EXECUTION COPY
AMENDED AND RESTATED
SALE AND SERVICING AGREEMENT
Dated as of July 31, 1997
among
OLYMPIC AUTOMOBILE RECEIVABLES WAREHOUSE TRUST
Issuer
ARCADIA RECEIVABLES FINANCE CORP. II
Seller
ARCADIA FINANCIAL LTD.
In its individual capacity and as Servicer
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
Backup Servicer
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
Section 1.1. Definitions................................................... 1
Section 1.2. Usage of Terms................................................ 22
Section 1.3. Calculations.................................................. 22
Section 1.4. Section References............................................ 22
Section 1.5. No Recourse................................................... 22
Section 1.6. Condition to Effectiveness of Agreements...................... 22
ARTICLE II
CONVEYANCE OF RECEIVABLES
Section 2.1. Conveyance of Receivables..................................... 23
Section 2.2. Custody of Receivables Files.................................. 27
Section 2.3. Conditions to Acceptance by Owner Trustee..................... 29
Section 2.4. Deemed Acceptance by Owner Trustee and Indenture Trustee...... 29
Section 2.5. Representations and Warranties of Seller...................... 29
Section 2.6. Repurchase of Receivables Upon Breach of Warranty............. 33
Section 2.7. Nonpetition Covenant.......................................... 34
Section 2.8. Collecting Lien Certificates Not Delivered on the Initial
Closing Date or Transfer Date................................. 34
Section 2.9. Trust's Assignment of Administrative Receivables and
Warranty Receivables.......................................... 35
ARTICLE III
ADMINISTRATION AND SERVICING OF RECEIVABLES
Section 3.1. Duties of the Servicer........................................ 35
Section 3.2. Collection of Receivable Payments; Modifications of
Receivables; Lockbox Agreements............................... 36
Section 3.3. Realization Upon Receivables.................................. 39
Section 3.4. Insurance..................................................... 40
Section 3.5. Maintenance of Security Interests in Vehicles................. 41
Section 3.6. Covenants, Representations, and Warranties of Servicer........ 42
Section 3.7. Purchase of Receivables Upon Breach of Covenant............... 44
Section 3.8. Total Servicing Fee; Payment of Certain Expenses by Servicer.. 44
Section 3.9. Servicer's Certificate........................................ 45
i
Page
----
Section 3.10. Annual Statement as to Compliance; Notice of Servicer
Termination Event............................................. 46
Section 3.11. Annual Independent Accountants' Report........................ 46
Section 3.12. Access to Certain Documentation and Information Regarding
Receivables................................................... 47
Section 3.13. Monthly Tape.................................................. 47
Section 3.14. Retention of Servicer......................................... 48
Section 3.15. Fidelity Bond................................................. 48
Section 3.16. Duties of the Servicer under the Indenture.................... 48
Section 3.17. Daily Report.................................................. 50
Section 3.18. Certain Duties of the Servicer under the Trust Agreement...... 50
Section 3.19. Monthly Reports............................................... 50
ARTICLE IV
DISTRIBUTIONS; STATEMENTS TO
CERTIFICATEHOLDERS AND NOTEHOLDERS
Section 4.1. Trust Accounts................................................ 50
Section 4.2. Collections................................................... 52
Section 4.3. Application of Collections.................................... 53
Section 4.4. Monthly Advances.............................................. 54
Section 4.5. Additional Deposits........................................... 55
Section 4.6. Distributions................................................. 55
Section 4.7. Distributions on Trust Property Liquidation................... 57
Section 4.8. Net Deposits.................................................. 58
Section 4.9. Statements to Certificateholders and Noteholders.............. 59
Section 4.10. Indenture Trustee as Agent.................................... 60
Section 4.11. Eligible Accounts............................................. 60
ARTICLE V
THE SPREAD ACCOUNT
Section 5.1. Withdrawals from Spread Account............................... 60
ARTICLE VI
THE SELLER
Section 6.1. Liability of Seller........................................... 61
Section 6.2. Merger or Consolidation of, or Assumption of the Obligations
of, Seller; Amendment of Certificate of Incorporation......... 61
Section 6.3. Limitation on Liability of Seller and Others.................. 62
Section 6.4. Seller May Own Certificates or Notes.......................... 62
Section 6.5. Limited Recourse Upon Securitized Offering.................... 62
ii
Page
----
ARTICLE VII
THE SERVICER
