RECEIVABLES PURCHASE AGREEMENT

Receivables Purchase Transfer Agreement

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APPLE RIDGE SERVICES CORPORATION | CENDANT MOBILITY FINANCIAL CORPORATION | Cendant Mobility Services Corporation

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Title: RECEIVABLES PURCHASE AGREEMENT
Governing Law: New York Date: 2/3/2005
Industry: Rental and Leasing Law Firm: Orrick Herrington Sector: Services

RECEIVABLES PURCHASE AGREEMENT, Parties: apple ridge services corporation , cendant mobility financial corporation , cendant mobility services corporation

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

TABLE OF CONTENTS

Page

ARTICLE I DEFINITIONS
ARTICLE II SALE AND PURCHASE OF ASSETS
Section 2.1 Sale and Purchase	1
Section 2.2 Purchases	2
Section 2.3 No Assumption	3
Section 2.4 No Recourse	3
Section 2.5 True Sales	3
Section 2.6 Servicing of ARSC Purchased Assets	3
Section 2.7 Financing Statements	3
ARTICLE III CALCULATION OF ARSC PURCHASE PRICE
Section 3.1 Calculation of the ARSC Purchase Price	4
ARTICLE IV PAYMENT OF ARSC PURCHASE PRICE
Section 4.1 ARSC Purchase Price Payments	4
Section 4.2 The ARSC Subordinated Note	5
Section 4.3 Seller Adjustments; Originator Adjustments	5
Section 4.4 Payments and Computations, Etc	6
ARTICLE V CONDITIONS PRECEDENT
Section 5.1 Conditions Precedent to Sales and Purchases	6
Section 5.2 Conditions Precedent to ARSC Subordinated Loans	6


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TABLE OF CONTENTS

(continued)

Page

ARTICLE VI REPRESENTATIONS AND WARRANTIES
Section 6.1 Representations and Warranties of the Seller	7
Section 6.2 Representations and Warranties of ARSC	11

ARTICLE VII GENERAL COVENANTS
Section 7.1 Affirmative Covenants of the Seller	12
Section 7.2 Reporting Requirements	15
Section 7.3 Negative Covenants of the Seller	17
Section 7.4 Affirmative Covenants of ARSC	18
ARTICLE VIII ADDITIONAL RIGHTS AND OBLIGATIONS IN RESPECT OF THE ARSC PURCHASED ASSETS
Section 8.1 Rights of ARSC	19
Section 8.2 Responsibilities of the Seller	20
Section 8.3 Further Action Evidencing Purchases	20
Section 8.4 CMF Collections; Rights of ARSC and its Assignees	21
ARTICLE IX TERMINATION
Section 9.1 ARSC Purchase Termination Events	22
Section 9.2 Purchase Termination	22


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TABLE OF CONTENTS

(continued)

Page

ARTICLE X INDEMNIFICATION; SECURITY INTEREST
Section 10.1 Indemnities by the Seller	23
Section 10.2 Security Interest	25
ARTICLE XI MISCELLANEOUS
Section 11.1 Amendments; Waivers, Etc.
Section 11.2 Notices, Etc.	26
Section 11.3 Cumulative Remedies	26
Section 11.4 Binding Effect; Assignability; Survival of Provisions	26
Section 11.5 Governing Law	26
Section 11.6 Costs, Expenses and Taxes	26
Section 11.7 Submission to Jurisdiction	27
Section 11.8 Waiver of Jury Trial	28
Section 11.9 Integration	28
Section 11.10 Captions and Cross References	28
Section 11.11 Execution in Counterparts	28
Section 11.12 Acknowledgment and Consent	28
Section 11.13 No Partnership or Joint Venture	29
Section 11.14 No Proceedings	29
Section 11.15 Severability of Provisions	29
Section 11.16 Recourse to the Seller	29
Section 11.17 Recourse to ARSC	29
Section 11.18 Confidentiality	30


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APPENDIX

APPENDIX A

Definitions

SCHEDULES

SCHEDULE 2.1	List of CMF Home Purchase Contracts
SCHEDULE 6.1(n)	Principal Place of Business and Chief Executive Office of the Seller and List of Offices Where the Seller Keeps CMF Records

EXHIBITS

EXHIBIT 2.1	Form of Notice of Additional CMF Home Purchase Contracts
EXHIBIT 4.2	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


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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


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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,


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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


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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


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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


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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


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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


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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


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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.


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(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


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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


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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;


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(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


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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 and complied with all provisions, covenants and other pro

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