EX-10.1 3 dex101.txt PURCHASE AGREEMENT EXHIBIT 10.1 EXECUTION COPY PURCHASE AGREEMENT between THE FINANCE COMPANY, Seller and TFC RECEIVABLES CORPORATION IV, Purchaser dated as of March 30, 2001 TABLE OF CONTENTS
Page ---- ARTICLE I DEFINITIONS.................................................................... 1 SECTION 1.1 General................................................................... 1 SECTION 1.2 Specific Terms............................................................ 2 SECTION 1.3 Usage of Terms............................................................ 3 SECTION 1.4 Certain References........................................................ 3 SECTION 1.5 No Recourse............................................................... 3 SECTION 1.6 Action by or Consent of Noteholders and Certificateholders................ 3 SECTION 1.7 Material Adverse Effect................................................... 4 ARTICLE II CONVEYANCE OF THE RECEIVABLES AND THE OTHER CONVEYED PROPERTY.................. 4 SECTION 2.1 Conveyance of the Receivables and the Other Conveyed Property............. 4 ARTICLE III REPRESENTATIONS AND WARRANTIES................................................. 6 SECTION 3.1 Representations and Warranties of Seller.................................. 6 SECTION 3.2 Representations and Warranties of Purchaser............................... 9 ARTICLE IV COVENANTS OF SELLER............................................................ 12 SECTION 4.1 Protection of Title of Purchaser.......................................... 12 SECTION 4.2 Other Liens or Interests.................................................. 13 SECTION 4.3 Costs and Expenses........................................................ 13 SECTION 4.4 Indemnification........................................................... 14 ARTICLE V REPURCHASES.................................................................... 16 SECTION 5.1 Repurchase of Receivables Upon Breach of Warranty......................... 16 SECTION 5.2 Reassignment of Purchased Receivables..................................... 16 SECTION 5.3 Waivers................................................................... 17 ARTICLE VI MISCELLANEOUS.................................................................. 17 SECTION 6.1 Liability of Seller....................................................... 17 SECTION 6.2 Merger or Consolidation of Seller or Purchaser............................ 17 SECTION 6.3 Limitation on Liability of Seller and Others.............................. 18 SECTION 6.4 Seller May Own Notes or Certificates...................................... 18 SECTION 6.5 Amendment................................................................. 19
i SECTION 6.6 Notices................................................................... 20 SECTION 6.7 Merger and Integration.................................................... 20 SECTION 6.8 Severability of Provisions................................................ 20 SECTION 6.9 Intention of the Parties.................................................. 20 SECTION 6.10 Governing Law............................................................. 21 SECTION 6.11 Counterparts.............................................................. 21 SECTION 6.12 Conveyance of the Receivables and the Other Conveyed Property to the Issuer.................................................................... 21 SECTION 6.13 Nonpetition Covenant...................................................... 21 SECTION 6.14 Third Party Beneficiary................................................... 21 SECTION 6.15 Limitation of Liability................................................... 22
SCHEDULES SCHEDULE A Schedule of Receivables SCHEDULE B Representations and Warranties of Seller SCHEDULE C The Finance Company Charge-Off Policy SCHEDULE D Assignment ii PURCHASE AGREEMENT ------------------ THIS PURCHASE AGREEMENT, dated as of March 30, 2001, executed between TFC Receivables Corporation IV, a Delaware corporation, as purchaser ("Purchaser"), and The Finance Company, a Virginia corporation, as seller ("Seller"). W I T N E S S E T H: ------------------- WHEREAS, Seller and Purchaser are entering into this Agreement to provide for, among other things, the acquisition by Purchaser of all of the right, title and interests of Seller in and to the Receivables and the Other Conveyed Property on the Closing Date; WHEREAS, as a precondition to the effectiveness of this Agreement, Seller, the Trustee, the Trust Collateral Agent, the Back-up Servicer, the Successor Servicer, the Insurer and the Issuer will enter into the Sale and Servicing Agreement to provide for the servicing of the Receivables; WHEREAS, Purchaser is and will be conveying to the Issuer, among other things, all of Purchaser's rights derived under this Agreement and the Sale and Servicing Agreement, and Seller and Purchaser each agree that all covenants, representations, warranties and agreements made by it in this Agreement with respect to itself or the Receivables shall also be for the benefit of the Trustee, on behalf of the Noteholders, and the Insurer; WHEREAS, in connection with the issuance of the Notes, Seller will transfer the Receivables or other consideration to Purchaser in exchange for such Notes; WHEREAS, the transfer will be effected by this Agreement and an Assignment between Seller and Purchaser, and the list of Receivables so conveyed will be listed on Schedule A attached hereto; WHEREAS, Purchaser has agreed to purchase from Seller, and Seller, pursuant to this Agreement, is transferring to Purchaser the Receivables and Other Conveyed Property; NOW, THEREFORE, in consideration of the premises and the mutual agreements hereinafter contained, and for other good and valuable consideration, the receipt of which is acknowledged, Purchaser and Seller, intending to be legally bound, hereby agree as follows: ARTICLE I DEFINITIONS SECTION 1.1 General. Capitalized terms used herein without ------- definition shall have the respective meanings assigned to such terms in the Sale and Servicing Agreement dated as of March 30, 2001, by and among Asset Guaranty Insurance Company, as Insurer, The Finance Company, in its capacity as Servicer, TFC Automobile Receivables Trust 2001-1, as Issuer, TFC Receivables Corporation IV, as Seller, Wells Fargo Bank Minnesota, National Association, as Back-up Servicer and Trust Collateral Agent and Wells Fargo Financial America, Inc., as Successor Servicer. SECTION 1.2 Specific Terms. Whenever used in this Agreement, the -------------- following words and phrases, unless the context otherwise requires, shall have the following meanings: "Agreement" means this Purchase Agreement and all amendments hereof and supplements hereto. "Closing Date" means April 2, 2001. "Contracts Purchase Price" shall mean $80,000,002. "Indenture Trustee" means Wells Fargo Bank Minnesota, National Association, and any successor Indenture Trustee appointed and acting pursuant to the Indenture. "Issuer" means TFC Automobile Receivables Trust 2001-1. "Other Conveyed Property" means all money, instruments, rights and other property that are subject or intended to be subject to the lien and security interest of the Indenture (including all property and interests granted to the Trust Collateral Agent), including all proceeds thereof, other than the Receivables. "Owner Trustee" means Wilmington Trust Company, not in its individual capacity but solely as Owner Trustee appointed and acting pursuant to the Trust Agreement. "Receivables" means the Receivables listed on the Schedule of Receivables attached hereto as Schedule A. "Related Documents" means the Notes, the Certificates, the Custodian Agreement (if any), the Sale and Servicing Agreement, the Indenture, the Trust Agreement, the Note Policy, Servicer Termination Side Letter, the Insurance Agreement, the Indemnification Agreement, the Note Purchase Agreement, the Standby Processing Agreement, and the Premium Letter. The Related Documents to be executed by any party are referred to herein as "such party's Related Documents" or "its Related Documents" or by a similar expression. "Repurchase Event" means the occurrence of a breach of any of Seller's representations and warranties hereunder or any other event which requires the repurchase of a Receivable by Seller or Purchaser under the Sale and Servicing Agreement. "Sale and Servicing Agreement" means the Sale and Servicing Agreement referred to in Section 1.1 hereof. 2 "Schedule of Receivables" means the schedule of Receivables sold and transferred pursuant to this Agreement which is attached hereto as Schedule A. "Schedule of Representations" means the Schedule of Representations and Warranties attached hereto as Schedule B. "Security Majority" means a majority by principal amount of the Noteholders so long as the Notes are outstanding and a majority by principal amount of the Certificateholders thereafter. "Trust Collateral Agent" means Wells Fargo Bank Minnesota, National Association, as trust collateral agent and any successor trust collateral agent appointed and acting pursuant to the Sale and Servicing Agreement. SECTION 1.3 Usage of Terms. With respect to all terms used in this -------------- Agreement, the singular includes the plural and the plural includes the singular; words importing any gender include the other gender; references to "writing" include printing, typing, lithography, and other means of reproducing words in a visible form; references to agreements and other contractual instruments include all subsequent amendments thereto or changes therein entered into in accordance with their respective terms and not prohibited by this Agreement or the Sale and Servicing Agreement; references to Persons include their permitted successors and assigns; any form of the word "include" shall be deemed to be followed by the words "without limitation"; "the words "herein", "hereof" and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision; and Article, Section, Schedule and Exhibit references, unless otherwise specified, refer to Articles and Sections of and Schedules and Exhibits to this Agreement. SECTION 1.4 Certain References. All references to the Principal ------------------ Balance of a Receivable as of any date of determination shall refer to the close of business on such day, or as of the first day of a Monthly Period shall refer to the opening of business on such day. All references to the last day of a Monthly Period shall refer to the close of business on such day. SECTION 1.5 No Recourse. Without limiting the obligations of Seller ----------- hereunder, no recourse may be taken, directly or indirectly, under this Agreement or any certificate or other writing delivered in connection herewith or therewith, against any stockholder, officer or director, as such, of Seller, or of any predecessor or successor of Seller. SECTION 1.6 Action by or Consent of Noteholders and --------------------------------------- Certificateholders. Whenever any provision of this Agreement refers to action ------------------ to be taken, or consented to, by Noteholders or Certificateholders, such provision shall be deemed to refer to the