EXECUTION COPY
SUPPLEMENTAL AGREEMENT
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This Supplemental Agreement (this "Agreement"), is dated and effective as
of August 14, 2003, between GMAC Commercial Mortgage Corporation as Mortgage
Loan Seller (the "Mortgage Loan Seller") and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Company as
purchaser (the "Purchaser").
WHEREAS, the Mortgage Loan Seller sold certain mortgage loans to the
Purchaser pursuant to a certain Mortgage Loan Purchase Agreement, dated as of
March 29, 2001 (as amended, the "GSMC Purchase Agreement").
WHEREAS, the Purchaser intends to sell the mortgage loans as shown on
Exhibit A hereto (the "Mortgage Loans") to GMAC Commercial Mortgage Securities,
Inc. as Depositor, (the "Depositor") pursuant to a certain Mortgage Loan
Purchase Agreement, dated as of August 14, 2003 (the "Mortgage Loan Purchase
Agreement") and the Depositor intends to transfer the Mortgage Loans, together
with other multifamily and commercial mortgage loans, to a trust fund (the
"Trust Fund") to be formed by the Depositor, beneficial ownership of which will
be evidenced by a series of mortgage pass-through certificates (the
"Certificates"). Certain classes of the Certificates will be rated by Fitch
Ratings and Standard & Poor's Ratings Services, a division of The ▇▇▇▇▇▇-▇▇▇▇
Companies, Inc. (together, the "Rating Agencies"). Certain classes of the
Certificates (the "Registered Certificates") will be registered under the
Securities Act of 1933, as amended (the "Securities Act"). The Trust Fund will
be created and the Certificates will be issued pursuant to a pooling and
servicing agreement to be dated as of August 1, 2003 (the "Pooling and Servicing
Agreement"), among the Depositor as depositor, GMAC Commercial Mortgage
Corporation as master servicer (in such capacity, the "Master Servicer") and
special servicer and ▇▇▇▇▇ Fargo Bank Minnesota, National Association, as
trustee (in such capacity, the "Trustee") and serviced companion loan paying
agent. Capitalized terms not otherwise defined herein have the meanings assigned
to them in the Pooling and Servicing Agreement as in effect on the Closing Date
(as defined below).
WHEREAS, the Depositor intends to sell the Class A-1, Class A-2, Class A-3,
Class B, Class C, Class D and Class E Certificates to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co.
Incorporated, Deutsche Bank Securities Inc. and ▇▇▇▇▇▇▇, Sachs & Co. (together,
the "Underwriters"), pursuant to an underwriting agreement dated the date hereof
(the "Underwriting Agreement"). The Depositor intends to sell the Class X-1,
Class X-2, Class F, Class G, Class H, Class J, Class K, Class L, Class M, Class
N, Class O and Class P Certificates to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated,
Deutsche Bank Securities Inc. and ▇▇▇▇▇▇▇, Sachs & Co. (in such capacity, each
an "Initial Purchaser") pursuant to a certificate purchase agreement, dated the
date hereof (the "Certificate Purchase Agreement). The Depositor intends to sell
the Class R-I, Class R-II and Class R-III Certificates to a Qualified
Institutional Buyer (in such capacity, an "Initial Purchaser").
WHEREAS, each of the Mortgage Loan Seller and the Purchaser, in connection
with the transaction described above, desires to amend and supplement certain of
the provisions of the GSMC Purchase Agreement as it relates to the Mortgage
Loans in order to facilitate such transaction and in contemplation of the
assignment by the Purchaser to the Depositor of all of its right, title and
interest in and to this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
set forth herein, the parties agree as follows:
SECTION 1. Amendment of GSMC Purchase Agreement.
The parties hereto agree that, with respect to the Mortgage Loans only, the
GSMC Purchase Agreement is hereby amended to the extent that the provisions of
such GSMC Purchase Agreement are inconsistent with this Agreement.
SECTION 2. Representations, Warranties and Covenants of the Mortgage Loan
Seller.
(a) The Mortgage Loan Seller hereby makes, as of August 28, 2003 (the
"Closing Date") (or as of such other date specifically provided in the
particular representation or warranty), to and for the benefit of the Purchaser,
and its successors and assigns (including, without limitation, the Depositor,
the Trustee and the holders of the Certificates), each of the representations
and warranties set forth in Exhibit B, with such changes or modifications as may
be permitted or required by the Rating Agencies.
(b) In addition, the Mortgage Loan Seller, as of the date hereof, hereby
represents and warrants to, and covenants with, the Purchaser that:
(i) The Mortgage Loan Seller is a corporation, duly organized, validly
existing and in good standing under the laws of the State of California, and is
in compliance with the laws of each State in which any Mortgaged Property is
located to the extent necessary to ensure the enforceability of each Mortgage
Loan and to perform its obligations under this Agreement.
(ii) The execution and delivery of this Agreement by the Mortgage Loan
Seller, and the performance and compliance with the terms of this Agreement by
the Mortgage Loan Seller, will not violate the Mortgage Loan Seller's
organizational documents or constitute a default (or an event which, with notice
or lapse of time, or both, would constitute a default) under, or result in the
breach of, any material agreement or other instrument to which it is a party or
which is applicable to it or any of its assets, in each case which materially
and adversely affects the ability of the Mortgage Loan Seller to carry out the
transactions contemplated by this Agreement.
(iii) The Mortgage Loan Seller has the full power and authority to
enter into and consummate all transactions contemplated by this Agreement, has
duly authorized the execution, delivery and performance of this Agreement, and
has duly executed and delivered this Agreement.
(iv) This Agreement, assuming due authorization, execution and
delivery by the Purchaser, constitutes a valid, legal and binding obligation of
the Mortgage Loan Seller, enforceable against the Mortgage Loan Seller in
accordance with the terms hereof, subject to (A) applicable bankruptcy,
insolvency, reorganization, moratorium and other laws affecting the enforcement
of creditors' rights generally, (B) general principles of equity, regardless of
whether such enforcement is considered in a proceeding in equity or at law, and
(C) public policy considerations underlying the securities laws, to the extent
that such public policy considerations
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limit the enforceability of the provisions of this Agreement that purport to
provide indemnification for securities laws liabilities.
(v) The Mortgage Loan Seller is not in violation of, and its execution
and delivery of this Agreement and its performance and compliance with the terms
of this Agreement will not constitute a violation of, any law, any order or
decree of any court or arbiter, or any order, regulation or demand of any
federal, state or local governmental or regulatory authority, which violation,
in the Mortgage Loan Seller's good faith and reasonable judgment, is likely to
affect materially and adversely either the ability of the Mortgage Loan Seller
to perform its obligations under this Agreement or the financial condition of
the Mortgage Loan Seller.
(vi) No litigation is pending with regard to which the Mortgage Loan
Seller has received service of process or, to the best of the Mortgage Loan
Seller's knowledge, threatened against the Mortgage Loan Seller the outcome of
which, in the Mortgage Loan Seller's good faith and reasonable judgment, could
reasonably be expected to prohibit the Mortgage Loan Seller from entering into
this Agreement or materially and adversely affect either the ability of the
Mortgage Loan Seller to perform its obligations under this Agreement or the
financial condition of the Mortgage Loan Seller.
(vii) The Mortgage Loan Seller has not dealt with any broker,
investment banker, agent or other person, other than the Purchaser, the
Underwriters, the Initial Purchasers and their respective affiliates, that may
be entitled to any commission or compensation in connection with the sale of the
Mortgage Loans or the consummation of any of the other transactions contemplated
hereby.
(viii) No consent, approval, authorization or order of, registration
or filing with, or notice to, any governmental authority or court is required,
under federal or state law (including, with respect to any bulk sale laws), for
the execution, delivery and performance of or compliance by the Mortgage Loan
Seller with this Agreement, or the consummation by the Mortgage Loan Seller of
any transaction contemplated hereby, other than (1) such consents, approvals,
authorizations, qualifications, registrations, filings or notices as have been
obtained or made and (2) where the lack of such consent, approval,
authorization, qualification, registration, filing or notice would not have a
material adverse effect on the performance by the Mortgage Loan Seller under
this Agreement.
(c) Upon discovery by any of the parties hereto of a breach of any of the
representations and warranties made pursuant to and set forth in subsection (b)
above which materially and adversely affects the interests of the Purchaser or
its successors or assigns or a Material Breach, the party discovering such
breach shall give prompt written notice to the other party hereto or if this
Agreement has been assigned by the Purchaser, to such assignee. The
representations, warranties and covenants set forth in Section 2(a) shall, as
between the Mortgage Loan Seller and the Purchaser, supplement, and as between
the Mortgage Loan Seller and any successors or assigns of the Purchaser
(including, without limitation, the Depositor, the Trustee and holders of the
Certificates), replace and amend and restate in their entirety, the
representations, warranties and covenants of the Mortgage Loan Seller made
pursuant to Section 4.1(a) of the GSMC Purchase Agreement to the extent they
relate to the Mortgage Loans.
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SECTION 3. Representations, Warranties and Covenants of the Purchaser.
(a) The Purchaser, as of the date hereof, hereby represents and warrants
to, and covenants with, the Mortgage Loan Seller that:
(i) The Purchaser is a limited partnership duly organized, validly
existing and in good standing under the laws of the State of New York.
(ii) The execution and delivery of this Agreement by the Purchaser,
and the performance and compliance with the terms of this Agreement by the
Purchaser, will not violate the Purchaser's organizational documents or
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, or result in the breach of, any material
agreement or other instrument to which it is a party or which is applicable to
it or any of its assets, in each case which materially and adversely affects the
ability of the Purchaser to carry out the transactions contemplated by this
Agreement.
(iii) The Purchaser has the full power and authority to enter into and
consummate all transactions contemplated by this Agreement, has duly authorized
the execution, delivery and performance of this Agreement, and has duly executed
and delivered this Agreement.
(iv) This Agreement, assuming due authorization, execution and
delivery by the Mortgage Loan Seller, constitutes a valid, legal and binding
obligation of the Purchaser, enforceable against the Purchaser in accordance
with the terms hereof, subject to (A) applicable bankruptcy, insolvency,
reorganization, moratorium and other laws affecting the enforcement of
creditors' rights generally, (B) general principles of equity, regardless of
whether such enforcement is considered in a proceeding in equity or at law, and
(C) public policy considerations underlying the securities laws, to the extent
that such public policy considerations limit the enforceability of the
provisions of this Agreement that purport to provide indemnification for
securities laws liabilities.
(v) The Purchaser is not in violation of, and its execution and
delivery of this Agreement and its performance and compliance with the terms of
this Agreement will not constitute a violation of, any law, any order or decree
of any court or arbiter, or any order, regulation or demand of any federal,
state or local governmental or regulatory authority, which violation, in the
Purchaser's good faith and reasonable judgment, is likely to affect materially
and adversely either the ability of the Purchaser to perform its obligations
under this Agreement or the financial condition of the Purchaser.
(vi) No litigation is pending or, to the best of the Purchaser's
knowledge, threatened against the Purchaser which would prohibit the Purchaser
from entering into this Agreement or, in the Purchaser's good faith and
reasonable judgment, is likely to materially and adversely affect either the
ability of the Purchaser to perform its obligations under this Agreement or the
financial condition of the Purchaser.
