- -------------------------------------------------------------------------------
LOAN ACQUISITION AGREEMENT
between
ALLEGIANCE CAPITAL, LLC
("Company")
and
ALLEGIANCE FUNDING CORP. I
("Depositor")
- -------------------------------------------------------------------------------
Dated as of August 1, 1998
TABLE OF CONTENTS
Page
----
ARTICLE ON
DEFINITIONS
Section 1.01 Defined Terms..........................................................................2
Section 1.02 Certain Rules of Construction..........................................................5
ARTICLE TWO
ACQUISITION OF LOAN ASSETS
Section 2.01 Conveyance of Loan Assets. ..........................................................7
Section 2.02 Authorization and Issuance of Common Stock by the Depositor. ..........................7
Section 2.03 Use of Proceeds........................................................................7
Section 2.04 Delivery of Loans; Filing of Financing Statements......................................8
Section 2.05 Servicing of Loans.....................................................................8
Section 2.06 Review of Loans........................................................................8
Section 2.07 Nature of Transfer. ..................................................................9
ARTICLE THREERE
PRESENTATIONS AND WARRANTIES
Section 3.01 Representations and Warranties of the Company.........................................10
Section 3.02 Representations and Warranties of the Depositor.......................................20
Section 3.03 Substitution or Repurchase of Loans. ................................................22
Section 3.04 Requirements for Purchase or Substitution of Loans....................................22
ARTICLE FOUR
COVENANTS OF THE COMPANY
Section 4.01 The Company Covenants. ...............................................................24
Section 4.02 Depositor Covenants. .................................................................27
Section 4.03 Assignment of Loan Assets. ...........................................................28
ARTICLE FIVE
CONDITIONS
Section 5.01 Conditions to the Depositor's Obligations. ...........................................29
Section 5.02 Conditions to the Company's Obligations. ............................................30
ARTICLE SIX
TERM AND TERMINATION
Section 6.01 Term. ................................................................................31
Section 6.02 Default by the Company. .............................................................31
i
ARTICLE SEVEN
GENERAL PROVISIONS
Section 7.01 Amendments............................................................................32
Section 7.02 Governing Law. ......................................................................32
Section 7.03 Notices...............................................................................32
Section 7.04 Separability Clause. ................................................................32
Section 7.05 Assignment. .........................................................................32
Section 7.06 Further Assurances....................................................................32
Section 7.07 No Waivers; Cumulative Remedies.......................................................33
Section 7.08 Binding Effect; Third Party Beneficiaries.............................................33
Section 7.09 Set-Off...............................................................................33
<FN>
EXHIBITS
Exhibit A Form of Company Certificate
Exhibit D Pool Criteria
</FN>
ii
This LOAN ACQUISITION AGREEMENT (this "Agreement"), dated as of August
1, 1998, is entered into between Allegiance Capital, LLC, a Delaware limited
liability company (the "Company"), and Allegiance Funding Corp. I, a Delaware
corporation (the "Depositor").
RECITALS
The Depositor has entered into, or is in the process of entering into,
a Trust Agreement, dated as of August 1, 1998 (the "Trust Agreement"), with
Manufacturers and Traders Trust Company, a New York banking corporation (the
"Trustee"), Allegiance Capital, LLC, as special servicer (the "Special
Servicer"), and Point West Capital Corporation, as servicer (the "Servicer"),
pursuant to which the Depositor, on behalf of the Trust, has caused or will
cause the issuance of various Series of Revolving Certificates and various
Series of Term Certificates.
In furtherance thereof, the Company and the Depositor are entering into
this Agreement to provide for, among other things, the acquisition by the
Depositor of all of the Company's right, title and interest in and to certain
Loan Assets, which the Depositor will, in accordance with the Trust Agreement,
subsequently be conveying to the Trustee from time to time for inclusion in the
Trust Estate. As a precondition to the effectiveness of this Agreement, the
Depositor, the Trustee, the Servicer, the Special Servicer and the Servicing
Advisor will enter into the Servicing Agreement to provide for the servicing of
the Loan Assets.
In addition, the Depositor will be conveying to the Trustee, among
other things, all of the Depositor's rights derived under this Agreement and the
Servicing Agreement, and the Company agrees that all representations,
warranties, covenants and agreements made by it in this Agreement with respect
to the Loan Assets and otherwise shall also be for the benefit of the Trustee
and all Certificateholders. In consideration of the Company's contribution and
sale and the Company's representations, warranties, covenants and agreements
under this Agreement, the Company will be receiving all of the Common Stock and
such other consideration as is required to be paid from time to time hereunder.
In consideration of the mutual agreements contained herein and of other
good and valuable consideration (the receipt and adequacy of which are hereby
acknowledged), the parties hereto agree as follows:
1
ARTICLE ONE
-----------
DEFINITIONS
-----------
Section 1.01 Defined Terms.
------------ --------------
Each capitalized term used herein but not otherwise defined has the
meaning assigned to such term in the Trust Agreement or, if not defined therein,
in the Servicing Agreement. For purposes of this Agreement, each of the
following terms has the meaning specified herein:
"Agreement": The meaning set forth in the introductory paragraph
hereof.
"Common Stock": All of the issued and outstanding shares of common
stock of the Depositor, which consist of one thousand (1,000) shares having a
par value of $0.01 per share.
"Company": The Person described in the introductory paragraph hereof
and all successors and permitted assigns of such Person under this Agreement.
"Company Address": 1700 Montgomery Street, Suite 250, San Francisco,
California 94111, or such other address furnished in writing to the Trustee, the
Certificateholders and the Depositor in accordance with the provisions hereof.
"Company Certificate": A certificate of the Company, substantially in
the form of Exhibit A.
----------
"Depositor": The Person described in the introductory paragraph hereof
and all successors and permitted assigns of such Person under the Trust
Agreement and this Agreement.
"Depositor Address": 1700 Montgomery Street, Suite 250B, San Francisco,
California 94111, or such other address furnished in writing to the Trustee, the
Certificateholders and the Company in accordance with the provisions hereof.
"Electronic Records": The electronic master records of all loans of the
Company or the Special Servicer similar to and including the Loans.
"Eligible Loan": A Loan that satisfies all of the criteria set forth in
Section 3.01(a) and does not cause the Loan Pool to violate the Pool Criteria.
"Environmental Laws": All federal, state, local and foreign statutes,
laws, regulations, ordinances, rules, judgments, orders, decrees, permits,
concessions, grants, franchises, licenses, agreements or other governmental
restrictions relating to the environment or to emissions, discharges or releases
of pollutants, contaminants, petroleum or petroleum products, chemicals or
industrial, toxic or hazardous substances or wastes into the environment,
including ambient air, surface water, ground water, or land, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of pollutants, contaminants, petroleum or
petroleum products, chemicals or industrial, toxic or hazardous substances or
wastes or the cleanup or other remediation thereof.
"Existing Indebtedness": Any indebtedness of the Company that relates
to pre-existing financings of any Loans that are conveyed hereunder.
2
"GAAP": With respect to any Loan, generally accepted accounting
principles in the United States consistently applied and, to the extent not in
conflict therewith, in the case of any accounting determination with respect to
the related Obligor(s), on a basis consistent with the financial statements of
such Obligor(s).
"Initial Delivery Date": The meaning set forth in the Trust Agreement.
"Lease": A lease for all or any portion of the real property comprising
the Mortgaged Property entered into with a third party, the lessee's interest in
which is held by an Obligor of the related Loan.
"Lien": Any security interest, lien, charge, pledge, equity or
encumbrance of any kind, other than any inchoate liens for taxes not yet due.
"Loan Assets": All of the Company's right, title and interest,
whenever existing or arising and whether now owned or hereafter acquired, in and
to the following: (a) the Loans and all rights with respect thereto, including
(i) all payments made or payable by or on behalf of any Obligor thereunder or
with respect thereto on or after the Cut-Off Date for such Loan, including all
periodic payments ( including all Scheduled Payments but excluding the portion
thereof representing interest accrued prior to the Cut-Off Date), all amounts
paid by any guarantor of a Loan, all payments made in respect of Defaulted
Loans, all Insurance Proceeds, all prepayments fees, all premiums, and all late
payment or other incidental charges or fees (including late fees, collection
fees and bounced check charges) and (ii) all guaranties, Insurance Policies, and
other agreements or arrangements of whatever character from time to time
supporting or securing payment of any Loan; (b) the Loan Files; (c) the security
interests and other Liens of the Company in the Loan Collateral; and (d) all
income and proceeds of the foregoing or relating thereto.
"Loan Collateral": The tangible and intangible assets (including
accounts, equipment, general intangibles, inventory, and real property) that
secure, directly or indirectly, all or any portion of a Loan.
"Loan File": With respect to any Loan, a file containing: (a) all of
the items on the Loan Funding Checklist for such Loan, including the original
manually executed credit agreement(s), loan agreement(s), promissory note(s),
Mortgage(s), assignment(s), consent(s), estoppel(s), guaranty(ies), security
agreement(s), and other agreements, documents and instruments (including any
Insurance Policies) evidencing or otherwise relating to such Loan, the original
credit application executed by the Obligor(s) thereunder, and all other
agreements, documents, and instruments required by the Loan Funding Checklist
(including any share certificates and related stock powers); (b) the related
loan application; (c) the related credit memorandum; (d) the related Valuation;
(e) the related ***; and (f) all related filings (including Uniform Commercial
Code filings), notices, transfers, assignments (including assignments of all
related Mortgages (in recordable form and duly executed) and Notes), stock or
other appropriate powers or instruments of transfer (duly executed in blank) and
recordings as required under Section 3.01(a)(ix) hereof, the Trust Agreement or
applicable law (i) to perfect the sale by the Company to the Depositor of such
Loan and the related Loan Assets being acquired hereunder, (ii) to assign to the
Trustee all Uniform Commercial Code financing statements perfecting the security
interest of the Depositor (as assignee of the Company) in the related Loan
Collateral, (iii) to perfect the first priority security interest of the Trustee
in the Depositor's rights therein, and (iv) to cause any related Loan Collateral
(including any related Mortgages) to name the Trustee as lienholder in
accordance with the provisions of the Trust Agreement.
"Loan Funding Checklist": The checklist of all required documentation
relating to any Loan, substantially in the form of Exhibit B.
---------
***Confidential information omitted pursuant to a request for confidential
treatment filed separately with the Securities and Exchange Commission.
3
"Mortgage": The mortgage, deed of trust or other instrument securing a
Loan, which creates a first lien on an unsubordinated fee, leasehold or ground
leasehold estate on real property.
"Mortgaged Property": Any real property (irrespective of whether a fee
or a leasehold estate) that is encumbered by a Mortgage and secures, directly or
indirectly, the repayment of all or any portion of any Loan or any guaranty
thereof or any debt evidenced by a Note.
"Note": The note or other evidence of indebtedness of an Obligor
evidencing a Loan.
"Pending Credit Schedule": A schedule, substantially in the form of
Exhibit C attached hereto, setting forth, with respect to each Loan, a summary
- ---------
of the financial terms of such Loan, a summary of the relevant documents and the
structure of the Loan and the security therefor.
