WHOLE LOAN ORIGINATION FACILITY AGREEMENT
THIS WHOLE LOAN ORIGINATION FACILITY AGREEMENT (this "Agreement") is made
as of this 1st day of June, 1998 (the "Effective Date") by and among PRUDENTIAL
SECURITIES INCORPORATED, a Delaware corporation ("PSI"), having an address at
Xxx Xxx Xxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000, PRUDENTIAL SECURITIES CREDIT
CORP., a Delaware corporation ("PSCC") having an address at Xxx Xxx Xxxx Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000-0000, and CRIIMI MAE INC. a Maryland corporation,
having an office at 00000 Xxxxxxxxx Xxxx, Xxxxxxxxx, Xxxxxxxx 00000 ("CRIIMI
MAE").
RECITALS
A. PSI, PSCC and CRIIMI MAE desire to develop a funding facility to
finance the origination of commercial mortgage loans ("Mortgage Loans") secured
by multifamily residential properties and commercial properties located
throughout the United States (the "Facility"). It is contemplated that CRIIMI
MAE shall identify, originate and underwrite Mortgage Loans to be funded through
the Facility upon PSCC's determination, in its sole discretion, to fund.
B. Contemporaneously with the origination of Mortgage Loans through
the Facility, it is contemplated that Prudential Mortgage Capital Company
L.L.C., a Delaware limited liability company ("PMCC") will originate mortgage
loans similar to the Eligible Loans (as hereinafter defined) pursuant to a
separate agreement between PMCC and CRIIMI MAE (the "PMCC Agreement).
C. The parties contemplate that the Mortgage Loans shall be combined
with mortgage loans originated by PMCC (the "PMCC Loans") into a pool of loans
having an aggregate principal amount of up to $1,000,000,000 in accordance with
the terms and conditions contained herein and the PMCC Agreement with a view to
the purchase by CRIIMI MAE or a wholly-owned subsidiary of CRIIMI MAE of the
Mortgage Loans and the PMCC Loans (collectively, the "Pooled Loans") and the
financing of such purchase through a securitization of the Pooled Loans and the
issuance of pass-through Certificates or other commercial mortgage-backed
securities ("CMBSs") (such a transaction, a "Securitization"). It is intended
that the Mortgage Loans to be acquired through the Facility will be funded by,
closed in the name of and, pending the consummation of a Securitization or other
disposition, held by PSCC. CRIIMI MAE's affiliate, CRIIMI MAE Services Limited
Partnership, an affiliate of CRIIMI MAE ("CRIIMI MAE Services"), will service
such Mortgage Loans during the period that the Mortgage Loans are being
aggregated through the Facility.
D. To enable CRIIMI MAE to effect a Securitization, PSCC intends to
grant to CRIIMI MAE an option to purchase the Mortgage Loans, and PMCC intends
to grant CRIIMI MAE an option to purchase the PMCC Loans, with the option
exercise price to be obtained by CRIIMI MAE in part through its receipt of the
proceeds of the Securitization and in part through other sources (which may
include financing under the Securities Repurchase Facility contemplated by
Article VI of this Agreement).
E. CRIIMI MAE presently intends to effect a Securitization and
purchase the Mortgage Loans and the PMCC Loans. The parties intend, however,
that CRIIMI MAE shall not be under any obligation to do so, and desire to
provide for PSCC's and PMCC's respective rights to retain the Mortgage Loans and
the PMCC Loans and, in PSCC's case, the option purchase price paid by CRIIMI
MAE, in the event CRIIMI MAE does not exercise its purchase option.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I.
LOAN ORIGINATION
Section I.01 Mortgage Loan Origination by CRIIMI MAE. (A) From and after the
Effective Date, CRIIMI MAE shall use its best efforts to identify and originate
Mortgage Loans that are Eligible Loans for inclusion in the Facility. As used
in this Agreement, an "Eligible Loan" is a Mortgage Loan that (i) is secured by
a first mortgage lien on the related borrower's fee simple or leasehold estate
in the real property collateral for the Eligible Loan (the "Mortgaged
Property"), (ii) is in an original principal amount of not more than $50,000,000
(in the case of a Mortgage Loan secured by a single Mortgaged Property), or more
than $100,000,000 (in the case of a Mortgage Loan secured by more than one
Mortgaged Property), (iii) requires monthly payments due on the first day of
each month, with interest payable in arrears, (iv) has a term to maturity of not
less than 7 nor more than 15 years, (v) has a loan to appraised value ratio not
exceeding 80%, (vi) has a debt service coverage ratio of not less than 1.20 to
1; (vii) satisfies the underwriting criteria set forth in Section 1.02 and
(viii) with respect to which the representations and warranties contained in
Section 2.01(A) are true and correct in all material respects on the date of
funding or purchase, as the case may be. The Mortgaged Property securing an
Eligible Loan may consist of one or more of the following types of properties:
multifamily residential projects, retail property, hotel property, assisted
living facilities, office buildings, self-storage facilities, warehouse
property, industrial property and manufactured housing communities. The parties
agree that (x) only Mortgage Loans underwritten by CRIIMI MAE may be included in
the Facility and (y) only Mortgage Loans originated through the Facility and
PMCC Loans may be included in a Securitization, provided that CRIIMI MAE agrees
to give good faith consideration to the inclusion in the Securitization of other
loans held by third parties and having the characteristics of Eligible Loans.
Eligible Loans may, but shall not be required to, include yield maintenance and
prepayment prohibitions. Without limiting the generality of the foregoing,
Eligible Loans may permit prepayment of the principal amount thereof, together
with all accrued and unpaid interest and other outstanding amounts on written
notice, provided that any such prepayment provision shall also require payment
of the following prepayment penalties: 3% penalty for prepayment during the
first three (3) years of the Mortgage Loan; 2% for prepayment during years four
(4), five (5) and six (6) of the Mortgage Loan; and 1% for prepayment during
years seven (7), eight (8) and nine (9) of the Mortgage Loan. No prepayment
penalty shall be required in connection with a prepayment in year ten (10) of
the Mortgage Loan or thereafter. PSCC agrees to give good faith consideration to
the inclusion as Eligible Loans of one or more Mortgage Loans having an initial
principal amount in excess of the maximum amounts set forth in this Section,
provided that PSCC shall be under no obligation to so include any such Mortgage
Loan. Anything in this Agreement to the contrary notwithstanding, a Mortgage
Loan shall not be an Eligible Loan if any of the representations and warranties
set forth in Section 2.01(B) of this Agreement shall not be true, complete and
correct in all material respects at the time of closing and funding, or closing
of the acquisition, of such Mortgage Loan. Criteria for Eligible Loans shall be
revised from time to time to comply with modifications required by one or more
nationally recognized statistical rating organizations (each, a "Rating
Agency') standards. Any such revisions shall be subject to the consent of all
parties to this Agreement.
(B) Notwithstanding the provisions of clause (viii) of Section 1.01(A),
PSCC and PSI acknowledge that CRIIMI MAE is engaged in originating and acquiring
"mezzanine loans", the terms of which may include equity participation by CRIIMI
MAE, participation in the cash flow or proceeds of disposition of the related
Mortgaged Property, CRIIMI MAE's acquisition of an ownership interest in the
Mortgaged Property or related Borrower CRIIMI MAE's acquisition of a security
interest in partnership or other equity interests in the related Borrower,
and/or CRIIMI MAE's acquisition of junior liens on the related Mortgaged
Property. Mortgage Loans secured by property that is or will be the subject of
a mezzanine loan may be proposed for inclusion in the Facility as Eligible
Loans, provided that any such mezzanine loan is subordinated to the Mortgage
Loan and any lien on the related Mortgaged Property is subordinated to the lien
of the Mortgage Loan pursuant to subordination terms satisfactory to PSCC, in
its sole discretion.
Section I.02 Underwriting of Mortgage Loans.
(A) Not later than 30 days following the Effective Date, PSCC and
CRIIMI MAE shall determine the underwriting standards for Mortgage Loans to be
included in the Facility. CRIIMI MAE shall adhere to such Mortgage Loan
underwriting standards in connection with its origination of Mortgage Loans for
the Facility. Such underwriting standards maybe modified from time to time with
PSCC's prior written consent. Pending the determination of such underwriting
standards, Mortgage Loans proposed for inclusion in the facility shall be
underwritten in accordance with standards satisfactory to PSCC.
(B) With respect to each Mortgage Loan identified by CRIIMI MAE and
proposed to PSCC for inclusion in the Facility as an Eligible Loan, CRIIMI MAE
shall prepare, or cause to be prepared, a comprehensive underwriting memorandum.
Such underwriting memorandum shall be in a form reasonably satisfactory to PSCC
and shall include the following information with respect to the Mortgage Loan to
which it relates:
(i) a description of the related Mortgaged Property;
(ii) a capitalization rate valuation computed in accordance with
industry practices for similar loans;
(iii) an analysis of the historical and projected operating
results of the related Mortgaged Property;
(iv) a calculation of the debt service coverage ratio and Mortgage
Loan to appraised value ratio for the Mortgage Loan;
(v) a rent roll for the related Mortgaged Property;
(vi) market information for the geographic area in which the Mortgaged
Property is situated;
(vii) photographs of the Mortgaged Property;
(viii) a site map showing the location of the related Mortgaged
Property;
(ix) information regarding sales and leases of comparable properties
in the vicinity of the Mortgaged Property;
(x) a description of the proposed borrower, including its business,
management, financial condition and credit history;
(xi) an analysis of the proposed borrower's business experience;
(xii) the proposed terms and conditions, including the
subordination provisions, of any related mezzanine financing; and
(xiii) such other information as may be reasonably requested by
PSCC in connection with its consideration of the proposed Mortgage Loan as
an Eligible Loan.
(C) After receipt of the final underwriting memorandum for a Mortgage
Loan, PSCC shall review such memorandum to determine the proposed Mortgage
Loan's compliance with CRIIMI MAE's underwriting criteria and its status as an
Eligible Loan. Based on such review, PSCC may, in its sole discretion, accept
the Mortgage Loan for the Facility, reject the proposed Mortgage Loan submitted
by CRIIMI MAE, or further evaluate the proposed Mortgage Loan. Provided that,
subsequent to receipt of the prospective borrower's application for the proposed
Mortgage Loan, PSCC shall have been afforded a reasonable opportunity to conduct
a site visit at the proposed Mortgaged Property and its environs, PSCC shall
give written notice to CRIIMI MAE of its acceptance or rejection of each
Mortgage Loan within four (4) business days after receipt of the underwriting
memorandum from CRIIMI MAE and shall use its best efforts to give such notice
within two (2) business days. In the event that PSCC shall not have notified
CRIIMI MAE of its acceptance or rejection within such four-business day period,
the proposed Mortgage Loan shall be deemed rejected.
Section I.03 Mortgage Loan Commitment; Rate Lock; Documentation and Closing.
(A) Upon receipt of PSCC's written notice of approval of a Mortgage
Loan presented to it for inclusion in the Facility, CRIIMI MAE shall prepare and
submit to PSCC for signature a Purchase Price and Terms Letter ("PPT") in the
form annexed as Exhibit A-1 to this Agreement (in the case of a Mortgage Loan to
be funded) or Exhibit A-2 to this Agreement (in the case of a Mortgage Loan to
be purchased). Upon receipt of a PPT executed by PSCC with respect to a
Mortgage Loan, CRIIMI MAE shall issue its standard loan commitment letter to the
related borrower and shall forward a copy thereof to PSCC. CRIIMI MAE shall not
issue a commitment letter with respect to a Mortgage Loan to be funded or
purchased by PSCC through the Facility prior to receipt of a PPT with respect to
such Mortgage Loan, and no such loan commitment letter shall be materially
amended, modified or supplemented by CRIIMI MAE without prior written notice to
and consent of PSCC.
(B) Each commitment letter issued with respect to the Facility shall
provide for an interest rate expressed as a spread over applicable Treasury
securities. Each such commitment letter shall, if specified in the related PPT,
permit the prospective borrower to "lock" or "fix" the interest rate on the
Mortgage Loan (a "Rate Lock") pursuant to an agreement satisfactory to PSI and
PSCC and specify that PSCC will lock or fix the interest rate for such Mortgage
Loan on a date mutually agreeable to CRIIMI MAE and the prospective borrower if
CRIIMI MAE has offered the prospective borrower a Rate Lock and such prospective
borrower has elected a Rate Lock and remitted the deposit therefor specified in
the commitment letter. At CRIIMI MAE's request, PSI will review with CRIIMI MAE
PSI'S proposed hedging strategy. On the date fixed by CRIIMI MAE and the
prospective mortgagor for the fixing of the interest rate, PSI will enter into
appropriate hedging arrangements with respect to each such Rate Lock. CRIIMI
MAE shall notify PSI immediately upon receipt of actual notice that any Eligible
Loan subject to a Rate-Lock will not be closed and funded under the Facility.
PSI shall thereupon terminate its hedging arrangements with respect to such
locked-in rate. The costs incurred by PSI in terminating such hedging
arrangements shall be borne by CRIIMI MAE.
(C) All Mortgage Loans funded under the Facility shall be documented
on the most current forms of Promissory Note; Mortgage, Assignment of Rents and
Security Agreement; Assignment of Leases and Rents; Environmental Indemnity
Agreement and other standard mortgage documents of PMCC, as the foregoing may be
modified from time to time by PMCC (including, without limitation, modifications
required by the Rating Agencies in connection with or for purposes of
facilitating a Securitization), together with riders thereto as provided by PSCC
(the "PMCC Loan Documents") or other forms approved by PSCC. PSCC shall provide
copies of any such modified PMCC Loan Documents to CRIIMI MAE and its counsel
promptly after implementation of any such modifications. CRIIMI MAE
acknowledges that it has reviewed the PMCC Loan Documents and that such
documents, to the extent no modifications are made which would materially
adversely affect the mortgagee's interest thereunder, are acceptable to CRIIMI
MAE for the purposes of the Facility and CRIIMI MAE's obligations under this
Agreement; provided, however, that CRIIMI MAE shall be entitled to request
changes to the PMCC Loan Documents at CRIIMI MAE's sole cost and expense. Any
such changes (which may be of general applicability or negotiated with respect
to a particular Mortgage Loan), including changes required to implement CRIIMI
MAE's "No-lock" prepayment terms described in Section 1.10, shall be subject to
PSCC's reasonable approval. The parties acknowledge that any Mortgage Loans
acquired in the secondary market pursuant to Section 1.06 may not be documented
utilizing the PMCC Loan Documents approved for the Facility.