Certificateholder or Noteholder, as the case may be, of record as of the Record Date immediately preceding the date on which such action is to be taken, or consent given, by Noteholders or Certificateholders. Solely for the purposes of any action to be taken, or consented to, by Noteholders or Certificateholders, any Note or 3 Certificate registered in the name of Seller or any Affiliate thereof shall be deemed not to be outstanding; provided, however, that, solely for the purpose of determining whether the Indenture Trustee or the Trust Collateral Agent is entitled to rely upon any such action or consent, only Notes or Certificates which the Owner Trustee, the Indenture Trustee or the Trust Collateral Agent, respectively, knows to be so owned shall be so disregarded. SECTION 1.7 Material Adverse Effect. Whenever used in the Basic ----------------------- Documents, "Material Adverse Effect" or "material adverse effect" means (i) when used with respect to any action, event, fact or other matter or thing, means that such action, event, fact or other matter or thing will not, individually or in the aggregate, have a material adverse effect on (a) the Trust, the Trust Property or Collateral, (b) the existence, perfection or priority of the security interests of the Trust Collateral Agent in the Collateral, (c) the ability of the Trust Collateral Agent on behalf of the Noteholders to collect on, liquidate, or foreclose against, the Collateral in accordance with the Indenture, (d) the validity, enforceability, or the performance of any Person's obligations under, or with respect to, the Basic Documents, or the validity, enforceability, or performance of any Person's obligations under or with respect to, or the payment of, the Notes, (e) the transactions contemplated by the Basic Documents, (f) the business, operations, condition (financial or otherwise) or prospects of TFC, Purchaser or the Issuer, (g) or the interests, right and/or remedies hereunder, or otherwise with respect to the Collateral, or the Trust Collateral Agent, the Trustee, the Insurer or any of the Noteholders (which determination shall be made, in each case, without giving effect to the existence of the Note Policy) and (ii) when used in relation to or in connection with any Person also means that such action, event, fact or other matter or thing shall not, individually or in the aggregate, have a material adverse effect on the business, operations, condition (financial otherwise) or prospects of such Person. ARTICLE II CONVEYANCE OF THE RECEIVABLES AND THE OTHER CONVEYED PROPERTY SECTION 2.1 Conveyance of the Receivables and the Other Conveyed ---------------------------------------------------- Property. -------- (a) Subject to the terms and conditions of this Agreement, Seller hereby sells, transfers, assigns, and otherwise conveys to Purchaser without recourse (but without limitation of its obligations in this Agreement), and Purchaser hereby purchases, all right, title and interest of Seller in and to: (i) the Receivables and all monies paid or payable thereon on or after the Cutoff Date (including amounts due on or before the Cutoff Date but received by Seller on or after the Cutoff Date); 4 (ii) the security interests in the Financed Vehicles granted by Obligors pursuant to the Receivables and any other interest of Seller in such Financed Vehicles; (iii) any proceeds and the right to receive proceeds with respect to the Receivables from claims on any physical damage, credit life or disability insurance policies, if any, covering Financed Vehicles or Obligors, and any proceeds from the liquidation of the Receivables; (iv) all rights of Seller against Dealers pursuant to Dealer Agreements or Dealer Assignments; (v) all rights under any Service Contracts on the related Financed Vehicles; (vi) the related Receivables Files and any and all other documents that Seller keeps on file in accordance with its customary procedures relating to the Receivables, the Obligors or the Financed Vehicles; (vii) property (including the right to receive future Net Liquidation Proceeds) that secures a Receivable and that has been acquired by or on behalf of Purchaser pursuant to liquidation of such Receivable; (viii) the rights under the Standby Processing Agreement; (ix) all of the Other Conveyed Property; and (x) the proceeds of any and all of the foregoing. It is the intention of Seller and Purchaser that the transfer and assignment contemplated by this Agreement shall constitute a valid and enforceable sale of the Receivables and the Other Conveyed Property from Seller to Purchaser, conveying good title thereto, free and clear of any encumbrances or liens, and the beneficial interest in and title to the Receivables and the Other Conveyed Property shall not be part of Seller's estate in the event of the filing of a bankruptcy petition by or against Seller under any bankruptcy or similar law, and Seller delivers to Purchaser an assignment in the form attached hereto as Schedule D with respect to the Receivables to be sold (the "Assignment"). However, in the event that, notwithstanding the intent of the parties hereto, the Receivables are held to be property of Seller's estate, or if for any reason this Agreement is held or deemed to create a security interest in the Receivables, then (a) this agreement and the Assignment shall also be deemed to be a security agreement within the meaning of Article 1, Article 8 and Article 9 of the Uniform Commercial Code as in effect in the State of New York and (b) the transfers of the Receivables provided for in this Agreement and the Assignment shall be deemed to be a grant by Seller to Purchaser of, and Seller hereby grants to Purchaser, a security interest in all of Seller's rights, title and interest in and to the Receivables. Seller hereby represents and warrants that all Receivables transferred, assigned to and originated on behalf of Purchaser hereunder shall be eligible contracts and that all assets conformed with the Schedule of Representations and that all the Receivables acquired by Purchaser do and shall conform with all of the requirements 5 hereof. Seller hereby acknowledges that its transfer and assignment of the Receivables to Purchaser is absolute and irrevocable, without reservation or retention of any interests whatsoever by Seller. To the extent that Seller shall retain any files or documentation, written or electronic (collectively, "documents") pertaining to the Receivables, it shall hold such documents in trust for the benefit of the Indenture Trustee as the owner thereof. The possession of any such documents pertaining to the Receivables by Seller (or any affiliate thereof other than Purchaser) is at the will of Purchaser and for the sole purpose of servicing such Receivables, and such retention and possession by Seller (or any affiliate thereof other than Purchaser) is in a custodial capacity in its role as Servicer under the Sale and Servicing Agreement and the Related Documents. The documents retained by Seller relating to the Receivables shall be segregated from the books and records of Seller and shall be marked appropriately to reflect clearly the transfer by Seller of the Receivables to Purchaser. (b) Simultaneously with the conveyance of the Receivables and the Other Conveyed Property to Purchaser, Purchaser shall pay or cause to be paid to or upon the order of Seller the Contracts Purchase Price. An amount equal to approximately 75.3% of the Contracts Purchase Price shall be paid to Seller in cash. The remaining approximately 24.7% of the Contracts Purchase Price shall be deemed paid and returned to Purchaser and be considered a contribution to capital. The portion of the Contracts Purchase Price to be paid in cash shall be by wire transfer of immediately available funds. ARTICLE III REPRESENTATIONS AND WARRANTIES SECTION 3.1 Representations and Warranties of Seller. Seller ---------------------------------------- makes the following representations and warranties as of the date hereof on which Purchaser relies in purchasing the Receivables and the Other Conveyed Property and in transferring the Receivables and the Other Conveyed Property to the Issuer under the Sale and Servicing Agreement and on which the Insurer will rely in issuing the Note Policy, on which the Noteholders rely in purchasing the Notes, and on which the Indenture Trustee relies in entering into the Related Documents. Such representations are made as of the execution and delivery of this Agreement but shall survive the sale, transfer and assignment of the Receivables and the Other Conveyed Property hereunder, and the sale, transfer and assignment thereof by Purchaser to the Issuer under the Sale and Servicing Agreement. Seller and Purchaser agree that Purchaser will assign to Issuer all Purchaser's rights under this Agreement and that the Trust Collateral Agent will thereafter be entitled to enforce this Agreement against Seller in the Trust Collateral Agent's own name on behalf of the Noteholders. (i) Schedule of Representations. The representations and warranties --------------------------- set forth on the Schedule of Representations with respect to the Receivables are true and correct as of the date hereof. 6 (ii) Organization and Good Standing. Seller has been duly organized ------------------------------ and is validly existing as a corporation in good standing under the laws of the Commonwealth of Virginia, with power and authority to own its properties and to conduct its business as such properties are currently owned and such business is currently conducted, or is proposed to be conducted, and had at all relevant times, and now has, power, authority and legal right to acquire, own and sell the Receivables and the Other Conveyed Property to be transferred to Purchaser. (iii) Due Qualification. Seller is duly qualified to do business ----------------- as a foreign corporation and is in good standing, and has obtained all necessary licenses and approvals in all jurisdictions in which the ownership or lease of its property or the conduct of its business, including without limitation, the acquisition and sale of the Receivables, requires such qualification. (iv) Power and Authority. Seller has the power and authority to ------------------- execute and deliver this Agreement and its Related Documents and to perform its obligations under this Agreement and its Related Documents; Seller has full power and authority to sell and assign the Receivables and the Other Conveyed Property to be sold and assigned to and deposited with Purchaser hereunder and has duly authorized such sale and assignment to Purchaser by all necessary corporate action; and the execution, delivery and performance of this Agreement and Seller's Related Documents have been duly authorized by Seller by all necessary corporate action. (v) Valid Sale; Binding Obligations. This Agreement and Seller's ------------------------------- Related Documents have been duly executed and delivered, shall effect a valid sale, transfer and assignment of the Receivables and the Other Conveyed Property to Purchaser, enforceable against Seller and creditors of and purchasers from Seller and as a result of such sale, transfer and assignment, Purchaser