EXECUTION VERSION
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MORTGAGE LOAN PURCHASE AGREEMENT
between
PRINCIPAL COMMERCIAL FUNDING II, LLC
as Seller
and
MORGAN STANLEY CAPITAL I INC.
as Purchaser
Dated as of February 15, 2007
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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....................11
4.
REPRESENTATIONS AND WARRANTIES OF SELLER AND
PURCHASER....................12
5.
REMEDIES UPON BREACH OF REPRESENTATIONS AND WARRANTIES MADE BY
SELLER.....16
6.
CLOSING...................................................................20
7.
CLOSING
DOCUMENTS.........................................................21
8.
COSTS.....................................................................24
9.
NOTICES...................................................................24
10. SEVERABILITY OF
PROVISIONS................................................24
11. FURTHER
ASSURANCES........................................................24
12.
SURVIVAL..................................................................24
13. GOVERNING
LAW.............................................................25
14. BENEFITS OF MORTGAGE LOAN PURCHASE
AGREEMENT..............................25
15.
MISCELLANEOUS.............................................................25
16. ENTIRE
AGREEMENT..........................................................25
Exhibit 1
Mortgage Loan Schedule
Exhibit 2
Representations and Warranties
Exhibit 3
Pricing Formulation
Exhibit 4
Bill of Sale
Exhibit 5
Power of Attorney
Index of Defined Terms
----------------------
Affected Loan(s)...................................18
Agreement...........................................2
Certificate Purchase Agreement......................2
Certificates........................................2
Closing Date........................................3
Collateral Information.............................11
Crossed Mortgage Loans.............................17
Defective Mortgage Loan............................17
Final Judicial Determination.......................19
Indemnification Agreement..........................14
Initial Purchaser...................................2
Master Servicer.....................................2
Material Breach....................................16
Material Document Defect...........................16
Memorandum..........................................3
MERS................................................5
Mortgage File.......................................4
Mortgage Loan Schedule..............................3
Mortgage Loans......................................2
Officer's Certificate...............................8
Other Mortgage Loans................................2
Pooling and Servicing Agreement.....................2
Private Certificates................................2
Prospectus Supplement...............................2
Public Certificates.................................2
Purchaser...........................................2
Repurchased Loan...................................18
Seller..............................................2
Servicing File......................................9
Special Servicer....................................2
Trust...............................................2
Trustee.............................................2
Underwriters........................................2
Underwriting Agreement..............................2
i
MORTGAGE LOAN PURCHASE AGREEMENT
(PCFII LOANS)
Mortgage Loan Purchase Agreement (this "Agreement"), dated as of
February 15,
2007, between Principal Commercial Funding II, LLC (the "Seller"),
and Morgan
Stanley Capital I Inc. (the "Purchaser").
Seller agrees to sell and Purchaser agrees to purchase certain
mortgage loans
listed on Exhibit 1 hereto (the "Mortgage Loans") as described
herein. Purchaser
will convey the Mortgage Loans to a trust (the "Trust") created
pursuant to a
Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement"), to be
dated as of February 1, 2007, between Purchaser, as depositor,
Capmark Finance
Inc., as master servicer, J.E. Robert Company, Inc., as special
servicer
("Special Servicer"), Wells Fargo Bank, National Association, as
trustee and
custodian ("Trustee") and LaSalle Bank National Association, as
paying agent,
certificate registrar and authenticating agent. In exchange for the
Mortgage
Loans and certain other mortgage loans (the "Other Mortgage Loans")
to be
purchased by Purchaser, the Trust will issue to the Depositor
pass-through
certificates to be known as Morgan Stanley Capital I Inc.,
Commercial Mortgage
Pass-Through Certificates, Series 2007-HQ11 (the "Certificates").
The
Certificates will be issued pursuant to the Pooling and Servicing
Agreement.
Capitalized terms used herein but not defined herein shall have the
meanings
assigned to them in the Pooling and Servicing Agreement. The term
"Master
Servicer" as used herein shall mean Capmark Finance Inc. in its
capacity as a
master servicer under the Pooling and Servicing Agreement unless
otherwise
specified.
The Class A-1, Class A-1A, Class A-2, Class A-3-1, Class A-3-2,
Class A-AB,
Class A-4, Class A-4FL, Class A-M, Class A-MFL, Class A-J, Class B,
Class C,
Class D, Class E and Class F Certificates (the "Public
Certificates") will be
sold by Purchaser to Morgan Stanley & Co. Incorporated, LaSalle
Financial
Services, Inc., Deutsche Bank Securities Inc. and Merrill Lynch,
Pierce, Fenner
& Smith Incorporated (other than with respect to the Class A-4
Certificates)
(the "Underwriters"), pursuant to an Underwriting Agreement,
between Purchaser
and the Underwriters, dated February 15, 2007 (the "Underwriting
Agreement"),
and the Class X, Class G, Class H, Class J, Class K, Class L, Class
M, Class N,
Class O, Class P, Class Q, Class S, Class T, Class R-I, Class R-II
and Class
R-III Certificates (the "Private Certificates") will be sold by
Purchaser to
Morgan Stanley & Co. Incorporated (the "Initial Purchaser")
pursuant to a
Certificate Purchase Agreement, between Purchaser and the Initial
Purchaser,
dated February 15, 2007 (the "Certificate Purchase Agreement"). The
Underwriters
will offer the Public Certificates for sale publicly pursuant to a
Prospectus
dated February 6, 2007, as supplemented by a Prospectus Supplement
dated
February 15, 2007 (together with the Prospectus, the "Prospectus
Supplement"),
and the Initial Purchaser will offer the Private Certificates for
sale in
transactions exempt from the registration requirements of the
Securities Act of
1933 pursuant to a Private Placement Memorandum dated February 15,
2007 (the
"Memorandum").
In consideration of the mutual agreements contained herein, Seller
and Purchaser
hereby agree as follows:
1.
AGREEMENT TO PURCHASE.
---------------------
1.1
Seller agrees to sell, and Purchaser agrees to purchase, on a
servicing
released basis, the Mortgage Loans identified on the schedule (the
"Mortgage
Loan Schedule") annexed hereto as Exhibit 1, as such schedule may
be amended to
reflect the actual Mortgage Loans accepted by Purchaser pursuant to
the terms
hereof. The Cut-Off Date with respect to the Mortgage Loans is
February 1, 2007.
The Mortgage Loans will have an aggregate principal balance as of
the close of
business on the Cut-Off Date, after giving effect to any payments
due on or
before such date, whether or not received, of $193,201,511. The
sale of the
Mortgage Loans shall take place on February 28, 2007 or such other
date as shall
be mutually acceptable to the parties hereto (the "Closing Date").
The purchase
price to be paid by Purchaser for the Mortgage Loans shall equal
the amount set
forth as such purchase price on Exhibit 3 hereto. The purchase
price shall be
paid to Seller by wire transfer in immediately available funds on
the Closing
Date.
1.2
On the Closing Date, Purchaser will assign to Trustee pursuant to
the
Pooling and Servicing Agreement all of its right, title and
interest in and to
the Mortgage Loans and its rights under this Agreement (to the
extent set forth
in Section 14), and Trustee shall succeed to such right, title and
interest in
and to the Mortgage Loans and Purchaser's rights under this
Agreement (to the
extent set forth in Section 14).