(D) All costs and expenses associated with the origination,
preparation of Mortgage Loan documents, title review and closing costs of any
Mortgage Loan, including, without limitation, legal and brokerage fees, shall be
paid by the borrower as provided in the commitment letter issued with respect to
a Mortgage Loan unless otherwise agreed by PSCC and CRIIMI MAE.
(E) CRIIMI MAE shall retain, at its expense (but subject to the
preceding Section 1.03(D)), counsel of its choosing, reasonably satisfactory to
PSI and PSCC, to represent CRIIMI MAE, PSI and PSCC in connection with the
negotiation and closing of Mortgage Loans. The fees and expenses of any
additional counsel retained by PSI or PSCC in connection with the negotiation
and closing of Mortgage Loans shall be paid by PSI and PSCC. CRIIMI MAE shall
provide PSCC with CRIIMI MAE's or its counsel's standard closing procedures, and
shall follow such Mortgage Loan closing procedures, except as otherwise
requested by PSCC. In connection with the closing and funding of each Eligible
Loan under the Facility, CRIIMI MAE shall deliver the following documents to
PSCC at the time or times specified in CRIIMI MAE's closing procedures:
(i) a notice of borrowing providing the amount of the advance,
executed by an authorized officer of CRIIMI MAE;
(ii) a schedule providing the terms of the Mortgage Loan to be funded,
approved by an authorized officer of CRIIMI MAE;
(iii) wire transfer instructions;
(iv) an acknowledgement of receipt of documents delivered for closing
from a title insurance company; and
(v) a closing certification by counsel retained by CRIIMI MAE to
represent CRIIMI MAE and PSCC in connection with the closing of the
Mortgage Loan.
(F) CRIIMI MAE shall require the borrower under an Eligible Loan
either to (i) appoint a title insurance company approved by PSCC to act as
escrow agent in connection with the closing of each Eligible Loan included in
the Facility or (ii) furnish to PSCC a closing protection letter from a title
insurance company approved by PSCC confirming and acknowledging that the title
company appointed to act as escrow agent is an authorized agent of such approved
title company. The provisions of this Subsection (F) shall not be applicable to
Mortgage Loans that are closed and funded pursuant to "New York style" closing
procedures.
(G) In connection with the closing of a Mortgage Loan, PSCC shall
advance (i) in the case of a new Mortgage Loan, 100% of the par value of the
Mortgage Loan, and (ii) in the case of a Section 1.06 Loan, as defined below,
100% of the lesser of the purchase price of such Mortgage Loan or the Market
Value thereof provided, that the amount advanced with respect to a Section 1.06
Loan shall not be more than 105% of the par value thereof (the amount determined
pursuant to clause (i) or (ii), as the case may be, being the "Loan Amount").
The "Market Value" of a Mortgage Loan shall be the fair market value thereof,
determined by PSI by reference to the prices for similar loans in the secondary
market for mortgage loans among institutional sellers and purchasers, taking
into account the value of the hedging transaction associated with such Mortgage
Loan as well as the scheduled payments of principal, interest and other amounts
due on the Mortgage Loan.
(H) Notwithstanding anything to the contrary set forth herein,
Mortgage Loans will be funded and closed in the name of PSCC, provided that, if
required by applicable licensing, regulatory, or other legal requirements, PSCC
shall use its best efforts to fund and close such loan in the name of PMCC or
another entity such that the Certificates or other securities to be issued in
the Securitization will qualify as "mortgage related securities" within the
meaning of Section 3(a)(41) of the Securities Exchange Act of 1934, as amended.
In the event that one or more Mortgage Loans is closed in the name of PMCC or
any such other entity, the representations, warranties, covenants and agreements
of CRIIMI MAE shall be deemed to have been made to, with, and for the benefit of
PMCC or such other entity. Upon any assignment of such Mortgage Loan or Loans
by PMCC or such other entity to PSCC, all of the assignor's rights under such
representations, warranties, covenants and agreements shall be assigned to and
vested in PSCC. PSCC further agrees to use its reasonable best efforts to apply
for licensure as a mortgage lender in those states in which such licensure is
required and to obtain approval as a mortgagee by the Secretary of Housing and
Urban Development pursuant to Sections 203 and 211 of the National Housing Act.
Section I.04 Origination Fees. CRIIMI MAE may, but shall not be obligated to,
charge a prospective mortgagor a commitment fee or an origination fee in
connection with the issuance of a commitment letter. Any such loan commitment
origination fees collected in connection with the issuance of a commitment
letter or otherwise may be retained by CRIIMI MAE.
Section I.05 Custodial Arrangements. Not later than the first closing of the
funding or purchase of a Mortgage Loan originated by CRIIMI MAE hereunder, the
parties shall select a bank to act as custodian the ("Custodian") of the
promissory notes, mortgages, and all other documents customarily retained by
custodians on behalf of institutional lenders (collectively, the "Loan
Documents") pursuant to an agreement (the "Custodial Agreement") on terms
mutually satisfactory to the parties hereto and the Custodian. Anything in this
Agreement to the contrary notwithstanding, it shall be a condition to PSCC's
obligation to fund or purchase any Mortgage Loan originated by CRIIMI MAE
pursuant to this Agreement that the parties shall have entered into the
Custodial Agreement. CRIIMI MAE shall deliver all Loan Documents to the
Custodian promptly following the closing of an Eligible Loan (other than Loan
Documents required to be filed or recorded, which shall be delivered to the
Custodian promptly upon the receipt of such documents from the relevant filing
or recordation office). The fees and expenses of the Custodian shall be paid by
CRIIMI MAE.
Section I.06 Secondary Market Mortgage Loan Acquisitions. In the event CRIIMI
MAE proposes that PSCC acquire any existing Mortgage Loan or Loans from an
unrelated third-party through the Facility, PSCC and CRIIMI MAE shall establish
in advance written procedures for the acquisition of such Mortgage Loan or
Mortgage Loans consistent with the terms of this Agreement. Such procedures
shall include, without limitation, CRIIMI MAE'S preparation of an underwriting
memorandum with respect to Mortgage Loans proposed to be acquired, such other
actions as shall be necessary to demonstrate that any such Mortgage Loan should
be considered to be an Eligible Loan, and the payment of an "Initial Haircut
Payment" (as defined in Section 3.01(A)) by CRIIMI MAE to PSCC in connection
with the closing of the acquisition of any such Mortgage Loan. Any Mortgage
Loans acquired pursuant to this Section 1.06 shall be subject to the purchase
option granted by PSCC to CRIIMI MAE pursuant to Section 5.01. The costs and
expenses related to all secondary market Mortgage Loan acquisitions shall be
paid as agreed upon by the parties, provided that any broker's, finder's or
similar fees shall be paid solely by CRIIMI MAE. Any Mortgage Loan acquired or
to be acquired in the secondary market through the Facility is herein after
referred to as a "Section 1.06 Loan."
Section I.07 Maximum Facility Size. The maximum principal amount of Mortgage
Loans which PSCC shall be required to fund through the Facility shall be $500
million in the aggregate, which amount may be increased in PSI's and PSCC's sole
discretion.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES
Section II.01 Representations and Warranties of CRIIMI MAE.
(A) CRIIMI MAE hereby represents and warrants to PSI and PSCC, and
their respective successors and assigns as provided in this Agreement (subject
to the qualifications with respect to matters of enforceability set forth below
in Section 2.01(B)) that:
(i) Due Organization; Qualification; REIT Status. CRIIMI MAE is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Maryland, is duly qualified to transact business as a
foreign corporation, in good standing and licensed in each state in which
the nature of its business or property owned by it requires such
qualification and licensure. CRIIMI MAE has, at all relevant times,
maintained its qualifications as a Real Estate Investment Trust under the
Internal Revenue Code of 1986, as amended.
(ii) Authority. CRIIMI MAE has the full power, authority and legal
right to execute and deliver this Agreement (and all agreements executed
and delivered by CRIIMI MAE in connection herewith) and to perform all
transactions contemplated by this Agreement (and all agreements executed
and delivered by CRIIMI MAE in connection herewith). CRIIMI MAE has duly
authorized the execution, delivery and performance of this Agreement (and
all agreements executed and delivered by CRIIMI MAE in connection
herewith), and has duly executed and delivered this Agreement (and all
agreements executed and delivered by CRIIMI MAE in connection herewith).
This Agreement (and each agreement executed and delivered by CRIIMI MAE in
connection herewith) constitutes the legal, valid and binding obligation of
CRIIMI MAE enforceable in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
receivership, moratorium or other laws relating to or affecting the rights
of creditors generally and by general principles of equity (regardless of
whether such enforcement is considered in a proceeding in equity or at
law).
(iii) No Conflicts. Neither the execution and delivery of this
Agreement, nor the fulfillment of or compliance with the terms and
conditions of this Agreement by CRIIMI MAE, will (a) conflict with or
result in a breach of any of the terms, conditions or provisions of CRIIMI
MAE's certificate of incorporation, as amended, or other organization
documents or any agreement or instrument to which CRIIMI MAE is now a party
or by which it (or any of its properties) is bound, or constitute a default
or result in an acceleration of indebtedness under any of the foregoing;
(b) conflict with or result in a breach of any legal restriction if
compliance therewith is necessary (1) to ensure the enforceability of this
Agreement, or (2) for CRIIMI MAE to perform its duties and obligations
under this Agreement (or any agreement executed and delivered by CRIIMI MAE
in connection herewith); (c) result in the violation of any law, rule,
regulation, order, judgment or decree to which CRIIMI MAE or its property
is subject if compliance therewith is necessary (1) to ensure the
enforceability of this Agreement or any Mortgage Loan, or (2) for CRIIMI
MAE to perform its duties and obligations under this Agreement (or any
agreement executed and delivered by CRIIMI MAE in connection herewith); or
(d) result in the creation or imposition of any lien, charge or encumbrance
that would have a material adverse effect upon any of its properties
pursuant to the terms of any mortgage, contract, deed of trust or other
instrument, or materially impair the ability of PSCC to acquire, hold,
administer or dispose of or otherwise to realize on the Mortgage Loans.
(iv) Solvency. CRIIMI MAE is solvent and the execution, delivery and
performance of this Agreement (1) will not cause CRIIMI MAE to become
insolvent, and (2) is not intended by CRIIMI MAE to hinder, delay or
defraud any of its creditors.
(v) No Consent Required. No consent, approval, authorization or
order of, or registration or filing with, or notice to, any court or
governmental agency or body having jurisdiction or regulatory authority
over CRIIMI MAE is required for (a) CRIIMI MAE's execution and delivery of
this Agreement (and each agreement executed and delivered by CRIIMI MAE in
connection herewith) (b) the consummation by CRIIMI MAE of the transactions
contemplated by this Agreement (and each agreement executed and delivered
by CRIIMI MAE in connection herewith) or, to the extent so required, such
consent, approval, authorization, order, registration, filing or notice has
been obtained, made or given (as applicable), except that (x) CRIIMI MAE
may not be duly qualified to transact business as a foreign corporation or
licensed in one or more states if such qualification or licensing is not
necessary (1) to ensure the enforceability of any Mortgage Loan, or (2) for
CRIIMI MAE to perform its duties and obligations under this Agreement (or
any agreement executed and delivered by CRIIMI MAE in connection herewith),
and (y) CRIIMI MAE makes no representation with respect to any required
registration under the federal Securities Act of 1933, as amended (the
"Securities Act"), or any state securities or blue sky law in connection
with a Securitization. Without limitation of the foregoing, CRIIMI MAE
represents and warrants that it is licensed as a mortgage broker in each
jurisdiction in which such license is necessary in connection with the
execution, delivery and performance of this Agreement.
(vi) Ability to Perform. CRIIMI MAE does not believe, nor does it
have any reason or cause to believe, that it cannot perform each and every
covenant of CRIIMI MAE contained in this Agreement (or any agreement
executed and delivered by CRIIMI MAE in connection herewith).
(vii) No Litigation Pending. There are no actions, suits or
proceedings pending or to CRIIMI MAE's knowledge threatened against CRIIMI
MAE which draw into question the validity of this Agreement or which (if
decided adversely to CRIIMI MAE), either in any one instance or in the
aggregate, would result in any material adverse change in the business,
operations, or financial condition of CRIIMI MAE or would impair materially
the ability of CRIIMI MAE to perform its duties and obligations under this
Agreement (or any agreement executed and delivered by CRIIMI MAE in
connection herewith).
(viii) No Brokers. CRIIMI MAE has not dealt with any Person (other
than PSI, PSCC and their affiliates) that may be entitled, by reason of any act
or omission of CRIIMI MAE, to any commission or compensation from PSI, PSC, PMCC
or any of their affiliates in connection with this Agreement or the transactions
contemplated hereby.
(ix) No Untrue Information. No statement, report, or other document
relating to any Mortgage Loan furnished by or on behalf of CRIIMI MAE or any
affiliate thereof in writing (including electronic media) in connection with
CRIIMI MAE's underwriting of and origination of the Mortgage Loans will contain
any untrue statement by CRIIMI MAE or any affiliate thereof of any material fact
or an omission by CRIIMI MAE or any affiliate thereof of a material fact
necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading.
