EXHIBIT
10.3
EXECUTION COPY
RECEIVABLES PURCHASE AGREEMENT
Dated
as of April 25, 2000
by
and between
CENDANT MOBILITY FINANCIAL CORPORATION
as
originator and seller,
and
APPLE RIDGE SERVICES CORPORATION
as
buyer
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SALE
AND PURCHASE OF ASSETS
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Section 2.1 Sale and
Purchase
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Section 2.3 No Assumption
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Section 2.6 Servicing of ARSC Purchased
Assets
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Section 2.7 Financing Statements
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CALCULATION OF ARSC PURCHASE PRICE
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Section 3.1 Calculation of the ARSC
Purchase Price
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PAYMENT OF ARSC PURCHASE PRICE
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Section 4.1 ARSC Purchase Price
Payments
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Section 4.2 The ARSC Subordinated
Note
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Section 4.3 Seller Adjustments;
Originator Adjustments
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Section 4.4 Payments and Computations,
Etc
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Section 5.1 Conditions Precedent to Sales
and Purchases
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Section 5.2 Conditions Precedent to ARSC
Subordinated Loans
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TABLE OF CONTENTS
(continued)
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REPRESENTATIONS AND WARRANTIES
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Section 6.1 Representations and
Warranties of the Seller
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Section 6.2 Representations and
Warranties of ARSC
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Section 7.1 Affirmative Covenants of the
Seller
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Section 7.2 Reporting Requirements
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Section 7.3 Negative Covenants of the
Seller
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Section 7.4 Affirmative Covenants of
ARSC
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ARTICLE VIII
ADDITIONAL RIGHTS AND OBLIGATIONS IN RESPECT OF THE ARSC
PURCHASED ASSETS
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Section 8.1 Rights of ARSC
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Section 8.2 Responsibilities of the
Seller
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Section 8.3 Further Action Evidencing
Purchases
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Section 8.4 CMF Collections; Rights of
ARSC and its Assignees
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Section 9.1 ARSC Purchase Termination
Events
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Section 9.2 Purchase Termination
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TABLE OF CONTENTS
(continued)
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INDEMNIFICATION; SECURITY INTEREST
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Section 10.1 Indemnities by the
Seller
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Section 10.2 Security Interest
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Section 11.1 Amendments; Waivers,
Etc.
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Section 11.2 Notices, Etc.
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Section 11.3 Cumulative Remedies
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Section 11.4 Binding Effect;
Assignability; Survival of Provisions
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Section 11.5 Governing Law
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Section 11.6 Costs, Expenses and
Taxes
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Section 11.7 Submission to
Jurisdiction
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Section 11.8 Waiver of Jury Trial
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Section 11.10 Captions and Cross
References
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Section 11.11 Execution in
Counterparts
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Section 11.12 Acknowledgment and
Consent
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Section 11.13 No Partnership or Joint
Venture
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Section 11.14 No Proceedings
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Section 11.15 Severability of
Provisions
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Section 11.16 Recourse to the Seller
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Section 11.17 Recourse to ARSC
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Section 11.18 Confidentiality
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APPENDIX
SCHEDULES
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SCHEDULE 2.1
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List of CMF Home Purchase Contracts
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SCHEDULE 6.1(n)
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Principal Place of Business and Chief
Executive Office of the Seller and List of Offices Where the Seller
Keeps CMF Records
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EXHIBITS
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EXHIBIT 2.1
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Form of Notice of Additional CMF Home Purchase
Contracts
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EXHIBIT 4.2
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Form of ARSC Subordinated Note
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RECEIVABLES PURCHASE AGREEMENT
THIS RECEIVABLES
PURCHASE AGREEMENT (this “ Agreement
”) dated as of April 25, 2000 made by and between CENDANT
MOBILITY FINANCIAL CORPORATION, a Delaware corporation, as
originator and seller (the “ Seller ”)
and APPLE RIDGE SERVICES CORPORATION, a Delaware Corporation, as
buyer (“ ARSC ”).
WHEREAS, the Seller
has purchased certain Receivables and Related Assets from Cendant
Mobility Services Corporation (“ CMSC
”) and from time to time hereafter will create, and will
purchase from CMSC, additional Receivables and Related Assets;
and
WHEREAS, the Seller
wishes to sell Receivables and Related Assets that it now owns and
Receivables and Related Assets that it from time to time hereafter
will own to ARSC, and ARSC is willing to purchase such Receivables
and Related Assets from the Seller from time to time, on the terms
and subject to the conditions contained in this Agreement; and
WHEREAS, ARSC
intends to transfer the ARSC Purchased Assets to the Issuer from
and after the Closing Date pursuant to the terms of the Transfer
and Servicing Agreement;
NOW, THEREFORE, for
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto, intending to be
legally bound, agree as follows:
ARTICLE I
DEFINITIONS
Capitalized terms
used and not otherwise defined in this Agreement have the meanings
specified in Part A of Appendix A or as specified in Appendix A of
the Purchase Agreement. In addition, this Agreement shall be
interpreted in accordance with the conventions set forth in Parts
B, C and D of Appendix A.
ARTICLE II
SALE AND PURCHASE OF ASSETS
Section 2.1
Sale and Purchase .