"Pension Plans": The meaning set forth in Section 3.01(c)(xvi).
"Permitted Loan Collateral Liens": Collectively, with respect to any
Loan and the related Loan Collateral therefor: (a) Liens that are identified as
existing on the date of the related Loan closing or that are permitted under the
terms of the related Loan documents to arise thereafter, in each case as
approved in writing by the Depositor and the Certificateholder Agent; (b)
statutory Liens of landlords, carriers, warehousemen, mechanics, or materialmen,
and other Liens (other than Liens in connection with any Environmental Law and
any Lien imposed under ERISA) imposed by law and incurred in the ordinary course
of business of any related Obligor for sums either not yet delinquent or being
contested in good faith by appropriate proceedings promptly instituted and
diligently conducted and for which adequate reserves have been established in
accordance with GAAP (if so required); (c) Liens (other than Liens in connection
with any Environmental Law and any Lien imposed under ERISA) incurred or
deposits made in the ordinary course of business of any related Obligor in
connection with workers' compensation, unemployment insurance, and other types
of social security, or to secure the performance of statutory obligations,
surety and appeal bonds, leases, or other similar obligations; (d) non-material
easements, rights-of-way, restrictions, and other similar charges or
encumbrances not interfering in any material respect with the ordinary course of
business of any Obligor; (e) banker's Liens in the nature of rights of setoff
arising in the ordinary course of business of any related Obligor; (f) Liens on
property of any related Obligor to another related Obligor securing debt of the
one party owing to the other (but only if such debt is Loan Collateral); (g)
Liens for taxes, assessments or other governmental charges or statutory
obligations that are not delinquent or remain payable without any penalty or
that are being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted and for which adequate reserves have been
established in accordance with GAAP (if so required); and (h) Liens created by
the Loan documents in favor of the Company.
"Pool Criteria": The criteria set forth on Exhibit D.
----------
"Program Guidelines": The underwriting guidelines of the Company with
respect to the origination of the Loans, which are as set forth on Exhibit E
---------
attached hereto; provided that "Program Guidelines" shall not include any
--------
Proposed Revisions (as that term is defined in Section 4.01(r)) if the same is,
-------
or is deemed, rejected by the Depositor, the Rating Agency or the
Certificateholder Agent in accordance with Section 4.01(r).
-------
"Proposed Revisions": The meaning set forth in the Section 4.01(r).
4
"Qualified Insurer": An insurance company duly qualified as such under
the laws of the states in which any applicable Loan Collateral is located, duly
authorized and licensed in such states to transact the applicable insurance
business and to write the insurance provided, and which is rated as to claims
paying ability as follows: (a) with respect to pre-need insurance for customers
of Obligors, at least *** or, in the case of ***; (b) with respect to life
insurance assigned by an Obligor under a Loan, at least *** or, if in excess of
the applicable state guaranty fund limits, at least ***; and (c) with respect to
all other insurance, at least ***.
"Servicer": The Person described in the recitals hereof until a
successor Person shall have (if applicable) become the Servicer pursuant to the
applicable provisions of the Servicing Agreement, whereupon "Servicer" shall
mean such successor Person.
"Servicing Advisor": The Person described in the introduction of the
Servicing Agreement until a successor Person shall have (if applicable) become
the Servicing Advisor pursuant to the applicable provisions of the Servicing
Agreement, whereupon "Servicing Advisor" shall mean such successor Person.
"Special Servicer": The Person described in the recitals hereof until a
successor Person shall have (if applicable) become the Special Servicer pursuant
to the applicable provisions of the Servicing Agreement, whereupon "Special
Servicer" shall mean such successor Person.
***
"Standard Forms": The forms of the documents attached hereto as Exhibit
-------
G with such changes thereto, if any, as are from time to time approved by both
- -
the Certificateholder Agent and the Rating Agency.
"Substitute Loan": The meaning set forth in Section 3.04(b).
"Transfer Taxes": The meaning set forth in Section 3.01(a)(viii).
"Trust Agreement": The meaning set forth in the recitals hereof.
"Trustee": The Person described in the recitals hereof until a
successor Person shall have (if applicable) become the Trustee pursuant to the
applicable provisions of the Trust Agreement, whereupon "Trustee" shall mean
such successor Person.
"Valuation": A valuation of an Obligor's business and assets comprising
the Loan Collateral, as prepared by an experienced and competent business
appraiser acceptable to the Certificateholder Agent and which, initially, shall
include ***.
Section 1.02 Certain Rules of Construction.
----------- ------------------------------
Unless the context of this Agreement clearly requires otherwise: (a)
references to the plural include the singular and to the singular include the
plural; (b) references to any gender include any other gender; (c) the words
"include" and "including" are not limiting; (d) the word "or" has the inclusive
meaning represented
***Confidential information omitted pursuant to a request for confidential
treatment filed separately with the Securities and Exchange Commission.
5
by the phrase "and/or"; (e) the words "hereof," "herein," "hereby," and
"hereunder," and any other similar words, refer to this Agreement as a whole and
not to any particular provision hereof; and (f) article, section, subsection,
clause, exhibit, and schedule references are to this Agreement. Article,
section, and subsection headings are for convenience of reference only, shall
not constitute a part of this Agreement for any other purpose, and shall not
affect the construction of this Agreement. All exhibits and schedules attached
hereto are incorporated herein by this reference. Any reference herein to this
Agreement or any other agreement, document, or instrument includes all permitted
alterations, amendments, changes, extensions, modifications, renewals, or
supplements thereto or thereof, as applicable.
6
ARTICLE TWO
-----------
ACQUISITION OF LOAN ASSETS
--------------------------
Section 2.01 Conveyance of Loan Assets.
------------ ---------------------------
(a) In consideration of the Depositor's delivery to or upon the order
of the Company of the Common Stock and the net proceeds from the initial sale of
the Certificates, the Company does hereby sell, transfer, contribute, assign,
set over and otherwise convey to the Depositor, without recourse (except as
provided in Sections 2.06, 3.03 and 3.04), all of the Company's right, title and
interest now existing or hereafter arising in and to the Loan Assets related to
the Loans listed on each Loan Schedule. The Company, from time to time
hereafter, shall sell and contribute to the Depositor all of the Company's
right, title and interest then existing or thereafter arising in and to a
Funding Group or Substitute Loans (and, in each case, the related Loan Assets)
pursuant to a Company Certificate under the circumstances and in accordance with
the procedures set forth herein and in the Trust Agreement. The Company agrees
that all Loans sold, contributed, transferred and conveyed to the Depositor
hereunder shall be Eligible Loans and that all Loan Assets acquired by the
Depositor shall conform with all of the requirements hereof. The Company hereby
acknowledges that each transfer of the Loan Assets to the Depositor is absolute
and irrevocable, without reservation, retention of any interest, or recourse to
the Company, except as provided in Sections 2.06, 3.03 and 3.04.
(b) If, for any reason, the Company retains any portion of the Loan
File pertaining to any Loan sold to the Depositor hereunder, it shall hold such
documents as the Special Servicer in trust for the benefit of the Depositor and
the Trustee. The possession by the Company of any Loan File (or any portion
thereof) pertaining to any Loan is, and shall be, at the will of the Depositor
and the Trustee for the sole purpose of servicing such Loan Assets, and such
retention and possession by the Company is, and shall be, in a custodial
capacity only. Any Loan File or portion thereof relating to any Loan shall be
segregated from the books and records of the Company and shall be marked
appropriately to reflect clearly the sale of the related Loan Assets to the
Depositor and the conveyance thereof to the Trust.
Section 2.02 Authorization and Issuance of Common Stock by the
------------ --------------------------------------------------
Depositor.
- ----------
Subject to all the terms and conditions hereof and in reliance upon the
representations, warranties and covenants set forth in this Agreement, the
Depositor shall issue, as of the Initial Delivery Date, the Common Stock to the
Company. In accordance with all of the terms and conditions hereof: (a) the
Depositor shall issue the Common Stock in the name of, and shall deliver the
Common Stock directly to, the Company; and (b) the Company shall obtain the
Common Stock directly from the Depositor.
Section 2.03 Use of Proceeds.
------------ ----------------
Subject to all the terms and conditions hereof and in reliance upon the
representations, warranties and covenants set forth herein, the Depositor shall,
on the Initial Delivery Date and on any Acquisition Date, repay the Existing
Indebtedness, if any, with the proceeds of the sale of any Certificates
simultaneously upon the issuance of such Certificates.
7
Section 2.04 Delivery of Loans; Filing of Financing Statements.
------------ --------------------------------------------------
(a) In connection with each Funding, the Company shall deliver to the
Depositor, the Certificateholder Agent and the Rating Agency a Pending Credit
Schedule, ***, a Funding Report and a Company Certificate in accordance with
Sections 4.03 and 4.04 of the Trust Agreement.
(b) Promptly upon the transfer by the Company to the Depositor of the
Loan Assets, the Company shall notify all Obligors in writing to send all
payments in respect of the Loans directly to the Lockbox Account.
(c) In connection with the Depositor's acquisition of any Loan Assets,
the Company, on behalf of the Depositor, shall deliver to the Trustee in
accordance with Section 4.06 of the Trust Agreement the original related Loan
Files and shall deliver to the Servicer and the Special Servicer a copy of such
Loan Files to assist them in their respective servicing obligations (as provided
under the Transaction Documents). In addition, in connection with the
Depositor's acquisition of any Loan Assets, the Company shall make, file, or
record, as applicable, on or prior to the acquisition of such Loan Assets all
filings (including Uniform Commercial Code filings), notices, transfers,
assignments (including assignments of all related Mortgages (in recordable form
duly executed) and Notes), stock or other appropriate powers or instruments of
transfer (duly executed in blank) and recordings as required under Section
3.01(a)(ix) hereof, the Trust Agreement or applicable law (i) to perfect the
sale by the Company to the Depositor of the Loans and the related Loan Assets
being acquired hereunder, (ii) to assign to the Trustee all Uniform Commercial
Code financing statements perfecting the security interest of the Depositor (as
assignee of the Company) in the related Loan Collateral, (iii) to perfect the
first priority security interest of the Trustee in the Depositor's rights
therein, and (iv) to cause any related Loan Collateral (including any Mortgages)
to name the Trustee as lienholder in accordance with the provisions of the Trust
Agreement.
(d) In connection with the Depositor's acquisition of any Loan Assets,
the Company shall promptly, at its own expense, cause all Electronic Records and
other records maintained by it to be marked to show that the Loan Assets have
been acquired by the Depositor in accordance herewith and subsequently conveyed
by the Depositor to the Trustee in accordance with the Transaction Documents..
Section 2.05 Servicing of Loans.
------------ -------------------
The Servicer and the Special Servicer shall service all Loan Assets for
the benefit of the Depositor (and its successors and assigns), the Trustee and
the Certificateholders, in accordance with the terms and conditions of the
Transaction Documents. Notwithstanding the foregoing, the Company acknowledges
and agrees that its obligations hereunder are independent of any obligations it
may have as the Special Servicer and that its obligations under this Agreement
will continue in full force and effect, whether or not it is acting as the
Special Servicer, until termination of this Agreement in accordance with Section
6.01.
