EXHIBIT 4 .3
WACHOVIA MORTGAGE LOAN TRUST, LLC,
as Purchaser,
and
WACHOVIA BANK, NATIONAL ASSOCIATION,
as Seller and Servicer,
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_______________________________________
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MORTGAGE LOAN PURCHASE AGREEMENT
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_______________________________________
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Dated as of ______ __, 200_
TABLE OF CONTENTS
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ARTICLE I
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DEFINITIONS
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Section 1.1
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Definitions
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1
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Section 1.2
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Other Definitional Provisions
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2
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ARTICLE II
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SALE OF MORTGAGE LOANS AND RELATED
PROVISIONS
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Section 2.1
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Sale of Mortgage Loans
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2
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Section 2.2
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Sale of Subsequent Mortgage Loans
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5
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Section 2.3
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Payment of Purchase Price
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7
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Section 2.4
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Allocation
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8
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Section 2.5
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Draws During the Rapid Amortization
Period.
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8
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Section 2.6
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Security Interest.
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8
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ARTICLE III
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REPRESENTATIONS AND WARRANTIES; REMEDIES FOR
BREACH
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Section 3.1
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Representations and Warranties of the
Seller
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9
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ARTICLE IV
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SELLER’S COVENANTS
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Section 4.1
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Covenants of the Seller
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17
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ARTICLE V
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[RESERVED]
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ARTICLE VI
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LIMITATION OF LIABILITY
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Section 6.1
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Limitation on Liability of the Seller
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18
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ARTICLE VII
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TERMINATION
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Section 7.1
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Termination
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18
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Section 8.1
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Amendment
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18
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Section 8.2
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GOVERNING LAW
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18
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Section 8.3
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Notices
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19
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TABLE OF CONTENTS
(continued)
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ARTICLE VIII
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MISCELLANEOUS PROVISIONS
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Section 8.4
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Severability of Provisions
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20
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Section 8.5
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Relationship of Parties
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20
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Section 8.6
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Counterparts
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20
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Section 8.7
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Further Agreements
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20
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Section 8.8
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Intention of the Parties
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20
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Section 8.9
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Successors and Assigns; Assignment of this
Agreement
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21
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Section 8.10
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Survival
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21
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Section 8.11
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Third-Party Beneficiary
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21
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EXHIBIT 1
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MORTGAGE LOAN SCHEDULE
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1-1
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EXHIBIT 2
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FORM OF SUBSEQUENT TRANSFER AGREEMENT
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2-1
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EXHIBIT 3
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FORM OF ADDITION NOTICE
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3-1
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EXHIBIT 4
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FORM OF INITIAL CERTIFICATION
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4-1
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EXHIBIT 5
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FORM OF FINAL CERTIFICATION
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5-1
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EXHIBIT 6
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Standard & Poor’s LEVELS® Glossary,
Version 5.6 Revised, Appendix E
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6-1
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This Mortgage Loan Purchase Agreement (this
“ Agreement ”), dated as of ______ __, 200_, is made by and between
Wachovia Bank, National Association, as seller (in such capacity,
the “ Seller ”) and as servicer (in such capacity, the “
Servicer ”), and
Wachovia Mortgage Loan Trust, LLC, as purchaser (the “
Purchaser ” or
the “ Depositor
”).