(vii) The Purchaser has not dealt with any broker, investment banker,
agent or other person, other than the Mortgage Loan Seller, the Underwriters,
the Initial Purchasers and their respective affiliates, that may be entitled to
any commission or compensation in connection
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with the sale of the Mortgage Loans or the consummation of any of the
transactions contemplated hereby.
(viii) No consent, approval, authorization or order of, registration
or filing with, or notice to, any governmental authority or court is required,
under federal or state law, for the execution, delivery and performance of or
compliance by the Purchaser with this Agreement, or the consummation by the
Purchaser of any transaction contemplated hereby, other than (1) such consents,
approvals, authorizations, qualifications, registrations, filings or notices as
have been obtained or made and (2) where the lack of such consent, approval,
authorization, qualification, registration, filing or notice would not have a
material adverse effect on the performance by the Purchaser under this
Agreement.
(b) The Purchaser hereby makes, as of the Closing Date (or as of such other
date specifically provided in the particular representation or warranty), to and
for the benefit of the Mortgage Loan Seller, and its successors and assigns,
with respect to each Mortgage Loan each of the representations and warranties
set forth below:
(i) Immediately prior to the transfer thereof to the Depositor, the
Purchaser had whatever title to such Mortgage Loan as was conveyed to it by the
Mortgage Loan Seller, free and clear of any and all liens, encumbrances and
other interests on, in or to such Mortgage Loan (other than, in certain cases,
the right of a third party servicer to directly service such Mortgage Loan)
created by the Purchaser. Such transfer validly assigns such title to such
Mortgage Loan to the Depositor free and clear of any pledge, lien, encumbrance
or security interest created by the Purchaser;
(ii) The Purchaser has full right and authority to sell, assign and
transfer its interest in such Mortgage Loan;
(iii) The Purchaser has not done anything that would materially impair
the coverage under the lender's title insurance policy that insures the lien of
the related Mortgage;
(iv) The Purchaser has not waived any material default, breach,
violation or event of acceleration existing under the related Mortgage or
Mortgage Note;
(v) To the Purchaser's actual knowledge, without independent inquiry
as to the provisions of the Mortgage Loans, there is no valid offset, defense or
counterclaim to such Mortgage Loan arising out of the Purchaser's actions or
holding of the Mortgage Loans; and
(vi) The terms of the related Mortgage and the Mortgage Note have not
been impaired, waived, altered or modified by the Purchaser in any material
respect, except as specifically set forth in the related Mortgage File;
provided, that with respect to the representations and warranties in clauses
(iii), (iv), (v) and (vi) above, such representations and warranties cover only
actions taken directly by the Purchaser and its Affiliates or taken by the
Mortgage Loan Seller at the direction of the Purchaser.
(c) Upon discovery by any of the parties hereto of a breach of any of the
representations and warranties set forth above which materially and adversely
affects the
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interests of the Mortgage Loan Seller, the party discovering such breach shall
give prompt written notice to the other party hereto.
SECTION 4. Repurchases.
The Mortgage Loan Seller hereby agrees to comply, on behalf of the
Purchaser, with Sections 2.02 and 2.03 of the Pooling and Servicing Agreement,
including, but not limited to, any obligation to repurchase or substitute
Mortgage Loans in respect of any Material Breach or Material Document Defect.
SECTION 5. Conveyance of Mortgage Files.
In connection with the Purchaser's assignment of the Mortgage Loans to the
Depositor pursuant to the Mortgage Loan Purchase Agreement, the Mortgage Loan
Seller acknowledges that the Depositor has directed the Purchaser, and the
Mortgage Loan Seller hereby agrees, on behalf of the Purchaser to deliver the
Mortgage File to the Trustee, and otherwise comply with the requirements of
Sections 2.01(b), 2.01(c) and 2.01(d) of the Pooling and Servicing Agreement on
behalf of the Purchaser, provided that whenever the term Mortgage File is used
to refer to documents actually received by the Purchaser or the Trustee, such
term shall not be deemed to include such documents and instruments required to
be included therein unless they are actually so received. SECTION 6.
Representations, Warranties and Agreements to Survive Delivery.
All representations, warranties and agreements contained in this Agreement,
incorporated herein by reference or contained in the certificates of officers of
the Mortgage Loan Seller submitted pursuant hereto, shall remain operative and
in full force and effect and shall survive delivery of the Mortgage Loans by the
Mortgage Loan Seller to the Purchaser or its designee.
SECTION 7. Costs.
Costs relating to the transactions contemplated hereby and in the Mortgage
Loan Purchase Agreement shall be borne by the Mortgage Loan Seller.
SECTION 8. Indemnification.
(a) The Purchaser agrees to indemnify and hold harmless the Mortgage Loan
Seller against any and all losses, claims, damages or liabilities, joint or
several, to which it may become subject insofar as such losses, claims, damages
or liabilities (or actions in respect thereto) arise out of or are based upon
the breach of any of the Purchaser's representations or warranties contained in
Section 3(b) of this Agreement. This indemnity will be in addition to any
liability which the Purchaser may otherwise have.
(b) The indemnity agreement contained in this Section 8 shall remain
operative and in full force and effect regardless of (i) any termination of this
Agreement, or (ii) any investigation made by any indemnified party.
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SECTION 9. Severability of Provisions.
Any part, provision, representation, warranty or covenant of this Agreement
that is prohibited or which is held to be void or unenforceable shall be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof. Any part, provision,
representation, warranty or covenant of this Agreement that is prohibited or
unenforceable or is held to be void or unenforceable in any particular
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
particular jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction. To the extent permitted by applicable law,
the parties hereto waive any provision of law which prohibits or renders void or
unenforceable any provision hereof.
SECTION 10. Counterparts.
This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original, but all of which together shall constitute
one and the same instrument.
SECTION 11. GOVERNING LAW.
THIS AGREEMENT AND THE RIGHTS, DUTIES, OBLIGATIONS AND RESPONSIBILITIES OF
THE PARTIES HERETO SHALL BE GOVERNED IN ACCORDANCE WITH THE INTERNAL LAWS AND
DECISIONS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES
EXCEPT THAT THE PARTIES HERETO INTEND THAT THE PROVISIONS OF SECTION 5-1401 OF
THE NEW YORK GENERAL OBLIGATIONS LAW SHALL APPLY TO THIS AGREEMENT.
SECTION 12. Further Assurances.
The Mortgage Loan Seller and the Purchaser agree to execute and deliver
such instruments and take such further actions as the other party may, from time
to time, reasonably request in order to effectuate the purposes and to carry out
the terms of this Agreement.
SECTION 13. Successors and Assigns.
The rights and obligations of the Mortgage Loan Seller under this Agreement
shall not be assigned by the Mortgage Loan Seller without the prior written
consent of the Purchaser, except that any person into which the Mortgage Loan
Seller may be merged or consolidated, or any corporation or other entity
resulting from any merger, conversion or consolidation to which the Mortgage
Loan Seller is a party, or any person succeeding to all or substantially all of
the business of the Mortgage Loan Seller, shall be the successor to the Mortgage
Loan Seller hereunder. The Purchaser and its assignee have the right to assign
its interest under this Agreement, in whole or in part. Subject to the
foregoing, this Agreement shall bind and inure to the benefit of and be
enforceable by the Mortgage Loan Seller and the Purchaser, and their permitted
successors and assigns.
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SECTION 14. Amendments.
No term or provision of this Agreement may be amended, waived, modified or
in any way altered, unless such amendment, waiver, modification or alteration is
in writing and signed by a duly authorized officer of the party against whom
such amendment, waiver, modification or alteration is sought to be enforced.
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IN WITNESS WHEREOF, the parties hereto have caused their names to be signed
hereto by their respective duly authorized officers as of the date first above
written.
GMAC COMMERCIAL MORTGAGE CORPORATION
By:
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Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
▇▇▇▇▇▇▇ SACHS MORTGAGE COMPANY
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇ Real Estate
Funding Corp., its General
Partner
By:
---------------------------------
Name:
Title:
S-1
EXHIBIT A
MORTGAGE LOAN SCHEDULE
Loan Number Property Name ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇
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▇▇▇▇▇ Estancia Apartments ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Remaining
Mortgage Term to Date
Rate Original Cut-Off Date Maturity Maturity ARD Payment Monthly ARD Credit Lease
Loan Number (%) Type Balance ($) Balance ($) (Mos.) Date date due Payment Loan Loan
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41671 4.50000 Fixed 19,584,000 19,560,659 59 7/1/2008 1 99,229
Cross Annualized Broker Additional Environmental Letter
Collateralized Debt Strip Servicing Insurance of Credit
Loan Number Prepayment Provision Groups Service Loan Fee Loan Loan Loan Leasehold
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41671 Lockout/36_>YM or 1%/20_0%/4 1,190,751
Servicing
Loan Number Fee Rate(%) Loan Seller
-------------------------------------------------
41671 0-12680 GMACCM
A-1
EXHIBIT B
REPRESENTATIONS AND WARRANTIES OF THE MORTGAGE LOAN SELLER
REGARDING THE INDIVIDUAL MORTGAGE LOANS
For purposes of these representations and warranties, the phrases "to the
knowledge of the Mortgage Loan Seller" or "to the Mortgage Loan Seller's
knowledge" shall mean, except where otherwise expressly set forth below, the
actual state of knowledge of the Mortgage Loan Seller or any servicer acting on
its behalf regarding the matters referred to, in each case: (i) after the
Mortgage Loan Seller's having conducted such inquiry and due diligence into such
matters as would be customarily performed by prudent institutional commercial or
multifamily, as applicable, mortgage lenders, and in all events as required by
the Mortgage Loan Seller's underwriting standards, at the time of the Mortgage
Loan Seller's origination or acquisition of the particular Mortgage Loan; and
(ii) subsequent to such origination, utilizing the servicing and monitoring
practices customarily utilized by prudent commercial mortgage loan servicers
with respect to securitizable commercial or multifamily, as applicable, mortgage
loans. Also for purposes of these representations and warranties, the phrases
"to the actual knowledge of the Mortgage Loan Seller" or "to the Mortgage Loan
Seller's actual knowledge" shall mean, except where otherwise expressly set
forth below, the actual state of knowledge of the Mortgage Loan Seller or any
servicer acting on its behalf without any express or implied obligation to make
inquiry. All information contained in documents included in the definition of
Mortgage File in the Pooling and Servicing Agreement shall be deemed to be
within the knowledge and the actual knowledge of the Mortgage Loan Seller, to
the extent that the Mortgage Loan Seller or its closing counsel or custodian, if
any, have reviewed or had possession of such document at any time. For purposes
of these representations and warranties, to the extent that any representation
or warranty is qualified by the Mortgage Loan Seller's knowledge with respect to
the contents of the Note, Mortgage, lender's title policy and any letters of
credit or ground leases, if such document is not included in the Mortgage File,
the Mortgage Loan Seller shall make such representation or warranty without any
such qualification. Wherever there is a reference in a representation or
warranty to receipt by, or possession of, the Mortgage Loan Seller of any
information or documents, or to any action taken by the Mortgage Loan Seller or
to any action which has not been taken by the Mortgage Loan Seller or its agents
or employees, such reference shall include the receipt or possession of such
information or documents by, or the taking of such action or the not taking such
action by, either of the Mortgage Loan Seller or any servicer acting on its
behalf. For purposes of these representations and warranties, when referring to
the conduct of "reasonable prudent institutional commercial or multifamily, as
applicable mortgage lenders" (or similar such phrases and terms), such conduct
shall be measured by reference to the industry standards generally in effect as
of the date the related representation or warranty relates to or is made.
