RECEIVABLES FUNDING AND SERVICING AGREEMENT
dated as of October 17, 1997
among
ARCADIA RECEIVABLES FINANCE CORP. III,
Borrower,
ARCADIA FINANCIAL LTD.,
as Servicer and Custodian,
DLJ MORTGAGE CAPITAL, INC. and its permitted assigns,
as Lenders,
DLJ MORTGAGE CAPITAL, INC.,
as Agent,
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Backup Servicer and Collateral Agent
RECEIVABLES FUNDING AND SERVICING AGREEMENT
THIS RECEIVABLES FUNDING AND SERVICING AGREEMENT is made and entered into
as of October 17, 1997, among ARCADIA RECEIVABLES FINANCE CORP. III, a
Delaware corporation having its principal office at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ (the "BORROWER"), ARCADIA
FINANCIAL LTD., a Minnesota corporation having its principal office at ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇ (in its
individual capacity, "ARCADIA"), as servicer (in such capacity the
"SERVICER") and as custodian (in such capacity, the "CUSTODIAN"), DLJ
MORTGAGE CAPITAL, INC. and its permitted assigns, as lenders (each, a
"LENDER" and together, the "LENDERS"), DLJ MORTGAGE CAPITAL, INC. ("DLJ") a
Delaware corporation, as Agent (the "AGENT"), and NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, a national banking association ("NORWEST"), as backup
servicer (in such capacity the "BACKUP SERVICER") and as collateral agent (in
such capacity, the "COLLATERAL AGENT").
BACKGROUND
1. The Borrower desires that the Lenders extend financing to the
Borrower on the terms and conditions set forth herein.
2. The Lenders (as defined herein) are willing to provide such
financing on the terms and conditions set forth in this Agreement.
3. The Borrower is a wholly owned subsidiary of Arcadia, and to enable
the Borrower to obtain the financing provided for herein, and for the
consideration set forth herein, Arcadia is willing to act as Custodian and
Servicer hereunder.
4. The Lenders and the Borrower have requested Norwest, and Norwest has
agreed to act as Backup Servicer and Collateral Agent hereunder on the terms
and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINED TERMS. As used in this Agreement, the following terms
have the following meanings:
"ACCOUNTANTS' REPORT" has the meaning set forth in SECTION 8.11(a).
"ADVANCE" means any amount disbursed by any Lender to the Borrower under
this Agreement.
"ADVANCE DATE" means the date any Advance is made under SECTION 2.3.
"ADVANCE RATE" means:
(a) with respect to Premier Receivables, 95%;
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(b) with respect to Classic Receivables (other than Financed Repo
Receivables), 93%; and
(c) with respect to Financed Repo Receivables, 85%.
"ADVANCE REQUEST" has the meaning set forth in SECTION 2.2.
"ADVERSE CLAIM" means any claim of ownership or any lien, security
interest, title retention, trust or other charge or encumbrance, or other
type of preferential arrangement having the effect or purpose of creating a
lien or security interest, other than the security interest created under
this Agreement.
"AFFECTED PERSON" has the meaning set forth in SECTION 6.1(a).
"AFFILIATE" of any Person means any other Person that directly or
indirectly controls, is controlled by or is under common control with such
Person (excluding any trustee under, or any committee with responsibility for
administering, any employee benefit plan). A Person shall be deemed to be
"controlled by" any other Person if such other Person controls such Person
within the meaning of Section 15 of the Securities Act of 1933, as amended,
or Section 20 of the Securities Exchange Act of 1934, as amended.
The word "AFFILIATED" has a correlative meaning.
"AGENT", prior to the Remarketing Date, has the meaning set forth in the
PREAMBLE, and on and after the Remarketing Date, means the Custodian.
"AGENT'S ACCOUNT" has the meaning set forth in SECTION 5.1.
"AGGREGATE OUTSTANDING PRINCIPAL BALANCE" means, with respect to any
group of Receivables as of any date, the sum of the outstanding Principal
Balances of all such Receivables as at the close of business on such date.
"AGREEMENT" shall mean this Receivables Funding and Servicing Agreement,
as it may be amended, supplemented or otherwise modified from time to time.
"AMOUNT FINANCED" means, with respect to a Receivable, the aggregate
amount of credit extended under such Receivable toward the purchase price of
the related 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.
"ANNUAL PERCENTAGE RATE" or "APR" means, 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 Closing Date, the rate per annum with respect to a
Receivable as of the Closing Date is reduced as a result of (a) an insolvency
proceeding involving the relevant Obligor or (b) pursuant to the Soldiers'
and Sailors' Act, the "Annual Percentage Rate" or "APR" shall refer to such
reduced rate.
"APPLICABLE MARGIN" means .60% per annum; PROVIDED, HOWEVER, that in the
event any Investor which is a Structured Lender funds or maintains any
Advance or portion thereof through a
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Support Bank of such Structured Lender, the Applicable Margin for such
Advance or portion thereof shall be 1.0% per annum.
"APPLICABLE PERIOD" means, with respect to an Advance and (a) an Interest
Period of 21 days or more, 30 days; (b) an Interest Period of 14 or more but
less than 21 days, 21 days; (c) an Interest Period of 7 or more but less than
14 days, 14 days and (d) an Interest Period of less than 7 days, 7 days;
PROVIDED that the Applicable Period with respect to an Interest Period of
less than 30 days will be 30 days if such Advance is not repaid in full on
the last day of such Interest Period.
"APPLICABLE TELERATE PAGE" MEANS, WITH RESPECT TO LIBOR FOR ANY INTEREST
PERIOD OF 30 DAYS, TELERATE PAGE 3750, AND FOR LIBOR FOR ANY INTEREST PERIOD
OF LESS THAN 30 DAYS, THE HIGHEST RATE APPEARING ON TELERATE PAGE 4833.
"ARCADIA" has the meaning set forth in the PREAMBLE.
"ASSIGNMENT AND ACCEPTANCE" means an Assignment and Acceptance Agreement
in the form of Exhibit F hereto or such other assignment agreement as may be
agreed to between such assignee and the Agent.
"AVERAGE EXCESS SPREAD PERCENTAGE" means, with respect to any
Determination Date following a Settlement Period during which Advances were
outstanding, the average of the Spread Percentages for such Determination
Date and the two most recent Determination Dates following a Settlement
Period during which Advances were outstanding (or such lesser number of such
Settlement Periods as shall have occurred after the Closing Date).
"AVERAGE SERVICING PORTFOLIO" means as of any date, the average of the
Servicing Portfolio for the seven preceding Settlement Periods.
"BACKUP SERVICER" means Norwest Bank Minnesota, National Association,
together with its permitted successors and assigns, in its capacity as such
hereunder.
"BANKRUPTCY CODE" means the United States Bankruptcy Code, 11 U.S.C.
Section 101, ET SEQ., as amended.
"BORROWER" has the meaning set forth in the PREAMBLE.
"BORROWER ACCOUNT COLLATERAL" has the meaning set forth in SECTION 9.1(c).
"BORROWER ASSIGNED AGREEMENTS" has the meaning set forth in SECTION
9.1(b).
"BORROWING BASE" shall mean (a) as of any Determination Date, the product
of (i) the Weighted Average Advance Rate and (ii) (x) an amount equal to
Aggregate Outstanding Principal Balance of the Pledged Receivables that are
Eligible Receivables PLUS (y) an amount equal to the Aggregate Outstanding
Principal Balance of the Pledged Receivables that are not Eligible
Receivables to the extent such ineligibility results solely from such Pledged
Receivables being Delinquent Receivables (excluding any Delinquent
Receivables which are Defaulted Receivables); PROVIDED, HOWEVER, that such
amount shall not exceed .75% of the Aggregate Outstanding Principal Balance
of the Pledged Receivables, included pursuant to clauses (x) and (y) above,
as calculated as of the last day of the Settlement Period preceding such
Determination Date and (b) as of any other date of determination, the product
of (i) the Weighted Average Advance Rate and (ii) (x) an amount equal to the
Aggregate Outstanding Principal Balance of the Pledged Receivables that are
Eligible Receivables PLUS (y) an amount equal to the Aggregate Outstanding
Principal
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Balance of the Pledged Receivables that are not Eligible Receivables to the
extent such ineligibility results solely from such Pledged Receivables being
Delinquent Receivables (excluding any Pledged Receivables with respect to
which an amount greater than $10 is 60 or more days past due); PROVIDED,
HOWEVER, that such amount shall not exceed .75% of the Aggregate Outstanding
Principal Balance of the Pledged Receivables, included pursuant to clauses
(x) and (y) above, as calculated on such date.
"BORROWING BASE DEFICIENCY" has the meaning set forth in SECTION 15.1(e).
"BORROWER COLLATERAL" has the meaning set forth in SECTION 9.1.
"BUSINESS DAY" shall mean any day on which commercial banks in New York,
New York, Minneapolis, Minnesota or Chicago, Illinois are not authorized or
required to be closed.
"CHANGE OF CONTROL" means the occurrence of any of the following with
respect to Arcadia:
(a)(i) a majority of the directors of Arcadia shall be Persons
other than Persons (x) for whose election proxies shall have been solicited
by the board of directors of Arcadia or (y) who are then serving as directors
appointed by the board of directors to fill vacancies on the board of
directors caused by death or resignation (but not by removal) or to fill
newly-created directorships or (ii) any person or group of persons (within
the meaning of Section 13 or 14 of the Securities Exchange Act of 1934, as
amended) shall have acquired beneficial ownership (within the meaning of Rule
13d-3 promulgated by the Securities and Exchange Commission under said Act)
of 50% or more in voting power of the outstanding voting stock of Arcadia; or
(b) Arcadia shall fail to own, directly or indirectly, 100% of
the outstanding capital stock of the Borrower.
"CLASSIC RECEIVABLE" means a Receivable originated under Arcadia's
"Classic Program."
"CLOSING DATE" means October 17, 1997.
"COLLATERAL" means the Pledged Receivables and the Other Conveyed
Property.
"COLLATERAL AGENT AGREEMENT" means the Collateral Agent Agreement dated
as of the Closing Date among the Collateral Agent, the Agent, the Borrower
and the Servicer, including all amendments, modifications and supplements
thereto.
"COLLATERAL INSURANCE" means a vendor's single interest or other
collateral protection insurance policy with respect to Financed Vehicles,
which policy by its terms insures against physical damage in the event any
Obligor fails to maintain physical damage insurance with respect to the
related Financed Vehicle.
"COLLATERAL RECEIPT AND CONFIRMATION" means a Custodial Receipt and
Confirmation substantially in the form of EXHIBIT D.
"COLLECTION ACCOUNT" means the account designated as the Collection
Account in, and which is established and maintained pursuant to, SECTION
8.15(a).
"COLLECTION RECORDS" means all manually prepared or computer generated
records relating to collection efforts or payment histories with respect to
the Pledged Receivables.
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"CONTINGENT LIABILITY" means any agreement, undertaking or arrangement by
which any Person guarantees, endorses or otherwise becomes or is contingently
liable upon (by direct or indirect agreement, contingent or otherwise, to
provide funds for payment, to supply funds to, or otherwise to invest in, a
debtor, or otherwise to assure a creditor against loss) the indebtedness,
obligation or any other liability of any other Person (other than by
endorsements of instruments in the course of collection), or guarantees the
payment of dividends or other distributions upon the shares of any other
Person. The amount of any Person's obligation under any Contingent Liability
shall (subject to any limitation set forth therein) be deemed to be the
outstanding principal amount (or maximum outstanding principal amount, if
larger) of the debt, obligation or other liability guaranteed thereby.
"CRAM DOWN LOSS" means, with respect to a Receivable, if a court of
appropriate jurisdiction in an insolvency proceeding shall have issued an
order reducing the amount owed on such Receivable or otherwise modifying or
restructuring the scheduled payments to be made on such Receivable, an amount
equal to the excess of the principal balance of such Receivable immediately
prior to such order, minus the principal balance of such Receivable as so
reduced. A "Cram Down Loss" shall be deemed to have occurred on the date of
issuance of such order.
"CUSTODIAN" means Arcadia and any successors and assigns in its capacity
as custodian hereunder.
"DEALER" means a seller of new or used automobiles or light trucks that
originated one or more of the Pledged Receivables and sold the respective
Receivable, directly or indirectly, to Arcadia.
"DEALER AGREEMENT" means an agreement by and among Arcadia and a Dealer
relating to the sale of Receivables to Arcadia and all documents and
instruments relating thereto.
"DEALER ASSIGNMENT" means, with respect to a Receivable, the executed
assignment executed by a Dealer conveying such Receivable to Arcadia.
"DEALER UNDERWRITING GUIDELINES" means, collectively, the underwriting
guidelines used by Arcadia in the purchase of Receivables as amended from
time to time.
"DEFAULT RATE" means a rate PER ANNUM equal to LIBOR PLUS 2% per annum.
"DEFAULTED RECEIVABLE" means, with respect to any date of determination,
a Pledged Receivable with respect to which: (i) an amount greater than $10.00
is 60 days or more past due, (ii) the Servicer has repossessed the related
Financed Vehicle (and any applicable redemption period has expired), (iii)
such Pledged Receivable is in default and the Servicer has determined in good
faith that payments thereunder are not likely to be resumed or (iv) the
Obligor has been identified on the records of the Servicer as being the
subject of a current bankruptcy proceeding.
"DELINQUENCY RATIO" means, as of any Determination Date, with respect to
the Servicing Portfolio, the ratio (expressed as a percentage) computed by
dividing:
(a) the Aggregate Outstanding Principal Balance of the
Receivables which were Delinquent Receivables on the last
day of the immediately preceding Settlement Period
BY
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(b) the sum of the Aggregate Outstanding Principal Balance of
the Receivables on the last day of such immediately
preceding Settlement Period.
"DELINQUENT RECEIVABLE" means a Receivable with respect to which an
amount greater than $10.00 is more than 30 days past due thereunder.
"DETERMINATION DATE" means, with respect to a Distribution Date, the
tenth day of the calendar month in which such Distribution Date occurs, or if
such tenth day is not a Business Day, the next succeeding Business Day.
"DISTRIBUTABLE EXCESS SPREAD AMOUNT" means, with respect to any
Determination Date prior to the Facility Termination Date following a
Settlement Period during which any Advances were outstanding, the sum of the
amounts to be distributed on the following Distribution Date pursuant to
subsections 3(a)(i), 3(a)(ii) and 3(a)(v) of the Collateral Agent Agreement
(other than any such amounts which relate to the maintenance of an Investor's
commitment to make Advances hereunder rather than to maintaining or funding
its interest in outstanding Advances).
"DISTRIBUTION DATE" means the 15th day of each calendar month, or if such
15th day is not a Business Day, the next succeeding Business Day, commencing
the 15th day of the month following the month in which the initial Advance is
made hereunder.
"DOLLAR(S)" and the sign "$" mean lawful money of the United States of
America.
"ELECTRONIC LEDGER" means the electronic master record of the Receivables
of Arcadia.
"ELIGIBLE ACCOUNT" means (a) a segregated trust account or (b) a
segregated direct deposit account, in each case 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. In either case, such
depository institution or trust company shall either (x) be Norwest or (y)
have been approved by the Agent, acting in its discretion, by written notice
to the Collateral Agent.
"ELIGIBLE ASSIGNEE" has the meaning set forth in SECTION 17.1.
"ELIGIBLE RECEIVABLE" means a Receivable:
() that (i) was originated by a Dealer for the retail sale of a
Financed Vehicle in the ordinary course of such Dealer's business and such
Dealer had all necessary licenses and permits to originate Receivables in the
state where such Dealer was located, was fully and properly executed by the
parties thereto, was purchased by Arcadia from such Dealer under an existing
Dealer Agreement with Arcadia and was validly assigned by such Dealer to
Arcadia, (ii) contains customary and enforceable provisions such as to render
the rights and remedies of the holder thereof adequate for realization
against the collateral security, and (iii) is interest bearing, fully
amortizing and provides for level monthly payments (PROVIDED that the payment
in the first monthly period and the final monthly period of the life of the
Receivable may be minimally different from the level monthly payment) which,
if made when due, shall fully amortize the related Amount Financed over the
original term;
() which is a United States dollar obligation of an Obligor domiciled
in the United States and was sold by the Dealer to Arcadia without any fraud
or material misrepresentation on the part of such Dealer;
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() with respect to which all requirements of applicable federal, state
and local laws, and regulations thereunder (including, without limitation,
usury laws, the Federal Truth-in-Lending Act, the Equal Credit Opportunity
Act, the Fair Credit Billing Act, the Fair Credit Reporting Act, the Fair
Debt Collection Practices Act, the Federal Trade Commission Act, the
▇▇▇▇▇▇▇▇-▇▇▇▇ Warranty Act, the Federal Reserve Board's Regulations "B" and
"Z", the Soldiers' and Sailors' Act, the Minnesota Motor Vehicle Retail
Installment Sales Act and state adaptations of the National Consumer Act and
of the Uniform Consumer Credit Code and other consumer credit laws and equal
credit opportunity and disclosure laws), in respect of such Receivable, the
sale of the Financed Vehicle related thereto and the sale of credit life and
credit accident and health insurance and any extended service contracts, if
any, in connection with such Receivable, have been complied with in all
material respects;
() that was originated in the United States of America and, at the time
of origination, materially conformed to all requirements of the Dealer
Underwriting Guidelines applicable to such Receivable;
() which represents the genuine, legal, valid and binding payment
obligation of the Obligor thereon, enforceable by the holder thereof in
accordance with its terms, except (i) as enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting the
enforcement of creditors' rights generally and by equitable limitations on
the availability of specific remedies, regardless of whether such
enforceability is considered in a proceeding in equity or at law and (ii) as
such Receivable may be modified by the application of the Soldiers' and
Sailors' Act; and all parties to such Receivable had full legal capacity to
execute and deliver such Receivable and all other documents related thereto
and to grant the security interest purported to be granted thereby;
() which is not due from the United States of America or any State or
from any agency, department, subdivision or instrumentality thereof;
() with respect to which the information pertaining to such Receivable
set forth in the applicable Schedule of Receivables has been produced from
the Electronic Ledger and is true and correct in all material respects;
() with respect to which Arcadia will have caused the portions of the
Electronic Ledger to be clearly and unambiguously marked to show that such
Receivable is owned by the Borrower and is subject to the Lien of the
Collateral Agent;
() with respect to which the Monthly Tape made available by the
Servicer to the Agent was complete and accurate in all respects as of the
date delivered and includes a description of such Receivable;
() which constitutes chattel paper within the meaning of the UCC;
() of which there is only one original executed copy;
() with respect to which a Receivable File is in the possession of the
Custodian at its office specified herein and such Receivable File contains
(i) the fully executed original of such Receivable, (ii) a certificate of
insurance, an application form for insurance signed by the related Obligor,
or a signed representation letter from the Obligor named in such Receivable
pursuant to which such Obligor has agreed to obtain physical damage insurance
for the related Financed Vehicle, or copies thereof, or a documented verbal
confirmation by an insurance agent for such
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Obligor of a policy number for an insurance policy for the Financed Vehicle,
(iii) the original Lien Certificate or application therefor or a letter from
the applicable Dealer agreeing unconditionally to repurchase the related
Receivable if the certificate of title is not received by the Servicer within
180 days (provided that the Lien Certificate is delivered to the Custodian
within 180 days), and (iv) a credit application signed by the Obligor, or a
copy thereof; each of such documents which is required to be signed by the
Obligor has been signed by the Obligor in the appropriate spaces; and all
blanks on any form have been properly filled in and each form has otherwise
been correctly prepared;
() which has not been satisfied, subordinated or rescinded, and the
Financed Vehicle securing such Receivable has not been released from the lien
of such Receivable in whole or in part; no provisions of such Receivable have
been waived, altered or modified in any respect since its origination, except
by instruments or documents identified in the Receivable File; and no
Receivable has been modified as a result of application of the Soldiers' and
Sailors' Act;
() which was not originated in, or is subject to the laws of, any
jurisdiction the laws of which would make unlawful, void or voidable the
sale, transfer and assignment of such Receivable under this Agreement; with
respect to such sale, transfer and assignment of such Receivable under the
Purchase Agreement, any Assignment Agreement or the pledge of such Receivable
under this Agreement either (i) no consent of any Person is required or (ii)
all required consents have been obtained;
() which has not been sold, transferred, assigned or pledged by Arcadia
to any Person other than the Borrower or by the Borrower to any Person other
than the Collateral Agent. Arcadia was the sole owner of and had good and
indefeasible title thereto, free and clear of any Lien immediately prior to
the conveyance of such Receivable pursuant to the Purchase Agreement. The
Borrower was the sole owner thereof and had good and indefeasible title
thereto, free of any Lien immediately prior to the pledge of such Receivable
to the Collateral Agent;
() which has created, or will create when all required procedures are
completed by the Servicer, a valid, binding and enforceable first priority
perfected security interest in the related Financed Vehicle in favor of
Arcadia as secured party, and such security interest is, or will be upon the
completion of all required procedures by the Servicer, prior to all other
liens upon and security interests in such Financed Vehicle that now exist or
may hereafter arise or be created (except, as to priority, for any tax liens,
mechanic's liens or that may arise after the date an Advance is made with
respect to such Pledged Receivable);
() as to which all filings (including, without limitation, UCC filings)
required to be made by any Person and actions required to be taken or
performed by any Person in any jurisdiction to give the Collateral Agent, for
the benefit of the Investors, a first priority perfected lien on such
Receivable and the proceeds thereof and the other Collateral related thereto
have been made, taken or performed;
() as to which neither Arcadia nor the Borrower has done anything to
convey any right to any Person that would result in such Person having a
right to payments due under such Receivable or otherwise to impair the rights
of the Collateral Agent in such Receivable or the proceeds thereof;
() which is not assumable by another Person in a manner which would
release the Obligor thereof from such Obligor's obligations to the Borrower
with respect to such Receivable;
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() which is not subject to any right of rescission, setoff,
counterclaim or defense and no such right has been asserted or threatened
with respect to such Receivable;
() as to which there has been no default, breach, violation or event
permitting acceleration under the terms of such Receivable (other than
payment delinquencies of not more than 30 days) and no condition exists or
event has occurred and is continuing that with notice, the lapse of time or
both would constitute a default, breach, violation or event permitting
acceleration under the terms of such Receivable, and there has been no waiver
of any of the foregoing except as otherwise permitted herein;
() as to which the related Financed Vehicle has not been repossessed
from the related Obligor;
() at the date an Advance is made with respect to such Pledged
Receivable, the related Financed Vehicle was covered by a comprehensive and
collision insurance policy (i) in an amount at least equal to the lesser of
(A) its maximum insurable value and (B) the Amount Financed, (ii) naming
Arcadia as loss payee and (iii) insuring against loss and damage due to fire,
theft, transportation, collision and other risks generally covered by
comprehensive and collision coverage and with respect to which the Obligor is
required to maintain physical loss and damage insurance, naming Arcadia and
its successors and assigns as additional insured parties, and such Receivable
permits the holder thereof to obtain physical loss and damage insurance at
the expense of the Obligor if the Obligor fails to do so unless otherwise
prohibited by the law of the state in which the contract was entered into;
and the related Financed Vehicle is not nor has previously been insured under
a policy of Forced Placed Insurance;
() with respect to which the following is true:
() the Lien Certificate for the related Financed Vehicle shows,
or, if a new or replacement Lien Certificate is being applied for with
respect to such Financed Vehicle, the Lien Certificate will be received
within 180 days of the related Advance Date and will show, Arcadia named
as the original secured party under such Receivable and, accordingly,
Arcadia will be the holder of a first priority security interest in such
Financed Vehicle;
() if the Lien Certificate has not yet been returned from the
Registrar of Titles, Arcadia has received written evidence from the
related Dealer or the Obligor that such Lien Certificate showing Arcadia
as first lienholder has been applied for;
() if the Receivable was originated in a state in which a filing
or recording is required of the secured party to perfect a security
interest in motor vehicles, such filings or recordings have been duly
made to show Arcadia named as the original secured party under the
related Receivable;
() Arcadia's security interest has been validly assigned by
Arcadia to the Borrower and pledged by the Borrower to the Collateral
Agent pursuant to this Agreement;
() immediately after the pledge thereof to the Collateral Agent,
such Receivable will be secured by an enforceable and perfected first
priority security interest in the related Financed Vehicle in favor of
the Borrower, as assignee from Arcadia, which security interest is prior
to all other liens upon any security interests in such Financed Vehicle
which now exist or may hereafter arise or be created (except, as to
priority, for any lien for taxes, labor or materials affecting a Finance
Vehicle); and
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() as of the date of any Advance made with respect thereto, there
are no Liens or claims for taxes, work, labor or materials affecting the
related Financed Vehicle which are or may be Liens prior or equal to the
lien of the related Receivable;
() as to which no selection procedures adverse to the Investors have
been utilized in selecting such Receivable from all other similar Receivables
originated by Arcadia;
() that, as of the last day of the immediately preceding Settlement
Period, is not a Delinquent Receivable and none of the Servicer, the
Borrower, any Dealer or anyone acting on behalf of any of them has made any
advance of funds in order to cause such Receivable not to be a Delinquent
Receivable;
() which, when included in the Pledged Receivables, would not cause the
Aggregate Outstanding Principal Balance of Pledged Receivables which are
Financed Repo Receivables to exceed 5% of the Aggregate Outstanding Principal
Balance of the Pledged Receivables;
() which has, on the related Advance Date, a remaining principal
balance equal to or greater than $500.00;
() (i) which does not have an initial payment date more than three
months subsequent to the related Advance Date; (ii) which does not have a
final scheduled payment date on or before the related Advance Date; (iii)
after giving effect to the pledge of Receivables on such Advance Date, the
Aggregate Principal Balances of Pledged Receivables with original maturities
ranging from 73 to 84 months shall not exceed 7.5% of the Aggregate
Outstanding Principal Balance of the Pledged Receivables on such Advance
Date; and (iv) as of related Advance Date, (A) had an original maturity of at
least three months but not more than 84 months, (B) had an original amount
financed of at least $1,000 and not more than $77,000, (C) had an APR of at
least 7.75% and not more than 27%, and (D) which, when included in the
Pledged Receivables would not cause the weighted average APR of the Pledged
Receivables to be reduced below 12%; and
() the Obligor with respect to such Receivable, as of the related
Advance Date, is required to make all Scheduled Payments to the Lockbox Bank.
For purposes of this definition, the eligibility of Receivables will be
determined from time to time, such that a Receivable that was an Eligible
Receivable at one time but that subsequently fails to meet all applicable
eligibility requirements will no longer be an Eligible Receivable (unless and
until it again meets all applicable eligibility requirements).
"ELIGIBLE SERVICER" means Arcadia, the Backup Servicer or another Person
which at the time of its appointment as Servicer (a) is servicing a portfolio
of motor vehicle retail installment sales contracts and/or motor vehicle
installment loans, (b) is legally qualified and has the capacity to service
the Pledged Receivables, (c) has demonstrated the ability professionally and
competently to service a portfolio of motor vehicle retail installment sales
contracts and/or motor vehicle installment loans similar to the Pledged
Receivables with reasonable skill and care, and (d) 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.
"ERISA" means the U.S. Employee Retirement Income Security Act of 1974,
as amended from time to time.
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"EUROCURRENCY LIABILITIES" has the meaning assigned to that term in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"EURODOLLAR RATE RESERVE PERCENTAGE" of any Lender for any Advance means
the reserve percentage applicable two Business Days before the first day of
the Interest Period for such Advance under regulations issued from time to
time by the Board of Governors of the Federal Reserve System (or any
successor) (or if more than one such percentage shall be applicable, the
daily average of such percentages for those days in such Interest Period
during which any such percentage shall be so applicable) for determining the
maximum reserve requirement (including, without limitation, any emergency,
supplemental or other marginal reserve requirement) for such Lender with
respect to liabilities or assets consisting of or including Eurocurrency
Liabilities (or with respect to any other category of liabilities that
includes deposits by reference to which the yield rate on Eurocurrency
Liabilities is determined) having a term equal to such Interest Period.
"EVENT OF BANKRUPTCY" shall be deemed to have occurred with respect to a
Person if either:
(a) a case or other proceeding shall be commenced, without the
application or consent of such Person, in any court, seeking the liquidation,
reorganization, debt arrangement, dissolution, winding up, or composition or
readjustment of debts of such Person, the appointment of a trustee, receiver,
custodian, liquidator, assignee, sequestrator or the like for such Person or
all or substantially all of its assets, or any similar action with respect to
such Person under any law relating to bankruptcy, insolvency, reorganization,
winding up or composition or adjustment of debts, and such case or proceeding
shall continue undismissed, or unstayed and in effect, for a period of 60
consecutive days; or an order for relief in respect of such Person shall be
entered in an involuntary case under the federal bankruptcy laws or other
similar laws now or hereafter in effect; or
(b) such Person shall commence a voluntary case or other proceeding
under any applicable bankruptcy, insolvency, reorganization, debt
arrangement, dissolution or other similar law now or hereafter in effect, or
shall consent to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator (or other similar
official) for such Person or for all or substantially all of its property, or
shall make any general assignment for the benefit of creditors, or shall fail
to, or admit in writing its inability to, pay its debts generally as they
become due, or, if a corporation or similar entity, its board of directors
shall vote to implement any of the foregoing.
"FACILITY" has the meaning set forth in SECTION 2.1.
"FACILITY LIMIT" means $300,000,000, as such amount may be reduced
pursuant to SECTION 2.5. References to the unused portion of the Facility
Limit shall mean, at any time, the Facility Limit, as then reduced pursuant
to SECTION 2.5, MINUS the sum of the then outstanding principal amount of
Advances under this Agreement.
"FACILITY TERMINATION DATE" means, the earliest to occur of (a) the
Stated Maturity Date, (b) the date of any termination of the Facility, in
whole, by the Borrower pursuant to SECTION 2.5, and (c) the effective date on
which the Facility is terminated pursuant to SECTION 15.2.