(a)
Agreement . Upon the terms and subject to the conditions
hereof, ARSC agrees to buy, and the Seller agrees to sell, all of
the Seller’s right, title and interest in and to the
following:
(i)
all CMSC Purchased Assets owned by the Seller on the Closing Date
or thereafter purchased, and all rights of the Seller under the
Purchase Agreement
and the PHH Guarantee with respect to the CMSC
Purchased Assets (collectively, the “Seller Purchased
Assets” );
(ii) all Receivables
arising out of or with respect to Equity Payments, Mortgage
Payments and Mortgage Payoffs made by the Seller in respect of Home
Purchase Contracts to which CMF is a party from and after the
Closing Date (collectively, the “ Seller
Receivables ”);
(iii) all Related
Property with respect to the Seller Receivables (collectively, the
“ Seller Related Property ”);
(iv) all CMF
Collections;
(v) all proceeds of
and earnings on any of the foregoing; and
(vi) all of the right,
title and interest (if any) CMF has in, to or under CMF Designated
Receivables, including all Related Property with respect thereto
and all proceeds thereof, including all rights, if any, to
reimbursement of, or interest on, such CMF Designated
Receivables.
The items listed
above in clauses (iii), (iv) and (v), whenever and wherever
arising, are collectively referred to herein as the “
Seller Related Assets .” The Seller
Purchased Assets, the Seller Receivables and the Seller Related
Assets are sometimes collectively referred to herein as the “
Seller Assets .”
As used herein,
“ CMF Purchased Assets ” means Seller
Purchased Assets that are being purchased or have been Purchased by
ARSC hereunder; “ CMF Receivables ”
means Seller Receivables that are being purchased or have been
Purchased by ARSC hereunder; “ CMF Related
Property ” means Seller Related Property that is
being purchased or has been Purchased by ARSC hereunder; “
CMF Related Assets ” means Seller Related
Assets that are being purchased or have been Purchased by ARSC
hereunder; and “ ARSC Purchased Assets
” means Seller Assets that are being purchased or have been
Purchased by ARSC hereunder.
Schedule 2.1 sets
forth a list of all CMF Home Purchase Contracts as of the Closing
Date. Each new Home Purchase Contract that is not an Excluded
Contract and that is entered into by the Seller on any day in a
month shall be added to the CMF Home Purchase Contracts and shall
be reported on the last day of such month by delivering a notice as
set forth in Exhibit 2.1 to ARSC or its designee, whereupon
Schedule 2.1 shall be amended by the Seller to add such new Home
Purchase Contract to the list of CMF Home Purchase Contracts set
forth therein. On or prior to the date of the delivery of any such
notice, the Seller shall indicate, or cause to be indicated, in its
computer files, books and records that the CMF Receivables and
other ARSC Purchased Assets then existing and thereafter created
pursuant to or in connection with each such CMF Home Purchase
Contract are being transferred to ARSC pursuant to this
Agreement.
(b)
Treatment of Certain Receivables and CMF Related Assets . It
is expressly understood that (i) each Pool Receivable sold to ARSC
hereunder, together with all other CMSC Purchased Assets and all
CMF Related Assets then existing or thereafter created and arising
with
respect thereto, will thereafter be the
property of ARSC (or its assignees), without the necessity of any
further purchase or other action by ARSC (other than satisfaction
of the conditions set forth herein) and (ii) the change of a
Receivable’s status from that of Unsold Home Receivable to
Unbilled Receivable or from Unbilled Receivable to Billed
Receivable shall not be deemed the creation of a new Receivable for
any purpose.
Section 2.2
Purchases . On the Closing
Date, ARSC shall purchase all of the Seller’s right, title
and interest in and to all Seller Assets and in any property
described in clause (vi) of Section 2.1 existing as of the close of
business on the immediately preceding Business Day. On each
Business Day thereafter until the ARSC Termination Date, ARSC shall
purchase all of the Seller’s right, title and interest in and
to all Seller Assets and in any property described in clause (vi)
of Section 2.1 existing as of the close of business on the
immediately preceding Business Day that were not previously
purchased by ARSC hereunder. Notwithstanding the foregoing, if an
Insolvency Proceeding is pending with respect to either the Seller
or ARSC prior to the Termination Date, the Seller shall not sell
and ARSC shall not buy any ARSC Purchased Assets hereunder unless
and until such Insolvency Proceeding is dismissed or otherwise
terminated.
Section 2.3
No Assumption . The sales
and Purchases of ARSC Purchased Assets do not constitute and are
not intended to result in a creation or an assumption by ARSC or
its successors and assigns of any obligation of CMSC, the Seller or
any other Person in connection with the ARSC Purchased Assets
(other than such obligations as may arise from the ownership of the
Pool Receivables) or under the related Contracts or any other
agreement or instrument relating thereto, including without
limitation any obligation to any Obligors or Transferred Employees.
None of the Servicer, ARSC or ARSC’s assignees shall have any
obligation or liability to any Obligor, Transferred Employee or
other customer or client of CMSC (including without limitation any
obligation to perform any of the obligations of CMSC under any
Relocation Management Agreement, CMSC Home Purchase Contract, CMSC
Related Property or any other agreement or any obligation of the
Seller under any CMF Home Purchase Contract), except such
obligations as may arise from the ownership of the Pool
Receivables. Except as expressly provided in Section 3.05(j) of the
Transfer and Servicing Agreement, no such obligation or liability
to any Obligor, Transferred Employee or other customer or client of
CMSC is intended to be assumed by the Servicer or its successors
and assigns hereunder or under the Transfer and Servicing
Agreement, and any such assumption is expressly disclaimed.
Section 2.4
No Recourse . Except as
specifically provided in this Agreement, the sale and Purchase of
the ARSC Purchased Assets and any other property described in
clause (vi) of Section 2.1(a) under this Agreement shall be without
recourse to the Seller; provided , however , that the
Seller shall be liable to ARSC and its successors and assigns for
all representations, warranties, covenants and indemnities made by
it pursuant to the terms of this Agreement ( it being
understood that such obligations of the Seller will not arise
solely on account of the credit-related inability of an Obligor to
pay a Receivable).
