MORTGAGE LOAN PURCHASE AGREEMENT
Mortgage Loan Purchase Agreement, dated as of the date of the Pooling and
Servicing Agreement (as defined below) (the "Agreement"), between First Union
National Bank (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 "FUNB Mortgage Loans") as
provided herein. The Purchaser intends to deposit the FUNB Mortgage Loans,
together with the Other 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 the Cut-Off Date,
among the Purchaser as depositor, First Union National Bank as master servicer
(in such capacity, the "Master Servicer"), Orix Real Estate Capital Markets, LLC
as special servicer (in such capacity, the "Special Servicer"), and Norwest Bank
Minnesota, National Association as trustee (the "Trustee"). Concurrently with
the purchase of the FUNB Mortgage Loans pursuant to this Agreement, the
Purchaser will also purchase certain multifamily and commercial mortgage loans
(the "Other Mortgage Loans", and collectively with the FUNB Mortgage Loans, the
"Mortgage Loans") pursuant to a separate mortgage loan purchase agreement, dated
as of the date of the Pooling and Servicing Agreement between the Purchaser and
Xxxxxxx Xxxxx Mortgage Capital Inc. The Other 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 FUNB 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 FUNB Mortgage Loans delivered to the Purchaser
pursuant to the terms hereof. The FUNB Mortgage Loans are expected to have an
aggregate principal balance of $707,415,635 (the "FUNB 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
received. The FUNB 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 received), is expected
to equal an aggregate principal balance (the "Initial Pool Balance") of
$885,738,326 (subject to a variance of plus or minus 5%). The purchase and sale
of the FUNB Mortgage Loans shall take place on December 17, 1999 or such other
date as shall be mutually acceptable to the parties hereto (the "Closing Date").
The consideration (the "Aggregate Purchase Price") for the FUNB Mortgage Loans
shall consist of a cash amount equal to (i) ____% of the FUNB Balance as of the
Cut-Off Date, plus (ii) interest accrued on the FUNB 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 in the amount of $_______, less fees and expenses
payable by the Seller. The Aggregate Purchase Price 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 FUNB Mortgage Loans.
SECTION 2. Conveyance of FUNB 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 (except as set forth in this Agreement), all the right, title and
interest of the Seller in and to the FUNB 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. 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 FUNB 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 FUNB Mortgage Loans due on or
before the Cut-Off Date and principal prepayments thereon), 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 FUNB 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 (or a lost note
affidavit and indemnity with a copy of such Mortgage Note
attached thereto) together with any intervening endorsements
thereon, endorsed on its face or by allonge attached thereto
(without recourse, representation or warranty, express or
implied) to the order of Norwest Bank Minnesota, National
Association, as trustee for the
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registered holders of First Union National Bank Commercial
Mortgage Pass-Through Certificates, Series 1999-C4 or in
blank;
(ii) an original or copy of the Mortgage, together with any and all
intervening assignments thereof, in each case with evidence of
recording indicated thereon;
(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
with evidence of recording indicated thereon;
(iv) an original executed assignment, in recordable form, of (a)
the Mortgage, (b) any related Assignment of Leases (if such
item is a document separate from the Mortgage) and (c) any
other recorded document relating to the FUNB Mortgage Loan
otherwise included in the Mortgage File, in favor of Norwest
Bank Minnesota, National Association, as trustee for the
registered holders of First Union National Bank Commercial
Mortgage Pass-Through Certificates, Series 1999-C4 or in
blank;
(v) an original assignment of all unrecorded documents relating to
the FUNB Mortgage Loan, in favor of Norwest Bank Minnesota,
National Association, as trustee for the registered holders of
First Union National Bank Commercial Mortgage Pass-Through
Certificates, Series 1999-C4 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;
(vii) the original or a copy of the policy or certificate of
lender's title insurance or, if such policy has not been
issued, an original or copy of an irrevocable, binding
commitment to issue such title insurance policy;
(viii) any filed copies (with 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 FUNB
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
statements in favor of the Seller on record with the
applicable public office for UCC Financing Statements, an
original UCC-2 or UCC-3 assignment, as appropriate, in form
suitable for filing, as appropriate, in favor of Norwest Bank
Minnesota, National Association, as trustee for the registered
holders of First Union
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National Bank Commercial Mortgage Pass-Through Certificates,
Series 1999-C4 or in blank;
(ix) an original or copy of any Ground Lease, any Credit Lease and
any Lease Enhancement Policy, RVI Policy or Guaranty; and
(x) any subordination, standstill or intercreditor agreement
relating to any permitted debt of the Mortgagor.
