RECEIVABLES PURCHASE AGREEMENT AND ASSIGNMENT
between
ARCADIA RECEIVABLES FINANCE CORP.
Purchaser
and
ARCADIA FINANCIAL LTD.
Seller
dated as of
March 1, 1999
TABLE OF CONTENTS
PAGE
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ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
SECTION 1.1. General . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
SECTION 1.2. Specific Terms. . . . . . . . . . . . . . . . . . . . . . . . .2
SECTION 1.3. Usage of Terms. . . . . . . . . . . . . . . . . . . . . . . . .4
SECTION 1.4. Certain References. . . . . . . . . . . . . . . . . . . . . . .5
SECTION 1.5. No Recourse . . . . . . . . . . . . . . . . . . . . . . . . . .5
SECTION 1.6. Action by or Consent of Noteholders . . . . . . . . . . . . . .5
SECTION 1.7. Material Adverse Effect . . . . . . . . . . . . . . . . . . . .5
ARTICLE II CONVEYANCE OF THE INITIAL RECEIVABLES AND THE INITIAL OTHER CONVEYED
PROPERTY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
SECTION 2.1. Conveyance of the Initial Receivables and the Initial
Other Conveyed Property . . . . . . . . . . . . . . . . . . . .5
SECTION 2.2. Purchase Price of Initial Receivables . . . . . . . . . . . . .6
SECTION 2.3. Conveyance of Subsequent Receivables and Subsequent Other
Conveyed Property . . . . . . . . . . . . . . . . . . . . . . .6
ARTICLE III REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . .8
SECTION 3.1. Representations and Warranties of AFL . . . . . . . . . . . . .8
SECTION 3.2. Representations and Warranties of ARFC. . . . . . . . . . . . 10
ARTICLE IV COVENANTS OF AFL . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 4.1. Protection of Title of ARFC and the Trust . . . . . . . . . . 12
SECTION 4.2. Other Liens or Interests. . . . . . . . . . . . . . . . . . . 14
SECTION 4.3. Costs and Expenses. . . . . . . . . . . . . . . . . . . . . . 14
SECTION 4.4. Indemnification . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE V REPURCHASES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 5.1. Repurchase of Receivables Upon Breach of Warranty . . . . . . 16
SECTION 5.2. Reassignment of Purchased Receivables . . . . . . . . . . . . 17
SECTION 5.3. Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE VI
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 6.1. Liability of AFL. . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 6.2. Failure of AFL to Sell Subsequent Receivables . . . . . . . . 17
SECTION 6.3. Merger or Consolidation of AFL or ARFC. . . . . . . . . . . . 18
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SECTION 6.4. Limitation on Liability of AFL and Others . . . . . . . . . . 19
SECTION 6.5. AFL May Own Notes . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 6.6. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 6.7. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 6.8. Merger and Integration. . . . . . . . . . . . . . . . . . . . 20
SECTION 6.9. Severability of Provisions. . . . . . . . . . . . . . . . . . 20
SECTION 6.10. Intention of the Parties. . . . . . . . . . . . . . . . . . . 20
SECTION 6.11. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 6.12. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 6.13 Conveyance of the Initial Receivables and the Initial
Other Conveyed Property to the Trust. . . . . . . . . . . . . 21
SECTION 6.14. Nonpetition Covenant. . . . . . . . . . . . . . . . . . . . . 21
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SCHEDULES
Schedule A -- Schedule of Initial Receivables
Schedule B -- Representations and Warranties of AFL
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RECEIVABLES PURCHASE AGREEMENT AND ASSIGNMENT
THIS RECEIVABLES PURCHASE AGREEMENT AND ASSIGNMENT, dated as of
March 1, 1999, executed between Arcadia Receivables Finance Corp., a Delaware
corporation, as purchaser ("ARFC"), and Arcadia Financial Ltd., a Minnesota
corporation, as seller ("AFL").
W I T N E S S E T H:
WHEREAS, ARFC has agreed to purchase from AFL and AFL, pursuant
to one or more Assignments pursuant to an Amended and Restated Receivables
Purchase Agreement and Assignment, dated as of July 21, 1998, between ARFC and
AFL (the "BOA Purchase Agreement"), has transferred to ARFC certain of the
Initial Receivables and Initial Other Conveyed Property;
WHEREAS, ARFC has agreed to purchase from AFL and AFL,
pursuant to this Agreement, is transferring to ARFC the remainder of the
Initial Receivables and Initial Other Conveyed Property; and
WHEREAS, ARFC has agreed to purchase (or has purchased) from
AFL and AFL has agreed to transfer (or has transferred) to ARFC the
Subsequent Receivables and Subsequent Other Conveyed Property in an amount
set forth herein.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements hereinafter contained, and for other good and valuable
consideration, the receipt of which is acknowledged, ARFC and AFL, intending
to be legally bound, hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. GENERAL. The specific terms defined in this
Article include the plural as well as the singular. The words "herein,"
"hereof" and "hereunder" and other words of similar import refer to this
Agreement as a whole and not to any particular Article, Section or other
subdivision, and Article, Section, Schedule and Exhibit references, unless
otherwise specified, refer to Articles and Sections of and Schedules and
Exhibits to this Agreement. Capitalized terms used herein without definition
shall have the respective meanings assigned to such terms in the Sale and
Servicing Agreement, dated as of March 1, 1999, by and among Arcadia
Receivables Finance Corp. (as Seller), Arcadia Financial Ltd. (in its
individual capacity and as Servicer), Arcadia Automobile Receivables Trust,
1999-A (as Issuer) (the "Trust") and
Norwest Bank Minnesota, National Association, a national banking association
(as Backup Servicer).
SECTION 1.2. SPECIFIC TERMS. Whenever used in this Agreement,
the following words and phrases, unless the context otherwise requires, shall
have the following meanings:
"AGREEMENT" shall mean this Receivables Purchase Agreement and
Assignment and all amendments hereof and supplements hereto.
"CLOSING DATE" means March 17, 1999.
"INDENTURE TRUSTEE" means Norwest Bank Minnesota, National
Association, a national banking association, as trustee and indenture collateral
agent under the Indenture, dated as of March 1, 1999, between the Trust, the
Indenture Trustee and the Indenture Collateral Agent.
"INITIAL OTHER CONVEYED PROPERTY" means all monies at any
time paid or payable on the Initial Receivables or in respect thereof after
the Initial Cutoff Date (including amounts due on or before the Initial
Cutoff Date but received by AFL after the Initial Cutoff Date), an assignment
of security interests in the Financed Vehicles, the Collection Account
(including all Eligible Investments therein and all proceeds therefrom), the
Subcollection Account, the Insurance Policies and any proceeds from any
Insurance Policies relating to the Initial Receivables, the Obligors or the
related Financed Vehicles, including rebates of premiums, rights under any
Collateral Insurance and any Force-Placed Insurance relating to the Initial
Receivables, an assignment of the rights of AFL against Dealers with respect
to the Initial Receivables under the Dealer Agreements and the Dealer
Assignments, all items contained in the Receivable Files relating to the
Initial Receivables, any and all other documents or electronic records that
AFL keeps on file in accordance with its customary procedures relating to the
Initial Receivables, the Obligors or the related Financed Vehicles, property
(including the right to receive future Liquidation Proceeds) that secures an
Initial Receivable and that has been acquired by or on behalf of the Trust
pursuant to liquidation of such Initial Receivable, and all proceeds of the
foregoing.
"INITIAL RECEIVABLES" means the Receivables listed on the
Schedule of Initial Receivables attached hereto as Schedule A.
"INITIAL SPREAD ACCOUNT DEPOSIT" means $0.
"INSURANCE AGREEMENT" means the Insurance and Indemnity
Agreement, dated as of March 17, 1999, among the Security Insurer, the Trust,
ARFC and AFL.
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"LIQUIDATED DAMAGES" means an amount equal to the sum of the
Class A-1 Prepayment Premium, the Class A-2 Prepayment Premium, the Class A-3
Prepayment Premium, the Class A-4 Prepayment Premium and the Class A-5
Prepayment Premium.
"OTHER CONVEYED PROPERTY" means the Initial Other Conveyed
Property conveyed by AFL to ARFC pursuant to this Agreement together with any
and all Subsequent Other Conveyed Property conveyed by AFL to ARFC pursuant
to each Subsequent Purchase Agreement.
"OWNER TRUSTEE" means Wilmington Trust Company, a Delaware
corporation, not in its individual capacity but solely as trustee of the
Trust, and any successor trustee appointed and acting pursuant to the Trust
Agreement.
"RELATED DOCUMENTS" means the Notes, the Custodian Agreement,
the Trust Agreement, the Administration Agreement, the Indenture, each
Subsequent Purchase Agreement, the Sale and Servicing Agreement, each
Subsequent Transfer Agreement, the Note Policy, the Spread Account Agreement,
the Insurance Agreement, the Lockbox Agreement and the Underwriting Agreement
among AFL, ARFC and the underwriters of the Notes. The Related Documents to
be executed by any party are referred to herein as "such party's Related
Documents," "its Related Documents" or by a similar expression.