2.
CONVEYANCE OF MORTGAGE LOANS.
----------------------------
2.1
Effective as of the Closing Date, subject only to receipt of the
consideration referred to in Section 1 hereof and the satisfaction
of the
conditions specified in Sections 6 and 7 hereof, Seller does hereby
transfer,
assign, set over and otherwise convey to Purchaser, without
recourse, except as
specifically provided herein, all the right, title and interest of
Seller, with
the understanding that a Servicing Rights Purchase and Sale
Agreement, dated
February 1, 2007, will be executed by Seller and Master Servicer,
in and to the
Mortgage Loans identified on the Mortgage Loan Schedule as of the
Closing Date.
The Mortgage Loan Schedule, as it may be amended from time to time
on or prior
to the Closing Date, shall conform to the requirements of this
Agreement and the
Pooling and Servicing Agreement. In connection with such transfer
and
assignment, Seller shall deliver to or on behalf of Trustee, on
behalf of
Purchaser, on or prior to the Closing Date, the Mortgage Note (as
described in
clause 2.2.1 hereof) for each Mortgage Loan and on or prior to the
fifth
Business Day after the Closing Date, five limited powers of
attorney
substantially in the form attached hereto as Exhibit 5 in favor of
Trustee,
Master Servicer and Special Servicer to empower Trustee, Master
Servicer and, in
the event of the failure or incapacity of Trustee and Master
Servicer, Special
Servicer, to submit for recording, at the expense of Seller, any
Mortgage Loan
documents required to be recorded as described in the Pooling and
Servicing
Agreement and any intervening assignments with evidence of
recording thereon
that are required to be included in the Mortgage Files (so long as
original
counterparts have previously been delivered to Trustee). Seller
agrees to
reasonably cooperate with Trustee, Master Servicer and Special
Servicer in
connection with any additional powers of attorney or revisions
thereto that are
requested by such parties for purposes of such recordation. The
parties hereto
agree that no such power of attorney shall be used with respect to
any Mortgage
Loan by or under authorization by any party hereto except to the
extent that the
absence of a document described in the second preceding sentence
with respect to
such Mortgage Loan remains
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unremedied as of the earlier of (i) the date that is 180 days
following the
sdelivery of notice of such absence to Seller, but in no event
earlier than 18
months from the Closing Date, and (ii) the date (if any) on which
such Mortgage
Loan becomes a Specially Serviced Mortgage Loan. Custodian shall
submit such
documents for recording, at Seller's expense, after the periods set
forth above,
provided, however, Custodian shall not submit such assignments for
recording if
Seller produces evidence that it has sent any such assignment for
recording and
certifies that Seller is awaiting its return from the applicable
recording
office. In addition, not later than the 30th day following the
Closing Date,
Seller shall deliver to or on behalf of Trustee each of the
remaining documents
or instruments specified in Section 2.2 hereof (with such
exceptions and
additional time periods as are permitted by this Section 2) with
respect to each
Mortgage Loan (each, a "Mortgage File"). (Seller acknowledges that
the term
"without recourse" does not modify the duties of Seller under
Section 5 hereof.)
2.2
All Mortgage Files, or portions thereof, delivered prior to the
Closing
Date are to be held by or on behalf of Trustee in escrow on behalf
of Seller at
all times prior to the Closing Date. The Mortgage Files shall be
released from
escrow upon closing of the sale of the Mortgage Loans and payments
of the
purchase price therefor as contemplated hereby. The Mortgage File
for each
Mortgage Loan shall contain the following documents:
2.2.1
The original Mortgage Note bearing all intervening endorsements,
endorsed, by allonge or on the original Mortgage Note, "Pay to the
order of
Wells Fargo Bank, National Association, as Trustee for Morgan
Stanley Capital I
Inc., Commercial Mortgage Pass-Through Certificates, Series
2007-HQ11, without
recourse, representation or warranty" or if the original Mortgage
Note is not
included therein, then a lost note affidavit, with a copy of the
Mortgage Note
attached thereto;
2.2.2
The original Mortgage, with evidence of recording thereon, and,
if the Mortgage was executed pursuant to a power of attorney, a
certified true
copy of the power of attorney certified by the public recorder's
office, with
evidence of recording thereon (if recording is customary in the
jurisdiction in
which such power of attorney was executed), or certified by a title
insurance
company or escrow company to be a true copy thereof; provided that
if such
original Mortgage cannot be delivered with evidence of recording
thereon on or
prior to the 90th day following the Closing Date because of a delay
caused by
the public recording office where such original Mortgage has been
delivered for
recordation or because such original Mortgage has been lost, Seller
shall
deliver or cause to be delivered to Trustee a true and correct copy
of such
Mortgage, together with (i) in the case of a delay caused by the
public
recording office, an Officer's Certificate (as defined below) of
Seller stating
that such original Mortgage has been sent to the appropriate public
recording
official for recordation or (ii) in the case of an original
Mortgage that has
been lost after recordation, a certification by the appropriate
county recording
office where such Mortgage is recorded that such copy is a true and
complete
copy of the original recorded Mortgage;
2.2.3
The originals of all agreements modifying a Money Term or other
material modification, consolidation and extension agreements, if
any, with
evidence of recording thereon, or if any such original
modification,
consolidation or extension agreement has been delivered to the
appropriate
recording office for recordation and either has not yet been
returned on or
prior to the 90th day following the Closing Date with evidence of
recordation
thereon or
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has been lost after recordation, a true copy of such modification,
consolidation
or extension certified by Seller together with (i) in the case of a
delay caused
by the public recording office, an Officer's Certificate of Seller
stating that
such original modification, consolidation or extension agreement
has been
dispatched or sent to the appropriate public recording official for
recordation
or (ii) in the case of an original modification, consolidation or
extension
agreement that has been lost after recordation, a certification by
the
appropriate county recording office where such document is recorded
that such
copy is a true and complete copy of the original recorded
modification,
consolidation or extension agreement, and the originals of all
assumption
agreements, if any;
2.2.4
An original Assignment of Mortgage for each Mortgage Loan, in
form and substance acceptable for recording (except for recording
information
not yet available if the instrument being recorded has not been
returned from
the applicable recording office), signed by the holder of record in
blank or in
favor of "Wells Fargo Bank, National Association, as Trustee for
Morgan Stanley
Capital I Inc., Commercial Mortgage Pass-Through Certificates,
Series
2007-HQ11," provided, if the related Mortgage has been recorded in
the name of
Mortgage Electronic Registration Systems, Inc. ("MERS") or its
designee, no such
assignments will be required to be submitted for recording or
filing and
instead, Seller shall take all actions as are necessary to cause
Trustee to be
shown as the owner of the related Mortgage on the record of MERS
for purposes of
the system of recording transfers of beneficial ownership of
mortgages
maintained by MERS and shall deliver to Special Servicer evidence
confirming
that Trustee is shown as the owner on the record of MERS;
2.2.5
Originals of all intervening assignments of Mortgage (except
with respect to any Mortgage that has been recorded in the name of
MERS or its
designees), if any, with evidence of recording thereon or, if such
