Filed pursuant to Rule 424(b)(5) File No. 333-108125 The information in this prospectus supplement is not complete and may be changed. We may not sell these securities, nor will we accept offers to buy these securities, prior to the time a final prospectus supplement is delivered. This prospectus supplement is not an offer to sell these securities, and it is not soliciting an offer to buy these securities, in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION, DATED JUNE 6, 2005 PROSPECTUS SUPPLEMENT (TO PROSPECTUS DATED JUNE 6, 2005) CITIGROUP COMMERCIAL MORTGAGE TRUST 2005-C3 COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2005-C3 CLASS A-1, CLASS A-2, CLASS A-3, CLASS A-SB, CLASS A-4, CLASS A-1A, CLASS A-MFL, CLASS A-MFX, CLASS A-J, CLASS B, CLASS C AND CLASS D APPROXIMATE TOTAL OFFERED CERTIFICATE PRINCIPAL BALANCE AT INITIAL ISSUANCE: $1,318,565,000 We, Citigroup Commercial Mortgage Securities Inc., have prepared this prospectus supplement in order to offer the classes of commercial mortgage pass-through certificates identified above. These certificates are the only securities offered by this prospectus supplement. This prospectus supplement specifically relates to, and is accompanied by, our prospectus dated June 6, 2005. We will not list the offered certificates on any national securities exchange or any automated quotation system of any registered securities associations, such as NASDAQ. The offered certificates will represent interests only in the trust identified in the title above. The offered certificates will not represent interests in or obligations of any other party. The assets of the trust will include a pool of multifamily and commercial mortgage loans with the characteristics described in this prospectus supplement. No governmental agency or instrumentality or private insurer has insured or guaranteed the offered certificates or any of the mortgage loans that back them. Each class of offered certificates will receive monthly distributions of interest, principal or both, commencing in July 2005. The table on page S-5 of this prospectus supplement contains a list of the classes of offered certificates and sets forth the principal balance, pass-through rate and other select characteristics of each of those classes. Credit enhancement is being provided through the subordination of various other classes, including multiple non-offered classes, of series 2005-C3 certificates. That same table on page S-5 of this prospectus supplement also contains a list of the non-offered classes of the series 2005-C3 certificates. ---------------- YOU SHOULD FULLY CONSIDER THE RISK FACTORS BEGINNING ON PAGE S-54 IN THIS PROSPECTUS SUPPLEMENT AND ON PAGE 14 IN THE ACCOMPANYING PROSPECTUS PRIOR TO INVESTING IN THE OFFERED CERTIFICATES. ---------------- NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ---------------- Citigroup Global Markets Inc., IXIS Securities North America Inc., Deutsche Bank Securities Inc. and Wachovia Capital Markets, LLC are the underwriters for this offering. They will purchase the offered certificates from us, although not every underwriter is obligated to purchase offered certificates from us. Our proceeds from the sale of the offered certificates will equal approximately % of the total initial principal balance of the offered certificates, plus accrued interest, before deducting expenses payable by us. Each underwriter currently intends to sell its allocation of offered certificates from time to time in negotiated transactions or otherwise at varying prices to be determined at the time of sale. See "Method of Distribution" in this prospectus supplement. With respect to this offering, Citigroup Global Markets Inc. is acting as lead and sole bookrunning manager. IXIS Securities North America Inc., Deutsche Bank Securities Inc. and Wachovia Capital Markets, LLC are co-managers. CITIGROUP IXIS SECURITIES NORTH AMERICA DEUTSCHE BANK SECURITIES WACHOVIA SECURITIES ---------------- The date of this prospectus supplement is , 2005. CITIGROUP COMMERCIAL MORTGAGE TRUST 2005-C3 Commercial Mortgage Pass-Through Certificates, Series 2005-C3 [Map Omitted] WASHINGTON NORTH CAROLINA 4 properties 5 properties $46,680,000 $167,756,153 3.3% of total 11.7% of total MONTANA GEORGIA 1 property 3 properties $8,944,432 $37,592,182 0.6% of total 2.6% of total MISSOURI FLORIDA 1 property 6 properties $19,400,000 $65,399,435 1.4% of total 4.6% of total WISCONSIN ALABAMA 1 roperty 2 properties $14,000,000 $29,404,758 1.0% of total 2.0% of total INDIANA TENNESSEE 3 properties 1 property $37,588,702 $5,972,830 2.6% of total 0.4% of total MICHIGAN TEXAS 4 properties 26 properties $41,514,879 $181,537,395 2.9% of total 12.6% of total OHIO OKLAHOMA 3 properties 1 property $26,191,341 $3,841,674 1.8% of total 0.3% of total PENNSYLVANIA COLORADO 2 properties 1 property $17,415,050 $31,500,000 1.2% of total 2.2% of total NEW YORK ARIZONA 10 properties 4 properties $61,809,839 $28,159,807 4.3% of total 2.0% of total MASSACHUSETTS SOUTHERN CALIFORNIA 3 properties 16 properties $41,250,000 $169,088,839 2.9% of total 11.8% of total CONNECTICUT CALIFORNIA 5 properties 23 properties $22,815,000 $234,088,645 1.6% of total 16.3% of total NEW JERSEY NORTHERN CALIFORNIA 1 property 7 properties $53,000,000 $64,999,807 3.7% of total 4.5% of total MARYLAND NEVADA 5 properties 5 properties $154,658,475 $39,192,528 10.8% of total 2.7% of total DELAWARE OREGON 1 property 3 properties $5,625,943 $37,350,072 0.4% of total 2.6% of total VIRGINIA ALASKA 2 properties 1 property $18,143,781 $4,340,000 1.3% of total 0.3% of total % OF INITIAL MORTGAGE POOL BALANCE [PIE CHART OMITTED] Mixed Use 0.6% Other 0.6% Land 0.3% Anchored Retail 38.9% Office 26.8% Multifamily 21.1% Unanchored Retail 5.4% Industrial 3.7% Self Storage 2.0% Manufactured Housing 0.7% [ ] (greater-than) $75 MM of Initial Mortgage Pool Balance [ ] $50 - $75 MM of Initial Mortgage Pool Balance [ ] $25 - $50 MM of Initial Mortgage Pool Balance [ ] $0 - $25 MM of Initial Mortgage Pool Balance
TABLE OF CONTENTS PROSPECTUS SUPPLEMENT PAGE ----- Important Notice About the Information Contained in this Prospectus Supplement and the Accompanying Prospectus................................S-4 Notice to Residents of the United Kingdom....................................S-4 Summary of Prospectus Supplement.............................................S-5 Risk Factors................................................................S-54 Capitalized Terms Used in this Prospectus Supplement........................S-78 Forward-Looking Statements..................................................S-78 Description of the Mortgage Pool............................................S-78 Servicing of the Underlying Mortgage Loans.................................S-114 Description of the Offered Certificates....................................S-153 Yield and Maturity Considerations..........................................S-191 Description of the Swap Agreement..........................................S-198 Federal Income Tax Consequences............................................S-201 ERISA Considerations.......................................................S-207 Legal Investment...........................................................S-211 Method of Distribution.....................................................S-211 Legal Matters..............................................................S-213 Ratings....................................................................S-214 Glossary...................................................................S-216 ANNEX A-1--Characteristics of the Underlying Mortgage Loans and the Mortgaged Real Properties...............................................A-1-1 ANNEX A-2--Summary Characteristics of the Underlying Mortgage Loans and the Mortgaged Real Properties...........................................A-2-1 ANNEX A-3--Summary Characteristics of the Underlying Mortgage Loans in Loan Group No. 1 and the related Mortgaged Real Properties..............A-3-1 ANNEX A-4--Summary Characteristics of the Underlying Mortgage Loans in Loan Group No. 2 and the related Mortgaged Real Properties..............A-4-1 ANNEX A-5--Characteristics of the Multifamily and Manufactured Housing Mortgaged Real Properties...............................................A-5-1 ANNEX B--Description of Ten Largest Mortgage Loans and/or Groups of Cross-Collateralized Mortgage Loans.......................................B-1 ANNEX C--Decrement Tables....................................................C-1 ANNEX D--Form of Payment Date Statement......................................D-1 ANNEX E--Reference Rate Schedule.............................................E-1 ANNEX F--Class XP Total Notional Amount......................................F-1 ANNEX G--Class A-SB Planned Principal Balance Schedule.......................G-1 ANNEX H--Global Clearance, Settlement And Tax Documentation Procedures.......H-1 S-3 ---------- IMPORTANT NOTICE ABOUT THE INFORMATION CONTAINED IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS Information about the offered certificates is contained in two separate documents: o this prospectus supplement, which describes the specific terms of the offered certificates; and o the accompanying prospectus, which provides general information, some of which may not apply to the offered certificates. If the description of the terms of the offered certificates contained in this prospectus supplement varies from the information contained in the accompanying prospectus, you should rely on the information contained in this prospectus supplement. You should rely only on the information contained in this prospectus supplement and the accompanying prospectus. We have not authorized any person to give any other information or to make any representation that is different from the information contained in this prospectus supplement and the accompanying prospectus. NOTICE TO RESIDENTS OF THE UNITED KINGDOM Within the United Kingdom, this prospectus supplement and the accompanying prospectus are directed only at persons who (i) have professional experience in matters relating to investments or (ii) are persons falling within Articles 49(2)(a) through (d) ("high net worth companies, unincorporated associations, etc.") of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2001 (all such persons together being referred to as "Relevant U.K. Persons"). This prospectus supplement and the accompanying prospectus must not be acted on or relied on within the United Kingdom by persons who are not Relevant U.K. Persons. Within the United Kingdom, any investment or investment activity to which this prospectus supplement and the accompanying prospectus relate, including the offered certificates, is available only to Relevant U.K. Persons and will be engaged in only with Relevant U.K. Persons. S-4 - -------------------------------------------------------------------------------- SUMMARY OF PROSPECTUS SUPPLEMENT This summary contains selected information regarding the offering being made by this prospectus supplement. It does not contain all of the information you need to consider in making your investment decision. TO UNDERSTAND ALL OF THE TERMS OF THE OFFERING OF THE OFFERED CERTIFICATES, YOU SHOULD READ CAREFULLY THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS IN FULL. INTRODUCTION TO THE TRANSACTION The offered certificates will be part of a series of commercial mortgage pass-through certificates designated as the Series 2005-C3 Commercial Mortgage Pass-Through Certificates, which series consists of multiple classes. The table below identifies the respective classes of that series, specifies various characteristics of each of those classes and indicates which of those classes are offered by this prospectus supplement and which are not. <TABLE> - --------------------------------------------------------------------------------------------------------------------------- SERIES 2005-C3 COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES(1) - --------------------------------------------------------------------------------------------------------------------------- APPROX. % APPROX. TOTAL % CREDIT APPROX. OF INITIAL SUPPORT WEIGHTED TOTAL PRINCIPAL MORTGAGE AT PASS-THROUGH INITIAL AVERAGE BALANCE AT POOL INITIAL RATE PASS-THROUGH LIFE PRINCIPAL S&P/MOODY'S CLASS INITIAL ISSUANCE BALANCE(3) ISSUANCE(3) DESCRIPTION RATE (YEARS) WINDOW RATINGS - --------------------------------------------------------------------------------------------------------------------------- Offered Certificates - --------------------------------------------------------------------------------------------------------------------------- A-1 $ 75,811,000 5.3% 30.000%(4) % 2.98 07/05-01/10 AAA/Aaa - --------------------------------------------------------------------------------------------------------------------------- A-2 $ 164,149,000 11.4% 30.000%(4) % 4.62 01/10-05/10 AAA/Aaa - --------------------------------------------------------------------------------------------------------------------------- A-3 $ 52,867,000 3.7% 30.000%(4) % 6.52 11/11-02/12 AAA/Aaa - --------------------------------------------------------------------------------------------------------------------------- A-SB $ 92,945,000 6.5% 30.000%(4) % 6.97 05/10-10/14 AAA/Aaa - --------------------------------------------------------------------------------------------------------------------------- A-4 $ 329,125,000 22.9% 30.000%(4) % 9.51 10/14-03/15 AAA/Aaa - --------------------------------------------------------------------------------------------------------------------------- A-1A $ 289,724,000 20.2% 30.000%(4) % 6.69 07/05-03/15 AAA/Aaa - --------------------------------------------------------------------------------------------------------------------------- A-MFL $ 75,000,000 5.2% 20.000%(5) Floating(6) LIBOR+%(7) 9.73 03/15-04/15 AAA/Aaa(8) - --------------------------------------------------------------------------------------------------------------------------- A-MFX $ 68,517,000 4.8% 20.000%(5) % 9.73 03/15-04/15 AAA/Aaa - --------------------------------------------------------------------------------------------------------------------------- A-J $ 102,256,000 7.1% 12.875% % 9.79 04/15-04/15 AAA/Aaa - --------------------------------------------------------------------------------------------------------------------------- B $ 30,497,000 2.1% 10.750% % 9.79 04/15-04/15 AA/Aa2 - --------------------------------------------------------------------------------------------------------------------------- C $ 16,146,000 1.1% 9.625% % 9.79 04/15-04/15 AA-/Aa3 - --------------------------------------------------------------------------------------------------------------------------- D $ 21,528,000 1.5% 8.125% % 9.79 04/15-04/15 A/A2 - --------------------------------------------------------------------------------------------------------------------------- Non-Offered Certificates - --------------------------------------------------------------------------------------------------------------------------- XC $1,435,172,920(9) NAP NAP %(10) NAP NAP AAA/Aaa - --------------------------------------------------------------------------------------------------------------------------- XP $1,378,553,000(9) NAP NAP %(10) NAP NAP AAA/Aaa - --------------------------------------------------------------------------------------------------------------------------- E $ 17,939,000 1.2% 6.875% % NAP NAP A-/A3 - --------------------------------------------------------------------------------------------------------------------------- F $ 19,734,000 1.4% 5.500% % NAP NAP BBB+/Baa1 - --------------------------------------------------------------------------------------------------------------------------- G $ 14,352,000 1.0% 4.500% % NAP NAP BBB/Baa2 - --------------------------------------------------------------------------------------------------------------------------- H $ 12,557,000 0.9% 3.625% % NAP NAP BBB-/Baa3 - --------------------------------------------------------------------------------------------------------------------------- J $ 5,382,000 0.4% 3.250% % NAP NAP BB+/Ba1 - --------------------------------------------------------------------------------------------------------------------------- K $ 7,176,000 0.5% 2.750% % NAP NAP BB/Ba2 - --------------------------------------------------------------------------------------------------------------------------- L $ 5,382,000 0.4% 2.375% % NAP NAP BB-/Ba3 - --------------------------------------------------------------------------------------------------------------------------- M $ 5,382,000 0.4% 2.000% % NAP NAP B+/B1 - --------------------------------------------------------------------------------------------------------------------------- N $ 3,588,000 0.3% 1.750% % NAP NAP B/B2 - --------------------------------------------------------------------------------------------------------------------------- O $ 2,870,000 0.2% 1.550% % NAP NAP B-/B3 - --------------------------------------------------------------------------------------------------------------------------- P $ 22,245,920 1.6% NAP % NAP NAP NR/NR(11) - --------------------------------------------------------------------------------------------------------------------------- CP-1(2) $ 2,760,000 NAP NAP Loan-Specific % NAP NAP BBB/Baa1 - --------------------------------------------------------------------------------------------------------------------------- CP-2(2) $ 6,440,000 NAP NAP Loan-Specific % NAP NAP BBB-/Baa2 - --------------------------------------------------------------------------------------------------------------------------- CP-3(2) $ 6,600,000 NAP NAP Loan-Specific % NAP NAP BB+/ Baa3 - --------------------------------------------------------------------------------------------------------------------------- R NAP NAP NAP NAP NAP NAP NAP NR/NR(11) - --------------------------------------------------------------------------------------------------------------------------- Y NAP NAP NAP NAP NAP NAP NAP NR/NR(11) - --------------------------------------------------------------------------------------------------------------------------- </TABLE> (footnotes on next page) - -------------------------------------------------------------------------------- S-5 - -------------------------------------------------------------------------------- (footnotes to table on prior page) (1) Various characteristics of the series 2005-C3 certificates shown in this table are further discussed below under "--Key Certificate Features Shown in the Table Above". (2) The class CP-1, CP-2 and CP-3 certificates will represent interests solely in the underlying mortgage loan that is secured by the mortgaged real property identified on Annex A-1 to this prospectus supplement as Carolina Place. The portion of the Carolina Place underlying mortgage loan that is represented by the class CP-1, CP-2 and CP-3 certificates is considered the non-pooled portion of that mortgage loan. The remaining portion of the Carolina Place underlying mortgage loan, which is the pooled portion of that mortgage loan, will be pooled with the other underlying mortgage loans to back the other classes of the series 2005-C3 certificates. (3) The approximate percentage of the initial mortgage pool balance, and the approximate percentage of the total credit support at initial issuance, of any class shown in the table on page S-5 does not take into account the total principal balance of, or the portion of the Carolina Place underlying mortgage loan (that is, the non-pooled portion thereof) represented by, the class CP-1, CP-2 and CP-3 certificates. (4) Calculated in the aggregate for the class A-1, A-2, A-3, A-SB, A-4 and A-1A certificates. (5) Calculated in the aggregate for the class A-MFL and A-MFX certificates (6) The assets of the trust will include a swap agreement that relates to the class A-MFL certificates. The class A-MFL certificates will represent undivided interests in, among other things, a real estate mortgage investment conduit regular interest, designated as the class A-MFL REMIC II regular interest, and the rights and obligations under that swap agreement. For so long as it is in effect, that swap agreement will provide, among other things, that fixed amounts payable by the trust as interest with respect to the class A-MFL REMIC II regular interest will be exchanged for floating amounts payable as interest by the swap provider under the swap agreement, with regularly scheduled payments to be made between the trust and the swap counterparty on a net basis. The swap agreement will provide for the calculation of interest accruing at a LIBOR-based rate on a notional amount equal to the total principal balance of the class A-MFL certificates outstanding from time to time. The total principal balance of the class A-MFL certificates at any time will equal the total principal balance of the class A-MFL REMIC II regular interest. The class A-MFL REMIC II regular interest will accrue interest at the pass-through rate described under "Description of the Offered Certificates--Payments--Calculation of Pass-Through Rates" in this prospectus supplement. See "Description of the Swap Agreement" in this prospectus supplement. (7) The initial value of LIBOR will be calculated on June , 2005. (8) The ratings on the class A-MFL certificates will address the payment of interest on that class only up to the pass-through rate for the class A-MFL REMIC II regular interest. (9) Notional amount. (10) Approximate. (11) "NR" means not rated. ---------- The offered certificates will evidence beneficial ownership interests in a common law trust designated as the Citigroup Commercial Mortgage Trust 2005-C3. We will form the trust at or prior to the time of initial issuance of the offered certificates. The assets of the trust, which we sometimes collectively refer to as the trust fund, will include a pool of multifamily and commercial mortgage loans having the characteristics described in this prospectus supplement. Unless specifically indicated otherwise, statistical information in this prospectus supplement with respect to the underlying mortgage loan secured by the mortgaged real property identified on Annex A-1 as Carolina Place is being presented without regard to the non-pooled portion of that mortgage loan and, furthermore, excludes the related subordinate companion loan, which subordinate companion loan is secured by the same mortgage instrument on the same mortgaged real property as the subject underlying mortgage loan, but which subordinate companion loan will not be included in the trust fund. In addition, references in this prospectus supplement to the initial mortgage pool balance are to the aggregate principal balance of the underlying mortgage loans (without regard to the non-pooled portion of the Carolina Place underlying mortgage loan) as of the cut-off date for the mortgage pool described in this prospectus supplement, after application of all scheduled payments of principal due with respect to the underlying mortgage loans on or before that date, whether or not received. - -------------------------------------------------------------------------------- S-6 - -------------------------------------------------------------------------------- The governing document for purposes of issuing the offered certificates and forming the trust will be a pooling and servicing agreement to be dated as of June 1, 2005. The series 2005-C3 pooling and servicing agreement will also govern the servicing and administration of the mortgage loans and other assets that back the offered certificates. The parties to the series 2005-C3 pooling and servicing agreement will include us, a trustee, a fiscal agent, a master servicer and a special servicer. We will file a copy of the series 2005-C3 pooling and servicing agreement with the SEC as an exhibit to a current report on Form 8-K, within 15 days after the initial issuance of the offered certificates. The SEC will make that current report on Form 8-K and its exhibits available to the public for inspection. See "Available Information; Incorporation by Reference" in the accompanying prospectus. --------------- KEY CERTIFICATE FEATURES SHOWN IN THE TABLE ABOVE TOTAL PRINCIPAL BALANCE OR NOTIONAL AMOUNT AT INITIAL ISSUANCE................... The class A-1, A-2, A-3, A-SB, A-4, A-1A, A-MFL, A-MFX, A-J, B, C, D, E, F, G, H, J, K, L, M, N, O, P, CP-1, CP-2 and CP-3 certificates will be the series 2005-C3 certificates with principal balances and are sometimes referred to as the series 2005-C3 principal balance certificates. The table on page S-5 of this prospectus supplement sets forth for each of those classes of certificates, the approximate total principal balance of the subject class at initial issuance. The actual total principal balance of any class of series 2005-C3 principal balance certificates at initial issuance may be larger or smaller than the amount shown in the table on page S-5 of this prospectus supplement, depending on, among other things, the actual size of the initial mortgage pool balance or, in the case of the class CP-1, CP-2 and CP-3 certificates, the actual size of the non-pooled portion of the Carolina Place underlying mortgage loan. The actual size of the initial mortgage pool balance may be as much as 5% larger or smaller than the amount presented in this prospectus supplement. The total principal balance of the class A-MFL certificates will at all times equal the total principal balance of the class A-MFL REMIC II regular interest. The principal balance of any of the series 2005-C3 principal balance certificates at any time represents the maximum amount that the holder may receive as principal out of cash flow received on or with respect to the underlying mortgage loans. The class XC and XP certificates will not have principal balances and are sometimes referred to as the series 2005-C3 interest-only certificates. For purposes of calculating the amount of accrued interest with respect thereto, however, each of those classes of certificates will have a notional amount. The total notional amount of the class XP certificates from time to time will equal the sum of the components thereof set forth on Annex F to this prospectus supplement. Each of those components of the total notional amount of the class XP - -------------------------------------------------------------------------------- S-7 - -------------------------------------------------------------------------------- certificates will relate to a particular class of series 2005-C3 principal balance certificates and, at any time during any of the periods specified on Annex F to this prospectus supplement, will equal the lesser of (a) the specific amount identified in the table on Annex F to this prospectus supplement with respect to the related class of series 2005-C3 principal balance certificates for that period and (b) the then total principal balance of the related class of series 2005-C3 principal balance certificates. Notwithstanding anything to the contrary in this prospectus supplement, the total notional amount of the class XP certificates will be $0 following the payment date in June 2012. The total notional amount of the class XC certificates will be equal to the total principal balance of the class A-1, A-2, A-3, A-SB, A-4, A-1A, A-MFL, A-MFX, A-J, B, C, D, E, F, G, H, J, K, L, M, N, O and P certificates outstanding from time to time. In general, the total principal balance of each such class of series 2005-C3 principal balance certificates will constitute a separate component of the total notional amount of the class XC certificates. However, if a portion, but not all, of the total principal balance of any particular such class of series 2005-C3 principal balance certificates is identified on Annex F to this prospectus supplement as being part of the total notional amount of the class XP certificates at any time prior to the payment date in June 2012, then that identified portion of such total principal balance will represent one separate component of the then total notional amount of the class XC certificates, and the remaining portion of such total principal balance will represent another separate component of the then total notional amount of the class XC certificates. The class R certificates will not have principal balances or notional amounts. They will be residual interest certificates. The holders of the class R certificates are not expected to receive any material payments. The class Y certificates also will not have principal balances or notional amounts. They will represent the right to receive any collections of additional interest that may accrue with respect to the mortgage loans that have anticipated repayment dates, as described under "--The Underlying Mortgage Loans and the Mortgaged Real Properties" below. That additional interest results from an increase in the applicable accrual rate if the subject mortgage loan remains outstanding past its anticipated repayment date. - -------------------------------------------------------------------------------- S-8 - -------------------------------------------------------------------------------- TOTAL CREDIT SUPPORT AT INITIAL ISSUANCE........... The respective classes of the series 2005-C3 certificates, other than the class Y and R certificates, will entitle their holders to varying degrees of seniority for purposes of: o receiving payments of interest and, except in the case of the class XC and XP certificates, payments of principal; and o bearing the effects of losses on the underlying mortgage loans (or on a specified underlying mortgage loan), as well as default-related and other unanticipated expenses of the trust. Without regard to the class CP-1, CP-2 and CP-3 certificates: o the class A-1, A-2, A-3, A-SB, A-4, A-1A, XC and XP certificates will be the most senior classes of the series 2005-C3 certificates; o the class A-MFL and A-MFX certificates will be the next most senior classes of the series 2005-C3 certificates; o the class A-J certificates will be the next most senior class of the series 2005-C3 certificates; and o the class B, C, D, E, F, G, H, J, K, L, M, N, O and P certificates will, in the case of each such class, be senior to each other such class, if any, with a later alphabetic class designation. The class CP-1, CP-2 and CP-3 certificates will, in the case of each of those classes, represent a subordinated right to receive out of payments and other collections (or advances in lieu thereof) on the non-pooled portion of the Carolina Place underlying mortgage loan monthly payments of: interest at the related pass-through rate; and principal in the amounts generally described under "--Payments--Payments of Principal" below. See "Description of the Offered Certificates--Payments--Allocation of Payments on the Carolina Place Mortgage Loan; Payments on the Class CP-1, CP-2 and CP-3 Certificates" in this prospectus supplement. The class Y and R certificates will not provide any credit support for, or receive any credit support from, any other class of series 2005-C3 certificates. The table on page S-5 of this prospectus supplement shows the approximate total credit support provided to each class of the series 2005-C3 certificates, other than the class XC, XP, P, CP-1, CP-2, CP-3, Y and R certificates, through the subordination of - -------------------------------------------------------------------------------- S-9 - -------------------------------------------------------------------------------- other classes of the series 2005-C3 principal balance certificates (exclusive of the class CP-1, CP-2 and CP-3 certificates). In the case of each of those classes of series 2005-C3 certificates, the credit support shown in the table on page S-5 of this prospectus supplement represents the total initial principal balance, expressed as a percentage of the initial mortgage pool balance, of all classes of the series 2005-C3 principal balance certificates (exclusive of the class CP-1, CP-2 and CP-3 certificates) that are subordinate to the indicated class. The above-described relative priority of the class A-MFL certificates is based solely on the priority of payments of interest and principal with respect to the class A-MFL REMIC II regular interest out of collections and advances on the underlying mortgage loans. NO CLASS OF SERIES 2005-C3 CERTIFICATES PROVIDES ANY CREDIT SUPPORT TO THE CLASS A-MFL CERTIFICATES FOR A FAILURE BY THE SWAP COUNTERPARTY. PASS-THROUGH RATES............ Each class of the series 2005-C3 certificates, other than the class Y and R certificates, will bear interest. The table on page S-5 of this prospectus supplement provides the indicated information regarding the pass-through rate at which each of those classes of the series 2005-C3 certificates will accrue interest. Each interest-bearing class of series 2005-C3 certificates identified in the table on page S-5 of this prospectus supplement as having a "Fixed" pass-through rate, has a fixed pass-through rate that will remain constant at the initial pass-through rate for that class. Each interest-bearing class of series 2005-C3 certificates identified in the table on page S-5 of this prospectus supplement as having a "WAC" pass-through rate, has a variable pass-through rate equal to a weighted average coupon derived from certain net interest rates on the underlying mortgage loans (without regard to the non-pooled portion of the Carolina Place underlying mortgage loan). Each interest-bearing class of series 2005-C3 certificates identified in the table on page S-5 of this prospectus supplement as having a "WAC Cap" pass-through rate, has a variable pass-through rate equal to the lesser of: o the rate per annum shown in the table on page S-5 as the initial pass-through rate for that class; and o a weighted average coupon derived from certain net interest rates on the underlying mortgage loans (without regard to the non-pooled portion of the Carolina Place underlying mortgage loan). - -------------------------------------------------------------------------------- S-10 - -------------------------------------------------------------------------------- For so long as the related swap agreement is in effect and there is no continuing payment default thereunder on the part of the swap counterparty, the pass-through rate applicable to payments of interest to holders of the class A-MFL certificates for any interest accrual period will equal the value of LIBOR from time to time (which will be determined as described under "Description of the Offered Certificates--Payments--Calculation of Pass-Through Rates" in this prospectus supplement) plus ______%; except that, if and to the extent that the amount of interest payable with respect to the class A-MFL REMIC II regular interest out of collections and advances on the underlying mortgage loans -- and, accordingly, the amount of interest payable to the swap counterparty -- for any payment date is less than 1/12 of the product of (a) ______%, multiplied by (b) the total principal balance of the class A-MFL certificates immediately prior to that payment date, then there will be a dollar-for-dollar reduction in the amounts payable under the related swap agreement for -- and, accordingly, in the actual payments of interest to the holders of the class A-MFL certificates on -- that payment date. The pass-through rate for the class A-MFL REMIC II regular interest will be variable and, from time to time, will equal the lesser of (x) ______% per annum and (y) a weighted average coupon derived from the net interest rates on the underlying mortgage loans (without regard to the non-pooled portion of the Carolina Place underlying mortgage loan). However, if there is a continuing payment default on the part of the swap counterparty under the related swap agreement, or if the related swap agreement is terminated and not replaced, then the pass-through rate applicable to the class A-MFL certificates will convert to the pass-through rate applicable to the class A-MFL REMIC II regular interest. The initial value of LIBOR will be determined on June __, 2005, and subsequent values of LIBOR will be determined two LIBOR business days before the start of the related interest accrual period. See "Description of the Swap Agreement--The Swap Agreement" and "Description of the Offered Certificates--Payments" in this prospectus supplement. As described under "--Key Certificate Features Shown in the Table Above--Total Principal Balance or Notional Amount at Initial Issuance" above, the total notional amount of the class XP certificates from time to time consists of multiple components. The pass-through rate for the class XP certificates, for each interest accrual period from and including the initial interest accrual period through and including the May 2012 interest accrual period, will equal the weighted average of the respective strip rates, which we refer to as class XP strip rates, at which interest accrues during the subject interest accrual period on the respective components of the total notional amount of the class XP certificates outstanding immediately prior to the related payment date, with the relevant weighting to be done based upon the relative sizes of those components. - -------------------------------------------------------------------------------- S-11 - -------------------------------------------------------------------------------- For purposes of accruing interest during any interest accrual period from and including the initial interest accrual period through and including the May 2012 interest accrual period, on any particular component of the total notional amount of the class XP certificates outstanding immediately prior to the related payment date, the applicable class XP strip rate will equal the excess, if any, of: (1) the lesser of-- (a) the reference rate specified on Annex E to this prospectus supplement for the related payment date, and (b) the weighted average of certain net interest rates on the underlying mortgage loans for that interest accrual period (without regard to the non-pooled portion of the Carolina Place underlying mortgage loan), over (2) the pass-through rate in effect during that interest accrual period for the class of series 2005-C3 principal balance certificates whose total principal balance, or a designated portion thereof, comprises the subject component (or, in the case of the class A-MFL certificates, the pass-through rate in effect during that interest accrual period for the class A-MFL REMIC II regular interest). Following the May 2012 interest accrual period, the class XP certificates will cease to accrue interest. In connection therewith, the class XP certificates will have a 0% pass-through rate for the June 2012 interest accrual period and for each interest accrual period thereafter. The May 2012 interest accrual period for the class XC and XP certificates corresponds to the payment date in June 2012. As described under "--Key Certificate Features Shown in the Table Above--Total Principal Balance or Notional Amount at Initial Issuance" above, the total notional amount of the class XC certificates from time to time consists of multiple components. The pass-through rate for the class XC certificates will, with respect to any interest accrual period, equal a weighted average of the respective strip rates, which we refer to as class XC strip rates, at which interest accrues during that interest accrual period on the respective components of the total notional amount of the class XC certificates outstanding immediately prior to the related payment date, with the relevant weighting to be done based upon the relative sizes of those components. - -------------------------------------------------------------------------------- S-12 - -------------------------------------------------------------------------------- For purposes of accruing interest during any interest accrual period from and including the initial interest accrual period through and including the May 2012 interest accrual period, on any particular component of the total notional amount of the class XC certificates outstanding immediately prior to the related payment date, the applicable class XC strip rate will be calculated as follows: (1) if the subject component consists of the entire total principal balance of any class of series 2005-C3 principal balance certificates, and if that total principal balance also constitutes, in its entirety, a component of the total notional amount of the class XP certificates outstanding immediately prior to the related payment date, then the applicable class XC strip rate will equal the excess, if any, of (a) the weighted average of certain net interest rates on the underlying mortgage loans (without regard to the non-pooled portion of the Carolina Place underlying mortgage loan), over (b) the greater of (i) the reference rate specified on Annex E to this prospectus supplement for the related payment date and (ii) the pass-through rate in effect during that interest accrual period for that class of series 2005-C3 principal balance certificates (or, in the case of the class A-MFL certificates, the pass-through rate in effect during that interest accrual period for the class A-MFL REMIC II regular interest); (2) if the subject component consists of a designated portion (but not all) of the total principal balance of any class of series 2005-C3 principal balance certificates, and if that designated portion of that total principal balance also constitutes a component of the total notional amount of the class XP certificates outstanding immediately prior to the related payment date, then the applicable class XC strip rate will equal the excess, if any, of (a) the weighted average of certain net interest rates on the underlying mortgage loans (without regard to the non-pooled portion of the Carolina Place underlying mortgage loan), over (b) the greater of (i) the reference rate specified on Annex E to this prospectus supplement for the related payment date and (ii) the pass-through rate in effect during that interest accrual period for that class of series 2005-C3 principal balance certificates (or, in the case of the class A-MFL certificates, if applicable, the pass-through rate in effect during that interest accrual period for the class A-MFL REMIC II regular interest); (3) if the subject component consists of the entire total principal balance of any class of series 2005-C3 principal balance certificates, and if that total principal balance does not, in whole or in part, also constitute a - -------------------------------------------------------------------------------- S-13 - -------------------------------------------------------------------------------- component of the total notional amount of the class XP certificates outstanding immediately prior to the related payment date, then the applicable class XC strip rate will equal the excess, if any, of (a) the weighted average of certain net interest rates on the underlying mortgage loans (without regard to the non-pooled portion of the Carolina Place underlying mortgage loan), over (b) the pass-through rate in effect during that interest accrual period for that class of series 2005-C3 principal balance certificates (or, in the case of the class A-MFL certificates, if applicable, the pass-through rate in effect during that interest accrual period for the class A-MFL REMIC II regular interest); and (4) if the subject component consists of a designated portion (but not all) of the total principal balance of any class of series 2005-C3 principal balance certificates, and if that designated portion of that total principal balance does not also constitute a component of the total notional amount of the class XP certificates outstanding immediately prior to the related payment date, then the applicable class XC strip rate will equal the excess, if any, of (a) the weighted average of certain net interest rates on the underlying mortgage loans (without regard to the non-pooled portion of the Carolina Place underlying mortgage loan), over (b) the pass-through rate in effect during that interest accrual period for that class of series 2005-C3 principal balance certificates (or, in the case of the class A-MFL certificates, if applicable, the pass-through rate in effect during that interest accrual period for the class A-MFL REMIC II regular interest). Notwithstanding the foregoing, for purposes of accruing interest on the class XC certificates during each interest accrual period subsequent to the May 2012 interest accrual period, consistent with the discussion under "--Key Certificate Features Shown in the Table Above--Total Principal Balance or Notional Amount at Initial Issuance" above, the total principal balance of each class of series 2005-C3 principal balance certificates (exclusive of the class CP-1, CP-2 and CP-3 certificates) will constitute a single separate component of the total notional amount of the class XC certificates, and the applicable class XC strip rate with respect to each of those components for each of those interest accrual periods will equal the excess, if any, of (a) the weighted average of certain net interest rates on the underlying mortgage loans (without regard to the non-pooled portion of the Carolina Place underlying mortgage loan), over (b) the pass-through rate in effect during the subject interest accrual period for the class of series 2005-C3 principal balance certificates whose total principal balance makes up that component (or, in the case of the class A-MFL certificates, if applicable, the pass-through rate in - -------------------------------------------------------------------------------- S-14 - -------------------------------------------------------------------------------- effect during the subject interest accrual period for the class A-MFL REMIC II regular interest). The respective initial pass-through rates listed in the table on page S-5 for the class XC, XP and _______ certificates are each approximate. The references to "certain net interest rates on the underlying mortgage loans" above in this "--Pass-Through Rates" subsection mean, as to any particular mortgage loan in the trust, an interest rate that is generally equal to (a) the related mortgage rate in effect as of the date of initial issuance of the offered certificates (without regard to any subsequent modification, waiver or amendment), minus (b) the sum of: o the annual rate at which the related master servicing fee, including any primary servicing fee, is calculated; and o the annual rate at which the trustee fee is calculated; provided that, if the subject underlying mortgage loan accrues interest on the basis of the actual number of days elapsed during any one-month interest accrual period in a year assumed to consist of 360 days, then, in some months, the "related mortgage rate" referred to above in clause (a) of this sentence will be converted to an annual rate that would generally produce an equivalent amount of interest accrued during the same one-month interest accrual period on the basis of an assumed 360-day year consisting of twelve 30-day months, prior to subtracting the rates described in clause (b) of this sentence. The pass-through rates for the class CP-1, CP-2 and CP-3 certificates will generally equal the "net interest rate" contemplated by the preceding paragraph with respect to the Carolina Place underlying mortgage loan. See "Description of the Offered Certificates--Payments--Calculation of Pass-Through Rates" in this prospectus supplement. WEIGHTED AVERAGE LIFE AND The weighted average life of any class of PRINCIPAL WINDOW........... offered certificates refers to the average amount of time, expressed in years, that will elapse from the date of their issuance until each dollar to be applied in reduction of the total principal balance of those certificates is paid to investors. The principal window for any class of offered certificates is the period during which the holders of that class of offered certificates will receive payments of principal. The weighted average life and principal window shown in the table on page S-5 of this prospectus supplement for each class of - -------------------------------------------------------------------------------- S-15 - -------------------------------------------------------------------------------- offered certificates were calculated based on the following assumptions with respect to each underlying mortgage loan: o the related borrower timely makes all payments on the mortgage loan; o if the mortgage loan has an anticipated repayment date, as described under "--The Underlying Mortgage Loans and the Mortgaged Real Properties" below, the mortgage loan will be paid in full on that date; and o the mortgage loan will not otherwise be prepaid prior to stated maturity. The weighted average life and principal window shown in the table on page S-5 of this prospectus supplement for each class of offered certificates were further calculated based on the other maturity assumptions referred to under "--Yield and Maturity Considerations" in, and set forth in the glossary to, this prospectus supplement. RATINGS....................... The ratings shown in the table on page S-5 of this prospectus supplement for the offered certificates are those of Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc., and Moody's Investors Service, Inc., respectively. It is a condition to their issuance that the respective classes of the offered certificates receive credit ratings no lower than those shown in the table on page S-5 of this prospectus supplement. As discussed in this prospectus supplement and in the accompanying prospectus, the ratings assigned to each class of offered certificates will represent the likelihood of: o timely receipt by the related certificateholders of all interest (subject to the proviso below) to which they are entitled on each payment date; and o the ultimate receipt by the related certificateholders of all principal to which they are entitled by the applicable rated final payment date (see "--Relevant Dates and Periods--Rated Final Payment Date" below); provided that the ratings on the class A-MFL certificates will address the payment of interest on that class only up to the pass-through rate for the class A-MFL REMIC II regular interest. A security rating is not a recommendation to buy, sell or hold securities and the assigning rating agency may revise or withdraw its rating at any time. - -------------------------------------------------------------------------------- S-16 - -------------------------------------------------------------------------------- The rating on the class A-MFL certificates does not represent any assessment as to whether the floating interest rate on those certificates will convert to the pass-through rate for the class A-MFL REMIC II regular interest or vice versa or any DTC delays related thereto. The ratings on the class A-MFL certificates do not constitute a rating with respect to the likelihood of the receipt of payments to be made by the swap counterparty or any interest rate reductions or increases contemplated herein. For a description of the limitations of the ratings of the offered certificates, see "Ratings" in this prospectus supplement. RELEVANT PARTIES WE AND US..................... Our name is Citigroup Commercial Mortgage Securities Inc. We are a Delaware corporation. Our address is 388 Greenwich Street, New York, New York 10013 and our telephone number is (212) 816-6000. We are a wholly-owned subsidiary of Citigroup Financial Products Inc. and an affiliate of Citigroup Global Markets Inc., one of the underwriters, and Citigroup Global Markets Realty Corp., one of the mortgage loan sellers. We will transfer to the trust the original mortgage loans that will back the series 2005-C3 certificates. See "Citigroup Commercial Mortgage Securities Inc." in the accompanying prospectus. TRUSTEE....................... LaSalle Bank National Association, a national banking association, will act as the trustee on behalf of all the series 2005-C3 certificateholders. It maintains an office at 135 S. LaSalle Street, Suite 1625, Chicago, Illinois 60603. The trustee will be responsible for, among other things, distributing payments to series 2005-C3 certificateholders and making various statements and reports available to series 2005-C3 certificateholders. See "Description of the Offered Certificates--The Trustee" in this prospectus supplement. The trustee will also have, or be responsible for appointing an agent to perform, additional duties with respect to tax administration. FISCAL AGENT.................. ABN AMRO Bank N.V., a Netherlands banking corporation, will act as the fiscal agent on behalf of all the series 2005-C3 certificateholders. It maintains an office at 135 S. LaSalle Street, Suite 1625, Chicago, Illinois 60603. See "Description of the Offered Certificates--The Fiscal Agent" in this prospectus supplement. MASTER SERVICER............... Wachovia Bank, National Association, a national banking association, will act as the master servicer with respect to the underlying mortgage loans. Wachovia Bank, National Association is an affiliate of Wachovia Capital Markets, LLC, one of the underwriters. See "Servicing of the Underlying Mortgage Loans--The Master Servicer and the Special Servicer" in this prospectus supplement. - -------------------------------------------------------------------------------- S-17 - -------------------------------------------------------------------------------- SPECIAL SERVICER.............. Allied Capital Corporation, a Maryland Corporation, will act as the special servicer with respect to the underlying mortgage loans. See "Servicing of the Underlying Mortgage Loans--The Master Servicer and the Special Servicer" in this prospectus supplement. Allied Capital has signed an agreement with CWCapital Investments LLC to transfer its special servicing rights and obligations for transactions for which it is acting as special servicer to CWCapital, an affiliate of CWCapital or such other entity as CWCapital may designate. When such transfer is completed, including the obtaining of any required approvals (including any required rating agency approvals), CWCapital, such affiliate or such other entity will become the special servicer. CAROLINA PLACE NON-TRUST MORTGAGE LOAN NOTEHOLDER... The Carolina Place underlying mortgage loan is part of a loan pair comprised of two (2) mortgage loans, only one of which will be included in the trust fund. The remaining mortgage loan will not be included in the trust fund, but both of the mortgage loans in the loan pair are secured by the same mortgage instrument encumbering the same mortgaged real property. The Carolina Place underlying mortgage loan, which--taking into account the pooled and non-pooled portions thereof--has a cut-off date principal balance of $130,000,000, is generally senior in right of payment to the Carolina Place non-trust mortgage loan, which has an aggregate unpaid cut-off date principal balance of $37,919,878. The pooled portion of the Carolina Place underlying mortgage loan has a cut-off date principal balance of $114,200,000, which represents 8.0% of the initial mortgage pool balance and 10.0% of the initial loan group no. 1 balance. The Carolina Place non-trust mortgage loan is evidenced by two promissory notes held by one of our affiliates. Both of those promissory notes are expected to be transferred on or after the securitization closing date to third-party institutional investors. If the two promissory notes evidencing the Carolina Place non-trust mortgage loan are held by different parties, they will have the same aggregate characteristics and entitle their holders to the same aggregate rights as are described in this prospectus supplement with respect to the Carolina Place non-trust mortgage loan. Consequently, the Carolina Place non-trust mortgage loan is treated as a single mortgage loan in this prospectus supplement. See "Description of the Mortgage Pool--Carolina Place Loan Pair" in this prospectus supplement. Both of the mortgage loans comprising the Carolina Place loan pair will be serviced under the series 2005-C3 pooling and servicing agreement by the master servicer and the special servicer thereunder, and the non-trust mortgage loan will be serviced in generally the same manner as the underlying mortgage loan in the trust. - -------------------------------------------------------------------------------- S-18 - -------------------------------------------------------------------------------- The holder of the Carolina Place non-trust mortgage loan will be entitled to advise and direct the applicable servicer with respect to various servicing matters, including certain modifications, involving the Carolina Place loan pair and to replace the special servicer with respect to the Carolina Place loan pair, except that upon the occurrence of certain trigger events related to collateral value, those rights may become exercisable by holders of the class CP-1, CP-2 and CP-3 certificates or their representative or by the holders of the controlling class of series 2005-C3 certificates or their representative. In addition, the holder of the Carolina Place non-trust mortgage loan will be entitled to: o purchase the Carolina Place underlying mortgage loan under various default scenarios; and o cure defaults with respect to the Carolina Place underlying mortgage loan. See "Description of the Mortgage Pool--The Carolina Place Loan Pair" in this prospectus supplement for a more detailed description of the related co-lender arrangement and the priority of payments among the mortgage loans comprising such loan pair. Also, see "Servicing of the Underlying Mortgage Loans--The Series 2005-C3 Controlling Class Representative, the Class CP Representative and the Carolina Place Non-Trust Loan Noteholder" in this prospectus supplement for a more detailed description of certain of the foregoing rights of the Carolina Place non-trust mortgage loan noteholder. CLASS CP-1, CP-2 AND CP-3 CERTIFICATEHOLDERS AND CLASS CP REPRESENTATIVE.... The class CP-1, CP-2 and CP-3 certificates will, in the case of each of those classes, evidence an interest solely in the underlying mortgage loan secured by the mortgaged real property identified on Annex A-1 to this prospectus supplement as Carolina Place. If the holder of the Carolina Place non-trust mortgage loan is no longer entitled to do so, the holders-- or, if applicable, the beneficial owners-- of class CP-1, CP-2 and CP-3 certificates entitled to a majority of the series 2005-C3 voting rights allocated to the CP-1, CP-2 and CP-3 classes, collectively, will be entitled, among other things, to appoint a representative that may advise and direct the applicable servicer with respect to various servicing matters, including certain modifications, involving the Carolina Place loan pair and to replace the special servicer with respect to the Carolina Place loan pair, except that upon the occurrence of certain trigger events related to collateral value, those rights may become exercisable by holders of the controlling class of series 2005-C3 certificates or their representative. - -------------------------------------------------------------------------------- S-19 - -------------------------------------------------------------------------------- Under certain default scenarios, the holders -- or, if applicable, the beneficial owners -- of class CP-1, CP-2 and CP-3 certificates entitled to a majority of the series 2005-C3 voting rights allocated to the CP-1, CP-2 and CP-3 classes, collectively, will have a par purchase option with respect to the Carolina Place underlying mortgage loan. See "Servicing of the Underlying Mortgage Loans--The Series 2005-C3 Controlling Class Representative, the Class CP Representative and the Carolina Place Non-Trust Loan Noteholder", "--Replacement of the Special Servicer" and "--Fair Value Purchase Option" in this prospectus supplement. CONTROLLING CLASS OF SERIES 2005-C3 CERTIFICATEHOLDERS AND THE SERIES 2005-C3 CONTROLLING CLASS REPRESENTATIVE............. At any time of determination, the controlling class of series 2005-C3 certificateholders will be the holders of the most subordinate class of series 2005-C3 certificates, exclusive of the XC, XP, CP-1, CP-2, CP-3, Y and R classes, that has a total principal balance that is greater than 25% of the total initial principal balance of that class. However, if no class of series 2005-C3 certificates, exclusive of the XC, XP, CP-1, CP-2, CP-3, Y and R classes, has a total principal balance that satisfies the condition set forth in the preceding sentence at the time of determination, then the controlling class of series 2005-C3 certificateholders will be the holders of the most subordinate class of series 2005-C3 certificates then outstanding, exclusive of the XC, XP, CP-1, CP-2, CP-3, Y and R classes, that has a total principal balance greater than zero. For purposes of determining, and exercising the rights of, the controlling class of series 2005-C3 certificateholders, the class A-1, A-2, A-3, A-SB, A-4 and A-1A certificateholders will be considered a single class, and the class A-MFL and A-MFX certificateholders will be considered a single class. The holders -- or, if applicable, the beneficial owners -- of certificates representing a majority interest in the controlling class of series 2005-C3 certificates will be entitled, among other things, to: o replace the special servicer, subject to the conditions described under "Servicing of the Underlying Mortgage Loans--Replacement of the Special Servicer" in this prospectus supplement, except to the extent that the related non-trust mortgage loan noteholder or its representative or the class CP representative may otherwise do so with respect to the Carolina Place loan pair; and - -------------------------------------------------------------------------------- S-20 - -------------------------------------------------------------------------------- o select a representative that, subject to the conditions described under "Servicing of the Underlying Mortgage Loans--The Series 2005-C3 Controlling Class Representative, the Class CP Representative and the Carolina Place Non-Trust Loan Noteholder" in this prospectus supplement, may direct the special servicer with respect to various servicing matters, except to the extent that the related non-trust mortgage loan noteholder or its representative or the class CP representative may otherwise do so with respect to the Carolina Place loan pair. The holder -- or, if applicable, the beneficial owner -- of series 2005-C3 certificates evidencing the largest percentage interest of voting rights allocated to the series 2005-C3 controlling class will have a fair value purchase option with respect to defaulted underlying mortgage loans that satisfy the criteria described in this prospectus supplement. See "Servicing of the Underlying Mortgage Loans--Fair Value Purchase Option" in this prospectus supplement. MORTGAGE LOAN SELLERS......... We will acquire the mortgage loans that support the offered certificates, from: o Citigroup Global Markets Realty Corp., which is a New York corporation and an affiliate of both us and Citigroup Global Markets Inc., one of the underwriters; and o IXIS Real Estate Capital Inc., which is a New York corporation and an affiliate of IXIS Securities North America Inc., one of the underwriters. See "Description of the Mortgage Pool--The Mortgage Loan Sellers" in this prospectus supplement. SWAP COUNTERPARTY............. Citibank N.A., one of our affiliates and an affiliate of Citigroup Global Markets Realty Corp., one of the mortgage loan sellers, and Citigroup Global Markets Inc., one of the underwriters, will be the counterparty under the swap agreement relating to the class A-MFL certificates. As of the date of this prospectus supplement, the swap counterparty has been assigned a long-term senior unsecured debt rating of "AA" and a short-term unsecured debt rating of "A-1+" by Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc., and a long-term senior unsecured debt rating of "Aa1" and a short-term unsecured debt rating of "P-1" by Moody's Investors Service, Inc. See "Description of the Swap Agreement" in this prospectus supplement. UNDERWRITERS.................. Citigroup Global Markets Inc., IXIS Securities North America Inc., Deutsche Bank Securities Inc. and Wachovia Capital - -------------------------------------------------------------------------------- S-21 - -------------------------------------------------------------------------------- Markets, LLC are the underwriters with respect to this offering. With respect to this offering, Citigroup Global Markets Inc. is acting as lead and sole bookrunning manager. IXIS Securities North America Inc., Deutsche Bank Securities Inc. and Wachovia Capital Markets, LLC are co-managers. See "Method of Distribution" in this prospectus supplement. RELEVANT DATES AND PERIODS CUT-OFF DATE.................. References in this prospectus supplement to the "cut-off date" mean, individually and collectively, as the context may require: with respect to all but one (1) of the underlying mortgage loans, the related due date of each such underlying mortgage loan in June 2005, and in the case of one (1) underlying mortgage loan originated in May 2005 and having its first due date in July 2005, June 11, 2005. All payments and collections received on each underlying mortgage loan after the cut-off date, excluding any payments or collections that represent amounts due on or before that date, will belong to the trust. ISSUE DATE.................... The date of initial issuance of the offered certificates will be on or about June 29, 2005. PAYMENT DATE.................. Payments on the offered certificates are scheduled to occur monthly, commencing in July 2005. During any given month, the payment date will be the fourth business day following the related determination date. DETERMINATION DATE............ The 11th day of each month or, if such 11th day is not a business day, the next succeeding business day, commencing in July 2005. RECORD DATE................... The record date for each monthly payment on an offered certificate will be the last business day of the prior calendar month. The registered holders of the offered certificates at the close of business on each record date, will be entitled to receive, on the following payment date, any payments on those certificates, except that the last payment on any offered certificate will be made only upon presentation and surrender of the certificate. COLLECTION PERIOD............. Amounts available for payment on the series 2005-C3 certificates on any payment date will depend on the payments and other collections received, and any advances of payments due, on or with respect to the underlying mortgage loans during the related collection period. Each collection period: o will relate to a particular payment date; - -------------------------------------------------------------------------------- S-22 - -------------------------------------------------------------------------------- o will be approximately one month long; o will begin when the prior collection period ends or, in the case of the first collection period, will begin on the day following the cut-off date; and o will end at the close of business on the determination date immediately preceding the related payment date. INTEREST ACCRUAL PERIOD....... The amount of interest payable with respect to the interest-bearing classes of series 2005-C3 certificates and the class A-MFL REMIC II regular interest on any payment date will be a function of the interest accrued during the related interest accrual period. The interest accrual period for the interest-bearing classes of the series 2005-C3 certificates (exclusive of the class A-MFL certificates) and the class A-MFL REMIC II regular interest for any payment date will be the calendar month immediately preceding the month in which that payment date occurs. The interest accrual period for the class A-MFL certificates for any payment date will be the period from and including the payment date in the month preceding the month in which the related payment date occurs (or, in the case of the first payment date, from and including the date of initial issuance of the class A-MFL certificates) to, but excluding, the related payment date; except that, if there is a continuing payment default on the part of the swap counterparty under the related swap agreement, or if the related swap agreement is terminated and not replaced, then the interest accrual period with respect to the class A-MFL certificates for any payment date will also be the calendar month preceding the month in which that payment date occurs. Interest will be calculated with respect to each interest-bearing class of series 2005-C3 certificates (other than the class A-MFL certificates) and with respect to the class A-MFL REMIC II regular interest assuming that each year consists of twelve 30-day months, and interest will be calculated with respect to the class A-MFL certificates based upon the actual number of days in the related interest accrual period and a year consisting of 360 days; except that, if there is a continuing payment default on the part of the swap counterparty under the related swap agreement, or if the related swap agreement is terminated and not replaced, then the class A-MFL certificates will also accrue interest on the basis of a 360-day year consisting of twelve 30-day months. LIBOR DETERMINATION DATE...... The applicable value of LIBOR, for purposes of calculating the pass-through rate for the class A-MFL certificates as well as the payment obligations under the related swap agreement, will initially be determined on June __, 2005 and will thereafter be determined monthly on the second LIBOR business day preceding the applicable interest accrual period. - -------------------------------------------------------------------------------- S-23 - -------------------------------------------------------------------------------- RATED FINAL PAYMENT DATE...... The rated final payment date for each class of the offered certificates is the payment date in May 2043. See "Ratings" in this prospectus supplement. DESCRIPTION OF THE OFFERED CERTIFICATES OFFERED CERTIFICATES.......... We are offering to you the following classes of certificates of our Commercial Mortgage Pass-Through Certificates, Series 2005-C3 pursuant to this prospectus supplement: o class A-1; o class A-2; o class A-3; o class A-SB; o class A-4; o class A-1A; o class A-MFL; o class A-MFX; o class A-J; o class B; o class C; and o class D. REGISTRATION AND DENOMINATIONS.............. We intend to deliver the offered certificates in book-entry form in original denominations of $10,000 initial principal balance and in any whole dollar denomination in excess of $10,000. You will initially hold your offered certificates, directly or indirectly, through The Depository Trust Company, in the United States, or Clearstream Banking Luxembourg or Euroclear Bank S.A./N.V., as operator of the Euroclear System, in Europe. As a result, you will not receive a fully registered physical certificate representing your interest in any offered certificate, except under the limited circumstances described under "Description of the Offered Certificates--Registration and Denominations" in this prospectus supplement and under "Description of the Certificates--Book-Entry Registration" in the accompanying prospectus. - -------------------------------------------------------------------------------- S-24 - -------------------------------------------------------------------------------- PAYMENTS A. GENERAL.................... For purposes of allocating payments on certain classes of the offered certificates, the pool of mortgage loans backing the series 2005-C3 certificates will be divided into: o a loan group no. 1 consisting of 94 mortgage loans that represent 79.8% of the initial mortgage pool balance and are secured by the various property types that constitute collateral for those mortgage loans; and o a loan group no. 2 consisting of 30 mortgage loans that represent 20.2% of the initial mortgage pool balance and are secured by multifamily and manufactured housing properties. The trustee will make payments of interest and, except in the case of the class XC and XP certificates, principal with respect to the following classes of series 2005-C3 certificates (or, in the case of the reference to "A-MFL" below, the class A-MFL REMIC II regular interest), in the following order: PAYMENT ORDER CLASS ------------------- ------------------------- 1st................ A-1, A-2, A-3, A-SB, A-4, A-1A, XC and XP 2nd................ A-MFL and A-MFX 3rd................ A-J 4th................ B 5th................ C 6th................ D 7th................ E 8th................ F 9th................ G 10th............... H 11th............... J 12th............... K 13th............... L 14th............... M 15th............... N 16th............... O 17th............... P Interest payments with respect to the class A-1, A-2, A-3, A-SB, A-4, A-1A, XC and XP certificates are to be made concurrently: o in the case of the class A-1, A-2, A-3, A-SB and A-4 certificates, on a pro rata basis in accordance with the respective interest entitlements evidenced by those classes of series 2005-C3 certificates, from available funds attributable to loan group no. 1; o in the case of the class A-1A certificates, from available funds attributable to loan group no. 2; and - -------------------------------------------------------------------------------- S-25 - -------------------------------------------------------------------------------- o in the case of the class XC and XP certificates, on a pro rata basis in accordance with the respective interest entitlements evidenced by those classes of series 2005-C3 certificates, from available funds attributable to loan group no. 1 and loan group no. 2; provided that, if the foregoing would result in a shortfall in the interest payment on any of the class A-1, A-2, A-3, A-SB, A-4, A-1A, XC and/or XP certificates, then payments of interest will be made on those classes of series 2005-C3 certificates, on a pro rata basis in accordance with the respective interest entitlements evidenced thereby, from available funds attributable to the entire mortgage pool. The allocation of principal payments among the class A-1, A-2, A-3, A-SB, A-4 and A-1A certificates is described under "--Payments--Payments of Principal" below. The allocation of interest payments between the class A-MFL REMIC II regular interest and the class A-MFX certificates are to be made concurrently, on a pro rata basis in accordance with the respective interest entitlements represented thereby. The allocation of principal distributions between the class A-MFL REMIC II regular interest and the class A-MFX certificates are to be made concurrently, on a pro rata basis in accordance with the relative sizes of the respective then outstanding total principal balances thereof. Payments of interest made on or with respect to the class A-MFL REMIC II regular interest will be applied to make payments to the swap counterparty and/or the class A-MFL certificateholders, as applicable. Payments of principal made on or with respect to the class A-MFL REMIC II regular interest will be applied to make payments to the class A-MFL certificateholders. The class CP-1, CP-2 and CP-3 certificates will, in the case of each of those classes, represent a subordinated right to receive out of payments and other collections (or advances in lieu thereof) on the Carolina Place underlying mortgage loan, monthly payments of: interest at the related pass-through rate; and principal in the amounts generally described under "--Payments--Payments of Principal" below. See "Description of the Offered Certificates--Payments--Allocation of Payments on the Carolina Place Mortgage Loan; Payments on the Class CP-1, CP-2 and CP-3 Certificates" in this prospectus supplement. The class Y and R certificates do not bear interest. The class XC, XP, Y and R certificates do not have principal balances and do not entitle their respective holders to payments of principal. - -------------------------------------------------------------------------------- S-26 - -------------------------------------------------------------------------------- See "Description of the Offered Certificates--Payments--Priority of Payments", "--Payments--Payments on the Class A-MFL Certificates" and "--Payments--Allocation of Payments on the Carolina Place Mortgage Loan; Payments on the Class CP-1, CP-2 and CP-3 Certificates" in this prospectus supplement. No payments or other collections on the Carolina Place non-trust mortgage loan will be available for payments on the series 2005-C3 certificates. B. PAYMENTS OF INTEREST....... Each class of series 2005-C3 certificates--other than the class Y and R certificates--and the class A-MFL REMIC II regular interest, will bear interest. In each case, that interest will accrue during each interest accrual period based upon: o the pass-through rate applicable for the particular class of series 2005-C3 certificates or the class A-MFL REMIC II regular interest, as the case may be, for that interest accrual period; o the total principal balance or notional amount, as the case may be, of the particular class of series 2005-C3 certificates or the class A-MFL REMIC II regular interest, as the case may be, outstanding immediately prior to the related payment date; and o the assumption that each year consists of twelve 30-day months (or, in the case of the class A-MFL certificates, for so long as the related swap agreement is in effect and there is no continuing payment default thereunder on the part of the swap counterparty, based on the actual number of days in the applicable interest accrual period and the assumption that each year consists of 360 days). In addition, if the pass-through rate of the class A-MFL REMIC II regular interest for any interest accrual period is limited by the weighted average of the net interest rates of the underlying mortgage loans, then the amount by which the interest distributable with respect to the class A-MFL REMIC II regular interest is reduced as a result of such limitation will result in the amount of interest payable by the trust to the swap counterparty being reduced by that amount. As a result, there will be a dollar-for-dollar reduction in the amount payable by the swap counterparty to the trust, and a corresponding dollar-for-dollar reduction in the amount of interest payable with respect to the class A-MFL certificates on that payment date. On each payment date, subject to available funds from collections and advances on the underlying mortgage loans, the payment priorities described under "--Payments--General" above and, in the case of the class A-MFL certificates only, the - -------------------------------------------------------------------------------- S-27 - -------------------------------------------------------------------------------- amount received from the swap counterparty for that payment date, the holders of each class of offered certificates will generally be entitled to receive: o all interest accrued with respect to that class of offered certificates during the related interest accrual period, as described above in this "--Payments--Payments of Interest" subsection; plus o any interest that such class of offered certificateholders was entitled to receive (or, in the case of the class A-MFL certificates, to the extent not otherwise payable to the swap counterparty to make up prior shortfalls, that was payable with respect to the class A-MFL REMIC II regular interest) on all prior payment dates, to the extent not previously received; minus o such class' allocable share of any shortfalls in interest collections due to prepayments on the underlying mortgage loans, to the extent that such interest shortfalls are not offset by certain payments made by the master servicer; minus o such class' allocable share of any reduction in interest paid on any underlying mortgage loan as a result of a modification that allows the reduction in accrued but unpaid interest to be added to the principal balance of the subject mortgage loan. See "Description of the Offered Certificates--Payments--Payments of Interest", "--Payments--Priority of Payments", "--Payments--Payments on the Class A-MFL Certificates" and "--Payments--Allocation of Payments on the Carolina Place Mortgage Loan; Payments on the Class CP-1, CP-2 and CP-3 Certificates" in this prospectus supplement. C. SWAP AGREEMENT............. The assets of the trust will include an interest rate swap agreement between the trustee on behalf of the trust and Citibank N.A. as swap counterparty. The initial notional amount of the swap agreement will be equal to the total initial principal balance of the class A-MFL certificates (and, correspondingly, of the class A-MFL REMIC II regular interest). The notional amount of the swap agreement for any payment date will equal the total principal balance of the class A-MFL certificates (and, correspondingly, of the class A-MFL REMIC II regular interest) immediately prior to that payment date. The maturity date of the swap agreement will be the earlier of the rated final payment date for the class A-MFL certificates and the date on which the notional amount of the swap agreement is zero (including as a result of the termination of the trust fund). Under the swap agreement, the trust will generally be obligated to pay to the swap counterparty with respect to each payment date, out of - -------------------------------------------------------------------------------- S-28 - -------------------------------------------------------------------------------- interest amounts paid or payable, as the case may be, with respect to the class A-MFL REMIC II regular interest, an amount equal to the sum of (i) any prepayment premiums or yield maintenance charges allocable to the class A-MFL REMIC II regular interest and (ii) 1/12th of the product of (A) the notional amount of the swap agreement for that payment date and (B) ____% per annum. The swap counterparty will generally be obligated to pay to the trust with respect to each payment date an amount equal to the product of (i) the notional amount of the swap agreement for that payment date, (ii) LIBOR plus ____% per annum and (iii) a fraction, the numerator of which is the actual number of days elapsed during the related accrual period, and the denominator of which is 360. If the pass-through rate on the class A-MFL REMIC II regular interest is reduced below ____% per annum or if there is an interest shortfall with respect to the class A-MFL REMIC II regular interest, then the amount payable by the trust to the swap counterparty with respect to any payment date will be reduced by an amount equal to the excess, if any, of (1) 1/12th of the product of (a) ____%, multiplied by (b) the notional amount of the swap agreement for that payment date over (2) the lesser of (x) 1/12th of the product of (i) a weighted average coupon derived from the net interest rates of the underlying mortgage loans, multiplied by (ii) the notional amount of the swap agreement for that payment date and (y) the amount of interest distributions with respect to the class A-MFL REMIC II regular interest pursuant to the priority of distributions on that payment date. As a result, the amount payable by the swap counterparty to the trust with respect to the subject payment date will be reduced (to not less than zero) by the exact same amount as the reduction determined as described in the immediately preceding sentence. If the reduction in the amount payable by the trust to the swap counterparty with respect to any payment date, which reduction is determined as described in the second to last sentence of the prior paragraph, exceeds the total amount payable by the swap counterparty to the trust without regard to that reduction, then the swap counterparty will in the future be entitled to be reimbursed by the trust to the extent that such reduction more than offset the payment from the swap counterparty; provided that any such reimbursement payment from the trust will, with respect to any future payment date, generally be limited to the excess, if any, of (a) the amount of interest distributions with respect to the class A-MFL REMIC II regular interest with respect to that future payment date, over (b) 1/12th of the product of (i) ____% per annum and (ii) the notional amount of the swap agreement for that payment date. Payments by the trust to the swap counterparty, and by the swap counterparty to the trust, as described above in this "--The Swap - -------------------------------------------------------------------------------- S-29 - -------------------------------------------------------------------------------- Agreement" section will, in general, be made on a net basis, and any such amounts paid to or retained by the trust will be available to make payments of interest to the class A-MFL certificateholders. See "Risk Factors--Risks Relating to the Swap Agreement" and "Description of the Swap Agreement" in this prospectus supplement. D. PAYMENTS OF PRINCIPAL...... Subject to-- o available funds, o the payment priorities described under "--Payments--General" above, and o the reductions in their respective total principal balances as described under "--Reductions of Certificate Principal Balances in Connection with Losses on the Underlying Mortgage Loans and Default-Related and Other Unanticipated Expenses" below, the holders of each class of offered certificates will be entitled to receive a total amount of principal over time equal to the total principal balance of their particular class. The total payments of principal to be made on the series 2005-C3 certificates on any payment date will, in general, be a function of: o the amount of scheduled payments of principal due or, in some cases, deemed due on the underlying mortgage loans during the related collection period, which payments are either received as of the end of that collection period or advanced by the master servicer, the trustee or the fiscal agent; and o the amount of any prepayments and other unscheduled collections of previously unadvanced principal with respect to the underlying mortgage loans that are received during the related collection period. In the case of the class A-MFL certificates, however, any payments of principal will first be made with respect to the class A-MFL REMIC II regular interest, after which any corresponding payments will be made to the class A-MFL certificateholders. If the master servicer, the special servicer, the trustee or the fiscal agent reimburses itself out of general collections on the mortgage pool for any advance (including the portion of any monthly debt service advance with respect to the non-pooled - -------------------------------------------------------------------------------- S-30 - -------------------------------------------------------------------------------- portion of the Carolina Place underlying mortgage loan) that it has determined is not recoverable out of collections on the related underlying mortgage loan, then that advance (together with accrued interest thereon) will be deemed, to the fullest extent permitted, to be reimbursed first out of payments and other collections of principal otherwise distributable on the series 2005-C3 principal balance certificates, prior to being deemed reimbursed out of payments and other collections of interest otherwise distributable on the series 2005-C3 certificates. In addition, if payments and other collections of principal on the mortgage pool are applied to reimburse, or pay interest on, any advance that is determined to be nonrecoverable from collections on the related underlying mortgage loan, as described in the prior sentence, then that advance will be reimbursed, and/or interest thereon will be paid, first out of payments or other collections of principal on the loan group (i.e., loan group no. 1 or loan group no. 2, as applicable) that includes the subject underlying mortgage loan as to which the advance was made, and prior to using payments or other collections of principal on the other loan group. Notwithstanding the prior paragraph, amounts otherwise payable as interest and/or principal on the class CP-1, CP-2 and CP-3 certificates will not be available to reimburse advances in respect of any underlying mortgage loan other than the Carolina Place underlying mortgage loan. The trustee must make payments of principal in a specified sequential order, taking account of whether the payments (or advances in lieu thereof) and other collections of principal that are to be distributed were received and/or made with respect to underlying mortgage loans in loan group no. 1 or underlying mortgage loans in loan group no. 2, such that: o no payments of principal will be made to the holders of the class E, F, G, H, J, K, L, M, N, O and P certificates until the total principal balance of the class A-1, A-2, A-3, A-SB, A-4, A-1A, A-MFX, A-J, B, C and D certificates and the class A-MFL REMIC II regular interest is reduced to zero; o no payments of principal will be made to the holders of the class A-J, B, C or D certificates until, in the case of each of those classes, the total principal balance of class A-1, A-2, A-3, A-SB, A-4, A-1A and A-MFX certificates and the class A-MFL REMIC II regular interest is reduced to zero; o no payments of principal will be made to the holders of the class A-MFX certificates or with respect to the class A-MFL REMIC II regular interest until the total principal balance of the class A-1, A-2, A-3, A-SB, A-4 - -------------------------------------------------------------------------------- S-31 - -------------------------------------------------------------------------------- and A-1A certificates is reduced to zero, and any and all payments of principal with respect to the class A-MFL REMIC II regular interest and the class A-MFX certificates will be allocated between them on a pro rata basis in accordance with the respective total principal balances thereof; o except as described in the second paragraph following these bullets, no payments of principal with respect to loan group no. 1 will be made to the holders of the class A-1A certificates until the total principal balance of the class A-1, A-2, A-3, A-SB and A-4 certificates is reduced to zero; o except as described in the second paragraph following these bullets, no payments of principal with respect to loan group no. 2 will be made to the holders of the class A-1, A-2, A-3, A-SB and A-4 certificates until the total principal balance of the class A-1A certificates is reduced to zero; and o except as described in the two paragraphs following these bullets, no payments of principal will be made to the holders of the class A-4 certificates until the total principal balance of the class A-1, A-2, A-3 and A-SB certificates is reduced to zero, no payments of principal will be made to the holders of the class A-SB certificates until the total principal balance of class A-1, A-2 and A-3 certificates is reduced to zero, no payments of principal will be made to the holders of the class A-3 certificates until the total principal balance of the class A-1 and A-2 certificates is reduced to zero, and no payments of principal will be made to the holders of the class A-2 certificates until the total principal balance of the class A-1 certificates is reduced to zero. The discussion in the foregoing paragraph notwithstanding, and except as otherwise described in the following paragraph, on each payment date the total principal balance of the class A-SB certificates must, subject to available funds, be paid down, if necessary, to the scheduled principal balance for that class for that payment date that is set forth on Annex G to this prospectus supplement before any payments of principal are made with respect to the class A-1, A-2 and/or A-3 certificates. Because of losses on the underlying mortgage loans and/or default-related or other unanticipated expenses of the trust, the total principal balance of the class A-MFL REMIC II regular interest and the class A-MFX, A-J, B, C, D, E, F, G, H, J, K, L, M, N, O and P certificates could be reduced to zero at a time when the class A-1, A-2, A-3, A-SB, A-4 and A-1A certificates, or any two or more of those classes of series 2005-C3 - -------------------------------------------------------------------------------- S-32 - -------------------------------------------------------------------------------- certificates, remain outstanding. Under those circumstances, the trustee will remit payments of principal to the holders of the outstanding class A-1, A-2, A-3, A-SB, A-4 and/or A-1A certificates on a pro rata basis in accordance with the respective total principal balances of those classes of series 2005-C3 certificates and without regard to loan groups or the scheduled principal balance of the class A-SB certificates. All distributions of principal with respect to the class A-MFL REMIC II regular interest will be made to a segregated account or sub-account maintained by the trustee from which they will, in turn, be distributed to the holders of the class A-MFL certificates. So long as certain default scenarios do not exist with respect to the Carolina Place underlying mortgage loan, the holders of each class of the class CP-1, CP-2 and CP-3 certificates will collectively be entitled to receive, on a subordinate basis, payments of principal equal to a proportionate share (generally based on the total principal balance of those classes relative to the principal amount of the pooled portion of the Carolina Place underlying mortgage loan) of (a) all scheduled payments of principal due or, in some cases, deemed due on the Carolina Place underlying mortgage loan from time to time, to the extent those payments are, in each case, either received as of the end of the collection period when due or deemed due or advanced by the master servicer, the trustee or the fiscal agent, and (b) any prepayments and other unscheduled collections of previously unadvanced principal with respect to the Carolina Place underlying mortgage loan. However, for so long as certain default scenarios exist with respect to the Carolina Place underlying mortgage loan, the holders of the class CP-1, CP-2 and CP-3 certificates will not receive any payments of principal unless and until the holders of the other series 2005-C3 principal balance certificates collectively receive or are deemed to receive over time payments of principal equal to the cut-off date principal balance of the pooled portion of the Carolina Place underlying mortgage loan. Payments of principal with respect to the class CP-1, CP-2 and CP-3 certificates will be allocated among those classes as described under "--Payments--Allocation of Payments on the Carolina Place Mortgage Loan; Payments on the Class CP-1, CP-2 and CP-3 Certificates" in this prospectus supplement. The class XC, XP, R and Y certificates do not have principal balances and do not entitle their holders to payments of principal. See "Description of the Offered Certificates--Payments--Payments of Principal" "--Payments--Priority of Payments", "--Payments--Payments on the Class A-MFL Certificates" and "--Payments--Allocation of Payments on the Carolina Place - -------------------------------------------------------------------------------- S-33 - -------------------------------------------------------------------------------- Mortgage Loan; Payments on the Class CP-1, CP-2 and CP-3 Certificates" in this prospectus supplement. E. PAYMENTS OF PREPAYMENT PREMIUMS AND YIELD MAINTENANCE CHARGES........ If any prepayment premium or yield maintenance charge is collected on any of the underlying mortgage loans, then the trustee will remit that amount as described under "Description of the Offered Certificates--Payments--Payments of Prepayment Premiums and Yield Maintenance Charges" in this prospectus supplement. REDUCTIONS OF CERTIFICATE PRINCIPAL BALANCES IN CONNECTION WITH LOSSES ON THE UNDERLYING MORTGAGE LOANS AND DEFAULT-RELATED AND OTHER UNANTICIPATED EXPENSES................... As and to the extent described under "Description of the Offered Certificates--Reductions of Certificate Principal Balances in Connection with Realized Losses and Additional Trust Fund Expenses" in this prospectus supplement, losses on the underlying mortgage loans and default-related and/or otherwise unanticipated expenses of the trust will be allocated to reduce the respective total principal balances of the following classes of series 2005-C3 principal balance certificates (or, in the case of the reference to "A-MFL" below, the class A-MFL REMIC II regular interest), sequentially, in the following order (subject to the discussion in the next paragraph): REDUCTION ORDER CLASS -------------------- ------------------------ 1st................. P 2nd................. O 3rd................. N 4th................. M 5th................. L 6th................. K 7th................. J 8th................. H 9th................. G 10th................ F 11th................ E 12th................ D 13th................ C 14th................ B 15th................ A-J 16th................ A-MFL and A-MFX 17th................ A-1, A-2, A-3, A-SB, A-4 and A-1A, pro rata by total principal balance Notwithstanding the foregoing, losses on and/or default-related or other unanticipated expenses of the trust with respect to the Carolina Place underlying mortgage loan will be allocated, as and to the extent described under "Description of the Offered Certificates--Reductions of Certificate Principal Balances in - -------------------------------------------------------------------------------- S-34 - -------------------------------------------------------------------------------- Connection with Realized Losses and Additional Trust Fund Expenses" in this prospectus supplement, to reduce the respective total principal balances of the class CP-3, CP-2 and CP-1 certificates, in that order, prior to being allocated to reduce the total principal balance of any class identified in the foregoing table. Also notwithstanding the foregoing, if any advance is reimbursed out of general collections on the mortgage pool because collections on the related underlying mortgage loan are determined to be insufficient to make that reimbursement, then any resulting shortfall will not be considered a loss or part of a loss allocable as described above until a final recovery determination is made with respect to the related underlying mortgage loan as to which the subject advance was made. Although losses on the underlying mortgage loans, extraordinary expenses and available funds shortfalls will not be directly allocated to the class A-MFL certificates, such losses and shortfalls may be allocated to the class A-MFL REMIC II regular interest in reduction of the total principal balance of the class A-MFL REMIC II regular interest and the amount of its interest entitlement, respectively. Any decrease in the total principal balance of the class A-MFL REMIC II regular interest will result in a corresponding decrease in the total principal balance of the class A-MFL certificates, and any interest shortfalls suffered by the class A-MFL REMIC II regular interest (for whatever reason) will reduce the amount of interest distributed on the class A-MFL certificates to the extent described in this prospectus supplement. See "Description of the Offered Certificates--Reductions of Certificate Principal Balances in Connection with Realized Losses and Additional Trust Fund Expenses" in this prospectus supplement. ADVANCES OF DELINQUENT MONTHLY DEBT SERVICE PAYMENTS................... Except as described below, the master servicer will be required to make, for each payment date, a total amount of advances of principal and/or interest generally equal to all monthly debt service payments -- other than balloon payments -- and assumed monthly debt service payments, in each case net of related master servicing fees and special servicing fees, that: o were due or deemed due, as the case may be, with respect to the underlying mortgage loans (including the non-pooled portion of the Carolina Place underlying mortgage loan) during the related collection period; and o were not paid by or on behalf of the respective borrowers or otherwise collected as of the close of business on the last day of the related collection period. - -------------------------------------------------------------------------------- S-35 - -------------------------------------------------------------------------------- In addition, the trustee--or the fiscal agent on its behalf--must make any of those advances that the master servicer is required, but fails, to make. As described under "Description of the Offered Certificates--Advances of Delinquent Monthly Debt Service Payments" in this prospectus supplement, any party that makes an advance will be entitled to be reimbursed for the advance, together with interest at the prime rate described in that section of this prospectus supplement. Notwithstanding the foregoing, none of the master servicer, the trustee or the fiscal agent will be required to make any advance that it determines, or that the special servicer determines, will not be recoverable from proceeds of the related underlying mortgage loan. The trustee and the fiscal agent will be entitled to rely on any determination of nonrecoverability made by the master servicer, and the trustee, the fiscal agent and the master servicer, in the case of a specially serviced mortgage loan or a mortgage loan as to which the related mortgaged real property has become a foreclosure property, must rely on any determination of nonrecoverability made by the special servicer. In addition, if any of the adverse events or circumstances that we refer to under "Servicing of the Underlying Mortgage Loans--Required Appraisals" in, and identify in the glossary to, this prospectus supplement, occurs or exists with respect to any underlying mortgage loan or the mortgaged real property for that mortgage loan, then the special servicer will generally be obligated to obtain a new appraisal (or, in cases involving underlying mortgage loans with principal balances that are, in any such case, less than $2 million, may conduct an internal valuation) of that property. If, based on that appraisal or other valuation, it is determined that: o the principal balance of, and other delinquent amounts due under, the subject underlying mortgage loan, together with various related expenses and fees; exceed o an amount generally equal to: 1. 