EXHIBIT 99.4
Artesia Mortgage Loan Purchse Agreement
MORTGAGE LOAN PURCHASE AGREEMENT
This Mortgage Loan Purchase Agreement, dated as of November 1,
2003 (the "Agreement"), is entered into between Artesia Mortgage Capital
Corporation (the "Seller") and Wachovia Commercial Mortgage Securities, Inc.
(the "Purchaser").
The Seller intends to sell and the Purchaser intends to
purchase certain multifamily and commercial mortgage loans (the "Mortgage
Loans") identified on the schedule (the "Mortgage Loan Schedule") annexed hereto
as Exhibit A. The Purchaser intends to deposit the Mortgage Loans, along with
certain other mortgage loans (the "Other Mortgage Loans"), into a trust fund
(the "Trust Fund"), the beneficial ownership of which will be evidenced by
multiple classes (each, a "Class") of mortgage pass-through certificates (the
"Certificates"). One or more "real estate mortgage investment conduit" ("REMIC")
elections will be made with respect to most of the Trust Fund. The Trust Fund
will be created and the Certificates will be issued pursuant to a Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement"), dated as of
November 1, 2003, among the Purchaser, as depositor, Wachovia Bank, National
Association, as master servicer (in such capacity, the "Master Servicer"),
Clarion Partners, LLC, as special servicer (in such capacity, the "Special
Servicer") and Xxxxx Fargo Bank Minnesota, N.A., as trustee (the "Trustee").
Capitalized terms used but not defined herein (including the Schedules attached
hereto) have the respective meanings set forth in the Pooling and Servicing
Agreement.
Now, therefore, in consideration of the premises and the
mutual agreements set forth herein, the parties agree as follows:
SECTION 1. Agreement to Purchase.
The Seller agrees to sell, and the Purchaser agrees to
purchase, the Mortgage Loans identified on the Mortgage Loan Schedule. The
Mortgage Loan Schedule may be amended to reflect the actual Mortgage Loans
delivered to the Purchaser pursuant to the terms hereof. The Mortgage Loans are
expected to have an aggregate principal balance of $86,618,259 (the "Artesia
Mortgage Loan Balance") (subject to a variance of plus or minus 5.0%) as of the
close of business on the Cut-Off Date, after giving effect to any payments due
on or before such date, whether or not such payments are received. The Artesia
Mortgage Loan Balance, together with the aggregate principal balance of the
Other Mortgage Loans as of the Cut-Off Date (after giving effect to any payments
due on or before such date whether or not such payments are received), is
expected to equal an aggregate principal balance (the "Cut-Off Date Pool
Balance") of $974,238,293 (subject to a variance of plus or minus 5.0%). The
purchase and sale of the Mortgage Loans shall take place November 25, 2003, or
such other date as shall be mutually acceptable to the parties to this Agreement
(the "Closing Date"). The consideration (the "Aggregate Purchase Price") for the
Mortgage Loans shall be equal to (i) ______% of the Artesia Mortgage Loan
Balance as of the Cut-Off Date, plus (ii) $319,750, which amount represents the
amount of interest accrued on the Artesia Mortgage Loan Balance at the related
Net Mortgage Rate for the period from and including the Cut-Off Date up to but
not including the Closing Date.
The Aggregate Purchase Price shall be paid to the Seller or
its designee by wire transfer in immediately available funds on the Closing
Date.
SECTION 2. Conveyance of Mortgage Loans.
(a) Effective as of the Closing Date, subject only to receipt
of the Aggregate Purchase Price and satisfaction of the other conditions to
closing that are for the benefit of the Seller, the Seller does hereby sell,
transfer, assign, set over and otherwise convey to the Purchaser, without
recourse (except as set forth in this Agreement), all the right, title and
interest of the Seller in and to the Mortgage Loans identified on the Mortgage
Loan Schedule as of such date, on a servicing released basis, together with all
of the Seller's right, title and interest in and to the proceeds of any related
title, hazard, primary mortgage or other insurance proceeds.
(b) The Purchaser or its assignee shall be entitled to receive
all scheduled payments of principal and interest due after the Cut-Off Date, and
all other recoveries of principal and interest collected after the Cut-Off Date
(other than in respect of principal and interest on the Mortgage Loans due on or
before the Cut-Off Date). All scheduled payments of principal and interest due
on or before the Cut-Off Date but collected on or after the Cut-Off Date, and
recoveries of principal and interest collected on or before the Cut-Off Date
(only in respect of principal and interest on the Mortgage Loans due on or
before the Cut-Off Date and principal prepayments thereon), shall belong to, and
shall be promptly remitted to, the Seller.
(c) No later than the Closing Date, the Seller shall, on
behalf of the Purchaser, deliver to the Trustee the documents and instruments
specified below with respect to each Mortgage Loan (each a "Mortgage File"). All
Mortgage Files so delivered will be held by the Trustee in escrow at all times
prior to the Closing Date. Each Mortgage File shall contain the following
documents:
(i) the original executed Mortgage Note including any power of
attorney related to the execution thereof, together with any and all
intervening endorsements thereon, endorsed on its face or by allonge
attached thereto (without recourse, representation or warranty, express
or implied) to the order of Xxxxx Fargo Bank Minnesota, N.A., as
trustee for the registered holders of Wachovia Bank Commercial Mortgage
Trust, Commercial Mortgage Pass-Through Certificates, Series 2003-C8 or
in blank (or a lost note affidavit and indemnity with a copy of such
Mortgage Note attached thereto);
(ii) an original or copy of the Mortgage, together with any
and all intervening assignments thereof, in each case (unless not yet
returned by the applicable recording office) with evidence of recording
indicated thereon or certified by the applicable recording office;
(iii) an original or copy of any related Assignment of Leases
(if such item is a document separate from the Mortgage), together with
any and all intervening assignments thereof, in each case (unless not
yet returned by the applicable recording office) with evidence of
recording indicated thereon or certified by the applicable recording
office;
(iv) an original executed assignment, in recordable form
(except for any missing recording information), of (a) the Mortgage,
(b) any related Assignment of Leases (if such item is a document
separate from the Mortgage and to the extent not already assigned
pursuant to preceding clause (a)) and (c) any other recorded document
relating to the Mortgage Loan otherwise included in the Mortgage File,
in favor of Xxxxx Fargo Bank Minnesota, N.A., as trustee for the
registered holders of Wachovia Bank Commercial Mortgage Trust,
Commercial Mortgage Pass-Through Certificates, Series 2003-C8, or in
blank;
(v) an original assignment of all unrecorded documents
relating to the Mortgage Loan (to the extent not already assigned
pursuant to clause (iv) above), in favor of Xxxxx Fargo Bank Minnesota,
N.A., as trustee for the registered holders of Wachovia Bank Commercial
Mortgage Trust, Commercial Mortgage Pass-Through Certificates, Series
2003-C8, or in blank;
(vi) originals or copies of any consolidation, assumption,
substitution and modification agreements in those instances where the
terms or provisions of the Mortgage or Mortgage Note have been
consolidated or modified or the Mortgage Loan has been assumed or
consolidated;
(vii) the original or a copy of the policy or certificate of
lender's title insurance or, if such policy has not been issued or
located, an original or copy of an irrevocable, binding commitment
(which may be a marked version of the policy that has been executed by
an authorized representative of the title company or an agreement to
provide the same pursuant to binding escrow instructions executed by an
authorized representative of the title company) to issue such title
insurance policy;
(viii) any filed copies (bearing evidence of filing) or other
evidence of filing satisfactory to the Purchaser of any prior UCC
Financing Statements in favor of the originator of such Mortgage Loan
or in favor of any assignee prior to the Trustee (but only to the
extent the Seller had possession of such UCC Financing Statements prior
to the Closing Date) and, if there is an effective UCC Financing
Statement and continuation statement in favor of the Seller on record
with the applicable public office for UCC Financing Statements, an
original UCC Amendment, in form suitable for filing in favor of Xxxxx
Fargo Bank Minnesota, N.A., as trustee for the registered holders of
Wachovia Bank Commercial Mortgage Trust, Commercial Mortgage
Pass-Through Certificates, Series 2003-C8, as assignee, or in blank;
(ix) an original or copy of (a) any Ground Lease or (b) any
loan guaranty, indemnity, ground lessor estoppel or environmental
insurance policy;
(x) any intercreditor agreement relating to permitted debt
(including, without limitation, mezzanine debt) of the Mortgagor;
(xi) copies of any loan agreement, escrow agreement or
security agreement relating to a Mortgage Loan;
(xii) with respect to any Companion Loan, all of the above
documents with respect to such Companion Loan and the related
Intercreditor Agreement; provided that a copy of each mortgage note
relating to such Companion Loan, rather than the original, shall be
provided, and no assignments shall be provided; and
(xiii) a copy of any letter of credit and related transfer
documents relating to a Mortgage Loan.
(d) The Seller shall take all actions reasonably necessary (i)
to permit the Trustee to fulfill its obligations pursuant to Section 2.01(d) of
the Pooling and Servicing Agreement and (ii) to perform its obligations
described in Section 2.01(d) of the Pooling and Servicing Agreement. Without
limiting the generality of the foregoing, if a draw upon a letter of credit is
required before its transfer to the Trust Fund can be completed, the Seller
shall draw upon such letter of credit for the benefit of the Trust pursuant to
written instructions from the Master Servicer. The Seller shall reimburse the
Trustee for all reasonable costs and expenses, if any, incurred by the Trustee
for recording any documents described in Section 2(c)(iv)(c) hereof and filing
any assignments of UCC Financing Statements described in the proviso in the
third to last sentence in Section 2.02(a) of the Pooling and Servicing
Agreement.
(e) All documents and records (except draft documents,
attorney-client privileged communications, internal correspondence and credit
and other underwriting analysis of the Seller) delivered by the related
mortgagor in connection with, or relating to the origination and servicing of
the Mortgage Loan or related Companion Loan or which are reasonably required for
the ongoing administration of the Mortgage Loan or related Companion Loan and in
the Seller's possession (the "Additional Mortgage Loan Documents") that are not
required to be delivered to the Trustee shall promptly be delivered or caused to
be delivered by the Seller to the Master Servicer or at the direction of the
Master Servicer to the appropriate sub-servicer, together with any related
escrow amounts and reserve amounts.
(f) The Seller shall take such actions as are reasonably
necessary to assign or otherwise grant to the Trust Fund the benefit of any
letters of credit in the name of the Seller which secure any Mortgage Loan.
SECTION 3. Representations, Warranties and Covenants of
Seller.
(a) The Seller hereby represents and warrants to and covenants
with the Purchaser, as of the date hereof, that:
(i) The Seller is a corporation organized and validly existing
and in good standing under the laws of the State of Delaware and
possesses all requisite authority, power, licenses, permits and
franchises to carry on its business as currently conducted by it and to
execute, deliver and comply with its obligations under the terms of
this Agreement;
(ii) This Agreement has been duly and validly authorized,
executed and delivered by the Seller and, assuming due authorization,
execution and delivery hereof by the Purchaser, constitutes a legal,
valid and binding obligation of the Seller, enforceable against the
Seller in accordance with its terms, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization, receivership,
moratorium and other laws affecting the enforcement of creditors'
rights in general, and by general equity principles (regardless of
whether such enforcement is considered in a proceeding in equity or at
law), and by public policy considerations underlying the securities
laws, to the extent that such public policy considerations limit the
enforceability of the provisions of this Agreement which purport to
provide indemnification from liabilities under applicable securities
laws;
(iii) The execution and delivery of this Agreement by the
Seller and the Seller's performance and compliance with the terms of
this Agreement will not (A) violate the Seller's certificate of
incorporation or bylaws, (B) violate any law or regulation or any
administrative decree or order to which it is subject or (C) constitute
a material default (or an event which, with notice or lapse of time, or
both, would constitute a material default) under, or result in the
breach of, any material contract, agreement or other instrument to
which the Seller is a party or by which the Seller is bound;
(iv) The Seller is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal,
state, municipal or other governmental agency or body, which default
might have consequences that would, in the Seller's reasonable and good
faith judgment, materially and adversely affect the condition
(financial or other) or operations of the Seller or its properties or
have consequences that would materially and adversely affect its
performance hereunder;
(v) The Seller is not a party to or bound by any agreement or
instrument or subject to any certificate of incorporation, bylaws or
any other corporate restriction or any judgment, order, writ,
injunction, decree, law or regulation that would, in the Seller's
reasonable and good faith judgment, materially and adversely affect the
ability of the Seller to perform its obligations under this Agreement
or that requires the consent of any third person to the execution of
this Agreement or the performance by the Seller of its obligations
under this Agreement (except to the extent such consent has been
obtained); (vi) No consent, approval, authorization or order of any
court or governmental agency or body is required for the execution,
delivery and performance by the Seller of or compliance by the Seller
with this Agreement or the consummation of the transactions
contemplated by this Agreement except as have previously been obtained,
and no bulk sale law applies to such transactions;
(vii) No litigation is pending or, to the Seller's knowledge,
threatened against the Seller that would, in the Seller's good faith
and reasonable judgment, prohibit its entering into this Agreement or
materially and adversely affect the performance by the Seller of its
obligations under this Agreement; and
(viii) Under generally accepted accounting principles ("GAAP")
and for federal income tax purposes, the Seller will report the
transfer of the Mortgage Loans to the Purchaser as a sale of the
Mortgage Loans to the Purchaser in exchange for consideration
consisting of a cash amount equal to the Aggregate Purchase Price. The
consideration received by the Seller upon the sale of the Mortgage
Loans to the Purchaser will constitute at least reasonably equivalent
value and fair consideration for the Mortgage Loans. The Seller will be
solvent at all relevant times prior to, and will not be rendered
insolvent by, the sale of the Mortgage Loans to the Purchaser. The
Seller is not selling the Mortgage Loans to the Purchaser with any
intent to hinder, delay or defraud any of the creditors of the Seller.
(b) The Seller hereby makes the representations and warranties
contained in Schedule I hereto for the benefit of the Purchaser and the Trustee
for the benefit of the Certificateholders as of the Closing Date, with respect
to (and solely with respect to) each Mortgage Loan, which representations and
warranties are subject to the exceptions set forth on Schedule II.