"FACILITY TERMINATION EVENT" means, prior to the Remarketing Date, any of
the events described in SECTION 15.1, and from and after the Remarketing
Date, any of the events described in SECTION 15.1(a), (b), (c) or (d).
"FEE LETTER" has the meaning set forth in SECTION 3.3.
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"FEES" means all fees and other amounts payable by the Borrower to the
Agent pursuant to the Fee Letter.
"FINANCED REPO RECEIVABLE" means Classic Receivables which are secured by
Financed Vehicles that were previously repossessed by Arcadia pursuant to a
Receivable serviced by the Servicer.
"FINANCED VEHICLE" means any automobile, light duty truck, van, minivan
or sport utility vehicle, together with all accessories, additions and parts
constituting a part thereof and all accessions thereto securing a Receivable.
"FORCE-PLACED INSURANCE" has the meaning set forth in SECTION 8.4(B).
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment
of the accounting profession, which are applicable to the circumstances as of
any date of determination.
"INDEBTEDNESS" of any Person means, without duplication:
(a) all obligations of such Person for borrowed money and all
obligations of such Person evidenced by bonds, debentures, notes or other
similar instruments;
(b) all obligations, contingent or otherwise, relative to the face
amount of all letters of credit, whether or not drawn, and banker's
acceptances issued for the account of such Person;
(c) all obligations of such Person as lessee under leases that have been
or should be, in accordance with GAAP, recorded as capitalized lease
liabilities;
(d) all other items that, in accordance with GAAP, would be included as
liabilities on the liability side of the balance sheet of such Person as of
the date at which Indebtedness is to be determined;
(e) whether or not so included as liabilities in accordance with GAAP,
all obligations of such Person to pay the deferred purchase price of property
or services, and indebtedness (excluding prepaid interest thereon) secured by
a lien on property owned or being purchased by such Person (including
indebtedness arising under conditional sales or other title retention
agreements), whether or not such indebtedness shall have been assumed by such
Person or is limited in recourse; and
(f) all Contingent Liabilities of such Person in respect of any of the
foregoing.
"INDEMNIFIED AMOUNTS" has the meaning set forth in SECTION 18.1.
"INDEMNIFIED PARTY" has the meaning set forth in SECTION 18.1.
"INDEPENDENT ACCOUNTANTS" has the meaning set forth in SECTION 8.11.
"INDEPENDENT DIRECTOR" has the meaning set forth in SECTION 11.6(a).
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"INSURANCE ADD-ON AMOUNT" means the premium charged to the Obligor if the
Servicer obtains Force-Placed Insurance pursuant to SECTION 8.4.
"INSURANCE POLICIES" means, with respect to a Receivable, any insurance
policy (including the insurance policies described in clause (w) of the
definition of "ELIGIBLE RECEIVABLE") 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.
"INTEREST PERIOD" means, with respect to an Advance, the period
commencing on the day following the last day of the preceding Interest Period
(or the day commencing on the Advance Date, in the case of the first Interest
Period) and ending on the 30th day following such day; PROVIDED, HOWEVER,
that if any Interest Period begins during the 30-day period preceding the
date for which the Borrower has notified the Agent that a Take-Out
Securitization is scheduled to occur, such Interest Period for such Advance
shall be the period commencing on the date of the related Advance or the day
following the last day of the preceding Interest Period for the related
Advance and ending on the scheduled date of the scheduled Take-Out
Securitization; PROVIDED, HOWEVER, that if the Take-Out Securitization does
not take place on the scheduled date therefor, a new Interest Period shall
commence on such date and end on the earlier of (x) the new scheduled date
for such Take-Out Securitization as notified to the Agent in writing by the
Borrower and (y) the date which is 29 days from such date.
"INTEREST RATE" means, with respect to an Interest Period a per annum
rate equal to LIBOR for such Interest Period plus the Applicable Margin.
"INVESTOR" means (a) all Lenders, (b) all other owners by assignment or
participation of an Advance and, to the extent of the undivided interests so
purchased, shall include any participants, and (c) all holders of any Note.
"LENDERS" means DLJ and any Eligible Assignee to which a Lender assigns
all or any part of its obligation hereunder to make Advances pursuant to an
Assignment and Acceptance Agreement.
"LIBOR" means, with respect to any Interest Period, the rate for deposits
in U.S. dollars which appears on the Applicable Telerate Page (as defined
herein) as of 11:00 a.m., London time, on the London Business Day preceding
the date on which such Interest Period commences for the relevant Applicable
Period; PROVIDED, that in no event shall LIBOR for any Interest Period
exceed the rate shown for 30-day deposits for U.S. dollars shown on Telerate
Page 3750 on the London Business Day preceding the first day of such Interest
Period. If such rate does not appear on the Applicable Telerate Page, or, if
such rate is not available from such source, an equivalent rate determined by
the Agent at such time based on such other published service of general
application as shall be selected by the Agent for such purpose. If no such
rate is available from such other published service, the rate for that day
will be determined on the basis of the rates at which deposits in United
States dollars are offered by the Reference Banks at approximately 11:00
a.m., London time, on that day to prime banks in the London interbank market
for a period equal to the relevant Applicable Period (commencing on the first
day of such Applicable Period). The Agent will request the principal London
office of each of the Reference Banks to provide a quotation of its rate. If
at least two such quotations are provided, the rate for the day will be the
arithmetic mean of the quotations. If fewer than two quotations are provided
as requested, the rate for that day will be the arithmetic mean of the rates
quoted by major banks in New York City, selected by the Agent, at
approximately 11:00 a.m., New York City time, on that day for loans in United
States dollars to leading international banks for a period equal to the
relevant Applicable Period (commencing on the first day of such Applicable
Period).
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"LIEN" means 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" means, 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" means a Receivable as to which (a) 91 days have
elapsed since the date the Servicer repossessed the related Financed Vehicle
following the expiration of any applicable acceleration and redemption
periods, (b) the Servicer has determined in good faith that all amounts it
expects to recover have been received, or (c) all or any portion of a
Scheduled Payment shall have become more than 180 days delinquent.
"LOCKBOX ACCOUNT" means the segregated account maintained on behalf of
Borrower and the Agent, for the benefit of the Investors, by the Lockbox Bank
in accordance with SECTION 8.2(e).
"LOCKBOX AGREEMENT" means the Agency Agreement, dated as of November 13,
1992 by and among ▇▇▇▇▇▇ Trust and Savings Bank, Arcadia, Shawmut Bank, N.A.,
as Trustee, Saturn Financial Services, Inc. and the Program Parties (as
defined therein), taken 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 the Closing Date, among
▇▇▇▇▇▇ Trust and Savings Bank, Arcadia, and the Collateral Agent, as such
agreements may be amended from time to time, unless the Collateral Agent
hereunder 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 Agent, among the Servicer, the Collateral Agent and the Lockbox Bank.
"LOCKBOX BANK" means ▇▇▇▇▇▇ Trust and Savings Bank or any depository
institution named by the Servicer and acceptable to the Agent.
"LONDON BUSINESS DAY" means any day on which dealings are carried on in
the London interbank Eurodollar market.
"MAJORITY INVESTORS" means, as of any date of determination, Investors
holding beneficial interest in not less than 51% of the outstanding principal
balance of the Advances.
"MONTHLY RECORDS" means all records and data maintained by the Servicer
with respect to the Pledged Receivables, including the following with respect
to each Pledged Receivable: the account number; the originating Dealer;
Obligor name; Obligor address; Obligor home phone number; Obligor business
phone number; original Principal Balance; original term; Annual Percentage
Rate; current Principal Balance; origination date; first 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 of Scheduled Payment; and, once
available, current remaining term and current Insurance Policy expiration
date and past due late charges, if any.
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"MONTHLY TAPE" means the computer tape or listing generated on behalf of
the Borrower which contains the information set forth in the definition of
"Monthly Records" in a format acceptable to the Backup Servicer.
"MOODY'S" means ▇▇▇▇▇'▇ Investors Service, Inc.
"NET PLEDGED RECEIVABLE LOSS RATIO" means, as of any Determination Date,
a fraction, expressed as a percentage, the numerator of which equals the Net
Pledged Receivable Losses for the preceding Settlement Period and the
denominator of which equals the average Aggregate Outstanding Principal
Balance of the Pledged Receivables during such Settlement Period.
"NET PLEDGED RECEIVABLE LOSSES" means with respect to any Settlement
Period, the aggregate amount of gross charge-offs of Pledged Receivables
during such Settlement Period net of all Recoveries with respect to any such
Receivables (including post-disposition amounts received on previously
charged-off Receivables), calculated in a manner consistent with the
calculations of net losses in Arcadia's Annual Report on Form 10-K for the
year ended December 31, 1996.
"NET WORTH" means, with respect to Arcadia, the net worth of Arcadia
calculated in accordance with GAAP.
"NORWEST" has the meaning set forth in the PREAMBLE.
"NOTE" means (a) prior to the Remarketing Date, the promissory grid note,
in the form of EXHIBIT B, made payable to the order of the Agent, on behalf
of the Investors and (b) after the Remarketing Date, any promissory grid
notes in the form of Exhibit B made payable to any Investor.
"NOTE REGISTER" has the meaning set forth in SECTION 17.5(a).
"NOTE REGISTRAR" has the meaning set forth in SECTION 17.5(a).
"OBLIGATIONS" means all obligations (monetary or otherwise) of the
Borrower to the Investors or the Agent arising under or in connection with
this Agreement, the Note and each other Transaction Document.
"OBLIGOR" means a Person obligated to make payments with respect to a
Receivable.
"OFFICER'S CERTIFICATE" means a certificate signed by the president, the
chief financial officer, the treasurer, the assistant treasurer or any vice
president of any Person.
"OPINION OF COUNSEL" means a written opinion of counsel reasonably
acceptable to the Agent which, unless otherwise provided herein, may be an
employee of the Person delivering such opinion.
"OTHER CONVEYED PROPERTY" means, with respect to any Pledged Receivable,
all monies at any time paid or payable on such Receivable or in respect
thereof after the applicable Advance Date (including amounts due on or before
the applicable Advance Date but received by the Borrower or Arcadia after
such Advance Date), an assignment of security interests in the related
Financed Vehicle, the Insurance Policies and any proceeds from any Insurance
Policies relating to such Receivable, the Obligors or the Financed Vehicle,
including rebates of premiums, rights under any Collateral Insurance relating
to such Receivable, rights of Arcadia against Dealers with respect to such
Receivable under the Dealer Agreements and the Dealer Assignments, all items
contained in
17
the related Receivable File, any and all other documents or electronic
records that Arcadia keeps on file in accordance with its customary
procedures relating to such Receivable, the Obligors or the Financed
Vehicles, property (including the right to receive Recoveries) that secures
such Receivable and that has been acquired by or on behalf of Arcadia
pursuant to liquidation of such Receivable, and all proceeds of the foregoing.
"PERMITTED INVESTMENT" means 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
thereof and subject to supervision and examination by federal and/or
state banking authorities (including, if applicable, the Collateral Agent
or any agent thereof acting in its commercial 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
Collateral Agent has taken actual or constructive delivery of such
obligation, 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 Collateral Agent or any agent
thereof 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
Permitted 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 Collection Account and the Reserve Account to
exceed 10% of the value of Permitted Investments held in such accounts
(with Permitted Investments held in such 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) units of money market funds rated in the highest credit rating
category by each Rating Agency; or
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(g) any other demand or time deposit, obligation, security or
investment (including, without limitation, a hedging arrangement) as may
be acceptable to the Agent, as evidenced by a writing to that effect, as
may from time to time be confirmed in writing to the Collateral Agent by
the Agent;
Permitted Investments may be purchased by or through the Collateral Agent or
any of its Affiliates. All Permitted Investments shall be held in the name
of the Collateral Agent.
"PERSON" means an individual, partnership, corporation (including a
business trust), limited liability company or partnership, joint stock
company, trust, unincorporated association, joint venture, government or any
agency or political subdivision thereof or any other entity.
"PLEDGED RECEIVABLE" means any Receivable listed on Schedule A to any
Advance Request delivered pursuant to SECTION 2.2 other than such Receivables
which have been paid in full or released from the lien of the Collateral
Agent hereunder.
"PORTFOLIO NET LOSS RATIO" means, as of any Determination Date, a
fraction, expressed as a percentage, the numerator of which equals the
product of 2.0 times the Portfolio Net Losses for the six (6) preceding
Settlement Periods and the denominator of which equals the Average Servicing
Portfolio as of such Determination Date.
"PORTFOLIO NET LOSSES" means with respect to any Settlement Period, the
aggregate amount of gross charge-offs of Receivables serviced by Arcadia or
any of its Affiliates during such Settlement Period net of all Recoveries
with respect to any such Receivables (including post-disposition amounts
received on previously charged-off Receivables), calculated in a manner
consistent with the calculations of net losses in Arcadia's Annual Report on
Form 10-K for the year ended December 31, 1996.
"PREMIER RECEIVABLE" means a Receivable originated under Arcadia's
"Premier Program."
"PRINCIPAL BALANCE" means, with respect to any Receivable, as of any
date, the Amount Financed for such Receivable MINUS (a) that portion of all
amounts collected with respect to such Receivable on or prior to such date
and allocable to principal in accordance with the terms of such Receivable,
and (b) any Cram Down Loss in respect of such Receivable.
"PRINCIPAL COLLECTIONS" means, with respect to a Distribution Date, the
sum of (a) amounts deposited in the Collection Account during the preceding
Settlement Period attributable to principal payments on the Pledged
Receivables pursuant to the terms thereof, (b) the portion of any Recoveries
or Purchase Amounts received during such Settlement Period allocable to
principal on the related Receivables and (c) proceeds of any Insurance
Policies deposited in the Collection Account during the preceding Settlement
Period, in each case to the extent such amounts are applied to the reduction
of the Principal Balance of the related Receivable on or prior to the last
day of such Settlement Period.
"PURCHASE AMOUNT" means, with respect to a Receivable purchased by the
Servicer pursuant to SECTION 8.7, the Principal Balance of such Receivable
and all accrued and unpaid interest thereon as of the date of such purchase.
"PURCHASE AGREEMENT" means the Receivables Purchase Agreement and
Assignment, dated as of the Closing Date, by and between the Borrower and
Arcadia.
"PURCHASE DATE" has the meaning set forth in the Purchase Agreement.
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"RATING AGENCIES" means Standard & Poor's and Moody's.
"RECEIVABLE" means a retail installment contract or promissory note and
related security agreement originated or purchased by Arcadia, and all rights
and obligations thereunder.
"RECEIVABLE FILE" means, with respect to a Receivable:
(a) the fully executed original of such Receivable (together with any
agreements modifying such Receivable, including, without limitation, any
extension agreements);
(b) documents evidencing or related to any Insurance Policy or copies
thereof;
(c) the original credit application, or a copy thereof, of each Obligor,
fully executed by each such Obligor on Arcadia's customary form, or on a form
approved by Arcadia, for such application; and
(d) the original Lien Certificate, or, if not yet received, a copy of
the application therefor, showing Arcadia as secured party or a letter from
the applicable Dealer agreeing unconditionally to purchase the related
Receivable if the Lien Certificate is not received within 180 days and such
documents, if any, that Arcadia keeps on file in accordance with its
customary procedures indicating that the Financed Vehicle is owned by the
Obligor and subject to the interest of Arcadia as first lienholder or secured
party.
"RECOVERIES" means, with respect to any Liquidated Receivable, monies
collected in respect thereof, from whatever source, during any Settlement
Period, net of the sum of any amounts expended by the Servicer for the
account of the Obligor and any amounts required by law to be remitted to the
Obligor.
"REFERENCE BANKS" means The Chase Manhattan Bank, Citibank, N.A. and
▇▇▇▇▇▇ Guaranty Trust Company of New York.
"REGISTRAR OF TITLES" means, 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.
"REMARKETING DATE" means the date after the Facility Termination Date on
which any Note is transferred to any Person other than the Agent.
"REQUEST FOR RELEASE AND RECEIPT OF DOCUMENTS" means a request for
release substantially in the form of EXHIBIT E to this Agreement.
"RESERVE ACCOUNT" means the account designated as the Reserve Account in,
and which is established and maintained pursuant to, SECTION 8.15(b).
"RESPONSIBLE OFFICER" means, with respect to any Person that is not an
individual, the President, the Chief Financial Officer, any Vice-President or
Assistant Vice-President, the Treasurer, the Assistant Treasurer, the
Assistant Controller, the Warehouse Manager, Corporate Trust Officer or the
Controller of such Person, or any other officer or employee having similar
functions.
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"SCHEDULE OF RECEIVABLES" means the Schedule of Receivables in the form
attached hereto as Schedule A as supplemented from time to time in connection
with the sale of Receivables by Arcadia to the Borrower and the pledge of
such Receivables by the Borrower to the Collateral Agent.
"SCHEDULED PAYMENT" means, with respect to any Settlement Period for any
Receivable, the amount set forth in such Receivable as required to be paid by
the Obligor in such Settlement Period. If after the Closing Date, the
Obligor's obligation under a Receivable with respect to a Settlement 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'
Act or (iii) modifications or extensions of the Receivable permitted by
SECTION 8.2, the Scheduled Payment with respect to such Settlement Period
shall refer to the Obligor's payment obligations with respect to such
Settlement Period as so modified.
"SERVICER" means Arcadia or, as applicable, any successor servicer
appointed pursuant to SECTION 13.3.
"SERVICER TERMINATION EVENT" has the meaning set forth in SECTION 13.1.
"SERVICER'S CERTIFICATE" means, with respect to each Determination Date,
a certificate, completed by and executed on behalf of the Servicer, in
accordance with SECTION 8.9, substantially in the form attached hereto as
EXHIBIT C.
"SERVICING FEE" means, as of any Distribution Date, an amount equal to
the product of (i) 1/12 of the Servicing Fee Rate for the preceding
Determination Date and (ii) the average Aggregate Outstanding Principal
Balance of Pledged Receivables for each day during the preceding Settlement
Period immediately preceding such Distribution Date.
"SERVICING FEE RATE" means 1.25%.
"SERVICING PORTFOLIO" means as of any date, the Aggregate Outstanding
Principal Balance of all Receivables (whether or not thereafter sold or
disposed of) which are serviced by the Servicer or any of its Affiliates at
such time, calculated in a manner consistent with the calculation of the
components of Average Servicing Portfolio in the Servicer's most recent
Annual Report on Form 10-K to the extent such calculation is consistent with
the calculation of the components of Average Servicing Portfolio in Arcadia's
most recent Annual Report on Form 10-K.
"SERVICING PROCEDURES MANUAL" means the collections procedures manual
used by Arcadia in the servicing of Receivables, as amended from time to time.
"SETTLEMENT DATE" means, the date on which the Borrower shall prepay an
Advance pursuant to SECTION 4.1 hereof (other than a Distribution Date).
"SETTLEMENT PERIOD" means any calendar month and, with respect to a
Determination Date or a Distribution Date, the calendar month preceding the
month in which such Determination Date or Distribution Date occurs (such
calendar month being referred to as the "related" Settlement Period with
respect to such Determination Date or Distribution Date) or, in the case of
the initial Distribution Date and Determination Date, the period commencing
at the opening of business on the Closing Date and ending at the end of the
calendar month following the calendar month in which the Closing Date occurs.
Any amount stated "as of the last day of a Settlement Period" shall give
effect to all collections received on such day.
21
"SOLDIERS' AND SAILORS' ACT" means the Soldiers' and Sailors' Civil
Relief Act of 1940, as amended.
"SPREAD PERCENTAGE" means with respect to any Determination Date and any
Settlement Period immediately preceding such date during which Advances were
outstanding, (a) the weighted average Annual Percentage Rate of the Pledged
Receivables as of the last day of such Settlement Period MINUS (b) the
product, expressed as a percentage, of (i) the sum of (A) a fraction, the
numerator of which is the Distributable Excess Spread Amount for such
Determination Date and the denominator of which is the weighted average
Aggregate Outstanding Principal Balance of the Pledged Receivables during
such Settlement Period and (B) 1.00% and (ii) a fraction, the numerator of
which is the number of days in such preceding Settlement Period and the
denominator of which is the number of days in the year.
"STANDARD & POOR'S" means Standard & Poor's Ratings Group, a division of
The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.
"STATED MATURITY DATE" means (a) October 20, 1999, renewable annually at
the option of the Agent subject to earlier termination upon the Facility
Termination Date or (b) such other date as determined by the Agent on the
Remarketing Date.
"STRUCTURED LENDER" means any Investor whose principal business consists
of issuing commercial paper notes, medium term notes or other debt securities
to fund its acquisition and maintenance of receivables, accounts,
instruments, chatter paper, general intangibles and other similar assets or
interests therein and which is required by any nationally recognized rating
agency which is rating such securities to obtain from its principal debtors
an agreement such as that set forth in SECTION 19.12 of this Agreement in
order to maintain such rating.
"SUBSIDIARY" means, with respect to any Person, a corporation of which
such Person and/or its other Subsidiaries own, directly or indirectly, such
number of outstanding shares as have more than 50% of the ordinary voting
power for the election of directors.
"SUPPORT AGREEMENT" means any written liquidity agreement or credit
support agreement relating to any Structured Lender's Advances or commitment
to make Advances hereunder.
"SUPPORT BANK" means any bank or other financial institution extending or
having a commitment to extend funds to or for the account of any Structured
Lender (including by agreement to purchase an assignment of, or participation
in, any Advance) under a Support Agreement.
"TAKE-OUT SECURITIZATION" means (a) a financing transaction of any sort
undertaken by Arcadia or any Affiliate of Arcadia secured, directly or
indirectly, by any Receivable that was immediately prior to such transaction,
a Pledged Receivable or (b) any other asset securitization, secured loans or
similar transactions involving any Pledged Receivables or any beneficial
interest therein.
"TELERATE PAGE 3750" means the display page currently so designated on
the Dow ▇▇▇▇▇ Telerate Service (or such other page as may replace that page
on that service for the purpose of displaying comparable rates or prices).
"TELERATE PAGE 4833" means the display page currently so designated on
the Dow ▇▇▇▇▇ Telerate Service (or such other page as may replace that page
on that service for the purpose of displaying comparable rates or prices).
22
"TRANSACTION DOCUMENTS" means this Agreement, the Note, the Fee Letter,
the Collateral Agent Agreement, the Purchase Agreement, the Lockbox Agreement
and the other documents to be executed and delivered in connection with this
Agreement.
"TRANSFER REQUEST" has the meaning set forth in SECTION 9.5(a).
"UCC" means the Uniform Commercial Code as from time to time in effect in
the applicable jurisdiction or jurisdictions.
"UNMATURED FACILITY TERMINATION EVENT" means any event that, if it
continues uncured, will, with lapse of time or notice or lapse of time and
notice, constitute a Facility Termination Event.
"WARRANTY RECEIVABLE" means, with respect to any Settlement Period, a
Receivable that the Servicer has become obligated to repurchase pursuant to
SECTION 8.7.
"WEIGHTED AVERAGE ADVANCE RATE" means, with respect to the calculation of
the Borrowing Base on any date of determination, the average of the Advance
Rates applicable to the Pledged Receivables which are Eligible Receivables as
of the last day of the preceding Settlement Period, if such date of
determination is a Determination Date, and on such day, in any other case,
and in each case weighted based on the Aggregate Outstanding Principal
Balances of such Receivables which are Classic Receivables which are not
Financed Repo Receivables, Premier Receivables and Financed Repo Receivables.
"YIELD" means, with respect to any Advance for any period, the sum of the
daily interest accrued on such Advance for such period, equal to the product
of (a) the outstanding principal amount of such Advance on each day during
such period, (b) the Interest Rate for such Advance for the related Interest
Period and (c) the actual number of days in such period divided by 360,
PROVIDED, THAT, after the date any principal amount of any Advance is due and
payable (whether on the Stated Maturity Date, upon acceleration or otherwise)
or after any other monetary Obligation of the Borrower arising under this
Agreement shall become due and payable, the Borrower shall pay (to the extent
permitted by law, if in respect of any unpaid amounts representing Yield)
Yield (after as well as before judgment) on such amounts at a rate PER ANNUM
equal to the Default Rate; and PROVIDED, FURTHER, THAT, on any day on or
after the Remarketing Date, the "Yield" for any period shall be equal to the
sum of the daily interest for each day during such period at a rate equal to
the product of (x) a per annum rate determined by the Agent as the weighted
average of the actual rates applicable to all Investors= investments in the
Notes (which shall be notified to the Borrower by the Agent) and in each case
shall be the lowest fixed rate at which the Lenders could collectively sell
their interests in the Note for a purchase price equal to the outstanding
principal balance of such interests, as set forth in a notice from the Agent
to the Borrower, (y) the outstanding principal amount of all Advances on such
day, and (z) 1/360.
SECTION 1.2 OTHER DEFINITIONAL PROVISIONS.
() Unless otherwise specified therein, all terms defined in this
Agreement have the meanings as so defined herein when used in the Note or any
other Transaction Document, certificate, report or other document made or
delivered pursuant hereto.
() Each term defined in the singular form in SECTION 1.1 or
elsewhere in this Agreement shall mean the plural thereof when the plural
form of such term is used in this Agreement, the Note or any other
Transaction Document, certificate, report or other document
23
made or delivered pursuant hereto, and each term defined in the plural form
in SECTION 1.1 shall mean the singular thereof when the singular form of such
term is used herein or therein.
() The words "hereof," "herein," "hereunder" and similar terms
when used in this Agreement shall refer to this agreement as a whole and not
to any particular provision of this Agreement, and article, section,
subsection, schedule and exhibit references herein are references to
articles, sections, subsections, schedules and exhibits to this Agreement
unless otherwise specified.
ARTICLE II
THE FACILITY, ADVANCE PROCEDURES AND NOTE
SECTION 2.1 FACILITY. On the terms and subject to the conditions set
forth in this Agreement, the Lenders shall make Advances to the Borrower on a
revolving basis from time to time before the Facility Termination Date, in
such amounts as may be from time to time requested by the Borrower pursuant
to SECTION 2.2 (the "FACILITY"); PROVIDED, HOWEVER, that the aggregate
principal amount of all Advances from time to time outstanding hereunder
shall not exceed the Facility Limit. Within the limits of the Facility, the
Borrower may borrow, prepay and reborrow under this SECTION 2.1. Under no
circumstances shall any Lender make any such Advance if after giving effect
thereto the aggregate outstanding principal balance of all Advances would
exceed the Facility Limit.
SECTION 2.2 ADVANCE PROCEDURES. The Borrower may request an Advance
hereunder by giving notice to the Agent and the Custodian of a proposed
Advance not later than 2:00 P.M., New York time, one Business Day prior to
the proposed date of such Advance. Each such notice (herein called an
"ADVANCE REQUEST") shall be in the form of EXHIBIT A and shall include the
date and amount of such proposed Advance and the supplement to the Schedule
of Receivables setting forth the information required therein with respect to
the Receivables to be acquired by the Borrower with the proceeds of the
proposed Advance. Any Advance Request given by the Borrower pursuant to this
SECTION 2.2 shall be irrevocable and binding on the Borrower.
SECTION 2.3 FUNDING. Subject to the satisfaction of the conditions
precedent set forth in ARTICLE VII with respect to such Advance and the
limitations set forth in SECTION 2.1, the Lenders shall make the proceeds of
such requested Advance available to the Agent, and the Agent shall make such
Advance available to the Borrower, as follows: first, an amount equal to 1%
of the amount of such Advance shall be deposited by the Lenders in the
Reserve Account; and second, the balance of the proposed Advance shall be
made available to the Borrower at ABA#▇▇▇▇▇▇▇▇▇, Account No. 173103117615 at
First Bank National Association in same day funds no later than 3:00 p.m.,
New York City time, on the proposed date of the Advance. The amount of each
Advance shall be equal to the sum of, for each Receivable listed in the
Schedule of Receivables attached to the related Advance Request, the product
of (x) the Principal Balance of such Receivable and (y) the Advance Rate for
such Receivable. Each Advance shall be on a Business Day and shall be in an
amount of at least $2,000,000 (or integral multiple of $1 in excess thereof).
SECTION 2.4 REPRESENTATION AND WARRANTY. Each request for an Advance
pursuant to SECTION 2.2 shall automatically constitute a representation and
warranty by the Borrower to the Agent and the Lenders that, on the requested
date of such Advance, (a) the representations and warranties contained in
ARTICLE X will be true and correct as of
24
such requested date as though made on such date, and (b) no Facility
Termination Event or Unmatured Facility Termination Event has occurred and is
continuing or will result from the making of such Advance, and (c) after
giving effect to such requested Advance, the aggregate principal balance of
the outstanding Advances hereunder will not exceed the sum of (i) the
Borrowing Base and (ii) the amounts on deposit in the Collection Account and
the Lockbox Account to the extent such amounts have been applied to the
reduction of the Principal Balance of Pledged Receivables which are Pledged
Receivables which are included in the Borrowing Base.
SECTION 2.5 VOLUNTARY TERMINATION OF FACILITY; REDUCTION OF FACILITY
LIMIT. The Borrower may, in its sole discretion for any reason upon at least
five Business Days' notice to the Agent, terminate the Facility in whole or
reduce in part the unused portion of the Facility Limit; PROVIDED, HOWEVER,
that (a) each such partial reduction will be in a minimum amount of
$5,000,000 or a higher integral multiple of $1,000,000, (b) in the event of a
partial reduction and after giving effect to any such partial reduction and
any prior partial reduction, the remaining Facility Limit will not be less
than $50,000,000, and (c) in connection therewith the Borrower complies with
SECTION 4.1(b).