"REPURCHASE EVENT" means the occurrence of a breach of any of
AFL's representations and warranties hereunder or under any Subsequent
Purchase Agreement or any other event which requires the repurchase of a
Receivable by AFL under the Sale and Servicing Agreement.
"SALE AND SERVICING AGREEMENT" means the Sale and Servicing
Agreement, dated as of March 1, 1999, executed and delivered by Arcadia
Receivables Finance Corp., as Seller, Arcadia Financial Ltd., in its
individual capacity and as Servicer, Arcadia Automobile Receivables Trust,
1999-A, as Issuer, and Norwest Bank Minnesota, National Association, as
Backup Servicer.
"SCHEDULE OF INITIAL RECEIVABLES" means the schedule of all
retail installment sales contracts and promissory notes sold and transferred
pursuant to this Agreement which is attached hereto as Schedule A.
"SCHEDULE OF RECEIVABLES" means the Schedule of Initial
Receivables attached hereto as Schedule A as supplemented by each Schedule of
Subsequent Receivables attached to each Subsequent Purchase Agreement as
Schedule A.
"SCHEDULE OF REPRESENTATIONS" means the Schedule of
Representations and Warranties attached hereto as Schedule B.
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"SCHEDULE OF SUBSEQUENT RECEIVABLES" means the schedule of
all retail installment sales contracts and promissory notes sold and
transferred pursuant to a Subsequent Purchase Agreement which is attached to
such Subsequent Purchase Agreement as Schedule A, which Schedule of
Subsequent Receivables shall supplement the Schedule of Initial Receivables.
"SPREAD ACCOUNT" means the Spread Account established and
maintained pursuant to the Spread Account Agreement. The Spread Account
shall in no event be deemed to be part of the Trust Property.
"SPREAD ACCOUNT AGREEMENT" means the Spread Account
Agreement, dated as of March 25, 1993, as thereafter amended and restated,
among AFL, ARFC, the Security Insurer, the Collateral Agent and the trustees
specified therein, as the same may be amended, supplemented or otherwise
modified in accordance with the terms thereof.
"SUBSEQUENT OTHER CONVEYED PROPERTY" means the Subsequent
Other Conveyed Property conveyed by AFL to ARFC pursuant to each Subsequent
Purchase Agreement.
"SUBSEQUENT RECEIVABLES" means the Receivables specified in
the Schedule of Subsequent Receivables attached as Schedule A to each
Subsequent Purchase Agreement.
"TRUST" means the trust created by the Trust Agreement, the
estate of which consists of the Trust Property.
"TRUST PROPERTY" means the property and proceeds of every
description conveyed pursuant to Section 2.5 of the Trust Agreement, Sections
2.1 and 2.4 of the Sale and Servicing Agreement and Section 2.1 hereof and
pursuant to any Subsequent Purchase Agreement and Subsequent Transfer
Agreement, together with the Trust Accounts (including all Eligible
Investments therein and all proceeds therefrom). Although ARFC has pledged
the Spread Account to the Collateral Agent pursuant to the Spread Account
Agreement, the Spread Account shall not under any circumstances be deemed to
be a part of or otherwise includable in the Trust or the Trust Property.
SECTION 1.3. USAGE OF TERMS. With respect to all terms used
in this Agreement, the singular includes the plural and the plural the
singular; words importing any gender include the other gender; references to
"writing" include printing, typing, lithography, and other means of
reproducing words in a visible form; references to agreements and other
contractual instruments include all subsequent amendments thereto or changes
therein entered into in accordance with their respective terms and not
prohibited by this Agreement or the Sale and Servicing Agreement; references
to Persons include their permitted successors and assigns; and the terms
"include" or "including" mean "include without limitation" or "including
without limitation."
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SECTION 1.4. CERTAIN REFERENCES. All references to the
Principal Balance of a Receivable as of an Accounting Date shall refer to the
close of business on such day, or as of the first day of a Monthly Period
shall refer to the opening of business on such day. All references to the
last day of a Monthly Period shall refer to the close of business on such day.
SECTION 1.5. NO RECOURSE. Without limiting the obligations
of AFL hereunder, no recourse may be taken, directly or indirectly, under
this Agreement or any certificate or other writing delivered in connection
herewith or therewith, against any stockholder, officer or director, as such,
of AFL, or of any predecessor or successor of AFL.
SECTION 1.6. ACTION BY OR CONSENT OF NOTEHOLDERS. Whenever
any provision of this Agreement refers to action to be taken, or consented
to, by Noteholders, such provision shall be deemed to refer to Noteholders of
record as of the Record Date immediately preceding the date on which such
action is to be taken, or consent given, by Noteholders. Solely for the
purposes of any action to be taken, or consented to, by Noteholders, any Note
registered in the name of the Seller, AFL or any Affiliate thereof shall be
deemed not to be outstanding, and the related Outstanding Amount, evidenced
thereby shall not be taken into account in determining whether the requisite
Outstanding Amount necessary to effect any such action or consent has been
obtained; PROVIDED, HOWEVER, that, solely for the purpose of determining
whether the Indenture Trustee is entitled to rely upon any such action or
consent, only Notes which the Indenture Trustee knows to be so owned shall be
so disregarded.
SECTION 1.7. MATERIAL ADVERSE EFFECT. Whenever a
determination is to be made under this Agreement as to whether a given event,
action, course of conduct or set of facts or circumstances could or would
have a material adverse effect on the Trust or the Noteholders (or any
similar or analogous determination), such determination shall be made without
taking into account the funds available from claims under the Note Policy.
ARTICLE II
CONVEYANCE OF THE INITIAL RECEIVABLES
AND THE INITIAL OTHER CONVEYED PROPERTY
SECTION 2.1. CONVEYANCE OF THE INITIAL RECEIVABLES AND THE
INITIAL OTHER CONVEYED PROPERTY. Subject to the terms and conditions of this
Agreement, AFL hereby sells, transfers, assigns, and otherwise conveys to
ARFC without recourse (but without limitation of its obligations in this
Agreement), and ARFC hereby purchases, all right, title and interest of AFL
in and to the Initial Receivables and the Initial Other Conveyed Property.
AFL and ARFC acknowledge that certain of the Initial Receivables and Initial
Other Conveyed Property have previously been sold, transferred, assigned and
conveyed to ARFC pursuant to the Telluride Purchase Agreement, and AFL hereby
confirms such prior sale, transfer, assignment and conveyance. It is the
intention of AFL and ARFC that the transfer and assignment contemplated by
this Agreement shall constitute a sale of the Initial Receivables and the
Initial Other
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Conveyed Property from AFL to ARFC, conveying good title thereto free and
clear of any Liens, and the Initial Receivables and the Initial Other
Conveyed Property shall not be part of AFL's estate in the event of the
filing of a bankruptcy petition by or against AFL under any bankruptcy or
similar law.
SECTION 2.2. PURCHASE PRICE OF INITIAL RECEIVABLES.
Simultaneously with the conveyance of the Initial Receivables and the Initial
Other Conveyed Property to ARFC, ARFC has paid or caused to be paid to or
upon the order of AFL approximately $399,660,692.51 by wire transfer of
immediately available funds (representing the proceeds to ARFC from the sale
of the Initial Receivables after (i) deducting expenses of $725,000 incurred
by ARFC in connection with such sale, (ii) depositing the Pre-Funded Amount
in the Pre-Funding Account and (iii) depositing the Reserve Amount in the
Reserve Account).
SECTION 2.3. CONVEYANCE OF SUBSEQUENT RECEIVABLES AND
SUBSEQUENT OTHER CONVEYED PROPERTY.
(a) Subject to the conditions set forth in paragraph (b)
below and the terms and conditions in the related Subsequent Purchase
Agreement, in consideration of AFL's delivery on the related Subsequent
Transfer Date to or upon the order of ARFC of an amount equal to the purchase
price of the Subsequent Receivables (as set forth in the related Subsequent
Purchase Agreement), AFL hereby agrees to sell, transfer, assign, and
otherwise convey to ARFC without recourse (but without limitation of its
obligations in this Agreement and the related Subsequent Purchase Agreement),
and ARFC hereby agrees to purchase all right, title and interest of AFL in
and to the Subsequent Receivables and the Subsequent Other Conveyed Property
described in the related Subsequent Purchase Agreement.
