Exhibit 5.1
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IMPAC CMB TRUST 1998-C1
Owner Trust
MIDLAND LOAN SERVICES, INC.
as Master Servicer and Special Servicer
LASALLE NATIONAL BANK
as Indenture Trustee
and
ABN AMRO BANK N.V.
as Fiscal Agent
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SERVICING AGREEMENT
Dated as of August 1, 1998
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IMPAC CMB TRUST 1998-C1
Collateralized Mortgage Bonds
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TABLE OF CONTENTS
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PRELIMINARY STATEMENT
ARTICLE I
DEFINITIONS
Section 1.01. Defined Terms..........................................................................2
Section 1.02. Other Definitional Provisions.........................................................24
Section 1.03. Certain Calculations in Respect of the Mortgage Loans.................................25
Section 1.04. Interest Calculations.................................................................26
Section 1.05. Cross-Collateralized Mortgage Loans...................................................26
ARTICLE II
REPRESENTATIONS AND WARRANTIES; RECORDINGS AND FILINGS; BOOKS
AND RECORDS; DEFECT, BREACH, CURE, REPURCHASE AND SUBSTITUTION
Section 2.01. Representations and Warranties of the Master Servicer and
Special Servicer......................................................................27
Section 2.02. Representations and Warranties of the Owner Trust.....................................28
Section 2.03. Recordings and Filings; Books and Records; Document Defects...........................29
Section 2.04. Repurchase or Substitution of Mortgage Loans for Document Defects and
Breaches of Representations and Warranties............................................31
ARTICLE III
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 3.01. Administration of the Mortgage Loans..................................................34
Section 3.02. Collection of Mortgage Loan ..........................................................35
Section 3.03. Collection of Taxes, Assessments and Similar Items; Servicing Accounts;
Reserve Accounts......................................................................35
Section 3.04. Collection Account....................................................................37
Section 3.05. Permitted Withdrawals From the Collection Account.....................................39
Section 3.06. Investment of Funds in the Collection Account and the
REO Account...........................................................................42
Section 3.07. Maintenance of Insurance Policies; Errors and Omissions and Fidelity
Coverage..............................................................................43
Section 3.08. Enforcement of Alienation Clauses; Assumption Agreements..............................45
Section 3.09. Realization Upon Defaulted Mortgage Loans.............................................47
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Section 3.10. Owner Trust and Indenture Trustee to Cooperate; Release of Mortgage
Loan Files............................................................................49
Section 3.11. Servicing Compensation; Interest on Servicing Advances................................50
Section 3.12. Property Inspections; Collection of Financial Statements; Delivery of
Certain Reports.......................................................................53
Section 3.13. Annual Statement as to Compliance.....................................................54
Section 3.14. Reports by Independent Public Accountants.............................................54
Section 3.15. Access to Certain Information.........................................................55
Section 3.16. Title to REO Property; REO Account....................................................55
Section 3.17. Management of REO Property............................................................56
Section 3.18. Sale of Mortgage Loans and REO Properties.............................................59
Section 3.19. Additional Obligations of Master Servicer and Special Servicer........................62
Section 3.20. Modifications, Waivers, Amendments and Consents.......................................64
Section 3.21. Transfer of Servicing Between Master Servicer and Special Servicer;
Record Keeping........................................................................67
Section 3.22. Asset Strategy Reports................................................................68
Section 3.23. Directing Bondholder..................................................................70
Section 3.24. Sub-Servicing Agreements..............................................................71
ARTICLE IV
REPORTS; P&I ADVANCES
Section 4.01. Reports to the Owner Trustee and the Indenture Trustee................................74
Section 4.02. P&I Advances..........................................................................74
Section 4.03. Use of Agents.........................................................................76
Section 4.04. Exchange Act Reporting................................................................76
ARTICLE V
THE MASTER SERVICER AND THE SPECIAL SERVICER
Section 5.01. Liability of the Master Servicer......................................................77
Section 5.02. Merger, Consolidation or Conversion of the Master Servicer and the
Special Servicer......................................................................77
Section 5.03. Indemnity.............................................................................78
Section 5.04. Master Servicer and Special Servicer Not to Resign....................................79
Section 5.05. Rights of Certain Persons in Respect of the Master Servicer and
the Special Servicer..................................................................79
Section 5.06. Designation of Master Servicer and Special Servicer by the
Controlling Class.....................................................................80
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Section 5.07. Master Servicer or Special Servicer as Owner of Bonds
and Certificates......................................................................81
Section 5.08 Limitation on Liability of the Master Servicer and of the
Special Servicer......................................................................82
ARTICLE VI
DEFAULT
Section 6.01. Servicing Events of Default...........................................................83
Section 6.02. Indenture Trustee to Act; Appointment of Successor....................................86
Section 6.03. Waiver of Servicing Events of Default.................................................87
Section 6.04. Additional Remedies of the Owner Trust and the Indenture
Trustee upon a Servicing Event of Default.............................................87
ARTICLE VII
CONCERNING THE FISCAL AGENT
Section 7.01. Duties of the Fiscal Agent............................................................89
Section 7.02. Fiscal Agent May Own Bonds and Certificates...........................................89
Section 7.03. Fees and Expenses of Fiscal Agent; Indemnification of
Fiscal Agent..........................................................................89
Section 7.04. Resignation and Removal of Fiscal Agent...............................................90
Section 7.05. Successor Fiscal Agent................................................................91
Section 7.06. Merger or Consolidation of Fiscal Agent...............................................91
ARTICLE VIII
TERMINATION
Section 8.01. Termination Upon Repurchase or Liquidation of All Mortgage Loans or
Discharge of Indenture................................................................92
ARTICLE IX
MISCELLANEOUS PROVISIONS
Section 9.01. Amendment.............................................................................94
Section 9.02. Recordation of Agreement; Counterparts................................................94
Section 9.03. GOVERNING LAW.........................................................................94
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Section 9.04. Notices...............................................................................94
Section 9.05. Severability of Provisions............................................................95
Section 9.06. Effect of Headings and Table of Contents..............................................95
Section 9.07. Notices to Rating Agencies and Others.................................................95
Section 9.08. Successors and Assigns; Beneficiaries.................................................96
Section 9.09. Complete Agreement....................................................................97
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EXHIBITS
EXHIBIT A-1 MORTGAGE LOAN SCHEDULE FOR SUB-POOL 1
EXHIBIT A-2 MORTGAGE LOAN SCHEDULE FOR SUB-POOL 2
EXHIBIT B-1 FORM OF MASTER SERVICER REQUEST FOR RELEASE
EXHIBIT B-2 FORM OF SPECIAL SERVICER REQUEST FOR RELEASE
EXHIBIT C-1 FORM OF DETERMINATION DATE REPORT
EXHIBIT C-2 FORM OF SPECIAL SERVICER REPORT
EXHIBIT C-3 FORM OF OPERATING STATEMENT ANALYSIS
EXHIBIT D-1 FORM OF NOTICE AND ACKNOWLEDGMENT
CONCERNING REPLACEMENT OF MASTER SERVICER OR
SPECIAL SERVICER
EXHIBIT D-2 FORM OF ACKNOWLEDGMENT OF PROPOSED
SPECIAL SERVICER
EXHIBIT E FORM OF LIMITED POWER OF ATTORNEY
EXHIBIT F FORM OF ACKNOWLEDGMENT OF RESTRICTIONS ON
USE OF ASSET STRATEGY REPORT
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This SERVICING AGREEMENT, dated as of August 1, 1998 (this
"Agreement"), is made among the IMPAC CMB Trust 1998-C1, as owner (the "Owner
Trust"), Midland Loan Services, Inc., as master servicer and special servicer
(together with its successors in such capacities, the "Master Servicer" and
"Special Servicer," respectively), LaSalle National Bank, as indenture trustee
(together with its successors in such capacity, the "Indenture Trustee") and ABN
AMRO Bank N.V., as fiscal agent (together with its successors in such capacity,
the "Fiscal Agent").
PRELIMINARY STATEMENT
The Mortgage Loans will be transferred to the Owner Trust on
the Closing Date on behalf of the holders of the Owner Trust Certificates issued
under the Owner Trust Agreement (each as defined herein), and upon such
transfer, the Owner Trust will grant a first priority security interest in its
right, title and interest in and to the Mortgage Loans, perfected under the
Uniform Commercial Code, to the Indenture Trustee as security for the
indebtedness evidenced by the Bonds issued under the Indenture (each as defined
herein). The Mortgage Loans will be serviced by Midland on behalf of the Owner
Trust. Accordingly, the Owner Trust Agreement and the Indenture require that the
Owner Trust and the Indenture Trustee, respectively, execute and deliver this
Agreement to provide for Midland to service the Mortgage Loans in accordance
with this Agreement as Master Servicer and Special Servicer hereunder.
ARTICLE I
DEFINITIONS
Section 1.01. Defined Terms.
Whenever used in this Agreement, including in the Preliminary
Statement, the words and phrases set forth below, unless the context otherwise
requires, shall have the meanings specified in this Section 1.01. Capitalized
terms used in this Agreement, including the Preliminary Statement, and not
defined herein, unless the context otherwise requires, shall have the respective
meanings specified in Section 1.01 of the Indenture or, to the extent not
defined therein, Article I of the Owner Trust Agreement (each as defined below).
"Administrative Expenses": The Indenture Trustee Fees, the
Owner Trustee Fees, the Management Fees, the Master Servicing Fees and the fees
of the Rating Agencies with respect to the Bonds (as specified by the Company).
"Advance": Any P&I Advance or Servicing Advance.
"Advance Interest": Interest accrued on any Advance at the
Reimbursement Rate and payable to the Master Servicer, the Special Servicer, the
Indenture Trustee or the Fiscal Agent, as the case may be, all in accordance
with Section 3.11(e) or Section 4.02(d), as applicable.
"Affiliate": With respect to any specified Person, any other
Person controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" when used with respect to
any specified Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agreement": This Servicing Agreement and all amendments
hereof and supplements hereto.
"Appraisal": With respect to any Mortgaged Property or REO
Property as to which an appraisal is required to be performed pursuant to the
terms of this Agreement, either: (i) a narrative appraisal complying with USPAP
conducted by a Qualified Appraiser in the case of Mortgage Loans and REO Loans
with a Stated Principal Balance as of the date of such appraisal of greater than
$1,000,000; or (ii) a limited appraisal and a summary report of the "market
value" of the Mortgaged Property, as defined in 12 CFR ss.225.62(g), conducted
by a Qualified Appraiser in the case of Mortgage Loans and REO Loans with a
Stated Principal Balance as of the date of such appraisal of $1,000,000 or less.
"Appraisal Reduction Amount": With respect to any Required
Appraisal Loan, an amount equal to the excess, if any, of (a) as calculated on
the Determination Date immediately
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following the date on which the most recent relevant Appraisal was obtained by
the Special Servicer pursuant to this Agreement, the sum of (i) the Stated
Principal Balance of such Required Appraisal Loan, (ii) to the extent not
previously advanced by or on behalf of the Master Servicer or the Indenture
Trustee, all accrued and unpaid interest on such Required Appraisal Loan through
the most recent Due Date prior to such Determination Date at a per annum rate
equal to the related Net Mortgage Rate, (iii) all accrued but unpaid Master
Servicing Fees and Special Servicing Fees in respect of such Required Appraisal
Loan, (iv) all related unreimbursed Advances made by or on behalf of the Master
Servicer, the Special Servicer or the Indenture Trustee in respect of such
Required Appraisal Loan, together with all unpaid Advance Interest accrued on
such Advances, and (v) all currently due but unpaid real estate taxes and
assessments, insurance premiums, and if applicable, ground rents in respect of
the related Mortgaged Property or REO Property, net of any Escrow Payments or
other reserves held by the Master Servicer or the Special Servicer with respect
to any such item, over (b) 90% of an amount equal to (i) the Appraised Value of
the related Mortgaged Property or REO Property, as applicable, as determined by
such Appraisal, net of (ii) the amount of any liens on such property (not
accounted for in clause (a)(v) of this definition) that are prior to the lien of
the Required Appraisal Loan.
"Appraised Value": With respect to each Mortgaged Property or
REO Property, the appraised value thereof (as is) based upon the most recent
Appraisal obtained pursuant to this Agreement but in no event based upon an
Appraisal more than 12 months old.
"Asset Strategy Report": The report prepared pursuant to
Section 3.22(a).
"Assignment of Leases": With respect to any Mortgaged
Property, any assignment of leases, rents and profits or similar document or
instrument executed by the Borrower in connection with the origination or
subsequent modification or amendment of the related Mortgage Loan.
"Balloon Mortgage Loan": Any Mortgage Loan that by its
original terms or by virtue of any modification entered into as of the Closing
Date provides for an amortization schedule extending beyond its Stated Maturity
Date and as to which, in accordance with such terms, the Scheduled Payment due
on its Stated Maturity Date is larger than the Scheduled Payment due on the Due
Date immediately preceding its Stated Maturity Date.
"Balloon Payment": With respect to any Balloon Mortgage Loan
as of any date of determination, the Scheduled Payment payable on the Stated
Maturity Date of such Mortgage Loan.
"Bankruptcy Code": The federal Bankruptcy Code of 1978, Title
11 of the United States Code, as amended from time to time.
"Bonds": The IMPAC CMB Trust 1998-C1 Collateralized Mortgage
Bonds issued pursuant to the Indenture and secured by a first priority security
interest, perfected under the Uniform Commercial Code, in the Trust Estate.
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"Borrower": The obligor or obligors on a Mortgage Note,
including any Person that has acquired the related Mortgaged Property and
assumed the obligations of the original obligor under the Mortgage Note.
"Borrower Group": The Borrowers with respect to any group of
Mortgage Loans that are cross-defaulted, cross-collateralized or both.
"Breach": As defined in Section 2.04(a).
"Business Day": Any day other than a Saturday, a Sunday or a
day on which banking institutions are authorized or obligated by law or
executive order to remain closed in Kansas City, Missouri, New York, New York,
Chicago, Illinois, Wilmington, Delaware, or any other city in which is located
the Primary Servicing Office of the Master Servicer or the Special Servicer or
the Corporate Trust Office of the Owner Trustee or the Indenture Trustee.
"CERCLA": The Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended from time to time.
"Class": Collectively, all of the Bonds or Owner Trust
Certificates bearing the same alphabetical and, if applicable, numerical
designation.
"Closing Date": August 26, 1998.
"Code": The Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated by the United States Treasury
thereunder.
"Collection Account": The segregated account or accounts
created and maintained by the Master Servicer pursuant to Section 3.04(a) on
behalf of the Indenture Trustee, which shall be entitled "Midland Loan Services,
Inc., as Master Servicer for the IMPAC CMB Trust 1998-C1."
"Collection Period": With respect to any Payment Date, the
period commencing immediately following the Determination Date for the preceding
Payment Date (or, in the case of the initial Payment Date, commencing
immediately following the Cut-off Date) and ending on and including the related
Determination Date.
"Company": IMH Assets Corp., a Delaware corporation, in its
capacity as depositor under the Owner Trust Agreement, or its successor in
interest.
"Control Person": With respect to any Person, anyone that
constitutes a "controlling person" of such Person within the meaning of the
Securities Act of 1933.
"Controlling Class": As of any date of determination, the most
subordinate of the Owner Trust Certificates and the Classes of Bonds then
outstanding as to which the excess, if any, of the aggregate Stated Principal
Balance of the Mortgage Loans over the aggregate Bond Principal
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Balance of any Classes of Bonds with a higher Payment Priority is not less than
25% of the aggregate initial Bond Principal Balance or Certificate Principal
Balance thereof.
"Corporate Trust Office": The principal corporate trust office
of the Owner Trustee or the Indenture Trustee (as the context requires) at which
at any particular time its corporate trust business with respect to the Owner
Trust Certificates and the Bonds, respectively, shall be administered, which
office at the Closing Date is located at (i) in the case of the Owner Trustee,
▇▇▇▇▇▇ Square North, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇,
Attention: Corporate Trust Administration, IMPAC CMB Trust 1998-C1, and (ii) in
the case of the Indenture Trustee, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇, Attention: Asset-Backed Securities Trust Services Group - IMPAC CMB
Trust 1998-C1.
"Corrected Mortgage Loan": Any Mortgage Loan that had been a
Specially Serviced Mortgage Loan but has ceased to be such in accordance with
the definition of such term below (other than by reason of a Liquidation Event
occurring in respect of such Mortgage Loan or the related Mortgaged Property
becoming an REO Property, as the case may be).
"CSSA": The Commercial Real Estate Secondary Market and
Securitization Association, or any association or organization that is a
successor thereto.
"Cut-off Date": August 1, 1998.
"Cut-off Date Balance": With respect to any Mortgage Loan, the
outstanding principal balance of such Mortgage Loan as of the Cut-off Date,
after application of all payments of principal due on or before such date,
whether or not received.
"Debt Service Coverage Ratio": With respect to any Mortgage
Loan, the net operating income for the related Mortgaged Property divided by the
annual debt service for such Mortgage Loan.
"Default Interest": With respect to any Mortgage Loan (or
successor REO Loan), any amounts collected thereon that represent penalty
interest in excess of interest on the principal balance of such Mortgage Loan
(or successor REO Loan) accrued at the related Mortgage Rate.
"Defaulted Mortgage Loan": A Mortgage Loan (i) that is
delinquent in an amount equal to at least two Monthly Payments (not including
the Balloon Payment), such delinquency to be determined without regard to any
acceleration of payments under any related Mortgage or Mortgage Note, or (ii) as
to which the Special Servicer has, by written notice to the related Borrower,
accelerated the maturity of the indebtedness evidenced by the related Mortgage
Note.
"Deleted Mortgage Loan": A Mortgage Loan replaced or to be
replaced with a Qualified Substitute Mortgage Loan.
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"Determination Date": With respect to any Payment Date, the
13th day of the month in which such Payment Date occurs, or if such 13th day is
not a Business Day, the Business Day immediately succeeding such 13th day.
"Determination Date Report": As defined in Section 4.01(a).
"Directing Bondholder": The Bondholder selected by the holders
of a majority of the Controlling Class, as certified by the Indenture Trustee
from time to time; provided, that, absent such selection, or (i) until a
Directing Bondholder is so selected, or (ii) upon receipt of notice from a
majority of the Controlling Class that a Directing Bondholder is no longer so
designated, the Bondholder(s) which owns the largest aggregate Bond Principal
Balance or Class Principal Balance, as applicable, of the Controlling Class
shall be the Directing Bondholder.
"Directly Operate": With respect to any REO Property, the
furnishing or rendering of services to the tenants thereof, the management or
operation of such REO Property, the holding of such REO Property primarily for
sale to customers, the performance of any construction work thereon or any use
of such REO Property in a trade or business conducted by the Owner Trust other
than through an Independent Contractor; provided, however, that the Owner Trust
(or the Special Servicer or any Sub-Servicer on behalf of the Owner Trust) shall
not be considered to Directly Operate an REO Property solely because the Owner
Trust (or the Special Servicer or any Sub-Servicer on behalf of the Owner Trust)
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.
"Document Defect": As defined in Section 2.03(c).
"Due Date": With respect to any Mortgage Loan (and any
successor REO Loan), the day of the month set forth in the related Mortgage Note
on which each Monthly Payment on such Mortgage Loan is scheduled to be due.
"Eligible Account": As defined in Section 1.01 of the
Indenture.
"Emergency Advance:" Any Servicing Advance that must be made
within five Business Days in order to avoid any penalty, any material harm to a
Mortgaged Property or any other material adverse consequence to the Trust
Estate.
"Escrow Payment": Any payment received by the Master Servicer
or the Special Servicer for the account of any Borrower for application toward
the payment of real estate taxes, assessments, insurance premiums, ground rents
(if applicable) and similar items in respect of the related Mortgaged Property.
"Exchange Act": The Securities Exchange Act of 1934, as
amended, and the rules, regulations and published interpretations of the
Securities and Exchange Commission thereunder and from time to time.
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"Extraordinary Expense": Any expense experienced with respect
to the Owner Trust that would result in the holders of the Bonds and the Owner
Trust Certificates, collectively, receiving less than the full amount of
principal and interest to which they are entitled on any Payment Date, including
any Special Servicing Fees, any Workout Fees and, in accordance with Section
4.02(d), interest on Advances payable to the Master Servicer, Special Servicer,
the Indenture Trustee or the Fiscal Agent as well as any of the expenses of the
Owner Trust that may be withdrawn pursuant to any of clauses (xii) and (xiii) of
Section 3.05 out of general collections on the Mortgage Loans and any REO
Properties on deposit in the Collection Account.
"Final Recovery Determination": A determination by the Special
Servicer with respect to any defaulted Mortgage Loan or REO Property (other than
a Mortgage Loan or an REO Property, as the case may be, purchased by the Master
Servicer or the Special Servicer pursuant to Section 3.18(b), by the Majority
Holder of the Controlling Class pursuant to Section 3.18(c) or pursuant to
Section 8.01) that there has been a recovery of all Insurance Proceeds,
Liquidation Proceeds and other payments or recoveries that the Special Servicer
has determined, in accordance with the Servicing Standard, will be ultimately
recoverable.
"Fiscal Agent": ABN AMRO Bank N.V., a Netherlands banking
corporation, in its capacity as fiscal agent under this Agreement, or its
successor in interest or any successor fiscal agent appointed as herein
provided.
"Hazardous Materials": Any dangerous, toxic or hazardous
pollutants, chemicals, wastes, or substances, including those so identified
pursuant to CERCLA or any other federal, state or local environmental related
laws and regulations now existing or hereafter enacted, and specifically
including 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.
"Indenture": The Indenture, dated as of August 1, 1998,
between the Owner Trust and the Indenture Trustee relating to the issuance of
the Bonds.
"Indenture Trustee": LaSalle National Bank, a national banking
association, in its capacity as indenture trustee under the Indenture, or its
successor in interest or any successor indenture trustee appointed as provided
in the Indenture.
"Indenture Trustee Fee": With respect to each Mortgage Loan
and REO Loan, a monthly fee payable from the Collection Account pursuant to
Section 3.05 on each Master Servicer Remittance Date and accruing thereon at the
Indenture Trustee Fee Rate as provided in Section 1.04.
"Indenture Trustee Fee Rate": With respect to each Mortgage
Loan and REO Loan, a fixed percentage rate equal to 0.0065% per annum.
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"Independent": When used with respect to any specified Person,
any such Person who (i) is in fact independent of the Company, the Manager, the
Owner Trust, the Owner Trustee, the Indenture Trustee, the Fiscal Agent, the
Master Servicer, the Special Servicer and any and all of their respective
Affiliates, (ii) does not have any direct financial interest in or any material
indirect financial interest in any of the Company, the Manager, the Owner Trust,
the Owner Trustee, the Indenture Trustee, the Fiscal Agent, the Master Servicer,
the Special Servicer or any of their respective Affiliates, and (iii) is not
connected with the Company, the Manager, the Owner Trust, the Owner Trustee, the
Indenture Trustee, the Fiscal Agent, the Master Servicer, the Special Servicer
or any of their respective Affiliates 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
Company, the Manager, the Owner Trust, the Owner Trustee, the Indenture Trustee,
the Fiscal Agent, the Master Servicer, the Special Servicer or any of their
respective Affiliates merely because such Person is the beneficial owner of 1%
or less of any class of securities issued by the Company, the Manager, the Owner
Trust, the Owner Trustee, the Indenture Trustee, the Fiscal Agent, the Master
Servicer, the Special Servicer or any of their respective Affiliates, as the
case may be.
"Independent Contractor": Any Person that would be an
"independent contractor" with respect to the Owner Trust within the meaning of
Section 856(d)(3) of the Code if the Owner Trust were a real estate investment
trust (except that the ownership test set forth in that section shall be
considered to be met by any Person that owns, directly or indirectly, 35% or
more of any Class of Bonds or Owner Trust Certificates, or such other interest
in any Class of Bonds or Owner Trust Certificates as is set forth in an Opinion
of Counsel, which shall not be an expense of the Owner Trust, delivered to the
Owner Trustee and the Indenture Trustee), so long as the Owner Trust does not
receive or derive any income from such Person and provided that the relationship
between such Person and the Owner Trust is at arm's length, all within the
meaning of Treasury regulation Section 1.856-4(b)(5), or any other Person upon
receipt of an Opinion of Counsel by the Owner Trustee and the Indenture Trustee
(which shall not be an expense of the Owner Trust, the Owner Trustee or the
Indenture Trustee) to the effect that the taking of any action in respect of any
REO Property by such Person, subject to any conditions therein specified, that
is otherwise herein contemplated to be taken by an Independent Contractor will
not cause such REO Property to cease to qualify as "foreclosure property" within
the meaning of Section 860G(a)(8) of the Code, or cause any income realized in
respect of such REO Property to fail to qualify as Rents from Real Property.
"Insurance Policy": With respect to any Mortgage Loan or REO
Property, any hazard insurance policy, flood insurance policy, title policy,
environmental policy or other insurance policy that is maintained from time to
time in respect of such Mortgage Loan (or the related Mortgaged Property) or
such REO Property, as the case may be.
"Insurance Proceeds": Proceeds paid under any Insurance
Policy, to the extent such proceeds are not applied to the restoration, repair
or remediation of the related Mortgaged Property or released to the Borrower, in
either case, in accordance with the Servicing Standard.
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"Interest Accrual Period": With respect to each Due Date
related to any Mortgage Loan (and any successor REO Loan), the period during
which interest due on such Due Date accrues.
"Interested Person": The Company, the Manager, the Master
Servicer, the Special Servicer, the Seller, any Holder of Bonds or Owner Trust
Certificates or an Affiliate of any such Person.
"Investment Account": As defined in Section 3.06(a).
"Late Collections": With respect to any Mortgage Loan, all
amounts received thereon during any Collection Period, whether as payments,
Insurance Proceeds, Liquidation Proceeds or otherwise, which represent late
collections of the principal or interest portions of a Monthly Payment or an
Assumed Scheduled Payment in respect of such Mortgage Loan due or deemed due on
a Due Date in a previous Collection Period, or on a Due Date coinciding with or
preceding the Cut-off Date, and not previously recovered. With respect to any
REO Loan, all amounts received in connection with the related REO Property
during any Collection Period, whether as Insurance Proceeds, Liquidation
Proceeds, REO Revenues or otherwise, which represent late collections of the
principal or interest portions of a Monthly Payment or an Assumed Scheduled
Payment in respect of the predecessor Mortgage Loan or of an Assumed Scheduled
Payment in respect of such REO Loan due or deemed due on a Due Date in a
previous Collection Period and not previously recovered.
"Liquidation Event": With respect to any Mortgage Loan, any of
the following events: (i) such Mortgage Loan is paid in full; (ii) a Final
Recovery Determination is made with respect to such Mortgage Loan; (iii) such
Mortgage Loan is repurchased by the Seller pursuant to the Loan Sale Agreement;
or (iv) such Mortgage Loan is purchased by the Master Servicer or the Special
Servicer pursuant to Section 3.18(b), by the Majority Holder of the Controlling
Class pursuant to Section 3.18(c) or pursuant to Section 8.01. With respect to
any REO Property (and the related REO Loan), any of the following events: (i) a
Final Recovery Determination is made with respect to such REO Loan or (ii) such
REO Property is purchased pursuant to Section 8.01.
"Liquidation Fee": With respect to each Specially Serviced
Mortgage Loan or REO Property (other than any Specially Serviced Mortgage Loan
or REO Property that is purchased or otherwise removed from the Trust Estate
pursuant to or as contemplated by Section 3.18(b), Section 3.18(c) or Section
8.01 or that is purchased by the Seller pursuant to the Loan Sale Agreement),
the fee designated as such and payable to the Special Servicer pursuant to the
third paragraph of Section 3.11(c).
"Liquidation Fee Rate": With respect to each Specially
Serviced Mortgage Loan or REO Property as to which a Liquidation Fee is payable,
1.00%.
"Liquidation Proceeds": All cash amounts (other than Insurance
Proceeds and REO Revenues) received by the Master Servicer or the Special
Servicer in connection with: (i) the taking of all or a part of any Mortgaged
Property by exercise of the power of eminent domain or
9
condemnation, to the extent such amounts are not applied to the restoration of
the related Mortgaged Property or released to the related Borrower, in either
case, in accordance with the Servicing Standard; (ii) the liquidation of any
Mortgaged Property or other collateral constituting security for a defaulted
Mortgage Loan, through trustee's sale, foreclosure sale, REO Disposition or
otherwise, exclusive of any portion thereof required to be released to the
related Borrower in accordance with applicable law and the terms and conditions
of the related Mortgage Note or Mortgage; (iii) the realization upon any
deficiency judgment obtained against a Borrower; (iv) the purchase of a Mortgage
Loan by the Master Servicer or the Special Servicer pursuant to Section 3.18(b),
by the Majority Holder of the Controlling Class pursuant to Section 3.18(c) or
any other sale thereof pursuant to Section 3.18(d); (v) the purchase or
substitution of a Mortgage Loan by the Seller pursuant to the Loan Sale
Agreement; or (vi) the purchase of the Mortgage Loans and REO Properties
pursuant to Section 8.01.
"Loan Sale Agreement": The Loan Sale Agreement, dated as of
August 1, 1998, between the Seller and Impac Commercial Assets Corp. relating to
the transfer of the Mortgage Loans.
"MAI": A designation signifying that the designee is a Member
of the Appraisal Institute.
"Majority Holder": With respect to any specified Class or
Classes of Owner Trust Certificates or Bonds, as of any date of determination,
any single Holder of more than 50% of such Class or Classes, as the case may be,
and in the case of the Owner Trust Certificates, without regard to any Owner
Trust Certificates which do not have a principal balance.
"Management Agreement": The Management Agreement, dated as of
August 1, 1998, between the Owner Trust and the Manager relating to the
performance by the Manager of certain administrative services for the Owner
Trust and the Owner Trustee.
"Management Fee": With respect to each Mortgage Loan and REO
Loan, a monthly fee payable from the Collection Account pursuant to Section 3.05
on each Master Servicer Remittance Date and accruing at the Management Fee Rate
as provided in Section 1.04.
"Management Fee Rate": With respect to each Mortgage Loan and
REO Loan, a fixed percentage rate equal to 0.005% per annum.
"Manager": Impac Commercial Holdings, Inc., in its capacity as
manager under the Management Agreement, or any successor manager appointed as
provided in the Management Agreement.
"Master Servicer": Midland, in its capacity as master servicer
under this Agreement, or any successor master servicer appointed as herein
provided.
"Master Servicer Remittance Amount": With respect to any
Master Servicer Remittance Date, an amount equal to (a) the aggregate of all
amounts on deposit in the Collection
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Account as of the commencement of business on such Master Servicer Remittance
Date and all P&I Advances and Liquidation Proceeds required to be deposited in
the Collection Account on such Master Servicer Remittance Date pursuant to
Section 4.02 or Section 8.01, net of (b) any portion of the amounts described in
clause (a) of this definition that represents one or more of the following: (i)
collected Monthly Payments that are due on a Due Date following the end of the
related Collection Period, (ii) any payments of principal (including, without
limitation, Principal Prepayments) and interest, Liquidation Proceeds and
Insurance Proceeds received after the end of the related Collection Period,
(iii) any amounts payable or reimbursable to any Person from the Collection
Account pursuant to clauses (ii) through (xvi) of Section 3.05(a) and (iv) any
amounts deposited in the Collection Account in error.
"Master Servicer Remittance Date": The first Business Day
preceding each Payment Date.
"Master Servicing Fee": With respect to each Mortgage Loan and
REO Loan, the fee payable to the Master Servicer pursuant to Section 3.11(a).
"Master Servicing Fee Rate": With respect to each Mortgage
Loan and REO Loan in the Mortgage Pool, the fixed percentage rate set forth on
the Mortgage Loan Schedule.
"Midland": Midland Loan Services, Inc., a Delaware
corporation, or its successor in interest.
"Modified Mortgage Loan": Any Mortgage Loan as to which any
Servicing Transfer Event has occurred and which has been modified by the Special
Servicer pursuant to Section 3.20 in a manner that:
(A) affects the amount or timing of any payment of principal
or interest due thereon (other than, or in addition to,
bringing current Monthly Payments with respect to such
Mortgage Loan);
(B) except as expressly contemplated by the related Mortgage,
results in a release of the lien of the Mortgage on any
material portion of the related Mortgaged Property without a
corresponding Principal Prepayment in an amount not less than
the fair market value (as is), as determined by an Appraisal
delivered to the Special Servicer (at the expense of the
related Borrower and upon which the Special Servicer may
conclusively rely) of the property to be released; or
(C) in the reasonable good faith judgment of the Special
Servicer, otherwise materially impairs the security for such
Mortgage Loan or reduces the likelihood
of timely payment of amounts due thereon.
"Monthly Payment": With respect to any Mortgage Loan as of any
Due Date, the scheduled monthly payment of principal and interest for the
related Interest Accrual Period at the Mortgage Rate on such Mortgage Loan that
is actually payable by the related Borrower from
11
time to time under the terms of the related Mortgage Note, as such scheduled
monthly payment may be changed or modified in connection with a bankruptcy or
similar proceeding involving the related Borrower or by reason of a
modification, waiver or amendment granted or agreed to by the Special Servicer
pursuant to Section 3.20.
"Moody's": ▇▇▇▇▇'▇ Investors Service, Inc., a nationally
recognized statistical rating organization under the federal securities laws.
"Mortgage": With respect to any Mortgage Loan, the mortgage,
deed of trust, deed to secure debt or similar document that secures, in whole or
in part, the related Mortgage Note and creates a lien on the related Mortgaged
Property.
"Mortgage Loan": Each of the mortgage loans listed on the
Mortgage Loan Schedule and from time to time held in the Trust Estate. As used
herein, the term "Mortgage Loan" includes the related Mortgage Note, Mortgage
and other documents contained in the related Mortgage Loan File.
"Mortgage Loan File": As defined in Section 1.01 of the
Indenture.
"Mortgage Loan Schedule": The list of Mortgage Loans attached
hereto as Exhibit A-1 with respect to Sub-Pool 1 and Exhibit A-2 with respect to
Sub-Pool 2. Such list shall set forth the following information with respect to
each Mortgage Loan in the Mortgage Pool:
(i) the related Loan number;
(ii) property name;
(iii) the street address (including city, state and zip code) of the
related Mortgaged Property;
(iv) the related Cut-off Date Balance;
(v) the amount of the related Monthly Payment due as of the
cut-off date;
(vi) the Mortgage Rate, including, for adjustable rate Mortgage
Loans, the related index, margin, cap and floor;
(vii) the (A) remaining term to stated maturity and (B) the Stated
Maturity Date;
(viii) the remaining amortization term; and
(ix) the Master Servicing Fee Rate.
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"Mortgage Note": The original executed note evidencing the
indebtedness of a Borrower under a Mortgage Loan, together with any rider,
addendum or amendment thereto, or any renewal, substitution or replacement of
such note.