(x) No Default. CRIIMI MAE is not in default or breach of any
agreement or instrument to which CRIIMI MAE is now a party or by which it (or
any of its properties) is bound which breach or default would materially and
adversely affect the ability of CRIIMI MAE to perform its obligations under this
Agreement.
(B) CRIIMI MAE (with respect to each Mortgage Loan to be presented to
PSCC as an Eligible Loan) hereby represents and warrants to PSI and PSCC and
their respective successors and assigns as provided in this Agreement (subject
to the qualifications with respect to matters of enforceability set forth below
in this Section 2.01(B)) that as of the date of closing and funding, or
acquisition, of such Mortgage Loan, as the case may be, each of the following
representations shall be true and correct with respect to such Mortgage Loan:
(i) Underwriting Memorandum. The information set forth in the
Underwriting Memorandum and the Preliminary Mortgage Loan Schedule annexed
to the PPT is true and correct in all material respects.
(ii) Mortgage Loans Documents. CRIIMI MAE has delivered to PSCC
each of the documents comprising the Mortgage Loan Documents
(iii) Payment Current. With respect to a Section 1.06 Loan,
all payments required to be made with respect to such Mortgage Loan under
the terms of the related Note or Mortgage (inclusive of any applicable
grace or cure period) up to the Closing Date have been made. Within the
twelve months preceding such closing date, there has not been any
delinquency in excess of 30 days with respect to such Mortgage Loan.
(iv) Equity Participation or Participation Interest. Except as
disclosed in the related underwriting memorandum, such Mortgage Loan does
not contain any equity participation by CRIIMI MAE or any other person and
is a whole loan and not a participation certificate; neither the related
Note nor the related Mortgage provides for negative amortization or any
contingent or additional interest in the form of participation in the cash
flow of the related Mortgaged Property. Except as so disclosed, CRIIMI MAE
has no ownership interest in such Mortgaged Property or the related
Borrower.
(v) Compliance with Applicable Laws. As of the date of its
origination, such Mortgage Loan either complied with or was exempt from and
(in the case of a Section 1.06 Loan) on the closing date such Mortgage Loan
either complies with or is exempt from applicable state or federal laws,
regulations and other requirements pertaining to usury. CRIIMI MAE has
complied and, in the case of a Section 1.06 Loan, as of the date of
origination of such Mortgage Loan, the originator complied, in all material
respects, with the requirements of any and all other federal, state or
local laws applicable to the origination, servicing and collection of such
Mortgage Loan, including, without limitation, if applicable,
truth-in-lending, real estate settlement procedures, equal credit
opportunity and disclosure laws.
(vi) Proceeds Fully Disbursed. Except as disclosed in the
related underwriting memorandum, the proceeds of such Mortgage Loan have
been or at the closing date thereof will be fully disbursed, and there is
no requirement for future advances thereunder. All costs, fees and
expenses incurred in connection with the origination and closing of such
Mortgage Loan, including, without limitation, recording costs and fees,
have been paid to the appropriate person or arrangements have been made for
their payment to the appropriate person on a timely basis by the related
Borrower.
(vii) Documents Valid. Each of the related Note, the related
Mortgage and any other related Mortgage Loan Document is the legal, valid
and binding obligation of the related Borrower, the related guarantor or
other party executing such document, enforceable in accordance with its
terms, subject to any non-recourse provisions in the Mortgage Loan
Documents and applicable state anti-deficiency laws. There is no valid
offset, defense, counterclaim or right of rescission with respect to such
Note, Mortgage or other Mortgage Loan Document, nor will the operation of
any of the terms of such Note or such Mortgage, or the exercise of any
right thereunder, render either such Mortgage or such Note unenforceable or
subject to any valid right of rescission, offset, counterclaim or defense,
including without limitation the defense of usury, and CRIIMI MAE has no
knowledge that any such right of rescission, offset, counterclaim or
defense has been asserted or is available with respect thereto.
(viii) Assignment of Mortgage: Note Endorsement. With respect
to any Section 1.06 Loan, the related Assignment of Mortgage (except for
any related recording information which is not yet available to CRIIMI MAE)
shall be in recordable form and shall evidence the related seller's legal,
valid and binding assignment to PSCC of the related Mortgage and any
related Assignment of Leases, Rents and Profits. The seller's endorsement
and delivery of the related Note to PSCC constitutes the seller's legal,
valid and binding transfer to PSCC of such Note, and together with such
seller's execution and delivery of such Assignment of Mortgage to PSCC,
legally and validly conveys all right, title and interest of the seller in
such Mortgage Loan to PSCC.
(ix) First Lien. The related Mortgage is a legal, valid and
enforceable first lien on the related Mortgaged Property (including all
buildings and improvements on such Mortgaged Property and all installations
and mechanical, electrical, plumbing, heating and air conditioning systems
located in or annexed to such buildings, and all additions, alterations and
replacements made at any time prior to the closing date of such Mortgage
Loan with respect to the foregoing, but excluding any related personal
property), which Mortgaged Property is free and clear of all encumbrances
and liens having priority over the first lien of such Mortgage, except for
(1) the lien of current real estate taxes and special assessments not yet
delinquent or accruing interest or penalties, (2) covenants, conditions and
restrictions, rights of way, easements and other matters of public record
as of the date of recording of such Mortgage which do not or will not
materially and adversely (A) affect the value of such Mortgaged Property as
security for such Mortgage Loan, or (B) interfere with the related
Borrower's ability to make required principal and interest payments or to
make use of such Mortgaged Property for the intended purposes therefor, (3)
leases and subleases pertaining to such Mortgaged Property which the
originator or CRIIMI MAE did not require to be subordinated to the lien of
such Mortgage, and (4) other matters to which like properties are commonly
subject which do not or will not, individually or in the aggregate,
materially and adversely (A) affect the value of such Mortgaged Property as
security for such Mortgage Loan, or (B) interfere with the related
Borrower's ability to make required principal and interest payments or to
make use of such Mortgaged Property for the intended purposes therefor.
(x) No Modification, Release or Satisfaction. With respect to a
Section 1.06 Loan, neither the related Mortgage nor the related Note
(including any amendments or supplements thereto included in the related
mortgage file) has been impaired, waived, modified, altered, satisfied,
canceled, subordinated or rescinded in any material respect, and the
related Mortgaged Property has not been released from the lien of such
Mortgage and the related Borrower has not been released from its
obligations under such Mortgage, in whole or in any part, in each such
event in a manner which would materially interfere with the benefits of the
security intended to be provided by such Mortgage. No instrument has been
executed that would effect any waiver, modification, alteration,
satisfaction, cancellation, subordination, rescission or release of such
Note or Mortgage or any related Mortgage Loan Document, with the exception
of the written instruments (1) which are a part of the related Mortgage
File, and (2) which have been recorded if necessary to protect the
interests of the related Mortgagee.
(xi) No Taxes or Assessments Delinquent. Based upon the
applicable laws, rules and regulations of the taxing authorities having
jurisdiction over the related Mortgaged Property (excluding any related
personal property), no tax or governmental assessment, or if payable in
installments, no installment thereof, which became due and owing prior to
the Closing Date in respect of such Mortgaged Property and which, if left
unpaid, would be, or might become, a lien on such Mortgaged Property having
priority over the related Mortgage, has become delinquent such that (a)
such tax, assessment or installment has commenced to accrue interest or
penalties, or (b) any such taxing authority may commence proceedings to
collect such tax, assessment or installment, as applicable.
(xii) Escrow Deposits. As of the closing date: (a) the
related escrow account(s), if any, contains all escrow deposits and other
escrow payments required by the terms of the related Mortgage Loan
Documents (inclusive of any applicable grace or cure period) to be held by
the seller or the Mortgagee as of the Closing Date; and (b) in the case of
Section 1.06 Loans, the seller is transferring all amounts on deposit in
the related escrow account(s) on the Closing Date to PSCC. To the extent
not being transferred to PSCC, all escrow deposits and other escrow
payments required under the related Note, the related Mortgage and any
other related Mortgage Loan Documents have been applied in accordance with
their intended purposes by the seller or its agent.
(xiii) No Third Party Advances. The seller of any Section
1.06 Loan has not, directly or indirectly, advanced funds, induced or
solicited any payment from a Person other than the related Borrower, or,
received any payment from a Person other than such Borrower, for the
payment of any amount required under the related Note or the related
Mortgage, except for interest accruing from the date of such Note or the
date of disbursement of the proceeds of such Mortgage Loan, whichever is
later, to the date which precedes by 30 days the first due date under such
Note.
(xiv) No Condemnation or Damages. To CRIIMI MAE's knowledge,
no proceedings for the total or partial condemnation of the related
Mortgaged Property (1) have occurred or (2) are pending or threatened other
than, in each such case, proceedings as to partial condemnation which do
not materially and adversely affect the value of such Mortgaged Property as
security for such Mortgage Loan. Such Mortgaged Property is being used for
the purpose(s) set forth in the commitment letter executed by the related
Borrower (or an affiliate thereof) in connection with the origination of
such Mortgage Loan and, to CRIIMI MAE's knowledge, is in good repair and
free of any damage, waste or defective condition that would materially and
adversely affect the value of such Mortgaged Property as security for such
Mortgage Loan or the use for which such Mortgaged Property was intended at
the time of origination of such Mortgage Loan.
(xv) No Mechanics' Liens. As of the Closing Date for such
Mortgage Loan, the related Mortgaged Property (excluding any related
personal property) is free and clear of any mechanics' and materialmen's
liens or liens in the nature thereof, and no rights are outstanding that,
under law, could give rise to any such liens, if any of such liens are or
may be prior to, or equal with, the lien of the related Mortgage, except
those which are insured against by the related lender's title insurance
policy referred to in Section 2.02(B)(xix) below.
(xvi) Title Survey: Improvements. (1) The related Mortgage
File includes an as-built survey, a survey recertification, a site plan, a
recorded plat or the like with respect to the related Mortgaged Property
which satisfied the requirements of the related title insurance company for
deletion of the standard general exceptions for encroachments, boundary and
other survey matters and for easements not shown by the public records from
the related title insurance policy, except with respect to any of the
Mortgaged Properties located in the State of Texas where the exception for
"shortages in area" and easements not shown by the public records could not
be deleted and is customarily accepted by prudent commercial mortgage
lenders in such jurisdiction. Except for encroachments and similar matters
which do not materially and adversely affect the value of such Mortgaged
Property as security for such Mortgage Loan, (i) none of the improvements
which were included for the purpose of determining the appraised value of
such Mortgaged Property in the related appraisal (the "Appraised Value") at
the time of the origination of such Mortgage Loan lies outside the
boundaries and building restriction lines of such Mortgaged Property, and
(ii) no improvements on adjoining properties materially encroach upon such
Mortgaged Property so as to materially and adversely affect the value of
such Mortgaged Property as security for such Mortgage Loan.
(xvii) Title. In the case of a Section 1.06 Loan, the seller
identified by CRIIMI MAE is the sole owner and beneficial holder of such
Mortgage Loan, has full right and authority to sell and assign such
Mortgage Loan hereunder, is the sole mortgagee or beneficiary of record
under the related Mortgage and is transferring such Mortgage Loan to PSCC
free and clear of any and all liens, encumbrances, participation interests,
pledges, charges or security interests of any nature encumbering such
Mortgage Loan.
(xviii) Compliance with Laws. To CRIIMI MAE's knowledge (based
upon a letter or letters from governmental authorities, a legal opinion, an
endorsement or endorsements to the related title insurance policy, a
representation of the related Borrower at the time of origination of such
Mortgage Loan, a representation or opinion obtained from the seller or
Borrower or other information acceptable to CRIIMI MAE at the time of such
purchase), (1) no improvements located on or forming a part of the related
Mortgaged Property are in violation of any applicable zoning and building
laws or ordinances, (2) the related Mortgaged Property complies with all
other laws and regulations pertaining to the use and occupancy thereof,
excluding Environmental Laws (as defined and addressed in Sections
2.01(A)(xxxii) and 2.01(A)(xxxiii) below), and all applicable insurance
requirements, (3) the Borrower has obtained all inspections, licenses,
permits, authorizations, and certificates necessary for such compliance,
including, but not limited to, certificates of occupancy, and (4) no
governmental authority has issued any notification that such Mortgaged
Property violates or does not comply with such laws or regulations or is
being used, operated or occupied unlawfully or that such Borrower has
failed to obtain such inspections, licenses or certificates, except (in the
case of any of clauses (1), (2), (3) or (4)) for such violation or
non-compliance (A) which does not materially and adversely affect the value
of such Mortgaged Property as security for such Mortgage Loan or the use
for which such Mortgaged Property was intended at the time of origination
of such Mortgage Loan, (B) which is specifically addressed by the appraiser
in the determination of the related Appraised Value, or (C) for which an
escrow account held for the lender has been established in an amount
sufficient to pay for the estimated costs to correct such violations or
non-compliance.
(xix) Title Insurance. The lien of the related Mortgage is
insured by an ALTA lender's title insurance policy or, if an ALTA lender's
title insurance policy is unavailable, another state-approved form of
lender's title insurance policy issued in an amount not less than the
stated principal amount of such Mortgage Loan (after all advances of
principal) insuring PSCC and its successors and assigns that the related
Mortgage is a valid first lien on the related Mortgaged Property, subject
only to exceptions described in Section 2.01(B)(ix) above (or, if such a
title insurance policy has not yet been issued in respect of any Mortgage
Loan, such a policy will be issued and is currently evidenced by a pro
forma or specimen policy or by a "marked-up" commitment for title insurance
which was furnished by the related title insurance company for purposes of
closing such Mortgage Loan). Such title insurance policy is (or, when
issued, will be) in full force and effect, and upon payment of any required
additional premium, issuance or endorsement and delivery of the related
Note to PSCC and recording of the related Mortgage or Assignment of
Mortgage in favor of PSCC in the applicable real estate records, such title
insurance policy will inure to the benefit of PSCC. Such title insurance
policy (1) does not contain the standard general exceptions for
encroachments, boundary or other survey matters and for easements not shown
by the public records, other than such exceptions as are customarily
accepted by prudent commercial mortgage lenders in the related
jurisdiction, and (2) contains only such exceptions for boundary,
encroachments and survey matters as are customarily accepted by prudent
commercial mortgage lenders. CRIIMI MAE will not take, or omit to take,
any action, and to CRIIMI MAE's knowledge, no other person has taken, or
omitted to take, any action, that would materially impair the coverage
benefits of any such title insurance policy. No Seller of any Section 1.06
Loan has made any claim under such title insurance policy.
