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EXHIBIT F.7.a
EXECUTION COPY
SALE AND SERVICING AGREEMENT
among
ALLIED CAPITAL COMMERCIAL MORTGAGE TRUST 1998-1,
Issuer,
ALLIED CAPITAL CMT, INC.,
Seller,
ALLIED CAPITAL CORPORATION,
Servicer and Special Servicer,
LASALLE NATIONAL BANK,
Indenture Trustee and Custodian,
and
ABN AMRO BANK N.V.,
Fiscal Agent
Dated as of January 1, 1998
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TABLE OF CONTENTS
Page
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ARTICLE I
Definitions
SECTION 1.01. Definitions........................................................................ 1
SECTION 1.02. Other Definitional Provisions...................................................... 23
ARTICLE II
Conveyance of Mortgage Loans and the Funding Note
SECTION 2.01. Conveyance of Mortgage Loans and the Funding Note.................................. 24
ARTICLE III
The Mortgage Loans and the Funding Note
SECTION 3.01. Representations and Warranties of Allied REIT and BMI REIT......................... 25
SECTION 3.02. Representations and Warranties of the Seller....................................... 26
SECTION 3.03. Repurchase upon Breach............................................................. 27
SECTION 3.04. Delivery and Possession of Servicing Files; Custody of Mortgage Files; Review of
Mortgage Files .................................................................... 27
SECTION 3.05. Instructions; Authority to Act..................................................... 30
SECTION 3.06. Custodian's Indemnification........................................................ 30
SECTION 3.07. Effective Period and Termination................................................... 31
SECTION 3.08. Delivery of the Mortgage Files to the Servicer or Special Servicer................. 31
ARTICLE IV
Administration and Servicing of Mortgage Loans
SECTION 4.01. Duties of Servicer................................................................. 31
SECTION 4.02. Collection and Mortgage Loan Payments; Modifications of Mortgage Loans............. 33
SECTION 4.03. Realization upon Mortgage Loans.................................................... 35
SECTION 4.04. Maintenance of Insurance Policies; Errors and Omissions and Fidelity Coverage...... 37
SECTION 4.05. Reserved........................................................................... 39
SECTION 4.06. Recordation of Mortgages and Other Documents....................................... 39
SECTION 4.07. Reserved........................................................................... 39
SECTION 4.08. Servicing Fee...................................................................... 39
SECTION 4.09. Servicer's Certificate............................................................. 40
SECTION 4.10. Annual Statement as to Compliance; Notice of Servicer Event of Default............. 40
SECTION 4.11. Annual Independent Accountants' Report............................................. 41
SECTION 4.12. Access to Certain Documentation and Information Regarding Mortgage Loans........... 41
SECTION 4.13. Reserved........................................................................... 41
SECTION 4.14. "Due-on-Sale" Clauses: Assumption Agreements........................................ 41
SECTION 4.15. Management of REO Property......................................................... 43
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SECTION 4.16. Sale of REO Properties............................................................. 44
SECTION 4.17. Inspections; Collection of Operating Statements.................................... 45
SECTION 4.18. Reports of Foreclosures of Mortgaged Property...................................... 46
SECTION 4.19. Notification of Adjustments........................................................ 46
SECTION 4.20. Appraisals......................................................................... 46
SECTION 4.21. Certain Matters Regarding the Servicer and the Special Servicer.................... 46
SECTION 4.22. Eligibility of Servicer and Special Servicer....................................... 47
ARTICLE V
Distributions; Statements to Certificateholders and Bondholders
SECTION 5.01. Establishment of and Deposits to Collection Account ............................... 47
SECTION 5.02. Trust Accounts..................................................................... 48
SECTION 5.03. Application of Collections......................................................... 49
SECTION 5.04. Purchase Price..................................................................... 50
SECTION 5.05. Permitted Withdrawals From Collection Account...................................... 50
SECTION 5.06. Distributions...................................................................... 51
SECTION 5.07. Deposits to Escrow Account. ....................................................... 52
SECTION 5.08. Permitted Withdrawals from Escrow Account: Payment of Taxes and Insurance.......... 53
SECTION 5.09. P&I Advances....................................................................... 54
SECTION 5.10. Servicing Advances................................................................. 56
SECTION 5.11. Reserved........................................................................... 56
SECTION 5.12. Statements to Securityholders...................................................... 56
ARTICLE VI
The Seller
SECTION 6.01. Representations of Seller.......................................................... 59
SECTION 6.02. Corporate Existence................................................................ 61
SECTION 6.03. Liability of Seller; Indemnities................................................... 61
SECTION 6.04. Merger or Consolidation of, or Assumption of the Obligations of, Seller............ 61
SECTION 6.05. Limitation on Liability of Seller and Others....................................... 62
SECTION 6.06. Seller May Own Securities.......................................................... 62
ARTICLE VII
The Servicer
SECTION 7.01. Representations of Servicer and Special Servicer................................... 62
SECTION 7.02. Indemnities of Servicer and the Special Servicer................................... 64
SECTION 7.03. Merger or Consolidation of, or Assumption of the Obligations of, Servicer and
the Special Servicer .............................................................. 65
SECTION 7.04. Limitation on Liability of Servicer, the Special Servicer and Others............... 67
SECTION 7.05. Appointment of Subservicer......................................................... 68
SECTION 7.06. Servicer Not to Resign............................................................. 70
SECTION 7.07. Merger or Consolidation of, or
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Assumption of the Obligations of, Custodian........................................ 71
ARTICLE VIII
Default
SECTION 8.01. Servicer Events of Default......................................................... 74
SECTION 8.02. Consequences of a Servicer Event of Default........................................ 75
SECTION 8.03. Appointment of Successor........................................................... 76
SECTION 8.04. Notification to Bondholders and Certificateholders................................. 77
SECTION 8.05. Waiver of Past Defaults............................................................ 77
ARTICLE IX
Termination
SECTION 9.01. Optional Redemption of Bonds....................................................... 77
ARTICLE X
Miscellaneous
SECTION 10.01. Amendment......................................................................... 78
SECTION 10.02. Reserved.......................................................................... 79
SECTION 10.03. Notices........................................................................... 79
SECTION 10.04. Assignment by the Seller or the Servicer.......................................... 79
SECTION 10.05. Limitations on Rights of Others................................................... 80
SECTION 10.06. Severability...................................................................... 80
SECTION 10.07. Separate Counterparts............................................................. 80
SECTION 10.08. Headings.......................................................................... 80
SECTION 10.09. Governing Law..................................................................... 80
SECTION 10.10. Assignment by Issuer.............................................................. 80
SECTION 10.11. Nonpetition Covenants............................................................. 80
SECTION 10.12. Limitation of Liability of Owner Trustee and Indenture Trustee.................... 81
SECTION 10.13. Servicer Payment Obligation....................................................... 81
SCHEDULE A Schedule of Mortgage Loans
SCHEDULE B Mortgage Loan Data Tables
EXHIBIT A Form of Distribution Date Statement to Securityholders
EXHIBIT B Form of Servicer's Certificate
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SALE AND SERVICING AGREEMENT dated as of January 1, 1998 (the "Agreement"),
among Allied Capital Commercial Mortgage Trust 1998-1, a Delaware
business trust (the "Issuer"), Allied Capital CMT, Inc., a Delaware
corporation (the "Seller"), Allied Capital Corporation, a Maryland
corporation, as servicer (in such capacity, the "Servicer") and special
servicer (in such capacity, the "Special Servicer"), LaSalle National
Bank, a national banking association, as indenture trustee (in such
capacity, the "Indenture Trustee") and custodian (in such capacity, the
"Custodian"), and ABN AMRO Bank N.V., a banking corporation formed
under the laws of the Netherlands (the "Fiscal Agent").
WHEREAS the Issuer desires to purchase the Allied Interests and the
Funding Note;
WHEREAS the Seller is willing to sell the Allied Interests and the
Funding Note to the Issuer;
WHEREAS the Servicer is willing to service the Mortgage Loans; and
WHEREAS the Servicer will perform certain functions relating to the
Funding Note as set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Definitions. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the following meanings:
"ACC" means Allied Capital Corporation.
"ACC Guaranty" means the guaranty of ACC dated as of January 1, 1998 in
favor of the Issuer.
"Advance" means a P&I Advance or a Servicing Advance.
"Affiliate" means, with respect to any specified Person, any other
Person controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" when used with respect to
any Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Aggregate Stated Balance" means, with respect to any Determination
Date, an amount equal to the aggregate of the Stated Principal Balances of the
Mortgage Loans included in the Mortgage Pool as of the end of the immediately
preceding Prepayment Period.
"Allied Interests" means, collectively, the Allied Participations and
the Allied Mortgage Loans.
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"Allied Mortgage Loan Purchase Agreement" means the Mortgage Loan
Purchase Agreement dated as of January 1, 1998, between Allied REIT, as seller,
and the Seller, as purchaser.
"Allied Mortgage Loans" means the Mortgage Loans identified as such on
the Mortgage Loan Schedule attached hereto.
"Allied Participation" means, with respect to each Participation
Mortgage Loan, the participation interest of such Participation Mortgage Loan
transferred by Allied REIT to the Seller pursuant to the Allied Mortgage Loan
Purchase Agreement.
"Allied Principal Collections" means, with respect to any Distribution
Date, that portion of the following amounts attributable to the Allied
Interests:
(a) that portion of the aggregate of the principal portions of all
Scheduled Payments (other than Balloon Payments) due and any Assumed
Scheduled Payments deemed due in respect of the Mortgage Loans for
their respective Due Dates occurring during the related Collection
Period;
(b) the aggregate of all Principal Prepayments received on the Mortgage
Loans during the related Prepayment Period;
(c) with respect to any Mortgage Loan as to which the related Stated
Maturity Date occurred during or prior to the related Collection
Period, any payment of principal made by or on behalf of the related
Mortgagor during the related Collection Period, net of any portion of
such payment that represents a recovery of the principal portion of any
Scheduled Payment (other than a Balloon Payment) due, or the principal
portion of any Assumed Scheduled Payment deemed due, in respect of such
Mortgage Loan on a Due Date during or prior to the related Collection
Period and not previously recovered; and
(d) the Liquidation Principal Amount for such Distribution Date.
"Allied REIT" means Allied Capital REIT, Inc., a Maryland corporation.
"Assignment" means, with respect to each Mortgage Loan, the original
assignments from the related Mortgage Loan holder, in favor of the Indenture
Trustee, described in clauses (iv) and (v) of the definition of "Mortgage File"
herein, pertaining to such Mortgage Loan.
"Assumed Scheduled Payment" means, with respect to any Balloon Loan
that is delinquent in respect of its Balloon Payment beyond the first
Determination Date that follows its Stated Maturity Date, an amount deemed to be
due for such Balloon Loan on its Stated Maturity Date and on each successive
related Due Date on which it remains or is deemed to remain outstanding equal to
the Scheduled Payment that would have been due thereon on such date if the
related Balloon Payment had not come due but rather such Mortgage Loan had
continued to amortize in accordance with such loan's amortization schedule, if
any, in effect prior to its Stated Maturity Date. With respect to any delinquent
Balloon Loan that provides for Monthly Payments of interest only prior to its
Stated Maturity Date, the Assumed
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Scheduled Payment for such Balloon Loan will equal the amount of such payment of
interest.
"Available Funds" means, with respect to each Distribution Date, an
amount equal to the sum, without duplication, of the following amounts:
(a) that portion of Scheduled Payments due in respect of the Allied
Interests during the related Collection Period and collected during
such Collection Period;
(b) all P&I Advances made with respect to such Distribution Date;
(c) that portion of all full and partial Principal Prepayments received
in respect of the Allied Interests during the related Prepayment
Period;
(d) with respect to the Funding Note, all payments of principal and
interest due thereon on the related Remittance Date and received
thereon prior to such Distribution Date;
(e) all other proceeds received in respect of the Allied Interests and
the Funding Note during the related Prepayment Period (excluding any
Prepayment Premiums); and
(f) any other amounts allocable to the Allied Interests required to be
deposited into the Collection Account (including without limitation
Investment Earnings on amounts on deposit in the Collection Account and
modification fees and extension fees to the extent collected from
Mortgagors) during the related Collection Period or the related
Prepayment Period, as applicable, and received no later than the last
day of such Collection Period or Prepayment Period, as applicable;
but net of the following amounts allocable to the Allied Interests:
(i) the Servicing Fee paid with respect to the related Collection
Period;
(ii) amounts applied to reimburse P&I Advances for prior Distribution
Dates and unreimbursed Servicing Advances (and interest thereon at the
related Reimbursement Rate), and all other amounts permitted to be
withdrawn from the Collection Account in accordance with the terms of
this Agreement; and
(iii) any late payment fees, assumption fees and escrow payments paid
by Mortgagors.
"Balloon Loan" means a Mortgage Loan whose amortization schedule
includes a Balloon Payment.
"Balloon Payment" means, with respect to any Mortgage Loan which is not
fully amortizing over its term to maturity, a lump-sum payment equal to the
unpaid principal balance of such Mortgage Loan due on the Stated Maturity Date
thereof.
"Basic Documents" means the Certificate of Trust, the Trust Agreement,
the Indenture, this Agreement, the Mortgage Loan Purchase Agreements, the
Funding Note, the Funding Note Purchase Agreement,
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the Administration Agreement and the ACC Guaranty.
"BMI Collections" shall have the meaning specified in Section
5.06(d)(1) hereof.
"BMI LLC" means BMI Funding, LLC, a limited liability company organized
under the laws of the State of Delaware.
"BMI Mortgage Loan Purchase Agreement" means the Mortgage Loan Purchase
Agreement dated as of January 1, 1998 between BMI REIT, as seller, and BMI LLC,
as purchaser.
"BMI Participation" means, with respect to each Participation Mortgage
Loan, the participation interest in such Participation Mortgage Loan transferred
by BMI REIT to BMI LLC pursuant to the BMI Mortgage Loan Purchase Agreement.
"BMI REIT" means Business Mortgage Investors, Inc., a Maryland
corporation.
"Bond" means a Class A, Class B or Class C Bond.
"Bond Balance" shall have the meaning specified in the Indenture.
"Bond Class Balance" shall have the meaning specified in the Indenture.
"Bond Distribution Account" means the account designated as such, and
established and maintained pursuant to Section 5.02(a)(i) hereof.
"Bondholder" means the Person in whose name a Bond is registered in the
Bond Register.
"Bond Rate" means a per annum rate equal to, with respect to (i) the
Class A Bonds, 6.31%, (ii) the Class B Bonds, 6.60%, and (iii) the Class C
Bonds, 6.71%.
"Business Day" means any day other than a Saturday or Sunday or a day
on which banking institutions or trust companies in New York, New York or the
city in which the Corporate Trust Office of the Indenture Trustee are authorized
or obligated by law, regulation or executive order to remain closed.
"Certificate Distribution Account" has the meaning assigned to such
term in the Trust Agreement.
"Certificateholders" has the meaning assigned to such term in the Trust
Agreement.
"Certificates" means the Trust Certificates (as defined in the Trust
Agreement).
"Class" means any class of Bonds.
"Closing Date" means January 30, 1998.
"Collection Account" means the account designated as such, established
and maintained pursuant to Section 5.01.
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"Collection Period" means, with respect to any Remittance Date or
Distribution Date, the calendar month preceding the month in which such
Remittance Date or Distribution Date occurs (except that, in the case of the
first Remittance Date and Distribution Date, the related Collection Period will
commence on the day after the Cut-off Date).
"Condemnation Proceeds" means all awards or settlements in respect of a
Mortgaged Property, whether permanent or temporary, partial or entire, by
exercise of the power of eminent domain, condemnation, or otherwise.
"Control" shall have the meaning specified in Section 8-106 of the UCC.
"Corporate Trust Office" means (i) with respect to the Indenture
Trustee, the principal office of the Indenture Trustee at which at any
particular time its corporate trust business shall be administered, which office
at the date of the execution of this Agreement is located at LaSalle National
Bank, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇,
Attention: Asset Backed Securities Trust Services Group-Allied Capital 1998-1,
or at such other address as the Indenture Trustee may designate from time to
time by notice to the Bondholders, the Seller and the Servicer, or the principal
corporate trust office of any successor Indenture Trustee (of which address such
successor Indenture Trustee shall notify the Bondholders, the Seller, and the
Servicer) and (ii) with respect to the Owner Trustee, as defined in the Trust
Agreement.
"Corrected Mortgage Loan" means any Specially Serviced Mortgage Loan as
to which any of the following as are applicable occur with respect to
circumstances that caused such Mortgage Loan to be characterized as a Specially
Serviced Mortgage Loan (and provided that no other Servicing Transfer Event then
exists):
1. with respect to the circumstances described in clauses (i) and (ii)
of the definition of Servicing Transfer Event, the related Mortgagor
has made three consecutive full and timely Monthly Payments under the
terms of such Mortgage Loan (as such terms may be changed or modified
in connection with a bankruptcy or similar proceeding involving the
related borrower or by reason of a modification, waiver or amendment
granted or agreed to by the Special Servicer);
(b) with respect to the circumstances described in clauses (iii), (v),
(vi) and (vii) of the definition of Servicing Transfer Event, such
circumstances cease to exist in the good faith and reasonable judgment
of the Special Servicer;
(c) with respect to the circumstance described in clause (iv) of the
definition of Servicing Transfer Event, such default is cured; and
(d) with respect to the circumstances described in clause (viii) of the
definition of Servicing Transfer Event, such proceedings are
terminated.
"Custodian" means LaSalle National Bank and its successors in interest,
when acting in its capacity as Custodian under this Agreement.
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"Cut-off Date" means January 1, 1998.
"Defect" shall have the meaning assigned to such term in Section
3.04(c).
"Depositor" means the Seller in its capacity as Depositor under the
Trust Agreement.
"Determination Date" means, with respect to each Remittance Date and
Distribution Date, the fifth Business Day preceding such Distribution Date.
"Discount Rate" means the rate which, when compounded monthly, is
equivalent to the Treasury Rate when compounded semi-annually.
"Distribution Date" means the 25th day of each month, or, if such day
is not a Business Day, the immediately following Business Day, commencing in
February 1998.
"Due Date" means, with respect to any Mortgage Loan, the date each
month on which the Scheduled Payment for such Mortgage Loan is due.
_. "Eligible Account" means either(_) (a) a segregated account with an Eligible
Institution or (b) (_)a segregated trust account with the corporate trust
department of a depository institution organized under the laws of the United
States of America or any State (or any domestic branch of a foreign bank),
having corporate trust powers and acting as trustee for funds deposited in such
account, so long as any of the securities of such depository institution shall
have a credit rating from each Rating Agency in one of its generic rating
categories that signifies investment grade.
_. "Eligible Institution" means either (a) the corporate trust department of the
Indenture Trustee or the Owner Trustee or (_)(b) a depository institution
organized under the laws of the United States of America or any State (or any
domestic branch of a foreign bank), the long-term unsecured debt obligations of
which are rated AA- or better by Standard & Poor's and AA or better by Fitch or
the short-term debt obligations of which are rated AA or better by Standard &
Poor's and F-1+ or better by Fitch, or any other long-term, short-term or
certificate of deposit rating acceptable to the Rating Agencies and(_) whose
deposits are insured by the FDIC. If so qualified, the Indenture Trustee or the
Owner Trustee may be considered an Eligible Institution for the purposes of
clause (b) of this definition.
_. "Eligible Investments" means book-entry securities, negotiable instruments or
securities represented by instruments in bearer or registered form which
evidence:
(a) direct obligations of, and obligations fully guaranteed as to the
full and timely payment by, the United States of America;
(b) demand deposits, time deposits or certificates of deposit of any
depository institution or trust company incorporated under the laws of
the United States of America or any State (or any domestic branch of a
foreign bank) and subject to supervision and examination by federal or
state banking or depository institution authorities; provided, however,
that at the time of the investment or contractual commitment to invest
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therein, the commercial paper or other short-term unsecured debt
obligations (other than such obligations the rating of which is based
on the credit of a Person other than such depository institution or
trust company) thereof shall have a credit rating from each of the
Rating Agencies in the highest investment category granted thereby;
(c) commercial paper having, at the time of the investment or
contractual commitment to invest therein, a rating from each of the
Rating Agencies in the highest investment category granted thereby;
(d) investments in money market funds having a rating from each of the
Rating Agencies in the highest investment category granted thereby
(including funds for which the Indenture Trustee or the Owner Trustee
or any of their respective Affiliates is investment manager or
advisor);
(e) bankers' acceptances issued by any depository institution or trust
company referred to in clause (b) above;
(f) repurchase obligations with respect to any security that is a
direct obligation of, or fully guaranteed by, the United States of
America or any agency or instrumentality thereof the obligations of
which are backed by the full faith and credit of the United States of
America, in either case entered into with a depository institution or
trust company (acting as principal) described in clause (b) above;
(g) securities bearing interest or sold at a discount issued by any
corporation incorporated under the laws of the United States or any
State which, at the time of such investment or contractual commitment
providing for such investments, are then rated in the highest rating
category of each Rating Agency; and
(h) any other investment with respect to which the Issuer or the
Servicer has received written notification from the Rating Agencies
that the acquisition of such investment as an Eligible Investment will
not result in a downgrade, withdrawal or qualification of the ratings
on the Bonds;
provided, however, that (A) no such instrument shall be an Eligible Investment
if an "r" highlighter is affixed to its rating by S&P and (B) no such instrument
shall be an Eligible Investment (1) if such instrument evidences either (a) a
right to receive only interest payments or only principal payments with respect
to the obligations underlying such instrument or (b) a right to receive both
principal and interest payments derived from obligations underlying such
instrument and the principal and interest payments with respect to such
instrument provide a yield to maturity of greater than 120% of the yield to
maturity at par of such underlying obligations or (2) if it may be redeemed at a
price below the purchase price therefor (the foregoing clause (2) shall not
apply to investments in units of money market funds pursuant to clause (vi) or
clause (viii) above); and provided, further, that interest on any variable rate
instrument shall be tied to a single interest rate index plus a single fixed
spread (if any) and move proportionately with that index.
"Eligible Servicer" means any Person which at the time of its appointment
as Servicer (i) is servicing a portfolio of commercial
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mortgage loans, (ii) is legally qualified and has the capacity to service the
Mortgage Loans, (iii) has demonstrated the ability professionally and
competently to service a portfolio of commercial mortgage loans similar to the
Mortgage Loans with reasonable skill and care, (iv) has a minimum net worth of
$100,000,000 and (v) the appointment of which will satisfy the Rating Agency
Condition.
"Eligible Special Servicer" means any Person whose appointment will
satisfy the Rating Agency Condition.
"Environmental Law" means any present or future federal, state or local
law, statute, regulation or ordinance, and any judicial order, administrative
order or consent, unilateral administrative order, judgment, voluntary cleanup
agreement, Brownfields agreement, or memorandum of understanding thereunder,
pertaining to (i) health, safety and the indoor and outdoor environment; (ii)
the conservation, management or use of natural resources and wildlife; (iii) the
protection or use of groundwater and surface water; (iv) the management,
manufacture, possession, presence, use, generation, transportation, treatment,
storage, disposal, release, threatened release, abatement, removal, remediation,
or handling of or exposure to any Environmental Material; or (v) pollution,
including any release to air, land, surface water and groundwater, including but
not limited to each of the following, as enacted as of the date hereof or as
hereafter amended: (i) the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, 42 U.S.C. ' 9601 et seq.; (ii) the Resource
Conservation and Recovery Act of 1976, 42 U.S.C. ' 6901 et seq.; (iii) the Toxic
Substances Control Act, 15 U.S.C. ' 2601 et seq.; (iv) the Water Pollution
Control Act (also known as the Clean Water Act), 33 U.S.C. ' 1251 et seq.; (v)
the Clean Air Act, 42 U.S.C. ' 7401 et seq.; (vi) the Hazardous Materials
Transportation Act, 49 U.S.C. ' 1801 et seq.; (vii) the Occupational Safety and
Health Act, 29 U.S.C. ' 651 et seq.; (viii) the Oil Pollution Act of 1990, 33
U.S.C. ' 2701 et seq.; and (ix) the Emergency Planning and Community Right to
Know Act of 1986, 42 U.S.C. ' 11001 et seq.
"Environmental Material" means any material (i) that is regulated by an
Environmental Law or (ii) the existence of which would give rise to an
"unacceptable environmental condition" under Section 501.04 of Part II of the
Multifamily Guide of the Federal National Mortgage Association as in effect at
the date of determination.
"Environmental Professional" shall have the meaning assigned thereto in
Section 4.03(b) hereof.
"Escrow Account" means the separate account or accounts created and
maintained pursuant to Section 5.02(a)(ii), which account may be a sub-account
within the Collection Account.
"Escrow Payments" means, with respect to any Mortgage Loan, the amounts
constituting ground rents, taxes, assessments, water rates, sewer rents,
municipal charges, fire, hazard, liability and other insurance premiums,
condominium charges and any other payments required to be escrowed by the
Mortgagor with the Mortgagee pursuant to the Mortgage or any other document.
"FDIC" means the Federal Deposit Insurance Corporation.
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"Final Rated Distribution Date" means January 25, 2028.