90% of the new appraised or estimated value of that real property (net of any prior liens and estimated liquidation expenses), which value may be reduced by the special servicer based on its review of the related appraisal and other relevant information; plus 2. certain escrows and reserves and any letters of credit constituting additional security for the subject mortgage loan, then the amount otherwise required to be advanced with respect to interest on the subject mortgage loan will be reduced, thereby - -------------------------------------------------------------------------------- S-36 - -------------------------------------------------------------------------------- reducing the amounts available for payment on the series 2005-C3 certificates. The reduction will be based on an allocation of the amount of that excess--generally referred to as an appraisal reduction amount--to one or more classes of the series 2005-C3 principal balance certificates and will generally equal one month's interest at the related pass-through rates on the respective allocated portions. Due to the payment priorities, any reduction will first reduce the funds available to pay interest on the most subordinate interest-bearing class of series 2005-C3 certificates (or, in the case of the class A-MFL certificates, the class A-MFL REMIC II regular interest) outstanding that evidences an interest in the subject underlying mortgage loan. The calculation of any appraisal reduction amount, as described in the preceding paragraph, in respect of the Carolina Place underlying mortgage loan will take into account the Carolina Place non-trust mortgage loan. The special servicer will determine whether an appraisal reduction amount exists with respect to the entire Carolina Place loan pair based on a calculation that generally treats the Carolina Place loan pair as if it were a single mortgage loan. Any resulting appraisal reduction amount with respect to the Carolina Place loan pair will be allocated, first to the Carolina Place non-trust loan (up to the amount of the outstanding principal balance thereof), and then, to the Carolina Place underlying mortgage loan. The amount of advances of interest on the Carolina Place underlying mortgage loan will reflect any appraisal reduction amount allocable thereto. See "Description of the Offered Certificates--Advances of Delinquent Monthly Debt Service Payments" and "Servicing of the Underlying Mortgage Loans--Required Appraisals" in this prospectus supplement. See also "Description of the Certificates--Advances" in the accompanying prospectus. REPORTS TO CERTIFICATEHOLDERS......... On each payment date, various statements and reports prepared by the trustee, the master servicer and/or the special servicer regarding the offered certificates and the underlying mortgage loans will be made available to you via the trustee's internet website and will contain the information described under "Description of the Offered Certificates--Reports to Certificateholders; Available Information" in this prospectus supplement. Upon reasonable prior notice, you may also review at the offices of the trustee, the master servicer and/or the special servicer during normal business hours a variety of information and documents that pertain to the underlying mortgage loans and the mortgaged real properties for those loans. We expect that the available information and documents will include loan modifications, borrower operating statements, rent rolls and property inspection reports, all to the extent received by the - -------------------------------------------------------------------------------- S-37 - -------------------------------------------------------------------------------- trustee, the master servicer and/or the special servicer, as applicable. See "Description of the Offered Certificates--Reports to Certificateholders; Available Information" in this prospectus supplement. OPTIONAL TERMINATION.......... Specified parties to the transaction may terminate the trust through the purchase of all the mortgage loans and any REO properties in the trust fund when the total principal balance of the underlying mortgage loans, including the non-pooled portion of the Carolina Place underlying mortgage loan, net of outstanding advances of principal, is less than approximately 1.0% of the initial total principal balance of the series 2005-C3 principal balance certificates. In addition, if, following the date on which the total principal balances of the class A-1, A-2, A-3, A-SB, A-4, A-1A, A-MFL, A-MFX, A-J, B, C and D certificates are reduced to zero, all of the remaining certificates (excluding the class R and Y certificates) are held by the same certificateholder, the trust fund may also be terminated, subject to such additional conditions as may be set forth in the pooling and servicing agreement, including, without limitation, the consent of the master servicer, in connection with an exchange of all the remaining certificates for all the mortgage loans and any foreclosure properties remaining in the trust fund at the time of exchange. See "Description of the Offered Certificates--Termination" in this prospectus supplement. THE UNDERLYING MORTGAGE LOANS AND THE MORTGAGED REAL PROPERTIES GENERAL....................... In this section, "--The Underlying Mortgage Loans and the Mortgaged Real Properties", we provide summary information with respect to the mortgage loans that we intend to include in the trust fund. For more detailed information regarding those mortgage loans, you should review the following sections in this prospectus supplement: o "Risk Factors--Risks Related to the Underlying Mortgage Loans"; o "Description of the Mortgage Pool"; o Annex A-1--Characteristics of the Underlying Mortgage Loans and the Mortgaged Real Properties; o Annex A-2--Summary Characteristics of the Underlying Mortgage Loans and the Mortgaged Real Properties; - -------------------------------------------------------------------------------- S-38 - -------------------------------------------------------------------------------- o Annex A-3--Summary Characteristics of the Underlying Mortgage Loans in Loan Group No. 1 and the related Mortgaged Real Properties; o Annex A-4--Summary Characteristics of the Underlying Mortgage Loans in Loan Group No. 2 and the related Mortgaged Real Properties; o Annex A-5--Characteristics of the Multifamily and Manufactured Housing Mortgaged Real Properties; and o Annex B--Description of Ten Largest Mortgage Loans and/or Groups of Cross-Collateralized Mortgage Loans. For purposes of calculating distributions on certain classes of the offered certificates, the pool of mortgage loans backing the series 2005-C3 certificates will be divided into a loan group no. 1 and a loan group no. 2. Loan group no. 1 will consist of 94 mortgage loans, with an initial loan group no. 1 balance of $1,145,448,916 and representing approximately 79.8% of the initial mortgage pool balance, that are secured by the various property types that constitute collateral for those mortgage loans. Loan group no. 2 will consist of 30 mortgage loans, with an initial loan group no. 2 balance of $289,724,005 and representing approximately 20.2% of the initial mortgage pool balance, that are secured by multifamily and manufactured housing properties. When reviewing the information that we have included in this prospectus supplement, including the Annexes hereto, with respect to the mortgage loans that are to back the offered certificates, please note that-- o All numerical information provided with respect to the underlying mortgage loans is provided on an approximate basis. o References to initial mortgage pool balance mean the aggregate cut-off date principal balance of all the underlying mortgage loans (exclusive of the cut-off date principal balance of the non-pooled portion of the Carolina Place underlying mortgage loan), references to the initial loan group no. 1 balance mean the aggregate cut-off date principal balance of the underlying mortgage loans in loan group no. 1 (exclusive of the cut-off date principal balance of the non-pooled portion of the Carolina Place underlying mortgage loan) and references to the initial loan group no. 2 balance mean the aggregate cut-off date principal balance of the underlying mortgage loans in loan group no. 2. We will - -------------------------------------------------------------------------------- S-39 - -------------------------------------------------------------------------------- transfer each of the underlying mortgage loans, at its respective cut-off date principal balance, to the trust. We show the cut-off date principal balance for each of the underlying mortgage loans (or, in the case of the Carolina Place underlying mortgage loan, the cut-off date principal balance for the pooled portion of that mortgage loan) on Annex A-1 to this prospectus supplement. o All weighted average information provided with respect to the underlying mortgage loans reflects a weighting based on their respective cut-off date principal balances (or, in the case of the Carolina Place underlying mortgage loan, unless the context clearly indicates otherwise, the cut-off date principal balance for the pooled portion of that mortgage loan). o When information with respect to mortgaged real properties is expressed as a percentage of the initial mortgage pool balance, the initial loan group no. 1 balance or the initial loan group no. 2 balance, the percentages are based upon the cut-off date principal balances of the related underlying mortgage loans or allocated portions of those balances (or, in the case of the Carolina Place underlying mortgage loan, unless the context clearly indicates otherwise, based upon the cut-off date principal balance of the pooled portion of that mortgage loan). o Unless specifically indicated otherwise, statistical information presented in this prospectus supplement with respect to the Carolina Place underlying mortgage loan is being presented without regard to either (a) the non-pooled portion of that mortgage loan or (b) the related subordinate non-trust mortgage loan. o If any of the underlying mortgage loans is secured by multiple mortgaged real properties, a portion of that mortgage loan has been allocated to each of those properties for purposes of providing various statistical information in this prospectus supplement. o The general characteristics of the entire mortgage pool backing the offered certificates are not necessarily representative of the general characteristics of either loan group no. 1 or loan group no. 2. The yield and risk of loss on any class of offered certificates may depend on, among other things, the composition of each of loan group no. 1 and loan group no. 2. The general characteristics of each such loan group should also be analyzed when making an investment decision. - -------------------------------------------------------------------------------- S-40 - -------------------------------------------------------------------------------- o Whenever loan-level information, such as loan-to-value ratios or debt service coverage ratios, is presented in the context of the mortgaged real properties, the loan level statistic attributed to a mortgaged real property is the same as the statistic for the related underlying mortgage loan. o Whenever we refer to a particular underlying mortgage loan or mortgaged real property by name, we mean the underlying mortgage loan or mortgaged real property, as the case may be, identified by that name on Annex A-1 to this prospectus supplement. Whenever we identify a particular underlying mortgage loan by loan number, we are referring to the underlying mortgage loan identified by that loan number on Annex A-1 to this prospectus supplement. o Statistical information regarding the underlying mortgage loans may change prior to the date of initial issuance of the offered certificates due to changes in the composition of the mortgage pool prior to that date, and the initial mortgage pool balance may be as much as 5% larger or smaller than indicated. SOURCE OF THE UNDERLYING MORTGAGE LOANS............. We are not the originator of the mortgage loans that we intend to include in the trust fund. We will acquire those mortgage loans from two separate sellers. Each of those mortgage loans was originated by-- o the related mortgage loan seller from whom we acquired the mortgage loan, o an affiliate of the related mortgage loan seller, or o a correspondent in the related mortgage loan seller's conduit lending program. PAYMENT AND OTHER TERMS A. General.................... Each of the mortgage loans that we intend to include in the trust fund is the obligation of a borrower to repay a specified sum with interest. Repayment of each of the mortgage loans that we intend to include in the trust fund is secured by a mortgage lien on the fee simple and/or leasehold interest of the related borrower or another party in one or more commercial or multifamily real properties. Except for limited permitted encumbrances, which we identify in the glossary to this prospectus supplement, that mortgage lien will be a first priority lien. - -------------------------------------------------------------------------------- S-41 - -------------------------------------------------------------------------------- All of the mortgage loans that we intend to include in the trust fund are or should be considered nonrecourse. None of those mortgage loans is insured or guaranteed by any governmental agency or instrumentality or by any private mortgage insurer. B. Mortgage Rates............. Each of the mortgage loans that we intend to include in the trust fund currently accrues interest at the annual rate specified with respect to that loan on Annex A-1 to this prospectus supplement. Except as otherwise described below with respect to each mortgage loan that has an anticipated repayment date, the mortgage rate for each mortgage loan that we intend to include in the trust fund is, in the absence of default, fixed for the entire term of the loan. C. Due Dates.................. Subject, in some cases, to a next business day convention-- o twenty-five (25) of the mortgage loans that we intend to include in the trust fund, representing 19.2% of the initial mortgage pool balance, of which 20 mortgage loans are in loan group no. 1, representing 20.4% of the initial loan group no. 1 balance, and five mortgage loans are in loan group no. 2, representing 14.5% of the initial loan group no. 2 balance, provide for scheduled payments of principal and/or interest to be due on the fifth day of each month; o seven (7) of the mortgage loans that we intend to include in the trust fund, representing 9.4% of the initial mortgage pool balance, of which two mortgage loans are in loan group no. 1, representing 4.3% of the initial loan group no. 1 balance, and five mortgage loans are in loan group no. 2, representing 29.3% of the initial loan group no. 2 balance, provide for scheduled payments of principal and/or interest to be due on the seventh day of each month; o one (1) of the mortgage loans that we intend to include in the trust fund, representing 1.5% of the initial mortgage pool balance, and 1.9% of the initial loan group no. 1 balance, provide for scheduled payments of principal and/or interest to be due on the ninth day of each month; and o ninety-one (91) of the mortgage loans that we intend to include in the trust fund, representing 69.9% of the initial mortgage pool balance, of which 71 mortgage loans are in loan group no. 1, representing 73.4% of the initial loan group no. 1 balance, and 20 mortgage loans are in loan group no. 2, representing 56.2% of the initial loan group no. 2 balance, provide for scheduled payments of principal and/or interest to be due on the eleventh day of each month. - -------------------------------------------------------------------------------- S-42 - -------------------------------------------------------------------------------- D. Balloon Loans.............. One hundred nineteen (119) of the mortgage loans that we intend to include in the trust fund, representing 97.1% of the initial mortgage pool balance, of which 89 mortgage loans are in loan group no. 1, representing 96.3% of the initial loan group no. 1 balance, and 30 mortgage loans are in loan group no. 2, representing 100.0% of the initial loan group no. 2 balance, each provides for: o an amortization schedule that is significantly longer than their respective remaining terms to stated maturity or for no amortization prior to stated maturity; and o a substantial balloon payment of principal on their respective maturity dates. Fifty-six (56) of the 119 balloon mortgage loans that we intend to include in the trust fund, representing 48.9% of the initial mortgage pool balance, of which 39 mortgage loans are in loan group no. 1, representing 46.2% of the initial loan group no. 1 balance, and 17 mortgage loans are in loan group no. 2, representing 59.5% of the initial loan group no. 2 balance, provide for payments of interest only for periods ranging from the first 12 to the first 96 payments following origination. Four (4) of the 119 balloon mortgage loans that we intend to include in the trust fund, representing 5.4% of the initial mortgage pool balance, of which three mortgage loans are in loan group no. 1, representing 5.4% of the initial loan group no. 1 balance, and one mortgage loan is in loan group no. 2, representing 5.6% of the initial loan group no. 2 balance, provide for payments of interest only until maturity. E. ARD Loans.................. Three (3) of the mortgage loans that we intend to include in the trust, representing 2.1% of the initial mortgage pool balance and 2.7% of the initial loan group no. 1 balance, each provides incentives to the related borrower to pay the subject mortgage loan in full by a specified date prior to maturity. We consider that date to be the anticipated repayment date for each of those mortgage loans. There can be no assurance, however, that these incentives will result in any of those mortgage loans being paid in full on or before its anticipated repayment date. The incentives, which in each case will become effective as of the related anticipated repayment date may (but need not), include: o the calculation of interest at an annual rate in excess of the initial mortgage rate, which additional interest will be deferred, may be compounded and will be payable only after the outstanding principal balance of the mortgage loan is paid in full; and o the application of all or a portion of excess cash flow from the mortgaged real property, after debt service payments and any specified reserves or expenses have - -------------------------------------------------------------------------------- S-43 - -------------------------------------------------------------------------------- been funded or paid, to pay the principal amount of the mortgage loan, which payment of principal will be in addition to the principal portion of the normal monthly debt service payment. One (1) of the three mortgage loans with anticipated repayment dates that we intend to include in the trust fund, representing 0.7% of the initial mortgage pool balance and 0.8% of the initial loan group no. 1 balance, provides for payments of interest only for the first 12 payments following origination. F. Fully Amortizing Loans..... Two (2) of the mortgage loans that we intend to include in the trust fund, representing 0.8% of the initial mortgage pool balance and 1.0% of the initial loan group no. 1 balance, each have payment schedules that provide for the payment of the subject mortgage loan in full or substantially in full by its maturity date. These mortgage loans do not provide for any of the repayment incentives associated with a mortgage loan that has an anticipated repayment date. DELINQUENCY STATUS............ None of the mortgage loans that we intend to include in the trust fund was more than 30 days delinquent with respect to any monthly debt service payment as of the cut-off date. PREPAYMENT RESTRICTIONS....... As described more fully in Annex A-1 to this prospectus supplement, as of the cut-off date, all but two (2) of the mortgage loans that we intend to include in the trust fund provide for a prepayment lockout period during which voluntary prepayments are prohibited. In each case, that initial prepayment lockout period will be followed by one or more of the following: o a prepayment lockout/defeasance period during which voluntary prepayments are prohibited, but defeasance is allowed; o a prepayment consideration period during which a voluntary prepayment must be accompanied by prepayment consideration; and/or o an open prepayment period during which voluntary prepayments are permitted without payment of any prepayment consideration. Notwithstanding the foregoing prepayment restrictions, prepayments may occur in connection with loan defaults, casualties and condemnations in respect of the mortgaged real properties and, in certain cases, out of cash holdbacks where certain conditions relating to the holdback have not been satisfied. Prepayment premiums and/or yield maintenance charges may not be payable in connection with prepayments of this type. - -------------------------------------------------------------------------------- S-44 - -------------------------------------------------------------------------------- DEFEASANCE.................... One hundred fourteen (114) of the mortgage loans to be included in the trust fund, representing 93.9% of the initial mortgage pool balance, of which 85 mortgage loans are in loan group no. 1, representing 93.6% of the initial loan group no. 1 balance, and 29 mortgage loans are in loan group no. 2, representing 94.7% of the initial loan group no. 2 balance, permit the related borrower to defease the mortgage loan and obtain a release of the mortgaged real property from the related mortgage lien by delivering U.S. Treasury obligations or other government securities as substitute collateral, but continue to prohibit voluntary prepayments during the defeasance period. None of those 114 mortgage loans permits defeasance prior to the second anniversary of the date of initial issuance of the series 2005-C3 certificates. ADDITIONAL STATISTICAL INFORMATION................ Set forth below is various statistical information regarding the mortgage pool, loan group no. 1 and loan group no. 2, respectively. A. GENERAL CHARACTERISTICS.... The mortgage pool, loan group no. 1 and loan group no. 2, respectively, will have the following general characteristics as of the cut-off date: <TABLE> MORTGAGE LOAN GROUP LOAN GROUP POOL NO. 1 NO. 2 -------------- -------------- ------------ Initial mortgage pool/loan group balance........ $1,435,172,921 $1,145,448,916 $289,724,005 Number of mortgage loans........................ 124 94 30 Number of mortgaged real properties............. 127 97 30 Largest cut-off date principal balance.......... $ 114,200,000 $ 114,200,000 $21,600,000 Smallest cut-off date principal balance......... $ 818,673 $ 818,673 $1,386,000 Average cut-off date principal balance.......... $ 11,573,975 $ 12,185,627 $9,657,467 Highest mortgage rate........................... 6.2100% 6.2100% 5.6550% Lowest mortgage rate............................ 4.5975% 4.5975% 4.7800% Weighted average mortgage rate.................. 5.3487% 5.3729% 5.2529% Longest original loan term to maturity or anticipated repayment date................... 240 months 240 months 120 months Shortest original loan term to maturity or anticipated repayment date................... 55 months 55 months 60 months Weighted average original loan term to maturity or anticipated repayment date................ 105 months 109 months 91 months Longest remaining loan term to maturity or anticipated repayment date................... 238 months 238 months 120 months Shortest remaining loan term to maturity or anticipated repayment date................... 49 months 55 months 49 months Weighted average remaining loan term to maturity or anticipated repayment date................ 101 months 105 months 85 months Highest underwritten net cash flow debt service coverage ratio............................... 2.99x 2.99x 1.43x Lowest underwritten net cash flow debt service coverage ratio............................... 1.13x 1.13x 1.16x Weighted average underwritten net cash flow debt service coverage ratio....................... 1.38x 1.40x 1.29x </TABLE> - -------------------------------------------------------------------------------- S-45 - -------------------------------------------------------------------------------- <TABLE> Highest cut-off date loan-to-value ratio........ 80.03% 80.03% 80.00% Lowest cut-off date loan-to-value ratio......... 32.28% 32.28% 62.90% Weighted average cut-off date loan-to-value ratio........................................ 70.71% 70.18% 72.79% Highest maturity date/ARD loan-to-value ratio... 79.12% 75.00% 79.12% Lowest maturity date/ARD loan-to-value ratio.... 1.37% 1.37% 56.92% Weighted average maturity date/ARD loan-to-value ratio........................................ 61.60% 60.57% 65.70% </TABLE> When reviewing the foregoing table, please note the following: o The initial mortgage pool balance is subject to a permitted variance of plus or minus 5%. The initial loan group no. 1 balance and the initial loan group no. 2 balance may each also vary. o With respect to seven (7) mortgage loans that we intend to include in the trust fund (loan numbers 33, 34, 38, 40, 44, 48 and 65), which collectively represent 7.1% of the initial mortgage pool balance (four (4) mortgage loans in loan group no. 1, representing 5.5% of the initial loan group no. 1 balance, and three (3) mortgage loans are in loan group no. 2, representing 13.2% of the initial loan group no. 2 balance), the underwritten net cash flow debt service coverage ratios have, and with respect to one (1) mortgage loan (loan number 34), which represents 1.2% of the initial mortgage pool balance and 1.5% of the initial loan group no. 1 balance, the cut-off date loan-to-value ratio has, been calculated and/or presented on an adjusted basis that (a) takes into account various assumptions regarding the financial performance of the related mortgaged real property that are consistent with the respective performance related criteria required to obtain the release of a cash holdback or letter of credit that serves as additional collateral or otherwise covers losses to a limited extent and/or (b) reflects an application of that cash holdback or letter of credit to pay down the subject mortgage loan, with (if applicable) a corresponding reamortization of the monthly debt service payment. If the related cash holdbacks or letters of credit were not taken into account for any of these seven underlying mortgage loans, then: (a) the underwritten net cash flow debt service coverage ratios for the mortgage pool would range from 1.02:1 to 2.99:1, with a weighted average of 1.37:1; - -------------------------------------------------------------------------------- S-46 - -------------------------------------------------------------------------------- (b) the cut-off date loan-to-value ratios of the mortgage pool would range from 32.28% to 80.27%, with a weighted average of 70.88%; (c) the underwritten net cash flow debt service coverage ratios for loan group no. 1 would range from 1.02:1 to 2.99:1, with a weighted average of 1.39:1; (d) the cut-off date loan-to-value ratios of loan group no. 1 would range from 32.28% to 80.27%, with a weighted average of 70.39%; and (e) the underwritten net cash flow debt service coverage ratios for loan group no. 2 would range from 1.11:1 to 1.43:1, with a weighted average of 1.29:1. Weighted average underwritten net cash flow debt service coverage and cut-off date loan-to-value ratio information for the mortgage pool (or portions thereof that contain any of those seven (7) underlying mortgage loans) set forth in this prospectus supplement reflect the respective adjustments referenced above. o Unless specifically indicated otherwise, statistical information presented in this prospectus supplement with respect to the Carolina Place underlying mortgage loan is being presented without regard to either (a) the non-pooled portion of that mortgage loan or (b) the related subordinate non-trust mortgage loan. The combined underwritten net cash flow debt service coverage ratio for the pooled and non-pooled portions of the Carolina Place underlying mortgage loan is 1.72x; and the combined cut-off date loan-to-value ratio and maturity date/ARD loan-to-value ratio for the pooled and non-pooled portions of the Carolina Place underlying mortgage loan will be 55.32% and 51.02%, respectively. The combined underwritten net cash flow debt service coverage ratio for the entire Carolina Place loan pair is 1.33x; and the combined cut-off date loan-to-value ratio and maturity date/ARD loan-to-value ratio for the entire Carolina Place loan pair will be 71.46% and 65.91%, respectively. - -------------------------------------------------------------------------------- S-47 - -------------------------------------------------------------------------------- B. GEOGRAPHIC CONCENTRATION... The table below shows the number of, and percentage of the initial mortgage pool balance, the initial loan group no. 1 balance and the initial loan group no. 2 balance, secured by, mortgaged real properties located in the indicated states or regions: <TABLE> NUMBER OF % OF INITIAL % OF INITIAL % OF INITIAL MORTGAGED MORTGAGE LOAN GROUP LOAN GROUP STATE/REGION PROPERTIES POOL BALANCE NO. 1 BALANCE NO. 2 BALANCE - ------------------------- ---------- ------------ ------------- ------------- California............... 23 16.3% 19.1% 5.3% Southern California... 16 11.8 13.4 5.3 Northern California... 7 4.5 5.7 -- Texas.................... 26 12.6 9.8 24.1 North Carolina........... 5 11.7 12.3 9.1 Maryland................. 5 10.8 13.5 -- Florida.................. 6 4.6 5.3 1.7 New York................. 10 4.3 5.4 -- New Jersey............... 1 3.7 4.6 -- Washington............... 4 3.3 4.1 -- Michigan................. 4 2.9 1.0 10.6 Massachusetts............ 3 2.9 2.9 2.7 Other.................... 40 27.0 22.0 46.6 </TABLE> The reference to "Other" in the foregoing table, insofar as it relates to the entire mortgage pool, includes 18 other states. No more than 2.8% of the initial mortgage pool balance is secured by mortgaged real properties located in any of those other jurisdictions. Northern California includes areas with zip codes of 93612 and above, and Southern California includes areas with zip codes of 92832 and below. - -------------------------------------------------------------------------------- S-48 - -------------------------------------------------------------------------------- C. PROPERTY TYPES............. The table below shows the number of, and percentage of the initial mortgage pool balance, the initial loan group no. 1 balance and the initial loan group no. 2 balance, secured by, mortgaged real properties predominantly operated for each indicated purpose: <TABLE> NUMBER OF % OF INITIAL % OF INITIAL % OF INITIAL MORTGAGED MORTGAGE LOAN GROUP LOAN GROUP PROPERTY TYPES PROPERTIES POOL BALANCE NO. 1 BALANCE NO. 2 BALANCE - --------------------------------- ---------- ------------ ------------- ------------- Retail .......................... 57 44.2% 55.4% % Anchored ..................... 24 18.4 23.0 -- Regional Mall ................ 5 14.5 18.2 -- Unanchored ................... 8 5.4 6.8 -- Anchored, Single Tenant ...... 15 3.9 4.9 -- Shadow Anchored .............. 4 1.4 1.8 -- Factory Outlet Center ........ 1 0.6 0.8 -- Office .......................... 22 26.8 33.5 -- Suburban ..................... 14 14.2 17.7 -- Central Business District .... 4 6.3 7.9 -- Flex ......................... 1 3.6 4.5 -- Medical Office ............... 3 2.7 3.4 -- Multifamily ..................... 32 21.1 2.1 96.5 Conventional ................. 26 14.6 2.1 64.0 Student Housing .............. 6 6.5 -- 32.4 Industrial ...................... 8 3.7 4.6 -- Self Storage .................... 4 2.0 2.5 -- Manufactured Housing ............ 1 0.7 -- 3.5 Mixed Use ....................... 1 0.6 0.8 -- Other ........................... 1 0.6 0.7 -- Land ............................ 1 0.3 0.4 -- </TABLE> With respect to each of the four (4) mortgaged real properties identified in the foregoing table as "Shadow Anchored Retail", none of the relevant anchor tenants is on any portion of the particular property that is subject to the lien of the related mortgage instrument. D. ENCUMBERED INTERESTS....... The table below shows the number of, and percentage of the initial mortgage pool balance secured by, mortgaged real properties for which the whole or predominant encumbered interest is as indicated: NUMBER OF % OF INITIAL MORTGAGED MORTGAGE ENCUMBERED INTERESTS PROPERTIES POOL BALANCE -------------------- ---------- ------------ Fee Simple ......... 124(1) 99.0% Leasehold .......... 3(2) 1.0 - -------------------------------------------------------------------------------- S-49 ---------- (1) Ninety-four (94) of these mortgaged real properties secure mortgage loans in loan group no. 1, representing 98.7% of the initial loan group no. 1 balance, and 30 of these mortgaged real properties secure mortgage loans in loan group no. 2, representing 100% of the initial loan group no. 2 balance. (2) All of these mortgaged real properties secure mortgage loans in loan group no. 1, representing 1.3% of the initial loan group no. 1 balance. It should be noted that each mortgage loan secured by overlapping fee and leasehold interests is presented as being secured by a fee simple interest in this prospectus supplement and is therefore included within the category referred to as "Fee Simple" in the chart above. LEGAL AND INVESTMENT CONSIDERATIONS FEDERAL INCOME TAX CONSEQUENCES............... The trustee or its agent will make elections to treat designated portions of the assets of the trust as three separate real estate mortgage investment conduits -- or REMICs -- under Sections 860A through 860G of the Internal Revenue Code of 1986, as amended. One of those REMICs will primarily consist of the Carolina Place underlying mortgage loan. The other two of those REMICs will be as follows: o REMIC I, the lowest tier REMIC, which will hold, among other things, the underlying mortgage loans -- or, in the case of the Carolina Place underlying mortgage loan, regular interests in the related single loan REMIC referred to above -- and various other related assets; and o REMIC II, which will hold the regular interests in REMIC I. Notwithstanding the foregoing, neither REMIC I nor the Carolina Place individual loan REMIC will hold collections of additional interest accrued, and deferred as to payment, with respect to any underlying mortgage loan with an anticipated repayment date. Any assets not included in a REMIC will constitute one or more grantor trusts for U.S. federal income tax purposes. The class A-MFL REMIC II regular interest, the swap agreement and the trustee's floating rate account, will constitute a grantor trust for federal income tax purposes. The offered certificates (exclusive of the class A-MFL certificates) and the class A-MFL REMIC II regular interest will be treated as regular interests in REMIC II. This means that they will be treated as newly issued debt instruments for federal income tax purposes. The class A-MFL certificates will represent undivided beneficial ownership interests in the class A- - -------------------------------------------------------------------------------- S-50 - -------------------------------------------------------------------------------- MFL REMIC II regular interest, the swap agreement and the trustee's floating rate account. You will have to report income on your offered certificates in accordance with the accrual method of accounting even if you are otherwise a cash method taxpayer. The offered certificates will not represent any interest in the grantor trust referred to above. One or more classes of the offered certificates (excluding the class A-MFL certificates but including the class A-MFL REMIC II regular interest) may be issued with more than de minimis original issue discount. If you own an offered certificate issued with original issue discount, you may have to report original issue discount income and be subject to a tax on this income before you receive a corresponding cash payment. Some of the offered certificates (excluding the class A-MFL certificates but including the class A-MFL REMIC II regular interest) may be treated as having been issued at a premium. When determining the rate of accrual of original issue discount, market discount and premium, if any, for federal income tax purposes, the prepayment assumption used will be that following any date of determination: o the underlying mortgage loans with anticipated repayment dates will be paid in full on those dates; o no mortgage loan in the trust fund will otherwise be prepaid prior to maturity; and o there will be no extension of maturity for any mortgage loan in the trust fund. For a more detailed discussion of the federal income tax aspects of investing in the offered certificates, see "Federal Income Tax Consequences" in each of this prospectus supplement and the accompanying prospectus. - -------------------------------------------------------------------------------- S-51 - -------------------------------------------------------------------------------- ERISA......................... The acquisition of an offered certificate by an employee benefit plan or other plan or arrangement subject to the Employee Retirement Income Security Act of 1974, as amended, or to section 4975 of the Internal Revenue Code of 1986, as amended, could, in some instances, result in a prohibited transaction or other violation of the fiduciary responsibility provisions of these laws. We anticipate that, subject to satisfaction of the conditions referred to under "ERISA Considerations" in this prospectus supplement, retirement plans and other employee benefit plans and arrangements subject to-- o Title I of the Employee Retirement Income Security Act of 1974, as amended, or o Section 4975 of the Internal Revenue Code of 1986, as amended, initially will be able to invest in the offered certificates without giving rise to a prohibited transaction. This is based upon an individual prohibited transaction exemption granted to a predecessor of Citigroup Global Markets Inc. by the U.S. Department of Labor. If you are a fiduciary or any other person investing the assets of any retirement plan or other employee benefit plan or arrangement subject to Title I of ERISA or Section 4975 of the Internal Revenue Code of 1986, as amended, you should review carefully with your legal advisors whether the purchase or holding of the offered certificates could give rise to a transaction that is prohibited under ERISA or Section 4975 of the Internal Revenue Code of 1986, as amended. In addition, if you are a fiduciary of any such retirement plan or other employee benefit plan and are considering an investment in the class A-MFL certificates, you should review the specific requirements for purchases of class A-MFL certificates by plans. See "ERISA Considerations" in this prospectus supplement and in the accompanying prospectus. LEGAL INVESTMENT.............. The offered certificates will not be mortgage related securities within the meaning of the Secondary Mortgage Market Enhancement Act of 1984. All institutions whose investment activities are subject to legal investment laws and regulations, regulatory capital requirements or review by regulatory authorities should consult with their own legal advisors in determining whether and to what extent the offered certificates will be legal investments for them. See "Legal Investment" in this prospectus supplement and in the accompanying prospectus. - -------------------------------------------------------------------------------- S-52 - -------------------------------------------------------------------------------- INVESTMENT CONSIDERATIONS..... The yield to maturity of any offered certificate will depend upon, among other things: o the price paid for the offered certificate; and o the rate, timing and amount of payments on the offered certificate. The rate and timing of payments and other collections of principal on or with respect to the underlying mortgage loans could affect the yield to maturity on an offered certificate. In the case of offered certificates purchased at a discount, a slower than anticipated rate of payments and other collections of principal on the underlying mortgage loans could result in a lower than anticipated yield. In the case of offered certificates purchased at a premium, a faster than anticipated rate of payments and other collections of principal on the underlying mortgage loans could result in a lower than anticipated yield. Holders of the class A-1, A-2, A-3, A-SB and A-4 certificates will be very affected by the rate and timing of payments and other collections of principal on the underlying mortgage loans in loan group no. 1 and, in the absence of significant losses on the mortgage pool, should be largely unaffected by the rate and timing of payments and other collections of principal on the underlying mortgage loans in loan group no. 2. Conversely, holders of the class A-1A certificates will be very affected by the rate and timing of payments and other collections of principal on the underlying mortgage loans in loan group no. 2 and, only after the retirement of the class A-1, A-2, A-3, A-SB and A-4 certificates or in connection with significant losses on the mortgage pool, will be affected by the rate and timing of payments and other collections of principal on the underlying mortgage loans in loan group no. 1. The yield on the class A-MFL certificates will be highly sensitive to changes in the level of LIBOR. The yield on the class A-MFL certificates, as well as on the other offered certificates with variable or capped pass-through rates, could also be adversely affected if the underlying mortgage loans with relatively higher net mortgage rates pay principal faster than the underlying mortgage loans with relatively lower net mortgage rates. See "Yield and Maturity Considerations" in this prospectus supplement and in the accompanying prospectus. - -------------------------------------------------------------------------------- S-53 RISK FACTORS The offered certificates are not suitable investments for all investors. In particular, you should not purchase any class of offered certificates unless you understand and are able to bear the risks associated with that class. The offered certificates are complex securities and it is important that you possess, either alone or together with an investment advisor, the expertise necessary to evaluate the information contained in this prospectus supplement and the accompanying prospectus in the context of your financial situation. You should consider the following factors, as well as those set forth under "Risk Factors" in the accompanying prospectus, in deciding whether to purchase any offered certificates. The "Risk Factors" section in the accompanying prospectus includes a number of general risks associated with making an investment in the offered certificates. RISKS RELATED TO THE OFFERED CERTIFICATES The Class A-MFL, A-MFX, A-J, B, C and D Certificates Are Subordinate to, and Are Therefore Riskier than, the Class A-1, A-2, A-3, A-SB, A-4 and A-1A Certificates. If you purchase class A-MFL, A-MFX, A-J, B, C or D certificates, then your offered certificates (in the case of the class A-MFL certificates, by virtue of the interest evidenced thereby in the class A-MFL REMIC II regular interest) will provide credit support to other classes of offered certificates, as well as to the class XC and XP certificates. As a result, you will receive payments after, and must bear the effects of losses on the underlying mortgage loans before, the holders of those other classes of series 2005-C3 certificates. When making an investment decision, you should consider, among other things: o the payment priorities of the respective classes of the series 2005-C3 certificates; o the order in which the principal balances of the respective classes of the series 2005-C3 certificates with balances will be reduced in connection with losses and default-related shortfalls; and o the characteristics and quality of the mortgage loans in the trust fund. See "Description of the Mortgage Pool" and "Description of the Offered Certificates--Payments" and "--Reductions of Certificate Principal Balances in Connection with Realized Losses and Additional Trust Fund Expenses" in this prospectus supplement. See also "Risk Factors--The Investment Performance of Your Offered Certificates Will Depend Upon Payments, Defaults and Losses on the Underlying Mortgage Loans; and Those Payments, Defaults and Losses May Be Highly Unpredictable", "--Any Credit Support for Your Offered Certificates May Be Insufficient to Protect You Against All Potential Losses" and "--Payments on the Offered Certificates Will Be Made Solely from the Limited Assets of the Related Trust, and Those Assets May Be Insufficient to Make All Required Payments on Those Certificates" in the accompanying prospectus. The Offered Certificates Have Uncertain Yields to Maturity. The yield on your offered certificates will depend on: o the price you paid for your offered certificates; and o the rate, timing and amount of payments on your offered certificates. S-54 The rate, timing and amount of payments on your offered certificates will, in turn, depend on: o the pass-through rate for, and the other payment terms of, your offered certificates; o the rate and timing of payments, including prepayments, and other collections of principal on the underlying mortgage loans; o the rate and timing of any purchases, including repurchases by mortgage loan sellers as a result of material breaches of representations and warranties and material document deficiencies, of mortgage loans out of the trust fund; o the rate and timing of defaults, and the severity of losses, if any, on the underlying mortgage loans; o the rate, timing and severity of any unanticipated or default-related trust expenses that reduce amounts available for payment on the offered certificates; o the rate, timing, severity and allocation of any other shortfalls that reduce amounts available for payment on your offered certificates; o the collection of prepayment premiums and yield maintenance charges with respect to the underlying mortgage loans and the extent to which those amounts are paid to you; and o servicing decisions with respect to the underlying mortgage loans. In general, the factors described in the preceding paragraph cannot be predicted with any certainty. Accordingly, you may find it difficult to analyze the effect that these factors might have on the yield to maturity of your offered certificates. Further, in the absence of significant losses on the mortgage pool, holders of the class A-1, A-2, A-3, A-SB and A-4 certificates should be concerned with the factors described in the second through eighth bullets of the preceding paragraph primarily insofar as they relate to the underlying mortgage loans in loan group no. 1. Until the class A-1, A-2, A-3, A-SB and A-4 certificates are retired, holders of the class A-1A certificates should, in the absence of significant losses on the mortgage pool, be concerned with the factors described in the second through eighth bullets of the preceding paragraph primarily insofar as they relate to the underlying mortgage loans in loan group no. 2. The yield to investors in the class A-MFL certificates will be highly sensitive to changes in the level of LIBOR. Investors in the class A-MFL certificates should consider the risk that lower than anticipated levels of LIBOR could result in actual yields that are lower than anticipated yields on the class A-MFL certificates. In addition, because interest payments on the class A-MFL certificates may be reduced or the pass-through rate on the class A-MFL certificates may convert to the pass-through rate on the class A-MFL REMIC II regular interest, in connection with certain events discussed in this prospectus supplement, the yield to investors in the class A-MFL certificates under such circumstances may not be as high as that offered by other LIBOR-based investments that are not subject to such interest rate restrictions. In general, the earlier a change in the level of LIBOR, the greater the effect on the yield to maturity to an investor in the class A-MFL certificates. As a result, the effect on such investor's yield to maturity of a level of LIBOR that is lower than the rate anticipated by such investor during the period immediately following the issuance of the class A-MFL certificates is not likely to be offset by a subsequent like increase in the level of LIBOR. The failure by the swap counterparty in its obligation to make payments under the swap agreement, the conversion to a pass-through rate that is below the rate that would otherwise be payable under the swap agreement S-55 at the applicable floating rate and/or the reduction of interest payments resulting from payment of interest to the class A-MFL REMIC II regular interest based on a pass-through rate below % per annum would have such a negative impact. There can be no assurance that a default by the swap counterparty and/or the conversion of the pass-through rate from a rate based on LIBOR to the pass-through rate on the class A-MFL REMIC II regular interest would not adversely affect the amount and timing of distributions to the holders of the class A-MFL certificates. See "Yield and Maturity Considerations" in this prospectus supplement. See "Description of the Mortgage Pool" (particularly "Description of the Mortgage Pool--Mortgage Loans Which Permit Partial Release of the Related Mortgaged Real Property"), "Servicing of the Underlying Mortgage Loans", "Description of the Offered Certificates--Payments" and "--Reductions of Certificate Principal Balances in Connection with Realized Losses and Additional Trust Fund Expenses" and "Yield and Maturity Considerations" in this prospectus supplement. See also "Risk Factors--The Investment Performance of Your Offered Certificates Will Depend Upon Payments, Defaults and Losses on the Underlying Mortgage Loans; and Those Payments, Defaults and Losses May Be Highly Unpredictable" and "Yield and Maturity Considerations" in the accompanying prospectus. The Investment Performance of Your Offered Certificates May Vary Materially and Adversely from Your Expectations Because the Rate of Prepayments and Other Unscheduled Collections of Principal on the Underlying Mortgage Loans Is Faster or Slower than You Anticipated. If you purchase your offered certificates at a premium, and if payments and other collections of principal on the mortgage loans in the trust fund occur at a rate faster than you anticipated at the time of your purchase, then your actual yield to maturity may be lower than you had assumed at the time of your purchase. Conversely, if you purchase your offered certificates at a discount, and if payments and other collections of principal on the mortgage loans in the trust fund occur at a rate slower than you anticipated at the time of your purchase, then your actual yield to maturity may be lower than you had assumed at the time of your purchase. Holders of the class A-1, A-2, A-3, A-SB and A-4 certificates will be very affected by the rate of payments and other collections of principal on the underlying mortgage loans in loan group no. 1 and, in the absence of significant losses on the mortgage pool, should be largely unaffected by the rate of payments and other collections of principal on the underlying mortgage loans in loan group no. 2. Conversely, holders of the class A-1A certificates will be very affected by the rate and timing of payments and other collections of principal on the underlying mortgage loans in loan group no. 2 and, only after the retirement of the class A-1, A-2, A-3, A-SB and A-4 certificates or in connection with significant losses on the mortgage pool, will be affected by the rate and timing of payments and other collections of principal on the underlying mortgage loans in loan group no. 1. You should consider that prepayment premiums and yield maintenance charges may not be collected in all circumstances. Furthermore, even if a prepayment premium or yield maintenance charge is collected and payable on your offered certificates, it may not be sufficient to offset fully any loss in yield on your offered certificates resulting from the corresponding prepayment. The yield on the class A-MFL certificates and the other offered certificates with variable or capped pass-through rates could also be adversely affected if the underlying mortgage loans with relatively higher net mortgage rates pay principal faster than the underlying mortgage loans with relatively lower net mortgage rates. The Right of the Master Servicer, the Special Servicer, the Trustee and the Fiscal Agent to Receive Interest on Advances, and the Right of the Special Servicer to Receive Special Servicing Compensation, May Result in Additional Losses to the Trust Fund. The master servicer, the special servicer, the trustee and the fiscal agent will each generally be entitled to receive interest on unreimbursed advances made by it. This interest will generally accrue from the date on which the related advance is made through the date of reimbursement. In addition, the special servicer will be entitled to receive special servicing fees, liquidation fees and workout fees as compensation for performing its obligations. The right to receive payments of interest and fees is senior to the S-56 rights of holders to receive distributions on the offered certificates and, consequently, may result in losses being allocated to the offered certificates that would not have resulted absent the accrual of this interest. Potential Conflicts of Interest May Affect the Servicing of the Underlying Mortgage Loans. The master servicer, the special servicer or any of their respective affiliates may: o acquire series 2005-C3 certificates; and o engage in other financial transactions, including as a lender, with the underlying borrowers and their respective affiliates. A special servicer or any affiliate of a special servicer is not precluded by the terms of the documents governing this transaction from buying certain non-offered classes of series 2005-C3 certificates, including the controlling class. In addition, the master servicer, the special servicer or any of their respective affiliates may have interests when dealing with the underlying mortgage loans that are in conflict with those of holders of the offered certificates. These relationships may create conflicts of interest. If the special servicer, an affiliate thereof or any other related entity holds any of the series 2005-C3 non-offered certificates, it might seek to reduce the potential for losses on those non-offered certificates by deferring acceleration or other action with respect to a defaulted or specially serviced mortgage loan in the hope of maximizing future proceeds. That failure to take immediate action, however, might pose a greater risk to the trust and ultimately result in less proceeds to the trust than would be realized if earlier action had been taken. As described in "Summary of Prospectus Supplement--Relevant Parties" in this prospectus supplement, the master servicer is an affiliate of one of the underwriters. The holders (or, in the case of a class of book-entry certificates, the beneficial owners) of series 2005-C3 certificates representing a majority interest in the controlling class of series 2005-C3 certificates will be entitled to designate a series 2005-C3 controlling class representative to exercise the rights and powers in respect of the mortgage pool described under "Servicing of the Underlying Mortgage Loans--The Series 2005-C3 Controlling Class Representative, the Class CP Representative and the Carolina Place Non-Trust Loan Noteholder" in this prospectus supplement. You should expect that the series 2005-C3 controlling class representative will exercise those rights and powers on behalf of the series 2005-C3 controlling class certificateholders, and it will not be liable to any class of series 2005-C3 certificateholders for doing so. In addition, subject to the conditions described under "Servicing of the Underlying Mortgage Loans--Replacement of the Special Servicer" in this prospectus supplement, the holders of series 2005-C3 certificates representing a majority interest in the controlling class of series 2005-C3 certificates may remove any special servicer, with or without cause, and appoint a successor special servicer chosen by them without the consent of the holders of any other series 2005-C3 certificates, the trustee or the master servicer. In the absence of significant losses on the underlying mortgage loans, the series 2005-C3 controlling class will be a non-offered class of series 2005-C3 certificates. The series 2005-C3 controlling class certificateholders are therefore likely to have interests that conflict with those of the holders of the offered certificates. The holders (or, in the case of a class of book-entry certificates, beneficial owners) of class CP-1, CP-2 and CP-3 certificates entitled to a majority of the series 2005-C3 voting rights allocated to the class CP-1, CP-2 and CP-3 certificates will be entitled to replace the special servicer for, and to designate a class CP representative having the rights and powers in respect of, the Carolina Place underlying mortgage loan, to the extent that the Carolina Place non-trust mortgage loan noteholder is not otherwise entitled to do so and subject to the conditions described under "Servicing of the Underlying Mortgage Loans--Replacement of the Special Servicer" and "--The Series 2005-C3 Controlling Class Representative, the Class CP Representative and the Carolina Place Non- S-57 Trust Loan Noteholder", respectively, in this prospectus supplement. You should expect that the class CP representative will exercise its rights and powers on behalf of the class CP-1, CP-2 and CP-3 certificateholders, and it will not be liable to any class of series 2005-C3 certificateholders for doing so. The class CP-1, CP-2 and CP-3 certificates, which are not offered by this prospectus supplement, represent interests solely in the Carolina Place underlying mortgage loan. Accordingly, the holders of the class CP-1, CP-2 and CP-3 certificates are likely to have interests that conflict with those of the holders of the offered certificates. You May Be Bound by the Actions of Other Series 2005-C3 Certificateholders. In some circumstances, the consent or approval of the holders of a specified percentage of the series 2005-C3 certificates will be required to direct, consent to or approve certain actions, including amending the series 2005-C3 pooling and servicing agreement. In these cases, this consent or approval will be sufficient to bind all holders of series 2005-C3 certificates. RISKS RELATED TO THE SWAP AGREEMENT Distributions on the Class A-MFL Certificates will Depend, in Part, on Payments Received from the Swap Counterparty. The trust will have the benefit of a swap agreement relating to the class A-MFL certificates with Citibank N.A. Because the class A-MFL REMIC II regular interest accrues interest at a fixed rate of interest subject to a maximum pass-through rate equal to a weighted average coupon derived from net interest rates on the underlying mortgage loans, the ability of the holders of the class A-MFL certificates to obtain the payment of interest at the designated LIBOR-based pass-through rate (which payment of interest may be reduced in certain circumstances as described in this prospectus supplement) will depend on payment by the swap counterparty pursuant to the swap agreement. See "Description of the Swap Agreement" in this prospectus supplement. A Decline in the Ratings of the Swap Counterparty, Among Other Things, May Result in the Termination of the Swap Agreement and as a Result, the Pass-Through Rate on the Class A-MFL Certificates May Convert to the Pass-Through Rate on the Class A-MFL REMIC II Regular Interest. If the swap counterparty's long-term or short-term ratings fall below the ratings specified under "Description of the Swap Agreement--The Swap Agreement" in this prospectus supplement, then: (a) in the case of the collateralization event, the swap counterparty will be required to post collateral to the extent necessary to fund any termination fee payable by the swap counterparty in the event of a termination of the swap agreement, to find a suitable replacement swap counterparty or to find a suitable guarantor of its obligations under the swap agreement; and (b) in the case of a rating agency trigger event, the swap counterparty will be required to find a suitable replacement swap counterparty or find a suitable guarantor of its obligations under the swap agreement. If the swap counterparty fails to post acceptable collateral, find a suitable replacement swap counterparty or find a suitable guarantor of its obligations under the swap agreement after a collateralization event, or if the swap counterparty fails to find a suitable replacement swap counterparty or find a suitable guarantor of its obligations under the swap agreement after a rating agency trigger event, or if another event of default or a termination event occurs under the swap agreement, then the trustee will be required to take such actions (following the expiration of any applicable grace period), unless otherwise directed in writing by the holders of 25% (by balance) of the class A-MFL certificates, to enforce the rights of the trustee under the swap agreement as may be permitted by the terms of the swap agreement, including the termination of the swap agreement, and use any termination fees received from the swap counterparty to enter into a replacement swap agreement on substantially similar terms. Other events of default under the swap agreement will include the failure of either party to make any payment required thereunder, which failure is not remedied within one (1) business day following notice thereof. The swap agreement will provide for other customary events of default and termination events. S-58 If a guarantor of the swap counterparty's obligations under the swap agreement is in place, then the ratings requirements of the swap agreement with respect to the swap counterparty will be satisfied provided that the ratings of that guarantor satisfy those rating requirements. If the costs attributable to entering into a replacement swap agreement would exceed the net proceeds of the liquidation of the swap agreement, then a replacement swap agreement will not be entered into and any such proceeds will instead be distributed to the holders of the class A-MFL certificates. There can be no assurance that the swap counterparty will maintain the required ratings or have sufficient assets or otherwise be able to fulfill its obligations under the swap agreement, and there can be no assurance that any termination fee payable by the swap counterparty under the swap agreement will be sufficient for the trustee to engage a replacement swap counterparty. Furthermore, a termination fee may not be payable by the swap counterparty in connection with certain termination events. In addition, and notwithstanding the foregoing, the trustee will not be obligated to take any enforcement action with respect to the swap agreement unless it has received from the class A-MFL certificateholders an indemnity satisfactory to it with respect to the costs, expenses and liabilities associated with enforcing the rights of the trust under the swap agreement. No such costs, expenses and/or liabilities will be payable out of the trust fund. During the occurrence of a continuing payment default on the part of the swap counterparty, or if the swap agreement is terminated and no replacement swap counterparty is found, the class A-MFL certificate pass-through rate will convert to the pass-through rate on the class A-MFL REMIC II regular interest, which is a fixed interest rate of % per annum subject to a maximum pass-through rate equal to a weighted average coupon derived from the net interest rates on the underlying mortgage loans (without regard to the non-pooled portion of the Carolina Place underlying mortgage loan). Any such conversion to the pass-through rate on the class A-MFL REMIC II regular interest might result in a temporary delay of payment of the distributions to the holders of the class A-MFL certificates if notice of the resulting change in payment terms of the class A-MFL certificates is not given to DTC within the time frame in advance of the payment date that DTC requires to modify the payment. If the Pass-Through Rate of the Class A-MFL REMIC II Regular Interest is Limited by a Weighted Average of the Net Interest Rates on the Underlying Mortgage Loans, or if Interest Distributions with Respect to the Class A-MFL REMIC II Regular Interest are Insufficient to Make the Required Payment to the Swap Counterparty, Interest Distributions on the Class A-MFL Certificates Will Be Reduced. Interest distributions with respect to the class A-MFL REMIC II regular interest will be subject to a maximum pass-through rate equal to a weighted average coupon derived from net interest rates on the underlying mortgage loans (without regard to the non-pooled portion of the Carolina Place underlying mortgage loan). If this weighted average coupon drops below % per annum, then interest distributions on the class A-MFL certificates will be reduced dollar-for-dollar with the reduction in the amount of interest allocated to the class A-MFL REMIC II regular interest as a result of that weighted average coupon dropping below % per annum. In addition, if for any other reason the funds allocated to payment of interest distributions on the class A-MFL REMIC II regular interest are insufficient to make all required interest payments on the class A-MFL REMIC II regular interest (for example, as a result of prepayment interest shortfalls), interest distributions on the class A-MFL certificates will also be reduced dollar-for-dollar. See "Description of the Swap Agreement" in this prospectus supplement. The Swap Agreement May Be Assigned. The swap counterparty may assign its rights and obligations under the swap agreement provided that, among other conditions, the ratings of the replacement swap counterparty would not cause a collateralization event under the swap agreement. S-59 RISKS RELATED TO THE UNDERLYING MORTGAGE LOANS The Absence of or Inadequacy of Insurance Coverage on the Mortgaged Real Properties May Adversely Affect Payments on Your Certificates. After the September 11, 2001 terrorist attacks in New York City, the Washington, D.C. area and Pennsylvania, the cost of insurance coverage for acts of terrorism increased and the availability of such insurance decreased. In an attempt to redress this situation, President George W. Bush signed into law the Terrorism Risk Insurance Act of 2002, which established a three-year federal back-stop program under which the federal government and the insurance industry will share in the risk of loss associated with certain future terrorist attacks. Under the provisions of the act, (a) qualifying insurers must offer terrorism insurance coverage in all property and casualty insurance policies on terms not materially different than terms applicable to other losses, (b) the federal government will reimburse insurers 90% of amounts paid on claims, in excess of a specified deductible, provided that aggregate property and casualty insurance losses resulting from an act of terrorism exceed $5,000,000, (c) the federal government's aggregate insured losses are limited to $100 billion per program year, (d) reimbursement to insurers will require a claim based on a loss from a terrorist act, (e) to qualify for reimbursement, an insurer must have previously disclosed to the policyholder the premium charged for terrorism coverage and its share of anticipated recovery for insured losses under the federal program, and (f) the federal program by its terms will terminate December 31, 2005. With regard to policies in existence on November 26, 2002, the act provides that any terrorism exclusion in a property and casualty insurance contract in force on that date is void if the exclusion exempts losses that would otherwise be subject to the act, provided that an insurer may reinstate such a terrorism exclusion if the insured either (x) authorizes such reinstatement in writing or (y) fails to pay the premium increase related to the terrorism coverage within 30 days of receiving notice of such premium increase and of its rights in connection with such coverage. The Terrorism Risk Insurance Act of 2002 only applies to losses resulting from attacks that have been committed by individuals on behalf of a foreign person or foreign interest, and does not cover acts of purely domestic terrorism. Further, any such attack must be certified as an "act of terrorism" by the federal government, which decision is not subject to judicial review. As a result, insurers may continue to try to exclude from coverage under their policies losses resulting from terrorist acts not covered by the act. Moreover, the act's deductible and copayment provisions still leave insurers with high potential exposure for terrorism-related claims. Because nothing in the act prevents an insurer from raising premium rates on policyholders to cover potential losses, or from obtaining reinsurance coverage to offset its increased liability, the cost of premiums for terrorism insurance coverage is still expected to be high. Finally, upon expiration, in December 2005, of the federal insurance back-stop program established by the act, it is possible that the program will not be renewed and there is no assurance that subsequent terrorism legislation would be passed. IF THE FEDERAL INSURANCE BACK-STOP PROGRAM REFERRED TO IN THE TWO PRECEDING PARAGRAPHS IS NOT EXTENDED OR RENEWED, PREMIUMS FOR TERRORISM INSURANCE COVERAGE WILL LIKELY INCREASE AND/OR THE TERMS OF SUCH INSURANCE MAY BE MATERIALLY AMENDED TO ENLARGE STATED EXCLUSIONS OR TO OTHERWISE EFFECTIVELY DECREASE THE SCOPE OF COVERAGE AVAILABLE (PERHAPS TO THE POINT WHERE IT IS EFFECTIVELY NOT AVAILABLE). IN ADDITION, TO THE EXTENT THAT ANY POLICIES THAT CONTAIN "SUNSET CLAUSES" (I.E. CLAUSES THAT VOID TERRORISM COVERAGE IF THE FEDERAL INSURANCE BACKSTOP PROGRAM IS NOT RENEWED), THEN SUCH POLICIES MAY CEASE TO PROVIDE TERRORISM INSURANCE COVERAGE UPON THE EXPIRATION OF THE FEDERAL INSURANCE BACKSTOP PROGRAM. With respect to each of the mortgaged real properties securing a mortgage loan that we intend to include in the trust fund, the related borrower is required under the related mortgage loan documents to maintain comprehensive all-risk casualty insurance (which may be provided under a blanket insurance policy). However, the related mortgage loan documents may not specifically require coverage for acts of terrorism. If the related mortgage loan documents do not expressly require insurance against acts of terrorism, but permit the lender to require such other insurance as is reasonable, the related borrower may challenge whether maintaining insurance against acts of terrorism is reasonable in light of all the circumstances, including the cost. Generally, the mortgage loans specifically require terrorism insurance, but in the case of some mortgage loans, such insurance S-60 may be required only to the extent it can be obtained for premiums less than or equal to a "cap" amount specified in the related loan documents, only if it can be purchased at commercially reasonable rates and/or only with a deductible at a certain threshold. In the case of some of the mortgaged real properties securing mortgage loans that we intend to include in the trust fund, the insurance covering any of such mortgaged real properties for acts of terrorism may be provided through a blanket policy that also covers properties unrelated to the trust fund. Acts of terrorism at those other properties could exhaust coverage under the blanket policy. No representation is made as to the adequacy of any such insurance coverage provided under a blanket policy, in light of the fact that multiple properties are covered by that policy. In the event that any mortgaged real property securing one of the underlying mortgage loans sustains damage as a result of an uninsured terrorist or similar act, such damaged mortgaged real property may not generate adequate cash flow to pay, and/or provide adequate collateral to satisfy, all amounts owing under that mortgage loan, which could result in a default on that mortgage loan and, potentially, losses on some classes of the series 2005-C3 certificates. If a borrower is required, under the circumstances described above, to maintain such insurance for terrorist or similar acts, the borrower may incur higher costs for insurance premiums in obtaining such coverage which would have an adverse effect on the net cash flow of the related mortgaged real property. Repayment of the Underlying Mortgage Loans Depends on the Operation of the Mortgaged Real Properties. The underlying mortgage loans are secured by mortgage liens on fee simple and/or leasehold interests primarily in the following types of real property: o retail; o office; o multifamily; o industrial; o self storage; o manufactured housing; o mixed use; o movie theater; and o land. See the property type table under "Summary of Prospectus Supplement--The Underlying Mortgage Loans and the Mortgaged Real Properties--Additional Statistical Information--Property Types" in this prospectus supplement for statistical information regarding the various types of real properties that secure the underlying mortgage loans. S-61 The risks associated with lending on these types of real properties are inherently different from those associated with lending on the security of single-family residential properties. This is because, among other reasons, repayment of each of the underlying mortgage loans is dependent on: o the successful operation and value of the related mortgaged real property; and o the related borrower's ability to refinance the mortgage loan or sell the related mortgaged real property. See "Risk Factors--Repayment of a Commercial or Multifamily Mortgage Loan Depends Upon the Performance and Value of the Underlying Real Property, Which May Decline Over Time, and the Related Borrower's Ability to Refinance the Property, of Which There Is No Assurance" and "Description of the Trust Assets--Mortgage Loans--A Discussion of the Various Types of Multifamily and Commercial Properties that May Secure Mortgage Loans Underlying a Series of Offered Certificates" in the accompanying prospectus. Risks Associated with Condominium Ownership. Four (4) mortgage loans (loan numbers 40, 51, 65 and 121), representing 1.0%, 0.8%, 0.6% and 0.2%, respectively, of the initial mortgage pool balance (of which three (3) mortgage loans are in loan group no. 1, representing 2.5% of the initial loan group no. 1 balance, and one (1) mortgage loan is in loan group no. 2, representing 3.1% of the initial loan group no. 2 balance), are each secured by the related borrower's interest in residential and/or commercial condominium units. A condominium owner is generally responsible for the payment of common area maintenance charges. In the event those charges are not paid when due, the condominium association may have a lien for those unpaid charges against the owner of the subject condominium unit, and, in some cases, pursuant to the condominium declaration, the lien of the mortgage for a related underlying mortgage loan is subordinate to that lien for unpaid common area maintenance charges. In addition, pursuant to a condominium declaration, the holders of the remaining units may be responsible for common area maintenance charges that remain unpaid by any particular unit holder. In addition, a board of managers generally has discretion to make decisions affecting the condominium building and there is no assurance that the borrower under a mortgage loan secured by one or more interests in that condominium will have any control over decisions made by the related board of managers. Therefore, decisions made by that board of managers, including with respect to assessments to be paid by the unit owners, insurance to be maintained on the condominium building, restoration following a casualty and many other decisions affecting the maintenance of that building, may have an adverse impact on the underlying mortgage loans that are secured by mortgaged real properties consisting of such condominium interests. There can be no assurance that the related board of managers will always act in the best interests of the borrower under those mortgage loans. Further, due to the nature of condominiums, a default on the part of the borrower with respect to such mortgaged real properties will not allow the special servicer the same flexibility in realizing on the collateral as is generally available with respect to properties that are not condominiums. The rights of other unit owners, the documents governing the management of the condominium units and the state and local laws applicable to condominium units must be considered. A mortgaged real property may not be readily convertible (or convertible at all) due to use and other restrictions imposed by the condominium declaration and other related documents, especially in a situation where the mortgaged real property does not represent the entire condominium regime. In addition, in the event of a casualty with respect to the subject mortgaged real property, due to the possible existence of multiple loss payees on any insurance policy covering such mortgaged real property, there could be a delay in the restoration of the mortgaged real property and/or the allocation of related insurance proceeds, if any. Consequently, servicing and realizing upon the collateral described above could subject the series 2005-C3 certificateholders to a greater delay, expense and risk than with respect to a mortgage loan secured by a property that does not consist of a condominium. Further, the liquidation value of a mortgaged S-62 real property subject to limitations on convertibility of use, may be substantially less than would be the case if the property were readily adaptable to other uses. The Underlying Mortgage Loans Have a Variety of Characteristics That May Expose Investors to Greater Risk of Default and Loss. When making an investment decision, you should consider, among other things, the following characteristics of the underlying mortgage loans and/or the mortgaged real properties for those loans. Any or all of these characteristics can affect, perhaps materially and adversely, the investment performance of your offered certificates. Several of the items below include a cross-reference to where the associated risks are further discussed in this prospectus supplement or in the accompanying prospectus. In addition, several of those items include a cross reference to where further information about the particular characteristic may be found in this prospectus supplement. o The Mortgaged Real Property Will Be the Principal Asset Available to Satisfy the Amounts Owing Under an Underlying Mortgage Loan in the Event of Default. All of the mortgage loans that we intend to include in the trust fund are or should be considered nonrecourse loans. If the related borrower defaults on any of the underlying mortgage loans, only the mortgaged real property (and any reserves, letters of credit or other additional collateral for the mortgage loan), and none of the other assets of the borrower, is or should be expected to be available to satisfy the debt. Even if the related loan documents permit recourse to the borrower or a guarantor, the trust may not be able to ultimately collect the amount due under a defaulted mortgage loan or under a guaranty. None of the mortgage loans are insured or guaranteed by any governmental agency or instrumentality or by any private mortgage insurer. See "Risk Factors--Repayment of a Commercial or Multifamily Mortgage Loan Depends Upon the Performance and Value of the Underlying Real Property, Which May Decline Over Time, and the Related Borrower's Ability to Refinance the Property, of Which There Is No Assurance--Most of the Mortgage Loans Underlying Your Offered Certificates Will Be Nonrecourse" in the accompanying prospectus. o In Some Cases, a Mortgaged Real Property Is Dependent on a Single Tenant or on One or a Few Significant Tenants. In the case of 26 mortgaged real properties, securing 8.5% of the initial mortgage pool balance and 10.7% of the initial loan group no. 1 balance, the related borrower has leased the particular property to a single tenant that occupies 100% of the leasable square footage at that property. In the case of 63 mortgaged real properties, securing 49.4% of the initial mortgage pool balance and 62.0% of the initial loan group no. 1 balance, including the 26 properties referred to in the prior sentence, the related borrower has leased the property to at least one tenant that occupies 25% or more of the leasable square footage at the particular mortgaged real property. Accordingly, the full and timely payment of each of the related mortgage loans is highly dependent on the continued operation of a major tenant, which, in some cases, is the sole tenant, at the mortgaged real property. See "Risk Factors--Repayment of a Commercial or Multifamily Mortgage Loan Depends Upon the Performance and Value of the Underlying Real Property, Which May Decline Over Time and the Related Borrower's Ability to Refinance the Property, of Which There Is No Assurance--The Successful Operation of a Multifamily or Commercial Property Depends on Tenants", "--Repayment of a Commercial or Multifamily Mortgage Loan Depends Upon the Performance and Value of the Underlying Real Property, Which May Decline Over Time and the Related Borrower's Ability to Refinance the Property, of Which There Is No Assurance--Dependence on a Single Tenant or a Small Number of Tenants Makes a Property Riskier Collateral" and "--Repayment of a Commercial or Multifamily Mortgage Loan Depends Upon the Performance and Value of the Underlying Real Property, Which May Decline Over Time and the Related Borrower's Ability to Refinance the Property, of Which There Is No Assurance--Tenant Bankruptcy Adversely Affects Property Performance" in the accompanying prospectus. S-63 o Ten Percent or More of the Initial Mortgage Pool Balance Is Made Up of Mortgage Loans Secured by Mortgage Liens on Each of the Following Property Types: Retail, Office and Multifamily. Fifty-seven (57) mortgaged real properties, securing 44.2% of the initial mortgage pool balance and 55.4% of the initial loan group no. 1 balance, are primarily used for retail purposes. A number of factors may adversely affect the value and successful operation of a retail property. Some of these factors include: 1. the strength, stability, number and quality of the tenants; 2. tenants' sales; 3. tenant mix; 4. whether the subject property is in a desirable location; 5. the physical condition and amenities of the subject building in relation to competing buildings; 6. competition from nontraditional sources such as catalog retailers, home shopping networks, electronic media shopping, telemarketing and outlet centers; 7. whether a retail property is anchored, shadow anchored or unanchored and, if anchored or shadow anchored, the strength, stability, quality and continuous occupancy of the anchor tenant or the shadow anchor, as the case may be, are particularly important factors; and 8. the financial condition of the owner of the subject property. We consider 49 of the foregoing retail properties, securing 38.9% of the initial mortgage pool balance and 48.7% of the initial loan group no. 1 balance, to be anchored retail properties, which signifies that there is at least one anchor tenant located at the property. An anchor tenant is a retail tenant or retail occupant whose space is or would be substantially larger in size than that of other tenants at a retail mall or shopping center and whose operation is or would be vital in attracting customers to a retail mall or shopping center. Four (4) of those 49 anchored retail properties, securing 1.4% of the initial mortgage pool balance and 1.8% of the initial loan group no. 1 balance, are shadow anchored, which means that none of the anchor tenants is on any portion of the subject property that is subject to the lien of the related mortgage instrument. Another 15 of those anchored retail properties, securing 3.9% of the initial mortgage pool balance and 4.9% of the initial loan group no. 1 balance, are occupied by a single tenant. The remaining eight (8) retail properties, securing 5.4% of the initial mortgage pool balance and 6.8% of the initial loan group no. 1 balance, are unanchored retail properties. In addition, one (1) of the mortgaged real properties, securing 0.6% of the initial mortgage pool balance and 0.8% of the initial loan group no. 1 balance, is used for mixed use purposes that include a significant retail component. In those cases where the property owner does not control the space occupied by the anchor tenant, the property owner may not be able to take actions with respect to the space that it otherwise typically would, such as granting concessions to retain an anchor tenant or removing an ineffective anchor tenant. The presence or absence of an anchor tenant in a retail property can be important, because anchor tenants play a key role in generating customer traffic and making the retail property desirable for other tenants. Some tenants, in particular anchor tenants (or shadow anchor tenants), may have the right to cease operations or may not be prohibited from ceasing S-64 operations at the property while continuing to pay rent during their lease terms. Also, if an anchor tenant or a shadow anchor tenant ceases operations at a retail property or if their sales do not reach a specified threshold, other tenants at the property may be entitled to terminate their leases prior to the scheduled termination date or to pay rent at a reduced rate for the remaining term of the leases. See "Description of the Trust Assets--Mortgage Loans--A Discussion of the Various Types of Multifamily and Commercial Properties that May Secure Mortgage Loans Underlying a Series of Offered Certificates--Retail Properties" in the accompanying prospectus. Twenty-two (22) of the mortgaged real properties, securing 26.8% of the initial mortgage pool balance and 33.5% of the initial loan group no. 1 balance, are used entirely or primarily for office purposes. Some of those office properties are heavily dependent on one or a few major tenants that lease a substantial portion of the mortgaged real property or the entire mortgaged real property. A number of factors may adversely affect the value and successful operation of an office property. Some of these factors include: 1. the strength, stability, number and quality of the tenants; 2. accessibility from surrounding highways/streets; 3. the physical condition and amenities of the subject building in relation to competing buildings, including the condition of the HVAC system, parking and the subject building's compatibility with current business wiring requirements; 4. whether the area in which the office property is located is a desirable business location, including local labor cost and quality, access to transportation, tax environment, including tax benefits, and quality of life issues, such as schools and cultural amenities; and 5. the financial condition of the owner of the subject property. See "Description of the Trust Assets--Mortgage Loans--A Discussion of the Various Types of Multifamily and Commercial Properties that May Secure Mortgage Loans Underlying a Series of Offered Certificates--Office Properties" in the accompanying prospectus. Thirty-two (32) of the mortgaged real properties, securing 21.1% of the initial mortgage pool balance (three (3) of which secure mortgage loans in loan group no. 1, representing 2.1% of the initial loan group no. 1 balance, and 29 of which secure mortgage loans in loan group no. 2, representing 96.5% of the initial loan group no. 2 balance), are primarily used for multifamily rental purposes. A number of factors may adversely affect the value and successful operation of a multifamily rental property. Some of these factors include: 1. the number of competing residential developments in the local market, including apartment buildings and site-built single family homes; 2. the physical condition and amenities of the subject apartment building in relation to competing buildings; 3. the subject property's reputation; S-65 4. applicable state and local regulations designed to protect tenants in connection with evictions and rent increases; 5. local factory or other large employer closings; 6. the level of mortgage rates to the extent it encourages tenants to purchase single-family housing; 7. compliance and continuance of any government housing rental subsidiary programs from which the subject property receives benefits; 8. distance from employment centers and shopping areas; and 9. the financial condition of the owner of the subject property. In addition, multifamily rental properties are typically in markets that, in general, are characterized by low barriers to entry. Therefore, a particular multifamily rental property market with historically low vacancies could experience substantial new construction and a resultant oversupply of rental units within a relatively short period of time. Since apartments within a multifamily rental property are typically leased on a short-term basis, the tenants residing at a particular property may easily move to alternative multifamily rental properties with more desirable amenities or locations or to single family housing. Multifamily rental properties that are wholly or predominately occupied by students may be more susceptible to damage or wear and tear than other types of multifamily housing and may be dependent on the financial well-being of the college or university to which they relate. Such multifamily properties may be subject to competition from on-campus housing units, may not be readily convertible to other types of multifamily use, and will likely be subject to a higher turnover rate than other types of multifamily properties due to the relatively short-term nature of student leases. See "Description of the Trust Assets--Mortgage Loans--A Discussion of the Various Types of Multifamily and Commercial Properties that May Secure Mortgage Loans Underlying a Series of Offered Certificates--Multifamily Rental Properties" in the accompanying prospectus. In addition, eight (8) of the mortgaged real properties, securing 3.7% of the initial mortgage pool balance and 4.6% of the initial loan group no. 1 balance, are used for industrial purposes; and four (4) of the mortgaged real properties, securing 2.0% of the initial mortgage pool balance and 2.5% of the initial loan group no. 1 balance, are self storage properties. Mortgage loans that are secured by liens on each of those types of properties are exposed to unique risks particular to those types of properties. For a discussion of factors uniquely affecting industrial properties, see "Description of the Trust Assets--Mortgage Loans--A Discussion of the Various Types of Multifamily and Commercial Properties that May Secure Mortgage Loans Underlying a Series of Offered Certificates--Industrial Properties" in the accompanying prospectus. For a discussion of factors uniquely affecting self storage facilities, see "Description of the Trust Assets--Mortgage Loans--A Discussion of the Various Types of Multifamily and Commercial Properties that May Secure Mortgage Loans Underlying a Series of Offered Certificates--Warehouse, Mini-Warehouse and Self Storage Facilities" in the accompanying prospectus. The inclusion in the trust fund of a significant concentration of mortgage loans that are secured by mortgage liens on a particular type of income-producing property makes the overall performance of the mortgage pool materially more dependent on the factors that affect the operations at and S-66 value of that property type. See "Description of the Trust Assets--Mortgage Loans--A Discussion of Various Types of Multifamily and Commercial Properties that May Secure Mortgage Loans Underlying a Series of Offered Certificates" in the accompanying prospectus. o Five Percent or More of the Initial Mortgage Pool Balance Will Be Secured by Mortgage Liens on Real Property Located in Each of California, Texas, North Carolina and Maryland. Mortgage loans representing 5% or more of the initial mortgage pool balance are secured by mortgaged real properties located in each of the following states or regions: <TABLE> NUMBER OF % OF INITIAL % OF INITIAL % OF INITIAL MORTGAGED MORTGAGE LOAN GROUP LOAN GROUP STATE/REGION PROPERTIES POOL BALANCE NO. 1 BALANCE NO. 2 BALANCE ------------------------------ ---------- ------------ ------------- ------------- California.................... 23 16.3% 19.1% 5.3% Southern California(1)..... 16 11.8 13.4 5.3 Northern California(2)..... 7 4.5 5.7 -- Texas......................... 26 12.6 9.8 24.1 North Carolina................ 5 11.7 12.3 9.1 Maryland...................... 