Exhibit 99.2
Execution Copy
MORTGAGE LOAN PURCHASE AGREEMENT
Mortgage Loan Purchase Agreement (this "Agreement"), dated as of November
10, 2000 (the "Closing Date") between Merrill Lynch Mortgage Capital Inc. and
Merrill Lynch Mortgage Lending, Inc. (each, a "Seller" and together, the
"Sellers") and First Union National Bank (the "Purchaser").
Each Seller intends to sell and the Purchaser intends to purchase the
multifamily and commercial mortgage loans identified after the name of the
applicable Seller on the schedule (the "Mortgage Loan Schedule") annexed hereto
as Annex A (collectively, the "ML Mortgage Loans").
The Purchaser intends to sell or otherwise assign the ML Mortgage Loans and
certain other multifamily and commercial mortgage loans (the "Other Mortgage
Loans") to a subsequent purchaser in one or more transactions involving the ML
Mortgage Loans and the Other Mortgage Loans (any such transaction, a
"Disposition"). It is expected that any such subsequent purchaser will deposit
the ML Mortgage Loans, together with the Other Mortgage Loans, into a trust fund
(the "Trust Fund"), the beneficial ownership of which will be evidenced by
multiple classes of mortgage pass-through certificates (the "Certificates").
Such transaction shall be referred to as the "Securitization". Capitalized terms
not otherwise defined herein shall have the meanings ascribed to them in Section
20 hereof.
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) Each Seller agrees to sell the ML Mortgage Loans, and the Purchaser
agrees to purchase, the ML Mortgage Loans. The consideration (the "Aggregate
Purchase Price") for the ML Mortgage Loans shall consist of a cash amount equal
to (i) 85% of the outstanding principal balance of the ML Mortgage Loans after
the Cut-Off Date for each ML Mortgage Loan and accrued interest from the Cut-Off
Date for each ML Mortgage Loan through and including the Closing Date
($169,681,914.61), payable on the Closing Date, plus (ii) if a Disposition or
Securitization occurs, the Purchase Price Adjustment Amount, payable on the
closing date of the Disposition or Securitization, provided that, in no event
shall the Aggregate Purchase Price exceed $103% of the outstanding principal
balance of the ML Mortgage Loans after the scheduled November 1, 2000 payment
($205,101,532.00) plus the cost incurred by the Sellers or their affiliates in
liquidating their hedge positions with respect to the ML Mortgage Loans. The
"Cut-Off Date" shall be November 5, 2000 with respect to any ML Mortgage Loans
having a due date on the fifth of the month and November 1, 2000 with respect to
the other ML Mortgage Loans.
(b) The "Purchase Price Adjustment Amount" shall be an amount equal to the
profit earned on the ML Mortgage Loans in connection with any Disposition or
Securitization, determined as set forth on Annex B hereto.
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SECTION 2. Conveyance of ML Mortgage Loans.
(a) Effective as of the Cut-Off Date, subject only to receipt of the amount
specified in clause (i) of the definition of Aggregate Purchase Price, each
Seller does hereby sell, transfer, assign, set over and otherwise convey to the
Purchaser, without recourse (except as set forth in this Agreement), all of its
the right, title and interest in and to the applicable ML Mortgage Loans, on a
servicing released basis, together with all of its right, title and interest in
and to the proceeds of any related title, hazard, primary mortgage or other
insurance proceeds. The sale of the ML Mortgage Loans shall not include any
hedges or other swaps held by either Seller or an affiliate with respect to the
ML Mortgage Loans. The Mortgage Loan Schedule, as it may be amended, shall
conform to the requirements set forth in this 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 ML 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 ML Mortgage Loans due on or
before the Cut-Off Date and principal prepayments thereon), shall belong to, and
be promptly remitted to, the applicable Seller.
(c) Each Seller hereby represents and warrants that it has, on behalf of
the Purchaser, delivered to the Purchaser or its designee, the documents and
instruments specified below with respect to each applicable ML Mortgage Loan
(each a "Mortgage File"). All Mortgage Files so delivered will be held by the
Purchaser or its designee 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) 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 or certified by the applicable recorders office;
(iii) an original or copy of any related Assignment of Leases (if such
item is a document separate from the Mortgage), together with any and all
intervening assignments thereof, in each case with evidence of recording
indicated thereon or certified by the applicable recorders office;
(iv) an original executed assignment, in recordable form, of (a) the
Mortgage, (b) any related Assignment of Leases (if such item is a document
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separate from the Mortgage) and (c) any other recorded document relating to
the ML Mortgage Loan otherwise included in the Mortgage File, in blank;
(v) an original assignment of all unrecorded documents relating to the
ML Mortgage Loan 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 or located, an
original or copy of an irrevocable, binding commitment (which may be a
marked version of the policy that has been executed by an authorized
representation of the title company) 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 ML Mortgage Loan or in favor of any
assignee prior to the Purchaser (but only to the extent such 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 such 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 blank;
(ix) an original or copy of any Ground Lease or Guaranty; and
(x) any intercreditor agreement relating to permitted debt of the
Mortgagor.
(d) As to each ML Mortgage Loan, the applicable Seller shall take all
actions necessary or desirable to permit the Purchaser or a subsequent purchaser
in the case of a Disposition (such person, the "Holder"), at the Holder's
expense and direction, to cause to be submitted for recording or filing, as the
case may be, in the appropriate public office for real property records or UCC
Financing Statements, as appropriate, in favor of the Holder, each assignment of
Mortgage, assignment of Assignment of Leases and any other recordable documents
relating to the Mortgage Loan referred to in clause (iv) of Section 2(c) above
and each UCC-2 and UCC-3 assignment in favor of the Holder and so delivered to
the Holder and referred to in clause (viii) of Section 2(c) above. If any such
document or instrument is lost or returned unrecorded or unfiled, as the case
may be, because of a defect therein, the applicable Seller shall, at direction
of the Holder, promptly prepare or cause to be prepared a substitute therefor or
cure such defect, as the case may be.
(e) All documents and records (except attorney-client privileged
communication and internal credit analysis of either Seller) relating to each ML
Mortgage Loan and in such Seller's possession that are not required to be
delivered pursuant to the previous
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paragraph shall promptly be delivered or caused to be delivered by the
applicable Seller to the Purchaser at its direction, together with any related
escrow amounts and reserve amounts.
