RECEIVABLES PURCHASE AGREEMENT AND ASSIGNMENT
between
ARCADIA RECEIVABLES FINANCE CORP.
Purchaser
and
ARCADIA FINANCIAL LTD.
Seller
dated as of
June 1, 1997
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 . . . . . . . . . . . . . . . . . . . 4
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 . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 6.1. Liability of AFL . . . . . . . . . . . . . . . . . . . . 18
SECTION 6.2. Failure of AFL to Sell Subsequent Receivables . . . . . 18
SECTION 6.3. Merger or Consolidation of AFL or ARFC . . . . . . . . . 18
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 . . . . . . . . . . . . . . . . . 21
SECTION 6.9. Severability of Provisions . . . . . . . . . . . . . . . 21
SECTION 6.10. Intention of the Parties . . . . . . . . . . . . . . . 21
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. . . . . . . . . 22
SECTION 6.14. Nonpetition Covenant . . . . . . . . . . . . . . . . . 22
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
June 1, 1997, 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, 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 June 1, 1997, by and among Arcadia Receivables Finance
Corp. (as Seller), Arcadia Financial Ltd. (in its individual capacity and as
Servicer), Arcadia Automobile Receivables Trust, 1997-B (as Issuer) (the
"Trust") and The Chase Manhattan Bank, 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 June 19, 1997.
"INDENTURE TRUSTEE" means The Chase Manhattan Bank, a national
banking association, as trustee and indenture collateral agent under the
Indenture, dated as of June 1, 1997, 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 $11,625,000.00.
"INSURANCE AGREEMENT" means the Insurance and Indemnity Agreement,
dated as of June 19, 1997, 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, the Class A-3
Prepayment Premium, the Class A-4 Prepayment Premium and the Class A-5
Prepayment Premium.
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"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 Mellon Bank (DE), National Association, 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 June 1, 1997, executed and delivered by Arcadia
Receivables Finance Corp., as Seller, Arcadia Financial Ltd., in its
individual capacity and as Servicer, Arcadia Automobile Receivables Trust,
1997-B, as Issuer, and The Chase Manhattan Bank, 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.
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"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 amended and restated as of June 1, 1997, 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."
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
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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
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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 $539,368,879.26 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 ARFC, the Owner
Trustee, the Indenture Trustee and the Security Insurer in writing 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 14.75%, (2) the weighted average
remaining term of such Receivables will not be more than 67 nor less
than 63 months, (3) not more than 87% of the Aggregate Principal Balances
of such Receivables will represent used Financed Vehicles, (4) not more
than 52% of the Aggregate Principal Balance of such Receivables will
represent Receivables originated under AFL's "Classic" program, (5) not
more than 2.0% of the Principal Balance of such Receivables will have an
Annual Percentage Rate in excess of 21.0%, (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 3.0% of the
Aggregate Principal Balance of such Receivables will represent loans
with original terms greater than 72 months and (8) not more than 5.0% 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 equal to
$233,522,236.50; 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
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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 0000 Xxxxxxxxxx Xxxxxx Xxxxx, Xxxxxxxxxxx, XX 00000-0000.
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.
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(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 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
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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 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
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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.
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(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 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
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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, 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
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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.
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
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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 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
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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 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.
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(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
Certificateholder and 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 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., 0000 Xxxxxxxxxx Xxxxxx Xxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000-0000,
Attention: XxxxX. Xxxxxx, 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., 0000 Xxxxxxxxxx Xxxxxx Xxxxx, Xxxxx 000,
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000, Attention: Xxxx X. Xxxxxx.
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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 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.
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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/ Xxxx X. Xxxxxx
-----------------------------------------------
Name: Xxxx X. Xxxxxx
Title: Senior Vice President and Chief
Financial Officer
ARCADIA FINANCIAL LTD., as Seller
By /s/ Xxxx X. Xxxxxx
-----------------------------------------------
Name: Xxxx X. Xxxxxx
Title: Executive Vice President and
Chief Financial Officer
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