EXHIBIT 10.1
EXECUTION COPY
PURCHASE AGREEMENT
between
NEW SOUTH FEDERAL SAVINGS BANK
Originator
and
BOND SECURITIZATION, L.L.C.
Depositor
Dated as of November 26, 2002
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS ............................................................................ 1
Section 1.1 General ........................................................................... 1
Section 1.2 Specific Terms .................................................................... 1
Section 1.3 Usage of Terms .................................................................... 2
Section 1.4 No Recourse ....................................................................... 3
Section 1.5 Action by or Consent of Noteholders and Certificateholder ......................... 3
Section 1.6 Material Adverse Effect ........................................................... 3
ARTICLE II. CONVEYANCE OF THE RECEIVABLES AND THE OTHER CONVEYED PROPERTY .......................... 3
Section 2.1 Conveyance of the Initial Receivables and the Other Initial
Purchased Property ................................................................ 3
Section 2.2 Conveyance of the Additional Receivables and the Other
Additional Purchased Property ..................................................... 4
ARTICLE III. REPRESENTATIONS AND WARRANTIES ......................................................... 4
Section 3.1 Representations and Warranties of Originator ...................................... 4
Section 3.2 Representations and Warranties of Originator with Respect
to the Receivables ................................................................ 6
Section 3.3 Representations and Warranties of Depositor ....................................... 6
ARTICLE IV. COVENANTS OF ORIGINATOR ................................................................ 8
Section 4.1 Protection of Title of Depositor .................................................. 8
Section 4.2 Purchase of Receivables on the Funding Date ....................................... 9
Section 4.3 Other Liens or Interests .......................................................... 9
Section 4.4 Costs and Expenses ................................................................ 9
Section 4.5 Indemnification by Originator ..................................................... 9
ARTICLE V. REPURCHASES ............................................................................ 11
Section 5.1 Repurchase of Receivables Upon Breach of Warranty ................................. 11
Section 5.2 Reassignment of Purchased Receivables ............................................. 11
Section 5.3 Waivers ........................................................................... 12
ARTICLE VI. MISCELLANEOUS .......................................................................... 12
Section 6.1 Liability of Originator and Depositor ............................................. 12
Section 6.2 Merger or Consolidation of Originator or Depositor ................................ 12
Section 6.3 Limitation on Liability of Originator, and Depositor and Others ................... 13
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TABLE OF CONTENTS
(continued)
Page
Section 6.4 Originator May Own Notes or the Certificate ....................................... 13
Section 6.5 Amendment ......................................................................... 13
Section 6.6 Notices ........................................................................... 15
Section 6.7 Merger and Integration ............................................................ 16
Section 6.8 Severability of Provisions ........................................................ 16
Section 6.9 Intention of the Parties .......................................................... 16
Section 6.10 Governing Law ..................................................................... 17
Section 6.11 Counterparts ...................................................................... 17
Section 6.12 Conveyance of the Receivables and the Other Purchased
Property to the Issuer ............................................................ 17
Section 6.13 Nonpetition Covenant .............................................................. 17
Section 6.14 Third Party Beneficiaries ......................................................... 18
SCHEDULES
Schedule A -- Schedule of Receivables
Schedule B -- Schedule of Representations
Schedule C -- Perfection Representations
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PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT, dated as of November 26, 2002, is between New
South Federal Savings Bank, a federally chartered savings bank, as Originator
("Originator"), and Bond Securitization, L.L.C., a Delaware limited liability
company, as Depositor ("Depositor").
Depositor has agreed to purchase from the Originator, and the Originator,
pursuant to this Agreement, is selling to Depositor the Receivables and Other
Purchased Property.
In consideration of the premises and the mutual agreements hereinafter
contained, and for other good and valuable consideration, the receipt of which
is acknowledged, the Originator and the Depositor, intending to be legally
bound, hereby agree as follows:
ARTICLE I.
DEFINITIONS
SECTION 1.1 General. Capitalized terms used herein without definition
will have the respective meanings assigned to such terms in the Sale and
Servicing Agreement dated as of November 26, 2002, by and among the Depositor,
New South Federal Savings Bank, in its individual capacity, as Custodian and as
Servicer, New South Motor Vehicle Trust 2002-A, as Issuer, and JPMorgan Chase
Bank, as Indenture Trustee.
SECTION 1.2 Specific Terms. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, will have
the following meanings:
"Additional Receivables" means the Receivables originated by the
Originator, purchased by the Depositor and transferred to the Issuer on the
Funding Date.
"Agreement" means this Purchase Agreement and all amendments hereof and
supplements hereto.
"Indemnified Person" means any Person in respect of which indemnity may
be sought pursuant to Section 4.5 herein.
"Initial Receivables" means the Receivables listed on the Schedule of
Receivables on the Closing Date.
"Insolvency Proceeding" is defined in Section 6.9(a).
"Other Additional Purchased Property" means all property described in
Section 2.2(a)(ii), (iii), (iv), (v), (vi), (vii) and (ix) of the Sale and
Servicing Agreement.
"Other Initial Purchased Property" means all property described in
Section 2.1(b), (c), (d), (e), (f), (g) and (i) of the Sale and Servicing
Agreement.
"Other Purchased Property" means the Other Initial Purchased Property and
the Other Additional Purchased Property.
"Perfection Representations" means the representations and warranties of
the Originator set forth in Schedule C hereto.
"Receivables" means the Receivables listed on the Schedule of
Receivables.
"Related Documents" means the Notes, the Certificate, the Sale and
Servicing Agreement, the Indenture, the Trust Agreement, the Note Policy, the
Insurance Agreement and the Underwriting Agreement. The Related Documents to be
executed by any party are referred to herein as "such party's Related
Documents," "its Related Documents" or by a similar expression.
"Repurchase Event" means the occurrence of a breach of any of the
Originator's representations and warranties set forth in the Schedule of
Representations or in Schedule C to this Agreement that materially and adversely
the interests of the Noteholders or the Insurer in any Receivable.
"Sale and Servicing Agreement" means the Sale and Servicing Agreement
referred to in Section 1.1.
"Schedule of Representations" means the Schedule of Representations
attached hereto as Schedule B.
"Schedule of Receivables" means the schedule of Receivables sold and
transferred pursuant to this Agreement on the Closing Date, as supplemented by
the schedule of Receivables sold and transferred pursuant to this Agreement on
the Funding Date, a copy of which is incorporated herein as Schedule A to this
Agreement.
"Taxes" means any sales, gross receipts, personal property, tangible or
intangible personal property, privilege or license taxes (but not including any
(x) federal, state or other taxes, arising out of the ownership of the Notes or
the Certificate, (y) transfer taxes arising in connection with the transfer of
the Notes or the Certificate or (z) federal, state or other taxes arising out of
any fees paid to the indemnified parties pursuant to the Transaction Documents).
"Transferred Assets" is defined in Section 6.9(a).
SECTION 1.3 Usage of Terms. With respect to all terms used in this
Agreement, the singular includes the plural and the plural the singular; words
importing any gender include the other gender; references to "writing" include
printing, typing, lithography, and other means of reproducing words in a visible
form; references to agreements and other contractual instruments include all
subsequent amendments thereto or changes therein entered into in accordance with
their respective terms and not prohibited by this Agreement or the Sale and
Servicing Agreement; references to Persons include their permitted successors
and assigns; and the terms "include" or "including" mean "include without
limitation" or "including without limitation." The words "herein," "hereof" and
"hereunder" and other words of similar import refer to this Agreement as a whole
and not to any particular Article, Section or other subdivision,
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and Article, Section, Schedule and Exhibit references, unless otherwise
specified, refer to Articles and Sections of and Schedules and Exhibits to this
Agreement.
SECTION 1.4 No Recourse. Without limiting the obligations of the
Originator or the Depositor hereunder, no recourse may be taken, directly or
indirectly, under this Agreement or any certificate or other writing delivered
in connection herewith or therewith, against any stockholder, officer, director,
employee or agent, as such, of the Originator or the Depositor, or of any
predecessor, successor or affiliate of the Originator or the Depositor.
