EXECUTION COPY
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SERVICING AGREEMENT
Dated as of December 3, 1996
among
ARCADIA RECEIVABLES CONDUIT CORP.
Issuer
OLYMPIC RECEIVABLES FINANCE CORP.
Seller
OLYMPIC FINANCIAL LTD.
In its individual capacity and as Servicer
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
Agent
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
Backup Servicer, Collateral Agent and Indenture Trustee
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TABLE OF CONTENTS
Page
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INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I
DEFINITIONS
Section 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2. Usage of Terms . . . . . . . . . . . . . . . . . . . . . . . 23
Section 1.3. Calculations . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 1.4. Section References . . . . . . . . . . . . . . . . . . . . . 23
Section 1.5. No Recourse . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 1.6. Material Adverse Effect . . . . . . . . . . . . . . . . . . 24
ARTICLE II
ADMINISTRATION AND SERVICING OF RECEIVABLES
Section 2.1. Duties of the Servicer . . . . . . . . . . . . . . . . . . . 24
Section 2.2. Collection of Receivable Payments; Modifications of
Receivables; Lockbox Agreements. . . . . . . . . . . . . . . 25
Section 2.3. Realization Upon Receivables . . . . . . . . . . . . . . . . 28
Section 2.4. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 2.5. Maintenance of Security Interests in Vehicles . . . . . . . 31
Section 2.6. Covenants, Representations, and Warranties of Servicer . . . 32
Section 2.7. Purchase of Receivables Upon Breach of Covenant . . . . . . 34
Section 2.8. Total Servicing Fee; Payment of Certain Expenses by
Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 2.9. Servicer's Certificate . . . . . . . . . . . . . . . . . . . 35
Section 2.10. Annual Statement as to Compliance; Notice of Servicer
Termination Event. . . . . . . . . . . . . . . . . . . . . . 35
Section 2.11. Annual Independent Accountants' Report . . . . . . . . . . . 36
Section 2.12. Access to Certain Documentation and Information Regarding
Receivables . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 2.13. Monthly Tape . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 2.14. Retention and Termination of Servicer . . . . . . . . . . . 38
Section 2.15. Fidelity Bond . . . . . . . . . . . . . . . . . . . . . . . 39
Section 2.16. Duties of the Servicer under the Indenture . . . . . . . . . 39
Section 2.17. Collecting Lien Certificates Not Delivered on the
Purchase Date . . . . . . . . . . . . . . . . . . . . . . . 39
Section 2.18. Accountants' Review of Receivable Files . . . . . . . . . . 39
ARTICLE III
DISTRIBUTIONS; STATEMENTS TO NOTEHOLDERS
Section 3.1. Secured Accounts . . . . . . . . . . . . . . . . . . . . . . 40
Section 3.2. Collections . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 3.3. Application of Collections . . . . . . . . . . . . . . . . . 42
Section 3.4. Monthly Advances . . . . . . . . . . . . . . . . . . . . . . 43
Section 3.5. Additional Deposits . . . . . . . . . . . . . . . . . . . . 44
Section 3.6. Distributions . . . . . . . . . . . . . . . . . . . . . . . 45
Section 3.7. Statements to Noteholders . . . . . . . . . . . . . . . . . 48
Section 3.8. Indenture Trustee as Agent; Calculation of Weighted Average
APR, WAC Deficiency Amounts, Basis Fee Percent and Advance
Interest Rate . . . . . . . . . . . . . . . . . . . . . . . 48
Section 3.9. Eligible Accounts . . . . . . . . . . . . . . . . . . . . . 49
Section 3.10. Additional Withdrawals from the Collection Account . . . . . 49
Section 3.11. Cross-Collateralization with the Spread
Account Agreement. . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE IV
THE SERVICER
Section 4.1. Liability of Servicer; Indemnities . . . . . . . . . . . . . 50
Section 4.2. Merger or Consolidation of, or Assumption of the Obligations
of, the Servicer or Backup Servicer. . . . . . . . . . . . . 52
Section 4.3. Limitation on Liability of Servicer, Backup Servicer and
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 4.4. Delegation of Duties . . . . . . . . . . . . . . . . . . . . 54
Section 4.5. Servicer and Backup Servicer Not to Resign . . . . . . . . . 54
ARTICLE V
SERVICER TERMINATION EVENTS
Section 5.1. Servicer Termination Event . . . . . . . . . . . . . . . . . 55
Section 5.2. Consequences of a Servicer Termination Event . . . . . . . 57
Section 5.3. Appointment of Successor . . . . . . . . . . . . . . . . . . 58
Section 5.4. Notification to Noteholders . . . . . . . . . . . . . . . . 60
Section 5.5. Waiver of Past Defaults . . . . . . . . . . . . . . . . . . 60
ARTICLE VI
MISCELLANEOUS PROVISIONS
Section 6.1. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . 60
Section 6.2. Protection of Title to Seller Conveyed Property . . . . . . 61
Section 6.3. Governing Law . . . . . . . . . . . . . . . . . . . . . . . 64
ii
Section 6.4. Severability of Provisions . . . . . . . . . . . . . . . . . 64
Section 6.5. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 6.6. Third-Party Beneficiaries . . . . . . . . . . . . . . . . . 64
Section 6.7. Disclaimer by Security Insurer . . . . . . . . . . . . . . . 64
Section 6.8. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 6.9. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 6.10. Interest Rate Protection . . . . . . . . . . . . . . . . . . 65
EXHIBITS
Exhibit A - Servicing Policies and Procedures
Exhibit B - Form of Servicer's Certificate
Exhibit C - Form of Note for Intercompany Indebtedness
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THIS SERVICING AGREEMENT, dated as of December 3, 1996, is made among
ARCADIA RECEIVABLES CONDUIT CORP., a Delaware corporation (the "Issuer"),
OLYMPIC RECEIVABLES FINANCE CORP., a Delaware corporation, as Seller (the
"Seller"), OLYMPIC FINANCIAL LTD., a Minnesota corporation, in its individual
capacity and as Servicer (in its individual capacity, "OFL"; in its capacity as
Servicer, the "Servicer"), BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, a national banking association, in its capacity as Agent (in such
capacity as administrator for Receivables Capital Corporation and as agent for
certain liquidity purchasers, the "Agent"), and NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, a national banking association, as Backup Servicer (in such
capacity the "Backup Servicer"), as Collateral Agent (in such capacity the
"Collateral Agent") and as Indenture Trustee (in such capacity the "Indenture
Trustee").
In consideration of the mutual agreements herein contained, and of
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. DEFINITIONS. All terms defined in the Spread Account
Agreement, the Security Agreement, the Repurchase Agreement, the Purchase
Agreement, the Note Purchase Agreement or the Indenture (as defined below) shall
have the same meaning in this Agreement. Whenever capitalized and used in this
Agreement, the following words and phrases, unless the context otherwise
requires, shall have the following meanings:
ACCOUNTANTS' REPORT: The report of a firm of nationally recognized
independent accountants described in Section 2.11.
ACCOUNTING DATE: With respect to a Distribution Date, the last day of
the Monthly Period immediately preceding such Distribution Date.
ADMINISTRATIVE RECEIVABLE: With respect to any Monthly Period, a
Receivable which the Servicer is required to purchase pursuant to Section 2.7 or
which OFL has elected to purchase pursuant to Section 2.4(c).
ADVANCE INTEREST CARRYOVER SHORTFALL: With respect to any
Distribution Date, the excess of the Advance Monthly Interest Distributable
Amount for the preceding Distribution Date and any outstanding Advance Interest
Carryover Shortfall on such preceding Distribution Date, over the amount in
respect of interest that is actually deposited in the Note Distribution Account
on such preceding Distribution Date, plus interest on the amount of interest due
but not paid with respect to the Advances
on the preceding Distribution Date, to the extent permitted by law, at the
Advance Interest Rate from such preceding Distribution Date through the
current Distribution Date.
ADVANCE INTEREST DISTRIBUTABLE AMOUNT: With respect to any
Distribution Date, the sum of the Advance Monthly Interest Distributable Amount
for such Distribution Date and the Advance Interest Carryover Shortfall for such
Distribution Date.
ADVANCE INTEREST RATE: With respect to each Interest Period or any
shorter period for which interest accrues, a per annum rate determined in
arrears of the daily weighted average cost of funding of the Noteholders'
purchase or carrying of the Notes during such Interest Period or any shorter
period for which interest accrues, which shall be: (A) prior to the occurrence
of an Amortization Event, (i) the CP Rate plus 0.20%, to the extent the purchase
or carrying of Notes issued pursuant to the Indenture is funded by the
Noteholders by issuing Commercial Paper Notes, or (ii) the Offshore Rate plus
the Applicable Margin, to the extent the purchase or carrying of Notes issued
pursuant to the Indenture is not so funded by the Noteholders and (B) after the
occurrence of an Amortization Event, the Reference Rate; PROVIDED, that, from
and after the occurrence of an Amortization Event, the Advance Interest Rate
shall not exceed the Maximum Interest Rate, and the Agent may, on any Business
Day, by prior written notice to the Issuer, the Indenture Trustee, the Seller,
the Servicer and the Security Insurer, convert the Advance Interest Rate to a
fixed interest rate not to exceed the Maximum Interest Rate as of the close of
business on the date such Amortization Event occurs, such fixed interest rate
not to exceed the Two Year Treasury Yield (as of the close of business on the
date such Amortization Event occurs) plus 0.60% PLUS the Basis Fee Percent.
ADVANCE MONTHLY INTEREST DISTRIBUTABLE AMOUNT: With respect to any
Distribution Date, the sum of the interest accrued on each day during the
immediately preceding Interest Period at the Advance Interest Rate(s) in effect
from time to time with respect to such Interest Period on the outstanding
principal balance of the Advances on each day; PROVIDED that the amount of the
Advance Monthly Interest Distributable Amount distributed pursuant to Sections
3.6(a)(i) or (b)(ii) shall not be duplicative of the amount of any interest that
accrued during such immediately preceding Interest Period on any Advance that
was prepaid during such Interest Period pursuant to Section 3(e) of the
Repurchase Agreement and which was deposited into the Note Distribution Account
pursuant to Section 3.10(b).
ADVANCE PRINCIPAL CARRYOVER SHORTFALL: As of the close of business on
any Distribution Date after the occurrence of an Amortization Event, the excess
of the sum of the Principal Distribution Amount and any outstanding Advance
Principal Carryover Shortfall from the preceding Distribution Date over the
amount in respect of Advances that is actually deposited in the Note
Distribution Account on such Distribution Date.
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ADVANCE PRINCIPAL DISTRIBUTABLE AMOUNT: With respect to any
Distribution Date (other than the Final Distribution Date) during the
Amortization Period, the sum of the Principal Distribution Amount for such
Distribution Date and any outstanding Advance Principal Carryover Shortfall as
of the close of the preceding Distribution Date; PROVIDED, HOWEVER, the Advance
Principal Distributable Amount shall not exceed the outstanding principal
balance of the Advances. The "Advance Principal Distributable Amount" on the
Final Distribution Date will equal the outstanding principal balance of the
Advances on the Final Distribution Date.
AFFILIATE: With respect to any Person, any other Person directly or
indirectly controlling, controlled by, or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
AGENT: Bank of America National Trust and Savings Association, as
administrator of RCC and as agent for certain liquidity purchasers under the
Liquidity Asset Purchase Agreement, and its successors in such capacity.
AGGREGATE PRINCIPAL BALANCE: With respect to any Determination Date,
the sum of the Principal Balances (computed as of the related Accounting Date)
for all Receivables (other than (i) any Receivable that became a Liquidated
Receivable during the related Monthly Period, (ii) any Purchased Receivable with
respect to the related Monthly Period and (iii) any Receivable that became a
Repurchased Receivable during the related Monthly Period).
AGREEMENT OR THIS AGREEMENT: This Servicing Agreement, all amendments
and supplements thereto and all exhibits and schedules to any of the foregoing.
AMORTIZATION EVENT: Any of (i) an Event of Default shall have
occurred and either the Repurchase Date shall be deemed to occur automatically
or the Issuer or the Agent shall exercise its option to have the Repurchase Date
with respect to all Transactions occur automatically, (ii) an Insurance
Agreement Event of Default shall have occurred and the Security Insurer shall
have delivered notice to the Issuer and the Seller that such Insurance Agreement
Event of Default shall constitute an Amortization Event,(iii) an Insurer Default
shall have occurred and be continuing or (iv) the succession of the Backup
Servicer as Servicer hereunder.
AMORTIZATION PERIOD: The period commencing on the earliest to occur
of (i) December 2, 1999, and (ii) the date on
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which an Insurer Notice Date has occurred and ending on the Final
Distribution Date.
AMOUNT FINANCED: With respect to a Receivable, the aggregate amount
advanced under such Receivable toward the purchase price of the Financed Vehicle
and related costs, including amounts advanced in respect of accessories,
insurance premiums, service and warranty contracts, other items customarily
financed as part of retail automobile installment sale contracts or promissory
notes, and related costs. The term "Amount Financed" shall not include any
Insurance Add-On Amounts.
ANNUAL PERCENTAGE RATE OR APR: With respect to a Receivable, the rate
per annum of finance charges stated in such Receivable as the "annual percentage
rate" (within the meaning of the Federal Truth-in-Lending Act). If after the
applicable Cut-Off Date with respect to a Receivable, the rate per annum with
respect to such Receivable as of such Cut-Off Date is reduced as a result of (i)
an insolvency proceeding involving the Obligor or (ii) pursuant to the Soldiers'
and Sailors' Civil Relief Act of 1940, Annual Percentage Rate or APR from and
after such date shall refer to such reduced rate.
APPLICABLE MARGIN: 0.375%.
AVAILABLE FUNDS: With respect to any Determination Date, the amount
on deposit in the Collection Account as of the immediately preceding Accounting
Date plus any amounts deposited in the Collection Account on such Determination
Date pursuant to Section 3.1(e) to satisfy the Collateral Test.
BACKUP SERVICER: Norwest Bank Minnesota, National Association, or its
successor in interest pursuant to Section 5.2, or such Person as shall have been
appointed as Backup Servicer or successor Servicer pursuant to Section 5.3.
BASIC SERVICING FEE: With respect to any Monthly Period, the fee
payable to the Servicer for services rendered during such Monthly Period, which
shall be equal to one-twelfth of the Basic Servicing Fee Rate multiplied by the
daily average aggregate Principal Balance of the Receivables during such Monthly
Period; PROVIDED, HOWEVER, with respect to the first Monthly Period, the Basic
Servicing Fee shall accrue from the Closing Date until December 31, 1996 on the
basis of a 360-day year consisting of twelve 30-day months.
BASIC SERVICING FEE RATE: 1.00% per annum, payable monthly at
one-twelfth of the annual rate.
BASIS FEE PERCENT: As of any date of determination, the positive
difference, if any, as determined by the Agent, as calculation agent, between
(A) the comparable spread over the Two Year Treasury Yield of the yield on OFL's
most recent two year weighted average life AAA/Aaa rated, publicly issued
automobile
4
asset-backed securities; or, if such a spread is not available, the average
price offered for such AAA/Aaa rated automobile asset-backed securities by
the asset-backed trading desk from time to time of two nationally recognized
underwriters or dealers that last underwrote OFL's most recent AAA/Aaa rated,
publicly issued automobile asset-backed securities, and (B) 0.45%.
BofA: Bank of America National Trust and Savings Association, a
national banking association, and its successors in interest.
BREAKAGE FEE: An amount payable by the Seller pursuant to Section
3(e) of the Repurchase Agreement in connection with a prepayment of an Advance
(and the concurrent prepayment of Notes pursuant to the Indenture) if the Seller
shall have requested a prepayment of an Advance on a date other than the last
day of a Tranche Period or in an amount in excess of the Tranches maturing on
such date, which shall be equal to the amount as may be necessary to compensate
the Noteholders for any resulting losses or costs, including those resulting
from any liquidation or reemployment of deposits or other funds or other funding
arrangements (such losses to be calculated on a net basis assuming reinvestment
(for the period with respect to which breakage is being paid) equal to the rate
quoted by the Agent for a time deposit equal to the principal so prepaid for a
period equal to the breakage period).
BUSINESS DAY: Any day other than a Saturday, Sunday, legal holiday or
other day on which commercial banking institutions in Minneapolis, Minnesota,
Chicago, Illinois, New York, New York, or any other location of any successor
Servicer, successor Indenture Trustee or successor Collateral Agent are
authorized or obligated by law, executive order or governmental decree to be
closed and, if the applicable Business Day relates to any calculation of the
Offshore Rate, such a day on which dealings are carried on in the applicable
offshore dollar interbank market.
CLASSIC RECEIVABLES: Receivables originated under OFL's "Classic"
program.
CLOSING DATE: December 3, 1996.
COLLATERAL AGENT: The Collateral Agent named in the Security
Agreement, and any successor thereto pursuant to the terms of the Security
Agreement.
COLLATERAL TEST: On any Determination Date, a test that will be
satisfied if, as of the immediately preceding Accounting Date, the aggregate
outstanding amount of all Advances under the Repurchase Agreement is less than
or equal to the sum of the following amounts, each determined as of such
Accounting Date: (i) the amount on deposit in the Collection Account less the
WAC Deficiency Deposit, if any, (ii) the product of (I) 0.98 and (II) the sum of
the aggregate outstanding Principal Balance
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of Premier Receivables that are Qualifying Receivables and the aggregate
outstanding Principal Balance of Classic Receivables that are not Financed
Repossessions and that are Qualifying Receivables and (iii) the product of
the aggregate outstanding Principal Balance of Classic Receivables that are
Financed Repossessions and that are Qualifying Receivables and 0.85;
PROVIDED, that any deposit into the Collection Account that the Seller may
make on such Determination Date pursuant to Section 3.1(e) shall be included
as amounts on deposit in the Collection Account as of the immediately
preceding Accounting Date in clause (i) above.
COLLECTED FUNDS: With respect to any Determination Date, the amount
of funds in the Collection Account representing collections on the Receivables
during the related Monthly Period, including all Liquidation Proceeds collected
during the related Monthly Period (but excluding any Monthly Advances and any
Purchase Amounts and the Repurchase Price of any Repurchased Receivables).
COLLECTION ACCOUNT: The account designated as the Collection Account
in, and which is established and maintained pursuant to, Section 3.1(a).
COLLECTION RECORDS: All manually prepared or computer generated
records relating to collection efforts or payment histories with respect to the
Receivables.
COMMERCIAL PAPER NOTES: The short-term promissory notes issued or to
be issued in the United States commercial paper market to fund the purchase of
the Notes, which, unless otherwise agreed to in writing by the Seller, the Agent
and the Security Insurer, shall mature within 120 days from the date of issuance
of such notes.
CORPORATE TRUST OFFICE: The principal office of the Indenture Trustee
at which at any particular time its corporate trust business shall be
administered, which office is located at Xxxxx Xxxxxx xxx Xxxxxxxxx Xxxxxx,
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000, Attention: Corporate Trust Services - Asset-
Backed Administration; the telecopy number for the Corporate Trust Office of the
Indenture Trustee on the date of execution of this Agreement is (000) 000-0000.
CP COMPOSITE RATE: For any date of determination, the Money Market
Yield of the rate set forth in the weekly statistical release designated as
H.15(519), or any successor publication, published by the Board of Governors of
the Federal Reserve System ("H.15(519)") for the 30 day maturity under the
caption "Commercial Paper." If such rate cannot be determined, the Offshore
Rate.
CP RATE: For any Interest Period or any shorter period for which
interest accrues, and with respect to any portion of the principal amount of the
Notes as to which the Noteholders'
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funding of their purchase or carrying thereof is provided by Commercial Paper
Notes, the rate of interest per annum determined in arrears in good faith by
the Agent equal to the Noteholders' cost of funding the purchase or carrying
of such portion of the Notes, which shall be equal to the weighted daily
average interest rate payable in respect of such Commercial Paper Notes
during such period (determined in the case of discount Commercial Paper Notes
by converting the discount to an interest bearing equivalent rate per annum),
plus applicable placement fees and commissions, but excluding any other fees
related to such funding.
CP TRANCHE PERIOD: If the funding of the purchase or carrying of the
Notes is funded in whole or in part by Commercial Paper Notes, a period of up to
120 days from and including the date any amount of such Commercial Paper Notes
are issued to and including the date such Commercial Paper Notes mature.
CRAM DOWN LOSS: With respect to a Receivable, if a court of
appropriate jurisdiction in an insolvency proceeding shall have issued an order
reducing the Principal Balance of such Receivable, the amount of such reduction.
A "Cram Down Loss" shall be deemed to have occurred on the date of issuance of
such order.
CUSTODIAN: Olympic Financial Ltd., a Minnesota corporation, and any
successor thereto pursuant to the terms of the Custodian Agreement.
CUSTODIAN AGREEMENT: Any Custodian Agreement from time to time in
effect among the Custodian named therein, the Issuer, the Seller and the Agent
relating to custody of the Receivable Files, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof, which Custodian Agreement and any amendments, supplements or
modifications thereto shall (so long as an Insurer Default shall not have
occurred and be continuing) be acceptable to the Security Insurer (the Custodian
Agreement which is effective on the Closing Date is acceptable to the Security
Insurer).
CUT-OFF DATE: With respect to any Receivables, the date specified in
the related Confirmation.
DEALER: A seller of new or used automobiles or light trucks that
originated one or more of the Receivables and sold the respective Receivable,
directly or indirectly, to OFL under an existing agreement between such seller
and OFL.
DEALER AGREEMENT: An agreement between OFL and a Dealer relating to
the sale of retail installment sale contracts and installment notes to OFL and
all documents and instruments relating thereto.
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DEALER ASSIGNMENT: With respect to a Receivable, the executed
assignment executed by a Dealer conveying such Receivable to OFL.
DEFAULT AMOUNT: With respect to any Distribution Date, an amount, if
positive, equal to the sum of default interest for each day during the
immediately preceding Interest Period or portion thereof after the occurrence of
an Amortization Event that accrues at the applicable Default Rate on the
aggregate outstanding principal balance of the Notes on each such day,
calculated on the basis of the actual number of days elapsed and a 365-day year.
DEFAULT AMOUNT CARRYOVER SHORTFALL: With respect to any Distribution
Date, the excess of the Default Amount for the preceding Distribution Date and
any outstanding Default Amount Carryover Shortfall on such preceding
Distribution Date, over the amount in respect of such Default Amount and Default
Amount Carryover Shortfall that is actually deposited in the Note Distribution
Account on such preceding Distribution Date, PLUS interest on the Default Amount
Carryover Shortfall, to the extent permitted by law, at an annualized rate equal
to the Reference Rate from such preceding Distribution Date through the current
Distribution Date.
DEFAULT AMOUNT DISTRIBUTABLE AMOUNT: With respect to any Distribution
Date, the sum of the Default Amount for such Distribution Date and the Default
Amount Carryover Shortfall for such Distribution Date.