(f) If the Purchaser does not sell or otherwise assign any of the ML
Mortgage Loans in a Disposition or Securitization on or prior to December 31,
2000, the Sellers shall have the right to repurchase such ML Mortgage Loans from
the Purchaser for a purchase price equal to 85% of the then aggregate principal
balance of such ML Mortgage Loans plus accrued and unpaid interest.
SECTION 3. Representations, Warranties and Covenants of Seller.
(a) Each Seller hereby represents and warrants to and covenants with the
Purchaser, as of the date hereof, that:
(i) Such Seller is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and has taken all
necessary corporate action to authorize the execution, delivery and
performance of this Agreement by it, and has the power and authority to
execute, deliver and perform this Agreement and all the transactions
contemplated hereby.
(ii) This Agreement has been duly and validly authorized, executed and
delivered by such Seller and, assuming the due authorization, execution and
delivery of this Agreement by each other party hereto, this Agreement and
all of the obligations of such Seller hereunder are the legal, valid and
binding obligations of such Seller, enforceable against such Seller in
accordance with the terms of this Agreement, except as such enforcement may
be limited by bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors' rights generally, and by general
principles of equity (regardless of whether such enforceability 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 such Seller its
performance and compliance with the terms of this Agreement will not (A)
violate its 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 such Seller is a party or by which such Seller is bound.
(iv) Such 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 such Seller's reasonable and good faith
judgment, materially and
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adversely affect the condition (financial or other) or operations of such
Seller or its properties or have consequences that would materially and
adversely affect its performance hereunder.
(v) Such 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 such Seller's reasonable and good faith
judgment, materially and adversely affect the ability of such 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 such 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 such Seller of or compliance by such 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 such Seller's knowledge,
threatened against such Seller that would, in such Seller's good faith and
reasonable judgment, prohibit its entering into this Agreement or
materially and adversely affect the performance by such Seller of its
obligations under this Agreement.
(viii) Under generally accepted accounting principles ("GAAP") and for
federal income tax purposes, such Seller will report the transfer of the
applicable ML Mortgage Loans to the Purchaser as a sale of such ML Mortgage
Loans to the Purchaser in exchange for consideration consisting of a cash
amount equal to the its pro rata portion of the Aggregate Purchase Price.
The consideration received by such Seller upon the sale of the applicable
ML Mortgage Loans to the Purchaser will constitute reasonably equivalent
value at least equal to the fair market value of such ML Mortgage Loans.
Such Seller will be solvent at all relevant times prior to, and will not be
rendered insolvent by, the sale of the applicable ML Mortgage Loans to the
Purchaser. Such Seller is not selling the applicable ML Mortgage Loans to
the Purchaser with any intent to hinder, delay or defraud any of the
creditors of such Seller.
(b) Each Seller hereby makes the representations and warranties contained
in Schedule I and Schedule II hereto for the benefit of the Purchaser and its
permitted assignees, including any trustee on behalf of holders of Certificates
in a Securitization, as of the Closing Date and as of the closing date of any
Disposition, with respect to (and solely with respect to) each ML Mortgage Loan.
(c) If either Seller receives written notice that any document or documents
listed in Section 2(c) above has not been properly executed, is missing,
contains information that does not conform in any material respect with the
corresponding information set forth in the
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Mortgage Loan Schedule, or does not appear to be regular on its face (each, a
"Document Defect"), or of or a breach of a representation or warranty contained
herein relating to an ML Mortgage Loan, then, if such Document Defect or breach
shall materially and adversely affect the value of the related ML Mortgage Loan
or of the interest of the Purchaser or a subsequent Holder therein, such Seller
shall cure such Document Defect or breach (which shall include payment of losses
and any additional trust fund expenses incurred by the Trust Fund in connection
with such Mortgage Loan) not later than 90 days from receipt of such notice (or,
in the case of a Document Defect or breach relating to an ML Mortgage Loan
included in a Securitization not being a "qualified mortgage" within the meaning
of the REMIC Provisions (a "Qualified Mortgage"), not later than ninety (90)
days after any party to the related pooling and servicing agreement discovering
such Document Defect or breach provided the Seller receives such notice in a
timely manner) 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) not later than the end of
such 90-day period, repurchase from the Purchaser or any subsequent Holder,
including any trustee on behalf of holders of Certificates in a Securitization,
the affected ML Mortgage Loan for a cash price (the "Repurchase Price") equal to
the outstanding principal balance of such ML Mortgage Loan as of the date of
purchase, together with (a) all accrued and unpaid interest on such Mortgage
Loan at the related mortgage rate to but not including the applicable due date
plus, if such Mortgage Loan has been included in a Securitization, any accrued
interest on advances of principal and/or interest made with respect to such ML
Mortgage Loan by a master servicer, special servicer or trustee, (b) all related
and unreimbursed other advances made by the related master servicer, special
servicer or trustee, plus any accrued interest thereon and (c) any other costs
and expenses incurred by such master servicer, special servicer or the Trust
Fund in connection with any such purchase by such Seller as set forth in the
related pooling and servicing agreement (to the extent not included in clause
(b) above), or any additional trust fund expenses incurred by the Trust Fund in
respect of such Mortgage Loan, as set forth in the related pooling and servicing
agreement; provided, that the Repurchase Price shall not be reduced by any
outstanding advance of principal and/or interest, or (ii) substitute a mortgage
loan for such affected ML Mortgage Loan not later than the end of such 90-day
period, provided that such substitution complies with the terms and conditions
contained in the related pooling and servicing agreement (including, without
limitation, the payment of any shortfall in the principal balance of the
mortgage loan being substituted for the affected ML Mortgage Loan); 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 ML Mortgage Loan not being treated as a Qualified Mortgage, and the
applicable 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 ML 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 Purchaser or its transferee or Holder
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; and provided, further, that no Document Defect (other than with respect
to a Mortgage Note, the Mortgage, the title insurance policy, the ground lease
or any letter of credit) shall be considered to materially and adversely affect
the interests of the
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Purchaser or any subsequent transferee or the value of the related Mortgage Loan
unless the document with respect to which the Document Defect exists is required
in connection with an imminent enforcement of the mortgagee's rights or remedies
under the related Mortgage Loan, defending any claim asserted by any borrower or
third party with respect to the Mortgage Loan, establishing the validity or
priority of any lien or any collateral securing the Mortgage Loan or for an
immediate servicing obligation. For a period of two years from the closing date
of a Disposition, so long as there remains any Mortgage File relating to an ML
Mortgage Loan as to which there is any uncured Document Defect or breach, the
applicable Seller shall provide the Officer's Certificate 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 foregoing provisions of this Section 3(c), if such Document Defect or
breach shall materially and adversely affect the value of such ML Mortgage Loan
or the interests of the Purchaser or subsequent Holder therein (subject to the
last proviso in the immediately preceding sentence), the applicable Seller shall
in all cases on or prior to the second anniversary of the closing date of the
related Disposition either cause such Document Defect or breach to be cured or
repurchase the affected ML Mortgage Loan. Notwithstanding the foregoing, the
delivery of a commitment to issue a policy of lender's title insurance as
described in clause 12 of Schedule I hereof in lieu of the delivery of the
actual policy of lender's title insurance shall not be considered a Document
Defect or breach with respect to any Mortgage File if such actual policy of
insurance is delivered to the Purchaser or a designee on its behalf not later
than the 90th day following the closing date of the related Disposition. The
obligations of the Sellers under this paragraph (c) with respect to each ML
Mortgage Loan shall be joint and several.
