MORTGAGE LOAN PURCHASE AGREEMENT
Mortgage Loan Purchase Agreement, dated as of May 1, 1997 (the
"Agreement"), between Xxxxxx Brothers Holdings Inc. (the "Seller") and First
Union 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") as provided
herein. The Purchaser intends to deposit them, together with the First Union
Mortgage Loans (as defined below), 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 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 May 1, 1997 (the "Cut-off Date"), among the
Purchaser as depositor, First Union National Bank of North Carolina as master
servicer (in such capacity, the "Master Servicer"), CRIIMI MAE Services Limited
Partnership as special servicer (in such capacity, the "Special Servicer") and
State Street Bank and Trust Company as trustee (the "Trustee"). Concurrently
with the purchase of Mortgage Loans pursuant to this Agreement, the Purchaser
will also purchase multifamily and commercial mortgage loans pursuant to a
Mortgage Loan Purchase Agreement, dated as of May 1, 1997, between First Union
National Bank of North Carolina and the Purchaser (the "First Union Agreement").
Such mortgage loans (the "First Union Mortgage Loans") will likewise be
deposited into the Trust Fund. Capitalized terms used but not defined herein
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.
(a) The Seller agrees to sell, and the Purchaser agrees to purchase, the
Mortgage Loans identified on the schedule (the "Mortgage Loan Schedule") annexed
hereto as Exhibit A. The Mortgage Loan Schedule may be amended to reflect the
actual Mortgage Loans accepted by the Purchaser pursuant to the terms hereof.
(The Mortgage Loans identified on the Mortgage Loan Schedule shall hereinafter
be referred to as the "LBHI Mortgage Loans.") The LBHI Mortgage Loans will have
an aggregate principal balance of $784,188,582.16 (the "LBHI Balance") 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 received.
The LBHI Balance and the First Union Balance (as defined in the First Union
Agreement) together equal an aggregate principal balance (the "Initial Pool
Balance") of $1,305,448,224. The purchase and sale of the LBHI Mortgage Loans
shall take place on May 1, 1997 or such other date as shall be mutually
acceptable to the parties hereto (the "Closing Date"). The consideration for the
LBHI Mortgage Loans shall consist of (A) a cash amount equal to 100% of the
aggregate principal balance of the LBHI Mortgage Loans, plus (B) interest
accrued on each LBHI Mortgage Loan at the related Net Mortgage Rate, for the
period from and including the Cut-off Date up to but not including the Closing
Date, which cash amount shall be paid to the Seller or its designee by wire
transfer in immediately available funds on the Closing Date.
The Purchaser will assign to the Trustee, all of its right, title and
interest in and to the LBHI Mortgage Loans.
SECTION 2. Conveyance of Mortgage Loans.
(a) Effective as of the Closing Date, subject only to receipt of the
purchase price referred to in Section 1 hereof, the Seller does hereby sell,
transfer, assign, set over and otherwise convey to the Purchaser, without
recourse, all the right, title and interest of the Seller in and to the LBHI
Mortgage Loans identified on the Mortgage Loan Schedule as of such date other
than the primary servicing rights. The Mortgage Loan Schedule, as it may be
amended, shall conform to the requirements set forth in this Agreement and the
Pooling and Servicing Agreement.
(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 LBHI 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 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 LBHI Mortgage Loans due on or
before the Cut-off Date), shall belong to, and be promptly remitted to, the
Seller.
(c) The Seller hereby represents and warrants that it has, on behalf of the
Purchaser, delivered to the Trustee, the documents and instruments specified
below with respect to each LBHI 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, except as otherwise
disclosed on Exhibit B hereto, contain the following documents:
(i) the original executed Mortgage Note, endorsed (without recourse,
representation or warranty,
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express or implied) to the order of State Street Bank and Trust Company, as
trustee for the registered holders of the First Union-Xxxxxx Brothers
Commercial Mortgage Trust, Commercial Mortgage Pass-Through Certificates,
Series 1997-C1;
(ii) an original or copy of the Mortgage and of any intervening
assignments thereof, in each case with evidence of recording indicated
thereon;
(iii) an original or copy of any related Assignment of Leases (with
recording information indicated thereon), if such item is a document
separate from the Mortgage;
(iv) an original executed assignment of the Mortgage, any related
Assignment of Leases (if such item is a document separate from the
Mortgage), and any other recorded document relating to the Mortgage Loan
otherwise included in the Mortgage File, in favor of State Street Bank and
Trust Company, as trustee for the registered holders of the First
Union-Xxxxxx Brothers Commercial Mortgage Trust, Commercial Mortgage
Pass-Through Certificates, Series 1997-C1, in recordable form;
(v) an original assignment of all unrecorded documents relating to the
Mortgage Loan in favor of State Street Bank and Trust Company, as trustee
for the registered holders of the First Union-Xxxxxx Brothers Commercial
Mortgage Trust, Commercial Mortgage Pass-Through Certificates, Series
1997-C1;
(vi) originals or copies of any written modification agreements in
those instances where the terms or provisions of the Mortgage or Mortgage
Note have been modified;
(vii) the original or a copy of the policy or certificate of lender's
title insurance issued on the date of the origination of such Mortgage
Loan, or, if such policy has not been issued, an irrevocable, binding
commitment to issue such title insurance policy; and
(viii) filed copies 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
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there is an effective UCC Financing Statement in favor of the Seller on
record with the applicable public office for UCC Financing Statements, an
original UCC-2 or UCC-3, as appropriate, in favor of State Street Bank and
Trust Company, as trustee for the registered holders of the First
Union-Xxxxxx Brothers Commercial Mortgage Trust, Commercial Mortgage
Pass-Through Certificates, Series 1997-C1.