SECTION 2.6 NOTE. All Advances shall be evidenced by a Note, with
appropriate insertions, payable to the order of the Agent, on behalf of the
Investors. The Borrower hereby irrevocably authorizes the Agent to make (or
cause to be made) appropriate notations on the grid attached to the Note (or
on any continuation of such grid, or at the Agent's option, in its records),
which notations, if made, shall evidence, INTER ALIA, the date of, the
outstanding principal of, and the yield rate applicable to the Advances
evidenced thereby. Such notations shall be rebuttably presumptive evidence of
the principal amount of the Advances outstanding absent manifest error;
PROVIDED, HOWEVER, that the failure to make any such notations shall not
limit or otherwise affect any Obligations of the Borrower.
ARTICLE III
YIELD, FEES, ETC.
SECTION 3.1 YIELD. The Borrower hereby promises to pay Yield on the
unpaid principal amount of each Advance (or each portion thereof) for the
period commencing on the date of such Advance until such Advance is paid in
full. No provision of this Agreement or the Note shall require the payment
or permit the collection of Yield in excess of the maximum permitted by
applicable law.
SECTION 3.2 YIELD PAYMENT DATES. Yield accrued on each Advance shall be
payable, without duplication:
() on the date of any payment or prepayment, in whole or in part, of
principal outstanding on such Advance; and
() on each Distribution Date in accordance with the Collateral Agent
Agreement;
provided that, prior to the Remarketing Date, Yield relating to any such
Advance may be payable, at the option of the Agent or the Borrower, on the
related Settlement Date.
SECTION 3.3 FEES. The Borrower agrees to pay to the Agent, for its own
account and the account of the Investors, as they may separately agree,
certain fees in the amounts and on the dates set forth in the letter
agreement among the Agent, the Borrower, Arcadia and the
25
Collateral Agent as of the date hereof (as the same may be amended,
supplemented or otherwise modified, the "FEE LETTER").
SECTION 3.4 COMPUTATION OF YIELD AND FEES. All Yield and Fees shall be
computed on the basis of the actual number of days (including the first day
but excluding the last day) occurring during the period for which such Yield
or fee is payable over a year comprised of 360 days.
ARTICLE IV
REPAYMENTS AND PREPAYMENTS
SECTION 4.1 REPAYMENTS AND PREPAYMENTS. The Borrower:
() may, from time to time on any Business Day, make a prepayment, in
whole or in part, of the outstanding principal amount of any Advance;
PROVIDED, HOWEVER, that
() all such voluntary prepayments shall require at least one but no
more than five Business Days' prior written notice to the Agent;
and
() all such voluntary partial prepayments shall be in a minimum
amount of $1,000,000 and an integral multiple of $500,000, or
pay such Advance in full;
() shall, on each date when any reduction in the Facility Limit shall
become effective pursuant to SECTION 2.5, make a prepayment of the Advances
in an amount equal to the excess, if any, of the aggregate outstanding
principal amount of the Advances over the Facility Limit as so reduced;
() shall, immediately upon any acceleration of the Stated Maturity Date
of any Advances pursuant to SECTION 15.2, repay all Advances, unless,
pursuant to SECTION 15.2(a), only a portion of all Advances is so
accelerated, in which event the Borrower shall repay the accelerated portion
of the Advances;
() shall, if a Borrowing Base Deficiency shall exist on any
Determination Date (after giving effect to all distributions to be made on
the following Distribution Date pursuant to the Collateral Agent Agreement),
repay the outstanding principal amount of Advances in an amount equal to such
Borrowing Base Deficiency; and
() shall, on the date the Borrower receives any proceeds from the sale
of any Pledged Receivables included in any Take-Out Securitization, make a
prepayment of the Advances in an amount substantially equal to such proceeds
or, if less, the total outstanding amount of Advances.
Each such prepayment shall be subject to the payment of any amounts
required by SECTION 6.3 resulting from a prepayment of an Advance prior to
the date of such prepayment.
ARTICLE V
PAYMENTS
26
SECTION 5.1 MAKING OF PAYMENTS. Subject to, and in accordance with, the
provisions of the Collateral Agent Agreement, all payments of principal of,
or Yield on, the Advances and of all Fees and other amounts shall be made by
the Borrower or the Collateral Agent on the Borrower's behalf from the
Collateral no later than 1:00 p.m., New York time, on the day when due in
lawful money of the United States of America in same day funds to the Agent,
at its special account (account number _________) maintained at the office of
the Agent at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ or such other account as the
Agent shall designate in writing to the Borrower and the Collateral Agent
(the "AGENT'S ACCOUNT"). Funds received by the Agent after 1:00 p.m., New
York time, on the date when due, will be deemed to have been received by the
Agent on its next following Business Day.
SECTION 5.2 APPLICATION OF CERTAIN PAYMENTS. Each payment of principal of
the Advances shall be applied to such Advances as the Borrower shall direct
or, in the absence of such notice or during the existence of a Facility
Termination Event or after the Facility Termination Date, as the Agent shall
determine, prior to the Remarketing Date, in its discretion, and after the
Remarketing Date, as directed by the holders of the Note.
SECTION 5.3 DUE DATE EXTENSION. If any payment of principal or Yield with
respect to any Advance falls due on a day which is not a Business Day, then
such due date shall be extended to the next following Business Day, and
additional Yield shall accrue and be payable for the period of such extension
at the rate applicable to such Advance.
ARTICLE VI
INCREASED COSTS, ETC.
SECTION 6.1 INCREASED COSTS.
() If due to the introduction of or any change in or in the
interpretation of any law or regulation occurring or issued after the date
hereof, the Agent, any Lender, any Structured Lender to which a Lender
assigns an interest in Advances, any entity which enters into a commitment to
make Advances or purchase interests therein from any Structured Lender, or
any of their respective Affiliates (each an "AFFECTED PERSON") determines
that compliance with any law or regulation or any guideline or request from
any central bank or other governmental authority (whether or not having the
force of law) affects or would affect the amount of capital required or
expected to be maintained by such Affected Person and such Affected Person
determines that the amount of such capital is increased by or based upon the
existence of any commitment to make Advances related to this Agreement or to
the funding thereof and other commitments of the same type, then, upon demand
by such Affected Person (with a copy to the Agent) (which demand shall be
accompanied by a statement setting forth the basis for the calculations of
the amount being claimed), the Borrower shall immediately pay to the Agent,
for the account of such Affected Person (as a third-party beneficiary), from
time to time as specified by such Affected Person, additional amounts
sufficient to compensate such Affected Person in the light of such
circumstances, to the extent that such Affected Person reasonably determines
such increase in capital to be allocable to the existence of any of such
commitments PROVIDED, that the Seller shall not be obligated to pay any such
additional amounts that are attributable to the period ending 60 days prior
to the Borrower's receipt of such demand, except to the extent such
additional amounts accrue during such period because of the retroactive
effect of the applicable regulatory change, in which case the foregoing
limitation shall not apply. Such written statement shall, in the absence of
manifest error, be rebuttably presumptive evidence of the subject matter
thereof. Any Affected Person claiming any additional amounts payable
pursuant to this SECTION 6.1(a) agrees to use reasonable efforts (consistent
with legal and regulatory restrictions) to designate a different office or
branch of such Affected Person if the making of such a designation would
avoid the need
27
for, or reduce the amount of, any such additional amounts and would not, in
the reasonable judgment of such Affected Person, be otherwise disadvantageous
to such Affected Person.
() If, due to either (i) the introduction of or any change (other than
any change by way of imposition or increase of reserve requirements referred
to in SECTION 6.2) in or in the interpretation of any law or regulation or
(ii) compliance with any guideline or request from any central bank or other
governmental authority (whether or not having the force of law) issued after
the date hereof, there shall be any increase in the cost to an Affected
Person of agreeing to make Advances hereunder, then, upon demand by such
Affected Person (with a copy to the Agent) (which demand shall be accompanied
by a statement setting forth the basis for the amount being claimed), the
Borrower shall immediately pay to the Agent, for the account of such Affected
Person (as a third-party beneficiary), from time to time as specified by such
Affected Person, additional amounts sufficient to compensate such Affected
Person for such increased costs PROVIDED, that the Seller shall not be
obligated to pay any such additional amounts that are attributable to the
period ending 60 days prior to the Borrower's receipt of such demand, except
to the extent such additional amounts accrue during such period because of
the retroactive effect of the applicable regulatory change, in which case the
foregoing limitation shall not apply. Such written statement shall, in the
absence of manifest error, be rebuttably presumptive evidence of the subject
matter thereof. Any Affected Person claiming any additional amounts payable
pursuant to this SECTION 6.1(b) agrees to use reasonable efforts (consistent
with legal and regulatory restrictions) to designate a different office or
branch of such Affected Person if the making of such a designation would
avoid the need for, or reduce the amount of, any such additional amounts and
would not, in the reasonable judgment of such Affected Person, be otherwise
disadvantageous to such Affected Person.
SECTION 6.2 ADDITIONAL YIELD ON ADVANCES. The Borrower shall pay to any
Affected Person, so long as such Affected Person shall be required under
regulations of the Board of Governors of the Federal Reserve System to
maintain reserves with respect to liabilities or assets consisting of or
including Eurocurrency Liabilities, additional Yield on the unpaid Advances
of such Affected Person, at a rate per annum equal at all times to the
remainder obtained by subtracting (i) LIBOR for the related Interest Period
from (ii) the rate obtained by dividing such LIBOR by that percentage equal
to 100% MINUS the Eurodollar Rate Reserve Percentage of such Affected Person,
payable on each date on which Yield is payable on such Advances. Such
additional Yield shall be determined by such Affected Person and notice
thereof (accompanied by a statement setting forth the basis for the amount
being claimed) given to the Borrower through the Agent within 30 days after
any Yield payment is made with respect to which such additional Yield is
requested. Such written statement shall, in the absence of manifest error,
be rebuttably presumptive evidence of the subject matter thereof. Any
Affected Person claiming any additional amounts payable pursuant to this
SECTION 6.2 agrees to use reasonable efforts (consistent with legal and
regulatory restrictions) to designate a different office or branch of such
Affected Person if the making of such a designation would avoid the need for,
or reduce the amount of, any such additional amounts and would not, in the
reasonable judgment of such Affected Person, be otherwise disadvantageous to
such Affected Person.
SECTION 6.3 FUNDING LOSSES. The Borrower hereby agrees that upon demand
by any Affected Person (which demand shall be accompanied by a statement
setting forth the basis for the calculations of the amount being claimed) the
Borrower will indemnify such Affected Person against any net loss or expense
which such Affected Person may sustain or incur (including, without
limitation, any net loss or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Affected Person to
fund or maintain any Advance to the Borrower), as reasonably determined by
such Affected Person, as a result of any
28
prepayment (including any mandatory prepayment) of any Advance. Such written
statement shall, in the absence of manifest error, be rebuttably presumptive
evidence of the subject matter thereof.
SECTION 6.4 REPLACEMENT OF AFFECTED PERSON. Upon the receipt by the
Borrower of a claim for reimbursement or compensation under SECTIONS 6.1, 6.2
or 6.3 hereof by an Affected Person, if payment thereof shall not be waived
by such Affected Person, the Borrower may (i) request such Affected Person or
the Lender that has assigned an interest in its Advances to such Affected
Person to obtain a replacement bank, financial institution or Structured
Lender, as applicable, satisfactory to the Borrower (in the case of a
replacement Lender), to acquire and assume all or a ratable part of such
Affected Person's commitment to make Advances, Advances, or interests therein
(a "REPLACEMENT PERSON"), (ii) request one or more of the other Lenders or
Investors to acquire and assume all or a part of such Affected Person's
commitment to make Advances, Advances or interests therein, or (iii)
designate a Replacement Person. Any such designation of a Replacement Person
pursuant to clause (i) or clause (iii) above shall be subject to the prior
written consent of the Agent (which consent shall not be unreasonably
withheld). Upon notice from the Borrower, such Affected Person shall, or the
Lender that has assigned an interest in its Advances to such Affected Person
shall cause such Affected Person to, assign its commitment to make Advances,
Advances or interests therein and its other rights and obligations (if any)
hereunder, or a ratable share thereof, to the Replacement Person or
Replacement Persons designated by the Borrower for a purchase price equal to
the sum of the principal amount of the Advances or interests therein so
assigned, all accrued and unpaid Yield thereon and any other amounts
(including fees) to which such Affected Person is entitled hereunder;
provided, that the Borrower shall provide such Affected Person with an
officer's certificate stating that such Replacement Person has advised the
Borrower that it is not subject to, or has agreed not to seek, such increased
amount.
ARTICLE VII
CONDITIONS TO ADVANCES
The making of any Advance hereunder is subject to the following
conditions precedent:
SECTION 7.1 INITIAL ADVANCE. The making of the initial Advance is, in
addition to the conditions precedent specified in SECTION 7.2, subject to the
condition precedent that the Agent shall have received all of the following,
each duly executed and dated the date of such Advance (or such earlier date
as shall be satisfactory to the Agent), in form and substance satisfactory to
the Agent:
(1) RESOLUTIONS. (i) Certified copies of resolutions of the Board
of Directors of each of the Borrower and Arcadia, authorizing or ratifying
the execution, delivery and performance, respectively, of this Agreement and
the other Transaction Documents to which it is a party and (ii) a certified
copy of the Certificate of Incorporation of each of the Borrower and Arcadia.
(2) INCUMBENCY AND SIGNATURES. A certificate of the Secretary or an
Assistant Secretary of each of the Borrower and Arcadia certifying the names
of its officer or officers authorized to sign this Agreement and the other
Transaction Documents to which it is a party.
(3) TRANSACTION DOCUMENTS. Executed counterparts of each
Transaction Document, duly executed by each of the parties thereto, and all
conditions to the effectiveness thereof set forth therein shall have been
satisfied in all respects.
29
(4) OPINIONS OF COUNSEL. Counsel to Arcadia will provide true sale,
non-consolidation, perfection, priority and general corporate opinions
regarding the Borrower, Arcadia and the transactions contemplated by the
Transaction Documents, in form and substance satisfactory to the Agent.
(5) FINANCING STATEMENTS. Acknowledgment copies of proper financing
statements filed under the UCC of all jurisdictions that the Agent may deem
necessary or desirable in order to perfect the ownership and security
interests contemplated by this Agreement; and
(6) OTHER. Such other documents or opinions as the Agent may
reasonably request.
SECTION 7.2 ALL ADVANCES. The making of the initial Advance and each
subsequent Advance are subject to the following further conditions precedent
that:
(1) NO FACILITY TERMINATION EVENT, ETC. (i) No Facility Termination
Event, Unmatured Facility Termination Event or Servicer Termination Event has
occurred and is continuing or will result from the making of such Advance,
and (ii) the representations and warranties of the Borrower contained in
ARTICLE X are true and correct as of the date of such requested Advance, with
the same effect as though made on the date of such Advance, and (iii) after
giving effect to such Advance, the aggregate outstanding principal balance of
the Advances hereunder will not exceed the sum of (x) the Borrowing Base and
(y) the amounts on deposit in the Collection Account and the Lockbox Account
to the extent such amounts have been applied to the reduction of the
Principal Balance of Pledged Receivables which are Pledged Receivables which
are included in the Borrowing Base
(2) ELIGIBLE RECEIVABLES. All of the Receivables to be purchased
with such Advance are Eligible Receivables.
(3) ADVANCE REQUEST, ETC. The Agent shall have received the Advance
Request for such Advance in accordance with SECTION 2.2, together with all
items required to be delivered in connection therewith.
(4) FACILITY TERMINATION DATE. The Facility Termination Date shall
not have occurred.
(5) COLLATERAL RECEIPT. The Agent shall have received a Collateral
Receipt and Confirmation in respect of each Receivable identified on the
Schedule of Receivables attached to the related Advance Request.
ARTICLE VIII
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 8.1 DUTIES OF THE SERVICER. The Servicer is hereby authorized to
act for the Borrower and in such capacity shall manage, service, administer
and make collections on the Pledged Receivables, and perform the other
actions required by the Servicer under this Agreement for the benefit of the
Borrower and the Investors. The Servicer agrees that its servicing of the
Pledged 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
30
time with respect to all comparable motor vehicle receivables that it
services for itself or others in accordance with the Servicing Procedures
Manual as in effect from time to time for servicing all its other comparable
motor vehicle receivables. The Servicer's duties shall include, without
limitation, collection and posting of all payments, responding to inquiries
of Obligors on the Pledged Receivables, investigating delinquencies, sending
payment statements or payment books 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 Agent 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
Pledged 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
Pledged Receivables, the related Financed Vehicles or the related Obligors.
To the extent consistent with the standards, policies and procedures
otherwise required hereby, the Servicer shall follow its customary standards,
policies, and procedures with respect to the Pledged Receivables 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 Borrower to
execute and deliver, on behalf of the Borrower, the Investors, the Collateral
Agent or any of them, any and all instruments of satisfaction or
cancellation, or of partial or full release or discharge, and all other
comparable instruments, with respect to the Pledged Receivables and with
respect to the related Financed Vehicles. The Servicer is authorized to
release Liens on Financed Vehicles in order to collect insurance proceeds
with respect thereto and to liquidate such Financed Vehicles in accordance
with its customary standards, policies and procedures; 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 Pledged Receivable or waive the right
to collect the unpaid balance of any Pledged 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 Borrower or the Collateral
Agent on behalf of the Investors (PROVIDED that if the Servicer is acting in
the name of the Borrower or the Collateral Agent on behalf of the Investor,
the Servicer shall have obtained the Borrower's, the Collateral Agent's and
the Agent's consent, as the case may be, which consent shall not be
unreasonably withheld), a legal proceeding to enforce a Pledged Receivable
pursuant to SECTION 8.3 or to commence or participate in any other legal
proceeding (including, without limitation, a bankruptcy proceeding) relating
to or involving a Pledged Receivable, an Obligor or a Financed Vehicle. If
the Servicer commences or participates in such a legal proceeding in its own
name, the Borrower and the Collateral Agent, on behalf of the Investors, as
the case may be, shall thereupon be deemed to have automatically assigned
such Pledged 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 Borrower and the Collateral Agent on
behalf of the Investors, 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
Borrower and the Collateral Agent shall furnish the Servicer with any powers
of attorney and other documents which the Servicer may reasonably request in
writing and which the Servicer deems necessary or appropriate and take any
other steps which the Servicer may deem reasonably necessary or appropriate
to enable the Servicer to carry out its servicing and administrative duties
under this Agreement.
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SECTION 8.2 COLLECTION OF RECEIVABLE PAYMENTS; MODIFICATION AND AMENDMENT
OF RECEIVABLES; LOCKBOX AGREEMENTS. () 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 Pledged 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 Pledged Receivables, the Dealer Agreements,
the Dealer Assignments and the Insurance Policies in such manner as will, in
the reasonable judgment of the Servicer, maximize the amount to be received
by the Borrower and the Investors 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 Pledged Receivable.
( The Servicer may at any time agree, in accordance with its normal
underwriting criteria, to a modification, amendment or extension of a Pledged
Receivable in order to (i) change the Obligor's regular due date to another
date within the Settlement Period in which such due date occurs, (ii)
re-amortize the scheduled payments on the Pledged Receivable following a
partial prepayment of principal or (iii) grant extensions on a Receivable,
provided that the Servicer shall not be permitted to extend the monthly
payments on a Receivable more than two times in any twelve-month period, and
provided further that the aggregate period of all extensions on a Receivable
shall not exceed six months.
( The Servicer may grant payment extensions or deferrals on, or other
modifications or amendments to, a Pledged Receivable (including those
modifications permitted by SECTION 8.2(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 Pledged
Receivable, will maximize the amount to be received by the Borrower and the
Investors with respect to such Pledged Receivable, and is otherwise in the
best interests of the Borrower and the Investors; PROVIDED, HOWEVER, that:
( any such extension shall not extend beyond 84 months after
the Facility Termination Date; and
( the Servicer shall not amend or modify a Pledged Receivable
(except as provided in SECTION 8.2(b) and this SECTION 8.2(c)) without the
written consent of the Agent;
PROVIDED, THAT any such amendment, modification or extension shall be
delivered by the Servicer to the Custodian promptly after execution thereof.
( The Servicer shall use its best efforts to cause Obligors to make
all payments on the Pledged Receivables, whether by check or by direct debit
of the Obligor's bank account, directly to one or more Lockbox Banks, acting
as agent for the Collateral Agent pursuant to the Lockbox Agreement. Amounts
received by the Lockbox Bank in respect of the Pledged 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 an Eligible
Account satisfying clause (i) of the definition thereof.
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Prior to each Advance Date, the Servicer shall have notified each Obligor
that makes its payments on the Pledged Receivables 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 a supply of mailing address
labels 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, the Servicer shall request each Obligor that makes
payment on the Pledged Receivables by direct debit of such Obligor's bank
account, to execute a new authorization for automatic payment which in the
judgment of the Agent is sufficient to authorize direct debit by the Lockbox
Bank on behalf of the Borrower. If at any time the Lockbox Bank is unable to
directly debit an Obligor's bank account that makes payment on the Pledged
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 the Lockbox Agreement, or any of the provisions of this
Agreement relating to the Lockbox Agreement, the Servicer shall remain
obligated and liable to the Borrower and the Investors for servicing and
administering the Pledged Receivables 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 Backup Servicer or successor Servicer shall thereupon assume all of
the rights and, from the date of assumption, all of the obligations of the
outgoing Servicer under the Lockbox Agreement, if applicable. The Backup
Servicer or any other successor Servicer shall not be liable for any acts,
omissions or obligations of the Servicer prior to such succession. 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 the 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
the 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 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 Agent
elects to change the identity of the Lockbox Bank, the Servicer, at its
expense, shall cause the Lockbox Bank to deliver, at the direction of the
Agent, or a successor Lockbox Bank, all documents and records relating to the
Pledged 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.
( 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 Bank 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.
SECTION 8.3 REALIZATION UPON RECEIVABLES. () 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 Pledged
Receivable with respect to which the Servicer
33
has determined that payments thereunder are not likely to be resumed, as soon
as is practicable after default on such Pledged Receivable but in no event
later than the date on which all or any portion of a Scheduled Payment has
become 150 or more 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 8.1,
which practices and procedures may include reasonable efforts to realize upon
any recourse to Dealers, selling 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 Pledged 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
and/or repossession shall increase the proceeds of liquidation of the related
Pledged Receivable by an amount greater than the amount of such expenses.
All Recoveries shall be remitted directly by the Servicer to the Lockbox Bank
without deposit into any intervening account as soon as practicable, but in
no event later than two Business Days 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, but only out of
the cash proceeds of such 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 in the
Collection Account) to the extent of such expenses. The Servicer shall pay
on behalf of the Borrower any personal property taxes assessed on repossessed
Financed Vehicles and the Servicer shall be entitled to reimbursement of any
such tax.
( 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 Borrower and the Collateral
Agent 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 Borrower, at the Servicer'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. All amounts
recovered shall be remitted directly by the Servicer to the Collection
Account or to the Lockbox Bank for deposit into the Collection Account
without deposit into any intervening account as soon as practicable, but in
no event more than two Business Days after receipt thereof.
SECTION 8.4 INSURANCE. () The Servicer shall require that each Financed
Vehicle be insured by the Insurance Policies referred to in clause (w) of the
definition of "Eligible Receivables" and shall monitor the status of the
Insurance Policies thereafter, in accordance with its customary servicing
procedures. If the Servicer shall determine that an Obligor has failed to
obtain or maintain a physical loss and damage Insurance Policy covering the
related Financed Vehicle which satisfies the conditions set forth in clause
(w) of the definition of "Eligible Receivables" (including, without
limitation, during the repossession of such Financed Vehicle), the Servicer
shall enforce the rights of the holder of the Pledged Receivable under the
Pledged Receivable to require the Obligor to obtain such physical loss and
damage insurance.
( The Servicer may, if an Obligor fails to obtain or maintain a
physical loss and damage 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"). All policies of Force-Placed Insurance shall be endorsed with
clauses providing for loss payable to the Collateral Agent. Any cost
incurred by the Servicer in maintaining such
34
Force-Placed Insurance shall only be recoverable out of premiums paid by the
Obligors or Recoveries with respect to the Pledged Receivable, as provided in
paragraph (c) of this Section 8.4.
( In connection with any Force-Placed Insurance obtained hereunder,
the Servicer may, in the manner and to the extent permitted by applicable
law, require the Obligors to repay the entire premium to the Servicer. In no
event shall the Servicer 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 in respect of the Obligations. The
Servicer shall retain and separately administer the right to receive payments
from Obligors with respect to Insurance Add-On Amounts or rebates of
Force-Placed Insurance premiums. If an Obligor makes a payment with respect
to a Receivable having Force-Placed Insurance, but the Servicer 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. Recoveries 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 the Servicer
has placed Force-Placed Insurance fails to make scheduled payments of such
Insurance Add-On Amount as due, and the Servicer has determined that eventual
payment of the Insurance Add-On Amount is unlikely, the Servicer may, but
shall not be required to, purchase such Receivable from the Borrower for the
Purchase Amount on any subsequent Distribution Date. Any such Receivable,
and any Receivable with respect to which the Servicer has placed Force-Placed
Insurance which has been paid in full (excluding any Insurance Add-On
Amounts) will be assigned to the Servicer.
( The Servicer may ▇▇▇ to enforce or collect upon the Insurance
Policies, in its own name, if possible, or as agent of the Borrower. 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 Borrower 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 Collateral Agent, on behalf of the
Borrower, at the Servicer's expense, or the Borrower, at the Borrower's
expense, shall take such steps as the Servicer deems reasonably necessary to
enforce such Insurance Policy, including bringing suit in its name or the
name of the Collateral Agent for the benefit of the Collateral Agent. The
Servicer shall deposit the proceeds of any Insurance Policies in the
Collection Account as soon as practicable (but in no event more than two
Business Days) after receipt thereof.
( The Servicer shall maintain a vendor's single interest or other
collateral protection insurance policy with respect to all Financed Vehicles,
which policy shall by its terms insure against physical damage in the event
any Obligor fails to maintain physical loss and damage insurance with respect
to the related Financed Vehicle. Costs incurred by the Servicer in
maintaining such insurance shall be paid by the Servicer. The Servicer will
cause itself to be named as named insured and the Collateral Agent to be
named a loss payee under all such policies. The Servicer may, with the
consent of the Agent, elect not to maintain such insurance policy but in such
event will be obligated to indemnify the Investors against any losses arising
from an Obligor's failure to maintain physical loss and damage insurance with
respect to the related Financed Vehicle.
SECTION 8.5 MAINTENANCE OF SECURITY INTERESTS IN FINANCED VEHICLES.
Consistent with its obligations under this Agreement,
35
the Servicer shall take such steps as are necessary to maintain perfection of
the security interest created by each Pledged Receivable in the related
Financed Vehicle on behalf of the Borrower and the Collateral Agent, for the
benefit of the Investors, 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 Pledged
Receivables. The Borrower, the Collateral Agent and the Investors each
hereby authorize the Servicer, and the Servicer agrees, to take any and all
steps necessary to re-perfect such security interest on behalf of the
Borrower and the Collateral Agent, for the benefit of the Investors as
necessary because of the relocation of a Financed Vehicle or for any other
reason. In the event that the assignment of a Pledged Receivable to the
Borrower and the pledge thereof to the Collateral Agent for the benefit of
the Investors, and the filing of Uniform Commercial Code financing statements
all as provided herein, 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 Borrower, and the pledge thereof to the Collateral
Agent, for the benefit of the Investors, the parties hereto agree that
Arcadia's designation as the secured party on the certificate of title is,
with respect to each secured party, as applicable, in its capacity as agent
of the Borrower and the Collateral Agent.
SECTION 8.6 COVENANTS, REPRESENTATIONS AND WARRANTIES OF SERVICER. The
Servicer hereby makes the following representations, warranties and covenants
to the other parties hereto on which the Lenders shall rely in making the
Advances:
( The Servicer covenants to the Borrower, the Agent and the Investors
as follows:
( LIENS IN FORCE. The Financed Vehicle securing each Pledged
Receivable shall not be released in whole or in part from the security
interest granted by such Receivable, except upon payment in full of such
Pledged Receivable or as otherwise contemplated herein;
( NO IMPAIRMENT. The Servicer shall do nothing to impair the
rights of the Borrower or the Collateral Agent in the Pledged Receivables,
the Dealer Agreements, the Dealer Assignments or the Insurance Policies;
( NO AMENDMENTS. The Servicer shall not extend or otherwise amend
the terms of any Pledged Receivable, except in accordance with SECTION 8.2;
( SERVICING OF RECEIVABLES. The Servicer shall service the
Pledged Receivables as required by the terms of this Agreement and in
material compliance with the current Servicing Procedures Manual for
servicing all its other comparable motor vehicle receivables and the Servicer
shall not change the manner in which it services the Receivables in any way
that can have a material adverse effect on the Pledged Receivables;
( COMPLIANCE WITH LAWS. The Servicer shall comply in all material
respects with the laws of each state in which a Pledged Receivable is
located, including, without limitation, all federal and state laws regarding
the collection and enforcement of consumer debt;
▇▇
( ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇. The Servicer shall give the Agent 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 the Collateral and its principal executive office within the
United States of America;
( MAINTENANCE OF COMPUTER SYSTEMS, ETC. The Servicer shall
maintain its computer systems so that, from and after the time of the first
Advance under this Agreement, the Servicer's master computer records
(including archives) that shall refer to the Collateral indicate clearly that
such Collateral is subject to a first priority security interest in favor of
the Collateral Agent, for the benefit of the Investors. Indication of the
Collateral Agent's security interest shall be deleted from or modified on the
Servicer's computer systems when, and only when, the Collateral in question
shall have been paid in full or sold by the Borrower in accordance herewith;
and
( OTHER SALES, GRANTS OR TRANSFERS. If at any time the Servicer
shall propose to sell, grant a security interest in, or otherwise transfer
any interest in motor vehicle receivables to any prospective purchaser,
lender or other transferee, the Servicer shall give to such prospective
purchaser, lender, or other transferee computer tapes, records, or print-outs
(including any restored from archives) that, if they shall refer in any
manner whatsoever to any Collateral, shall indicate clearly that such
Collateral is subject to a first priority security interest in favor of the
Collateral Agent.