(d) In connection with any permitted repurchase or substitution of one or
more ML Mortgage Loans contemplated hereby (including a repurchase pursuant to
Section 2(f)), upon receipt of the Repurchase Price or any substitution
shortfall, the execution and delivery of appropriate documents and assignments
to the Purchaser or its designee and the receipt of the Mortgage File, (i) the
Purchaser or its designee shall execute and deliver such endorsements and
assignments as are provided to it by the Seller, 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 ML Mortgage Loan or
substituted ML Mortgage Loan, as applicable, and (ii) the Purchaser or its
designee shall tender to the Seller, upon delivery to it of a receipt executed
by the Seller, all portions of the Mortgage File and other documents pertaining
to such ML Mortgage Loan possessed by it.
(e) Without limiting the remedies of the Purchaser or any subsequent
Holders pursuant to this Agreement, it is acknowledged that the representations
and warranties are being made for risk allocation purposes. Subject to Section 8
of this Agreement, this Section 3 provides the sole remedy respecting any
Document Defect in a Mortgage File or any breach of any representation or
warranty set forth in or required to be made pursuant to Section 3 of this
Agreement.
SECTION 4. Representations and Warranties of the Purchaser. In order to
induce the Sellers to enter into this Agreement, the Purchaser hereby represents
and warrants for the benefit of the Sellers as of the date hereof that:
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(a) The Purchaser is a national banking association validly existing
under the laws of the United States of America and possesses all requisite
authority, power, licenses, permits and franchises to carry on its business
as currently conducted by it to acquire the ML Mortgage Loans from the
Sellers.
(b) This Agreement has been duly and validly authorized, executed and
delivered by the Purchaser and, assuming due authorization, execution and
delivery hereof by the Sellers, constitutes a legal, valid and binding
obligation of the Purchaser, enforceable against the Purchaser 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 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.
(c) The execution and delivery of this Agreement by the Purchaser and
the Purchaser's performance and compliance with the terms of this Agreement
will not (A) violate the Purchaser'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 Purchaser is a party or by which
the Purchaser is bound.
(d) 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 other governmental agency or body, which default might
have consequences that would, in the Purchaser's reasonable and good faith
judgment, materially and adversely affect the condition (financial or
other) or operations of the Purchaser or its properties or have
consequences that would materially and adversely affect its performance
hereunder.
(e) The Purchaser 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 Purchaser's reasonable and good faith
judgment, materially and adversely affect the ability of the Purchaser 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 Purchaser of its obligations under this Agreement (except to the
extent such consent has been obtained).
(f) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Purchaser of or compliance by the Purchaser with this
Agreement or the consummation of the transactions contemplated by this
Agreement except as have previously been obtained.
(g) No litigation is pending or, to the best of the Purchaser's
knowledge, threatened against the Purchaser that would, in the Purchaser's
good faith and reasonable
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judgment, prohibit its entering into this Agreement or materially and
adversely affect the performance by the Purchaser of its obligations under
this Agreement.
(h) 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.
(i) 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 ML Mortgage Loans (the
"Closing") shall be held at the offices of Willkie Farr & Gallagher on the
Closing Date.
The Closing shall be subject to each of the following conditions:
(a) All of the representations and warranties of the Sellers 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 ML 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 and the Seller and their counsel in their reasonable
discretion, shall be duly executed and delivered by all signatories as
required pursuant to the respective terms thereof;
(c) The Sellers shall have delivered and released to the Purchaser or
its designee all documents represented to have been or required to be
delivered to the Purchaser or its designee pursuant to Section 2 of this
Agreement; and
(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 Sellers 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.
All parties agree to use their best efforts to perform their respective
obligations hereunder in a manner that will enable the Purchaser to purchase the
ML Mortgage Loans on the Closing Date.
SECTION 6. Closing Documents. The Closing Documents shall consist of the
following:
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(a) This Agreement duly executed by the Purchaser and the Sellers;
(b) A Certificate of each Seller, executed by a duly authorized
officer of such Seller and dated the Closing Date, and upon which the
Purchaser and its permitted assigns may rely, to the effect that: (i) the
representations and warranties of such 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) such Seller has, in all
material respects, complied with all the agreements and satisfied all the
conditions on its part that are required under this Agreement to be
performed or satisfied at or prior to the date hereof;
(c) An Officer's Certificate from an officer of each Seller, dated the
Closing Date, and upon which the Purchaser and its permitted assigns may
rely, to the effect that each individual who, as an officer or
representative of such 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; and
(d) The resolutions of the requisite committee of each 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
each Seller, and a certificate of good standing of each Seller issued by
the State of Delaware not earlier than sixty (60) days prior to the Closing
Date.
(e) Such further certificates, opinions and documents as the Purchaser
may reasonably request.
SECTION 7. Covenants.
