collection Account;
and
(vii) any event that would result in the voluntary or
involuntary termination of any insurance of the
accounts of the Master Servicer or the Special
Servicer.
In addition, the party providing such notice to the Rating Agency shall furnish
to the Rating Agency copies of each notice or report to Certificateholders.
(b) Each of the Master Servicer and the Special Servicer shall
promptly furnish to the Rating Agency copies of the following:
(i) each of its annual statements as to compliance
described in Section 3.14; and
(ii) each of its annual independent public accountants'
servicing reports described in Section 3.15.
(c) The Depositor hereby requests that the Master Servicer or the
Special Servicer, as the case may be, shall furnish the Rating Agency with such
information with respect to a non-performing or Defaulted Mortgage Loan as the
Rating Agency shall reasonably request and which the Master Servicer or the
Special Servicer, as the case may be, can reasonably obtain.
(d) Notices to the Rating Agency shall be addressed as follows:
Standard & Poor's Ratings Services
▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Structured Finance -- Commercial Real Estate
Surveillance Group
or, in each case, to such other address as the Rating Agency shall specify by
written notice to the parties hereto.
SECTION 10.7 AMENDMENT.
This Agreement or any Custodial Agreement may be amended from time to
time by the Depositor, the Master Servicer, the Special Servicer and the
Trustee, without the consent of any of the Certificateholders, to cure any
ambiguity, to correct or supplement any provisions herein or therein that may be
inconsistent with any other provisions herein or therein, to maintain the rating
or ratings assigned to the Class A, Class R, Class LR, Class B, Class C,
Class D, Class E, Class F and Class G Certificates by the Rating Agency, or to
make any other provisions with respect to matters or questions arising under
this Agreement or such Custodial Agreement which shall not be inconsistent with
the provisions of this Agreement or such Custodial Agreement; PROVIDED, HOWEVER,
that such action shall not, as evidenced by an Officer's Certificate of the
Depositor, which shall be at the expense of the party requesting such amendment
(or, if such amendment is required by the Rating Agency to maintain the rating
issued by it or requested by the Trustee in order to clarify any ambiguity or
resolve any inconsistency, then the related Officer's
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Certificate shall be an expense of the Trust Fund), adversely affect in any
material respect the interests of any Certificateholder.
Further, the Depositor, the Master Servicer, the Special Servicer and
the Trustee, at any time and from time to time, without the consent of the
Certificateholders, may amend this Agreement to modify, eliminate or add to any
of its provisions to such extent as shall be necessary or helpful to maintain
the qualification of each of the Upper-Tier REMIC or Lower-Tier REMIC as a
REMIC, or to prevent the imposition of any tax on either entity under the REMIC
Provisions or of any additional material federal, state or local taxes, at all
times that any Certificates or Uncertificated Lower-Tier Interests are
outstanding; PROVIDED, HOWEVER, that such action, as evidenced by an Officer's
Certificate of the Depositor (obtained at the expense of the Trust Fund), is
necessary or helpful to maintain such qualification or to prevent the imposition
of any such taxes, and would not adversely affect in any material respect the
interest of any Certificateholder.
This Agreement or any Custodial Agreement may also be amended from
time to time by the Depositor, the Master Servicer, the Special Servicer and the
Trustee with the consent of the Holders of the Class A, Class R, Class LR, Class
B, Class C, Class D, Class E, Class F, Class G, Class X-1 and Class X-2
Certificates representing not less than 66 2/3% of the Voting Rights allocated
to each such Class of Certificates affected by the amendment (except as
otherwise provided in Section 3.20(c)) for the purpose of adding any provisions
to or changing in any manner or eliminating any of the provisions of this
Agreement or of modifying in any manner the rights of the Certificateholders;
PROVIDED, HOWEVER, that no such amendment shall:
(i) reduce in any manner the amount of, or delay the timing
of, payments received on Mortgage Loans or
distributions received on Mortgage Certificates which
are required to be distributed on any Certificate
without the consent of each affected Certificateholder;
or
(ii) reduce the aforesaid percentage of Certificates the
Holders of which are required to consent to any such
amendment or any action hereunder, without the consent
of the Holders of all Certificates then outstanding; or
(iii) alter the servicing standard set forth in Section 3.1
without the consent of the Holders of all Certificates
then outstanding; or
(iv) amend the principal amount of any Certificates, the
interest rate payable on any Certificate or the latest
possible maturity date of the Certificates; or
(v) adversely affect the qualification of either the
Upper-Tier REMIC or the Lower-Tier REMIC as a REMIC.
Any such consent by a Holder shall be conclusive and binding on such
Holder and upon all future Holders whether or not notation is made upon such
Holder's Certificate.
Promptly after the execution of any amendment, the Master Servicer
shall furnish written notification of the substance of such amendment to each
Certificateholder.