Section 2.06 Review of Loans.
------------ ----------------
If the Company discovers or is notified by the Depositor or by the
Trustee on behalf of the Certificateholders or by the Certificateholder Agent
that any material document in any Loan File (including any Note, Mortgage or
other document specified in clause (f) of the definition of "Loan File"
contained herein) is missing or defective (that is, mutilated, damaged, defaced,
incomplete, improperly dated, clearly forged or otherwise physically altered) in
any material respect, the Company shall correct or cure such omission, defect or
other irregularity within forty-five (45) days from the date the Company
discovered, or
***Confidential information omitted purusant to a request for confidential
treatment filed separately with the Securities and Exchange Commission.
8
is notified by the Depositor or the Trustee of, such omission or defect.
Otherwise, the Company shall repurchase such Loan from the Depositor or replace
such Loan with a Substitute Loan in accordance with Sections 3.03 and 3.04.
Section 2.07 Nature of Transfer.
------------ -------------------
(a) The transfers of Loan Assets by the Company to the Depositor
pursuant to this Agreement are intended to be absolute assignments of all of the
Company's right, title and interest in, to and under such Loan Assets, without
recourse (except as provided in Sections 2.06, 3.03 and 3.04), for all purposes.
(b) If the transfer of any or all of the Loan Assets from the Company
to the Depositor is deemed for any reason to be a secured financing, then the
Company shall be deemed hereunder to have granted to the Depositor, and the
Company does hereby grant to the Depositor, a first priority security interest
in all of the Loan Assets. For purposes of such grant, this Agreement shall
constitute a security agreement under applicable law.
(c) If the transfer contemplated by this Agreement is deemed for any
reason to be less than a transfer of complete legal title of all of the Loan
Assets, the parties hereto nevertheless intend that this Agreement operate to
transfer all of the Loan Assets to the Depositor.
9
ARTICLE THREE
-------------
REPRESENTATIONS AND WARRANTIES
------------------------------
Section 3.01 Representations and Warranties of the Company.
------------ ----------------------------------------------
(a) Subject to any exceptions reflected in a related Funding Report
that are approved by the Certificateholder Agent, the Company hereby makes the
following representations and warranties as to each Loan to the Depositor and
for the benefit of the Trustee and the Certificateholders, on which the
Depositor relies in acquiring the Loan and the other related Loan Assets, the
Trustee relies in accepting the Trust Estate and authenticating the Certificates
and the Certificateholders rely in acquiring the Certificates and making
advances under the Transaction Documents. Such representations and warranties
speak, unless otherwise indicated, as of the Acquisition Date with respect to
such Loan, but such representations and warranties shall survive any subsequent
transfer, assignment, contribution or conveyance of such Loan.
(i) The information set forth with respect to such Loan in the
Loan Schedule is true and correct as of the related Cut-Off Date and
Acquisition Date;
(ii) Such Loan is a senior secured commercial loan originated
in the United States of America by the Company in the ordinary course
of the Company's business. Such Loan is denominated and payable in
United States dollars. Such Loan is fully and properly executed by the
parties thereto. The rights with respect to such Loan are assignable by
the lender thereunder and its assignees without the consent of or
notice to any Person.
(iii) The Company shall hav delivered to the Depositor either
(A) the original manually executed Note relating to such Loan, all
other original documents evidencing such Loan (with the exception of
such original documents as have not yet been returned from the
appropriate filing/recordation office, which documents shall be
forwarded to the Trustee within one hundred twenty (120) days of the
date of the closing of such Loan; provided that, if such original
---------
documents are not forwarded to the Trustee on or before such date, then
the Company shall provide written notice to the Trustee and the
Certificateholder Agent of such fact, such written notice to provide
the circumstances of such failure and what steps the Company is taking
or is able to take in respect thereof (depending on information
supplied by the applicable filing/recordation office)), and the other
items comprising the Loan File related thereto or (B) executed Escrow
Instructions, or other evidence acceptable to the Depositor, the
Trustee and the Certificateholder Agent that such items have been
obtained from the Obligor and are being held in escrow; with delivery
of all original documents evidencing such Loan and the related Loan
File to be made within two (2) Business Days following the related
Acquisition Date (with the exception of such original documents as have
not yet been returned from the appropriate filing/recordation office,
which documents shall be forwarded to the Trustee within one hundred
twenty (120) days of the date of the closing of such Loan; provided
--------
that, if such original documents are not forwarded to the Trustee on or
before such date, then the Company shall provide written notice to the
Trustee and the Certificateholder Agent of such fact, such written
notice to provide the circumstances of such failure and what steps the
Company is taking or is able to take in respect thereof (depending on
information supplied by the applicable filing/recordation office)).
10
(iv) There is only one original manually executed counterpart
of the Note relating to such Loan, which has been delivered to the
Trustee, and the Company's Electronic Records and other records have
been marked as provided in Section 2.04(d).
(v) Such Loan was not originated in, nor is it subject to the
laws of, any jurisdiction, the laws of which would make unlawful the
sale, transfer or assignment of such document under any of the
Transaction Documents, including any repurchase in accordance with the
Transaction Documents.
(vi) Such Loan is, and on the related Cut-Off Date and
Acquisition Date will be, in full force and effect in accordance with
its respective terms and neither the Company nor any Obligor has or
will have suspended or reduced any payments or obligations due or to
become due thereunder by reason of a default by the other party to such
Loan; and, as of the related Acquisition Date: (A) such Loan is not a
Delinquent Loan or a Defaulted Loan and (B) there are no proceedings
pending, or to the best of the Company's knowledge, threatened,
asserting the insolvency of an Obligor; and there are no proceedings
pending, or to the best of the Company's knowledge, threatened wherein
the Obligor or any governmental agency has alleged that such Loan is
illegal or unenforceable or which could reasonably be expected to have
a material adverse effect on the financial condition of the related
Obligor or the enforceability of the Loan; and no advances were made to
qualify the Loan under the eligibility criteria contained in this
Section 3.01.
(vii) To the best of the Company's knowledge,there has been no
advance of funds by a party other than the related Obligor(s) for the
payment of any amount required in respect of such Loan.
(viii) Such Loan is the valid, binding and legall enforceable
obligation of the parties thereto, enforceable in accordance with its
terms, subject, as to enforcement, to applicable bankruptcy,
insolvency, reorganization and other similar laws of general
applicability relating to or affecting creditors' rights generally and
to general principles of equity regardless of whether enforcement is
sought in a court of law or equity.
(ix) All related filings (including Uniform Commercial Code
filings and further including such Uniform Commercial Code filings
naming the Trustee as assignee of secured party with respect to the
Obligors under such Loan), notices, transfers, assignments (including
assignments of all related Mortgages (in recordable form and duly
executed)), stock or other appropriate powers or instruments of
transfer (duly executed in blank), recordings and other actions as
required under the Trust Agreement or applicable law to perfect the
first priority security interest of the Depositor in such Loan and the
related Loan Assets being acquired hereunder, to assign such security
interest to the Trustee, to perfect the first priority security
interest of the Trustee in the Depositor's rights therein and to cause
any related Loan Collateral (including any related Mortgages) to name
the Trustee as lienholder in accordance with the provisions of the
Trust Agreement have been accomplished and are in full force and effect
or will be accomplished within the time period specified in the
Transaction Documents. Such Loan creates a valid, subsisting and
enforceable first priority lien upon and security interest in the
related Loan Collateral subject only to Permitted Loan Collateral
Liens, securing such Loan in favor of the Company. Such Loan together
with the related lien and security interest in the Loan Collateral has
been duly assigned by the Company to the Depositor and by the Depositor
to the Trustee.
11
(X) Each Loan (except as described below) is secured by a
related Mortgage, which is a valid and enforceable first lien on the
fee or leasehold estate (as indicated in the exhibit/attachment to the
Mortgage) of the related Mortgage Property, which estate is free and
clear of all other encumbrances and liens, except (in the case of a
mortgage of a fee estate) for (A) liens for real estate taxes and
special assessments not yet due and payable, (B) covenants, conditions
and restrictions, rights of way, easements and other matters of public
record as of the date of recording of such Mortgage, such exceptions
appearing of record being acceptable to commercial mortgage lending
institutions generally or specifically (i.e., not through a general
exception or exclusion) reflected in the title policy made in
connection with the origination of the related Loan, (C) other matters
to which like properties are commonly subject which do not individually
or in the aggregate, materially interfere with the benefits of the
security intended to be provided by such Mortgage, or (D) any other
lien as approved by the Company, the Depositor and the
Certificateholder Agent.
(xi) Such Loan is not cross-collateralized with any other
obligation other than the following: (A) a Loan that is a whole loan
and not a participation interest; or (B) an obligation not a Loan to
the extent that: (1) such obligation is a loan originated by the
Company; (2) such obligation has a debt service coverage ratio, fixed
charge coverage ratio or other similar measure analogous to the
Coverage Ratio applicable to the Loan of not less than ***;(3) the
proceeds of such other obligation are to be used solely for (y)
acquiring additional death care establishments or real property or
making any improvements relating thereto or (z) constructive business
purposes of the related Obligor, provided that no proceeds of any such
--------
obligation are used by or distributed to any Affiliate of the related
Obligor other than such Person's wholly owned subsidiaries; (4) such
other obligation will be serviced solely by the Servicer; (5) the
Company shall have entered into an intercreditor agreement in form and
substance reasonably satisfactory to the Certificateholder Agent and
the Rating Agency with the related creditor (or the assignee thereof)
of such other obligation; and (6) the Company shall have provided all
information with respect to such other obligation as shall have been
reasonably requested by the Certificateholder Agent and the Rating
Agency.
(xii) In the case of a Mortgage of a fee or leasehold estate in
connection with such Loan, the related Mortgaged Property is covered by
an ALTA or comparable lender's title insurance policy, issued by a
Qualified Insurer, insuring the Company, its successors and assigns
that the related Mortgage is a valid first lien on such Mortgaged
Property, subject (in the case of a Mortgage on a fee estate) only to
the matters set forth in Section 3.01(a)(x) and Permitted Loan
Collateral Liens. Such title insurance policy is in full force and
effect, is freely assignable to each of the Depositor and the Trustee,
as assignee of the Loan using a 104 or similar endorsement which
endorsement insures the holder of record that there is no prior
assignment of the Loan. Such title insurance policy insures the
Mortgaged Property in the amount required by the Program Guidelines.
The policy does not contain any special exceptions (other than standard
exclusions and endorsements) for zoning and uses or other special
exceptions (other than survey exceptions) that would render the
Mortgaged Property unmarketable. No claim has been made under such
title insurance policy. The Company has not done, by act or omission,
anything, and has no knowledge of any fact, which would materially
impair the coverage of any such title insurance policy. The title
policy has been marked to delete the intervening lien exception and all
premiums for such policy, including any premiums for endorsements and
special endorsements, have been paid.