DEFAULT RATE: For each day during an Interest Period or any portion
thereof after the occurrence of an Amortization Event, a per annum rate equal to
the positive difference, if any, between (i) the Reference Rate for such
Interest Period, and (y) the Advance Interest Rate for such Interest Period;
PROVIDED, that if the Advance Interest Rate has been converted to a fixed
interest rate, the Default Rate shall be that rate set forth in the side letter
between the Issuer and the Agent and acknowledged by the Trustee.
DEFICIENCY CLAIM AMOUNT: As defined in Section 3.11(a).
DEFICIENCY CLAIM DATE: With respect to any Distribution Date, the
fourth Business Day immediately preceding such Distribution Date.
DEFICIENCY NOTICE: As defined in Section 3.11(a).
DEPOSIT DATE: With respect to any Monthly Period, the Business Day
immediately preceding the related Distribution Date.
DETERMINATION DATE: With respect to any Monthly Period, the sixth
Business Day prior to the related Distribution Date (or, if such day is not a
Business Day, the next succeeding
8
Business Day); provided, however, that if the determination dates in all of
the other automobile loan securitizations of the Seller insured by the
Security Insurer are on the same date, the Determination Date shall be such
date provided the Seller provides the Indenture Trustee, the Security
Insurer, and the Agent 30 days prior written notice of such change.
DISTRIBUTION AMOUNT: With respect to a Distribution Date, the amount
of funds on deposit in the Collection Account on such Distribution Date.
DISTRIBUTION DATE: The 15th day of each calendar month, or if such
15th day is not a Business Day, the next succeeding Business Day, commencing
January 15, 1997 and including the Final Distribution Date.
ELECTRONIC LEDGER: The electronic master record of the retail
installment sales contracts or installment loans of OFL.
ELIGIBLE ACCOUNT: (i) A segregated trust account that is maintained
with the corporate trust department of a depository institution acceptable to
the Security Insurer (so long as an Insurer Default shall not have occurred and
be continuing), or (ii) a segregated direct deposit account maintained with a
depository institution or trust company organized under the laws of the United
States of America, or any of the States thereof, or the District of Columbia,
having a certificate of deposit, short term deposit or commercial paper rating
of at least "A-1+" by Standard & Poor's and "P-1" by Moody's and (so long as an
Insurer Default shall not have occurred and be continuing) acceptable to the
Security Insurer.
ELIGIBLE INVESTMENTS: Any one or more of the following types of
investments:
(a) (i) direct interest-bearing obligations of, and
interest-bearing obligations guaranteed as to timely payment of principal
and interest by, the United States or any agency or instrumentality of the
United States the obligations of which are backed by the full faith and
credit of the United States; and (ii) direct interest-bearing obligations
of, and interest-bearing obligations guaranteed as to timely payment of
principal and interest by, the Federal National Mortgage Association or the
Federal Home Loan Mortgage Corporation, but only if, at the time of
investment, such obligations are assigned the highest credit rating by each
Rating Agency;
(b) demand or time deposits in, certificates of deposit of, or
bankers' acceptances issued by any depository institution or trust company
organized under the laws of the United States or any State and subject to
supervision and examination by federal or state banking authorities
(including, if applicable, the Indenture Trustee or any agent of the
Indenture Trustee acting in its commercial
9
capacity); provided that the short-term unsecured debt obligations of
such depository institution or trust company at the time of such
investment, or contractual commitment providing for such investment,
are assigned the highest credit rating by each Rating Agency;
(c) repurchase obligations pursuant to a written agreement (i)
with respect to any obligation described in clause (a) above, where the
Indenture Trustee has taken actual or constructive delivery of such
obligation in accordance with Section 3.1, and (ii) entered into with the
corporate trust department of a depository institution or trust company
organized under the laws of the United States or any state thereof, the
deposits of which are insured by the Federal Deposit Insurance Corporation
and the short-term unsecured debt obligations of which are rated "A-1+" by
Standard & Poor's and "P-1" by Moody's (including, if applicable, the
Indenture Trustee or any agent of the Indenture Trustee acting in its
commercial capacity);
(d) securities bearing interest or sold at a discount issued by
any corporation incorporated under the laws of the United States or any
state whose long-term unsecured debt obligations are assigned the highest
credit rating by each Rating Agency at the time of such investment or
contractual commitment providing for such investment; provided however that
securities issued by any particular corporation will not be Eligible
Investments to the extent that an investment therein will cause the then
outstanding principal amount of securities issued by such corporation and
held in the Secured Accounts to exceed 10% of the Eligible Investments held
in the Secured Accounts (with Eligible Investments held in the Secured
Accounts valued at par);
(e) commercial paper that (i) is payable in United States dollars
and (ii) is rated in the highest credit rating category by each Rating
Agency;
(f) with the prior written consent of the Security Insurer, money
market mutual funds registered under the Investment Company Act of 1940, as
amended, having a rating at the time of such investment from each of the
Rating Agencies in the highest credit rating category; or
(g) any other demand or time deposit, obligation, security or
investment as may be acceptable to the Security Insurer, as evidenced by
the prior written consent of the Security Insurer, as may from time to time
be confirmed in writing to the Indenture Trustee by the Security Insurer,
and with prior written notice to the Rating Agencies and the Agent.
Eligible Investments may be purchased by or through the Indenture Trustee or any
of its Affiliates.
10
ELIGIBLE SERVICER: OFL, the Backup Servicer or another Person which
at the time of its appointment as Servicer (i) is servicing a portfolio of motor
vehicle retail installment sales contracts or motor vehicle installment loans,
(ii) is legally qualified and has the capacity to service the Receivables, (iii)
has demonstrated the ability professionally and competently to service a
portfolio of motor vehicle retail installment sales contracts or motor vehicle
installment loans similar to the Receivables with reasonable skill and care, and
(iv) is qualified and entitled to use, pursuant to a license or other written
agreement, and agrees to maintain the confidentiality of, the software which the
Servicer uses in connection with performing its duties and responsibilities
under this Agreement or otherwise has available software which is adequate to
perform its duties and responsibilities under this Agreement.
EVENT OF DEFAULT: An "Event of Default" (as defined in the Repurchase
Agreement) with respect to the Seller.
FINAL DISTRIBUTION DATE: The earlier to occur of (i) the Final
Scheduled Distribution Date, and (ii) if an Amortization Event shall have
occurred, the Distribution Date next succeeding the date on which the
Controlling Party shall have sold, securitized or otherwise liquidated the last
Receivable.
FINAL SCHEDULED DISTRIBUTION DATE: After the commencement of the
Amortization Period, the fourth Distribution Date after the Monthly Period in
which occurs the latest final scheduled payment on a Receivable (without giving
effect to any extensions granted by the Servicer pursuant to Section 2.2).
FINANCED REPOSSESSION: Classic Receivables that are secured by
Financed Vehicles that are financed repossessions.
FINANCED VEHICLE: A new or used automobile or light truck, together
with all accessories thereto, securing or purporting to secure an Obligor's
indebtedness under a Receivable.
FORCE-PLACED INSURANCE: The meaning set forth in Section 2.4(b).
FRB: The Board of Governors of the Federal Reserve System, and any
Governmental Authority succeeding to any of its principal functions.
INDENTURE: The Indenture, dated as of December 3, 1996, between the
Issuer and the Indenture Trustee, as the same may be amended and supplemented
from time to time.
INDENTURE TRUSTEE: The Person acting as Trustee under the Indenture,
its successors in interest and any successor Trustee under the Indenture.
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INDEPENDENT ACCOUNTANTS: As defined in Section 2.11(a).
INSURANCE ADD-ON AMOUNT: The premium charged to the Obligor in the
event that the Servicer obtains Force-Placed Insurance pursuant to Section 2.4.
INSURANCE AGREEMENT: The Insurance and Indemnity Agreement, dated as
of December 3, 1996, among the Security Insurer, the Issuer, the Seller and OFL.
INSURANCE AGREEMENT EVENT OF DEFAULT: An "Event of Default" as
defined in the Insurance Agreement.
INSURANCE POLICY: With respect to a Receivable, any insurance policy
benefiting the holder of the Receivable providing loss or physical damage,
credit life, credit disability, theft, mechanical breakdown or similar coverage
with respect to the Financed Vehicle or the Obligor.
INSURANCE PREMIUM: The amount of the premium payable to the Security
Insurer, as set forth in the Premium Letter, dated December 3, 1996, from the
Security Insurer to OFL, the Seller, the Issuer and the Indenture Trustee.
INSURER DEFAULT: The occurrence and continuance of any of the
following:
(a) the Security Insurer shall have failed to make a payment
required under the Note Policy;
(b) The Security Insurer shall have (i) filed a petition or
commenced any case or proceeding under any provision or chapter of the
United States Bankruptcy Code, the New York State Insurance Law, or any
other similar federal or state law relating to insolvency, bankruptcy,
rehabilitation, liquidation or reorganization, (ii) made a general
assignment for the benefit of its creditors, or (iii) had an order for
relief entered against it under the United States Bankruptcy Code, the New
York State Insurance Law, or any other similar federal or state law
relating to insolvency, bankruptcy, rehabilitation, liquidation or
reorganization which is final and nonappealable; or
(c) a court of competent jurisdiction, the New York Department of
Insurance or other competent regulatory authority shall have entered a
final and nonappealable order, judgment or decree (i) appointing a
custodian, trustee, agent or receiver for the Security Insurer or for all
or any material portion of its property or (ii) authorizing the taking of
possession by a custodian, trustee, agent or receiver of the Security
Insurer (or the taking of possession of all or any material portion of the
property of the Security Insurer).
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INTEREST PERIOD: With respect to any Distribution Date, the Monthly
Period immediately preceding such Distribution Date (or, in the case of the
first Distribution Date, the period from and including the Closing Date to and
excluding the first day of the succeeding calendar month); PROVIDED, that the
final Interest Period shall commence on the first day of the calendar month
immediately preceding the month in which the Final Distribution Date occurs and
shall end on, but shall exclude, the Final Distribution Date.
ISSUER: Arcadia Receivables Conduit Corp., a Delaware corporation.
LIEN: Any security interest, lien, charge, pledge, preference, equity
or encumbrance of any kind, including tax liens, mechanics' liens and any liens
that attach by operation of law.
LIEN CERTIFICATE: With respect to a Financed Vehicle, an original
certificate of title, certificate of lien or other notification issued by the
Registrar of Titles of the applicable state to a secured party which indicates
that the lien of the secured party on the Financed Vehicle is recorded on the
original certificate of title. In any jurisdiction in which the original
certificate of title is required to be given to the Obligor, the term "Lien
Certificate" shall mean only a certificate or notification issued to a secured
party.
LIQUIDATED RECEIVABLE: With respect to any Monthly Period, a
Receivable as to which (i) 91 days have elapsed since the Servicer repossessed
the Financed Vehicle, (ii) the Servicer has determined in good faith that all
amounts it expects to recover have been received, or (iii) all or any portion of
a Scheduled Payment shall have become more than 180 days delinquent.
LIQUIDATION PROCEEDS: With respect to a Liquidated Receivable, all
amounts realized with respect to such Receivable (other than amounts withdrawn
from the Spread Account and drawings under the Note Policy) net of (i)
reasonable expenses incurred by the Servicer in connection with the collection
of such Receivable and the repossession and disposition of the Financed Vehicle
and (ii) amounts that are required to be refunded to the Obligor on such
Receivable; PROVIDED, HOWEVER, that the Liquidation Proceeds with respect to any
Receivable shall in no event be less than zero.
LOCKBOX ACCOUNT: The segregated account maintained on behalf of the
Issuer by the Lockbox Bank in accordance with Section 2.2(d).
LOCKBOX AGREEMENT: The Agency Agreement, dated as of November 13,
1992 by and among Xxxxxx Trust and Savings Bank, OFL, Shawmut Bank, N.A., as
trustee, Saturn Financial Services, Inc. and the Program Parties (as defined
therein), taken
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together with the Retail Lockbox Agreement, dated as of November 13, 1992,
among such parties, and the Counterpart to Agency Agreement and Retail
Lockbox Agreement, dated as of December 3, 1996, among Xxxxxx Trust and
Savings Bank, OFL, the Issuer, the Indenture Trustee and the Security
Insurer, as such agreements may be amended from time to time, unless the
Indenture Trustee and the Issuer shall cease to be a Program Party
thereunder, or such agreement shall be terminated in accordance with its
terms, in which event "Lockbox Agreement" shall mean such other agreement, in
form and substance acceptable to the Security Insurer, or if an Insurer
Default shall have occurred and be continuing, to the Agent, among the
Servicer, the Issuer, the Indenture Trustee and the Lockbox Bank.
LOCKBOX BANK: A depository institution named by the Servicer and, so
long as an Insurer Default shall not have occurred and be continuing, acceptable
to the Security Insurer, or, if an Insurer Default shall have occurred and be
continuing, to the Agent.
MAXIMUM INTEREST RATE: As of the date on which an Amortization Event
occurs, the greater of (I) the sum of (i) the Two Year Treasury Yield determined
as of such day by the Indenture Trustee pursuant to Section 403(b) of the
Indenture plus (ii) 0.60% plus (iii) the Basis Fee Percent and (II) the weighted
average APR (weighted based on the aggregate outstanding Principal Balance of
the relevant Receivables as of the immediately preceding Accounting Date PLUS
the aggregate outstanding Principal Balance of any Receivables transferred by
the Seller to the Issuer since such Accounting Date and LESS the aggregate
outstanding Principal Balance of any Receivables that became Purchased
Receivables or Repurchased Receivables since such Accounting Date) of Qualifying
Receivables, MINUS 6.50%, MINUS the Total Expense Percent.
MONTHLY ADVANCE: The amount that the Servicer is required to advance
on any Receivable pursuant to Section 3.4(a) or that the Servicer (or OFL if OFL
is not the Servicer) is required to advance on any Determination Date pursuant
to Section 3.4(b).
MONTHLY PERIOD: With respect to a Distribution Date, the calendar
month preceding the month in which such Distribution Date occurs (such calendar
month being referred to as the "related" Monthly Period with respect to such
Distribution Date). With respect to an Accounting Date, the calendar month in
which such Accounting Date occurs is referred to herein as the "related" Monthly
Period to such Accounting Date.
MONTHLY RECORDS: All records and data maintained by the Servicer with
respect to the Receivables, including the following with respect to each
Receivable: the account number; the identity of the originating Dealer; Obligor
name; Obligor address; Obligor home phone number; Obligor business phone number;
original Principal Balance; original term; Annual
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Percentage Rate; current Principal Balance; current remaining term;
origination date; first payment date; final scheduled payment date; next
payment due date; date of most recent payment; new/used classification;
collateral description; days currently delinquent; number of contract
extensions (months) to date; amount, if any, of Force-Placed Insurance
payable monthly; amount of the Scheduled Payment; and past due late charges,
if any.
MOODY'S: Xxxxx'x Investors Service, Inc., or any successor thereto.
NOTES: The Floating Rate Automobile Receivables-Backed Notes issued
by the Issuer pursuant to the Indenture.
NOTE DISTRIBUTION ACCOUNT: The account designated as such,
established and maintained pursuant to Section 3.1(b).
NOTE MAJORITY: Holders of Notes representing a majority of the
outstanding principal balance of the Notes.
NOTE POLICY: The financial guaranty insurance policy issued by the
Security Insurer to the Indenture Trustee on behalf of the Noteholders.
NOTE PURCHASE AGREEMENT: The Note Purchase Agreement, dated as of
December 3, 1996, among OFL, the Issuer, the Agent and Receivables Capital
Corporation.
OBLIGOR: The purchaser or the co-purchasers of the Financed Vehicle
and any other Person or Persons who are primarily or secondarily obligated to
make payments under a Receivable.
OFL: Olympic Financial Ltd., a Minnesota corporation.
OFFSHORE RATE: (i) For any Interest Period or any shorter period for
which interest accrues and (ii) for the purpose of determining the WAC
Deficiency Percentage, the rate of interest per annum (rounded upward, if
necessary, to the next 1/16th of 1%) determined by the Agent as follows:
Offshore Rate = IBOR
-------------------------------------
1.00 - Eurodollar Reserve Percentage.
Where,
EURODOLLAR RESERVE PERCENTAGE means for any day for any Interest
Period the maximum reserve percentage (expressed as a decimal, rounded
upward, if necessary, to the next 1/100th of 1%) in effect on such day and
applicable to any Noteholder under regulations issued from time to time by
the FRB for determining the maximum reserve requirement (including any
emergency supplemental or other marginal reserve requirement) with respect
to Eurocurrency funding (currently referred to as "Eurocurrency
liabilities"); and
15
IBOR means the rate of interest per annum determined by the Agent as
the rate at which dollar deposits in the approximate amount of the
Noteholders' funding for the purchase or carrying of Notes that is not
being provided by Commercial Paper Notes are offered for such Interest
Period or any shorter period for which interest accrues based on
information presented on the Telerate Screen page 3750 at approximately
11:00 a.m. (Chicago time) two Business Days prior to such date of
determination; PROVIDED, that if at least two such offered rates appear on
the Telerate Screen in respect of such Interest Period or any shorter
period for which interest accrues, the arithmetic mean of all such rates
(as determined by the Agent) will be the rate used; PROVIDED, FURTHER, that
if Telerate ceases to provide LIBOR quotations, such rate shall be the rate
of interest determined by the Agent at which dollar deposits in the
approximate amount of the Noteholders' funding for the purchase or carrying
of Notes that is not being provided by Commercial Paper Notes for such
Interest Period or shorter period for which interest accrues would be
offered by BofA's Grand Cayman Branch, Grand Cayman, B.W.I. (or such other
office as may be designated for such purpose of BofA), to major banks in
the offshore dollar market at their request at approximately 11:00 a.m.
(New York City time) two Business Days prior to such date of determination.
The Offshore Rate shall be adjusted automatically as of the effective
date of any change in the Eurodollar Reserve Percentage.
OFFSHORE TRANCHE PERIOD: The period commencing on the date any
portion of the Notes is no longer funded by Commercial Paper Notes or the last
day of any previous Offshore Tranche Period and ending on the date seven,
fourteen or twenty-one days or one, two or three months thereafter as selected
by the Issuer; PROVIDED that:
(i) if any Offshore Tranche Period would otherwise end on a day that
is not a Business Day, such Offshore Tranche Period shall be extended to
the following Business Day unless, in the case of an Offshore Tranche
Period of one, two or three months, the result of such extension would be
to carry such Offshore Tranche Period into another calendar month, in which
event such Offshore Tranche Period shall end on the preceding Business Day;
(ii) any Offshore Tranche Period of one, two or three months that
begins on the last Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the calendar month at the end
of such Offshore Tranche Period) shall end on the last Business Day of the
calendar month at the end of such Offshore Tranche Period; and
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(iii) no Offshore Tranche Period for any Notes shall extend beyond the
end of the Purchase Period.
OPINION OF COUNSEL: A written opinion of counsel acceptable in form
and substance and from counsel acceptable to the Agent and, if such opinion or a
copy thereof is required to be delivered to the Indenture Trustee or the
Security Insurer, to the Indenture Trustee or the Security Insurer, as
applicable.
OTHER FEE PERCENT: 0.025% per annum.
OUTSTANDING MONTHLY ADVANCES: With respect to any Determination Date,
(A) the sum of all Monthly Advances made pursuant to Section 3.4(a) with respect
to a Receivable on any Determination Date prior to such Determination Date
relating to that Receivable which have not been reimbursed pursuant to Section
3.6(b)(i) or (B) the sum of all Monthly Advances made pursuant to Section 3.4(b)
on any Determination Date prior to such Determination Date which have not been
reimbursed pursuant to Section 3.6(a)(ii).
PERSON: Any legal person, including any individual, corporation,
partnership, joint venture, estate, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof, or any other entity.
PREMIER RECEIVABLES: Receivables originated under OFL's "Premier"
program.
PRINCIPAL BALANCE: With respect to any Receivable, as of any date,
the Amount Financed minus (i) that portion of all amounts received on or prior
to such date and allocable to principal in accordance with the terms of the
Receivable, and (ii) any Cram Down Loss in respect of such Receivable.
PRINCIPAL DISTRIBUTION AMOUNT: With respect to any Distribution Date
during the Amortization Period, the amount equal to the sum of the following
amounts with respect to the immediately preceding Monthly Period, in each case
computed without duplication (including without duplication of amounts
distributed with respect to prior Distribution Dates): (i) that portion of all
collections on Receivables allocable to principal, including all full and
partial principal prepayments, (ii) the Principal Balance (as of the related
Accounting Date) of all Receivables that are Liquidated Receivables as of the
prior Accounting Date (other than Receivables that became Purchased Receivables
or Repurchased Receivables as of the immediately preceding Accounting Date),
(iii) the portion of the Purchase Amount allocable to principal of all
Receivables that became Purchased Receivables as of the immediately preceding
Accounting Date, (iv) the portion of the Repurchase Price allocable to principal
of all Receivables that became Repurchased Receivables during the preceding
Monthly Period, (v) the portion of the proceeds allocable to principal from the
sale or securitization
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of the Receivables pursuant to the Security Agreement, and (vi) the aggregate
amount of Cram Down Losses that shall have occurred during or prior to the
related Monthly Period.
PURCHASE AGREEMENT: The Receivables Purchase Agreement and
Assignment, dated as of December 3, 1996 between OFL and the Seller.
PURCHASE AMOUNT: With respect to a Receivable, the Principal Balance
and all accrued and unpaid interest on the Receivable (without regard to any
Monthly Advances that may have been made with respect to the Receivable) as of
the Accounting Date on which the obligation to purchase such Receivable arises.
PURCHASED RECEIVABLE: As of any Accounting Date, any Receivable
(including any Liquidated Receivable) that became an Administrative Receivable
as of such Accounting Date, and as to which the Purchase Amount has been
deposited in the Collection Account by the Seller, OFL or the Servicer, as
applicable, on or before the related Deposit Date.
QUALIFYING RECEIVABLE: With respect to any Monthly Period, a
Receivable as to which (i) no portion of a Scheduled Payment shall have become
more than 30 days delinquent, (ii) the Servicer in good faith has not determined
that the Obligor thereon is unlikely to continue making Scheduled Payments, and
(iii) all of the representations and warranties under the Purchase Agreement and
Repurchase Agreement are true and correct; PROVIDED, that the sum (without
duplication) of the aggregate Principal Balance of Classic Receivables that are
Financed Repossessions in excess of 5% of the aggregate outstanding Principal
Balance of Qualifying Receivables and the aggregate Principal Balance of Classic
Receivables in excess of 65% of the aggregate outstanding Principal Balance of
Qualifying Receivables shall be excluded from the Principal Balance of
Qualifying Receivables for all purposes hereunder, including the denominator of
the aforesaid calculations and the calculation of the Collateral Test.