"Mortgage Rate": With respect to any Mortgage Loan (and any
successor REO Loan), the annualized rate at which interest is scheduled (in the
absence of a default) to accrue on such Mortgage Loan from time to time during
any Interest Accrual Period in accordance with the related Mortgage Note and
applicable law, as such rate may be modified in accordance with Section 3.20 or
in connection with a bankruptcy, insolvency or similar proceeding involving the
related Borrower.
"Mortgaged Property": With respect to any Mortgage Loan, the
property subject to the lien of the related Mortgage.
"Net Default Interest": With respect to any Mortgage Loan, any
Default Interest collected thereon, net of any Advance Interest accrued on
Advances made in respect of such Mortgage Loan and reimbursable from such
Default Interest in accordance with Section 3.05.
"Net Investment Earnings": With respect to any Investment
Account for any Collection Period, the amount by which the aggregate of all
interest and other income realized during such Collection Period on funds held
in such Investment Account, if any, exceeds the aggregate of all losses, if any,
incurred during such Collection Period in connection with the investment of such
funds in accordance with Section 3.06.
"Net Investment Loss": With respect to any Investment Account
for any Collection Period, the amount by which the aggregate of all losses
incurred during such Collection Period in connection with the investment of
funds held in such Investment Account in accordance with Section 3.06, if any,
exceeds the aggregate of all interest and other income realized during such
Collection Period on such funds.
"Net Mortgage Rate": With respect to any Mortgage Loan or REO
Loan, as of any date of determination, a rate per annum equal to the related
Mortgage Rate as of such date minus the sum of the related Master Servicing Fee
Rate, the Indenture Trustee Fee Rate and the
Management Fee Rate.
"Net Penalty Charge": With respect to any Mortgage Loan, any
Penalty Charges actually collected thereon, net of any portion of Default
Interest thereof allocable to pay the Special Servicer any Liquidation Fee or
Workout Fee in respect of such Mortgage Loan and further net of any Advance
Interest accrued on Advances made in respect of such Mortgage Loan and
reimbursable from such Penalty Charges in accordance with Section 3.05(a).
"Nonrecoverable Advance": Any Nonrecoverable P&I Advance or
Nonrecoverable Servicing Advance.
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"Nonrecoverable P&I Advance": Any P&I Advance previously made
or to be made in respect of any Mortgage Loan or any REO Loan that, as
determined by the Master Servicer (or, if applicable, the Indenture Trustee or
the Fiscal Agent) in accordance with the Servicing Standard, will not be
ultimately recoverable from late payments, Insurance Proceeds or Liquidation
Proceeds, or any other recovery on or in respect of such Mortgage Loan or REO
Loan.
"Nonrecoverable Servicing Advance": Any Servicing Advance
previously made or to be made in respect of a Mortgage Loan or REO Property
that, as determined by the Master Servicer or the Special Servicer in accordance
with the Servicing Standard (or, if applicable, the Indenture Trustee in its
good faith judgment) will not be ultimately recoverable from late payments,
Insurance Proceeds, Liquidation Proceeds, or any other recovery on or in respect
of such Mortgage Loan or REO Property.
"Officer's Certificate": A certificate signed by a Servicing
Officer of the Master Servicer or the Special Servicer or a Responsible Officer
of the Indenture Trustee or the Owner Trustee, as the case may be.
"Opinion of Counsel": A written opinion of counsel (which
shall be rendered by counsel that is Independent of the Company, the Manager,
the Owner Trust, the Owner Trustee, the Indenture Trustee, the Fiscal Agent, the
Master Servicer and the Special Servicer) in form and substance reasonably
acceptable to and delivered to the addressees thereof.
"Owner Trust": The IMPAC CMB Trust 1998-C1, a Delaware
business trust established by the Company pursuant to the Owner Trust Agreement.
"Owner Trust Agreement": The Owner Trust Agreement, dated as
of August 1, 1998, between the Company and the Owner Trustee relating to the
issuance of the Owner Trust Certificates.
"Owner Trust Certificates": The IMPAC CMB Trust 1998-C1 Owner
Trust Certificates issued pursuant to the Owner Trust Agreement and,
collectively, representing the entire beneficial ownership interest in the Trust
Estate, subject to the lien of the Indenture.
"Owner Trustee": Wilmington Trust Company, a Delaware banking
corporation, in its capacity as owner trustee under the Owner Trust Agreement,
or its successor in interest or any successor owner trustee appointed as
provided in the Owner Trust Agreement.
"Owner Trustee Fee": An annual fee payable from the Collection
Account pursuant to Section 3.05(a) on the Master Servicer Remittance Date in
August of each calendar year, commencing in August 1999, in an amount equal to
$5,440.00.
"P&I Advance": As to any Mortgage Loan or REO Loan, any
advance made by the Master Servicer or by the Indenture Trustee or by the Fiscal
Agent pursuant to Section 4.02.
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"Payment Date": The 20th day of any month, or if such 20th day
is not a Business Day, the Business Day immediately following such 20th day,
commencing in September 1998.
"Payment Priority": With respect to any Class of Bonds or
Owner Trust Certificates, the priority of the Holders thereof in respect of the
Holders of the other Classes of Bonds and Owner Trust Certificates to receive
remittances on any Payment Date, as provided in
the Indenture and the Owner Trust Agreement.
"Penalty Charges": Net Default Interest, late payment charges
and/or charges for checks returned for insufficient funds that are paid or
payable, as the context may require, in respect of any Mortgage Loan or REO
Loan.
"Permitted Investments": As defined in Section 1.01 of the
Indenture.
"Person": Any individual, corporation, partnership, joint
venture, association, joint-stock company, limited liability company, trust,
unincorporated organization or government or any agency or political subdivision
of any government.
"Prepayment Charge": With respect to any Mortgage Loan, any
premium, penalty or fee paid or payable, as the context requires, by a Borrower
in connection with a Principal Prepayment on, or other early collection of
principal of, such Mortgage Loan or any successor REO Loan, to the extent such
premium, penalty or fee is expressed as a percentage of the principal amount
being prepaid.
"Prepayment Interest Excess": With respect to any Mortgage
Loan that was subject to a Principal Prepayment in full or in part after the Due
Date in the related Collection Period, any payment of interest (net of the
related Master Servicing Fee) actually collected from the related Borrower and
intended to cover the period from such Due Date to the date of prepayment.
"Prepayment Interest Shortfall": With respect to any Mortgage
Loan that was subject to a Principal Prepayment in full or in part made and
applied to such Mortgage Loan prior to the Due Date in the related Collection
Period, the amount of interest, to the extent not collected from the related
Borrower, that would have accrued at a rate per annum equal to the Mortgage Rate
for such Mortgage Loan (net of the Master Servicing Fee) on the amount of such
Principal Prepayment during the period commencing on the date as of which such
Principal Prepayment was applied to such Mortgage Loan and ending on such Due
Date.
"Primary Servicing Office": The office of the Master Servicer
or the Special Servicer, as the context may require, that is primarily
responsible for such party's servicing obligations hereunder.
"Prime Rate": The "prime rate" published in the "Money Rates"
section of THE WALL STREET JOURNAL, as such "prime rate" may change from time to
time. If THE WALL STREET JOURNAL ceases to publish the "prime rate," then the
Indenture Trustee shall select an equivalent publication that publishes such
"prime rate;" and if such "prime rate" is no longer generally published or is
15
limited, regulated or administered by a governmental or quasi-governmental body,
then the Indenture Trustee shall select a comparable interest rate index. In
either case, such selection shall be made by the Indenture Trustee in its sole
discretion and the Indenture Trustee shall notify the Master Servicer and the
Special Servicer in writing of its selection.
"Principal Prepayment": Any payment of principal made by the
Borrower on a Mortgage Loan that is received in advance of its scheduled Due
Date and that is not accompanied by an amount of interest representing scheduled
interest due on any date or dates in any month or
months subsequent to the month of prepayment.
"Purchase Price": With respect to any Mortgage Loan to be
purchased by the Seller pursuant to the Loan Sale Agreement, by the Master
Servicer or the Special Servicer pursuant to Section 3.18(b), by the Majority
Holder of the Controlling Class pursuant to Section 3.18(c) or by the Majority
Holder of the Owner Trust Certificates or the Master Servicer pursuant to
Section 8.01 or to be otherwise sold pursuant to Section 3.18(d), a cash price
equal to the outstanding principal balance of such Mortgage Loan as of the date
of purchase, together with (a) all accrued and unpaid interest on such Mortgage
Loan at the related Mortgage Rate to but not including the date of purchase (or,
if such purchase occurs after the Determination Date in any calendar month,
through the end of such calendar month) and (b) all related and unreimbursed
expenses including Servicing Advances, Advance Interest and Extraordinary
Expenses.
"Qualified Appraiser": In connection with the Appraisal of any
Mortgaged Property or REO Property, an Independent MAI-designated appraiser with
at least five years of experience in respect of the relevant geographic location
and property type.
"Qualified Insurer": An insurance company or security or
bonding company qualified to write the related Insurance Policy in the relevant
jurisdiction, whose claims paying ability at the time of determination is rated
at least "BBB" by S&P and "Baa2" by Moody's, unless each of the Rating Agencies
has confirmed in writing that obtaining the related insurance or fidelity bond
from an insurance company or security or bonding company with a lower claims
paying ability shall not result, in and of itself, in a downgrading, withdrawal
or qualification of the rating then assigned by such Rating Agency to any Class
of Bonds.
"Qualified Substitute Mortgage Loan": A Mortgage Loan
substituted for a Deleted Mortgage Loan which must, on the date of such
substitution, as confirmed in an Officer's Certificate delivered to the Owner
Trustee and the Indenture Trustee, at the time of substitution, (i) have an
outstanding principal balance not greater than the principal balance of the
related Deleted Mortgage Loan, in each case after taking into account all
payments of principal due on or before the Due Date related to the month of
substitution, whether or not received, (ii) have an Mortgage Rate not less than,
and not more than one percentage point greater than, such Deleted Mortgage Loan,
(iii) have a remaining term to maturity not greater than, and not more than one
year less than, that of such Deleted Mortgage Loan, (iv) have a Debt Service
Coverage Ratio not less than that of such Deleted Mortgage Loan, (v) have a Due
Date on the first day of each calendar month, and (vi) comply with all of the
representations and warranties made by the Seller in the Loan Sale Agreement
with respect to such Deleted Mortgage Loan.
16
"Rating Agency": Each of S&P and Moody's or their respective
successors in interest. If neither of such rating agencies or any related
successor remains in existence, "Rating Agency" shall be deemed to refer to such
other nationally recognized statistical rating organization or other comparable
Person designated by the Owner Trust, notice of which designation shall be given
to the other parties to this Agreement, and specific ratings of either S&P or
Moody's referenced herein shall be deemed to refer to the equivalent ratings of
the party so designated. References herein to "applicable rating category"
(other than any such references to "highest applicable rating category") shall,
in the case of S&P and Moody's, be deemed to refer to such applicable rating
category of S&P and Moody's, respectively, without regard to any plus or minus
or other comparable rating qualification.
"Realized Loss": With respect to (1) each defaulted Mortgage
Loan as to which a Final Recovery Determination has been made, or with respect
to any successor REO Loan as to which a Final Recovery Determination has been
made as to the related REO Property, an amount (not less than zero) equal to (a)
the unpaid principal balance of such Mortgage Loan or REO Loan, as the case may
be, as of the commencement of the Collection Period in which the Final Recovery
Determination was made, plus (b) without reduction by the amount described in
subclause (1)(d) of this definition, all accrued but unpaid interest on such
Mortgage Loan or REO Loan, as the case may be, at the related Mortgage Rate to
but not including the Due Date occurring in the Collection Period in which the
Final Recovery Determination was made, plus (c) any related unreimbursed
Servicing Advances as of the commencement of the Collection Period in which the
Final Recovery Determination was made, together with any new related Servicing
Advances made during such Collection Period, minus (d) all payments and
proceeds, if any, received in respect of such Mortgage Loan or REO Loan, as the
case may be, during the Collection Period in which such Final Recovery
Determination was made; (2) each defaulted Mortgage Loan as to which any portion
of the principal or past due interest payable thereunder was canceled in
connection with a bankruptcy or similar proceeding involving the related
Borrower or a modification, waiver or amendment of such Mortgage Loan granted or
agreed to by the Special Servicer pursuant to Section 3.20, the amount of such
principal or past due interest so canceled; and (3) each defaulted Mortgage Loan
as to which the Mortgage Rate thereon has been permanently reduced and not
recaptured for any period in connection with a bankruptcy or similar proceeding
involving the related Borrower or a modification, waiver or amendment of such
Mortgage Loan granted or agreed to by the Special Servicer pursuant to Section
3.20, the amount of the consequent reduction in the interest portion of each
successive Monthly Payment due thereon (each such Realized Loss to be deemed to
have been incurred on the Due Date for each affected Monthly Payment).
"Reimbursement Rate": The rate per annum applicable to the
accrual of Advance Interest, which rate per annum is equal to the Prime Rate.
"Rents from Real Property": With respect to any REO Property,
gross income of the character described in Section 856(d) of the Code.
"REO Account": A segregated custodial account or accounts
created and maintained by the Special Servicer pursuant to Section 3.16 on
behalf of the Indenture Trustee, which shall
17
be entitled "Midland Loan Services, Inc., as Special Servicer for the IMPAC CMB
Trust 1998-C1."
"REO Acquisition": The acquisition of any REO Property
pursuant to Section 3.09.
"REO Disposition": The sale or other disposition of any REO
Property pursuant to Section 3.18(d).
"REO Loan": The mortgage loan deemed for purposes hereof to be
outstanding with respect to each REO Property. Each REO Loan shall be deemed to
provide for monthly payments of principal and interest equal to its Assumed
Scheduled Payment and otherwise to have the same terms and conditions as its
predecessor Mortgage Loan (such terms and conditions to be applied without
regard to the default on such predecessor Mortgage Loan). All Monthly Payments
and other amounts due and owing, or deemed to be due and owing, in respect of
the predecessor Mortgage Loan as of the date of the related REO Acquisition,
shall be deemed to continue to be due and owing in respect of an REO Loan. In
addition, all amounts payable or reimbursable to the Master Servicer, the
Special Servicer, the Indenture Trustee, the Fiscal Agent or the Manager in
respect of the predecessor Mortgage Loan as of the date of the related REO
Acquisition, including any unpaid Servicing Fees, Indenture Trustee Fees and
Management Fees and any unreimbursed Advances (together with any related unpaid
Advance Interest), shall continue to be payable or reimbursable to the Master
Servicer, the Special Servicer, the Indenture Trustee, the Fiscal Agent or the
Manager, as the case may be, in respect of an REO Loan.
"REO Property": A Mortgaged Property acquired by the Owner
Trust on behalf of the Indenture Trustee through foreclosure, acceptance of a
deed-in-lieu of foreclosure or otherwise in accordance with applicable law in
connection with the default or imminent default of a Mortgage Loan.
"REO Revenues": All income, rents, profits and proceeds
derived from the ownership, operation or leasing of any REO Property.
"REO Tax": As defined in Section 3.17(a).
"Request for Release": A request signed by a Servicing
Officer, as applicable, of the Master Servicer in the form of Exhibit B-1
attached hereto or of the Special Servicer in the form of Exhibit B-2 attached
hereto.
"Required Appraisal Loan": As defined in Section 3.19(c).
"Reserve Account": The account or accounts created and
maintained pursuant to Section 3.03(e).
"Reserve Funds": With respect to any Mortgage Loan, any
amounts delivered by the related Borrower to be held in escrow by or on behalf
of the mortgagee representing reserves for repairs, replacements or capital
improvements with respect to the related
Mortgaged Property.
18
"Responsible Officer": When used with respect to the Owner
Trustee and the Indenture Trustee, any officer of the Owner Trustee or the
Indenture Trustee, as the case may be (and, in the case of the Indenture
Trustee, assigned to its Asset-Backed Securities Trust Services Group),
customarily performing functions with respect to corporate trust matters and
having direct responsibility for the administration of this Agreement and, 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.
"Scheduled Payment": With respect to any Mortgage Loan, for
any Due Date following the Cut-off Date as of which it is outstanding, the
scheduled monthly payment of principal and interest on such Mortgage Loan that
is or would be, as the case may be, payable by the related Borrower on such Due
Date under the terms of the related Mortgage Note as in effect on the Closing
Date, without regard to any subsequent change in or modification of such terms
in connection with a bankruptcy or similar proceeding involving the related
Borrower or a modification, waiver or amendment of such Mortgage Loan granted or
agreed to by the Special Servicer pursuant to Section 3.20, and assuming that
each prior Scheduled Payment has been made in a timely manner.
"S&P": Standard and Poor's Ratings Services, a division of The
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., a nationally recognized statistical rating
organization under the federal securities laws.
"Seller": With respect to any Mortgage Loan, Impac Commercial
Holdings, Inc., a Maryland corporation, in its capacity as seller under the Loan
Sale Agreement, or its successor in interest.
"Servicer": The Master Servicer or the Special Servicer, as
applicable.
"Servicing Account": The account or accounts created and
maintained pursuant to Section 3.03(a).
"Servicing Advances": All customary, reasonable and necessary
"out of pocket" costs and expenses incurred by the Master Servicer or Special
Servicer in connection with the servicing of a Mortgage Loan after a default,
delinquency or other unanticipated event, or in connection with the
administration of any REO Property, including, but not limited to, the cost of
(a) compliance with the obligations of the Master Servicer or the Special
Servicer set forth in Sections 2.04(c) and 3.03(c), (b) the preservation,
insurance, restoration, protection and management of any Mortgaged Property,
including the cost of any "force placed" insurance policy purchased by the
Master Servicer to the extent such cost is allocable to a particular item of
Mortgaged Property that the Master Servicer is required to cause to be insured
pursuant to Section 3.07(a), (c) obtaining any Liquidation Proceeds (insofar as
such Liquidation Proceeds are of the nature described in clauses (i) through (v)
of the definition thereof) or Insurance Proceeds in respect of any Mortgaged
Property, REO Property, (d) any enforcement or judicial proceedings with respect
to any Mortgaged Property, including foreclosures, and (e) the operation,
management, maintenance and liquidation of any REO Property. Notwithstanding
anything to the
19
contrary, "Servicing Advances" shall not include allocable overhead of the
Master Servicer or the Special Servicer, such as costs for office space, office
equipment, supplies and related expenses, employee salaries and related expenses
and similar internal costs and expenses.
"Servicing Event of Default": One or more of the events
described in Section 6.01(a).
"Servicing Fees": With respect to each Mortgage Loan and REO
Loan, the Master Servicing Fee and the Special Servicing Fee.
"Servicing File": Any documents (other than documents required
to be part of the related Mortgage Loan File) in the possession of the Master
Servicer or the Special Servicer and relating to the origination and servicing
of any Mortgage Loan or the administration of any REO Property.
"Servicing Officer": Any officer or employee of the Master
Servicer or the Special Servicer involved in, or responsible for, the
administration and servicing of the Mortgage Loans, whose name and specimen
signature appear on a list of servicing officers furnished by such party to the
Company, the Manager, the Owner Trustee, the Fiscal Agent and the Indenture
Trustee on the Closing Date, as such list may be amended from time to time.
"Servicing Return Date": With respect to any Corrected
Mortgage Loan, the date that servicing thereof is returned by the Special
Servicer to the Master Servicer pursuant to Section 3.21(a).
"Servicing Standard": To service and administer the Mortgage
Loans with the same care, skill and diligence with which prudent institutional
commercial mortgage lenders and loan servicers service comparable loans (and
with the higher of the care, skill, prudence and diligence with which the Master
Servicer or Special Servicer, as the case may be, generally services loans owned
by it or by others ), and with a view to the timely collection of all scheduled
payments of principal and interest under the Mortgage Loans or, if a Mortgage
Loan comes into and continues in default and no satisfactory arrangements can be
made for the collection of the delinquent payments, the maximization of the
recovery on such Mortgage Loan to the Owner Trust (as a collective whole) on a
present value basis (the relevant discounting of anticipated collections to be
performed at the related Mortgage Rate), but without regard to: (i) any
relationship that the Master Servicer or the Special Servicer, as the case may
be, or any Affiliate thereof may have with the related Borrower or any other
party to the loan transaction; (ii) the ownership of any Bond or Owner Trust
Certificate by the Master Servicer or the Special Servicer, as the case may be,
or by any Affiliate thereof; (iii) the Master Servicer's obligation to make
Advances; (iv) the Special Servicer's obligation to make Servicing Advances; (v)
the right of the Master Servicer (or any Affiliate thereof) or the Special
Servicer (or any Affiliate thereof), as the case may be, to receive compensation
for its services or reimbursement of costs hereunder or with respect to any
particular transaction; (vi) the Master Servicer's or the Special Servicer's
ownership, servicing or management for others of any other mortgage loans or
mortgaged properties; and (vii) the Master
20
Servicer's or the Special Servicer's obligation (as an affiliate of the Seller)
to pay any indemnity with respect to or repurchase any Mortgage Loan.
"Servicing Transfer Event": With respect to any Mortgage Loan,
the occurrence of any of the events described in clauses (a) through (g) of the
definition of "Specially Serviced Mortgage Loan".
"Special Servicer": Midland, in its capacity as special
servicer under this Agreement, or any successor special servicer appointed as
herein provided.
"Special Servicer Report": As defined in Section 4.01(b).
"Special Servicing Fee": With respect to each Specially
Serviced Mortgage Loan and REO Loan, the fee designated as such and payable to
the Special Servicer pursuant to the first paragraph of Section 3.11(c).
"Special Servicing Fee Rate": With respect to each Specially
Serviced Mortgage Loan and any REO Loan, a fixed percentage rate equal to 0.25%
per annum for each such Mortgage Loan with a Stated Principal Balance equal to
or greater than $2,000,000 as of the applicable Servicing Transfer Event and
0.35% per annum for any other Specially Serviced Mortgage Loan and REO Loan, as
applicable.
"Specially Serviced Mortgage Loan": Any Mortgage Loan as to
which any of the following events has occurred:
(a) the related Borrower has failed to make when due any
Balloon Payment, which failure continues, or the
Master Servicer determines in its reasonable good
faith judgment will continue, unremedied for at least
30 days; or
(b) the related Borrower has failed to make when due any
Monthly Payment (other than a Balloon Payment) or any
other payment required under the related Mortgage
Note or the related Mortgage, which failure continues
unremedied for 60 days; or
(c) the Master Servicer has determined in its good faith
and reasonable judgment, that a default in the making
a Monthly Payment (including a Balloon Payment) or
any other payment required under the related Mortgage
Note or the related Mortgage is likely to occur
within 30 days and is likely to remain unremedied for
at least 60 days or, in the case of a Balloon
Payment, for at least 30 days; or
(d) the Master Servicer has determined in its good faith
judgment that a default, other than as described in
clause (a) or (b) above, has occurred that materially
impairs the value of the related Mortgaged Property
as security for the Mortgage Loan, which default has
continued unremedied for the
21
applicable grace period under the terms of the
Mortgage Loan (or, if no grace period is specified,
for 30 days); or
(e) there shall have been commenced in a court or agency
or supervisory authority having jurisdiction in the
premises in an involuntary action against the related
Borrower under any present or future federal or state
bankruptcy, insolvency or similar law or the
appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt,
marshaling of assets and liabilities or similar
proceedings, or for the winding-up or liquidation of
its affairs, which action shall not have been
dismissed for a period of 60 days; or
(f) the related Borrower shall have consented to the
appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt,
marshaling of assets and liabilities or similar
proceedings of or relating to such Borrower or of or
relating to all or substantially all of its property;
or
(g) the related Borrower shall have admitted in writing
its inability to pay its debts generally as they
become due, filed a petition to take advantage of any
applicable insolvency or reorganization statute, made
an assignment for the benefit of its creditors, or
voluntarily suspended payment of its obligations; or
(h) the Master Servicer shall have received notice of the
commencement of foreclosure or similar proceedings
with respect to the related Mortgaged Property;
provided that a Mortgage Loan will cease to be a Specially Serviced Mortgage
Loan, when a Liquidation Event has occurred in respect of such Mortgage Loan,
when the related Mortgaged Property has become an REO Property or, so long as at
such time no circumstance identified in clauses (a) through (h) above exists
that would cause the Mortgage Loan to continue to be
characterized as a Specially Serviced Mortgage Loan:
(w) with respect to the circumstances described in clause
(b) above, when the related Borrower has made three
consecutive full and timely Monthly Payments under
the terms of such Mortgage Loan (as such terms may be
changed or modified in connection with a bankruptcy
or similar proceeding involving the related Borrower
or by reason of a modification, waiver or amendment
granted or agreed to by the Special Servicer pursuant
to Section 3.20);
(x) with respect to the circumstances described in
clauses (c), (e), (f) and (g) above, when such
circumstances cease to exist in the good faith and
reasonable judgment of the Special Servicer;
22
(y) with respect to the circumstances described in clause
(d) above, when such default is cured; and
(z) with respect to the circumstances described in clause
(h) above, when such proceedings are terminated.
"Stated Maturity Date": With respect to any Mortgage Loan, the
Due Date specified in the related Mortgage Note (as in effect on the Closing
Date) on which the last payment of principal is due and payable under the terms
of such Mortgage Note (as in effect on the Closing Date), without regard to any
change in or modification of such terms in connection with a bankruptcy or
similar proceeding involving the related Borrower or a modification, waiver or
amendment of such Mortgage Loan granted or agreed to by the Special Servicer
pursuant to Section 3.20.
"Stated Principal Balance": With respect to any Mortgage Loan
(and any successor REO Loan), the Cut-off Date Balance of such Mortgage Loan, as
reduced on each Payment Date (to not less than zero) by (i) all payments (or
advances in lieu thereof) and other collections of principal of such Mortgage
Loan (or successor REO Loan) that are (or, if they had not been applied to cover
any Extraordinary Expense, would have been) remitted to the Holders of the Bonds
and the Owner Trust Certificates on such Payment Date and (ii) the principal
portion of any Realized Loss incurred in respect of such Mortgage Loan (or
successor REO Loan) during the related Collection Period.
"Sub-Servicer": Any Person with which the Master Servicer or
the Special Servicer has entered into a Sub-Servicing Agreement.
"Sub-Servicing Agreement": The written contract between the
Master Servicer or the Special Servicer, on the one hand, and any Sub-Servicer,
on the other hand, relating to servicing and administration of Mortgage Loans as
provided in Section 3.24.
"Trust Estate": As defined in Section 1.01 of the Indenture.
"UCC Financing Statement": One or more financing statements
executed and either filed or recorded or in a form suitable for filing and
recording under the Uniform Commercial Code.
"Uniform Commercial Code": The Uniform Commercial Code as in
effect in any applicable jurisdiction.
"USPAP": The Uniform Standards of Professional Appraisal
Practices.
"Workout Event": With respect to any Specially Serviced
Mortgage Loan, the occurrence of any of the following: (i) such Specially
Serviced Mortgage Loan becomes a Corrected Mortgage Loan; (ii) the Special
Servicer receives a full or discounted payoff of such Specially Serviced
Mortgage Loan from the related Borrower; or (iii) the Special Servicer receives
23
any Liquidation Proceeds or Insurance Proceeds with respect to such Specially
Serviced Mortgage Loan. With respect to any REO Property, the receipt by the
Special Servicer of any Liquidation Proceeds or Insurance Proceeds with respect
to such REO Property.
"Workout Fee": With respect to each Specially Serviced
Mortgage Loan or REO Loan (other than a Specially Serviced Mortgage Loan (i)
repurchased by the Seller pursuant to the Loan Sale Agreement within 30 days
after the circumstance or condition that gives rise to such repurchase
obligation, (ii) purchased by the Master Servicer or the Special Servicer
pursuant to Section 3.18(b), (iii) purchased by a Majority Holder of the
Controlling Class pursuant to Section 3.18(c), (iv) purchased by the Majority
Holder of the Owner Trust Certificates or the Master Servicer pursuant to
Section 8.01 or (v) to be otherwise sold pursuant to Section 3.18(d), and other
than a Specially Serviced Mortgage Loan or an REO Loan that relates to a
Mortgage Loan that previously had been a Corrected Mortgage Loan), the fee
payable to the Special Servicer upon the occurrence of a Workout Event pursuant
to the second paragraph of Section 3.11(c).
"Workout Fee Rate": With respect to each Specially Serviced
Mortgage Loan or REO Loan in the Mortgage Pool as to which a Workout Fee is
payable, a fixed amount equal to 0.50%.
"Yield Maintenance Premium": With respect to any Mortgage
Loan, any premium, penalty or fee paid or payable, as the context requires, by a
Borrower in connection with a Principal Prepayment on, or other early collection
of principal of, a Mortgage Loan, other than
any Prepayment Charge.
Section 1.02. Other Definitional Provisions.
(a) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined
therein.
(b) As used in this Agreement and in any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms not
defined in this Agreement or in any such certificate or other document, and
accounting terms partly defined in this Agreement or in any such certificate or
other document, to the extent not defined, shall have the respective meanings
given to them under generally accepted accounting principles. To the extent that
the definitions of accounting terms in this Agreement or in any such certificate
or other document are inconsistent with the meanings of such terms under
generally accepted accounting principles, the definitions contained in this
Agreement or in any such certificate or other document shall control.
(c) The words "hereof," "herein," and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement; Section and Exhibit
references contained in this Agreement are references to Sections and Exhibits
in or to this Agreement unless otherwise specified; a reference to a subsection
or other subdivision without further reference to a Section is a reference to
such
24
subsection or other subdivision as contained in the Section in which the
reference appears; and the words "include" and "including" shall mean without
limitation by reason of enumeration.
(d) The definitions contained in this Agreement are applicable
to the singular as well as the plural forms of such terms and to the masculine
as well as the feminine and neuter
genders of such terms.
(e) Any agreement, instrument or statute defined or referred
to herein or in any instrument or certificate delivered in connection herewith
means such agreement, instrument or statute as from time to time amended,
modified or supplemented and includes (in the case of agreements or instruments)
references to all attachments thereto and instruments incorporated
therein; references to a Person are also to its permitted assignees.
Section 1.03. Certain Calculations in Respect of the
Mortgage Loans.
(a) All amounts collected in respect of any Mortgage Loan in
the form of payments from the related Borrower, Liquidation Proceeds or
Insurance Proceeds shall be applied to amounts due and owing under the related
Mortgage Note and Mortgage (including for principal and accrued and unpaid
interest) in accordance with the express provisions of the related Mortgage Note
and Mortgage and, in the absence of such express provisions, shall be applied
for purposes of this Agreement: FIRST, as a recovery of any related and
unreimbursed Servicing Advances; SECOND, as a recovery on a pro rata basis of
accrued and unpaid interest at the related Mortgage Rate on such Mortgage Loan
to but not including, as appropriate, the date of receipt or the Due Date in the
Collection Period of receipt; THIRD, as a recovery of principal of such Mortgage
Loan then due and owing, including by reason of acceleration of the Mortgage
Loan following a default thereunder (or, if a Liquidation Event has occurred in
respect of such Mortgage Loan, a recovery of principal to the extent of its
entire remaining unpaid principal balance); FOURTH, as a recovery of any
Prepayment Charge or Yield Maintenance Premium then due and owing under such
Mortgage Loan; FIFTH, in accordance with the normal servicing practices of the
Master Servicer, but subject to Section 1.03(c), as a recovery of any other
amounts then due and owing under such Mortgage Loan, including Default Interest;
and SIXTH, as a recovery of any remaining principal of such Mortgage Loan to the
extent of its entire remaining unpaid principal balance.
(b) Collections in respect of each REO Property (exclusive of
amounts to be applied to the payment of the costs of operating, managing,
maintaining and disposing of such REO Property) shall be treated: FIRST, as a
recovery of any related and unreimbursed Servicing Advances; SECOND, as a
recovery on a pro rata basis of accrued and unpaid interest on the related REO
Loan at the related Mortgage Rate to but not including the Due Date in the
Collection Period of receipt; THIRD, as a recovery of principal of the related
REO Loan to the extent of its entire unpaid principal balance; and FOURTH, in
accordance with the normal servicing practices of the Master Servicer, but
subject to Section 1.03(c), as a recovery of any other amounts deemed to be due
and owing in respect of the related REO Loan.
(c) Insofar as amounts received in respect of any Mortgage
Loan or REO Property and allocable to fees and charges owing in respect of such
Mortgage Loan or the related
25
REO Loan, as the case may be, constituting additional servicing compensation
payable to the Master Servicer or Special Servicer are insufficient to cover the
full amount of such fees and charges, such amounts shall be allocated between
such of those fees and charges as are payable to the Master Servicer, on the one
hand, and as are payable to the Special Servicer, on the other, PRO RATA in
accordance with their respective entitlements.
(d) The foregoing applications of amounts received in respect
of any Mortgage Loan or REO Property shall be determined by the Master Servicer
and reflected in the appropriate
monthly Determination Date Report.
Section 1.04. Interest Calculations.
The amount of interest accrued on each Mortgage Loan in the
Mortgage Pool during any Interest Accrual Period will be calculated in
accordance with the provisions of the related Mortgage Note. The calculation of
the Servicing Fees shall be made in accordance with Section 3.11, and the
calculation of the Management Fees and the Indenture Trustee Fees shall be made
on the basis of the same principal amount and for the same period respecting
which the interest payments due on the related Mortgage Loans or deemed to be
due on the related REO Loans are computed. All dollar amounts calculated
hereunder shall be rounded to the nearest ▇▇▇▇▇ with one-half of one ▇▇▇▇▇ being
rounded up.
Section 1.05. Cross-Collateralized Mortgage Loans.
The Master Servicer or Special Servicer, as applicable in
accordance with this Agreement, shall service and administer the Mortgage Loans
in each Borrower Group as a single Mortgage Loan as and when it deems necessary
and appropriate and consistent with the Servicing
Standard.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES; RECORDINGS AND FILINGS; BOOKS AND
RECORDS; DEFECT, BREACH, CURE, REPURCHASE AND SUBSTITUTION
Section 2.01. Representations and Warranties of the Master
Servicer and Special Servicer.
