EXECUTION VERSION
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MORTGAGE LOAN PURCHASE AGREEMENT
between
PRINCIPAL COMMERCIAL FUNDING II, LLC
as Seller
and
XXXXXX XXXXXXX CAPITAL I INC.
as Purchaser
Dated as of February 15, 2007
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TABLE OF CONTENTS
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1. AGREEMENT TO PURCHASE......................................................3
2. CONVEYANCE OF MORTGAGE LOANS...............................................3
3. EXAMINATION OF MORTGAGE FILES AND DUE DILIGENCE REVIEW....................11
4. REPRESENTATIONS AND WARRANTIES OF SELLER AND PURCHASER....................12
5. REMEDIES UPON BREACH OF REPRESENTATIONS AND WARRANTIES MADE BY SELLER.....16
6. CLOSING...................................................................20
7. CLOSING DOCUMENTS.........................................................21
8. COSTS.....................................................................24
9. NOTICES...................................................................24
10. SEVERABILITY OF PROVISIONS................................................24
11. FURTHER ASSURANCES........................................................24
12. SURVIVAL..................................................................24
13. GOVERNING LAW.............................................................25
14. BENEFITS OF MORTGAGE LOAN PURCHASE AGREEMENT..............................25
15. MISCELLANEOUS.............................................................25
16. ENTIRE AGREEMENT..........................................................25
Exhibit 1 Mortgage Loan Schedule
Exhibit 2 Representations and Warranties
Exhibit 3 Pricing Formulation
Exhibit 4 Xxxx of Sale
Exhibit 5 Power of Attorney
Index of Defined Terms
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Affected Loan(s)...................................18
Agreement...........................................2
Certificate Purchase Agreement......................2
Certificates........................................2
Closing Date........................................3
Collateral Information.............................11
Crossed Mortgage Loans.............................17
Defective Mortgage Loan............................17
Final Judicial Determination.......................19
Indemnification Agreement..........................14
Initial Purchaser...................................2
Master Servicer.....................................2
Material Breach....................................16
Material Document Defect...........................16
Memorandum..........................................3
MERS................................................5
Mortgage File.......................................4
Mortgage Loan Schedule..............................3
Mortgage Loans......................................2
Officer's Certificate...............................8
Other Mortgage Loans................................2
Pooling and Servicing Agreement.....................2
Private Certificates................................2
Prospectus Supplement...............................2
Public Certificates.................................2
Purchaser...........................................2
Repurchased Loan...................................18
Seller..............................................2
Servicing File......................................9
Special Servicer....................................2
Trust...............................................2
Trustee.............................................2
Underwriters........................................2
Underwriting Agreement..............................2
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MORTGAGE LOAN PURCHASE AGREEMENT
(PCFII LOANS)
Mortgage Loan Purchase Agreement (this "Agreement"), dated as of February 15,
2007, between Principal Commercial Funding II, LLC (the "Seller"), and Xxxxxx
Xxxxxxx Capital I Inc. (the "Purchaser").
Seller agrees to sell and Purchaser agrees to purchase certain mortgage loans
listed on Exhibit 1 hereto (the "Mortgage Loans") as described herein. Purchaser
will convey the Mortgage Loans to a trust (the "Trust") created pursuant to a
Pooling and Servicing Agreement (the "Pooling and Servicing Agreement"), to be
dated as of February 1, 2007, between Purchaser, as depositor, Capmark Finance
Inc., as master servicer, X.X. Xxxxxx Company, Inc., as special servicer
("Special Servicer"), Xxxxx Fargo Bank, National Association, as trustee and
custodian ("Trustee") and LaSalle Bank National Association, as paying agent,
certificate registrar and authenticating agent. In exchange for the Mortgage
Loans and certain other mortgage loans (the "Other Mortgage Loans") to be
purchased by Purchaser, the Trust will issue to the Depositor pass-through
certificates to be known as Xxxxxx Xxxxxxx Capital I Inc., Commercial Mortgage
Pass-Through Certificates, Series 2007-HQ11 (the "Certificates"). The
Certificates will be issued pursuant to the Pooling and Servicing Agreement.
Capitalized terms used herein but not defined herein shall have the meanings
assigned to them in the Pooling and Servicing Agreement. The term "Master
Servicer" as used herein shall mean Capmark Finance Inc. in its capacity as a
master servicer under the Pooling and Servicing Agreement unless otherwise
specified.
The Class A-1, Class A-1A, Class A-2, Class A-3-1, Class A-3-2, Class A-AB,
Class A-4, Class A-4FL, Class A-M, Class A-MFL, Class A-J, Class B, Class C,
Class D, Class E and Class F Certificates (the "Public Certificates") will be
sold by Purchaser to Xxxxxx Xxxxxxx & Co. Incorporated, LaSalle Financial
Services, Inc., Deutsche Bank Securities Inc. and Xxxxxxx Lynch, Pierce, Xxxxxx
& Xxxxx Incorporated (other than with respect to the Class A-4 Certificates)
(the "Underwriters"), pursuant to an Underwriting Agreement, between Purchaser
and the Underwriters, dated February 15, 2007 (the "Underwriting Agreement"),
and the Class X, Class G, Class H, Class J, Class K, Class L, Class M, Class N,
Class O, Class P, Class Q, Class S, Class T, Class R-I, Class R-II and Class
R-III Certificates (the "Private Certificates") will be sold by Purchaser to
Xxxxxx Xxxxxxx & Co. Incorporated (the "Initial Purchaser") pursuant to a
Certificate Purchase Agreement, between Purchaser and the Initial Purchaser,
dated February 15, 2007 (the "Certificate Purchase Agreement"). The Underwriters
will offer the Public Certificates for sale publicly pursuant to a Prospectus
dated February 6, 2007, as supplemented by a Prospectus Supplement dated
February 15, 2007 (together with the Prospectus, the "Prospectus Supplement"),
and the Initial Purchaser will offer the Private Certificates for sale in
transactions exempt from the registration requirements of the Securities Act of
1933 pursuant to a Private Placement Memorandum dated February 15, 2007 (the
"Memorandum").
In consideration of the mutual agreements contained herein, Seller and Purchaser
hereby agree as follows:
1. AGREEMENT TO PURCHASE.
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1.1 Seller agrees to sell, and Purchaser agrees to purchase, on a servicing
released basis, the Mortgage Loans identified on the schedule (the "Mortgage
Loan Schedule") annexed hereto as Exhibit 1, as such schedule may be amended to
reflect the actual Mortgage Loans accepted by Purchaser pursuant to the terms
hereof. The Cut-Off Date with respect to the Mortgage Loans is February 1, 2007.
The Mortgage Loans will have an aggregate principal balance as of the close of
business on the Cut-Off Date, after giving effect to any payments due on or
before such date, whether or not received, of $193,201,511. The sale of the
Mortgage Loans shall take place on February 28, 2007 or such other date as shall
be mutually acceptable to the parties hereto (the "Closing Date"). The purchase
price to be paid by Purchaser for the Mortgage Loans shall equal the amount set
forth as such purchase price on Exhibit 3 hereto. The purchase price shall be
paid to Seller by wire transfer in immediately available funds on the Closing
Date.
1.2 On the Closing Date, Purchaser will assign to Trustee pursuant to the
Pooling and Servicing Agreement all of its right, title and interest in and to
the Mortgage Loans and its rights under this Agreement (to the extent set forth
in Section 14), and Trustee shall succeed to such right, title and interest in
and to the Mortgage Loans and Purchaser's rights under this Agreement (to the
extent set forth in Section 14).
2. CONVEYANCE OF MORTGAGE LOANS.
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2.1 Effective as of the Closing Date, subject only to receipt of the
consideration referred to in Section 1 hereof and the satisfaction of the
conditions specified in Sections 6 and 7 hereof, Seller does hereby transfer,
assign, set over and otherwise convey to Purchaser, without recourse, except as
specifically provided herein, all the right, title and interest of Seller, with
the understanding that a Servicing Rights Purchase and Sale Agreement, dated
February 1, 2007, will be executed by Seller and Master Servicer, in and to the
Mortgage Loans identified on the Mortgage Loan Schedule as of the Closing Date.
The Mortgage Loan Schedule, as it may be amended from time to time on or prior
to the Closing Date, shall conform to the requirements of this Agreement and the
Pooling and Servicing Agreement. In connection with such transfer and
assignment, Seller shall deliver to or on behalf of Trustee, on behalf of
Purchaser, on or prior to the Closing Date, the Mortgage Note (as described in
clause 2.2.1 hereof) for each Mortgage Loan and on or prior to the fifth
Business Day after the Closing Date, five limited powers of attorney
substantially in the form attached hereto as Exhibit 5 in favor of Trustee,
Master Servicer and Special Servicer to empower Trustee, Master Servicer and, in
the event of the failure or incapacity of Trustee and Master Servicer, Special
Servicer, to submit for recording, at the expense of Seller, any Mortgage Loan
documents required to be recorded as described in the Pooling and Servicing
Agreement and any intervening assignments with evidence of recording thereon
that are required to be included in the Mortgage Files (so long as original
counterparts have previously been delivered to Trustee). Seller agrees to
reasonably cooperate with Trustee, Master Servicer and Special Servicer in
connection with any additional powers of attorney or revisions thereto that are
requested by such parties for purposes of such recordation. The parties hereto
agree that no such power of attorney shall be used with respect to any Mortgage
Loan by or under authorization by any party hereto except to the extent that the
absence of a document described in the second preceding sentence with respect to
such Mortgage Loan remains
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unremedied as of the earlier of (i) the date that is 180 days following the
sdelivery of notice of such absence to Seller, but in no event earlier than 18
months from the Closing Date, and (ii) the date (if any) on which such Mortgage
Loan becomes a Specially Serviced Mortgage Loan. Custodian shall submit such
documents for recording, at Seller's expense, after the periods set forth above,
provided, however, Custodian shall not submit such assignments for recording if
Seller produces evidence that it has sent any such assignment for recording and
certifies that Seller is awaiting its return from the applicable recording
office. In addition, not later than the 30th day following the Closing Date,
Seller shall deliver to or on behalf of Trustee each of the remaining documents
or instruments specified in Section 2.2 hereof (with such exceptions and
additional time periods as are permitted by this Section 2) with respect to each
Mortgage Loan (each, a "Mortgage File"). (Seller acknowledges that the term
"without recourse" does not modify the duties of Seller under Section 5 hereof.)
2.2 All Mortgage Files, or portions thereof, delivered prior to the Closing
Date are to be held by or on behalf of Trustee in escrow on behalf of Seller at
all times prior to the Closing Date. The Mortgage Files shall be released from
escrow upon closing of the sale of the Mortgage Loans and payments of the
purchase price therefor as contemplated hereby. The Mortgage File for each
Mortgage Loan shall contain the following documents:
2.2.1 The original Mortgage Note bearing all intervening endorsements,
endorsed, by allonge or on the original Mortgage Note, "Pay to the order of
Xxxxx Fargo Bank, National Association, as Trustee for Xxxxxx Xxxxxxx Capital I
Inc., Commercial Mortgage Pass-Through Certificates, Series 2007-HQ11, without
recourse, representation or warranty" or if the original Mortgage Note is not
included therein, then a lost note affidavit, with a copy of the Mortgage Note
attached thereto;
2.2.2 The original Mortgage, with evidence of recording thereon, and,
if the Mortgage was executed pursuant to a power of attorney, a certified true
copy of the power of attorney certified by the public recorder's office, with
evidence of recording thereon (if recording is customary in the jurisdiction in
which such power of attorney was executed), or certified by a title insurance
company or escrow company to be a true copy thereof; provided that if such
original Mortgage cannot be delivered with evidence of recording thereon on or
prior to the 90th day following the Closing Date because of a delay caused by
the public recording office where such original Mortgage has been delivered for
recordation or because such original Mortgage has been lost, Seller shall
deliver or cause to be delivered to Trustee a true and correct copy of such
Mortgage, together with (i) in the case of a delay caused by the public
recording office, an Officer's Certificate (as defined below) of Seller stating
that such original Mortgage has been sent to the appropriate public recording
official for recordation or (ii) in the case of an original Mortgage that has
been lost after recordation, a certification by the appropriate county recording
office where such Mortgage is recorded that such copy is a true and complete
copy of the original recorded Mortgage;
2.2.3 The originals of all agreements modifying a Money Term or other
material modification, consolidation and extension agreements, if any, with
evidence of recording thereon, or if any such original modification,
consolidation or extension agreement has been delivered to the appropriate
recording office for recordation and either has not yet been returned on or
prior to the 90th day following the Closing Date with evidence of recordation
thereon or
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has been lost after recordation, a true copy of such modification, consolidation
or extension certified by Seller together with (i) in the case of a delay caused
by the public recording office, an Officer's Certificate of Seller stating that
such original modification, consolidation or extension agreement has been
dispatched or sent to the appropriate public recording official for recordation
or (ii) in the case of an original modification, consolidation or extension
agreement that has been lost after recordation, a certification by the
appropriate county recording office where such document is recorded that such
copy is a true and complete copy of the original recorded modification,
consolidation or extension agreement, and the originals of all assumption
agreements, if any;
2.2.4 An original Assignment of Mortgage for each Mortgage Loan, in
form and substance acceptable for recording (except for recording information
not yet available if the instrument being recorded has not been returned from
the applicable recording office), signed by the holder of record in blank or in
favor of "Xxxxx Fargo Bank, National Association, as Trustee for Xxxxxx Xxxxxxx
Capital I Inc., Commercial Mortgage Pass-Through Certificates, Series
2007-HQ11," provided, if the related Mortgage has been recorded in the name of
Mortgage Electronic Registration Systems, Inc. ("MERS") or its designee, no such
assignments will be required to be submitted for recording or filing and
instead, Seller shall take all actions as are necessary to cause Trustee to be
shown as the owner of the related Mortgage on the record of MERS for purposes of
the system of recording transfers of beneficial ownership of mortgages
maintained by MERS and shall deliver to Special Servicer evidence confirming
that Trustee is shown as the owner on the record of MERS;
2.2.5 Originals of all intervening assignments of Mortgage (except
with respect to any Mortgage that has been recorded in the name of MERS or its
designees), if any, with evidence of recording thereon or, if such original
assignments of Mortgage have been delivered to the appropriate recorder's office
for recordation, certified true copies of such assignments of Mortgage certified
by Seller, or in the case of an original blanket intervening assignment of
Mortgage retained by Seller, a copy thereof certified by Seller or, if any
original intervening assignment of Mortgage has not yet been returned on or
prior to the 90th day following the Closing Date from the applicable recording
office or has been lost, a true and correct copy thereof, together with (i) in
the case of a delay caused by the public recording office, an Officer's
Certificate of Seller stating that such original intervening assignment of
Mortgage has been sent to the appropriate public recording official for
recordation or (ii) in the case of an original intervening Assignment of
Mortgage that has been lost after recordation, a certification by the
appropriate county recording office where such assignment is recorded that such
copy is a true and complete copy of the original recorded intervening Assignment
of Mortgage;
2.2.6 If the related Assignment of Leases is separate from the
Mortgage, the original of such Assignment of Leases with evidence of recording
thereon or, if such Assignment of Leases has not been returned on or prior to
the 90th day following the Closing Date from the applicable public recording
office, a copy of such Assignment of Leases certified by Seller to be a true and
complete copy of the original Assignment of Leases submitted for recording,
together with (i) an original of each assignment of such Assignment of Leases
with evidence of recording thereon and showing a complete recorded chain of
assignment from the named assignee to the holder of record, and if any such
assignment of such Assignment of Leases has not been returned from the
applicable public recording office, a copy of such assignment certified by
Seller to be a true and
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complete copy of the original assignment submitted for recording, and (ii) an
original assignment of such Assignment of Leases, in recordable form, signed by
the holder of record in favor of "Xxxxx Fargo Bank, National Association, as
Trustee for Xxxxxx Xxxxxxx Capital I Inc., Commercial Mortgage Pass-Through
Certificates, Series 2007-HQ11," which assignment may be effected in the related
Assignment of Mortgage, provided, if the related Mortgage has been recorded in
the name of MERS or its designee, no assignment of Assignment of Leases in favor
of Trustee will be required to be recorded or delivered and instead, Seller
shall take all actions as are necessary to cause Trustee to be shown as the
owner of the related Mortgage on the record of MERS for purposes of the system
of recording transfers of beneficial ownership of mortgages maintained by MERS
and shall deliver to Special Servicer evidence confirming that Trustee is shown
as the owner on the record of MERS;
2.2.7 The original or a copy of each guaranty, if any, constituting
additional security for the repayment of such Mortgage Loan;
2.2.8 The original Title Insurance Policy, or in the event such
original Title Insurance Policy has not been issued, an original binder or
actual title commitment or a copy thereof certified by the title company with
the original Title Insurance Policy to follow within 180 days of the Closing
Date or a preliminary title report with an original Title Insurance Policy to
follow within 180 days of the Closing Date;
2.2.9 (A) Copies of UCC financing statements (together with all
assignments thereof) and (B) UCC-2 or UCC-3 financing statements assigning such
UCC financing statements to Trustee executed and delivered in connection with
the Mortgage Loan, provided, if the related Mortgage has been recorded in the
name of MERS or its designee, no such financing statements will be required to
be recorded or delivered and instead, Seller shall take all actions as are
necessary to cause Trustee to be shown as the owner of the related Mortgage on
the record of MERS for purposes of the system of recording transfers of
beneficial ownership of mortgages maintained by MERS and shall deliver to
Special Servicer evidence confirming that Trustee is shown as the owner on the
record of MERS;
2.2.10 Copies of the related ground lease(s), if any, to any Mortgage
Loan where the Mortgagor is the lessee under such ground lease and there is a
lien in favor of the mortgagee in such lease;
2.2.11 Copies of any loan agreements, lock-box agreements and
intercreditor agreements (including, without limitation, any Intercreditor
Agreement, any Non-Serviced Mortgage Loan Intercreditor Agreement and any Loan
Pair Intercreditor Agreement, and a copy (that is, not the original) of the
mortgage note evidencing the related B Note), if any, related to any Mortgage
Loan;
2.2.12 Either (A) the original of each letter of credit, if any,
constituting additional collateral for such Mortgage Loan (other than letters of
credit representing tenant security deposits which have been collaterally
assigned to the lender), which shall be assigned and delivered to Trustee on
behalf of the Trust with a copy to be held by Primary Servicer (or Master
Servicer), and applied, drawn, reduced or released in accordance with documents
evidencing or securing the applicable Mortgage Loan, the Pooling and Servicing
Agreement and the Primary
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Servicing Agreement or (B) the original of each letter of credit, if any,
constituting additional collateral for such Mortgage Loan (other than letters of
credit representing tenant security deposits which have been collaterally
assigned to the lender), which shall be held by Primary Servicer (or Master
Servicer) on behalf of Trustee, with a copy to be held by Trustee, and applied,
drawn, reduced or released in accordance with documents evidencing or securing
the applicable Mortgage Loan, the Pooling and Servicing Agreement and the
Primary Servicing Agreement (it being understood that Seller has agreed (a) that
the proceeds of such letter of credit belong to the Trust, (b) to notify, on or
before the Closing Date, the bank issuing the letter of credit that the letter
of credit and the proceeds thereof belong to the Trust, and to use reasonable
efforts to obtain within 30 days (but in any event to obtain within 90 days)
following the Closing Date, an acknowledgement thereof by the bank (with a copy
of such acknowledgement to be sent to Trustee) or a reissued letter of credit
and (c) to indemnify the Trust for any liabilities, charges, costs, fees or
other expenses accruing from the failure of Seller to assign the letter of
credit hereunder including the right and power to draw on the letter of credit).
