EXHIBIT NO. 99.5
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MORTGAGE LOAN PURCHASE AGREEMENT
between
PRINCIPAL COMMERCIAL FUNDING, LLC
as Seller
and
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ CAPITAL I INC.
as Purchaser
Dated as of January 20, 2006
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TABLE OF CONTENTS
1. AGREEMENT TO PURCHASE ............................................... 3
2. CONVEYANCE OF MORTGAGE LOANS ........................................ 3
3. EXAMINATION OF MORTGAGE FILES AND DUE DILIGENCE REVIEW .............. 10
4. REPRESENTATIONS AND WARRANTIES OF SELLER AND PURCHASER .............. 12
5. REMEDIES UPON BREACH OF REPRESENTATIONS AND WARRANTIES MADE
BY SELLER ........................................................... 15
6. CLOSING ............................................................. 20
7. CLOSING DOCUMENTS ................................................... 21
8. COSTS ............................................................... 23
9. NOTICES ............................................................. 23
10. SEVERABILITY OF PROVISIONS .......................................... 24
11. FURTHER ASSURANCES .................................................. 24
12. SURVIVAL ............................................................ 24
13. GOVERNING LAW ....................................................... 24
14. BENEFITS OF MORTGAGE LOAN PURCHASE AGREEMENT ........................ 24
15. MISCELLANEOUS ....................................................... 25
16. ENTIRE AGREEMENT .................................................... 25
Exhibit 1 Mortgage Loan Schedule
Exhibit 2 Representations and Warranties
Exhibit 3 Pricing Formulation
Exhibit 4 ▇▇▇▇ of Sale
Exhibit 5 Power of Attorney
Index of Defined Terms
Affected Loan(s) .......................................................... 17
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 ................................................. 13
Initial Purchasers ........................................................ 2
Master Servicer ........................................................... 2
Material Breach ........................................................... 16
Material Document Defect .................................................. 16
Memorandum ................................................................ 2
MERS ...................................................................... 5
Mortgage File ............................................................. 4
Mortgage Loan Schedule .................................................... 3
Mortgage Loans ............................................................ 2
Officer's Certificate ..................................................... 7
Other Mortgage Loans ...................................................... 2
Pooling and Servicing Agreement ........................................... 2
Private Certificates ...................................................... 2
Prospectus Supplement ..................................................... 2
Public Certificates ....................................................... 2
Purchaser ................................................................. 2
Repurchased Loan .......................................................... 17
Seller .................................................................... 2
Special Servicer .......................................................... 2
Trust ..................................................................... 2
Trustee ................................................................... 2
Underwriters .............................................................. 2
Underwriting Agreement .................................................... 2
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MORTGAGE LOAN PURCHASE AGREEMENT
(PRINCIPAL LOANS)
Mortgage Loan Purchase Agreement ("Agreement"), dated as of January 20, 2006,
between Principal Commercial Funding, LLC ("Seller") and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Capital
I Inc. ("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 January 1, 2006 between Purchaser, as depositor, ▇▇▇▇▇ Fargo Bank,
National Association, as master servicer (the "Master Servicer"), ARCap
Servicing, Inc., as special servicer (the "Special Servicer"), LaSalle Bank
National Association, as trustee (the "Trustee") and ▇▇▇▇▇ Fargo Bank, National
Association, as paying agent and certificate registrar. In exchange for the
Mortgage Loans and certain other mortgage loans to be purchased by Purchaser
(collectively the "Other Mortgage Loans"), the Trust will issue to the Depositor
pass-through certificates to be known as ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Capital I Inc.,
Commercial Mortgage Pass-Through Certificates, Series 2006-TOP21 (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 Class A-1, Class A-2, Class A-3, Class A-AB, Class A-4, Class A-M and Class
A-J Certificates (the "Public Certificates") will be sold by Purchaser to ▇▇▇▇▇▇
▇▇▇▇▇▇▇ & Co. Incorporated and Bear, ▇▇▇▇▇▇▇ & Co. Inc. (the "Underwriters"),
pursuant to an Underwriting Agreement, between Purchaser and the Underwriters,
dated January 20, 2006 (the "Underwriting Agreement"), and the Class X, Class B,
Class C, Class D, Class E, Class F, Class G, Class H, Class J, Class K, Class L,
Class M, Class N, Class O, Class P, Class MM-NA, Class R-I, Class R-II and Class
R-III Certificates (the "Private Certificates") will be sold by Purchaser to
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated and Bear, ▇▇▇▇▇▇▇ & Co. Inc. (the "Initial
Purchasers") pursuant to a Certificate Purchase Agreement, between Purchaser and
the Initial Purchasers, dated January 20, 2006 (the "Certificate Purchase
Agreement"). The Underwriters will offer the Public Certificates for sale
publicly pursuant to a Prospectus dated June 7, 2005, as supplemented by a
Prospectus Supplement dated January 20, 2006 (together, the "Prospectus
Supplement") and the Initial Purchasers 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 January 20, 2006
(the "Memorandum").
In consideration of the mutual agreements contained herein, Seller and Purchaser
hereby agree as follows:
1. AGREEMENT TO PURCHASE.
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 January 1, 2006.
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 $158,359,539. The sale of the
Mortgage Loans shall take place on January 30, 2006 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 the 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 the 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.