Section 7.1. Liability of Servicer; Indemnities............................ 62
Section 7.2. Merger or Consolidation of, or Assumption of the Obligations
of, the Servicer or Backup Servicer........................... 64
Section 7.3. Limitation on Liability of Servicer, Backup Servicer and
Others........................................................ 65
Section 7.4. Delegation of Duties.......................................... 65
Section 7.5. Servicer and Backup Servicer Not to Resign.................... 65
ARTICLE VIII
SERVICER TERMINATION EVENTS
Section 8.1. Servicer Termination Event.................................... 66
Section 8.2. Consequences of a Servicer Termination Event.................. 67
Section 8.3. Appointment of Successor...................................... 68
Section 8.4. Notification to Certificateholders and Noteholders............ 69
Section 8.5. Waiver of Past Defaults....................................... 69
ARTICLE IX
TERMINATION
Section 9.1. Optional Purchase of Receivables; Liquidation of Trust Estate. 69
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.1. Amendment..................................................... 72
Section 10.2. Protection of Title to Trust Property......................... 73
Section 10.3. Governing Law................................................. 75
Section 10.4. Severability of Provisions.................................... 75
Section 10.5. Assignment.................................................... 75
Section 10.6. Third-Party Beneficiaries..................................... 75
Section 10.7. [RESERVED].................................................... 75
Section 10.8. Counterparts.................................................. 75
Section 10.9. Intention of Parties.......................................... 76
Section 10.10. Notices....................................................... 76
Section 10.11. Limitation of Liability....................................... 77
iii
SCHEDULE
SCHEDULE A SCHEDULE OF RECEIVABLES
SCHEDULE B REPRESENTATIONS AND WARRANTIES OF SELLER AND AFL
SCHEDULE C SERVICING POLICIES AND PROCEDURES
EXHIBIT
EXHIBIT B FORM OF CUSTODIAN AGREEMENT
EXHIBIT D FORM OF RECEIVABLES PURCHASE AGREEMENT
EXHIBIT E FORM OF SERVICER'S CERTIFICATE
EXHIBIT F FORM OF TRANSFER AGREEMENT
iv
THIS AMENDED AND RESTATED SALE AND SERVICING AGREEMENT, dated as of July
31, 1997, is made among Olympic Automobile Receivables Warehouse Trust (the
"Issuer"), Arcadia Receivables Finance Corp. II, a Delaware corporation, as
Seller (the "Seller"), Arcadia Financial Ltd., a Minnesota corporation, in its
individual capacity and as Servicer (in its individual capacity, "AFL"; in its
capacity as Servicer, the "Servicer") and Norwest Bank Minnesota, National
Association, a national banking association, as Backup Servicer (the "Backup
Servicer").
In consideration of the mutual agreements herein contained, and of other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
Section I.1. DEFINITIONS. All terms defined in the Indenture or the Trust
Agreement (each as defined below) shall have the same meaning in this Agreement.
Whenever capitalized and used in this Agreement, the following words and
phrases, unless the context otherwise requires, shall have the following
meanings:
ACCOUNTANTS' REPORT: The report of a firm of nationally recognized
independent accountants described in Section 3.11.
ACCOUNTING DATE: With respect to a Distribution Date or a Determination
Date, the last day of the Monthly Period immediately preceding such Distribution
Date or Determination Date.
ADMINISTRATIVE RECEIVABLE: With respect to any Monthly Period, a
Receivable which the Servicer is required to purchase pursuant to Section 3.7 or
which the Servicer has elected to purchase pursuant to Section 3.4(c).
ADMINISTRATOR: The meaning assigned to such term in the Trust Agreement.
AFFILIATE: With respect to any Person, any other Person directly or
indirectly controlling, controlled by, or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
AFL: Arcadia Financial Ltd., a Minnesota corporation.
AGGREGATE MONTHLY ADVANCE AMOUNT: As of any Determination Date, the
excess, if any, of (x) the amount of interest accrued on the Receivables (for
the number of calendar days in the related Monthly Period) (calculated according
to the method specified in the
1
related retail installment sale contract or promissory note at the APR on the
Principal Balance of such Receivable as of the second Accounting Date preceding
such Determination Date) over (y) the amounts deposited into the Collection
Account during the related Monthly Period in respect of the Receivables and
allocable to interest (determined in accordance with Section 4.3).
AGGREGATE PRINCIPAL BALANCE: With respect to any Determination Date, the
sum of the Principal Balances (computed as of the related Accounting Date) for
all Receivables (other than (i) any Receivable that became a Liquidated
Receivable during the related Monthly Period and (ii) any Receivable that became
a Purchased Receivable as of the related Accounting Date).