In the case of clause (B) above, any letter of credit held by Primary Servicer
(or Master Servicer) acknowledges that any letter of credit held by it shall be
held in its capacity as agent of the Trust, and if Primary Servicer (or Master
Servicer) sells its rights to service the applicable Mortgage Loan, Primary
Servicer (or Master Servicer) has agreed to assign the applicable letter of
credit to the Trust or at the direction of Special Servicer to such party as
Special Servicer may instruct, in each case, at the expense of Primary Servicer
(or Master Servicer). Primary Servicer (or Master Servicer) has agreed to
indemnify the Trust for any loss caused by the ineffectiveness of such
assignment;
2.2.13 The original or a copy of the environmental indemnity agreement,
if any, related to any Mortgage Loan;
2.2.14 Copies of third-party management agreements, if any, for all
hotels and for such other Mortgaged Properties securing Mortgage Loans with a
Cut-Off Date principal balance equal to or greater than $20,000,000;
2.2.15 The original or a copy of any Environmental Insurance Policy;
and
2.2.16 Any affidavit and indemnification agreement.
The original of each letter of credit referred to in clause 2.2.12 above shall
be delivered to Primary Servicer, Master Servicer or Trustee (as the case may
be) within 45 days of the Closing Date. In addition, a copy of any ground lease
shall be delivered to Primary Servicer within 30 days of the Closing Date.
"Officer's Certificate" shall mean a certificate signed by one or more of the
Chairman of the Board, any Vice Chairman, the President, any Senior Vice
President, any Vice President, any Assistant Vice President, any Treasurer or
any Assistant Treasurer.
2.3 The Assignments of Mortgage and assignment of Assignment of Leases
referred to in Sections 2.2.4 and 2.2.6 may be in the form of a single
instrument assigning the Mortgage and the Assignment of Leases to the extent
permitted by applicable law. To avoid the unnecessary expense and administrative
inconvenience associated with the execution and recording or filing
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of multiple assignments of mortgages, assignments of leases (to the extent
separate from the mortgages) and assignments of UCC financing statements, Seller
shall execute, in accordance with the third succeeding paragraph, the
assignments of mortgages, assignment of the assignments of leases (to the extent
separate from the mortgages) and the assignments of UCC financing statements
relating to the Mortgage Loans naming Trustee on behalf of the
Certificateholders as assignee. Notwithstanding the fact that such assignments
of mortgages, assignments of leases (to the extent separate from the assignments
of mortgages) and assignments of UCC financing statements shall name Trustee on
behalf of the Certificateholders as the assignee, the parties hereto acknowledge
and agree that the Mortgage Loans shall for all purposes be deemed to have been
transferred from Seller to Purchaser and from Purchaser to Trustee on behalf of
the Certificateholders.
2.4 If Seller cannot deliver, or cause to be delivered, as to any Mortgage
Loan, any of the documents and/or instruments referred to in Sections 2.2.2,
2.2.3, 2.2.5 or 2.2.6, with evidence of recording thereon, solely because of a
delay caused by the public recording office where such document or instrument
has been delivered for recordation within such 90 day period, but Seller
delivers a photocopy thereof (certified by the appropriate county recorder's
office to be a true and complete copy of the original thereof submitted for
recording), to Trustee within such 90 day period, Seller shall then deliver
within 180 days after the Closing Date the recorded document (or within such
longer period after the Closing Date as Trustee may consent to, which consent
shall not be unreasonably withheld so long as Seller is, as certified in writing
to Trustee no less often than monthly, in good faith attempting to obtain from
the appropriate county recorder's office such original or photocopy).
2.5 Trustee, as assignee or transferee of Purchaser, shall be entitled to
all scheduled payments of principal due thereon after the Cut-Off Date, all
other payments of principal collected after the Cut-Off Date (other than
scheduled payments of principal due on or before the Cut-Off Date), and all
payments of interest on the Mortgage Loans allocable to the period commencing on
the Cut-Off Date. All scheduled payments of principal and interest due on or
before the Cut-Off Date and collected after the Cut-Off Date shall belong to
Seller.
2.6 Within 45 days following the Closing Date, Seller shall deliver, and
Purchaser, Trustee or the agents of either may submit or cause to be submitted
for recordation at the expense of Seller, in the appropriate public office for
real property records, each assignment referred to in clauses 2.2.4, 2.2.6(ii)
and 2.2.9(B) above (with recording information in blank if such information is
not yet available). If any such document or instrument is lost or returned
unrecorded or unfiled, as the case may be, because of a defect therein, Seller
shall prepare a substitute therefor or cure such defect, and Seller shall, at
its own expense (except in the case of a document or instrument that is lost by
Trustee), record or file, as the case may be, and deliver such document or
instrument in accordance with this Section 2.
2.7 As to each Mortgage Loan secured by a Mortgaged Property with respect to
which the related Mortgagor has entered into a franchise agreement and each
Mortgage Loan secured by a Mortgaged Property with respect to which a letter of
credit is in place, Seller shall provide a notice on or prior to the date that
is 30 days after the Closing Date to the franchisor or the issuing financial
institution, as applicable, of the transfer of such Mortgage Loan to the Trust
pursuant to the Pooling and Servicing Agreement, and inform such parties that
any notices to the
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Mortgagor's lender pursuant to such franchise agreement or letter of credit
should thereafter be forwarded to Master Servicer and, with respect to each
franchise agreement, provide a franchise comfort letter on or prior to the date
that is 30 days after the Closing Date. After the Closing Date, with respect to
any letter of credit that has not yet been assigned to the Trust, upon the
written request of Master Servicer or the applicable Primary Servicer, Seller
will draw on such letter of credit as directed by Master Servicer or such
Primary Servicer in such notice to the extent Seller has the right to do so.
2.8 Documents that are in the possession of Seller, its agents or its
subcontractors that relate to the servicing of any Mortgage Loans and that are
not required to be a part of the Mortgage File and are reasonably necessary for
the ongoing administration and/or servicing of the applicable Mortgage Loan (the
"Servicing File") shall be delivered to Trustee by Seller to or at the direction
of Master Servicer, on behalf of Purchaser, on or prior to the 75th day after
the Closing Date, in accordance with Section 3.1 of the Primary Servicing
Agreement, if applicable.
2.9 The documents required to be delivered to Master Servicer (or in the
alternative, Primary Servicer) shall include, to the extent required to be (and
actually) delivered to Seller pursuant to the applicable Mortgage Loan
documents, copies of the following items: the Mortgage Note, any Mortgage, the
Assignment of Leases and the Assignment of Mortgage, any guaranty/indemnity
agreement, any loan agreement, the insurance policies or certificates, as
applicable, the property inspection reports, any financial statements on the
property, any escrow analysis, the tax bills, the Appraisal, the environmental
report, the engineering report, the asset summary, financial information on the
Mortgagor/sponsor and any guarantors, any letters of credit, any intercreditor
agreement and any Environmental Insurance Policies. Notwithstanding the
foregoing, Seller shall not be required to deliver any draft documents, or any
attorney-client communications that are privileged communications or constitute
legal or other due diligence analyses, or internal communications of Seller or
its affiliates, or credit underwriting or other analyses or data. Delivery of
any of the foregoing documents to Primary Servicer shall be deemed a delivery to
Master Servicer and satisfy Seller's obligations under this subparagraph. Each
of the foregoing items may be delivered by Seller in electronic form, to the
extent such document is available in such form and such form is reasonably
acceptable to Master Servicer.
2.10 Upon the sale of the Mortgage Loans by Seller to Purchaser pursuant to
this Agreement, the ownership of each Mortgage Note, Mortgage and the other
contents of the related Mortgage File shall be vested in Purchaser and its
assigns, and the ownership of all records and documents constituting the
Servicing File with respect to the related Mortgage Loan prepared by or that
come into the possession of Seller shall immediately vest in Purchaser and its
assigns, and shall be delivered promptly by Seller to or on behalf of either
Trustee or Master Servicer as set forth herein, subject to the requirements of
the Primary Servicing Agreement. Seller's and Purchaser's records shall reflect
the transfer of each Mortgage Loan from Seller to Purchaser and its assigns as a
sale.
2.11 It is the express intent of the parties hereto that the conveyance of
the Mortgage Loans and related property to Purchaser by Seller as provided in
this Section 2 be, and be construed as, an absolute sale of the Mortgage Loans
and related property. It is, further, not the intention of the parties that such
conveyance be deemed a pledge of the Mortgage Loans and related property by
Seller to Purchaser to secure a debt or other obligation of Seller. However, in
the event that,
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notwithstanding the intent of the parties, the Mortgage Loans or any related
property are held to be the property of Seller, or if for any other reason this
Agreement is held or deemed to create a security interest in the Mortgage Loans
or any related property, then:
2.11.1 this Agreement shall be deemed to be a security agreement; and
2.11.2 the conveyance provided for in this Section 2 shall be deemed to
be a grant by Seller to Purchaser of a security interest in all of Seller's
right, title, and interest, whether now owned or hereafter acquired, in and to:
A. All accounts, general intangibles, chattel paper,
instruments, documents, money, deposit accounts, certificates of
deposit, goods, letters of credit, advices of credit and investment
property consisting of, arising from or relating to any of the following
property: the Mortgage Loans identified on the Mortgage Loan Schedule,
including the related Mortgage Notes, Mortgages, security agreements,
and title, hazard and other insurance policies, all distributions with
respect thereto payable after the Cut-Off Date, all substitute or
replacement Mortgage Loans and all distributions with respect thereto,
and the Mortgage Files;
B. All accounts, general intangibles, chattel paper,
instruments, documents, money, deposit accounts, certificates of
deposit, goods, letters of credit, advices of credit, investment
property and other rights arising from or by virtue of the disposition
of, or collections with respect to, or insurance proceeds payable with
respect to, or claims against other Persons with respect to, all or any
part of the collateral described in clause (A) above (including any
accrued discount realized on liquidation of any investment purchased at
a discount); and
C. All cash and non-cash proceeds of the collateral described in
clauses (A) and (B) above.
2.12 The possession by Purchaser or its designee of the Mortgage Notes, the
Mortgages, and such other goods, letters of credit, advices of credit,
instruments, money, documents, chattel paper or certificated securities shall be
deemed to be possession by the secured party or possession by a purchaser for
purposes of perfecting the security interest pursuant to the Uniform Commercial
Code (including, without limitation, Sections 9-313 thereof) as in force in the
relevant jurisdiction. Notwithstanding the foregoing, Seller makes no
representation or warranty as to the perfection of any such security interest.
2.13 Notifications to Persons holding such property, and acknowledgments,
receipts, or confirmations from persons holding such property, shall be deemed
to be notifications to, or acknowledgments, receipts or confirmations from,
securities intermediaries, bailees or agents of, or Persons holding for,
Purchaser or its designee, as applicable, for the purpose of perfecting such
security interest under applicable law.
2.14 Seller shall, to the extent consistent with this Agreement and upon
request by or on behalf of Purchaser, take such reasonable actions as may be
necessary to ensure that, if this Agreement were deemed to create a security
interest in the property described above, such security interest
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would be deemed to be a perfected security interest of first priority under
applicable law and will be maintained as such throughout the term of the
Agreement. In such case, Seller hereby authorizes Master Servicer to file all
filings necessary to maintain the effectiveness of any original filings
necessary under the Uniform Commercial Code as in effect in any jurisdiction to
perfect such security interest in such property. In connection herewith,
Purchaser shall have all of the rights and remedies of a secured party and
creditor under the Uniform Commercial Code as in force in the relevant
jurisdiction.
2.15 Notwithstanding anything to the contrary contained herein, and subject
to Section 2.1, Purchaser shall not be required to purchase any Mortgage Loan as
to which any Mortgage Note or lost note affidavit and indemnity (endorsed as
described in clause 2.2.1) required to be delivered to or on behalf of Trustee
or Master Servicer pursuant to this Section 2 on or before the Closing Date is
not so delivered, or is not properly executed or is defective on its face, and
Purchaser's acceptance of the related Mortgage Loan on the Closing Date shall in
no way constitute a waiver of such omission or defect or of Purchaser's or its
successors' and assigns' rights in respect thereof pursuant to Section 5.
3. EXAMINATION OF MORTGAGE FILES AND DUE DILIGENCE REVIEW.
3.1 Seller shall (i) deliver to Purchaser on or before the Closing Date a
diskette acceptable to Purchaser that contains such information about the
Mortgage Loans as may be reasonably requested by Purchaser, (ii) deliver to
Purchaser investor files (collectively the "Collateral Information") with
respect to the assets proposed to be included in the Mortgage Pool and made
available at Purchaser's headquarters in New York, and (iii) otherwise cooperate
fully with Purchaser in its examination of the credit files, underwriting
documentation and Mortgage Files for the Mortgage Loans and its due diligence
review of the Mortgage Loans. The fact that Purchaser has conducted or has
failed to conduct any partial or complete examination of the credit files,
underwriting documentation or Mortgage Files for the Mortgage Loans shall not
affect the right of Purchaser or Trustee to cause Seller to cure any Material
Document Defect or Material Breach (each as defined below), or to repurchase or
replace the defective Mortgage Loans pursuant to Section 5 hereof.
3.2 On or prior to the Closing Date, Seller shall allow representatives of
any of Purchaser, each Underwriter, each Initial Purchaser, Trustee, Special
Servicer and each Rating Agency to examine and audit all books, records and
files pertaining to the Mortgage Loans, Seller's underwriting procedures and
Seller's ability to perform or observe all of the terms, covenants and
conditions of this Agreement. Such examinations and audits shall take place at
one or more offices of Seller during normal business hours and shall not be
conducted in a manner that is disruptive to Seller's normal business operations
upon reasonable prior advance notice. In the course of such examinations and
audits, Seller will make available to such representatives of any of Purchaser,
each Underwriter, each Initial Purchaser, Trustee, Special Servicer and each
Rating Agency reasonably adequate facilities, as well as the assistance of a
sufficient number of knowledgeable and responsible individuals who are familiar
with the Mortgage Loans and the terms of this Agreement, and Seller shall
cooperate fully with any such examination and audit in all material respects. On
or prior to the Closing Date, Seller shall provide Purchaser with all material
information regarding Seller's financial condition and access to knowledgeable
financial
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or accounting officers for the purpose of answering questions with respect to
Seller's financial condition, financial statements as provided to Purchaser or
other developments affecting Seller's ability to consummate the transactions
contemplated hereby or otherwise affecting Seller in any material respect.
Within 45 days after the Closing Date, Seller shall provide Master Servicer or
Primary Servicer, if applicable, with any additional information identified by
Master Servicer or Primary Servicer, if applicable, as necessary to complete the
CMSA Property File, to the extent that such information is available.
3.3 Purchaser may exercise any of its rights hereunder through one or more
designees or agents, provided Purchaser has provided Seller with prior notice of
the identity of such designee or agent.
3.4 Purchaser shall keep confidential any information regarding Seller and
the Mortgage Loans that has been delivered into Purchaser's possession and that
is not otherwise publicly available; provided, however, that such information
shall not be kept confidential (and the right to require confidentiality under
any confidentiality agreement is hereby waived) to the extent such information
is required to be included in the Memorandum or the Prospectus Supplement or
Purchaser is required by law or court order to disclose such information. If
Purchaser is required to disclose in the Memorandum or the Prospectus Supplement
confidential information regarding Seller as described in the preceding
sentence, Purchaser shall provide to Seller a copy of the proposed form of such
disclosure prior to making such disclosure and Seller shall promptly, and in any
event within two Business Days, notify Purchaser of any inaccuracies therein, in
which case Purchaser shall modify such form in a manner that corrects such
inaccuracies. If Purchaser is required by law or court order to disclose
confidential information regarding Seller as described in the second preceding
sentence, Purchaser shall notify Seller and cooperate in Seller's efforts to
obtain a protective order or other reasonable assurance that confidential
treatment will be accorded such information and, if in the absence of a
protective order or such assurance, Purchaser is compelled as a matter of law to
disclose such information, Purchaser shall, prior to making such disclosure,
advise and consult with Seller and its counsel as to such disclosure and the
nature and wording of such disclosure and Purchaser shall use reasonable efforts
to obtain confidential treatment therefor. Notwithstanding the foregoing, if
reasonably advised by counsel that Purchaser is required by a regulatory agency
or court order to make such disclosure immediately, then Purchaser shall be
permitted to make such disclosure without prior review by Seller.