Section 2.5
True Sales . The Seller and
ARSC intend the transfers of ARSC Purchased Assets hereunder to be
true sales by the Seller to ARSC that are absolute and irrevocable
and to provide ARSC with the full benefits of ownership of the ARSC
Purchased Assets, and neither the Seller nor ARSC intends the
transactions contemplated hereunder to be,
or for any purpose to be characterized as,
loans from ARSC to the Seller, secured by the ARSC Purchased
Assets.
Section 2.6
Servicing of ARSC Purchased
Assets . Consistent with ARSC’s ownership of all
ARSC Purchased Assets and subject to the terms of the Pool
Relocation Management Agreements, as between the parties to this
Agreement, ARSC shall have the sole right to service, administer
and collect all ARSC Purchased Assets, to assign such right and to
delegate such right to others. In consideration of ARSC’s
purchase of the ARSC Purchased Assets and as more fully set forth
in Section 11.12, the Seller hereby acknowledges and agrees that
ARSC intends to assign for the benefit of the Issuer and its
successors and assigns the rights and interests granted by the
Seller to ARSC hereunder, and agrees to cooperate fully with the
Issuer and its successors and assigns in the exercise of such
rights.
Section 2.7
Financing Statements . In
connection with the transfer described above, the Seller agrees, at
its expense, to record and file financing statements (and
continuation statements when applicable) with respect to the ARSC
Purchased Assets conveyed by the Seller meeting the requirements of
applicable law in such manner and in such jurisdictions as are
necessary to perfect and maintain the perfection of the transfer
and assignment of its interest in the ARSC Purchased Assets to
ARSC, and to deliver a file stamped copy of each such financing
statement or other evidence of such filing to ARSC as soon as
practicable after the Closing Date; provided ,
however , that prior to recordation pursuant to Section 8.3
or the sale of a Home to an Ultimate Buyer, record title to such
Home may remain in the name of the related Transferred Employee and
no recordation in real estate records of the conveyance pursuant to
the related Home Purchase Contract or Home Sale Contract shall be
made except as otherwise required or permitted under Section
2.01(d)(i) of the Transfer and Servicing Agreement.
ARTICLE III
CALCULATION OF ARSC PURCHASE
PRICE
Section 3.1
Calculation of the ARSC Purchase
Price .
(a) On each Business
Day from and including the Closing Date to but excluding the
Termination Date, the Seller shall deliver, or cause the Servicer
to deliver, to ARSC an accounting (each, a “ Daily
Seller Report ”) with respect to (i) the Purchases
of ARSC Purchased Assets to be made on such Business Day and (ii)
the ARSC Purchase Price to be paid on account of the foregoing as
calculated in accordance with this Section 3.1.
(b) With respect
to the Purchase of any ARSC Purchased Assets by ARSC from the
Seller pursuant to Article II, (i) on the Closing Date, ARSC shall
pay to the Seller a purchase price equal to $653,974,274, and (ii)
on any day thereafter ARSC shall pay to the Seller a purchase price
equal to the fair market value thereof using a discount rate and
expected collection period to be recalculated monthly based on
ARSC’s weighted cost of funds and Average Days Outstanding
for the prior month and assuming a reasonable return on
ARSC’s equity (each such purchase price, the “
ARSC Purchase Price ”), calculated in the
case of each CMF Receivable at the time of such CMF
Receivable’s sale to ARSC, and adjusted to reflect
such factors as the Seller and ARSC mutually
agree will result in an ARSC Purchase Price determined to be the
fair market value of such ARSC Purchased Assets.
ARTICLE IV
PAYMENT OF ARSC PURCHASE PRICE
Section 4.1
ARSC Purchase Price Payments
. On the terms and subject to the conditions of this Agreement,
ARSC shall pay to the Seller on the Closing Date the ARSC Purchase
Price for the ARSC Purchased Assets sold on such date, by paying
such ARSC Purchase Price to the Seller in cash. On the terms and
subject to the conditions of this Agreement, ARSC shall pay to the
Seller, on each other Business Day on which any ARSC Purchased
Assets are purchased from the Seller by ARSC pursuant to Article
II, the ARSC Purchase Price for such ARSC Purchased Assets by
paying such ARSC Purchase Price to the Seller in cash (including
funds borrowed under the ARSC Subordinated Note as provided in the
ARSC Subordinated Note and in Sections 4.2 and 5.2 of this
Agreement).
Section 4.2
The ARSC Subordinated Note .
On the Closing Date, ARSC shall deliver to CMSC the ARSC
Subordinated Note in the form set forth as Exhibit 4.2. Pursuant to
the terms of, and subject to the limitations set forth in, the ARSC
Subordinated Note, CMF will request from CMSC an advance (each, an
“ ARSC Subordinated Loan ”) on or
prior to the ARSC Termination Date for the purpose of purchasing
ARSC Purchased Assets hereunder. Pursuant to the terms of the ARSC
Subordinated Note, ARSC shall not request or receive any advance
thereunder on any date if the aggregate principal amount
outstanding thereunder on such date, after giving effect to such
advance, would exceed an amount equal to five times the net worth
of ARSC (such maximum amount required to be advanced at any time,
the “ ARSC Subordinated Note Cap ”).
The ARSC Subordinated Loans shall be evidenced by, and shall be
payable in accordance with the terms and provisions of, the ARSC
Subordinated Note. Notwithstanding any other provision of this
Agreement, ARSC shall not use funds borrowed under the ARSC
Subordinated Note for any purpose other than paying the ARSC
Purchase Price.