(xiii) Any Mortgaged Property related to such Loan is insured by
a fire and extended perils insurance policy, issued by a Qualified
Insurer, providing coverage against loss or damage sustained by reason
of fire, lightning, windstorm, hail, explosion, riot, riot attending a
strike, civil
***Confidential information omitted pursuant to a request for confidential
treatment filed separately with the Securities and Exchange Commission.
12
commotion, aircraft, vehicles and smoke, and, to the extent required as
of the date of origination by the Company consistent with its
commercial lending practices and the Program Guidelines, against other
risks insured against by Persons operating like properties in the
locality of the Mortgaged Property, in an amount not less than that
specified by the Program Guidelines. The primary related Obligor also
maintains business interruption and rental continuation coverage
sufficient to protect against loss under a policy issued by a Qualified
Insurer in accordance with the Program Guidelines. If any portion of
the Mortgage Property is in an area identified by any federal
governmental department, agency or authority as having special flood
hazards, and flood insurance is available, a flood insurance policy
meeting the current guidelines of the Federal Insurance Administration
is in effect with a generally acceptable insurance carrier, in an
amount representing coverage not less than the least of the maximum
amount of insurance available under the Flood Disaster Protection Act
of 1973, as amended. All such insurance policies contain a standard
loss payable endorsement naming the Company, its successors and assigns
(including subsequent owners of the Loan), as mortgagee, and may not be
reduced, terminated or cancelled without thirty (30) days prior written
notice to the mortgagee. No such notice has been received by the
insured. All premiums on any such policy have been paid for at least
six (6) months following the related Loan closing date. The related
Mortgage obligates the related Obligor to maintain all such insurance
and, at such Obligor's failure to do so, authorizes the mortgagee to
maintain such insurance at the Obligor's cost and expense and to seek
reimbursement therefor from such Obligor.
(xiv) Such Loan was originated by the Company and each related
Loan Asset satisfies in all material respects the Program Guidelines.
(xv) The proceeds of such Loan have been fully disbursed and
there is no requirement for future advances thereunder and any and all
requirements stated in the commitment letter between the Company and
the related Obligors and the closing instructions of the Company as to
the escrow of any funds have been complied with except as described in
the related Loan File and approved in writing by the Depositor and the
Certificateholder Agent. Except for any escrowed funds deposited
pursuant to the related Loan documents, no cash deposits, letters of
credit, pledged account, surety bonds or other cash equivalent items
are held to assure compliance by any related Obligor with any of its
obligations in respect of the Loan.
(xvi) The Coverage Ratio relating to such Loan is not less
than ***.
(xvii) No Obligor with respect to such Loan is the United States
of America or any state, or agency, department or instrumentality or
political subdivision of the United States of America or any State.
(xviii) All requirements of any federal, state or local law
(including usury, truth in lending, real estate settlement procedures,
consumer credit protection, equal credit opportunity or disclosure
laws) applicable to the origination, conveyance and servicing of such
Loan have been complied with.
(xix) Such Loan is not and, to the best of the Company's
knowledge, will not be subject to any right of rescission, set-off,
claim, counterclaim or defense, including the defense of usury, whether
arising out of transactions concerning such Loan or otherwise; the
operation of any of the terms of such Loan or the exercise by the
Company or any related Obligor of any right under such Loan will not
render such Loan unenforceable in whole or in part, nor subject to any
claim, counterclaim, setoff, recision or defense, and no such right of
rescission, set-off, claim, counterclaim
***Confidential information omitted purusant to a request for confidential
treatment filed separately with the Securities and Exchange Commission.
13
or defense has been asserted with respect thereto; provided that
--------
certain rights or defenses may exist under applicable law which,
individually or in the aggregate, do not make the remedies available to
the Company and its assignees with respect to such Loan inadequate for
the practical realization of the benefits provided thereby.
(xx) Proceeds of the Loans may be used for acquisitions, debt
refinancing, stock purchase, distribution and other legal purposes
specified in the Program Guidelines or otherwise approved by the
Certificateholder Agent. Except as expressly previously disclosed to
the Depositor and the Certificateholder Agent, to the best of the
Company's knowledge, the proceeds of such Loan have not been and will
not be used to satisfy, in whole or in part, any debt owed or owing by
any Obligor to any of its Affiliates.
(xxi) All existing indebtedness of the related primary Obligor
of such Loan shall be repaid prior to or concurrently upon the closing
of such Loan; provided that, subject to Section 3.01(a) (xvi),
--------
*** consistent with the Program Guidelines and as permitted under the
related Loan documents is permitted.
(xxii) There is no default, breach, violation or event of
acceleration existing with respect to such Loan, 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 default, breach, violation or event of acceleration,
exists with respect to such Loan.
(xxiii) Such Loan is evidenced by document substantially in
the form of the Standard Forms. The related Note, the related Mortgage
and the other related Loan documents contain customary and enforceable
provisions such as to render the rights and remedies of the holder
thereof adequate for the realization against each related Obligor's
interest in the related Loan Collateral. Such Loan has a stated
maturity. Such Loan has scheduled monthly payments and an amortization
schedule that comply with the Program Guidelines; without limiting the
foregoing, the grace period with respect to any scheduled monthly
payment due in respect of such Loan is not greater than five (5) days.
(xxiv) To the extent such Loan is secured by a Mortgage that
is a deed of trust, a trustee, duly qualified under applicable law to
serve as such, has either been properly designated and currently so
serves or may be substituted in accordance with applicable law. Except
in connection with a trustee's sale after default by the related
Obligor, no fees or expenses are payable by the Company or the
Depositor to such trustee.
(xxv) With respect to each Loan which is secured by the
interest of an Obligor as lessee under a Lease, unless otherwise
approved in writing by the Depositor and the Certificateholder Agent:
(1) The lessor under such Lease has agreed in such
Lease or in another writing contained in the Loan File, or the
related Loan provides for the Obligor's agreement, that such
Lease may not be amended, modified, surrendered, cancelled or
terminated in any manner that would be materially adverse to
the Company without the prior written consent of the Company;
***Confidential information omitted pursuant to a request for confidential
treatment filed separately with the Securities and Exchange Commission.
14
(2) Such Loan provides that the original term of the
related Lease (plus all consecutive renewal terms which may be
exercised, and which under all circumstances would be
enforceable, by the Company, the Depositor and the Trustee, as
appropriate) extends beyond the stated maturity date for such
Loan, unless otherwise approved in writing by the Depositor
and the Certificateholder Agent;
(3) Such Lease or related lease estoppel requires the
lessor thereunder to give to the Company notice of any default
by the lessee, the opportunity to cure any such default, and
the right to enter into a new lease on substantially the same
terms as the Lease following a rejection thereof by a trustee
or debtor-in-possession in any bankruptcy or insolvency
proceeding or a termination of such Lease as a result of an
incurable default; and
(4) Such Lease is in full force and effect and no
default has occurred under such Lease, nor is there any
existing condition which, but for the passage of time or the
giving of notice, would result in a default under the terms of
such Lease.
(xxvi) The Company has duly fulfilled all obligations to be
fulfilled on the lender's part under or in connection with the
origination, acquisition and assignment of the Loan Assets related to
such Loan, including giving any notices or consents necessary to effect
the acquisition of such Loan Assets by the Depositor, and has done
nothing to impair the rights of the Trust Estate and the
Certificateholders in such Loan. The Company has obtained all necessary
licenses, permits and charters required to be obtained by the Company,
which failure to obtain would render any material portion of the Loan
documents unenforceable or would have a material adverse effect on the
Depositor or the Certificateholders.
(xxvii) Such Loan and the related Loan Assets have not been
sold, transferred, assigned or pledged by the Company to any Person
other than the Depositor (except for security interests in the Loan
Assets which shall be terminated on or prior to the related Cut-Off
Date), and upon execution and delivery of this Agreement by the Company
and the contemporaneous repayment of the Existing Indebtedness, the
Depositor will have all of the right, title and interest in and to the
Loan Assets, free and clear of all liens and encumbrances and any
interest of the Company or its successors, except for the interests of
any related Obligors in connection with the Loan and the lien of the
Trustee under the Trust Agreement. The sale to the Depositor of the
such Loan and the related Loan Assets does not violate the terms or
provisions of any loan or any other agreement to which the Company is a
party or by which it is bound.
(xxviii) The sale, transfer, assignment and conveyance of such
Loan and the related Loan Assets by the Company pursuant to this
Agreement is not subject to and will not result in any tax, fee or
governmental charge payable by the Company to any federal, state or
local government ("Transfer Taxes") other than Transfer Taxes that have
or will be paid by the Company as due. If the Depositor receives actual
notice of any Transfer Taxes arising out of the transfer, assignment
and conveyance of such Loan or the related Loan Assets, on written
demand by the Depositor, or upon the Company otherwise being given
notice thereof, then the Company shall pay, and otherwise indemnify and
hold the Depositor, the Trustee and the Trust harmless, on an after-tax
basis, from
15
and against any and all such Transfer Taxes (it being understood that
the Certificateholders, the Trustee and the Trust shall have no
obligation to pay such Transfer Taxes).
(xxix) As of the related Acquisition Date, such Loan has not
been prepaid in full or in part (except for any partial prepayment
reflected in the Loan Balance as shown on the Loan Schedule).
(xxx) Such Loan has been originated at par (100% of the Note
amount) and all fees paid to the Company in connection with the
origination of such Loan have been disclosed in the related Loan File.
(xxxi) Such Loan has a final Scheduled Payment on or before
the date that is six months prior to the latest Series Termination
Date.
(xxxii) Such Loan has (A) an amortization schedule of not more
than *** months and (B) a remaining term of at least *** months and
not more than *** months.
(xxxiii) Except as disclosed in the Funding Report relating to
such Loan, to the best of the Company's knowledge, there is no
hazardous substance, or proceeding for remediation of any hazardous
substance, affecting any Mortgaged Property related to such Loan and
there is no material violation of any environmental law, regulation or
order affecting any Mortgaged Property relating to such Loan.
(xxxiv) There are no delinquent property taxes or similar
charges on or affecting any Mortgaged Property relating to such Loan.
(xxxv) Any improvements on any Mortgaged Property relating to
such Loan are in good repair, and, to the best of the Company's
knowledge, since the origination of such Loan, the operator of such
Mortgaged Property has maintained all material licenses, permits and
qualifications necessary for the operation of the Mortgaged Property,
and the Company has not received any notice of any proceeding to revoke
or suspend any such license, permit or qualification.
(xxxvi) Such Loan has been serviced solely by the Company or
the Servicer.
(b) The Company hereby makes, as of each Acquisition Date, the
following representations and warranties to the Depositor, and for the benefit
of the Trustee and the Certificateholders, on which the Depositor relies in
acquiring the Loan Assets and selling the Certificates, the Trustee relies in
accepting the Trust Estate and authenticating the Certificates and the
Certificateholders rely in acquiring the Certificates and making advances under
the Transaction Documents. Such representations and warranties speak as of each
Acquisition Date, as applicable, unless otherwise indicated, but shall survive
any subsequent transfer, assignment, contribution or conveyance of the Loans.
