EXECUTION COPY
SUPPLEMENTAL AGREEMENT
----------------------
This Supplemental Agreement (this "Agreement"), is dated and effective
as of December 10, 2002, between GMAC Commercial Mortgage Corporation as
Mortgage Loan Seller (the "Mortgage Loan Seller") and Xxxxxxx Xxxxx Mortgage
Company as purchaser (the "Purchaser").
WHEREAS, the Mortgage Loan Seller sold certain mortgage loans to the
Purchaser pursuant to a certain Mortgage Loan Purchase Agreement, dated as of
June 27, 2001 (the "GSMC Purchase Agreement").
WHEREAS, the Purchaser intends to sell the mortgage loans as shown on
Exhibit A hereto (the "Mortgage Loans") to GMAC Commercial Mortgage Securities,
Inc. as Depositor, (the "Depositor") pursuant to a certain Mortgage Loan
Purchase Agreement, dated as of December 10, 2002 (the "Mortgage Loan Purchase
Agreement") and the Depositor intends to transfer the Mortgage Loans, together
with other multifamily and commercial mortgage loans, to a trust fund (the
"Trust Fund") to be formed by the Depositor, beneficial ownership of which will
be evidenced by a series of mortgage pass-through certificates (the
"Certificates"). Certain classes of the Certificates will be rated by Fitch
Ratings, Xxxxx'x Investors Service, Inc. and Standard & Poor's Ratings Services,
a division of the XxXxxx-Xxxx Companies, Inc. (together, the "Rating Agencies").
Certain classes of the Certificates (the "Registered Certificates") will be
registered under the Securities Act of 1933, as amended (the "Securities Act").
The Trust Fund will be created and the Certificates will be issued pursuant to a
pooling and servicing agreement to be dated as of December 1, 2002 (the "Pooling
and Servicing Agreement"), among the Depositor as depositor, GMAC Commercial
Mortgage Corporation as master servicer (in such capacity, the "Master
Servicer") and special servicer and Xxxxx Fargo Bank Minnesota, National
Association, as trustee (in such capacity, the "Trustee"). Capitalized terms not
otherwise defined herein have the meanings assigned to them in the Pooling and
Servicing Agreement as in effect on the Closing Date (as defined below).
WHEREAS, the Depositor intends to sell the Class A-1, Class A-2, Class
B, Class C, Class D and Class E Certificates to Xxxxxxx, Sachs & Co., Deutsche
Bank Securities Inc. and Xxxxxx Xxxxxxx & Co. Incorporated (together, the
"Underwriters"), pursuant to an underwriting agreement dated the date hereof
(the "Underwriting Agreement"). The Depositor intends to sell the Class X-1,
Class X-2, Class F, Class G, Class H, Class J, Class K, Class L, Class M, Class
N, Class O-1, Class O-2 and Class P Certificates to Xxxxxxx, Sachs & Co.,
Deutsche Bank Securities Inc. and Xxxxxx Xxxxxxx & Co. Incorporated (in such
capacity, each an "Initial Purchaser") pursuant to a certificate purchase
agreement, dated the date hereof (the "Certificate Purchase Agreement"). The
Depositor intends to sell the Class R-I, Class R-II and Class R-III Certificates
to a Qualified Institutional Buyer (in such capacity, an "Initial Purchaser").
WHEREAS, each of the Mortgage Loan Seller and the Purchaser, in
connection with the transaction described above, desires to amend and supplement
certain of the provisions of the GSMC Purchase Agreement as it relates to the
Mortgage Loans in order to facilitate such transaction and in contemplation of
the assignment by the Purchaser to the Depositor of all of its right, title and
interest in and to this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements set forth herein, the parties agree as follows:
SECTION 1. Amendment of GSMC Purchase Agreement.
The parties hereto agree that, with respect to the Mortgage Loans only,
the GSMC Purchase Agreement is hereby amended to the extent that the provisions
of such GSMC Purchase Agreement are inconsistent with this Agreement.
SECTION 2. Representations, Warranties and Covenants of the Mortgage
Loan Seller.
(a) The Mortgage Loan Seller hereby makes, as of December 19, 2002 (the
"Closing Date") (or as of such other date specifically provided in the
particular representation or warranty), to and for the benefit of the Purchaser,
and its successors and assigns (including, without limitation, the Depositor,
the Trustee and the holders of the Certificates), each of the representations
and warranties set forth in Exhibit B, with such changes or modifications as may
be permitted or required by the Rating Agencies.
(b) In addition, the Mortgage Loan Seller, as of the date hereof,
hereby represents and warrants to, and covenants with, the Purchaser that:
(i) The Mortgage Loan Seller is a corporation, duly organized,
validly existing and in good standing under the laws of the State of California,
and is in compliance with the laws of each State in which any Mortgaged Property
is located to the extent necessary to ensure the enforceability of each Mortgage
Loan and to perform its obligations under this Agreement.
(ii) The execution and delivery of this Agreement by the
Mortgage Loan Seller, and the performance and compliance with the terms of this
Agreement by the Mortgage Loan Seller, will not violate the Mortgage Loan
Seller's organizational documents or constitute a default (or an event which,
with notice or lapse of time, or both, would constitute a default) under, or
result in the breach of, any material agreement or other instrument to which it
is a party or which is applicable to it or any of its assets, in each case which
materially and adversely affects the ability of the Mortgage Loan Seller to
carry out the transactions contemplated by this Agreement.
(iii) The Mortgage Loan Seller has the full power and authority
to enter into and consummate all transactions contemplated by this Agreement,
has duly authorized the execution, delivery and performance of this Agreement,
and has duly executed and delivered this Agreement.
(iv) This Agreement, assuming due authorization, execution and
delivery by the Purchaser, constitutes a valid, legal and binding obligation of
the Mortgage Loan Seller, enforceable against the Mortgage Loan Seller in
accordance with the terms hereof, subject to (A) applicable bankruptcy,
insolvency, reorganization, moratorium and other laws affecting the enforcement
of creditors' rights generally, (B) general principles of equity, regardless of
whether such enforcement is considered in a proceeding in equity or at law, and
(C) public policy
2
considerations underlying the securities laws, to the extent that such public
policy considerations limit the enforceability of the provisions of this
Agreement that purport to provide indemnification for securities laws
liabilities.
(v) The Mortgage Loan Seller is not in violation of, and its
execution and delivery of this Agreement and its performance and compliance with
the terms of this Agreement will not constitute a violation of, any law, any
order or decree of any court or arbiter, or any order, regulation or demand of
any federal, state or local governmental or regulatory authority, which
violation, in the Mortgage Loan Seller's good faith and reasonable judgment, is
likely to affect materially and adversely either the ability of the Mortgage
Loan Seller to perform its obligations under this Agreement or the financial
condition of the Mortgage Loan Seller.
(vi) No litigation is pending with regard to which the Mortgage
Loan Seller has received service of process or, to the best of the Mortgage Loan
Seller's knowledge, threatened against the Mortgage Loan Seller the outcome of
which, in the Mortgage Loan Seller's good faith and reasonable judgment, could
reasonably be expected to prohibit the Mortgage Loan Seller from entering into
this Agreement or materially and adversely affect either the ability of the
Mortgage Loan Seller to perform its obligations under this Agreement or the
financial condition of the Mortgage Loan Seller.
(vii) The Mortgage Loan Seller has not dealt with any broker,
investment banker, agent or other person, other than the Purchaser, the
Underwriters, the Initial Purchasers and their respective affiliates, that may
be entitled to any commission or compensation in connection with the sale of the
Mortgage Loans or the consummation of any of the other transactions contemplated
hereby.
(viii) No consent, approval, authorization or order of,
registration or filing with, or notice to, any governmental authority or court
is required, under federal or state law (including, with respect to any bulk
sale laws), for the execution, delivery and performance of or compliance by the
Mortgage Loan Seller with this Agreement, or the consummation by the Mortgage
Loan Seller of any transaction contemplated hereby, other than (1) such
consents, approvals, authorizations, qualifications, registrations, filings or
notices as have been obtained or made and (2) where the lack of such consent,
approval, authorization, qualification, registration, filing or notice would not
have a material adverse effect on the performance by the Mortgage Loan Seller
under this Agreement.