SECTION 1.5 Action by or Consent of Noteholders and Certificateholder.
Whenever any provision of this Agreement refers to action to be taken, or
consented to, by Noteholders or the Certificateholder, such provision will be
deemed to refer to the Certificateholder or Noteholder, as the case may be, of
record as of the Record Date immediately preceding the date on which such action
is to be taken, or consent given, by Noteholders or the Certificateholder.
Solely for the purposes of any action to be taken, or consented to, by
Noteholders, any Note registered in the name of the Issuer, the Originator or
any Affiliate thereof will be deemed not to be outstanding; provided, however,
that, solely for the purpose of determining whether the Owner Trustee or the
Indenture Trustee is entitled to rely upon any such action or consent, only
Notes or Certificates that the Owner Trustee or the Indenture Trustee,
respectively, knows to be so owned will be so disregarded.
SECTION 1.6 Material Adverse Effect. Whenever a determination is to be
made under this Agreement as to whether a given event, action, course of conduct
or set of facts or circumstances could or would have a material adverse effect
on the Noteholders or the Insurer (or any similar or analogous determination),
such determination will be made without taking into account the funds available
from claims under the Note Policy.
ARTICLE II.
CONVEYANCE OF THE RECEIVABLES
AND THE OTHER CONVEYED PROPERTY
SECTION 2.1 Conveyance of the Initial Receivables and the Other Initial
Purchased Property.
(a) Subject to the terms and conditions of this Agreement, effective as
of the Closing Date, Originator hereby sells, transfers, assigns and
otherwise conveys to Depositor without recourse (but without limitation of
its obligations in this Agreement), and Depositor hereby purchases, all
right, title and interest of Originator in and to the Initial Receivables and
the Other Initial Purchased Property, including moneys received thereon on or
after the Initial Cutoff Date (excluding amounts collected in respect of
interest accrued on the Receivables prior to the Closing Date). It is the
intention of Originator and Depositor that the sale and assignment
contemplated by this Agreement on the Closing Date constitutes a sale of the
Receivables and the Other Initial Purchased Property from Originator to
Depositor, conveying good title thereto free and clear of any liens, and the
beneficial interest in and title to the Initial Receivables and the Other
Initial Purchased Property will not be the property of the Originator or of
the conservatorship or
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receivership for the Originator in the event of an Insolvency Proceeding with
respect to the Originator.
(b) Simultaneously with the sale of the Receivables and the Other Initial
Purchased Property to Depositor on the Closing Date, Depositor has paid or
caused to be paid to or upon the order of Originator (i) an amount equal to
net proceeds of the Class A Notes by wire transfer of immediately available
funds and (ii) the Certificate.
SECTION 2.2 Conveyance of the Additional Receivables and the Other
Additional Purchased Property.
(a) Subject to the terms and conditions of this Agreement, effective as
of the Funding Date, Originator hereby sells, transfers, assigns and
otherwise conveys to Depositor without recourse (but without limitation of
its obligations in this Agreement), and Depositor hereby purchases, all
right, title and interest of Originator in and to the Additional Receivables
and the Other Additional Property, including all moneys received thereon on
or after the Additional Cutoff Date (excluding amounts collected in respect
of interest accrued on the Additional Receivables prior to the Funding Date).
It is the intention of Originator and Depositor that the sale and assignment
contemplated by this Agreement on the Funding Date constitutes a sale of the
Additional Receivables and the Other Additional Purchased Property from
Originator to Depositor, conveying good title thereto free and clear of any
liens, and the beneficial interest in and title to the Additional Receivables
and the Other Additional Purchased Property will not be the property of the
Originator or of the conservatorship or receivership for the Originator in
the event of an Insolvency Proceeding with respect to the Originator.
(b) Simultaneously with the sale of the Additional Receivables and the
Other Additional Conveyed Property to Depositor on the Funding Date,
Depositor has paid or caused to be paid to or upon the order of Originator an
amount equal to the aggregate Principal Balance of the Additional Receivables
as of the Additional Cutoff Date.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 Representations and Warranties of Originator. Originator
makes the following representations and warranties as of the Closing Date and as
of the Funding Date, on which Depositor relies in purchasing the Receivables and
the Other Purchased Property, on which the Issuer will rely in purchasing the
Receivables and the Other Purchased Property and on which the Insurer will rely
in issuing the Note Policy. Such representations are made as of the Closing Date
and the Funding Date, but will survive the sale, transfer and assignment of the
Receivables and the Other Purchased Property hereunder; the sale, transfer and
assignment thereof by Depositor to the Issuer and the pledge thereof by the
Issuer to the Indenture Trustee pursuant to the Indenture. Originator and
Depositor agree that Depositor will assign to Issuer all Depositor's rights
under this Agreement and that the Indenture Trustee will thereafter be entitled
to enforce this Agreement against Originator in the Indenture Trustee's own name
on behalf of the Noteholders.
(a) Perfection Representations. The Perfection Representations shall be a
part of this Agreement.
(b) Organization and Valid Existence. Originator has been duly organized
and is validly existing as a federally chartered savings bank, with power and
authority to own its properties and to conduct its business as such
properties are currently owned and such business is currently conducted, and
had at all relevant times, and now has, power, authority and legal right to
acquire, own, transfer and sell the Receivables and the Other Purchased
Property to be transferred to Depositor.
(c) Due Qualification. Originator is duly qualified to do business in
good standing, and has obtained all necessary licenses and approvals in all
jurisdictions in which the ownership or lease of its property or the conduct
of its business with respect to the Receivables requires such qualification.
(d) Power and Authority. Originator has the power and authority to
execute and deliver this Agreement and its Related Documents and to carry out
its terms and their terms, respectively; Originator has full power and
authority to sell and assign the Receivables and the Other Purchased Property
to be sold and assigned to Depositor hereunder and has duly authorized such
sale and assignment to Depositor by all necessary corporate action; and the
execution, delivery and performance of this Agreement and Originator's
Related Documents have been duly authorized by Originator by all necessary
corporate action.
(e) Valid Sale; Binding Obligations. This Agreement and Originator's
Related Documents have been duly executed and delivered, will effect a valid
sale, transfer and assignment of the Receivables and the Other Purchased
Property to the Depositor, enforceable against Originator and creditors of
and purchasers from Originator; and this Agreement and Originator's Related
Documents constitute legal, valid and binding obligations of Originator
enforceable in accordance with their respective terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization or
other similar laws affecting the enforcement of creditors' rights generally
and by equitable limitations on the availability of specific remedies,
regardless of whether such enforceability is considered in a proceeding in
equity or at law.
(f) No Violation. The consummation of the transactions contemplated by
this Agreement and the Related Documents, and the fulfillment of the terms of
this Agreement and the Related Documents, will not conflict with, result in
any breach of any of the terms and provisions of, or constitute (with or
without notice, lapse of time or both) a default under, the organizational
documents of Originator, or any indenture, agreement, mortgage, deed of trust
or other instrument to which Originator is a party or by which it is bound,
or result in the creation or imposition of any Lien upon any of its
properties pursuant to the terms of any such indenture, agreement, mortgage,
deed of trust or other instrument, other than this Agreement, the Sale and
Servicing Agreement and the Indenture, or violate any law, order, rule or
regulation applicable to Originator of any court or of any federal or state
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over Originator or any of its properties.
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(g) No Proceedings. There are no proceedings or investigations pending
or, to Originator's knowledge, threatened against Originator, before any
court, regulatory body, administrative agency or other tribunal or
governmental instrumentality having jurisdiction over Originator or its
properties (i) asserting the invalidity of this Agreement or any of the
Related Documents, (ii) seeking to prevent the issuance of the Notes or the
consummation of any of the transactions contemplated by this Agreement or any
of the Related Documents, (iii) seeking any determination or ruling that
might materially and adversely affect the performance by Originator of its
obligations under, or the validity or enforceability of, this Agreement or
any of the Related Documents or (iv) seeking to affect adversely the federal
income tax or other federal, state or local tax characterization of, or
seeking to impose any excise, franchise, transfer or similar tax upon, the
transfer and acquisition of the Receivables and the Other Purchased Property
hereunder or under the Sale and Servicing Agreement.