(b) AFL shall transfer to ARFC, and ARFC shall acquire,
the Subsequent Receivables and the Subsequent Other Conveyed Property to be
transferred on any Subsequent Transfer Date only upon the satisfaction of
each of the following conditions on or prior to such Subsequent Transfer Date:
(i) ARFC shall have provided the Owner Trustee, the
Indenture Trustee, the Security Insurer and the Rating Agencies with a
timely Addition Notice and shall have provided any information
reasonably requested by any of the foregoing with respect to the
Subsequent Receivables;
(ii) the Funding Period shall not have terminated;
(iii) the Security Insurer (so long as an Insurer
Default shall not have occurred and be continuing) shall in its sole and
absolute discretion have given its prior written approval of the
transfer of the Subsequent Receivables and the Subsequent Other Conveyed
Property by AFL to ARFC and, in turn, by ARFC to the Trust;
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(iv) ARFC shall have delivered to AFL a duly executed
Subsequent Receivables Purchase Agreement and Assignment, in
substantially the form of Exhibit A hereto (the "Subsequent Purchase
Agreement"), which shall include a Schedule of Subsequent Receivables;
(v) as of each Subsequent Transfer Date, neither AFL
nor ARFC was insolvent nor will either of them have been made insolvent
by such transfer nor is either of them aware of any pending insolvency;
(vi) each Rating Agency shall have notified the
Security Insurer that following such transfer the Notes will be rated in
the highest rating category by such Rating Agency;
(vii) such addition will not result in a material
adverse tax consequence to the Trust or the Noteholders as evidenced by
an Opinion of Counsel to be delivered by AFL;
(viii) ARFC shall have delivered to the Rating Agencies
and to the Security Insurer one or more Opinions of Counsel with respect
to the transfer of the Subsequent Receivables substantially in the form
of the Opinions of Counsel delivered to such persons on the Closing
Date;
(ix) (A) the Receivables in the Trust, including the
Subsequent Receivables to be conveyed by AFL to ARFC and, in turn, by
ARFC to the Trust on the Subsequent Transfer Date, shall meet the
following criteria (based on the characteristics of the Initial
Receivables on the Initial Cutoff Date and the Subsequent Receivables on
each related Subsequent Cutoff Date): (1) the weighted average APR of
such Receivables will not be less than 16.29%, (2) the weighted average
remaining term of such Receivables will not be more than 68 nor less
than 60 months, (3) not more than 90% of the Aggregate Principal Balance
of such Receivables will represent used Financed Vehicles, (4) not more
than 4% of the Aggregate Principal Balance of such Receivables will be
attributable to Receivables with an Annual Percentage Rate in excess of
21%, (5) not more than 0.25% of the Aggregate Principal Balance of such
Receivables will represent loans on Financed Vehicles in excess of
$50,000.00, (6) not more than 3% of the Aggregate Principal Balance of
such Receivables will represent loans with original terms greater than
72 months and (7) not more than 2.0% of the Aggregate Principal Balance
of such Receivables will represent loans secured by Financed Vehicles
that previously secured a loan originated by AFL with an obligor other
than the current Obligor, and (B) the Trust, the Owner Trustee, the
Indenture Trustee and the Security Insurer shall have received written
confirmation from a firm of certified independent public accountants as
to the satisfaction of such criteria;
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(x) AFL shall have taken any action necessary, or if
requested by the Security Insurer, advisable to maintain the first
perfected ownership interest of the Trust in the Trust Property and the
first perfected security interest of ARFC in the Subsequent Receivables
and the Subsequent Other Conveyed Property, the Trust in the Trust
Property and the first perfected security interest of the Indenture
Collateral Agent in the Indenture Collateral;
(xi) AFL is conveying Subsequent Receivables to the
Seller in substantially the order they were originated by AFL; and
(xii) no selection procedures believed by AFL to be
adverse to the interests of the Noteholders shall have been utilized in
selecting the Subsequent Receivables.
It is the intention of AFL and ARFC that the transfer and assignment
contemplated by this Agreement and the related Subsequent Purchase Agreement
shall constitute a sale of the Subsequent Receivables and the Subsequent
Other Conveyed Property from AFL to ARFC, conveying good title thereto free
and clear of any Liens, and the Subsequent Receivables and the Subsequent
Other Conveyed Property shall not be part of AFL's estate in the event of the
filing of a bankruptcy petition by or against AFL under any bankruptcy or
similar law.
(c) AFL covenants to transfer to ARFC pursuant to
paragraph (a) above Subsequent Receivables with an aggregate Principal
Balance approximately equal to $148,818,732.02; PROVIDED, HOWEVER, that the
sole remedy of ARFC with respect to a failure of such covenant shall be to
enforce the provisions of Section 6.2 of this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. REPRESENTATIONS AND WARRANTIES OF AFL. AFL
makes the following representations and warranties, on which ARFC relies in
purchasing the Initial Receivables and the Initial Other Conveyed Property
and in transferring the Initial Receivables and the Initial Other Conveyed
Property to the Trust under the Sale and Servicing Agreement and on which the
Security Insurer will rely in issuing the Note Policy. Such representations
are made as of the execution and delivery of this Agreement, but shall
survive the sale, transfer and assignment of the Initial Receivables and the
Initial Other Conveyed Property hereunder and the sale, transfer and
assignment thereof by ARFC to the Trust under the Sale and Servicing
Agreement. AFL and ARFC agree that ARFC will assign to the Trust all of
ARFC's rights under this Agreement and that the Trust will thereafter be
entitled to enforce this Agreement against AFL in the Trust's own name.
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(a) SCHEDULE OF REPRESENTATIONS. The representations and
warranties set forth on the Schedule of Representations are true and
correct.
(b) ORGANIZATION AND GOOD STANDING. AFL has been duly
organized and is validly existing as a corporation in good standing
under the laws of the State of Minnesota, with power and authority to
own its properties and to conduct its business as such properties are
currently owned and such business is currently conducted, and had at all
relevant times, and now has, power, authority and legal right to
acquire, own and sell the Initial Receivables and the Initial Other
Conveyed Property transferred to ARFC.
(c) DUE QUALIFICATION. AFL is duly qualified to do business
as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals, in all jurisdictions in which the
ownership or lease of its property or the conduct of its business
requires such qualification.
(d) POWER AND AUTHORITY. AFL has the power and authority to
execute and deliver this Agreement and its Related Documents and to
carry out its terms and their terms, respectively; AFL has full power
and authority to sell and assign the Initial Receivables and the Initial
Other Conveyed Property to be sold and assigned to and deposited with
ARFC hereunder and has duly authorized such sale and assignment to ARFC
by all necessary corporate action; and the execution, delivery and
performance of this Agreement and AFL's Related Documents have been duly
authorized by AFL by all necessary corporate action.
(e) VALID SALE; BINDING OBLIGATIONS. This Agreement and
AFL's Related Documents have been duly executed and delivered, shall
effect a valid sale, transfer and assignment of the Initial Receivables
and the Initial Other Conveyed Property, enforceable against AFL and
creditors of and purchasers from AFL; and this Agreement and AFL's
Related Documents constitute legal, valid and binding obligations of AFL
enforceable in accordance with their respective terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization
or other similar laws affecting the enforcement of creditors' rights
generally and by equitable limitations on the availability of specific
remedies, regardless of whether such enforceability is considered in a
proceeding in equity or at law.
(f) NO VIOLATION. The consummation of the transactions
contemplated by this Agreement and the Related Documents and the
fulfillment of the terms of this Agreement and the Related Documents
shall not conflict with, result in any breach of any of the terms and
provisions of or constitute (with or without notice, lapse of time or
both) a default under, the articles of incorporation or bylaws of AFL,
or any indenture, agreement, mortgage, deed of trust or other instrument
to which AFL is a party or by which it is bound, or result in the
creation or imposition of any Lien upon any of its properties pursuant
to the terms of any such indenture, agreement, mortgage, deed of trust
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or other instrument, other than this Agreement, the Spread Account
Agreement and the Sale and Servicing Agreement, or violate any law,
order, rule or regulation applicable to AFL of any court or of any
federal or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over AFL or any of its
properties.
(g) NO PROCEEDINGS. There are no proceedings or
investigations pending or, to AFL's knowledge, threatened against AFL,
before any court, regulatory body, administrative agency or other
tribunal or governmental instrumentality having jurisdiction over AFL or
its properties (i) asserting the invalidity of this Agreement or any of
the Related Documents, (ii) seeking to prevent the issuance of the Notes
or the consummation of any of the transactions contemplated by this
Agreement or any of the Related Documents, (iii) seeking any
determination or ruling that might materially and adversely affect the
performance by AFL of its obligations under, or the validity or
enforceability of, this Agreement or any of the Related Documents or
(iv) seeking to affect adversely the federal income tax or other
federal, state or local tax attributes of, or seeking to impose any
excise, franchise, transfer or similar tax upon, the transfer and
acquisition of the Initial Receivables and the Initial Other Conveyed
Property hereunder or under the Sale and Servicing Agreement.
(h) CHIEF EXECUTIVE OFFICE. The chief executive office of
AFL is located at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇-▇▇▇▇.