(c) With respect to the schedule of exceptions delivered by
the Trustee on the Closing Date, within fifteen (15) Business Days (or, in the
reasonable discretion of the Controlling Class Representative, thirty (30)
Business Days) of the Closing Date, with respect to the documents specified in
clauses (i), (ii), (vii), (ix) (solely with respect to Ground Leases) and (xii)
of the definition of Mortgage File, the Seller shall cure any material exception
listed therein (for the avoidance of doubt, any deficiencies with respect to the
documents specified in clause (ii) resulting solely from a delay in the return
of the related documents from the applicable recording office, shall be cured in
the time and manner described in Section 2.01(c) of the Pooling and Servicing
Agreement). If such exception is not so cured, the Seller shall either (1)
repurchase the related Mortgage Loan, (2) with respect to exceptions relating to
clause (xii) of the definition of "Mortgage File", deposit with the Trustee an
amount, to be held in trust in a Special Reserve Account pursuant to the Pooling
and Servicing Agreement, equal to the amount of the undelivered letter of credit
(in the alternative, the Seller may deliver to the Trustee, with a certified
copy to the Master Servicer and Trustee, a letter of credit for the benefit of
the Master Servicer on behalf of the Trustee and upon the same terms and
conditions as the undelivered letter of credit) which the Master Servicer on
behalf of the Trustee may use (or draw upon, as the case may be) under the same
circumstances and conditions as the Master Servicer would have been entitled to
draw on the undelivered letter of credit, or (3) with respect to any exceptions
relating to clauses (i), (ii) and (vii), deposit with the Trustee an amount, to
be held in trust in a Special Reserve Account pursuant to the Pooling and
Servicing Agreement, equal to 25% of the Stated Principal Balance of the related
Mortgage Loan on such date. Any funds or letter of credit deposited pursuant to
clauses (2) and (3) shall be held by the Trustee until the earlier of (x) the
date on which the Master Servicer certifies to the Trustee and the Controlling
Class Representative that such exception has been cured (or the Trustee
certifies the same to the Controlling Class Representative), at which time such
funds or letter of credit, as applicable, shall be returned to the Seller and
(y) thirty (30) Business Days or, if the Controlling Class Representative has
extended the cure period, forty-five (45) Business Days after the Closing Date;
provided, however, that if such exception is not cured within such thirty (30)
Business Days or forty-five (45) Business Days, as the case may be, (A) in the
case of clause (2), the Trustee shall retain the funds or letter of credit, as
applicable, or (B) in the case of clause (3), the Seller shall repurchase the
related Mortgage Loan in accordance with the terms and conditions of this
Agreement, at which time such funds shall be applied to the Purchase Price of
the related Mortgage Loan and any letter of credit will be returned to the
Seller.
If the Seller receives written notice of a Document Defect or
a Breach pursuant to Section 2.03(a) of the Pooling and Servicing Agreement
relating to a Mortgage Loan, then the Seller shall not later than 90 days from
receipt of such notice (or, in the case of a Document Defect or Breach relating
to a Mortgage Loan not being a "qualified mortgage" within the meaning of the
REMIC Provisions (a "Qualified Mortgage"), not later than 90 days from any party
to the Pooling and Servicing Agreement discovering such Document Defect or
Breach provided the Seller receives such notice in a timely manner), if such
Document Defect or Breach shall materially and adversely affect the value of the
applicable Mortgage Loan or the interests of any Certificateholder, cure such
Document Defect or Breach, as the case may be, in all material respects, which
shall include payment of actual or provable losses and any Additional Trust Fund
Expenses directly resulting from any such Document Defect or Breach or, if such
Document Defect or Breach (other than omissions solely due to a document not
having been returned by the related recording office) cannot be cured within
such 90-day period, (i) repurchase the affected Mortgage Loan at the applicable
Purchase Price not later than the end of such 90-day period or (ii) substitute a
Qualified Substitute Mortgage Loan for such affected Mortgage Loan not later
than the end of such 90-day period (and in no event later than the second
anniversary of the Closing Date) and pay the Master Servicer for deposit into
the Certificate Account, any Substitution Shortfall Amount in connection
therewith; provided, however, that unless the Breach would cause the Mortgage
Loan not to be a Qualified Mortgage, and if such Document Defect or Breach is
capable of being cured but not within such 90-day period and the Seller has
commenced and is diligently proceeding with the cure of such Document Defect or
Breach within such 90-day period, such Seller shall have an additional 90 days
to complete such cure (or, failing such cure, to repurchase or substitute the
related Mortgage Loan); and provided, further, that with respect to such
additional 90-day period the Seller shall have delivered an officer's
certificate to the Trustee setting forth what actions the Seller is pursuing in
connection with the cure thereof and stating that the Seller anticipates that
such Document Defect or Breach will be cured within the additional 90-day
period; and provided; further, that no Document Defect (other than with respect
to a Mortgage Note, Mortgage, title insurance policy, Ground Lease or any letter
of credit) shall be considered to materially and adversely affect the value of
the related Mortgage Loan or the interests of the Certificateholders unless the
document with respect to which the Document Defect exists is required in
connection with an imminent enforcement of the mortgagee's rights or remedies
under the related Mortgage Loan, defending any claim asserted by any borrower or
third party with respect to the Mortgage Loan, establishing the validity or
priority of any lien or any collateral securing the Mortgage Loan or for any
immediate significant servicing obligations. For a period of two years from the
Closing Date, so long as there remains any Mortgage File relating to a Mortgage
Loan as to which there is any uncured Document Defect or Breach, the Seller
shall provide the officer's certificate to the Trustee described above as to the
reasons such Document Defect or Breach remains uncured and as to the actions
being taken to pursue cure. Notwithstanding the foregoing, the delivery of a
commitment to issue a policy of lender's title insurance as described in clause
12 of Schedule I hereof in lieu of the delivery of the actual policy of lender's
title insurance shall not be considered a Document Defect or Breach with respect
to any Mortgage File if such actual policy of insurance is delivered to the
Trustee or a Custodian on its behalf not later than the 90th day following the
Closing Date.
If (i) any Mortgage Loan is required to be repurchased or
substituted for in the manner described in the immediately preceding paragraph,
(ii) such Mortgage Loan is cross-collateralized and cross-defaulted with one or
more other Mortgage Loans (each, a "Crossed Loan"), and (iii) the applicable
Document Defect or Breach does not constitute a Document Defect or Breach, as
the case may be, as to any other Crossed Loan in such Crossed Group (without
regard to this paragraph), then the applicable Document Defect or Breach, as the
case may be, will be deemed to constitute a Document Defect or Breach, as the
case may be, as to any other Crossed Loan in the Crossed Group for purposes of
this paragraph, and the Seller will be required to repurchase or substitute for
all of the remaining Crossed Loan(s) in the related Crossed Group as provided in
the immediately preceding paragraph unless such other Crossed Loans in such
Crossed Group satisfy the Crossed Loan Repurchase Criteria and satisfy all other
criteria for substitution or repurchase, as applicable, of Mortgage Loans set
forth herein. In the event that the remaining Crossed Loans satisfy the
aforementioned criteria, the Seller may elect either to repurchase or substitute
for only the affected Crossed Loan as to which the related Breach or Document
Defect exists or to repurchase or substitute for all of the Crossed Loans in the
related Crossed Group. The Seller shall be responsible for the cost of any
Appraisal required to be obtained by the Master Servicer to determine if the
Crossed Loan Repurchase Criteria have been satisfied, so long as the scope and
cost of such Appraisal has been approved by the Seller (such approval not to be
unreasonably withheld).
To the extent that the Seller is required to repurchase or
substitute for a Crossed Loan hereunder in the manner prescribed above while the
Trustee continues to hold any other Crossed Loans in such Crossed Group, neither
the Seller nor the Purchaser shall enforce any remedies against the other's
Primary Collateral, but each is permitted to exercise remedies against the
Primary Collateral securing its respective Crossed Loans, including with respect
to the Trustee, the Primary Collateral securing Crossed Loans still held by the
Trustee.
If the exercise of remedies by one party would materially
impair the ability of the other party to exercise its remedies with respect to
the Primary Collateral securing the Crossed Loans held by such party, then the
Seller and the Purchaser shall forbear from exercising such remedies until the
Mortgage Loan documents evidencing and securing the relevant Crossed Loans can
be modified in a manner that complies with this Agreement to remove the threat
of material impairment as a result of the exercise of remedies or some other
accommodation can be reached. Any reserve or other cash collateral or letters of
credit securing the Crossed Loans shall be allocated between such Crossed Loans
in accordance with the Mortgage Loan documents, or otherwise on a pro rata basis
based upon their outstanding Stated Principal Balances. Notwithstanding the
foregoing, if a Crossed Loan included in the Trust Fund is modified to terminate
the related cross-collateralization and/or cross-default provisions, as a
condition to such modification, the Seller shall furnish to the Trustee an
Opinion of Counsel that any modification shall not cause an Adverse REMIC Event.
Any expenses incurred by the Purchaser in connection with such modification or
accommodation (including but not limited to recoverable attorney fees) shall be
paid by the Seller.
(d) In connection with any permitted repurchase or
substitution of one or more Mortgage Loans contemplated hereby, upon receipt of
a certificate from a Servicing Officer certifying as to the receipt of the
Purchase Price or Substitution Shortfall Amount(s), as applicable, in the
Certificate Account, and the delivery of the Mortgage File(s) and the Servicing
File(s) for the related Qualified Substitute Mortgage Loan(s) to the Custodian
and the Master Servicer, respectively, if applicable (i) the Trustee shall
execute and deliver such endorsements and assignments as are provided to it by
the Master Servicer, in each case without recourse, representation or warranty,
as shall be necessary to vest in the Seller, the legal and beneficial ownership
of each repurchased Mortgage Loan or substituted Mortgage Loan, as applicable,
(ii) the Trustee, the Custodian, the Master Servicer and the Special Servicer
shall each tender to the Seller, upon delivery to each of them of a receipt
executed by the Seller, all portions of the Mortgage File and other documents
pertaining to such Mortgage Loan possessed by it, and (iii) the Master Servicer
and the Special Servicer shall release to the Seller any Escrow Payments and
Reserve Funds held by it in respect of such repurchased or deleted Mortgage
Loans.
(e) Without limiting the remedies of the Purchaser, the
Certificateholders or the Trustee on behalf of the Certificateholders pursuant
to this Agreement, it is acknowledged that the representations and warranties
are being made for risk allocation purposes. This Section 3 provides the sole
remedy available to the Certificateholders, or the Trustee on behalf of the
Certificateholders, respecting any Document Defect in a Mortgage File or any
Breach of any representation or warranty set forth in or required to be made
pursuant to Section 3 of this Agreement.
(f) Notwithstanding the foregoing, if there exists a Breach
relating to whether or not the Mortgage Loan documents or any particular
Mortgage Loan document requires the related Mortgagor to bear the costs and
expenses associated with any particular action or matter under such Mortgage
Loan document(s) with respect to matters described in Representations 23 and 43
of Schedule I, then the Purchaser shall direct the Seller in writing to wire
transfer to the Master Servicer for deposit into the Certificate Account, within
90 days of the Seller's receipt of such direction, the amount of any such costs
and expenses borne by the Purchaser, the Certificateholders, the Master
Servicer, the Special Servicer and the Trustee on their behalf that are the
basis of such Breach. Upon its making such deposit, the Seller shall be deemed
to have cured such Breach in all respects. Provided such payment is made in
full, this paragraph describes the sole remedy available to the Purchaser, the
Certificateholders, the Master Servicer, the Special Servicer and the Trustee on
their behalf regarding any such Breach and the Seller shall not be obligated to
repurchase the affected Mortgage Loan on account of such Breach or otherwise
cure such Breach.
SECTION 4. Representations and Warranties of the Purchaser. In
order to induce the Seller to enter into this Agreement, the Purchaser hereby
represents and warrants for the benefit of the Seller as of the date hereof
that:
(a) The Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of the State of North Carolina. The
Purchaser has the full corporate power and authority and legal right to acquire
the Mortgage Loans from the Seller and to transfer the Mortgage Loans to the
Trustee.
(b) This Agreement has been duly and validly authorized,
executed and delivered by the Purchaser, all requisite action by the Purchaser's
directors and officers has been taken in connection therewith, and (assuming the
due authorization, execution and delivery hereof by the Seller) this Agreement
constitutes the valid, legal and binding agreement of the Purchaser, enforceable
against the Purchaser in accordance with its terms, except as such enforcement
may be limited by (A) laws relating to bankruptcy, insolvency, reorganization,
receivership or moratorium, (B) other laws relating to or affecting the rights
of creditors generally, or (C) general equity principles (regardless of whether
such enforcement is considered in a proceeding in equity or at law).
(c) Except as may be required under federal or state
securities laws (and which will be obtained on a timely basis), 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 by the Purchaser of or compliance by
the Purchaser with this Agreement, or the consummation by the Purchaser of any
transaction described in this Agreement.
(d) None of the acquisition of the Mortgage Loans by the
Purchaser, the transfer of the Mortgage Loans to the Trustee, and the execution,
delivery or performance of this Agreement by the Purchaser, results or will
result in the creation or imposition of any lien on any of the Purchaser's
assets or property, or conflicts or will conflict with, results or will result
in a breach of, or constitutes or will constitute a default under (A) any term
or provision of the Purchaser's articles of association or bylaws, (B) any term
or provision of any material agreement, contract, instrument or indenture, to
which the Purchaser is a party or by which the Purchaser is bound, or (C) any
law, rule, regulation, order, judgment, writ, injunction or decree of any court
or governmental authority having jurisdiction over the Purchaser or its assets.
(e) Under GAAP and for federal income tax purposes, the
Purchaser will report the transfer of the Mortgage Loans by the Seller to the
Purchaser as a sale of the Mortgage Loans to the Purchaser in exchange for
consideration consisting of a cash amount equal to the Aggregate Purchase Price.
(f) There is no action, suit, proceeding or investigation
pending or to the knowledge of the Purchaser, threatened against the Purchaser
in any court or by or before any other governmental agency or instrumentality
which would materially and adversely affect the validity of this Agreement or
any action taken in connection with the obligations of the Purchaser
contemplated herein, or which would be likely to impair materially the ability
of the Purchaser to enter into and/or perform under the terms of this Agreement.
(g) The Purchaser is not in default with respect to any order
or decree of any court or any order, regulation or demand of any federal, state,
municipal or governmental agency, which default might have consequences that
would materially and adversely affect the condition (financial or other) or
operations of the Purchaser or its properties or might have consequences that
would materially and adversely affect its performance hereunder.