SECTION 3.2 Representations and Warranties of Originator with Respect to
the Receivables. The Originator makes the representations and warranties set
forth in the Schedule of Representations on which the Depositor and the Issuer
rely in purchasing the Receivables. Unless otherwise indicated, such
representations and warranties speak as of the Initial Cutoff Date in the case
of the Initial Receivables, and as of the Additional Cutoff Date, in the case of
the Additional Receivables, but shall survive the sale, transfer and assignment
of the Receivables and the Other Purchased Property hereunder; the sale,
transfer and assignment thereof by the Depositor to the Issuer and the pledge
thereof by the Issuer to the Indenture Trustee pursuant to the Indenture.
SECTION 3.3 Representations and Warranties of Depositor. Depositor makes
the following representations and warranties on the Closing Date and on the
Funding Date, on which Originator relies in transferring the Receivables and the
Other Purchased Property to the Depositor, on which the Issuer will rely in
purchasing the Receivables and on which the Insurer will rely in issuing the
Note Policy. Such representations are made as of the execution and delivery of
this Agreement, but will survive the sale, transfer and assignment of the
Receivables and the Other Purchased Property hereunder, and the sale, transfer
and assignment thereof to the Issuer under the Sale and Servicing Agreement.
(a) Organization and Good Standing. Depositor has been duly organized and
is validly existing as a limited liability company in good standing under the
laws of the State of Delaware, with power and authority to own its properties
and to conduct its business as such properties are currently owned and such
business is currently conducted, and had at all relevant times, and now has,
power, authority and legal right to acquire, own and sell the Receivables and
the Other Purchased Property to be transferred to the Issuer.
(b) Due Qualification. Depositor is duly qualified to do business as a
foreign limited liability company in good standing, and has obtained all
necessary licenses and approvals in all jurisdictions in which the ownership
or lease of its property or the conduct of its business requires such
qualification.
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(c) Power and Authority. Depositor has the power and authority to execute
and deliver this Agreement and its Related Documents and to carry out its
terms and their terms, respectively; and the execution, delivery and
performance of this Agreement and Depositor's Related Documents have been
duly authorized by Depositor by all necessary action.
(d) Valid Sale; Binding Obligations. This Agreement and Depositor's
Related Documents have been duly executed and delivered, and this Agreement
and Depositor's Related Documents constitute legal, valid and binding
obligations of Depositor enforceable in accordance with their respective
terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of creditors'
rights generally and by equitable limitations on the availability of specific
remedies, regardless of whether such enforceability is considered in a
proceeding in equity or at law.
(e) No Violation. The consummation of the transactions contemplated by
this Agreement and the Related Documents, and the fulfillment of the terms of
this Agreement and the Related Documents, will not conflict with, result in
any breach of any of the terms and provisions of, or constitute (with or
without notice, lapse of time or both) a default under, the limited liability
company agreement of Depositor, or any indenture, agreement, mortgage, deed
of trust or other instrument to which Depositor is a party or by which it is
bound, or result in the creation or imposition of any Lien upon any of its
properties pursuant to the terms of any such indenture, agreement, mortgage,
deed of trust or other instrument, other than this Agreement, the Sale and
Servicing Agreement and the Indenture, or violate any law, order, rule or
regulation applicable to Depositor of any court or of any federal or state
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over Depositor or any of its properties.
(f) No Proceedings. There are no proceedings or investigations pending
or, to Depositor's knowledge, threatened against Depositor, before any court,
regulatory body, administrative agency or other tribunal or governmental
instrumentality having jurisdiction over Depositor or its properties (i)
asserting the invalidity of this Agreement or any of the Related Documents,
(ii) seeking to prevent the issuance of the Notes or the consummation of any
of the transactions contemplated by this Agreement or any of the Related
Documents, (iii) seeking any determination or ruling that might materially
and adversely affect the performance by Depositor of its obligations under,
or the validity or enforceability of, this Agreement or any of the Related
Documents or (iv) seeking to affect adversely the federal income tax or other
federal, state or local tax characterization of, or seeking to impose any
excise, franchise, transfer or similar tax upon, the transfer and acquisition
of the Receivables and the Other Purchased Property hereunder or under the
Sale and Servicing Agreement.
In the event of any breach of a representation and warranty made by
Depositor hereunder, Originator covenants and agrees that it will not take any
action to pursue any remedy that it may have hereunder, in law, in equity or
otherwise, until a year and a day have passed since the date on which all notes,
certificates, pass-through certificates or other similar securities issued by
Depositor, or a trust, limited liability company or similar vehicle formed by
Depositor,
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have been paid in full. Originator and Depositor agree that damages will not be
an adequate remedy for such breach and that this covenant may also be
specifically enforced by Issuer or by the Indenture Trustee on behalf of the
Noteholders and Owner Trustee on behalf of the Certificateholder.
ARTICLE IV.
COVENANTS OF ORIGINATOR
SECTION 4.1 Protection of Title of Depositor.
(a) At or prior to the Closing Date and the Funding Date, Originator will
have filed or caused to be filed UCC-1 financing statements, (i) naming
Originator as seller or debtor and naming Depositor as purchaser or secured
party, (ii) naming Depositor as seller or debtor and the Issuer as purchaser
or secured party, and (iii) naming Issuer as debtor and Indenture Trustee as
secured party and describing the Receivables and the Other Purchased Property
being transferred on the Closing Date or the Funding Date, as applicable, as
collateral, in such locations as are required in order to perfect the
transfers and pledges thereof under the Related Documents. From time to time
thereafter, Originator will execute and file such financing statements and
cause to be executed and filed such continuation statements, all in such
manner and in such places as may be required by law fully to preserve,
maintain and protect the interest of Depositor under this Agreement, of the
Issuer under the Sale and Servicing Agreement and of the Indenture Trustee
under the Indenture in the Receivables and the Other Purchased Property and
in the proceeds thereof. Originator will deliver (or cause to be delivered)
to Depositor, the Indenture Trustee and the Insurer file-stamped copies of,
or filing receipts for, any document filed as provided above, as soon as
available following such filing. In the event that Originator fails to
perform its obligations under this subsection, Depositor, Issuer or the
Indenture Trustee may do so, at the expense of Originator. In furtherance of
the foregoing, the Originator hereby authorizes the Depositor, the Issuer or
the Indenture Trustee to file a record or records (as defined in the
applicable UCC), including financing statements, in all jurisdictions and
with all filing offices as each may determine, in its sole discretion, are
necessary or advisable to perfect the security interest granted to the
Depositor pursuant to Section 6.9. Such financing statements may describe the
collateral in the same manner as described herein or may contain an
indication or description of collateral that describes such property in any
other manner as such party may determine, in its sole discretion, is
necessary, advisable or prudent to ensure the perfection of the security
interest in the collateral granted to the Depositor herein.
(b) Originator will not change (i) its name, identity or corporate
structure in any manner that would, could or might make any financing
statement or continuation statement filed by Originator (or by Depositor,
Issuer or the Indenture Trustee on behalf of Originator) in accordance with
Section 4.1(a) seriously misleading within the meaning of ss.9-506 of the
applicable UCC or (ii) its jurisdiction of organization, unless Originator
has given Depositor, Issuer, Insurer and the Indenture Trustee at least 60
days' prior written notice thereof, and will promptly file appropriate
amendments to all previously filed financing statements and continuation
statements.
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(c) Originator shall at all times maintain each office from which it
services Receivables and its principal executive office within the United
States of America.
(d) Prior to the Closing Date and the Funding Date, Originator has
maintained accounts and records as to each Initial Receivable and Additional
Receivable, respectively, accurately and in sufficient detail to permit (i)
the reader thereof to know at any time as of or prior to the Closing Date or
the Funding Date, as applicable, the status of such Receivable, including
payments and recoveries made and payments owing (and the nature of each) and
(ii) reconciliation between payments or recoveries on (or with respect to)
each Receivable and the Principal Balance as of the Related Cutoff Date.