"Fiscal Agent" means ABN AMRO Bank N.V., a banking organization formed
under the laws of the Netherlands, in its capacity as fiscal agent under this
Agreement.
"Fitch" means Fitch IBCA, Inc., or its successor.
"Funding Note" means the Funding Note issued by BMI LLC to the order of
the Seller pursuant to the Funding Note Purchase Agreement.
"Funding Note Balance" means, with respect to any Determination Date,
the initial principal balance of the Funding Note reduced by all payments of
principal made thereon prior to such Determination Date.
"Funding Note Principal Payment Amount" means, with respect to the
Funding Note and any Distribution Date, the Principal Payment Amount (as such
term is defined in the Funding Note) due on the related Remittance Date.
"Funding Note Purchase Agreement" means the Funding Note Purchase and
Security Agreement dated as of January 1, 1998, among the Seller, BMI REIT and
BMI LLC.
"Holder" means Bondholder in connection with the Bonds and
Certificateholder in connection with the Certificates.
"Indenture" means the Indenture dated as of January 1, 1998, between
the Issuer and the Indenture Trustee.
"Indenture Trustee" means LaSalle National Bank, in its capacity as
Indenture Trustee under the Indenture, its successors in interest and any
successor trustee under the Indenture.
"Independent" means, when used with respect to any specified Person,
that the Person (a) is in fact independent of the Issuer, any other obligor on
the Bonds, the Seller and any Affiliate of any of the foregoing Persons, (b)
does not have any direct financial interest or any material indirect financial
interest in the Issuer, any such other obligor, the Seller or any Affiliate of
any of the foregoing Persons and (c) is not connected with the Issuer, any such
other obligor, the Seller or any Affiliate of any of the foregoing Persons as an
officer, employee, promoter, underwriter, trustee, partner, director or person
performing similar functions.
"Initial Pool Balance" means $310,336,239, the aggregate outstanding
unpaid scheduled principal balance of the Mortgage Loans as of the close of
business on the Cut-off Date.
"Insolvency Event" means, with respect to a specified Person, (a)(_)
the filing of a decree or order for relief by a court having jurisdiction in the
premises in respect of such Person or any substantial part of its property in an
involuntary case under any applicable federal or state bankruptcy, insolvency or
other similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official for
such Person or for any substantial part of its property, or ordering the
winding-up or liquidation of such Person's affairs, if such decree or order
remains unstayed and in effect for
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a period of 60 consecutive days or (_)(b) the commencement by such Person of a
voluntary case under any applicable federal or state bankruptcy, insolvency or
other similar law now or hereafter in effect, or the consent by such Person to
the entry of an order for relief in an involuntary case under any such law, or
the consent by such Person to the appointment of or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
official for such Person or for any substantial part of its property, or the
making by such Person of any general assignment for the benefit of creditors, or
the failure by such Person generally to pay its debts as such debts become due,
or the taking of action by such Person in furtherance of any of the foregoing.
"Insurance Policies" means all insurance policies insuring any Mortgage
Loan or Mortgaged Property, to the extent the Issuer or the Owner Trustee has
any interest therein.
"Insurance Proceeds" means, with respect to any Mortgage Loan, the
proceeds of any Insurance Policies insuring such Mortgage Loan or the related
Mortgaged Property that are not applied to the restoration or repair of the
related Mortgaged Property in accordance with the Servicing Standard.
"Interest Accrual Amount" means, with respect to each Class of Bonds
and (i) with respect to the first Distribution Date, interest accrued for the
related Interest Accrual Period at the related Bond Rate on the outstanding
principal amount of the related Class of Bonds on the Closing Date and (ii) with
respect to any Distribution Date other than the first Distribution Date, the
interest accrued for the related Interest Accrual Period at the related Bond
Rate on the outstanding principal amount of the related Class of Bonds on the
immediately preceding Distribution Date, after giving effect to all
distributions of principal to the related Bondholders on or prior to such
preceding Distribution Date. For all purposes of this Agreement and the Basic
Documents, interest with respect to the Bonds shall be computed on the basis of
a 360-day year consisting of twelve thirty-day months.
"Interest Accrual Period" means, with respect to any Distribution Date,
the calendar month immediately preceding the month in which such Distribution
Date occurs.
"Interest Carryover Shortfall" means, with respect to a Class of Bonds
and any Distribution Date after the first Distribution Date, the amount, if any,
by which the sum of the related Interest Accrual Amount for the immediately
preceding Distribution Date and any related outstanding Interest Carryover
Shortfall on such preceding Distribution Date exceeds the amount in respect of
interest actually distributed on such Bonds on such preceding Distribution Date,
plus interest on the amount of interest due but not paid to the related
Bondholders on such preceding Distribution Date, to the extent permitted by law,
at the related Bond Rate.
"Interest Distribution Amount" means, with respect to a Class of Bonds
and any Distribution Date, the sum of the related Interest Accrual Amount and
the related Interest Carryover Shortfall for such Distribution Date.
"Investment Earnings" means, with respect to any Distribution Date, the
investment earnings (net of losses and investment
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expenses) on amounts on deposit in the Collection Account to be deposited into
the Collection Account on such Distribution Date pursuant to Section
5.02(a)(iii).
"Issuer" means Allied Capital Commercial Mortgage Trust 1998-1, a
Delaware business trust.
"Liquidated Mortgage Loan" means, with respect to any Distribution
Date, a defaulted Mortgage Loan (including any REO Property) which was
liquidated in the related Prepayment Period for such Distribution Date and as to
which the Special Servicer has certified (in accordance with this Agreement)
that it has received all amounts it expects to receive in connection with the
liquidation of such Mortgage Loan, including the final disposition of an REO
Property.
"Liquidation Date" means, with respect to any Mortgage Loan, the date
of the final receipt of all Liquidation Proceeds or other payments with respect
to such Mortgage Loan.
"Liquidation Principal Amount" means, with respect to any Distribution
Date, the aggregate of all Liquidation Proceeds, Insurance Proceeds,
Condemnation Proceeds and proceeds of Mortgage Loan repurchases that were
received on or in respect of Mortgage Loans during the related Prepayment Period
and that were identified and applied by the Servicer or the Special Servicer, as
applicable, as recoveries of principal, in each case net of any portion of such
amounts that represents a recovery of the principal portion of any Scheduled
Payment (other than a Balloon Payment) due, or of the principal portion of any
Assumed Scheduled Payment deemed due, in respect of the related Mortgage Loan on
a Due Date during or prior to the related Collection Period and not previously
recovered.
"Liquidation Proceeds" means, with respect to any Liquidated Mortgage
Loan, the moneys (other than Insurance Proceeds, Condemnation Proceeds and any
REO Proceeds) collected in respect thereof, from whatever source, on such
Liquidated Mortgage Loan during the Prepayment Period in which such Mortgage
Loan became a Liquidated Mortgage Loan, net of the sum of any amounts expended
by the Servicer or the Special Servicer in connection with such liquidation and
any amounts required by law to be remitted to the Mortgagor on such Liquidated
Mortgage Loan.
"Lock-out Period" means, with respect to any Mortgage Loan, the period
of time specified in the related Mortgage Note during which voluntary Principal
Prepayments are prohibited.
"Money Term" means, with respect to any Mortgage Loan, the maturity
date, Mortgage Rate, principal balance, amortization term or payment frequency
of such Mortgage Loan.
"Monthly Payment" means, with respect to any Mortgage Loan, the
scheduled monthly payment of principal and/or interest on such Mortgage Loan
(including any Balloon Payment) which is payable by a Mortgagor from time to
time under the related Mortgage Note.
"Mortgage" means, with respect to any Mortgage Loan, the original
mortgage, deed of trust or other similar security instrument that creates a
first mortgage lien on a fee simple or leasehold estate in a Mortgaged Property
securing such Mortgage
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Loan.
"Mortgagee" means the obligee on a Mortgage Note.
"Mortgage File" means, with respect to each Mortgage Loan:
(i) the original Mortgage Note, endorsed (at the direction of the
Issuer given to the Seller pursuant to this Agreement) by the Seller,
in the form "Pay to the order of LaSalle National Bank, as Indenture
Trustee for the benefit of the registered Holders of Allied Capital
Commercial Mortgage Trust 1998-1 Commercial Mortgage Collateralized
Bonds, without recourse", together with all intervening endorsements
evidencing a complete chain of endorsements from the originator of the
Mortgage Loan to the Seller and in an amount at least equal to the
outstanding principal amount of the Mortgage Loan as reported on the
related Mortgage Loan Schedule;
(ii) the original of the Mortgage, with evidence of recording indicated
thereon;
(iii) an original assignment of the Mortgage duly executed by the
Seller in blank and sufficient under the laws of the jurisdiction
wherein the related Mortgaged Property is located to reflect of record
the transfer of the Mortgage, together with originals of all
intervening assignments of the Mortgage evidencing a complete chain of
assignments of the Mortgage from the originator of the Mortgage Loan to
the Seller, with evidence of recording indicated on such intervening
assignments;
(iv) if separate from the related Mortgage, an original assignment of
any leases, rents, income or profits derived from the ownership,
operation or disposition of all or a portion of the related Mortgaged
Property (an "Assignment of Leases"), duly executed by the related
Mortgagor, with evidence of recording indicated thereon;
(v) an original assignment, duly executed by the Seller in blank, of
any related Assignment of Leases, sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to
reflect of record the transfer of such Assignment of Leases, together
with all intervening assignments of such Assignment of Leases
evidencing a complete chain of assignments of such Assignment of Leases
from the originator of the Mortgage Loan to the Seller, with evidence
of recording on such intervening assignments;
(vi) if separate from the related Mortgage, an original or copy of each
security agreement that creates a lien in any personal property that
constitutes collateral for the Mortgage Loan (a "Security Agreement"),
duly executed by the related Mortgagor;
(vii) an original assignment, duly executed by the Seller in blank, of
any related Security Agreement, together with all intervening
assignments of such Security Agreement evidencing a complete chain of
assignments of such Security Agreement from the originator of the
Mortgage Loan to the Seller, with evidence of recording on such
intervening assignments;
(viii) originals or copies of all written modification,
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assumption, written assurance and substitution agreements in those
instances in which the terms or provisions of the Mortgage or Mortgage
Note or any related security document have been modified or the
Mortgage Loan has been assumed;
(ix) the original or a copy of the policy or certificate of lender's
title insurance issued on the date of the origination of such Mortgage
Loan, or, if such policy has not been issued, an irrevocable, binding
commitment to issue such title insurance policy, or an attorney's title
opinion, if customary in the related jurisdiction where the related
Mortgaged Property is located;
(x) any file copies of any UCC-1, UCC-2 and UCC-3 financing statements
and continuation statements necessary to perfect and/or maintain the
perfection of the security interest held by the originator of the
Mortgage Loan (and each assignee before the Indenture Trustee) in the
personal property subject to any related security agreement (to the
extent such file copies are in the possession of Allied REIT or BMI
REIT), and to transfer such security interest to the Indenture Trustee;
(xi) when relevant, the related ground lease or certified copies
thereof; and
(xii) if any document referred to above has been signed by a person or
entity on behalf of the Mortgagor pursuant to a power of attorney, an
original or a copy of such power of attorney, together with evidence of
the recordation of such power of attorney in the same jurisdiction in
which the Mortgage was recorded, and if a copy of such power of
attorney is provided, an officer's certificate certifying that such
copy represents a true and correct reproduction of the original.
In such cases where the original document required in (ii) through (x) above is
not available, a copy accompanied by an officer's certificate certifying that
such copy represents a true and correct reproduction of the original shall be
included as part of the Mortgage File for the related Mortgage Loan. With
respect to any Participation Mortgage Loan, the related Mortgage File shall also
include (i) the participation agreements, if any, relating to the related Allied
Participation and BMI Participation, (ii) originals of all assignments of the
interest being conveyed hereunder in such Participation Mortgage Loan and (iii)
copies of all notices required to be given or consents required to be obtained
in connection with the assignment of the interest that is being conveyed
hereunder in such Participation Mortgage Loan.
"Mortgage Loan" means a mortgage loan, including any Participation
Mortgage Loan, identified in the Mortgage Loan Schedule attached hereto, as well
as any REO Property related thereto. With respect to any Participation Mortgage
Loan, references to any rights to payments, receipts or recoveries will be
limited to the percentage ownership interest owned by the Issuer in such
Participation Mortgage Loan.
"Mortgage Loan Purchase Agreements" means the Allied Mortgage Loan
Purchase Agreement and the BMI Mortgage Loan Purchase Agreement.
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"Mortgage Loan Schedule" means the list of Mortgage Loans set forth on
Schedule A attached hereto.
"Mortgage Note" means the originally executed note or other evidence of
indebtedness of a Mortgagor under the related Mortgage Loan.
"Mortgage Pool" means as of any date, the pool of all Mortgage Loans
(consisting of the Allied Mortgage Loans and the Participation Mortgage Loans)
outstanding on such date.
"Mortgaged Property" means, with respect to any Mortgage Loan, land and
improvements thereon (or leasehold estate interests therein) securing the
indebtedness of a Mortgagor under such Mortgage Loan.
"Mortgagor" means a person who is indebted under a Mortgage Note or who
has acquired real property subject to the Mortgage securing a Mortgage Note.
"Mortgage Rate" means, with respect to each Mortgage Loan, the fixed or
adjustable rate per annum set forth in the related Mortgage Note from time to
time at which interest accrues on such Mortgage Loan, as of the Closing Date (in
the case of a fixed rate mortgage loan) or as of the most recent interest rate
adjustment pursuant to such Mortgage Note (in the case of an adjustable rate
Mortgage Loan), in each case after giving effect to any modification of such
Mortgage Loan for any period in connection with a bankruptcy or similar
proceeding involving the related Mortgagor or a modification, waiver or
amendment of such Mortgage Loan granted or agreed to by the Servicer or the
Special Servicer, as applicable, in accordance with this Agreement.
"Net Mortgage Rate" means, with respect to each Mortgage Loan, the
Mortgage Rate net of the Servicing Fee Rate (and, if applicable, the Special
Servicing Fee Rate) on such Mortgage Loan.
"Nonrecoverable Advance" means any portion of (i) any Advance (together
with interest thereon at the Reimbursement Rate) that, in the reasonable good
faith business judgment of the Servicer or the Special Servicer (or, if
applicable, the Indenture Trustee or the Fiscal Agent), would not, if made, be
ultimately recoverable (a) in the case of a P&I Advance, from collections in
respect of the Allied Interests and the Funding Note or (b) in the case of a
Servicing Advance, from amounts to be realized on the related Mortgaged Property
or (ii) any Advance previously made in respect of a Mortgage Loan that is
determined, in the good faith business judgment of the Servicer or the Special
Servicer (or, if applicable, the Indenture Trustee or the Fiscal Agent), not to
be ultimately recoverable, together with interest thereon at the Reimbursement
Rate, (a) in the case of a P&I Advance, from collections in respect of the
Allied Interests and the Funding Note or (b) in the case of a Servicing Advance,
from amounts to be realized on the related Mortgaged Property. The determination
by the Servicer or the Special Servicer (or, if applicable, the Indenture
Trustee or the Fiscal Agent)that any Advance, if made, would (or, if previously
made, does) constitute a Nonrecoverable Advance shall be evidenced by an
Officer's Certificate delivered to the Issuer and the Indenture Trustee,
detailing the reasons for such determination with copies of appraisals performed
within the last twelve months,
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prepared by an Independent appraiser in accordance with the Servicing Standard,
and any other information relevant thereto which supports such determination.
Any successor to the Servicer or the Special Servicer (including the Indenture
Trustee or the Fiscal Agent acting on behalf of the Indenture Trustee as
successor to the Servicer, or the Fiscal Agent acting on behalf of the Indenture
Trustee) shall be entitled to rely on any Nonrecoverable Advance determination
made by the Servicer or the Special Servicer prior to termination or resignation
thereof.
"Officer's Certificate" means a certificate signed by (a) the chairman
of the board, president, managing director, any vice president, the controller
or any assistant controller and (b) a treasurer, assistant treasurer, secretary
or assistant secretary of the Seller, the Servicer or the Special Servicer, as
appropriate.
"Opinion of Counsel" means one or more written opinions of counsel, who
may be external counsel to the Seller, the Servicer or the Special Servicer, as
appropriate, which counsel shall be reasonably acceptable to the Indenture
Trustee, the Owner Trustee or the Rating Agencies, as applicable.
"Overcollateralization Level" means, as to any Distribution Date, the
result, expressed as a percentage, obtained by dividing (i) the excess of the
Aggregate Stated Balance for the related Determination Date, over the aggregate
Bond Balance of Bonds (computed after taking into account the principal payment
to be made on such Distribution Date) by (ii) the Aggregate Stated Balance for
the related Determination Date.
"Owner Trustee" means Wilmington Trust Company, not in its individual
capacity, but solely in its capacity as Owner Trustee under the Trust Agreement,
its successors in interest and any successor owner trustee under the Trust
Agreement.
"Owner Trust Estate" has the meaning assigned to such term in the Trust
Agreement.
"P&I Advance" means, as to any Remittance Date, any advance made by the
Servicer (or the Indenture Trustee, as successor Servicer, or the Fiscal Agent
on behalf of the Indenture Trustee) pursuant to Section 5.09.
"Participation Mortgage Loan" means any Mortgage Loan with respect to
which the percentage ownership interest owned by Allied REIT prior to transfer
to the Issuer of the related Allied Participation is less than 100%.
"Paying Agent" shall mean any Paying Agent appointed under the Trust
Agreement or the Indenture.
"Person" means any individual, corporation, estate, partnership,
limited liability company, joint venture, association, joint stock company,
trust (including any beneficiary thereof), unincorporated organization or
government or any agency or political subdivision thereof.
"Prepayment Period" means, with respect to any Remittance Date or
Distribution Date, the period commencing on the 16th day of the calendar month
preceding the month in which such Remittance Date or
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Distribution Date occurs and ending on the 15th day of the calendar month in
which such Remittance Date or Distribution Date occurs (except that, in the case
of the first Remittance Date and Distribution Date, the related Prepayment
Period will commence on the day after the Cut-off Date).
"Prepayment Premium" any premium, penalty or fee (including any yield
maintenance or comparable charges) paid or payable, as the context requires, by
a Mortgagor in connection with a Principal Prepayment.
"Principal Distribution Amount" means, with respect to any Distribution
Date, the sum of the Allied Principal Collections for such Distribution Date and
the Funding Note Principal Payment Amount for such Distribution Date.
"Principal Prepayment" means any payment or other recovery of principal
on a Mortgage Loan which is received in advance of its scheduled Due Date
(excluding any Prepayment Premium thereon) and is not accompanied by an amount
of interest representing scheduled interest due on any date or dates in any
month or months subsequent to the month of prepayment.
"Purchase Price" means, with respect to any Allied Mortgage Loan that
became a Purchased Mortgage Loan, or any Allied Participation or BMI
Participation that became a Purchased Participation, the sum of (i) the unpaid
principal balance of such Allied Mortgage Loan, Allied Participation or BMI
Participation, as applicable, (ii) unpaid accrued interest thereon through the
last day of the related Collection Period in which the purchase is to occur, and
(iii) certain servicing expenses related to such Mortgage Loan that are
reimbursable to the Servicer and/or the Special Servicer.
"Purchased Mortgage Loan" means an Allied Mortgage Loan required to be
purchased by the Seller or Allied REIT pursuant to Section 3.03.
"Purchased Participation" means an Allied Participation required to be
purchased by the Seller or Allied REIT, or a BMI Participation required to be
purchased by BMI REIT, pursuant to Section 3.03.
"Qualified Insurer" means an insurance company duly qualified as such
under the laws of the state in which the related Mortgaged Property is located
(with respect to hazard and flood insurance), duly authorized and licensed to
transact the applicable insurance business and to write the insurance provided,
and whose claims-paying ability is rated no lower than "A" by Fitch and S&P and
no lower than A:IX (or the equivalent in any successor rating system) by Best's
Key Rating Guide, in each case, with respect to hazard and flood insurance,
errors and omissions insurance and fidelity bonds, unless each of the Rating
Agencies has confirmed in writing that an insurance carrier with lower
claims-paying ability ratings would not result, in and of itself, in a
downgrade, withdrawal or qualification of the then current rating assigned by
such Rating Agency to any Class of Bonds.
"Rating Agency" means either Fitch or Standard & Poor's or, when used
in the plural form, Fitch and Standard & Poor's. If none of Fitch, Standard &
Poor's or a successor to either of them remains in existence, "Rating Agency"
shall mean any nationally recognized
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statistical rating organization or other comparable Person designated by the
Seller, notice of which designation shall be given to the Issuer, the Indenture
Trustee, the Servicer and the Special Servicer.
"Rating Agency Condition" means, with respect to any action specified
herein, that each Rating Agency shall have been given 10 days' (or such shorter
period as shall be acceptable to each Rating Agency) prior notice thereof and
that each of the Rating Agencies shall have notified the Seller, the Servicer,
the Special Servicer, the Issuer and the Indenture Trustee in writing that such
action will not result in a downgrade, withdrawal or qualification of the then
current rating of the Bonds.
"Realized Losses" means, with respect to any Liquidated Mortgage Loan,
the excess, if any, of (a) the outstanding principal balance thereof as of the
Liquidation Date plus (i) all accrued and unpaid interest thereon at the related
Mortgage Rate in effect from time to time through the end of the Collection
Period in which the liquidation occurred and (ii) related Servicing Advances
plus interest thereon at the Reimbursement Rate, over (b) the aggregate amount
of related Liquidation Proceeds or Insurance Proceeds, if any, recovered in
connection with such liquidation. Realized Losses shall also include any portion
of the amount due under a Mortgage Loan that is forgiven, whether in connection
with a modification, waiver or amendment granted or agreed to by the Servicer or
the Special Servicer, as applicable, or in connection with the bankruptcy or
similar proceeding involving the related Mortgagor.
"Reimbursement Rate" means, with respect to an Advance, a rate per
annum equal to the "prime rate" as published in the "Money Rates" section of The
Wall Street Journal as most recently available as of the date of such Advance,
or if such rate is not published for any reason, a daily prime loan rate from a
comparable financial publication.
"Remittable Funds" means, with respect to any Distribution Date,
Available Funds net of the related P&I Advance.
"Remittance Date" means, with respect to any Distribution Date, the
Business Day that is two Business Days prior to such Distribution Date.
"REO Proceeds" means proceeds, net of any related expenses of the
Special Servicer, received in respect of any REO Property (including, without
limitation, proceeds from the rental of the related Mortgaged Property) which
are received prior to the final liquidation of such Mortgaged Property.
"REO Property" means a Mortgaged Property acquired by the Special
Servicer on behalf of the Bondholders and in the name of the Issuer through
foreclosure, acceptance of a deed in lieu of foreclosure or otherwise in
accordance with this Agreement and applicable law in connection with the default
of a Mortgage Loan.
"Responsible Officer" means the chairman of the board, the president,
managing director, any vice president, and the treasurer of the Servicer or the
Special Servicer, as applicable.
"Scheduled Payment" means, with respect to any Mortgage Loan and
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any Due Date for such Mortgage Loan, the amount of the Monthly Payment that
would have been due thereon on such date, without regard to any waiver,
modification or amendment of such Mortgage Loan granted or agreed to by the
Servicer or the Special Servicer, as applicable, or otherwise in connection with
a bankruptcy or similar proceeding involving the related Mortgagor, and assuming
that each prior Scheduled Payment has been made in a timely manner and
notwithstanding that the Mortgaged Property securing any such Mortgage Loan is
acquired by the Servicer or the Special Servicer, as applicable, through
foreclosure or otherwise.
"Securities" means the Bonds and the Certificates.
"Securityholders" means the Bondholders and/or the Certificateholders,
as the context may require.
"Seller" means Allied Capital CMT, Inc. and its successors in interest
to the extent permitted hereunder.
"Servicer" means ACC, as the servicer of the Mortgage Loans hereunder,
and each successor thereto (in the same capacity) pursuant to Section 7.03 or
8.03.
"Servicer Event of Default" means an event specified in Section 8.01.
"Servicer's Certificate" means an Officer's Certificate of the Servicer
delivered pursuant to Section 4.09, substantially in the form of Exhibit C.
"Servicing Advances" means any cost or expense of the Servicer, the
Special Servicer, the Indenture Trustee or the Fiscal Agent designated as a
Servicing Advance herein and any other cost or expense incurred by the Servicer,
the Special Servicer, the Indenture Trustee or the Fiscal Agent to protect and
preserve the security for the Mortgage Loans, including, but not limited to, the
cost of (a) the preservation, restoration and protection of the related
Mortgaged Properties, (b) any enforcement or judicial proceedings, including,
but not limited to, foreclosures, and (c) compliance with the obligations
specified in the second sentence of Section 5.08(b). Notwithstanding the
foregoing, none of the Servicer, the Special Servicer, the Indenture Trustee or
the Fiscal Agent shall be required to advance any Nonrecoverable Advance.
"Servicing Fee" means the fee payable to the Servicer for services
rendered during each Collection Period, determined pursuant to Section 4.08.
"Servicing Fee Rate" means a rate of 0.0865% per annum.
