Mortgage Loan Purchase Agreement between Bay View Bank, National Association and Washington Mutual Bank, FA (July 22, 2002)

Summary

Bay View Bank, National Association (Seller) and Washington Mutual Bank, FA (Purchaser) entered into this agreement for the sale and purchase of certain multifamily and commercial mortgage loans. The Seller agrees to transfer ownership of these loans to the Purchaser, including all related documents and servicing rights, except as otherwise specified. The agreement outlines the purchase price, representations and warranties, remedies for breach, and the process for transferring servicing. It also details closing conditions, costs, and confidentiality requirements. The agreement is effective as of July 22, 2002.

EX-2.2 4 f83106a1exv2w2.txt EXHIBIT 2.2 Exhibit 2.2 MORTGAGE LOAN PURCHASE AGREEMENT between BAY VIEW BANK, NATIONAL ASSOCIATION ("Seller") and WASHINGTON MUTUAL BANK, FA ("Purchaser") Dated as of July 22, 2002 TABLE OF CONTENTS
Page ---- ARTICLE I. DEFINITIONS................................................................1 Section 1.01 Definitions..........................................................1 ARTICLE II. AGREEMENT TO PURCHASE......................................................9 Section 2.01 Agreement to Purchase................................................9 Section 2.02 SBO Closing..........................................................9 ARTICLE III. MORTGAGE PREPAYMENTS......................................................10 Section 3.01 Mortgage Prepayments................................................10 ARTICLE IV. PURCHASE PRICE; PAYMENT...................................................10 Section 4.01 Purchase Price......................................................10 Section 4.02 Document Deficiencies; Holdback.....................................11 ARTICLE V. CONVEYANCE FROM SELLER TO PURCHASER.......................................12 Section 5.01 Conveyance of Mortgage Loans........................................12 Section 5.02 Additional Transfer Provisions......................................12 Section 5.03 Delivery of Mortgage Loan Documents.................................13 ARTICLE VI. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER; REMEDIES FOR BREACH................................................................15 Section 6.01 Representations and Warranties Regarding the Seller.................15 Section 6.02 Representations, Warranties and Covenants Regarding Individual Mortgage Loans......................................................18 Section 6.03 Remedies for Breach of Seller's Representations, Warranties and Covenants.......................................................31 Section 6.04 Survival of Representations, Warranties and Covenants; Limitation Period...................................................33 ARTICLE VIA. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER................34 Section 6.01A Representations and Warranties Regarding the Purchaser..............34 Section 6.02A Survival of Representations, Warranties and Covenants...............35
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Page ---- ARTICLE VII. INTERIM SERVICING; TRANSFER OF SERVICING..................................36 Section 7.01 Interim Servicing...................................................36 Section 7.02 Transfer of Servicing...............................................36 Section 7.03 Substitution of Trustee.............................................36 ARTICLE VIII. CLOSING...................................................................36 Section 8.01 Closing.............................................................36 Section 8.02 Conditions to the Purchaser's Closing Obligations...................36 Section 8.03 Conditions to the Seller's Closing Obligations......................37 Section 8.04 SBO Closing Conditions..............................................38 ARTICLE IX. CLOSING DOCUMENTS.........................................................38 Section 9.01 Closing Documents...................................................38 Section 9.02 SBO Closing Documents...............................................39 ARTICLE X. COSTS.....................................................................39 Section 10.01 Costs...............................................................39 ARTICLE XI. TERMINATION...............................................................40 Section 11.01 Termination.........................................................40 ARTICLE XII. MISCELLANEOUS.............................................................40 Section 12.01 Notices.............................................................40 Section 12.02 Severability Clause.................................................41 Section 12.03 Counterparts........................................................41 Section 12.04 Governing Law.......................................................41 Section 12.05 Recordation of Agreement............................................41 Section 12.06 Intention of the Parties............................................42 Section 12.07 Successors and Assigns; Assignment of Agreement.....................42 Section 12.08 Confidentiality; Press Releases.....................................42 Section 12.09 Attorneys' Fees.....................................................43 Section 12.10 Complete Agreement; Waivers.........................................43 Section 12.11 Exhibits............................................................43 Section 12.12 General Interpretive Principles.....................................43 Section 12.13 Reproduction of Documents...........................................44 Section 12.14 Further Agreements..................................................44 Section 12.15 Recordability of Assignments of Mortgage............................44 Section 12.16 No Solicitation.....................................................44 Section 12.17 Survival............................................................44
ii LIST OF EXHIBITS EXHIBIT 1 MORTGAGE LOAN SCHEDULE EXHIBIT 2 SELLER'S OFFICER'S CERTIFICATE EXHIBIT 3 ASSIGNMENT AND CONVEYANCE EXHIBIT 4 NEGATIVE ESCROWS EXHIBIT 5 CONTENTS OF EACH SERVICING FILE EXHIBIT 6 SPECIAL ENVIRONMENTAL LOANS EXHIBIT 7 INTERIM SERVICING AGREEMENT EXHIBIT 8 ESCROW AND BAILEE AGREEMENT EXHIBIT 9 LOST NOTE AFFIDAVIT LOANS EXHIBIT 10 NOTICES TO/CONSENTS FROM INSURERS EXHIBIT 11 LOANS SUBJECT TO BANKRUPTCY EXHIBIT 12 LOANS WITH DELINQUENT TAXES EXHIBIT 13 SBOs EXHIBIT 14 LOANS WITH DELINQUENT INSURANCE PREMIUMS EXHIBIT 15 NEW MORTGAGE LOANS EXHIBIT 16 DOCUMENT DEFICIENCIES EXHIBIT 17 MORTGAGE LOANS WITH PLEDGED LOAN PROCEEDS EXHIBIT 18 POWER OF ATTORNEY EXHIBIT 19 MORTGAGE LOAN PAYMENT EXCEPTIONS EXHIBIT 20 SENIOR LIENS AND GROUND LEASES EXHIBIT 21 CROSS-COLLATERALIZED OR CROSS-DEFAULTED MORTGAGE LOANS EXHIBIT 22 SPECIAL MULTI-FAMILY PROPERTIES EXHIBIT 23 UNDERWRITING GUIDELINE EXCEPTIONS EXHIBIT 24 CLASSIFIED MORTGAGE LOANS EXHIBIT 25 SECTION 6.02(VV) ITEMS EXHIBIT 26 CUSTODIAL ACCOUNTS; MORTGAGE LOANS WITH ESCROW PAYMENTS EXHIBIT 27 MORTGAGE LOANS WITH AUTOMATIC DEBIT iii MORTGAGE LOAN PURCHASE AGREEMENT This MORTGAGE LOAN PURCHASE AGREEMENT (the "Agreement"), dated as of July 22, 2002, by and between WASHINGTON MUTUAL BANK, FA, a federal association, having an office at 1301 Fifth Avenue, Seattle, Washington 98101 (the "Purchaser"), and BAY VIEW BANK, NATIONAL ASSOCIATION, a national banking association, having an office at 1840 Gateway Drive, San Mateo, California 94404 (the "Seller"). W I T N E S S E T H: WHEREAS, the Seller desires to sell to the Purchaser, and the Purchaser desires to purchase from the Seller, certain multifamily and commercial mortgage loans on a servicing-released basis (except as herein expressly provided); WHEREAS, each Mortgage Loan is secured by a mortgage or deed of trust creating a lien on a multifamily dwelling or commercial real property located in the jurisdiction indicated on the Mortgage Loan Schedule for the Mortgage Loans; and WHEREAS, the Purchaser and the Seller wish to prescribe the manner of the sale by the Seller and the purchase by the Purchaser of such Mortgage Loans; NOW, THEREFORE, in consideration of the promises and mutual agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Purchaser and the Seller agree as follows: ARTICLE I. DEFINITIONS. Section 1.01 Definitions. For purposes of this Agreement the following capitalized terms shall have the respective meanings set forth below: Accepted Servicing Practices: With respect to any Mortgage Loan, such mortgage servicing practices of and standard of care employed by prudent servicers that service mortgage loans of the same type as such Mortgage Loans in the jurisdiction where the related Mortgaged Property is located; such standard of care shall not be lower than that the Seller customarily employs and exercises in servicing and administering similar mortgage loans for its own account, and shall be in full compliance with all federal, state and local laws, ordinances, rules and regulations. Accepted Servicing Practices shall in all events incorporate the loan collection, administration, enforcement and other related requirements of the applicable Mortgage Loan Documents. Affiliate: With respect to any Person, any other Person controlling, controlled by or under common control with such first Person. For the purposes of this definition, "control" means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. Ancillary Fees: Charges for late fees relating to delinquent Mortgage Loan Payments (to the extent permitted by the applicable Mortgage Loan Documents), charges for dishonored checks, pay-off fees and fax fees (but not including prepayment premiums, yield maintenance premiums, modification fees, default interest, assumption fees, or other fees and charges of any kind collected from or assessed against the Mortgagor, all which belong to and shall be remitted to Purchaser on the next Remittance Date after received). Appraised Value: The value set forth in an appraisal made in connection with the origination of the related Mortgage Loan (or, if applicable, at any time subsequent thereto) as the value of the Mortgaged Property. Assignment of Mortgage: With respect to each Mortgage, an assignment of the Mortgage, notice of transfer or equivalent instrument in recordable form, sufficient under and complying with the laws of the jurisdiction wherein the related Mortgaged Property is located to reflect the sale of the Mortgage to the Purchaser. Bailee: Deutsche Bank or other entity reasonably designated by the Purchaser. Business Day: Any day other than (i) a Saturday or Sunday, or (ii) a day on which banking and savings and loan institutions, in the State of New York, the State of Washington, or the state in which the Seller's operations are located, are authorized or obligated by law or executive order to be closed. Closing Date: The date on which the Purchaser shall purchase, and the Seller shall sell, the Mortgage Loans listed on the Mortgage Loan Schedule. The Closing Date shall be August 7, 2002, or such other date as may be agreed upon by the parties. Custodial Accounts: The separate account or accounts created and maintained by the Seller for the benefit of the Purchaser or the Mortgagors in which Custodial Funds are deposited and held. Custodial Funds: All funds held in trust for and for the benefit of Purchaser or the Mortgagors by or on behalf of Seller with respect to the Mortgage Loans, including, but not limited to, all principal and interest funds, buydown funds, Escrow Payments, funds from hazard insurance loss drafts and other mortgage escrow and 2 impound amounts (including interest accrued thereon for the benefit of the Mortgagors under the Mortgage Loans, if required by law or contract) maintained by or on behalf of the Seller relating to the Mortgage Loans. Cut-off Date: The close of business on August 5, 2002. Data File: Collectively, with respect to each Mortgage Loan, the data files of Seller, Safeco with respect to insurance on each Mortgaged Property and LERETA Corp. and First American Real Estate Information Services, Inc. with respect to taxes and assessments payable on each Mortgaged Property, in each case in form and containing the information reasonably acceptable to the Purchaser, in order to, among other things, facilitate an efficient and accurate transition of servicing of the Mortgage Loans from the Seller to the Purchaser (and its servicing platform) in accordance with the Interim Servicing Agreement. Determination Date: A date and time occurring twice each month as of 5:00 p.m. California time on the Business Day immediately preceding each Remittance Date. DSCR: The debt service coverage ratio with respect to a Mortgagor and the related Mortgaged Property. Due Date: The day of the month on which the Monthly Payment is due on a Mortgage Loan, exclusive of any days of grace or, as applicable, any cure period following notice of delinquency or other default. Escrow and Bailee Agreement: That certain agreement in the general form attached hereto as Exhibit 8, as such form is ultimately negotiated between Bailee and the Purchaser, subject to the reasonable approval of the Seller. The Seller, the Purchaser and the Bailee shall be parties to the Escrow and Bailee Agreement, which shall provide that all costs and expenses of the Bailee shall be shared equally by the Seller and the Purchaser. Escrow Payments: With respect to any Mortgage Loan, the amounts constituting ground rents, taxes, assessments, water rates, sewer rates, municipal charges, mortgage insurance premiums, fire and hazard insurance premiums, condominium charges, and any other payments required to be escrowed by the Mortgagor with the mortgagee pursuant to the Mortgage or any other document. First Remittance Date: The 15th day (or if such 15th day is not a Business Day, the first Business Day immediately thereafter) of any calendar month. Gross Margin: With respect to each adjustable rate Mortgage Loan, the fixed percentage amount set forth in the related Mortgage Note to be added to the 3 applicable Index to determine on each Interest Rate Adjustment Date the Mortgage Interest Rate for such Mortgage Loan. Holdback: That portion of the Purchase Price, initially $25,000,000, which amount shall be payable to the Seller by the Purchaser in installments after the Closing Date under the terms and conditions set forth in Section 4.02 below. Index: The index rate set forth in each adjustable rate Mortgage Note, which is as specified on the Mortgage Loan Schedule. Insurer: FHA, VA or any private mortgage insurer and any insurer or guarantor under any standard hazard insurance policy, any federal flood insurance policy, any title insurance policy, any earthquake insurance policy or other insurance policy, and any successor thereto, with respect to the Mortgage Loan or the Mortgaged Property. Interest Rate Adjustment Date: With respect to each adjustable rate Mortgage Loan, the date, specified in the related Mortgage Note, on which the Mortgage Interest Rate is to be adjusted. Interest Rate Decrease Maximum: As to each adjustable rate Mortgage Loan, the maximum amount, if any, that the Mortgage Interest Rate can adjust downwards on any Interest Rate Adjustment Date, determined in accordance with the related Mortgage Note. Interest Rate Increase Maximum: As to each adjustable rate Mortgage Loan, the maximum amount, if any, that the Mortgage Interest Rate can adjust upwards on any Interest Rate Adjustment Date, determined in accordance with the related Mortgage Note. Interim Period: As to each Mortgage Loan, the period of time between the Closing Date and the Transfer Date for such Mortgage Loan. Interim Servicing Agreement: That certain Interim Servicing Agreement by and between the Seller and the Purchaser in substantially the form attached hereto as Exhibit 7. Loan-to-Value Ratio or LTV: With respect to any Mortgage Loan, the ratio (expressed as a percentage) of the original outstanding principal amount of the Mortgage Loan or the current outstanding principal amount, as the case may be, to the lesser of (a) the Appraised Value of the Mortgaged Property at origination or (b) if the Mortgage Loan was made to finance the acquisition of the related Mortgaged Property, the purchase price of the Mortgaged Property. 