(i) The Company used no selection procedures that identified
the Loans being acquired as being less desirable or valuable than other
comparable loans, if any, originated by the Company.
(ii) The Loans comply with the Pool Criteria.
(iii) As of any Acquisition Date on which any Substitute Loans
are conveyed to the Depositor and the Trustee: (A) the weighted average
remaining term to maturity of the Loans
***Confidential information omitted pursuant to a request for confidential
treatment filed separately with the Securities and Exchange Commission.
16
immediately after the substitution of such Substitute Loans does not
vary by more than 1.5 months shorter or longer from the weighted
average remaining term to maturity immediately prior to such
substitution of Substitute Loans; (B) each Substitute Loan has a final
Scheduled Payment on or before the final scheduled maturity of all
other Loans; (C) the interest rate and prepayment premium with respect
to each Substitute Loan are not less than those on the Loan being
replaced.
(iv) As to any Loans acquired on any Acquisition Date while a
Swap Agreement is then in effect, the acquisition of such Loans will
not cause the weighted average interest rate on all Loans then held in
the Trust Estate (computed, prior to any default under the Swap
Agreement, by taking into account any Swap Payments anticipated to be
made in respect thereof) to be less than the weighted average interest
rate then accruing on Rated Certificates then Outstanding.
(c) The Company hereby makes the following representations and
warranties to the Depositor, and for the benefit of the Trustee and the
Certificateholders, on which the Depositor relies in acquiring the Loan Assets
and selling the Certificates, the Trustee relies in accepting the Trust Estate
and authenticating the Certificates and the Certificateholders rely in acquiring
the Certificates and making advances under the Transaction Documents. Such
representations and warranties speak as of the related Acquisition Date, unless
otherwise indicated, but shall survive any subsequent transfer, assignment,
contribution or conveyance of the Loans:
(i) The Company has been duly organized and is validly
existing and in good standing as a limited liability company under the
laws of its jurisdiction of organization with limited liability company
power and authority to own its properties and to transact the business
in which it is now engaged, and the Company is duly qualified to do
business in and is in good standing under the laws of each State in
which any Obligor or Mortgaged Property is located or is not required
under applicable law to effect such qualification, except where failure
to so qualify would not have a material adverse effect on the ability
of the Company to perform its obligations under the Transaction
Documents or under any of the Loans.
(ii) The performance of the obligations of the Company under
this Agreement and the other Transaction Documents and the consummation
of the transactions herein and therein contemplated will not conflict
with or result in any breach of any of the terms or provisions of, or
constitute with or without notice, lapse of time or both, a default
under any material indenture, agreement, mortgage, deed of trust or
other instrument to which the Company is a party or by which it is
bound, or result in the creation or imposition of any Lien (except the
Lien created by the Trust Agreement) upon any of the property or assets
of the Company pursuant to the terms of such indenture, mortgage, deed
of trust, or other agreement or instrument to which the Company is a
party or by which the Company is bound or to which any of the Company's
property or assets is subject, nor will such action conflict with or
result in any violation of the provisions of the Company's certificate
of formation or limited liability company operating agreement or any
statute or any order, rule or regulation of any court or any regulatory
authority or other governmental agency or body having jurisdiction over
the Company or any of its properties; and no consent, approval,
authorization, order, registration or qualification of or with or other
action of any court, or any such regulatory authority or other
governmental agency or body is required for consummation of the
transactions contemplated by this Agreement and the other Transaction
Documents except such consents, approvals and authorizations that have
been obtained or such registrations or qualifications that have been
made.
17
(iii) Each of the Transaction Documents has been duly
authorized, executed and delivered by the Company by all necessary
corporate action and such agreements are the valid and legally binding
obligations of the Company, enforceable against the Company in
accordance with their respective terms, subject as to enforcement to
applicable bankruptcy, insolvency, reorganization and other similar
laws of general applicability relating to or affecting creditors'
rights generally and to general principles of equity regardless of
whether enforcement is sought in a court of law or equity.
(iv) The Company Address is the chief executive office and
chief place of business of the Company and the office where the Company
keeps its records concerning the Loans.
(v) The Company does not believe, nor does it have any
reasonable cause to believe, that it cannot perform each and every
covenant contained in this Agreement.
(vi) The transactions contemplated by the Transaction
Documents are being consummated by the Company in furtherance of its
ordinary business purposes, with no contemplation of insolvency and
with no intent to hinder, delay or defraud any of its present or future
creditors.
(vii) The consideration received by the Company as set forth
herein is fair consideration having value reasonably equivalent to or
in excess of the value of the Loan Assets and the performance of the
Company's obligations hereunder.
(viii) Neither on the date of the transactions contemplated by
the Transaction Documents or immediately before or after such
transactions, nor as a result of the transactions, will the Company:
(1) be insolvent such that the sum of its debts is
greater than all of its respective property, at a fair
valuation;
(2) be engaged in or about to engage in, business or
a transaction for which the Company will have unreasonably
small capital or the remaining assets of the Company will be
unreasonably small in relation to its respective business or
the transaction; and
(3) have intended to incur or believed it would
incur, debts that would be beyond its respective ability to
pay as such debts mature or become due. The Company's assets
and cash flow enable it to meet its present obligations in the
ordinary course of business as they become due.
(ix) Both immediately before and after the transactions
contemplated by the Transaction Documents: (A) the present fair salable
value of the Company's assets was or will be in excess of the amount
that will be required to pay its probable liabilities as they then
exist and as they become absolute and matured; and (B) the sum of the
Company's assets was or will be greater than the sum of its debts,
valuing its assets at a fair salable value.
18
(x) The acquisition of the Loan Assets by the Depositor
pursuant to this Agreement is not subject to the bulk transfer or any
similar statutory provisions in effect in any applicable jurisdiction.
(xi) There are no proceedings or investigations pending, or to
the knowledge of the Company, threatened, against or affecting the
Company in or before any court, governmental authority or agency or
arbitration board or tribunal which, individually or in the aggregate,
if determined adversely to the Company, would materially and adversely
affect the ability of the Company to perform its obligations under, or
the validity or enforceability of, any of the Transaction Documents.
The Company is not in default with respect to any order of any court,
governmental authority or agency or arbitration board or tribunal.
(xii) All tax returns or extensions required to be filed by
the Company in any jurisdiction have in fact been filed, and all taxes,
assessments, fees and other governmental charges upon the Company, or
upon any of the respective properties, income or franchises of the
Company, shown to be due and payable on such returns have been, or will
be, paid when due. To the best of the Company's knowledge, all such tax
returns are true and correct and the Company has no knowledge of any
proposed additional tax assessment against it in any material amount
nor of any basis therefor. The provisions for taxes on the books of the
Company are in accordance with generally accepted accounting
principles.
(xiii) The Company (A) is not in violation of any laws,
ordinances, governmental rules or regulations to which it is subject,
(B) has not failed to obtain any licenses, permits, franchises or other
governmental authorizations necessary to the ownership of its property
or to the conduct of its business, and (C) is not in violation in any
material respect of any term of any agreement, charter instrument,
bylaw or instrument to which it is a party or by which it may be bound
which violation or failure to obtain would materially and adversely
affect the ability of the Company to perform its obligations under, or
the validity or enforceability of, any of the Transaction Documents.
(xiv) It is the intention of the Company that the Loan Assets
be acquired by the Depositor and that the beneficial interest in and
title to the Loan Assets not be part of the Company's estate in the
event of the filing of a bankruptcy petition by or against the Company
under any bankruptcy law.
(xv) As of the Initial Delivery Date and after giving effect
to the transactions contemplated hereby to be consummated on the
Initial Delivery Date, the Company is and will be the registered owner
of all of the issued and outstanding common stock of the Depositor, all
of which Common Stock is validly issued, fully paid and nonassessable.
(xvi) The present value of all benefits vested under all
"employee pension benefit plans," as such term is defined in Section 3
of ERISA, maintained by the Company, or in which employees of the
Company are entitled to participate, as from time to time in effect
(collectively, the "Pension Plans"), does not exceed the value of the
assets of the Pension Plans allocable to such vested benefits (based on
the value of such assets as of December 31, 1997, the last annual
valuation date). No prohibited transactions, accumulated funding
deficiencies, withdrawals or reportable events have occurred with
respect to any Pension Plans that, in the aggregate, could subject the
Company to any material tax, penalty or other liability. No notice of
intent to terminate a Pension Plan has been filed, nor has any Pension
Plan been terminated under Section 4041(f) of ERISA, nor has the
19
Pension Benefit Guaranty Corporation instituted proceedings to
terminate, or appoint a trustee to administer, a Pension Plan and no
event has occurred or condition exists which might constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Pension Plan.
(xvii) There has been no material adverse change in the
financial condition of the Company since April 28, 1998 and all
information concerning the Company and its Affiliates furnished by the
Company to the Depositor, the Certificateholder Agent, any
Certificateholder, the Trustee or the Rating Agency prior to such
Acquisition Date in connection with the Transaction Documents or any
transaction contemplated thereby was true and accurate in all material
respects or based on reasonable estimates (but, if based on estimates,
shall be identified as so based) on the date as of which such
information is stated or certified, as applicable, and no such
information contains any untrue statement of a material fact or omits
to state a material fact necessary in order to make the statements
contained herein or therein, in light of the circumstances under which
such statements were made and taken as a whole, not misleading;
provided that, to the extent that the representations and warranties of
--------
the Company contained in this clause (xvii) relate to any such
information that was not prepared by the Company or any of its
Affiliates, then such representations and warranties are made by the
Company solely to the best of its knowledge. As used in this clause,
"information" does not include casual oral conversations or informal
oral statements of opinions on which it would be unreasonable to rely.
Notwithstanding that any representation or warranty set forth in this Section
3.01 is made to the best of the Company's knowledge (or to the best of the
Depositor's knowledge as such representation or warranty is applied to the
Depositor under the terms of the Trust Agreement), in the event any such
representation or warranty is found to be untrue or incorrect, the repurchase
and substitution provisions of Sections 3.03 and 3.04 shall apply as if such
representation or warranty was not conditioned on the Company's (or the
Depositor's) knowledge.
Section 3.02 Representations and Warranties of the Depositor.
------------ ------------------------------------------------
The Depositor hereby makes the following representations and warranties
to the Company, and for the benefit of the Trustee and the Certificateholders,
on which the Company relies in entering into this Agreement with the Depositor
the Trustee relies in accepting the Trust Estate and authenticating the
Certificates and the Certificateholders rely in acquiring the Certificates and
making Fundings. The Company agrees that any breach by the Depositor of any such
representations and warranties shall not limit or excuse the full performance of
the Company's obligations hereunder. Unless otherwise indicated, such
representations and warranties speak as of the Initial Delivery Date and each
Acquisition Date, but such representations and warranties shall survive any
subsequent transfer, assignment, contribution or conveyance of the Loan Assets:
(a) The Depositor has been duly organized and is validly existing in
good standing as a corporation under the laws of the State of Delaware, with
corporate power and authority to own its properties, perform its obligations
under the Transaction Documents and to transact the business in which it is now
engaged or in which it proposes to engage; the Depositor is duly qualified to do
business and is in good standing in each State in which the nature of its
business requires it to be so qualified, except where failure to so qualify
would not have a material adverse effect on the ability of the Depositor to
perform its obligations under the Transaction Documents.