(d) Within 30 days following the Closing Date, the Purchaser shall submit
or cause to be submitted for recordation or filing, as the case may be, in the
appropriate public office for real property records or Uniform Commercial Code
financing statements, as appropriate, each assignment of Mortgage and each
assignment of Assignment of Leases referred to in clauses (iv) and (v) of
subsection (c) above and each UCC-2 and UCC-3 in favor of and delivered to the
Trustee constituting part of the Mortgage File. If any such document or
instrument is lost or returned unrecorded or unfiled, as the case may be,
because of a defect therein, then the Seller shall prepare a substitute therefor
or cure such defect or cause such to be done, as the case may be, and the Seller
shall deliver such substitute or corrected document or instrument to the
Purchaser or its designee.
(e) All documents necessary to the servicing of the LBHI Mortgage Loans and
in the Seller's possession (the "Additional Mortgage Loan Documents") that are
not required to be delivered to the Trustee shall 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.
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 validly existing 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, moratorium and other laws affecting the
enforcement of creditors' rights in general, and by general equity
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principles (regardless of whether such enforcement is considered in a
proceeding in equity or at law), or 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 By-Laws,
(B) violate any law or regulation or any administrative decree or order to
which it is subject or (C) constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, or
result in the breach of, any material 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 articles 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.
(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 and no bulk sale law applies to such transactions.
(vii) No litigation is pending or, to the best of 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.
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(viii) Under generally accepted accounting principles ("GAAP") and for
federal income tax purposes, the Seller will report the transfer of the
LBHI Mortgage Loans to the Purchaser as a sale of the LBHI Mortgage Loans
to the Purchaser in exchange for consideration consisting of (A) a cash
amount equal to 100% of the aggregate principal balance of the LBHI
Mortgage Loans, plus (B) interest accrued on each LBHI Mortgage Loan 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 consideration received
by the Seller upon the sale of the LBHI Mortgage Loans to the Purchaser
will constitute reasonably equivalent value and fair consideration for the
LBHI Mortgage Loans. The Seller will be solvent at all relevant times prior
to, and will not be rendered insolvent by, the sale of the LBHI Mortgage
Loans to the Purchaser. The Seller is not selling the LBHI Mortgage Loans
to the Purchaser with any intent to hinder, delay or defraud any of the
creditors of the Seller.
(b) The Seller hereby represents and warrants for the benefit of the
Purchaser and the Trustee for the benefit of the Certificateholders as of the
Closing Date, with respect to each LBHI Mortgage Loan, that:
(i) 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;
(ii) If such Mortgage Loan was originated by the Seller or an
affiliate thereof, then, 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; and, if such Mortgage Loan was not originated by the
Seller or an affiliate thereof, then, to the best of the Seller's knowledge
after having performed the type of due diligence customarily performed by
prudent institutional commercial and multifamily mortgage lenders, 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;
(iii) The Seller owns the Mortgage Loan, has good and marketable title
thereto, has full right and authority to sell, assign and transfer the
Mortgage Loan and is transferring the Mortgage Loan free and clear of any
and all liens, pledges, charges or security interests of any nature
encumbering such Mortgage Loan, and no provision of the Mortgage Note,
Mortgage or other loan document relating to such Mortgage Loan prohibits or
restricts the Seller's right to assign or transfer such Mortgage Loan;
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(iv) The proceeds of such Mortgage Loan have been fully disbursed and
there is no requirement for future advances thereunder;
(v) Each of the related Mortgage Note, Mortgage(s), Assignment of
Leases, if any, and other agreements executed in connection therewith is
the legal, valid and binding obligation of the maker thereof (subject to
any non-recourse provisions therein and any state anti-deficiency
legislation), enforceable in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization or
other similar laws affecting the enforcement of creditors' rights
generally, and by general principles of equity (regardless of whether such
enforcement is considered in a proceeding in equity or at law), and a legal
opinion to such effect was obtained by the originator of such Mortgage Loan
at the time of origination;
(vi) As of the date of its origination, there was no valid offset,
defense, counterclaim or right to rescission with respect to any of the
related Mortgage Note, Mortgage(s) or other agreements executed in
connection therewith, and, as of the Cut-off Date, to the best knowledge of
the Seller, there is no valid offset, defense, counterclaim or right to
rescission with respect to such Mortgage Note, Mortgage(s) or other
agreements;
(vii) The assignment of the related Mortgage and assignment of leases
to the Trustee constitutes the legal, valid, binding and enforceable
assignment of such Mortgage in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization or