( The Servicer represents and warrants to the Borrower, the Agent and
the Investors, as of the Closing Date as to itself that:
( ORGANIZATION AND GOOD STANDING. The Servicer has been duly
organized and is validly existing and in good standing under the laws of the
State of Minnesota, 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;
( 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 where the failure to
do so would have a material adverse effect on its ability to perform its
obligations hereunder or under any other Transaction Document;
( POWER AND AUTHORITY. The Servicer has the power and authority
to execute and deliver this Agreement and the Transaction Documents to which
it is a party and to carry out its terms and their terms, respectively, and
the execution, delivery and performance of this
37
Agreement and the Transaction Documents to which it is a party have been duly
authorized by the Servicer by all necessary corporate action;
( BINDING OBLIGATION. This Agreement and the Transaction
Documents to which it is a party 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 general principles of equity.
( NO VIOLATION. The consummation of the transactions contemplated
by this Agreement and the Transaction Documents, and the fulfillment of the
terms of this Agreement and the Transaction 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
certificate 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 any of its properties are subject, or
result in the creation or imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture, agreement, mortgage, deed of
trust or other instrument, other than 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, or in any way materially adversely affect the interest of the
Borrower or the Investors in any Pledged Receivable, or affect the Servicer's
ability to perform its obligations under this Agreement;
( 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
Transaction Documents, (B) seeking to prevent the consummation of any of the
transactions contemplated by this Agreement or any of the Transaction
Documents, (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 Transaction
Documents, or (D) that could have a material adverse effect on the Pledged
Receivables;
( APPROVALS. All approvals, authorizations, consents, orders or
other actions of any person, corporation or other organization, or of any
court, governmental agency or body or official, required in connection with
the execution and delivery by the Servicer of this Agreement and the
consummation of the transactions contemplated hereby have been or will be
taken or obtained on or prior to the Closing Date;
( 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
38
agency in connection with the execution, delivery, performance, validity or
enforceability of this Agreement; and
( CHIEF EXECUTIVE OFFICE. The chief executive office of Arcadia
is located at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇-▇▇▇▇.
SECTION 8.7 PURCHASE OF RECEIVABLES UPON BREACH OF COVENANT OR
REPRESENTATION AND WARRANTY. The Borrower or the Servicer, as the case may
be, shall inform the other parties to this Agreement promptly, in writing,
upon the discovery of any breach of the Servicer's representations and
warranties and covenants pursuant to SECTION 8.5 or 8.6(A); PROVIDED,
HOWEVER, that the failure to give any such notice shall not derogate from any
obligation of the Servicer hereunder to repurchase any Pledged Receivable;
PROVIDED, FURTHER that, the Backup Servicer shall have no duty to inquire
into or to investigate the breach of any such representations and warranties
and covenants. Unless the breach shall have been cured by the last day of
the first full calendar month following the discovery by or notice to the
Servicer of the breach, the Servicer shall have an obligation, and the
Borrower and the Agent shall (PROVIDED that it either has made such discovery
or has received such notice thereof) enforce such obligation of the Servicer,
to repurchase any Pledged Receivable materially and adversely affected by the
breach. The Borrower shall notify the Agent promptly, in writing, of any
failure by the Servicer to so repurchase any Pledged Receivable. In
consideration of the purchase of the Pledged Receivable, the Servicer shall
remit the Purchase Amount to the Collection Account on the date of such
repurchase.
SECTION 8.8 TOTAL SERVICING FEE; PAYMENT OF CERTAIN EXPENSES BY SERVICER.
( Subject to, and in accordance with, the provisions of the Collateral Agent
Agreement, on each Distribution Date, the Servicer shall be entitled to
receive out of the Collection Account the Servicing Fee for the related
Settlement Period.
( 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). The Servicer shall be liable for the fees and expenses of
the Backup Servicer, the Collateral Agent, the Lockbox Bank (and any fees
under the Lockbox Agreement) and the Independent Accountants.
SECTION 8.9 SERVICER'S CERTIFICATE. () No later than 10:00 a.m. New York
City time on each Determination Date, the Servicer shall deliver to the
Backup Servicer, the Collateral Agent, the Borrower and the Agent a
Servicer's Certificate executed by a Responsible Officer of the Servicer in
the form attached hereto as EXHIBIT C. Pledged Receivables purchased by the
Servicer or Arcadia and each Pledged Receivable which became a Liquidated
Receivable or which was paid in full during the related Settlement Period
shall be identified by account number (as set forth in the Schedule of
Receivables).
( In addition to the information required by SECTION 8.9(a), the
Servicer shall include in the copy of the Servicer's Certificate (i) whether
any Facility Termination Event or Unmatured Facility Termination Event has
occurred as of such Determination Date, and (ii) whether any Facility
Termination Event or Unmatured Facility Termination Event that may have
occurred as of a prior Determination Date is deemed cured as of such
Determination Date.
SECTION 8.10 ANNUAL STATEMENT AS TO COMPLIANCE; NOTICE OF SERVICER
TERMINATION EVENT. () The Servicer shall deliver to the Backup Servicer, the
Borrower and the Agent, on or before April 30 (or 120 days after the end of
the Servicer's fiscal year, if other than December 31) of each year,
beginning on the first April 30 (or other applicable date) next following the
date that is six months after the
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Closing Date, an Officer's Certificate, dated as of December 31 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
obligation, specifying each such default known to such officer and the nature
and status thereof.
( The Borrower or the Servicer shall deliver to the Backup Servicer,
the Borrower and the 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
13.1.
SECTION 8.11 ANNUAL INDEPENDENT ACCOUNTANTS' REPORT. 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 Arcadia, to deliver to the Servicer, on or
before April 30 (or 120 days after the end of the Servicer's fiscal year, if
other than December 31) of each year, beginning on April 30, 1998, 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 "ACCOUNTANTS'
REPORT") addressed to the Servicer, to the effect that such firm has audited
the books and records of the Servicer and issued its report thereon and that:
(1) such audit 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) the firm is independent of Arcadia and the Servicer within
the meaning of the Code of Professional Ethics of the American Institute of
Certified Public Accountants; and (3) certain agreed upon procedures were
performed relating to three randomly selected Servicer's Certificates (which
procedures shall be submitted for approval to the Agent who so requests,
which approval shall not be unreasonably withheld). The Servicer shall
deliver a copy of the Accountants' Report, within 15 days of receipt, to the
Agent and the Backup Servicer. Such Accountant's Report shall state that it
is intended solely for the use of the Servicer and should not be used by
those who have not agreed to the procedures and taken responsibility for the
sufficiency of the procedures for their purposes.
SECTION 8.12 ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING
RECEIVABLES. The Servicer shall provide to representatives of the Backup
Servicer, the Collateral Agent, the Borrower and the Agent reasonable access
to the documentation, computer systems, records and other information
regarding the Pledged Receivables including, without limitation, copies of
the Dealer Underwriting Guidelines and the Servicing Procedures Manual.
Nothing in this SECTION 8.12 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 8.12 as a result of such obligation shall not
constitute a breach of this SECTION 8.12.
SECTION 8.13 MONTHLY TAPE. 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 Backup Servicer the Monthly Tape containing the information
with respect to the Pledged Receivables as of the last day of the immediately
preceding calendar month 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 the
Collateral Agent Agreement.
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In addition, the Servicer shall, if so requested by the Agent, deliver to
the Backup Servicer its Collection Records and its Monthly Records as soon as
practicable and in any event within ten Business Days of the occurrence of a
Servicer Termination Event or the occurrence of any event which, if uncured,
with lapse of time or notice or lapse of time and notice, would constitute a
Servicer Termination Event 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 Pledged 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 8.14 INSURANCE. The Servicer shall maintain customary amounts of
insurance coverage, including, without limitation, commercial crime coverage,
employee dishonesty coverage, commercial auto coverage, valuable papers and
records coverage, coverage for fire, theft, workers compensation, public
liability, property damage and errors and omissions coverage. The Servicer
shall be entitled to self-insure with respect to such insurance so long as
the long-term unsecured debt obligations of the Servicer are rated in the
second highest long-term debt category by each of the Rating Agencies.
SECTION 8.15 ACCOUNTS. () The Servicer shall establish the Collection
Account in the name of the Collateral Agent for the benefit of the Investors.
The Collection Account shall be an Eligible Account and initially shall be a
segregated trust account established and maintained with the Collateral Agent.
() The Servicer shall establish the Reserve Account in the name of the
Collateral Agent for the benefit of the Investors. The Reserve Account shall
be an Eligible Account and initially shall be a segregated trust account
established and maintained with the Collateral Agent.
SECTION 8.16 SERVICER REIMBURSEMENT FROM COLLECTIONS. The Servicer will be
entitled to be reimbursed from amounts on deposit in the Collection Account
with respect to a Settlement Period for amounts previously deposited in the
Collection Account but later determined by the Servicer 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 upon certification by the Servicer of such amounts
and the provision of such information to the Collateral Agent and the Agent
as may be necessary in the opinion of the Agent to verify the accuracy of
such certification. In the event that the Agent has not received evidence
satisfactory to it of the Servicer's entitlement to reimbursement pursuant to
this SECTION 8.16, the Agent shall give the Collateral Agent written notice
to such effect, following receipt of which the Collateral Agent shall not
make a distribution to the Servicer in respect of such amount, or if the
Servicer prior thereto has been reimbursed, the Collateral Agent shall
withhold such amounts from amounts otherwise distributable to the Servicer on
the next succeeding Distribution Date.
SECTION 8.17 APPLICATION OF COLLECTIONS. For the purposes of this
Agreement, all collections in respect of a Receivable shall be applied by the
Servicer in accordance with the terms of such Receivable.
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ARTICLE IX
GRANT OF SECURITY INTERESTS
SECTION 9.1 BORROWER'S GRANT OF SECURITY INTEREST. As security for the
prompt payment or performance in full when due, whether at stated maturity,
by acceleration or otherwise, of all Obligations, the Borrower hereby assigns
and pledges to the Collateral Agent, for the benefit of the Investors, and
grants to the Collateral Agent, for the benefit of the Investors, a security
interest in and lien upon all of the Borrower's right, title and interest
(but none of the obligations) in and to the following, in each case whether
now or hereafter existing or in which Borrower now has or hereafter acquires
an interest and wherever the same may be located (collectively, the "BORROWER
COLLATERAL"):
() all Collateral;
() the Purchase Agreement, each Dealer Agreement, the Lockbox Agreement
and all other Transaction Documents now or hereafter in effect relating to
the purchase, servicing or processing of Pledged Receivables (collectively,
the "BORROWER ASSIGNED AGREEMENTS"), including (i) all rights of the Borrower
to receive moneys due and to become due under or pursuant to the Borrower
Assigned Agreements, (ii) all rights of the Borrower to receive proceeds of
any insurance, indemnity, warranty or guaranty with respect to the Borrower
Assigned Agreements, (iii) the Borrower's right of foreclosure as lienholder
of the vehicles underlying the Pledged Receivables, (iv) claims of the
Borrower for damages arising out of or for breach of or default under the
Borrower Assigned Agreements, and (v) the right of the Borrower to amend,
waive or terminate the Borrower Assigned Agreements, to perform under the
Borrower Assigned Agreements and to compel performance and otherwise exercise
all remedies and rights under the Borrower Assigned Agreements; PROVIDED,
that to the extent any of the Borrower Assigned Agreements applies to the
Pledged Receivables as well as other receivables originated and/or serviced
by Arcadia, the security interest granted under this SECTION 9.1 shall attach
only to the extent such Borrower Assigned Agreements relate to the Pledged
Receivables;
() all of the following (the "BORROWER ACCOUNT COLLATERAL"):
() the Lockbox Account and all funds held in the Lockbox Account
and all certificates and instruments, if any, from time to time
representing or evidencing the Lockbox Account or such funds,
() the Collection Account, all funds held in the Collection
Account, and all certificates and instruments, if any, from time
to time representing or evidencing the Collection Account or
such funds,
() all investments from time to time of amounts in the Collection
Account, and all certificates and instruments, if any, from time
to time representing or evidencing such investments,
() the Reserve Account, all funds held in the Reserve Account, and
all certificates and instruments, if any, from time to time
representing or evidencing the Reserve Account or such funds,
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() all investments from time to time of amounts in the Reserve
Account, and all certificates and instruments, if any, from time
to time representing or evidencing such investments,
() all notes, certificates of deposit and other instruments from
time to time delivered to or otherwise possessed by the
Collateral Agent in substitution for or in addition to any of
the then existing Borrower Account Collateral, and
() all interest, dividends, cash, instruments and other property
from time to time received, receivable or otherwise distributed
in respect of or in exchange for any and all of the then
existing Borrower Account Collateral;
() all additional property that may from time to time hereafter be
granted and pledged by the Borrower or by anyone on its behalf under this
Agreement, including the deposit with the Collateral Agent or the Agent of
additional moneys by the Borrower; and
() all proceeds, accessions, substitutions, rents and profits of any
and all of the foregoing Borrower Collateral (including proceeds that
constitute property of the types described in SECTIONS 9.1(a) through (d)
above) and, to the extent not otherwise included, all payments under
insurance (whether or not the Collateral Agent is the loss payee thereof) or
any indemnity, warranty or guaranty payable by reason of loss or damage to or
otherwise with respect to any of the foregoing Borrower Collateral.
SECTION 9.2 DELIVERY OF COLLATERAL. All documents in the Receivables File
shall be delivered to and held by or on behalf of the Custodian pursuant to
SECTION 14.4, and shall be in suitable form for transfer by delivery, all in
form and substance satisfactory to the Custodian.
SECTION 9.3 BORROWER REMAINS LIABLE. Notwithstanding anything in this
Agreement, (a) except to the extent of the Servicer's duties hereunder, the
Borrower shall remain liable under the Pledged Receivables, Borrower Assigned
Agreements and other agreements included in the Borrower Collateral to
perform all of its duties and obligations thereunder to the same extent as if
this Agreement had not been executed, (b) the exercise by the Agent or the
Collateral Agent of any of its rights under this Agreement shall not release
the Borrower from any of its duties or obligations under the Pledged
Receivables, Borrower Assigned Agreements or other agreements included in the
Collateral, or the Servicer from any of its duties hereunder, (c) the Agent,
the Investors and the Collateral Agent shall not have any obligation or
liability under the Pledged Receivables, Borrower Assigned Agreements or
other agreements included in the Collateral by reason of this Agreement, and
(d) neither the Agent, the Collateral Agent nor the Investors shall be
obligated to perform any of the obligations or duties of the Borrower or the
Servicer under the Pledged Receivables, Borrower Assigned Agreements or other
agreements included in the Collateral or of the Servicer hereunder, or to
take any action to collect or enforce any claim for payment assigned under
this Agreement.
SECTION 9.4 COVENANTS OF THE BORROWER AND SERVICER REGARDING THE COLLATERAL.
(1) OFFICES AND RECORDS. The Borrower shall keep its chief place of
business and chief executive offices and the office where it keeps its
records at the location specified in SECTION 10.9 or, upon 60 days prior
written notice to the Agent and the Collateral Agent, at such
43
other location in a jurisdiction where all action required by SECTION 9.4(e)
shall have been taken with respect to the Collateral. The Borrower and the
Servicer will permit representatives of the Agent, the Backup Servicer and
the Collateral Agent (and following the occurrence of a Facility Termination
Event, the Investors) at any time and from time to time during normal
business hours, and at such times outside of normal business hours as the
Agent, the Backup Servicer, the Collateral Agent and the Investors shall
reasonably request, (i) to inspect and make copies of and abstracts from such
records, and (ii) to visit the properties of the Borrower or the Servicer
utilized in connection with the collection, processing or servicing of the
Pledged Receivables for the purpose of examining such records, and to discuss
matters relating to the Receivables or the Borrower's or Servicer's
performance under this Agreement with any officer or employee of the Borrower
or Servicer having knowledge of such matters. In connection therewith, the
Agent, the Backup Servicer or the Collateral Agent may institute procedures
to permit it to confirm the Obligor balances in respect of any Pledged
Receivables. Each of the Borrower and the Servicer agrees to render to the
Agent, the Backup Servicer and the Collateral Agent such clerical and other
assistance as may be reasonably requested with regard to the foregoing.
Without duplication of any obligations of the Servicer set forth in clause
(b) below, if a Facility Termination Event shall have occurred and be
continuing, promptly upon request therefor, the Borrower or the Servicer
shall deliver to the Collateral Agent and the Backup Servicer records
reflecting activity through the close of business on the immediately
preceding Business Day.
(2) MAINTAIN RECORDS OF PLEDGED RECEIVABLES. 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. The Servicer shall maintain its computer systems so that,
from and after the time of sale under the Purchase Agreement and pledge
hereunder, the Servicer's master computer records (including any backup
archives) that refer to any Pledged Receivable indicate clearly the
assignment and security interest granted by this Article IX. Indication of
the Collateral Agent's interest in a Pledged Receivable shall be deleted from
or modified on the Servicer's computer systems when, and only when, such
Receivable has been paid in full or repurchased by Arcadia or the Servicer.
Upon the occurrence and during the continuation of a Facility Termination
Event, the Borrower and Servicer shall (i) deliver and turn over to the
Backup Servicer or to its representatives, or at the option of the Backup
Servicer, shall provide the Backup Servicer or its representatives with
access to, after the occurrence of a Facility Termination Event, at any time,
and during all other times, during ordinary business hours, on demand of the
Backup Servicer, all of the Borrower's and Servicer's facilities, personnel,
books and records pertaining to the Collateral, including all records, and
(ii) allow the Backup Servicer to occupy the premises of the Borrower and the
Servicer where such books and records are maintained, and utilize such
premises, the equipment thereon and any personnel of the Borrower or the
Servicer that the Backup Servicer may wish to employ to administer, service
and collect the Pledged Receivables. The Backup Servicer will reimburse
Arcadia for the cost of the ue of the portion of such premises, equipment and
personnel used by the Backup Servicer.
(3) PERFORMANCE OF BORROWER ASSIGNED AGREEMENTS. The Borrower shall
(i) perform and observe all the terms and provisions of the Borrower Assigned
Agreements to be performed or observed by it, maintain the Borrower Assigned
Agreements in full force and effect, enforce the Borrower Assigned Agreements
in accordance with their terms and take all such action to such end as may be
from time to time requested by the Agent, and (ii) upon request of the Agent,
make to any other party to the Borrower Assigned Agreements such demands and
requests for information and reports or for action as the Borrower is
entitled to make under the Borrower Assigned Agreements.
44
(4) NOTICE OF ADVERSE CLAIM. Each of the Borrower and the Servicer
shall advise the Agent and the Collateral Agent promptly, in reasonable
detail, (i) of any Adverse Claim known to it made or asserted against any of
the Borrower Collateral, and (ii) of the occurrence of any event which would
have a material adverse effect on the aggregate value of the Borrower
Collateral or on the assignments and security interests granted by the
Borrower in this Agreement.
(5) FURTHER ASSURANCES; FINANCING STATEMENTS. () Each of the Borrower
and the Servicer severally agrees that at any time and from time to time, at
its expense, it shall promptly execute and deliver all further instruments
and documents, and take all reasonable further action, that may be necessary
or desirable or that the Collateral Agent or the Agent may reasonably request
to perfect and protect the assignments and security interests granted or
purported to be granted by this ARTICLE IX or to enable the Agent or the
Collateral Agent to exercise and enforce its rights and remedies under this
Agreement or the Collateral Agent Agreement with respect to any Collateral.
Without limiting the generality of the foregoing, the Borrower shall execute
and file such financing or continuation statements, or amendments thereto,
and such other instruments or notices as may be necessary or desirable or
that the Collateral Agent or the Agent may reasonably request to protect and
preserve the assignments and security interests granted by this Agreement.
() The Borrower, the Agent and each Investor hereby severally
authorize the Collateral Agent to execute for filing one or more
financing or continuation statements, and amendments thereto,
relating to all or any part of the Collateral without the
signature of the Borrower or the Investors where permitted by
law. A carbon, photographic or other reproduction of this
Agreement or any financing statement covering the Collateral or
any part thereof shall be sufficient as a financing statement
where permitted by law. The Agent will promptly send to the
Borrower any financing or continuation statements thereto which
it files without the signature of the Borrower and will promptly
send to each Investor and the Borrower any financing or
continuation statements thereto which it files without the
signature of the Investors except, in the case of filings of
copies of this Agreement as financing statements, the Agent will
promptly send the Borrower and each Investor, as the case may
be, the filing or recordation information with respect thereto.
() Each of the Borrower and the Servicer shall furnish to the
Collateral Agent from time to time such statements and schedules
further identifying and describing the Collateral and such other
reports in connection with the Collateral as the Collateral
Agent or the Agent may reasonably request, all in reasonable
detail.
SECTION 9.5 RELEASE OF BORROWER COLLATERAL.
(1) GENERALLY. For purposes of selling and transferring Receivables
to third parties in connection with securitizations (including any Take-Out
Securitization), to the extent that (immediately after giving effect to any
requested release) there exists no Borrowing Base Deficiency and there is no
Facility Termination Event or, in connection with the purchase by the
Servicer of a Receivable pursuant to SECTION 8.7 or by Arcadia under the
Purchase Agreement, the Borrower may obtain releases of the Collateral
Agent's (for the benefit of the Investors) security interest in all or any
part of the Borrower Collateral. Each request (a "TRANSFER REQUEST") for a
45
partial release of Collateral, except in connection with the repurchase by
the Servicer of a Receivable pursuant to SECTION 8.7 or by Arcadia under the
Purchase Agreement, shall be addressed to the Agent (with a copy thereof sent
by the Borrower or the Servicer to the Collateral Agent), demonstrating
compliance with the immediately preceding sentence and acknowledging that the
receipt of proceeds from such sale or transfer shall be deposited into the
Collection Account.
(2) CONTINUATION OF LIEN. Unless released in writing by the
Collateral Agent, as herein provided, the security interest in favor of the
Collateral Agent, for the benefit of the Investors, in all Borrower
Collateral shall continue in effect until such time as the Collateral Agent
shall have received payment in full of the proceeds from the sale or transfer
of such Borrower Collateral to third parties in accordance with this SECTION
9.5.
(3) APPLICATION OF PROCEEDS; NO DUTY. Neither of the Agent, nor the
Collateral Agent, nor any Investor shall be under any duty at any time to
credit Borrower for any amount due from any third party in respect of any
purchase of any Borrower Collateral contemplated above, until the Collateral
Agent has actually received such amount in immediately available funds for
deposit to the Collection Account. Neither the Collateral Agent nor any
Investor, nor the Agent shall be under any duty at any time to collect any
amounts or otherwise enforce any obligations due from any third party in
respect of any such purchase of Receivables covered by the release of such
portion of Borrower Collateral or in respect of a securitization thereof with
a third party.
(4) REPRESENTATION IN CONNECTION WITH RELEASES, SALES AND TRANSFERS.
The Borrower represents and warrants that each request for any release or
transfer in connection with other securitizations pursuant to SECTION 9.5(a)
shall automatically constitute a representation and warranty to the
Investors, the Agent and the Collateral Agent to the effect that immediately
before and after giving effect to such release or Transfer Request, there is
no Facility Termination Event.
(5) RELEASE OF SECURITY INTEREST. Upon receipt of a Transfer Request
or, in connection with the purchase by the Servicer of a Receivable pursuant
to SECTION 8.7 or by Arcadia under the Purchase Agreement, upon the
Servicer's written request, and, in each case upon receipt in the Collection
Account of proceeds from the sale or transfer, the Collateral Agent shall
promptly release, at the Borrower's expense, such part of Borrower Collateral
as is required in connection with the Transfer Request or such Servicer's
request; PROVIDED that the trustee or such similar entity in connection with
the third party securitization (including any Take-Out Securitization) or the
Servicer, as the case may be, acknowledges and agrees (i) that all proceeds
thereof that it receives are held in trust for the Investors and (ii) at such
time that the Agent shall instruct such trustee to transfer such proceeds,
the trustee shall transfer such funds pursuant to such instructions.
ARTICLE X
REPRESENTATIONS AND WARRANTIES OF THE BORROWER
In order to induce the other parties hereto to enter into this Agreement
and, in the case of the Lenders, to make Advances hereunder, the Borrower
hereby represents and warrants to the Agent and the Investors as to itself,
as of the Closing Date and the date of each Advance, as follows:
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SECTION 10.1 ORGANIZATION AND GOOD STANDING. The Borrower has been duly
organized and is validly existing as a corporation in good standing under the
laws of the State of Delaware, with power and authority to own its properties
and to conduct its business as such properties are currently owned and such
business is currently conducted. The Borrower had at all relevant times and
now has, power, authority and legal right to acquire and own the Pledged
Receivables and the Other Conveyed Property, to grant to the Collateral Agent
a security interest in the Pledged Receivables and the Other Conveyed
Property and to enter into and perform its obligations under this Agreement.
SECTION 10.2 DUE QUALIFICATION. The Borrower is duly qualified to do
business as a foreign entity in good standing, and has obtained all necessary
licenses and approvals, in all jurisdictions in which the ownership or lease
of its property or the conduct of its business requires such qualification.
SECTION 10.3 POWER AND AUTHORITY. The Borrower has the power and authority
to execute and deliver this Agreement and the other Transaction Documents to
which it is a party and to carry out its terms and their terms; the Borrower
has full power and authority to grant to the Collateral Agent, for the
benefit of the Investors, a perfected first priority security interest in the
Pledged Receivables and the Other Conveyed Property and has duly authorized
such grant by all necessary corporate action and the execution, delivery and
performance of this Agreement and the other Transaction Documents to which it
is a party have been duly authorized by the Borrower by all necessary
corporate action.
SECTION 10.4 SECURITY INTEREST; BINDING OBLIGATIONS. This Agreement and the
Transaction Documents to which it is a party have been duly executed and
delivered and shall create a valid first priority security interest (except,
as to priority, for any tax liens that may arise after the Closing Date) in
the Pledged Receivables and the Other Conveyed Property in favor of the
Collateral Agent, enforceable against the Borrower and creditors of and
purchasers from the Borrower, and this Agreement and the other Transaction
Documents to which it is a party shall constitute legal, valid and binding
obligations of the Borrower 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.
SECTION 10.5 NO VIOLATION. The consummation of the transactions
contemplated by this Agreement and the other Transaction Documents to which
it is a party, and the fulfillment of the terms of this Agreement and the
other Transaction Documents to which it is a party, 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 of the Borrower or any indenture, agreement, mortgage, deed of
trust or other instrument to which the Borrower is a party or by which it is
bound or any of its properties are subject, or result in the creation or
imposition of any Lien upon any of its properties pursuant to the terms of
any such indenture, agreement, mortgage, deed of trust or other instrument,
other than this Agreement, or violate any law, order, rule or regulation
applicable to the Borrower of any court or of any federal or state regulatory
body, administrative agency or other governmental instrumentality having
jurisdiction over the Borrower or any of their properties, or in any way
adversely affect the Borrower's ability to perform its obligations under this
Agreement or the other Transaction Documents to which it is a party.
SECTION 10.6 NO PROCEEDINGS. There are no proceedings or investigations
pending or, to the Borrower's knowledge, threatened against the Borrower,
before any court, regulatory body, administrative agency or other tribunal or
governmental instrumentality
47
having jurisdiction over the Borrower or its properties (a) asserting the
invalidity of this Agreement or any of the other Transaction Documents, (b)
seeking to prevent the consummation of any of the transactions contemplated
by this Agreement or any of the other Transaction Documents, (c) seeking any
determination or ruling that might materially and adversely affect the
performance by the Borrower of its obligations under, or the validity or
enforceability of, this Agreement or any of the other Transaction Documents
or (d) that could have a material adverse effect on the Pledged Receivables.
SECTION 10.7 NO CONSENTS. The Borrower 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 or the other
Transaction Documents to which it is a party.
SECTION 10.8 APPROVALS. All approvals, authorizations, orders or other
actions of any person, corporation or other organization, or of any court,
governmental agency or body or official, required in connection with the
execution and delivery by the Borrower of this Agreement and the other
Transaction Documents and the consummation of the transactions contemplated
hereby have been or will be taken or obtained on or prior to the Closing Date.
SECTION 10.9 CHIEF EXECUTIVE OFFICE. The chief executive office of the
Borrower is located at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇-▇▇▇▇.
SECTION 10.10 SOLVENCY. The Borrower is solvent and will not become
insolvent after giving effect to the transactions contemplated by this
Agreement and the Transaction Documents. The Borrower has no Indebtedness to
any Person other than pursuant to this Agreement and the other Transaction
Documents. The Borrower, after giving effect to the transactions
contemplated by this Agreement and the other Transaction Documents, will have
an adequate amount of capital to conduct its business in the foreseeable
future.
SECTION 10.11 TAX TREATMENT. For federal income tax purposes, each Pledged
Receivable and the related Other Conveyed Property will be treated as owned
by Arcadia and its consolidated subsidiaries, including the Borrower. For
accounting purposes, the Borrower will treat the purchase or absolute
assignment of each Pledged Receivable and Other Conveyed Property pursuant to
the Purchase Agreement as a purchase or absolute assignment of Arcadia's full
right, title and ownership interest in such Pledged Receivable and Other
Conveyed Property (and those Pledged Receivables and Other Conveyed Property
contributed to the Borrower by Arcadia pursuant to the Purchase Agreement
shall be accounted for as an increase in the stated capital of the Borrower)
and the Borrower has not in any other manner accounted for or treated the
transfer to it of Pledged Receivables and Other Conveyed Property.
SECTION 10.12 COMPLIANCE WITH LAWS. The Borrower has complied and will
comply in all material respects with all applicable laws, rules, regulations,
judgments, agreements, decrees and orders with respect to its business and
properties and all Collateral.