(a) The Purchaser or other Holder will provide the Sellers with all forms
of Disclosure Materials (including the preliminary and final forms of the
Memorandum and the Prospectus Supplement) related to a Disposition or a
Securitization as soon as such document are available.
(b) Each Seller will provide an Officer's Certificate from an officer of
such Seller, dated as of the closing date of any Disposition or Securitization,
and upon which the Purchaser and its permitted assignees 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 of the Disposition
or Securitization, included or includes any untrue statement of a material fact
relating to the applicable ML Mortgage Loans or omitted or omits to state
therein a material fact necessary in order to make the statements therein
relating to the applicable ML 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 of
the Disposition or Securitization, included or includes any untrue statement of
a material fact relating to the applicable ML Mortgage Loans or omitted or omits
to state therein a material fact necessary in
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order to make the statements therein related to the applicable ML Mortgage
Loans, in the light of the circumstances under which they were made, not
misleading.
(c) Sellers will provide a written opinion of counsel for the Sellers,
reasonably satisfactory to the Purchaser and its counsel and rating agencies
rating the Certificates, dated the date of any Disposition or Securitization and
addressed to the Purchaser and rating agencies rating the Certificates.
SECTION 8. Indemnification.
(a) The Sellers shall, jointly and severally, indemnify and hold harmless
the Purchaser, its permitted assignees, any underwriters with respect to any
Securitization, their respective officers and directors, and each person, if
any, who controls the Purchaser or any such person within the meaning of either
Section 15 of the Securities Act of 1933, as amended (the "1933 Act") or Section
20 of the Securities Exchange Act of 1934, as amended (the "1934 Act"), against
any and all losses, claims, damages or liabilities, joint or several, to which
they or any of them may become subject under the 1933 Act, the 1934 Act or other
federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) (i) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in (A) any Prospectus Supplement,
Memorandum, Diskette or, insofar as they are required to be filed as part of a
Registration Statement pursuant to the No-Action Letters, any Computational
Materials or ABS Term Sheets with respect to any publicly offered 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 any privately offered 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 applicable ML Mortgage Loans,
the related Mortgagors and/or the related Mortgaged Properties contained in any
Data File (it being herein acknowledged that any Data File may be used to
prepare a Prospectus Supplement including without limitation Annex A thereto, a
Memorandum, a Diskette, any Computational Materials and ABS Term Sheets with
respect to the publicly offered Certificates and any items similar to
Computational Materials and ABS Term Sheets forwarded to prospective investors
in the privately offered 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
applicable ML Mortgage Loans, the related Mortgagors, the related Mortgaged
Properties and/or the Seller set forth (X) in a Prospectus Supplement and any
Memorandum under the headings: "SUMMARY OF PROSPECTUS SUPPLEMENT--THE
PARTIES--The Mortgage Loan Originators", "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 any
such 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
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upon a breach of the representations and warranties of the Sellers set forth in
or made pursuant to Section 3; provided that the indemnification provided by
this Section 8 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 ML Mortgage Loans, the related Mortgagors and/or the related
Mortgaged Properties set forth in any Data File or Annex A to the Prospectus
Supplement, including without limitation the aggregation of such information
with comparable information relating to the mortgage loans other than the ML
Mortgage Loans. This indemnity agreement will be in addition to any liability
which the Sellers 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 a
registration statement filed by a depositor to a Securitization on Form S-3,
including without limitation exhibits thereto and information incorporated
therein by reference; "Base Prospectus" shall mean the prospectus, as
supplemented by the prospectus supplement (the "Prospectus Supplement") relating
to publicly offered certificates relating to a Securitization, including all
annexes thereto; "Memorandum" shall mean the private placement memorandum,
relating to any privately offered Certificates, including all exhibits thereto;
"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 Kidder,
Peabody Acceptance Corporation I, Kidder, Peabody & Co. Incorporated, and Kidder
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 "Kidder 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 (together with the Kidder 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 applicable ML Mortgage Loans covered by
the Agreed Upon Procedures Letter to be rendered by an accounting firm in
connection with a Securitization (a "hard copy" of which Data File was initialed
on behalf of the Sellers and the Purchaser).
(c) The Purchaser shall indemnify and hold harmless each of the Sellers,
their respective directors, officers, employees and agents, and each person, if
any, who controls each 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.
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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 8 (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 Sellers (the "indemnifying party") under this Section 8, 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 8 (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 8. 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 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 any underwriters,
representing all the indemnified parties under Section 8(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 8 is unavailable to
an indemnified party under Section 8(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
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<PAGE>
material fact relates to information supplied by such parties. The obligations
of the Sellers under this Paragraph (e) shall be joint and several.
(f) The Purchaser and the Sellers agree that it would not be just and
equitable if contribution pursuant to Section 8(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 8(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 8 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 8, which expenses the indemnifying party shall
pay as and when incurred, at the request of the indemnified party, to the extent
that the indemnifying party will be ultimately obligated to pay such expenses.
If any expenses so paid by the indemnifying party are subsequently determined to
not be required to be borne by the indemnifying party hereunder, the party that
received such payment shall promptly refund the amount so paid to the party
which made such payment. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the 1933 Act) 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 8
shall remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by the Purchaser, any
underwriters of a related Securitization, any of their directors or officers, or
any person controlling the Purchaser or such 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, any underwriters under any Securitization shall be
third-party beneficiaries of the provisions of this Section 8.
SECTION 9. Grant of a Security Interest. It is the express intent of the
parties hereto that the conveyance of the ML Mortgage Loans by the applicable
Seller to the Purchaser as provided in Section 2 hereof be, and be construed as,
a sale of the ML Mortgage Loans by the applicable Seller to the Purchaser and
not as a pledge of the ML Mortgage Loans by such Seller to the Purchaser to
secure a debt or other obligation of such Seller. However, if, notwithstanding
the aforementioned intent of the parties, the ML Mortgage Loans are held to be
property of such Seller, then, (a) it is the express intent of the parties that
such conveyance be deemed a pledge of the ML 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;
and (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 ML Mortgage Loans, and all
amounts payable to the holder of the ML 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, if the ML Mortgage Loans have been included in a
Securitization, all amounts, other than investment earnings, from time to time
held or invested in any related account established under a pooling and
servicing agreement whether in the form of cash, instruments, securities or
other property;
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(iii) the assignment to a permitted assignee 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 a permitted assignee
of the Purchaser or any of its agents 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 assignees of the Purchaser) holding such property, and
acknowledgments, receipts or confirmations from persons (other than assignees of
the Purchaser) 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. Each 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 applicable ML 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, if the ML Mortgage Loans are included in a Securitization, the
related 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
each of the Sellers submitted pursuant hereto, shall remain operative and in
full force and effect and shall survive delivery of the ML Mortgage Loans by the
Sellers to the Purchaser (and by the Purchaser to its permitted assignee).