other similar laws affecting the enforcement of creditors' rights
generally, and by general principles of equity (regardless of whether such
enforcement is considered in a proceeding in equity or at law);
(viii) Each related Mortgage is a valid and enforceable first lien on
the related Mortgaged Property, which Mortgaged Property is free and clear
of all encumbrances and liens having priority over or on a parity with the
first lien of such Mortgage, except for (a) liens for real estate taxes and
special assessments not yet due and payable, (b) covenants, conditions and
restrictions, rights of way, easements and other matters of public record
as of the date of recording of such Mortgage, such exceptions appearing of
record being customarily acceptable to mortgage lending institutions
generally or specifically reflected in the appraisal of such Mortgaged
Property made in connection with the origination of such Mortgage Loan and
(c) other matters to which like properties are commonly subject and which
do not, individually or in the aggregate, materially interfere with the
benefits of the security intended to be provided by such Mortgage or
materially affect the value or marketability of
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such Mortgaged Property, and such encumbrances do not materially interfere
with the current use or operation of the related Mortgaged Property or the
ability of the related Mortgagor to timely pay in full the principal and
interest on the related Mortgage Note; there exists with respect to such
Mortgaged Property an assignment of leases and rents provision, whether as
part of the related Mortgage or as a separate document or instrument, which
establishes and creates a first priority security interest in and to leases
and rents arising in respect of the related Mortgaged Property, subject
only to encumbrances described in subsections (a), (b) and (c) of this
subparagraph (viii);
(ix) The Seller has filed and/or recorded in all appropriate public
filing and recording offices all UCC-1 financing statements necessary to
create and perfect a security interest in and lien on the items of personal
property described therein (or, if not filed and/or recorded, has submitted
such UCC-1 financing statements for filing and/or recording and such UCC-1
financing statements are in form and substance acceptable for filing and/or
recording), to the extent perfection may be effected pursuant to applicable
law by recording or filing;
(x) All taxes and governmental assessments that prior to the Cut-off
Date became due and owing in respect of, and affect, each related Mortgaged
Property have been paid, or an escrow of funds in an amount sufficient to
cover such payments has been established;
(xi) As of the date of its origination, there was no proceeding
pending for the total or partial condemnation of each related Mortgaged
Property that materially affects the value thereof, and such Mortgaged
Property was free of material damage; and, as of the Cut-off Date, the
Seller has not received any notice of the commencement of any proceeding
for the total or partial condemnation of any related Mortgaged Property
that materially affects the value thereof, and such Mortgaged Property is
free of material damage;
(xii) Each related Mortgaged Property is covered by an ALTA (or its
equivalent) lender's title insurance policy insuring that each related
Mortgage is a valid first lien on such Mortgaged Property in the original
principal amount of the Mortgage Loan after all advances of principal, or
there is a binding commitment from a title insurer qualified and licensed
in the applicable jurisdiction, as required, to issue such policy; such
title insurance policy, if issued, is in full force and effect, is freely
assignable and will inure solely to the benefit of the Trustee as mortgagee
of record, or any such commitment is a legal, valid and binding obligation
of such insurer; no claims have been made under such title insurance
policy, if issued; and to the best knowledge of the Seller, no prior
mortgagee has done, by act
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or omission, anything which would materially impair the coverage of any
such title insurance policy;
(xiii) As of the date of its origination, all insurance 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, was in an amount (subject to a customary deductible) at
least equal to 100% of the full insurable replacement cost of the
improvements located on such Mortgaged Property, was in full force and
effect with respect to each related Mortgaged Property; and, as of the
Cut-off Date, to the best knowledge of the Seller, all insurance 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; and no notice of termination or
cancellation with respect to any such insurance policy has been received by
the Seller; except for certain amounts not greater than amounts which would
be considered prudent by an institutional commercial 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 or taking,
will be applied either to the repair or restoration of all or part of the
related Mortgaged Property;
(xiv) Other than payments due but not yet 30 days or more delinquent,
(A) there is no material default, breach, violation or event of
acceleration, and there is no other material default, breach, violation or
event of acceleration, existing under the related Mortgage Note or each
related Mortgage, and (B) to the best of the Seller's knowledge, after due
inquiry, 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, breach, violation or event of acceleration under any of the
documents referred to in clause (A), and, to the knowledge of the Seller,
there is no event which, with the passage of time or with notice and the
expiration of any grace or cure period, would constitute any other material
default, breach, violation or event of acceleration under any of the