RATING AGENCY: Each of Moody's and Standard & Poor's, so long as such
Persons determined a capital charge with respect to the issuance of the Note
Policy by the Security Insurer; and if either Moody's or Standard & Poor's no
longer determines such capital charge, such other nationally recognized
statistical rating organization selected by the Agent and (so long as an Insurer
Default shall not have occurred and be continuing) acceptable to the Security
Insurer.
RECEIVABLE: A retail installment sale contract or promissory note
(and related security agreement) for a new or used automobile or light truck
(and all accessories thereto) that is included in the Receivables Schedule, and
all rights and obligations under such a contract, but not including (i) any
Liquidated Receivable (other than for purposes of calculating the Advance
Interest Distributable Amounts, Advance Principal
18
Distributable Amounts and the WAC Deficiency Amount hereunder and for the
purpose of determining the obligations pursuant to Section 2.7 to purchase
Receivables), (ii) any Purchased Receivable on or after the Accounting Date
immediately preceding the Deposit Date on which payment of the Purchase
Amount is made in connection therewith pursuant to Section 3.5 or (iii) any
Repurchased Receivable on or after the date on which payment of the
Repurchase Price is deposited in the Collection Account pursuant to Section
3(d) of the Repurchase Agreement.
RECEIVABLE FILES: The documents, electronic entries, instruments and
writings listed in Section 6(c) of the Repurchase Agreement.
REFERENCE RATE: For any day, a fluctuating interest rate per annum as
shall be in effect from time to time, which rate shall be at all times equal to
the rate of interest in effect for such day, as publicly announced from time to
time by BofA in San Francisco, California, as its "reference rate." It is a
rate set by BofA based upon various factors including BofA's costs and desired
return, general economic conditions and other factors, and is used as a
reference point for pricing some loans, which may be priced at, above or below
such announced rate.
REGISTRAR OF TITLES: With respect to any state, the governmental
agency or body responsible for the registration of, and the issuance of
certificates of title relating to, motor vehicles and liens thereon.
RELATED DOCUMENTS: The Repurchase Agreement, the Indenture, the
Notes, the Purchase Agreement, the Custodian Agreement, the Note Policy, the
Security Agreement, the Note Purchase Agreement, the Fee Letter, the Insurance
Agreement, the Spread Account Agreement and the Lockbox Agreement. The Related
Documents executed by any party are referred to herein as "such party's Related
Documents," "its Related Documents" or by a similar expression.
REPURCHASE AGREEMENT: The Repurchase Agreement dated as of December
3, 1996, between the Issuer, as Buyer, and Olympic Receivables Finance Corp., as
Seller.
REPURCHASED RECEIVABLES: Any Receivables that are required to be
repurchased by the Seller pursuant to Section 3(d) of the Repurchase Agreement.
RESPONSIBLE OFFICER: The President, any Vice President or Assistant
Vice President or the Controller of such Person, or any other officer or
employee having similar functions and, with respect to the Seller or the
Servicer, those employees of the Seller or the Servicer, as the case may be,
whose names appear on a list of people authorized to sign on behalf of the
Seller or Servicer, as applicable, furnished to the Indenture Trustee, the
19
Security Insurer and the Agent, as such list may from time to time be amended.
REVOLVING PERIOD: The period from and including the Closing Date to
but excluding the date on which the Amortization Period commences.
SCHEDULE OF REPRESENTATIONS: The Schedule of Representations and
Warranties attached as Schedule A to the Repurchase Agreement.
SCHEDULED PAYMENT: With respect to any Monthly Period for any
Receivable, the amount set forth in such Receivable as required to be paid by
the Obligor in such Monthly Period. If after the applicable Cut-Off Date with
respect to a Receivable, the Obligor's obligation under such Receivable with
respect to a Monthly Period has been modified so as to differ from the amount
specified in such Receivable as a result of (i) the order of a court in an
insolvency proceeding involving the Obligor, (ii) pursuant to the Soldiers' and
Sailors' Civil Relief Act of 1940 or (iii) modifications or extensions of the
Receivable permitted by Section 2.2(b), the Scheduled Payment with respect to
such Monthly Period shall refer to the Obligor's payment obligation with respect
to such Monthly Period as so modified.
SECURED ACCOUNTS: The meaning specified in Section 3.1(c).
SECURITY AGREEMENT: The Security Agreement dated as of December 3,
1996, among OFL, the Seller, the Security Insurer, the Agent, the Issuer, the
Indenture Trustee and the Collateral Agent.
SECURITY INSURER: Financial Security Assurance Inc., a financial
guaranty insurance corporation incorporated under the laws of the State of New
York, or any successor thereto, as issuer of the Note Policy.
SECURITY INSURER OPTIONAL DEPOSIT: With respect to a Determination
Date, the amount, if any, delivered by the Security Insurer to the Indenture
Trustee pursuant to Section 3.5(b) with respect to such Determination Date.
SELLER: Olympic Receivables Finance Corp., a Delaware corporation.
SERVICER: Olympic Financial Ltd., its successor in interest pursuant
to Section 5.2 or, after any termination of the Servicer upon a Servicer
Termination Event, the Backup Servicer or any other successor Servicer.
SERVICER EXTENSION NOTICE: The notice delivered pursuant to Section
2.14.
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SERVICER TERMINATION EVENT: An event described in Section 5.1.
SERVICER'S CERTIFICATE: With respect to each Determination Date, a
certificate, completed by and executed on behalf of the Servicer, in accordance
with Section 2.9, substantially in the form attached hereto as Exhibit B.
SPREAD ACCOUNT: The Spread Account maintained pursuant to the Spread
Account Agreement.
SPREAD ACCOUNT AGREEMENT: The Spread Account Agreement dated as of
March 25, 1993, as amended and restated as of December 3, 1996, among the
Seller, OFL, the Spread Account Collateral Agent, the Security Insurer and the
trustees specified therein, together with the Warehousing Series Supplement
thereto dated as of December 3, 1996, as the same may be amended, supplemented
or otherwise modified in accordance with the terms thereof.
SPREAD ACCOUNT AVAILABLE FUNDS: With respect to any Deficiency Claim
Date, the amount on deposit in the Collection Account as of such date, without
taking into account any amounts deposited into the Collection Account with
respect to amounts withdrawn from the Spread Account pursuant to Section 3.11.
SPREAD ACCOUNT COLLATERAL AGENT: The Collateral Agent named in the
Spread Account Agreement, and any successor thereto pursuant to the terms of the
Spread Account Agreement.
STANDARD & POOR'S: Standard & Poor's Ratings Group, a division of
McGraw Hill, Inc., or any successor thereto.
SUPPLEMENTAL SERVICING FEE: With respect to any Monthly Period, all
administrative fees, expenses and charges paid by or on behalf of Obligors,
including late fees, collected on the Receivables during such Monthly Period.
TOTAL EXPENSE PERCENT: The sum of (i) the Basic Servicing Fee Rate,
(ii) the Insurance Premium and (iii) the Other Fee Percent.
TOTAL SERVICING FEE: The sum of the Basic Servicing Fee and the
Supplemental Servicing Fee.
TRANCHE: A portion of the Advances funded by Notes funded by the
Noteholders' sale of Commercial Paper Notes maturing at the end of a CP Tranche
Period, or funded at the Offshore Rate for an Offshore Tranche Period as
selected by the Issuer as provided in the definition thereof.
TRANCHE PERIOD: A CP Tranche Period or an Offshore Tranche Period.
21
TWO YEAR TREASURY YIELD: As of any date of determination, the per
annum rate equal to the yield for two year United States Treasury notes that
appears on the Telerate Page 5 (or such replacement system or page as is then
customarily used to quote yields on United States Treasury notes) as of 10:00
a.m., New York City time, on such date of determination; PROVIDED, HOWEVER,
following the occurrence of an Amortization Event, the Two Year Treasury Yield
shall be the yield for two year United States Treasury notes appearing on the
Telerate Page 5 (or such replacement system or pages as is then customarily used
to quote yields on United States Treasury notes) at the close of business, New
York City time, on the date of the occurrence of such Amortization Event.
UCC: The Uniform Commercial Code as in effect in the relevant
jurisdiction.
WAC DEFICIENCY AMOUNT: As of any date of determination on which the
WAC Deficiency Percentage is greater than zero, an amount equal to the product
of (x) 1.7 times (y) the WAC Deficiency Percentage times (z) the result of (i)
the aggregate outstanding Principal Balance of the Receivables as of the
immediately preceding Accounting Date PLUS (ii) the aggregate outstanding
Principal Balance of any Receivables transferred by the Seller to the Issuer
since such Accounting Date and LESS (iii) the aggregate outstanding Principal
Balance of any Receivables that become Purchased Receivables or Repurchased
Receivables since such Accounting Date.
WAC DEFICIENCY DEPOSIT: As of any date of determination, the amount
on deposit in the Collection Account in respect of the WAC Deficiency Amount,
which shall equal the amount withheld in the Collection Account in respect of
the WAC Deficiency Amount on the Distribution Date coinciding with or next
preceding such date of determination pursuant to Section 3.6(a)(vii) plus
amounts, if any, deposited into the Collection Account in respect of the WAC
Deficiency Amount from such Distribution Date to and including the date of
determination.
WAC DEFICIENCY PERCENTAGE: As of any date of determination, an amount
expressed as a percentage equal to the excess, if any, of (A) 6.50% PLUS the
greatest of (I) the sum of (i) the Two Year Treasury Yield, determined as of
such date, (ii) 0.60%, (iii) the Basis Fee Percent and (iv) the Total Expense
Percent; (II) the sum of (i) the product of (1) the CP Composite Rate, if the
purchase or carrying of any of the Notes by the Noteholder is funded by
Commercial Paper Notes, and (2) 1.2 PLUS (ii) 0.25% and (iii) the Total Expense
Percent; and (III) the sum of (i) the product of (1) the Offshore Rate, if the
purchase or carrying of any of the Notes by the Noteholders is not funded by
Commercial Paper Notes, and (2) 1.2, (ii) 0.375% and (iii) the Total Expense
Percent over (B) the weighted average APR (weighted based on the aggregate
outstanding Principal Balance of the relevant Receivables as of the immediately
preceding Accounting Date PLUS the aggregate outstanding Principal Balance of
any
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Receivables transferred by the Seller to the Issuer since such Accounting
Date and LESS the aggregate outstanding Principal Balance of any Receivables
that became Purchased Receivables or Repurchased Receivables since such
Accounting Date) of Qualifying Receivables.
WAREHOUSING SHORTFALL AVAILABLE FUNDS: With respect to any Deficiency
Claim Date, means the amount on deposit in the Collection Account as of such
date, taking into account amounts deposited into the Collection Account in
respect of a Collection Account Shortfall but without taking into account
amounts deposited into the Collection Account in respect of a Warehousing
Shortfall.
WARRANTY RECEIVABLE: With respect to any Monthly Period, a Receivable
that the Seller or OFL has become obligated to repurchase pursuant to Section 10
of the Repurchase Agreement.
Section 1.2. USAGE OF TERMS. With respect to all terms used in this
Agreement, the singular includes the plural and the plural the singular; words
importing any gender include the other gender; references to "writing" include
printing, typing, lithography, and other means of reproducing words in a visible
form; references to agreements and other contractual instruments include all
subsequent amendments thereto or changes therein entered into in accordance with
their respective terms and not prohibited by this Agreement; references to
Persons include their permitted successors and assigns; and the terms "include"
or "including" mean "include without limitation" or "including without
limitation."
Section 1.3. CALCULATIONS. All calculations of the amount of
interest accrued on the Notes shall be made on the basis of a 360-day year and
actual days elapsed and all calculations of the amount of the Basic Servicing
Fee shall be made on the basis of a 360-day year consisting of twelve 30-day
months. All references to the Principal Balance of a Receivable as of an
Accounting Date shall refer to the close of business on such day.
Section 1.4. SECTION REFERENCES. All references to Articles,
Sections, paragraphs, subsections, exhibits and schedules shall be to such
portions of this Agreement unless otherwise specified.
Section 1.5. NO RECOURSE. 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, employee,
incorporator, officer, or director, as such, of the Seller, the Agent, OFL, the
Servicer, the Indenture Trustee, the Collateral Agent, the Backup Servicer or
the Issuer or of any predecessor or successor of the Seller, the Agent, OFL, the
Servicer, the Indenture Trustee, the Collateral Agent, the Backup Servicer or
the Issuer.
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Section 1.6. MATERIAL ADVERSE EFFECT. Whenever a determination is to
be made under this Agreement as to whether a given event, action, course of
conduct or set of facts or circumstances could or would have a material adverse
effect on the Issuer or the Noteholders (or any similar or analogous
determination), such determination shall be made without taking into account the
insurance provided by the Note Policy.
ARTICLE II
ADMINISTRATION AND SERVICING OF RECEIVABLES
Section 2.1. DUTIES OF THE SERVICER. The Servicer is hereby
authorized to act as agent for the Issuer and the Seller and in such capacity
shall manage, service, administer and make collections on the Receivables, and
perform the other actions required by the Servicer under this Agreement. The
Servicer agrees that its servicing of the Receivables shall be carried out in
accordance with customary and usual procedures of institutions which service
motor vehicle retail installment sales contracts and, to the extent more
exacting, the degree of skill and attention that the Servicer exercises from
time to time with respect to all comparable motor vehicle receivables that it
services for itself or others. In performing such duties, so long as OFL is the
Servicer, it shall comply with the policies and procedures attached hereto as
Exhibit A. The Servicer's duties shall include, without limitation, collection
and posting of all payments, responding to inquiries of Obligors on the
Receivables, investigating delinquencies, sending payment coupons to Obligors,
reporting any required tax information to Obligors, policing the collateral,
complying with the terms of the Lockbox Agreement, accounting for collections
and furnishing monthly and annual statements to the Issuer, the Agent, the
Indenture Trustee and the Security Insurer with respect to distributions,
monitoring the status of Insurance Policies with respect to the Financed
Vehicles and performing the other duties specified herein. The Servicer shall
also administer and enforce all rights and responsibilities of the holder of the
Receivables provided for in the Dealer Agreements (and shall maintain possession
of the Dealer Agreements, to the extent it is necessary to do so), the Dealer
Assignments and the Insurance Policies, to the extent that such Dealer
Agreements, Dealer Assignments and Insurance Policies relate to the Receivables,
the Financed Vehicles or the Obligors. To the extent consistent with the
standards, policies and procedures otherwise required hereby, the Servicer shall
follow its customary standards, policies, and procedures and shall have full
power and authority, acting alone, to do any and all things in connection with
such managing, servicing, administration and collection that it may deem
necessary or desirable. Without limiting the generality of the foregoing, the
Servicer is hereby authorized and empowered by the Issuer to execute and
deliver, on behalf of the Issuer, any and all instruments of satisfaction or
cancellation, or of partial or full release or discharge, and all other
comparable instruments,
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with respect to the Receivables and with respect to the Financed Vehicles;
PROVIDED, HOWEVER, that notwithstanding the foregoing, the Servicer shall
not, except pursuant to an order from a court of competent jurisdiction,
release an Obligor from payment of any unpaid amount under any Receivable or
waive the right to collect the unpaid balance of any Receivable from the
Obligor, except that the Servicer may forego collection efforts if the amount
subject to collection is DE MINIMIS and if it would forego collection in
accordance with its customary procedures. The Servicer is hereby authorized
to commence, in its own name or in the name of the Issuer (provided the
Servicer has obtained the Issuer's consent, which consent shall not be
unreasonably withheld), a legal proceeding to enforce a Receivable pursuant
to Section 2.3 or to commence or participate in any other legal proceeding
(including, without limitation, a bankruptcy proceeding) relating to or
involving a Receivable, an Obligor or a Financed Vehicle. If the Servicer
commences or participates in such a legal proceeding in its own name, the
Issuer shall thereupon be deemed to have automatically assigned such
Receivable to the Servicer solely for purposes of commencing or participating
in any such proceeding as a party or claimant, and the Servicer is authorized
and empowered by the Issuer to execute and deliver in the Servicer's name any
notices, demands, claims, complaints, responses, affidavits or other
documents or instruments in connection with any such proceeding. The Issuer
shall furnish the Servicer with any powers of attorney and other documents
which the Servicer may reasonably request and which the Servicer deems
necessary or appropriate and take any other steps which the Servicer may deem
necessary or appropriate to enable the Servicer to carry out its servicing
and administrative duties under this Agreement.
Section 2.2. COLLECTION OF RECEIVABLE PAYMENTS; MODIFICATIONS OF
RECEIVABLES; LOCKBOX AGREEMENTS.
(a) Consistent with the standards, policies and procedures required by
this Agreement, the Servicer shall make reasonable efforts to collect all
payments called for under the terms and provisions of the Receivables as and
when the same shall become due, and shall follow such collection procedures as
it follows with respect to all comparable automobile receivables that it
services for itself or others and otherwise act with respect to the Receivables,
the Dealer Agreements, the Dealer Assignments, the Insurance Policies and the
other Seller Conveyed Property in such manner as will, in the reasonable
judgment of the Servicer, maximize the amount to be received by the Issuer with
respect thereto. The Servicer is authorized in its discretion to waive any
prepayment charge, late payment charge or any other similar fees that may be
collected in the ordinary course of servicing any Receivable.
(b) The Servicer may at any time agree to a modification or amendment
of a Receivable in order to (i) change the Obligor's regular due date to another
date within the Monthly Period in which such due date occurs, (ii) re-amortize
the
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scheduled payments on the Receivable following a partial prepayment of
principal or (iii) grant extensions on a Receivable, provided that the
aggregate period of all extensions on a Receivable shall not exceed three
months. The aggregate Principal Balance of Receivables which have been
extended during any calendar quarter shall not exceed the greater of (A)
$500,000 and (B) 1.5% of the Aggregate Principal Balance as of the Accounting
Date immediately prior to the first day of such calendar quarter.
(c) The Servicer may grant payment extensions on, or other
modifications or amendments to, a Receivable (in addition to those modifications
permitted by Section 2.2(b)) in accordance with its customary procedures if the
Servicer believes in good faith that such extension, modification or amendment
is necessary to avoid a default on such Receivable, will maximize the amount to
be received by the Issuer with respect to such Receivable, and is otherwise in
the best interests of the Issuer; PROVIDED, HOWEVER, that:
(i) In no event may a Receivable be extended beyond the Monthly Period
immediately preceding the Final Scheduled Distribution Date;
(ii) So long as an Insurer Default shall not have occurred and be
continuing, the Servicer shall not amend or modify a Receivable (except as
provided in Section 2.2(b)) without the consent of the Security Insurer;
and
(iii) If an Insurer Default shall have occurred and be continuing, the
Servicer may not extend or modify any Receivable (other than as permitted
by Section 2.2(b)).
(d) The Servicer shall use its best efforts to cause Obligors to make
all payments on the Receivables, whether by check or by direct debit of the
Obligor's bank account, to be made directly to one or more Lockbox Banks, acting
as agent for the Collateral Agent pursuant to a Lockbox Agreement. Amounts
received by a Lockbox Bank in respect of the Receivables may initially be
deposited into a demand deposit account maintained by the Lockbox Bank as agent
for the Collateral Agent and for other owners of automobile receivables serviced
by the Servicer. The Servicer shall use its best efforts to cause any Lockbox
Bank to deposit all payments on the Receivables in the Lockbox Account no later
than the Business Day after receipt, and to cause all amounts credited to the
Lockbox Account on account of such payments to be transferred to the Collection
Account no later than the second Business Day after receipt of such payments.
The Lockbox Account shall be a demand deposit account held by the Lockbox Bank,
or at the request of the Agent or the Security Insurer (unless an Insurer
Default shall have occurred and be continuing) an Eligible Account satisfying
clause (i) of the definition thereof. The Collateral Agent shall not be liable
for any actions or omissions of the Lockbox Bank.
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Prior to each Purchase Date, the Servicer shall have notified each
Obligor that makes its payments on the Receivables being transferred to the
Issuer on such date by check to make such payments thereafter directly to the
Lockbox Bank (except in the case of Obligors that have already been making such
payments to the Lockbox Bank), and shall have provided each such Obligor with
respect to the Premier Receivables with a supply of mailing address labels and
shall provide each such Obligor with respect to the Classic Receivables with
monthly invoices, in each case in order to enable such Obligors to make such
payments directly to the Lockbox Bank for deposit into the Lockbox Account, and
the Servicer will continue, not less often than every three months, to so notify
those Obligors who have failed to make payments to the Lockbox Bank. If and to
the extent requested by the Agent or the Security Insurer (unless an Insurer
Default shall have occurred and be continuing), the Servicer shall request each
Obligor that makes payment on the Receivables by direct debit of such Obligor's
bank account to execute an authorization for automatic payment which in the
judgment of the Security Insurer is sufficient to authorize direct debit by the
Lockbox Bank on behalf of the Issuer. If at any time the Lockbox Bank is unable
to directly debit an Obligor's bank account that makes payment on the
Receivables by direct debit and if such inability is not cured within 15 days or
cannot be cured by execution by the Obligor of a new authorization for automatic
payment, the Servicer shall notify such Obligor that it cannot make payment by
direct debit and must thereafter make payment by check.
Notwithstanding any Lockbox Agreement, or any of the provisions of
this Agreement relating to the Lockbox Agreement, the Servicer shall remain
obligated and liable to the Issuer, Indenture Trustee and Noteholders for
servicing and administering the Receivables and the other Seller Conveyed
Property in accordance with the provisions of this Agreement without diminution
of such obligation or liability by virtue thereof.
In the event the Servicer shall for any reason no longer be acting as
such, the successor Servicer shall thereupon assume all of the rights and
obligations of the outgoing Servicer under the Lockbox Agreement. In such
event, the successor Servicer shall be deemed to have assumed all of the
outgoing Servicer's interest therein and to have replaced the outgoing Servicer
as a party to each such Lockbox Agreement to the same extent as if such Lockbox
Agreement had been assigned to the successor Servicer, except that the outgoing
Servicer shall not thereby be relieved of any liability or obligations on the
part of the outgoing Servicer to the Lockbox Bank under such Lockbox Agreement.
The outgoing Servicer shall, upon request of the Agent, but at the expense of
the outgoing Servicer, deliver to the successor Servicer all documents and
records relating to each such Lockbox Agreement and an accounting of amounts
collected and held by the Lockbox Bank and otherwise use its best efforts to
effect the orderly and efficient transfer of any Lockbox Agreement to the
successor Servicer. In the event that the Security Insurer (so long as an
Insurer Default shall not have
27
occurred and be continuing) or the Agent (if an Insurer Default shall have
occurred and be continuing) elects to change the identity of the Lockbox
Bank, the outgoing Servicer, at its expense, shall cause the Lockbox Bank to
deliver, at the direction of the Security Insurer (so long as an Insurer
Default shall not have occurred and be continuing) or the Agent (if an
Insurer Default shall have occurred and be continuing) to the Agent or a
successor Lockbox Bank, all documents and records relating to the Receivables
and all amounts held (or thereafter received) by the Lockbox Bank (together
with an accounting of such amounts) and shall otherwise use its best efforts
to effect the orderly and efficient transfer of the lockbox arrangements and
the Servicer shall notify the Obligors to make payments to the Lockbox
Account established by the successor.