(c) Upon discovery by any of the parties hereto of a breach of any of
the representations and warranties made pursuant to and set forth in subsection
(b) above which materially and adversely affects the interests of the Purchaser
or its successors or assigns or a breach of any of the representations and
warranties made pursuant to subsection (a) above and set forth in Exhibit B
which materially and adversely affects the value of any Mortgage Loan or the
interests therein of the Purchaser or its successors and assigns (including,
without limitation the Depositor, the Trustee and the holders of the
Certificates), the party discovering such breach shall give prompt written
notice to the other party hereto or if this Agreement has been assigned by the
Purchaser, to such assignee. The representations, warranties and covenants set
forth in Section 2(a) shall, as between the Mortgage Loan Seller and the
Purchaser, supplement, and as between the Mortgage Loan Seller and any
successors or assigns of the Purchaser, replace and
3
amend and restate in their entirety, the representations, warranties and
covenants of the Mortgage Loan Seller made pursuant to Section 4.1(a) of the
GSMC Purchase Agreement to the extent they relate to the Mortgage Loans.
SECTION 3. Representations, Warranties and Covenants of the Purchaser.
(a) The Purchaser, as of the date hereof, hereby represents and
warrants to, and covenants with, the Mortgage Loan Seller that:
(i) The Purchaser is a limited partnership duly organized,
validly existing and in good standing under the laws of the State of New York.
(ii) The execution and delivery of this Agreement by the
Purchaser, and the performance and compliance with the terms of this Agreement
by the Purchaser, will not violate the Purchaser's organizational documents or
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, or result in the breach of, any material
agreement or other instrument to which it is a party or which is applicable to
it or any of its assets, in each case which materially and adversely affects the
ability of the Purchaser to carry out the transactions contemplated by this
Agreement.
(iii) The Purchaser has the full power and authority to enter
into and consummate all transactions contemplated by this Agreement, has duly
authorized the execution, delivery and performance of this Agreement, and has
duly executed and delivered this Agreement.
(iv) This Agreement, assuming due authorization, execution and
delivery by the Mortgage Loan Seller, constitutes a valid, legal and binding
obligation of the Purchaser, enforceable against the Purchaser in accordance
with the terms hereof, subject to (A) applicable bankruptcy, insolvency,
reorganization, moratorium and other laws affecting the enforcement of
creditors' rights generally, (B) general principles of equity, regardless of
whether such enforcement is considered in a proceeding in equity or at law, and
(C) public policy considerations underlying the securities laws, to the extent
that such public policy considerations limit the enforceability of the
provisions of this Agreement that purport to provide indemnification for
securities laws liabilities.
(v) The Purchaser is not in violation of, and its execution and
delivery of this Agreement and its performance and compliance with the terms of
this Agreement will not constitute a violation of, any law, any order or decree
of any court or arbiter, or any order, regulation or demand of any federal,
state or local governmental or regulatory authority, which violation, in the
Purchaser's good faith and reasonable judgment, is likely to affect materially
and adversely either the ability of the Purchaser to perform its obligations
under this Agreement or the financial condition of the Purchaser.
(vi) No litigation is pending or, to the best of the
Purchaser's knowledge, threatened against the Purchaser which would prohibit the
Purchaser from entering into this Agreement or, in the Purchaser's good faith
and reasonable judgment, is likely to materially and
4
adversely affect either the ability of the Purchaser to perform its obligations
under this Agreement or the financial condition of the Purchaser.
(vii) The Purchaser has not dealt with any broker, investment
banker, agent or other person, other than the Mortgage Loan Seller, the
Underwriters, the Initial Purchasers and their respective affiliates, that may
be entitled to any commission or compensation in connection with the sale of the
Mortgage Loans or the consummation of any of the transactions contemplated
hereby.
(viii) No consent, approval, authorization or order of,
registration or filing with, or notice to, any governmental authority or court
is required, under federal or state law, for the execution, delivery and
performance of or compliance by the Purchaser with this Agreement, or the
consummation by the Purchaser of any transaction contemplated hereby, other than
(1) such consents, approvals, authorizations, qualifications, registrations,
filings or notices as have been obtained or made and (2) where the lack of such
consent, approval, authorization, qualification, registration, filing or notice
would not have a material adverse effect on the performance by the Purchaser
under this Agreement.
(b) The Purchaser hereby makes, as of the Closing Date (or as of such
other date specifically provided in the particular representation or warranty),
to and for the benefit of the Mortgage Loan Seller, and its successors and
assigns, with respect to each Mortgage Loan each of the representations and
warranties set forth below:
(i) Immediately prior to the transfer thereof to the Depositor,
the Purchaser had whatever title to such Mortgage Loan as was conveyed to it by
Mortgage Loan Seller, free and clear of any and all liens, encumbrances and
other interests on, in or to such Mortgage Loan (other than, in certain cases,
the right of a third party servicer to directly service such Mortgage Loan)
created by the Purchaser. Such transfer validly assigns such title to such
Mortgage Loan to the Depositor free and clear of any pledge, lien, encumbrance
or security interest created by the Purchaser;
(ii) The Purchaser has full right and authority to sell, assign
and transfer its interest in such Mortgage Loan;
(iii) The Purchaser has not done anything that would materially
impair the coverage under the lender's title insurance policy that insures the
lien of the related Mortgage;
(iv) The Purchaser has not waived any material default, breach,
violation or event of acceleration existing under the related Mortgage or
Mortgage Note;
(v) To the Purchaser's actual knowledge, without independent
inquiry as to the provisions of the Mortgage Loans, there is no valid offset,
defense or counterclaim to such Mortgage Loan arising out of the Purchaser's
actions or holding of the Mortgage Loans; and
(vi) The terms of the related Mortgage and the Mortgage Note
have not been impaired, waived, altered or modified by the Purchaser in any
material respect, except as specifically set forth in the related Mortgage File;
5
provided that, with respect to the representations and warranties in clauses
(iii), (iv), (v) and (vi) above, such representations and warranties cover only
actions taken directly by the Purchaser and its Affiliates or taken by the
Mortgage Loan Seller at the direction of the Purchaser.
(c) Upon discovery by any of the parties hereto of a breach of
any of the representations and warranties set forth above which materially and
adversely affects the interests of the Mortgage Loan Seller, the party
discovering such breach shall give prompt written notice to the other party
hereto.
SECTION 4. Repurchases.
(a) Within 90 days of the earlier of discovery or receipt of notice by
the Mortgage Loan Seller, from either the Purchaser or any successor or assign
thereof, of a Defect (as defined in the Pooling and Servicing Agreement as in
effect on the Closing Date) in respect of the Mortgage File for any Mortgage
Loan or a breach of any representation or warranty made pursuant to Section 2(a)
and set forth in Exhibit B (a "Breach"), which Defect or Breach, as the case may
be, materially and adversely affects the value of any Mortgage Loan or any
Mortgaged Property or the interests therein of the Purchaser or its successors
and assigns (including, without limitation, the Trustee and the holders of the
Certificates), the Mortgage Loan Seller shall cure such Defect or Breach, as the
case may be, in all material respects or repurchase the affected Mortgage Loan
from the then owner(s) thereof at the applicable Purchase Price (as defined in
the Pooling and Servicing Agreement as in effect on the Closing Date) by payment
of such Purchase Price by wire transfer of immediately available funds to the
account designated by such owner(s); provided, however, that in lieu of
effecting any such repurchase, the Mortgage Loan Seller will be permitted to
deliver a Qualifying Substitute Mortgage Loan and to pay a cash amount equal to
the applicable Substitution Shortfall Amount, subject to the terms and
conditions of the Pooling and Servicing Agreement as in effect on the Closing
Date; provided, further, that if such Defect relates to clause (18) of Exhibit B
of the Mortgage Loan Purchase Agreement, the Mortgage Loan Seller may deposit
with the Master Servicer an amount, to be held in a Special Reserve Account (as
defined in the Pooling and Servicing Agreement as in effect on the Closing
Date), equal to the amount of the undelivered letter of credit (or
alternatively, the Mortgage Loan Seller may deliver to the Master Servicer, with
a copy to the Purchaser or any successor or assign thereof, a letter of credit
for the benefit of the Master Servicer on behalf of the Purchaser and upon the
same terms and conditions as the undelivered letter of credit) which the Master
Servicer on behalf of the Purchaser may use (or draw upon, as the case may be)
under the same circumstances and conditions as the Master Servicer would have
been entitled to draw on the undelivered letter of credit. Any such letter of
credit or funds shall be held by the Master Servicer until the earlier of (i)
the date on which the Master Servicer certifies to the Purchaser or any
successor or assign thereof that such Defect has been cured, at which time such
letter of credit or funds shall be returned to the Mortgage Loan Seller and (ii)
the date on which the Mortgage Loan is repurchased.