WITNESSETH :
WHEREAS, the Seller, in the ordinary course of its
business acquires and originates mortgage loans and acquired or
originated all of the mortgage loans listed on the Mortgage Loan
Schedule attached as Exhibit 1 hereto (the “
Initial Mortgage Loans ”);
WHEREAS, the Seller owns the Initial Mortgage Loans,
the Cut-Off Date Principal Balances and the Related Documents for
the Initial Mortgage Loans, including rights to (a) any
property acquired by foreclosure or deed in lieu of foreclosure or
otherwise, and (b) the proceeds of any insurance policies
covering the Initial Mortgage Loans;
WHEREAS, the parties hereto desire that: (i) the
Seller sell the Cut-Off Date Principal Balances of the Initial
Mortgage Loans to the Purchaser on the Closing Date pursuant to the
terms of this Agreement together with the Related Documents, and
all Additional Balances relating to the Initial Mortgage Loans
created on or after the Cut-Off Date and prior to the Rapid
Amortization Period, (ii) the Seller may sell the applicable
Cut-Off Date Principal Balances of the Subsequent Mortgage Loans to
the Purchaser on one or more Subsequent Transfer Dates pursuant to
the terms of the related Subsequent Transfer Agreement and all
Additional Balances relating to the Subsequent Mortgage Loans
created on or after the applicable Subsequent Cut-Off Date and
prior to the Rapid Amortization Period and (iii) the Seller make
certain representations and warranties on the Closing Date and on
each Subsequent Transfer Date as applicable;
WHEREAS, pursuant to the terms of the Trust
Agreement and the applicable Subsequent Transfer Agreement, the
Depositor will transfer the Mortgage Loans and other Transferred
Property to the Issuer and the Issuer will issue the
Certificates;
WHEREAS, pursuant to the terms of the Servicing
Agreement, the Servicer will service the Mortgage Loans;
WHEREAS, pursuant to the terms of the Indenture, the
Issuer will issue the Notes, secured by the Trust
Estate;
NOW, THEREFORE, in consideration of the mutual
covenants herein contained, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions . For all purposes of
this Agreement, except as otherwise expressly provided herein or
unless the context otherwise requires, capitalized terms not
otherwise defined herein shall have the meanings assigned to such
terms in the definitions contained in Appendix A to the indenture
dated as of ______ __, 200_ (the “ Indenture ”), among Wachovia
Mortgage Loan Trust, LLC [______] Trust, a Delaware statutory trust
(the “ Issuer ”),
[____________], a national banking association, as
indenture trustee (the “ Indenture
Trustee ”) and Wachovia Bank,
National Association, as paying agent (the “
Paying Agent ”),
which is incorporated by reference herein. All other capitalized
terms used herein shall have the meanings specified
herein.
Section 1.2 Other
Definitional Provisions . All terms
defined in this Agreement (including those incorporated by
reference) shall have the defined meanings when used in any
certificate or other document made or delivered pursuant hereto
unless otherwise defined therein.
As used in this Agreement and in any certificate or
other document made or delivered pursuant hereto or thereto,
accounting terms not defined in this Agreement or in any such
certificate or other document, and accounting terms partly defined
in this Agreement or in any such certificate or other document, to
the extent not defined, shall have the respective meanings given to
them under GAAP. To the extent that the definitions of accounting
terms in this Agreement or in any such certificate or other
document are inconsistent with the meanings of such terms under
GAAP, the definitions contained in this Agreement or in any such
certificate or other document shall control.
The words “hereof,”
“herein,” “hereunder” and words of similar
import when used in this Agreement shall refer to this Agreement as
a whole and not to any particular provision of this Agreement;
Section and Exhibit references contained in this Agreement are
references to Sections and Exhibits in or to this Agreement unless
otherwise specified; the term “including” shall mean
“including without limitation” “or” shall
include “and/or” and the term “proceeds”
shall have the meaning ascribed thereto in the UCC.
The definitions contained in this Agreement are
applicable to the singular as well as the plural forms of such
terms and to the masculine as well as the feminine and neuter
genders of such terms.
Any agreement, instrument or statute defined or
referred to herein or in any instrument or certificate delivered in
connection herewith means such agreement, instrument or statute as
from time to time amended, modified or supplemented and includes
(in the case of agreements or instruments) references to all
attachments thereto and instruments incorporated therein;
references to a Person are also to its permitted successors and
assigns.
ARTICLE II
SALE OF MORTGAGE LOANS AND RELATED
PROVISIONS
Section 2.1 Sale of
Mortgage Loans .
(a) The Seller, by the execution and delivery of
this Agreement, does hereby sell, transfer, assign, set over, and
otherwise convey to the Purchaser, without recourse (except as
expressly provided herein), all of its right, title and interest,
whether now owned or existing or hereafter created, arising, or
acquired, in, to and under the Initial Transferred Property;
provided ,
however , that the
Purchaser does not assume the obligation under any Loan Agreement
to fund Draws by the Mortgagor thereunder or any other obligation
arising under or related to the Related Documents, and the
Purchaser shall not be obligated or permitted to fund any such
Draws, it being agreed that the Seller will retain the obligation
to fund future Draws.