documents referred to in clause (A); the Seller has not waived any material
default, breach, violation or event of acceleration under any of the
documents referred to in clause (A), and the Seller has not waived any
other material default, breach, violation or event of acceleration under
such documents; and under the terms of each Mortgage Loan, each related
Mortgage Note, each related
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Mortgage and the other loan documents in the related Mortgage File, no
person or party other than the Mortgagee may declare an event of default or
accelerate the related indebtedness under such Mortgage Loan, Mortgage Note
or Mortgage;
(xv) As of the Cut-off Date, the 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;
(xvi) Except with respect to the Mortgage Loans listed in Exhibit E
hereto which accrue interest on the basis of the actual number of days
elapsed over a 360 day year, the Mortgage Loan accrues interest (payable
monthly in arrears) at a fixed Mortgage Rate on the basis of a 360-day year
consisting of twelve 30-day months;
(xvii) 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 and other than another
Mortgage Loan in the Trust Fund;
(xviii) Such Mortgage Loan is or constitutes part of a "qualified
mortgage" within the meaning of Section 860G(a)(3) of the Code;
(xix) One or more environmental site assessments 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-month period preceding the Cut-off Date, 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 knowledge of
any material and adverse environmental condition or circumstance affecting
such Mortgaged Property that was not disclosed in such report(s);
(xx) The related Mortgage Note, Mortgage(s) and Assignment of Leases,
if any, contain customary and enforceable provisions such as to render the
rights and remedies of the holder thereof adequate for the realization
against the related Mortgaged Property or properties of the benefits of the
security, including realization by judicial or, if applicable, non-judicial
foreclosure, subject to applicable reorganization, insolvency, moratorium
and other similar laws affecting creditors' rights generally as from time
to time, in effect, and to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at
law);
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(xxi) To the best of the Seller's knowledge, after due inquiry, the
related Mortgagor is not a debtor in any bankruptcy, reorganization,
insolvency or comparable proceeding;
(xxii) Such Mortgage Loan is secured by either a mortgage on a fee
simple interest or a leasehold estate in a commercial property or
multifamily property owned by the related Mortgagor, including all of the
related Mortgagor's interest in all improvements on the related Mortgaged
Property;
(xxiii) Such Mortgage Loan does not provide for negative amortization;
(xxiv) Such Mortgage Loan is a whole loan, 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;
(xxv) The related Mortgage contains provisions for the acceleration of
the payment of the unpaid principal balance of such Mortgage Loan if,
without the prior written consent of the Mortgagee, each related Mortgaged
Property or any interest therein, is directly or indirectly encumbered in
connection with subordinate financing; provided, however, the eight
Mortgage Loans listed in Exhibit F hereto, are encumbered by subordinated
debt;
(xxvi) Except with respect to (W) transfers of certain non-controlling
interests in the Mortgagors as specified in the related Mortgage, (X) the
Mortgage Loans listed in Exhibit G hereto, which permit a transfer of the
related Mortgaged Property to a person that satisfies certain criteria
(including criteria related to bankruptcy remoteness and apartment
management experience) specified in the related Mortgage, (Y) the Mortgage
Loans listed in Exhibit H hereto, which permit a one-time transfer of the
Mortgaged Property, subject to payment of an assumption fee and certain
other conditions, and (Z) the Mortgage Loans listed in Exhibit I hereto,
which permit two separate transfers of the related Mortgaged Property,
subject to payment of an assumption fee and certain other conditions, the
related Mortgage contains either (A) provisions for the acceleration of the
payment of the unpaid principal balance of such Mortgage Loan if each
related Mortgaged Property, or any interest therein, is directly or
indirectly transferred or sold without the prior written consent of the
Mortgagee, or (b) provisions for the acceleration of the payment of the
unpaid principal balance of such Mortgage Loan if each related Mortgaged
Property, or any interest therein, is directly or indirectly transferred or
sold without the related Mortgagor having satisfied certain
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conditions specified in the related Mortgage with respect to permitted
transfers;
(xxvii) The Mortgage Loan, together with any other Mortgage Loan made
to the same Mortgagor or to an affiliate of such Mortgagor, does not
represent more than 5% of the aggregate Stated Principal Balance of the
Mortgage Pool;
(xxviii) 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, cancelled, subordinated or
rescinded in any manner which materially interferes with the security
intended to be provided by such Mortgage;
(xxix) Each related Mortgaged Property was inspected by or on behalf
of the related originator during the 12 month period prior to the related
origination date;
(xxx) Except for the Mortgage Loans listed in Exhibit J hereto, the
terms of the related Mortgage Note or Mortgage do not provide for the
release of any material portion of the related Mortgaged Property from the
lien of such Mortgage without payment in full of the Mortgage Loan;
(xxxi) The related Mortgagor has covenanted in the Mortgage Loan
documents to maintain the related Mortgaged Property in compliance with all