SECTION 3.2. REPRESENTATIONS AND WARRANTIES OF ARFC. ARFC
makes the following representations and warranties, on which AFL relies in
selling, assigning, transferring and conveying the Initial Receivables and the
Initial Other Conveyed Property to ARFC hereunder. Such representations are
made as of the execution and delivery of this Agreement, but shall survive the
sale, transfer and assignment of the Initial Receivables and the Initial Other
Conveyed Property hereunder and the sale, transfer and assignment thereof by
ARFC to the Trust under the Sale and Servicing Agreement.
(a) ORGANIZATION AND GOOD STANDING. ARFC has been duly
organized and is validly existing and in good standing as a corporation
under the laws of the State of Delaware, with the power and authority to
own its properties and to conduct its business as such properties are
currently owned and such business is currently conducted, and had at all
relevant times, and has, full power, authority and legal right to
acquire and own the Initial Receivables and the Initial Other Conveyed
Property and to transfer the Initial Receivables and the Initial Other
Conveyed Property to the Trust pursuant to the Sale and Servicing
Agreement.
(b) DUE QUALIFICATION. ARFC is duly qualified to do
business as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals in all jurisdictions where the failure
to do so would materially and adversely affect (i) ARFC's ability to
acquire the Initial Receivables or the Initial Other Conveyed Property,
(ii) the
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validity or enforceability of the Initial Receivables and the Initial
Other Conveyed Property or (iii) ARFC's ability to perform its
obligations hereunder and under the Related Documents.
(c) POWER AND AUTHORITY. ARFC has the power, authority and
legal right to execute and deliver this Agreement and its Related
Documents and to carry out the terms hereof and thereof and to acquire
the Initial Receivables and the Initial Other Conveyed Property
hereunder; and the execution, delivery and performance of this Agreement
and its Related Documents and all of the documents required pursuant
hereto or thereto have been duly authorized by ARFC by all necessary
action.
(d) NO CONSENT REQUIRED. ARFC is not required to obtain the
consent of any other Person, or any consent, license, approval or
authorization or registration or declaration with, any governmental
authority, bureau or agency in connection with the execution, delivery
or performance of this Agreement and the Related Documents, except for
such as have been obtained, effected or made.
(e) BINDING OBLIGATION. This Agreement and each of its
Related Documents constitutes a legal, valid and binding obligation of
ARFC, enforceable against ARFC in accordance with its terms, subject, as
to enforceability, to applicable bankruptcy, insolvency, reorganization,
conservatorship, receivership, liquidation and other similar laws and to
general equitable principles.
(f) NO VIOLATION. The execution, delivery and performance
by ARFC of this Agreement, the consummation of the transactions
contemplated by this Agreement and the Related Documents and the
fulfillment of the terms of this Agreement and the Related Documents do
not and will not conflict with, result in any breach of any of the terms
and provisions of or constitute (with or without notice or lapse of
time) a default under the certificate of incorporation or bylaws of
ARFC, or conflict with or breach any of the terms or provisions of, or
constitute (with or without notice or lapse of time) a default under,
any indenture, agreement, mortgage, deed of trust or other instrument to
which ARFC is a party or by which ARFC is bound or to which any of its
properties are subject, or result in the creation or imposition of any
Lien upon any of its properties pursuant to the terms of any such
indenture, agreement, mortgage, deed of trust or other instrument (other
than the Sale and Servicing Agreement and the Indenture), or violate any
law, order, rule or regulation, applicable to ARFC or its properties, of
any federal or state regulatory body or any court, administrative
agency, or other governmental instrumentality having jurisdiction over
ARFC or any of its properties.
(g) NO PROCEEDINGS. There are no proceedings or
investigations pending, or, to the knowledge of ARFC, threatened against
ARFC, before any court, regulatory body, administrative agency, or other
tribunal or governmental instrumentality having jurisdiction over ARFC
or its properties: (i) asserting the invalidity of this Agreement or
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any of the Related Documents, (ii) seeking to prevent the consummation
of any of the transactions contemplated by this Agreement or any of the
Related Documents, (iii) seeking any determination or ruling that might
materially and adversely affect the performance by ARFC of its
obligations under, or the validity or enforceability of, this Agreement
or any of the Related Documents or (iv) that may adversely affect the
federal or state income tax attributes of, or seeking to impose any
excise, franchise, transfer or similar tax upon, the transfer and
acquisition of the Initial Receivables and the Initial Other Conveyed
Property hereunder or the transfer of the Initial Receivables and the
Initial Other Conveyed Property to the Trust pursuant to the Sale and
Servicing Agreement.
In the event of any breach of a representation and warranty made by ARFC
hereunder, AFL covenants and agrees that it will not take any action to
pursue any remedy that it may have hereunder, in law, in equity or otherwise,
until a year and a day have passed since the later of (i) the date on which
all pass-through certificates or other similar securities issued by the
Trust, or a trust or similar vehicle formed by ARFC, have been paid in full,
or (ii) all Notes or other similar securities issued by the Trust, or a trust
or similar vehicle formed by ARFC, have been paid in full. AFL and ARFC
agree that damages will not be an adequate remedy for such breach and that
this covenant may be specifically enforced by ARFC or by the Owner Trustee on
behalf of the Trust.
ARTICLE IV
COVENANTS OF AFL
SECTION 4.1. PROTECTION OF TITLE OF ARFC AND THE TRUST.
(a) At or prior to the Closing Date or each Subsequent
Transfer Date, as the case may be, AFL shall have filed or caused to be filed
a UCC-1 financing statement, executed by AFL as seller or debtor, naming ARFC
as purchaser or secured party and describing the Initial Receivables and the
Initial Other Conveyed Property, with respect to this Agreement, and the
Subsequent Receivables and the Subsequent Other Conveyed Property, with
respect to each Subsequent Purchase Agreement, being sold by it to ARFC as
collateral, with the office of the Secretary of State of the State of
Minnesota and in such other locations as ARFC shall have required. From time
to time thereafter, AFL shall execute and file such financing statements and
cause to be executed and filed such continuation statements, all in such
manner and in such places as may be required by law fully to preserve,
maintain and protect the interest of ARFC under this Agreement and each
Subsequent Purchase Agreement and of the Trust under the Sale and Servicing
Agreement and each Subsequent Transfer Agreement in the Initial Receivables
and the Initial Other Conveyed Property and the Subsequent Receivables and
the Subsequent Other Conveyed Property, as the case may be, and in the
proceeds thereof. AFL shall deliver (or cause to be delivered) to ARFC, the
Owner Trustee, the Indenture Trustee and the Security Insurer file-stamped
copies of, or filing receipts for, any document filed as provided above, as
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soon as available following such filing. In the event that AFL fails to
perform its obligations under this subsection, ARFC or the Owner Trustee may
do so at the expense of AFL.
(b) AFL shall not change its name, identity, or corporate
structure in any manner that would, could or might make any financing
statement or continuation statement filed by AFL (or by ARFC or the Owner
Trustee on behalf of AFL) in accordance with paragraph (a) above seriously
misleading within the meaning of Section 9-402(7) of the UCC, unless it shall
have given ARFC, the Owner Trustee and the Security Insurer at least 60 days'
prior written notice thereof, and shall promptly file appropriate amendments
to all previously filed financing statements and continuation statements.
(c) AFL shall give ARFC, the Security Insurer (so long as
an Insurer Default shall not have occurred and be continuing), the Indenture
Trustee and the Owner Trustee at least 60 days' prior written notice of any
relocation of its principal executive office if, as a result of such
relocation, the applicable provisions of the UCC would require the filing of
any amendment of any previously filed financing or continuation statement or
of any new financing statement. AFL shall at all times maintain each office
from which it services Receivables and its principal executive office within
the United States of America.
(d) AFL shall maintain its computer systems so that, from
and after the time of sale under this Agreement of the Initial Receivables to
ARFC, and from and after the time of sale under each Subsequent Purchase
Agreement of the Subsequent Receivables to ARFC, and the conveyance of the
Initial Receivables and the Subsequent Receivables by ARFC to the Trust,
AFL's master computer records (including archives) that shall refer to an
Initial Receivable or Subsequent Receivable indicate clearly that such
Initial Receivable or Subsequent Receivable has been sold to ARFC and has
been conveyed by ARFC to the Trust. Indication of the Trust's ownership of
an Initial Receivable or Subsequent Receivable shall be deleted from or
modified on AFL's computer systems when, and only when, the Initial
Receivable or Subsequent Receivable shall become a Purchased Receivable or
shall have been paid in full.
(e) If at any time AFL shall propose to sell, grant a
security interest in, or otherwise transfer any interest in motor vehicle
receivables to any prospective purchaser, lender or other transferee, AFL
shall give to such prospective purchaser, lender, or other transferee
computer tapes, records, or print-outs (including any restored from archives)
that, if they shall refer in any manner whatsoever to any Initial Receivable
or Subsequent Receivable, shall indicate clearly that such Initial Receivable
or Subsequent Receivable has been sold to ARFC and is owned by the Trust.