shall have a valid, first priority perfected ownership interest in such Receivables and the Other Conveyed Property. This Agreement and Seller's Related Documents constitute legal, valid and binding obligations of Seller enforceable in accordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement of creditors' rights generally and by equitable limitations on the availability of specific remedies, regardless of whether such enforceability is considered in a proceeding in equity or at law. (vi) No Violation. The consummation of the transactions ------------ contemplated by this Agreement and the Related Documents and the fulfillment of the terms of this Agreement and the Related Documents shall not conflict with, result in any breach of any of the terms and provisions of or constitute (with or without notice, lapse of time or both) a default under, the articles of incorporation or bylaws of Seller, or any indenture, agreement, mortgage, deed of trust or other instrument to which Seller is a party or by which it is bound, or result in the creation or imposition of any Lien upon any of its properties pursuant to the terms of any such indenture, agreement, mortgage, deed of trust or other instrument (other than 7 this Agreement, the Sale and Servicing Agreement and the Indenture and any instruments, certificates and other documents executed pursuant to the provisions thereof), or violate any law, order, rule or regulation applicable to Seller of any court or of any federal or state regulatory body, administrative agency or other governmental instrumentality having jurisdiction over Seller or any of its properties. (vii) No Proceedings. There are no proceedings or investigations -------------- pending or, to Seller's knowledge, after due inquiry, threatened against Seller, before any court, regulatory body, administrative agency or other tribunal or governmental instrumentality having jurisdiction over Seller or its properties (i) asserting the invalidity of this Agreement or any of the Related Documents, (ii) seeking to prevent the issuance of the Notes or the consummation of any of the transactions contemplated by this Agreement or any of the Related Documents, (iii) seeking any determination or ruling that might materially and adversely affect the business, the operations, the condition (financial or otherwise) or the prospects of Seller or affect the performance by Seller of its obligations under, or the validity or enforceability of, this Agreement or any of the Related Documents, (iv) seeking to affect adversely the federal income tax or other federal, state or local tax attributes of, or seeking to impose any excise, franchise, transfer or similar tax upon, the transfer and acquisition of the Receivables and the Other Conveyed Property hereunder or under the Sale and Servicing Agreement or (v) that have a material adverse effect on the Receivables. (viii) Chief Executive Office. The chief executive office of Seller ---------------------- Seller is located at 5425 Robin Hood Road, Suite 101B, Norfolk, Virginia 23513. (ix) No Consents. Seller is not required to obtain the consent of ----------- any other party or any consent, license, approval or authorization, or registration or declaration with, any governmental authority, bureau or agency in connection with the execution, delivery, performance, validity or enforceability of this Agreement which has not already been obtained. (x) Approvals. All approvals, authorizations, consents, order or --------- other actions of any person, corporation or other organization, or of any court, governmental agency or body or official, required in connection with the execution and delivery by Seller of this Agreement and the consummation of the transactions contemplated hereby or will be taken or obtained on or prior to the Closing Date. (xi) Name. The legal name of Seller is as set forth in this ---- Agreement, Seller has not changed its name during the six years prior to the Closing Date and does not have any trade names, fictitious names, assumed names or "doing business" names. (xii) Solvency. Seller is solvent and will not become insolvent -------- after giving effect to the transactions contemplated by the Basic Documents. Seller is paying its debts as they become due and, after giving effect to the transactions 8 contemplated by the Basic Documents, will have adequate capital to conduct its business. (xiii) Pension Plan. All pension or profit sharing plans of Seller ------------ have been fully funded in accordance with applicable obligations. (xiv) Substantive Consolidation. Seller, in its individual capacity ------------------------- and as Servicer confirms that the statement contained under "assumptions of fact" in the opinion of Weil, Gotshal & Manges LLP regarding substantive consolidation matters delivered to Seller on the Closing Date are true and correct with respect to itself, and that Seller will comply with any covenants or obligations assumed to be complied with by it therein as if such covenants and obligations were set forth herein. (xv) Sole Stockholder. Seller is the sole stockholder of Purchaser, ---------------- and all of the shares of stock have been fully paid for and are owned of record, free and clear of all mortgages, assignments, pledges and security interests. SECTION 3.2 Representations and Warranties of Purchaser. ------------------------------------------- Purchaser makes the following representations and warranties, on which Seller relies in selling, assigning, transferring and conveying the Receivables and the Other Conveyed Property to Purchaser hereunder, on which the Noteholders rely in purchasing the Notes, and on which the Indenture Trustee relies in entering into the Related Documents. Such representations are made as of the execution and delivery of this Agreement, but shall survive the sale, transfer and assignment of the Receivables and the Other Conveyed Property hereunder and the sale, transfer and assignment thereof by Purchaser to the Issuer under the Sale and Servicing Agreement. (i) Organization and Good Standing. Purchaser has been duly ------------------------------ organized and is validly existing and in good standing as a corporation under the laws of the State of Delaware, with the power and authority to own its properties and to conduct its business as such properties are currently owned and such business is currently conducted, and had at all relevant times, and has, full power, authority and legal right to acquire and own the Receivables and the Other Conveyed Property, and to transfer the Receivables and the Other Conveyed Property to the Issuer pursuant to the Sale and Servicing Agreement. (ii) Due Qualification. Purchaser is duly qualified to do business ----------------- as a foreign corporation in good standing, and has obtained all necessary licenses and approvals in all jurisdictions where the failure to do so would materially and adversely affect Purchaser's ability to acquire the Receivables or the Other Conveyed Property, and to transfer the Receivables and the Other Conveyed Property to the Issuer pursuant to the Sale and Servicing Agreement, or the validity or enforceability of the Receivables and the Other Conveyed Property or to perform Purchaser's obligations hereunder and under Purchaser's Related Documents. 9 (iii) Power and Authority. Purchaser has the power, authority and ------------------- legal right to execute and deliver this Agreement and to carry out the terms hereof and to acquire the Receivables and the Other Conveyed Property hereunder; and the execution, delivery and performance of this Agreement and all of the documents required pursuant hereto have been duly authorized by Purchaser by all necessary action. (iv) No Consent Required. Purchaser is not required to obtain the ------------------- consent of any other Person, or any consent, license, approval or authorization or registration or declaration with, any governmental authority, bureau or agency in connection with the execution, delivery or performance of this Agreement and the Related Documents, except for such as have been obtained, effected or made. (v) Binding Obligation. This Agreement constitutes a legal, valid ------------------ and binding obligation of Purchaser, enforceable against Purchaser in accordance with its terms, subject, as to enforceability, to applicable bankruptcy, insolvency, reorganization, conservatorship, receivership, liquidation and other similar laws and to general equitable principles. (vi) No Violation. The execution, delivery and performance by ------------ Purchaser of this Agreement, the consummation of the transactions contemplated by this Agreement and the Related Documents and the fulfillment of the terms of this Agreement and the Related Documents do not and will not conflict with, result in any breach of any of the terms and provisions of, or constitute (with or without notice or lapse of time) a default under, the certificate of incorporation or bylaws of Purchaser, or conflict with or breach any of the terms or provisions of, or constitute (with or without notice or lapse of time) a default under, any indenture, agreement, mortgage, deed of trust or other instrument to which Purchaser is a party or by which Purchaser is bound or to which any of its properties are subject, or result in the creation or imposition of any Lien upon any of its properties pursuant to the terms of any such indenture, agreement, mortgage, deed of trust or other instrument (other than the Sale and Servicing Agreement, and the Indenture and any instruments, certificates and other documents executed pursuant to the provisions thereof), or violate any law, order, rule or regulation, applicable to Purchaser or its properties, of any federal or state regulatory body, any court, administrative agency, or other governmental instrumentality having jurisdiction over Purchaser or any of its properties. (vii) No Proceedings. There are no proceedings or investigations -------------- pending, or, to the knowledge of Purchaser, threatened against Purchaser, before any court, regulatory body, administrative agency, or other tribunal or governmental instrumentality having jurisdiction over Purchaser or its properties: (i) asserting the invalidity of this Agreement or any of the Related Documents, (ii) seeking to prevent the consummation of any of the transactions contemplated by this Agreement or any of the Related Documents, (iii) seeking any determination or ruling that might materially and adversely affect the business, the operations, the condition (financial or otherwise) or the prospects of Purchaser or the 10 performance by Purchaser of its obligations under, or the validity or enforceability of, this Agreement or any of the Related Documents or (iv) that may adversely affect the federal or state income tax attributes of, or seeking to impose any excise, franchise, transfer or similar tax upon, the transfer and acquisition of the Receivables and the Other Conveyed Property hereunder or the transfer of the Receivables and the Other Conveyed Property to the Issuer pursuant to the Sale and Servicing Agreement. (viii) Approvals. All approvals, authorizations, consents, licenses, --------- orders