applicable laws, zoning ordinances, rules, covenants and restrictions
affecting the construction, occupancy, use and operation of such Mortgaged
Property, and the related originator performed the type of due diligence in
connection with the origination of such Mortgage Loan customarily performed
by prudent institutional commercial and multifamily mortgage lenders with
respect to the foregoing matters; the Seller has received no notice of any
material violation of any applicable laws, zoning ordinances, rules,
covenants or restrictions affecting the construction, occupancy, use or
operation of such Mortgaged Property; to the Seller's knowledge (based on
surveys and/or title insurance obtained in connection with the origination
of such Mortgage Loan), as of the date of such origination, no improvement
that was included for the purpose of determining the appraised value of the
related Mortgaged Property at the time of origination of such Mortgage Loan
lay outside the boundaries and building restriction lines of such property
to an extent which would have a material adverse affect on the related
Mortgagor's use and operation of such Mortgaged Property (unless
affirmatively covered by the title insurance referred to in paragraph (xii)
above), and no improvements on adjoining properties encroached upon such
Mortgaged Property to any material extent;
(xxxii) The related Mortgagor has covenanted in the Mortgage Loan
documents to deliver each year to the
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Mortgagee an operating statement of each related Mortgaged Property
covering the twelve-month period identified therein;
(xxxiii) If the Mortgage Loan had an original principal balance
greater than $5,000,000, 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 and assets
incidental to its ownership and operation of such Mortgaged Property;
(xxxiv) With respect to any Mortgage Loan that is secured in whole or
in material part by the interest of a Mortgagor as a lessee under a Ground
Lease but not by the related fee interest;
(A) Such Ground Lease or a memorandum thereof has been or will be
duly recorded 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) The Mortgagor's interest in such Ground Lease is assignable
to the Trustee without the consent of the lessor thereunder (or, if
any such consent is required, it has been obtained prior to the
Closing Date) and, in the event that it is so assigned, is further
assignable by the Trustee and its successors without a need to obtain
the consent of such lessor;
(C) Such Ground Lease may not be amended, modified, canceled or
terminated without the prior written consent of the Mortgagee
thereunder and that any such action without such consent is not
binding on such Mortgagee, its successors or assigns;
(D) Unless otherwise set forth in the Ground Lease, the Ground
Lease does not permit any increase in the amount of rent payable by
the ground lessee thereunder during the term of the Mortgage Loan;
(E) To the actual knowledge of the Seller, at the Closing Date,
such Ground Lease is in full force and effect and other than payments
due but not yet 30 days or more delinquent, (A) there is no material
default, and (B) 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;
(F) Such Ground Lease or an estoppel or consent letter received
by the Mortgagee from the lessor, requires the lessor thereunder to
give notice of any default by the lessee to the Mortgagee; and such
Ground Lease, or an
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estoppel or consent letter received by the Mortgagee from the lessor,
further provides that no notice of termination given under such Ground
Lease is effective against the Mortgagee unless a copy has been
delivered to the Mortgagee in the manner described in such Ground
Lease, estoppel or consent letter;
(G) The ground lessee's interest in the Ground Lease is not
subject to any liens or encumbrances superior to, or of equal priority
with, the related Mortgage, other than the related ground lessor's
related fee interest and any exceptions stated in the related title
insurance policy or opinion of title, which exceptions do not and will
not materially and adversely interfere with (1) the ability of the
related Mortgagor timely to pay in full the principal and interest on
the related Mortgage Note, (2) the use of such Mortgaged Property for
the use currently being made thereof, or (3) the value of the
Mortgaged Property;
(H) A Mortgagee is permitted a reasonable opportunity to cure any
curable default under such Ground Lease before the lessor thereunder
may terminate such Ground Lease;
(I) Such Ground Lease has an original term (including any
extension options set forth therein) that extends not less than 10
years beyond the Maturity Date of the related Mortgage Loan;
(J) 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 proceeds will be applied either to the repair or
restoration of all or part of the related Mortgaged Property, with the
Mortgagee or a trustee appointed by it having the right to hold and
disburse such proceeds as the repair or restoration progresses, or to
the payment of the outstanding principal balance of the Mortgage Loan
together with any accrued interest thereon;
(K) Such Ground Lease does not impose any restrictions on
subletting which would be viewed as commercially unreasonable by a
prudent commercial mortgage lender;
(L) 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, and
(except with respect to Mortgage Loans listed on Exhibit L hereto) for
any reason, upon the request of the lender; and
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(M) The terms of the related Ground Lease have not been waived,
modified, altered, satisfied, impaired, cancelled, subordinated or
rescinded in any manner which materially interferes with the security
intended to be provided by such Mortgage.