4. REPRESENTATIONS AND WARRANTIES OF SELLER AND PURCHASER.
4.1 To induce Purchaser to enter into this Agreement, Seller hereby makes
for the benefit of Purchaser and its assigns with respect to each Mortgage Loan
(subject to the last paragraph of this Section 4.1) as of the date hereof (or as
of such other date specifically set forth in the particular representation and
warranty) each of the representations and warranties set forth on Exhibit 2
hereto, except as otherwise set forth on Schedule A attached thereto, and hereby
further represents and warrants to Purchaser as of the date hereof that:
4.1.1 Seller is duly organized and is validly existing as a limited
liability company in good standing under the laws of the State of New York.
Seller has the requisite power and
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authority and legal right to own the Mortgage Loans and to transfer and convey
the Mortgage Loans to Purchaser and has the requisite power and authority to
execute and deliver, engage in the transactions contemplated by, and perform and
observe the terms and conditions of, this Agreement.
4.1.2 This Agreement has been duly and validly authorized, executed
and delivered by Seller, and assuming the due authorization, execution and
delivery hereof by Purchaser, this Agreement constitutes the valid, legal and
binding agreement of Seller, enforceable in accordance with its terms, except as
such enforcement may be limited by (A) laws relating to bankruptcy, insolvency,
reorganization, receivership or moratorium, (B) other laws relating to or
affecting the rights of creditors generally, (C) general equity principles
(regardless of whether such enforcement is considered in a proceeding in equity
or at law) or (D) public policy considerations underlying the securities laws,
to the extent that such public policy considerations limit the enforceability of
the provisions of this Agreement that purport to provide indemnification from
liabilities under applicable securities laws.
4.1.3 No consent, approval, authorization or order of, registration or
filing with, or notice to, any governmental authority or court is required,
under federal or state law, for the execution, delivery and performance of or
compliance by Seller with this Agreement, or the consummation by Seller of any
transaction contemplated hereby, other than (A) such qualifications as may be
required under state securities or blue sky laws, (B) the filing or recording of
financing statements, instruments of assignment and other similar documents
necessary in connection with Seller's sale of the Mortgage Loans to Purchaser,
(C) such consents, approvals, authorizations, qualifications, registrations,
filings or notices as have been obtained and (D) where the lack of such consent,
approval, authorization, qualification, registration, filing or notice would not
have a material adverse effect on the performance by Seller under this
Agreement.
4.1.4 Neither the transfer of the Mortgage Loans to Purchaser, nor the
execution, delivery or performance of this Agreement by Seller, conflicts or
will conflict with, results or will result in a breach of, or constitutes or
will constitute a default under (A) any term or provision of Seller's articles
of organization or by-laws, (B) any term or provision of any material agreement,
contract, instrument or indenture to which Seller is a party or by which it or
any of its assets is bound or results in the creation or imposition of any lien,
charge or encumbrance upon any of its property pursuant to the terms of any such
indenture, mortgage, contract or other instrument, other than pursuant to this
Agreement, or (C) after giving effect to the consents or taking of the actions
contemplated in subsection 4.1.3, any law, rule, regulation, order, judgment,
writ, injunction or decree of any court or governmental authority having
jurisdiction over Seller or its assets, except where in any of the instances
contemplated by clauses (B) or (C) above, any conflict, breach or default, or
creation or imposition of any lien, charge or encumbrance, will not have a
material adverse effect on the consummation of the transactions contemplated
hereby by Seller or materially and adversely affect its ability to perform its
obligations and duties hereunder or result in any material adverse change in the
business, operations, financial condition, properties or assets of Seller, or in
any material impairment of the right or ability of Seller to carry on its
business substantially as now conducted.
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4.1.5 There are no actions or proceedings against, or investigations
of, Seller pending or, to Seller's knowledge, threatened in writing against
Seller before any court, administrative agency or other tribunal, the outcome of
which could reasonably be expected to materially and adversely affect the
transfer of the Mortgage Loans to Purchaser or the execution or delivery by, or
enforceability against, Seller of this Agreement or have an effect on the
financial condition of Seller that would materially and adversely affect the
ability of Seller to perform its obligations under this Agreement.
4.1.6 On the Closing Date, the sale of the Mortgage Loans pursuant to
this Agreement will effect a transfer by Seller of all of its right, title and
interest in and to the Mortgage Loans to Purchaser.
4.1.7 To Seller's knowledge, the PCF II Mortgage Loan Information (as
defined in that certain indemnification agreement, dated February 15, 2007,
between Seller, Purchaser, the Underwriters and the Initial Purchaser (the
"Indemnification Agreement")) relating to the Mortgage Loans does not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading (when read together with the Final
Prospectus Supplement, in the case of Public Certificates, or when read together
with the Memorandum, in the case of the Private Certificates). Notwithstanding
anything contained herein to the contrary, this subparagraph 4.1.7 shall run
exclusively to the benefit of Purchaser and no other party.
To induce Purchaser to enter into this Agreement, Seller hereby covenants that
the foregoing representations and warranties and those set forth on Exhibit 2
hereto, subject to the exceptions set forth in Schedule A to Exhibit 2, will be
true and correct in all material respects on and as of the Closing Date with the
same effect as if made on the Closing Date, provided that any representations
and warranties made as of a specified date shall be true and correct in all
material respects as of such specified date.
4.1.8 Seller has complied with the disclosure requirements of
Regulation AB that arise from its role as "seller" and "sponsor" in connection
with the issuance of the Certificates.
4.1.9 For so long as the Trust is subject to the reporting
requirements of the Exchange Act, Seller shall provide Purchaser (or with
respect to any Serviced Companion Mortgage Loan that is deposited into an Other
Securitization, the depositor in such Other Securitization) and the Paying Agent
with any Additional Form 10-D Disclosure and any Additional Form 10-K Disclosure
set forth next to Seller's name on Schedule XV and Schedule XVI of the Pooling
and Servicing Agreement within the time periods set forth in the Pooling and
Servicing Agreement.
Each of the representations, warranties and covenants made by Seller pursuant to
this Section 4.1 shall survive the sale of the Mortgage Loans and shall continue
in full force and effect notwithstanding any restrictive or qualified
endorsement on the Mortgage Notes.
4.2 To induce Seller to enter into this Agreement, Purchaser hereby
represents and warrants to Seller as of the date hereof:
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4.2.1 Purchaser is a corporation duly organized, validly existing, and
in good standing under the laws of the State of Delaware with full power and
authority to carry on its business as presently conducted by it.
4.2.2 Purchaser has full power and authority to acquire the Mortgage
Loans, to execute and deliver this Agreement and to enter into and consummate
all transactions contemplated by this Agreement. Purchaser has duly and validly
authorized the execution, delivery and performance of this Agreement and has
duly and validly executed and delivered this Agreement. This Agreement, assuming
due authorization, execution and delivery by Seller, constitutes the valid and
binding obligation of Purchaser, enforceable against it in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity, regardless of
whether such enforcement is considered in a proceeding in equity or at law.
4.2.3 No consent, approval, authorization or order of, registration or
filing with, or notice to, any governmental authority or court is required,
under federal or state law, for the execution, delivery and performance of or
compliance by Purchaser with this Agreement, or the consummation by Purchaser of
any transaction contemplated hereby that has not been obtained or made by
Purchaser.
4.2.4 Neither the purchase of the Mortgage Loans nor the execution,
delivery and performance of this Agreement by Purchaser will violate Purchaser's
certificate of incorporation or by-laws or constitute a default (or an event
that, with notice or lapse of time or both, would constitute a default) under,
or result in a breach of, any material agreement, contract, instrument or
indenture to which Purchaser is a party or that may be applicable to Purchaser
or its assets.
4.2.5 Purchaser's execution and delivery of this Agreement and its
performance and compliance with the terms of this Agreement will not constitute
a violation of any law, rule, writ, injunction, order or decree of any court, or
order or regulation of any federal, state or municipal government agency having
jurisdiction over Purchaser or its assets, which violation could materially and
adversely affect the condition (financial or otherwise) or the operation of
Purchaser or its assets or could materially and adversely affect its ability to
perform its obligations and duties hereunder.
4.2.6 There are no actions or proceedings against, or investigations
of, Purchaser pending or, to Purchaser's knowledge, threatened against Purchaser
before any court, administrative agency or other tribunal, the outcome of which
could reasonably be expected to adversely affect the transfer of the Mortgage
Loans, the issuance of the Certificates, the execution, delivery or
enforceability of this Agreement or have an effect on the financial condition of
Purchaser that would materially and adversely affect the ability of Purchaser to
perform its obligation under this Agreement.
4.2.7 Purchaser has not dealt with any broker, investment banker,
agent or other person, other than Seller, the Underwriters, the Initial
Purchasers and their respective affiliates, that may be entitled to any
commission or compensation in connection with the sale of the Mortgage Loans or
consummation of any of the transactions contemplated hereby.
15
To induce Seller to enter into this Agreement, Purchaser hereby covenants that
the foregoing representations and warranties will be true and correct in all
material respects on and as of the Closing Date with the same effect as if made
on the Closing Date.
Each of the representations and warranties made by Purchaser pursuant to this
Section 4.2 shall survive the purchase of the Mortgage Loans.
5. REMEDIES UPON BREACH OF REPRESENTATIONS AND WARRANTIES MADE BY SELLER.
5.1 It is hereby acknowledged that Seller shall make for the benefit of
Trustee on behalf of the holders of the Certificates, whether directly or by way
of Purchaser's assignment of its rights hereunder to Trustee, the
representations and warranties set forth on Exhibit 2 hereto (each as of the
date hereof unless otherwise specified).
5.2 It is hereby further acknowledged that if any document required to be
delivered to Trustee pursuant to Section 2 is not delivered as and when required
(and including the expiration of any grace or cure period), is not properly
executed or is defective on its face, or if there is a breach of any of the
representations and warranties required to be made by Seller regarding the
characteristics of the Mortgage Loans and/or the related Mortgaged Properties as
set forth in Exhibit 2 hereto, and in either case such defect or breach, either
(i) materially and adversely affects the interests of the holders of the
Certificates in the related Mortgage Loan, or (ii) both (A) the document defect
or breach materially and adversely affects the value of the Mortgage Loan and
(B) the Mortgage Loan is a Specially Serviced Mortgage Loan or Rehabilitated
Mortgage Loan (such a document defect described in the preceding clause (i) or
(ii), a "Material Document Defect" and such a breach described in the preceding
clause (i) or (ii) a "Material Breach"), the party discovering such Material
Document Defect or Material Breach shall promptly notify, in writing, the other
parties; provided that any breach of the representation and warranty contained
in paragraph 42 of such Exhibit 2 shall constitute a Material Breach only if
such prepayment premium or yield maintenance charge is not deemed "customary"
for commercial mortgage loans as evidenced by (i) an opinion of tax counsel to
such effect or (ii) a determination by the Internal Revenue Service that such
provision is not customary. Promptly (but in any event within three Business
Days) upon becoming aware of any such Material Document Defect or Material
Breach, Master Servicer shall, and Special Servicer may, request that Seller,
not later than 90 days from Seller's receipt of the notice of such Material
Document Defect or Material Breach, cure such Material Document Defect or
Material Breach, as the case may be, in all material respects; provided,
however, that if such Material Document Defect or Material Breach, as the case
may be, cannot be corrected or cured in all material respects within such 90 day
period, and such Material Document Defect or Material Breach would not cause the
Mortgage Loan to be other than a "qualified mortgage"(as defined in the Code)
but Seller is diligently attempting to effect such correction or cure, as
certified by Seller in an Officer's Certificate delivered to Trustee, then the
cure period will be extended for an additional 90 days unless, solely in the
case of a Material Document Defect, (x) the Mortgage Loan is, at the end of the
initial 90 day period, then a Specially Serviced Mortgage Loan and a Servicing
Transfer Event has occurred as a result of a monetary default or as described in
clause (ii) or clause (v) of the definition of "Servicing Transfer Event" in the
Pooling and Servicing Agreement and (y) the
16
Material Document Defect was identified in a certification delivered to Seller
by Trustee pursuant to Section 2.2 of the Pooling and Servicing Agreement not
less than 90 days prior to the delivery of the notice of such Material Document
Defect. The parties acknowledge that neither delivery of a certification or
schedule of exceptions to Seller pursuant to Section 2.2 of the Pooling and
Servicing Agreement or otherwise nor possession of such certification or
schedule by Seller shall, in and of itself, constitute delivery of notice of any
Material Document Defect or knowledge or awareness by Seller of any Material
Document Defect listed therein.
5.3 Seller hereby covenants and agrees that, if any such Material Document
Defect or Material Breach cannot be corrected or cured in all material respects
within the above cure periods, Seller shall, on or before the termination of
such cure periods, either (i) repurchase the affected Mortgage Loan or REO
Mortgage Loan from Purchaser or its assignee at the Purchase Price as defined in
the Pooling and Servicing Agreement, or (ii) if within the three-month period
commencing on the Closing Date (or within the two-year period commencing on the
Closing Date if the related Mortgage Loan is a "defective obligation" within the
meaning of Section 860G(a)(4)(B)(ii) of the Code and Treasury Regulation Section
1.860G-2(f)), at its option replace, without recourse, any Mortgage Loan or REO
Mortgage Loan to which such defect relates with a Qualifying Substitute Mortgage
Loan. If such Material Document Defect or Material Breach would cause the
Mortgage Loan to be other than a "qualified mortgage" (as defined in the Code),
then notwithstanding the previous sentence or the previous paragraph, repurchase
or substitution must occur within 90 days from the date Seller was notified of
the breach or defect. Seller agrees that any substitution shall be completed in
accordance with the terms and conditions of the Pooling and Servicing Agreement.
5.4 If (x) a Mortgage Loan is to be repurchased or replaced as contemplated
above (a "Defective Mortgage Loan"), (y) such Defective Mortgage Loan is
cross-collateralized and cross-defaulted with one or more other Mortgage Loans
("Crossed Mortgage Loans") and (z) the applicable document defect or breach does
not constitute a Material Document Defect or Material Breach, as the case may
be, as to such Crossed Mortgage Loans (without regard to this paragraph), then
the applicable document defect or breach (as the case may be) shall be deemed to
constitute a Material Document Defect or Material Breach, as the case may be, as
to each such Crossed Mortgage Loan for purposes of the above provisions, and
Seller shall be obligated to repurchase or replace each such Crossed Mortgage
Loan in accordance with the provisions above, unless, in the case of such breach
or document defect, (A) Seller provides a Nondisqualification Opinion to Trustee
at the expense of Seller if Trustee acting at the direction of the Controlling
Class determines that it would be usual and customary in accordance with
industry practice to obtain a Nondisqualification Opinion and (B) both of the
following conditions would be satisfied if Seller were to repurchase or replace
only those Mortgage Loans as to which a Material Breach or Material Document
Defect had occurred without regard to this paragraph (the "Affected Loan(s)"):
(i) the debt service coverage ratio for all such other Mortgage Loans (excluding
the Affected Loan(s)) for the four calendar quarters immediately preceding the
repurchase or replacement is not less than the greater of (A) the debt service
coverage ratio for all such Crossed Mortgage Loans (including the Affected
Loan(s)) set forth under the heading "NCF DSCR" in Appendix II to the Final
Prospectus Supplement and (B) 1.25x, and (ii) the loan-to-value ratio for all
such Crossed Mortgage Loans (excluding the Affected Loan(s)) is not greater than
the lesser of (A) the current loan-to-value ratio for all such Mortgage Loans
(including the Affected Loan(s)) set forth under the heading "Cut-Off Date
17
LTV" in Appendix II to the Final Prospectus Supplement and (B) 75%. The
determination of Master Servicer as to whether the conditions set forth above
have been satisfied shall be conclusive and binding in the absence of manifest
error. Master Servicer will be entitled to cause to be delivered, or direct
Seller to (in which case Seller shall) cause to be delivered to Master Servicer:
(A) an Appraisal of any or all of the related Mortgaged Properties for purposes
of determining whether the condition set forth in clause (ii) above has been
satisfied, in each case at the expense of Seller if the scope and cost of the
Appraisal is approved by Seller (such approval not to be unreasonably withheld)
and (B) an opinion of counsel that not requiring the repurchase of each such
Crossed Mortgage Loan will not result in an Adverse REMIC Event.
5.5 With respect to any Defective Mortgage Loan, to the extent that Seller
is required to repurchase or substitute for such Defective Mortgage Loan (each,
a "Repurchased Loan") in the manner prescribed above while Trustee (as assignee
of Purchaser) continues to hold any Crossed Mortgage Loan that is
cross-collateralized and/or cross-defaulted (each, a "Cross-Collateralized
Loan") with such Repurchased Loan, Seller and Purchaser hereby agree to modify,
prior to such repurchase or substitution, the related Mortgage Loan documents in
a manner such that such affected Repurchased Loan, on the one hand, and any
related Cross-Collateralized Loans held by Trustee, on the other, would no
longer be cross-defaulted or cross-collateralized with one another; provided
that Seller shall have furnished Trustee, at the expense of Seller, a
nondisqualification opinion that such modification shall not cause an Adverse
REMIC Event; provided, further, that if such nondisqualification opinion cannot
be furnished, Seller and Purchaser agree that such repurchase or substitution of
only the Repurchased Loan, notwithstanding anything to the contrary herein,
shall not be permitted and Seller shall repurchase or substitute for the
Repurchased Loan and all related Cross-Collateralized Loans. Any reserve or
other cash collateral or letters of credit securing the Cross-Collateralized
Mortgage Loans shall be allocated between such Mortgage Loans in accordance with
the Mortgage Loan documents, or otherwise on a pro rata basis based upon their
outstanding Principal Balances. All other terms of the Mortgage Loans shall
remain in full force and effect, without any modification thereof. The
Mortgagors set forth on Schedule B to Exhibit 2 hereto are intended third-party
beneficiaries of the provisions set forth in this paragraph and the preceding
paragraph. The provisions of this paragraph and the preceding paragraph may not
be modified with respect to any Mortgage Loan without the related Mortgagor's
consent.