4 Loss: Any and all losses, damages, deficiencies, claims, reasonable and necessary costs or expenses, including without limitation, attorneys' fees and disbursements, court costs, and internal and administrative costs and expenses. Maximum Monthly Payment Adjustment: As to each adjustable rate Mortgage Loan, the maximum amount, if any, that the Monthly Payment can adjust upwards on any Interest Rate Adjustment Date, determined in accordance with the related Mortgage Note. Maximum Mortgage Interest Rate: As to each adjustable rate Mortgage Loan, the maximum rate of interest, if any, that may be charged pursuant to the related Mortgage Note. Minimum Mortgage Interest Rate: As to each adjustable rate Mortgage Loan, the minimum rate of interest, if any, that may be charged pursuant to the related Mortgage Note. Monthly Payment: The scheduled monthly payment of principal and interest on a Mortgage Loan. Mortgage: The mortgage or deed of trust securing a Mortgage Note, which creates a lien on an estate in real property that secures the Mortgage Note. Mortgage Interest Rate: The annual rate of interest borne on a Mortgage Note, which shall be fixed with respect to fixed rate Mortgage Loans and adjusted from time to time with respect to adjustable rate Mortgage Loans. In the case of each SBO, Mortgage Interest Rate shall be understood to mean the net Mortgage Interest Rate contractually payable to the Seller under the applicable SBO documentation. Mortgage Interest Rate Cap: With respect to an adjustable rate Mortgage Loan, the limit on each Mortgage Interest Rate adjustment as set forth in the related Mortgage Note. Mortgage Loan: An individual Mortgage Loan (including the Mortgage Loans set forth on Exhibit 13) that is the subject of this Agreement, each Mortgage Loan originally sold and subject to this Agreement being identified on the Mortgage Loan Schedule, which Mortgage Loan includes without limitation the Mortgage Loan Documents, the Servicing Rights to the Mortgage Loan (except with respect to Mortgage Loans set forth on Exhibit 13), all Custodial Funds and, from and after the Cut-off Date, the Monthly Payments, principal prepayments, liquidation proceeds, condemnation proceeds, insurance proceeds, and all other rights, benefits, proceeds and obligations arising from or in connection with such Mortgage Loan, excluding Repurchased Mortgage Loans. The Mortgage Loans are identified on Attachment I hereto, subject to (a) the exclusion therefrom of any Mortgage Loan listed on Exhibit 6 hereto as to which 5 the environmental insurance policy referred to in the first paragraph of Section 4.01 is determined not to apply, and (b) the further exclusion therefrom of certain SBOs in accordance with Section 2.02 below. The identification of the Mortgage Loans as set forth in the preceding sentence shall be superceded by the final forms of Exhibits 1 and 13 as attached to this Agreement in conformity with Sections 8.02(d) and 8.03(c) below. Mortgage Loan Documents: The documents listed in Section 5.03(a) and required to be delivered to the Purchaser or the Bailee on the Closing Date with respect to each Mortgage Loan and any other documents or instruments evidencing, securing or otherwise executed and delivered in favor of the lender with respect to a Mortgage Loan (or in favor of the Seller in the case of SBOs). Mortgage Loan Schedule: The schedule of Mortgage Loans attached as Exhibit 1 (as the same shall be updated and delivered on the Closing Date in accordance with Section 9.01 below) setting forth the following information with respect to each Mortgage Loan (subject to appropriate variation as to SBOs, as to which detailed supplementary information is set forth on Exhibit 13 hereto): (1) the Seller's Mortgage Loan identifying number; (2) the Mortgagor's name; (3) the street address of the Mortgaged Property including the state and zip code; (4) the property type; (5) the original amortization term; (6) the Appraised Value of the Mortgaged Property at origination; (7) the Mortgage Interest Rate as of the Cut-off Date; (8) the Due Date under the Mortgage Loan; (9) the stated maturity date; (10) the amount of the Monthly Payment as of the Cut-off Date; (11) with respect to adjustable rate Mortgage Loans, the Maximum Monthly Payment Adjustment; (12) the original principal amount of the Mortgage Loan; (13) the principal balance of the Mortgage Loan on the Cut-off Date; (14) with respect to adjustable rate Mortgage Loans, the next Interest Rate Adjustment Date after the Cut-off Date; (15) with respect to adjustable rate Mortgage Loans, the Gross Margin; (16) with respect to adjustable rate Mortgage Loans, the Maximum Mortgage Interest Rate; (17) with respect to adjustable rate Mortgage Loans, the Minimum Mortgage Interest Rate; (18) with respect to adjustable rate Mortgage Loans, the Interest Rate Increase Maximum; (19) with respect to adjustable rate Mortgage Loans, the Interest Rate Decrease Maximum; (20) with respect to adjustable rate Mortgage Loans, a code indicating the type of Index; (21) the most recent reported total monthly rent, if available; (22) the most recent reported NOI and period covered thereby, if available; (23) the most recent DSCR and the effective date thereof, calculated from reported information, if available; (24) the last property inspection date, if available; (25) the last Due Date for which a Monthly Payment has been made; (26) with respect to multifamily Mortgage Loans, a code indicating number of units at the Mortgaged Property; (27) the applicable late charge; (28) a code indicating the number of days per month and the number of days per year on which the monthly interest amount due is calculated (example: "Actual/360" or "360/360"); (29) a code indicating the maximum allowable amount of negative amortization, expressed as a percentage of the original loan balance; (30) in the case of each SBO, the applicable base servicing fee (defined as the 6 difference between the gross Mortgage Interest Rate on the loan and the net Mortgage Interest Rate contractually payable to the Seller under the applicable SBO documentation); (31) a code indicating each Mortgage Loan with a balloon payment of principal at maturity; and (32) the maturity date of the Mortgage Loan. With respect to the Mortgage Loans in the aggregate, the Mortgage Loan Schedule shall set forth the following information, as of the Cut-off Date: (a) the number of Mortgage Loans; and (b) the current aggregate outstanding principal balance of the Mortgage Loans. The Mortgage Loan Schedule shall be provided in printed format, as well as in electronic form in Excel format. Mortgage Note: The note or other evidence of the indebtedness of a Mortgagor secured by a Mortgage. Mortgaged Property: The real property (or leasehold estate, if applicable) securing repayment of the debt evidenced by a Mortgage Note. Mortgagor: The obligor on a Mortgage Note. Negative Escrows: Amounts advanced by the Seller out of its own funds with respect to the Mortgage Loans, which advances are ultimately reimbursable from the related Mortgagor under the terms of the Mortgage Loan Documents, a list of advances (with amounts as of the Cut-off Date) and related Mortgage Loans being contained in Exhibit 4 hereto. New Mortgage Loans: Those Mortgage Loans closed and funded by the Seller on or after May 1, 2002 and not later than July 15, 2002, a list of such Mortgage Loans being contained in Exhibit 15 hereto. NOI: Net operating income generated from a Mortgaged Property. OCC: The Office of the Comptroller of the Currency within the U.S. Department of the Treasury, and any successor thereto. Officer's Certificate: A certificate signed by the Chairman of the Board or the Vice Chairman of the Board or the President or a Vice President and by the Treasurer or the Secretary or one of the Assistant Treasurers or Assistant Secretaries of the Seller, and delivered to the Purchaser pursuant to this Agreement. Opinion of Counsel: A written opinion of counsel, who may be in-house counsel for the Seller, reasonably acceptable to the Purchaser. Parties: The Seller and the Purchaser. 7 Purchase Price: The price paid by the Purchaser to the Seller in exchange for the Mortgage Loans purchased hereunder, as calculated in accordance with Section 4.01 of this Agreement. Purchase Price and Terms Letter: If applicable, the letter agreement dated __________, 2002, by and between the Seller and the Purchaser setting forth the specific Purchase Price (expressed as percentage(s) of par with respect to individual, groups or the entire portfolio of Mortgage Loans, as applicable, and setting forth any additional terms and conditions of the transaction on a basis consistent with this Agreement, for each Mortgage Loan to be purchased hereunder. Remittance Date: Either the First Remittance Date or the Second Remittance Date, as applicable, of any calendar month. Repurchased Mortgage Loan: A Mortgage Loan that is repurchased by the Seller from the Purchaser pursuant to the terms of this Agreement. Repurchase Price: With respect to any Mortgage Loan, a price equal to the sum of (i) the product of (x) the percentage of par applicable to such Mortgage Loan, as referred to in Section 4.01 below or, as applicable, otherwise stated in the Purchase Price and Terms Letter, and (y) the unpaid principal balance of such Mortgage Loan, plus (ii) accrued interest on such unpaid principal balance of such Mortgage Loan at the Mortgage Interest Rate from the last date through which interest has been paid and distributed to the Purchaser to the date of repurchase, plus (iii) the outstanding amount of any Negative Escrow related to such Mortgage Loan, plus (iv) any outstanding amounts advanced by the Purchaser out of its own funds with respect to such Mortgage Loan on or after the Closing Date, which advances are ultimately reimbursable from the related Mortgagor under the terms of the Mortgage Loan Documents. SBOs: Those Mortgage Loans as to which the Seller owns a participating interest purchased from the originator of such Mortgage Loans, a list of such Mortgage Loans being contained in Exhibit 13 attached hereto. Second Remittance Date: The last Business Day of any calendar month. Servicing File: The documents listed in Exhibit 5 as required to be delivered to Purchaser with respect to each Mortgage Loan. Servicing Rights: The rights and obligations to administer, collect the payments for the reduction of principal and application of interest, collect payments on account of taxes and insurance, pay taxes and insurance, remit collected payments, modify, waive or amend any terms or provisions of the Mortgage Loan Documents, provide foreclosure and default management services, provide full escrow administration and any other obligations required or in connection with the Mortgage Loans, together 8 with (a) the rights to any monies in any escrow or reserve accounts relating to the Mortgage Loans, (b) rights in all agreements or documents creating, defining or evidencing any such servicing rights to the extent they relate to such servicing rights and all rights of the Seller thereunder, (c) any and all documents, files, records, servicing files, servicing documents, servicing records, data tapes, computer records, or other information pertaining to a Mortgage Loan or pertaining to the past, present or prospective servicing or a Mortgage Loan, and (d) the right to receive any fees arising from or connected to the Mortgage Loans, and all rights, powers and privileges incident to any of the foregoing. Transfer Date: Each date on which the Purchaser shall assume servicing obligations with respect to a Mortgage Loan, not to exceed 120 days after the Closing Date, all as more particularly provided in the Interim Servicing Agreement. ARTICLE II. AGREEMENT TO PURCHASE. Section 2.01 Agreement to Purchase. On the Closing Date, the Seller agrees to sell, and the Purchaser agrees to purchase, the Mortgage Loans set forth on the Mortgage Loan Schedule on the terms and conditions set forth in this Agreement and all related closing documents. Section 2.02 SBO Closing. Notwithstanding any other provision in this Agreement, the closing date for the purchase and sale of the SBOs shall be August 30, 2002 or such earlier or later date as the Parties may mutually agree upon in writing (the "SBO Closing Date"), and the Cut-off Date therefor shall, accordingly, be August 28, 2002. As to all matters pertaining to the closing of the purchase and sale of the SBOs under this Agreement, all references herein to the "Closing Date" shall be understood to mean and refer to the "SBO Closing Date", provided that the foregoing shall not extend the 12-month limitation period referred to in Section 6.04(b). Not later than the SBO Closing Date, the Seller shall deliver to the Purchaser, pursuant to Section 9.02 below, each of the items referred to in the last sentence of Section 5.03(a) and in Section 9.02 below, together with an appropriate form of assignment (substantively similar to Exhibit 3 hereto) sufficient to assign and transfer to the Purchaser all rights, title and interest of the Seller in and to the SBOs, and further together with all information with regard to the underlying Mortgage Loans the subject of each SBO (as referred to generally in the definition of Mortgage Loan Schedule) sufficient to permit the Purchaser to track (independent of the servicer) the monthly payment obligations of the borrowers under such underlying Mortgage Loans. In the event that the Seller is not able to deliver, on a timely basis, any of the items referred to in the preceding sentence with respect to an SBO, despite the exercise of all reasonable best efforts on the part of the Seller, then such SBO shall be excluded from the Mortgage Loans to be purchased by the Purchaser on the SBO Closing Date. The Seller shall exercise all reasonable best efforts to provide to the Purchaser, as a part of the Servicing File for each underlying Mortgage Loan the subject 9 of an SBO, copies of the Mortgage Loan Documents for each such underlying Mortgage Loan. ARTICLE III. MORTGAGE PREPAYMENTS. Section 3.01 Mortgage Prepayments. Any Mortgage Loans that have been prepaid in full on or prior to the Closing Date shall be deleted from the Mortgage Loan Schedule by the Seller and shall not be purchased by the Purchaser. ARTICLE IV. PURCHASE PRICE; PAYMENT. Section 4.01 Purchase Price. The Purchase Price for the Mortgage Loans purchased hereunder shall be (a) one hundred and one-quarter percent (100.25%) multiplied by the aggregate principal balance, as of the Cut-off Date, of the Mortgage Loans listed on the Mortgage Loan Schedule, minus (b) the environmental insurance policy premium payable by the Purchaser to American International Group (or such other insurer as the Purchaser shall approve) for environmental insurance coverage satisfactory to the Purchaser with respect to those Mortgage Loans listed on Exhibit 6 hereto which are purchased by the Purchaser hereunder. The Purchase Price shall be payable in accordance with ARTICLE VIII below, and subject to the Holdback as provided in Section 4.02. In addition to the Purchase Price as described above, the Purchaser shall pay to the Seller, at closing, accrued interest on the unpaid principal amount of each Mortgage Loan from the last date through which interest has been paid to the Seller thereon to, but not including, the Closing Date, plus any Negative Escrows related thereto outstanding as of the Closing Date. The Purchase Price payable on the initial Closing Date shall not include that portion thereof attributable to, and payable by the Purchaser with respect to, the SBOs; rather, such portion of the Purchase Price shall be payable by the Purchaser to the Seller on the SBO Closing Date pursuant to Section 2.02 above, and shall be calculated as of the applicable Cut-off Date with respect thereto based upon those SBOs so purchased. With respect to the Mortgage Loans, the Purchaser shall be entitled to (1) all principal received after the Cut-off Date, (2) all other