The Mortgage Loan Seller hereby represents and warrants with respect to the
Mortgage Loans that, as of the date herein below specified or, if no such date
is specified, as of the Closing Date, and subject to Section 13 of this
Agreement:
1. Mortgage Loan Schedule. The information pertaining to each Mortgage Loan
set forth in the Mortgage Loan Schedule to the Pooling and Servicing Agreement
was true and
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accurate in all material respects as of the Cut-Off Date and contains all of the
information set forth in the definition of "Mortgage Loan Schedule" in the
Pooling and Servicing Agreement.
2. Ownership of Mortgage Loans. Immediately prior to the transfer of the
Mortgage Loans to the Purchaser, the Mortgage Loan Seller had good title to, and
was the sole owner of, each Mortgage Loan. The Mortgage Loan Seller has full
right, power and authority to sell, transfer and assign each Mortgage Loan to,
or at the direction of, the Purchaser free and clear of any and all pledges,
liens, charges, security interests, participation interests and/or other
interests and encumbrances (other than the rights to servicing and related
compensation as reflected in the Mortgage Loan Schedule). Subject to the
completion of the names and addresses of the assignees and endorsees and any
missing recording information in all instruments of transfer or assignment and
endorsements and the completion of all recording and filing contemplated hereby
and by the Pooling and Servicing Agreement, the Mortgage Loan Seller will have
validly and effectively conveyed to the Purchaser all legal and beneficial
interest in and to each Mortgage Loan free and clear of any pledge, lien,
charge, security interest or other encumbrance (except for certain servicing
rights described on Schedule B-41 hereto or otherwise contemplated by this
Agreement or the Pooling and Servicing Agreement). The sale of the Mortgage
Loans to the Purchaser or its designee does not require the Mortgage Loan Seller
to obtain any governmental or regulatory approval or consent that has not been
obtained. Each Mortgage Note is, or shall be as of the Closing Date, endorsed to
the Purchaser, or its designee, in conformity with the requirements of the
definition of "Mortgage File" in the Pooling and Servicing Agreement and each
such endorsement is genuine.
3. Payment Record. Such Mortgage Loan was not as of the Cut-off Date for
such Mortgage Loan, and has not been during the twelve-month period prior
thereto, 30 days or more delinquent in respect of any debt service payment
required thereunder, without giving effect to any applicable grace period.
4. Lien; Valid Assignment. The Mortgage related to and delivered in
connection with each Mortgage Loan constitutes a legal, valid and, subject to
the exceptions set forth in Paragraph 13 below, enforceable first priority lien
upon the related Mortgaged Property, except for the following (collectively, the
"Permitted Encumbrances"): (a) the lien for current real estate taxes, water
charges, sewer rents and assessments not yet due and payable; (b) covenants,
conditions and restrictions, rights of way, easements and other matters that are
of public record and are referred to in the related lender's title insurance
policy (or, if not yet issued, referred to in a pro forma title policy or title
policy commitment meeting the requirements described in Paragraph 8 below); (c)
exceptions and exclusions specifically referred to in the related lender's title
insurance policy (or, if not yet issued, referred to in a pro forma title policy
or title policy commitment meeting the requirements described in Paragraph 8
below); (d) other matters to which like properties are commonly subject; (e) the
rights of tenants (as tenants only) under leases (including subleases)
pertaining to the related Mortgaged Property; (f) condominium declarations of
record and identified in the related lender's title insurance policy (or, if not
yet issued, identified in a pro forma title policy or title policy commitment
meeting the requirements described in Paragraph 8 below); and (g) if such
Mortgage Loan constitutes a Cross-Collateralized Mortgage Loan, the lien of the
Mortgage for another Mortgage Loan contained in the same group of
Cross-Collateralized Mortgage Loans. With respect to each Mortgage Loan, such
Permitted Encumbrances do not, individually or in the aggregate, materially
interfere with
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the security intended to be provided by the related Mortgage, the current
principal use of the related Mortgaged Property, the current ability of the
related Mortgaged Property to generate income sufficient to service such
Mortgage Loan or materially and adversely affect the value of the Mortgage Loan
.. The related assignment of the Mortgage for each Mortgage Loan, executed and
delivered in favor of the Trustee, is in recordable form (but for insertion of
the name and address of the assignee and any related recording information which
is not yet available to the Mortgage Loan Seller) to validly and effectively
convey the assignor's interest therein and constitutes a legal, valid, binding
and, subject to the exceptions set forth in Paragraph 13 below, enforceable
assignment of such Mortgage from the relevant assignor to the Trustee.
5. Assignment of Leases. There exists as part of the related Mortgage File
an Assignment of Leases (an "Assignment of Leases") either as a separate
document or as part of the Mortgage. Each related Assignment of Leases creates a
valid, first priority collateral assignment of, or a valid perfected first
priority lien on or security interest in, certain rights under the related lease
or leases, including the right to receive all payment due under the related
Lease, subject only to a license granted to the related Mortgagor to exercise
certain rights and to perform certain obligations of the lessor under such lease
or leases, including the right to operate the related leased property and none
of the related leases contains any restriction on such collateral assignment or
creation of a security interest therein, as applicable. The related assignment
of any Assignment of Leases not included in a Mortgage, executed and delivered
in favor of the Trustee is in recordable form (but for insertion of the name and
address of the assignee and any related recording information which is not yet
available to the Mortgage Loan Seller) to validly and effectively convey the
assignor's interest therein and constitutes a legal, valid, binding and, subject
to the exceptions set forth in Paragraph 13 below, enforceable assignment of
such Assignment of Leases from the relevant assignor to the Trustee.
6. Mortgage Status; Waivers and Modifications. The terms of the Mortgage
Loan have not been waived, modified, altered, satisfied, impaired, canceled,
subordinated or rescinded in any manner which materially interferes with the
security provided by such Mortgage Loan and the related Mortgaged Property other
than any material amendment or modification which has been effected pursuant to
a written instrument and has been duly submitted for recordation to the extent
necessary to protect the interests of the mortgagee, and is a part of the
related Mortgage File. Except as set forth on Schedule B-6, no consents,
waivers, modifications, alterations or assumptions of any kind with respect to a
Mortgage Loan have occurred since the date upon which the due diligence file
related to the applicable Mortgage Loan was delivered to Allied Capital
Corporation. The Mortgage Loan Seller has not taken any affirmative action
inconsistent with the Servicing Standard that would cause the representations
and warranties of the related Mortgagor under the Mortgage Loan not to be true
and correct in any material respect.
7. Condition of Property; Condemnation. In the case of each Mortgage Loan,
one or more engineering reports were prepared in connection with the origination
of such Mortgage Loan by an independent third-party engineering firm who
inspected the Mortgaged Property, and except as set forth in such engineering
assessment(s) or on Schedule B-7A, the related Mortgaged Property is, to the
Mortgage Loan Seller's knowledge, free and clear of any damage that would
materially and adversely affect its value as security for such Mortgage Loan
(except in cases set forth in clauses (a), (b) and (c) below). As of origination
of such Mortgage Loan there was no proceeding pending, and subsequent to such
date, the Mortgage Loan Seller has not
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received actual notice of, any proceeding pending for the condemnation of all or
any material portion of the Mortgaged Property. Except as set forth on Schedule
B-7B, if any of the engineering reports referred to above in this Paragraph 7
revealed any material damage or material deferred maintenance, then one of the
following is true: (a) the repairs and/or maintenance necessary to correct such
condition have been completed in all material respects; (b) an escrow of funds
is required or a letter of credit was obtained in a percentage equal to 125% of
the amount reasonably estimated to be sufficient to complete the repairs and/or
maintenance necessary to correct such condition; or (c) the reasonable estimate
of the cost to complete the repairs and/or maintenance necessary to correct such
condition represented no more than (i) 2% of the value of the related Mortgaged
Property as reflected in an appraisal conducted in connection with the
origination of the subject Mortgage Loan or (ii) $50,000 whichever is less. As
of the date of the origination of each Mortgage Loan, except as set forth on
Schedule B-7B: (x) all of the material improvements on the related Mortgaged
Property lay wholly within the boundaries and, to the extent in effect at the
time of construction, building restriction lines of such property, except for
encroachments that are insured against by the lender's title insurance policy
referred to in Paragraph 8 below or that do not affect the value or current
principal use of such Mortgaged Property to any material extent, (y) no
improvements on adjoining properties encroached upon such Mortgaged Property so
as to affect the value or current principal use of such Mortgaged Property to
any material extent, except those encroachments that are insured against by the
lender's title insurance policy referred to in Paragraph 8 below and (z) the
Mortgaged Property securing each Mortgage Loan is located on or adjacent to a
public road, or has access to an irrevocable easement permitting ingress and
egress.
8. Title Insurance. The lien of each Mortgage securing a Mortgage Loan is
insured by an American Land Title Association (or an equivalent form of)
lender's title insurance policy (the "Title Policy") (except that if such policy
is yet to be issued, such insurance may be evidenced by a "marked up" pro forma
policy or title commitment in either case marked as binding and countersigned by
the title company or its authorized agent, either on its face or by an
acknowledged closing instruction or escrow letter) in the original principal
amount of such Mortgage Loan after all advances of principal, insuring the
originator of the related Mortgage Loan, its successors and assigns (as the sole
insured) that the related Mortgage is a valid first priority lien on such
Mortgaged Property, subject only to the Permitted Encumbrances. Such Title
Policy (or, if it has yet to be issued, the coverage to be provided thereby) is
in full force and effect, all premiums thereon have been paid, the Mortgage Loan
Seller has made no claims thereunder and, to the Mortgage Loan Seller's
knowledge, no prior holder of the related Mortgage has made any claims
thereunder and no claims have been paid thereunder. The Mortgage Loan Seller has
not, and to the Mortgage Loan Seller's knowledge, no prior holder of the related
Mortgage has done anything that would materially impair the coverage under such
Title Policy. Immediately following the transfer and assignment of the related
Mortgage Loan to the Trustee (including endorsement and delivery of the related
Mortgage Note to the Purchaser or its designee and recording of the related
Assignment of Mortgage in favor of the Purchaser or its designee in the
applicable real estate records), such Title Policy (or, if it has yet to be
issued, the coverage to be provided thereby) will inure to the benefit of the
Trustee without the consent of or notice to the insurer. Such Title Policy
contains no exclusion for any of the following circumstances, or it
affirmatively insures (unless the related Mortgaged Property is located in a
jurisdiction where such affirmative insurance is not available), (a) that the
related Mortgaged Property has access to a public road, and (b) that the area
shown on the survey, if any, reviewed
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or prepared in connection with the origination of the related Mortgage Loan is
the same as the property legally described in the related Mortgage. Such Title
Policy contains no exclusion regarding the encroachment upon any easements of
any permanent improvements located on the related Mortgaged Property for which
the grantee of such easement has the ability to force removal of such
improvement, or such Title Policy affirmatively insures against losses caused by
forced removal of any material permanent improvements on the related Mortgaged
Property that encroach upon any material easements.