original
assignments of Mortgage have been delivered to the appropriate
recorder's office
for recordation, certified true copies of such assignments of
Mortgage certified
by Seller, or in the case of an original blanket intervening
assignment of
Mortgage retained by Seller, a copy thereof certified by Seller or,
if any
original intervening assignment of Mortgage has not yet been
returned on or
prior to the 90th day following the Closing Date from the
applicable recording
office or has been lost, a true and correct copy thereof, together
with (i) in
the case of a delay caused by the public recording office, an
Officer's
Certificate of Seller stating that such original intervening
assignment of
Mortgage has been sent to the appropriate public recording official
for
recordation or (ii) in the case of an original intervening
Assignment of
Mortgage that has been lost after recordation, a certification by
the
appropriate county recording office where such assignment is
recorded that such
copy is a true and complete copy of the original recorded
intervening Assignment
of Mortgage;
2.2.6
If the related Assignment of Leases is separate from the
Mortgage, the original of such Assignment of Leases with evidence
of recording
thereon or, if such Assignment of Leases has not been returned on
or prior to
the 90th day following the Closing Date from the applicable public
recording
office, a copy of such Assignment of Leases certified by Seller to
be a true and
complete copy of the original Assignment of Leases submitted for
recording,
together with (i) an original of each assignment of such Assignment
of Leases
with evidence of recording thereon and showing a complete recorded
chain of
assignment from the named assignee to the holder of record, and if
any such
assignment of such Assignment of Leases has not been returned from
the
applicable public recording office, a copy of such assignment
certified by
Seller to be a true and
5
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 "Wells Fargo Bank, National
Association, as
Trustee for Morgan Stanley Capital I Inc., Commercial Mortgage
Pass-Through
Certificates, Series 2007-HQ11," which assignment may be effected
in the related
Assignment of Mortgage, provided, if the related Mortgage has been
recorded in
the name of MERS or its designee, no assignment of Assignment of
Leases in favor
of Trustee will be required to be recorded or delivered and
instead, Seller
shall take all actions as are necessary to cause Trustee to be
shown as the
owner of the related Mortgage on the record of MERS for purposes of
the system
of recording transfers of beneficial ownership of mortgages
maintained by MERS
and shall deliver to Special Servicer evidence confirming that
Trustee is shown
as the owner on the record of MERS;
2.2.7
The original or a copy of each guaranty, if any, constituting
additional security for the repayment of such Mortgage Loan;
2.2.8
The original Title Insurance Policy, or in the event such
original Title Insurance Policy has not been issued, an original
binder or
actual title commitment or a copy thereof certified by the title
company with
the original Title Insurance Policy to follow within 180 days of
the Closing
Date or a preliminary title report with an original Title Insurance
Policy to
follow within 180 days of the Closing Date;
2.2.9
(A) Copies of UCC financing statements (together with all
assignments thereof) and (B) UCC-2 or UCC-3 financing statements
assigning such
UCC financing statements to Trustee executed and delivered in
connection with
the Mortgage Loan, provided, if the related Mortgage has been
recorded in the
name of MERS or its designee, no such financing statements will be
required to
be recorded or delivered and instead, Seller shall take all actions
as are
necessary to cause Trustee to be shown as the owner of the related
Mortgage on
the record of MERS for purposes of the system of recording
transfers of
beneficial ownership of mortgages maintained by MERS and shall
deliver to
Special Servicer evidence confirming that Trustee is shown as the
owner on the
record of MERS;
2.2.10
Copies of the related ground lease(s), if any, to any Mortgage
Loan where the Mortgagor is the lessee under such ground lease and
there is a
lien in favor of the mortgagee in such lease;
2.2.11
Copies of any loan agreements, lock-box agreements and
intercreditor agreements (including, without limitation, any
Intercreditor
Agreement, any Non-Serviced Mortgage Loan Intercreditor Agreement
and any Loan
Pair Intercreditor Agreement, and a copy (that is, not the
original) of the
mortgage note evidencing the related B Note), if any, related to
any Mortgage
Loan;
2.2.12
Either (A) the original of each letter of credit, if any,
constituting additional collateral for such Mortgage Loan (other
than letters of
credit representing tenant security deposits which have been
collaterally
assigned to the lender), which shall be assigned and delivered to
Trustee on
behalf of the Trust with a copy to be held by Primary Servicer (or
Master
Servicer), and applied, drawn, reduced or released in accordance
with documents
evidencing or securing the applicable Mortgage Loan, the Pooling
and Servicing
Agreement and the Primary
6
Servicing Agreement or (B) the original of each letter of credit,
if any,
constituting additional collateral for such Mortgage Loan (other
than letters of
credit representing tenant security deposits which have been
collaterally
assigned to the lender), which shall be held by Primary Servicer
(or Master
Servicer) on behalf of Trustee, with a copy to be held by Trustee,
and applied,
drawn, reduced or released in accordance with documents evidencing
or securing
the applicable Mortgage Loan, the Pooling and Servicing Agreement
and the
Primary Servicing Agreement (it being understood that Seller has
agreed (a) that
the proceeds of such letter of credit belong to the Trust, (b) to
notify, on or
before the Closing Date, the bank issuing the letter of credit that
the letter
of credit and the proceeds thereof belong to the Trust, and to use
reasonable
efforts to obtain within 30 days (but in any event to obtain within
90 days)
following the Closing Date, an acknowledgement thereof by the bank
(with a copy
of such acknowledgement to be sent to Trustee) or a reissued letter
of credit
and (c) to indemnify the Trust for any liabilities, charges, costs,
fees or
other expenses accruing from the failure of Seller to assign the
letter of
credit hereunder including the right and power to draw on the
letter of credit).
In the case of clause (B) above, any letter of credit held by
Primary Servicer
(or Master Servicer) acknowledges that any letter of credit held by
it shall be
held in its capacity as agent of the Trust, and if Primary Servicer
(or Master
Servicer) sells its rights to service the applicable Mortgage Loan,
Primary
Servicer (or Master Servicer) has agreed to assign the applicable
letter of
credit to the Trust or at the direction of Special Servicer to such
party as
Special Servicer may instruct, in each case, at the expense of
Primary Servicer
(or Master Servicer). Primary Servicer (or Master Servicer) has
agreed to
indemnify the Trust for any loss caused by the ineffectiveness of
such
assignment;
2.2.13
The original or a copy of the environmental indemnity agreement,
if any, related to any Mortgage Loan;
2.2.14
Copies of third-party management agreements, if any, for all
hotels and for such other Mortgaged Properties securing Mortgage
Loans with a
Cut-Off Date principal balance equal to or greater than
$20,000,000;
2.2.15
The original or a copy of any Environmental Insurance Policy;
and
2.2.16
Any affidavit and indemnification agreement.
The original of each letter of credit referred to in clause 2.2.12
above shall
be delivered to Primary Servicer, Master Servicer or Trustee (as
the case may
be) within 45 days of the Closing Date. In addition, a copy of any
ground lease
shall be delivered to Primary Servicer within 30 days of the
Closing Date.
"Officer's Certificate" shall mean a certificate signed by one or
more of the
Chairman of the Board, any Vice Chairman, the President, any Senior
Vice
President, any Vice President, any Assistant Vice President, any
Treasurer or
any Assistant Treasurer.