SECTION 4.2. OTHER LIENS OR INTERESTS. Except for the
conveyances hereunder and under any Subsequent Purchase Agreement, AFL will
not sell, pledge, assign or transfer to any other Person, or grant, create,
incur, assume or suffer to exist any Lien on the Initial Receivables or the
Initial Other Conveyed Property or on the Subsequent Receivables or the
Subsequent Other Conveyed Property, or any interest therein, and AFL shall
defend the right,
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title, and interest of ARFC and the Trust in and to the Initial Receivables
and the Initial Other Conveyed Property and the Subsequent Receivables and
the Subsequent Other Conveyed Property against all claims of third parties
claiming through or under AFL.
SECTION 4.3. COSTS AND EXPENSES. AFL shall pay all
reasonable costs and disbursements in connection with the performance of its
obligations hereunder and under each Subsequent Purchase Agreement and its
Related Documents.
SECTION 4.4. INDEMNIFICATION.
(a) AFL shall defend, indemnify and hold harmless ARFC,
the Trust, the Owner Trustee, the Security Insurer, the Indenture Trustee,
the Backup Servicer and the Noteholders from and against any and all costs,
expenses, losses, damages, claims, and liabilities, arising out of or
resulting from any breach of any of AFL's representations and warranties
contained herein or in any Subsequent Purchase Agreement.
(b) AFL shall defend, indemnify and hold harmless ARFC,
the Trust, the Owner Trustee, the Indenture Trustee, the Backup Servicer and
the Noteholders from and against any and all costs, expenses, losses,
damages, claims, and liabilities, arising out of or resulting from the use,
ownership or operation by AFL or any affiliate thereof of a Financed Vehicle.
(c) AFL shall defend and indemnify ARFC, the Trust, the
Owner Trustee, the Security Insurer, the Indenture Trustee, the Backup
Servicer and the Noteholders against any and all costs, expenses, losses,
damages, claims and liabilities arising out of or resulting from any action
taken, or failed to be taken, by it in respect of any portion of the Trust
Property other than in accordance with this Agreement, each Subsequent
Purchase Agreement or the Sale and Servicing Agreement and each Subsequent
Transfer Agreement.
(d) AFL agrees to pay, and shall defend, indemnify and
hold harmless ARFC, the Trust, the Owner Trustee, the Indenture Trustee, the
Backup Servicer and the Noteholders from and against any taxes that may at
any time be asserted against ARFC, the Owner Trustee, the Indenture Trustee,
the Backup Servicer and the Noteholders with respect to the transactions
contemplated in this Agreement or in any Subsequent Purchase Agreement,
including, without limitation, any sales, gross receipts, general
corporation, tangible or intangible personal property, privilege, or license
taxes (but not including any taxes asserted with respect to, and as of the
date of, the sale, transfer and assignment of the Initial Receivables and the
Initial Other Conveyed Property or the Subsequent Receivables or Subsequent
Other Conveyed Property to ARFC and of the Trust Property to the Trust or the
issuance and original sale of the Notes, or asserted with respect to
ownership of the Initial Receivables and Initial Other Conveyed Property or
the Subsequent Receivables or Subsequent Other Conveyed Property or the Trust
Property which shall be indemnified by AFL pursuant to clause (e) below, or
federal, state or other income taxes, arising out of distributions on the
Notes or transfer taxes arising in connection with the transfer of the Notes)
and costs and expenses in defending against the same, arising by reason of
the acts
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to be performed by AFL under this Agreement or under any Subsequent Purchase
Agreement or imposed against such Persons.
(e) AFL agrees to pay, and to indemnify, defend and hold
harmless ARFC, the Trust, the Owner Trustee, the Indenture Trustee, the
Backup Servicer and the Noteholders from, any taxes which may at any time be
asserted against such Persons with respect to, and as of the date of, the
conveyance or ownership of the Initial Receivables or the Initial Other
Conveyed Property hereunder or the Subsequent Receivables or Subsequent Other
Conveyed Property under each Subsequent Purchase Agreement and the conveyance
or ownership of the Trust Property under the Sale and Servicing Agreement and
the Subsequent Transfer Agreements or the issuance and original sale of the
Notes, including, without limitation, any sales, gross receipts, personal
property, tangible or intangible personal property, privilege or license
taxes (but not including any federal or other income taxes, including
franchise taxes, arising out of the transactions contemplated hereby or
transfer taxes arising in connection with the transfer of Notes) and costs
and expenses in defending against the same, arising by reason of the acts to
be performed by AFL under this Agreement or under any Subsequent Purchase
Agreement or imposed against such Persons.
(f) AFL shall defend, indemnify, and hold harmless ARFC,
the Owner Trustee, the Security Insurer, the Indenture Trustee, the Backup
Servicer, the Trust and the Noteholders from and against any and all costs,
expenses, losses, claims, damages, and liabilities to the extent that such
cost, expense, loss, claim, damage, or liability arose out of, or was imposed
upon ARFC, the Trust, the Indenture Trustee and the Noteholders through the
negligence, willful misfeasance, or bad faith of AFL in the performance of
its duties under this Agreement or under any Subsequent Purchase Agreement or
by reason of reckless disregard of AFL's obligations and duties under this
Agreement or under any Subsequent Purchase Agreement.
(g) AFL shall indemnify, defend and hold harmless ARFC,
the Owner Trustee, the Security Insurer, the Indenture Trustee, the Backup
Servicer, the Trust and the Noteholders from and against any loss, liability
or expense incurred by reason of the violation by AFL of federal or state
securities laws in connection with the registration or the sale of the Notes.
(h) AFL shall indemnify, defend and hold harmless ARFC,
the Owner Trustee, the Security Insurer, the Indenture Trustee, the Backup
Servicer, the Trust and the Noteholders from and against any loss, liability
or expense imposed upon, or incurred by, ARFC, the Owner Trustee, the
Indenture Trustee, the Trust or the Noteholders as a result of the failure of
any Initial Receivable or Subsequent Receivable, or the sale of the related
Financed Vehicle, to comply with all requirements of applicable law.
(i) AFL shall defend, indemnify, and hold harmless ARFC
from and against all costs, expenses, losses, claims, damages, and
liabilities arising out of or incurred in connection with the acceptance or
performance of AFL's trusts and duties as Servicer under the Sale and
Servicing Agreement, except to the extent that such cost, expense, loss,
claim, damage,
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or liability shall be due to the willful misfeasance, bad faith, or
negligence (except for errors in judgment) of ARFC.
(j) AFL shall indemnify, defend and hold harmless ARFC,
the Owner Trustee, the Indenture Trustee, the Backup Servicer, the Trust and
the Noteholders from and against any loss, liability or expense imposed upon,
or incurred by, ARFC, the Owner Trustee and the Indenture Trustee, the Trust
and the Noteholders as a result of AFL's or ARFC's use of the name "Arcadia."
Indemnification under this Section 4.4 shall include
reasonable fees and expenses of counsel and expenses of litigation and shall
survive termination of the Trust. The indemnity obligations hereunder shall
be in addition to any obligation that AFL may otherwise have.
ARTICLE V
REPURCHASES
SECTION 5.1. REPURCHASE OF RECEIVABLES UPON BREACH OF
WARRANTY. Upon the occurrence of a Repurchase Event AFL shall, unless such
breach shall have been cured in all material respects, repurchase such
Receivable from the Trust and, on or before the related Deposit Date, AFL
shall pay the Purchase Amount to the Trust pursuant to Section 4.5 of the
Sale and Servicing Agreement. It is understood and agreed that, except as set
forth in Section 6.1, the obligation of AFL to repurchase any Receivable as
to which a breach has occurred and is continuing shall, if such obligation is
fulfilled, constitute the sole remedy against AFL for such breach available
to ARFC, the Security Insurer, Noteholders, or the Indenture Trustee on
behalf of Noteholders. The provisions of this Section 5.1 are intended to
grant the Owner Trustee and the Indenture Trustee a direct right against AFL
to demand performance hereunder, and in connection therewith, AFL waives any
requirement of prior demand against ARFC with respect to such repurchase
obligation. Any such purchase shall take place in the manner specified in
Section 2.6 of the Sale and Servicing Agreement. Notwithstanding any other
provision of this Agreement, any Subsequent Purchase Agreement or the Sale
and Servicing Agreement or any Subsequent Transfer Agreement to the contrary,
the obligation of AFL under this Section shall not terminate upon a
termination of AFL as Servicer under the Sale and Servicing Agreement and
shall be performed in accordance with the terms hereof notwithstanding the
failure of the Servicer or ARFC to perform any of their respective
obligations with respect to such Receivable under the Sale and Servicing
Agreement.
In addition to the foregoing and notwithstanding whether the
related Receivable shall have been purchased by AFL, AFL shall indemnify the
Owner Trustee, the Indenture Trustee, the Backup Servicer, the Security
Insurer, the Trust and the Noteholders against all costs, expenses, losses,
damages, claims and liabilities, including reasonable fees and expenses of
counsel, which may be asserted against or incurred by any of them as a result
of third party claims arising out of the events or facts giving rise to such
Repurchase Events.