(xx) Appraisal. CRIIMI MAE has obtained (or, in the case of a
Section 1.06 Loan, the related Mortgage Loan file contains an appraisal of
the related Mortgaged Property by an MAI-certified appraiser duly appointed
by CRIIMI MAE (or, in the case of a Section 1.06 Loan, by the seller
thereof) who had no interest, direct or indirect in such Mortgaged Property
or in any loan made on the security thereof, whose compensation under the
terms of the appraiser's engagement was not (directly or indirectly) based
upon the approval or disapproval of such Mortgage Loan (other than a
reduction of such compensation due to an early termination of the
engagement). Such appraisal satisfies the underwriting requirements of
this Agreement. The market value used by CRIIMI MAE in calculating the
loan-to-value ratio of such Mortgage Loan was not greater than the
appraised value as set forth in the appraisal.
(xxi) Insurance Related to Mortgaged Property. The related
Mortgaged Property is insured by (a) a fire and extended perils insurance
policy providing coverage on a full replacement cost basis in an amount not
less than the lesser of (1) the full replacement cost of all improvements
to such Mortgaged Property and (2) the outstanding principal balance of
such Mortgage Loan, but in any event in an amount sufficient to avoid the
operation of any co-insurance provisions contained in such insurance
policy, which policy contains a standard mortgagee clause naming mortgagee
and its successors as additional insureds; (b) an insurance policy
providing business interruption or rental continuation coverage in an
amount not less than 12 months of operations of such Mortgaged Property;
(c) a comprehensive general liability insurance policy in an amount not
less than $1 million per occurrence; and (d) if any material improvement on
such Mortgaged Property is located in an area identified by the Federal
Emergency Management Agency as having special flood hazards under the
National Flood Insurance Act of 1968, as amended, a flood insurance policy
providing coverage in an amount not less than the lesser of (A) the stated
principal amount of the related Note, and (B) the maximum amount of
insurance available under the Flood Disaster Protection Act of 1973, as
amended. Each such insurance policy contains a clause providing that it is
not terminable and may not be reduced without 30 days prior written notice
to the mortgagee, and no such notice has been received by any person. With
respect to each such insurance policy, either the seller or CRIIMI MAE has
received a certificate of insurance or similar document dated within the
last 12 months to the effect that such policy is in full force and effect.
(xxii) UCC Financing Statements. One or more Uniform
Commercial Code financing statements covering all furniture, fixtures,
equipment and other personal property (1) which are collateral under the
related Mortgage or under a security or similar agreement executed and
delivered in connection with such Mortgage Loan, and (2) in which a
security interest can be perfected by the filing of Uniform Commercial Code
financing statement(s) under applicable law have been filed or recorded (or
have been sent for filing or recording) in all Uniform Commercial Code
filing offices necessary to the perfection under applicable law, of a
security interest in such furniture, fixtures, equipment and other personal
property.
(xxiii) Default, Breach and Acceleration. With respect to each
Section 1.06 Loan, there is no monetary default, breach, violation or event
of acceleration under the related Mortgage or note and no event (other than
failure to make payments due but not yet delinquent) which, with the
passage of time or notice and the expiration of any grace or cure period,
would constitute a monetary default, breach, violation or event of
accelaration and, to CRIIMI MAE's knowledge, there is no non-monetary
default, breach, violation or event of acceleration existing under the
related Mortgage or the related Note and no event 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
thereunder. CRIIMI MAE has no knowledge that the related Borrower under
any Mortgage Loan is a debtor in any state or federal bankruptcy or
insolvency proceeding.
(xxiv) Customary Provisions. The related Note and the related
Mortgage contain customary and enforceable provisions such as to render the
rights and remedies of the holder thereof adequate for the practical
realization against the related Mortgaged Property of the benefits of the
security, including, but not limited to, judicial or, if applicable,
nonjudicial foreclosure.
(xxv) Access Routes. Surveys, title insurance reports, the
title insurance policy and other relevant documents contained in the
related Mortgage File indicate that (1) the Borrower has (or, in the case
of a Section 1.06 Loan, at the time of origination of such Mortgage Loan,
the Borrower had and on the closing date continues to have) sufficient
rights with respect to amenities, ingress and egress and similar matters
identified in the appraisal of the related Mortgaged Property as being
critical to the Appraised Value thereof, and (2) such Mortgaged Property is
receiving (or, in the case of a Section 1.06 Loan, at the time of
origination was receiving and on the closing date, continues to receive)
adequate services from public or private water, sewer and other utilities,
none of which is subject to revocation as a result of a foreclosure or
change in ownership of an adjacent property.
(xxvi) Mortgage Loans Secured by Ground Lease but Not Fee
Interest. With respect to each Mortgage Loan that is secured in whole or
in part by the interest of the related Borrower as lessee under a ground
lease of all or a portion of the related Mortgaged Property (a "Ground
Lease"), but the related fee interest in the portion of such Mortgaged
Property covered by such Ground Lease (the "Fee Interest") is not subject
or subordinate to the lien of the related Mortgage, CRIIMI MAE hereby
represents and warrants that:
(1) to CRIIMI MAE's knowledge: (A) such Ground Lease is in full
force and effect, (B) such Ground Lease or a memorandum thereof has been
recorded in the applicable real estate records, (C) such Ground Lease does
not prohibit the interest of the related lessee thereunder from being
encumbered by the related Mortgage, or a separate written agreement
permitting such encumbrance has been obtained, and (D) there have been no
material changes in the terms of such Ground Lease except as set forth in
written instruments which are part of the related Mortgage File;
(2) except as may be indicated in the related title insurance
policy or commitment, the related lessee's leasehold interest in the
portion of the related Mortgaged Property covered by such Ground Lease is
not subject to any liens or encumbrances superior to, or of equal priority
with, the related Mortgage;
(3) the related lessee's interest in such Ground Lease may be
transferred to PSCC and its successors and assigns through foreclosure of
the related Mortgage or conveyance in lieu of foreclosure and, thereafter,
may be transferred to another person by the mortgagee and its successors
and assigns, upon notice to, but without the consent of, the related lessor
(or, if any such consent is required, either (A) it has been obtained prior
to the Closing Date, or (B) it is not to be unreasonably withheld) provided
that such Ground Lease has not been terminated and all amounts owed
thereunder have been paid;
(4) the related lessor is required to give notice of any default
under such Ground Lease by the related lessee to the mortgagee either under
the terms of such Ground Lease (the related lessor having received notice
of the related Mortgage) or under the terms of a separate written
agreement;
(5) a mortgagee is entitled, under the terms of such Ground
Lease or a separate written agreement, to receive notice of any default by
the related lessee under such Ground Lease, and after any such notice is
entitled to the time provided to the related lessee under such Ground Lease
to cure such default;
(6) the currently effective term of such Ground Lease (excluding
any extension or renewal which is not binding on the lessor thereunder)
extends not less than 10 years beyond the Maturity Date of the related
Mortgage Loan;
(7) such Ground Lease does not impose any restrictions on
subletting which CRIIMI MAE considers to be commercially unreasonable at
the time of its origination of such Mortgage Loan;
(8) the lessee has not received any notice that (A) the related
lessor under such Ground Lease is asserting a default by the related lessee
or an event of default thereunder, or (B) any event has occurred which,
with the passage of time, the giving of notice, or both (other than rental
or other payments being due, but not yet delinquent), would result in a
default or an event of default under the terms of such Ground Lease;
(9) the related lessor has agreed in a writing which is included
in the related Mortgage File that such Ground Lease may not be amended,
modified, cancelled or terminated without the prior written consent of the
mortgagee and that any such action without such consent is not binding upon
the mortgagee; and
(10) under the terms of such Ground Lease and the related
Mortgage, any related insurance proceeds or condemnation award (other than
in respect of a total or substantially total loss or taking) will be
applied either to the repair or restoration of all or part of the related
Mortgaged Property covered by such Ground Lease, with the mortgagee or a
trustee appointed by it having the right to hold and disburse such proceeds
as such repair or restoration progresses, or to the payment of the
outstanding principal balance of or accrued interest on such Mortgage Loan.
(xxvii) Mortgage Loans Secured by Both Ground Lease and Fee
Interest. With respect to each Mortgage Loan that is secured in whole or
in part by the interest of the related Borrower as lessee under a Ground
Lease of all or a portion of the related Mortgaged Property, and as to
which the related Fee Interest is subject or subordinate to the lien of the
related Mortgage, CRIIMI MAE hereby represents and warrants that (1) such
fact is set forth in the Mortgage file or the underwriting memorandum, and
(2):
(A) such Fee Interest is subject or subordinated of record to
such Mortgage; and such Mortgage does not by its terms provide that it will
be subordinated to the lien of any other mortgage or encumbrance upon such
Fee Interest; and
(B) except as disclosed in writing in the related Mortgage File
and as approved in writing by the originator or CRIIMI MAE, upon occurrence
of a default under the terms of such Mortgage by the related Borrower, any
right of the related lessor to cure such default (granted to such lessor
under any agreement binding upon the originator or as successors and
assigns) would entitle such lessor, prior to acceleration of the maturity
of such Mortgage Loan and the commencement of foreclosure of such Mortgage,
to be given notice of such default and (I) no more than 30 days after such
notice, to cure any default in the payment of principal or interest or
other monetary default under such Mortgage, and (II) no more than 60 days
after such notice, to cure any other default or, alternatively, to commence
proceedings to recover possession of such Mortgaged Property plus a
reasonable opportunity to cure such default after such lessor's recovery of
possession if such lessor pursues such proceedings in good faith and with
due diligence.
(xxviii) Deed of Trust. With respect to any related Mortgage
that is a deed of trust or trust deed, a trustee, duly qualified under
applicable law to serve as such, either has 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 Borrower or in connection with the release of the related Mortgaged
Property following the payment of such Mortgage Loan in full, no fees or
expenses are or will be payable by the mortgagee to such trustee.
(xxix) Cross-Security. Except as disclosed in the related
underwriting memorandum, the related Mortgaged Property is not collateral
or security for the payment or performance, of any other obligations owed
to any Person other than, the mortgagee thereunder, except for security
interests in personal property and fixtures.
(xxx) Assignment of Leases, Rents and Profits. Unless the
related Mortgaged Property is occupied by the related Borrower, the related
Mortgage Loan Documents contain the provisions of an Assignment of Leases,
Rents and Profits or include a separate Assignment of Leases, Rents and
Profits. Any related Assignment of Leases, Rents and Profits incorporated
within the related Mortgage or set forth in a separate Mortgage Loan
Document creates a valid first priority assignment of, or security interest
in, the right to receive all payments due under the related leases, if any.
(xxxi) Qualified Mortgage (1) Such Mortgage Loan is
principally secured by an interest in real property and either (A) the fair
market value of such real property was at least equal to 80% of the
adjusted issue price of such Mortgage Loan on the date of origination or,
if such Mortgage Loan has been "significantly modified" within the meaning
of Section 1001 of the Code, on the date of such modification (unless such
modification may be disregarded under Treas. Reg. Sec. 1.860G-2(b)(3)), or
(B) substantially all of the proceeds of such Mortgage Loan were used to
acquire or improve or protect an interest in real property that, at
origination, was the only security for such Mortgage Loan; (2) except as
disclosed in the related underwriting memorandum such Mortgage Loan
contains no equity participation by the lender, and neither the related
Note nor the related Mortgage provides for any contingent or additional
interest in the form of participation in the cash flow or proceeds realized
on disposition of the related Mortgaged Property; and (3) such Mortgage
Loan is a "qualified mortgage" as defined in, and for purposes of, Section
860G of the Code.
(xxxii) Environmental Assessment. (1) In connection with the
origination of such Mortgage Loan, a Phase I Environmental Report and, if
recommended by the Phase I Environmental Report, a Phase II Environmental
Report were obtained with respect to the related Mortgaged Property from an
independent environmental engineer or consultant; and (2) such
Environmental Report(s) did not indicate the existence of conditions or
circumstances respecting such Mortgaged Property that would (A) constitute
or result in a material violation of any applicable Environmental Law, (B)
impose any material constraint on the operation of such Mortgaged Property
or require material change in the use thereof, or (C) require clean-up,
remedial action or other response with respect to Hazardous Materials on or
affecting such Mortgaged Property under any applicable Environmental Law,
with the exception of conditions or circumstances (I) which such
Environmental Report(s) indicated could be cleaned up, remediated or
brought into compliance with applicable Environmental Law by the taking of
certain actions, and (II) either (a) for which a hold-back or other escrow
of funds not less than the costs of taking such clean-up, remediation or
compliance actions as estimated in such Environmental Report(s) has been
created to be held by the mortgagee or an escrow agent until such clean-up,
remediation or compliance actions have been taken, or (b) for which an
environmental insurance policy (which policy shall be issued by an
insurance company which is duly qualified as such under the laws of the
states in which the Mortgaged Properties insured by such company are
located, duly authorized and licensed insuch states to transact the
applicable insurance business and write the insurance provided, and whose
claims-paying ability with respect to hazard and flood insurance is rated
A:V or better (or the equivalent in any successor rating system) by Best's
Key Rating Guide) in an amount satisfactory to CRIIMI MAE has been obtained
by the related Borrower or an indemnity for such costs has been obtained
from a potentially culpable party, or (c) such clean up, remediation or
compliance actions in compliance with applicable Environmental Law have
been completed prior to the closing of such Mortgage Loan. For purposes of
this Agreement, the term "Environmental Law" shall mean any environmental
law, ordinance, rule, regulation or order of a federal, state or local
governmental authority, including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
(42 U.S.C. 9601 et seq.) ("CERCLA"), the Hazardous Material Transportation
Act, as amended (49 U.S.C. 1801 et seq.), the Resource Conservation and
Recovery Act, as amended (42 U.S.C. 6901 et seq.), the Federal Water
Pollution Control Act, as amended (33 U.S.C. 1251 et seq.), the Clean Air
Act, as amended (42 U.S.C. 7401 et seq.) and the regulations promulgated
pursuant thereto. To CRIIMI MAE's knowledge, neither the borrower nor, in
the case of a Section 1.06 Loan, the seller, has taken any action which
would cause either such Mortgaged Property to become subject to liability
under CERCLA.