If the Mortgage Loan Seller is notified of a Defect in any Mortgage
File that corresponds to information set forth in the Mortgage Loan Schedule,
the Mortgage Loan Seller shall promptly correct such Defect and provide a new,
corrected Mortgage Loan Schedule to the Purchaser or any successor or assign
thereof, which corrected Mortgage Loan Schedule shall be deemed to amend and
replace the existing Mortgage Loan Schedule for all purposes.
6
In addition, if, as of the Closing Date, any Mortgage Loan is secured
by a Mortgage that does not constitute a valid first lien upon the related
Mortgaged Property, including all buildings located thereon and all fixtures
attached thereto, or if a Mortgage is subject to something other than (A) the
lien of current real property taxes and assessments not yet due and payable, (B)
covenants, conditions and restrictions, rights of way, easements and other
matters of public record, (C) exceptions and exclusions specifically referred to
in the lender's title insurance policy issued or, as evidenced by a "marked-up"
commitment, to be issued in respect of such Mortgage Loan and (D) those
exceptions set forth on Schedule B-1 to Exhibit B hereto (the exceptions set
forth in the foregoing clauses (A), (B), (C) and (D) collectively, "Permitted
Encumbrances"), or if the insurer that issued the Title Policy referred to in
clause (6) of Exhibit B hereto in respect of any Mortgage Loan was not qualified
to do business in the state in which the related Mortgaged Property is located,
and in either case such failure materially and adversely affects the interests
of holders of Certificates (any such failure that materially and adversely
affects the interests of holders of Certificates, also a "Breach"), the Mortgage
Loan Seller shall be required, at its option, to either (i) cure such Breach in
all material respects or (ii) repurchase the affected Mortgage Loan, in each
case, within the applicable Permitted Cure Period. If any such Breach is not
corrected or cured in all material respects within the applicable Permitted Cure
Period, the Mortgage Loan Seller shall, not later than the last day of such
Permitted Cure Period, (i) repurchase the affected Mortgage Loan from the
Purchaser or its assignee at the applicable Purchase Price or (ii) if within the
three-month period commencing on the Closing Date (or within the two-year period
commencing on the Closing Date if the related Mortgage Loan is a "defective
obligation" within the meaning of Section 860G(a)(4)(B)(ii) of the Code and
Treasury Regulation Section 1.860G-2(f)), at its option, replace such Mortgage
Loan with a Qualifying Substitute Mortgage Loan and pay any corresponding
Substitution Shortfall Amount. The Mortgage Loan Seller agrees that any such
repurchase or substitution shall be completed in accordance with and subject to
the terms and conditions of the Pooling and Servicing Agreement.
For purposes of the preceding paragraph only, the "Permitted Cure
Period" applicable to any Breach in respect of any Mortgage Loan shall be the
90-day period immediately following the earlier of the discovery by the Mortgage
Loan Seller or receipt by the Mortgage Loan Seller of notice of such Breach;
provided that if such Breach cannot be corrected or cured in all material
respects within such 90-day period, but it is reasonably likely that such Breach
could be corrected or cured within 180 days of the earlier of discovery by the
Mortgage Loan Seller and receipt by the Mortgage Loan Seller of notice of such
Breach, and the Mortgage Loan Seller is diligently attempting to effect such
correction or cure, then the applicable Permitted Cure Period shall, with the
consent of the Purchaser or its assignee (which consent shall not be
unreasonably withheld), be extended for an additional 90 days, unless (i) the
affected Mortgage Loan is in default and (ii) the applicable Breach constitutes
a Material Document Defect (as defined in the Pooling and Servicing Agreement)
other than a Material Document Defect resulting solely from a delay caused by
the public recording or filing office where documents have been sent for
recording or filing.
(b) Notwithstanding Section 4(a), within 60 days of the earlier of
discovery or receipt of notice by the Mortgage Loan Seller, from either the
Purchaser or any successor or assign thereof, that any Mortgage Loan does not
constitute a "qualified mortgage" within the meaning
7
of Section 860G(a)(3) of the Code, the Mortgage Loan Seller shall repurchase
such Mortgage Loan from the then owner(s) thereof at the applicable Purchase
Price by payment of such Purchase Price by wire transfer of immediately
available funds to the account designated by such owner(s).
(c) In connection with any repurchase of or substitution for a Mortgage
Loan contemplated by this Section 4, the then owner(s) thereof shall tender or
cause to be tendered promptly to the Mortgage Loan Seller, upon delivery of a
receipt executed by the Mortgage Loan Seller, the related Mortgage File and
Servicing File, and each document that constitutes a part of the Mortgage File
that was endorsed or assigned to the Purchaser or the Trustee shall be endorsed
or assigned, as the case may be, to the Mortgage Loan Seller or its designee in
the same manner. The form and sufficiency of all such instruments and
certificates shall be the responsibility of the Mortgage Loan Seller.
(d) This Section 4 provides the sole remedies available to the
Purchaser, and its successors and assigns (including, without limitation, the
Depositor, the Trustee and the holders of the Certificates) respecting any
Defect in a Mortgage File or any Breach, or in connection with the circumstances
described in Section 4(b). If the Mortgage Loan Seller defaults on its
obligations to repurchase or replace any Mortgage Loan in accordance with
Section 4(a) or 4(b) or disputes its obligation to repurchase or replace any
Mortgage Loan in accordance with either such subsection, the Purchaser or its
successors and assigns may take such action as is appropriate to enforce such
payment or performance, including, without limitation, the institution and
prosecution of appropriate proceedings. The Mortgage Loan Seller shall reimburse
the Purchaser for all necessary and reasonable costs and expenses incurred in
connection with such enforcement. The remedies provided in this Section 4 shall
replace and amend and restate in their entirety the provisions of Section 4.3 of
the GSMC Purchase Agreement with respect to the Mortgage Loans.
(e) In the event that (i) any Mortgage Loan that is a
Cross-Collateralized Mortgage Loan (as defined in the Pooling and Servicing
Agreement) is required to be repurchased pursuant to this Section 4 as a result
of a Breach, Defect or other event, and (ii) the cross-collateralization
provisions of the related Cross-Collateralized Mortgage Loans cannot be released
to the extent required by Section 2.03 of the Pooling and Servicing Agreement to
permit repurchase of the affected Mortgage Loan within the time period specified
in this Agreement for such repurchase, the Mortgage Loan Seller shall repurchase
the affected Mortgage Loan and all of the related Cross-Collateralized Mortgage
Loans not so released.
SECTION 5. Conveyance of Mortgage Files.
(a) In connection with the Purchaser's assignment of the Mortgage Loans
to the Depositor pursuant to the Mortgage Loan Purchase Agreement, the Purchaser
hereby covenants with the Mortgage Loan Seller that, at least five (5) Business
Days before the Closing Date, it shall have delivered to and deposited with the
Trustee, the Mortgage File (as described on Exhibit B to the Mortgage Loan
Purchase Agreement) for each Mortgage Loan so assigned to the extent that such
Mortgage File was delivered to the Purchaser. In the event the Purchaser fails
to so deliver each such Mortgage File to the Trustee, the Mortgage Loan Seller
and its successors
8
and assigns shall be entitled to pursue any rights or remedies in respect of
such failure as may be available under applicable law.