recoveries collected after the Cut-off Date, (3) all payments of interest on the Mortgage Loans received after the Cut- off Date, (4) all Servicing Rights from and after the Closing Date (except with respect to the Mortgage Loans set forth on Exhibit 13), subject to the Seller's rights and obligations under the Interim Servicing Agreement, and (5) all Negative Escrow recoveries collected or received after the Cut-off Date. The outstanding principal balance of each Mortgage 10 Loan as of the Cut-off Date is determined after application of payments of principal received on or before the Cut-off Date. Payments of principal and interest prepaid for a due date beyond the Cut-off Date shall be applied to the principal balance prior to the Cut-off Date. Section 4.02 Document Deficiencies; Holdback. (a) Attached hereto as Exhibit 16 is a listing of document deficiencies identified by the Parties prior to the Closing Date. Not later than 90 days following the Closing Date, the Seller shall correct, or cause to be corrected, all such document deficiencies in a manner satisfactory to the Purchaser in all material respects. At the election of the Purchaser, any Mortgage Loan as to which any document deficiency applicable thereto has not been so corrected within such 90-day period shall be repurchased by the Seller, not later than 30 days following written demand from the Purchaser, at the applicable Repurchase Price and generally in accordance with the provisions set forth in Section 6.03 hereof. (b) The Purchaser shall withhold from the Purchase Price paid to the Seller on the Closing Date the full amount of the Holdback, initially in the amount of $25,000,000. The unpaid amount of the Holdback shall increase by a per annum accrual factor equal to the three-month certificate of deposit rate quoted by the Purchaser on the Closing Date. Subject to the conditions to payment referred to below, the Holdback (plus, in each case, the then unpaid accrual thereon as referred to above) shall be payable by the Purchaser to the Seller as follows: (i) $10,000,000 on the date three Business Days following the Second Remittance Date in August 2002; (ii) $5,000,000 on the date three Business Days following the Second Remittance Date in September 2002; (iii) $3,000,000 on the date three Business Days following the Second Remittance Date in October 2002; and (iv) The remaining $7,000,000 on the earlier of (1) 30 days following the final Transfer Date of all Mortgage Loans under the Interim Servicing Agreement, or (2) December 27, 2002. Each of the foregoing payments of the Holdback shall be subject to the condition that there shall then exist no payment default or material non-payment default by the Seller under the Interim Servicing Agreement (including, without limitation, the Seller's obligations to deliver to the Purchaser all Mortgage Loan Documents, Servicing Files, Custodial Funds and pledged loan proceeds referred to on Exhibit 26, and to deliver to the Mortgagors notices of the transfer of servicing). In addition, a further condition to the 11 final payment of the Holdback pursuant to clause (iv) above shall be full compliance by the Seller with its obligations under Section 4.02(a) above. The Purchaser shall pay to the Seller each installment of the Holdback (including the accrual thereon referred to above) by wire transfer of immediately available funds to the account designated by the Seller. Nothing in this Section 4.02 shall limit any other right or remedy of the Purchaser in the enforcement of the obligations of the Seller under this Agreement, the Interim Servicing Agreement or any other closing document. (c) Consistent with the provisions of this Section 4.02, the Seller shall execute and file, not later than Closing Date, a UCC financing statement in favor of the Purchaser with respect to the full amount of the Holdback. Such financing statement shall be filed in such jurisdiction(s) as shall be necessary in order to perfect fully the Purchaser's interest therein. Upon payment of the entire Holdback to the Seller, the Purchaser shall promptly execute and file a release for each such financing statement. The Seller shall provide evidence to the Purchaser of the appropriate place(s) of filing in accordance with Uniform Commercial Code Section 9307(f). The filing of any financing statement pursuant to this Section 4.02(c) shall not indicate that the Parties intended to create a secured transaction pursuant to this Section 4.02. ARTICLE V. CONVEYANCE FROM SELLER TO PURCHASER. Section 5.01 Conveyance of Mortgage Loans. As of the Closing Date, the Seller hereby sells, transfers, assigns and conveys to the Purchaser, on a "servicing released" basis except as expressly referred to below, the Mortgage Loans and the related Mortgage Loan Documents and all other rights and interests related thereto including, without limitation, all Servicing Rights with respect to such Mortgage Loans (except with respect to the Mortgage Loans set forth on Exhibit 13), and any and all Custodial Funds (including Escrow Payments) with respect to such Mortgage Loans. The Seller, simultaneously with the delivery of the Mortgage Loan Schedule with respect to the Mortgage Loans to be purchased on the Closing Date, shall execute and deliver at closing an Assignment and Conveyance in the form attached hereto as Exhibit 3, and the beneficial ownership of each Mortgage Loan Document and Servicing File is and shall be vested in the Purchaser. Section 5.02 Additional Transfer Provisions. The transfer of ownership to each Mortgage Loan shall be in the name of the Purchaser or one or more designees of the Purchaser, as the Purchaser shall select. All rights arising out of the Mortgage Loans, including, but not limited to, all funds received by the Seller after the Cut-off Date on or in connection with a Mortgage Loan, shall be vested in the Purchaser or one or more designees of the Purchaser and shall be remitted by Seller to the Purchaser pursuant to the terms of the Interim Servicing Agreement or otherwise. 12 The sale of each Mortgage Loan shall be reflected on the Seller's balance sheet and other financial statements as a sale of assets by the Seller. Section 5.03 Delivery of Mortgage Loan Documents. (a) The Seller shall deliver or cause to be delivered to the Bailee, prior to the Closing Date (or on such other date as may be agreed to by the Parties in writing), each of the following items or documents with respect to each related Mortgage Loan pursuant to the Escrow and Bailee Agreement: (i) the original Mortgage Note, endorsed "Pay to the order of _____________________, without recourse," and signed in the name of Seller by an authorized officer, with all intervening endorsements showing a complete, valid and proper chain of title from the originator of such Mortgage Loan to the Seller. Notwithstanding the foregoing, it is agreed by the Parties that lost note affidavits may be delivered in lieu of Mortgage Notes for the Mortgage Loans identified in Exhibit 9. In the event that the Mortgage Loan was acquired by the Seller in a merger, the endorsement must be by "[NAME OF SELLER], successor by merger to [name of predecessor]"; and in the event that the Mortgage Loan was acquired or originated by the Seller while doing business under another name, the endorsement must be by "[NAME OF SELLER], formerly known as [previous name]"; (ii) the original Mortgage, with evidence of recording thereon; (iii) an original Assignment of Mortgage, from the Seller assigned in blank, which assignment shall be in form and substance acceptable for recording (except for the insertion of the name of the assignee) and in compliance with all applicable federal and state laws, rules, regulations and ordinances. In the event that the Mortgage Loan was acquired by the Seller in a merger, the Assignment of Mortgage must be by "[NAME OF SELLER], successor by merger to name of predecessor]"; and in the event that the Mortgage Loan was acquired or originated by the Seller while doing business under another name, the Assignment of Mortgage must be by "[NAME OF SELLER], formerly known as [previous name]"; (iv) the original policy of title insurance and all applicable endorsements thereto; (v) originals of all intervening Assignments of Mortgage, with evidence of recording thereon, showing a complete chain of title from the originator to the Seller; 13 (vi) originals of all assumption and/or modification agreements, if any; (vii) original UCC assignment, if a UCC-1 financing statement was filed in connection with a Mortgage Loan, showing the Purchaser as the new secured party; (viii) original assignment of leases and rents (if separate from the Mortgage), and an original Assignment of Assignment of Leases and Rents (if separate from the Mortgage), from the Seller assigned in blank, which assignment shall be in form and substance acceptable for recording (except for the insertion of the name of the assignee) and in compliance with all applicable federal and state laws, rules, regulations and ordinances. In the event that the Assignment of Leases and Rents Loan was acquired by the Seller in a merger, the Assignment of Assignment of Leases and Rents must be by "[NAME OF SELLER], successor by merger to [name of predecessor]"; and in the event that the Assignment of Leases and Rents was acquired or originated by the Seller while doing business under another name, the Assignment of Assignment of Leases and Rents must be by "[NAME OF SELLER], formerly known as [previous name]": (ix) original security agreement (if separate from the Mortgage); (x) original guaranties, if any; (xi) original environmental liability agreement, if any; (xii) original non-recourse agreement, if any; and (xiii) original collateral assignment, if any, of property management agreements, and any other documents or instruments, if any, evidencing or securing the Mortgage Loan. Notwithstanding the foregoing, the following shall apply with respect to each New Mortgage Loan: (A) if the original Mortgage has been delivered for recording to the appropriate public recording office of the jurisdiction in which the Mortgaged Property is located and such original Mortgage has not yet been returned to the Seller by such recording office as of the Closing Date, the Seller may tender to the Purchaser a certified true, correct and complete copy of such original Mortgage; and (B) if the original policy of title insurance insuring such New Mortgage Loan has not yet been received by the Seller as of the Closing Date, the Seller may tender to the Purchaser a true, correct and complete copy of a pro forma policy, preliminary title report, title insurance binder or marked-up commitment for the issuance of such policy and an insured closing statement, in each case adequately defining the terms and conditions of the title policy which the 14 applicable title insurer has committed to issue with respect to such Mortgage; provided, however, that the Seller shall obtain and cause to be delivered to the Purchaser the originals of such Mortgage and policy of title insurance with respect to each such New Mortgage Loan not later than the Transfer Date therefor under the Interim Servicing Agreement. Further, notwithstanding the foregoing, with respect to each SBO the Seller shall deliver or cause to be delivered to the Purchaser, not later than the SBO Closing Date, the original Participation Agreement, each Certificate of Participation, any intervening assignments of the participation interest (if applicable), and all other original documentation evidencing the interest of the Seller in the underlying Mortgage Loans covered by such SBO, together with all SBO Servicing Files; provided, however, that, to the extent the Seller cannot deliver the foregoing original documents, then the following shall apply: (1) the Purchaser shall accept a fully executed copy of the governing Participation Agreement; and (2) in lieu of original Certificates of Participation, intervening assignments (if any) and other original documentation as aforesaid, the Purchaser shall accept the written consent and acknowledgment of the originator/servicer of the SBO confirming the participation interest held by the Seller, the underlying Mortgage Loans and other similar items clearly defining the SBO asset being purchased by the Purchaser, with such consent and acknowledgment to be in a form jointly approved by the Seller and the Purchaser. (b) The Seller shall cause the Bailee to certify to the Seller and the Purchaser, in the manner specified in the Escrow and Bailee Agreement, Bailee's receipt of certain Mortgage Loan Documents on or prior to the Closing Date, attaching a list of any missing document or other deficiencies. The Seller shall cure all such deficiencies in the manner referred to in Section 4.02(a) above. (c) If any Assignment of Mortgage is at any time returned unrecorded because of any defect therein, the Seller shall cause such defect to be cured and such Assignment of Mortgage to be recorded promptly following written request by the Purchaser. Without limiting the foregoing, the Seller shall execute and deliver, at closing, a power-of-attorney in favor of the Purchaser in the form attached hereto as Exhibit 18, pursuant to which the Purchaser shall be authorized to supplement or modify any such Assignment of Mortgage, or execute a replacement thereof in appropriate form, in any manner to the extent necessary to permit such recordation in any applicable jurisdiction. ARTICLE VI. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SELLER; REMEDIES FOR BREACH. Section 6.01 Representations and Warranties Regarding the Seller. The Seller represents and warrants to the Purchaser that, as of the date hereof and as of the Closing Date: 15 (a) Due Organization and Authority. The Seller is duly organized and validly existing as a national bank under the laws of the United States and has all licenses necessary to carry on its business as now being conducted; the Seller is in compliance with the laws of each relevant jurisdiction or governmental authority to the extent necessary to ensure the enforceability of the transfer of the Mortgage Loans in accordance with the terms of this Agreement and the enforceability of the Mortgage Loans in accordance with the Mortgage Loan Documents; the Seller has the full corporate power, authority and legal right to hold, transfer and convey the Mortgage Loans and to execute and deliver this Agreement and to perform its obligations hereunder; the execution, delivery and performance of this Agreement (including all agreements and instruments of transfer to be delivered pursuant to this Agreement) by the Seller and the consummation of the transactions contemplated hereby (including without limitation the repurchase obligations hereinafter set forth) have been duly and validly authorized; this Agreement and all agreements and instruments of transfer contemplated hereby have been duly executed and delivered and constitute the valid, legal, binding and enforceable obligations of the Seller, except as such enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting the enforcement of creditors' rights generally and by general principles of equity, regardless of whether such enforcement is considered in a proceeding in equity or at law; and all requisite corporate action has been taken by the Seller to make this Agreement and all agreements and instruments contemplated hereby valid and binding upon the Seller in accordance with their terms. (b) No Conflicts. Neither the sale of the Mortgage Loans to the Purchaser, nor the consummation of the transactions contemplated hereby, nor the fulfillment of or compliance with the terms and conditions of this Agreement, will conflict with or result in a breach of any of the terms, conditions or provisions of the Seller's charter or by-laws or any legal restriction or any agreement or instrument to which the Seller is now a party or by which it is bound, or constitute a default or result in an acceleration under any of the foregoing, or result in the violation of any law, rule, regulation, order, judgment or decree to which the Seller or its property is subject, or result in the creation or imposition of any lien, charge or encumbrance that would have a material adverse effect upon any of its properties pursuant to the terms of any mortgage, contract, deed of trust or other instrument, or impair the ability of the Purchaser to realize on the Mortgage Loans, impair the value of the Mortgage Loans, or impair the ability of the Purchaser to realize the full mortgage insurance benefits applicable thereto. (c) Ability to Perform; Solvency. The Seller does not believe, nor does it have any reason or cause to believe, that it cannot perform each and every covenant contained in this Agreement. The Seller is solvent and the sale of the Mortgage Loans will not cause the Seller to become insolvent. The sale of the Mortgage Loans is not undertaken with the intent to hinder, delay or defraud any of the Seller's creditors. 