(xxxv) No advance of funds has been made, directly or indirectly, by
the Seller to the Mortgagor other than pursuant to the Mortgage Note and no
funds have been received from any person other than such Mortgagor for or
on account of payments due on the Mortgage Note;
(xxxvi) To the Seller's actual knowledge, there are no pending
actions, suits or proceedings by or before any court or governmental
authority against or affecting the related Mortgagor or the related
Mortgaged Property that, if determined adversely to such Mortgagor or
Mortgaged Property, would materially and adversely affect the value of the
Mortgaged Property or the ability of the Mortgagor to pay principal,
interest or any other amounts due under such Mortgage Loan;
(xxxvii) Such Mortgage Loan complied with all applicable usury laws in
effect at its date of origination;
(xxxviii) To the extent required under applicable law as of the
Closing Date, 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 held the Mortgage Loan to the extent necessary
to ensure the enforceability of such Mortgage Loan;
(xxxix) If the related Mortgage is a deed of trust, a trustee, duly
qualified under applicable law to serve as such, is properly designated and
serving under such Mortgage;
(xl) The related Mortgage Note is not secured by any collateral 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;
(xli) The related Mortgaged Property is not located in a flood hazard
area as defined by the Federal Insurance Administration or is covered by
flood hazard insurance;
(xlii) Except with respect to the Mortgage Loans listed on Exhibit K
hereto, one or more engineering assessments were performed by an
engineering consulting firm in dependent of the Seller and the Seller's
affiliates with respect to each related Mortgaged Property during the
18-month period preceding the Cut-off Date, and the Seller, having made no
independent inquiry other than to review the report(s)
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prepared in connection with the assessment(s) referenced herein, has no
knowledge of any material and adverse engineering condition or circumstance
affecting such Mortgaged Property that was not disclosed in such report(s);
(xliii) All escrow deposits and payments relating to the Mortgage Loan
are under control of the Seller or the servicer of such Mortgage Loan and
all amounts required as of the date hereof under the Mortgage Loan
Documents to be deposited by the related Mortgagor have been deposited;
(xliv) The related Mortgagor has represented to the Seller that as of
the date of origination of the Mortgage Loan, such Mortgagor, the related
lessee, franchisor or operator was in possession of all licenses, permits
and authorizations then required for use of the related Mortgaged Property,
which were valid and in full force and effect; and
(xlv) The origination, servicing and collection practices used by the
Seller or any prior holder of the Mortgage Note have been in all respects
legal, proper and prudent and have met customary industry standards.
(c) If the Seller receives notice of a Document Defect or a Breach (the
"Defect/Breach Notice"), then the Seller shall within 90 days after its receipt
of the Defect/Breach Notice (i) cure such Document Defect or Breach, as the case
may be, in all material respects, which shall include payment of any Additional
Trust Fund Expenses associated therewith, or (ii) repurchase the affected LBHI
Mortgage Loan (or the related Mortgaged Property) from the Trustee at a price
equal to the Purchase Price; provided, however, that 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, the Seller shall have an additional
90 days to complete such cure; 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 the reason such Document Defect or
Breach is not capable of being cured within the initial 90-day period and what
actions the Seller is pursuing in connection with the cure thereof and stating
that the Seller anticipates that such breach will be cured within the additional
90-day period. Notwithstanding the foregoing, the delivery of a commitment to
issue a policy of lender's title insurance as described in Section 3(b)(xii) in
lieu of the delivery of the actual policy of lender's title insurance shall not
be considered a Document Defect 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.
SECTION 4. Representations and Warranties of the Purchaser. In order to
induce the Seller to enter into this
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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 Delaware. The Purchaser
has the full corporate power and authority and legal right to acquire the
LBHI Mortgage Loans from the Seller and to transfer the LBHI 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 LBHI Mortgage Loans by the
Purchaser, the transfer of the LBHI Mortgage Loans to the Trustee, and the
execution, delivery or performance of this Agreement by the Purchaser,
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 Incorporation 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 LBHI Mortgage Loans by the Seller to the
Purchaser as a sale of the LBHI Mortgage Loans to the Purchaser in exchange
for consideration consisting of (A) a cash amount equal to 100% of the
aggregate principal balance of the LBHI Mortgage Loans, plus (B) interest
accrued on each LBHI Mortgage Loan at the related Net Mortgage Rate, for
the
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period from and including the Cut-off Date up to but not including the
Closing Date.
SECTION 5. Closing. The closing of the sale of the LBHI Mortgage Loans (the
"Closing") shall be held at the offices of Xxxxxxx Xxxx & Xxxxxxxxx, One
Citicorp Center, 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 at 10:00 A.M.,
New York time, 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 Sections 3(a), 3(b) and 3(c) 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; provided, however, that any material inaccuracy in any
representation and warranty set forth in Section 3(b) shall not affect the
Purchaser's obligation to purchase the Mortgage Loans not affected by such
inaccuracy;
(b) All documents specified in Section 6 of this Agreement (the
"Closing Documents"), in such forms as are agreed upon and acceptable to
the Purchaser in its reasonable discretion, shall be duly executed and
delivered by all signatories as required pursuant to the respective terms
thereof;
(c) The Seller shall have delive red and released to the Custodian 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; and
(e) The Seller shall have paid all fees and expenses payable by it to
the Purchaser or otherwise pursuant to this Agreement.