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SECTION 5.2. REASSIGNMENT OF PURCHASED RECEIVABLES. Upon
deposit in the Collection Account of the Purchase Amount of any Receivable
repurchased by AFL under Section 5.1, ARFC and the Owner Trustee shall take
such steps as may be reasonably requested by AFL in order to assign to AFL
all of ARFC's and the Trust's right, title and interest in and to such
Receivable and all security and documents and all Other Conveyed Property
conveyed to ARFC and the Trust directly relating thereto, without recourse,
representation or warranty, except as to the absence of liens, charges or
encumbrances created by or arising as a result of actions of ARFC or the
Owner Trustee. Such assignment shall be a sale and assignment outright, and
not for security. If, following the reassignment of a Purchased Receivable,
in any enforcement suit or legal proceeding, it is held that AFL may not
enforce any such Receivable on the ground that it shall not be a real party
in interest or a holder entitled to enforce the Receivable, ARFC and the
Owner Trustee shall, at the expense of AFL, take such steps as AFL deems
reasonably necessary to enforce the Receivable, including bringing suit in
ARFC's or the Owner Trustee's name.
SECTION 5.3. WAIVERS. No failure or delay on the part of
ARFC, or the Owner Trustee as assignee of ARFC, in exercising any power,
right or remedy under this Agreement or under any Subsequent Purchase
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power, right or remedy preclude any other or future
exercise thereof or the exercise of any other power, right or remedy.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1. LIABILITY OF AFL. AFL shall be liable in
accordance herewith only to the extent of the obligations in this Agreement
or in any Subsequent Purchase Agreement specifically undertaken by AFL and
the representations and warranties of AFL.
SECTION 6.2. FAILURE OF AFL TO SELL SUBSEQUENT RECEIVABLES.
In the event that AFL shall fail to deliver and sell to ARFC any or all of
the Subsequent Receivables required under this Agreement, AFL shall be
obligated to pay to ARFC the Liquidated Damages on the Business Day
immediately preceding the Distribution Date on which the Funding Period ends
(or, if the Funding Period does not end on a Distribution Date, on the first
Distribution Date following the end of the Funding Period).
SECTION 6.3. MERGER OR CONSOLIDATION OF AFL OR ARFC. Any
corporation or other entity (i) into which AFL or ARFC may be merged or
consolidated, (ii) resulting from any merger or consolidation to which AFL or
ARFC is a party or (iii) succeeding to the business of AFL or ARFC, in the
case of ARFC, which corporation has a certificate of incorporation containing
provisions relating to limitations on business and other matters
substantively identical to those contained in ARFC's certificate of
incorporation, provided that in any of the foregoing cases such corporation
shall execute an agreement of assumption to perform every obligation of
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AFL or ARFC, as the case may be, under this Agreement and each Subsequent
Purchase Agreement and, whether or not such assumption agreement is executed,
shall be the successor to AFL or ARFC, as the case may be, hereunder and
under each such Subsequent Purchase Agreement (without relieving AFL or ARFC
of its responsibilities hereunder, if it survives such merger or
consolidation) without the execution or filing of any document or any further
act by any of the parties to this Agreement or each Subsequent Purchase
Agreement. Notwithstanding the foregoing, so long as an Insurer Default
shall not have occurred and be continuing, ARFC shall not merge or
consolidate with any other Person or permit any other Person to become the
successor to ARFC's business without the prior written consent of the
Security Insurer. AFL or ARFC shall promptly inform the other party, the
Owner Trustee and the Indenture Trustee and, so long as an Insurer Default
shall not have occurred and be continuing, the Security Insurer of such
merger, consolidation or purchase and assumption. Notwithstanding the
foregoing, as a condition to the consummation of the transactions referred to
in clauses (i), (ii) and (iii) above, (x) immediately after giving effect to
such transaction, no representation or warranty made pursuant to Sections 3.1
and 3.2 and this Agreement, or similar representation or warranty made in any
Subsequent Purchase Agreement, shall have been breached (for purposes hereof,
such representations and warranties shall speak as of the date of the
consummation of such transaction) and no event that, after notice or lapse of
time, or both, would become an event of default under the Insurance
Agreement, shall have occurred and be continuing, (y) AFL or ARFC, as
applicable, shall have delivered written notice of such consolidation, merger
or purchase and assumption to the Rating Agencies prior to the consummation
of such transaction and shall have delivered to the Owner Trustee and the
Indenture Trustee an Officer's Certificate and an Opinion of Counsel each
stating that such consolidation, merger or succession and such agreement of
assumption comply with this Section 6.3 and that all conditions precedent, if
any, provided for in this Agreement, or in each Subsequent Purchase
Agreement, relating to such transaction have been complied with, and (z) AFL
or ARFC, as applicable, shall have delivered to the Owner Trustee and the
Indenture Trustee an Opinion of Counsel, stating that, in the opinion of such
counsel, either (A) all financing statements and continuation statements and
amendments thereto have been executed and filed that are necessary to
preserve and protect the interest of the Owner Trustee in the Trust Property
and reciting the details of the filings or (B) no such action shall be
necessary to preserve and protect such interest.
SECTION 6.4. LIMITATION ON LIABILITY OF AFL AND OTHERS. AFL
and any director, officer, employee or agent may rely in good faith on the
advice of counsel or on any document of any kind prima facie properly
executed and submitted by any Person respecting any matters arising under
this Agreement. AFL shall not be under any obligation to appear in, prosecute
or defend any legal action that is not incidental to its obligations under
this Agreement, any Subsequent Purchase Agreement or its Related Documents
and that in its opinion may involve it in any expense or liability.
SECTION 6.5. AFL MAY OWN NOTES. Subject to the provisions
of the Sale and Servicing Agreement, AFL and any Affiliate of AFL may in its
individual or any other capacity
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become the owner or pledgee of Notes with the same rights as it would have if
it were not AFL or an Affiliate thereof.
SECTION 6.6. AMENDMENT.
(a) This Agreement and any Subsequent Purchase Agreement
may be amended by AFL and ARFC, so long as an Insurer Default shall not have
occurred and be continuing, with the prior written consent of the Security
Insurer and without the consent of the Owner Trustee, the Indenture Trustee
or any of the Noteholders (A) to cure any ambiguity or (B) to correct any
provisions in this Agreement or any such Subsequent Purchase Agreement;
PROVIDED, HOWEVER, that such action shall not, as evidenced by an Opinion of
Counsel delivered to the Owner Trustee and the Indenture Trustee, adversely
affect in any material respect the interests of any Noteholder.
(b) This Agreement may also be amended from time to time
by AFL and ARFC, so long as an Insurer Default shall not have occurred and be
continuing, with the prior written consent of the Security Insurer, the Owner
Trustee and the Indenture Trustee and a Note Majority, for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement, or of modifying in any manner the rights of the
Noteholders; PROVIDED, HOWEVER, that no such amendment shall (i) increase or
reduce in any manner the amount of, or accelerate or delay the timing of,
collections of payments on Receivables, distributions that shall be required
to be made on any Note or the Note Interest Rate or (ii) reduce the aforesaid
percentage required to consent to any such amendment or any waiver hereunder,
without the consent of the Holders of all Notes then outstanding.
(c) Prior to the execution of any such amendment or
consent, AFL shall have furnished written notification of the substance of
such amendment or consent to each Rating Agency.
(d) Promptly after the execution of any such amendment or
consent, the Owner Trustee or the Indenture Trustee, as applicable, shall
furnish written notification of the substance of such amendment or consent to
each Noteholder.
(e) It shall not be necessary for the consent of
Noteholders pursuant to this Section to approve the particular form of any
proposed amendment or consent, but it shall be sufficient if such consent
shall approve the substance thereof. The manner of obtaining such consents
and of evidencing the authorization of the execution thereof by Noteholders
shall be subject to such reasonable requirements as the Owner Trustee or the
Indenture Trustee, as applicable, may prescribe, including the establishment
of record dates. The consent of any Holder of a Note given pursuant to this
Section or pursuant to any other provision of this Agreement shall be
conclusive and binding on such Holder and on all future Holders of such Note
and of any Note issued upon the transfer thereof or in exchange thereof or in
lieu thereof whether or not notation of such consent is made upon the Note.
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SECTION 6.7. NOTICES. All demands, notices and
communications to AFL or ARFC hereunder shall be in writing, personally
delivered, or sent by telecopier (subsequently confirmed in writing),
reputable overnight courier or mailed by certified mail, return receipt
requested, and shall be deemed to have been given upon receipt (a) in the
case of AFL, to Arcadia Financial Ltd., ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇, or such other
address as shall be designated by AFL in a written notice delivered to the
other party or to the Owner Trustee or the Indenture Trustee, as applicable,
or (b) in case of ARFC, to Arcadia Receivables Finance Corp., ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: ▇▇▇▇
▇. ▇▇▇▇▇▇.