16 (d) No Litigation Pending. There is no action, suit, proceeding or investigation pending or, to the best of Seller's knowledge, threatened against the Seller which, either in any one instance or in the aggregate, may result in any material adverse change in the business, operations, financial condition, properties or assets of the Seller, or in any material impairment of the right or ability of the Seller to carry on its business substantially as now conducted, or in any material liability on the part of the Seller, or which would draw into question the validity of this Agreement or the Mortgage Loans or of any action taken or to be taken in connection with the obligations of the Seller contemplated herein, or that would be likely to impair materially the ability of the Seller to perform under the terms of this Agreement. (As used in this Section 6.01 and in Section 6.02 below, the phrase "best of Seller's knowledge" shall be understood to mean knowledge actually possessed by the Seller or which a reasonably prudent lender should possess.) (e) No Consent Required. No consent, approval, authorization or order of, or registration or filing with, or notice to any court or governmental agency or body including HUD, is required for the execution, delivery and performance by the Seller of or compliance by the Seller with this Agreement or the sale of the Mortgage Loans or the consummation of the transactions contemplated by this Agreement, or if required, such approval has been obtained prior to the Closing Date. In addition, no consent or approval is required from any non-governmental person or agency in connection with matters referred to in the preceding sentence, unless such consent or approval has been obtained prior to the Closing Date (with evidence thereof being delivered to the Purchaser as contemplated in Section 9.01(j) below) or, if the same is to be obtained following the Closing Date, such consent or approval is listed on Exhibit 16 hereto, and the Seller shall obtain same in a timely manner in accordance with Section 4.02(a) above. (f) Sale Treatment. The Seller has been advised by its independent certified public accountants that under generally accepted accounting principles the transfer and assignment of the Mortgage Loans may be treated as a sale on the books and records of the Seller, and the Seller has determined that the disposition of the Mortgage Loans pursuant to this Agreement will be afforded sale treatment for accounting and tax purposes. (g) Reasonable Purchase Price. The consideration received by the Seller upon the sale of the Mortgage Loans under this Agreement constitutes fair consideration and reasonably equivalent value for the Mortgage Loans. (h) Insured Depository Institution Representations. The Seller is an insured depository institution, and accordingly, the Seller makes the following additional representations and warranties: (1) This Agreement conforms to all statutory and regulatory requirements applicable to the Seller. This Agreement is (a) executed 17 contemporaneously with the agreement reached by the Seller and the Purchaser, (b) approved by a specific corporate or banking association resolution by the board of directors of the Seller, which approval shall be reflected in the minutes of said board, and (c) continuously, from the time of its execution, an official record of the Seller; (2) This Agreement has been duly and validly authorized by a specific corporate or banking association resolution by the board of directors of the Seller. A copy of such resolution, certified by the corporate secretary of the Seller or attested to by a vice president or higher officer of the Seller has been provided to the Purchaser; and (3) The Seller will maintain a copy of this Agreement in its official books and records and shall make same available for the Purchaser's inspection and copying on one Business Day's notice. Section 6.02 Representations, Warranties and Covenants Regarding Individual Mortgage Loans. The Seller hereby represents, warrants and covenants to the Purchaser that, as to each Mortgage Loan, as of the Closing Date: (a) Accuracy of Information. The description of and the information with respect to the Mortgage Loan set forth in the Mortgage Loan Schedule and the Data Files are true, complete, and accurate in all material respects; provided, however, that the Purchaser acknowledges that the following items were calculated or derived by the Seller from sources believed by it to be accurate or from analysis prepared solely for the Seller's own use, as to which items the Seller represents only that they are accurately set forth on the Mortgage Loan Schedule: total monthly rent, NOI and DSCR. (b) Full Disbursement; Pledged Loan Proceeds. The principal amount of the Mortgage Loan stated in the related Mortgage Note has been fully disbursed, and there is no requirement under any of the related Mortgage Loan Documents for, and the Seller shall not make, any future advances thereunder. Any further advances made prior to the Cut-off Date have been consolidated with the principal balance secured by the Mortgage, and such principal balance, as consolidated, bears a single interest rate and single repayment term reflected on the Mortgage Loan Schedule. Except with respect to the Mortgage Loans listed on Exhibit 17, the proceeds of each Mortgage Loan have been fully disbursed to Mortgagor; for each Mortgage Loan listed on Exhibit 17, the Mortgagor has pledged to (and the Seller has a perfected security interest in) a portion of the proceeds of such Mortgage Loan in the amount shown on Exhibit 17, and such pledged funds are non-interest bearing and subject to disbursement or other application in accordance with the applicable Mortgage Loan Documents. (c) Term; Monthly Installments; Amortization. Except as otherwise shown in the Mortgage Loan Schedule, the Mortgage Loan (i) has an original term to 18 maturity not exceeding 30 years, and (ii) provides for Monthly Payments payable on the first day of each month. The principal amount of the Mortgage Loan has begun to amortize or will begin to amortize no later than the first day of the month immediately following the Cut-off Date (provided that certain Mortgage Loans may negatively amortize from time to time in accordance with their terms). (d) Interest Rate. If the Mortgage Loan is an adjustable rate Mortgage Loan (i) all of the terms set forth in the Mortgage Loan Documents pertaining to interest rate adjustments, payment adjustments, and adjustments of the unpaid principal balance are enforceable, in accordance with their terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting the enforcement of creditors' rights generally and by general principals of equity, regardless of whether such enforcement is considered in a proceeding in equity or at law; (ii) all such adjustments have been timely and correctly made in accordance with the terms of the related Mortgage Note and applicable law, and the related Mortgagor timely and appropriately advised; (iii) such adjustments will not affect the lien priority of the Mortgage; (iv) on each Interest Rate Adjustment Date occurring after the Closing Date, the Mortgage Interest Rate is subject to adjustment to a new Mortgage Interest Rate equal to the then current Index plus the Gross Margin (rounded as provided in the related Mortgage Note), as specified on the Mortgage Loan Schedule, subject to the Maximum Mortgage Interest Rate, the Minimum Mortgage Interest Rate, the Interest Rate Increase Maximum and the Interest Rate Decrease Maximum specified on the Mortgage Loan Schedule; and (v) on each Interest Rate Adjustment Date occurring after the Closing Date, the Monthly Payment is subject to adjustment, subject to the Maximum Monthly Payment Adjustment or permitted negative amortization as specified on the Mortgage Loan Schedule. On the Closing Date and until the next Interest Rate Adjustment Date, in the absence of a default, the Mortgage Interest Rate is and shall be as set forth on the Mortgage Loan Schedule. (e) Interest Accrual. Interest at the rate or rates provided for by the Mortgage Note will accrue continuously, calculated on the full disbursed amount of the Mortgage Loan (and on any accumulated deferred interest, if any, but not on any principal repaid), and will be payable, either in advance for the period from the date on which funds were disbursed to one month before the first monthly payment date or (except insofar as interest is treated as deferred interest under the applicable Mortgage Note) in arrears, in scheduled installments that each provide for one month's interest accrual. Except as shown on the Mortgage Loan Schedule, the accrual of interest under the Mortgage Note (and the calculation of such interest) is based on a 360-day year consisting of twelve 30-day months, except during the month of origination (unless the date of such origination was the first of such month) and the month in which such maturity date falls (unless such maturity date was the first of such month), in which case, for each such month, interest shall accrue for each day that the Mortgage Loan remains outstanding, on the basis of an actual 365/366-day year. 19 (f) Payment History; No Defaults. Except as shown on Exhibit 19: (i) all Monthly Payments and Escrow Payments due under the Mortgage and Mortgage Note as of the Cut-off Date have been made; (ii) no Monthly Payment required to be made under the related Mortgage and Mortgage Note has been paid more than 30 days after its due date (excluding any applicable grace period) more than once during the twelve-month period preceding the Cut-off Date; (iii) no Monthly Payment required to be made under the related Mortgage and Mortgage Note has been paid more than 60 days after its due date (excluding any applicable grace period) during the 12-month period preceding the Cut-off Date; (iv) during the 12 months preceding the Cut-off Date, the Seller has not advanced a tax, insurance premium or leasehold payment with respect to a Mortgaged Property due to the failure of the related Mortgagor to make such payment in a timely manner; (v) to the best of the Seller's knowledge, there is no, and during the 12 months preceding the Cut-off Date there has been no, material default, breach or violation, or event of acceleration existing under the Mortgage or the Mortgage Note and no event which, with the passage of time or with notice and the expiration of any grace or cure period, would constitute such a material default, breach or violation, or event of acceleration, and neither the Seller, nor to the best of the Seller's knowledge, any mortgagee or servicer under any SBO, has waived any such default, breach, violation, or event of acceleration; (vi) except as shown on Exhibit 12 hereto, all taxes, and other governmental assessments (including assessments payable in future installments) if and to the extent shown on the periodic tax bill for the Mortgaged Property issued by the county or municipal tax collector, currently due and owing in respect of or affecting the related Mortgaged Property have been paid, or Escrow Payments have been collected from the Mortgagor, and remain available in the applicable Custodial Fund in the respective amounts shown on Exhibit 26 hereto, in an amount sufficient to pay for every such item which remains unpaid and which has been assessed but is not yet due and payable; (vii) except as shown on Exhibit 14 hereto, all insurance premiums required to be paid by each Mortgagor currently due and owing in respect of or affecting the related Mortgaged Property have been paid, or Escrow Payments have been collected from the Mortgagor, and remain available in the applicable Custodial Fund in the respective amounts shown on Exhibit 26 hereto, in an amount sufficient to pay for every such item which remains unpaid; (viii) to the best of Seller's knowledge, all municipal charges, water and sewer assessments, condominium charges, leasehold payments, or ground rents that previously became due and owing in respect of or affecting the related Mortgaged Property have been paid, or Escrow Payments have been collected from the Mortgagor, and remain available in the applicable Custodial Fund, in an amount sufficient to pay for every such item which remains unpaid and which has been assessed but is not yet due and payable; and (ix) the Seller has not accelerated the Mortgage Loan during the 12 months preceding the Cut-off Date. Except as set forth on Exhibit 4, the Seller has not advanced funds, or induced, solicited, or knowingly received any advance of funds by a party other than the 20 Mortgagor, directly or indirectly, for the payment of any amount required by the Mortgage or the Mortgage Note. Pursuant to the terms of the Mortgage Loan Documents, no person or party other than the holder of the Mortgage Note may declare an event of default or accelerate the related indebtedness under such Mortgage Loan Documents. (g) No Equity Kickers. The Mortgage does not include any "equity participation" or similar provisions or "equity kicker" or similar provisions. (h) Appraisal. The Servicing File contains an Appraisal of the related Mortgaged Property, which Appraisal was made in connection with the origination of the Mortgage and was signed prior to the approval of the application for such Mortgage Loan by a qualified appraiser certified under the laws of the jurisdiction in which the Mortgaged Property is located and conforms to regulations of the Federal Home Loan Bank Board, the Office of Thrift Supervision, the OCC, or other applicable governmental regulator for the Mortgage Loan, which regulations were applicable at the time the Mortgage was originated, and who met the requirements of the Seller's appraisal policies and procedures, who had no interest, direct or indirect, in the Mortgaged Property or in any loan made on the security thereof, and whose compensation was not affected by the approval or disapproval of such application. To the best of Seller's knowledge, all of the improvements that were included for the purpose of determining the appraised value of the Mortgaged Property were completed at the time that such Mortgage Loan was originated and lie wholly within the boundaries and building restriction lines of such Mortgaged Property. Except for de minimis encroachments permitted by the prudent lenders which do not (1) extend more than one foot over the property line, (2) touch any improvements on the Mortgaged Property, or (3) interfere with the use of any improvements on the Mortgaged Property or with the use of the balance of the property not covered by any improvements, to the best of Seller's knowledge, no improvements on adjoining properties encroach upon the Mortgaged Property. No improvement located on or being part of the Mortgaged Property is in violation of any applicable zoning law or regulation. (i) Lien Priority. Except with respect to Mortgage Loans set forth on Exhibit 20, the Mortgage is a first and paramount lien on the related Mortgaged Property, including all buildings, fixtures, installations and improvements to the Mortgaged Property, and all leases, rents, and profits related thereto. To the best of Seller's knowledge, such Mortgaged Property is free and clear of any mechanics and materialmen's liens or other liens in the nature thereof. To the best of Seller's knowledge, no rights are outstanding that under applicable law could give rise to any such mechanics' or materialmen's or similar liens that would be prior to, or equal with, the lien of the Mortgage. 