SECTION 10.13 TAXES. The Borrower has filed on a timely basis all tax
returns (including, without limitation, foreign, federal, state, local and
otherwise) required to be filed, is not liable for taxes payable by any other
Person and has paid or made adequate provisions for the payment of all taxes,
assessments and other governmental charges due from the Borrower. No tax
lien or similar adverse claim has been filed, and no claim is being asserted,
with respect to any
48
such tax, assessment or other governmental charge. Any taxes, fees and other
governmental charges payable by the Borrower in connection with the execution
and delivery of this Agreement and the other Transaction Documents and the
transactions contemplated hereby or thereby including the transfer of each
Pledged Receivable and Other Conveyed Property to the Borrower have been paid
or shall have been paid if and when due at or prior to the Closing Date and
the relevant Purchase Date, as the case may be.
SECTION 10.14 NO LIENS, ETC. The Collateral and each part thereof is owned
by the Borrower free and clear of any Adverse Claim or restrictions on
transferability and the Borrower has the full right, corporate power and
lawful authority to assign, transfer and pledge the same and interests
therein, and upon the making of each Advance, the Collateral Agent, for the
benefit of the Investors, will have acquired a perfected, first priority and
valid security interest (except, as to priority, for any tax lien that may
arise after the Closing Date) in such Collateral, free and clear of any
Adverse Claim or restrictions on transferability. No effective financing
statement or other instrument similar in effect covering all or any part of
the Collateral is on file in any recording office, except such as may have
been filed in favor of the Collateral Agent as "Secured Party" pursuant to
ARTICLE IX of this Agreement or, with respect to the Pledged Receivables
purchased by the Borrower from Arcadia, in favor of the Borrower pursuant to
the Purchase Agreement.
SECTION 10.15 PURCHASE AND SALE. Each Pledged Receivable and the related
Other Conveyed Property was purchased by the Borrower on the relevant
Purchase Date pursuant to the Purchase Agreement.
SECTION 10.16 SECURITIES ACT OF 1933; INVESTMENT COMPANY ACT OF 1940. Each
purchase of Pledged Receivables and Other Conveyed Property under the
Purchase Agreement will constitute a purchase or other acquisition of notes,
drafts, acceptances, open accounts receivable or other obligations
representing part or all of the sales price of merchandise, insurance or
services within the meaning of Section 3(c)(5) of the Investment Company Act
of 1940, as amended.
SECTION 10.17 INFORMATION TRUE AND CORRECT. All information heretofore or
hereafter furnished by or on behalf of the Borrower, the Servicer or Arcadia
in connection with this Agreement or any transaction contemplated hereby is
and will be true and complete in all material respects and does not and will
not omit to state a material fact necessary to make the statements contained
therein not misleading.
SECTION 10.18 ERISA COMPLIANCE. The Borrower is in compliance with ERISA and
has not incurred and does not expect to incur any liabilities (except for
premium payments arising in the ordinary course of business) to the Pension
Benefit Guaranty Corporation (or any successor thereto) under ERISA.
SECTION 10.19 INVESTMENT COMPANY STATUS. The Borrower is not an "investment
company" or an "affiliated person" of, or "promoter" or "principal
underwriter" for, an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended.
SECTION 10.20 NO SHARED OBLIGATIONS. There is not now, nor will there be at
any time in the future, any agreement or understanding between Arcadia and
the Borrower (other than as expressly set forth herein) providing for the
allocation or sharing of obligations to make payments or otherwise in respect
of any taxes, fees, assessments or other governmental charges.
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SECTION 10.21 ELIGIBLE RECEIVABLES. Except as provided in the definition of
"Borrowing Base" in Article I hereof, all Receivables included in the
Borrowing Base are Eligible Receivables.
ARTICLE XI
COVENANTS OF THE BORROWER
From the date hereof until the first day, following the Facility
Termination Date, on which all Obligations shall have been finally and fully
paid and performed, the Borrower hereby covenants and agrees with the
Investors and the Agent as follows:
SECTION 11.1 PROTECTION OF SECURITY INTEREST OF THE INVESTORS. () The
Borrower shall not change its name, identity, or corporate structure in any
manner that would, could or might make any financing statement or
continuation statement filed by the Borrower (or by the Agent, or the
Collateral Agent on behalf of the Borrower) in accordance with paragraph (a)
above seriously misleading within the meaning of Section 9-402(7) of the UCC,
unless the Borrower shall have given the Agent and the Collateral Agent at
least 60 days prior written notice thereof, and shall promptly file
appropriate amendments to all previously filed financing statements and
continuation statements.
() The Borrower shall at all times maintain its principal executive
office within the United States of America.
() If at any time the Borrower shall propose to sell, grant a security
interest in, or otherwise transfer any interest in motor vehicle receivables
to any prospective purchaser, lender or other transferee, the Borrower shall
give to such prospective purchaser, lender, or other transferee computer
tapes, records, or print-outs (including any restored from archives) that, if
they shall refer in any manner whatsoever to any Collateral shall indicate
clearly that such Collateral is subject to a first priority security interest
in favor of the Collateral Agent for the benefit of the Investors.
SECTION 11.2 OTHER LIENS OR INTERESTS. Except for the security interest
granted hereunder, the Borrower will not sell, pledge, assign or transfer to
any other Person, or grant, create, incur, assume or suffer to exist any Lien
on the Collateral or any interest therein, and the Borrower shall defend the
right, title, and interest of the Collateral Agent (for the benefit of the
Investors), in and to the Collateral against all claims of third parties
claiming through or under the Borrower.
SECTION 11.3 COSTS AND EXPENSES. The Borrower shall pay all of its
reasonable costs and disbursements in connection with the performance of its
obligations hereunder and under the Transaction Documents.
SECTION 11.4 REPORTING REQUIREMENTS. The Borrower shall furnish, or cause
to be furnished, to the Agent and the Collateral Agent:
() on each Determination Date, a Servicer's Certificate;
() as soon as available and in any event within 90 days (or next
succeeding Business Day if the last day of such period is not a Business Day)
after the end of each fiscal year, a copy of the audited consolidated
financial statements for such year for Arcadia and its consolidated
Subsidiaries, certified, without qualification by independent public
accountants acceptable to the
50
Agent and each other report or statement sent to shareholders or publicly
filed by Arcadia or the Borrower;
() as soon as available and in any event within 45 days (or next
succeeding Business Day if the last day of such period is not a Business Day)
after the end of each of the first three quarters of each fiscal year of
Arcadia, a consolidated balance sheet of Arcadia and its consolidated
Subsidiaries as of the end of such quarter and including the prior comparable
period, and consolidated statements of income and retained earnings, of
Arcadia and its consolidated Subsidiaries for such quarter and for the period
commencing at the end of the previous fiscal year and ending with the end of
such quarter, certified by the chief financial officer or chief accounting
officer of Arcadia identifying such documents as being the documents
described in this paragraph (c) and stating that the information set forth
therein fairly presents the financial condition of Arcadia and its
consolidated Subsidiaries as of and for the periods then ended, subject to
year-end adjustments consisting only of normal, recurring accruals and
confirming that Arcadia is in compliance with all financial covenants in this
Agreement;
() as soon as possible and in any event within five days after the
occurrence of a Facility Termination Event or an Unmatured Facility
Termination Event or any other event which would have a material adverse
effect on the Collateral or the collectibility thereof, the statement of the
chief executive officer of the Borrower setting forth complete details of any
such Facility Termination Event or Unmatured Facility Termination Event and
the action which the Borrower has taken, is taking and proposes to take with
respect thereto;
() promptly, from time to time, such other information, documents,
records or reports respecting the Pledged Receivables, the Other Conveyed
Property related thereto or the Financed Vehicles related thereto or the
condition or operations, financial or otherwise, of the Borrower, or Arcadia
or any of its Subsidiaries, as may, from time to time, be reasonably
requested.
SECTION 11.5 TAKE-OUT SECURITIZATION. The Borrower shall effect or cause
an Affiliate to effect a Take-Out Securitization which will result in the
prepayment of not less than 75% of the principal amount of all outstanding
Advances no more than six months after the Closing Date and thereafter no
more than six months after the immediately preceding Take-Out Securitization.
SECTION 11.6 CORPORATE SEPARATENESS.
() The Borrower shall at all times maintain at least one independent
director (an "INDEPENDENT DIRECTOR") who (i) is in fact independent, (ii)
does not have any direct financial interest or any material indirect
financial interest in the Borrower, or in any Affiliate of the Borrower,
(iii) is not, and has not been, connected with the Borrower or any Affiliate
of the Borrower as an officer, employee, promoter, underwriter, trustee,
partner or person performing similar functions and is not a member of the
immediate family of any such officer or employee and (iv) is not, and has not
been, a director (other than as an independent director for an Affiliate
which is a limited special purpose corporation) or stockholder of any
Affiliate of the Borrower and is not a member of the immediate family of any
such director or stockholder.
() The Borrower shall not direct or participate in the management of
any other Person's operations, and no other Person shall be permitted to
direct or participate in the management of the Borrower.
() The Borrower shall maintain a principal executive and administrative
office through which its business is conducted separately from those of any
other Person, and, to the extent that the Borrower and any other Persons have
offices in contiguous space, there shall be
51
fair and appropriate allocation of overhead costs among them, and each such
entity shall bear its fair share of such expenses.
() The Borrower shall engage only in those transactions described
in Article III of its Certificate of Incorporation and matters necessarily
incident thereto.
() The Borrower shall have stationery and other business forms and
a mailing address separate from that of any other Person.
() The Borrower shall ensure that, to the extent that it jointly
contracts with any of its stockholders or Affiliates to do business with
vendors or service providers or to share overhead expenses, the costs
incurred in so doing shall be allocated fairly among such entities and that
each such entity shall bear its fair share of such costs and shall ensure
that, to the extent that the Borrower contracts or does business with vendors
or service providers where the goods and services provided are partially for
the benefit of any other Person, the costs incurred in so doing shall be
fairly allocated to or among such entities for whose benefit the goods and
services are provided and that each such entity shall bear its fair share of
such costs.
() The Borrower shall at all times be adequately capitalized in
light of its contemplated business.
() The Borrower shall at all times provide for its own operating
expenses and liabilities from its own funds, shall not allow its funds to be
diverted to any other Person or for other than the corporate use of the
Borrower, and shall not, except as may be expressly permitted by agreements
of the Borrower, allow its funds to be commingled with those of any Affiliate
of the Borrower; PROVIDED, that nothing in this subsection shall be construed
to prohibit the payment of dividends by the Borrower to its Affiliates to the
extent that such payment does not cause a Facility Termination Event or
Unmatured Facility Termination Event to occur.
() The Borrower shall maintain its assets and transactions
separately from those of any other Person, reflect such assets and
transactions in financial statements separate and distinct from those of any
other Person and evidence such assets and transactions by appropriate entries
in books and records separate and distinct from those of any other Person.
() The Borrower shall ensure that all material transactions
between the Borrower and any of its Affiliates shall be only on an
arm's-length basis and shall receive the approval of its board of directors,
including at least one Independent Director.
() The Borrower shall hold itself out to the public under its own
name as a legal entity separate and distinct from any other Person, shall act
solely in its own corporate name and through its own authorized officers and
agents, and no Affiliate of the Borrower shall be appointed to act as agent
by the Borrower, except as may be expressly permitted by any agreements of
the Borrower.
() The Borrower shall not hold itself out as having agreed to pay,
or as being liable, primarily or secondarily, for any obligations of any
other Person, except as may be expressly permitted in any agreements of the
Borrower.
() The Borrower shall not maintain any joint account with any other
Person or become liable as a guarantor or otherwise with respect to any debt
or contractual obligation of any other Person.
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() The Borrower shall not make any payment or distribution of
assets with respect to any obligation of any other Person or grant any lien,
security interest or encumbrance on any of its assets to secure any
obligation of any other Person.
() The Borrower shall not make loans, advances or otherwise extend
credit to any other Person, except on an arm's-length basis, and shall not
permit any Affiliate of the Borrower to advance funds to the Borrower or
otherwise supply funds to, or guaranty debts of, the Borrower except as
provided in the Purchase Agreement.
() The Borrower shall hold regular duly noticed meetings of its
board of directors, no less than once annually, and make and retain minutes
of such meetings.
() The Borrower shall ensure that decisions with respect to its
business and daily operations shall be independently made by the Borrower
(although the officer making any particular decision may also be an officer
or director of any Affiliate of the Borrower).
() The Borrower shall have bills of sale (or other similar
instruments of assignment) and, if appropriate, UCC-1 financing statements,
with respect to all assets purchased from any other Person.
() The Borrower shall file its own tax returns or, if it is a
member of a consolidated group, will join in the consolidated return of such
group as a separate member thereof and shall ensure that any financial
reports required of the Borrower shall comply with generally accepted
accounting principles and shall be issued separately from, but may be
consolidated with, any reports prepared for any of its Affiliates.
() The Borrower shall maintain its assets in such a manner that it
will not be costly or difficult to segregate, ascertain or identify its
individual assets from those of any other Person.
() The Borrower shall comply with all provisions of its
Certificate of Incorporation and By-Laws and shall observe all necessary,
appropriate and customary corporate formalities.
SECTION 11.7 INSPECTIONS. Until the latest of the Facility Termination Date
or the date on which no principal of or Yield on any Advance shall be
outstanding or the date all other amounts owed hereunder to the Investors or
the Agent are paid in full, each of the Borrower and Arcadia will, from time
to time during regular business hours as requested by the Agent, permit the
Agent and the Collateral Agent (and following the occurrence of a Facility
Termination Event, the Investors) or their agents or representatives, (i) to
examine and make copies of and abstracts from all books, records and
documents (including, without limitation, computer tapes and disks) in the
possession or under the control of the Borrower or Arcadia, as the case may
be, relating to Pledged Receivables and the Other Conveyed Property, (ii) to
visit the offices and properties of the Borrower or Arcadia, as the case may
be, for the purpose of examining such materials described in clause (i)
above, and to discuss matters relating to Pledged Receivables and the Other
Conveyed Property or the Borrower's or Arcadia's performance under the
Transaction Documents or under the Receivables with any of the officers or
employees of the Borrower or Arcadia, as the case may be, having knowledge of
such matters, and (iii) solely in the case of the Collateral Agent, and upon
the request of the Collateral Agent, conduct an audit of the Receivables, the
related Other Conveyed Property and the related books and records and
collection systems of the Servicer; PROVIDED that, unless a Facility
Termination Event or Unmatured Facility Termination Event has occurred, no
such audit shall require the Servicer to re-underwrite the
53
Pledged Receivables or shall occur any more frequently than monthly.
Nothing in this SECTION 11.7(a) 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 11.7(a) as a result of such obligation shall not
constitute a breach of this SECTION 11.7(a).
Not less than five Business Days following the first Advance
hereunder, not less than five Business Days following the first Advance made
after a Take-Out Securitization has occurred, and once during each calender
month following any such Advance during which Advances are outstanding, the
Collateral Agent shall conduct a physical inventory (which may be electronic
if so approved by the Agent) of the Receivables Files relating to the Pledged
Receivables, in order to determine that the Custodian is in possession of a
Receivable File for each Receivable listed in Schedule A to each Advance
Request, and to perform a limited review of at least fifty (50) of the
Receivable Files relating to the Pledged Receivables to determine that each
Receivable File so reviewed includes (i) a fully executed original retail
installment sales contract or promissory note and related security agreement,
(ii) a certificate of insurance, application form for insurance signed by the
Obligor or a signed representation letter from the Obligor named in the
Receivable File pursuant to which the Obligor has agreed to obtain physical
damage insurance of the related Financed Vehicle, or a documented verbal
confirmation of the insurance policy for the Financed Vehicle, (iii) an
original Lien Certificate or application therefor and (iv) a credit
application or a copy thereof. As evidence of the performance of each such
review on each review date, the Collateral Agent or such other person shall
execute and deliver to the Agent, an acknowledgment in the form of Exhibit G
hereto. If such review reveals, in the Agent's opinion, an unsatisfactory
number of missing items the Agent in its sole discretion may require a full
review of every Receivable File by the Collateral Agent or such other party
acceptable to the Agent. The party performing such full review shall be
entitled to reimbursement from the Borrower for any fee, costs or expenses
incurred in connection therewith.
In addition, at any time following the occurrence of a Facility
Termination Event, the Borrower and Arcadia will permit the Agent, the
Collateral Agent and the Investors or their agents or representatives to
conduct periodic audits of the Receivables, the related Other Conveyed
Property and the related books and records and collection systems of the
Borrower or Arcadia, as the case may be.
ARTICLE XII
THE SERVICER
SECTION 12.1 LIABILITY OF SERVICER; INDEMNITIES.
() The Servicer shall be liable hereunder only to the extent of the
obligations in this Agreement specifically undertaken by the Servicer and the
representations made by the Servicer;
() The Servicer shall defend, indemnify and hold harmless the
Investors, the Agent, the Backup Servicer, the Collateral Agent, their
respective officers, directors, agents and employees from and against any and
all costs, expenses, losses, damages, claims, liabilities, penalties, fines,
forfeitures and judgments, 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 of any
Financed Vehicle related to a Pledged Receivable;
() The Servicer shall indemnify, defend and hold harmless the
Investors, the Agent, the Backup Servicer, the Collateral Agent and their
respective officers, directors, agents and
54
employees, from and against any and all costs, expenses, losses, claims,
penalties, fines, forfeitures, judgments, damages and liabilities to the
extent that such cost, expense, loss, claim, penalty, fine, forfeiture,
judgment, damage or liability arose out of, or was imposed upon the
Investors, the Agent, the Backup Servicer or the Collateral Agent by reason
of the breach of this Agreement by the Servicer, the negligence (other than
errors in judgment), 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.
() Arcadia, in its individual capacity, hereby acknowledges that the
indemnification provisions in the Purchase Agreement benefitting the Agent,
the Investors, the Backup Servicer or the Collateral Agent are enforceable by
each hereunder.
() The Servicer shall indemnify, defend and hold harmless the
Investors, the Agent, the Backup Servicer and the Collateral Agent, their
respective officers, directors, agents and employees and any holders of the
Note from and against any taxes that may at any time be asserted against the
Investors, the Agent, the Backup Servicer and the Collateral Agent and any
holders of the Note with respect to 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 income taxes or taxes asserted with respect to, and as of the
date of, the sale of the Receivables and Other Conveyed Property to the
Borrower or the issuance and original sale of the Notes and costs and
expenses in defending against the same).
() Indemnification under this SECTION 12.1 shall survive the
termination of this Agreement and shall include reasonable fees and expenses
of counsel and expenses of litigation. If the Servicer has made any
indemnity payments pursuant to this SECTION 12.1 and the recipient thereafter
collects any of such amounts from others, the recipient shall promptly repay
such amounts collected to the Servicer, without interest.
() Notwithstanding the indemnity provisions contained in SECTIONS
12.1(b) through (f), the Servicer shall not be required to indemnify the
Investors, the Agent, the Backup Servicer or their respective officers,
directors, agents or employees, against any costs, expenses, losses, damages,
claims or liabilities to the extent the same shall have (i) been caused by
the misfeasance, bad faith or gross negligence of such party, or (ii)
suffered by reason of uncollectible or uncollected Receivables not caused by
the Servicer's negligence (other than errors in judgment), misfeasance or bad
faith in performing its obligations hereunder.
SECTION 12.2 MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE OBLIGATIONS
OF, THE SERVICER OR BACKUP SERVICER.
() 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, shall be acceptable to the Agent and shall be capable of
fulfilling the duties of the Servicer contained in this Agreement. Any
Person (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
55
Servicer from any obligation hereunder. The Servicer shall provide notice of
any merger, consolidation or succession pursuant to this SECTION 12.2(a) to
the Agent, the Backup Servicer and the Collateral Agent. Notwithstanding the
foregoing, as a condition to the consummation of the transactions referred to
in CLAUSES (i), (ii), (iii) and (iv) above, (x) immediately after giving
effect to such transaction, no representation or warranty made pursuant to
SECTION 8.6 shall have been breached in any material respect (for purposes
hereof, such representations and warranties shall speak as of the date of the
consummation of such transaction) (y) the Servicer shall have delivered to
the Agent an Officer's Certificate and an Opinion of Counsel each stating
that such consolidation, merger or succession and such agreement of
assumption comply with this SECTION 12.2(a), and (z) the Servicer shall have
delivered to the Agent an Opinion of Counsel, stating, in the opinion of such
counsel, either (A) all financing statements and continuation statements and
amendments thereto have been executed and filed that are necessary to
preserve and protect the security interest of the Collateral Agent (for the
benefit of the Investors) in the Collateral and reciting the details of the
filings or (B) no such action shall be necessary to preserve and protect such
interest.
() Any Person (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 under this Agreement.
SECTION 12.3 LIMITATION ON LIABILITY OF SERVICER, BACKUP SERVICER AND
OTHERS.
() 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 Borrower, the Investors or the Agent, 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
(excluding errors in judgment) in the performance of duties. 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 written 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.
The Backup Servicer shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if the
repayment of such funds or adequate written indemnity against such risk or
liability is not reasonably assured to it in writing prior to the expenditure
or risk of such funds or incurrence of financial liability.
() Unless acting as Servicer hereunder, the Backup Servicer shall not
be liable for any obligation of the Servicer contained in this Agreement, and
the Agent, the Borrower and the Investors shall look only to the Servicer to
perform such obligations.
() The parties hereto and each Investor, by its acceptance of an
assignment of any interest in any Note or Advances, or of any portion of any
Lender's commitment to make Advances hereunder, expressly acknowledge and
consent to Norwest acting in the possible dual
56
capacity of Backup Servicer or successor Servicer and in the capacity as
Collateral Agent. Norwest may, in such dual capacity, discharge its separate
functions fully, without hindrance or regard to conflict of interest
principles, duty of loyalty principles or other breach of fiduciary duties to
the extent that any such conflict or breach arises from the performance by
Norwest of express duties set forth in this Agreement in any of such
capacities, all of which defenses, claims or assertions are hereby expressly
waived by the other parties hereto except in the case of gross negligence and
willful misconduct by Norwest.
() The Backup Servicer shall have no responsibility and shall not be in
default hereunder nor incur any liability for any failure, error, malfunction
or any delay in carrying out any of its duties under this Agreement if any
such failure or delay results from the Backup Servicer acting in accordance
with information prepared or supplied by a Person other than the Backup
Servicer or the failure of any such Person to prepare or provide such
information. The Backup Servicer shall have no responsibility, shall not be
in default and shall incur no liability (i) for any act or failure to act by
any third party, including the Servicer or the Agent or for any inaccuracy or
omission in a notice or communication received by the Backup Servicer from
any third party or (ii) that is due to or results from the invalidity,
unenforceability of any Receivable under applicable law or the breach or the
inaccuracy of any representation or warranty made with respect to any
Receivable.
SECTION 12.4 DELEGATION OF DUTIES. So long as Arcadia is the Servicer,
the Servicer may delegate duties under this Agreement to an Affiliate of
Arcadia with the prior written consent of the Agent and the Backup Servicer.
The Servicer also may at any time perform the specific duties of (i)
repossession of Financed Vehicles, (ii) tracking Financed Vehicles' insurance
and (iii) pursuing the collection of deficiency balances on Delinquent
Receivables through sub-contractors who are in the business of servicing
automotive receivables, in each case without the consent of the Agent and the
Backup Servicer. The Servicer may also perform other specific duties through
such sub-contractors in accordance with its customary servicing policies and
procedures without the prior consent of the Agent; PROVIDED, HOWEVER, that no
such delegation or subcontracting of duties by the Servicer shall relieve the
Servicer of its responsibility with respect to such duties. Neither Arcadia
nor any other party acting as Servicer hereunder shall appoint any
subservicer hereunder without the prior written consent of the Agent and the
Backup Servicer. If the Backup Servicer assumes the role of successor
Servicer, such successor Servicer may delegate its duties under this
Agreement to any Person or appoint a subservicer with the prior consent of
the Agent.
SECTION 12.5 SERVICER AND BACKUP SERVICER NOT TO RESIGN. Subject to the
provisions of SECTION 12.2, 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 result in a material adverse effect on the Servicer or the
Backup Servicer, as the case may be, and the Agent 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
resignation of the Servicer or Backup Servicer shall be evidenced by an
Opinion of Counsel to such effect delivered and acceptable to the Agent. No
resignation of the Servicer shall become effective until the Backup Servicer
or an entity acceptable to the Agent shall have assumed the responsibilities
and obligations of the Servicer. No resignation of the Backup Servicer shall
become effective until an entity acceptable to the Agent 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
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resignation as permitted by this SECTION 12.5, the Backup Servicer may
petition a court for its removal. Notwithstanding the foregoing, the Backup
Servicer may resign for any reason, provided an entity acceptable to the
Agent shall have assumed the responsibilities and obligations of the Backup
Servicer prior to the effectiveness of any such resignation.
ARTICLE XIII
SERVICER TERMINATION EVENTS
SECTION 13.1 SERVICER TERMINATION EVENT. For purposes of this Agreement,
each of the following shall constitute a "SERVICER TERMINATION EVENT":
() Any failure by the Servicer or, so long as Arcadia or an Affiliate
of the Borrower is the Servicer, the Borrower to deliver to the Collateral
Agent or deposit to the Collection Account any proceeds or payment required
to be so delivered or deposited under the terms of this Agreement (or, if
Arcadia or an Affiliate of the Borrower is the Servicer, under the Purchase
Agreement) that continues unremedied for a period of three Business Days (or,
with respect to any Purchase Amounts, one Business Day) after written notice
is received by the Servicer from the Agent or after discovery of such failure
by a Responsible Officer of the Servicer;
() Failure by the Servicer to deliver the Servicer's Certificate
required by SECTION 8.9 by 10:00 a.m. New York City time three Business Days
before the related Distribution Date;
() Failure on the part of the Servicer to observe in all material
aspects its covenants and agreements set forth in SECTION 12.2(a);
() Failure on the part of the Servicer or, so long as Arcadia or an
Affiliate of the Borrower is the Servicer, the Borrower, duly to observe or
perform in any respect any other covenants or agreements of the Servicer or,
so long as Arcadia is the Servicer, the Borrower, as the case may be, set
forth in this Agreement (or, as to Arcadia, if Arcadia is the Servicer, the
Purchase Agreement) which failure continues unremedied for a period of 30
days after the earlier of knowledge thereof by a Responsible Officer of the
Servicer and the date on which written notice of such failure, requiring the
same to be remedied, shall have been given to the Servicer by the Agent;
() The occurrence of an Event of Bankruptcy with respect to the
Servicer (or the Borrower);
() Any representation, warranty or statement of the Servicer (or, if
Arcadia or an Affiliate of the Borrower is the Servicer, the Borrower) 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 (excluding, however, any
representation or warranty set forth in the definition of "ELIGIBLE
RECEIVABLE"), and, within 30 days after the earlier of knowledge thereof by a
Responsible Officer of the Servicer and the date written notice thereof shall
have been given to the Servicer (or, if Arcadia or an Affiliate of the
Borrower is the Servicer, the Borrower) by the Agent the circumstances or
condition in respect of which such representation, warranty or statement was
incorrect shall not have been eliminated or otherwise cured;
() The Net Worth of the Servicer is less than $325,000,000; or
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() An acceleration shall have occurred with respect to any Indebtedness
of the Servicer (other than any Indebtedness incurred pursuant to this
Agreement) having an outstanding principal amount of $10,000,000 or more or,
if Arcadia is the Servicer, Arcadia shall fail to comply with Section 5.12 of
the Indenture, dated as of March 12, 1997, between Arcadia and Norwest, as
Indenture Trustee, as supplemented by the First Supplemental Indenture, dated
as of March 12, 1997, related to Arcadia's 112% Senior Notes due 2007, as in
effect on the Closing Date or as amended thereafter with the consent of the
Agent.
SECTION 13.2 CONSEQUENCES OF A SERVICER TERMINATION EVENT. If a Servicer
Termination Event shall occur and be continuing, the Agent, by written notice
given to the Servicer, may terminate all of the rights and obligations of the
Servicer under this Agreement by declaring a Servicer Termination Event. On
or after the receipt by the Servicer of such written notice, 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; PROVIDED, HOWEVER, that the Backup
Servicer shall have no liability with respect to any obligation which was
required to be performed by the prior Servicer prior to the date that the
Backup Servicer becomes the Servicer or any claim of a third party based on
any alleged action or inaction of the prior Servicer. The Backup Servicer is
authorized and empowered by this Agreement to execute and deliver, on behalf
of the prior 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 Pledged
Receivables and related documents to show the Collateral Agent (for the
benefit of the Investors) as lienholder or secured party, or otherwise. The
prior Servicer agrees to cooperate with the Backup Servicer in effecting the
termination of the responsibilities and rights of the prior Servicer under
this Agreement, including, without limitation and at the prior Servicer's
expense, the transfer to the Backup Servicer for administration by it of all
cash amounts that shall at the time be held by the prior Servicer for
deposit, or have been deposited by the prior Servicer, in the Collection
Account or thereafter received with respect to the Pledged Receivables and
the delivery to the Backup Servicer of all Receivable Files, Servicer Files,
Monthly Records and Collection Records and a computer tape in readable form
containing all information necessary to enable the Backup Servicer or a
successor Servicer to service the Pledged Receivables. In addition, upon the
occurrence of a Servicer Termination Event, the Servicer shall, if so
requested by the Agent, deliver to the Backup Servicer its Monthly Records
within 15 days after demand therefor and a computer tape or diskette (or any
other means of electronic transmission acceptable to the Backup Servicer)
containing as of the close of business on the date of demand all of the data
maintained b the Servicer in computer format in connection with servicing the
Pledged Receivables. If requested by the Agent, the Backup Servicer or
successor Servicer shall terminate each Lockbox Agreement and direct the
Obligors to make all payments under the Pledged Receivables directly to the
successor Servicer (in which event the successor Servicer shall process such
payments in accordance with SECTION 8.2(e)), or to a lockbox established by
the successor Servicer at the direction of the Agent at the prior Servicer's
expense. The terminated Servicer shall grant the Collateral Agent, the
Backup Servicer and the Agent reasonable access to the terminated Servicer's
premises at the terminated Servicer's expense.