(b) The Initial Mortgage Loans, including the
Cut-Off Date Principal Balances of such Initial Mortgage Loans, and
all other related Initial Transferred Property, shall be sold by
the Seller and purchased by the Purchaser on the Closing Date. The
Subsequent Mortgage Loans, including the Cut-Off Date Principal
Balances of such Subsequent Mortgage Loans, and all other related
Subsequent Transferred Property, shall be sold by the Seller and
purchased by the Purchaser on the related Subsequent Transfer Date.
Additional Balances and the related Transferred Property arising
after the Cut-Off Date or related Subsequent Cut-Off Date, as
applicable, through and including the date immediately preceding
the commencement of the Rapid Amortization Period shall be sold by
the Seller and purchased by the Purchaser on the later of the
Closing Date (or with respect to Subsequent Mortgage Loans, the
applicable Subsequent Transfer Date) and the date of creation of
such Additional Balance.
(c) In connection with the conveyance by the Seller
of the Initial Mortgage Loans and any Subsequent Mortgage Loans,
the Seller further agrees, at its own expense, on or prior to the
Closing Date with respect to the Cut-Off Date Principal Balances of
the Initial Mortgage Loans and on or prior to the related
Subsequent Cut-Off Date in the case of any Subsequent Mortgage
Loans, to indicate in its books and records that the Initial
Mortgage Loans have been sold to the Purchaser pursuant to this
Agreement, and, in the case of the Subsequent Mortgage Loans,
pursuant to the related Subsequent Transfer Agreement and to
deliver to the Purchaser true and complete lists of all of the
Mortgage Loans specifying for each Mortgage Loan the information
contained in the Mortgage Loan Schedule. The Mortgage Loan Schedule
shall be marked as Exhibit 1 to this Agreement and is hereby
incorporated into and made a part of this Agreement.
(d) In connection with the conveyance by the Seller
of the Initial Mortgage Loans and any Subsequent Mortgage Loans,
the Seller shall on behalf of the Purchaser deliver to and deposit
with the Servicer prior to the Closing Date, in the case of an
Initial Mortgage Loan, and prior to the related Subsequent Transfer
Date, in the case of a Subsequent Mortgage Loan, with respect to
(i) below, or within 90 days of the Closing Date in the case of an
Initial Mortgage Loan, and, 90 days of the related Subsequent
Transfer Date, in the case of a Subsequent Mortgage Loan, with
respect to (ii) through (v) below, the following documents or
instruments with respect to each Mortgage Loan:
(i) the original Loan Agreement endorsed or assigned
without recourse in blank (which endorsement shall contain either
an original signature or a facsimile signature of an authorized
officer of the Seller and which assignment may be included in one
or more blanket assignments if permitted by applicable law) or,
with respect to any Mortgage Loan as to which the original Loan
Agreement has been permanently lost or destroyed and has not been
replaced, a Lost Note Affidavit; provided that any such endorsement
or assignment may be completed after the Closing Date or Subsequent
Transfer Date, as applicable, so long as such endorsement or
assignment is completed prior to the earlier of (A) 90 days after
the Closing Date or Subsequent Transfer Date, as applicable, and
(B) the date on which the Servicer is required to prepare the
Assignments of Mortgage pursuant to Section 3.17 of the Servicing
Agreement;
(ii) the original Mortgage with evidence of
recording thereon, or, if the original Mortgage has not yet been
returned from the public recording office, a copy of the original
Mortgage certified by the Seller that such Mortgage has been sent
for recording, or a county certified copy of such Mortgage in the
event the recording office keeps the original or if the original is
lost;
(iii) originals of any intervening assignments of
the Mortgage from the originator to the Seller, with evidence of
recording thereon, or, if the original of any such intervening
assignment has not yet been returned from the public recording
office, a copy of such original intervening assignment certified by
the Seller that such original intervening assignment has been sent
for recording; and
(iv) a true and correct copy of each assumption,
modification, consolidation or substitution agreement, if any,
relating to such Mortgage Loan;
Within 90 days following delivery of the Mortgage
Files to the Servicer pursuant to the preceding paragraph, the
Servicer shall review the Mortgage Files and deliver to the
Indenture Trustee and the Enhancer an initial certification in the
form attached hereto as Exhibit 4 evidencing the status of the
completeness of the Mortgage Files. If, in the course of such
review, a material defect in any Mortgage File is discovered which
may materially and adversely affect the value of the related
Mortgage Loan, or the interests of the Indenture Trustee (as
pledgee of the Mortgage Loans), the Noteholders, the Enhancer or
the Certificateholders, including the Seller’s failure to
deliver any document required to be delivered to the Servicer on
behalf of the Indenture Trustee, the Seller shall cure such defect,
repurchase the related Mortgage Loan at the Repurchase Price or
substitute an Eligible Substitute Loan therefor upon the same terms
and conditions set forth in Section 3.1 hereof for breaches of
representations and warranties as to the Mortgage Loans.