21 (j) Cross-Collateralization and Cross-Default. Except with respect to Mortgage Loans set forth on Exhibit 21, the Mortgage Loan is not cross-collateralized or cross-defaulted to any other mortgage loan, except to another Mortgage Loan that is subject to sale hereunder. (k) Security Interest in Personal Property. Except with respect to Mortgage Loans set forth on Exhibit 20, the Mortgage Loan Documents create and the Seller has, and upon transfer of the Mortgage Loan Documents to the Purchaser and the recordation of the Assignments of Mortgage, the Purchaser will have, a first lien priority perfected security interest in all furniture, fixtures, and equipment subject to the lien of the Mortgage and related to the operation of the Mortgaged Property as a multifamily dwelling or commercial property and condemnation and casualty proceeds relating to the Mortgaged Property, subject only, if applicable, to a third party's interest in leased items of personalty. (l) Interest in Property. Except with respect to Mortgage Loans set forth on Exhibit 20, each Mortgage encumbers a fee simple interest in the Mortgaged Property. (m) Title Insurance. The Mortgage Loan is covered by an ALTA Lender's title insurance policy (with an adjustable rate mortgage loan endorsement, if applicable, and, if the Mortgage Note provides for negative amortization, either with a negative amortization endorsement or in an amount equal to the negative amortization cap amount set forth in the related Mortgage Note), issued by and the valid and binding obligation of a title insurer qualified to do business in the jurisdiction where the Mortgaged Property is located, insuring the Seller, and its successors and assigns, as to the first priority lien (except with respect to Mortgage Loans set forth on Exhibit 20) of the Mortgage on the related Mortgaged Property in the original principal amount of such Mortgage Loan (plus, if applicable as stated above, an amount equal to the negative amortization cap amount, if any, set forth in the related Mortgage Note). The exceptions set forth in the title policy are limited solely to covenants, conditions, restrictions, rights-of-way, easements, and other matters of public records as of the date of recording of the Mortgage that customarily are acceptable to lending institutions generally and that do not, individually or in the aggregate, materially interfere with the benefits of the security intended to be provided by the Mortgage or materially affect the value or marketability of such Mortgaged Property. If the Mortgaged Property secured by the Mortgage is subject to a ground lease, then the title insurance policy is an ALTA ground lease policy or contains a CLTA Endorsement 107.5. No claims have been made under such title insurance policy. Such title insurance policy is in full force and effect and will inure to the benefit of the Purchaser, as successor mortgagee, by operation of title policy without any action required to be taken by any Person. (n) Property Insurance. The Mortgaged Property related to the Mortgage Loan was insured at its origination with property insurance policies; provided, 22 however, that earthquake coverage was not required. As of the applicable Cut-off Date, all improvements upon the Mortgaged Property are insured against loss by fire, hazards of extended coverage and such other hazards as are customary in the area where the Mortgaged Property is located. If the Mortgaged Property is located in an area identified in the Federal Register by the Federal Emergency Management Agency as having special flood hazards (and such flood insurance has been made available), such Mortgaged Property is covered by flood insurance meeting the requirements of the current guidelines of the Federal Insurance Administration. To the best of the Seller's knowledge, each individual insurance policy has been validly issued. Each such policy is in full force and effect. The Seller has caused or will cause to be performed any and all acts required to preserve the rights and interests of the Purchaser in all insurance policies required by this Agreement, including, without limitation, notification of insurers, and assignment of policies or interests therein. Each individual insurance policy contains a standard mortgagee clause naming the Seller, and its successors and assigns, as mortgagee and loss payee. All premiums thereon have been paid. The Mortgage obligates the Mortgagor to maintain all such insurance at the Mortgagor's cost and expense, and upon the Mortgagor's failure to do so, authorizes the holder of the Mortgage Note and the beneficiary of the Mortgage to obtain and maintain such insurance at the Mortgagor's cost and expense and to seek reimbursement therefor from the Mortgagor, and the Seller has not acted or failed to act so as to impair the coverage of any such insurance policy or the validity, binding effect and enforceability thereof. (o) No Side Agreements. All terms governing the Mortgage Loans are in writing and are set forth in the Mortgage Loan Documents, and all such Mortgage Loan Documents will be or have been delivered to the Purchaser in connection with such purchase. (p) Enforceability of Loan Documents; Compliance. The Mortgage Loan Documents contain an absolute, unconditional, and enforceable assignment of leases, rents, and profits. Each of the Mortgage Loan Documents is genuine, and each is the legal, valid, and binding obligation of the maker thereof and each party assuming liability therefor, enforceable in accordance with its respective terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium, and other similar laws affecting the enforcement of creditors' rights generally and by general principles of equity, regardless of whether such enforcement is considered in a proceeding in equity or at law. All parties to the Mortgage Loan Documents had legal capacity to execute the Mortgage Loan Documents and convey the estate therein purported to be conveyed, and each of the Mortgage Loan Documents has been duly and properly executed by such parties or pursuant to a valid power of attorney that has been recorded with the Mortgage. There is no valid offset, defense, counterclaim, or right of rescission with respect to the Mortgage Loan Documents. As of the date of origination, the Mortgage Loan complied with, or was exempt from, applicable state and federal laws, regulations, and requirements relating to usury. Any and all requirements of any federal, 23 state, or local law including, without limitation, usury, truth-in-lending, real estate settlement procedures, consumer credit protection, equal credit opportunity, or disclosure laws applicable to such Mortgage Loan have been complied with, and the Seller shall maintain, in its possession, available for the Purchaser's inspection, or shall deliver to the Purchaser or its designee, any evidence of compliance with such requirements the Seller may have that is not being delivered to the Purchaser as part of the Mortgage Loan Documents or the Servicing Files. The consummation of the transactions contemplated by this Agreement will not cause the violation of any such laws. (q) Benefits of Loan Documents. The Mortgage contains customary provisions enforceable in accordance with their terms (except as such enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting the enforcement of creditors' rights generally and by general principals of equity, regardless of whether such enforcement is considered in a proceeding in equity or at law) that, upon assignment to the Purchaser pursuant to this Agreement, will render the rights and remedies of the Purchaser thereof adequate for the realization against the Mortgaged Property of the benefits of the security, including (i) in the case of a Mortgage designated as a deed of trust, by trustee's sale, and (ii) otherwise by judicial foreclosure. To the best of Seller's knowledge, there is no homestead, dower, curtesy, or other exemption or right available to the Mortgagor or any other person which would interfere with the right to sell the Mortgaged Property at a trustee's sale or the right to foreclose the Mortgage. The Mortgage contains customary and enforceable provisions for the acceleration of the payment of the unpaid principal balance of such Mortgage Loan in the event all or any part of the related Mortgaged Property is sold or otherwise transferred without the prior consent of the mortgagee thereunder. If the Mortgage constitutes a deed of trust, a trustee, duly qualified under applicable law to serve as such, has been properly designated and currently so serves and is named in such Mortgage, and no fees or expenses are or will become payable by the Purchaser to the trustee under the deed of trust, except in connection with a trustee's sale after default by the Mortgagor. (r) No Waivers or Releases. The terms of the Mortgage and the Mortgage Note have not been impaired, waived, altered, or modified in any respect, except by a written instrument which has been recorded, if necessary, to protect the interest of the Purchaser and each of which is a part of the Mortgage Loan Documents and which has been delivered to the Purchaser or was included in the Mortgage Loan Document files made available to the Purchaser during its diligence prior to the date of this Agreement. The substance of any such alteration or modification is reflected on the Mortgage Loan Schedule, if such information is required thereby, and, to the extent necessary, has been approved by the insurer under the applicable mortgage title insurance policy. No instrument of release, waiver, alteration, or modification has been executed in connection with such Mortgage Loan, and no Mortgagor has been released, in whole or in part, except in connection with an assumption agreement which has been approved by the Mortgage insurer, if any, and which is part of the Mortgage Loan Documents and has 24 been or will be delivered to the Purchaser in accordance with the terms of this Agreement, and the terms of which are reflected in the Mortgage Loan Schedule, if such information is required thereby. (s) No Shortening or Extension of Term. The Seller has no right or obligation under the Mortgage Loan Documents to shorten (except as allowed in the related Mortgage Note or in the event of a Mortgagor default) or extend the original term of the Mortgage Loan. The Mortgage Loan is not due and payable on demand or on a date certain that is earlier than the stated maturity date (except as allowed in the related Mortgage or Mortgage Note or in the event of a Mortgagor default). (t) Notice to Insurer. Except as set forth on Exhibit 10 hereto, the transfer of the Mortgage Loans by the Seller to the Purchaser does not require notice to, or consent from, any Insurer thereunder. (u) Senior Liens; Ground Leases. With respect to each Mortgage Loan shown on Exhibit 20, (i) the Seller shall deliver to the Purchaser, as a part of the applicable Servicing File, true, correct and complete copies of the senior loan documents or ground lease, as applicable, to the extent in the possession of the Seller, and (ii) to the best of Seller's knowledge, there is no, and during the 12 months preceding the Cut-off Date there has been no, material default, breach or violation, or event of acceleration or termination under any such senior loan or ground lease, as applicable. (v) Mortgagor Eligibility. The Mortgagor is one or more individuals, a limited or general partnership, a corporation, a trust, or a limited liability company (or a co-tenancy of such individual entities). The Seller has no knowledge of any proceedings that would, in its opinion, adversely affect the ability of the Mortgagor to meet its obligations under the Mortgage Loan Documents. (w) Mortgagor Bankruptcy. Except as provided on Exhibit 11 attached hereto, to the best of the Seller's knowledge, no Mortgagor or any guarantors of the Mortgage are the subject of any bankruptcy, reorganization, insolvency, or comparable proceeding. (x) Good Repair. To the best of the Seller's knowledge, the Mortgaged Property is free of material damage or waste and is in good repair. (y) No Condemnation. To the best of Seller's knowledge, there is no proceeding pending or threatened, for the partial or total condemnation of the Mortgaged Property securing the Mortgage Loan, no notice of any such pending or threatened proceeding has been received by the Seller, and no such proceeding is currently occurring. No part of the Mortgaged Property has been taken by eminent domain. 25 (z) Parcels. Each Mortgaged Property consists of either (i) a single parcel of real property, or (ii) two or more parcels of real property that are contiguous or are separated only by streets that are not major arteries, upon which is erected a multi-family dwelling or building(s) used for commercial purposes. (aa) Leasehold Estates. Except with respect to Mortgage Loans set forth on Exhibit 20, no Mortgage Loan is secured by a leasehold estate. (bb) Public Services; Access; Utilities. To the best of Seller's knowledge, the Mortgaged Property related to the Mortgage Loan (i) is located on a dedicated, all-weather road, or is accessible from such a road by means of access subject to a satisfactory easement, (ii) is serviced by public water and sewer systems and by adequate public utilities, (iii) is equipped (i.e., electrical wiring, plumbing, etc.) to provide the accepted level of utility service for the market area, and (iv) has access to community services, generally including police and fire protection, public transportation (if available to the community as a whole), refuse removal, and public education. (cc) No Materially Adverse Consequences from Utilities. To the best of Seller's knowledge, no public or private utility easements affecting the Mortgaged Property, including easements for utilities such as transcontinental pipelines, high power electric transmission lines, or drainage channels, will have a material adverse effect on the value or marketability of the Mortgaged Property. (dd) Mortgaged Property's Compliance with Applicable Laws. To the best of Seller's knowledge, all improvements on the Mortgaged Property and the use of the Mortgaged Property comply in all material respects with all applicable federal, state and local statutes, rules, and regulations, including, but not limited to, all applicable statutes, rules, and regulations pertaining to requirements for equal opportunity, fair housing, disability accommodation, zoning, and land use, and all applicable health, fire, and building codes, and all bond related regulatory agreements, deed restrictions, other bond related or tax credit related restrictive covenants, and any other applicable restrictive covenants, except to the extent that such non-compliance with any of the foregoing will not have a material adverse effect on the value or marketability of the Mortgaged Property, and including, but not limited to, current tenant parking requirements. (ee) Walkups. If the Mortgaged Property is improved by a building that contains more than three stories, it has an elevator. (ff) No Construction or Rehabilitation. The Mortgaged Property is not in construction or, to the best of Seller's knowledge, in substantial rehabilitation. (gg) Cooperatives. No Mortgaged Property is owned by a cooperative corporation or association. 