SECTION 6.8. MERGER AND INTEGRATION. Except as specifically
stated otherwise herein, this Agreement and the Related Documents set forth
the entire understanding of the parties relating to the subject matter
hereof, and all prior understandings, written or oral, are superseded by this
Agreement and the Related Documents. This Agreement may not be modified,
amended, waived or supplemented except as provided herein.
SECTION 6.9. SEVERABILITY OF PROVISIONS. If any one or more
of the covenants, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, provisions or terms
shall be deemed severable from the remaining covenants, provisions or terms
of this Agreement and shall in no way affect the validity or enforceability
of the other provisions of this Agreement.
SECTION 6.10. INTENTION OF THE PARTIES. The execution and
delivery of this Agreement and of each Subsequent Purchase Agreement shall
constitute an acknowledgment by AFL and ARFC that they intend that each
assignment and transfer herein and therein contemplated constitute a sale and
assignment outright, and not for security, of the Initial Receivables and the
Initial Other Conveyed Property and the Subsequent Receivables and Subsequent
Other Conveyed Property, as the case may be, conveying good title thereto
free and clear of any Liens, from AFL to ARFC, and that the Initial
Receivables and the Initial Other Conveyed Property and the Subsequent
Receivables and Subsequent Other Conveyed Property shall not be a part of
AFL's estate in the event of the bankruptcy, reorganization, arrangement,
insolvency or liquidation proceeding, or other proceeding under any federal
or state bankruptcy or similar law, or the occurrence of another similar
event, of, or with respect to, AFL. In the event that such conveyance is
determined to be made as security for a loan made by ARFC, the Trust or the
Noteholders to AFL, the parties intend that AFL shall have granted to ARFC a
security interest in all of AFL's right, title and interest in and to the
Initial Receivables and the Initial Other Conveyed Property and the
Subsequent Receivables and Subsequent Other Conveyed Property, as the case
may be, conveyed pursuant to Section 2.1 hereof or pursuant to any Subsequent
Purchase Agreement, and that this Agreement and each Subsequent Purchase
Agreement shall constitute a security agreement under applicable law.
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SECTION 6.11. GOVERNING LAW. This Agreement shall be
construed in accordance with, the laws of the State of New York without
regard to the principles of conflicts of laws thereof, and the obligations,
rights and remedies of the parties under this Agreement shall be determined
in accordance with such laws.
SECTION 6.12. COUNTERPARTS. For the purpose of facilitating
the execution of this Agreement and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and all of which counterparts
shall constitute but one and the same instrument.
SECTION 6.13. CONVEYANCE OF THE INITIAL RECEIVABLES AND THE
INITIAL OTHER CONVEYED PROPERTY TO THE TRUST. AFL acknowledges that ARFC
intends, pursuant to the Sale and Servicing Agreement, to convey the Initial
Receivables and the Initial Other Conveyed Property, together with its rights
under this Agreement, to the Trust on the date hereof. AFL acknowledges and
consents to such conveyance and waives any further notice thereof and
covenants and agrees that the representations and warranties of AFL contained
in this Agreement and the rights of ARFC hereunder are intended to benefit
the Security Insurer, the Owner Trustee, the Indenture Trustee, the Trust,
and the Noteholders. In furtherance of the foregoing, AFL covenants and
agrees to perform its duties and obligations hereunder, in accordance with
the terms hereof for the benefit of the Security Insurer, the Owner Trustee,
the Indenture Trustee, the Trust, and the Noteholders and that,
notwithstanding anything to the contrary in this Agreement, AFL shall be
directly liable to the Owner Trustee and the Trust (notwithstanding any
failure by the Servicer, the Backup Servicer or ARFC to perform its duties
and obligations hereunder or under the Sale and Servicing Agreement) and that
the Owner Trustee may enforce the duties and obligations of AFL under this
Agreement against AFL for the benefit of the Security Insurer, the Trust, and
the Noteholders.
SECTION 6.14. NONPETITION COVENANT. Neither ARFC nor AFL
shall petition or otherwise invoke the process of any court or government
authority for the purpose of commencing or sustaining a case against the
Trust (or, in the case of AFL, against ARFC) under any federal or state
bankruptcy, insolvency or similar law or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of the
Trust (or ARFC) or any substantial part of its property, or ordering the
winding up or liquidation of the affairs of the Trust (or ARFC).
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IN WITNESS WHEREOF, the parties have caused this Receivables
Purchase Agreement and Assignment to be duly executed by their respective
officers as of the day and year first above written.
ARCADIA RECEIVABLES FINANCE CORP.,
as Purchaser
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President and Chief
Financial Officer
ARCADIA FINANCIAL LTD., as Seller
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Executive Vice President and
Chief Financial Officer
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SCHEDULE A
SCHEDULE OF INITIAL RECEIVABLES
[Available in transaction files.]
SCHEDULE B
REPRESENTATIONS AND WARRANTIES OF AFL
1. CHARACTERISTICS OF RECEIVABLES. Each Receivable (A)
was originated by a Dealer for the retail sale of a Financed Vehicle in the
ordinary course of such Dealer's business and such Dealer had all necessary
licenses and permits to originate Receivables in the state where such Dealer
was located, was fully and properly executed by the parties thereto, was
purchased by AFL from such Dealer under an existing Dealer Agreement with AFL
and was validly assigned by such Dealer to AFL, (B) contains customary and
enforceable provisions such as to render the rights and remedies of the
holder thereof adequate for realization against the collateral security, and
(C) is fully amortizing and provides for level monthly payments (provided
that the payment in the first Monthly Period and the final Monthly Period of
the life of the Receivable may be minimally different from the level payment)
which, if made when due, shall fully amortize the Amount Financed over the
original term.
2. NO FRAUD OR MISREPRESENTATION. Each Receivable was
originated by a Dealer and was sold by the Dealer to AFL without any fraud or
misrepresentation on the part of such Dealer in either case.
3. COMPLIANCE WITH LAW. All requirements of applicable
federal, state and local laws, and regulations thereunder (including, without
limitation, usury laws, the Federal Truth-in-Lending Act, the Equal Credit
Opportunity Act, the Fair Credit Billing Act, the Fair Credit Reporting Act,
the Fair Debt Collection Practices Act, the Federal Trade Commission Act, the
▇▇▇▇▇▇▇▇-▇▇▇▇ Warranty Act, the Federal Reserve Board's Regulations "B" and
"Z", the Soldiers' and Sailors' Civil Relief Act of 1940, the Minnesota Motor
Vehicle Retail Installment Sales Act, and state adaptations of the National
Consumer Act and of the Uniform Consumer Credit Code and other consumer
credit laws and equal credit opportunity and disclosure laws) in respect of
all of the Receivables and each and every sale of Financed Vehicles, have
been complied with in all material respects, and each Receivable and the sale
of the Financed Vehicle evidenced by each Receivable complied at the time it
was originated or made and now complies in all material respects with all
applicable legal requirements.
4. ORIGINATION. Each Receivable was originated in the
United States.
5. BINDING OBLIGATION. Each Receivable represents the
genuine, legal, valid and binding payment obligation of the Obligor thereon,
enforceable by the holder thereof in accordance with its terms, except (A) as
enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting the enforcement of creditors' rights generally and by
equitable limitations on the availability of specific remedies, regardless of
whether such enforceability is considered in a proceeding in equity or at law
and (B) as such Receivable may be modified by the application after the
Initial Cutoff Date or any Subsequent Cutoff Date, as the
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case may be, of the Soldiers' and Sailors' Civil Relief Act of 1940, as
amended; and all parties to each Receivable had full legal capacity to
execute and deliver such Receivable and all other documents related thereto
and to grant the security interest purported to be granted thereby.
6. NO GOVERNMENT OBLIGOR. No Obligor is the United
States of America or any State or any agency, department, subdivision or
instrumentality thereof.
7. OBLIGOR BANKRUPTCY. At the Initial Cutoff Date or
each Subsequent Cutoff Date, as applicable, no Obligor had been identified on
the records of AFL as being the subject of a current bankruptcy proceeding.
8. SCHEDULE OF RECEIVABLES. The information set forth
in the Schedule of Receivables has been produced from the Electronic Ledger
and was true and correct in all material respects as of the close of business
on the Initial Cutoff Date or each Subsequent Cutoff Date, as applicable.
9. MARKING RECORDS. By the Closing Date or by each
Subsequent Transfer Date, as applicable, AFL will have caused the portions of
the Electronic Ledger relating to the Receivables to be clearly and
unambiguously marked to show that the Receivables constitute part of the
Trust Property and are owned by the Trust in accordance with the terms of the
Sale and Servicing Agreement.
10. COMPUTER TAPE. The Computer Tape made available by
AFL to ARFC, the Owner Trustee and the Indenture Trustee on the Closing Date
or on each Subsequent Transfer Date was complete and accurate as of the
Initial Cutoff Date or Subsequent Cutoff Date, as applicable, and includes a
description of the same Receivables that are described in the Schedule of
Receivables.