"Servicing File" means, with respect to each Mortgage Loan, the file
held by the Servicer or the Special Servicer (or in either case, any related
Subservicer), as the case may be, consisting of all documents relating to such
Mortgage Loan that are not included in the definition of Mortgage File and that
are necessary or appropriate to service the Mortgage Loans.
"Servicing Standard" means the requirement that the Mortgage Loans be
serviced and administered in accordance with the higher of the following
standards of care:
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(a) in the same manner in which and with the same care, skill, prudence
and diligence with which the Servicer or Special Servicer, as applicable,
services and administers similar mortgage loans for other third-party
portfolios, giving due consideration to customary and usual standards of
practice of prudent institutional commercial mortgage lenders servicing their
own mortgage loans and to the maximization of the net present value of the
Mortgage Loans; and
(b) the care, skill, prudence and diligence the Servicer or the Special
Servicer, as applicable, uses for loans which it owns and which are
substantially the same as the Mortgage Loans, giving due consideration to the
maximization of the net present value of the Mortgage Loans.
"Servicing Transfer Event" means, with respect to any Mortgage Loan, any
of the following events: (i) the related Mortgagor has failed to make when due a
Balloon Payment, which failure has continued unremedied for 30 days; (ii) the
related Mortgagor has failed to make when due any Monthly Payment (other than a
Balloon Payment) or any other payment required under the related Mortgage Note
or the related Mortgage(s), which failure has continued unremedied for 60 days;
(iii) the Servicer has determined, in its good faith and reasonable judgment,
that a default in the making of a Monthly Payment or any other payment required
under the related Mortgage Note or the related Mortgage(s) is likely to occur
within 30 days and is likely to remain unremedied for at least 60 days or, in
the case of a Balloon Payment, for at least 30 days; (iv) there shall have
occurred a default under the related loan documents, other than as described in
clause (i) or (ii) above, that (in the Servicer's good faith and reasonable
judgment) materially impairs the value of the related Mortgaged Property as
security for the Mortgage Loan or otherwise materially and adversely affects the
interests of Bondholders, which default has continued unremedied for the
applicable grace period under the terms of the Mortgage Loan (or, if no grace
period is specified, 60 days); (v) a decree or order of a court or agency or
supervisory authority having jurisdiction in the premises in an involuntary case
under any present or future federal or state bankruptcy, insolvency or similar
law or the appointment of a conservator or receiver or liquidator in any
insolvency, readjustment of debt, marshaling of assets and liabilities or
similar proceedings, or for the winding-up or liquidation of the related
Mortgagor's affairs, shall have been entered against it and such decree or order
shall have remained in force undischarged or unstayed for a period of 60 days;
(vi) the related Mortgagor shall have consented to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceedings of or relating to
such Mortgagor or of or relating to all or substantially all of its property;
(vii) the related Mortgagor shall have admitted in writing its inability to pay
its debts generally as they become due, filed a petition to take advantage of
any applicable insolvency or reorganization statute, made an assignment for the
benefit of its creditors, or voluntarily suspended payment of its obligations;
and (viii) the Servicer shall have received notice of the commencement of
foreclosure or similar proceedings with respect to the related Mortgaged
Property.
"Specially Serviced Mortgage Loan" means a Mortgage Loan as to which a
Servicing Transfer Event has occurred and is continuing.
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"Special Servicer" means ACC, as the special servicer of the Mortgage
Loans hereunder, and each successor thereto (in the same capacity) pursuant to
Section 7.03 or 8.03.
"Special Servicing Fee" means the fee payable to the Special Servicer
for services rendered during each Collection Period, determined pursuant to
Section 4.08.
"Special Servicing Fee Rate" means a rate of 0.40% per annum.
"Standard & Poor's" means Standard & Poor's Ratings Services, a
division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc. or its successor.
"State" means any one of the 50 states of the United States of America
or the District of Columbia.
"Stated Maturity Date" means, with respect to any Mortgage Loan, the
month in which the last payment of principal of such Mortgage Loan shall be due
and payable after taking into account all partial Principal Prepayments received
prior to the date of determination, without regard to any change in or
modification of such terms in connection with a bankruptcy or similar proceeding
involving the related Mortgagor or a modification, waiver or amendment of such
Mortgage Loan granted or agreed to by the Servicer or the Special Servicer.
"Stated Principal Balance" means, with respect to each Mortgage Loan
outstanding at the date of determination, the principal balance of such Mortgage
Loan ultimately due and payable by the related Mortgagor and equal to the
principal balance thereof as of the Cut-off Date, reduced (to not less than
zero) by
(a) any payments or other collections of principal of such Mortgage
Loan actually received during all prior Collection Periods or
Prepayment Periods, as applicable;
(b) the principal portions of all Scheduled Payments (other than
Balloon Payments) due but not received, and the principal portion of
any Assumed Scheduled Payment deemed due, during all prior Collection
Periods; and
(c) without duplication, the principal portion of any Realized Loss
incurred in respect of such Mortgage Loan during all prior Prepayment
Periods.
"Total Bond Interest Amount" means, with respect to any Distribution
Date, the sum of the Interest Distribution Amounts for all Classes of Bonds for
such Distribution Date.
"Treasury Rate" is the yield calculated by the linear interpolation of
the yields, as reported in Federal Reserve Statistical Release H.15-Selected
Interest Rates under the heading "U.S. government securities/Treasury constant
maturities" for the week ending prior to the date of the relevant principal
prepayment, of U.S. Treasury constant maturities with a maturity date (one
longer and one shorter) most nearly approximating the maturity date of the
Mortgage Loan prepaid. If Release H.15 is no longer published, the Trustee shall
select a comparable publication to determine the Treasury Rate.
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"Trust Account" means any of the Collection Account, the Escrow Account
or the Bond Distribution Account.
"Trust Agreement" means the Amended and Restated Trust Agreement dated
as of January 1, 1998, between the Seller, as depositor, Wilmington Trust
Company, as Owner Trustee and LaSalle National Bank, as Paying Agent.
"Trust Officer" means, in the case of the Indenture Trustee, any
officer within the Corporate Trust Office, including any Assistant Vice
President, Assistant Treasurer, Assistant Secretary or any other officer of the
Indenture Trustee customarily performing functions similar to those performed by
any of the above-designated officers and also, with respect to a particular
matter, any other officer to whom such matter is referred because of such
officer's knowledge of and familiarity with the particular subject and, with
respect to the Owner Trustee, any officer in the Corporate Trust Administration
Department of the Owner Trustee with direct responsibility for the
administration of the Trust Agreement and the Basic Documents on behalf of the
Owner Trustee.
"UCC" means the Uniform Commercial Code as in effect in the relevant
jurisdiction.
SECTION 1.02 Other Definitional Provisions. (_) Capitalized terms used
herein and not otherwise defined herein have the meanings assigned to them in
the Indenture or, if not defined therein, in the Trust Agreement.
(_) All terms defined in this Agreement shall have such defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(_) As used in this Agreement and in any certificate or other document
made or delivered pursuant hereto or thereto, accounting terms not defined in
this Agreement or in any such certificate or other document, and accounting
terms partly defined in this Agreement or in any such certificate or other
document to the extent not defined, shall have the respective meanings given to
them under generally accepted accounting principles. To the extent that the
definitions of accounting terms in this Agreement or in any such certificate or
other document are inconsistent with the meanings of such terms under generally
accepted accounting principles, the definitions contained in this Agreement or
in any such certificate or other document shall control.
(_) The words "hereof," "herein," "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement; Article, Section, Schedule
and Exhibit references contained in this Agreement are references to Articles,
Sections, Schedules and Exhibits in or to this Agreement unless otherwise
specified; and the term "including" shall mean "including without limitation".
(_) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such terms.
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(_) Any agreement, instrument or statute defined or referred to herein
or in any instrument or certificate delivered in connection herewith means such
agreement, instrument or statute as from time to time amended, modified or
supplemented and includes (in the case of agreements or instruments) references
to all attachments thereto and instruments incorporated therein; references to a
Person are also to its permitted successors and assigns.
ARTICLE II
Conveyance of Mortgage Loans and the Funding Note
SECTION 2.01. Conveyance of Mortgage Loans and the Funding Note. The
Seller, in consideration for the delivery of the Securities by the Issuer,
concurrently with the execution and delivery of this Agreement, does hereby
sell, transfer, assign, set over and otherwise convey to the Issuer, without
recourse, all right, title and interest of the Seller, including any security
interest therein for the benefit of the Seller, in, to and under: (a) the Allied
Interests, including the related Mortgage Files and all interest and principal
due with respect to the Allied Mortgage Loans and the Allied Participations
after the Cut-off Date, but excluding any payments of interest and principal due
on or prior to the Cut-off Date, (b) the Funding Note and all interest and
principal due with respect thereto after the Cut-off Date, but excluding any
payments of interest and principal due on or prior to the Cut-off Date, (c) the
Allied Mortgage Loan Purchase Agreement, (d) the Insurance Policies relating to
the Allied Mortgage Loans and the Allied Participations, (e) all funds in
respect of the Allied Interests on deposit from time to time in the Trust
Accounts and the Certificate Distribution Account and all investments and
proceeds thereof (including all income thereon), (f) the Funding Note Purchase
Agreement and (g) the proceeds of any and all of the foregoing. Although it is
the intent of the parties to this Agreement that the conveyance of the Seller's
right, title and interest in, to and under the Allied Interests, the Funding
Note and the other assets in the Owner Trust Estate pursuant to this Agreement
shall constitute a purchase and sale and not a loan, in the event that such
conveyance is deemed to be a loan, it is the intent of the parties to this
Agreement that the Seller shall be deemed to have granted to the Issuer a first
priority perfected security interest in all of the Seller's right, title and
interest in, to and under the Allied Interests, the Funding Note and the other
assets in the Owner Trust Estate and that this Agreement shall constitute a
security agreement under applicable law.
The Issuer hereby directs the Seller to endorse each Mortgage Note in
the name of the Indenture Trustee for the benefit of the Bondholders.
ARTICLE III
The Mortgage Loans and the Funding Note
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SECTION 3.01. Representations and Warranties of Allied REIT and BMI REIT.
(a) Allied REIT has made certain representations and warranties relating to the
Mortgage Loans and the Allied Participations under the Allied Mortgage Loan
Purchase Agreement and has consented to the assignment by the Seller to the
Issuer of the Seller's rights with respect thereto. Such representations and
warranties speak as of the execution and delivery of the Allied Mortgage Loan
Purchase Agreement and as of the Closing Date, but shall survive the sale,
transfer and assignment of the Allied Interests to the Issuer. Pursuant to
Section 2.01 of this Agreement, the Seller has sold, assigned, transferred and
conveyed to the Issuer the Seller's rights under the Allied Mortgage Loan
Purchase Agreement, including its rights in respect of the representations and
warranties of Allied REIT therein, upon which the Issuer relies in accepting the
Allied Interests and delivering the Securities, together with all rights of the
Seller with respect to any breach thereof, including the right to require Allied
REIT to repurchase any Allied Mortgage Loans and/or Allied Participations in
accordance with the Allied Mortgage Loan Purchase Agreement. It is understood
and agreed that the representations and warranties referred to in this Section
shall survive the delivery of such Mortgage Files to the Issuer or any
custodian.
(b) Pursuant to Section 15 of the Allied Mortgage Loan Purchase
Agreement, Allied REIT has agreed that the Issuer shall have the right to
enforce any and all rights under the Allied Mortgage Loan Purchase Agreement
assigned to the Issuer herein, including the right to cause Allied REIT to
repurchase any Allied Mortgage Loan and/or Allied Participation with respect to
which it is in breach of any of its representations and warranties as specified
therein, directly against Allied REIT as though the Issuer were a party to the
Allied Mortgage Loan Purchase Agreement, and the Issuer shall not be obligated
to exercise any such rights indirectly through the Seller.
(c) BMI REIT has made certain representations and warranties relating
to the Participation Mortgage Loans under the BMI Mortgage Loan Purchase
Agreement and has consented to the assignment (i) by BMI LLC to the Seller under
the Funding Note Purchase Agreement of BMI LLC's rights with respect thereto
(ii) and by the Seller to the Issuer under this Agreement of the Seller's rights
in such assigned rights of BMI LLC. Such representations and warranties speak as
of the execution and delivery of the BMI Mortgage Loan Purchase Agreement and as
of the Closing Date, but shall survive the sale, transfer and assignment of the
Funding Note to the Issuer. Pursuant to Section 2.01 of this Agreement, the
Seller has sold, assigned, transferred and conveyed to the Issuer the Seller's
rights under the Funding Note Purchase Agreement, including its rights in
respect of the representations and warranties of BMI REIT in the BMI Mortgage
Loan Purchase Agreement, upon which the Issuer relies in accepting the Funding
Note and delivering the Securities, together with all rights of BMI LLC with
respect to any breach thereof, including the right to require BMI REIT to
repurchase any BMI Participation securing the Funding Note in accordance with
the BMI Mortgage Loan Purchase Agreement.
(d) Pursuant to Section 15 of the BMI Mortgage Loan Purchase
Agreement, BMI REIT has agreed that the Issuer shall have the right to enforce
any and all rights under the BMI Mortgage Loan Purchase
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Agreement assigned to the Issuer herein, including the right to cause BMI REIT
to repurchase BMI Participation with respect to which it is in breach of any of
its representations and warranties as specified therein, directly against BMI
REIT as though the Issuer were a party to the BMI Mortgage Loan Purchase
Agreement, and the Issuer shall not be obligated to exercise any such rights
indirectly through the Seller or BMI LLC.
SECTION 3.02. Representations and Warranties of the Seller. The Seller
makes the following representations and warranties as to the Allied Interests
and the Funding Note on which the Issuer relies in accepting the Allied
Interests and the Funding Note and delivering the Securities. Such
representations and warranties speak as of the execution and delivery of this
Agreement and as of the Closing Date, but shall survive the sale, transfer and
assignment of the Allied Interests and the Funding Note by the Seller to the
Issuer and the pledge thereof by the Issuer to the Indenture Trustee pursuant to
the Indenture.
(i) Neither the Funding Note nor any Allied Mortgage Loan nor any
Allied Participation has been sold, transferred, assigned or pledged by
the Seller to any Person other than the Issuer.
(ii) Immediately prior to the transfer and assignment herein
contemplated, the Seller had good and marketable title to each Allied
Mortgage Loan, each Allied Participation and the Funding Note, free and
clear of all liens and rights of others and, immediately upon the
transfer thereof, the Issuer shall have good and marketable title to
each such Allied Mortgage Loan, Allied Participation and the Funding
Note, free and clear of all liens and rights of others.
SECTION 3.03. Repurchase upon Breach. The Seller and either the
Servicer or the Special Servicer, as the case may be, shall inform the other
parties to this Agreement promptly, in writing, upon the discovery of any breach
of (a) Allied REIT's representations and warranties made pursuant to Section 3
of the Allied Mortgage Loan Purchase Agreement, (b) BMI REIT's representations
and warranties made pursuant to Section 3 of the BMI Mortgage Loan Purchase
Agreement or (c) the Seller's representations and warranties made pursuant to
Section 3.02 of this Agreement. Unless any such breach shall have been cured by
the last day of the first Collection Period following the discovery thereof by,
or notice thereof to, the Seller, the Servicer or the Special Servicer, (i) in
the case of clause (a) above, the Seller or the Issuer shall enforce the
obligation of Allied REIT under the Allied Mortgage Loan Purchase Agreement to
repurchase, as of such last day, any Allied Mortgage Loan or any Allied
Participation materially and adversely affected by any such breach, (ii) in the
case of clause (b) above, the Seller or the Issuer shall enforce the obligation
of BMI REIT under the BMI Mortgage Loan Purchase Agreement to repurchase, as of
such last day, any BMI Participation materially and adversely affected by any
such breach and (iii) in the case of clause (c) above, the Seller shall
repurchase, as of such last day, the Funding Note or any Allied Mortgage Loan or
any Allied Participation materially and adversely affected by any such breach.
In connection with any such repurchase, the Seller, shall, or shall require
Allied REIT to, remit the Purchase Price to the Collection Account in the manner
specified in Section 5.04 or the Seller shall require BMI
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REIT to cause a partial redemption of the Funding Note in an amount equal to the
Purchase Price, as applicable. Upon the receipt of the Purchase Price by the
Servicer, the Servicer shall give notice thereof to the Indenture Trustee. The
sole remedy of the Issuer, the Indenture Trustee, the Bondholders or the
Certificateholder with respect to a breach of representations and warranties
pursuant to Sections 3.01 and 3.02 and the agreement contained in this Section
shall be to enforce the Seller's obligation to repurchase Allied Mortgage Loans,
Allied Participations or the Funding Note or to require the Seller or the Issuer
to enforce Allied REIT's obligation to repurchase Allied Mortgage Loans or
Allied Participations and BMI REIT's obligation to cause a partial redemption of
the Funding Note, as applicable, pursuant to this Section 3.03, subject to the
conditions contained herein, as applicable.
SECTION 3.04. Delivery and Possession of Servicing Files; Custody of
Mortgage Files; Review of Mortgage Files. (a) On or before the Closing Date, the
Seller shall cause to be transferred and delivered to the Servicer the Servicing
File for each Mortgage Loan. Each Servicing File so transferred and delivered to
the Servicer shall be held by the Servicer or the Special Servicer, as
applicable, in order to service the Mortgage Loans pursuant to this Agreement
and is and shall be held in trust by the Servicer or the Special Servicer, as
applicable, for the benefit of the Indenture Trustee as the record owner of the
Mortgage Loans. The Servicer's or Special Servicer's, as applicable, possession
of any portion of any Servicing File and any portion of any Mortgage File shall
be at the will of the Indenture Trustee for the sole purpose of facilitating
servicing of the Mortgage Loans pursuant to this Agreement and such retention
and possession by the Servicer or Special Servicer, as applicable, shall be in a
custodial capacity only. The ownership of each Mortgage Note, Mortgage, and the
contents of the Servicing File shall be vested in the Indenture Trustee and the
ownership of all records and documents with respect to the Mortgage Loans
prepared by or which come into the possession of the Servicer or Special
Servicer, as applicable, shall immediately vest in the Indenture Trustee and
shall be retained and maintained, in trust, by the Servicer or Special Servicer,
as applicable, at the will of the Indenture Trustee in such custodial capacity
only. The portion of each Servicing File retained by the Servicer or Special
Servicer, as applicable, pursuant to this Agreement shall be segregated from the
other books and records of the Servicer or Special Servicer, as applicable, and
shall be appropriately marked to clearly reflect the record ownership of the
related Mortgage Loan by the Indenture Trustee. The Servicer or Special
Servicer, as applicable, shall release from its custody the contents of any
Servicing File retained by it only in accordance with this Agreement.
(b) The Seller shall deliver and release the Mortgage Files to the
Custodian on behalf of the Indenture Trustee on or prior to the Closing Date.
On or prior to the Closing Date, the Indenture Trustee shall have
certified its receipt of each Mortgage Note, as evidenced by the certificate of
the Indenture Trustee with any exceptions noted on the list attached thereto, a
copy of which shall be provided to the Servicer and the Seller. The Seller shall
be responsible for, as and when due, any and all initial document review fees,
initial and final certification fees and recertification fees and any costs
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associated with correcting any deficiencies identified in connection with such
review(s).
The Special Servicer or the Servicer, as applicable, shall notify the
Indenture Trustee, the Owner Trustee and each Rating Agency of any assumption,
modification, consolidation, waiver, amendment or extension entered into in
respect of any Mortgage Loan in accordance with this Agreement. The Servicer or
Special Servicer, as applicable, shall forward to the Custodian original
executed documents evidencing any such assumption, modification, consolidation
or extension within ten Business Days of the execution thereof; provided,
however, that the Servicer or Special Servicer, as applicable, shall provide to
the Custodian, for inclusion in such Mortgage File, a certified true copy of any
such document submitted for recordation within ten Business Days of its
execution, and shall provide the original of any document submitted for
recordation or a copy of such document certified by the appropriate public
recording office to be a true and complete copy of the original promptly upon
receipt of the recorded original or the certified copy of such document.
(c) The Indenture Trustee agrees, for the benefit of the Holders of the
Bonds, to review, within 90 days after the Closing Date, the Mortgage Files
delivered to it in connection with the Grant of the Allied Interests and the
Funding Note under the Indenture and after completion of such review to provide
a final certification to the Seller, the Issuer and the Servicer. The Indenture
Trustee's review shall be limited to a determination that all documents
comprising the Mortgage Files in respect of the Mortgage Loans have been
delivered with respect to each such Mortgage Loan, that all such documents have
been executed, and that all such documents purport on their face to relate to
the Mortgage Loans. In performing such review the Indenture Trustee may rely
upon the purported genuineness of any signature thereon.
If the Indenture Trustee discovers any defect or omission in the
applicable Mortgage Files or that any document required to be delivered to it
has not been delivered or that any document so delivered has not been executed
or does not relate to any of the Mortgage Loans (any of the foregoing, a
"Defect" in the related Mortgage File), it shall promptly notify the Issuer, the
Seller and the Servicer. In conducting any such review, the Indenture Trustee
shall be entitled to rely conclusively upon the accuracy, sufficiency and
genuineness of any recording or filing information contained in each Mortgage
File.
If any Defect in a Mortgage File materially and adversely affects the
interests of the Bondholders, then the Indenture Trustee shall direct the Issuer
to promptly request (a) Allied REIT (if such Mortgage Loan is an Allied Mortgage
Loan), or (b) Allied REIT or BMI REIT (if such Mortgage Loan is a Participation
Mortgage Loan) (i) to cure such Defect in all material respects not later than
90 days from receipt by Allied REIT or BMI REIT, as applicable, of such request
or (ii) to repurchase the affected Allied Mortgage Loan, Allied Participation or
BMI Participation at the applicable Purchase Price pursuant to the related
Mortgage Loan Purchase Agreement. If the related Defect is not cured within a
period of 90 days following receipt of notice thereof, (i) Allied REIT will be
obligated pursuant to the Allied Mortgage Loan Purchase Agreement to repurchase
the affected Allied Participation or Allied Mortgage
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Loan, as the case may be, or (ii) BMI REIT will be obligated pursuant to the BMI
Mortgage Loan Purchase Agreement to repurchase the affected BMI Participation,
as applicable, in each case within such 90-day period at the Purchase Price,
provided that Allied REIT and BMI REIT, as applicable, will have an additional
90-day period to deliver the document or cure the defect, as the case may be, if
it is diligently proceeding to effect such delivery or cure and has delivered to
the Indenture Trustee an Officer's Certificate that describes the reasons that
such delivery or cure was not effected within the first 90-day cure period and
the actions it intends to take to effect such delivery or cure, and that states
that it anticipates such delivery or cure will be effected within the additional
90-day period; and provided further that if any document required to be included
in the Mortgage File is not included therein because it has been delivered to a
recording office for recording and has not been returned, no repurchase is
required if Allied REIT or BMI REIT, as applicable, provides the Indenture
Trustee with an Officer's Certificate to such effect. The foregoing repurchase
obligations will constitute the sole remedy available to the Bondholders and the
Indenture Trustee for any uncured failure to deliver, or any uncured defect in,
a constituent Mortgage Loan document. In addition, in the event that (a) Allied
REIT is required to reacquire any Allied Participation as described above, BMI
shall be obligated to reacquire the BMI Participation which evidences an
interest in the same Participation Mortgage Loan as such Allied Participation,
and (b) in the event that BMI REIT is required to reacquire any BMI
Participation as described above, Allied REIT shall be obligated to reacquire
the Allied Participation which evidences an interest in the same Participation
Mortgage Loan as such BMI Participation, in each case, in the manner described
above.
SECTION 3.05. Instructions; Authority to Act. The Custodian shall be
deemed to have received proper instructions with respect to the Mortgage Files
upon its receipt of written instructions signed by a Trust Officer of the
Indenture Trustee (if the Custodian is not the Indenture Trustee) or by a
Responsible Officer of the Servicer or the Special Servicer, as applicable.
SECTION 3.06. Custodian's Indemnification. The Custodian shall
indemnify the Issuer, the Owner Trustee and the Indenture Trustee (if the
Custodian is not the Indenture Trustee) and each of their officers, directors,
employees and agents for any and all liabilities, obligations, losses,
compensatory damages, payments, costs, or expenses of any kind whatsoever that
may be imposed on, incurred by or asserted against the Issuer, the Owner Trustee
or the Indenture Trustee or any of their officers, directors, employees or
agents as the result of any improper act or omission in any way relating to the
maintenance and custody by the Custodian of the Mortgage Files; provided,
however, that the Custodian shall not be liable to the Issuer, the Owner
Trustee, the Indenture Trustee or any such officer, director, employee or agent
of the Owner Trustee or the Indenture Trustee for any portion of any such amount
resulting from the willful misfeasance or bad faith of the Owner Trustee or the
Indenture Trustee, as the case may be, or for the gross negligence of the Owner
Trustee or the negligence of the Indenture Trustee, as the case may be, or any
such officer, director, employee or agent of the Owner Trustee or the Indenture
Trustee, as the case may be.
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Indemnification under this Section shall survive the resignation or
removal of the Custodian or the termination of this Agreement and shall include
reasonable fees and expenses of counsel and expenses of litigation. If the
Custodian shall have made any indemnity payments pursuant to this Section and
the Person to or on behalf of whom such payments are made thereafter collects
any of such amounts from others, such Person shall promptly repay such amounts
to the Custodian, without interest.