SECTION 13.3 APPOINTMENT OF SUCCESSOR SERVICER.
() On and after (i) the time the Servicer receives a notice of
termination pursuant to SECTION 13.2 or (ii) upon the resignation of the
Servicer pursuant to SECTION 12.5, the Backup 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
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Backup Servicer shall not be liable for any acts, omissions or obligations of
the Servicer prior to such succession or for any breach by the Servicer of
any of its representations and warranties contained in this Agreement or in
any related document. The Servicer and such successor shall take such
action, consistent with this Agreement, as shall be necessary to effectuate
any such succession. If a successor Servicer is acting as Servicer
hereunder, it shall be subject to termination under SECTION 13.2 upon the
occurrence of any Servicer Termination Event applicable to it as Servicer.
() The Agent may 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 shall have no liability to the
Investors, the Borrower, Arcadia, the Person then serving as Backup Servicer
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 the Backup
Servicer may petition a court of competent jurisdiction to appoint any
Eligible Servicer as the successor to the Servicer. Pending such
appointment, 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 12.5, 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
13.2 or the resignation of the Servicer pursuant to SECTION 12.5. If, upon
the termination of the Servicer pursuant to SECTION 13.2 or the resignation
of the Servicer pursuant to SECTION 12.5, the Agent appoints a successor
Servicer other than the Backup Servicer, the Backup Servicer shall not be
relieved of its duties as Backup Servicer hereunder.
() Any successor Servicer shall be entitled to the greater of such
compensation (whether payable out of the Collection Account or otherwise) as
the Servicer would have been entitled to under this Agreement if the Servicer
had not resigned or been terminated hereunder and the current market rate for
servicing a pool of automobile installment loans and contracts comparable to
the Receivables. If any successor Servicer is appointed for any reason, the
Agent and such successor Servicer may agree on additional compensation to be
paid to such successor Servicer. In addition, any successor Servicer shall
be entitled to reasonable transition expenses incurred in acting as successor
Servicer not to exceed $50,000.
ARTICLE XIV
THE CUSTODIAN
SECTION 14.1 DELIVERY OF THE CUSTODIAL RECEIPT AND CONFIRMATION.
() The Agent hereby appoints Arcadia to act as Custodian of the
Receivables Files, and Arcadia hereby accepts such appointment. At least one
day prior to each Advance Date, the Custodian shall deliver or cause to be
delivered to the Agent a Custodial Receipt and Confirmation in the form of
EXHIBIT E hereto. From time to time, the Custodian shall attach for
inclusion in the appropriate Receivables File, any additional original
documents evidencing any assumption or modification of a Receivable approved
by the Servicer in accordance with the terms hereof.
SECTION 14.2 OBLIGATIONS OF THE CUSTODIAN.
() The Custodian shall segregate and maintain continuous custody of the
Receivables Files in secure facilities in accordance with customary standards
for such custody. The Receivables Files shall be maintained in fireproof
facilities. For so long as the Servicer is the Custodian, the Custodian
shall maintain the Receivables Files at its office set forth in Section 10.9.
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() With respect to the documents constituting each Receivables File,
the Custodian shall (i) act exclusively as the custodian for and the bailee
(solely for purposes of UCC Section 9-305) of the Collateral Agent, for the
benefit of the Investors, (ii) hold all documents constituting each
Receivables File received by it for the exclusive use and benefit of the
Borrower and the Investors, and (iii) make disposition thereof only in
accordance with the terms of this Agreement or with written instructions
furnished by the Agent.
() In the event that (i) Arcadia, the Agent, the Backup Servicer, the
Collateral Agent, the Borrower or the Custodian shall be served by a third
party with any type of levy, attachment, writ or court order with respect to
any Receivables File or a document included within a Receivables File or (ii)
a third party shall institute any court proceeding by which any Receivables
File or a document included within a Receivables File shall be required to be
delivered otherwise than in accordance with the provisions of this Agreement,
the party receiving such service shall promptly deliver or cause to be
delivered to the other parties to this Agreement copies of all court papers,
orders, documents and other materials concerning such proceedings. The
Custodian shall continue to hold and maintain all Receivables Files that are
the subject of such proceedings pending a final order of a court of competent
jurisdiction permitting or directing disposition thereof. Upon final
determination of such court, the Custodian shall dispose of such Receivables
File or a document included within such Receivables File as directed by such
determination or, if no such determination is made, in accordance with the
provisions of this Agreement.
SECTION 14.3 RELEASE OF RECEIVABLES FILES. In the event that the Servicer
is not then acting as Custodian, from time to time and as appropriate for the
repossession or servicing of any of the Contracts, the Custodian is hereby
authorized, upon receipt of a Request for Release and Receipt of Documents,
to release to the Servicer or the Borrower within, on a best efforts basis,
one (1) Business Day, but in no case more than two (2) Business Days, the
related Receivables File or the documents from a Receivables File set forth
in such Request for Release and Receipt of Documents. If the Custodian
receives such request after 12:00 noon (Minneapolis time), such request shall
be deemed to have been received on the next Business Day. All documents so
released to the Servicer or the Borrower shall be held by the Servicer or the
Borrower in trust for the benefit of the Investors. The Servicer or the
Borrower shall return to the Custodian each and every document previously
requested from the Receivables File when the Servicer's or the Borrower's
need therefor in connection with such repossession or servicing no longer
exists, unless the Receivable shall be liquidated, in which case, upon
receipt of a certification to this effect from the Servicer or the Borrower
to the Custodian in a Request for Release and Receipt of Documents, such
Receivables File shall be retained by the Servicer or the Borrower.
▇▇▇▇▇▇▇ ▇▇.▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ OR PAYMENT IN FULL. In the event
that the Servicer is not then acting as Custodian, upon the transfer of any
Receivable by way of repurchase pursuant to the Purchase Agreement or the
payment in full of any Receivable or the sale of any Receivable pursuant to a
Take Out Securitization, each of which shall be evidenced by the delivery to
the Custodian of the Borrower's Request for Release and Receipt of Documents,
the Custodian shall release the related Receivables File to the Borrower or
Arcadia in accordance with the time parameters set forth in SECTION 14.3.
SECTION 14.5 FEES AND EXPENSES OF THE CUSTODIAN. It is understood that any
Custodian (other than the Servicer) shall be entitled to charge fees and
receive reimbursement for expenses (such fees and reimbursement are referred
to hereinafter as the "CUSTODIAN FEE"), including fees and expenses of its
agents and counsel and expenses incurred in connection with the transfer of
Receivables Files pursuant to SECTION 14.2,
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and such Custodian Fee shall be the sole obligation of the Borrower. Such
agreed upon Custodian's Fee shall be set forth in a separate fee letter
between the Custodian and the Borrower.
SECTION 14.6 EXAMINATION OF RECEIVABLES FILES.
Upon reasonable prior written notice to the Custodian, any Lender, the
Agent, the Collateral Agent or the Borrower or any of their representatives
and agents will be permitted during normal business hours to examine the
Receivables Files, documents, records and other papers in the possession, or
under the control, of the Custodian relating to any or all of the Pledged
Receivables. Any expenses incurred by the Custodian in connection with such
examination shall be borne by the party making the request (or, if a Facility
Termination Event has occurred, the Borrower).
SECTION 14.7 INSURANCE OF THE CUSTODIAN.
The Custodian shall, at its own expense, maintain at all times during the
term of this Agreement and keep in full force and effect theft of documents
insurance. All such insurance shall be in amounts, with standard coverage
and subject to deductibles, as are customary for similar insurance typically
maintained by Persons that act as custodian in similar transactions.
SECTION 14.8 PERIODIC STATEMENTS.
Within 30 days after the written request of the Agent, the Servicer or
the Borrower, the Custodian shall provide to the requesting party at such
party's expense (or, if a Facility Termination Event has occurred, the
expense of the Borrower) a list of all the Receivables for which the
Custodian holds a Receivables File pursuant to this Agreement. Such list may
be in the form of a copy of all Schedules of Receivables with manual
deletions to specifically denote any Receivables paid off, liquidated,
released or repurchased since the date of this Agreement.
SECTION 14.9 RESIGNATION BY AND REMOVAL OF THE CUSTODIAN; SUCCESSOR
CUSTODIAN.
() The Custodian may at any time resign and terminate its obligations
under this Agreement upon at least 60 days prior written notice to the Agent.
Promptly after receipt of notice of the Custodian's resignation, the Agent
shall appoint, by written instrument, a successor custodian. If a successor
custodian is not appointed in accordance with the foregoing procedures, the
Custodian may petition a court of competent jurisdiction to appoint a
successor custodian. One (1) original counterpart of such instrument of
appointment shall be delivered to each of the Agent, the Custodian and the
successor custodian.
() If (i) the Custodian has failed to perform any of its duties
hereunder in any material respect or (ii) if the Servicer is the Custodian,
if a Servicer Termination Event has occurred, the Agent, upon at least 60
days written notice to the Custodian, may remove and discharge the Custodian
(or any successor custodian thereafter appointed) from the performance of its
obligations under this Agreement. A copy of such notice shall be delivered
to each other party hereto. Promptly after the giving of notice of removal
of the Custodian, the Agent shall appoint, by written instrument, a successor
custodian. One (1) original counterpart of such instrument of appointment
shall be delivered to each of the Agent, the Custodian and the successor
custodian.
() In the event of any such resignation or removal, the Custodian shall
promptly transfer to the successor custodian, as directed in writing by the
Agent, all the Receivables Files being administered under this Agreement.
ARTICLE 15
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FACILITY TERMINATION EVENTS; THEIR EFFECT
SECTION 15.1 FACILITY TERMINATION EVENTS.
Each of the following shall constitute a Facility Termination Event under
this Agreement:
() Default in the payment when due of any principal of any Advance, or
default in the payment of any other amount payable by the Borrower hereunder,
including, without limitation, any Yield on any Advance or any Fees, which
default shall continue for three Business Days;
() The Borrower shall fail to perform or observe any other term,
covenant or agreement contained in this Agreement, or any other Transaction
Document on its part to be performed or observed and, except in the case of
the covenant and agreement contained in SECTION 11.6, as to which no grace
period shall apply, any such failure shall remain unremedied for 30 days
after knowledge thereof or after written notice thereof shall have been given
by the Agent to the Borrower;
() Any representation or warranty of the Borrower made or deemed to
have been made hereunder or in any other Transaction Document or any other
writing or certificate furnished by or on behalf of the Borrower to the Agent
for purposes of or in connection with this Agreement or any other Transaction
Document (including any certificates delivered pursuant to SECTION 7.1(c) and
any Servicer's Certificate) shall prove to have been false or incorrect in
any material respect when made or deemed to have been made; provided that no
breach shall be deemed to occur hereunder in respect of any representation or
warranty relating to any Eligible Receivable if as a result thereof a
Facility Termination Event under SECTION 15.1(a) shall not occur;
() An Event of Bankruptcy shall have occurred and remained continuing
with respect to the Borrower;
() As of any Determination Date, the aggregate principal amount of all
Advances outstanding as of the last day of the preceding Settlement Period
hereunder exceeds the Borrowing Base (after giving effect to all
distributions in respect of principal to be made on the following
Distribution Date from the Collection Account and transfers from the Lockbox
Account from amounts deposited therein during the preceding Settlement Period
pursuant to the Collateral Agent Agreement) and such condition continues
unremedied for one Business Day (such excess referred to as the "BORROWING
BASE DEFICIENCY");
() The Internal Revenue Service shall file notice of a lien pursuant to
Section 6323 of the Internal Revenue Code with regard to any of the assets of
the Borrower and such lien shall not have been released within 30 days, or
the Pension Benefit Guaranty Corporation shall file notice of a lien pursuant
to Section 4068 of ERISA with regard to any of the assets of the Borrower and
such lien shall not have been released within 30 days;
() (i) Any Transaction Document or any lien or security interest
granted thereunder by the Borrower, shall (except in accordance with its
terms), in whole or in part, terminate, cease to be effective or cease to be
the legally valid, binding and enforceable obligation of the Borrower; or
(ii) the Borrower or any other party shall, directly or indirectly, contest
in any manner such effectiveness, validity, binding nature or enforceability;
or (iii) any security interest securing any Obligation shall, in whole or in
part, cease to be a perfected first priority security interest (except, as to
priority, for any tax liens or mechanic's liens that may arise with respect
to any Financed Vehicle after the Closing Date) against the Borrower;
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() A Servicer Termination Event shall have occurred;
() A Change of Control occurs;
() An acceleration shall have occurred with respect to any Indebtedness
of the Borrower (other than any Indebtedness incurred pursuant to this
Agreement) having an outstanding principal amount of $10,000,000 or more;
() A final, non-appealable judgment shall be entered against the
Borrower, the Servicer or Arcadia by a court of competent jurisdiction
assessing monetary damages in excess of $10,000,000, shall not have been
discharged or stayed within 60 days;
() On any Determination Date, the Delinquency Ratio averaged for such
Determination Date and the five immediately preceding Determination Dates
exceeds 4% if such Determination Date relates to the first six Settlement
Periods following the Closing Date, or 4.5% for any Determination Date
thereafter;
() On any Determination Date, the Portfolio Net Loss Ratio exceeds
3.75% if such Determination Date relates to the first six Settlement Periods
following the Closing Date, or 4.25% for any Determination Date thereafter;
() On any Determination Date on which Advances are outstanding, the Net
Pledged Receivable Loss Ratio for the Pledged Receivables averaged for such
Determination Date and the two immediately preceding Determination Dates
relating to Settlement Periods during which Advances were outstanding exceeds
1%; or
() The Average Excess Spread Percentage for any Determination Date is
less than 3.75%.
SECTION 15.2 EFFECT OF FACILITY TERMINATION EVENT; REMEDIES.
() (1) OPTIONAL TERMINATION. Upon the occurrence of a Facility
Termination Event (other than a Facility Termination Event described in
SECTION 15.1(d)) the Agent may declare all or any portion of the outstanding
principal amount of the Advances and other Obligations to be immediately due
and payable and/or the Facility (if not theretofore terminated) to be
terminated, whereupon the full unpaid amount of such Advances and other
Obligations which shall be so declared due and payable shall be and become
immediately due and payable, without further notice, demand or presentment,
and/or, as the case may be, the Facility shall terminate.
() (2) AUTOMATIC TERMINATION. Upon the occurrence of a Facility
Termination Event described in SECTION 15.1(d) the Facility Termination Date
shall be deemed to have occurred automatically, and all outstanding Advances
under this Agreement and all other Obligations under this Agreement shall
become immediately and automatically due and payable, all without
presentment, demand, protest, or notice of any kind.
() (3) REMEDIES. If the Agent has declared a Facility Termination
Event to have occurred, the Agent may, or may direct the Collateral Agent to,
exercise the remedies set forth in the Collateral Agent Agreement.
ARTICLE XVI
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THE AGENT
SECTION 16.1 AUTHORIZATION AND ACTION.
The Lenders and each Investor, by its acceptance of an assignment of any
interest in any Note or Advance, or in a Lender's obligation to make Advances
hereunder, appoints DLJ as its agent for purposes of the Transaction
Documents, and authorizes the Agent and the Collateral Agent, in such
capacity, to take such action on their behalf under each Transaction Document
and to exercise such powers, hereunder and thereunder as are delegated to the
Agent, by the terms hereof and thereof, together with such powers as are
reasonably incidental thereto.
SECTION 16.2 EXCULPATION.
Neither the Agent (acting in such capacity under the Transaction
Documents) nor any of its directors, officers, agents or employees shall be
liable to any Investor for any action taken or omitted to be taken by it or
them under or in connection with the Transaction Documents, except for its or
their own gross negligence or willful misconduct. Without limiting the
generality of the foregoing, the Agent: (a) may consult with legal counsel
(including counsel for the Borrower and the Servicer), independent certified
public accountants and other experts selected by it and shall not be liable
for any action taken or omitted to be taken in good faith by it in accordance
with the advice of such counsel, accountants or experts; (b) makes no
warranty or representation to any Investor, and shall not be responsible to
any Investor, for any statements, warranties or representations made by the
Borrower, in or in connection with any Transaction Document; (c) shall not
have any duty to ascertain or to inquire as to the performance or observance
of any of the terms, covenants or conditions of any Transaction Document on
the part of the Borrower or Servicer or to inspect the property (including
the books and records) of the Borrower or Servicer; (d) shall not be
responsible to any Investor for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement, the
Note, any other Transaction Document or any other instrument or document
provided for herein or delivered or to be delivered hereunder or in
connection herewith; and (e) shall incur no liability under or in respect of
any Transaction Document by acting upon any notice (including notice by
telephone), consent, certificate or other instrument or writing (which may be
by telex or facsimile transmission) believed by it to be genuine and signed
or sent by the proper party or parties.
SECTION 16.3 AGENT AND AFFILIATES.
The Agent, including, but not limited to, DLJ, and any of its Affiliates
may generally engage in any kind of business with the Borrower, the Servicer,
the Backup Servicer, the Collateral Agent, any Obligor, any of their
respective Affiliates and any Person who may do business with or own
securities of the Borrower, the Servicer, the Backup Servicer, the Collateral
Agent, any Obligor or any of their respective Affiliates, all as if the Agent
were not the Agent hereunder and without any duty to account therefor to any
Investor.
SECTION 16.4 REPLACEMENT AGENT.
Upon the occurrence of the Facility Termination Date and the sale of the
Note to a Person other than DLJ or any Lender, the Collateral Agent shall
automatically become the Agent hereunder.
ARTICLE XVII
ASSIGNMENTS
SECTION 17.1 RESTRICTIONS ON ASSIGNMENTS.
The Borrower may not assign its rights hereunder or any interest herein
without the prior written consent of the Agent. No Investor may assign its
rights under this Agreement, the Note, or with
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respect to any Advance (or any portion thereof) to any Person without the
prior written consent of the Borrower or the Agent (as to the Borrower only,
such consent not to be unreasonably withheld); PROVIDED, HOWEVER, that any
Lender may assign, or grant a security interest in, all or any portion of its
interest in advances and the Note to (i) DLJ or any of its Affiliates or (ii)
any Person managed by DLJ or any of its Affiliates, (iii) any Structured
Lender or any Person providing liquidity with respect to a Structured Lender;
PROVIDED, HOWEVER, that in the case of this subsection (iii) a Lender may
only assign its rights thereunder with respect to outstanding Advances, but
not its obligations hereunder to make additional Advances (each, an "ELIGIBLE
ASSIGNEE"), in each case under clauses (i), (ii) and (iii) above, without the
prior written consent of the Borrower or the Agent; PROVIDED, FURTHER,
HOWEVER, that after the occurrence of the Facility Termination Date, any
Lender may, subject to the provisions of SECTION 17.5, assign all or a
portion of its interest in the Note to a Person other than those identified
in clauses (i), (ii) and (iii) above without the prior written consent of the
Borrower. Any assignment by a Lender of its rights and obligations hereunder
shall be evidenced by an Assignment and Acceptance Agreement in the form of
Exhibit F hereto or such other agreement as agreed to from time to time
between the Agent, such Lender and the Eligible Assignee.
Within five Business Days after notice to the Borrower of any proposed
assignment by an Investor for which the Borrower's consent is required, the
Borrower agrees to advise the Agent of its consent or non-consent thereto.
If the Borrower does not consent to such assignment by the end of such five
Business Day period, such Investor may immediately assign its interest (or a
portion thereof) in the Advances and/or the Note that was subject to such
proposal to an Eligible Assignee. Subject to SECTION 17.2, all of the
aforementioned assignments shall be upon such terms and conditions as such
Investor and the assignee may mutually agree.
SECTION 17.2 DOCUMENTATION.
Each Investor shall deliver to each assignee an assignment, in such form
as such Investor and the related assignee may agree, duly executed by such
Investor assigning any such Advance to the assignee, such Investor shall
promptly execute and deliver all further instruments and documents, and take
all further action, that the assignee may reasonably request, in order to
perfect, protect or more fully evidence the assignee's right, title and
interest in and to such Advance, and to enable the assignee to exercise or
enforce any rights hereunder or under the Note evidencing such Advance.
SECTION 17.3 RIGHTS OF ASSIGNEE.
Upon the foreclosure of any assignment of any Advances made for security
purposes, or upon any other assignment of any Advance from any Investor
pursuant to this ARTICLE XVII, the respective assignee receiving such
assignment shall have all of the rights of an Investor hereunder with respect
to such Advances and all references to the Investors in SECTION 6.1 shall be
deemed to apply to such assignee.
SECTION 17.4 NOTICE OF ASSIGNMENT.
Each Investor shall provide notice to the Agent and the Borrower of any
assignment hereunder by such Investor to any assignee. Each Investor
authorizes the Agent to, and the Agent agrees that it shall, prior to the
Remarketing Date, endorse the Note, and following the Remarketing Date, to
reflect any assignments made pursuant to this ARTICLE XVII or otherwise in
the Note Register.
SECTION 17.5 REGISTRATION; REGISTRATION OF TRANSFER AND EXCHANGE.
() From and after the Remarketing Date, the Collateral Agent shall keep
a register (the "NOTE REGISTER") in which, subject to such reasonable
regulations as it may prescribe, the Collateral Agent shall provide for the
registration of the Notes and of transfers of the Notes. The Collateral
Agent is hereby appointed "NOTE REGISTRAR" for the purpose of registering the
Notes and transfers of the Notes as herein provided.
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() Each person who has or who acquired a Note shall be deemed by the
acceptance of acquisition of such Note to have agreed to be bound by the
provisions of this SECTION 17.5. No Note may be transferred, and the
Collateral Agent shall not register the transfer of the Note, unless the
proposed transferee shall have delivered to the Collateral Agent (i) either
(x) evidence satisfactory to it that the transfer of such Note is exempt from
registration or qualification under the Securities Act of 1933, as amended,
and all applicable state securities laws and that the transfer does not
constitute a "prohibited transaction" under ERISA or (y) an express agreement
by the proposed transferee to be bound by and to abide by the provisions of
this SECTION 17.5, the restrictions noted on the face of such Note and (ii) a
properly executed Form W-9 and, in the case of a transferee who is a foreign
person (within the meaning of Section 7701(a)(5) of the Code), a properly
executed Form 4224 or Form 1001 showing a zero rate of withholding.
() At the option of the holder thereof, any Note may be exchanged for
one or more new Notes of any authorized denominations and of a like class and
aggregate principal amount at an office or agency of the Borrower. Whenever
any Notes are so surrendered for exchange, the Borrower shall execute and
deliver the new Notes which the holder making the exchange is entitled to
receive.
() Upon surrender for registration of transfer of any Note at an office
or agency of the Borrower, the Borrower shall execute and deliver, in the
name of the designated transferee or transferees, one or more new Notes of
any authorized denominations and of a like class and aggregate principal
amount.
() All Notes issued upon any registration of transfer or exchange of
any Note in accordance with the provisions of this Agreement shall be the
valid obligations of the Borrower, evidencing the same debt, and entitled to
the same benefits under this Agreement, as the Note(s) surrendered upon such
registration of transfer or exchange.
() Every Note presented or surrendered for registration of transfer or
for exchange shall (if so required by the Borrower or the Collateral Agent)
be fully endorsed, or be accompanied by a written instrument of transfer in
form satisfactory to the Note Registrar, duly executed by the holder thereof
or his attorney duly authorized in writing. Each such Note shall be
accompanied by a statement providing the name of the transferee and
indicating whether the transferee is subject to income tax backup withholding
requirements and whether the transferee is the sole beneficial owner of such
Notes.
() No service charge shall be made for any registration of transfer or
exchange of Notes, but the Borrower or the Collateral Agent may require
payment from the transferee holder of a sum sufficient to cover any tax or
other governmental charge that may be imposed in connection with any
registration of transfer or exchange of Notes.
() The holders of the Notes shall be bound by the terms and conditions
of this Agreement.
SECTION 17.6 MUTILATED, DESTROYED, LOST AND STOLEN NOTES.
() If any Note is mutilated and surrendered to the Borrower or, from and
after the Remarketing Date, the Collateral Agent, the Borrower shall execute
and deliver in exchange therefor a new Note of like class and tenor and
principal amount and bearing a number not contemporaneously outstanding.
() If there shall be delivered to the Borrower and, from and after the
Remarketing Date, the Collateral Agent prior to the payment of the Notes (i)
evidence to their satisfaction of the
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destruction, loss or theft of any Note and (ii) such security or indemnity as
may be required by them to save each of them and any agent of either of them
harmless, then, in the absence of notice to the Borrower that such Note has
been acquired by a BONA FIDE purchaser, the Borrower shall execute and
deliver, in lieu of any such destroyed, lost or stolen Note, a new Note of
like tenor and principal amount.
() Upon the issuance of any new Note under this SECTION 17.6, the
Borrower or the Collateral Agent may require the payment from the transferor
holder of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other expenses (including the fees
and expenses of the Collateral Agent) connected therewith.
() Every new Note issued pursuant to this SECTION 17.6 and in accordance
with the provisions of this Agreement, in lieu of any destroyed, lost or stolen
Note shall constitute an original additional contractual obligation of the
Borrower, whether or not the destroyed, lost or stolen Note shall be at any time
enforceable by anyone, and shall be entitled to all the benefits of this
Agreement equally and proportionately with any and all other Notes duly issued
hereunder.
() The provisions of this SECTION 17.6 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Notes.
SECTION 17.7 PERSONS DEEMED OWNERS.
The Borrower, the Servicer, the Collateral Agent and any agent of the
Borrower, the Servicer or the Collateral Agent may treat the holder of any
Note as the owner of such Note for all purposes whatsoever, whether or not
such Note may be overdue, and none of the Borrower, the Servicer, the
Collateral Agent and any agent of the Borrower, the Servicer or the
Collateral Agent shall be affected by notice to the contrary; provided that
payment on the Stated Maturity Date shall be made to the holder as of the
preceding Record Date.
SECTION 17.8 CANCELLATION.
All Notes surrendered for payment or registration of transfer or exchange
shall be delivered to the Borrower or, from and after the Remarketing Date,
the Collateral Agent and shall be promptly canceled by it and may be
destroyed (in the case of the Collateral Agent, pursuant to the Collateral
Agent's securities retention policies). From and after the Remarketing Date,
the Borrower shall promptly deliver to the Collateral Agent for cancellation
any Notes previously authenticated and delivered hereunder which the Borrower
may have acquired in any manner whatsoever, and all Notes so delivered shall
be promptly canceled by the Collateral Agent. No Notes shall be issued in
lieu of or in exchange for any Notes canceled as provided in this Section
17.8, except as expressly permitted by this Agreement.
SECTION 17.9 HOLDER OF NOTE PRIOR TO FACILITY TERMINATION DATE.
Notwithstanding anything in this Agreement to the contrary, the Agent
shall at all times remain the sole holder of the Note until the Facility
Termination Date, except as may otherwise be agreed by the Borrower in
writing. Assignments by a Lender of interests in the Advances, the Note, and
its commitment to make Advances hereunder to other Lenders shall be evidenced
by separate Assignments and Acceptances.
ARTICLE XVIII
INDEMNIFICATION
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SECTION 18.1 GENERAL INDEMNITY OF THE BORROWER.
Without limiting any other rights which any such Person may have
hereunder or under applicable law, the Borrower hereby agrees to indemnify
the Agent, the Investors, the Custodian, the Backup Servicer, the Collateral
Agent and each of their Affiliates, and each of their respective successors,
transferees, participants and assigns and all officers, directors,
shareholders, controlling persons, employees and agents of any of the
foregoing (each of the foregoing Persons being individually called an
"INDEMNIFIED PARTY"), forthwith on demand, from and against any and all
damages, losses, claims, liabilities and related costs and expenses,
including reasonable attorneys' fees and disbursements (all of the foregoing
being collectively called "INDEMNIFIED AMOUNTS") awarded against or incurred
by any of them arising out of or relating to any Transaction Document or the
transactions contemplated thereby or the use of proceeds therefrom by the
Borrower, including (without limitation) in respect of the funding of any
Advance or in respect of any Pledged Receivable, EXCLUDING, HOWEVER, (a)
Indemnified Amounts to the extent determined by a court of competent
jurisdiction to have resulted from gross negligence or willful misconduct on
the part of any Indemnified Party or its agent or subcontractor, (b) (except
as otherwise provided herein) Indemnified Amounts related to the non-payment
of any Pledged Receivable, (c) any loss in value of any Financed Vehicle or
Permitted Investment due to changes in market conditions or for other reasons
beyond the control of the Borrower or (d) any tax upon or measured by net
income on any Indemnified Party. Without limiting the foregoing, but subject
to the exclusions (a) through (d) above, the Borrower agrees to indemnify
each Indemnified Party for Indemnified Amounts arising out of or relating to:
() the breach of any representation or warranty made by the
Borrower (or any of its officers) under or in connection
with this Agreement or the other Transaction Documents,
any Servicer's Certificate or any other information,
report or certificate delivered by the Borrower or
Servicer pursuant hereto or thereto, which shall have
been false or incorrect in any material respect when made
or deemed made;
() the failure by the Borrower to comply in any material way
with any applicable law, rule or regulation with respect
to any Pledged Receivable or any Financed Vehicle, or the
nonconformity of any Pledged Receivable with any such
applicable law, rule or regulation;
() the failure to vest and maintain vested in the Collateral
Agent for the benefit of the Investors, a first-priority
security interest in all the Collateral, free and clear
of any Lien, other than a Lien arising solely as a result
of an act of any Investor, or any assignee of any
Investor;
() any dispute, claim, offset or defense (other than
discharge in bankruptcy) of an Obligor to the payment of
any Pledged Receivable (including, without limitation, a
defense based on such Pledged Receivable not being a
legal, valid and binding obligation of such Obligor
enforceable against it in accordance with its terms);
() any failure of Arcadia or an Affiliate of Arcadia, as
Servicer, to perform its duties or obligations in
accordance with the provisions of ARTICLE VIII or any
provision contained in any Transaction Document;
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() any claim involving products liability that arises out of
or relates to merchandise or services that are the
subject of any Pledged Receivable or strict liability
claim in connection with any Financed Vehicle related to
a Pledged Receivable;
() any tax or governmental fee or charge (but not including
taxes upon or measured by net income), all interest and
penalties thereon or with respect thereto, and all
out-of-pocket costs and expenses, including the
reasonable fees and expenses of counsel in defending
against the same, which may arise by reason of the
making, maintenance or funding, directly or indirectly,
of any Advance, or any other interest in the Collateral;
or
() the commingling of the proceeds of Collateral at any time
with other funds.