Section 4.3
Seller Adjustments; Originator
Adjustments
(a) With respect to
any CMF Receivable created by the Seller, if on any day ARSC (or
ARSC’s assignee), the Servicer or the Seller determines that
(i) any CMF Receivable that (A) was not identified by or on behalf
of the Seller in the Daily Seller Report as other than an Eligible
Receivable on the Business Day such CMF Receivable was sold
hereunder or (B) was otherwise treated as or represented to be an
Eligible Receivable in any Receivables Activity Report, was not in
fact an Eligible Receivable on such date or (ii) any of the
representations or warranties set forth in Section 6.1(d) or 6.1(k)
was not true when made with respect to such CMF Receivable or the
related CMF Related Asset (each such CMF Receivable described in
clause (i) or clause (ii), a “ CMF Noncomplying
Asset ”), then the Seller shall pay the aggregate
Unpaid Balance of such CMF Receivables (such payment, the “
CMF Noncomplying Asset Adjustment ”) to ARSC
in accordance with Section 4.3(c).
(b) If on any day
the Unpaid Balance of any CMF Receivable (i) is reduced as a result
of any cash discount or any adjustment by the Seller, (ii) is
subject to reduction on
account of any offsetting account payable of
the Seller to an Obligor or is reduced or cancelled as a result of
a set-off in respect of any claim by, or defense or credit of, the
related Obligor against the Seller (whether such claim, defense or
credit arises out of the same or a related or an unrelated
transaction) or (iii) is reduced on account of the obligation of
the Seller to pay to the related Obligor any rebate or refund (each
of the reductions and cancellations described above in clauses (i)
through (iii), a “ Seller Dilution
Adjustment ”), then the Seller shall pay such Seller
Dilution Adjustment to ARSC in accordance with Section 4.3(c).
(c) On each
Business Day, the Seller shall pay to ARSC in cash in accordance
with Section 4.4, an amount (a “ Seller
Adjustment ”) equal to the sum of (A) the
aggregate Seller Dilution Adjustment, if any, for each day from and
including the immediately preceding Business Day plus (B)
the CMF Noncomplying Asset Adjustment, if any, for each day from
and including the immediately preceding Business Day. The CMF
Receivables that gave rise to any CMF Noncomplying Asset Adjustment
shall remain the property of ARSC. From and after the day on which
any CMSC Noncomplying Asset Adjustment or CMF Noncomplying Asset
Adjustment is made, any collections received by ARSC that are
identified as proceeds of the Receivables that gave rise to such
CMSC Noncomplying Asset Adjustment or CMF Noncomplying Asset
Adjustment and any Related Property with respect to such Receivable
shall be promptly returned to the Seller.
(d) The Seller
shall pay to ARSC in cash, on the date of receipt by the Seller,
any payment in respect of Originator Adjustments relating to the
ARSC Purchased Assets made by CMSC to the Seller pursuant to the
Purchase Agreement. The Seller shall instruct CMSC to deposit all
payments in respect of such Originator Adjustments directly in the
Collection Account.
Section 4.4
Payments and Computations,
Etc. All amounts to be paid by the Seller to ARSC
hereunder shall be paid in accordance with the terms hereof no
later than 11:00 a.m. (New York time) on the day when due in United
States dollars in immediately available funds to an account
specified in writing from time to time by ARSC or its designee.
Payments received by ARSC after such time shall be deemed to have
been received on the next Business Day. If any payment becomes due
on a day that is not a Business Day, then such payment shall be
made on the next succeeding Business Day. The Seller shall pay to
ARSC, on demand, interest on all amounts not paid when due
hereunder at a rate equal to the Prime Rate plus 2% per annum;
provided , however , that such interest rate shall
not at any time exceed the maximum rate permitted by applicable
law. All computations of interest payable hereunder shall be made
on the basis of a year of 360 days for the actual number of days
elapsed (including the first day but excluding the last day). All
payments made under this Agreement shall be made without set-off or
counterclaim.
ARTICLE V
CONDITIONS PRECEDENT
Section 5.1
Conditions Precedent to Sales and
Purchases . No Purchase of ARSC Purchased Assets shall
be made hereunder on any date on which ARSC does not have
sufficient funds available to pay the ARSC
Purchase Price in cash (including cash made available to ARSC under
the ARSC Subordinated Loan).
Section 5.2
Conditions Precedent to ARSC
Subordinated Loans . ARSC shall not request any ARSC
Subordinated Loan under the ARSC Subordinated Note unless the
following conditions precedent have been satisfied on the date of
such ARSC Subordinated Loan:
(a) the ARSC
Subordinated Note shall have been duly executed and delivered by
ARSC and shall be in full force and effect;
(b) no Event of
Bankruptcy shall have occurred and be continuing with respect to
ARSC; and
(c) after giving
effect to such ARSC Subordinated Loan, the aggregate outstanding
principal amount of the ARSC Subordinated Note shall not exceed the
ARSC Subordinated Note Cap.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
Section 6.1
Representations and Warranties of the
Seller . In order to induce ARSC to enter into this
Agreement and to make Purchases hereunder, the Seller hereby makes
the representations and warranties set forth in this Section 6.1,
in each case as of the date hereof, as of the Closing Date, as of
the date of each Purchase hereunder and as of any other date
specified in such representation and warranty.
(a)
Organization and Good Standing . The Seller is a corporation
duly organized and validly existing in good standing under the laws
of the State of Delaware and has full power and authority to own
its properties and to conduct its business as such properties are
presently owned and such business is presently conducted. The
Seller had at all relevant times, and now has, all necessary power,
authority and legal right to own and sell the ARSC Purchased
Assets.