(b) Neither the Custodian nor any of its officers, directors, employees
or agents shall be liable, directly or indirectly, for any damages or expenses
arising out of the services performed under this Agreement other than damages
which result from the negligence or willful misconduct of it or them.
SECTION 3.07. Effective Period and Termination. (a) The Custodian's
appointment as custodian shall continue in full force and effect unless and
until terminated pursuant to this Section 3.07. The appointment of the Custodian
as custodian may be terminated by the Indenture Trustee or the Holders of at
least 51% of the Bond Balance, by notice given in writing to the Custodian (and
to the Indenture Trustee, the Issuer and the Seller if given by such
Bondholders) in the same manner as the Indenture Trustee or such Bondholders, as
the case may be, may terminate the rights and obligations of the Servicer under
Section 8.02. With the consent of the Indenture Trustee, the Issuer, may
terminate the Custodian's appointment as custodian, with cause, at any time upon
written notification to the Custodian. As soon as practicable after any
termination of such appointment (but in no event more than 10 Business Days
after any such termination of appointment), the Custodian shall deliver the
Mortgage Files to the Indenture Trustee or the Indenture Trustee's agent at such
place or places as the Indenture Trustee may reasonably designate.
SECTION 3.08. Delivery of the Mortgage Files to the Servicer or Special
Servicer. As is appropriate for the servicing or foreclosure of any Mortgage
Loan, the Custodian shall deliver to the Servicer or the Special Servicer, as
applicable, the Mortgage Files for such Mortgage Loan upon receipt by the
Custodian, on or prior to the date such release is to be made, of a trust
receipt and request for release executed by the Servicer or Special Servicer, as
applicable, providing the reason that the Servicer or Special Servicer, as
applicable, is requesting such release and providing that such entity will hold
or retain the Mortgage Files in trust for the benefit of the Indenture Trustee
and the Holders of Bonds.
ARTICLE IV
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Administration and Servicing of Mortgage Loans
SECTION 4.01. Duties of Servicer. (a) The Servicer, for the benefit of
the Issuer and the Indenture Trustee, shall manage, service, administer and make
collections on all Mortgage Loans (other than Specially Serviced Mortgage Loans)
and all Corrected Mortgage Loans and shall perform the other actions required by
the Servicer under this Agreement. The Special Servicer, for the benefit of the
Issuer and the Indenture Trustee, shall manage, service, administer and make
collections on all Specially Serviced Mortgage Loans and all REO Properties and
shall perform the other actions required by the Special Servicer under this
Agreement. The Servicer and the Special Servicer shall service the Mortgage
Loans that each of them is primarily responsible for servicing and
administering, in accordance with their customary and usual procedures and
consistent with the Servicing Standard. The Servicer and the Special Servicer
shall adhere to the Servicing Standard without regard to any conflict of
interest that either of them may have (including, without limitation, debt
extended to any Mortgagor or its obligation to make Advances), any fees or other
compensation to which they are respectively entitled and any relationship with
the Mortgagor and without regard to the different payment priorities among the
Classes of Bonds. The Servicer's duties shall include the collection and posting
of all payments, responding to inquiries of Mortgagors, investigating
delinquencies, sending payment coupons to Mortgagors, reporting any required tax
information to Mortgagors, monitoring the collateral, accounting for
collections, furnishing monthly and annual statements to the Owner Trustee and
the Indenture Trustee with respect to distributions, monitoring the compliance
by Mortgagors with the insurance requirements contained in the related Mortgages
and/or Mortgage Notes, and performing the other duties specified herein. The
Servicer shall continue to collect information and prepare all reports to the
Indenture Trustee required hereunder with respect to any Specially Serviced
Mortgage Loans and REO Properties, and shall render such incidental services
with respect to any Specially Serviced Mortgage Loans and REO Properties as are
specifically provided for herein. The Servicer also shall administer and
enforce, on behalf of the Securityholders, all rights of the Issuer, as holder
of each Mortgage Loan under the related Mortgage Note. To the extent consistent
with the standards, policies and procedures otherwise required hereby (including
without limitation the Servicing Standard), each of the Servicer and the Special
Servicer shall follow its customary standards, policies and procedures and shall
have full power and authority, acting alone, to do any and all things in
connection with the managing, servicing, administration and collection of the
Mortgage Loans that it may deem necessary or desirable. Neither the Servicer nor
the Special Servicer shall have any responsibility for the performance by the
other of its duties under this Agreement.
(b) Without limiting the generality of the foregoing, the Servicer and
the Special Servicer are hereby authorized and empowered to execute and deliver,
on behalf of itself, the Issuer, the Owner Trustee (solely on behalf of the
Issuer), the Indenture Trustee, the Certificateholders and the Bondholders or
any of them, any and all instruments of satisfaction or cancellation, or of
partial or full release or discharge, and all other comparable instruments with
respect to the Mortgage Loans and with respect to the Mortgaged Properties.
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(c) The Servicer and the Special Servicer are hereby authorized to
commence, each in its own name or in the name of the Issuer, the Indenture
Trustee, the Owner Trustee (solely on behalf of the Issuer), the
Certificateholders or the Bondholders, a legal proceeding to enforce any
Mortgage Loan pursuant to Section 4.03 or to commence or participate in any
other legal proceeding (including a bankruptcy proceeding) relating to or
involving a Mortgage Loan, a Mortgagor or a Mortgaged Property. If the Servicer
or the Special Servicer commences or participates in any such legal proceeding
in its own name, the Indenture Trustee and/or the Issuer shall thereupon be
deemed to have automatically assigned the applicable Mortgage Loan to the
Servicer or the Special Servicer, as applicable, solely for purposes of
commencing or participating in such proceeding as a party or claimant, and the
Servicer and the Special Servicer are authorized and empowered by the Indenture
Trustee and the Issuer to execute and deliver in the Indenture Trustee's or the
Issuer's name any notices, demands, claims, complaints, responses, affidavits,
or other documents or instruments in connection with any such proceeding. If in
any enforcement suit or legal proceeding it shall be held that the Servicer or
the Special Servicer may not enforce a Mortgage Loan, on the ground that it
shall not be a real party in interest or a holder entitled to enforce such
Mortgage Loan, the Issuer shall, at the expense and direction of the Servicer or
the Special Servicer, as the case may be, take steps to enforce such Mortgage
Loan, including bringing suit in the name of the Issuer (or in the name of the
Owner Trustee on behalf of the Issuer), the Indenture Trustee, the
Certificateholders or the Bondholders. The Owner Trustee and the Indenture
Trustee shall upon the Servicer's or the Special Servicer's written request
furnish the Servicer or the Special Servicer with any powers of attorney and
other documents reasonably necessary or appropriate to enable it to carry out
its servicing and administrative duties hereunder. Neither the Indenture Trustee
nor the Owner Trustee will have any liability for the misuse by the Servicer or
the Special Servicer of any power of attorney granted pursuant to this Section
4.01(c).
(d) Each of the Servicer and Special Servicer shall service and
administer the respective groups of cross-collateralized Mortgage Loans as a
single Mortgage Loan as and when it deems necessary and appropriate, consistent
with the Servicing Standard. If any cross-collateralized Mortgage Loan becomes a
Specially Serviced Mortgage Loan, then each other Mortgage Loan with which it is
cross-collateralized shall also become a Specially Serviced Mortgage Loan. No
cross-collateralized Mortgage Loan may subsequently become a Corrected Mortgage
Loan unless and until all Servicing Transfer Events in respect of each other
Mortgage Loan in its group are cured or otherwise addressed as provided in the
definition of Corrected Mortgage Loan.
SECTION 4.02. Collection and Mortgage Loan Payments; Modifications of
Mortgage Loans. (a) Consistent with the standards, policies and procedures
required by this Agreement (including without limitation the Servicing
Standard), the Servicer (and, if applicable, the Special Servicer) shall make
reasonable efforts to collect all payments called for under the terms and
provisions of the Mortgage Loans as and when the same shall become due, and
shall ascertain and estimate Escrow Payments and all other charges that will
become due and payable with respect to the Mortgage Loans and each related
Mortgaged Property, to the end that
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the installments payable by the Mortgagors will be sufficient to pay such
charges as and when they become due and payable. The Servicer (with respect to
Mortgage Loans other than the Specially Serviced Mortgage Loans) and the Special
Servicer (with respect to Specially Serviced Mortgage Loans) are authorized in
their discretion to waive any late payment charge or any other similar fees that
may be collected in the ordinary course of servicing any such Mortgage Loan.
(b)(i) (A) The Servicer may amend any term, other than a Money Term of
a Mortgage Loan that is not a Specially Serviced Mortgage Loan; (B) the
Servicer or the Special Servicer, as applicable, may, in its
discretion, but only upon determining that the coverage under any
related hazard insurance policy will not be affected, extend or cause
to be extended the Due Dates for payments due on a Mortgage Loan for
such period as is consistent with the Servicing Standard; and (C) the
Special Servicer shall be permitted to enter into a modification,
waiver or amendment of the terms of any Specially Serviced Mortgage
Loan to (i) reduce the amounts owing under such Specially Serviced
Mortgage Loan by forgiving principal, accrued interest and/or any
Prepayment Premium, (ii) reduce the amount of the Monthly Payment on
such Specially Serviced Mortgage Loan, including by way of a reduction
in the related Mortgage Rate, (iii) forbear in the enforcement of any
right granted under any Mortgage Note or Mortgage relating to such
Specially Serviced Mortgage Loan, (iv) extend the maturity date of such
Mortgage Loan, and/or (v) accept a principal prepayment during any
Lock-Out Period, so long as, in each case, (x) the related Mortgagor is
in default with respect to such Specially Serviced Mortgage Loan or, in
the reasonable judgment of the Special Servicer, such default is
reasonably foreseeable and (y) in the reasonable judgment of the
Special Servicer, such modification, waiver or amendment would increase
the recovery to Bondholders on a net present value basis, as documented
by the Special Servicer to the Indenture Trustee.
(ii) In no event shall the Special Servicer be permitted to (i) extend
the maturity date of a Mortgage Loan beyond a date that is two years
prior to the Final Rated Distribution Date, (ii) extend the maturity
date of a Mortgage Loan that has a Mortgage Rate below the
then-prevailing interest rate for comparable loans, as determined by
the Special Servicer, unless such Mortgage Loan is a Balloon Loan that
has failed to make the Balloon Payment at its Stated Maturity Date and
such Balloon Loan is not a Specially Serviced Mortgage Loan (other than
by reason of failure to make the Balloon Payment) and has not been
delinquent in the preceding 12 months (other than with respect to the
Balloon Payment), in which case the Special Servicer may make up to
three one-year extensions at the existing Mortgage Rate for such
Mortgage Loan (such limitation of extensions made at a below market
rate shall not limit the ability of the Special Servicer to extend the
maturity date of any Mortgage Loan at an interest rate at or in excess
of the prevailing rate for comparable loans at the time of such
modification), (iii) if the Mortgage Loan is secured by a ground lease,
extend the maturity date of such Mortgage Loan beyond a date that is
ten years prior to the expiration of the term of the related ground
lease, (iv) reduce the Mortgage Rate to a rate below the
then-prevailing interest rate for comparable loans, as determined by
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the Special Servicer or (v) defer interest due on any Mortgage Loan in
excess of 10% of the Stated Principal Balance of such Mortgage Loan or
defer the collection of interest on any Mortgage Loan without accruing
interest on such deferred interest at a rate at least equal to the
Mortgage Rate of such Mortgage Loan.
SECTION 4.03. Realization upon Mortgage Loans. (a)(i) The Special
Servicer may, consistent with the provisions of any Mortgage and this Agreement,
at any time institute foreclosure proceedings, exercise any power of sale
contained in such Mortgage, obtain a deed in lieu of foreclosure or otherwise
acquire title to the related Mortgaged Property, by operation of law or
otherwise, in the event of a default under such Mortgage, as permitted under
such Mortgage. The foregoing is subject to the proviso that the Special Servicer
shall not be required to advance its own funds to restore any property damaged
with respect to which Insurance Proceeds will not cover the damage unless it
shall determine that (A) such restoration will increase the Liquidation Proceeds
in respect of the related Mortgage Loan after reimbursement to itself for such
expenses plus interest, if any, at the Reimbursement Rate as provided under the
terms of this Agreement (such advances to be treated as a Servicing Advance) and
(B) such expenses will be recoverable by it through Insurance Proceeds or
Liquidation Proceeds from the related Mortgaged Property, as contemplated by
Section 5.05(a)(i). The Special Servicer shall be responsible for all costs and
expenses incurred by it in any such proceedings; provided, however, that it
shall be entitled to reimbursement thereof from related Liquidation Proceeds or
REO Proceeds to the extent provided in Section 5.05.
(ii) If title to any Mortgaged Property is acquired in foreclosure or
by deed in lieu of foreclosure, the deed or certificate of sale shall
be taken in the name of the Indenture Trustee. Notwithstanding any such
acquisition of title and cancellation of the related Mortgage Loan,
such Mortgage Loan shall be considered to be a Mortgage Loan until such
time as the related REO Property is sold pursuant to this Agreement and
shall be reduced only by collections net of expenses. Consistent with
the foregoing, for purposes of all calculations hereunder, so long as
such Mortgage Loan shall be considered to be an outstanding Mortgage
Loan:
(A) it shall be assumed that, notwithstanding that the
indebtedness evidenced by the related Mortgage Note shall have been
discharged, such Mortgage Note and, for purposes of determining the
Monthly Payments thereof, the related amortization schedule in effect
at the time of any such acquisition of title remain in effect; and
(B) REO Proceeds received in any month shall be applied to
amounts which would have been payable under the related Mortgage Note
in accordance with the terms of such Mortgage Note. In the absence of
such terms, REO Proceeds shall be deemed to have been received, first,
in payment of the accrued interest that remained unpaid on the date
that the related REO Property was acquired by the Issuer; second, in
respect of the delinquent principal installments that remained unpaid
on such date; and, thereafter, in respect of installments of principal
and accrued interest on such Mortgage Loan deemed to be due and payable
in accordance with the terms of such Mortgage Note and such
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amortization schedule. If such REO Proceeds exceed the Monthly Payment
then payable, the excess shall be treated as a Principal Prepayment
received in respect of such Mortgage Loan.
(b) The Special Servicer shall not obtain title to a Mortgaged Property
as a result or in lieu of foreclosure or otherwise, and shall not otherwise
acquire possession of, or take any other action with respect to, any Mortgaged
Property, if, as a result of any such action, the Issuer, the Owner Trust
Estate, the Owner Trustee, the Indenture Trustee or the Special Servicer would
be considered to have participated in management of, or to hold title to, or be
a "mortgagee-in-possession," an "owner" or an "operator" of, such Mortgaged
Property, or otherwise be a "responsible party" for Environmental Materials at,
on, under or adjacent to the Mortgaged Property, within the meaning of any
Environmental Law, unless the Special Servicer has previously determined, based
solely (as to environmental matters) on an environmental report prepared by an
Independent Person who regularly performs environmental audits and is able to
perform such work with the degree of care and due diligence and good workmanship
customarily provided by an expert professional environmental consultant
providing the same or similar work ("Environmental Professional"), that:
(i) such Mortgaged Property is in compliance with applicable
Environmental Laws or, if not, that taking such actions as are
necessary to bring the Mortgaged Property in compliance therewith is
reasonably more likely to produce a greater recovery on a present value
basis than not taking such actions;
(ii) there are no circumstances or conditions present at such Mortgaged
Property that have resulted in any contamination for which
investigation, testing, monitoring, containment, clean-up or
remediation could be required under any Environmental Law, or if such
circumstances or conditions are present for which any such action could
be required, taking such actions with respect to such Mortgaged
Property is reasonably likely to produce a greater recovery on a
present value basis than not taking such actions; and
(iii) the Servicer has determined based on satisfaction of the criteria
in clauses (i) and (ii) above that it would be in the best economic
interest of the Issuer, the Indenture Trustee and the Bondholders to
take such actions.
If the environmental report first obtained by the Special Servicer with
respect to a Mortgaged Property indicates that such Mortgaged Property may not
be in compliance with applicable Environmental Laws or that Environmental
Materials may be present but does not definitely establish such fact, the
Special Servicer shall cause such further environmental tests as the Special
Servicer shall deem prudent to protect the interests of the Indenture Trustee,
the Owner Trustee and the Bondholders to be conducted by an Environmental
Professional. Any such tests shall be deemed part of the environmental reports
obtained by the Special Servicer for purposes of this Section 4.03. The cost of
preparation of any environmental report shall be advanced by the Special
Servicer as a Servicing Advance and the Special Servicer shall be reimbursed
therefor, together with interest thereon, if any, at the Reimbursement Rate
computed in accordance with the terms of this Agreement, from the Collection
Account as provided in Section 5.05.
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(c) If the Special Servicer determines, pursuant to paragraph (b) of
this Section 4.03, that taking such actions as are necessary to bring any such
Mortgaged Property into compliance with applicable Environmental Laws, or taking
such actions with respect to the containment, clean-up, removal or remediation
of Environmental Materials affecting any such Mortgaged Property, is not
reasonably likely to produce a greater recovery on a present value basis than
not taking such actions, then the Special Servicer shall take such action as it
deems to be in the best economic interests of the Bondholders, including without
limitation releasing the lien of the Mortgage with respect to the affected
Mortgaged Property. The cost of any such compliance, containment, clean-up or
remediation may be reimbursed to the Special Servicer from the Collection
Account as a Servicing Advance pursuant to Section 5.05.
SECTION 4.04. Maintenance of Insurance Policies; Errors and Omissions
and Fidelity Coverage. (a) The Servicer or the Special Servicer, as applicable,
shall maintain, or cause each Mortgagor to maintain for each Mortgaged Property
(including any REO Property) a hazard insurance policy that has been obtained
from an insurance company duly qualified as such under the laws of the state in
which the related Mortgaged Property is located, duly authorized and licensed in
such state to transact the applicable insurance business and to write the
insurance provided (and, if the Servicer or the Special Servicer shall obtain
such hazard insurance policy on behalf of the related Mortgage, such insurance
policy shall be obtained from a Qualified Insurer), and that provides for such
coverage as is required by the terms of the related Mortgage in the amounts set
forth therein or, if such Mortgage permits the holder thereof to dictate to the
Mortgagor the insurance coverage to be maintained on such Mortgaged Property,
such coverage shall be in an amount equal to the lesser of (i) the principal
balance owing on such Mortgage Loan and (ii) the full replacement cost of such
Mortgaged Property (together with flood insurance coverage, if obtainable and if
such Mortgaged Property is located in a federally designated flood area, in an
amount equal to the lesser of (i) the amount necessary to fully compensate for
any damage or loss to the improvements which are part of such Mortgaged Property
on a replacement cost basis and (ii) the maximum amount of insurance available
from time to time under the federal flood insurance program, whether or not the
area is participating in the program), but in any event not less than the amount
necessary to avoid the application of any co-insurance clause contained in the
hazard insurance policy. Each such insurance policy shall (i) contain a
"standard" mortgagee clause, and proceeds will be payable to the Servicer (in
the case of insurance maintained in respect of Mortgage Loans other than REO
Properties) or (ii) be in the name of the Special Servicer (in the case of
insurance maintained in respect of REO Properties) on behalf of the Indenture
Trustee. All amounts collected by the Servicer or the Special Servicer under any
such policies (other than amounts to be applied to the restoration or repair of
the related Mortgaged Property or REO Property or amounts released to the
Mortgagor in accordance with normal servicing procedures of the Servicer or
Special Servicer, as applicable, and/or the terms of the related Mortgage and
Mortgage Note) shall be deposited in the Collection Account, subject to
withdrawal pursuant to Section 5.05. To the extent the Servicer has expended its
own funds to pay for insurance premiums under this paragraph (a), the cost of
such premiums shall be recoverable by the Servicer out of the collections of
delinquent premiums by the Mortgagor on the related Mortgage Loan or from the
sources permitted
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by Section 5.05 or Section 5.08.
(b) The Servicer or the Special Servicer, as applicable, shall be
permitted to obtain and maintain a blanket policy insuring against hazard losses
on all of the Mortgaged Properties with a Qualified Insurer, in which event the
Servicer or the Special Servicer, as applicable, shall conclusively be deemed to
have satisfied its obligations as set forth in paragraph (a) of this Section
4.04, it being understood and agreed that such policy may contain a deductible
clause, in which case the Servicer or the Special Servicer, as applicable,
shall, in the event that there shall not have been maintained on the related
Mortgaged Property a policy complying with paragraph (a) of this Section 4.04
and there shall have been a loss which would have been covered by such policy
but for such deductible clause, deposit in the Collection Account the amount not
otherwise payable under the blanket policy because of such deductible clause.
Any such deposit by the Servicer or the Special Servicer, as applicable, shall
be made on the date preceding the Remittance Date upon which the proceeds
represented by such deposit are required to be distributed and shall not be
reimbursable to the Servicer or the Special Servicer, as applicable. The
Servicer, in connection with its activities as servicer of the Mortgage Loans,
and the Special Servicer, in connection with its activities as servicer of the
Specially Serviced Mortgage Loans, agrees to present or cause to be presented,
on behalf of itself, the Indenture Trustee, the Issuer and the Owner Trustee,
claims under any such blanket policy.
(c) The Servicer and the Special Servicer shall each obtain and
maintain at their own expense, and keep in full force and effect throughout the
term of this Agreement, a blanket fidelity bond issued by a Qualified Insurer.
The amount of fidelity bond coverage shall be in form and amount consistent with
the Servicing Standard.
(d) Each of the Servicer and the Special Servicer shall at all times
during the term of this Agreement keep in force a policy or policies of
insurance covering loss occasioned by the errors and omissions of the officers,
employees and agents of the Servicer or the Special Servicer, as applicable, in
connection with its obligations hereunder, which policy or policies shall be
obtained from a Qualified Insurer and provide for coverage consistent with the
Servicing Standard. The Servicer and the Special Servicer must each maintain in
effect the related errors and omissions policy at all times and such errors and
omissions policy may not be canceled, permitted to lapse or otherwise terminated
without 30 days' prior written notice by registered mail to the Servicer or the
Special Servicer, as applicable, and to the Indenture Trustee and Owner Trustee.
Further, each such errors and omissions policy must provide or the insurer must
state in writing to the Indenture Trustee and Owner Trustee, that such errors
and omissions policy shall not be cancelable without the giving of notice as
provided for in the prior sentence.
(e) Coverage of the Servicer or the Special Servicer under a policy or
bond obtained by an Affiliate of the Servicer or the Special Servicer, as
applicable, and providing the coverage required by this Section 4.04 shall
satisfy the requirements of this Section.
SECTION 4.05. Reserved.
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SECTION 4.06. Recordation of Mortgages and Other Documents. (a) Record
title to each Mortgage and the endorsement on the related Mortgage Note shall be
in the name of the Indenture Trustee. At the Servicer's expense, the Indenture
Trustee shall prepare (i) the Assignments and (ii) the UCC-2s and UCC-3s
referred to in clause (x) of the definition of "Mortgage File," and, not later
than 45 days after the Closing Date, the Indenture Trustee shall cause the
Assignments to be duly recorded in the public records in which the related
Mortgage shall have been recorded. The Servicer shall pay all necessary
recording fees associated with preparing and recording the Assignments. The
Seller shall cooperate with the Servicer and the Issuer in the preparation and
recording of any and all Assignments. All rights arising out of the Mortgage
Loans shall be vested in the Indenture Trustee pursuant to the Indenture. All
funds received on or in connection with a Mortgage Loan shall be received and
held by the Servicer in trust for the benefit of the Indenture Trustee as the
record owner of the Mortgage Loans and the Mortgagors as their respective
interests may appear.
SECTION 4.07. Reserved.
SECTION 4.08. Servicing Fee. As consideration for servicing the
Mortgage Loans, the Servicer shall be entitled to receive the Servicing Fee, and
as consideration for servicing the Specially Serviced Mortgage Loans, the
Special Servicer shall be entitled to receive the Special Servicing Fee. The
Servicing Fee and Special Servicing Fee with respect to any Collection Period
shall equal the product of (i) the Servicing Fee Rate or the Special Servicing
Fee Rate, as applicable, and (ii) the Stated Principal Balance of the Mortgage
Loans or Specially Serviced Mortgage Loans, respectively, at the beginning of
such Collection Period. Such fees are limited to, and shall be paid solely from,
the interest portion (including recoveries with respect to interest from
Liquidation Proceeds, to the extent permitted by Section 5.05) of such Monthly
Payment actually collected by the Servicer or Special Servicer, as applicable,
or as otherwise provided under Section 5.05.
Each of the Servicer and the Special Servicer shall be required to pay
all expenses incurred by it in connection with its servicing activities
hereunder, including the fees of any Subservicer retained by it, and shall not
be entitled to reimbursement thereof except as specifically provided for herein.
The Servicer shall be entitled to retain all late payment fees accrued
and paid from time to time by any Mortgagor and any fees collected from time to
time from any Mortgagor with respect to assumptions or substitutions of
liability effected during the period the related Mortgage Loan is subject to
this Agreement.