5.6 Upon occurrence (and after any applicable cure or grace period), any of
the following document defects shall be conclusively presumed materially and
adversely to affect the interests of Certificateholders in a Mortgage Loan and
be a Material Document Defect: (a) the absence from the Mortgage File of the
original signed Mortgage Note, unless the Mortgage File contains a signed lost
note affidavit and indemnity that appears to be regular on its face; (b) the
absence from the Mortgage File of the original signed Mortgage that appears to
be regular on its face, unless there is included in the Mortgage File a
certified copy of the Mortgage by the local authority with which the Mortgage
was recorded; or (c) the absence from the Mortgage File of the item specified in
paragraph 2.2.8. If any of the foregoing Material Document Defects is discovered
by the Custodian (or Trustee if there is no Custodian), Trustee (or as set forth
in Section 2.3(a) of the Pooling and Servicing Agreement, Master Servicer) will
take the steps described elsewhere in this Section, including the giving of
notices to the Rating Agencies and the parties hereto and making demand upon
Seller for the cure of the Material Document Defect or repurchase or replacement
of the related Mortgage Loan.
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5.7 If Seller disputes that a Material Document Defect or Material Breach
exists with respect to a Mortgage Loan or otherwise refuses (i) to effect a
correction or cure of such Material Document Defect or Material Breach, (ii) to
repurchase the affected Mortgage Loan from Purchaser or its assignee or (iii) to
replace such Mortgage Loan with a Qualifying Substitute Mortgage Loan, each in
accordance with this Agreement, then provided that (i) the period of time
provided for Seller to correct, repurchase or cure has expired and (ii) the
Mortgage Loan is then in default and is then a Specially Serviced Mortgage Loan,
Special Servicer may, subject to the Servicing Standard, modify, work-out or
foreclose, sell or otherwise liquidate (or permit the liquidation of) the
Mortgage Loan pursuant to Sections 9.5, 9.12, 9.15 and 9.36, as applicable, of
the Pooling and Servicing Agreement, while pursuing the repurchase claim. Seller
acknowledges and agrees that any modification of the Mortgage Loan pursuant to a
work-out shall not constitute a defense to any repurchase claim nor shall such
modification and work-out change the Purchase Price due from Seller for any
repurchase claim. Any sale of the Mortgage Loan, or foreclosure upon such
Mortgage Loan and sale of the REO Property, to a Person other than Seller shall
be without (i) recourse of any kind (either express or implied) by such Person
against Seller and (ii) representation or warranty of any kind (either express
or implied) by Seller to or for the benefit of such Person.
5.8 Seller shall have the right to purchase certain of the Mortgage Loans or
REO Properties, as applicable, to the extent set forth in the Pooling and
Servicing Agreement.
5.9 The fact that a Material Document Defect or Material Breach is not
discovered until after foreclosure (but in all instances prior to the sale of
the related REO Property or Mortgage Loan) shall not prejudice any claim against
Seller for repurchase of the REO Mortgage Loan or REO Property. In such an
event, Master Servicer shall notify Seller of the discovery of the Material
Document Defect or Material Breach and Seller shall have 90 days to correct or
cure such Material Document Defect or Material Breach or purchase the REO
Property at the Purchase Price. After a final liquidation of the Mortgage Loan
or REO Mortgage Loan, if a court of competent jurisdiction issues a final order
that Seller is or was obligated to repurchase the related Mortgage Loan or REO
Mortgage Loan, after the expiration of any applicable appeal period (a "Final
Judicial Determination") or Seller otherwise accepts liability, then, but in no
event later than the Termination of the Trust pursuant to Section 9.30 of the
Pooling and Servicing Agreement, then Seller will be obligated to pay to the
Trust the difference between any Liquidation Proceeds received upon such
liquidation in accordance with the Pooling and Servicing Agreement (including
those arising from any sale to Seller) and the Purchase Price.
5.10 Notwithstanding anything to the contrary contained herein, in connection
with any sale or other liquidation of a Mortgage Loan or REO Property as
described in this Section 5, Special Servicer shall not receive a Liquidation
Fee from Seller (but may collect such Liquidation Fee from the related
Liquidation Proceeds as otherwise provided herein) unless Seller is required to
repurchase such Mortgage Loan or REO Property and such Mortgage Loan or REO
Property is repurchased after the date that is 180 days or more after the Seller
receives notice of the breach or defect causing the repurchase; provided,
however, that in the event Seller is obligated to repurchase the Mortgage Loan
or REO Mortgaged Property after a final liquidation of such Mortgage Loan or REO
Property pursuant to the immediately preceding paragraph, an amount equal to any
Liquidation Fee (calculated on the basis of Liquidation Proceeds) payable to
Special Servicer shall be included in the definition of "Purchase Price" in
respect of such Mortgage Loan
19
or REO Mortgaged Property. Except as expressly set forth above, no Liquidation
Fee shall be payable in connection with a repurchase of a Mortgage Loan by
Seller.
5.11 The obligations of Seller set forth in this Section 5 to cure a Material
Document Defect or a Material Breach or repurchase or replace a defective
Mortgage Loan constitute the sole remedies of Purchaser or its assignees with
respect to a Material Document Defect or Material Breach in respect of an
outstanding Mortgage Loan; provided, that this limitation shall not in any way
limit Purchaser's rights or remedies upon breach of any other representation or
warranty or covenant by Seller set forth in this Agreement (other than those set
forth in Exhibit 2).
5.12 Notwithstanding the foregoing, in the event that there is a breach of
the representations and warranties set forth in paragraph 39 of Exhibit 2 hereto
because the underlying loan documents do not provide for the payment by the
Mortgagor of reasonable costs and expenses associated with the defeasance or
assumption of a Mortgage Loan, and the related Mortgagor's payments made for the
reasonable costs and expenses associated with the defeasance or assumption of a
Mortgage Loan are insufficient and cause the Trust to incur an Additional Trust
Expense in an amount equal to such reasonable costs and expenses not paid by
such Mortgagor, Seller hereby covenants and agrees to reimburse the Trust within
90 days of the receipt of notice of such breach in an amount sufficient to avoid
such Additional Trust Expense. The parties hereto acknowledge that such
reimbursement shall be Seller's sole obligation with respect to the breach
discussed in the previous sentence.
5.13 The Pooling and Servicing Agreement shall provide that Trustee (or
Master Servicer or Special Servicer on its behalf) shall give written notice
promptly (but in any event within three Business Days) to Seller of its
discovery of any Material Document Defect or Material Breach and prompt written
notice to Seller in the event that any Mortgage Loan becomes a Specially
Serviced Mortgage Loan (as defined in the Pooling and Servicing Agreement).
5.14 If Seller repurchases any Mortgage Loan pursuant to this Section 5,
Purchaser or its assignee, following receipt by Trustee of the Purchase Price
therefor, promptly shall deliver or cause to be delivered to Seller all Mortgage
Loan documents with respect to such Mortgage Loan, and each document that
constitutes a part of the Mortgage File that was endorsed or assigned to Trustee
shall be endorsed and assigned to Seller in the same manner such that Seller
shall be vested with legal and beneficial title to such Mortgage Loan, in each
case without recourse, including any property acquired in respect of such
Mortgage Loan or proceeds of any insurance policies with respect thereto.
6. CLOSING.
6.1 The closing of the sale of the Mortgage Loans shall be held at the
offices of Xxxxxx & Xxxxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, XX 00000 at 9:00
a.m., New York time, on the Closing Date. The closing shall be subject to each
of the following conditions:
6.1.1 All of the representations and warranties of Seller and
Purchaser specified in Section 4 hereof (including, without limitation, the
representations and warranties set forth on Exhibit 2 hereto) shall be true and
correct as of the Closing Date, provided that any
20
representations and warranties made as of a specified date shall be true and
correct as of such specified date (to the extent of the standard, if any, set
forth in each representation and warranty).
6.1.2 All Closing Documents specified in Section 7 hereof, in such
forms as are agreed upon and reasonably acceptable to Seller or Purchaser, as
applicable, shall be duly executed and delivered by all signatories as required
pursuant to the respective terms thereof.
6.1.3 Seller shall have delivered and released to Purchaser or its
designee all documents required to be delivered to Purchaser as of the Closing
Date pursuant to Section 2 hereof.
6.1.4 The result of the examination and audit performed by Purchaser
and its affiliates pursuant to Section 3 hereof shall be satisfactory to
Purchaser and its affiliates in their sole determination and the parties shall
have agreed to the form and contents of the PCFII Mortgage Loan Information to
be disclosed in the Memorandum and the Prospectus Supplement.
`6.1.5 All other terms and conditions of this Agreement required to
be complied with on or before the Closing Date shall have been complied with,
and Seller and Purchaser shall have the ability to comply with all terms and
conditions and perform all duties and obligations required to be complied with
or performed after the Closing Date.
6.1.6 Seller shall have paid all fees and expenses payable by it to
Purchaser pursuant to Section 8 hereof.
6.1.7 The Certificates to be so rated shall have been assigned
ratings by each Rating Agency no lower than the ratings specified for each such
Class in the Memorandum and the Prospectus Supplement.
6.1.8 No Underwriter shall have terminated the Underwriting
Agreement and none of the Initial Purchasers shall have terminated the
Certificate Purchase Agreement, and neither the Underwriters nor the Initial
Purchasers shall have suspended, delayed or otherwise cancelled the Closing
Date.
6.1.9 Seller shall have received the purchase price for the Mortgage
Loans pursuant to Section 1 hereof.
6.2 Each party agrees to use its best efforts to perform its respective
obligations hereunder in a manner that will enable Purchaser to purchase the
Mortgage Loans on the Closing Date.
7. CLOSING DOCUMENTS. The Closing Documents shall consist of the following:
7.1 This Agreement duly executed by Purchaser and Seller.
7.2 A certificate of Seller, executed by a duly authorized officer of Seller
and dated the Closing Date, and upon which Purchaser and its successors and
assigns may rely, to the effect that: (i) the representations and warranties of
Seller in this Agreement are true and correct in all material respects on and as
of the Closing Date with the same force and effect as if made on the Closing
Date, provided that any representations and warranties made as of a specified
date shall
21
be true and correct as of such specified date; and (ii) Seller has complied with
all agreements and satisfied all conditions on its part to be performed or
satisfied on or prior to the Closing Date.
7.3 True, complete and correct copies of Seller's articles of organization
and by-laws.
7.4 A certificate of existence for Seller from the Secretary of State of
Delaware dated not earlier than 30 days prior to the Closing Date.
7.5 A certificate of the Secretary or Assistant Secretary of Seller, dated
the Closing Date, and upon which Purchaser may rely, to the effect that each
individual who, as an officer or representative of Seller, signed this Agreement
or any other document or certificate delivered on or before the Closing Date in
connection with the transactions contemplated herein, was at the respective
times of such signing and delivery, and is as of the Closing Date, duly elected
or appointed, qualified and acting as such officer or representative, and the
signatures of such persons appearing on such documents and certificates are
their genuine signatures.
7.6 An opinion of counsel (which, other than as to the opinion described in
paragraph 7.6.6 below, may be in-house counsel) to Seller, dated the Closing
Date, substantially to the effect of the following (with such changes and
modifications as Purchaser may approve and subject to such counsel's reasonable
qualifications):
7.6.1 Seller is validly existing under Delaware law and has full
corporate or organizational power and authority to enter into and perform its
obligations under this Agreement.
7.6.2 This Agreement has been duly authorized, executed and
delivered by Seller.
7.6.3 No consent, approval, authorization or order of any federal
court or governmental agency or body is required for the consummation by Seller
of the transactions contemplated by the terms of this Agreement except any
approvals as have been obtained.
7.6.4 Neither the execution, delivery or performance of this
Agreement by Seller, nor the consummation by Seller of any of the transactions
contemplated by the terms of this Agreement (A) conflicts with or results in a
breach or violation of, or constitutes a default under, the organizational
documents of Seller, (B) to the knowledge of such counsel, constitutes a default
under any term or provision of any material agreement, contract, instrument or
indenture, to which Seller is a party or by which it or any of its assets is
bound or results in the creation or imposition of any lien, charge or
encumbrance upon any of its property pursuant to the terms of any such
indenture, mortgage, contract or other instrument, other than pursuant to this
Agreement, or (C) conflicts with or results in a breach or violation of any law,
rule, regulation, order, judgment, writ, injunction or decree of any court or
governmental authority having jurisdiction over Seller or its assets, except
where in any of the instances contemplated by clauses (B) or (C) above, any
conflict, breach or default, or creation or imposition of any lien, charge or
encumbrance, will not have a material adverse effect on the consummation of the
transactions contemplated hereby by Seller or materially and adversely affect
its ability to perform its obligations and duties hereunder or result in any
material adverse change in the business, operations, financial condition,
properties or assets of Seller, or in any material
22
impairment of the right or ability of Seller to carry on its business
substantially as now conducted.
7.6.5 To his or her knowledge, there are no legal or governmental
actions, investigations or proceedings pending to which Seller is a party, or
threatened against Seller, (a) asserting the invalidity of this Agreement or (b)
which materially and adversely affect the performance by Seller of its
obligations under, or the validity or enforceability of, this Agreement.
7.6.6 This Agreement is a valid, legal and binding agreement of
Seller, enforceable against Seller in accordance with its terms, except as such
enforcement may be limited by (1) laws relating to bankruptcy, insolvency,
reorganization, receivership or moratorium, (2) other laws relating to or
affecting the rights of creditors generally, (3) general equity principles
(regardless of whether such enforcement is considered in a proceeding in equity
or at law) or (4) public policy considerations underlying the securities laws,
to the extent that such public policy considerations limit the enforceability of
the provisions of this Agreement that purport to provide indemnification from
liabilities under applicable securities laws.
Such opinion may express its reliance as to factual matters on, among other
things specified in such opinion, the representations and warranties made by,
and on certificates or other documents furnished by officers of, the parties to
this Agreement.
In rendering the opinions expressed above, such counsel may limit such opinions
to matters governed by the federal laws of the United States and the corporate
laws of the State of Delaware and the State of New York, as applicable.
7.7 A "10b-5" opinion of counsel addressed to Purchaser and the
Underwriters, in form reasonably acceptable to Purchaser and the Underwriters,
as to the disclosure provided by Seller to Purchaser in connection with the
Certificates.
7.8 An opinion of counsel addressed to Purchaser and the Underwriters, in
form reasonably acceptable to Purchaser and the Underwriters, that such
disclosure complies as to form with the applicable requirements of Regulation AB
with respect to Seller's role as Sponsor (as such term is defined in Regulation
AB) in connection with the Certificates. Such other opinions of counsel as any
Rating Agency may request in connection with the sale of the Mortgage Loans by
Seller to Purchaser or Seller's execution and delivery of, or performance under,
this Agreement.
7.9 A letter from Deloitte & Touche, certified public accountants, dated the
date hereof, to the effect that they have performed certain specified procedures
as a result of which they determined that certain information of an accounting,
financial or statistical nature set forth in the Memorandum and the Prospectus
Supplement agrees with the records of Seller.
7.10 Such further certificates, opinions and documents as Purchaser may
reasonably request.
7.11 An officer's certificate of Purchaser, dated as of the Closing Date,
with the resolutions of Purchaser authorizing the transactions described herein
attached thereto, together with certified copies of the charter, by-laws and
certificate of good standing of Purchaser dated not earlier than 30 days prior
to the Closing Date.
23
7.12 Such other certificates of Purchaser's officers or others and such other
documents to evidence fulfillment of the conditions set forth in this Agreement
as Seller or its counsel may reasonably request.
7.13 An executed Xxxx of Sale in the form attached hereto as Exhibit 4.
---------
8. COSTS. Seller shall pay Purchaser the costs and expenses as agreed upon by
Seller and Purchaser in a separate Letter of Understanding entered into in
connection with this Agreement and the issuance of the Certificates.
9. NOTICES. All communications provided for or permitted hereunder shall be in
writing and shall be deemed to have been duly given if (a) personally delivered,
(b) mailed by registered or certified mail, postage prepaid and received by the
addressee, (c) sent by express courier delivery service and received by the
addressee, or (d) transmitted by telex or facsimile transmission (or any other
type of electronic transmission agreed upon by the parties) and confirmed by a
writing delivered by any of the means described in (a), (b) or (c), if (i) to
Purchaser, addressed to Xxxxxx Xxxxxxx Capital I Inc., 0000 Xxxxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, Attention: Xxxxxx Friend (or such other address as may hereafter
be furnished in writing by Purchaser), or if (ii) to Seller, addressed to Seller
at Principal Commercial Funding II, LLC, 000 Xxxxx Xxxxxx, Xxx Xxxxxx, Xxxx
00000, Attention: Xxxxxx X. Xxxxxx (with a copy to the attention of Xxxxxx X.
Xxxxxxxxx, or to such other address as may hereafter be furnished in writing by
such entity).
10. SEVERABILITY OF PROVISIONS. Any part, provision, representation, warranty or
covenant of this Agreement that is prohibited or that is held to be void or
unenforceable shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof. Any part,
provision, representation, warranty or covenant of this Agreement that is
prohibited or unenforceable or is held to be void or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by applicable law, the parties
hereto waive any provision of law that prohibits or renders void or
unenforceable any provision hereof.
11. FURTHER ASSURANCES. Seller and Purchaser each agree to execute and deliver
such instruments and take such actions as the other may, from time to time,
reasonably request in order to effectuate the purpose and to carry out the terms
of this Agreement and the Pooling and Servicing Agreement.
12. SURVIVAL. Each party hereto agrees that the representations, warranties and
agreements made by it herein and in any certificate or other instrument
delivered pursuant hereto shall be deemed to be relied upon by the other party,
notwithstanding any investigation heretofore or hereafter made by the other
party or on its behalf, and that the representations,
24
warranties and agreements made by such other party herein or in any such
certificate or other instrument shall survive the delivery of and payment for
the Mortgage Loans and shall continue in full force and effect, notwithstanding
any restrictive or qualified endorsement on the Mortgage Notes and
notwithstanding subsequent termination of this Agreement.
13. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS, DUTIES, OBLIGATIONS AND
RESPONSIBILITIES OF THE PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS AND DECISIONS OF THE STATE OF NEW YORK. THE
PARTIES HERETO INTEND THAT THE PROVISIONS OF SECTION 5-1401 OF THE NEW YORK
GENERAL OBLIGATIONS LAW SHALL APPLY TO THIS AGREEMENT.
14. BENEFITS OF MORTGAGE LOAN PURCHASE AGREEMENT. This Agreement shall inure to
the benefit of and shall be binding upon Seller, Purchaser and their respective
successors, legal representatives, and permitted assigns, and nothing expressed
or mentioned in this Agreement is intended or shall be construed to give any
other person any legal or equitable right, remedy or claim under or in respect
of this Agreement, or any provisions herein contained, this Agreement and all
conditions and provisions hereof being intended to be and being for the sole and
exclusive benefit of such persons and for the benefit of no other person except
that the rights and obligations of Purchaser pursuant to Sections 2, 4.1 (other
than clause 4.1.7), 5, 9, 10, 11, 12 and 13 hereof may be assigned to Trustee as
may be required to effect the purposes of the Pooling and Servicing Agreement
and, upon such assignment, Trustee shall succeed to the rights and obligations
hereunder of Purchaser. No owner of a Certificate issued pursuant to the Pooling
and Servicing Agreement shall be deemed a successor or permitted assigns because
of such ownership.
15. MISCELLANEOUS. This Agreement may be executed in two or more counterparts,
each of which when so executed and delivered shall be an original, but all of
which together shall constitute one and the same instrument. Neither this
Agreement nor any term hereof may be changed, waived, discharged or terminated
orally, but only by an instrument in writing signed by the party against whom
enforcement of the change, waiver, discharge or termination is sought. The
headings in this Agreement are for purposes of reference only and shall not
limit or otherwise affect the meaning hereof. The rights and obligations of
Seller under this Agreement shall not be assigned by Seller without the prior
written consent of Purchaser, except that any person into which Seller may be
merged or consolidated, or any corporation resulting from any merger, conversion
or consolidation to which Seller is a party, or any person succeeding to the
entire business of Seller shall be the successor to Seller hereunder.
16. ENTIRE AGREEMENT. This Agreement contains the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof (other than the Letter of Understanding (solely with respect to those
portions of this Agreement that are not assigned to Trustee), the
Indemnification Agreement and the Pooling and Servicing Agreement), and
supersedes all prior and contemporaneous agreements, understandings, inducements
and
25
conditions, express or implied, oral or written, of any nature whatsoever
with respect to the subject matter hereof. The express terms hereof control and
supersede any course of performance or usage of the trade inconsistent with any
of the terms hereof.
26
IN WITNESS WHEREOF, Purchaser and Seller have caused this Agreement to be
executed by their respective duly authorized officers as of the date first above
written.
PRINCIPAL COMMERCIAL FUNDING II, LLC
By: /s/ Xxxxx X. Xxxxxx
Name: Xxxxx X. Xxxxxx
Title: Managing Director
By: /s/ Xxxxxxxx X. Xxxxxx
Name: Xxxxxxxx X. Xxxxxx
Title: Director of Finance
XXXXXX XXXXXXX CAPITAL I INC.
By: /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title:Vice President
EXHIBIT 1
MORTGAGE LOAN SCHEDULE
o Mortgage Loan Seller
o Loan Number
o Property Name
o Street Address
o City
o State
o Date of Maturity
o Cut-off Date Balance
o Note Date
o Original Term to Maturity or ARD
o Remaining Term
o Original Amortization
o Rate
o ARD Loan (Yes/No)
1-1
------------ ---------- ----------------- --------------------- ---------------
MORTGAGE MORTGAGE
LOAN
LOAN NO. SELLER PROPERTY NAME STREET ADDRESS CITY
------------ ---------- ----------------- --------------------- ---------------
10 PCF II Xxxxxxxxx Xxx 00-00 Xxxxxxx Xxxxx Xxxxxx
Tudor Wharf Avenue
Southlake 250 North Xxxxxxx
00 XXX XX Xxxxxxx Xxxxxx Xxxxxxxxx
Xxxxx
49 PCF II 000 Xxxxx Xxxx 000 Xxxxx Xxxx Xxxxxxxxx
Xxxx Xxxxx
Xxxxxxx Xxxxx Xxxx
51 PCF II Apartments 00 Xxxxxxxxxx Xxxxx Xxxxx Xxxxxxx
Xxxxxxx
Packaging
58 PCF II Facility 000 Xxxxxxxxx Xxxxx Xxxxxxxxxxx
00 Xxxxxx Xxxxxx
64 PCF II Euram Building Northwest Washington
550 Xxxxxxxx
71 PCF II Drive 550 Xxxxxxxx Drive Braintree
Cedar Tree 2512 Cedar Tree Brandywine
00 XXX XX Xxxxxxxxxx Xxxxx Xxxxxxx
Xxxxxxxx Office 555 South Executive
00 XXX XX Xxxxxxxx Xxxxx Xxxxxxxxxx
Xxxxxxxxx
Xxxxxxx 4024 North Main
00 XXX XX Xxxxxxxxxx Xxxxxx Xxxxxxxxx
0000 North 1901 North Federal
00 XXX XX Xxxxxxx Xxxxxxx Xxxxxxx Xx. Lauderdale
0000 Xxxx Xxxxx 0000 Xxxx Xxxxx
000 XXX XX Xxxxxx Xxxxxx Xxxxxx
101-131 & 200-230
000 XXX XX Xxxxxxxx Xxxxxx Xxxxxxx Xxx Chalfont
Supply One Bedford
113 PCF II Warehouse 26401 Richmond Road Heights
Green Country 4433 West 49th
000 XXX XX Xxxxxxxxxxxx Xxxxxx Xxxxx
00000 & 10710 10620 & 00000
Xxxxxxxx Xxxx Xxxxxxxx Xxxx
141 PCF II Boulevard Boulevard Pineville
Union Square 3901-3915 Union
000 XXX XX Xxxxxxxx Xxxxxx Xxxxxxx Xxxx Xxxxxxxxxx
Frenchtown
154 PCF II 0000 Xxxx Xxxx 0000 Xxxx Xxxx Xxxxxxxx
Xxxx Lodi Self 2650 West Lodi
000 XXX XX Xxxxxxx Xxxxxx Xxxx
0000-0000
Xxxxxxxxx 4110-4120 Xxxxxxxxx
000 XXX XX Xxxxxx Xxxxxx Xxxxxxxxx Xxxxx
000 Bethlehem
160 PCF II Pike 000 Xxxxxxxxx Xxxx Xxxxxxxxxx
00000 Xxxxxx
000 XXX XX Xxxxx 00000 Xxxxxx Xxxxx Novi
1030
International 1030 International
000 XXX XX Xxxxxxx Xxxxxxx Xxxxxxxxx
0000-0000 Xxxxxxxxx
000 XXX XX Xxxxxx Xxxxx Xxxxxx Bucyrus
0000 0xx Xxxxxx 0000 0xx Xxxxxx Xxxxxxxxxxxx
000 XXX XX Xxxxx Xxxxx Xxxxx
0000 Xxxxxxxxx 3507 Southside
000 XXX XX Xxxxxxxxx Xxxxxxxxx Xxxxxxxxxxxx
------------ ---------- ----------------- ------ -------------- ------------- -
MORTGAGE MORTGAGE CUT-OFF DATE
LOAN
LOAN NO. SELLER PROPERTY NAME STATE MATURITY DATE BALANCE
------------ ---------- ----------------- ------ -------------- ------------- -
10 PCF II Residence Inn MA 01/01/2014 $46,260,000
Tudor Wharf
Southlake
24 PCF II Corners TX 01/01/2012 $20,625,000
49 PCF II 000 Xxxxx Xxxx XX 01/01/2017 $13,971,230
Xxxx Xxxxx
Xxxxxxx
00 XXX XX Xxxxxxxxxx XX 01/01/2017 $13,387,505
Prairie
Packaging
58 PCF II Facility IL 02/01/2017 $10,400,000
00 XXX XX Xxxxx Xxxxxxxx XX 01/01/2017 $9,000,000
550 Xxxxxxxx
71 PCF II Drive MA 01/01/2017 $8,800,000
Cedar Tree
73 PCF II Apartments DE 01/01/2017 $8,591,981
Allstate Office
85 PCF II Building WI 02/01/2017 $7,500,000
Xxxxxxxxx
Xxxxxxx
00 XXX XX Xxxxxxxxxx XX 01/01/2017 $6,794,334
0000 Xxxxx
00 XXX XX Xxxxxxx Xxxxxxx XX 01/01/2017 $6,500,000
0000 Xxxx Xxxxx
000 XXX XX Xxxxxx XX 01/01/2017 $5,550,000
000 XXX XX Xxxxxxxx Xxxxxx XX 01/01/2017 $5,320,000
Supply One
113 PCF II Warehouse OH 01/01/2017 $5,097,423
Green Country
127 PCF II Distribution OK 12/01/2016 $4,300,000
10620 & 00000
Xxxxxxxx Xxxx
000 XXX XX Xxxxxxxxx XX 06/04/2017 $3,050,000
Union Square
151 PCF II Shopping Center PA 01/01/2017 $2,298,851
154 PCF II 0000 Xxxx Xxxx XX 12/01/2016 $2,226,333
West Lodi Self
157 PCF II Storage CA 01/01/2017 $2,148,161
4110-4120
Xxxxxxxxx
159 PCF II Retail Center FL 01/01/2017 $1,998,303
931 Bethlehem
160 PCF II Pike PA 01/01/2017 $1,998,303
29725 Xxxxxx
161 PCF II Drive MI 01/01/2017 $1,997,467
1030
International
164 PCF II Parkway IL 01/01/2017 $1,600,000
000 XXX XX Xxxxxx Xxxxx XX 01/01/2017 $1,598,695
0000 0xx Xxxxxx
000 XXX XX Xxxxx XX 01/01/2017 $1,548,808
0000 Xxxxxxxxx
000 XXX XX Xxxxxxxxx XX 12/01/2016 $639,118
------------ ---------- ----------------- ------------ --------- ----------- -
ORIGINAL REMAINING
MORTGAGE MORTGAGE TERM TERM
LOAN TO TO
LOAN NO. SELLER PROPERTY NAME NOTE DATE MATURITY MATURITY
------------ ---------- ----------------- ------------ --------- ----------- -
10 PCF II Residence Inn 12/15/2006 84 83
Tudor Wharf
Southlake
24 PCF II Corners 12/29/2006 60 59
49 PCF II 000 Xxxxx Xxxx 12/18/2006 120 119
Xxxx Eagle
Village
51 PCF II Apartments 12/14/2006 120 119
Prairie
Packaging
58 PCF II Facility 01/10/2007 120 120
64 PCF II Euram Building 12/21/2006 120 119
550 Xxxxxxxx
71 PCF II Drive 12/28/2006 120 119
Cedar Tree
73 PCF II Apartments 12/14/2006 120 119
Allstate Xxxxxx
00 XXX XX Xxxxxxxx 00/00/0000 000 000
Xxxxxxxxx
Xxxxxxx
87 PCF II Apartments 12/05/2006 120 119
1901 North
00 XXX XX Xxxxxxx Xxxxxxx 00/00/0000 120 119
1307 East North
102 PCF II Avenue 12/20/2006 120 119
107 PCF II Heritage Pointe 12/08/2006 120 119
Supply One
113 PCF II Warehouse 12/21/2006 120 119
Green Country
127 PCF II Distribution 11/30/2006 120 118
10620 & 00000
Xxxxxxxx Xxxx
141 PCF II Boulevard 11/21/2006 126 000
Xxxxx Xxxxxx
151 PCF II Shopping Center 12/08/2006 120 119
154 PCF II 0000 Xxxx Xxxx 11/14/2006 120 118
West Lodi Self
157 PCF II Storage 12/29/2006 120 119
4110-4120
Xxxxxxxxx
159 PCF II Retail Center 12/21/2006 120 119
931 Bethlehem
160 PCF II Pike 12/07/2006 120 119
29725 Xxxxxx
161 PCF II Drive 12/18/2006 120 119
1030
International
164 PCF II Parkway 12/08/2006 120 119
165 PCF II Morgan Manor 12/29/2006 120 119
4080 3rd Street
166 PCF II South 12/12/2006 120 119
3507 Southside
171 PCF II Boulevard 11/28/2006 120 118
------------ ---------- ------------------ ---------- ----------- -----------
MORTGAGE MORTGAGE ORIGINAL MORTGAGE
LOAN AMORT.
LOAN NO. SELLER PROPERTY NAME TERM(9) RATE ARD LOAN
------------ ---------- ------------------ ---------- ----------- -----------
10 PCF II Residence Inn IO 5.935% Yes
Tudor Wharf
Southlake
24 PCF II Corners IO 5.540% No
49 PCF II 000 Xxxxx Xxxx 240 5.800% No
Xxxx Eagle
Village
51 PCF II Apartments 360 5.540% No
Prairie
Packaging
58 PCF II Facility IO 5.780% Yes
00 XXX XX Xxxxx Xxxxxxxx 000 5.490% No
550 Xxxxxxxx
71 PCF II Drive IO 5.910% Yes
Cedar Tree
73 PCF II Apartments 360 5.540% No
Allstate Xxxxxx
00 XXX XX Xxxxxxxx 000 0.000% Xx
Xxxxxxxxx
Xxxxxxx
87 PCF II Apartments 360 5.980% No
0000 Xxxxx
00 XXX XX Xxxxxxx Xxxxxxx 000 5.940% Yes
0000 Xxxx Xxxxx
000 XXX XX Xxxxxx 000 5.890% Yes
000 XXX XX Xxxxxxxx Xxxxxx 000 5.900% No
Supply One
113 PCF II Warehouse 420 6.160% No
Green Country
127 PCF II Distribution 360 5.930% No
10620 & 10710
Southern Xxxx
000 XXX XX Xxxxxxxxx 000 5.990% Yes
Union Square
151 PCF II Shopping Center 420 6.190% No
000 XXX XX 0000 Xxxx Xxxx 360 6.040% No
West Lodi Self
157 PCF II Storage 360 5.880% No
4110-4120
Xxxxxxxxx
159 PCF II Retail Center 360 5.910% No
931 Bethlehem
160 PCF II Pike 360 5.910% No
29725 Xxxxxx
161 PCF II Drive 300 6.040% No
1030
International
164 PCF II Parkway IO 5.900% Xx
000 XXX XX Xxxxxx Xxxxx 000 6.060% No
0000 0xx Xxxxxx
000 XXX XX Xxxxx 000 6.280% No
3507 Xxxxxxxxx
000 XXX XX Xxxxxxxxx 000 6.680% No
\ EXHIBIT 2
REPRESENTATIONS AND WARRANTIES REGARDING
INDIVIDUAL MORTGAGE LOANS
1. Mortgage Loan Schedule. The information set forth in the Mortgage Loan
Schedule is true and correct in all material respects as of the Cut-Off Date.
2. Whole Loan; Ownership of Mortgage Loans. Each Mortgage Loan is a whole loan
and not a participation interest in a mortgage loan. Immediately prior to the
transfer to Purchaser of the Mortgage Loans, Seller had good title to, and was
the sole owner of, each Mortgage Loan. Seller has full right, power and
authority to transfer and assign each of the Mortgage Loans to or at the
direction of Purchaser and has validly and effectively conveyed (or caused to be
conveyed) to Purchaser or its designee all of Seller's legal and beneficial
interest in and to the Mortgage Loans free and clear of any and all pledges,
liens, charges, security interests and/or other encumbrances (other than with
respect to certain agreements relating to servicing rights and the rights of a
holder of a related companion loan pursuant to a co-lender or other agreement);
provided that recording and/or filing of various transfer documents are to be
completed after the Closing Date as contemplated hereby and by the Pooling and
Servicing Agreement. Upon the consummation of the transactions contemplated by
this Agreement, Seller will have validly and effectively conveyed to Purchaser
all legal and beneficial interest in and to each Mortgage Loan free and clear of
any pledge, lien, charge, security interest or other encumbrance (other than
with respect to certain agreements relating to servicing rights and the rights
of a holder of a related companion loan pursuant to a co-lender or other
agreement); provided that recording and/or filing of various transfer documents
are to be completed after the Closing Date as contemplated hereby and by the
Pooling and Servicing Agreement. The sale of the Mortgage Loans to Purchaser or
its designee does not require Seller to obtain any governmental or regulatory
approval or consent that has not been obtained.
3. Payment Record. No scheduled payment of principal and interest under any
Mortgage Loan was 30 days or more past due as of the Cut-Off Date, and no
Mortgage Loan was 30 days or more delinquent in the twelve (12) month period (or
since the date of origination of the Mortgage Loan if the Mortgage Loan was
originated within the past twelve (12) months) immediately preceding the Cut-Off
Date, in each case, without giving effect to any applicable grace period.