(b) In connection with the Mortgage Loan Seller's assignment of the
Mortgage Loans pursuant to the GSMC Purchase Agreement, the Mortgage Loan Seller
hereby agrees that, to the extent any Mortgage Files (as described on Exhibit B
to the Mortgage Loan Purchase Agreement) in its possession and has not been
previously delivered and deposited with the Purchaser, the Mortgage Loan Seller
hereby covenants with the Purchaser that, at least five (5) Business Days before
the Closing Date, it shall have delivered to and deposited with the Trustee,
such Mortgage File. For the benefit of the Purchaser and its successors and
assigns, the Mortgage Loan Seller acknowledges and agrees that the Depositor
intends to cause the Trustee to perform a limited review of the Mortgage Files
relating to the Mortgage Loans to enable the Trustee to confirm to the Depositor
on or before the Closing Date that the Mortgage Note referred to in clause (1)
of Exhibit B of the Mortgage Loan Purchase Agreement has been delivered to the
Trustee with respect to each such Mortgage File. If the Mortgage Loan Seller
cannot deliver, or cause to be delivered as to any Mortgage Loan, the original
Mortgage Note, the Mortgage Loan Seller shall deliver a copy or duplicate
original of such Mortgage Note, together with an affidavit certifying that the
original thereof has been lost or destroyed. If the Mortgage Loan Seller cannot
deliver, or cause to be delivered, as to any Mortgage Loan, the original or a
copy of any of the documents and/or instruments referred to in clauses (2), (4),
(8), (10)(A), (12) or (20) of Exhibit B of the Mortgage Loan Purchase Agreement,
with evidence of recording thereof, solely because of a delay caused by the
public recording or filing office where such document or instrument has been
delivered for recordation or filing, or because such original recorded document
has been lost or returned from the recording or filing office and subsequently
lost, as the case may be, the delivery requirements of this Section 5 shall be
deemed to have been satisfied as to such missing item, and such missing item
shall be deemed to have been included in the related Mortgage File, provided
that a photocopy of such missing document or instrument certified by the
Mortgage Loan Seller to be a true and complete copy of the original thereof
submitted for recording or filing, as the case may be) has been delivered to the
Trustee on or before the Closing Date, and either the original of such missing
document or instrument, or a copy thereof, with evidence of recording or filing,
as the case may be, thereon, is delivered to or at the direction of the
Depositor or Trustee within 180 days of the Closing Date (or within such longer
period after the Closing Date as the Trustee (or such subsequent owner) may
consent to, which consent shall not be unreasonably withheld so long as the
Mortgage Loan Seller has provided the Depositor or Trustee with evidence of such
recording or filing, as the case may be, or has certified to the Depositor or
Trustee as to the occurrence of such recording or filing, as the case may be,
and is, as certified to the Trustee no less often than quarterly, in good faith
attempting to obtain from the appropriate county recorder's or filing office
such original or copy).
(c) If the Mortgage Loan Seller cannot deliver, or cause to be
delivered, as to any Mortgage Loan, the original or a copy of the related
lender's title insurance policy referred to in clause (9) of Exhibit B of the
Mortgage Loan Purchase Agreement solely because such policy has not yet been
issued, the delivery requirements of this Section 5 shall be deemed to be
satisfied as to such missing item, and such missing item shall be deemed to have
been included in the related Mortgage File, provided that the Mortgage Loan
Seller has delivered to the
9
Trustee, on or before the Closing Date, a commitment for title insurance
"marked-up" at the closing of such Mortgage Loan, and the Mortgage Loan Seller
shall deliver to or at the direction of the Depositor or Trustee, promptly
following the receipt thereof, the original related lender's title insurance
policy (or a copy thereof). In addition, notwithstanding anything to the
contrary contained herein, if there exists with respect to any group of related
cross-collateralized Mortgage Loans only one original of any document referred
to in Exhibit B of the Mortgage Loan Purchase Agreement covering all the
Mortgage Loans in such group, then the inclusion of the original of such
document in the Mortgage File for any of the Mortgage Loans in such group shall
be deemed an inclusion of such original in the Mortgage File for each such
Mortgage Loan.
(d) As to each Mortgage Loan, the Mortgage Loan Seller, at its own
cost, shall be responsible for (i) the recording or filing, as the case may be,
of each assignment referred to in clauses (3) and (5) of Exhibit B to the
Mortgage Loan Agreement and each UCC-2 and UCC-3, if any, referred to in clause
(11)(B) of Exhibit B to the Mortgage Loan Purchase Agreement and (ii) the
delivery of a copy of any such document or instrument to the Master Servicer
promptly following its return to the Trustee or its designee after such
recording or filing. If any such document or instrument is lost or returned
unrecorded or unfiled, as the case may be, because of a defect therein, the
Mortgage Loan Seller shall promptly prepare or cause the preparation of a
substitute therefor or cure or cause the curing of such defect, as the case may
be, and shall thereafter deliver the substitute or corrected document to or at
the direction of the Depositor or (or any subsequent owner of the affected
Mortgage Loan, including without limitation the Trustee) for recording or
filing, as appropriate, at the Mortgage Loan Seller's expense.
SECTION 6. Representations, Warranties and Agreements to Survive
Delivery.
All representations, warranties and agreements contained in this
Agreement, incorporated herein by reference or contained in the certificates of
officers of the Mortgage Loan Seller submitted pursuant hereto, shall remain
operative and in full force and effect and shall survive delivery of the
Mortgage Loans by the Mortgage Loan Seller to the Purchaser or its designee.
SECTION 7. Costs.
Costs relating to the transactions contemplated hereby and in the
Mortgage Loan Purchase Agreement shall be borne by the Mortgage Loan Seller.
SECTION 8. Indemnification.
(a) The Purchaser (the "Indemnifying Party") agrees to indemnify and
hold harmless the Mortgage Loan Seller against any and all losses, claims,
damages or liabilities, joint or several, to which it may become subject insofar
as such losses, claims, damages or liabilities (or actions in respect thereto)
arise out of or are based upon the breach of any of the Purchaser's
representations or warranties contained in Section 3(b) of this Agreement. This
indemnity will be in addition to any liability which the Purchaser may otherwise
have.
(b) The indemnity agreement contained in this Section 8 shall remain
operative and in full force and effect regardless of (i) any termination of this
Agreement, or (ii) any investigation made by any indemnified party.
10
SECTION 9. Severability of Provisions.
Any part, provision, representation, warranty or covenant of this
Agreement that is prohibited or which is held to be void or unenforceable shall
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof. Any part, provision,
representation, warranty or covenant of this Agreement that is prohibited or
unenforceable or is held to be void or unenforceable in any particular
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
particular jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction. To the extent permitted by applicable law,
the parties hereto waive any provision of law which prohibits or renders void or
unenforceable any provision hereof.
SECTION 10. Counterparts.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
SECTION 11. GOVERNING LAW.
THIS AGREEMENT AND THE RIGHTS, DUTIES, OBLIGATIONS AND RESPONSIBILITIES
OF THE PARTIES HERETO SHALL BE GOVERNED IN ACCORDANCE WITH THE INTERNAL LAWS AND
DECISIONS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES
EXCEPT THAT THE PARTIES HERETO INTEND THAT THE PROVISIONS OF SECTION 5-1401 OF
THE NEW YORK GENERAL OBLIGATIONS LAW SHALL APPLY TO THIS AGREEMENT.
SECTION 12. Further Assurances.
The Mortgage Loan Seller and the Purchaser agree to execute and deliver
such instruments and take such further actions as the other party may, from time
to time, reasonably request in order to effectuate the purposes and to carry out
the terms of this Agreement.
SECTION 13. Successors and Assigns.
The rights and obligations of the Mortgage Loan Seller under this
Agreement shall not be assigned by the Mortgage Loan Seller without the prior
written consent of the Purchaser, except that any person into which the Mortgage
Loan Seller may be merged or consolidated, or any corporation or other entity
resulting from any merger, conversion or consolidation to which the Mortgage
Loan Seller is a party, or any person succeeding to all or substantially all of
the business of the Mortgage Loan Seller, shall be the successor to the Mortgage
Loan Seller hereunder. The Purchaser and its assignee have the right to assign
its interest under this Agreement, in whole or in part. Subject to the
foregoing, this Agreement shall bind and inure to the benefit of and be
enforceable by the Mortgage Loan Seller and the Purchaser, and their permitted
successors and assigns.
11
SECTION 14. Amendments.
No term or provision of this Agreement may be amended, waived, modified
or in any way altered, unless such amendment, waiver, modification or alteration
is in writing and signed by a duly authorized officer of the party against whom
such amendment, waiver, modification or alteration is sought to be enforced.
12
IN WITNESS WHEREOF, the parties hereto have caused their names to be
signed hereto by their respective duly authorized officers as of the date first
above written.