9. No Holdback. The proceeds of each Mortgage Loan have been fully
disbursed (except in those cases where the full amount of the Mortgage Loan has
been disbursed but a portion thereof is being held in escrow or reserve accounts
pending the satisfaction of certain conditions relating to leasing, repairs or
other matters with respect to the related Mortgaged Property), and there is no
obligation for future advances with respect thereto. If the related Mortgage
Loan documents include any requirements regarding (a) the completion of any
on-site or off-site improvements and (b) the disbursement of any funds escrowed
for such purpose, and if those requirements were to have been complied with on
or before the Closing Date, then such requirements have been complied with in
all material respects or such funds so escrowed have not been released except to
the extent specifically provided by the related Mortgage Loan documents.
10. Mortgage Provisions. The Mortgage Note, Mortgage (along with any
security agreement and UCC financing statement) and Assignment of Leases for
each Mortgage Loan, together with applicable state law, contain customary and,
subject to the exceptions set forth in Paragraph 13 below, enforceable
provisions for commercial Mortgage Loans such as to render the rights and
remedies of the holder thereof adequate for the practical realization against
the related Mortgaged Property of the principal benefits of the security
intended to be provided thereby. The Mortgage Loan documents for each Mortgage
Loan, subject to applicable law, provide for the appointment of a receiver for
the collection of rents or for the related mortgagee to enter into possession to
collect the rents if there is an event of default under such Mortgage Loan.
11. Trustee under Deed of Trust. If the Mortgage for any Mortgage Loan is a
deed of trust, then (a) a trustee, duly qualified under applicable law to serve
as such, has either (i) been properly designated, has accepted such designation
and currently so serves or (ii) may be substituted in accordance with the
Mortgage and applicable law, and (b) no fees or expenses are payable to such
trustee by the Mortgage Loan Seller, the Depositor or any transferee thereof
except for such fees and expenses (all of which are the obligation of the
related Mortgagor under the related Mortgage Loan documents) as would be payable
in connection with a trustee's sale after default by the related Mortgagor or in
connection with any full or partial release of the related Mortgaged Property or
related security for such Mortgage Loan.
12. Environmental Conditions. Except in the case of the Mortgaged
Properties identified on Schedule B-12A, (a) an environmental site assessment
meeting the requirements of the American Society for Testing and Materials and
covering all environmental hazards typically assessed for similar properties
including use, type and tenants of the Mortgaged Property ("Environmental
Report"), or an update of such an assessment, was performed by a licensed (to
the extent required by applicable state law) reputable, independent third-party
environmental
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consulting firm with respect to each Mortgaged Property in connection with the
origination of such Mortgage Loan and/or thereafter updated such that, except as
set forth on Schedule B-12B, such Environmental Report is dated no earlier than
twelve months prior to the Closing Date, (b) a copy of each such Environmental
Report has been delivered to the Purchaser, and (c) either: (i) no such
Environmental Report provides that as of the date of the report there is a
material violation of any applicable environmental laws with respect to any
circumstances or conditions relating to the related Mortgaged Property; or (ii)
if any such Environmental Report does reveal any such circumstances or
conditions with respect to the related Mortgaged Property and the same have not
been subsequently remediated in all material respects, then, except as described
on Schedule B-12C, one or more of the following are true: (A) one or more
parties not related to or including the related Mortgagor and collectively
having financial resources reasonably estimated by the Mortgage Loan Seller at
the time of origination to be adequate to cure the subject violation in all
material respects, were identified as the responsible party or parties for such
condition or circumstance and such condition or circumstance does not materially
impair the value of the Mortgaged Property, (B) the related Mortgagor was
required to provide additional security reasonably estimated by the Mortgage
Loan Seller at the time of origination to be adequate to cure the subject
violation in all material respects, (C) if and to the extent that such condition
or circumstances can, based upon the recommendation set forth in the subject
Environmental Report, be remediated or otherwise appropriately addressed in all
material respects through the implementation of an operations and maintenance
plan, the related Mortgagor was required to obtain and maintain an operations
and maintenance plan, (D) the related Mortgagor, or other responsible party,
provided a "no further action" letter or other evidence reasonably acceptable to
a reasonably prudent commercial mortgage lender that applicable federal, state
or local governmental authorities had no current intention of taking any action,
and are not requiring any action, in respect of such condition or circumstance,
(E) such conditions or circumstances were investigated further and based upon
such additional investigation, an independent third-party environmental
consultant recommended no further investigation or remediation, (F) the
expenditure of funds reasonably estimated to be necessary to effect such
remediation is not greater than the lesser of 2% of the outstanding principal
balance of the related Mortgage Loan or $50,000, (G) there exists an escrow of
funds reasonably estimated by the Mortgage Loan Seller at origination to be
sufficient for purposes of effecting such remediation, (H) the related Mortgaged
Property is identified on Schedule B-12D and insured under a policy of insurance
subject to per occurrence and aggregate limits and a deductible, each as set
forth on Schedule C-12D, against certain losses arising from such circumstances
and conditions or (I) a party with financial resources reasonably estimated by
the Mortgage Loan Seller at the time of origination to be adequate to cure the
subject violation in all material respects provided a guaranty or indemnity to
the related Mortgagor to cover the costs of any required investigation, testing,
monitoring or remediation. To the Mortgage Loan Seller's actual knowledge,
having made no independent inquiry other than reviewing the Environmental
Reports(s) and employing an environmental consultant to perform the
assessment(s) referenced herein, there are no material circumstances or
conditions with respect to any Mortgaged Property not revealed in any such
Environmental Report, where obtained, that render such Mortgaged Property in
material violation of any applicable environmental laws. The Mortgage Loan
documents for each Mortgage Loan require the related Mortgagor to comply with
all applicable federal, state and local environmental laws and regulations. The
Mortgage Loan Seller has not taken any affirmative action which would cause the
Mortgaged Property securing any Mortgage
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Loan not to be in compliance with all federal, state and local laws pertaining
to environmental hazards. Each Mortgagor represents and warrants in the related
Mortgage Loan documents substantially to the effect that, except as set forth in
certain specified environmental reports and to the Mortgagor's knowledge, as of
the date of origination, it has not used, caused or permitted to exist and will
not use, cause or permit to exist on the related Mortgaged Property any
hazardous materials which violate federal, state or local laws, ordinances,
regulations, orders, directives, or policies governing the use, storage,
treatment, transportation, manufacture, refinement, handling, production or
disposal of hazardous materials. Unless the related Mortgaged Property is
identified on Schedule B-12D, the related Mortgagor (or an affiliate thereof)
has agreed to indemnify mortgagee against, or otherwise be liable for, any and
all losses resulting from a breach of environmental representations, warranties
or covenants given by the Mortgagor in connection with such Mortgage Loan,
generally including any and all losses, liabilities, damages, injuries,
penalties, fines, expenses and claims of any kind or nature whatsoever
(including without limitation, attorneys' fees and expenses) paid, incurred or
suffered by or asserted against, any such party resulting from such breach.
13. Loan Document Status. Each Mortgage Note, Mortgage, and other agreement
executed by or on behalf of the related Mortgagor, or any guarantor of
non-recourse exceptions and environmental liability, with respect to each
Mortgage Loan is the legal, valid and binding obligation of the maker thereof
(subject to any non-recourse provisions contained in any of the foregoing
agreements and any applicable state anti-deficiency or market value limit
deficiency legislation), enforceable in accordance with its terms, except as
such enforcement may be limited by (i) bankruptcy, insolvency, reorganization,
fraudulent transfer and conveyance or other similar laws affecting the
enforcement of creditors' rights generally and (ii) general principles of equity
(regardless of whether such enforcement is considered in a proceeding in equity
or at law), and except that certain provisions in such loan documents may be
further limited or rendered unenforceable by applicable law. There is no right
of rescission, offset, abatement, diminution or valid defense or counterclaim
available to the related Mortgagor with respect to such Mortgage Note, Mortgage
or other agreements that would deny the mortgagee the principal benefits
intended to be provided thereby. The Mortgage Loan Seller has no actual
knowledge of any such rights, defenses or counterclaims having been asserted.
14. Insurance. Except as otherwise set forth on Schedule B-14A, all
improvements upon each Mortgaged Property are insured under a fire and extended
perils insurance policy included within the classification "All Risk of Physical
Loss" insurance (or the equivalent) policy in an amount (subject to a customary
and reasonable deductible) at least equal to the full insurable replacement cost
of the improvements located on such Mortgaged Property, and if applicable, the
related hazard insurance policy contains appropriate endorsements to avoid the
application of coinsurance and does not permit reduction in insurance proceeds
for depreciation. Except in the case of the Mortgaged Properties identified on
Schedule B-14B hereto, each Mortgaged Property is the subject of a business
interruption, actual loss sustained or rent loss insurance policy providing
coverage for at least twelve (12) months (or a specified dollar amount which is
reasonably estimated to cover no less than twelve (12) months of rental income).