4. Lien; Valid Assignment. The Mortgage related to and delivered in connection
with each Mortgage Loan constitutes a valid and, subject to the exceptions set
forth in paragraph 13 below, enforceable first priority lien upon the related
Mortgaged Property, prior to all other liens and encumbrances, except for (a)
the lien for current real estate taxes and assessments not yet due and payable,
(b) covenants, conditions and restrictions, rights of way, easements and other
matters that are of public record and/or are referred to in the Title Insurance
Policy, (c) exceptions and exclusions specifically referred to in such Title
Insurance Policy, (d) other matters to which like properties are commonly
subject, none of which matters referred to in clauses (b), (c) or (d),
individually or in the aggregate, materially interferes with the security
intended to be provided by such Mortgage, the marketability or current use of
the Mortgaged Property or the current ability of the Mortgaged Property to
generate operating income sufficient to service the Mortgage Loan debt and (e)
if such Mortgage Loan is cross-collateralized with any
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other Mortgage Loan, the lien of the Mortgage for such other Mortgage Loan (the
foregoing items (a) through (e) being herein referred to as the "Permitted
Encumbrances"). The related assignment of such Mortgage executed and delivered
in favor of Trustee is in recordable form and constitutes a legal, valid and
binding assignment, sufficient to convey to the assignee named therein all of
the assignor's right, title and interest in, to and under such Mortgage. Such
Mortgage, together with any separate security agreements, chattel mortgages or
equivalent instruments, establishes and creates a valid and, subject to the
exceptions set forth in paragraph 13 below, enforceable security interest in
favor of the holder thereof in all of the related Mortgagor's personal property
used in, and reasonably necessary to operate, the related Mortgaged Property. In
the case of a Mortgaged Property operated as a hotel or an assisted living
facility, the Mortgagor's personal property includes all personal property that
a prudent mortgage lender making a similar Mortgage Loan would deem reasonably
necessary to operate the related Mortgaged Property as it is currently being
operated. A Uniform Commercial Code financing statement has been filed and/or
recorded in all places necessary to perfect a valid security interest in such
personal property, to the extent a security interest may be so created therein,
and such security interest is a first priority security interest, subject to any
prior purchase money security interest in such personal property, any personal
property leases applicable to such personal property and any Permitted
Encumbrances. Notwithstanding the foregoing, no representation is made as to the
perfection of any security interest in rents or other personal property to the
extent that possession or control of such items or actions other than the filing
of Uniform Commercial Code financing statements are required in order to effect
such perfection.
5. Assignment of Leases and Rents. The Assignment of Leases related to and
delivered in connection with each Mortgage Loan establishes and creates a valid,
subsisting and, subject to the exceptions set forth in paragraph 13 below and
any Permitted Encumbrances, enforceable first priority lien and first priority
security interest in the related Mortgagor's interest in all leases, sub-leases,
licenses or other agreements pursuant to which any person is entitled to occupy,
use or possess all or any portion of the real property subject to the related
Mortgage, and each assignor thereunder has the full right to assign the same.
The related assignment of any Assignment of Leases not included in a Mortgage
has been executed and delivered in favor of Trustee and is in recordable form
and constitutes a legal, valid and binding assignment, sufficient to convey to
the assignee named therein all of the assignor's right, title and interest in,
to and under such Assignment of Leases. If an Assignment of Leases exists with
respect to any Mortgage Loan (whether as a part of the related Mortgage or
separately), then the related Mortgage or related Assignment of Leases, subject
to applicable law, provides for, upon an event of default under the Mortgage
Loan, the appointment of a receiver for the collection of rents or for the
related mortgagee to enter into possession to collect the rents or for rents to
be paid directly to the mortgagee.
6. Mortgage Status; Waivers and Modifications. No Mortgage has been satisfied,
cancelled, rescinded or subordinated in whole or in part, and the related
Mortgaged Property has not been released from the lien of such Mortgage, in
whole or in part (except for partial reconveyances of real property that are set
forth on Schedule A to Exhibit 2), nor has any instrument been executed that
would effect any such satisfaction, cancellation, subordination, rescission or
release, in any manner that, in each case, materially adversely affects the
value of the related Mortgaged Property. None of the terms of any Mortgage Note,
Mortgage or Assignment of Leases has been impaired, waived, altered or modified
in any respect, except by written instruments, all of which
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are included in the related Mortgage File and none of the Mortgage Loans has
been materially modified since January 19, 2007.
7. Condition of Property; Condemnation. Except with respect to Mortgage Loans
secured primarily by unimproved land: (i) With respect to the Mortgaged
Properties securing the Mortgage Loans that were the subject of an engineering
report within 18 months prior to the Cut-Off Date as set forth on Schedule A to
this Exhibit 2, each Mortgaged Property is, to Seller's knowledge, free and
clear of any damage (or adequate reserves therefor have been established based
on the engineering report) that would materially and adversely affect its value
as security for the related Mortgage Loan, and (ii) with respect to the
Mortgaged Properties securing the Mortgage Loans that were not the subject of an
engineering report within 18 months prior to the Cut-Off Date as set forth on
Schedule A to this Exhibit 2, each Mortgaged Property is in good repair and
condition and all building systems contained therein are in good working order
(or adequate reserves therefor have been established) and each Mortgaged
Property is free of structural defects, in each case, that would materially and
adversely affect its value as security for the related Mortgage Loan as of the
date hereof. Seller has received no notice of the commencement of any proceeding
for the condemnation of all or any material portion of any Mortgaged Property.
To Seller's knowledge (based on surveys and/or title insurance obtained in
connection with the origination of the Mortgage Loans), as of the date of the
origination of each Mortgage Loan, (x) all of the material improvements on the
related Mortgaged Property that were considered in determining the appraised
value of the Mortgaged Property lay wholly within the boundaries and building
restriction lines of such property, except for encroachments that are insured
against by the Title Policy referred to herein or that do not materially and
adversely affect the value or marketability of such Mortgaged Property, (y) no
improvements on adjoining properties materially encroached upon such Mortgaged
Property so as to materially and adversely affect the value or marketability of
such Mortgaged Property, except those encroachments that are insured against by
the Title Policy referred to herein, and (z) the Mortgaged Property securing
each Mortgage Loan is located on or adjacent to a public road, or has access to
an easement permitting ingress and egress.
8. Title Insurance. Each Mortgaged Property is covered by an American Land Title
Association (or an equivalent form of) lender's title insurance policy or a pro
forma or marked-up title insurance commitment or escrow instructions binding on
the title insurer irrevocably obligating the title insurer to issue such title
insurance policy (on which the required premium has been paid) which evidences
such title insurance policy (the "Title Policy") in the original principal
amount of the related Mortgage Loan after all advances of principal, except that
in the case of a Mortgage Loan as to which the related Mortgaged Property is
made up of more than one parcel of property, the security interest in each of
which parcel is granted by a Mortgage and such Mortgage (and therefore the
related Title Policy) may be in an amount less than the original principal
amount of the Mortgage Loan, but such Mortgages, in the aggregate, are not less
than the total original principal amount of the Mortgage Loan, and provided that
such amount is at least equal to the allocated Mortgage Loan amount, as
evidenced by the Mortgage Loan documents. Each Title Policy insures that the
related Mortgage is a valid first priority lien on such Mortgaged Property,
subject only to Permitted Encumbrances. Each Title Policy (or, if it has yet to
be issued, the coverage to be provided thereby) is in full force and effect, all
premiums thereon have been paid and no material claims have been made thereunder
and no claims have been paid thereunder. No holder of the related Mortgage has
done, by act or omission, anything
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that would materially impair the coverage under such Title Policy. Immediately
following the transfer and assignment of the related Mortgage Loan to Trustee,
such Title Policy (or, if it has yet to be issued, the coverage to be provided
thereby) will inure to the benefit of Trustee without the consent of, or notice
to, the insurer. To Seller's knowledge, the insurer issuing such Title Policy is
qualified to do business in the jurisdiction in which the related Mortgaged
Property is located.
9. No Holdbacks. The proceeds of each Mortgage Loan have been fully disbursed
and there is no obligation for future advances with respect thereto. With
respect to each Mortgage Loan, any and all requirements as to completion of any
on-site or off-site improvement and as to disbursements of any funds escrowed
for such purpose that were to have been complied with on or before the Closing
Date have been complied with, or any such funds so escrowed have not been
released.
10. Mortgage Provisions. The Mortgage Note or Mortgage for each Mortgage Loan,
together with applicable state law, contains customary and enforceable
provisions (subject to the exceptions set forth in paragraph 13) such as to
render the rights and remedies of the holder thereof adequate for the practical
realization against the related Mortgaged Property of the principal benefits of
the security intended to be provided thereby.
11. Trustee under Deed of Trust. If any Mortgage is a deed of trust, (1) a
trustee, duly qualified under applicable law to serve as such, is properly
designated and serving under such Mortgage, and (2) no fees or expenses are
payable to such trustee by Seller, Purchaser or any transferee thereof except in
connection with a trustee's sale after default by the related Mortgagor or in
connection with any full or partial release of the related Mortgaged Property or
related security for the related Mortgage Loan.
12.Environmental Conditions.
(i) Except as set forth on Schedule A to this Exhibit 2, with respect to
the Mortgaged Properties securing the Mortgage Loans that were the
subject of an environmental site assessment within 18 months prior to
the Cut-Off Date, an environmental site assessment prepared to ASTM
standards, or an update of a previous assessment, was performed with
respect to each Mortgaged Property in connection with the origination
or the sale of the related Mortgage Loan, a report of the most recent
assessment with respect to each Mortgaged Property (an "Environmental
Report") has been delivered to Purchaser, and Seller has no knowledge
of any material and adverse environmental condition or circumstance
affecting any Mortgaged Property that was not disclosed in such
Environmental Report. Each Mortgage requires the related Mortgagor to
comply with all applicable federal, state and local environmental laws
and regulations. Where such Environmental Report disclosed the
existence of a material and adverse environmental condition or
circumstance affecting any Mortgaged Property, (i) a party not related
to the Mortgagor was identified as the responsible party for such
condition or circumstance or (ii) environmental insurance covering
such condition was obtained or must be maintained until the condition
is remediated or (iii) the related Mortgagor was required either to
provide additional security that was
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deemed to be sufficient by the originator in light of the
circumstances and/or to establish an operations and maintenance plan.
In connection with the origination of each Mortgage Loan, each
environmental consultant has represented in such Environmental Report
or in a supplement letter that the environmental assessment of the
applicable Mortgaged Property was conducted utilizing generally
accepted Phase I industry standards using the American Society for
Testing and Materials (ASTM) standards. Each Mortgage Loan set forth
on Schedule C to this Exhibit 2 (each, a "Schedule C Loan") is the
subject of a Secured Creditor Impaired Property Policy, issued by the
issuer set forth on Schedule C (the "Policy Issuer") and effective as
of the date thereof (the "Environmental Insurance Policy"). Except as
set forth on Schedule A to this Exhibit 2, with respect to each
Schedule C Loan, (i) to Seller's knowledge, the Environmental
Insurance Policy is in full force and effect, (ii)(a) a property
condition or engineering report was prepared with respect to lead
based paint ("LBP") and --- radon gas ("RG") at each Mortgaged
Property that is used as a multifamily dwelling, and with respect to
asbestos -- containing materials ("ACM") at each related Mortgaged
Property and (b) if such report disclosed the existence of a ---
material and adverse LBP, ACM or RG environmental condition or
circumstance affecting the related Mortgaged Property, the related
Mortgagor (A) was required to remediate the identified condition prior
to closing the Mortgage Loan or provide additional security, or
establish with the lender a reserve from loan proceeds, in an amount
deemed to be sufficient by Seller for the remediation of the problem
and/or (B) agreed in the Mortgage Loan documents to establish an
operations and maintenance plan after the closing of the Mortgage
Loan, (iii) on the effective date of the Environmental Insurance
Policy, Seller as originator had no knowledge of any material and
adverse environmental condition or circumstance affecting the
Mortgaged Property (other than the existence of LBP, ACM or RG) that
was not disclosed to the Policy Issuer in one or more of the
following: (a) the application for insurance, (b) a borrower
questionnaire that was provided to the Policy Issuer or (c) an
engineering or other report provided to the Policy Issuer and (iv) the
premium of any Environmental Insurance Policy has been paid through
the maturity of the policy's term and the term of such policy extends
at least five years beyond the maturity of the Mortgage Loan.
(ii)
With respect to the Mortgaged Properties securing the Mortgage Loans
that were not the subject of an environmental site assessment prepared
to ASTM standards within 18 months prior to the Cut-Off Date as set
forth on Schedule A to this Exhibit 2, (i) no Hazardous Material is
present on such Mortgaged Property such that (1) the value, use or
operation of such Mortgaged Property is materially and adversely
affected or (2) under applicable federal, state or local law, (a) such
Hazardous Material could be required to be eliminated at a cost
materially and adversely affecting the value of the Mortgaged Property
before such Mortgaged Property could be altered, renovated, demolished
or transferred or (b) the presence of such Hazardous Material could
(upon action by the appropriate governmental authorities) subject the
owner of such Mortgaged Property, or the holders of a security
interest therein, to liability for the cost of eliminating such
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Hazardous Material or the hazard created thereby at a cost materially
and adversely affecting the value of the Mortgaged Property, and (ii)
such Mortgaged Property is in material compliance with all applicable
federal, state and local laws pertaining to Hazardous Materials or
environmental hazards, any noncompliance with such laws does not have
a material adverse effect on the value of such Mortgaged Property and
neither Seller nor, to Seller's knowledge, the related Mortgagor or
any current tenant thereon, has received any notice of violation or
potential violation of any such law.
"Hazardous Materials" means gasoline, petroleum products, explosives,
radioactive materials, polychlorinated biphenyls or related or similar
materials, and any other substance or material as may be defined as a
hazardous or toxic substance by any federal, state or local
environmental law, ordinance, rule, regulation or order, including
without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended (42 U.S.C. xx.xx.
9601 et seq.), the Hazardous Materials Transportation Act as amended
(42 U.S.C. xx.xx. 6901 et seq.), the Resource Conservation and
Recovery Act, as amended (42 U.S.C. xx.xx. 6901 et seq.), the Federal
Water Pollution Control Act as amended (33 U.S.C. xx.xx. 1251 et
seq.), the Clean Air Act (42 U.S.C. xx.xx. 1251 et seq.) and any
regulations promulgated pursuant thereto.
13. Loan Document Status. Each Mortgage Note, Mortgage, Assignment of Leases and
other agreement that evidences or secures such Mortgage Loan and was executed by
or on behalf of the related Mortgagor or any guarantor of any non-recourse
exceptions and environmental liability is the legal, valid and binding
obligation of the maker thereof (subject to any non-recourse provisions
contained in any of the foregoing agreements and any applicable state
anti-deficiency or market value limit deficiency legislation), enforceable in
accordance with its terms, except as such enforcement may be limited by (a)
bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally, and by (b) general principles of
equity (regardless of whether such enforcement is considered in a proceeding in
equity or at law), and except that certain provisions in such loan documents may
be further limited or rendered unenforceable by applicable law but (subject to
the limitations set forth in the foregoing clauses (a) and (b)) such limitations
or unenforceability will not render such loan documents invalid as a whole or
substantially interfere with the mortgagee's realization of the principal
benefits and/or security provided thereby. There is no valid defense,
counterclaim or right of offset or rescission available to the related Mortgagor
with respect to such Mortgage Note, Mortgage or other agreement that would deny
the mortgagee the principal benefits intended to be provided thereby, except in
each case, with respect to the enforceability of any provisions requiring the
payment of default interest, late fees, additional interest, prepayment premium
or yield maintenance charges.
14. Insurance. Each Mortgaged Property is, and is required pursuant to the
related Mortgage to be, insured by (a) a fire and extended perils insurance
policy providing coverage against loss or damage sustained by reason of fire,
lightning, windstorm, hail, explosion, riot, riot attending a strike, civil
commotion, aircraft, vehicles and smoke, and, to the extent required as of the
date of origination by the originator of such Mortgage Loan consistent with its
capital markets conduit lending practices, against other risks insured against
by persons operating like properties in the
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locality of the Mortgaged Property in an amount not less than the lesser of the
principal balance of the related Mortgage Loan and the replacement cost of the
improvements located at the Mortgaged Property, and not less than the amount
necessary to avoid the operation of any co-insurance provisions with respect to
the Mortgaged Property, and the policy contains no provisions for a deduction
for depreciation; (b) a business interruption or rental loss insurance policy,
in an amount at least equal to twelve months of operations of the Mortgaged
Property estimated as of the date of origination by the originator of such
Mortgage Loan consistent with its capital markets conduit lending practices; (c)
a flood insurance policy (if any portion of buildings or other structures on the
Mortgaged Property are located in an area identified by the Federal Emergency
Management Agency as having special flood hazards and the Federal Emergency
Management Agency requires flood insurance to be maintained); and (d) a
comprehensive general liability insurance policy in amounts as are generally
required by commercial mortgage lenders for properties of similar types and in
any event not less than $1 million per occurrence. Each insurance policy
contains a standard mortgagee clause that names the mortgagee as an additional
insured in the case of liability insurance policies and as a loss payee in the
case of property insurance policies and requires prior notice to the holder of
the Mortgage of termination, reduction of coverage or cancellation. No such
notice has been received, including any notice of nonpayment of premiums, that
has not been cured. Each Mortgage obligates the related Mortgagor to maintain
all such insurance and, upon such Mortgagor's failure to do so, authorizes the
holder of the Mortgage to maintain such insurance at the Mortgagor's cost and
expense and to seek reimbursement therefor from such Mortgagor. Each Mortgage
provides that casualty insurance proceeds will (or at the lender's option will)
be applied (a) to the restoration or repair of the related Mortgaged Property,
(b) to the restoration or repair of the related Mortgaged Property, with any
excess insurance proceeds after restoration or repair being paid to the
Mortgagor, or (c) to the reduction of the principal amount of the Mortgage Loan.
For each Mortgaged Property located in a Zone 3 or Zone 4 seismic zone, either:
(i) a seismic report which indicated a PML of less than 20% was prepared, based
on a 450 or 475-year average return period with a 10% probability of exceedance
in a 50-year period, in connection with the origination of the Mortgage Loan
secured by such Mortgaged Property or (ii) the improvements for the Mortgaged
Property are insured against earthquake damage.
15. Taxes and Assessments. As of the Closing Date, there are no delinquent or
unpaid taxes, assessments (including assessments payable in future installments)
or other outstanding charges affecting any Mortgaged Property that are or may
become a lien of priority equal to or higher than the lien of the related
Mortgage. For purposes of this representation and warranty, real property taxes
and assessments shall not be considered delinquent or unpaid until the date on
which interest or penalties would be first payable thereon.
16. Mortgagor Bankruptcy. No Mortgagor is, to Seller's knowledge, a debtor in
any state or federal bankruptcy or insolvency proceeding.