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
January 1, 2006, will be executed by Seller and the 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 the 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 the Trustee
and the Special Servicer to empower the Trustee and, in the event of the failure
or incapacity of the Trustee, the 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 the Trustee). Seller agrees to reasonably cooperate with the Trustee and the
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 unremedied
as of the earlier of (i) the date
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that is 180 days following the delivery 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. The
Trustee shall submit such documents, at Seller's expense, after the periods set
forth above, provided, however, the Trustee 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 the Trustee each of
the remaining documents or instruments specified in Section 2.2 hereof (with
such exceptions 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 the 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 "Pay to the order of LaSalle Bank National Association, as Trustee for
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Capital I Inc., Commercial Mortgage Pass-Through Certificates,
Series 2006-TOP21, 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 45th 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 the 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 45th day following the Closing Date with evidence of recordation
thereon or 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,
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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, signed by the holder of record in
favor of "LaSalle Bank National Association, as Trustee for ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Capital I Inc., Commercial Mortgage Pass-Through Certificates, Series
2006-TOP21," 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 the 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 the Master Servicer and the Special
Servicer evidence confirming that the 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 45th 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 45th 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 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 "LaSalle Bank
National Association, as Trustee for ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Capital I Inc., Commercial
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Mortgage Pass-Through Certificates, Series 2006-TOP21," 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 the Trustee will be required to be recorded or
delivered and instead, Seller shall take all actions as are necessary to cause
the 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 the Master Servicer and the
Special Servicer evidence confirming that the Trustee is shown as the owner on
the record of MERS;
2.2.7 The original 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 binding on the title company with an original
Title Insurance Policy to follow within 180 days of the Closing Date;
2.2.9 (A) UCC financing statements (together with all assignments
thereof) and (B) UCC-2 or UCC-3 financing statements to the 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 the 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 the Master Servicer and the Special Servicer evidence
confirming that the 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, 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, which shall be
assigned and delivered to the Trustee on behalf of the Trust with a copy to be
held by the Primary Servicer (or the 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
Servicing Agreement or (B) the original of each letter of credit, if any,
constituting additional collateral for such Mortgage Loan, which shall be held
by the Primary Servicer (or the Master Servicer) on behalf of the Trustee, with
a copy to be held by the 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
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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 the 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 all rights to 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 the Primary Servicer (or Master Servicer) shall be held
in its capacity as agent of the Trust, and if the Primary Servicer (or Master
Servicer) sells its rights to service the applicable Mortgage Loan, the Primary
Servicer (or Master Servicer) has agreed to assign the applicable letter of
credit to the Trust or at the direction of the Special Servicer to such party as
the Special Servicer may instruct, in each case, at the expense of the Primary
Servicer (or Master Servicer). The 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 environmental indemnity agreement, if any, related
to any Mortgage Loan;
2.2.14 Third-party management agreements 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 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 the Primary Servicer, the Master Servicer or the 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 the Primary Servicer within 30 days of the
Closing Date. Any failure to deliver any ground lease shall constitute a
document defect.
"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 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,
the assignments of leases (to the extent separate from the mortgages) and the
assignments of UCC financing statements relating to the Mortgage Loans naming
the 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
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statements shall name the 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 the 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 45 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 the Trustee within such 45 day period, Seller shall then deliver
within 90 days after the Closing Date the recorded document (or within such
longer period after the Closing Date as the Trustee may consent to, which
consent shall not be unreasonably withheld so long as Seller is, as certified in
writing to the 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 The 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, the 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
and 2.2.6(ii) above. Within 90 days following the Closing Date, Seller shall
deliver and Purchaser, the Trustee or the agents of either may submit or cause
to be submitted for filing, at the expense of Seller, in the appropriate public
office for Uniform Commercial Code financing statements, the assignment referred
to in clause 2.2.1. 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
the Trustee), record or file, as the case may be, and deliver such document or
instrument in accordance with this Section 2.
2.7 Documents that are in the possession of Seller, its agents or its
subcontractors that relate to the Mortgage Loans and that are not required to be
delivered to the Trustee shall be shipped by Seller to or at the direction of
the 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.
2.8 The documents required to be delivered to the Master Servicer (or in the
alternative, the 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
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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 Borrower/sponsor and any guarantors, any letters of credit,
any intercreditor agreement and any Environmental Insurance Policies. Delivery
of any of the foregoing documents to the Primary Servicer shall be deemed a
delivery to the Master Servicer and satisfy Seller's obligations under this
subparagraph.
2.9 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 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 the Trustee or the 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.
2.10 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, 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:
2.10.1 this Agreement shall be deemed to be a security agreement; and
2.10.2 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
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(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.
2.11 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.
2.12 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.
2.13 Seller shall, to the extent consistent with this Agreement, 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 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 shall 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.
2.14 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 (endorsed as described in clause 2.2.1) required to be
delivered to or on behalf of the Trustee or the 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
10
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 the 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, the Trustee, the 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, the Trustee, the 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 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 the Master Servicer or Primary Servicer, if applicable, with any
additional information identified by the 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
11
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 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 hereto, 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 Delaware.
Seller has the requisite power and 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,
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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 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.
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, Seller's Information (as defined in that
certain indemnification agreement, dated January 20, 2006, between Seller,
Purchaser, the Underwriters and the Initial Purchasers (the "Indemnification
Agreement")) 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. Notwithstanding
anything contained herein to the contrary, this subparagraph 4.1.7 shall run
exclusively to the benefit of Purchaser and no other party.
4.1.8 The 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 Public Certificates.
4.1.9 For so long as the Trust is subject to the reporting requirements
of the Exchange Act, the Seller shall provide the Purchaser (or with respect to
any Serviced Companion Mortgage
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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 the Purchaser'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.
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.
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:
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,
14
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.