20
(b) The performance of the obligations of the Depositor under this
Agreement and the other Transaction Documents and the consummation of the
transactions herein and therein contemplated will not conflict with or result in
any breach of any of the terms or provisions of, or constitute with or without
notice, lapse of time or both, a default under any indenture, agreement,
mortgage, deed of trust or other instrument to which the Depositor is a party or
by which it is bound, or result in the creation or imposition of any Lien
(except the Lien created by the Trust Agreement) upon any of the property or
assets of the Depositor pursuant to the terms of such indenture, mortgage, deed
of trust, or other agreement or instrument to which the Depositor is a party or
by which the Depositor is bound or to which any of the Depositor's property or
assets is subject, nor will such action conflict with or result in any violation
of the provisions of the Depositor's certificate of incorporation or bylaws or
any statute or any order, rule or regulation of any court or any regulatory
authority or other governmental agency or body having jurisdiction over the
Depositor or any of its properties; and no consent, approval, authorization,
order, registration or qualification of or with or other action of any court, or
any such regulatory authority or other governmental agency or body is required
for consummation of the transactions contemplated by this Agreement and the
other Transaction Documents except such consents, approvals and authorizations
that have been obtained or such registrations or qualifications that have been
made.
(c) The Transaction Documents have been duly authorized, executed and
delivered by the Depositor by all necessary corporate action and constitute
valid and legally binding obligations of the Depositor, enforceable against the
Depositor in accordance with their terms, except that such enforcement may be
subject to bankruptcy, insolvency, reorganization and other similar laws of
general applicability relating to or affecting creditors' rights generally and
to general principles of equity regardless of whether enforcement is sought in a
court of equity or law.
(d) There are no proceedings or investigations to which the Depositor
is a party pending, or, to the knowledge of the Depositor, threatened, before
any court, regulatory body, administrative agency or other tribunal or
governmental instrumentality (i) asserting the invalidity of any Transaction
Document, (ii) seeking to prevent the issuance of the Certificates or the
consummation of any of the transactions contemplated by any of the Transaction
Documents, or (iii) seeking any determination or ruling that would materially
and adversely affect the performance by the Depositor of its obligations under,
or the validity or enforceability of, any of the Transactions Documents.
(e) All approvals, authorizations, consents, orders or other actions of
any Person or of any court, governmental agency or body or official, required in
connection with the execution and delivery of this Agreement have been or will
be taken or obtained on or prior to the Initial Delivery Date.
(f) The Depositor Address is the principal place of business and chief
executive office of the Depositor.
(g) All tax returns or extensions required to be filed by the Depositor
in any jurisdiction have in fact been filed, and all taxes, assessments, fees
and other governmental charges upon the Depositor, or upon any of the respective
properties, income or franchises of the Depositor, shown to be due and payable
on such returns have been, or will be, paid when due. To the best of the
Depositor's knowledge, all such tax returns are true and correct and the
Depositor has no knowledge of any proposed additional tax assessment against it
in any material amount nor of any basis therefor. The provisions for taxes on
the books of the Depositor are in accordance with generally accepted accounting
principles.
21
(h) The Depositor (i) is not in violation of any laws, ordinances,
governmental rules or regulations to which it is subject, (ii) has not failed to
obtain any licenses, permits, franchises or other governmental authorizations
necessary to the ownership of its property or to the conduct of its business,
and (iii) is not in violation in any material respect of any term of any
agreement, charter instrument, bylaw or instrument to which it is a party or by
which it may be bound which violation or failure to obtain would materially and
adversely affect the ability of the Depositor to perform its obligations under,
or the validity or enforceability of, any of the Transaction Documents.
Section 3.03 Substitution or Repurchase of Loans.
----------- ------------------------------------
If (a) the Company, the Depositor, the Trustee, the Servicer or the
Special Servicer discovers or are notified of (i) the breach of any
representations or warranties set forth in Sections 3.01 or 3.02 that materially
and adversely affects the value of a Loan, an interest (of the Company, the
Depositor or the Trustee) in the related Loan Collateral, or the interests of
the Certificateholders, or (ii) the breach of any of the representations and
warranties set forth in Sections 3.01(a)(ii), 3.01(a)(v), 3.01(a)(viii) or
3.01(a)(xxvii), or (b) the Company or the Depositor discovers or is notified of
the occurrence of any missing or defective document as specified in Section
2.06, then the party discovering such breach or condition shall give prompt
written notice to the other parties and to the Trustee, the Certificateholder
Agent and each Certificateholder and, in the case of clause (a) of this Section,
the Company shall, within thirty (30) days from the date the Company was
notified of or otherwise discovers such breach, cure such breach, and in the
case of clause (b) of this Section, the Company shall, within forty-five (45)
days from the date the Company was notified of or otherwise discovers such
breach, cure such breach. If in the case of either clause (a) or (b) of this
Section, the Company fails to cure such breach in the applicable time period or
the Company or the Special Servicer is unable to cure such circumstance or
condition, then at the expiration of the applicable cure period the Company
shall either (A) purchase such Loan and the security interest in the related
Loan Collateral at the Repurchase Price or (B) provide a Substitute Loan
(together with a Company Certificate) and remit the applicable Repurchase Price,
if any, to the Collection Account. The Repurchase Price for a repurchased Loan
and, if any, for a Substitute Loan shall be paid and any Substitute Loan shall
be delivered, by the Company to the Collection Account in accordance with
Section 3.04. It is understood and agreed that the obligation of the Company to
cure or purchase or substitute any Loan as to which such a breach has occurred
shall constitute the sole remedy respecting such breach available to the
Depositor, the Certificateholders or the Trustee on behalf of such
Certificateholders (except for any indemnities provided under Section 4.01(j) or
under the Trust Agreement) for any losses, claims, damages and liabilities
arising from the Depositor's ownership of such Loan or the inclusion of such
Loan in the Trust Estate.
Section 3.04 Requirements for Purchase or Substitution of Loans.
------------ ---------------------------------------------------
(a) If the Company purchases any Loan under Sections 2.06 or 3.03, or
if the Depositor removes any Loan under Section 3.04 of the Trust Agreement,
such Loan shall be purchased by the Company or removed by the Depositor, as
applicable, at the Repurchase Price. All purchases and removals shall be
accomplished at the times specified in subsection (c) below.
(b) If the Company substitutes for any Loan under Section 2.06 or 3.03,
or if the Depositor substitutes any Loan under Section 3.04 of the Trust
Agreement (a "Substitute Loan"), each such Substitute Loan shall (i) be an
Eligible Loan, (ii) be written on one of the Standard Forms, (iii) be
accompanied by (A) a Company Certificate subjecting such Loan to the provisions
hereof and providing with respect to such Substitute Loan the related Loan
Schedule and (B) evidence of all required UCC filings and other actions required
under the Transaction Documents to perfect the interests of the Depositor and
the Trustee in such
22
Substitute Loan and the related Loan Assets, and (iv) not have been selected
using any other procedures that identified the Loan as being less desirable or
valuable than other comparable loans owned by the Company. Upon the substitution
of any Substitute Loan pursuant to the provisions of this Section 3.04(b): (y)
such Substitute Loan will be subject to all the terms and provisions of this
Agreement, the Servicing Agreement and the Trust Agreement (including the
applicability and accuracy of all of the representations and warranties set
forth in Sections 3.01(a) and 3.01(b) as of the date of substitution) just as if
such Substitute Loan had been one of the original Loans acquired on the Initial
Delivery Date; and (z) the Depositor and the Company shall also comply with the
provisions and limitations set forth in the Trust Agreement. All substitutions
shall be accomplished at the time specified in subsection (c) below.
(c) Any purchase or substitution of a Loan by the Company in accordance
with Sections 2.06, 3.03 or this Section 3.04 shall be made by remittance of the
Repurchase Price directly to the Collection Account or by substitution of a
Substitute Loan and remittance of the applicable Repurchase Price, if any,
directly to the Collection Account, on or prior to the Determination Date next
following the expiration of the cure period set forth in Sections 2.06 or 3.03,
as applicable. In addition, the Trustee shall release the related Loan in
accordance with Section 3.05 of the Trust Agreement, and the Special Servicer
shall no longer hold the copy of the related Loan File in its capacity as the
Special Servicer in accordance with the provisions of the Servicing Agreement.
(d) Any voluntary purchase or substitution of a Loan by the Depositor
pursuant to the terms of the Trust Agreement in the event of a prepayment,
default or delinquency with respect to such Loan shall satisfy the same
requirements for a purchase or substitution, as the case may be, as are set
forth in this Section 3.04.
23
ARTICLE FOUR
------------
COVENANTS OF THE COMPANY
------------------------
Section 4.1 The Company Covenants.
----------- ----------------------
The Company hereby covenants and agrees with the Depositor and for the
benefit of the Trustee and the Certificateholders as follows:
(a) Except as hereinafter provided, the Company will keep in full
effect its existence, rights and franchises as a limited liability company and
will obtain and preserve its qualification to do business as a foreign limited
liability company in each jurisdiction in which such qualification is or shall
be necessary to protect the validity and enforceability of the Transaction
Documents or any of the Loans and to perform its duties hereunder. The Company
may not merge or consolidate with, or sell all or substantially all of its
assets to, any other Person unless: (i) immediately after giving effect to such
transaction, no representation or warranty made pursuant to Section 3.01(c)
shall have been breached and no Default would occur as a result thereof, (ii)
such intended successor executes an agreement or assumption, in form reasonably
satisfactory to the Trustee, to perform every obligation under each of the
Transaction Documents to which it is to be a party, (iii) such intended
successor has a net worth that is sufficient to perform in accordance with the
Transaction Documents to which it is to be a party and at least approximately
equivalent to the net worth of the Company immediately prior to such intended
sale, merger or consolidation, (iv) the Company shall have delivered prior
written notice to the Certificateholder Agent, the Certificateholders and the
Trustee and shall have delivered to the Depositor, the Certificateholder Agent,
the Certificateholders and the Trustee an Officer's Certificate of the Company
and an Opinion of Counsel each stating that such intended consolidation, merger,
or succession and such agreement of assumption complies with this Section 4.01
and that all conditions precedent, if any, provided for in this Agreement
relating to such transaction have been complied with, and (v) the Company shall
have delivered to the Depositor, the Certificateholder Agent, the
Certificateholders and the Trustee an Opinion of Counsel either (A) stating
that, in the opinion of such Counsel, all financing statements, continuation
statements and amendments thereto have been executed and filed and, if
applicable, all other actions have been taken, to preserve fully the interest of
the Depositor in the Loans and the Loan Assets and reciting the details of such
filings and, if applicable, such actions, or (B) stating that, in the opinion of
such counsel, no such action shall be necessary to preserve and protect such
interest; whereupon such Person, upon consummation of such transaction shall
become the successor of the Company hereunder, without the execution or filing
of any paper or any further act on the part of any of the parties hereto.