(xxxiii) Notice of Environmental Problem. Other than with
respect to any conditions identified in the Phase I and/or Phase II
Environmental Reports referred to in Section (xxxi) above, neither the
borrower nor the seller of a Section 1.06 Loan: (1) has received actual
notice from any federal, state or other governmental authority of (A) any
failure of the related Mortgaged Property to comply with any applicable
Environmental Laws, or (B) any known or threatened release of Hazardous
Materials on or from such Mortgaged Property in violation of Environmental
Laws; or (2) has received actual notice from the related Borrower that (A)
such Borrower has received any such notice from any such governmental
authority, (B) such Mortgaged Property fails to comply with Environmental
Laws, or (C) has received actual notice that there is any known or
threatened release of Hazardous Materials on or from such Mortgaged
Property in violation of Environmental Laws; or (3) has any actual
knowledge that (A) the related Mortgaged Property fails to materially or
significantly comply with any applicable Environmental Law or (B) there has
been any known or threatened material or significant release of Hazardous
Materials on or from such Mortgaged Property in violation of any applicable
Environmental Law.
(xxxiv) Recourse. Except as set forth in the related
underwriting memorandum, the related Mortgage Loan Documents contain
standard provisions providing for recourse against the related Borrower for
damages sustained in connection with the Borrower's fraud, intentional
misrepresentation, or misappropriation of any tenant security deposits or
rent. Except as set forth in the related underwriting memorandum, the
related Mortgage Loan Documents contain provisions pursuant to which the
related Borrower has agreed to indemnify the mortgagee for damages
resulting from violations of Environmental Laws.
(xxxv) Leases. With respect to each Mortgage Loan: (1) prior
to either the origination of such Mortgage Loan or the purchase of such
Mortgage Loan by PSCC, the originator or CRIIMI MAE as applicable, obtained
tenant estoppel certificates from all tenants whose leases covered more
than 10% of the net leasable area of the related Mortgaged Property; and
based upon such tenant estoppel certificates, no defaults with respect to
any such lease existed as of the date of the related tenant estoppel
certificate; and (2) neither CRIIMI MAE nor the Originator has received any
notice of the existence of any default under any such lease or of the
existence of any condition which, but for the passage of time or the giving
of notice, or both, would result in such a default.
(xxxvi) Environmental Compliance. One or more of the related
Mortgage Loan Documents contains either a representation, warranty or
covenant that the related Borrower will not use, cause or permit to exist
on the related Mortgaged Property any Hazardous Materials in violation of
Environmental Law or an indemnity with respect to any such violation in
favor of the mortgagee.
(xxxvii) Inspection. Either the originator, the seller of a
Section 1.06 Loan or CRIIMI MAE has inspected the related Mortgaged
Property or caused such Mortgaged Property to be inspected within the last
12 months.
(xxxviii) Subordinate Debt. Except as has been specifically
disclosed in writing to PSCC on or before the closing date, the related
Mortgage contains a provision for the acceleration of the payment of the
unpaid principal balance of such Mortgage Loan in the event that the
related Borrower encumbers the related Mortgaged Property without the prior
written consent of the mortgagee thereunder.
(xxxix) Common Ownership. No two properties securing a
Mortgage Loan are directly or indirectly under common ownership except to
the extent that such common ownership and the ownership structure has been
specifically disclosed in writing to PSCC.
(xl) Operating or Financial Statement. The related Mortgage Loan
Documents require the related Borrower to furnish to the mortgagee at least
annually an operating statement with respect to the related Mortgaged
Property or, in the case of a borrower-occupied Mortgaged Property, a
financial statement with respect to the related Borrower.
Each representation and warranty of CRIIMI MAE set forth in Section
2.01(A) or 2.01(B) of this Agreement, to the extent related to the
enforceability of any instrument, agreement or other document or as to offsets,
defenses, counterclaims or rights of rescission related to such enforceability,
including, without limitation, the representations set forth above in Sections
2.01(B)(vii) and 2.01(B)(xxiii), is qualified to the extent that (1) enforcement
may be limited (A) by bankruptcy, insolvency, reorganization or other similar
laws affecting enforcement of creditors' rights generally, (B) by general
principles of equity (regardless of whether such enforcement is considered in a
proceeding in equity or at law), and (C) by any applicable anti-deficiency law
or statute; and (2) such instrument, agreement or other document may contain
certain provisions which may be unenforceable in accordance with their terms, in
whole or in part, but the unenforceability of such provisions will not (subject
to the qualification in clause (1), above) (A) cause the related Note or
Mortgage to be void, (B) invalidate the related Borrower's obligation to pay
interest at the stated interest rate of such Note on, and repay the principal
of, the related Mortgage Loan in accordance with the payment terms of such Note,
such Mortgage and other written agreements delivered to CRIIMI MAE in connection
therewith, (C) invalidate the obligation of any related guarantor to pay
guaranteed obligations with respect to interest at the stated interest rate of
such Note on, and the principal of, such Mortgage Loan in accordance with the
payment terms of such guarantor's written guaranty, (D) impair the mortgagee's
right to accelerate and demand payment of the interest at the stated interest
rate of such Note on, and principal of, such Mortgage Loan upon the occurrence
of a legally enforceable default, or (E) impair the mortgagee's right to realize
against such Mortgaged Property by judicial or, if applicable, nonjudicial
foreclosure. Each representation made "to the knowledge" of CRIIMI MAE shall
refer to such knowledge of CRIIMI MAE after due inquiry by such personnel of
CRIIMI MAE whose positions and responsibilities would require such inquiry in
the course of their duties.
(C) In connection with the closing and funding of a Mortgage Loan or the
closing of the purchase of a Section 1.06 Loan, the issuance of a notice of
borrowing or wire transfer instructions by CRIIMI MAE to PSCC shall constitute
an affirmation by CRIIMI MAE that the representations and warranties of CRIIMI
MAE set forth in Section 2.01(A)(ix) and Section 2.01(B) are true and correct in
all material respects on the closing date with respect to the Mortgage Loan to
be funded or acquired.
Section II.02 Representations and Warranties of PSI and
PSCC.
(A) PSI and PSCC, each solely for itself, hereby represents and
warrants to CRIIMI MAE and its successors and assigns as provided in this
Agreement that:
(i) Due Organization; Qualification. It is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware, is duly qualified to transact business as a foreign
corporation, in good standing in each state in which the nature of its
business or property owned by it requires such foreign qualification.
(ii) Authority. It has the full power, authority and legal right to
execute and deliver this Agreement (and all agreements executed and
delivered by it in connection herewith) and to perform all transactions
contemplated by this Agreement (and all agreements executed and delivered
by it in connection herewith). It has duly authorized the execution,
delivery and performance of this Agreement (and all agreements executed and
delivered by it in connection herewith), and has duly executed and
delivered this Agreement (and all agreements executed and delivered by it
in connection herewith). This Agreement (and each agreement executed and
delivered by it in connection herewith) constitutes its legal, valid and
binding obligation enforceable in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
receivership, moratorium or other laws relating to or affecting the rights
of creditors generally and by general principles of equity (regardless of
whether such enforcement is considered in a proceeding in equity or at
law).
(iii) No Conflicts. Neither the execution and delivery of this
Agreement, nor the fulfillment of or compliance with the terms and
conditions of this Agreement, will (a) conflict with or result in a breach
of any of the terms, conditions or provisions of its certificate of
incorporation, as amended, or other organization documents or any agreement
or instrument to which it is now a party or by which it (or any of its
properties) is bound, or constitute a default or result in an acceleration
of indebtedness under any of the foregoing; (b) conflict with or result in
a breach of any legal restriction if compliance therewith is necessary (1)
to ensure the enforceability of this Agreement, or (2) for it to perform
its duties and obligations under this Agreement (or any agreement executed
and delivered by it in connection herewith); (c) result in the violation of
any law, rule, regulation, order, judgment or decree to which it or its
property is subject if compliance therewith is necessary (1) to ensure the
enforceability of this Agreement, or (2) for it to perform its duties and
obligations under this Agreement (or any agreement executed and delivered
by it in connection herewith); or (d) result in the creation or imposition
of any lien, charge or encumbrance that would have a material adverse
effect upon any of its properties pursuant to the terms of any mortgage,
contract, deed of trust or other instrument.
(iv) Solvency. It is solvent and the execution, delivery and
performance of this Agreement (1) will not cause it to become insolvent,
and (2) is not intended by it to hinder, delay or defraud any of its
creditors.
(v) No Consent Required. No consent, approval, authorization or
order of, or registration or filing with, or notice to, any court or
governmental agency or body having jurisdiction or regulatory authority
over it is required for (a) its execution and delivery of this Agreement
(and each agreement executed and delivered by it in connection herewith)
(b) the consummation by it of the transactions contemplated by this
Agreement (and each agreement executed and delivered by it in connection
herewith) or, to the extent so required, such consent, approval,
authorization, order, registration, filing or notice has been obtained,
made or given (as applicable), except that (x) it may not be duly qualified
to transact business as a foreign corporation or licensed in one or more
states if such qualification or licensing is not necessary for it to
perform its duties and obligations under this Agreement (or any agreement
executed and delivered by it in connection herewith), and (y) it makes no
representation with respect to any required registration under the
Securities Act or any state securities or blue sky law in connection with a
Securitization.
(vi) Ability to Perform. It does not believe, nor does it have any
reason or cause to believe, that it cannot perform each and every covenant
of it contained in this Agreement (or any agreement executed and delivered
by it in connection herewith).
(vii) No Litigation Pending. There are no actions, suits or
proceedings pending or to its knowledge threatened against it which draw
into question the validity of this Agreement or which (if decided adversely
to it), either in any one instance or in the aggregate, would result in any
material adverse change in its business, operations, or financial condition
or would impair materially its ability to perform its duties and
obligations under this Agreement (or any agreement executed and delivered
by it in connection herewith).
(viii) No Brokers. It has (A) not dealt with any Person (other
than one or more of its affiliates) that may be entitled, by reason of any
act or omission by it to any commission or compensation in connection with
this Agreement or the transactions contemplated hereby.
(ix) No Default. It is not in default or breach of any agreement or
instrument to which it is now a party or by which it (or any of its
properties) is bound which breach or default would materially and adversely
affect the ability of it to perform its obligations under this Agreement.
ARTICLE III.
HAIRCUT PAYMENTS
Section III.01 Haircut Payments
(A) Concurrently with the closing of (i) each Mortgage Loan
originated by CRIIMI MAE or by PSCC for the Facility and (ii) each purchase of a
Section 1.06 Loan in the secondary market for the Facility, CRIIMI MAE agrees to
deposit with PSCC an amount, in cash, equal to five (5%) percent of the Loan
Amount of such Mortgage Loan (the "Initial Haircut Payment"). PSCC shall remit
each Initial Haircut Payment on the date received to an interest-bearing money
market account held at PSI in the name of PSCC (the "Haircut Funds Account").
PSI shall not be responsible for any losses resulting from such investment or
for obtaining any specific level or percentage of earnings. Each Initial
Haircut Payment made by CRIIMI MAE shall constitute the purchase price for the
option granted to CRIIMI MAE pursuant to Section 5.01 of this Agreement to
purchase the Mortgage Loan with respect to which such Initial Haircut Payment
was made. Upon exercise of such Option, the aggregate amount of such payments,
together with any earnings on the Haircut Funds Account (collectively, the
"Haircut Funds") not previously paid to CRIIMI MAE pursuant to Section 3.01(C)
shall by applied against the purchase price for the Mortgage Loans in accordance
with the provisions of Article V of this Agreement. If CRIIMI MAE does not
exercise such Option, PSCC shall retain the Haircut Funds in accordance with
Article V.
(B) PSI shall have sole dominion and control over the Haircut Funds
Account subject to the terms of this Agreement. Except as otherwise expressly
provided in this Agreement, none of CRIIMI MAE, PSI or PSCC shall grant or
permit any liens or claims to arise with respect to the Haircut Funds Account.
(C) Except as otherwise provided in this Agreement, all investment
earnings on amounts on deposit in the Haircut Funds Account shall be added to
and become a part of the Haircut Funds Account. On each December 1st during the
Term of this Agreement, and provided that no Event of Default shall have
occurred and be continuing and CRIIMI MAE is then otherwise in compliance with
the terms and conditions hereof, PSI shall pay to CRIIMI MAE an amount equal to
the excess, if any, of the aggregate amount then on deposit in the Haircut Funds
Account over an amount equal to 5% of the greater of the aggregate Market Value
and the aggregate par value of Mortgage Loans funded through the Facility
through such December 1st (the "Haircut Earnings Payment").
(D) For tax purposes, notwithstanding anything contained herein, all
investment earnings on funds in the Haircut Funds Account shall be deemed to be
income of CRIIMI MAE and CRIIMI MAE shall indemnify and hold PSI and PSCC
harmless from and against any tax liability resulting therefrom, which
indemnification shall survive the expiration or earlier termination of this
Agreement.