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.
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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 Sellers 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 each
Seller under this Agreement shall not be assigned by such Seller without the
prior written consent of the Purchaser, except that any person into which a
Seller may be merged or consolidated, or any corporation resulting from any
merger, conversion or consolidation to which a Seller is a party, or any person
succeeding to all or substantially all of the business of a Seller, shall be the
successor to such 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 Sellers, the Purchaser, and their
permitted successors and assigns, and the officers, directors and controlling
persons referred to in Section 8. This Agreement is enforceable by the 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. 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.
SECTION 19. Accountants' Letters. If the ML Mortgage Loans are included in
a Securitization, the parties hereto shall cooperate with the applicable
accounting firm retained with respect to such Securitization in making available
all information and taking all steps reasonably necessary to permit such
accountants to deliver the letters required in connection with the
Securitization.
SECTION 20. Additional Definitions.
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"Anticipated Repayment Date": For each ARD Loan, the date specified in the
related Mortgage Note after which the Mortgage Rate for such ARD Loan will
increase as specified in the related Mortgage Note.
"ARD Loan": Any Mortgage Loan that provides that if the unamortized
principal balance thereof is not repaid on its Anticipated Repayment Date, such
Mortgage Loan will accrue additional interest at the rate specified in the
related Mortgage Note and the Mortgagor is required to apply excess monthly cash
flow generated by the related Mortgaged Property to the repayment of the
outstanding principal balance on such Mortgage Loan.
"Assignment of Leases": With respect to any Mortgaged Property, any
assignment of leases, rents and profits or similar document or instrument
executed by the Mortgagor in connection with the origination of the related
Mortgage Loan.
"Balloon Mortgage Loan": Any Mortgage Loan that by its original terms or by
virtue of any modification entered into as of the Closing Date provides for an
amortization schedule extending beyond its Stated Maturity Date.
"Balloon Payment": With respect to any Balloon Mortgage Loan as of any date
of determination, the Scheduled Payment payable on the Stated Maturity Date of
such Mortgage Loan.
"Cut-Off Date Balance": With respect to any Mortgage Loan, the outstanding
principal balance of such Mortgage Loan as of the Cut-Off Date, after
application of all unscheduled payments of principal received on or before such
date and the principal component of all Periodic Payments due on or before such
date, whether or not received.
"Defeasance Collateral": With respect to any Defeasance Loan, the United
States Treasury obligations required or permitted to be pledged in lieu of
prepayment pursuant to the terms thereof.
"Defeasance Loan": Any ML Mortgage Loan identified as a Defeasance Loan on
the Mortgage Loan Schedule which permits or requires the related Mortgagor (or
permits the holder of such Mortgage Loan to require the related Mortgagor) to
pledge Defeasance Collateral to such holder in lieu of prepayment.
"Due Date": With respect to (i) any Mortgage Loan on or prior to its Stated
Maturity Date, the day of the month set forth in the related Mortgage Note on
which each Periodic Payment on such Mortgage Loan is scheduled to be first due;
(ii) any Mortgage Loan after its Stated Maturity Date, the day of the month set
forth in the related Mortgage Note on which each Periodic Payment on such
Mortgage Loan had been scheduled to be first due; and (iii) any REO Loan, the
day of the month set forth in the related Mortgage Note on which each Periodic
Payment on the related Mortgage Loan had been scheduled to be first due.
"Mortgage": With respect to any Mortgage Loan, the mortgage, deed of trust,
deed to secure debt or similar instrument that secures the Mortgage Note and
creates a lien on the fee or leasehold interest in the related Mortgaged
Property.
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"Mortgage Loan": An ML Mortgage Loan. As used herein, the term "Mortgage
Loan" includes the related Mortgage Note, Mortgage and other security documents
contained in the related Mortgage File.
"Mortgage Note": The original executed note evidencing the indebtedness of
a Mortgagor under a Mortgage Loan, together with any rider, addendum or
amendment thereto, or any renewal, substitution or replacement of such note.
"Mortgaged Property": The property subject to the lien of a Mortgage.
"Mortgagor": The obligor or obligors on a Mortgage Note, including without
limitation, any Person that has acquired the related Mortgaged Property and
assumed the obligations of the original obligor under the Mortgage Note.
"Periodic Payment": With respect to any Mortgage Loan as of any Due Date,
the scheduled payment of principal and/or interest on such Mortgage Loan,
including any Balloon Payment, that is actually payable by the related Mortgagor
from time to time under the terms of the related Mortgage Note (as such terms
may be changed or modified in connection with a bankruptcy or similar proceeding
involving the related Mortgagor or by reason of a modification, waiver or
amendment granted or agreed to by a special servicer under a Securitization).
"Person": Any individual, corporation, partnership, joint venture,
association, joint-stock company, limited liability company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"REMIC Provisions": Provisions of the federal income tax law relating to
real estate mortgage investment conduits, which appear at Sections 860A through
860G of Subchapter M of Chapter 1 of the Code, and related provisions, and
proposed, temporary and final Treasury regulations and any published rulings,
notices and announcements promulgated thereunder, as the foregoing may be in
effect from time to time.
"REO Loan": The mortgage loan deemed for purposes hereof to be outstanding
with respect to each REO Property.
"REO Property": A Mortgaged Property acquired on behalf and in the name of
the trustee in a Securitization through foreclosure, acceptance of a
deed-in-lieu of foreclosure or otherwise in accordance with applicable law in
connection with the default or imminent default of a Mortgage Loan.