(d) Within 75 days following the Closing Date, the Seller 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 and each other document referred to in clause
(iv) 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 and records (except attorney-client privileged
communication and internal credit analysis of the Seller) relating to each FUNB
Mortgage 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.
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 national banking association organized and
validly existing and in good standing under the banking laws of the United
States 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, as they may be
applied in the context of the insolvency of a national banking
association, and by general equity principles (regardless
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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 articles of association or
By-Laws, (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 articles of association, 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.
(viii) Under generally accepted accounting principles ("GAAP")
and for federal income tax purposes, the Seller will report the transfer
of the FUNB Mortgage Loans to the Purchaser as a sale of the FUNB 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 FUNB Mortgage Loans to the Purchaser
will constitute reasonably equivalent value at least equal to the fair
market value
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of the FUNB Mortgage Loans. The Seller will be solvent at all relevant
times prior to, and will not be rendered insolvent by, the sale of the
FUNB Mortgage Loans to the Purchaser. The Seller is not selling the FUNB
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, Schedule II, Schedule III and Schedule IV 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 FUNB Mortgage Loan.
(c) 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 FUNB 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 FUNB Mortgage Loan not being a "qualified mortgage" within the
meaning of the REMIC Provisions (a "Qualified Mortgage"), not later than 90 days
of 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 related FUNB Mortgage Loan or the interest of the
Certificateholders therein, cure such Document Defect or Breach, as the case may
be, in all material respects, which shall include payment of losses and any
Additional Trust Fund Expenses associated therewith 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 FUNB 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 FUNB 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 if such Document Defect or Breach is capable
of being cured but not within such 90-day period, such Document Defect or Breach
does not relate to the FUNB Mortgage Loan not being treated as a Qualified
Mortgage, 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 FUNB 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 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 Document Defect
or Breach will be cured within the additional 90-day period. For a period of two
years from the Closing Date, so long as there remains any Mortgage File relating
to a FUNB 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; provided, however, that,
without limiting the effect of the forgoing provisions of this Section 3(c), if
such Document Defect or Breach shall materially and adversely affect the value
of such FUNB Mortgage Loan or the interests of the holders of the Certificates
therein, the Seller shall in all cases
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on or prior to the second anniversary of the Closing Date either cause such
Document Defect or Breach to be cured or repurchase the affected FUNB Mortgage
Loan. Notwithstanding the foregoing, the delivery of a commitment to issue a
policy of lender's title insurance as described in clause (xii) 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.
(d) In connection with any repurchase or substitution of one or more
FUNB 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 FUNB
Mortgage Loan or substituted FUNB Mortgage Loan, as applicable, and (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
FUNB Mortgage Loan possessed by it.
(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. Subject to Section 7 of this
Agreement, 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 2 of this Agreement.
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 FUNB Mortgage Loans from the Seller and to transfer the FUNB 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,
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(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 FUNB Mortgage Loans by the
Purchaser, the transfer of the FUNB 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 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 FUNB Mortgage Loans by the Seller to the
Purchaser as a sale of the FUNB 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
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 FUNB Mortgage Loans (the
"Closing") shall be held at the offices of Xxxxx, Xxxxx & Xxxxx, New York, New
York, on the Closing Date.
The Closing shall be subject to each of the following conditions:
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(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; provided, however, that any material inaccuracy in any
representation and warranty set forth in or made pursuant to Section 3(b) shall
not affect the Purchaser's obligation to purchase the FUNB 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, 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; and
(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.