Upon receipt of all documents required to be
included in the Mortgage Files and no later than within one year of
the Closing Date, the Servicer shall deliver to the Indenture
Trustee and the Enhancer a final certification in the form attached
hereto as Exhibit 5 evidencing the completeness of the Mortgage
Files.
The Seller on behalf of the Purchaser will deliver
the original Loan Agreements to the Servicer, endorsed or assigned
in blank, to effect the transfer to the Purchaser of the Loan
Agreements and all related Mortgages and Related Documents.
Concurrently herewith, the Purchaser has contracted to sell the
Mortgage Loans to the Issuer, and the Issuer, in turn, has Granted
its right, title and interest in the Mortgage Loans and other
Transferred Property constituting the Trust Estate to the Indenture
Trustee to secure payments on the Notes. To avoid the unnecessary
expense and administrative inconvenience associated with the
execution and recording of multiple assignment documents, the
Seller may execute one or more assignments of mortgages naming the
Indenture Trustee as assignee. Notwithstanding the fact that
assignments of mortgages naming the Indenture Trustee as assignee
have not been prepared and delivered, the parties hereto
acknowledge and agree that the Mortgage Loans shall for all
purposes be deemed to have been transferred from the Seller to the
Purchaser, from the Purchaser to the Issuer, and from the Issuer to
the Indenture Trustee.
In instances where an original Mortgage or any
original intervening assignment of Mortgage was not, in accordance
with clause (iii) above, delivered by the Seller to the Servicer,
as provided above, the Seller will deliver or cause to be delivered
the originals or certified copies of such documents to the Servicer
promptly upon receipt thereof. If an Assignment of Mortgage is
required to be prepared under Section 3.17 of the Servicing
Agreement, the Seller will promptly execute such Assignment of
Mortgage upon request of the Servicer.
Upon sale of the Initial Mortgage Loans, the
ownership of each related Loan Agreement (subject to the proviso in
Section 2.1(a)), each related Mortgage and the contents of the
related Mortgage File shall be vested in the Purchaser and the
ownership of all records and documents with respect to the Mortgage
Loans that are prepared by or that come into the possession of the
Seller, as the seller of the Mortgage Loans hereunder, or by the
Servicer under the Servicing Agreement shall immediately vest in
the Purchaser, and shall be retained and maintained in trust by the
Servicer at the will of the Purchaser, in such custodial capacity
only; provided , however ,
that if Wachovia is no longer the Servicer under the Servicing
Agreement, any records and documents that come into the possession
of the Seller shall be promptly delivered to the Servicer. The
Seller’s records will accurately reflect the sale of the
Mortgage Loans by it to the Purchaser.
The Purchaser hereby acknowledges its acceptance of
all right, title and interest to the property conveyed to it
pursuant to this Section 2.1.
Section 2.2 Sale of
Subsequent Mortgage Loans .