"Scheduled Payment": With respect to any Mortgage Loan, for any Due Date
following the Cut-Off Date as of which it is outstanding, the scheduled Periodic
Payment of principal and interest (other than additional interest with respect
to an ARD Loan after its Anticipated Repayment Date) on such Mortgage Loan that
is or would be, as the case may be, payable by the related Mortgagor on such Due
Date under the terms of the related Mortgage Note as in effect on the Closing
Date, without regard to any subsequent change in or modification of such terms
in connection with a bankruptcy or similar proceeding involving the related
Mortgagor or a modification, waiver or amendment of such Mortgage Loan granted
or agreed to by the special
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servicer under a Securitization or acceleration of principal by reason of
default, and assuming that each prior Scheduled Payment has been made in a
timely manner.
"Stated Maturity Date": With respect to any Mortgage Loan, the Due Date
specified in the Mortgage Note (as in effect on the Closing Date) on which the
last payment of principal is due and payable under the terms of the Mortgage
Note (as in effect on the closing date of a Disposition), without regard to any
change in or modification of such terms in connection with a bankruptcy or
similar proceeding involving the related Mortgagor or a modification, waiver or
amendment of such Mortgage Loan granted or agreed to by the special servicer
under a Securitization, in the case of an ARD Loan, without regard to its
Anticipated Repayment Date.
"UCC Financing Statement": A financing statement executed and filed
pursuant to the Uniform Commercial Code, as in effect in any relevant
jurisdiction.
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IN WITNESS WHEREOF, the Sellers and the Purchaser have caused their names
to be signed hereto by their respective duly authorized officers as of the date
first above written.
SELLERS
MERRILL LYNCH MORTGAGE CAPITAL INC.
By:
_________________________________
Name:
_______________________________
Title:
______________________________
MERRILL LYNCH MORTGAGE LENDING, INC.
By:
_________________________________
Name:
_______________________________
Title:
______________________________
Address for Notices:
100 Church Street, 18th Floor
New York, New York 10080-6518
Attention: Andrea Balkan
Telecopier No.: (212) 652-7552
With a copy to:
Merrill Lynch
100 Vesey Street
World Financial Center
North Tower, 12th Floor
New York, New York 10281
Attention: Michael McGovern
Telecopier No.: (212) 446-0265
<PAGE>
PURCHASER
FIRST UNION NATIONAL BANK
By:
_________________________________
Name:
_______________________________
Title:
______________________________
Address for Notices:
One First Union Center
301 South College Street
Charlotte, North Carolina 28288-0600
Attention: Craig M. Lieberman
Telecopier No.: (704) 374-6435
Telephone No.: (704) 383-7407
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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.
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.
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, receivorship,
reorganization, moratorium, redemption 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 Notes, Mortgage(s) or other agreements executed in connection
therewith, and, as of the Cut-Off 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 Purchaser or its designee constitutes the legal,
valid and binding assignment from the Seller, except as such enforcement may be
limited by bankruptcy, insolvency, redemption, reorganization, liquidation,
receivership, moratorium or other laws relating to or affecting creditors'
rights generally or by general principles of equity (regardless of whether such
enforcement is considered in a proceeding in equity or at law).
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
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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, receivorship, reorganization, moratorium, redemption,
liquidation or other laws affecting the enforcement of creditor's rights
generally, or by general principles of equity (regardless of whether such
enforcement is considered in a proceeding in equity or at law).
10. All taxes and governmental assessments which would be a lien on the
Mortgaged Property and that prior to the Cut-Off Date have become delinquent in
respect of each related Mortgaged Property have been paid, or an escrow of funds
in an amount sufficient to cover such payments has been established. For
purposes of this representation and warranty, 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 Cut-Off 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 Cut-Off Date there was no proceeding pending for the total
or partial condemnation of such Mortgaged Property.
12. The lien of each related Mortgage as a first priority lien in the
original principal amount of such Mortgage Loan after all advances of principal
(as set forth on the Mortgage Loan Schedule) is insured by an ALTA lender's
title insurance policy (or a binding commitment therefor), or its equivalent as
adopted in the applicable jurisdiction, insuring the Seller, its successors and
assigns, subject only to the Title Exceptions; the 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 Purchaser or its designee as mortgagee of record; is
in full force and effect upon
I-2
<PAGE>
the consummation of the transactions contemplated by this Agreement; all
premiums thereon have been paid; no claims have been made under such policy and
the Seller has not done anything, by act or omission, and the Seller has no
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, and with respect to a fire and extended perils insurance policy, was in
an amount (subject to a customary deductible) equal to the lesser of (i) the
replacement cost of improvements located on such Mortgaged Property, or (ii) the
initial principal balance of the Mortgage Loan, was in full force and effect
with respect to each related Mortgaged Property; and, as of the Cut-Off 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; all premiums due and payable through the closing date of the related
Disposition have been paid; and no notice of termination or cancellation with
respect to any such insurance policy has been received by the Seller; and except
for certain amounts not greater than amounts which would be considered prudent
by an institutional commercial 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 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 in
respect of any Scheduled Payment.
I-3
<PAGE>
16. Except with respect to ARD Loans, which provide that the rate at which
interest accrues thereon increases after the Anticipated Repayment Date, the
Mortgage Rate (exclusive of any default interest, late charges or prepayment
premiums) of such Mortgage Loan is a fixed rate.
17. Each related Mortgage does not provide for or permit, without the prior
written consent of the holder of the Mortgage Note, each related Mortgaged
Property to secure any other promissory note or obligation except as expressly
described in such Mortgage.
18. Each Mortgage Loan constitutes a "qualified mortgage" within the
meaning of Section 860G(a)(3) of the Code (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 of the related Disposition. For purposes of the previous
sentence, (1) the fair market value of the referenced interest in real property
shall first be reduced by (a) the amount of any lien on such interest in real
property that is senior to the Mortgage Loan, and (b) a proportionate amount of
any lien on such interest in real property that is on a parity with the Mortgage
Loan, and (2) the "Testing Date" shall be the date on which the referenced
Mortgage Loan was originated unless (a) such Mortgage Loan was modified after
the date of its origination in a manner that would cause a "significant
modification" of such Mortgage Loan within the meaning of Treasury Regulations
Section 1.1001-3(b), and (b) such "significant modification" did not occur at a
time when such Mortgage Loan was in default or when default with respect to such
Mortgage Loan was reasonably foreseeable. However, if the referenced Mortgage
Loan has been subjected to a "significant modification" after the date of its
origination and at a time when such Mortgage Loan was not in default or when
default with respect to such Mortgage Loan was not reasonably foreseeable, the
Testing Date shall be the date upon which the latest such "significant
modification" occurred. The Mortgage Loan documents with respect to each
Defeasance Loan do not allow such Defeasance Loan to be defeased prior to two
years after the closing date of a related Securitization.