(b) Due
Qualification . The Seller is duly qualified to do business, is
in good standing as a foreign corporation, and has obtained (or has
filed all necessary applications for and will obtain within 60 days
of the Closing Date) all necessary licenses and approvals in all
jurisdictions in which the ownership or lease of property or the
conduct of its business requires such qualification, licenses or
approvals and in which the failure so to qualify or to obtain such
licenses and approvals or to preserve and maintain such
qualification, licenses or approvals could reasonably be expected
to give rise to a Material Adverse Effect.
(c) Power
and Authority: Due Authorization . The Seller (i) has all
necessary corporate power and authority (A) to execute and deliver
this Agreement, the Contracts and the other Transaction Documents
to which it is a party, (B) to perform its obligations under this
Agreement, the Contracts and the other Transaction Documents to
which it is a party and (C) to
sell and assign the ARSC Purchased Assets
transferred hereunder on and after such date, on the terms and
subject to the conditions herein and therein provided and (ii) has
duly authorized by all necessary corporate action such sale and
assignment and the execution, delivery and performance of, and the
consummation of the transactions provided for in, this Agreement,
the Contracts and the other Transaction Documents to which it is a
party.
(d) Valid
Sale; Binding Obligations . This Agreement constitutes a valid
sale, transfer, set-over and conveyance to ARSC of all of the
Seller’s right, title and interest in, to and under the Pool
Receivables transferred hereunder on such date, which is perfected
and of first priority (subject to Permitted Liens and Permitted
Exceptions) under the UCC and other applicable law, enforceable
against creditors of, and purchasers from, the Seller, free and
clear of any Lien (other than Permitted Liens); and this Agreement
constitutes, and each other Transaction Document to which the
Seller is a party when duly executed and delivered will constitute,
a legal, valid and binding obligation of the Seller, enforceable
against the Seller in accordance with its terms, except (i) as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors’ rights generally and (ii) as such
enforceability may be limited by general principles of equity,
regardless of whether such enforceability is considered in a
proceeding in equity or at law.
(e) No
Conflict or Violation . The execution, delivery and performance
of, and the consummation of the transactions contemplated by, this
Agreement and the other Transaction Documents to be signed by the
Seller, and the fulfillment of the terms hereof and thereof, will
not (i) conflict with, result in any breach of any of the terms and
provisions of, or constitute (with or without notice or lapse of
time or both) a material default under (A) the certificate of
incorporation or the by-laws of the Seller or (B) any material
indenture, loan agreement, mortgage, deed of trust or other
material agreement or instrument to which the Seller is a party or
by which it or any of its properties is bound, (ii) result in the
creation or imposition of any Lien on any of the ARSC Purchased
Assets pursuant to the terms of any such material indenture, loan
agreement, mortgage, deed of trust or other material agreement or
instrument other than this Agreement and the other Transaction
Documents or (iii) conflict with or violate any federal, state,
local or foreign law or any decision, decree, order, rule or
regulation applicable to the Seller or of any federal, state, local
or foreign regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Seller,
which conflict or violation described in this clause (iii),
individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect.
(f)
Litigation and Other Proceedings . (i) There is no action,
suit, proceeding or investigation pending, or to the best knowledge
of the Seller threatened, against the Seller before any court,
arbitrator, regulatory body, administrative agency or other
tribunal or governmental instrumentality and (ii) the Seller is not
subject to any order, judgment, decree, injunction, stipulation or
consent order of or with any court or other government authority
that, in the case of either of the foregoing clauses (i) or (ii),
(A) asserts the invalidity of this Agreement or any other
Transaction Document, (B) seeks to prevent the sale of any ARSC
Purchased Asset by the Seller to ARSC, the creation of a material
amount of CMF Receivables or the consummation of any of the
transactions contemplated by this Agreement or any other
Transaction Document, (C) seeks any determination or ruling that,
in the reasonable judgment of the Seller, would materially and
adversely affect the performance by the Seller of its
obligations
under this Agreement or any other Transaction
Document to which it is a party or the validity or enforceability
of this Agreement or any other Transaction Document to which it is
a party or (D) individually or in the aggregate for all such
actions, suits, proceedings and investigations could reasonably be
expected to have a Material Adverse Effect.
(g)
Governmental Approvals . Except where the failure to obtain
or make such authorization, consent, order, approval or action
could not reasonably be expected to have a Material Adverse Effect,
(i) all authorizations, consents, orders and approvals of, or other
actions by, any Governmental Authority that are required to be
obtained by the Seller in connection with the conveyance of the
ARSC Purchased Assets transferred hereunder on and after such date,
or the due execution, delivery and performance by the Seller of
this Agreement or any other Transaction Document to which it is a
party and the consummation of the transactions contemplated by this
Agreement or any other Transaction Documents to which it is a party
have been obtained or made and are in full force and effect and
(ii) all filings with any Governmental Authority that are required
to be obtained in connection with such conveyance and the execution
and delivery by the Seller of this Agreement have been made;
provided , however , that prior to recordation
pursuant to Section 8.3 or the sale of a Home to an Ultimate Buyer,
record title to such Home may remain in the name of the related
Transferred Employee and no recordation in real estate records of
the conveyance pursuant to the related Home Purchase Contract or
Home Sale Contract shall be made except as otherwise required or
permitted under Section 2.01(d)(i) of the Transfer and Servicing
Agreement.
(h) Margin
Regulations . The Seller is not engaged, principally or as one
of its important activities, in the business of extending credit
for the purpose of purchasing or carrying margin stock (within the
meanings of Regulations T, U and X of the Board of Governors of the
Federal Reserve System). The Seller has not taken and will not take
any action to cause the use of proceeds of the sales hereunder to
violate said Regulations T, U or X.