(f) A letter from the independent accounting firm of KPMG LLP in
form satisfactory to the Purchaser, relating to certain information regarding
the Mortgage Loans as set forth in the Prospectus and a letter from KPMG LLP
regarding certain information regarding the Certificates as set forth in the
Prospectus Supplement.
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 FUNB 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 date hereof;
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(c) An Officer's Certificate from an officer of the Seller, 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, 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 and
nothing has come to his attention that would lead him to believe that the
Prospectus, as of the date of the Prospectus Supplement or as of the Closing
Date, included or includes any untrue statement of a material fact relating to
the FUNB Mortgage Loans or omitted or omits to state therein a material fact
necessary in order to make the statements therein relating to the FUNB Mortgage
Loans, in light of the circumstances under which they were made, not misleading,
and (ii) such officer has examined the Memorandum 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 FUNB Mortgage Loans or omitted or omits to state
therein a material fact necessary in order to make the statements therein
related to the FUNB Mortgage Loans, in the light of the circumstances under
which they were made, not misleading.
(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 articles of association and by-laws of the
Seller, and 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, 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, 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
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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 (the items in (A) and
(B) being defined as the "Disclosure Material"), 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 FUNB 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 including without limitation Annex A thereto,
the Memorandum, the Diskette, 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 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 FUNB 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 PROSPECTUS SUPPLEMENT-THE PARTIES-The Mortgage Loan
Sellers", "SUMMARY OF PROSPECTUS SUPPLEMENT-THE MORTGAGE LOANS", "RISK
FACTORS-Certain Risk Factors Associated With 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 a 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 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 FUNB Mortgage Loans, the
related Mortgagors and/or the related Mortgaged Properties set forth in the Data
File and Annex A to the Prospectus Supplement, including without limitation the
aggregation of such information with comparable information relating to the
Other Mortgage Loans in the Trust Fund. This indemnity agreement will be in
addition to any liability which the Seller may otherwise have (the information
described in clauses (I) through (III) above, collectively the "Seller
Information").
(b) For purposes of this Agreement, "Registration Statement" shall
mean such registration statement No. 333-62671 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 December
8, 1999, as supplemented by the prospectus supplement dated December 14, 1999
(the "Prospectus Supplement") relating to the Registered Certificates, including
all annexes thereto; "Memorandum" shall mean the private placement memorandum
dated December 14, 1999, relating to the Non-Registered Certificates, including
all exhibits thereto;
11
"Registered Certificates" shall mean the Class A-1, Class A-2, Class IO, and
Class B 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 FUNB Mortgage Loans covered by the Agreed Upon Procedures
Letter dated December 14, 1999 and rendered by KPMG (a "hard copy" of which Data
File was initialed on behalf of the Seller and the Purchaser).
(c) The Purchaser shall indemnify and hold harmless the Seller, its
directors, officers, employees and agents, and each person, if any, who controls
the Seller within the meaning of either the 1933 Act or 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) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Disclosure Material, or 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 not misleading in the light of the circumstances under which they were
made, except to the extent that such untrue statement, alleged untrue statement,
omission or alleged omission is based upon the Seller Information, and the
Purchaser shall reimburse each such indemnified party, as incurred, or 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
agreement will be in addition to any liability which the Purchaser may otherwise
have.
(d) 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
satisfactory to such
12
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 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).
(e) 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.
(f) The Purchaser and the Seller agree that it would not be just and
equitable if contribution pursuant to Section 7(e) 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(e) 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
13
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.
(g) 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.
(h) 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 FUNB 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 together with the legal fees of counsel to S&P; (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
FUNB 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 FUNB Mortgage Loans by the Seller to the
Purchaser as provided in Section 2 hereof be, and be construed as, a sale of the
FUNB Mortgage Loans by the Seller to the Purchaser and not as a pledge of the
FUNB 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 FUNB 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 FUNB 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
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 FUNB Mortgage Loans, and all amounts payable to the
holder of the FUNB 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
14
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 9-305 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 FUNB
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 the FUNB 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 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.
15
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. 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 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.
SECTION 18. Accountants' Letters. The parties hereto shall cooperate with KPMG
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 19. 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.