Originator will maintain its computer systems so that, from and after the
time of transfer under this Agreement of the Receivables to Depositor and the
conveyance of the Receivables by Depositor to the Issuer, Originator's master
computer records (including archives) that will refer to a Receivable
indicate clearly that such Receivable has been transferred to the Depositor
and has been conveyed by Depositor to Issuer. Indication of the Issuer's
ownership of a Receivable will be deleted from or modified on Originator's
computer systems when, and only when, the Receivable will become a Purchased
Receivable or will have been paid in full.
(e) If at any time Originator proposes to sell, grant a security interest
in, or otherwise transfer any interest in any motor vehicle receivables to
any prospective purchaser, lender or other transferee, Originator will give
to such prospective purchaser, lender or other transferee computer tapes,
records or print-outs (including any restored from archives) that, if they
refer in any manner whatsoever to any Receivable (other than a Purchased
Receivable), will indicate clearly that such Receivable has been sold by the
Originator and is owned by the Issuer.
SECTION 4.2 Purchase of Receivables on the Funding Date. Originator shall
use its best efforts in good faith to make available for assignment to the
Depositor, on the Funding Date, all Receivables acquired by Originator which
meet the eligibility criteria set forth in the Sale and Servicing Agreement as
of such date. This covenant and agreement shall be for the benefit of the
Depositor, the Owner Trustee and the Indenture Trustee and any such Person may
enforce its legal or equitable rights, remedies or claims hereunder.
SECTION 4.3 Other Liens or Interests. Except for the conveyances
hereunder, Originator will not sell, pledge, assign or transfer to any other
Person or grant, create, incur, assume or suffer to exist any Lien on the
Receivables or the Other Purchased Property or any interest herein and
Originator will defend the right, title, and interest of Depositor and the
Issuer in and to the Receivables and the Other Purchased Property against all
claims of third parties claiming through or under Originator.
SECTION 4.4 Costs and Expenses. Each of Originator and Depositor will pay
all reasonable and actual costs and disbursements in connection with the
performance of its obligations hereunder and under its Related Documents.
SECTION 4.5 Indemnification by Originator. (a) Originator will defend,
indemnify and hold harmless the Depositor, the Issuer, the Indenture Trustee,
the Owner Trustee,
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the Noteholders and the Insurer from and against any and all costs, expenses,
losses, damages, claims, and liabilities, arising out of or resulting from: (i)
any breach of any of Originator's representations and warranties contained
herein, (ii) the use, ownership or operation by Originator or any affiliate
thereof of a Financed Vehicle, (iii) any action taken, or failed to be taken, by
it in respect of the Receivables other than in accordance with this Agreement or
the Sale and Servicing Agreement or (iv) the negligence (except for errors in
judgment), willful misfeasance, or bad faith of Originator in the performance of
its duties under this Agreement or by reason of reckless disregard of
Originator's obligations and duties under this Agreement.
(a) Originator will defend, indemnify and hold harmless the Issuer, the
Indenture Trustee, the Owner Trustee, the Noteholders and the Insurer from
and against any and all costs, expenses, losses, damages, claims, and
liabilities, arising out of or resulting from any Taxes which may at any time
be asserted against such Persons with respect to (i) the conveyance or
ownership of the Receivables or the Other Purchased Property hereunder, (ii)
the conveyance or ownership of the Receivables under the Sale and Servicing
Agreement and (iii) the issuance and original sale of the Notes and the
issuance of the Certificate, and costs and expenses in defending against the
same, arising by reason of the acts to be performed by Originator under this
Agreement or imposed against such Persons.
Indemnification under this Section 4.5 will include reasonable and actual
fees and expenses of counsel and expenses of litigation and will survive payment
of the Notes and the Certificate and termination of this Agreement. If any suit,
action, proceeding (including any governmental or regulatory investigation),
claim or demand shall be brought or asserted against any Indemnified Person,
such Indemnified Person shall promptly notify Originator in writing, and
Originator, upon request of the Indemnified Person, shall retain counsel
reasonably satisfactory to the Indemnified Person to represent the Indemnified
Person and any others Originator designates in such proceeding and shall pay the
reasonable and actual fees and expenses of such counsel related to such
proceeding. Originator shall not be liable for any settlement of any claim or
proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, Originator agrees to
indemnify any Indemnified Person from and against any loss or liability by
reason of such settlement or judgment. Originator shall not, without the prior
written consent of the Indemnified Person, effect any settlement of any pending
or threatened proceeding in respect of which any Indemnified Person is or could
have been a party and indemnity could have been sought hereunder by such
Indemnified Person, unless such settlement includes an unconditional release of
such Indemnified Person from all liability on claims that are the subject matter
of such proceeding. If Originator shall have made any indemnity payments
pursuant to this Section 4.5 and the Person to or on behalf of whom such
payments are made thereafter shall collect any of such amounts from others, such
Person shall promptly repay such amounts to Originator, without interest. The
indemnity obligations hereunder will be in addition to any obligation that
Originator may otherwise have.
10
ARTICLE V.
REPURCHASES
SECTION 5.1 Repurchase of Receivables Upon Breach of Warranty. As of the
last day of the second (or, if Originator so elects, the first) month following
the discovery by Originator or receipt by Originator of written notice of a
Repurchase Event, unless the breach which is the subject of such Repurchase
Event is cured by such date, Originator will repurchase any Receivable in which
the interests of the Noteholders or the Insurer are materially and adversely
affected by any such breach as of such date. The "second month" will mean the
month following the month in which discovery occurs or written notice is given,
and the "first month" will mean the month in which discovery occurs or written
notice is given. In consideration of and simultaneously with the repurchase of
the Receivable, Originator will remit to the Collection Account the Purchase
Amount in the manner specified in Section 5.6 of the Sale and Servicing
Agreement and the Issuer will execute such assignments and other documents
reasonably requested by such person in order to effect such repurchase. It is
understood and agreed that, except as set forth in the immediately following
paragraph, the obligation of Originator to repurchase any Receivable, as to
which a breach occurred and is continuing, will, if such obligation is
fulfilled, constitute the sole remedy against Originator for such breach
available to Depositor, the Issuer, the Insurer, the Noteholders, the
Certificateholder, the Indenture Trustee on behalf of the Noteholders or the
Owner Trustee on behalf of the Certificateholder. This Section 5.1 is intended
to grant the Issuer and the Indenture Trustee a direct right against Originator
to demand performance hereunder, and in connection therewith, Originator waives
any requirement of prior demand against Depositor with respect to such
repurchase obligation. Notwithstanding any other provision of this Agreement or
the Sale and Servicing Agreement to the contrary, the obligation of Originator
under this Section 5.1 will not terminate upon a termination of Originator as
Servicer under the Sale and Servicing Agreement and will be performed in
accordance with the terms hereof notwithstanding the failure of the Servicer or
Depositor to perform any of their respective obligations with respect to such
Receivable under the Sale and Servicing Agreement.
In addition to the foregoing and notwithstanding whether the related
Receivable will have been purchased by Originator, Originator will indemnify the
Depositor, the Issuer, the Indenture Trustee, the Owner Trustee, the Insurer,
the Noteholders and the Certificateholder from and against all costs, expenses,
losses, damages, claims and liabilities, including reasonable fees and expenses
of counsel, which may be asserted against or incurred by any of them as a result
of third party claims arising out of the events or facts giving rise to such
Repurchase Events.
SECTION 5.2 Reassignment of Purchased Receivables. Upon deposit in the
Collection Account of the Purchase Amount of any Receivable repurchased by
Originator under Section 5.1, the Issuer will take such steps as may be
reasonably requested by Originator in order to assign to Originator all of the
Issuer's right, title and interest in and to such Receivable and all security
and documents and all Other Purchased Property conveyed to the Issuer directly
relating thereto, without recourse, representation or warranty, except as to the
absence of Liens created by or arising as a result of actions of the Issuer.