(i)
Taxes . The Seller has filed (or there have been filed on
its behalf as a member of a consolidated group) all tax returns and
reports required by law to have been filed by it and has paid all
taxes, assessments and governmental charges thereby shown to be
owing by it, other than any such taxes, assessments or charges (i)
that are being diligently contested in good faith by appropriate
proceedings, for which adequate reserves in accordance with GAAP
have been set aside on its books and that have not given rise to
any Liens (other than Permitted Liens) or (ii) the amount of which,
either singly or in the aggregate, would not have a Material
Adverse Effect.
(j)
Solvency . After giving effect to the conveyance of ARSC
Purchased Assets hereunder on such date, the Seller is solvent and
able to pay its debts as they come due and has adequate capital to
conduct its business as presently conducted.
(k) Quality
of Title/Valid Transfers .
(i)
Immediately before the Purchase to be made by ARSC hereunder on
such date, each ARSC Purchased Asset to be sold to ARSC shall be
owned by the Seller free and clear of any Lien (other than any
Permitted Lien), and the Seller shall have made all filings and
shall have taken all other action under applicable law in each
relevant jurisdiction in order to protect and perfect the
ownership interest of ARSC and its successors
and assigns in such ARSC Purchased Assets against all creditors of,
and purchasers from, the Seller (subject to Permitted
Exceptions).
(ii) With
respect to each Pool Receivable transferred hereunder on such date,
ARSC shall acquire a valid and (subject to Permitted Exceptions)
perfected ownership interest in such Pool Receivable and any
identifiable proceeds thereof, free and clear of any Lien (other
than any Permitted Liens).
(iii) Immediately
prior to the sale of an ARSC Purchased Asset hereunder on such
date, no effective financing statement or other instrument similar
in effect that covers all or part of any ARSC Purchased Asset or
any interest therein is on file in any recording office except such
as may be filed (A) in favor of CMSC in accordance with the Pool
Relocation Management Agreements, (B) in favor of the Seller in
accordance with the Purchase Agreement, (C) in favor of ARSC
pursuant to this Agreement, (D) in favor of ARSC’s successors
and assigns pursuant to the Transfer and Servicing Agreement or the
Indenture or otherwise filed by or at the direction of ARSC’s
successors and assigns or (E) to evidence any Mortgage on a CMSC
Home or CMF Home created by a Transferred Employee.
(iv) The ARSC
Purchase Price constitutes reasonably equivalent value for the ARSC
Purchased Assets conveyed in consideration therefor on such date,
and no purchase of an interest in such ARSC Purchased Assets by
ARSC from the Seller constitutes a fraudulent transfer or
fraudulent conveyance under the United States Bankruptcy Code or
applicable state bankruptcy or insolvency laws or subject to
subordination under similar laws or principles or for any other
reason.
(l) Eligible
Receivables . Each CMF Receivable included in the ARSC
Purchased Assets transferred hereunder on such date, unless
otherwise identified to ARSC and its assignees by the Seller in the
related Daily Seller Report, is an Eligible Receivable on such
date.
(m) Accuracy
of Information . All written information furnished by the
Seller to ARSC or its successors and assigns pursuant to or in
connection with any Transaction Document or any transaction
contemplated herein or therein with respect to the ARSC Purchased
Assets transferred hereunder on such date is true and correct in
all material respects on such date.
(n)
Offices . The principal place of business and chief
executive office of the Seller is located, and the offices where
the Seller keeps all CMF Records (and all original documents
relating thereto) are located, at the addresses specified in
Schedule 6.1(n), except that (i) Home Deeds and related documents
necessary to close CMF Home sale transactions, including powers of
attorney, may be held by local attorneys or escrow agents acting on
behalf of the Seller in connection with the sale of CMF Homes to
Ultimate Buyers, so long as such local attorneys are notified that
such Home Deeds constitute property of CMF and also are notified of
the interest of ARSC’s assignees therein and (ii) CMF Records
relating to the ARSC Purchased Assets arising under or in
connection with any Pool Relocation Management Agreement may be
maintained at the offices of the related Employer.
(o) Payment
Instructions to Obligors . The Seller has instructed (i) all
Obligors to remit all payments on the ARSC Purchased Assets
directly to one of the Lockboxes or Lockbox Accounts, (ii) all
Lockbox Banks to deposit all Pool Collections remitted to a Lockbox
directly to the related Lockbox Account and (iii) all Persons
receiving Home Sale Proceeds to deposit such Home Sale Proceeds in
one of the Lockboxes or Lockbox Accounts within two Business Days
after receipt, except to the extent a longer escrow period is
required under applicable law, in which case such Home Sale
Proceeds shall be deposited into one of the Lockboxes or Lockbox
Accounts within one Business Day after the expiration of such
period.
(p)
Investment Company Act . The Seller is not, and is not
controlled by, an “investment company” registered or
required to be registered under the Investment Company Act.
(q) Legal
Names . Except as described in Schedule 6.1(q), since
January 1, 1995, the Seller (i) has not been known by any
legal name other than its corporate name as of the date hereof,
(ii) has not been the subject of any merger or other corporate
reorganization that resulted in a change of name, identity or
corporate structure and (iii) has not used any trade names other
than its actual corporate name.
(r)
Compliance with Applicable Laws . The Seller is in
compliance with the requirements of all applicable laws, rules,
regulations and orders of all Governmental Authorities (federal,
state, local or foreign, including without limitation Environmental
Laws), a violation of any of which, individually or in the
aggregate for all such violations, is reasonably likely to have a
Material Adverse Effect.
(s) Credit
and Collection Policy . As of the date each CMF Receivable is
transferred hereunder, the Seller has complied in all applicable
material respects with the Credit and Collection Policy with
respect to such CMF Receivable transferred on such date and the
related Contract.