or other actions of any person, corporation or other organization, or of any court, governmental agency or body or official, required in connection with the execution and delivery by Purchaser of this Agreement and the consummation of the transactions contemplated hereby, including, without limitation, the purchase of the Receivables, has been taken, or will be taken or obtained on or prior to the Closing Date. (ix) Since the formation of Purchaser (a) Purchaser has incurred no debt other than trade payables and expense accruals in connection with its operations in the normal course of business; (b) Purchaser has maintained its books and records separate from the books and records of any other entity, has maintained separate bank accounts and no funds of Purchaser have been commingled with funds of any other entity; (c) Purchaser has kept in full effect its existence, rights and franchises as a corporation under the laws of the State of Delaware, and has obtained and preserved its qualification to do business as a foreign corporation in each jurisdiction in which such qualification is or shall be necessary to protect the validity and enforceability of the Receivables; (d) Purchaser does not own any subsidiary and has not loaned or advanced any moneys to, or made an investment in, any Person; (e) Purchaser has not made any capital expenditures; (f) Purchaser has not guaranteed, except with respect to its obligation to repurchase or substitute Receivables pursuant to the terms of this Agreement and the Indenture (directly or indirectly), endorsed or is otherwise contingently liable (directly or indirectly) for the obligations of, or owned or purchased any stock, obligations or securities of or any other interest in, or made any capital contribution to, any Person; and (g) Purchaser has not engaged in any other action that bears on whether the separate legal identity of Purchaser will be respected, including without limitation (l) has not held itself out as being liable for the debts of any of any other party, (2) has not acted other than in its corporate name and through its duly authorized officers or agents, and (3) has not created, incurred, assumed, or in any manner become liable in respect of any indebtedness except trade payables and expense accruals incurred in the ordinary course of business and which are incidental to its business purpose. In the event of any breach of a representation and warranty made by Purchaser hereunder, Seller covenants and agrees that it will not take any action to pursue any remedy that it may have hereunder, in law, in equity or otherwise, until a year and a day have passed since the date on which all Notes, Certificates, pass-through certificates or other similar securities issued by Purchaser, or a trust or similar vehicle formed by Purchaser, have 11 been paid in full. Seller and Purchaser agree that damages will not be an adequate remedy for such breach and that this covenant may be specifically enforced by Purchaser, Issuer or by the Indenture Trustee on behalf of the Noteholders and Owner Trustee on behalf of the Certificateholders. ARTICLE IV COVENANTS OF SELLER ------------------- SECTION 4.1 Protection of Title of Purchaser. -------------------------------- (a) At or prior to the Closing Date, Seller shall have filed or caused to be filed a UCC-1 financing statement, executed by Seller as seller or debtor, naming Purchaser as purchaser or secured party and describing the Receivables and the Other Conveyed Property being sold by it to Purchaser as collateral, with the office of the Secretary of State of the Commonwealth of Virginia, the office of the Clerk of the City of Norfolk, Virginia and in such other locations as Purchaser shall have required and as shall be necessary to perfect the security interest of Purchaser in the collateral. From time to time thereafter, Seller shall execute and file such additional financing statements and cause to be executed and filed such continuation statements, all in such manner and in such places as may be required by law fully to preserve, maintain and protect the interest of Purchaser under this Agreement, of the Issuer under the Sale and Servicing Agreement and of the Trust Collateral Agent under the Indenture in the Receivables and the Other Conveyed Property and in the proceeds thereof. Seller shall deliver (or cause to be delivered) to Purchaser, the Trust Collateral Agent and the Insurer file-stamped copies of, or filing receipts for, any document filed as provided above, as soon as available following such filing. In the event that Seller fails to perform its obligations under this subsection, Purchaser, Issuer or the Trust Collateral Agent may do so, at the expense of Seller. (b) Seller shall not change its name, identity, or corporate structure in any manner that would, could or might make any financing statement or continuation statement filed by Seller (or by Purchaser, Issuer or the Trust Collateral Agent on behalf of Seller) in accordance with paragraph (a) above misleading within the meaning of (S) 9-402(7) of the UCC, unless it shall have given Purchaser, Issuer and the Trust Collateral Agent at least 60 days' prior written notice thereof, and shall have provided evidence of appropriate amendments to all previously filed financing statements and continuation statements acceptable to the Controlling Party. (c) Seller shall give Purchaser, the Issuer, the Insurer (so long as an Insurer Default shall not have occurred and be continuing) and the Trust Collateral Agent at least 60 days' prior written notice of any relocation of its principal place of business or chief executive office if, as a result of such relocation, the applicable provisions of the UCC would require the filing of any amendment of any previously filed financing or continuation statement or of any new financing statement and Seller shall provide evidence of appropriate filings required by the UCC acceptable to the Controlling Party. Seller shall at all times maintain each office from which it services Receivables and its 12 principal place of business and chief executive office within the United States of America. (d) Prior to the Closing Date, Seller has maintained accounts and records as to each Receivable accurately and in sufficient detail to permit (i) the reader thereof to know at any time as of or prior to the Closing Date the status of such Receivable, including payments and recoveries made and payments owing (and the nature of each) and (ii) reconciliation between payments or recoveries on (or with respect to) each Receivable and the Principal Balance as of the Closing Date. Seller shall maintain its computer systems so that, from and after the time of sale under this Agreement of the Receivables to Purchaser, and the conveyance of the Receivables by Purchaser to the Issuer, Seller's master computer records (including archives) that shall refer to a Receivable indicate clearly that such Receivable has been sold to Purchaser and has been conveyed by Purchaser to the Issuer. Indication of the Issuer's ownership of a Receivable shall be deleted from or modified on Seller's computer systems when, and only when, the Receivable shall become a Purchased Receivable or shall have been paid in full. (e) If at any time Seller shall propose to sell, grant a security interest in, or otherwise transfer any interest in any motor vehicle receivables to any prospective purchaser, lender or other transferee, Seller shall give to such prospective purchaser, lender, or other transferee computer tapes, records, or print-outs (including any restored from archives) that, if they shall refer in any manner whatsoever to any Receivable (other than a Purchased Receivable), shall indicate clearly that such Receivable has been sold to Purchaser, sold by Purchaser to Issuer, and is owned by the Issuer. SECTION 4.2 Other Liens or Interests. (a)Except for the ------------------------ conveyances hereunder, Seller will not sell, pledge, assign or transfer to any other Person, or grant, create, incur, assume or suffer to exist any Lien on the Receivables or the Other Conveyed Property or any interest therein, and Seller shall defend the right, title, and interest of Purchaser and the Issuer in and to the Receivables and the Other Conveyed Property against all claims of third parties claiming through or under Seller. Seller shall notify Purchaser, the Trustee and the Insurer promptly after becoming aware of any Lien or any Receivable. (b) Seller will perform the transactions contemplated by this Agreement in a manner that is consistent with Purchaser's ownership interest in the Receivables and Seller will respond to all third party inquiries confirming the transfer of the Receivables and the Other Conveyed Property to Purchaser. (c) Seller will not make any material amendments to its Charge- Off Policy without obtaining the prior written consent of the Controlling Party and giving prior written notice of such amendment to the Rating Agency. SECTION 4.3 Costs and Expenses. Seller shall pay all ------------------ reasonable costs and disbursements in connection with the performance of its obligations hereunder and under its Related Documents. 13 SECTION 4.4 Indemnification. --------------- (a) Seller shall defend, indemnify and hold harmless Purchaser, the Issuer, the Trust Collateral Agent, the Indenture Trustee, the Insurer, the Owner Trustee, the Noteholders and the Certificateholders from and against any and all costs, expenses, losses, damages, claims, and liabilities, arising out of or resulting from any breach of any of Seller's representations and warranties contained herein. (b) Seller shall defend, indemnify and hold harmless Purchaser, the Insurer, the Issuer, the Trust Collateral Agent, the Indenture Trustee, the Owner Trustee, the Noteholders and the Certificateholders from and against any and all costs, expenses, losses, damages, claims, and liabilities, arising out of or resulting from the use, ownership or operation by Seller or any affiliate thereof of a Financed Vehicle. (c) Seller shall defend, indemnify and hold harmless Purchaser, the Insurer, the Issuer, the Trust Collateral Agent, the Indenture Trustee, the Owner Trustee, the Noteholders and the Certificateholders against any and all costs, expenses, losses, damages, claims and liabilities arising out of or resulting from any action taken, or failed to be taken, by it in respect of any portion of the Receivables other than in accordance with this Agreement or the Sale and Servicing Agreement. (d) Seller agrees to pay, and shall defend, indemnify and hold harmless Purchaser, the Issuer, the Trust Collateral Agent, the Insurer, the Indenture Trustee, the Owner Trustee, the Noteholders and the Certificateholders from and against any taxes that may at any time be asserted against Purchaser, the Issuer, the Trust Collateral Agent, the Indenture Trustee, the Owner Trustee, the Noteholders and the Certificateholders with respect to the transactions contemplated in this Agreement, including, without limitation, any sales, gross receipts, general corporation, tangible or intangible personal property, privilege, or license taxes (but not including any taxes asserted with respect to, and