(b) Neither the Company nor any of the directors, officers, employees
or agents of the Company shall be under any liability to the Depositor, the
Trustee or the Certificateholders for taking any action, or for refraining to
take any action, in good faith pursuant to this Agreement or for errors in
judgment unless such action or inaction involves recklessness or negligence;
provided that this provision shall not protect the Company against any breach of
- --------
warranties or representations made herein, any failure to perform its
obligations in strict compliance with this Agreement, or any liability which
would otherwise be imposed by reason of any breach of the terms and conditions
of this Agreement. The Company, and any director, officer, employee or agent of
the Company, may rely in good faith on any document of any kind prima facie
properly executed and submitted by any Person respecting any matters arising
hereunder. The Company shall not be under any obligation to appear in,
prosecute, or defend any legal action that is not incidental to its obligations
as the contributor of the Loan Assets hereunder and that in its opinion may
involve it incurring any expense or liability.
24
(c) The Company, from time to time, at its own expense, shall execute
and file such additional financing statements (including continuation
statements) and take such other actions as may be necessary to preserve the
security interests and liens described in Section 3.01(a)(ix) as may be
reasonably requested by the Depositor or the Trustee and are reasonably
satisfactory in form and substance to the Trustee.
(d) The Company will not change its name, identity or corporate
structure in any manner that would, could, or might make any financing statement
or continuation statement misleading within the meaning of Section 9-402(7) of
the UCC, unless it shall have given the Depositor, the Certificateholder Agent
and the Trustee at least thirty (30) days prior written notice thereof and shall
have provided evidence of appropriate UCC filings.
(e) The Company will give the Depositor, the Certificateholder Agent
and the Trustee at least thirty (30) days prior written notice of any relocation
of its principal executive office and, if, as a result of such relocation, the
applicable provisions of the UCC would require the filing of any amendment of
any previously filed financing or continuation statement or of any new financing
statement and the Company, the Company shall provide evidence of appropriate UCC
filings.
(f) The Company will duly fulfill all obligations on its part to be
fulfilled under or in connection with each Loan, will not change or modify the
terms of the Loans except as expressly permitted by the terms of the Transaction
Documents and will do nothing to impair the rights of the Depositor or the
Trustee in the Loans or the Loan Collateral. If, for any reason, the rights of
the Company under any Loan (including under any guaranty of the related
Obligor's obligations under any Loan) are not assignable or have, in fact, not
been assigned to the Depositor or to the Trustee, then the Company will enforce
such rights on behalf of the Depositor and the Trustee.
(g) The Company will comply, in all material respects, with all acts,
rules, regulations, orders, decrees and directions of any governmental authority
applicable to the Loan Assets or any part thereof; provided that the Company may
--------
contest any act, regulation, order, decree or direction in any reasonable manner
which shall not materially and adversely affect the rights of the Depositor or
the Trustee in the Loan Assets.
(h) The Company will advise the Depositor, the Certificateholders and
the Trustee promptly, in reasonable detail, of the occurrence of any breach by
the Company, following discovery by the Company of such breach, of any of its
representations, warranties or covenants contained herein.
(i) The Company will execute or endorse, acknowledge, and deliver to
the Depositor, the Certificateholders and the Trustee from time to time such
schedules, confirmatory assignments, conveyances, powers of attorney, and other
reassurances or instruments and take such further similar actions relating to
the Loans and the rights covered by the Transaction Documents, as the Depositor
or the Trustee may reasonably request to preserve and maintain title to the Loan
Assets and the rights of the Trustee and the Certificateholders therein against
the claims of all Persons.
(j) The Company agrees to indemnify, defend and hold the Depositor,
the Trustee and the Certificateholders harmless from and against any loss,
liability, damage, judgment, claim, deficiency or expense (including interest,
penalties, reasonable attorney's fees and amounts paid in settlement) that is
caused by (i) a breach at any time by the Company of its representations,
warranties and covenants contained in Section 3.01 or this Section 4.01 or (ii)
any material information furnished by the Company that is set forth in any
schedule delivered hereunder, being untrue in any respect when any such
representation was
25
made or schedule delivered; provided that the Company shall not have any
--------
liability with respect to a representation or warranty as to any specific Loan
other than to purchase such Loan or substitute for such Loan in accordance with
Sections 3.03 and 3.04 unless such breach of representation or warranty is the
result of the Company's fraud, gross negligence, bad faith or willful
misconduct. The Company shall also indemnify the Depositor, the Trustee and the
Certificateholders for any costs or expenses incurred by them in the enforcement
of this Agreement or as a result of the Company's failure to perform its
obligations hereunder. The obligations of the Company under this Section 4.01(j)
shall be considered to have been relied upon by the Depositor, the Trustee and
the Certificateholders and shall survive the execution, delivery and performance
of this Agreement, regardless of any investigation made by or on behalf of the
Depositor, the Trustee, the Certificateholder Agent or any Certificateholder
until termination of the Trust Agreement. If the Company has made any indemnity
payments pursuant to this Section 4.01(j) and thereafter any Person recovers the
amount of the related loss or any portion thereof from others, such Person will
promptly repay the amount recovered to the Company, without interest.
(k) The Company will not do anything to disturb or impair the
acquisition of the Loan Assets by the Depositor hereunder.
(l) The Company (i) will (A) maintain its books and records separate
from the books and records of the Depositor and (B) maintain bank accounts
separate from those of the Depositor and (C) maintain one (1) independent
director on the Depositor's board of directors, so long as the Company is a
shareholder of the Depositor and (ii) will not, and will not in any manner
encourage any other Person to, (A) take any action that would cause the
dissolution or liquidation of the Depositor, (B) guarantee (directly or
indirectly), endorse or otherwise become contingently liable (directly or
indirectly) for the obligations of the Depositor, or (C) institute against the
Depositor, or join any other Person in instituting against the Depositor, any
case, proceeding or other action under any existing or future bankruptcy,
insolvency or similar laws. This Section 4.01(l) shall survive termination of
this Agreement.
(m) The Company shall notify the Depositor, the Trustee, the
Certificateholder Agent and each Certificateholder promptly after becoming aware
of any Lien (other than a Permitted Loan Collateral Lien) on any Loan Asset.
(n) On each date as of which the Company substitutes a Substitute Loan
or Substitute Loans in accordance with Sections 2.06 or 3.04(b), the Company
shall provide to the Depositor (with a copy thereof to the Trustee, the
Certificateholder Agent and each Certificateholder) a Company Certificate with
respect to such Substitute Loan(s), subjecting such Loan(s) and the related Loan
Assets to the provisions hereof and providing with respect to such Loan(s) the
information required in the related amended Loan Schedule.
(o) The annual financial statements of the Company will reflect the
effects of the transactions contemplated by the Transaction Documents as a sale
by the Company and a sale by the Depositor in accordance with generally accepted
accounting principles. The financial statements of the Company and the Depositor
will also reflect that the assets of the Depositor are not available to pay
creditors of the Company. The resolutions, agreements and other instruments
underlying the Transaction Documents will be continuously maintained by the
Company as official records.
(p) The Company, in its capacity as the Special Servicer, will, at its
own cost and expense, (i) retain on its Electronic Records a master record of
the Loans for the benefit of the Depositor, the Trustee and other Persons, if
any, with interests in the Loans and (ii) mark its Electronic Records and all
other records
26
to the effect that the Loan Assets have been acquired by the Depositor and that
they have been transferred and assigned to the Trustee pursuant to the Trust
Agreement.
(q) Except as otherwise agreed to in advance in writing by the
Controlling Holders, the Company will at all times own one hundred percent
(100%) of the Common Stock and will not pledge the Common Stock as security. If
(with such agreement of the Controlling Holders) the Company elects to transfer
the Common Stock to an affiliate or pledge a security interest in the Common
Stock, then, as a condition to such sale or pledge, the Company shall, on behalf
of the Depositor, obtain an agreement from the transferee or the secured party
that it will take no action that would cause the Depositor to breach any of its
covenants under any Transaction Document, and that for so long as the Trust
Agreement is in effect and for one year and one day thereafter, it will not file
any involuntary petition or otherwise institute any bankruptcy, reorganization,
insolvency or liquidation proceeding or other proceeding under any federal or
state bankruptcy or similar law against the Depositor and it will comply with
the Depositor's certificate of incorporation and the covenants of the Depositor
set forth in the Transaction Documents. Subject to the foregoing limitation, the
parties acknowledge and agree that the Company may in the future transfer the
Common Stock to a direct or indirect wholly owned subsidiary of the Company,
which subsidiary may pledge the Common Stock to or for the benefit of one or
more lenders or purchasers of its Certificates or other obligations.
(r) If the Company desires to amend or otherwise revise the Program
Guidelines, then the Company shall first deliver to the Depositor, the Trustee,
the Certificateholder Agent and the Rating Agency the final version of the
proposed amendments or other proposed revisions to the Program Guidelines (in
each instance and as so proposed, the "Proposed Revision"). Within thirty (30)
days following its receipt of any Proposed Revision, each of the Depositor, the
Rating Agency and the Certificateholder Agent shall deliver to the Company
written notice indicating whether the Depositor, the Rating Agency and the
Certificateholder Agent deem the Proposed Revision acceptable or not acceptable;
provided that the failure of the Depositor, the Rating Agency or the
- --------
Certificateholder Agent to provide such a written notice to the Company within
such time period shall be deemed to constitute rejection of such Proposed
Revision.
Section 4.02 Depositor Covenants.
------------ --------------------
The Depositor hereby covenants and agrees with the Company and for the
benefit of the Trustee and the Certificateholders as follows:
(a) If in any enforcement suit or legal proceeding it is held that the
Company may not enforce a Loan on the ground that it is not a real party in
interest or holder entitled to enforce the Loan, the Depositor shall, at the
Depositor's expense, take such steps as the Depositor deems necessary to enforce
the Loan, including bringing suit in the Depositor's name.
(b) The Depositor warrants that it will own and possess a first
priority security interest in the Loan Collateral (subject only to Permitted
Loan Collateral Liens) upon its acquisition of the Loan Assets and that it will
warrant and defend its interest in the Loan Collateral against all Persons,
claims and demands whatsoever. The Depositor shall not assign, sell, pledge, or
exchange, or in any way encumber or otherwise dispose of its interest in the
Loan Assets, except as permitted under the Trust Agreement.
27
Section 4.03 Assignment of Loan Assets.
------------ --------------------------
The Company understands that the Depositor will convey and assign to
the Trustee all of its right, title and interest in and to this Agreement and
the Loan Assets. The Company consents to such assignment and grants and further
agrees that all representations, warranties, covenants and agreements of the
Company made herein shall also be for the benefit of and inure to the Trustee
and all Certificateholders.
28
ARTICLE FIVE
------------
CONDITIONS
----------
Section 5.01 Conditions to the Depositor's Obligations.