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 the
Trustee on behalf of the holders of the Certificates, whether directly or by way
of Purchaser's assignment of its rights hereunder to the 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 the Trustee pursuant to Section 2 is not delivered as and when
required, 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 the
party discovering such breach or defect determines that either (i) the defect or
breach materially and adversely affects the interests of the holders of the
Certificates in the related Mortgage Loan or (ii) both (A) the 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 (any such defect described in the preceding clause (i) or (ii), a "Material
Document Defect" and any such breach described in the preceding clause (i) or
(ii), a "Material Breach"), the party determining that such Material Document
Defect or Material Breach exists shall promptly notify,
15
in writing, the other parties; provided that any breach of the representation
and warranty contained in paragraph (41) 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 determining (or becoming aware of another
party's determination) that any such Material Document Defect or Material Breach
exists (which determination shall, absent evidence to the contrary, be presumed
to be no earlier than three Business Days prior to delivery of the notice to
Seller referred to below), the Master Servicer shall, and the 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 the 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 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 Material Document Defect was
identified in a certification delivered to Seller by the 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, the Master Servicer or the Special Servicer 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 or Seller otherwise fails
to correct or cure 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 (or interest therein) 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 must occur within 85 days from
the date Seller was notified of the defect. Seller agrees that any substitution
shall be completed in accordance with the terms and conditions of the Pooling
and Servicing Agreement.
16
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 the
Trustee at the expense of Seller if, in the reasonable business judgment of the
Trustee, 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 lesser of (A) 0.10x below the debt service
coverage ratio for all such other Mortgage Loans (including the Affected
Loans(s)) set forth in Appendix II to the Final Prospectus Supplement and (B)
the debt service coverage ratio for all such Crossed Mortgage Loans (including
the Affected Loan(s)) for the four preceding calendar quarters preceding the
repurchase or replacement, and (ii) the loan-to-value ratio for all such Crossed
Mortgage Loans (excluding the Affected Loan(s)) is not greater than the greater
of (A) the loan-to-value ratio, expressed as a whole number (taken to one
decimal place), for all such Crossed Mortgage Loans (including the Affected
Loan(s)) set forth in Appendix II to the Final Prospectus Supplement plus 10%
and (B) the loan-to-value ratio for all such Crossed Mortgage Loans (including
the Affected Loans(s)), at the time of repurchase or replacement. The
determination of the Master Servicer as to whether the conditions set forth
above have been satisfied shall be conclusive and binding in the absence of
manifest error. The Master Servicer will be entitled to cause to be delivered,
or direct Seller to (in which case Seller shall) cause to be delivered to the
Master Servicer, 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).
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 the Trustee (as
assignee of Purchaser) continues to hold any Crossed Mortgage Loan, Seller and
Purchaser hereby agree to forebear from enforcing any remedies against the
other's Primary Collateral but may exercise remedies against the Primary
Collateral securing their respective Mortgage Loans, including with respect to
the Trustee, the Primary Collateral securing the Mortgage Loans still held by
the Trustee, so long as such exercise does not impair the ability of the other
party to exercise its remedies against its Primary Collateral. If the exercise
of remedies by one party would impair the ability of the other party to exercise
its remedies with respect to the Primary Collateral securing the Mortgage Loan
or Mortgage Loans held by such party, then both parties shall forbear from
exercising such
17
remedies until the loan documents evidencing and securing the relevant Mortgage
Loans can be modified in a manner that complies with the Pooling and Servicing
Agreement to remove the threat of impairment as a result of the exercise of
remedies. Any reserve or other cash collateral or letters of credit securing the
Crossed 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 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 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 the Trustee if there is no Custodian), the
Trustee (or as set forth in Section 2.3(a) of the Pooling and Servicing
Agreement, the 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.
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,
the 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. In the event of any such modification and work-out, Seller
shall be obligated to repurchase the Mortgage Loan as modified and the Purchase
Price shall include any Work-Out Fee paid to the Special Servicer up to the date
of repurchase plus the present value (calculated at a discount rate equal to the
applicable Mortgage Rate) of the Work-Out Fee that would have been payable to
the Special Servicer in respect of such Mortgage Loan if the Mortgage Loan
performed in accordance with its terms to its Maturity Date, provided that no
amount shall be paid by Seller in respect of any Work-Out Fee if a Liquidation
Fee already comprises a portion of the Purchase Price.
18
5.8 Seller shall have the right to purchase certain of the Mortgage Loans or
REO Properties, as applicable, in accordance with Section 9.36 of 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, the 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 (or interest therein) 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 after the expiration of any applicable appeal period that
Seller is or was obligated to repurchase the related Mortgage Loan or REO
Mortgage Loan (or interest therein) (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,
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, the 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); provided, however,
that in the event Seller is obligated to repurchase the Mortgage Loan or REO
Mortgaged Property (or interest therein) 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 the Special Servicer shall be included in the definition of
"Purchase Price" in respect of such Mortgage Loan 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 in Exhibit 2 hereto,
and as a result the payments, by a Mortgagor, of reasonable costs and expenses
associated with the defeasance or assumption of a Mortgage Loan are insufficient
causing 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.
19
5.13 The Pooling and Servicing Agreement shall provide that the Trustee (or the
Master Servicer or the Special Servicer on its behalf) shall give written notice
promptly (but in any event within three Business Days) to Seller of its
determination that any Material Document Defect or Material Breach exists (which
determination shall, absent evidence to the contrary, be presumed to be no
earlier than three Business Days prior to delivery of the notice) 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 the 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
the 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 ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ 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 (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 Seller's 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.
20
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 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):
21
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 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.
22
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 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.
7.8 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.
7.9 Such further certificates, opinions and documents as Purchaser may
reasonably request.
7.10 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.
7.11 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.
7.12 An executed ▇▇▇▇ 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 ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Capital I Inc., ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ Friend, with a copy to
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Capital I Inc., ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Legal
Department, Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Esq. (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, LLC, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (with a copy to the attention of ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇, Esq., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ 50392) (or such other
address as may hereafter be furnished in writing by such entity).
23
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, 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 the Trustee as may be required to effect the purposes of the Pooling and
Servicing Agreement and, upon such assignment, the Trustee shall succeed to the
rights and obligations hereunder of Purchaser. No owner of a Certificate issued
pursuant to
24
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 the Trustee), the
Indemnification Agreement and the Pooling and Servicing Agreement), and
supersedes all prior and contemporaneous agreements, understandings, inducements
and 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.