Such assignment will be a sale and assignment outright, and not for security.
If, following the reassignment of a Purchased Receivable, in any
11
enforcement suit or legal proceeding, it is held that Originator may not enforce
any such Receivable on the ground that it will not be a real party in interest
or a holder entitled to enforce the Receivable, the Issuer will, at the expense
of Originator, take such steps as Originator deems reasonably necessary to
enforce the Receivable, including bringing suit in the Issuer's name.
SECTION 5.3 Waivers. No failure or delay on the part of Depositor, or the
Issuer as assignee of Depositor, in exercising any power, right or remedy under
this Agreement will operate as a waiver thereof, nor will any single or partial
exercise of any such power, right or remedy preclude any other or future
exercise thereof or the exercise of any other power, right or remedy.
ARTICLE VI.
MISCELLANEOUS
SECTION 6.1 Liability of Originator and Depositor. Each of Originator and
Depositor will be liable in accordance herewith only to the extent of the
obligations in this Agreement specifically undertaken by each of Originator and
Depositor, respectively and the representations and warranties of each of
Originator and Depositor, respectively.
SECTION 6.2 Merger or Consolidation of Originator or Depositor. Any
corporation, limited liability company or other entity (i) into which Originator
or Depositor may be merged or consolidated, (ii) resulting from any merger or
consolidation to which Originator or Depositor is a party or (iii) succeeding to
the business of Originator or Depositor, in the case of Depositor, which
corporation, limited liability company or other entity has a certificate of
incorporation or limited liability company agreement containing provisions
relating to limitations on business and other matters substantively identical to
those contained in Depositor's limited liability company agreement, provided
that in any of the foregoing cases such corporation or other entity will execute
an agreement of assumption to perform every obligation of Originator or
Depositor, as the case may be, under this Agreement and, whether or not such
assumption agreement is executed, will be the successor to Originator or
Depositor, as the case may be, hereunder (without relieving Originator or
Depositor of their responsibilities hereunder, if it survives such merger or
consolidation) without the execution or filing of any document or any further
action by any of the parties to this Agreement. Notwithstanding the foregoing,
so long as no Insurer Default has occurred and is continuing, Depositor will not
merge or consolidate with any other Person or permit any other Person to become
the successor to Depositor's business without the prior written consent of the
Insurer. Originator or Depositor will promptly inform the other parties, the
Issuer, the Indenture Trustee, the Owner Trustee and, so long as no Insurer
Default has occurred and is continuing, the Insurer, of such merger,
consolidation or purchase and assumption. Notwithstanding the foregoing, as a
condition to the consummation of the transactions referred to in clauses (i),
(ii) and (iii) above, (x) immediately after giving effect to such transaction,
no representation or warranty made pursuant to Sections 3.1 and 3.3 will have
been breached (for purposes hereof, such representations and warranties will be
true and correct as of the date of the consummation of such transaction), (y)
with respect to a transaction involving the Depositor, Depositor will have
delivered written notice of such consolidation, merger or purchase and
assumption to the Rating Agencies prior to the consummation of such transaction
and will have delivered to the Issuer, the Insurer and the Indenture Trustee an
12
Officer's Certificate and an Opinion of Counsel each stating that such
consolidation, merger or succession and such agreement of assumption comply with
this Section 6.2 and that all conditions precedent, if any, provided for in this
Agreement relating to such transaction have been complied with, and (y)
Originator or Depositor, as applicable, will have delivered to the Issuer and
the Indenture Trustee an Opinion of Counsel, stating, in the opinion of such
counsel, either (A) all financing statements and continuation statements and
amendments thereto have been executed and filed that are necessary to preserve
and protect the interest of the Issuer and the Indenture Trustee in the
Receivables and reciting the details of the filings or (B) no such action will
be necessary to preserve and protect such interest.
SECTION 6.3 Limitation on Liability of Originator, and Depositor and
Others. Originator, and Depositor and any director, officer, employee or agent
thereof may rely in good faith on the advice of counsel or on any document of
any kind prima facie properly executed and submitted by any Person respecting
any matters arising under this Agreement. Neither Originator nor Depositor will
be under any obligation to appear in, prosecute or defend any legal action that
is not incidental to its obligations under this Agreement or its Related
Documents and that in its opinion may involve it in any expense or liability.
SECTION 6.4 Originator May Own Notes or the Certificate. Subject to the
provisions of the Sale and Servicing Agreement, Originator and any Affiliate of
Originator may in their individual or any other capacity become the owner or
pledgee of Notes or the Certificate with the same rights as they would have if
they were not Originator or an Affiliate thereof.
SECTION 6.5 Amendment.
(a) Except as described in Section 6.5(b), with respect to any amendment
requiring the consent of each Holder of any Outstanding Class A Note affected
thereby, so long as no Insurer Default has occurred and is continuing, this
Agreement may be amended from time to time by the parties hereto with the
consent of the Insurer (which consent will not be unreasonably withheld), but
without the consent of any of the Noteholders. If an Insurer Default has
occurred and is continuing, this Agreement may be amended from time to time
by the parties hereto, with the consent of the Insurer (which consent will
not be unreasonably withheld), but without the consent of any of the
Noteholders; provided that the Indenture Trustee has received an officer's
certificate of the Servicer stating that, in the reasonable belief of the
certifying officer, such action will not materially adversely affect the
interests of the Noteholders.
(b) If an Insurer Default has occurred and is continuing, the parties
hereto, with the consent of the Insurer and the Majority Noteholders, may
also amend this Agreement in order to add, change or eliminate any other
provisions with respect to matters or questions arising under this Agreement
or affecting the rights of the Noteholders; provided, that no such amendment
may, without the consent of the Insurer and the Holder of each Outstanding
Note affected thereby:
(i) change the Final Scheduled Payment Date for any Class of the
Class A Notes or the due date for any installment of interest on any
Class A Note, or reduce the principal amount thereof, the interest rate
thereon or the Redemption
13
Price with respect thereto, or change any place of payment where, or the
coin or currency in which, any Note or the interest thereon is payable;
(ii) reduce the percentage of the Outstanding Amount of the Class A
Notes, the consent of the Holders of which is required for any such
amendment or for any waiver of compliance with certain provisions of this
Agreement or certain defaults hereunder and their consequences as
provided for in this Agreement;
(iii) modify or alter the provisions of this Agreement regarding the
voting of Class A Notes held by the Trust, any obligor on the Notes, New
South or any affiliate of the foregoing;
(iv) permit the creation of any lien ranking prior to or on a parity
with the lien of the Indenture with respect to any part of the Trust
Estate or, except as otherwise permitted or contemplated herein or in any
of the Basic Documents, terminate the lien of the Indenture on any
property at any time subject thereto or deprive the Holder of any Note of
the security provided by the lien of the Indenture; or
(v) reduce the percentage of the Outstanding Amount of the Class A
Notes required to direct the Indenture Trustee to sell or liquidate the
Trust Property.
The Indenture Trustee may determine whether or not any Class A Notes
would be affected by any amendment and such determination will be conclusive
upon the Holders of all Class A Notes, whether theretofore or thereafter
authenticated and delivered hereunder. The Indenture Trustee will not be liable
for any such determination made in good faith and will be entitled to receive,
and will be fully protected in relying upon, an Opinion of Counsel stating that
the execution of any amendments is authorized or permitted by this Agreement.
(c) Promptly after the execution of any such amendment or consent, the
Originator will furnish written notification of the substance of such
amendment or consent to the Indenture Trustee and the Rating Agencies.
(d) It will not be necessary for the consent of Certificateholder or
Noteholders pursuant to this Section 6.5 to approve the particular form of
any proposed amendment or consent, but it will be sufficient if such consent
will approve the substance thereof. The manner of obtaining such consents and
of evidencing the authorization of the execution thereof by Certificateholder
or Noteholders will be subject to such reasonable requirements as the
Indenture Trustee may prescribe, including the establishment of record dates.