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
LBHI Mortgage Loans on the Closing Date.
SECTION 6. Closing Documents. The Closing Documents shall consist of the
following:
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(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: (1) 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 date hereof;
(c) An Officer's Certificate from an officer of the Seller, in his or
her individual capacity, 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, in his or
her individual capacity, dated the Closing Date, and upon which the
Purchaser and the Underwriters may rely, to the effect that (i) such
officer has carefully examined the Prospectus (as defined in the
Underwriting Agreement, dated as of May 9, 1997 between the Purchaser and
Xxxxxx Brothers Inc. (the "Underwriting Agreement")) and nothing has come
to his attention that would lead him to believe that the Prospectus, as of
the date of the Prospectus Supplement (as defined in the Underwriting
Agreement) or as of the Closing Date, included or includes any untrue
statement of a material fact relating to the LBHI Mortgage Loans or omitted
or omits to state therein a material fact necessary in order to make the
statements therein relating to the LBHI Mortgage Loans, in light of the
circumstances under which they were made, not misleading, and (ii) such
officer has examined the Memorandum (as defined in the Certificate Purchase
Agreement, dated as of May 16, 1997, among the Purchaser, Xxxxxx Brothers
Inc. and First Union Capital Markets Corp.) and nothing has come to his
attention that would lead him to believe that the Memorandum, as of the
date thereof or as of the Closing Date, included or includes any untrue
statement of a material fact relating to the LBHI Mortgage Loans or omitted
or omits to state therein a material fact necessary in order to make the
statements therein related to the LBHI Mortgage Loans, in the light of the
circumstances under which they were made, not misleading.
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(e) The resolutions of the 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 a certificate
of good standing of the Seller issued by the Secretary of State of the
State of Delaware not earlier than sixty (60) days prior to the Closing
Date;
(f) A written opinion of counsel for the Seller, in form and substance
acceptable to the Purchaser and its counsel, with any modifications
required by the rating agencies identified in the Prospectus Supplement
(the "Rating Agencies"), dated the Closing Date and addressed to the
Purchaser, 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, 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, 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 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, or in any revision or amendment of or supplement to any of the
foregoing or (B) any items similar to Computational Materials and ABS Term
Sheets forwarded to prospective investors in the Non-Registered Certificates, or
(ii) arise out of or are based upon the omission or alleged omission to state
therein 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 only if and to the extent that (I) any such untrue
statement or alleged untrue statement or omission or alleged omission arises out
of or is based upon an untrue statement or omission with respect to the LBHI
Mortgage Loans, the related Mortgagors and/or the related Mortgaged Properties
contained in the Master Tape (it being herein acknowledged that the Master Tape
was used to prepare the Prospectus Supplement including without limitation Annex
A thereto, the Memorandum, the Diskette, the Computational
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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 is with
respect to, or arises out of or is based upon an untrue statement or omission
with respect to, the information regarding the LBHI Mortgage Loans, the related
Mortgagors, the related Mortgaged Properties and/or the Seller set forth (X) in
the Prospectus Supplement and the Memorandum under the headings "Summary of the
Prospectus Supplement--The Mortgage Pool" or "Summary of the Memorandum--The
Mortgage Pool", as applicable, "Risk Factors--The Mortgage Loans" and
"Description of the Mortgage Pool" and (Y) on Annex A to the Prospectus
Supplement and, to the extent consistent therewith, on the Diskette, or (III)
any such untrue statement or alleged untrue statement or omission or alleged
omission 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; provided
that the indemnification provided by this Section 7 shall not apply to the
extent that such untrue statement or omission 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 LBHI Mortgage Loans, the related Mortgagors
and/or the related Mortgaged Properties set forth in the Master Tape and Annex A
to the Prospectus Supplement, including without limitation the aggregation of
such information with comparable information relating to the First Union
Mortgage Loans in the Trust Fund. This indemnity agreement will be in addition
to any liability which the Seller may otherwise have.
For purposes of this Agreement, "Registration Statement" shall mean the
registration statement No. 33-97994 filed by the Purchaser on Form S-3,
including without limitation exhibits thereto and information incorporated
therein by reference; "Prospectus" shall mean the prospectus dated April 29,
1997, as supplemented by the prospectus supplement dated May 9, 1997 (the
"Prospectus Supplement"), relating to the Registered Certificates including all
annexes thereto; "Memorandum" shall mean the private placement memorandum dated
May 9, 1997, relating to the Non-Registered Certificates; "Registered
Certificates" shall mean the Class A-1, Class A-2, Class A-3, Class B, Class C,
Class D, Class E and Class IO 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, Peabody Acceptance Corporation
I, Xxxxxx, Xxxxxxx & 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"
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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 attached
to each of the Prospectus and the Memorandum; and "Master Tape" shall mean the
compilation of information and data regarding the LBHI Mortgage Loans and the
First Union Mortgage Loans covered by the Agreed Upon Procedures Letter dated
May 16, 1997 and rendered by Deloitte & Touche LLP (a "hard copy" of which
Master Tape was initiated on behalf of the Seller and the Purchaser).