(a) Each of the Master Servicer and Special Servicer
represents and warrants to the other parties hereto, and for the benefit of the
Company, the Manager and the Owner
Trustee, as of the Closing Date:
(i) Such Servicer is a corporation duly organized,
validly existing and in good standing under the laws of the
state of Delaware and is in compliance with the laws of each
state in which any Mortgaged Property is located to the extent
necessary to ensure the enforceability of each Mortgage Loan
in accordance with the terms of this Agreement;
(ii) The execution and delivery of this Agreement by
such Servicer, and the performance and compliance with the
terms of this Agreement by such servicer, will not violate its
organizational documents or constitute an event which, with
notice or lapse of time, or both, would constitute a default
under, or result in the breach of, any material agreement or
other instrument to which it is a party or by which it is
bound which default or breach would have consequences that
would materially and adversely affect the financial condition
or operations of the Servicer or its properties taken as a
whole or impair the ability of the Trust Estate to realize on
the Mortgage Loans;
(iii) Such Servicer has the full power and authority to
enter into and consummate all transactions of such Servicer
contemplated by this Agreement, has duly authorized the
execution, delivery and performance of this Agreement, and
has duly executed and delivered this Agreement;
(iv) This Agreement, assuming due authorization,
execution and delivery by each of the other parties hereto,
constitutes a valid, legal and binding obligation of such
Servicer, enforceable against such Servicer in accordance with
the terms hereof, subject to (A) applicable bankruptcy,
insolvency, reorganization, liquidation, receivership,
moratorium and other laws relating to or affecting creditors'
rights generally and (B) general principles of equity,
regardless of whether such enforcement is considered in a
proceeding in equity or at law;
(v) Such Servicer is not in violation of, and its
execution and delivery of this Agreement and its performance
and compliance with the terms of this Agreement will not
constitute a violation of, any law, any order or decree of any
court or arbiter, or any order, regulation or demand of any
federal, state or local
27
governmental or regulatory authority having jurisdiction,
which violation, in such Servicer's good faith and reasonable
judgment, is likely to materially and adversely affect the
financial condition or operations of the Master Servicer or
its properties taken as a whole or impair the ability of the
Trust Estate to realize on the Mortgage Loans;
(vi) No actions, suits or proceedings are pending or, to
the knowledge of such Servicer's, are threatened against such
Servicer that, if determined adversely to such Servicer, would
prohibit such Servicer from entering into this Agreement or
that, in such Servicer's good faith and reasonable judgment,
would be likely to materially and adversely affect the ability
of such Servicer to perform its obligations under this
Agreement or would result in a material adverse change in the
business, operations or the financial condition of such
Servicer; and
(vii) The execution, delivery and performance of this
Agreement by such Servicer does not require the authorization,
consent or approval of, the giving of notice to, or the taking
of any other action by, any arbitrator, court or other
governmental authority.
(b) The representations and warranties of the Master Servicer
and the Special Servicer set forth in Section 2.01(a) shall survive the
execution and delivery of this Agreement and shall inure to the benefit of the
Persons to whom and for whose benefit they were made pursuant to Section 2.01(a)
for so long as the Owner Trust remains in existence. Upon discovery by any party
hereto of any breach of any of the foregoing representations and warranties, the
party discovering such breach shall give prompt written notice to the other
parties.
(c) Any successor Master Servicer or Special Servicer shall be
deemed to have made, as of the date of its succession, each of the
representations and warranties set forth in Section 2.01(a), subject to such
appropriate modifications to the representation and warranty set forth in
Section 2.01(a)(i) to accurately reflect such successor's jurisdiction of
organization and whether it is a corporation, partnership, bank, association or
other type of organization.
Section 2.02. Representations and Warranties of the Owner
Trust.
(a) The Owner Trust hereby represents and warrants to each of
the other parties hereto, and for the benefit of the Manager, as of the Closing
Date:
(i) The Owner Trust is a business trust duly created
and validly existing in good standing under the laws of the State of
Delaware and has full power, authority and legal right to execute and
deliver this Agreement and to perform its obligations under this
Agreement.
(ii) The execution and delivery by the Owner Trust of
this Agreement and the performance by the Owner Trust of its
obligations under this Agreement has been duly and validly authorized
and directed and will not violate the Owner Trust
Agreement,
28
any provision of any law or regulation governing the Owner Trust or any
order, writ, judgment or decree of any arbitrator, court or other
governmental authority applicable to the Owner Trust or any of its
assets, nor will such execution, delivery or performance require the
authorization, consent or approval of, the giving of notice to, the
filing or registration with, or the taking of any other action by, any
arbitrator, court or other governmental authority or conflict with, or
result in a breach or violation of, any indenture or other agreement or
instrument to which the Owner Trust is a party or by which the Owner
Trust or any portion of the Trust Estate is a party or by which the
Owner Trust or all or any portion of the Trust Estate is bound.
(iii) This Agreement has been duly executed and
delivered by the Owner Trust and, assuming due authorization, execution
and delivery by each of the other parties hereto, constitutes a valid,
legal and binding obligation of the Owner Trust, enforceable against
the Owner Trust in accordance with the terms hereof, subject to (A)
applicable bankruptcy, insolvency, reorganization, moratorium and other
laws affecting the enforcement of creditors' rights generally and (B)
general principles of equity, regardless of whether such enforcement is
considered in a proceeding in equity or at law.
(iv) No litigation is pending or, to the knowledge
of the Owner Trustee, threatened against the Owner Trust that, if
determined adversely to the Owner Trust, would prohibit the Owner
Trust from entering into this Agreement or that, in the Owner
Trustee's good faith and reasonable judgment, is likely to materially
and adversely affect either the ability of the Owner Trust to perform
its obligations under this Agreement or the financial condition of the
Owner Trust.
(b) The representations and warranties of the Owner Trust set
forth in Section 2.02(a) shall survive the execution and delivery of this
Agreement and shall inure to the benefit of the Persons to whom and for whose
benefit they were made for so long as the Owner Trust remains in existence. Upon
discovery by any party hereto of any breach of any of the foregoing
representations and warranties, the party discovering such breach shall give
prompt written notice to the other parties.
Section 2.03. Recordings and Filings; Books and Records;
Document Defects
(a) In connection with the Grant made by the Owner Trust to
the Indenture Trustee pursuant to the Granting Clause of the Indenture and the
delivery of the Mortgage Loan Files for the Mortgage Loans to the Indenture
Trustee in furtherance of such Grant, the Indenture Trustee shall deliver to the
Master Servicer and the Master Servicer shall, at the Seller's expense under the
Loan Sale Agreement, as to each Mortgage Loan, promptly (and in any event within
45 days following the Closing Date) cause to be submitted for recording or
filing, as the case may be, in the appropriate public office for real property
records or for UCC Financing Statements, as the Master Servicer deems
appropriate, each assignment of Mortgage and assignment of Assignment of Leases
in favor of the Indenture Trustee referred to in the definition of "Mortgage
Loan File" and each UCC Financing Statement on Form UCC-2 and UCC-3 in favor of
the Indenture Trustee referred to in such definition. Each such assignment shall
reflect that it should be returned by the
29
public recording office to the Master Servicer following recording, and each
such UCC Financing Statement shall reflect that the file copy thereof should be
returned to the Master Servicer following filing, provided that, in those
instances where the public recording office retains the original assignment of
Mortgage or assignment of Assignment of Leases, the Master Servicer shall obtain
therefrom a certified copy of the recorded original. Upon the receipt by the
Master Servicer of any such assignment or file copy following recordation or
filing, and upon the receipt by the Master Servicer of any such certified copy,
the Master Servicer shall promptly deliver the same to the Indenture Trustee. If
any such document or instrument is lost or returned unrecorded or unfiled, as
the case may be, because of a defect therein, the Master Servicer shall promptly
prepare and cause to be executed a substitute therefor or cure such defect, as
the case may be, and thereafter, the Master Servicer shall cause the same to be
duly recorded or filed, as appropriate.
(b) The Owner Trust shall deliver to and deposit with, or
cause to be delivered to and deposited with, the Master Servicer all documents
and records in the possession of the Owner Trust or the Seller that relate to
the Mortgage Loans and that are not required to be a part of a Mortgage Loan
File in accordance with the definition thereof, and the Master Servicer shall
hold all such documents and records in trust on behalf of the Indenture Trustee.
The Master Servicer's possession of such documents and records shall be at the
will of the Owner Trust and the Indenture Trustee for the sole purpose of
facilitating the servicing of the Mortgage Loans pursuant to this Agreement and
such possession by the Master Servicer shall be in a custodial capacity only on
behalf of the Indenture Trustee. The ownership of such documents and records
shall be vested in the Owner Trust, subject to the lien of the Indenture, and
the ownership of all documents and records with respect to the Mortgage Loans
that are prepared by or which come into possession of the Master Servicer or the
Special Servicer shall immediately vest in the Owner Trust, subject to the lien
of the Indenture, and shall be delivered to and deposited with the Master
Servicer, in the case of documents or records in the hands of the Special
Servicer, and retained and maintained in trust by the Master Servicer in such
custodial capacity only on behalf of the Indenture Trustee, except as otherwise
provided herein. All such documents and records shall be appropriately marked to
clearly reflect the ownership of such documents and records by the Owner Trust,
subject to the lien of the Indenture, and that such documents and records are
being held on behalf of the Indenture Trustee, and the Master Servicer shall
release such documents and records from its custody only in accordance with this
Agreement.
(c) If any party hereto discovers that any document
constituting a part of a Mortgage Loan File has not been properly executed, is
missing, contains information that does not conform in any respect with the
corresponding information set forth in the related Mortgage Loan Schedule (and
the terms of such document have not been modified by written instrument
contained in the Mortgage Loan File) or does not appear to be regular on its
face (each, a "Document Defect"), such party shall give prompt written notice
thereof to the other parties thereto. Upon its discovery or receipt of notice of
any such Document Defect, the Master Servicer shall notify the Seller. If the
Seller does not correct any Document Defect within 90 days of the Seller's
receipt of such notice and such Document Defect materially and adversely affects
the interests of the Owner Trust in the related Mortgage Loan, the Master
Servicer shall, on behalf of the Owner Trust, and subject to the provisions of
Section 2.04 to the same extent as if such Document Defect
30
were a Breach, exercise such rights and remedies as the Owner Trust may have
under the Loan Sale Agreement.
(d) Notwithstanding the foregoing, the delivery of a
commitment to issue a policy of lender's title insurance in lieu of the delivery
of the actual policy of lender's title insurance shall not be considered a
Document Defect with respect to any Mortgage Loan File if such actual policy of
insurance is delivered to the Indenture Trustee not later than 270 days after
the Closing Date.
Section 2.04. Repurchase or Substitution of Mortgage Loans
for Document Defects and Breaches of
Representations and Warranties.
(a) If any party hereto discovers or receives notice of a
breach of any representation or warranty relating to any Mortgage Loan set forth
in the Loan Sale Agreement which materially and adversely affects the interests
of the Owner Trust in such Mortgage Loan (a "Breach"), the party discovering
such Breach shall give prompt written notice thereof to the other parties hereto
and the Seller. Promptly upon becoming aware of any such Breach, the Master
Servicer shall request that the Seller, not later than 90 days from the receipt
by the Seller of such request, cure such Breach in all material respects or
repurchase the affected Mortgage Loan at the applicable Purchase Price as, if
and to the extent required by the Loan Sale Agreement; provided that if (i) such
Breach is capable of being cured but not within such 90-day period, (ii) the
Seller has commenced and is diligently proceeding with the cure of such Breach
within such 90-day period, and (iii) the Seller shall have delivered to the
Owner Trustee and the Indenture Trustee a certification executed on behalf of
the Seller by an officer thereof setting forth the reason such Breach is not
capable of being cured within an initial 90-day period and what actions the
Seller is pursuing in connection with the cure thereof and stating that the
Seller anticipates that such Breach will be cured within an additional period
not to exceed 90 more days, then the Seller shall have up to an additional 90
days to complete such cure; and provided, further, that the Seller shall have
the option to substitute one or more Qualified Substitute Mortgage Loans for
such Deleted Mortgage Loan in the manner provided below. If the affected
Mortgage Loan is to be repurchased, the Master Servicer shall designate the
Collection Account as the account to which funds in the amount of the Purchase
Price are to be wired, and the Master Servicer shall promptly notify the Owner
Trustee and the Indenture Trustee when such deposit is made. Any such purchase
of a Mortgage Loan shall be on a whole loan, servicing released basis.
In the event that the Seller elects to substitute one or more
Qualified Substitute Mortgage Loans for a Deleted Mortgage Loan pursuant to this
Section 2.04(a), the Master Servicer shall require the Seller to deliver to the
Indenture Trustee all documents as specified in the definition of "Mortgage Loan
File" in Section 1.01 with respect to such Qualified Substitute Mortgage Loans
in accordance with the Loan Sale Agreement. No substitution shall be made in any
calendar month after the Determination Date for such month and no such
substitution shall be made unless the Seller shall have received from each
Rating Agency and delivered to the Master Servicer, the Owner Trustee and the
Indenture Trustee a written confirmation that such substitution will not cause
such Rating Agency to downgrade, qualify or withdraw any rating then assigned by
such Rating Agency to any Class of Bonds. Monthly Payments due with respect to
31
Qualified Substitute Mortgage Loans in the month of substitution shall not be
part of the Trust Estate and will be retained by the Master Servicer and
remitted by the Master Servicer to the Seller on the next succeeding Payment
Date. For the month of substitution, the Master Servicer Remittance Amount shall
include the Monthly Payment due on a Deleted Mortgage Loan for such month and
thereafter the Seller shall be entitled to retain all amounts received in
respect of such Deleted Mortgage Loan. The Master Servicer shall amend or cause
to be amended the Mortgage Loan Schedule related to such Deleted Mortgage Loan
and the Master Servicer shall deliver the amended Mortgage Loan Schedule to the
Indenture Trustee and the Owner Trustee. Upon such substitution, the Qualified
Substitute Mortgage Loan or Loans shall be subject to the terms of this
Agreement in all respects, and the Seller shall be deemed to have made the
representations and warranties with respect to the Qualified Substitute Mortgage
Loan contained in the Loan Sale Agreement as of the date of substitution.
In connection with the substitution of one or more Qualified Substitute
Mortgage Loans for one or more Deleted Mortgage Loans, the Master Servicer shall
require the Seller to determine, in accordance with the Loan Sale Agreement, the
amount (if any) by which the aggregate principal balance of all such Qualified
Substitute Mortgage Loans as of the date of substitution is less than the
aggregate Stated Principal Balance of all such Deleted Mortgage Loans (in each
case after application of the principal portion of the Monthly Payments due in
the month of substitution) and shall require the Seller to remit to the Master
Servicer for deposit in the Collection Account the amount of such shortfall on
the day of substitution, without any reimbursement therefor, plus the amount of
all related unreimbursed expenses, including P&I Advances, Servicing Advances,
Advance Interest and Extraordinary Expenses. In addition, the Master Servicer
shall require the Seller to give notice in writing to the Owner Trustee and the
Indenture Trustee of such event in accordance with the Loan Sale Agreement,
which notice shall be accompanied by an Officer's Certificate as to the
calculation of such shortfall and expenses.
(b) Upon receipt of an Officer's Certificate from the Master
Servicer to the effect that the full amount of the Purchase Price for any
Mortgage Loan repurchased by the Seller (or the shortfalls and expenses related
to any substitution) as contemplated by Section 2.04(a) has been deposited in
the Collection Account and that all requirements for such repurchase (or
substitution) have been satisfied, which Officer's Certificate shall be
furnished by the Master Servicer promptly after becoming appropriate, the
Indenture Trustee shall release or cause to be released to the Seller or its
designee the related Mortgage Loan File and each of the Owner Trust and the
Indenture Trustee shall execute and deliver such instruments of release,
transfer and assignment, in each case without recourse, representation or
warranty, as shall be provided to it and are reasonably necessary to vest in the
Seller the ownership of the related Mortgage Loan, free and clear of the lien of
the Indenture. The Master Servicer shall, and is hereby authorized and empowered
by the Owner Trust and the Indenture Trustee to, prepare, execute and deliver in
its own name, on behalf of the Owner Trust and the Indenture Trustee or any of
them, the endorsements, assignments and other documents contemplated by this
Section 2.04(b), and the Owner Trust and the Indenture Trustee shall execute and
deliver any powers of attorney necessary to permit the Master Servicer to do so,
provided, however, that none of the Owner Trust, the Owner Trustee or the
Indenture Trustee shall be held liable for any misuse of any such power of
attorney by the Master Servicer and the Master Servicer hereby agrees to
indemnify the Owner
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Trust, the Owner Trustee and the Indenture Trustee against, and hold the Owner
Trust, the Owner Trustee and the Indenture Trustee harmless from, any loss or
liability arising from any misuse of such power of attorney. In connection with
any such repurchase or substitution by the Seller, the Master Servicer or the
Special Servicer, as appropriate, shall deliver the related Servicing File to
the Seller.
(c) The Loan Sale Agreement provides the sole remedies
available to the Owner Trust, the Owner Trustee, the Indenture Trustee and the
holders of the Bonds and the Owner Trust Certificates, respecting any Breach. If
the Seller defaults on its obligations to repurchase or substitute for any
Mortgage Loan as contemplated by Section 2.04(a), the Master Servicer shall
promptly notify the Owner Trustee and the Indenture Trustee and shall take such
actions with respect to the enforcement of such obligations, including the
institution and prosecution of appropriate proceedings, as the Master Servicer
shall determine, in its good faith and reasonable judgment, are in the best
interests of the Owner Trust. Any and all expenses incurred by the Master
Servicer with respect to the foregoing shall constitute Servicing Advances in
respect of the affected Mortgage Loan.
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ARTICLE III
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 3.01. Administration of the Mortgage Loans.
(a) Each of the Master Servicer and the Special Servicer shall
service and administer the Mortgage Loans that it is obligated to service and
administer pursuant to this Agreement on behalf of the Owner Trust, and in the
best interests and for the benefit of the holders of the Bonds and the Owner
Trust Certificates, in accordance with any and all applicable laws and the terms
of this Agreement and the respective Mortgage Loans and, to the extent
consistent with the foregoing, in accordance with the Servicing Standard.
Without limiting the foregoing, and subject to Section 3.20, (i) the Master
Servicer shall service and administer all Mortgage Loans as to which no
Servicing Transfer Event has occurred and all Corrected Mortgage Loans, and (ii)
the Special Servicer shall service and administer (x) each Mortgage Loan (other
than a Corrected Mortgage Loan) as to which a Servicing Transfer Event has
occurred, and (y) each REO Property; provided, however, that the Master Servicer
shall continue to collect information and prepare all reports to the Indenture
Trustee and the Owner Trustee required hereunder with respect to any Specially
Serviced Mortgage Loans, REO Properties (and the related REO Loans), and further
to render such incidental services with respect to any Specially Serviced
Mortgage Loans and REO Properties as are specifically provided for herein.
(b) Subject to Section 3.01(a), the Master Servicer and the
Special Servicer each shall have full power and authority, acting alone, to do
or cause to be done any and all things in connection with such servicing and
administration which it may deem necessary or desirable. Without limiting the
generality of the foregoing, each of the Master Servicer and the Special
Servicer, in its own name, with respect to each of the Mortgage Loans it is
obligated to service hereunder, is hereby authorized and empowered by the Owner
Trust and the Indenture Trustee to execute and deliver, on behalf of the Owner
Trust and the Indenture Trustee: (i) any and all financing statements,
continuation statements and other documents or instruments necessary to maintain
the lien created by any Mortgage or other security document in the related
Mortgage Loan File on the related Mortgaged Property; (ii) in accordance with
the Servicing Standard and subject to Sections 3.08, 3.20 and 3.21, any and all
modifications, waivers, amendments or consents to or with respect to any
documents contained in the related Mortgage Loan File; and (iii) any and all
instruments of satisfaction or cancellation, or of partial or full release or
discharge, and all other comparable instruments. Subject to Section 3.10, the
Owner Trust and the Indenture Trustee shall, at the written request of an
Authorized Officer of the Master Servicer or the Special Servicer, furnish, or
cause to be so furnished, to the Master Servicer or the Special Servicer, as the
case may be, any limited powers of attorney (substantially in the form of
Exhibit E attached hereto) and other documents necessary or appropriate to
enable it to carry out its servicing and administrative duties hereunder,
provided, however, that none of the Owner Trust, the Owner Trustee or the
Indenture Trustee shall be held liable for any misuse of any such power of
attorney by the Master Servicer or the Special Servicer and each of the Master
Servicer and the Special Servicer hereby agree to indemnify the Owner Trust, the
Owner Trustee and the Indenture
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Trustee against, and hold the Owner Trust, the Owner Trustee and the Indenture
Trustee harmless from, any loss or liability arising from any misuse by it of
such power of attorney.
(c) The relationship of each of the Master Servicer and the
Special Servicer to the Owner Trust, and to the Owner Trustee, the Indenture
Trustee or the Fiscal Agent, under this Agreement is intended by the parties to
be and shall be that of an independent contractor and not that of a joint
venturer, partner or agent.
Section 3.02. Collection of Mortgage Loan Payments.
Each of the Master Servicer or the Special Servicer shall
undertake reasonable efforts to collect all payments called for under the terms
and provisions of the Mortgage Loans it is obligated to service hereunder and
shall follow such collection procedures as are consistent with the Servicing
Standard and with this Agreement. In addition, if a Borrower becomes delinquent
with respect to any Monthly Payment (including, without limitation, a Balloon
Payment), the Master Servicer shall promptly so notify the Special Servicer,
shall keep the Special Servicer apprised of all collection and customer service
matters with respect to the related Mortgage Loan and shall furnish to the
Special Servicer copies of all written communications between the Master
Servicer and such Borrower.
Section 3.03. Collection of Taxes, Assessments and Similar
Items; Servicing Accounts; Reserve Accounts.
(a) The Master Servicer shall, as to the Mortgage Loans (other
than REO Loans), establish and maintain one or more accounts (the "Servicing
Accounts"), into which all Escrow Payments shall be deposited and retained. Each
Servicing Account shall be an Eligible Account and, to the extent invested,
shall only be invested in Permitted Investments (except as otherwise required by
applicable law or the terms of the related Mortgage Loan). Withdrawals of
amounts so collected from a Servicing Account may be made only to: (i) effect
payment of real estate or personal property taxes, assessments, insurance
premiums, ground rents (if applicable) and comparable items (including taxes or
other amounts which could constitute liens prior to or on parity with the lien
of the related Mortgaged Property); (ii) reimburse the Master Servicer for any
unreimbursed Servicing Advances made thereby to cover any of the items described
in the immediately preceding clause (i); (iii) refund to Borrowers any sums as
may be determined to be overages; (iv) pay interest, if required and as
described below, to Borrowers on balances in the Servicing Account; (v) clear
and terminate the Servicing Account at the termination of this Agreement in
accordance with Section 8.01 or (vi) withdraw any amounts deposited in error.
The Master Servicer shall pay or cause to be paid to the Borrowers interest, if
any, earned on the investment of funds in Servicing Accounts maintained thereby,
if required by law or the terms of the related Mortgage Loan. If the Master
Servicer shall deposit in a Servicing Account any amount not required to be
deposited therein, it may at any time withdraw such amount from such Servicing
Account, any provision herein to the contrary notwithstanding.
(b) The Master Servicer shall, as to the Mortgage Loans (other
than REO Loans), (i) maintain accurate records with respect to the related
Mortgaged Property reflecting the
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status of real estate or personal property taxes, assessments and other similar
items that are or may become a lien thereon and the status of insurance premiums
and any ground rents payable in respect thereof and (ii) use reasonable efforts
to obtain, from time to time, all bills for the payment of such items (including
renewal premiums) and shall effect payment thereof prior to the applicable
penalty or termination date. For purposes of effecting any such payment for
which it is responsible, the Master Servicer shall apply Escrow Payments as
allowed under the terms of the related Mortgage Loan or, if such Mortgage Loan
does not require the related Borrowers to escrow for the payment of real estate
taxes, assessments, insurance premiums, ground rents (if applicable) and similar
items, each of the Master Servicer and the Special Servicer shall, as to those
Mortgage Loans it is obligated to service hereunder, use its best efforts to
enforce the requirement of the related Mortgage that the Borrower make payments
in respect of such items at the time they first become due.
(c) In accordance with the Servicing Standard, each of the
Master Servicer and the Special Servicer shall, as to those Mortgage Loans it is
obligated to service hereunder, advance with respect to the related Mortgaged
Property (and to the Owner Trust), all such funds as are necessary for the
purpose of effecting the payment of (i) real estate or personal property taxes,
assessments and other similar items, (ii) ground rents (if applicable), and
(iii) premiums on Insurance Policies, in each instance if and to the extent
Escrow Payments (if any) collected from the related Borrower are insufficient to
pay such item when due and the related Borrower has failed to pay such item on a
timely basis, and provided that the particular advance would not, if made,
constitute a Nonrecoverable Servicing Advance. All such Advances shall be
Servicing Advances reimbursable in the first instance from related collections
from the Borrowers and further as provided in Section 3.05. No costs incurred by
the Master Servicer or the Special Servicer in effecting the payment of real
estate taxes, assessments and, if applicable, ground rents on or in respect of
such Mortgaged Property shall, for purposes hereof, including calculating
monthly remittances, be added to the unpaid principal balances of the related
Mortgage Loans, notwithstanding that the terms of such Mortgage Loans so permit.
(d) Notwithstanding anything herein to the contrary, no
Servicing Advance shall be required to be made hereunder if such Servicing
Advance would, if made, constitute a Nonrecoverable Servicing Advance. The
determination by either the Master Servicer or the Special Servicer that it has
made a Nonrecoverable Servicing Advance or that any proposed Servicing Advance,
if made, would constitute a Nonrecoverable Servicing Advance, shall be made in
accordance with the Servicing Standard and shall be evidenced by an Officer's
Certificate delivered promptly to the Owner Trustee and the Indenture Trustee
stating that: (i) based upon an estimate of the value of the related Mortgage
Loan based on the most recent Appraisal of the related Mortgaged Property
conducted by a Qualified Appraiser and all other relevant information that has
come to the attention of the Master Servicer or the Special Servicer, as
applicable, including information regarding events subsequent to the date of
such estimate, the Master Servicer or Special Servicer, as applicable, has
determined that the amount of any Servicing Advance (or a portion thereof) plus
interest thereon will not be recoverable from future payments and collections
with respect to such Mortgage Loan, including proceeds of the sale and operation
of the related Mortgaged Property and (ii) setting forth the basis of such
determination and attaching any relevant documents. If either the Master
Servicer or the Special Servicer is required
36
to make a Servicing Advance and has not determined that such Servicing Advance
would, if made, constitute a Nonrecoverable Servicing Advance, but does not make
such Servicing Advance within ten days after required to do so, the Indenture
Trustee shall (if a Responsible Officer has actual knowledge of such failure)
give the defaulting party notice of such failure and, if such failure continues
for five more days after delivery of such notice, the Indenture Trustee shall be
required to make such Servicing Advance.
(e) The Master Servicer shall, as to the Mortgage Loans (other
than REO Loans), establish and maintain, as applicable, one or more accounts
(the "Reserve Accounts"), into which all Reserve Funds, if any, shall be
deposited and retained. Withdrawals of amounts so deposited may be made to pay
for, or to reimburse the related Borrower in connection with, the related
repairs, replacements and/or capital improvements at the related Mortgaged
Property if such repairs, replacements and/or capital improvements have been
completed, and such withdrawals are made, in accordance with the Servicing
Standard and the terms of the related Mortgage Note, Mortgage and any agreement
with the related Borrower governing such Reserve Funds. Subject to applicable
law and the terms of the related Mortgage Note and Mortgage, all Reserve
Accounts shall be Eligible Accounts and shall only be invested in Permitted
Investments.
Section 3.04. Collection Account.
(a) The Master Servicer shall establish and maintain one or
more accounts (collectively, the "Collection Account"), held on behalf of the
Indenture Trustee for the benefit of the holders of the Bonds and the Owner
Trust Certificates. The Collection Account shall be an Eligible Account. The
Master Servicer shall deposit or cause to be deposited in the Collection
Account, within one Business Day after receipt (in the case of payments by
Borrowers or other collections on the Mortgage Loans) or as otherwise required
hereunder, the following payments and collections received or made by or on
behalf of the Master Servicer subsequent to the Cut-off Date (other than in
respect of principal and interest on the Mortgage Loans due and payable on or
before the Cut-off Date, which payments shall be delivered promptly to the
Seller or its designee, with negotiable instruments endorsed as necessary and
appropriate without recourse):
(i) all payments on account of principal of the
Mortgage Loans, including Principal Prepayments;
(ii) all payments on account of interest on the Mortgage
Loans;
(iii) any amounts required to be deposited by the Master
Servicer pursuant to Section 3.19(a) in connection with Prepayment
Interest Shortfalls;
(iv) all Insurance Proceeds and Liquidation Proceeds
(including Liquidation Proceeds described in clause (vi) of the
definition thereof that are required to be deposited in the Collection
Account pursuant to Section 8.01) received in respect of any
Mortgage Loan;
37
(v) any amounts required to be deposited by the Master
Servicer pursuant to Section 3.06 in connection with losses incurred
with respect to Permitted Investments of funds held in the Collection
Account;
(vi) any amounts required to be deposited by the Master
Servicer or the Special Servicer pursuant to Section 3.07(b) in
connection with losses resulting from a deductible clause in a blanket
hazard policy;
(vii) any amounts required to be transferred from any REO
Account pursuant to Section 3.16(c);
(viii) any P&I Advances required to be made by the Master
Servicer in accordance with Section 4.02(a);
(ix) insofar as they do not constitute Escrow Payments,
any amounts paid by a Borrower specifically to cover items for which a
Servicing Advance has been made; and
(x) any other amounts required to be deposited under
the Servicing Agreement.
The foregoing requirements for deposit in the Collection
Account shall be exclusive. Without limiting the generality of the foregoing,
actual payments from Borrowers in the nature of Escrow Payments, and amounts
that the Master Servicer and the Special Servicer are entitled to retain as
additional servicing compensation pursuant to Section 3.11(b) and Section
3.11(d), respectively, need not be deposited by the Master Servicer in the
Collection Account. If the Master Servicer shall deposit 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. The Master Servicer shall promptly deliver to the
Special Servicer as additional servicing compensation in accordance with Section
3.11(d), extension fees, assumption fees, modification fees, similar processing
charges, late payment charges and other transaction fees received by the Master
Servicer with respect to Specially Serviced Mortgage Loans and REO Loans. The
Collection Account shall be maintained as a segregated account, separate and
apart from trust funds created for mortgage trust certificates of other series
serviced and the other accounts of the Master Servicer.
Upon receipt of any of the amounts described in clauses (i),
(ii) and (iv) above with respect to any Mortgage Loan, the Special Servicer
shall promptly, but in no event later than one Business Day after receipt, remit
such amounts to the Master Servicer for deposit into the Collection Account in
accordance with the second preceding paragraph, unless the Special Servicer
determines, consistent with the Servicing Standard, that a particular item
should not be deposited because of a restrictive endorsement or other reasonably
appropriate reason. Any such amounts received by the Special Servicer with
respect to an REO Property shall be deposited by the Special Servicer into the
REO Account and remitted to the Master Servicer for deposit into the Collection
Account pursuant to Section 3.16(c). With respect to any such amounts paid by
check to the order
38
of the Special Servicer, the Special Servicer shall endorse such check to the
order of the Master Servicer and shall deliver promptly, but in no event later
than one Business Day after receipt, any such check to the Master Servicer by
overnight courier, unless the Special Servicer determines, consistent with the
Servicing Standard, that a particular item cannot be so endorsed and delivered
because of a restrictive endorsement or other reasonably appropriate reason.
(b) Funds in the Collection Account, to the extent invested,
shall be invested in Permitted Investments in accordance with the provisions of
Section 3.06. The Master Servicer shall give notice to the other parties hereto
of the location of the Collection Account as of the Closing Date and of the new
location of the Collection Account prior to any change thereof.
Section 3.05. Permitted Withdrawals From the Collection
Account.
(a) The Master Servicer may, from time to time, make
withdrawals from the Collection Account for any of the following purposes and
solely from the sources specified (the order set forth below not constituting an
order of priority for such withdrawals):
(i) to remit on each Master Servicer Remittance Date to
the Indenture Trustee for deposit in the Bond Account under
the Indenture the Master Servicer Remittance Amount for each
Master Servicer Remittance Date;
(ii) to reimburse the Fiscal Agent, the Indenture
Trustee and itself, in that order for ▇▇▇▇▇▇▇▇▇▇▇▇ ▇&▇
Advances as provided in Section 6.01(b), the Master Servicer's
right to reimburse itself, the Indenture Trustee and the
Fiscal Agent pursuant to this clause (ii) with respect to any
P&I Advance (other than Nonrecoverable Advances, which are
reimbursable pursuant to clause (vii) below) being limited to
amounts that represent Late Collections of interest (net of
the related Master Servicing Fees) and principal received in
respect of the particular Mortgage Loan or REO Property as to
which such P&I Advance was made;
(iii) to pay to itself earned and unpaid Master Servicing
Fees in respect of each Mortgage Loan and REO Loan and, the
Master Servicer's right to payment pursuant to this clause
(iii) with respect to any Mortgage Loan or REO Loan being
limited to amounts received on or in respect of such Mortgage
Loan (whether in the form of payments, Liquidation Proceeds or
Insurance Proceeds) or such REO Loan (whether in the form of
REO Revenues, Liquidation Proceeds or Insurance Proceeds) that
are allocable as a recovery of interest thereon;
(iv) to pay to the Special Servicer earned and unpaid
Special Servicing Fees in respect of each Specially Serviced
Mortgage Loan and REO Loan at the time and in the manner
specified in this Agreement;
(v) to pay the Special Servicer earned and unpaid
Workout Fees and Liquidation Fees to which it is entitled
pursuant to, and from the sources contemplated by, the second
and third paragraphs of Section 3.11(c);
39
(vi) to reimburse the Fiscal Agent, the Indenture
Trustee, itself and Special Servicer, in that order (to the
extent such reimbursement is made under subclause (B) below),
for any unreimbursed Servicing Advances, the Indenture
Trustee, Master Servicer and Special Servicer's respective
rights to reimbursement pursuant to this clause (vi) with
respect to any Servicing Advance being limited to (A) payments
made by the related Borrower that are allocable to cover the
item in respect of which such Servicing Advance was made, and
(B) Liquidation Proceeds, Insurance Proceeds and, if
applicable, REO Revenues received in respect of the particular
Mortgage Loan or REO Property as to which such Servicing
Advance was made;
(vii) to reimburse the Fiscal Agent, the Indenture
Trustee, itself and the Special Servicer, in that order, for
any unreimbursed Advances that have been or
are determined to be Nonrecoverable Advances;
(viii) to pay the Fiscal Agent, the Indenture Trustee,
itself and the Special Servicer, in that order, any Advance
Interest due and owing thereto, the Indenture Trustee, Master
Servicer and Special Servicer's right to payment pursuant to
this clause (viii) being limited to Default Interest collected
in respect of the Mortgage Loan or REO Loan as to which the
related Advances were made;
(ix) at or following such time as it reimburses the
Fiscal Agent, the Indenture Trustee, itself or the Special
Servicer for any unreimbursed Advance pursuant to clause (ii),
(vi) or (vii) above or otherwise, and insofar as payment has
not already been made pursuant to clause (viii) above, to pay
the Fiscal Agent, the Indenture Trustee, itself and the
Special Servicer, in that order, any related Advance Interest
accrued and payable thereon;
(x) [reserved]
(xi) to pay itself, additional servicing compensation in
accordance with Section 3.11(b);
(xii) to pay itself, the Special Servicer, the Company,
the Manager, the Owner Trustee, the Indenture Trustee, the
Fiscal Agent or any of their respective directors, officers,
employees, agents and Control Persons, as the case may be, any
amounts payable to any such Person pursuant to Section 4.03,
5.03 or 7.03(b) of this Agreement, Section 7.2 or 11.5 of the
Owner Trust Agreement, Section 5.04(a)(2) of the Indenture,
Section 2(c) of the Management Agreement;
(xiii) to pay for (A) the advice of counsel contemplated
by Section 3.17(a)(iii), (B) the cost of the Opinions of
Counsel contemplated by Sections 3.09(b), 3.16(a) and 9.02(a),
(C) the cost of an Opinion of Counsel contemplated by the
Indenture or the Owner Trust Agreement in connection with any
amendment thereof or to this Agreement or the Loan Sale
Agreement that
40
protects or is in furtherance of the rights and interests of
the Owner Trust, the holders of the Owner Trust Certificates
or the Bonds, (D) the cost of recording this Agreement in
accordance with Section 9.02(a), (E) to pay any and all
federal, state and local taxes imposed on the Owner Trust or
on any of the income, assets or transactions thereof, together
with all incidental costs and expenses, and any and all
expenses relating to tax audits, to the extent that none of
the Owner Trustee, the Indenture Trustee, the Master Servicer
or the Special Servicer is liable therefor pursuant hereto or
pursuant to the Owner Trust Agreement or the Indenture, (F)
any amounts payable in respect of taxes pursuant to Section
9.03 of the Indenture and (G) any other costs, expenses and
liabilities (exclusive of Administrative Expenses and of
Extraordinary Expenses not specified in this subclause (G))
that are required to be borne by the Owner Trust in accordance
with applicable law or the terms of this Agreement, the
Management Agreement, the Loan Sale Agreement, the Indenture
or the Owner Trust Agreement (including the cost of opinions
of and advice from counsel required to be obtained in
connection with the performance of the duties of the Indenture
Trustee or the Owner Trustee under the Indenture and the Owner
Trust Agreement);
(xiv) to pay itself, the Special Servicer, the Seller,
the Majority Holder of the Controlling Class, the Majority
Holder of the Owner Trust Certificates or any other Person, as
the case may be, with respect to each Mortgage Loan, if any,
previously purchased or substituted for by such Person
pursuant to this Agreement, all amounts related to the periods
after the date of such purchase or substitution received
thereon subsequent to the date of purchase or substitution;
(xv) to pay the Manager, the Owner Trustee and the
Indenture Trustee earned and unpaid Management Fees, Owner
Trustee Fees and Indenture Trustee Fees; and
(xvi) to clear and terminate the Collection Account at
the termination of this Agreement pursuant to Section 8.01.