It shall not be necessary for the consent of Certificateholders under
this Section 10.7 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.
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Notwithstanding any contrary provision of this Agreement, no amendment
shall be made to this Agreement unless the Master Servicer and the Trustee shall
have received an Opinion of Counsel, at the expense of the party requesting such
amendment (or, if such amendment is required by the Rating Agency to maintain
the rating issued by it or requested by the Trustee in order to clarify any
ambiguity or resolve any inconsistency, then at the expenses of the Trust Fund),
to the effect that such amendment will not cause the Trust Fund to fail to
qualify as two separate REMICs at any time that any Certificates or
Uncertificated Lower-Tier interests are outstanding or cause a tax to be imposed
on the Upper-Tier REMIC or Lower-Tier REMIC under the REMIC Provisions. The
placement of an "original issue discount" legend on, or any change required to
correct any such legend previously placed on, Certificate shall not be deemed an
amendment to this Agreement.
Prior to the execution of any amendment to this Agreement, the Trustee
and the Master Servicer shall be entitled to receive and rely upon an Opinion of
Counsel, at the expense of the party requesting such amendment (or, if such
amendment is required by the Rating Agency to maintain the rating issued by it
or requested by the Trustee in order to clarify any ambiguity or resolve any
inconsistency, then at the expense of the Trust Fund) stating that the execution
of such amendment is authorized or permitted by this Agreement. The Trustee
may, but shall not be obligated to, enter into any such amendment which affects
the Trustee's own rights, duties or immunities under this Agreement.
SECTION 10.8 LIMITATION OF LIABILITY OF CERTAIN PERSONS.
No recourse under or upon any obligation or covenant contained in this
Agreement, or of any Certificate, or for any claim based thereon or otherwise in
respect thereof, shall be had against an incorporator, shareholder, officer or
director, as such, past, present or future, of the Trustee, the Originator, the
Master Servicer, the Special Servicer or the Depositor or any successor
corporation, either directly or through the Trustee, the Originator, the Master
Servicer, the Special Servicer or the Depositor, whether by virtue of any
constitution, statute or rule of law, or by the enforcement of any assessment or
penalty or otherwise; it being expressly understood that this Agreement and the
obligations issued hereunder are solely corporate obligations, and that no such
personal liability whatever shall attach to, or is or shall be incurred by the
incorporators, shareholders, officers or directors, as such, of the Trustee, the
Originator, the Master Servicer, the Special Servicer or the Depositor, or any
of them, because of the creation of the Certificates hereby authorized, or under
or by reason of the obligations or covenants contained in this Agreement or in
any of the Certificates or implied therefrom; and that any and all such personal
liability, either at common law or in equity or by constitution or statute, of,
and any and all such rights and claims against, every such incorporator,
shareholder, officer or director, as such, because of the creation of the
Certificates hereby authorized, or under or by reason of the obligations or
covenants contained in this Agreement or in any of the Certificates or implied
therefrom, are hereby expressly waived and released as a condition of, and as a
consideration for, the execution of this Agreement and the issuance of the
Certificates.
SECTION 10.9 ▇▇▇▇▇▇ ACT.
Any provisions required to be contained in this Agreement by Section
126 of Article 4-A of the New York Real Property Law and any provisions
permitted to be contained in this Agreement by Section 130-k of such Article 4A
that are necessary in order to permit the Trustee to act in the manner
contemplated by this Agreement 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 and/or Section 130-k
shall not have any effect, and if said Section 126 and/or Section 130-k 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 and/or Section 130-k
shall cease to have any further effect upon the provisions of this Agreement.
In the case of a conflict between the provisions of this Agreement and any
mandatory provisions of Article 4-A of the New York Real Property Law, such
mandatory provisions of said Article 4-A shall prevail, provided that if said
Article 4-A shall not apply to this Agreement, should at any time be repealed,
or cease to apply to this Agreement, or be construed by judicial decision to be
inapplicable, such mandatory provisions of such Article 4-A shall cease to have
any further effect upon the provisions of this Agreement.
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IN WITNESS WHEREOF, the Depositor, the Master Servicer, the Special
Servicer and the Trustee 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.
LTC REMIC IV CORPORATION,
as Depositor
By:___________________________
Name:____________________
Title:___________________
GMAC COMMERCIAL MORTGAGE
CORPORATION,
as Master Servicer
By:___________________________
Name:____________________
Title:___________________
LTC PROPERTIES, INC.,
as Special Servicer
By:___________________________
Name:____________________
Title:___________________
LASALLE NATIONAL BANK,
as Trustee, Custodian, Certificate
Registrar, Authenticating Agent and
Paying Agent
By:___________________________
Name:____________________
Title:___________________