16
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
FIRST UNION NATIONAL BANK
By:
----------------------------------
Name:
Title:
Address for Notices:
One First Union Center
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxxxxx
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
PURCHASER
FIRST UNION COMMERCIAL
MORTGAGE SECURITIES, INC.
By:
----------------------------------
Name:
Title:
Address for Notices:
One First Union Center
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxxxxx
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
17
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.
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 and such
Mortgage Loan has been serviced in accordance with the servicing performed on
comparable Mortgage Loans originated by the Seller.
3. Immediately prior to the sale, transfer and assignment to the
Purchaser, the Seller had good 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 or security interests of any nature
encumbering such Mortgage Loan except as set forth in the related title policy
(the "Title Policy").
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
any) and other agreement executed in connection with such Mortgage Loan are
legal, valid and binding obligations of the related Mortgagor (subject to any
non-recourse provisions therein and any state anti-deficiency legislation),
enforceable in accordance with their terms, except with respect to provisions
relating to default interest, yield maintenance charges or prepayment premiums
and except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium 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.
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 Note, Mortgage(s) or other agreements executed in
connection therewith, and, as of the Closing Date, to the 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, 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 assignment from the Seller, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, liquidation, receivership, moratorium or
other laws relating to or affecting creditors' rights generally
1
or by general principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law).
8. Each related Mortgage is a valid and enforceable first lien on
the related Mortgaged Property subject only to the following title exceptions
(each such exception, a "Title Exception", and collectively, the "Title
Exceptions"): (a) the lien of current real property taxes, ground rents, 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
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 when they become due or materially and adversely affects the
value of the Mortgaged Property and (c) the exceptions (general and specific)
set forth in such policy or appearing of record, none of which, individually or
in the aggregate, materially 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 when they become due or materially
and adversely affects the value of the Mortgaged Property.
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 necessary to operate the Mortgaged Property
owned by a Mortgagor and located on the related Mortgaged 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, reorganization, moratorium 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).
10. All taxes and governmental assessments which would be a lien on
the Mortgaged Property and that prior to the Closing 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, taxes and 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 knowledge as of the Closing Date, 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 that would affect materially and adversely the value of
such Mortgaged Property as security for the Mortgage Loan and to the Seller's
knowledge as of the Closing Date there was no proceeding pending for the total
or partial condemnation of such Mortgaged Property.
2
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 Seller or its
successors or assigns is the named insured of such policy; such policy is
assignable 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; to the
Seller's knowledge the insurer issuing such policy is qualified to do business
in the jurisdiction in which the Mortgaged Property is located; no claims have
been made under such policy and the Seller has not done anything, by act or
omission, and the Seller has no knowledge of any matter, which would impair or
diminish the coverage of such policy.
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 (including comprehensive general liability and business interruption
coverage for a period of twelve months), and with respect to a fire and extended
perils insurance policy, was in an amount (subject to a customary deductible) at
least equal to the replacement cost of improvements located on such Mortgaged
Property, or an amount at least equal to the initial principal balance of the
Mortgage Loan in each case, without deduction for depreciation, was in full
force and effect with respect to each related Mortgaged Property; and, as of the
Closing Date, to the 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; for any Mortgage Loan with a Cut-Off Date Balance that is greater than
5% of the aggregate CutOff Date Balances of all Mortgage Loans, the insurer has
a claims paying ability rating from a nationally-recognized rating agency of not
less than 'A'; all premiums due and payable through the Closing Date have been
paid; the insurance policies contain a standard mortgagee clause naming the
mortgagee as an additional insured, and provide that they are not terminable and
may not be reduced without thirty (30) days prior written notice to the
mortgagee; 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 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 to the repair or restoration of all or
part of the related Mortgaged Property or the reduction of the outstanding
principal balance of the Mortgage Loan.