(e) The Servicer shall remit all payments by or on behalf of the
Obligors received directly by the Servicer to the Collection Account or the
Lockbox Account for deposit into the Collection Account as soon as practicable,
but in no event later than the Business Day after receipt thereof.
Section 2.3. REALIZATION UPON RECEIVABLES.
(a) Consistent with the standards, policies and procedures required by
this Agreement, the Servicer shall use its best efforts to repossess (or
otherwise comparably convert the ownership of) and liquidate any Financed
Vehicle securing a Receivable with respect to which the Servicer has determined
that payments thereunder are not likely to be resumed, as soon as is practicable
after default on such Receivable but in no event later than the date on which
all or any portion of a Scheduled Payment has become 91 days delinquent. The
Servicer is authorized to follow such customary practices and procedures as it
shall deem necessary or advisable, consistent with the standard of care required
by Section 2.1, which practices and procedures may include reasonable efforts to
realize upon any recourse to Dealers, the sale of the related Financed Vehicle
at public or private sale, the submission of claims under an Insurance Policy
and other actions by the Servicer in order to realize upon such a Receivable.
The foregoing is subject to the provision that, in any case in which the
Financed Vehicle shall have suffered damage, the Servicer shall not expend funds
in connection with any repair or towards the repossession of such Financed
Vehicle unless it shall determine in its discretion that such repair or
repossession shall increase the proceeds of liquidation of the related
Receivable by an amount greater than the amount of such expenses. All amounts
received upon liquidation of a Financed Vehicle shall be remitted directly by
the Servicer to the Collection Account or the Lockbox Account for deposit into
the Collection Account without deposit into any intervening account as soon as
practicable, but in no event later than the Business Day after receipt thereof.
The Servicer shall be entitled to recover all reasonable expenses incurred by it
in the course of repossessing and liquidating a Financed Vehicle into cash
proceeds, but only out of the cash proceeds of such
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Financed Vehicle, any deficiency obtained from the Obligor or any amounts
received from the related Dealer, which amounts may be retained by the
Servicer (and shall not be required to be deposited as provided in Section
2.2(e)) to the extent of such expenses. The Servicer shall pay on behalf of
the Issuer any personal property taxes assessed on repossessed Financed
Vehicles; the Servicer shall be entitled to reimbursement of any such tax
from Liquidation Proceeds with respect to such Receivable.
(b) If the Servicer elects to commence a legal proceeding to enforce a
Dealer Agreement or Dealer Assignment, the act of commencement shall be deemed
to be an automatic assignment from the Issuer to the Servicer of the rights
under such Dealer Agreement and Dealer Assignment for purposes of collection
only. If, however, in any enforcement suit or legal proceeding, it is held that
the Servicer may not enforce a Dealer Agreement or Dealer Assignment on the
grounds that it is not a real party in interest or a Person entitled to enforce
the Dealer Agreement or Dealer Assignment, the Issuer, at the Servicer's
expense, or the Seller, at the Seller's expense, shall take such steps as the
Servicer deems necessary to enforce the Dealer Agreement or Dealer Assignment,
including bringing suit in its name or the name of the Seller or of the Issuer
and the Collateral Agent for the benefit of the Secured Parties. All amounts
recovered shall be remitted directly by the Servicer as provided in Section
2.2(e).
Section 2.4. INSURANCE.
(a) The Servicer shall require that each Financed Vehicle be insured
by the Insurance Policies referred to in Paragraph 24 of the Schedule of
Representations and shall monitor the status of such comprehensive and collision
insurance coverage thereafter, in accordance with its customary servicing
procedures. Each Receivable requires the Obligor to maintain such comprehensive
and collision insurance, naming OFL and its successors and assigns as additional
insureds, and permits the holder of such Receivable to obtain comprehensive and
collision insurance at the expense of the Obligor if the Obligor fails to
maintain such insurance. If the Servicer shall determine that an Obligor has
failed to obtain or maintain a comprehensive and collision Insurance Policy
covering the related Financed Vehicle which satisfies the conditions set forth
in such Paragraph 24 (including, without limitation, during the repossession of
such Financed Vehicle) the Servicer shall enforce the rights of the holder of
the Receivable under the Receivable to require the Obligor to obtain such
comprehensive and collision insurance.
(b) The Servicer may, if an Obligor fails to obtain or maintain a
comprehensive and collision Insurance Policy, obtain insurance with respect to
the related Financed Vehicle and advance on behalf of such Obligor, as required
under the terms of the insurance policy, the premiums for such insurance (such
insurance being referred to herein as "Force-Placed Insurance").
29
All policies of Force-Placed Insurance shall be endorsed with clauses
providing for loss payable to the Issuer. Any cost incurred by the Servicer
in maintaining such Force-Placed Insurance shall only be recoverable out of
premiums paid by the Obligors or Liquidation Proceeds with respect to the
Receivable, as provided in Section 2.4(c).
(c) In connection with any Force-Placed Insurance obtained hereunder,
OFL may, in the manner and to the extent permitted by applicable law, require
the Obligors to repay the entire premium to OFL. In no event shall OFL include
the amount of the premium in the Amount Financed under the Receivable. For all
purposes of this Agreement, the Insurance Add-on Amount with respect to any
Receivable having Force-Placed Insurance will be treated as a separate
obligation of the Obligor and will not be added to the Principal Balance of such
Receivable, and amounts allocable thereto will not be available for distribution
on the Notes. OFL shall retain and separately administer the right to receive
payments from Obligors with respect to Insurance Add-on Amounts or rebates of
Forced-Placed Insurance premiums. If an Obligor makes a payment with respect to
a Receivable having Force-Placed Insurance, but OFL is unable to determine
whether the payment is allocable to the Receivable or to the Insurance Add-on
Amount, the payment shall be applied first to any unpaid Scheduled Payments and
then to the Insurance Add-on Amount. Liquidation Proceeds on any Receivable
will be used first to pay the Principal Balance and accrued interest on such
Receivable and then to pay the related Insurance Add-on Amount. If an Obligor
under a Receivable with respect to which OFL has placed Force-Placed Insurance
fails to make scheduled payments of such Insurance Add-on Amount as due, and OFL
has determined that eventual payment of the Insurance Add-on Amount is unlikely,
OFL may, but shall not be required to, purchase such Receivable from the Issuer
for the Purchase Amount on any subsequent Deposit Date. Any such Receivable,
and any Receivable with respect to which OFL has placed Force-Placed Insurance
which has been paid in full (excluding any Insurance Add-on Amounts) will be
assigned to OFL.
(d) The Servicer may xxx to enforce or collect upon the Insurance
Policies, in its own name, if possible, or as agent of the Issuer. If the
Servicer elects to commence a legal proceeding to enforce an Insurance Policy,
the act of commencement shall be deemed to be an automatic assignment of the
rights of the Issuer under such Insurance Policy to the Servicer for purposes of
collection only. If, however, in any enforcement suit or legal proceeding it is
held that the Servicer may not enforce an Insurance Policy on the grounds that
it is not a real party in interest or a holder entitled to enforce the Insurance
Policy, the Issuer, on behalf of the Collateral Agent and the Secured Parties,
at the Servicer's expense, or the Seller, at the Seller's expense, shall take
such steps as the Servicer deems necessary to enforce such Insurance Policy,
including bringing suit in its name or the name of the Issuer and the Collateral
Agent for the benefit of the Secured Parties.
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Section 2.5. MAINTENANCE OF SECURITY INTERESTS IN VEHICLES.
(a) Consistent with the policies and procedures required by this
Agreement, the Servicer shall take such steps as are necessary to maintain
perfection of the security interest created by each Receivable in the related
Financed Vehicle on behalf of the Issuer, including but not limited to obtaining
the execution by the Obligors and the recording, registering, filing,
re-recording, re-filing, and re-registering of all security agreements,
financing statements and continuation statements as are necessary to maintain
the security interest granted by the Obligors under the respective Receivables.
The Issuer hereby authorizes the Servicer, and the Servicer agrees, to take any
and all steps necessary to re-perfect such security interest on behalf of the
Issuer as necessary because of the relocation of a Financed Vehicle or for any
other reason. In the event that the assignment of a Receivable to the Issuer is
insufficient, without a notation on the related Financed Vehicle's certificate
of title, or without fulfilling any additional administrative requirements under
the laws of the state in which the Financed Vehicle is located, to perfect a
security interest in the related Financed Vehicle in favor of the Issuer, the
Servicer hereby agrees that the Servicer's designation as the secured party on
the certificate of title is in its capacity as agent of the Issuer.
(b) Upon the occurrence of an Insurance Agreement Event of Default,
the Security Insurer may (so long as an Insurer Default shall not have occurred
and be continuing) instruct the Issuer and the Servicer to take or cause to be
taken, or, if an Insurer Default shall have occurred, upon the occurrence of a
Servicer Termination Event, the Issuer and the Servicer shall take or cause to
be taken such action as may, in the opinion of counsel to the Security Insurer
(or, if an Insurer Default shall have occurred and be continuing, counsel to the
Agent), be necessary to perfect or reperfect the security interests in the
Financed Vehicles securing the Receivables in the name of the Issuer by amending
the title documents of such Financed Vehicles or by such other reasonable means
as may, in the opinion of counsel to the Security Insurer or the Agent (as
applicable), be necessary or prudent. OFL hereby agrees to pay all expenses
related to such perfection or reperfection and to take all action necessary
therefor. In addition, prior to the occurrence of an Insurance Agreement Event
of Default, the Security Insurer may (unless an Insurer Default shall have
occurred and be continuing) instruct the Issuer and the Servicer to take or
cause to be taken such action as may, in the opinion of counsel to the Security
Insurer, be necessary to perfect or re-perfect the security interest in the
Financed Vehicles underlying the Receivables in the name of the Issuer,
including by amending the title documents of such Financed Vehicles or by such
other reasonable means as may, in the opinion of counsel to the Security
Insurer, be necessary or prudent; PROVIDED, HOWEVER, that (unless an Insurer
Default shall have occurred and be continuing) if the Security
31
Insurer requests that the title documents be amended prior to the occurrence
of an Insurance Agreement Event of Default, the out-of-pocket expenses of the
Servicer or the Issuer in connection with such action shall be reimbursed to
the Servicer or the Issuer, as applicable, by the Security Insurer.
Section 2.6. COVENANTS, REPRESENTATIONS, AND WARRANTIES OF SERVICER.
By its execution and delivery of this Agreement, the Servicer makes the
following representations, warranties and covenants on which the Issuer relies
in purchasing the Receivables and issuing the Notes, on which the Indenture
Trustee relies in authenticating the Notes and on which the Security Insurer
relies in issuing the Note Policy.
(a) The Servicer covenants as follows:
(i) LIENS IN FORCE. The Financed Vehicle securing each Receivable
shall not be released in whole or in part from the security interest
granted by the related Obligor, except upon payment in full of the
Receivable or as otherwise contemplated herein;
(ii) NO IMPAIRMENT. The Servicer shall do nothing to impair the
rights of the Issuer or the Noteholders in the Receivables, the Dealer
Agreements, the Dealer Assignments, the Insurance Policies or the other
Seller Conveyed Property; and
(iii) NO AMENDMENTS. The Servicer shall not extend or otherwise amend
the terms of any Receivable, except in accordance with Section 2.2.
(b) The Servicer represents, warrants and covenants as of the Closing
Date as to itself:
(i) ORGANIZATION AND GOOD STANDING. The Servicer has been duly
organized and is validly existing and in good standing under the laws of
its jurisdiction of organization, with power, authority and legal right to
own its properties and to conduct its business as such properties are
currently owned and such business is currently conducted, and had at all
relevant times, and now has, power, authority and legal right to enter into
and perform its obligations under this Agreement;
(ii) DUE QUALIFICATION. The Servicer is duly qualified to do business
as a foreign corporation in good standing, and has obtained all necessary
licenses and approvals, in all jurisdictions in which the ownership or
lease of property or the conduct of its business (including the servicing
of the Receivables as required by this Agreement) requires or shall require
such qualification, if the failure to be so qualified would have a material
adverse effect on the ability of the Servicer to perform its obligations
hereunder or on the enforceability of any Receivable.
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(iii) POWER AND AUTHORITY. The Servicer has the power and authority
to execute and deliver this Agreement and its Related Documents and to
carry out its terms and their terms, respectively, and the execution,
delivery and performance of this Agreement and the Servicer's Related
Documents have been duly authorized by the Servicer by all necessary
corporate action;
(iv) BINDING OBLIGATION. This Agreement and the Servicer's Related
Documents shall constitute legal, valid and binding obligations of the
Servicer 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;
(v) NO VIOLATION. The consummation of the transactions contemplated
by this Agreement and the Servicer's Related Documents, and the fulfillment
of the terms of this Agreement and the Servicer's Related Documents, shall
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 articles of incorporation or bylaws of the Servicer, or any
indenture, agreement, mortgage, deed of trust or other instrument to which
the Servicer is a party or by which it is bound, or result in the creation
or imposition of any Lien upon any of its properties pursuant to the terms
of any such indenture, agreement, mortgage, deed of trust or other
instrument, other than this Agreement, or violate any law, order, rule or
regulation applicable to the Servicer of any court or of any federal or
state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Servicer or any of its
properties;
(vi) NO PROCEEDINGS. There are no proceedings or investigations
pending or, to the Servicer's knowledge, threatened against the Servicer,
before any court, regulatory body, administrative agency or other tribunal
or governmental instrumentality having jurisdiction over the Servicer or
its properties (A) asserting the invalidity of this Agreement or any of the
Related Documents, (B) 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, or (C) seeking any determination or ruling
that might materially and adversely affect the performance by the Servicer
of its obligations under, or the validity or enforceability of, this
Agreement or any of the Related Documents or (D) seeking to adversely
affect the federal income tax or other federal, state or local tax
attributes of the Notes; and
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(vii) NO CONSENTS. The Servicer 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.
Section 2.7. PURCHASE OF RECEIVABLES UPON BREACH OF COVENANT. Upon
discovery by any of the Servicer, the Security Insurer, the Issuer or the
Indenture Trustee of a breach of any of the covenants set forth in Sections
2.5(a) or 2.6(a), the party discovering such breach shall give prompt written
notice to the others; PROVIDED, HOWEVER, that the failure to give any such
notice shall not affect any obligation of the Servicer. As of the second
Accounting Date following its discovery or receipt of notice of any breach of
any covenant set forth in Sections 2.5(a) or 2.6(a) which materially and
adversely affects the interests of the Noteholders, the Issuer or the Security
Insurer in any Receivable (including any Liquidated Receivable) (or, at the
Servicer's election, the first Accounting Date so following), the Servicer
shall, unless it shall have cured such breach in all material respects, purchase
from the Issuer the Receivable affected by such breach and, on the related
Deposit Date, the Servicer shall pay the related Purchase Amount. It is
understood and agreed that the obligation of the Servicer to purchase any
Receivable (including any Liquidated Receivable) with respect to which such a
breach has occurred and is continuing shall, if such obligation is fulfilled,
constitute the sole remedy against the Servicer for such breach available to the
Security Insurer, the Noteholders, the Issuer or the Indenture Trustee on behalf
of Noteholders; PROVIDED, HOWEVER, that the Servicer shall indemnify the Issuer,
the Backup Servicer, the Collateral Agent, the Security Insurer, the Indenture
Trustee, the Agent and the Noteholders against all costs, expenses, losses,
damages, claims and liabilities, including reasonable fees and expenses of
counsel, which may be asserted against or incurred by any of them as a result of
third party claims arising out of the events or facts giving rise to such
breach.
Section 2.8. TOTAL SERVICING FEE; PAYMENT OF CERTAIN EXPENSES BY
SERVICER. On each Distribution Date, the Servicer shall be entitled to receive
out of the Collection Account the Basic Servicing Fee and any Supplemental
Servicing Fee for the related Monthly Period pursuant to Section 3.6. The
Servicer shall be required to pay all expenses incurred by it in connection with
its activities under this Agreement (including taxes imposed on the Servicer,
expenses incurred in connection with distributions and reports to Noteholders
and the Security Insurer and all other fees and expenses of the Issuer,
including claims against the Issuer in respect of indemnification, unless such
fees, expenses or claims in respect of indemnification are expressly stated to
be for the account of OFL or not to be for the account of the Servicer). The
Servicer shall be liable for the fees and expenses of the Indenture Trustee, the
Custodian, the Backup Servicer, the Collateral Agent, the Lockbox Bank (and
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any fees under the Lockbox Agreement) and the Independent Accountants.
Notwithstanding the foregoing, if the Servicer shall not be OFL, a successor
to OFL as Servicer permitted by Section 4.2 or an Affiliate of any of the
foregoing, such Servicer shall not be liable for claims against the Issuer in
respect of indemnification.
Section 2.9. SERVICER'S CERTIFICATE. No later than 5:00 p.m. New
York City time on each Determination Date, the Servicer shall deliver to the
Issuer, the Agent, the Indenture Trustee, the Backup Servicer, the Security
Insurer and the Collateral Agent, a Servicer's Certificate executed by a
Responsible Officer of the Servicer containing, among other things, (i) all
information available as of such date necessary to enable the Indenture Trustee
to make the distributions required by Section 3.6 and to determine the amount to
which the Servicer is entitled to be reimbursed or has been reimbursed during
the related Monthly Period for Monthly Advances, (ii) all information available
as of such date necessary to enable the Indenture Trustee to send the statements
to Noteholders and the Security Insurer required by Section 3.7, (iii) a listing
of all Warranty Receivables and Administrative Receivables purchased or
repurchased as of the related Deposit Date, identifying the Receivables so
purchased or repurchased and (iv) all information available as of such date
necessary to enable the Indenture Trustee to reconcile all deposits to, and
withdrawals from, the Collection Account for the related Monthly Period and
Distribution Date, including the accounting required by compliance with the
Collateral Test. Receivables purchased by the Servicer or by the Seller or OFL
on the related Deposit Date and each Receivable which became a Liquidated
Receivable or which was paid in full during the related Monthly Period shall be
identified by account number (as set forth in the Receivables Schedule).
Section 2.10. ANNUAL STATEMENT AS TO COMPLIANCE; NOTICE OF SERVICER
TERMINATION EVENT.
(a) The Servicer shall deliver to the Issuer, the Agent, the Indenture
Trustee, the Backup Servicer, the Security Insurer, the Collateral Agent and
each Rating Agency, on or before March 31, (or 90 days after the end of the
Servicer's fiscal year, if other than December 31) of each year, beginning on
March 31, 1997, an officer's certificate signed by any Responsible Officer of
the Servicer, dated as of December 31, (or other applicable date) of such year,
stating that (i) a review of the activities of the Servicer during the preceding
12-month period (or such other period as shall have elapsed from the Closing
Date to the date of the first such certificate) and of its performance under
this Agreement has been made under such officer's supervision, and (ii) to such
officer's knowledge, based on such review, the Servicer has fulfilled all its
obligations under this Agreement throughout such period, or, if there has been a
default in the fulfillment of any such
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obligation, specifying each such default known to such officer and the nature
and status thereof.
(b) The Servicer shall deliver to the Issuer, the Agent, the Indenture
Trustee, the Backup Servicer, the Security Insurer and the Collateral Agent,
promptly after having obtained knowledge thereof, but in no event later than two
Business Days thereafter, written notice in an officer's certificate of any
event which with the giving of notice or lapse of time, or both, would become a
Servicer Termination Event under Section 5.1(a). The Seller or the Servicer
shall deliver to the Issuer, the Agent, the Indenture Trustee, the Backup
Servicer, the Security Insurer, the Collateral Agent and the Servicer or the
Seller (as applicable) promptly after having obtained knowledge thereof, but in
no event later than two Business Days thereafter, written notice in an officer's
certificate of any event which with the giving of notice or lapse of time, or
both, would become a Servicer Termination Event under any other clause of
Section 5.1.
Section 2.11. ANNUAL INDEPENDENT ACCOUNTANTS' REPORT.
(a) The Servicer shall cause a firm of nationally recognized
independent certified public accountants (the "Independent Accountants"), who
may also render other services to the Servicer or to the Seller, to deliver to
the Issuer, the Indenture Trustee, the Agent, the Backup Servicer, the Security
Insurer, the Collateral Agent and each Rating Agency, on or before March 31 (or
90 days after the end of the Servicer's fiscal year, if other than December 31)
of each year, beginning on March 31, 1997, with respect to the twelve months
ended the immediately preceding December 31 (or other applicable date) (or such
other period as shall have elapsed from the Closing Date to the date of such
certificate), a statement (the "Accountant's Report") addressed to the Board of
Directors of the Servicer, to the Agent, the Indenture Trustee, the Backup
Servicer, the Collateral Agent and the Security Insurer, to the effect that such
firm has audited the financial statements of the Servicer and issued its report
thereon and that such audit (1) was made in accordance with generally accepted
auditing standards, and accordingly included such tests of the accounting
records and such other auditing procedures as such firm considered necessary in
the circumstances; (2) included an examination of documents and records relating
to the servicing of automobile installment sales contracts under pooling and
servicing agreements, sale and servicing agreements and warehousing agreements
substantially similar one to another (such statement to have attached thereto a
schedule setting forth the pooling and servicing agreements and sale and
servicing agreements covered thereby, including this Agreement); (3) included an
examination of the delinquency and loss statistics relating to the Servicer's
portfolio of automobile installment sales contracts; and (4) except as described
in the statement, disclosed no exceptions or errors in the records relating to
automobile and light truck loans serviced for others that, in the firm's
opinion, generally accepted auditing standards requires such firm to report.
The
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Accountants' Report shall further state that (1) a review in accordance with
agreed upon procedures was made of three randomly selected Servicer's
Certificates for each such pooling and servicing agreement, sale and servicing
agreement or warehousing agreements and (2) except as disclosed in the
Accountant's Report, no exceptions or errors in the Servicer's Certificates so
examined were found.
(b) The Accountants' Report shall also indicate that the firm is
independent of the Seller and the Servicer within the meaning of the Code of
Professional Ethics of the American Institute of Certified Public Accountants.
(c) A copy of the Accountants' Report may be obtained by any
Noteholder by a request in writing to the Indenture Trustee addressed to the
Corporate Trust Office.