SECTION 5. Closing. The closing of the sale of the Mortgage
Loans (the "Closing") shall be held at the offices of Cadwalader, Xxxxxxxxxx &
Xxxx LLP, Charlotte, North Carolina on the Closing Date.
The Closing shall be subject to each of the following
conditions:
(a) All of the representations and warranties of the Seller
set forth in or made pursuant to Sections 3(a) and 3(b) of this Agreement and
all of the representations and warranties of the Purchaser set forth in Section
4 of this Agreement shall be true and correct in all material respects as of the
Closing Date;
(b) The Pooling and Servicing Agreement (to the extent it
affects the obligations of the Seller hereunder) and all documents specified in
Section 6 of this Agreement (the "Closing Documents"), in such forms as are
agreed upon and acceptable to the Purchaser, the Seller, the Underwriters and
their respective counsel in their reasonable discretion, shall be duly executed
and delivered by all signatories as required pursuant to the respective terms
thereof;
(c) The Seller shall have delivered and released to the
Trustee (or a Custodian on its behalf) and the Master Servicer, respectively,
all documents represented to have been or required to be delivered to the
Trustee and the Master Servicer pursuant to Section 2 of this Agreement;
(d) All other terms and conditions of this Agreement required
to be complied with on or before the Closing Date shall have been complied with
in all material respects and the Seller shall have the ability to comply with
all terms and conditions and perform all duties and obligations required to be
complied with or performed after the Closing Date;
(e) The Seller shall have paid all fees and expenses payable
by it to the Purchaser or otherwise pursuant to this Agreement as of the Closing
Date; and
(f) A letter from the independent accounting firm of KPMG LLP
or Ernst & Young LLP, as applicable, in form satisfactory to the Purchaser,
relating to certain information regarding the Mortgage Loans and Certificates as
set forth in the Prospectus and Prospectus Supplement, respectively.
Both parties agree to use their best efforts to perform their
respective obligations hereunder in a manner that will enable the Purchaser to
purchase the Mortgage Loans on the Closing Date.
SECTION 6. Closing Documents. The Closing Documents shall
consist of the following:
(a) This Agreement duly executed by the Purchaser and the
Seller;
(b) A certificate of the Seller, executed by a duly authorized
officer of the Seller and dated the Closing Date, and upon which the Purchaser
and the Underwriters may rely, to the effect that: (i) the representations and
warranties of the Seller in this Agreement are true and correct in all material
respects at and as of the Closing Date with the same effect as if made on such
date; and (ii) the Seller has, in all material respects, complied with all the
agreements and satisfied all the conditions on its part that are required under
this Agreement to be performed or satisfied at or prior to the Closing Date;
(c) An officer's certificate from an officer of the Seller
(signed in his/her capacity as an officer), dated the Closing Date, and upon
which the Purchaser may rely, to the effect that each individual who, as an
officer or representative of the Seller, signed this Agreement or any other
document or certificate delivered on or before the Closing Date in connection
with the transactions contemplated herein, was at the respective times of such
signing and delivery, and is as of the Closing Date, duly elected or appointed,
qualified and acting as such officer or representative, and the signatures of
such persons appearing on such documents and certificates are their genuine
signatures;
(d) An officer's certificate from an officer of the Seller
(signed in his/her capacity as an officer), dated the Closing Date, and upon
which the Purchaser and the Underwriters may rely, to the effect that with
respect to the Seller, the Mortgage Loans, the related Mortgagors and the
related Mortgaged Properties (i) such officer has carefully examined the
Specified Portions of the Prospectus Supplement and nothing has come to his
attention that would lead him to believe that the Specified Portions of the
Prospectus Supplement, as of the date of the Prospectus Supplement, or as of the
Closing Date, included or include any untrue statement of a material fact
relating to the Mortgage Loans or omitted or omit to state therein a material
fact necessary in order to make the statements therein relating to the Mortgage
Loans, in light of the circumstances under which they were made, not misleading,
and (ii) such officer has examined the Specified Portions of the Memorandum and
nothing has come to his attention that would lead him to believe that the
Specified Portions of the Memorandum, as of the date thereof or as of the
Closing Date, included or include any untrue statement of a material fact
relating to the Mortgage Loans or omitted or omit to state therein a material
fact necessary in order to make the statements therein related to the Mortgage
Loans, in light of the circumstances under which they were made, not misleading.
The "Specified Portions" of the Prospectus Supplement shall consist of Annex A
thereto, the diskette which accompanies the Prospectus Supplement (insofar as
such diskette is consistent with such Annex A) and the following sections of the
Prospectus Supplement (exclusive of any statements in such sections that purport
to summarize the servicing and administration provisions of the Pooling and
Servicing Agreement: "Summary of the Prospectus Supplement--The Parties--The
Mortgage Loan Sellers," "Summary of the Prospectus Supplement--The Mortgage
Loans," "Risk Factors--The Mortgage Loans," and "Description of the Mortgage
Pool--General," "--Mortgage Loan History," "--Certain Terms and Conditions of
the Mortgage Loans," "--Assessments of Property Condition," "--Co-Lender Loans,"
"--Additional Mortgage Loan Information," "--Twenty Largest Mortgage Loans,"
"--The Mortgage Loan Sellers," "--Underwriting Standards" and "--Representations
and Warranties; Repurchases and Substitutions." The "Specified Portions" of the
Memorandum shall consist of the Specified Portions of the Prospectus Supplement
and the first and second full paragraph on page "iii" of the Memorandum.
(e) The resolutions of the requisite committee of the Seller's
board of directors authorizing the Seller's entering into the transactions
contemplated by this Agreement, the certificate of incorporation and by-laws of
the Seller, and an original or copy of a certificate of good standing of the
Seller issued by the State of Delaware not earlier than sixty (60) days prior to
the Closing Date;
(f) A written opinion of counsel for the Seller (which opinion
may be from in-house counsel, outside counsel or a combination thereof),
reasonably satisfactory to the Purchaser, its counsel and the Rating Agencies,
dated the Closing Date and addressed to the Purchaser, the Trustee, the
Underwriters and each of the Rating Agencies, together with such other written
opinions as may be required by the Rating Agencies; and
(g) Such further certificates, opinions and documents as the
Purchaser may reasonably request.
SECTION 7. Indemnification.
(a) The Seller shall indemnify and hold harmless the
Purchaser, the Underwriters, the Initial Purchasers, their respective officers
and directors, and each person, if any, who controls the Purchaser or any
Underwriter within the meaning of either Section 15 of the Securities Act of
1933, as amended (the "1933 Act") or Section 20 of the Securities Exchange Act
of 1934, as amended (the "1934 Act"), against any and all losses, expenses
(including the reasonable fees and expenses of legal counsel), claims, damages
or liabilities, joint or several, to which they or any of them may become
subject under the 1933 Act, the 1934 Act or other federal or state statutory law
or regulation, at common law or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) (i) arise out of or are
based upon any untrue statement or alleged untrue statement of a material fact
contained in (A) the Prospectus Supplement, the Preliminary Prospectus
Supplement, the Memorandum, the Diskette or, insofar as they are required to be
filed as part of the Registration Statement pursuant to the No-Action Letters,
any Computational Materials or ABS Term Sheets with respect to the Registered
Certificates, in any revision or amendment of or supplement to any of the
foregoing, (B) any items similar to Computational Materials or ABS Term Sheets
forwarded by the Seller to the Initial Purchasers, or in any revision or
amendment of or supplement to any of the foregoing or (C) the summaries,
reports, documents and other written and computer materials and all other
information regarding the Mortgage Loans or the Seller furnished by the Seller
for review by prospective investors (the items in (A), (B) and (C) above being
defined as the "Disclosure Material"), or (ii) arise out of or are based upon
the omission or alleged omission to state therein (in the case of Computational
Materials and ABS Term Sheets, when read in conjunction with the Prospectus
Supplement, in the case of items similar to Computational Materials and ABS Term
Sheets, when read in conjunction with the Memorandum, and in the case of any
summaries, reports, documents, written or computer materials, or other
information contemplated in clause (C) above, when read in conjunction with the
Memorandum) a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading; but, with respect to the Disclosure Material described in
clauses (A) and (B) of the definition thereof, only if and to the extent that
(I) any such untrue statement or alleged untrue statement or omission or alleged
omission occurring in, or with respect to, such Disclosure Material, arises out
of or is based upon an untrue statement or omission with respect to the Mortgage
Loans, the related Mortgagors and/or the related Mortgaged Properties contained
in the Data File (it being herein acknowledged that the Data File was and will
be used to prepare the Prospectus Supplement and the Preliminary Prospectus
Supplement, including without limitation Annex A thereto, the Memorandum, the
Diskette and any Computational Materials and ABS Term Sheets with respect to the
Registered Certificates, and any items similar to Computational Materials and
ABS Term Sheets forwarded to prospective investors in the Non-Registered
Certificates), (II) any such untrue statement or alleged untrue statement or
omission or alleged omission of a material fact occurring in, or with respect
to, such Disclosure Material, is with respect to, or arises out of or is based
upon an untrue statement or omission of a material fact with respect to, the
information regarding the Mortgage Loans, the related Mortgagors, the related
Mortgaged Properties and/or the Seller set forth in the Specified Portions of
each of the Prospectus Supplement, the Preliminary Prospectus Supplement and the
Memorandum, (III) any such untrue statement or alleged untrue statement or
omission or alleged omission occurring in, or with respect to, such Disclosure
Material, arises out of or is based upon a breach of the representations and
warranties of the Seller set forth in or made pursuant to Section 3 or (IV) any
such untrue statement or alleged untrue statement or omission or alleged
omission occurring in, or with respect to, such Disclosure Material, arises out
of or is based upon any other written information concerning the characteristics
of the Mortgage Loans, the related obligors on the Mortgage Loans or the related
Mortgaged Properties furnished to the Purchaser or the Underwriters by the
Seller; provided that the indemnification provided by this Section 7 shall not
apply to the extent that such untrue statement or omission of a material fact
was made as a result of an error in the manipulation of, or in any calculations
based upon, or in any aggregation of the information regarding the Mortgage
Loans, the related Mortgagors and/or the related Mortgaged Properties set forth
in the Data File or Annex A to the Prospectus Supplement or the Preliminary
Prospectus Supplement to the extent such information was not materially
incorrect in the Data File or such Annex A, as applicable, including without
limitation the aggregation of such information with comparable information
relating to the Other Mortgage Loans. Notwithstanding the foregoing, the
indemnification provided in this Section 7(a) shall not inure to the benefit of
any Underwriter or Initial Purchaser (or to the benefit of any person
controlling such Underwriter or Initial Purchaser) from whom the person
asserting claims giving rise to any such losses, claims, damages, expenses or
liabilities purchased Certificates if (x) the subject untrue statement or
omission or alleged untrue statement or omission made in any Disclosure Material
(exclusive of the Prospectus or any corrected or amended Prospectus or the
Memorandum or any corrected or amended Memorandum) is eliminated or remedied in
the Prospectus or the Memorandum (in either case, as corrected or amended, if
applicable), as applicable, and (y) a copy of the Prospectus or Memorandum (in
either case, as corrected or amended, if applicable), as applicable, shall not
have been sent to such person at or prior to the written confirmation of the
sale of such Certificates to such person, and (z) in the case of a corrected or
amended Prospectus or Memorandum, such Underwriter or Initial Purchaser received
written notice of such correction or amendment prior to the written confirmation
of such sale. The information described in clauses (I) through (IV) above is
collectively referred to as the "Seller Information". The Seller shall, subject
to clause (c) below, reimburse each such indemnified party, as incurred, for any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action.
This indemnity will be in addition to any liability which the Seller may
otherwise have.
(b) For purposes of this Agreement, "Registration Statement"
shall mean such registration statement No. 333-108944 filed by the Purchaser on
Form S-3, including without limitation exhibits thereto and information
incorporated therein by reference; "Base Prospectus" shall mean the prospectus
dated November 14, 2003, as supplemented by the prospectus supplement dated
November 14, 2003 (the "Prospectus Supplement" and, together with the Base
Prospectus, the "Prospectus") relating to the Registered Certificates, including
all annexes thereto; "Preliminary Prospectus Supplement" shall mean the
prospectus supplement dated November 5, 2003, relating to the Registered
Certificates, including all annexes thereto; "Memorandum" shall mean the private
placement memorandum dated November 14, 2003, relating to the Non-Registered
Certificates, including all exhibits thereto; "Registered Certificates" shall
mean the Class A-1, Class A-2, Class A-3, Class A-4, Class B, Class C, Class D
and Class E Certificates; "Non-Registered Certificates" shall mean the
Certificates other than the Registered Certificates; "Computational Materials"
shall have the meaning assigned thereto in the no-action letter dated May 20,
1994, issued by the Division of Corporation Finance of the Securities and
Exchange Commission (the "Commission") to Xxxxxx, Xxxxxxx Acceptance Corporation
I, Xxxxxx, Peabody & Co. Incorporated, and Xxxxxx Structured Asset Corporation
and the no-action letter dated May 27, 1994, issued by the Division of
Corporation Finance of the Commission to the Public Securities Association
(together, the "Xxxxxx Letters"); "ABS Term Sheets" shall have the meaning
assigned thereto in the no-action letter dated February 17, 1995, issued by the
Division of Corporation Finance of the Commission to the Public Securities
Association (the "PSA Letter" and, together with the Xxxxxx letters, the
"No-Action Letters"); "Diskette" shall mean the diskette or compact disc
attached to each of the Prospectus and the Memorandum; and "Data File" shall
mean the compilation of information and data regarding the Mortgage Loans
covered by the Agreed Upon Procedures Letters dated November 5, 2003, or
November 14, 2003, and rendered by KPMG LLP or Ernst & Young LLP, as the case
may be (a "hard copy" of which Data File was initialed on behalf of the Seller
and the Purchaser).