------------ ------------------------------------------
The obligations of the Depositor to provide the Company with the
consideration provided for herein, and of the Certificateholders to make
Fundings on any Funding Date, shall be subject to the satisfaction of the
following conditions:
(a) On or before the Initial Delivery Date, the Depositor, the
Servicer, the Special Servicer, the Servicing Advisor and the Trustee shall have
entered into the Trust Agreement and the Servicing Agreement (to the extent they
are parties thereto);
(b) On the Initial Delivery Date, the Certificates to be sold on such
Date shall have been issued and sold and the Depositor shall have received the
full consideration due it upon the issuance of such Certificates.
(c) No Default (other than a Servicing Advisor Default), Depositor
Event of Default, Servicer Event of Default, Special Servicer Event of Default
or Servicing Advisor Event of Default shall have occurred and be continuing;
(d) The Company shall have delivered all other information previously
required or reasonably requested by the Depositor, the Trustee or the
Certificateholder Agent to be delivered by the Company hereunder, duly certified
by an officer of the Company, shall have complied with Section 2.04 and shall
have substantially performed all other obligations required to be performed by
it pursuant to the terms of the Transaction Documents;
(e) All representations and warranties of the Company contained in
Sections 3.01(a) and (b) and all information provided in any Loan Schedule
(including any related Funding Report and Pending Credit Schedule), as
applicable, shall be true and correct on the relevant Acquisition Date, all
representations and warranties in Sections 3.01(c) shall be true and correct as
of each Acquisition Date, and the Company shall have delivered to the Depositor
and the Trustee an Officer's Certificate to such effect;
(f) Within two (2) Business Days of each Acquisition Date, as
applicable, the Company shall have delivered, or cause to have been delivered,
to the Trustee, in the manner contemplated by Section 3.01(a)(iii), the original
manually executed Note relating to the Loans being acquired, all other original
documents evidencing such Loans (except as otherwise contemplated by Section
3.01(a)(iii)), and the other items comprising the Loans Files relating to such
Loans, and there shall have been made all filings, recordings or registrations,
and there shall have been given or taken any notice or any other action, as
applicable, as may be necessary in the reasonable opinion of the Depositor, the
Trustee and the Certificateholder Agent, in order to establish and preserve the
right, title and interest of the Depositor and the Trustee in the Loan Assets;
(g) On or prior to the second Business Day following delivery of each
of the documents specified in Section 3.01(a)(iii), the Servicer and the Special
Servicer shall have received a copy of such documents; and
29
(h) On or before the Initial Delivery Date, the Depositor, the
Servicer, the Special Servicer, the Servicing Advisor and the Trustee shall have
entered into the Trust Agreement and the Servicing Agreement (to the extent they
are parties thereto).
Section 5.02 Conditions to the Company's Obligations.
------------ ----------------------------------------
The obligations of the Company to enter into this Agreement on the
Initial Delivery Date shall be subject to the satisfaction of the following
conditions:
(a) On or before the Initial Delivery Date, the Depositor, the
Servicer, the Special Servicer, the Servicing Advisor and the Trustee shall have
entered into the Trust Agreement and the Servicing Agreement;
(b) On the Initial Delivery Date, the Certificates shall have been
issued and sold and the Depositor shall have received the full consideration due
it upon the issuance of such Certificates; and
(c) The consideration set forth herein shall have been paid or
delivered to the Company simultaneously with the execution of this Agreement.
30
ARTICLE SIX
-----------
TERM AND TERMINATION
--------------------
Section 6.01 Term.
------------ -----
This Agreement shall commence as of the date of execution and delivery
hereof and shall continue in full force and effect until the later of (a) the
final payment with respect to the last Loan Asset and (b) termination of the
Trust Agreement; provided that any obligations of the Depositor with respect to
--------
the acquisition of any Loans from and after the Initial Delivery Date shall
terminate upon the occurrence of a Funding Termination Event.
Section 6.02 Default by the Company.
------------ -----------------------
If the Company shall be in default under this Agreement and such
default shall not have been cured for a period of thirty (30) days, or if the
Company shall become insolvent or make an assignment for the benefit of its
creditors or have a receiver appointed for all or substantially all of its
properties, or if any proceedings are commenced, or consented to, by the Company
or are not stayed or dismissed within sixty (60) days after being commenced
against the Company under any bankruptcy, insolvency or other law for the relief
of debtors, then the Depositor shall have the right, with the prior written
consent of the Trustee, in addition to any other rights it may have under any
applicable law, to terminate its obligations under this Agreement upon thirty
(30) days prior written notice to the Company; provided that any termination of
--------
this Agreement pursuant to this Section 6.02 shall not release the Company from
any obligation under this Agreement.
31
ARTICLE SEVEN
-------------
GENERAL PROVISIONS
------------------
Section 7.01 Amendments.
------------ -----------
This Agreement and the rights and obligations of the parties hereunder
may not be changed orally but only by an instrument in writing signed by the
party against whom enforcement is sought together with the prior written consent
of the Holders of not less than 51% of the Outstanding Principal Amount of each
affected Class (or, with respect to any affected Class during the Funding Period
applicable to such Class, of not less than 51% of the Maximum Series Amount of
such Class) of Rated Certificates. Promptly after the execution of any
amendment, the Depositor shall send to the Trustee, each Certificateholder, the
Certificateholder Agent and each Rating Agency a conformed copy of each such
amendment.
Section 7.02 Governing Law.
------------ --------------
This Agreement shall be construed in accordance with the internal laws
of the State of New York.
Section 7.03 Notices.
------------ --------
All demands, notices and communications hereunder shall be made in
accordance with the provisions of the Trust Agreement and shall be addressed, in
the case of the Company, to the Company Address, in the case of the Depositor,
to the Depositor Address, and in the case of any Certificateholders, to their
address set forth on the Certificate Register. All demands, notices and
communications made in accordance with the provisions hereof shall be deemed to
have been received or made (as applicable) as provided in the Trust Agreement.
Any Person may change the address for notices hereunder by giving notice of such
change to the other Person (or in the case of a Certificateholder, by causing
the Trustee to change its address as provided on the Certificate Register).
Section 7.04 Separability Clause.
------------ --------------------
Any provisions of this Agreement which are prohibited or unenforceable
in any 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
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
Section 7.05 Assignment.
------------ -----------
Except as provided in Section 4.01(a), this Agreement may not be
assigned or delegated by the Company without the prior written consent of the
Depositor and the Trustee and may not be assigned or delegated by the Depositor
without the prior written consent of the Trustee.
Section 7.06 Further Assurances.
------------ -------------------
Each of the Company and the Depositor agrees to do such further acts
and things and to execute and deliver to the Trustee such additional
assignments, agreements, powers and instruments as are required by the Trustee
to carry into effect the purposes of this Agreement or to better assure and
confirm unto the Trustee or the Certificateholders their rights, powers or
remedies hereunder. If any Obligor shall be in
32
default under any Loan, upon reasonable request from the Special Servicer or the
Trustee, the Company will take all reasonable steps to assist in enforcing such
Loan and preserving and maintaining title to the Loan Assets and the rights of
the Trustee and the Certificateholders therein against the claims of all persons
and parties to the extent the Company is capable of performing such requested
steps and the Special Servicer or the Trustee reasonably determines that the
assistance of the Company is necessary to effect the intent and purposes hereof.
Section 7.07 No Waivers; Cumulative Remedies.
------------ --------------------------------
No failure to exercise and no delay in exercising, on the part of the
Depositor, the Company, the Trustee or any other Person, any right, remedy,
power or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise of any right, remedy, or privilege hereunder preclude
any other or further exercise hereof or the exercise of any other right, remedy,
power or privilege. The rights, remedies, powers and privileges herein provided
are cumulative and not exhaustive of any rights, remedies, powers and privilege
provided by law.
Section 7.08 Binding Effect; Third Party Beneficiaries.
------------ ------------------------------------------
This Agreement will inure to the benefit of and be binding upon the
parties hereto and shall inure to the benefit of the Trustee and the
Certificateholders, and their respective successors and permitted assigns, as
express third party beneficiaries.
Section 7.09 Set-Off.
------------ --------
(a) The Company hereby irrevocably and unconditionally waives all right
of set-off that it may have under contract (including this Agreement),
applicable law or otherwise with respect to any funds or monies of the
Depositor, the Trustee, each Certificateholder, the Certificateholder Agent, the
Servicer, the Special Servicer or the Servicing Advisor at any time held by or
in the possession of the Company.
(b) Each of the Depositor, the Trustee, the Certificateholders and the
Certificateholder Agent shall have the right to set-off against the Company any
amounts to which the Company may be entitled and to apply such amounts to any
claims the Depositor, the Trustee, any Certificateholder or the
Certificateholder Agent may have against the Company from time to time under
this Agreement. Upon any such set-off, the Person exercising such right shall
give notice of the amount thereof and the reasons therefor.
33
IN WITNESS WHEREOF, the Company and the Depositor have caused this
Agreement to be duly executed by their respective officers thereunto duly
authorized as of the date first written above.
ALLEGIANCE CAPITAL, LLC,
Company
By: /s/ Alan B. Perper
-------------------------------
Name: Alan B. Perper
Title: President
ALLEGIANCE FUNDING CORP. I
Depositor
By: /s/ Alan B. Perper
-------------------------------
Name: Alan B. Perper
Title: President
EXHIBIT A
---------
to Loan Acquisition Agreement
-----------------------------
COMPANY CERTIFICATE
-------------------
, 19
--------------- --
Pursuant to Section 2.01 of that certain Loan Acquisition Agreement,
dated as of August 1, 1998 (as amended or modified from time to time in
accordance with the terms thereof, the "Loan Acquisition Agreement"), between
Allegiance Capital, LLC (the "Company") and Allegiance Funding Corp. I (the
"Depositor"), attached hereto as Schedule A is a Loan Schedule related to the
requested Funding that includes information regarding the Loan Assets that are
hereby sold, transferred, contributed, assigned, set over and otherwise conveyed
by the Company to the Depositor in accordance with the Loan Acquisition
Agreement. Each capitalized term used herein that is not otherwise defined
herein has the meaning assigned thereto in the Loan Acquisition Agreement.
ALLEGIANCE CAPITAL, LLC,
Company
By :
---------------------------
Name:
---------------------------
Title:
---------------------------
ALLEGIANCE FUNDING CORP. I
Depositor
By:
---------------------------
Name:
---------------------------
Title:
---------------------------
A-1
Schedule A to
-------------
Company Certificate
-------------------
Loan Schedule
A-2
EXHIBIT D
---------
to Loan Acquisition Agreement
-----------------------------
POOL CRITERIA
-------------
(Dollar Percentage Limits Based on Greater of Pool Balance and $30,000,000)
---------------------------------------------------------------------------
***
- ----------------------
***
***Confidential information omitted pursuant to a request for confidential
treatment filed separately with the Securities and Exchange Commission.
D-1
***
- --------
***
***Confidential information omitted pursuant to a request for confidential
treatment filed separately with the Securities and Exchange Commission.
D-2