2.3
The Assignments of Mortgage and assignment of Assignment of Leases
referred to in Sections 2.2.4 and 2.2.6 may be in the form of a
single
instrument assigning the Mortgage and the Assignment of Leases to
the extent
permitted by applicable law. To avoid the unnecessary expense and
administrative
inconvenience associated with the execution and recording or filing
7
of multiple assignments of mortgages, assignments of leases (to the
extent
separate from the mortgages) and assignments of UCC financing
statements, Seller
shall execute, in accordance with the third succeeding paragraph,
the
assignments of mortgages, assignment of the assignments of leases
(to the extent
separate from the mortgages) and the assignments of UCC financing
statements
relating to the Mortgage Loans naming Trustee on behalf of the
Certificateholders as assignee. Notwithstanding the fact that such
assignments
of mortgages, assignments of leases (to the extent separate from
the assignments
of mortgages) and assignments of UCC financing statements shall
name Trustee on
behalf of the Certificateholders as the assignee, the parties
hereto acknowledge
and agree that the Mortgage Loans shall for all purposes be deemed
to have been
transferred from Seller to Purchaser and from Purchaser to Trustee
on behalf of
the Certificateholders.
2.4
If Seller cannot deliver, or cause to be delivered, as to any
Mortgage
Loan, any of the documents and/or instruments referred to in
Sections 2.2.2,
2.2.3, 2.2.5 or 2.2.6, with evidence of recording thereon, solely
because of a
delay caused by the public recording office where such document or
instrument
has been delivered for recordation within such 90 day period, but
Seller
delivers a photocopy thereof (certified by the appropriate county
recorder's
office to be a true and complete copy of the original thereof
submitted for
recording), to Trustee within such 90 day period, Seller shall then
deliver
within 180 days after the Closing Date the recorded document (or
within such
longer period after the Closing Date as Trustee may consent to,
which consent
shall not be unreasonably withheld so long as Seller is, as
certified in writing
to Trustee no less often than monthly, in good faith attempting to
obtain from
the appropriate county recorder's office such original or
photocopy).
2.5
Trustee, as assignee or transferee of Purchaser, shall be entitled
to
all scheduled payments of principal due thereon after the Cut-Off
Date, all
other payments of principal collected after the Cut-Off Date (other
than
scheduled payments of principal due on or before the Cut-Off Date),
and all
payments of interest on the Mortgage Loans allocable to the period
commencing on
the Cut-Off Date. All scheduled payments of principal and interest
due on or
before the Cut-Off Date and collected after the Cut-Off Date shall
belong to
Seller.
2.6
Within 45 days following the Closing Date, Seller shall deliver,
and
Purchaser, Trustee or the agents of either may submit or cause to
be submitted
for recordation at the expense of Seller, in the appropriate public
office for
real property records, each assignment referred to in clauses
2.2.4, 2.2.6(ii)
and 2.2.9(B) above (with recording information in blank if such
information is
not yet available). If any such document or instrument is lost or
returned
unrecorded or unfiled, as the case may be, because of a defect
therein, Seller
shall prepare a substitute therefor or cure such defect, and Seller
shall, at
its own expense (except in the case of a document or instrument
that is lost by
Trustee), record or file, as the case may be, and deliver such
document or
instrument in accordance with this Section 2.
2.7
As to each Mortgage Loan secured by a Mortgaged Property with
respect to
which the related Mortgagor has entered into a franchise agreement
and each
Mortgage Loan secured by a Mortgaged Property with respect to which
a letter of
credit is in place, Seller shall provide a notice on or prior to
the date that
is 30 days after the Closing Date to the franchisor or the issuing
financial
institution, as applicable, of the transfer of such Mortgage Loan
to the Trust
pursuant to the Pooling and Servicing Agreement, and inform such
parties that
any notices to the
8
Mortgagor's lender pursuant to such franchise agreement or letter
of credit
should thereafter be forwarded to Master Servicer and, with respect
to each
franchise agreement, provide a franchise comfort letter on or prior
to the date
that is 30 days after the Closing Date. After the Closing Date,
with respect to
any letter of credit that has not yet been assigned to the Trust,
upon the
written request of Master Servicer or the applicable Primary
Servicer, Seller
will draw on such letter of credit as directed by Master Servicer
or such
Primary Servicer in such notice to the extent Seller has the right
to do so.
2.8
Documents that are in the possession of Seller, its agents or its
subcontractors that relate to the servicing of any Mortgage Loans
and that are
not required to be a part of the Mortgage File and are reasonably
necessary for
the ongoing administration and/or servicing of the applicable
Mortgage Loan (the
"Servicing File") shall be delivered to Trustee by Seller to or at
the direction
of Master Servicer, on behalf of Purchaser, on or prior to the 75th
day after
the Closing Date, in accordance with Section 3.1 of the Primary
Servicing
Agreement, if applicable.
2.9
The documents required to be delivered to Master Servicer (or in
the
alternative, Primary Servicer) shall include, to the extent
required to be (and
actually) delivered to Seller pursuant to the applicable Mortgage
Loan
documents, copies of the following items: the Mortgage Note, any
Mortgage, the
Assignment of Leases and the Assignment of Mortgage, any
guaranty/indemnity
agreement, any loan agreement, the insurance policies or
certificates, as
applicable, the property inspection reports, any financial
statements on the
property, any escrow analysis, the tax bills, the Appraisal, the
environmental
report, the engineering report, the asset summary, financial
information on the
Mortgagor/sponsor and any guarantors, any letters of credit, any
intercreditor
agreement and any Environmental Insurance Policies. Notwithstanding
the
foregoing, Seller shall not be required to deliver any draft
documents, or any
attorney-client communications that are privileged communications
or constitute
legal or other due diligence analyses, or internal communications
of Seller or
its affiliates, or credit underwriting or other analyses or data.
Delivery of
any of the foregoing documents to Primary Servicer shall be deemed
a delivery to
Master Servicer and satisfy Seller's obligations under this
subparagraph. Each
of the foregoing items may be delivered by Seller in electronic
form, to the
extent such document is available in such form and such form is
reasonably
acceptable to Master Servicer.
2.10
Upon the sale of the Mortgage Loans by Seller to Purchaser pursuant
to
this Agreement, the ownership of each Mortgage Note, Mortgage and
the other
contents of the related Mortgage File shall be vested in Purchaser
and its
assigns, and the ownership of all records and documents
constituting the
Servicing File with respect to the related Mortgage Loan prepared
by or that
come into the possession of Seller shall immediately vest in
Purchaser and its
assigns, and shall be delivered promptly by Seller to or on behalf
of either
Trustee or Master Servicer as set forth herein, subject to the
requirements of
the Primary Servicing Agreement. Seller's and Purchaser's records
shall reflect
the transfer of each Mortgage Loan from Seller to Purchaser and its
assigns as a
sale.
2.11
It is the express intent of the parties hereto that the conveyance
of
the Mortgage Loans and related property to Purchaser by Seller as
provided in
this Section 2 be, and be construed as, an absolute sale of the
Mortgage Loans
and related property. It is, further, not the intention of the
parties that such
conveyance be deemed a pledge of the Mortgage Loans and related
property by
Seller to Purchaser to secure a debt or other obligation of Seller.