as of the date of, the sale, transfer and assignment of the Receivables and the Other Conveyed Property to Purchaser and by Purchaser to the Issuer or the issuance and original sale of the Notes or the Certificates, or asserted with respect to ownership of the Receivables and Other Conveyed Property which shall be indemnified by Seller pursuant to clause (e) below, or federal, state or other income taxes, arising out of distributions on the Notes or the Certificates or transfer taxes arising in connection with the transfer of the Notes or the Certificates) and costs and expenses in defending against the same, arising by reason of the acts to be performed by Seller under this Agreement or imposed against such Persons. (e) Seller agrees to pay, and to indemnify, defend and hold harmless Purchaser, the Issuer, the Trust Collateral Agent, the Indenture Trustee, the Insurer, the Owner Trustee, the Noteholders and the Certificateholders from, any taxes which may at any time be asserted against such Persons with respect to, and as of the date of, the conveyance or ownership of the Receivables or the Other Conveyed Property hereunder and the conveyance or ownership of the Receivables and the Other Conveyed Property under the Sale and Servicing Agreement or the issuance and original sale of the Notes or 14 the Certificates, including, without limitation, any sales, gross receipts, personal property, tangible or intangible personal property, privilege or license taxes (but not including any federal or other income taxes, including franchise taxes, arising out of the issuance and ownership of the Notes or the transactions contemplated hereby or transfer taxes arising in connection with the transfer of the Notes or the Certificates) and costs and expenses in defending against the same, arising by reason of the acts to be performed by Seller under this Agreement or imposed against such Persons. (f) Seller shall defend, indemnify, and hold harmless Purchaser, the Insurer, the Issuer, the Trust Collateral Agent, the Indenture Trustee, the Owner Trustee, the Noteholders and the Certificateholders from and against any and all costs, expenses, losses, claims, damages, and liabilities to the extent that such cost, expense, loss, claim, damage, or liability arose out of, or was imposed upon any of such Persons through the negligence, willful misfeasance, or bad faith of Seller in the performance of its duties under this Agreement or by reason of reckless disregard of Seller's obligations and duties under this Agreement. (g) Seller shall indemnify, defend and hold harmless Purchaser, the Insurer, the Issuer, the Trust Collateral Agent, the Indenture Trustee, the Owner Trustee, the Noteholders and the Certificateholders from and against any and all costs, claims, damages and any loss, liability or expense incurred by reason of the violation by Seller of federal or state securities laws in connection with the registration or the sale of the Notes or the Certificates. (h) Seller shall indemnify, defend and hold harmless Purchaser, the Insurer, the Issuer, the Trust Collateral Agent, the Indenture Trustee, the Owner Trustee, the Noteholders and the Certificateholders from and against any loss, liability or expense imposed upon, or incurred by, any of such Persons as result of the failure of any Receivable, or the sale of the related Financed Vehicle, to comply with all requirements of applicable law. (i) Seller shall defend, indemnify, and hold harmless Purchaser from and against all costs, expenses, losses, claims, damages, and liabilities arising out of or incurred in connection with the acceptance or performance of Seller's trusts and duties as Servicer under the Sale and Servicing Agreement, except to the extent that such cost, expense, loss, claim, damage, or liability shall be due to the willful misfeasance, bad faith, or negligence (except for errors in judgment) of Purchaser. Indemnification under this Section 4.4 shall include reasonable fees and expenses of counsel and expenses of litigation incurred by the Noteholders, Trust Collateral Agent, Insurer or the Trustee in connection with enforcement of this Agreement and shall survive termination of the Notes and the Certificates. The indemnity obligations hereunder shall be in addition to any obligation that Seller may otherwise have. 15 ARTICLE V REPURCHASES ----------- SECTION 5.1 Repurchase of Receivables Upon Breach of Warranty. ------------------------------------------------- Upon the occurrence of a Repurchase Event, Seller shall, unless the breach which is the subject of such Repurchase Event shall have been cured in all material respects, repurchase the Receivable relating thereto from the Issuer as promptly as possible but in no event later than by the last day of the first full calendar month following the discovery by Seller or receipt by Seller of notice of such breach and, simultaneously with the repurchase of the Receivable, Seller shall deposit the Purchase Amount in full, without deduction or offset, to the Collection Account, pursuant to Section 3.2 of the Sale and Servicing Agreement. It is understood and agreed that, except as set forth in Section 6.1 hereof, the obligation of Seller to repurchase any Receivable, as to which a breach occurred and is continuing, shall, if such obligation is fulfilled, constitute the sole remedy against Seller for such breach available pursuant to this Agreement (subject to the next paragraph of this Section 5.1) to Purchaser, the Issuer, the Insurer, the Noteholders, the Certificateholders, the Trust Collateral Agent on behalf of the Noteholders or the Owner Trustee on behalf of Certificateholders. The provisions of this Section 5.1 are intended to grant the Issuer and the Trust Collateral Agent a direct right against Seller to demand performance hereunder, and in connection therewith, Seller waives any requirement of prior demand against Purchaser with respect to such repurchase obligation. Any such repurchase shall take place in the manner specified in Section 3.2 of the Sale and Servicing Agreement. Notwithstanding any other provision of this Agreement or the Sale and Servicing Agreement to the contrary, the obligation of Seller under this Section shall not terminate upon a termination of Seller as Servicer under the Sale and Servicing Agreement and shall be performed in accordance with the terms hereof notwithstanding the failure of the Servicer or Purchaser to perform any of their respective obligations with respect to such Receivable under the Sale and Servicing Agreement. In addition to the foregoing and notwithstanding whether the related Receivable shall have been purchased by Seller, Seller shall indemnify the Issuer, the Trust Collateral Agent, the Indenture Trustee, the Owner Trustee, the Insurer, the Noteholders and the Certificateholders against all costs, expenses, losses, damages, claims and liabilities, including reasonable fees and expenses of counsel, which may be asserted against or incurred by any of them as a result of third party claims arising out of the events or facts giving rise to such Repurchase Events. SECTION 5.2 Reassignment of Purchased Receivables. Upon ------------------------------------- deposit in the Collection Account of the Purchase Amount of any Receivable repurchased by Seller under Section 5.1 hereof, Purchaser and the Issuer shall take such steps as may be reasonably requested by Seller in order to sell, assign, convey and otherwise transfer to Seller all right, title and interest of each of Purchaser and the Issuer in and to such Receivable and all security and documents and all Other Conveyed Property conveyed to Purchaser or the Issuer directly relating thereto, without recourse, representation or 16 warranty, except as to the absence of liens, charges or encumbrances created by or arising as a result of actions of Purchaser or the Issuer. Such assignment shall be a sale and assignment outright, and not for security. If, following the reassignment of a Purchased Receivable, in any enforcement suit or legal proceeding, it is held that Seller may not enforce any such Receivable on the ground that it shall not be a real party in interest or a holder entitled to enforce the Receivable, Purchaser and the Issuer shall, at the expense of Seller, take such steps as Seller deems reasonably necessary to enforce the Receivable, including bringing suit in Purchaser's or in the Issuer's name. SECTION 5.3 Waivers. No failure or delay on the part of ------- Purchaser, or the Issuer as assignee of Purchaser, in exercising any power, right or remedy under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or remedy preclude any other or future exercise thereof or the exercise of any other power, right or remedy. ARTICLE VI MISCELLANEOUS ------------- SECTION 6.1 Liability of Seller. Seller shall be liable in ------------------- accordance herewith only to the extent of the obligations in this Agreement specifically undertaken by Seller and the representations and warranties of Seller. SECTION 6.2 Merger or Consolidation of Seller or Purchaser. Any ---------------------------------------------- corporation or other entity (i) into which Seller or Purchaser may be merged or consolidated, (ii) resulting from any merger or consolidation to which Seller or Purchaser is a party or (iii) succeeding to the business of Seller or Purchaser, in the case of Purchaser, which corporation has a certificate of incorporation containing provisions relating to limitations on business and other matters substantively identical to those contained in Purchaser's certificate of incorporation, provided that in any of the foregoing cases such corporation shall execute an agreement of assumption to perform every obligation of Seller or Purchaser, as the case may be, under this Agreement and, whether or not such assumption agreement is executed, shall be the successor to Seller or Purchaser, as the case may be, hereunder (without relieving Seller or Purchaser of its responsibilities hereunder, if it survives such merger or consolidation) without the execution or filing of any document or any further action by any of the parties to this Agreement. Notwithstanding the foregoing, so long as an Insurer Default shall not have occurred and be continuing and (a) there are Notes outstanding, (b) any amounts due to the Insurer remain unpaid or (c) the Note Policy has not expired in accordance with its terms, Purchaser shall not merge or consolidate with any other Person or permit any other Person to become the successor to Purchaser's business without the prior written consent of the Controlling Party. Seller or Purchaser shall promptly inform the other party, the Issuer, the Trust Collateral Agent, the Owner Trustee and, so long as an Insurer Default shall not have occurred and be continuing and (a) there are Notes outstanding, (b) any amounts due to the Insurer remain unpaid or (c) the Note Policy has not expired in accordance with its terms, the Controlling Party of such merger, consolidation or purchase and assumption. Notwithstanding the foregoing, as a condition to the 17 consummation of the transactions referred to in clauses (i), (ii) and (iii) above, (w) the Rating Agency Condition shall