The Master Servicer shall keep and maintain separate
accounting records, on a loan-by-loan and property-by-property basis when
appropriate, in connection with any withdrawal from the Collection Account
pursuant to clauses (ii) through (xvi) above.
(b) Once per month, the Master Servicer shall pay to the
Indenture Trustee, the Fiscal Agent and the Special Servicer from the Collection
Account amounts permitted to be paid to it therefrom promptly upon receipt of a
certificate of a Responsible Officer of the Trustee, an officer of the Fiscal
Agent and a Servicing Officer of the Special Servicer describing the item and
amount to which the Special Servicer is entitled. The Master Servicer may rely
conclusively on any such certificate and shall have no duty to re-calculate the
amounts stated therein. The Special Servicer shall keep and maintain separate
accounting for each Specially Serviced Mortgage Loan and REO Property, on a
loan-by-loan and property-by-property basis, for the purpose of justifying any
request for withdrawal from the Collection Account.
41
Section 3.06. Investment of Funds in the Collection
Account and the REO Account.
(a) The Master Servicer may direct any depository institution
maintaining the Collection Account, and the Special Servicer shall direct any
depository institution maintaining the REO Account, to invest the funds held
therein (each such account, for purposes of this Section 3.06, an "Investment
Account") in one or more Permitted Investments bearing interest or sold at a
discount, and maturing, unless payable on demand, not later than the Business
Day immediately preceding the next succeeding date on which such funds are
required to be withdrawn from such account pursuant to this Agreement. All such
Permitted Investments shall be held to maturity, unless payable on demand. Any
investment of funds in an Investment Account shall be made in the name of the
Indenture Trustee (in its capacity as such) or in the name of the Master
Servicer or the Special Servicer, as applicable, on behalf of the Indenture
Trustee (in its capacity as such). The Master Servicer (with respect to
Permitted Investments of amounts in the Collection Account) and the Special
Servicer (with respect to Permitted Investments of amounts in the REO Account),
on behalf of the Indenture Trustee, shall (and the Indenture Trustee hereby
designates the Master Servicer and the Special Servicer, as applicable, as the
Person that shall) (i) be the "entitlement holder" of any Permitted Investment
that is a "security entitlement" and (ii) maintain "control" of any Permitted
Investment that is either a "certificated security" or an uncertificated
security". For purposes of this Section 3.06(a), the terms "entitlement holder",
"security entitlement", "control", "certificated security" and "uncertificated
security" shall have the meanings given such terms in Revised Article 8 (1994
Revision) of the Uniform Commercial Code, and "control" of any Permitted
Investment by the Master Servicer or the Special Servicer shall constitute
"control" by a Person designated by, and acting on behalf of, the Indenture
Trustee for purposes of Revised Article 8 (1994 Revision) of the Uniform
Commercial Code. If amounts on deposit in an Investment Account are at any time
invested in a Permitted Investment payable on demand, the Master Servicer (in
the case of the 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; and
(y) demand payment of all amounts due thereunder
promptly upon determination by the Master Servicer or the
Special Servicer, as the case may be, that such Permitted
Investment would not constitute a Permitted Investment in
respect of funds thereafter on deposit in the Investment
Account.
(b) Whether or not the Master Servicer directs the investment
of funds in the Collection Account, interest and investment income realized on
funds deposited therein, to the extent of the Net Investment Earnings, if any,
for each such Investment Account for each Collection Period, shall be for the
sole and exclusive benefit of the Master Servicer and shall be subject to its
withdrawal in accordance with Section 3.05. Whether or not the Special Servicer
directs the investment of funds in the REO Account, interest and investment
income realized on
42
funds deposited therein, to the extent of the Net Investment Earnings, if any,
for such Investment Account for each Collection Period, shall be for the sole
and exclusive benefit of the Special Servicer and shall be subject to its
withdrawal in accordance with Section 3.16(b). If any loss shall be incurred in
respect of any Permitted Investment on deposit in any Investment Account, the
Master Servicer (in the case of the Collection Account) and the Special Servicer
(in the case of the REO Account) shall promptly deposit therein from its own
funds, without right of reimbursement, not later than the end of the Collection
Period during which such loss was incurred, the amount of the Net Investment
Loss, if any, for such Collection Period.
(c) Except as otherwise expressly provided in this Agreement,
if any default occurs in the making of a payment due under any Permitted
Investment, or if a default occurs in any other performance required under any
Permitted Investment, the Owner Trust and the Indenture Trustee may and, subject
to Section 5.3 of the Owner Trust Agreement and Section 5.03 of the Indenture,
respectively, upon the request of holders of Owner Trust Certificates or the
Bonds holding not less than 25% of any Class thereof, shall take such action as
may be appropriate to enforce such payment or performance, including the
institution and prosecution of appropriate proceedings.
(d) Notwithstanding the investment of funds held in any
Investment Account, for purposes of the calculations hereunder, including the
calculation of the Master Servicer Remittance Amount, the amounts so invested
shall be deemed to remain on deposit in such Investment Account.
Section 3.07. Maintenance of Insurance Policies; Errors
and Omissions and Fidelity Coverage.
(a) The Master Servicer (with respect to Mortgage Loans
including Specially Serviced Mortgage Loans) and the Special Servicer (with
respect to REO Properties) shall use its best efforts in accordance with the
Servicing Standards to cause the related Borrower to maintain (and, if the
related Borrower does not so maintain, the Master Servicer shall maintain
(subject to the provisions of this Agreement concerning Nonrecoverable Advances)
to the extent the Indenture Trustee, as mortgagee on behalf of the holders of
Owner Trust Certificates, has an insurable interest and to the extent available
at commercially reasonable rates) for each Mortgaged Property all insurance
coverage as is required under the related Mortgage subject to applicable law;
provided that if and to the extent that any such Mortgage permits the holder
thereof any discretion (by way of consent, approval or otherwise) as to the
insurance coverage that the related Borrower is required to maintain on such
Mortgaged Property, the Master Servicer shall impose such insurance requirements
as are consistent with the Servicing Standards. Subject to Section 3.17, the
Special Servicer shall cause to be maintained, to the extent available at
commercially reasonable rates, for each REO Property no less insurance coverage
than was previously required of the related Borrower under the related Mortgage
and if the related Mortgage did not so require, (i) hazard insurance, (ii)
public liability insurance and business interruption or rental loss insurance in
such amounts as are consistent with the Servicing Standard, and the Special
Servicer shall be reimbursed for the premium costs thereof as a Servicing
Advance pursuant to and to the extent permitted under Section 3.05. All such
insurance policies shall contain a "standard" mortgagee
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clause, with loss payable to the Master Servicer (in the case of insurance
maintained in respect of Mortgaged Property) or the Special Servicer (in the
case of insurance maintained in respect of REO Properties), on behalf of the
Owner Trust, and shall be issued by an insurer authorized under applicable law
to issue such insurance, and unless prohibited by the related Mortgage, may
contain a deductible clause (not in excess of a customary amount). Any amounts
collected by the Master Servicer or the Special Servicer under any such policies
(other than amounts to be applied to the restoration, remediation or repair of
the related Mortgaged Property or REO Property or amounts to be released to the
related Borrower, in each case in accordance with the Servicing Standard) shall
be deposited in the Collection Account, subject to withdrawal pursuant to
Section 3.05, in the case of amounts received in respect of a Mortgage Loan, or
in the REO Account, subject to withdrawal pursuant to Section 3.16(c), in the
case of amounts received in respect of an REO Property. Any cost incurred by the
Master Servicer or the Special Servicer, as the case may be, in maintaining any
such insurance shall not, solely for purposes hereof, including, without
limitation, calculating monthly distributions to the holders of Owner Trust
Certificates, be added to unpaid principal balance or the Stated Principal
Balance of the related Mortgage Loan (or any successor REO Loan),
notwithstanding that the terms of such Mortgage Loan so permit; provided,
however, that this provision is in no way intended to affect amounts due and
owing from the related Mortgage under such Mortgage Loans.
(b) If the Master Servicer or the Special Servicer shall
obtain and maintain, or cause to be obtained and maintained, a blanket policy or
master forced placed policy insuring against hazard losses on Mortgage Loans and
REO Properties that it is required to service and administer, then, to the
extent such policy (i) is obtained from a Qualified Insurer and (ii) provides
protection equivalent to the individual policies otherwise required, the Master
Servicer or the Special Servicer, as the case may be, shall conclusively be
deemed to have satisfied its obligation to cause hazard insurance to be
maintained on the related Mortgaged Property. Such policy may contain a
deductible clause (not in excess of a customary amount), in which case the
Master Servicer or the Special Servicer, as appropriate, shall, if there shall
not have been maintained on the related Mortgaged Property or REO Property a
hazard insurance policy complying with the requirements of Section 3.07(a), and
there shall have been one or more losses that would have been covered by such
policy, promptly deposit into the Collection Account from its own funds the
amount not otherwise payable under the blanket policy in connection with such
loss or losses because of such deductible clause to the extent that any such
deductible exceeds the deductible limitation that pertained to the related
Mortgage Loan, or, in the absence of any such deductible limitation, the
deductible limitation which is consistent with the Servicing Standard. The
Master Servicer or the Special Servicer, as appropriate, shall prepare and
present, on behalf of itself, and the Owner Trust, the Indenture Trustee, the
Owner Trustee and the holders of the Bonds and the Owner Trust Certificates,
claims under any such blanket policy in a timely fashion in accordance with the
terms of such policy.
(c) Each of the Master Servicer and the Special Servicer shall
at all times during the term of this Agreement (or, in the case of the Special
Servicer, at all times during the term of this Agreement in which Specially
Serviced Mortgage Loans or REO Properties exist as part of the Trust Estate)
keep in force with a Qualified Insurer having a claims paying ability rated not
lower than two ratings below the highest rating then assigned to any Class of
Bonds by each
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Rating Agency (unless each of the Rating Agencies has confirmed in writing that
use of a Qualified Insurer with a lower rated claims paying ability shall not
result in the downgrading, qualification or withdrawal of the ratings then
assigned to any Class of Bonds), a fidelity bond in such form and amount as
would permit it to be a qualified FNMA seller-servicer of multifamily loans, or
in such other form and amount as would not adversely affect any rating assigned
by either Rating Agency to any Class of Bonds (as evidenced in writing from each
Rating Agency). Each of the Master Servicer and the Special Servicer shall be
deemed to have complied with the foregoing provision if an Affiliate thereof has
such fidelity bond coverage and, by the terms of such fidelity bond, the
coverage afforded thereunder extends to the Master Servicer or the Special
Servicer, as the case may be. Such fidelity bond shall provide that it may not
be canceled without ten days' prior written notice to the Owner Trustee and the
Indenture Trustee.
Each of the Master Servicer and the Special Servicer shall at
all times during the term of this Agreement (or, in the case of the Special
Servicer, at all times during the term of this Agreement in which Specially
Serviced Mortgage Loans or REO Properties exist as part of the Trust Estate)
also keep in force with a Qualified Insurer having a claims paying ability rated
not lower than two ratings below the highest rating then assigned to any Class
of Bonds by each Rating Agency (unless each of the Rating Agencies has confirmed
in writing that use of a Qualified Insurer with a lower rated claims paying
ability shall not result in the downgrading, qualification or withdrawal of the
ratings then assigned to any Class of Bonds), a policy or policies of insurance
covering loss occasioned by the errors and omissions of its officers and
employees in connection with its servicing obligations hereunder, which policy
or policies shall be in such form and amount as would permit it to be a
qualified FNMA seller-servicer of multifamily mortgage loans, or in such other
form and amount as would not adversely affect any rating assigned by either
Rating Agency to any Class of Bonds (as evidenced in writing from each Rating
Agency). Each of the Master Servicer and the Special Servicer shall be deemed to
have complied with the foregoing provisions if an Affiliate thereof has such
insurance and, by the terms of such policy or policies, the coverage afforded
thereunder extends to the Master Servicer or the Special Servicer, as the case
may be. Any such errors and omissions policy shall provide that it may not be
canceled without ten days' prior written notice to the Owner Trustee and the
Indenture Trustee.
(d) Notwithstanding the foregoing, so long as the long-term
unsecured debt obligations of the Master Servicer or Special Servicer, as
applicable, or its respective corporate parent have been rated "A" or better by
S&P and "A2" or better by ▇▇▇▇▇'▇ (or such lower rating as will not result in
qualification, downgrading or withdrawal of the ratings then assigned to the
Bonds, as evidenced in writing by the Rating Agencies), the Master Servicer or
Special Servicer, as applicable, shall be entitled to provide self-insurance or
obtain from its respective corporate parent adequate insurance, as applicable,
with respect to its obligations hereunder to maintain a fidelity bond or an
errors and omissions insurance policy.
Section 3.08. Enforcement of Alienation Clauses;
Assumption Agreements.
(a) With respect to those Mortgage Loans it is obligated to
service hereunder, each of the Master Servicer and the Special Servicer, on
behalf of the Owner Trust for the benefit of the holders of the Bonds and the
Owner Trust Certificates, shall enforce the restrictions
45
contained in the related Mortgage or in any other document in the related
Mortgage Loan File on transfers or further encumbrances of the related Mortgaged
Property and on transfers of interests in the related Borrower, unless (i) it
has determined, consistent with the Servicing Standard, that waiver of such
restrictions or consent to a transfer or further encumbrance would be in
accordance with the Servicing Standard; (ii) with respect to the enforcement of
any due-on-sale clause, it has obtained written confirmation from each Rating
Agency that the waiver of such provision with respect to any Mortgage Loan
representing more than 5% of the outstanding principal balance of the Mortgage
Loans, including any other Mortgage Loans to the same Borrower or any group of
cross-collateralized Mortgage Loans, will not result in the downgrading,
qualification or withdrawal of the ratings then assigned to any Class of Bonds;
and (iii) with respect to the enforcement of any due-on-sale encumbrance
provision, it has obtained written confirmation from each Rating Agency that the
waiver of such provision will not result in the downgrading, qualification or
withdrawal of the ratings then assigned to any Class of Bonds. The Master
Servicer or Special Servicer, as applicable, shall use its reasonable efforts to
have the cost, if any, of obtaining any such confirmation paid by the Borrower;
if such cost is not paid by the Borrower, the Master Servicer shall advance such
amount as a Servicing Advance. After having made the determination referred to
in clause (i) above, the Master Servicer or the Special Servicer, as the case
may be, shall deliver to the Indenture Trustee (and the Master Servicer in the
case of the Special Servicer) an Officer's Certificate setting forth the basis
for such determination.
(b) Subject to the foregoing, the Master Servicer or the
Special Servicer, as applicable, is authorized to take or enter into an
assumption agreement from or with the Person to whom such Mortgaged Property has
been or is about to be conveyed, or to release the original related Borrower
from liability upon such Mortgage Loan and substitute the new Borrower as
obligor thereon. 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 (x) the Master Servicer's or the Special Servicer's, as
applicable, regular commercial mortgage origination or servicing standards and
criteria, (y) the terms of the related Mortgage Loan and (z) the Servicing
Standard. The Master Servicer or the Special Servicer, as applicable, shall
notify the Indenture Trustee that any such assumption or substitute agreement
has been completed by forwarding to the Indenture Trustee the original of such
agreement, which document shall be added to the related Mortgage Loan File and
shall, for all purposes, be considered a part of such Mortgage Loan 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
Rate, principal amount and other material payment terms (including any
cross-collateralization and cross-default provisions) of such Mortgage Loan
pursuant to the related Mortgage Note and Mortgage shall not be changed, other
than in connection with a default or reasonably foreseeable default with respect
to the Mortgage Loan. Assumption fees collected by the Master Servicer or the
Special Servicer, as applicable, for entering into an assumption or substitution
agreement will be retained by the Master Servicer or the Special Servicer, as
applicable, as additional servicing compensation. Notwithstanding the foregoing,
the Master Servicer or Special Servicer may consent to the assumption of a
Mortgage Loan by a prospective new Borrower in a bankruptcy proceeding involving
the related Mortgaged Property.
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Section 3.09. Realization Upon Defaulted Mortgage Loans.
(a) With respect to any Specially Serviced Mortgage Loan, the
Special Servicer shall determine, in accordance with the Servicing Standard and
subject to Sections 3.09(b) and 3.09(c), whether to grant a modification, waiver
or amendment to the terms of such Specially Serviced Mortgage Loan (subject to
the limitations contained in Section 3.20), commence foreclosure proceedings or
attempt to sell such Specially Serviced Mortgage Loan with reference to which
course of action is reasonably likely to produce a greater recovery on a present
value basis with respect to such Specially Serviced Mortgage Loan. In connection
with any foreclosure or other acquisition, the Master Servicer shall, at the
direction of the Special Servicer, pay the costs and expenses in any such
proceedings as an Advance. Nothing contained in this Section 3.09 shall be
construed so as to require the Special Servicer, on behalf of the Owner Trust,
to make a bid on any Mortgaged Property at a foreclosure sale or similar
proceeding that is in excess of the fair market value of such property, as
determined by the Special Servicer in its good faith and reasonable judgment
taking into account the factors described in Section 3.18(e) and the results of
any Appraisal obtained pursuant to the following sentence, all such bids to be
made in a manner consistent with the Servicing Standard. If and when the Master
Servicer or the Special Servicer deems it necessary and prudent for purposes of
establishing the fair market value of any Mortgaged Property securing a
defaulted Mortgage Loan, whether for purposes of bidding at foreclosure or
otherwise, the Special Servicer or the Master Servicer, as the case may be, is
authorized, and within 60 days after any Mortgage Loan becomes a Specially
Serviced Mortgage Loan, the Special Servicer is required, to have an Appraisal
done by a Qualified Appraiser (the cost of which Appraisal shall constitute a
Servicing Advance).
(b) Notwithstanding the foregoing provisions of this Section
3.09, neither the Master Servicer nor the Special Servicer shall, on behalf of
the Owner Trust, obtain title to a Mortgaged Property by deed in lieu of
foreclosure or otherwise, or take any other action with respect to any Mortgaged
Property, if, as a result of any such action, the Owner Trust, or the Indenture
Trustee or Owner Trustee, could, in the reasonable judgment of the Special
Servicer, made in accordance with the Servicing Standard, be considered to hold
title to, to be a "mortgagee- in-possession" of, or to be an "owner" or
"operator" of such Mortgaged Property within the meaning of CERCLA or any
comparable law, unless:
(A) the Special Servicer has previously determined in
accordance with the Servicing Standard, based on a Phase I
Environmental Assessment (and any additional environmental testing that
the Special Servicer deems necessary and prudent) of such Mortgaged
Property conducted by an Independent Person who regularly conducts
Phase I Environmental Assessments and performed during the twelve-month
period preceding any such acquisition of title or other action, that
the Mortgaged Property is in compliance with applicable environmental
laws and regulations and there are no circumstances or conditions
present at the Mortgaged Property relating to the use, management or
disposal of Hazardous Materials for which investigation, testing,
monitoring, containment, clean-up or remediation could be required
under any applicable environmental laws and regulations; or
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(B) in the event that the determination described in clause
(A) above cannot be made, the Special Servicer has previously
determined in accordance with the Servicing Standard, on the same basis
as described in clause (A) above, that it would maximize the recovery
to the holders of the Bonds and the Owner Trust (as a collective whole)
on a present value basis (the relevant discounting of anticipated
collections that will be paid to the holders of the Bonds and the Owner
Trust to be performed at the related Net Mortgage Rate) to acquire
title to or possession of the Mortgaged Property and to take such
remedial, corrective and/or other further actions as are necessary to
bring the Mortgaged Property into compliance with applicable
environmental laws and regulations and to appropriately address any of
the circumstances and conditions referred to in clause (A) above.
Any such determination by the Special Servicer shall be
evidenced by an Officer's Certificate to such effect delivered to the Owner
Trustee, to the Indenture Trustee, to the Directing Bondholder and to the Master
Servicer and specifying all of the bases for such determination, such Officer's
Certificate to be accompanied by all related environmental reports. The Special
Servicer shall undertake, in good faith, reasonable efforts to make the
determination referred to in clause (B) above, and may conclusively rely on the
Phase I Environmental Assessment referred to above, and upon an Opinion of
Counsel, in making such determination. The cost of any such Phase I
Environmental Assessment and any such Opinion of Counsel, and the cost of any
Phase I Environmental Assessment, additional environmental testing and remedial,
corrective or other further action contemplated by clause (A) or clause (B)
above, may be reimbursed to the Special Servicer from the Collection Account as
a Servicing Advance pursuant to Section 3.05.
(c) If the environmental testing contemplated by Section
3.09(b) above establishes that any of the conditions set forth in clause (A) has
not been satisfied with respect to any Mortgaged Property securing a defaulted
Mortgage Loan, the Special Servicer shall take such action as is in accordance
with the Servicing Standard (other than proceeding against the Mortgaged
Property) and, at such time as it deems appropriate, may, on behalf of the Owner
Trust and the Indenture Trustee, release all or a portion of such Mortgaged
Property from the lien of the related Mortgage.
(d) The Special Servicer shall report to the Owner Trustee,
the Indenture Trustee, the Master Servicer and the Directing Bondholder monthly
in writing as to any actions taken by the Special Servicer with respect to any
Mortgaged Property as to which the environmental testing contemplated in Section
3.09(b) above has revealed that any of the conditions set forth in clause (A)
above have not been satisfied, in each case until the earliest to occur of
satisfaction of all such conditions, release of the lien of the related Mortgage
on such Mortgaged Property and the related Mortgage Loan becoming a Corrected
Mortgage Loan.
(e) The Special Servicer shall have the right to determine, in
accordance with the Servicing Standard, the advisability of seeking to obtain a
deficiency judgment if the state in which the Mortgaged Property is located and
the terms of the Mortgage Loan permit such an action and shall, in accordance
with the Servicing Standard, seek such deficiency judgment if it deems
advisable.
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(f) The Special Servicer shall prepare and file the reports of
foreclosures and abandonments of any Mortgaged Property and the information
returns relating to cancellation of indebtedness income with respect to any
Mortgaged Property required by Sections 6050J and 6050P of the Code and promptly
deliver to the Owner Trustee and the Indenture Trustee an Officer's Certificate
stating that such reports have been filed. Such reports shall be in form and
substance sufficient to meet the reporting requirements imposed by Sections
6050J and 6050P of the Code.
(g) The Special Servicer shall maintain accurate records,
prepared by a Servicing Officer, of each Final Recovery Determination in respect
of any Mortgage Loan or REO Property and the basis thereof. Each Final Recovery
Determination shall be evidenced by an Officer's Certificate delivered to the
Owner Trustee, the Indenture Trustee and the Master Servicer not later than the
third Business Day following such Final Recovery Determination.
Section 3.10. Owner Trust and Indenture Trustee to
Cooperate; Release of Mortgage Loan Files.
(a) Upon the payment in full of any Mortgage Loan, or the
receipt by the Master Servicer of a notification that payment in full shall be
escrowed in a manner customary for such purposes, the Master Servicer shall
promptly notify the Owner Trustee and the Indenture Trustee by a certification
(which certification shall be in the form of a Request for Release in the form
of Exhibit B-1 attached hereto, shall be accompanied by the form of any
necessary release or discharge and shall include a statement to the effect that
all amounts received or to be received in connection with such payment which are
required to be deposited in the Collection Account pursuant to Section 3.04(a)
have been or will be so deposited) of a Servicing Officer (a copy of which
certification shall be delivered to the Special Servicer and the Owner Trustee)
and shall request delivery to it of the related Mortgage Loan File. Upon receipt
of such certification and request, the Indenture Trustee shall promptly release
the related Mortgage Loan File to the Master Servicer and the Indenture Trustee
and the Owner Trust shall deliver to the Master Servicer such release or
discharge, duly executed. No expenses incurred in connection with any instrument
of satisfaction or deed of reconveyance shall be chargeable to the Collection
Account.
(b) If from time to time, the Indenture Trustee, upon request
of the Master Servicer and receipt from the Master Servicer of a Request for
Release in the form of Exhibit B-1 attached hereto signed by a Servicing Officer
thereof, or upon request of the Special Servicer and receipt from the Special
Servicer of a Request for Release in the form of Exhibit B-2 attached hereto,
shall release such Mortgage Loan File (or portion thereof) to the Master
Servicer or the Special Servicer, as the case may be. Upon return of such
Mortgage Loan File (or portion thereof) to the Indenture Trustee, or upon the
Special Servicer's delivery to the Indenture Trustee of an Officer's Certificate
stating that (i) such Mortgage Loan was liquidated and all amounts received or
to be received in connection with such liquidation that are required to be
deposited into the Collection Account pursuant to Section 3.04(a) have been or
will be so deposited or (ii) such Mortgage Loan has become an REO Property, a
copy of the Request for Release shall be released by the Indenture Trustee to
the Master Servicer or the Special Servicer, as applicable.
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(c) Within seven Business Days of the Special Servicer's
request therefor (or, if the Special Servicer notifies the Owner Trustee and the
Indenture Trustee of an exigency, within such shorter period as is reasonable
under the circumstances), each of the Owner Trust and the Indenture Trustee
shall execute and deliver to the Special Servicer, in the form supplied to the
Owner Trustee and the Indenture Trustee by the Special Servicer, any court
pleadings, requests for trustee's sale or other documents reasonably necessary
to the foreclosure or sale in respect of any Mortgaged Property or to any legal
action brought to obtain judgment against any Borrower on the Mortgage Note or
Mortgage or to obtain a deficiency judgment, or to enforce any other remedies or
rights provided by the Mortgage Note or Mortgage or otherwise available at law
or in equity or to defend any legal action or counterclaim filed against the
Owner Trust, the Master Servicer or the Special Servicer; provided that each of
the Owner Trust and the Indenture Trustee may alternatively execute and deliver
to the Special Servicer, in the form supplied to the Owner Trustee and the
Indenture Trustee by the Special Servicer, a limited power of attorney issued in
favor of the Special Servicer and empowering the Special Servicer to execute and
deliver any or all of such pleadings or documents on behalf of the Owner Trust
or the Indenture Trustee, as the case may be, provided, however, that none of
the Owner Trust, the Owner Trustee or the Indenture Trustee shall be held liable
for any misuse of such power of attorney by the Special Servicer and the Special
Servicer hereby agrees to indemnify the Owner Trust, the Owner Trustee and the
Indenture Trustee against, and hold the Owner Trust, the Owner Trustee and the
Indenture Trustee harmless from, any loss or liability arising from any misuse
of such power of attorney. Together with such pleadings or documents (or such
power of attorney empowering the Special Servicer to execute the same on behalf
of the Owner Trust and the Indenture Trustee), the Special Servicer shall
deliver to each of the Owner Trustee and the Indenture Trustee an Officer's
Certificate requesting that such pleadings or documents (or such power of
attorney empowering the Special Servicer to execute the same on behalf of the
Owner Trust or the Indenture Trustee, as the case may be) be executed by the
Owner Trust or the Indenture Trustee and certifying as to the reason such
pleadings or documents are required and that the execution and delivery thereof
by the Owner Trust or the Indenture Trustee (or by the Special Servicer on
behalf of the Owner Trust or the Indenture Trustee) will not invalidate or
otherwise affect the lien of the related Mortgage, except for the termination of
such a lien upon completion of the foreclosure or sale.
Section 3.11. Servicing Compensation; Interest on Servicing
Advances.
(a) As compensation for its activities hereunder, the Master
Servicer shall be entitled to receive the Master Servicing Fee with respect to
each Mortgage Loan (including, without limitation, each Specially Serviced
Mortgage Loan) and REO Loan. As to each such Mortgage Loan and REO Loan, the
Master Servicing Fee shall accrue at the applicable Master Servicing Fee Rate on
the basis of the same principal amount and for the same period respecting which
the related interest payment due on such Mortgage Loan or deemed to be due on
such REO Loan is computed. The Master Servicing Fee with respect to any Mortgage
Loan or REO Loan shall cease to accrue if a Liquidation Event occurs in respect
thereof. Earned but unpaid Master Servicing Fees shall be payable monthly, on a
loan-by-loan basis, from payments of interest on each Mortgage Loan and REO
Revenues allocable as interest on each REO Loan. The Master Servicer shall be
entitled to recover unpaid Master Servicing Fees in respect of any Mortgage Loan
or REO Loan out of Insurance Proceeds or Liquidation Proceeds, to the extent
permitted by
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Section 3.05(a). The right to receive the Master Servicing Fee may not be
transferred in whole or in part except in connection with the transfer of all of
the Master Servicer's responsibilities and
obligations under this Agreement.
(b) The Master Servicer shall also be entitled to additional
servicing compensation in the form of: (i) any Prepayment Interest Excesses;
(ii) Default Interest collected on the Mortgage Loan to the extent allocable to
the period when the related Mortgage Loan did not constitute a Specially
Serviced Mortgage Loan or REO Property and not applied to pay interest on
Advances, Workout Fees and Liquidation Fees; (iii) interest or other income
earned on deposits in the Collection Account, in accordance with Section 3.06(b)
(but only to the extent of the Net Investment Earnings, if any, with respect to
the Collection Account for each Collection Period); (iv) late payment charges
and/or charges for checks returned for insufficient funds that are paid or
payable, as the context may require, in respect of any Mortgage Loan or REO
Loan; (v) to the extent not required to be paid to any Borrower under applicable
law or under the related Mortgage, any interest or other income earned on
deposits in the Servicing Accounts maintained thereby; and (vi) extension fees,
assumption fees, modification fees and similar processing fees with respect to
Mortgage Loans other than REO Loans and Specially Serviced Mortgage Loans. The
Master Servicer shall be required to pay out of its own funds all expenses
incurred by it in connection with its servicing activities hereunder (including,
without limitation, payment of any amounts due and owing to any of Sub-Servicers
retained by it and the premiums for any blanket policy insuring against hazard
losses pursuant to Section 3.07(b)), if and to the extent such expenses are not
payable directly out of the Collection Account, and the Master Servicer shall
not be entitled to reimbursement therefor except as expressly provided in this
Agreement, except for the incremental cost of such insurance applicable to a
Mortgage Loan or REO Property which shall be reimbursed as a Servicing Advance.
(c) As compensation for its activities hereunder, the Special
Servicer shall be entitled to receive the Special Servicing Fee with respect to
each Specially Serviced Mortgage Loan and each REO Loan. As to each Specially
Serviced Mortgage Loan and REO Loan, the Special Servicing Fee shall accrue from
time to time at the Special Servicing Fee Rate on the basis of the same
principal amount and for the same period respecting which any related interest
payment due on such Mortgage Loan or deemed to be due on such REO Loan is
computed. The Special Servicing Fee with respect to any Specially Serviced
Mortgage Loan or REO Loan shall cease to accrue as of the date a Liquidation
Event occurs in respect thereof or it becomes a Corrected Mortgage Loan. Earned
but unpaid Special Servicing Fees shall be payable monthly out of general
collections on the Mortgage Loans and any REO Properties on deposit in the
Collection Account pursuant to Section 3.05(a).
As further compensation for its activities hereunder, the
Special Servicer shall be entitled to receive the Workout Fee with respect to
each Corrected Mortgage Loan. As to each Corrected Mortgage Loan, the Workout
Fee shall be payable out of the Collection Account, and shall be calculated by
application of the Workout Fee Rate to the outstanding principal balance of such
Mortgage Loan as of the date it became a Corrected Mortgage Loan; provided that
the Workout Fee for any Mortgage Loan may not exceed $50,000. With respect to
each Corrected Mortgage Loan, 50% of the Workout Fee will be payable to the
Special Servicer on the date such
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Mortgage Loan becomes a Corrected Mortgage Loan and 50% of the Workout Fee will
be payable to the Special Servicer on the first date thereafter on which such
Mortgage Loan has not been 30 days or more delinquent or otherwise in default
for six continuous months. If the Special Servicer is terminated other than for
cause or resigns in accordance with Section 5.04, it shall retain the right to
receive any and all Workout Fees payable in respect of Mortgage Loans that
became Corrected Mortgage Loans during the period that it acted as Special
Servicer and were not 30 days or more delinquent or otherwise in default at the
time of such termination or resignation (and the successor Special Servicer
shall not be entitled to any portion of such Workout Fees), in each case until
such Mortgage Loan becomes a Specially Serviced Mortgage Loan or the related
Mortgaged Property has become an REO Property.