14. (A) Other than payments due but not yet 30 days or more
delinquent, to the Seller's knowledge, there is no material default, breach,
violation or event of acceleration existing under the related Mortgage or the
related Mortgage Note, and no event (other than payments due but not yet
delinquent) which, with the passage of time or with notice and the expiration of
any
3
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 of clauses (10),
(15) and (19) of this Schedule I or in any clause of Schedule II, III or IV, 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 pursuant to the terms of the related Mortgage or the related Mortgage Note,
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 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
(and for the 30 days prior to the Cut-Off Date, without giving effect to any
applicable grace period) 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 for
any Mortgage Loans that are cross- collateralized with any other Mortgage Loan
sold pursuant to this Agreement.
18. Each Mortgage Loan constitutes a "qualified mortgage" within the
meaning of Section 860G(a)(3) of the Code (but without regard to the rule in
Treasury Regulations 1.860 G-2(f)(2) that treats a defective obligation as a
qualified mortgage, or any substantially similar successor provision).
Accordingly, such Mortgage Loan 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
4
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 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
prior to the Closing 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 and has received no notice of any material
and adverse environmental condition or circumstance affecting such Mortgaged
Property that was not disclosed in such report(s) and either (x) no such report
reveals any known circumstances or conditions with respect to the related
Mortgaged Property that rendered such Mortgaged Property, at the date of such
report, in material violation of any applicable environmental laws or (y) if any
such report does reveal any such circumstances or conditions with respect to the
related Mortgaged Property, then either (1) an environmental insurance policy
was obtained from a third-party insurer; or (2) either (i) an operations and
maintenance program, including, in several cases, with respect to
asbestos-containing materials, lead-based paint and/or radon, or periodic
monitoring of nearby properties, has been or is expected to be implemented in
the manner and within the reasonable time frames specified in the related loan
documents, or (ii) remediation in accordance with applicable law has been
performed; or (3) an escrow or reserve was established to cover the estimated
cost of remediation, with each remediation required to be completed within a
reasonable time frame in accordance with the related loan documents. With
respect to any Mortgage Loans, as to which the Mortgagor was required to
purchase a secured creditor impaired property environmental insurance policy (i)
the policy premium for the term of the policy is fully paid and the deductible
either escrowed or is less than or equal to $25,000, (ii) at issuance, the
insurer had a claims paying ability of not less than "AA" by a nationally
recognized statistical rating agency, and (iii) the policy is in an amount not
less than the full principal amount of the Mortgage Loan. Each Mortgage requires
the related Mortgagor to comply, and to cause the related Mortgaged Property to
be in compliance, in all material respects, with all materially applicable
federal, state and local environmental laws and regulations.
20. Each related Mortgage and Assignment of Leases contains
customary and enforceable provisions such as to render the rights and remedies
of the holder thereof adequate for the 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 or
similar law affecting the right of creditors and the application of principles
of equity.
21. At the time of origination and, to the knowledge of Seller as of
the Closing Date, no Mortgagor is a debtor in, and no Mortgaged Property is the
subject of, any state or federal bankruptcy or insolvency proceeding.
5
22. Except for the Mortgage Loans indicated on the Mortgage Loan
Schedule attached hereto as eligible to receive low-income housing tax credits
pursuant to Section 42 of the Internal Revenue Code of 1986, each Mortgage 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 or provide for
negative amortization.
23. 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 the prior written consent of the Mortgagee or complying with
other requirements of the Mortgage or loan agreement any controlling interest in
the Mortgagor therein is directly transferred or sold, or encumbered in
connection with any financing secured by such controlling interest. Each related
Mortgage or loan agreement contains provisions for the acceleration of payment
of the unpaid principal balance of such Mortgage Loan if, without the prior
consent of the Mortgagee, the related Mortgaged Property is encumbered in
connection with any subordinate financing by a lien or security interest against
the related Mortgaged Property, other than any existing permitted additional
debt.
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.