(t)
Environmental . On such date, to the best knowledge of
Seller, (i) there are no (A) pending or threatened claims,
complaints, notices or requests for information received by Seller
with respect to any alleged violation of any Environmental Law in
connection with any CMF Home relating to any CMF Receivable
transferred hereunder on such date or (B) pending or threatened
claims, complaints, notices or requests for information received by
Seller regarding potential liability under any Environmental Law in
connection with any CMF Home relating to any CMF Receivable
transferred hereunder on such date and (ii) the Seller is in
material compliance with all permits, certificates, approvals,
licenses and other authorizations relating to environmental
matters, if any, that are required to be held by it under
applicable law in connection with any CMF Homes relating to any CMF
Receivable transferred hereunder on such date, other than those
that, in the case of either clause (i) or (ii), singly or in the
aggregate, are not reasonably likely to have a Material Adverse
Effect.
(u) Business
and Indebtedness of Seller . The Seller has no Indebtedness for
Borrowed Money except as permitted under this Agreement. The Seller
has not engaged in any business other than the Purchase of CMSC
Receivables and other CMSC Purchased Assets under the Purchase
Agreement, the sale of ARSC Purchased Assets under this Agreement
and the
purchase and sale of CMF Homes and creation of
CMF Receivables pursuant to related Equity Payments, Mortgage
Payments and Mortgage Payoffs, and incidental activities related
thereto.
Section 6.2
Representations and Warranties of
ARSC . ARSC hereby represents and warrants, on and as of
the date hereof and on and as of the Closing Date, that (a) this
Agreement has been duly authorized, executed and delivered by ARSC
and constitutes ARSC’s valid, binding and legally enforceable
obligation, except (i) as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors’ rights generally
and (ii) as such enforceability may be limited by general
principles of equity, regardless of whether such enforceability is
considered in a proceeding in equity or at law, (b) the execution,
delivery and performance of this Agreement does not violate any
federal, state, local or foreign law applicable to ARSC or any
agreement to which ARSC is a party and (c) all of the outstanding
capital stock of ARSC is directly or indirectly owned by the
Seller, and all such capital stock is fully paid and
nonassessable.
ARTICLE VII
GENERAL COVENANTS
Section 7.1
Affirmative Covenants of the
Seller . From the Closing Date until the termination of
this Agreement in accordance with Section 11.4, the Seller hereby
agrees that it will perform the covenants and agreements set forth
in this Section 7.1.
(a)
Compliance with Laws, Etc. The Seller will comply in all
material respects with all applicable laws, rules, regulations,
judgments, decrees and orders (including without limitation those
relating to the CMF Receivables, CMF Home Purchase Contracts, CMF
Related Assets and all Environmental Laws affecting any CMF Home),
in each case to the extent that any such failure to comply,
individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect.
(b)
Preservation of Corporate Existence . The Seller (i) will
preserve and maintain its corporate existence, rights, franchises
and privileges in the jurisdiction of its incorporation and (ii)
will qualify and remain qualified in good standing as a foreign
corporation in each jurisdiction in which the failure to preserve
and maintain such qualification as a foreign corporation could
reasonably be expected to have a Material Adverse Effect.
(c) Keeping
of Records and Books of Account . The Seller will maintain and
implement administrative and operating procedures (including
without limitation an ability to recreate records evidencing the
CMF Receivables and the related CMF Related Assets in the event of
the destruction of the originals thereof) and will keep and
maintain all documents, books, records and other information that
are necessary or advisable, in the reasonable determination of
ARSC, for the collection of all amounts due under any or all CMF
Receivables and the related CMF Related Assets. Upon the reasonable
request of ARSC or its assignees made at any time after the
occurrence and continuance of an Unmatured Servicer Default or a
Servicer Default, the Seller will deliver copies of all CMF Records
maintained pursuant to this Section 7.1(c) to ARSC or its designee.
The Seller will maintain at all times accurate and complete books,
records and accounts relating to the CMF Receivables and the
related CMF
Related Assets, in which timely entries will
be made. The Seller’s computer files, books and records will
be marked to indicate the sales of all ARSC Purchased Assets to
ARSC hereunder and will include without limitation all payments
received and all credits and extensions granted with respect to the
ARSC Purchased Assets.
(d) Location
of Records and Offices . The Seller will keep its principal
place of business and chief executive office and the offices where
it keeps all CMF Records (and all original documents relating
thereto other than those CMF Records that are maintained with local
attorneys or escrow agents or at the offices of the relevant
Employer as described in Section 6.1(n)) at the addresses specified
in Schedule 6.1(n) or, upon not less than 30 days’ prior
written notice given by the Seller to ARSC and its assignees, at
such other locations in jurisdictions in the United States of
America where all action required by Section 8.3 has been taken and
completed.
(e) Separate
Corporate Existence of the Seller . The Seller hereby
acknowledges that the parties to the Transaction Documents are
entering into the transactions contemplated by the Transaction
Documents in reliance upon the Seller’s identity as a legal
entity separate from CMSC and the other CMS Persons. From and after
the date hereof until the Final Payout Date, the Seller will take
such actions as shall be required in order that:
(i) The
Seller will conduct its business in office space allocated to it
and for which it pays an appropriate rent and overhead
allocation;
(ii) The
Seller will maintain corporate records and books of account
separate from those of each CMS Person and telephone numbers and
stationery that are separate and distinct from those of each CMS
Person;
(iii) The
Seller’s assets will be maintained in a manner that
facilitates their identification and segregation from those of any
CMS Person;
(iv) The
Seller will strictly observe corporate formalities in its dealings
with the public and with each CMS Person, and funds or other assets
of the Seller will not be commingled with those of any CMS Person.