However, in
the event that,
9
notwithstanding the intent of the parties, the Mortgage Loans or
any related
property are held to be the property of Seller, or if for any other
reason this
Agreement is held or deemed to create a security interest in the
Mortgage Loans
or any related property, then:
2.11.1
this Agreement shall be deemed to be a security agreement; and
2.11.2
the conveyance provided for in this Section 2 shall be deemed to
be a grant by Seller to Purchaser of a security interest in all of
Seller's
right, title, and interest, whether now owned or hereafter
acquired, in and to:
A. All accounts, general intangibles, chattel paper,
instruments, documents, money, deposit accounts, certificates of
deposit, goods, letters of credit, advices of credit and investment
property consisting of, arising from or relating to any of the
following
property: the Mortgage Loans identified on the Mortgage Loan
Schedule,
including the related Mortgage Notes, Mortgages, security
agreements,
and title, hazard and other insurance policies, all distributions
with
respect thereto payable after the Cut-Off Date, all substitute or
replacement Mortgage Loans and all distributions with respect
thereto,
and the Mortgage Files;
B. All accounts, general intangibles, chattel paper,
instruments, documents, money, deposit accounts, certificates of
deposit, goods, letters of credit, advices of credit, investment
property and other rights arising from or by virtue of the
disposition
of, or collections with respect to, or insurance proceeds payable
with
respect to, or claims against other Persons with respect to, all or
any
part of the collateral described in clause (A) above (including any
accrued discount realized on liquidation of any investment
purchased at
a discount); and
C. All cash and non-cash proceeds of the collateral described in
clauses (A) and (B) above.
2.12
The possession by Purchaser or its designee of the Mortgage Notes,
the
Mortgages, and such other goods, letters of credit, advices of
credit,
instruments, money, documents, chattel paper or certificated
securities shall be
deemed to be possession by the secured party or possession by a
purchaser for
purposes of perfecting the security interest pursuant to the
Uniform Commercial
Code (including, without limitation, Sections 9-313 thereof) as in
force in the
relevant jurisdiction. Notwithstanding the foregoing, Seller makes
no
representation or warranty as to the perfection of any such
security interest.
2.13
Notifications to Persons holding such property, and
acknowledgments,
receipts, or confirmations from persons holding such property,
shall be deemed
to be notifications to, or acknowledgments, receipts or
confirmations from,
securities intermediaries, bailees or agents of, or Persons holding
for,
Purchaser or its designee, as applicable, for the purpose of
perfecting such
security interest under applicable law.
2.14
Seller shall, to the extent consistent with this Agreement and upon
request by or on behalf of Purchaser, take such reasonable actions
as may be
necessary to ensure that, if this Agreement were deemed to create a
security
interest in the property described above, such security interest
10
would be deemed to be a perfected security interest of first
priority under
applicable law and will be maintained as such throughout the term
of the
Agreement. In such case, Seller hereby authorizes Master Servicer
to file all
filings necessary to maintain the effectiveness of any original
filings
necessary under the Uniform Commercial Code as in effect in any
jurisdiction to
perfect such security interest in such property. In connection
herewith,
Purchaser shall have all of the rights and remedies of a secured
party and
creditor under the Uniform Commercial Code as in force in the
relevant
jurisdiction.
2.15
Notwithstanding anything to the contrary contained herein, and
subject
to Section 2.1, Purchaser shall not be required to purchase any
Mortgage Loan as
to which any Mortgage Note or lost note affidavit and indemnity
(endorsed as
described in clause 2.2.1) required to be delivered to or on behalf
of Trustee
or Master Servicer pursuant to this Section 2 on or before the
Closing Date is
not so delivered, or is not properly executed or is defective on
its face, and
Purchaser's acceptance of the related Mortgage Loan on the Closing
Date shall in
no way constitute a waiver of such omission or defect or of
Purchaser's or its
successors' and assigns' rights in respect thereof pursuant to
Section 5.
3. EXAMINATION OF MORTGAGE FILES AND DUE DILIGENCE REVIEW.
3.1
Seller shall (i) deliver to Purchaser on or before the Closing Date
a
diskette acceptable to Purchaser that contains such information
about the
Mortgage Loans as may be reasonably requested by Purchaser, (ii)
deliver to
Purchaser investor files (collectively the "Collateral
Information") with
respect to the assets proposed to be included in the Mortgage Pool
and made
available at Purchaser's headquarters in New York, and (iii)
otherwise cooperate
fully with Purchaser in its examination of the credit files,
underwriting
documentation and Mortgage Files for the Mortgage Loans and its due
diligence
review of the Mortgage Loans. The fact that Purchaser has conducted
or has
failed to conduct any partial or complete examination of the credit
files,
underwriting documentation or Mortgage Files for the Mortgage Loans
shall not
affect the right of Purchaser or Trustee to cause Seller to cure
any Material
Document Defect or Material Breach (each as defined below), or to
repurchase or
replace the defective Mortgage Loans pursuant to Section 5 hereof.
3.2
On or prior to the Closing Date, Seller shall allow representatives
of
any of Purchaser, each Underwriter, each Initial Purchaser,
Trustee, Special
Servicer and each Rating Agency to examine and audit all books,
records and
files pertaining to the Mortgage Loans, Seller's underwriting
procedures and
Seller's ability to perform or observe all of the terms, covenants
and
conditions of this Agreement. Such examinations and audits shall
take place at
one or more offices of Seller during normal business hours and
shall not be
conducted in a manner that is disruptive to Seller's normal
business operations
upon reasonable prior advance notice. In the course of such
examinations and
audits, Seller will make available to such representatives of any
of Purchaser,
each Underwriter, each Initial Purchaser, Trustee, Special Servicer
and each
Rating Agency reasonably adequate facilities, as well as the
assistance of a
sufficient number of knowledgeable and responsible individuals who
are familiar
with the Mortgage Loans and the terms of this Agreement, and Seller
shall
cooperate fully with any such examination and audit in all material
respects. On
or prior to the Closing Date, Seller shall provide Purchaser with
all material
information regarding Seller's financial condition and access to
knowledgeable
financial
11
or accounting officers for the purpose of answering questions with
respect to
Seller's financial condition, financial statements as provided to
Purchaser or
other developments affecting Seller's ability to consummate the
transactions
contemplated hereby or otherwise affecting Seller in any material
respect.
Within 45 days after the Closing Date, Seller shall provide Master
Servicer or
Primary Servicer, if applicable, with any additional information
identified by
Master Servicer or Primary Servicer, if applicable, as necessary to
complete the
CMSA Property File, to the extent that such information is
available.
3.3
Purchaser may exercise any of its rights hereunder through one or
more
designees or agents, provided Purchaser has provided Seller with
prior notice of
the identity of such designee or agent.