have been satisfied, (x) immediately after giving effect to such transaction, no representation or warranty made pursuant to Sections 3.1 and 3.2 of this Agreement shall have been breached (for purposes hereof, such representations and warranties shall speak as of the date of the consummation of such transaction) and no event that, after notice or lapse of time, or both, would become an event of default under the Insurance Agreement, shall have occurred and be continuing, (y) Seller or Purchaser, as applicable, shall have delivered written notice of such consolidation, merger or purchase and assumption to the Rating Agency prior to the consummation of such transaction and shall have delivered to the Issuer, the Controlling Party and the Trust Collateral Agent an Officer's Certificate and an Opinion of Counsel each stating that such consolidation, merger or succession and such agreement of assumption comply with this Section 6.2 and that all conditions precedent, if any, provided for in this Agreement relating to such transaction have been complied with, and (z) Seller or Purchaser, as applicable, shall have delivered to the Issuer, the Insurer and the Trust Collateral Agent an Opinion of Counsel, stating, in the opinion of such counsel, either (A) all financing statements and continuation statements and amendments thereto have been executed and filed that are necessary to preserve and protect the interest of the Issuer and the Trust Collateral Agent in the Receivables and reciting the details of the filings or (B) no such action shall be necessary to preserve and protect such interest. SECTION 6.3 Limitation on Liability of Seller and Others. -------------------------------------------- Seller and any director, officer, employee or agent may rely in good faith on the advice of counsel or on any document of any kind prima facie properly executed and submitted by any Person respecting any matters arising under this Agreement. Seller shall not be under any obligation to appear in, prosecute or defend any legal action that is not incidental to its obligations under this Agreement or its Related Documents and that in its opinion may involve it in any expense or liability. SECTION 6.4 Seller May Own Notes or Certificates. Subject to ------------------------------------ the provisions of the Sale and Servicing Agreement, the Trust Agreement, the Indenture and the Insurance Agreement, Seller and any Affiliate of Seller may in its individual or any other capacity become the owner or pledgee of Notes or Certificates with the same rights as it would have if it were not Seller or an Affiliate thereof. 18 SECTION 6.5 Amendment. --------- (a) This Agreement may be amended by Seller and Purchaser with the prior written consent of the Insurer (so long as an Insurer Default shall not have occurred and be continuing and (a) there are Notes outstanding, (b) any amounts due to the Insurer remain unpaid or (c) the Note Policy has not expired in accordance with its terms) and with prior written notice to the Rating Agency but without the consent of the Trust Collateral Agent, the Owner Trustee or any of the Certificateholders or Noteholders (i) to cure any ambiguity or (ii) to correct any provisions in this Agreement; provided, however, that such action shall not adversely affect in any material respect the interests of any Certificateholder or Noteholder. (b) This Agreement may also be amended from time to time by Seller and Purchaser, with the prior written consent of the Insurer (so long as an Insurer Default shall not have occurred and be continuing and (a) there are Notes outstanding, (b) any amounts due to the Insurer remain unpaid or (c) the Note Policy has not expired in accordance with its terms), with prior written notice to the Rating Agency and with the consent of the Trust Collateral Agent and, if required, a Security Majority in accordance with the Sale and Servicing Agreement, for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Agreement, or of modifying in any manner the rights of the Certificateholders or Noteholders; provided, however, Seller provides the Trust Collateral Agent with an Opinion of Counsel, (which may be provided by Seller's internal counsel) that no such amendment shall increase or reduce in any manner the amount of, or accelerate or delay the timing of, collections of payments on Receivables or distributions that shall be required to be made on any Note or Certificate. (c) It shall not be necessary for the consent of Certificateholders or Noteholders pursuant to this Section to approve the particular form of any proposed amendment or consent, but it shall be sufficient if such consent shall approve the substance thereof. The manner of obtaining such consents and of evidencing the authorization of the execution thereof by Certificateholders or Noteholders shall be subject to such reasonable requirements as the Trust Collateral Agent may prescribe, including the establishment of record dates. The consent of a Holder of a Certificate or a Note given pursuant to this Section or pursuant to any other provision of this Agreement shall be conclusive and binding on such Holder and on all future Holders of such Certificate or Note and of any Certificate or Note issued upon the transfer thereof or in exchange thereof or in lieu thereof whether or not notation of such consent is made upon the Certificate or Note. Prior to the execution of any amendment to this Agreement, the Indenture Trustee or the Trust Collateral Agent, if requested, shall be entitled to receive and rely upon an Opinion of Counsel stating that the execution of such amendment is authorized or permitted by this Agreement and that all conditions precedent to the execution and delivery of such amendment have been satisfied. 19 SECTION 6.6 Notices. All demands, notices and communications ------- to Seller, Purchaser, the Insurer or the Noteholders hereunder shall be in writing, personally delivered, or sent by telecopier (subsequently confirmed in writing), reputable overnight courier or mailed by certified mail, return receipt requested, and shall be deemed to have been given upon receipt (a) in the case of Seller, to The Finance Company, Attention: Chief Financial Officer, 5425 Robin Hood Road, Suite 101A, Norfolk, Virginia 23513, (b) in the case of Purchaser, to TFC Receivables Corporation IV, Attention: Chief Financial Officer, 5425 Robin Hood Road, Suite 101B, Norfolk, Virginia 23513, (c) in the case of the Insurer, to Asset Guaranty Insurance Company, Attention: Manager Asset-Backed Surveillance, 335 Madison Avenue, New York, New York 10017-4605, with a copy to the Senior Vice President - Transaction Oversight, or (d) in the case of the Liz Taylor - Private Placement Noteholders, c/o AEGON USA Investment Management, Inc., Attention: Bob Broseman, 400 West Market Street, Louisville, Kentucky 40202 and AEGON USA Management, Inc., Attention: Director of Private Placements, 4333 Edgewood Road NE, Cedar Rapids, Iowa 52499-5335 or such other address as shall be designated by a party in a written notice delivered to the other party or to the Issuer, Owner Trustee or the Trust Collateral Agent, as applicable. SECTION 6.7 Merger and Integration. Except as specifically ---------------------- stated otherwise herein, this Agreement and Related Documents set forth the entire understanding of the parties relating to the subject matter hereof, and all prior understandings, written or oral, are superseded by this Agreement and the Related Documents. This Agreement may not be modified, amended, waived or supplemented except as provided herein. SECTION 6.8 Severability of Provisions. If any one or more of -------------------------- the covenants, provisions or terms of this Agreement shall be for any reason whatsoever held invalid, then such covenants, provisions or terms shall be deemed severable from the remaining covenants, provisions or terms of this Agreement and shall in no way affect the validity or enforceability of the other provisions of this Agreement. SECTION 6.9 Intention of the Parties. The execution and delivery ------------------------ of this Agreement shall constitute an acknowledgment by Seller and Purchaser that they intend that the assignment and transfer herein contemplated constitute a sale and assignment outright, and not for security, of the Receivables and the Other Conveyed Property, conveying good title thereto free and clear of any Liens, from Seller to Purchaser, and that the Receivables and the Other Conveyed Property shall not be a part of Seller's estate in the event of the bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding, or other proceeding under any federal or state bankruptcy or similar law, or the occurrence of another similar event, of or with respect to Seller. In the event that such conveyance is determined to be made as security for a loan made by Purchaser, the Issuer, the Noteholders or the Certificateholders to Seller, the parties intend that Seller shall have granted to Purchaser a first priority, perfected security interest in all of Seller's right, title and interest in and to the Receivables and the Other Conveyed Property conveyed pursuant to Section 2.1 hereof, and that this Agreement shall constitute a security agreement under applicable law and shall have granted such security interest. 20 SECTION 6.10 Governing Law. This Agreement shall be construed in ------------- accordance with the laws of the State of New York, including Section 5-1401 of the General Obligations Laws but otherwise without regard to the principles of conflicts of laws thereof and the obligations, rights and remedies of the parties under this Agreement shall be determined in accordance with such laws. SECTION 6.11 Counterparts. For the purpose of facilitating the ------------ execution of this Agreement and for other purposes, this Agreement may be executed simultaneously in any number of counterparts, each of which counterparts shall be deemed to be an original, and all of which counterparts shall constitute but one and the same instrument. SECTION 6.12 Conveyance of the Receivables and the Other Conveyed ---------------------------------------------------- Property to the Issuer. Seller acknowledges that Purchaser intends, pursuant to ---------------------- the Sale and Servicing Agreement, to convey the Receivables and the Other Conveyed Property, together with its rights under this Agreement, to the Issuer on the date hereof. Seller acknowledges and consents to such conveyance and pledge and waives any further notice thereof and covenants and agrees that the representations and warranties of Seller contained in this Agreement and the rights of Purchaser hereunder are intended to benefit the Insurer, the Issuer, the Owner Trustee, the Trust Collateral Agent, the Noteholders and the Certificateholders. In furtherance of the foregoing, Seller covenants and agrees to perform its duties and obligations hereunder, in accordance with the terms hereof for the benefit of the Insurer, the Issuer, the Owner Trustee, the Trust Collateral Agent, the Noteholders and the Certificateholders and that, notwithstanding anything to the contrary in this Agreement, Seller shall be directly liable to the