5 10.8 13.5 -- -- ---- ---- ---- Total 59 51.4% 54.7% 38.5% == ==== ==== ==== </TABLE> - ---------- (1) Southern California includes properties that are located in zip codes of 92832 and lower. (2) Northern California includes properties that are located in zip codes of 93612 and higher. The inclusion of a significant concentration of mortgage loans that are secured by mortgage liens on real properties located in a particular state, region or other jurisdiction makes the overall performance of the mortgage pool materially more dependent on economic and other conditions or events in that state or region. See "Risk Factors--Geographic Concentration Within a Trust Exposes Investors to Greater Risk of Default and Loss" in the accompanying prospectus. o The Mortgage Pool Will Include Material Concentrations of Balloon Loans and Mortgage Loans with an Anticipated Repayment Date. One hundred nineteen (119) mortgage loans, representing 97.1% of the initial mortgage pool balance, of which 89 are in loan group no. 1, representing 96.3% of the initial loan group no. 1 balance, and 30 are in loan group no. 2, representing 100.0% of the initial loan group no. 2 balance, are balloon loans. In addition, three (3) mortgage loans, representing 2.1% of the initial mortgage pool balance and 2.7% of the initial loan group no. 1 balance, provide incentives for the related borrowers to repay those loans by their respective anticipated repayment dates prior to maturity. Four (4) of the balloon loans that we intend to include in the trust fund, representing 5.4% of the initial mortgage pool balance, of which three (3) mortgage loans are in loan group no. 1, representing 5.4% of the initial loan group no. 1 balance, and one (1) mortgage loan is in loan group no. 2, representing 5.6% of the initial loan group no. 2 balance, provide for payments of interest only until maturity; and another 56 of the balloon loans that we intend to include in the trust fund, representing 48.9% of the initial mortgage pool balance, of which 39 are in loan group no. 1, representing 46.2% of the initial loan group no. 1 balance, and 17 are in loan group no. 2, representing 59.5% of the initial loan group no. 2 balance, provide for payments of interest only for periods ranging from the first 12 payments to the first 96 payments of those mortgage loans. One (1) of the mortgage loans with anticipated repayment dates that we intend to include in the trust fund, representing 0.7% of the initial mortgage pool balance and 0.8% of the initial loan group no. 1 balance, provides for payments of interest only for the first 12 payments following origination. Ninety-four (94) S-67 mortgage loans, representing 70.4% of the initial mortgage pool balance, have either a maturity date or an anticipated repayment date during the 12-month period from and including October 2014 to and including September 2015; 79 mortgage loans, representing 76.5% of the initial loan group no. 1 balance, have either a maturity date or an anticipated repayment date during the 12-month period from and including October 2014 to and including September 2015; and 15 mortgage loans, representing 46.2% of the initial loan group no. 2 balance, have either a maturity date or an anticipated repayment date during the 12-month period from and including October 2014 to and including September 2015. The ability of a borrower to make the required balloon payment on a balloon loan or payment of the entire principal balance of an interest-only balloon loan, at maturity, and the ability of a borrower to repay a mortgage loan on or before any related anticipated repayment date, in each case depends upon, among other things, the borrower's ability either to refinance the loan or to sell the mortgaged real property. Although a mortgage loan may provide the related borrower with incentives to repay the loan by an anticipated repayment date prior to maturity, the failure of that borrower to do so will not be a default under that loan. See "Description of the Mortgage Pool--Terms and Conditions of the Underlying Mortgage Loans" in this prospectus supplement and "Risk Factors--The Investment Performance of Your Offered Certificates Will Depend Upon Payments, Defaults and Losses on the Underlying Mortgage Loans; and Those Payments, Defaults and Losses May Be Highly Unpredictable--There Is an Increased Risk of Default Associated with Balloon Payments" in the accompanying prospectus. o The Mortgage Pool Will Include Some Disproportionately Large Mortgage Loans. The inclusion in the mortgage pool of one or more loans that have outstanding principal balances that are each substantially larger than the other mortgage loans in that pool can result in losses that are more severe, relative to the size of the mortgage pool, than would be the case if the total balance of the mortgage pool were distributed more evenly. The ten largest mortgage loans and/or groups of cross-collateralized mortgage loans to be included in the trust fund represent 32.4% of the initial mortgage pool balance. The ten largest mortgage loans and/or groups of cross-collateralized mortgage loans to be included in loan group no. 1 represent 40.0% of the initial loan group no. 1 balance. The ten largest mortgage loans and/or groups of cross-collateralized mortgage loans to be included in loan group no. 2 represent 61.5% of the initial loan group no. 2 balance. See "Description of the Mortgage Pool--General" and "--Cross-Collateralized Mortgage Loans and Multiple Property Mortgage Loans" in this prospectus supplement and "Risk Factors--Loan Concentration Within a Trust Exposes Investors to Greater Risk of Default and Loss" in the accompanying prospectus. See also attached to this prospectus supplement Annex B--Description of Ten Largest Mortgage Loans and/or Groups of Cross-Collateralized Mortgage Loans. o The Mortgage Pool Will Include Mortgage Loans Secured In Whole or In Part By Leasehold Interests. Three (3) mortgage loans, representing 1.0% of the initial mortgage pool balance and 1.3% of the initial loan group no. 1 balance, are each secured by a mortgage lien on the related borrower's leasehold interest in a material portion of the corresponding mortgaged real property, but not on the fee simple interest in that property. Because of possible termination of the related ground lease, lending secured by a leasehold interest in a real property is riskier than lending secured by an actual ownership interest in that property. See "Description of the Mortgage Pool--Additional Loan and Property Information--Ground Leases" in this prospectus supplement. In addition, the terms of certain ground leases may require that insurance proceeds or condemnation awards be applied to restore the property or be paid, in whole or in part, to the ground lessor rather than be applied against the outstanding principal balance of the related mortgage loan. Furthermore, if an underlying mortgage loan is secured by a mortgage on both the related borrower's leasehold interest in the related mortgaged real property and the underlying fee interest in such property (in which case we reflect in this prospectus supplement that the S-68 mortgage loan is secured by a mortgage on both the related borrower's leasehold interest in the related mortgaged real property and the underlying fee interest in such property (in which case we reflect in this prospectus supplement that the mortgage loan is secured by a mortgage on the related fee interest), the related borrower may be a special purpose entity, but the owner and pledgor of the related fee interest may not be a special purpose entity. See also "Risk Factors--Ground Leases Create Risks for Lenders that Are Not Present When Lending on an Actual Ownership Interest in a Real Property" and "Legal Aspects of Mortgage Loans--Foreclosure--Leasehold Considerations" in the accompanying prospectus. o Several of the Mortgaged Real Properties Are Legal Nonconforming Uses or Legal Nonconforming Structures. Several of the mortgage loans that we intend to include in the trust fund are secured by a mortgage lien on a real property that is a legal nonconforming use or structure or that is subject to a de minimis zoning violation. This may impair the ability of the borrower to restore the improvements on a mortgaged real property to its current form or use following a major casualty. See "Description of the Mortgage Pool--Zoning and Building Code Compliance" in this prospectus supplement and "Risk Factors--Changes in Zoning Laws May Adversely Affect the Use or Value of a Real Property" in the accompanying prospectus. o Some of the Underlying Borrowers Have Incurred or Are Permitted to Incur Additional Debt Secured by the Related Mortgaged Real Property. One (1) of the mortgage loans that we intend to include in the trust fund, which is described under "Description of the Mortgage Pool--The Carolina Place Loan Pair" in this prospectus supplement, which--taking into account the pooled and non-pooled portions thereof--has a cut-off date principal balance of $130,000,000, and the pooled portion of which has a cut-off date principal balance of $114,200,000, representing 8.0% of the initial mortgage pool balance and 10.0% of the initial loan group no. 1 balance, is part of a loan pair that includes an additional mortgage loan (not included in the trust fund) that is secured by the same mortgage instrument encumbering the related mortgaged real property as is the Carolina Place underlying mortgage loan. The Carolina Place underlying mortgage loan, which has a cut-off date unpaid principal balance of $130,000,000, is generally senior in right of payment to the Carolina Place non-trust mortgage loan, which has a cut-off date principal balance of $37,919,878. See "Description of the Mortgage Pool--Additional Loan and Property Information--Additional and Other Financing" in this prospectus supplement and "Risk Factors--Subordinate Debt Increases the Likelihood That a Borrower Will Default on a Mortgage Loan Underlying Your Offered Certificates" in the accompanying prospectus. The existence of secured subordinate debt will increase the risk of loss on the corresponding underlying mortgage loan and will subject the trust to additional risks, including: o the risk that the necessary maintenance of the related mortgaged real property could be deferred to allow the borrower to pay the required debt service on the subordinate obligation and that the value of the mortgaged real property may fall as a result; o the risk that a default on the subordinate loan could result in a default on the underlying mortgage loan; and o the risk that it may be more difficult for the borrower to refinance the underlying mortgage loan or to sell the related mortgaged real property for purposes of making any balloon payment on the entire balance of both the senior obligation and the subordinate obligation upon the maturity of the mortgage loan. Except as disclosed under this "--Some of the Underlying Borrowers Have Incurred or Are Permitted to Incur Additional Debt Secured by the Related Mortgaged Real Property" subsection S-69 and "Description of the Mortgage Pool--Additional Loan and Property Information--Additional and Other Financing" in this prospectus supplement, we have not been able to confirm whether the respective borrowers under the mortgage loans that we intend to include in the trust fund have any other debt outstanding that is secured by the respective mortgaged real properties; however, no other outstanding secured subordinate debt was indicated on the title insurance policies that were obtained in connection with the origination of the mortgage loans. o Some of the Underlying Borrowers Have Incurred or Are Permitted to Incur Additional Debt That Is Not Secured by the Related Mortgaged Real Property or by Equity Interests in Those Borrowers. In the case of two (2) underlying mortgage loans, representing 4.9% of the initial mortgage pool balance and 6.2% of the initial loan group no. 1 balance, the related borrowers have incurred or are permitted to incur additional unsecured debt as described under "Description of the Mortgage Pool--Additional Loan and Property Information--Additional and Other Financing" in this prospectus supplement. Substantially all the mortgage loans permit the related borrower to incur limited indebtedness in the ordinary course of business that is not secured by the related mortgaged real property. Additionally, in the case of those underlying mortgage loans that require or allow letters of credit to be posted by the related borrower as additional security for the mortgage loan, in lieu of reserves or otherwise, the related borrower may be obligated to pay fees and expenses associated with the letter of credit and/or to reimburse the letter of credit issuer or others in the event of a draw upon the letter of credit by the lender. Even unsecured debt and other unsecured obligations can result in a diversion of cash flow to pay those debts and obligations, thereby increasing the likelihood of deferred maintenance at the subject mortgaged real property, a default on the subject mortgage loan and/or a borrower bankruptcy. Except as disclosed under this "--Some of the Underlying Borrowers Have Incurred or Are Permitted to Incur Additional Debt That Is Not Secured by the Related Mortgaged Real Property or by Equity Interests in Those Borrowers" subsection and "Description of the Mortgage Pool--Additional Loan and Property Information--Additional and Other Financing" in this prospectus supplement, we have not been able to confirm whether the respective borrowers under the mortgage loans that we intend to include in the trust fund have any other debt outstanding that is not secured by the related mortgaged real property. See "Description of the Mortgage Pool--Additional Loan and Property Information--Additional and Other Financing" in this prospectus supplement and "Risk Factors--Subordinate Debt Increases the Likelihood That a Borrower Will Default on a Mortgage Loan Underlying Your Offered Certificates" in the accompanying prospectus. o In the Case of Some of the Mortgage Loans That We Intend to Include in the Trust Fund, One or More of the Principals of the Related Borrower Are Permitted to Incur Mezzanine Debt. In the case of 22 mortgage loans that we intend to include in the trust fund, representing 15.5% of the initial mortgage pool balance, of which 16 mortgage loans are in loan group no. 1, representing 14.7% of the initial loan group no. 1 balance, and six (6) are in loan group no. 2, representing 18.9% of the initial loan group no. 2 balance, one or more of the principals of the related borrower have incurred or are permitted to incur mezzanine debt as described under "Description of the Mortgage Pool--Additional Loan and Property Information--Additional and Other Financing" in this prospectus supplement. S-70 Mezzanine debt is debt that is secured by the principal's ownership interest in the borrower. This type of financing effectively reduces the indirect equity interest of any principal in the corresponding mortgaged real property. The existence of mezzanine debt may reduce available cash flow on the borrower's mortgaged real property after the payment of debt service or result in cash flow pressures if the mezzanine debt matures or becomes payable prior to the maturity of the related mortgage loan, and may increase the likelihood that the owner(s) of a borrower will permit the value or income-producing potential of a mortgaged real property to decline and create a greater risk that a borrower will default on the mortgage loan secured by a mortgaged real property whose value or income is relatively weak. Generally, upon a default under a mezzanine loan, the holder of the mezzanine loan would be entitled to foreclose upon the equity interests in the related borrower pledged to secure payment of the mezzanine loan. Although such a transfer of equity may not trigger the due on sale clause under the related mortgage loan, it could cause the obligor under such mezzanine loan to file for bankruptcy, which could negatively affect the operation of the related mortgaged real property and the related borrower's ability to make payments on the related mortgage loan in a timely manner. The holder of a mezzanine loan often has the right to purchase the related mortgage loan from the trust if certain defaults on the related mortgage loan occur and, in some cases, may have the right to cure certain defaults occurring on the related mortgage loan. The purchase price required to be paid in connection with such a purchase is generally equal to the outstanding principal balance of the related mortgage loan, together with accrued and unpaid interest on, and certain unpaid servicing expenses relating to, the subject mortgage loan. Except as disclosed under this "--In the Case of Some of the Mortgage Loans That We Intend to Include in the Trust Fund, One or More of the Principals of the Related Borrower Have Incurred or Are Permitted to Incur Mezzanine Debt" subsection and "Description of the Mortgage Pool--Additional Loan and Property Information--Additional and Other Financing" in this prospectus supplement, we have not been able to confirm whether the principals of the respective borrowers under the mortgage loans that we intend to include in the trust fund have any other mezzanine financing outstanding. See "Description of the Mortgage Pool--Additional Loan and Property Information--Additional and Other Financing" in this prospectus supplement and "Risk Factors--Subordinate Debt Increases the Likelihood That a Borrower Will Default on a Mortgage Loan Underlying Your Offered Certificates" in the accompanying prospectus. o Some of the Mortgaged Real Properties May Not Comply with the Americans with Disabilities Act of 1990. Some of the mortgaged real properties securing mortgage loans that we intend to include in the trust fund may not comply with the Americans with Disabilities Act of 1990. Compliance can be expensive. See "Risk Factors--Compliance with the Americans with Disabilities Act of 1990 May be Expensive" and "Legal Aspects of Mortgage Loans--Americans with Disabilities Act" in the accompanying prospectus. o Multiple Mortgaged Real Properties Are Owned by the Same Borrower or Affiliated Borrowers. Thirteen (13) separate groups of mortgage loans that we intend to include in the trust fund, consisting of a total of 45 mortgage loans and representing a total of 31.6% of the initial mortgage pool balance, of which 29 mortgage loans are in loan group no. 1, representing 26.5% of the initial loan group no. 1 balance, and 16 mortgage loans are in loan group no. 2, representing 51.9% of the initial loan group no. 2 balance, have borrowers that, in the case of each of those S-71 groups, are the same or under common control. The largest of these groups is identified on Annex A-1 to this prospectus supplement as Related Mortgage Loan Group R1, which consists of five (5) mortgage loans, representing 5.9% of the initial mortgage pool balance and 29.3% of the initial loan group no. 2 balance. The next largest of these groups is identified on Annex A-1 to this prospectus supplement as Related Mortgage Loan Group R2 which consists of two (2) mortgage loans, representing 4.8% of the initial mortgage pool balance, and 6.0% of the initial loan group no. 1 balance. See "Description of the Mortgage Pool--Mortgage Loans With Affiliated Borrowers" in this prospectus supplement. o Multiple Mortgaged Real Properties are Occupied, in Whole or in Part, by the Same Tenant or Affiliated Tenants. There are several tenants that lease space at more than one mortgaged real property securing mortgage loans that we intend to include in the trust fund. For example, 13 mortgage loans that we intend to include in the trust fund, representing 2.9% of the initial mortgage pool balance and 3.6% of the initial loan group no. 1 balance, are secured by mortgaged real properties as to which United Supermarkets, Inc. is the sole tenant at the related mortgaged real properties. In addition, three (3) mortgage loans that we intend to include in the trust fund, representing 12.1% of the initial mortgage pool balance and 15.2% of the initial loan group no. 1 balance, are secured by mortgaged real properties as to which J.C. Penney is one of the three (3) largest major tenants at each of those mortgaged real properties. Furthermore, there may be tenants that are related to or affiliated with a borrower. See Annex A-1 to this prospectus supplement for a list of the three (3) largest major tenants at each of the mortgaged real properties used for retail, office or industrial purposes. The bankruptcy or insolvency of, or other financial problems with respect to, any borrower or tenant that is, directly or through affiliation, associated with two or more of the mortgaged real properties could have an adverse effect on all of those properties and on the ability of those properties to produce sufficient cash flow to make required payments on the related mortgage loans in the trust fund. See "Risk Factors--Repayment of a Commercial or Multifamily Mortgage Loan Depends upon the Performance and Value of the Underlying Real Property, which May Decline Over Time and the Related Borrower's Ability to Refinance the Property, of which there Is No Assurance--Tenant Bankruptcy Adversely Affects Property Performance", "--Borrower Concentration Within a Trust Exposes Investors to Greater Risk of Default and Loss" and "--Borrower Bankruptcy Proceedings Can Delay and Impair Recovery on a Mortgage Loan Underlying Your Offered Certificates" in the accompanying prospectus. Tenancies in Common May Hinder Recovery. Certain of the mortgage loans that we intend to include in the trust fund have borrowers that own the related mortgaged real properties as tenants-in-common. Under certain circumstances, a tenant-in-common can be forced to sell its property, including by a bankruptcy trustee, by one or more tenants-in-common seeking to partition the property and/or by a governmental lienholder in the event of unpaid taxes. Such a forced sale or action for partition of a mortgaged real property may occur during a market downturn and could result in an early repayment of the related mortgage loan, a significant delay in recovery against the tenant-in-common borrowers and/or a substantial decrease in the amount recoverable upon the related mortgage loan. Although some of the related borrowers have purported to waive any right of partition, we cannot assure you that any such waiver would be enforced by a court of competent jurisdiction. The commencement of a partition action by any tenant-in-common borrower is generally an event of default under the related mortgage loan documents. In addition, enforcement of remedies against tenant-in-common borrowers may be prolonged if the tenant-in-common borrowers become insolvent or bankrupt at different times because each time a tenant-in-common borrower files for bankruptcy, the bankruptcy court stay is reinstated. Additionally, mortgaged real properties owned by tenant-in-common borrowers may be characterized by inefficient property management, inability to raise capital and the need to deal with multiple borrowers in the event of a default on the loan. The mortgaged real properties securing 22 mortgage loans, which collectively represent 17.6% of the initial mortgage S-72 pool balance and 22.1% of the initial loan group no. 1 balance, are each owned by individuals or entities as tenants-in-common. The tenants-in-common for these mortgage loans may not all be special purpose entities, and some of those tenants-in-common may be individuals. Changes in Mortgage Pool Composition Can Change the Nature of Your Investment. In general, if you purchase any offered certificates that have a relatively longer weighted average life, then you will be more exposed to risks associated with changes in concentrations of borrower, loan or property characteristics than are persons who own offered certificates with relatively shorter weighted average lives. See "Risk Factors--Changes in Pool Composition Will Change the Nature of Your Investment" in the accompanying prospectus. Lending on Income-Producing Real Properties Entails Environmental Risks. The trust could become liable for a material adverse environmental condition at one or more of the mortgaged real properties securing the mortgage loans in the trust fund. Any potential environmental liability could reduce or delay payments on the offered certificates. A third-party environmental consultant conducted a Phase I environmental study meeting ASTM standards for each of the mortgaged real properties securing the mortgage loans that we intend to include in the trust fund. The resulting environmental reports were prepared: o in the case of 121 mortgaged real properties, securing 93.1% of the initial mortgage pool balance (of which 97 mortgaged real properties secure mortgage loans in loan group no. 1, representing 100.0% of the initial loan group no. 1 balance, and 24 mortgaged real properties secure mortgage loans in loan group no. 2, representing 65.8% of the initial loan group no. 2 balance), during the 12-month period preceding the cut-off date, and o in the case of six (6) mortgaged real properties, securing 6.9% of the initial mortgage pool balance and 34.2% of the initial loan group no. 2 balance, during the 12- to 16-month period preceding the cut-off date. There can be no assurance that the above-referenced environmental testing identified all adverse environmental conditions and risks at the mortgaged real properties securing the underlying mortgage loans or that adverse environmental conditions and risks have not developed at any of those properties since that testing. See "Description of the Mortgage Pool--Additional Loan and Property Information--Environmental Reports" for a discussion of specific environmental matters with respect to certain of the mortgage loans. See "Risk Factors--Environmental Liabilities Will Adversely Affect the Value and Operation of the Contaminated Property and May Deter a Lender from Foreclosing" and "Legal Aspects of Mortgage Loans--Environmental Considerations" in the accompanying prospectus. Lending on Income-Producing Properties Entails Risks Related to Property Condition. Professional engineers or architects inspected all of the mortgaged real properties for the underlying mortgage loans, except in the case of the underlying mortgage loan (loan number 110, securing 0.3% of the initial mortgage pool balance and 0.4% of the initial loan group no. 1 balance) which is secured by land. One hundred nineteen (119) of the mortgaged real properties, securing 92.5% of the initial mortgage pool balance, of which 95 mortgaged real properties secure mortgage loans in loan group no. 1, representing 99.3% of the initial loan group no. 1 balance, and 24 mortgaged real properties secure mortgage loans in loan group no. 2, representing 65.8% of the initial loan group no. 2 balance, were inspected during the 12-month period preceding the cut-off date, and seven (7) of the mortgaged real properties, securing 7.2% of the initial mortgage pool balance, of which one (1) mortgaged real property secures a mortgage loan in loan group no. 1, representing 0.3% of the initial loan group no. 1 balance, and six (6) mortgaged real properties secure mortgage loans in loan group no. 2, representing 34.2% of the initial S-73 loan group no. 2 balance, were inspected during the 12- to 16-month period preceding the cut-off date. The scope of those inspections included an assessment of: o the exterior walls, roofing, interior construction, mechanical and electrical systems; and o general condition of the site, buildings and other improvements located at each mortgaged real property. There can be no assurance that the above-referenced inspections identified all risks related to property condition at the mortgaged real properties securing the underlying mortgage loans or that adverse property conditions, including deferred maintenance and waste, have not developed at any of the properties since that inspection. Uninsured Loss; Sufficiency of Insurance. The borrowers under the mortgage loans that we intend to include in the trust fund are, with limited exception, required to maintain the insurance coverage described under "Description of the Mortgage Pool--Hazard, Liability and Other Insurance" in this prospectus supplement. Some types of losses, however, may be either uninsurable or not economically insurable, such as losses due to riots or acts of war or terrorism or earthquakes. Furthermore, there is a possibility of casualty losses on a mortgaged real property for which insurance proceeds may not be adequate. Consequently, there can be no assurance that each casualty loss incurred with respect to a mortgaged real property securing one of the underlying mortgage loans will be fully covered by insurance. Thirty-three (33) mortgaged real properties, securing 23.9% of the initial mortgage pool balance, are located in seismic zones 3 and 4, which are areas that are considered to have a high earthquake risk. Twenty-eight (28) of those 33 mortgaged real properties secure mortgage loans in loan group no. 1, representing 25.7% of the initial loan group no. 1 balance, and five (5) of those 33 mortgaged real properties secure mortgage loans in loan group no. 2, representing 16.9% of the initial loan group no. 2 balance. One (1) of those 33 mortgaged real properties, securing 0.7% of the initial mortgage pool balance and 3.5% of the initial loan group no. 2 balance, is secured by a manufactured housing community as to which no seismic assessment was performed. However, earthquake insurance is not necessarily required to be maintained by a borrower, even in the case of mortgaged real properties located in areas that are considered to have a high earthquake risk. Earthquake insurance is generally required only if the probable maximum loss for the subject property is greater than 20% of the replacement cost of the improvements on the property and no retrofitting will be done to improve that percentage. In addition, the southern and eastern coasts of the continental United States have historically been at greater risk, than other areas, of experiencing losses due to windstorms, such as tropical storms or hurricanes. For purposes of this prospectus supplement, we consider all areas within 20 miles of the coast from the southern tip of Texas to the northern border of North Carolina to have such a high windstorm risk. Ten (10) mortgaged real properties, securing 7.3% of the initial mortgage pool balance, are located in high windstorm risk areas. Seven (7) of those 10 mortgaged real properties secure mortgage loans in loan group no. 1, representing 6.4% of the initial loan group no. 1 balance, and three (3) of those 10 mortgaged real properties secure mortgage loans in loan group no. 2, representing 11.2% of the initial loan group no. 2 balance. Potential Conflicts of Interest Exist with Respect to Property Managers, the Borrowers and the Mortgage Loan Sellers. In the case of many of the mortgage loans that we intend to include in the trust fund, the related property managers and borrowers may experience conflicts of interest in the management and/or ownership of the related mortgaged real properties because: o the property managers also may manage additional properties, including properties that may compete with those mortgaged real properties; or S-74 o affiliates of the property managers and/or the borrowers, or the property managers and/or the borrowers themselves, also may own other properties, including properties that may compete with those mortgaged real properties. Further, certain mortgage loans may have been refinancings of debt previously held by a mortgage loan seller or an affiliate of one of the mortgage loan sellers and/or the mortgage loan sellers or their affiliates may have or have had equity investments in the borrowers or mortgaged real properties under certain of the mortgage loans. Each of the mortgage loan sellers or any of their respective affiliates may engage in other financial transactions with the underlying borrowers, principals of the underlying borrowers and/or their respective affiliates. In addition, the respective underwriters are affiliated with various other participants in the series 2005-C3 transaction. Citigroup Global Markets Inc. is affiliated with us and with Citigroup Global Markets Realty Corp., one of the mortgage loan sellers. IXIS Securities North America Inc. is affiliated with IXIS Real Estate Capital Inc., another of the mortgage loan sellers. The Interests of the Holders of the Carolina Place Non-Trust Mortgage Loan May Conflict with Your Interests. One (1) mortgage loan that we intend to include in the trust, which is described under "Description of the Mortgage Pool--The Carolina Place Loan Pair" in this prospectus supplement, and the pooled portion of which represents 8.0% of the initial mortgage pool balance and 10.0% of the initial loan group no. 1 balance, is part of a loan pair that includes one additional mortgage loan (not included in the trust) that is secured by the same mortgage instrument encumbering the same mortgaged real property as is the subject underlying mortgage loan. Pursuant to the related co-lender agreement, the holder of the Carolina Place non-trust mortgage loan is granted various rights and powers that affect the underlying mortgage loan in that loan pair, including (a) cure rights and a purchase option with respect to the underlying mortgage loan in that loan pair and (b) the right to advise, direct and/or consult with the applicable servicer regarding various servicing matters, including certain modifications, affecting that loan pair. In connection with exercising any of the foregoing rights afforded to it, the holder of the Carolina Place non-trust mortgage loan will likely not be an interested party with respect to the series 2005-C3 securitization and, consequently, may have interests that conflict with your interests. You should expect that the Carolina Place non-trust mortgage loan noteholder will exercise its rights and powers to protect its economic interests, and will not be liable to the series 2005-C3 certificateholders for so doing. See "Description of the Mortgage Pool--The Carolina Place Loan Pair" in this prospectus supplement for a more detailed description of the related co-lender arrangement and the priority of payments among the mortgage loans comprising the Carolina Place loan pair. Also, see "Servicing of the Underlying Mortgage Loans--The Series 2005-C3 Controlling Class Representative, the Class CP Representative and the Carolina Place Non-Trust Loan Noteholder" in this prospectus supplement for a more detailed description of certain of the foregoing rights of the Carolina Place non-trust mortgage loan noteholder. Limitations on Enforceability of Cross-Collateralization Reduce Its Benefits; Security Provided By Mortgages Securing Cross-Collateralized Mortgage Loans May Be Limited For Recording Tax Purposes. The mortgage pool will include 16 mortgage loans, representing 6.9% of the initial mortgage pool balance, of which 12 mortgage loans are in loan group no. 1, representing 3.1% of the initial loan group no. 1 balance, and four (4) mortgage loans are in loan group no. 2, representing 21.9% of the initial loan group no. 2 balance, that are, in each case, individually or through cross-collateralization with other mortgage loans, secured by two or more mortgaged real properties. These mortgage loans are identified under "Description of the Mortgage Pool--Cross-Collateralized Mortgage Loans and Multiple Property Loans" in this prospectus supplement. The purpose of cross-collateralizing mortgage loans with multiple mortgaged real properties is to reduce the risk of default or ultimate loss as a result of an inability of any particular property to generate sufficient net operating income to pay debt service. However, all of these mortgage loans permit-- o the release of one or more of the mortgaged real properties from the related mortgage lien, and/or S-75 o a full or partial termination of the applicable cross-collateralization, in each case, upon the satisfaction of the conditions described under "Description of the Mortgage Pool--Cross-Collateralized Mortgage Loans" and "--Mortgage Loans Which Permit Partial Release of the Related Mortgaged Real Property" in this prospectus supplement. If the borrower under any mortgage loan that is cross-collateralized with the mortgage loans of other borrowers, were to become a debtor in a bankruptcy case, the creditors of that borrower or the representative of that borrower's bankruptcy estate could challenge that borrower's pledging of the underlying mortgaged real property as a fraudulent conveyance. See "Risk Factors--Some Provisions in the Mortgage Loans Underlying Your Offered Certificates May Be Challenged as Being Unenforceable--Cross-Collateralization Arrangements" in the accompanying prospectus. In addition, when multiple real properties secure an individual mortgage loan or group of cross-collateralized mortgage loans, the amount of the mortgage encumbering any particular one of those properties may be less than the full amount of that individual mortgage loan or group of cross-collateralized mortgage loans, generally to avoid recording tax. This mortgage amount may equal the appraised value or allocated loan amount for the mortgaged real property and will limit the extent to which proceeds from the property will be available to offset declines in value of the other properties securing the same mortgage loan or group of cross-collateralized mortgage loans. Limited Information Causes Uncertainty. Fifty-nine (59) of the mortgage loans that we intend to include in the trust fund, representing 48.5% of the initial mortgage pool balance, of which 45 mortgage loans are in loan group no. 1, representing 48.5% of the initial loan group no. 1 balance, and 14 mortgage loans are in loan group no. 2, representing 48.5% of the initial loan group no. 2 balance, were originated for the purpose of providing acquisition financing. Fifteen (15) of the mortgage loans that we intend to include in the trust fund, representing 9.0% of the initial mortgage pool balance, of which 12 mortgage loans are in loan group no. 1, representing 8.5% of the initial loan group no. 1 balance, and three (3) mortgage loans are in loan group no. 2, representing 11.0% of the initial loan group no. 2 balance, are secured by mortgaged real properties that were constructed or completed after January 1, 2004. Accordingly, there may be limited or no recent historical operating information available with respect to the mortgaged real properties for these mortgage loans. As a result, you may find it difficult to analyze the historical performance of these properties. Prior Bankruptcies May Reflect Future Performance. We are aware that, in the case of three (3) mortgage loans that we intend to include in the trust fund, which are controlled by one principal or principal group and which represent 7.0% of the initial mortgage pool balance and 8.8% of the initial loan group no. 1 balance, the related borrower or a principal in the related borrower has been a party to a prior bankruptcy proceeding within the last seven years. We are also aware that, in the case of 10 mortgage loans that we intend to include in the trust fund, which represent 5.3% of the initial mortgage pool balance, of which five (5) mortgage loans are in loan group no. 1, representing 3.1% of the initial loan group no. 1 balance, and five (5) mortgage loans are in loan group no. 2, representing 13.6% of the initial loan group no. 2 balance, the related borrower or a principal in the related borrower was a party to a bankruptcy proceeding prior to the last seven years. There can be no assurance that principals or affiliates of other borrowers have not been a party to bankruptcy proceedings. Litigation May Adversely Affect Property Performance. There may be pending or threatened legal proceedings against the borrowers and/or guarantors under the underlying mortgage loans, the managers of the related mortgaged real properties and their respective affiliates, arising out of the ordinary business of those borrowers, managers and affiliates. We cannot assure you that litigation will not have a material adverse effect on your investment. S-76 Tax Considerations Related to Foreclosure. If the trust were to acquire an underlying real property through foreclosure or similar action, the special servicer may be required to retain an independent contractor to operate and manage the property. Any net income from that operation and management, other than qualifying "rents from real property" within the meaning of section 856(d) of the Internal Revenue Code of 1986, as amended, or any rental income based on the net profits of a tenant or sub-tenant or allocable to a service that is non-customary in the area and for the type of building involved, will subject the trust to federal, and possibly state or local, tax as described under "Federal Income Tax Consequences--REMICs--Prohibited Transactions Tax and Other Taxes" in the accompanying prospectus. Those taxes, and the cost of retaining an independent contractor, would reduce net proceeds available for distributions with respect to the series 2005-C3 certificates. In addition, in connection with the trust's acquisition of an underlying real property, through foreclosure or similar action, and/or its liquidation of such property, the trust may in certain jurisdictions--particularly in California and New York--be required to pay state or local transfer or excise taxes. Such state or local taxes may reduce net proceeds available for distributions with respect to the series 2005-C3 certificates. The Underwritten Net Cash Flow Debt Service Coverage Ratios and/or Loan-to-Value Ratios for Certain of the Underlying Mortgage Loans Have Been Adjusted in Consideration of a Cash Holdback or a Letter of Credit. With respect to seven (7) mortgage loans that we intend to include in the trust fund (loan numbers 33, 34, 38, 40, 44, 48 and 65), which collectively represent 7.1% of the initial mortgage pool balance, of which four (4) mortgage loans are in loan group no. 1, representing 5.5% of the initial loan group no. 1 balance, and three (3) mortgage loans are in loan group no. 2, representing 13.2% of the initial loan group no. 2 balance, the underwritten net cash flow debt service coverage ratios have, and with respect to one (1) of those seven (7) mortgage loans (loan number 34), which represents 1.2% of the initial mortgage pool balance and 1.5% of the initial loan group no. 1 balance, the cut-off date loan-to-value ratio has been calculated and/or presented on an adjusted basis that (a) takes into account various assumptions regarding the financial performance of the related mortgaged real property that are consistent with the respective performance related criteria required to obtain the release of a cash holdback or letter of credit which serves as additional collateral or otherwise covers losses to a limited extent and/or (b) reflects an application of that cash holdback or letter of credit to pay down the subject mortgage loan, with (if applicable) a corresponding reamortization of the monthly debt service payment. IF THE RELATED CASH HOLDBACKS OR LETTERS OF CREDIT WERE NOT TAKEN INTO ACCOUNT FOR ANY OF THESE SEVEN (7) UNDERLYING MORTGAGE LOANS, THEN: (A) THE UNDERWRITTEN NET CASH FLOW DEBT SERVICE COVERAGE RATIOS FOR THE MORTGAGE POOL WOULD RANGE FROM 1.02:1 TO 2.99:1, WITH A WEIGHTED AVERAGE OF 1.37:1; (B) THE CUT-OFF DATE LOAN-TO-VALUE RATIOS OF THE MORTGAGE POOL WOULD RANGE FROM 32.28% TO 80.27%, WITH A WEIGHTED AVERAGE OF 70.88%; (C) THE UNDERWRITTEN NET CASH FLOW DEBT SERVICE COVERAGE RATIOS FOR LOAN GROUP NO. 1 WOULD RANGE FROM 1.02:1 TO 2.99:1, WITH A WEIGHTED AVERAGE OF 1.39:1; (D) THE CUT-OFF DATE LOAN-TO-VALUE RATIOS OF LOAN GROUP NO. 1 WOULD RANGE FROM 32.28% TO 80.27%, WITH A WEIGHTED AVERAGE OF 70.39%; AND (E) THE UNDERWRITTEN NET CASH FLOW DEBT SERVICE COVERAGE RATIOS FOR LOAN GROUP NO. 2 WOULD RANGE FROM 1.11:1 TO 1.43:1, WITH A WEIGHTED AVERAGE OF 1.29:1. WEIGHTED AVERAGE UNDERWRITTEN NET CASH FLOW DEBT SERVICE COVERAGE AND CUT-OFF DATE LOAN-TO-VALUE RATIO INFORMATION FOR THE MORTGAGE POOL (OR PORTIONS THEREOF THAT CONTAIN ANY OF THOSE SEVEN (7) UNDERLYING MORTGAGE LOANS) SET FORTH IN THIS PROSPECTUS SUPPLEMENT REFLECT THE RESPECTIVE ADJUSTMENTS REFERENCED ABOVE. Future Terrorist Attacks and Military Actions May Adversely Affect the Value of the Offered Certificates and Payments on the Underlying Mortgage Loans. It is impossible to predict whether, or the extent to which, future terrorist activities may occur in the United States or with respect to U.S. interests around the world. It is uncertain what effects any future terrorist activities in the United States or abroad and/or any consequent actions on the part of the United States Government and others, including military action, will have on: (a) U.S. and world financial markets; (b) local, regional and national economies; (c) real estate markets across the U.S.; (d) particular business segments, including those that are important to the performance of the mortgaged real properties that secure the underlying mortgage loans; and/or (e) insurance costs and the availability of insurance coverage for terrorist acts in the future. Any negative financial impact in respect of any of the foregoing could S-77 adversely affect the cash flow at the related mortgaged real properties and ultimately the ability of borrowers to pay interest and/or principal on the underlying mortgage loans. Among other things, reduced investor confidence could result in substantial volatility in securities markets and a decline in real estate-related investments. In addition, reduced consumer confidence, as well as a heightened concern for personal safety, could result in a material decline in personal spending and travel. As a result of the foregoing factors, defaults on commercial real estate loans could increase; and, regardless of the performance of the underlying mortgage loans, the liquidity and market value of the offered certificates may be impaired. See "Risk Factors--Lack of Liquidity Will Impair Your Ability to Sell Your Offered Certificates and May Have an Adverse Effect on the Market Value of Your Offered Certificates," "--The Market Value of Your Offered Certificates May Be Adversely Affected by Factors Unrelated to the Performance of Your Offered Certificates and the Underlying Mortgage Assets, Such as Fluctuations in Interest Rates and the Supply and Demand of CMBS Generally" and "--Repayment of a Commercial or Multifamily Mortgage Loan Depends on the Performance and Value of the Underlying Real Property, Which May Decline Over Time, and the Related Borrower's Ability to Refinance the Property, of Which There Is No Assurance" in the accompanying prospectus. CAPITALIZED TERMS USED IN THIS PROSPECTUS SUPPLEMENT From time to time we use capitalized terms in this prospectus supplement, including in the annexes to this prospectus supplement. Each of those capitalized terms will have the meaning given to it in the glossary attached to this prospectus supplement. FORWARD-LOOKING STATEMENTS This prospectus supplement and the accompanying prospectus include the words "expects", "intends", "anticipates", "estimates" and similar words and expressions. These words and expressions are intended to identify forward-looking statements. Any forward-looking statements are made subject to risks and uncertainties that could cause actual results to differ materially from those stated. These risks and uncertainties include, among other things, declines in general economic and business conditions, increased competition, changes in demographics, changes in political and social conditions, regulatory initiatives and changes in customer preferences, many of which are beyond our control and the control of any other person or entity related to this offering. The forward-looking statements made in this prospectus supplement are accurate as of the date stated on the cover of this prospectus supplement. We have no obligation to update or revise any forward-looking statement. DESCRIPTION OF THE MORTGAGE POOL GENERAL We intend to include the 124 mortgage loans identified on Annex A-1 to this prospectus supplement in the trust fund. The mortgage pool consisting of those loans will have an Initial Mortgage Pool Balance of $1,435,172,921. However, the actual Initial Mortgage Pool Balance may be as much as 5.0% smaller or larger than that amount if any of those mortgage loans are removed from the mortgage pool or any other mortgage loans are added to the mortgage pool. See "--Changes in Mortgage Pool Characteristics" below. S-78 For purposes of calculating distributions on certain classes of the offered certificates, the pool of mortgage loans backing the series 2005-C3 certificates will be divided into a loan group no. 1 and a loan group no. 2. Loan group no. 1 will consist of 94 mortgage loans, with an Initial Loan Group No. 1 Balance of $1,145,448,916 and representing approximately 79.8% of the Initial Mortgage Pool Balance, that are secured by the various property types that constitute collateral for those mortgage loans. Loan group no. 2 will consist of 30 mortgage loans, with an Initial Loan Group No. 2 Balance of $289,724,005 and representing approximately 20.2% of the Initial Mortgage Pool Balance, that are secured by multifamily and manufactured housing properties. See Annex A-5--Characteristics of the Multifamily and Manufactured Housing Mortgaged Real Properties. The "Initial Mortgage Pool Balance" will equal the total cut-off date principal balance of the mortgage loans included in the trust (exclusive of the portion of the cut-off date principal balance of the Carolina Place Mortgage Loan allocated to the Carolina Place Non-Pooled Portion), the "Initial Loan Group No. 1 Balance" will equal the total cut-off date principal balance of the mortgage loans in loan group no. 1 (exclusive of the portion of the cut-off date principal balance of the Carolina Place Mortgage Loan allocated to the Carolina Place Non-Pooled Portion), and the "Initial Loan Group No. 2 Balance" will equal the total cut-off date principal balance of the mortgage loans in loan group no. 2. The cut-off date principal balance of any underlying mortgage loan is equal to its unpaid principal balance as of the cut-off date, after application of all monthly debt service payments due with respect to the mortgage loan on or before that date, whether or not those payments were received. We will transfer each of the underlying mortgage loans, at its respective cut-off date principal balance, to the trust. The cut-off date principal balance of each mortgage loan that we intend to include in the trust fund (or, in the case of the Carolina Place Mortgage Loan, the cut-off date principal balance of the Carolina Place Pooled Portion) is shown on Annex A-1 to this prospectus supplement. Those cut-off date principal balances range from $818,673 to $114,200,000, and the average of those cut-off date principal balances is $11,573,975. Each of the mortgage loans that we intend to include in the trust fund is an obligation of the related borrower to repay a specified sum with interest. Each of those mortgage loans is evidenced by a promissory note and secured by a mortgage, deed of trust or other similar security instrument that creates a mortgage lien on the fee simple and/or leasehold interest of the related borrower or another party in one or more commercial or multifamily real properties. That mortgage lien will, in all cases, be a first priority lien, subject only to Permitted Encumbrances. The Carolina Place Mortgage Loan has a cut-off date principal balance of $130,000,000. In connection with distributions on the series 2005-C3 certificates, the Carolina Place Mortgage Loan will be treated as if it consists of two (2) portions, which we refer to as the Carolina Place Pooled Portion and the Carolina Place Non-Pooled Portion, respectively. The Carolina Place Pooled Portion consists of $114,200,000 of the entire cut-off date principal balance of the Carolina Place Mortgage Loan. The Carolina Place Non-Pooled Portion consists of the remaining $15,800,000 of the cut-off date principal balance of the Carolina Place Mortgage Loan. The class CP-1, CP-2 and CP-3 certificates represent beneficial ownership of the Carolina Place Non-Pooled Portion, and the holders of those series 2005-C3 certificates will be entitled to collections of principal and interest on the Carolina Place Mortgage Loan that are allocable to the Carolina Place Non-Pooled Portion. The holders of the class A-1, A-2, A-3, A-SB, A-4, A-1A, A-MFL, A-MFX, A-J, B, C, D, E, F, G, H, J, K, L, M, N, P, XC and XP certificates will be entitled to receive collections of principal and/or interest on the Carolina Place Mortgage Loan that are allocable to the Carolina Place Pooled Portion. As and to the extent described under "Description of the Offered Certificates--Payments--Allocation of Payments on the Carolina Place Mortgage Loan; Payments on the Class CP-1, CP-2 and CP-3 Certificates" in this prospectus supplement, the rights of the holders of the class CP-1, CP-2 and CP-3 certificates to receive payments to which they are entitled with respect to the Carolina Place Mortgage Loan will be subordinated to the rights of the holders of the class A-1, A-2, A-3, A-SB, A-4, A-1A, A- S-79 MFL, A-MFX, A-J, B, C, D, E, F, G, H, J, K, L, M, N, P, XC and XP certificates to receive payments to which they are entitled with respect to the Carolina Place Mortgage Loan in certain default scenarios. You should consider each of the underlying mortgage loans to be a nonrecourse obligation of the related borrower. In the event of a payment default by the related borrower, recourse will be, or you should expect recourse to be, limited to the corresponding mortgaged real property or properties (and any reserves, letters of credit or other additional collateral for the mortgage loan) for satisfaction of that borrower's obligations. In those cases where recourse to a borrower or guarantor is permitted under the related loan documents, we have not undertaken an evaluation of the financial condition of any of these persons. None of the underlying mortgage loans will be insured or guaranteed by any governmental agency or instrumentality. We provide in this prospectus supplement a variety of information regarding the mortgage loans that we intend to include in the trust fund. When reviewing this information, please note that: o All numerical information provided with respect to the underlying mortgage loans is provided on an approximate basis. o Except as described in the next sentence, all weighted average information provided with respect to the underlying mortgage loans or any sub-group thereof reflects a weighting based on their respective cut-off date principal balances. For the purposes of calculating weighted averages, unless the context clearly indicates otherwise, the Carolina Place Mortgage Loan is considered to exclude the Carolina Place Non-Pooled Portion. o When information with respect to mortgaged real properties is expressed as a percentage of the Initial Mortgage Pool Balance, the Initial Loan Group No. 1 Balance or the Initial Loan Group No. 2 Balance, the percentages are based upon the cut-off date principal balances of the related underlying mortgage loans or allocated portions of those balances (or, in the case of the Carolina Place Mortgage Loan, based upon the cut-off date principal balance of the Carolina Place Pooled Portion). o Unless specifically indicated otherwise, statistical information presented in this prospectus supplement with respect to the Carolina Place Mortgage Loan is presented without regard to either the Carolina Place Non-Pooled Portion or the Carolina Place Non-Trust Loan. o If any of the underlying mortgage loans is secured by multiple mortgaged real properties, a portion of that mortgage loan has been allocated to each of those properties for purposes of providing various statistical information in this prospectus supplement. o The general characteristics of the entire mortgage pool backing the offered certificates are not necessarily representative of the general characteristics of either loan group no. 1 or loan group no. 2. The yield and risk of loss on any class of offered certificates may depend on, among other things, the composition of each of loan group no. 1 and loan group no. 2. The general characteristics of each such loan group should also be analyzed when making an investment decision. o Whenever loan-level information, such as loan-to-value ratios or debt service coverage ratios, is presented in the context of the mortgaged real properties, the loan level statistic attributed to a mortgaged real property is the same as the statistic for the related underlying mortgage loan. o Whenever we refer to a particular underlying mortgage loan or mortgaged real property by name, we mean the underlying mortgage loan or mortgaged real property, as the case may be, identified S-80 by that name on Annex A-1 to this prospectus supplement. Whenever we refer to a particular underlying mortgage loan by loan number, we are referring to the underlying mortgage loan identified by that loan number on Annex A-1 to this prospectus supplement. o Statistical information regarding the underlying mortgage loans may change prior to the date of initial issuance of the offered certificates due to changes in the composition of the mortgage pool prior to that date, and the Initial Mortgage Pool Balance may be as much as 5% larger or smaller than indicated. CROSS-COLLATERALIZED MORTGAGE LOANS AND MULTIPLE PROPERTY MORTGAGE LOANS The mortgage pool will include 17 mortgage loans, representing 7.9% of the Initial Mortgage Pool Balance, of which 13 mortgage loans are in loan group no. 1, representing 4.4% of the Initial Loan Group No. 1 Balance, and four (4) mortgage loans are in loan group no. 2, representing 21.9% of the Initial Loan Group No. 2 Balance, that are, in each case, individually or through cross-collateralization with other mortgage loans, secured by two or more mortgaged real properties. The amount of the mortgage lien encumbering any particular one of those mortgaged real properties may be less than the full amount of the related mortgage loan or group of cross-collateralized mortgage loans, generally to avoid mortgage recording tax. The mortgage amount may equal the appraised value or allocated loan amount for the particular mortgaged real property. This would limit the extent to which proceeds from that property would be available to offset declines in value of the other mortgaged real properties securing the same mortgage loan or group of cross-collateralized mortgage loans. The following table identifies the various individual multiple property mortgage loans and groups of cross-collateralized mortgage loans that we will include in the trust fund. CROSS-COLLATERALIZED MORTGAGE LOAN GROUPS AND MULTIPLE PROPERTY MORTGAGE LOANS <TABLE> % OF INITIAL TOTAL % OF INITIAL LOAN GROUP CUT-OFF DATE MORTGAGE NO. 1/2 MORTGAGE LOAN/CROSSED GROUP RELATIONSHIP LOAN GROUP PRINCIPAL BALANCE POOL BALANCE BALANCE - ------------------------------ ------------- ---------- ----------------- ------------ ------------ United Supermarket Portfolio Crossed Group Group 1 $35,433,430 2.5% 3.1% United # 526- Amarillo 6,183,761 0.4 0.5 United # 517- Wichita Falls 4,554,364 0.3 0.4 United # 549- Snyder 3,839,019 0.3 0.3 United # 515- Burkburnett 3,497,243 0.2 0.3 United # 513- Vernon 3,203,157 0.2 0.3 United # 501- Lubbock 2,893,174 0.2 0.3 United # 509- Levelland 2,869,329 0.2 0.3 United # 527- Amarillo 2,225,518 0.2 0.2 United # 522- Amarillo 2,217,570 0.2 0.2 United # 533- Amarillo 2,169,880 0.2 0.2 United # 525- Perryton 961,742 0.1 0.1 United # 518- Childress 818,673 0.1 0.1 EDR Portfolio I Crossed Group Group 2 33,900,000 2.4 11.7 Jefferson Commons - University of Missouri 19,400,000 1.4 6.7 Jefferson Commons - Texas Tech 14,500,000 1.0 5.0 EDR Portfolio II Crossed Group Group 2 29,500,000 2.1 10.2 Jefferson Commons - Purdue 14,800,000 1.0 5.1 </TABLE> S-81 <TABLE> % OF INITIAL TOTAL % OF INITIAL LOAN GROUP CUT-OFF DATE MORTGAGE NO. 1/2 MORTGAGE LOAN/CROSSED GROUP RELATIONSHIP LOAN GROUP PRINCIPAL BALANCE POOL BALANCE BALANCE - ------------------------------ ------------- ---------- ----------------- ------------ ------------ Jefferson Commons - Ohio State University 14,700,000 1.0 5.1 Inip Drive Industrial Multiple Property Loan Group 1 14,974,962 1.0 1.3 95 Inip Drive 7,191,922 0.5 0.6 475 Doughty Blvd. 4,236,338 0.3 0.4 41 Inip Drive 2,265,948 0.2 0.2 90 Inip Drive 1,280,753 0.1 0.1 </TABLE> The three (3) groups of cross-collateralized mortgage loans identified in the table above entitle the related borrowers to obtain a release of one or more of the corresponding mortgaged real properties and a termination of the related cross-collateralization arrangement, subject, in each case, to the fulfillment of the following conditions, among others-- o the defeasance of the mortgage loan(s) in an amount equal to: 1. in the case of the United Supermarket Portfolio, 125% of the unpaid principal balance of the mortgage loan being defeased, or 2. in the case of each of the Crossed Groups identified in the foregoing table as EDR Portfolio I and EDR Portfolio II, respectively, 100% of the unpaid principal balance of the mortgage loan being defeased plus 10% of the original principal balance of the mortgage loan being defeased; o the satisfaction of debt service coverage and loan-to-value tests for the property or properties that constitute collateral for the undefeased mortgage loan(s) in the subject Crossed Group; and o receipt by the lender of confirmation from each applicable rating agency that the action will not result in a qualification, downgrade or withdrawal of any of the then-current ratings of the offered certificates. The multiple property mortgage loan identified as Inip Drive Industrial in the table above entitles the related borrower to obtain a release of one or more of the corresponding mortgaged real properties in connection with the sale to an unaffiliated third-party purchaser, provided that no event of default under the related mortgage loan documents has occurred and is continuing, and subject to the fulfillment of the following conditions, among others-- o concurrently with the partial release, the related borrower pays (and the outstanding principal balance of such mortgage loan is reduced by) a release amount equal to the greater of (1) the net sale proceeds from such partial release and (2) 125% of the allocated loan amount with respect to that parcel; o the related borrower pays a yield maintenance premium calculated on the release amount; o the mortgage lender determines that income from the remaining property will provide a debt service coverage ratio after the date of the release not less than the greater of (1) 1.15:1 or (2) the debt service coverage ratio immediately preceding such release; and S-82 o immediately following the release, the outstanding principal balance will be no more than 75% of the fair market value of the remaining mortgaged real property or properties. MORTGAGE LOANS WHICH PERMIT PARTIAL RELEASE OF THE RELATED MORTGAGED REAL PROPERTY Some of the mortgage loans that we intend to include in the trust fund may permit the release of one or more undeveloped or non-income producing parcels or outparcels that, in each such case, do not represent a significant portion of the appraised value of the related mortgaged real property, or have been excluded from the appraised value of the related mortgaged real property, shown on Annex A-1 to this prospectus supplement. MORTGAGE LOANS WITH AFFILIATED BORROWERS Thirteen (13) separate groups of mortgage loans that we intend to include in the trust fund, consisting of a total of 45 mortgage loans, and representing a total of 31.6% of the Initial Mortgage Pool Balance, of which 29 mortgage loans are in loan group no. 1, representing 26.5% of the Initial Loan Group No. 1 Balance, and 16 mortgage loans are in loan group no. 2, representing 51.9% of the Initial Loan Group No. 2 Balance, have borrowers that, in the case of the mortgage loans contained within a particular group, are related such that they have at least one controlling sponsor or principal in common. S-83 SIGNIFICANT UNDERLYING MORTGAGE LOANS Set forth on Annex B to this prospectus supplement are summary discussions of the 10 largest mortgage loans and/or groups of cross-collateralized mortgage loans that we intend to include in the trust fund. The following table shows certain characteristics of the 10 largest mortgage loans and/or groups of cross-collateralized mortgage loans that we intend to include in the trust, by cut-off date principal balance. <TABLE> CUT-OFF % OF DATE % OF INITIAL CUT-OFF PRINCIPAL INITIAL LOAN DATE MORTGAGE CUT-OFF DATE BALANCE MORTGAGE GROUP U/W LOAN-TO LOAN PROPERTY TYPE, PRINCIPAL PER POOL NO. 1/2 NCF VALUE MORTGAGE LOAN NAME SELLER SUB-TYPE LOAN GROUP BALANCE SF/UNIT BALANCE BALANCE DSCR RATIO - --------------------------- -------- ----------------- ---------- ------------ ---------- -------- ------- ---- ------- 1. Carolina Place CGM Retail, Regional Group 1 $114,200,000(2) $191.65(2) 8.0%(2) 10.0%(2) 1.96x(2) 48.60%(2) Mall 2. Novo Nordisk CGM Office, Suburban Group 1 53,000,000 234.88 3.7 4.6 1.63 74.13 Headquarters 3. 270 Technology Park CGM Office, Group 1 51,200,000 113.96 3.6 4.5 1.28 80.00 Flex 4. Penn Mar Shopping IXIS Retail, Group 1 38,877,977 101.79 2.7 3.4 1.36 64.26 Center Anchored 5. 250 West Pratt CGM Office, Group 1 37,000,000 104.17 2.6 3.2 1.35 68.52 CBD 6. Abilene Mall IXIS Retail, Regional Group 1 37,000,000 110.90 2.6 3.2 1.23 79.74 Mall 7. United Supermarket CGM 35,433,430 2.5 3.1 1.25(3) 79.48(3) Portfolio(1) (a) United # 526- Retail, Anchored, Group 1 6,183,761 86.52 0.4 0.5 Amarillo Single Tenant (b) United # 517- Retail, Anchored, Group 1 4,554,364 75.91 0.3 0.4 Wichita Falls Single Tenant (c) United # 549- Retail, Anchored, Group 1 3,839,019 87.45 0.3 0.3 Snyder Single Tenant (d) United # 515- Retail, Anchored, Group 1 3,497,243 81.09 0.2 0.3 Burkburnett Single Tenant (e) United # 513- Retail, Anchored, Group 1 3,203,157 74.27 0.2 0.3 Vernon Single Tenant (f) United # 501- Retail, Anchored, Group 1 2,893,174 73.63 0.2 0.3 Lubbock Single Tenant (g) United # 509- Retail, Anchored, Group 1 2,869,329 67.04 0.2 0.3 Levelland Single Tenant (h) United # 527- Retail, Anchored, Group 1 2,225,518 62.34 0.2 0.2 Amarillo Single Tenant (i) United # 522- Retail, Anchored, Group 1 2,217,570 59.96 0.2 0.2 Amarillo Single Tenant (j) United # 533- Retail, Anchored, Group 1 2,169,880 59.99 0.2 0.2 Amarillo Single Tenant (k) United # 525- Retail, Anchored, Group 1 961,742 29.32 0.1 0.1 Perryton Single Tenant (l) United # 518- Retail, Anchored, Group 1 818,673 24.96 0.1 0.1 Childress Single Tenant 8. EDR Portfolio I(1) CGM 33,900,000 2.4 11.7 1.36(3) 68.07(3) (a) Jefferson Commons - Multifamily, Group 2 19,400,000 74,615 1.4 6.7 University of Student Housing Missouri (b) Jefferson Commons - Multifamily, Group 2 14,500,000 59,671 1.0 5.0 Texas Tech Student Housing 9. The Plaza at Huntington IXIS Office, Suburban Group 1 33,500,000 121.67 2.3 2.9 1.31 68.51 Beach 10. Alamo Plaza CGM Office, CBD Group 1 31,500,000 164.79 2.2 2.8 1.23 75.00 ------------ ---- TOTAL/WTD. AVG. $465,611,407 32.4% 1.50X 67.31% ============ ==== </TABLE> - ---------- (1) Represents a Crossed Group. (2) Reflects or is based solely on Carolina Place Pooled Portion. (3) Calculated with respect to Crossed Loans based on entire Crossed Group and all related mortgaged real properties. S-84 TERMS AND CONDITIONS OF THE UNDERLYING MORTGAGE LOANS Due Dates. Subject, in some cases, to a next business day convention: o twenty-five (25) of the mortgage loans that we intend to include in the trust fund, representing 19.2% of the Initial Mortgage Pool Balance, of which 20 mortgage loans are in loan group no. 1, representing 20.4% of the Initial Loan Group No. 1 Balance, and five (5) mortgage loans are in loan group no. 2, representing 14.5% of the Initial Loan Group No. 2 Balance, provide for scheduled payments of principal and/or interest to be due on the fifth day of each month; o seven (7) of the mortgage loans that we intend to include in the trust fund, representing 9.4% of the Initial Mortgage Pool Balance, of which two (2) mortgage loans are in loan group no. 1, representing 4.3% of the Initial Loan Group No. 1 Balance, and five (5) mortgage loans are in loan group no. 2, representing 29.3% of the Initial Loan Group No. 2 Balance, provide for scheduled payments of principal and/or interest to be due on the seventh day of each month; o one (1) of the mortgage loans that we intend to include in the trust fund, representing 1.5% of the Initial Mortgage Pool Balance and 1.9% of the Initial Loan Group No. 1 Balance, provides for scheduled payments of principal and/or interest to be due on the ninth day of each month; and o ninety-one (91) of the mortgage loans that we intend to include in the trust fund, representing 69.9% of the Initial Mortgage Pool Balance, of which 71 mortgage loans are in loan group no. 1, representing 73.4% of the Initial Loan Group No. 1 Balance, and 20 mortgage loans are in loan group no. 2, representing 56.2% of the Initial Loan Group No. 2 Balance, provide for scheduled payments of principal and/or interest to be due on the eleventh day of each month. Mortgage Rates; Calculations of Interest. In general, each of the mortgage loans that we intend to include in the trust fund bears interest at a mortgage rate that, in the absence of default, is fixed until maturity. However, as described under "--ARD Loans" below, each ARD Loan will accrue interest after its anticipated repayment date at a rate that is in excess of its mortgage rate prior to that date. The current mortgage rate for each of the mortgage loans that we intend to include in the trust fund is shown on Annex A-1 to this prospectus supplement. As of the cut-off date, those mortgage rates ranged from 4.5975% per annum to 6.2100% per annum, and the weighted average of those mortgage rates was 5.3487% per annum. As of the cut-off date the mortgage rates for the mortgage loans in loan group no. 1 ranged from 4.5975% per annum to 6.2100% per annum, and the weighted average of those mortgage rates was 5.3729% per annum. As of the cut-off date the mortgage rates for the mortgage loans in loan group no. 2 ranged from 4.7800% per annum to 5.6550% per annum, and the weighted average of those mortgage rates was 5.2529% per annum. Except if an ARD Loan remains outstanding past its anticipated repayment date, none of the mortgage loans that we intend to include in the trust fund provides for negative amortization or for the deferral of interest. With the exception of one (1) underlying mortgage loan, representing 1.5% of the Initial Mortgage Pool Balance and 1.8% of the Initial Loan Group No. 1 Balance, for which interest will accrue on the basis of a 360-day year consisting of twelve 30-day months, each of the underlying mortgage loans will accrue interest on the basis of the actual number of days elapsed during each one-month accrual period in a year assumed to consist of 360 days. Balloon Loans. One hundred nineteen (119) of the mortgage loans that we intend to include in the trust fund, representing 97.1% of the Initial Mortgage Pool Balance, of which 89 mortgage loans are in loan group no. S-85 1, representing 96.3% of the Initial Loan Group No. 1 Balance, and 30 mortgage loans are in loan group no. 2, representing 100.0% of the Initial Loan Group No. 2 Balance, are characterized by: o an amortization schedule that is significantly longer than the actual term of the mortgage loan or for no amortization prior to stated maturity; and o a substantial payment, or balloon payment, being due with respect to the mortgage loan on its stated maturity date. Four (4) of the balloon mortgage loans that we intend to include in the trust fund, representing 5.4% of the Initial Mortgage Pool Balance, of which three (3) mortgage loans are in loan group no. 1, representing 5.4% of the Initial Loan Group No. 1 Balance, and one (1) mortgage loan is in loan group no. 2, representing 5.6% of the Initial Loan Group No. 2 Balance, provide for payments of interest only until maturity. Another 56 of the balloon mortgage loans that we intend to include in the trust fund, representing 48.9% of the Initial Mortgage Pool Balance, of which 39 mortgage loans are in loan group no. 1, representing 46.2% of the Initial Loan Group No. 1 Balance, and 17 mortgage loans are in loan group no. 2, representing 59.5% of the Initial Loan Group No. 2 Balance, provide for payments of interest only for periods ranging from the first 12 to the first 96 payments following origination and prior to amortization. ARD Loans. Three (3) mortgage loans that we intend to include in the trust fund, representing 2.1% of the Initial Mortgage Pool Balance and 2.7% of the Initial Loan Group No. 1 Balance, are each characterized by the following features: o A maturity date that is 20 or 30 years following origination. o The designation of an anticipated repayment date that is generally five to ten years following origination. The anticipated repayment date for each ARD Loan is listed on Annex A-1 to this prospectus supplement. o The ability of the related borrower to prepay the mortgage loan, without restriction, including without any obligation to pay a prepayment premium or a yield maintenance charge, at any time on or after a date that is generally three to five months prior to the related anticipated repayment date. o Until its anticipated repayment date, the calculation of interest at its initial mortgage rate. o From and after its anticipated repayment date, the accrual of interest at a revised annual rate that will be at least two percentage points in excess of its initial mortgage rate. o The deferral of any additional interest accrued with respect to the mortgage loan from and after the related anticipated repayment date at the difference between its revised mortgage rate and its initial mortgage rate. This Post-ARD Additional Interest may, in some cases, to the extent permitted by applicable law, compound at the new revised mortgage rate. Any Post-ARD Additional Interest accrued with respect to the mortgage loan following its anticipated repayment date will not be payable until the entire principal balance of the mortgage loan has been paid in full. o From and after its anticipated repayment date, the accelerated amortization of the mortgage loan out of any and all monthly cash flow from the corresponding mortgaged real property that remains after payment of the applicable monthly debt service payments and permitted operating expenses and capital expenditures and the funding of any required reserves. These accelerated amortization payments and the Post-ARD Additional Interest are considered separate from the monthly debt service payments due with respect to the mortgage loan. S-86 One (1) of the ARD Loans that we intend to include in the trust fund, representing 0.7% of the Initial Mortgage Pool Balance, which mortgage loan is in loan group no. 1, representing 0.8% of the Initial Loan Group No. 1 Balance, provides for payments of interest only for the first 12 payments following origination. In the case of each of the ARD Loans that we intend to include in the trust fund, the related borrower has either entered into a cash management agreement or has agreed to enter into a cash management agreement on or prior to the anticipated repayment date if it has not previously done so. The related borrower or the manager of the corresponding mortgaged real property will be required under the terms of that cash management agreement to deposit or cause the deposit of all revenue from that property received after the anticipated repayment date into a lockbox account designated by the lender under the loan documents for the related ARD Loan. Fully Amortizing Loans. Two (2) of the mortgage loans that we intend to include in the trust fund, representing 0.8% of the Initial Mortgage Pool Balance and 1.0% of the Initial Loan Group No. 1 Balance, are in each case characterized by: o constant monthly debt service payments throughout the substantial term of the subject mortgage loan; and o an amortization schedule that is approximately equal to the actual term of the subject mortgage loan. The fully amortizing mortgage loans do not have anticipated repayment dates or the repayment incentives, such as an increased interest rate, associated with ARD Loans. Voluntary Prepayment Provisions. All but two (2) of the mortgage loans that we intend to include in the trust fund provided as of the cut-off date for: o a prepayment lock-out period or a prepayment lock-out/defeasance period during which voluntary prepayments are prohibited; followed by o one of the following: 1. in the case of eight (8) mortgage loans, representing 4.8% of the Initial Mortgage Pool Balance, of which seven (7) mortgage loans are in loan group no. 1, representing 4.7% of the Initial Loan Group No. 1 Balance, and one (1) mortgage loan is in loan group no. 2, representing 5.3% of the Initial Loan Group No. 2 Balance, a prepayment consideration period during which any voluntary principal prepayment must be accompanied by prepayment consideration, followed by an open prepayment period during which voluntary principal prepayments may be made without any prepayment consideration; or 2. in the case of 114 mortgage loans, representing 93.9% of the Initial Mortgage Pool Balance, of which 85 mortgage loans are in loan group no. 1, representing 93.6% of the Initial Loan Group No. 1 Balance, and 29 mortgage loans are in loan group no. 2, representing 94.7% of the Initial Loan Group No. 2 Balance, just by an open prepayment period. In addition, two (2) mortgage loans that we intend to include in the trust fund, representing 1.3% of the Initial Mortgage Pool Balance and 1.7% of the Initial Loan Group No. 1 Balance, provided, as of the cut-off date, for a prepayment consideration period, followed by an open prepayment period. S-87 The prepayment terms of each of the mortgage loans that we intend to include in the trust fund are set forth in Annex A-1 to this prospectus supplement. Generally, the prepayment restrictions relating to each of the underlying mortgage loans do not apply to prepayments arising out of a casualty or condemnation of the corresponding mortgaged real property. Prepayments of this type are generally not required to be accompanied by any prepayment consideration. In addition, several of the mortgage loans that we intend to include in the trust fund also permit the related borrower to prepay the entire principal balance of the mortgage loan remaining, without prepayment consideration, after application of insurance proceeds or a condemnation award to a partial prepayment of the mortgage loan, provided that such prepayment of the entire principal balance is made within a specified time period following the date of such application. In the case of certain mortgage loans, if the entire principal balance is not prepaid, the monthly principal and interest payment is reduced to reflect the smaller principal balance. Also notwithstanding the foregoing prepayment restrictions, prepayments may occur in connection with loan defaults and, in certain cases, out of cash holdbacks where certain conditions relating to the holdback have not been satisfied. Prepayment premiums and/or yield maintenance charges may not be collectable in connection with prepayments of this type. The aggregate characteristics of the prepayment provisions of the underlying mortgage loans will vary over time as: o lock-out periods expire and mortgage loans enter periods during which prepayment consideration may be required in connection with principal prepayments and, thereafter, enter open prepayment periods; and o mortgage loans are prepaid, repurchased, replaced or liquidated following a default or as a result of a delinquency. Prepayment Lock-out Periods. All but two (2) of the mortgage loans that we intend to include in the trust fund provided for prepayment lock-out periods as of the cut-off date. For those mortgage loans-- o the longest remaining prepayment lock-out period as of that date (including any part of the relevant period during which a defeasance could occur) is 235 months with respect to the entire mortgage pool, 235 months with respect to loan group no. 1 and 117 months with respect to loan group no. 2, o the shortest remaining prepayment lock-out period as of that date (including any part of the relevant period during which a defeasance could occur) is 21 months with respect to the entire mortgage pool, 21 months with respect to loan group no. 1 and 24 months with respect to loan group no. 2, and o the weighted average remaining prepayment lock-out period as of that date (including any part of the relevant period during which a defeasance could occur) is 94 months with respect to the entire mortgage pool, 97 months with respect to loan group no. 1 and 80 months with respect to loan group no. 2. Prepayment Consideration. Ten (10) of the mortgage loans that we intend to include in the trust fund, representing 6.1% of the Initial Mortgage Pool Balance, of which nine (9) mortgage loans are in loan group no. 1, representing 6.4% of the Initial Loan Group No. 1 Balance, and one (1) mortgage loan is in loan group no. 2, representing 5.3% of the Initial Loan Group No. 2 Balance, each provides for the payment of prepayment consideration in connection with a voluntary prepayment during part of the loan term, commencing at origination S-88 or at the expiration of an initial prepayment lock-out period. That prepayment consideration is calculated on the basis of a yield maintenance formula that is, in some cases, subject to a minimum amount equal to a specified percentage of the principal amount prepaid. Prepayment premiums and yield maintenance charges received on the underlying mortgage loans, whether in connection with voluntary or involuntary prepayments, will be allocated and paid to the series 2005-C3 certificateholders (or, if allocable to the class A-MFL REMIC II regular interest while the swap agreement is in effect and there is no continuing payment default thereunder on the part of the swap counterparty, to the swap counterparty), in the amounts and in accordance with the priorities, described under "Description of the Offered Certificates--Payments--Payments of Prepayment Premiums and Yield Maintenance Charges" in this prospectus supplement. Certain limitations exist under applicable state law on the enforceability of the provisions of the underlying mortgage loans that require payment of prepayment premiums or yield maintenance charges. Neither we nor any of the underwriters and/or mortgage loan sellers makes any representation or warranty as to the collectability of any prepayment premium or yield maintenance charge with respect to any of those mortgage loans. See "Certain Legal Aspects of Mortgage Loans--Default Interest and Limitations on Prepayments" in the accompanying prospectus. Proceeds received in connection with the liquidation of any defaulted mortgage loan in the trust fund may be insufficient to pay any prepayment premium or yield maintenance charge due in connection with such involuntary prepayment. Defeasance Loans. One hundred fourteen (114) of the mortgage loans that we intend to include in the trust fund, representing 93.9% of the Initial Mortgage Pool Balance, of which 85 mortgage loans are in loan group no. 1, representing 93.6% of the Initial Loan Group No. 1 Balance, and 29 mortgage loans are in loan group no. 2, representing 94.7% of the Initial Loan Group No. 2 Balance, each permits the borrower to deliver U.S. Treasury obligations or other government-related securities as substitute collateral, but prohibit voluntary prepayments during the defeasance period. Each of these mortgage loans permits the related borrower, during specified periods and subject to specified conditions, to pledge to the holder of the mortgage loan the requisite amount of U.S. Treasury obligations or other government securities and obtain a full or partial release of the mortgaged real property or properties. In general, the U.S. Treasury obligations or other government securities that are to be delivered in connection with the defeasance of any mortgage loan must provide for a series of payments that: o will be made on or prior, but as closely as possible, to all successive due dates through and including the maturity date (or, in some cases, through and including the beginning of the subject mortgage loan's open prepayment period); and o will, in the case of each due date, be in a total amount equal to or greater than the monthly debt service payment, including any applicable balloon payment, scheduled to be due on that date, with any excess to be returned to the related borrower. For purposes of determining the defeasance collateral for an ARD Loan, however, that mortgage loan will be treated as if a balloon payment is due on its anticipated repayment date. Generally, in connection with any delivery of defeasance collateral, the related borrower will be required to deliver a security agreement granting the trust a first priority security interest in the collateral. No borrower will be permitted to defease the related mortgage loan prior to the second anniversary of the date of initial issuance of the offered certificates. S-89 Due-on-Sale and Due-on-Encumbrance Provisions. All of the mortgage loans that we intend to include in the trust fund contain both a due-on-sale clause and a due-on-encumbrance clause. In general, except for the permitted transfers discussed below, these clauses either: o permit the holder of the related mortgage to accelerate the maturity of the mortgage loan if the borrower sells or otherwise transfers or encumbers the corresponding mortgaged real property; or o prohibit the borrower from doing so without the consent of the holder of the mortgage. See "Legal Aspects of Mortgage Loans--Due-on-Sale and Due-on-Encumbrance Provisions" in the accompanying prospectus. All of the mortgage loans that we intend to include in the trust fund permit one or more of the following types of transfers: o transfers of the corresponding mortgaged real property or of ownership interests in the related borrower if specified conditions are satisfied, which conditions normally include the reasonable acceptability of the transferee to the lender; o a transfer of the corresponding mortgaged real property or of ownership interests in the related borrower to a person that is affiliated with or otherwise related to the borrower; o transfers of the corresponding mortgaged real property or of ownership interests in the related borrower to specified entities or types of entities; o transfers of ownership interests in the related borrower for estate-planning purposes; o transfers of non-controlling ownership interests in the related borrower; o involuntary transfers caused by the death of any owner, general partner or manager of the related borrower; o changes of ownership among existing partners or members of the related borrower; o issuance by a related borrower of new partnership or membership interests; or o other transfers similar to the foregoing. ADDITIONAL LOAN AND PROPERTY INFORMATION Escrows and Reserves. Information regarding escrows and reserves with respect to the underlying mortgage loans is presented on Annex A-1 to this prospectus supplement. Delinquencies. None of the mortgage loans that we intend to include in the trust fund were, as of the cut-off date, more than 30 days delinquent with respect to any monthly debt service payment. Tenant Matters. Described and listed below are special considerations regarding tenants at the mortgaged real properties securing the mortgage loans that we intend to include in the trust fund: o Sixty-three (63) of the mortgaged real properties, securing 49.4% of the Initial Mortgage Pool Balance and 62.0% of the Initial Loan Group No. 1 Balance, are, in each case, a commercial S-90 property that is leased to one or more tenants that each occupy at least 25% or more of the net rentable area of the particular property. A number of companies are tenants at more than one of the mortgaged real properties. o There are several cases in which a particular entity is a tenant at more than one of the mortgaged real properties, and although it may not be a major tenant at any of those properties, it is significant to the success of the properties. o Six (6) mortgaged real properties, securing 6.5% of the Initial Mortgage Pool Balance and 32.4% of the Initial Loan Group No. 2 Balance, are multifamily rental properties that have material concentrations of student tenants or is a student housing facility. o With respect to certain of the mortgage loans, the related borrower has given to certain tenants, or the project developer has retained, an option to purchase, a right of first refusal or a right of first offer to purchase all or a portion of the related mortgaged real property in the event a sale is contemplated. This may impede the lender's ability to sell the related mortgaged real property at foreclosure, or, upon foreclosure, this may affect the value and/or marketability of the related mortgaged real property. o Certain of the mortgaged real properties may be leased in whole or in part by government-sponsored tenants who may have certain rights to cancel their leases or reduce the rent payable with respect to such lease at any time for, among other reasons, a lack of appropriations. o With respect to certain of the mortgage loans, one or more of the tenants at the related mortgaged real property have yet to take possession of their leased premises or may have taken possession of their leased premises but have yet to open their respective businesses to the general public and, in some cases, may not have commenced paying rent under their leases. There can be no assurances that a prolonged delay in the opening of business to the general public will not negatively impact the related tenant's ability to fulfill its obligations under its respective lease. Ground Leases. Three (3) of the mortgage loans that we intend to include in the trust fund, representing 1.0% of the Initial Mortgage Pool Balance and 1.3% of the Initial Loan Group No. 1 Balance, are each secured by a mortgage lien on the borrower's leasehold interest in the corresponding mortgaged real property, but not on the fee simple interest in that property. For two of the three (3) mortgage loans described above, the term of the related ground lease, after giving effect to all extension options exercisable by the lender, expires more than 10 years after the stated maturity date of the related mortgage loan. In the case of one (1) of the three (3) mortgage loans described above, the term of the related ground lease expires prior to the stated maturity date, however, the lien of the related mortgage encumbers both the fee and leasehold interests in the related mortgaged property. With respect to all of these mortgage loans, the related ground lessor has agreed to give, or the related ground lease provides that the ground lessor must give, the holder of each leasehold mortgage loan we intend to include in the trust notice of, and the right to cure, any default or breach by the ground lessee. Additional and Other Financing. As indicated under "Risk Factors--Risks Related to the Underlying Mortgage Loans--Some of the Underlying Borrowers Have Incurred or Are Permitted to Incur Additional Debt Secured by the Related Mortgaged Real Property" in this prospectus supplement, the Carolina Place Mortgage Loan, which--taking into account the pooled and non-pooled portions thereof--has a cut-off date principal balance of $130,000,000 and the pooled portion of which has a cut-off date principal balance of $114,200,000, representing 8.0% of the Initial Mortgage Pool Balance and 10.0% of the Initial Loan Group No. 1 Balance, is part of a loan pair that includes an additional mortgage loan (not included in the trust fund) that is secured by the same mortgage instrument encumbering the related mortgaged real property as is the Carolina Place underlying S-91 mortgage loan. The Carolina Place Mortgage Loan is generally senior in right of payment to the Carolina Place Non-Trust Loan, which has a cut-off date principal balance of $37,919,878. As indicated under "Risk Factors--Risks Related to the Underlying Mortgage Loans--Some of the Underlying Borrowers Have Incurred or Are Permitted to Incur Additional Debt That Is Not Secured by the Related Mortgaged Real Property or bY Equity Interests in Those Borrowers", the borrowers with respect to two (2) mortgage loans that we intend to include in the trust fund, representing 4.9% of the Initial Mortgage Pool Balance and 6.2% of the Initial Loan Group No. 1 Balance, have incurred or are permitted to incur additional unsecured debt as described below. In the case of one (1) mortgage loan (loan number 2) that we intend to include in the trust fund, representing 3.7% of the Initial Mortgage Pool Balance and 4.6% of the Initial Loan Group No. 1 Balance, there is an existing unsecured subordinate loan in the amount of $20,000,000, subject to the terms of an intercreditor and subordination agreement in favor of the mortgage lender. All payments on account of the subordinate debt are required to be paid out of excess cash flow. In the case of one (1) mortgage loan (loan number 34) that we intend to include in the trust fund, representing 1.2% of the Initial Mortgage Pool Balance and 1.5% of the Initial Loan Group No. 1 Balance, the related borrower is permitted to incur certain unsecured subordinate debt, provided that, among other things, (a) the maximum amount of such debt, when combined with the subject underlying mortgage loan, does not exceed 80% of the value of the related mortgaged real property (as determined by lender) or result in a debt service coverage ratio of less than 1.10:1, (b) the mortgage lender approves the subordinate lender and the subordinate loan documents and (c) the borrower, guarantors and subordinate lender execute a subordination and standstill agreement in form reasonably acceptable to the mortgage lender. Substantially all the mortgage loans permit the related borrower to incur limited indebtedness in the ordinary course of business that is not secured by the related mortgaged real property. Additionally, in the case of those underlying mortgage loans that require or allow letters of credit to be posted by the related borrower as additional security for the subject mortgage loan, in lieu of reserves or otherwise, the related borrower may be obligated to pay fees and expenses associated with the letter of credit and/or to reimburse the letter of credit issuer or others in the event of a draw upon the letter of credit by the lender. As indicated under "Risk Factors--Risks Related to the Underlying Mortgage Loans--In the Case of Some of the Mortgage Loans That We Intend to Include in the Trust Fund, One or More of the Principals of the Related Borrower Have Incurred or Are Permitted to Incur Mezzanine Debt" in this prospectus supplement, in the case of 22 mortgage loans that we intend to include in the trust fund, representing 15.5% of the Initial Mortgage Pool Balance, of which 16 mortgage loans are in loan group no. 1, representing 14.7% of the Initial Loan Group No. 1 Balance, and six (6) mortgage loans are in loan group no. 2, representing 18.9% of the Initial Loan Group No. 2 Balance, one or more of the principals of the related borrower are permitted to incur mezzanine debt as described below. In the case of the Carolina Place Mortgage Loan, the related mortgage loan documents permit the sole member of the related borrower to obtain mezzanine financing secured by its ownership interest in the related borrower, subject to, among other conditions: (i) a maximum loan-to-value ratio (based on the aggregate balances of the mortgage debt and the mezzanine debt) of 72%; (ii) if the mezzanine debt bears interest at a floating rate, the maintenance of an interest rate cap agreement during the term of the mezzanine loan with a strike price that results in a debt service coverage ratio (based on the aggregate debt service payments under the mortgage debt and the mezzanine debt) of no less than 1.37:1; (iii) if the mezzanine debt bears interest at a fixed rate, a weighted average debt service constant (based on the aggregate balances of the mortgage debt and the mezzanine debt) of S-92 no greater than 6.14%; (iv) the debt service coverage ratio (based on the aggregate debt service under the mortgage debt and the mezzanine debt) immediately following the closing of the mezzanine debt will not be less than 1.37:1 (with the interest rate for any portion of the mezzanine debt that bears interest at a floating rate calculated using the strike price referred to in clause (ii) above); (v) rating agency confirmation; and (vi) an intercreditor agreement in form and substance acceptable to the rating agencies and reasonably acceptable to the mortgage lender. Also, in the case of the Carolina Place Mortgage Loan. the related mortgage loan documents permit pledges of indirect interests in the related borrower, provided that, among other things, the following conditions are satisfied: (i) the pledge is to a "qualified pledgee" as defined in the mortgage loan documents, or is subject to the mortgage lender's prior written consent, which consent may be withheld in its sole and absolute discretion (which includes the right to impose additional conditions with respect thereto), provided that the mortgage lender's consent may not be unreasonably withheld, if the borrower has delivered (A) written confirmation from the rating agencies to the effect that the pledge will not, in and of itself, result in a downgrade, withdrawal or qualification of the then-current ratings assigned to the series 2005-C3 certificates and (B) a revised substantive non-consolidation opinion in form, scope and substance reasonably acceptable to the mortgage lender and the rating agencies, (ii) if in connection with the pledge, the property manager (or the borrower, if self-managed) will not thereafter continue to manage the related mortgaged real property, then the replacement manager must meet the conditions of a substitute manager set forth in the related mortgage loan documents, (iii) immediately prior to the pledge, no event of default has occurred and is continuing, (iv) upon the request of the rating agencies, following the exercise of any remedies available to the pledgee pursuant to the pledge, the borrower will deliver, or cause to be delivered, to the mortgage lender a non-consolidation opinion reasonably acceptable to a prudent mortgage lender and the rating agencies, and (v) the pledgee shall not, in any event, pledge, sell, assign, further pledge or otherwise transfer the pledge or any of the documents that evidence or secure the pledge to a person or entity other than to a qualified pledgee. Pledges of equity to or from affiliates of the borrower are also permitted subject to the terms and conditions contained in the related mortgage loan documents. In the case of the 12 mortgage loans secured by the portfolio of mortgaged real properties identified on Annex A-1 as United Supermarket Portfolio, which mortgage loans represent 2.5% of the Initial Mortgage Pool Balance and 3.1% of the Initial Loan Group No. 1 Balance and in the case of one (1) mortgage loan (loan number 102) representing 0.3% of the Initial Mortgage Pool Balance and 0.4% of the Initial Loan Group No. 1 Balance, one or more principals of the related borrower are permitted to incur mezzanine debt in accordance with the terms of the related loan documents, including satisfaction of the following conditions: (a) the minimum combined debt service coverage ratio must be 1.20:1, with a combined loan-to-value ratio of no greater than 80%; (b) the mezzanine lender must be reasonably approved by the mortgage lender; and (c) the mezzanine lender must execute a subordination and standstill intercreditor agreement satisfactory to the mortgage lender. In the case of one (1) mortgage loan (loan number 44) that we intend to include in the trust fund, representing 1.0% of the Initial Mortgage Pool Balance and 4.8% of the Initial Loan Group No. 2 Balance, one or more principals of the related borrower are permitted to incur mezzanine debt in accordance with the terms of the related loan documents, including satisfaction of the following conditions: (a) the ratio of the borrower's then underwritten net cash flow to the aggregate amount of scheduled debt service payments on the subject underlying mortgage loan and all debt service payments on the mezzanine loan will be not less than 1.10:1; (b) any payments made to the mezzanine lender on account of the mezzanine loan must only be made out of excess cash flow; (c) the ratio of the principal balance of the subject underlying mortgage loan and the mezzanine loan to the appraised value of the related mortgaged real property may not exceed 90%; (d) the mortgage lender and the mezzanine lender must enter into an agreement reasonably satisfactory to the mortgage lender that, among other things, subordinates the mezzanine loan to the subject underlying mortgage loan and requires the mezzanine lender to refrain from enforcing any of its remedies until such time as the mortgage lender has approved the mezzanine lender as a successor owner of the related mortgaged real property; and (e) the mortgage lender approves the S-93 mezzanine lender, the terms of the mezzanine financing and the terms of the documents evidencing the mezzanine loan, which approval may not be unreasonably withheld. In the case of one (1) mortgage loan (loan number 61) that we intend to include in the trust fund, representing 0.7% of the Initial Mortgage Pool Balance and 0.8% of the Initial Loan Group No. 1 Balance, respectively, one or more principals of the related borrower are permitted to incur mezzanine debt in accordance with the terms and conditions of the related loan documents, including satisfaction of the following conditions: (a) the maximum aggregate amount of the mortgage debt and the mezzanine debt may not exceed 90% of the value of the related mortgaged real property (as determined by lender), (b) the aggregate debt service coverage ratio for the mortgage debt and the mezzanine debt may be not less than 1.1:1, (c) the mortgage lender must approve the mezzanine lender and all mezzanine loan documents, and (d) borrower, guarantors and mezzanine lender must execute a subordination and standstill agreement in form reasonably acceptable to the mortgage lender. In the case of four (4) mortgage loans (loan numbers 63, 77, 79 and 80) that we intend to include in the trust fund, representing 0.6%, 0.5%, 0.5% and 0.5%, respectively, of the Initial Mortgage Pool Balance, respectively, and 3.2%, 2.6%, 2.6% and 2.5%, respectively, of the Initial Loan Group No. 2 Balance, one or more principals of the related borrower are permitted to incur mezzanine debt in accordance with the terms of the related loan documents, including satisfaction of the following conditions: (a) the combined loan-to-value ratio may not exceed 85%; (b) the mezzanine lender must enter into a standstill, subordination, intercreditor and mutual recognition agreement wholly acceptable to the mortgage lender, which agreement must contain, without limitation, the mezzanine lender's agreement (i) to subordinate the mezzanine loan to the mortgage loan, (ii) not to modify the mezzanine loan without the mortgage lender's consent, (iii) not to foreclose or take any collection action against the mortgage loan borrower except for the realization on the partnership interests pledged as collateral for the mezzanine loan until full repayment of the mortgage loan, (iv) not to pursue any judicial or administrative action against the borrower (including, without limitation, bankruptcy or similar proceeding) until full repayment of the mortgage loan, (v) not to accept payment on the mezzanine loan and to turn over to the mortgage lender all payments made on the mezzanine loan, while any default exists under the mortgage loan, (vi) to assign its voting rights in any bankruptcy or similar insolvency proceeding to the mortgage lender and (vii) not to attempt to obtain any priming lien order in any bankruptcy or similar proceeding of the borrower; (c) the mortgage lender must approve all of the terms and provisions of mezzanine lender's loan documents; and (d) the stated maturity of the mezzanine loan must not occur earlier than the stated maturity date of the mortgage loan. In the case of one (1) mortgage loan (loan number 65), that we intend to include in the trust fund, representing 0.6% of the Initial Mortgage Pool Balance and 3.1% of the Initial Loan Group No. 2 Balance, respectively, one or more principals of the related borrower are permitted to incur mezzanine debt in accordance with the terms of the related loan documents, including satisfaction of the following conditions: (a) the combined debt service coverage ratio for the underlying mortgage loan and the mezzanine loan may be no lower than 1.15:1; (b) any payments made to the mezzanine lender on account of the mezzanine loan may only be made out of excess cash flow; (c) the combined ratio of the underlying mortgage loan and the mezzanine loan to the appraised value of the related mortgaged real property may not exceed 5%; (d) the mortgage lender must approve the mezzanine lender and the terms of the mezzanine loan documents; and (e) the mezzanine lender must execute a subordination and standstill agreement acceptable to the mortgage lender. In the case of one (1) mortgage loan (loan number 111) that we intend to include in the trust fund, representing 0.3% of the Initial Mortgage Pool Balance and 0.4% of the Initial Loan Group No. 1 Balance, the related borrower is permitted to obtain secondary financing wholly secured by a pledge and assignment of all partnership interests owned by the partners of such borrower, upon the satisfaction of the following conditions: (i) the mortgagee has approved the mezzanine lender and all of the terms of the mezzanine loan; (ii) the mortgagee and the mezzanine lender shall enter into a standstill, subordination and mutual recognition agreement wholly acceptable to the mortgagee; (iii) the mortgagee has approved all of the terms and provisions of the mezzanine S-94 lender's loan documents; and (iv) the combined loan-to-value ratio of the underlying mortgage loan and the mezzanine loan may not exceed 85%. Mezzanine debt is debt that is secured by the principal's ownership interest in the borrower. This type of financing effectively reduces the indirect equity interest of any principal in the corresponding mortgaged real property. Except as disclosed under this "--Additional and Other Financing" subsection and "Risk Factors--Risks Related to the Underlying Mortgage Loans--Some of the Underlying Borrowers Have Incurred or Are Permitted to Incur Additional Debt Secured by the Related Mortgaged Real Property", "--Risks Related to the Underlying Mortgage Loans--Some of the Underlying Borrowers Have Incurred or Are Permitted to Incur Additional Debt That Is Not Secured by the Related Mortgaged Real Property or by Equity Interests in Those Borrowers" and "--In the Case of Some of the Mortgage Loans That We Intend to Include in the Trust Fund, One or More of the Principals of the Related Borrower Have Incurred or Are Permitted to Incur Mezzanine Debt" in this prospectus supplement, we have not been able to confirm whether the respective borrowers under the mortgage loans that we intend to include in the trust fund have any other debt outstanding or whether the principals of those borrowers have any mezzanine debt outstanding. Such debt may be outstanding despite our inability to confirm its existence. Environmental Reports. A third-party environmental consultant conducted a Phase I environmental study meeting ASTM standards for each of the mortgaged real properties securing the mortgage loans that we intend to include in the trust fund. The resulting Environmental Reports were prepared: o in the case of 121 mortgaged real properties, securing 93.1% of the Initial Mortgage Pool Balance (of which 97 mortgaged real properties secure mortgage loans in loan group no. 1, representing 100.0% of the Initial Loan Group No. 1 Balance, and 24 mortgaged real properties secure mortgage loans in loan group no. 2, representing 65.8% of the Initial Loan Group No. 2 Balance), during the 12-month period preceding the cut-off date; and o in the case of six (6) mortgaged real properties, securing 6.9% of the Initial Mortgage Pool Balance and 34.2% of the Initial Loan Group No. 2 Balance, during the 12- to 16-month period preceding the cut-off date. The environmental investigation at any particular mortgaged real property did not necessarily cover all potential environmental issues. For example, tests for radon, mold, lead-based paint, and lead in drinking water were generally performed only at multifamily rental properties and only when the environmental consultant or originator of the related mortgage loan believed this testing was warranted under the circumstances. The above-described environmental investigations identified various adverse or potentially adverse environmental conditions at some of the mortgaged real properties. If the particular condition is significant, it could result in a claim for damages by any party injured by that condition. In many cases, the identified condition related to the suspected or confirmed presence of asbestos-containing materials, mold, lead-based paint and/or radon. Where these substances were suspected or present, and depending upon the condition of the substances, the environmental consultant generally recommended, and the lender required, the implementation of the recommendations prior to closing, or the escrowing of funds sufficient to affect such recommendations, including: o that the substances not be disturbed and that additional testing be performed prior to any renovation or demolition activities; or o the establishment of an operation and maintenance plan to address the issue; or S-95 o an abatement or removal program and, where appropriate, a notification program. In other cases, where the environmental consultant recommended specific remediation of a material adverse environmental condition, the related originator of the mortgage loan generally required the related borrower: 1. to carry out the specific remedial measures prior to closing; 2. to carry out the specific remedial measures post-closing and deposit with the lender a cash reserve in an amount equal to at least 100% of the estimated cost to complete the remedial measures; or 3. to obtain from a party with financial resources reasonably estimated to be adequate to cure the subject violation in all material respects a guaranty or indemnity to cover the costs of any necessary remedial measures. 