(c) Promptly after receipt by any person entitled to
indemnification under this Section 7 (an "indemnified party") of notice of the
commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against the Seller (the "indemnifying party") under this
Section 7, notify the indemnifying party in writing of the commencement thereof;
but the omission so to notify the indemnifying party will not relieve it from
any liability that it may have to any indemnified party under this Section 7
(except to the extent that such omission has prejudiced the indemnifying party
in any material respect) or from any liability which it may have otherwise than
under this Section 7. In case any such action is brought against any indemnified
party and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein, and to the extent
that it may elect by written notice delivered to the indemnified party promptly
after receiving the aforesaid notice from such indemnified party, to assume the
defense thereof, with counsel selected by the indemnifying party and reasonably
satisfactory to such indemnified party; provided, however, that if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party or parties shall have reasonably
concluded that there may be legal defenses available to it or them and/or other
indemnified parties that are different from or additional to those available to
the indemnifying party, the indemnified party shall have the right to select
separate counsel to assert such legal defenses and to otherwise participate in
the defense of such action on behalf of such indemnified party or parties. Upon
receipt of notice from the indemnifying party to such indemnified party of its
election so to assume the defense of such action and approval by the indemnified
party of counsel, the indemnifying party will not be liable for any legal or
other expenses subsequently incurred by such indemnified party in connection
with the defense thereof, unless (i) the indemnified party shall have employed
separate counsel in connection with the assertion of legal defenses in
accordance with the proviso to the preceding sentence (it being understood,
however, that the indemnifying party shall not be liable for the expenses of
more than one separate counsel, approved by the Purchaser and the Underwriters,
representing all the indemnified parties under Section 7(a) who are parties to
such action), (ii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of commencement of the action or
(iii) the indemnifying party has authorized the employment of counsel for the
indemnified party at the expense of the indemnifying party; and except that, if
clause (i) or (iii) is applicable, such liability shall only be in respect of
the counsel referred to in such clause (i) or (iii). Unless it shall assume the
defense of any proceeding, an indemnifying party shall not be liable for any
settlement of any proceeding effected without its written consent but, if
settled with such consent or if there be a final judgment for the plaintiff, the
indemnifying party shall indemnify the indemnified party from and against any
loss or liability by reason of such settlement or judgment.
(d) If the indemnification provided for in this Section 7 is
unavailable to an indemnified party under Section 7(a) hereof or insufficient in
respect of any losses, claims, damages or liabilities referred to therein, then
the indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities, in such proportion as is
appropriate to reflect the relative fault of the indemnified and indemnifying
parties in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of the indemnified and indemnifying parties
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by such parties;
provided that no Underwriter shall be obligated to contribute more than its
share of underwriting discounts and commissions pertaining to the Certificates
less any damages otherwise paid by such Underwriter with respect to such loss,
liability, claim, damage or expense.
(e) The Purchaser and the Seller agree that it would not be
just and equitable if contribution pursuant to Section 7(d) were determined by
pro rata allocation or by any other method of allocation that does not take
account of the considerations referred to in Section 7(d) above. The amount paid
or payable by an indemnified party as a result of the losses, claims, damages
and liabilities referred to in this Section 7 shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim, except where the indemnified party is
required to bear such expenses pursuant to this Section 7, which expenses the
indemnifying party shall pay as and when incurred, at the request of the
indemnified party, to the extent that the indemnifying party will be ultimately
obligated to pay such expenses. If any expenses so paid by the indemnifying
party are subsequently determined to not be required to be borne by the
indemnifying party hereunder, the party that received such payment shall
promptly refund the amount so paid to the party which made such payment. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 0000 Xxx) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
(f) The indemnity and contribution agreements contained in
this Section 7 shall remain operative and in full force and effect regardless of
(i) any termination of this Agreement, (ii) any investigation made by the
Purchaser, the Underwriters, any of their respective directors or officers, or
any person controlling the Purchaser or the Underwriters, and (iii) acceptance
of and payment for any of the Certificates.
(g) Without limiting the generality or applicability of any
other provision of this Agreement, the Underwriters shall be third-party
beneficiaries of the provisions of this Section 7.
SECTION 8. Costs. The Seller shall pay (or shall reimburse the
Purchaser to the extent that the Purchaser has paid) the Seller's pro rata
portion of the aggregate of the following amounts (the Seller's pro rata portion
to be determined according to the percentage that the Artesia Mortgage Loan
Balance represents as of the Cut-Off Date Pool Balance): (i) the costs and
expenses of printing and delivering the Pooling and Servicing Agreement and the
Certificates; (ii) the costs and expenses of printing (or otherwise reproducing)
and delivering a Prospectus, Preliminary Prospectus Supplement and Memorandum
relating to the Certificates; (iii) the initial fees, costs, and expenses of the
Trustee (including reasonable attorneys' fees); (iv) the filing fee charged by
the Securities and Exchange Commission for registration of the Certificates so
registered; (v) the fees charged by the Rating Agencies to rate the Certificates
so rated; (vi) the fees and disbursements of a firm of certified public
accountants selected by the Purchaser and the Seller with respect to numerical
information in respect of the Mortgage Loans and the Certificates included in
the Prospectus, the Memorandum and any related items similar to Computational
Materials or ABS Term Sheets, including in respect of the cost of obtaining any
"comfort letters" with respect to such items; (vii) the reasonable out-of-pocket
costs and expenses in connection with the qualification or exemption of the
Certificates under state securities or "Blue Sky" laws, including filing fees
and reasonable fees and disbursements of counsel in connection therewith, in
connection with the preparation of any "Blue Sky" survey and in connection with
any determination of the eligibility of the Certificates for investment by
institutional investors and the preparation of any legal investment survey;
(viii) the expenses of printing any such "Blue Sky" survey and legal investment
survey; and (ix) the reasonable fees and disbursements of counsel to the
Underwriters; provided, however, Seller shall pay (or shall reimburse the
Purchaser to the extent that the Purchaser has paid) the expense of recording
any assignment of Mortgage or assignment of Assignment of Leases as contemplated
by Section 2 hereof with respect to such Seller's Mortgage Loans. All other
costs and expenses in connection with the transactions contemplated hereunder
shall be borne by the party incurring such expense.
SECTION 9. Grant of a Security Interest. It is the express
intent of the parties hereto that the conveyance of the Mortgage Loans by the
Seller to the Purchaser as provided in Section 2 hereof be, and be construed as,
a sale of the Mortgage Loans by the Seller to the Purchaser and not as a pledge
of the Mortgage Loans by the Seller to the Purchaser to secure a debt or other
obligation of the Seller. However, if, notwithstanding the aforementioned intent
of the parties, the Mortgage Loans are held to be property of the Seller, then,
(a) it is the express intent of the parties that such conveyance be deemed a
pledge of the Mortgage Loans by the Seller to the Purchaser to secure a debt or
other obligation of the Seller, and (b) (i) this Agreement shall also be deemed
to be a security agreement within the meaning of Article 9 of the Uniform
Commercial Code of the applicable jurisdiction; (ii) the conveyance provided for
in Section 2 hereof shall be deemed to be a grant by the Seller to the Purchaser
of a security interest in all of the Seller's right, title and interest in and
to the Mortgage Loans, and all amounts payable to the holder of the Mortgage
Loans in accordance with the terms thereof, and all proceeds of the conversion,
voluntary or involuntary, of the foregoing into cash, instruments, securities or
other property, including, without limitation, all amounts, other than
investment earnings, from time to time held or invested in the Certificate
Account, the Distribution Account or, if established, the REO Account (each as
defined in the Pooling and Servicing Agreement) whether in the form of cash,
instruments, securities or other property; (iii) the assignment to the Trustee
of the interest of the Purchaser as contemplated by Section 1 hereof shall be
deemed to be an assignment of any security interest created hereunder; (iv) the
possession by the Trustee or any of its agents, including, without limitation,
the Custodian, of the Mortgage Notes, and such other items of property as
constitute instruments, money, negotiable documents or chattel paper shall be
deemed to be possession by the secured party for purposes of perfecting the
security interest pursuant to Section 9-313 of the Uniform Commercial Code of
the applicable jurisdiction; and (v) notifications to persons (other than the
Trustee) holding such property, and acknowledgments, receipts or confirmations
from persons (other than the Trustee) holding such property, shall be deemed
notifications to, or acknowledgments, receipts or confirmations from, financial
intermediaries, bailees or agents (as applicable) of the secured party for the
purpose of perfecting such security interest under applicable law. The Seller
and the Purchaser shall, to the extent consistent with this Agreement, take such
actions as may be necessary to ensure that, if this Agreement were deemed to
create a security interest in the Mortgage Loans, such security interest would
be deemed to be a perfected security interest of first priority under applicable
law and will be maintained as such throughout the term of this Agreement and the
Pooling and Servicing Agreement.
SECTION 10. Covenants of Purchaser. The Purchaser shall
provide the Seller with all forms of Disclosure Materials (including the final
form of the Memorandum, the Preliminary Prospectus Supplement and the Prospectus
Supplement) promptly upon any such document becoming available.
SECTION 11. Notices. All notices, copies, requests, consents,
demands and other communications required hereunder shall be in writing and
telecopied or delivered to the intended recipient at the "Address for Notices"
specified beneath its name on the signature pages hereof or, as to either party,
at such other address as shall be designated by such party in a notice hereunder
to the other party. Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given when transmitted by
telecopier or personally delivered or, in the case of a mailed notice, upon
receipt, in each case given or addressed as aforesaid.
SECTION 12. 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 Seller submitted pursuant hereto, shall remain
operative and in full force and effect and shall survive delivery of the
Mortgage Loans by the Seller to the Purchaser (and by the Purchaser to the
Trustee).
SECTION 13. 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 14. Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be an original, but which
together shall constitute one and the same agreement.
SECTION 15. 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 NEW YORK. THE PARTIES
HERETO INTEND THAT THE PROVISIONS OF SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW SHALL APPLY TO THIS AGREEMENT.
SECTION 16. Attorneys Fees. If any legal action, suit or
proceeding is commenced between the Seller and the Purchaser regarding their
respective rights and obligations under this Agreement, the prevailing party
shall be entitled to recover, in addition to damages or other relief, costs and
expenses, attorneys' fees and court costs (including, without limitation, expert
witness fees). As used herein, the term "prevailing party" shall mean the party
which obtains the principal relief it has sought, whether by compromise
settlement or judgment. If the party which commenced or instituted the action,
suit or proceeding shall dismiss or discontinue it without the concurrence of
the other party, such other party shall be deemed the prevailing party.
SECTION 17. Further Assurances. The 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 18. Successors and Assigns. The rights and obligations
of the Seller under this Agreement shall not be assigned by the Seller without
the prior written consent of the Purchaser, except that any person into which
the Seller may be merged or consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Seller is a party, or any
person succeeding to all or substantially all of the business of the Seller,
shall be the successor to the Seller hereunder. The Purchaser has the right to
assign its interest under this Agreement, in whole or in part, as may be
required to effect the purposes of the Pooling and Servicing Agreement, and the
assignee shall, to the extent of such assignment, succeed to the rights and
obligations hereunder of the Purchaser. Subject to the foregoing, this Agreement
shall bind and inure to the benefit of and be enforceable by the Seller, the
Purchaser, the Underwriters (as intended third party beneficiaries hereof) and
their permitted successors and assigns, and the officers, directors and
controlling persons referred to in Section 7. This Agreement is enforceable by
the Underwriters and the other third party beneficiaries hereto in all respects
to the same extent as if they had been signatories hereof.
SECTION 19. Amendments. No term or provision of this Agreement
may be waived or modified unless such waiver or modification is in writing and
signed by a duly authorized officer of the party, or third party beneficiary,
against whom such waiver or modification is sought to be enforced. No amendment
to the Pooling and Servicing Agreement which relates to defined terms contained
therein, Section 2.01(d) thereof or the repurchase obligations or any other
obligations of the Seller shall be effective against the Seller (in such
capacity) unless the Seller shall have agreed to such amendment in writing.
SECTION 20. Accountants' Letters. The parties hereto shall
cooperate with KPMG LLP and Ernst & Young LLP in making available all
information and taking all steps reasonably necessary to permit such accountants
to deliver the letters required by the Underwriting Agreement.
SECTION 21. Knowledge. Whenever a representation or warranty
or other statement in this Agreement is made with respect to a Person's
"knowledge," such statement refers to such Person's employees or agents who were
or are responsible for or involved with the indicated matter and have actual
knowledge of the matter in question.
IN WITNESS WHEREOF, the Seller and the Purchaser have caused
their names to be signed hereto by their respective duly authorized officers as
of the date first above written.
SELLER
ARTESIA MORTGAGE CAPITAL CORPORATION
By: /s/ Xxxxx Xxxxxx Xxxxx
----------------------------------------------
Name: Xxxxx Xxxxxx Xxxxx
Title: Vice President
Address for Notices:
0000 XX Xxxxx Xxxxxx
Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
PURCHASER
WACHOVIA COMMERCIAL MORTGAGE SECURITIES, INC.
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Managing Director
Address for Notices:
One Wachovia Center
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
SCHEDULE I
General Mortgage Representations and Warranties
1. The information pertaining to each Mortgage Loan set forth in the
Mortgage Loan Schedule was true and correct in all material respects as
of the Cut-Off Date and included all of the material information
required by the definition of Mortgage Loan Schedule.
2. As of the date of its origination, such Mortgage Loan complied in all
material respects with, or was exempt from, all requirements of
federal, state or local law relating to the origination of such
Mortgage Loan.
3. Immediately prior to the sale, transfer and assignment to the
Purchaser, the Seller had good and marketable title to, and was the
sole owner of, each Mortgage Loan, and the Seller is transferring such
Mortgage Loan free and clear of any and all liens, pledges, charges,
security interests or any other ownership interests of any nature
encumbering such Mortgage Loan. Upon consummation of the transactions
contemplated by the Mortgage Loan Purchase Agreement, the Seller will
have validly and effectively conveyed to the Purchaser all legal and
beneficial interest in and to such Mortgage Loan (other than those
rights to servicing and related compensation as reflected in the
Mortgage Loan Schedule) free and clear of any pledge, lien or security
interest.
4. The proceeds of such Mortgage Loan have been fully disbursed and there
is no requirement for future advances thereunder.