Issuer, the Insurer, the Owner Trustee, the Trust Collateral Agent, the Noteholders and the Certificateholders (notwithstanding any failure by the Servicer, or Purchaser to perform their respective duties and obligations hereunder or under Related Documents) and that the Trust Collateral Agent may enforce the duties and obligations of Seller under this Agreement against Seller for the benefit of the Insurer, the Owner Trustee, the Trust Collateral Agent, the Noteholders and the Certificateholders. SECTION 6.13 Nonpetition Covenant. Neither Purchaser nor Seller -------------------- shall petition or otherwise invoke the process of any court or government authority for the purpose of commencing or sustaining a case against Purchaser or the Issuer under any federal or state bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of Purchaser or the Issuer or any substantial part of their respective property, or ordering the winding up or liquidation of the affairs of Purchaser or the Issuer. SECTION 6.14 Third Party Beneficiary. The Insurer, the ----------------------- Noteholders and the Trustee shall be third party beneficiaries of this Agreement. The Insurer, the Noteholders and the Trustee, and each of their respective successors and assigns, shall be a third party beneficiary to the provisions of this Agreement, and the Insurer shall be entitled to rely upon and directly enforce such provisions of this Agreement so long as no Insurer Default shall have occurred and be continuing and (a) there are Notes outstanding, (b) any amounts due to the Insurer remain unpaid or (c) the Note Policy has 21 not expired in accordance with its terms. Except as expressly stated otherwise herein, any right of the Insurer to direct, appoint, consent to, approve of, or take any action under this Agreement, shall be a right exercised by the Insurer in its reasonable discretion. The Insurer may disclaim any of its rights and powers under this Agreement (but not its duties and obligations under the Note Policy) upon delivery of a written notice to the Trust Collateral Agent. Nothing in this Agreement, whether express or implied, shall be construed to give to any other Person any legal or equitable right, remedy or claim in the Trust Property or under or in respect of this Agreement or any covenants, conditions or provisions contained herein. SECTION 6.15 Limitation of Liability. It is expressly understood ----------------------- and agreed by the parties hereto that (a) this Agreement is executed and delivered by Wilmington Trust Company, not individually or personally but solely as Owner Trustee of the Issuer under the Trust Agreement, in the exercise of the powers and authority conferred and vested in it, (b) each of the representations, undertakings and agreements herein made on the part of the Issuer is made and intended not as personal representations, undertakings and agreements by Wilmington Trust Company but is made and intended for the purpose for binding only the Issuer, (c) nothing herein contained shall be construed as creating any liability on Wilmington Trust Company individually or personally, to perform any covenant either expressed or implied contained herein, all such liability, if any, being expressly waived by the parties to this Agreement and by any person claiming by, through or under them and (d) under no circumstances shall Wilmington Trust Company be personally liable for the payment of any indebtedness or expenses of the Issuer or be liable for the breach or failure of any obligation, representation, warranty or covenant made or undertaking by the Issuer under this Agreement or any related documents. [Signature Page Follows] 22 IN WITNESS WHEREOF, the parties have caused this Purchase Agreement to be duly executed by their respective officers as of the day and year first above written. THE FINANCE COMPANY, as Seller By_________________________________ Name: Title: TFC RECEIVABLES CORPORATION IV, as Purchaser By_________________________________ Name: Title: Acknowledged and Accepted: WELLS FARGO BANK MINNESOTA, NATIONAL ASSOCIATION, As Trustee and Trust Collateral Agent By_________________________________ Name: Title: [Signature Page for Purchase Agreement] SCHEDULE A ---------- SCHEDULE OF RECEIVABLES [Distributed at Closing] SCHEDULE B ---------- REPRESENTATIONS AND WARRANTIES OF SELLER 1. Characteristics of Receivables. Each Receivable (A) was originated by a ------------------------------ Dealer for the retail sale of a Financed Vehicle in the ordinary course of such Dealer's business in accordance with either (i) TFC's credit policies or (ii) credit policies which were reviewed by TFC prior to a purchase of a Receivable by TFC and such Dealer had all necessary licenses and permits to originate Receivables in the state where such Dealer was located, was fully and properly executed by the parties thereto was purchased by TFC from such Dealer under an existing Dealer Agreement or pursuant to a Dealer Assignment, was validly assigned by such Dealer to TFC pursuant to the Dealer Agreement or the Dealer Assignment, was validly assigned by TFC to the Seller, and was validly assigned by the Seller to the Trust and pledged by the Trust to the Trust Collateral Agent, (B) contains customary and enforceable provisions such as to render the rights and remedies of the holder thereof adequate for realization against the collateral security, (C) is a Receivable which provides for level Scheduled Receivable Payments (provided that the payment in the first Monthly Period and the payment in the final Monthly Period of the Receivable may be minimally different from the normal period and level payment) which, if made when due, shall fully amortize the Amount Financed over the original term, (D) provides for, in the event that the related Contract is prepaid, a prepayment that fully pays the principal balance of such related Contract and includes accrued but unpaid interest through the date of prepayment in an amount at least equal to the annual percentage rate, (E) has not been amended or rewritten, or collections with respect to which deferred or waived, other than as evidenced in the Receivable File relating thereto, (F) that is a military Receivable, has an original term of eleven (11) to forty-eight (48) months or that is a civilian Receivable, has an original term of eleven (11) to sixty (60) months, (G) that has been acquired by TFC and, if a monthly pay contract which is not more than thirty (30) days delinquent, the related Obligor does not have other Receivables owing to TFC that are more than thirty (30) days delinquent or defaulted, (H) that has been acquired by TFC and, if a non- monthly-pay contract, is not more than thirty (30) days delinquent nor is it defaulted based on the Company's methodology in effect for converting non- monthly pay Receivables to a daily delinquency equivalent as such methodology is described in Schedule 1 of the Insurance Agreement nor does the Obligor have other Receivables owing to TFC that are more than thirty (30) days delinquent or defaulted, (I) has a final Scheduled Receivable Payment due no less than eight (8) months before the Final Receivable Payment Date, (J) has an annual percentage rate of not less than 9.9%, (K) has a remaining Principal Balance of not more than $24,411, (L) has not been extended beyond its original term, except in keeping with the TFC's stated policies and procedures for deferments contained in the August 1, 1992 memo attached as part of Exhibit E to the Sale and Servicing Agreement, which allows for up to two, one-month deferments in any twelve month period not to exceed up to four, one- month deferments over the life of a monthly-pay contract, (M) satisfies, the requirements under TFC's Credit Guidelines as in effect on August 31, 1999, in all material respects (except with respect to (a) changes associated with certain memorandums previously delivered to the Insurer relating to allowing total loss protection instead of comprehensive vehicle insurance and (b) a new lending program called, Special E4 Program) including but not limited to, down-payment provisions, (N) was purchased through an approved Dealer of TFC, (O) is due from a U.S. citizen in the case of military Receivables and a U.S. resident in the case of civilian Receivables and is denominated in U.S. dollars, (P) is secured by a Financed Vehicle and a valid first priority perfected security interest is in effect with respect to such Financed Vehicle, (Q) is owned solely by TFC free and clear of any lien, claim, or other encumbrance, excluding liens that will be released no later than the Closing Date, (R) with respect to the related security interest in the related Financed Vehicle is perfected and with clear legal right of repossession, (S) that is a Point-of-Sale Receivable, was secured by a vehicle with total loss protection coverage or covered by an Insurance Policy, and naming TFC as loss payee on the date the loan advance was made, (T) meets, in all material respects, all applicable requirements of federal, state, and local laws and regulations, (U) is not subject to any right of setoff by the Obligor and (V) will be clearly marked in the books and records of TFC as being sold to Seller, and from Seller to Issuer and liened to the Trust Collateral Agent. 2. No Fraud or Misrepresentation. Each Receivable (A) was originated by a ----------------------------- Dealer, (B) was sold by the Dealer to TFC and (C) was sold by TFC to the Seller and by the Seller to the Trust without any fraud or misrepresentation in any case. 3. Compliance with Law. All requirements of applicable federal, state and ------------------- local laws, and regulations thereunder (including usury laws, the Federal Truth-in- Lending Act, the Equal Credit Opportunity Act, the Fair Credit Billing Act, the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the Federal Trade Commission Act, the Moss-Magnuson Warranty Act, the Federal Reserve Board's Regulations "B" and "Z", the Soldiers' and Sailors' Civil - - Relief Act of 1940, as amended, each applicable state Motor Vehicle Retail Installment Sales Act, and state adaptations of the National Consumer Act and of the Uniform Consumer Credit Code and other consumer credit laws and equal credit opportunity and disclosure laws) in respect of the Receivables, the Financed Vehicles and the sale of any physical damage, credit life and credit accident and health insurance and any extended service contracts, have been complied with in all material respects by TFC and the Seller, as applicable, and each Receivable, the sale of the Financed Vehicle evidenced by each Receivable and the sale of any physical damage, credit life and credit accident and health insurance and any extended service contracts complied at the time it was originated or made in all material respects and now complies in all material respects with all applicable legal and regulatory requirements. 4. Origination. Each Point-of-Sale Receivable was originated in the United ----------- States and materially conforms to all requirements of the "Dealer ------ Underwriting Guide" applicable to such Receivable at the time assigned to ------------------ TFC, at the time of such assignment. 