25
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, LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President/Managing
Director
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Financial Officer/Director
of Finance
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ CAPITAL I INC.
By: /s/ ▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
EXHIBIT 1
MORTGAGE LOAN SCHEDULE
PRINCIPAL LOAN SCHEDULE
PRINCIPAL
ORIGINAL
TERM TO
LOAN POOL MORTGAGE LOAN CUT-OFF DATE MATURITY
NO. LOAN SELLER NUMBER PROPERTY NAME BALANCE NOTE DATE OR ARD
--------- ----------- ---------- ---------------------------- ------------ ---------- --------
60 PCF 7-001 University Town Centre $52,000,000 09/02/2005 120
64 PCF ▇▇-▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Shopping Center $26,850,000 11/21/2005 120
69 PCF 16-001 1757 Tapo Canyon Road $20,000,000 11/17/2005 120
78 PCF ▇▇-▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Plaza $12,000,000 03/02/2005 120
92 PCF ▇▇-▇▇▇ ▇▇▇▇▇▇▇▇ Shoppes $ 7,200,000 11/14/2005 120
97 PCF ▇▇-▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Shopping
Center $ 6,500,000 10/31/2005 120
99 PCF 46-001 Garden View Apartments $ 6,040,000 12/07/2005 120
118 PCF 62-001 Lynnhaven Shopping Center $ 4,050,000 12/06/2005 120
119 PCF ▇▇-▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
Building $ 3,996,270 11/09/2005 120
123 PCF 67-001 ▇▇-▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ $ 3,589,327 11/01/2005 120
126 PCF ▇▇-▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ $ 3,190,433 10/24/2005 120
3801, 3803 & 3807 South
132 PCF ▇▇-▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ $ 2,697,489 11/21/2005 120
146 PCF 90-001 12971 Fair Lakes Center $ 1,997,238 10/31/2005 120
149 PCF 93-001 University Shoppes II $ 1,848,364 10/31/2005 120
157 PCF 101-001 ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ $ 1,598,578 10/28/2005 120
161 PCF 105-001 ▇▇▇▇▇▇▇ Self Storage $ 1,375,274 11/02/2005 180
168 PCF 112-001 ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ $ 1,198,444 10/25/2005 120
175 PCF 119-001 ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ $ 759,362 11/01/2005 120
176 PCF ▇▇▇-▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ $ 749,328 11/04/2005 120
177 PCF 121-001 ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ $ 719,433 11/22/2005 120
LOAN POOL MORTGAGE LOAN REMAINING ORIG. REM. MONTHLY DEBT
NO. LOAN SELLER NUMBER TERM AMORT. AMORT. RATE SERVICE (P&I) SEASONING
--------- ----------- ----------
60 PCF ▇-▇▇▇ ▇▇▇ 360 360 5.750% $303,458 3
64 PCF ▇▇-▇▇▇ ▇▇▇ 360 360 5.940% $159,945 1
69 PCF ▇▇-▇▇▇ ▇▇▇ IO IO 5.820% NAP 1
78 PCF ▇▇-▇▇▇ ▇▇▇ 360 360 5.680% $ 69,496 9
92 PCF ▇▇-▇▇▇ ▇▇▇ 360 360 5.530% $ 41,016 1
97 PCF ▇▇-▇▇▇ ▇▇▇ 360 360 5.190% $ 35,652 2
99 PCF ▇▇-▇▇▇ ▇▇▇ 360 360 5.860% $ 35,671 0
118 PCF ▇▇-▇▇▇ ▇▇▇ 360 360 5.750% $ 23,635 0
119 PCF ▇▇-▇▇▇ ▇▇▇ 360 359 5.540% $ 22,812 1
123 PCF ▇▇-▇▇▇ ▇▇▇ 300 298 5.510% $ 22,129 2
126 PCF ▇▇-▇▇▇ ▇▇▇ 300 298 5.460% $ 19,574 2
132 PCF ▇▇-▇▇▇ ▇▇▇ 360 359 5.550% $ 15,415 1
146 PCF ▇▇-▇▇▇ ▇▇▇ 300 299 5.590% $ 12,389 1
149 PCF ▇▇-▇▇▇ ▇▇▇ 360 359 5.750% $ 10,796 1
157 PCF ▇▇▇-▇▇▇ ▇▇▇ 360 359 5.730% $ 9,317 1
161 PCF ▇▇▇-▇▇▇ ▇▇▇ 180 179 5.530% $ 11,298 1
168 PCF ▇▇▇-▇▇▇ ▇▇▇ 300 299 5.920% $ 7,673 1
175 PCF ▇▇▇-▇▇▇ ▇▇▇ 360 359 5.950% $ 4,532 1
176 PCF ▇▇▇-▇▇▇ ▇▇▇ 360 359 5.700% $ 4,353 1
177 PCF ▇▇▇-▇▇▇ ▇▇▇ 360 359 6.190% $ 4,405 1
MORTGAGE ADMIN
LOAN POOL LOAN LO END COST
NO. SELLER LOAN NUMBER YM CODE LO DATE DEF DEF/YM1 DEF/YM YM2 YM1 OPEN RATE
--------- -------- -----------
60 PCF 7-001 27 06/30/2015 89 4 3.170
64 PCF 11-001 25 08/31/2015 91 4 3.170
69 PCF 16-001 25 08/31/2015 91 4 3.170
78 PCF 25-001 33 03/31/2015 86 1 3.170
92 PCF 39-001 25 08/31/2015 91 4 3.170
97 PCF 44-001 26 10/31/2015 93 1 3.170
99 PCF 46-001 G 36 01/31/2009 80 4 3.170
118 PCF ▇▇-▇▇▇ ▇ 24 01/31/2008 94 2 3.170
119 PCF ▇▇-▇▇▇ ▇ 0 NAP 116 4 3.170
123 PCF ▇▇-▇▇▇ ▇ 26 01/31/2008 92 2 3.170
126 PCF 70-001 26 07/31/2015 90 4 3.170
132 PCF ▇▇-▇▇▇ ▇ 25 01/31/2008 91 4 3.170
146 PCF 90-001 25 10/31/2015 93 2 3.170
149 PCF ▇▇-▇▇▇ ▇ 25 01/31/2008 93 2 3.170
157 PCF 101-001 G 25 01/31/2008 93 2 3.170
161 PCF 105-001 25 08/31/2020 151 4 3.170
168 PCF 112-001 25 10/31/2015 93 2 3.170
175 PCF 119-001 G 25 01/31/2008 91 4 3.170
176 PCF 120-001 25 10/31/2015 93 2 3.170
177 PCF 121-001 G 25 01/31/2008 91 4 3.170
MASTER PRIMARY
EXCESS EXCESS
MASTER PRIMARY SERV. SERVICING EXCESS
LOAN POOL MORTGAGE SERVICE SERVICE FEE RATE FEE RATE DEAL TRUSTEE SERVICE
NO. LOAN SELLER LOAN NUMBER FEE RATE FEE RATE (BPS) (BPS) FEES FEE RATE FEE RATE
--------- ----------- -----------
60 PCF 7-001 2.000 1.000 0.000 0.000 3.000 0.170 1.000
64 PCF 11-001 2.000 1.000 0.000 0.000 3.000 0.170 1.000
69 PCF 16-001 2.000 1.000 0.000 0.000 3.000 0.170 1.000
78 PCF 25-001 2.000 1.000 0.000 0.000 3.000 0.170 1.000
92 PCF 39-001 2.000 1.000 0.000 0.000 3.000 0.170 1.000