As further compensation for its activities hereunder, the
Special Servicer shall also be entitled to receive a Liquidation Fee with
respect to each Specially Serviced Mortgage Loan or REO Property as to which it
receives any full or discounted payoff from the related Borrower or any
Liquidation Proceeds or Insurance Proceeds (other than in connection with the
purchase or other removal from the Trust Estate of any such Specially Serviced
Mortgage Loan or REO Property by the Majority Holder of the Controlling Class,
the Special Servicer or the Master Servicer pursuant to or as contemplated by
Section 3.18 or by the Seller pursuant to the Loan Sale Agreement or pursuant to
Section 8.01). As to each such Specially Serviced Mortgage Loan or REO Property,
the Liquidation Fee shall be payable out of, and shall be calculated by
application of the Liquidation Fee Rate to, such full or discounted payoff,
Liquidation Proceeds and/or Insurance Proceeds, in each case net of any portion
of such payment or proceeds payable or reimbursable to the Master Servicer or
the Special Servicer to cover related unpaid or unreimbursed Master Servicing
Fees, Special Servicing Fees and/or Advances. The Liquidation Fee with respect
to any such Specially Serviced Mortgage Loan will not be payable if such
Mortgage Loan becomes a Corrected Mortgage Loan. Notwithstanding anything herein
to the contrary, the Liquidation Fee for any one Mortgage Loan shall not exceed
$100,000 and no Liquidation Fee will be payable in connection with the receipt
of, or out of, Liquidation Proceeds collected as a result of the purchase of any
Specially Serviced Mortgage Loan or REO Property described in the parenthetical
to the first sentence of this paragraph.
The Special Servicer's right to receive the Special Servicing
Fee, the Workout Fee and/or the Liquidation Fee may not be transferred in whole
or in part except in connection with the transfer of all of the Special
Servicer's responsibilities and obligations under this
Agreement.
(d) Additional servicing compensation in the form of any
extension fees, modification fees, any assumption fees and similar processing
fees received on or with respect to Mortgage Loans may be retained by the Master
Servicer (except when received on or with respect to Specially Serviced Mortgage
Loans or REO Loans, then such fees may be retained by the Special Servicer (to
the extent collected by the Special Servicer), or shall be promptly paid to the
Special Servicer by the Master Servicer (to the extent collected by the Master
Servicer)), and in any event shall not be required to be deposited in the
Collection Account pursuant to Section 3.04(a). The Master Servicer shall also
be entitled to all fees received in connection with any payments returned for
non-sufficient funds. The Special Servicer shall also be entitled to any Net
Penalty Charges received on the Mortgage Loans that are not required to be paid
as additional
52
servicing compensation to the Master Servicer. To the extent collected by the
Special Servicer, additional servicing compensation in the form of any Net
Penalty Charges that the Master Servicer is entitled to as additional servicing
compensation shall be paid promptly by the Special Servicer to the Master
Servicer. The Special Servicer shall be required to pay out of its own funds all
expenses incurred by it in connection with its servicing activities hereunder
(including, without limitation, payment of any amounts due and owing to any of
Sub-Servicers retained by it and the premiums for any blanket policy obtained by
it insuring against hazard losses pursuant to Section 3.07(b)), if and to the
extent such expenses are not payable directly out of the Collection Account or
the REO Account, and the Special Servicer shall not be entitled to reimbursement
except as expressly provided in this Agreement, except for the incremental cost
of such insurance applicable to a Mortgage Loan or REO Property which shall be
reimbursed as a Servicing Advance.
(e) As and to the extent permitted by Section 3.05, the Master
Servicer and the Special Servicer shall each be entitled to receive interest at
the Reimbursement Rate in effect from time to time, accrued on the amount of
each Servicing Advance made thereby for so long as such Servicing Advance is
outstanding. The Master Servicer shall reimburse itself or the Special Servicer,
as appropriate, for any Servicing Advance with accrued interest as soon as
practicable after funds available for such purpose are deposited in the
Collection Account.
Section 3.12. Property Inspections; Collection of Financial
Statements; Delivery of Certain Reports.
(a) The Master Servicer shall perform (or cause to be
performed) a physical inspection of each Mortgaged Property (other than
Mortgaged Properties constituting collateral for Specially Serviced Mortgage
Loans) at such times and in such manner as are consistent with the Master
Servicer's normal servicing procedures, but in any event (i) at least once every
year with respect to each Mortgaged Property securing a Mortgage Loan with an
outstanding principal balance in excess of $1,000,000, and (ii) at least once
every other year with respect to each Mortgaged Property securing a Mortgage
Loan with an outstanding principal balance of less than or equal to $1,000,000.
The expense of such inspections shall be borne by the Master Servicer without
reimbursement hereunder. The Master Servicer shall prepare a written report of
each such inspection performed by it that sets forth in detail the condition of
the Mortgaged Property and that specifies the existence of: (i) any sale,
transfer or abandonment of the Mortgaged Property of which the Master Servicer
is aware, (ii) any change in the condition or value of the Mortgaged Property
that it, in its good faith and reasonable judgment, considers material, or (iii)
any waste committed on the Mortgaged Property. The Master Servicer shall deliver
to the Owner Trustee, the Indenture Trustee and the holders of the Controlling
Class a copy of each such written report prepared by it during each calendar
quarter within 15 days of the end of such quarter.
(b) The Special Servicer shall at its expense perform a
physical inspection of each Mortgaged Property as soon as practicable after the
related Mortgage Loan becomes a Specially Serviced Mortgage Loan. The Special
Servicer shall prepare a written report of each such inspection performed by it
that sets forth in detail the condition of the Mortgaged Property and that
specifies the existence of: (i) any sale, transfer or abandonment of the
Mortgaged Property of which the Special Servicer is aware, (ii) any change in
the condition or value of the Mortgaged
53
Property that it, in its good faith and reasonable judgment, considers material,
or (iii) any waste committed on the Mortgaged Property. The Special Servicer
shall deliver to the Owner Trustee, the Indenture Trustee and the holders of the
Controlling Class and to the Master Servicer a copy of each such written report
prepared by it during each calendar quarter within 15 days of the end of such
quarter.
(c) The Special Servicer, in the case of any Specially
Serviced Mortgage Loan, and the Master Servicer, in the case of all other
Mortgage Loans, shall make reasonable efforts to collect promptly from each
related Borrower and review annual operating statements of the related Mortgaged
Property, and financial statements of such Borrower, whether or not delivery of
such items is required pursuant to the terms of the related Mortgage Note or
Mortgage or otherwise. In addition, the Special Servicer shall cause annual
operating statements to be regularly prepared in respect of each REO Property
and shall collect all such items promptly following their preparation. The
Master Servicer and the Special Servicer shall each deliver copies of all of the
foregoing items so collected thereby during a calendar year to the Owner
Trustee, the Indenture Trustee, the holders of the Controlling Class and, in the
case of the Special Servicer, the Master Servicer on or before March 31 of the
following year.
Section 3.13. Annual Statement as to Compliance.
Each of the Master Servicer and the Special Servicer shall
deliver to the Owner Trustee, to the Indenture Trustee and, in the case of the
Special Servicer, to the Master Servicer, on or before March 31 of each year,
beginning March 31, 1999, an Officer's Certificate stating, as to each signer
thereof, that (i) a review of the activities of the Master Servicer or the
Special Servicer, as the case may be, during the preceding calendar year and of
its performance under this Agreement has been made under such officer's
supervision, (ii) to the best of such officer's knowledge, based on such review,
the Master Servicer or the Special Servicer, as the case may be, maintained an
effective internal control system over the servicing of the Mortgage Loans and
fulfilled in all material respects throughout the year its obligations under
this Agreement or, if there was not an effective internal control system or a
default in the fulfillment of any such obligation in any material respect, such
Officer's Certificate shall include a description of such lack of controls or
specify each such default, as the case may be, known to such officer and the
nature and status thereof and (iii) the Master Servicer or the Special Servicer,
as the case may be, has received no written notice regarding qualification, or
challenging the classification or the status, of the Owner Trust as a "qualified
real estate investment trust subsidiary" within the meaning of Section 856(i) of
the Code from the Internal Revenue Service or any other governmental agency or
body or, if it has received any such notice, specifying the details thereof.
Section 3.14. Reports by Independent Public Accountants.
On or before 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 (which may also render other
services to the Master Servicer or the Special Servicer, as the case may be) to
furnish to the Owner Trustee and the Indenture Trustee and, in the case of
54
the Special Servicer, to the Master Servicer a report containing such firm's
opinion that, on the basis of an examination conducted by such firm
substantially in accordance with procedures set forth in the Uniform Single
Attestation Program for Mortgage Bankers, as applicable, the assertion made by
an officer of the Master Servicer or the Special Servicer, as applicable,
regarding maintenance of an effective internal control system by the Master
Servicer or the Special Servicer, as the case may be, during the preceding
calendar year is fairly stated in all material respects, subject to such
exceptions and other qualifications that, in the opinion of such firm, such
institute's standards require it to report. In rendering such statement, such
firm may rely, as to matters relating to direct servicing of mortgage loans by
Sub-Servicers, upon comparable reports for examinations conducted substantially
in accordance with such firm's standards (rendered within one year of such
report) with respect to the related Sub-Servicer.
Section 3.15. Access to Certain Information.
Each of the Master Servicer and the Special Servicer shall
afford to the other, to the Company, the Manager, the Owner Trustee and the
Indenture Trustee and any banking or insurance regulatory authority that may
exercise authority over any holder of Bonds or Owner Trust Certificates, access
to any records regarding the Mortgage Loans and its servicing thereof (as
required by applicable regulations of the Federal Reserve Board, the FDIC, the
OTS or any such governmental or regulatory body), which are within its control,
except to the extent it is prohibited from doing so by applicable law or
contract or to the extent such information is subject to a privilege under
applicable law to be asserted on behalf of the Owner Trust or the holders of the
Bonds or the Owner Trust Certificates. Such access shall be afforded without
charge but only upon reasonable prior written request and during normal business
hours at the offices of the Master Servicer or the Special Servicer, as the case
may be, designated by it.
Section 3.16. Title to REO Property; REO Account.
(a) If title to any Mortgaged Property is acquired (thereby
becoming an REO Property), the deed or certificate of sale shall be issued to
the Owner Trust or a wholly-owned subsidiary of the Owner Trust. Upon
acquisition of such REO Property, the Special Servicer shall, if any amount
remains due and owing under the related Mortgage Note, prepare and deliver to
the Owner Trustee for execution and delivery to the Indenture Trustee a new
Mortgage (along with appropriate UCC Financing Statements), as applicable, in
favor of the Indenture Trustee to secure the lien of the Indenture. The cost of
preparing, delivering and recording such new Mortgage and any other related loan
documents shall be paid as an expense of the Owner Trust from the Collection
Account.
(b) The Special Servicer shall segregate and hold all funds
collected and received in connection with any REO Property separate and apart
from its own funds and general assets. If an acquisition of any REO Property
shall occur, the Special Servicer shall establish and maintain one or more
accounts (collectively, the "REO Account"), held on behalf of the Indenture
Trustee for the benefit of the holders of the Bonds and the Owner Trust
Certificates, for the retention of revenues and other proceeds derived from each
REO Property. The REO Account shall be an Eligible Account. The Special Servicer
shall deposit, or cause to be deposited, in the
55
REO Account, within one Business Day of receipt, all REO Revenues, Insurance
Proceeds and Liquidation Proceeds received in respect of an REO Property. Funds
in the REO Account, to the extent invested, shall be invested in Permitted
Investments in accordance with Section 3.06. The Special Servicer shall be
entitled to make withdrawals from the REO Account to pay itself, as additional
servicing compensation in accordance with Section 3.11(d), interest and
investment income earned in respect of amounts held in the REO Account as
provided in Section 3.06(b) (but only to the extent of the Net Investment
Earnings with respect to the REO Account for any Collection Period). The Special
Servicer shall give notice to the other parties hereto and to the Holders of the
Controlling Class of the location of the REO Account when first established and
of the new location of the REO Account prior to any change thereof.
(c) The Special Servicer shall withdraw from the REO Account
funds necessary for the proper operation, management, maintenance and
disposition of any REO Property, but only to the extent of amounts on deposit in
the REO Account for the related REO Property. Within two Business Days following
the end of each Collection Period, the Special Servicer shall withdraw from the
REO Account and deliver to the Master Servicer (which shall deposit such amounts
into the Collection Account) the aggregate of all amounts received in respect of
each REO Property during such Collection Period, net of any withdrawals made out
of such amounts pursuant to the preceding sentence; provided that the Special
Servicer may retain in the REO Account such portion of proceeds and collections
as may be necessary to maintain a reserve of sufficient funds for the proper
operation, management, maintenance and disposition of the related REO Property
(including the creation of a reasonable reserve for repairs, replacements and
necessary capital improvements and other related expenses), such reserve not to
exceed an amount sufficient to cover such items to be incurred during the
following twelve-month period.
(d) The Special Servicer shall keep and maintain separate
records, on a property-by-property basis, for the purpose of accounting for all
deposits to, and withdrawals from, the REO Account pursuant to Section 3.16(b)
or (c).
Section 3.17. Management of REO Property.
(a) Prior to the acquisition of title to any Mortgaged
Property securing a defaulted Mortgage Loan, the Special Servicer shall review
the operation of such Mortgaged Property and determine the nature of the income
that would be derived from such property if it were acquired by the Owner Trust.
If the Special Servicer determines from such review that:
(i) None of the income from Directly Operating such
Mortgaged Property would be subject to tax as "net income from
foreclosure property" within the meaning of Section
857(b)(4)(B) of the Code (such tax referred to herein as an
"REO Tax"), such Mortgaged Property may be Directly Operated
by the Special Servicer as REO Property;
(ii) Directly Operating such Mortgaged Property as an
REO Property could result in income from such property that
would be subject to an REO Tax, but that a lease of such
property to another party to operate such property, or the
56
performance of some services by an Independent Contractor with
respect to such property, or another method of operating such
property would not result in income subject to an REO Tax,
then the Special Servicer may (provided, that in the good
faith and reasonable judgment of the Special Servicer, it is
commercially feasible) acquire such Mortgaged Property as REO
Property and so lease or operate such REO Property; or
(iii) It is reasonable to believe that Directly Operating
such property as REO Property could result in income subject
to an REO Tax and that no commercially feasible means exists
to operate such property as REO Property without the Owner
Trust incurring or possibly incurring an REO Tax on income
from such property, the Special Servicer shall deliver to the
Owner Trustee and the Indenture Trustee, in writing, a
proposed plan (the "Proposed Plan") to manage such property as
REO Property. Such plan shall include potential sources of
income, and to the extent commercially feasible, estimates of
the amount of income from each such source. Within a
reasonable period of time after receipt of such plan, the
Owner Trust shall consult with the Indenture Trustee and the
Special Servicer and shall advise the Indenture Trustee and
the Special Servicer of the Owner Trust's federal income tax
reporting position with respect to the various sources of
income that the Owner Trust would derive under the Proposed
Plan.
In
addition, the Owner Trust shall (to the maximum extent
possible) advise the Indenture Trustee and the Special
Servicer of the estimated amount of taxes that the Owner Trust
would be required to pay with respect to each such source of
income.
After receiving the information described in the two preceding
sentences from the Owner Trust, the Special Servicer shall
consult with the Indenture Trustee and shall either (A)
implement the Proposed Plan (after acquiring the respective
Mortgaged Property as REO Property) or (B) manage and operate
such property in a manner that would not result in the
imposition of an REO Tax on the income derived from such
property.
The Special Servicer's decision as to how each REO Property shall be managed and
operated shall be based in either case on the good faith and reasonable judgment
of the Special Servicer as to which means would be in the best interest of the
Owner Trust by maximizing (to the extent commercially feasible) the net
after-tax REO Revenues received by the Owner Trust with respect to such property
and, to the extent consistent with the foregoing, in the same manner as would
prudent mortgage loan servicers and asset managers operating acquired mortgaged
property comparable to the respective Mortgaged Property. The Owner Trustee, the
Indenture Trustee and the Special Servicer may consult with counsel at the
expense of the Owner Trust in connection with determinations required under this
Section 3.17(a). None of the Owner Trustee, the Indenture Trustee or the Special
Servicer shall be liable to the Owner Trust, the holders of the Bonds or the
Owner Trust Certificates, the other parties hereto or each other, nor shall the
Owner Trust be liable to any such holders or to the other parties hereto, for
errors in judgment made in good faith in the exercise of their discretion while
performing their respective responsibilities under this Section 3.17(a). Nothing
in this Section 3.17(a) is intended to prevent the sale of a
57
Defaulted Mortgage Loan or REO Property pursuant to the terms and subject to the
conditions of Section 3.18.
(b) If title to any Mortgaged Property is acquired (thereby
becoming an REO Property), the Special Servicer shall manage, conserve, protect
and operate such REO Property for the benefit of the Owner Trust solely for the
purpose of its prompt disposition and sale. Except as provided in Section
3.17(a), the Special Servicer shall not enter into any lease, contract or other
agreement that causes the Owner Trust to receive, and (unless required to do so
under any lease, contract or agreement to which the Special Servicer or the
Owner Trust may become a party or successor to a party due to a foreclosure,
deed-in-lieu of foreclosure or other similar exercise of a creditor's rights or
remedies with respect to a Mortgage Loan) shall not cause or allow the Owner
Trust to receive any "net income from foreclosure property" that is subject to
taxation under Section 857(b)(4)(B) of the Code. Subject to the foregoing,
however, the Special Servicer shall have full power and authority to do any and
all things in connection therewith as are consistent with the Servicing Standard
and, consistent therewith, shall withdraw from the REO Account, to the extent of
amounts on deposit therein with respect to any REO Property, funds necessary for
the proper operation, management, maintenance and disposition of such REO
Property, including:
(i) all insurance premiums due and payable in respect
of such REO roperty;
(ii) all real estate and personal property taxes and
assessments in respect of such REO Property that may result in
the imposition of a lien thereon (including taxes or other
amounts which could constitute liens prior to or on parity
with the lien of the related Mortgage);
(iii) any ground rents in respect of such REO Property;
and
(iv) all costs and expenses necessary to maintain,
lease, sell, protect, manage, operate and restore such REO
Property.
To the extent that amounts on deposit in the REO Account in respect of any REO
Property are insufficient for the purposes set forth in clauses (i) through (iv)
above with respect to such REO Property, the Special Servicer shall make
Servicing Advances in such amounts as are necessary for such purposes unless (as
evidenced by an Officer's Certificate delivered to the Owner Trustee and the
Indenture Trustee) the Special Servicer would not make such advances if the
Special Servicer determines, in accordance with the Servicing Standard, that
such payment would be a Nonrecoverable Advance; provided, however, that the
Special Servicer may in its sole discretion make any such Servicing Advance
without regard to recoverability if it is a necessary fee or expense incurred in
connection with the defense or prosecution of legal proceedings.
58
(c) If consistent with the determinations made pursuant to
Section 3.17(a), the Special Servicer may contract with any Independent
Contractor for the operation and management of any REO Property, provided that:
(i) the terms and conditions of any such contract (A)
may not be inconsistent herewith, (B) shall reflect an
agreement reached at arm's length and (C) shall be consistent
with the provisions of Section 856 of the Code and Treasury
Regulation ss.1.856.4(b)(5);
(ii) the fees of such Independent Contractor (which
shall be expenses of the Owner Trust) shall be reasonable and
customary in consideration of the nature
and locality of the REO Property;
(iii) any such contract shall require, or shall be
administered to require, that the Independent Contractor, in a
timely manner, (A) pay all costs and expenses incurred in
connection with the operation and management of such REO
Property, including those listed in Section 3.17(b) above, and
(B) remit all related revenues collected (net of its fees and
such costs and expenses) to the Special Servicer upon receipt
but only to the extent consistent with the provisions of
Section 856 of the Code and Treasury Regulation
ss.1.856.4(b)(5);
(iv) none of the provisions of this Section 3.17(c)
relating to any such contract or to actions taken through any
such Independent Contractor shall be deemed to relieve the
Special Servicer of any of its duties and obligations
hereunder with respect to the operation and management of any
such REO Property; and
(v) the Special Servicer shall be obligated with
respect thereto to the same extent as if it alone were
performing all duties and obligations in connection with the
operation and management of such REO Property.
The Special Servicer shall be entitled to enter into any agreement with any
Independent Contractor performing services for it related to its duties and
obligations hereunder for indemnification of the Special Servicer by such
Independent Contractor, and nothing in this Agreement shall be deemed to limit
or modify such indemnification.
Section 3.18. Sale of Mortgage Loans and REO Properties.
(a) The parties hereto may sell or purchase, or permit the
sale or purchase of, a Mortgage Loan or REO Property only on the terms and
subject to the conditions set forth in this Section 3.18 or as otherwise
expressly provided in or contemplated by Sections 2.03(a)
and 8.01.
(b) If the Special Servicer has determined, in its good faith
and reasonable judgment, that any Defaulted Mortgage Loan will become subject to
foreclosure or similar proceedings (other than any such Defaulted Mortgage Loan
that it determines, in its reasonable good faith judgment, is in default to
avoid pre-payment restrictions), the Special Servicer shall
59
promptly so notify in writing the Owner Trustee, the Indenture Trustee and the
Master Servicer, and the Master Servicer may at its option or, if the Master
Servicer does not exercise such option, the Special Servicer may at its option
purchase from the Owner Trust, at a price equal to the applicable Purchase
Price, such Defaulted Mortgage Loan free and clear of the lien of the Indenture.
The Purchase Price for any Mortgage Loan purchased under this paragraph (b)
shall be deposited into the Collection Account, and upon receipt of an Officer's
Certificate from the Master Servicer to the effect that such deposit has been
made (which the Master Servicer shall deliver to the Indenture Trustee and the
Owner Trustee promptly after such deposit is made), together with a request for
release in the form of Exhibit B-1, the Indenture Trustee shall release or cause
to be released to the Master Servicer or the Special Servicer, as applicable,
the related Mortgage Loan File and each of the Owner Trust and the Indenture
Trustee shall execute and deliver such instruments of transfer or assignment, in
each case without recourse, representation or warranty, as shall be provided to
it and are reasonably necessary to vest in the Master Servicer or the Special
Servicer, as applicable, the ownership of such Mortgage Loan. In connection with
any such purchase by the Master Servicer, the Special Servicer shall deliver the
related Servicing File to the Master Servicer.
(c) If neither the Master Servicer nor the Special Servicer
has purchased any Defaulted Mortgage Loan within 30 days of the receipt by the
Master Servicer of notice in respect thereof pursuant to Section 3.18(b) above,
the Master Servicer shall, within 10 days after the end of such 30-day period
(or after the waiver by the Master Servicer and the Special Servicer of any such
purchase rights), so notify the Indenture Trustee, which shall in turn so notify
the Majority Holder of the Controlling Class, and such holder may at its option
purchase such Defaulted Mortgage Loan from the Owner Trust within 30 days after
its receipt of such notice, free and clear of the lien of the Indenture, at a
price equal to the Purchase Price. The Purchase Price for any such Mortgage Loan
purchased under this paragraph (c) shall be deposited into the Collection
Account, and upon receipt of an Officer's Certificate from the Master Servicer
to the effect that such deposit has been made (which the Master Servicer shall
deliver to the Indenture Trustee and the Owner Trustee promptly after such
deposit is made), together with a request for release in the form of Exhibit
B-1, the Indenture Trustee shall release or cause to be released to the Person
effecting such purchase the related Mortgage Loan File and each of the Owner
Trust and the Indenture Trustee shall execute and deliver such instruments of
transfer or assignment, in each case without recourse, representation or
warranty, as shall be provided to it and are reasonably necessary to vest in
such Person the ownership of such Mortgage Loan. In connection with any such
purchase, the Special Servicer shall deliver the related Servicing File to the
Person effecting such purchase.
(d) The Special Servicer may offer to sell any Defaulted
Mortgage Loan not otherwise purchased pursuant to Section 3.18(b) or Section
3.18(c) above, if and when the Special Servicer determines, consistent with the
Servicing Standard, that such a sale would be in the best economic interests of
the Bondholders. Such offer shall be made in a commercially reasonable manner
(which, for purposes hereof, includes an offer to sell without representation or
warranty other than customary warranties of title and condition, if liability
for breach thereof is limited to recourse against the Owner Trust) for a period
of not less than 10 days. Unless the Special Servicer determines that acceptance
of any bid would not be in the best economic interests of the
60
Bondholders, the Special Servicer shall accept the highest cash bid received
from any Person that constitutes a fair price for such Mortgage Loan. In the
absence of any bid determined as provided below to be fair, the Special Servicer
shall proceed with respect to such Defaulted Mortgage Loan in accordance with
Section 3.09.
The Special Servicer shall use its best efforts to solicit
bids for each REO Property in such manner as will be reasonably likely to
realize a fair price. The Special Servicer shall accept the first (and, if
multiple bids are received contemporaneously, highest) cash bid received from
any Person that constitutes a fair price for such REO Property. If the Special
Servicer reasonably believes that it will be unable to realize a fair price for
any REO Property within three years after the date of foreclosure, the Special
Servicer shall dispose of such REO Property upon such terms and conditions as
the Special Servicer shall deem necessary and desirable to maximize the recovery
thereon under the circumstances and, in connection therewith, shall accept the
highest outstanding cash bid, regardless of from whom received.
The Special Servicer shall give the Indenture Trustee and the
Master Servicer not less than five Business Days' prior written notice of its
intention to sell any Defaulted Mortgage Loan or REO Property pursuant to this
Section 3.18(d). No Interested Person shall be obligated to submit a bid to
purchase any such Mortgage Loan or REO Property, and notwithstanding anything to
the contrary herein, neither the Owner Trustee or the Indenture Trustee, in
their individual capacities, or the Fiscal Agent nor any of their respective
Affiliates may bid for or purchase any Defaulted Mortgage Loan or REO Property
pursuant hereto.
(e) Whether any cash bid constitutes a fair price for any
Defaulted Mortgage Loan or REO Property, as the case may be, for purposes of
Section 3.18(d), shall be determined by the Special Servicer or, if such cash
bid is from the Special Servicer or an Affiliate of the Special Servicer, by the
Indenture Trustee or, if the expected Liquidation Proceeds with respect to such
Defaulted Mortgage Loan or REO Property would be insufficient to provide
reimbursement for all unreimbursed Advances, together with any related Advance
Interest thereon, by the Master Servicer. In determining whether any bid
received from an Interested Person represents a fair price for any such Mortgage
Loan or REO Property, the Indenture Trustee shall be supplied with and shall
rely on the most recent Appraisal conducted in accordance with Section 3.09(a)
within the preceding 12-month period or, in the absence of any such Appraisal,
on a narrative Appraisal prepared at the expense of the Owner Trust by a
Qualified Appraiser retained by the Special Servicer. Such appraiser shall be
selected by the Special Servicer if the Special Servicer is not bidding with
respect to a Defaulted Mortgage Loan or REO Property and shall be selected by
the Master Servicer if the Special Servicer is bidding. Where any Interested
Person is among those bidding with respect to a Defaulted Mortgage Loan or REO
Property, the Special Servicer shall require that all bids be submitted in
writing and be accompanied by a refundable deposit of cash in an amount equal to
5% of the bid amount. In determining whether any bid constitutes a fair price
for any such Defaulted Mortgage Loan or REO Property, the Special Servicer, the
Indenture Trustee or the Master Servicer, as applicable, shall take into account
(in addition to the results of any Appraisal that it may have obtained pursuant
to Section 3.09(a)), among other factors, the period and amount of any
delinquency on the affected Mortgage Loan, the occupancy level and physical
condition of the Mortgaged Property or REO Property and the
61
state of the local economy. The Purchase Price for any such Mortgage Loan or REO
Property shall in all cases be deemed a fair price. Notwithstanding the other
provisions of this Section 3.18, no cash bid from the Special Servicer or any
Affiliate thereof shall constitute a fair price for any Defaulted Mortgage Loan
or REO Property unless such bid is the highest cash bid received and at least
two independent bids (not including the bid of the Special Servicer or any
Affiliate) have been received. In the event the bid of the Special Servicer or
any Affiliate is the only bid received or is the higher of only two bids
received, then additional bids shall be solicited. If an additional bid or bids
are received and the original bid of the Special Servicer or any Affiliate is
the highest of all cash bids received, then the bid of the Special Servicer or
such Affiliate shall be deemed to constitute a fair price.
(f) Subject to Sections 3.18(a) through 3.18(e) above, the
Special Servicer shall act on behalf of the Owner Trust and the Indenture
Trustee in negotiating and taking any other action necessary or appropriate in
connection with the sale of any Defaulted Mortgage Loan or REO Property, and the
collection of all amounts payable in connection therewith. In connection
therewith, the Special Servicer may charge prospective bidders, and may retain,
fees that approximate the Special Servicer's actual costs in the preparation and
delivery of information pertaining to such sales or evaluating bids without
obligation to deposit such amounts into the Collection Account. Any sale of a
Defaulted Mortgage Loan or any REO Property shall be free and clear of the lien
of the Indenture and shall be final and without recourse to, or representation
or warranty by the Owner Trust, the Owner Trustee, the Indenture Trustee, the
Master Servicer or the Special Servicer. If such sale is consummated in
accordance with the terms of this Agreement, none of the Master Servicer, the
Special Servicer or the Indenture Trustee shall have any liability to the Owner
Trust, the Owner Trustee or any holder of Bonds or Owner Trust Certificates with
respect to the purchase price therefor accepted by the Master Servicer, the
Special Servicer or the Indenture Trustee, as the case may be.
(g) Any sale of a Defaulted Mortgage Loan or REO Property
shall be for cash only.
(h) Notwithstanding any of the foregoing paragraphs of this
Section 3.18, the Special Servicer shall not be obligated to accept the highest
cash bid if the Special Servicer determines, in accordance with the Servicing
Standard, that rejection of such bid would be in the best interests of the
Bondholders, and the Special Servicer may accept a lower cash bid if it
determines, in accordance with the Servicing Standard, that acceptance of such
bid would be in the best interests of the Bondholders (for example, if the
prospective buyer making the lower bid is more likely to perform its obligations
or the terms offered by the prospective buyer making the lower bid are more
favorable).
Section 3.19. Additional Obligations of Master Servicer and
Special Servicer.
(a) The Master Servicer shall deliver to the Indenture Trustee
for deposit in the Bond Account on each Master Servicer Remittance Date, without
any right of reimbursement therefor, an amount equal to the lesser of (i) the
aggregate amount of Prepayment Interest Shortfalls incurred in connection with
Principal Prepayments received during the most recently
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ended Collection Period, and (ii) the total amount of Master Servicing Fees
received by the Master Servicer during such Collection Period plus any
Prepayment Interest Excesses received during
such Collection Period.
(b) Any Servicing Advances required to be made by the Special
Servicer hereunder shall, at the Special Servicer's option, either (i) be made
by the Master Servicer upon the request of the Special Servicer, which request
can be made no more than once per month, or (ii) be made by the Special Servicer
and shall be reimbursed by the Master Servicer on a monthly basis with interest
thereon at the Reimbursement Rate from the date made to, but not including, the
date of reimbursement; provided, however, that the Special Servicer shall have
an obligation to make any Emergency Advance. Such reimbursement and any
accompanying payment of interest shall be made within ten (10) days of the
request therefor by wire transfer of immediately available funds to an account
designated by the Special Servicer. Upon the Master Servicer's payment of any
Servicing Advance or reimbursement to the Special Servicer of any Servicing
Advance and payment to the Special Servicer of interest thereon, all in
accordance with this Section 3.19(b), the Master Servicer shall for all purposes
of this Agreement be deemed to have made such Servicing Advance at the same time
as the Special Servicer actually made such Advance, and accordingly, the Master
Servicer shall be entitled to reimbursement for such Advance, together with
interest thereon in accordance with Sections 3.05(a) and 3.11(e), at the same
time, in the same manner and to the same extent as the Master Servicer would
otherwise have been entitled if it had actually made such Servicing Advance at
the time the Special Servicer did.
Notwithstanding anything to the contrary contained in this
Agreement, if the Special Servicer is required under this Agreement to make any
Servicing Advance but does not desire to do so, the Special Servicer may, in its
sole discretion, request that the Master Servicer make such Advance, such
request to be made in writing and in a timely manner that does not adversely
affect the interests of the Issuer or any Bondholder; provided, however, that
the Special Servicer shall have an obligation to make any Emergency Advance. The
Master Servicer shall have the obligation to make any such Servicing Advance
(other than an Emergency Advance) that it is requested by the Special Servicer
to make within ten days of the Master Servicer's receipt of such request. The
Special Servicer shall be relieved of any obligations with respect to an Advance
that it requests the Master Servicer to make (regardless of whether or not the
Master Servicer shall make such Advance) other than an Emergency Advance. The
Master Servicer shall be entitled to reimbursement for any Servicing Advance
made by it at the direction of the Special Servicer, together with interest
thereon in accordance with Sections 3.05(a) and 3.11(e), at the same time, in
the same manner and to the same extent as the Master Servicer is entitled with
respect to any other Servicing Advance made thereby.
Notwithstanding the foregoing provisions of this Section
3.19(b), the Master Servicer shall not be required to reimburse the Special
Servicer for, or to make at the Special Servicer's direction, any Servicing
Advance if the Master Servicer determines in its reasonable good faith judgment
that the Servicing Advance for which the Special Servicer is requesting
reimbursement, or which the Special Servicer is directing the Master Servicer to
make, hereunder, although not characterized by the Special Servicer as a
Nonrecoverable Servicing Advance, is in
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fact a Nonrecoverable Servicing Advance. The Master Servicer shall notify the
Special Servicer in writing of such determination and, if applicable, such
Nonrecoverable Servicing Advance shall be reimbursed to the Special Servicer
pursuant to Section 3.05(a).
(c) Within 30 days (or within such longer period as the
Special Servicer is diligently and in good faith proceeding to obtain such) the
earliest of (i) the date on which any Mortgage Loan becomes a Modified Mortgage
Loan, (ii) the 90th day after the occurrence of any uncured delinquency in
Monthly Payments with respect to any Mortgage Loan, (iii) the date on which a
receiver is appointed and continues in such capacity in respect of the Mortgaged
Property securing any Mortgage Loan, (iv) the date on which the Borrower under
any Mortgage Loan becomes the subject of bankruptcy or insolvency proceedings,
and (v) the date on which the Mortgaged Property securing any Mortgage Loan
becomes an REO Property (each such Mortgage Loan, a "Required Appraisal Loan"),
the Special Servicer shall obtain an Appraisal of the related Mortgaged
Property, unless an Appraisal thereof had previously been obtained within the
prior twelve months. The cost of such Appraisal shall be a Servicing Advance.