3.4
Purchaser shall keep confidential any information regarding Seller
and
the Mortgage Loans that has been delivered into Purchaser's
possession and that
is not otherwise publicly available; provided, however, that such
information
shall not be kept confidential (and the right to require
confidentiality under
any confidentiality agreement is hereby waived) to the extent such
information
is required to be included in the Memorandum or the Prospectus
Supplement or
Purchaser is required by law or court order to disclose such
information. If
Purchaser is required to disclose in the Memorandum or the
Prospectus Supplement
confidential information regarding Seller as described in the
preceding
sentence, Purchaser shall provide to Seller a copy of the proposed
form of such
disclosure prior to making such disclosure and Seller shall
promptly, and in any
event within two Business Days, notify Purchaser of any
inaccuracies therein, in
which case Purchaser shall modify such form in a manner that
corrects such
inaccuracies. If Purchaser is required by law or court order to
disclose
confidential information regarding Seller as described in the
second preceding
sentence, Purchaser shall notify Seller and cooperate in Seller's
efforts to
obtain a protective order or other reasonable assurance that
confidential
treatment will be accorded such information and, if in the absence
of a
protective order or such assurance, Purchaser is compelled as a
matter of law to
disclose such information, Purchaser shall, prior to making such
disclosure,
advise and consult with Seller and its counsel as to such
disclosure and the
nature and wording of such disclosure and Purchaser shall use
reasonable efforts
to obtain confidential treatment therefor. Notwithstanding the
foregoing, if
reasonably advised by counsel that Purchaser is required by a
regulatory agency
or court order to make such disclosure immediately, then Purchaser
shall be
permitted to make such disclosure without prior review by Seller.
4. REPRESENTATIONS AND WARRANTIES OF SELLER AND PURCHASER.
4.1
To induce Purchaser to enter into this Agreement, Seller hereby
makes
for the benefit of Purchaser and its assigns with respect to each
Mortgage Loan
(subject to the last paragraph of this Section 4.1) as of the date
hereof (or as
of such other date specifically set forth in the particular
representation and
warranty) each of the representations and warranties set forth on
Exhibit 2
hereto, except as otherwise set forth on Schedule A attached
thereto, and hereby
further represents and warrants to Purchaser as of the date hereof
that:
4.1.1
Seller is duly organized and is validly existing as a limited
liability company in good standing under the laws of the State of
New York.
Seller has the requisite power and
12
authority and legal right to own the Mortgage Loans and to transfer
and convey
the Mortgage Loans to Purchaser and has the requisite power and
authority to
execute and deliver, engage in the transactions contemplated by,
and perform and
observe the terms and conditions of, this Agreement.
4.1.2
This Agreement has been duly and validly authorized, executed
and delivered by Seller, and assuming the due authorization,
execution and
delivery hereof by Purchaser, this Agreement constitutes the valid,
legal and
binding agreement of Seller, enforceable in accordance with its
terms, except as
such enforcement may be limited by (A) laws relating to bankruptcy,
insolvency,
reorganization, receivership or moratorium, (B) other laws relating
to or
affecting the rights of creditors generally, (C) general equity
principles
(regardless of whether such enforcement is considered in a
proceeding in equity
or at law) or (D) public policy considerations underlying the
securities laws,
to the extent that such public policy considerations limit the
enforceability of
the provisions of this Agreement that purport to provide
indemnification from
liabilities under applicable securities laws.
4.1.3
No consent, approval, authorization or order of, registration or
filing with, or notice to, any governmental authority or court is
required,
under federal or state law, for the execution, delivery and
performance of or
compliance by Seller with this Agreement, or the consummation by
Seller of any
transaction contemplated hereby, other than (A) such qualifications
as may be
required under state securities or blue sky laws, (B) the filing or
recording of
financing statements, instruments of assignment and other similar
documents
necessary in connection with Seller's sale of the Mortgage Loans to
Purchaser,
(C) such consents, approvals, authorizations, qualifications,
registrations,
filings or notices as have been obtained and (D) where the lack of
such consent,
approval, authorization, qualification, registration, filing or
notice would not
have a material adverse effect on the performance by Seller under
this
Agreement.
4.1.4
Neither the transfer of the Mortgage Loans to Purchaser, nor the
execution, delivery or performance of this Agreement by Seller,
conflicts or
will conflict with, results or will result in a breach of, or
constitutes or
will constitute a default under (A) any term or provision of
Seller's articles
of organization or by-laws, (B) any term or provision of any
material agreement,
contract, instrument or indenture to which Seller is a party or by
which it or
any of its assets is bound or results in the creation or imposition
of any lien,
charge or encumbrance upon any of its property pursuant to the
terms of any such
indenture, mortgage, contract or other instrument, other than
pursuant to this
Agreement, or (C) after giving effect to the consents or taking of
the actions
contemplated in subsection 4.1.3, any law, rule, regulation, order,
judgment,
writ, injunction or decree of any court or governmental authority
having
jurisdiction over Seller or its assets, except where in any of the
instances
contemplated by clauses (B) or (C) above, any conflict, breach or
default, or
creation or imposition of any lien, charge or encumbrance, will not
have a
material adverse effect on the consummation of the transactions
contemplated
hereby by Seller or materially and adversely affect its ability to
perform its
obligations and duties hereunder or result in any material adverse
change in the
business, operations, financial condition, properties or assets of
Seller, or in
any material impairment of the right or ability of Seller to carry
on its
business substantially as now conducted.
13
4.1.5
There are no actions or proceedings against, or investigations
of, Seller pending or, to Seller's knowledge, threatened in writing
against
Seller before any court, administrative agency or other tribunal,
the outcome of
which could reasonably be expected to materially and adversely
affect the
transfer of the Mortgage Loans to Purchaser or the execution or
delivery by, or
enforceability against, Seller of this Agreement or have an effect
on the
financial condition of Seller that would materially and adversely
affect the
ability of Seller to perform its obligations under this Agreement.
4.1.6
On the Closing Date, the sale of the Mortgage Loans pursuant to
this Agreement will effect a transfer by Seller of all of its
right, title and
interest in and to the Mortgage Loans to Purchaser.
4.1.7
To Seller's knowledge, the PCF II Mortgage Loan Information (as
defined in that certain indemnification agreement, dated February
15, 2007,
between Seller, Purchaser, the Underwriters and the Initial
Purchaser (the
"Indemnification Agreement")) relating to the Mortgage Loans does
not contain
any untrue statement of a material fact or omit to state a material
fact
necessary to make the statements therein, in the light of the
circumstances
under which they were made, not misleading (when read together with
the Final
Prospectus Supplement, in the case of Public Certificates, or when
read together
with the Memorandum, in the case of the Private Certificates).
Notwithstanding
anything contained herein to the contrary, this subparagraph 4.1.7
shall run
exclusively to the benefit of Purchaser and no other party.
To induce Purchaser to enter into this Agreement, Seller hereby
covenants that
the foregoing representations and warranties and those set forth on
Exhibit 2
hereto, subject to the exceptions set forth in Schedule A to
Exhibit 2, will be
true and correct in all material respects on and as of the Closing
Date with the
same effect as if made on the Closing Date, provided that any
representations
and warranties made as of a specified date shall be true and
correct in all
material respects as of such specified date.
4.1.8
Seller has complied with the disclosure requirements of
Regulation AB that arise from its role as "seller" and "sponsor" in
connection
with the issuance of the Certificates.