25. Each related Mortgaged Property was inspected by or on behalf of
the related originator during the 12 month period prior to the Closing 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, (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 (d) with respect to Mortgage Loans which permit the
related Mortgagor to substitute a replacement property in compliance with REMIC
Provisions, 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. Each Mortgage Loan containing
provisions for defeasance of Mortgaged Property either (I) requires the prior
written consent of, and compliance with the conditions set by, the holder of the
Mortgage Loan; or (II) requires that (A) defeasance must occur within the time
permitted by, applicable REMIC rules and regulations (if applicable), (B) the
replacement collateral consist of U.S. government securities in an amount
sufficient to make all scheduled payments under the Mortgage Note when due, (C)
all fees, costs and expenses incurred by the Mortgagee in connection with the
defeasance be paid on or before the
6
release date, (D) the Mortgage Loan be assumed by a single-purpose entity that
complies with the requirements of the Mortgage and is reasonably satisfactory to
the Mortgagee, and (E) counsel provide an opinion that the trustee has a
perfected security interest in such collateral prior to any other claim or
interest.
27. Based on legal opinion(s) received at the time of origination
due diligence customarily performed by the Seller in the origination of
comparable Mortgage Loans by the Seller, as of the date of origination of such
Mortgage Loan, and, to the Seller's knowledge, as of the Closing Date, there are
no violations of any applicable zoning ordinances, building codes and land laws
applicable to the Mortgaged Property or the and occupancy thereof which would
have a material adverse effect on the value, operation or net operating income
of the Mortgaged Property. As of the date of origination, based upon due
diligence customarily performed by the Seller in the origination of comparable
Mortgage Loans, any non-conformity with zoning laws of which the Seller has
knowledge constitutes a legal non-conforming use or structure which, in the
event of casualty or destruction, may be restored or repaired to the full extent
of the use or structure at the time of such casualty, or for which law and
ordinance insurance coverage has been obtained in amounts customarily required
by prudent commercial mortgage lenders.
28. None of the 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 the related Mortgagor's use and operation
of such Mortgaged Property (unless affirmatively covered by the title insurance)
and no improvements on adjoining properties encroached upon such Mortgaged
Property to any material extent.
29. With respect to at least 95% of the FUNB 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 substantially to the effect that (A) it will
not own any 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, (B) may not engage in any business
unrelated to such Mortgaged Property or Mortgaged Properties, (C) does not have
any material assets other than those related to its interest in and operation of
such Mortgage Property or Mortgaged Properties, (D) may not incur indebtedness
other than as permitted by the related Mortgage or other Mortgage Loan
documents, (E) has its own books and records separate and apart from any other
person, and (F) holds itself out as 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 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, provided, however, rental payments or similar payments
7
made by the Tenant under the related Credit Lease directly to the Seller (or its
loan servicer or agent) shall not be deemed a breach of this representation.
31. As of the date of origination and, to the Seller's knowledge, as
of the Closing Date, there was no pending action, suit or proceeding against the
Mortgagor or the related Mortgaged Property an adverse outcome of which would
materially affect either such Mortgagor's performance under the related Mortgage
Loan documents or the holders of the Certificates.
32. The Mortgage Rate of such Mortgage Loan complied as of the date
of origination with, or is exempt from, applicable state or federal laws,
regulations and other requirements pertaining to usury, except with respect to
any provisions requiring the payment of default interest, late fees, additional
interest, prepayment premiums or yield maintenance charges.
33. To the Seller's knowledge, 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 and, to the Seller's
knowledge, no fees or expenses are, or will become, payable to the trustee under
the deed of trust, except in connection with a trustee sale of the Mortgaged
Property after default by the Mortgagor or in connection with the release of the
Mortgaged Property or related security for the Mortgage Loan.
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 the Mortgagor
is required to maintain or the Mortgagee maintains, flood insurance with respect
to such improvements.
36. All escrow deposits and payments required pursuant to the
Mortgage Loan 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 knowledge, based on due diligence customarily
performed in the origination of comparable Mortgage Loans by the Seller, 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.
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. To
the extent required by applicable law, the originator of the related Mortgage
Note and each subsequent holder was authorized to transact and do business in
the jurisdiction where the Mortgaged Property is located while each was the
holder.
8
39. Except for Mortgagors under Ground Lease Loans, related
Mortgagor (or its affiliate) has title in the fee simple interest in each
related Mortgaged Property.
40. The related Mortgage Loan documents contain provisions providing
for recourse against the related Mortgagor (and its principals or other third
party entities with assets other than its interest in the Mortgagor) for damages
sustained in connection with certain circumstances including fraud,
misappropriation, material misrepresentation and other matters expressly set
forth in the related Mortgage Loan documents.