26 (hh) Environmental Hazards. The Seller represents and warrants to Purchaser, such representations and warranties to be true and correct as of the date of origination of such Mortgage Loan and, to the best of Seller's knowledge, as of the Closing Date: (1) the Mortgaged Property was not and is not in material violation of any federal, state, or local law, statute, ordinance, rule or regulation, decree, order, and/or permit, relating to the environmental conditions on, under, or about such Mortgaged Property, including, but not limited to, soil and surface and ground water conditions. (2) Except for lead-based paint, asbestos and radon gases, there had been and has been no disposal or release of any flammable explosives, petroleum, petroleum byproducts, radioactive materials, hazardous substances or wastes, or related materials, including, without limitation, polychlorinated biphenyls (PCBs), on, from, or under the Mortgaged Property. For purposes of this Section, the terms "disposal," "release," "hazardous substances," and "hazardous wastes" shall mean and include, without limitation, any hazardous, toxic, or dangerous waste, substance, material, or any disposal, discharge, or release, or any of the foregoing as defined in (or for purposes of) the federal Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, and/or any other federal, state, or local law, statute, ordinance, code, rule, regulation, order, decree, and/or permit regulating, relating to, or imposing liability or standards of conduct concerning any hazardous, toxic, or dangerous waste, substance, or material. (3) With respect to lead-based paint, asbestos and radon gases, there was no and is no lead-based paint, asbestos or radon gases on the Mortgaged Property in such form and/or amount as to constitute a violation of any federal, state, or local statute, law, ordinance, code, rule, regulation, order, or decree. (4) The Mortgagor was not and is not manufacturing, generating, or storing hazardous substances or wastes or chemical substances on the Mortgaged Property nor permitting the manufacture, generation, or storage of such substances on the Mortgaged Property, except for de minimis amounts necessary for the proper operation of the Mortgaged Property and not constituting a violation of any federal, state or local statute, law, ordinance, code, rule, regulation, order or decree. (5) There were no and are no actions, suits, proceedings, orders, inquiries, or investigations pending or threatened against, involving, or affecting the Mortgaged Property, at law or in equity, or before, or by any 27 federal, state, municipal, or other governmental department, commission, board, bureau, agency, or instrumentality, domestic or foreign, alleging the violation of any federal, state, or local law, statute, ordinance, rule, regulation, decree, order, and/or permit relating to Environmental Matters ("Environmental Matters" shall include, without limitation, matters relating to the generation, manufacture, use, storage, handling, transportation, and/or disposal of hazardous substances or wastes, chemical substances, or conditions with respect to the atmosphere, soil, surface and ground waters, wetlands, stream sediments, and vegetation). (6) The Seller had not and has not received any claim, notice, or opinion that the ownership or operation of the Mortgaged Property violates any federal, state, or local law, statute, ordinance, rule, regulation, decree, order, and/or permit relating to Environmental Matters, and no valid basis for any proceeding, action, or claim of such nature exists; provided, however, that a breach of any representation and warranty set forth in subparagraphs (1) through (6) above being given as of the date of origination shall not constitute a breach of this subsection 6.02(hh) for purposes of Section 6.03 or any other provisions hereof unless such breach could reasonably be expected to have been detected by a modified "Phase I" report if such a report had been obtained at the time of origination of such Mortgage Loan, unless the Seller acquired actual knowledge of the matter subsequent to the origination of such Mortgage Loan and such information was not disclosed to the Purchaser pursuant to this Agreement. A modified Phase I report means an environmental report that is more thorough than a transaction screen but less thorough than a standard Phase I report. (ii) Location. The Mortgaged Property is located as set forth on the Mortgage Loan Schedule. (jj) Composition of Multifamily Property. Except with respect to Mortgage Loans set forth on Exhibit 22, each Mortgaged Property classified as "multifamily" on the Mortgage Loan Schedule is improved by a multifamily residential structure composed of at least five dwelling units, and no more than 20 percent of the net rentable space of such Mortgaged Property is used for non-residential purposes. (kk) Whole Loans; Ownership. Except with respect to Mortgage Loans set forth on Exhibits 13 and 14, each Mortgage Loan is a whole loan and not a participation interest in a Mortgage Loan. Immediately prior to the transfer thereof to the Purchaser pursuant to this Agreement, the Seller will have good and marketable title thereto, and the Seller will be the sole owner and holder of each Mortgage Loan free and clear of any and all liens, claims, encumbrances, participation interests, equities, pledges, charges, or security interests of any nature (other than the lien of the Federal Home Loan Bank of San Francisco being released not later than the Closing Date) and will have full 28 right and authority, subject to no interest or participation of, or agreement with, any other party, to sell and assign each Mortgage Loan pursuant to this Agreement. Upon the transfer thereof to the Purchaser pursuant to this Agreement, the Seller will have taken all actions necessary on its part to be taken so that the Purchaser will have good and marketable title to, and will be sole owner of, the Mortgage Loan, the Mortgage and the Mortgage Note, free and clear of any and all liens, claims, encumbrances, participation interests, equities, pledges, charges, or security interests of any nature. (ll) Escrow Payments. All escrow deposits and payments relating to each Mortgage are in the possession or under the control of the Seller. All such escrows and deposits will be conveyed by the Seller to the Purchaser pursuant to this Agreement and identified as such with appropriate detail. There exist no deficiencies in excess of $200 with respect to escrow deposits and payments, if such are required, for which customary arrangements for repayment have not been made or which the Seller expects not to be cured, and no escrow deposits or payments of other charges or payments due the Seller have been capitalized under the Mortgage or the Mortgage Note. (mm) Mortgagor Concentration. No more than 5 percent of the aggregate outstanding principal amount of the Mortgage Loans have the same Mortgagor or, to the Seller's best knowledge, are made to Mortgagors that are Affiliates of each other. (nn) Underwriting Guidelines. Except as set forth on Exhibit 23 hereto, each Mortgage Loan was underwritten in accordance with the underwriting guidelines of the Seller in effect at the time such Mortgage Loan was originated, true and correct copies of which have been delivered by the Seller to the Purchaser. (oo) No Fraudulent Statements. No statement, report, or other document constituting a part of the Mortgage Loan Documents or the Servicing File contains any fraudulent statements or omissions by the Seller or, to the best of the Seller's knowledge, by the Mortgagor or any other person or entity. (pp) Compliance. The origination, servicing and collection practices, if any, used by the Seller with respect to such Mortgage Loan have complied in all material respects with applicable requirements of federal, state and local laws and have been consistent with those practices applied by the Seller to similar types of mortgage loans-owned by the Seller. (qq) Licensing. The Seller and any of its Affiliates that have had any interest in the Mortgage, whether as mortgagee, assignee, pledgee, or otherwise, are (or, during the period in which they held and disposed of such interest, were) (i) in compliance with any and all applicable licensing requirements of the laws of the state wherein the Mortgaged Property is located and (ii) (A) organized under the laws of such state, (B) qualified to do business in such state, (C) federal savings and loan associations 29 or national banks having principal offices in such state, (D) not doing business in such state, or (E) not required to qualify to do business in such state. (rr) Custodial Agreements, etc. There are no custodial agreements in effect adversely affecting the right or ability of the Seller to make the deliveries of the Mortgage Loan Documents. Each of the Mortgage Loan Documents with respect to such Mortgage Loan specified in Section 5.03 or in the Servicing File is, to the best of the Seller's knowledge, genuine, true, correct and complete and has not been altered or modified in any way except as noted in the Servicing File and each is duly executed and in due and proper form. With respect to each Servicing File, each of the items listed under Part One of Exhibit 5 hereto is in each Servicing File, and each item listed under Part Two of Exhibit 5 is, where applicable as to each Mortgage Loan, in the Servicing File therefor. (ss) Assignments. The transfer of the Mortgage Note and the Mortgage as and in the manner contemplated by this Agreement will be sufficient fully to transfer to the Purchaser all right, title and interest of the Seller thereto as note holder and mortgagee or trust deed beneficiary. The Mortgage will be duly assigned and the Mortgage Note will be duly endorsed as provided in Section 5.03. The Assignment of Mortgage delivered pursuant to Section 5.03 is in recordable form (except for the insertion of the name of the assignee) and is acceptable for recording under the laws of the applicable jurisdiction. (tt) Delivery to the Bailee. Prior to the Closing Date, the Seller has, in accordance with Section 5.03, delivered to the Bailee originals of each of the documents with respect to such Mortgage Loan specified in Section 5.03. (uu) Classified Loans. Except as set forth on Exhibit 24, no Mortgage Loan is a "criticized" or "special credit" asset. (vv) Litigation; Casualty Losses. Except as shown on Exhibit 25 hereto, to the best of Seller's knowledge, there is (i) no litigation, arbitration or other similar proceeding pending or threatened with respect to any Mortgage Loan, (ii) no material unrepaired casualty loss with respect to any Mortgaged Property, and (iii) no material unpaid insurance claim pending with respect to any Mortgaged Property. (ww) SBOs. With respect to each SBO, the Seller (i) has, in accordance with Section 5.03 above, delivered to the Bailee true, correct and complete originals of each Participation Agreement, Certificate of Participation and other similar document evidencing the interest of the Seller in the underlying Mortgage Loan(s), (ii) has included in the Servicing File for each such Mortgage Loan copies of Mortgage Loan Documents, each report or notice received from the servicer under the applicable Participation Agreement, and other items referred to on Exhibit 5 hereto, but only to the extent to the possession of the Seller, with respect to each such underlying Mortgage Loan, (iii) has no 30 knowledge of any breach or default on the part of the servicer under such SBO or any Mortgager under any underlying Mortgage Loan, and (iv) has executed and delivered to the Purchaser an assignment sufficient fully to transfer to the Purchaser all right, title and interest of the Seller in and to such SBO. The information set forth on Exhibit 13 hereto is true and correct. With respect to each SBO, the provisions of this subparagraph (xx) shall apply in lieu of other representations and warranties set forth in this Section 6.02, except for the following subparagraphs: (a), (b), (g) through (j), (l), (m), (w), (x), (y), (dd), (ff), (ii), (jj), (nn), (oo), (uu) and (vv). (xx) Custodial Accounts. Exhibit 26 hereto is a true and complete listing of all Custodial Accounts, as well as each Mortgage Loan on which the Seller is collecting Escrow Payments from the Mortgagor. (yy) Automatic Debit. Exhibit 27 hereto is a true and complete listing of all Mortgage Loans with respect to which an automatic debit, against a deposit account held at the Seller or elsewhere, is in place with respect to regular Monthly Payments thereunder. Section 6.03 Remedies for Breach of Seller's Representations, Warranties and Covenants. It is understood and agreed that the representations and warranties set forth in Sections 6.01 and 6.02 shall survive the sale of the Mortgage Loans to the Purchaser and shall inure to the benefit of the Purchaser, notwithstanding any restrictive or qualified endorsement on any Mortgage Note or Assignment of Mortgage or the examination or failure to examine any Mortgage Loan Documents or Servicing File. Upon discovery by either the Seller or the Purchaser of a breach of any of the foregoing representations and warranties which materially and adversely affects the value of the Mortgage Loans or the interest of the Purchaser in the Mortgage Loans, in the case of a representation or warranty set forth in Section 6.01 (or which materially and adversely affects the value of any Mortgage Loan or the interest of the Purchaser in any Mortgage Loan, in the case of a representation and warranty set forth in Section 6.02), the Party discovering such breach shall give prompt written notice to the other. Within 60 days of the earlier of either discovery by (and written notice to the Purchaser in accordance with the preceding paragraph) or written notice to the Seller of any breach of a representation or warranty set forth in Section 6.02, the Seller shall use its reasonable best efforts promptly to cure such breach in all material respects and, if such breach cannot be or is not cured within such 60-day period, and such breach meets the threshold standard set forth in the preceding paragraph, the Seller shall, at the Purchaser's option, which option must be exercised within 60 days following written notice to the Purchaser of the Seller's inability to cure such breach or the expiration of the 60-day cure period referred to above, repurchase such Mortgage Loan at the Repurchase Price not later than 30 days following demand for repurchase from the Purchaser. In the event that a breach shall involve any representation or warranty set forth in Section 6.01, and such breach cannot be or is not cured within 60 days of the earlier of either discovery 31 by (and written notice to the Purchaser in accordance with the preceding paragraph) or written notice to the Seller of such breach, and such breach meets the threshold standard set forth in the preceding paragraph, the Seller shall repurchase, at the Repurchase Price, either, at the Seller's option, (1) all of the Mortgage Loans, or (2) such of the Mortgage Loans selected by the Purchaser, in its commercially reasonable discretion, so that, after such repurchase, such breach is cured in all material respects. Such repurchase shall close not later than 30 days following demand for repurchase from the Purchaser. In addition, (a) if any Monthly Payment that becomes due during the period beginning on the Closing Date and ending on the first anniversary of the Closing Date in respect of any of the Mortgage Loans listed on Exhibit 12 becomes 60 days or more delinquent, or (b) with respect to any New Mortgage Loan shown on Part One of Exhibit 15 hereto, the Mortgagor thereunder defaults on the first Monthly Payment or becomes 60 days or more delinquent on any Monthly Payment during the period beginning on the Closing Date and ending on the first anniversary of the Closing Date, or (c) with respect to any New Mortgage Loan shown on Part Two of Exhibit 15 hereto, the Mortgagor thereunder defaults on the first Monthly Payment, then, in each such circumstance, the Seller shall, at the election of the Purchaser, repurchase (at the applicable Repurchase Price) the related Mortgage Loan not later than 30 days following written demand for repurchase from the Purchaser, which demand must be made within 60 days of the Purchaser acquiring knowledge of such delinquency or default (with delinquency understood to mean a failure to pay within the time period, including any cure period, provided in the applicable Mortgage Loan Documents). Any repurchase of a Mortgage Loan or Loans pursuant to the foregoing provisions of this Section 6.03 shall be accomplished by the Seller wiring immediately available funds into an account designated by the Purchaser. The Seller shall pay all out-of-pocket costs and expenses incurred in connection with the repurchase of any Mortgage Loan. At the time of