(b) 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 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
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 or parties 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, representing all the
indemnified parties under Section 7(a) who are parties to such action), (ii) the
indemnifying party shall not have employed counsel 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
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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).
(c) 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.
(d) The Purchaser and the Seller agree that it would not be just and
equitable if contribution pursuant to Section 7(c) 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(c) 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.
(e) 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.
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(f) 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 LBHI Balance represents of the
Initial Pool Balance): (i) the costs and expenses of printing (or otherwise
reproducing) and delivering a preliminary and final Prospectus and Memorandum
relating to the Certificates; (ii) the initial fees, costs, and expenses of the
Trustee (including reasonable attorneys' fees); (iii) the filing fee charged by
the Securities and Exchange Commission for registration of the Certificates so
registered; (iv) the fees charged by the Rating Agencies to rate the
Certificates so rated; (v) the expense of recording any assignment of Mortgage
or assignment of Assignment of Leases as contemplated by Section 2 hereof; and
(vi) the cost of obtaining a "comfort letter" from a firm of certified public
accountants selected by the Purchaser and the Seller with respect to numerical
information in respect of the LBHI Mortgage Loans included in the Prospectus and
Memorandum. 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 LBHI Mortgage Loans by the Seller to
the Purchaser as provided in Section 2 hereof be, and be construed as, a sale of
the LBHI Mortgage Loans by the Seller to the Purchaser and not as a pledge of
the LBHI 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 LBHI 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 LBHI 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 Articles 8 and 9 of the
New York Uniform Commercial Code; (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
LBHI Mortgage Loans, and all amounts payable to the holder of the LBHI 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
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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 9-305 of the New York
Uniform Commercial Code; and (v) notifications to persons (other than the
Trustee) holding such property, and acknowledgments, receipts or confirmations
from persons 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 LBHI 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. 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 11. 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 LBHI Mortgage Loans by the Seller to
the Purchaser (and by the Purchaser to the Trustee).
SECTION 12. 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
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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 13. 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 14. 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 15. 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 16. 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.
SECTION 17. 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.
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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
XXXXXX BROTHERS HOLDINGS INC.
By:
------------------------------------
Name:
Title:
Address for Notices:
Attention:
Telecopier No.:
Telephone No.:
PURCHASER
FIRST UNION COMMERCIAL
MORTGAGE SECURITIES, INC.
By:
------------------------------------
Name:
Title
Address for Notices:
Attention:
Telecopier No.:
Telephone No:
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EXHIBIT A
MORTGAGE LOAN SCHEDULE
EXHIBIT B
MORTGAGE FILE SCHEDULE
NONE
EXHIBIT C
MORTGAGE PROPERTIES SUBJECT TO
SECONDARY LIENS
EXHIBIT D
LIST OF PRINCIPAL BORROWERS
WITH MULTIPLE MORTGAGE LOANS
EXHIBIT E
LIST OF MORTGAGE LOANS WHICH ACCRUE INTEREST
OTHER THAN AT A FIXED MORTGAGE RATE
ON THE BASIS OF A 360-DAY YEAR
CONSISTING OF TWELVE 30-DAY MONTHS
NONE
EXHIBIT F
LIST OF MORTGAGE LOANS ENCUMBERED
BY SUBORDINATED DEBT
EXHIBIT G
LIST OF MORTGAGE LOANS WHICH PERMIT A TRANSFER
OF THE RELATED MORTGAGED PROPERTY TO A PERSON
THAT SATISFIES CERTAIN CRITERIA
EXHIBIT H
LIST OF MORTGAGE LOANS WHICH PERMIT A
ONE-TIME TRANSFER OF THE MORTGAGED PROPERTY,
SUBJECT TO PAYMENT OF AN ASSUMPTION FEE
AND CERTAIN OTHER CONDITIONS
EXHIBIT I
LIST OF MORTGAGE LOANS WHICH PERMIT
TWO SEPARATE TRANSFERS OF THE RELATED MORTGAGED
PROPERTY, SUBJECT TO PAYMENT OF AN ASSUMPTION FEE
AND CERTAIN OTHER CONDITIONS
NONE
EXHIBIT J
LIST OF MORTGAGE LOANS THE TERMS
OF WHICH PROVIDE FOR THE RELEASE OF A
MATERIAL PORTION OF THE RELATED
MORTGAGED PROPERTY FROM THE LIEN OF THE
MORTGAGE WITHOUT PREPAYMENT
EXHIBIT K
NO ENGINEERING WITHIN LAST 18 MONTHS
EXHIBIT L
GROUND LEASE EXCEPTIONS