GMAC COMMERCIAL MORTGAGE
CORPORATION
By:
--------------------------------
Name: Xxxxx Xxxxxxx
Title: Vice President
XXXXXXX SACHS MORTGAGE COMPANY
By: Xxxxxxx Xxxxx Real Estate Funding Corp.,
its General Partner
By:
------------------------------------
Name:
Title:
13
EXHIBIT A
MORTGAGE LOAN SCHEDULE
A-1
EXHIBIT B
REPRESENTATIONS AND WARRANTIES OF THE MORTGAGE LOAN SELLER
REGARDING THE INDIVIDUAL MORTGAGE LOANS
With respect to each Mortgage Loan, the Mortgage Loan Seller hereby
represents and warrants, as of the date herein below specified or, if no such
date is specified, as of the Closing Date, except as set forth on Schedule B-1
hereto, that:
1) Mortgage Loan Schedule. The information set forth in the Mortgage Loan
Schedule is complete, true and correct in all material respects as of the
date of this Agreement and as of the Cut-Off Date.
2) Whole Loan; Ownership of Mortgage Loans. Each Mortgage Loan is a whole
loan and not a participation interest in a mortgage loan. Immediately
prior to the transfer to the Purchaser of the Mortgage Loans, the Seller
had good title to, and was the sole owner of, each Mortgage Loan. The
Seller has full right, power and authority to transfer and assign each of
the Mortgage Loans to or at the direction of the Purchaser and has validly
and effectively conveyed (or caused to be conveyed) to the Purchaser or
its designee all of the Seller's legal and beneficial interest in and to
the Mortgage Loans free and clear of any and all pledges, liens, charges,
security interests and/or other encumbrances. The sale of the Mortgage
Loans to the Purchaser or its designee does not require the Seller to
obtain any governmental or regulatory approval or consent that has not
been obtained.
3) Payment Record. No scheduled payment of principal and interest under any
Mortgage Loan was 30 days or more past due as of the Cut-Off Date, and no
Mortgage Loan was 30 days or more delinquent in the twelve-month period
immediately preceding the Cut-Off Date.
4) Permitted Encumbrances. The Permitted Encumbrances (as defined in the
Mortgage Loan Purchase Agreement of which this Exhibit B forms a part) do
not materially interfere with the security intended to be provided by the
related Mortgage, the current use or operation of the related Mortgaged
Property or the current ability of the Mortgaged Property to generate net
operating income sufficient to service the Mortgage Loan. If the Mortgaged
Property is operated as a nursing facility, a hospitality property or a
multifamily property, the Mortgage, together with any separate security
agreement, similar agreement and UCC financing statement, if any,
establishes and creates a first priority, perfected security interest
(subject only to any prior purchase money security interest), to the
extent such security interest can be perfected by the recordation of a
Mortgage or the filing of a UCC financing statement, in all personal
property owned by the Mortgagor that is used in, and is reasonably
necessary to, the operation of the related Mortgaged Property.
5) Assignment of Leases and Rents. The Assignment of Leases related to and
delivered in connection with each Mortgage Loan establishes and creates a
valid, subsisting and, subject to the exceptions set forth in paragraph 13
below, enforceable first priority lien and first priority security
interest in the related Mortgagor's interest in all leases, sub-
B-1
leases, licenses or other agreements pursuant to which any person is
entitled to occupy, use or possess all or any portion of the real property
subject to the related Mortgage, and each assignor thereunder has the full
right to assign the same. The related assignment of any Assignment of
Leases not included in a Mortgage has been executed and delivered in favor
of the Trustee and is in recordable form and constitutes a legal, valid
and binding assignment, sufficient to convey to the assignee named therein
all of the assignor's right, title and interest in, to and under such
Assignment of Leases.
6) Mortgage Status; Waivers and Modifications. No Mortgage has been
satisfied, cancelled, rescinded or subordinated in whole or in part, and
the related Mortgaged Property has not been released from the lien of such
Mortgage, in whole or in part (except for partial reconveyances of real
property that are set forth on Schedule B-1 to Exhibit B), nor has any
instrument been executed that would effect any such satisfaction,
cancellation, subordination, rescission or release, in any manner that, in
each case, materially adversely affects the value of the related Mortgaged
Property. None of the terms of any Mortgage Note, Mortgage or Assignment
of Leases has been impaired, waived, altered or modified in any respect,
except by written instruments, all of which are included in the related
Mortgage File.
7) Condition of Property; Condemnation. (i) With respect to the Mortgaged
Properties securing the Mortgage Loans that were the subject of an
engineering report within 18 months prior to the Cut-Off Date as set forth
on Schedule B-1 to this Exhibit B, each Mortgaged Property is, to the
Seller's knowledge, free and clear of any damage (or adequate reserves
therefor have been established) that would materially and adversely affect
its value as security for the related Mortgage Loan, and (ii) with respect
to the Mortgaged Properties securing the Mortgage Loans that were not the
subject of an engineering report within 18 months prior to the Cut-Off
Date as set forth on Schedule B-1 to this Exhibit B, each Mortgaged
Property is in good repair and condition and all building systems
contained therein are in good working order (or adequate reserves therefor
have been established) and each Mortgaged Property is free of structural
defects, in each case, that would materially and adversely affect its
value as security for the related Mortgage Loan as of the date hereof. The
Seller has received no notice of the commencement of any proceeding for
the condemnation of all or any material portion of any Mortgaged Property.
To the Seller's knowledge (based on surveys and/or title insurance
obtained in connection with the origination of the Mortgage Loans), as of
the date of the origination of each Mortgage Loan, all of the material
improvements on the related Mortgaged Property that were considered in
determining the appraised value of the Mortgaged Property lay wholly
within the boundaries and building restriction lines of such property,
except for encroachments that are insured against by the lender's title
insurance policy referred to herein or that do not materially and
adversely affect the value or marketability of such Mortgaged Property,
and no improvements on adjoining properties materially encroached upon
such Mortgaged Property so as to materially and adversely affect the value
or marketability of such Mortgaged Property, except those encroachments
that are insured against by the Title Policy referred to herein.
8) Title Insurance. Each Mortgaged Property is covered by an American Land
Title Association (or an equivalent form of) lender's title insurance
policy or a marked-up title
B-2
insurance commitment (on which the required premium has been paid) which
evidences such title insurance policy (the "Title Policy") in the original
principal amount of the related Mortgage Loan after all advances of
principal. Each Title Policy insures that the related Mortgage is a valid
first priority lien on such Mortgaged Property, subject only to Permitted
Encumbrances. Each Title Policy (or, if it has yet to be issued, the
coverage to be provided thereby) is in full force and effect, all premiums
thereon have been paid and no material claims have been made thereunder
and no claims have been paid thereunder. No holder of the related Mortgage
has done, by act or omission, anything that would materially impair the
coverage under such Title Policy. Immediately following the transfer and
assignment of the related Mortgage Loan to the Trustee, such Title Policy
(or, if it has yet to be issued, the coverage to be provided thereby) will
inure to the benefit of the Trustee without the consent of or notice to
the insurer. To the Seller's knowledge, the insurer issuing such Title
Policy is qualified to do business in the jurisdiction in which the
related Mortgaged Property is located.
9) No Holdbacks. The proceeds of each Mortgage Loan have been fully disbursed
and there is no obligation for future advances with respect thereto. With
respect to each Mortgage Loan, any and all requirements as to completion
of any on-site or off-site improvement and as to disbursements of any
funds escrowed for such purpose that were to have been complied with on or
before the Closing Date have been complied with, or any such funds so
escrowed have not been released.
10) Mortgage Provisions. The Mortgage Note or Mortgage for each Mortgage Loan,
together with applicable state law, contains customary and enforceable
provisions (subject to the exceptions set forth in paragraph 13) such as
to render the rights and remedies of the holder thereof adequate for the
practical realization against the related Mortgaged Property of the
principal benefits of the security intended to be provided thereby.
11) Trustee under Deed of Trust. If any Mortgage is a deed of trust, (1) a
trustee, duly qualified under applicable law to serve as such, is properly
designated and serving under such Mortgage, and (2) no fees or expenses
are payable to such trustee by the Seller, the Purchaser or any transferee
thereof except in connection with a trustee's sale after default by the
related Mortgagor or in connection with any full or partial release of the
related Mortgaged Property or related security for the related Mortgage
Loan.