4. to obtain environmental insurance (in the form of a secured creditor impaired property policy or other form of environmental insurance). However, some borrowers under the mortgage loans have not yet satisfied all post-closing obligations required by the related loan documents with respect to environmental matters. In addition, there can be no assurance that these obligations or the recommended operations and maintenance plans have been or will continue to be implemented, or that the cost of implementing them will not exceed the estimated cost. If any adverse environmental conditions are not properly addressed or monitored over time by the related borrower, it could result in a significant loss or environmental liability for the trust. In some cases, residual contamination does or will remain at a mortgaged real property after remedial action is performed. While the presence of this residual contamination may be acceptable today, there can be no assurance that future legal requirements, prospective purchasers or future owners will not require additional investigation or cleanup. In some cases, the environmental consultant did not recommend that any action be taken with respect to a potential adverse environmental condition at a mortgaged real property because: o an environmental consultant investigated those conditions and recommended no further investigations or remediation; or o the responsible party or parties with respect to that condition had already been identified; or o the responsible party or parties currently monitor actual or potential adverse environmental conditions at that property; or o the levels of hazardous substances at that property were found to be below or very close to applicable thresholds for reporting, abatement or remediation; or o the property had been accepted into a state-funded remediation program; or o a letter was obtained from the applicable regulatory authority stating that no further action was required, or the issue has received proper closure with the applicable regulatory authority. S-96 However, there can be no assurance that the responsible party or parties, in each case, are financially able or will actually correct the problem. In some of these cases, the responsible party or parties have installed monitoring wells on the mortgaged real property and/or need access to the mortgaged real property for monitoring or to perform remedial action. In some cases, the environmental report for a mortgaged real property identified potential environmental problems at nearby properties, including but not limited to spills of hazardous materials and leaking underground storage tanks. In those cases, the environmental reports indicated that: o the subject mortgaged real property had not been affected; o the potential for the problem to affect the subject mortgaged real property was limited; o the party or parties responsible for remediating the potential environmental problems had been identified; or o there was no evidence to suggest that there has been an adverse environmental impact to the subject mortgaged real property. In those cases where the party or parties responsible for remediation had been identified, there can be no assurance that such party or parties, in each case, are financially able or will actually correct the problem. The information contained in this prospectus supplement regarding environmental conditions at the mortgaged real properties is based on the environmental site assessments referred to in this "--Environmental Reports" subsection and has not been independently verified by: o us; o any of the mortgage loan sellers; o any of the underwriters; o the master servicer; o the special servicer; o the trustee; or o the affiliates of any of these parties. There can be no assurance that the environmental assessments or studies, as applicable, identified all adverse environmental conditions and risks at, or that any environmental conditions will not have a material adverse effect on the value of or cash flow from, one or more of the mortgaged real properties or will not result in a claim for damages by a party injured by the condition. The series 2005-C3 pooling and servicing agreement requires that the special servicer obtain an environmental site assessment of a mortgaged real property prior to acquiring title to the property or assuming its operation. This requirement precludes enforcement of the security for the related mortgage loan until a satisfactory environmental site assessment is obtained or until any required remedial action is taken. In addition, there can be no assurance that the requirements of the series 2005-C3 pooling and servicing agreement will S-97 effectively insulate the trust from potential liability for a materially adverse environmental condition at any mortgaged real property. Property Condition Assessments. All but one (1) of the mortgaged real properties securing mortgage loans that we intend to include in the trust fund were inspected by professional engineers or architects. One hundred nineteen (119) of those mortgaged real properties, securing 92.5% of the Initial Mortgage Pool Balance, of which 95 mortgaged real properties secure mortgage loans in loans group no. 1, representing 99.3% of the Initial Loan Group No. 1 Balance and 24 mortgaged real properties secure mortgage loans in loan group no. 2, representing 65.8% of the Initial Loan Group No. 2 Balance, were inspected during the 12-month period preceding the cut-off date, and seven (7) of those mortgaged real properties securing mortgage loans representing 7.2% of the Initial Mortgage Pool Balance, of which one (1) mortgaged real property secures a mortgage loan in loan group no. 1, representing 0.3% of the Initial Loan Group No. 1 Balance and six (6) mortgaged real properties secure mortgage loans in loan group no. 2, representing 34.2% of the Initial Loan Group No. 2 Balance, were inspected during the 12- to 16- month period preceding the cut-off date. These inspections included an assessment of the mortgaged real properties' exterior walls, roofing, interior construction, mechanical and electrical systems and general condition of the site, buildings and other improvements located at each of the mortgaged real properties. One (1) mortgaged real property, securing 0.3% of the Initial Mortgage Pool Balance and 0.4% of the Initial Loan Group No. 1 Balance, is secured by land therefore no property condition assessment was required. The inspections identified various deferred maintenance items and necessary capital improvements at some of the mortgaged real properties. The resulting inspection reports generally included an estimate of cost for any recommended repairs or replacements at a mortgaged real property. When repairs or replacements were recommended, the related borrower was generally required to: o carry out necessary repairs or replacements; or o establish reserves, generally in the amount of 125% of the estimated cost of the repairs or replacements necessary to cure the deferred maintenance items identified in the inspection report that, at the time of origination, remained outstanding, with that estimated cost being based upon the estimates given in the inspection report, or, in certain cases, upon an actual contractor's estimate. There can be no assurance that another inspector would not have discovered additional maintenance problems or risks, or arrived at different, and perhaps significantly different, judgments regarding the problems and risks disclosed by the respective inspection reports and the cost of corrective action. Appraisals and Market Studies. An independent appraiser that is state-certified and/or a member of the Appraisal Institute prepared an appraisal of each of the mortgaged real properties securing the mortgage loans that we intend to include in the trust fund, in order to establish the approximate value of the property. Those appraisals are the basis for the appraised values for the respective mortgaged real properties set forth on Annex A-1 to this prospectus supplement. For 120 mortgaged real properties, securing 92.5% of the Initial Mortgage Pool Balance, of which 96 mortgaged real properties secure mortgage loans in loan group no. 1, representing 99.2% of the Initial Loan Group No. 1 Balance, and 24 mortgaged real properties secure mortgage loans in loan group no. 2, representing 65.8% of the Initial Loan Group No. 2 Balance, the appraised value is as of a date within 12 months of the cut-off date. For seven (7) mortgaged real properties, securing 7.5% of the Initial Mortgage Pool Balance, of which one (1) mortgaged real property secures a mortgage loan in loan group no. 1, representing 0.8% of the Initial Loan Group No. 1 Balance, and six (6) mortgaged real properties secure mortgage loans in loan S-98 group no. 2, representing 34.2% of the Initial Loan Group No. 2 Balance, the appraised value is as of a date during the 12-to 15-month period preceding the cut-off date. In some cases, an appraisal contained an "as is" value, with an "as of" date consistent with the date that the appraisal was prepared, and a "stabilized" value, with a specified future "as of" date. For mortgaged real properties where the specified conditions for the stabilized value were met, the stabilized value "as of" date was used in the above analysis, with certain exceptions, where stabilized values were used even when specified conditions have not been met. Each of the appraisals referred to above represents the analysis and opinions of the appraiser at or before the origination of the related underlying mortgage loan. The appraisals are not guarantees of, and may not be indicative of, the present or future value of the subject mortgaged real property. There can be no assurance that another appraiser would not have arrived at a different valuation of any particular mortgaged real property, even if the appraiser used the same general approach to, and the same method of, appraising that property. Neither we nor any of the underwriters has confirmed the values of the respective mortgaged real properties in the appraisals referred to above. In general, appraisals seek to establish the amount a typically motivated buyer would pay a typically motivated seller. However, this amount could be significantly higher than the amount obtained from the sale of a property under a distress or liquidation sale. The appraisal upon which the appraised value for each mortgaged real property is based contains, or is accompanied by a separate letter that contains, a statement by the respective appraiser, to the effect that the appraisal guidelines set forth in Title XI of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 were followed in preparing that appraisal. However, neither we nor any of the underwriters, the related mortgage loan seller or the related originator has independently verified the accuracy of this statement. Zoning and Building Code Compliance. Each mortgage loan seller has, with respect to the mortgage loans that it is selling to us for inclusion in the trust fund, examined whether the use and operation of the related mortgaged real properties were in material compliance with all zoning and land-use ordinance, rules, regulations and orders applicable to those real properties at the time of origination. The mortgage loan sellers may have considered-- o legal opinions or zoning consultant's reports, o certifications from, and/or discussions with, government officials, o information contained in appraisals, surveys and site plan, o title insurance endorsements, o representations by the related borrower contained in the related mortgage loan documents, or o property condition assessments undertaken by independent licensed engineers, in determining whether the mortgaged real properties were in compliance. In some cases, the use, operation or structure of a mortgaged real property constitutes a permitted nonconforming use or structure. Generally, the improvements on that mortgaged real property may not be rebuilt to their current state in the event that those improvements are materially damaged or destroyed. Generally, where a mortgaged real property constitutes a permitted nonconforming use or structure and the improvements on the S-99 particular property may not be rebuilt to their current specifications in the event of a major casualty, the related mortgage loan seller conducted an analysis as to: o whether the extent of the nonconformity is material; o whether sufficient insurance proceeds would be available to restore the mortgaged real property in accordance with then-applicable requirements, and whether the mortgaged real property, if permitted to be repaired or restored in conformity with current law, would be adequate security for the related mortgage loan; o the extent of the risk that the mortgaged real property would suffer a material casualty of a magnitude that applicable ordinances would require conformity with current requirements, is remote; and/or o whether the insurance proceeds, together with the value of the remaining property, would be sufficient to pay the loan. There is no assurance, however, that any such analysis was correct, or that the above determinations were made in each and every case. Hazard, Liability and Other Insurance. Although exceptions exist, the loan documents for each of the mortgage loans we intend to include in the trust fund generally require the related borrower to maintain with respect to the corresponding mortgaged real property the following insurance coverage: o except in the case of manufactured housing, hazard insurance in an amount, subject to a customary deductible, that is at least equal to the lesser of-- 1. the outstanding principal balance of the mortgage loan, and 2. replacement cost or the full insurable replacement cost of the improvements located on the insured property; o if any portion of the improvements at the property are in an area identified in the federal register by the Flood Emergency Management Agency as having special flood hazards, flood insurance meeting the requirements of the Federal Insurance Administration guidelines in an amount that is equal to the least of-- 1. the outstanding principal balance of the related mortgage loan, 2. the full insurable value of the insured property, and 3. the maximum amount of insurance available under the National Flood Insurance Act of 1968; o comprehensive general liability insurance against claims for personal and bodily injury, death or property damage occurring on, in or about the insured property, in an amount at least equal to $1,000,000 per occurrence; o business interruption or rent loss insurance either in an amount not less than 100% of the projected rental income or revenue from the insured property for at least 12 months or, alternatively, in an amount as may be required by the lender; and S-100 o if the mortgaged real property is in an area identified as having a high risk of loss due to windstorms, as described under "Risk Factors--Risks Related to the Underlying Mortgage Loans--Uninsured Loss; Sufficiency of Insurance", windstorm insurance. In general, the mortgaged real properties for the mortgage loans that we intend to include in the trust fund are not insured against earthquake risks. Thirty-three (33) mortgaged real properties, securing 23.9% of the Initial Mortgage Pool Balance, of which 28 of those mortgaged real properties secure mortgage loans in loan group no. 1, representing 25.7% of the Initial Loan Group No. 1 Balance, and five (5) of those mortgaged real properties secure mortgage loans in loan group no. 2, representing 16.9% of the Initial Loan Group No. 2 Balance, are located in seismic zones 3 and 4, which are areas that are considered to have a high earthquake risk. In most of these cases, a third-party consultant conducted seismic studies to assess the probable maximum loss ("PML") for the property. In general, those studies were performed in accordance with generally accepted industry standard assumptions and methodologies. None of those studies showed a PML greater than 20%. However, one of these mortgaged real properties, securing 0.7% of the Initial Mortgage Pool Balance and 3.5% of the Initial Loan Group No. 2 Balance, is a manufactured housing community and no seismic study was performed. In the case of some of the mortgaged real properties securing mortgage loans that we intend to include in the trust fund, the insurance covering any of such mortgaged real properties for acts of terrorism may be provided through a blanket policy that also covers properties unrelated to the trust fund. Acts of terrorism at those other properties could exhaust coverage under the blanket policy. No representation is made as to the adequacy of any such insurance coverage provided under a blanket policy, in light of the fact that multiple properties are covered by that policy. THE CAROLINA PLACE LOAN PAIR General. The Carolina Place Mortgage Loan has a cut-off date principal balance of $130,000,000, the pooled portion of which represents 8.0% of the Initial Mortgage Pool Balance and 10.0% of the Initial Loan Group No. 1 Balance. The Carolina Place Mortgage Loan is one of two (2) mortgage loans, together referred to as the Carolina Place Loan Pair, that are both secured by the Carolina Place Mortgaged Property. The Carolina Place Mortgage Loan is generally senior in right of payment to the Carolina Place Non-Trust Loan, which has a cut-off date principal balance of $37,919,878. See "Servicing of the Underlying Mortgage Loans--Rights and Powers of the Series 2005-C3 Controlling Class Representative, the Class CP Representative and the Carolina Place Non-Trust Loan Noteholder" in this prospectus supplement for a more detailed description of certain rights of the Carolina Place Non-Trust Loan Noteholder. The Carolina Place Non-Trust Loan is evidenced by two promissory notes held by one of our affiliates. Both of those promissory notes are expected to be transferred on or after the securitization closing date to third-party institutional investors. If the two promissory notes evidencing the Carolina Place Non-Trust Mortgage Loan are held by different parties, they will have the same aggregate characteristics and entitle their holders to the same aggregate rights as are described in this prospectus supplement with respect to Carolina Place Non-Trust Mortgage Loan. Consequently, the Carolina Place Non-Trust Mortgage Loan is treated as a single mortgage loan in this prospectus supplement. The Carolina Place Non-Trust Loan will be serviced, along with the Carolina Place Mortgage Loan, under the series 2005-C3 pooling and servicing agreement by the master servicer and the special servicer, generally as if the Carolina Place Non-Trust Loan was a mortgage loan in the trust fund. The Underwritten NCF Debt Service Coverage Ratio and the Cut-off Date Loan-to-Value Ratio for the Carolina Place Loan Pair (calculated as if it was a single underlying mortgage loan) are 1.33x and 71.46%, respectively. The Carolina Place Non-Trust Loan is cross-defaulted with the Carolina Place Mortgage Loan. S-101 Co-Lender Agreement. The respective rights of the holder of the Carolina Place Mortgage Loan and the Carolina Place Non-Trust Loan Noteholder are governed by a co-lender agreement (the "Carolina Place Co-Lender Agreement"), which generally provides that: o for so long as (1) the sum of (a) an amount generally equal to the unpaid principal balance of the Carolina Place Non-Trust Loan, net of that portion of any existing Appraisal Reduction Amount with respect to the Carolina Place Loan Pair that is allocable to the Carolina Place Non-Trust Loan, plus (b) the amount of any cash collateral or letters of credit posted by the Carolina Place Non-Trust Loan Noteholder to maintain control of the Carolina Place Loan Pair, if any, is equal to or greater than (2) an amount generally equal to 25% of the unpaid principal balance of the Carolina Place Non-Trust Loan, then the Carolina Place Non-Trust Loan Noteholder will have the ability to advise and direct the master servicer and/or the special servicer with respect to certain specified servicing actions regarding the Carolina Place Loan Pair, including those involving foreclosure or material modification of the Carolina Place Mortgage Loan and the Carolina Place Non-Trust Loan (see "Servicing of the Underlying Mortgage Loans--Rights and Powers of the Series 2005-C3 Controlling Class Representative, the Class CP Representative and the Carolina Place Non-Trust Loan Noteholder" in this prospectus supplement) and to replace the special servicer with respect to the Carolina Place Loan Pair (see "Servicing of the Underlying Mortgage Loans--Replacement of the Special Servicer"); o if (1) the sum of (a) an amount generally equal to the unpaid principal balance of the Carolina Place Non-Trust Loan, net of that portion of any existing Appraisal Reduction Amount with respect to the Carolina Place Loan Pair that is allocable to the Carolina Place Non-Trust Loan, plus (b) the amount of any cash collateral or letters of credit posted by the Carolina Place Non-Trust Loan Noteholder to maintain control of the Carolina Place Loan Pair, if any, is less than (2) an amount generally equal to 25% of the unpaid principal balance of the Carolina Place Non-Trust Loan, the ability to advise and direct the master servicer and/or the special servicer, and to replace the special servicer, referred to in the preceding bullet will belong to the holder of the Carolina Place Mortgage Loan or its designee (which designee, in accordance with the series 2005-C3 pooling and servicing agreement, will be the series 2005-C3 controlling class representative); o if the borrower defaults in any of its obligations under the Carolina Place Mortgage Loan, the Carolina Place Non-Trust Loan Noteholder will have five days to cure any monetary default and 30 days to cure any non-monetary default that is susceptible of cure, in each case from the later of the date of the expiration of the borrower's grace period under the loan documents or the Carolina Place Non-Trust Loan Noteholder's receipt of notice of the default from the servicer, subject to limitations on the number of cures contained in the Carolina Place Co-Lender Agreement; and o in the event that (a) any payment of principal or interest on the Carolina Place Mortgage Loan becomes 90 days or more delinquent, (b) the Carolina Place Mortgage Loan is accelerated, (c) the Carolina Place Mortgage Loan is not paid at maturity, (d) the borrower files a petition for bankruptcy or (e) the Carolina Place Mortgage Loan becomes a specially serviced loan and is either in default or a default is reasonably foreseeable, the Carolina Place Non-Trust Loan Noteholder will have the option to purchase the Carolina Place Mortgage Loan at a price generally equal to the unpaid principal balance of the Carolina Place Mortgage Loan, together with all accrued unpaid interest on the Carolina Place Mortgage Loan (other than Default Interest) to but not including the date of such purchase, and any servicing compensation, advances and interest on advances payable or reimbursable to any party to the series 2005-C3 pooling and servicing agreement pursuant thereto (but exclusive of any prepayment consideration and S-102 exclusive of any liquidation fees if the purchase is made within 90 days of the option becoming exercisable). Priority of Payments. Pursuant to the Carolina Place Co-Lender Agreement, following the allocation of payments to each mortgage loan in the Carolina Place Loan Pair in accordance with the related loan documents, unless there exists (without remedy by the Carolina Place Non-Trust Loan Noteholder) either (a) a monetary event of default as to the Carolina Place Mortgage Loan or (b) a non-monetary event of default with respect to the Carolina Place Mortgage Loan at a time when the Carolina Place Mortgage Loan is being specially serviced, collections on the Carolina Place Loan Pair will be allocated (after application to certain related unreimbursed or unpaid costs and expenses, including outstanding advances, together with interest thereon, and unpaid servicing compensation) generally in the following manner: o first, to the Carolina Place Mortgage Loan, in an amount up to all accrued and unpaid interest (other than Default Interest) on the principal balance thereof (net of related master servicing fees and trustee fees), until all such interest is paid in full; o second, to the Carolina Place Mortgage Loan, in an amount up to its pro rata portion of all principal payments in accordance with its percentage interest in the Carolina Place Loan Pair; o third, to reimburse the Carolina Place Non-Trust Noteholder for any cure payments made with respect to the Carolina Place Mortgage Loan; o fourth, to the Carolina Place Non-Trust Loan, in an amount up to all accrued and unpaid interest (other than Default Interest) on the unpaid principal balance thereof (net of related master servicing fees), until all such interest is paid in full; o fifth, to the Carolina Place Non-Trust Loan, in an amount up to its pro rata portion of all principal payments in accordance with its percentage interest in the Carolina Place Loan Pair; o sixth, to the Carolina Place Mortgage Loan, its pro rata portion of any prepayment premium in accordance with its percentage interest in the Carolina Place Loan Pair, to the extent actually paid by the borrower; o seventh, to the Carolina Place Non-Trust Loan, its pro rata portion of any prepayment premium in accordance with its percentage interest in the Carolina Place Loan Pair, to the extent actually paid by the borrower; o eighth, to the Carolina Place Mortgage Loan and the Carolina Place Non-Trust Loan, their respective pro rata portions of any Default Interest (after application as provided in the series 2005-C3 pooling and servicing agreement), to the extent actually paid by the borrower, based on their respective percentage interests; o ninth, to the Carolina Place Mortgage Loan and the Carolina Place Non-Trust Loan, their respective pro rata portions of any late charges (after application as provided in the series 2005-C3 pooling and servicing agreement), to the extent actually paid by the borrower, based on their respective percentage interests; and o tenth, if any excess amount is paid by the borrower and is not required to be returned to the borrower or to any other party under the loan documents, pro rata, to the Carolina Place Mortgage Loan and the Carolina Place Non-Trust Loan. S-103 Pursuant to the Carolina Place Co-Lender Agreement, during the continuance of (a) a monetary event of default with respect to the Carolina Place Mortgage Loan or (b) a non-monetary event of default with respect to the Carolina Place Mortgage Loan that results in the Carolina Place Mortgage Loan becoming a specially serviced loan, which event of default has not been remedied by the Carolina Place Non-Trust Loan Noteholder, collections on the Carolina Place Loan Pair will be allocated (after application to certain related unreimbursed or unpaid costs and expenses, including outstanding advances, together with interest thereon, and unpaid servicing compensation) generally in the following manner: o first, to the Carolina Place Mortgage Loan, in an amount up to accrued and unpaid interest (excluding Default Interest) on the principal balance thereof (net of related master servicing fees and trustee fees); o second, to the Carolina Place Mortgage Loan, in an amount up to the principal balance thereof, until such principal balance has been reduced to zero; o third, to reimburse the Carolina Place Non-Trust Noteholder for any cure payments made with respect to the Carolina Place Mortgage Loan; o fourth, to the Carolina Place Non-Trust Loan, an amount up to accrued and unpaid interest (excluding Default Interest) on the principal balance thereof (net of related master servicing fees); o fifth, to the Carolina Place Non-Trust Loan in an amount up to the principal balance thereof, until such principal balance has been reduced to zero; o sixth, to the Carolina Place Mortgage Loan, its pro rata portion of any prepayment premium in accordance with its percentage interest in the Carolina Place Loan Pair, to the extent actually paid by the borrower; o seventh, to the Carolina Place Non-Trust Loan, its pro rata portion of any prepayment premium in accordance with its percentage interest in the Carolina Place Loan Pair, to the extent actually paid by the borrower; o eighth, to the Carolina Place Mortgage Loan and the Carolina Place Non-Trust Loan, their respective pro rata portions of any Default Interest (after application as provided in the series 2005-C3 pooling and servicing agreement), to the extent actually paid by the borrower, based on their respective percentage interests; o ninth, to the Carolina Place Mortgage Loan and the Carolina Place Non-Trust Loan, their respective pro rata portions of any late charges (after application as provided in the series 2005-C3 pooling and servicing agreement), to the extent actually paid by the borrower, based on their respective percentage interests; and o tenth, if any excess amount is paid by the borrower and is not required to be returned to the borrower or to any other party under the loan documents, pro rata, to the Carolina Place Mortgage Loan and the Carolina Place Non-Trust Loan. THE MORTGAGE LOAN SELLERS We will acquire the mortgage loans from the respective mortgage loan sellers on or prior to the Closing Date pursuant to separate mortgage loan purchase agreements. S-104 Ninety-six (96) of the mortgage loans that we intend to include in the trust fund, representing 75.8% of the Initial Mortgage Pool Balance, of which 71 mortgage loans are in loan group no. 1, representing 73.4% of the Initial Loan Group No. 1 Balance, and 25 mortgage loans are in loan group no. 2, representing 85.5% of the Initial Loan Group No. 2 Balance, were originated by Citigroup Global Markets Realty Corp., a New York corporation whose principal offices are located in New York, New York and that is primarily engaged in the business of purchasing and originating commercial mortgage loans. CGM is a subsidiary of Citigroup Financial Products, Inc. and is also one of our affiliates. Citigroup Global Markets Inc., an affiliate of CGM, is acting as an underwriter for this transaction. Twenty-eight (28) of the mortgage loans that we intend to include in the trust fund, representing 24.2% of the Initial Mortgage Pool Balance, of which 23 mortgage loans are in loan group no. 1, representing 26.6% of the Initial Loan Group No. 1 Balance, and five (5) mortgage loans are in loan group no. 2, representing 14.5% of the Initial Loan Group No. 2 Balance, were originated by IXIS Real Estate Capital Inc. IXIS Real Estate Capital Inc. is a New York corporation whose principal offices are located in New York, New York. IXIS Real Estate Capital Inc. is a wholly-owned subsidiary of IXIS Capital Markets North America Inc. IXIS Real Estate Capital Inc. is an affiliate of IXIS Securities North America Inc., which is an underwriter. CGM has no obligation to repurchase or replace any of the IXIS Mortgage Loans and IXIS has no obligation to repurchase or replace any of the Citigroup Mortgage Loans. All information concerning the Citigroup Mortgage Loans contained herein or used in the preparation of this prospectus supplement is as underwritten by CGM. All information concerning the IXIS Mortgage Loans contained herein or used in the preparation of this prospectus supplement is as underwritten by IXIS. UNDERWRITING STANDARDS General. Each mortgage loan seller's commercial real estate finance or commercial mortgage banking group has the authority, with the approval from the appropriate credit committee, to originate fixed-rate, first lien mortgage loans for securitization. Each mortgage loan seller's commercial real estate finance or commercial mortgage banking operation is staffed by real estate professionals. Each mortgage loan seller's loan underwriting group is an integral component of the commercial real estate finance or commercial mortgage banking group which also includes groups responsible for loan origination and closing mortgage loans. Upon receipt of a loan application, the respective mortgage loan seller's loan underwriters commence an extensive review of the borrower's financial condition and creditworthiness and the real property which will secure the loan. Loan Analysis. Generally, each mortgage loan seller performs both a credit analysis and collateral analysis with respect to a loan applicant and the real property that will secure the loan. In general, credit analysis of the borrower and the real estate includes a review of historical financial statements, including rent rolls (generally unaudited), third-party credit reports, search reports on judgments, liens, bankruptcies and pending litigation and, if applicable, the loan payment history of the borrower. Each mortgage loan seller typically performs a qualitative analysis which incorporates independent credit checks and published debt and equity information with respect to certain principals of the borrower as well as the borrower itself. Borrowers are generally required to be single-purpose entities although they are generally not required to be structured to limit the possibility of becoming insolvent or bankrupt. The collateral analysis typically includes an analysis of historical property operating statements, rent rolls, operating budgets, a projection of future performance, if applicable, and a review of tenant leases. Each mortgage loan seller generally requires third-party appraisals, as well as environmental and building condition reports. Each report is reviewed for acceptability by a staff member of the applicable mortgage loan seller or a third-party consultant for compliance with program standards. Generally, the results of these reviews are incorporated into the underwriting report. In some instances, one or S-105 more provisions of its underwriting guidelines were waived or modified by the related mortgage loan seller where it was determined not to adversely affect the mortgage loans originated by it in any material respect. Loan Approval. Prior to commitment, all mortgage loans must be approved by the applicable mortgage loan seller's credit or similar committee in accordance with its credit policies. Debt Service Coverage Ratio and LTV Ratio. Each mortgage loan seller's underwriting standards generally mandate minimum debt service coverage ratios and maximum loan-to-value ratios. The debt service coverage ratio guidelines are generally calculated based on net cash flow at the time of origination. In addition, each mortgage loan seller's underwriting guidelines generally permit a maximum amortization period of 30 years. However, notwithstanding such guidelines, in certain circumstances the actual debt service coverage ratios, loan-to-value ratios and amortization periods for the mortgage loans originated by such mortgage loan seller may vary from these guidelines. Escrow Requirements. Generally, each mortgage loan seller requires most borrowers to fund various escrows for taxes and insurance, capital expenses and replacement reserves. Generally, the required escrows for mortgage loans originated by each mortgage loan seller are as follows: o Taxes--Typically an initial deposit and monthly escrow deposits equal to 1/12th of the annual property taxes (based on the most recent property assessment and the current millage rate) are required to provide the mortgage loan seller with sufficient funds to satisfy all taxes and assessments. This escrow requirement may be sometimes waived. o Insurance--If the property is insured under an individual policy (i.e., the property is not covered by a blanket policy), typically an initial deposit and monthly escrow deposits equal to 1/12th of the annual property insurance premium are required to provide the mortgage loan seller with sufficient funds to pay all insurance premiums. This escrow requirement may be sometimes waived. o Replacement Reserves--Replacement reserves are generally calculated in accordance with the expected useful life of the components of the mortgaged real property during the term of the related mortgage loan. o Completion Repair/Environmental Remediation--Typically, a completion repair or remediation reserve is required where an environmental or engineering report suggests that such reserve is necessary. Upon funding of the applicable mortgage loan, the mortgage loan seller generally requires that at least 100% of the estimated costs of repairs or replacements be reserved and generally requires that repairs or replacements be completed within a year after the funding of the applicable mortgage loan. o Tenant Improvement/Lease Commissions--In some cases, major tenants have lease expirations prior to the expiration of the term of the related mortgage loan. To mitigate this risk, special reserves may be required to be funded either at closing of the mortgage loan and/or during the mortgage loan term to cover certain anticipated leasing commissions or tenant improvement costs which might be associated with re-leasing the space occupied by such tenants. ASSIGNMENT OF THE MORTGAGE LOANS; REPURCHASES AND SUBSTITUTIONS On the Closing Date, we will transfer the mortgage loans, without recourse, to the trustee for the benefit of the series 2005-C3 certificateholders. In connection with such transfer, the applicable mortgage loan seller is required to deliver to the trustee or to a document custodian appointed by the trustee, among other things, the S-106 following documents with respect to each mortgage loan that we intend to include in the trust fund (the "Mortgage File"): (a) the original mortgage note, endorsed on its face or by allonge attached thereto, without recourse, to the order of the trustee or in blank (or, if the original mortgage note has been lost, an affidavit to such effect from the applicable mortgage loan seller or another prior holder, together with a copy of the mortgage note); (b) the original or a copy of the mortgage instrument, together with an original or a copy of any intervening assignments of the mortgage instrument, in each case (unless not yet returned by the applicable recording office) with evidence of recording indicated thereon or certified by the applicable recorder's office; (c) the original or a copy of any related assignment of leases and of any intervening assignments thereof (if such item is a document separate from the related mortgage instrument), in each case (unless not yet returned by the applicable recording office) with evidence of recording indicated thereon or certified by the applicable recorder's office; (d) an original assignment of the mortgage instrument in favor of the trustee or in blank and (subject to the completion of certain missing recording information and, if delivered in blank, completion of the name of the trustee) in recordable form; (e) an original assignment of any related assignment of leases (if such item is a document separate from the related mortgage instrument) in favor of the trustee or in blank and (subject to the completion of certain missing recording information and, if delivered in blank, completion of the name of the trustee) in recordable form; (f) originals or copies of all modification, consolidation, assumption and substitution agreements in those instances in which the terms or provisions of the mortgage instrument or mortgage note have been consolidated or modified or the mortgage loan has been assumed or consolidated; (g) the original or a copy of the policy or certificate of lender's title insurance, or, if such policy has not been issued or located, an irrevocable, binding commitment (which may be a pro forma or marked version of the policy that has been executed by an authorized representative of the title company or an agreement to provide the same pursuant to binding escrow instructions executed by an authorized representative of the title company) to issue such title insurance policy; (h) any filed copies (bearing evidence of filing) or other evidence of filing reasonably satisfactory to the depositor of any prior UCC financing statements, related amendments and continuation statements in the possession of the applicable mortgage loan seller; (i) an original assignment in favor of the trustee or in blank of any financing statement executed and filed in favor of the applicable mortgage loan seller in the relevant jurisdiction; (j) any intercreditor, co-lender or similar agreement relating to permitted debt of the related borrower; (k) copies of any loan agreement, escrow agreement, security agreement or letter of credit relating to such mortgage loan; (l) the original or a copy of any ground lease, ground lessor estoppel, environmental insurance policy or guaranty relating to such mortgage loan; S-107 (m) a copy of any letter of credit and related transfer documents relating to such mortgage loan; and (n) copies of franchise agreements and franchisor comfort letters, if any, for hotel properties and any applicable transfer or assignment documents. As provided in the series 2005-C3 pooling and servicing agreement, the trustee or a custodian on its behalf is required to review each Mortgage File within a specified period following its receipt thereof. If any of the documents described in the preceding paragraph is found during the course of such review to be missing from any Mortgage File or defective, and in either case such omission or defect materially and adversely affects the value of the applicable mortgage loan or the interests of the series 2005-C3 certificateholders therein, the applicable mortgage loan seller, if it does not deliver the document or cure the defect (other than omissions solely due to a document not having been returned by the related recording office) within a period of 90 days following such mortgage loan seller's receipt of notice thereof, will be obligated pursuant to the applicable mortgage loan purchase agreement (the relevant rights under which will be assigned by us the trustee) to: (1) repurchase the affected mortgage loan within such 90-day period at a price (the "Purchase Price") generally equal to the sum of (a) the unpaid principal balance of such mortgage loan, (b) the unpaid accrued interest on such mortgage loan (other than any Default Interest and/or Post-ARD Additional Interest) to but not including the due date in the collection period in which the purchase is to occur plus any accrued and unpaid interest on monthly debt service advances, (c) all related and unreimbursed servicing advances plus any accrued and unpaid interest thereon, (d) any reasonable costs and expenses, including, but not limited to, the cost of any enforcement action, incurred by the master servicer, the special servicer, the trustee or the trust fund in connection with any purchase by a mortgage loan seller (to the extent not included in clause (c) above), and (e) any other Additional Trust Fund Expenses in respect of such underlying mortgage loan (including any Additional Trust Fund Expenses previously reimbursed or paid by the trust fund but not so reimbursed by the related borrower or other party or from insurance proceeds or condemnation proceeds or any other collections in respect of the underlying mortgage loan or the related mortgaged real property from a source other than the trust fund, and including, if the subject underlying mortgage loan is repurchased after the end of the required cure period (as it may be extended as described below), any liquidation fee payable to the special servicer in respect of such underlying mortgage loan, as described under "Servicing of the Underlying Mortgage Loans--Servicing and Other Compensation and Payment of Expenses--Principal Special Servicing Compensation--The Liquidation Fee"); or (2) substitute a Qualified Substitute Mortgage Loan for such mortgage loan and pay the master servicer for deposit into the master servicer's collection account a shortfall amount equal to the difference between the Purchase Price of the deleted mortgage loan calculated as of the date of substitution and the Stated Principal Balance of such Qualified Substitute Mortgage Loan as of the date of substitution (the "Substitution Shortfall Amount"); provided that, unless the document omission or defect would cause the subject mortgage loan not to be a qualified mortgage within the meaning of Section 860G(a)(3) of the Internal Revenue Code, the applicable mortgage loan seller will generally have an additional 90-day period to deliver the missing document or cure the defect, as the case may be, if it is diligently proceeding to effect such delivery or cure; and provided, further, that no such document omission or defect (other than with respect to the mortgage note, the mortgage instrument, the title insurance policy, any ground lease or any letter of credit) will be considered to materially and adversely affect the interests of the series 2005-C3 certificateholders in, or the value of, the affected mortgage loans unless the document with respect to which the document omission or defect exists is required in connection with an imminent enforcement of the lender's rights or remedies under the related mortgage loan, defending any claim asserted by any borrower or third party with respect to the related mortgage loan, establishing the validity or priority of any lien on any collateral securing the related mortgage loan or for any immediate significant servicing obligation. The foregoing repurchase or substitution obligation constitutes the sole remedy available to the series 2005-C3 certificateholders and the trustee for any uncured failure to deliver, or any uncured defect in, a constituent mortgage loan document. Each mortgage loan seller is solely responsible for its repurchase or substitution obligation, and those obligations will not be our responsibility. Any substitution of a Qualified Substitute Mortgage Loan for a defective mortgage loan in the trust fund must occur no later than the second anniversary of the date of initial issuance of the offered certificates, and the Carolina Place Mortgage Loan may not be substituted for. S-108 The series 2005-C3 pooling and servicing agreement and/or the applicable mortgage loan purchase agreement will require the trustee or the related mortgage loan seller to cause each of the assignments described in clauses (d), (e) and (i) of the second preceding paragraph to be submitted for recording or filing, as applicable, in the appropriate public records within a specified time period. REPRESENTATIONS AND WARRANTIES; REPURCHASES AND SUBSTITUTIONS In the related mortgage loan purchase agreement, the applicable mortgage loan seller has represented and warranted with respect to each mortgage loan that we intend to include in the trust fund (subject to certain exceptions specified in the related mortgage loan purchase agreement), as of the date of initial issuance of the offered certificates, or as of such other date specifically provided in the representation and warranty, among other things, generally that: (i) the information with respect to the subject mortgage loan set forth in the schedule of mortgage loans attached to the applicable mortgage loan purchase agreement (which contains certain of the information set forth in Annex A-1 to this prospectus supplement) was true and correct in all material respects as of the cut-off date; (ii) as of the date of its origination, the subject mortgage loan complied in all material respects with, or was exempt from, all requirements of federal, state or local law relating to the origination of the subject mortgage loan; (iii) immediately prior to the sale, transfer and assignment to us, the applicable mortgage loan seller had good and marketable title to, and was the sole owner of, each mortgage loan, and is transferring the mortgage loan free and clear of any and all liens, pledges, charges or security interests of any nature encumbering the subject mortgage loan; (iv) the proceeds of the subject mortgage loan have been fully disbursed and there is no requirement for future advances thereunder by the lender; (v) each related mortgage note, mortgage instrument, assignment of leases, if a document separate from the mortgage instrument, and other agreement executed in connection with the subject mortgage loan is a legal, valid and binding obligation of the related borrower (subject to any nonrecourse provisions therein and any state anti-deficiency or market value limit deficiency legislation), enforceable in accordance with its terms, except (a) that certain provisions contained in such mortgage loan documents are or may be unenforceable in whole or in part under applicable state or federal laws, but neither the application of any such laws to any such provision nor the inclusion of any such provision renders any of the mortgage loan documents invalid as a whole and such mortgage loan documents taken as a whole are enforceable to the extent necessary and customary for the practical realization of the rights and benefits afforded thereby, and (b) as such enforcement may be limited by bankruptcy, insolvency, receivership, reorganization, moratorium, redemption, liquidation or other laws affecting the enforcement of creditors' rights generally, and by general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law); (vi) as of the date of its origination, there was no valid offset, defense, counterclaim, abatement or right to rescission with respect to any of the related mortgage note, mortgage instrument or other agreements executed in connection therewith, and, as of the cut-off date, there was no valid offset, defense, counterclaim or right to rescission with respect to such mortgage note, mortgage instrument or other agreements, except in each case with respect to the enforceability of any S-109 provisions requiring the payment of Default Interest, late fees, Post-ARD Additional Interest, prepayment premiums or yield maintenance charges; (vii) each related assignment of the related mortgage instrument and assignment of any related assignment of leases from the applicable mortgage loan seller to the trustee constitutes the legal, valid and binding first priority assignment from such mortgage loan seller (subject to the customary limitations set forth in clause (v) above); (viii) the related mortgage instrument is a valid and enforceable first lien on the related mortgaged real property except for the exceptions set forth in clause (v) above and subject to (a) the lien of current real property taxes, ground rents, water charges, sewer rents and assessments not yet due and payable, (b) covenants, conditions and restrictions, rights of way, easements and other matters of public record, none of which, individually or in the aggregate, materially and adversely interferes with the current use of the related mortgaged real property or the security intended to be provided by such mortgage instrument or with the borrower's ability to pay its obligations under the subject mortgage loan when they become due or materially and adversely affects the value of the related mortgaged real property, (c) the exceptions (general and specific) and exclusions set forth in the related title insurance policy or appearing of record, none of which, individually or in the aggregate, materially interferes with the current use of the related mortgaged real property or the security intended to be provided by such mortgage instrument or with the borrower's ability to pay its obligations under the subject mortgage loan when they become due or materially and adversely affects the value of the related mortgaged real property, (d) other matters to which like properties are commonly subject, none of which, individually or in the aggregate, materially and adversely interferes with the current use of the mortgaged real property or the security intended to be provided by such mortgage instrument or with the borrower's ability to pay its obligations under the subject mortgage loan when they become due or materially and adversely affects the value of the mortgaged real property, (e) the right of tenants (whether under ground leases, space leases or operating leases) at the related mortgaged real property to remain following a foreclosure or similar proceeding (provided that such tenants are performing under such leases) and (f) if the subject mortgage loan is cross-collateralized with any other mortgage loan, the lien of such mortgage instrument for such other mortgage loan, none of which, individually or in the aggregate, materially and adversely interferes with the current use of the related mortgaged real property or the security intended to be provided by such mortgage instrument or with the mortgagor's ability to pay its obligations under the subject mortgage loan when they become due or materially and adversely affects the value of the related mortgaged real property; (ix) all real estate taxes and governmental assessments, or installments thereof, which would be a lien on the related mortgaged real property and that prior to the cut-off date have become delinquent in respect of the related mortgaged real property, have been paid, or an escrow of funds in an amount sufficient to cover such payments has been established; provided that for purposes of this representation and warranty, real estate taxes and governmental assessments and installments thereof will not be considered delinquent until the earlier of (x) the date on which interest and/or penalties would first be payable thereon and (y) the date on which enforcement action is entitled to be taken by the related taxing authority. (x) one or more engineering assessments were performed by an independent engineering consultant firm with respect to each related mortgaged real property during the 12-month period preceding the origination of the subject mortgage loan, and to the applicable mortgage loan seller's knowledge, relying solely on the review of such engineering assessment(s), except as set forth in the engineering assessment, the related mortgaged real property is in good repair, free and clear of any damage that would materially and adversely affect its value as security for the subject S-110 mortgage loan; as of the date of origination of the subject mortgage loan, there was no proceeding pending, and subsequent to such date, the related mortgage loan seller has not received notice of any pending or threatened proceeding for the condemnation of all or any material portion of the related mortgaged real property; (xi) as of the date of its origination, all insurance coverage required under each related mortgage instrument, which insurance covered such risks as were customarily acceptable to prudent commercial and multifamily mortgage lending institutions lending on the security of property comparable to the related mortgaged real property in the jurisdiction in which such mortgaged real property is located, and with respect to a fire and extended perils insurance policy, was in an amount (subject to a customary deductible) at least equal to the lesser of (a) the replacement cost of improvements located on such mortgaged real property, or (b) the initial principal balance of the subject mortgage loan, and in any event, the amount necessary to prevent operation of any co-insurance provisions, was in full force and effect with respect to each related mortgaged real property; (xii) as of the date of initial issuance of the offered certificates, the subject mortgage loan is not, and in the prior 12 months (or since the date of origination if the subject mortgage loan has been originated within the past 12 months), has not been, 30 days or more past due in respect of any scheduled payment; and (xiii) one or more environmental site assessments, updates or transaction screens thereof were performed by an environmental consulting firm independent of the applicable mortgage loan seller and the applicable mortgage loan seller's affiliates with respect to each related mortgaged real property during the 18-month period preceding the origination of the subject mortgage loan, and the applicable mortgage loan seller, having made no independent inquiry other than to review the report(s) prepared in connection with the assessment(s), updates or transaction screens referenced herein, has no actual knowledge and has received no notice of any material and adverse environmental condition or circumstance affecting such mortgaged real property that was not disclosed in such report(s). In the case of a breach of any of the loan-level representations and warranties in any mortgage loan purchase agreement that materially and adversely affects the value of any of the underlying mortgage loans or the interests of the series 2005-C3 certificateholders therein, the applicable mortgage loan seller, if it does not cure such breach within a period of 90 days following its receipt of notice thereof, is obligated pursuant to the applicable mortgage loan purchase agreement (the relevant rights under which have been assigned by us to the trustee) to either substitute a Qualified Substitute Mortgage Loan and pay any Substitution Shortfall Amount or to repurchase the affected mortgage loan within such 90-day period at the applicable Purchase Price; provided that, unless the breach would cause the mortgage loan not to be a qualified mortgage within the meaning of Section 860G(a)(3) of the Internal Revenue Code, the applicable mortgage loan seller generally has an additional 90-day period to cure such breach if it is diligently proceeding with such cure. Each mortgage loan seller is solely responsible for its repurchase or substitution obligation, and such obligations will not be our responsibility. Any substitution of a Qualified Substitute Mortgage Loan for a defective mortgage loan in the trust fund must occur no later than the second anniversary of the date of initial issuance of the offered certificates, and the Carolina Place Mortgage Loan may not be substituted for. The foregoing substitution or repurchase obligation constitutes the sole remedy available to the series 2005-C3 certificateholders and the trustee for any uncured material breach of any mortgage loan seller's representations and warranties regarding its mortgage loans. There can be no assurance that the applicable mortgage loan seller will have the financial resources to repurchase any mortgage loan at any particular time. Each mortgage loan seller is the sole warranting party in respect of the mortgage loans sold by that mortgage loan S-111 seller to us, and no other person or entity will be obligated to substitute or repurchase any such affected mortgage loan in connection with a material breach of a mortgage loan seller's representations and warranties if such mortgage loan seller defaults on its obligation to do so. REPURCHASE OR SUBSTITUTION OF CROSS-COLLATERALIZED MORTGAGE LOANS If (a) any underlying mortgage loan is required to be repurchased or substituted for in the manner described above in "--Assignment of the Mortgage Loans; Repurchases and Substitutions" or "--Representations and Warranties; Repurchases and Substitutions," (b) that mortgage loan is cross-collateralized and cross-defaulted with one or more other mortgage loans in the trust fund and (c) the applicable document omission or defect or breach of a representation and warranty giving rise to the repurchase/substitution obligation does not otherwise relate to any other Crossed Loan in the subject Crossed Group (without regard to this paragraph), then the applicable document omission or defect or the applicable breach, as the case may be, will be deemed to relate to the other Crossed Loans in the subject Crossed Group for purposes of this paragraph, and the related mortgage loan seller will be required to repurchase or substitute for such other Crossed Loan(s) in the subject Crossed Group as provided above in "--Assignment of the Mortgage Loans; Repurchases and Substitutions" or "--Representations and Warranties; Repurchases and Substitutions" unless: (i) the debt service coverage ratio for all of the remaining Crossed Loans for the four calendar quarters immediately preceding the repurchase or substitution is not less than the debt service coverage ratio for all such related Crossed Loans, including the actually affected Crossed Loan, for the four calendar quarters immediately preceding the repurchase or substitution, (ii) the loan-to-value ratio for any of the remaining related Crossed Loans, determined at the time of repurchase or substitution based upon an appraisal obtained by the special servicer at the expense of the related mortgage loan seller is not greater than the loan-to-value ratio for all such related Crossed Loans, including the actually affected Crossed Loan, determined at the time of repurchase or substitution based upon an appraisal obtained by the special servicer at the expense of the related mortgage loan seller, and (iii) the trustee receives an opinion of counsel to the effect that such repurchase or substitution will not adversely affect the tax status of REMIC I or REMIC II. In the event that the remaining Crossed Loans satisfy the aforementioned criteria, the applicable mortgage loan seller may elect either to repurchase or substitute for only the actually affected Crossed Loan as to which the related breach or the related document omission or defect, as the case may be, exists or to repurchase or substitute for all of the Crossed Loans in the related Crossed Group. To the extent that the related mortgage loan seller repurchases or substitutes for an affected Crossed Loan as described in the immediately preceding paragraph while the trustee continues to hold any related Crossed Loans, we and the related mortgage loan seller have agreed in the related mortgage loan purchase agreement to forbear from enforcing any remedies against the other's Primary Collateral, but each is permitted to exercise remedies against the Primary Collateral securing its respective affected Crossed Loans, including, with respect to the trustee, the Primary Collateral securing mortgage loans still held by the trustee, so long as such exercise does not materially impair the ability of the other party to exercise its remedies against its Primary Collateral. If the exercise of remedies by one party would materially impair the ability of the other party to exercise its remedies with respect to the Primary Collateral securing the Crossed Loans held by such party, then both parties have agreed in the related mortgage loan purchase agreement to forbear from exercising such remedies until the loan documents evidencing and securing the relevant mortgage loans can be modified in a manner that complies with the related mortgage loan purchase agreement to remove the threat of material impairment as a result of the exercise of remedies. CHANGES IN MORTGAGE POOL CHARACTERISTICS The description in this prospectus supplement of the underlying mortgage loans and the related mortgaged real properties is based upon the mortgage pool as it is expected to be constituted at the time the offered certificates are issued assuming that (i) all scheduled principal and interest payments due on or before the cut-off date will be made, and (ii) there will be no principal prepayments on or before the cut-off date. Prior to the S-112 issuance of the offered certificates, mortgage loans may be removed from the mortgage pool as a result of prepayments, delinquencies, incomplete documentation or otherwise, if we or the applicable mortgage loan seller deems that removal necessary, appropriate or desirable. A limited number of other mortgage loans may be included in the mortgage pool prior to the issuance of the offered certificates, unless including those mortgage loans would materially alter the characteristics of the Mortgage Pool as described in this prospectus supplement. We believe that the information set forth in this prospectus supplement will be representative of the characteristics of the mortgage pool as it will be constituted at the time the offered certificates are issued, although the range of mortgage rates and maturities, as well as other characteristics, of the subject mortgage loans described in this prospectus supplement may vary. A current report on Form 8-K will be available to purchasers of the offered certificates on or shortly after the date of initial issuance of the offered certificates. That current report on Form 8-K will be filed, together with the series 2005-C3 pooling and servicing agreement, with the Securities and Exchange Commission within 15 days after the initial issuance of the offered certificates. S-113 SERVICING OF THE UNDERLYING MORTGAGE LOANS GENERAL The series 2005-C3 pooling and servicing agreement will govern the servicing and administration of the mortgage loans in the trust fund. The following summaries describe some of the provisions of the series 2005-C3 pooling and servicing agreement relating to the servicing and administration of those mortgage loans and any related REO Properties. You should also refer to the accompanying prospectus, in particular the section captioned "Description of the Governing Documents", for additional important information regarding provisions of the series 2005-C3 pooling and servicing agreement that relate to the rights and obligations of the master servicer and the special servicer. The master servicer and the special servicer must each service and administer the underlying mortgage loans and any related REO Properties for which it is responsible, directly or through sub-servicers, in accordance with: o any and all applicable laws; o the express terms of the series 2005-C3 pooling and servicing agreement; o the express terms of the related loan documents, including any intercreditor agreements; and o to the extent consistent with the foregoing, the Servicing Standard. In general, the master servicer will be responsible for the servicing and administration of: o all mortgage loans in the trust fund as to which no Servicing Transfer Event has occurred; and o all worked-out mortgage loans in the trust fund as to which no new Servicing Transfer Event has occurred. The special servicer, on the other hand, will be responsible for the servicing and administration of each mortgage loan in the trust fund as to which a Servicing Transfer Event has occurred and which has not yet been worked-out with respect to that Servicing Transfer Event. The special servicer will also be responsible for the administration of each REO Property in the trust fund. Despite the foregoing, the series 2005-C3 pooling and servicing agreement will require the master servicer to continue to receive payments, make certain calculations and, subject to the master servicer's timely receipt of information from the special servicer, prepare certain reports to the trustee with respect to any specially serviced mortgage loans and REO Properties in the trust fund. The master servicer may also render other incidental services with respect to any specially serviced mortgage loans and REO Properties in the trust fund. Neither the master servicer nor the special servicer will have responsibility for the performance by the other of its respective obligations and duties under the series 2005-C3 pooling and servicing agreement. The master servicer will transfer servicing of an underlying mortgage loan to the special servicer, if it has not already done so, upon the occurrence of a Servicing Transfer Event with respect to that mortgage loan. The special servicer will return the servicing of that mortgage loan to the master servicer, and that mortgage loan will be considered to have been worked-out, if and when all Servicing Transfer Events with respect to that mortgage loan cease to exist as contemplated by the definition of "Servicing Transfer Event". S-114 In general, subject to the discussion under "--The Series 2005-C3 Controlling Class Representative, the Class CP Representative and the Carolina Place Non-Trust Loan Noteholder" below, the master servicer and/or, if a Servicing Transfer Event exists, the special servicer will be responsible for servicing and administering the Carolina Place Loan Pair under series 2005-C3 pooling and servicing agreement on behalf of the trust, as holder of the Carolina Place Mortgage Loan, and the Carolina Place Non-Trust Loan Noteholder generally as if the Carolina Place Loan Pair were a mortgage loan in the trust fund. A Servicing Transfer Event with respect to either mortgage loan comprising the Carolina Place Loan Pair will generally result in a transfer of servicing of the entire loan pair to the special servicer. However, the Carolina Place Non-Trust Loan Noteholder will have certain cure rights with respect to defaults under the Carolina Place Mortgage Loan that would prevent the Carolina Place Loan Pair from becoming specially serviced. Some of the mortgage loans that we intend to include in the trust fund are currently being serviced by third-party servicers that are entitled to and will become sub-servicers of these loans on behalf of the master servicer. Some of those sub-servicers may not be terminable by the master servicer except for cause. THE MASTER SERVICER AND THE SPECIAL SERVICER The Master Servicer. Wachovia Bank, National Association, a national banking association, will be the initial master servicer with respect to the mortgage pool. Wachovia Bank is a wholly owned subsidiary of Wachovia Corporation, and is an affiliate of one of the underwriters. Wachovia Bank's principal servicing offices are located at NC 1075, 8739 Research Drive URP4, Charlotte, North Carolina 28262. As of March 31, 2005, Wachovia Bank and its affiliates were responsible for master or primary servicing approximately 15,825 commercial and multifamily loans, totaling approximately $146 billion in aggregate outstanding principal amounts, including loans securitized in mortgage-backed securitization transactions. The information set forth in this prospectus supplement concerning Wachovia Bank, National Association in the two preceding paragraphs has been provided by it. Neither we nor any of the underwriters makes any representation or warranty as to the accuracy or completeness of this information. Wachovia will make no representation as to the validity or sufficiency of the series 2005-C3 pooling and servicing agreement, the series 2005-C3 certificates, the underlying mortgage loans, this prospectus supplement or related documents. The Special Servicer. Allied Capital Corporation, a Maryland corporation, will initially be appointed as special servicer of the mortgage pool. The principal executive offices of Allied Capital are located at 1919 Pennsylvania Avenue N.W., Washington, D.C. 20006, and its telephone number is (202) 331-1112. Allied Capital has historically been involved in the real estate investment, finance and management business. As of March 31, 2005, Allied Capital's commercial mortgage securitization portfolio included approximately 6,600 mortgage loans and real estate owned properties as underlying collateral in various states across the country with a then current face value of $48.4 billion, all of which are secured by commercial real estate assets. Included in this managed portfolio are approximately $17.2 billion of commercial real estate assets representing approximately 2,600 mortgage loans and foreclosure properties within 19 securitization transactions, for which Allied Capital currently acts as special servicer. On May 3, 2005, Allied Capital announced that it had completed the sale of all of its commercial mortgage-backed securities holdings to an affiliate of CWCapital Investments LLC, which assets are included in the financial and statistical information set forth in this paragraph. In a related transaction, Allied Capital has signed an agreement with CWCapital Investments LLC to transfer its special servicing rights and obligations for transactions for which it is acting as special servicer to CWCapital, an affiliate of CWCapital or another entity designated by CWCapital. When such transfer is completed, including the obtaining of any required approvals (including any required rating agency approvals), CWCapital, such affiliate or such other entity will become the special servicer. S-115 The information set forth in this prospectus supplement concerning Allied Capital in the three preceding paragraphs (exclusive of the last sentence of the immediately preceding paragraph) has been provided by it. Neither we nor any of the underwriters makes any representation or warranty as to the accuracy or completeness of this information. Allied Capital will make no representation as to the validity or sufficiency of the series 2005-C3 pooling and servicing agreement, the series 2005-C3 certificates, the underlying mortgage loans, this prospectus supplement or related documents. The information set forth in this prospectus supplement concerning CWCapital in the last sentence of the second preceding paragraph has been provided by it. Neither we nor any of the underwriters makes any representation or warranty as to the accuracy or completeness of this information. CWCapital will make no representation as to the validity or sufficiency of the series 2005-C3 pooling and servicing agreement, the series 2005-C3 certificates, the underlying mortgage loans, this prospectus supplement or related documents. SERVICING AND OTHER COMPENSATION AND PAYMENT OF EXPENSES The Master Servicing Fee. The principal compensation to be paid to the master servicer with respect to its master servicing activities will be the master servicing fee. The master servicing fee will be earned with respect to each and every mortgage loan in the trust fund, including: o each specially serviced mortgage loan, if any; o each mortgage loan, if any, as to which the corresponding mortgaged real property has become an REO Property; and o each mortgage loan, if any, that has been defeased. In the case of each mortgage loan in the trust, the master servicing fee will: o be calculated on a 30/360 Basis (except in the case of partial periods of less than a month, when it will be calculated on the basis of the actual number of days elapsed in that partial period and a 360-day year); o accrue at the related master servicing fee rate, which on a loan-by-loan basis will range from 0.0400% per annum to 0.1400% per annum; o accrue on the same principal amount as interest accrues or is deemed to accrue, from time to time with respect to that mortgage loan; and o be payable monthly from amounts received with respect to, or allocable as recoveries of, interest on that mortgage loan or, following liquidation of that mortgage loan and any related REO Property, from general collections on the other mortgage loans and REO Properties in the trust. For purposes of this prospectus supplement, master servicing fees include primary servicing fees. Master servicing fees payable with respect to the Carolina Place Loan Pair will be payable out of collections on the entire Carolina Place Loan Pair. Prepayment Interest Shortfalls. The series 2005-C3 pooling and servicing agreement will provide that, if any Prepayment Interest Shortfall is incurred by reason of a voluntary principal prepayment being made by a S-116 borrower with respect to any of the underlying mortgage loans (other than a specially serviced mortgage loan and other than any mortgage loan for which the special servicer has waived a prepayment restriction) during any collection period, then the master servicer must make a non-reimbursable payment with respect to the related payment date in an amount equal to the lesser of: o the amount of the subject Prepayment Interest Shortfall; and o the sum of-- 1. the master servicing fee (calculated for this purpose only at a rate of 0.02% per annum) received by the master servicer during such collection period on the subject prepaid mortgage loan, and 2. any investment income earned on the related principal prepayment during such collection period while on deposit in the master servicer's collection account. No other master servicing compensation will be available to cover Prepayment Interest Shortfalls. Any payments made by the master servicer with respect to any payment date to cover Prepayment Interest Shortfalls will be included in the Total Available P&I Funds for that payment date, as described under "Description of the Offered Certificates--Payments" in this prospectus supplement. If the amount of Prepayment Interest Shortfalls incurred with respect to the mortgage pool during any collection period exceeds the total of any and all payments made by the master servicer with respect to the related payment date to cover those Prepayment Interest Shortfalls, then the resulting Net Aggregate Prepayment Interest Shortfall will be allocated among the respective interest-bearing classes of the series 2005-C3 certificates (exclusive of the class A-MFL certificates) and the class A-MFL REMIC II regular interest, in reduction of the interest payable thereon, as and to the extent described under "Description of the Offered Certificates--Payments--Payments of Interest" in this prospectus supplement. The master servicer will not cover any interest shortfalls similar to Prepayment Interest Shortfalls that occur by reason of involuntary prepayments made with insurance proceeds, condemnation proceeds and/or liquidation proceeds. Principal Special Servicing Compensation. The principal compensation to be paid to the special servicer with respect to its special servicing activities in respect of the mortgage pool will be: o the special servicing fee; o the workout fee; and o the liquidation fee. The Special Servicing Fee. The special servicing fee will be earned with respect to each underlying mortgage loan, if any: o that is being specially serviced; or o as to which the corresponding mortgaged real property has become an REO Property. In the case of each underlying mortgage loan that satisfies the criteria described in the foregoing paragraph, the special servicing fee will: S-117 o be calculated on a 30/360 Basis (except in the case of partial periods of less than a month, when it will be calculated on the basis of the actual number of days elapsed in that partial period and a 360-day year); o accrue at a special servicing fee rate of 0.25 % per annum; o accrue on the same principal amount as interest accrues or is deemed to accrue from time to time with respect to that mortgage loan; and o generally be payable monthly from general collections on all the mortgage loans and any REO Properties in the trust fund, that are on deposit in the master servicer's collection account from time to time. The Workout Fee. The special servicer will, in general, be entitled to receive a workout fee with respect to each underlying mortgage loan as to which, following a period of special servicing and resolution of all Servicing Transfer Events, servicing thereof has been returned to the master servicer. The workout fee for any such underlying mortgage loan will generally be payable out of, and will be calculated by application of a workout fee rate of 1.0% to, each collection of interest, other than Default Interest and Post-ARD Additional Interest, and principal received on the subject mortgage loan for so long as it remains a worked-out mortgage loan. The workout fee with respect to any underlying mortgage loan referred to in the prior paragraph will cease to be payable if a new Servicing Transfer Event occurs with respect to that loan or if the related mortgaged real property becomes an REO Property. However, a new workout fee would become payable if the subject underlying mortgage loan again became a worked-out mortgage loan with respect to that new Servicing Transfer Event. If the special servicer is terminated or resigns, then it will retain the right to receive any and all workout fees payable with respect to mortgage loans that were worked-out -- or, in some cases, about to be worked out -- by it during the period that it acted as special servicer and as to which no new Servicing Transfer Event had occurred as of the time of its termination or resignation. The successor special servicer will not be entitled to any portion of those workout fees. Although workout fees are intended to provide the special servicer with an incentive to better perform its duties, the payment of any workout fee may reduce amounts payable to the holders of the offered certificates (exclusive of the class A-MFL certificateholders) and with respect to the class A-MFL REMIC II regular interest. The Liquidation Fee. The special servicer will be entitled to receive a liquidation fee with respect to any specially serviced mortgage loan in the trust fund (or any Qualified Substitute Mortgage Loan delivered in replacement thereof by the related mortgage loan seller) for which it obtains a full, partial or discounted payoff. Except as described in the next paragraph, the special servicer will also be entitled to receive a liquidation fee with respect to any specially serviced mortgage loan or REO Property in the trust fund (or any Qualified Substitute Mortgage Loan delivered in replacement thereof by the related mortgage loan seller) as to which it receives any liquidation proceeds, sale proceeds or REO revenues, including any specially serviced mortgage loan repurchased by the applicable mortgage loan seller outside of the required cure period (as that cure period may be extended) as described above under "Description of the Mortgage Pool--Assignment of the Mortgage Loans; Repurchases and Substitutions" and "--Representations and Warranties; Repurchases and Substitutions" in this prospectus supplement. As to each such specially serviced mortgage loan and REO Property, the liquidation fee will generally be payable from, and will be calculated by application of a liquidation fee rate of 1.0% to, the portion of the related payment, proceeds or revenues allocable as a full or partial recovery of principal, interest or expenses. S-118 Despite anything to the contrary described in the prior paragraph, no liquidation fee will be payable based on, or out of, insurance proceeds, condemnation proceeds or proceeds received in connection with: o the repurchase or replacement of any mortgage loan in the trust fund by or on behalf of a mortgage loan seller for a breach of representation or warranty or for defective or deficient mortgage loan documentation, so long as the repurchase or substitution occurs within the required cure period (as that cure period may be extended), as described under "Description of the Mortgage Pool--Assignment of the Mortgage Loans; Repurchases and Substitutions" and "--Representations and Warranties; Repurchases and Substitutions" in this prospectus supplement; o the purchase of any Defaulted Mortgage Loan out of the trust fund by the special servicer or the Majority Controlling Class Certificateholder, as described under "--Fair Value Purchase Option" below; o the purchase of the Carolina Place Mortgage Loan by the Carolina Place Non-Trust Noteholder, as described under "Description of the Mortgage Pool--The Carolina Place Loan Pair" in this prospectus supplement, or by the Majority Class CP Certificateholder, as described under "--The Series 2005-C3 Controlling Class Representative, the Class CP Representative and the Carolina Place Non-Trust Loan Noteholder", unless in either such case a liquidation fee is paid as part of the purchase price; o the purchase of any mortgage loan by a related mezzanine lender pursuant to any applicable intercreditor, co-lender or similar agreement, unless a liquidation fee is paid as part of the purchase price; or o the purchase of all of the mortgage loans and REO Properties in the trust fund by the master servicer, the special servicer or the Majority Controlling Class Certificateholder in connection with the termination of the trust, all as described under "Description of the Offered Certificates--Termination" in this prospectus supplement. Although liquidation fees are intended to provide the special servicer with an incentive to better perform its duties, the payment of any liquidation fee may reduce amounts payable to the holders of the offered certificates (exclusive of the class A-MFL certificateholders) and with respect to the class A-MFL REMIC II regular interest. Carolina Place Loan Pair. Any special servicing fees, workout fees and liquidation fees earned with respect to the Carolina Place Loan Pair may be paid out of collections on the entire Carolina Place Loan Pair. Additional Servicing Compensation. As additional master servicing compensation, the master servicer will be entitled to receive any Prepayment Interest Excesses collected with respect to the underlying mortgage loans. S-119 In addition, the following items collected on any particular mortgage loan in the trust fund will be allocated between the master servicer and the special servicer as additional compensation in accordance with the series 2005-C3 pooling and servicing agreement: o any late payment charges and Default Interest actually collected on any particular mortgage loan in the trust fund, which late payment charges and Default Interest are not otherwise applied to reimburse the parties to the series 2005-C3 pooling and servicing agreement for, or to offset, certain expenses of the trust (including interest on advances), each as provided in the series 2005-C3 pooling and servicing agreement; and o any modification fees, assumption fees, assumption application fees, earnout fees, consent/waiver fees and other comparable transaction fees and charges. The master servicer will be authorized to invest or direct the investment of funds held in its collection account or in any escrow and/or reserve account maintained by it, in Permitted Investments. See "--Collection Account" below and "Description of the Offered Certificates" in this prospectus supplement. The master servicer: o will generally be entitled to retain any interest or other income earned on those funds; and o will generally be required to cover any losses of principal of those investments from its own funds, to the extent those losses are incurred with respect to investments made for that master servicer's benefit. The master servicer will not be obligated, however, to cover any losses resulting solely from the bankruptcy or insolvency of any depository institution or trust company holding any of those accounts so long as those institutions or trust companies meet certain eligibility requirements set forth in the series 2005-C3 pooling and servicing agreement. The special servicer will be authorized to invest or direct the investment of funds held in its REO account in Permitted Investments. See "--REO Properties" below. The special servicer: o will be entitled to retain any interest or other income earned on those funds; and o will generally be required to cover any losses of principal of those investments from its own funds. The special servicer will not be obligated, however, to cover any losses resulting solely from the bankruptcy or insolvency of any depository institution or trust company holding its REO account so long as that institution or trust company meets certain eligibility requirements set forth in the series 2005-C3 pooling and servicing agreement. Payment of Expenses; Servicing Advances. Each of the master servicer and the special servicer will be required to pay its overhead costs and any general and administrative expenses incurred by it in connection with its servicing activities under the series 2005-C3 pooling and servicing agreement. The master servicer and the special servicer will not be entitled to reimbursement for these expenses except as expressly provided in the series 2005-C3 pooling and servicing agreement. Any and all customary, reasonable and necessary out-of-pocket costs and expenses incurred by or on behalf of the master servicer, the special servicer, the trustee or the fiscal agent in connection with the servicing of a mortgage loan in the trust fund or in connection with the administration of any REO Property in the trust fund, will generally be servicing advances. Servicing advances will be reimbursable from future payments and other S-120 collections, including insurance proceeds, condemnation proceeds and liquidation proceeds, received in connection with the related mortgage loan or REO Property. The special servicer will generally be required to give the master servicer not less than five business days' notice (or two business days' notice, if required to be made on an emergency or urgent basis) with respect to servicing advances to be made on a specially serviced mortgage loan or REO Property in the trust fund, before the date on which the master servicer is required to make any servicing advance with respect to such mortgage loan or REO Property. If the master servicer is required under the series 2005-C3 pooling and servicing agreement to make a servicing advance, but it does not do so within 15 days (or such shorter period as may be required to avoid foreclosure of liens for delinquent real estate taxes or a lapse in insurance coverage) after the servicing advance is required to be made, then the trustee will be required: o if any of certain officers of the trustee has actual knowledge of the failure, to give the master servicer notice of the failure; and o if the failure continues for five more business days after such notice, to make the servicing advance. The fiscal agent will be required to make any servicing advances that the trustee was required, but failed, to make. Despite the foregoing discussion or anything else to the contrary in this prospectus supplement, none of the master servicer, the special servicer, the trustee or the fiscal agent will be obligated to make servicing advances that, in the judgment of the party making the advance, or in the judgment of the special servicer (in the case of a servicing advance by the master servicer, the trustee or the fiscal agent), would not be ultimately recoverable from expected collections on the related mortgage loan or REO Property. If the master servicer, the special servicer , the trustee or the fiscal agent makes any servicing advance that it subsequently determines, or that the special servicer determines (in the case of servicing advances by the master servicer, the trustee or the fiscal agent), is not recoverable from expected collections on the related mortgage loan or REO Property, it may obtain reimbursement for that advance, together with interest on that advance, out of general collections on the underlying mortgage loans and any related REO Properties that are on deposit in the master servicer's collection account from time to time as more particularly described in this prospectus supplement. The trustee and the fiscal agent may conclusively rely on the determination of the master servicer, and the master servicer, the trustee and the fiscal agent, in the case of specially serviced mortgage loans and REO Properties, must conclusively rely on the determination of the special servicer, regarding the nonrecoverability of a servicing advance. In making a recoverability determination in accordance with the series 2005-C3 pooling and servicing agreement, the master servicer, the special servicer, the trustee and the fiscal agent may consider, among other things, the obligations of the borrower under the terms of the related mortgage loan as it may have been modified, the condition of the related mortgaged real property, future expenses, and the existence and amount of any outstanding advances on the subject underlying mortgage loan, together with (to the extent accrued and unpaid) interest on such advances, and the existence and amount of any nonrecoverable advances in respect of other underlying mortgage loans, the reimbursement of which is being deferred as contemplated in the next paragraph. Notwithstanding the foregoing, upon a determination that a previously made servicing advance is not recoverable from expected collections on the related underlying mortgage loan or REO Property in the trust fund, instead of obtaining reimbursement out of general collections on the mortgage pool immediately, any of the master servicer, the special servicer, the trustee or the fiscal agent, as applicable, may, in its sole discretion, elect to obtain reimbursement for such nonrecoverable servicing advance over a period of time (not to exceed 12 months or such longer period of time as is approved in writing by the series 2003-C5 controlling class S-121 representative) and the unreimbursed portion of that advance will accrue interest at the prime rate described below. At any time after such a determination to obtain reimbursement over time in accordance with the preceding sentence, the master servicer, the special servicer, the trustee or the fiscal agent, as applicable, may, in its sole discretion, decide to obtain reimbursement from general collections on the mortgage pool immediately. The fact that a decision to recover a nonrecoverable servicing advance over time, or not to do so, benefits some classes of series 2005-C3 certificateholders to the detriment of other classes of series 2005-C3 certificateholders will not, with respect to the master servicer or the special servicer, constitute a violation of the Servicing Standard or, with respect to the trustee or the fiscal agent, constitute a violation of any fiduciary duty to the series 2005-C3 certificateholders and/or contractual duty under the series 2005-C3 pooling and servicing agreement. In the event that the master servicer, the special servicer, the trustee or the fiscal agent, as applicable, elects not to recover such nonrecoverable advances over time, the master servicer, the special servicer, the trustee or the fiscal agent, as applicable, will be required to give S&P and Moody's at least 15 days' notice prior to any such reimbursement, unless the master servicer, the special servicer, the trustee or the fiscal agent, as applicable, makes a determination not to give such notices in accordance with the terms of the series 2005-C3 pooling and servicing agreement. If the master servicer, the special servicer, the trustee or the fiscal agent reimburses itself out of general collections on the mortgage pool for any servicing advance that it has determined is not recoverable out of collections on the related mortgage loan, then that advance (together with accrued interest thereon) will be deemed, to the fullest extent permitted, to be reimbursed first out of payments and other collections of principal on the underlying mortgage loans otherwise distributable on the series 2005-C3 principal balance certificates (prior to being deemed reimbursed out of payments and other collections of interest on the underlying mortgage loans otherwise distributable on the series 2005-C3 certificates), thereby reducing the payments of principal on the series 2005-C3 principal balance certificates (exclusive of the class A-MFL certificates) and the class A-MFL REMIC II regular interest. In addition, if payments and other collections of principal on the mortgage pool are applied to reimburse, or pay interest on, any advance that is determined to be nonrecoverable from collections on the related underlying mortgage loan, as described in the prior sentence, then that advance will be reimbursed, and/or interest thereon will be paid, first out of payments and other collections of principal on the loan group that includes the subject underlying mortgage loan as to which the advance was made, and prior to using payments or other collections of principal on the other loan group. Notwithstanding the foregoing, amounts otherwise payable with respect to the class CP-1, CP-2 and CP-3 certificates will not be available to reimburse advances or pay interest thereon with respect to any underlying mortgage loan other than the Carolina Place Mortgage Loan. The series 2005-C3 pooling and servicing agreement will permit the master servicer to pay, and will permit the special servicer to direct the master servicer to pay, some servicing expenses out of general collections on the underlying mortgage loans and any REO Properties on deposit in the master servicer's collection account, including, to the extent not advanced, for the remediation of any adverse environmental circumstance or condition at any of the mortgaged real properties. In addition, under the series 2005-C3 pooling and servicing agreement, the master servicer will be permitted (or, in the case of a specially serviced mortgage loan or an REO Property, if the special servicer directs, the master servicer will be required) to pay directly out of the master servicer's collection account any servicing expense that, if advanced by the master servicer, would not be recoverable from expected collections on the related mortgage loan or REO Property. This is only to be done, however, when the master servicer or the special servicer, as applicable, has determined in accordance with the Servicing Standard that making the payment is in the best interests of the series 2005-C3 certificateholders (and, in the case of the Carolina Place Loan Pair, the Carolina Place Non-Trust Loan Noteholder), as a collective whole. The master servicer will be able to conclusively rely on any such determination made by the special servicer. S-122 The master servicer, the special servicer, the trustee and the fiscal agent will be entitled to receive interest on servicing advances made by them. The interest will accrue on the amount of each servicing advance, and compound annually, for so long as the servicing advance is outstanding, at a rate per annum equal to the prime rate as published in the "Money Rates" section of The Wall Street Journal, as that prime rate may change from time to time. Interest accrued with respect to any servicing advance will generally be payable: o first, out of any late payment charges and Default Interest collected on the related underlying mortgage loan in the collection period in which that servicing advance was reimbursed; and o then, after or at the same time that advance is reimbursed, but only if and to the extent that the late payment charges and Default Interest referred to in clause first above is insufficient to cover the advance interest, out of any other amounts then on deposit in the master servicer's collection account. If any payment of interest on advances is paid out of general collections on the mortgage pool as contemplated by the second bullet of the prior sentence, then any late payment charges and Default Interest collected during the following 12 months on the underlying mortgage loan as to which those advances were made will be applied to reimburse the trust for that payment prior to being applied as additional compensation to the master servicer or the special servicer. THE SERIES 2005-C3 CONTROLLING CLASS REPRESENTATIVE, THE CLASS CP REPRESENTATIVE AND THE CAROLINA PLACE NON-TRUST LOAN NOTEHOLDER Series 2005-C3 Controlling Class. As of any date of determination, the controlling class of series 2005-C3 certificateholders will be the holders of the most subordinate class of series 2005-C3 certificates then outstanding, other than the class XC, XP, CP-1, CP-2, CP-3, Y and R certificates, that has a total principal balance that is greater than 25% of that class's original total principal balance. However, if no class of series 2005-C3 certificates, exclusive of the class XC, XP, CP-1, CP-2, CP-3, Y and R certificates, has a total principal balance that satisfies this requirement, then the controlling class of series 2005-C3 certificateholders will be the holders of the most subordinate class of series 2005-C3 certificates then outstanding, other than the class XC, XP, CP-1, CP-2, CP-3, Y and R certificates, that has a total principal balance greater than zero. For purposes of determining, and exercising the rights of, the series 2005-C3 controlling class, the class A-1, A-2, A-3, A-SB, A-4 and A-1A certificates will represent a single class, and the class A-MFL and A-MFX certificates will represent a single class. Election of the Series 2005-C3 Controlling Class Representative. The series 2005-C3 controlling class certificateholders entitled to a majority of the voting rights allocated to the series 2005-C3 controlling class, will be entitled to: o select a representative having the rights and powers described under "--The Series 2005-C3 Controlling Class Representative, the Class CP Representative and the Carolina Place Non-Trust Loan Noteholder--Rights and Powers of the SerieS 2005-C3 Controlling Class Representative, the Class CP Representative and the Carolina Place Non-Trust Loan Noteholder" below and elsewhere in this prospectus supplement; or o replace an existing series 2005-C3 controlling class representative. S-123 The trustee will be required to notify promptly all the certificateholders of the series 2005-C3 controlling class that they may select a series 2005-C3 controlling class representative upon: o the receipt by the trustee of written requests for the selection of a successor series 2005-C3 controlling class representative from series 2005-C3 certificateholders entitled to a majority of the voting rights allocated to the series 2005-C3 controlling class; o the resignation or removal of the person acting as series 2005-C3 controlling class representative; or o a determination by the trustee that the series 2005-C3 controlling class has changed. The notice will explain the process for selecting a series 2005-C3 controlling class representative. The appointment of any person as a series 2005-C3 controlling class representative will not be effective until that person provides the trustee and the master servicer with: 1. written confirmation of its acceptance of its appointment; 2. an address and telecopy number for the delivery of notices and other correspondence; and 3. a list of officers or employees of the person with whom the parties to the series 2005-C3 pooling and servicing agreement may deal, including their names, titles, work addresses and telecopy numbers. Resignation and Removal of the Series 2005-C3 Controlling Class Representative. The series 2005-C3 controlling class representative may at any time resign by giving written notice to the trustee and each series 2005-C3 certificateholder of the series 2005-C3 controlling class. The series 2005-C3 certificateholders entitled to a majority of the voting rights allocated to the series 2005-C3 controlling class, will be entitled to remove any existing series 2005-C3 controlling class representative by giving written notice to the trustee and to the existing series 2005-C3 controlling class representative. Election, Resignation and Removal of the Class CP Representative. The Majority Class CP Certificateholder may elect and/or remove a class CP representative, and a class CP representative may resign, in each case in a manner substantially similar to that discussed above as being applicable to the series 2005-C3 controlling class certificateholders and the series 2005-C3 controlling class representative. Rights and Powers of the Series 2005-C3 Controlling Class Representative, the Class CP Representative and the Carolina Place Non-Trust Loan Noteholder. The special servicer will be required to prepare a report, referred to as an "Asset Status Report", for each mortgage loan in the trust fund that becomes a specially serviced mortgage loan, not later than 30 days after the servicing of the mortgage loan is transferred to the special servicer. Each Asset Status Report is to include, among other things, a summary of the status of the subject specially serviced mortgage loan and negotiations with the related borrower and a summary of the special servicer's recommended action with respect to the subject specially serviced mortgage loan. Each Asset Status Report will be delivered to the series 2005-C3 controlling class representative, among others, by the special servicer. The foregoing sentence, notwithstanding, in the case of the Carolina Place Loan Pair, for so long as a Carolina Place A/B Change of Control Event (as defined below) and a Carolina Place Pooled/Non-Pooled Change of Control Event (also as defined below) do not both exist, any Asset Status Report with respect to the Carolina Place Loan Pair will also be delivered to the Carolina Place Non-Trust Noteholder and the Class CP representative, and one of those two parties will exercise the review and objection rights described below. S-124 If within ten business days of receiving an Asset Status Report that relates to a recommended action to which the series 2005-C3 controlling class representative is entitled to object, as described below, the series 2005-C3 controlling class representative does not disapprove such Asset Status Report in writing, then the special servicer shall implement the recommended action as outlined in such Asset Status Report; provided, however, that the special servicer may not take any action that is contrary to applicable law, the Servicing Standard or the terms of the applicable mortgage loan documents. If the series 2005-C3 controlling class representative disapproves such Asset Status Report, the special servicer must revise such Asset Status Report and deliver to the series 2005-C3 controlling class representative, among others, a new Asset Status Report as soon as practicable, but in no event later than 30 days after such disapproval. The special servicer must continue to revise such Asset Status Report as described above until the series 2005-C3 controlling class representative fails to disapprove such revised Asset Status Report in writing within ten business days of receiving such revised Asset Status Report or until the special servicer makes one of the determinations described below. The special servicer may, from time to time, modify any Asset Status Report it has previously delivered and implement such report; provided that such report shall have been prepared, reviewed and not rejected pursuant to the terms of this discussion. Notwithstanding the foregoing, the special servicer (a) may, following the occurrence of an extraordinary event with respect to the related mortgaged real property, take any action set forth in such Asset Status Report (and consistent with the terms of the series 2005-C3 pooling and servicing agreement) before the expiration of a ten-business day period if the special servicer has reasonably determined that failure to take such action would materially and adversely affect the interests of the series 2005-C3 certificateholders, as a collective whole, and it has made a reasonable effort to contact the series 2005-C3 controlling class representative and (b) in any case, shall determine whether such affirmative disapproval is not in the best interest of all the series 2005-C3 certificateholders pursuant to the Servicing Standard. Upon making the determination in clause (b) of the last sentence of the immediately preceding paragraph, the special servicer shall notify the trustee of such rejection and deliver to the trustee a proposed notice to series 2005-C3 certificateholders which must include a copy of the Asset Status Report, and the trustee will be required to send such notice to all series 2005-C3 certificateholders. If the majority of such series 2005-C3 certificateholders, as determined by series 2005-C3 voting rights, fail, within 15 days of the trustee's sending such notice, to reject such Asset Status Report, the special servicer will implement the same. If the Asset Status Report is rejected by a majority of the series 2005-C3 certificateholders (other than for a reason which violates the Servicing Standard, which will control), the special servicer must revise such Asset Status Report as described above and provide a copy of such revised report to the master servicer. The trustee will be entitled to reimbursement from the trust fund for the reasonable expenses of providing such notices. The special servicer will have the authority to meet with the borrower under any specially serviced mortgage loan in the trust fund and take such actions consistent with the Servicing Standard, the terms of the series 2005-C3 pooling and servicing agreement and the related Asset Status Report. The special servicer may not take any action inconsistent with the related Asset Status Report unless that action would be required in order to act in accordance with the Servicing Standard. No direction of the series 2005-C3 controlling class representative or the majority of the series 2005-C3 certificateholders in connection with any Asset Status Report may (a) require or cause the master servicer or the special servicer to violate the terms of the subject mortgage loan, applicable law or any provision of the series 2005-C3 pooling and servicing agreement, including the master servicer's or the special servicer's, as the case may be, obligation to act in accordance with the Servicing Standard and to maintain the REMIC status of any REMIC created under the series 2005-C3 pooling and servicing agreement, (b) result in the imposition of a "prohibited transaction" or "prohibited contribution" tax under the REMIC provisions of the Internal Revenue Code, or (c) expand the scope of the master servicer's, trustee's fiscal agent's or special servicer's responsibilities under the series 2005-C3 pooling and servicing agreement. Furthermore, for so long as a Carolina Place A/B Change of Control Event (as defined below) and a Carolina Place Pooled/Non-Pooled Change of Control Event S-125 do not both exist, the series 2005-C3 controlling class representative will not have any right to approve or reject any Asset Status Report with respect to the Carolina Place Loan Pair. The foregoing sentence notwithstanding, the series 2005-C3 controlling class representative will have the right to discuss the performance and servicing of any specially serviced mortgage loan with the special servicer. In addition, the series 2005-C3 controlling class representative will generally be entitled to advise the special servicer with respect to the following actions of the special servicer, and the special servicer will not be permitted to take any of the following actions as to which the series 2005-C3 controlling class representative has objected in writing within ten business days of having been notified in writing of the particular action: 1. any foreclosure upon or comparable conversion, which may include acquisitions of an REO Property, of the ownership of any mortgaged real properties securing those specially serviced mortgage loans in the trust fund as come into and continue in default; 2. any modification of a monetary term (other than late payment charge and Default Interest provisions) or a material non-monetary term of an underlying mortgage loan, but excluding a modification consisting of the extension of the maturity date of the subject mortgage loan for one year or less; 3. any proposed sale of an REO Property out of the trust fund (other than in connection with the termination of the trust fund) for less than the related Purchase Price; 4. any determination to bring an REO Property held by the trust into compliance with applicable environmental laws or to otherwise address hazardous materials located at such REO Property; 5. any release of collateral, or acceptance of substitute or additional collateral, for an underlying mortgage loan unless required by the related mortgage loan documents and not conditioned on the lender's discretionary consent and/or applicable law; 6. any waiver of a "due-on-sale" clause or "due-on-encumbrance" clause; 7. any acceptance of an assumption agreement releasing a borrower from liability under an underlying mortgage loan (other than in connection with a defeasance permitted under the terms of the applicable mortgage loan documents); 8. any termination of a property manager for an underlying mortgage loan having an unpaid principal balance of greater than $5,000,000; and 9. any termination of, or modification of, any applicable franchise agreements related to an underlying mortgage loan secured by a hotel property. Furthermore, the series 2005-C3 controlling class representative may direct the special servicer to take, or