(a) Subject to the conditions set forth in
paragraphs (b) and (c) below (the satisfaction of which (other than
the conditions specified in paragraphs (b)(i), (b)(ii) and
(b)(iii)) shall be evidenced by an Officer’s Certificate of
the Seller dated the date of the related Subsequent Transfer Date),
in consideration of the Purchaser’s payment of the purchase
price provided for in Section 2.3 on one or more Subsequent
Transfer Dates, the Seller may, on the related Subsequent Transfer
Date, sell, transfer, assign, set over and convey to the Purchaser
without recourse (except as expressly provided herein), all of the
right, title and interest of the Seller whether now owned or
existing or hereafter created, arising, or acquired, in, to and
under the Subsequent Transferred Property; provided , however , that the Purchaser does not
assume the obligation under any Loan Agreement to fund Draws by the
Mortgagor thereunder or any other obligation arising under or
related to the Related Documents, and the Purchaser shall not be
obligated or permitted to fund any such Draws, it being agreed that
the Seller will retain the obligation to fund future Draws. Any
transfer to the Purchaser by the Seller of Subsequent Mortgage
Loans shall be absolute, and is intended by the Purchaser and the
Seller to constitute and to be treated as a sale of such Subsequent
Mortgage Loans by the Seller to the Purchaser.
The Purchaser on each Subsequent Transfer Date shall
acknowledge, by execution of the related Subsequent Transfer
Agreement, its acceptance of all right, title and interest to the
related Subsequent Mortgage Loans and other property, existing on
the Subsequent Transfer Date and thereafter created, conveyed to it
pursuant to this Section 2.2.
The Purchaser shall be entitled to all scheduled
principal payments due on and after each Subsequent Cut-Off Date,
all other payments of principal due and collected on and after each
Subsequent Cut-Off Date, all payments of interest on any related
Subsequent Mortgage Loans due on or after the related Subsequent
Cut-Off Date, all interest accruing thereon, all monies due or to
become due thereon and all collections in respect thereof received
on or after the Subsequent Cut-Off Date.
Upon sale of the Subsequent Mortgage Loans, the
ownership of each related Loan Agreement (subject to the proviso in
Section 2.1(a)), each related Mortgage and the contents of the
related Mortgage File shall be vested in the Purchaser and the
ownership of all records and documents with respect to the
Subsequent Mortgage Loans that are prepared by or that come
into
the possession of the Seller, as the seller of the
Subsequent Mortgage Loans, or by the Servicer under the Servicing
Agreement shall immediately vest in the Purchaser, and shall be
retained and maintained in trust by the Servicer at the will of the
Purchaser, in such custodial capacity only; provided , however , that if Wachovia is no
longer the Servicer under the Servicing Agreement, any records and
documents that come into the possession of the Seller shall be
promptly delivered to the Servicer. The Seller’s records will
accurately reflect the sale of the Subsequent Mortgage Loans by it
to the Purchaser.
(b) The Seller may transfer to the Purchaser,
Subsequent Mortgage Loans and the other property and rights related
thereto described in Section 2.2(a), and the Purchaser shall
pay for such Subsequent Mortgage Loans, only upon the satisfaction
of each of the following conditions on or prior to the related
Subsequent Transfer Date:
(i) the Seller shall have provided the Indenture
Trustee, the Issuer, the Purchaser, Rating Agencies and the
Enhancer with a timely Addition Notice substantially in the form of
Exhibit 3, which notice shall be given no later than seven Business
Days prior to the related Subsequent Transfer Date, and shall
designate the Subsequent Mortgage Loans to be sold to the Purchaser
and the aggregate Principal Balance of such Subsequent Mortgage
Loans as of the related Subsequent Cut-Off Date;
(ii) the Seller shall have delivered to the
Purchaser, the Indenture Trustee and the Enhancer a duly executed
Subsequent Transfer Agreement substantially in the form of Exhibit
2, (A) confirming the satisfaction of each condition precedent and
making the representations specified in this Section 2.2(b)
and in the related Subsequent Transfer Agreement and (B) including
a Mortgage Loan Schedule listing the Subsequent Mortgage
Loans;
(iii) as of each Subsequent Transfer Date, as
evidenced by delivery to the Indenture Trustee of the Subsequent
Transfer Agreement in the form of Exhibit 2, the Seller shall not
be insolvent, made insolvent by such transfer or aware of any
pending insolvency;
(iv) such sale and transfer shall not result in a
material adverse tax consequence to the Purchaser or the Issuer or
due to any action or inaction on the part of the Seller, to the
Securityholders or the Enhancer;
(v) the Revolving Period shall not have terminated;
and
(vi) the Enhancer and each Rating Agency (each, an
“ Approval Party
”) shall have approved the sale of the
Subsequent Mortgage Loans (which approval shall not be unreasonably
withheld) within five (5) Business Days of receipt of an electronic
file containing the information regarding the Subsequent Mortgage
Loans that was delivered to each Approval Party prior to the
Closing Date with respect to the Initial Mortgage Loans; provided,
that if an Approval Party shall not have notified the respective
Seller within such five (5) Business Days that such Approval Party
does not so approve, such sale of Subsequent Mortgage Loans shall
be deemed approved by such Approval Party.