If any portion of the improvements upon the related Mortgaged Property was, at
the time of the origination of such Mortgage Loan, in a flood zone area as
identified in the Federal Register by the Federal Emergency Management Agency as
a 100 year flood zone or special hazard area, and flood insurance was available,
a flood insurance policy meeting any requirements of the then
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current guidelines of the Federal Insurance Administration is in effect with a
generally acceptable insurance carrier, in an amount representing coverage not
less than the least of (1) the outstanding principal balance of such Mortgage
Loan, (2) the full insurable value of such Mortgaged Property, (3) the maximum
amount of insurance available under the National Flood Insurance Act of 1968, as
amended, or (4) 100% of the replacement cost of the improvements located on such
Mortgaged Property. If any Mortgaged Property is located in the state of
California or in a "seismic zone" 3 or 4, a seismic assessment was conducted
(except in the case of mobile home parks) at the time of originations and
seismic insurance was obtained to the extent such Mortgaged Property has a PML
of greater than twenty percent (20%) calculated using at least a 450 a year look
back with a 10% probability of exceedance in a 50 year period. If the Mortgaged
Property for any Mortgage Loan is located in any of the locations set forth on
Schedule B-14WS, then such Mortgaged Property is insured by windstorm insurance
in an amount at least equal to the lesser of (i) the outstanding principal
balance of such Mortgage Loan and (ii) 100% of the insurable replacement cost of
the improvements located on the related Mortgaged Property. All such hazard and
flood insurance policies contain a standard mortgagee clause for the benefit of
the holder of the related Mortgage, its successors and assigns, as mortgagee,
and are not terminable (nor may the amount of coverage provided thereunder be
reduced) without thirty (30) days' (fifteen (15) days for non-payment of
premiums) prior written notice to the mortgagee; and no such notice has been
received, including any notice of nonpayment of premiums, that has not been
cured. Each Mortgaged Property and all improvements thereon are also covered by
comprehensive general liability insurance in such amounts as are generally
required by reasonably prudent commercial lenders or as recommended by a
reputable, independent insurance consultant. If any Mortgaged Property is, to
the Mortgage Loan Seller's knowledge, a materially non-conforming use or
structure under applicable zoning laws and ordinances, then, in the event of a
material casualty or destruction, one or more of the following is true: (i) such
Mortgaged Property may be restored or repaired to materially the same extent of
the use or structure at the time of such casualty; (ii) such Mortgaged Property
is covered by law and ordinance insurance in an amount customarily required by
reasonably prudent commercial mortgage lenders or as recommended by a reputable,
independent insurance consultant; or (iii) the amount of hazard insurance
currently in place and required by the related Mortgage Loan documents would
generate proceeds sufficient to pay off the subject Mortgage Loan. Additionally,
the insurer for all of the required coverages set forth herein has a claims
paying ability rating from Standard & Poor's, ▇▇▇▇▇'▇ or ▇▇▇▇▇ Ratings of not
less than A-minus (or the equivalent), or from A.M. Best of not less than "A:V"
(or the equivalent) except that for any Mortgage Loan having a Cut-off Date
Principal Balance equal to or greater than $20,000,000, the insurer for all of
the required coverages set forth herein has a claims paying ability rating from
Standard & Poor's, ▇▇▇▇▇'▇ or Fitch of not less than A (or the equivalent), or
from A.M. Best of not less than "A:IX" (or the equivalent). With respect to each
Mortgage Loan, the related Mortgage Loan documents require that the related
Mortgagor or a tenant of such Mortgagor maintain insurance as described above or
permit the Mortgagee to require insurance as described above. Except under
circumstances set forth in the related Mortgage Loan documents that would be
reasonably acceptable to a prudent commercial mortgage lender or that would not
otherwise materially and adversely affect the security intended to be provided
by the related Mortgage, the Mortgage Loan documents for each Mortgage Loan
provide that proceeds paid under any such casualty insurance policy will (or, at
the lender's option, will) be applied either to the repair or restoration of the
related Mortgaged Property or to
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the payment of amounts due under such Mortgage Loan; provided that the related
Mortgage Loan documents may entitle the related Mortgagor to any portion of such
proceeds remaining after the repair or restoration of the related Mortgaged
Property or payment of amounts due under the Mortgage Loan; and provided,
further, that, if the related Mortgagor holds a leasehold interest in the
related Mortgaged Property, the application of such proceeds will be subject to
the terms of the related Ground Lease (as defined in Paragraph 18 below). Based
on the due diligence performed by the Mortgage Loan Mortgage Loan Seller, which
in all events was at least such due diligence as a prudent commercial mortgage
lender (with respect to the below referenced insurance policies regarding the
origination of the related Mortgage Loan) or a prudent commercial mortgage
servicer (with respect to any renewal of the below referenced insurance policies
since the origination of the related Mortgage Loan) would undertake with respect
to such issue after September 11, 2001, for each Mortgage Loan, except as
indicated on Schedule B-14C, the related all risk property casualty insurance
policy and business interruption policy do not specifically exclude acts of
terrorism, or any related damage claims, from coverage as of the later of (i)
the date of origination of the Mortgage Loan and (ii) the last date as of which
the policy was renewed or amended except as indicated on Schedule __, and the
related loan documents do not expressly prohibit or waive such coverage, except
to the extent that any right to require such coverage may be limited by
commercially reasonable availability. To the Mortgage Loan Seller's actual
knowledge, all insurance policies described above are with an insurance carrier
qualified to write insurance in the relevant jurisdiction and all insurance
described above is in full force and effect.
15. Taxes and Assessments. No real estate taxes or governmental assessments
or governmental charges that prior to the Cut-Off Date became due and owing in
respect of each Mortgaged Property are delinquent and unpaid, or, an escrow of
funds in an amount sufficient to pay such payments has been established. Such
taxes, assessments and charges shall not be considered delinquent and unpaid
until the date on which interest or penalties may first be payable thereon.
16. Mortgagor Bankruptcy. No Mortgaged Property, nor any portion thereof is
the subject of, and no Mortgagor under a Mortgage Loan is a debtor in, any state
or federal bankruptcy, insolvency or similar proceeding.
17. Local Law Compliance. To the Mortgage Loan Seller's knowledge, based
upon a letter from governmental authorities, an opinion of counsel, a zoning
consultant's report, an endorsement to the related Title Policy, or (when such
would be acceptable to a reasonably prudent commercial mortgage lender) a
representation of the related Mortgagor at the time of origination of the
subject Mortgage Loan, or based on such other due diligence considered
reasonable by prudent commercial mortgage lenders in the lending area where the
subject Mortgaged Property is located, except as described on Schedule B-17, the
improvements located on or forming part of, and the existing use of, each
Mortgaged Property: (i) are not in violation of any applicable building codes or
land laws applicable to the Mortgaged Property, the improvements thereon or the
use and occupancy thereof which would have a material adverse effect on the
value, operation, current principal use or net operating income of the Mortgaged
Property which are not covered by title insurance; and (ii) are in material
compliance with applicable zoning laws and ordinances, including all such
applicable parking ordinances or requirements, or constitute a legal
non-conforming use or structure (provided that with respect to
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any non-conformity with such laws or ordinances either: (x) in the event of
casualty or destruction, the use or structure may be restored or repaired to the
full extent of the use or structure at the time of such casualty as provided in
Paragraph 14 above; (y) law and ordinance insurance coverage has been obtained
for the structure or use as provided in Paragraph 14 above; or (z) such
non-compliance does not materially and adversely affect the value of the related
Mortgaged Property).
18. Leasehold Estate Only. If any Mortgage Loan is secured by the interest
of a Mortgagor as a lessee under a ground lease (together with any and all
written amendments and modifications thereof and any and all estoppels from or
other agreements with the ground lessor, a "Ground Lease"), but not by the
related fee interest in the subject real property (the "Fee Interest"), then,
except as set forth on Schedule B-18:
(a) Such Ground Lease or a memorandum thereof has been or will be duly
recorded; such Ground Lease permits the interest of the lessee thereunder
to be encumbered by the related Mortgage and does not restrict the use of
the related Mortgaged Property by such lessee, its successors or assigns in
a manner that would materially adversely affect the security provided by
the related Mortgage; to the extent required under such Ground Lease, the
lessor under such Ground Lease has been sent notice of the lien of the
related Mortgage in accordance with the provisions of such Ground Lease;
and there has been no material change in the terms of such Ground Lease
since its recordation, with the exception of material changes reflected in
written instruments which are a part of the related Mortgage File;
(b) The lessee's interest in such Ground Lease is not subject to any
liens or encumbrances superior to, or of equal priority with, the related
Mortgage, other than Permitted Encumbrances, and such Ground Lease provides
that it shall remain superior to any mortgage or other lien upon the
related Fee Interest;
(c) The Mortgagor's interest in such Ground Lease is assignable to the
Purchaser and its successors and assigns upon notice to, but without the
consent of, the lessor thereunder (or, if such consent is required, it has
been obtained prior to the Closing Date); and in the event that it is so
assigned, is further assignable by the Purchaser and its successors and
assigns upon notice to, but without the need to obtain the consent of such
lessor;
(d) Such Ground Lease is in full force and effect, and the Mortgage
Loan Seller has not received, as of the Closing Date, any notice that an
event of default has occurred thereunder and to the Mortgage Loan Seller's
actual knowledge, there exists no condition that, but for the passage of
time or the giving of notice, or both, would result in an event of default
under the terms of such Ground Lease;
(e) Such Ground Lease requires the lessor under such Ground Lease
thereunder to give notice of any default by the lessee to the mortgagee
under such Mortgage Loan provided such mortgagee has provided such lessor
with notice of its lien in accordance with the provisions of such Ground
Lease and such Ground Lease further provides that no notice of termination
given under such Ground Lease is effective against
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the mortgagee under such Mortgage Loan unless a copy has been delivered to
such mortgagee in the manner described in such Ground Lease and the
Mortgage Loan Seller has provided such lessor with notice of the lien of
the related Mortgage in accordance with the provisions of such Ground
Lease;
(f) The mortgagee under such Mortgage Loan is permitted a reasonable
opportunity (including, where necessary, sufficient time to gain possession
of the interest of the lessee under such Ground Lease) to cure any default
under such Ground Lease, which is curable after the receipt of notice of
any such default, before the lessor thereunder may terminate such Ground
Lease;
(g) Except as set forth on Schedule B-18G, such Ground Lease has an
original term (or an original term plus options exercisable by the holder
of the related Mortgage) which extends not less than twenty (20) years
beyond the end of the amortization term of such Mortgage Loan;
(h) Such Ground Lease requires the lessor to enter into a new lease
with a mortgagee upon termination of such Ground Lease by reason of default
by the Mortgagor including termination as a result of a rejection of such
Ground Lease in a bankruptcy proceeding;
(i) Under the terms of such Ground Lease and the related Mortgage,
taken together, any related insurance proceeds, will be applied either to
the repair or restoration of all or part of the related Mortgaged Property,
with the mortgagee or a trustee appointed by it having the right to hold
and disburse such proceeds as the repair or restoration progresses (except
in such cases where a provision entitling another party to hold and
disburse such proceeds would not be viewed as commercially unreasonable by
a prudent commercial mortgage lender), or to the payment of the outstanding
principal balance of the Mortgage Loan together with any accrued interest
thereon. Under the terms of such Ground Lease and the related Mortgage Loan
documents, taken together, any condemnation proceeds or awards in respect
of a total or substantially total taking will be applied first to the
payment of the outstanding principal and interest on the Mortgage Loan
(except as otherwise provided by applicable law) and subject to any rights
to require the improvements to be rebuilt;
(j) Such Ground Lease does not impose any restrictions on subletting
which would be viewed as commercially unreasonable by a prudent commercial
mortgage lender and such Ground Lease contains a covenant that the lessor
thereunder is not permitted, in the absence of an uncured default, to
disturb the possession, interest or quiet enjoyment of any subtenant of the
lessee, or in any manner, which would materially adversely affect the
security provided by the related Mortgage;
(k) The lessor under such Ground Lease is not permitted in the absence
of an uncured default to disturb the possession, interest or quiet
enjoyment of the tenant in any manner, which would materially adversely
affect the security provided by such Ground Lease and the related Mortgage;
and
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(l) Such Ground Lease provides that it may not be amended or modified
without the prior consent of the mortgagee under such Mortgage Loan and
that any such action without such consent is not binding on such mortgagee,
its successors or assigns.
19. Qualified Mortgage. Such Mortgage Loan is a "qualified mortgage" within
the meaning of Section 860G(a)(3) of the Code and Treasury regulation section
1.860G-2(a), and the related Mortgaged Property, if acquired in connection with
the default or imminent default of such Mortgage Loan, would constitute
"foreclosure property" within the meaning of Section 860G(a)(8) (without regard
to Section 856(e)(4) of the Code).
20. Advancement of Funds. The Mortgage Loan Seller has not (nor, to the
Mortgage Loan Seller's knowledge, has any prior holder of such Mortgage Loan)
advanced funds or knowingly received any advance of funds from a party other
than the owner of the related Mortgaged Property (or a tenant at or the property
manager of the related Mortgaged Property), for the payment of any amount
required by such Mortgage Loan, except for interest accruing from the date of
origination of such Mortgage Loan or the date of disbursement of the Mortgage
Loan proceeds, whichever is later, to the date which preceded by 30 days the
first due date under the related Mortgage Note.
21. No Equity Interest, Equity Participation or Contingent Interest. No
Mortgage Loan contains any equity participation by the lender or shared
appreciation feature and does not provide for any contingent or additional
interest in the form of participation in the cash flow of the related Mortgaged
Property or provide for negative amortization. Neither the Mortgage Loan Seller
nor any Affiliate thereof has any obligation to make any capital contribution to
the Mortgagor under the Mortgage Loan or otherwise.