repurchase, the Purchaser and the Seller shall arrange for the reassignment of the Repurchased Mortgage Loan to the Seller pursuant to documents consistent with those delivered by the Seller to the Purchaser on the Closing Date and the delivery to the Seller of any documents held by the Purchaser relating to the Repurchased Mortgage Loan. The Seller shall on behalf of the Purchaser provide any required notice to any Mortgagor with respect to any Repurchased Mortgage Loan. In addition to such cure and repurchase obligations, the Seller shall indemnify, defend and hold the Purchaser harmless from and against any Loss resulting from any claim, demand, defense or assertion based on or founded upon, or resulting from, a breach by the Seller of any of its representations, warranties and covenants contained in this Agreement, the Interim Servicing Agreement and any other writing delivered pursuant hereto; provided, however, the Purchaser shall not be entitled to make a claim against the Seller under this paragraph if the amount of such Loss is (or is projected to be) less than $10,000 as to any single breach, unless the cumulative amount of all such Losses under all breaches of any kind exceeds $100,000, in which event the 32 Seller shall be liable to the Purchaser for the full amount of all such Losses without regard to such $10,000 or $100,000 limitation. It is understood and agreed that the obligations of the Seller set forth in this Section 6.03 to cure or repurchase a defective Mortgage Loan and to indemnify the Purchaser as provided in this Section 6.03 constitute the sole remedies of the Purchaser respecting a breach of the Seller's representations, warranties or covenants. Any cause of action against the Seller relating to or arising out of the breach of any representation and warranty made in Section 6.01 or 6.02 shall accrue as to any Mortgage Loan upon (i) discovery of such breach by the Purchaser or written notice thereof by the Seller to the Purchaser, (ii) failure by the Seller to cure such breach or repurchase such Mortgage Loan as specified above, as applicable, and (iii) demand upon the Seller by the Purchaser for all amounts payable in respect of such Mortgage Loan, as applicable. Section 6.04 Survival of Representations, Warranties and Covenants; Limitation Period. (a) The representations, warranties and covenants of the Seller contained in this Agreement or in any writing delivered pursuant to the provisions of this Agreement shall survive the consummation of the transactions contemplated hereby and any examination by or on behalf of the Purchaser and the termination of this Agreement. (b) The provisions of this Section 6.04(b) shall govern the time period within which the Purchaser may make a claim for breach of a representation or warranty by the Seller, whether in the nature of a demand for repurchase of a Mortgage Loan or indemnification with respect to such breach; the provisions of this subparagraph shall not limit the Purchaser's rights or remedies with respect to a breach by the Seller of any covenant under this Agreement or any related document. The time period for the assertion by the Purchaser of any such claim for breach of a representation or warranty by the Seller hereunder shall be limited to 12 months following the Closing Date. In addition, with respect to a claim for indemnification, the Purchaser shall have determined, within such 12-month period, that the breach of the Seller with respect to which such indemnification claim is being asserted has a reasonable possibility of resulting in a Loss to the Purchaser; each such claim for indemnification shall be in writing to the Seller and shall include a reasonable estimate by the Purchaser of the amount of such Loss, provided that such estimate shall not constitute a contractual limit on the amount of actual Loss under such indemnification claim, if larger. In response to any such claim for indemnification, the Seller may, in its sole discretion, elect to repurchase (at the applicable Repurchase Price and in the manner generally provided in Section 6.03 above) the related Mortgage Loan, in which case the Seller shall have no further obligation to the Purchaser with respect to the indemnification claim related thereto. If the Seller elects so to repurchase the related Mortgage Loan, such repurchase shall close not later than 30 days following the date the Purchaser made such 33 indemnification claim. The Seller covenants to maintain, in its reasonable judgment, sufficient capital to satisfy all obligations to the Seller under this Agreement, the Interim Servicing Agreement and each other writing delivered pursuant hereto; any breach of the foregoing covenant shall render of no further force and effect the limitations set forth in this subparagraph (b). In no event shall the 12-month limitation period pursuant to this subparagraph (b) impair any claim or repurchase obligation, whether or not resolved within such 12-month period, discovered by the Seller or made by the Purchaser in writing to the Seller, as provided in Section 6.03 or in this Section 6.04, prior to the end of such period. ARTICLE VIA. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER. Section 6.01A Representations and Warranties Regarding the Purchaser. The Purchaser represents and warrants to the Seller that, as of the date hereof and as of the Closing Date: (a) Due Organization and Authority. The Purchaser is duly organized and validly existing as a federal association under the laws of the United States and has all licenses necessary to carry on its business as now being conducted; the Purchaser is in compliance with the laws of each relevant jurisdiction or governmental authority to the extent necessary to conduct business of the type conducted by the Purchaser; the Purchaser has the full corporate power, authority and legal right to receive and hold the Mortgage Loans and to execute and deliver this Agreement and to perform its obligations hereunder; the execution, delivery and performance of this Agreement (including all agreements and instruments of transfer to be delivered pursuant to this Agreement) by the Purchaser and the consummation of the transactions contemplated hereby (including without limitation the purchase obligations hereinafter set forth) have been duly and validly authorized; this Agreement and all agreements and instruments contemplated hereby have been duly executed and delivered and constitute the valid, legal, binding and enforceable obligations of the Purchaser, except as such enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting the enforcement of creditors' rights generally and by general principles of equity, regardless of whether such enforcement is considered in a proceeding in equity or at law; and all requisite corporate action has been taken by the Purchaser to make this Agreement and all agreements and instruments contemplated hereby valid and binding upon the Purchaser in accordance with their terms. (b) No Conflicts. Neither the purchase of the Mortgage Loans by the Purchaser, nor the consummation of the transactions contemplated hereby, nor the fulfillment of or compliance with the terms and conditions of this Agreement, will conflict with or result in a breach of any of the terms, conditions or provisions of the Purchaser's charter or by-laws or any legal restriction or any agreement or instrument to 34 which the Purchaser is now a party or by which it is bound, or constitute a default or result in an acceleration under any of the foregoing, or result in the violation of any law, rule, regulation, order, judgment or decree to which the Purchaser or its property is subject, or result in the creation or imposition of any lien, charge or encumbrance that would have an adverse effect upon any of its properties pursuant to the terms of any mortgage, contract, deed of trust or other instrument. (c) Ability to Perform; Solvency. The Purchaser does not believe, nor does it have any reason or cause to believe, that it cannot perform each and every covenant contained in this Agreement. The Purchaser is solvent and the purchase of the Mortgage Loans will not cause the Purchaser to become insolvent. The purchase of the Mortgage Loans is not undertaken with the intent to hinder, delay or defraud any of the Purchaser's creditors. (d) No Litigation Pending. There is no action, suit, proceeding or investigation pending or, to the best of the Purchaser's knowledge, threatened against the Purchaser which, either in any one instance or in the aggregate, may result in any material adverse change in the business, operations, financial condition, properties or assets of the Purchaser, or in any material impairment of the right or ability of the Purchaser to carry on its business substantially as now conducted, or in any material liability on the part of the Purchaser, or which would draw into question the validity of this Agreement or of any action taken or to be taken in connection with the obligations of the Purchaser contemplated herein, or which would be likely to impair materially the ability of the Purchaser to perform under the terms of this Agreement. (e) No Consent Required. No consent, approval, authorization or order of, or registration or filing with, or notice to any court or governmental agency or body including HUD, is required for the execution, delivery and performance by the Purchaser of or compliance by the Purchaser with this Agreement or the purchase of the Mortgage Loans or the consummation of the transactions contemplated by this Agreement, or if required, such approval has been obtained prior to the Closing Date. Section 6.02A Survival of Representations, Warranties and Covenants. The representations, warranties and covenants of the Purchaser contained in this Agreement or in any writing delivered pursuant to the provisions of this Agreement shall survive the consummation of the transactions contemplated hereby and any examination by or on behalf of the Seller and the termination of this Agreement; provided, however, that the representations and warranties contained in this Article VIA shall survive only as long as the survival period applicable to the Seller's representations and warranties pursuant to Section 6.04(b) hereof. 35 ARTICLE VII. INTERIM SERVICING; TRANSFER OF SERVICING. Section 7.01 Interim Servicing. On or before the Closing Date, the Parties shall execute the Interim Servicing Agreement attached hereto as Exhibit 7. The Interim Servicing Agreement shall set for the rights and obligations of the parties regarding the servicing of the Mortgage Loans during the Interim Period. Section 7.02 Transfer of Servicing. The Seller shall transfer servicing responsibility with respect to the Mortgage Loans to the Purchaser or its designee in accordance with customary mortgage industry servicing practices on the applicable Transfer Date. Seller shall deliver the Servicing File to Purchaser on the applicable Transfer Date, or on such other date that the Parties shall agree upon. The Seller and Purchaser agree to make a good faith effort in order to execute and deliver such instruments and take such actions as either Party may, from time to time, reasonably request in order to effectuate the transfer of servicing. Nothing in this Section 7.02 shall alter or limit the specific provisions of the Interim Servicing Agreement. Section 7.03 Substitution of Trustee. In the case of any Mortgage in the form of a deed of trust under which the trustee is the Seller or an Affiliate of the Seller, the Purchaser shall, (a) prior to the initiation of record of any foreclosure proceeding under such deed of trust, and (b) in all events promptly following the service of any summons or other legal process naming the Seller or Affiliate as a party in its capacity as such trustee, substitute a replacement trustee thereunder for the Seller or Affiliate, as applicable. ARTICLE VIII. CLOSING. Section 8.01 Closing. The closing for the purchase of the Mortgage Loans shall take place on the Closing Date. At the Purchaser's option, the closing shall be either: by telephone, confirmed by letter or wire as the parties shall agree, or conducted in person, at such place as the Parties shall agree. Section 8.02 Conditions to the Purchaser's Closing Obligations. The obligations of the Purchaser to consummate the transactions contemplated hereunder at closing are subject to satisfaction or written waiver by the Purchaser of the following conditions: (a) in a timely manner on or before the Closing Date, the Seller shall deliver to the Purchaser or the Bailee, as provided herein and in the Escrow and Bailee Agreement, the Mortgage Loan Documents, the Mortgage Loan Schedule, all Data Files, and a magnetic diskette, or transmit by modem, a listing (in Microsoft Excel format) on a loan-level basis of the necessary information to compute the Purchase Price of the 36 Mortgage Loans delivered on the Closing Date (including accrued interest); additionally, on the Closing Date the Seller shall deliver or cause to be delivered to the Purchaser an exported data tape in Microsoft Excel format (via computer diskette, compact disc, e-mail or other form of electronic transmission acceptable to both parties) containing all available data from each of the Seller's servicing systems (and the Seller's third-party servicers' systems) including, without limitation, FISERV and the SBO Access Database System; (b) all of the representations and warranties of the Seller under this Agreement shall be true and correct, if qualified as to materiality, or otherwise true and correct in all material respects, as of the Closing Date, and no event shall have occurred which, with notice or the passage of time, would constitute a default under this Agreement; (c) the Purchaser shall have received, or the Purchaser's attorneys shall have received, in escrow, all closing documents as specified in Section 9.01 of this Agreement to be delivered by the Seller and/or any person or entity other than the Purchaser, in such forms as are agreed upon and acceptable to the Purchaser, duly executed by all signatories other than the Purchaser as required pursuant to the terms hereof; (d) The final form of all Exhibits hereto (as updated to the Closing Date as appropriate) shall be in form and substance acceptable in all respects to the Purchaser; (e) the Seller shall not have received any notice or other communication from a regulatory body with jurisdiction over the Seller disapproving of the sale of the Mortgage Loans pursuant to this Agreement; and (f) all other terms and conditions of the Seller with respect to this Agreement and the related Purchase Price and Terms Letter shall have been complied with. Subject to the foregoing conditions, the Purchaser shall pay to the Seller on the Closing Date the Purchase Price (less Holdback), plus accrued interest, pursuant to Article IV of this Agreement, by wire transfer of immediately available funds to the account designated by the Seller, subject to the provisions of the third paragraph of Section 4.01 with respect to that portion of the Purchase Price allocable to the SBOs. Section 8.03 Conditions to the Seller's Closing Obligations. The obligations of the Seller to consummate the transactions contemplated hereunder at closing are subject to satisfaction or written waiver by the Seller of the following conditions: 37 (a) All of the representations and warranties of the Purchaser under this Agreement shall be true and correct, if qualified as to materiality, or otherwise true and correct in all material respects, as of the Closing Date, and no event shall have occurred which, with notice or the passage of time, would constitute a default under this Agreement; (b) The Seller shall have received, or the Seller's attorneys shall have received, in escrow, all closing documents as specified in Section 9.01 of this Agreement to be delivered by the Purchaser, in such forms as are agreed upon and acceptable to the Seller, duly executed by all signatories other than the Seller as required pursuant to the terms hereof; (c) The final form of all Exhibits hereto (as updated to the Closing Date as appropriate) shall be in form and substance acceptable in all respects to