Section 2.12. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION
REGARDING RECEIVABLES. The Servicer shall provide to representatives of the
Issuer, Indenture Trustee, the Agent, the Backup Servicer and the Security
Insurer reasonable access to the documentation and its operations regarding the
Receivables. In each case, such access shall be afforded without charge but
only upon reasonable request and during normal business hours and on a date not
more than two Business Days after the date of such request. Nothing in this
Section shall derogate from the obligation of the Servicer to observe any
applicable law prohibiting disclosure of information regarding the Obligors, and
the failure of the Servicer to provide access as provided in this Section as a
result of such obligation shall not constitute a breach of this Section.
Section 2.13. MONTHLY TAPE.
(a) On or before the third Business Day, but in no event later than
the fifth calendar day, of each month, the Servicer will deliver to the
Indenture Trustee and the Backup Servicer a computer tape or a diskette (or any
other electronic transmission acceptable to the Indenture Trustee and the Backup
Servicer) in a format acceptable to the Indenture Trustee and the Backup
Servicer containing the information with respect to the Receivables as of the
preceding Accounting Date necessary for preparation of the Servicer's
Certificate relating to the immediately succeeding Determination Date and
necessary to determine the application of collections as provided in Section
3.3. The Backup Servicer shall use such tape or diskette (or other electronic
transmission acceptable to the Indenture Trustee and the Backup Servicer) to
verify the Servicer's Certificate delivered by the Servicer, and the Backup
Servicer shall certify to the Security Insurer and the Agent that it has
verified the Servicer's Certificate in accordance with this Section 2.13 and
shall notify the Servicer, the Security Insurer and the Agent of any
discrepancies, in each case, on or before the second Business Day following the
Determination Date. In the event that the Backup Servicer reports any
discrepancies, the Servicer and the
37
Backup Servicer shall attempt to reconcile such discrepancies prior to the
related Deficiency Claim Date, but in the absence of a reconciliation, the
Servicer's Certificate shall control for the purpose of calculations and
distributions with respect to the related Distribution Date. In the event
that the Backup Servicer and the Servicer are unable to reconcile
discrepancies with respect to a Servicer's Certificate by the related
Distribution Date, the Servicer shall cause the Independent Accountants, at
the Servicer's expense, to audit the Servicer's Certificate and, prior to the
third Business Day, but in no event later than the fifth calendar day, of the
following month, reconcile the discrepancies. The effect, if any, of such
reconciliation shall be reflected in the Servicer's Certificate for such next
succeeding Determination Date. In addition, the Servicer shall, if so
requested by the Agent or the Security Insurer (unless an Insurer Default
shall have occurred and be continuing) deliver to the Backup Servicer its
Collection Records and its Monthly Records within one Business Day of demand
therefor and a computer tape containing as of the close of business on the
date of demand all of the data maintained by the Servicer in computer format
in connection with servicing the Receivables. Other than the duties
specifically set forth in this Agreement, the Backup Servicer shall have no
obligations hereunder, including, without limitation, to supervise, verify,
monitor or administer the performance of the Servicer. The Backup Servicer
shall have no liability for any actions taken or omitted by the Servicer.
The duties and obligations of the Backup Servicer shall be determined solely
by the express provisions of this Agreement and no implied covenants or
obligations shall be read into this Agreement against the Backup Servicer.
Section 2.14. RETENTION AND TERMINATION OF SERVICER. The Servicer
hereby covenants and agrees to act as such under this Agreement for an initial
term, commencing on the Closing Date and ending on March 31, 1997 which term may
be extended by the Security Insurer for successive quarterly terms ending on
each successive June 30, September 30, December 31, and March 31, (or, pursuant
to revocable written standing instructions from time to time to the Servicer,
the Indenture Trustee and the Agent, for any specified number of terms greater
than one), until the termination of this Agreement. Each such notice (including
each notice pursuant to standing instructions, which shall be deemed delivered
at the end of successive quarterly terms for so long as such instructions are in
effect) (a "Servicer Extension Notice") shall be delivered by the Security
Insurer to the Agent, the Indenture Trustee and the Servicer. The Servicer
hereby agrees that, as of the date hereof and upon its receipt of any such
Servicer Extension Notice, the Servicer shall become bound, for the initial term
beginning on the Closing Date and for the duration of the term covered by such
Servicer Extension Notice, to continue as the Servicer subject to and in
accordance with the other provisions of this Agreement. Until such time as an
Insurer Default shall have occurred and be continuing, the Indenture Trustee
agrees that if as of the fifteenth day prior to the last day of any term of the
Servicer the Indenture Trustee
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shall not have received any Servicer Extension Notice from the Security
Insurer, the Indenture Trustee will, within five days thereafter, give
written notice of such non-receipt to the Agent, the Security Insurer and the
Servicer.
Section 2.15. FIDELITY BOND. The Servicer shall maintain a fidelity
bond in such form and amount as is customary for entities acting as custodian of
funds and documents in respect of consumer contracts on behalf of institutional
investors.
Section 2.16. DUTIES OF THE SERVICER UNDER THE INDENTURE. The
Servicer shall, and hereby agrees that it will, perform on behalf of the Issuer
the following duties of the Issuer under the Indenture (references are to the
applicable Sections in the Indenture):
(a) the direction to the Paying Agent, if any, to deposit moneys with
the Indenture Trustee (Section 1011);
(b) the preparation of all supplements, amendments, financing
statements, continuation statements, instruments of further assurance and other
instruments, in accordance with Section 1016 of the Indenture, necessary to
protect the Trust Estate (Section 1016); and
(c) the preparation of any written instruments required to confirm
more fully the authority of any co-trustee or separate trustee and any written
instruments necessary in connection with the resignation or removal of any
co-trustee or separate trustee (Sections 710 and 716).
Section 2.17. COLLECTING LIEN CERTIFICATES NOT DELIVERED ON THE
PURCHASE DATE. In the case of any Receivable in respect of which written
evidence from the Dealer selling the related Financed Vehicle that the Lien
Certificate for such Financed Vehicle showing OFL as first lienholder has been
applied for from the Registrar of Titles was delivered to the Custodian on the
applicable Purchase Date in lieu of a Lien Certificate, the Servicer shall use
its best efforts to collect such Lien Certificate from the Registrar of Titles
as promptly as practicable. If such Lien Certificate showing OFL as first
lienholder is not received by the Custodian within 180 days after the applicable
Purchase Date, then the representation and warranty in paragraph 5 of the
Schedule of Representations shall be deemed to have been incorrect in a manner
that materially and adversely affects the Security Insurer and the Issuer.
Section 2.18. ACCOUNTANTS' REVIEW OF RECEIVABLE FILES. The Servicer
(or OFL, if OFL is not the Servicer) shall at its own expense cause Independent
Accountants acceptable to the Security Insurer to conduct a review of Receivable
Files upon the terms and subject to the conditions of a letter agreement dated
December 3, 1996 between OFL and the Security Insurer.
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ARTICLE III
DISTRIBUTIONS; STATEMENTS TO NOTEHOLDERS
Section 3.1. SECURED ACCOUNTS.
(a) The Servicer shall establish the Collection Account in the name of
the Collateral Agent for the benefit of the Secured Parties (as defined in the
Security Agreement). The Collection Account shall be an Eligible Account and
shall be a segregated trust account established with the Collateral Agent and
maintained with the Collateral Agent. The Issuer and the Collateral Agent agree
that the Indenture Trustee shall have full power and authority to withdraw, or
cause to be withdrawn, funds held in the Collection Account in accordance with
the provisions of this Agreement and the Indenture.
(b) The Issuer shall establish the Note Distribution Account in the
name of the Collateral Agent for the benefit of the Secured Parties. The Note
Distribution Account shall be an Eligible Account and shall be a segregated
trust account established with the Collateral Agent and maintained with the
Collateral Agent. The Issuer and the Collateral Agent agree that the Indenture
Trustee shall have full power and authority to withdraw, or cause to be
withdrawn, funds held in the Note Distribution Account in accordance with the
provisions of this Agreement and the Indenture.
(c) All amounts held in the Collection Account and the Note
Distribution Account (collectively, the "Secured Accounts") shall, to the extent
permitted by applicable laws, rules and regulations, be invested over night, as
directed by the Servicer, in Eligible Investments. Any such written direction
shall certify that any such investment is authorized by this Section 3.1.
Investments in Eligible Investments shall be made in the name of the Collateral
Agent on behalf of the Secured Parties, and such investments shall not be sold
or disposed of prior to their maturity. Any investment of funds in the Secured
Accounts shall be made in Eligible Investments held by a financial institution
in accordance with the following requirements: (a) all Eligible Investments
shall be held in an account with such financial institution in the name of the
Collateral Agent, (b) with respect to securities held in such account, such
securities shall be (i) certificated securities (as such term is used in N.Y.
UCC Section 8-313(d)(i)), securities deemed to be certificated securities under
applicable regulations of the United States government, or uncertificated
securities issued by an issuer organized under the laws of the State of New York
or the State of Delaware, (ii) either (A) in the possession of such institution,
(B) in the possession of a clearing corporation (as such term is used in Minn.
Stat. Section 336.8-313(g)) in the State of New York, registered in the name of
such clearing corporation or its nominee, not endorsed for collection or
surrender or any other purpose not involving transfer, not containing any
evidence of a right or interest inconsistent with the Collateral Agent's
40
security interest therein, and held by such clearing corporation in an account
of such institution, (C) held in an account of such institution with the Federal
Reserve Bank of New York or the Federal Reserve Bank of Minneapolis, or (D) in
the case of uncertificated securities, issued in the name of such institution,
and (iii) identified, by book entry or otherwise, as held for the account of, or
pledged to, the Collateral Agent on the records of such institution, and such
institution shall have sent the Collateral Agent a confirmation thereof, (c)
with respect to repurchase obligations held in such account, such repurchase
obligations shall be identified by such institution, by book entry or otherwise,
as held for the account of, or pledged to, the Collateral Agent on the records
of such institution, and the related securities shall be held in accordance with
the requirements of clause (b) above, and (d) with respect to other Eligible
Investments shall be held in a manner acceptable to the Controlling Party.
Subject to the other provisions hereof, the Collateral Agent shall have sole
control over each such investment and the income thereon, and any certificate or
other instrument evidencing any such investment, if any, shall be delivered
directly to the Collateral Agent or its agent, together with each document of
transfer, if any, necessary to transfer title to such investment to the
Collateral Agent in a manner which complies with this Section 3.1. All
interest, dividends, gains upon sale and other income from, or earnings on,
investments of funds in the Secured Accounts shall be deposited in the
Collection Account and distributed on the next Distribution Date pursuant to
Section 3.6. The Servicer shall deposit in the applicable Secured Account an
amount equal to any net loss on such investments immediately as realized.
(d) On each Purchase Date, the Servicer shall deposit in the
Collection Account (x) all Scheduled Payments and prepayments of the Receivables
transferred to the Issuer on such date that are received by the Servicer after
the related Cut-Off Date and on or prior to the Business Day immediately
preceding such Purchase Date or received by the Lockbox Bank after the related
Cut-Off Date and on or prior to the second Business Day immediately preceding
such Purchase Date and (y) all Liquidation Proceeds and proceeds of Insurance
Policies in respect of a Financed Vehicle and applied by the Servicer after the
related Cut-Off Date.
(e) The Seller shall have the right (but not the obligation) to make
deposits into the Collection Account in order to satisfy the Collateral Test.
OFL represents and warrants and agrees that it will not make a capital
contribution to the Seller to enable the Seller to make such a deposit and that
it will have the option (but not the obligation) to make loans to the Seller to
enable the Seller to make such a deposit, but only if (i) such loans are made on
an arms-length basis, (ii) OFL reasonably believes that at the time it shall
make such loan it will be repaid by the Seller and (iii) if OFL shall make any
such loan to the Seller, OFL shall enter into a Note for Intercompany
Discretionary Advance and Subordination Agreement and a
41
Subordinated Revolving Credit Promissory Note in substantially the form of
Exhibit C hereto. The Seller shall provide the Rating Agencies prior written
notice of any loans it shall receive from OFL in order to satisfy the
Collateral Test.
(f) On any Business Day on which there is a WAC Deficiency Amount,
the Seller shall deposit into the Collection Account the positive difference, if
any, between the WAC Deficiency Amount on such Business Day and the WAC
Deficiency Deposit. The Seller shall provide the Rating Agencies prior written
notice of any loans it shall receive from OFL in order to make a deposit in
respect of the WAC Deficiency Amount.
(g) The Issuer shall deposit into the Collection Account the amount
of all Advances made by the Issuer to the Seller pursuant to Section 3 of the
Repurchase Agreement.
Section 3.2. COLLECTIONS. The Servicer will be entitled to be
reimbursed from amounts on deposit in the Collection Account with respect to a
Monthly Period for amounts previously deposited in the Collection Account but
later determined by the Servicer or the Lockbox Bank to have resulted from
mistaken deposits or postings or checks returned for insufficient funds. The
amount to be reimbursed hereunder shall be paid to the Servicer on the related
Distribution Date pursuant to Sections 3.6(a)(iv) and 3.6(b)(iv) upon
certification by the Servicer of such amounts and the provision of such
information to the Indenture Trustee, the Agent and the Security Insurer as may
be necessary in the opinion of the Agent or the Security Insurer to verify the
accuracy of such certification. In the event that the Security Insurer or the
Agent has not received evidence satisfactory to it of the Servicer's entitlement
to reimbursement pursuant to this Section 3.2, the Agent or the Security
Insurer, as the case may be, shall (unless an Insurer Default shall have
occurred and be continuing) give the Indenture Trustee notice to such effect,
following receipt of which the Indenture Trustee shall not make a distribution
to the Servicer in respect of such amount pursuant to Section 3.6, or if the
Servicer prior thereto has been reimbursed pursuant to Section 3.6, the
Indenture Trustee shall withhold such amounts from amounts otherwise
distributable to the Servicer on the next succeeding Distribution Date.
Section 3.3. APPLICATION OF COLLECTIONS. For the purposes of this
Agreement, all collections for a Monthly Period shall be applied by the Servicer
as follows:
(a) With respect to each Receivable, payments by or on behalf of the
Obligor thereof (other than of Supplemental Servicing Fees with respect to such
Receivable, to the extent collected) shall be applied to interest and principal
with respect to such Receivable in accordance with the terms of such Receivable.
With respect to each Liquidated Receivable, Liquidation Proceeds shall be
applied to interest and principal with respect to such Receivable in accordance
with the terms of
42
such Receivable, and then to any Insurance Add-On Amount due and payable with
respect to such Receivable. The Servicer shall not be entitled to any
Supplemental Servicing Fees with respect to a Liquidated Receivable.
(b) With respect to each Receivable that has become a Purchased
Receivable on any Deposit Date, the Purchase Amount shall be applied, for
purposes of this Agreement only, to interest and principal on the Receivable in
accordance with the terms of the Receivable as if the Purchase Amount had been
paid by the Obligor on the Accounting Date next preceding such Deposit Date.
The Servicer shall not be entitled to any Supplemental Servicing Fees with
respect to such a Receivable. Nothing contained herein shall relieve any
Obligor of any obligation relating to any Receivable.
(c) With respect to each Receivable that has become a Repurchased
Receivable on any date, the Repurchase Price shall be applied, for purposes of
this Agreement only, to interest and principal on the Receivable in accordance
with the terms of the Receivable as if the Repurchase Price had been paid by the
Obligor on such date. The Servicer shall not be entitled to any Supplemental
Servicing Fees with respect to such a Receivable. Nothing contained herein
shall relieve any Obligor of any obligation relating to any Receivable.
(d) All amounts collected that are payable to the Servicer as
Supplemental Servicing Fees hereunder shall be deposited in the Collection
Account and paid to the Servicer in accordance with Sections 3.6(a)(iv) and
3.6(b)(iv).
(e) All payments by or on behalf of an Obligor received with respect
to any Purchased Receivable after the Accounting Date immediately preceding the
Deposit Date on which the Purchase Amount was paid by the Seller, OFL or the
Servicer shall be paid to the Seller, OFL or the Servicer, respectively, and
shall not be included in the Available Funds, the Distribution Amount or the
Spread Account Available Funds.
Section 3.4. MONTHLY ADVANCES.
(a) After the occurrence of an Amortization Event, if with respect to
a Receivable the amount deposited into the Collection Account during a Monthly
Period in respect of such Receivable and allocable to interest (determined in
accordance with Section 3.3) is less than the amount of interest accrued on such
Receivable (for the number of calendar days in such Monthly Period), the
Servicer shall make a Monthly Advance equal to the amount of such shortfall;
PROVIDED, HOWEVER, that the Servicer shall not be required to make a Monthly
Advance with respect to a Receivable extended pursuant to Section 2.2(b) for any
Monthly Period during which no Scheduled Payment is due according to the terms
of such extension.
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(b) If with respect to any Determination Date so long as an
Amortization Event has not occurred, the amount of Available Funds is less than
the sum of the amounts payable on the related Distribution Date pursuant to
clause (i) of Section 3.6(a), then on such Determination Date the Servicer, or
OFL if OFL is no longer the Servicer, shall make a Monthly Advance equal to the
amount of such shortfall.
(c) On or before each Determination Date and prior to the delivery of
the Servicer's Certificate for such Determination Date pursuant to Section 2.9,
the Servicer (or OFL if OFL is not the Servicer and OFL is required to make a
Monthly Advance pursuant to Section 3.4(b)) shall deposit in the Collection
Account the aggregate amount of Monthly Advances required for the related
Monthly Period in immediately available funds.
(d) The Servicer shall be entitled to be reimbursed for Outstanding
Monthly Advances pursuant to Section 3.6(b)(i) from the following sources on any
day subsequent to the Distribution Date in respect of which such Monthly Advance
was made: (i) subsequent payments by or on behalf of any Obligor with respect
to such Receivable, (ii) collections of Liquidation Proceeds with respect to any
Receivable if such Receivable becomes a Liquidated Receivable, (iii) payment of
any Purchase Amount with respect to any Receivable if such Receivable becomes a
Purchased Receivable and (iv) payment of any Repurchase Price with respect to
any Receivable if such Receivable becomes a Repurchased Receivable. If any
Receivable shall become a Liquidated Receivable and the Servicer shall not have
been fully reimbursed for Outstanding Monthly Advances with respect to such
Receivable from the sources of funds previously described in this paragraph, the
Servicer shall be entitled to reimbursement from collections on Receivables
other than the Receivable in respect of which such Outstanding Monthly Advance
shall have been made.
Section 3.5. ADDITIONAL DEPOSITS.
(a) On or before each Deposit Date, the Servicer or OFL shall deposit
in the Collection Account the aggregate Purchase Amounts with respect to
Administrative Receivables. The Seller shall deposit in the Collection Account
the Repurchase Price with respect to Repurchased Receivables. All such deposits
of Purchase Amounts and Repurchase Prices shall be made in immediately available
funds. On each Deficiency Claim Date, the Indenture Trustee shall deposit in
the Collection Account any amounts delivered to the Indenture Trustee by the
Spread Account Collateral Agent.
(b) The Security Insurer shall at any time, and from time to time,
have the option but not the obligation to deliver amounts to the Indenture
Trustee for deposit into the Collection Account, for distribution as a component
of the Distribution Amount with respect to the Deficiency Claim Date coinciding
with or next succeeding the date of such deposit to the extent that without such
distribution a draw would be required to be made on
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the Note Policy, in order to provide for the compensation of a Successor
Servicer as provided in Section 5.3(c), or otherwise to provide for expenses
of the Issuer, including amounts due to providers of services to the Issuer.
Section 3.6. DISTRIBUTIONS.
(a) On each Distribution Date prior to the occurrence of an
Amortization Event, the Indenture Trustee shall (based on the information
contained in the Servicer's Certificate delivered on the related Determination
Date) distribute the following amounts in the following order of priority:
(i) first, from the Distribution Amount, to the Note Distribution
Account, an amount equal to the Advance Interest Distributable Amount for
such Distribution Date;
(ii) second, from the Distribution Amount, to the Servicer (or to OFL
if OFL is not the Servicer and OFL has made a Monthly Advance pursuant to
Section 3.4(b)), the amount of Outstanding Monthly Advances for which the
Servicer (or OFL) is entitled to be reimbursed and for which the Servicer
(or OFL) has not previously been reimbursed;
(iii) third, from the Distribution Amount, PRO RATA, to the Indenture
Trustee, any accrued and unpaid fees of the Indenture Trustee in accordance
with the Indenture; to any Lockbox Bank, Custodian, Backup Servicer or
Collateral Agent (including the Indenture Trustee if acting in any such
additional capacity), any accrued and unpaid fees (in each case, to the
extent such Person has not previously received such amount from the
Servicer or OFL); to any successor Servicer, to the extent not previously
paid by the predecessor Servicer pursuant to Section 5.2, reasonable
transition expenses incurred in acting as successor Servicer in an amount
not to exceed $50,000 in total;
(iv) fourth, from the Distribution Amount, to the Servicer, the Basic
Servicing Fee for the related Monthly Period, any Supplemental Servicing
Fees for the related Monthly Period, and any amounts permitted to be paid
to the Servicer pursuant to Section 3.2;
(v) fifth, from the Distribution Amount, on Distribution Dates with
respect to the Amortization Period so long as no Amortization Event shall
have occurred, to the Note Distribution Account, an amount equal to the
Advance Principal Distributable Amount for such Distribution Date;
(vi) sixth, from the Distribution Amount, to the Security Insurer, to
the extent of any amounts owing to the Security Insurer under the Insurance
Agreement and not paid, whether or not OFL or any other Person is also
obligated to pay such amounts;
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(vii) seventh, from the Distribution Amount, on Distribution Dates
with respect to the Revolving Period, an amount determined and certified by
the Servicer and included in the Servicer's Certificate delivered on the
related Determination Date to be at least equal to the sum of (1) the WAC
Deficiency Amount, if any, on such Determination Date, and (2) the amount
necessary to be held in the Collection Account such that after giving
effect to all deposits and distributions to be made on such Distribution
Date, the Collateral Test will be satisfied (not taking into account any
WAC Deficiency Amounts provided for in clause (1) above) as of the
immediately preceding Accounting Date, shall remain on deposit in the
Collection Account;
(viii) eighth, from the Distribution Amount, on Distribution Dates
with respect to the Amortization Period so long as no Amortization Event
shall have occurred, to the Note Distribution Account, an amount equal to
the remaining amount on deposit in the Collection Account until an amount
payable in respect of the principal of the Advances equal to the unpaid
principal amount of the Advances has been deposited in the Note
Distribution Account;
(ix) ninth, from the Distribution Amount, to the Agent for
distribution to the applicable parties, any amounts owing to the Agent, the
Noteholders or any Permitted Assignee by the Issuer or the Seller under the
Note Purchase Agreement, the Fee Letter or any other Related Document, to
the extent not otherwise paid; and
(x) tenth, from the Distribution Amount (excluding amounts required
to be retained in the Collection Account pursuant to clause (vii) above),
the remaining portion of the Distribution Amount to the Spread Account
Collateral Agent for deposit in the Spread Account.