The Servicer shall be required to pay, out of its Servicing Fee, the
compensation of the Indenture Trustee and the Owner Trustee.
SECTION 4.09. Servicer's Certificate. Not later than 10:00 a.m. New
York City time on each Determination Date, the Servicer shall deliver to the
Owner Trustee, each Paying Agent, the Indenture Trustee and the Seller, with a
copy to the Rating Agencies, a Servicer's Certificate containing all information
set forth in Section 5.12 for the related Collection Period in such form as
shall be reasonably acceptable to the Indenture Trustee. Mortgage Loans or
Allied Participations to be repurchased by the Seller or Allied
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REIT, as well as each Mortgage Loan that became a Liquidated Mortgage Loan,
shall be identified by the Servicer by account number with respect thereto.
SECTION 4.10. Annual Statement as to Compliance; Notice of Servicer
Event of Default. (a) Each of the Servicer and the Special Servicer shall
deliver to the Owner Trustee, the Indenture Trustee and each Rating Agency,
within 120 days after the end of each fiscal year (with the first such
certificate being delivered no later than April 30, 1999), an Officer's
Certificate of the Servicer or Special Servicer, stating that (i) a review of
the activities of the Servicer or Special Servicer, as applicable, during the
preceding 12-month period (or such shorter period as shall have elapsed from the
Closing Date to the end of the first such fiscal year) and of the performance of
its obligations under this Agreement has been made under the supervision of the
officers signing such Officer's Certificate and (ii) to such officers'
knowledge, based on such review, the Servicer or Special Servicer has fulfilled
all its obligations under this Agreement throughout such period or, if there has
been a default in the fulfillment of any such obligation, specifying each such
default known to such officers and the nature and status thereof.
(b) The Servicer, the Special Servicer or the Seller shall deliver to
the Owner Trustee, the Indenture Trustee and each Rating Agency, promptly after
having obtained knowledge thereof, but in no event later than two Business Days
thereafter, written notice in an Officer's Certificate of any event which with
the giving of notice or lapse of time or both would become a Servicer Event of
Default under Section 8.01.
SECTION 4.11. Annual Independent Accountants' Report. Within 120 days
after the end of each fiscal year of each of the Servicer and the Special
Servicer, beginning with the 1998 fiscal year, each of the Servicer and the
Special Servicer, as applicable, at their expense, shall cause a firm of
Independent public accountants that is a member of the American Institute of
Certified Public Accountants to furnish a statement to the Indenture Trustee and
Owner Trustee to the effect that such firm has examined certain documents and
records relating to the servicing of the mortgage loan portfolios of the
Servicer and the Special Servicer, as applicable, for the preceding calendar
year (or during the period from the Closing Date until the end of the preceding
calendar year in the case of the first such certificate) and that on the basis
of such examination conducted substantially in compliance with the Uniform
Single Attestation Program for Mortgage Bankers, such firm is of the opinion
that such servicing has been conducted in compliance with the Uniform Single
Attestation Program for Mortgage Bankers except for such exceptions as such firm
believes to be immaterial, in which case such exceptions shall be set forth in
such statement.
SECTION 4.12. Access to Certain Documentation and Information Regarding
Mortgage Loans. The Servicer, the Special Servicer and the Custodian shall
provide to representatives of the Owner Trustee, the Indenture Trustee, the
Certificateholders and Bondholders reasonable access to the documentation
regarding the Mortgage Loans. Access shall be afforded without charge, but only
upon reasonable request and during the normal business hours at the offices of
the Servicer, the Special Servicer or Custodian, as applicable. Nothing in this
Section shall affect the obligation of the Servicer, the
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Special Servicer or the Custodian, as applicable, to observe any applicable law
prohibiting disclosure of information regarding the Mortgagors and the failure
of the Servicer, the Special Servicer or the Custodian, as applicable, to
provide access to information as a result of such obligation shall not
constitute a breach of this Section 4.12.
SECTION 4.13. [Reserved].
Section 4.14. "Due-on-Sale" Clauses: Assumption Agreements. (a) When
the Servicer or Special Servicer, as applicable, receives notice that any
Mortgaged Property has been or is about to be conveyed by the Mortgagor, the
Servicer or Special Servicer, as applicable, shall immediately give notice to
the Indenture Trustee and the Owner Trustee of the contemplated conveyance and
take such actions as are consistent with the Servicing Standard including
waiving or enforcing any due-on-sale clause or due-on-encumbrance clause
contained in any Mortgage Note or Mortgage, to the extent permitted under the
terms of the Mortgage Loan and applicable law and governmental regulations,
taking or entering into an assumption or substitution agreement from or with the
Person to whom such property has been or is about to be conveyed, and releasing
the original Mortgagor from liability upon the Mortgage Loan and substituting
the new Mortgagor as obligor thereon. If a Mortgagor applies for approval to
place a subordinate lien on a Mortgaged Property in accordance with the terms of
the Mortgage Note, the Servicer or Special Servicer, as applicable, shall
immediately give notice to the Indenture Trustee of the requested encumbrance
and obtain at the expense of the Mortgagor and deliver to the Indenture Trustee
such appraisals and other supporting documentation as are required by the terms
of the Mortgage Note together with such additional information as the Indenture
Trustee shall request to facilitate its review and approval of the requested
encumbrance; provided, however, that prior to the Indenture Trustee granting
permission for additional indebtedness, the Servicer or the Special Servicer, as
applicable, shall confirm that such grant satisfies the Rating Agency Condition.
The Indenture Trustee (in such capacity) shall be permitted to rely exclusively
on the affirmation of each Rating Agency in determining whether to approve any
request for a subordinate lien. If the Indenture Trustee advises the Servicer or
Special Servicer, as applicable, that it has approved the requested encumbrance,
the Servicer or Special Servicer, as applicable, shall cause to be prepared at
the expense of the Servicer or Special Servicer, as applicable, and presented to
the Indenture Trustee for execution and obtain the Mortgagor's signature on a
subordination and intercreditor agreement acceptable to the Indenture Trustee.
Any processing fees paid by a Mortgagor in connection with such application
shall be retained by the Servicer or Special Servicer, as applicable, as
additional servicing compensation.
(b) If a Mortgaged Property is to be conveyed by a Mortgagor, and the
Person to which the Mortgaged Property is to be conveyed is to enter into an
assumption agreement or supplement to the Mortgage Note or Mortgage which
requires the signature of the Indenture Trustee, or if an instrument of release
to be signed by the Indenture Trustee is required releasing the Mortgagor from
liability on the Mortgage Loan, the Servicer or the Special Servicer, as
applicable, shall deliver or cause to be delivered to the Indenture Trustee for
signature such assumption agreement, modification agreement, supplement or
release and all such other instruments as
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are reasonable or necessary to carry out the terms of the Mortgage Note or
Mortgage or otherwise to comply with any applicable laws regarding assumptions
or the transfer of the Mortgaged Property to such Person; provided, however,
that prior to granting permission for any such assumption, supplement or
release, the Servicer or the Special Servicer, as applicable, shall confirm that
such grant satisfies the Rating Agency Condition. The Indenture Trustee (in such
capacity) shall be permitted to rely exclusively on the affirmation of each
Rating Agency in determining whether to approve a request for assumption,
supplement or release. The Servicer or the Special Servicer, as applicable,
shall also deliver or cause to be delivered to the Indenture Trustee with the
foregoing documents a letter explaining the nature of such documents. With such
letter, the Servicer or the Special Servicer, as applicable, shall deliver to
the Indenture Trustee a certificate of a Responsible Officer certifying that:
(i) a Responsible Officer has examined and approved such documents, (ii) any
required consents of insurers under any insurance policies required by this
Agreement have been obtained and (iii) there are no changes or modifications
other than those previously approved in accordance with this Agreement. Upon the
closing of the transactions contemplated by such documents, the Servicer or the
Special Servicer, as applicable, shall cause the originals of the assumption
agreement, release (if any), modification or supplement to be delivered to the
Indenture Trustee. Any fee collected by the Servicer or Special Servicer, as
applicable, for entering into an assumption or substitution of liability
agreement with respect to such Mortgage Loan shall be retained by the Servicer
or Special Servicer, as additional servicing compensation.
Section 4.15. Management of REO Property. (a) The Special Servicer
shall manage, conserve, protect and operate each REO Property in a separate
account solely for the purpose of its prompt disposition and sale. The Special
Servicer shall either itself or, subject to Section 4.15(c), through an agent
selected by the Special Servicer, manage, conserve, protect and operate the REO
Property in the same manner that it manages, conserves, protects and operates
other foreclosed real property for its own account, in the same manner that
similar property in the same locality as the REO Property is managed and in a
manner that would to the extent commercially feasible, maximize the net
after-tax proceeds from such REO Property (but in any event in accordance with
the Servicing Standard). The Special Servicer shall attempt to sell the same as
expeditiously as possible (and may temporarily rent the same) on such terms and
conditions as the Special Servicer deems to be in the best interest of the
Bondholders.
(b) If any REO Property is acquired, the Special Servicer shall have
full power and authority, subject only to the specific requirements and
prohibitions of this Agreement, to do any and all things in connection therewith
as are consistent with the Servicing Standard, all on terms and for such period
as the Special Servicer deems to be in the best interest of the Issuer, the
Owner Trustee, the Indenture Trustee and the Bondholders and, consistent
therewith, shall advance from its own funds:
(i) all insurance premiums due and payable in respect of such REO
Property;
(ii) all taxes in respect of such REO Property that could result
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or have resulted in the imposition of a lien thereon;
(iii) all ground rental payments, if applicable, with respect to the
REO Property; and
(iv) all costs and expenses necessary to maintain such REO Property;
if, but only if, (A) the Special Servicer would make such an advance if it owned
such REO Property and (B) in the Special Servicer's judgment, such amounts will
be recoverable from related REO Proceeds or Liquidation Proceeds.
(c) The Special Servicer may contract with any Independent Person for
the operation and management of any REO Property, provided that:
(i) the terms and conditions of any such contract shall not be
inconsistent herewith;
(ii) any such contract shall require, or shall be administered to
require, that the Independent Person (A) pay all costs and expenses
incurred in connection with the operation and management of such REO
Property and (B) deposit on a daily basis all operating income in an
Eligible Account;
(iii) none of the provisions of this Section 4.15 relating to any such
contract or to actions taken through any such Independent Person shall
be deemed to relieve the Special Servicer of any of its duties and
obligations to the Issuer, the Owner Trustee or the Indenture Trustee
with respect to the operation and management of any such REO Property;
and
(iv) the Special Servicer shall be obligated with respect thereto to
the same extent as if it alone were performing all duties and
obligations in connection with the operation and management of such REO
Property.
The Special Servicer shall be entitled to enter into any agreement with any
Independent Person performing services for it related to its duties and
obligations hereunder for indemnification of the Special Servicer by such
Independent Person, and nothing in this Agreement shall be deemed to limit or
modify such indemnification. The Special Servicer shall be solely liable for all
fees owed by it to any such Independent Person, irrespective of whether the
Special Servicer's compensation pursuant to Section 4.08 is sufficient to pay
such fees.
Section 4.16. Sale of REO Properties. (a) The Special Servicer may
offer to sell to any Person any REO Property, if and when the Special Servicer
determines consistent with this Agreement that such a sale would be in the best
economic interests of the Bondholders, but shall, in any event, so offer to sell
any REO Property no later than the time determined by the Special Servicer to be
sufficient to result in the sale of such REO Property on or prior to three years
from the date of acquisition thereof. The Special Servicer shall (i) give the
Indenture Trustee and the Owner Trustee not less than five days' prior notice of
its intention to sell any REO Property, (ii) solicit bids for the purchase of
such REO Property and (iii) accept the highest bid received from any Person for
such REO
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Property in an amount at least equal to the sum of:
(A) the actual outstanding principal balance of the related Mortgage
Loan, plus all Advances together with interest thereon, if any, at the
Reimbursement Rate as provided under the terms of this Agreement; and
(B) all unpaid interest accrued thereon at the Mortgage Rate that would
have been in effect from time to time through the date of sale.
In the absence of any such bid after such REO Property has been marketed for six
(6) months, the Special Servicer shall offer such REO Property for sale, in a
commercially reasonable manner, to any Person which is not affiliated with the
Special Servicer or the related Mortgagor and shall accept the highest cash bid
received therefor.
(b) Subject to the provisions of Sections 4.03 and 4.14, the Special
Servicer shall negotiate and take any other action necessary or appropriate in
connection with the sale of any REO Property, including the collection of all
amounts payable in connection therewith. Any sale of any REO Property shall be
without recourse to the Special Servicer, Issuer, Owner Trustee, Indenture
Trustee, Fiscal Agent or any other Person.
Section 4.17. Inspections; Collection of Operating Statements. (a) The
Servicer shall inspect or cause to be inspected each Mortgaged Property at such
times and in such manner as are consistent with the provisions of Sections 4.01
and 4.02, provided that each of the Mortgaged Properties shall be inspected at
least once per calendar year. If any Mortgage Loan becomes a Specially Serviced
Mortgage Loan, the Special Servicer shall inspect the related Mortgaged Property
as soon as practicable thereafter. The Servicer or the Special Servicer, as
applicable, shall prepare a written report of each such inspection performed by
it, which report shall describe the condition of the related Mortgaged Property
and shall specify the existence with respect thereto of any sale, transfer or
abandonment or any material change in its condition or value.
(b) With respect to each Mortgage Loan, the Servicer or the Special
Servicer, as applicable, shall use reasonable efforts to collect and review the
annual operating statements of the related Mortgaged Property.
(c) The Servicer and the Special Servicer, as applicable, shall make
available at their offices, for review by Securityholders and the Rating
Agencies during normal business hours, copies of the inspection reports and
operating statements referred to in Sections 4.17(a) and 4.17(b).
Section 4.18. Reports of Foreclosures of Mortgaged Property.
Each year beginning in 1998, the Servicer shall file information
returns with respect to the receipt of mortgage interest received in a trade or
business, the reports of foreclosures and abandonments of any Mortgaged Property
and information returns relating to cancellation of indebtedness income with
respect to any Mortgaged Property as required by Sections 6050H, 6050J and 6050P
of the Code,
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respectively.
Section 4.19. Notification of Adjustments. With respect to each
adjustable rate Mortgage Loan, the Servicer shall adjust the Mortgage Rate on
each related interest rate adjustment date occurring after the Cut-off Date for
such Mortgage Loans in compliance with the requirements of applicable law and
the related Mortgage and Mortgage Note. The Servicer shall execute and deliver
any and all necessary notices required under applicable law and the terms of the
related Mortgage Note and Mortgage regarding the Mortgage Rate adjustments. The
Servicer shall promptly, upon written request therefor, deliver to the Indenture
Trustee and the Owner Trustee such notifications and any additional applicable
data regarding such adjustments and the methods used to calculate and implement
such adjustments.
Section 4.20. Appraisals. As soon as reasonably practicable (but in any
event within 60 days) following the earliest of (i) the date 90 days after the
occurrence of any delinquency in payment with respect to a Mortgage Loan if such
delinquency remains uncured, (ii) the date 90 days after the related Mortgagor
files a bankruptcy petition or a receiver is appointed in respect of the related
Mortgaged Property, provided such petition or appointment is still in effect,
(iii) the effective date of any modification to a Money Term of a Mortgage Loan,
other than the extension of the date that a Balloon Payment is due for a period
of less than six months and (iv) the date 30 days following the date a Mortgaged
Property becomes an REO Property (in the case of each of clauses (i), (ii),
(iii) and (iv), the affected Mortgage Loan, a "Required Appraisal Loan"), the
Special Servicer shall obtain an MAI appraisal of the related Mortgaged Property
or REO Property, as the case may be (or, at its discretion, if the Stated
Principal Balance of such Required Appraisal Loan is less than or equal to
$1,000,000, to perform an internal valuation of such property). The Special
Servicer shall consider the results of such appraisal or market study, in
accordance with the Servicing Standard, in determining how to maximize the net
present value of the related Mortgage Loan.
Section 4.21. Certain Matters Regarding the Servicer and the Special
Servicer. (a) The Servicer or the Special Servicer, as applicable, shall be
entitled to become the owner or pledgee of Bonds with the same rights as each
would have if it were not the Servicer or the Special Servicer, as applicable.
Any such interest of the Servicer or the Special Servicer in the Bonds shall not
be taken into account when evaluating whether actions of the Servicer or the
Special Servicer, as applicable, are consistent with its obligations in
accordance with the Servicing Standard, regardless of whether such actions may
have the effect of benefitting the Class or Classes of Bonds owned by it.
(b) The Servicer and the Special Servicer shall be entitled to lend
money on an unsecured basis and otherwise generally engage in any kind of
business or dealings with, any Mortgagor as though the Servicer or the Special
Servicer, as applicable, were not a party to the transactions contemplated
hereby.
Section 4.22. Eligibility of Servicer and Special Servicer. (a) The
Servicer shall at all times during the term of this Agreement qualify as an
Eligible Servicer.
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(b) The Special Servicer shall at all times during the term of this
Agreement qualify as an Eligible Special Servicer.
ARTICLE V
Distributions; Statements to Certificateholders and Bondholders
SECTION 5.01. Establishment of and Deposits to Collection Account. The
Servicer shall segregate and hold all funds collected and received on or in
respect of the Mortgage Loans separate and apart from any of its own funds and
general assets and shall establish and maintain an account held in trust for the
benefit of the Indenture Trustee and the Securityholders, bearing a designation
clearly indicating that the amounts deposited thereto are held for the benefit
of the Securityholders (the "Collection Account"). The Collection Account shall
be an Eligible Account and may include one or more sub-accounts. Funds deposited
in the Collection Account that are not specifically designated for deposit into
sub-accounts maintained as the Escrow Account under this Agreement may be drawn
on by the Servicer only in accordance with Section 5.05.
The Servicer and the Special Servicer shall deposit in the Collection
Account as soon as practicable, but in no event later than the close of business
on the second Business Day after its receipt thereof, the following collections
received by the Servicer or the Special Servicer, as applicable, after the
Cut-off Date:
(i) all payments on account of principal on the Mortgage Loans,
including all Principal Prepayments;
(ii) all payments on account of interest on the Mortgage Loans,
adjusted to the related Net Mortgage Rate;
(iii) all Liquidation Proceeds;
(iv) all REO Proceeds;
(v) all Insurance Proceeds;
(vi) all Condemnation Proceeds which are to be applied as a Principal
Prepayment;
(vii) without duplication, all payments of interest and principal
received on the Funding Note; and
(viii) any other amounts received in respect of any Mortgage Loan which
amounts are not otherwise specifically designated herein, other than
amounts Servicer or the Special Servicer, as applicable, is authorized
to retain pursuant to Section 4.08;
In addition, the Servicer and the Special Servicer shall each deposit in the
Collection Account all payments required to be made by the Servicer or the
Special Servicer, as applicable, pursuant to Section 4.04(b).
The foregoing requirements for deposit in the Collection Account shall
be exclusive, it being understood that, without limiting the generality of the
foregoing, actual payments from Mortgagors in the nature of Escrow Payments,
charges for beneficiary statements or demands, and any other administrative fees
or charges or amounts
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collected for checks returned for insufficient funds and all late payment fee
and assumption fees collected from Mortgagors need not be deposited by the
Servicer or the Special Servicer, as applicable, in the Collection Account. If
the Servicer or the Special Servicer, as applicable, shall deposit in the
Collection Account any amount not required to be deposited therein, it may at
any time withdraw such amount from the Collection Account, any provision herein
to the contrary notwithstanding.
SECTION 5.02. Trust Accounts. (a)(i) The Indenture Trustee for the
benefit of the Bondholders, shall establish and maintain in the name of the
Indenture Trustee an Eligible Account (the "Bond Distribution Account"), bearing
a designation clearly indicating that the funds deposited therein are held for
the benefit of the Bondholders. The Indenture Trustee is under no obligation to
invest the amounts on deposit in the Bond Distribution Account.
(ii) The Servicer shall segregate and hold all funds collected and
received constituting Escrow Payments separate and apart from any of
its own funds and general assets and shall establish and maintain an
Eligible Account (the "Escrow Account") (which may be a sub-account
maintained within the Collection Account), bearing a designation
clearly indicating that the funds deposited therein are held for the
benefit of the Securityholders.
(iii) Funds on deposit in the Collection Account shall be invested by
the Servicer in Eligible Investments. All such Eligible Investments
shall be held by the Servicer for the benefit of the Securityholders;
provided that, on each Remittance Date all interest and other
investment income (net of losses and investment expenses) on funds on
deposit in the Collection Account shall be retained in the Collection
Account and shall be deemed to constitute a portion of Available Funds
for the related Distribution Date. Other than as permitted by the
Rating Agencies, funds on deposit in the Collection Account shall be
invested in Eligible Investments that will mature not later than the
Business Day immediately preceding the next Remittance Date. Funds
deposited in the Collection Account upon the maturity of any Eligible
Investments on a day which immediately precedes a Remittance Date are
not required to be invested overnight.
(iv) The Indenture Trustee shall not be held liable in any way by
reason of any insufficiency in the Collection Account resulting from
any loss on an Eligible Investment included therein, except for losses
attributable to the Indenture Trustee's failure to make payments on
such Eligible Investments issued by the Indenture Trustee, in its
commercial capacity as principal obligor and not as Indenture Trustee,
in accordance with their terms.
(b)(i) The Indenture Trustee shall possess all right, title and
interest in all funds on deposit in the Trust Accounts and in all
proceeds thereof (including all income thereon). The Bond Distribution
Account shall be under the sole dominion and control of the Indenture
Trustee for the benefit of the Bondholders, and the Collection Account
and the Escrow Account shall be under the sole dominion and control of
the Servicer, on behalf of the Indenture Trustee, for the benefit of
the
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Bondholders. If, at any time, any Trust Account ceases to be an
Eligible Account, the Indenture Trustee, in the case of the Bond
Distribution Account, or the Servicer, in the case of the Collection
Account or the Escrow Account shall within 10 Business Days (or such
longer period, not to exceed 30 calendar days, as to which each Rating
Agency may consent) establish a new Trust Account, as applicable, as an
Eligible Account and shall transfer any cash and/or any investments
from the account that is no longer an Eligible Account to the new Trust
Account.
(ii) The Servicer and the Special Servicer, as applicable, shall have
the power, revocable by the Indenture Trustee or by the Issuer with the
consent of the Indenture Trustee, to instruct the Indenture Trustee to
make withdrawals and payments from the Bond Distribution Account for
the purpose of permitting the Servicer or the Special Servicer to carry
out its respective duties hereunder or permitting the Indenture Trustee
to carry out its duties under the Indenture.
SECTION 5.03. Application of Collections. With respect to each Mortgage
Loan (other than a Purchased Mortgage Loan), all amounts received with respect
to such Mortgage Loan during each Collection Period shall be applied by the
Servicer by or on behalf of the Mortgagor to interest and principal in
accordance with the related amortization schedule and the terms of such Mortgage
Loan. If, in any month, the payment received with respect to a Mortgage Loan is
less than the payment of principal and interest due in that month, the amount
received shall be allocated first to interest and then to principal unless, in
the case of a Mortgage Loan, such Mortgage Loan provides otherwise.
Notwithstanding the foregoing, in the case of any Mortgage Loan that
provides for Scheduled Payments on a semi-annual basis, (a) for all purposes of
this Agreement, any payment in respect of such Mortgage Loans shall be applied
as if only one-sixth of such Scheduled Payment was received in each month over a
six-month period commencing in the month of receipt of such payment, (b) for
purposes of calculating the Principal Distribution Amount for any Distribution
Date, the Scheduled Payment for any such Mortgage Loan shall equal the portion
of the related payment allocable to principal to be applied during the
immediately preceding Collection Period and (c) any amounts in respect of such
payments not applied in any Collection Period shall remain on deposit in the
Collection Account for application in one or more subsequent Collection Periods
in accordance with this paragraph.
SECTION 5.04. Purchase Price. The Seller shall or, if applicable, shall
require Allied REIT or BMI REIT to, deposit in the Collection Account, on or
prior to each Determination Date, the aggregate Purchase Price with respect to
Purchased Mortgage Loans and the Funding Note, as applicable. With respect to a
redemption of the Bonds pursuant to Section 9.01, the Seller or the Successor
Servicer shall deposit the Redemption Price in the Collection Account on or
prior to the Redemption Date.