SECTION 18.2 CONTRIBUTION.
() If for any reason (other than the exclusions (a) through (d) set forth
in the first paragraph of SECTION 18.1) the indemnification provided above in
SECTION 18.1 is unavailable to an Indemnified Party or is insufficient to
hold an Indemnified Party harmless, then the Borrower shall contribute to the
amount paid or payable by such Indemnified Party as a result of such loss,
claim, damage or liability in such proportion as is appropriate to reflect
not only the relative benefits received by such Indemnified Party, on the one
hand, and the Borrower, on the other hand, but also the relative fault of
such Indemnified Party, on the one hand, and the Borrower, on the other hand,
as well as any other relevant equitable considerations.
ARTICLE XIX
MISCELLANEOUS
SECTION 19.1 NO WAIVER; REMEDIES.
No failure on the part of any Investor, the Agent, any Indemnified Party
or any Affected Person to exercise, and no delay in exercising, any right,
power or remedy hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise by any of them of any right, power or remedy
hereunder preclude any other or further exercise thereof, or the exercise of
any other right, power or remedy. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law. Without
limiting the foregoing, each Eligible Assignee is hereby authorized by the
Borrower at any time and from time to time, to the fullest extent permitted
by law, to set off and apply any and all deposits (general or special, time
or demand, provisional or final) at any time held and other indebtedness at
any time owing by it to or for the credit or the account of the Borrower, now
or hereafter existing under this Agreement, to the Agent, any Affected
Person, any Indemnified Party or any Investor or their respective successors
and assigns.
SECTION 19.2 AMENDMENTS, WAIVERS.
No amendment, modification or waiver of, or consent with respect to, any
provision of this Agreement and any Schedules hereto, or the Note shall in
any event be effective unless the same shall be in writing and signed and
delivered by (i) the Borrower and the Agent (with respect to an amendment),
(ii) the Agent (with respect to a waiver or consent by it) or the Borrower
(with respect to a waiver or consent by it), (iii) the Agent (with respect to
a waiver of any Facility Termination Event), any such waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given or (iv) the Collateral Agent or the Backup Servicer (if such
amendment,
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modification, waiver or consent would have an adverse effect on the
Collateral Agent or the Backup Servicer, as applicable).
SECTION 19.3 NOTICES, ETC.
All notices and other communications provided for hereunder shall, unless
otherwise stated herein, be in writing (including facsimile communication)
and shall be personally delivered or sent by certified mail, postage prepaid,
or by facsimile, to the intended party at the address or facsimile number of
such party set forth under its name on the signature pages hereof or at such
other address or facsimile number as shall be designated by such party in a
written notice to the other parties hereto. All such notices and
communications shall be effective, (a) if personally delivered, when
received, (b) if sent by certified mail, three Business Days after having
been deposited in the mail, postage prepaid, (c) if sent by overnight
courier, one Business Day after having been given to such courier, and (d) if
transmitted by facsimile, when sent, receipt confirmed by telephone or
electronic means, except that notices and communications pursuant to SECTION
2.2 shall not be effective until received.
SECTION 19.4 COSTS, EXPENSES AND TAXES.
In addition to the rights of indemnification granted under SECTION 18.1,
the Borrower agrees to pay on demand all reasonable costs and expenses of DLJ
in connection with the preparation (subject to the Fee Letter), execution,
delivery and administration of this Agreement and the other documents and
agreements to be delivered hereunder, and any amendments, waivers or consents
executed in connection with this Agreement and the other Transaction
Documents, including, without limitation, the reasonable fees and
out-of-pocket expenses of counsel for DLJ, with respect thereto and with
respect to advising the Agent and the Collateral Agent, as to their rights
and remedies under this Agreement and the other Transaction Documents, and
all costs and expenses, if any (including reasonable counsel fees and
expenses), of the Agent, DLJ, the Investors and their respective Affiliates,
in connection with the enforcement of this Agreement and the other documents
and agreements to be delivered hereunder.
SECTION 19.5 BINDING EFFECT; SURVIVAL.
This Agreement shall be binding upon the Borrower, the Servicer, the
Custodian, DLJ, the Agent, the Backup Servicer, the Collateral Agent, and
their respective permitted successors and assigns, and shall inure to the
benefit of the Borrower, the Servicer, the Custodian, DLJ, the Agent, the
Backup Servicer, the Collateral Agent, the Investors, and their respective
permitted successors and assigns. The provisions of ARTICLE VI, ARTICLE XII
and ARTICLE XVIII shall also inure to the benefit of the Affected Persons and
the Indemnified Parties, respectively, and their respective successors and
assigns. Nothing in this Section 19.5 shall be deemed to authorize any
assignment not permitted by ARTICLE XVII. This Agreement shall create and
constitute the continuing obligations of the parties hereto in accordance
with its terms, and shall remain in full force and effect until such time,
after the Facility Termination Date, when all Obligations have been finally
and fully paid and performed. The rights and remedies with respect to any
breach of any representation and warranty made by the Borrower pursuant to
ARTICLE IX and the indemnification and payment provisions of ARTICLE VI,
ARTICLE XII and ARTICLE XVIII shall be continuing and shall survive any
termination of this Agreement and any termination of Arcadia's rights to act
as Servicer hereunder or under any other Transaction Document.
SECTION 19.6 CAPTIONS AND CROSS REFERENCES.
The various captions (including, without limitation, the table of
contents) in this Agreement are provided solely for convenience of reference
and shall not affect the meaning or interpretation of any provision of this
Agreement. Unless otherwise indicated, references in this Agreement to any
Section, Schedule or Exhibit are to such Section of or Schedule or Exhibit to
this Agreement, as the case may be, and references in any Section,
subsection, or clause to any subsection, clause or subclause are to such
subsection, clause or subclause of such Section, subsection or clause.
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SECTION 19.7 SEVERABILITY.
Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of
such provision in any other jurisdiction.
SECTION 19.8 GOVERNING LAW.
THIS AGREEMENT AND THE NOTE SHALL BE A CONTRACT MADE UNDER AND GOVERNED
BY THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ANY OTHERWISE
APPLICABLE CONFLICT OF LAW PRINCIPLES THEREOF (OTHER THAN SECTION 5-1401 OF
THE NEW YORK GENERAL OBLIGATIONS LAW).
SECTION 19.9 COUNTERPARTS.
This Agreement may be executed by the parties hereto in several
counterparts, each of which shall be deemed to be an original but all of
which shall constitute together but one and the same agreement.
SECTION 19.10 WAIVER OF JURY TRIAL.
EACH OF THE PARTIES HERETO AND EACH INVESTOR, BY ITS ACCEPTANCE OF ANY
INTEREST IN ANY NOTE, ANY ADVANCE OR ANY LENDER'S COMMITMENT TO MAKE ADVANCES
HEREUNDER, HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS
IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR
ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER
TRANSACTION DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE BORROWER, THE AGENT, THE
INVESTORS, DLJ, THE SERVICER, THE CUSTODIAN, THE BACKUP SERVICER, THE
COLLATERAL AGENT OR ANY OTHER AFFECTED PERSON. THE BORROWER ACKNOWLEDGES AND
AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS
PROVISION (AND EACH OTHER PROVISION OF EACH OTHER TRANSACTION DOCUMENT TO
WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE
AGENT AND THE INVESTORS ENTERING INTO THIS AGREEMENT AND EACH SUCH OTHER
TRANSACTION DOCUMENT.
SECTION 19.11 THIRD PARTY BENEFICIARY.
This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and permitted assigns. Except
as expressly stated otherwise in the Agreement any right of the Agent to
direct, appoint, consent to, approve of, or take any action under this
Agreement or the Collateral Agent Agreement shall be exercised by the Agent
in its sole and absolute discretion.
SECTION 19.12 NO PROCEEDINGS.
() Each of DLJ, the Servicer, the Custodian, the Backup Servicer, each
Investor (by its acceptance of any interest in any Note, any Advance or any
Lender's commitment to make Advances hereunder), the Agent and the Collateral
Agent hereby agrees that it will not institute against the Borrower, or join
any other Person in instituting against the Borrower, any insolvency
proceeding (namely, any proceeding of the type referred to in the definition
of Event of Bankruptcy) so long as any Advances or other amounts due from the
Borrower hereunder shall be outstanding or there shall not have elapsed one
year PLUS one day since the last day on which any such Advances or other
amounts shall be outstanding. The
72
foregoing shall not limit such Person's right to file any claim in or
otherwise take any action with respect to any insolvency proceeding that was
instituted by any Person other than such Person.
() Each of the Borrower, the Servicer, the Custodian, the Backup
Servicer, each Investor (by its acceptance of any interest in any Note, any
Advance or any Lender's commitment to make Advances hereunder), the Agent and
the Collateral Agent hereby agrees that it will not institute against any
Structured Lender, or join any other Person in instituting against any
Structured Lender, any insolvency proceeding (namely, any proceeding of the
type referred to in the definition of Event of Bankruptcy) so long as any
commercial paper notes, medium term notes or other debt securities of such
Structured Lender shall be outstanding or there shall not have elapsed one
year PLUS one day since the last day on which any such commercial paper
notes, medium term notes or other debt securities of such Structured Lender
shall be outstanding. The foregoing shall not limit such Person's right to
file any claim in or otherwise take any action with respect to any insolvency
proceeding that was instituted by any Person other than such Person.
SECTION 19.13 ENTIRE AGREEMENT.
THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS EXECUTED AND DELIVERED
HEREWITH REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES HERETO AND THERETO
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS AMONG THE PARTIES.
ARTICLE XX
THE COLLATERAL AGENT AS AGENT
The provisions of this ARTICLE 20 shall apply only to the extent that the
Collateral Agent becomes the Agent following the Remarketing Date.
SECTION 20.1 DUTIES OF THE AGENT.
() Subject to paragraph (c) of this SECTION 20.1, the Agent undertakes to
perform as Agent such duties and only such duties as are specifically set
forth in this Agreement.
() The Agent, upon receipt of any resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Agent that are specifically required to be furnished pursuant to any
provisions of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement.
() No provision of this Agreement shall be construed to relieve the
Agent from liability for its own grossly negligent action, its own grossly
negligent failure to act (other than errors in judgment) or its own bad faith
or willful misfeasance; PROVIDED HOWEVER, that:
() the duties and obligations of the Agent shall be determined
solely by the express provisions of this Agreement, the Agent
shall not be liable except for the performance of such duties and
obligations as are specifically set forth in this Agreement, no
implied covenants or obligations shall be read into this
Agreement against the Agent and, in the absence of bad faith on
the part of the Agent, the Agent may conclusively rely as to the
truth of the statements and the correctness of
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the opinions expressed therein, upon any certificates or opinions
furnished to the Agent and conforming to the requirements of this
Agreement;
() the Agent shall not be liable for an error of judgment made in
good faith by a Responsible Officer of the Agent, unless it shall
be proven that the Agent was negligent in performing its duties
in accordance with the terms of this Agreement;
() the Agent shall not be liable for any action taken, suffered or
omitted to be taken by it in good faith and reasonably believed
by it to be authorized or within the discretion or rights or
powers conferred upon it by this Agreement; and
() the Agent shall not be liable for any action it takes or omits to
take in good faith at the direction of the holders of the Notes;
provided that the Agent shall not be authorized hereunder to
comply with any direction which is not authorized by the terms of
this Agreement.
() Notwithstanding any other provision of this Agreement, the Agent
shall not be required to expend or risk its own funds or otherwise incur
financial liability in the performance of any of its duties as Agent under
this Agreement, or in the exercise of any of its rights or powers, if there
is reasonable ground for believing that the repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured
to it, and none of the provisions contained in this Agreement shall in any
event require the Agent to perform, or be responsible for the manner of
performance of, any of the obligations of the Servicer under this Agreement
except during such time, if any, as the Backup Servicer (if the Agent and the
Backup Servicer are the same entity) shall be the successor to, and be vested
with the rights, duties, powers and privileges of, the Servicer in accordance
with the terms of this Agreement.
() The Agent shall not be charged with knowledge of any failure by the
Servicer to comply with the obligations of the Servicer referred to in this
Agreement, unless a Responsible Officer obtains actual knowledge of such
failure (it being understood that knowledge of the Servicer is not
attributable to the Agent) or the Agent receives written notice of such
failure from the Servicer or any holders of the Notes.
() Except for actions expressly authorized by this Agreement, the Agent
shall take no action reasonably likely to impair the security interests
created or existing under any Pledged Receivable or Finance Vehicle or to
impair the value of any Pledged Receivable or Financed Vehicle.
SECTION 20.2 CERTAIN MATTERS AFFECTING THE AGENT.
Except as otherwise provided in SECTION 20.1(c):
() The Agent may rely and shall be protected in acting or refraining
from acting upon any resolution, officer's certificate, certificate of
auditors or any other certificate, statement, instrument, opinion, report,
notice, request, consent, order, appraisal, bond or other paper or document
believed by it to be genuine and to have been signed or presented by the
proper party or parties;
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() The Agent may consult with counsel, and any Opinion of Counsel shall
be full and complete authorization and protection in respect of any action
taken or suffered or omitted by the Agent under this Agreement in good faith
and in accordance with such Opinion of Counsel;
() Notwithstanding anything to the contrary, the Agent shall be under no
obligation to exercise any of the rights or powers vested in it by this
Agreement, or to institute, conduct or defend any litigation under this
Agreement or in relation to this Agreement, at the request, order or
direction of any of the holders of the Notes pursuant to the provisions of
this Agreement unless such holders shall have furnished to the Agent security
or indemnity satisfactory to the Agent against the costs, expenses and
liabilities that may be incurred therein or thereby; PROVIDED, HOWEVER, that
the Agent shall, upon the occurrence of a Servicer Termination Event (that
has not been cured), exercise the rights and powers vested in it by this
Agreement with reasonable care and skill;
() The Agent shall not be bound to make any investigation into the facts
of matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond or other
paper or documents, unless requested in writing to do so by Investors holding
beneficial interests in not less than 25% of the outstanding principal
balance of the Advances; PROVIDED, HOWEVER, that if the payment within a
reasonable time to the Agent of the costs, expenses or liabilities likely to
be incurred by it in the making of such investigation is, in the opinion of
the Agent, not reasonably assured to the Agent by the security afforded to it
by the terms of this Agreement, the Agent may require indemnity satisfactory
to it against such cost, expense or liability as a condition to so
proceeding; the reasonable expense of every such examination shall be paid by
the Person making such request or, if paid by the Agent, shall be reimbursed
by the Person making such request upon demand;
() The Agent may execute any of the trusts or powers under this
Agreement or perform any duties under this Agreement either directly or by or
through agents or attorneys or custodians. The Agent shall not be
responsible for any misconduct or negligence on the part of any agent or
attorney appointed with due care by the Agent. The Agent shall not be
responsible for any misconduct or negligence attributable to the acts or
omissions of the Servicer;
() The Agent may rely, as to factual matters relating to the Servicer,
on an Officer's Certificate of the Servicer; and
() The Agent shall not be required to take any action or refrain from
taking any action under this Agreement, or any Transaction Document referred
to herein, nor shall any provision of this Agreement or any such Transaction
Document be deemed to impose a duty on the agent to take action, if the Agent
shall have been advised by counsel that such action is contrary to the terms
of this Agreement or any Transaction Document or is contrary to law.
SECTION 20.3 AGENT NOT LIABLE FOR NOTES OR RECEIVABLES.
The Agent makes no representations as to the validity or sufficiency of
this Agreement or of the Notes or of any Receivable or Transaction Document,
except to the extent otherwise expressly provided herein. The Agent shall at
no time (except during such time, if any, as it is acting a successor
Servicer) have any responsibility or liability for or with respect to the
legality, validity or enforceability of any security interest in any Financed
Vehicle or any Receivable, or the perfection and priority of such a security
interest or the maintenance of any such perfection and priority, or for or
with respect to the sufficiency of the Collateral or its ability to generate
the payments to be distributed to holders of the Notes under this Agreement,
including, without limitation, the existence, condition, location and
ownership of any Financed Vehicle; the performance or enforcement of any
Receivable; the compliance by the Borrower, the Servicer or
75
the Custodian with any covenant or the breach by the Borrower or the
Servicer, of any warranty or representation made under this Agreement or in
any related document and the accuracy of any such warranty or representation
prior to the Agent's receipt of notice or other discovery of any
noncompliance therewith or any breach thereof, any investment of monies by or
at the direction of the Servicer or any loss resulting therefrom (it being
understood, however, that the Agent shall remain otherwise responsible for
any Collateral that it may hold directly); the acts or omissions of the
Servicer, the Custodian (if other than the Agent), the Borrower or any
Obligor, any action of the Servicer taken in the name of the Agent; or any
action by the Agent taken at the instruction of the Servicer, the Borrower,
or the holders of the Note holding the requisite percentage of the Note;
PROVIDED, HOWEVER, that the foregoing shall not relieve the Agent of its
obligations to perform its duties under this Agreement, whether as Agent or
as Back-up Servicer. The Agent shall not be accountable for the use or
application by the Borrower of the Note or of the proceeds of such Note, or
for the use or application of any funds paid to the Servicer in respect of
the Pledged Receivables prior to the time such funds are deposited in the
Collection Account.
SECTION 20.4 AGENT MAY OWN NOTES.
The Agent in its individual or any other capacity may become the owner or
pledgee of Notes with the same rights as it would have if it were not the
Agent and may deal with the Servicer in banking transactions with the same
rights as it would have if it were not the Agent.
SECTION 20.5 AGENT'S INDEMNIFICATION.
The Borrower and the Servicer shall indemnify, defend, and hold harmless
the Agent, the Collateral Agent and the Backup Servicer from and against all
costs, expenses, losses, claims, damages and liabilities arising out of or
incurred in connection with the acceptance of the performance of the trusts
and duties contained in this Agreement, except to the extent that such cost,
expense, loss, claim, damage or liability is due to the bad faith or
negligence (except for errors in judgment) of the Agent, the Collateral Agent
or the Backup Servicer, respectively. In addition, the Borrower in SECTION
18.1 has agreed to indemnify the Agent, the Collateral Agent and the Backup
Servicer with respect to certain matters. The provisions of this SECTION
20.5, (i) shall not terminate or be deemed released upon the resignation or
termination of Arcadia as the Servicer, (ii) shall survive any termination of
this Agreement and (iii) shall continue for the benefit of any agent which
has resigned or been removed.
SECTION 20.6 ELIGIBILITY REQUIREMENTS FOR AGENT.
The Agent under this Agreement shall at all times be an entity duly
organized and validly existing under the laws of its jurisdiction of
organization authorized under such laws to exercise corporate trust powers,
having a combined capital and surplus of at least $50,000,000 and subject to
supervision or examination by federal or state authority. If such entity
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for
the purpose of this SECTION 20.6, the combined capital and surplus of such
entity shall be deemed to be its combined capital and surplus as set forth in
its most recent report of condition so published. In case at any time the
agent shall cease to be eligible in accordance with the provisions of this
SECTION 20.6, the Agent shall resign immediately in the manner and with the
effect specified in SECTION 20.6.
SECTION 20.7 RESIGNATION OR REMOVAL OF AGENT.
() Subject to the provisions of subsection (c) of this SECTION 20.7, the
Agent may at any time resign from the trusts created by this Agreement by
giving 30 days' written notice thereof to the Servicer, the Investors and the
Borrower. Upon receiving such notice of resignation, the Majority Investors
shall promptly appoint a successor Agent by written instrument, in duplicate,
one copy of which instrument shall be delivered to the resigning Agent and
one copy to the successor Agent. If no successor Agent shall have been so
appointed and have accepted appointment within thirty (30)
76
days after the giving of such notice of resignation, the resigning Agent may
petition any court of competent jurisdiction for the appointment of a
successor Agent.
() If at any time the Agent shall cease to be eligible in accordance
with the provisions of SECTION 20.6 and shall fail to resign after written
request therefor by the Majority Investors, or if at any time the Agent shall
be legally unable to act, or shall be adjudged a bankrupt or insolvent or a
receiver of the Agent or of its property shall be appointed or any public
officer shall take charge or control of the Agent or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then
the Majority Investors shall remove the Agent. If the Majority Investors, as
the case may be, removed the Agent under the authority of the immediately
preceding sentence, the Majority Investors, as the case may be, shall
promptly appoint a successor Agent by written instrument, in duplicate, one
copy of which instrument shall be delivered to the Agent so removed and one
copy to the successor Agent. The Majority Investors, as the case may be,
shall also pay all fees due and owing to the outgoing Agent.
() Any resignation or removal of the Agent and appointment of a
successor Agent pursuant to any of the provisions of this SECTION 20.7 shall
not become effective until acceptance of appointment by the successor agent
as provided in SECTION 20.8.
SECTION 20.8 SUCCESSOR AGENT.
Any successor Agent appointed as provided in SECTION 20.7 shall execute,
acknowledge and deliver to the Servicer and the Investors, and to its
predecessor Agent an instrument accepting such appointment under this
Agreement, and thereupon the resignation or removal of the predecessor Agent
shall become effective and such successor agent, without any further act,
deed or conveyance (except as provided below), shall become fully vested with
all the rights, power, duties and obligations of its predecessor under this
Agreement, with like effect as if originally named as Agent; but, on request
of the Majority Investors, or the successor Agent, such predecessor Agent
shall, upon payment of its charges then unpaid, execute and deliver an
instrument transferring to such successor Agent all of the rights, powers and
trusts of the Agent so ceasing to act, and shall duly assign, transfer and
deliver to such successor agent all property and money held by such agent so
ceasing to act hereunder. Upon request of any such successor Agent, the
Borrower shall execute any and all instruments for more fully and certainly
vesting in and confirming to such successor Agent all such rights, powers and
trusts. The predecessor Agent shall deliver to the successor Agent all
documents and statements held by it under this Agreement or any Transaction
Document; and the predecessor Agent and the other parties to the Transaction
Documents shall amend any Transaction Document to make the successor Agent
the successor to the predecessor Agent thereunder; and the Investors and the
predecessor Agent shall execute and deliver such instruments and do such
other things as may reasonably be required for fully and certainly vesting
and confirming in the successor Agent all such rights, powers, duties and
obligations. No successor Agent shall accept appointment as provided in this
SECTION 20.8 unless at the time of such acceptance such successor Agent shall
be eligible under the provisions of SECTION 20.6. Upon acceptance of
appointment by a successor Agent as provided in this SECTION 20.8, the
Borrower shall mail notice by first-class mail of the successor of such Agent
and the address of the successor Agent's corporate trust office under this
Agreement to all holders of Notes at their addresses as shown in the Note
Register. If the Borrower fails to mail such notice within ten (10) days
after acceptance of appointment by the successor Agent, the successor Agent
shall cause such notice to be mailed at the expense of the Agent.
SECTION 20.9 MERGER OR CONSOLIDATION OF AGENT.
Any corporation into which the Agent may be merged or with which it may
be consolidated, or any corporation resulting from any merger or
consolidation to which the Agent shall be a party, or any corporation
succeeding to the corporate trust business of the Agent, shall be the
successor of the Agent under this Agreement, provided such corporation shall
be eligible under the provisions of
77
SECTION 20.6, without the execution or filing of any instrument or any
further act on the part of any of the parties to this Agreement, anything in
this Agreement to the contrary notwithstanding. The Agent or its successor
hereunder shall provide the Servicer with prompt notice of any such
transaction.
SECTION 20.10 APPOINTMENT OF CO-AGENT OR SEPARATE AGENT.
() Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in
which any part of the Collateral or any Financed Vehicle may at the time be
located, the Agent, with the consent of the Servicer, such consent not to be
unreasonably withheld, shall have the power and may execute and deliver all
instruments to appoint one or more Persons approved by the Agent to act as
co-agent or co-agents, jointly with the Agent, or separate agent or separate
agents, of all or any part of the Collateral, and to vest in such Person or
Persons, in such capacity and for the benefit of the Investors, such title to
the Collateral, or any part thereof, and, subject to the other provisions of
this SECTION 20.10, such powers, duties, obligations, rights and trusts as
the Servicer and the Agent may consider necessary or desirable. If the
Servicer shall not have consented to such appointment within fifteen (15)
days after the receipt by it of a request to do so, or if a Servicer
Termination Event shall have occurred and be continuing, the consent of the
Servicer shall not be required. No co-agent or separate agent under this
Agreement shall be required to meet the terms of eligibility as a successor
agent under SECTION 20.6 and no notice to holders of Notes of the appointment
of any co-agent or separate agent shall be required under SECTION 20.8.
Every separate agent and co-agent shall, to the extent permitted by law, be
appointed and act subject to the following provisions and conditions:
() All rights, powers, duties and obligations conferred or imposed
upon the Agent shall be conferred or imposed upon and exercised
or performed by the Agent and such separate agent or co-agent
jointly (it being understood that such separate agent or co-agent
is not authorized to act separately without the Agent joining in
such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be
performed by the Agent, the Agent shall be incompetent or
unqualified to perform such act or acts, in which event such
rights, powers, duties and obligations (including the holding of
title to the Collateral or any portion thereof in any such
jurisdiction) shall be exercised and performed singly by such
separate agent or co-agent, but solely at the direction of the
Agent;
() No agent under this Agreement shall be personally liable by
reason of any act or omission of any other agent under this
Agreement; and
() The Servicer and the Agent acting jointly may at any time accept
the resignation of or remove any separate agent or co-agent.
() Any notice, request or other writing given to the Agent shall be
deemed to have been given to each of the then separate agents and co-agents,
as effectively as if given to each of them. Every instrument appointing any
separate agent or co-agent shall refer to this Agreement and the conditions
of this ARTICLE XX. Each separate agent and co-agent, upon its acceptance of
the trusts conferred, shall be vested with the estates of property specified
in its instrument of appointment, either jointly with the Agent or
separately, as may be provided therein, subject to all the provisions of this
Agreement, specifically including every provision of this Agreement relating
78
to the conduct of, affecting the liability of, or affording protection to,
the Agent. Every such instrument shall be filed with the Agent and a copy
thereof given to the servicer.
() Any separate agent or co-agent may, at any time constitute the
Agent, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of
this Agreement on its behalf and in its name. If any separate agent or
co-agent shall die, become incapable of acting, resign or be removed, all of
its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Agent, to the extent permitted by law, without the
appointment of a new or successor agent.
SECTION 20.11 AGENT MAY ENFORCE CLAIMS WITHOUT POSSESSION OF NOTES.
All rights of action and claims under this Agreement or the Notes may be
prosecuted and enforced by the Agent without the possession of any of the
Notes or the production thereof in any proceeding relating thereto, and any
such proceeding instituted by the Agent shall be brought in its own name as
agent. Any recovery of judgment shall, after provision for the payment of
the reasonable compensation, expenses, disbursements and advances of the
Agent, its agents and counsel, be for the ratable benefit of the Investors in
respect of which such judgment has been obtained.
SECTION 20.12 SUIT FOR ENFORCEMENT.
If a Servicer Termination Event shall occur and be continuing, the Agent,
in its discretion may (but shall have no duty or obligation so to proceed),
subject to the provisions of SECTION 20.1, proceed to protect and enforce its
rights and the rights of the Investors under this Agreement by a suit, action
or proceeding in equity or at law or otherwise, whether for the specific
performance of any covenant or agreement contained in this Agreement or in
aid of the execution of any power granted in this agreement or for the
enforcement of any other legal, equitable or other remedy as the Agent, being
advised by counsel, shall deem most effectual to protect and enforce any of
the rights of the Agent or the Investors.
[signature pages to follow]
79
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective officers thereunto duly authorized as of the day and year
first above written.
ARCADIA RECEIVABLES FINANCE CORP. III
By:
-------------------------------
Name:
Title:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Treasurer
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
ARCADIA FINANCIAL LTD.