With respect to each Required Appraisal Loan (unless such
Required Appraisal Loan has become a Corrected Mortgage Loan and has remained
current for twelve consecutive Monthly Payments, and no other Servicing Transfer
Event has occurred with respect thereto during such twelve months), the Special
Servicer shall, within 30 days of each anniversary of such Required Appraisal
Loan's having become such, order an update of the prior Appraisal (the cost of
which will be a Servicing Advance). Based upon such Appraisal, the Special
Servicer shall redetermine and report to the Indenture Trustee the Appraisal
Reduction Amount, if any, with respect to such Required Appraisal Loan.
Section 3.20. Modifications, Waivers, Amendments and Consents.
(a) The Master Servicer and the Special Servicer each may,
consistent with the Servicing Standard, agree to any modification, waiver or
amendment of any term of, forgive interest on and principal of, capitalize
interest on, permit the release, addition or substitution of Mortgaged Property
securing, and permit the release of the Borrower on or any guarantor of any
Mortgage Loan it is required to service and administer hereunder, without the
consent of the Owner Trust, the Owner Trustee, the Indenture Trustee or any
holder of Bonds or Owner Trust Certificates, subject, however, to each of the
following limitations, conditions and restrictions:
(i) other than as provided in Section 3.08 and in subsection
(c) below, the Master Servicer shall not agree to any modification,
waiver or amendment of any term of, or take any of the other acts
referenced in this Section 3.20(a) with respect to, any Mortgage Loan
it is required to service and administer hereunder that would affect
the amount or timing of any related payment of principal, interest or
other amount payable thereunder or, in the Master Servicer's reasonable
good faith and judgment, would materially impair the security for such
Mortgage Loan or reduce the likelihood of timely payment of amounts due
thereon; the Special Servicer may, however, agree to any modification,
waiver or amendment of any term of, or take any of the other acts with
respect to, a Specially Serviced Mortgage Loan that would have any such
effect, but only
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if a material default on such Mortgage Loan has occurred or, in the
Special Servicer's reasonable good faith judgment, a default in respect
of payment on such Mortgage Loan is reasonably foreseeable, and such
modification, waiver, amendment or other action is reasonably likely to
produce a greater recovery to Owner Trust on a present value basis (the
relevant discounting of anticipated collections that will be remitted
by the Master Servicer to be done at the related Net Mortgage Rate),
than would liquidation;
(ii) the Special Servicer may not extend the date on which any
Balloon Payment is scheduled to be due on any Specially Serviced
Mortgage Loan more than three times and, in the case of any such
extension, for more than a one year period and in no event more than
one year beyond its Stated Maturity Date; and, furthermore, the Special
Servicer may not grant any such extension unless (A) the Special
Servicer's recovery determination contemplated by the immediately
preceding clause (i) is supported by an Appraisal performed within the
preceding 12-month period and (B) the Borrower agrees to deliver to the
Special Servicer, the Indenture Trustee and the Issuer quarterly
operating statements with respect to the related Mortgaged Property
(the Special Servicer to request that such statements be audited,
provided that the Special Servicer may waive such condition relating to
such statements being audited, in its sole discretion);
(iii) neither the Master Servicer nor the Special Servicer
shall permit any Borrower to add or substitute any collateral unless
the Master Servicer or the Special Servicer, as the case may be, shall
have first determined in accordance with the Servicing Standard, based
upon a Phase I Environmental Assessment prepared within the past twelve
months (and any additional environmental testing that the Special
Servicer, deems necessary and prudent) prepared by an Independent
Person who regularly conducts Phase I Environmental Assessments, at the
expense of the Borrower, that such additional or substitute collateral
property is in compliance with applicable environmental laws and
regulations and that there are no circumstances or conditions present
with respect to such new 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 applicable environmental laws and/or regulations, and
such addition or substitution of collateral will not result in the
downgrade, qualification or withdrawal of the rating then assigned by
either Rating Agency to any Bonds (as confirmed in writing by each
Rating Agency);
(iv) neither the Master Servicer nor the Special Servicer
shall release or substitute for any Mortgaged Property securing an
outstanding Mortgage Loan except as provided in Section 3.09(c) and
except where a Mortgage Loan is satisfied and except in the case of a
release where (A) the use of the collateral to be released will not, in
the Special Servicer's reasonable good faith judgment, materially and
adversely affect the Net Operating Income being generated by or the use
of the related Mortgaged Property, (B) there is a corresponding
principal paydown of such Mortgage Loan in an amount at least equal to
the appraised value of the collateral to be released (or substitute
collateral with an appraised value at least equal to that of the
collateral to be released, is delivered), (C) the remaining Mortgaged
Property (together with any substitute collateral) is, in the Special
65
Servicer's reasonable good faith judgment, adequate security for the
remaining Mortgage Loan and (D) such release or substitution would not
result in the downgrade, qualification or withdrawal of the rating then
assigned by either Rating Agency to any Bonds (as confirmed in writing
by each Rating Agency);
(v) neither the Master Servicer nor the Special Servicer shall
extend the maturity date of any Mortgage Loan secured by the Borrower's
interest in a ground lease to a date which is less than ten years prior
to the termination date of such ground lease (including any extension
options set forth therein); and
(vi) neither the Master Servicer nor the Special Servicer
shall extend the maturity date of any Mortgage Loan to date which is
less than two years prior to August
2030.
provided that (x) the limitations, conditions and restrictions set forth in
clauses (i) through (vi) above shall not apply to any modification of any term
of any Mortgage Loan that is required under the terms of such Mortgage Loan in
effect on the Closing Date or that is solely within the control of the related
Borrower, and (y) notwithstanding clauses (i) through (iv) above, neither the
Master Servicer nor the Special Servicer shall be required to oppose the
confirmation of a plan in any bankruptcy or similar proceeding involving a
Borrower if in its reasonable good faith judgment such opposition would not
ultimately prevent the confirmation of such plan or one substantially similar.
(b) The Master Servicer and the Special Servicer shall have no
liability to the Owner Trust, to the Owner Trustee or the Indenture Trustee, to
the holders of the Bonds or the Owner Trust Certificates or to any other Person
if its analysis and determination that the modification, waiver, amendment or
other action contemplated by Section 3.20(a) would not materially impair the
security for such Mortgage Loan or reduce the likelihood of timely payment of
amounts due thereon, or that such modification, waiver, amendment or other
action is reasonably likely to produce a greater recovery to the Owner Trust on
a present value basis than would liquidation, should prove to be wrong or
incorrect, so long as the analysis and determination were made on a reasonable
basis in good faith by the Master Servicer or the Special Servicer, as the case
may be.
(c) Any payment of interest which is deferred pursuant to
Section 3.20(a), shall not, for purposes hereof, including calculating monthly
remittances by the Master Servicer, be added to the unpaid principal balance of
the related Mortgage Loan, notwithstanding that the terms of such Mortgage Loan
so permit or that such interest may actually be capitalized.
(d) The Master Servicer and the Special Servicer each may, as
a condition to its granting any request by a Borrower for consent, modification,
waiver or indulgence or any other matter or thing, the granting of which is
within the Master Servicer or Special Servicer's, as the case may be, discretion
pursuant to the terms of the instruments evidencing or securing the related
Mortgage Loan and is permitted by the terms of this Agreement, require that such
Borrower pay to it, as additional servicing compensation, a reasonable or
customary fee
66
(not to exceed 1.0% of the outstanding principal balance of the related Mortgage
Loan) for the additional services performed in connection with such request,
together with any related costs and
expenses incurred by it.
(e) All modifications, waivers, amendments and other actions
entered into or taken in respect of the Mortgage Loans pursuant to this Section
3.20 shall be in writing. Each of the Master Servicer and the Special Servicer
shall notify the other such party and the Owner Trustee and the Indenture
Trustee, in writing of any modification, waiver, amendment or other action
entered into or taken in respect of any Mortgage Loan pursuant to this Section
3.20 and the date thereof, and shall deliver to the Indenture Trustee for
deposit in the related Mortgage Loan File (with a copy to the other such party),
an original counterpart of the agreements relating to such modification, waiver,
amendment or other action, promptly (and in any event within 10 Business Days)
following the execution thereof. In addition, following any modification,
waiver, amendment or other action agreed to by the Master Servicer or the
Special Servicer pursuant to Section 3.20(a) above, the Master Servicer or the
Special Servicer, as the case may be, shall deliver to the Rating Agencies, to
the Owner Trustee, to the Indenture Trustee and, in the case of the Special
Servicer, to the Master Servicer an Officer's Certificate setting forth in
reasonable detail the basis of the determinations made by it pursuant to such
subsection (a), such Officer's Certificate to be accompanied by any related
environmental reports and an amended Mortgage Loan Schedule in the case of any
modification, waiver, amendment or other action agreed to by the Master Servicer
or the Special Servicer pursuant to clause (ii) or (iii)(A) of Section 3.20(a)
above.
Section 3.21. Transfer of Servicing Between Master
Servicer and Special Servicer; Record
Keeping.
(a) Upon determining that a Servicing Transfer Event has
occurred with respect to any Mortgage Loan and if the Master Servicer is not
also the Special Servicer, the Master Servicer shall immediately give notice
thereof, and shall deliver the related Servicing File, to the Special Servicer
and shall use its best efforts to provide the Special Servicer with all
information, documents (or copies thereof) and records (including records stored
electronically on computer tapes, magnetic discs and the like) relating to the
Mortgage Loan and reasonably requested by the Special Servicer to enable it to
assume its functions hereunder with respect thereto without acting through a
Sub-Servicer. The Master Servicer shall use 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. With respect to each Mortgage Loan that
becomes a Specially Serviced Mortgage Loan, the Master Servicer shall instruct
the related Borrower to continue to remit all payments in respect of such
Mortgage Loan to the Master Servicer. If Midland Loan Services, Inc. ceases to
be the Master Servicer or the Special Servicer, Midland Loan Services, Inc. and
the successor Master Servicer or Special Servicer, as applicable, may agree
that, notwithstanding the preceding sentence, with respect to each Mortgage Loan
that becomes a Specially Serviced Mortgage Loan, the Master Servicer shall
instruct the related
67
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 a Specially Serviced Mortgage Loan has
become a Corrected Mortgage Loan and if the Master Servicer is not also the
Special Servicer, the Special Servicer shall immediately give notice thereof,
and shall return the related Servicing File, to the Master Servicer and upon
giving such notice, and returning such Servicing File, to the Master Servicer,
the Special Servicer's obligation to service such Mortgage Loan, and the Special
Servicer's right to receive the Special Servicing Fee (other than such fees
which have accrued) with respect to such Mortgage Loan, shall terminate, and the
obligations of the Master Servicer to service and administer such Mortgage Loan
shall resume. In addition, if the related Borrower has been instructed, pursuant
to the last sentence of the preceding paragraph, to make payments to the Special
Servicer, upon such determination, the Special Servicer shall instruct such
Borrower to remit all payments in respect of such Mortgage Loan that is no
longer a Specially Serviced Mortgage Loan directly to the Master Servicer.
(b) In servicing any Specially Serviced Mortgage Loans, the
Special Servicer shall provide to the Indenture Trustee (to the extent such
documents are in the possession of the Special Servicer) originals of documents
included within the definition of "Mortgage Loan File" for inclusion in the
related Mortgage Loan 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) Notwithstanding anything in this Agreement to the
contrary, in the event that the Master Servicer and the Special Servicer are the
same Person, all notices, certificates, information and consents required to be
given by the Master Servicer to the Special Servicer or vice versa shall be
deemed to be given without the necessity of any action on such Person's part.
Section 3.22. Asset Strategy Reports.
(a) No later than sixty (60) days after the occurrence of a
Servicing Transfer Event, the Special Servicer shall deliver to the Indenture
Trustee, the Company, the Master Servicer, each Rating Agency and the Directing
Bondholder a report (the "Asset Strategy Report") with respect to such Mortgage
Loan and the related Mortgaged Property. Such Asset Strategy Report shall set
forth the following information to the extent reasonably determinable:
(i) summary of the status of such Specially
Serviced Mortgage Loan and any negotiations
with the related Borrower;
(ii) consideration of alternatives to the
exercise of remedies (such as forbearance
relief, modification of the terms and
conditions of such Mortgage Loan,
disposition of the Specially Serviced
Mortgaged Loan or the related Mortgaged
Property and application of the proceeds of
such disposition to the outstanding
principal balance of
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such Mortgage Loan and interest thereon, or
abandonment of the related Mortgaged
Property);
(iii) a discussion of the probable time frames and
estimated amount of any related Servicing
Advances applicable to each of the
alternatives referred to above;
(iv) a discussion of the legal and environmental
considerations reasonably known to the
Special Servicer, consistent with the
Servicing Standard, that are applicable to
the exercise of remedies as aforesaid and to
the enforcement of any related guaranties or
other collateral for the related Mortgage
Loan and a recommendation as to whether
outside legal counsel should be retained;
(v) estimated budgets for any operating or
capital funds expected to be required for
the related Mortgaged Property;
(vi) the most current rent roll available for and
any strategy for the leasing or releasing of
the related Mortgaged Property;
(vii) the Special Servicer's analysis and
recommendations (which will include a
discussion of alternative courses of action
and a comparison of the probable benefits
and detriments of each alternative course of
action) on how such Specially Serviced
Mortgage Loan might be returned to
performing status and returned to the Master
Servicer for regular servicing or otherwise
realized upon; and
(viii) such other information as the Special
Servicer deems relevant in light of the
Servicing Standard.
If within (10) Business Days of receiving an Asset Strategy
Report, the Directing Bondholder does not disapprove such Asset Strategy Report
in writing, the Special Servicer shall implement the recommended action as
outlined in such Asset Strategy Report; provided, however, that any such action
is not contrary to applicable law, the terms of the applicable Mortgage Loan
File or the Servicing Standard. If the Directing Bondholder disapproves such
Asset Strategy Report, the Special Servicer will revise such Asset Strategy
Report and deliver to the Indenture Trustee, each member of the Controlling
Class, the Master Servicer and each Rating Agency a new Asset Strategy Report as
soon as practicable. The Special Servicer shall revise such Asset Strategy
Report as described above in this Section 3.22(a) until the Directing Bondholder
shall fail to disapprove such revised Asset Strategy Report in writing within
ten (10) Business Days of receiving such revised Asset Strategy Report. The
Special Servicer may, from time to time, modify any Asset Strategy Report it has
previously delivered and implement such report, provided such report shall have
been prepared, reviewed and not rejected pursuant to the terms of this
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Section. Notwithstanding the foregoing, the Special Servicer (i) may following
the occurrence of an extraordinary event with respect to the related Mortgaged
Property, take any action set forth in such Asset Strategy Report before the
expiration of a ten (10) Business Day period if the Special Servicer has
reasonably determined that failure to take such action would materially and
adversely affect the interest of the Bondholders and it has made a reasonable
effort to contact the Directing Bondholder and (ii) in any case, shall determine
whether such disapproval is not in the best interest of all of the Bondholders
pursuant to the Servicing Standard. If the Special Servicer determines that the
objection is not in the best interest of the Bondholders pursuant to the
Servicing Standard, the Special Servicer shall either implement such Asset
Strategy Report or notify the Indenture Trustee of such objection and deliver to
the Indenture Trustee a proposed notice to Bondholders which shall include the
Asset Strategy Report, and the Indenture Trustee shall send such notice to all
Bondholders. If the majority of such Bondholders, as determined by Bond
Principal Balance, fail within ten (10) days of the Indenture Trustee's sending
such notice to reject such Asset Strategy Report, the Special Servicer shall
implement the same. If the Asset Strategy Report is rejected by the Bondholders,
the Special Servicer shall revise such Asset Strategy Report as described above
in this Section 3.22(a). The Indenture Trustee shall be entitled to
reimbursement from the Collection Account for the reasonable expenses of
providing such notices.
(b) The Special Servicer shall have the authority to meet with
the Borrower for any Specially Serviced Mortgage Loan and take such actions
consistent with the Servicing Standard and the related Asset Strategy Report.
The Special Servicer shall not take any action inconsistent with the related
Asset Strategy Report.
(c) Upon request of any Bondholder or Rating Agency, the
Indenture Trustee shall mail, at the expense of such Bondholder, to the address
specified in such request a copy of the most current Asset Strategy Report for
any Specially Serviced Mortgage Loan or REO Property.
(d) Prior to delivering an Asset Strategy Report to any Holder
of a Class A, Class B, Class C, Class D or Class E Bond, the Indenture Trustee
shall have obtained an acknowledgment in substantially the form of Exhibit F
hereto, from the recipient thereof that the U.S. securities laws may restrict
the use of the information in the Asset Strategy Report.
Section 3.23. Directing Bondholder.
(a) Within thirty (30) days of the Closing Date, the Indenture
Trustee shall notify the holders in the Controlling Class that they may select a
Directing Bondholder for purposes of Section 3.09 and 3.22 of this Agreement.
Such notice shall state that (i) absent such selection within 30 days from the
date of such notice, or (ii) until a Directing Bondholder is so selected, or
(iii) upon receipt of notice from a majority of the controlling class that a
Directing Bondholder is no longer so designated, the Bondholder(s) which owns
the largest aggregate Bond Principal Balance or Class Principal Balance, as
applicable, of the Controlling Class shall be the Directing Bondholder.
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(b) Once a Directing Bondholder has been selected pursuant to
clause (a) above, the Indenture Trustee shall immediately notify each of the
Master Servicer, the Special Servicer, the Company and each other Bondholder of
the results of such selection, such notice shall be in writing, and each of the
Master Servicer, Special Servicer, Company, the Indenture Trustee and each other
Bondholder shall be entitled to rely on such selection unless a majority of the
Controlling Class, by Bond Principal Balance or Certificate Principal Balance,
as applicable, or such Directing Bondholder shall have notified the Indenture
Trustee and each other member of the Controlling Class, in writing, of the
resignation of such Directing Bondholder or the selection of a new Directing
Bondholder. Upon the resignation of a Directing Bondholder, the Indenture
Trustee shall request the Controlling Class to select a new Directing
Bondholder.
(c) Within two (2) Business Days (or as soon thereafter as
practicable if the Bonds of the Controlling Class are held in book-entry form)
of receiving a request from the Special Servicer pursuant to Section 3.22(a) the
Indenture Trustee shall deliver to the Special Servicer and the Master Servicer
a list of each holder of Bonds or Owner Trust Certificates in the Controlling
Class, including names and addresses. In addition to the foregoing, within two
(2) Business Days of receiving notice of the selection of a new Directing
Bondholder or the existence of a new holder in the Controlling Class, the
Indenture Trustee shall notify the Special Servicer.
(d) If at any time the Bonds in the Controlling Class are held
in book-entry form, the Indenture Trustee shall notify the related holder
(through DTC, unless the Indenture Trustee shall have been previously provided
with the name and address of such holder) of such event and shall request that
it be informed of any change in the identity of the related holder from
time to time.
(e) Until it receives notice to the contrary, each of the
Servicers and the Indenture Trustee shall be entitled to rely on the most recent
notification with respect to the identity of the holders in the Controlling
Class and the Directing Bondholder.
Section 3.24. Sub-Servicing Agreements.
(a) The Master Servicer and the Special Servicer may enter
into Sub-Servicing Agreements to provide for the performance by third parties of
any or all of their respective obligations hereunder, provided that, in each
case, the Sub-Servicing Agreement: (i) is consistent with this Agreement in all
material respects and requires the Sub-Servicer to comply with all of the
applicable conditions of this Agreement; (ii) provides that if the Master
Servicer or the Special Servicer, as the case may be, shall for any reason no
longer act in such capacity hereunder (including by reason of an Event of
Default), the Indenture Trustee or its designee may thereupon assume all of the
rights and, except to the extent they arose prior to the date of assumption,
obligations of the Master Servicer or the Special Servicer, as the case may be,
under such agreement or, alternatively, may terminate such Sub-Servicing
Agreement without cause and without payment of any penalty or termination fee;
(iii) provides that the Owner Trust, the Indenture Trustee, the other parties
hereto and, as and to the extent provided herein, the third party beneficiaries
hereof shall be third party beneficiaries under such agreement, but that (except
to the extent the Indenture Trustee or its designee assumes the obligations of
the Master Servicer
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or the Special Servicer, as the case may be, thereunder as contemplated by the
immediately preceding clause (ii) and, in such case, only from the date of such
assumption) none of the Owner Trust, the Indenture Trustee, any other party
hereto, any successor Master Servicer or Special Servicer, as the case may be,
any holder of Bonds or Owner Trust Certificates or any other third party
beneficiary hereof shall have any duties under such agreement or any liabilities
arising therefrom; (iv) permits any purchaser of a Mortgage Loan pursuant to
this Agreement or the Loan Sale Agreement to terminate such agreement with
respect to such purchased Mortgage Loan at its option and without penalty, (v)
does not permit the Sub-Servicer to enter into or consent to any modification,
waiver or amendment or otherwise take any action on behalf of the Master
Servicer or Special Servicer, as the case may be, contemplated by Section 3.20
hereof without the consent of the Master Servicer or Special Servicer, as the
case may be, and (vi) does not permit the Sub- Servicer any rights of
indemnification that may be satisfied out of the Trust Estate. In addition, each
Sub-Servicing Agreement entered into by the Master Servicer shall provide that
such agreement shall terminate with respect to any Mortgage Loan serviced
thereunder at the time such Mortgage Loan becomes a Specially Serviced Mortgage
Loan, and each Sub-Servicing Agreement entered into by the Special Servicer
shall relate only to Specially Serviced Mortgage Loans and shall terminate with
respect to any such Mortgage Loan which ceases to be a Specially Serviced
Mortgage Loan.
The Master Servicer and the Special Servicer shall each
deliver to the Owner Trustee and the Indenture Trustee copies of all
Sub-Servicing Agreements, and any amendments thereto and modifications thereof,
entered into by it promptly upon its execution and delivery of such documents.
References in this Agreement to actions taken or to be taken by the Master
Servicer or the Special Servicer include actions taken or to be taken by a
Sub-Servicer on behalf of the Master Servicer or the Special Servicer, as the
case may be, and in connection therewith, all amounts advanced by any
Sub-Servicer to satisfy the obligations of the Master Servicer or the Special
Servicer hereunder to make P&I Advances or Servicing Advances shall be deemed to
have been advanced by the Master Servicer or the Special Servicer, as the case
may be, out of its own funds and, accordingly, such P&I Advances or Servicing
Advances shall be recoverable by such Sub-Servicer in the same manner and out of
the same funds as if such Sub-Servicer were the Master Servicer or the Special
Servicer, as the case may be. For so long as they are outstanding, Advances
shall accrue interest in accordance with Sections 3.11(e) and 4.02(d), such
interest to be allocable between the Master Servicer or the Special Servicer, as
the case may be, and such Sub-Servicer as they may agree. For purposes of this
Agreement, the Master Servicer and the Special Servicer each shall be deemed to
have received any payment, and shall be obligated to handle such payment in
accordance with the terms of this Agreement, when a Sub-Servicer retained by it
receives such payment. The Master Servicer and the Special Servicer each shall
notify the other, the Owner Trustee and the Indenture Trustee in writing
promptly of the appointment by it of any Sub-Servicer.
(b) Each Sub-Servicer shall be authorized to transact business
in the state or states in which the Mortgaged Properties related to the Mortgage
Loans it is to service are situated, if and to the extent required by applicable
law.
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(c) The Master Servicer and the Special Servicer, for the
benefit of the Owner Trust, shall (at no expense to the Owner Trust, the Owner
Trustee or the Indenture Trustee) monitor the performance and enforce the
obligations of their respective Sub-Servicers under the related Sub-Servicing
Agreements. Such enforcement, including the legal prosecution of claims,
termination of Sub-Servicing Agreements in accordance with their respective
terms and the pursuit of other appropriate remedies, shall be in such form and
carried out to such an extent and at such time as the Master Servicer or the
Special Servicer, as applicable, in its good faith and reasonable judgment,
would require were it the owner of the Mortgage Loans. Subject to the terms of
the related Sub-Servicing Agreement, the Master Servicer and the Special
Servicer shall each have the right to remove a Sub-Servicer retained by it at
any time it considers such removal to be in the best interests of Owner Trust.
(d) If the Master Servicer or the Special Servicer ceases to
serve as such under this Agreement for any reason (including by reason of an
Event of Default) and no successor Master Servicer or Special Servicer, as the
case may be, has succeeded to its rights and assumed its obligations hereunder
or, in the case of the Special Servicer, no replacement Special Servicer has
been designated pursuant to Section 5.06, then the Indenture Trustee or its
designee shall succeed to the rights and assume the obligations of the Master
Servicer or the Special Servicer under any Sub-Servicing Agreement, unless the
Indenture Trustee elects to terminate any such Sub-Servicing Agreement in
accordance with its terms. In any event, if a Sub-Servicing Agreement is to be
assumed by the Indenture Trustee or another successor thereto, then the Master
Servicer or the Special Servicer, as applicable, at its expense shall, upon
request of the Indenture Trustee, deliver to the assuming party all documents
and records relating to such Sub-Servicing Agreement and the Mortgage Loans then
being serviced thereunder and an accounting of amounts collected and held on
behalf of it thereunder, and otherwise use its best efforts to effect the
orderly and efficient transfer of the Sub-Servicing Agreement to the assuming
party.
(e) Notwithstanding any Sub-Servicing Agreement, the Master
Servicer and the Special Servicer shall remain obligated and liable to the Owner
Trust, the Indenture Trustee and each other for the performance of their
respective obligations and duties under this Agreement in accordance with the
provisions hereof to the same extent and under the same terms and conditions as
if each alone were servicing and administering the Mortgage Loans or REO
Properties for which it is responsible.
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ARTICLE IV
REPORTS; P&I ADVANCES
Section 4.01. Reports to the Owner Trustee and the
Indenture Trustee.
(a) By 1:00 p.m. New York City time two Business Days after
the last day of each Collection Period, the Master Servicer shall deliver to the
Indenture Trustee and the Special Servicer a report substantially in the form of
Exhibit C-1 (the "Determination Date Report"), reflecting information as of the
close of business on the last day of the Collection Period, in a mutually
agreeable electronic format. The Determination Date Report and any written
information supplemental thereto (including any Mortgage Loan information
contained in any CSSA loan setup file or CSSA loan periodic update file) shall
include such information with respect to the Mortgage Loans and any REO
Properties as is required by the Indenture Trustee for purposes of making the
calculations and reports required of it pursuant to the Indenture, as set forth
in written specifications or guidelines issued by the Indenture Trustee from
time to time. Such information may be delivered by the Master Servicer to the
Indenture Trustee by telecopy or in such electronic or other form as may be
reasonably acceptable to the Indenture Trustee. The Special Servicer shall from
time to time (and, in any event, as may be reasonably required by the Master
Servicer) provide the Master Servicer with such information in its possession
regarding the Specially Serviced Mortgage Loans and REO Properties as may be
necessary for the Master Servicer to prepare each Determination Date Report and
any supplemental information to be provided by the Master Servicer to the
Indenture Trustee.
(b) By 1:00 p.m. New York City time two Business Days after
the last day of each Collection Period, the Special Servicer shall deliver to
the Master Servicer and the Indenture Trustee a report substantially in the form
of Exhibit C-2 (the "Special Servicer Report") reflecting information as of the
close of business on the last day of such Collection Period.
(c) Not later than the 30th day following the end of each
calendar quarter, commencing in December 1998, the Special Servicer shall
deliver to the Indenture Trustee and the Master Servicer a report in the form of
Exhibit C-3 (an "Operating Statement Analysis") with respect to all operating
statements and other financial information collected or otherwise obtained by
the Special Servicer pursuant to Section 3.12(b) during such calendar quarter
(together with copies of the operating statements and other financial
information on which it is based).
(d) The Indenture Trustee shall not be responsible for
verifying the content of any report delivered to it by the Master Servicer or
the Special Servicer hereunder and may conclusively rely on any such report
absent actual knowledge of or written notice to a Responsible Officer that any
such report, or portion thereof, is materially inaccurate.
Section 4.02. P&I Advances.
(a) On or before 1:00 p.m., New York City time, on each Master
Servicer Remittance Date, the Master Servicer shall, subject to Section 4.02(c)
below, either (i) deposit into
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the Collection Account from its own funds an amount equal to the aggregate
amount of P&I Advances, if any, to be made in respect of the related Payment
Date, (ii) utilize amounts held in the Collection Account for future remittances
in subsequent months in discharge of any such obligation to make P&I Advances,
or (iii) make P&I Advances in the form of any combination of (i) and (ii)
aggregating the total amount of P&I Advances to be made. Any amounts held in the
Collection Account for future remittances and so used to make P&I Advances shall
be appropriately reflected in the Master Servicer's records and replaced by the
Master Servicer by deposit in the Collection Account on or before the next
succeeding Determination Date (to the extent not previously replaced through the
deposit of Late Collections of the delinquent principal and interest in respect
of which such P&I Advances were made). If the Indenture Trustee does not
receive, or there is not deposited in the Bond Account under the Indenture, on
or before 3:00 p.m. New York City time, on any such Master Servicer Remittance
Date, the full amount of P&I Advances, if any, required to be made in respect of
the next succeeding Payment Date, then the Indenture Trustee shall provide
notice thereof to a Servicing Officer of the Master Servicer not later than 4:00
p.m., New York City time, on such Master Servicer Remittance Date. If after such
notice the Indenture Trustee does not receive the full amount of such P&I
Advances by 11:00 a.m., New York City time, on the Business Day next following
such Master Servicer Remittance Date, then (i) the Indenture Trustee shall make
the portion of such P&I Advances that was required to be, but was not, made by
the Master Servicer on or prior to the related Payment Date and (ii) such
failure shall constitute a Servicing Event of Default on behalf of the Master
Servicer. Such P&I Advances as are made by the Indenture Trustee shall be deemed
made by the Indenture Trustee in its capacity as successor to the Master
Servicer and shall thereafter be reimbursable to the Indenture Trustee, together
with Advance Interest thereon, in accordance with Section 3.05.
(b) The aggregate amount of P&I Advances to be made by the
Master Servicer in respect of any Payment Date, subject to Section 4.02(c)
below, shall equal the aggregate of all Monthly Payments (other than Balloon
Payments) and any Assumed Scheduled Payments as defined in the Indenture, in
each case net of related Master Servicing Fees, due or deemed due, as the case
may be, in respect of the Mortgage Loans (including, without limitation, Balloon
Mortgage Loans delinquent as to their respective Balloon Payments) and REO Loans
on their respective Due Dates during the related Collection Period, in each case
to the extent such amount was not paid by or on behalf of the related Borrower
or otherwise collected as of the close of business on the related Determination
Date; provided that, if an Appraisal Reduction Amount exists with respect to any
Required Appraisal Loan, then, in the event of subsequent delinquencies thereon,
the interest portion of the P&I Advance in respect of such Required Appraisal
Loan for the related Payment Date shall be reduced (it being herein acknowledged
that there shall be no reduction in the principal portion of such P&I Advance)
to equal the product of (i) the amount of the interest portion of such P&I
Advance for such Required Appraisal Loan for such Payment Date without regard to
this proviso, multiplied by (ii) a fraction, expressed as a percentage, the
numerator of which is equal to the Stated Principal Balance of such Required
Appraisal Loan immediately prior to such Payment Date, net of the related
Appraisal Reduction Amount, if any, and the denominator of which is equal to the
Stated Principal Balance of such Required Appraisal Loan immediately prior to
such Payment Date.
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(c) Notwithstanding anything herein to the contrary, no P&I
Advance shall be required to be made hereunder if such P&I Advance would, if
made, constitute a Nonrecoverable P&I Advance. The determination by the Master
Servicer (or, if applicable, the Indenture Trustee) that it has made a
Nonrecoverable P&I Advance or that any proposed P&I Advance, if made, would
constitute a Nonrecoverable P&I Advance, shall be evidenced by an Officer's
Certificate delivered to the Owner Trustee and, if made by the Master Servicer,
the Indenture Trustee on or before one Business Day prior to the related Master
Servicer Remittance Date, setting forth the basis for such determination,
together with any other information, including any appraisals, engineers'
reports, environmental surveys or similar reports that the Person making such
determination may have obtained consistent with the Servicing Standard and at
the expense of the Owner Trust, that support such determination. The Owner Trust
and the Indenture Trustee shall be entitled to rely conclusively on any such
Officer's Certificate reasonably believed by it to be genuine and to have been
signed or presented by the Master Servicer or, in the case of reliance by the
Owner Trust, the Indenture Trustee.
(d) As and to the extent permitted by Section 3.05, the Master
Servicer shall be entitled to pay itself interest at the Reimbursement Rate in
effect from time to time, accrued on the amount of each P&I Advance made thereby
(out of its own funds) for so long as such P&I Advance is outstanding. The
Master Servicer shall reimburse itself for any outstanding P&I Advance together
with accrued interest thereon as soon as practicable after funds available for
such purpose are deposited in the Collection Account.
Section 4.03. Use of Agents.
The Master Servicer may at its own expense utilize agents or
attorneys-in-fact in performing any of its obligations under this Article IV
(except the obligation to make P&I Advances), but no such utilization shall
relieve the Master Servicer from any of such obligations, and the Master
Servicer shall remain responsible for all acts and omissions of any such agent
or attorney-in-fact. The Master Servicer shall have all the limitations upon
liability and all the indemnities for the actions and omissions of any such
agent or attorney-in-fact that it has for its own actions hereunder pursuant to
Article V hereof, and any such agent or attorney-in-fact shall have the benefit
of all the limitations upon liability, if any, and all the indemnities provided
to the Master Servicer under Section 5.03.
Section 4.04. Exchange Act Reporting.
The Owner Trust, the Master Servicer, the Special Servicer,
the Indenture Trustee and the Fiscal Agent shall reasonably cooperate with the
Company in connection with the Company's satisfying the reporting requirements
in respect of the Owner Trust under the Exchange Act. The Indenture Trustee
shall prepare and file on behalf of the Company periodic reports with respect to
the Owner Trust as required by the Exchange Act and the Rules and Regulations of
the Securities and Exchange Commission thereunder; provided that the Indenture
Trustee shall have received such information as it requires to prepare such
reports (to the extent not generated by the Indenture Trustee in the course of
its duties hereunder excluding under this Section 4.04) in the format required
for electronic filing via the ▇▇▇▇▇ system; and provided,
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further, that any such items that are required to be delivered by the Master
Servicer, the Special Servicer, the Company or any other Person to the Indenture
Trustee shall be so delivered in the format required for electronic filing via
the ▇▇▇▇▇ system (in addition to any other required format). The Indenture
Trustee shall have no responsibility to file any such items that have not been
received in such ▇▇▇▇▇ compatible format nor shall it have any responsibility to
convert any items to such format. The Company shall seek from the Securities and
Exchange Commission a no-action letter or other exemptive relief relating to
reduced reporting requirements in respect of the Owner Trust under the Exchange
Act and shall, in accordance with and to the extent permitted by applicable law,
file a Form 15 relating to the automatic termination of reporting in respect of
the Owner Trust under the Exchange Act.