The consent of a Holder of a Certificate or a Note given pursuant to this
Section or pursuant to any other provision of this Agreement will be
conclusive and binding on such Holder and on all future Holders of such
Certificate or Note and of any Certificate or Note issued upon the transfer
thereof or in exchange thereof or in lieu thereof whether or not notation of
such consent is made upon the Certificate or Note.
(e) Notwithstanding the foregoing, unless any amendment would require the
consent of each Holder of any Outstanding Class A Note affected thereby, this
14
Agreement may be amended by the Originator and the Depositor, with the
consent of the Insurer, but without the consent of any of the Noteholders
or any other Person to add, modify or eliminate such provisions as may be
necessary or advisable in order to enable (a) the Originator, the
Depositor or any of their Affiliates to otherwise comply with or obtain
more favorable treatment under any law or regulation or any accounting
rule or principle; it being a condition to any such amendment that the
Rating Agency Condition shall have been met ."Rating Agency Condition"
means, with respect to any event, either (a) written confirmation by such
Rating Agency that the occurrence of such event will not cause it to
downgrade its rating assigned to the Class A Notes or the shadow rating
assigned to the Class A Notes without the benefit of the Insurance Policy
or (b) that such Rating Agency shall have been given notice of such event
at least ten (10) days prior to such event (or, if ten (10) days advance
notice is impracticable, as much advance notice as is practicable) and
such Rating Agency shall not have issued any written notice that the
occurrence of such event will cause it to downgrade its rating assigned
to the Class A Notes or the shadow rating assigned to the Class A Notes
without the benefit of the Insurance Policy.
(f) The Originator will provide the Rating Agencies will prior written
notice of any amendment to this Agreement.
SECTION 6.6 Notices.
All demands, notices and communications hereunder will be in writing and
will be deemed to have been duly given to the addressee if mailed, by
first-class registered mail, postage prepaid service, confirmed facsimile
transmission, or a nationally recognized express courier, as follows:
If to the Originator:
New South Federal Savings Bank
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Depositor:
Bond Securitization, L.L.C.
▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or such other address as will be designated by a party in a written notice
delivered to the other party or to the Issuer, Owner Trustee or the Indenture
Trustee, as applicable. Any such demand, notice or communication hereunder will
be deemed to have been received on the date delivered
15
to or received at the premises of the addressee as evidenced by the date noted
on the return receipt.
Section 6.7 Merger and Integration. Except as specifically stated
otherwise herein, this Agreement and Related Documents set forth the entire
understanding of the parties relating to the subject matter hereof, and all
prior understandings, written or oral, are superseded by this Agreement and the
Related Documents. This Agreement may not be modified, amended, waived or
supplemented except as provided herein.
Section 6.8 Severability of Provisions. If any one or more of the
covenants, provisions or terms of this Agreement will be for any reason
whatsoever held invalid, then such covenants, provisions or terms will be deemed
severable from the remaining covenants, provisions or terms of this Agreement
and will in no way affect the validity or enforceability of the other provisions
of this Agreement.
Section 6.9 Intention of the Parties.
(a) The Receivables and the Other Purchased Property (collectively, the
"Transferred Property") shall be deemed to no longer be the property, assets
or rights of Originator. Originator, its creditors, or, in any Insolvency
Proceeding (as hereinafter defined) with respect to Originator or
Originator's property, a bankruptcy trustee, receiver, debtor, debtor in
possession or similar person, shall have no rights, legal or equitable,
whatsoever to reacquire, reclaim, recover, repudiate, disaffirm, redeem or
recharacterize as property of Originator, in whole or in part, the
Transferred Property. In the event of an Insolvency Proceeding with respect
to Originator or Originator's property, such Transferred Property shall not
be deemed to be part of Originator's property, assets, rights or estate.
Notwithstanding anything herein to the contrary, nothing in this Section
shall limit any contractual rights in this Agreement or any Basic Document
that require or permit the transfer or return of the Transferred Property to
Originator. As used herein, the term "Insolvency Proceeding" shall mean a
bankruptcy, reorganization, arrangement, insolvency or liquidation
proceeding, receivership or other proceeding under any federal or state
bankruptcy, insolvency or similar law.
(b) The parties hereto intend that (i) the Asset-Backed Securities
Facilitation Act of Alabama (Alabama Act No. 2001-779, the "Act") shall apply
to the transactions contemplated in this Agreement and (ii) the transactions
contemplated in this Agreement, taken as a whole, shall constitute a
"securitization transaction" within the meaning of such term as set forth in
the Act.
(c) If such conveyance is determined to be made as security for a loan
made by Depositor, the Issuer, the Noteholders or the Certificateholder to
the Originator, Originator hereby grants, and the parties intend that the
Originator shall have granted, to Depositor a security interest in all of
Originator's right, title and interest in and to:
(1) the Initial Receivables and all moneys received thereon after the
Initial Cutoff Date (excluding amounts collected in respect of interest
accrued on the Receivables prior to the Closing Date);
16
(2) the Additional Receivables and all moneys received thereon after
the Additional Cutoff Date (excluding amounts collected in respect of
interest accrued on the Additional Receivables prior to the Funding Date);
(3) the Other Purchased Property conveyed to Depositor by Originator
pursuant to this Agreement; and
(4) all proceeds and investments with respect to items (1), (2) and
(3) above.
(d) This Agreement will constitute a security agreement under applicable
law.
Section 6.10 Governing Law. THIS AGREEMENT WILL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF ALABAMA WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICTS OF LAWS THEREOF AND THE OBLIGATIONS, RIGHTS AND REMEDIES
OF THE PARTIES UNDER THIS AGREEMENT WILL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS.
Section 6.11 Counterparts. For the purpose of facilitating the execution
of this Agreement and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts will be
deemed to be an original, and all of which counterparts will constitute but one
and the same instrument.
Section 6.12 Conveyance of the Receivables and the Other Purchased
Property to the Issuer. Originator acknowledges that Depositor intends, pursuant
to the Sale and Servicing Agreement, to convey the Receivables and the Other
Purchased Property, together with its rights under this Agreement, to the Issuer
on the date hereof. Originator acknowledges and consents to such conveyance and
pledge and waives any further notice thereof and covenants and agrees that the
representations and warranties of Originator contained in this Agreement and the
rights of Depositor hereunder are intended to benefit the Insurer, the Issuer,
the Owner Trustee, the Indenture Trustee, the Noteholders and the
Certificateholder. In furtherance of the foregoing, Originator covenants and
agrees to perform its duties and obligations hereunder, in accordance with the
terms hereof for the benefit of the Insurer, the Issuer, the Owner Trustee, the
Indenture Trustee, the Noteholders and the Certificateholder and that,
notwithstanding anything to the contrary in this Agreement, Originator will be
directly liable to the Issuer, the Owner Trustee, the Indenture Trustee, the
Noteholders and the Certificateholder (notwithstanding any failure by the
Servicer to perform its duties and obligations hereunder or under Related
Documents) and that the Indenture Trustee may enforce the duties and obligations
of Originator under this Agreement against Originator for the benefit of the
Insurer, the Owner Trustee, the Indenture Trustee, the Noteholders and the
Certificateholder.
Section 6.13 Nonpetition Covenant. Originator will not petition or
otherwise invoke the process of any court or government authority for the
purpose of commencing or sustaining a case against the Depositor or the Issuer
under any federal or state bankruptcy, insolvency or similar law or appointing a
receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of the Depositor or the Issuer or any substantial
17
part of their respective property, or ordering the winding up or liquidation of
the affairs of the Depositor or the Issuer.
Section 6.14 Third Party Beneficiaries. Each of Owner Trustee
(individually and in its capacity as such), Indenture Trustee (individually and
in its capacity as such), the Insurer and the other Persons referred to in
Section 4.5 is an intended third party beneficiary of the indemnities of
Originator as set forth in Section 4.5 and the other provisions of this
Agreement in favor of such Persons. It is acknowledged and agreed that such
indemnities and other provisions may be enforced by or on behalf of such Persons
against Originator to the same extent as if it were a party hereto.