to refrain from taking, such other actions as the series 2005-C3 controlling class representative may deem advisable or as to which provision is otherwise made in the series 2005-C3 pooling and servicing agreement; provided that, notwithstanding anything herein to the contrary no such direction, and no objection contemplated by the preceding paragraph, may (and the special servicer or the master servicer must disregard any such direction or objection that would) require or cause the special servicer or the master servicer to violate any applicable law, any provision of the series 2005-C3 pooling and servicing agreement or any underlying mortgage loan or the REMIC provisions of the Internal Revenue Code, including the special servicer's or the master servicer's obligation to act in accordance with the Servicing Standard, or materially expand the scope of the special servicer's or the master servicer's responsibilities under the series 2005-C3 pooling and servicing agreement or S-126 cause the special servicer or the master servicer to act, or fail to act, in a manner which in the reasonable judgment of the special servicer or the master servicer is not in the best interests of the series 2005-C3 certificateholders. Notwithstanding the foregoing, for so long as a Carolina Place A/B Change of Control Event and a Carolina Place Pooled/Non-Pooled Change of Control Event do not both exist, the series 2005-C3 controlling class representative will not have any of the rights described in the preceding two paragraphs with respect to the Carolina Place Loan Pair or any related REO Property. For so long as no Carolina Place A/B Change of Control Event exists, the special servicer will, in general, not be permitted to take, or consent to the master servicer's taking, any of the following actions under the series 2005-C3 pooling and servicing agreement with respect to the Carolina Place Loan Pair, as to which the Carolina Place Non-Trust Loan Noteholder has objected within 10 business days of having been notified thereof in writing and receiving the information reasonably necessary to make an informed decision with respect thereto: 1. any determination to expend money to bring the related mortgaged real property (including if it is an REO Property) into compliance with applicable environmental laws or to otherwise address hazardous materials located at the related mortgaged real property; 2. any replacement of the property manager or the consummation, termination, renewal or material modification of the property management agreement, in each case if approval is required by the related loan documents; 3. any approval of annual budgets, business plans for the property or material capital expenditures, to the extent approval is required by the related loan documents; 4. any acceleration of a mortgage loan that is part of the Carolina Place Loan Pair and any proposed foreclosure upon or comparable conversion, which may include acquisition of an REO Property, of the related mortgaged real property and the other collateral securing the Carolina Place Loan Pair, or any acquisition of the property by deed-in-lieu of foreclosure, or other enforcement action under the loan documents; 5. any proposed modification, amendment or waiver of a monetary term (including the timing of payments, any extension of the maturity date, deferral or forgiveness of interest (other than Default Interest) or principal or reduction in interest rate) or any material non-monetary term (including any provision restricting the borrower or any guarantor from incurring additional indebtedness or placing additional liens on the mortgaged real property) of a mortgage loan that is part of the Carolina Place Loan Pair; 6. any acceptance of a discounted payoff of a mortgage loan that is part of the Carolina Place Loan Pair; 7. any release of a material portion of the collateral for the Carolina Place Loan Pair or any release of the borrower or any guarantor, other than pursuant to and in accordance with the terms of the loan documents where no material discretion is given to the mortgagee; 8. any acceptance of substitute collateral for the Carolina Place Loan Pair, other than pursuant to and in accordance with the terms of the loan documents where no material discretion is given to the mortgagee or upon payment and satisfaction of the loan in full; 9. any waiver of a "due-on-sale" or "due-on-encumbrance" clause with respect to the Carolina Place Loan Pair; S-127 10. approval of the material waiver or modification of any insurance requirements under the related loan documents; 11. any proposed sale or transfer of the mortgaged real property securing the Carolina Place Loan Pair (or any part thereof) or assumption of any mortgage loan that is part of the Carolina Place Loan Pair (other than in accordance with the terms of the loan documents where no material discretion given to the mortgagee); 12. any release or waiver of amounts of escrows or reserves not expressly required by the terms of the loan documents or under applicable law; 13. any determination to apply casualty proceeds toward repayment of a mortgage loan that is part of the Carolina Place Loan Pair rather than toward restoration of the related mortgaged real property; and 14. any approval of the incurrence of additional indebtedness secured by the related mortgaged real property or mezzanine financing by the holders of equity interests (whether direct or indirect) in the borrower, other than pursuant to and in accordance with the terms of the loan documents where no material discretion is given to the mortgagee; provided that, if the special servicer determines that immediate action is necessary to protect the interests of the series 2005-C3 certificateholders and the Carolina Place Non-Trust Loan Noteholder, as a collective whole, then the special servicer may take any such action without waiting for the Carolina Place Non-Trust Loan Noteholder's response; and provided, further, that the foregoing rights will be exercisable by (a) the class CP representative whenever a Carolina Place A/B Change of Control Event exists but a Carolina Place Pooled/Non-Pooled Change of Control Event does not exist or (b) the series 2005-C3 controlling class representative whenever a Carolina Place A/B Change of Control Event and a Carolina Place Pooled/Non-Pooled Change of Control Event both exist. A "Carolina Place A/B Change of Control Event" will generally exist whenever (1) the sum of (a) an amount generally equal to the unpaid principal balance of the Carolina Place Non-Trust Loan, net of that portion of any existing Appraisal Reduction Amount with respect to the Carolina Place Loan Pair that is allocable to the Carolina Place Non-Trust Loan, plus (b) the amount of any cash collateral or letters of credit posted by the Carolina Place Non-Trust Loan Noteholder to maintain control of the Carolina Place Loan Pair, if any, is less than (2) an amount generally equal to 25% of the unpaid principal balance of the Carolina Place Non-Trust Loan. A "Carolina Place Pooled/Non-Pooled Change of Control Event" will generally exist whenever (1) the total principal balance of the class CP-1, CP-2 and CP-3 certificates, net of that portion of any existing Appraisal Reduction Amount with respect to the Carolina Place Loan Pair that is allocable to the Carolina Place Mortgage Loan, is less than (2) 25% of the initial total principal balance of the class CP-1, CP-2 and CP-3 certificates. Any Appraisal Reduction Amount in respect of the Carolina Place Loan Pair will be allocable, first, to the Carolina Place Non-Trust Loan, up to the outstanding principal balance thereof, and then to the Carolina Place Mortgage Loan. When reviewing the rest of this "Servicing of the Underlying Mortgage Loans" section, it is important that you consider the effects that the rights and powers of the series 2005-C3 controlling class representative, the class CP representative and the Carolina Place Non-Trust Loan Noteholder discussed above could have on the actions of the special servicer. Certain Liability Matters. In general, any and all expenses of the series 2005-C3 controlling class representative and the class CP representative are to be borne by the holders of the series 2005-C3 controlling class and the holders of the class CP-1, CP-2 and CP-3 certificates, respectively, in each case in proportion to S-128 their respective percentage interests in the subject class(es), and not by the trust. However, if a claim is made against the series 2005-C3 controlling class representative or the class CP representative by a borrower with respect to the series 2005-C3 pooling and servicing agreement or any particular underlying mortgage loan, then (subject to the discussion under "Description of the Governing Documents--Matters Regarding the Master Servicer, the Special Servicer, the Manager and Us" in the accompanying prospectus) the special servicer on behalf of, and at the expense of, the trust, will assume the defense of the claim against the series 2005-C3 controlling class representative or the class CP representative, as the case may be, but only if: o the special servicer or the trust are also named parties to the same action; and o in the sole judgment of the special servicer-- 1. the series 2005-C3 controlling class representative or the class CP representative, as the case may be, acted in good faith, without negligence or willful misfeasance, with regard to the particular matter at issue, and 2. there is no potential for the special servicer or the trust to be an adverse party in the action as regards the series 2005-C3 controlling class representative or the class CP representative, as the case may be. The series 2005-C3 controlling class representative and the class CP representative may each have special relationships and interests that conflict with those of the holders of one or more classes of the offered certificates. In addition, the series 2005-C3 controlling class representative does not have any duties or liability to the holders of any class of series 2005-C3 certificates other than the series 2005-C3 controlling class. It may act solely in the interests of the certificateholders of the series 2005-C3 controlling class and will have no liability to any other series 2005-C3 certificateholders for having done so. Likewise, the class CP representative does not have any duties or liability to the holders of any class of series 2005-C3 certificates other than the CP-1, CP-2 and CP-3 classes. It may act solely in the interests of the certificateholders of the CP-1, CP-2 and CP-3 classes and will have no liability to any other series 2005-C3 certificateholders for having done so. No series 2005-C3 certificateholder may take any action against the series 2005-C3 controlling class representative or the class CP representative for its having acted solely in the interests of the certificateholders of the series 2005-C3 controlling class or the CP-1, CP-2 and CP-3 classes, as the case may be. Additional Rights of the Carolina Place Non-Trust Loan Noteholder; Right to Purchase and Right to Cure. Right to Purchase. Pursuant to the Carolina Place Co-Lender Agreement, in the event (a) any payment of principal or interest on the Carolina Place Mortgage Loan becomes 90 days or more delinquent, (b) the Carolina Place Mortgage Loan is accelerated, (c) the Carolina Place Mortgage Loan is not paid at maturity, (d) the borrower files a petition for bankruptcy or (e) the Carolina Place Mortgage Loan becomes a specially serviced loan and is either in default or a default is reasonably foreseeable, the Carolina Place Non-Trust Loan Noteholder will have the option to purchase the Carolina Place Mortgage Loan at a price generally equal to the unpaid principal balance of the Carolina Place Mortgage Loan, together with all accrued unpaid interest on that loan (other than Default Interest) to but not including the date of such purchase, and any servicing compensation, advances and interest on advances payable or reimbursable to any party to the series 2005-C3 pooling and servicing agreement pursuant thereto (but exclusive of any prepayment consideration and exclusive of any liquidation fees if the purchase is made within 90 days of the option becoming exercisable). Right to Cure Defaults. Further, in the case of the Carolina Place Loan Pair, pursuant to the Carolina Place Co-Lender Agreement and subject to limitations on the number of cures contained therein, the Carolina Place Non-Trust Loan Noteholder has five days to cure any monetary default and 30 days to cure any non- S-129 monetary default that is susceptible of cure, in each case from the later of the date of the expiration of the borrower's grace period under the loan documents or the Carolina Place Non-Trust Loan Noteholder's receipt of notice of the default from the master servicer or the special servicer. REPLACEMENT OF THE SPECIAL SERVICER Series 2005-C3 certificateholders entitled to a majority of the voting rights allocated to the series 2005-C3 controlling class may terminate an existing special servicer and appoint a successor. However, any such termination of an existing special servicer and/or appointment of a successor special servicer will be subject to, among other things, receipt by the trustee of: 1. written confirmation from each of S&P and Moody's that the appointment will not result in a qualification, downgrade or withdrawal of any of the ratings then assigned by the rating agency to any class of the series 2005-C3 certificates (provided that such confirmation need not be obtained from S&P if the proposed successor special servicer is on S&P's approved special servicer list); and 2. the written agreement of the proposed special servicer to be bound by the terms and conditions of the series 2005-C3 pooling and servicing agreement, together with an opinion of counsel regarding, among other things, the enforceability of the series 2005-C3 pooling and servicing agreement against the proposed special servicer. Subject to the foregoing, any series 2005-C3 certificateholder or any affiliate of a series 2005-C3 certificateholder may be appointed as special servicer. If the series 2005-C3 certificateholders entitled to a majority of the voting rights allocated to the series 2005-C3 controlling class terminate an existing special servicer, then the reasonable out-of-pocket costs and expenses of any related transfer of special servicing duties are to be paid by the party or parties that removed the terminated special servicer. Furthermore, the terminated special servicer will be entitled to all amounts due and payable to it under the series 2005-C3 pooling and servicing agreement at the time of the termination (including workout fees as described under "--Servicing and Other Compensation and Payment of Expenses--Principal Special Servicing Compensation--The Workout Fee" above). Notwithstanding the foregoing, for so long as no Carolina Place A/B Change of Control Event exists: o the Carolina Place Non-Trust Loan Noteholder may terminate an existing special servicer with respect to, but solely with respect to, the Carolina Place Loan Pair, with or without cause, and appoint a successor to any special servicer with respect to, but solely with respect to, the Carolina Place Loan Pair that has resigned or been terminated, subject to receipt by the trustee of the items described in clauses (1) and (2) of the first paragraph under this "--Replacement of Special Servicer" section; and o the majority holders of the series 2005-C3 controlling class certificates cannot terminate a special servicer appointed by the Carolina Place Non-Trust Loan Noteholder with respect to the Carolina Place Loan Pair without cause. However, if a Carolina Place A/B Change of Control Event does exist, then for so long as no Carolina Place Pooled/Non-Pooled Change of Event exists: o the Majority Class CP Certificateholder may terminate an existing special servicer with respect to, but solely with respect to, the Carolina Place Loan Pair, with or without cause, and appoint a S-130 successor to any special servicer with respect to, but solely with respect to, the Carolina Place Loan Pair that has resigned or been terminated, subject to receipt by the trustee of the items described in clauses (1) and (2) of the first paragraph under this "--Replacement of Special Servicer" section; and o the majority holders of the series 2005-C3 controlling class certificates cannot terminate a special servicer appointed by the Majority Class CP Certificateholder with respect to the Carolina Place Loan Pair without cause. If the special servicer for the Carolina Place Loan Pair is different from the special servicer for the rest of the mortgage loans serviced under the series 2005-C3 pooling and servicing agreement, then (unless the context indicates otherwise) all references to the special servicer in this prospectus supplement and the accompanying prospectus are intended to mean the applicable special servicer or both special servicers together, as appropriate in light of the circumstances. BENEFICIAL OWNERS OF THE CONTROLLING CLASS OF SERIES 2005-C3 CERTIFICATES If the certificates of the series 2005-C3 controlling class or any of the CP-1, CP-2 and CP-3 classes are held in book-entry form, then any beneficial owner of those certificates whose identity and beneficial ownership interest has been proven to the satisfaction of the trustee, will be entitled to: o receive all notices described under "--The Series 2005-C3 Controlling Class Representative, the Class CP Representative and the Carolina Place Non-Trust Loan Noteholder" and/or "--Replacement of the Special Servicer" above; and o exercise directly all rights described under "--The Series 2005-C3 Controlling Class Representative, the Class CP Representative and the Carolina Place Non-Trust Loan Noteholder" and/or "--Replacement of the Special Servicer" above, that it otherwise would if it were the registered holder of certificates of the subject class. Beneficial owners of series 2005-C3 controlling class certificates, class CP-1 certificates, class CP-2 certificates or class CP-3 certificates held in book-entry form will likewise be subject to the same limitations on rights and the same obligations as they otherwise would if they were registered holders of certificates of the subject class. ENFORCEMENT OF DUE-ON-SALE AND DUE-ON-ENCUMBRANCE PROVISIONS Upon receipt of any request of a waiver in respect of a due-on-sale (including, without limitation, a sale of a mortgaged real property (in full or in part) or a sale, transfer, pledge or hypothecation of direct or indirect interests in a borrower or its owners) or due-on-encumbrance (including, without limitation, any mezzanine financing of a borrower or a mortgaged real property or a sale or transfer of preferred equity in a borrower or its owners) provision with respect to any of the underlying mortgage loans (other than a specially serviced mortgage loan) or a request by a borrower for a determination with respect to an underlying mortgage loan (other than a specially serviced mortgage loan) which by its terms permits transfer, assumption or further encumbrance without lender consent upon the satisfaction of certain conditions, that such conditions have been satisfied, the master servicer must promptly analyze that request, prepare written materials in connection with that analysis and provide that analysis and those materials to the special servicer and, if the special servicer, subject to the consent rights of the series 2005-C3 controlling class representative, the Carolina Place Non-Trust Loan Noteholder or the class CP representative, as applicable, approves such request, the master servicer must close the related transaction and any applicable intercreditor, co-lender or similar agreement. With respect to all mortgage loans in S-131 the trust fund, the special servicer, on behalf of the trustee as the mortgagee of record, must, to the extent permitted by applicable law, enforce the restrictions contained in the related mortgage instrument on transfers or further encumbrances of the related mortgaged real property and on transfers of interests in the related borrower, unless the special servicer has determined, consistent with the Servicing Standard, that waiver of those restrictions would be in accordance with the Servicing Standard. The special servicer may not exercise any such waiver in respect of a due-on-encumbrance provision of any of the underlying mortgage loans (1) with respect to which (a) the aggregate of the Stated Principal Balance of that mortgage loan and the Stated Principal Balance of all other underlying mortgage loans that are cross-collateralized with, cross-defaulted with or have been made to borrowers affiliated with the borrower on the subject mortgage loan, is equal to or in excess of $20,000,000, (b) the aggregate of the Stated Principal Balance of the subject mortgage loan and the Stated Principal Balance of all other underlying mortgage loans that are cross-collateralized with, cross-defaulted with or have been made to borrowers affiliated with the borrower on the subject mortgage loan, are greater than 5% of the aggregate Stated Principal Balance of all the underlying mortgage loans or (c) the subject mortgage loan is one of the ten largest mortgage loans in the trust fund as of the date of the waiver (by Stated Principal Balance), without receiving prior written confirmation from Moody's that such action would not result in a downgrading, qualification or withdrawal of the ratings then assigned to the series 2005-C3 certificates and (2) with respect to which (a) the criteria set forth in clause (1)(a), (1)(b) and (1)(c) have been met or (b) the subject mortgage loan has a loan-to-value ratio (calculated to include the additional indebtedness secured by any encumbrance) that is equal to or greater than 85% and a debt service coverage ratio (calculated to include the additional debt from any encumbrance) of 1.2:1 or less, without receiving a prior written confirmation from S&P that such action would not result in a downgrading, qualification or withdrawal of the ratings then assigned to the series 2005-C3 certificates. With respect to a waiver of a due-on-sale provision of any of the underlying mortgage loans, the special servicer may not waive any such restriction with respect to which (a) the aggregate of the Stated Principal Balance of the subject mortgage loan and the Stated Principal Balance of all other underlying mortgage loans that are cross-collateralized with, cross-defaulted with or have been made to borrowers affiliated with the borrower on the subject mortgage loan, is equal to or in excess of $35,000,000 (or $20,000,000 with respect to Moody's), (b) the aggregate of the Stated Principal Balance of the subject mortgage loan and the Stated Principal Balance of all other underlying mortgage loans in the trust fund that are cross-collateralized with, cross-defaulted with or have been made to borrowers affiliated with the borrower on the subject mortgage loan, are greater than 5% of the aggregate Stated Principal Balance of all the underlying mortgage loans or (c) the subject mortgage loan is one of the ten largest mortgage loans in the trust fund as of the date of the waiver (by Stated Principal Balance), without receiving prior written confirmation from S&P and Moody's that such action would not result in a downgrading, qualification or withdrawal of the ratings then assigned to the series 2005-C3 certificates; provided that, if the subject mortgage loan does not meet the criteria set forth in clauses (a), (b) and (c) of this sentence, the special servicer may waive such requirement without approval by S&P or Moody's in accordance with the Servicing Standard. Any fees charged by the rating agencies in connection with obtaining any written confirmation contemplated in the two preceding sentences will be charged to the borrower unless prohibited by the related mortgage loan documents, in which case such fees will be Additional Trust Fund Expenses. If the special servicer, in accordance with the Servicing Standard, determines with respect to any underlying mortgage loan that by its terms permits transfer, assumption or further encumbrance of an underlying mortgage loan or the related mortgaged real property, as applicable, without lender consent upon the satisfaction of certain conditions, that such conditions have not been satisfied, then the master servicer may not permit such transfer, assumption or further encumbrance. As used in this paragraph, the terms "sale", "transfer" and "encumbrance" include the matters contemplated by the parentheticals in the first sentence of this paragraph. In addition, the master servicer (with respect to underlying mortgage loans that are not specially serviced mortgage loans and are not related to REO Properties) (without the special servicer's consent) or the special servicer (with respect to specially serviced mortgage loans and REO Properties in the trust fund), without any rating agency confirmation as provided in the prior paragraph, may grant a borrower's request for consent (or, in the case of an REO Property, may consent) to subject the related mortgaged real property to an easement or right-of-way for utilities, access, parking, public improvements or another purpose, and may consent to subordination S-132 of the related underlying mortgage loan to such easement or right-of-way, provided that the master servicer or the special servicer, as applicable, has determined in accordance with the Servicing Standard that such easement or right-of-way will not materially interfere with the then-current use of the related mortgaged real property, or the security intended to be provided by the related mortgage instrument or the related borrower's ability to repay the related underlying mortgage loan, and will not materially or adversely affect the value of such mortgaged real property or cause certain adverse tax consequences with respect to the trust fund. MODIFICATIONS, WAIVERS, AMENDMENTS AND CONSENTS Subject to the following discussion in this "--Modifications, Waivers, Amendments and Consents" section and to the rights of the series 2005-C3 controlling class representative, the Carolina Place Non-Trust Loan Noteholder or the class CP representative, as applicable, and further subject to any applicable intercreditor, co-lender or similar agreement, the master servicer (to the extent provided in the penultimate paragraph of this "--Modifications, Waivers, Amendments and Consents" section and in connection with certain waivers of Default Interest and late payment charges) and the special servicer may, on behalf of the trustee, agree to any modification, waiver or amendment of any term of any underlying mortgage loan (including, subject to the penultimate paragraph of this "--Modifications, Waivers, Amendments and Consents" section, the lease reviews and lease consents related thereto) without the consent of the trustee or any series 2005-C3 certificateholder. All modifications, waivers or amendments of any underlying mortgage loan must be in writing and must be considered and effected in accordance with the Servicing Standard; provided, however, that neither the master servicer nor the special servicer, as applicable, may make or permit or consent to, as applicable, any modification, waiver or amendment of any term of any mortgage loan in the trust fund not otherwise permitted as described in this "--Modifications, Waivers, Amendments and Consents" section that would constitute a "significant modification" of the subject mortgage loan within the meaning of Treasury regulations section 1.860G-2(b). Except as discussed in the next paragraph and except for waivers of Default Interest and late payment charges, neither the master servicer nor the special servicer, on behalf of the trustee, may agree or consent to any modification, waiver or amendment of any term of any mortgage loan in the trust fund that would: (a) affect the amount or timing of any related payment of principal, interest or other amount (including prepayment premiums or yield maintenance charges, but excluding Default Interest, late payment charges and amounts payable as additional servicing compensation) payable thereunder; (b) affect the obligation of the related borrower to pay a prepayment premium or yield maintenance charge or permit a principal prepayment during any period in which the related mortgage note prohibits principal prepayments; (c) except as expressly contemplated by the related mortgage instrument or in circumstances involving environmental issues, result in a release of the lien of the related mortgage instrument on any material portion of the related mortgaged real property without a corresponding principal prepayment in an amount not less than the fair market value of the property to be released, other than in connection with a taking of all or part of the related mortgaged real property or REO Property for not less than fair market value by exercise of the power of eminent domain or condemnation or casualty or hazard losses with respect to such mortgaged real property or REO Property; (d) if the subject mortgage loan has a Stated Principal Balance, individually or in the aggregate with all other underlying mortgage loans that are cross-collateralized with, cross-defaulted with or have been made to borrowers affiliated with the borrower on the subject mortgage loan, equal to S-133 or in excess of 5% of the then aggregate current principal balances of all mortgage loans in the trust fund or $35,000,000 (or with respect to Moody's $20,000,000), or is one of the ten largest mortgage loans in the trust fund by Stated Principal Balance as of such date, permit the transfer or transfers of (A) the related mortgaged real property or any interest therein or (B) equity interests in the borrower or any equity owner of the borrower that would result, in the aggregate during the term of the subject mortgage loan, in a transfer greater than 49% of the total interest in the borrower and/or any equity owner of the borrower or a transfer of voting control in the borrower or an equity owner of the borrower without the prior written confirmation from each applicable rating agency that such changes will not result in the qualification, downgrade or withdrawal to the ratings then assigned to the series 2005-C3 certificates; (e) allow any additional lien on the related mortgaged real property if the subject mortgage loan has a Stated Principal Balance, individually or in the aggregate with all other underlying mortgage loans that are cross-collateralized with, cross-defaulted with or have been made to borrowers affiliated with the borrower on the subject mortgage loan, equal to or in excess of 5% of the then aggregate current principal balances of all the mortgage loans in the trust fund or $20,000,000, is one of the ten largest mortgage loans in the trust fund by Stated Principal Balance as of such date, or, with respect to S&P only, has (together with that additional lien) an aggregate loan-to-value ratio that is equal to or greater than 85% or has an aggregate debt service coverage ratio that is less than 1.2:1, without the prior written confirmation from each applicable rating agency that such change will not result in the qualification, downgrade or withdrawal of the ratings then assigned to the series 2005-C3 certificates; or (f) in the reasonable, good faith judgment of the special servicer, otherwise materially impair the security for the subject mortgage loan or reduce the likelihood of timely payment of amounts due thereon. Notwithstanding the foregoing, but subject to the second following paragraph, and further subject to the rights of the series 2005-C3 controlling class representative, the Carolina Place Non-Trust Loan Noteholder or the class CP representative, as applicable, and any applicable co-lender, intercreditor or similar agreement, the special servicer may (1) reduce the amounts owing under any specially serviced mortgage loan in the trust fund by forgiving principal, accrued interest or any prepayment premium or yield maintenance charge, (2) reduce the amount of the scheduled monthly debt service payment on any specially serviced mortgage loan, including by way of a reduction in the related mortgage rate, (3) forbear in the enforcement of any right granted under any mortgage note or mortgage instrument relating to a specially serviced mortgage loan in the trust fund, (4) extend the maturity date of any specially serviced mortgage loan in the trust fund, or (5) accept a principal prepayment on any specially serviced mortgage loan in the trust fund during any prepayment lockout period; provided that (A) the related borrower is in default with respect to the subject specially serviced mortgage loan or, in the judgment of the special servicer, such default is reasonably foreseeable, and (B) in the judgment of the special servicer, such modification would increase the recovery on the subject mortgage loan to the series 2005-C3 certificateholders on a net present value basis. In the case of every other modification, waiver or consent, the special servicer must determine and may rely on an opinion of counsel to the effect that such modification, waiver or amendment would not both (1) effect an exchange or reissuance of the subject mortgage loan under Treasury regulations section 1.860G-2(b) of the Internal Revenue Code and (2) cause any REMIC created under the series 2005-C3 pooling and servicing agreement to fail to qualify as a REMIC under the Internal Revenue Code or result in the imposition of any tax on "prohibited transactions" or "contributions" after the startup day under the REMIC provisions of the Internal Revenue Code. In addition, notwithstanding the second preceding paragraph, but subject to the next paragraph, and further subject to the rights of the series 2005-C3 controlling class representative, the Carolina Place Non-Trust Loan Noteholder or the class CP representative, as applicable, and any applicable co-lender, intercreditor or S-134 similar agreement, the special servicer may extend the date on which any balloon payment is scheduled to be due in respect of a specially serviced mortgage loan in the trust fund if the conditions set forth in the proviso to the first sentence of the prior paragraph are satisfied and the special servicer has obtained an appraisal of the related mortgaged real property, in connection with such extension, which appraisal supports the determination of the special servicer contemplated by clause (B) of the proviso to the first sentence of the immediately preceding paragraph. In no event may the special servicer: (1) extend the maturity date of a mortgage loan in the trust fund beyond a date that is two years prior to the rated final payment date or, in connection with any extension of maturity, reduce the mortgage rate of a mortgage loan in the trust fund to less than the least of (a) the original mortgage rate of the subject mortgage loan, (b) the highest fixed pass-through rate of any class of series 2005-C3 principal balance certificates then outstanding and (c) a rate below the then prevailing interest rate for comparable loans, as determined by the special servicer; or (2) if the subject mortgage loan is secured by a ground lease (and not by the corresponding fee simple interest), extend the maturity date of the subject mortgage loan beyond a date which is less than 20 years (or, to the extent consistent with the Servicing Standard, giving due consideration to the remaining term of the ground lease, ten years) prior to the expiration of the term of such ground lease. Any modification, extension, waiver or amendment of the payment terms of the Carolina Place Loan Pair will be required to be structured so as to be reasonably consistent with the allocation and payment priorities in the related loan documents and the Carolina Place Co-Lender Agreement, such that neither the trust as holder of the Carolina Place Mortgage Loan, on the one hand, nor the Carolina Place Non-Trust Loan Noteholder, on the other hand, gains a priority over the other that is not reflected in the loan documents and the Carolina Place Co-Lender Agreement. Further, to the extent consistent with the Servicing Standard, with respect to the Carolina Place Loan Pair, taking into account the subordinate position of the Carolina Place Non-Trust Loan: o no waiver, reduction or deferral of any amounts due on the Carolina Place Mortgage Loan will be effected prior to the waiver, reduction or deferral of the entire corresponding item in respect of the Carolina Place Non-Trust Loan; and o no reduction of the mortgage interest rate of the Carolina Place Mortgage Loan may be effected prior to the reduction of the mortgage interest rate of the Carolina Place Non-Trust Loan, to the fullest extent possible. The special servicer or the master servicer, as applicable, may, as a condition to granting any request by a borrower for consent, modification, waiver or indulgence or any other matter or thing, the granting of which is within its discretion pursuant to the terms of the instruments evidencing or securing the subject underlying mortgage loan and is permitted by the terms of the series 2005-C3 pooling and servicing agreement, require that the borrower pay to it (a) as additional servicing compensation, a reasonable or customary fee for the additional services performed in connection with such request, provided that such fee would not itself be a "significant modification" pursuant to Treasury regulations section 1.1001-3(e)(2); and (b) any related costs and expenses incurred by it. In no event will the special servicer or the master servicer be entitled to payment for such fees or expenses unless such payment is collected from the related borrower. The special servicer must notify, among others, the master servicer, any related sub-servicers, the trustee, the series 2005-C3 controlling class representative and the rating agencies, in writing, of any material modification, waiver or amendment of any term of any underlying mortgage loan (including fees charged the related borrower) and the date thereof, and must deliver to the custodian (with a copy to the master servicer) for deposit in the related Mortgage File, an original counterpart of the agreement relating to such modification, waiver or amendment, promptly (and in any event within ten business days) following the execution thereof. S-135 Copies of each agreement whereby any such modification, waiver or amendment of any term of any underlying mortgage loan is effected will be made available for review upon prior request during normal business hours at the offices of the special servicer as described under "Description of the Offered Certificates--Reports to Certificateholders; Available Information". For any non-specially serviced mortgage loan in the trust fund, and subject to the rights of the special servicer described above and the rights of the series 2005-C3 controlling class representative, the Carolina Place Non-Trust Loan Noteholder or the class CP representative, as applicable, the master servicer, without the consent of the special servicer, will be responsible for any request by a borrower for the consent or other appropriate action on the part of the lender with respect to: 1. approving routine leasing activity with respect to any lease for less than the amount or percentage of the square footage of the related mortgaged real property specified in the series 2005-C3 pooling and servicing agreement; 2. approving any waiver affecting the timing of receipt of financial statements from any borrower; provided that such financial statements are delivered no less than quarterly and within 60 days of the end of the calendar quarter; 3. approving annual budgets for the related mortgaged real property; provided that no such budget (a) provides for the payment of operating expenses in an amount equal to more than 110% of the amounts budgeted therefor for the prior year or (b) provides for the payment of any material expenses to any affiliate of the related borrower (other than the payment of a management fee to any property manager if such management fee is no more than the management fee in effect on the cut-off date); 4. subject to other restrictions herein regarding principal prepayments, waiving any provision of a mortgage loan in the trust fund requiring a specified number of days notice prior to a principal prepayment; 5. approving modifications, consents or waivers (other than those described in the third paragraph of this "--Modifications, Waivers, Amendments and Consents" section) in connection with a defeasance permitted by the terms at the related underlying mortgage loan if the master servicer receives an opinion of counsel to the effect that such modification, waiver or consent would not cause any REMIC created under the series 2005-C3 pooling and servicing agreement to fail to qualify as a REMIC or result in a "prohibited transaction" under the REMIC provisions of the Internal Revenue Code; and 6. approving certain consents with respect to right-of-ways and easements and consent to subordination of the related underlying mortgage loan to such easements or right-of-ways. Notwithstanding anything to the contrary described in this prospectus supplement, neither the master servicer nor the special servicer, as applicable, may take the following action unless it has received prior written confirmation from the applicable rating agencies that such action will not result in a qualification, downgrade or withdrawal of any of the ratings assigned by such rating agency to the series 2005-C3 certificates: (a) with respect to any mortgaged real property that secures a mortgage loan in the trust fund with an unpaid principal balance that is at least equal to 5% of the then aggregate principal balance of all mortgage loans in the trust fund or $20,000,000, the giving of any consent, approval or direction regarding the termination of the related property manager or the designation of any replacement property manager; and S-136 (b) with respect to each mortgage loan in the trust fund with an unpaid principal balance that is equal to or greater than (i) 5% of the then aggregate principal balance of all the mortgage loans in the trust fund or (ii) $20,000,000 and which is secured by a mortgaged real property which is a hotel property, the giving of any consent to any change in the franchise affiliation of such mortgaged real property. REQUIRED APPRAISALS The special servicer must obtain, within 60 days following the occurrence of any Appraisal Trigger Event with respect to any of the mortgage loans in the trust fund, and deliver to the trustee and the master servicer, among others, a copy of, an appraisal of the related mortgaged real property from an independent appraiser meeting the qualifications imposed in the series 2005-C3 pooling and servicing agreement, unless an appraisal had previously been obtained within the prior 12 months and the special servicer is not aware of any subsequent material change in the condition of that property (in which case a letter update will be permitted). Notwithstanding the foregoing, if the unpaid principal balance of the subject mortgage loan is less than $2,000,000, the special servicer may, at its option, cause an internal valuation of the mortgaged real property to be performed. As a result of any appraisal or other valuation, it may be determined that an Appraisal Reduction Amount exists with respect to the subject underlying mortgage loan. An Appraisal Reduction Amount is relevant to the determination of the amount of any advances of delinquent interest required to be made with respect to the affected underlying mortgage loan and, in the case of the Carolina Place Mortgage Loan, to certain control issues. See "Description of the Offered Certificates--Advances of Delinquent Monthly Debt Service Payments" in this prospectus supplement and "--The Series 2005-C3 Controlling Class Representative, the Class CP Representative and the Carolina Place Non-Trust Loan Noteholder" above. If an Appraisal Trigger Event occurs with respect to any specially serviced mortgage loan in the trust fund, then the special servicer will have an ongoing obligation to obtain or perform, as the case may be, on or about each anniversary of the occurrence of that Appraisal Trigger Event, a new appraisal, an update of the prior required appraisal or other valuation, as applicable. Based thereon, the appropriate party under the series 2005-C3 pooling and servicing agreement is to redetermine and report to the trustee and the master servicer, the new Appraisal Reduction Amount, if any, with respect to the mortgage loan. This ongoing obligation will cease if and when all Appraisal Trigger Events have ceased to exist with respect to the subject mortgage loan in accordance with the definition of "Appraisal Trigger Event". The cost of each required appraisal, and any update of that appraisal, will be advanced by the master servicer, at the direction of the special servicer, and will be reimbursable to the master servicer as a servicing advance. If an Appraisal Reduction Amount exists with respect to the Carolina Place Loan Pair, the Carolina Place Non-Trust Loan Noteholder--and, during the existence of a Carolina Place A/B Change of Control Event, the Majority Class CP Certificateholder--will be entitled, at its expense, to cause the special servicer to obtain a new appraisal meeting the requirements of the series 2005-C3 pooling and servicing agreement in order to establish that such Appraisal Reduction Amount does not exist or should be a lesser amount. COLLECTION ACCOUNT General. The master servicer will be required to establish and maintain a collection account for purposes of holding payments and other collections that it receives with respect to the underlying mortgage loans. That S-137 collection account must be maintained in a manner and with a depository institution that satisfies rating agency standards for securitizations similar to the one involving the offered certificates. The funds held in the master servicer's collection account may be held as cash or invested in Permitted Investments. Any interest or other income earned on funds in the master servicer's collection account will be paid to the master servicer as additional compensation, subject to the limitations set forth in the series 2005-C3 pooling and servicing agreement. Deposits. Under the series 2005-C3 pooling and servicing agreement, the master servicer must deposit or cause to be deposited in its collection account within one business day following receipt of available funds, in the case of payments and other collections on the underlying mortgage loans, or as otherwise required under the series 2005-C3 pooling and servicing agreement, the following payments and collections received or made by or on behalf of the master servicer with respect to the mortgage pool subsequent to the date of initial issuance of the offered certificates, other than monthly debt service payments due on or before the cut-off date, which monthly debt service payments belong to the related mortgage loan seller: o all payments on account of principal on the underlying mortgage loans, including principal prepayments; o all payments on account of interest on the underlying mortgage loans, including Default Interest and Post-ARD Additional Interest; o all prepayment premiums, yield maintenance charges and late payment charges collected with respect to the underlying mortgage loans; o all proceeds received under any hazard, flood, title or other insurance policy that provides coverage with respect to an underlying mortgage loan or the related mortgaged real property, and all proceeds received in connection with the condemnation or the taking by right of eminent domain of a mortgaged real property securing an underlying mortgage loan, in each case to the extent not otherwise required to be applied to the restoration of the real property or released to the related borrower; o any amounts required to be deposited by the master servicer in connection with losses incurred with respect to Permitted Investments of funds held in the collection account; o any amounts required to be deposited by the master servicer or the special servicer in connection with losses resulting from a deductible clause in any blanket or force placed insurance policy maintained by it as described under "--Maintenance of Insurance" below; o any amount required to be transferred to the master servicer's collection account from any REO account maintained by the special servicer; o all amounts received and retained in connection with the liquidation of defaulted mortgage loans in the trust fund by foreclosure or similar proceeding or as otherwise contemplated under "--Fair Value Purchase Option" below; o any amounts paid by a mortgage loan seller in connection with the repurchase or replacement of an underlying mortgage loan as described under "Description of the Mortgage Pool--Assignment of the Mortgage Loans; Repurchases and Substitutions" and "--Representations and Warranties; Repurchases and Substitutions" in this prospectus supplement; S-138 o any amounts paid to purchase or otherwise acquire all the mortgage loans and any REO Properties in the trust fund in connection with the termination of the trust as contemplated under "Description of the Offered Certificates--Termination" in this prospectus supplement; o any amounts paid by the master servicer to cover Prepayment Interest Shortfalls; o any amounts paid by a borrower under an underlying mortgage loan to cover items for which a servicing advance has been previously made and for which the master servicer, the special servicer, the trustee or the fiscal agent, as applicable, has been previously reimbursed out of the collection account; and o any cure payments by the Carolina Place Non-Trust Loan Noteholder; provided that Default Interest and late payment charges will be deposited in the master servicer's collection account only to the extent necessary to reimburse parties to the series 2005-C3 pooling and servicing agreement for, or to offset, certain expenses of the trust (including interest on advances), each as provided in the series 2005-C3 pooling and servicing agreement. Upon its receipt of any of the amounts described in the prior paragraph with respect to any specially serviced mortgage loan in the trust fund, the special servicer is required to promptly remit those amounts to the master servicer for deposit in the master servicer's collection account. Notwithstanding the foregoing, amounts received on the Carolina Place Mortgage Loan will be deposited into a separate account maintained by the master servicer before being transferred to the master servicer's collection account. The foregoing sentence notwithstanding, the master servicer may deposit amounts received on the Carolina Place Mortgage Loan into a sub-account of its collection account, which sub-account for purposes of the discussion in this prospectus supplement is presented as a separate account. Withdrawals. The master servicer may make withdrawals from its collection account for any of the following purposes, which are not listed in any order of priority: 1. to remit to the trustee for deposit in the trustee's payment account (or, in the case of Post-ARD Additional Interest, any other applicable account), as described under "Description of the Offered Certificates--Payment Account" in this prospectus supplement, on the business day preceding each payment date, an amount (the "Master Servicer Remittance Amount") equal to all payments and other collections on the mortgage loans and any REO Properties in the trust fund that are then on deposit in the collection account, exclusive of any portion of those payments and other collections that represents one or more of the following: (a) monthly debt service payments due on a due date subsequent to the end of the related collection period; (b) payments and other collections received after the end of the related collection period; and (c) amounts that are payable or reimbursable from the collection account in accordance with any of clauses 3. through 18. below; 2. to apply amounts held for future distribution on the series 2005-C3 certificates to make advances to cover delinquent scheduled debt service payments, other than balloon payments; S-139 3. to reimburse itself, the special servicer, the trustee or the fiscal agent, as applicable, for any unreimbursed advances made by that party under the series 2005-C3 pooling and servicing agreement, which reimbursement is to be made out of collections on or proceeds from the mortgage loan or REO Property in the trust fund as to which the advance was made; 4. to pay itself earned and unpaid master servicing fees with respect to each mortgage loan in the trust fund, which payment is first to be made out of amounts received on or with respect to that mortgage loan that are allocable as a recovery of interest and then, if the subject underlying mortgage loan and any related REO Property has been liquidated, out of general collections on deposit in the collection account; 5. to pay the special servicer, out of general collections on the mortgage loans and any REO Properties in the trust fund, earned and unpaid special servicing fees with respect to each mortgage loan in the trust fund that is either: (a) a specially serviced mortgage loan; or (b) a mortgage loan as to which the related mortgaged real property has become an REO Property; 6. to pay the special servicer or, if applicable, its predecessor earned and unpaid workout fees and liquidation fees to which it is entitled, which payment is to be made from the sources described under "--Servicing and Other Compensation and Payment of Expenses" above; 7. to reimburse itself, the special servicer, the trustee or the fiscal agent, as applicable, out of general collections on or proceeds from the mortgage loans and any REO Properties in the trust fund, for any unreimbursed advance made by that party under the series 2005-C3 pooling and servicing agreement that has been determined to be a Nonrecoverable Advance; 8. in connection with the reimbursement of any advance as described in clause 3. or 7. above, to pay itself, the special servicer, the trustee or the fiscal agent, as applicable, unpaid interest accrued on that advance, with that payment to be made out of Default Interest and late payment charges received (during the collection period in which that advance was reimbursed) with respect to the particular underlying mortgage loan as to which, or that relates to the mortgaged real property as to which, that advance was made; 9. to pay the cost of inspections by the special servicer of any mortgaged real property that secures a specially serviced mortgage loan or of any REO Property; 10. in connection with the reimbursement of advances as described in clause 3. or 7. above, to pay itself, the special servicer, the trustee or the fiscal agent, as the case may be, out of general collections on or proceeds from the mortgage loans and any REO Properties in the trust fund, any interest accrued and payable on that advance and not otherwise paid or payable under clause 8. above; 11. to pay itself or the special servicer, as applicable, any items of additional servicing compensation on deposit in the collection account as discussed under "--Servicing and Other Compensation and Payment of Expenses--Additional Servicing Compensation" above; 12. subject to the determinations described under "--Servicing and Other Compensation and Payment of Expenses" above, to pay, out of general collections on the mortgage loans and any S-140 REO Properties in the trust fund, any servicing expenses that would, if advanced, be a Nonrecoverable Advance; 13. to pay, out of general collections on the mortgage loans and any REO Properties in the trust fund, for costs and expenses incurred by the trust in connection with environmental assessments of, and/or the remediation of adverse environmental conditions at, any mortgaged real property that secures a defaulted mortgage loan in the trust fund; 14. to pay itself, the special servicer, the trustee, us or any of their or our respective directors, officers, managers, members, employees and agents, as the case may be, out of general collections on or proceeds from the mortgage loans and any REO Properties in the trust fund, any of the fees, expenses, reimbursements or indemnities to which we or any of those other persons or entities are entitled as described under "Description of the Governing Documents--Matters Regarding the Master Servicer, the Special Servicer, the Manager and Us" and "Description of the Governing Documents--Matters Regarding the Trustee" in the accompanying prospectus; 15. to pay, out of general collections on or proceeds from the mortgage loans and any REO Properties in the trust fund, for the costs of various opinions of counsel, the costs of appraisals and other valuations of mortgaged real properties, the cost of recording the series 2005-C3 pooling and servicing agreement, the costs of rating confirmations not otherwise paid by a borrower or other party and expenses properly incurred and fees earned by the trustee in connection with providing tax advice to the special servicer; 16. to pay any other items provided in the series 2005-C3 pooling and servicing agreement as being payable from the collection account; 17. to pay to the person entitled thereto any amounts received on any mortgage loan or REO Property that has been purchased or otherwise removed from the trust; 18. to withdraw amounts deposited in the collection account in error; and 19. to clear and terminate the collection account upon the termination of the series 2005-C3 pooling and servicing agreement. In no event may the master servicer apply amounts otherwise distributable with respect to the class CP-1, CP-2 and CP-3 certificates to pay and/or reimburse Additional Trust Fund Expenses and/or advances attributable to underlying mortgage loans other than the Carolina Place Mortgage Loan. MAINTENANCE OF INSURANCE The master servicer (with respect to mortgage loans in the trust fund) and the special servicer (with respect to REO properties) will be required to use reasonable efforts to cause the related borrower to maintain or, consistent with the Servicing Standard and to the extent that the trust has an insurable interest and the subject coverage, except as discussed below with respect to insurance against terrorist or similar acts, is available at commercially reasonable rates, otherwise cause to be maintained for each mortgaged real property all insurance coverage as is required under the related mortgage instrument; provided that, if and to the extent that any such mortgage instrument 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, the master servicer must exercise such discretion in a manner consistent with the Servicing Standard. The cost of any such insurance coverage obtained by either the master servicer or the special servicer shall be a servicing advance to be paid by the master servicer. S-141 The special servicer must also cause to be maintained for each REO Property in the trust fund no less insurance coverage than was previously required of the borrower under the related underlying mortgage loan. Notwithstanding the foregoing, the master servicer or special servicer, as applicable, will not be required to maintain and will not cause a borrower to be in default with respect to the failure of the related borrower to obtain, all-risk casualty insurance which does not contain any carve-out for terrorist or similar acts, if and only if, the special servicer, in consultation with the series 2005-C3 controlling class representative and, in the case of the Carolina Place Mortgage Loan, subject to the discussion under "--The Series 2005-C3 Controlling Class Representative, the Class CP Representative and the Carolina Place Non-Trust Loan Noteholder--Rights and Powers of the Series 2005-C3 Controlling Class Representative, the Class CP Representative and the Carolina Place Non-Trust Loan Noteholder" above, has determined in accordance with the Servicing Standard that either (a) such insurance is not available at any rate or (b) such insurance is not available at commercially reasonably rates and that such hazards are not at the time commonly insured against for properties similar to the subject mortgaged real property and located in or around the region in which the subject mortgaged real property is located; provided, however, that the series 2005-C3 controlling class representative will not have more than three business days to respond to the special servicer's request for consultation; and provided, further, that upon the special servicer's determination, consistent with the Servicing Standard, that exigent circumstances do not allow the special servicer to consult with the series 2005-C3 controlling class representative, the special servicer will not be required to do so; and provided, further, that, during the period that the special servicer is evaluating such insurance under the series 2005-C3 pooling and servicing agreement, the master servicer will not be liable for any loss related to its failure to require the borrower to maintain terrorism insurance and will not be in default of its obligations hereunder as a result of such failure. If the master servicer or the special servicer obtains and maintains, or causes to be obtained and maintained, a blanket policy insuring against hazard losses on all of the underlying mortgage loans and/or REO Properties that it is required to service and administer or a force placed policy as to any particular such underlying mortgage loan and/or REO Property, then, to the extent such policy (i) is obtained from an insurer meeting the criteria specified in the series 2005-C3 pooling and servicing agreement and (ii) provides protection equivalent to the individual policies otherwise required, the master servicer or the special servicer, as the case may be, will conclusively be deemed to have satisfied its obligation to cause hazard insurance to be maintained on the related mortgaged real properties and/or REO Properties. Such blanket policy or force placed 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, must, if there has not been maintained on the related mortgaged real property or REO Property a hazard insurance policy complying with the requirements of the series 2005-C3 pooling and servicing agreement, and there has 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 or force placed policy because of such deductible clause, to the extent the amount of such deductible exceeds the deductible permitted under the related mortgage loan documents or, if the related mortgage loan documents are silent regarding a permitted deductible, to the extent the amount of the deductible under the blanket policy or force placed policy, as the case may be, exceeds a customary deductible for a particular type of individual policy. FAIR VALUE PURCHASE OPTION Within 60 days after any of the underlying mortgage loans becomes a Defaulted Mortgage Loan, the special servicer must determine the fair value of the subject mortgage loan in accordance with the Servicing Standard. The special servicer will be required to make that determination without taking into account any effect the restrictions on the sale of the subject mortgage loan contained in the series 2005-C3 pooling and servicing agreement may have on the value thereof. In addition, the special servicer will be required to use reasonable efforts promptly to obtain an appraisal with respect to the related mortgaged real property unless it has an appraisal that is less than 12 months old and has no actual knowledge of, or notice of, any event that in the special servicer's judgment would materially affect the validity of such appraisal. The special servicer must make its fair S-142 value determination as soon as reasonably practicable (but in any event within 30 days) after its receipt of such new appraisal, if applicable. The special servicer is permitted to change, from time to time, its determination of the fair value of a Defaulted Mortgage Loan based upon changed circumstances, new information or otherwise, in accordance with the Servicing Standard; and, in any event, the special servicer must update its determination of the fair value at least once every 90 days. The special servicer must notify the trustee, the master servicer, each rating agency and the Majority Controlling Class Certificateholder promptly upon its fair value determination and any adjustment thereto. In determining the fair value of any Defaulted Mortgage Loan, the special servicer will be required to take into account, among other factors, the period and amount of the delinquency on the subject mortgage loan, the occupancy level and physical condition of the related mortgaged real property, the state of the local economy in the area where the related mortgaged real property is located, and the time and expense associated with a purchaser's foreclosing on the related mortgaged real property. In addition, the special servicer will be required to refer to all other relevant information obtained by it or otherwise contained in the mortgage loan file; and, in any event, the special servicer must take account of any change in circumstances regarding the related mortgaged real property known to the special servicer that has occurred subsequent to, and that would, in the special servicer's judgment, materially affect the value of the related mortgaged real property reflected in, the most recent related appraisal. Furthermore, the special servicer will be required to consider all available objective third-party information obtained from generally available sources, as well as information obtained from vendors providing real estate services to the special servicer, concerning the market for distressed real estate loans and the real estate market for the subject property type in the area where the related mortgaged real property is located. The special servicer may conclusively rely on the opinion and reports of independent third parties in making such determination. In the event any of the underlying mortgage loans becomes a Defaulted Mortgage Loan, each of the Majority Controlling Class Certificateholder and the special servicer will have an assignable option (a "Purchase Option") to purchase such Defaulted Mortgage Loan from the trust at a price (the "Option Price") equal to (a) a par purchase price that includes such additional items as are provided for in the series 2005-C3 pooling and servicing agreement, if the special servicer has not yet determined the fair value of the Defaulted Mortgage Loan, or (b) the fair value of the Defaulted Mortgage Loan as determined by the special servicer in the manner described in the preceding paragraph and in accordance with the Servicing Standard, if the special servicer has made such fair value determination. Any holder of a Purchase Option may sell, transfer, assign or otherwise convey its Purchase Option with respect to any Defaulted Mortgage Loan to any party other than the related borrower or an affiliate of the related borrower at any time after the subject mortgage loan becomes a Defaulted Mortgage Loan. The transferor of any Purchase Option must notify the trustee and the master servicer of such transfer, which notice should include the transferee's name, address, telephone number, facsimile number and appropriate contact person(s) and shall be acknowledged in writing by the transferee. In general, the Majority Controlling Class Certificateholder shall have the right to exercise its Purchase Option prior to any exercise of the Purchase Option by any other holder of a Purchase Option, except that, if the Purchase Option is not exercised by the Majority Controlling Class Certificateholder or any assignee thereof within 60 days of an underlying mortgage loan becoming a Defaulted Mortgage Loan, then the special servicer will have the right to exercise its Purchase Option prior to any exercise by the Majority Controlling Class Certificateholder and the special servicer or its assignee may exercise such Purchase Option at any time during the 15-day period immediately following the expiration of such 60-day period. Following the expiration of that 15-day period, the Majority Controlling Class Certificateholder will again have the right to exercise its Purchase Option prior to any exercise of the Purchase Option by the special servicer. If not exercised earlier, the Purchase Option with respect to any Defaulted Mortgage Loan will automatically terminate (a) once the subject mortgage loan is no longer a Defaulted Mortgage Loan, although, if such mortgage loan subsequently becomes a Defaulted Mortgage Loan, the related Purchase Option will again be exercisable, (b) upon the acquisition, by or on behalf of the trust, of title to the related mortgaged real property through foreclosure or deed in lieu of foreclosure, (c) the modification or pay-off, in full or at a discount, of such Defaulted Mortgage Loan in connection with a workout or (d) removal of such Defaulted Mortgage Loan from the trust fund. S-143 The series 2005-C3 pooling and servicing agreement will specify the procedure for exercising a Purchase Option. If the Carolina Place Mortgage Loan becomes a Defaulted Mortgage Loan, then (for 90 days thereafter or, if sooner, until the end of the corresponding Purchase Option described above), the Majority Class CP Certificateholder will be entitled to purchase that mortgage loan at the applicable Purchase Price (as defined under "Description of the Mortgage Pool--Assignment of the Mortgage Loans; Repurchases and Substitutions" in this prospectus supplement, but including the liquidation fee if purchased more than 60 days after such option is first exercisable) (and such right will be superior to the corresponding Purchase Option described above). If the special servicer or the Majority Controlling Class Certificateholder, or any of their respective affiliates, is the person expected to acquire any Defaulted Mortgage Loan, then the trustee will be required to determine as soon as reasonably practicable (and, in any event, within 30 days) after the trustee has received the applicable written notice, whether the Option Price represents fair value for the Defaulted Mortgage Loan; except that, if the special servicer is then in the process of obtaining a new appraisal with respect to the related mortgaged real property, then the trustee will make its fair value determination with respect to the subject mortgage loan as soon as reasonably practicable (but in any event within 30 days) after the trustee's receipt of such new appraisal. Such fair value determination shall be made in accordance with the trustee's good faith reasonable judgment. In determining the fair value of any Defaulted Mortgage Loan, the trustee will be required to rely on the opinion and reports of independent third parties in making such determination and, further, may rely on the most current appraisal obtained for the related mortgaged real property pursuant to this Agreement. The reasonable costs of all appraisals, inspection reports and broker opinions of value, reasonably incurred by the trustee or any such third party pursuant to this subsection are to be advanced by the master servicer and shall constitute, and be reimbursable as, servicing advances. Unless and until the Purchase Option with respect to a Defaulted Mortgage Loan is exercised, the special servicer will be required to pursue such other resolution strategies available under the series 2005-C3 pooling and servicing agreement with respect to such Defaulted Mortgage Loan, including, without limitation, workout and foreclosure, as the special servicer may deem appropriate consistent with the Servicing Standard. The special servicer will not be permitted to sell the Defaulted Mortgage Loan other than in connection with the exercise of the related Purchase Option or in connection with a repurchase by the applicable mortgage loan seller as described under "Description of the Mortgage Pool--Assignment of the Mortgage Loans; Repurchases" and "--Representations and Warranties; Repurchases and Substitutions" in this prospectus supplement. REALIZATION UPON DEFAULTED MORTGAGE LOANS If a default on an underlying mortgage loan has occurred, then, subject to the discussion under "--The Series 2005-C3 Controlling Class Representative, the Class CP Representative and the Carolina Place Non-Trust Loan Noteholder" above, the special servicer may, on behalf of the trust, take any of the following actions: o work out the mortgage loan; o institute foreclosure proceedings; o exercise any power of sale contained in the related mortgage instrument; o obtain a deed in lieu of foreclosure; and/or o otherwise acquire title to the corresponding mortgaged real property, by operation of law or otherwise. S-144 The special servicer may not, however, initiate foreclosure proceedings, acquire title to any mortgaged real property or take any other action with respect to any mortgaged real property that would cause the trustee, for the benefit of the series 2005-C3 certificateholders, or any other specified person to be considered to hold title to, to be a "mortgagee-in-possession" of, or to be an "owner" or an "operator" of the particular real property within the meaning of various federal environmental laws, unless: o the special servicer has, within the prior six months, received an environmental assessment report prepared by a person who regularly conducts environmental audits, which report will be an expense of the trust; and o either-- 1. the report indicates that-- (a) the particular real property is in compliance with applicable environmental laws and regulations, and (b) there are no circumstances or conditions present at the particular real property that have resulted in any contamination for which investigation, testing, monitoring, containment, clean-up or remediation could be required under any applicable environmental laws and regulations; or 2. the special servicer, based on the information set forth in the report, determines that taking the actions necessary to bring the particular real property into compliance with applicable environmental laws and regulations and/or taking any of the other actions contemplated by clause 1. above, would maximize the recovery for the series 2005-C3 certificateholders, as a collective whole, on a present value basis, than not taking those actions. See, however, "--The Series 2005-C3 Controlling Class Representative, the Class CP Representative and the Carolina Place Non-Trust Loan Noteholder--Rights and Powers of the Series 2005-C3 Controlling Class Representative, the Class CP Representative and the Carolina Place Non-Trust Loan Noteholder" above. The cost of any environmental testing, as well as the cost of any remedial, corrective or other further action contemplated by the second bullet of the second paragraph of this "--Realization Upon Defaulted Mortgage Loans" section, will generally be payable directly out of the master servicer's collection account. If neither of the conditions in clauses 1. and 2. of the second bullet of the second paragraph of this "--Realization Upon Defaulted Mortgage Loans" section has been satisfied with respect to any mortgaged real property securing an underlying mortgage loan, then the special servicer may, subject to the discussion under "--The Series 2005-C3 Controlling Class Representative, the Class CP Representative and the Carolina Place Non-Trust Loan Noteholder" above, take those actions as are in accordance with the Servicing Standard, other than proceeding against the contaminated mortgaged real property. In connection with the foregoing, when the special servicer determines it to be appropriate, it may, subject to the discussion under "--The Series 2005-C3 Controlling Class Representative, the Class CP Representative and the Carolina Place Non-Trust Loan Noteholder" above, on behalf of the trust, release all or a portion of the related mortgaged real property from the lien of the related mortgage instrument. If liquidation proceeds collected with respect to a defaulted mortgage loan in the trust fund are less than the outstanding principal balance of the defaulted mortgage loan, together with accrued interest on and reimbursable expenses incurred by the special servicer, the master servicer and/or any other applicable party in S-145 connection with the defaulted mortgage loan, then the trust will realize a loss in the amount of the shortfall. The special servicer, the master servicer, the trustee and/or the fiscal agent will be entitled to reimbursement out of the liquidation proceeds, insurance proceeds and condemnation proceeds recovered on any defaulted mortgage loan, prior to the payment of those proceeds to the series 2005-C3 certificateholders, for: o any and all amounts that represent unpaid servicing compensation with respect to the mortgage loan; o any unreimbursed servicing expenses and advances incurred with respect to the mortgage loan; and o any unreimbursed advances of delinquent payments made with respect to the mortgage loan. In addition, amounts otherwise payable on the series 2005-C3 certificates may be further reduced by interest payable to the master servicer, the special servicer, the trustee and/or the fiscal agent on servicing expenses and advances and on monthly debt service advances. REO PROPERTIES If title to any mortgaged real property is acquired by the special servicer on behalf of the trust, the special servicer will be required to sell that property not later than the end of the third taxable year following the year of acquisition, unless: o the IRS grants an extension of time to sell the property; or o the special servicer obtains an opinion of independent counsel generally to the effect that the holding of the property subsequent to the end of the third year following the year in which the acquisition occurred will not result in the imposition of a tax on the trust assets or cause any REMIC created under the series 2005-C3 pooling and servicing agreement to fail to qualify as such under the Internal Revenue Code. Subject to the foregoing, the special servicer will generally be required to solicit cash offers for any REO Property held by the trust in a commercially reasonable manner. Neither the trustee nor any of its affiliates may bid for or purchase from the trust any REO Property. Regardless of whether the special servicer applies for or is granted an extension of time to sell any REO Property, the special servicer must act in accordance with the Servicing Standard to liquidate the property on a timely basis. If an extension is granted or opinion given, the special servicer must sell the subject REO Property within the period specified in the extension or opinion, as the case may be. Sales of REO Properties will be subject to the approval of the series 2005-C3 controlling class representative, the Carolina Place Non-Trust Loan Noteholder or the class CP representative, as applicable, as and to the extent described under "--The Series 2005-C3 Controlling Class Representative, the Class CP Representative and the Carolina Place Non-Trust Loan Noteholder" above. The special servicer may retain an independent contractor to operate and manage any REO Property held by the trust. S-146 In general, the special servicer or an independent contractor employed by the special servicer at the expense of the trust will be obligated to operate and manage any REO Property held by the trust in a manner that: o maintains its status as foreclosure property under the REMIC provisions of the Internal Revenue Code; and o would, to the extent commercially feasible and consistent with the preceding bullet, maximize net after-tax revenues received from that property. The special servicer must review the operation of each REO Property held by the trust and consult with the trustee, or any person appointed by the trustee to act as tax administrator, to determine the trust's federal income tax reporting position with respect to the income it is anticipated that the trust would derive from the property. The special servicer's determination as to how each REO Property is to be managed is to be based on the Servicing Standard. The special servicer could determine that it would not be consistent with the Servicing Standard to manage and operate the property in a manner that would avoid the imposition of: o a tax on net income from foreclosure property, within the meaning of section 860G(c) of the Internal Revenue Code; or o a tax on prohibited transactions under section 860F of the Internal Revenue Code. To the extent that income the trust receives from an REO Property is subject to: o a tax on net income from foreclosure property, that income would be subject to federal tax at the highest marginal corporate tax rate, which is currently 35%; or o a tax on prohibited transactions, that income would be subject to federal tax at a 100% rate. The determination as to whether income from an REO Property held by the trust would be subject to a tax will depend on the specific facts and circumstances relating to the management and operation of each REO Property. Generally, income from an REO Property that is directly operated by the special servicer would be apportioned and classified as service or non-service income. The service portion of the income could be subject to federal tax either at the highest marginal corporate tax rate or at the 100% rate. The non-service portion of the income could be subject to federal tax at the highest marginal corporate tax rate or, although it appears unlikely, at the 100% rate. Any tax imposed on the trust's income from an REO Property would reduce the amount available for payment to the series 2005-C3 certificateholders (exclusive of the class A-MFL certificateholders) and the class A-MFL REMIC II regular interest. See "Federal Income Tax Consequences" in this prospectus supplement and in the accompanying prospectus. The reasonable out-of-pocket costs and expenses of obtaining professional tax advice in connection with the foregoing will be payable out of the master servicer's collection account. The special servicer will be required to segregate and hold all funds collected and received in connection with any REO Property held by the trust separate and apart from its own funds and general assets. If an REO Property is acquired by the trust, the special servicer will be required to establish and maintain an account for the retention of revenues and other proceeds derived from that property. That REO account must be maintained in a manner and with a depository institution that satisfies rating agency standards for securitizations similar to the one involving the offered certificates. The special servicer will be required to deposit, or cause to be deposited, in its REO account, within two business days after receipt, all net income, insurance proceeds, condemnation proceeds and liquidation proceeds received with respect to each REO Property held by the trust. The funds held in this REO account may be held as cash or invested in Permitted Investments. Any interest or other income earned on funds in the special servicer's REO account will be payable to the special servicer, subject to the limitations described in the series 2005-C3 pooling and servicing agreement. S-147 The special servicer will be required to withdraw from its REO account funds necessary for the proper operation, management, leasing, maintenance and disposition of any REO Property held by the trust, but only to the extent of amounts on deposit in the account relating to that particular REO Property. Promptly following the end of each collection period, the special servicer will be required to withdraw from the REO account and deposit, or deliver to the master servicer for deposit, into the master servicer's collection account the total of all amounts received with respect to each REO Property held by the trust during that collection period, net of: o any withdrawals made out of those amounts as described in the preceding sentence; and o any portion of those amounts that may be retained as reserves as described in the next sentence. The special servicer may, subject to the limitations described in the series 2005-C3 pooling and servicing agreement, retain in its REO account the portion of the proceeds and collections on any REO Property held by the trust as may be necessary to maintain a reserve of sufficient funds for the proper operation, management, leasing, maintenance and disposition of that property, including the creation of a reasonable reserve for repairs, replacements, necessary capital improvements and other related expenses. The special servicer will be required to keep and maintain separate records, on a property-by-property basis, for the purpose of accounting for all deposits to, and withdrawals from, its REO account. INSPECTIONS; COLLECTION OF OPERATING INFORMATION The special servicer is required to perform or cause to be performed a physical inspection of the related mortgaged real property as soon as practicable after any of the underlying mortgage loans becomes specially serviced or the related debt service coverage ratio is below 1.0:1; and the expense of that inspection will be payable first, out of Default Interest and late payment charges received with respect to the related underlying mortgage loan in the collection period during which such inspection related expenses were incurred, then as an Additional Trust Fund Expense. In addition, beginning in 2006, with respect to each mortgaged real property securing an underlying mortgage loan with a principal balance (or allocated loan amount) at the time of such inspection of at least $2,000,000, the master servicer (with respect to each such mortgaged real property securing an underlying mortgage loan other than a specially serviced mortgage loan) and the special servicer (with respect to each mortgaged real property securing a specially serviced mortgage loan in the trust fund) is required at its expense to inspect or cause to be inspected the related mortgaged real property every calendar year, and with respect to each mortgaged real property securing an underlying mortgage loan with a principal balance (or allocated loan amount) at the time of such inspection of less than $2,000,000 once every other calendar year, provided that the master servicer is not obligated to inspect any mortgaged real property that has been inspected by the special servicer in the previous six months. The special servicer and the master servicer each will be required to prepare a written report of each such inspection performed by it that describes the condition of the subject mortgaged real property and that specifies the existence with respect thereto of any sale, transfer or abandonment of the subject mortgaged real property, any material change in its condition or value or any visible waste committed on it. The special servicer or the master servicer, as applicable, is also required to endeavor to collect from the related borrower and review the quarterly and annual operating statements of each mortgaged real property and to cause annual operating statements to be prepared for each REO Property. Generally, the mortgage loans that we intend to include in the trust fund require the related borrower to deliver an annual property operating statement. However, there can be no assurance that any operating statements required to be delivered will in fact be delivered, nor is the master servicer or special servicer likely to have any practical means of compelling such delivery in the case of an otherwise performing mortgage loan. S-148 Copies of the inspection reports and operating statements referred to above are required to be available for review by series 2005-C3 certificateholders during normal business hours at the offices of the special servicer or the master servicer, as applicable. See "Description of the Offered Certificates--Reports to Certificateholders, Available Information" in this prospectus supplement. EVIDENCE AS TO COMPLIANCE On or before May 1 (or such earlier date as may be provided for under the series 2005-C3 pooling and servicing agreement) of each year, beginning in 2006, each of the master servicer and the special servicer must: o at its expense, cause a firm of independent public accountants, that is a member of the American Institute of Certified Public Accountants to furnish a statement to the trustee, among others, to the effect that: 1. the firm has examined the servicing operations of the master servicer or the special servicer, as the case may be, for the previous year or the portion of that year during which the series 2005-C3 certificates were outstanding; and 2. on the basis of that examination, conducted substantially in compliance with USAP, the firm confirms that the master servicer or the special servicer, as the case may be, has complied with the minimum servicing standards identified in USAP, in all material respects, except for the significant exceptions or errors in records that, in the opinion of the firm, USAP requires it to report; and o deliver to the trustee, among others, a statement signed by an officer of the master servicer or the special servicer, as the case may be, to the effect that, to the knowledge of that officer, the master servicer or the special servicer, as the case may be, has fulfilled its obligations under the series 2005-C3 pooling and servicing agreement in all material respects throughout the preceding calendar year or the portion of that year during which the series 2005-C3 certificates were outstanding. In rendering its report, the accounting firm referred to in the first bullet of the prior sentence may, as to matters relating to the direct servicing of commercial and multifamily mortgage loans by sub-servicers, rely upon comparable reports of firms of independent certified public accountants rendered on the basis of examinations conducted in accordance with substantially the same standards, within one year of the report, with respect to those sub-servicers. EVENTS OF DEFAULT Each of the following events, circumstances and conditions will be considered events of default under the series 2005-C3 pooling and servicing agreement: o the master servicer fails to deposit into its collection account any amount required to be so deposited, and that failure continues unremedied for one business day following the date on which the deposit or remittance was required to be made; o the master servicer fails to remit to the trustee for deposit in the trustee's payment account any amount (other than P&I advances) required to be so remitted, and that failure continues unremedied until 10:00 a.m., New York City time, on the applicable payment date; S-149 o any failure by the special servicer to timely deposit into its REO account or to timely deposit into, or to timely remit to the master servicer for deposit into, the master servicer's collection account, any amount required to be so deposited or remitted; o the master servicer fails to timely make any servicing advance required to be made by it under the series 2005-C3 pooling and servicing agreement, and that failure continues unremedied for five business days following the date on which notice of such failure has been given to the master servicer by the trustee; o 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 agreements under the series 2005-C3 pooling and servicing agreement, which failure continues unremedied for 30 days after the date on which written notice of that failure, requiring the same to be remedied, has been given to the master servicer or the special servicer, as the case may be, by any other party to the series 2005-C3 pooling and servicing agreement or to the master servicer or the special servicer, as the case may be (with a copy to each other party to the series 2005-C3 pooling and servicing agreement), by the series 2005-C3 certificateholders entitled to at least 25% of the series 2005-C3 voting rights; provided, however, that with respect to any such failure which is not curable within such 30-day period, the master servicer or the special servicer, as the case may be, will have an additional cure period of 30 days to effect the cure thereof so long as the master servicer or the special servicer, as the case may be, has commenced to cure that failure within the initial 30-day period and has provided the trustee with an officer's certificate certifying that it has diligently pursued, and is diligently continuing to pursue, a full cure; o any breach on the part of the master servicer or the special servicer of any representation or warranty contained in the series 2005-C3 pooling and servicing agreement that materially and adversely affects the interests of any class of series 2005-C3 certificateholders, which breach continues unremedied for a period of 30 days after the date on which notice of that breach, requiring the same to be remedied, has been given to the master servicer or the special servicer, as the case may be, by any other party to the series 2005-C3 pooling and servicing agreement or to the master servicer or the special servicer, as the case may be (with a copy to each other party to the series 2005-C3 pooling and servicing agreement), by the series 2005-C3 certificateholders entitled to at least 25% of the series 2005-C3 voting rights; provided, however, that with respect to any such breach which is not curable within such 30-day period, the master servicer or the special servicer, as the case may be, will have an additional cure period of 30 days so long as the master servicer or the special servicer, as the case may be, has commenced to cure within the initial 30-day period and has provided the trustee with an officer's certificate certifying that it has diligently pursued, and is diligently continuing to pursue, a full cure; o a decree or order of a court, agency or supervisory authority having jurisdiction in an involuntary case under any present or future bankruptcy, insolvency or similar law for the appointment of a conservator, receiver, liquidator, trustee or similar official in any bankruptcy, insolvency, readjustment of debt, marshalling of assets and liabilities or similar proceedings, or for the winding-up or liquidation of its affairs, is entered against the master servicer or the special servicer and the decree or order remains in force undischarged or unstayed for a period of 60 days; o the master servicer or special servicer consents to the appointment of a conservator, receiver, liquidator, trustee or similar official in any bankruptcy, insolvency, readjustment of debt, marshalling of assets and liabilities or similar proceedings of or relating to it or of or relating to all or substantially all of its property; S-150 o the master servicer or special servicer admits in writing its inability to pay its debts as they become due or takes various other actions indicating its insolvency or inability to pay its obligations; o the consolidated net worth of the master servicer and of its direct or indirect parent, determined in accordance with generally accepted accounting principles, declines below $15,000,000; o the master servicer or the special servicer, as the case may be, receives actual knowledge that Moody's has (a) qualified, downgraded or withdrawn its rating or ratings of one or more classes of series 2005-C3 certificates or (b) placed one or more classes of series 2005-C3 certificates on "watch status" in contemplation of possible rating downgrade or withdrawal (and such "watch status" placement shall not have been withdrawn by Moody's within 60 days of the date that the master servicer or the special servicer obtained such actual knowledge), and, in the case of either clause (a) or (b), has cited servicing concerns with the master servicer or the special servicer, as the case may be, as the sole or material factor in such rating action; o the master servicer is removed from S&P's approved master servicer list, or the special servicer is removed from S&P's approved special servicer list, and that master servicer or special servicer, as the case may be, is not reinstated to that list within 60 days after its removal from the applicable list; o the master servicer fails to remit to the trustee for deposit into the trustee's payment account, on the applicable date in any calendar month, the full amount of monthly debt service advances required to be made on that date, which failure continues unremedied until 10:00 a.m. New York City time on the next business day; or o the special servicer fails to be rated at least "CSS2" by Fitch, Inc. The series 2005-C3 pooling and servicing agreement may provide that the Caroline Place Non-Trust Loan Noteholder may have the right, similar to those of series 2005-C3 certificateholders entitled to not less than 25% of the voting rights for the series 2005-C3 certificates, to notify the master servicer or the special servicer of the defaults and breaches described in the fifth and sixth bullets above, to the extent those defaults or breaches relate to the Carolina Place Non-Trust Loan. Additionally, the series 2005-C3 pooling and servicing agreement may provide for additional events of default, including those that relate solely to the Carolina Place Non-Trust Loan. RIGHTS UPON EVENT OF DEFAULT If an event of default described above under "--Events of Default" occurs with respect to the master servicer or the special servicer and remains unremedied, the trustee will be authorized, and at the direction of the series 2005-C3 certificateholders entitled to not less than 25% of the series 2005-C3 voting rights, the trustee will be required, to terminate all of the rights and obligations of the defaulting party under the series 2005-C3 pooling and servicing agreement and in and to the trust assets other than any rights the defaulting party may have as a series 2005-C3 certificateholder; provided that the terminated defaulting party will continue to be entitled to receive all amounts due and owing to it in accordance with the terms of the series 2005-C3 pooling and servicing agreement and will continue to be entitled to the benefits any provisions for reimbursement or indemnity as and to the extent provided in the series 2005-C3 pooling and servicing agreement. Upon any termination, the trustee must either: o succeed to all of the responsibilities, duties and liabilities of the master servicer or special servicer, as the case may be, under the series 2005-C3 pooling and servicing agreement; or S-151 o appoint an established mortgage loan servicing institution to act as successor master servicer or special servicer, as the case may be, under the series 2005-C3 pooling and servicing agreement. The holders of series 2005-C3 certificates entitled to at least 51% of the series 2005-C3 voting rights may require the trustee to appoint an established mortgage loan servicing institution to act as successor master servicer or special servicer, as the case may be, under the series 2005-C3 pooling and servicing agreement, rather than have the trustee act as that successor. Notwithstanding the foregoing discussion in this "--Rights Upon Event of Default" section, if the master servicer is terminated under the circumstances described above because of the occurrence of any of the events of default described in the eleventh and twelfth bullets under "--Events of Default" above, the master servicer will have the right for a period of 45 days, at its expense, to sell its master servicing rights with respect to the mortgage pool to a master servicer whose appointment Moody's and S&P have each confirmed will not result in a qualification, downgrade or withdrawal of any of the then current ratings of the series 2005-C3 certificates. In general, the series 2005-C3 certificateholders entitled to at least 66 2/3% of the series 2005-C3 voting rights allocated to the classes of series 2005-C3 certificates affected by any event of default may waive the event of default. However, some events of default may only be waived by all of the holders of the series 2005-C3 certificates. Upon any waiver of an event of default, the event of default will cease to exist and will be deemed to have been remedied for every purpose under the series 2005-C3 pooling and servicing agreement. The series 2005-C3 pooling and servicing agreement may provide that the applicable primary servicer or the special servicer may be terminated and replaced solely with respect to the Carolina Place Loan Pair and no other mortgage loan in the trust fund in circumstances where a default of the master servicer or the special servicer affects the Carolina Place Non-Trust Loan. If the special servicer for the Carolina Place Loan Pair is different from the special servicer for the rest of the mortgage pool, then all references to the special servicer in this prospectus supplement or the accompanying prospectus are intended to mean the applicable special servicer or both special servicers together, as the context may require. No series 2005-C3 certificateholder will have the right under the series 2005-C3 pooling and servicing agreement to institute any suit, action or proceeding with respect to that agreement or any underlying mortgage loan unless, with respect to any suit, action or proceeding upon or under or with respect to the series 2005-C3 pooling and servicing agreement: o that holder previously has given to the trustee written notice of default; o except in the case of a default by the trustee, series 2005-C3 certificateholders entitled to not less than 25% of the series 2005-C3 voting rights have made written request upon the trustee to institute that suit, action or proceeding in its own name as trustee under the series 2005-C3 pooling and servicing agreement and have offered to the trustee such reasonable indemnity as it may require; and o the trustee for 60 days has neglected or refused to institute any such suit, action or proceeding, as the case may be. The trustee, however, will be under no obligation to exercise any of the trusts or powers vested in it by the series 2005-C3 pooling and servicing agreement or to make any investigation of matters arising thereunder or to institute, conduct or defend any litigation thereunder or in relation thereto at the request, order or direction of any of the series 2005-C3 certificateholders, unless in the trustee's opinion, those series 2005-C3 certificateholders have offered to the trustee reasonable security or indemnity against the costs, expenses and liabilities which may be incurred by the trustee as a result. S-152 DESCRIPTION OF THE OFFERED CERTIFICATES GENERAL The series 2005-C3 certificates will be issued, on or about June 29, 2005, under the series 2005-C3 pooling and servicing agreement. They will represent the entire beneficial ownership interest of the trust. The assets of the trust will include, among other things: o the underlying mortgage loans; o any and all payments under and proceeds of the underlying mortgage loans received after the cut-off date, exclusive of payments of principal, interest and other amounts due on or before that date; o the loan documents for the underlying mortgage loans required to be delivered to the trustee by the respective mortgage loan sellers; o our rights under each of the mortgage loan purchase agreements between us and the respective mortgage loan sellers; o any REO Properties acquired by the special servicer on behalf of the trust with respect to defaulted mortgage loans; o those funds or assets as from time to time are deposited in the master servicer's collection account, the special servicer's REO account, the payment account maintained by the trustee as described under "--Payment Account" below, the floating rate account maintained by the trustee as described under "--Floating Rate Account" below or the interest reserve account maintained by the trustee as described under "--Interest Reserve Account" below. The series 2005-C3 certificates will include the following classes: o the A-1, A-2, A-3, A-SB, A-4, A-1A, A-MFL, A-MFX, A-J, B, C and D classes, which are the classes of series 2005-C3 certificates that are offered by this prospectus supplement, and o the E, F, G, H, J, K, L, M, N, O, P, XC, XP, CP-1, CP-2, CP-3, R and Y classes, which are the classes of series 2005-C3 certificates that are not offered by this prospectus supplement. The class A-MFL certificates will represent undivided interests in a grantor trust, the assets of which will include, among other things, an uncertificated REMIC regular interest, designated as the class A-MFL REMIC II regular interest, and the rights and obligations under a swap agreement. For so long as it is in effect, that swap agreement will provide, among other things, that amounts payable as interest by the trust with respect to the class