(E) If at any time the amount of Haircut Funds (including investment
earnings thereon) shall be less than 5% of the sum of (i) the aggregate par
value of all Mortgage Loans originated by CRIIMI MAE through the Facility, plus
(ii) the aggregate purchase price of all Section 1.06 Loans purchased by PSCC
through the Facility, in each case through the date of determination, CRIIMI MAE
shall make an additional payment to the Haircut Funds Account in an amount
sufficient to cause the value of the Haircut Funds to be equal to 5% of such
sum.
ARTICLE IV.
MORTGAGE LOAN FACILITY DURING AGGREGATION PERIOD
Section IV.01 Loan Facility during Aggregation Period. All Mortgage Loans in
the Facility funded or purchased by PSCC shall be held in the name of PSCC by
the Custodian on its behalf pursuant to the Custodial Agreement in accordance
with the terms and conditions contained herein and therein until the earlier to
occur of (i) the first anniversary of the funding date of the first Mortgage
Loan acquired through the Facility, and (ii) the date on which the sum of the
aggregate principal amount of Mortgage Loans funded or acquired through the
Facility held by PMCC plus the aggregate principal amount of PMCC Loans
originated pursuant to the PMCC Agreement equals $1 billion (or such smaller
amount as PSI and CRIIMI MAE mutually agree is sufficient for a Securitization)
(the period from the Effective Date until the earlier of the dates described in
the preceding clause (i) and (ii) being the "Aggregation Period").
Notwithstanding anything to the contrary, it is expressly understood that
effective as of 30 days prior to the Termination Date, PSCC shall have no
further obligation to fund or purchase any additional Mortgage Loans through the
Facility pursuant to any new commitment letters or extension of the term of any
then existing commitment letters.
Section IV.02 Hedging During Aggregation Period. PSI shall be responsible, in
accordance with the procedures set forth herein, for executing an interest rate
hedge with respect to each of the Mortgage Loans acquired through the Facility
during the Aggregation Period. Prior to executing any hedge, or modifying an
existing hedge, PSI shall discuss its hedging strategy with CRIIMI MAE and
provide any supporting analyses as reasonably requested by CRIIMI MAE. PSI
shall provide monthly hedge position reports in reasonable detail to CRIIMI MAE,
and shall provide such additional information relating to such hedge positions
as CRIIMI MAE may reasonably request.
Section IV.03 Servicing of Mortgage Loans During Aggregation Period. During the
Aggregation Period, CRIIMI MAE Services shall service the Mortgage Loans in the
Facility for a monthly servicing fee equal to the excess of the aggregate amount
of interest earned on the Mortgage Loans during each month over the Notional
Amount for such month. The "Notional Amount" for any month shall be the sum of
(i) the aggregate amount of interest which would have been earned on the
Mortgage Loans during such month if the interest rate on each of the Mortgage
Loans were 1.00% in excess of the 30-day LIBOR rate, as in effect from time to
time, and (ii) the aggregate amount of hedging costs incurred with respect to
Mortgage Loans in the Facility during such month. In computing the Notional
Amount for any month, any change in the 30-day LIBOR rate shall be taken into
account as of the effective date of such change. CRIIMI MAE Services shall
service the Mortgage Loans during the Aggregation Period pursuant to an Interim
Servicing Agreement on terms mutually agreeable to CRIIMI MAE, PSI and PSCC (the
"Interim Servicing Agreement"). The payment and performance of the obligations
of CRIIMI MAE Services under the Interim Servicing Agreement shall be guaranteed
to PSI and PSCC pursuant to the terms of a Guaranty, the form of which is
attached hereto as Exhibit B (the "Guaranty") and which shall be executed
contemporaneously with the execution and delivery of the Interim Servicing
Agreement. Anything in this Agreement to the contrary notwithstanding, it shall
be a condition to PSCC's obligation to fund or purchase any Mortgage Loan
originated by CRIIMI MAE pursuant to this Agreement that the parties shall have
entered into the Interim Servicing Agreement and the Guaranty. After the
consummation of the Securitization, and subject to the consent of the Rating
Agencies, CRIIMI MAE Services shall continue to service each Mortgage Loan in
the Facility.
Section IV.04 Mortgage Loan Defaults During Aggregation Period. In the event a
Borrower shall default in the payment of any amount due under a Mortgage Loan
during the Aggregation Period and such default shall continue beyond any grace
period provided in the related Mortgage, CRIIMI MAE or CRIIMI MAE Services shall
cause an appraisal of the related Mortgaged Property to be conducted. If such
appraisal values the Mortgaged Property at less than 110% of the then
outstanding principal balance of the Mortgage Loan, CRIIMI MAE shall, within
five (5) business days of its receipt of such appraisal, either (i) deposit with
PSCC additional collateral for such Mortgage Loan acceptable to PSCC, or (ii)
purchase such Mortgage Loan at a purchase price equal to the sum of: (a) the
outstanding principal balance of and accrued interest on such Mortgage Loan (or,
for any Section 1.06 Loan, the purchase price paid by PSCC, reduced by any
amortization of the principal balance of such Section 1.06 Loan after the date
of acquisition), (b) the costs incurred by PSI and PSCC in connection with the
establishment and maintenance of the hedge position with respect to the Mortgage
Loan, net of any gains and including any losses associated with the hedge
position or in connection with a rate lock of the Mortgage Loan and (c) any
other amounts due PSI or PSCC hereunder or under the Servicing Agreement,
including, without limitation, unreimbursed servicing advances and servicing
advances reimbursed to the Servicer by PSCC or PSI prior to such purchase. If
CRIIMI MAE shall not have concluded one of the actions required by the preceding
clauses (i) and (ii), PSCC may, but shall not be obligated to sell the Mortgage
Loan on such terms and conditions as it shall determine and, if the net proceeds
of such sale are less than the then outstanding principal balance of the
Mortgage Loan plus the costs of the related hedge position, than PSCC may
withdraw and pay to itself from the Haircut Funds Account the amount of any such
shortfall. If such appraisal values the Mortgaged Property at 110% of the then
outstanding principal balance of the Mortgage Loan or more, then PSCC and CRIIMI
MAE shall, by mutual agreement, determine the action to be taken by CRIIMI MAE
Services, as special servicer, with respect to such Mortgage Loan. The
foregoing notwithstanding, if PSCC determines, in good faith after receipt of
the appraisal and consideration of the advice of CRIIMI MAE Services, as special
servicer, that a material risk exists that the value of such Mortgage Loan could
decline below the outstanding principal balance thereof, PSCC may take such
action as it reasonably determines to be appropriate with respect to such
Mortgage Loan including, without limitation, the sale of other disposition of
such Mortgage Loan on such terms as PSCC determines to be appropriate under the
circumstances.
ARTICLE V.
CRIIMI MAE ACQUISITION OF LOANS
Section V.01 CRIIMI MAE's Option to Purchase Mortgage Loans. PSCC hereby
grants to CRIIMI MAE an option (the "Option") to purchase all (but not less than
all) of the Mortgage Loans acquired through the Facility from PSCC in accordance
with the terms hereof. The Option shall be exercisable for a 30-day period
commencing upon the earlier to occur of: (i) the last day of the Aggregation
Period referred to in Section 4.01 or (ii) a date mutually agreeable to the
parties to this Agreement (the "Exercise Period"), provided, however, that (a)
the Option may be exercised only if CRIIMI MAE contemporaneously exercises the
option to purchase the PMCC Loans contained in the PMCC Agreement; and (b)
except as may otherwise be agreed by PSI and PSCC, the Option may be exercised
only in connection with a Securitization, the closing date of which shall also
be the closing date of CRIIMI MAE's purchase of the Pooled Loans. The foregoing
notwithstanding, if (x) the Option shall become exercisable pursuant to the
operation of clause (ii) of Section 4.01 and (y) PSI, PSCC and CRIIMI MAE agree
that conditions in the CMBS market are unfavorable for the Securitization, the
Exercise Period may be extended for a mutually agreeable period (but not later
than the expiration of the Term of this Agreement). In the event CRIIMI MAE
elects to extend the Term of this Agreement pursuant to Section 8.01, the
commencement date of the Exercise Period shall be similarly extended. The
purchase price of the Mortgage Loans (the "Purchase Price") shall be equal to
the sum of: (i) the outstanding principal balance of and accrued interest on the
Mortgage Loans (or, for any Section 1.06 Loan, the purchase price paid by PSCC,
reduced by any amortization of the principal balance of such Section 1.06 Loan
after the date of acquisition), (ii) the costs incurred by PSI and PSCC in
connection with the establishment and maintenance of hedge positions with
respect to the Mortgage Loans, net of any gains and including any losses
associated with the hedge positions or in connection with rate locks of the
Mortgage Loans and (iii) any other amounts due PSI or PSCC hereunder or under
the Servicing Agreement, including, without limitation, unreimbursed servicing
advances and servicing advances reimbursed to the Servicer by PSI or PSCC during
the Aggregation Period. The Purchase Price for the Mortgage Loans and the PMCC
Loans shall be paid, (i) to the extent available, by the payment to PSCC or
PMCC, as the case may be, of the net proceeds of the Securitization; and (ii) by
crediting against the Purchase Price the Haircut Funds (after deduction and
payment to PSCC of any amounts payable to it pursuant to Section 4.04 hereof).
The remaining balance of the Purchase Price shall be paid from other funds of
CRIIMI MAE, including funds obtained through the Securities Repurchase Facility
provided for in Article VI.
Section V.02 Securitization. (A) PSI, PSCC and CRIIMI MAE will act in good
faith in connection with the Securitization, to negotiate and execute the
following agreements:
(i) if required, one or more loan sale agreements (each, a
"Mortgage Loan Sale Agreement") between PSCC and CRIIMI MAE (or a
subsidiary of CRIIMI MAE) or between PMCC and CRIIMI MAE or such
subsidiary, as the case may be, for such Securitization providing for,
among other things,
(a) the sale of the Mortgage Loans and the PMCC Loans;
(b) the payment of the costs and expenses of the
transaction by CRIIMI MAE (or, if Loans held by a third party are
included in the Securitization, by CRIIMI MAE and such third party);
(c) the making of representations and warranties by PSCC,
CRIIMI MAE and PMCC reasonably satisfactory to PSI and satisfactory to
the Rating Agencies in connection with such Securitization, provided
that (I) any such representations and warranties made by PMCC with
respect to the PMCC Loans shall be limited to corporate matters
comparable to the representations and warranties contained in Section
2.02(A) and such additional representations and warranties as are
provided for in the PMCC Agreement; (II) the representations and
warranties to be made by PSCC shall be limited to corporate matters
comparable to the representations and warranties contained in
Section 2.02(A), ownership of the Mortgage Loans and matters relating
to Mortgage Loans funded through the Facility that arose during the
Aggregation Period; (III) none of PMCC, PSCC, or PSI shall be deemed
to have made or be required to make any representations or warranties
with respect to a particular Mortgage Loan or PMCC Loan, as the case
may be, if and to the extent CRIIMI MAE or CRIIMI MAE Services as
servicer under the Interim Servicing Agreement becomes aware such
representation and warranty is incorrect during the term of this
Agreement or the Interim Servicing Agreement, and (IV) if the Rating
Agencies require additional or different representations and
warranties in connection with such Securitization, CRIIMI MAE will
make such additional or different representations and warranties to
the extent that the truth and correctness of such representations and
warranties can be substantiated through reasonable due diligence
efforts and expenditures; and
(d) CRIIMI MAE providing PSI, its officers, directors,
affiliates and controlling persons with a reasonable and customary
"10b-5" indemnity reasonably satisfactory to PSI with respect to any
disclosure document delivered in connection with such transaction but
excluding (i) any portion thereof with respect to PSI, its plan of
distribution of the related CMBSs and the structure of the related
CMBSs (consisting principally of the descriptions of the priority of,
and allocation of distributions and losses to, the CMBS's, yield and
detrimental tables) such information, the "PSI Information"); and (ii)
information relating to Mortgage Loans and related Mortgage Properties
that were not originated or underwritten by CRIIMI MAE through the
Facility or are not then being serviced by CRIIMI MAE; and
(e) PSI providing CRIIMI MAE and its officers, directors,
affiliates and controlling persons a reasonable and customary "10b-5"
indemnity reasonably satisfactory to CRIIMI MAE with respect to the
PSI Information;
(ii) if the CMBSs are to be issued by or through a Securitization
Trust, as defined below, a pooling and servicing agreement (each, a
"Pooling and Servicing Agreement") among CRIIMI MAE and or a subsidiary
(which need not be a wholly-owned subsidiary) of CRIIMI MAE, as depositor,
CRIIMI MAE Services, as master servicer and special servicer, and a trustee
(the "Trustee"), to be on substantially the same terms as Rating Agencies
allow for conduit securitizations, providing for, among other things, the
deposit of the Pooled Loans into a trust (a "Securitization Trust"), the
issuance of one or more classes of mortgage pass-through certificates
("Certificates") evidencing beneficial ownership interests in the
Securitization Trust, and the servicing and special servicing of the Pooled
Loans deposited into the Securitization Trust, with such modifications as
the Rating Agencies may require and the parties thereto shall otherwise
agree;
(iii) if the CMBSs are to be issued other than through to a
Securitization Trust, a trust indenture (the "Indenture") providing for the
issuance of the CMBSs and the pledge of the Pooled Loans to the trustee
under the Indenture (the "Indenture Trustee") as collateral security for
the obligations of the issuer of the CMBSs, to be on substantially the same
terms as Rating Agencies allow in similar securitizations and otherwise
containing provisions customarily set forth in trust indentures for the
issuance of CMBSs including, if the CMBSs are to be registered under the
Securities Act, provisions required for the qualification of the Indenture
under the Trust Indenture Act of 1939, as amended;
(iv) if the CMBSs are to be issued under an Indenture, a
servicing agreement (the "Servicing Agreement") between CRIIMI MAE and
CRIIMI MAE Services as servicer, master servicer and special servicer, to
be on substantially the same terms as Rating Agencies allow in similar CMBS
securitizations and (if the Indenture Trustee is not a party thereto)
assigned to the Indenture Trustee as additional collateral security under
the Indenture; and
(v) an underwriting agreement (the "Underwriting Agreement")
between CRIIMI MAE and PSI relating to the sale of any publicly-offered
CMBSs, a purchase agreement (the "Purchase Agreement") between CRIIMI MAE
and PSI, as dealer, with respect to any privately-offered CMBSs with
respect to which PSI has elected to act as principal, and a private
placement agency agreement ("Placement Agreement") between CRIIMI MAE and
PSI, as broker, with respect to any privately offered CMBSs with respect to
which PSI has elected to act as placement agent, each in connection with
the sale of any privately-offered CMBSs, providing for underwriting,
purchase or placement fees, as applicable. The underwriting, purchase or
placement fee (collectively "Underwriting Fee" shall be equal to (a) 0.625%
of the face amount of investment grade rated CMBSs and (b) a mutually
agreeable Underwriting Fee with respect to any non-investment grade rated
CMBSs (except that no Underwriting Fee shall be payable with respect to any
Certificates retained by CRIIMI MAE); and
(B) PSI agrees that there may be one co-manager of the Securitization
who shall receive an allocation of approximately 25% of the investment grade
rated CMBSs, provided, that the co-manager shall not receive any Underwriting
Fee with respect to any securities allocated to it that are not sold during the
offering period at the price fixed for such securities on the pricing date for
the securities.