4.1.9
For so long as the Trust is subject to the reporting
requirements of the Exchange Act, Seller shall provide Purchaser
(or with
respect to any Serviced Companion Mortgage Loan that is deposited
into an Other
Securitization, the depositor in such Other Securitization) and the
Paying Agent
with any Additional Form 10-D Disclosure and any Additional Form
10-K Disclosure
set forth next to Seller's name on Schedule XV and Schedule XVI of
the Pooling
and Servicing Agreement within the time periods set forth in the
Pooling and
Servicing Agreement.
Each of the representations, warranties and covenants made by
Seller pursuant to
this Section 4.1 shall survive the sale of the Mortgage Loans and
shall continue
in full force and effect notwithstanding any restrictive or
qualified
endorsement on the Mortgage Notes.
4.2
To induce Seller to enter into this Agreement, Purchaser hereby
represents and warrants to Seller as of the date hereof:
14
4.2.1
Purchaser is a corporation duly organized, validly existing, and
in good standing under the laws of the State of Delaware with full
power and
authority to carry on its business as presently conducted by it.
4.2.2
Purchaser has full power and authority to acquire the Mortgage
Loans, to execute and deliver this Agreement and to enter into and
consummate
all transactions contemplated by this Agreement. Purchaser has duly
and validly
authorized the execution, delivery and performance of this
Agreement and has
duly and validly executed and delivered this Agreement. This
Agreement, assuming
due authorization, execution and delivery by Seller, constitutes
the valid and
binding obligation of Purchaser, enforceable against it in
accordance with its
terms, except as such enforceability may be limited by bankruptcy,
insolvency,
reorganization, moratorium and other similar laws affecting the
enforcement of
creditors' rights generally and by general principles of equity,
regardless of
whether such enforcement is considered in a proceeding in equity or
at law.
4.2.3
No consent, approval, authorization or order of, registration or
filing with, or notice to, any governmental authority or court is
required,
under federal or state law, for the execution, delivery and
performance of or
compliance by Purchaser with this Agreement, or the consummation by
Purchaser of
any transaction contemplated hereby that has not been obtained or
made by
Purchaser.
4.2.4
Neither the purchase of the Mortgage Loans nor the execution,
delivery and performance of this Agreement by Purchaser will
violate Purchaser's
certificate of incorporation or by-laws or constitute a default (or
an event
that, with notice or lapse of time or both, would constitute a
default) under,
or result in a breach of, any material agreement, contract,
instrument or
indenture to which Purchaser is a party or that may be applicable
to Purchaser
or its assets.
4.2.5
Purchaser's execution and delivery of this Agreement and its
performance and compliance with the terms of this Agreement will
not constitute
a violation of any law, rule, writ, injunction, order or decree of
any court, or
order or regulation of any federal, state or municipal government
agency having
jurisdiction over Purchaser or its assets, which violation could
materially and
adversely affect the condition (financial or otherwise) or the
operation of
Purchaser or its assets or could materially and adversely affect
its ability to
perform its obligations and duties hereunder.
4.2.6
There are no actions or proceedings against, or investigations
of, Purchaser pending or, to Purchaser's knowledge, threatened
against Purchaser
before any court, administrative agency or other tribunal, the
outcome of which
could reasonably be expected to adversely affect the transfer of
the Mortgage
Loans, the issuance of the Certificates, the execution, delivery or
enforceability of this Agreement or have an effect on the financial
condition of
Purchaser that would materially and adversely affect the ability of
Purchaser to
perform its obligation under this Agreement.
4.2.7
Purchaser has not dealt with any broker, investment banker,
agent or other person, other than Seller, the Underwriters, the
Initial
Purchasers and their respective affiliates, that may be entitled to
any
commission or compensation in connection with the sale of the
Mortgage Loans or
consummation of any of the transactions contemplated hereby.
15
To induce Seller to enter into this Agreement, Purchaser hereby
covenants that
the foregoing representations and warranties will be true and
correct in all
material respects on and as of the Closing Date with the same
effect as if made
on the Closing Date.
Each of the representations and warranties made by Purchaser
pursuant to this
Section 4.2 shall survive the purchase of the Mortgage Loans.
5. REMEDIES UPON BREACH OF REPRESENTATIONS AND WARRANTIES MADE BY
SELLER.
5.1
It is hereby acknowledged that Seller shall make for the benefit of
Trustee on behalf of the holders of the Certificates, whether
directly or by way
of Purchaser's assignment of its rights hereunder to Trustee, the
representations and warranties set forth on Exhibit 2 hereto (each
as of the
date hereof unless otherwise specified).
5.2
It is hereby further acknowledged that if any document required to
be
delivered to Trustee pursuant to Section 2 is not delivered as and
when required
(and including the expiration of any grace or cure period), is not
properly
executed or is defective on its face, or if there is a breach of
any of the
representations and warranties required to be made by Seller
regarding the
characteristics of the Mortgage Loans and/or the related Mortgaged
Properties as
set forth in Exhibit 2 hereto, and in either case such defect or
breach, either
(i) materially and adversely affects the interests of the holders
of the
Certificates in the related Mortgage Loan, or (ii) both (A) the
document defect
or breach materially and adversely affects the value of the
Mortgage Loan and
(B) the Mortgage Loan is a Specially Serviced Mortgage Loan or
Rehabilitated
Mortgage Loan (such a document defect described in the preceding
clause (i) or
(ii), a "Material Document Defect" and such a breach described in
the preceding
clause (i) or (ii) a "Material Breach"), the party discovering such
Material
Document Defect or Material Breach shall promptly notify, in
writing, the other
parties; provided that any breach of the representation and
warranty contained
in paragraph 42 of such Exhibit 2 shall constitute a Material
Breach only if
such prepayment premium or yield maintenance charge is not deemed
"customary"
for commercial mortgage loans as evidenced by (i) an opinion of tax
counsel to
such effect or (ii) a determination by the Internal Revenue Service
that such
provision is not customary. Promptly (but in any event within three
Business
Days) upon becoming aware of any such Material Document Defect or
Material
Breach, Master Servicer shall, and Special Servicer may, request
that Seller,
not later than 90 days from Seller's receipt of the notice of such
Material
Document Defect or Material Breach, cure such Material Document
Defect or
Material Breach, as the case may be, in all material respects;
provided,
however, that if such Material Document Defect or Material Breach,
as the case
may be, cannot be corrected or cured in all material respects
within such 90 day
period, and such Material Document Defect or Material Breach would
not cause the
Mortgage Loan to be other than a "qualified mortgage"(as defined in
the Code)
but Seller is diligently attempting to effect such correction or
cure, as
certified by Seller in an Officer's Certificate delivered to
Trustee, then the
cure period will be extended for an additional 90 days unless,
solely in the
case of a Material Document Defect, (x) the Mortgage Loan is, at
the end of the
initial 90 day period, then a Specially Serviced Mortgage Loan and
a Servicing
Transfer Event has occurred as a result of a monetary default or as
described in
clause (ii) or clause (v) of the definition of "Servicing Transfer
Event" in the
Pooling and Servicing Agreement and (y) the
16
Material Document Defect was identified in a certification
delivered to Seller
by Trustee pursuant to Section 2.2 of the Pooling and Servicing
Agreement not
less than 90 days prior to the delivery of the notice of such
Material Document
Defect. The parties acknowledge that neither delivery of a
certification or
schedule of exceptions to Seller pursuant to Section 2.2 of the
Pooling and
Servicing Agreement or otherwise nor possession of such
certification or
schedule by Seller shall, in and of itself, constitute delivery of
notice of any
Material Document Defect or knowledge or awareness by Seller of any
Material
Document Defect listed therein.