The Seller will at all times, in its dealings with the public and
with each CMS Person, hold itself out and conduct itself as a legal
entity separate and distinct from each CMS Person. The Seller will
not maintain joint bank accounts or other depository accounts to
which any CMS Person (other than the Servicer) has independent
access;
(v) The
duly elected board of directors of the Seller and duly appointed
officers of the Seller will at all times have sole authority to
control decisions and actions with respect to the daily business
affairs of the Seller;
(vi) Not
less than one member of the Seller’s board of directors will
be an Independent Director. The Seller will observe those
provisions in its certificate of incorporation that provide that
the Seller’s board of directors will not approve, or take any
other action to cause the filing of, a voluntary bankruptcy
petition with respect to the Seller unless the Independent Director
and all other members of the Seller’s board of directors
unanimously approve the taking of such action in writing prior to
the taking of such action;
(vii) The
Seller will compensate each of its employees, consultants and
agents from the Seller’s own funds for services provided to
the Seller; and
(viii) The Seller
will not hold itself out to be responsible for the debts of any CMS
Person.
(f) Payment
Instruction to Obligors . The Seller will (or will cause the
Servicer to) (i) instruct all Obligors to submit all payments on
the Pool Receivables either (A) to one of the Lockboxes maintained
at the Lockbox Banks for deposit in a Lockbox Account or (B)
directly to one of the Lockbox Accounts and (ii) instruct all
Persons receiving Home Sale Proceeds to deposit such Home Sale
Proceeds in one of the Lockboxes or Lockbox Accounts within two
Business Days after such receipt, except to the extent a longer
escrow period is required under applicable law, in which case such
Home Sale Proceeds will be deposited into one of the Lockboxes or
Lockbox Accounts within one Business Day after the expiration of
such period.
(g)
Segregation of Collections . The Seller will use reasonable
efforts to minimize the deposit of any funds other than Pool
Collections into any of the Lockbox Accounts and, to the extent
that any such funds are deposited into any of such Lockbox
Accounts, promptly will identify any such funds or will cause such
funds to be so identified to the Servicer, it being understood
and agreed that the Seller does not hereby assume any
affirmative duty to re-direct Obligors to remit funds to alternate
locations.
(h)
Identification of Eligible Receivables . The Seller will (or
will cause the Servicer to) (i) establish and maintain necessary
procedures for determining, no less frequently than each date on
which a Daily Seller Report is required to be delivered pursuant to
Section 3.1(a), whether each Receivable qualifies as an Eligible
Receivable, and for identifying on any such date all CMF
Receivables to be sold to ARSC on that date that are not Eligible
Receivables and (ii) will provide to the Servicer in a timely
manner information that shows whether, and to what extent, the CMF
Receivables described in such Daily Seller Report are Eligible
Receivables.
(i) Payment
of Taxes . The Seller will file (or there will be filed on its
behalf as a member of a consolidated group) all tax returns and
reports required by law to be filed by it and will pay all taxes,
assessments and governmental charges thereby shown to be owing by
it, except for any such taxes, assessments or charges (i) that are
being diligently contested in good faith by appropriate
proceedings, for which adequate reserves in accordance with GAAP
have been set aside on its books and that have not given rise to
any Liens (other than Permitted Liens) or (ii) the amount of which,
either singly or in the aggregate, would not have a Material
Adverse Effect.
(j)
Receivables Reviews . Upon reasonable prior notice, the
Seller will permit ARSC or its assignees (or other Persons
designated by ARSC from time to time) or their agents or
representatives (including without limitation certified public
accountants or other auditors), at the expense of the Seller and
during regular business hours, (i) to examine and make copies of
and abstracts from, and to conduct accounting reviews of, all CMF
Records in the possession or under the control of the Seller,
including without limitation the related Contracts, invoices and
other documents related thereto and (ii) to visit the offices and
properties of the Seller for the
purpose of examining any materials described
in the preceding clause (i) and to discuss matters relating to the
CMF Receivables or the other ARSC Purchased Assets or the
performance by the Seller of its obligations under any Transaction
Document to which it is a party with any Authorized Officers of the
Seller having knowledge of such matters or with the Seller’s
certified public accountants or other auditors; provided ,
however , that all such reviews will occur no more
frequently than twice per year (with only the first such review in
any year being at the Seller’s expense) unless (i) a Servicer
Default has occurred and is continuing or (ii) ARSC or its
successor or assignee has given advance written notice to the
Seller that it believes the composition and/or performance of the
ARSC Purchased Assets have deteriorated in a manner materially
adverse to the interests of ARSC or its assignees.
(k)
Environmental Claims . The Seller will use commercially
reasonable efforts to promptly cure and have dismissed with
prejudice to the satisfaction of ARSC any actions and any
proceedings relating to compliance with Environmental Laws relating
to any CMF Home, but only to the extent that the conditions that
gave rise to such proceedings were in existence as of the date on
which ARSC acquired the related CMF Receivable.
(l) Turnover
of Collections . If the Seller or any of its agents or
representatives at any time receives any cash, checks or other
instruments constituting Pool Collections, such recipient will
segregate and hold such payments in trust for, and in a manner
acceptable to, the Servicer and will, promptly upon receipt (and in
any event within one Business Day following receipt) remit all such
cash, checks and instruments, duly endorsed or with duly executed
instruments of transfer, to a Lockbox Account.
(m)
Performance and Compliance by Seller with CMF Home Purchase
Contracts and other Contracts . The Seller will, at its
expense, timely and fully perform and comply with, or cause to be
timely and fully performed