22. Legal Proceedings. To the Mortgage Loan Seller's knowledge, as of
origination of the Mortgage Loan, there were no, and to the Mortgage Loan
Seller's actual knowledge, as of the Closing Date, there are no pending actions,
suits, litigation or other proceedings by or before any court or governmental
authority against or affecting the Mortgagor (or any guarantor to the extent a
reasonably prudent commercial or multifamily, as applicable, mortgage lender
would consider such guarantor material to the underwriting of such Mortgage
Loan) under any Mortgage Loan or the related Mortgaged Property that, if
determined adversely to such Mortgagor or Mortgaged Property, would materially
and adversely affect the value of the Mortgaged Property as security for such
Mortgage Loan, the Mortgagor's ability to pay principal, interest or any other
amounts due under such Mortgage Loan or the ability of any such guarantor to
meet its obligations under the applicable guaranty.
23. Other Mortgage Liens. Except as otherwise set forth on Schedule B-23,
none of the Mortgage Loans permits the related Mortgaged Property or any direct
controlling interest in the related Mortgagor to be encumbered by any mortgage
lien or, in the case of a direct controlling interest in the related Mortgagor,
a lien to secure any other debt, without the prior written consent of the holder
of the subject Mortgage Loan or the satisfaction of debt service coverage or
similar criteria specified therein. To the Mortgage Loan Seller's knowledge, as
of origination of the subject Mortgage Loan, and to the Mortgage Loan Seller's
actual knowledge, as of the Closing Date, except as otherwise set forth on
Schedule B-23, and except for cases involving other Mortgage Loans, no Mortgaged
Property securing the subject Mortgage Loan is
B-12
encumbered by any other mortgage liens (other than Permitted Encumbrances) and
no direct controlling equity interest in the related Mortgagor is encumbered by
a lien to secure any other debt. The related Mortgage Loan documents do not
specifically prohibit the mortgagee from requiring the Mortgagor under each
Mortgage Loan to pay all reasonable costs and expenses related to any required
consent to an encumbrance, including reasonable legal fees and expenses and any
applicable Rating Agency fees, or would permit the subject mortgagee to withhold
such consent if such costs and expenses are not paid by a party other than such
mortgagee.
24. No Mechanics' Liens. To the Mortgage Loan Seller's knowledge, as of the
origination of the Mortgage Loan, and, to the Mortgage Loan Seller's actual
knowledge, as of the Closing Date: (i) each Mortgaged Property (exclusive of any
related personal property) is free and clear of any and all mechanics' and
materialmen's liens that are prior or equal to the lien of the related Mortgage
and that are not bonded or escrowed for or covered by title insurance, and (ii)
no rights are outstanding that under law could give rise to any such mechanic's
or materialmen's lien that would be prior or equal to the lien of the related
Mortgage and that is not bonded or escrowed for or covered by title insurance.
25. Compliance with Usury Laws. Each Mortgage Loan complied with, or was
exempt from, all applicable usury laws in effect at its date of origination.
26. Licenses and Permits. Except as set forth on Schedule B-26, each
Mortgage Loan contains provisions substantially to the effect that, to the
extent required by applicable law, each Mortgagor is required to be qualified to
do business and requires the related Mortgagor and the related Mortgaged
Property to be in material compliance with all regulations, licenses, permits,
authorizations, restrictive covenants and zoning, parking and building laws or
ordinances, in each case to the extent required by law or to the extent that the
failure to be so qualified or in compliance would have a material and adverse
effect upon the enforceability of the Mortgage Loan or upon the practical
realization against the related Mortgaged Property of the principal benefits of
the security intended to be provided thereby.
27. Cross-Collateralization. No Mortgage Loan is cross-collateralized with
any loan which is outside the Mortgage Pool. With respect to any group of
cross-collateralized Mortgage Loans, the sum of the amounts of the respective
Mortgages upon which recording taxes and fees were paid in an amount sufficient
to allow the mortgagee to realize on the Mortgaged Properties in an amount at
least equal to the original principal balance of such Mortgage Loan.
28. Releases of Mortgaged Properties. Except as set forth on Schedule
B-28A, no Mortgage Note or Mortgage requires the mortgagee to release all or any
material portion of the related Mortgaged Property from the lien of the related
Mortgage except upon: (i) payment in full of all amounts due under the related
Mortgage Loan or (ii) delivery of "government securities" within the meaning of
Treas. Reg. Section 1.860G-2(a)(8)(i) in connection with a defeasance of the
related Mortgage Loan; provided that the Mortgage Loans that are
Cross-Collateralized Mortgage Loans, and the other individual Mortgage Loans
secured by multiple parcels, may require the respective mortgagee(s) to grant
releases of material portions of the related Mortgaged Property or the release
of one or more related Mortgaged Properties upon: (i) the satisfaction of
certain legal and underwriting requirements, (ii) the payment of a release price
for the released property or parcel as set forth on Schedule C-28B or (iii) the
delivery of
B-13
comparable substitute real estate collateral subject to certain conditions
precedent as set forth on Schedule B-28C. Notwithstanding the foregoing, any
Mortgage Loan may permit the unconditional release of one or more unimproved
parcels of land to which the Mortgage Loan Seller did not give any material
value in its underwriting of such Mortgage Loan. No release or partial release
of any Mortgaged Property, or any portion thereof, expressly permitted pursuant
to the terms of any Mortgage Note or Mortgage will constitute a significant
modification of the related Mortgage Loan under Treas. Reg. Section
1.860G-2(b)(2). With respect to any release or substitution, the related
Mortgagor is required to pay all reasonable costs and expenses associated
therewith incurred by the mortgagee including any Rating Agency fees and
expenses.
29. Defeasance. Each Mortgage Loan containing provisions for defeasance of
all or a portion of the Mortgaged Property either (i) requires the prior written
consent of, and compliance with all conditions set by, the holder of the
Mortgage Loan, or (ii) requires confirmation from the rating agencies rating the
certificates of any securitization transaction in which such Mortgage Loan is
included that such defeasance will not cause the downgrade, withdrawal or
qualification of the then current ratings of such certificates, and (iii)
requires that (A) defeasance must occur in accordance with the requirements of,
and within the time permitted by, applicable REMIC rules and regulations, (B)
the replacement collateral consists of non-callable U.S. government securities
in an amount sufficient to make all scheduled payments under such Mortgage Loan
when due, (C) at the mortgagee's election, the Mortgage Loan may only be assumed
by a single-purpose entity designated or approved by the holder of the Mortgage
Loan and (D) counsel provide an opinion that the Trustee has a perfected
security interest in such U.S. government securities prior to any other claim or
interest. The Mortgagor is required by the Mortgage Loan documents to pay all
reasonable costs and expenses, including but not limited to Rating Agency fees,
accountants fees and legal fees, associated with such defeasance.
30. Inspection. Except as set forth on Schedule B-30, the Mortgage Loan
Seller, an affiliate of the Mortgage Loan Seller, or a correspondent in the
conduit funding program of the Mortgage Loan Seller, inspected, or caused the
inspection of, each Mortgaged Property within twelve (12) months of the Closing
Date.
31. No Material Default. Other than payments due but not yet 30 days or
more past due, there exists no material default, breach, violation or event of
acceleration under the Mortgage Note or Mortgage for any Mortgage Loan;
provided, however, that this representation and warranty does not cover any
default, breach, violation or event of acceleration that specifically pertains
to or arises out of the subject matter otherwise covered by any other
representation and warranty made by the Mortgage Loan Seller in this Exhibit B.
32. Due-on-Sale. The Mortgage for each Mortgage Loan contains a
"due-on-sale" clause, which provides for the acceleration of the payment of the
unpaid principal balance of such Mortgage Loan if, without the prior written
consent of the holder of such Mortgage, either the related Mortgaged Property,
or any direct controlling equity interest in the related Mortgagor, is
transferred or sold, other than by reason of family and estate planning
transfers, transfers of less than a controlling interest in the Mortgagor,
transfers of shares in public companies, issuance of non-controlling new equity
interests, transfers to an affiliate meeting the requirements of the Mortgage
Loan, transfers among existing members, partners or shareholders in the
Mortgagor, transfers among affiliated Mortgagors with respect to
cross-collateralized Mortgaged Loans or
B-14
multi-property Mortgage Loans, transfers among co-Mortgagors or transfers of a
similar nature to the foregoing meeting the requirements of the Mortgage Loan.
The related Mortgage Loan documents require the Mortgagor under each Mortgage
Loan to pay all reasonable fees and expenses associated with securing the
consent or approval of the holder of the related Mortgage for all such actions
requiring such consent or approval under the related Mortgage, including Rating
Agency fees and the cost of counsel opinions relating to REMIC or other
securitization tax issues.
33. Single Purpose Entity. Except as otherwise described on Schedule B-33
hereto, each Mortgage Loan with an original principal balance over $5,000,000.00
requires the related Mortgagor to be, at least for so long as the Mortgage Loan
is outstanding, and to the Mortgage Loan Seller's actual knowledge, the related
Mortgagor is, a Single-Purpose Entity. For this purpose, "Single-Purpose Entity"
means a person, other than an individual, which is formed or organized solely
for the purpose of owning and operating the related Mortgaged Property or
Properties; does not engage in any business unrelated to such Mortgaged Property
or Properties and the financing thereof; and whose organizational documents
provide, or which entity represented and covenanted in the related Mortgage Loan
documents, substantially to the effect that such Mortgagor (i) does not and will
not have any material assets other than those related to its interest in such
Mortgaged Property or Properties or the financing thereof; (ii) does not and
will not have any indebtedness other than as permitted by the related Mortgage
or other related Mortgage Loan documents; (iii) maintains its own books, records
and accounts, in each case which are separate and apart from the books, records
and accounts of any other person; and (iv) holds itself out as being a legal
entity, separate and apart from any other person. In addition, each Mortgage
Loan with a Cut-off Date Principal Balance of $20,000,000 or more, except as set
forth on Schedule B-33, the related Mortgagor's organizational documents provide
substantially to the effect that the Mortgagor shall: conduct business in its
own name; not guarantee or assume the debts or obligations of any other person;
not commingle its assets or funds with those of any other person; prepare
separate tax returns and financial statements, or if part of a consolidated
group, be shown as a separate member of such group; transact business with
affiliates on an arm's length basis; hold itself out as being a legal entity,
separate and apart from any other person, and such organizational documents
further provide substantially to the effect that: any dissolution and winding up
or insolvency filing for such entity is prohibited or requires the consent of an
independent director or member or the unanimous consent of all partners or
members, as applicable; such documents may not be amended with respect to the
Single-Purpose Entity requirements without the approval of the mortgagee or
rating agencies; the Mortgagor shall have an outside independent director or
member. The Mortgage Loan Seller has obtained, and the Servicing File contains,
with respect to each Mortgage Loan having a Cut-off Date Principal Balance of
$20,000,000 or more, in connection with its origination or acquisition thereof,
a counsel's opinion regarding non-consolidation of the Mortgagor. The
organization documents of any Mortgagor on a Mortgage Loan having a Cut-off Date
Principal Balance of $20,000,000 or more that is a single member limited
liability company, provide that the Mortgagor shall not dissolve or liquidate
upon the bankruptcy, dissolution, liquidation or death of the sole member and
the Mortgage Loan Seller has obtained in connection with its origination or
acquisition of the subject Mortgage Loan, and the Servicing File contains, an
opinion of such Mortgagor's counsel confirming that the law of the jurisdiction
in which such single member limited liability company was organized permits such
continued existence upon such bankruptcy, dissolution, liquidation or death of
the sole member of the Mortgagor and that the applicable law
B-15
provides that creditors of the single member may only attach the assets of the
member including the membership interests in the Mortgagor but not the assets of
the Mortgagor.