A-MFL REMIC II regular interest will be exchanged for amounts payable as interest by the swap counterparty under the swap agreement, with payments to be made between the trust and the swap counterparty on a net basis. The swap agreement will provide for the calculation of interest at a LIBOR-based rate accruing of interest on a notional amount equal to the total principal balance of the class A-MFL certificates outstanding from time to time. The total principal balance of the class A-MFL certificates at any time will equal the total principal balance of the class A-MFL REMIC II regular interest. See "Description of the Swap Agreement" in this prospectus supplement. The class A-1, A-2, A-3, A-SB, A-4, A-1A, A-MFL, A-MFX, A-J, B, C, D, E, F, G, H, J, K, L, M, N, O and P certificates are the series 2005-C3 certificates that will have principal balances and are sometimes referred to in this prospectus supplement as the series 2005-C3 principal balance certificates. The principal balance of any S-153 of these certificates will represent the total payments of principal to which the holder of the certificate is entitled over time out of payments, or advances in lieu of payments, and other collections on the assets of the trust. Accordingly, on each payment date, the principal balance of each of these certificates will be permanently reduced by any payments of principal actually made with respect to the certificate on that payment date. See "--Payments" below. On any particular payment date, the principal balance of each of these certificates may also be reduced, without any corresponding payment, in connection with Realized Losses on the underlying mortgage loans and Additional Trust Fund Expenses. See "--Reductions of Certificate Principal Balances in Connection with Realized Losses and Additional Trust Fund Expenses" below. On any particular payment date, the total principal balance of a class of series 2005-C3 principal balance certificates may be increased by an amount equal to any Mortgage Deferred Interest allocated to that class in reduction of the interest payable thereon on such payment date. Notwithstanding the foregoing, in the case of the class A-MFL certificates, any applicable distributions of principal on any given payment date will first be allocated in reduction of the total principal balance of the class A-MFL REMIC II regular interest before actually being distributed to the class A-MFL certificateholders. In addition, any reduction in the total principal balance of the class A-MFL certificates on any given payment date, without a corresponding distribution, in connection with losses on the underlying mortgage loans and default-related and otherwise unanticipated trust fund expenses will be made in response to a corresponding reduction made in the total principal balance of the class A-MFL REMIC II regular interest in connection with those losses and expenses. Furthermore, on any particular payment date, the total principal balance of the class A-MFL REMIC II regular interest (and, accordingly, the total principal balance of the class A-MFL certificates) may be increased by an amount equal to any Mortgage Deferred Interest allocated to that REMIC II regular interest in reduction of the interest payable thereon on such payment date. The class XC and XP certificates will not have principal balances and are sometimes referred to as the series 2005-C3 interest-only certificates. For purposes of calculating the amount of accrued interest, each class of series 2005-C3 interest-only certificates will have a total notional amount. The total notional amount of the class XP certificates from time to time will equal the sum of the components thereof set forth on Annex F to this prospectus supplement. Each of those components of the total notional amount of the class XP certificates will relate to a particular class of series 2005-C3 principal balance certificates and, at any time during any of the periods specified on Annex F to this prospectus supplement, will equal the lesser of (a) the specific amount identified in the table on Annex F to this prospectus supplement with respect to the related class of series 2005-C3 principal balance certificates for that period and (b) the then total principal balance of the related class of series 2005-C3 principal balance certificates. Notwithstanding anything to the contrary in this prospectus supplement, the total notional amount of the class XP certificates will be $0 following the payment date in June 2012. The total notional amount of the class XC certificates will be equal to the total principal balance of the class A-1, A-2, A-3, A-SB, A-4, A-1A, A-MFL, A-MFX, A-J, B, C, D, E, F, G, H, J, K, L, M, N, O and P certificates outstanding from time to time. In general, the total principal balance of each such class of series 2005-C3 principal balance certificates will constitute a separate component of the total notional amount of the class XC certificates. However, if a portion, but not all, of the total principal balance of any particular such class of series 2005-C3 principal balance certificates is identified on Annex F to this prospectus supplement as being part of the total notional amount of the class XP certificates at any time prior to the payment date in June 2012, then that identified portion of such total principal balance will represent one separate component of the then total notional amount of the class XC certificates, and the remaining portion of such total principal balance will represent another separate component of the then total notional amount of the class XC certificates. The class R and Y certificates will not have principal balances or notional amounts. S-154 In general, principal balances and notional amounts will be reported on a class-by-class basis. In order to determine the principal balance of any of your offered certificates from time to time, you may multiply the original principal balance of that certificate as of the date of initial issuance of the offered certificates, as specified on the face of that certificate, by the then-applicable certificate factor for the relevant class. The certificate factor for any class of offered certificates, as of any date of determination, will equal a fraction, expressed as a percentage, the numerator of which will be the then outstanding total principal balance of that class, and the denominator of which will be the original total principal balance of that class. Certificate factors will be reported monthly in the trustee's payment date statement. REGISTRATION AND DENOMINATIONS General. The offered certificates will be issued in book-entry form in original denominations of $10,000 initial principal balance and in any whole dollar denomination in excess of $10,000. Each class of offered certificates will initially be represented by one or more certificates registered in the name of Cede & Co., as nominee of The Depository Trust Company. You will not be entitled to receive an offered certificate issued in fully registered, certificated form, except under the limited circumstances described in the accompanying prospectus under "Description of the Certificates--Book-Entry Registration". For so long as any class of offered certificates is held in book-entry form-- o all references in this prospectus supplement to actions by holders of those certificates will refer to actions taken by DTC upon instructions received from beneficial owners of those certificates through its participating organizations, and o all references in this prospectus supplement to payments, notices, reports, statements and other information made or sent to holders of those certificates will refer to payments, notices, reports and statements made or sent to DTC or Cede & Co., as the registered holder of those certificates, for payment or transmittal, as applicable, to the beneficial owners of those certificates through its participating organizations in accordance with DTC's procedures. The trustee will initially serve as registrar for purposes of providing for the registration of the offered certificates and, if and to the extent physical certificates are issued to the actual beneficial owners of any of the offered certificates, the registration of transfers and exchanges of those certificates. DTC, Euroclear and Clearstream. You will hold your certificates through DTC, in the United States, or Clearstream Banking Luxembourg or Euroclear Bank S.A./N.V., as operator of the Euroclear System, in Europe, if you are a participating organization of the applicable system, or indirectly through organizations that are participants in the applicable system. Clearstream and Euroclear will hold omnibus positions on behalf of organizations that are participants in either of these systems, through customers' securities accounts in Clearstream's or Euroclear's names on the books of their respective depositaries. Those depositaries will, in turn, hold those positions in customers' securities accounts in the depositaries' names on the books of DTC. For a discussion of DTC, Euroclear and Clearstream, see "Description of the Certificates--Book-Entry Registration--DTC, Euroclear and Clearstream" in the accompanying prospectus. Transfers between participants in DTC will occur in accordance with DTC's rules. Transfers between participants in Clearstream and Euroclear will occur in accordance with their applicable rules and operating procedures. Cross-market transfers between persons holding directly or indirectly through DTC, on the one hand, and directly or indirectly through participants in Clearstream or Euroclear, on the other, will be accomplished through DTC in accordance with DTC rules on behalf of the relevant European international clearing system by its depositary. See "Description of the Certificates--Book-Entry Registration--Holding and Transferring Book-Entry Certificates" in the accompanying prospectus. For additional information regarding clearance and S-155 settlement procedures for the offered certificates and for information with respect to tax documentation procedures relating to the offered certificates, see Annex F hereto. PAYMENT ACCOUNT General. The trustee must establish and maintain an account in which it will hold funds pending their payment on the series 2005-C3 certificates (exclusive of the class A-MFL certificates) and the class A-MFL REMIC II regular interest and from which it will make those payments. That payment account must be maintained in a manner and with a depository institution that satisfies the criteria set forth in the series 2005-C3 pooling and servicing agreement. Any funds in the trustee's payment account may, at the trustee's risk, be invested in Permitted Investments, and any interest or other income earned on those funds will be paid to the trustee as additional compensation, subject to the limitations set forth in the series 2005-C3 pooling and servicing agreement. Deposits. On the business day prior to each payment date, the master servicer will be required to remit to the trustee for deposit in the payment account an amount equal to the sum of the following: o the applicable Master Servicer Remittance Amount, exclusive of any portion thereof that represents Post-ARD Additional Interest (which will be remitted to the trustee for deposit in an account relating solely to Post-ARD Additional Interest); o the aggregate amount of any advances of delinquent monthly debt service payments required to be made by the master servicer with respect to the underlying mortgage loans for that payment date; o the aggregate amount transferred from the special servicer's REO account to the collection account with respect to the trust's interest in any REO Properties on or prior to such date but after the end of the related collection period; and o the aggregate amount deposited by the master servicer in the collection account for such payment date in connection with Prepayment Interest Shortfalls. In addition, for each payment date occurring in March, and for the final payment date if the final payment date occurs in February or, if such year is not a leap year, in January, the trustee must, on or before that payment date, transfer from its interest reserve account to its payment account the aggregate of the interest reserve amounts in respect of each underlying mortgage loan that accrues interest on an Actual/360 Basis. See "--Interest Reserve Account" and "--Advances of Delinquent Monthly Debt Service Payments" below and "Servicing of the Underlying Mortgage Loans--Collection Account" and "--Servicing and Other Compensation and Payment of Expenses" in this prospectus supplement. Withdrawals. The trustee may from time to time make withdrawals from its payment account for any of the following purposes: o to pay itself the monthly trustee fee, which is described under "--The Trustee" below, and investment earnings on Permitted Investments of funds in the payment account; o to pay itself or any of various related persons and entities any reimbursements or indemnities to which they are entitled, as described under "Description of the Governing Documents--Matters Regarding the Trustee" in the accompanying prospectus; S-156 o to pay for various opinions of counsel required to be obtained in connection with any amendments to the series 2005-C3 pooling and servicing agreement and the administration of the trust; o to pay any federal, state and local taxes imposed on the trust, its assets and/or transactions, together with all incidental costs and expenses, that are required to be borne by the trust as described under "Federal Income Tax Consequences--REMICs--Prohibited Transactions Tax and Other Taxes" in the accompanying prospectus and "Servicing of the Underlying Mortgage Loans--REO Properties" in this prospectus supplement; o to transfer from its payment account to its interest reserve account interest reserve amounts with respect to those mortgage loans that accrue interest on an Actual/360 Basis, as and when described under "--Interest Reserve Account" below; o to pay to the person entitled thereto any amounts deposited in the payment account in error; and o to clear and terminate the payment account at the termination of the series 2005-C3 pooling and servicing agreement; provided that amounts otherwise payable with respect to the class CP-1, CP-2 and CP-3 certificates will not be available to cover Additional Trust Fund Expenses attributable to any underlying mortgage loan other than the Carolina Place Mortgage Loan. On each payment date, all amounts on deposit in the payment account, exclusive of any portion of those amounts that are to be withdrawn for the purposes contemplated in the foregoing paragraph, and the Post-ARD Additional Interest account will represent the "Total Available Funds" for that date. On each payment date, the trustee will apply the Total Available Funds to make payments on the series 2005-C3 certificates (exclusive of the class A-MFL certificates) and the class A-MFL REMIC II regular interest. For any payment date, the Total Available Funds will consist of the following separate components: o the portion of those funds that represent prepayment consideration collected on the underlying mortgage loans as a result of voluntary or involuntary prepayments that occurred during the related collection period, which will be paid to the holders of the class A-1, A-2, A-3, A-SB, A-4, A-1A, A-MFX, A-J, B, C, D, E, F, G, H and/or XC certificates and with respect to the class A-MFL REMIC II regular interest, as described under "--Payments--Payments of Prepayment Premiums and Yield Maintenance Charges" below; o the portion of those funds that represent Post-ARD Additional Interest collected on the ARD Loans in the trust fund during the related collection period, which will be paid to the holders of the class Y certificates as described under "--Payments--Payments of Post-ARD Additional Interest" below; and S-157 o the remaining portion of those funds, which we refer to as the Total Available P&I Funds, and which will be paid to the holders of all the series 2005-C3 certificates, other than the class A-MFL and Y certificates, and with respect to the class A-MFL REMIC II regular interest, as and to the extent described under "--Payments--Priority of Payments" and "--Payments--Allocation of Payments on the Carolina Place Mortgage Loan; Payments on the Class CP-1, CP-2 and CP-3 Certificates" below. FLOATING RATE ACCOUNT The trustee, on behalf of the class A-MFL certificateholders, will be required to establish and maintain an account in which it will hold funds pending their distribution on the class A-MFL certificates or to the swap counterparty and from which it will make those distributions. That floating rate account must be maintained in a manner and with a depository institution that satisfies rating agency standards for securitizations similar to the one involving the offered certificates. Any funds held in the trustee's floating rate account may be held in cash or, at the trustee's risk, invested in Permitted Investments. Subject to the limitations in the series 2005-C3 pooling and servicing agreement, any interest or other income earned on funds in the trustee's floating rate account will be paid to the trustee as additional compensation. Deposits. The trustee will deposit into the floating rate account: o all payments received from the swap counterparty under the swap agreement, as described under "Description of the Swap Agreement" in this prospectus supplement; and o all amounts allocable to the class A-MFL REMIC II regular interest, as described under this "Description of the Offered Certificates" section. The trustee will be required to deposit in the floating rate account the amount of any losses of principal arising from investments of funds held in the floating rate account. However, it will not be obligated to cover any losses resulting from the bankruptcy or insolvency of any depository institution holding the floating rate account. Withdrawals. The trustee may from time to time make withdrawals from the floating rate account for any of the following purposes: o to make payments to the swap counterparty in respect of regularly scheduled payments payable under the swap agreement, as described under "Description of the Swap Agreement" in this prospectus supplement; o to make distributions to the class A-MFL certificates on each payment date, as described under "--Payments--Payments on the Class A-MFL Certificates" below; o to pay itself interest and other investment income earned on funds held in the floating rate account; and o to pay to the person entitled thereto any amounts deposited in the floating rate account in error. INTEREST RESERVE ACCOUNT The trustee must maintain an account in which it will hold the interest reserve amounts described in the next paragraph with respect to those underlying mortgage loans that accrue interest on an Actual/360 Basis. That interest reserve account must be maintained in a manner and with a depository that satisfies rating agency standards for securitizations similar to the one involving the offered certificates. Any funds in the trustee's S-158 interest reserve account may, at the trustee's risk, be invested in Permitted Investments, and any interest or other income earned on those funds will be paid to the trustee as additional compensation, subject to the limitations set forth in the series 2005-C3 pooling and servicing agreement. During January, except in a leap year, and February of each calendar year, beginning in 2006, the trustee will deposit in its interest reserve account the interest reserve amounts with respect to those underlying mortgage loans that accrue interest on an Actual/360 Basis and for which the monthly debt service payment due in that month was either received or advanced. In general, that interest reserve amount for each of those mortgage loans will, for each payment date in those months, equal one day's interest accrued at the related mortgage interest rate on the Stated Principal Balance of that mortgage loan as of the end of the related collection period. In the case of an ARD Loan, however, the interest reserve amount will not include Post-ARD Additional Interest. During March of each calendar year, beginning in 2006, the trustee will withdraw from its interest reserve account and deposit in its payment account any and all interest reserve amounts then on deposit in the interest reserve account with respect to those underlying mortgage loans that accrue interest on an Actual/360 Basis. All interest reserve amounts that are so transferred from the interest reserve account to the payment account will be included in the Total Available P&I Funds for the payment date during the month of transfer. PAYMENTS General. For purposes of allocating payments on certain classes of the offered certificates, the pool of mortgage loans backing the series 2005-C3 certificates will be divided into: 1. Loan group no. 1, which will consist of 94 mortgage loans, with an Initial Loan Group No. 1 Balance of $1,145,448,916 and representing approximately 79.8% of the Initial Mortgage Pool Balance, that are secured by various property types that constitute collateral for these mortgage loans. 2. Loan group no. 2, which will consist of 30 mortgage loans, with an Initial Loan Group No. 2 Balance of $289,724,005 and representing approximately 20.2% of the Initial Mortgage Pool Balance, that are secured by multifamily and manufactured housing properties. On each payment date, the trustee will, subject to the available funds, remit all payments required to be made on the series 2005-C3 certificates on that date to the holders of record as of the close of business on the last business day of the calendar month preceding the month in which those payments are to occur. The final payment of principal and/or interest on any offered certificate, however, will be made only upon presentation and surrender of that certificate at the location to be specified in a notice of the pendency of that final payment. In order for a series 2005-C3 certificateholder to receive payments by wire transfer on and after any particular payment date, that certificateholder must provide the trustee with written wiring instructions no less than five business days prior to the record date for that payment date. Otherwise, that certificateholder will receive its payments by check mailed to it. Payments made to a class of series 2005-C3 certificateholders will be allocated among those certificateholders in proportion to their respective percentage interests in that class. Cede & Co. will be the registered holder of your offered certificates, and you will receive payments on your offered certificates through DTC and its participating organizations, until physical certificates are issued, if ever, to the actual beneficial owners. See "--Registration and Denominations" above. All payments with respect to the class A-MFL REMIC II regular interest will be made to the trustee's floating rate account. S-159 Payments of Interest. All of the classes of the series 2005-C3 certificates, other than the Y and R classes, and the class A-MFL REMIC II regular interest will bear interest. With respect to each interest-bearing class of the series 2005-C3 certificates and with respect to the class A-MFL REMIC II regular interest, that interest will accrue during each interest accrual period based upon-- o the pass-through rate applicable for that particular class of series 2005-C3 certificates or the class A-MFL REMIC II regular interest, as the case may be, for that interest accrual period, o the total principal balance or notional amount, as the case may be, of that particular class of series 2005-C3 certificates or the class A-MFL REMIC II regular interest, as the case may be, outstanding immediately prior to the related payment date, and o the assumption that each year consists of twelve 30-day months (or, in the case of the class A-MFL certificates, for so long as the related swap agreement is in effect and there is no continuing payment default thereunder on the part of the swap counterparty, based on the actual number of days in that interest accrual period and the assumption that each year consists of 360 days). However, no interest will accrue with respect to the class XP certificates following the May 2012 interest accrual period. In addition, if the pass-through rate of the class A-MFL REMIC II regular interest for any interest accrual period is limited by the Weighted Average Pool Pass-Through Rate, then the amount by which the interest distributable with respect to the class A-MFL REMIC II regular interest is reduced as a result of that limitation will result in a corresponding reduction to the amount of interest payable by the swap counterparty with respect to the related payment date and therefore a corresponding reduction to the amount of interest distributable with respect to the class A-MFL certificates on that payment date. On each payment date, subject to available funds and the priorities of payment described under "--Payments--Priority of Payments" and "--Payments--Allocation of Payments on the Carolina Place Mortgage Loan; Payments on the Class CP-1, CP-2 and CP-3 Certificates" below, the total amount of interest distributable with respect to each interest-bearing class of the series 2005-C3 certificates (exclusive of the class A-MFL certificates) and with respect to the class A-MFL REMIC II regular interest will equal: o the total amount of interest accrued during the related interest accrual period with respect to that class of series 2005-C3 certificate or that REMIC II regular interest, as the case may be, reduced (to not less than zero) by o that class's or that REMIC II regular interest's allocable share, if any, of-- 1. any Net Aggregate Prepayment Interest Shortfall for that payment date, and 2. except in the case of the class XC and XP certificates, the aggregate amount of any Mortgage Deferred Interest added to the principal balances of the underlying mortgage loans during the related collection period. If the full amount of interest distributable with respect to any interest-bearing class of the series 2005-C3 certificates (exclusive of the class A-MFL certificates) or with respect to the class A-MFL REMIC II regular interest is not paid on any payment date, then they will continue to be entitled to receive the unpaid portion of that interest on future payment dates, subject to available funds and the priorities of payment described under "--Payments--Priority of Payments" and "--Payments--Allocation of Payments on the Carolina Place Mortgage S-160 Loan; Payments on the Class CP-1, CP-2 and CP-3 Certificates" below. However, no interest will accrue on any of that unpaid interest, and a portion of any past-due interest with respect to the class A-MFL REMIC II regular interest may be payable to the swap counterparty. The portion of any Net Aggregate Prepayment Interest Shortfall for any payment date that is allocable to any particular interest-bearing class of the series 2005-C3 certificates (exclusive of the class A-MFL certificates) or the class A-MFL REMIC II regular interest will equal the product of: o in the case of each class of the class CP-1, CP-2 and CP-3 certificates, the product of-- 1. the total portion, if any, of that Net Aggregate Prepayment Interest Shortfall that is attributable to the Carolina Place Mortgage Loan, multiplied by 2. a fraction, the numerator of which is the total amount of interest accrued during the related interest accrual period with respect to the subject class of series 2005-C3 certificates (calculated without regard to any allocation of that Net Aggregate Prepayment Interest Shortfall and net of any Mortgage Deferred Interest allocated to that class of series 2005-C3 certificates for that payment date), and the denominator of which is equal to the excess, if any of (a) one-twelfth of the product of (i) the Net Mortgage Pass-Through Rate for the Carolina Place Mortgage Loan for such payment date, multiplied by (ii) the Stated Principal Balance of the Carolina Place Mortgage Loan outstanding immediately prior to such payment date, over (b) any Mortgage Deferred Interest added to the outstanding principal balance of the Carolina Place Mortgage Loan during the related collection period; and o in the case of each other interest-bearing class of series 2005-C3 certificates, the product of-- 1. the total amount of that Net Aggregate Prepayment Interest Shortfall, exclusive of any portion thereof allocable to the CP-1, CP-2 and CP-3 classes in accordance with the preceding bullet, multiplied by 2. a fraction, the numerator of which is the total amount of interest accrued during the related interest accrual period with respect to the subject REMIC II regular interest or interest-bearing class of series 2005-C3 certificates, as the case may be, calculated without regard to any allocation of that Net Aggregate Prepayment Interest Shortfall and, except in the case of the class XC and XP certificates, net of any Mortgage Deferred Interest allocated to the subject REMIC II regular interest or interest-bearing class of series 2005-C3 certificates for that payment date, and the denominator of which is the total amount of interest accrued during the related interest accrual period with respect to the class A-MFL REMIC II regular interest and all of the interest-bearing classes of the series 2005-C3 certificates (exclusive of the class A-MFL, CP-1, CP-2 and CP-3 certificates), calculated without regard to any allocation of that Net Aggregate Prepayment Interest Shortfall, and net of any Mortgage Deferred Interest allocated to the class A-MFL REMIC II regular interest and the respective classes of series 2005-C3 principal balance certificates (exclusive than the class A-MFL, CP-1, CP-2 and CP-3 certificates) for that payment date. Although Net Aggregate Prepayment Interest Shortfalls will not be allocated directly to the class A-MFL certificates, any such shortfalls allocated to the class A-MFL REMIC II regular interest will result in a dollar-for-dollar reduction in the interest distributable on the class A-MFL certificates. S-161 On each payment date, any Mortgage Deferred Interest added to the unpaid principal balance of any underlying mortgage loan (other than the Carolina Place Mortgage Loan) during the related collection period will be allocated among the respective classes of series 2005-C3 principal balance certificates (exclusive of the class A-MFL, CP-1, CP-2 and CP-3 certificates) and the class A-MFL REMIC II regular interest in reverse order of seniority (based on the priority of payments described under "--Payments--Priority of Payments" below and, in the case of the class A-1, A-2, A-3, A-SB, A-4 and A-1A certificates, on a pro rata basis in accordance with accrued interest for the related interest accrual period), in each case up to the respective amounts of interest accrued during the related interest accrual period with respect to the subject REMIC II regular interest or interest-bearing class(es) of series 2005-C3 certificates (in each case calculated without regard to any allocation of that Mortgage Deferred Interest or any Net Aggregate Prepayment Interest Shortfall). On each payment date, any Mortgage Deferred Interest added to the unpaid principal balance of the Carolina Place Mortgage Loan during the related collection period will be allocated first, to the class CP-1, CP-2 and CP-3 certificates, in that order, in each case up to the amount of the total amount of interest accrued during the related interest accrual period with respect to the subject class of series 2005-C3 certificates (calculated without regard to any allocation of that Mortgage Deferred Interest or any Net Aggregate Prepayment Interest Shortfall); and then, to the other classes of series 2005-C3 principal balance certificates (exclusive of the class A-MFL certificates) and the class A-MFL REMIC II regular interest as described in the prior sentence. No portion of any Mortgage Deferred Interest will be allocated to the class XC and/or XP certificates. Any distributions of interest allocated to the class A-MFL REMIC II regular interest will be deposited in the trustee's floating rate account and will thereafter be distributed to the holders of the class A-MFL certificates and/or the swap counterparty, as applicable. Calculation of Pass-Through Rates. The initial pass-through rate for each interest-bearing class of the series 2005-C3 certificates is shown in the table on page S-5 to this prospectus supplement; provided that, in the case of the class , XC and XP certificates, that initial pass-through rate is approximate. The pass-through rates applicable to the class ____, ____ and ____ certificates for each subsequent interest accrual period will, in the case of each of those classes, remain fixed at the pass-through rate applicable to the particular class of series 2005-C3 certificates for the initial interest accrual period. The pass-through rates for the class _____, ____ and ____ certificate for each subsequent interest accrual period will, in the case of each of those classes, equal the Weighted Average Pool Pass-Through Rate for the related payment date. The pass-through rates applicable to the class ____, ____ and ____ certificates for each subsequent interest accrual period will, in the case of each of those classes, equal the lesser of-- o the rate per annum shown in the table on page S-5 as the initial pass-through rate for that class; and o the Weighted Average Pool Pass-Through Rate for the related payment date. The pass-through rate applicable to the class A-MFL REMIC II regular interest for each interest accrual period will equal the lesser of-- o ____% per annum, and o the Weighted Average Pool Pass-Through Rate for the related payment date. S-162 For so long as the swap agreement is in effect and there is no continuing payment default thereunder on the part of the swap counterparty, the pass-through rate applicable to the class A-MFL certificates for each interest accrual period will equal LIBOR plus ____% per annum. However, the pass-through rate with respect to the class A-MFL certificates may be effectively reduced as a result of shortfalls allocated to the class A-MFL REMIC II regular interest. In addition, if there is a continuing Swap Payment Default, or if the swap agreement is terminated and a replacement swap agreement is not obtained, then the pass-through rate applicable to the class A-MFL certificates will convert to a per annum rate equal to the pass-through rate on the class A-MFL REMIC II regular interest, and accordingly the interest accrual period and interest accrual basis for the class A-MFL certificates will convert to those of the class A-MFL REMIC II regular interest. See "--Payments on the Class A-MFL Certificates" and "Description of the Swap Agreement--The Swap Agreement" in this prospectus supplement. The term "LIBOR" means, with respect to the class A-MFL certificates and each interest accrual period for those certificates, the rate for deposits in U.S. Dollars, for a period equal to one month, which appears on the Dow Jones Market Service (formerly Telerate) Page 3750 as of 11:00 a.m., London time, on the related LIBOR Determination Date. If that rate does not appear on Dow Jones Market Service Page 3750, LIBOR for that interest accrual period will be determined on the basis of the rates at which deposits in U.S. Dollars are offered by any five major reference banks in the London interbank market selected by the calculation agent under the swap agreement to provide that bank's offered quotation of such rates at approximately 11:00 a.m., London time, on the related LIBOR Determination Date to prime banks in the London interbank market for a period of one month, commencing on the first day of the subject interest accrual period and in an amount that is representative for a single such transaction in the relevant market at the relevant time. The calculation agent under the swap agreement will request the principal London office of any five major reference banks in the London interbank market selected by the calculation agent to provide a quotation of those rates, as offered by each such bank. If at least two such quotations are provided, LIBOR for that interest accrual period will be the arithmetic mean of the quotations. If fewer than two quotations are provided as requested, LIBOR for that interest accrual period will be the arithmetic mean of the rates quoted by major banks in New York City selected by the calculation agent under the swap agreement, at approximately 11:00 a.m., New York City time, on the related LIBOR Determination Date with respect to the subject interest accrual period for loans in U.S. Dollars to leading European banks for a period equal to one month, commencing on the LIBOR Determination Date with respect to such interest accrual period and in an amount that is representative for a single such transaction in the relevant market at the relevant time. The calculation agent under the swap agreement will determine LIBOR for each interest accrual period and the determination of LIBOR by the trustee will be binding absent manifest error. The "LIBOR Determination Date" for the class A-MFL certificates is (i) with respect to the initial interest accrual period, June , 2005, and (ii) with respect to each applicable interest accrual period thereafter, the date that is two LIBOR Business Days prior to the commencement of the subject interest accrual period. A "LIBOR Business Day" is any day on which commercial banks are open for general business (including dealings in foreign exchange and foreign currency deposits) in London, England and New York, New York. The pass-through rates for the class CP-1, CP-2 and CP-3 certificates for each interest accrual period will equal the Net Mortgage Pass-Through Rate for the Carolina Place Mortgage Loan for the related payment date. As described under "--General" above, the total notional amount of the class XP certificates from time to time consists of multiple components. The pass-through rate for the class XP certificates, for each interest accrual period from and including the initial interest accrual period through and including the May 2012 interest accrual period, will equal the weighted average of the respective strip rates, which we refer to as class XP strip rates, at which interest accrues during the subject interest accrual period on the respective components of the total notional amount of the class XP certificates outstanding immediately prior to the related payment date, with the relevant weighting to be done based upon the relative sizes of those components. For purposes of accruing interest during any interest accrual period from and including the initial interest accrual period through and including the May S-163 2012 interest accrual period, on any particular component of the total notional amount of the class XP certificates outstanding immediately prior to the related payment date, the applicable class XP strip rate will equal the excess, if any, of: (1) the lesser of (a) the reference rate specified on Annex E to this prospectus supplement for the related payment date and (b) the Weighted Average Pool Pass-Through Rate for the related payment date, over (2) the pass-through rate in effect during that interest accrual period for the class of series 2005-C3 principal balance certificates whose total principal balance, or a designated portion thereof, comprises the subject component (or, in the case of the class A-MFL certificates, the pass-through rate in effect during that interest accrual period for the class A-MFL REMIC II regular interest). Following the May 2012 interest accrual period, the class XP certificates will cease to accrue interest. In connection therewith, the class XP certificates will have a 0% pass-through rate for the June 2012 interest accrual period and for each interest accrual period thereafter. As described under "--General" above, the total notional amount of the class XC certificates consists of multiple components. The pass-through rate for the class XC certificates will, with respect to any interest accrual period, equal a weighted average of the respective strip rates, which we refer to as class XC strip rates, at which interest accrues during that interest accrual period on the respective components of the total notional amount of the class XC certificates outstanding immediately prior to the related payment date, with the relevant weighting to be done based upon the relative sizes of those components. For purposes of accruing interest during any interest accrual period, from and including the initial interest accrual period through and including the May 2012 interest accrual period, on any particular component of the total notional amount of the class XC certificates outstanding immediately prior to the related payment date, the applicable class XC strip rate will be calculated as follows: o if the subject component consists of the entire total principal balance of any class of series 2005-C3 principal balance certificates, and if that total principal balance also constitutes, in its entirety, a component of the total notional amount of the class XP certificates outstanding immediately prior to the related payment date, then the applicable class XC strip rate will equal the excess, if any, of (a) the Weighted Average Pool Pass-Through Rate for the related payment date, over (b) the greater of (i) the reference rate specified on Annex E to this prospectus supplement for the related payment date and (ii) the pass-through rate in effect during that interest accrual period for that class of series 2005-C3 principal balance certificates (or, in the case of the class A-MFL certificates, if applicable, the pass-through rate in effect during that interest accrual period for the class A-MFL REMIC II regular interest); o if the subject component consists of a designated portion (but not all) of the total principal balance of any class of series 2005-C3 principal balance certificates, and if that designated portion of that total principal balance also constitutes a component of the total notional amount of the class XP certificates outstanding immediately prior to the related payment date, then the applicable class XC strip rate will equal the excess, if any, of (a) the Weighted Average Pool Pass-Through Rate for the related payment date, over (b) the greater of (i) the reference rate specified on Annex E to this prospectus supplement for the related payment date and (ii) the pass-through rate in effect during that interest accrual period for that class of series 2005-C3 principal balance certificates (or, in the case of the class A-MFL certificates, if applicable, the pass-through rate in effect during that interest accrual period for the class A-MFL REMIC II regular interest); S-164 o if the subject component consists of the entire total principal balance of any class of series 2005-C3 principal balance certificates, and if that total principal balance does not, in whole or in part, also constitute a component of the total notional amount of the class XP certificates outstanding immediately prior to the related payment date, then the applicable class XC strip rate will equal the excess, if any, of (a) the Weighted Average Pool Pass-Through Rate for the related payment date, over (b) the pass-through rate in effect during that interest accrual period for that class of series 2005-C3 principal balance certificates (or, in the case of the class A-MFL certificates, if applicable, the pass-through rate in effect during that interest accrual period for the class A-MFL REMIC II regular interest); and o if the subject component consists of a designated portion (but not all) of the total principal balance of any class of series 2005-C3 principal balance certificates, and if that designated portion of that total principal balance does not also constitute a component of the total notional amount of the class XP certificates outstanding immediately prior to the related payment date, then the applicable class XC strip rate will equal the excess, if any, of (a) the Weighted Average Pool Pass-Through Rate for the related payment date, over (b) the pass-through rate in effect during that interest accrual period for that class of series 2005-C3 principal balance certificates (or, in the case of the class A-MFL certificates, if applicable, the pass-through rate in effect during that interest accrual period for the class A-MFL REMIC II regular interest). Notwithstanding the foregoing, for purposes of accruing interest on the class XC certificates during each interest accrual period subsequent to the May 2012 interest accrual period, consistent with the discussion under "--General" above, the total principal balance of each class of series 2005-C3 principal balance certificates, exclusive of the class CP-1, CP-2 and CP-3 certificates, will constitute a single separate component of the total notional amount of the class XC certificates, and the applicable class XC strip rate with respect to each of those components for each of those interest accrual periods will equal the excess, if any, of (a) the Weighted Average Pool Pass-Through Rate for the related payment date, over (b) the pass-through rate in effect during the subject interest accrual period for the class of series 2005-C3 principal balance certificates whose total principal balance makes up that component (or, in the case of the class A-MFL certificates, if applicable, the pass-through rate in effect during that interest accrual period for the class A-MFL REMIC II regular interest). The calculation of the Weighted Average Pool Pass-Through Rate will be unaffected by any change in the mortgage rate for any mortgage loan in the trust fund, including in connection with any bankruptcy or insolvency of the related borrower or any modification of that mortgage loan agreed to by the master servicer or the special servicer. The class Y and R certificates will not be interest-bearing and, therefore, will not have pass-through rates. Payments of Principal. Subject to available funds and the priority of payments described under "--Payments--Priority of Payments" below, the total amount of principal payable with respect to each class of the series 2005-C3 certificates (other than the class A-MFL, XC, XP, Y and R certificates) and the class A-MFL REMIC II regular interest, on each payment date, will equal that class's or REMIC II regular interest's allocable share of the Total Principal Payment Amount for that payment date. Subject to available funds and the priority of payments described under "--Payments--Allocation of Payments on the Carolina Place Mortgage Loan; Payments on the Class CP-1, CP-2 and CP-3 Certificates" below, the portion of the Total Principal Payment Amount payable with respect to the class CP-1, CP-2 and CP-3 certificates on each payment date will equal the Class CP Principal Payment Amount for that payment date. The Total Principal Payment Amount, net of the Class CP Principal Payment Amount, for any payment date is the Net Principal Payment Amount for that payment date. S-165 In general, the portion of the Net Principal Payment Amount for any payment date consisting of the Loan Group No. 1 Principal Payment Amount (i.e., the portion of the Net Principal Payment Amount attributable to loan group no. 1) for that payment date will be allocated to the class A-1, A-2, A-3, A-SB and A-4 certificates on each payment date as follows: o first, to the class A-SB certificates, up to the lesser of-- 1. the entire Loan Group No. 1 Principal Payment Amount for that payment date, and 2. the excess, if any, of (a) the total principal balance of the class A-SB certificates outstanding immediately prior to, plus any Mortgage Deferred Interest allocated to the class A-SB certificates on, that payment date, over (b) the Class A-SB Planned Principal Balance for that payment date; and o second, to the class A-1 certificates, up to the lesser of-- 1. the entire Loan Group No. 1 Principal Payment Amount for that payment date, reduced by any portion of that amount that is allocable to the class A-SB certificates as described in the preceding bullet, and 2. the total principal balance of the class A-1 certificates outstanding immediately prior to, plus any Mortgage Deferred Interest allocated to the class A-1 certificates on, that payment date; and o third, to the class A-2 certificates, up to the lesser of-- 1. the entire Loan Group No. 1 Principal Payment Amount for that payment date, reduced by any portion of the Loan Group No. 1 Principal Payment Amount for that payment date that is allocable to the class A-SB and/or A-1 certificates as described in the preceding two bullets, and 2. the total principal balance of the class A-2 certificates outstanding immediately prior to, plus any Mortgage Deferred Interest allocated to the class A-2 certificates on, that payment date; and o fourth, to the class A-3 certificates, up to the lesser of-- 1. the entire Loan Group No. 1 Principal Payment Amount for that payment date, reduced by any portion of the Loan Group No. 1 Principal Payment Amount for that payment date that is allocable to the class A-SB, A-1 and/or A-2 certificates as described in the preceding three bullets, and 2. the total principal balance of the class A-3 certificates outstanding immediately prior to, plus any Mortgage Deferred Interest allocated to the class A-3 certificates on, that payment date; and o fifth, to the class A-SB certificates, up to the lesser of-- 1. the entire Loan Group No. 1 Principal Payment Amount for that payment date, reduced by any portion of the Loan Group No. 1 Principal Payment Amount for that payment date S-166 that is allocable to the class A-SB, A-1, A-2 and/or A-3 certificates as described in the preceding four bullets, and 2. the total principal balance of the class A-SB certificates outstanding immediately prior to, plus any Mortgage Deferred Interest allocated to the class A-SB certificates on, that payment date (as reduced by any portion of the Loan Group No. 1 Principal Payment Amount for that payment date allocable to the class A-SB certificates as described in the fourth preceding bullet); and o sixth, to the class A-4 certificates, up to the lesser of-- 1. the entire Loan Group No. 1 Principal Payment Amount for that payment date, reduced by any portion of the Loan Group No. 1 Principal Payment Amount for that payment date that is allocable to the class A-1, A-2, A-3 and/or A-SB certificates as described in the preceding five bullets, and 2. the total principal balance of the class A-4 certificates outstanding immediately prior to, plus any Mortgage Deferred Interest allocated to the class A-4 certificates on, that payment date. In general, the portion of the Net Principal Payment Amount that will be allocated to the class A-1A certificates on each payment date will equal the lesser of-- o the entire Loan Group No. 2 Principal Payment Amount (i.e., the portion of the Net Principal Payment Amount attributable to loan group no. 2) for that payment date; and o the total principal balance of the class A-1A certificates immediately prior to, plus any Mortgage Deferred Interest allocated to the class A-1A certificates on, that payment date. If the Loan Group No. 1 Principal Payment Amount for any payment date exceeds the total principal balance of the class A-1, A-2, A-3, A-SB and A-4 certificates outstanding immediately prior to, plus the total amount of any Mortgage Deferred Interest allocated to those classes of series 2005-C3 certificates on, that payment date, then (following retirement of the class A-1, A-2, A-3, A-SB and A-4 certificates) the remaining portion thereof would be allocated to the class A-1A certificates, up to the extent necessary to retire such class of series 2005-C3 certificates. Similarly, if the Loan Group No. 2 Principal Payment Amount for any payment date exceeds the total principal balance of the class A-1A certificates outstanding immediately prior to, plus any Mortgage Deferred Interest allocated to the class A-1A certificates on, that payment date, then (following retirement of the class A-1A certificates) the remaining portion thereof would be allocated (after taking account of the allocations of the Loan No. 1 Principal Payment Amount for that payment date described in the second preceding paragraph): first, to the class A-SB certificates, up to the extent necessary to pay down the then total principal balance of the class A-SB certificates, including any Mortgage Deferred Interest allocated to the class A-SB certificates on that payment date, to the Class A-SB Planned Principal Balance for that payment date; and, then, to the class A-1, A-2, A-3, A-SB and A-4 certificates, in that order, up to the extent necessary to retire each such class of series 2005-C3 certificates. Notwithstanding the foregoing, if any two or more of the A-1, A-2, A-3, A-SB, A-4 and A-1A classes are outstanding as of the Senior Principal Payment Cross-Over Date, then the Net Principal Payment Amount for each payment date thereafter will be allocable between the A-1, A-2, A-3, A-SB, A-4 and/or A-1A classes, whichever are outstanding at that time, on a pro rata basis in accordance with their respective total principal balances immediately prior to, plus the respective amounts of any Mortgage Deferred Interest allocated to those classes on, that payment date, in each case up to that total principal balance and the amount of that Mortgage Deferred S-167 Interest. In addition, if the A-1, A-2, A-3, A-SB, A-4 and A-1A classes, or any two or more of them, are outstanding on the final payment date for the series 2005-C3 certificates, then the Net Principal Payment Amount will be similarly allocated between them. WHILE THE CLASS A-1, A-2, A-3, A-SB, A-4 AND/OR A-1A CERTIFICATES ARE OUTSTANDING, NO PORTION OF THE NET PRINCIPAL PAYMENT AMOUNT FOR ANY PAYMENT DATE WILL BE ALLOCATED TO ANY OTHER CLASS OF SERIES 2005-C3 PRINCIPAL BALANCE CERTIFICATES. Following the retirement of the class A-1, A-2, A-3, A-SB, A-4 and A-1-A certificates, distributions of principal, up to the Net Principal Payment Amount for each distribution date (net of any portion of that amount applied in retirement of the class A-1, A-2, A-3, A-SB, A-4 and/or A-1-A certificates), will be allocated between the class A-MFL REMIC II regular interest and the class A-MFX certificates, on a pro rata basis in accordance with the respective total principal balances thereof, to the extent necessary to reduce those respective total principal balances to zero. Any distributions of principal allocated to the class A-MFL REMIC II regular interest will be deposited in the trustee's floating rate account and thereafter distributed to the holders of the class A-MFL certificates. Following the retirement of the class A-1, A-2, A-3, A-SB, A-4, A-1A and A-MFX certificates and the class A-MFL REMIC II regular interest, the Net Principal Payment Amount for each payment date will be allocated to the respective classes of series 2005-C3 principal balance certificates identified in the table below and in the order of priority set forth in that table, in each case up to the lesser of: o the total principal balance of the subject class outstanding immediately prior to, plus any Mortgage Deferred Interest allocated to the subject class on, that payment date; and o the portion of that Net Principal Payment Amount that remains unallocated to the A-1, A-2, A-3, A-SB, A-4, A-1A and A-MFX classes, the class A-MFL REMIC II regular interest and each other class, if any, listed above the subject class in the table below. ORDER OF ALLOCATION CLASS ------------------- ----- 1st.................................................................. A-J 2nd.................................................................. B 3rd.................................................................. C 4th.................................................................. D 5th.................................................................. E 6th.................................................................. F 7th.................................................................. G 8th.................................................................. H 9th.................................................................. J 10th................................................................. K 11th................................................................. L 12th................................................................. M 13th................................................................. N 14th................................................................. O 15th................................................................. P IN NO EVENT WILL THE HOLDERS OF ANY CLASS OF SERIES 2005-C3 PRINCIPAL BALANCE CERTIFICATES LISTED IN THE FOREGOING TABLE BE ENTITLED TO RECEIVE ANY PAYMENTS OF PRINCIPAL UNTIL THE TOTAL PRINCIPAL BALANCE OF ALL OTHER CLASSES OF SERIES 2005-C3 PRINCIPAL BALANCE CERTIFICATES, IF ANY, LISTED ABOVE IT IN THE FOREGOING TABLE IS REDUCED TO ZERO. S-168 Any distributions of principal allocated to the class A-MFL REMIC II regular interest will be deposited in the trustee's floating rate account and will thereafter distributed to the holders of the class A-MFL certificates. If the master servicer, the special servicer, the trustee or the fiscal agent reimburses itself out of general collections on the mortgage pool for any advance (including the portion of any monthly debt service advance with respect to the Carolina Place Non-Pooled Portion) that it has determined is not recoverable out of collections on the related mortgage loan in the trust fund, then that advance (together with accrued interest thereon) will be deemed, to the fullest extent permitted, to be reimbursed first out of payments and other collections of principal on the underlying mortgage loans otherwise distributable on the series 2005-C3 principal balance certificates (exclusive of the class A-MFL certificates) and the class A-MFL REMIC II regular interest) prior to being deemed reimbursed out of payments and other collections of interest on the underlying mortgage loans otherwise distributable on the series 2005-C3 certificates (exclusive of the class A-MFL certificates) and the class A-MFL REMIC II regular interest), thereby reducing the payments of principal on the series 2005-C3 principal balance certificates (exclusive of the class A-MFL certificates) and the class A-MFL REMIC II regular interest. As a result, the Total Principal Payment Amount for the corresponding payment date would be reduced, to not less than zero, by the amount of any such reimbursement. In addition, if payments and other collections of principal on the mortgage pool are applied to reimburse, or pay interest on, any advance that is determined to be nonrecoverable from collections on the related underlying mortgage loan, as described above, then that advance will be reimbursed, and/or interest thereon will be paid, first out of payments or other collections of principal on the loan group that includes the subject underlying mortgage loan as to which the advance was made, and prior to using payments or other collections of principal on the other loan group. Notwithstanding the foregoing, amounts otherwise distributable with respect to the class CP-1, CP-2 and CP-3 certificates will not be available to reimburse advances or pay Additional Trust Fund Expenses with respect to any underlying mortgage loan other than the Carolina Place Mortgage Loan. If any advance is considered to be nonrecoverable from collections on the related underlying mortgage loan and is, therefore, reimbursed out of payments and other collections of principal with respect to the entire mortgage pool as described in the preceding paragraph, and if there is a subsequent recovery of that item, that subsequent recovery would generally be included as part of the amounts payable as principal with respect to the series 2005-C3 principal balance certificates (exclusive of the class A-MFL, CP-1, CP-2 and CP-3 certificates) and the class A-MFL REMIC II regular interest. In addition, if any advance is determined to be nonrecoverable from collections on the related underlying mortgage loan and, therefore, interest on that advance is paid out of general principal collections on the mortgage pool, and if interest on that advance is subsequently reimbursed to the trust out of Default Interest, late payment charges or any other amounts collected on the underlying mortgage loan as to which that advance was made, then the portion of such Default Interest, late payment charge or other amount that was applied to reimburse the trust for interest on that advance would also generally be included as amounts payable as principal with respect to the series 2005-C3 principal balance certificates (exclusive of the class A-MFL certificates) and the class A-MFL REMIC II regular interest. For purposes of determining the respective portions of the Total Principal Payment Amount attributable to each loan group, those subsequent recoveries that are to be included as amounts payable as principal with respect to the series 2005-C3 principal balance certificates (exclusive of the class A-MFL, CP-1, CP-2 and CP-3 certificates) and the class A-MFL REMIC II regular interest will be deemed allocated to offset the corresponding prior reductions in amounts attributable to each loan group in reverse order to that set forth in the last sentence of the prior paragraph. Reimbursement Amounts. As discussed under "--Reductions of Certificate Principal Balances in Connection with Realized Losses and Additional Trust Fund Expenses" below, the total principal balance of any class of series 2005-C3 principal balance certificates (exclusive of the class A-MFL certificates) or of the class A-MFL REMIC II regular interest may be reduced without a corresponding payment of principal. If that occurs with respect to any class of series 2005-C3 principal balance certificates (exclusive of the class A-MFL certificates) or with respect to the class A-MFL REMIC II regular interest, then, subject to available funds and the priority of payments described under "--Payments--Priority of Payments" and "--Payments--Allocation of S-169 Payments on the Carolina Place Mortgage Loan; Payments on the Class CP-1, CP-2 and CP-3 Certificates" below, the holders of that class or that REMIC II regular interest, as the case may be, will be entitled to be reimburseD for the amount of that reduction, without interest. References to the "loss reimbursement amount" under "--Payments--Priority of Payments" and "--Payments--Allocation of Payments on the Carolina Place Mortgage Loan; Payments on the Class CP-1, CP-2 and CP-3 Certificates" below mean, in the case of any class of series 2005-C3 principal balance certificates (exclusive of the class A-MFL certificates) and in the case of the class A-MFL REMIC II regular interest for any payment date, the total amount to which the holders of that class or that REMIC II regular interest, as the case may be, are entitled as reimbursement for all previously unreimbursed reductions, if any, made in the total principal balance of that class or that REMIC II regular interest, as the case may be, on all prior payment dates as discussed under "--Reductions of Certificate Principal Balances in Connection with Realized Losses and Additional Trust Fund Expenses" below. Priority of Payments. On each payment date, the trustee will apply the Standard Available P&I Funds (which are the Total Available P&I Funds, exclusive of the Class CP Available P&I Funds) for that date to make the following payments in the following order of priority, in each case to the extent of the remaining Standard Available P&I Funds: ORDER OF RECIPIENT PAYMENT CLASS OR CLASSES TYPE AND AMOUNT OF PAYMENT - -------- -------------------- ---------------------------------------------- 1st XC and XP* From the entire Standard Available P&I Funds, interest up to the total interest payable on those classes, pro rata based on entitlement, without regard to loan groups A-1, A-2, A-3, From the portion of the Standard Available P&I A-SB and A-4* Funds attributable to the mortgage loans in loan group no. 1, interest up to the total interest payable on those classes, pro rata based on entitlement A-1A* From the portion of the Standard Available P&I Funds attributable to the mortgage loans in loan group no. 2, interest up to the total interest payable on that class 2nd A-1, A-2, A-3, Principal up to the Loan Group No. 1 Principal A-SB and A-4** Payment Amount (and, if the class A-1A certificates are retired, any remaining portion of the Loan Group No. 2 Principal Payment Amount), first to the class A-SB certificates, until the total principal balance of that class is reduced to the applicable Class A-SB Planned Principal Balance, and then to the class A-1, A-2, A-3, A-SB and A-4 certificates, in that order, in each case until retired A-1A** Principal up to the Loan Group No. 2 Principal Payment Amount (and, if the class A-4 certificates are retired, any remaining portion of the Loan Group No. 1 Principal Payment Amount), to class A-1A until it is retired 3rd A-1, A-2, A-3, A-SB, Reimbursement up to the loss reimbursement A-4 and A-1A amounts for those classes, pro rata based on entitlement, without regard to loan groups - -------------------------------------------------------------------------------- S-170 ORDER OF RECIPIENT PAYMENT CLASS OR CLASSES TYPE AND AMOUNT OF PAYMENT - -------- -------------------- ---------------------------------------------- 4th A-MFL*** and A-MFX Interest up to the total interest payable to those classes, pro rata based on entitlement - -------------------------------------------------------------------------------- 5th A-MFL*** and A-MFX Principal up to the total principal payable to the class A-MFX certificates and the class A-MFL REMIC II regular interest, pro rata based on total principal balance - -------------------------------------------------------------------------------- 6th A-MFL*** and A-MFX Reimbursement up to the loss reimbursement amount for the class A-MFX certificates and the class A-MFL REMIC II regular interest, pro rata based on entitlement - -------------------------------------------------------------------------------- 7th A-J Interest up to the total interest payable on that class 8th A-J Principal up to the total principal payable on that class 9th A-J Reimbursement up to the loss reimbursement amount for that class - -------------------------------------------------------------------------------- 10th B Interest up to the total interest payable on that class 11th B Principal up to the total principal payable on that class 12th B Reimbursement up to the loss reimbursement amount for that class - -------------------------------------------------------------------------------- 13th C Interest up to the total interest payable on that class 14th C Principal up to the total principal payable on that class 15th C Reimbursement up to the loss reimbursement amount for that class - -------------------------------------------------------------------------------- 16th D Interest up to the total interest payable on that class 17th D Principal up to the total principal payable on that class 18th D Reimbursement up to the loss reimbursement amount for that class - -------------------------------------------------------------------------------- 19th E Interest up to the total interest payable on that class 20th E Principal up to the total principal payable on that class 21st E Reimbursement up to the loss reimbursement amount for that class - -------------------------------------------------------------------------------- 22nd F Interest up to the total interest payable on that class 23rd F Principal up to the total principal payable on that class 24th F Reimbursement up to the loss reimbursement amount for that class - -------------------------------------------------------------------------------- 25th G Interest up to the total interest payable on that class 26th G Principal up to the total principal payable on that class 27th G Reimbursement up to the loss reimbursement amount for that class - -------------------------------------------------------------------------------- 28th H Interest up to the total interest payable on that class 29th H Principal up to the total principal payable on that class 30th H Reimbursement up to the loss reimbursement amount for that class - -------------------------------------------------------------------------------- S-171 ORDER OF RECIPIENT PAYMENT CLASS OR CLASSES TYPE AND AMOUNT OF PAYMENT - -------- -------------------- ---------------------------------------------- 31st J Interest up to the total interest payable on that class 32nd J Principal up to the total principal payable on that class 33rd J Reimbursement up to the loss reimbursement amount for that class - -------------------------------------------------------------------------------- 34th K Interest up to the total interest payable on that class 35th K Principal up to the total principal payable on that class 36th K Reimbursement up to the loss reimbursement amount for that class - -------------------------------------------------------------------------------- 37th L Interest up to the total interest payable on that class 38th L Principal up to the total principal payable on that class 39th L Reimbursement up to the loss reimbursement amount for that class - -------------------------------------------------------------------------------- 40th M Interest up to the total interest payable on that class 41st M Principal up to the total principal payable on that class 42nd M Reimbursement up to the loss reimbursement amount for that class - -------------------------------------------------------------------------------- 43rd N Interest up to the total interest payable on that class 44th N Principal up to the total principal payable on that class 45th N Reimbursement up to the loss reimbursement amount for that class - -------------------------------------------------------------------------------- 46th O Interest up to the total interest payable on that class 47th O Principal up to the total principal payable on that class 48th O Reimbursement up to the loss reimbursement amount for that class - -------------------------------------------------------------------------------- 49th P Interest up to the total interest payable on that class 50th P Principal up to the total principal payable on that class 51st P Reimbursement up to the loss reimbursement amount for that class - -------------------------------------------------------------------------------- 52nd R Any remaining Standard Available P&I Funds - -------------------------------------------------------------------------------- - ---------- * If the portion of the Standard Available P&I Funds allocable to pay interest on any one or more of the A-1, A-2, A-3, A-SB, A-4, A-1A, XC and XP classes, as set forth in the table above, is insufficient for that purpose, then the Standard Available P&I Funds will be applied to pay interest on all those classes, pro rata based on entitlement. ** In general, no payments of principal will be made in respect of the class A-1, A-2, A-3 and/or A-4 certificates on any given payment date until the total principal balance of the class A-SB certificates is paid down to the then applicable Class A-SB Planned Principal Balance. In addition, no payments of principal will be made in respect of the class A-2 certificates until the total principal balance of the class A-1 certificates is reduced to zero, no payments of principal will be made in respect of the class A-3 certificates until the total principal balance of the class A-1 and A-2 certificates is reduced to zero, no payments of principal will be made in respect of the class A-SB certificates (other than as described in the prior sentence) until the total principal balance of the class A-1, A-2 and A-3 certificates is reduced to zero, and no payments of principal will be made in respect of the class A-4 certificates until the total principal balance of the class A-1, A-2, A-3 and A-SB certificates is reduced to zero. Furthermore, for purposes of receiving distributions of principal from the Loan Group No. 1 Principal Payment Amount, the holders of the class A-1, A-2, A-3, A-SB and A-4 certificates will have a prior right, relative to the holders of the class A-1A certificates, to any available funds attributable to loan group no. 1; and, for purposes of receiving distributions of principal from the Loan Group No. 2 Principal Payment Amount, the holders of the class A-1A certificates will have a prior right, relative to the holders of the class A-1, A-2, A-3, A-SB and A-4 certificates, to any available funds attributable to loan group no. 2. However, if S-172 any two or more of the A-1, A-2, A-3, A-SB, A-4 and A-1A classes are outstanding as of the Senior Principal Distribution Cross-Over Date, or if all or any two or more of those classes are outstanding on the final payment date for the series 2005-C3 certificates, then payments of principal on the outstanding class A-1, A-2, A-3, A-SB, A-4 and A-1A certificates will be made on a pro rata basis in accordance with the respective total principal balances of those classes then outstanding. *** Refers to class A-MFL REMIC II regular interest. Interest, principal and loss reimbursement amounts in respect of the class A-MFL REMIC II regular interest will be paid to the trustee's floating rate account for distribution to the holders of the class A-MFL certificates and/or the swap counterparty on the subject payment date. Allocation of Payments on the Carolina Place Mortgage Loan; Payments on the Class CP Certificates. On or prior to each payment date, amounts received during the related collection period with respect to the Carolina Place Mortgage Loan, together with any amounts advanced with respect to the Carolina Place Mortgage Loan, subject to adjustment for interest reserve amounts with respect to the Carolina Place Mortgage Loan, and exclusive of amounts payable and/or reimbursable to the master servicer, the special servicer, the trustee and/or the fiscal agent with respect to the Carolina Place Mortgage Loan under the series 2005-C3 pooling and servicing agreement, will be applied as follows: o first, for inclusion in Standard Available P&I Funds, as interest accrued with respect to the Carolina Place Pooled Portion, accrued (on a 30/360 Basis) at the applicable Net Mortgage Pass-Through Rate from time to time, on the Allocated Principal Balance of the Carolina Place Pooled Portion, through but not including the then-most recent due date for the Carolina Place Mortgage Loan (net of any portion thereof that constitutes Mortgage Deferred Interest with respect to the Carolina Place Mortgage Loan that is allocable to the Carolina Place Pooled Portion), to the extent not previously received or advanced; o second, for inclusion in Standard Available P&I Funds, as principal on the Carolina Place Pooled Portion in an amount equal to the lesser of (1) the Allocated Principal Balance of the Carolina Place Pooled Portion immediately prior to, together with any Mortgage Deferred Interest with respect to the Carolina Place Mortgage Loan that is allocable to the Carolina Place Pooled Portion for, the subject payment date and (2) either (A) if no Carolina Place Payment Trigger Event exists for such payment date, a proportionate share (based on the Allocated Principal Balance of the Carolina Place Pooled Portion relative to the Stated Principal Balance of the Carolina Place Mortgage Loan) of the Carolina Place Principal Payment Amount for the subject payment date, or (B) if a Carolina Place Trigger Event exists for such payment date, the entire Carolina Place Principal Payment Amount for the subject payment date; o third, for inclusion in the Standard Available P&I Funds, as a reimbursement with respect to the Carolina Place Pooled Portion for any Realized Losses and/or Additional Trust Fund Expenses incurred with respect to the Carolina Place Mortgage Loan that were not otherwise borne by the holders of the class CP-1, CP-2 and CP-3 certificates and that have not been previously reimbursed; o fourth, for inclusion in the Class CP Available P&I Funds, as interest with respect to the Carolina Place Non-Pooled Portion, accrued (on a 30/360 Basis) at the applicable Net Mortgage Pass-Through Rate from time to time, on the Allocated Principal Balance of the Carolina Place Non-Pooled Portion, through but not including the then-most recent due date for the Carolina Place Mortgage Loan (net of any portion thereof that constitutes Mortgage Deferred Interest with respect to the Carolina Place Mortgage Loan that is allocable to the Carolina Place Non-Pooled Portion), to the extent not previously received or advanced; o fifth, for inclusion in the Class CP Available P&I Funds, as principal of the Carolina Place Non-Pooled Portion in an amount (the "Class CP Principal Payment Amount") equal to the lesser of S-173 (1) the Allocated Principal Balance of the Carolina Place Non-Pooled Portion immediately prior to, together with any Mortgage Deferred Interest with respect to the Carolina Place Mortgage Loan that is allocable to the Carolina Place Non-Pooled Portion for, the subject payment date and (2) the excess, if any, of (a) the entire Carolina Place Principal Payment Amount for the subject payment date, over (b) the payments of principal to be made with respect to the Carolina Place Pooled Portion on that payment date in accordance with clause second above; o sixth, for inclusion in the Class CP Available P&I Funds, as a reimbursement with respect to the Carolina Place Non-Pooled Portion for any Realized Losses and/or Additional Trust Fund Expenses incurred with respect to the Carolina Place Mortgage Loan that were borne by the holders of the class CP-1, CP-2 and CP-3 certificates and that have not been previously reimbursed; and o seventh, for inclusion in the Standard Available P&I Funds, any remaining portion of the amounts being distributed on the subject payment date. For purposes of clauses first and fourth of the preceding sentence, any Mortgage Deferred Interest with respect to the Carolina Place Mortgage Loan that is allocable to the Carolina Place Non-Pooled Portion for any payment date will be equal to the Mortgage Deferred Interest that is allocated to the class CP certificates for the subject payment date, and the balance of any Mortgage Deferred Interest with respect to the Carolina Place Mortgage Loan for the subject payment date will be allocated to the Carolina Place Pooled Portion. On each payment date, the trustee will apply the Class CP Available P&I Funds for that date to make the following distributions in the following order of priority, in each case to the extent of the remaining portion of the Class CP Available P&I Funds: o first, to make distributions of interest to the holders of the class CP-1 certificates up to the total interest distributable on that class on that payment date; o second, to make distributions of principal to the holders of the class CP-1 certificates up to an amount (not to exceed the total principal balance of the class CP-1 certificates outstanding immediately prior to, together with all Mortgage Deferred Interest allocated to the class CP-1 certificates for, such payment date) equal to either (a) if no Carolina Place Payment Trigger Event exists, the class CP-1 certificateholders' pro rata share (based on balance) of the Class CP Principal Payment Amount for that payment date or (b) if a Carolina Place Payment Trigger Event does exist, the entire Class CP Principal Payment Amount for that payment date; o third, to make distributions to the holders of the class CP-1 certificates, up to an amount equal to, and in reimbursement of, all previously unreimbursed reductions, if any, made in the total principal balance of that class on all prior distribution dates as discussed under "--Reductions of Certificate Principal Balances in Connection with Realized Losses and Additional Trust Fund Expenses" below; o fourth, to make distributions of interest to the holders of the class CP-2 certificates up to the total interest distributable on that class on that payment date; o fifth, to make distributions of principal to the holders of the class CP-2 certificates up to an amount (not to exceed the total principal balance of the class CP-2 certificates outstanding immediately prior to, together with all Mortgage Deferred Interest allocated to the class CP-2 certificates for, such payment date) equal to either (a) if no Carolina Place Payment Trigger Event exists, the class CP-2 certificateholders' pro rata share (based on balance) of the Class CP S-174 Principal Payment Amount for that payment date or (b) if a Carolina Place Payment Trigger Event does exist, the entire Class CP Principal Payment Amount for that payment date, net of any portion thereof payable as principal with respect to the class CP-1 certificates as described in clause second above; o sixth, to make distributions to the holders of the class CP-2 certificates, up to an amount equal to, and in reimbursement of, all previously unreimbursed reductions, if any, made in the total principal balance of that class on all prior distribution dates as discussed under "--Reductions of Certificate Principal Balances in Connection with Realized Losses and Additional Trust Fund Expenses" below; o seventh, to make distributions of interest to the holders of the class CP-3 certificates up to the total interest distributable on that class on that payment date; o eighth, to make distributions of principal to the holders of the class CP-3 certificates up to an amount (not to exceed the total principal balance of the class CP-3 certificates outstanding immediately prior to, together with all Mortgage Deferred Interest allocated to the class CP-3 certificates for, such payment date) equal to the entire Class CP Principal Payment Amount for that payment date, net of any portion thereof payable as principal with respect to the class CP-1 and/or CP-2 certificates as described in clauses second and fifth above; o ninth, to make distributions to the holders of the class CP-3 certificates, up to an amount equal to, and in reimbursement of, all previously unreimbursed reductions, if any, made in the total principal balance of that class on all prior distribution dates as discussed under "--Reductions of Certificate Principal Balances in Connection with Realized Losses and Additional Trust Fund Expenses" below; and o tenth, to apply any remaining Class CP Available P&I Funds as described in the series 2005-C3 pooling and servicing agreement. Payments of Prepayment Premiums and Yield Maintenance Charges. If any prepayment consideration is collected during any particular collection period with respect to any mortgage loan in the trust fund, regardless of whether that prepayment consideration is calculated as a percentage of the amount prepaid or in accordance with a yield maintenance formula, then on the payment date corresponding to that collection period, the trustee will pay a portion of that prepayment consideration to the holders of each class of series 2005-C3 principal balance certificates (exclusive of the class A-MFL, J, K, L, M, N, O, P, CP-1, CP-2 and CP-3 certificates) and with respect to the class A-MFL REMIC II regular interest, to the extent any such class or that REMIC II regular interest, as the case may be, then entitled to payments of principal from the loan group (i.e., loan group no. 1 or loan group no. 2) that includes the prepaid mortgage loan, up to an amount equal to, in the case of any particular class of those series 2005-C3 principal balance certificates and/or that REMIC II regular interest, the product of-- o the full amount of that prepayment consideration, multiplied by o a fraction, which in no event may be greater than 1.0 or less than 0.0, the numerator of which is equal to the excess, if any, of the pass-through rate for that class of series 2005-C3 principal balance certificates or that REMIC II regular interest, as the case may be, for the corresponding interest accrual period, over the relevant discount rate, and the denominator of which is equal to the excess, if any, of the mortgage rate of the prepaid mortgage loan over the relevant discount rate, and further multiplied by S-175 o a fraction, the numerator of which is equal to the amount of principal payable to the holders of that class of series 2005-C3 certificates or that REMIC II regular interest, as the case may be, on that payment date with respect to the loan group that includes the prepaid mortgage loan, and the denominator of which is the portion of the Total Principal Payment Amount for that payment date attributable to the loan group that includes the prepaid mortgage loan. For the purpose of the foregoing, the relevant discount rate will be the discount rate specified in the mortgage loan documents for the subject underlying mortgage loan. On each payment date, immediately following the distributions described above in this "--Payments of Prepayment Premiums and Yield Maintenance Charges" subsection, the trustee will thereafter remit any remaining portion of the subject prepayment consideration distributable on that payment date to the holders of the class XC certificates. After the payment date on which the total principal balance of all classes of the offered certificates has been reduced to zero, the trustee will pay any prepayment consideration collected on the underlying mortgage loans, entirely to the holders of non-offered certificates. For so long as the swap agreement relating to the class A-MFL certificates remains in effect and there is no continuing payment default thereunder on the part of the swap counterparty, prepayment consideration allocated to the class A-MFL REMIC II regular interest will be payable to the swap counterparty. Neither we nor any of the underwriters makes any representation as to: o the enforceability of the provision of any promissory note evidencing one of the mortgage loans requiring the payment of a prepayment premium or yield maintenance charge; or o the collectability of any prepayment premium or yield maintenance charge. See "Description of the Mortgage Pool--Terms and Conditions of the Underlying Mortgage Loans--Voluntary Prepayment Provisions" in this prospectus supplement. Payments on the Class A-MFL Certificates. On each payment date, for so long as the total principal balance of the class A-MFL certificates has not been reduced to zero, the trustee is required to apply amounts on deposit in the floating rate account (exclusive of any portion thereof that constitutes prepayment consideration, amounts deposited in error, amounts payable to the swap counterparty and/or interest and other investment earnings payable to the trustee), in the following order of priority: o first, to make distributions of interest to the holders of the class A-MFL certificates, up to an amount equal to the Class A-MFL Interest Distribution Amount for the subject payment date; o second, to make distributions of principal to the holders of the class A-MFL certificates, up to the Class A-MFL Principal Distribution Amount for the subject payment date, until the total principal balance of that class is reduced to zero; and o third, to reimburse the holders of the class A-MFL certificates for all previously unreimbursed reductions, if any, made in the total principal balance of that class on all prior payment dates as discussed under "--Reductions of Certificate Principal Balances in Connection with Realized Losses and Additional Trust Fund Expenses" below. S-176 For so long as the swap agreement is in effect and there is no continuing payment default thereunder on the part of the swap counterparty, the "Class A-MFL Interest Distribution Amount" with respect to any payment date will generally be equal to: (a) all interest accrued during the related interest accrual period at the applicable pass-through rate for the class A-MFL certificates on the total principal balance of such class, reduced (to not less than zero) by (b) the excess, if any, of (i) 1/12th of the product of (A) _________% and (B) the total principal balance of the class A-MFL certificates immediately prior to the subject payment date, over (ii) the lesser of (A) 1/12th of the product of (1) the Weighted Average Pool Pass-Through Rate for the subject payment date, multiplied by (2) the total principal balance of the class A-MFL REMIC II regular interest immediately prior to the subject payment date and (B) the amount of interest distributions with respect to the class A-MFL REMIC II regular interest pursuant to the priority of distributions on that payment date; and increased by (c) to the extent not otherwise payable to the swap counterparty, the amount, if any, by which (i) interest distributions with respect to the class A-MFL REMIC II regular interest pursuant to the priority of distributions on that payment date exceeds (ii) 1/12th of the product of (A) ________%, multiplied by (B) the notional amount of the swap agreement for that payment date. All or a portion of the amount described in clause (c) of the prior sentence with respect to any payment date may be payable to the swap counterparty if, with respect to any prior payment date, the amount of the reduction described in clause (b) of the prior sentence exceeded the maximum amount payable by the swap counterparty with respect to that prior payment date without regard to any such reduction. Notwithstanding the foregoing, if there is a continuing Swap Payment Default, or if the swap agreement is terminated and a replacement swap agreement is not obtained, then the "Class A-MFL Interest Distribution Amount" with respect to any payment date will be the amount of interest distributions with respect to the class A-MFL REMIC II regular interest on such payment date pursuant to the priority of distributions. With respect to any payment date, the "Class A-MFL Principal Distribution Amount" will be an amount equal to the amount of principal allocated to the class A-MFL REMIC II regular interest pursuant to the priority of distributions on such payment date. For so long as the swap agreement is in effect and there is no continuing payment default thereunder on the part of the swap counterparty, all prepayment consideration allocable to the class A-MFL REMIC II regular interest will be payable to the swap counterparty. However, if there is a continuing Swap Payment Default, or if the swap agreement is terminated and a replacement swap agreement is not obtained, then all prepayment consideration allocable to the class A-MFL REMIC II regular interest will be payable to the holders of the class A-MFL certificates. See "--Payments--Priority of Payments" and "Description of the Swap Agreement" in this prospectus supplement. Payments of Post-ARD Additional Interest. The class Y certificates will entitle holders to all amounts, if any, collected on the ARD Loans in the trust fund and applied as Post-ARD Additional Interest. TREATMENT OF REO PROPERTIES Notwithstanding that any mortgaged real property may be acquired as part of the trust fund through foreclosure, deed in lieu of foreclosure or otherwise, the related underlying mortgage loan will be treated as having remained outstanding, until the REO Property is liquidated, for purposes of determining: o payments on the series 2005-C3 certificates and/or the class A-MFL REMIC II regular interest; o allocations of Realized Losses and Additional Trust Fund Expenses to the series 2005-C3 certificates and/or the class A-MFL REMIC II regular interest; and S-177 o the amount of all fees payable to the master servicer, the special servicer and the trustee under the series 2005-C3 pooling and servicing agreement. In connection with the foregoing, that mortgage loan will be taken into account when determining the Weighted Average Pool Pass-Through Rate and the Total Principal Payment Amount for each payment date. Operating revenues and other proceeds derived from an REO Property held by the trust will be applied: o first, to pay, or to reimburse the master servicer, the special servicer and/or the trustee for the payment of, any costs and expenses incurred in connection with the operation and disposition of the REO Property and select other items; and o thereafter, as collections of principal, interest and other amounts due on the related underlying mortgage loan (or, if the REO Property relates thereto, on the Carolina Place Loan Pair). To the extent described under "--Advances of Delinquent Monthly Debt Service Payments" below, the master servicer, the trustee and the fiscal agent will be required to advance delinquent monthly debt service payments with respect to each mortgage loan in the trust fund as to which the corresponding mortgaged real property has become an REO Property, in all cases as if the mortgage loan had remained outstanding. REDUCTIONS OF CERTIFICATE PRINCIPAL BALANCES IN CONNECTION WITH REALIZED LOSSES AND ADDITIONAL TRUST FUND EXPENSES As a result of Realized Losses and Additional Trust Fund Expenses, the total Stated Principal Balance of the mortgage pool may decline below the total principal balance of the series 2005-C3 principal balance certificates (exclusive of the class A-MFL certificates) and the class A-MFL REMIC II regular interest. On each payment date, following the payments to be made to the series 2005-C3 certificateholders (exclusive of the class A-MFL certificates) and with respect to the class A-MFL REMIC II regular interest on that payment date, the trustee will allocate to the respective classes of the series 2005-C3 principal balance certificates (exclusive of the class A-MFL, CP-1, CP-2 and CP-3 certificates) and the class A-MFL REMIC II regular interest, sequentially in the order described in the following table and, in each case, up to the total principal balance of the subject class(es) or REMIC II regular interest, the aggregate of all Realized Losses and Additional Trust Fund Expenses that were incurred at any time following the cut-off date through the end of the related collection period and were not previously allocated on any prior payment date, but only to the extent that the total Stated Principal Balance of the mortgage pool--reduced by the Allocated Principal Balance of the Carolina Place Non-Pooled Portion--that will be outstanding immediately following that payment date exceeds the total principal balance of the series 2005-C3 principal balance certificates (exclusive of the class A-MFL, CP-1, CP-2 and CP-3 certificates) and the class A-MFL REMIC II regular interest following all payments made to series 2005-C3 certificateholders (exclusive of the class A-MFL certificates) and with respect to the class A-MFL REMIC II regular interest on that payment date. S-178 ORDER OF ALLOCATION CLASS - ------------------- -------------------- 1st................ P 2nd................ O 3rd................ N 4th................ M 5th................ L 6th................ K 7th................ J 8th................ H 9th................ G 10th............... F 11th............... E 12th............... D 13th............... C 14th............... B 15th............... A-J 16th............... A-MFL and A-MFX* 17th............... A-1, A-2, A-3, A-SB, A-4 and A-1A* - ---------- * Pro rata based on the respective total principal balances thereof. The reference in the foregoing table to "A-MFL" means the class A-MFL REMIC II regular interest. However, any reduction in the total principal balance of the class A-MFL REMIC II regular interest, as described above, will result in a dollar-for-dollar reduction in the total principal balance of the class A-MFL certificates. In no event will the total principal balance of the class A-MFL REMIC II regular interest or any class of series 2005-C3 principal balance certificates identified in the foregoing table be reduced until the total principal balance of all other series 2005-C3 principal balance certificates listed above it in the table has been reduced to zero. In no event will the total principal balance of any of the A-1, A-2, A-3, A-SB, A-4 or A-1A classes be reduced until the total principal balance of the class A-MFL REMIC II regular interest has been reduced to zero. Notwithstanding the foregoing, all Realized Losses and Additional Trust Fund Expenses, if any, in respect of or related to the Carolina Place Mortgage Loan will be allocated-- o first, to the class CP-3, CP-2 and CP-1 certificates, in that order, in each case up to the total principal balance of the subject class, but in the aggregate only to the extent that the total principal balance of all those classes exceeds the Allocated Principal Balance of the Carolina Place Non-Pooled Portion that will be outstanding immediately following the subject payment date; and o then, to the respective classes of series 2005-C3 principal balance certificates (exclusive of the class A-MFL, CP-1, CP-2 and CP-3 certificates) and the class A-MFL REMIC II regular interest as described above in this "--Reductions of Certificate Principal Balances in Connection with Realized Losses and Additional Trust Fund Expenses" section. All Realized Losses and Additional Trust Fund Expenses, if any, allocated to a class of series 2005-C3 principal balance certificates (exclusive of the class A-MFL certificates) and the class A-MFL REMIC II regular interest will be made by reducing the total principal balance of such class by the amount so allocated. S-179 The Realized Loss with respect to a defaulted mortgage loan, or related REO Property, in the trust fund as to which a final recovery determination has been made, is an amount generally equal to the excess, if any, of: o the outstanding principal balance of the mortgage loan as of the commencement of the collection period in which the final recovery determination was made, together with-- 1. all accrued and unpaid interest on the mortgage loan to but not including the due date in the collection period in which the final recovery determination was made, exclusive, however, of any portion of that interest that represents Default Interest, Post-ARD Additional Interest, prepayment premiums and yield maintenance charges; and 2. all related unreimbursed servicing advances, together with interest accrued thereon; over o all payments and proceeds, if any, received in respect of such mortgage loan or, to the extent allocable thereto, in respect of any related REO Property, as the case may be, during the collection period in which such final recovery determination was made. A final recovery determination is a determination made by the special servicer that all amounts collectible with respect to a defaulted mortgage loan, or related REO Property, in the trust fund have been received. If any portion of the debt due under any underlying mortgage loan is forgiven, whether in connection with a modification, waiver or amendment granted or agreed to by the master servicer or the special servicer or in connection with the bankruptcy, insolvency or similar proceeding involving the related borrower, the amount forgiven, other than Default Interest and Post-ARD Additional Interest, also will be treated as a Realized Loss. Realized Losses may include advances (and interest accrued thereon) that are determined to be nonrecoverable from collections on the related underlying mortgage loan and are therefore recovered out of general collections on the Mortgage Pool, but only after a final recovery determination has been made with respect to that mortgage loan or a related REO Property. Some examples of Additional Trust Fund Expenses are: o any special servicing fees, workout fees and liquidation fees paid to the special servicer; o any interest paid to the master servicer, the special servicer, the trustee and/or the fiscal agent with respect to unreimbursed advances, which interest payment is not covered out of late payment charges and Default Interest actually collected on the related underlying mortgage loan as provided in the series 2005-C3 pooling and servicing agreement; o the cost of certain property inspections by the special servicer at the expense of the trust, which cost is not covered out of late payment charges and Default Interest actually collected on the related underlying mortgage loan as provided in the series 2005-C3 pooling and servicing agreement; o the cost of various opinions of counsel and other legal and tax accounting advice required or permitted to be obtained in connection with the servicing of the underlying mortgage loans, the administration of the other trust assets, certain amendments to the series 2005-C3 pooling and servicing agreement and the recording of the series 2005-C3 pooling and servicing agreement; S-180 o any unanticipated, non-mortgage loan specific expenses of the trust, including-- 1. any reimbursements and indemnifications to the trustee and various related persons and entities described under "Description of the Governing Documents--Matters Regarding the Trustee" in the accompanying prospectus, 2. any reimbursements and indemnifications to the master servicer, the special servicer, us and various related persons and entities described under "Description of the Governing Documents--Matters Regarding the Master Servicer, the Special Servicer, the Manager and Us" in the accompanying prospectus, and 3. any federal, state and local taxes, and tax-related expenses, payable out of the trust assets, as described under "Federal Income Tax Consequences--REMICs--Prohibited Transactions Tax and Other Taxes" in the accompanying prospectus; o rating agency fees, other than on-going surveillance fees, that cannot be recovered from the related borrower; and o any amounts expended on behalf of the trust to test for and/or remediate an adverse environmental condition at any mortgaged real property securing a defaulted mortgage loan as described under "Servicing of the Underlying Mortgage Loans--Realization Upon Defaulted Mortgage Loans" in this prospectus supplement. ADVANCES OF DELINQUENT MONTHLY DEBT SERVICE PAYMENTS The master servicer will be required to make, for each payment date, a total amount of advances of principal and/or interest generally equal to all monthly debt service payments--other than balloon payments--and assumed monthly debt service payments, in each case net of related master servicing fees and special servicing fees, that: o were due or deemed due, as the case may be, with respect to the underlying mortgage loans--including the Carolina Place Non-Pooled Portion--during the related collection period; and o were not paid by or on behalf of the respective borrowers or otherwise collected as of the close of business on the last day of the related collection period. Notwithstanding the foregoing, if it is determined that an Appraisal Reduction Amount exists with respect to any mortgage loan in the trust fund, then the master servicer will reduce the interest portion, but not the principal portion, of each monthly debt service advance that it must make with respect to that mortgage loan during the period that the Appraisal Reduction Amount exists. The interest portion of any monthly debt service advance required to be made with respect to any such underlying mortgage loan as to which there exists an Appraisal Reduction Amount, will equal: o the amount of the interest portion of that advance of monthly debt service payments that would otherwise be required to be made for the subject payment date without regard to this sentence and the prior sentence; reduced (to not less than zero) by o with respect to each class of series 2005-C3 principal balance certificates (or, if applicable, the class A-MFL REMIC II regular interest) to which any portion of the subject Appraisal Reduction Amount is allocated, one month's interest (calculated on a 30/360 Basis) on the portion of the S-181 subject Appraisal Reduction Amount allocated to that class or REMIC II regular interest, as the case may be, at the applicable pass-through rate. Appraisal Reduction Amounts will be allocated to the respective classes of the series 2005-C3 principal balance certificates (exclusive of the class A-MFL certificates) and the class A-MFL REMIC II regular interest, in each case up to (but without any reduction in) the related outstanding total principal balance thereof, in the following order: (a) if the subject Appraisal Reduction Amount relates to any mortgage loan other than the Carolina Place Mortgage Loan, then first, to the P, O, N, M, L, K, J, H, G, F, E, D, C, B and A-J classes, in that order; and then, to the class A-MFL REMIC II regular interest and the A-MFX class, on a pro rata basis by balance; and last, to the A-1, A-2, A-3, A-SB, A-4 and A-1A classes, on a pro rata basis by balance; and (b) if the subject Appraisal Reduction Amount relates to the Carolina Place Mortgage Loan, then first, to the CP-3, CP-2, CP-1, P, O, N, M, L, K, J, H, G, F, E, D, C, B and A-J classes, in that order; and then, to the class A-MFL REMIC II regular interest and the A-MFX class, on a pro rata basis by balance; and last, to the A-1, A-2, A-3, A-SB, A-4 and A-1A classes, on a pro rata basis by balance. With respect to any payment date, the master servicer will be required to make monthly debt service advances either out of its own funds or, subject to the conditions set forth in the series 2005-C3 pooling and servicing agreement, funds held in the master servicer's collection account that are not required to be paid on the series 2005-C3 certificates (exclusive of the class A-MFL certificates) or with respect to the class A-MFL REMIC II regular interest. If the master servicer fails to make a required advance and the trustee is aware of that failure, the trustee will be obligated to make that advance. If the trustee fails to make a required advance and the fiscal agent is aware of that failure, the fiscal agent will be obligated to make that advance. See "--The Trustee" and "--The Fiscal Agent" below. The master servicer, the trustee and the fiscal agent will each be entitled to recover any monthly debt service advance made by it out of its own funds with respect to any underlying mortgage loan, together with interest thereon, from collections on that mortgage loan. None of the master servicer, the trustee or the fiscal agent will be obligated to make any monthly debt service advance with respect to any underlying mortgage loan that, in its judgment, or in the judgment of the special servicer, would not ultimately be recoverable out of collections on that mortgage loan. The trustee and the fiscal agent will be entitled to conclusively rely on any determination of nonrecoverability made by the master servicer, and the master servicer, the trustee and the fiscal agent, in the case of a specially serviced mortgage loans and REO Properties, must conclusively rely on any determination of nonrecoverability made by the special servicer. If the master servicer, the trustee or the fiscal agent makes any monthly debt service advance with respect to any underlying mortgage loan (including the Carolina Place Non-Pooled Portion) that it subsequently determines will not be recoverable out of collections on that mortgage loan, it may obtain reimbursement for that advance, together with interest accrued on the advance as described below, out of general collections on the mortgage loans and any REO Properties in the trust fund on deposit in the master servicer's collection account from time to time. See "Description of the Certificates--Advances" in the accompanying prospectus and "Servicing of the Underlying Mortgage Loans--Collection Account" in this prospectus supplement. If the master servicer, the trustee or the fiscal agent reimburses itself out of general collections on the mortgage pool for any monthly debt service advance (including the portion of any monthly debt service advance made with respect to the Carolina Place Non-Pooled Portion) that it has determined is not recoverable out of collections on the related mortgage loan, then that advance (together with accrued interest thereon) will be deemed, to the fullest extent permitted, to be reimbursed first out of payments and other collections of principal on the underlying mortgage loans otherwise distributable on the series 2005-C3 principal balance certificates (exclusive of the class A-MFL certificates) and the class A-MFL REMIC II regular interest on the related payment date (prior to being deemed reimbursed out of payments and other collections of interest on the S-182 underlying mortgage loans otherwise distributable on the series 2005-C3 certificates (exclusive of the class A-MFL certificates) and the class A-MFL REMIC II regular interest), thereby reducing the payments of principal on the series 2005-C3 principal balance certificates (exclusive of the class A-MFL certificates) and the class A-MFL REMIC II regular interest. In addition, if payments and other collections of principal on the mortgage pool are applied to reimburse, or pay interest on, any advance that is determined to be nonrecoverable from collections on the related underlying mortgage loan, as described in the prior sentence, then that advance will be reimbursed, and/or interest thereon will be paid, first out of payments or other collections of principal on the loan group that includes the subject underlying mortgage loan as to which the advance was made, and prior to using payments or other collections of principal on the other loan group. Notwithstanding the foregoing, amounts otherwise payable with respect to the class CP-1, CP-2 and CP-3 certificates will not be available to reimburse advances on any underlying mortgage loan other than the Carolina Place Mortgage Loan. In making a recoverability determination in accordance with the series 2005-C3 pooling and servicing agreement, the master servicer, the special servicer, the trustee and the fiscal agent may consider, among other things, the obligations of the borrower under the terms of the related mortgage loan as it may have been modified, the condition of the related mortgaged real property, future expenses, and the existence and amount of any outstanding advances on the subject underlying mortgage loan, together with (to the extent accrued and unpaid) interest on such advances, and the existence and amount of any nonrecoverable advances in respect of other underlying mortgage loans, the reimbursement of which is being deferred as contemplated in the next paragraph. Notwithstanding the foregoing, upon a determination that a previously made monthly debt service advance is not recoverable from expected collections on the related underlying mortgage loan or REO Property in the trust fund, instead of obtaining reimbursement out of general collections on the mortgage pool immediately, the master servicer, the trustee or the fiscal agent, as applicable, may, in its sole discretion, elect to obtain reimbursement for such nonrecoverable monthly debt service advance over a period of time (not to exceed 12 months or such longer period of time as is approved in writing by the series 2003-C5 controlling class representative) and the unreimbursed portion of such advance will accrue interest at the prime rate described below. At any time after such a determination to obtain reimbursement over time in accordance with the preceding sentence, the master servicer, the trustee or the fiscal agent, as applicable, may, in its sole discretion, decide to obtain reimbursement from general collections on the mortgage pool immediately. The fact that a decision to recover a nonrecoverable monthly debt service advance over time, or not to do so, benefits some classes of series 2005-C3 certificateholders to the detriment of other classes of series 2005-C3 certificateholders will not, with respect to the master servicer, constitute a violation of the Servicing Standard or, with respect to the trustee or the fiscal agent, constitute a violation of any fiduciary duty to the series 2005-C3 certificateholders and/or contractual duty under the series 2005-C3 pooling and servicing agreement. In the event that the master servicer, the trustee or the fiscal agent, as applicable, elects not to recover such nonrecoverable advances over time, the master servicer, the trustee or the fiscal agent, as applicable, will be required to give S&P and Moody's at least 15 days' notice prior to any such reimbursement, unless the master servicer, the trustee or the fiscal agent, as applicable, makes a determination not to give such notices in accordance with the terms of the series 2005-C3 pooling and servicing agreement. The master servicer, the trustee and the fiscal agent will each be entitled to receive interest on monthly debt service advances made by it out of its own funds with respect to the underlying mortgage loans. That interest will accrue on the amount of each such monthly debt service advance, and compound annually, for so long as that advance is outstanding -- or, if the advance was made during the grace period for the subject monthly debt service payment, for so long as that advance is outstanding from the end of that grace period -- at an annual rate equal to the prime rate as published in the "Money Rates" section of The Wall Street Journal, as that prime rate may change from time to time. Interest accrued with respect to any such monthly debt service advance will be payable: S-183 o first, out of any Default Interest and/or late payment charge collected on the related underlying mortgage loan during the collection period in which that monthly debt service advance is reimbursed; and o then, after or at the same time that advance is reimbursed, but only if and to the extent that the Default Interest and late payment charges referred to in clause first above are insufficient to cover the advance interest, out of any other amounts then on deposit in the master servicer's collection account. If any payment of interest on advances is paid out of general collections on the mortgage pool as contemplated by the second bullet of the prior sentence, then any late payment charges and Default Interest collected during the following 12 months on the underlying mortgage loan as to which those advances were made will be applied to reimburse the trust for that payment prior to being applied as additional compensation to the master servicer or the special servicer. To the extent not offset by Default Interest and/or late payment charges accrued and actually collected on the related underlying mortgage loan, interest accrued on outstanding monthly debt service advances with respect to the underlying mortgage loans will result in a reduction in amounts payable on one or more classes of the series 2005-C3 certificates. A monthly debt service payment will be assumed to be due with respect to: o each underlying mortgage loan that is delinquent with respect to its balloon payment beyond the end of the collection period in which its maturity date occurs and as to which no arrangements have been agreed to for the collection of the delinquent amounts, including an extension of maturity; and o each underlying mortgage loan as to which the corresponding mortgaged real property has become an REO Property. The assumed monthly debt service payment deemed due on any mortgage loan described in the prior sentence that is delinquent as to its balloon payment, will equal, for its maturity date and for each successive due date that it remains outstanding and part of the trust, the monthly debt service payment that would have been due on the mortgage loan on the relevant date if the related balloon payment had not come due and the mortgage loan had, instead, continued to amortize and accrue interest according to its terms in effect immediately prior to, and without regard to the occurrence of, the subject maturity date. The assumed monthly debt service payment deemed due on any mortgage loan described in the second preceding sentence as to which the related mortgaged real property has become an REO Property, will equal, for each due date that the REO Property remains part of the trust fund, the monthly debt service payment or, in the case of a mortgage loan delinquent with respect to its balloon payment, the assumed monthly debt service payment that would have been due or deemed due if the related mortgaged real property had not become an REO Property. Assumed monthly debt service payments for an ARD Loan will not include Post-ARD Additional Interest or accelerated amortization payments. None of the master servicer, the special servicer, the trustee or the fiscal agent will be required to make any P&I advance with respect to the Carolina Place Non-Trust Mortgage Loan. REPORTS TO CERTIFICATEHOLDERS; AVAILABLE INFORMATION Certificateholder Reports. Based solely on historical information provided on a one-time basis by the respective mortgage loan sellers and information provided in monthly reports prepared by the master servicer and the special servicer, and in any event delivered to the trustee, the trustee will be required to provide or otherwise S-184 make available as described under "--Information Available Electronically" below, on each payment date, to each registered holder of an offered certificate and, upon request, to each beneficial owner of an offered certificate held in book-entry form that is identified to the reasonable satisfaction of the trustee, a payment date statement substantially in the form of Annex D to this prospectus supplement. On the second business day prior to each determination date, the special servicer will deliver or cause to be delivered to the master servicer the following reports with respect to the specially serviced mortgage loans and any REO Properties providing the required information as of the end of the preceding calendar month: (i) a CMSA property file; (ii) a CMSA comparative financial status report and (iii) a CMSA financial file. On the first business day following each determination date, the special servicer will deliver or cause to be delivered to the master servicer the following reports with respect to the mortgage loans (and, if applicable, the related REO Properties) (or, as to clause (iv) below, only with respect to specially serviced mortgage loans) providing the required information as of such determination date: (i) a CMSA historical liquidation report; (ii) a CMSA historical loan modification and corrected mortgage loan report; (iii) a CMSA REO status report; (iv) a CMSA loan level reserve/LOC report and (v) a CMSA delinquent loan status report. On the second business day prior to each payment date, the master servicer will be required to furnish to the trustee the CMSA loan periodic update file providing the required information for the mortgage loans as of the related determination date. On the third business day after each determination date, the master servicer will be required to deliver or cause to be delivered to the trustee (in electronic format acceptable to the master servicer and the trustee) (A) the most recent CMSA historical loan modification and corrected mortgage loan report, CMSA historical liquidation report and CMSA REO status report received from the special servicer; (B) a CMSA property file, a CMSA comparative financial status report and a CMSA financial file, each with the required information as of the end of the preceding calendar month (in each case combining the reports prepared by the special servicer and the master servicer); (C) a CMSA loan level reserve/LOC report, a CMSA delinquent loan status report and a CMSA advance recovery report, each with the required information as of such determination date (in each case combining the reports prepared by the special servicer and the master servicer);and (D) a CMSA servicer watch list with the required information as of such determination date. The master servicer will be entitled, absent manifest error, to conclusively rely on the reports to be provided by the special servicer as described above. The trustee will be entitled, absent manifest error, to conclusively rely on the CMSA loan periodic update file to be provided by the master servicer. In the case of information or reports to be furnished by the master servicer to the trustee, to the extent that such information is based on reports to be provided by the special servicer and, to the extent that such reports are to be prepared and delivered by the special servicer, the master servicer will have no obligation to provide such information or reports until it has received such information or reports from the special servicer and the master servicer will not be in default due to a delay in providing the reports to the extent caused by the special servicer's failure to timely provide any report. In addition, the special servicer with respect to each specially serviced mortgage loan and REO Property, and the master servicer with respect to each non-specially serviced mortgage loan, will each prepare or, if previously prepared, update an operating statement analysis report for the related mortgaged real property or REO Property, as the case may be. Subject to the conditions set forth in the last paragraph under "--Other Information" below, the master servicer and the special servicer will make available to the trustee, the series 2005-C3 controlling class representative, any certificateholder, certificate owner or prospective certificateholder or certificate owner (or licensed or registered investment adviser representing such person), in each case upon request, all of the operating statement analysis reports so prepared or updated; provided, that if the requesting party is a certificateholder, certificate owner or prospective certificateholder or certificate owner (or licensed or registered investment adviser representing such person), the master servicer or the special servicer, as the case S-185 may be, will be permitted to require payment of a sum sufficient to cover the reasonable costs and expenses of providing any copies. See "Servicing of the Underlying Mortgage Loans--Inspections; Collection of Operating Information" in this prospectus supplement. Each CMSA file or report will be substantially in the form of, and contain the information called for in, the downloadable form of that file or report available as of the date of the initial issuance of the series 2005-C3 certificates on the CMSA website, currently located at www.cmbs.org, or in such other form for the presentation of that information and containing such additional information as may from time to time be approved by the CMSA for commercial mortgage-backed securities transactions generally. Book-Entry Certificates. If you hold your offered certificates in book-entry form through DTC, you may obtain direct access to the monthly reports of the trustee as if you were a registered certificateholder, provided that you deliver a written certification to the trustee confirming your beneficial ownership in the offered certificates. Otherwise, until definitive certificates are issued with respect to your offered certificates, the information contained in those monthly reports will be available to you only to the extent that it is made available through DTC and the DTC participants or is available on the trustee's internet website. Conveyance of notices and other communications by DTC to the DTC participants, and by the DTC participants to beneficial owners of the offered certificates, will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. We, the master servicer, the special servicer, the trustee and the series 2005-C3 certificate registrar are required to recognize as certificateholders only those persons in whose names the series 2005-C3 certificates are registered on the books and records of the certificate registrar. Information Available Electronically. On each payment date, the trustee will make available to Privileged Persons via its internet website, which is currently located at "www.etrustee.net", (i) the monthly payment date statement, (ii) the CMSA loan periodic update file, CMSA loan setup file, CMSA bond file and CMSA collateral summary file, (iii) the Unrestricted Servicer Reports, (iv) as a convenience for Privileged Persons (and not in furtherance of the distribution thereof under the securities laws), this prospectus supplement, the prospectus and the series 2005-C3 pooling and servicing agreement, and (v) any other items at the request of the Depositor. In addition, on or prior to each payment date, the trustee will make available via its internet website, on a restricted basis, (i) the Restricted Servicer Reports, (ii) the CMSA property file and (iii) any other items at the request of the Depositor. The trustee will provide access to such restricted reports, upon request, to each Privileged Person. The trustee will not be obligated to make any representation or warranty as to the accuracy or completeness of any report, document or other information made available on its internet website and will assume no responsibility therefor. In addition, the trustee may disclaim responsibility for any information distributed by the trustee for which it is not the original source. In connection with providing access to its internet website, the trustee may require registration and the acceptance of a disclaimer. The trustee will not be liable for the dissemination of information in accordance with, and in compliance with the terms of, the series 2005-C3 pooling and servicing agreement. The master servicer may, but is not required to, make available to any interested party via its internet website (i) the monthly payment date statement, (ii) as a convenience for interested parties (and not in furtherance of the distribution thereof under the securities laws), the series 2005-C3 pooling and servicing agreement, the accompanying prospectus and this prospectus supplement and (iii) any other items at our request. In addition, the master servicer may, but is not required to, make available each month via its internet website (i) to any interested party, the Unrestricted Servicer Reports, the CMSA loan setup file and the CMSA loan periodic update file, and (ii) to any Privileged Person, with the use of a password provided by the master servicer, the Restricted Servicer Reports, the CMSA financial file and the CMSA property file. Any Restricted Servicer Report or Unrestricted Servicer Report that is not available on the master servicer's internet website as described in the immediately preceding sentence by 5:00 p.m. (New York City time) on the related payment date, will be provided (in S-186 electronic format, or if electronic mail is unavailable, by facsimile) by the master servicer, upon request, to any person otherwise entitled to access such report on the master servicer's internet website. In connection with providing access to the master servicer's or the special servicer's internet website, the master servicer or the special servicer, as applicable, may require registration and the acceptance of a disclaimer. Other Information. The series 2005-C3 pooling and servicing agreement will obligate the master servicer (with respect to the items listed in clauses 1, 2 (other than monthly payment date statements), 3, 5, 6, 8, 9 and 10), the special servicer (with respect to the items in clauses 3, 7, 8 (with respect to specially serviced mortgage loans), 9 and 10) and the trustee (with respect to the items in clauses 2, 3, 4 and 9 below and to the extent any other items are in its possession) to make available at their respective offices, upon ten days' prior written request and during normal business hours, for review by any holder or beneficial owner of an offered certificate or any person identified to the master servicer, the special servicer or the trustee, as the case may be, as a prospective transferee of an offered certificate or any interest in an offered certificate (or a licensed or registered investment adviser representing a prospective purchaser), originals or copies of, among other things, the following items: 1. the series 2005-C3 pooling and servicing agreement, including exhibits, and any amendments to the series 2005-C3 pooling and servicing agreement; 2. this prospectus supplement and the accompanying prospectus, all monthly payment date statements delivered, or otherwise electronically made available, to series 2005-C3 certificateholders since the date of initial issuance of the offered certificates, and all reports, statements and analyses delivered, as described under the heading "--Certificateholder Reports" above, by the master servicer since the date of initial issuance of the offered certificates; 3. all officer's certificates delivered to the trustee by the master servicer and/or the special servicer (in the case of the master servicer and the special servicer, only with respect to officer's certificates delivered by that party) since the date of initial issuance of the certificates, as described under "Servicing of the Underlying Mortgage Loans--Evidence as to Compliance" in this prospectus supplement; 4. all accountant's reports delivered to the trustee with respect to the master servicer and/or the special servicer since the date of initial issuance of the offered certificates, as described under "Servicing of the Underlying Mortgage Loans--Evidence as to Compliance" in this prospectus supplement; 5. the most recent inspection report with respect to each mortgaged real property for an underlying mortgage loan prepared by the master servicer or received by the master servicer from the special servicer and any environmental assessments prepared, in each case as described under "Servicing of the Underlying Mortgage Loans--Inspections; Collection of Operating Information" in this prospectus supplement; 6. the most recent annual operating statement and rent roll for each mortgaged real property for an underlying mortgage loan collected or otherwise received by the master servicer as described under "Servicing of the Underlying Mortgage Loans--Inspections; Collection of Operating Information" in this prospectus supplement; 7. any and all modifications, waivers and amendments of the terms of an underlying mortgage loan entered into by the special servicer and the asset status report prepared pursuant the series 2005-C3 pooling and servicing agreement; S-187 8. all of the servicing files with respect to the underlying mortgage loans (exclusive of any items therein that may not be disclosed by reason of contract or applicable law); 9. any and all officers' certificates and other evidence delivered by the master servicer or the special servicer, as the case may be (and only with respect to officer's certificates delivered by that party), to support its determination that any advance was, or if made, would be, a Nonrecoverable Advance, including appraisals affixed thereto and any required appraisal; and 10. all CMSA operating statement analyses and CMSA NOI adjustment worksheets maintained by the master servicer or the special servicer (and only with respect to those items maintained by that party). Copies of any and all of the foregoing items will be available from the master servicer, the special servicer or the trustee, as the case may be, upon request. However, the master servicer, the special servicer or the trustee, as the case may be, will be permitted to require payment of a sum sufficient to cover the reasonable costs and expenses of providing the copies, unless the party requesting such copies is any of the rating agencies. In connection with providing access to or copies of the items described above, the trustee, the master servicer or the special servicer, as applicable, may require: o in the case of a holder of an offered certificate or a beneficial owner of an offered certificate held in book-entry form, a written confirmation executed by the requesting person or entity, in the form attached to the series 2005-C3 pooling and servicing agreement or otherwise reasonably acceptable to the trustee, the master servicer or the special servicer, as applicable, generally to the effect that the person or entity is a holder or beneficial owner of offered certificates and will keep the information confidential; and o in the case of a prospective purchaser of an offered certificate or any interest in that offered certificate (or a licensed or registered investment adviser representing a prospective purchaser), confirmation executed by the requesting person or entity, in the form attached to the series 2005-C3 pooling and servicing agreement or otherwise reasonably acceptable to the trustee, the master servicer or the special servicer, as applicable, generally to the effect that the person or entity is a prospective purchaser of offered certificates or an interest in offered certificates (or a licensed or registered investment adviser representing a prospective purchaser), is requesting the information for use in evaluating a possible investment in the offered certificates and will otherwise keep the information confidential. In addition, any holder of an offered certificate will be deemed, by virtue of its acceptance of that certificate, to keep confidential any information received by it from the trustee, the master servicer or the special servicer as described above. VOTING RIGHTS The voting rights for the series 2005-C3 certificates will be allocated as follows: o 96.0% of the voting rights will be allocated to the class A-1, A-2, A-3, A-SB, A-4, A-1A, A-MFL, A-MFX, A-J, B, C, D, E, F, G, H, J, K, L, M, N, O, P, CP-1, CP-2 and CP-3 certificates in proportion to the respective total principal balances of those classes; o 4.0% of the voting rights will be allocated to the class XC and XP certificates in proportion to the respective total notional amounts of those classes; and S-188 o 0.0% of the voting rights will be allocated to the class R and Y certificates; provided that, solely for the purpose of determining the voting rights of the classes of certificates specified in the first bullet, the aggregate Appraisal Reduction Amount (determined as set forth herein) will be treated as Realized Losses with respect to the calculation of the total principal balances of such certificates; and provided, further, that the aggregate Appraisal Reduction Amount will not reduce the total principal balance of any class for purposes of determining the series 2005-C3 controlling class, the series 2005-C3 controlling class representative or the Majority Controlling Class Certificateholder, but Appraisal Reduction Amounts with respect to the Carolina Place Mortgage Loan will be taken into account for purposes of determining the Majority Class CP Certificateholder. Voting rights allocated to a class of series 2005-C3 certificateholders will be allocated among those certificateholders in proportion to their respective percentage interests in that class. TERMINATION The obligations created by the series 2005-C3 pooling and servicing agreement will terminate following the earliest of: 1. the final payment or advance on, or other liquidation of, the last mortgage loan or related REO Property remaining in the trust fund; and 2. the purchase of all of the mortgage loans and REO Properties remaining in the trust fund by the special servicer, the Majority Controlling Class Certificateholder or the master servicer, in that order of preference. Written notice of termination of the series 2005-C3 pooling and servicing agreement will be given to each series 2005-C3 certificateholder. The final payment with respect to each series 2005-C3 certificate will be made only upon surrender and cancellation of that certificate at the office of the series 2005-C3 certificate registrar or at any other location specified in the notice of termination. Any purchase by the special servicer, the Majority Controlling Class Certificateholder or the master servicer of all the mortgage loans and REO Properties remaining in the trust fund is required to be made at a price equal to: o the sum of-- 1. the total Stated Principal Balance of all the mortgage loans then included in the trust fund, other than any mortgage loans as to which the mortgaged real properties have become REO Properties, together with-- (a) all unpaid and unadvanced interest, other than Default Interest and Post-ARD Additional Interest, on those mortgage loans up to, but not including their respective due dates in the related collection period, and (b) all unreimbursed advances for those mortgage loans, together with any interest on those advances owing to the parties that made them, and 2. the appraised value of all REO Properties then included in the trust fund, as determined by an appraiser selected by the master servicer and approved by the trustee; minus S-189 o if the purchaser is the master servicer or the special servicer, the aggregate amount of unreimbursed advances made by that servicer, together with any interest accrued and payable to that servicer in respect of unreimbursed advances in accordance with the series 2005-C3 pooling and servicing agreement and any unpaid master servicing fees or special servicing fees, as applicable, remaining outstanding (which items shall be deemed to have been paid or reimbursed to the master servicer or the special servicer, as the case may be, in connection with such purchase). That purchase will result in early retirement of the then outstanding series 2005-C3 certificates. However, the right of the special servicer, the Majority Controlling Class Certificateholder or the master servicer to make the purchase is subject to the requirement that the total Stated Principal Balance of the mortgage pool, including the Carolina Place Non-Pooled Portion, be less than 1.0% of the initial total principal balance of all the series 2005-C3 certificates. The termination price, exclusive of any portion of the termination price payable or reimbursable to any person other than the series 2005-C3 certificateholders, will constitute part of the Total Available P&I Funds for the final payment date. In addition, if, following the date on which the total principal balances of the class A-1, A-2, A-3, A-SB, A-4, A-1A, A-MFL, A-MFX, A-J, B, C and D certificates are reduced to zero, all of the remaining certificates (other than the class R and Y certificates) are held by the same certificateholder, the trust fund may also be terminated, subject to such additional conditions as may be set forth in the pooling and servicing agreement, including, without limitation, the consent of the master servicer, in connection with an exchange of all the remaining certificates for all the mortgage loans and REO Properties remaining in the trust fund at the time of exchange. THE TRUSTEE LaSalle Bank National Association, a national banking association, will act as trustee on behalf of all the series 2005-C3 certificateholders. The corporate trust office of the trustee is located at 135 S. LaSalle Street, Suite 1625, Chicago, Illinois 60603, Attention: Global Securities and Trust Services Group--Citigroup Commercial Mortgage Trust 2005-C3. The trustee is at all times required to be a corporation, bank, trust company or association organized and doing business under the laws of the U.S. or any State of the U.S. or the District of Columbia. In addition, the trustee must at all times: o be authorized under those laws to exercise trust powers; o have a combined capital and surplus of at least $100,000,000; and o be subject to supervision or examination by federal or state banking authority. If the subject corporation, bank, trust company or association publishes reports of condition at least annually, in accordance with law or the requirements of the supervising or examining authority, then the combined capital and surplus of that corporation, bank, trust company or association will be deemed to be its combined capital and surplus as described in its most recent published report of condition. We, the master servicer, the special servicer and our and their respective affiliates, may from time to time enter into normal banking and trustee relationships with the trustee and its affiliates. The trustee and any of its respective affiliates may hold series 2005-C3 certificates in its own name. In addition, for purposes of meeting the legal requirements of some local jurisdictions, the master servicer and the trustee acting jointly will have the power to appoint a co-trustee or separate trustee of all or any part of the trust assets. All rights, powers, duties and S-190 obligations conferred or imposed upon the trustee will be conferred or imposed upon the trustee and the separate trustee or co-trustee jointly, or in any jurisdiction in which the trustee shall be incompetent or unqualified to perform various acts, singly upon the separate trustee or co-trustee who shall exercise and perform its rights, powers, duties and obligations solely at the direction of the trustee. The trustee will be entitled to a monthly fee for its services. With respect to each and every underlying mortgage loan, including each specially serviced mortgage loan, each mortgage loan as to which the related mortgaged real property has become an REO Property and each mortgage loan that has been defeased, that fee will accrue at a specified rate per annum on the Stated Principal Balance of the related mortgage loan outstanding from time to time and be calculated on a 30/360 Basis. The trustee fee is payable out of general collections on the mortgage loans and any REO Properties in the trust fund. The trustee will also be permitted to retain investment income earned on amounts on deposit in the payment account. See also "Description of the Governing Documents--The Trustee", "--Duties of the Trustee", "--Matters Regarding the Trustee" and "--Resignation and Removal of the Trustee" in the accompanying prospectus. THE FISCAL AGENT ABN AMRO Bank N.V., a banking corporation organized under the laws of The Netherlands, will act as fiscal agent pursuant to the series 2005-C3 pooling and servicing agreement. The fiscal agent's office is located at 135 South LaSalle Street, Suite 1625, Chicago, Illinois 60603, Attention: Global Securities and Trust Services Group -- Citigroup Commercial Mortgage Trust 2005-C3. The fiscal agent will be deemed to have been removed in the event of the resignation or removal of the trustee. The fiscal agent will make no representation as to the validity or sufficiency of the series 2005-C3 pooling and servicing agreement, the series 2005-C3 certificates, the underlying mortgage loans, this prospectus supplement (except for the information in the immediately preceding paragraph) or related documents. The duties and obligations of the fiscal agent consist only of making advances as described in this prospectus supplement; and the fiscal agent will not be liable except for the performance of those duties and obligations. In the event that the master servicer and the trustee fail to make a required advance, the fiscal agent will be required to make that advance, provided that the fiscal agent will not be obligated to make any advance that it deems to be a Nonrecoverable Advance. The fiscal agent will be entitled to rely conclusively on any determination by the master servicer or the trustee, as applicable, that an advance, if made, would be a Nonrecoverable Advance. The fiscal agent will be entitled to reimbursement for each advance made by it in the same manner and to the same extent as the trustee and the master servicer. YIELD AND MATURITY CONSIDERATIONS YIELD CONSIDERATIONS General. The yield on any offered certificate will depend on: o the price at which the certificate is purchased by an investor, and o the rate, timing and amount of payments on the certificate. The rate, timing and amount of payments on any offered certificate will in turn depend on, among other things, S-191 o the pass-through rate for the certificate, o the rate and timing of principal payments, including principal prepayments, and other principal collections on the underlying mortgage loans and the extent to which those amounts are to be applied in reduction of the principal balance of the certificate, o the rate, timing and severity of Realized Losses and Additional Trust Fund Expenses and the extent to which those losses and expenses result in the reduction of the principal balance of the certificate, o the timing and severity of any Net Aggregate Prepayment Interest Shortfalls and the extent to which those shortfalls result in the reduction of the interest payments on the certificate, and o in the case of the class A-MFL certificates only, whether the pass-through rate on the class A-MFL REMIC II regular interest is limited by the Weighted Average Pool Pass-Through Rate. Pass-Through Rates. If the pass-through rate applicable to any class of offered certificates is equal to, based upon or limited by the Weighted Average Pool Pass-Through Rate from time to time, then the yield on those offered certificates could be sensitive to changes in the relative composition of the mortgage pool as a result of scheduled amortization, voluntary prepayments and liquidations of the underlying mortgage loans following default. The pass-through rate on the class A-MFL REMIC II regular interest will be sensitive to changes in the relative composition of the mortgage pool. For so long as the swap agreement is in effect and there is no continuing payment default thereunder on the part of the swap counterparty, the pass-through rate on the class A-MFL certificates is based on LIBOR, and therefore the yield on the class A-MFL certificates will be highly sensitive to changes in the level of LIBOR. The yield to investors in the class A-MFL certificates will be highly sensitive to changes in the level of LIBOR. If you purchase a class A-MFL certificate, you should consider the risk that lower than anticipated levels of LIBOR could result in actual yields that are lower than you anticipate. In addition, because interest payments on the class A-MFL certificates may be reduced or the pass-through rate may convert to a fixed rate, subject to a maximum pass-through rate equal to the Weighted Average Pool Pass-Through Rate, in connection with certain events discussed in this prospectus supplement, the yield to investors in the class A-MFL certificates under such circumstances may not be as high as that offered by other LIBOR-based investments that are not subject to such interest rate restrictions. See "Description of the Offered Certificates--Payments--Calculation of Pass-Through Rates" and "Description of the Mortgage Pool" in this prospectus supplement and "--Rate and Timing of Principal Payments" below. Rate and Timing of Principal Payments. The yield to maturity on offered certificates purchased at a discount or a premium will be affected by the rate and timing of principal payments made in reduction of the principal balances of those certificates. In turn, the rate and timing of principal payments that are paid in reduction of the principal balance of any offered certificate will be directly related to the rate and timing of principal payments on or with respect to the underlying mortgage loans. Finally, the rate and timing of principal payments on or with respect to the underlying mortgage loans will be affected by their amortization schedules, the dates on which balloon payments are due and the rate and timing of principal prepayments and other unscheduled collections on them, including for this purpose, collections made in connection with liquidations of mortgage loans due to defaults, casualties or condemnations affecting the mortgaged real properties, or purchases or other removals of mortgage loans from the trust fund. S-192 Prepayments and other early liquidations of the underlying mortgage loans, including as a result of the purchase of any mortgage loan out of the trust as described under "Description of the Mortgage Pool--Assignment of the Mortgage Loans; Repurchases and Substitutions", "Description of the Mortgage Pool--Representations and Warranties; Repurchases and Substitutions" and "Description of the Offered Certificates--Termination" in this prospectus supplement, will result in payments on the offered certificates of amounts that would otherwise be paid over the remaining terms of the underlying mortgage loans. This will tend to shorten the weighted average lives of the offered certificates. Defaults on the underlying mortgage loans, particularly at or near their maturity dates, may result in significant delays in payments of principal on those mortgage loans and, accordingly, on the offered certificates, while work-outs are negotiated or foreclosures are completed. These delays will tend to lengthen the weighted average lives of the offered certificates. See "Servicing of the Underlying Mortgage Loans--Modifications, Waivers, Amendments and Consents" in this prospectus supplement. In addition, the ability of a borrower under an ARD Loan, to repay that loan on the related anticipated repayment date will generally depend on its ability to either refinance the mortgage loan or sell the corresponding mortgaged real property. Also, a borrower under an ARD Loan may have little incentive to repay its mortgage loan on the related anticipated repayment date if then prevailing interest rates are relatively high. Accordingly, there can be no assurance that any ARD Loan in the trust fund will be paid in full on its anticipated repayment date. The extent to which the yield to maturity on any offered certificate may vary from the anticipated yield will depend upon the degree to which the certificate is purchased at a discount or premium and when, and to what degree, payments of principal on the underlying mortgage loans are in turn paid in a reduction of the principal balance of the certificate. If you purchase your offered certificates at a discount, you should consider the risk that a slower than anticipated rate of principal payments on the underlying mortgage loans or a particular group of underlying mortgage loans could result in an actual yield to you that is lower than your anticipated yield. Conversely, if you purchase your offered certificates at a premium, you should consider the risk that a faster than anticipated rate of principal payments on the underlying mortgage loans or a particular group of underlying mortgage loans could result in an actual yield to you that is lower than your anticipated yield. In the event that prepayments and other early liquidations occur with respect to underlying mortgage loans that have relatively high net mortgage rates, the Weighted Average Pool Pass-Through Rate would decline, which could, in turn, adversely affect the yield on any offered certificate with a variable or capped pass-through rate. Because the rate of principal payments on or with respect to the underlying mortgage loans will depend on future events and a variety of factors, no assurance can be given as to that rate or the rate of principal prepayments in particular. We are not aware of any relevant publicly available or authoritative statistics with respect to the historical prepayment experience of a large group of real estate loans comparable to those in the mortgage pool. Even if they are collected and payable on your offered certificates, prepayment premiums and yield maintenance charges may not be sufficient to offset fully any loss in yield on your offered certificates attributable to the related prepayments of the underlying mortgage loans. Delinquencies and Defaults on the Mortgage Loans. The rate and timing of delinquencies and defaults on the underlying mortgage loans will affect: o the amount of payments on your offered certificates; o the yield to maturity of your offered certificates; o the rate of principal payments on your offered certificates; and S-193 o the weighted average life of your offered certificates. Delinquencies on the underlying mortgage loans, unless covered by monthly debt service advances, may result in shortfalls in payments of interest and/or principal on your offered certificates for the current month. If-- o you calculate the anticipated yield to maturity for your offered certificates based on an assumed rate of default and amount of losses on the underlying mortgage loans that is lower than the default rate and amount of losses actually experienced, and o the additional losses result in a reduction of the total payments on or the total principal balance of your offered certificates, then your actual yield to maturity will be lower than you calculated and could, under some scenarios, be negative. The timing of any loss on a liquidated mortgage loan that results in a reduction of the total payments on or the total principal balance of your offered certificates will also affect your actual yield to maturity, even if the rate of defaults and severity of losses are consistent with your expectations. In general, the earlier your loss occurs, the greater the effect on your yield to maturity. Even if losses on the underlying mortgage loans do not result in a reduction of the total payments on or the total principal balance of your offered certificates, the losses may still affect the timing of payments on, and the weighted average life and yield to maturity of, your offered certificates. In addition, if the master servicer, the special servicer, the trustee or the fiscal agent reimburses itself out of general collections on the mortgage pool for any advance that it has determined is not recoverable out of collections on the related mortgage loan, then that advance (together with accrued interest thereon) will be deemed, to the fullest extent permitted, to be reimbursed out of payments and other collections of principal on the underlying mortgage loans otherwise distributable on the series 2005-C3 principal balance certificates (exclusive of the class A-MFL certificates) and the class A-MFL REMIC II regular interest, prior to being deemed reimbursed out of payments and other collections of interest on the underlying mortgage loans otherwise distributable on the series 2005-C3 certificates (exclusive of the class A-MFL certificates) and the class A-MFL REMIC II regular interest. As a result, the Total Principal Payment Amount for the corresponding payment date would be reduced, to not less than zero, by the amount of any such reimbursement. Accordingly, any such reimbursement would have the effect of reducing current payments of principal on the offered certificates. Notwithstanding the foregoing, amounts otherwise payable with respect to the class CP-1, CP-2 and CP-3 certificates will not be available to reimburse advances and/or pay Additional Trust Fund Expenses with respect to any underlying mortgage loan other than the Carolina Place Mortgage Loan. The Effect of Loan Groups. The mortgage pool has been divided into two loan groups for purposes of calculating distributions on certain classes of the offered certificates. As a result, the holders of the class A-1, A-2, A-3, A-SB and A-4 certificates will be very affected by the rate, timing and amount of payments and other collections of principal on, and by delinquencies and defaults on, the mortgage loans in loan group no. 1 and, in the absence of significant losses on the mortgage pool, should be largely unaffected by the rate, timing and amount of payments and other collections of principal on, and by delinquencies and defaults on, the mortgage loans in loan group no. 2. In addition, the holders of the class A-1A certificates will be very affected by the rate, timing and amount of payments and other collections of principal on, and by delinquencies and defaults on, the mortgage loans in loan group no. 2 and, prior to the retirement of the class A-1, A-2, A-3, A-SB and A-4 certificates, in the absence of significant losses on the mortgage pool, should be largely unaffected by the rate, timing and amount of payments and other collections of principal on, and by delinquencies and defaults on, the S-194 mortgage loans in loan group no. 1. Investors should take this into account when reviewing this "Yield and Maturity Considerations" section. Relevant Factors. The following factors, among others, will affect the rate and timing of principal payments and defaults and the severity of losses on or with respect to the mortgage loans in the trust fund: o prevailing interest rates; o the terms of the mortgage loans, including-- 1. provisions that require the payment of prepayment premiums and yield maintenance charges, 2. provisions that impose prepayment lock-out periods, and 3. amortization terms that result in balloon payments; o the demographics and relative economic vitality of the areas in which the mortgaged real properties are located; o the general supply and demand for commercial and multifamily rental space of the type available at the mortgaged real properties in the areas in which those properties are located; o the quality of management of the mortgaged real properties; o the servicing of the mortgage loans; o possible changes in tax laws; and o other opportunities for investment. See "Risk Factors--Risks Related to the Underlying Mortgage Loans", "Description of the Mortgage Pool" and "Servicing of the Underlying Mortgage Loans" in this prospectus supplement and "Description of the Governing Documents" and "Yield and Maturity Considerations--Yield and Prepayment Considerations" in the accompanying prospectus. The rate of prepayment on the mortgage loans in the trust fund is likely to be affected by prevailing market interest rates for mortgage loans of a comparable type, term and risk level. When the prevailing market interest rate is below the annual rate at which a mortgage loan accrues interest, the related borrower may have an increased incentive to refinance the mortgage loan. Conversely, to the extent prevailing market interest rates exceed the annual rate at which a mortgage loan accrues interest, the related borrower may be less likely to voluntarily prepay the mortgage loan. Assuming prevailing market interest rates exceed the revised mortgage rate at which an ARD Loan accrues interest following its anticipated repayment date, the primary incentive for the related borrower to prepay the mortgage loan on or before its anticipated repayment date is to give the borrower access to excess cash flow, all of which, net of the minimum required debt service, approved property expenses and any required reserves, must be applied to pay down principal of the mortgage loan. Accordingly, there can be no assurance that any ARD Loan in the trust fund will be prepaid on or before its anticipated repayment date or on any other date prior to maturity. Depending on prevailing market interest rates, the outlook for market interest rates and economic conditions generally, some underlying borrowers may sell their mortgaged real properties in order to realize their S-195 equity in those properties, to meet cash flow needs or to make other investments. In addition, some underlying borrowers may be motivated by federal and state tax laws, which are subject to change, to sell their mortgaged real properties prior to the exhaustion of tax depreciation benefits. A number of the underlying borrowers are partnerships. The bankruptcy of the general partner in a partnership may result in the dissolution of the partnership. The dissolution of a borrower partnership, the winding-up of its affairs and the distribution of its assets could result in an acceleration of its payment obligations under the related mortgage loan. We make no representation or warranty regarding: o the particular factors that will affect the rate and timing of prepayments and defaults on the underlying mortgage loans; o the relative importance of those factors; o the percentage of the total principal balance of the underlying mortgage loans that will be prepaid or as to which a default will have occurred as of any particular date; or o the overall rate of prepayment or default on the underlying mortgage loans. Unpaid Interest. If the portion of the Total Available P&I Funds payable with respect to interest on any class of offered certificates on any payment date is less than the total amount of interest then payable for the class, the shortfall will be payable to the holders of those certificates on subsequent payment dates, subject to the available funds on those subsequent payment dates and the priority of payments described under "Description of the Offered Certificates--Payments--Priority of Payments" in this prospectus supplement. That shortfall will not bear interest, however, and will therefore negatively affect the yield to maturity of that class of offered certificates for so long as it is outstanding. Delay in Payments. Because monthly payments will not be made on the offered certificates until several days after the due dates for the underlying mortgage loans during the related collection period, your effective yield will be lower than the yield that would otherwise be produced by your pass-through rate and purchase price, assuming that purchase price did not account for a delay. CPR MODEL Prepayments on loans are commonly measured relative to a prepayment standard or model. The prepayment model used in this prospectus supplement is the constant prepayment rate, or "CPR", model, which represents an assumed constant rate of prepayment each month, which is expressed on a per annum basis, relative to the then-outstanding principal balance of a pool of loans for the life of those loans. The CPR model does not purport to be either a historical description of the prepayment experience of any pool of loans or a prediction of the anticipated rate of prepayment of any pool of loans, including the mortgage pool. We do not make any representations about the appropriateness of the CPR model. WEIGHTED AVERAGE LIVES OF THE OFFERED CERTIFICATES The tables set forth on Annex C to this prospectus supplement: o indicate the respective weighted average lives of the various classes of the offered certificates; and S-196 o set forth the percentages of the respective initial total principal balances of the various classes of the offered certificates that would be outstanding after the payment dates in each of the calendar months shown. Those tables were prepared based on the Maturity Assumptions and the indicated prepayment scenarios. For purposes of this prospectus supplement, weighted average life refers to the average amount of time that will elapse from the date of issuance of a security until each dollar of principal of the security will be repaid to the investor, assuming no losses. For purposes of this "Yield and Maturity Considerations" section and Annex C, the weighted average life of any offered certificate is determined by: 1. multiplying the amount of each principal payment on the certificate by the number of years from the assumed settlement date, which is part of the Maturity Assumptions, to the related payment date; 2. summing the results; and 3. dividing the result by the sum of the principal payments for the certificate. Accordingly, the weighted average life of any offered certificate will be influenced by, among other things, the rate at which principal of the underlying mortgage loans is paid or otherwise collected or advanced and the extent to which those payments, collections and/or advances of principal are in turn applied in reduction of the principal balance of the subject offered certificate (or, in the case of a class A-MFL certificate, of the class A-MFL REMIC II regular interest). The weighted average life of any offered certificate may also be affected to the extent that additional payments of principal are in turn applied in reduction of the principal balance of that certificate occur as a result of the purchase of a mortgage loan from the trust or the optional termination of the trust. The purchase of a mortgage loan from the trust will have the same effect on payments to the offered certificateholders as if the subject mortgage loan had prepaid in full, except that no prepayment fee is collectable on the subject mortgage loans. The actual characteristics and performance of the underlying mortgage loans will differ from the assumptions used in calculating the tables on Annex C. Those tables are hypothetical in nature and are provided only to give a general sense of how the principal cash flows might behave under the assumed prepayment scenarios. Any difference between the assumptions used in calculating the tables on Annex C and the actual characteristics and performance of the underlying mortgage loans, or actual prepayment or loss experience, will affect the percentages of initial total principal balances outstanding over time and the weighted average lives of the respective classes of the offered certificates. It is highly unlikely that the underlying mortgage loans will prepay in accordance with the Maturity Assumptions at any of the specified CPRs until maturity or that all the underlying mortgage loans will so prepay at the same rate. In addition, variations in the actual prepayment experience and the balance of the underlying mortgage loans that prepay may increase or decrease the percentages of initial principal balances and weighted average lives shown in the tables. Variations may occur even if the average prepayment experience of the underlying mortgage loans were to conform to the assumptions and be equal to any of the specified CPRs. You must make your own decisions as to the appropriate prepayment, liquidation and loss assumptions to be used in deciding whether to purchase any offered certificate. We make no representation that: o the mortgage loans in the trust fund or any particular group of those mortgage loans will prepay in accordance with the assumptions set forth in this prospectus supplement at any of the CPRs shown or at any other particular prepayment rate; S-197 o all the mortgage loans in the trust fund or any particular group of those mortgage loans will prepay in accordance with the assumptions set forth in this prospectus supplement at the same rate; o mortgage loans in the trust fund or any particular group of those mortgage loans that are in a lockout period, a yield maintenance period or declining premium period will not prepay as a result of involuntary liquidations upon default or otherwise; or o mortgage loans in the trust fund or any particular group of those mortgage loans will not experience defaults and losses. USE OF PROCEEDS Substantially all of the proceeds from the sale of the offered certificates will be used by us to purchase the mortgage loans that we will include in the trust fund and to pay those expenses incurred in connection with the issuance of the series 2005-C3 certificates. DESCRIPTION OF THE SWAP AGREEMENT GENERAL On the closing date, the trustee, on behalf of the trust, will enter into an interest rate swap agreement related to the class A-MFL certificates with the swap counterparty. The initial notional amount of the swap agreement will be equal to the total initial principal balance of the class A-MFL certificates (and, correspondingly, the class A-MFL REMIC II regular interest). The notional amount of the swap agreement will decrease to the extent of any decrease in the total principal balance of the class A-MFL certificates (and, correspondingly, the class A-MFL REMIC II regular interest). The maturity date of the swap agreement will be the earlier of the rated final payment date for the class A-MFL certificates and the date on which the notional amount of the swap agreement is zero (including as a result of the termination of the trust fund). THE SWAP AGREEMENT The swap agreement will provide that, with respect to each payment date, commencing in July 2005, (a) the trust will generally be obligated to pay to the swap counterparty, on that payment date, (i) any prepayment consideration distributable in respect of the class A-MFL REMIC II regular interest for that payment date and (ii) an amount equal to 1/12th of the product of (x) the notional amount of the swap agreement for that payment date and (y) _____% per annum, and (b) the swap counterparty will pay to the trust, for the benefit of the class A-MFL certificateholders, on the second business day prior to that payment date, an amount equal to the product of (i) the notional amount of the swap agreement for that payment date, (ii) LIBOR plus _____% per annum and (iii) a fraction, the numerator of which is the actual number of days elapsed during the related interest accrual period, and the denominator of which is 360. For so long as the applicable swap agreement is in effect and there is no continuing payment default thereunder on the part of the swap counterparty, the pass-through rate for the class A-MFL certificates for any interest accrual period will equal LIBOR plus _____%. If the pass-through rate on the class A-MFL REMIC II regular interest is reduced below _____% per annum or if there is an interest shortfall with respect to the class A-MFL REMIC II regular interest, then the amount payable by the trust to the swap counterparty with respect to the subject payment date will be reduced by an amount equal to the excess, if any, of (a) 1/12th of the product of (i) _____%, multiplied by (ii) the notional amount of the swap agreement for that payment date over (b) the lesser of (i) 1/12th of the product of (x) the Weighted Average Pool Pass-Through Rate, multiplied by (y) the notional amount of the swap agreement for that S-198 payment date and (ii) the amount of interest distributions with respect to the class A-MFL REMIC II regular interest pursuant to the priority of distributions on that payment date. If the amount described in clause (a) of the preceding sentence exceeds the amount described in clause (b) of the preceding sentence, then the amount payable by the swap counterparty to the trust will be reduced on a dollar-for-dollar basis (to not less than zero) by the amount of that excess. If the reduction in the amount payable by the trust to the swap counterparty with respect to any payment date, which reduction is determined as described in the first sentence of the prior paragraph, exceeds the total amount payable by the swap counterparty to the trust without regard to that reduction, then the swap counterparty will in the future be entitled to be reimbursed by the trust to the extent that such reduction more than offset the payment from the swap counterparty; provided that any such reimbursement payment from the trust will, with respect to any future payment date, generally be limited to the excess, if any, of (a) the amount of interest distributions with respect to the class A-MFL REMIC II regular interest with respect to that future payment date over (b) 1/12th of the product of (i) _____% per annum and (ii) the notional amount of the swap agreement for that payment date. Payments by the trust to the swap counterparty and by the swap counterparty to the trust will, in general, be made on a net basis, and any such amounts paid to the trust will be available to make payments of interest to the class A-MFL certificateholders. If at any time a Collateralization Event is in effect, the swap counterparty will be required to: (a) post collateral securing its obligations under the swap agreement, but only to the extent necessary to cover any termination fee payable by it in the event of a termination of the swap agreement; (b) find a replacement swap counterparty whose ratings would not cause a Collateralization Event; or (c) find a party to guarantee the swap counterparty's obligations under the swap agreement, the ratings of which guarantor would have allowed it to be an acceptable replacement swap counterparty under the immediately preceding clause (b). If at any time a Rating Agency Trigger Event is in effect, the swap counterparty will be required to find a replacement swap counterparty or a guarantor whose ratings would not cause a Collateralization Event. If the swap counterparty fails to post acceptable collateral, find a suitable replacement swap counterparty or find a suitable guarantor of its obligations under the swap agreement while a Collateralization Event is in effect, fails to find a suitable replacement swap counterparty or find a suitable guarantor while a Rating Agency Trigger Event is in effect, fails to make a payment to the trust required under the swap agreement (which failure continues unremedied for one business day following notice), or if an early termination date is designated under the swap agreement in accordance with its terms (each such event, a "Swap Default"), then the trustee will be required to take such actions (following the expiration of any applicable grace period), unless otherwise directed in writing by the holders or beneficial owners, as the case may be, of 25% of the total principal balance of the class A-MFL certificates, to enforce the rights of the trust under the swap agreement as may be permitted by the terms of the swap agreement, including the termination thereof, and use any termination payments received from the swap counterparty (as described under "--Termination Payments" below) to enter into a replacement interest rate swap agreement on substantially identical terms. If the costs attributable to entering into a replacement interest rate swap agreement would exceed the net proceeds of the liquidation of the swap agreement, a replacement interest rate swap agreement will not be entered into and any such proceeds will instead be distributed to the holders of the class A-MFL certificates. Notwithstanding the foregoing, the trustee will not be obligated to take any enforcement action with respect to the swap agreement unless it has received from the class A-MFL certificateholders an indemnity satisfactory to it with respect to the costs, expenses and liabilities associated with enforcing the rights of the trust under the swap agreement. No such costs, expenses and/or liabilities will be payable out of the trust fund. A "Collateralization Event" will be in effect if: (a) either (i) the unsecured, unguaranteed and otherwise unsupported long-term senior debt obligations of the swap counterparty are rated below "A1" by Moody's or are rated "A1" by Moody's and such rating is on watch for possible downgrade (but only for so long as it is on watch for possible downgrade) or (ii) the unsecured, unguaranteed and otherwise unsupported short-term debt S-199 obligations of the swap counterparty are rated below "P-1" by Moody's or are rated "P-1" by Moody's and such rating is on watch for possible downgrade (but only for so long as it is on watch for possible downgrade); (b) no short-term rating is available from Moody's and the unsecured, unguaranteed and otherwise unsupported long-term senior debt obligations of the swap counterparty are rated below "Aa3" by Moody's or are rated "Aa3" by Moody's and such rating is on watch for possible downgrade (but only for so long as it is on watch for possible downgrade); or (c) either (i) the unsecured, unguaranteed and otherwise unsupported short-term debt obligations of the swap counterparty are rated below "A-1" by S&P or (ii) if the swap counterparty does not have a short-term rating from S&P, the unsecured, unguaranteed and otherwise unsupported long-term senior debt obligations of the swap counterparty are rated below "A" by S & P; or (d) either (i) the unsecured, unguaranteed and otherwise unsupported long-term senior debt obligations of the swap counterparty are rated below "A+" by Fitch or are rated "A+" by Fitch and such rating is on watch for possible downgrade (but only for so long as it is on watch for possible downgrade) or (ii) the unsecured, unguaranteed and otherwise unsupported short-term debt obligations of the swap counterparty are rated below "F-1+" by Fitch. A "Rating Agency Trigger Event" will be in effect if at any time after the date hereof the swap counterparty and any guarantor of its obligations under the swap agreement shall both fail to satisfy the Swap Counterparty Ratings Threshold. "Swap Counterparty Ratings Threshold" shall mean: (a) either (i) the unsecured, unguaranteed and otherwise unsupported long-term senior debt obligations of the swap counterparty are rated at least "BBB" and the unsecured, unguaranteed and otherwise unsupported short-term debt obligations of the swap counterparty are rated at least "A-3" by S&P or (ii) if the swap counterparty does not have a short-term rating from S&P, the unsecured, unguaranteed and otherwise unsupported long-term senior debt obligations of the swap counterparty are rated at least "BBB+" by S & P; and (b) either (i) the unsecured, unguaranteed and otherwise unsupported long-term senior debt obligations of the swap counterparty are rated at least "A3" by Moody's (and such rating is not on watch for possible downgrade) and the unsecured, unguaranteed and otherwise unsupported short-term debt obligations of the swap counterparty are rated at least "P-2" by Moody's (and such rating is not on watch for possible downgrade) or (ii) no short-term rating is available from Moody's and the unsecured, unguaranteed and otherwise unsupported long-term senior debt obligations of the swap counterparty are rated at least "A2" by Moody's; provided that, if a guarantor of the swap counterparty's obligations under the swap agreement is in place, then the ratings requirements set forth in clauses (a) and (b) of this sentence will instead apply to that guarantor, and the Swap Counterparty Ratings Threshold will be satisfied if the ratings of that guarantor satisfy the ratings requirements set forth in clauses (a) and (b) of this sentence. As of the date of this prospectus supplement, the swap counterparty has been assigned a long-term senior unsecured debt rating of "AA" and a short-term unsecured debt rating of "A-1+" by S&P, and a long-term senior unsecured debt rating of "Aa1" and a short-term unsecured debt rating of "P-1" by Moody's. Any conversion of the pass-through rate, interest accrual period and interest accrual basis of the class A-MFL certificates to the pass-through rate, interest accrual period and interest accrual basis, respectively, of the class A-MFL REMIC II regular interest following a payment default under the swap agreement on the part of the swap counterparty (a "Swap Payment Default") will become permanent following the determination by either the trustee or the holders or beneficial owners, as the case may be, of 25% of the total principal balance of the class A-MFL certificates not to enter into a replacement interest rate swap agreement and distribution of any termination payments to the holders of the class A-MFL certificates. Any such Swap Payment Default and the consequent conversion of the pass-through rate, interest accrual period and interest accrual basis of the class A-MFL certificates to the pass-through rate, interest accrual period and interest accrual basis, respectively, of the class A-MFL REMIC II regular interest will not constitute a default under the series 2005-C3 pooling and servicing agreement. Any such conversion might result in a temporary delay of payment of the distributions to the holders of the class A-MFL certificates if notice of the resulting change in payment terms of the class A-MFL certificates is not given to DTC within the time frame in advance of the payment date that DTC requires to modify the payment. S-200 The trustee will have no obligation on behalf of the trust to pay or cause to be paid to the swap counterparty any portion of the amounts due to the swap counterparty under the swap agreement for any payment date unless and until the related payment of interest and/or prepayment consideration on the class A-MFL REMIC II regular interest for such payment date is actually received by the trustee. TERMINATION FEES In the event of the termination of the swap agreement and the failure of the swap counterparty to replace the swap agreement, the swap counterparty may be obligated to pay a termination fee to the trust generally designed to compensate the trust for the cost, if any, of entering into a substantially similar interest rate swap agreement with another swap counterparty. If that termination fee is not used to pay for such a replacement swap agreement, then such termination fee will be distributed to the class A-MFL certificateholders. To the extent that a replacement swap agreement is obtained and any upfront payment is received from the replacement swap counterparty, then that upfront payment will be applied to pay any termination fee owing to the terminated swap counterparty, with any balance thereof to be paid to us. No upfront payment from a replacement swap counterparty will be available for payments on the class A-MFL certificates. THE SWAP COUNTERPARTY Citibank N.A. ("Citibank") is the swap counterparty under the swap agreement. Citibank was originally organized on June 16, 1812, and now is a national banking association organized under the National Bank Act of 1864. Citibank is a wholly owned subsidiary of Citicorp ("Citicorp"), a Delaware corporation, and is Citicorp's principal subsidiary. Citicorp is an indirect, wholly owned subsidiary of Citigroup Inc., a Delaware holding company. As of March 31, 2005, the total assets of Citibank and its consolidated subsidiaries represented approximately 73% of the total assets of Citicorp and its consolidated subsidiaries. Citibank is a commercial bank that, along with its subsidiaries and affiliates, offers a wide range of banking and trust services to its customers throughout the United States and the world. As of March 31, 2005, Citibank had consolidated assets of $684,592 million, consolidated deposits of $463,727 million and stockholder's equity of $55,225 million. The information in the preceding paragraph has been provided by Citibank and is not guaranteed as to accuracy or completeness, and is not to be construed as representations by us or the underwriters. Except for the foregoing paragraph, Citibank has not been involved in the preparation of, and does not accept responsibility for, this prospectus supplement or the accompanying prospectus. The swap counterparty may assign its rights and obligations under the swap agreement provided that, among other conditions, the ratings of the replacement swap counterparty would not result in a Collateralization Event. FEDERAL INCOME TAX CONSEQUENCES GENERAL Upon the initial issuance of the offered certificates, our counsel, Sidley Austin Brown & Wood LLP, will deliver its opinion generally to the effect that, assuming compliance with the series 2005-C3 pooling and servicing agreement, and subject to any other assumptions set forth in the opinion, REMIC I, REMIC II and the Carolina Place individual loan REMIC, respectively, will each qualify as a REMIC under the Internal Revenue Code, the arrangement under which the class A-MFL REMIC II regular interest, the trustee's floating rate account and the swap agreement relating to the class A-MFL certificates is held will be classified as a grantor trust for S-201 U.S. federal income tax purposes and the arrangement under which the right to Post-ARD Additional Interest is held will be classified as a grantor trust for U.S. federal income tax purposes. The assets of REMIC I will generally include: o the underlying mortgage loans; o any REO Properties acquired on behalf of the trust fund; o the master servicer's collection account; o the special servicer's REO account; and o the trustee's payment account and interest reserve account. However, the Carolina Place Mortgage Loan will constitute the sole asset of a separate REMIC, and REMIC I will include the regular interests in that loan REMIC instead of that mortgage loan or any related REO Property. In addition, neither REMIC I nor the Carolina Place individual loan REMIC will include any collections of Post-ARD Additional Interest on any ARD Loan. For federal income tax purposes, o the separate non-certificated regular interests in REMIC I will be the regular interests in REMIC I and will be the assets of REMIC II; o the class A-1, A-2, A-3, A-SB, A-4, A-1A, XC, XP, A-MFX, A-J, B, C, D, E, F, G, H, J, K, L, M, N, O and P certificates and the class A-MFL REMIC II regular interest (collectively, the "REMIC II Regular Interests") will evidence or constitute, as applicable, the regular interests in, and will generally be treated as debt obligations of, REMIC II; o the class R certificates will evidence the sole class of residual interests in each of the individual loan REMIC, REMIC I and REMIC II; o the class A-MFL certificates will evidence interests in a grantor trust consisting of the class A-MFL REMIC II regular interest, the swap agreement and the trustee's floating rate account, and o the class Y certificates will evidence 100% of the beneficial ownership of the grantor trust consisting of any Post-ARD Additional Interest collected on any ARD Loan. DISCOUNT AND PREMIUM For U.S. federal income tax reporting purposes, one or more of the REMIC II Regular Interests may be issued with more than a de minimis amount of original issue discount. If you own an offered certificate evidencing a REMIC II Regular Interest issued with original issue discount, you may have to report original issue discount income and be subject to a tax on this income before you receive a corresponding cash payment. The IRS has issued regulations under sections 1271 to 1275 of the Code generally addressing the treatment of debt instruments issued with original issue discount. Section 1272(a)(6) of the Code provides for special rules applicable to the accrual of original issue discount on, among other things, REMIC regular S-202 certificates. The Treasury Department has not issued regulations under that section. You should be aware, however, that the regulations issued under sections 1271 to 1275 of the Code and section 1272(a)(6) of the Code do not adequately address all issues relevant to, or are not applicable to, prepayable securities such as the offered certificates. You should consult with your own tax advisor concerning the tax treatment of your offered certificates. If the method for computing original issue discount described in the accompanying prospectus results in a negative amount for any period with respect to any holder of offered certificates, the amount of original issue discount allocable to such period would be zero. The holder would be permitted to offset the negative amount only against future original issue discount, if any, attributable to his or her offered certificate. Although the matter is not free from doubt, a holder of an offered certificate may be permitted to deduct a loss to the extent that his or her respective remaining basis in the certificate exceeds the maximum amount of future payments to which the holder is entitled, assuming no further prepayments of the underlying mortgage loans. Any loss might be treated as a capital loss. Some of the REMIC II Regular Interests may be treated for U.S. federal income tax purposes as having been issued at a premium. Whether any holder of these REMIC II Regular Interests will be treated as holding a certificate with amortizable bond premium will depend on the certificateholder's purchase price and the payments remaining to be made on the certificate at the time of its acquisition by the certificateholder. If you acquire an interest in any REMIC II Regular Interests issued at a premium, you should consider consulting your own tax advisor regarding the possibility of making an election to amortize the premium. See "Federal Income Tax Consequences--REMICs--Taxation of Owners of REMIC Regular Certificates--Premium" in the accompanying prospectus. When determining the rate of accrual of original issue discount, market discount and premium, if any, with respect to the series 2005-C3 certificates for federal income tax purposes, the prepayment assumption will be that, subsequent to the date of any determination-- o the ARD Loans in the trust fund will be paid in full on their respective anticipated repayment dates, o no mortgage loan in the trust fund will otherwise be prepaid prior to maturity, and o there will be no extension of maturity for any mortgage loan in the trust fund. However, no representation is made as to the actual rate at which the mortgage loans in the trust fund will prepay, if at all. See "Federal Income Tax Consequences--REMICs--Taxation of Owners of REMIC Regular Certificates" in the accompanying prospectus. PREPAYMENT CONSIDERATION Prepayment premiums and yield maintenance charges actually collected on the underlying mortgage loans will be paid on the offered certificates as and to the extent described in this prospectus supplement. It is not entirely clear under the Internal Revenue Code when the amount of a prepayment premium or yield maintenance charge should be taxed to the holder of a class of offered certificates entitled to that amount. For federal income tax reporting purposes, the trustee will report prepayment premiums or yield maintenance charges as income to the holders of a class of offered certificates entitled thereto only after the master servicer's actual receipt of those amounts. The IRS may nevertheless seek to require that an assumed amount of prepayment premiums and yield maintenance charges be included in payments projected to be made on the offered certificates and that taxable income be reported based on the projected constant yield to maturity of the offered certificates. Therefore, the projected prepayment premiums and yield maintenance charges would be included prior to their actual receipt by S-203 holders of the offered certificates. If the projected prepayment premiums and yield maintenance charges were not actually received, presumably the holder of an offered certificate would be allowed to claim a deduction or reduction in gross income at the time the unpaid prepayment premiums and yield maintenance charges had been projected to be received. Moreover, it appears that prepayment premiums and yield maintenance charges are to be treated as ordinary income rather than capital gain. However, the correct characterization of the income is not entirely clear. We recommend you consult your own tax advisors concerning the treatment of prepayment premiums and yield maintenance charges. CHARACTERIZATION OF INVESTMENTS IN OFFERED CERTIFICATES Except to the extent noted below, the offered certificates will generally be "real estate assets" within the meaning of Section 856(c)(5)(B) of the Internal Revenue Code in the same proportion that the assets of the trust would be so treated. In addition, interest, including original issue discount, if any, on the offered certificates will be interest described in Section 856(c)(3)(B) of the Internal Revenue Code to the extent that those certificates are treated as "real estate assets" within the meaning of Section 856(c)(5)(B) of the Internal Revenue Code. Most of the mortgage loans to be included in the trust fund are not secured by real estate used for residential or other purposes prescribed in Section 7701(a)(19)(C) of the Internal Revenue Code. Consequently, it appears that the offered certificates will be treated as assets qualifying under that section to only a limited extent. Accordingly, investment in the offered certificates may not be suitable for a thrift institution seeking to be treated as a "domestic building and loan association" under Section 7701(a)(19)(C) of the Internal Revenue Code. The offered certificates will be treated as "qualified mortgages" for another REMIC under Section 860G(a)(3)(C) of the Internal Revenue Code. To the extent an offered certificate represents ownership of an interest in a mortgage loan that is secured in part by the related borrower's interest in a bank account or reserve fund, that mortgage loan is not secured solely by real estate. Therefore: o a portion of that certificate may not represent ownership of "loans secured by an interest in real property" or other assets described in Section 7701(a)(19)(C) of the Internal Revenue Code; o a portion of that certificate may not represent ownership of "real estate assets" under Section 856(c)(5)(B) of the Internal Revenue Code; and o the interest on that certificate may not constitute "interest on obligations secured by mortgages on real property" within the meaning of Section 856(c)(3)(B) of the Internal Revenue Code. In addition, most of the mortgage loans that we intend to include in the trust fund contain defeasance provisions under which the lender may release its lien on the collateral securing the mortgage loan in return for the borrower's pledge of substitute collateral in the form of U.S. government securities. Generally, under the Treasury regulations, if a REMIC releases its lien on real property that secures a qualified mortgage, that mortgage ceases to be a qualified mortgage on the date the lien is released unless certain conditions are satisfied. In order for the mortgage loan to remain a qualified mortgage, the Treasury regulations require that-- o the borrower pledges substitute collateral that consist solely of certain U.S. government securities; o the mortgage loan documents allow that substitution; S-204 o the lien is released to facilitate the disposition of the property or any other customary commercial transaction, and not as part of an arrangement to collateralize a REMIC offering with obligations that are not real estate mortgages; and o the release is not within two years of the startup day of the REMIC. Following the defeasance of a mortgage loan, regardless of whether the foregoing conditions were satisfied, that mortgage loan would not be treated as a "loan secured by an interest in real property" or a "real estate asset" and interest on that loan would not constitute "interest on obligations secured by real property" for purposes of Sections 7701(a)(19)(C), 856(c)(5)(B) and 856(c)(3)(B), respectively of the Internal Revenue Code. See "Description of the Mortgage Pool" in this prospectus supplement and "Federal Income Tax Consequences--REMICs--Characterization of Investments in REMIC Certificates" in the accompanying prospectus. PROHIBITED TRANSACTIONS TAX AND OTHER TAXES In the case of REO Properties directly operated by the special servicer, a tax may be imposed on any of the REMICs should the REO Properties consist primarily of hotels and income from the REO Property would be apportioned and classified as "service" or "non-service" income. The "service" portion of the income could be treated as net income from foreclosure property or net income from a prohibited transaction subject to federal tax either at the highest marginal corporate tax rate or at the 100% rate, respectively. Any tax imposed on the trust's income from an REO Property would reduce the amount available for payment to the series 2005-C3 certificateholders. For further information regarding the federal income tax consequences of investing in the offered certificates, see "Federal Income Tax Consequences--REMICs" in the accompanying prospectus. THE CLASS A-MFL CERTIFICATES Each holder of a class A-MFL certificate will be treated for federal income tax purposes as having bought its proportionate share of the class A-MFL REMIC II regular interest and having entered into its proportionate share of the swap agreement. Holders of the class A-MFL certificates must allocate the price they pay for their certificates between their interests in the class A-MFL REMIC II regular interest and the swap agreement based on their relative market values. Such allocation will be used for, among other things, purposes of computing any original issue discount, market discount or premium on the class A-MFL REMIC II regular interest. Any amount allocated to the swap agreement will be treated as a swap premium (the "Swap Premium") either paid or received by the holders of the class A-MFL certificates, as the case may be. If a Swap Premium is deemed paid by a holder, it will reduce the purchase price allocable to the class A-MFL REMIC II regular interest. If the Swap Premium is deemed received by a holder, it will be deemed to have increased the purchase price for the class A-MFL REMIC II regular interest. Based on the anticipated purchase prices of the class A-MFL certificates and issue price of the class A-MFL REMIC II regular interest, it is anticipated that the class A-MFL REMIC II regular interest will be issued at a premium and that a Swap Premium will be deemed to be paid to the initial holders of the class A-MFL certificates. The initial holders of a class A-MFL certificate will be required to amortize the amount of the Swap Premium into income over the term of the swap agreement. Such holders may do so under a method based on the Swap Premium representing the present value of a series of equal payments made over the term of the swap agreement that would fully amortize a loan with an interest rate equal to the discount rate used to determine the Swap Premium (or at some other reasonable rate). The amount amortized into income in each period would be the principal amount of the hypothetical level payment in such period. Moreover, while Regulations promulgated S-205 by the U.S. Treasury Department ("Treasury") treat a non-periodic payment made under a swap contract as a loan for all federal income tax purposes if the payment is "significant", it is anticipated that the Swap Premium would not be treated "significant" under those Treasury regulations. Prospective purchasers of class A-MFL certificates should consult their own tax advisors regarding the appropriate method of amortizing any Swap Premium. Treasury regulations have been promulgated under Section 1275 of the Internal Revenue Code generally providing for the integration of a "qualifying debt instrument" with a hedge if the combined cash flows of the components are substantially equivalent to the cash flows on a variable rate debt instrument. However, such regulations specifically disallow integration of debt instruments subject to Section 1272(a)(6) of the Internal Revenue Code, such as REMIC regular interests. Therefore, holders of the class A-MFL certificate will be unable to use the integration method provided for under such regulations with respect to such certificates. Consequently, the rate at which holders of the class A-MFL certificates amortize the Swap Premium they are deemed to receive in income each period may differ from the rate at which such holders amortize (and offset against interest income on the class A-MFL REMIC II regular interest) in each such period the initially corresponding amount of bond premium at which they are deemed to have purchased the class A-MFL REMIC II regular interest. Under Treasury regulations (i) all taxpayers must recognize periodic payments with respect to a notional principal contract under the accrual method of accounting, and (ii) any periodic payments received under the swap agreement must be netted against payments made under the swap agreement and deemed made or received as a result of the Swap Premium over the recipient's taxable year and accounted for as a net payment, rather than accounted for on a gross basis. The resulting net income or deduction with respect to net payments under a notional principal contract for a taxable year should constitute ordinary income or ordinary deduction. Such deduction (including the amortization of the upfront payment) is treated as a miscellaneous itemized deduction, which, for individuals, is subject to limitations on deductibility, including that the deduction may not be used at all if the individual is subject to the alternative minimum tax. PROSPECTIVE INVESTORS WHO ARE INDIVIDUALS SHOULD CONSULT THEIR TAX ADVISORS PRIOR TO INVESTING IN THE CLASS A-MFL CERTIFICATES, WHICH MAY NOT BE AN APPROPRIATE INVESTMENT FOR INVESTORS WHO ARE SUBJECT TO LIMITATIONS ON THE DEDUCTIBILITY OF MISCELLANEOUS ITEMIZED DEDUCTIONS. Any amount of proceeds from the sale, redemption or retirement of a class A-MFL certificate that is considered to be allocated to the holder's rights under the swap agreement or that the holder is deemed to have paid to the purchaser would be considered a "termination payment" allocable to that class A-MFL certificate under Treasury regulations. A holder of a class A-MFL certificate will have gain or loss from such a termination equal to (A)(i) any termination payment it received or is deemed to have received minus (ii) the unamortized portion of any Swap Premium paid (or deemed paid) by the holder upon entering into or acquiring its interest in the swap agreement or (B)(i) any termination payment it paid or is deemed to have paid minus (ii) the unamortized portion of any Swap Premium received upon entering into or acquiring its interest in the swap agreement. Gain or loss realized upon the termination of the swap agreement will generally be treated as capital gain or loss. Moreover, in the case of a bank or thrift institution, Section 582(c) of the Code would likely not apply to treat such gain or loss as ordinary. The class A-MFL certificates, representing a beneficial ownership in the class A-MFL REMIC II regular interest and in the swap agreement, may constitute positions in a straddle, in which case the straddle rules of Section 1092 of the Code would apply. A selling holder's capital gain or loss with respect to such regular interest would be short term because the holding period would be tolled under the straddle rules. Similarly, capital gain or loss realized in connection with the termination of the swap agreement would be short term. If the holder of a class A-MFL certificate incurred or continued to incur indebtedness to acquire or hold such class A-MFL certificate, the holder would generally be required to capitalize a portion of the interest paid on such indebtedness until termination of the swap agreement. S-206 ERISA CONSIDERATIONS GENERAL If you are-- (1) a fiduciary of a Plan, or (2) any other person investing "plan assets" of any Plan, you should carefully review with your legal advisors whether the purchase or holding of an offered certificate would be a "prohibited transaction" or would otherwise be impermissible under ERISA or Section 4975 of the Internal Revenue Code. See "ERISA Considerations" in the accompanying prospectus. If a Plan acquires an offered certificate, the assets of the trust will be deemed for purposes of ERISA to be assets of the investing Plan, unless certain exceptions apply. See "ERISA Considerations--Plan Asset Regulations" in the accompanying prospectus. However, we cannot predict in advance, nor can there be any continuing assurance, whether those exceptions may be applicable because of the factual nature of the rules set forth in the Plan Asset Regulations. For example, one of the exceptions in the Plan Asset Regulations states that the underlying assets of an entity will not be considered "plan assets" if less than 25% of the value of each class of equity interests is held by "benefit plan investors", which include Plans, as well as employee benefit plans not subject to ERISA, such as governmental plans; this exception is tested immediately after each acquisition of a series 2005-C3 certificate, whether upon initial issuance or in the secondary market. Because there are no relevant restrictions on the purchase and transfer of the series 2005-C3 certificates by Plans, it cannot be assured that benefit plan investors will own less than 25% of each class of the series 2005-C3 certificates. If one of the exceptions in the Plan Asset Regulations applies, the prohibited transaction provisions of ERISA and the Internal Revenue Code will not apply to transactions involving the trust's underlying assets. However, if the trust or any of the Exemption-Favored Parties is a Party in Interest with respect to an investing Plan, the acquisition or holding of the offered certificates by that Plan could result in a prohibited transaction, unless the Underwriter Exemption, as discussed below, or some other exemption is available. THE UNDERWRITER EXEMPTION The U.S. Department of Labor issued an individual prohibited transaction exemption to a predecessor of Citigroup Global Markets Inc., which exemption is identified as Prohibited Transaction Exemption 91-23, as amended by Prohibited Transaction Exemptions 97-34, 2000-58 and 2002-41. Subject to the satisfaction of certain conditions set forth in the Underwriter Exemption, it generally exempts from the application of the prohibited transaction provisions of Sections 406(a) and (b) and 407(a) of ERISA, and the excise taxes imposed on these prohibited transactions under Sections 4975(a) and (b) of the Internal Revenue Code, specified transactions relating to, among other things: o the servicing and operation of pools of real estate loans, such as the mortgage pool; and o the purchase, sale and holding of mortgage pass-through certificates, such as the offered certificates, that are underwritten by an Exemption-Favored Party. S-207 The Underwriter Exemption sets forth five general conditions which must be satisfied for a transaction involving the purchase, sale and holding of an offered certificate to be eligible for exemptive relief under that exemption. The conditions are as follows: o first, the acquisition of the offered certificate by a Plan must be on terms that are at least as favorable to the Plan as they would be in an arm's-length transaction with an unrelated party; o second, at the time of its acquisition by the Plan, the offered certificate must be rated in one of the four highest generic rating categories by Moody's, S&P or Fitch; o third, the trustee cannot be an affiliate of any other member of the Restricted Group (other than an underwriter); o fourth, the following must be true-- 1. the sum of all payments made to and retained by Exemption-Favored Parties must represent not more than reasonable compensation for underwriting the relevant class of offered certificates, 2. the sum of all payments made to and retained by us in connection with the assignment of the underlying mortgage loans to the trust must represent not more than the fair market value of the obligations, and 3. the sum of all payments made to and retained by the master servicer, the special servicer and any sub-servicer must represent not more than reasonable compensation for that person's services under the series 2005-C3 pooling and servicing agreement and reimbursement of that person's reasonable expenses in connection therewith; and o fifth, the investing Plan must be an accredited investor as defined in Rule 501(a)(1) of Regulation D under the Securities Act of 1933, as amended. It is a condition of their issuance that each class of the offered certificates be rated at least investment grade by S&P and Moody's. In addition, the initial trustee is not an affiliate of any other member of the Restricted Group. Accordingly, as of the date of initial issuance of the offered certificates, the second and third general conditions set forth above will be satisfied with respect to the offered certificates. A fiduciary of a Plan contemplating the purchase of an offered certificate in the secondary market must make its own determination that, at the time of the purchase, the certificate continues to satisfy the second and third general conditions set forth above. A fiduciary of a Plan contemplating the purchase of an offered certificate, whether in the initial issuance of the certificate or in the secondary market, must make its own determination that the first and fourth general conditions set forth above will be satisfied with respect to the offered certificate as of the date of the purchase. A Plan's authorizing fiduciary will be deemed to make a representation regarding satisfaction of the fifth general condition set forth above in connection with the purchase of an offered certificate. The Underwriter Exemption also requires that the trust meet the following requirements: o the trust assets must consist solely of assets of the type that have been included in other investment pools; o certificates evidencing interests in those other investment pools must have been rated in one of the four highest generic categories of Moody's, S&P or Fitch for at least one year prior to the Plan's acquisition of an offered certificate; and S-208 o certificates evidencing interests in those other investment pools must have been purchased by investors other than Plans for at least one year prior to any Plan's acquisition of an offered certificate. We believe that these requirements have been satisfied as of the date of this prospectus supplement. If the general conditions of the Underwriter Exemption are satisfied, the Underwriter Exemption may provide an exemption from the restrictions imposed by Sections 406(a) and 407(a) of ERISA, as well as the excise taxes imposed by Sections 4975(a) and (b) of the Internal Revenue Code by reason of Sections 4975(c)(1)(A) through (D) of the Internal Revenue Code, in connection with: o the direct or indirect sale, exchange or transfer of an offered certificate acquired by a Plan upon initial issuance from us or an Exemption-Favored Party when we are, or a mortgage loan seller, the trustee, the fiscal agent, the master servicer, the special servicer, or any sub-servicer, provider of credit support, Exemption-Favored Party or borrower is, a Party in Interest with respect to the investing Plan; o the direct or indirect acquisition or disposition in the secondary market of an offered certificate by a Plan; and o the continued holding of an offered certificate by a Plan. However, no exemption is provided from the restrictions of Sections 406(a)(1)(E), 406(a)(2) and 407 of ERISA for the acquisition or holding of an offered certificate on behalf of a Plan sponsored by any member of the Restricted Group, if such acquisition or holding is by any person who has discretionary authority or renders investment advice with respect to the assets of that Plan. Moreover, if the general conditions of the Underwriter Exemption, as well as other conditions set forth in that exemption, are satisfied, the