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
preceding the origination of the related Mortgage Loan, and the Seller, having
made no independent inquiry other than to review the report(s) prepared in
connection with the assessment(s) referenced herein, has no 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).
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
I-4
<PAGE>
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
Cut-Off Date, no Mortgagor is a debtor in, and no Mortgaged Property is the
subject of, any state or federal bankruptcy or insolvency proceeding.
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 complying with the requirements of the Mortgage or loan
agreement, the related Mortgaged Property, or any controlling interest therein,
is directly transferred or sold, or encumbered in connection with 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 related origination
date.
26. Since origination, no material portion of the related Mortgaged
Property has been released from the lien of the related Mortgage in any manner
which materially and adversely affects the value of the Mortgage Loan or
materially interferes with the security intended to be provided by such
Mortgage, and, except with respect to Mortgage Loans (a) which permit defeasance
by means of substituting for the Mortgaged Property (or, in the case of a
Mortgage Loan secured by multiple Mortgaged Properties, one or more of such
Mortgaged Properties) U.S. Treasury Obligations sufficient to pay the Mortgage
Loans in accordance with their terms, (b) where a release of the portion of the
Mortgaged Property was contemplated at origination and such portion was not
considered material for purposes of underwriting the Mortgage Loan, (c) where
release is conditional upon the satisfaction of certain underwriting and legal
requirements and the payment of a release price that represents adequate
consideration for such Mortgaged Property, or (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.
I-5
<PAGE>
27. To the Seller's knowledge, as of the date of origination of such
Mortgage Loan and as of the Cut-Off Date, there are no violations of any
applicable zoning ordinances, building codes and land laws applicable to the
Mortgaged Property or the use and occupancy thereof which would have a material
adverse effect on the value, operation or net operating income of the Mortgaged
Property.
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 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 ML Mortgage Loans (by balance)
having a Cut-Off Date Balance in excess of 1% of the Cut-Off Date Balance of all
ML Mortgage Loans, the related Mortgagor has covenanted in its organizational
documents and/or the Mortgage Loan documents to own no significant asset other
than the related Mortgaged Property or Mortgaged Properties, as applicable, and
assets incidental to its ownership and operation of such Mortgaged Property.
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.
31. As of the date of origination and, to the Seller's knowledge, as of the
Cut-Off 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.
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.
I-6
<PAGE>
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 the 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, and, as of the Cut-Off Date, the Seller has no actual knowledge that
the related Mortgagor, the related lessee, franchisor or operator was not in
possession of such licenses, permits and authorizations.
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.
39. Except for Mortgagors under Ground Lease Loans, the related Mortgagor
(or its affiliate) has title in the fee simple interest in each related
Mortgaged Property.
40. The Mortgage Loan documents for each Mortgage Loan provide that each
Mortgage Loan is non-recourse to the related Mortgagor except that the related
Mortgagor accepts responsibility for fraud and/or other intentional
misrepresentation. Furthermore, the Mortgage Loan documents for each Mortgage
Loan provide that the related Mortgagor shall be liable to the lender for losses
incurred due to the misapplication or misappropriation of rents collected in
advance or received by the related Mortgagor after the occurrence of an event of
default, insurance proceeds or condemnation awards or any breach of the
environmental covenants in the related Mortgage Loan documents.
41. 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.
I-7
<PAGE>
SCHEDULE II
Ground Lease Representations and Warranties
1. Such Ground Lease or a memorandum thereof has been or will be duly
recorded and such Ground Lease permits the interest of the lessee thereunder to
be encumbered by the related Mortgage or, if consent of the lessor thereunder is
required, it has been obtained prior to the Closing Date.
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 that 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 and the closing date
of the related Disposition, 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 (a) 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 (b) 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 if the mortgagee acquires the lessee's rights
under the Ground Lease) that extends not less than (x) 20 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.
II-1
<PAGE>
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 (other than in
respect of a total or substantially total loss or taking) will be applied either
to the repair or restoration of all or part of the related Mortgaged Property,
with the mortgagee or a trustee appointed by it having the right to hold and
disburse such proceeds as repair or restoration progresses, or to the payment 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.
II-2
<PAGE>
<TABLE>
ANNEX A
<CAPTION>
(i) (ii) (ii) (ii) (ii) (ii)
Control Zip
Number Property Name Address City State Code
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
92 1087-1152 Holt Avenue 1087-1151 E. Holt Avenue Pomona CA 91767
87 215 Worchester 205-215 Worchester Road Framingham MA 01701
88 Corporate Square 7402 North 56th Street Tampa FL 33617
8 FelCor- Embassy Suites- Orlando 8978 International Drive Orlando FL 32819
13 FelCor- Embassy Suites- Piscataway 121 Centennial Avenue Piscataway NJ 08854
53 Four Corners Shopping Center 14099 FM 2920 Road Tomball TX 77375
86 GND-31200 Solon Road 31200 & 31250 Solon Road Solon OH 44139
34 Hartford Square North 10 Columbus Blvd Hartford CT 06106
26 LW-Charter Oak Mall 940 Silver Lane East Hartford CT 06118
130 Merrill Lynch Building 4201 Bridgeview Drive Ft. Worth TX 76109
17 North Andover Mills One High Street North Andover MA 01845
74 Northwest Medical Arts Building 5901 Colonial Drive Margate FL 33063
102 Norwest Bank Building 7375 West 52nd Avenue Arvada CO 80002
97 Regency Medical Park I 1340 Medical Park Drive Melbourne FL 32901
4 Schneider Automation Facility One High Street North Andover MA 01845
36 The Capital Shopping Center 114 Western Avenue Augusta ME 04330
11 Thomson Consumer Electronics Office 10330 North Meridian Street Indianapolis IN 46290
83 Vintage Faire North 3600 Sisk Road Modesto CA 95350
64 Westbluff Plaza 6990-6998 El Camino Real Carlsbad CA 92009
<CAPTION>
(i) (iii) (iv) (v) (vi) (vi) (vi) (vii) (viii)
Remaining
Cut-Off Original Remaining Amort
Date Monthly Term to Term to Term Original
Loan P&I Maturity Maturity Maturity for all Amort
Control Balance Payments Mortgage or ARD or ARD Date or balloon Term
Number ($) ($) (1) Rate (%) (Mos.) (Mos.) ARD loans (Mos.)