SECTION 5.05. Permitted Withdrawals From Collection Account. (a) The
Servicer and, where applicable, the Special Servicer, may, from time to time,
withdraw funds from the Collection Account for any of the following purposes:
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(i) to reimburse itself, the Indenture Trustee or the Fiscal Agent for
unreimbursed Servicing Advances plus interest, if any, accrued thereon
at the Reimbursement Rate as provided under the terms of this
Agreement, not otherwise reimbursed or reimbursable under Section 5.08,
and any unpaid Servicing Fees, the Servicer's and Special Servicer's
right to reimburse itself, the Indenture Trustee or the Fiscal Agent
pursuant to this subclause (i) being limited to Liquidation Proceeds,
REO Proceeds, Condemnation Proceeds, Insurance Proceeds and such other
amounts collected or received on the related Mortgage Loan;
(ii) to clear and terminate the Collection Account upon the termination
of this Agreement;
(iii) to transfer funds to another Eligible Account in accordance with
Section 5.02(b)(i);
(iv) to make payments to the Servicer as provided in Section 4.08 with
respect to assumption fees and late payment fees, but only to the
extent such amounts were deposited in the Collection Account;
(v) to reimburse itself, the Indenture Trustee or the Fiscal Agent for
any Advance that, following the date such Advance is made, becomes a
Nonrecoverable Advance;
(vi) to remove funds not required to be deposited in the Collection
Account; and
(vii) in the case of the Servicer, to reimburse itself, the Indenture
Trustee or the Fiscal Agent from collections in respect of the Allied
Interests and the Funding Note for any previously ▇▇▇▇▇▇▇▇▇▇▇▇ ▇&▇
Advance plus interest, if any, accrued thereon at the Reimbursement
Rate as provided under the terms of this Agreement.
(b)(_) The Servicer and the Special Servicer shall each keep and
maintain separate accounting records, on a Mortgage Loan-by-Mortgage Loan basis,
for the purpose of justifying any withdrawal from the Collection Account
pursuant to clauses (i) and (v) of Section 5.05(a).
SECTION 5.06. Distributions. (a) On each Determination Date, the
Servicer shall calculate all amounts required to be deposited in the Bond
Distribution Account and the Certificate Distribution Account and all amounts to
be distributed to BMI LLC.
(b) On each Remittance Date, the Servicer shall instruct the Indenture
Trustee in writing (based on the information contained in the Servicer's
Certificate delivered on the related Determination Date pursuant to Section
4.09) to make the following deposits and distributions in the applicable
accounts by 11:00 a.m. (New York City time), to the extent of amounts available
for distribution in the Collection Account, to make required payments and
distributions on such date, in the following order and priority:
(1) to the Bond Distribution Account, from Available
Funds, the Total Bond Interest Amount;
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(2) to the Bond Distribution Account, from Available
Funds, the Principal Distribution Amount;
(3) to the Certificate Distribution Account, the
remainder of Available Funds.
(c) In addition, any Prepayment Premium collected with respect to an
Allied Mortgage Loan during any Prepayment Period will be distributed on the
following Remittance Date as follows:
(1) to the Bond Distribution Account, an aggregate
amount equal to the lesser of (a) such Prepayment Premium, and
(b) such Prepayment Premium multiplied by a fraction, the
numerator of which is equal to the excess, if any, of the Bond
Rate applicable to the most senior of such Classes of Bonds
then outstanding, over the relevant Discount Rate, and the
denominator of which is equal to the excess, if any, of the
Mortgage Rate for the prepaid Mortgage Loan, over the relevant
Discount Rate; and
(2) to the Certificate Distribution Account, the
remainder of any such Prepayment Premium.
If a Prepayment Premium is collected with respect to a Mortgage Loan
that is a Participation Mortgage Loan, that portion of the Prepayment Premium
attributable to the Allied Interests shall be allocated as set forth above. That
portion of the Prepayment Premium attributable to the BMI Participations shall
be allocated to the Funding Note in the same proportion as the Prepayment
Premium attributable to the Allied Interests is allocated to the Bonds. Such
Prepayment Premiums allocated to the Funding Note shall be distributed to that
Class or Classes of Bonds entitled to distributions of principal for such
Distribution Date as set forth above.
(d) On each Remittance Date, the Servicer shall:
(i) retain in the Collection Account as part of Available Funds for the
related Distribution Date, out of collections in respect of the
Participation Mortgage Loans (the "BMI Collections"), an amount equal
to the sum of accrued and unpaid interest on the Funding Note and the
Funding Note Principal Payment Amount for such Remittance Date; and
(ii) distribute to BMI LLC, the remaining BMI Collections, if any,
after giving effect to the application of the amount specified in
Section 5.06(d)(i).
Section 5.07. Deposits to Escrow Account. The Servicer or Special
Servicer, as applicable, shall deposit in the Escrow Account or Escrow Accounts
as soon as practicable, but in no event later than the close of business on the
second Business Day after its receipt thereof, and shall retain therein:
(i) all Escrow Payments collected on account of the Mortgage Loans for
the purpose of effecting timely payment of any such items as required
under the terms of this Agreement;
(ii) all amounts representing Insurance Proceeds which are to be
applied to the restoration or repair of any Mortgaged Property;
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and
(iii) all Liquidation Proceeds or REO Proceeds in connection with
Escrow Payments and property liquidation expenses.
The Servicer shall make withdrawals from the Escrow Account only to
effect such payments as are required under this Agreement, as set forth in
Section 5.08.
Section 5.08. Permitted Withdrawals from Escrow Account: Payment of
Taxes and Insurance. (a) Withdrawals from the Escrow Account or Accounts may be
made only by the Servicer and only:
(i) to effect timely payments of ground rents, taxes, assessments,
water rates, condominium charges, fire and hazard, liability and other
insurance premiums or other items constituting Escrow Payments for the
related Mortgage;
(ii) to reimburse the Servicer, Special Servicer, Indenture Trustee or
Fiscal Agent, as applicable, for any Servicing Advance not otherwise
reimbursed or reimbursable under Section 5.05, plus interest at the
Reimbursement Rate as provided under the terms of this Agreement,
relating to taxes, assessments, water rates, sewer rates and other
charges which are or may become a lien upon the Mortgaged Property and
fire, hazard, liability and other insurance coverage premium payments
made by the Servicer with respect to a related Mortgage Loan, but only
from amounts received on the related Mortgage Loan which represent late
collections of Escrow Payments thereunder;
(iii) (A) to refund to any Mortgagor any funds found to be in excess of
the amounts required under the terms of the related Mortgage Loan or
applicable federal or state law or judicial or administrative ruling or
(B) to pay interest to any Mortgagor on balances in the Escrow Account,
if required by applicable law or the terms of the related Mortgage
Loan, or if not so required, to transfer such funds to the Collection
Account pursuant to Section 5.02(a)(iii);
(iv) for application to restoration or repair of the Mortgaged Property
in accordance with the Servicing Standard and the servicing provisions
set forth herein;
(v) to clear and terminate the Escrow Account on the termination of
this Agreement;
(vi) to transfer funds to another Eligible Account in accordance with
Section 5.02(b)(i); and
(vii) to remove funds the Servicer or Special Servicer, as applicable,
deposited in the Escrow Account in error.
(b) The Servicer or Special Servicer, as applicable, shall maintain
accurate records with respect to each Mortgaged Property reflecting the status
of taxes, assessments, basic carrying costs and other similar items that are or
may become a lien thereon and the status of insurance premiums and ground rents,
if applicable, payable in respect thereof. The Servicer or Special Servicer, as
applicable, shall obtain, from time to time, all bills for the payment of such
items (including renewal premiums) and shall effect
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payment thereof prior to the applicable penalty or termination date, employing
for such purpose amounts in the Escrow Account as allowed under the terms of the
Mortgage Loan. If not paid from amounts on deposit in the Escrow Account, the
Servicer or Special Servicer, as applicable, shall pay or cause to be paid all
such taxes, insurance premiums, ground rents or comparable items related to any
Mortgaged Property when and as the same shall become due and payable, and shall
be reimbursed therefor pursuant to Section 5.05 or this Section 5.08. In the
event that the Servicer or the Special Servicer, as the case may be, fails to
pay all such taxes, insurance premiums, ground rents or comparable items related
to any Mortgaged Property when and as the same shall become due and payable,
then, in addition to the indemnification provisions set forth in Section 7.02,
the Servicer or the Special Servicer, as the case may be, shall pay any
penalties and/or late payment charges assessed with respect thereto.
Section 5.09. P&I Advances. (a) On or before 1:00 p.m., New York City
time, on each Remittance Date, the Servicer shall deposit immediately available
funds to the Bond Distribution Account in an amount equal to the P&I Advance, if
any, to be made in respect of the related Distribution Date, from either (i) the
Servicer's own funds, (ii) amounts allocable to the Allied Interests or the
Funding Note held in the Collection Account for future remittances hereunder in
discharge of any such obligation to make such P&I Advance or (iii) any
combination of (i) and (ii) aggregating the total amount of the P&I Advance to
be made on such Remittance Date. Any amounts allocable to the Allied Interests
and the Funding Note held in the Collection Account for future remittances
hereunder and so used to make a P&I Advance shall be appropriately reflected in
the Servicer's records and replaced by the Servicer from its own funds by
deposit in the Collection Account on or before the next succeeding Remittance
Date (to the extent not previously replaced through the deposit of collections
of the delinquent principal and/or interest in respect of which such P&I Advance
was made).
(b) The amount of the P&I Advance to be made on any Remittance Date
shall, subject to subsection (c) below, equal the excess, if any, of (i) the sum
of the Interest Distribution Amount for the related Distribution Date and the
Principal Distribution Amount for such Distribution Date over (ii) the
Remittable Funds for such Remittance Date, reduced by any amounts then held by
the Indenture Trustee in the Bond Distribution Account and available for payment
to Bondholders on the related Distribution Date.
(c) The obligation of the Servicer to make any P&I Advance is
mandatory; provided, however, that notwithstanding anything herein to the
contrary, no P&I Advance shall be required to be made hereunder if and to the
extent such P&I Advance would, if made, constitute a Nonrecoverable Advance. The
determination by the Servicer that any proposed P&I Advance, if made, would
constitute a Nonrecoverable Advance, shall be evidenced by an Officer's
Certificate delivered to the Indenture Trustee and the Issuer, detailing a basis
for such determination, together with a copy of an appraisal of each related
Mortgaged Property or REO Property, as the case may be, performed within the
twelve months preceding such determination by the Servicer and prepared by an
Independent appraiser in accordance with the Servicing Standard, and any other
information relevant thereto which supports such determination by the Servicer.
The Servicer shall not have any liability to the
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Indenture Trustee, the Issuer or any other Person if its analysis and
determination with respect to a Nonrecoverable Advance proves to be wrong or
incorrect, so long as the analysis and determination was made by the Servicer in
good faith.
(d) If, as of the close of business, on any Remittance Date, the
Servicer has failed to make a deposit to the Collection Account in an amount
equal to the sum of the Remittable Funds plus any P&I Advance required for such
Remittance Date, then the Indenture Trustee shall, by 10:00 a.m. New York City
time on the immediately succeeding Business Day, send a notice to the Servicer
that it has failed to remit such amount and that such failure, if not cured by
the close of business on such Business Day, will constitute a Servicer Event of
Default pursuant to Section 8.01(a) hereof. If the Servicer fails to make such
remittance as described in the immediately preceding sentence, then by 10:00
a.m. New York City time on the related Distribution Date, the Indenture Trustee
shall simultaneously send a notice to the Servicer terminating it from all of
its rights hereunder pursuant to Section 8.01 and make a deposit in an amount
equal to the Remittable Funds plus the required P&I Advance for such
Distribution Date that the Servicer has failed to remit and the entire amount of
such deposit shall constitute a "P&I Advance" for purposes of this Agreement;
provided, however, that no P&I Advance shall be required to be made by the
Indenture Trustee if such P&I Advance would, if made, constitute a
Nonrecoverable Advance. To the extent of any P&I Advance made by the Indenture
Trustee pursuant to this Section 5.09, all references to the Servicer in this
Agreement relating to the reimbursement of the Servicer for P&I Advances,
including interest thereon at the Reimbursement Rate, shall instead be
references to the Indenture Trustee to the extent of P&I Advances made pursuant
to this Section 5.09 and the Indenture Trustee shall be entitled to
reimbursement therefor, with interest at the Reimbursement Rate, as provided
herein, provided that the Indenture Trustee shall have first priority over the
Servicer for reimbursement of its P&I Advances, with interest, hereunder.
If the Indenture Trustee fails to make any P&I Advance as described in
the immediately preceding paragraph, the Fiscal Agent shall make such P&I
Advance by 12:00 noon New York City time on such Distribution Date; provided,
however, that no P&I Advance shall be required to be made by the Fiscal Agent if
such P&I Advance would, if made, constitute a Nonrecoverable Advance. To the
extent of P&I Advances made by the Fiscal Agent, the Fiscal Agent shall have the
rights to reimbursement therefor as are given to the Indenture Trustee in the
immediately preceding paragraph; provided, however, that the Fiscal Agent's
right to reimbursement for P&I Advances, with interest thereon at the
Reimbursement Rate, shall be senior to both the Indenture Trustee and the
Servicer.
(e) Any P&I Advance made pursuant to the terms of this Agreement shall
accrue interest at the Reimbursement Rate from the time the funds are advanced
by the Servicer from its own funds until such time as the Servicer is reimbursed
for such P&I Advance. Such interest shall be paid to the Servicer at the time
the related advance is reimbursed in accordance with the provisions of Section
5.05. The Servicer shall reimburse itself for any outstanding P&I Advance as
soon as practicably possible after funds are or become available for such
purpose in the Collection Account.
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SECTION 5.10. Servicing Advances. (a) Notwithstanding anything to the
contrary contained herein, neither the Servicer nor the Special Servicer shall
be obligated to make a Servicing Advance otherwise required pursuant to the
terms of this Agreement if the Servicer or the Special Servicer, as applicable,
determines, in its good faith judgment, that such Servicing Advance would
constitute a Nonrecoverable Advance. Any such determination must be evidenced by
an Officer's Certificate delivered to the Indenture Trustee and the Issuer
setting forth such determination of nonrecoverability and the procedure and
considerations of the Servicer or the Special Servicer, as applicable, forming
the basis of such determination.
(b) Any Servicing Advance (including any advance under Subsection (b)
of Section 5.08) made pursuant to the terms of this Agreement shall accrue
interest at the Reimbursement Rate from the time the funds are advanced by the
Servicer, the Special Servicer, the Indenture Trustee or the Fiscal Agent, as
applicable, from its own funds until such time as the Servicer, the Special
Servicer, the Indenture Trustee or the Fiscal Agent, as applicable, is
reimbursed for such Servicing Advance. Such interest shall be paid to the
Servicer, the Special Servicer, the Indenture Trustee or the Fiscal Agent, as
applicable, at the time the related advance is reimbursed in accordance with the
provisions of Section 5.05 or 5.08.
(c) If the Servicer fails to make any Servicing Advance required to be
made by it pursuant to this Agreement and a Trust Officer of the Indenture
Trustee has actual knowledge that such Servicing Advance is required to be made,
the Indenture Trustee shall make such Servicing Advance no later than the date
on which the Servicer's failure to make such Servicing Advance would constitute
a Servicer Event of Default; provided, however, that the Indenture Trustee shall
make such Servicing Advance on such earlier date as shall be necessary to
protect the interest of the Issuer, on behalf of the Bondholders, in the related
Mortgaged Property. If the Indenture Trustee fails to make any Servicing Advance
required to be made by it pursuant to the preceding sentence, the Fiscal Agent
shall make such Servicing Advance within two Business Days, in each case,
subject to such Servicing Advance not being a Nonrecoverable Advance.
SECTION 5.11. Reserved.
SECTION 5.12. Statements to Securityholders. Not later than 10:00 A.M.
on each Determination Date, the Servicer shall provide to the Indenture Trustee,
in electronic form (with a copy to the Rating Agencies and each Paying Agent),
and the Indenture Trustee shall forward to each Bondholder of record as of the
most recent Record Date and to the Owner Trustee (with a copy to each Paying
Agent under the Trust Agreement for such Paying Agent to forward to each
Certificateholder of record as of the most recent Record Date) the following
statements: (a) a statement substantially in the form of Exhibit B, setting
forth, to the extent applicable:
(i) the amount, if any, of the distributions to the holders of each
Class of Bonds on such Distribution Date applied to reduce the
aggregate Bond Class Balance thereof;
(ii) the amount of the distributions to holders of each Class of Bonds
on such Distribution Date allocable to (A) interest, (B) Interest
Carryover Shortfalls and (C) Prepayment Premiums;
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(iii) the outstanding Funding Note Balance as of the related
Determination Date;
(iv) the number and Aggregate Stated Principal Balance of outstanding
Mortgage Loans in the Mortgage Pool;
(v) the number and aggregate Stated Principal Balance of Mortgage Loans
in the Mortgage Pool (A) delinquent one month, (B) delinquent two
months, (C) delinquent three or more months or (D) as to which
foreclosure proceedings have been commenced;
(vi) with respect to any REO Property acquired during the related
Collection Period, the Stated Principal Balance of the related Mortgage
Loan as of the date of acquisition of the REO Property;
(vii) (A) the most recent appraised value of any REO Property as of the
related Determination Date, (B) as to any REO Property sold during the
related Collection Period, the date of the related determination by the
Special Servicer that it has recovered all related proceeds that it
expects to be finally recoverable and the amount of the proceeds of
such sale deposited into the Collection Account, and (C) the aggregate
amount of other revenues collected by the Servicer or the Special
Servicer with respect to each REO Property during the related
Collection Period and credited to the Collection Account, in each case
identifying such REO Property by the loan number of the related
Mortgage Loan;
(viii) the aggregate Bond Class Balance of each Class of Bonds before
and after giving effect to the distributions made on such Distribution
Date;
(ix) the aggregate amount of Principal Prepayments made during the
related Prepayment Period;
(x) the aggregate amount of servicing compensation retained by or paid
to the Servicer and the Special Servicer;
(xi) the amount of Realized Losses, if any, incurred with respect to
the Mortgage Loans during the related Collection Period;
(xii) the aggregate amount of Servicing Advances and P&I Advances
outstanding as of the end of the prior calendar month that have been
made by the Servicer, the Special Servicer, the Indenture Trustee and
the Fiscal Agent, separately stated;
(xiii) the Overcollateralization Level at the close of business on such
Distribution Date;
(xiv) the amount, if any, withdrawn from the Collection Account and
paid to the Fiscal Agent, the Indenture Trustee, the Servicer or the
Special Servicer as reimbursement for Nonrecoverable Advances;
(xv) with respect to any Mortgage Loan that is delinquent in respect of
three or more Monthly Payments, (A) the loan number thereof, (B) the
unpaid balance thereof, (C) whether the delinquency is in respect of
any Balloon Payment, (D) the aggregate amount of ▇▇▇▇▇▇▇▇▇▇▇▇ ▇&▇
Advances and Servicing
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Advances in respect thereof, (E) if applicable, the aggregate amount of
any interest accrued and payable to the Servicer or the Special
Servicer (or the Indenture Trustee or Fiscal Agent, if applicable) for
related P&I Advances and Servicing Advances, (F) whether a notice of
acceleration has been sent to the Mortgagor and, if so, the date of
such notice and (G) a brief description of the status of any
foreclosure proceedings or negotiations with the Mortgagor;
(xvi) with respect to any Mortgage Loan liquidated during the related
Prepayment Period in connection with a default thereon or by reason of
being purchased out of the Owner Trust Estate due to a missing or
defective Mortgage File document or a material breach of a
representation or warranty that is not cured or otherwise, (A) the loan
number thereof, (B) the manner in which it was liquidated, (C) the
aggregate amount of proceeds received, (D) the portion of such
liquidation proceeds payable or reimbursable to the Special Servicer in
respect of such Mortgage Loan and (E) the amount of any Realized Loss
in respect of such Mortgage Loan;
(xvii) with respect to each REO Property included in the Owner Trust
Estate as of the end of the related Collection Period, (A) the loan
number of the related Mortgage Loan, (B) the date of acquisition, (C)
the Stated Principal Balance of the related Mortgage Loan (calculated
as if such Mortgage Loan were still outstanding), (D) the aggregate
amount of unreimbursed Servicing Advances in respect thereof and (E) if
applicable, the aggregate amount of interest accrued and payable to the
Servicer or the Special Servicer (or the Indenture Trustee or Fiscal
Agent, if applicable) for related Servicing Advances;
(xviii) with respect to each REO Property sold during the related
Prepayment Period, (A) the loan number of the related Mortgage Loan,
(B) the aggregate amount of sales proceeds, (C) the portion of such
sales proceeds payable or reimbursable to the Servicer or the Special
Servicer in respect of such REO Property or such Mortgage Loan and (D)
the amount of any Realized Loss in respect of such Mortgage Loan; and
(xix) the number of Mortgage Loans (not counting any Mortgage Loan that
is delinquent with respect to any Balloon Payment or 60 or more days
delinquent with respect to any other Scheduled Payment) remaining in
the Mortgage Pool at the close of business on such Distribution Date;
and
(b) a report containing information regarding the Mortgage Loans as of
the end of the related Prepayment Period, which report will contain
substantially the categories of information regarding the Mortgage Loans set
forth in Schedule A and Schedule B, will be presented in a tabular format
substantially similar to the respective format utilized in Schedule A and
Schedule B or such other form as shall be acceptable to the Indenture Trustee
and will be updated within a reasonable period after the requisite underlying
information is available.
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In the case of information furnished pursuant to subclauses (i), (ii)
and (x) of clause (a) above, the amounts shall be expressed as a dollar amount
per $1,000 original principal amount of the Bonds for all Bonds of each
applicable Class. The Indenture Trustee shall be under no obligation to
recompute, recalculate or verify any of the information provided by the Servicer
pursuant to this Section 5.12.
ARTICLE VI
The Seller
SECTION 6.01. Representations of Seller. The Seller makes the following
representations on which the Issuer relies in accepting the Allied Interests and
the Funding Note and delivering the Securities, and on which the Indenture
Trustee and the Fiscal Agent rely in executing this Agreement. The
representations speak as of the execution and delivery of this Agreement and as
of the Closing Date, but shall survive the sale, transfer and assignment of the
Allied Interests and the Funding Note by the Seller to the Issuer and the pledge
thereof by the Issuer to the Indenture Trustee pursuant to the Indenture.
(a) Organization and Good Standing. The Seller is duly organized and
validly existing as a corporation in good standing under the laws of the State
of Delaware, with the corporate power and authority to own its properties and to
conduct its business as such properties are currently owned and such business is
presently conducted.
(b) Due Qualification. The Seller is duly qualified to do business as a
foreign corporation in good standing, and has obtained all necessary licenses
and approvals, in all jurisdictions where the failure to do so would materially
and adversely affect the Seller's ability to transfer the Allied Interests and
the Funding Note to the Issuer pursuant to this Agreement or the validity or
enforceability of the Allied Interests or the Funding Note.
(c) Power and Authority. The Seller has the corporate power and
authority to execute and deliver this Agreement and the other Basic Documents to
which it is a party and to carry out their respective terms; the Seller has full
power and authority to sell and assign the property to be sold and assigned to
and deposited with the Issuer, and the Seller has duly authorized such sale and
assignment to the Issuer by all necessary corporate action; the execution,
delivery and performance of this Agreement and the other Basic Documents to
which the Seller is a party have been duly authorized by the Seller by all
necessary corporate action; and this Agreement and such other Basic Documents
have been duly executed and delivered by the Seller.
(d) Binding Obligation. This Agreement and the other Basic Documents to
which the Seller is a party, when duly executed and delivered by the other
parties hereto and thereto, shall constitute legal, valid and binding
obligations of the Seller, enforceable against the Seller in accordance with
their respective terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, and similar laws now or hereafter in
effect relating to or affecting creditors' rights generally and to general
principles of equity (whether applied in a proceeding at law
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or in equity).
(e) No Violation. The consummation of the transactions contemplated by
this Agreement and the other Basic Documents and the fulfillment of the terms of
this Agreement and the other Basic Documents does not conflict with, and will
not result in any breach of any of the terms and provisions of, or constitute
(with or without notice or lapse of time, or both) a default under, the
certificate of incorporation or bylaws of the Seller, or any indenture,
agreement, mortgage, deed of trust, or other instrument to which the Seller is a
party or by which it is bound; or result in the creation or imposition of any
lien upon any of its properties pursuant to the terms of any such indenture,
agreement, mortgage, deed of trust, or other instrument, other than this
Agreement and the other Basic Documents; or violate any law, order, rule or
regulation applicable to the Seller of any court or of any federal or state
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over the Seller or its properties.
(f) No Proceedings. There are no proceedings or investigations pending
or, to the Seller's knowledge, threatened against the Seller, before any court,
regulatory body, administrative agency or other tribunal or governmental
instrumentality having jurisdiction over the Seller or its properties: (1)
asserting the invalidity of this Agreement or any other Basic Document; (2)
seeking to prevent the issuance of the Bonds or the Certificates or the
consummation of any of the transactions contemplated by this Agreement or any
other Basic Document; (3) seeking any determination or ruling that might
materially and adversely affect the performance by the Seller of its obligations
under, or the validity or enforceability of, this Agreement or any other Basic
Document; or (4) seeking to adversely affect the federal income tax attributes
of the Issuer, the Bonds or the Certificates.
(g) No Consents. The Seller is not required to obtain the consent of
any other party or any consent, license, approval, registration, authorization,
or declaration of or with any governmental authority, bureau or agency in
connection with the execution, delivery, performance, validity, or
enforceability of this Agreement or any other Basic Document to which it is a
party that has not already been obtained.
SECTION 6.02. Corporate Existence. During the term of this Agreement,
the Seller will keep in full force and effect its existence, rights and
franchises as a corporation under the laws of the jurisdiction of its
incorporation and will obtain and preserve its qualification to do business in
each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of this Agreement, the Basic Documents
and each other instrument or agreement necessary or appropriate to the proper
administration of this Agreement and the transactions contemplated hereby. In
addition, all transactions and dealings between the Seller and its Affiliates
will be conducted on an arm's-length basis.
