RECEIVABLES PURCHASE AGREEMENT AND ASSIGNMENT
between
ARCADIA RECEIVABLES FINANCE CORP.
Purchaser
and
ARCADIA FINANCIAL LTD.
Seller
dated as of
September 1, 1998
TABLE OF CONTENTS
PAGE
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ARTICLE I - DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.1. General . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2. Specific Terms . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.3. Usage of Terms. . . . . . . . . . . . . . . . . . . . . . 4
SECTION 1.4. Certain References. . . . . . . . . . . . . . . . . . . . 4
SECTION 1.5. No Recourse . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 1.6. Action by or Consent of Noteholders . . . . . . . . . . . 4
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 . . . . . . . . . . 5
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. . . . . . . . . . 9
ARTICLE IV - COVENANTS OF AFL. . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 4.1. Protection of Title of ARFC and the Trust . . . . . . . . 11
SECTION 4.2. Other Liens or Interests. . . . . . . . . . . . . . . . . 13
SECTION 4.3. Costs and Expenses. . . . . . . . . . . . . . . . . . . . 13
SECTION 4.4. Indemnification . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE V - REPURCHASES. . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 5.1. Repurchase of Receivables Upon Breach of Warranty . . . . 15
SECTION 5.2. Reassignment of Purchased Receivables . . . . . . . . . . 16
SECTION 5.3. Waivers . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE VI - MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 6.1. Liability of AFL. . . . . . . . . . . . . . . . . . . . . 16
SECTION 6.2. Failure of AFL to Sell Subsequent Receivables . . . . . . 16
SECTION 6.3. Merger or Consolidation of AFL or ARFC. . . . . . . . . . 16
SECTION 6.4. Limitation on Liability of AFL and Others . . . . . . . . 17
SECTION 6.5. AFL May Own Notes . . . . . . . . . . . . . . . . . . . . 17
SECTION 6.6. Amendment . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 6.7. Notices . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 6.8. Merger and Integration. . . . . . . . . . . . . . . . . . 19
SECTION 6.9. Severability of Provisions. . . . . . . . . . . . . . . . 19
SECTION 6.10. Intention of the Parties . . . . . . . . . . . . . . . . 19
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SECTION 6.11. Governing Law. . . . . . . . . . . . . . . . . . . . . . 19
SECTION 6.12. Counterparts . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 6.13. Conveyance of the Initial Receivables and the Initial
Other Conveyed Property to the Trust . . . . . . . . . 20
SECTION 6.14. Nonpetition Covenant . . . . . . . . . . . . . . . . . . 20
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
September 1, 1998, 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 a Receivables Purchase Agreement and
Assignment, dated as of December 3, 1996, as amended, between ARFC and AFL (the
"ARCC 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
September 1, 1998, by and among Arcadia Receivables Finance Corp. (as Seller),
Arcadia Financial Ltd. (in its individual capacity and as Servicer), Arcadia
Automobile Receivables Trust, 1998-C (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 September 22, 1998.
"INDENTURE TRUSTEE" means Norwest Bank Minnesota, National
Association, a national banking association, as trustee and indenture collateral
agent under the Indenture, dated as of September 1, 1998, 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 September 22, 1998, among the Security Insurer, the Trust, ARFC and
AFL.
"LIQUIDATED DAMAGES" means an amount equal to the sum of the
Class A-1 Prepayment Premium, the Class A-2 Prepayment Premium and the Class A-3
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.
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"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 September 1, 1998, executed and delivered by Arcadia
Receivables Finance Corp., as Seller, Arcadia Financial Ltd., in its individual
capacity and as Servicer, Arcadia Automobile Receivables Trust, 1998-C, 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.
"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,
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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."
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
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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 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 $441,555,272.00 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).
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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;
(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;
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(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 15.725%, (2) the weighted average remaining term of
such Receivables will not be more than 67 nor less than 63 months, (3) not
more than 90% of the Aggregate Principal Balance of such Receivables will
represent used Financed Vehicles, (4) not more than 70% of the Aggregate
Principal Balance of such Receivables will represent Receivables originated
under AFL's "Classic" program (excluding loans for the purchase of
repossessed automobiles that would otherwise be deemed originated under the
"Classic" program), (5) not more than 3% of the Aggregate Principal Balance
of such Receivables will be attributable to Receivables with an Annual
Percentage Rate in excess of 21%, (6) 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, (7) not more than 3% of the Aggregate
Principal Balance of such Receivables will represent loans with original
terms greater than 72 months and (8) not more than 1.5% 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;
(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
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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 equal to
$157,000,681.36; 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.
(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
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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 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
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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
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
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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 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
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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 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.
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(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,
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
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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 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,
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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, 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.
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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.
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
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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 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.
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
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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.
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
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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
SCHEDULE A
SCHEDULE OF INITIAL RECEIVABLES
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 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.
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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 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.
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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 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
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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 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.
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27. FINAL SCHEDULED MATURITY DATE. No Receivable has a final
maturity later than November 30, 2005.
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 6 months but not more than 84 months; (C) each Initial Receivable
had an original principal balance of at least $1,700.00 and not more than
$46,089.55; (D) each Initial Receivable had a remaining Principal Balance as
of the Initial Cutoff Date of at least $505.45 and not more than $45,975.35;
(E) each Initial Receivable has an Annual Percentage Rate of at least 8.25%
and not more than 23.95%; (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
December 1, 1998; (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) 15.99% 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 84.01% of the Initial Receivables was
attributable to loans for the purchase of used Financed Vehicles; (K) not
more than 70% of the Aggregate Principal Balance as of the Initial Cutoff
Date was attributable to loans originated under AFL's "Classic" program
(excluding loans for the purchase of repossessed automobiles that would
otherwise be deemed originated under the "Classic" program); (L) not more
than 3% of the Principal Balance of the Initial Receivables as of the Initial
Cutoff Date had an Annual Percentage Rate in excess of 21%; (M) none of such
Receivables represented loans in excess of $50,000.00; (N) not more than .16%
of the Aggregate Principal Balance of such Receivables represented loans with
original terms greater than 72 months; and (O) not more than 2.0% 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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