5. Each related Mortgage Note, Mortgage, Assignment of Leases (if a
document separate from the Mortgage) and other agreement executed by
the related Mortgagor in connection with such Mortgage Loan is legal,
valid and binding obligation of the related Mortgagor (subject to any
non-recourse provisions therein and any state anti-deficiency or market
value limit deficiency legislation), enforceable in accordance with its
terms, except (i) that certain provisions contained in such Mortgage
Loan documents are or may be unenforceable in whole or in part under
applicable state or federal laws, but neither the application of any
such laws to any such provision nor the inclusion of any such
provisions renders any of the Mortgage Loan documents invalid as a
whole and such Mortgage Loan documents taken as a whole are enforceable
to the extent necessary and customary for the practical realization of
the rights and benefits afforded thereby and (ii) as such enforcement
may be limited by bankruptcy, insolvency, receivership, reorganization,
moratorium, redemption, liquidation or other laws affecting the
enforcement of creditors' rights generally, or by general principles of
equity (regardless of whether such enforcement is considered in a
proceeding in equity or at law). The related Mortgage Note and Mortgage
contain no provision limiting the right or ability of the Seller to
assign, transfer and convey the related Mortgage Loan to any other
Person. With respect to any Mortgaged Property that has tenants, there
exists as either part of the Mortgage or as a separate document, an
assignment of leases.
6. As of the date of its origination, there was no valid offset, defense,
counterclaim, abatement or right to rescission with respect to any of
the related Mortgage Notes, Mortgage(s) or other agreements executed in
connection therewith, and, as of the Cut-Off Date, there is no valid
offset, defense, counterclaim or right to rescission with respect to
such Mortgage Note, Mortgage(s) or other agreements, except in each
case, with respect to the enforceability of any provisions requiring
the payment of default interest, late fees, additional interest,
prepayment premiums or yield maintenance charges.
7. Each related assignment of Mortgage and assignment of Assignment of
Leases from the Seller to the Trustee constitutes the legal, valid and
binding first priority assignment from the Seller, except as such
enforcement may be limited by bankruptcy, insolvency, redemption,
reorganization, liquidation, receivership, moratorium or other laws
relating to or affecting creditors' rights generally or by general
principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law). Each Mortgage and
Assignment of Leases is freely assignable.
8. Each related Mortgage is a valid and enforceable first lien on the
related Mortgaged Property subject only to the exceptions set forth in
paragraph (5) above and the following title exceptions (each such title
exception, a "Title Exception", and collectively, the "Title
Exceptions"): (a) the lien of current real property taxes, water
charges, sewer rents and assessments not yet due and payable, (b)
covenants, conditions and restrictions, rights of way, easements and
other matters of public record, none of which, individually or in the
aggregate, materially and adversely interferes with the current use of
the Mortgaged Property or the security intended to be provided by such
Mortgage or with the Mortgagor's ability to pay its obligations under
the Mortgage Loan when they become due or materially and adversely
affects the value of the Mortgaged Property, (c) the exceptions
(general and specific) and exclusions set forth in the applicable
policy described in paragraph (12) below or appearing of record, none
of which, individually or in the aggregate, materially and adversely
interferes with the current use of the Mortgaged Property or the
security intended to be provided by such Mortgage or with the
Mortgagor's ability to pay its obligations under the Mortgage Loan when
they become due or materially and adversely affects the value of the
Mortgaged Property, (d) other matters to which like properties are
commonly subject, none of which, individually or in the aggregate,
materially and adversely interferes with the current use of the
Mortgaged Property or the security intended to be provided by such
Mortgage or with the Mortgagor's ability to pay its obligations under
the Mortgage Loan when they become due or materially and adversely
affects the value of the Mortgaged Property, (e) the right of tenants
(whether under ground leases, space leases or operating leases) at the
Mortgaged Property to remain following a foreclosure or similar
proceeding (provided that such tenants are performing under such
leases) and (f) if such Mortgage Loan is cross-collateralized with any
other Mortgage Loan, the lien of the Mortgage for such other Mortgage
Loan, none of which, individually or in the aggregate, materially and
adversely interferes with the current use of the Mortgaged Property or
the security intended to be provided by such Mortgage or with the
Mortgagor's ability to pay its obligations under the Mortgage Loan when
they become due or materially and adversely affects the value of the
Mortgaged Property. Except with respect to cross-collateralized and
cross-defaulted Mortgage Loans and as provided below, there are no
mortgage loans that are senior or pari passu with respect to the
related Mortgaged Property or such Mortgage Loan.
9. 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 located on the
Mortgaged Property that are owned by the Mortgagor and either (i) are
reasonably necessary to operate the Mortgaged Property or (ii) are (as
indicated in the appraisal obtained in connection with the origination
of the related Mortgage Loan) material to the value of the Mortgaged
Property (other than any personal property subject to a purchase money
security interest or a sale and leaseback financing arrangement
permitted under the terms of such Mortgage Loan or any other personal
property leases applicable to such personal property), to the extent
perfection may be effected pursuant to applicable law by recording or
filing, 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 lien
and priority security interest on such items of personalty except as
such enforcement may be limited by bankruptcy, insolvency,
receivership, reorganization, moratorium, redemption, liquidation or
other laws affecting the enforcement of creditor's rights generally, or
by general principles of equity (regardless of whether such enforcement
is considered in a proceeding in equity or at law). Notwithstanding any
of the foregoing, no representation is made as to the perfection 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.
10. All real estate taxes and governmental assessments, or installments
thereof, which would be a lien on the Mortgaged Property and that prior
to the Cut-Off Date have become delinquent in respect of each related
Mortgaged Property have been paid, or an escrow of funds in an amount
sufficient to cover such payments has been established. For purposes of
this representation and warranty, real estate taxes and governmental
assessments and installments thereof shall not be considered delinquent
until the earlier of (a) the date on which interest and/or penalties
would first be payable thereon and (b) the date on which enforcement
action is entitled to be taken by the related taxing authority.
11. To the Seller's actual knowledge as of the Cut-Off Date, and to the
Seller's actual knowledge based solely upon due diligence customarily
performed with the origination of comparable Mortgage Loans by the
Seller, each related Mortgaged Property was free and clear of any
material damage (other than deferred maintenance for which escrows were
established at origination) that would affect materially and adversely
the value of such Mortgaged Property as security for the Mortgage Loan
and to the Seller's actual knowledge as of the Cut-Off Date there was
no proceeding pending or, based solely upon the delivery of written
notice thereof from the appropriate condemning authority, threatened
for the total or partial condemnation of such Mortgaged Property.
12. The lien of each related Mortgage as a first priority lien in the
original principal amount of such Mortgage Loan after all advances of
principal (as set forth on the Mortgage Loan Schedule) is insured by an
ALTA lender's title insurance policy (or a binding commitment
therefor), or its equivalent as adopted in the applicable jurisdiction,
insuring the Seller, its successors and assigns, subject only to the
Title Exceptions; the mortgagee or its successors or assigns is the
sole named insured of such policy; such policy is assignable without
consent of the insurer and will inure to the benefit of the Trustee as
mortgagee of record; is in full force and effect upon the consummation
of the transactions contemplated by this Agreement; all premiums
thereon have been paid; no claims have been made under such policy and
the Seller has not done anything, by act or omission, and the Seller
has no actual knowledge of any matter, which would impair or diminish
the coverage of such policy. The insurer issuing such policy is either
(x) a nationally-recognized title insurance company or (y) qualified to
do business in the jurisdiction in which the related Mortgaged Property
is located to the extent required; such policy contains no material
exclusions for, or affirmatively insures (except for any Mortgaged
Property located in a jurisdiction where such insurance is not
available) (a) access to public road or (b) against any loss due to
encroachments of any material portion of the improvements thereon.
13. As of the date of its origination, all insurance coverage required
under each related Mortgage, which insurance covered such risks as were
customarily acceptable to prudent commercial and multifamily mortgage
lending institutions lending on the security of property comparable to
the related Mortgaged Property in the jurisdiction in which such
Mortgaged Property is located, and with respect to a fire and extended
perils insurance policy, is in an amount (subject to a customary
deductible) at least equal to the lesser of (i) the replacement cost of
improvements located on such Mortgaged Property, or (ii) the
outstanding principal balance of the Mortgage Loan, and in any event,
the amount necessary to prevent operation of any co-insurance
provisions; and, except if such Mortgaged Property is operated as a
mobile home park, is also covered by business interruption or rental
loss insurance, in an amount at least equal to 12 months of operations
of the related Mortgaged Property, all of which was in full force and
effect with respect to each related Mortgaged Property; and, as of the
Cut-Off Date, to the actual knowledge of the Seller, all insurance
coverage required under each Mortgage, which insurance covers such
risks and is in such amounts as are customarily acceptable to prudent
commercial and multifamily mortgage lending institutions lending on the
security of property comparable to the related Mortgaged Property in
the jurisdiction in which such Mortgaged Property is located, is in
full force and effect with respect to each related Mortgaged Property;
all premiums due and payable through the Closing Date have been paid;
and no notice of termination or cancellation with respect to any such
insurance policy has been received by the Seller; and except for
certain amounts not greater than amounts which would be considered
prudent by an institutional commercial and/or multifamily mortgage
lender with respect to a similar Mortgage Loan and which are set forth
in the related Mortgage, any insurance proceeds in respect of a
casualty loss, will be applied either (i) to the repair or restoration
of all or part of the related Mortgaged Property or (ii) the reduction
of the outstanding principal balance of the Mortgage Loan, subject in
either case to requirements with respect to leases at the related
Mortgaged Property and to other exceptions customarily provided for by
prudent institutional lenders for similar loans. The Mortgaged Property
is also covered by comprehensive general liability insurance against
claims for personal and bodily injury, death or property damage
occurring on, in or about the related Mortgaged Property, in an amount
customarily required by prudent institutional lenders. An architectural
or engineering consultant has performed an analysis of each of the
Mortgaged Properties located in seismic zone 3 or 4 in order to
evaluate the structural and seismic condition of such property, for the
sole purpose of assessing the probable maximum loss ("PML") for the
Mortgaged Property in the event of an earthquake. In such instance, the
PML was based on a 475 year lookback with a 10% probability of
exceedance in a 50 year period. If the resulting report concluded that
the PML would exceed 20% of the amount of the replacement costs of the
improvements, earthquake insurance on such Mortgaged Property was
obtained by an insurer rated at least A-:V by A.M. Best Company or
"BBB-" (or the equivalent) from S&P or "Baa3" (or the equivalent) from
Xxxxx'x. If the Mortgaged Property is located in Florida or within 25
miles of the coast of Texas, Louisiana, Mississippi, Alabama, Georgia,
North Carolina or South Carolina 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 full insurable value, or 100% of the replacement cost, of the
improvements located on the related Mortgaged Property.
The insurance policies contain a standard mortgagee clause naming the
Seller, its successors and assigns as loss payee, in the case of a
property insurance policy, and additional insured in the case of a
liability insurance policy and provide that they are not terminable
without 30 days prior written notice to the Mortgagee (or, with respect
to non-payment, 10 days prior written notice to the Mortgagee) or such
lesser period as prescribed by applicable law. Each Mortgage requires
that the Mortgagor maintain insurance as described above or permits the
Mortgagee to require insurance as described above, and permits the
Mortgagee to purchase such insurance at the Mortgagor's expense if
Mortgagor fails to do so.
14. (A) Other than payments due but not yet 30 days or more delinquent, to
the Seller's actual knowledge, based upon due diligence customarily
performed with the servicing of comparable mortgage loans by prudent
institutional lenders, there is no material default, breach, violation
or event of acceleration existing under the related Mortgage or the
related Mortgage Note, and to the Seller's actual knowledge no event
(other than payments due but not yet delinquent) which, with the
passage of time or with notice and the expiration of any grace or cure
period, would constitute a material default, breach, violation or event
of acceleration, provided, however, that this representation and
warranty does not address or otherwise cover any default, breach,
violation or event of acceleration that specifically pertains to any
matter otherwise covered by any other representation and warranty made
by the Seller in any paragraph of this Schedule I and (B) the Seller
has not waived any material default, breach, violation or event of
acceleration under such Mortgage or Mortgage Note, except for a written
waiver contained in the related Mortgage File being delivered to the
Purchaser, and no such waiver has been granted since the date upon
which the due diligence file related to the applicable Mortgage Loan
was delivered to Clarion Partners, LLC, and pursuant to the terms of
the related Mortgage or the related Mortgage Note and other documents
in the related Mortgage File no Person or party other than the holder
of such Mortgage Note may declare any event of default or accelerate
the related indebtedness under either of such Mortgage or Mortgage
Note.
15. As of the Closing Date, each Mortgage Loan is not, and in the prior 12
months (or since the date of origination if such Mortgage Loan has been
originated within the past 12 months), has not been, 30 days or more
past due in respect of any Scheduled Payment.
16. Except with respect to ARD Loans, which provide that the rate at which
interest accrues thereon increases after the Anticipated Repayment
Date, the Mortgage Rate (exclusive of any default interest, late
charges or prepayment premiums) of such Mortgage Loan is a fixed rate.
17. Each related Mortgage does not provide for or permit, without the prior
written consent of the holder of the Mortgage Note, each related
Mortgaged Property to secure any other promissory note or obligation
except as expressly described in such Mortgage.
18. Each Mortgage Loan constitutes a "qualified mortgage" within the
meaning of Section 860G(a)(3)of the Code, is directly secured by a
Mortgage on a commercial property or a multifamily residential
property, and either (1) substantially all of the proceeds of such
Mortgage Loan were used to acquire, improve or protect the portion of
such commercial or multifamily residential property that consists of an
interest in real property (within the meaning of Treasury Regulations
Sections 1.856-3(c) and 1.856-3(d)) and such interest in real property
was the only security for such Mortgage Loan as of the Testing Date (as
defined below), or (2) the fair market value of the interest in real
property which secures such Mortgage Loan was at least equal to 80% of
the principal amount of the Mortgage Loan (a) as of the Testing Date,
or (b) as of the Closing Date. For purposes of the previous sentence,
(1) the fair market value of the referenced interest in real property
shall first be reduced by (a) the amount of any lien on such interest
in real property that is senior to the Mortgage Loan, and (b) a
proportionate amount of any lien on such interest in real property that
is on a parity with the Mortgage Loan, and (2) the "Testing Date" shall
be the date on which the referenced Mortgage Loan was originated unless
(a) such Mortgage Loan was modified after the date of its origination
in a manner that would cause a "significant modification" of such
Mortgage Loan within the meaning of Treasury Regulations Section
1.1001-3(b), and (b) such "significant modification" did not occur at a
time when such Mortgage Loan was in default or when default with
respect to such Mortgage Loan was reasonably foreseeable. However, if
the referenced Mortgage Loan has been subjected to a "significant
modification" after the date of its origination and at a time when such
Mortgage Loan was not in default or when default with respect to such
Mortgage Loan was not reasonably foreseeable, the Testing Date shall be
the date upon which the latest such "significant modification"
occurred.