the Seller; and (d) All other terms and conditions of the Purchaser with respect to this Agreement and the related Purchase Price and Terms Letter shall have been complied with. Section 8.04 SBO Closing Conditions. With respect to the sale and assignment of the SBOs on SBO Closing Date, as referred to in Section 2.02 above, (a) with respect to the Purchaser: each of the conditions set forth in Section 8.02 shall apply as of the SBO Closing Date, except that the items referred to in subparagraph (a) thereof shall be supplemented and modified on a basis consistent with Section 2.02 above; and (b) with respect to the Seller: the conditions referred to in Section 8.03 above shall apply as of the SBO Closing Date. Subject to the conditions referred to in clause (a) above, the Purchaser shall pay to the Seller on the SBO Closing Date that portion of the Purchase Price attributable to the SBOs being transferred and assigned to the Purchaser, plus accrued interest, pursuant to Article IV of this Agreement, by wire transfer of immediately available funds to the account designated by the Seller. ARTICLE IX. CLOSING DOCUMENTS. Section 9.01 Closing Documents. The closing documents for the Mortgage Loans to be purchased on the Closing Date shall consist of fully executed originals of the following documents: (a) this Agreement and all Exhibits hereto properly and fully completed, including, without limitation, the Mortgage Loan Schedule, one copy to be attached hereto, and one copy to be attached to the related Assignment and Conveyance as the Mortgage Loan Schedule thereto; 38 (b) the Mortgage Loan Documents, the power-of-attorney referred to in Section 5.03(c) above, the Data Files and the Escrow and Bailee Agreement; (c) an Officer's Certificate, substantially in the form of Exhibit 2 hereto, including all attachments thereto; (d) an opinion of counsel of the Seller (who may be an employee of the Seller), in a form reasonably approved by the Purchaser; (e) a certificate or other evidence of merger or change of name, signed or stamped by the applicable regulatory authority, if any of the Mortgage Loans were acquired by the Seller by merger or acquired or originated by the Seller while conducting business under a name other than its present name, if applicable; (f) the Assignment and Conveyance, substantially in the form of Exhibit 3 hereto; (g) the Interim Servicing Agreement, substantially in the form of Exhibit 7 hereto; (h) the certification of Bailee, in the form of Exhibit B to the Escrow and Bailee Agreement, in a form acceptable to the Purchaser; (i) any releases/terminations of security interests, including all security interests in favor of the Federal Home Loan Bank; (j) a copy of each consent, approval, authorization or order, governmental or otherwise, in accordance with Section 6.01(e) above; and (k) UCC financing statements of the Seller in accordance with Section 4.02(c) above. Section 9.02 SBO Closing Documents. The closing documents for the SBOs to be purchased on the SBO Closing Date shall consist of fully executed originals of the documents referred to in Section 2.02 above, together with each item applicable to the SBOs as referred to in Section 9.01, subparagraphs (i) and (j), above. ARTICLE X. COSTS. Section 10.01 Costs. Except as otherwise expressly set forth in this Agreement: the Seller shall pay all costs and expenses incurred in connection with the transfer and delivery of the Mortgage Loans, including without limitation recording and filing fees, estimated fees for recording Assignments of Mortgage, the fees and expenses to complete Assignments of Mortgages and the fees and expenses of Seller's accountants, 39 attorneys and other service providers, and all costs and expenses attributable to its performance of this Agreement; and the Purchaser shall pay the fees and expenses of the Purchaser's accountants, attorneys and other service providers, and all costs and expenses attributable to its performance of this Agreement. ARTICLE XI. TERMINATION. Section 11.01 Termination. The respective obligations and responsibilities of the Seller shall terminate by mutual consent of the Seller and the Purchaser in writing. ARTICLE XII. MISCELLANEOUS. Section 12.01 Notices. All demands, notices and communications hereunder shall be in writing and shall be deemed to have been duly given if mailed, by registered or certified mail, return receipt requested, or, if by other means, when received by the other Party at the address as follows: (i) if to the Seller: Bay View Bank, National Association 1840 Gateway Drive San Mateo, California ###-###-#### Attention: Joseph J. Catalano Assistant General Counsel Fax: (650) 573-6381 with a copy to: Duane Morris LLP 4200 One Liberty Place Philadelphia, Pennsylvania 19103 Attention: Frederick W. Dreher Fax: (215) 979-1213 (ii) if to the Purchaser: Washington Mutual Bank, FA 1301 Fifth Avenue, RBB1310 Seattle, WA 98101 Attention: Brian Terpstra First Vice President Fax: (206) 490-5656 40 with a copy to: Washington Mutual Bank, FA 9200 Oakdale Avenue, N110701 Northridge, CA 91311 Attention: Geoffrey Olsen First Vice President Fax: (818) 349-2734 or such other address as may hereafter be furnished to the other Party by like notice. Any such demand, notice or communication hereunder shall be deemed to have been received on the date delivered to or received at the premises of the addressee (as evidenced, in the case of registered or certified mail, by the date noted on the return receipt). Section 12.02 Severability Clause. Any part, provision, representation or warranty of this Agreement which is prohibited or which is held to be void or unenforceable shall be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof. Any part, provision, representation or warranty of this Agreement which is prohibited or unenforceable or is held to be void or unenforceable in any jurisdiction shall be ineffective, as to such jurisdiction, to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction as to any Mortgage Loan shall not invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted by applicable law, the Parties hereto waive any provision of law which prohibits or renders void or unenforceable any provision hereof. If the invalidity of any part, provision, representation or warranty of this Agreement shall deprive any Party of the economic benefit intended to be conferred by this Agreement, the Parties shall negotiate, in good-faith, to develop a structure the economic effect of which is nearly as possible the same as the economic effect of this Agreement without regard to such invalidity. Section 12.03 Counterparts. This Agreement may be executed simultaneously in any number of counterparts. Each counterpart shall be deemed to be an original, and all such counterparts shall constitute one and the same instrument. Section 12.04 Governing Law. The Agreement shall be construed in accordance with the laws of the State of California and the obligations, rights and remedies of the Parties hereunder shall be determined in accordance with the substantive laws of the State of California (without regard to conflicts of laws principles), except to the extent preempted by federal law. Section 12.05 Recordation of Agreement. To the extent permitted by applicable law, a memorandum of this Agreement shall be recorded in all appropriate public offices for real properly records in all the counties or other comparable 41 jurisdictions in which any Mortgage Property is situated, and in any other appropriate public recording office or elsewhere, such recordation to be effected by the Seller at the Seller's expense on direction of the Purchaser accompanied by an opinion of counsel to the effect that such recordation materially and beneficially affects the interest of the Purchaser or is necessary for the administration or servicing of the Mortgage Loans. Section 12.06 Intention of the Parties. It is the intention of the Parties that the Purchaser is purchasing, and the Seller is selling the Mortgage Loans and not a debt instrument of the Seller or another security. Accordingly, the Parties each intend to treat the transaction for federal income tax purposes as a sale by the Seller, and a purchase by the Purchaser, of the Mortgage Loans. The Purchaser shall have the right to review the Mortgage Loans and the related Mortgage Loan Documents to determine the characteristics of the Mortgage Loans which shall affect the federal income tax consequences of owning the Mortgage Loans and the Seller shall cooperate with all reasonable requests made by the Purchaser in the course of such review. Section 12.07 Successors and Assigns; Assignment of Agreement. This Agreement shall bind and inure to the benefit of and be enforceable by the Seller and the Purchaser and the respective permitted successors and assigns of the Seller and the successors and assigns of the Purchaser. This Agreement shall not be assigned, pledged or hypothecated by the Seller to a third party without the consent of the Purchaser. This Agreement may be assigned, pledged or hypothecated by the Purchaser without the consent of the Seller. If the Purchaser assigns any or all of its rights as Purchaser hereunder, the assignee of the Purchaser will become the "Purchaser" hereunder to the extent of such assignment, provided that the Purchaser shall also remain responsible for its obligations hereunder, unless the Seller's prior written consent to such assignment has been obtained. Section 12.08 Confidentiality; Press Releases. The Parties agree to maintain in confidence the specific contents and terms of this Agreement and to disclose same only to those attorneys, accountants and governmental entities which have a reasonable need to know such contents and terms. Notwithstanding the foregoing, the Parties agree that disclosures of the contents and terms of this Agreement may be made to the extent that the disclosing party in good faith determines that such disclosure is required by law. In the event a Party receives a request for the disclosure thereof from a third party in an arbitration or litigation, such Party shall promptly notify the other Party of such request, identifying the specific information or documents sought to be disclosed and the proceeding in which such disclosure is sought. Within 15 days of receipt of such written notice, the Party receiving such notice shall notify the other Party whether or not such first Party opposes the disclosure; if such receiving Party opposes the disclosure, the Parties shall mutually cooperate in the formulation and presentation of an appropriate opposition thereto. In addition, neither Party shall make any public filing or issue any press release or other publicity regarding the transactions contemplated by this 42 Agreement without coordinating same with the other Party and providing such Party, in advance of such filing or publication, the text thereof for review and comment; each Party shall cooperate with the other in accommodating all reasonable comments regarding the form and content of any such filing or publication. Section 12.09 Attorneys' Fees. If either Party retains an attorney to enforce any of the provisions of this Agreement or any writing delivered pursuant hereto, the prevailing Party shall be entitled to reasonable attorneys' fees and costs from the other Party, including such fees and costs incurred in both trial and appellate courts and all accounting and other costs of experts. Section 12.10 Complete Agreement; Waivers. (a) This Agreement, the Interim Servicing Agreement and other documents executed pursuant hereto contain or expressly incorporate by reference the entire agreement of the Parties with respect to the matters contemplated herein and therein and supersede all prior negotiations or agreements, written or oral. (b) No term or provision of this Agreement may be waived or modified unless such waiver or modification is in writing and signed by the Party against whom such waiver or modification is sought to be enforced. Section 12.11 Exhibits. The exhibits to this Agreement are hereby incorporated and made a part hereof and are an integral part of this Agreement. Section 12.12 General Interpretive Principles. For purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires: (a) the terms defined in this Agreement have the meanings assigned to them in this Agreement and include the plural as well as the singular, and the use of any gender herein shall be deemed to include the other gender; (b) accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles; (c) references herein to "Articles," "Sections," "Paragraphs," and other Subdivisions without reference to a document are to designated Articles, Sections, Paragraphs and other subdivisions of this Agreement; (d) reference to a Section without further reference to a Section is a reference to such Section as contained in the same Section in which the reference appears, and this rule shall also apply to Paragraphs and other subdivisions; 43 (e) the words "herein," "hereof," "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular provision; and (f) the term "include" or "including" shall mean, without limitation by reason of enumeration. Section 12.13 Reproduction of Documents. This Agreement and all documents relating thereto, including, without limitation, (a) consents, waivers and modifications which may hereafter be executed, (b) documents received by any Party at the closing, and (c) financial statements, certificates and other information previously or hereafter furnished, may be reproduced by any photographic, photostatic, microfilm, micro-card, miniature photographic or other similar process. The Parties agree that any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding, whether or not the original is in existence and whether or not such reproduction was made by a Party in the regular course of business, and that any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence. Section 12.14 Further Agreements. The Seller and the Purchaser each agree to execute and deliver to the other such reasonable and appropriate additional documents, instruments or agreements as may be necessary or appropriate to effectuate the purposes of this Agreement. Section 12.15 Recordability of Assignments of Mortgage. To the extent permitted by applicable law, each of the Assignments of Mortgage is subject to recordation in all appropriate public offices for real property records in all the counties or other comparable jurisdictions in which any or all of the Mortgaged Properties are situated, and in any other appropriate public recording office or elsewhere. Section 12.16 No Solicitation. From and after the date of this Agreement, the Seller agrees that it and its Affiliates will not take any action or permit or cause any action to be taken by any of its agents or affiliates, or by any independent contractors on the Seller's behalf, to specifically target, by telephone, mail or otherwise any Mortgagor for solicitation of refinancing of the Mortgage Loans, without the prior written consent of the Purchaser. Section 12.17 Survival. Except as otherwise expressly provided in Sections 6.04(b) and 6.02A, each representation, warranty and covenant of the Parties contained in this Agreement or in any writing delivered pursuant to the provisions of this Agreement and each document executed and delivered pursuant hereto shall survive the consummation of the transactions contemplated hereby. [Signatures Commence on Following Page] 44 IN WITNESS WHEREOF, the Seller and the Purchaser have caused their names to be signed hereto by their respective officers thereunto duly authorized as of the date first above written. WASHINGTON MUTUAL BANK, FA (Purchaser) By:________________________________________ Name:______________________________________ Title:_____________________________________ BAY VIEW BANK, NATIONAL ASSOCIATION (Seller) By:________________________________________ Name:______________________________________ Title:_____________________________________ SCHEDULES AND EXHIBITS LISTED IN TABLE OF CONTENTS OMITTED PURSUANT TO ITEM 601 (b) (2) OF REGULATION S-K AND WILL BE PROVIDED SUPPLEMENTALLY TO THE SECURITIES AND EXCHANGE COMMISSION UPON ITS REQUEST.