34. Whole Loan. Each Mortgage Loan is a whole loan and not a participation
interest in a mortgage loan.
35. Tax Parcels. Except as described on Schedule B-35 of this Agreement,
each Mortgaged Property constitutes one or more complete separate tax lots
containing no other property, or is subject to an endorsement under the related
Title Policy insuring same, or an application for the creation of separate tax
lots complying in all respects with the applicable laws and requirements of the
applicable governing authority has been made and approved by the applicable
governing authority and such separate tax lots shall be effective for the next
tax year.
36. Security Interests. UCC Financing Statements have been filed and/or
recorded (or, if not filed and/or recorded, have been submitted in proper form
for filing and recording), in all public places necessary to perfect a valid
security interest in all items of personal property owned by a Mortgagor and
located on the related Mortgaged Property (other than any personal property
subject to a leasing arrangement or purchase money security interest permitted
under the terms of such Mortgage Loan or any other applicable personal property
leases, provided, the related Mortgage Loan documents contain a provision
providing for the assignment of such leases and related contracts to the
mortgagee in the event of a foreclosure of the Mortgage Loan), which in all
cases, includes any elevators and all Mortgagor-owned furniture, fixtures and
equipment material to the operation and use of the Mortgaged Property as
presently operated, and if such Mortgaged Property is a hotel or self-storage
facility, operated by the related Mortgagor, then such personal property
constitutes all of the material personal property required to operate the
Mortgagor's business as currently operated (other than any personal property
subject to a leasing arrangement or purchase money security interest permitted
under the terms of such Mortgage Loan or any other applicable personal property
leases, provided, the related Mortgage Loan documents contain a provision
providing for the assignment of such leases and related contracts to the
mortgagee in the event of a foreclosure of the Mortgage Loan) and the Mortgages,
security agreements, chattel mortgages or equivalent documents related to and
delivered in connection with the related Mortgage Loan establish and create a
valid and enforceable first priority (except as noted above in this Paragraph
36) lien and security interest, to the extent perfection may be effected
pursuant to applicable law solely by recording or filing UCC Financing
Statements, on such items of personalty except as enforceability may be limited
as set forth in Paragraph 13. In the case of each Mortgage Loan secured by a
hotel, the related loan documents contain such provisions as are necessary and
UCC Financing Statements have been filed as necessary, in each case, to perfect
a valid first security interest in Mortgagor's related operating revenues with
respect to such Mortgaged Property. An assignment of each UCC Financing
Statement relating to the Mortgage Loan has been completed or will be prepared
in blank which the Purchaser or Trustee, as applicable, or its designee is
authorized to complete and to file in the filing office in which such Financing
Statement was filed. Notwithstanding any of the foregoing, no representation is
made as to the perfection or priority of any security interest in rents or other
personal property to the extent that possession or control of such items or
actions other than the filing of UCC Financing Statements are required in order
to effect such perfection.
B-16
37. Disclosure to Environmental Insurer and Other Matters. If the Mortgaged
Property securing any Mortgage Loan is covered by a secured creditor impaired
property policy, then the Mortgage Loan Seller:
(a) has disclosed, or is aware that there has been disclosed, in the
application for such policy or otherwise to the insurer under such policy
the "pollution conditions" (as defined in such policy) identified in any
environmental reports related to such Mortgaged Property which are in the
Mortgage Loan Seller's possession or are otherwise known to the Mortgage
Loan Seller; or
(b) has delivered or caused to be delivered to the insurer under such
policy copies of all environmental reports in the Mortgage Loan Seller's
possession related to such Mortgaged Property;
in each case to the extent required by such policy or to the extent the
failure to make any such disclosure or deliver any such report would
materially and adversely affect the Purchaser's ability to recover under
such policy. If the Mortgaged Property securing any Mortgage Loan is
covered by a secured creditor impaired property policy, then: (v) all
premiums for such insurance have been paid and any deductible is held in
escrow by the Mortgage Loan Seller and will be transferred to the
Purchaser; (w) such insurance is in full force and effect; (x) the policy
is in an amount equal to at least 125% of the principal balance of the
Mortgage Loan; (y) the policy has a term that ends no sooner than five (5)
years after the maturity date of the Mortgage Loan and is not cancelable
during such term; and (z) (i) an environmental report, a property condition
report or an engineering report was prepared that included an assessment
for lead based paint ("LBP") (in the case of a multifamily property built
prior to 1978), asbestos containing materials ("ACM") (in the case of any
property built prior to 1985) and radon gas ("RG") (in the case of a
multifamily property) at such Mortgaged Property and (ii) if such report
disclosed the existence of a material and adverse LBP, ACM or RG
environmental condition or circumstance affecting such Mortgaged Property,
then, except as otherwise described on Schedule C-38, (A) the related
Mortgagor was required to remediate such condition or circumstance prior to
the closing of the subject Mortgage Loan, or (B) the related Mortgagor was
required to provide additional security reasonably estimated to be adequate
to cure such condition or circumstance, or (C) the related Mortgage Loan
documents require the related Mortgagor to establish an operations and
maintenance plan with respect to such condition or circumstance after the
closing of such Mortgage Loan. If the Mortgage Loan is listed on Schedule
B-12D and the environmental insurance for such Mortgage Loan is not a
secured creditor policy but was required to be obtained by the Mortgagor,
then the holder of the Mortgage Loan is entitled to be an additional
insured under such policy, all premiums have been paid, such insurance is
in full force and effect and, to the Mortgage Loan Seller's knowledge, the
Mortgagor has made the disclosures and complied with the requirements of
clauses (a) and (b) of this Paragraph 37.
38. Prepayment Premiums and Yield Maintenance Charges. Prepayment Premiums
and Yield Maintenance Charges payable with respect to each Mortgage Loan, if
any, constitute "customary prepayment penalties" within meaning of Treas. Reg.
Section 1.860G-1(b)(2).
B-17
39. Operating Statements. Except as set forth on Schedule B-39, each
Mortgage Loan requires the Mortgagor, in some cases only at the request of the
holder of the related Mortgage, to provide the owner or holder of the related
Mortgage with at least quarterly and annual operating statements, rent rolls (if
there is more than one tenant) and related information and annual financial
statements, which annual financial statements with respect to each Mortgage Loan
with an original principal balance greater than $20 million shall be audited (or
prepared and certified) by an independent certified public accountant upon the
request of the holder of the related Mortgage.
40. Recourse. Each Mortgage Loan is non-recourse; provided that, except as
described on Schedule B-40, the Mortgagor and either a principal of the
Mortgagor or other individual guarantor, with assets other than any interest in
the Mortgagor, is liable in the event of (i) fraud or material intentional
misrepresentation, (ii) misapplication or misappropriation of rents, insurance
payments, condemnation awards or tenant security deposits (to the extent
received by the related Mortgagor after the occurrence of an event of default
and not paid to the Mortgagee or applied to the Mortgaged Property in the
ordinary course of business), (iii) violation of applicable environmental laws
or breaches of environmental covenants or (iv) the filing of a voluntary
bankruptcy or insolvency proceeding by the Mortgagor; and provided, further,
that, with respect to clause (iii) of the preceding proviso, an indemnification
against losses related to such violations or environmental insurance shall
satisfy such requirement. No waiver of liability for such non-recourse
exceptions has been granted to the Mortgagor or any such guarantor or principal
by the Mortgage Loan Seller or anyone acting on behalf of the Mortgage Loan
Seller.
41. Assignment of Collateral. There is no material collateral securing any
Mortgage Loan that has not been assigned to the Purchaser.
42. Fee Simple or Leasehold Interests. The interest of the related
Mortgagor in the Mortgaged Property securing each Mortgage Loan includes a fee
simple and/or leasehold estate or interest in real property and the improvements
thereon.
43. Servicing. The servicing and collection practices used with respect to
the Mortgage Loan have complied with applicable law and the servicing standard
set forth in Section 3.01(a) of the Pooling and Servicing Agreement.
44. Originator's Authorization To Do Business. To the extent required under
applicable law, at all times when it held such Mortgage Loan, the originator of
such Mortgage Loan was authorized to do business in the jurisdiction in which
the related Mortgaged Property is located to the extent necessary to ensure the
enforceability of such Mortgage Loan.
45. No Fraud In Origination. In the origination of the Mortgage Loan, none
of the Mortgage Loan Seller, the originator, or any employee or mortgage broker,
if any, of the Mortgage Loan Seller or the originator, engaged in any fraud or
intentional material misrepresentation with respect to the Mortgagor, the
Mortgaged Property or any guarantor. To the Mortgage Loan Seller's actual
knowledge, no Mortgagor is guilty of defrauding or making an intentional
material misrepresentation to the Mortgage Loan Seller or originator with
respect to the origination of the Mortgage Loan, the Mortgagor or the Mortgaged
Property.
B-18
46. Appraisal. In connection with its origination or acquisition of each
Mortgage Loan, the Mortgage Loan Seller obtained an appraisal of the related
Mortgaged Property, which appraisal is signed by an appraiser, who, to the
Mortgage Loan Seller's actual knowledge, had no interest, direct or indirect, in
the Mortgagor, the Mortgaged Property or in any loan made on the security of the
Mortgaged Property, and whose compensation is not affected by the approval or
disapproval of the Mortgage Loan; the appraisal provides that it satisfy the
requirements of the "Uniform Standards of Professional Appraisal Practice" as
adopted by the Appraisal Standards Board of the Appraisal Foundation, all as in
effect on the date the Mortgage Loan was originated.
47. Jurisdiction of Organization. In respect of each Mortgage Loan, in
reliance on certified copies of incorporation or partnership or other entity
documents, as applicable, delivered in connection with the origination of such
Mortgage Loan, the related Mortgagor is an entity organized under the laws of a
state of the United States of America, the District of Columbia or the
Commonwealth of Puerto Rico.
48. Mortgagor Concentration. Except as otherwise specified on Schedule
B-48, no single Mortgagor, and to Mortgage Loan Seller's knowledge, no group of
affiliated Mortgagors is/are the obligor(s) under any one or more Mortgage Loans
with a Cut-off Date Principal Balance of $50,000,000 or more.
49. Escrows. All escrow deposits (including capital improvements and
environmental remediation reserves) relating to any Mortgage Loan that were
required to be delivered to the lender under the terms of the related Mortgage
Loan documents, have been received and, to the extent of any remaining balances
of such escrow deposits, are in the possession or under the control of the
Mortgage Loan Seller or its agents (which shall include the Master Servicer).
All such escrow deposits which are required for the administration and servicing
of such Mortgage Loan are conveyed hereunder to the Purchaser.
50. Single Asset REMIC. With respect to each of the single asset REMICs,
there has been no amendment, waiver, impairment, alteration, or modification to
any provision of the related REMIC declaration or to any provisions of the
related Mortgage Loan documents since the startup day of the single asset REMIC.
