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 in