By:
-------------------------------
Name:
Title:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Treasurer
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
DLJ MORTGAGE CAPITAL, INC. as Agent
and as a Lender
By:
-------------------------------
Name:
Title:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention:
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
[Signature Page to Receivables Funding and Servicing Agreement]
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, as Backup
Servicer and Collateral Agent
By:
-------------------------------
Name:
Title:
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Corporate Trust Services -
Asset Backed Administration
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
[Signature Page to Receivables Funding and Servicing Agreement]
EXHIBIT A
DLJ Mortgage Capital, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention:
Fax #: (▇▇▇) ▇▇▇-▇▇▇▇
Phone #: (▇▇▇) ▇▇▇-▇▇▇▇/9086
Norwest Bank Minnesota, National Association
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Corporate Trust Services -
Asset Backed Administration
Fax #: (▇▇▇) ▇▇▇-▇▇▇▇
Phone #: (▇▇▇) ▇▇▇-▇▇▇▇
RE: Advance Request: $_________
[_________]
Gentlemen and Ladies:
This Advance Request confirms our request for an Advance against the
Pledged Receivables listed in SCHEDULE A hereto, pursuant to the Receivables
Funding and Servicing Agreement dated as of October 17, 1997 (as amended from
time to time, the "Agreement"), as follows:
Advance Date: ____________, 199___
Pledged Receivables: See SCHEDULE A hereto
Advance Amount:
1) Product of 0.95 and the Aggregate Outstanding Principal Balance of
Pledged Receivables that are Premier Receivables:
a. Aggregate Outstanding Principal Balance: $_____
b. Advance Rate: 0.95
c. Advance Amount Against Premier Receivables (a x b): $_____
2) Product of 0.93 and the Aggregate Principal Balance of Pledged
Receivables that are Classic Receivables that are not Financed
Repossessions:
a. Aggregate Outstanding Principal Balance: $_____
b. Advance Rate: 0.93
A-84
c. Advance Amount Against Classic Receivables
that are not Financed Repossessions (a x b): $_____
3) Product of 0.85 and the Aggregate Principal Balance of Pledged
Receivables that are Classic Receivables that are Financed
Repossessions:
a. Aggregate Outstanding Principal Balance: $_____
b. Advance Rate: 0.85
c. Advance Amount Against Classic Receivables
that are Financed Repossessions (a x b): $_____
4) Gross Advance Amount (sum of 1c plus 2c plus 3c): $_____
5) Reserve Account Deposit (1% of 4): $_____
6) Net Advance Amount to Borrower (4 - 5): $_____
The Borrower hereby acknowledges that, pursuant to SECTION 2.4 of the
Receivables Funding and Servicing Agreement, the delivery of this Advance
Request and the acceptance by the Borrower of the proceeds of the Advance
requested hereby constitutes a representation and warranty by the Borrower
that, on the date of such Advance, and before and after giving effect thereto
and to the application of the proceeds therefrom in accordance with the
Transaction Documents, all applicable statements set forth in SECTION 2.4 are
true and correct in all material respects.
The Borrower agrees that if prior to the time of the Advance requested
hereby any matter certified to herein by it will not be true and correct at
such time as if then made, it will immediately so notify the Agent. Except
to the extent, if any, that prior to the time of the Advance requested hereby
the Agent shall receive written notice to the contrary from the Borrower,
each matter certified to herein shall be deemed once again to be certified as
true and correct at the date of such Advance as if then made.
The Borrower has caused this Advance Request to be executed and
delivered, and the certification and warranties contained herein to be made,
by its duly authorized officer this ___ day of ___________ __, 19__.
ARCADIA RECEIVABLES FINANCE CORP. III
By:
---------------------------------------
Name:
Title:
ARCADIA FINANCIAL LTD.,
as Servicer
By:
---------------------------------------
A-85
Responsible Officer
A-86
WIRE INSTRUCTIONS:
Norwest Bank
ABA #091 0000 19
Acct # ▇▇-▇▇-▇▇▇
Corporate Trust FFC
(A) Liquidity Acct # ▇▇▇-▇▇▇-▇▇ XXXXXXX
(B) TO BE INCLUDED AT A LATER DATE
A-87
EXHIBIT B
NOTE
THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAW, AND MAY NOT
BE DIRECTLY OR INDIRECTLY OFFERED OR SOLD OR OTHERWISE DISPOSED OF BY THE
OWNER HEREOF UNLESS SUCH TRANSACTION IS EXEMPT FROM REGISTRATION UNDER THE
ACT AND SUCH STATE LAWS, AND WILL NOT BE A "PROHIBITED TRANSACTION" UNDER THE
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"). BY
ACCEPTANCE OF THIS NOTE, THE HOLDER AGREES TO BE BOUND BY ALL THE TERMS OF
THE RECEIVABLES FUNDING AND SERVICING AGREEMENT REFERRED TO HEREIN.
$______________ _________ __, 1997
FOR VALUE RECEIVED, the undersigned, ARCADIA RECEIVABLES FINANCE CORP.
III, a Delaware corporation (the "BORROWER"), promises to pay to the order of
DLJ Mortgage Capital, Inc., as Agent for the Investors, on the Stated
Maturity Date the principal sum of _________________________ _______
($___________) or, if less, the aggregate unpaid principal amount of all
Advances shown on the schedule attached hereto (and any continuation thereof)
and/or in the records of Agent made pursuant to that certain Receivables
Funding and Servicing Agreement, dated as of October 17, 1997 (together with
all amendments and other modifications, if any, from time to time thereafter
made thereto, the "RECEIVABLES FUNDING AND SERVICING AGREEMENT"), among the
Borrower, Arcadia Financial Ltd., Norwest Bank Minnesota, National
Association and DLJ Mortgage Capital, Inc., as Agent. Unless otherwise
defined, capitalized terms used herein have the meanings provided in the
Receivables Funding and Servicing Agreement.
The Borrower also promises to pay Yield on the unpaid principal amount
hereof from time to time outstanding from the date hereof until maturity
(whether by acceleration or otherwise) and, after maturity, until paid, at
the rates per annum and on the dates specified in the Receivables Funding and
Servicing Agreement.
Payments of both principal and Yield are to be made in lawful money of
the United States of America in same day or immediately available funds to
the account designated by the Agent pursuant to the Receivables Funding and
Servicing Agreement.
This Note is the Note referred to in, and evidences Advances made under,
the Receivables Funding and Servicing Agreement, and the holder hereof is
entitled to the benefits of the Receivables Funding and Servicing Agreement,
to which reference is made for a description of the security for this Note
and for a statement of the terms and conditions on which the Borrower is
permitted and required to make prepayments and repayments of principal of the
indebtedness evidenced by this Note and on which such indebtedness may be
declared to be immediately due and payable.
B-89
All parties hereto, whether as makers, endorsers, or otherwise, severally
waive presentment for payment, demand, protest and notice of dishonor.
As provided in the Receivables Funding and Servicing Agreement and
subject to certain limitations therein set forth, the transfer of this Note
is registrable in the Note Register, upon surrender of this Note for
registration of transfer at the office or agency of the Collateral Agent in
Minneapolis, Minnesota, and at any other office or agency maintained by the
Borrower for that purpose, duly endorsed by, or accompanied by a written
instrument of transfer in the form satisfactory to the Note Registrar duly
executed by, the holder hereof or his attorney duly authorized in writing,
and thereupon one or more new Notes, of authorized denominations and for the
same aggregate principal amount, will be issued to the designated transferee
or transferees.
The Notes are issuable only in registered form without coupons in minimum
denominations of $100,000. As provided in the Agreement and subject to
certain limitations therein set forth, Notes are exchangeable for a like
aggregate principal amount of Notes of a different authorized denomination,
as requested by the holder surrendering the same.
No service charge shall be made for any such registration of transfer or
exchange, but the Borrower or the Collateral Agent may require payment of a
sum sufficient to cover any tax or other governmental charge payable in
connection therewith.
The Borrower, the Collateral Agent and any agent of the Borrower or the
Collateral Agent may treat the Person in whose name this Note is registered
as the owner hereof for all purposes, whether or not this Note may be
overdue, and neither the Borrower, the Collateral Agent nor any such agent
shall be affected by notice to the contrary.
The holder hereof hereby agrees, and any assignee or participant of such
holder, by accepting such assignment or participation, shall be deemed to
have agreed, that it will not institute against the Borrower, or join any
other Person in instituting against the Borrower, any insolvency proceeding
(namely, any proceeding of the type referred to in the definition of Event of
Bankruptcy) so long as any Advances or other amounts due from the Borrower
hereunder shall be outstanding or there shall not have elapsed one year PLUS
one day since the last day on which any such Advances or other amounts shall
be outstanding. The foregoing shall not limit such Person's right to file
any claim in or otherwise take any action with respect to any insolvency
proceeding that was instituted by any Person other than such Person.
THIS NOTE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE
INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ANY OTHERWISE
APPLICABLE CONFLICTS OF LAWS PRINCIPLES (OTHER THAN SECTION 5-1401 OF THE NEW
YORK GENERAL OBLIGATION LAW).
ARCADIA RECEIVABLES FINANCE CORP. III
By:_____________________________
Name:
Title:
Personally appeared before me ________________________ [name of notary],
in _____________________[county], ____________________ [state], the
above-named
B-90
_______________________ [name of person executing], known or proved to me to
be the same person who executed the foregoing instrument and to be the
_______________________ [title] of Arcadia Receivables Finance Corp. III and
acknowledged to me that he executed the same as his free act and deed and the
free act and deed of [ ].
Subscribed and sworn before me this ____ day of _________, 1997.
NOTARY PUBLIC
COUNTY OF __________________
STATE OF ___________________
My commission expires the ____ day of
____________, 199_.
Schedule attached to Note Dated _________ __, 1997 of [ ]
payable to the order of DLJ Mortgage Capital, Inc., as Agent
Date of Amount of Amount of
Advance Advance Repayment
B-91
B-92
FORM OF ASSIGNMENT FORM
ASSIGNMENT FORM
If you the holder want to assign this Note, fill in the form below and
have your signature guaranteed:
I or we assign and transfer this Note to:
(Print or type name, address and zip code and
social security or tax ID number of assignee)
and irrevocably appoint, agent to transfer this Note on the books of the
Borrower. The agent may substitute another to act for him.
Dated: Signed:
(sign exactly as the name appears on
the other side of this Note)
Signature Guarantee
Important Notice: When you sign your name to this Assignment Form without
filling in the name of your "Assignee" or "Attorney", this Note becomes fully
negotiable, similar to a check endorsed in blank. Therefore, to safeguard a
signed Note, it is recommended that you fill in the name of the new owner in
the "Assignee" blank. Alternatively, instead of using this Assignment Form,
you may sign a separate "power of attorney" form and then mail the unsigned
Note and the signed "power of attorney" in separate envelopes. For added
protection, use certified or registered mail for a Note.
B-93
EXHIBIT C
FORM OF SERVICER'S CERTIFICATE
C-95
EXHIBIT D
No.___
COLLATERAL RECEIPT AND CONFIRMATION
DLJ Mortgage Capital, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ___________________
Re: Receivables Funding and Servicing Agreement (the "Receivables
Funding Agreement") dated October 17, 1997, among DLJ Mortgage
Capital, Inc. Arcadia Financial Ltd., Arcadia Receivables Finance Corp. III
and Norwest Bank Minnesota, National Association, as Collateral Agent
---------------------------------------------------------------------------
Aggregate Outstanding Principal Balance
of the Receivables on the
Schedule of Receivables dated
__________ __, 199_: $_____________________
Gentlemen:
In accordance with the provisions of Section 14.1 of the Receivables
Financing Agreement, the undersigned, as Custodian, hereby certifies that, as
to each Receivable listed in the Schedule of Receivables dated ____________ __,
199_, it has in its possession the complete Receivable Files for the
Receivables identified on such Schedule of Receivables.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Receivables Financing Agreement.
ARCADIA FINANCIAL LTD.,
as Custodian
By:
Print Name:
Title:
D-97
EXHIBIT E
REQUEST FOR RELEASE AND RECEIPT OF DOCUMENTS
To: [CUSTODIAN]
Re: The Receivables Funding and Servicing Agreement (the "Receivables
Funding Agreement") dated October 17, 1997, among DLJ Mortgage Capital,
Inc., Arcadia Financial Ltd., Arcadia Receivables Finance Corp. III,
and Norwest Bank Minnesota, National Association, as Backup Servicer and
Collateral Agent
------------------------------------------------------------------------
Gentlemen:
In connection with the administration of the Receivables held by you as the
Custodian for the Agent, we request the release, and acknowledge receipt, of the
(Receivables File/specify documents) for the Receivable described below, for the
reason indicated.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Collateral Agent Agreement.
Obligor's Name, Address & Zip Code:
Receivable Number:
Reason for Requesting Documents (check one or more)
_____ 1. Receivable Paid in Full
_____ 2. Receivable Repurchased
_____ 3. Receivable Liquidated
_____ 4. Receivable in Repossession
_____ 5. Other (explain)
If item 1, 2 or 3 above is checked, and if all or part of the Receivables
File was previously released to us, please release to us our previous
receipt on file with you, as well as any additional documents in your
possession relating to the above specified Contract.
The undersigned hereby certifies that if a release has been requested due
to payment in full of a Receivable or repurchase upon breach of a
representation or warranty, all amounts received in connection therewith
which are required to be deposited in the Collection Account pursuant to
Section 8.3 of the Receivables Funding and Servicing Agreement have been
so deposited.
E-99
If item 4 or 5 above is checked, upon our return of the above document(s)
to you as the Collateral Agent, please acknowledge your receipt by
signing in the space indicated below, and returning this form.
ARCADIA FINANCIAL LTD.
By:________________________________
Print Name: _______________________
Title: ____________________________
Date: _____________________________
DOCUMENTS RETURNED TO THE CUSTODIAN:
[CUSTODIAN]
By:______________________________
Print Name: _____________________
Title: __________________________
Date: __________________________
E-100
EXHIBIT F
FORM OF ASSIGNMENT AND ACCEPTANCE
Reference is made to the Receivables Funding and Servicing Agreement,
dated as of October 17, 1997, by and among Arcadia Receivables Finance Corp.
III, as Borrower, Arcadia Financial Ltd., as Servicer and Custodian, DLJ
Mortgage Capital, Inc., individually and as Agent, the financial institutions
from time to time party thereto, and their permitted assigns, as Lenders, and
Norwest Bank Minnesota, National Association, as Collateral Agent and Backup
Servicer (the "FUNDING AGREEMENT"). Capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to such terms in
the Funding Agreement.
1. The Assignor hereby sells and assigns, without recourse, to the
Assignee, and the Assignee hereby purchases and assumes, without recourse,
from the Assignor, effective as of the Effective Date, the interests set
forth below (the "ASSIGNED INTERESTS") in the Assignor's rights and
obligations under the Funding Agreement, together with unpaid Yield accrued
on the assigned Advances to the Effective Date and the amount, if any, of the
fees accrued to the Effective Date for the account of the Assignor; all Liens
securing all or any amount s due under the Funding Agreement being hereby
expressly reserved and shall continue to secure the respective interests of
the Assignor and Assignee. From and after the Effective Date, (i) the
Assignee shall be a party to and be bound by the provisions of the Funding
Agreement and, to the extent of the intere sts assigned by this Assignment
and Acceptance, have the rights [and obligations] of a Lender thereunder and
(ii) the Assignor shall, to the extent of the interests assigned by this
Assignment and Acceptance, relinquish its rights [and be released from its
obligations] under the Funding Agreement.
2. This Assignment and Acceptance may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
shall constitute one and the same instrument
3. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
4. Assignment Information:
Date of Assignment:
Legal Name of Assignor:
Legal Name of Assignee:
Assignor's Address for Notices:
Attention:
Telephone:
Telecopier:
Assignee's Address for Notices:
Attention:
Telephone:
F-102
Telecopier:
Effective Date of Assignment:
Principal Amount of Advances of Assignor
(After giving affect to the Assignment):
Principal Amount of Advances of Assignee
(After giving affect to the Assignment):
Fees Assigned (if any):
5. Payment Instructions:
Assignor:
Attention:
Reference:
Assignee:
Attention:
Reference:
F-103
The terms set forth above are hereby
agreed to, New York, New York,
this ___ day of _____, 1997:
[________________________________].,
as Assignor
By:____________________________
Name:
Title:
[________________________________],
as Assignee
By:____________________________
Name:
Title:
Accepted:
DLJ MORTGAGE CAPITAL, INC.
By:____________________________
Name:
Title:
ARCADIA RECEIVABLES FINANCE
CORP. III
By:____________________________
Name:
Title:
F-104
EXHIBIT G
FORM OF ACKNOWLEDGMENT
Norwest Bank Minnesota, National Association, acting as Collateral Agent
pursuant to that certain Collateral Agent Agreement, dated as of October 17,
1997, among Arcadia Financial Ltd. ("AFL"), Norwest Bank Minnesota, National
Association, DLJ Mortgage Capital, Inc., as Agent and Arcadia Receivables
Finance Corp. III ("ARFC III"), hereby acknowledges that (i) it has conducted
a limited review of at least fifty of the Receivables Files transferred to
ARFC III pursuant to the Receivables Purchase Agreement and Assignment, dated
as of October 17, 1997, between AFL and ARFC III (the "Purchase Agreement")
and hereby confirms that each Receivables File so reviewed, with the
exceptions noted on Exhibit A hereto, included (a) a fully executed original
retail installment sales contract or promissory note and related security
agreement, (b) a certificate of insurance or application form for insurance
signed by the Obligor or a signed representation letter from the Obligor
named in the Receivable pursuant to which the Obligor has agreed to obtain
physical damage insurance for the related Financed Vehicle, or microfiche
copies thereof, (c) the original Lien Certificate or, as indicated on Exhibit
A hereto, an application therefor and (d) an original credit application,
signed by the Obligor, or a microfiche copy thereof, signed by the Obligor
and (ii) it has performed a physical inventory of the Receivables Files and
confirms that AFL is in possession of a Receivable File for each Receivable
listed on the Schedule of Receivables attached to the Purchase Agreement.
Norwest Bank Minnesota, National Association, has not otherwise reviewed the
Receivables or the related Receivables Files for compliance with the terms of
the Purchase Agreement.
IN WITNESS WHEREOF, Norwest Bank Minnesota, National Association,
has caused this acknowledgment to be executed by its duly authorized officer
as of this _____ day of _________, 199 .
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
as Collateral Agent
By____________________________
Name:
Title:
G-106
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.1 Defined Terms. . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2 Other Definitional Provisions. . . . . . . . . . . . . . . 25
ARTICLE II THE FACILITY, ADVANCE PROCEDURES AND NOTE. . . . . . . . . 26
SECTION 2.1 Facility . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 2.2 Advance Procedures . . . . . . . . . . . . . . . . . . . . 26
SECTION 2.3 Funding. . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 2.4 Representation and Warranty. . . . . . . . . . . . . . . . 27
SECTION 2.5 Voluntary Termination of Facility; Reduction of Facility
Limit. . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 2.6 Note . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE III YIELD, FEES, ETC.. . . . . . . . . . . . . . . . . . . . . 27
SECTION 3.1 Yield. . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 3.2 Yield Payment Dates. . . . . . . . . . . . . . . . . . . . 28
SECTION 3.3 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 3.4 Computation of Yield and Fees. . . . . . . . . . . . . . . 28
ARTICLE IV REPAYMENTS AND PREPAYMENTS . . . . . . . . . . . . . . . . 28
SECTION 4.1 Repayments and Prepayments . . . . . . . . . . . . . . . . 28
ARTICLE V PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 5.1 Making of Payments . . . . . . . . . . . . . . . . . . . . 29
SECTION 5.2 Application of Certain Payments. . . . . . . . . . . . . . 29
SECTION 5.3 Due Date Extension . . . . . . . . . . . . . . . . . . . . 29
ARTICLE VI INCREASED COSTS, ETC.. . . . . . . . . . . . . . . . . . . 30
SECTION 6.1 Increased Costs. . . . . . . . . . . . . . . . . . . . . . 30
SECTION 6.2 Additional Yield on Advances . . . . . . . . . . . . . . . 31
SECTION 6.3 Funding Losses . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE VII CONDITIONS TO ADVANCES . . . . . . . . . . . . . . . . . . 32
SECTION 7.1 Initial Advance. . . . . . . . . . . . . . . . . . . . . . 32
SECTION 7.2 All Advances . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE VIII ADMINISTRATION AND SERVICING OF RECEIVABLES. . . . . . . . 33
SECTION 8.1 Duties of the Servicer . . . . . . . . . . . . . . . . . . 33
SECTION 8.2 Collection of Receivable Payments; Modification and
Amendment of Receivables; Lockbox Agreements . . . . . . . 34
SECTION 8.3 Realization Upon Receivables . . . . . . . . . . . . . . . 37
SECTION 8.4 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 8.5 Maintenance of Security Interests in Financed Vehicles . . 39
SECTION 8.6 Covenants, Representations and Warranties of Servicer. . . 40
SECTION 8.7 Purchase of Receivables Upon Breach of Covenant or
Representation and Warranty. . . . . . . . . . . . . . . . 43
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SECTION 8.8 Total Servicing Fee; Payment of Certain Expenses by
Servicer . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 8.9 Servicer's Certificate . . . . . . . . . . . . . . . . . . 44
SECTION 8.10 Annual Statement as to Compliance; Notice of Servicer
Termination Event. . . . . . . . . . . . . . . . . . . . . 44
SECTION 8.11 Annual Independent Accountants' Report . . . . . . . . . . 44
SECTION 8.12 Access to Certain Documentation and Information Regarding
Receivables. . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 8.13 Monthly Tape . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 8.14 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 8.15 Accounts . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 8.16 Servicer Reimbursement from Collections. . . . . . . . . . 46
SECTION 8.17 Application of Collections . . . . . . . . . . . . . . . . 46
ARTICLE IX GRANT OF SECURITY INTERESTS. . . . . . . . . . . . . . . . 46
SECTION 9.1 Borrower's Grant of Security Interest. . . . . . . . . . . 46
SECTION 9.2 Delivery of Collateral . . . . . . . . . . . . . . . . . . 48
SECTION 9.3 Borrower Remains Liable. . . . . . . . . . . . . . . . . . 48
SECTION 9.4 Covenants of the Borrower and Servicer Regarding the
Collateral . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 9.5 Release of Borrower Collateral . . . . . . . . . . . . . . 51
ARTICLE X REPRESENTATIONS AND WARRANTIES OF THE BORROWER . . . . . . 52
SECTION 10.1 Organization and Good Standing . . . . . . . . . . . . . . 52
SECTION 10.2 Due Qualification. . . . . . . . . . . . . . . . . . . . . 52
SECTION 10.3 Power and Authority. . . . . . . . . . . . . . . . . . . . 53
SECTION 10.4 Security Interest; Binding Obligations . . . . . . . . . . 53
SECTION 10.5 No Violation . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 10.6 No Proceedings . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 10.7 No Consents. . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 10.8 Approvals. . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 10.9 Chief Executive Office . . . . . . . . . . . . . . . . . . 54
SECTION 10.10 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 10.11 Tax Treatment. . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 10.12 Compliance With Laws . . . . . . . . . . . . . . . . . . . 54
SECTION 10.13 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 10.14 No Liens, Etc. . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 10.15 Purchase and Sale. . . . . . . . . . . . . . . . . . . . . 55
SECTION 10.16 Securities Act of 1933; Investment Company Act of 1940 . . 55
SECTION 10.17 Information True and Correct . . . . . . . . . . . . . . . 55
SECTION 10.18 ERISA Compliance . . . . . . . . . . . . . . . . . . . . . 55
SECTION 10.19 Investment Company Status. . . . . . . . . . . . . . . . . 56
SECTION 10.20 No Shared Obligations. . . . . . . . . . . . . . . . . . . 56
SECTION 10.21 Eligible Receivables . . . . . . . . . . . . . . . . . . . 56
ARTICLE XI COVENANTS OF THE BORROWER. . . . . . . . . . . . . . . . . 56
SECTION 11.1 Protection of Security Interest of the Investors . . . . . 56
SECTION 11.2 Other Liens or Interests . . . . . . . . . . . . . . . . . 57
SECTION 11.3 Costs and Expenses . . . . . . . . . . . . . . . . . . . . 57
SECTION 11.4 Reporting Requirements . . . . . . . . . . . . . . . . . . 57
SECTION 11.5 Take-Out Securitization. . . . . . . . . . . . . . . . . . 58
SECTION 11.6 Corporate Separateness . . . . . . . . . . . . . . . . . . 58
SECTION 11.7 Inspections. . . . . . . . . . . . . . . . . . . . . . . . 60
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ARTICLE XII THE SERVICER . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 12.1 Liability of Servicer; Indemnities . . . . . . . . . . . . 62
SECTION 12.2 Merger or Consolidation of, or Assumption of the
Obligations of, the Servicer or Backup Servicer. . . . . . 63
SECTION 12.3 Limitation on Liability of Servicer, Backup Servicer and
Others . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 12.4 Delegation of Duties . . . . . . . . . . . . . . . . . . . 65
SECTION 12.5 Servicer and Backup Servicer Not to Resign . . . . . . . . 65
ARTICLE XIII SERVICER TERMINATION EVENTS. . . . . . . . . . . . . . . . 66
SECTION 13.1 Servicer Termination Event . . . . . . . . . . . . . . . . 66
SECTION 13.2 Consequences of a Servicer Termination Event . . . . . . . 67
SECTION 13.3 Appointment of Successor Servicer. . . . . . . . . . . . . 68
ARTICLE XIV THE CUSTODIAN. . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 14.1 Delivery of the Custodial Receipt and Confirmation . . . . 69
SECTION 14.2 Obligations of the Custodian . . . . . . . . . . . . . . . 69
SECTION 14.3 Release of Receivables Files . . . . . . . . . . . . . . . 69
SECTION 14.4 Release Upon Repurchase or Payment in Full . . . . . . . . 70
SECTION 14.5 Fees and Expenses of the Custodian . . . . . . . . . . . . 70
SECTION 14.6 Examination of Receivables Files . . . . . . . . . . . . . 70
SECTION 14.7 Insurance of the Custodian . . . . . . . . . . . . . . . . 70
SECTION 14.8 Periodic Statements. . . . . . . . . . . . . . . . . . . . 71
SECTION 14.9 Resignation by and Removal of the Custodian; Successor
Custodian. . . . . . . . . . . . . . . . . . . . . . . . . 71
ARTICLE XV FACILITY TERMINATION EVENTS; THEIR EFFECT. . . . . . . . . 71
SECTION 15.1 Facility Termination Events. . . . . . . . . . . . . . . . 71
SECTION 15.2 Effect of Facility Termination Event; Remedies . . . . . . 73
ARTICLE XVI THE AGENT. . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 16.1 Authorization and Action . . . . . . . . . . . . . . . . . 74
SECTION 16.2 Exculpation. . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 16.3 Agent and Affiliates . . . . . . . . . . . . . . . . . . . 74
SECTION 16.4 Replacement Agent. . . . . . . . . . . . . . . . . . . . . 75
ARTICLE XVII ASSIGNMENTS. . . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 17.1 Restrictions on Assignments. . . . . . . . . . . . . . . . 75
SECTION 17.2 Documentation. . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 17.3 Rights of Assignee . . . . . . . . . . . . . . . . . . . . 76
SECTION 17.4 Notice of Assignment . . . . . . . . . . . . . . . . . . . 76
SECTION 17.5 Registration; Registration of Transfer and Exchange. . . . 76
SECTION 17.6 Mutilated, Destroyed, Lost and Stolen Notes. . . . . . . . 77
SECTION 17.7 Persons Deemed Owners. . . . . . . . . . . . . . . . . . . 78
SECTION 17.8 Cancellation . . . . . . . . . . . . . . . . . . . . . . . 78
SECTION 17.9 Holder of Note Prior to Facility Termination Date. . . . . 78
ARTICLE XVIII INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . 78
SECTION 18.1 General Indemnity of the Borrower. . . . . . . . . . . . . 78
SECTION 18.2 Contribution . . . . . . . . . . . . . . . . . . . . . . . 80
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ARTICLE XIX MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 19.1 No Waiver; Remedies. . . . . . . . . . . . . . . . . . . . 80
SECTION 19.2 Amendments, Waivers. . . . . . . . . . . . . . . . . . . . 81
SECTION 19.3 Notices, Etc.. . . . . . . . . . . . . . . . . . . . . . . 81
SECTION 19.4 Costs, Expenses and Taxes. . . . . . . . . . . . . . . . . 81
SECTION 19.5 Binding Effect; Survival . . . . . . . . . . . . . . . . . 81
SECTION 19.6 Captions and Cross References. . . . . . . . . . . . . . . 82
SECTION 19.7 Severability . . . . . . . . . . . . . . . . . . . . . . . 82
SECTION 19.8 GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . 82
SECTION 19.9 Counterparts . . . . . . . . . . . . . . . . . . . . . . . 82
SECTION 19.10 WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . 82
SECTION 19.11 Third Party Beneficiary. . . . . . . . . . . . . . . . . . 83
SECTION 19.12 No Proceedings . . . . . . . . . . . . . . . . . . . . . . 83
SECTION 19.13 ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . 83
ARTICLE XX THE COLLATERAL AGENT AS AGENT. . . . . . . . . . . . . . . 84
SECTION 20.1 Duties of the Agent. . . . . . . . . . . . . . . . . . . . 84
SECTION 20.2 Certain Matters Affecting the Agent. . . . . . . . . . . . 85
SECTION 20.3 Agent Not Liable for Notes or Receivables. . . . . . . . . 86
SECTION 20.4 Agent May Own Notes. . . . . . . . . . . . . . . . . . . . 87
SECTION 20.5 Agent's Indemnification . . . . . . . . . . . . . . . . . 87
SECTION 20.6 Eligibility Requirements for Agent . . . . . . . . . . . . 87
SECTION 20.7 Resignation or Removal of Agent. . . . . . . . . . . . . . 88
SECTION 20.8 Successor Agent. . . . . . . . . . . . . . . . . . . . . . 88
SECTION 20.9 Merger or Consolidation of Agent . . . . . . . . . . . . . 89
SECTION 20.10 Appointment of Co-Agent or Separate Agent. . . . . . . . . 89
SECTION 20.11 Agent May Enforce Claims Without Possession of Notes . . . 90
SECTION 20.12 Suit for Enforcement . . . . . . . . . . . . . . . . . . . 91
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PAGE
EXHIBITS
EXHIBIT A Form of Advance Request (Section 2.2)
EXHIBIT B Form of Note (Section 2.8)
EXHIBIT C Form of Servicer's Certificate (Section 8.9)
EXHIBIT D Form of Collateral Receipt and Certification
EXHIBIT E Request for Release and Receipt of Document
EXHIBIT F Form of Assignment and Acceptance
EXHIBIT G Form of Acknowledgment
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