[Remainder of page intentionally left blank.]
18
IN WITNESS WHEREOF, the parties have caused this Purchase Agreement to be
duly executed by their respective officers as of the day and year first above
written.
NEW SOUTH FEDERAL SAVINGS BANK,
as Originator
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Executive Vice President
BOND SECURITIZATION, L.L.C.,
as Depositor
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Managing Director
Accepted:
JPMORGAN CHASE BANK,
as Indenture Trustee
By /s/ ▇▇▇▇▇▇ ▇▇▇
-------------------
Name: ▇▇▇▇▇▇ ▇▇▇
Title: Trust Officer
Purchase Agreement
SCHEDULE A
SCHEDULE OF RECEIVABLES
On File With The Indenture Trustee
SCH A-1
SCHEDULE B
REPRESENTATIONS AND WARRANTIES
1. Characteristics of Receivables. Each Receivable (A) was originated by
a Dealer and purchased by New South from such Dealer under an existing Dealer
Agreement or pursuant to a Dealer Assignment with New South and was validly
assigned by such Dealer to New South pursuant to a Dealer Assignment, (B) was
originated by such Dealer for the retail sale of a Financed Vehicle in the
ordinary course of the Dealer's business, in accordance with New South's credit
policies and was fully and properly executed by the parties thereto, and New
South and each Dealer had all necessary licenses and permits to originate
Receivables in the state where New South or each such Dealer, as applicable, was
located, (C) contains customary and enforceable provisions such that the rights
and remedies of the holder thereof adequate for realization against the
collateral security, (D) is a Receivable which provides for level monthly
payments (provided that the period in the first Collection Period and the
payment in the final Collection Period of the Receivable may be minimally
different from the normal period and level payment) that, if made when due, will
fully amortize the Amount Financed over the original term and (E) has not been
amended or collections with respect to which waived, other than as evidenced in
the Receivable File relating thereto.
2. Fraud or Misrepresentation. Each Receivable was originated by a
Dealer and was sold by the Dealer to New South, and was transferred by New South
to the Depositor and by the Depositor to the Issuer without any fraud or
misrepresentation on the part of New South, the Depositor or such Dealer in any
case.
3. Compliance with Law. All requirements of applicable federal, state
and local laws, and regulations thereunder (including, without limitation, usury
laws, the Federal Truth-in-Lending Act, the Equal Credit Opportunity Act, the
Fair Credit Billing Act, the Fair Credit Reporting Act, the Fair Debt Collection
Practices Act, the Federal Trade Commission Act, the ▇▇▇▇-▇▇▇▇▇▇▇▇ Warranty Act,
the Federal Reserve Board's Regulations "B" and "Z" (including amendments to the
Federal Reserve's Official Staff Commentary to Regulation Z, effective October
1, 1998, concerning negative equity loans), the Soldiers' and Sailors' Civil
Relief Act of 1940, each applicable state Motor Vehicle Retail Installment Sales
Act, and state adaptations of the National Consumer Act and of the Uniform
Consumer Credit Code and other consumer credit laws and equal credit opportunity
and disclosure laws) in respect of the Receivables and the related Financed
Vehicles, have been complied with in all material respects, and each Receivable
and the sale of the related Financed Vehicle evidenced by each Receivable
complied at the time it was originated or made and now complies in all material
respects with all applicable legal requirements.
4. Origination. Each Receivable was originated in the United States and
the related Obligor is a resident of the United States and has a U.S. billing
address.
5. Binding Obligation. Each Receivable represents the genuine, legal,
valid and binding payment obligation of the Obligor thereon, enforceable by the
holder thereof in accordance with its terms, except (A) as enforceability may be
limited by bankruptcy, insolvency, reorganization or similar laws affecting the
enforcement of creditors' rights generally
SCH B-1
and by equitable limitations on the availability of specific remedies,
regardless of whether such enforceability is considered in a proceeding in
equity or at law and (B) as such Receivable may be modified by the application
after the Related Cutoff Date of the Soldiers' and Sailors' Civil Relief Act of
1940, as amended; and all parties to each Receivable had full legal capacity to
execute and deliver such Receivable and all other documents related thereto and
to grant the security interest purported to be granted thereby.
6. No Government Obligor. No Obligor is the United States of America or
any State or any agency, department, subdivision or instrumentality thereof.
7. Obligor Bankruptcy. At the Related Cutoff Date no Obligor had been
identified on the records of New South as being the subject of a current
bankruptcy proceeding.
8. Schedule of Receivables. The information set forth in the Schedule of
Receivables has been produced from the Electronic Ledger and was true and
correct in all material respects as of the close of business on the Related
Cutoff Date.
9. Marking Records. By the Closing Date, as applicable, the Originator
will have caused the portions of the Electronic Ledger relating to the
Receivables to be clearly and unambiguously marked to show that the Receivables
have been sold to the Depositor by the Originator and sold by the Depositor to
the Issuer in accordance with the terms of the Sale and Servicing Agreement.
10. Computer Tape. The Computer Tape made available by the Originator to
the Trust on the Closing Date or the Funding Date, as applicable, was complete
and accurate as of the Related Cutoff Date and includes a description of the
same Receivables that are described in the Schedule of Receivables.
11. Adverse Selection. No selection procedures adverse to the Noteholders
or the Insurer were utilized in selecting the Receivables from those receivables
owned by the Originator which met the selection criteria contained in the Sale
and Servicing Agreement.
12. Chattel Paper. The Receivables constitute chattel paper within the
meaning of the UCC as in effect in the States of Alabama and Delaware.
13. One Original. There is only one original executed copy of each
Receivable.
14. Receivable Files Complete. There exists a Receivable File pertaining
to each Receivable and such Receivable File contains (a) a fully executed
original of the Receivable, (b) the original executed credit application, or a
paper or electronic copy thereof and (c) the original Lien Certificate or
application therefor. Each of such documents which is required to be signed by
the Obligor has been signed by the Obligor in the appropriate spaces. All blanks
on any form have been properly filled in and each form has otherwise been
correctly prepared. The complete Receivable File for each Receivable currently
is in the possession of the Custodian.
15. Receivables in Force. No Receivable has been satisfied, subordinated
or rescinded, and the Financed Vehicle securing each such Receivable has not
been released from the lien of the related Receivable in whole or in part. No
terms of any Receivable have been
SCH B-2
waived, altered or modified in any respect since its origination, except by
instruments or documents identified in the Receivable File. No Receivable has
been modified as a result of application of the Soldiers' and Sailors' Civil
Relief Act of 1940, as amended. All funds payable to or on behalf of the
Obligors with respect to the Receivables have been fully disbursed.
16. Lawful Assignment; No Consent Required. No Receivable was originated
in, or is subject to the laws of, any jurisdiction the laws of which would make
unlawful, void or voidable the sale, transfer and assignment of such Receivable
and the Other Purchased Property under this Agreement. For the validity of the
sale, transfer and assignment of the Receivables and Other Purchased Property to
New South, the Depositor, and the Trust, no consent by any Dealer or Obligor is
required under any agreement or applicable law.
17. Good Title. No Receivable has been sold, transferred, assigned or
pledged by the Dealer, New South or the Depositor, as the case may be, to any
Person other than New South, the Depositor and the Issuer, as the case may be.
Immediately prior to the conveyance of the Receivables to the Depositor pursuant
to this Agreement, the Originator was the sole owner thereof and had good title
thereto, free of any Lien and, upon execution and delivery of this Agreement by
the Originator and the Depositor will have good title to and will be the sole
owner of such Receivables, free of any Lien. No Dealer has an unpaid
participation in, or other right to receive, proceeds of any Receivable. The
Originator has not taken any action to convey any right to any Person that would
result in such Person having a right to payments received under the related
Insurance Policies or the related Dealer Agreements or Dealer Assignments or to
payments due under such Receivables.