The obligation of the Purchaser to purchase a
Subsequent Mortgage Loan on any Subsequent Transfer Date is subject
to the following conditions: (i) each such Subsequent Mortgage Loan
must satisfy the representations and warranties specified in the
related Subsequent Transfer
Agreement and this Agreement; (ii) the Seller has
not selected such Subsequent Mortgage Loans in a manner that it
reasonably believes is adverse to the interests of the Noteholders
or the Enhancer; and (iii) as of the related Subsequent Cut-Off
Date each Subsequent Mortgage Loan will satisfy the following
criteria: (A) such Subsequent Mortgage Loan may not be 30 or more
days contractually delinquent as of the related Subsequent Cut-Off
Date; (B) the original stated term to maturity of such Subsequent
Mortgage Loan will not exceed 480 months; (C) such Subsequent
Mortgage Loan must have an outstanding Principal Balance of at
least $1,000 and no more than $________ as of the related
Subsequent Cut-Off Date; (D) such Subsequent Mortgage Loan will be
underwritten substantially in accordance with the criteria set
forth under “ Description of the Mortgage Loans –
Underwriting Standards” in the Prospectus Supplement; (E)
such Subsequent Mortgage Loan shall not provide for negative
amortization; and (F) following the purchase of the Subsequent
Mortgage Loan by the issuer, the Mortgage Loans must have a
weighted average loan margin, a weighted average remaining term to
maturity and a weighted average CLTV Ratio at origination, as of
each respective Subsequent Cut-Off Date, which would not vary
materially from the Initial Mortgage Loans.
(c) Within five Business Days after each Subsequent
Transfer Date, the Seller shall deliver to the Purchaser, the
Rating Agencies, the Indenture Trustee and the Enhancer a copy of
the Mortgage Loan Schedule reflecting the Subsequent Mortgage Loans
in electronic format.
Section 2.3 Payment of
Purchase Price .
(a) The purchase price (the “
Purchase Price ”)
for the Initial Mortgage Loans and the related Initial Transferred
Property to be paid by the Purchaser to the Seller on the Closing
Date shall be an amount equal to one-hundred percent (100%) of the
related Cut-Off Date Principal Balances. The Purchase Price paid
for any Subsequent Mortgage Loans and related Subsequent
Transferred Property to be paid by the Purchaser to the Seller on
any Subsequent Transfer Date shall be one-hundred percent (100%) of
the related Cut-Off Date Principal Balances thereof (as identified
on the Mortgage Loan Schedule attached to the related Subsequent
Transfer Agreement provided by the Seller). In the case of each
Additional Balance and the related Transferred Property sold
hereunder created on or after the Cut-Off Date or any Subsequent
Cut-Off Date, as applicable, and prior to the commencement of the
Rapid Amortization Period, the Purchase Price thereof shall be 100%
of the principal amount of the related Draw under the related Loan
Agreement on the later of the Closing Date or any Subsequent
Cut-Off Date, as applicable, and the date of the creation of such
Additional Balance, adjusted to reflect such factors as the Seller
and the Purchaser mutually agree will result in a purchase price
determined to be the fair market value of such Additional Balance
and the related Transferred Property.