12) Environmental Conditions.
i) With respect to the Mortgaged Properties securing the Mortgage Loans
that were the subject of an environmental site assessment within 18
months prior to the Cut-Off Date as set forth on Schedule B-1 to
this Exhibit B, an environmental site assessment, or an update of a
previous such report, was performed with respect to each Mortgaged
Property in connection with the origination or the sale of the
related Mortgage Loan, a report of each such assessment (or the most
recent assessment with respect to each Mortgaged Property) (an
"Environmental Report") has been delivered to the Purchaser, and the
Seller has no knowledge of any material and adverse environmental
condition or circumstance affecting any Mortgaged Property that was
not disclosed in such report. Each Mortgage
B-3
requires the related Mortgagor to comply with all applicable
federal, state and local environmental laws and regulations. Where
such assessment disclosed the existence of a material and adverse
environmental condition or circumstance affecting any Mortgaged
Property, (i) a party not related to the Mortgagor was identified as
the responsible party for such condition or circumstance or (ii)
environmental insurance covering such condition was obtained or must
be maintained until the condition is remediated or (iii) the related
Mortgagor was required either to provide additional security that
was deemed to be sufficient by the originator in light of the
circumstances and/or to establish an operations and maintenance
plan. In the case of each Mortgage Loan set forth on Schedule B-1 to
this Exhibit B, (i) such Mortgage Loan is the subject of a Secured
Creditor Impaired Property Policy, issued by the issuer set forth on
Schedule B-1 (the "Policy Issuer") and effective as of the date
thereof (the "Environmental Insurance Policy"), (ii) the
Environmental Insurance Policy is in full force and effect, (iii)(a)
a property condition or engineering report was prepared with respect
to lead based paint ("LBP"), asbestos containing materials ("ACM")
and radon gas ("RG") at each related Mortgaged Property and (b) if
such report disclosed the existence of a material and adverse LBP,
ACM or RG environmental condition or circumstance affecting the
related Mortgaged Property, the related Mortgagor (A) was required
to remediate the identified condition prior to closing the Mortgage
Loan or provide additional security, or establish with the lender a
reserve from loan proceeds, in an amount deemed to be sufficient by
the Seller for the remediation of the problem and/or (B) agreed in
the Mortgage Loan documents to establish an operations and
maintenance plan after the closing of the Mortgage Loan, (iv) on the
effective date of the Environmental Insurance Policy, Seller as
originator had no knowledge of any material and adverse
environmental condition or circumstance affecting the Mortgaged
Property (other than the existence of LBP, ACM or RG) that was not
disclosed to the Policy Issuer in one or more of the following: (a)
the application for insurance, (b) a borrower questionnaire that was
provided to the Policy Issuer or (c) an engineering or other report
provided to the Policy Issuer and (v) the premium of any
Environmental Insurance Policy has been paid through the maturity of
the policy's term and the term of such policy extends at least five
years beyond the maturity of the Mortgage Loan.
ii) With respect to the Mortgaged Properties securing the Mortgage Loans
that were not the subject of an environmental site assessment within
18 months prior to the Cut-Off Date as set forth on Schedule B-1 to
this Exhibit B, (i) no Hazardous Material is present on such
Mortgaged Property such that (1) the value of such Mortgaged
Property is materially and adversely affected or (2) under
applicable federal, state or local law, (a) such Hazardous Material
could be required to be eliminated at a cost materially and
adversely affecting the value of the Mortgaged Property before such
Mortgaged Property could be altered, renovated, demolished or
transferred or (b) the presence of such Hazardous Material could
(upon action by the appropriate governmental authorities) subject
the owner of such Mortgaged Property, or the holders of a security
interest therein, to liability for the cost of eliminating such
Hazardous Material or the hazard created thereby at a cost
B-4
materially and adversely affecting the value of the Mortgaged
Property, and (ii) such Mortgaged Property is in material compliance
with all applicable federal, state and local laws pertaining to
Hazardous Materials or environmental hazards, any noncompliance with
such laws does not have a material adverse effect on the value of
such Mortgaged Property and neither Seller nor, to Seller's
knowledge, the related Mortgagor or any current tenant thereon, has
received any notice of violation or potential violation of any such
law.
"Hazardous Materials" means gasoline, petroleum products,
explosives, radioactive materials, polychlorinated biphenyls or
related or similar materials, and any other substance or material as
may be defined as a hazardous or toxic substance by any federal,
state or local environmental law, ordinance, rule, regulation or
order, including without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended (42
U.S.C. (Sections) 9601 et seq.), the Hazardous Materials
Transportation Act as amended (42 U.S.C. (Sections) 6901 et seq.),
the Federal Water Pollution Control Act as amended (33 U.S.C.
(Sections) 1251 et seq.), the Clean Air Act (42 U.S.C. (Sections)
1251 et seq.) and any regulations promulgated pursuant thereto.
13) Loan Document Status. Each Mortgage Note, Mortgage and other agreement
that evidences or secures such Mortgage Loan and was executed by or on
behalf of the related Mortgagor is the legal, valid and binding obligation
of the maker thereof (subject to any non-recourse provisions contained in
any of the foregoing agreements and any applicable state anti-deficiency
or market value limit deficiency legislation), enforceable in accordance
with its terms, except as such enforcement may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting the enforcement
of creditors' rights generally, and by general principles of equity
(regardless of whether such enforcement is considered in a proceeding in
equity or at law) and there is no valid defense, counterclaim or right of
offset or rescission available to the related Mortgagor with respect to
such Mortgage Note, Mortgage or other agreement.
14) Insurance. Each Mortgaged Property is, and is required pursuant to the
related Mortgage to be, insured by (a) a fire and extended perils
insurance policy providing coverage against loss or damage sustained by
reason of fire, lightning, windstorm, hail, explosion, riot, riot
attending a strike, civil commotion, aircraft, vehicles and smoke, and, to
the extent required as of the date of origination by the originator of
such Mortgage Loan consistent with its normal commercial mortgage lending
practices, against other risks insured against by persons operating like
properties in the locality of the Mortgaged Property in an amount not less
than the lesser of the principal balance of the related Mortgage Loan and
the replacement cost of the Mortgaged Property, and contains no provisions
for a deduction for depreciation, and not less than the amount necessary
to avoid the operation of any co-insurance provisions with respect to the
Mortgaged Property; (b) a business interruption or rental loss insurance
policy, in an amount at least equal to six months of operations of the
Mortgaged Property; (c) a flood insurance policy (if any portion of
buildings or other structures on the Mortgaged Property are located in an
area identified by the Federal Emergency Management Agency as having
special flood hazards and the Federal Emergency Management Agency requires
flood insurance to be
B-5
maintained); and (d) a comprehensive general liability insurance policy in
amounts as are generally required by commercial mortgage lenders, and in
any event not less than $1 million per occurrence. Such insurance policy
contains a standard mortgagee clause that names the mortgagee as an
additional insured in the case of liability insurance policies and as a
loss payee in the case of property insurance policies and requires prior
notice to the holder of the Mortgage of termination or cancellation. No
such notice has been received, including any notice of nonpayment of
premiums, that has not been cured. Each Mortgage obligates the related
Mortgagor to maintain all such insurance and, upon such Mortgagor's
failure to do so, authorizes the holder of the Mortgage to maintain such
insurance at the Mortgagor's cost and expense and to seek reimbursement
therefor from such Mortgagor. Each Mortgage provides that casualty
insurance proceeds will be applied (a) to the restoration or repair of the
related Mortgaged Property, (b) to the restoration or repair of the
related Mortgaged Property, with any excess insurance proceeds after
restoration or repair being paid to the Mortgagor, or (c) to the reduction
of the principal amount of the Mortgage Loan.
15) Taxes and Assessments. As of the Closing Date, there are no delinquent or
unpaid taxes, assessments (including assessments payable in future
installments) or other outstanding charges affecting any Mortgaged
Property that are or may become a lien of priority equal to or higher than
the lien of the related Mortgage. For purposes of this representation and
warranty, real property taxes and assessments shall not be considered
unpaid until the date on which interest or penalties would be first
payable thereon.
16) Mortgagor Bankruptcy. No Mortgaged Property, nor any portion thereof is
the subject of, and no Mortgagor under a Mortgage loan is, a debtor in any
state or federal bankruptcy or insolvency or similar proceeding.