19. One or more environmental site assessments or updates thereof (meeting
American Society for Testing and Materials (ASTM) standards) were
performed by an environmental consulting firm independent of the Seller
and the Seller's affiliates with respect to each related Mortgaged
Property during the 18-months preceding the origination of the related
Mortgage Loan, and the Seller, having made no independent inquiry other
than to review the report(s) prepared in connection with the
assessment(s) referenced herein, has no actual knowledge and has
received no notice of any material adverse environmental condition or
circumstance affecting such Mortgaged Property that was not disclosed
in such report(s). If any such environmental report identified any
Recognized Environmental Condition (REC), as that term is defined in
the Standard Practice for Environmental Site Assessments: Phase I
Environmental Site Assessment Process Designation: E 1527-00, as
recommended by the American Society for Testing and Materials (ASTM),
with respect to the related Mortgaged Property and the same have not
been subsequently addressed in all material respects, then either (i)
an escrow of 100% or more of the amount identified as necessary by the
environmental consulting firm to address the REC is held by the Seller
for purposes of effecting same (and the borrower has covenanted in the
Mortgage Loan documents to perform such work), (ii) the related
borrower or other responsible party having financial resources
reasonably estimated to be adequate to address the REC is required to
take such actions or is liable for the failure to take such actions, if
any, with respect to such circumstances or conditions as have been
required by the applicable governmental regulatory authority or any
environmental law or regulation, (iii) the borrower has provided an
environmental insurance policy, (iv) an operations and maintenance plan
has been or will be implemented or (v) such conditions or circumstances
were investigated further and based upon such additional investigation,
a qualified environmental consultant recommended no further
investigation or remediation. All environmental assessments or updates
that were in the possession of the Seller and that relate to a
Mortgaged Property insured by an environmental insurance policy have
been delivered to or disclosed to the environmental insurance carrier
or insurance broker issuing such policy prior to the issuance of such
policy. The Mortgage Loan documents require the borrower to comply with
all applicable environmental laws and each Mortgagor has agreed to
indemnify the mortgagee for any losses resulting from any material,
adverse environmental condition or failure of the Mortgagor to abide by
such laws or has provided environmental insurance.
20. Each related Mortgage and Assignment of Leases, together with
applicable state law, contains customary and enforceable provisions for
comparable mortgaged properties similarly situated such as to render
the rights and remedies of the holder thereof adequate for the
practical realization against the Mortgaged Property of the benefits of
the security, including realization by judicial or, if applicable,
non-judicial foreclosure, subject to the effects of bankruptcy,
insolvency, reorganization, receivership, moratorium, redemption,
liquidation or similar law affecting the right of creditors and the
application of principles of equity.
21. No Mortgagor is a debtor in any state or federal bankruptcy or
insolvency proceeding.
22. Each Mortgage Loan is a whole loan (except with respect to the
Co-Lender Loans) and contains no 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, other than the ARD Loans, provide
for negative amortization. The Seller holds no preferred equity
interest.
23. Subject to certain exceptions, which are customarily acceptable to
prudent commercial and multifamily mortgage lending institutions
lending on the security of property comparable to the related Mortgaged
Property, each related Mortgage or loan agreement contains provisions
for the acceleration of the payment of the unpaid principal balance of
such Mortgage Loan if, without complying with the requirements of the
Mortgage or loan agreement, (a) the related Mortgaged Property, or any
controlling interest in the related Mortgagor, is directly transferred
or sold (other than by reason of family and estate planning transfers,
transfers by devise, descent or operation of law upon the death of a
member, general partner or shareholder of the related Borrower and
transfers of less than a controlling interest (as such term is defined
in the related Mortgage Loan documents) in a mortgagor, issuance of
non-controlling new equity interests, transfers among existing members,
partners or shareholders in the Mortgagor or an affiliate thereof,
transfers among affiliated Mortgagors with respect to Crossed Loans or
multi-property Mortgage Loans or transfers of a similar nature to the
foregoing meeting the requirements of the Mortgage Loan (such as
pledges of ownership interests that do not result in a change of
control) or a substitution or release of collateral within the
parameters of paragraph (26) below), or (b) the related Mortgaged
Property or controlling interest in the borrower is encumbered in
connection with subordinate financing by a lien or security interest
against the related Mortgaged Property, other than any existing
permitted additional debt. The Mortgage Loan documents require the
borrower to pay all reasonable costs incurred by the Mortgagor with
respect to any transfer, assumption or encumbrance requiring lender's
approval.
24. Except as set forth in the related Mortgage File, the terms of the
related Mortgage Note and Mortgage(s) have not been waived, modified,
altered, satisfied, impaired, canceled, subordinated or rescinded in
any manner which materially interferes with the security intended to be
provided by such Mortgage and no such waiver, modification, alteration,
satisfaction, impairment, cancellation, subordination or recission has
occurred since the date upon which the due diligence file related to
the applicable Mortgage Loan was delivered to Clarion Capital, LLC.
25. Each related Mortgaged Property was inspected by or on behalf of the
related originator or an affiliate during the 12 month period prior to
the related origination date.
26. Since origination, no material portion of the related Mortgaged
Property has been released from the lien of the related Mortgage in any
manner which materially and adversely affects the value of the Mortgage
Loan or materially interferes with the security intended to be provided
by such Mortgage, and, except with respect to Mortgage Loans (a) which
permit defeasance by means of substituting for the Mortgaged Property
(or, in the case of a Mortgage Loan secured by multiple Mortgaged
Properties, one or more of such Mortgaged Properties) "government
securities" as defined in the Investment Company Act of 1940, as
amended, sufficient to pay the Mortgage Loans (or portions thereof) in
accordance with their terms, (b) where a release of the portion of the
Mortgaged Property was contemplated at origination and such portion was
not considered material for purposes of underwriting the Mortgage Loan,
(c) where release is conditional upon the satisfaction of certain
underwriting and legal requirements and the payment of a release price
that represents adequate consideration for such Mortgaged Property or
the portion thereof that is being released, (d) which permit the
related Mortgagor to substitute a replacement property in compliance
with REMIC Provisions or (e) which permit the release(s) of unimproved
out-parcels or other portions of the Mortgaged Property that will not
have a material adverse affect on the underwritten value of the
security for the Mortgage Loan or that were not allocated to any value
in the underwriting during the origination of the Mortgage Loan, the
terms of the related Mortgage do not provide for release of any portion
of the Mortgaged Property from the lien of the Mortgage except in
consideration of payment in full therefor.
27. To the Seller's actual knowledge, based upon a letter from governmental
authorities, a legal opinion, an endorsement to the related title
policy, or based upon other due diligence considered reasonable by
prudent commercial conduit mortgage lenders in the area where the
applicable Mortgaged Property is located, as of the date of origination
of such Mortgage Loan and as of the Cut-Off Date, there are no material
violations of any applicable zoning ordinances, building codes and land
laws applicable to the Mortgaged Property or the use and occupancy
thereof which (i) are not insured by an ALTA lender's title insurance
policy (or a binding commitment therefor), or its equivalent as adopted
in the applicable jurisdiction, or a law and ordinance insurance policy
or (ii) would have a material adverse effect on the value, operation or
net operating income of the Mortgaged Property. The Mortgage Loan
documents require the Mortgaged Property to comply with all applicable
laws and ordinances.
28. To the Seller's actual knowledge based on surveys and/or the title
policy referred to herein obtained in connection with the origination
of each Mortgage Loan, none of the material improvements which were
included for the purposes of determining the appraised value of the
related Mortgaged Property at the time of the origination of the
Mortgage Loan lies outside of the boundaries and building restriction
lines of such property (except Mortgaged Properties which are legal
non-conforming uses), to an extent which would have a material adverse
affect on the value of the Mortgaged Property or related Mortgagor's
use and operation of such Mortgaged Property (unless affirmatively
covered by title insurance) and no improvements on adjoining properties
encroached upon such Mortgaged Property to any material and adverse
extent (unless affirmatively covered by title insurance).
29. With respect to at least 95% of such Seller's Mortgage Loans (by
balance) having a Cut-Off Date Balance in excess of 1% of the Initial
Pool Balance, the related Mortgagor has covenanted in its
organizational documents and/or the Mortgage Loan documents to own no
significant asset other than the related Mortgaged Property or
Mortgaged Properties, as applicable, and assets incidental to its
ownership and operation of such Mortgaged Property, and to hold itself
out as being a legal entity, separate and apart from any other Person.
30. No advance of funds has been made other than pursuant to the loan
documents, directly or indirectly, by the Seller to the Mortgagor and,
to the Seller's actual knowledge, no funds have been received from any
Person other than the Mortgagor, for or on account of payments due on
the Mortgage Note or the Mortgage.
31. As of the date of origination and, to the Seller's actual knowledge, as
of the Cut-Off Date, there was no pending action, suit or proceeding,
or governmental investigation of which it has received notice, against
the Mortgagor or the related Mortgaged Property the adverse outcome of
which could reasonably be expected to materially and adversely affect
such Mortgagor's ability to pay principal, interest or any other
amounts due under such Mortgage Loan or the security intended to be
provided by the Mortgage Loan documents or the current use of the
Mortgaged Property.
32. As of the date of origination, and, to the Seller's actual knowledge,
as of the Cut-Off Date, if the related Mortgage is a deed of trust, a
trustee, duly qualified under applicable law to serve as such, has
either been properly designated and serving under such Mortgage or may
be substituted in accordance with the Mortgage and applicable law.
33. The Mortgage Loan and the interest (exclusive of any default interest,
late charges or prepayment premiums) contracted for complied as of the
date of origination with, or is exempt from, applicable state or
federal laws, regulations and other requirements pertaining to usury.
34. The related Mortgage Note is not secured by any collateral that secures
a Mortgage Loan that is not in the Trust Fund and each Mortgage Loan
that is cross-collateralized is cross-collateralized only with other
Mortgage Loans sold pursuant to this Agreement.
35. The improvements located on the Mortgaged Property are either not
located in a federally designated special flood hazard area or, if so
located, the Mortgagor is required to maintain or the mortgagee
maintains, flood insurance with respect to such improvements and such
policy is in full force and effect in an amount no less than the lesser
of (i) the original principal balance of the Mortgage Loan, (ii) the
value of such improvements on the related Mortgaged Property located in
such flood hazard area or (iii) the maximum allowed under the related
federal flood insurance program.
36. All escrow deposits and payments required pursuant to the Mortgage Loan
as of the Closing Date required to be deposited with the Seller in
accordance with the Mortgage Loan documents have been so deposited, are
in the possession, or under the control, of the Seller or its agent and
there are no deficiencies in connection therewith.
37. To the Seller's actual knowledge, based on the due diligence
customarily performed in the origination of comparable mortgage loans
by prudent commercial and multifamily mortgage lending institutions
with respect to the related geographic area and properties comparable
to the related Mortgaged Property, as of the date of origination of the
Mortgage Loan, the related Mortgagor, the related lessee, franchisor or
operator was in possession of all material licenses, permits and
authorizations then required for use of the related Mortgaged Property
by the related Mortgagor, and, as of the Cut-Off Date, the Seller has
no actual knowledge that the related Mortgagor, the related lessee,
franchisor or operator was not in possession of such licenses, permits
and authorizations. The Mortgage Loan documents require the borrower to
maintain all such licenses, permits, authorizations and franchises.
38. The origination (or acquisition, as the case may be), servicing and
collection practices used by the Seller with respect to the Mortgage
Loan have been in all respects legal and have met customary industry
standards for servicing of commercial mortgage loans for conduit loan
programs.
39. Except for Mortgagors under Mortgage Loans the Mortgaged Property with
respect to which includes a Ground Lease, the related Mortgagor (or its
affiliate) has title in the fee simple interest in each related
Mortgaged Property.
40. The Mortgage Loan documents for each Mortgage Loan provide that each
Mortgage Loan is non-recourse to the related Mortgagor except that the
related Mortgagor and an additional guarantor accepts responsibility
for fraud and/or other intentional material misrepresentation.
Furthermore, the Mortgage Loan documents for each Mortgage Loan provide
that the related Mortgagor and an additional guarantor shall be liable
to the lender for losses incurred due to the misapplication or
misappropriation of rents collected in advance or 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, misapplication or conversion by the
Mortgagor of insurance proceeds or condemnation awards or breach of the
environmental covenants in the related Mortgage Loan documents.
41. Subject to the exceptions set forth in paragraph (5) and upon
possession of the Mortgaged Property as required under applicable state
law, the Assignment of Leases set forth in the Mortgage or separate
from the related Mortgage and related to and delivered in connection
with each Mortgage Loan establishes and creates a valid, subsisting and
enforceable lien and security interest in the related Mortgagor's
interest in all leases, subleases, licenses or other agreements
pursuant to which any Person is entitled to occupy, use or possess all
or any portion of the real property.
42. With respect to such Mortgage Loan, any prepayment premium and Yield
Maintenance Charge constitutes a "customary prepayment penalty" within
the meaning of Treasury Regulations Section 1.860G-1(b)(2).
43. If such Mortgage Loan contains a provision for any defeasance of
mortgage collateral, such Mortgage Loan permits defeasance (1) no
earlier than two years after the Closing Date and (2) only with
substitute collateral constituting "government securities" within the
meaning of Treasury Regulations Section 1.860G-2(a)(8)(i) in an amount
sufficient to make all scheduled payments under the Mortgage Note. Such
Mortgage Loan was not originated with the intent to collateralize a
REMIC offering with obligations that are not real estate mortgages. In
addition, if such Mortgage contains such a defeasance provision, it
provides (or otherwise contains provisions pursuant to which the holder
can require) that an opinion be provided to the effect that such holder
has a first priority perfected security interest in the defeasance
collateral. The related Mortgage Loan documents permit the lender to
charge all of its expenses associated with a defeasance to the
Mortgagor (including rating agencies' fees, accounting fees and
attorneys' fees), and provide that the related Mortgagor must deliver
(or otherwise, the Mortgage Loan documents contain certain provisions
pursuant to which the lender can require) (a) an accountant's
certification as to the adequacy of the defeasance collateral to make
payments under the related Mortgage Loan for the remainder of its term,
(b) an Opinion of Counsel that the defeasance complies with all
applicable REMIC Provisions, and (c) assurances from the Rating
Agencies that the defeasance will not result in the withdrawal,
downgrade or qualification of the ratings assigned to the Certificates.