(b) On each Distribution Date after the occurrence of an Amortization
Event, the Indenture Trustee shall (based on the information contained in the
Servicer's Certificate delivered on the related Determination Date) distribute
the following amounts and in the following order of priority:
(i) first, from the Distribution Amount, to the Servicer (or to
OFL if OFL is not the Servicer and OFL has made a Monthly Advance
pursuant to Section 3.4(b)), an amount equal to the amount of
Outstanding Monthly Advances for which the Servicer (or OFL) is
entitled to be reimbursed and for which the Servicer (or OFL) has not
previously been reimbursed;
(ii) second, from the Distribution Amount, to the Note
Distribution Account, an amount equal to the Advance Interest
Distributable Amount for such Distribution Date;
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(iii) third, from the Distribution Amount, PRO RATA, to the
Indenture Trustee, an amount equal to any accrued and unpaid fees of
the Indenture Trustee in accordance with the Indenture; to any Lockbox
Bank, Custodian, Backup Servicer, Collateral Agent (including the
Indenture Trustee if acting in any such additional capacity), an
amount equal to any accrued and unpaid fees owing to such Persons (in
each case, to the extent such Person has not previously received such
amount from the Servicer or OFL); to any successor Servicer, to the
extent not previously paid by the predecessor Servicer pursuant to
Section 5.2, reasonable transition expenses incurred in acting as
successor Servicer in an amount not to exceed $50,000 in total;
(iv) fourth, from the Distribution Amount, to the Servicer, the
sum of the Basic Servicing Fee for the related Monthly Period, any
Supplemental Servicing Fees for the related Monthly Period, and any
amounts specified in Section 3.2;
(v) fifth, from the Distribution Amount, to the Note
Distribution Account, an amount equal to the Advance Principal
Distributable Amount for such Distribution Date;
(vi) sixth, from the Distribution Amount, to the Security
Insurer, to the extent of any amounts owing to the Security Insurer
under the Insurance Agreement and not paid, whether or not OFL or any
other Person is also obligated to pay such amounts; and
(vii) seventh, if an Insurer Default has occurred, from the
Distribution Amount, to the Note Distribution Account, an amount equal
to the Default Amount Distributable Amount for such Distribution Date;
(viii) eighth, from the Distribution Amount, to the Note
Distribution Account, an amount equal to the remaining Distribution
Amount until an amount payable in respect of principal of the Notes
equal to the unpaid principal amount of the Notes has been deposited
in the Note Distribution Account;
(ix) ninth, from the Distribution Amount, PRO RATA, (I) to the
Agent, for distribution to the applicable parties, an amount equal to
the sum, without duplication, of (A) any expenses incurred by the
Agent or the Noteholders as a result of any failure of the Seller to
perform under the Repurchase Agreement PLUS (B) any amounts owing to
the Agent, the Noteholders or any Permitted Assignee under the Note
Purchase Agreement, the Fee Letter or any other Related Document, to
the extent not otherwise paid; and (II) if an Insurer Default has not
occurred, to the Note
47
Distribution Account, an amount equal to the Default Amount
Distributable Amount for such Distribution Date; and
(x) tenth, any remaining Distribution Amount to the Spread
Account Collateral Agent for deposit in the Spread Account.
Section 3.7. STATEMENTS TO NOTEHOLDERS. On each Distribution Date,
the Indenture Trustee shall include with each distribution to each Noteholder, a
Servicer's Certificate.
Section 3.8. INDENTURE TRUSTEE AS AGENT; CALCULATION OF WEIGHTED
AVERAGE APR, WAC DEFICIENCY AMOUNTS, BASIS FEE PERCENT AND ADVANCE INTEREST
RATE.
(a) The Indenture Trustee, in making distributions as provided in
this Agreement, shall act solely on behalf of and as agent for the Noteholders.
(b) Prior to the occurrence of an Amortization Event, on each
Business Day the Seller shall calculate the Maximum Interest Rate, the weighted
average APR of the Receivables, the WAC Deficiency Percentage and the WAC
Deficiency Amount, if any, and shall, upon request, provide such calculation in
writing to the Indenture Trustee, the Issuer, the Agent, the Servicer or the
Security Insurer. Prior to the occurrence of an Amortization Event, if on any
Business Day the WAC Deficiency Amount is greater than zero, the Seller shall
provide written notice of such WAC Deficiency Amount and the corresponding WAC
Deficiency Percentage and the WAC Deficiency Deposit, if any, with respect to
such Business Day to the Issuer, the Agent, the Indenture Trustee, the Servicer,
and the Security Insurer by 12:00 noon, New York City time, on such day.
(c) On the Closing Date, the Basis Fee Percent shall be 0%. On any
Business Day on which the Agent determines, in its sole discretion, that there
has been a change in the Basis Fee Percent, the Agent shall calculate the Basis
Fee Percent and shall provide the Seller with telephonic notice of such
calculation by 10:00 a.m. New York City time on each such day. In the absence
of notice of a change in the Basis Fee Percent, the Basis Fee Percent shall
remain the same as it was as of the Closing Date or, if notice of a change in
the Basis Fee Percent has been given to the Seller by the Agent, as it was as of
the date of the last such notice of change in the Basis Fee Percent.
(d) The Agent shall provide the Indenture Trustee, the Security
Insurer, the Issuer, the Seller and the Servicer by facsimile transmission no
later than 10:00 a.m. on the Business Day prior to each Determination Date, a
certificate of a responsible officer, which shall set forth the Advance Interest
Rate for the immediately preceding Interest Period and shall set forth in
reasonable detail the manner in which such calculation of the Advance Interest
Rate was determined and, absent manifest
48
error, the amount set forth in such certificate with respect to the Advance
Interest Rate shall be conclusive. The Agent shall provide to the Security
Insurer, the Issuer, the Seller, OFL and the Indenture Trustee, on the
Business Day preceding the date of prepayment, if the Agent shall have
received notice of such prepayment on or prior to such Business Day, or on
the prepayment date, if the Agent shall receive notice of such prepayment on
such date of prepayment, a certificate of a responsible officer, which shall
set forth the interest due on the Notes being prepaid together with the
Breakage Fee, if any, due on such prepayment date, and which also shall set
forth, in reasonable detail, the manner in which the calculation of the
interest due on the Notes and the Breakage Fee was determined. Absent
manifest error, the amount set forth in such certificate with respect to the
Breakage Fee and interest shall be conclusive.
Section 3.9. ELIGIBLE ACCOUNTS. Any account which is required to be
established as an Eligible Account pursuant to this Agreement and which ceases
to be an Eligible Account shall within five Business Days (or such longer
period, not to exceed 30 days, as to which each Rating Agency, the Agent and the
Security Insurer may consent) be established as a new account which shall be an
Eligible Account and any cash or any investments shall be transferred to such
new account.
Section 3.10. ADDITIONAL WITHDRAWALS FROM THE COLLECTION ACCOUNT.
(a) On each Purchase Date under the Repurchase Agreement, the
Servicer shall instruct the Indenture Trustee in writing by 10:00 a.m.,
Minneapolis, Minnesota time, to withdraw from the Collection Account and deposit
to the Spread Account and pay to the account of the Seller specified by the
Servicer in such writing, and upon such instruction, the Indenture Trustee shall
withdraw from the Collection Account and initiate a wire transfer to the Spread
Account and to such account of the Seller no earlier than 2:00 p.m., New York
City time, and no later than 3:00 p.m., New York City time, the amounts set
forth in such instructions. The aggregate amount set forth in the instruction
referred to in the preceding sentence shall be equal to the least of (i) the
Purchase Price for the Receivables being purchased by the Issuer on such date,
(ii) for any Purchase Date occurring during the period from but excluding a
Determination Date through and including the related Distribution Date, an
amount equal to the total amount on deposit in the Collection Account on such
date over the sum of (A) the amounts to be distributed from or retained in the
Collection Account on such Distribution Date pursuant to clauses (i) through
(ix) of Section 3.6(a) as set forth in the Servicer's Certificate delivered on
such Determination Date, and (B) any increase in the WAC Deficiency Amount on
such date, if any, above the WAC Deficiency Amount on such Determination Date,
and (iii) an amount equal to the excess of the total amount on deposit in the
Collection Account on such date over the WAC Deficiency Amounts, if any,
required to be on deposit in the Collection Account on such date. The Servicer
49
shall instruct the Trustee to wire an amount equal to 1% of the aggregate
Principal Balance of Receivables being purchased by the Issuer on such date
to the Spread Account and the Servicer shall instruct the Trustee to wire the
remainder of the amount specified in the preceding sentence to the account of
the Seller.
(b) On the Business Day specified by the Seller in the notice of a
prepayment of an Advance delivered to the Indenture Trustee pursuant to Section
3(e) of the Repurchase Agreement, the Indenture Trustee shall withdraw from the
Collection Account and, if applicable, the Spread Account the amount of such
prepayment determined in accordance with the provisions of Section 3(e) of the
Repurchase Agreement (as set forth in a certificate of a Responsible Officer of
the Seller) and shall deposit such amount into the Note Distribution Account for
application in accordance with the provisions of the Indenture.
Section 3.11. CROSS-COLLATERALIZATION WITH THE SPREAD ACCOUNT
AGREEMENT.
(a) In the event that the Indenture Trustee shall determine on any
Deficiency Claim Date, based on information in the Servicer's Certificate, that
there exists a Collection Account Shortfall or a Warehousing Shortfall (each as
defined in the Spread Account Agreement) (any such shortfall being a "Deficiency
Claim Amount"), then on such Deficiency Claim Date, the Indenture Trustee shall
deliver to the Collateral Agent, the Spread Account Collateral Agent, the
Security Insurer, the Issuer and the Servicer, by hand delivery, telex or
facsimile transmission, a written notice (a "Deficiency Notice") specifying the
Deficiency Claim Amount for such Distribution Date. Such Deficiency Notice
shall direct the Spread Account Collateral Agent to remit such Deficiency Claim
Amount (to the extent of the funds available to be distributed pursuant to the
Spread Account Agreement) to the Indenture Trustee for deposit in the Collection
Account.
(b) Any Deficiency Notice shall be delivered by 10:00 a.m., New York
City time, on the related Deficiency Claim Date. The amounts distributed by the
Spread Account Collateral Agent to the Indenture Trustee pursuant to a
Deficiency Notice shall be deposited by the Indenture Trustee into the
Collection Account pursuant to Section 3.5.
ARTICLE IV
THE SERVICER
Section 4.1. LIABILITY OF SERVICER; INDEMNITIES.
(a) The Servicer (in its capacity as such and, in the case of OFL,
without limitation of its obligations under the Purchase Agreement) shall be
liable hereunder only to the extent
50
of the obligations in this Agreement specifically undertaken by the Servicer
and the representations made by the Servicer.
(b) The Servicer shall defend, indemnify and hold harmless the Issuer,
the Indenture Trustee, the Collateral Agent, the Backup Servicer, the Agent, the
Security Insurer, their respective officers, directors, agents and employees and
the Noteholders from and against any and all costs, expenses, losses, damages,
claims and liabilities, including reasonable fees and expenses of counsel and
expenses of litigation arising out of or resulting from the use, ownership or
operation by the Servicer or any Affiliate thereof other than the Seller or the
Issuer of any Financed Vehicle.
(c) The Servicer shall indemnify, defend and hold harmless the Issuer,
the Indenture Trustee, the Collateral Agent, the Backup Servicer, the Agent, the
Security Insurer, their respective officers, directors, agents and employees and
the Noteholders from and against any taxes that may at any time be asserted
against the Issuer, the Indenture Trustee, the Backup Servicer, the Agent, the
Collateral Agent, or the Noteholders with respect to the execution, delivery and
performance of this Agreement, including, without limitation, any sales, gross
receipts, general corporation, tangible personal property, privilege or license
taxes (but not including any taxes asserted with respect to, and as of the date
of, the sale of the Receivables and the other Seller Conveyed Property to the
Issuer or the issuance and original sale of the Notes, or federal or other
income taxes arising out of distributions on the Notes) and costs and expenses
in defending against the same.
(d) The Servicer shall indemnify, defend and hold harmless the Issuer,
the Indenture Trustee, the Collateral Agent, the Backup Servicer, the Agent, the
Security Insurer, their respective officers, directors, agents and employees and
the Noteholders from and against any and all costs, expenses, losses, claims,
damages, and liabilities to the extent that such cost, expense, loss, claim,
damage, or liability arose out of, or was imposed upon the Issuer, the Indenture
Trustee, the Collateral Agent, the Backup Servicer, the Agent, the Security
Insurer or the Noteholders through the breach of this Agreement, the negligence,
willful misfeasance, or bad faith of the Servicer in the performance of its
duties under this Agreement or by reason of reckless disregard of its
obligations and duties under this Agreement.
(e) Indemnification under this Article shall include, without
limitation, reasonable fees and expenses of counsel and expenses of litigation.
If the Servicer has made any indemnity payments pursuant to this Article and the
recipient thereafter collects any of such amounts from others, the recipient
shall promptly repay such amounts collected to the Servicer, without interest.
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(f) OFL, in its individual capacity, hereby acknowledges that the
indemnification provisions in the Purchase Agreement benefiting the Issuer, the
Agent, the Indenture Trustee, the Collateral Agent and the Backup Servicer are
enforceable by each hereunder.
(g) OFL, in its individual capacity, shall indemnify, defend and hold
harmless the Issuer, the Indenture Trustee, the Collateral Agent, the Backup
Servicer, the Agent, the Security Insurer, their respective officers, directors,
agents and employees and the Noteholders from and against any taxes that may at
any time be asserted against the Issuer, the Indenture Trustee, the Backup
Servicer, the Agent, the Collateral Agent, the Security Insurer or the
Noteholders with respect to the transactions contemplated in this Agreement,
including, without limitation, any sales, gross receipts, general corporation,
tangible personal property, privilege or license taxes (but not including any
taxes asserted with respect to, and as of the date of, the sale of the
Receivables and the other Seller Conveyed Property to the Issuer or the issuance
and original sale of the Notes, or federal or other income taxes arising out of
distributions on the Notes) and costs and expenses in defending against the
same, but only to the extent such amounts are not otherwise covered by the
indemnities set forth in Sections 4.1(b) through (f) above.
Section 4.2. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, THE SERVICER OR BACKUP SERVICER.
(a) The Servicer shall not merge or consolidate with any other person,
convey, transfer or lease substantially all its assets as an entirety to another
Person, or permit any other Person to become the successor to the Servicer's
business unless, after the merger, consolidation, conveyance, transfer, lease or
succession, the successor or surviving entity shall be an Eligible Servicer and
shall be capable of fulfilling the duties of the Servicer contained in this
Agreement. Any corporation (i) into which the Servicer may be merged or
consolidated, (ii) resulting from any merger or consolidation to which the
Servicer shall be a party, (iii) which acquires by conveyance, transfer, or
lease substantially all of the assets of the Servicer, or (iv) succeeding to the
business of the Servicer, in any of the foregoing cases shall execute an
agreement of assumption to perform every obligation of the Servicer under this
Agreement and, whether or not such assumption agreement is executed, shall be
the successor to the Servicer under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties to this
Agreement, anything in this Agreement to the contrary notwithstanding; PROVIDED,
HOWEVER, that nothing contained herein shall be deemed to release the Servicer
from any obligation. The Servicer shall provide notice of any merger,
consolidation or succession pursuant to this Section 4.2(a) to the Issuer, the
Indenture Trustee, the Agent, the Security Insurer and each Rating Agency.
Notwithstanding the foregoing, the Servicer shall not merge or consolidate with
any
52
other Person or permit any other Person to become a successor to the
Servicer's business, unless (x) immediately after giving effect to such
transaction, no representation or warranty made pursuant to Section 2.6 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 Insurance
Agreement Event of Default shall have occurred and be continuing, (y) the
Servicer shall have delivered to the Issuer, the Agent, the Indenture Trustee
and the Security Insurer 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 4.2(a) and that all conditions
precedent, if any, provided for in this Agreement relating to such
transaction have been complied with, and (z) the Servicer shall have
delivered to the Issuer, the Agent, the Indenture Trustee and the Security
Insurer 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 in the Seller Conveyed
Property and reciting the details of the filings or (B) no such action shall
be necessary to preserve and protect such interest.
(b) Any corporation (i) into which the Backup Servicer may be merged
or consolidated, (ii) resulting from any merger or consolidation to which the
Backup Servicer shall be a party, (iii) which acquires by conveyance, transfer
or lease substantially all of the assets of the Backup Servicer, or (iv)
succeeding to the business of the Backup Servicer, in any of the foregoing cases
shall execute an agreement of assumption to perform every obligation of the
Backup Servicer under this Agreement and, whether or not such assumption
agreement is executed, shall be the successor to the Backup Servicer under this
Agreement without the execution or filing of any paper or any further act on the
part of any of the parties to this Agreement, anything in this Agreement to the
contrary notwithstanding; PROVIDED, HOWEVER, that nothing contained herein shall
be deemed to release the Backup Servicer from any obligation.
Section 4.3. LIMITATION ON LIABILITY OF SERVICER, BACKUP SERVICER AND
OTHERS.
(a) Neither the Servicer, the Backup Servicer nor any of the directors
or officers or employees or agents of the Servicer or Backup Servicer shall be
under any liability to the Noteholders, except as provided in this Agreement,
for any action taken or for refraining from the taking of any action pursuant to
this Agreement; PROVIDED, HOWEVER, that this provision shall not protect the
Servicer, the Backup Servicer or any such Person against any liability that
would otherwise be imposed by reason of a breach of this Agreement or willful
misfeasance, bad faith or negligence in the performance of duties, by reason of
reckless disregard of obligations and duties under this Agreement or any
53
violation of law by the Servicer, Backup Servicer or such Person, as the case
may be; PROVIDED FURTHER, that this provision shall not affect any liability to
indemnify the Issuer and the Indenture Trustee for costs, taxes, expenses,
claims, liabilities, losses or damages paid by the Issuer or the Indenture
Trustee, each in its individual capacity. The Servicer, the Backup Servicer and
any director, officer, employee or agent of the Servicer or Backup Servicer 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.
(b) The Backup Servicer shall not be liable for any obligation of the
Servicer contained in this Agreement, and the Issuer, the Indenture Trustee, the
Agent, the Seller, the Security Insurer and the Noteholders shall look only to
the Servicer to perform such obligations.
Section 4.4. DELEGATION OF DUTIES. The Servicer may delegate duties
under this Agreement to an Affiliate of OFL with the prior written consent of
the Security Insurer (unless an Insurer Default shall have occurred and be
continuing) and the Agent. Any successor Servicer may delegate duties under
this Agreement with the prior written consent of the Security Insurer (unless an
Insurer Default shall have occurred and be continuing) and the Agent. The
Servicer also may at any time perform the specific duty of repossession of
Financed Vehicles through sub-contractors who are in the business of servicing
automotive receivables and may perform other specific duties through such
sub-contractors with the prior written consent of the Security Insurer (unless
an Insurer Default shall have occurred and be continuing); PROVIDED, HOWEVER,
that no such delegation or sub-contracting duties by the Servicer shall relieve
the Servicer of its responsibility with respect to such duties. Neither OFL nor
any party acting as Servicer hereunder shall appoint any subservicer hereunder
without the prior written consent of the Security Insurer (unless an Insurer
Default shall have occurred and be continuing) and the Agent.
Section 4.5. SERVICER AND BACKUP SERVICER NOT TO RESIGN. Subject to
the provisions of Section 4.2, neither the Servicer nor the Backup Servicer
shall resign from the obligations and duties imposed on it by this Agreement as
Servicer or Backup Servicer except upon a determination that by reason of a
change in legal requirements the performance of its duties under this Agreement
would cause it to be in violation of such legal requirements in a manner which
would have a material adverse effect on the Servicer or the Backup Servicer, as
the case may be, and the Security Insurer (so long as an Insurer Default shall
not have occurred and be continuing) or the Agent (if an Insurer Default shall
have occurred and be continuing) does not elect to waive the obligations of the
Servicer or the Backup Servicer, as the case may be, to perform the duties which
render it legally unable to act or to delegate those duties to another Person.
Any such determination permitting the
54
resignation of the Servicer or Backup Servicer shall be evidenced by an
Opinion of Counsel to such effect delivered and acceptable to the Issuer, the
Indenture Trustee, the Agent and the Security Insurer (unless an Insurer
Default shall have occurred and be continuing). No resignation of the
Servicer shall become effective until, so long as no Insurer Default shall
have occurred and be continuing, the Backup Servicer or an entity acceptable
to the Security Insurer shall have assumed the responsibilities and
obligations of the Servicer or, if an Insurer Default shall have occurred and
be continuing, the Backup Servicer or a successor Servicer that is an
Eligible Servicer shall have assumed the responsibilities and obligations of
the Servicer. No resignation of the Backup Servicer shall become effective
until, so long as no Insurer Default shall have occurred and be continuing,
an entity acceptable to the Security Insurer shall have assumed the
responsibilities and obligations of the Backup Servicer or, if an Insurer
Default shall have occurred and be continuing, a Person that is an Eligible
Servicer shall have assumed the responsibilities and obligations of the
Backup Servicer; PROVIDED, HOWEVER, that in the event a successor Backup
Servicer is not appointed within 60 days after the Backup Servicer has given
notice of its resignation and has provided the Opinion of Counsel required by
this Section 4.5, the Backup Servicer may petition a court for its removal.