17) Leasehold Estate. Each Mortgaged Property consists of a fee simple estate
in real estate or, if the related Mortgage Loan is secured in whole or in
part by the interest of a Mortgagor as a lessee under a ground lease of a
Mortgaged Property (a "Ground Lease"), by the related Mortgagor's interest
in the Ground Lease but not by the related fee interest in such Mortgaged
Property (the "Fee Interest"), and as to such Ground Leases:
i) Such Ground Lease or a memorandum thereof has been or will be duly
recorded; such Ground Lease (or the related estoppel letter or
lender protection agreement between the Seller and related lessor)
does not prohibit the current use of the Mortgaged Property and does
not prohibit the interest of the lessee thereunder to be encumbered
by the related Mortgage; and there has been no material change in
the payment terms of such Ground Lease since the origination of the
related Mortgage Loan, with the exception of material changes
reflected in written instruments that are a part of the related
Mortgage File;
ii) The lessee's interest in such Ground Lease is not subject to any
liens or encumbrances superior to, or of equal priority with, the
related Mortgage, other than Permitted Encumbrances;
B-6
iii) The Mortgagor's interest in such Ground Lease is assignable to the
Purchaser and its successors and assigns upon notice to, but without
the consent of, the lessor thereunder (or, if such consent is
required, it has been obtained prior to the Closing Date) and, in
the event that it is so assigned, is further assignable by the
Purchaser and its successors and assigns upon notice to, but without
the need to obtain the consent of, such lessor or if such lessor's
consent is required it cannot be unreasonably withheld;
iv) Such Ground Lease is in full force and effect, and the Ground Lease
provides that no material amendment to such Ground Lease is binding
on a mortgagee unless the mortgagee has consented thereto, and the
Seller has received no notice that an event of default has occurred
thereunder, and, to the Seller's knowledge, there exists no
condition that, but for the passage of time or the giving of notice,
or both, would result in an event of default under the terms of such
Ground Lease;
v) Such Ground Lease, or an estoppel letter or other agreement, (A)
requires the lessor under such Ground Lease to give notice of any
default by the lessee to the holder of the Mortgage; and (B)
provides that no notice of termination given under such Ground Lease
is effective against the holder of the Mortgage unless a copy of
such notice has been delivered to such holder and the lessor has
offered or is required to enter into a new lease with such holder on
terms that do not materially vary from the economic terms of the
Ground Lease.
vi) A mortgagee is permitted a reasonable opportunity (including, where
necessary, sufficient time to gain possession of the interest of the
lessee under such Ground Lease) to cure any default under such
Ground Lease, which is curable after the receipt of notice of any
such default, before the lessor thereunder may terminate such Ground
Lease;
vii) Such Ground Lease has an original term (including any extension
options set forth therein) which extends not less than twenty years
beyond the Stated Maturity Date of the related Mortgage Loan;
viii) Under the terms of such Ground Lease and the related Mortgage, taken
together, any related insurance proceeds or condemnation award
awarded to the holder of the ground lease interest will be applied
either (A) to the repair or restoration of all or part of the
related Mortgaged Property, with the mortgagee or a trustee
appointed by the related Mortgage having the right to hold and
disburse such proceeds as the repair or restoration progresses
(except in such cases where a provision entitling a third party to
hold and disburse such proceeds would not be viewed as commercially
unreasonable by a prudent commercial mortgage lender), or (B) to the
payment of the outstanding principal balance of the Mortgage Loan
together with any accrued interest thereon; and
ix) Such Ground Lease does not impose any restrictions on subletting
which would be viewed as commercially unreasonable by prudent
commercial mortgage lenders lending on a similar Mortgaged Property
in the lending area where the
B-7
Mortgaged Property is located; and such Ground Lease contains a
covenant that the lessor thereunder is not permitted, in the absence
of an uncured default, to disturb the possession, interest or quiet
enjoyment of the lessee thereunder for any reason, or in any manner,
which would materially adversely affect the security provided by the
related Mortgage.
x) Such Ground Lease requires the Lessor to enter into a new lease upon
termination of such Ground Lease if the Ground Lease is rejected in
a bankruptcy proceeding.
18) Escrow Deposits. All escrow deposits and payments relating to each
Mortgage Loan that are, as of the Closing Date, required to be deposited
or paid have been so deposited or paid.
19) Qualified Mortgage. Such Mortgage Loan is a "qualified mortgage" within
the meaning of Section 860G(a)(3) of the Code and Treasury regulation
section 1.860G-2(a), and the related Mortgaged Property, if acquired in
connection with the default or imminent default of such Mortgage Loan,
would constitute "foreclosure property" within the meaning of Section
860G(a)(8) (without regard to Section 856(e)(4) of the Code).
20) [Reserved]
21) Advancement of Funds by the Seller. No holder of a Mortgage Loan has
advanced funds or induced, solicited or knowingly received any advance of
funds from a party other than the owner of the related Mortgaged Property,
directly or indirectly, for the payment of any amount required by such
Mortgage Loan.
22) No Mechanics' Liens. Each Mortgaged Property is free and clear of any and
all mechanics' and materialmen's liens that are prior or equal to the lien
of the related Mortgage, and no rights are outstanding that under law
could give rise to any such lien that would be prior or equal to the lien
of the related Mortgage except, in each case, for liens insured against by
the Title Policy referred to herein.
23) Compliance with Usury Laws. Each Mortgage Loan complied with all
applicable usury laws in effect at its date of origination.
24) Cross-collateralization. No Mortgage Loan is cross-collateralized or
cross-defaulted with any loan other than one or more other Mortgage Loans.
25) Releases of Mortgaged Property. Except as described in the next sentence,
no Mortgage Note or Mortgage requires the mortgagee to release all or any
material portion of the related Mortgaged Property that was included in
the appraisal for such Mortgaged Property, and/or generates income from
the lien of the related Mortgage except upon payment in full of all
amounts due under the related Mortgage Loan or in connection with the
defeasance provisions of the related Note and Mortgage. The Mortgages
relating to those Mortgage Loans identified on Schedule B-1 hereto require
the mortgagee to grant releases of portions of the related Mortgaged
Properties upon (a) the satisfaction of certain legal and underwriting
requirements and/or (b) the payment of a release price and prepayment
consideration in connection therewith. Except as described in the first
B-8
sentence hereof and for those Mortgage Loans identified on Schedule B-1
hereto, no Mortgage Loan permits the full or partial release or
substitution of collateral unless the mortgagee or servicer can require
the Borrower to provide an opinion of tax counsel to the effect that such
release or substitution of collateral (a) would not constitute a
"significant modification" of such Mortgage Loan within the meaning of
Treas. Reg. (Section) 1.1001-3 and (b) would not cause such Mortgage Loan
to fail to be a "qualified mortgage" within the meaning of Section
860G(a)(3)(A) of the Code.
26) No Equity Participation or Contingent Interest. No Mortgage Loan contains
any equity participation by the lender or provides for negative
amortization (except that the ARD Loan may provide for the accrual of
interest at an increased rate after the Anticipated Repayment Date) or for
any contingent or additional interest in the form of participation in the
cash flow of the related Mortgaged Property.
27) No Material Default. There exists no material Event of Default, breach,
violation or event of acceleration (and, to the Seller's actual knowledge,
no event which, with the passage of time or the giving of notice, or both,
would constitute any of the foregoing) under the documents evidencing or
securing the Mortgage Loan, in any such case to the extent the same
materially and adversely affects the value of the Mortgage Loan and the
related Mortgaged Property; provided, however, that this representation
and warranty does not address or otherwise cover any default, breach,
violation or event of acceleration that specifically pertains to any
matter otherwise covered by any other representation and warranty made by
the Seller in any of paragraphs 3, 7, 12, 14, 15, 16 and 17 of this
Exhibit B.
28) Inspections. The Seller (or if the Seller is not the originator, the
originator of the Mortgage Loan) has inspected or caused to be inspected
each Mortgaged Property in connection with the origination of the related
Mortgage Loan.
29) Local Law Compliance. Based on due diligence considered reasonable by
prudent commercial mortgage lenders in the lending area where the
Mortgaged Property is located, the improvements located on or forming part
of each Mortgaged Property comply with applicable zoning laws and
ordinances, or constitute a legal non-conforming use or structure or, if
any such improvement does not so comply, such non-compliance does not
materially and adversely affect the value of the related Mortgaged
Property, such value as determined by the appraisal performed at
origination or in connection with the sale of the related Mortgage Loan by
the Seller hereunder.
30) Junior Liens. None of the Mortgage Loans permits the related Mortgaged
Property to be encumbered by any lien (other than a Permitted Encumbrance)
junior to or of equal priority with the lien of the related Mortgage
without the prior written consent of the holder thereof or the
satisfaction of debt service coverage or similar criteria specified
therein. The Seller has no knowledge that any of the Mortgaged Properties
is encumbered by any lien junior to the lien of the related Mortgage.