Notwithstanding the foregoing, some of the Mortgage Loan documents may
not affirmatively contain all such requirements, but such requirements
are effectively present in such documents due to the general obligation
to comply with the REMIC Provisions and/or deliver a REMIC Opinion of
Counsel.
44. To the extent required under applicable law as of the date of
origination, and necessary for the enforceability or collectability of
the Mortgage Loan, the originator of such Mortgage Loan was authorized
to do business in the jurisdiction in which the related Mortgaged
Property is located at all times when it originated and held the
Mortgage Loan.
45. Neither the Seller nor any affiliate thereof has any obligation to make
any capital contributions to the Mortgagor under the Mortgage Loan.
46. Except with respect to the Companion Loan of any Co-Lender Loan, none
of the Mortgaged Properties is encumbered, and none of the Mortgage
Loan documents permits the related Mortgaged Property to be encumbered
subsequent to the Closing Date without the prior written consent of the
holder thereof, by any lien securing the payment of money junior to or
of equal priority with, or superior to, the lien of the related
Mortgage (other than Title Exceptions, taxes, assessments and contested
mechanics and materialmens liens that become payable after the Cut-Off
Date of the related Mortgage Loan).
47. Each related Mortgaged Property constitutes one or more complete
separate tax lots (or the related Mortgagor has covenanted to obtain
separate tax lots and a Person has indemnified the mortgagee for any
loss suffered in connection therewith or an escrow of funds in an
amount sufficient to pay taxes resulting from a breach thereof has been
established) or is subject to an endorsement under the related title
insurance policy.
48. An appraisal of the related Mortgaged Property was conducted in
connection with the origination of such Mortgage Loan; and such
appraisal satisfied either (A) the requirements of the "Uniform
Standards of Professional Appraisal Practice" as adopted by the
Appraisal Standards Board of the Appraisal Foundation, or (B) the
guidelines in Title XI of the Financial Institutions Reform, Recovery
and Enforcement Act or 1989, in either case as in effect on the date
such Mortgage Loan was originated.
49. In the origination and servicing of the Mortgage Loan, neither Seller
nor any prior holder of the Mortgage Loan participated in any fraud or
intentional material misrepresentation with respect to the Mortgage
Loan. To Seller's knowledge, no Mortgagor or guarantor originated a
Mortgage Loan.
50. The related Mortgage Loan documents require the Mortgagor to provide
the mortgagee with certain financial information at the times required
under the related Mortgage Loan documents.
51. Each Mortgaged Property is served by public utilities, water and sewer
(or septic facilities) and otherwise appropriate for the use in which
the Mortgaged Property is currently being utilized.
52. With respect to each Mortgage Loan secured by a leasehold interest
(except with respect to any Mortgage Loan also secured by a fee
interest in the related Mortgaged Property), the Seller represents and
warrants the following with respect to the related Ground Lease:
(a) Such Ground Lease or a memorandum thereof has been or will
be duly recorded no later than 30 days after the Closing Date and such Ground
Lease permits the interest of the lessee thereunder to be encumbered by the
related Mortgage or, if consent of the lessor thereunder is required, it has
been obtained prior to the Closing Date.
(b) Upon the foreclosure of the Mortgage Loan (or acceptance
of a deed in lieu thereof), the Mortgagor's interest in such Ground Lease is
assignable to the mortgagee under the leasehold estate and its assigns without
the consent of the lessor thereunder (or, if any such consent is required, it
has been obtained prior to the Closing Date).
(c) Such Ground Lease may not be amended, modified, canceled
or terminated without the prior written consent of the mortgagee and any such
action without such consent is not binding on the mortgagee, its successors or
assigns, except termination or cancellation if (i) an event of default occurs
under the Ground Lease, (ii) notice thereof is provided to the mortgagee and
(iii) such default is curable by the mortgagee as provided in the Ground Lease
but remains uncured beyond the applicable cure period.
(d) Such Ground Lease is in full force and effect and, to the
actual knowledge of the Seller at the Closing Date, other than payments due but
not yet 30 days or more delinquent (i) there is no material default, and (ii)
there is no event which, with the passage of time or with notice and the
expiration of any grace or cure period, would constitute a material default
under such Ground Lease.
(e) The Ground Lease or ancillary agreement between the lessor
and the lessee requires the lessor to give notice of any default by the lessee
to the mortgagee. The Ground Lease or ancillary agreement further provides that
no notice given is effective against the mortgagee unless a copy has been given
to the mortgagee in a manner described in the Ground Lease or ancillary
agreement.
(f) The Ground Lease (i) is not subject to any liens or
encumbrances superior to, or of equal priority with, the Mortgage, subject,
however, to only the Title Exceptions or (ii) is subject to a subordination,
non-disturbance and attornment agreement to which the mortgagee on the lessor's
fee interest in the Mortgaged Property is subject.
(g) A mortgagee is permitted a reasonable opportunity
(including, where necessary, sufficient time to gain possession of the interest
of the lessee under the Ground Lease) to cure any curable default under such
Ground Lease before the lessor thereunder may terminate such Ground Lease.
(h) Such Ground Lease has an original term (together with any
extension options, whether or not currently exercised, set forth therein all of
which can be exercised by the mortgagee if the mortgagee acquires the lessee's
rights under the Ground Lease) that extends not less than 20 years beyond the
Stated Maturity Date.
(i) Under the terms of such Ground Lease, any estoppel or
consent letter received by the mortgagee from the lessor, and the related
Mortgage, taken together, any related insurance proceeds or condemnation award
(other than in respect of a total or substantially total loss or taking) 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 repair or restoration progresses, or
to the payment or defeasance of the outstanding principal balance of the
Mortgage Loan, together with any accrued interest (except in cases where a
different allocation would not be viewed as commercially unreasonable by any
commercial mortgage lender, taking into account the relative duration of the
Ground Lease and the related Mortgage and the ratio of the market value of the
related Mortgaged Property to the outstanding principal balance of such Mortgage
Loan).
(j) The Ground Lease does not impose any restrictions on
subletting that would be viewed as commercially unreasonable by a prudent
commercial lender.
(k) The ground lessor under such Ground Lease is required to
enter into a new lease upon termination of the Ground Lease for any reason,
including the rejection of the Ground Lease in bankruptcy.
SCHEDULE II
Exceptions to Representations and Warranties for Artesia Loans
Exceptions to Rep 11
--------------------
--------------------------------------------------------------------------------
Loans Description of Exception
----- ------------------------
--------------------------------------------------------------------------------
000-000 Xxxxxxx Xxxxxxx Site The borrower owns only the fee
interest in the subject property but
not the improvements thereon.
Therefore, an engineering assessment
was not required.
--------------------------------------------------------------------------------
Exceptions to Rep 13
--------------------
--------------------------------------------------------------------------------
Loans Description of Exception
----- ------------------------
--------------------------------------------------------------------------------
All Loans All insurance requirements specified
under each Mortgage may not as of
the date of origination or
thereafter have been required to be
satisfied in every respect; however,
the coverages specifically
enumerated in Representation 13 were
in place at origination, and to
Seller's actual knowledge, remain in
place except as otherwise indicated
in the exceptions to this
Representation 13.
--------------------------------------------------------------------------------
010-357 Wherehouse Music / Blockbuster The property is located within
Video seismic zone 3. However, the land
was valued at $900,000 at the time
of origination, and this value is
significantly higher than the
current unpaid principal balance of
approximately $550,000. A seismic
report was therefore not required.
--------------------------------------------------------------------------------
010-991 Xxxxxxx Commons Site The borrower owns only the fee
interest in the subject property but
not the improvements thereon.
Therefore, only liability insurance
was required.
--------------------------------------------------------------------------------
000-000 XxXxxxxxx Xxxxxx This loan is subject to 90%
co-insurance (Borrower is liable for
10% of the claim amount if Borrower
has underinsured the property). Due
to difficulties in obtaining
insurance coverage at a reasonable
cost, the Borrower obtained a policy
with 90% co-insurance provisions.
The property is insured at 1.12
times the insurable value as
determined by the appraiser. Lender
has agreed to allow the co-insurance
for the current policy term. At
renewal, Borrower will have to
request additional waivers of the
co-insurance prohibitions in the
loan documents from the Master
Servicer; however, the Master
Servicer may still require the
deletion of co-insurance in the
insurance policy under the terms of
the loan documents. The carve-out
guarantors on this loan reported a
combined net worth of over
$32,000,000 at the time of loan
origination.
--------------------------------------------------------------------------------
Exceptions to Rep 17
--------------------
--------------------------------------------------------------------------------
Loans Description of Exception
----- ------------------------
--------------------------------------------------------------------------------
010-999 FBI Headquarters These loans are cross-collateralized
010-1014 Natural Resource Center - and cross-defaulted. Each mortgaged
Boise, ID property is security for both loans.
--------------------------------------------------------------------------------
Exceptions to Representation 19
-------------------------------
--------------------------------------------------------------------------------
Loans Description of Exception
----- ------------------------
--------------------------------------------------------------------------------
010-357 Wherehouse Music / Each of these loans was funded prior
Blockbuster Video to institution of the ASTM 1527-00
010-374 North Eton Plaza reporting standard; therefore, the
000-000 Xxxxxxxxxxxx Xxxxxx Xxxxx environmental site assessments
received comply with ASTM 1527-97,
which was the then-current standard.
Note that for the North Eton Plaza
loan, portions of the report are
stated to have been performed to the
ASTM 1527-97 standards; however, it
is not clearly stated for the entire
report. The report appears to have
all required elements for the 1997
standard.
--------------------------------------------------------------------------------
Exceptions to Rep 20
--------------------
--------------------------------------------------------------------------------
Loans Description of Exception
----- ------------------------
--------------------------------------------------------------------------------
010-999 FBI Headquarters The single tenant has the right to
approve any sale or transfer of the
mortgaged property. However, the
tenant and Lender have executed an
SNDA providing that the tenant will
recognize Lender as the landlord in
the event of foreclosure. Future
transferees of the property would be
subject to the tenant's approval,
which may not be unreasonably
withheld, and such approval process
could take six weeks to complete.
--------------------------------------------------------------------------------
Exceptions to Rep 23
--------------------
--------------------------------------------------------------------------------
Loans Description of Exception
----- ------------------------
--------------------------------------------------------------------------------
000-000 Xxxxxxx Xxxxxx Xxxxxxxx Xxxxxx The loan documents permit the
borrower's managing member, who owns
100% of the ownership interests in
the borrower, to incur future
mezzanine debt of up to $278,000.00
to be secured by such ownership
interests. With respect to such
mezzanine debt, the mortgage loan
documents require that (a) such
mezzanine debt will be permitted to
have a maturity date of no earlier
than December 2011, (b) payments may
be made only out of excess cash flow
and (c) the mezzanine lender will
permit the managing member of the
borrower to remain in management
control of the borrower even after a
foreclosure of the membership
interests securing the mezzanine
debt. An intercreditor agreement
with the mezzanine lender will not
be required.
--------------------------------------------------------------------------------
Exceptions to Rep 26
--------------------
--------------------------------------------------------------------------------
Loans Description of Exception
----- ------------------------
--------------------------------------------------------------------------------
010-999 FBI Headquarters No release of one property will be
permitted in connection with a
010-1014 Natural Resource Center - defeasance or an assumption of one
Boise, ID loan unless either (a) both loans
are being simultaneously defeased or
assumed or (b) the following
conditions are satisfied:
(i) Lender has received a rating
agency confirmation from each rating
agency involved in the
securitization;
(ii) the debt service coverage ratio
for each loan shall be at least 1.35
to 1.00;
(iii) the loan-to-value ratio, based
on a then-current appraisal, for the
remaining loan is not greater than
75%; and
(iv) with respect to a defeasance
only, Borrower shall deposit with
Lender a cash deposit in an amount
equal to 15% of the then-current
value of the property to be
released, which deposit shall be
held as additional collateral for
the remaining loan. Alternatively,
the Borrower may submit a letter of
credit in such amount. In order to
meet conditions (ii) and (iii)
above, Borrower may deposit cash
collateral with Lender.
--------------------------------------------------------------------------------
Exceptions to Representation 29
-------------------------------
--------------------------------------------------------------------------------
Loans Description of Exception
----- ------------------------
--------------------------------------------------------------------------------
010-357 Wherehouse Music / Borrower is not an SPE.
Blockbuster Video
--------------------------------------------------------------------------------
010-374 North Eton Plaza Borrower is not an SPE.
--------------------------------------------------------------------------------
000-000 Xxxxxxxxxxxx Xxxxxx Xxxxx Borrower is not an SPE.
--------------------------------------------------------------------------------
Exceptions to Representation 31
-------------------------------
--------------------------------------------------------------------------------
Loans Description of Exception
----- ------------------------
--------------------------------------------------------------------------------
010-987 Eufaula Square Shopping Center The individual who is (a) the
guarantor and sponsor of the loan
and (b) the managing member of the
borrower is a defendant (both
individually and doing business as
Eufaula Square Shopping Center) in a
lawsuit related to alleged water
damage suffered by former tenants
from a broken drainage pipe. The
magnitude of damage, if any,
suffered by the plaintiffs is
unclear. An insurance company has
provided counsel for the individual,
and he has also retained his own
counsel. He intends to request
dismissal and to defend the case if
dismissal fails.
--------------------------------------------------------------------------------
Exceptions to Representation 40
-------------------------------
--------------------------------------------------------------------------------
Loans Description of Exception
----- ------------------------
--------------------------------------------------------------------------------
All Loans Borrower and the additional
guarantor are liable to the Lender
for losses incurred due to the
misapplication of rents only with
respect to rents received by
Borrower or any guarantor after
Lender makes written demand therefor
pursuant to any loan document.
--------------------------------------------------------------------------------
010-1014 Natural Resource There is one entity guarantor, and
Center - Boise, ID there are three warm body
010-999 FBI Headquarters - Richmond, VA guarantors. The warm body guarantors
do not have liability for breaches
of the environmental covenants of
the loan documents, but they did
sign the environmental indemnity
agreement and have liability
thereunder. The warm body guarantors
also have full recourse liability if
the mortgaged property is
environmentally impaired such that
the cost to remediate a release of
hazardous substances exceeds 25% of
the amount of the loan. The warm
body guarantors will be permanently
released from liability under the
environmental indemnity when the
entity guarantor achieves a net
worth of $20,000,000. In addition,
the warm body guarantors will be
permanently released from all
liability when the entity guarantor
achieves a net worth of $50,000,000.