17. Leasehold Estate. Each Mortgaged Property consists of a fee simple estate in
real estate or, if the related Mortgage Loan is secured in whole or in part by
the interest of a Mortgagor as a lessee under a ground lease of a Mortgaged
Property (a "Ground Lease" which term shall include any related estoppel letter
or lender protection agreement between Seller and related lessor), by the
related Mortgagor's interest in the Ground Lease but not by the related fee
interest in such Mortgaged Property (the "Fee Interest"), and as to such Ground
Leases:
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(i) Such Ground Lease or a memorandum thereof has been or will be duly
recorded; such Ground Lease (or the related estoppel letter or lender
protection agreement between Seller and related lessor) does not
prohibit the current use of the Mortgaged Property and does not
prohibit the interest of the lessee thereunder to be encumbered by the
related Mortgage; and there has been no material change in the payment
terms of such Ground Lease since the origination of the related
Mortgage Loan, with the exception of material changes reflected in
written instruments that are a part of the related Mortgage File;
(ii) The lessee's interest in such Ground Lease is not subject to any liens
or encumbrances superior to, or of equal priority with, the related
Mortgage, other than Permitted Encumbrances;
(iii) The Mortgagor's interest in such Ground Lease is assignable to
Purchaser and Trustee as its assignee upon notice to, but without the
consent of, the lessor thereunder (or, if such consent is required for
assignment to Purchaser, it has been obtained prior to the Closing
Date) and is further assignable by Purchaser and its successors and
assigns upon notice to, but without the need to obtain the consent of,
such lessor or if such lessor's consent is required it either has been
obtained or it cannot be unreasonably withheld;
(iv) Such Ground Lease is in full force and effect, the Ground Lease
provides that no material amendment to such Ground Lease is binding on
a mortgagee unless the mortgagee has consented thereto, Seller has
received no notice that an event of default has occurred thereunder,
and, to Seller's knowledge, there exists no condition that, but for
the passage of time or the giving of notice, or both, would result in
an event of default under the terms of such Ground Lease;
(v) Such Ground Lease (A) requires the lessor under such Ground Lease to
give notice of any default by the lessee to the holder of the
Mortgage; and (B) provides that no notice of termination given under
such Ground Lease is effective against the holder of the Mortgage
unless a copy of such notice has been delivered to such holder and the
lessor has offered or is required to enter into a new lease with such
holder on terms that do not materially vary from the economic terms of
the Ground Lease.
(vi) A mortgagee is permitted a reasonable opportunity (including, where
necessary, sufficient time to gain possession of the interest of the
lessee under such Ground Lease) to cure any default under such Ground
Lease, which is curable after the receipt of notice of any such
default, before the lessor thereunder may terminate such Ground Lease;
(vii) Such Ground Lease has an original term (including any extension
options set forth therein) which extends not less than twenty years
beyond the Maturity Date of the related Mortgage Loan;
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(viii) Under the terms of such Ground Lease and the related Mortgage,
taken together, any related insurance proceeds or condemnation
award awarded to the holder of the ground lease interest will
be applied either (A) to the repair or restoration of all or
part of the related Mortgaged Property, with the mortgagee or
a trustee appointed by the related Mortgage having the right
to hold and disburse such proceeds as the repair or
restoration progresses (except in such cases where a provision
entitling a third party to hold and disburse such proceeds
would not be viewed as commercially unreasonable by a prudent
commercial mortgage lender), or (B) to the payment of the
outstanding principal balance of the Mortgage Loan together
with any accrued interest thereon; and
(ix) Such Ground Lease does not impose any restrictions on
subletting which would be viewed as commercially unreasonable
by prudent commercial mortgage lenders lending on a similar
Mortgaged Property in the lending area where the Mortgaged
Property is located; and such Ground Lease contains a covenant
that the lessor thereunder is not permitted, in the absence of
an uncured default, to disturb the possession, interest or
quiet enjoyment of the lessee thereunder for any reason, or in
any manner, which would materially adversely affect the
security provided by the related Mortgage.
(x) Such Ground Lease requires the Lessor to enter into a new
lease upon termination of such Ground Lease if the Ground
Lease is rejected in a bankruptcy proceeding.
18. Escrow Deposits. All escrow deposits and payments relating to each Mortgage
Loan that are, as of the Closing Date, required to be deposited or paid have
been so deposited or paid.
19. LTV Ratio. The gross proceeds of each Mortgage Loan to the related Mortgagor
at origination did not exceed the non-contingent principal amount of the
Mortgage Loan and either: (a) such Mortgage Loan is secured by an interest in
real property having a fair market value (i) at the date the Mortgage Loan was
originated, at least equal to 80 percent of the original principal balance of
the Mortgage Loan or (ii) at the Closing Date, at least equal to 80 percent of
the principal balance of the Mortgage Loan on such date; provided that for
purposes hereof, the fair market value of the real property interest must first
be reduced by (x) the amount of any lien on the real property interest that is
senior to the Mortgage Loan and (y) a proportionate amount of any lien that is
in parity with the Mortgage Loan (unless such other lien secures a Mortgage Loan
that is cross-collateralized with such Mortgage Loan, in which event the
computation described in clauses (a)(i) and (a)(ii) of this paragraph 19 shall
be made on a pro rata basis in accordance with the fair market values of the
Mortgaged Properties securing such cross-collateralized Mortgage Loans); or (b)
substantially all the proceeds of such Mortgage Loan were used to acquire,
improve or protect the real property that served as the only security for such
Mortgage Loan (other than a recourse feature or other third party credit
enhancement within the meaning of Treasury Regulations Section
1.860G-2(a)(1)(ii)).
20. Mortgage Loan Modifications. Any Mortgage Loan that was "significantly
modified" prior to the Closing Date so as to result in a taxable exchange under
Section 1001 of the Code either (a) was modified as a result of the default
under such Mortgage Loan or under circumstances that made a default reasonably
foreseeable or (b) satisfies the provisions of either
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clause (a)(i) of paragraph 19 (substituting the date of the last such
modification for the date the Mortgage Loan was originated) or clause (a)(ii) of
paragraph 19, including the proviso thereto.
21. Advancement of Funds by Seller. No holder of a Mortgage Loan has advanced
funds or induced, solicited or knowingly received any advance of funds from a
party other than the owner of the related Mortgaged Property, directly or
indirectly, for the payment of any amount required by such Mortgage Loan.
22. No Mechanics' Liens. Each Mortgaged Property is free and clear of any and
all mechanics' and materialmen's liens that are prior or equal to the lien of
the related Mortgage, except, in each case, for liens insured against by the
Title Policy referred to herein, and no rights are outstanding that under law
could give rise to any such lien that would be prior or equal to the lien of the
related Mortgage except, in each case, for liens insured against by the Title
Policy referred to herein.
23. Compliance with Usury Laws. Each Mortgage Loan complied with (or is exempt
from) all applicable usury laws and any other applicable material laws in effect
at its date of origination.
24. Cross-collateralization. No Mortgage Loan is cross-collateralized or
cross-defaulted with any loan other than one or more other Mortgage Loans.
25. Releases of Mortgaged Property. Except as described in the next sentence, no
Mortgage Note or Mortgage requires the mortgagee to release all or any material
portion of the related Mortgaged Property that was included in the appraisal for
such Mortgaged Property, and/or generates income from the lien of the related
Mortgage except upon payment in full of all amounts due under the related
Mortgage Loan or in connection with the defeasance provisions of the related
Note and Mortgage. The Mortgages relating to those Mortgage Loans identified on
Schedule A hereto require the mortgagee to grant releases of portions of the
related Mortgaged Properties upon (a) the satisfaction of certain legal and
underwriting requirements and/or (b) the payment of a predetermined or
objectively determinable release price and prepayment consideration in
connection therewith. Except as described in the first sentence hereof and for
those Mortgage Loans identified on Schedule A, no Mortgage Loan permits the full
or partial release or substitution of collateral unless the mortgagee or
servicer can require the Borrower to provide an opinion of tax counsel to the
effect that such release or substitution of collateral (a) would not constitute
a "significant modification" of such Mortgage Loan within the meaning of Treas.
Reg. ss.1.1001-3 and (b) would not cause such Mortgage Loan to fail to be a
"qualified mortgage" within the meaning of Section 860G(a)(3)(A) of the Code.
The loan documents require the related Mortgagor to bear the reasonable cost of
such opinion.
26. No Equity Participation or Contingent Interest. No Mortgage Loan contains
any equity participation by the lender or shared appreciation feature or
provides for negative amortization (except that the ARD Loan may provide for the
accrual of interest at an increased rate after the Anticipated Repayment Date)
or for any contingent or additional interest in the form of participation in the
cash flow of the related Mortgaged Property. Neither Seller nor any affiliate
thereof has any obligation to make a capital contribution to the Mortgagor under
the Mortgage Loan or otherwise.
2-10
27. No Material Default. To Seller's knowledge, there exists no material
default, breach, violation or event of acceleration (and no event which, with
the passage of time or the giving of notice, or both, would constitute any of
the foregoing) under the documents evidencing or securing the Mortgage Loan
(other than payments due but not yet thirty (30) days or more delinquent), in
any such case to the extent the same materially and adversely affects the value
of the Mortgage Loan and the related Mortgaged Property; provided, however, that
this representation and warranty does not address or otherwise cover any
default, breach, violation or event of acceleration that specifically pertains
to any matter otherwise covered by any other representation and warranty made by
Seller elsewhere in this Exhibit 2 or the exceptions listed in Schedule A
attached hereto.
28. Inspections. Seller (or if Seller is not the originator, the originator of
the Mortgage Loan) has inspected or caused to be inspected each Mortgaged
Property in connection with the origination of the related Mortgage Loan.
29. Local Law Compliance. Based on due diligence considered reasonable by
prudent commercial mortgage lenders in the lending area where the Mortgaged
Property is located, the improvements located on or forming part of each
Mortgaged Property comply with applicable zoning laws and ordinances, or
constitute a legal non-conforming use or structure or, if any such improvement
does not so comply, such non-compliance does not materially and adversely affect
the value of the related Mortgaged Property, such value as determined by the
appraisal performed at origination or in connection with the sale of the related
Mortgage Loan by Seller hereunder.
30. Junior Liens. None of the Mortgage Loans permits the related Mortgaged
Property to be encumbered by any lien (other than a Permitted Encumbrance)
junior to or of equal priority with the lien of the related Mortgage without the
prior written consent of the holder thereof or the satisfaction of debt service
coverage or similar criteria specified therein. Seller has no knowledge that any
of the Mortgaged Properties is encumbered by any lien (other than a Permitted
Encumbrance) junior to the lien of the related Mortgage.
31. Actions Concerning Mortgage Loans. To the knowledge of Seller, there are no
actions, suits or proceedings before any court, administrative agency or
arbitrator concerning any Mortgage Loan, Mortgagor or related Mortgaged Property
that might adversely affect title to the Mortgaged Property or the validity or
enforceability of the related Mortgage or that might materially and adversely
affect the value of the Mortgaged Property as security for the Mortgage Loan or
the use for which the premises were intended.
32. Servicing. The servicing and collection practices used by Seller or any
prior holder or servicer of each Mortgage Loan have been in all material
respects legal, proper and prudent and have met customary industry standards.
33. Licenses and Permits. To Seller's knowledge, based on due diligence that it
customarily performs in the origination of comparable mortgage loans, as of the
date of origination of each Mortgage Loan or as of the date of the sale of the
related Mortgage Loan by Seller hereunder, the related Mortgagor was in
possession of all material licenses, permits and franchises required by
2-11
applicable law for the ownership and operation of the related Mortgaged Property
as it was then operated.
34. RESERVED [ONLY APPLICABLE IF ANY MORTGAGE LOAN IS AN ASSISTED LIVING
FACILITY].
35. Collateral in Trust. The Mortgage Note for each Mortgage Loan is not secured
by a pledge of any collateral that has not been assigned to Purchaser.
36. Due on Sale. Each Mortgage Loan contains a "due on sale" clause, which
provides for the acceleration of the payment of the unpaid principal balance of
the Mortgage Loan if, without prior written consent of the holder of the
Mortgage, the property subject to the Mortgage or any material portion thereof,
or a controlling interest in the related Mortgagor, is transferred, sold or
encumbered by a junior mortgage or deed of trust; provided, however, that
certain Mortgage Loans provide a mechanism for the assumption of the loan by a
third party upon the Mortgagor's satisfaction of certain conditions precedent,
and upon payment of a transfer fee, if any, or transfer of interests in the
Mortgagor or constituent entities of the Mortgagor to a third party or parties
related to the Mortgagor upon the Mortgagor's satisfaction of certain conditions
precedent.
37. Single Purpose Entity. The Mortgagor on each Mortgage Loan with a Cut-Off
Date Principal Balance in excess of $10 million, was, as of the origination of
the Mortgage Loan, a Single Purpose Entity. For this purpose, a "Single Purpose
Entity" shall mean an entity, other than an individual, whose organizational
documents provide substantially to the effect that it was formed or organized
solely for the purpose of owning and operating one or more of the Mortgaged
Properties securing the Mortgage Loans and prohibit it from engaging in any
business unrelated to such Mortgaged Property or Properties, and whose
organizational documents further provide, or which entity represented in the
related Mortgage Loan documents, substantially to the effect that it does not
have any assets other than those related to its interest in and operation of
such Mortgaged Property or Properties, or any indebtedness other than as
permitted by the related Mortgage(s) or the other related Mortgage Loan
documents, that it has its own books and records and accounts separate and apart
from any other person (other than a Mortgagor for a Mortgage Loan that is
cross-collateralized and cross-defaulted with the related Mortgage Loan), and
that it holds itself out as a legal entity, separate and apart from any other
person.
38. Non-Recourse Exceptions. The Mortgage Loan documents for each Mortgage Loan
provide that such Mortgage Loan constitutes either (a) the recourse obligations
of at least one natural person or (b) the non-recourse obligations of the
related Mortgagor, provided that at least one natural person (and the Mortgagor
if the Mortgagor is not a natural person) is liable to the holder of the
Mortgage Loan for damages arising in the case of fraud or willful
misrepresentation by the Mortgagor, misappropriation of rents, insurance
proceeds, condemnation awards and breaches of the environmental covenants in the
Mortgage Loan documents.
39. Defeasance and Assumption Costs. The related Mortgage Loan documents provide
that the related borrower is responsible for the payment of all reasonable costs
and expenses of the lender incurred in connection with the defeasance of such
Mortgage Loan and the release of the
2-12
related Mortgaged Property, and the borrower is required to pay all reasonable
costs and expenses of the lender associated with the approval of an assumption
of such Mortgage Loan.
40. Defeasance. No Mortgage Loan provides that (i) it can be defeased until the
date that is at least two years after the Closing Date, (ii) that it can be
defeased with any property other than government securities (as defined in
Section 2(a)(16) of the Investment Company Act of 1940, as amended) or any
direct non-callable security issued or guaranteed as to principal or interest by
the United States that will provide interest and principal payments sufficient
to satisfy scheduled payments of interest and principal as required under the
related Mortgage Loan, or (iii) defeasance requires the payment of any
consideration other than (a) reimbursement of incidental costs and expenses
and/or (b) a specified dollar amount or an amount that is based on a formula
that uses objective financial information (as defined in Treasury Regulation
Section 1.446-3(c)(4)(ii)).
41. Authorized to do Business. To the extent required under applicable law as of
the date of origination, and necessary for the enforceability or collectability
of the Mortgage Loan, the originator of such Mortgage Loan was authorized to do
business in the jurisdiction in which the related Mortgaged Property is located
at all times when it originated and held the Mortgage Loan.
42. Prepayment Premiums. As of the applicable date of origination of each such
Mortgage Loan, any prepayment premiums and yield maintenance charges payable
under the terms of the Mortgage Loans, in respect of voluntary prepayments,
constituted "customary prepayment penalties" within the meaning of Treasury
Regulation Section 1.860G-1(b)(2).
43. Terrorism Insurance. With respect to each Mortgage Loan that has a principal
balance as of the Cut-off Date that is greater than or equal to $17,500,000, the
related all risk insurance policy and business interruption policy do not
specifically exclude Acts of Terrorism, as defined in the Terrorism Risk
Insurance Act of 2002, from coverage, or if such coverage is excluded, is
covered by a separate terrorism insurance policy. With respect to each other
Mortgage Loan, the related all risk insurance policy and business interruption
policy did not as of the date of origination of the Mortgage Loan, and, to
Seller's knowledge, do not, as of the date hereof, specifically exclude Acts of
Terrorism from coverage, or if such coverage is excluded, it is covered by a
separate terrorism insurance policy. With respect to each of the Mortgage Loans,
the related Mortgage Loan documents do not waive or prohibit the mortgagee from
requiring coverage for acts of terrorism or damages related thereto, except to
the extent that any right to require such coverage may be limited by
commercially reasonable availability, or as otherwise indicated on Schedule A.
44. Operating Statements and Rent Rolls. In the case of each Mortgage Loan, the
related Mortgage Loan documents require the related Mortgagor, in some cases at
the request of the lender, to provide to the holder of such Mortgage Loan
operating statements and rent rolls not less frequently than annually (except in
certain cases if the Mortgage Loan has an outstanding principal balance of less
than or equal to $3,500,000 as of the Cut-off Date or the related Mortgaged
Property has only one tenant, in either of which cases, the Mortgage Loan
documents require the Mortgagor, in some cases at the request of the lender, to
provide to the holder of such Mortgage Loan operating statements and (if there
is more than one tenant) rent rolls and/or
2-13
financial statements of the Mortgagor annually), and such other information as
may be required therein.
45. Qualified Mortgage. Each Mortgage Loan is a "qualified mortgage" within the
meaning of Section 860G(a)(3) of the Code and Treasury Regulation Section
1.860G-2(a) (but without regard to the rule in Treasury Regulation Sections
1.860G-2(a)(3) and 1.860G-2(f)(2) that treat a defective obligation as a
qualified mortgage, or any substantially similar provision).
46. No Fraud in Origination. A court of competent jurisdiction will not find, in
a final non-appealable judgment, that an employee of Seller actively
participated with the Borrower in any intentional fraud in connection with the
origination of the Mortgage Loan. To Seller's knowledge, no Borrower is guilty
of defrauding or making an intentional material misrepresentation to Seller in
connection with the origination of the Mortgage Loan.