Section V.03 Purchase Without Securitization through PSI.
(A) If CRIIMI MAE exercises the Option and consummates a
Securitization in a transaction in which PSI is not the lead manager, CRIIMI MAE
shall pay PSI an amount equal to 0.625% of the aggregate face amount of the
investment grade related Securities issued in such Securitization (the "Breakup
Fee").
(B) If CRIIMI MAE exercises the Option and acquires the Mortgage
Loans and/or the PMCC Loans but does not consummate a Securitization, the
Breakup Fee shall be computed be reference to the aggregate face amount of
investment grade rated securities which could have been issued in a
Securitization (which amount shall be estimated by PSI in good faith using the
average of the preliminary subordination levels received from two Rating
Agencies and shall be conclusive, absent manifest error or unfairness, as
against CRIIMI MAE), and:
(i) If CRIIMI XXX xxxxx any Mortgage Loans and/or PMCC Loans in
a bulk sale or other whole loan transaction or series of transactions,
CRIIMI MAE shall pay to PSI the lesser of (a) the net profits received in
such transaction or series of transactions and (b) the Breakup Fee
(computed pursuant to Section 5.03(B) with respect to the sold loans), and
(ii) If CRIIMI MAE retains any Mortgage Loans and/or PMCC Loans,
CRIIMI MAE shall pay PSI the Breakup Fee (computed pursuant to Section
5.03(B) with respect to the retained loans).
Section V.04 Failure to Exercise Option. In the event that CRIIMI MAE does
not exercise the Option (and, in the case of the initial Term, does not exercise
its right to extend the Term) prior to the expiration of the 30-day period
following the Aggregation Period, the Option shall expire with respect to those
Mortgage Loans originated through the Facility. Upon such expiration, the
Mortgage Loans and the Haircut Funds shall be retained by \PSCC and PSI, and the
Facility shall terminate, but only with respect to such retained Mortgage Loans.
Section V.05 Other Securitizations. As long as this Agreement is in effect,
CRIIMI MAE shall use its best efforts to cause PSI to be designated a co-manager
of underwritten offerings of commercial mortgage-backed securities of CRIIMI MAE
and its subsidiaries and of securitizations in addition to the Securitization
contemplated by this Agreement.
ARTICLE VI.
SECURITIES REPURCHASE FACILITY
Section VI.01 Acquisition of Securities. In connection with a Securitization
effected through a Pooling and Servicing Agreement, CRIIMI MAE may cause it's
subsidiary referred to in Section 5.02(A)(ii) (the "SubCert Purchaser") to
purchase Certificates issued by the Securitization Trust at the market price
therefor as determined by PSI in its reasonable judgment. PSCC agrees to
provide financing pursuant to a Securities Repurchase Agreement (the "Repurchase
Agreement") for the purchase of any such Certificates that are rated "AAA"
through "B-" by at least one nationally recognized Rating Agency. The
Repurchase Agreement shall be entered into on PSI's standard form of repurchase
agreement, which shall be revised to the extent appropriate to reflect the
financing thereunder of Certificates rated lower than investment grade, and
shall otherwise be on terms and conditions mutually agreeable to CRIIMI MAE, PSI
and PSCC. The lender under the Repurchase Agreement may be PSCC, PSI, or
another of their affiliates.
Section VI.02 Other Credit Facility. In the event the Securitization is
effected in manner such that CRIIMI MAE or a subsidiary retains ownership of the
Pooled Loans, PSI and PSCC may elect to finance the portion of the Purchase
Price for the Mortgage Loans in excess of the sum of (i) the proceeds of the
issuance of investment grade rated CMBSs and (ii) the Haircut Funds. Any such
financing shall be effected pursuant to a credit agreement on terms and
conditions mutually agreeable to CRIIMI MAE, PSI and PSCC.
ARTICLE VII.
DEFAULT
Section VII.01 Default by CRIIMI MAE; Rights and Remedies.
(A) It shall be an event of default hereunder (an "Event of Default")
if:
(i) CRIIMI MAE shall fail to pay any amount due to PSI or PSCC
hereunder, or CRIIMI MAE Services shall fail to pay any amount due to PSCC
under the Interim Servicing Agreement and, in either such case, such
default shall continue for a period of 5 days after written demand is made
for such payment;
(ii) CRIIMI MAE shall fail to perform any other covenant or
obligation required to be performed by it hereunder, or CRIIMI MAE Services
shall fail to perform any other covenant or obligation required to be
performed by it under the Interim Servicing Agreement and, in any such
case, such failure shall continue for a period of 30 days after written
notice thereof to CRIIMI MAE or CRIIMI MAE Services from PSI or PSCC; or
(iii) any representation or warranty of CRIIMI MAE shall have
been untrue or incomplete in any material respect when made or when
reaffirmed pursuant to Section 2.01(C), and CRIIMI MAE shall fail to cure
any such misrepresentation within a period of 30 days after notice thereof
to CRIIMI MAE by PSI or PSCC.
The parties hereto agree that during the continuance of any Event of Default
hereunder PSI or PSCC may, without notice to CRIIMI MAE or any other party,
elect to terminate this Agreement, terminate the Option, or exercise any other
remedies available to them under this Agreement and under applicable law,
including without limitation, the right to apply all or part of the Haircut
Funds towards the obligations of CRIIMI MAE hereunder or to the reimbursement to
PSI or PSCC of any damages or losses suffered or incurred by them as a result of
such Event of Default, as well as the right to xxx for specific performance.
Nothing contained herein shall be deemed to impose on CRIIMI MAE any liability
under any Mortgage Loan or Mortgage Loan document, provided that the foregoing
exculpation shall not limit or reduce CRIIMI MAE's obligations under this
Section 7.01 or Section 8.03. Nothing contained herein shall be deemed to
modify the provisions of Section 5.01 with respect to the rights and obligations
of the parties in the event CRIIMI MAE fails to exercise the Option to purchase
the Mortgage Loans pursuant to the terms of this Agreement.
(B) In the event (i) CRIIMI MAE shall admit in writing its inability
to pay its debts as they become due, file a petition under any applicable
bankruptcy, insolvency or reorganization statute, make an assignment for the
benefit of its creditors, or voluntarily suspend payment of its obligations or
cease operations of its business; (ii) a decree or order in an involuntary case
under any present or future federal or state bankruptcy, insolvency or similar
law shall have been entered against CRIIMI MAE and such decree or order shall
remain in force undischarged or unstayed for a period of sixty (60) days or
more; or (iii) CRIIMI MAE shall consent to the appointment of a conservator,
receiver or liquidator in any insolvency, readjustment of debt, marshalling of
assets and liabilities or similar proceeding relating to CRIIMI MAE or its
properties (collectively, a "Bankruptcy Event") then PSI and PSCC shall have no
further obligations or fund any additional Mortgage Loans through the Facility
and PSI and PSCC shall have the right, at their sole option, to terminate this
Agreement and to remove all Mortgage Loans in the Facility from the terms of
this Agreement, thereby terminating any and all of CRIIMI MAE's rights and
obligations concerning such Mortgage Loans, including, without limitation,
CRIIMI MAE's Option to acquire the Mortgage Loans in conjunction with a
Securitization or otherwise. In such event PSCC shall retain the Mortgage Loans
and all amounts held in the Haircut Funds Account.
(C) Except as otherwise expressly provided in this Agreement, all
rights and remedies under this Agreement are distinct and cumulative, not only
as to each other, but as to any rights and remedies afforded by law or equity
and may be exercised together, separately and successively, for the benefit of
PSI, PSCC and their respective successors and assigns.
Section VII.02 Failure to Perform by PSI or PSCC. In the event that PSI or PSCC
shall fail to perform any covenant or obligation required to be performed by it
hereunder and, in any such case, such failure shall continue for a period of 30
days after written notice thereof to PSI or PSCC from CRIIMI MAE, CRIIMI MAE
shall be entitled to exercise any rights or remedies available to it under this
Agreement and under applicable law.
ARTICLE VIII.
MISCELLANEOUS
Section VIII.01 Term of Agreement; Survival; Exclusivity.
(A) Subject to Section 8.01(B), the term of this Agreement (the
"Term") shall commence on the Effective Date and terminate on the date (the
"Termination Date") that is the earlier to occur of (i) expiration of the 13-
month period following the funding, or closing of the purchase, as the case may
be, of the first Mortgage Loan originated by CRIIMI MAE hereunder without
exercise of the Option by CRIIMI MAE; and (ii) such earlier date that PSI and
PSCC may elect to terminate this Agreement upon the occurrence and during the
continuance of an Event of Default hereunder or upon the occurrence of any
Bankruptcy Event.
(B) CRIIMI MAE shall have a one-time right, upon payment of a fee
(the "Extension Fee") equal to one percent (1%) of the then applicable maximum
amount of the Facility, to extend the Term for a period of six months. Any such
extension shall be effective upon delivery of written notice by CRIIMI MAE to
PSCC and PSI of CRIIMI MAE's election to extend the Term, contemporaneously with
a wire transfer of the Extension Fee in immediately available funds.
(C) The parties agree that for the period from the Effective Date
through the end of the Aggregation Period, all Mortgage Loans having an initial
principal amount (or, in the case of Section 1.06 Loans, an outstanding
principal balance) of $30 million or more that are identified by CRIIMI MAE and
meet the criteria of Eligible Loans shall, notwithstanding any other agreements,
contracts or arrangements CRIIMI MAE may have with third parties, be offered
first to PSCC for review in accordance with Section 1.02 herein.
Notwithstanding the foregoing, (i) this arrangement shall not apply with respect
to loans originated by CRIIMI MAE for the AIM funds and any already existing
CRIIMI MAE or CRI affiliate, and (ii) the preceding sentence shall not apply to
any pool of Mortgage Loans if CRIIMI MAE, in the exercise of its reasonable
discretion, determines that the underwriting characteristics of such loan pool
are such that the loan pool is better suited for acquisition by Citicorp Real
Estate, Inc. ("CRE") pursuant to the Amended and Restated Mortgage Loan
Origination Program Agreement between CRIIMI MAE and CRE. If PSCC declines to
include any Mortgage Loan offered by CRIIMI MAE in the Facility, such mortgage
loan may be dealt with freely by CRIIMI MAE. The parties agree that only
Mortgage Loans underwritten by CRIIMI MAE or originated by PSI or by PSCC shall
be included in the Facility. Notwithstanding the foregoing, nothing herein
shall be deemed to restrict in any manner the ability of PSI, PSCC, or any of
their respective affiliates to make, originate or purchase Eligible Loans or
other Mortgage Loans in transactions unrelated to this Agreement.
(D) Notwithstanding anything contained herein, the obligations
representations and warranties of CRIIMI MAE, PSI and PSCC under this Agreement
shall commence on the Effective Date.
Section VIII.02 Costs and Expenses.
(A) Facility Costs. Except as otherwise specifically provided
herein, CRIIMI MAE shall pay all costs incurred in connection with establishment
and maintenance of the Facility including the costs of identifying, originating
and underwriting the Mortgage Loans (including the costs of any environmental
reports), Mortgage Loan closing costs not paid by Borrowers, the fees and
expenses of the Custodian under the Custodial Agreement, and the reasonable fees
and expenses of counsel to PSCC in connection with the establishment of the
Facility. PSCC shall pay all costs incurred by PSCC related to its funding the
Mortgage Loans. Notwithstanding anything to the contrary in this Agreement, in
the event of the acquisition of any Section 1.06 Loans through the Facility, the
costs and expenses related to such acquisition including, without limitation,
underwriting costs, third-party reports and reviews and legal fees and
disbursements, shall be paid as agreed upon by the parties prior to entering
into any such acquisition. All servicing fees and expenses related to the
Mortgage Loans shall be paid in accordance with the terms of the Servicing
Agreement.
(B) Securitization Costs. CRIIMI MAE shall pay all expenses in
connection with a Securitization, including printing costs in connection with
the preparation of a disclosure document, accounting costs, registration and
filing fees, legal fees and expenses incurred by the issuer and by the
underwriters, dealers or placement agents, as the case may be, and up-front and
surveillance fees and legal expenses of at least two Rating Agencies (or such
greater or lesser number of Rating Agencies as is consistent with then current
market practices in the securitization of mortgage loans). In connection with
the retention of underwriters' counsel for a Securitization, PSI agrees to use
its best efforts to obtain capped estimates of legal fees from at least two law
firms, provided, that the final determination of underwriters' counsel shall be
made by PSI, in its sole discretion.