--------------------------------------------------------------------------------
000-000 Xxxxxxxxxxxx Xxxxxx Xxxxx The loan is full recourse to
Borrower and is 50% recourse to the
warm body guarantor (in addition to
the non-recourse carveouts contained
in the representation).
--------------------------------------------------------------------------------
Exceptions to Representation 46
-------------------------------
--------------------------------------------------------------------------------
Loans Description of Exception
----- ------------------------
--------------------------------------------------------------------------------
010-999 FBI Headquarters These loans are cross-collateralized
010-1014 Natural Resource Center - and cross-defaulted. Each mortgaged
Boise, ID property is security for both loans.
--------------------------------------------------------------------------------
Exceptions to Rep 52(b)
-----------------------
--------------------------------------------------------------------------------
Loans Description of Exception
----- ------------------------
--------------------------------------------------------------------------------
010-965 Walgreen's - Newberg One of the two Ground Leases with
respect to the loan requires that
upon foreclosing, Lender may only
assign its interest once to an
assignee with a commercially
reasonable credit standing.
--------------------------------------------------------------------------------
Exceptions to Rep 52(c)
-----------------------
--------------------------------------------------------------------------------
Loans Description of Exception
----- ------------------------
--------------------------------------------------------------------------------
000-000 Xxxxxxxxxxxx Xxxxxx Xxxxx Amendments, modifications,
cancellations, and terminations of
the Ground Lease do not require
prior written consent of the
mortgagee.
--------------------------------------------------------------------------------
Exceptions to Rep 52(e)
-----------------------
--------------------------------------------------------------------------------
Loans Description of Exception
----- ------------------------
--------------------------------------------------------------------------------
000-000 Xxxxxxxxxxxx Xxxxxx Xxxxx The Ground Lease does not require
the lessor to give notice of any
default by the lessee to the
mortgagee. However, under Minnesota
Statute ss. 504B.291, for leases for
terms greater than 20 years, prior
to pursuing an eviction action, the
landlord must provide 60 days notice
of the lease default to all
creditors having a lien of record
upon the leasehold premises, and the
action may not proceed until the
expiration of such notice period.
Under the same statute, a creditor
holding a lien on a leasehold estate
greater than 20 years has six months
after eviction of the tenant to cure
the default and reinstate the lease.
--------------------------------------------------------------------------------
Exceptions to Rep 52(g)
-----------------------
--------------------------------------------------------------------------------
Loans Description of Exception
----- ------------------------
--------------------------------------------------------------------------------
000-000 Xxxxxxxxxxxx Xxxxxx Xxxxx The Ground Lease does not grant the
mortgagee an opportunity to cure any
curable default before the lessor
may terminate the Lease. However,
under Minnesota Statute ss.
504B.291, for leases for terms
greater than 20 years, prior to
pursuing an eviction action, the
landlord must provide 60 days notice
of the lease default to all
creditors having a lien of record
upon the leasehold premises, and the
action may not proceed until the
expiration of such notice period.
Under the same statute, a creditor
holding a lien on a leasehold estate
greater than 20 years has six months
after eviction of the tenant to cure
the default and reinstate the lease.
--------------------------------------------------------------------------------
Exceptions to Rep 52(h)
-----------------------
--------------------------------------------------------------------------------
Loans Description of Exception
----- ------------------------
--------------------------------------------------------------------------------
010-1010 Black Lake The Anticipated Repayment Date of
this loan is 10/11/08 and the
Maturity Date is 9/11/33. The Ground
Lease term ends 3/25/37. In
addition, the relevant extension
options are only exerciseable if the
ground lessee has fully and
faithfully performed all covenants
and conditions of the Ground Lease
during the term prior to allowable
exercise of the extension. The
ground lease collateral consists of
a parking lot. As only five of the
ground lease parking spaces were
required for zoning compliance, the
term of the Ground Lease was
considered a reasonable risk.
--------------------------------------------------------------------------------
Exceptions to Rep 52(i)
-----------------------
--------------------------------------------------------------------------------
Loans Description of Exception
----- ------------------------
--------------------------------------------------------------------------------
000-000 Xxxxxxxxxxxx Xxxxxx Xxxxx The ground lessee is not entitled to
the portion of any condemnation
award reflecting the value of the
land taken, exclusive of
improvements.
--------------------------------------------------------------------------------
010-965 Walgreen's Newberg Under both Ground Leases, the ground
lessee is only entitled to the
portion of any condemnation award
reflecting the value of the
leasehold interest, including
ownership of buildings, alterations,
improvements and fixtures, as well
as moving expenses and related
losses and expenses. In addition,
its award may not impair the
reversion interest of the ground
lessor.
--------------------------------------------------------------------------------
Exceptions to Rep 52(k)
-----------------------
--------------------------------------------------------------------------------
Loans Description of Exception
----- ------------------------
--------------------------------------------------------------------------------
000-000 Xxxxxxxxxxxx Xxxxxx Xxxxx The ground lessor is not required to
enter into a new lease upon
termination of the Ground Lease.
--------------------------------------------------------------------------------
010-965 Walgreen's Newberg Under both Ground Leases, the ground
lessor is required to enter into a
new lease with the mortgagee upon
termination of the lease only if an
event of default is not capable of
being cured by mortgagee, if the
mortgagor is insolvent or bankrupt,
or if the lease is rejected in
bankruptcy.
--------------------------------------------------------------------------------
EXHIBIT A
ARTESIA MORTGAGE LOAN SCHEDULE
Mortgage
Loan Zip
Number Property Name Address City State Code County
-------------------------------------------------------------------------------------------------------------------------
14 FBI 0000 Xxxx Xxxxxx Xxxx Xxxxxxxx XX 00000 Henrico
Headquarters-Richmond,
VA
15 Natural 1249 & 0000 Xxxxx Xxxxxxx Xxx Xxxxx XX 00000 Ada
Resource
Center-Boise, ID
18 Washington Various Various WA Various Xxxxxxx
Xxxxx Xxxxxxxxx
00.0 Xxxxx Xxxx X, 000 and 000 Xxxxx Xxxx Xxxxxxxxx SW; Xxxxxxx XX 00000 Xxxxxxxx
XX, and III and 0000 0xx Xxxxxx Xxxx
18.2 DSHS 0000 Xxxxxxxx Xxxxxx Xxxxxxxxxx XX 00000 Whatcom
Xxxxxxxx-Xxxxxxxxxx
00 Xxxxx Xxxxx 14301-14459 Xxxxx Xxxx Xxxxx Xxxxxxx Xxxxx XX 00000 Hillsborough
00 Xxxxxxx Xxxxxx 0000 Xxxxx Xxxxxxx Xxxxxx Xxxxxxx XX 00000 Xxxxxxx
Shopping Center
39 Walgreens - 0000 X Xxxxxxxx Xxxx Xxxxxxx XX 00000 Yamhill
Newberg, OR
42 Walgreens - 0000 Xxxxxxxxx Xxxx Xxxxxxxxxxx XX 00000 Spartanburg
Spartanburg, SC
00 XxXxxxxxx Xxxxxx 0000 XxXxxxxxx Xxxxxxxxx X Xxxx Xxxxxx Xxxx XX 00000 Mohave
44 Walgreens - 0000 Xxxxxxxx Xxxxxxxxx Xxxxxxxxxx XX 00000 Sacramento
Sacramento, CA
00 Xxxxxxx Xxxxxxx 0000 Xxxxx Xxxxxx Xxxxxx Xxxxxxx Xxxxxxx XX 00000 Xxxx
Site
48 Xxxxxxx Towne 0000 X. Xxxxxxxxxx Xxxxxxx Xxxxxxx XX 00000 Shelby
Center Phase I
50 Xxxxxx - Xxxxx, 0000 Xxxxx Xx Xxxxxx Xxxxx XX 00000 Cleveland
OK
52 Brackenridge 00 Xxxxxx Xxxxxx Xxxxxxxxx Xxxxxxxxx XX 00000 Olmsted
Xxxxxx Xxxxx
00 Xxxxx Xxxx Plaza 000-000 Xxxxx Xxxx Xxxxxx Xxxxxxxxxx XX 00000 Oakland
54 Wherehouse 0000 Xxxxx 000 Xxxx Xxxx Xxxx Xxxx XX 00000 Salt Lake
Music/Blockbuster
Video
Original Remaining
Term to Term to
Mortgage Cut-Off Maturity Maturity Stated
Loan Date Loan Monthly P&I Grace Mortgage Number Unit of or ARD or ARD Maturity
Number Balance ($) Payments ($) Days Rate (%) of Units Measure (Mos.) (Mos.) Date or ARD
--------------------------------------------------------------------------------------------------------------
14 18,000,000.00 100,178.51 0 5.3200% 96,607 Sq. Ft. 72 72 11-Nov-2009
15 17,887,500.00 99,552.40 0 5.3200% 131,453 Sq. Ft. 72 72 11-Nov-2009
18 13,915,884.29 76,491.15 0 5.2000% 121,442 Sq. Ft. 60 59 11-Oct-2008
18.1 92,053 Sq. Ft.
18.2 29,389 Sq. Ft.
22 11,400,000.00 67,471.74 0 5.8800% 105,585 Sq. Ft. 120 120 11-Nov-2013
31 5,275,000.00 34,019.15 0 6.0100% 105,975 Sq. Ft. 120 120 11-Nov-2013
39 3,184,654.63 22,429.71 0 5.4500% 14,490 Sq. Ft. 233 231 11-Feb-2023
42 3,000,000.00 22,426.39 0 6.4400% 14,560 Sq. Ft. 240 240 11-Nov-2023
43 2,996,282.45 19,605.05 0 6.1500% 49,997 Sq. Ft. 120 119 11-Oct-2013
44 2,843,405.54 19,037.09 0 5.0700% 15,120 Sq. Ft. 240 239 11-Oct-2023
47 2,100,000.00 17,647.19 0 5.8500% 481,345 Sq. Ft. 180 180 11-Nov-2018
48 2,000,000.00 12,106.98 0 6.0900% 16,058 Sq. Ft. 120 120 11-Nov-2013
50 1,835,000.00 15,722.93 0 6.1500% 11,347 Sq. Ft. 180 180 11-Nov-2018
52 914,639.45 7,652.03 10 7.9000% 38,223 Sq. Ft. 120 51 1-Feb-2008
53 718,306.27 6,453.64 10 7.1000% 10,460 Sq. Ft. 120 60 1-Nov-2008
54 547,585.89 4,145.47 10 6.7500% 14,798 Sq. Ft. 120 59 1-Oct-2008
Mortgage Original Amort Remaining Amort Ground Lease Master Servicing
Loan Number Property Name Term (Mos.) Term (Mos.) (Y/N) Fee Rate ARD Loans (Y/N)
---------------------------------------------------------------------------------------------------------------------------
14 FBI 360 000 X 0.00000% X
Xxxxxxxxxxxx-Xxxxxxxx,
XX
15 Natural Resource 360 000 X 0.00000% X
Xxxxxx-Xxxxx, XX
00 Xxxxxxxxxx Xxxxx 360 359 Y 0.04000% Y
Portfolio
18.1 Black Lake I , II, Y
and III
18.2 DSHS N
Xxxxxxxx-Xxxxxxxxxx
00 Xxxxx Xxxxx 360 000 X 0.00000% X
00 Xxxxxxx Xxxxxx 300 300 N 0.04000% N
Shopping Center
39 Walgreens - Xxxxxxx, 233 231 Y 0.04000% N
OR
42 Walgreens - 240 000 X 0.00000% X
Xxxxxxxxxxx, XX
00 XxXxxxxxx Xxxxxx 300 299 N 0.04000% N
44 Walgreens - 240 000 X 0.00000% X
Xxxxxxxxxx, XX
00 Xxxxxxx Xxxxxxx Site 180 000 X 0.00000% X
00 Xxxxxxx Xxxxx Xxxxxx 360 360 N 0.04000% N
Phase I
50 Eckerd - Moore, OK 180 180 N 0.04000% N
00 Xxxxxxxxxxxx Xxxxxx 300 231 Y 0.04000% X
Xxxxx
00 Xxxxx Xxxx Xxxxx 240 180 N 0.04000% N
54 Wherehouse 300 239 N 0.04000% N
Music/Blockbuster
Video
Cross
Collateralized
and Cross
Mortgage Anticipated Additional Environmental Defaulted Loan
Loan Number Repayment Date Interest Rate Loan Originator Insurance Flag Defeasance Loan
----------------------------------------------------------------------------------------------------------------------------
14 11-Nov-2009 Initial Rate + 2% AMCC Hai Portfolio Y
(7.32%)
15 11-Nov-2009 Initial Rate + 2% AMCC Hai Portfolio Y
(7.32%)
18 11-Oct-2008 Initial Rate + 2% AMCC Y
(7.20%)
18.1 AMCC
18.2 AMCC
22 AMCC Y
31 AMCC Y
39 AMCC Y
42 AMCC Y
43 AMCC Y
44 AMCC Y
47 AMCC Y
48 AMCC Y
50 AMCC Y
52 AMCC N
53 AMCC N
54 AMCC Y N
Initial Deposit
to Capital
Mortgage Secured by Interest Accrual Annual Deposit to Improvements Initial TI/LC Ongoing TI/LC
Loan Number LC Method Lockbox Replacement Reserve Reserve Escrow Footnote
------------------------------------------------------------------------------------------------------------------------------
14 N Actual/360 Day 1 19,381
15 N Actual/360 Day 1 26,291
18 N Actual/360 Day 1 24,288 107,558
18.1
18.2
22 N Actual/360 15,838 (1)
31 N Actual/360 15,896 (1)
39 N Actual/360 Day 1
42 N Actual/360 2,184
43 N Actual/360 9,000 50,000 (1)
44 N Actual/360
47 N Actual/360
48 N Actual/360 2,409 50,000 (1)
50 N Actual/360 2,042 (1)
52 N Actual/360
53 N Actual/360 21,000
54 N Actual/360
(1) In addition to any such escrows funded at loan closing for potential
TI/LC, these Mortgage Loans require funds to be escrowed during some or
all of the loan term for TI/LC expenses, which may be incurred during the
loan term. In certain instances, escrowed funds may be released to the
borrower upon satisfaction of certain leasing conditions.