(b) In consideration of the sale of the Initial
Mortgage Loans and the related Transferred Property by the Seller
to the Purchaser on the Closing Date, the Purchaser shall pay to
the Seller on the Closing Date by wire transfer of immediately
available funds to a bank account designated by the Seller, the
amount specified above in paragraph (a) for the Initial Mortgage
Loans and the related Transferred Property. In consideration of the
sale of any Subsequent Mortgage Loan and the related Transferred
Property by the Seller to the Purchaser on any Subsequent Transfer
Date, the Purchaser shall pay to the Seller by wire transfer of
immediately available funds to a bank account designated by the
Seller, the amount specified above in paragraph (a) for the
applicable Subsequent Mortgage Loans and the related Transferred
Property.
(c) [Reserved]
(d) With respect to each Additional Balance
transferred hereunder with respect to any Mortgage Loan, the
Purchaser shall pay or cause to be paid to the Seller or its
designee the Purchase Price specified above for such Additional
Balance and the related Transferred Property in cash on the Payment
Date in the calendar month immediately following the calendar month
in which such Additional Balance was created.
(e) The Seller shall have no obligation to sell any
Transferred Property to the Purchaser if the Seller is not paid the
purchase price for such Transferred Property as provided
herein.
Section 2.4 Allocation . Except with respect to
Liquidation Loss Amounts and Subsequent Recovery Amounts, the
Seller, the Servicer, and the Purchaser agree that all collections
on the Mortgage Loans will be allocated and applied as provided by
the terms of the related Loan Agreements or by applicable law.
Except with respect to Liquidation Loss Amounts and Subsequent
Recovery Amounts, if the Loan Agreement or applicable law does not
specify a method of allocation and application for particular
collections, such collections shall be allocated and applied (i)
first to interest, pro rata (based on the amounts coming due on
such date) among the amounts coming due on such date) and (ii) then
to principal, in the order of the dates on which such amounts for
principal were first incurred or, in the case of Promotional
Advances, first to Promotional Advances. If, as a result of the
provisions of this Section 2.4, collections are allocated to
Excluded Draws, such collections shall not be property of the
Purchaser or its assignees and shall be paid by the Servicer to the
Seller as provided in Section 2.5. Liquidation Loss Amounts
and Subsequent Recovery Amounts shall be allocated as provided in
the definition of Excluded Amount.
Section 2.5 Draws During
the Rapid Amortization Period . During
the Rapid Amortization Period, any Excluded Draw shall not be
deemed Additional Balances, and the ownership of such Excluded
Draws shall be retained by the Seller except as provided herein.
Payments and collections allocable pursuant to Section 2.4 to
an Excluded Draw shall not be deposited into the Custodial Account,
the Distribution Account or the Note Payment Account, and shall be
distributed by the Servicer to the Seller no less frequently than
monthly in accordance with reasonable instructions provided by the
Seller.
Section 2.6 Security
Interest . (a) The parties hereto intend
that the transactions set forth herein and in the Subsequent
Transfer Agreements each constitute a sale by the Seller to the
Purchaser of all the Seller’s right, title and interest in
and to the Mortgage Loans and the other Transferred Property,
including for accounting purposes, and not a secured borrowing. In
the event the transactions set forth herein or in any Subsequent
Transfer Agreement are deemed not to be a sale, the Seller hereby
grants to the Purchaser a security interest in the Transferred
Property to secure all of the Seller’s obligations hereunder,
and this Agreement shall and hereby does constitute a security
agreement under applicable law. The Seller agrees to take or cause
to be taken such actions and to execute such documents, including
without limitation the authorization and filing of any continuation
statements with respect to the UCC financing statements filed with
respect to the Mortgage Loans by the Purchaser on the Closing Date,
if any, and any amendments thereto required to reflect a change in
the name or corporate structure of the Seller or the filing of any
additional UCC financing statements due to the change in the
principal office or jurisdiction of organization of the Seller as
are necessary to perfect and protect the Purchaser’s and its
assignee’s interests in the
Transferred Property. The Seller shall file any such
continuation statements or amendments on a timely basis.