SECTION 6.03. Liability of Seller; Indemnities. The Seller shall be
liable in accordance herewith only to the extent of the obligations specifically
undertaken by the Seller under this
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Agreement (which shall not include distributions on account of the Bonds or
Certificates).
SECTION 6.04. Merger or Consolidation of, or Assumption of the
Obligations of, Seller. The Seller will keep in full effect its existence,
rights and franchises as a corporation under the laws of the state of its
incorporation, and will obtain and preserve its qualification to do business as
a foreign corporation in each jurisdiction in which such qualification is or
shall be necessary to protect the validity and enforceability of this Agreement,
the Securities, the Funding Note or any of the Allied Interests and to perform
its respective duties under this Agreement.
The Seller shall provide prompt notice of any merger, consolidation or
succession pursuant to this Section 6.04 to the Owner Trustee, the Indenture
Trustee, the Securityholders and the Rating Agencies. Notwithstanding the
foregoing, the Seller shall not merge or consolidate with any other Person or
permit any other Person to become a successor to the Seller's business unless
immediately after giving effect to such transaction, no representation or
warranty made pursuant to Section 3.02 or 6.01 shall have been breached (for
purposes hereof, such representations and warranties shall speak as of the date
of the consummation of such transaction).
Any Person into which the Seller may be merged or consolidated, or any
corporation resulting from any merger or consolidation to which the Seller shall
be a party, or any Person succeeding to the business of the Seller, shall be the
successor of the Seller hereunder, without the execution or filing of any paper
or any further act on the part of any of the parties hereto, anything herein to
the contrary notwithstanding.
SECTION 6.05. Limitation on Liability of Seller and Others. The Seller
and any director, officer, employee or agent of the Seller may rely in good
faith on the advice of counsel or on any document of any kind, prima facie
properly executed and submitted by any Person respecting any matters arising
hereunder. The Seller shall not be under any obligation to appear in, prosecute
or defend any legal action that shall not be incidental to its obligations under
this Agreement, and that in its opinion may involve it in any expense or
liability.
SECTION 6.06. Seller May Own Securities. The Seller and any Affiliate
thereof may in its individual or any other capacity become the owner or pledgee
of Securities with the same rights as it would have if it were not the Seller or
an Affiliate thereof, except as expressly provided herein or in any Basic
Document.
ARTICLE VII
The Servicer and the Special Servicer
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SECTION 7.01. Representations of Servicer and Special Servicer. Each of
the Servicer and Special Servicer makes the following representations applicable
to it on which the Issuer is deemed to have relied in acquiring the Allied
Interests and the Funding Note and on which the Indenture Trustee and the Fiscal
Agent rely in executing this Agreement. The representations speak as of the
execution and delivery of this Agreement and as of the Closing Date and shall
survive the sale of the Allied Interests and the Funding Note to the Issuer and
the pledge thereof by the Issuer to the Indenture Trustee pursuant to the
Indenture.
(a) Organization and Good Standing. Each of the Servicer and the
Special Servicer, as applicable, is duly organized and validly existing as a
corporation in good standing under the laws of the state of its incorporation,
with the corporate power and authority to own its properties and to conduct its
business as such properties are currently owned and such business is presently
conducted, and had at all relevant times, and has, the corporate power,
authority and legal right to acquire, own, sell and service the Mortgage Loans
and to hold the Mortgage Files as custodian.
(b) Due Qualification. Each of the Servicer and the Special Servicer,
as applicable, is duly qualified to do business as a foreign corporation in good
standing, and has obtained all necessary licenses and approvals, in all
jurisdictions in which the ownership or lease of property or the conduct of its
business (including the servicing of the Mortgage Loans as required by this
Agreement) shall require such qualifications.
(c) Power and Authority. Each of the Servicer and the Special Servicer,
as applicable, has the power and authority to execute and deliver this Agreement
and the other Basic Documents to which it is a party and to carry out their
respective terms; the execution, delivery and performance of this Agreement and
the other Basic Documents to which it is a party have been duly authorized by
the Servicer or the Special Servicer, as applicable, by all necessary corporate
action; and this Agreement and such other Basic Documents have been duly
executed and delivered by the Servicer or the Special Servicer, as applicable.
(d) Binding Obligation. This Agreement and the Basic Documents to which
it is a party constitute legal, valid and binding obligations of the Servicer or
the Special Servicer, as applicable, enforceable against the Servicer or the
Special Servicer, as applicable, in accordance with their respective terms,
except as the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of creditors'
rights generally and by equitable limitations on the availability of specific
remedies, regardless of whether such enforceability is considered in a
proceeding in equity or at law.
(e) No Violation. The consummation of the transactions contemplated by
this Agreement and the Basic Documents to which it is a party and the
fulfillment of their respective terms shall not conflict with, result in any
breach of any of the terms and provisions of, or constitute (with or without
notice or lapse of time or both) a default under, the articles of incorporation
or bylaws of the Servicer or the Special Servicer, as applicable, or any
indenture, agreement, mortgage, deed of trust, or other
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instrument to which the Servicer or the Special Servicer, as applicable, is a
party or by which it is bound; or result in the creation or imposition of any
lien upon any of its properties pursuant to the terms of any such indenture,
agreement, mortgage, deed of trust, or other instrument other than this
Agreement and the Basic Documents, or violate any law, order, rule or regulation
applicable to the Servicer or the Special Servicer, as applicable, of any court
or of any federal or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Servicer or the
Special Servicer, as applicable, or any of its properties.
(f) No Proceedings. There are no proceedings or investigations pending
or, to the Servicer's or the Special Servicer's, as applicable, knowledge,
threatened against the Servicer or the Special Servicer, as applicable, before
any court, regulatory body, administrative agency or other tribunal or
governmental instrumentality having jurisdiction over the Servicer or the
Special Servicer, as applicable, or its properties: (i) asserting the invalidity
of this Agreement or any of the Basic Documents; (ii) seeking to prevent the
issuance of the Securities or the consummation of any of the transactions
contemplated by this Agreement or any of the Basic Documents; (iii) seeking any
determination or ruling that might materially and adversely affect the
performance by the Servicer or the Special Servicer, as applicable, of its
respective obligations under, or the validity or enforceability of, this
Agreement or any of the Basic Documents; or (iv) seeking to adversely affect the
federal income tax or other federal, state or local tax attributes of the
Securities.
(g) No Consents. The Servicer or the Special Servicer, as applicable,
is not required to obtain the consent of any other party or any consent,
license, approval, registration, authorization, or declaration of or with any
governmental authority, bureau or agency in connection with the execution,
delivery, performance, validity, or enforceability of this Agreement or any
other Basic Document to which it is a party that has not already been obtained.
SECTION 7.02. Indemnities of Servicer and the Special Servicer. (a) The
Servicer shall indemnify the Issuer, the Indenture Trustee, the Fiscal Agent,
the Seller and the Owner Trustee (in its individual and trust capacities) and
hold them harmless against any and all claims, losses, damages, penalties,
fines, forfeitures, reasonable and necessary legal fees and related costs,
judgments and any other costs, fees and expenses that such parties may sustain
as a result of the failure of the Servicer to perform its duties and service the
Mortgage Loans in strict compliance with the terms of this Agreement or a breach
by the Servicer of the representations and warranties made herein. The Servicer
shall immediately notify the Indenture Trustee and Owner Trustee if a claim is
made by a third party with respect to this Agreement or the Mortgage Loans, and
the Servicer shall assume the defense of any such claim and pay all expenses in
connection therewith, including counsel fees, and promptly pay, discharge and
satisfy any judgment or decree which may be entered against the Seller, Special
Servicer, Issuer, Indenture Trustee, the Fiscal Agent or Owner Trustee in any
capacity in respect of such claim. The provisions of this Section 7.02 shall
survive the termination of this Agreement. The Issuer will notify the Servicer
of any claim with respect to this Section 7.02, provided that the failure of the
Issuer to so notify the Servicer
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will not relieve the Servicer of its obligations hereunder, except to the extent
that the Servicer is prejudiced by such failure to give notice.
For purposes of this Section, in the event of the termination of the
rights and obligations of ACC (or any successor thereto pursuant to Section
7.03) as Servicer pursuant to Section 8.02, or a resignation by such Servicer
pursuant to this Agreement, such Servicer shall be deemed to be the Servicer
pending appointment of a successor Servicer (other than the Indenture Trustee)
pursuant to Section 8.03.
(b) The Special Servicer shall indemnify the Issuer, the Indenture
Trustee, the Fiscal Agent, the Seller and the Owner Trustee (in its individual
and trust capacities) and hold them harmless against any and all claims, losses,
damages, penalties, fines, forfeitures, reasonable and necessary legal fees and
related costs, judgments and any other costs, fees and expenses that such
parties may sustain as a result of the failure of the Special Servicer to
perform its duties and service the Mortgage Loans in strict compliance with the
terms of this Agreement or a breach by the Special Servicer of the
representations and warranties made herein. The Special Servicer shall
immediately notify the Indenture Trustee and Owner Trustee if a claim is made by
a third party with respect to this Agreement or the Mortgage Loans, and the
Special Servicer shall assume the defense of any such claim and pay all expenses
in connection therewith, including counsel fees, and promptly pay, discharge and
satisfy any judgment or decree which may be entered against the Seller,
Servicer, Issuer, Indenture Trustee, the Fiscal Agent or Owner Trustee in
respect of such claim. The provisions of this Section 7.02 shall survive the
termination of this Agreement. The Issuer will notify the Special Servicer of
any claim with respect to this Section 7.02, provided that the failure of the
Issuer to so notify the Special Servicer will not relieve the Special Servicer
of its obligations hereunder, except to the extent that the Special Servicer is
prejudiced by such failure to give notice.
For purposes of this Section, in the event of the termination of the
rights and obligations of ACC (or any successor thereto pursuant to Section
7.03) as Special Servicer pursuant to Section 8.02, or a resignation by such
Special Servicer pursuant to this Agreement, such Special Servicer shall be
deemed to be the Special Servicer pending appointment of a successor Special
Servicer (other than the Indenture Trustee) pursuant to Section 8.03.
(c) Indemnification under this Section shall survive the resignation or
removal of any indemnified party or the termination of this Agreement and shall
include reasonable fees and expenses of counsel and expenses of litigation. If
the Servicer or the Special Servicer shall have made any indemnity payments
pursuant to this Section and the Person to or on behalf of whom such payments
are made thereafter collects any of such amounts from others, such Person shall
promptly repay such amounts to the Servicer or the Special Servicer, as
applicable, without interest.
SECTION 7.03. Merger or Consolidation of, or Assumption of the
Obligations of, Servicer and the Special Servicer. (a) Each of the Servicer and
the Special Servicer will keep in full effect its existence, rights and
franchises as a corporation under the laws of
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the state of its incorporation, and will obtain and preserve its qualification
to do business as a foreign corporation in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, the Securities, the Funding Note or any of the
Mortgage Loans and to perform its respective duties under this Agreement.
Neither the Servicer nor the Special Servicer shall merge or
consolidate with any other Person, convey, transfer or lease substantially all
its assets as an entirety to another Person, or permit any other Person to
become the successor to the Servicer's or the Special Servicer's, as applicable,
business unless, after the merger, consolidation, conveyance, transfer, lease,
or succession, the successor or surviving entity shall be capable of fulfilling
the duties of the Servicer or the Special Servicer, as applicable, contained in
this Agreement and shall be reasonably acceptable to the Indenture Trustee.
(b) The Servicer or the Special Servicer, as applicable, shall provide
notice of any merger, consolidation or succession pursuant to this Section
7.03(a) to the Owner Trustee, each Rating Agency and the Indenture Trustee.
Notwithstanding the foregoing, the Servicer or the Special Servicer, as
applicable, shall not merge or consolidate with any other Person or permit any
other Person to become a successor to the Servicer's or the Special Servicer's,
as applicable, business unless (x) immediately after giving effect to such
transaction, no representation or warranty made by it pursuant to Section 7.01
shall have been breached (for purposes hereof, such representations and
warranties shall speak as of the date of the consummation of such transaction)
and no event that, after notice or lapse of time or both, would become a
Servicer Event of Default with respect to it shall have occurred and be
continuing and (y) immediately after giving effect to such transaction, the
successor to the Servicer or the Special Servicer, as applicable, shall become
the Administrator under the Administration Agreement in accordance with Section
8 of such Agreement.
(c) Any Person into which the Servicer or the Special Servicer, as
applicable, may be merged or consolidated, or any corporation resulting from any
merger or consolidation to which the Servicer or the Special Servicer, as
applicable, shall be a party, or any Person succeeding to the business of the
Servicer, shall be the successor of the Servicer or the Special Servicer, as
applicable, hereunder, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding.
(d) Notwithstanding any provision herein or in the Basic Documents to the
contrary, the Servicer shall be liable as primary obligor for, and shall defend
and indemnify the Owner Trustee (in its individual and trust capacities) and its
successors, assigns, agents and servants (collectively, the "OT Indemnified
Parties") from and against, any and all liabilities, obligations, losses,
damages, taxes, claims, actions and suits, and any and all reasonable costs,
expenses and disbursements (including reasonable legal fees and expenses) of any
kind and nature whatsoever which may at any time be imposed on, incurred by, or
asserted against the Owner Trustee or any OT Indemnified Party in any way
relating to or arising out of this Agreement, the Basic Documents, the Owner
Trust Estate, the administration of the Owner Trust Estate or the action
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or inaction of the Owner Trustee hereunder, thereunder or in connection
therewith, except only that the Servicer shall not be liable for or required to
indemnify an OT Indemnified Party from and against expenses arising or resulting
from any of the matters described in the third sentence of Section 7.01 of the
Trust Agreement. The indemnities contained in this Section shall survive the
resignation or termination of the Owner Trustee or the termination of this
Agreement and the Basic Documents. In any event of any claim, action or
proceeding for which indemnity will be sought pursuant to this Section, the
Owner Trustee's choice of legal counsel shall be subject to the approval of the
Servicer, which approval shall not be unreasonably withheld.
SECTION 7.04. Limitation on Liability of Servicer, the Special Servicer
and Others. (a) Neither the Servicer, the Special Servicer nor any of the
officers, employees or agents of the Servicer or the Special Servicer shall be
under any liability to the Issuer, the Owner Trustee, the Indenture Trustee, the
Fiscal Agent or any other person for any action taken or for refraining from the
taking of any action in good faith pursuant to this Agreement, or for errors in
judgment; provided, however, that this provision shall not protect the Servicer
or the Special Servicer or any such person against any breach of warranties or
representations made herein, or failure to perform its respective obligations in
strict compliance with any standard of care set forth in this Agreement, or any
liability which would otherwise be imposed by reason of any breach of the terms
and conditions of this Agreement. The Servicer, the Special Servicer and any
officer, employee or agent of the Servicer or the Special Servicer may rely in
good faith on any document of any kind prima facie properly executed and
submitted by any Person respecting any matters arising hereunder. Neither the
Servicer nor the Special Servicer shall be under any obligation to appear in,
prosecute or defend any legal action which is not incidental to its duties to
service the Mortgage Loans in accordance with this Agreement and which in its
opinion may involve it in any expenses or liability; provided, however, that the
Servicer or the Special Servicer, as applicable, may undertake any such action
which it may deem necessary or desirable in respect of this Agreement and the
rights and duties of the parties hereto. In such event, the legal expenses and
costs of such action and any liabilities for which the Issuer will be liable,
the Servicer shall be entitled to be reimbursed therefor from the Issuer upon
written demand.
(b) Reserved.
(c) The parties expressly acknowledge and consent to LaSalle National
Bank simultaneously acting in the capacity of Custodian and Indenture Trustee.
LaSalle National Bank may, in such capacities, discharge its separate functions
fully, without hindrance or regard to conflict of interest principles, duty of
loyalty principles or other breach of fiduciary duties to the extent that any
such conflict or breach arises from the performance by LaSalle National Bank of
express duties set forth in this Agreement in any of such capacities.
SECTION 7.05. Appointment of Subservicer. (a) Each of the Servicer and
the Special Servicer may enter into Subservicing Agreements with Subservicers
for the servicing and administration of all or a portion of the Mortgage Loans
serviced by it hereunder, provided that each such Subservicing Agreement
satisfies the Rating
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Agency Condition. References in this Agreement to actions taken or to be taken
by the Servicer or the Special Servicer, as applicable, in servicing the
Mortgage Loans serviced by it hereunder include actions taken or to be taken by
a Subservicer on behalf of the Servicer or the Special Servicer, as applicable,
pursuant to a Subservicing Agreement. Each Subservicer shall be authorized to
transact business in the state or states in which the related Mortgaged
Properties it is to service are situated, if and to the extent required by
applicable law to enable the Subservicer to perform its obligations hereunder
and under the applicable Subservicing Agreement. Each Subservicing Agreement
will be upon such terms and conditions as the Servicer or the Special Servicer,
as applicable, and the Subservicer have agreed and which terms and conditions
shall not be inconsistent with this Agreement and shall provide that such
Subservicing Agreement is terminable or assumable by a successor servicer
without charge or penalty if the Servicer or the Special Servicer, as
applicable, is terminated hereunder. The Servicer or the Special Servicer, as
applicable, shall notify the Indenture Trustee and the Owner Trustee of its
intention to appoint any Subservicer.
(b) As part of its servicing activities hereunder, the Servicer or the
Special Servicer, as applicable, shall enforce the obligations of each
Subservicer appointed by it under the related Subservicing Agreement, including,
without limitation, the obligation to make advances in respect of delinquent
payments if required by the related Subservicing Agreement. Such enforcement,
including, without limitation, the legal prosecution of claims, and the pursuit
of other appropriate remedies, including the termination of Subservicing
Agreements, shall be in such form and carried out to such an extent and at such
time as the Servicer or the Special Servicer, as applicable, in its good faith
business judgment, would require were it the owner of the Mortgage Loans. The
Servicer or the Special Servicer, as applicable, shall pay the costs of such
enforcement at its own expense and shall be reimbursed therefor only (i) from a
general recovery resulting from such enforcement only to the extent, if any,
that such recovery exceeds all amounts due in respect of the related Mortgage
Loan or (ii) from a specific recovery of costs, expenses or attorneys' fees
against the party against whom such enforcement is directed.
(c) Notwithstanding any Subservicing Agreement, any of the provisions
of this Agreement relating to agreements or arrangements between the Servicer or
the Special Servicer, as applicable, and a Subservicer or reference to actions
taken through a Subservicer or otherwise, the Servicer or the Special Servicer,
as applicable, shall remain obligated and liable to the Issuer for the servicing
and administration of the Mortgage Loans serviced by it hereunder in accordance
with the provisions of this Agreement without diminution of such obligation or
liability by virtue of indemnification from a Subservicer and to the same extent
and under the same terms and conditions as if the Servicer or the Special
Servicer, as applicable, alone were servicing and administering the Mortgage
Loans serviced by it hereunder.
(d) At the cost and expense of the Servicer or the Special Servicer, as
applicable, without any right of reimbursement, the Servicer or the Special
Servicer, as applicable, shall be entitled to terminate the rights and
responsibilities of a Subservicer appointed by it and arrange for any servicing
responsibilities to be
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performed by a successor Subservicer meeting the eligibility requirements for
Subservicers set forth in paragraph (a) of this Section 7.05, provided, however,
that nothing contained herein shall be deemed to prevent or prohibit the
Servicer or the Special Servicer, as applicable, at the Servicer's or the
Special Servicer's, as applicable, option, from electing to service the related
Mortgage Loans itself. If the Servicer's or the Special Servicer's, as
applicable, responsibilities and duties under this Agreement are terminated
pursuant to this Agreement, the Servicer or the Special Servicer, as applicable,
shall at its own cost and expense promptly, but in no event later than three
Business Days after receipt of notice of such termination, terminate the rights
and responsibilities of any and all Subservicers except as provided in paragraph
(f) below. The Servicer or the Special Servicer, as applicable, shall pay from
its own funds, without any right of reimbursement, all fees, expenses or
penalties necessary in order to terminate the rights and responsibilities of the
Subservicers appointed by it.
(e) Any Subservicing Agreement and any other transactions or services
relating to the Mortgage Loans involving a Subservicer shall be deemed to be
between such Subservicer and Servicer or the Special Servicer, as applicable,
alone, and the Issuer shall have no obligations, duties or liabilities with
respect to such Subservicer, including no obligation, duty or liability to pay
such Subservicer's fees and expenses. For purposes of distributions by the
Servicer or the Special Servicer, as applicable, pursuant to this Agreement, the
Servicer or the Special Servicer, as applicable, shall be deemed to have
received a payment on a Mortgage Loan when the applicable Subservicer has
received such payment.
(f) If the Indenture Trustee assumes the obligations of the Servicer in
accordance with Section 8.02, the Indenture Trustee, to the extent necessary to
permit the Indenture Trustee to carry out the provisions of Section 8.02, shall,
without act or deed on the part of the Indenture Trustee, succeed to all of the
rights of the Servicer under any Subservicing Agreement entered into pursuant to
this Section 7.05. In such event, the Indenture Trustee as the successor to the
Servicer shall be deemed to have assumed all of the Servicer's interest therein
and to have replaced the Servicer as a party to such Subservicing Agreement to
the same extent as if such Subservicing Agreement had been assigned to the
Indenture Trustee as such successor to the Servicer, except that the Servicer
shall not thereby be relieved of any liability which has accrued or arisen under
a provision of such Subservicing Agreement prior to the assumption by the
Indenture Trustee or a successor to the Servicer under the terms of this Section
7.05.
In the event that the Indenture Trustee or any successor to the
Servicer or the Special Servicer, as applicable, shall succeed to the servicing
obligations of the Servicer or the Special Servicer, as applicable, upon request
of the Indenture Trustee or such successor to the Servicer or the Special
Servicer, as applicable, the Servicer or the Special Servicer, as applicable,
shall at its own expense deliver to the Indenture Trustee or such successor to
the Servicer or the Special Servicer (as the case may be) all documents and
records relating to any Subservicing Agreement and the Mortgage Loans then being
serviced thereunder and an accounting of amounts collected and held by it, if
any, and will otherwise use its best efforts to effect the orderly and efficient
transfer of any
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Subservicing Agreement to the Indenture Trustee or the successor to the Servicer
or the Special Servicer, as applicable.
SECTION 7.06. Servicer and Special Servicer Not to Resign. (a) With
respect to the responsibility of the Servicer to service the Mortgage Loans or
the Special Servicer to service the Specially Serviced Mortgage Loans hereunder,
the Servicer and the Special Servicer each acknowledges that the Issuer, Seller,
Indenture Trustee and Owner Trustee have acted in reliance upon the Servicer's
and the Special Servicer's, as applicable, the adequacy of its servicing
facilities, plan, personnel, records and procedures, its integrity, reputation
and financial standing and the continuance thereof. Without in any way limiting
the generality of this Section 7.06, neither the Servicer nor the Special
Servicer shall either assign this Agreement or its servicing obligations or
delegate its rights or duties hereunder (other than to a Subservicer) or any
portion thereof, except as provided in Section 7.06(b).
(b) Neither the Servicer nor the Special Servicer may resign from its
obligations under this Agreement unless such resignation, and the appointment of
a successor, will not result in a downgrade, withdrawal or qualification of the
rating of any Class of the Bonds or unless a determination is made that such
obligations are no longer permissible under applicable law or are in material
conflict by reason of applicable law with any other activities carried on by the
Servicer or the Special Servicer, as applicable, on the date hereof. Notice of
any determination that the performance by the Servicer or the Special Servicer,
as applicable, of its duties hereunder is no longer permitted under applicable
law shall be communicated to the Owner Trustee and the Indenture Trustee at the
earliest practicable time (and, if such communication is not in writing, shall
be confirmed in writing at the earliest practicable time) and any such
determination shall be evidenced by an Opinion of Counsel to such effect
delivered by the Servicer or the Special Servicer, as applicable, to each Rating
Agency, the Issuer, the Owner Trustee and the Indenture Trustee concurrently
with or promptly after such notice. No such resignation of the Servicer or the
Special Servicer, as applicable, shall become effective until the Indenture
Trustee has assumed the obligations and duties of the Servicer or until a
successor servicer has assumed the obligations and duties of the Servicer or the
Special Servicer in accordance with Section 8.03.
SECTION 7.07. Merger or Consolidation of, or Assumption of the
Obligations of, Custodian. Any person (i) into which the Custodian may be merged
or consolidated, (ii) resulting from any merger or consolidation to which the
Custodian shall be a party, (iii) which acquires by conveyance, transfer or
lease substantially all of the assets of the Custodian or (iv) succeeding to the
business of the Custodian, which Person shall execute an agreement of assumption
to perform every obligation of the Custodian under this Agreement, shall be the
successor to the Custodian under this Agreement without the execution or filing
of any paper or any further act on the part of any of the parties to this
Agreement.
SECTION 7.08. Representations and Warranties of the Indenture Trustee
and the Fiscal Agent.