18. Security Interest in Financed Vehicle. Each Receivable created or
will create a valid, binding and enforceable first priority security interest in
favor of the Originator in the Financed Vehicle. The Lien Certificate and
original certificate of title for each Financed Vehicle show, or if a new or
replacement Lien Certificate is being applied for with respect to such Financed
Vehicle the Lien Certificate will be received within 180 days of the Closing
Date, as applicable, and will show the Originator as the original secured party
under each Receivable as the holder of a first priority security interest in
such Financed Vehicle. With respect to each Receivable for which the Lien
Certificate has not yet been returned from the Registrar of Titles, the
Originator has applied for or received written evidence from the related Dealer
or Third-Party Lender that such Lien Certificate showing the Originator as first
lienholder has been applied for and the Originator's security interest has been
validly assigned by the Originator to the Depositor pursuant to this Agreement
and by the Depositor to the Trust pursuant to the Sale and Servicing Agreement.
Immediately after the sale, transfer and assignment thereof by the Originator to
the Depositor and by the Depositor to the Trust, each Receivable will be secured
by an enforceable and perfected first priority security interest in the Financed
Vehicle in favor of the Indenture Trustee as secured party, which security
interest is prior to all other Liens upon and security interests in such
Financed Vehicle which now exist or may hereafter arise or be created (except,
as to priority, for any lien for taxes, labor or materials affecting a Financed
Vehicle). As of the Related Cutoff Date there were no Liens or claims for taxes,
work, labor or materials affecting a Financed Vehicle which are or may be Liens
prior or equal to the Liens of the related Receivable.
SCH B-3
19. All Filings Made. All filings (including, without limitation, UCC
filings) required to be made by any Person, and actions required to be taken or
performed by any Person in any jurisdiction to give the Indenture Trustee a
first priority perfected lien on, or ownership interest in, the Receivables and
the proceeds thereof and the Other Purchased Property have been made, taken or
performed.
20. No Impairment. The Originator has not done anything to convey any
right to any Person that would result in such Person having a right to payments
due under the Receivable or otherwise to impair the rights of the Trust, the
Insurer, the Indenture Trustee and the Noteholders in any Receivable or the
proceeds thereof.
21. Receivable Not Assumable. No Receivable is assumable by another
Person in a manner which would release the Obligor thereof from such Obligor's
obligations to New South with respect to such Receivable.
22. No Defenses. No Receivable is subject to any right of rescission,
setoff, counterclaim or defense and no such right has been asserted or
threatened with respect to any Receivable.
23. No Default. There has been no default, breach, violation or event
permitting acceleration under the terms of any Receivable (other than payment
delinquencies of not more than 30 days and other defaults that will not have a
material adverse effect on the ability of the Obligor to make, nor the
enforceability of Obligor's obligation to make, Scheduled Receivables Payments
and will not have a material adverse effect on the validity or priority of
Originator's lien on the Financed Vehicle), and no condition exists or event has
occurred and is continuing that with notice, the lapse of time or both would
constitute a default, breach, violation or event permitting acceleration under
the terms of any Receivable, and there has been no waiver of any of the
foregoing. As of the Related Cutoff Date no Financed Vehicle had been
repossessed by or at the direction of the Originator.
24. Insurance. At the time of an origination of a Receivable by New South
or a purchase of a Receivable by New South from a Dealer, each Financed Vehicle
was covered by a comprehensive and collision insurance policy (i) subject to
maximum deductibles of $500 for collision coverage and $500 for comprehensive
coverage, (ii) naming New South as loss payee and (iii) insuring against loss
and damage due to fire, theft, transportation, collision and other risks
generally covered by comprehensive and collision coverage. Each Receivable
requires the Obligor to maintain physical loss and damage insurance, naming New
South and its successors and assigns as additional insured parties, and each
Receivable permits the holder thereof to obtain physical loss and damage
insurance at the expense of the Obligor if the Obligor fails to do so.
25. Past Due. At the Related Cutoff Date no Scheduled Receivable Payment
was more than 29 days past due.
26. Certain Characteristics of Receivables. (A) Each Receivable had a
remaining maturity, as of the Related Cutoff Date, of more than 1 month and
matures on or prior to the Final Scheduled Payment Date for the Class A-3 Notes;
(B) each Receivable had an original
SCH B-4
maturity of not more than 84 months; (C), each Receivable had a remaining
Principal Balance as of the Related Cutoff Date of at least $500; (D) each
Receivable has an Annual Percentage Rate of no less than 3.50% and not more than
27.60% and (E) each Receivable is a Simple Interest Receivable.
SCH B-5
SCHEDULE C
PERFECTION REPRESENTATIONS, WARRANTIES AND COVENANTS
In addition to the representations, warranties and covenants contained in
the Purchase Agreement, New South hereby represents, warrants, and covenants to
the Depositor as to itself as follows on the Closing Date:
1. The Purchase Agreement creates a valid and continuing security
interest (as defined in UCC Section 9-102) in the Receivables in favor of the
Depositor, which security interest is prior to all other Liens, and is
enforceable as such as against creditors of and purchasers from New South.
2. The Receivables constitute "tangible chattel paper" within the meaning
of UCC Section 9-102.
3. New South has taken all steps necessary to perfect its security
interest against the Obligors in the property securing the Receivables that
constitute chattel paper.
4. New South owns and has good and marketable title to the Receivables
free and clear of any Lien, claim or encumbrance of any Person, excepting only
Liens for taxes, assessments or similar governmental charges or levies incurred
in the ordinary course of business that are not yet due and payable or as to
which any applicable grace period shall not have expired, or that are being
contested in good faith by proper proceedings and for which adequate reserves
have been established, but only so long as foreclosure with respect to such a
Lien is not imminent and the use and value of the property to which the Lien
attaches is not impaired during the pendency of such proceeding.
5. Servicer has caused or will have caused, within ten days after the
effective date of the Indenture, the filing of all appropriate financing
statements in the proper filing office in the appropriate jurisdictions under
applicable law in order to perfect the sale of the Receivables from New South to
the Depositor, the transfer and sale of the Receivables from the Depositor to
the Issuer, and the security interest in the Receivables granted to Indenture
Trustee under the Indenture.
6. With respect to Receivables that constitute tangible chattel paper,
such tangible chattel paper is in the possession of the Custodian and Indenture
Trustee has received a written acknowledgment from the Custodian that the
Custodian is holding such tangible chattel paper solely on behalf and for the
benefit of Indenture Trustee.
7. Originator has not authorized the filing of, and is not aware of, any
financing statements against either the Originator or the Depositor that include
a description of collateral covering the Receivables, the Other Purchased
Property and proceeds related thereto other than any financing statement (i)
relating to the sale of Receivables by the Originator to the Depositor under the
Purchase Agreement, (ii) relating to the sale of Receivables by the Depositor to
the Issuer under the Sale and Servicing Agreement, (iii) relating to the
security interest granted to Indenture Trustee under the Indenture, or (iv) that
has been terminated.
SCH C-1
8. Originator is not aware of any judgment, ERISA or tax Lien filings
against the Originator or the Depositor.
9. None of the tangible chattel paper that constitute or evidence the
Receivables has any marks or notations indicating that they have been pledged,
assigned or otherwise conveyed to any Person other than Indenture Trustee.
10. Survival of Perfection Representations. Notwithstanding any other
provision of the Purchase Agreement, the Sale and Servicing Agreement, the
Indenture or any other Basic Document, the Perfection Representations contained
in this Schedule shall be continuing, and remain in full force and effect
(notwithstanding any replacement of Servicer or termination of Servicer's rights
to act as such), until such time as all obligations under the Purchase
Agreement, the Sale and Servicing Agreement and the Indenture have been finally
and fully paid and performed.
11. No Waiver. The parties hereto: (i) shall not, without obtaining a
confirmation of the then-current rating of the Notes, waive any of the
Perfection Representations; (ii) shall provide the Ratings Agencies with prompt
written notice of any breach of the Perfection Representations; and (iii) shall
not, without obtaining a confirmation of the then-current rating of the Notes
(as determined after any adjustment or withdrawal of the ratings following
notice of such breach), waive a breach of any of the Perfection Representations.
SCH C-2