11. ADVERSE SELECTION. No selection procedures adverse
to the Noteholders were utilized in selecting the Receivables from those
receivables owned by AFL which met the selection criteria contained in the
Sale and Servicing Agreement.
12. CHATTEL PAPER. The Receivables constitute chattel
paper within the meaning of the UCC as in effect in the States of Minnesota
and New York.
13. ONE ORIGINAL. There is only one original executed
copy of each Receivable.
14. RECEIVABLE FILES COMPLETE. There exists a Receivable
File pertaining to each Receivable, and such Receivable File contains (a) a
fully executed original of the Receivable, (b) a certificate of insurance,
application form for insurance signed by the Obligor or a signed
representation letter from the Obligor named in the Receivable pursuant to
which the Obligor has agreed to obtain physical damage insurance for the
Financed Vehicle, or copies
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thereof, (c) the original Lien Certificate or application therefor and (d) a
credit application signed by the Obligor, or a copy thereof. Each of such
documents which is required to be signed by the Obligor has been signed by
the Obligor in the appropriate spaces. All blanks on any form have been
properly filled in and each form has otherwise been correctly prepared. The
complete file for each Receivable currently is in the possession of the
Custodian.
15. RECEIVABLES IN FORCE. No Receivable has been
satisfied, subordinated or rescinded, and the Financed Vehicle securing each
such Receivable has not been released from the lien of the related Receivable
in whole or in part. No provisions of any Receivable have been waived,
altered or modified in any respect since its origination, except by
instruments or documents identified in the Receivable File. No Receivable
has been modified as a result of application of the Soldiers' and Sailors'
Civil Relief Act of 1940, as amended.
16. LAWFUL ASSIGNMENT. No Receivable was originated in,
or is subject to the laws of, any jurisdiction the laws of which would make
unlawful, void or voidable the sale, transfer and assignment of such
Receivable under this Agreement or pursuant to transfers of the Notes.
17. GOOD TITLE. No Receivable has been sold,
transferred, assigned or pledged by AFL to any Person other than ARFC;
immediately prior to the conveyance of the Receivables to ARFC pursuant to
this Agreement or any Subsequent Purchase Agreement, as applicable, ARFC or
AFL had good and indefeasible title thereto, free and clear of any Lien, and
immediately upon the transfer thereof, ARFC shall have good and indefeasible
title to and will be the sole owner of each Receivable, free of any Lien. No
Dealer has a participation in, or other right to receive, proceeds of any
Receivable. AFL has not taken any action to convey any right to any Person
that would result in such Person having a right to payments received under
the related Insurance Policies or the related Dealer Agreements or Dealer
Assignments or to payments due under such Receivables.
18. SECURITY INTEREST IN FINANCED VEHICLE. Each
Receivable created or shall create a valid, binding and enforceable first
priority security interest in favor of AFL in the Financed Vehicle. The Lien
Certificate and original certificate of title for each Financed Vehicle show,
or if a new or replacement Lien Certificate is being applied for with respect
to such Financed Vehicle, the Lien Certificate will be received within 180
days of the Closing Date or any Subsequent Transfer Date, as applicable, and
will show, AFL named as the original secured party under each Receivable as
the holder of a first priority security interest in such Financed Vehicle.
With respect to each Receivable for which the Lien Certificate has not yet
been returned from the Registrar of Titles, AFL has received written evidence
from the related Dealer that such Lien Certificate showing AFL as first
lienholder has been applied for. AFL's security interest has been validly
assigned by AFL to ARFC pursuant to this Agreement or any Subsequent Purchase
Agreement, as applicable. Immediately after the sale, transfer and
assignment thereof by ARFC to the Trust, each Receivable will be secured by
an enforceable and perfected first priority security interest in the Financed
Vehicle in favor of the Trust as secured
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party, which security interest is prior to all other Liens upon and security
interests in such Financed Vehicle which now exist or may hereafter arise or
be created (except, as to priority, for any lien for taxes, labor or
materials affecting a Financed Vehicle). As of the Initial Cutoff Date or
each Subsequent Cutoff Date, as applicable, there were no Liens or claims for
taxes, work, labor or materials affecting a Financed Vehicle which are or may
be Liens prior or equal to the lien of the related Receivable.
19. ALL FILINGS MADE. All filings (including, without
limitation, UCC filings) required to be made by any Person and actions
required to be taken or performed by any Person in any jurisdiction to give
the Trust a first priority perfected lien on, or ownership interest in, the
Receivables and the Other Conveyed Property have been made, taken or
performed.
20. NO IMPAIRMENT. AFL has not done anything to convey
any right to any Person that would result in such Person having a right to
payments due under a Receivable or otherwise to impair the rights of ARFC,
the Trust, the Indenture Trustee, the Security Insurer and the Noteholders in
any Receivable or the proceeds thereof.
21. RECEIVABLE NOT ASSUMABLE. No Receivable is assumable
by another Person in a manner which would release the Obligor thereof from
such Obligor's obligations to AFL with respect to such Receivable.
22. NO DEFENSES. No Receivable is subject to any right
of rescission, setoff, counterclaim or defense and no such right has been
asserted or threatened with respect to any Receivable.
23. NO DEFAULT. There has been no default, breach,
violation or event permitting acceleration under the terms of any Receivable
(other than payment delinquencies of not more than 30 days), and no condition
exists or event has occurred and is continuing that with notice, the lapse of
time or both would constitute a default, breach, violation or event
permitting acceleration under the terms of any Receivable, and there has been
no waiver of any of the foregoing. As of the Cutoff Date or any Subsequent
Transfer Date, as applicable, no Financed Vehicle had been repossessed.
24. INSURANCE. As of the date hereof or as of the date
of any Subsequent Purchase Agreement, as applicable, each Financed Vehicle is
covered by a comprehensive and collision insurance policy (i) in an amount at
least equal to the lesser of (a) its maximum insurable value or (b) the
principal amount due from the Obligor under the relate Receivable, (ii)
naming AFL as loss payee and (iii) insuring against loss and damage due to
fire, theft, transportation, collision and other risks generally covered by
comprehensive and collision coverage. Each Receivable requires the Obligor
to maintain physical loss and damage insurance, naming AFL and its successors
and assigns as additional insured parties, and each Receivable permits the
holder thereof to obtain physical loss and damage insurance at the expense of
the Obligor if the Obligor fails to do so. No Financed Vehicle was or had
previously been insured
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under a policy of Force-Placed Insurance on the Initial Cutoff Date or any
Subsequent Cutoff Date, as applicable.
25. PAST DUE. At the Initial Cutoff Date or any
Subsequent Cutoff Date, as applicable, no Receivable was more than 30 days
past due.
26. REMAINING PRINCIPAL BALANCE. At the Initial Cutoff
Date or any Subsequent Cutoff Date, as applicable, each Receivable had a
remaining principal balance equal to or greater than $500.00 and the
Principal Balance of each Receivable set forth in the Schedule of Receivables
is true and accurate in all material respects.
27. FINAL SCHEDULED MATURITY DATE. No Receivable has a
final maturity later than June 30, 2006.
28. CERTAIN CHARACTERISTICS. (A) Each Initial Receivable
had a remaining maturity, as of the Initial Cutoff Date, of at least 3 months
but not more than 84 months; (B) each Initial Receivable had an original
maturity of at least 12 months but not more than 84 months; (C) each Initial
Receivable had an original principal balance of at least $3,129.00 and not
more than $49,772.31; (D) each Initial Receivable had a remaining Principal
Balance as of the Initial Cutoff Date of at least $554.48 and not more than
$49,772.31; (E) each Initial Receivable has an Annual Percentage Rate of at
least 7.50% and not more than 23.99%; (F) no Initial Receivable was more than
30 days past due as of the Initial Cutoff Date; (G) no funds have been
advanced by the Seller, the Servicer, any Dealer, or anyone acting on behalf
of any of them in order to cause any Receivable to qualify under clause (F)
above; (H) no Initial Receivable has a final scheduled payment date on or
before June 1, 1999; (I) the Principal Balance of each Receivable set forth
in Schedule of Receivables is true and accurate in all material respects as
of the Initial Cutoff Date; (J) 13.02% of the Initial Receivables, by
principal balance as of the Initial Cutoff Date, was attributable to loans
for the purchase of new Financed Vehicles and 86.98% of the Initial
Receivables was attributable to loans for the purchase of used Financed
Vehicles; (K) not more than 3.64% of the Principal Balance of the Initial
Receivables as of the Initial Cutoff Date had an Annual Percentage Rate in
excess of 21.00%; (L) none of such Receivables represented loans in excess of
$50,000.00; (M) not more than 0.05% of the Aggregate Principal Balance of
such Receivables represented loans with original terms greater than 72
months; and (N) not more than 1.21% of the Aggregate Principal Balance of
such Receivables represented loans secured by Financed Vehicles that
previously secured a loan originated by AFL with an obligor other than the
current Obligor.
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