ARTICLE V
THE MASTER SERVICER AND THE SPECIAL SERVICER
Section 5.01. Liability of the Master Servicer.
The Master Servicer and the Special Servicer shall be liable
in accordance herewith only to the extent of the obligations specifically
imposed upon and undertaken by the Master
Servicer and the Special Servicer, respectively, herein.
Section 5.02. Merger, Consolidation or Conversion of the
Master Servicer and the Special Servicer.
Subject to the following paragraph, the Master Servicer and
the Special Servicer shall each keep in full effect its existence, rights and
franchises as a corporation, bank or association under the laws of the
jurisdiction of its incorporation, and each will obtain and preserve its
qualification to do business as a foreign corporation, bank or association in
each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of this Agreement or any of the Mortgage
Loans and to perform its respective duties under this Agreement.
Each of the Master Servicer and the Special Servicer may be
merged or consolidated with or into any Person, or may transfer all or
substantially all of its assets to any Person, in which case any Person
resulting from any merger or consolidation to which the Master Servicer or the
Special Servicer, shall be a party, or any Person succeeding to the business of
the Master Servicer or the Special Servicer shall be the successor of the Master
Servicer or the Special Servicer, as the case may be, hereunder, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding; provided,
however, that no successor or surviving Person shall succeed to the rights of
the Master Servicer or the Special Servicer unless such succession will not
result in any withdrawal, downgrade or qualification of the rating then assigned
by either Rating Agency to any Class of Bonds (as confirmed in writing by each
Rating Agency to the Owner Trustee and the Indenture Trustee).
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Section 5.03. Indemnity.
(a) Each Servicer shall each indemnify the Company, the
Indenture Trustee, the Fiscal Agent, the Owner Trustee, the Trust Estate and the
other Servicer and their respective officers, directors, employees, agents and
Control Persons against any and all costs, expenses, losses, damages, claims and
liabilities, including reasonable fees and expenses of counsel and expenses of
litigation, arising from claims or actions that were caused by or resulted from
a breach of any of the representations and warranties of such Servicer contained
in this Agreement, the failure of such Servicer to perform its duties and to
servicer the Mortgage Loans in accordance with the terms of this Agreement or
actions taken by the such Servicer pursuant to a power of attorney granted
hereunder or arising out of such Servicer's willful misfeasance, bad faith or
negligence.
(b) Each Servicer and its respective officers, directors,
employees and agents shall be entitled to indemnification from the Trust Estate
for any and all expenses, losses, damages, claims and liabilities, including
reasonable fees and expenses of counsel and expenses of litigation, incurred in
connection with any legal action relating to any Mortgage Loan and this
Agreement, other than any cost, expense, loss, damage, claim or liability
incurred by reason of willful misfeasance, bad faith or negligence of such
Servicer in the performance of its duties hereunder or by reason of reckless
disregard of obligations or duties of such Servicer hereunder.
(c) As soon as practicable after receipt by the Company, any
Servicer, the Indenture Trustee or the Owner Trustee of a notice of any
complaint or the commencement of any action or proceeding with respect to which
indemnification is being sought under clause (a) or (b) above (each, an
"Indemnified Party"), such Indemnified Party shall notify each Servicer from
which indemnification is sought pursuant to clause (a) above and the Indenture
Trustee and the Owner Trustee if Indemnification is sought from the Trust Estate
(each, an "Indemnifying Party") in writing of such complaint or of the
commencement of such action or proceeding, but failure to so notify the
Indemnifying Party shall not relieve the Indemnifying Party from any liability
which the Indemnifying Party may have hereunder or otherwise, except to the
extent that such failure materially prejudices the rights of the Indemnifying
Party. If the Indemnifying Party so elects or is requested by such Indemnified
Party, the Indemnifying Party shall assume the defense of such action or
proceeding, including the employment of counsel reasonably satisfactory to each
Indemnified Party and the payment of the fees and disbursements of such counsel.
In the event, however, such Indemnified Party reasonably determines in its
judgment that having common counsel would present such counsel with a conflict
of interest or that having common counsel would disadvantage such Indemnified
Party or if the Indemnifying Party fails to assume the defense of the action or
proceeding in a timely manner, then such Indemnified Party may employ separate
counsel to represent or defend it in any such action or proceeding and the
Indemnifying Party shall pay the fees and disbursements of such counsel;
provided, however, that the Indemnifying Party shall not be required to pay the
fees and disbursements of more than one separate counsel for all Indemnified
Parties in any jurisdiction in any single action or proceeding. In any action or
proceeding the defense of which the Indemnifying Party assumes and in which an
Indemnified Party is not entitled to a separate counsel pursuant to the
immediately preceding sentence, such Indemnified Party shall have the right to
participate in such action or proceeding
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and to retain its own counsel at such Indemnified Party's own expense. The
Indemnifying Party shall not, without the prior consent of each Indemnified
Party, settle or compromise or consent to the entry of any judgment in any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification may be sought hereunder (whether or not the Indemnified Party is
an actual or potential party to such claim, action, suit or proceeding) unless
such settlement, compromise or consent includes an unconditional release of each
Indemnified Party from all liability arising out of such claim, action, suit or
proceeding.
Section 5.04. Master Servicer and Special Servicer Not to
Resign.
Neither the Master Servicer nor the Special Servicer (subject
to Section 5.06) shall resign from the obligations and duties hereby imposed on
it, except upon determination that its duties hereunder are no longer
permissible under applicable law or are in material conflict by reason of
applicable law with any other activities carried on by it, the other activities
of the Master Servicer or the Special Servicer, as the case may be, so causing
such a conflict being of a type and nature carried on by the Master Servicer or
the Special Servicer, as the case may be, at the date of this Agreement. Any
such determination permitting the resignation of the Master Servicer or the
Special Servicer, as applicable, shall be evidenced by an Opinion of Counsel to
such effect which shall be delivered to the Owner Trustee and the Indenture
Trustee. No such resignation shall become effective until the Indenture Trustee
or other successor shall have assumed the responsibilities and obligations of
the resigning party hereunder. Notwithstanding the foregoing, each of the Master
Servicer and the Special Servicer may assign or transfer all of the obligations
and duties imposed on it by this Agreement, and allot its rights, benefits or
privileges hereunder, to an Affiliate upon its delivery to the Owner Trustee and
the Indenture Trustee of written confirmation from each Rating Agency that such
a transfer and assignment will not result in the down-grading, qualification or
withdrawal of its then-current rating of any Class of Bonds.
Consistent with the foregoing, neither the Master Servicer nor
the Special Servicer shall, except as expressly provided herein, assign or
transfer any of its rights, benefits or privileges hereunder to any other Person
or delegate to or subcontract with, or authorize or appoint, any other Person to
perform any of the duties, covenants or obligations to be performed by it
hereunder. If, pursuant to any provision hereof, the duties of the Master
Servicer or the Special Servicer are transferred to a successor thereto, the
entire amount of compensation payable to the Master Servicer or the Special
Servicer, as the case may be, that accrues pursuant hereto from and after the
date of such transfer shall be payable to such successor.
Section 5.05. Rights of Certain Persons in Respect of the
Master Servicer and the Special Servicer.
Each of the Master Servicer and the Special Servicer shall
afford to the other and, also, to the Company, the Manager, the Owner Trustee,
the Indenture Trustee and the Fiscal Agent, upon reasonable notice, during
normal business hours access to all records maintained by it in respect of its
rights and obligations hereunder and access to such of its officers as are
responsible for such obligations. Upon reasonable request, the Master Servicer
and the Special Servicer shall each furnish the Company, the Owner Trustee and
the Indenture Trustee with its
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most recent financial statements and such other information as it possesses, and
which it is not prohibited by applicable law or contract from disclosing,
regarding its business, affairs, property and condition, financial or otherwise.
The Company or, with the consent of the Company, the Manager may, but is not
obligated to, enforce the obligations of the Master Servicer and the Special
Servicer hereunder and may, but is not obligated to, perform, or cause a
designee to perform, any defaulted obligation of the Master Servicer or the
Special Servicer hereunder or exercise the rights of the Master Servicer or the
Special Servicer hereunder; provided, however, that none of the Master Servicer
or the Special Servicer shall be relieved of any of its obligations hereunder by
virtue of such performance by the Company or its designee. The Company shall not
have any responsibility or liability for any action or failure to act by or with
respect to the Master Servicer or the Special Servicer.
Section 5.06. Designation of Master Servicer and Special
Servicer by the Controlling Class.
The holders of more than 50% of the Controlling Class may at
any time and from time to time (on or after February 1, 2002 with respect to any
replacement of the initial Master Servicer) designate a Person to serve as
Master Servicer and/or Special Servicer hereunder and to replace any existing
Master Servicer and/or Special Servicer or any Master Servicer and/or Special
Servicer that has resigned or otherwise ceased to serve as Master Servicer or
Special Servicer, as applicable. Such holders shall so designate a Person to so
serve by the delivery to the Owner Trustee, the Indenture Trustee and the
existing Master Servicer or Special Servicer, as applicable, of a written notice
stating such designation. The Indenture Trustee shall, promptly after receiving
any such notice, deliver to each Rating Agency an executed Notice and
Acknowledgement in the form attached hereto as Exhibit D-1. The designated
Person shall become the Master Servicer and/or Special Servicer on the date that
the Owner Trustee and the Indenture Trustee shall have received written
confirmation from each Rating Agency that the appointment of such Person will
not result in the qualification, downgrading or withdrawal of the then current
ratings of any Class of Bonds. The appointment of such designated Person as
Master Servicer and/or Special Servicer shall also be subject to receipt by the
Owner Trustee and the Indenture Trustee of (i) an Acknowledgement of Proposed
Master Servicer or Special Servicer in the form attached hereto as Exhibit D-2,
executed by the designated Person, and (ii) an Opinion of Counsel (at the
expense of the Person designated to become the Master Servicer and/or Special
Servicer, as applicable) to the effect that the designation of such Person to
serve as Master Servicer or Special Servicer, as applicable, is in compliance
with this Section 5.06 and all other applicable provisions of this Agreement,
that upon the execution and delivery of the Acknowledgement of Proposed Master
Servicer or Special Servicer the designated Person shall be bound by the terms
of this Agreement and that this Agreement shall be enforceable against the
designated Person in accordance with its terms. Any existing Master Servicer
and/or Special Servicer shall be deemed to have resigned simultaneously with
such designated Person's becoming the Master Servicer and/or Special Servicer
hereunder; provided, however, that the terminated or resigning Master Servicer
and/or Special Servicer shall continue to be entitled to receive all amounts
accrued or owing to it under this Agreement on or prior to the effective date of
such termination or resignation, whether in respect of Servicing Advances or
otherwise, and it shall continue to be entitled to the benefits of Section 5.03
notwithstanding any such resignation;
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provided that on or prior to the replacement of the terminated or resigning
Master Servicer or Special Servicer, as applicable, such Master Servicer or
Special Servicer, as applicable, shall be reimbursed or paid for any outstanding
Advances, with interest thereon at the Reimbursement Rate, and any unpaid
compensation and other expenses that are due and payable under the terms of this
Agreement. Such resigning Master Servicer or Special Servicer as applicable
shall cooperate with the Indenture Trustee and the replacement Master Servicer
or Special Servicer, as applicable, in effecting the termination of the
resigning Master Servicer or Special Servicer's responsibilities and rights
hereunder, including the transfer within two Business Days to the replacement
Master Servicer or Special Servicer, as applicable, for administration by it of
all cash amounts that shall at the time be or should have been credited by the
Master Servicer and/or Special Servicer to the REO Account or delivered to the
Master Servicer or that are thereafter received with respect to Specially
Serviced Mortgage Loans or REO Properties.
Section 5.07. Master Servicer or Special Servicer as Owner
of Bonds and Certificates.
The Master Servicer or an Affiliate of the Master Servicer, or
the Special Servicer or an Affiliate of the Special Servicer, may become the
holder of any Bond or Owner Trust Certificate with the same rights it would have
if it were not the Master Servicer or the Special Servicer or an Affiliate
thereof. If, at any time during which the Master Servicer or the Special
Servicer or an Affiliate of the Master Servicer or the Special Servicer is the
holder of any Bond or Owner Trust Certificate, the Master Servicer or the
Special Servicer proposes to take action (including for this purpose, omitting
to take action) that (i) is not expressly prohibited by the terms hereof and
would not, in the Master Servicer or the Special Servicer's good faith judgment,
violate the Servicing Standard, and (ii) if taken, might nonetheless, in the
Master Servicer's or the Special Servicer's good faith judgment, be considered
by other Persons to violate the Servicing Standard, the Master Servicer or the
Special Servicer may (but need not) seek the approval of the holders of the
Bonds and the Owner Trust Certificates to such action by delivering to the Owner
Trustee and the Indenture Trustee a written notice that (a) states that it is
delivered pursuant to this Section 5.07, (b) identifies the amount of each Class
of Bonds and Owner Trust Certificates beneficially owned by the Master Servicer
or the Special Servicer or an Affiliate of the Master Servicer or the Special
Servicer, as applicable, and (c) describes in reasonable detail the action that
the Master Servicer or the Special Servicer, as the case may be, proposes to
take. Upon receipt of such notice, the Indenture Trustee shall forward it to the
holders of the Bonds and the Owner Trust shall forward it to the holders of the
Owner Trust Certificates (in each case other than the Master Servicer and its
Affiliates or the Special Servicer and its Affiliates, as appropriate), together
with such instructions for response as Indenture Trustee and the Owner Trustee,
respectively, shall reasonably determine. If at any time, holders of Bonds
representing greater than 50% of the Bonds and holders of Owner Trust
Certificates representing greater than 50% of Owner Trust Certificates
(calculated without regard to the Bonds and the Owner Trust Certificates
beneficially owned by the Master Servicer or its Affiliates or the Special
Servicer or its Affiliates) shall have separately consented in writing to the
proposal described in the written notice, and if the Master Servicer or the
Special Servicer shall act as proposed in the written notice, such action shall
be deemed to comply with the Servicing Standard. Each of the Owner Trust, the
Owner Trustee and the Indenture Trustee shall be entitled to reimbursement from
the Master Servicer or the Special
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Servicer, as applicable, for the reasonable expenses incurred by it pursuant to
this paragraph. It is not the intent of the foregoing provision that the Master
Servicer or the Special Servicer be permitted to invoke the procedure set forth
herein with respect to routine servicing matters arising
hereunder, but rather in the case of unusual circumstances.
Section 5.08 Limitation on Liability of the Master
Servicer and of the Special Servicer.
Neither the Owner Trust, the Master Servicer, the Special
Servicer, nor any of the owners, directors, officers, employees or agents of the
Owner Trust or the Master Servicer or the Special Servicer shall be under any
liability to the Trust Estate or the Holders of Owner Trust Certificates or
Bonds for any action taken, or for refraining from the taking of any action, in
good faith pursuant to this Agreement, or for errors in judgment; provided,
however, that this provision shall not protect the Owner Trust or the Master
Servicer or the Special Servicer or any such Person against any breach of
warranties or representations made herein, or against any specific liability
imposed on the Master Servicer or the Special Servicer pursuant to Section 5.03
or for a breach of the Servicing Standard, or against any liability which would
otherwise be imposed by reason of its respective willful misfeasance,
misrepresentation, bad faith, fraud or negligence in the performance of its
duties or by reason of negligent disregard of its respective obligations or
duties hereunder. The Owner Trust, the Master Servicer, the Special Servicer any
and owner, director, officer, employee or agent of the Owner Trust, 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 with respect to any matters arising hereunder.
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ARTICLE VI
DEFAULT
Section 6.01. Servicing Events of Default.
(a) "Servicing Event of Default", wherever used herein with
respect to the Master Servicer or Special Servicer, means any one of the
following events:
(i) any failure by the Master Servicer to deposit into the
Collection Account any amount (other than a P&I Advance)
required to be so deposited under this Agreement on the date
on which such deposit was first required to be made; or
(ii) any failure by the Special Servicer or the Master
Servicer to deposit into, or to remit to the Owner Trustee or
the Indenture Trustee any amount (other than a P&I Advance)
required to be so deposited or remitted; or
(iii) any failure by the Master Servicer to deposit into the
Collection Account, or to deposit with the Indenture Trustee,
on any Master Servicer Remittance Date the full amount of P&I
Advances required to be made on such date, which failure
continues unremedied until 5:00 New York City time on the date
on which such deposit was required to be made; or
(iv) any failure by the Special Servicer to deposit into the
REO Account or to deposit into, or remit to the Master
Servicer for deposit into, the Collection Account any amount
required to be so deposited under this Agreement which
continues unremedied for one day following the date on which
such deposit was first required to be made; or
(v) any failure by the Master Servicer to timely make any
Servicing Advance required to be made by it pursuant to the
second paragraph of Section 3.19(b) which continues unremedied
for a period of five days following the date on which notice
shall have been given to the Master Servicer by the Indenture
Trustee as provided in Section 3.03(d); or
(vi) any failure by the Special Servicer to timely make any
Emergency Advance required to be made by it pursuant to the
second paragraph of Section 3.19(b) which continues unremedied
for a period of five days following the date on which notice
has been given to the Special Servicer by the Indenture
Trustee as provided in Section 3.03(d); or
(vii) any failure on the part of the Master Servicer or the
Special Servicer duly to observe or perform in any material
respect any of its other covenants or obligations under this
Agreement which continues unremedied for a period of 30 days
(or, in the case of payment of insurance premiums, for a
period of 15 days)
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after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to
the Master Servicer or the Special Servicer, as the case may
be, by any other party hereto or to the Master Servicer or the
Special Servicer, as the case may be, (with a copy to each
other party hereto) by holders of not less than 25% of the
Owner Trust Certificates or the Bonds; or
(viii) any breach on the part of the Master Servicer or the
Special Servicer of any representation or warranty contained
in this Agreement that materially and adversely affects the
interests of the Issuer or any Class of Bondholders and which
continues unremedied for a period of 30 days after the date on
which notice of such breach, requiring the same to be
remedied, shall have been given to the Master Servicer or the
Special Servicer, as the case may be, by any other party
hereto or to the Master Servicer or the Special Servicer, as
the case may be, (with a copy to each other party hereto) by
holders of not less than 25% of the Owner Trust Certificates
or the Bonds; or
(ix) a decree or order of a court or agency or supervisory
authority having jurisdiction in the premises in an
involuntary case under any present or future federal or state
bankruptcy, insolvency or similar law for the appointment of a
conservator, receiver, liquidator, trustee or similar official
in any bankruptcy, insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceedings,
or for the winding-up or liquidation of its affairs, shall
have been entered against the Master Servicer or the Special
Servicer and such decree or order shall have remained in force
undischarged or unstayed for a period of 60 days; or
(x) the Master Servicer or the Special Servicer shall consent
to the appointment of a conservator, receiver, liquidator,
trustee or similar official in any bankruptcy, insolvency,
readjustment of debt, marshaling of assets and liabilities or
similar proceedings of or relating to it or of or relating to
all or substantially all of its property; or
(xi) the Master Servicer or the Special Servicer shall admit
in writing its inability to pay its debts generally as they
become due, file a petition to take advantage of any
applicable bankruptcy, insolvency or reorganization statute,
make an assignment for the benefit of its creditors,
voluntarily suspend payment of its obligations, or take any
corporate action in furtherance of the foregoing; or
(xii) the Owner Trustee or the Indenture Trustee shall have
received written notice from either Rating Agency that the
continuation of the Master Servicer or the Special Servicer in
such capacity would result in a downgrade, qualification or
withdrawal of any rating then assigned by such Rating Agency
to any Class of
Bonds.
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When a single entity acts as Master Servicer and Special Servicer, a Servicing
Event of Default in one capacity shall constitute a Servicing Event of Default
in each capacity; provided however that the Owner Trust, the Indenture Trustee
and the holders of the Bonds and the Owner Trust Certificates (in accordance
with clause (b) below) may at their option elect to terminate the Master
Servicer or Special Servicer in one or the other capacity rather than both such
capacities.
(b) If any Servicing Event of Default with respect to the
Master Servicer or the Special Servicer (in either case, for purposes of this
Section 6.01(b), the "Defaulting Party") shall occur and be continuing, then,
and in each and every such case, so long as the Event of Default shall not have
been remedied, the Owner Trust or the Indenture Trustee may, and at the written
direction of holders of 25% of the Owner Trust Certificates or the Bonds or if
the relevant Servicing Event of Default is the one described in clause (xiii) of
Section 6.01(a), the Owner Trust and the Indenture Trustee shall, terminate, by
notice in writing to the Defaulting Party (with a copy of such notice to each
other party hereto), all of the rights and obligations, other than any rights it
may have hereunder as a holder of Owner Trust Certificates or Bonds and any
rights or obligations that accrued prior to the date of such termination
(including the right to receive all amounts accrued or owing to it under this
Agreement, plus interest at the Reimbursement Rate on such amounts until
received to the extent such amounts bear interest as provided in this Agreement,
with respect to periods prior to the date of such termination, and the right to
the benefits of Section 5.08 notwithstanding any such termination) of the
Defaulting Party under this Agreement and in and to the Trust Estate (other than
as a holder of any Bond or Owner Trust Certificate). From and after the receipt
by the Defaulting Party of such written notice, all authority and power of the
Defaulting Party under this Agreement, whether with respect to the Owner Trust
(other than as a Holder of any Bond or Owner Trust Certificate) or the Mortgage
Loans or otherwise, shall pass to and be vested in the Indenture Trustee
pursuant to and under this Section, and, without limitation, the Indenture
Trustee is hereby authorized and empowered to execute and deliver, on behalf of
and at the expense of the Defaulting Party, as attorney-in-fact or otherwise,
any and all documents and other instruments, and to do or accomplish all other
acts or things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement or assignment of
the Mortgage Loans and related documents, or otherwise. Each of the Master
Servicer and the Special Servicer agrees that, if it is terminated pursuant to
this Section 6.01(b), it shall promptly (and in any event not later than ten
Business Days subsequent to its receipt of the notice of termination) provide
the Indenture Trustee with all documents and records requested thereby to enable
the Indenture Trustee to assume the Master Servicer or Special Servicer's, as
the case may be, functions hereunder, and shall cooperate with the Indenture
Trustee in effecting the termination of the Master Servicer or Special
Servicer's, as the case may be, responsibilities and rights hereunder, including
the transfer within two Business Days to the Indenture Trustee 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 or any
Servicing Account (if it is the Defaulting Party) or by the Special Servicer to
the REO Account, the Collection Account or any Servicing Account (if it is the
Defaulting Party) or thereafter be received by or on behalf of it with respect
to any Mortgage Loan or REO Property (provided, however, that the Master
Servicer and the Special Servicer each shall, if terminated pursuant to this
Section 6.01(b), continue to be obligated for or entitled to pay or receive all
amounts accrued or owing by or to it under this Agreement on or prior to the
date of such
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termination, whether in respect of Advances or otherwise, and it and its
directors, officers, employees and agents shall continue to be entitled to the
benefits of Section 5.03 notwithstanding any such termination). In the event any
Advances made by the Master Servicer, the Indenture Trustee, the Fiscal Agent or
the Special Servicer shall at any time be outstanding, or any amounts of
interest thereon shall be accrued and unpaid, all amounts available to repay
Advances and interest hereunder shall be applied first entirely to the Advances
made by the Fiscal Agent (and the accrued and unpaid interest thereon) until
such Advances made by the Fiscal Agent (and the accrued and unpaid interest
thereon) shall have been repaid in full, then to Advances made by the Indenture
Trustee (and the accrued and unpaid interest thereon) until such Advances made
by the Indenture Trustee (and the accrued and unpaid interest thereon) shall
have been repaid in full, and then to Advances made by the Master Servicer (and
the accrued and unpaid interest thereon), and then to Advances made by the
Special Servicer (and the accrued and unpaid interest thereon). Any costs or
expenses in connection with any actions to be taken by the Master Servicer or
Special Servicer pursuant to this paragraph shall be borne by the Master
Servicer or Special Servicer, as the case may be, and to the extent not paid by
such defaulting party within 30 days after demand therefor, such expense shall
be borne by the Owner Trust.
Section 6.02. Indenture Trustee to Act; Appointment of
Successor.
On and after the time the Master Servicer or the Special
Servicer resigns pursuant to the first paragraph of Section 5.04 or receives a
notice of termination pursuant to Section 6.01, the Indenture Trustee shall be
the successor in all respects to the Master Servicer or the Special Servicer, as
the case may be, in its capacity as such under this Agreement and the
transactions set forth or provided for herein and shall be subject to all the
responsibilities, duties and liabilities relating thereto and arising thereafter
placed on the Master Servicer or the Special Servicer, as the case may be, by
the terms and provisions hereof, including if the Master Servicer is the
resigning or terminated party, the Master Servicer's obligation to make P&I
Advances; provided that any failure to perform such duties or responsibilities
caused by the Master Servicer or the Special Servicer's, as the case may be,
failure to cooperate or to provide information or monies required by Section
6.01(b) shall not be considered a default by the Indenture Trustee hereunder.
Neither the Indenture Trustee nor any other successor shall be liable for any of
the representations and warranties of the resigning or terminated party or for
any losses incurred by the resigning or terminated party pursuant to Section
3.06 hereunder nor shall the Indenture Trustee or any other successor be
required to repurchase or substitute for any Mortgage Loan hereunder. As
compensation therefor, the Indenture Trustee shall be entitled to all fees and
other compensation which the resigning or terminated party would have been
entitled to for future services rendered if the resigning or terminated party
had continued to act hereunder.
Notwithstanding the above, the Indenture Trustee may, if it
shall be unwilling to so act, or shall, if (i) it is unable to so act or (ii) if
holders of at least 51% of the Bonds or the Owner Trust Certificates or (iii) if
the Indenture Trustee is not approved as a Master Servicer or Special Servicer
by either Rating Agency promptly appoint, or petition a court of competent
jurisdiction to appoint, any established commercial loan servicing institution
as the successor to the Master Servicer or the Special Servicer, as the case may
be, hereunder in the assumption of all or any part of the responsibilities,
duties or liabilities of the Master Servicer or the Special
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Servicer, as the case may be, hereunder; provided that such appointment does not
result in the downgrading, withdrawal or qualification of any rating assigned by
either Rating Agency to any Class of Bonds (as confirmed in writing by each
Rating Agency). No appointment of a successor to the Master Servicer or the
Special Servicer hereunder shall be effective until the assumption of the
successor to such party of all its responsibilities, duties and liabilities
hereunder, and pending such appointment and assumption, the Indenture Trustee
shall act in such capacity as hereinabove provided. In connection with any such
appointment and assumption, the Indenture Trustee may make such arrangements for
the compensation, which shall accrue from the date of such appointment and
assumption, of such successor out of payments on the Mortgage Loans or otherwise
as it and such successor shall agree; provided, however, that no such
compensation shall be in excess of that permitted the resigning or terminated
party hereunder. The Owner Trust, the Indenture Trustee, the Fiscal Agent, such
successor and each other party hereto shall take such action, consistent with
this Agreement, as shall be necessary to effectuate any such succession.
Section 6.03. Waiver of Servicing Events of Default.
The holders of at least 662/3% of the Bonds and the Owner
Trust Certificates affected by any Servicing Event of Default hereunder may,
acting separately, waive such Servicing Event of Default within ten Business
Days of notice thereof; provided, however, that a Servicing Event of Default
under clause (i), clause (ii) or clause (iii) of Section 6.01(a) may be waived
only by all of the holders of the Bonds and the Owner Trust Certificates of the
affected Classes. Upon any such waiver of a Servicing Event of Default and
payment to the Indenture Trustee of all costs and expenses incurred by it in
connection with such Servicer Event of Default and prior to its waiver, such
Servicing Event of Default shall cease to exist and shall be deemed to have been
remedied for every purpose hereunder. No such waiver shall extend to any
subsequent or other Servicing Event of Default or impair any right consequent
thereon except to the extent expressly so waived.
Section 6.04. Additional Remedies of the Owner Trust and
the Indenture Trustee upon a Servicing Event
of Default.
During the continuance of any Servicing Event of Default, so
long as such Servicing Event of Default shall not have been remedied, in
addition to the rights specified in Section
6.01,
the Owner Trust shall have the right, and each of the Owner Trustee and the
Indenture Trustee, shall have the right, in its own name and as trustee of an
express trust, to take all actions now or hereafter existing at law, in equity
or by statute to enforce its rights and remedies and to protect the interests,
and enforce the rights and remedies, of the holders of the Owner Trust
Certificates and the Bonds (including the institution and prosecution of all
judicial, administrative and other proceedings and the filings of proofs of
claim and debt in connection therewith). Except as otherwise expressly provided
in this Agreement, no remedy provided for by this Agreement shall be exclusive
of any other remedy, and each and every remedy shall be cumulative and in
addition to any other remedy, and no delay or omission to exercise any right or
remedy shall impair any such right or remedy or shall be deemed to be a waiver
of any Servicing Event of Default.
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ARTICLE VII
CONCERNING THE FISCAL AGENT
Section 7.01. Duties of the Fiscal Agent
(a) To the extent that the Indenture Trustee is required,
pursuant to the terms of this Agreement, to make any P&I Advance, whether as
successor Master Servicer or otherwise, and has failed to do so in accordance
with the terms hereof, the Fiscal Agent shall make such
P&I
Advance when and as required by the terms of this Agreement on behalf of the
Indenture Trustee as if the Fiscal Agent were the Indenture Trustee hereunder.
To the extent that the Fiscal Agent makes a P&I Advance pursuant to this Section
7.01(a), the obligations of the Indenture Trustee under this Agreement in
respect of such P&I Advance shall be satisfied. Notwithstanding anything
contained in this Agreement to the contrary, all references to the Indenture
Trustee and the rights, obligations and benefits of the Indenture Trustee
referred to herein, including the right to be reimbursed for any such P&I
Advance, with interest as provided herein, shall be deemed those of the Fiscal
Agent to the extent of each P&I Advance made by the Fiscal Agent pursuant to
this Section 7.01(a).
(b) [Reserved].
(c) The Fiscal Agent shall not be under any obligation to
appear in, prosecute or defend any legal action that is not incidental to its
duties as Fiscal Agent in accordance with this Agreement, and if it does so
appear, prosecute or defend any such legal action, all legal expenses and costs
of such action shall be expenses and costs of the Owner Trust, and the Fiscal
Agent shall be entitled to be reimbursed therefor from the Collection Account.
Section 7.02. Fiscal Agent May Own Bonds and Certificates.
The Fiscal Agent, in its individual or any other capacity, may
become the owner or pledgee of Bonds or Owner Trust Certificates with the same
rights it would have if it were not
the Fiscal Agent.
Section 7.03. Fees and Expenses of Fiscal Agent;
Indemnification of Fiscal Agent.
(a) The Indenture Trustee shall pay the fees of the Fiscal
Agent out of the Indenture Trustee's own funds for the performance by the Fiscal
Agent of its obligations hereunder, and such fees shall constitute the sole
compensation for the services to be rendered by
the Fiscal Agent hereunder.
(b) The Fiscal Agent and any director, officer, employee,
agent or Control Person of the Fiscal Agent shall be entitled to be indemnified
for and held harmless by the Owner Trust against any unanticipated loss,
liability or expense (including costs and expenses of litigation, and of
investigation, counsel fees, damages, judgments and amounts paid in settlement)
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arising out of, or incurred in connection with, this Agreement or any act or
omission of the Fiscal Agent relating to the performance of any of the powers
and duties of the Fiscal Agent hereunder, provided that the Fiscal Agent shall
not be entitled to indemnification pursuant to this Section 7.03(b) for (1) any
expense or liability specifically required to be borne thereby pursuant to the
terms hereof or (2) any loss, liability or expense incurred by reason of willful
misfeasance, bad faith or negligence in the performance of the Fiscal Agent's
obligations and duties hereunder. The provisions of this Section 7.03(b) shall
survive the termination of this Agreement and any resignation or removal of the
Fiscal Agent and appointment of a successor fiscal agent.
Section 7.04. Resignation and Removal of Fiscal Agent.
(a) Upon the resignation or removal of the Indenture Trustee
pursuant to the Indenture, the Fiscal Agent shall resign and be discharged from
its duties and obligations hereunder by giving written notice thereof to the
Master Servicer, the Special Servicer, the Owner Trustee and the Indenture
Trustee. Upon receiving such notice of resignation, the Owner Trust shall
promptly appoint a successor fiscal agent (which may be the successor indenture
trustee) acceptable to the Master Servicer by written instrument, in duplicate,
which instrument shall be delivered to the resigning Fiscal Agent and to the
successor fiscal agent. A copy of such instrument shall be delivered to the
Master Servicer, the Special Servicer and the successor indenture trustee by the
Owner Trust. If no successor fiscal agent shall have been so appointed and have
accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Fiscal Agent may petition any court of competent
jurisdiction for the appointment of a successor fiscal agent (which may be the
successor indenture trustee).
(b) If at any time the Fiscal Agent shall become incapable of
acting, or shall be adjudged bankrupt or insolvent, or a receiver of the Fiscal
Agent or of its properties shall be appointed, or any public officer shall take
charge or control of the Fiscal Agent or of its properties or affairs for the
purpose of rehabilitation, conservation or liquidation, or if the continued use
of the Fiscal Agent would, as confirmed in writing by any Rating Agency, result
in a qualification, downgrading or withdrawal of the rating assigned by such
Rating Agency to any Class of Bonds, then the Owner Trust may remove the Fiscal
Agent and appoint a successor fiscal agent (which may be the Indenture Trustee
or any successor indenture trustee) acceptable to the Master Servicer by written
instrument, in duplicate, which instrument shall be delivered to the Fiscal
Agent so removed and to the successor fiscal agent. A copy of such instrument
shall be delivered to the Master Servicer, the Special Servicer and the
Indenture Trustee (or successor indenture trustee) by the Owner Trustee.
(c) The holders of a majority of the Bonds and the Owner Trust
Certificates, acting separately, may at any time remove the Fiscal Agent and
appoint a successor fiscal agent (which may be the Indenture Trustee or any
successor indenture trustee) by written instrument or instruments, in six
counterparts, signed by such holders or their attorneys-in-fact duly authorized,
one complete set of which instruments shall be delivered to the Master Servicer,
the Special Servicer, the Owner Trustee, the Indenture Trustee, the Fiscal Agent
so removed and the successor fiscal agent so appointed. A copy of such
instrument shall be delivered to the Company and the Special Servicer by the
successor so appointed.