41. Each Mortgaged Property constitutes one or more complete
separate tax lots, or real estate tax on the portion of the Mortgaged Property
not owned by the Mortgagor is subject to an escrow arrangement sufficient to pay
such taxes, or is subject to an endorsement under the related title insurance
policy.
42. 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 subject to the
related Mortgage.
9
SCHEDULE II
Ground Lease Representations and Warranties
1. Such Ground Lease or a memorandum thereof has been or will be
duly recorded and has been submitted to the appropriate filing office 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, and to the Seller's knowledge there has
been no material change in the terms of such Ground Lease since its recordation,
except by written instruments all of which are included in the related Mortgage
File.
2. 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).
3. 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 if an event of default occurs under the Ground Lease and notice
is provided to the Mortgagee and such default is curable by the Mortgagee, but
remains uncured beyond the applicable cure period.
4. To the 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, (1) there is no material default, and (2) 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.
5. 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.
6. The ground lease 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 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
7. 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.
8. 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)
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that extends not less than (x) 10 years beyond the Stated Maturity Date and (y)
beyond the full amortization period of any related Mortgage Loan that is not an
interest-only Mortgage Loan for its entire term.
9. 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 that is
awarded with respect to the leasehold interest 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 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 institutional investor, 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).
10. The ground lease does not impose any restrictions on subletting
that would be viewed as commercially unreasonable by a prudent commercial
lender.
11. 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.
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SCHEDULE III
Health Care Facility Representations and Warranties
With respect to any Mortgage Loan that is secured in whole or in part by a
Mortgaged Property which is operated as a residential health care facility (a
"Facility"):
(1) Except with respect to the Mortgage Loans listed in Exhibit
III-A hereto, all governmental licenses, permits, regulatory
agreements or other approvals or agreements necessary for the
use and operation of each Facility as intended are held by the
related Mortgagor or the operator of the Facility, and are in
full force and effect, including, without limitation, a valid
certificate of need ("CON") or similar certificate, license,
or approval issued by the applicable department of health for
the requisite number of beds, and approved provider status in
any approved provider payment program (collectively, the
"Licenses").
(2) As of the Closing Date and to Seller's knowledge, based on due
diligence customarily performed in the origination of
comparable mortgage loans by the Seller (1) the Facility has
not received a "Level A" (or equivalent) violation which has
not been cured to the satisfaction of the applicable
governmental agency, and (2) no statement of charges or
deficiencies has been made or penalty enforcement action has
been undertaken against the Facility, its operator or the
Mortgagor or against any officer, director or stockholder of
such operator or the Mortgagor by any governmental agency
during the last three calendar years, and there have been no
violations over the past three years which have threatened the
Facility's, the operator's or the Mortgagor's certification
for participation in Medicare or Medicaid or the other
third-party payors' programs.
(3) To Seller's knowledge based on due diligence customarily
performed in the origination of comparable mortgage loans by
the Seller, each operator of a Facility, each Mortgagor and
each Facility complies in all material respects with all
federal, state and local laws, regulations, quality and safety
standards, accreditation standards and requirements of the
applicable state department of health and all other federal,
state or local governmental authorities including, without
limitation, those relating to the quality and adequacy of
medical care, distribution of pharmaceuticals, rate setting,
equipment, personnel, operating policies, additions to
facilities and services and fee splitting except where the
failure to so comply would not materially interfere with the
current use of the Mortgaged Property or the Facility or the
security intended to be provided by such Mortgage or with the
Mortgagor's
12
ability to pay its obligations when they become due or
materially and adversely affects the value of the Mortgaged
Property.
13
SCHEDULE IV
Credit Lease Loan Representations and Warranties
1. The lease payments due under the related Credit Lease, together
with any escrow payments held by the Seller or its designee, are equal to or
greater than the payments due with respect to the related Mortgage Loan.