97 PCF 44-001 2.000 1.000 0.000 0.000 3.000 0.170 1.000
99 PCF 46-001 2.000 1.000 0.000 0.000 3.000 0.170 1.000
118 PCF 62-001 2.000 1.000 0.000 0.000 3.000 0.170 1.000
119 PCF 63-001 2.000 1.000 0.000 0.000 3.000 0.170 1.000
123 PCF 67-001 2.000 1.000 0.000 0.000 3.000 0.170 1.000
126 PCF 70-001 2.000 1.000 0.000 0.000 3.000 0.170 1.000
132 PCF 76-001 2.000 1.000 0.000 0.000 3.000 0.170 1.000
146 PCF 90-001 2.000 1.000 0.000 0.000 3.000 0.170 1.000
149 PCF 93-001 2.000 1.000 0.000 0.000 3.000 0.170 1.000
157 PCF 101-001 2.000 1.000 0.000 0.000 3.000 0.170 1.000
161 PCF 105-001 2.000 1.000 0.000 0.000 3.000 0.170 1.000
168 PCF 112-001 2.000 1.000 0.000 0.000 3.000 0.170 1.000
175 PCF 119-001 2.000 1.000 0.000 0.000 3.000 0.170 1.000
176 PCF 120-001 2.000 1.000 0.000 0.000 3.000 0.170 1.000
177 PCF 121-001 2.000 1.000 0.000 0.000 3.000 0.170 1.000
1-1
EXHIBIT 2
REPRESENTATIONS AND WARRANTIES REGARDING
INDIVIDUAL MORTGAGE LOANS
1. Mortgage Loan Schedule. The information set forth in the Mortgage Loan
Schedule is complete, true and correct in all material respects as of the date
of this Agreement and 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. 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-month period
immediately preceding the Cut-Off Date.
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 related lender's title insurance policy, (c) exceptions and exclusions
specifically referred to in such lender's 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 other Mortgage Loan, the lien of the Mortgage for
such other Mortgage Loan (the foregoing items (a) through (e), the "Permitted
Encumbrances"). The related assignment of such Mortgage executed and delivered
in favor of the 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
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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 and any personal property leases applicable
to such personal property. 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,
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 the 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.
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 are included in the
related Mortgage File.
7. Condition of Property; Condemnation. (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) 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,
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
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and building restriction lines of such property, except for encroachments that
are insured against by the lender's title insurance policy referred to herein or
that do not materially and adversely affect the value or marketability of such
Mortgaged Property, and 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.
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 marked-up title insurance commitment (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. 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 that would materially impair the coverage under such Title Policy.
Immediately following the transfer and assignment of the related Mortgage Loan
to the Trustee, such Title Policy (or, if it has yet to be issued, the coverage
to be provided thereby) will inure to the benefit of the 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
2-3
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 such report, was performed with respect to each
Mortgaged Property in connection with the origination or the sale of
the related Mortgage Loan, a report of each such assessment (or the
most recent assessment with respect to each Mortgaged Property) (an
"Environmental Report") has been delivered to, or on behalf of,
Purchaser or its designee, and Seller has no knowledge of any
material and adverse environmental condition or circumstance
affecting any Mortgaged Property that was not disclosed in such
report. Each Mortgage requires the related Mortgagor to comply with
all applicable federal, state and local environmental laws and
regulations. Where such assessment 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 deemed to be sufficient by the
originator in light of the circumstances and/or to establish an
operations and maintenance plan. 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) 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.
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(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 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 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. ▇▇.▇▇. 9601 et seq.), the Hazardous Materials Transportation
Act as amended (42 U.S.C. ▇▇.▇▇. 6901 et seq.), the Federal Water
Pollution Control Act as amended (33 U.S.C. ▇▇.▇▇. 1251 et seq.),
the Clean Air Act (42 U.S.C. ▇▇.▇▇. 1251 et seq.) and any
regulations promulgated pursuant thereto.