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(d) Any resignation or removal of the Fiscal Agent and
appointment of a successor fiscal agent pursuant to any of the provisions of
this Section 7.04 shall not become effective until acceptance of appointment by
the successor fiscal agent as provided in Section 7.05 and, in the case of any
removal without cause, the reimbursement by the successor fiscal agent of the
Fiscal Agent so removed for any P&I Advances made by such Fiscal Agent and not
previously reimbursed (plus interest thereon from the respective dates on which
such P&I Advances were made through the date of reimbursement).
(e) The Fiscal Agent shall not resign from the obligations and
duties hereby imposed on it except (i) as required by this Section 7.04, and
(ii) if written confirmation is received by the Indenture Trustee from the
Rating Agencies that the resignation of the Fiscal Agent will not result in the
downgrade, qualification or withdrawal of the ratings of any Class of
Bonds.
Section 7.05. Successor Fiscal Agent.
(a) Any successor fiscal agent appointed as provided in
Section 7.04 shall execute, acknowledge and deliver to the Master Servicer, the
Special Servicer, the Owner Trustee, the Indenture Trustee and to its
predecessor fiscal agent an instrument accepting such appointment hereunder, and
thereupon the resignation or removal of the predecessor fiscal agent shall
become effective and such successor fiscal agent, without any further act, deed
or conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with the like effect as if originally
named as fiscal agent herein. The Master Servicer, the Special Servicer, the
Owner Trust, the Indenture Trustee and the predecessor fiscal agent shall
execute and deliver such instruments and do such other things as may reasonably
be required to more fully and certainly vest and confirm in the successor fiscal
agent all such rights, powers, duties and obligations, and to enable the
successor fiscal agent to perform its obligations hereunder.
(b) Upon acceptance of appointment by a successor fiscal agent
as provided in this Section 7.05, such successor fiscal agent shall mail notice
of the succession of such fiscal agent hereunder to the holders of the Bonds and
the Owner Trust Certificates.
Section 7.06. Merger or Consolidation of Fiscal Agent.
Any entity into which the Fiscal Agent may be merged or
converted or with which it may be consolidated or any entity resulting from any
merger, conversion or consolidation to which the Fiscal Agent shall be a party,
or any entity succeeding to all or substantially all of the business of the
Fiscal Agent, shall be the successor of the Fiscal Agent hereunder, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding.
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ARTICLE VIII
TERMINATION
Section 8.01. Termination Upon Repurchase or Liquidation
of All Mortgage Loans or Discharge of
Indenture.
The respective obligations and responsibilities under this
Agreement of the Master Servicer, the Special Servicer, the Owner Trust, the
Indenture Trustee and the Fiscal Agent shall terminate upon the remittance by
the Master Servicer to the Indenture Trustee, for deposit in the Bond Account
under the Indenture, of all amounts held by or on behalf of the Master Servicer
and required hereunder to be so remitted on the Master Servicer Remittance Date
following the earliest to occur of (i) the purchase by the Majority Holder of
the Owner Trust Certificates, or if such Holder does not exercise its option,
the Master Servicer, of all Mortgage Loans and REO Properties remaining in the
Trust Estate at a price equal to (A) the aggregate Purchase Price of all the
Mortgage Loans included in the Trust Estate, plus (B) the sum of the appraised
value of each REO Property, if any, included in the Trust Estate, such Appraisal
to be conducted by a Qualified Appraiser selected by the Master Servicer and
approved by the Owner Trust and the Indenture Trustee, and the fair price of
each item included in the Trust Estate, such price to be determined in
accordance with Section 3.18(e), minus (C) the aggregate amount of unreimbursed
Advances made by the Master Servicer, together with any unpaid Advance Interest
in respect of such unreimbursed Advances and any unpaid Master Servicing Fees
remaining outstanding (which items shall be deemed to have been paid or
reimbursed to the Master Servicer in connection with such purchase), (ii) the
final payment or other liquidation (or any advance with respect thereto) of the
last of the Mortgage Loans and REO Properties remaining in the Trust Estate and
(iii) the satisfaction of the indebtedness evidenced by the Bonds, the discharge
of the lien of the Indenture and the termination of the Owner Trust in
accordance with the provisions of the Indenture and the Owner Trust Agreement.
The Majority Holder of the Owner Trust Certificates (or, if
such Holder does not elect to do so, Master Servicer) may at its option elect to
purchase all of the Mortgage Loans and REO Properties remaining in the Trust
Estate as contemplated by clause (i) of the preceding paragraph by giving
written notice to the other parties hereto not later than 60 days prior to the
anticipated date of purchase; provided, however, that the aggregate Stated
Principal Balance of the Mortgage Loans and REO Loans at the time of such
election is less than or equal to 20% of the aggregate Cut-off Date Balance of
the Mortgage Loans. If the Owner Trust is to be terminated in connection with
the purchase of all of the Mortgage Loans and REO Properties remaining in the
Trust Estate by the Master Servicer, the Majority Holder of the Owner Trust
Certificates or the Master Servicer, as applicable, shall deposit in the
Collection Account not later than the Master Servicer Remittance Date relating
to the Payment Date on which the final payment on the Bonds and the Owner Trust
Certificates is to occur an amount in immediately available funds equal to the
above-described purchase price. In addition, the Master Servicer shall remit to
the Indenture Trustee for deposit into the Bond Account under the Indenture, and
shall otherwise pay, all amounts required to be remitted or paid by the Master
Servicer on such Master Servicer Remittance Date from the Collection Account
pursuant to Section 3.05(a) and Section 3.05(b).
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Upon confirmation that such final deposit has been made and the receipt of an
Officer's Certificate from the Master Servicer to the effect that all such other
amounts have been paid, the Indenture Trustee shall release or cause to be
released to the Majority Holder of the Owner Trust Certificates or the Master
Servicer, as applicable, the Mortgage Loan Files for the remaining Mortgage
Loans and the Owner Trust and the Indenture Trustee shall execute all
assignments, endorsements and other instruments furnished to it by the Majority
Holder of the Owner Trust Certificates or the Master Servicer, as applicable, in
each case without recourse, representation or warranty as shall be necessary to
effectuate transfer of the Mortgage Loans and REO Properties to the Majority
Holder of the Owner Trust Certificates or the Master Servicer, as applicable.
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ARTICLE IX
MISCELLANEOUS PROVISIONS
Section 9.01. Amendment.
Subject to the provisions of the Indenture and the Owner Trust
Agreement governing amendments, supplements and other modifications to this
Agreement, this Agreement may be amended by the parties hereto from time to time
but only by the mutual written agreement signed by the parties hereto and
written confirmation from each Rating Agency to the effect that such amendment
will not cause such Rating Agency to qualify, downgrade or withdraw its then
current rating of any Class of Bonds. The Master Servicer shall furnish to each
party hereto and to the Company, the Manager and each Rating Agency a fully
executed counterpart of each amendment to this Agreement.
Section 9.02. Recordation of Agreement; Counterparts.
(a) To the extent permitted by applicable law, this Agreement
is subject to recordation in all appropriate public offices for real property
records in all the counties or other comparable jurisdictions in which any or
all of the properties subject to the Mortgages are situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected by the Master Servicer at the expense of the Owner Trust upon the
direction of the Owner Trustee, but only if such direction is accompanied by an
Opinion of Counsel (the cost of which shall be paid out of the Collection
Account) to the effect that such recordation will materially and beneficially
affect the interests of the Owner Trust.
(b) For the purpose of facilitating the recordation of this
Agreement as herein provided and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which shall be
deemed to be an original, and all such counterparts
shall constitute but one and the same instrument.
SECTION 9.03. GOVERNING LAW.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF NEW YORK.
Section 9.04. Notices.
All notices, requests and other communications hereunder shall
be in writing and, unless otherwise provided herein, shall be deemed to have
been duly given if delivered by courier or mailed by first class mail, postage
prepaid, or if transmitted by telecopier and confirmed in a writing delivered or
mailed as aforesaid, to (a) in the case of the Master Servicer and the Special
Servicer, Midland Loan Services, Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, telecopy number: (▇▇▇) ▇▇▇-▇▇▇▇,
telephone number: (816) ▇▇▇- ▇▇▇▇, (b) in the case of S&P, ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Commercial
93
Mortgage Surveillance Group, telecopy number: (▇▇▇) ▇▇▇-▇▇▇▇, telephone number:
(212) ▇▇▇- ▇▇▇▇; (c) in the case of the Owner Trustee, Wilmington Trust Company,
▇▇▇▇▇▇ Square North, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇,
Attention: Corporate Trust Administration, telecopy number: (▇▇▇) ▇▇▇-▇▇▇▇,
telephone number: (▇▇▇) ▇▇▇-▇▇▇▇, (d) in the case of the Owner Trust, to IMPAC
CMB Trust 1998-C1, c/o Wilmington Trust Company, ▇▇▇▇▇▇ Square North, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: Corporate Trust
Administration, telecopy number: (▇▇▇) ▇▇▇-▇▇▇▇, telephone number: (302) 651-
1000, (e) in the case of the Indenture Trustee, LaSalle National Bank, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: Asset
Backed Securities Trust Services Group-Impac 1998-C1 telecopy number: (312)
904-2084, (f) in the case of the Fiscal Agent, ABN AMRO Bank N.V., ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: Asset
Backed Securities Trust Services Group-Impac 1998-C1, telecopy number: (312)
904-2084, (g) in the case of Moody's, ▇▇▇▇▇'▇ Investors Service, Inc., ▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇, Attention: ▇▇▇ ▇▇▇▇▇, telecopy number: (212)
▇▇▇-▇▇▇▇, telephone number: (▇▇▇) ▇▇▇-▇▇▇▇, (h) in the case of the Company,
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, telecopy number: (▇▇▇) ▇▇▇-▇▇▇▇, telephone number: (714)
▇▇▇-▇▇▇▇, and (i) in the case of the Manager, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, telecopy
number: (▇▇▇) ▇▇▇-▇▇▇▇, telephone number: (▇▇▇) ▇▇▇-▇▇▇▇, or, as to each such
Person, to such other address and telecopy number as shall be designated by such
Person in a written notice to parties hereto. Any notice required or permitted
to be delivered to a holder of Owner Trust Certificates or Bonds shall be deemed
to have been duly given if mailed by first class mail, postage prepaid, at the
address of such holder as shown in the register maintained for such purposes
under the Owner Trust Agreement and the Indenture, respectively. Any notice so
mailed within the time prescribed in this Agreement shall conclusively be
presumed to have been duly given, whether or not such holder receives such
notice.
Section 9.05. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or
terms of this Agreement shall be for any reason whatsoever held invalid, then
such covenants, agreements, provisions or terms shall be deemed severable from
the remaining covenants, agreements, provisions or terms of this Agreement and
shall in no way affect the validity or enforceability of
the other provisions of this Agreement.
Section 9.06. Effect of Headings and Table of Contents.
The article and section headings and the table of contents
herein are for convenience of reference only and shall not limit or otherwise
affect the construction hereof.
Section 9.07. Notices to Rating Agencies and Others.
(a) The Indenture Trustee shall promptly provide notice to the
Rating Agencies with respect to each of the following of which a Responsible
Officer of the Indenture Trustee has
actual knowledge:
94
(i) any material change or amendment to this Agreement;
(ii) the occurrence of any Servicing Event of Default
that has not been cured; and
(iii) the resignation or termination of the Master
Servicer or the Special Servicer and the appointment of a
successor.
(b) The Master Servicer shall promptly provide notice to the
Rating Agencies with respect to each of the following of which it has actual
knowledge:
(i) the resignation or removal of the Owner Trustee, the
Indenture Trustee or the Fiscal Agent and the appointment of a
successor; and
(ii) any change in the location of the Collection
Account.
(c) Each of the Master Servicer and the Special Servicer, as
the case may be, shall furnish each Rating Agency such information with respect
to the Mortgage Loans as such Rating Agency shall reasonably request and which
the Master Servicer or the Special Servicer, as
the case may be, can reasonably provide.
(d) Each of the Master Servicer and the Special Servicer, as
the case may be, shall promptly furnish the Rating Agencies with copies of the
following items:
(i) each of its annual statements as to compliance
described in Section 3.13;
(ii) each of its annual independent public accountants'
servicing reports described in Section 3.14; and
(iii) each report prepared by it pursuant to Section
3.09(d) or (g), Section 3.12 or Section 4.01.
(f) Any Officer's Certificate, Opinion of Counsel, report,
notice, request or other communication prepared by the Master Servicer, the
Special Servicer, the Owner Trustee, the Indenture Trustee or the Fiscal Agent,
or caused to be so prepared, for dissemination to any of the parties to this
Agreement or any holder of Bonds or Owner Trust Certificates shall also be
concurrently forwarded by such Person to the Company, the Manager and the
Majority Holder of the Controlling Class to the extent not otherwise required to
be so forwarded.
Section 9.08. Successors and Assigns; Beneficiaries.
The provisions of this Agreement shall be binding upon and
inure to the benefit of the respective successors and assigns of the parties
hereto, and all such provisions shall inure to the benefit of the Owner Trustee
and the holders of the Bonds and the Owner Trust
Certificates.
95
In addition, the provisions of this Agreement shall inure to the benefit of the
Company, the Manager and the holders of the Bonds. No other person, including
any Borrower, shall be entitled to any benefit or equitable right, remedy or
claim under this Agreement.
Section 9.09. Complete Agreement.
This Agreement embodies the complete agreement among the
parties and may not be varied or terminated except by a written agreement
conforming to the provisions of Section 9.01. All prior negotiations or
representations of the parties are merged into this Agreement and shall have no
force or effect unless expressly stated herein.
96
IN WITNESS WHEREOF, the Owner Trust, the Master Servicer and
Special Servicer, the Indenture Trustee and the Fiscal Agent have caused this
Agreement to be duly executed by their respective officers or representatives
all as of the day and year first above written.
IMPAC CMB TRUST 1998-C1
By: Wilmington Trust Company, not in its
individual capacity but solely as Owner
Trustee
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
MIDLAND LOAN SERVICES, INC.
as Master Servicer and Special Servicer
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Executive Vice President
LASALLE NATIONAL BANK
as Indenture Trustee
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: First Vice President
ABN AMRO BANK N.V.
as Fiscal Agent
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President
STATE OF ______________ )
) ss.:
COUNTY OF _____________ )
On the ___ day of ________, 1998, before me, a notary public
in and for said State, personally appeared _______________, known to me to be a
_____________ of Wilmington Trust Company, one of the entities that executed the
within agreement, and also known to me to be the person who executed it on
behalf of such entity, and acknowledged to me that such entity executed the
within agreement.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
------------------------------
Notary Public
[Notarial Seal]
STATE OF ______________ )
) ss.:
COUNTY OF _____________ )
On the _____ day of August, 1998, before me, a notary public
in and for said State, personally appeared ___________________, known to me to
be a ________________ of Midland Loan Services, Inc., one of the entities that
executed the within agreement, and also known to me to be the person who
executed it on behalf of such entity, and acknowledged to me that such entity
executed the within agreement.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
------------------------------
Notary Public
[Notarial Seal]
STATE OF ______________ )
) ss.:
COUNTY OF _____________ )
On the _____ day of August, 1998, before me, a notary public
in and for said State, personally appeared _____________, known to me to be a
____________ of LaSalle National Bank, one of the entities that executed the
within agreement, and also known to me to be the person who executed it on
behalf of such entity, and acknowledged to me that such entity executed the
within agreement.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
------------------------------
Notary Public
[Notarial Seal]
STATE OF ______________ )
) ss.:
COUNTY OF _____________ )
On the _____ day of August, 1998, before me, a notary public
in and for said State, personally appeared _____________, known to me to be a
____________ of ABN AMRO Bank N.V., one of the entities that executed the within
agreement, and also known to me to be the person who executed it on behalf of
such entity, and acknowledged to me that such entity executed the within
agreement.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
------------------------------
Notary Public
[Notarial Seal]
EXHIBIT A-1
LOAN SCHEDULE FOR SUB-POOL 1
EXHIBIT A-2
LOAN SCHEDULE FOR SUB-POOL 2
EXHIBIT B-1
FORM OF MASTER SERVICER REQUEST FOR RELEASE
[Date]
LaSalle National Bank
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Asset Backed Securities Trust Services Group-
IMPAC CMB Trust 1998-C1
In connection with the administration of the Mortgage Loan
Files held by or on behalf of you as Indenture Trustee under a certain Servicing
Agreement (the "Servicing Agreement") dated as of August 1, 1998, by and among
the undersigned, as master servicer and special servicer, IMPAC CMB Trust
1998-C1, as owner trust (the "Owner Trust"), you, as Indenture Trustee and ABN
AMRO Bank N.V., as fiscal agent, and an Indenture (the "Indenture") dated as of
August 1, 1998, between the Owner Trust and the Indenture Trustee, the
undersigned hereby requests a release of the Mortgage Loan File (or the portion
thereof specified below) held by or on behalf of you as Indenture Trustee with
respect to the following described Mortgage Loan for the reason indicated below.
Borrower's Name:
Address:
Loan No.:
If only particular documents in the Mortgage Loan File are requested, please
specify which:
Reason for requesting file (or portion thereof):
______ 1. Mortgage Loan paid in full.
The undersigned hereby certifies that all amounts
received in connection with the Mortgage Loan that
are required to be credited to the Collection Account
pursuant to the Servicing Agreement, have been or
will be so credited.
______ 2. Other. (Describe)
The undersigned acknowledges that the above Mortgage Loan File
(or requested portion thereof) will be held by the undersigned in accordance
with the provisions of the Servicing Agreement and will be returned to you or
your designee within ten (10) days of our receipt thereof, unless the Mortgage
Loan has been paid in full, in which case the Mortgage Loan File
(or such portion thereof) will be retained by us permanently.
Capitalized terms used but not defined herein shall have the
meanings ascribed to them in the Indenture.
MIDLAND LOAN SERVICES, INC.,
as Master Servicer
By: _________________________________
Name:
Title:
EXHIBIT B-2
FORM OF SPECIAL SERVICER REQUEST FOR RELEASE
[Date]
LaSalle National Bank
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Asset Backed Securities Trust Services Group-
IMPAC CMB Trust 1998-C1
In connection with the administration of the Mortgage Loan
Files held by or on behalf of you as Indenture Trustee under a certain Servicing
Agreement (the "Servicing Agreement") dated as of August 1, 1998, by and among
the undersigned, as master servicer and special servicer, IMPAC CMB Trust
1998-C1, as owner trust (the "Owner Trust"), you, as Indenture Trustee and ABN
AMRO Bank N.V., as fiscal agent, and an Indenture (the "Indenture") dated as of
August 1, 1998, between the Owner Trust and the Indenture Trustee, the
undersigned hereby requests a release of the Mortgage Loan File (or the portion
thereof specified below) held by or on behalf of you as Trustee with respect to
the following described Mortgage Loan for the reason indicated below.
Borrower's Name:
Address:
Loan No.:
If only particular documents in the Mortgage Loan File are requested, please
specify which:
Reason for requesting file (or portion thereof):
______ 1. The Mortgage Loan is being foreclosed or comparably
converted.
______ 2. Other. (Describe)
The undersigned acknowledges that the above Mortgage Loan File
(or requested portion thereof) will be held by the undersigned in accordance
with the provisions of the Servicing Agreement and will be returned to you or
your designee within ten (10) days of our receipt thereof, unless the Mortgage
Loan is being foreclosed or comparably converted, in which case the Mortgage
Loan File (or such portion thereof) will be returned when no longer required by
us for such purpose.
Capitalized terms used but not defined herein shall have the
meanings ascribed to them in the Indenture.
MIDLAND LOAN SERVICES, INC.,
as Special Servicer
By:______________________________
Name:
Title:
EXHIBIT C-1
FORM OF DETERMINATION DATE REPORT
Issue Identifier
Loan Number
Mortgage Note Rate %
Scheduled P & I Payment
Scheduled Interest Amount
Scheduled Principal Amount
Payoff Amount
Payoff Date (YYYYMMDD)
Payoff Code
Ending Scheduled Balance
Paid Through Date (YYYYMMDD)
Loan Status Code
Recovered Delinquency Amount
Filler
EXHIBIT C-2
FORM OF SPECIAL SERVICER REPORT
Loan Number
Property Name
Property Type
Property Address
Past Due Status
Paid-To Date
Date of Last Financial Statement
Date of Last Inspection Report
Current NOI
Number of Months of Revenue Annualized
Original Loan Balance*
Current Principal Balance
Scheduled Monthly P&I
Gross Coupon
Replacement Cost at Origination and Date of Determination*
Current Appraised Value and Date of Appraisal
Modified Since Origination (Y/N)*
Comments that the Special Servicer has regarding loan status and certain factual
matters regarding servicing including modifications, foreclosures and notices
* Special Servicer's information with respect to these items is based
solely upon information, if any, in files delivered to the Special
Servicer.
EXHIBIT C-3
FORM OF OPERATING STATEMENT ANALYSIS
EXHIBIT D-1
FORM OF NOTICE AND ACKNOWLEDGEMENT
CONCERNING REPLACEMENT OF MASTER SERVICER OR SPECIAL SERVICER
[Date]
Standard & Poor's Rating Services
▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇'▇ Investors Service Inc.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
This notice is being delivered pursuant to Section 5.06 of the
Servicing Agreement, dated as of August 1, 1998 (the "Servicing Agreement"),
relating to the IMPAC CMB Trust 1998-C1, Collateralized Mortgage Bonds. Any term
with initial capital letters not otherwise defined in this notice has the
meaning given such term in the Servicing Agreement.
Notice is hereby given that the [Majority Holder of the Controlling
Class] has designated ________________ to serve as the [Master Servicer]
[Special Servicer] under the Servicing Agreement.
The designation of __________________ as [Master Servicer] [Special
Servicer] will become final if certain conditions are met and if you deliver to
the Indenture Trustee and the Owner Trustee under the Servicing Agreement,
written confirmation that if the person designated to become the [Master
Servicer] [Special Servicer] were to serve as the [Master Servicer] [Special
Servicer], such event would not result in the qualification, downgrade or
withdrawal of the rating or ratings assigned to one or more Classes of the
Bonds. Accordingly, such confirmation is hereby requested as soon as possible.
Please acknowledge receipt of this notice by signing the enclosed copy
of this notice where indicated below and returning it to the Indenture Trustee
with a copy to the Owner Trustee, in the
enclosed stamped self-addressed envelope.
Very truly yours,
LASALLE NATIONAL BANK
By:________________________
Name:______________________
Title:_____________________
Receipt acknowledged:
STANDARD & POOR'S RATINGS SERVICES
By:____________________________
Title:_________________________
Date:__________________________
▇▇▇▇▇'▇ INVESTORS SERVICES INC.
By:____________________________
Title:_________________________
Date:__________________________
EXHIBIT D-2
FORM OF ACKNOWLEDGEMENT OF PROPOSED
MASTER SERVICER OR SPECIAL SERVICER
[Date]
LaSalle National Bank
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Asset Backed Securities Trust Services Group-
IMPAC CMB Trust 1998-C1
Ladies and Gentlemen:
Pursuant to Section 5.06 of the Servicing Agreement (the "Servicing
Agreement"), dated as of August 1, 1998, relating to the IMPAC CMB Trust
1998-C1, Collateralized Mortgage Bonds, the undersigned hereby agrees with all
the other parties to the Servicing Agreement that the undersigned shall serve as
[Master Servicer] [Special Servicer] under, and as defined in, the Servicing
Agreement. The undersigned hereby acknowledges that, as of the date hereof, it
is and shall be a party to the Servicing Agreement and bound thereby to the full
extent indicated therein in the capacity of [Master Servicer] [Special
Servicer]. The undersigned hereby makes, as of the date hereof, the
representations and warranties set forth in Section 2.01 of the Servicing
Agreement, with the following corrections with respect to type of entity and
jurisdiction of organization: ____________________.
_________________________________
By:______________________________
Name:____________________________
Title:___________________________
EXHIBIT E-1
FORM OF LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that LaSalle National Bank, as
indenture trustee (the "Indenture Trustee") under the Indenture (the
"Indenture"), dated as of August 1, 1998, among IMPAC CMB Trust 1998-C1, as
issuer (the "Issuer"), and the Indenture Trustee, as indenture trustee, a
national banking association having its office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, does by these presents make, constitute and
appoint Midland Loan Services, Inc., a corporation organized and existing under
the laws of the State of Delaware, its true and lawful Attorney-in-Fact, with
full power and authority to sign, execute, acknowledge, deliver, file for record
and record any instrument on its behalf and to perform such other act or acts as
may be customarily and reasonably necessary and appropriate to effectuate the
following enumerated transactions in respect of any of the loan agreements with
respect to any Mortgage Loan, including without limitation, any of the Mortgages
and Mortgage Notes (each as defined in the Indenture) in respect of which the
undersigned is acting as Indenture Trustee (whether the undersigned is named
therein as mortgagee, beneficiary, secured party or payee or has become such by
virtue of endorsement of the Mortgage Note secured by any such Mortgage.
This appointment shall apply to the following enumerated transactions
only:
a. The modification or re-recording of a Mortgage, where said
modification or re-recording is for the purpose of correcting the
Mortgage to conform the same to the original intent of the parties
thereto or to correct title errors discovered after such title
insurance was issued, and said modification or re-recording, in either
instance, does not adversely affect the lien of the Mortgage as
insured.
b. The subordination of the lien of a Mortgage to an easement
in favor of a public utility company, a government agency or unit with
powers of eminent domain or any other third party; this section shall
include, without limitation, the execution of partial satisfactions and
releases, partial reconveyances and the execution of requests to
trustees to accomplish same.
c. With respect to a Mortgage, the foreclosure, the taking of
a deed or a transfer or conveyance in lieu of foreclosure, the
completion of judicial or nonjudicial foreclosure or termination or the
cancellation or rescission of any such foreclosure, including, without
limitation, any and all of the following acts:
(1) the substitution of trustees serving under a
Mortgage, in accordance with state law and the Mortgage;
(2) statements of breach or nonperformance;
(3) notices of default;
(4) cancellations and rescissions of notices of
default and notices of sale;
(5) the taking of a deed or transfer or conveyance in
lieu of foreclosure; and
(6) such other documents and actions as may be
necessary under the terms of the Mortgage or state law to
expeditiously complete said transactions.
d. The closing of the title to property to be acquired as real
estate or equipment owned, or the conveyance of title to real estate or
equipment owned.
e. The completion of loan assumption a or collateral
substitution agreements and any documents or instruments related
thereto.
f. The full or partial satisfaction or release of a Mortgage
or full or partial conveyance upon payment and discharge of all sums
secured thereby, including, without limitation, cancellation of the
related Mortgage Note.
g. The assignment of any Mortgage and the related Mortgage
Note in connection with the repurchase of the Mortgage Loan (as defined
in the Indenture) secured and evidenced thereby, including, without
limitation, by reason of conversion of an adjustable rate loan from a
variable rate to a fixed rate.
h. The full assignment of a Mortgage upon payment and
discharge of all sums secured thereby in conjunction with the
refinancing thereof, including, without limitation, the assignment of
the related Mortgage Note.
i. Subject to the provisions of the above-referenced
Agreement, with respect to a workout of any Mortgage, the preparation,
execution and delivery of any modifications, amendments, waivers or
consents which may be necessary to expeditiously complete such
transaction.
j. Any other transaction, and the execution and delivery of
any documents and the taking of any actions in connection therewith,
permitted to be undertaken by said Attorney-in-Fact under the Servicing
Agreement, dated as of August 1, 1998 among said Attorney-in-Fact, the
Indenture Trustee, ABN AMRO Bank N.V., as fiscal agent and IMPAC CMB
Trust 1998-C1, as evidenced by an Officer's Certificate delivered by
said Attorney-in-Fact to any party relying on this Limited Power of
Attorney (with a copy of such Officer's Certificate to the undersigned)
which Officer's Certificate may be presumptively relied upon by such
third party without the need for further inquiry or investigation and
without recourse or liability to such third party.
The undersigned gives said Attorney-in-Fact full power and authority to
execute such instruments and to do and perform all and every act and thing
necessary and proper to carry into effect the power or powers granted by or
under this Limited Power of Attorney as fully as the undersigned might or could
do, and hereby does ratify and confirm all that said Attorney-in-Fact shall
lawfully do or cause to be done by authority hereof.
Third parties without actual notice may rely upon the exercise of the
power granted under this Limited Power of Attorney, and may be satisfied that
this Limited Power of Attorney shall continue in full force and effect and has
not been revoked unless an instrument has been made in
writing by the undersigned.
IN WITNESS WHEREOF, LaSalle National Bank, as Indenture Trustee, has
caused its corporate seal to be hereto affixed and these presents to be signed
and acknowledged in its name and behalf by ____________________, its duly
elected and authorized _________________________________________________________
this ___ day of __________, 199_.
___________________________________
By:________________________________
STATE OF )
) ss.
COUNTY OF )
On __________, 199_, before me, the undersigned, a Notary Public in and
for said state, personally appeared __________, __________ of __________, as
Indenture Trustee, personally known to me to be the person whose name is
subscribed to the within instrument and acknowledged to me that he/she executed
that same in his/her authorized capacity, and that by his/her signature on the
instrument the entity upon behalf of which the person acted, executed the
instrument.
WITNESS my hand and official seal.
(SEAL)
________________________________
Notary Public, State of
EXHIBIT E-2
FORM OF LIMITED POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that Wilmington Trust Company, as owner
trustee (the "Owner Trustee") under the owner trust (the "Owner Trust"), dated
as of August 1, 1998, among IMH Assets Corp., as depositor, and the Owner
Trustee, as owner trustee, a Delaware bank and trust company having its
principal place of business at ▇▇▇▇▇▇ Square North, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, does by these presents make, constitute and
appoint Midland Loan Services, Inc., a corporation organized and existing under
the laws of the State of Delaware, its true and lawful Attorney-in-Fact, with
full power and authority to sign, execute, acknowledge, deliver, file for record
and record any instrument on its behalf and to perform such other act or acts as
may be customarily and reasonably necessary and appropriate to effectuate the
following enumerated transactions in respect of any loan agreements with respect
to any Mortgage Loan, including without limitation, any of the Mortgages and
Mortgage Notes (each as defined in the Indenture, dated as of August 1, 1998
between LaSalle National Bank as indenture trustee (the "Indenture Trustee") and
Impac CMB Trust 1998-C1 as issuer (the "Issuer")) in respect of which the
undersigned is acting as Owner Trustee (whether the undersigned is named therein
as mortgagee, beneficiary, secured party or payee or has become such by virtue
of endorsement of the Note secured by any such Mortgage.
This appointment shall apply to the following enumerated transactions
only:
a. The modification or re-recording of a Mortgage, where said
modification or re-recording is for the purpose of correcting the
Mortgage to conform the same to the original intent of the parties
thereto or to correct title errors discovered after such title
insurance was issued, and said modification or re-recording, in either
instance, does not adversely affect the lien of the Mortgage as
insured.
b. The subordination of the lien of a Mortgage to an easement
in favor of a public utility company, or a government agency or unit
with powers of eminent domain or any third party; this section shall
include, without limitation, the execution of partial satisfactions and
releases, partial reconveyances and the execution of requests to
trustees to accomplish same.
c. With respect to a Mortgage, the foreclosure, the taking of
a deed or a transfer or conveyance in lieu of foreclosure, the
completion of judicial or nonjudicial foreclosure or termination or the
cancellation or rescission of any such foreclosure, including, without
limitation, any and all of the following acts:
(1) the substitution of trustees serving under a
Mortgage, in accordance with state law and the Mortgage;
(2) statements of breach or nonperformance;
(3) notices of default;
(4) cancellations and rescissions of notices of
default and notices of sale;
(5) the taking of a deed or a transfer or conveyance
in lieu of foreclosure; and
(6) such other documents and actions as may be
necessary under the terms of the Mortgage or state law to
expeditiously complete said transactions.
d. The closing of the title to property to be acquired as real
estate or equipment owned, or the conveyance of title to real estate or
equipment owned.
e. The completion of loan assumption or collateral
substitution agreements and any documents or instruments related
thereto.
f. The full or partial satisfaction or release of a Mortgage
or full or partial conveyance upon payment and discharge of all sums
secured thereby, including, without limitation, cancellation of the
related Mortgage Note.
g. The assignment of any Mortgage and the related Mortgage
Note in connection with the repurchase of the Mortgage Loan secured and
evidenced thereby, including, without limitation, by reason of
conversion of an adjustable rate loan from a variable rate to a fixed
rate.
h. The full assignment of a Mortgage upon payment and
discharge of all sums secured thereby in conjunction with the
refinancing thereof, including, without limitation, the assignment of
the related Mortgage Note.
i. Subject to the provisions of the above-referenced
Agreement, with respect to a workout of any Mortgage, the preparation,
execution and delivery of any modifications, amendments, waivers or
consents which may be necessary to expeditiously complete such
transaction.
j. Any other transaction, and the execution and delivery of
any documents and the taking of any actions in connection therewith,
permitted to be undertaken by said Attorney-in-Fact under the Servicing
Agreement, dated as of August 1, 1998 among said Attorney-in-Fact, the
Indenture Trustee, ABN AMRO Bank N.V., as fiscal agent and IMPAC CMB
Trust 1998-C1, as evidenced by an Officer's Certificate delivered by
said Attorney-in-Fact to any party relying on this Limited Power of
Attorney (with a copy of such Officer's Certificate to the undersigned)
which Officer's Certificate may be presumptively relied upon by such
third party without the need for further inquiry or investigation and
without recourse or liability to such third party.
The undersigned gives said Attorney-in-Fact full power and authority to
execute such instruments and to do and perform all and every act and thing
necessary and proper to carry into effect the power or powers granted by or
under this Limited Power of Attorney as fully as the undersigned might or could
do, and hereby does ratify and confirm all that said Attorney-in-Fact shall
lawfully do or cause to be done by authority hereof.
Third parties without actual notice may rely upon the exercise of the
power granted under this Limited Power of Attorney, and may be satisfied that
this Limited Power of Attorney shall continue in full force and effect and has
not been revoked unless an instrument has been made in
writing by the undersigned.
IN WITNESS WHEREOF, Wilmington Trust Company, as Owner Trustee, has
caused its corporate seal to be hereto affixed and these presents to be signed
and acknowledged in its name and behalf by ____________________, its duly
elected and authorized ____________________ this ___ day of __________, 199_.
_________________________________
By:______________________________
STATE OF )
) ss.
COUNTY OF )
On __________, 199_, before me, the undersigned, a Notary Public in and
for said state, personally appeared __________, __________ of __________, as
Owner Trustee, personally known to me to be the person whose name is subscribed
to the within instrument and acknowledged to me that he/she executed that same
in his/her authorized capacity, and that by his/her signature on the instrument
the entity upon behalf of which the person acted, executed the instrument.
WITNESS my hand and official seal.
(SEAL)
____________________________________
Notary Public, State of
EXHIBIT F
ACKNOWLEDGMENT OF RESTRICTIONS ON USE OF ASSET STRATEGY REPORT