ARTICLE V
SERVICER TERMINATION EVENTS
Section 5.1. SERVICER TERMINATION EVENT. For purposes of this
Agreement, each of the following shall constitute a "Servicer Termination
Event":
(a) Any failure by the Servicer to deliver to the Indenture Trustee
for distribution to Noteholders any proceeds or payment required to be so
delivered under the terms of this Agreement (or, if OFL is the Servicer, the
Purchase Agreement) that continues unremedied for a period of two Business Days
(one Business Day with respect to payment of Purchase Amounts) after written
notice is received by the Servicer from the Indenture Trustee or (unless an
Insurer Default shall have occurred and be continuing) the Security Insurer or
after discovery of such failure by a Responsible Officer of the Servicer;
(b) Failure by the Servicer to deliver the Servicer's Certificate to
the Indenture Trustee, the Issuer, the Agent and (so long as an Insurer Default
shall not have occurred and be continuing) the Security Insurer by 5:00 p.m.,
New York City time on the fifth Business Day prior to the Distribution Date, or
failure on the part of the Servicer to observe its covenants and agreements set
forth in Section 4.2(a);
(c) Failure on the part of the Servicer duly to observe or perform in
any material respect any other covenants or
55
agreements of the Servicer set forth in this Agreement (or, if OFL is the
Servicer, the Purchase Agreement), which failure (i) materially and adversely
affects the rights of the Issuer (determined without regard to the
availability of funds under the Note Policy), or of the Security Insurer
(unless an Insurer Default shall have occurred and be continuing), and (ii)
continues unremedied for a period of 30 days after the date on which written
notice of such failure, requiring the same to be remedied, shall have been
given to the Servicer by the Issuer, the Agent, the Indenture Trustee or the
Security Insurer;
(d) The entry of a decree or order for relief by a court or regulatory
authority having jurisdiction in respect of the Servicer or the Seller in an
involuntary case under the federal bankruptcy laws, as now or hereafter in
effect, or another present or future, federal or state, bankruptcy, insolvency
or similar law, or appointing a receiver, liquidator, assignee, trustee,
custodian, sequestrator or other similar official of the Servicer or the Seller
or of any substantial part of their respective properties or ordering the
winding up or liquidation of the affairs of the Servicer or the Seller and the
continuance of any such decree or order unstayed and in effect for a period of
60 consecutive days or the commencement of an involuntary case under the federal
bankruptcy laws, as now or hereafter in effect, or another present or future
federal or state bankruptcy, insolvency or similar law and such case is not
dismissed within 60 days;
(e) The commencement by the Servicer or the Seller of a voluntary case
under the federal bankruptcy laws, as now or hereafter in effect, or any other
present or future, federal or state, bankruptcy, insolvency or similar law, or
the consent by the Servicer or the Seller to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator
or other similar official of the Servicer or the Seller or of any substantial
part of its property or the making by the Servicer or the Seller of an
assignment for the benefit of creditors or the failure by the Servicer or the
Seller generally to pay its debts as such debts become due or the taking of
corporate action by the Servicer or the Seller in furtherance of any of the
foregoing;
(f) Any representation, warranty or statement of the Servicer or the
Seller made in this Agreement or any certificate, report or other writing
delivered pursuant hereto shall prove to be incorrect in any material respect as
of the time when the same shall have been made, and the incorrectness of such
representation, warranty or statement has a material adverse effect on the
Issuer or the Security Insurer and, within 30 days after written notice thereof
shall have been given to the Servicer or the Seller by the Issuer, the Agent,
the Indenture Trustee or the Security Insurer (or, if an Insurer Default shall
have occurred and be continuing, a Noteholder), the circumstances or condition
in respect of which such representation, warranty or
56
statement was incorrect shall not have been eliminated or otherwise cured;
(g) So long as an Insurer Default shall not have occurred and be
continuing, the Security Insurer shall not have delivered a Servicer Extension
Notice pursuant to Section 2.14;
(h) So long as an Insurer Default shall not have occurred and be
continuing, an Insurance Agreement Event of Default shall have occurred;
(i) A claim is made under the Note Policy; or
(j) A servicer termination event or like event shall occur in any
other securitization with respect to which OFL or any of its Affiliates is
acting as servicer.
Section 5.2. CONSEQUENCES OF A SERVICER TERMINATION EVENT. If a
Servicer Termination Event shall occur and be continuing, the Security Insurer
(or, if an Insurer Default shall have occurred and be continuing, either the
Indenture Trustee or the Agent), by notice given in writing to the Servicer (and
to the Indenture Trustee and the Agent if given by the Security Insurer) may
terminate all of the rights and obligations of the Servicer under this
Agreement; PROVIDED, that if the Security Insurer shall not deliver a Servicer
Extension Notice, the rights and obligations of the Servicer hereunder shall
terminate automatically upon the expiration of the term of the Servicer without
the requirement of notice. On or after the receipt by the Servicer of such
written notice or upon such automatic termination, all authority, power,
obligations and responsibilities of the Servicer under this Agreement
automatically shall pass to, be vested in and become obligations and
responsibilities of the Backup Servicer (or such other successor Servicer
appointed by the Security Insurer); PROVIDED, HOWEVER, that the successor
Servicer shall have no liability with respect to any obligation which was
required to be performed by the terminated Servicer prior to the date that the
successor Servicer becomes the Servicer or any claim of a third party based on
any alleged action or inaction of the terminated Servicer. The successor
Servicer is authorized and empowered by this Agreement to execute and deliver,
on behalf of the terminated Servicer, as attorney-in-fact or otherwise, any and
all documents and other instruments and to do or accomplish all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement of the Receivables
and the other Seller Conveyed Property and related documents to show the Issuer
as lienholder or secured party on the related Lien Certificates, or otherwise.
The terminated Servicer agrees to cooperate with the successor Servicer in
effecting the termination of the responsibilities and rights of the terminated
Servicer under this Agreement, including, without limitation, the transfer to
the successor Servicer for administration by it of all cash amounts that shall
at the time be held by the terminated Servicer for deposit, or
57
have been deposited by the terminated Servicer, in the Collection Account or
thereafter received with respect to the Receivables and the delivery to the
successor Servicer of all Receivable Files, Monthly Records and Collection
Records and a computer tape or diskette in readable form as of the most
recent Business Day containing all information necessary to enable the
successor Servicer to service the Receivables and the other Seller Conveyed
Property. If requested by the Agent or the Security Insurer (unless an
Insurer Default shall have occurred and be continuing), the successor
Servicer shall terminate the Lockbox Agreement and direct the Obligors to
make all payments under the Receivables directly to the successor Servicer
(in which event the successor Servicer shall process such payments in
accordance with Section 2.2(e)), or to a lockbox established by the successor
Servicer at the direction of the Agent or the Security Insurer (unless an
Insurer Default shall have occurred and be continuing), at the successor
Servicer's expense. In addition to any other amounts that are then payable
to the terminated Servicer under this Agreement, the terminated Servicer
shall then be entitled to receive out of Available Funds reimbursements for
any Outstanding Monthly Advances made during the period prior to the notice
pursuant to this Section 5.2 which terminates the obligation and rights of
the terminated Servicer under this Agreement. The Issuer, the Agent, the
Indenture Trustee and the successor Servicer may set off and deduct any
amounts owed by the terminated Servicer from any amounts payable to the
terminated Servicer pursuant to the preceding sentence. The terminated
Servicer shall grant the Issuer, the Agent, the Indenture Trustee, the
successor Servicer and the Security Insurer reasonable access to the
terminated Servicer's premises at the terminated Servicer's expense.
Section 5.3. APPOINTMENT OF SUCCESSOR.
(a) On and after the time the Servicer receives a notice of
termination pursuant to Section 5.2 or upon the resignation of the Servicer
pursuant to Section 4.5, or in the event the term of the Servicer expires as a
consequence of the Security Insurer electing not to deliver a Servicer Extension
Notice, the Backup Servicer (unless the Security Insurer shall have exercised
its option pursuant to Section 5.3(b) to appoint an alternate successor
Servicer) shall be the successor in all respects to the Servicer in its capacity
as servicer under this Agreement and the transactions set forth or provided for
in this Agreement, and shall be subject to all the responsibilities,
restrictions, duties, liabilities and termination provisions relating thereto
placed on the Servicer by the terms and provisions of this Agreement; PROVIDED,
HOWEVER, that the successor Servicer shall have no liability with respect to any
obligation which was required to be performed by the terminated Servicer prior
to the date that the successor Servicer becomes the Servicer or any claim of a
third party based on any alleged action or inaction of the terminated Servicer.
The Issuer and such successor shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any such
58
succession. If a successor Servicer is acting as Servicer hereunder, it
shall be subject to termination under Section 5.2 upon the occurrence of any
Servicer Termination Event applicable to it as Servicer.
(b) The Security Insurer may (so long as an Insurer Default shall not
have occurred and be continuing) exercise at any time its right to appoint as
Backup Servicer or as successor to the Servicer a Person other than the Person
serving as Backup Servicer at the time, and (without limiting its obligations
under the Note Policy) shall have no liability to the Issuer, the Indenture
Trustee, OFL, the Seller, the Person then serving as Backup Servicer, any
Noteholders or any other Person if it does so. Notwithstanding the above, if
the Backup Servicer shall be legally unable or unwilling to act as Servicer and
an Insurer Default shall have occurred and be continuing, the Backup Servicer,
the Indenture Trustee or the Agent may petition a court of competent
jurisdiction to appoint any Eligible Servicer as the successor to the Servicer.
Pending appointment pursuant to the preceding sentence, the Backup Servicer
shall act as successor Servicer unless it is legally unable to do so, in which
event the outgoing Servicer shall continue to act as Servicer until a successor
has been appointed and accepted such appointment. Subject to Section 4.5, no
provision of this Agreement shall be construed as relieving the Backup Servicer
of its obligation to succeed as successor Servicer upon the termination of the
Servicer pursuant to Section 5.2, the resignation of the Servicer pursuant to
Section 4.5 or the expiration of the term of the Servicer. If upon the
termination of the Servicer pursuant to Section 5.2, the resignation of the
Servicer pursuant to Section 4.5 or the expiration of the term of the Servicer,
the Security Insurer appoints a successor Servicer other than the Backup
Servicer, the Backup Servicer shall not be relieved of its duties as Backup
Servicer hereunder.
(c) Any successor Servicer shall be entitled to such compensation
(whether payable out of the Collection Account or otherwise) as the Servicer
would have been entitled to under the Agreement if the Servicer had not resigned
or been terminated hereunder. If any successor Servicer is appointed as a
result of the Backup Servicer's refusal (in contravention of the terms of this
Agreement) to act as Servicer although it is legally able to do so, the Security
Insurer and such successor Servicer may agree on reasonable additional
compensation to be paid to such successor Servicer by the Backup Servicer, which
additional compensation shall be paid by the Backup Servicer in its individual
capacity and solely out of its own funds. If any successor Servicer is
appointed for any reason other than the Backup Servicer's refusal to act as
Servicer although legally able to do so, the Security Insurer and such successor
Servicer may agree on additional compensation to be paid to such successor
Servicer, which additional compensation may be payable by the Security Insurer
as a Security Insurer Optional Deposit. In addition, any successor Servicer
shall be entitled to reasonable
59
transition expenses incurred in acting as successor Servicer to the extent
provided in Section 3.6(a)(iii) or 3.6(b)(iii).
Section 5.4. NOTIFICATION TO NOTEHOLDERS. Upon any termination of or
appointment of a successor to the Servicer pursuant to this Article V, the
Indenture Trustee shall give prompt written notice thereof to Noteholders at
their respective addresses appearing in the Note Register.
Section 5.5. WAIVER OF PAST DEFAULTS. The Security Insurer (or, if
an Insurer Default shall have occurred and be continuing, the Agent) may, waive
any default by the Servicer in the performance of its obligations hereunder and
its consequences. Upon any such waiver of a past default, such default shall
cease to exist, and any Servicer Termination Event arising therefrom shall be
deemed to have been remedied for every purpose of this Agreement. No such
waiver shall extend to any subsequent or other default or impair any right
consequent thereon.
ARTICLE VI
MISCELLANEOUS PROVISIONS
Section 6.1. AMENDMENT.
(a) This Agreement may be amended by the Seller, the Servicer, the
Agent and the Issuer, with the prior written consent of the Indenture Trustee,
the Backup Servicer and the Security Insurer (so long as an Insurer Default
shall not have occurred and be continuing) but without the consent of any of the
Noteholders, (i) to cure any ambiguity, (ii) to correct or supplement any
provisions in this Agreement or (iii) for the purpose of adding any provision to
or changing in any manner or eliminating any provision of this Agreement or of
modifying in any manner the rights of the Noteholders; PROVIDED, HOWEVER, that
such action shall not, as evidenced by an Opinion of Counsel, adversely affect
in any material respect the interests of the Noteholders.
(b) This Agreement may also be amended from time to time by the
Seller, the Servicer, the Agent and the Issuer with the prior written consent of
the Indenture Trustee, the Collateral Agent, the Backup Servicer and the
Security Insurer (so long as an Insurer Default shall not have occurred and be
continuing) and with the consent of a Note Majority (which consent of any Holder
of a Note given pursuant to this Section or pursuant to any other provision of
this Agreement shall be conclusive and binding on such Holder and on all future
Holders of such Note and of any Note issued upon the transfer thereof or in
exchange thereof or in lieu thereof whether or not notation of such consent is
made upon the Note) 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
60
rights of the Holders of Notes; PROVIDED, HOWEVER, that subject to the
express rights of the Security Insurer under the Related Documents, including
its rights to agree to certain modifications of the Receivables pursuant to
Section 2.2 and its rights to cause the Collateral Agent to liquidate the
Collateral under the circumstances and subject to the provisions of Section
6.1 of the Security Agreement, no such amendment shall (a) increase or reduce
in any manner the amount of, or accelerate or delay the timing of,
collections of payments on Receivables or distributions required to be made
with respect to any Advance or the Advance Interest Rate, (b) amend any
provisions of Section 3.6 in such a manner as to affect the priority of
payment of interest, principal or premium to Noteholders, or (c) reduce the
aforesaid percentage required to consent to any such amendment or any waiver
hereunder, without the consent of the Holders of all Notes then outstanding.
(c) Prior to the execution of any such amendment or consent, the
Issuer shall furnish written notification of the substance of such amendment or
consent to each Rating Agency.
(d) Promptly after the execution of any such amendment or consent, the
Issuer shall furnish written notification of the substance of such amendment or
consent to the Indenture Trustee.
(e) It shall not be necessary for the consent of Noteholders pursuant
to Section 6.1(b) 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 any other consents of
Noteholders provided for in this Agreement) and of evidencing the authorization
of the execution thereof by Noteholders shall be subject to such reasonable
requirements as the Issuer or Indenture Trustee, as applicable, may prescribe,
including the establishment of record dates.
(f) Prior to the execution of any amendment to this Agreement, the
Issuer and the Indenture Trustee 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, in addition to the Opinion of Counsel referred to
in Section 6.2(i). The Indenture Trustee may, but shall not be obligated to,
enter into any such amendment which affects the Indenture Trustee's own rights,
duties or immunities under this Agreement or otherwise.
Section 6.2. PROTECTION OF TITLE TO SELLER CONVEYED PROPERTY.
(a) The Servicer and the Seller shall execute and file such financing
statements and cause to be executed and filed such continuation and other
statements, all in such manner and in such places as may be required by law
fully to preserve, maintain and protect the interest of the Issuer and the
Collateral Agent in the Seller Conveyed Property and in the proceeds thereof.
The
61
Servicer shall deliver (or cause to be delivered) to the Issuer, the Agent,
the Collateral Agent and the Security Insurer file-stamped copies of, or
filing receipts for, any document filed as provided above, as soon as
available following such filing.
(b) Neither the Seller nor the Servicer shall change its name,
identity or corporate structure in any manner that would, could or might make
any financing statement or continuation statement filed by the Seller in
accordance with paragraph (a) above seriously misleading within the meaning of
Section 9-402(7) of the UCC, unless it shall have given the Issuer, the Agent,
the Indenture Trustee and the Security Insurer (so long as an Insurer Default
shall not have occurred and be continuing) at least 60 days prior written notice
thereof, and shall promptly file appropriate amendments to all previously filed
financing statements and continuation statements; provided that no prior notice
need be given for a change in the name of the Seller from Olympic Receivables
Finance Corp. to Arcadia Receivables Finance Corp. or the Servicer from Olympic
Financial Ltd. to Arcadia Financial Ltd.
(c) Each of the Seller and the Servicer shall give the Issuer, the
Agent, the Indenture Trustee and the Security Insurer at least 60 days' prior
written notice of any relocation of its principal executive office if, as a
result of such relocation, the applicable provisions of the UCC would require
the filing of any amendment of any previously filed financing or continuation
statement or of any new financing statement. The Servicer shall at all times
maintain each office from which it services Receivables and its principal
executive office within the United States of America.
(d) The Servicer shall maintain accounts and records as to each
Receivable accurately and in sufficient detail to permit (i) the reader thereof
to know at any time 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 amounts from time to time deposited in the Collection Account
in respect of such Receivable.
(e) The Servicer shall maintain its computer systems so that, from and
after the time of sale under the Repurchase Agreement of the Receivables to the
Issuer, the Servicer's master computer records (including any backup archives)
that refer to any Receivable indicate clearly that the Receivable is owned by
the Issuer. Indication of the Issuer's ownership of a Receivable shall be
deleted from or modified on the Servicer's computer systems when, and only when,
the Receivable has been paid in full or repurchased by the Seller or Servicer.
(f) If at any time the Seller or the Servicer proposes to sell, grant
a security interest in, or otherwise transfer any interest in automotive
receivables to any prospective purchaser,
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lender or other transferee, the Servicer shall give to such prospective
purchaser, lender or other transferee computer tapes, records or printouts
(including any restored from backup archives) that, if they refer in any
manner whatsoever to any Receivable, indicate clearly that such Receivable
has been sold and is owned by the Issuer unless such Receivable has been paid
in full or repurchased by the Seller or Servicer.
(g) The Servicer shall permit the Issuer, the Agent, the Indenture
Trustee, the Collateral Agent, the Backup Servicer, the Security Insurer and
their respective agents, at any time to inspect, audit and make copies of and
abstracts from the Servicer's records regarding any Receivables or any other
portion of the Seller Conveyed Property.
(h) The Servicer shall furnish to the Issuer, the Agent, the Indenture
Trustee, the Collateral Agent, the Backup Servicer and the Security Insurer at
any time upon request a list of all Receivables then held by the Issuer,
together with a reconciliation of such list to the Receivables Schedule and to
each of the Servicer's Certificates furnished before such request indicating
repurchase of Receivables from the Issuer. Upon request, the Servicer shall
furnish a copy of any list to the Seller. The Indenture Trustee shall hold any
such list and Receivables Schedule for examination by interested parties during
normal business hours at the Corporate Trust Office upon reasonable notice by
such Persons of their desire to conduct an examination.
(i) The Seller and the Servicer shall deliver to the Issuer, the
Agent, the Indenture Trustee, the Collateral Agent and the Security Insurer
simultaneously with the execution and delivery of this Agreement and of each
amendment thereto and upon the occurrence of the events giving rise to an
obligation to give notice pursuant to Section 6.2(b) or (c), an Opinion of
Counsel either (a) stating that, in the opinion of such counsel, all financing
statements and continuation statements have been executed and filed that are
necessary fully to preserve and protect the interest of the Issuer and the
Collateral Agent in the Receivables and the other Seller Conveyed Property, and
reciting the details of such filings or referring to prior Opinions of Counsel
in which such details are given, or (b) stating that, in the opinion of such
counsel, no such action is necessary to preserve and protect such interest.
(j) The Servicer shall deliver to the Issuer, the Agent, the Indenture
Trustee, the Collateral Agent and the Security Insurer, within 90 days after the
beginning of each calendar year beginning with the first calendar year beginning
more than three months after the Closing Date, an Opinion of Counsel, either (a)
stating that, in the opinion of such counsel, all financing statements and
continuation statements have been executed and filed that are necessary fully to
preserve and protect the interest of the Issuer and the Collateral Agent in the
Receivables, and reciting the details of such filings or
63
referring to prior Opinions of Counsel in which such details are given, or
(b) stating that, in the opinion of such counsel, no action shall be
necessary to preserve and protect such interest.
Section 6.3. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES UNDER THIS AGREEMENT SHALL BE DETERMINED IN ACCORDANCE
WITH SUCH LAWS.
Section 6.4. SEVERABILITY OF PROVISIONS. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Notes or the
respective rights of the Holders thereof.
Section 6.5. ASSIGNMENT. Notwithstanding anything to the contrary
contained in this Agreement, except as provided in Section 4.2 or Section 5.2
(and as provided in the provisions of the Agreement concerning the resignation
of the Servicer and the Backup Servicer), this Agreement may not be assigned by
the Seller or the Servicer without the prior written consent of the Issuer, the
Agent, the Indenture Trustee, the Collateral Agent and the Security Insurer (or,
if an Insurer Default shall have occurred and be continuing, the Agent, the
Issuer and the Indenture Trustee)
Section 6.6. THIRD-PARTY BENEFICIARIES. This Agreement shall inure
to the benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. The Security Insurer and the Noteholders and
their successors and assigns shall be third-party beneficiaries to the
provisions of this Agreement, and shall be entitled to rely upon and directly to
enforce such provisions of this Agreement so long as, with respect to the
Security Insurer, no Insurer Default shall have occurred and be continuing.
Except as set forth in this Section 6.6, nothing in this Agreement, express or
implied, shall give to any Person, other than the parties hereto and their
successors hereunder, any benefit or any legal or equitable right, remedy or
claim under this Agreement. Except as expressly stated otherwise herein or in
the Related Documents, any right of the Security Insurer to direct, appoint,
consent to, approve of, or take any action under this Agreement, shall be a
right exercised by the Security Insurer in its sole and absolute discretion.
Section 6.7. DISCLAIMER BY SECURITY INSURER. The Security 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 Issuer, the Agent and the Indenture Trustee.
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Section 6.8. COUNTERPARTS. For the purpose of facilitating its
execution and for other purposes, this Agreement may be executed simultaneously
in any number of counterparts, each of which counterpart shall be deemed to be
an original, and all of which counterparts shall constitute but one and the same
instrument.
Section 6.9. NOTICES. All demands, notices and communications under
this Agreement shall be in writing, personally delivered, sent by facsimile
transmission or mailed by certified mail-return receipt requested, and shall be
deemed to have been duly given upon receipt (a) in the case of OFL, the Seller
or the Servicer, at the following address: Olympic Receivables Finance Corp.,
0000 Xxxxxxxxxx Xxxxxx Xxxxx, Xxxxx 000, Xxxxxxxxxxx, Xxxxxxxxx 00000-0000,
Attention: Treasurer, with copies to: Olympic Financial Ltd., 0000 Xxxxxxxxxx
Xxxxxx Xxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000-0000, Attention: Treasurer, (b) in
the case of the Issuer, Arcadia Receivables Conduit Corp., 0000 Xxxxxxxxxx
Xxxxxx Xxxxx, Xxxxx 000, Xxxxxxxxxxx, Xxxxxxxxx 00000-0000, Attention:
Treasurer, (c) in the case of the Indenture Trustee and, for so long as the
Indenture Trustee is the Backup Servicer or the Collateral Agent, at Xxxxx
Xxxxxx xxx Xxxxxxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000-0000, Attention:
Corporate Trust Services - Asset-Backed Administration, (d) in the case of each
Rating Agency, 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (for Xxxxx'x) and 00
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (for Standard & Poor's), Attention:
Asset-Backed Surveillance), (e) in the case of the Security Insurer, Financial
Security Assurance Inc., 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Surveillance Department, Telex No.: (0) 000-0000, Confirmation: (0) 000-0000,
Telecopy Nos.: (0) 000-0000, (0) 000-0000, (in each case in which notice or
other communication to Financial Security refers to an Event of Default, a claim
on the Note Policy or with respect to which failure on the part of Financial
Security to respond shall be deemed to constitute consent or acceptance, then a
copy of such notice or other communication should also be sent to the attention
of the General Counsel and the Head-Financial Guaranty Group "URGENT MATERIAL
ENCLOSED"), and (f) in the case of the Agent, Bank of America National Trust and
Savings Association, Asset Securitization Group, 000 Xxxxx XxXxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxx, 00000, Attention: Xx. Xxxxxx Xxxxxxxxx or at such other
address as shall be designated by any such party in a written notice to the
other parties. Any notice required or permitted to be mailed to a Noteholder
shall be given by first class mail, postage prepaid, at the address of such
Holder as shown in the Note Register, and any notice so mailed within the time
prescribed in this Agreement shall be conclusively presumed to have been duly
given, whether or not the Noteholder receives such notice.