Underwriter Exemption may also provide an exemption from the restrictions imposed by Sections 406(b)(1) and (b)(2) of ERISA and the taxes imposed by Section 4975(c)(1)(E) of the Internal Revenue Code in connection with: o the direct or indirect sale, exchange or transfer of offered certificates in the initial issuance of those certificates between us or an Exemption-Favored Party and a Plan when the person who has discretionary authority or renders investment advice with respect to the investment of the assets of the Plan in those certificates is: 1. a borrower with respect to 5.0% or less of the fair market value of the underlying mortgage loans; or 2. an affiliate of that borrower; o the direct or indirect acquisition or disposition in the secondary market of offered certificates by a Plan; and o the continued holding of offered certificates by a Plan. Further, if the general conditions of the Underwriter Exemption, as well as other conditions set forth in that exemption, are satisfied, the Underwriter Exemption may provide an exemption from the restrictions imposed by Sections 406(a), 406(b) and 407(a) of ERISA, and the taxes imposed by Sections 4975(a) and (b) of the S-209 Internal Revenue Code by reason of Section 4975(c) of the Internal Revenue Code, for transactions in connection with the servicing, management and operation of the trust assets. Lastly, if the general conditions of the Underwriter Exemption are satisfied, the Underwriter Exemption also may provide an exemption from the restrictions imposed by Sections 406(a) and 407(a) of ERISA, and the taxes imposed by Section 4975(a) and (b) of the Internal Revenue Code, by reason of Sections 4975(c)(1)(A) through (D) of the Internal Revenue Code, if the restrictions are deemed to otherwise apply merely because a person is deemed to be a Party in Interest with respect to an investing Plan by virtue of: o providing services to the Plan; or o having a specified relationship to this person; solely as a result of the Plan's ownership of offered certificates. The Underwriter Exemption contains specific requirements applicable to the swap agreement and the swap counterparty. Among other requirements, the swap agreement must relate to an interest rate swap that is denominated in U.S. dollars and that is not leveraged. If the swap counterparty fails to maintain certain rating levels described in the swap agreement, the swap counterparty will be required to post collateral, arrange for a guarantee or assign its rights and obligations under the swap agreement to a replacement swap counterparty, and, if the swap counterparty does not, within the time period specified therein, take such action, the trustee will be permitted to terminate the swap agreement. In addition, the class A-MFL certificates may be sold to a person investing assets of a Plan only if such person is a "Qualified Plan Investor". A "Qualified Plan Investor" is a plan investor or group of plan investors on whose behalf the decision to purchase such class A-MFL certificates is made by an independent fiduciary that is (i) qualified to analyze and understand the terms and conditions of the swap agreement and the effect of the swap agreement on the credit ratings of the class A-MFL certificates, and (ii) a "qualified professional asset manager", as defined in Part V(a) of PTCE 84-14, an "in-house asset manager" as defined in Part IV(a) of PTCE 96-23, or a plan fiduciary with total Plan and non-Plan assets under management of at least $100 million at the time of the acquisition of such class A-MFL certificates. Before purchasing an offered certificate, a fiduciary of a Plan should itself confirm that the general and other conditions set forth in the Underwriter Exemption and the other requirements set forth in the Underwriter Exemption would be satisfied at the time of the purchase. EXEMPT PLANS A governmental plan as defined in Section 3(32) of ERISA is not subject to ERISA or Section 4975 of the Internal Revenue Code. However, a governmental plan may be subject to a federal, state or local law which is, to a material extent, similar to the foregoing provisions of ERISA or the Internal Revenue Code. A fiduciary of a governmental plan should make its own determination as to the need for and the availability of any exemptive relief under any similar law. FURTHER WARNINGS Any fiduciary of a Plan considering whether to purchase an offered certificate on behalf of that Plan should consult with its counsel regarding the applicability of the fiduciary responsibility and prohibited transaction provisions of ERISA and the Internal Revenue Code to the investment. S-210 The sale of offered certificates to a Plan is in no way a representation or warranty by us or any of the underwriters that: o the investment meets all relevant legal requirements with respect to investments by Plans generally or by any particular Plan; or o the investment is appropriate for Plans generally or for any particular Plan. LEGAL INVESTMENT The offered certificates will not be mortgage related securities for purposes of SMMEA. As a result, the appropriate characterization of the offered certificates under various legal investment restrictions, and thus the ability of investors subject to these restrictions to purchase those certificates, is subject to significant interpretive uncertainties. Neither we nor any of the underwriters makes any representation as to the ability of particular investors to purchase the offered certificates under applicable legal investment or other restrictions. All institutions whose investment activities are subject to legal investment laws and regulations, regulatory capital requirements or review by regulatory authorities should consult with their own legal advisors in determining whether and to what extent the offered certificates: o are legal investments for them; or o are subject to investment, capital or other restrictions. In addition, you should take into consideration the applicability of statutes, rules, regulations, orders, guidelines or agreements generally governing investments made by a particular investor, including, but not limited to: o prudent investor provisions; o percentage-of-assets limits; and o provisions which may restrict or prohibit investment in securities which are not interest bearing or income paying. There may be other restrictions on the ability of investors, including depository institutions, either to purchase offered certificates or to purchase offered certificates representing more than a specified percentage of the investor's assets. Investors should consult their own legal advisors in determining whether and to what extent the offered certificates are legal investments for the investors. See "Legal Investment" in the accompanying prospectus. METHOD OF DISTRIBUTION Subject to the terms and conditions of an underwriting agreement dated June __, 2005, between us and the underwriters, the underwriters will purchase from us, upon initial issuance, their respective allotments, as specified in the tables below, of the offered certificates. As specified in the tables below, not every underwriter is S-211 obligated to purchase offered certificates from us. It is expected that delivery of the offered certificates will be made to the underwriters in book-entry form through the same day funds settlement system of DTC on or about June 29, 2005, against payment therefor in immediately available funds. Proceeds to us from the sale of the offered certificates, before deducting expenses payable by us, will be approximately _____% of the initial total principal balance of the offered certificates, plus accrued interest on all the offered certificates (other than the class A-MFL certificates) from June 1, 2005. <TABLE> CITIGROUP GLOBAL IXIS SECURITIES DEUTSCHE BANK WACHOVIA CAPITAL CLASS MARKETS INC. NORTH AMERICA INC. SECURITIES INC. MARKETS, LLC - ----------- ---------------- ------------------ --------------- ---------------- Class A-1 $ $ $ $ Class A-2 $ $ $ $ Class A-3 $ $ $ $ Class A-SB $ $ $ $ Class A-4 $ $ $ $ Class A-1A $ $ $ $ Class A-MFL $ $ $ $ Class A-MFX $ $ $ $ Class A-J $ $ $ $ Class B $ $ $ $ Class C $ $ $ $ Class D $ $ $ $ </TABLE> With respect to this offering-- o Citigroup Global Markets Inc. is acting as the lead and sole bookrunning manager. o IXIS Securities North America Inc., Deutsche Bank Securities Inc. and Wachovia Capital Markets, LLC will act as co-managers. Distribution of the offered certificates will be made by the underwriters from time to time in negotiated transactions or otherwise at varying prices to be determined at the time of sale. In the case of each underwriter, any profit on the resale of the offered certificates positioned by it may be deemed to be underwriting discounts and commissions under the Securities Act. The underwriters may sell the offered certificates to or through dealers, and those dealers may receive compensation in the form of underwriting discounts, concessions or commissions from the underwriters. Depending on the facts and circumstances of the purchases, purchasers of the offered certificates, including dealers, may be deemed to be "underwriters" within the meaning of the Securities Act in connection with reoffers and sales by them of offered certificates. Accordingly, any profit on the resale of the offered certificates positioned by them may be deemed to be underwriting discounts and commissions under the Securities Act. Holders of offered certificates should consult with their legal advisors in this regard prior to any reoffer or sale of those certificates. The underwriters have advised us that some of the underwriters presently intend to make a market in the offered certificates, but they have no obligation to do so. Any market making may be discontinued at any time, and there can be no assurance that an active public market for the offered certificates will develop. Each underwriter has represented to and agreed with us that: o it has not offered or sold and, prior to the expiry of the period of six months from the date of initial issuance of the offered certificates, will not offer or sell any offered certificates to persons in the United Kingdom except to persons whose ordinary activities involve them in acquiring, S-212 holding, managing or disposing of investments (as principal or agent) for the purposes of their business or otherwise in circumstances which have not resulted and will not result in an offer to the public in the United Kingdom within the meaning of the Public Offers of Securities Regulations 1995, as amended; o it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services and Markets Act 2000 (the "FSMA") received by it in connection with the issue or sale of any offered certificates in circumstances in which section 21(1) of the FSMA does not apply to us; and o it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the offered certificates in, from or otherwise involving the United Kingdom. We have agreed to indemnify each underwriter and each person, if any, who controls that underwriter within the meaning of Section 15 of the Securities Act against, or make contributions to the underwriters and each of those controlling persons with respect to, various liabilities, including specific liabilities under the Securities Act. Each of the mortgage loan sellers has agreed to indemnify us, our officers and directors, the underwriters, and each person, if any, who controls us or any underwriter within the meaning of Section 15 of the Securities Act, with respect to liabilities, including specific liabilities under the Securities Act, relating to the mortgage loans being sold by the particular mortgage loan seller for inclusion in the trust fund. We expect that delivery of the offered certificates will be made against payment therefor on or about June 29, 2005, which is more than three business days following the date of pricing of the offered certificates. Under Rule 15c6-1 of the SEC under the Securities Exchange Act of 1934, trades in the secondary market generally are required to settle in three business days, unless the parties to any such trade expressly agree otherwise. Accordingly, purchasers of the offered certificates should take this into account on re-trade. LEGAL MATTERS Particular legal matters relating to the offered certificates will be passed upon for us and for the underwriters by Sidley Austin Brown & Wood LLP, New York, New York. S-213 RATINGS It is a condition to their issuance that the respective classes of offered certificates be rated as follows by S&P and Moody's: CLASS S&P MOODY'S - ------------------------------ --- ------- Class A-1..................... AAA Aaa Class A-2..................... AAA Aaa Class A-3..................... AAA Aaa Class A-SB.................... AAA Aaa Class A-4..................... AAA Aaa Class A-1A.................... AAA Aaa Class A-MFL................... AAA Aaa Class A-MFX................... AAA Aaa Class A-J..................... AAA Aaa Class B....................... AA Aa2 Class C....................... AA- Aa3 Class D....................... A A2 The ratings on the offered certificates address the likelihood of: o the timely receipt by their holders of all payments of interest to which they are entitled (subject to the below discussion of the ratings on the class A-MFL certificates) on each payment date; and o the ultimate receipt by their holders of all payments of principal to which they are entitled on or before the rated final payment date. The ratings on respective classes of offered certificates take into consideration: o the credit quality of the mortgage pool; o structural and legal aspects associated with the offered certificates; and o the extent to which the payment stream from the mortgage pool is adequate to make payments of interest and principal required under the offered certificates. The ratings on the respective classes of offered certificates do not represent any assessment of: o the tax attributes of the offered certificates or of the trust; o whether or to what extent prepayments of principal may be received on the underlying mortgage loans; o the likelihood or frequency of prepayments of principal on the underlying mortgage loans; o the yield to maturity that investors may experience; o the degree to which the amount or frequency of prepayments of principal on the underlying mortgage loans might differ from those originally anticipated; S-214 o whether or to what extent the interest payable on any class of offered certificates may be reduced in connection with Net Aggregate Prepayment Interest Shortfalls; and o whether and to what extent prepayment premiums, yield maintenance charges, Default Interest or Post-ARD Additional Interest (including any Post-ARD Additional Interest added to the principal balance of the related underlying mortgage loan) will be received. A rating on the class A-MFL certificates does not represent any assessment of whether the floating interest rate on such certificates will convert to the pass-through rate on the class A-MFL REMIC II regular interest. The ratings on the class A-MFL certificates do not constitute a rating with respect to the likelihood of the receipt of payments to be made by the swap counterparty or any interest rate reductions or increases contemplated herein. With respect to the class A-MFL certificates, the rating agencies are only rating the receipt of interest up to the pass-through rate applicable to the class A-MFL REMIC II regular interest, and are not rating the receipt of interest accrued at LIBOR plus _____%. In addition, the ratings do not address any shortfalls or delays in payment that investors in the class A-MFL certificates may experience as a result of the conversion of the pass-through rate on the class A-MFL certificates from a rate based on LIBOR to a fixed rate. There can be no assurance as to whether any rating agency not requested to rate the offered certificates will nonetheless issue a rating to any class of offered certificates and, if so, what the rating would be. A rating assigned to any class of offered certificates by a rating agency that has not been requested by us to do so may be lower than the rating assigned to that class by S&P or Moody's. The ratings on the offered certificates should be evaluated independently from similar ratings on other types of securities. A security rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time by the assigning rating organization. Each security rating should be evaluated independently of any other security rating. See "Rating" in the accompanying prospectus. S-215 GLOSSARY The following capitalized terms will have the respective meanings assigned to them in this "Glossary" section whenever they are used in this prospectus supplement, including in any of the annexes to this prospectus supplement or on the accompanying diskette. "30/360 BASIS" means the accrual of interest based on a 360-day year consisting of twelve 30-day months. "ACTUAL/360 BASIS" means the accrual of interest based on the actual number of days elapsed during each one-month accrual period in a year assumed to consist of 360 days. "ADDITIONAL TRUST FUND EXPENSE" means any one of certain specified expenses of the trust that, in any such case, generally: o arises out of a default on a mortgage loan in the trust fund or an otherwise unanticipated event; o is paid out of collections on the mortgage pool or on a particular mortgage loan in the trust fund; o is not included in the calculation of a Realized Loss; and o is not covered by a servicing advance or a corresponding collection from either the related borrower or a party to the series 2005-C3 pooling and servicing agreement that has no recourse to the trust for reimbursement. We provide some examples of Additional Trust Fund Expenses under "Description of the Offered Certificates--Reductions of Certificate Principal Balances in Connection with Realized Losses and Additional Trust Expenses" in this prospectus supplement. "ADMINISTRATIVE FEE RATE" means, for any mortgage loan in the trust fund, the sum of the master servicing fee rate, plus the per annum rate applicable to the calculation of the trustee fee. The master servicing fee rate will include any primary servicing fee rate. "ALLOCATED CUT-OFF DATE BALANCE" means, with respect to any mortgaged real property, the cut-off date principal balance of the related underlying mortgage loan, multiplied by the Appraised Value of the particular mortgaged real property, with the resulting product to be divided by the sum of the Appraised Values of all mortgaged real properties securing the same underlying mortgage loan. "ALLOCATED PRINCIPAL BALANCE" means the portion of the Stated Principal Balance of the Carolina Place Mortgage Loan allocated to the Carolina Place Pooled Portion or the Carolina Place Non-Pooled Portion, as the case may be, which portion, at any given time, will equal: o in the case of the Carolina Place Pooled Portion, the lesser of-- 1. the excess, if any, of (a) the portion of the cut-off date principal balance of the Carolina Place Mortgage Loan that is allocable to the Carolina Place Pooled Portion (which is $114,200,000), over (b) all collections and/or advances of principal with respect to the Carolina Place Mortgage Loan that have previously been allocated to the Carolina Place Pooled Portion, and included in the Standard Available P&I Funds, as described under "Description of the Offered Certificates--Payments--Allocation of Payments on the S-216 Carolina Place Mortgage Loan; Payments on the Class CP-1, CP-2 and CP-3 Certificates" in this prospectus supplement, and 2. the then Stated Principal Balance of the Carolina Place Mortgage Loan; and o in the case of the Carolina Place Non-Pooled Portion, the lesser of-- 1. the excess, if any, of (a) the portion of the cut-off date principal balance of the Carolina Place Mortgage Loan that is allocable to the Carolina Place Non-Pooled Portion (which is $15,800,000), over (b) all collections and/or advances of principal with respect to the Carolina Place Mortgage Loan that have previously been allocated to the Carolina Place Non-Pooled Portion, and included in the Class CP Available P&I Funds, as described under "Description of the Offered Certificates--Payments--Allocation of Payments on the Carolina Place Mortgage Loan; Payments on the Class CP-1, CP-2 and CP-3 Certificates" in this prospectus supplement, and 2. the excess, if any, of (a) the then Stated Principal Balance of the Carolina Place Mortgage Loan, over (b) the then Allocated Principal Balance of the Carolina Place Pooled Portion. "ANNUAL DEBT SERVICE" means, for any underlying mortgage loan, 12 times the amount of the monthly debt service due under that mortgage loan as of the cut-off date (or, in the case of an underlying mortgage loan with an initial interest-only period, as of the related due date on which amortization is scheduled to begin and, in the case of an underlying mortgage loan that is interest-only for the entire term of the loan, the product of (a) the principal balance of such mortgage loan as of the cut-off date and (b) the annual mortgage rate as adjusted for the interest accrual method). "APPRAISAL REDUCTION AMOUNT" means, for any mortgage loan in the trust fund as to which an Appraisal Trigger Event has occurred, an amount that: o will be determined shortly following either-- A. the date on which the relevant appraisal or other valuation is obtained or performed, as described under "Servicing of the Underlying Mortgage Loans--Required Appraisals" in this prospectus supplement, or B. if no such appraisal or other valuation is required, the date on which the master servicer obtained knowledge of the relevant Appraisal Trigger Event, and monthly thereafter for so long as an Appraisal Trigger Event exists with respect to the mortgage loan; and o will generally equal the excess, if any, of "x" over "y" where-- X. "x" is equal to the sum of: 1. the Stated Principal Balance of the mortgage loan; 2. to the extent not previously advanced by or on behalf of the master servicer, the trustee or the fiscal agent, all unpaid interest accrued on the mortgage loan through the most recent due date prior to the date of determination at a per annum rate equal to the related Net Mortgage Rate (exclusive of any portion thereof that constitutes Post-ARD Additional Interest); S-217 3. all accrued but unpaid master servicing fees and special servicing fees and all accrued but unpaid Additional Trust Fund Expenses with respect to the mortgage loan; 4. all related unreimbursed advances made by or on behalf of the master servicer, the special servicer, the trustee or the fiscal agent with respect to the mortgage loan, together with interest on those advances; and 5. all currently due and unpaid real estate taxes and unfunded improvement reserves and assessments, insurance premiums and, if applicable, ground rents with respect to the related mortgaged real property, and Y. "y" is equal to the sum of: 1. 90% of the resulting appraised value (net of any prior liens and estimated liquidation expenses) of the related mortgaged real property or REO Property, which value may be subject to reduction by the special servicer based on its review of the related appraisal and other relevant information (without implying any duty to do so); and 2. all escrows, reserves and letters of credit held for the purposes of reserves (provided such letters of credit may be drawn upon for reserve purposes under the related mortgage loan documents) held with respect to the mortgage loan. If, however, the appraisal or other valuation referred to above in clause A. of the first bullet of this definition is required, but it is not obtained or performed by the 60th day after the Appraisal Trigger Event referred to in the first bullet of this definition, then until the required appraisal or other valuation is obtained or performed, the Appraisal Reduction Amount for the subject mortgage loan will equal 25% of the outstanding principal balance of that mortgage loan. After receipt of the required appraisal or other valuation, the special servicer will determine the Appraisal Reduction Amount, if any, for the subject mortgage loan as described in the first sentence of this definition. Notwithstanding the foregoing, the Carolina Place Loan Pair will be treated as a single mortgage loan for purposes of calculating an Appraisal Reduction Amount. Any Appraisal Reduction Amount with respect to the Carolina Place Loan Pair will be allocated first to the Carolina Place B-Note Loan, up to the outstanding principal balance thereof, and then to the Carolina Place Mortgage Loan. "APPRAISAL TRIGGER EVENT" means, with respect to any mortgage loan in the trust fund, any of the following events: o the mortgage loan is 60 days or more delinquent in respect of any monthly debt service payment; o the mortgaged real property securing the mortgage loan becomes an REO Property; o the mortgage loan has been modified by the special servicer to reduce the amount of any monthly debt service payment (other than a balloon payment); S-218 o a receiver is appointed and continues in that capacity with respect to the related mortgaged real property; o the related borrower declares bankruptcy or becomes the subject of a bankruptcy proceeding; or o the related borrower fails to make any balloon payment on such mortgage loan by its scheduled maturity date unless the master servicer has, on or prior to the 60th day after the due date of such balloon payment, received written evidence from an institutional lender of such lender's binding commitment to refinance such mortgage loan within 120 days after the due date of such balloon payment (provided that if such refinancing does not occur during such time specified in the commitment, an Appraisal Trigger Event will occur immediately). However, an Appraisal Trigger Event will cease to exist with respect to a mortgage loan in the trust fund: o with respect to the circumstances described in the first and third bullets of the prior sentence, when the related borrower has made three consecutive full and timely monthly debt service 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), and o with respect to the circumstances described in the fourth, fifth and sixth bullets of the prior sentence, when those circumstances cease to exist in the good faith reasonable judgment of the special servicer and in accordance with the Servicing Standard, but, with respect to any bankruptcy or insolvency proceedings described in the fourth and fifth bullets of the prior sentence, no later than the entry of an order or decree dismissing such proceeding, and with respect to the circumstances described in the sixth bullet of the prior sentence, no later than the date that the special servicer agrees to an extension, so long as at that time no circumstance identified in the first through sixth bullets of the prior sentence exists that would cause an Appraisal Trigger Event to continue to exist with respect to such mortgage loan. "APPRAISAL VALUE" or "APPRAISED VALUE" means, for any mortgaged real property securing an underlying mortgage loan, the independent appraiser's estimate of value of the fee simple estate or, where applicable, the leasehold estate, as stated in the appraisal with a valuation date as specified on Annex A-1. "ARD" means anticipated repayment date. "ARD LOAN" means any mortgage loan in the trust fund having the characteristics described in the first paragraph under "Description of the Mortgage Pool--Terms and Conditions of the Underlying Mortgage Loans--ARD Loans" in this prospectus supplement. "ASSET STATUS REPORT" means the report designated as such, and described under, "Servicing of the Underlying Mortgage Loans--The Series 2005-C3 Controlling Class Representative, the Class CP Representative and the Carolina Place Non-Trust Loan Noteholder--Rights and Powers of the Series 2005-C3 Controlling Class Representative, the Class CP Representative and the Carolina Place Non-Trust Loan Noteholder" in this prospectus supplement. "CAROLINA PLACE A/B CHANGE OF CONTROL EVENT" has the meaning described under "Servicing of the Underlying Mortgage Loans--The Series 2005-C3 Controlling Class Representative, the Class CP Representative and the Carolina Place Non-Trust Loan Noteholder" in this prospectus supplement. S-219 "CAROLINA PLACE BORROWER" means the borrower under the Carolina Place Mortgage Loan. "CAROLINA PLACE CO-LENDER AGREEMENT" has the meaning described under "Description of the Mortgage Pool--Carolina Place Loan Pair" in this prospectus supplement. "CAROLINA PLACE LOAN PAIR" means, together, the Carolina Place Mortgage Loan and the Carolina Place Non-Trust Loan. "CAROLINA PLACE MORTGAGE LOAN" and "CAROLINA PLACE LOAN" each means the underlying mortgage loan that is secured by the Carolina Place Mortgaged Property, which underlying mortgage loan has, as of the cut-off date, an unpaid principal balance of $130,000,000. "CAROLINA PLACE MORTGAGED PROPERTY" and "CAROLINA PLACE PROPERTY" each means the mortgaged real property identified on Annex A-1 to this prospectus supplement as Carolina Place. "CAROLINA PLACE NON-POOLED PORTION" means the junior portion of the Carolina Place Mortgage Loan that consists of $15,800,000 of the entire cut-off date principal balance of the Carolina Place Mortgage Loan. "CAROLINA PLACE NON-TRUST LOAN" means the mortgage loan secured by the Carolina Place Mortgaged Property that is not included in the trust and that is, as and to the extent described under "Description of the Mortgage Pool--The Carolina Place Loan Pair" in this prospectus supplement, subordinate in right of payment to the Carolina Place Mortgage Loan. The Carolina Place Non-Trust Loan is represented by two promissory notes that, as of the cut-off date, have an aggregate unpaid principal balance of $37,919,878. "CAROLINA PLACE NON-TRUST LOAN NOTEHOLDER" means the holder of the Carolina Place Non-Trust Loan. "CAROLINA PLACE PAYMENT TRIGGER EVENT" means, with respect to any payment date, the event that exists if: (a) as of the related determination date, the Carolina Place Mortgage Loan was being specially serviced and a material default existed with respect thereto; (b) as of the related determination date, the Carolina Place Mortgage Loan is at least 30 days' delinquent as to any monthly debt service payment; (c) the Carolina Place Property had, as of the related determination date, become an REO Property; or (d) various events of bankruptcy, insolvency, readjustment of debt, marshalling of assets and liabilities, or similar proceedings occur with respect to the related borrower or the Carolina Place Property. "CAROLINA PLACE POOLED/NON-POOLED CHANGE OF CONTROL EVENT" has the meaning described under "Servicing of the Underlying Mortgage Loans--The Series 2005-C3 Controlling Class Representative, the Class CP Representative and the Carolina Place Non-Trust Loan Noteholder" in this prospectus supplement. "CAROLINA PLACE POOLED PORTION" means the senior portion of the Carolina Place Mortgage Loan that consists of $114,200,000 of the entire cut-off date principal balance of the Carolina Place Mortgage Loan. "CAROLINA PLACE PRINCIPAL PAYMENT AMOUNT" means, for any payment date, an amount generally equal to that portion of the Total Principal Payment Amount for the subject payment date described in clauses 1. through 4. of the definition of "Total Principal Payment Amount" that are allocable to the Carolina Place Mortgage Loan. "CBD" means central business district. "CGM" means Citigroup Global Markets Realty Corp. or its successor in interest. S-220 "CITIGROUP MORTGAGE LOAN" means any of the underlying mortgage loans transferred by CGM to us for inclusion in the trust fund and any Qualified Substitute Mortgage Loan delivered by CGM in replacement of a Citigroup Mortgage Loan. "CLASS A-SB PLANNED PRINCIPAL BALANCE" means, with respect to the class A-SB certificates for any payment date, the principal balance specified for that payment date on Annex G to this prospectus supplement. The principal balances set forth on Annex G to this prospectus supplement were calculated using, among other things, the Maturity Assumptions and a 0% CPR. Based on the Maturity Assumptions and a 0% CPR, the total principal balance of the class A-SB certificates on each payment date would be reduced to approximately the scheduled principal balance indicated for that payment date on Annex G to this prospectus supplement. There is no assurance, however, that the mortgage loans will perform in conformity with the Maturity Assumptions. Therefore, there can be no assurance that the total principal balance of the class A-SB certificates on any payment date will be equal to (and, furthermore, following retirement of the class A-1, A-2 and A-3 certificates, such total principal balance may be less than) the principal balance that is specified for that payment date on Annex G to this prospectus supplement. "CLASS CP AVAILABLE P&I FUNDS" means, in general, that portion of the Total Available P&I Funds that is allocable to interest on, principal of, and loss/expense reimbursements with respect to the Carolina Place Non-Pooled Portion in accordance with "Description of the Offered Certificates--Payments--Allocation of Payments on the Carolina Place Mortgage Loan; Payments on the Class CP-1, CP-2 and CP-3 Certificates" in this prospectus supplement. "CLASS CP PRINCIPAL PAYMENT AMOUNT" has the meaning assigned to that term under "Description of the Offered Certificates--Payments--Allocation of Payments on the Carolina Place Mortgage Loan; Payments on the Class CP-1, CP-2 and CP-3 Certificates" in this prospectus supplement. "CLEARSTREAM" means Clearstream Banking Luxembourg. "CMSA" means the Commercial Mortgage Securities Association, or any association or organization that is a successor thereto. "COLLATERALIZATION EVENT" has the meaning given to that term under "Description of the Swap Agreement--The Swap Agreement" in this prospectus supplement. "CPR" means an assumed constant rate of prepayment each month, which is expressed on a per annum basis, relative to the then-outstanding principal balance of a pool of mortgage loans for the life of those loans. The CPR model is the prepayment model that we use in this prospectus supplement. "CROSSED LOAN" means any mortgage loan in the trust fund that is cross-collateralized with another mortgage loan in the trust fund. "CROSSED GROUP" means any group of mortgage loans in the trust fund that are cross-collateralized and cross-defaulted with each other. "CUT-OFF DATE LOAN-TO-VALUE RATIO" and "CUT-OFF DATE LTV RATIO" each generally means, subject to the discussion under "Risk Factors--Risks Related to the Underlying Mortgage Loans--The Underwritten Net Cash Flow Debt Service Coverage Ratios and/or Loan-to-Value Ratios for Certain of the Underlying Mortgage Loans Have Been Adjusted in Consideration of a Cash Holdback or a Letter of Credit" in this prospectus supplement: o with respect to any underlying mortgage loan (other than a Crossed Loan), the ratio of-- S-221 1. the cut-off date principal balance of the mortgage loan (or, in the case of the Carolina Place Mortgage Loan, unless the context clearly indicates otherwise, the portion of that cut-off date principal balance allocable to the Carolina Place Pooled Portion, which is $114,200,000), to 2. the Appraised Value of the related mortgaged real property or properties; and o with respect to any Crossed Loan, the ratio of-- 1. the total cut-off date principal balance for all of the underlying mortgage loans in the applicable Crossed Group, to 2. the total Appraised Value for all of the mortgaged real properties related to the applicable Crossed Group. "CY ENDED" means calendar year ended. "DEFAULT INTEREST" means, for any underlying mortgage loan, any interest, other than late payment charges, prepayment premiums or yield maintenance charges, that: o accrues on a defaulted mortgage loan solely by reason of the subject default; and o is in excess of all interest at the related mortgage rate set forth on Annex A-1 and any Post-ARD Additional Interest accrued on the mortgage loan. "DEFAULTED MORTGAGE LOAN" means an underlying mortgage loan (i) that (A) is delinquent 60 days or more in respect to a monthly debt service payment (not including the balloon payment) or (B) is delinquent in respect of its balloon payment unless the master servicer has, on or prior to the 60th day after the due date of that balloon payment, received written evidence from an institutional lender of such lender's binding commitment to refinance such underlying mortgage loan within 120 days after the due date of such balloon payment (provided that, if such refinancing does not occur during such time specified in the commitment, the subject underlying mortgage loan will immediately become a Defaulted Mortgage Loan), in either case such delinquency to be determined without giving effect to any grace period permitted by the related mortgage instrument or mortgage note and without regard to any acceleration of payments under the related mortgage instrument and mortgage note, or (ii) as to which the master servicer or special servicer has, by written notice to the related borrower, accelerated the maturity of the indebtedness evidenced by the related mortgage note. "DEFICIENT VALUATION" means, with respect to any underlying mortgage loan, a valuation by a court of competent jurisdiction of the related mortgaged real property in an amount less than the then outstanding principal balance of the underlying mortgage loan, which valuation results from a proceeding initiated under the U.S. Bankruptcy Code. "DETAILED PROPERTY TYPE" means, with respect to any mortgaged real property, the general purpose or use for which it is operated, along with, when applicable, certain ancillary distinctions or characteristics. In the case of a mixed use property, the percentages included in the parenthesis next to each detailed property type are meant to be the estimated percentage of that purpose or use at the mortgaged real property, as measured by its relative contribution to the mortgaged real property's Underwritten Revenues. Each tenant space at the mortgaged real property may be comprised of only one of the uses, or may be some mixture of the two. "ENVIRONMENTAL REPORT" means a Phase I environmental assessment, a limited scope environmental assessment, a transaction screen, or an update of any of the foregoing, prepared by a third-party consultant. S-222 "ERISA" means the Employee Retirement Income Security Act of 1974, as amended. "ERISA PLAN" means any employee benefit plan, or other retirement plan, arrangement or account, that is subject to the fiduciary responsibility provisions of ERISA. "ESCROWED REPLACEMENT RESERVES CURRENT ANNUAL DEPOSIT" means, with respect to any underlying mortgage loan, the monthly dollar amount, if any, actually deposited into a replacement reserves escrow account in conjunction with the May 2005 monthly debt service payment, multiplied by 12. "ESCROWED REPLACEMENT RESERVES INITIAL DEPOSIT" means, with respect to any underlying mortgage loan, the dollar amount deposited into an escrow account at the time of origination, to be used for future ongoing repairs and replacements for the related mortgaged real property or properties. "ESCROWED TI/LC RESERVES CURRENT ANNUAL DEPOSIT" means, with respect to any underlying mortgage loan, the monthly dollar amount, if any, actually deposited into a tenant improvements and leasing commissions escrow account in conjunction with the May 2005 monthly debt service payment, multiplied by 12. "ESCROWED TI/LC RESERVES INITIAL DEPOSIT" means, with respect to any underlying mortgage loan, the dollar amount deposited into an escrow account at the time of origination, to be used for future tenant improvements and leasing commissions for the related mortgaged real property or properties. "EUROCLEAR" means Euroclear Bank S.A./N.V., as operator of the Euroclear System. "EXEMPTION-FAVORED PARTY" means any of the following-- o Citigroup Global Markets Inc., o any person directly or indirectly, through one or more intermediaries, controlling, controlled by or under common control with Citigroup Global Markets Inc., and o any member of the underwriting syndicate or selling group of which a person described in either of the prior two bullets is a manager or co-manager with respect to the offered certificates. "EXPENSES" are the operating expenses incurred for a mortgaged real property for the specified historical operating period, as reflected in the operating statements and other information furnished by the related borrower. Those expenses generally include: o salaries, wages and benefits; o the costs of utilities; o repairs and maintenance; o marketing; o insurance; o management; o landscaping; S-223 o security, if provided at the mortgaged real property; o real estate taxes; o general and administrative expenses; o ground lease payments; and o other similar costs; but without any deductions for debt service, depreciation, amortization, capital expenditures or reserves for any of these deductions. In the case of certain properties used for retail, office and/or industrial purposes, Expenses may have included leasing commissions and tenant improvements. "FITCH" means Fitch, Inc. "GAAP" means generally accepted accounting principles in the United States. "INITIAL LOAN GROUP NO. 1 BALANCE" has the meaning given to that term under "Description of the Mortgage Pool--General" in this prospectus supplement. "INITIAL LOAN GROUP NO. 2 BALANCE" has the meaning given to that term under "Description of the Mortgage Pool--General" in this prospectus supplement. "INITIAL MORTGAGE POOL BALANCE" has the meaning given to that term under "Description of the Mortgage Pool--General" in this prospectus supplement. "INTEREST DIFFERENTIAL" means the present value of a stream of payments each equal to the product of: 1. the excess, if any, of the mortgage rate over the Yield Maintenance Interest Rate; multiplied by 2. the principal balance outstanding after application of the constant monthly payment on the date of such prepayment; provided that the Interest Differential will in no event be less than zero. "INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as amended. "IRS" means the Internal Revenue Service. "IXIS" means IXIS Real Estate Capital Inc. or its successor in interest. "IXIS MORTGAGE LOAN" means any of the underlying loans transferred to us by IXIS for inclusion in the trust fund and any Qualified Substitute Mortgage Loan delivered by IXIS in replacement of an IXIS Mortgage Loan. "LIBOR" has the meaning given to that term under "Description of the Offered Certificates--Distributions--Calculation of Pass-Through Rates" in this prospectus supplement. S-224 "LIBOR BUSINESS DAY" has the meaning given to that term under "Description of the Offered Certificates--Distributions--Calculation of Pass-Through Rates" in this prospectus supplement. "LIBOR DETERMINATION DATE" has the meaning given to that term under "Description of the Offered Certificates--Distributions--Calculation of Pass-Through Rates" in this prospectus supplement. "LOAN BALANCE AT MATURITY/ARD" means, with respect to any underlying mortgage loan, the principal balance remaining after giving affect to the principal component of the monthly debt service payment made on the maturity date of the mortgage loan or, in the case of an ARD Loan, the anticipated repayment date, assuming no prior prepayments or defaults. "LOAN GROUP NO. 1 PRINCIPAL PAYMENT AMOUNT" means the portion of the Net Principal Payment Amount for any payment date attributable to loan group no. 1. "LOAN GROUP NO. 2 PRINCIPAL PAYMENT AMOUNT" means the portion of the Net Principal Payment Amount for any payment date attributable to loan group no. 2. "LOC" means letter of credit. "MAJOR TENANT" means either the largest, second largest or third largest tenant in occupancy at a commercial mortgaged real property, as measured by its rentable area as a percentage of the total net rentable area. "MAJORITY CLASS CP CERTIFICATEHOLDER" means, as of any date of determination, any single holder -- or, if applicable, beneficial owner -- of class CP-1, CP-2 and CP-3 certificates (other than any holder -- or, if applicable, beneficial owner -- that is an affiliate of us or a mortgage loan seller) entitled to greater than 50% of the voting rights allocated to the CP-1, CP-2 and CP-3 classes. "MAJORITY CONTROLLING CLASS CERTIFICATEHOLDER" means, as of any date of determination, any single holder -- or, if applicable, beneficial owner -- of series 2005-C3 certificates (other than any holder -- or, if applicable, beneficial owner -- that is an affiliate of us or a mortgage loan seller) entitled to greater than 50% of the voting rights allocated to the series 2005-C3 controlling class; provided, however, that, if there is no single holder - -- or, if applicable, beneficial owner -- of series 2005-C3 certificates entitled to greater than 50% of the voting rights allocated to such class, then the Majority Controlling Class Certificateholder will be the single holder -- or, if applicable, beneficial owner -- of series 2005-C3 certificates with the largest percentage of voting rights allocated to the series 2005-C3 controlling class. With respect to determining the Majority Controlling Class Certificateholder, the class A-1, A-2, A-3, A-SB, A-4 and A-1A certificates will, and the class A-MFL and A-MFX certificates will, in each case, be treated as a single class of series 2005-C3 certificates, with the subject voting rights allocated among the holders -- or, if applicable, beneficial owners -- of those series 2005-C3 certificates in proportion to the respective total principal balances thereof as of such date of determination. "MASTER SERVICER REMITTANCE AMOUNT" has the meaning given to that term under "Servicing of the Underlying Mortgage Loans--Collection Account--Withdrawals" in this prospectus supplement. "MATURITY ASSUMPTIONS" means, collectively, the following assumptions regarding the series 2005-C3 certificates and the underlying mortgage loans: o the mortgage loans have the characteristics set forth on Annex A-1 to this prospectus supplement, the Initial Mortgage Pool Balance is approximately $1,435,172,921, the Initial Loan Group No. 1 Balance is approximately $1,145,448,916 and the Initial Loan Group No. 2 Balance is approximately $289,724,005; S-225 o the initial total principal balance or notional amount, as the case may be, of each class of series 2005-C3 certificates, exclusive of the class R and Y certificates, and the class A-MFL REMIC II regular interest is as described in this prospectus supplement; o the pass-through rate for each interest-bearing class of series 2005-C3 certificates is as described in this prospectus supplement; o there are no delinquencies or losses with respect to the underlying mortgage loans; o there are no modifications, extensions, waivers or amendments affecting the monthly debt service payments by borrowers on the underlying mortgage loans; o there are no Appraisal Reduction Amounts with respect to the underlying mortgage loans; o there are no casualties or condemnations affecting the corresponding mortgaged real properties; o each of the underlying mortgage loans provides for monthly debt service payments to be due on the fifth, seventh, ninth or eleventh day of each month and accrues interest on the respective basis described in this prospectus supplement; o there are no breaches of any mortgage loan seller's representations and warranties regarding the underlying mortgage loans that are being sold by it; o monthly debt service payments on the mortgage loans are timely received on the respective payment day of each month, and amortization, if applicable, is assumed to occur prior to prepayment; o no voluntary or involuntary prepayments are received as to any of the underlying mortgage loans during that mortgage loan's prepayment lock-out period, defeasance period or prepayment consideration period, in each case if any; o each ARD Loan is paid in full on its anticipated repayment date; o except as otherwise assumed in the immediately preceding two bullets, prepayments are made on each of the underlying mortgage loans at the indicated CPRs set forth in the subject tables or other relevant part of this prospectus supplement, without regard to any limitations in those mortgage loans on partial voluntary principal prepayment; o all prepayments on the underlying mortgage loans are assumed to be accompanied by a full month's interest; o no person or entity entitled thereto exercises its right of optional termination described in this prospectus supplement under "Description of the Offered Certificates--Termination"; o no underlying mortgage loan is required to be repurchased by any mortgage loan seller; o there are no Additional Trust Fund Expenses; o payments on the offered certificates are made on the 15th day of each month, commencing in July 2005; and S-226 o the offered certificates are settled on June 29, 2005. "MATURITY DATE/ARD LOAN-TO-VALUE RATIO" and "MATURITY DATE/ARD LTV RATIO" each generally means, subject to the discussion under "Risk Factors--Risks Related to the Underlying Mortgage Loans--The Underwritten Net Cash Flow Debt Service Coverage Ratios and/or Loan-to-Value Ratios for Certain of the Underlying Mortgage Loans Have Been Adjusted in Consideration of a Cash Holdback or a Letter of Credit" in this prospectus supplement: o with respect to any underlying mortgage loan (other than a Crossed Loan), the ratio of-- 1. the related Loan Balance at Maturity/ARD for the particular mortgage loan (or, in the case of the Carolina Place Mortgage Loan, unless the context clearly indicates otherwise, the portion of the Loan Balance at Maturity/ARD for that mortgage loan that is allocable to the Carolina Place Pooled Portion, which is $105,333,069), to 2. the Appraised Value of the related mortgaged real property or properties; and o with respect to any Crossed Loan, the ratio of-- 1. the total Loan Balance at Maturity/ARD for all of the underlying mortgage loans in the applicable Crossed Group, to 2. the total Appraised Value for all of the mortgaged real properties related to the applicable Crossed Group. "MOODY'S" means Moody's Investors Service, Inc. "MORTGAGE DEFERRED INTEREST" means, with respect to any underlying mortgage loan, the amount of any interest accrued thereon at the related mortgage rate (other than Post-ARD Additional Interest) that, by virtue of a modification, is added to the outstanding principal balance of such underlying mortgage loan instead of being payable on the related due date on which it would otherwise have been due. "MORTGAGE FILE" has the meaning given to that term under "Description of the Mortgage Pool--Assignment of the Mortgage Loans; Repurchases and Substitutions" in this prospectus supplement. "N/A" and "NAP" each means not applicable. "NET AGGREGATE PREPAYMENT INTEREST SHORTFALL" means, with respect to any payment date, the excess, if any, of: o the Prepayment Interest Shortfalls incurred with respect to the mortgage pool during the related collection period; over o the total payments made by the master servicer to cover those Prepayment Interest Shortfalls. S-227 "NET MORTGAGE PASS-THROUGH RATE" means: o in the case of each underlying mortgage loan that accrues on a 30/360 Basis, for any payment date, an annual rate equal to the Net Mortgage Rate of that mortgage loan in effect as of the date of initial issuance of the offered certificates; and o in the case of each underlying mortgage loan that accrues interest on an Actual/360 Basis, for any payment date, an annual rate generally equal to-- (A) the product of (1) 12, times (2) a fraction, expressed as a percentage, ____ the numerator of which fraction is, subject to adjustment as described below in this definition, an amount of interest equal to the product of (a) the number of days in the calendar month preceding the month in which the subject payment date occurs, multiplied by (b) the Stated Principal Balance of that mortgage loan immediately prior to the subject payment date, multiplied by (c) 1/360, multiplied by (d) the mortgage interest rate of that mortgage loan in effect as of the date of initial issuance of the offered certificates, and _____ the _________ denominator of which fraction is the Stated Principal Balance of that mortgage loan immediately prior to the subject payment date, minus (B) the Administrative Fee Rate for that mortgage loan. Notwithstanding the foregoing, if the subject payment date occurs during January, except during a leap year, or February, then the amount of interest that comprises the numerator of the fraction described in clause (A)(2) of the second bullet of this definition will be decreased to reflect any interest reserve amount with respect to the subject mortgage loan that is transferred from the trustee's payment account to its interest reserve account during that month. Furthermore, if the subject payment date occurs during March, then the amount of interest that comprises the numerator of the fraction described in clause (A)(2) of the second bullet of this definition will be increased to reflect any interest reserve amount(s) with respect to the subject mortgage loan that are transferred from the trustee's interest reserve account to its payment account during that month. "NET MORTGAGE RATE" means, for any underlying mortgage loan, the mortgage rate, minus the Administrative Fee Rate. "NET OPERATING INCOME" or "NOI" means, for any mortgaged real property securing an underlying mortgage loan, the net property income derived from the property, which is equal to Revenues less Expenses, for the applicable time period, that was available for debt service, as established by information provided by the related borrower, except that in some cases the net operating income has been adjusted by removing various non-recurring expenses and revenues or by other normalizations. NOI does not reflect accrual of costs such as reserves, capital expenditures, tenant improvements and leasing commissions and does not reflect non-cash items such as depreciation or amortization. In some cases, capital expenditures, tenant improvements and leasing commissions and non-recurring items may have been treated by a borrower as an expense but were excluded from Expenses to reflect normalized NOI. We have not made any attempt to verify the accuracy of any information provided by a particular borrower or to reflect changes in net operating income that may have occurred since the date of the information provided by any borrower for the related mortgaged real property. NOI was not necessarily determined in accordance with GAAP. Moreover, NOI is not a substitute for net income determined in accordance with GAAP as a measure of the results of a mortgaged real property's operations or a substitute for cash flows from operating activities determined in accordance with GAAP as a measure of liquidity. In certain cases, NOI may reflect partial-year annualizations. S-228 "NET PRINCIPAL PAYMENT AMOUNT" means, for any payment date, an amount (not less than zero) equal to (a) the Total Principal Payment Amount for that date, less (b) the Class CP Principal Payment Amount for that date. "NOI DSCR" means: o with respect to any underlying mortgage loan (other than a Crossed Loan), for any specified 12-month period, the ratio of-- 1. the NOI for the corresponding mortgaged real property or properties for that 12-month period, to 2. the Annual Debt Service for the underlying mortgage loan (or, in the case of the Carolina Place Mortgage Loan, unless the context clearly indicates otherwise, the portion of the Annual Debt Service for that mortgage loan that is allocable to the Carolina Place Pooled Portion, based on the Allocated Principal Balance of the Carolina Place Pooled Portion as of the cut-off date as a percentage of the cut-off date principal balance of the entire Carolina Place Mortgage Loan); and o with respect to any Crossed Loan, for any specified 12-month period, the ratio of-- 1. the total NOI for all of the mortgaged real properties related to the applicable Crossed Group for that 12-month period, to 2. the total Annual Debt Service for all of the underlying mortgage loans in the applicable Crossed Group. "NONRECOVERABLE ADVANCE" means any advance made or proposed to be made, as applicable, with respect to any underlying mortgage loan or related REO Property that is determined in accordance with the series 2005-C3 pooling and servicing agreement, not to be ultimately recoverable out of payments or other collections on that mortgage loan or related REO Property (or, in the case of the Carolina Place Mortgage Loan, on or with respect to the Carolina Place Loan Pair). "NRSF", "NRS" or "SF" generally means the square footage of the net rentable area of a mortgaged real property. "OCCUPANCY %" or "OCCUPANCY PERCENTAGE" means, (a) for any mortgaged real property (other than a hotel property), the percentage of leasable square footage, total Units or total Pads, as the case may be, at the particular property that was physically occupied as of the "Occupancy as of Date" specified in the Annex A-1 to this prospectus supplement, and (b) for any mortgaged real property that is a hotel property, the average percentage of rooms that were occupied in the 12-month period ending on the "Occupancy as of Date" specified in the Annex A-1 to this prospectus supplement. Occupancy Percentages presented in this prospectus supplement may reflect leased space that is not currently occupied, that is subject to build out and/or that is subject to a free rent period. "OPTION PRICE" has the meaning given to that term under "Servicing of the Underlying Mortgage Loans--Fair Value Purchase Option" in this prospectus supplement. S-229 "ORIGINAL AMORTIZATION TERM" means, with respect to any underlying mortgage loan, the number of months that would be required to fully amortize the mortgage loan's original principal balance assuming: o the actual mortgage loan rate; and o the actual monthly debt service payment; provided that, with respect to any underlying mortgage loan that provides for interest only payments for a period of months following the cut-off date followed by payments of interest and principal for the remaining term of the mortgage loan, the "actual monthly debt service payment" referenced in the second bullet of this definition means the monthly payment of principal and interest scheduled to be due following the interest-only period; and provided, further, that, with respect to any underlying mortgage loan that provides for interest only payments until the scheduled maturity date, the term "Original Amortization Term" is not applicable and Annexes to this prospectus supplement will indicate "Interest Only". "ORIGINAL TERM TO MATURITY/ARD" means, with respect to any underlying mortgage loan, the total number of scheduled monthly debt service payments specified in the related promissory note, beginning with and including the first payment date of the mortgage loan through and including the stated maturity date or, in the case of an ARD Loan, the anticipated repayment date. "PADS" means, in the case of a mortgaged real property operated as a mobile home park, the number of pads, which are referred to in Annex A-1 to this prospectus supplement as "Pads". "PARTY IN INTEREST" means any person that is a "party in interest" within the meaning of ERISA or a "disqualified person" as defined in Section 4975 of the Internal Revenue Code. "PERMITTED ENCUMBRANCES" means, with respect to any mortgaged real property securing a mortgage loan in the trust fund, any and all of the following: o the lien of current real property taxes, water charges, sewer rents and assessments not yet due and payable; o covenants, conditions and restrictions, rights of way, easements and other matters that are of public record; o exceptions and exclusions specifically referred to in the related lender's title insurance policy or, if that policy has not yet been issued, referred to in a pro forma title policy or marked-up commitment; o other matters to which like properties are commonly subject; o the rights of tenants (whether under ground leases, space leases or operating leases) at the mortgaged real property to remain following a foreclosure or similar proceeding (provided that such tenants are performing under such leases); and o if the mortgage loan is cross-collateralized with any other mortgage loan in the trust fund, the lien of the mortgage instrument for that other mortgage loan. "PERMITTED INVESTMENTS" means the U.S. government-related securities and other investment grade obligations specified in the series 2005-C3 pooling and servicing agreement. S-230 "PLAN" means any ERISA Plan or any other employee benefit or retirement plan, arrangement or account, including any individual retirement account or Keogh plan, that is subject to Section 4975 of the Internal Revenue Code. "PLAN ASSET REGULATIONS" means the regulations issued by the United States Department of Labor concerning whether a Plan's assets will be considered to include an undivided interest in each of the underlying assets of an entity for purposes of the general fiduciary provisions of ERISA and the prohibited transaction provisions of ERISA and the Internal Revenue Code, if the Plan acquires an "equity interest" in that entity. "POST-ARD ADDITIONAL INTEREST" means, with respect to any ARD Loan, the additional interest accrued with respect to that mortgage loan as a result of the marginal increase in the related mortgage rate upon passage of the related anticipated repayment date, as that additional interest may compound in accordance with the terms of that mortgage loan. "PREPAYMENT INTEREST EXCESS" means, with respect to any underlying mortgage loan that was subject to a principal prepayment in full or in part made by the related borrower during any collection period, which principal prepayment was applied to such underlying mortgage loan following such underlying mortgage loan's due date in such collection period, the amount of any interest (net of related master servicing fees and, if applicable, any portion of that interest that constitutes Default Interest and/or Post-ARD Additional Interest) accrued on the amount of such principal prepayment during the period from and after such due date and ending on the date such principal prepayment was applied to such underlying mortgage loan, to the extent collected (exclusive of any related prepayment premium or yield maintenance charge actually collected). "PREPAYMENT INTEREST SHORTFALL" means, with respect to any underlying mortgage loan that was subject to a principal prepayment in full or in part made by the related borrower during any collection period, which principal prepayment was applied to such underlying mortgage loan prior to such underlying mortgage loan's due date in such collection period, the amount of interest, to the extent not collected from the related borrower (without regard to any prepayment premium or yield maintenance charge actually collected), that would have accrued on the amount of such principal prepayment during the period commencing on the date as of which such principal prepayment was applied to such underlying mortgage loan and ending on the day immediately preceding such due date, inclusive (net of related master servicing fees and, if applicable, any portion of that interest that would have constituted Default Interest and/or Post-ARD Additional Interest). "PREPAYMENT PROVISIONS" for each underlying mortgage loan are as follows: o "LO(y)" means that the original duration of the lock-out period is y payments; o "DEFEASANCE(y)" means that the original duration of the defeasance period is y payments; o "Grtrx%UPBorYM(y)" means that, for an original period of y payments, the relevant prepayment premium will equal the greater of the applicable yield maintenance charge and x% of the principal amount prepaid; o "Grtrx%UPBory%UPB+YM" means that the relevant prepayment premium will equal the greater of (1) y% of the principal amount prepaid plus the applicable yield maintenance charge and (2) x% of the principal amount prepaid; o "FREE(y)" means that the underlying mortgage loan is freely prepayable for a period of y payments; and S-231 o "YM(y)" means that, for an original period of y payments, the relevant prepayment premium will equal the applicable yield maintenance charge. "PRESENT VALUE" or "PV" means a yield maintenance charge that is equal to the excess, if any, of: 1. the present value, as of the prepayment date, of the remaining scheduled payments of principal and interest from the prepayment date through, as applicable, the maturity date or anticipated repayment date, including any balloon payment or assumed prepayment on the anticipated repayment date, as applicable, determined by discounting those payments at the Yield Maintenance Interest Rate; over 2. the amount of principal being prepaid. "PRIMARY COLLATERAL" means the mortgaged real property directly securing a Crossed Loan and excluding any property as to which the related lien may only be foreclosed upon by virtue of the cross-collateralization features of the related Crossed Group. "PRIVILEGED PERSON" means any certificateholder, certificate owner, any party to the series 2005-C3 pooling and servicing agreement, any person identified to the trustee or the master servicer, as applicable, as a prospective transferee of a certificate or interest therein (or licensed or registered investment adviser representing such person), any rating agency, any mortgage loan seller, any underwriter, any of our designees or a designee of any party to the series 2005-C3 pooling and servicing agreement; provided that no certificate owner or prospective transferee of a certificate or interest therein (or licensed or registered investment adviser representing such person) will be considered a "Privileged Person" or be entitled to a password or restricted access to any reports delivered on a restricted basis unless such person has delivered to the trustee or the master servicer, as applicable, a certification in the form required by the series 2005-C3 pooling and servicing agreement. "PROPERTY TYPE" means, with respect to any mortgaged real property, the general purpose or use for which it is operated. "PURCHASE OPTION" has the meaning given to that term under "Servicing of the Underlying Mortgage Loans--Fair Value Purchase Option" in this prospectus supplement. "PURCHASE PRICE" has the meaning given to that term under "Description of the Mortgage Pool--Assignment of the Mortgage Loans; Repurchases and Substitutions" in this prospectus supplement. "PV YIELD DIFFERENTIAL" means a yield maintenance charge that is equal to the present value of the excess, if any, of: 1. the amount of interest that would be payable as of the prepayment date from such prepayment date through the maturity date on the prepaid amount, over 2. the amount of interest that would be payable as of the prepayment date from such prepayment date through the maturity date on the prepaid amount if such amount were invested at the Yield Maintenance Interest Rate. S-232 "QUALIFIED SUBSTITUTE MORTGAGE LOAN" means a replacement mortgage loan which must, on the date of substitution, among other things: o have an outstanding Stated Principal Balance, after application of all scheduled payments of principal and interest due during or prior to the month of substitution, not in excess of the Stated Principal Balance of the deleted mortgage loan as of the due date in the calendar month during which the substitution occurs; o have a mortgage rate not less than the mortgage rate of the deleted mortgage loan; o have the same due date as the deleted mortgage loan; o accrue interest on the same basis as the deleted mortgage loan (for example, on an Actual/360 Basis); o have a remaining term to stated maturity not greater than, and not more than two years less than, the remaining term to stated maturity of the deleted mortgage loan; o have an original loan-to-value ratio not higher than that of the deleted mortgage loan and a current loan-to-value ratio not higher than the then-current loan-to-value ratio of the deleted mortgage loan; o comply as of the date of substitution with all of the representations and warranties set forth in the applicable mortgage loan purchase agreement; o have an environmental report with respect to the related mortgaged real property which will be delivered as a part of the related servicing file; o have an original debt service coverage ratio (calculated to include the additional debt from any encumbrance) of not less than the original debt service coverage ratio (calculated to include the additional debt from any encumbrance) of the deleted mortgage loan and a current debt service coverage ratio (calculated to include the additional debt from any encumbrance) of not less than the current debt service coverage ratio (calculated to include the additional debt from any encumbrance) of the deleted mortgage loan; o be determined by an opinion of counsel to be a "qualified replacement mortgage" within the meaning of Section 860G(a)(4) of the Internal Revenue Code; o not have a maturity date after the date two years prior to the rated final payment date; o not be substituted for a deleted mortgage loan unless the trustee has received prior confirmation in writing by each applicable rating agency that such substitution will not result in the withdrawal, downgrade, or qualification of the rating assigned by the rating agency to any class of series 2005-C3 certificates then rated by the rating agency (the cost, if any, of obtaining such confirmation to be paid by the applicable mortgage loan seller); o have a date of origination that is not more than 12 months prior to the date of substitution; o have been approved by the series 2005-C3 controlling class representative (or, if there is no series 2005-C3 controlling class representative then serving, by the series 2005-C3 certificateholders representing a majority of the series 2005-C3 voting rights allocated to the controlling class); and S-233 o not be substituted for a deleted mortgage loan if it would result in the termination of the REMIC status of any of the REMICs created under the series 2005-C3 pooling and servicing agreement or the imposition of tax on any of the REMICs created under the series 2005-C3 pooling and servicing agreement other than a tax on income expressly permitted or contemplated to be received by the terms of the series 2005-C3 pooling and servicing agreement. In the event that one or more mortgage loans are substituted for one or more deleted underlying mortgage loans, then the amounts described in the first bullet of this definition will be determined on the basis of aggregate principal balances and the rates described in the second bullet of this definition and the remaining term to stated maturity referred to in the fifth bullet of this definition will be determined on a weighted average basis; provided that no underlying mortgage loan may have a Net Mortgage Rate that is less than the highest pass-through rate of any class of series 2005-C3 principal balance certificates (exclusive of the class CP-1, CP-2 and CP-3 certificates) bearing a fixed rate and outstanding at the time of the substitution. When a Qualified Substitute Mortgage Loan is substituted for a deleted underlying mortgage loan, the applicable mortgage loan seller will be required to certify that the replacement mortgage loan meets all of the requirements of the above definition and must send such certification to the trustee. A Qualified Substitute Mortgage Loan may not be substituted for the Carolina Place Mortgage Loan. "RATING AGENCY TRIGGER EVENT" has the meaning given to that term under "Description of the Swap Agreement--The Swap Agreement" in this prospectus supplement. "REALIZED LOSSES" means losses on or with respect to the underlying mortgage loans arising from the inability of the master servicer and/or the special servicer to collect all amounts due and owing under the mortgage loans, including by reason of the fraud or bankruptcy of a borrower or, to the extent not covered by insurance, a casualty of any nature at a mortgaged real property. We discuss the calculation of Realized Losses under "Description of the Offered Certificates--Reductions of Certificate Principal Balances in Connection with Realized Losses and Additional Trust Fund Expenses" in this prospectus supplement. "RECOMMENDED ANNUAL REPLACEMENT RESERVES" means, for any mortgaged real property securing an underlying mortgage loan, the expected average annual amount for future ongoing repairs and replacements, without any adjustment for inflation, over a time horizon not less than the original loan term of the respective mortgage loan, as estimated in the property condition assessment. "RELATED UNDERLYING MORTGAGE LOANS" means any two or more underlying mortgage loans for which the related mortgaged real properties are either owned by the same entity or owned by two or more entities controlled by the same key principals. "REMAINING AMORTIZATION TERM" or "STATED REMAINING AMORTIZATION TERM" means: (a) with respect to any underlying mortgage loan that does not provide for an interest only payment as of the cut-off date, the Original Amortization Term less the Seasoning of the loan, calculated as of the cut-off date; and (b) with respect to any underlying mortgage loan that provides for an interest only payment as of the cut-off date, the Original Amortization Term. With respect to any underlying mortgage loan that provides for interest only payments until the scheduled maturity date, the terms "Remaining Amortization Term and "Stated Remaining Amortization Term" are not applicable, and the Annexes to this prospectus supplement will indicate "Interest Only". "REMAINING TERM TO MATURITY/ARD" means, with respect to any underlying mortgage loan, the Original Term to Maturity/ARD less the Seasoning of the loan, calculated as of the cut-off date. "REMIC" means a "real estate mortgage investment conduit" as defined in Section 860D of the Internal Revenue Code. S-234 "REO PROPERTY" means any mortgaged real property that is acquired by the trust through foreclosure, deed-in-lieu of foreclosure or otherwise following a default on the corresponding underlying mortgage loan. "RESTRICTED GROUP" means, collectively, the following persons and entities: o the trustee; o the Exemption-Favored Parties; o us; o the master servicer; o the special servicer; o any sub-servicers; o the mortgage loan sellers; o each borrower, if any, with respect to underlying mortgage loans constituting more than 5.0% of the total unamortized principal balance of the mortgage pool as of the date of initial issuance of the series 2005-C3 certificates; and o any and all affiliates of any of the aforementioned persons. "RESTRICTED SERVICER REPORTS" means, collectively, the following reports: o CMSA servicer watch list; o CMSA operating statement analysis report; o CMSA NOI adjustment worksheet; and o CMSA comparative financial status report; provided that, if a Restricted Servicer Report is filed with the SEC, it will thereafter become an Unrestricted Servicer Report. "REVENUES" means the gross revenues received with respect to a mortgaged real property securing any underlying mortgage loan, for the specified historical operating period, as reflected in the operating statements and other information furnished by the related borrower. Those revenues generally include: o for the multifamily rental properties, gross rental and other revenues; and o for the retail, office and industrial properties, base rent, percentage rent, expense reimbursements and other revenues. "S&P" means Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc. S-235 "SEASONING" means, with respect to any underlying mortgage loan, the number of scheduled monthly debt service payments between and including the first payment date of the mortgage loan through and including the cut-off date. "SEC" means the Securities and Exchange Commission. "SECURITIES ACT" means the Securities Act of 1933, as amended. "SENIOR PRINCIPAL PAYMENT CROSS-OVER DATE" means the first payment date as of the commencement of business on which: o the class A-1, A-2, A-3, A-SB, A-4 and A-1A certificates, or any two or more of those classes, remain outstanding; and o the total principal balance of the class A-MFX, A-J, B, C, D, E, F, G, H, J, K, L, M, N, O and P certificates and the class A-MFL REMIC II regular interest has previously been reduced to zero as described under "Description of the Offered Certificates--Reductions of Certificate Principal Balances in Connection with Realized Losses and Additional Trust Fund Expenses" in this prospectus supplement "SERVICING STANDARD" means, in general, with respect to each of the master servicer and the special servicer, to service and administer the mortgage loans (including the Carolina Place Non-Trust Loan) and any REO Properties for which that party is responsible under the series 2005-C3 pooling and servicing agreement: o in the same manner in which, and with the same care, skill, prudence and diligence with which, the master servicer or the special servicer, as the case may be, generally services and administers similar mortgage loans with similar borrowers and similar foreclosure properties (i) for other third parties, giving due consideration to customary and usual standards of practice of prudent institutional commercial mortgage loan servicers servicing and administering loans and foreclosure properties for third parties or (ii) held in its own portfolio, whichever standard is higher; o with a view to (i) the timely collection of all scheduled payments of principal and interest due on each such mortgage loan or, if any such mortgage loan shall come into and continue in default, the maximization of the recovery on such mortgage loan or REO Property on a net present value basis and (ii) the best interests (as determined by the master servicer or special servicer, as applicable, in its reasonable judgment) of the series 2005-C3 certificateholders and the trust fund and, in the case of the Carolina Place Loan Pair, the Carolina Place Non-Trust Loan Noteholder; and o without regard to: 1. any relationship that the master servicer or the special servicer, as the case may be, or any of its affiliates may have with any related borrower, us, any mortgage loan seller or any other party to the transaction pursuant to which the series 2005-C3 certificates will be issued or any affiliate thereof; 2. the ownership of any series 2005-C3 certificate (or other interest in any underlying mortgage loan) by the master servicer or the special servicer, as the case may be, or by any of its affiliates; S-236 3. the right of the master servicer or the special servicer, as the case may be, to receive compensation or other fees for its services rendered pursuant to the series 2005-C3 pooling and servicing agreement; 4. the obligation of the master servicer to make advances; 5. the ownership, servicing or management by the master servicer or the special servicer or any of its affiliates for others of any other mortgage loans or mortgaged real property; 6. any obligation of the master servicer or any of its affiliates to repurchase or substitute an underlying mortgage loan as a mortgage loan seller; 7. any obligation of the master servicer or any of its affiliates to cure a breach of a representation or warranty with respect to an underlying mortgage loan; and 8. any debt the master servicer or the special servicer or any of its affiliates has extended to any related borrower or any affiliate of that borrower. "SERVICING TRANSFER EVENT" means, with respect to any underlying mortgage loan, any of the following events: 1. the related borrower-- A. fails to make when due any balloon payment unless the master servicer has, on or prior to the 60th day after the due date of that balloon payment, received written evidence from an institutional lender of such lender's binding commitment to refinance the subject underlying mortgage loan within 120 days after the due date of such balloon payment (provided that if such refinancing does not occur during such time specified in the commitment, a "Servicing Transfer Event" will occur immediately), or B. fails to make when due any scheduled payment of principal and interest (other than a balloon payment), and such failure continues unremedied for 60 days; 2. the master servicer or the special servicer (in the case of the special servicer, with the consent of the series 2005-C3 controlling class representative or, in the case of the Carolina Place Mortgage Loan, so long as a Carolina Place A/B Change of Control Event does not exist, the Carolina Place Non-Trust Loan Noteholder or, in the case of the Carolina Place Mortgage Loan, so long as a Carolina Place Pooled/Non-Pooled Change of Control Event does not--but a Carolina Place A/B Change of Control Event does--exist, the class CP representative) determines in its good faith reasonable judgment and in accordance with the Servicing Standard, based on, among other things, communications with the related borrower, that a default in the making of a scheduled payment of principal and interest (including a balloon payment) or any other default under the related mortgage loan documents that would (with respect to such other default) materially impair the value of the mortgaged real property as security for the subject underlying mortgage loan or otherwise would materially adversely affect the interest of the series 2005-C3 certificateholders and would continue unremedied beyond the applicable grace period under the terms of the subject underlying mortgage loan (or, if no grace period is specified, for 60 days; provided that a default that would give rise to an acceleration right without any grace period will be deemed to have a grace period equal to zero) is likely to occur and is likely to remain unremedied for at least 60 days; S-237 3. there occurs a default (other than as described in clause 1. above) that the master servicer or special servicer determines, in its good faith and reasonable judgment and in accordance with the Servicing Standard, materially impairs the value of the related mortgaged real property as security for the subject underlying mortgage loan or otherwise materially adversely affects the interests of the series 2005-C3 certificateholders and that continues unremedied beyond the applicable grace period under the terms of the subject underlying mortgage loan (or, if no grace period is specified, for 60 days; provided that a default that gives rise to an acceleration right without any grace period shall be deemed to have a grace period equal to zero); provided, however, that, in the event the special servicer determines that the related borrower does not need to maintain terrorism insurance as provided in the series 2005-C3 pooling and servicing agreement, no default related to the failure to obtain such insurance will be considered outstanding for purposes of this clause 3.; 4. various events of bankruptcy, insolvency, readjustment of debt, marshalling of assets and liabilities, or similar proceedings occur with respect to the related borrower or the corresponding mortgaged real property, or the related borrower takes various actions indicating its bankruptcy, insolvency or inability to pay its obligations; or 5. the master servicer receives notice of the commencement of foreclosure or similar proceedings with respect to the corresponding mortgaged real property. A Servicing Transfer Event will generally cease to exist: o with respect to the circumstances described in clause 1. of this definition, if and when the related borrower makes three consecutive full and timely scheduled monthly debt service payments under the terms of the mortgage loan, as those 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 master servicer or the special servicer; o with respect to the circumstances described in clauses 2. and 4. of this definition, if and when those circumstances cease to exist in the good faith reasonable judgment of the special servicer and in accordance with the Servicing Standard, but, with respect to any bankruptcy or insolvency proceedings described in clause 4. of this definition, no later than the entry of an order or decree dismissing such proceeding; o with respect to the circumstances described in clause 3. of this definition, if and when the default is cured; and o with respect to the circumstances described in clause 5. of this definition, if and when the proceedings are terminated; so long as at that time no circumstance identified in clauses 1. through 5. of this definition exists that would cause a Servicing Transfer Event to continue to exist with respect to the underlying mortgage loan. If a Servicing Transfer Event exists with respect to one mortgage loan in the Carolina Place Loan Pair, it will also be considered to exist for the other mortgage loan in the Carolina Place Loan Pair; provided that, if the Carolina Place Non-Trust Loan Noteholder prevents the occurrence of a Servicing Transfer Event with respect to the Carolina Place Mortgage Loan through the exercise of cure rights as set forth in the Carolina Place Co-Lender Agreement, then the existence of such Servicing Transfer Event with respect to the Carolina Place Non-Trust Loan will not, in and of itself, result in the existence of a Servicing Transfer Event with respect to the Carolina S-238 Place Mortgage Loan or cause the servicing of the Carolina Place Loan Pair to be transferred to the special servicer, unless a separate Servicing Transfer Event has occurred with respect thereto. "SMMEA" means the Secondary Mortgage Market Enhancement Act of 1984. "STANDARD AVAILABLE P&I FUNDS" means, with respect to any payment date, the Total Available P&I Funds, net of the Class CP Available P&I Funds, for that date. "STATED PRINCIPAL BALANCE" means, for any outstanding mortgage loan in the trust fund as of any date of determination, an amount (which amount will not be less than zero) equal to "x" plus "y" minus "z" where: X. "x" is equal to the cut-off date principal balance of the subject mortgage loan (or, in the case of a Qualified Substitute Mortgage Loan, the unpaid principal balance after application of all principal payments due on or before the related date of substitution, whether or not received); Y. "y" is equal to any Mortgage Deferred Interest added to the principal balance of the mortgage loan prior to the end of the collection period for the then-most recent payment date coinciding with or preceding such date of determination; and Z. "z" is equal to the sum of-- 1. the principal portion of each scheduled payment of principal and interest due on the subject mortgage loan after the cut-off date or the related date of substitution, as the case may be, to the extent received from the related borrower or advanced by the master servicer and distributed to series 2005-C3 certificateholders on or before such date of determination, 2. all principal prepayments received with respect to the subject mortgage loan after the cut-off date or the related date of substitution, as the case may be, to the extent distributed to series 2005-C3 certificateholders on or before such date of determination, 3. the principal portion of all insurance proceeds, condemnation proceeds and liquidation proceeds received with respect to the subject mortgage loan after the cut-off date or the related date of substitution, as the case may be, to the extent distributed to series 2005-C3 certificateholders on or before such date of determination, 4. the principal portion of any Realized Loss incurred in respect of the subject mortgage loan prior to the end of the collection period for the then-most recent payment date coinciding with or preceding such date of determination, and 5. to the extent not otherwise included as part of the amount described in the immediately preceding clause 4., any amount of reduction in the outstanding principal balance of the subject mortgage loan resulting from a Deficient Valuation that occurred prior to the end of the collection period for the then-most recent payment date coinciding with or preceding such date of determination. With respect to any mortgage loan in the trust fund as to which the related mortgaged real property has become an REO Property, the "Stated Principal Balance" of that mortgage loan will be, as of any date of determination, an amount equal to (x) the Stated Principal Balance of that mortgage loan as of the date of the related REO acquisition, minus (y) the sum of: S-239 1. the principal portion of any P&I advance made with respect to the subject mortgage loan on or after the date of the related REO acquisition, to the extent distributed to series 2005-C3 certificateholders on or before such date of determination; 2. the principal portion of all insurance proceeds, condemnation proceeds, liquidation proceeds and REO revenues received with respect to the subject mortgage loan deemed to be outstanding, to the extent distributed to series 2005-C3 certificateholders on or before such date of determination; and 3. the principal portion of any Realized Loss incurred in respect of the subject mortgage loan prior to the end of the collection period for the then-most recent payment date coinciding with or preceding such date of determination. A mortgage loan (including a mortgage loan deemed to be outstanding with respect to an REO Property) shall be deemed to be part of the mortgage pool and to have an outstanding Stated Principal Balance until the payment date on which the payments or other proceeds, if any, received in connection with a liquidation event in respect thereof are to be (or, if no such payments or other proceeds are received in connection with such liquidation event, would have been) distributed to series 2005-C3 certificateholders. For purposes of this definition, payments or other collections of principal on or with respect to any underlying mortgage loan (including any mortgage loan as to which the related mortgaged real property has become an REO Property) will be considered distributed to series 2005-C3 certificateholders as of the first payment date that those payments are included in the Total Principal Payment Amount. However, to the extent that principal from general collections on the mortgage pool is used to reimburse, or pay interest on, advances deemed to be nonrecoverable pursuant to the series 2005-C3 pooling and servicing agreement with respect to any particular mortgage loan, and such amount has not been included as part of the Total Principal Payment Amount, such amount shall continue to be deemed to be distributed for purposes of calculating the Stated Principal Balance. Notwithstanding the foregoing, if any mortgage loan is paid in full, liquidated or otherwise removed from the trust fund, commencing as of the first payment date following the collection period during which such event occurred, the Stated Principal Balance of such mortgage loan will be zero. "SUB-SERVICING FEE RATE" means, for any underlying mortgage loan, the per annum rate at which the monthly sub-servicing fee is payable to any sub-servicer. "SUBSTITUTION SHORTFALL AMOUNT" has the meaning given to that term under "Description of the Mortgage Pool--Assignment of the Mortgage Loans; Repurchases and Substitutions" in this prospectus supplement. "SWAP DEFAULT" has the meaning given to that term under "Description of the Swap Agreement--The Swap Agreement" in this prospectus supplement. "SWAP PAYMENT DEFAULT" has the meaning given to that term under "Description of the Swap Agreement--The Swap Agreement" in this prospectus supplement. "SWAP PREMIUM" has the meaning given to that term under "U.S. Federal Income Tax Consequences--The Class A-MFL Certificates" in this prospectus supplement. "TOTAL AVAILABLE FUNDS" means, with respect to any payment date, the total amount of funds available to make payments on the series 2005-C3 certificates (exclusive of the class A-MFL certificates) and the class A-MFL REMIC II regular interest on that date as described under "Description of the Offered Certificates--Payment Account--Withdrawals" in this prospectus supplement. S-240 "TOTAL AVAILABLE P&I FUNDS" means, with respect to any payment date, subject to the discussion under "Description of the Offered Certificates--Payments" in this prospectus supplement, all funds in the trustee's payment account that are available to make payments of interest and principal on the series 2005-C3 certificates on that payment date. The Total Available P&I Funds do not include Post-ARD Additional Interest, yield maintenance charges or prepayment premiums. The trustee will apply the Total Available P&I Funds as described under "Description of the Offered Certificates--Payments" in this prospectus supplement to pay principal and accrued interest on the series 2005-C3 certificates (exclusive of the class R and Y certificates) on that date. "TOTAL PRINCIPAL PAYMENT AMOUNT" means, for any payment date, an amount generally equal to: 1. the aggregate of the principal portions of all monthly debt service payments (other than balloon payments) due or deemed due in respect of the underlying mortgage loans (including mortgage loans as to which the related mortgaged real properties have become REO Properties) for their respective due dates occurring during the related collection period, to the extent paid by the related borrower during or prior to, or otherwise received during, the related collection period or advanced by the master servicer, the trustee or the fiscal agent, as applicable, for such payment date; plus 2. the aggregate of all principal prepayments received on the underlying mortgage loans during the related collection period; plus 3. with respect to any underlying mortgage loan as to which the related stated maturity date occurred during or prior to the related collection period, any payment of principal (other than a principal prepayment) made by or on behalf of the related borrower during the related collection period (including any balloon payment), net of any portion of such payment that represents a recovery of the principal portion of any monthly debt service payment (other than a balloon payment) due or deemed due in respect of the subject underlying mortgage loan on a due date during or prior to the related collection period and included as part of the Total Principal Payment Amount for such payment date or any prior payment date pursuant to clause 1. above; plus 4. the aggregate of the principal portion of all liquidation proceeds, sale proceeds, insurance proceeds, condemnation proceeds and, to the extent not otherwise included in clause 1., 2. or 3. above, payments and revenues that were received on or in respect of the underlying mortgage loans and REO Properties during the related collection period and that were identified and applied by the master servicer and/or the special servicer as recoveries of principal of the underlying mortgage loans, in each case net of any portion of such amounts that represents a recovery of the principal portion of any monthly debt service payment due (other than a balloon payment) or deemed due in respect of the related underlying mortgage loan on a due date during or prior to the related collection period and included as part of the Total Principal Payment Amount for such payment date or any prior payment date pursuant to clause 1. above; plus 5. if the subject payment date is subsequent to the initial payment date, the excess, if any, of (a) the Total Principal Payment Amount for the immediately preceding payment date, over (b) the total payments of principal made with respect to the series 2005-C3 principal balance certificates (exclusive of the class A-MFL, CP-1, CP-2 and CP-3 certificates) and the class A-MFL REMIC II regular interest on the immediately preceding payment date; plus 6. any amounts that were used to reimburse Nonrecoverable Advances (including interest on such Nonrecoverable Advances) from principal collections on the mortgage pool and that are, in any S-241 such case, recovered during the related collection period on the related underlying mortgage loan as to which any such reimbursed advance was made; minus 7. the amount of any reimbursements of Nonrecoverable Advances (including interest on such Nonrecoverable Advances) that are paid or reimbursed from general principal collections on the mortgage pool with respect to such payment date where such principal collections would have otherwise been included in the Total Principal Payment Amount for such payment date pursuant to any of clauses 1. through 4. above; provided that, for the final payment date, the Total Principal Payment Amount will be no less than the total Stated Principal Balance of the mortgage pool immediately prior to that payment date. "UAV" means unavailable. "UNDERWRITER EXEMPTION" means Prohibited Transaction Exemption 91-23, as amended by Prohibited Transaction Exemptions 97-34, 2000-58 and 2002-41. "UNDERWRITTEN ANNUAL REPLACEMENT RESERVES" or "U/W ANNUAL REPLACEMENT RESERVES" means the average annual ongoing repairs and replacements estimated for a mortgaged real property, generally consistent with the greater of (a) the Recommended Annual Replacement Reserves and (b) the lender's minimum underwriting standard for that property type. "UNDERWRITTEN ANNUAL TI/LC RESERVES" or "U/W ANNUAL TI/LC RESERVES" means the average annual tenant improvement and leasing commissions estimated for a mortgaged real property, generally consistent with the lender's minimum underwriting standard for that property type. "UNDERWRITTEN EXPENSES" or "U/W EXPENSES" means, with respect to any mortgaged real property securing an underlying mortgage loan, the annual operating expenses estimated for that property, generally derived from the historical annual expenses reflected in the operating statements and other information furnished by the related borrower, except that those expenses were often modified as follows: o operating expenses were generally adjusted by various factors such as inflation, appraisers' estimates and historical trends; o if there was no management fee or a management fee which varies from the market, it was assumed that a management fee is payable with respect to the mortgaged real property in an amount that is the greater of the market rate as determined by an appraiser or the lender's minimum management fee underwriting criteria for the applicable property type; and o those expenses were adjusted so as to eliminate any capital expenditures, loan closing costs, tenant improvements or leasing commissions and similar nonrecurring expenses. Underwritten Expenses generally include: o salaries, wages and benefits; o the costs of utilities; o repairs and maintenance; o marketing; S-242 o insurance; o management; o landscaping; o security, if provided at the mortgaged real property; o real estate taxes; o general and administrative expenses; and o ground lease payments, and other costs; but without any deductions for debt service, depreciation and amortization or capital expenditures, tenant improvements or leasing commissions. "UNDERWRITTEN NET CASH FLOW", "UNDERWRITTEN NCF" or "U/W NCF" means, for any mortgaged real property, the Underwritten NOI for that property reduced by the following items, if and to the extent that the items have not already been netted-out in calculating Underwritten NOI: o underwritten capital expenditure reserves; and o underwritten tenant improvements and leasing commission reserves. Underwritten Net Cash Flow is subject to the same limitations and qualifications as Underwritten NOI. "UNDERWRITTEN NCF DEBT SERVICE COVERAGE RATIO" and "U/W NCF DSCR" means, subject to the discussion under "Risk Factors--Risks Related to the Underlying Mortgage Loans--The Underwritten Net Cash Flow Debt Service Coverage Ratios and/or Loan-to-Value Ratios for Certain of the Underlying Mortgage Loans Have Been Adjusted in Consideration of a Cash Holdback or a Letter of Credit" in this prospectus supplement: o with respect to any underlying mortgage loan (other than a Crossed Loan), the ratio of-- 1. the U/W NCF for the corresponding mortgaged real property or properties, to 2. the Annual Debt Service for the underlying mortgage loan (or, in the case of the Carolina Place Mortgage Loan, unless the context clearly indicates otherwise, the portion of the Annual Debt Service for that mortgage loan that is allocable to the Carolina Place Pooled Portion, based on the Allocated Principal Balance of the Carolina Place Pooled Portion as of the cut-off date as a percentage of the cut-off date principal balance of the entire Carolina Place Mortgage Loan); and o with respect to any Crossed Loan, the ratio of-- 1. the total U/W NCF for all of the mortgaged real properties related to the applicable Crossed Group, to 2. the total Annual Debt Service for all of the underlying mortgage loans in the applicable Crossed Group. S-243 "UNDERWRITTEN NOI" or "U/W NOI" means, for any mortgaged real property securing any underlying mortgage loan, an estimate, made at or about the time of origination of that mortgage loan or, in some cases, more recently derived from current financial information, of the total cash flow anticipated to be available for Annual Debt Service on the underlying mortgage loan, calculated as the excess of Underwritten Revenues over Underwritten Expenses before considering any reserves or capital expenditures. Underwritten NOI describes the cash flow available before deductions for capital expenditures such as tenant improvements, leasing commissions and structural reserves. In general, Underwritten NOI has been calculated without including underwritten reserves or any other underwritten capital expenditures among Underwritten Expenses. Had those reserves been so included, Underwritten NOI would have been lower. Even in those cases where such underwritten reserves or any other underwritten capital expenditures were so included, no cash may have been actually escrowed. No representation is made as to the future operating income of the properties, nor is the Underwritten NOI set forth in this prospectus supplement with respect to any mortgaged real property intended to represent such future net operating income. Actual conditions at any mortgaged real property may differ substantially from the assumed conditions used in calculating Underwritten NOI. In particular, the assumptions regarding future revenues, tenant vacancies, future expenses and various other relevant factors, may differ substantially from actual conditions and circumstances with respect to any mortgaged real property. There can be no assurance that the actual financial performance of any of the mortgaged real properties will meet the underwritten results assumed in connection with the origination or purchase of the underlying mortgage loans. Underwritten NOI and the Underwritten Revenues and Underwritten Expenses used to determine Underwritten NOI for each mortgaged real property are derived from information furnished by the respective borrowers. Net income for a mortgaged real property as determined under GAAP would not be the same as the Underwritten NOI for the mortgaged real property set forth in this prospectus supplement. In addition, Underwritten NOI is not a substitute for or comparable to operating income as determined in accordance with GAAP as a measure of the results of a property's operations or a substitute for cash flows from operating activities determined in accordance with GAAP as a measure of liquidity. "UNDERWRITTEN REVENUES" or "U/W REVENUES" means the annual operating revenues estimated for a mortgaged real property, and generally equals, subject to the assumptions and adjustments specified below: o in the case of the multifamily rental properties, the amount of gross rents expected to be received during a 12-month period, as estimated by annualizing a current rent roll provided by the borrower in connection with the origination of the underlying mortgage loan or, more recently, under its periodic operating statements reporting requirements; and o in the case of the commercial properties, the amount of gross rents expected to be received during a 12-month period, as estimated by annualizing a current rent roll provided by the borrower in connection with the origination of the underlying mortgage loan or, more recently, under its periodic operating statement reporting requirements, plus-- 1. for some commercial properties, percentage rents or other revenues based on normalized actual amounts collected during previous operating periods, and/or 2. in the case of some commercial properties with modified gross or net leases, the amount of expense reimbursements expected to be received over a 12-month period, as estimated based upon actual lease terms currently in effect or actual amounts collected during previous operating periods. S-244