5. Binding Obligation. Each Receivable represents the genuine, legal, valid ------------------ and binding payment obligation of the Obligor thereon, enforceable by the holder thereof in accordance with its terms, except (A) as enforceability may be limited by bankruptcy, insolvency, reorganization or similar laws affecting the enforcement of creditors' rights generally and by equitable limitations on the availability of specific remedies, regardless of whether such enforceability is considered in a proceeding in equity or at law and (B) as such Receivable may be modified by the application after the Cut-Off Date of the Soldiers' and Sailors' Civil Relief Act of 1940, as amended; and all parties to each Receivable had full legal capacity to execute and deliver such Receivable and all other documents related thereto and to grant the security interest purported to be granted thereby. 6. No Government Obligor. No Obligor is the United States of America or any --------------------- State or any agency, department, subdivision or instrumentality thereof. 7. Obligor Bankruptcy. At the Cut-Off Date, no Obligor had been the subject ------------------ of a current bankruptcy proceeding. 8. Schedule of Receivables. The information set forth in the Schedule of Receivables has been produced from the Electronic Ledger and was true and correct in all material respects as of the close of business on the Cut-Off Date as delivered on the Closing Date. 9. Marking Records. By the Closing Date, the Seller will have caused the portions of the Electronic Ledger relating to the Receivables to be clearly and unambiguously identified to show that the Receivables have been sold to the Seller by TFC and resold by the Seller to the Trust in accordance with the terms of the Sale and Servicing Agreement. 10. Computer Tape. The Computer Tape made available by the Seller to the Trust Collateral Agent on the Closing Date was complete and accurate as of the Cut- Off Date and includes a description of the same Receivables that are described in the Schedule of Receivables. 11. Adverse Selection. No selection procedures adverse to the Noteholders or the Insurer were utilized in selecting the Receivables from those receivables owned by TFC which met the selection criteria contained in the Sale and Servicing Agreement. 12. Chattel Paper. The Receivables constitute chattel paper within the meaning of the UCC as in effect in the State of New York, Delaware, Virginia and Minnesota. 13. One Original. There is only one original executed copy of each Receivable. ------------ 14. Receivable Files Complete. There exists a Receivable File pertaining to ------------------------- each Receivable and such Receivable File contains, without limitation, subject to any exceptions which may appear on any exception report delivered by the Trust Collateral Agent, (a) a fully executed original of the Receivable and (b) the original Lien Certificate or application therefor together with an assignment of the Lien Certificate executed by the Unaffiliated Originator and TFC by TFC to the Seller, and, an assignment of the Lien Certificate executed by the Seller to the Trustee. Each of such documents which is required to be signed by the Obligor has been signed by the Obligor in the appropriate spaces. All blanks on any form described in clauses (a) and (b) above have been properly filled in and each form has otherwise been correctly prepared. Notwithstanding the above, a copy of the complete Receivable File for each Receivable, which fulfills the documentation requirements of the Dealer Underwriting Guide as in effect at the time of purchase is in the possession of the Servicer or its bailee. 15. Receivables in Force. No Receivable has been satisfied, subordinated or -------------------- rescinded, and the Financed Vehicle securing each such Receivable has not been released from the lien of the related Receivable in whole or in part. No terms of any Receivable have been waived, altered or modified in any respect since its origination, except by instruments or documents identified in the Receivable File. No Receivable has been modified as a result of application of the Soldiers' and Sailors' Civil Relief Act of 1940, as amended. 16. Lawful Assignment. No Receivable was originated in, or is subject to the ----------------- laws of, any jurisdiction the laws of which would make unlawful, void or voidable the sale, transfer and assignment of such Receivable under this Agreement or pursuant to transfers of the Securities. The Seller has not entered into any agreement with any account debtor that prohibits, restricts or conditions the assignment of any portion of the Receivables. 17. Good Title. No Receivable has been sold, transferred, assigned or pledged ---------- by the Seller to any Person other than the Issuer; immediately prior to the conveyance of the Receivables to the Trust pursuant to this Agreement, the Seller was the sole owner thereof and had good and indefeasible title thereto, free (except with respect to GE Capital, which lien of GE Capital has been released (as of the Closing Date)) of any Lien and, upon execution and delivery of this Agreement by the Seller, the Trust shall have good and indefeasible title to and will be the sole owner of such Receivables, free of any Lien other than the Lien of the Trust Collateral Agent. No Dealer has a participation in, or other right to receive, proceeds of any Receivable. The Seller has not taken any action to convey any right to any Person that would result in such Person having a right to payments received under the related Insurance Policies or the related Dealer Agreements or Dealer Assignments or to payments due under such Receivables. 18. Security Interest in Financed Vehicle. Each Receivable created or will ------------------------------------- create a valid, binding and enforceable first priority security interest in favor of TFC or the Trust Collateral Agent in the Financed Vehicle. The Lien Certificate and original certificate of title for each Financed Vehicle show, or if a new or replacement Lien Certificate is being applied for with respect to such Financed Vehicle the Lien Certificate will be received within 180 days of the Closing Date, and will show TFC or the Trust Collateral Agent named as the original secured party under each Receivable as the holder of a first priority security interest in such Financed Vehicle. With respect to each Receivable for which the Lien Certificate has not yet been returned from the Registrar of Titles, TFC has received written evidence from the related Dealer that such Lien Certificate showing TFC or the Trust Collateral Agent as first lienholder has been applied for and (i) TFC's security interest has been validly assigned to the Seller pursuant to the Purchase Agreement and (ii) the Seller's security interest has been validly assigned by the Seller to the Trust pursuant to this Agreement and (iii) the Trust's security interest has been validly pledged to the Trust Collateral Agent pursuant to the Indenture. Immediately after the sale, transfer and assignment thereof by the Seller to the Trust, each Receivable will be secured by an enforceable and perfected first priority security interest in the Financed Vehicle in favor of the Trustee as secured party, which security interest is prior to all other Liens upon and security interests in such Financed Vehicle which now exist or may hereafter arise or be created (except, as to priority, for any lien for taxes, labor or materials affecting a Financed Vehicle arising subsequent to the Cut- Off Date). As of the Cut-Off Date there were no Liens or claims for taxes, work, labor or materials affecting a Financed Vehicle which are or may be Liens prior or equal to the Liens of the related Receivable. 19. All Filings Made. All filings (including UCC filings) required to be made ---------------- by any Person and actions required to be taken or performed by any Person in any jurisdiction to give the Trust Collateral Agent a first priority perfected lien on the Receivables and the proceeds thereof and the Other Conveyed Property have been made, taken or performed. 20. No Impairment. Neither TFC nor the Seller has done anything to convey any ------------- right to any Person that would result in such Person having a right to payments due under the Receivable or otherwise to impair the rights of the Trust, the Insurer, the Trustee, the Trust Collateral Agent and the Noteholders in any Receivable or the proceeds thereof. 21. Receivable Not Assumable. No Receivable is assumable by another Person in a ------------------------ manner which would release the Obligor thereof from such Obligor's obligations to the Seller with respect to such Receivable. 22. No Default. As of the Cut-Off Date, no Receivable was in default and no ---------- condition existed or event occurred that constituted a default, breach, violation or event permitting acceleration under the terms of any Receivable, and there has been no waiver of any of the foregoing. As of the Cut-Off Date no Financed Vehicle had been repossessed. 23. Insurance. At the time of origination of each Receivable that is --------- Point-of-Sale Product, the related Financed Vehicle was covered by an Insurance Policy which was (i) in an amount at least equal to the lesser of, excluding any deductible, (a) its maximum insurable value or (b) the principal amount due from the Obligor under the related Receivable, (ii) naming TFC and its successors and assigns as loss payee and (iii) insuring against loss and damage due to fire, theft, transportation, collision and other risks generally covered by either a physical loss and damage Insurance Policy or the combination of TFC's Total Loss Protection and GAP. No Financed Vehicle is insured under a policy of Force-Placed Insurance on the Cut-Off Date. 24. Certain Characteristics of Receivables. (i) No Receivable was more than 30 -------------------------------------- days past due as of the Cut-Off Date; (ii) no funds have been advanced by the Seller, the Servicer, any Dealer, or anyone acting on behalf of any of them in order to cause any Receivable to qualify under subclause (i) of this clause 24; (iii) the Principal Balance of each Receivable set forth in the Schedule of Receivables is true and accurate as of the Cut-Off Date. 25. Direct Payment. All Receivable are secured by Financed Vehicles on which at -------------- least one payment has been made directly to TFC subsequent to the date TFC has purchased such Receivable. 26. Military Assistance Corporation. As of the Closing Date, Fort Knox National ------------------------------- Bank ("FKNB") has been directed by TFC, and evidence of FKNB's ---- acknowledgment has been received to directly transfer to the Collection Account all amounts received by it pursuant to the Military Assistance Corporation ("MAC") program. --- 27. Annual Percentage. As of the Cut-Off Date, no more than 8.55% of the ----------------- Receivables (by Principal Balance) have annual percentage rates of less than 13.0% and the weighted average annual percentage rate for the entire pool is no less than 18.60%. SCHEDULE C ---------- THE FINANCE COMPANY CHARGE-OFF POLICY SCHEDULE D ---------- ASSIGNMENT