Section 6.10. INTEREST RATE PROTECTION. The parties hereto agree,
upon the request of the Seller, to amend this Agreement to allow for the
substitution of interest rate caps or other interest rate xxxxxx acceptable to
the Security Insurer and
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the Agent for the obligation of the Seller to make deposits to the Collection
Account or retain amounts on deposit in the Collection Account in respect of
the WAC Deficiency Amount, but only to the extent that such interest rate
caps or other interest rate xxxxxx would have the same economic effect as the
WAC Deficiency Amount, as determined by the Security Insurer and the Agent in
their reasonable discretion.
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IN WITNESS WHEREOF, the Issuer, the Agent, the Seller, OFL, the
Servicer and the Backup Servicer have caused this Servicing Agreement to be duly
executed by their respective officers as of the day and year first above
written.
ISSUER:
ARCADIA RECEIVABLES CONDUIT CORP.
By /s/ [illegible]
____________________________
Name:
Title:
SELLER:
OLYMPIC RECEIVABLES FINANCE CORP.
By /s/ [illegible]
____________________________
Name:
Title:
OLYMPIC FINANCIAL LTD.,
in its individual capacity and as Servicer
By /s/ [illegible]
____________________________
Name:
Title:
BACKUP SERVICER:
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
as Backup Servicer
By /s/ Xxxxxx X. Wraabsted
____________________________
Name:
Title:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Agent
By
By /s/ Xxxx X. Xxxx
____________________________
Name: XXXX X. XXXX
Title: as Attorney-in-Fact
Acknowledged and Accepted:
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
not in its individual capacity
but as Indenture Trustee and
Collateral Agent,
By /s/ Xxxxxx X. Wraabsted
____________________________
Name:
Title:
[Signature Page to Servicing Agreement]
SERVICING POLICIES AND PROCEDURES
NOTE: APPLICABLE TIME PERIODS WILL VARY BY STATE.
I. PAST DUE PAYMENT COLLECTIONS
A. Past due payment notices are generated and sent on the 9th and 15th day
of delinquency.
B. The collection officer will make at least one phone call by day 10.
C. The collection officer will write a personalized collection letter by
day 15 and will have made at least two collection phone calls.
D. The collection officer will make at least two (2) more phone calls and
write at least one (1) more letter between days 15 and 30.
E. The collection officer will send a final demand letter on or about 31
days past due. The letter will allow 10 days to bring the account
current.
F. The collection officer will recommend either repossession, or some
form of reasonable forbearance (e.g., one extension in exchange for a
partial payment for cooperative debtors).
All phone calls and correspondence will require a brief handwritten
comment in the credit file. The date of each comment and the officer's
initials will be documented.
II. PAYMENT EXTENSIONS
Extensions of monthly payments must be granted only after careful
consideration and analysis. The extension is not to be used to mask
delinquencies, but rather assist in the collection and correction of
verifiable and legitimate customer problems. All extensions or modifications
require the prior approval of the Branch Manager. In the absence of the
Branch Manager, the Executive Vice President's or the President's approval is
required.
Possible qualifications for extensions to cooperative and trustworthy
customers include:
(a) Medical problems - verifiable;
(b) Temporary work loss - verifiable;
(c) Pending insurance claim - verifiable; or
(d) Bankruptcy trustee cram down.
III. REPOSSESSIONS
Repossessions of the collateral is only to be pursued after exhausting
all other collection efforts. Once the decision is made to attempt
repossession, the following process is to be utilized:
(a) Decision on repossession.
(b) If the customer is cooperative, attempt repossession by Servicer
personnel. If uncooperative or unable to locate, utilize a third
party collection agency.
(c) Once secured, complete an inventory of personal belongings and
brief condition report on the vehicle. Return the property to the
customer and obtain a signed statement of inventory receipt.
(d) If the repossession is involuntary, notify the police department in
the city where the repossession occurred.
(e) Notify the originating dealership of repossession as soon as possible
and request a refund of all rebateable dealer adds.
(f) Send written notification to the customer regarding a 10-day notice
to redeem the loan.
(g) Decide on proper method of liquidation and plan for sale after the
10-day redemption period has expired.
(h) If consignment, set 21-day maximum term with the dealership, after
which time, if unsold, the vehicle is returned to the Servicer.
If wholesale, contact the appropriate auction company to make
arrangements for immediate sale.
If private sale, place advertisements in the proper media and attempt
to liquidate within one week.
(i) After the collateral is liquidated, send the debtor a letter stating
the amount of deficiency. Continued collection efforts will take the
form of voluntary payments or involuntary payments via judgment,
garnishment, and levy.
IV. CHARGE OFFS
It is the responsibility of the collection officer to diligently pursue
any and all deficiencies which result from problem accounts. All avenues of
potential collection will be pursued, ranging from cash settlements to
amortized deficiency notes to judgment and garnishment.
A complete list of all charge offs will be maintained. The list will be
categorized into "active" and "dead" accounts. A brief action plan will be
shown for each active account. Accounts will only be designated as "dead"
with the recommendation of the collection officer and approval of the
Executive Vice President. The "dead" designation will only be granted for
those accounts which hold no potential for recovery (e.g., discharged
Chapter 7).
Active charge off action plans will be presented at least monthly to the
Executive Vice President. Decisions regarding pursuit of legal action and
incurring potential legal fees will need prior approval by the Executive Vice
President.
V. DEFICIENCY COLLECTIONS
(a) Establish the exact amount of the deficiency, using the repossession
worksheet. This includes all fees and per diem interest.
(b) Attempt verbal and/or written negotiations with the debtor to settle
the deficiency.
(c) Send a certified letter to the debtor and cosigner(s) stating that we
need $X by _____________, 19__ (7-10 days), or we will begin legal
action. If no reasonable response is received move to (d).
(d) Complete a General Claim Form. Send the form to [applicable local
court].
(e) We should receive notification of the court's decision within one
week. If we receive notice of judgment, it is possible that the debtor
will pay the court and the court will then pay the Servicer. As this
usually does not happen, proceed to exercise on the judgment as
follows:
(1) File both the Transcript of Judgment and the Affidavit of
Identification of Judgment Debtor with [appropriate office].
(2) Order a Writ of Execution from [appropriate office].
(3) "Service" of the Writ of Execution is handled by the Sheriff or
an Attorney.
SERVICER'S CERTIFICATE
Delivered by Olympic Financial Ltd. ("the Servicer").
In accordance with the terms of the Servicing Agreement, dated December 3,
1996, among Arcadia Receivables Conduit Corporation ("the Issuer"), Olympic
Receivables Finance Corporation ("Seller"), Olympic Financial Ltd. in its
individual capacity and as Servicer, Bank of America National Trust & Savings
Association as Agent, and Norwest Bank Minnesota, National Association as
Backup Servicer, Collateral Agent and Indenture Trustee, the Servicer hereby
certifies that the following information is true and correct as of the close
of business on
INPUT SHEET (INPUTS ARE BLUE)
Dates
1 Accounting Date:
2 Determination Date:
3 Distribution Date:
4 Number of Days in Accounting Date Month 30
5 Has an Amortization Period commenced (Y/N) N
Rates 5 2-year Treasury 0.00%
6 30-day CP composite ratio 0.00%
7 Offshore Rate 0.00%
8 Weighted Average APR of Qualifying Receivables 0.00%
9 Basis Fee Percent 0.00%
10 Total Expense Percent 0.000%
Auto Loan Information
11 Total Premier Receivables $0
12 Total Classic Receivables $0
13 Total Financed Repossessions $0
--
Aggregate Principal Balance $0
Less: Classic Receivables in excess of 65% of Total $0
Less: Financed Repossession in excess of 5% of Total $0
--
Total aggregate Principal Balance of Qual. Receivables $0
14 Amount on deposit in Collection Account $0
15 WAC Deficiency Deposit $0
Aging of Pool
16 Current $0
17 1-30 days past due $0
18 31-60 days past due $0
19 61-90 days past due $0
20 90+ days past due $0
--
Total (should equal aggregate Principal Balance) $0
21 Advance Principal Distribution Amount $0
Funding Data
22 Is the purchase of Notes funded with CP (Y/N) Y
23 Outstanding Principal Amount as of Accounting Date $0
24 Advance Interest Carryover Shortfall $0
25 Interest Related to Prepayments (Sec. 3 (e) of Repo Agmt) $0
26 Total Interest due on Distribution Date $0
Portfolio Performance
Liquidated Receivables Calculation
Those Receivables where:
27 (i) 91 days have elapsed since the Servicer repossessed
the Financed Vehicle; $0
28 (ii) the Servicer has determined in good faith that
all amounts it expects to recover have been
received; $0
29 (iii) all or any portion of a Scheduled Payment shall
have become more than 180 days delinquent $0
--
Total Liquidated Receivables $0
30 Total Collections for the Accounting Period $0
Required Distributions from the Distribution Amount, Pursuant to Section
3.6(a) of the Servicing Agreement:
(i) Advance Interest Distributable Amount $0
(ii) Amount of Outstanding Monthly Advances for which the Servicer
(or OFL) is entitled to be reimbursed and for which the
Servicer (or OFL) has not been previously reimbursed $0
(iii) Accrued and unpaid fees and expenses, pro rata, to the extent
Exhibit B Page 1
that such Person has not previously received such amounts
from Servicer or OFL:
Accrued and unpaid fees of the Indenture Trustee $0
Accrued and unpaid expenses of the Indenture Trustee $0
Accrued and unpaid fees of the Lockbox Bank $0
Accrued and unpaid fees of the Custodian $0
Accrued and unpaid fees of the Backup Servicer $0
Accrued and unpaid fees of the Collateral Agent $0
Transition expense of successor Servicer (not to exceed
$50,000) $0
(iv) Basic Servicing Fee for the related Monthly Period $0
Supplemental Servicing Fees for the Related Monthly period $0
Amounts permitted to be paid to the Servicer pursuant to
Section 3.2: $0
(v) With respect to an Amortization Period, so long as no
Amortization Event has occurred, the Advance Principal
Distributable Amount $0
(vi) Any amount owed and unpaid to the Security Insurer under
the Insurer Agreement, whether or not OFL or any other
Person is also obligated to pay such amounts $0
(vii) With respect to the Revolving Period, an amount required
to be at least equal to the sum of:
(1) the WAC Deficiency Amount, if any, and $0
(2) the amount necessary to be held in the Collection
Account such that Collateral Test will be satisfied $0
(viii) With respect to an Amortization Period, so long as no
Amortization Event has occurred, the amount equal to the
remaining amount on deposit in the Collection Account
necessary to pay down the unpaid principal amount of
the Advances $0
(ix) To the Agent for distribution, any amounts owing to the
Agent, the Noteholders or any Permitted Assignee under
the Note Purchase Agreement, the Fee Letter or any other
Related Document, to the extent not otherwise paid $0
Total Required Distribution (Note: item (vii) not
distributed but retained in Collection Account) $0
(x) Any remaining portion of Distribution Amount to the Spread
Account (Collection Account balance less Total Required
Distribution note: Item (vii) not distributed but retained
in the Collection Account) $0
CALCULATION OF WAC DEFICIENCY PERCENTAGE AND AMOUNT
The excese, if any, of (A) 6.5% 6.500%
plus the greatest of:
(i) the sum of 2 year Treasury Yield + 0.60%
+ Basis Fee % + Total Expense % 0.600%
(ii) (30 day CP composite x 1.2)
+0.25% + Total Exp. % 0.250%
(iii) (Offshore Rate x 1.2) + 0.375%
+ Total Exp. % NA
--
Maximum: 0.600%
over (B) the Weighted Average APR of Qualifying Receivables 0.000%
------
WAC Deficiency Percentage 7.100%
multiplied by 1.7 12.070%
multiplied by the Principal Balance of Qualifying Receivables $0
--
equals WAC Deficiency Amount $0
Calculation of Collateral Value of Premier Receivables
1) Total current principal outstanding on Qualifying Premier
Receivables $0
2) multiplied by Premier Collateral Ratio 98.00%
------
Premier Collateral Value $0
Exhibit B Page 2
Calculation of Collateral Value of Classic Receivables
1) Total aggregate outstanding Principal Balance of
Qualifying Receivables (net of 65% cap) $0
2) multiplied by Classic Collateral Ratio 98.00%
------
Classic Collateral Value $0
Calculation of Collateral Value of Financed Repossessed Receivables
1) Outstanding Principal Balance of Classic Receivables that are
Financed Repossessions and are Qualifying Receivables $0
2) multiplied by Financed Repossessed Collateral Ratio 85.00%
------
Financed Repossessions Collateral Value $0
Total Collateral Value of all Qualifying Receivables $0
Collateral Test
1) Amount on deposit in Collection Account $0
Less WAC Deficiency Deposit $0
Plus the Total Collateral Value of all Qualifying Receivables $0
--
2) Aggregate outstanding amount of all Advances (LESS THAN or
EQUAL to above) $0
Is the Collateral Test satisfied? YES
If Collateral Test not satisfied, amount required to be held in
Collection Account $0
Determination of Advance Interest Distributable Amount
1) Outstanding Advance Balance $0
2) Total interest accrued during the immediately preceding
Interest Period $0
3) Less the amount of any Interest that accrued during the preceding
Interest Period on any Advance that was prepaid during such
Interest Period pursuant to section 3(e) of the Repurchase
Agreement and deposited into the Note Distribution account pursuant
to Section 3.10(b) of the Servicing Agreement $0
--
Advance Monthly Interest Distributable Amount $0
4) Determination of the Advance Interest Distributable Amount
a) Advance Monthly Interest Distributable Amount $0
b) Advance Interest Carryover Shortfall $0
--
Advance Interest Distributable Amount $0
Determination of the Basic Servicing Fee
1) Average Aggregate Principal Balance $0
multiplied by the Basic Servicing Fee Rate 1.00%
multiplied by 30/360 8.33%
-----
0.00
IN WITNESS WHEREOF, I ________________________
executed this Certificate as of the date set forth above
By: _____________________
Title: _____________________
Exhibit B
EXHIBIT C
INTERCOMPANY DISCRETIONARY ADVANCE
AND SUBORDINATION AGREEMENT
This Agreement is made as of this __ day of ______________, 199_ by and
between Olympic Financial Ltd. ("OFL") and Olympic Receivables Finance Corp.
("ORFC").
RECITALS
OFL and ORFC are parties to a Servicing Agreement dated as of December 3,
1996 (the "Servicing Agreement"), a Spread Account Agreement dated as of
March 25, 1994, as amended and restated as of December 3, 1996 (the "Spread
Account Agreement"), and an Insurance and Indemnity Agreement dated as of
August 1, 1994 (the "Insurance Agreement").
ORFC is party to a Repurchase Agreement dated as of December 3, 1996
between ORFC and Arcadia Receivables Conduit Corp. (the "Repurchase
Agreement").
Pursuant to the terms of the Servicing Agreement, ORFC has the right,
but not the obligation, to make deposits into the Collection Account in order
to satisfy the Collateral Test. Failure to satisfy the Collateral Test is an
Event of Default under the Repurchase Agreement.
In the event ORFC wishes to xxxx deposits to satisfy the Collateral
Test and does not have sufficient funds to do so, ORFC may seek to borrow
funds for that purpose from OFL.
OFL is not obligated, and has not committed, to lend funds to ORFC.
OFL and ORFC wish to enter into this Agreement to define the terms under
which ORFC will repay any loans OFL elects to make to ORFC for the purpose of
making deposits into the Collection Account to satisfy the Collateral Test.
NOW, THEREFORE, for good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, OFL and ORFC agree as follows:
1. DEFINITIONS. All undefined capitalized terms used in this Agreement
shall have the Leanings pen them in the Servicing Agreement, Spread Account
Agreement and Insurance Agreement.
2. ADVANCES. ORFC may request from time to time that OFL lend ORFC such
funds as may be required to satisfy the Collateral Test. OFL may, in its sole
and
absolute discretion, make a loan to ORFC (each such loan, an "Advance"). In
no event will OFL make an Advance unless its officers believe at the time that
there is a reasonable expectation of repayment.
3. REPAYMENT OF ADVANCES.
3.1 NOTE. The obligation of ORFC to repay the aggregate balance of
the Advances shall be evidenced by a nonrecourse promissory note of ORFC
dated the date hereof and substantially in the form of Exhibit A
attached hereto (the "Note"). OFL shall, and is hereby authorized by
ORFC to, endorse on the Note or on a schedule attached thereto an
appropriate notation evidencing the date and amount of each Advance made
by OFL and each principal payment and interest payment made by ORFC.
Such notations will be presumed correct unless and until the contrary is
established; PROVIDED, HOWEVER, that failure to make or any error in
making any such notation will not limit or expand or otherwise affect
the obligations of ORFC under this Agreement or the Note.
3.2 UNSECURED OBLIGATION. The obligation of ORFC to repay the
Advances shall be unsecured.
3.3 SUBORDINATION; LIMITED RECOURSE. The obligation of ORFC to
repay the Advances shall be subordinated in accordance with Section 4
and shall be recourse only to the extent of amounts released to ORFC
pursuant to priority EIGHTH of Section 3.03(b) of the Spread Account
Agreement after payment by ORFC of any amounts owing under, or in
connection with, any of the Transaction Documents (as defined in the
Spread Account Agreement) to any party, including any amounts payable to
OFL other than in respect of the Advances (such amounts, net of all such
payments, the "Available Funds").
3.4 INTEREST. Subject to the provisions of Section 4 of this
Agreement, ORFC agrees to pay interest on the principal balance of the
Advances at a per annum rate equal to [IBOR (as defined in the Servicing
Agreement) plus one percent] calculated on the basis of actual days
elapsed and a year of 360 days.
3.5 PAYMENTS. Funds shall be allocated for application to the Note
each month on the Distribution Date in an amount equal to the lesser of
(a) Available Funds, if any, and (b) the principal balance outstanding
on the Note plus accrued interest. Each payment shall be applied first
to accrued interest and the balance to principal.
4. SUBORDINATION. The parties hereto hereby agree that, except as and
to the extent hereinafter provided in this paragraph 4, the indebtedness of
ORFC
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evidenced by the Note, whether now outstanding or hereafter owing (the
"Subordinated Debt"), is and shall be subordinate and subject in right of
payment to the prior payment in full of all of OFRC's obligations under the
Repurchase Agreement and the other Transaction Documents (the "Senior Debt");
provided, however, that so long as no Act of Insolvency or Event of Default
(as defined in the Repurchase Agreement) shall have occurred and is
continuing, ORFC can borrow, repay and reborrow the Subordinated
Indebtedness, subject to the terms and conditions contained in this
Agreement. In the event of any distribution of all or part of the assets of
ORFC or the proceeds thereof to the creditors of ORFC, by reason of the
liquidation, dissolution or winding up of ORFC, or any sale, receivership,
insolvency or bankruptcy proceeding, then all payments or distributions of
cash, securities or property which but for this paragraph would be payable
upon the Subordinated Debt, shall instead be paid to the Collateral Agent for
application on the Senior Debt, whether or not due, until the Senior Debt is
paid in full.
5. NONPETITION COVENANT. OFL agrees that it will not commences or join
with any other creditor of ORFC in commencing, against ORFC, any bankruptcy,
insolvency, arrangement, reorganization, receivership, relief or similar
proceeding under any bankruptcy or similar law or assignment for the benefit
of creditors or any marshalling of assets and liabilities.
6. MISCELLANEOUS.
6.1. AMENDMENTS. The provisions of this Agreement may be modified,
amended, waived or terminated, only by a written document signed by both
parties or, in the case of a waiver, signed by the party against which such
waiver is being enforced, and, in each case, only with the prior written
consent of the Rating Agencies.
6.2. NOTICES. Except as otherwise expressly provided herein, all
notices and other communications hereunder will be in writing and will be
delivered in person or by courier or mailed, registered or certified mail,
postage prepaid and return address requested, to the parties at the following
addresses:
To ORFC: 0000 Xxxxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxxx, XX 000000-0000
Attn: Treasurer
To OFL: 0000 Xxxxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxxx, XX 000000-0000
Attn: Xxxx X. Xxxxxx
-3-
or to such other address or to the attention of such other person as the
recipient has previously designated to the sender in writing. All such
notices and communications will be effective when delivered (if delivered
personals or by courier) or received (in the case of telecommunications) or
three days after they have been deposited in the mail (if sent by U.S. mail).
6.3. GOVERNING LAW. This Agreement and the Note, and all questions
relating to their validity, interpretations, performance and enforcement,
shall be governed and construed in accordance with the substantive laws of
the State of Minnesota without regard to the principles of conflicts of law
thereof.
6.4. ASSIGNMENT. This Agreement and the Note shall not be assigned
or transferred by OFL to arm person other than a direct or indirect
subsidiary of OFL.
6.5. RATING AGENCY COPIES. Upon the execution and delivery of this
Agreement, OFL will deliver an executed copy of this Agreement and the
executed Note to each Rating Agency.
IN WITNESS WHEREOF, this Agreement has been executed as of the date
first written above.
OLYMPIC FINANCIAL LTD.
By:
-----------------------------------
Its:
-------------------------------
OLYMPIC RECEIVABLES FINANCE CORP.
By:
-----------------------------------
Its:
-------------------------------
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EXHIBIT A
SUBORDINATED
REVOLVING CREDIT PROMISSORY NOTE
Minneapolis, Minnesota
____________, 199_
FOR VALUE RECEIVED, Olympic Receivables Finance Corp. ("ORFC")
promises to pay to the order of Olympic Financial Ltd. ("OFL") the principal
amount of Advances, if any, made by OFL to ORFC in accordance with the terms
of the Intercompany Discretionary Advance and Subordination Agreement of even
date herewith (the "Agreement"), together with interest at the rate provided
in the Agreement.
This Note shall be payable at the times and in the amounts specified in
the Agreement.
Payment of the obligations of ORFC evidenced by this Note is
subordinated on the terms of the Agreement and shall be recourse only to the
extent provided in the Agreement.
The terms of the Agreement are incorporated by reference herein with the
same force and effect as if fully set forth herein.
This Note shall be governed by and construed in accordance with the
internal laws of the state of Minnesota.
OLYMPIC RECEIVABLES FINANCE CORP.
By
------------------------------------
Its
---------------------------------
[COPY TO BE DELIVERED TO XXXXX'X AND
S&P IF AND WHEN EXECUTED]
-5-