5.3
Seller hereby covenants and agrees that, if any such Material
Document
Defect or Material Breach cannot be corrected or cured in all
material respects
within the above cure periods, Seller shall, on or before the
termination of
such cure periods, either (i) repurchase the affected Mortgage Loan
or REO
Mortgage Loan from Purchaser or its assignee at the Purchase Price
as defined in
the Pooling and Servicing Agreement, or (ii) if within the
three-month period
commencing on the Closing Date (or within the two-year period
commencing on the
Closing Date if the related Mortgage Loan is a "defective
obligation" within the
meaning of Section 860G(a)(4)(B)(ii) of the Code and Treasury
Regulation Section
1.860G-2(f)), at its option replace, without recourse, any Mortgage
Loan or REO
Mortgage Loan to which such defect relates with a Qualifying
Substitute Mortgage
Loan. If such Material Document Defect or Material Breach would
cause the
Mortgage Loan to be other than a "qualified mortgage" (as defined
in the Code),
then notwithstanding the previous sentence or the previous
paragraph, repurchase
or substitution must occur within 90 days from the date Seller was
notified of
the breach or defect. Seller agrees that any substitution shall be
completed in
accordance with the terms and conditions of the Pooling and
Servicing Agreement.
5.4
If (x) a Mortgage Loan is to be repurchased or replaced as
contemplated
above (a "Defective Mortgage Loan"), (y) such Defective Mortgage
Loan is
cross-collateralized and cross-defaulted with one or more other
Mortgage Loans
("Crossed Mortgage Loans") and (z) the applicable document defect
or breach does
not constitute a Material Document Defect or Material Breach, as
the case may
be, as to such Crossed Mortgage Loans (without regard to this
paragraph), then
the applicable document defect or breach (as the case may be) shall
be deemed to
constitute a Material Document Defect or Material Breach, as the
case may be, as
to each such Crossed Mortgage Loan for purposes of the above
provisions, and
Seller shall be obligated to repurchase or replace each such
Crossed Mortgage
Loan in accordance with the provisions above, unless, in the case
of such breach
or document defect, (A) Seller provides a Nondisqualification
Opinion to Trustee
at the expense of Seller if Trustee acting at the direction of the
Controlling
Class determines that it would be usual and customary in accordance
with
industry practice to obtain a Nondisqualification Opinion and (B)
both of the
following conditions would be satisfied if Seller were to
repurchase or replace
only those Mortgage Loans as to which a Material Breach or Material
Document
Defect had occurred without regard to this paragraph (the "Affected
Loan(s)"):
(i) the debt service coverage ratio for all such other Mortgage
Loans (excluding
the Affected Loan(s)) for the four calendar quarters immediately
preceding the
repurchase or replacement is not less than the greater of (A) the
debt service
coverage ratio for all such Crossed Mortgage Loans (including the
Affected
Loan(s)) set forth under the heading "NCF DSCR" in Appendix II to
the Final
Prospectus Supplement and (B) 1.25x, and (ii) the loan-to-value
ratio for all
such Crossed Mortgage Loans (excluding the Affected Loan(s)) is not
greater than
the lesser of (A) the current loan-to-value ratio for all such
Mortgage Loans
(including the Affected Loan(s)) set forth under the heading
"Cut-Off Date
17
LTV" in Appendix II to the Final Prospectus Supplement and (B) 75%.
The
determination of Master Servicer as to whether the conditions set
forth above
have been satisfied shall be conclusive and binding in the absence
of manifest
error. Master Servicer will be entitled to cause to be delivered,
or direct
Seller to (in which case Seller shall) cause to be delivered to
Master Servicer:
(A) an Appraisal of any or all of the related Mortgaged Properties
for purposes
of determining whether the condition set forth in clause (ii) above
has been
satisfied, in each case at the expense of Seller if the scope and
cost of the
Appraisal is approved by Seller (such approval not to be
unreasonably withheld)
and (B) an opinion of counsel that not requiring the repurchase of
each such
Crossed Mortgage Loan will not result in an Adverse REMIC Event.
5.5
With respect to any Defective Mortgage Loan, to the extent that
Seller
is required to repurchase or substitute for such Defective Mortgage
Loan (each,
a "Repurchased Loan") in the manner prescribed above while Trustee
(as assignee
of Purchaser) continues to hold any Crossed Mortgage Loan that is
cross-collateralized and/or cross-defaulted (each, a
"Cross-Collateralized
Loan") with such Repurchased Loan, Seller and Purchaser hereby
agree to modify,
prior to such repurchase or substitution, the related Mortgage Loan
documents in
a manner such that such affected Repurchased Loan, on the one hand,
and any
related Cross-Collateralized Loans held by Trustee, on the other,
would no
longer be cross-defaulted or cross-collateralized with one another;
provided
that Seller shall have furnished Trustee, at the expense of Seller,
a
nondisqualification opinion that such modification shall not cause
an Adverse
REMIC Event; provided, further, that if such nondisqualification
opinion cannot
be furnished, Seller and Purchaser agree that such repurchase or
substitution of
only the Repurchased Loan, notwithstanding anything to the contrary
herein,
shall not be permitted and Seller shall repurchase or substitute
for the
Repurchased Loan and all related Cross-Collateralized Loans. Any
reserve or
other cash collateral or letters of credit securing the
Cross-Collateralized
Mortgage Loans shall be allocated between such Mortgage Loans in
accordance with
the Mortgage Loan documents, or otherwise on a pro rata basis based
upon their
outstanding Principal Balances. All other terms of the Mortgage
Loans shall
remain in full force and effect, without any modification thereof.
The
Mortgagors set forth on Schedule B to Exhibit 2 hereto are intended
third-party
beneficiaries of the provisions set forth in this paragraph and the
preceding
paragraph. The provisions of this paragraph and the preceding
paragraph may not
be modified with respect to any Mortgage Loan without the related
Mortgagor's
consent.
5.6
Upon occurrence (and after any applicable cure or grace period),
any of
the following document defects shall be conclusively presumed
materially and
adversely to affect the interests of Certificateholders in a
Mortgage Loan and
be a Material Document Defect: (a) the absence from the Mortgage
File of the
original signed Mortgage Note, unless the Mortgage File contains a
signed lost
note affidavit and indemnity that appears to be regular on its
face; (b) the
absence from the Mortgage File of the original signed Mortgage that
appears to
be regular on its face, unless there is included in the Mortgage
File a
certified copy of the Mortgage by the local authority with which
the Mortgage
was recorded; or (c) the absence from the Mortgage File of the item
specified in
paragraph 2.2.8. If any of the foregoing Material Document Defects
is discovered
by the Custodian (or Trustee if there is no Custodian), Trustee (or
as set forth
in Section 2.3(a) of the Pool