With respect to each of the single asset REMICs, the single asset REMIC has been
administered, the related Mortgage Loan has been serviced, and each provision of
the related REMIC declaration has been complied with in a manner such that the
single asset REMIC has not failed to qualify as a REMIC for federal income tax
purposes at any time since the Startup Day.
B-19
SCHEDULE B-1 to EXHIBIT B
EXCEPTIONS TO REPRESENTATIONS AND WARRANTIES
(5) Assignment of Leases
-------------------------- -------------------------------- ----------------------------------------------------------
Loan Number Property Name Issue
-------------------------- -------------------------------- ----------------------------------------------------------
DDR Portfolio - Meridian Center The lease with Shopko at the Meridian Center contains a
covenant by the landlord not to encumber the shopping
center with indebtedness exceeding 80% of the fair
market value of the center.
-------------------------- -------------------------------- ----------------------------------------------------------
(6) Mortgage Status; Waivers and Modifications
-------------------------- -------------------------------- ----------------------------------------------------------
Loan Number Property Name Issue
-------------------------- -------------------------------- ----------------------------------------------------------
DDR Portfolio The original Mortgage Loan was amended by an Omnibus
Amendment to increase the amount of the Mortgage Loan to
$150,000,000, include an additional borrower and add a
tenth property to the collateral package.
-------------------------- -------------------------------- ----------------------------------------------------------
(14) Insurance
-------------------------- -------------------------------- ----------------------------------------------------------
Loan Number Property Name Issue
-------------------------- -------------------------------- ----------------------------------------------------------
DDR Portfolio The Loan Agreement does not require the borrower to
carry insurance under a fire and extended perils policy
within the classification "All Risks of Physical Loss".1
Coverage may not meet FIA guidelines2 and coverage floor
is maximum amount available under FEMA program.
The Loan Agreement requires the Mortgagors to carry
coverage for terrorism providing property and business
interruption coverage in an amount no less than
$50,000,000 if either (A) it is then being obtained by
prudent owners of similar real estate in the United
States, or (B) it is otherwise available for an annual
premium
-------------------------- -------------------------------- ----------------------------------------------------------
--------
1 Mortgagors are required to carry insurance against loss or damage by standard
perils.
2 FIA guidelines are not required.
B-20
-------------------------- -------------------------------- ----------------------------------------------------------
less than or equal to $150,000. If neither
clause (A) nor clause (B) of the preceding sentence is
satisfied, then the Mortgagors are required to obtain
terrorism coverage from insurers, and with such
coverage, as is reasonably acceptable to Lender.
The Loan Agreement allows the Mortgagors to obtain
insurance coverage by means of a syndicate. Some of the
insurance coverage may not be with insurers with ratings
of A- or greater.
-------------------------- -------------------------------- ----------------------------------------------------------
(23) Other Mortgage Liens
-------------------------- -------------------------------- ----------------------------------------------------------
Loan Number Property Name Issue
-------------------------- -------------------------------- ----------------------------------------------------------
The Mortgage Loan permits the Mortgaged Property to be
09-0001776 Chippewa Center & ▇▇▇▇▇▇ Plaza encumbered by a lien junior to the lien of the mortgage.
In addition to lender's standard conditions (i.e.,
second mortgage to be originated and held by an
institutional lender, standstill agreement to be in
place, rating agency approval received), the loan
documents include the following limitations: (i) the
combined actual debt service coverage is not less than
1.10x, including the junior mortgage and (ii) the
loan-to-value ratio of the first and second mortgage
debt shall not exceed 85%.
-------------------------- -------------------------------- ----------------------------------------------------------
The Mortgage Loan permits the Mortgaged Property to be
09-0001781 Harley Commons encumbered by a lien junior to the lien of the mortgage.
In addition to lender's standard conditions (i..e,
second mortgage to be originated and held by an
institutional lender, standstill agreement to be in
place, rating agency approval received), the loan
documents include the following limitations: (i) the
combined actual debt service coverage is not less than
1.10x , including the junior mortgage and (ii) the
loan-to-value ratio of the first and second mortgage
debt shall not exceed 75%.
-------------------------- -------------------------------- ----------------------------------------------------------
(28) Releases of Mortgaged Property
-------------------------- -------------------------------- ----------------------------------------------------------
Loan Number Property Name Issue
-------------------------- -------------------------------- ----------------------------------------------------------
09-0001735 Geneva Commons The Mortgage allows for the partial release of a portion
of Mortgaged Property that was not
-------------------------- -------------------------------- ----------------------------------------------------------
B-21
-------------------------- -------------------------------- ----------------------------------------------------------
included in the
appraisal of the Mortgaged Property.
-------------------------- -------------------------------- ----------------------------------------------------------
DDR Portfolio Requirements for the release of certain pre-approved
parcels may be less stringent than the requirements set
forth in the representation.
-------------------------- -------------------------------- ----------------------------------------------------------
(32) Due on Sale
-------------------------- -------------------------------- ----------------------------------------------------------
Loan Number Property Name Issue
-------------------------- -------------------------------- ----------------------------------------------------------
The existing members of the borrower are permitted to
09-0001756 Hillview Plaza transfer 100% of membership interests into a new LLC in
which the existing direct or indirect members must hold
at least 51% of interests, but may admit up to 49% new
members, without payment of a fee.
-------------------------- -------------------------------- ----------------------------------------------------------
Certain exceptions for transfers in excess of 49% of the
09-0001740 Northfield Village Center ownership interests of borrower involving ▇▇▇▇▇▇ ▇▇▇▇▇▇
are permitted as specified in a side letter.
-------------------------- -------------------------------- ----------------------------------------------------------
The Loan Agreement contains a Qualified Successor
DDR Portfolio Borrower provision which allows the Mortgagors to
transfer all of the loan collateral to certain successor
single purpose entities which agree to assume the loan
obligations and meet other requirements.
-------------------------- -------------------------------- ----------------------------------------------------------
(33) Single Purpose Entity
-------------------------- -------------------------------- ----------------------------------------------------------
Loan Number Property Name Issue
-------------------------- -------------------------------- ----------------------------------------------------------
09-0001777 Boulder IV The loan documents allow the sponsor to bring in up to
four additional tenants in common during the 90 days
following June 30, 2003 without payment of a transfer
fee (only $2,500 administrative charge and payment of
lender's out-of-pocket expenses). These entities are
not currently known. However, all existing borrowers
are tenants in common.
-------------------------- -------------------------------- ----------------------------------------------------------
09-0001778 Boulder V The loan documents allow the sponsor to bring in up to
four additional tenants in common during the 90 days
following June 30, 2003 without payment of a transfer
fee (only $2,500 administrative charge and payment of
lender's out-of-pocket expenses). These entities are
not currently known. However, all existing
-------------------------- -------------------------------- ----------------------------------------------------------
B-22
-------------------------- -------------------------------- ----------------------------------------------------------
borrowers
are tenants in common.
-------------------------- -------------------------------- ----------------------------------------------------------
DDR Portfolio The Mortgage Loan allows management by affiliate if the
affiliate holds itself out as the borrower's agent.
-------------------------- -------------------------------- ----------------------------------------------------------
(40) Recourse
-------------------------- -------------------------------- ----------------------------------------------------------
Loan Number Property Name Issue
-------------------------- -------------------------------- ----------------------------------------------------------
09-0001735 Geneva Commons The natural person guarantor is not liable to the lender
for damages arising from breaches of environmental
covenants in the Mortgage Loan documents. The Guaranty
signed by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ does not cover
environmental concerns, violations of restrictions
relating to subordinate financing and voluntary liens
and violations of restrictions on
transferability/conveyance. However, the guaranty from
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Real Estate Inc. does cover these
items.
-------------------------- -------------------------------- ----------------------------------------------------------
09-0001756 Rosedale Marketplace The guarantor is not a natural person. The guarantor is
an Ontario, Canada general partnership with a $27
million net worth as of May 5, 2003.
-------------------------- -------------------------------- ----------------------------------------------------------
09-0001761 Long & ▇▇▇▇▇▇ Building The guarantor is not a natural person. ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ is natural person guarantor but only to the
extent that entity guarantor (▇▇▇▇▇▇ Company,
Incorporated) has net worth less than $1,500,000. The
guaranty provided by ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ is automatic.
-------------------------- -------------------------------- ----------------------------------------------------------
09-0001740 Northfield Village Center The guarantor is not a natural person. The guarantor is
the Amended and Restated Siebel Revocable Trust U/A/D
October 14, 1997.
-------------------------- -------------------------------- ----------------------------------------------------------
B-23
(48) Mortgagor Concentration
-------------------------- -------------------------------- ----------------------------------------------------------
Loan Number Property Name Issue
-------------------------- -------------------------------- ----------------------------------------------------------
DDR Portfolio The Mortgage Loan balance as of the cut-off date was in
excess of $50,000,000.
-------------------------- -------------------------------- ----------------------------------------------------------
B-24
Schedule B-14WS
------------------------- -------------------------------------------------------------------------------
STATE COUNTIES & SPECIFIC CITIES
------------------------- -------------------------------------------------------------------------------
------------------------- -------------------------------------------------------------------------------
Alabama ▇▇▇▇▇▇▇ and Mobile
Delaware Sussex
Florida Entire State - All Counties
▇▇▇▇▇▇▇ ▇▇▇▇▇, Camden, Chatham, Glynn, Liberty, ▇▇▇▇▇▇▇▇
Hawaii Entire State - All Counties
Louisiana Cameron, Iberia, Jefferson, Lafourche, Orleans, Plaquemines, St. ▇▇▇▇▇▇▇, St.
▇▇▇▇, St. Tammany, Terrebonne, ▇▇▇▇▇▇▇▇▇▇
Massachusetts Barnstable, Bristol, Dukes, Nantucket, Plymouth
Maryland ▇▇▇▇▇▇▇, Dorchester, Somerset, St. Mary's, Wicomico, Warchester
Mississippi Hancock, Harrison, ▇▇▇▇▇▇▇
North Carolina ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, Brunswick, Camden, Carteret, Choswan, Currituck, Dare,
Hyde, New Hanover, Onslow, Pamlico, Pasquotank, ▇▇▇▇▇▇, Perquimans, Tyrell,
Washington
New Jersey Atlantic, Cape May, Cumberland, Monmouth, Ocean
New York Nassau, Suffolk
Puerto Rico Entire Commonwealth - All Counties
South Carolina Beaufort Berkeley, Charleston, Colleton, Georgetown, Horry
Texas Aransas, Brazorla, Calhoun, Cameron, ▇▇▇▇▇▇▇▇, Galveston, Town of Baytown,
Jackson, Jefferson, Kenedyl, Kleiberg, Matagoda, Nueces, Refugio, San
▇▇▇▇▇▇▇▇, Willacy
Virginia Accomack, Chesapeake City, Gloucester, Hampton City, Isle of Wight,
Lancaster, ▇▇▇▇▇▇▇ Field City, Little Creek City, ▇▇▇▇▇▇▇, Middlesex, Newport
News City, Norfolk City, Northampton, Northumberland, Posquoson City,
Portsmith City, Suffolk City, Virginia Beach City, York.
------------------------- -------------------------------------------------------------------------------
B-25