13. Loan Document Status. Each Mortgage Note, Mortgage and other agreement
that evidences or secures such Mortgage Loan and was executed by or on behalf of
the related Mortgagor 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 bankruptcy, insolvency, reorganization or
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) and 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.
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
2-5
origination by the originator of such Mortgage Loan consistent with its normal
commercial mortgage lending practices, against other risks insured against by
persons operating like properties in the 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 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 six months of operations of the
Mortgaged Property estimated as of the date of origination by the originator of
such Mortgage Loan consistent with its normal commercial 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, and in any event not less than $1
million per occurrence. Such 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 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 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.
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 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. As of the date of
origination, (i) with respect to Mortgage Loans with a principal balance greater
than $3,500,000, no tenant physically occupying 25% or more (by square feet) of
the net rentable area of the related Mortgaged Property was, to Seller's
knowledge, a debtor in any state or federal bankruptcy or insolvency proceeding
and (ii) with respect to Mortgage Loans with a principal balance equal to or
less than $3,500,000 no tenant physically occupying 50% or more (by square feet)
of the net rentable area of the related Mortgaged Property was, 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"), by the related
2-6
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:
(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 its successors and assigns upon notice to, but without
the consent of, the lessor thereunder (or, if such consent is
required, it has been obtained prior to the Closing Date) and, in
the event that it is so assigned, 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 cannot be unreasonably withheld;
(iv) Such Ground Lease is in full force and effect, and the Ground Lease
provides that no material amendment to such Ground Lease is binding
on a mortgagee unless the mortgagee has consented thereto, and
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, or an estoppel letter or other agreement, (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;
2-7
(vii) Such Ground Lease has an original term (including any extension
options set forth therein) which extends not less than twenty years
beyond the Stated Maturity Date of the related Mortgage Loan;
(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)).
2-8
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 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, 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 all
applicable usury 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.
26. No Equity Participation or Contingent Interest. No Mortgage Loan contains
any equity participation by the lender 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.
2-9
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, 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 in any of paragraphs 3, 7, 8, 12, 14, 15, 16 and 17 of this Exhibit 2.
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 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
applicable law for the ownership and operation of the related Mortgaged Property
as it was then operated.
2-10
34. Assisted Living Facility Regulation. If the Mortgaged Property is operated
as an assisted living facility, to Seller's knowledge (a) the related Mortgagor
is in compliance in all material respects with all federal and state laws
applicable to the use and operation of the related Mortgaged Property and (b) if
the operator of the Mortgaged Property participates in Medicare or Medicaid
programs, the facility is in compliance in all material respects with the
requirements for participation in such programs.
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 or 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
2-11
lender incurred in connection with the defeasance of such Mortgage Loan and the
release of the 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 more than 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. 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 premiums and yield maintenance charges for
commercial mortgage loans.
42. 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
$20,000,000, 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 expressly 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.
43. 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 43 are being 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.
2-12
EXHIBIT 3
PRICING FORMULATION
MSCI 2006-TOP21
--------------------------------------------------------------------------------
ALLOCATION OF PROCEEDS
Total Bond Proceeds $1,415,874,674
Less Expenses ($4,916,803)
Net Proceeds $1,410,957,870 1,410,957,870
Less Purchase Price of BS Loans
Discounted Value of BS Loans $ 644,724,553
Allocable Expense Amount for BS Loans ($1,744,890)
--------------
Purchase Price of BS Loans $ 642,979,664 ($642,979,664)
Less Purchase Price of WF Loans
Discounted Value of WF Loans $ 271,761,223
Allocable Expense Amount for WF Loans ($1,182,585)
--------------
Purchase Price of WF Loans $ 270,578,638 ($270,578,638)
Less Purchase Price of PCF Loans
Discounted Value of PCF Loans $ 163,354,946
Allocable Expense Amount for PCF Loans ($671,002)
--------------
Purchase Price of PCF Loans $ 162,683,944 ($162,683,944)
Less Purchase Price of MS Loans
Discounted Value of MS Loans $ 337,608,789
Allocable Expense Amount for MS Loans ($1,318,327)
--------------
Purchase Price of MS Loans $ 336,290,462 ($336,290,462)
Remaining Proceeds ($1,574,837)
BS Share of Remaining Proceeds ($716,331)
WF Share of Remaining Proceeds ($301,930)
PCF Share of Remaining Proceeds ($181,489)
MS Share of Remaining Proceeds ($375,087)
Total Proceeds Allocated to BS $ 642,263,332
Total Proceeds Allocated to WF $ 270,276,708
Total Proceeds Allocated to PCF $ 162,502,455
Total Proceeds Allocated to MS $ 335,915,375
3-1
EXHIBIT 4
▇▇▇▇ OF SALE
1. Parties. The parties to this ▇▇▇▇ of Sale are the following:
Seller: Principal Commercial Funding, LLC
Purchaser: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 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 January 20, 2006 (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.
4-1
IN WITNESS WHEREOF, each of the parties hereto has caused this ▇▇▇▇ of Sale to
be duly executed and delivered on this 20th day of January, 2006.
SELLER: PRINCIPAL COMMERCIAL FUNDING, LLC
By:___________________________________
Name:______________________________
Title:_____________________________
PURCHASER: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ CAPITAL I INC.
By:___________________________________
Name:______________________________
Title:_____________________________
EXHIBIT 5
FORM OF LIMITED POWER OF ATTORNEY
LIMITED POWER OF ATTORNEY
TO LASALLE BANK NATIONAL ASSOCIATION
AND ARCAP SERVICING, INC.
WITH RESPECT TO
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ CAPITAL I INC.
COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 2006-TOP21
KNOW ALL MEN BY THESE PRESENTS:
WHEREAS, pursuant to the terms of the Mortgage Loan Purchase Agreement
dated as of January 20, 2006 (the "Mortgage Loan Purchase Agreement"), between
Principal Commercial Funding, LLC ("Principal") and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Capital I
Inc. ("Depositor"), Principal 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 January 1, 2006 (the "Pooling and Servicing Agreement"), between the
Depositor, ▇▇▇▇▇ Fargo Bank, National Association, as Master Servicer, ARCap
Servicing, Inc. ("ARCAP") as Special Servicer, LaSalle Bank National Association
("LaSalle") as Trustee and ▇▇▇▇▇ Fargo Bank, National Association, as Paying
Agent, 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, Principal has agreed to provide this Limited Power of Attorney
pursuant to the Mortgage Loan Purchase Agreement;
NOW, THEREFORE, Principal does hereby make, constitute and appoint
LaSalle, acting solely in its capacity as Trustee under, and in accordance with
the terms of, the Pooling and Servicing Agreement, Principal's true and lawful
agent and attorney-in-fact with respect to each Mortgage Loan in Principal'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
5-1
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 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 Principal 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 LaSalle and ARCAP only such powers, responsibilities and authority as
are set forth in Section 2.1 of the Mortgage Loan Purchase Agreement.
Principal does also hereby make, constitute and appoint ARCAP, acting
solely in its capacity as Special Servicer under the Pooling and Servicing
Agreement, Principal's true and lawful agent and attorney-in-fact with respect
to the Mortgage Loans in Principal's name, place and stead solely to exercise
and perform all of the rights, authority and powers of LaSalle as set forth in
the preceding paragraph in the event of the failure or the incapacity of LaSalle
to do so for any reason. As between ARCAP and any third party, no evidence of
the failure or incapacity of LaSalle shall be required and such third party may
rely upon ARCAP's written statement that it is acting pursuant to the terms of
this Limited Power of Attorney.
17.
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 Principal'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 Principal might or could do if personally present, hereby ratifying
and confirming whatsoever such attorney-in-fact shall and may do by virtue
hereof; and Principal 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
Principal, 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 Principal'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.
18.
Any act or thing lawfully done hereunder by either the Trustee or the
Special Servicer shall be binding on Principal and Principal's successors and
assigns.
19.
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:
19.1 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;
19.2 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;
19.3 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;
19.4 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;
19.5 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;
19.6 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
19.7 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 Principal under the Mortgage Loan Purchase
Agreement, and nothing herein shall constitute a waiver of any rights or
remedies under the Pooling and Servicing Agreement.
20.
Capitalized terms used but not defined herein have the respective meanings
assigned thereto in the Mortgage Loan Purchase Agreement.
21.
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, Principal has caused this instrument to be executed
and its corporate seal to be affixed hereto by its officer duly authorized as of
January 30, 2006.
PRINCIPAL COMMERCIAL FUNDING, LLC.
By: ____________________________
Name: ____________________________
Title:____________________________
By: ____________________________
Name: ____________________________
Title:____________________________
ACKNOWLEDGEMENT
STATE OF _____________ )
) ss:
COUNTY OF ____________ )
On this ____ day of January , 2006, 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, 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:
______________________________
Schedule A
Exceptions to Representations and Warranties
Principal Commercial Funding, LLC
A. INDIVIDUAL MORTGAGE LOANS
(Principal Commercial Funding, LLC - TOP21)
--------------------------------------------------------------------------------
REP. NO. 2 - Whole Loan; Ownership of Mortgage Loans
--------------------------------------------------------------------------------
LOAN NO. - 754268 (Water Street Plaza)
i. Explanation -
This Mortgage Loan has a related Note B, also secured by the
mortgage, which will not be held in the trust. Note B is subordinate to
Note A, pursuant to the terms of the Co-Lender Agreement between the
holders of Note A and Note B.
--------------------------------------------------------------------------------
REP. NO. 6 - Mortgage Status; Waivers and Modifications
--------------------------------------------------------------------------------
a. LOAN NO. - 754286 (Water Street Plaza)
EXPLANATION -
This Mortgage Loan has a Note A and a Note B. Note B will not be
held within the trust. Note B is subordinate to Note A, pursuant to the
terms of a Co-Lender Agreement between the holders of Note A and Note B.
--------------------------------------------------------------------------------
REP. NO. 7 - Condition of Property; Condemnation
--------------------------------------------------------------------------------
LOAN NO. - 754705 (1380 Tuscany Drive)
EXPLANATION -
The building on the Mortgaged Property encroaches the 30-foot rear
setback line. The Mortgaged Property is legal non-conforming. In
accordance with local zoning code, in event of destruction or damage
of building that is rebuilt within two years of such damage or
destruction, the building can be rebuilt to its original condition
and use. The LTV for the Mortgaged Property is 70% and the DSCR is
1.37
LOAN NO. - 754711 (▇▇-▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇)
▇▇▇▇▇▇▇▇▇▇▇ -
Each of the buildings that make up the collateral for this Mortgage
Loan encroach various setback lines for the Mortgaged Property. The
Mortgaged Property is a legal non-conforming use having been constructed
prior to the current setback standards and is grandfathered under the
local zoning code. The structures may be rebuilt to original condition and
use in event of partial or total destruction which is less than or equal
to 50% of the value of the buildings(s). The LTV and debt service coverage
ratio for the Mortgage Loan are 66% LTV, 1.34 DSCR.