Section VIII.03 Indemnification. CRIIMI MAE shall indemnify and hold
harmless each of PSI, PSCC, each affiliate thereof, and their respective
officers, directors and controlling persons within the meaning of Section 15 of
the Securities Act and Section 20 of the Securities Exchange Act of 1934, as
amended (collectively, the "Indemnified Persons") from and against all losses,
damages, penalties, fines, legal expenses, judgments, amounts paid in settlement
and any other costs, fees and expenses (collectively, "Losses") that the
Indemnified Persons may sustain arising from or in any way related to (i) CRIIMI
MAE's failure to perform, keep or observe any of its obligations, covenants,
representations or warranties under this Agreement, (ii) any breach or non-
performance of any of the representations and warranties made or reaffirmed by
CRIIMI MAE in or pursuant to Section 2.01 of this Agreement; (iii) changes in
the Market Value of Mortgage Loans acquired by PSCC through the Facility, other
than any such Losses incurred resulting from the gross negligence or willful
misconduct of any Indemnified Person; (iv) any change in the Market Value of the
hedge position with respect to the Mortgage Loans, other than any such Losses
incurred resulting from the gross negligence or willful misconduct of any
Indemnified Person; and (v) any Lender liability claims against any Indemnified
Person, other than any such claims resulting from the willful acts or omissions
of any Indemnified Person. The obligations of CRIIMI MAE under this Section
8.03 shall survive the expiration or other termination of this Agreement. This
Section 8.03 shall not apply to expand or enlarge the rights and remedies of
PSCC and PSI in the event CRIIMI MAE is not in default in the performance of its
obligations hereunder but elects not to exercise the Option, which rights and
remedies are as set forth in Section 5.04.
Section VIII.04 Notices. Whenever it is provided in this Agreement that
notice, demand, request or other communication shall be given to or served upon
one of the parties hereto by another, any such notice, demand, request or
communication shall be in writing and shall be delivered (i) personally to the
recipient at the address listed below, (ii) by certified or registered mail,
return receipt requested, (iii) by overnight commercial courier service, or (iv)
by fax to the fax number indicated below.
If to CRIIMI MAE, at the following address:
CRIIMI MAE Inc.
The CRI Building
00000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxxxx Xxxxxxxx, EVP
Telephone: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
CRIIMI MAE Inc.
The CRI Building
00000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attn: General Counsel
Telephone: (000) 000-0000
Fax: (000) 000-0000
If to PSI or PSCC, at the following address:
Prudential Securities, Incorporated
Xxx Xxx Xxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: X. Xxxxxx X'Xxxxxx, Jr., Managing Director
Investment Banking
Telephone: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Prudential Securities, Incorporated
One Xxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn.: Xxxx Xxxxxxxxxx, Esq.
Law Department
Telephone: (000) 000-0000
Fax: (000) 000-0000
and to:
Prudential Securities Incorporated
One Xxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx Xxxxx
Telephone: (000) 000-0000
Fax: (000) 000-0000
Such notice, demand, request or communication shall be deemed delivered on the
next day in case of methods (i), (iii) and (iv) and on the third (3rd) day in
the case of method (ii). Either party may at any time give notice in writing to
the other party of a change of its address or fax number for purposes of this
Section.
Section VIII.05 No Joint Venture. CRIIMI MAE and PSI and PSCC are not
partners or joint venturers with each other, and nothing herein shall be
construed so as to make them such or impose any liability as such on either of
them. Each party shall perform its obligations hereunder as an independent
contractor.
Section VIII.06 Actions Through Affiliates. CRIIMI MAE agrees that any
action or performance stated to be taken or performed by PSI or PSCC hereunder
may in their discretion be taken or performed by any affiliate of either of
them, and such action or performance shall be in satisfaction of any obligation
hereunder as fully as if taken by PSI or PSCC, as applicable. PSI and PSCC
agree that any action or performance stated to be taken or performed by CRIIMI
MAE hereunder may in CRIIMI MAE'S discretion be taken or performed by any entity
in which CRIIMI MAE owns a majority interest, and such action or performance
shall be in satisfaction of any obligation hereunder as fully as if taken by
CRIIMI MAE. Performance by any such affiliate shall not release a party from
its obligations hereunder.
Section VIII.07 PSI's and PSCC's Discretion. Unless otherwise explicitly
stated herein, any action, consent or waiver to be taken, granted, or given
hereunder in PSI's or PSCC's discretion or otherwise optionally by either of
them shall be taken by them in their reasonable discretion, unless exercise of
their sole discretion is provided for, in which case any such action, consent or
waiver may be taken, granted or given for any reason or for no reason, and
without any duty to any person.
Section VIII.08 Counterparts. This Agreement may be executed in
counterparts by the parties hereto, and all such counterparts shall constitute
one and the same instrument.
Section VIII.09 Trial by Jury Waived. EACH PARTY HERETO HEREBY WAIVES TO
THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION ARISING DIRECTLY OR INDIRECTLY OUT OF, UNDER OR IN CONNECTION
WITH THIS AGREEMENT (INCLUDING ANY AGREEMENTS ENTERED INTO IN CONNECTION
HEREWITH) OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREUNDER. EACH PARTY HERETO
(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY PARTY HERETO HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT IT WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENDORSE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THIS
WAIVER.
Section 8.10 Governing Law.This Agreement shall be construed in accordance
with and governed by the laws of the State of New York.
Section 8.11 Amendments; Waivers; Assignment; Sale of Participations.
(A) No amendment or waiver hereto shall be effective unless
evidenced by a writing executed by the parties hereto. Any waiver shall be
limited to the particular terms of such waiver. No act, course of dealing or
waiver shall be deemed to constitute an amendment hereto. This Agreement may not
be assigned by either party hereto without the prior written consent of the
other party which may be withheld in its sole discretion.
(B) PSCC shall have the right at any time, either directly or
through an agent, subject to the terms of the Loan Documents, to sell or grant
participations to any person in all or any part of the Mortgage Loans made or
acquired by it hereunder or in any commitment made with respect thereto, or in
any obligations owed to it under any such Mortgage Loan or Loans. Any such
participation shall be subject to the Option granted to CRIIMI MAE pursuant to
Section 5.01. As between PSCC and CRIIMI MAE, PSCC shall not be relieved of any
of its obligations hereunder as the result of the sale or grant or any
participations in all or part of any Mortgage Loan or Loans or in any such
related obligations. The sale of any such participation shall not entitle the
holder thereof, other than an affiliate of PSCC, to require CRIIMI MAE to take
or omit to take any action hereunder.
Section 8.12 Press Releases. None of PSI, PSCC nor CRIIMI MAE nor any of
their respective affiliates or subsidiaries shall issue any press release or
make any other formal public announcement related to this Agreement or the
transactions contemplated hereby unless such press release or announcement shall
have been approved in advance by the other party to this Agreement. This
provision shall not preclude either party from publicly disclosing any facts
with respect to the transactions contemplated by this Agreement if such
disclosure is required by law.
Section 8.13 Entire Agreement. This Agreement, taken together with the
Exhibits and schedules hereto set forth the entire agreement between the parties
with respect to the subject matter thereof, and such agreements supersede and
replace any agreement or understanding that may have existed between the parties
prior to the date hereof in respect of such subject matter.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
Effective Date.
PRUDENTIAL SECURITIES INCORPORATED
By: /s/ Xxxxx Xxxxxxxxxxxxxxx
Name: Xxxxx Xxxxxxxxxxxxxxx
Title: Managing Director
PRUDENTIAL SECURITIES CREDIT CORP.
By: /s/ [illegible]
Name:____________________________
Title:____________________________
CRIIMI MAE INC.
By: /s/ Xxxxxx X. Xxxx
Name: Xxxxxx X. Xxxx
Title: Senior Vice President
TABLE OF CONTENTS
Page
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ARTICLE I.
LOAN ORIGINATION. . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.01 Mortgage Loan Origination by CRIIMI MAE. . . . 2
Section 1.02 Underwriting of Mortgage Loans . . . . . . . . 3
Section 1.03 Mortgage Loan Commitment; Rate Lock;
Documentation and Closing. . . . . . . . . . 5
Section 1.04 Origination Fees . . . . . . . . . . . . . . . 7
Section 1.05 Custodial Arrangements . . . . . . . . . . . . 8
Section 1.06 Secondary Market Mortgage Loan Acquisitions. . 8
Section 1.07 Maximum Facility Size. . . . . . . . . . . . . 8
ARTICLE II.
REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . 9
Section 2.01 Representations and Warranties of
CRIIMI MAE . . . . . . . . . . . . . . . . . 9
Section 2.02 Representations and Warranties of PSI
and PSCC . . . . . . . . . . . . . . . . . . 24
ARTICLE III.
HAIRCUT PAYMENTS. . . . . . . . . . . . . . . . . . . . . . . 26
Section 3.01 Haircut Payments . . . . . . . . . . . . . . . 26
ARTICLE IV.
MORTGAGE LOAN FACILITY DURING AGGREGATION PERIOD. . . . . . . 28
Section 4.01 Loan Facility during Aggregation Period. . . . 28
Section 4.02 Hedging During Aggregation Period. . . . . . . 28
Section 4.03 Servicing of Mortgage Loans During Aggregation
Period . . . . . . . . . . . . . . . . . . . 28
Section 4.04 Mortgage Loan Defaults During Aggregation
Period . . . . . . . . . . . . . . . . . . . 29
ARTICLE V.
CRIIMI MAE ACQUISITION OF LOANS . . . . . . . . . . . . . . . 30
Section 5.01 CRIIMI MAE's Option to Purchase Mortgage
Loans. . . . . . . . . . . . . . . . . . . . 30
Section 5.02 Securitization . . . . . . . . . . . . . . . . 31
Section 5.03 Purchase Without Securitization through
PSI. . . . . . . . . . . . . . . . . . . . . 33
Section 5.04 Failure to Exercise Option . . . . . . . . . . 34
Section 5.05 Other Securitizations. . . . . . . . . . . . . 34
ARTICLE VI.
SECURITIES REPURCHASE FACILITY. . . . . . . . . . . . . . . . 34
Section 6.01 Acquisition of Securities. . . . . . . . . . . 34
Section 6.02 Other Credit Facility. . . . . . . . . . . . . 34
ARTICLE VII.
DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 7.01 Default by CRIIMI MAE; Rights and Remedies . . 35
Section 7.02 Failure to Perform by PSI or PSCC. . . . . . . 36
ARTICLE VIII.
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 8.01 Term of Agreement; Survival; Exclusivity . . . 36
Section 8.02 Costs and Expenses . . . . . . . . . . . . . . 37
Section 8.03 Indemnification. . . . . . . . . . . . . . . . 38
Section 8.04 Notices. . . . . . . . . . . . . . . . . . . . 38
Section 8.05 No Joint Venture . . . . . . . . . . . . . . . 40
Section 8.06 Actions Through Affiliates . . . . . . . . . . 40
Section 8.07 PSI's and PSCC's Discretion. . . . . . . . . . 40
Section 8.08 Counterparts . . . . . . . . . . . . . . . . . 40
Section 8.09 Trial by Jury Waived . . . . . . . . . . . . . 40
Section 8.10 Governing Law. . . . . . . . . . . . . . . . . 41
Section 8.11 Amendments; Waivers; Assignment; Sale of
Participations . . . . . . . . . . . . . . . 41
Section 8.12 Press Releases . . . . . . . . . . . . . . . . 41
Section 8.13 Entire Agreement . . . . . . . . . . . . . . . 41
INDEX OF DEFINED TERMS
Definition Section
Advance 6.01(A)(iii)
Aggregation Period 4.01
Agreement Preamble
Appraised Value 2.01(A)(xvii)
Bankruptcy Event 6.01(B)
Breakup Fee 5.03(A)
CERCLA 2.01(A)(xxxi)
Certificates 5.02(A)(ii)
CMBS Recital C
CRIIMI MAE Preamble
CRIIMI MAE Services Recital C
Custodial Agreement 1.05
Custodian 1.05
Effective Date Preamble
Eligible Loan 1.01(A)
Environmental Law 2.01(A)(xxxi)
Event of Default 7.01(A)
Exercise Period 5.01
Extension Fee
8.01(B)
Facility Recital A
Fee Interest 2.01(A)(xxv)
Ground Lease 2.01(A)(xxv)
Guaranty 4.03
Haircut Earnings Payment 3.01(C)
Haircut Funds 3.01(A)
Haircut Funds Account 3.01(A)
Indemnified Persons 8.03
Indenture 5.03(A)(iii)
Indenture Trustee 5.03(A)(iii)
Initial Haircut Payment 3.01(A)
Interim Servicing Agreement 4.03
Loan Amount 1.03(G)
Loan Documents 1.05
Losses 8.03
Market Value 1.03(G)
Mortgage Loan Recital A
Mortgage Loan Sale Agreement 5.02(A)(i)
Mortgaged Property 1.01(A)
Notional Amount 4.03
Option 5.01
Placement Agreement 5.02(A)(v)
PMCC Recital B
PMCC Agreement Recital B
PMCC Loan Documents 1.03(C)
PMCC Loans Recital C
Pooled Loans Recital C
Pooling and Servicing Agreement 5.02(A)(ii)
PPT 1.03(A)
PSCC Preamble
PSI Preamble
PSI Information 5.02(A)(i)
Purchase Price 5.01
Rate Lock 1.03(B)
Rating Agency 1.01
Section 1.06 Loan 1.06
Securities Act 2.01(A)(v)
Securities Purchase Agreement 5.02(A)(v)
Securitization Recital C
Securitization Trust 5.02(A)(ii)
Servicing Agreement 5.02(A)(iv)
SubCert Purchaser 6.01(A)
Term 8.01(A)
Termination Date 8.01(A)
Trustee 5.02(A)(ii)
Underwriting Agreement 5.02(A)(v)
Underwriting Fee 5.02(A)(v)