(b) To the extent that the Seller retains any
interest in the Transferred Property, the Seller hereby grants to
the Indenture Trustee for the benefit of the Noteholders a security
interest in the Transferred Property, to secure the performance of
all of the obligations of the Seller hereunder and under the other
Basic Documents. With respect to this security interest, the
Indenture Trustee shall have all of the rights that it has under
the Indenture and the Basic Documents and all of the rights of a
secured creditor under the UCC.
ARTICLE III
REPRESENTATIONS AND WARRANTIES;
REMEDIES FOR BREACH
Section 3.1 Representations
and Warranties of the Seller . The Seller
represents and warrants to the Purchaser, as of the Closing Date
or, as applicable, as of each Subsequent Transfer Date (or if
otherwise specified below, as of the date so specified):
(a) As to the Seller:
(i) The Seller is a national banking association
duly organized and validly existing under the laws of the United
States of America and is in compliance with the laws of each state
in which any Mortgaged Property is located to the extent necessary
to ensure the enforceability of each Mortgage Loan;
(ii) The Seller has the power and authority to make,
execute, deliver and perform its obligations under this Agreement
and each Subsequent Transfer Agreement to which it is a party and
all of the transactions contemplated under this Agreement and each
such Subsequent Transfer Agreement, and has taken all necessary
corporate action to authorize the execution, delivery and
performance of this Agreement and each such Subsequent Transfer
Agreement;
(iii) The Seller is not required to obtain the
consent of any other Person or any consents, licenses, approvals or
authorizations from, or registrations or declarations with, any
governmental authority, bureau or agency in connection with the
execution, delivery, performance, validity or enforceability of
this Agreement or each such Subsequent Transfer Agreement, except
for such consents, licenses, approvals or authorizations, or
registrations or declarations, as shall have been obtained or
filed, as the case may be;
(iv) The execution and delivery of this Agreement
and any Subsequent Transfer Agreement to which it is a party by the
Seller and its performance and compliance with the terms of this
Agreement and each such Subsequent Transfer Agreement will not
violate the Seller’s Articles of Association or Bylaws or
constitute a material default (or an event which, with notice or
lapse of time, or both, would constitute a material default) under,
or result in the material breach of, any material contract,
agreement or other instrument to which the Seller is a party or
which may be applicable to the Seller or any of its
assets;
(v) There are no pending or, to the best of the
Seller's knowledge, threatened, actions, suits, proceedings or
investigations before any court, tribunal,
administrative
agency, arbitrator or governmental body that, if
decided adversely, would materially and adversely affect
(A) the condition (financial or otherwise), business or
operations of the Seller, (B) the ability of the Seller to
perform its obligations under, or the validity or enforceability
of, the Basic Documents to which it is a party or (C) the
transactions contemplated by this Agreement;
(vi) This Agreement and each Subsequent Transfer
Agreement to which it is a party constitutes a legal, valid and
binding obligation of the Seller, enforceable against the Seller in
accordance with its terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium
and other laws affecting the enforcement of creditors’ rights
in general, as they may be applied in the context of the insolvency
of a national banking association, and by general equity principles
(regardless of whether such enforcement is considered in a
proceeding in equity or at law), and by public policy
considerations underlying the securities laws, to the extent that
such public policy considerations limit the enforceability of the
provisions of this Agreement which purport to provide
indemnification from liabilities under applicable securities
laws;
(vii) This Agreement constitutes a valid transfer
and assignment to the Purchaser of all right, title and interest of
the Seller in and to the Initial Mortgage Loans, including the
Cut-Off Date Principal Balances now existing and all Additional
Balances thereafter arising to and including the day immediately
preceding the Rapid Amortization Period, all monies due or to
become due with respect thereto, and all proceeds of such Cut-Off
Date Principal Balances with respect to the Initial Mortgage Loans;
and this Agreement and the related Subsequent Transfer Agreement,
when executed and delivered, will constitute a valid transfer and
assignment to the Purchaser of all right, title and interest of the
Seller in and to the Subsequent Mortgage L