31) Actions Concerning Mortgage Loans. To the knowledge of the Seller, there
are no actions, suits or proceedings before any court, administrative
agency or arbitrator
B-9
concerning any Mortgage Loan, Mortgagor or related Mortgaged Property that
might adversely affect title to the Mortgaged Property or the validity or
enforceability of the related Mortgage or that might materially and
adversely affect the value of the Mortgaged Property as security for the
Mortgage Loan or the use for which the premises were intended.
32) Servicing. The servicing and collection practices used by the Seller or
any prior holder or servicer of each Mortgage Loan have been in all
material respects legal, proper and prudent and have met customary
industry standards.
33) Licenses and Permits. To the Seller's knowledge, based on due diligence
that it customarily performs in the origination of comparable mortgage
loans, as of the date of origination of each Mortgage Loan or as of the
date of the sale of the related Mortgage Loan by the Seller hereunder, the
related Mortgagor was in possession of all material licenses, permits and
franchises required by applicable law for the ownership and operation of
the related Mortgaged Property as it was then operated.
34) Assisted Living Facility Regulation. If the Mortgaged Property is operated
as an assisted living facility, to the Seller's knowledge (a) the related
Mortgagor is in compliance in all material respects with all federal and
state laws applicable to the use and operation of the related Mortgaged
Property and (b) if the operator of the Mortgaged Property participates in
Medicare or Medicaid programs, the facility is in compliance in all
material respects with the requirements for participation in such
programs.
35) Collateral in Trust. The Mortgage Note for each Mortgage Loan is not
secured by a pledge of any collateral that has not been assigned to the
Purchaser.
36) Due on Sale. Each Mortgage Loan contains a "due on sale" clause, which
provides for the acceleration of the payment of the unpaid principal
balance of the Mortgage Loan if, without prior written consent of the
holder of the Mortgage, the property subject to the Mortgage or any
material portion thereof, or a controlling interest in the related
Mortgagor, is transferred, sold or encumbered; provided, however, that
certain Mortgage Loans provide a mechanism for the assumption of the loan
by a third party upon the Mortgagor's satisfaction of certain conditions
precedent, and upon payment of a transfer fee, if any, or transfer of
interests in the Mortgagor or constituent entities of the Mortgagor to a
third party or parties related to the Mortgagor upon the Mortgagor's
satisfaction of certain conditions precedent.
37) Single Purpose Entity. The Mortgagor on each Mortgage Loan with a Cut-Off
Date Principal Balance in excess of $10 million, was, as of the
origination of the Mortgage Loan, a Single Purpose Entity. For this
purpose, a "Single Purpose Entity" shall mean an entity, other than an
individual, whose organizational documents provide substantially to the
effect that it was formed or organized solely for the purpose of owning
and operating one or more of the Mortgaged Properties securing the
Mortgage Loans and prohibit it from engaging in any business unrelated to
such Mortgaged Property or Properties, and whose organizational documents
further provide, or which entity represented in the related Mortgage Loan
documents, substantially to the effect that it does not have any
B-10
assets other than those related to its interest in and operation of such
Mortgaged Property or Properties, or any indebtedness other than as
permitted by the related Mortgage(s) or the other related Mortgage Loan
documents, that it has its own books and records and accounts separate and
apart from any other person (other than a Mortgagor for a Mortgage Loan
that is cross-collateralized and cross-defaulted with the related Mortgage
Loan), and that it holds itself out as a legal entity, separate and apart
from any other person.
38) Non-Recourse Exceptions. The Mortgage Loan documents for each Mortgage
Loan provide that such Mortgage Loan constitutes either (a) the recourse
obligations of at least one natural person or (b) the non-recourse
obligations of the related Mortgagor, provided that at least one natural
person (and the Mortgagor if the Mortgagor is not a natural person) is
liable to the holder of the Mortgage Loan for damages arising in the case
of fraud or willful misrepresentation by the Mortgagor, misappropriation
of rents, insurance proceeds or condemnation awards and breaches of the
environmental covenants in the Mortgage Loan documents.
39) Defeasance and Assumption Costs. The related Mortgage Loan Documents
provide that the related borrower is responsible for the payment of all
reasonable costs and expenses of the lender incurred in connection with
the defeasance of such Mortgage Loan and the release of the related
Mortgaged Property, and the borrower is required to pay all reasonable
costs and expenses of the lender associated with the approval of an
assumption of such Mortgage Loan.
40) Defeasance. No Mortgage Loan provides that it can be defeased until the
date that is more than two years after the Closing Date or provides that
it can be defeased with any property other than government securities (as
defined in Section 2(a)(16) of the Investment Company Act of 1940, as
amended) or any direct non-callable security issued or guaranteed as to
principal or interest by the United States.
41) Prepayment Premiums. As of the applicable date of origination of each such
Mortgage Loan, any prepayment premiums and yield maintenance charges
payable under the terms of the Mortgage Loans, in respect of voluntary
prepayments, constituted customary prepayment premiums and yield
maintenance charges for commercial mortgage loans.
For purposes of these representations and warranties, the phrases "to the
knowledge of the Mortgage Loan Seller" or "to the Mortgage Loan Seller's
knowledge" shall mean (except where otherwise expressly set forth below) the
actual state of knowledge of the Mortgage Loan Seller (i) after the Mortgage
Loan Seller's having conducted such inquiry and due diligence into such matters
as would be customarily performed by prudent institutional commercial or
multifamily, as applicable, mortgage lenders, and in all events as required by
the Mortgage Loan Seller's underwriting standards, at the time of the Mortgage
Loan Seller's origination or acquisition of the particular Mortgage Loan; and
(ii) subsequent to such origination, utilizing the monitoring practices
customarily utilized by prudent commercial or multifamily, as applicable,
mortgage lenders with respect to securitizable commercial or multifamily, as
applicable, mortgage loans, including inquiry with a representative of the loan
servicer designated as the party responsible for the knowledge of the servicer
pertaining to the Mortgage Loans. Also for
B-11
purposes of these representations and warranties, the phrases "to the actual
knowledge of the Mortgage Loan Seller" or "to the Mortgage Loan Seller's actual
knowledge" shall mean (except where otherwise expressly set forth below) the
actual state of knowledge of the Mortgage Loan Seller without any express or
implied obligation to make inquiry. All information contained in the documents
included in the definition of Mortgage File in the Pooling and Servicing
Agreement shall be deemed to be within the knowledge and the actual knowledge of
the Mortgage Loan Seller, to the extent that the Mortgage Loan Seller or its
closing counsel or custodian, if any, has reviewed or had possession of such
document at any time. For purposes of these representations and warranties, to
the extent that any representation or warranty is qualified by the Mortgage Loan
Seller's knowledge with respect to the contents of the Mortgage Note, Mortgage,
lender's title policy and any letters of credit or Ground Leases, if such
document is not included in the Mortgage File, the Mortgage Loan Seller shall
make such representation or warranty without any such qualification. Wherever
there is a reference in a representation or warranty to receipt by, or
possession of, the Mortgage Loan Seller of any information or documents, or to
any action taken by the Mortgage Loan Seller or to any action which has not been
taken by the Mortgage Loan Seller or its agents or employees, such reference
shall include the receipt or possession of such information or documents by, or
the taking of such action or the not taking such action by, the Mortgage Loan
Seller. For purposes of these representations and warranties, when referring to
the conduct of "reasonable prudent institutional commercial or multifamily, as
applicable mortgage lenders" (or similar such phrases and terms), such conduct
shall be measured by reference to the industry standards generally in effect as
of the date the related representation or warranty relates to or is made.
It is understood and agreed that the representations and warranties set
forth in this Exhibit B shall survive delivery of the respective Mortgage Files
to the Purchaser, the Depositor and/or the Trustee and shall inure to the
benefit of the Purchaser, and its successors and assigns (including without
limitation the Depositor, the Trustee and the holders of the Certificates),
notwithstanding any restrictive or qualified endorsement or assignment.
B-12
SCHEDULE B-1 TO EXHIBIT B
EXCEPTIONS TO REPRESENTATIONS AND WARRANTIES
REP 14 INSURANCE
----------------
--------------------------------------------------------------------------------
Loan Number Property Name Issue
--------------------------------------------------------------------------------
31819 Beachway Shopping Center Windstorm limit of $2,487,000
--------------------------------------------------------------------------------