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
92 3,296,766 25,374 8.500% 120 118 09/01/10 360
87 3,596,472 27,681 8.500% 120 118 09/01/10 360
88 3,593,592 27,477 8.420% 120 116 07/01/10 360
8 25,459,300 207,988 8.615% 120 114 05/05/10 300
13 20,627,775 168,517 8.615% 120 114 05/05/10 300
53 7,354,824 56,907 8.380% 120 110 01/01/10 360
86 3,648,651 28,065 8.500% 120 119 10/01/10 360
34 10,490,000 81,481 8.600% 120 118 09/01/10 360
26 11,995,435 91,675 8.430% 60 59 10/01/05 360
130 1,627,791 12,533 8.500% 120 117 08/01/10 360
17 16,472,465 128,159 8.610% 60 56 07/01/05 360
74 4,541,847 34,664 8.400% 120 116 07/01/10 360
102 2,526,978 19,911 8.750% 120 116 07/01/10 360
97 2,696,177 20,493 8.360% 120 117 08/01/10 360
4 33,930,352 262,351 8.410% 120 116 07/01/10 360
36 10,022,779 77,412 8.530% 120 116 07/01/10 360
11 22,654,253 175,419 8.540% 144 137 04/01/12 360
83 3,898,483 29,643 8.375% 120 119 10/01/10 360
64 5,693,761 42,223 8.100% 120 118 09/01/10 360
<CAPTION>
(i) (viii) (ix) (x) (xi) (xii) (xiii) (xiv) (xv) (xvi) (xvii) (xvii)
Collater-
Remaining alized Is the
Amort Master and Cross loan a Letter Interest
Control Term Ground Servicing ARD Loan Defaulted defeasance of Reserve Reserve
Number (Mos.) Lease Fee Rate Loans Originator Loan Flag loan? Credit Loan Lockbox Funds
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
92 358 NA 0.0500% N ML NA Yes NA Yes Yes 109,349.29
87 358 NA 0.0500% N ML NA Yes NA Yes Yes 3,304.15
88 356 NA 0.0500% N ML NA Yes NA Yes 303,051.80
8 294 Yes 0.0550% N ML NA Yes NA Yes 288,456.00
13 294 Yes 0.0550% N ML NA Yes NA Yes 336,828.00
53 350 NA 0.0500% N ML NA Yes NA Yes 182,809.17
86 359 NA 0.0500% N ML NA Yes NA Yes 100,991.95
34 358 NA 0.0500% N ML NA No NA Yes 1,601,886.20
26 359 NA 0.0500% Y ML NA No NA Yes Yes 359,615.91
130 357 NA 0.0500% N ML NA Yes NA Yes 104,178.15
17 356 NA 0.0500% N ML NA Yes NA Yes 1,090,214.36
74 356 NA 0.0500% N ML NA No NA Yes 86,338.51
102 356 NA 0.0500% N ML NA Yes NA Yes 158,467.87
97 357 NA 0.0500% N ML NA No NA Yes 51,601.80
4 356 NA 0.0500% Y ML NA Yes NA Yes Yes 0.00
36 356 NA 0.0500% N ML NA Yes NA Yes 126,558.87
11 353 NA 0.0500% Y ML NA Yes NA Yes Yes 0.00
83 359 NA 0.0500% N ML NA Yes NA Yes 65,076.71
64 358 NA 0.0500% N ML NA Yes NA Yes 175,020.20
</TABLE>
<PAGE>
Annex B
(a) If the ML Mortgage Loans are sold pursuant to a Securitization in which
the Purchaser or one of its affiliates is the depositor, the Purchase Price
Adjustment Amount shall be computed as follows:
1. The ML Mortgage Loans and the Other Mortgage Loans will each be
reviewed as separate pools by the Rating Agencies rating the Securitization
(the "ML Pool" and the "FUNB Pool", respectively).
2. The ML Pool and the FUNB Pool will each be tranched based upon the
average "contributory" credit enhancement levels for each class, as
determined by the rating agencies utilized in the Securitization. (If only
one rating agency is used to rate the non-investment grade tranches of the
Securitization, then only the credit enhancement levels for each
corresponding non-investment grade tranche of each pool will be used). The
"contributory" credit enhancement levels for each class will be determined
in the same manner utilized by the parties in the FUNB 1999-C4 and FUNB
2000-C1 securitizations.
3. The Gross Proceeds of each individual pool will equal the sum of
the Tranche Proceeds for each of its tranches. The Tranche Proceeds for
each tranche will equal the tranche size determined according to #2 above
and the actual pricing for the corresponding Securitization tranche.
4. The ML Allocation will be determined by multiplying the Gross
Proceeds from the Securitization by a fraction, the numerator of which will
be the ML Pool Gross Proceeds and the denominator will be the sum of the ML
Pool Gross Proceeds and the FUNB Pool Gross Proceeds.
5. The Adjusted ML Allocation shall equal the ML Allocation minus the
Pro Rata Securitization Expenses.
6. The Pro Rata Securitization Expenses shall equal the sum of (i) the
sum of the custodial review fees and recordation fees incurred in
connection with the Securitization multiplied by a fraction, the numerator
of which is the number of ML Mortgage Loans and the denominator of which is
the number of ML Mortgage Loans and Other Mortgage Loans plus (ii) the sum
of all other expenses incurred in connection with the Securitization
multiplied by a fraction, the numerator of which is the aggregate principal
balance of the ML Mortgage Loans and the denominator of which is the sum of
the aggregate principal balance of the ML Mortgage Loans and the aggregate
principal balance of the Other Mortgage Loans.
7. The Purchase Price Adjustment Amount shall equal the Adjusted ML
Allocation minus $169,681,914.61.
(b) If the ML Mortgage Loans are sold in any other Disposition, the
Purchase Price Adjustment Amount will be computed as agreed to by the parties.
B-1