(a) The Indenture Trustee hereby represents and warrants as of the
execution and delivery of this Agreement and as of the
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Closing Date that:
(a) The Indenture Trustee is a national banking
association, duly organized, validly existing and in good
standing under the laws governing its creation and existence
and has full corporate power and authority to own its
property, to carry on its business as presently conducted, and
to enter into and perform its obligations under this Agreement
and the Indenture and the Administration Agreement;
(ii) The execution and delivery by the Indenture
Trustee of this Agreement, the Indenture and the
Administration Agreement have been duly authorized by all
necessary corporate action on the part of the Indenture
Trustee; neither the execution and delivery of this Agreement,
the Indenture or the Administration Agreement, nor the
consummation of the transactions contemplated in this
Agreement, the Indenture and the Administration Agreement, nor
compliance with the provisions of this Agreement, the
Indenture and the Administration Agreement, will conflict with
or result in a breach of, or constitute a default under, (i)
any of the provisions of any law, governmental rule,
regulation, judgment, decrees or order binding on the
Indenture Trustee or its properties that would materially and
adversely affect the Indenture Trustee's ability to perform
its obligations under this Agreement, the Indenture or the
Administration Agreement, (ii) the organizational documents of
the Indenture Trustee, or (iii) the terms of any material
agreement or instrument to which the Indenture Trustee is a
party or by which it is bound; the Indenture Trustee is not in
default with respect to any order or decree of any court or
any order, regulation or demand of any federal, state,
municipal or other governmental agency, which default would
materially and adversely affect its performance under this
Agreement, the Indenture or the Administration Agreement;
(iii) The execution, delivery and performance by the
Indenture Trustee of this Agreement, the Indenture or the
Administration Agreement and the consummation of the
transactions contemplated by this Agreement, the Indenture and
the Administration Agreement do not require the consent,
approval, authorization or order of, the giving of notice to
or the registration with any state, federal or other
governmental authority or agency, except such as has been or
will be obtained, given, effected or taken in order for the
Indenture Trustee to perform its obligations under this
Agreement, the Indenture and the Administration Agreement;
(iv) This Agreement, the Indenture and the
Administration Agreement have been duly executed and delivered
by the Indenture Trustee and, assuming due authorization,
execution and delivery by the other parties hereto, constitute
valid and binding obligations of the Indenture Trustee,
enforceable against the Indenture Trustee in accordance with
their respective terms, subject, as to enforcement of
remedies, to applicable bankruptcy, reorganization,
insolvency, moratorium and other similar laws affecting
creditors' rights generally as from time to
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time in effect, and to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or
at law); and
(v) There are no actions, suits or proceedings pending or, to
the best of the Indenture Trustee's knowledge, threatened, against the
Indenture Trustee that, either in one instance or in the aggregate,
would draw into question the validity of this Agreement, the Indenture,
or which would be likely to impair materially the ability of the
Indenture Trustee to perform under the terms of this Agreement, the
Indenture or the Administration Agreement.
(b) The Fiscal Agent hereby represents and warrants as of the execution
and delivery of this Agreement and as of the Closing Date that:
(i) The Fiscal Agent is a foreign banking corporation duly
organized, validly existing and in good standing under the laws
governing its creation and existence and has full corporate power and
authority to own its property, to carry on its business as presently
conducted, and to enter into and perform its obligations under this
Agreement;
(ii) The execution and delivery by the Fiscal Agent of this
Agreement have been duly authorized by all necessary corporate action
on the part of the Fiscal Agent; neither the execution and delivery of
this Agreement, nor the consummation of the transactions contemplated
in this Agreement, nor compliance with the provisions of this
Agreement, will conflict with or result in a breach of, or constitute a
default under, (i) any of the provisions of any law, governmental rule,
regulation, judgment, decrees or order binding on the Fiscal Agent or
its properties that would materially and adversely affect the Fiscal
Agent's ability to perform its obligations under this Agreement, (ii)
the organizational documents of the Fiscal Agent, or (iii) the terms of
any material agreement or instrument to which the Fiscal Agent is a
party or by which it is bound; the Fiscal Agent is not in default with
respect to any order or decree of any court or any order, regulation or
demand of any federal, state, municipal or other governmental agency,
which default would materially and adversely affect its performance
under this Agreement;
(iii) The execution, delivery and performance by the Fiscal
Agent of this Agreement and the consummation of the transactions
contemplated by this Agreement do not require the consent, approval,
authorization or order of, the giving of notice to, or the registration
with, any state, federal or other governmental authority or agency,
except such as has been obtained, given, effected or taken prior to the
date hereof;
(iv) This Agreement has been duly executed and delivered by
the Fiscal Agent and, assuming due authorization, execution and
delivery by the other parties hereto, constitutes a valid and binding
obligation of the Fiscal Agent, enforceable against the Fiscal Agent in
accordance with its terms, subject, as to enforcement of
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remedies, to applicable bankruptcy, reorganization, insolvency,
moratorium and other similar laws affecting creditors' rights generally
as from time to time in effect, and to general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law); and
(v) There are no actions, suits or proceedings pending or, to
the best of the Fiscal Agent's knowledge, threatened, against the
Fiscal Agent that, either in any one instance or in the aggregate,
would draw into question the validity of this Agreement, or which would
be likely to impair materially the ability of the Fiscal agent to
perform under the terms of this Agreement.
(c) The representations and warranties set forth in Sections 7.08(a)
and 7.08(b) shall survive the sale, transfer and assignment of the Allied
Interests and the Funding Note by the Seller to the Issuer and the pledge
thereof by the Issuer to the Indenture Trustee pursuant to the Indenture.
ARTICLE VIII
Default
SECTION 8.01. Servicer Events of Default. For purposes of this
Agreement, each of the following shall constitute a "Servicer Event of Default":
(a) (i) any failure by the Servicer to remit to the Bond Distribution
Account or the Certificate Distribution Account when due any amount required to
be so remitted or (ii) any failure by the Servicer or the Special Servicer, as
applicable, to deposit in the Collection Account or Escrow Account any payment
required to be made, which failure continues unremedied for two days (or, in the
case of any P&I Advance, one day ); or
(b) any failure by the Servicer or the Special Servicer, as applicable,
duly to observe or perform in any material respect any other of its other
covenants or obligations set forth in this Agreement that continues unremedied
for a period of 30 days after the date on which written notice of such failure,
requiring the same to be remedied, has been given to the Servicer or the Special
Servicer, as applicable, by or on behalf of the Indenture Trustee or the Issuer;
or
(c) an Insolvency Event shall have occurred with respect to the
Servicer or the Special Servicer, as applicable; or
(d) any failure of the Servicer or the Special Servicer to satisfy the
requirements of Section 4.22(a) or Section 4.22(b), respectively.
So long as a Servicer Event of Default exists and has not been
remedied, the Issuer or the Indenture Trustee, by notice in writing to the
Servicer may, and at the direction of Bondholders holding not less than 51% of
the then outstanding Bond Balance, the Indenture Trustee shall, in addition to
whatever rights the Issuer or the Indenture Trustee may have at law or equity to
damages, including
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injunctive relief and specific performance, terminate all the rights and
obligations (but not the liabilities that accrued prior to such termination) of
the Servicer and/or the Special Servicer, as applicable, under this Agreement,
whereupon, if such termination relates to the Servicer, the Indenture Trustee
shall succeed to all of the responsibilities, duties and liabilities of the
Servicer under this Agreement (except that if the Servicer is required to make
P&I Advances in respect of any Mortgage Loans, but the Indenture Trustee or, if
applicable, the Fiscal Agent, is prohibited by law from obligating itself to do
so, the Indenture Trustee or, if applicable, the Fiscal Agent, will not be
obligated to make such P&I Advances) or, if such termination relates to the
Special Servicer, the Indenture Trustee shall appoint a successor to the Special
Servicer; and the Indenture Trustee or any such successor to the Special
Servicer shall be entitled to similar compensation arrangements. On or after the
receipt by the Servicer of such written notice, all authority and power of the
Servicer under this Agreement, whether with respect to the Mortgage Loans or
otherwise, shall pass to and be vested in the Indenture Trustee pursuant to
Section 8.02. Upon such termination, the Servicer or the Special Servicer, as
applicable, shall prepare, execute and deliver any and all documents and other
instruments, place in the Indenture Trustee's or any such successor's possession
any portion of any Mortgage File that may then be in its possession and all
Servicing Files, and do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement or assignment of the Mortgage Loans and
related documents, or otherwise, at the sole expense of the Servicer or the
Special Servicer, as applicable. Each of the Servicer and the Special Servicer
agree that, if it is terminated hereunder, it shall cooperate with the Indenture
Trustee, the Issuer and the Owner Trustee in effecting the termination of its
responsibilities and rights hereunder, including, without limitation, the
transfer to such successor for administration by it of all cash amounts which
shall at the time be credited to the Collection Account or Escrow Account by the
Servicer or thereafter received with respect to the Mortgage Loans.
SECTION 8.02. Consequences of a Servicer Event of Default. On or after
the receipt by the Servicer or the Special Servicer, as applicable, of written
notice terminating its rights under this Agreement, all authority, power,
obligations and responsibilities of the Servicer under this Agreement
automatically shall pass to, be vested in and become obligations and
responsibilities of the Indenture Trustee or the successor servicer appointed by
the Indenture Trustee (in either case, the "Successor Servicer") or of the
successor Special Servicer appointed by the Indenture Trustee (the "Successor
Special Servicer"); provided, however, that neither the Successor Servicer nor
the Successor Special Servicer shall have any liability with respect to any
obligation that was required to be performed by its terminated predecessor prior
to the date that the Successor Servicer or Successor Special Servicer, as
applicable, becomes the Servicer or the Special Servicer, as applicable, or any
claim of a third party based on any alleged action or inaction of the terminated
Servicer or the terminated Special Servicer, as applicable. The Successor
Servicer or Successor Special Servicer, as applicable, is authorized and
empowered by this Agreement to execute and deliver, on behalf of the terminated
Servicer or the terminated Special Servicer, as applicable, as attorney-in-fact
or otherwise, any and all documents and other instruments and to do or
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accomplish all other acts or things necessary or appropriate to effect the
purposes of such notice of termination. The terminated Servicer or the
terminated Special Servicer, as applicable, agrees to cooperate with the
Successor Servicer or Successor Special Servicer, as applicable, in effecting
the termination of the responsibilities and rights of the terminated Servicer or
the terminated Special Servicer, as applicable, under this Agreement, including
the transfer to the Successor Servicer or Successor Special Servicer, as
applicable, for administration by it of all money and property held by the
terminated Servicer or the terminated Special Servicer, as applicable, with
respect to the Mortgage Loans and the delivery to the Successor Servicer or
Successor Special Servicer, as applicable, of all Mortgage Files, Servicing
Files and other records relating to the Mortgage Loans serviced by it hereunder
and a computer tape in readable form as of the most recent Business Day
containing all information necessary to enable the Successor Servicer or the
Successor Special Servicer, as applicable, to service such Mortgage Loans.
SECTION 8.03. Appointment of Successor. (a) On and after the time the
Servicer or the Special Servicer, as applicable, receives a notice of
termination pursuant to Section 8.02 or upon the resignation of the Servicer or
the Special Servicer, as applicable, pursuant to Section 7.06, the Successor
Servicer or the Successor Special Servicer, as applicable, shall be the
successor in all respects to the Servicer or the Special Servicer, as
applicable, in its capacity as Servicer or Special Servicer, as applicable,
under this Agreement (including, in the case of the Servicer, its appointment as
Administrator under the Administration Agreement as set forth in Section
8.03(c)) and shall be subject to all the rights, responsibilities, restrictions,
duties, liabilities, and termination provisions relating to the Servicer or the
Special Servicer, as applicable, under this Agreement, except as otherwise
stated herein. The Seller, the Issuer, the Indenture Trustee and such Successor
Servicer or Successor Special Servicer, as applicable, shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession. If a Successor Servicer or Successor Special Servicer, as
applicable, is acting as Servicer or Special Servicer, as applicable, hereunder,
it shall be subject to termination under Section 8.02 upon the occurrence of any
Servicer Event of Default applicable to it as Servicer or Special Servicer, as
applicable.
(b) If the Indenture Trustee is unwilling or unable to act as Successor
Servicer, it may (or, at the written request of Bondholders holding not less
than 51% of the then outstanding Bond Balance, it will be required to) appoint,
or petition a court of competent jurisdiction to appoint, a loan-servicing
institution that is an Eligible Servicer to act as successor to the Servicer
hereunder. Pending such appointment, the Indenture Trustee will be obligated to
act in such capacity.
(c) Upon appointment, the Successor Servicer or Successor Special
Servicer shall (i) be the successor in all respects to the predecessor Servicer
or Special Servicer, as applicable, and shall be subject to all the
responsibilities, duties and liabilities arising thereafter relating thereto
placed on the predecessor Servicer or Special Servicer, as applicable, and shall
be entitled, subject to the following sentence, to all the rights granted to the
predecessor Servicer or Special Servicer, as applicable, by the
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terms and provisions of this Agreement and (ii) in the case of a successor
Servicer, become the Administrator under the Administration Agreement in
accordance with Section 8 of such Agreement. The Indenture Trustee and any such
successor may agree upon the servicing compensation to be paid, which in no
event may be greater than the compensation payable to the Servicer or the
Special Servicer, as applicable, under this Agreement.
SECTION 8.04. Notification to Bondholders and Certificateholders. Upon
any termination of, or appointment of a successor to, the Servicer or Special
Servicer, as applicable, pursuant to this Article VIII, the Issuer shall give
prompt written notice thereof to Certificateholders, and the Indenture Trustee
shall give prompt written notice thereof to Bondholders and the Rating Agencies.
If the Indenture Trustee is the Paying Agent under the Trust Agreement, it shall
give such notice to the Certificateholders on behalf of the Issuer.
SECTION 8.05. Waiver of Past Defaults. The Holders of at least 51% of
the Bond Balance may, on behalf of all Securityholders, waive in writing any
default by the Servicer or Special Servicer in the performance of its
obligations hereunder and its consequences, except a default in making any
required deposits to or payments from any of the Trust Accounts in accordance
with this Agreement. Upon any such waiver of a past default, such default shall
cease to exist from the time of occurrence and shall be deemed not to have
occurred, and any Servicer Event of Default arising therefrom shall be deemed to
have been remedied for every purpose of this Agreement. No such waiver shall
extend to any subsequent or other default or impair any right consequent
thereto.
ARTICLE IX
Termination
SECTION 9.01. Optional Redemption of Bonds. (a) (i) At the option of
the Seller on any Distribution Date on or after the Distribution Date on which
the Bond Balance is less than 10% of the initial Bond Balance or (ii) in the
event that ACC is no longer the Servicer, at the option of the Successor
Servicer on any Distribution Date on or after the Distribution Date on which the
Bond Balance is less than 10% of the initial Bond Balance (each, a "Redemption
Date"), the Seller or the Successor Servicer, as applicable, shall be entitled
to redeem the Bonds in full, but not in part. To exercise such option, the
Seller or the Successor Servicer, as applicable, shall deposit to the Collection
Account on the Redemption Date, pursuant to Section 5.04, an amount (the
"Redemption Price") equal to the aggregate Purchase Price for the Funding Note
and Allied Interests and shall succeed to all interests in and to the Funding
Note and Allied Interests.
(b) As described in Article IX of the Trust Agreement, notice of any
termination of the existence of the Issuer shall be given by the Servicer to the
Owner Trustee and the Indenture Trustee as soon as practicable after the
Servicer has received notice thereof.
(c) Following the satisfaction and discharge of the Indenture and the
payment in full of the principal of and interest on the Bonds, the
Certificateholders will succeed to the rights of
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the Bondholders hereunder and the Issuer will succeed to the rights of, and
assume the obligations of, the Indenture Trustee pursuant to this Agreement.
ARTICLE X
Miscellaneous
SECTION 10.01. Amendment. (a) This Agreement may be amended by the
Seller, the Servicer, the Special Servicer, the Indenture Trustee, the Fiscal
Agent, the Custodian and the Issuer, without the consent of any of the
Securityholders, to cure any ambiguity, to correct or supplement any provisions
in this Agreement or for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions in this Agreement or of
modifying in any manner the rights of the Securityholders; provided, however,
that such action shall not, as evidenced by an Opinion of Counsel, at the
expense of the party seeking such amendment, delivered to the Owner Trustee and
the Indenture Trustee, adversely affect in any material respect the interests of
the Issuer, the Owner Trustee, the Indenture Trustee or any Bondholder or
Certificateholder; provided further that the indemnification obligations
hereunder in favor of the Owner Trustee may not be amended in any respect
without the prior written consent of the Owner Trustee.
(b) This Agreement may also be amended from time to time by the Seller,
the Servicer, the Special Servicer, the Indenture Trustee, the Fiscal Agent, the
Custodian and the Issuer, the Bondholders holding not less than 51% of the Bond
Balance and the Holders of outstanding Certificates evidencing not less than a
majority of the outstanding Percentage Interest, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or of modifying in any manner the rights of the Securityholders;
provided, however, that no such amendment shall (a) increase or reduce in any
manner the amount of, or accelerate or delay the timing of, collections of
payments on the Mortgage Loans or distributions required to be made for the
benefit of the Securityholders or (b) reduce the aforesaid portion of the Bond
Balance, or the Percentage Interest of the Certificates, whose Holders are
required to consent to any such amendment, without (i) the consent of the
Bondholders holding all the outstanding Bonds and Certificateholders holding all
the outstanding Certificates and (ii) receipt from each Rating Agency of a
written affirmation that such amendment shall not result in the downgrade,
reduction or withdrawal of the ratings then assigned by such Rating Agency to
each Class of Bonds.
Promptly after the execution of any amendment or consent, the Issuer
shall furnish written notification of the substance of such amendment or consent
to each Certificateholder, the Indenture Trustee and each of the Rating
Agencies.
It shall not be necessary for the consent of Securityholders pursuant
to this Section to approve the particular form of any proposed amendment or
consent, but it shall be sufficient if such consent shall approve the substance
thereof.
Prior to the execution of any amendment to this Agreement, the Owner
Trustee and the Indenture Trustee shall be entitled to receive
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and rely upon an Opinion of Counsel stating that the execution of such amendment
is authorized or permitted by this Agreement. The Owner Trustee (on behalf of
the Issuer) and the Indenture Trustee may, but shall not be obligated to, enter
into any such amendment which affects the Owner Trustee's or the Indenture
Trustee's, as applicable, own rights, duties or immunities under this Agreement
or otherwise.
SECTION 10.02. Reserved.
SECTION 10.03. Notices. All demands, notices, communications and
instructions upon or to the Seller, the Servicer, the Special Servicer, the
Issuer, the Owner Trustee, the Indenture Trustee or the Rating Agencies under
this Agreement shall be in writing, personally delivered or mailed by certified
mail, return receipt requested, and shall be deemed to have been duly given upon
receipt (a) in the case of the Seller, to Allied Capital CMT, Inc., ▇▇▇▇ ▇
▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇, Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇; (b) in the
case of the Servicer or the Special Servicer, to Allied Capital Corporation,
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇;
(c) in the case of the Custodian or the Indenture Trustee, to LaSalle National
Bank, ▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇,
Attention: Asset-Backed Securities Trust Services Group-Allied Capital 1998-1;
(d) in the case of the Issuer or the Owner Trustee, at the Corporate Trust
Office (as defined in the Trust Agreement), with a copy to any Administrator
appointed under the Administration Agreement (as defined in the Trust
Agreement); (e) in the case of Fitch, to Fitch IBCA, Inc., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, (f) in the case of Standard & Poor's, to
Standard & Poor's Ratings Services, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies,
Inc., ▇▇ ▇▇▇▇▇▇▇▇ (▇▇▇▇ ▇▇▇▇▇), ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Asset
Backed Surveillance Department and (g) in the case of the Fiscal Agent, to ABN
AMRO Bank N.V., ▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: Asset-Backed Securities Trust Services Group-Allied Capital 1998-1;
or, as to each of the foregoing, at such other address as shall be designated by
written notice to the other parties.
SECTION 10.04. Assignment by the Seller or the Servicer.
Notwithstanding anything to the contrary contained herein, except as provided in
the remainder of this Section, as provided in Sections 6.04 and 7.03 herein and
as provided in the provisions of this Agreement concerning the resignation of
the Servicer or the Special Servicer, this Agreement may not be assigned by the
Seller, the Servicer or the Special Servicer.
SECTION 10.05. Limitations on Rights of Others. The provisions of this
Agreement are solely for the benefit of the Seller, the Servicer, the Special
Servicer, the Issuer, the Owner Trustee (as an intended third party beneficiary
hereof in its individual and trust capacities), the Certificateholders, the
Indenture Trustee, the Fiscal Agent and the Bondholders, and nothing in this
Agreement, whether express or implied, shall be construed to give to any other
Person any legal or equitable right, remedy or claim in the Owner Trust Estate
or under or in respect of this Agreement or any covenants, conditions or
provisions contained herein.
SECTION 10.06. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to
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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 jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
SECTION 10.07. Separate Counterparts. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 10.08. Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
SECTION 10.09. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of New York, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
SECTION 10.10. Assignment by Issuer. The Seller hereby acknowledges and
consents to any mortgage, pledge, assignment and grant of a security interest by
the Issuer to the Indenture Trustee pursuant to the Indenture for the benefit of
the Bondholders of all right, title and interest of the Issuer in, to and under
the Funding Note, the Allied Interests and the ACC Guaranty and/or the
assignment of any or all of the Issuer's rights and obligations hereunder to the
Indenture Trustee.
SECTION 10.11. Nonpetition Covenants. Notwithstanding any prior
termination of this Agreement, the Servicer, the Special Servicer and the Seller
shall not, prior to the date which is one year and one day after the termination
of this Agreement, acquiesce, petition or otherwise invoke or cause the Issuer
or the Seller to invoke the process of any court or government authority for the
purpose of commencing or sustaining a case against the Issuer or the Seller
under any federal or state bankruptcy, insolvency or similar law, or appointing
a receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of the Issuer or the Seller or any substantial part of its
property, or ordering the winding up or liquidation of the affairs of the Issuer
or the Seller.
SECTION 10.12. Limitation of Liability of Owner Trustee and Indenture
Trustee. (a) Notwithstanding anything contained herein to the contrary, this
Agreement has been countersigned by Wilmington Trust Company not in its
individual capacity but solely in its capacity as Owner Trustee of the Issuer
and in no event shall Wilmington Trust Company in its individual capacity have
any liability for the representations, warranties, covenants, agreements or
other obligations of the Issuer or the Owner Trustee hereunder or in any of the
certificates, notices or agreements delivered pursuant hereto, as to all of
which recourse shall be had solely to the assets of the Issuer. For all purposes
of this Agreement, in the performance of any duties or obligations by or on
behalf of the Issuer hereunder, the Owner Trustee shall be subject to, and
entitled to the benefits of, the terms and provisions of the Trust Agreement
including, without limitation, Articles VI, VII and VIII
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(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been accepted by LaSalle National Bank, not in its individual
capacity but solely in its capacities as Indenture Trustee and Custodian and in
no event shall LaSalle National Bank have any liability for the representations,
warranties, covenants, agreements or other obligations of the Issuer hereunder
or in any of the certificates, notices or agreements delivered pursuant hereto,
as to all of which recourse shall be had solely to the assets of the Issuer.
(c) Notwithstanding anything contained herein to the contrary, this
Agreement has been accepted by ABN AMRO Bank N.V., not in its individual
capacity but solely in its capacity as Fiscal Agent and in no event shall ABN
AMRO Bank N.V. have any liability for the representations, warranties,
covenants, agreements or other obligations of the Issuer hereunder or in any of
the certificates, notices or agreements delivered pursuant hereto, as to all of
which recourse shall be had solely to the assets of the Issuer.
SECTION 10.13. Servicer Payment Obligation. The Servicer shall be
responsible for payment of the Administrator's fees under the Administration
Agreement and shall reimburse the Administrator for all expenses and liabilities
of the Administrator incurred thereunder. The Servicer shall also be responsible
for payment of the fees of the Indenture Trustee under the Indenture and the
fees of the Owner Trustee under the Trust Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers as of the day and year first above
written.
ALLIED CAPITAL COMMERCIAL MORTGAGE TRUST 1998-1
By:WILMINGTON TRUST COMPANY, not in its individual capacity but solely as
Owner Trustee on behalf of the
Issuer
By: /s/ W. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
---------------------------------------
Name: W. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Senior Financial Services
Officer
ALLIED CAPITAL CMT, INC., Seller
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Managing Director
ALLIED CAPITAL CORPORATION, Servicer and Special Servicer
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Managing Director
LASALLE NATIONAL BANK,
Indenture Trustee and Custodian
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: First Vice President
ABN AMRO BANK N.V.,
Fiscal Agent
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Group Vice President
80
SCHEDULE A
Schedule of Mortgage Loans
81
SCHEDULE B
Mortgage Loan Data Tables
82
EXHIBIT A
FORM OF DISTRIBUTION DATE STATEMENT TO SECURITYHOLDERS
On file with Allied Capital
A-1
83
EXHIBIT B
FORM OF SERVICER'S CERTIFICATE
On file with Allied Capital
(1) Denominations of $100,000 and integral multiples of $1 in excess thereof.
B-1