--------------------------------------------------------------------------------
REP. NO. 12(I)- Environmental Conditions
--------------------------------------------------------------------------------
LOAN NO. - 754711 (▇▇-▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇)
EXPLANATION -
Stormwater runoff is directed to sixteen drywells located throughout
Mortgaged Property's parking areas and sanitary wastewater is directed to
two septic leaching pools. Elevated levels of semi-volatile organic
compounds were detected in 9 of the drywells and one septic ▇▇▇▇▇ pool,
some of which exceeded local health department guidelines and are required
to be remediated under guidance of local health department. Lender holds a
$50,000 escrow pending completion of remediation. Lender is also holding
an escrow of $250,000 pending satisfaction of the following items: A) One
underground storage tank located at the Mortgaged Property failed as to
the tank fill line and some soil contamination resulted. This incident was
reported to state authorities and tank fill line has been repaired and
soil has been removed. Satisfactory documentation from state agency is to
be obtained and provided to Lender. B) Three underground storage tanks
were removed from the
Mortgaged Property in August of 2005 and local health department visually
assessed tanks and soil for contamination and no concerns were found,
however no closure reports or post closure sampling results were
available, so subsurface testing of soil to be conducted and satisfactory
documentation of results provided to Lender. The Mortgage Loan has a loan
to value ratio of 66% and the debt service coverage ratio is 1.34.
--------------------------------------------------------------------------------
REP. NO. 14(A) - Insurance
--------------------------------------------------------------------------------
LOAN NO. - 754702 (▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇)
ii. Explanation -
Fire and extended perils coverage was waived as the security for the
Mortgage Loan is land only.
--------------------------------------------------------------------------------
REP. NO. 14(D) - Insurance
--------------------------------------------------------------------------------
LOAN NO. - 754702 (▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇)
iii. Explanation -
The liability coverage was reduced to $500,000 per occurrence however the
Borrower has a general aggregate amount of $7,500,000 liability coverage.
The security for the Mortgage Loan is land only.
--------------------------------------------------------------------------------
REP. NO. 24 - Cross Collateralization
--------------------------------------------------------------------------------
LOAN ▇▇. - ▇▇▇▇▇▇ (▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇)
iv. Explanation -
This Mortgage Loan has a Note A and Note B which are cross-defaulted. The
Note B for this Mortgage Loan will not be held in the trust.
--------------------------------------------------------------------------------
REP. NO. 25 - Releases of Mortgaged Property
--------------------------------------------------------------------------------
LOAN NO. - 754581 (Crossroads Pointe Shopping Center)
v. Explanation -
Borrower may request a partial release of a parcel that is a .36-acre
portion of the Mortgaged Property, upon a subdivision of the Mortgaged
Property and subject to certain requirements as set forth in the Loan
Documents. No pay down is required for release of the .36-acre parcel.
LOAN NO. - 754350 (Southridge Shopping Center)
EXPLANATION -
Borrower may request a partial release of a parcel that is approximately 2
acres of the Mortgaged Property, upon a subdivision of the Mortgaged
property and, subject to certain requirements as set forth in the Loan
Documents, including a provision for a REMIC opinion if required. No pay
down is required for the partial release.
LOAN NO. - 754746 (1757 Tapo Canyon Road)
EXPLANATION -
Borrower may request a partial release of a parcel that is approximately 3
acres of the Mortgaged Property upon evidence that the license to
Countrywide Homes, Inc. to use the 3 acre parcel has been terminated or an
amendment to Countrywide's lease evidences that the lease no longer
includes the parcel to be released, and subject to certain requirements as
set forth in the Loan Documents including a provision for a REMIC opinion
if required. No pay down is required for the partial release.
--------------------------------------------------------------------------------
REP. NO. 30 - Junior Liens
--------------------------------------------------------------------------------
LOAN NO. - 754268 (Water Street Plaza)
vi. Explanation -
This Mortgage Loan has a Note A and a Note B. The Note B will not be held
within the trust. Note B is subordinate to the Note A as set forth in the
Co-Lender Agreement between the holders of the Note A and Note B.
--------------------------------------------------------------------------------
REP. NO. 33 - Licenses and Permits
--------------------------------------------------------------------------------
LOAN NO. - 754268 (Water Street Plaza)
vii. Explanation -
Not all certificates of occupancy for vacant tenant spaces were received
for the Mortgaged Property at time of closing. An escrow of $285,000 is
being held pending completion of the vacant tenant spaces and issuance of
the final certificates of occupancy.
LOAN NO. - 754635 (Causeway Shoppes)
EXPLANATION -
One tenant has not obtained a certificate of occupancy as of closing. An
escrow of $245,000 is being held pending completion of the tenant space
and issuance of the final certificate of occupancy.
--------------------------------------------------------------------------------
REP. NO. 36 - Due on Sale
--------------------------------------------------------------------------------
LOAN ▇▇. -▇▇▇▇▇▇ (▇▇▇▇▇ ▇▇▇▇▇▇ Plaza)
viii. Explanation -
The Mortgaged Property for this Mortgage Loan is encumbered by a junior
lien Note B that is held outside the trust. The rights of the note holders
for the Note A and Note B are governed by the terms of a Co-Lender
Agreement for this Mortgage Loan.
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REP. NO. 38 - Non-Recourse Exceptions
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LOAN NOS. - 754702 (1943 East 17th Street), 754728 (6380 Hypoluxo Road) and
754746 (1757 Tapo Canyon Road)
ix. Explanation -
These Mortgage Loans do not have any individual guarantor or natural
persons liable for any of the recourse carve-outs.
LOAN NO. - 754705 (1380 Tuscany Drive)
x. Explanation -
No carve-out for environmental matters was included in the non-recourse
exceptions. The carve-out guaranty includes the Environmental Indemnity
Agreement.
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REP. NO. 42 - Terrorism Insurance
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LOAN NO. - 754722 (3801, 3803 & ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇)
xi. Explanation -
Terrorism coverage was waived at closing as insurance carrier would not
add coverage mid-year but will be required upon renewal of insurance.
* * * * * * * * * * *
Schedule B
List of Mortgagors that are Third-Party Beneficiaries Under Section 5.5
NONE
5-1