47. An appraisal of the related Mortgaged Property was conducted in connection
with the origination of such Mortgage Loan, and such appraisal satisfied the
guidelines in Title XI of the Financial Institutions Reform, Recovery and
Enforcement Act of 1989, as in effect on the date such Mortgage Loan was
originated.
48. Foreclosure Property. Seller is not selling any Mortgage Loan as part of a
plan to transfer the underlying Mortgaged Property to Purchaser, and Seller does
not know or, to Seller's knowledge, have reason to know that any Mortgage Loan
will default. The representations in this paragraph 48 are made solely for the
purpose of determining whether the Mortgaged Property, if acquired by the Trust,
would qualify as "foreclosure property" within the meaning of Section 860G(a)(8)
of the Code, and may not be relied upon or used for any other purpose. Such
representations shall not be construed as a guarantee to any degree that
defaults or losses will not occur.
49. Tax Parcels. Each Mortgaged Property constitutes one or more complete
separate tax lots containing no other property, or is subject to an endorsement
under the related Title Policy insuring same, or an application for the creation
of separate tax lots complying in all respects with the applicable laws and
requirements of the applicable governing authority has been made and approved by
the applicable governing authority and such tax lots shall be effective for the
next tax year.
2-14
NY\1230791.5
Schedule A to Exhibit 2
Exceptions to Representations and Warranties
--------------------------------------------------------------------------------
REP NO. 7 - CONDITION OF PROPERTY; CONDEMNATION
--------------------------------------------------------------------------------
LOAN NO. - 755566 (WEST LODI SELF STORAGE)
------------------------------------------
EXPLANATION -The property does not have direct or indirect access to a public
road. The loan is fully recourse to Borrower and Guarantor until such time as an
access easement is recorded which provides title-insured access over an
adjoining site (owned by an affiliate of the Borrower) to the adjacent public
road. The LTV for the property is 44.8%.
--------------------------------------------------------------------------------
REP NO. 14 - INSURANCE
--------------------------------------------------------------------------------
LOAN 755491 (550 XXXXXXXX DRIVE)
EXPLANATION - Fire and extended perils and loss of rents coverage was waived as
the security for this loan is land only and the tenant (Best Buy Stores, LP)
does not have termination or abatement rights in their lease.
LOAN 755520 (1901 N FEDERAL HWY)
EXPLANATION - The liability coverage is carried on a $500,000 per occurrence
basis however, the tenant (TSA Stores, Inc) has a general aggregate limit of
$9,500,000.
LOAN 755531 (1307 EAST NORTH AVENUE)
EXPLANATION - Loss of Rents coverage was waived because the single tenant
(Hy-Vee Inc.) has no right to xxxxx rent or terminate the lease due to a
casualty event. In addition, Lender is not listed as Loss Payee on the
certificate. Loss Payee refers to Loss of Rents coverage, and since this is not
required, this is not applicable.
--------------------------------------------------------------------------------
REP. NO. 17 - LEASEHOLD ESTATE
--------------------------------------------------------------------------------
i.
LOAN NO. - 755520 (1901 NORTH FEDERAL HIGHWAY)
EXPLANATION -Mortgagee does not have the right to hold and disburse casualty and
condemnation proceeds for repair or restoration. The insurance and condemnation
proceeds are paid jointly to the ground lessor, lessee and mortgagee as their
interest appear and are held and disbursed by the ground lessor.
--------------------------------------------------------------------------------
REP. NO. 29 - LOCAL LAW COMPLIANCE
--------------------------------------------------------------------------------
ii.
iii. Loan No. 755490 (Lakeshore Village Apartments)
iv.
v. Explanation - THE PROPERTY IS LEGAL NON-CONFORMING WITH RESPECT
TO VIOLATION OF BUILDING SETBACK LINES. THE CURRENT REQUIRED SIDE
SETBACK LINE IS 20 FEET AND THE PROPERTY HAS A SIDE SETBACK OF 19.54
FEET (DEFICIENT .46 FEET). THE CURRENT REQUIRED REAR SETBACK LINE IS 50
FEET AND THE PROPERTY HAS A REAR SETBACK OF 18.81 FEET (DEFICIENT 31.19
FEET). THE PROPERTY IS LEGAL NON-CONFORMING WITH RESPECT TO VIOLATION
OF LOT AREA REQUIREMENTS. THE CURRENT REQUIRED LOT AREA IS 663,500 SQ.
FT. AND THE PROPERTY HAS A LOT AREA OF 367,337 SQ. FT. (DEFICIENT
296,163SF). THE PROPERTY IS LEGAL NON-CONFORMING WITH RESPECT TO
PARKING. ZONING REQUIRES 468 SPACES, AND THE PROPERTY HAS 323 SPACES
(DEFICIENT 145 SPACES). THE PROPERTY CAN BE RESTORED TO ITS EXISTING
STATE UNLESS THERE IS CASUALTY DAMAGE OF MORE THAN 50% OF THE
STRUCTURE. THE PROPERTY HAS 10 BUILDINGS AND THE LTV IS 67.7%. IN
ADDITION, LAW AND ORDINANCE INSURANCE IS BEING CARRIED.
--------------------------------------------------------------------------------
REP NO. 33 - LICENSES AND PERMITS
--------------------------------------------------------------------------------
LOAN NO. - 755482 (UNION SQUARE SHOPPING CENTER)
EXPLANATION - Only a temporary CO was issued for the tenant, Allstate (approx
9.8% of NRA). A recourse carve-out was added whereby Borrower and Guarantor are
personally liable for any loss or damage associated with the failure to obtain a
final certificate of occupancy.
--------------------------------------------------------------------------------
REP. NO. 37 - SINGLE PURPOSE ENTITY
--------------------------------------------------------------------------------
vi. Loan No. 755452 (Xxxx Eagle Village Apartments)
vii.
EXPLANATION -Borrower is not required to be an SPE nor an SAE. The LTV for the
property is 63.4%. The Borrowing entity can only own two other apartment
complexes besides the Mortgage Property (Cedar Tree Apartments (162 units) and
Oak Tree Apartments (299 units). Cedar Tree Apartments is an $8.6M loan in this
pool.
LOAN NO. 755557 (RESIDENCE INN TUDOR WHARF)
EXPLANATION - The Borrower is permitted to have indebtedness for equipment
leases in an amount not to exceed $1,000,000.
Schedule B to Exhibit 2
List of Mortgagors that are Third-Party Beneficiaries Under Section 5.5
None
Schedule C to Exhibit 2
List of Mortgage Loans Subject to Secured Creditor Impaired Property Policies
EXHIBIT 3
PRICING FORMULATION
Total Bond Proceeds $2,445,725,328
Less Expenses $4,200,620
----------
Net Proceeds $2,449,925,948
Less Purchase Price of MS Loans
Discounted Value of MS Loans $1,846,030,231
Allocable Expense Amount for MS Loans $3,179,813
----------
Purchase Price of MS Loans $1,849,210,045
Less Purchase Price of LaSalle Loans
Discounted Value of LaSalle Loans $402,997,949
Allocable Expense Amount for LaSalle Loans $685,122
--------
Purchase Price of LaSalle Loans $403,683,071
Less Purchase Price of PCF II Loans
Discounted Value of PCF II Loans $196,697,148
Allocable Expense Amount for PCF II Loans $335,684
--------
Purchase Price of PCF II Loans $197,032,832
EXHIBIT 4
XXXX OF SALE
1. Parties. The parties to this Xxxx of Sale are the following:
Seller: Principal Commercial Funding II, LLC
Purchaser: Xxxxxx Xxxxxxx Capital I Inc.
2. Sale. For value received, Seller hereby conveys to Purchaser, without
recourse, all right, title and interest in and to the Mortgage Loans identified
on Exhibit 1 (the "Mortgage Loan Schedule") to the Mortgage Loan Purchase
Agreement, dated as of February 15, 2007 (the "Mortgage Loan Purchase
Agreement"), between Seller and Purchaser and all of the following property:
(a) All accounts, general intangibles, chattel paper,
instruments, documents, money, deposit accounts, certificates of
deposit, goods, letters of credit, advices of credit and investment
property consisting of, arising from or relating to any of the
following property: the Mortgage Loans identified on the Mortgage Loan
Schedule including the related Mortgage Notes, Mortgages, security
agreements, and title, hazard and other insurance policies, all
distributions with respect thereto payable after the Cut-Off Date, all
substitute or replacement Mortgage Loans and all distributions with
respect thereto, and the Mortgage Files;
(b) All accounts, general intangibles, chattel paper,
instruments, documents, money, deposit accounts, certificates of
deposit, goods, letters of credit, advices of credit, investment
property, and other rights arising from or by virtue of the disposition
of, or collections with respect to, or insurance proceeds payable with
respect to, or claims against other Persons with respect to, all or any
part of the collateral described in clause (a) above (including any
accrued discount realized on liquidation of any investment purchased at
a discount); and
(c) All cash and non-cash proceeds of the collateral described
in clauses (a) and (b) above.
3. Purchase Price. The amount and other consideration set forth on Exhibit 3 to
the Mortgage Loan Purchase Agreement.
4. Definitions. Terms used but not defined herein shall have the meanings
assigned to them in the Mortgage Loan Purchase Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this Xxxx of Sale to
be duly executed and delivered on this __ day of February, 2007.
SELLER: PRINCIPAL COMMERCIAL FUNDING II, LLC
By:
---------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
PURCHASER: XXXXXX XXXXXXX CAPITAL I INC.
By:
---------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
EXHIBIT 5
FORM OF LIMITED POWER OF ATTORNEY
TO XXXXX FARGO BANK, NATIONAL ASSOCIATION
AND X.X. XXXXXX COMPANY, INC.
WITH RESPECT TO
XXXXXX XXXXXXX CAPITAL I INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2007-HQ11
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, pursuant to the terms of the Mortgage Loan Purchase Agreement
dated as of February 15, 2007 (the "Mortgage Loan Purchase Agreement"), between
Principal Commercial Funding II, LLC ("PCFII") and Xxxxxx Xxxxxxx Capital I Inc.
("Depositor"), PCFII is selling certain multifamily and commercial mortgage
loans (the "Mortgage Loans") to Depositor;
WHEREAS, pursuant to the terms of the Pooling and Servicing Agreement
dated as of February 1, 2007 (the "Pooling and Servicing Agreement"), between
the Depositor, Capmark Finance Inc., as Master Servicer, X.X. Xxxxxx Company,
Inc. ("JER") as Special Servicer, LaSalle Bank National Association, as Paying
Agent, Certificate Registrar and Authenticating Agent and Xxxxx Fargo Bank,
National Association ("WFB") as Trustee and Custodian, the Trustee and the
Special Servicer are granted certain powers, responsibilities and authority in
connection with the completion and the filing and recording of assignments of
mortgage, deeds of trust or similar documents, Form UCC-2 and UCC-3 assignments
of financing statements, reassignments of assignments of leases, rents and
profits and other Mortgage Loan documents required to be filed or recorded in
appropriate public filing and recording offices;
WHEREAS, PCFII has agreed to provide this Limited Power of Attorney
pursuant to the Mortgage Loan Purchase Agreement;
NOW, THEREFORE, PCFII does hereby make, constitute and appoint WFB,
acting solely in its capacity as Trustee under, and in accordance with the terms
of, the Pooling and Servicing Agreement, PCFII's true and lawful agent and
attorney-in-fact with respect to each Mortgage Loan in PCFII's name, place and
stead: (i) to complete (to the extent necessary) and to cause to be submitted
for filing or recording in the appropriate public filing or recording offices,
all assignments of mortgage, deeds of trust or similar documents, assignments or
reassignments of rents, leases and profits, in each case in favor of the
Trustee, as set forth in the definition of "Mortgage File" in Section 1.1 of the
Pooling and Servicing Agreement, that have been received by the Trustee or a
Custodian on its behalf, and all Form UCC-2 or UCC-3 assignments of financing
statements and all other comparable instruments or documents with respect to the
Mortgage Loans which are customarily and reasonably necessary or appropriate to
assign agreements, documents and instruments pertaining to the Mortgage Loans,
in each case in favor of the Trustee as set forth in the definition of "Mortgage
File" in, and in accordance with Section 1.1 of, the Pooling and Servicing
Agreement, and to evidence, provide notice of and perfect such assignments and
conveyances in favor of the Trustee in the public records of the appropriate
filing and recording offices; and (ii) to file or record in the appropriate
public filing
5-1
or recording offices, all other Mortgage Loan documents to be recorded under the
terms of the Pooling and Servicing Agreement or any such Mortgage Loan documents
which have not been submitted for filing or recordation by PCFII on or before
the date hereof or which have been so submitted but are subsequently lost or
returned unrecorded or unfiled as a result of actual or purported defects
therein, in order to evidence, provide notice of and perfect such documents in
the public records of the appropriate filing and recording offices.
Notwithstanding the foregoing, this Limited Power of Attorney shall grant to WFB
and JER only such powers, responsibilities and authority as are set forth in
Section 2.1 of the Mortgage Loan Purchase Agreement.
PCFII does also hereby make, constitute and appoint JER, acting solely
in its capacity as Special Servicer under the Pooling and Servicing Agreement,
PCFII's true and lawful agent and attorney-in-fact with respect to the Mortgage
Loans in PCFII's name, place and stead solely to exercise and perform all of the
rights, authority and powers of WFB as set forth in the preceding paragraph in
the event of the failure or the incapacity of WFB to do so for any reason. As
between JER and any third party, no evidence of the failure or incapacity of WFB
shall be required and such third party may rely upon JER's written statement
that it is acting pursuant to the terms of this Limited Power of Attorney.
The enumeration of particular powers herein is not intended in any way
to limit the grant to either the Trustee or the Special Servicer as PCFII's
attorney-in-fact of full power and authority with respect to the Mortgage Loans
to complete (to the extent necessary), file and record any documents,
instruments or other writings referred to above as fully, to all intents and
purposes, as PCFII might or could do if personally present, hereby ratifying and
confirming whatsoever such attorney-in-fact shall and may do by virtue hereof;
and PCFII agrees and represents to those dealing with such attorney-in-fact that
they may rely upon this Limited Power of Attorney until termination thereof
under the provisions of Article III below. As between PCFII, the Depositor, the
Master Servicer, the Special Servicer, the Trustee, the Trust Fund and the
Certificateholders, neither the Trustee nor the Special Servicer may exercise
any right, authority or power granted by this Limited Power of Attorney in a
manner which would violate the terms of the Pooling and Servicing Agreement, but
any and all third parties dealing with either the Trustee or the Special
Servicer as PCFII's attorney-in-fact may rely completely, unconditionally and
conclusively on the authority of the Trustee or the Special Servicer, as
applicable, and need not make any inquiry about whether the Trustee or the
Special Servicer is acting pursuant to the Pooling and Servicing Agreement. Any
purchaser, title insurance company or other third party may rely upon a written
statement by either the Trustee or the Special Servicer that any particular
Mortgage Loan or related mortgaged real property in question is subject to and
included under this Limited Power of Attorney and the Pooling and Servicing
Agreement.
Any act or thing lawfully done hereunder by either the Trustee or the
Special Servicer shall be binding on PCFII and PCFII's successors and assigns.
This Limited Power of Attorney shall continue in full force and effect
with respect to the Trustee and the Special Servicer, as applicable, until the
earliest occurrence of any of the following events:
with respect to the Trustee, the termination of the Trustee and its
replacement with a successor Trustee under the terms of the
Pooling and Servicing Agreement;
with respect to the Special Servicer, the termination of the
Special Servicer and its replacement with a successor Special
Servicer under the terms of the Pooling and Servicing
Agreement;
with respect to the Trustee, the appointment of a receiver or
conservator with respect to the business of the Trustee, or
the filing of a voluntary or involuntary petition in
bankruptcy by or against the Trustee;
with respect to the Special Servicer, the appointment of a receiver
or conservator with respect to the business of the Special
Servicer, or the filing of a voluntary or involuntary petition
in bankruptcy by or against the Special Servicer;
with respect to each of the Trustee and the Special Servicer and
any Mortgage Loan, such Mortgage Loan is no longer a part of
the Trust Fund;
with respect to each of the Trustee and the Special Servicer, the
termination of the Pooling and Servicing Agreement in
accordance with its terms; and
with respect to the Special Servicer, the occurrence of an Event of
Default under the Pooling and Servicing Agreement with respect
to the Special Servicer.
Nothing herein shall be deemed to amend or modify the Pooling and
Servicing Agreement, the Mortgage Loan Purchase Agreement or the respective
rights, duties or obligations of PCFII under the Mortgage Loan Purchase
Agreement, and nothing herein shall constitute a waiver of any rights or
remedies under the Pooling and Servicing Agreement.
Capitalized terms used but not defined herein have the respective
meanings assigned thereto in the Mortgage Loan Purchase Agreement.
THIS LIMITED POWER OF ATTORNEY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES APPLIED IN NEW YORK.
[Signature on next page]
IN WITNESS WHEREOF, PCFII has caused this instrument to be executed and
its corporate seal to be affixed hereto by its officer duly authorized as of
February 28, 2007.
PRINCIPAL COMMERCIAL FUNDING II, LLC.
By: PRINCIPAL REAL ESTATE INVESTORS, LLC, a
Delaware limited liability company, as its manager
By: ---------------------------------------------
Name: ---------------------------------------------
Title:---------------------------------------------
By: ---------------------------------------------
Name: ---------------------------------------------
Title:---------------------------------------------
ACKNOWLEDGEMENT
STATE OF )
) ss:
COUNTY OF )
On this ____ day of February, 2007, before me appeared
_______________________, and _____________________________________ to me
personally known, who, being by me duly sworn did say that he/she and he/she are
the _____________________ and ____________________________ of Principal
Commercial Funding II, LLC, and that the seal affixed to the foregoing
instrument is the corporate seal of said corporation, and that said instrument
was signed and sealed in behalf of said corporation by authority of its board of
directors, and said __________________ acknowledged said instrument to be the
free act and deed of said corporation.
_____________________________________________________
Name:________________________________________________
Notary Public in and for said County and State
My Commission Expires:
____________________________________