2. The Mortgagor does not have monetary obligations under the
related Credit Lease, and every monetary obligation associated with managing,
owning, developing and operating the leased property, including, but not limited
to, the costs associated with utilities, taxes, insurance, maintenance and
repairs is an obligation of the related Tenant.
3. The Mortgagor does not have any nonmonetary obligations under the
related Credit Lease, except for the delivery of possession of the leased
property.
4. The related Tenant cannot terminate such Credit Lease for any
reason prior to the payment in full of: (a) the principal balance of the related
Mortgage Loan; (b) all accrued and unpaid interest on such Mortgage Loan; and
(c) any other sums due and payable under such Mortgage Loan, as of the
termination date, which date is a rent payment date.
5. In the event the related Tenant assigns or sublets the related
leased property, such Tenant (and if applicable, the related guarantor) remains
obligated under the related Credit Lease.
6. Each property related to a Credit Lease Loan is one or more
separate tax lots.
7. The related Tenant has agreed to indemnify the Mortgagor from any
claims of any nature (a) to which the Mortgagor is subject because of such
Mortgagor's estate in the leased property, or (b) arising from (i) injury to or
death of any person or damage to or loss of property on the leased property or
connected with the use, condition or occupancy of the leased property, (ii)
Tenant's violation of the related Credit Lease, or (iii) any act or omission of
the Tenant.
8. The related Tenant has agreed to indemnify the Mortgagor from any
claims of any nature arising as a result of any hazardous material affecting the
leased property and due to such Tenant's use of the leased property.
9. Based on legal opinions and due diligence customarily performed
in the origination of comparable mortgage loans by the Seller, in the event any
credit lease is accompanied by a guaranty from the rated parent or affiliate of
the Tenant, such guaranty is legal, valid and binding against the guarantor; and
such guaranty provides that it is a guaranty of both the performance and payment
of the financial obligations of the Tenant, and may not be amended or released
without the Mortgagee's consent.
14
10. Except for the Credit Lease Loans which have residual value
insurance, each Credit Lease Loan fully amortizes over the term of the loan, and
there is no "balloon" payment due under such Credit Lease Loan at maturity.
11. No Tenant under a Credit Lease Loan may exercise any termination
right or offset or set-off right which shall be binding upon the related
Mortgagee without providing prior written notice of and the opportunity to cure
same to such Mortgagee.
12. Each Tenant under each Credit Lease Loan is required to make all
rental payments due under the applicable Credit Lease directly to a lock-box
being maintained by or on behalf of the Mortgagee.
13. Since the origination date, none of the terms of the Credit
Lease have been waived, impaired, altered or modified in any respect in a manner
binding on the Mortgagee. No material modification or amendment of any Credit
Lease Loan shall be binding upon the related Mortgagee without such Mortgagee's
prior written notice consent to such material modification or amendment.
14. Each Tenant has delivered a Subordination, Non-disturbance and
Attornment Agreement pursuant to which the respective Tenant has agreed in the
event the related Mortgagee succeeds to the interest of the Mortgagor under the
Credit Lease by reason of foreclosure or acceptance of a deed in lieu of
foreclosure, the Tenant will attorn to and recognize the Mortgagee as its
landlord under the Lease for the remainder of the term of the Credit Lease.
15. To the Seller's knowledge, the property related to each Credit
Lease Loan is not subject to any other lease other than the related Credit Lease
or any ground lease pursuant to which the related Mortgagor has acquired its
interest in the respective property, no person has any possessory interest in,
or right to occupy, the subject property except under and pursuant to any such
Credit Lease or ground lease and the related Tenant under each Credit Lease is
in occupancy of the demised premises.
16. To the Seller's knowledge based on due diligence performed in
connection with the origination of such Mortgage Loan, each Credit Lease
contains customary and enforceable provisions which render the rights and
remedies of the lessor thereunder adequate for the enforcement, and satisfaction
of the lessor's rights thereunder.
15
EXCEPTION EXHIBITS
16
Exhibit A
Mortgage Loan Schedule
FUNB Mortgage Loans transferred pursuant to this Agreement are set forth on
Exhibit B to the Pooling and Servicing Agreement under the column heading
"Seller" and with the designation "FUNB Seller".
17