AGREEMENT OR "THIS AGREEMENT": This Amended and Restated Sale and
Servicing Agreement, all amendments and supplements thereto and all exhibits and
schedules to any of the foregoing.
AMOUNT FINANCED: With respect to a Receivable or an Auto Receivable, the
aggregate amount advanced under such Receivable or Auto Receivable, as
applicable, toward the purchase price of the Financed Vehicle and related costs,
including amounts advanced in respect of accessories, insurance premiums,
service and warranty contracts, other items customarily financed as part of
retail automobile installment sale contracts or promissory notes, and related
costs. The term "Amount Financed" shall not include any Insurance Add-On
Amounts.
ANNUAL PERCENTAGE RATE OR APR: With respect to a Receivable, the rate per
annum of finance charges stated in such Receivable as the "annual percentage
rate" (within the meaning of the Federal Truth-in-Lending Act). If after the
Initial Closing Date or the applicable Transfer Date, the rate per annum with
respect to a Receivable as of the Initial Closing Date or the applicable
Transfer Date is reduced as a result of (i) an insolvency proceeding involving
the Obligor or (ii) pursuant to the Soldiers' and Sailors' Civil Relief Act of
1940, Annual Percentage Rate or APR shall refer to such reduced rate.
ARFC II: Arcadia Receivables Finance Corp. II, a Delaware Corporation.
ASSIGNMENT AGREEMENT: The assignment agreement between AFL and the Seller
pursuant to which AFL sells and assigns Receivables and related Other Conveyed
Property to the Seller, the form of which is attached to the Purchase Agreement
as Exhibit A.
AUTO RECEIVABLES: Any consumer installment sale contracts or promissory
notes (and related security agreements) secured by new and used automobiles and
light trucks (and all accessories thereto) purchased or otherwise acquired by
AFL or any Affiliate of AFL from Dealers.
AVAILABLE FUNDS: With respect to any Determination Date, the sum of (i)
the Collected Funds for such Determination Date, (ii) all Purchase Amounts to be
deposited in the Collection Account on the related Deposit Date, (iii) all
Monthly Advances to be made
2
by the Seller or the Servicer on the related Deposit Date, and (iv) all net
income from investments of funds in the Trust Accounts and the Certificate
Distribution Account during the related Monthly Period.
AVERAGE NET EXCESS SPREAD PERCENTAGE: (i) As of any Determination Date on
which there are Receivables in the Trust, the average of the Net Excess Spread
Percentages for the three preceding Monthly Periods during which there were
Receivables in the Trust, calculated as of the Accounting Date of each such
Monthly Period.
AVERAGE SERVICING PORTFOLIO: As of any date, the average of the Servicing
Portfolio for the seven preceding Monthly Periods, calculated in each case as of
the Accounting Date with respect to each Monthly Period.
BACKUP SERVICER: Norwest Bank Minnesota, National Association, or its
successor in interest pursuant to Section 8.2, or such Person as shall have been
appointed as Backup Servicer or successor Servicer pursuant to Section 8.3.
BASIC SERVICING FEE: With respect to any Monthly Period, the fee payable
to the Servicer for services rendered during such Monthly Period, which shall be
equal to one-twelfth of the Basic Servicing Fee Rate multiplied by the Aggregate
Principal Balance as of the Determination Date falling in such Monthly Period.
BASIC SERVICING FEE RATE: 1.00% per annum, payable monthly at one-twelfth
of the annual rate.
BUSINESS DAY: Any day other than a Saturday, Sunday, legal holiday or
other day on which commercial banking institutions in Minneapolis, Minnesota,
New York, New York, Wilmington, Delaware or any other location of any successor
Servicer, successor Owner Trustee or successor Indenture Trustee are authorized
or obligated by law, executive order or governmental decree to be closed.
CERTIFICATE BALANCE: The meaning assigned to such term in the Trust
Agreement.
CERTIFICATE DISTRIBUTION ACCOUNT: The meaning assigned to such term in the
Trust Agreement.
CERTIFICATE MAJORITY: The meaning assigned to such term in the Trust
Agreement.
CERTIFICATE PURCHASE AGREEMENT: The meaning assigned to such term in the
Trust Agreement
CERTIFICATE PURCHASE TERMINATION EVENT: Any event or occurrence designated
as such in the Certificate Purchase Agreement.
CERTIFICATE RATE: The meaning assigned to such term in the Certificate
Purchase Agreement.
3
CERTIFICATEHOLDERS' DISTRIBUTABLE AMOUNT: With respect to any Distribution
Date, the sum of the Certificateholders' Interest Distributable Amount and the
Certificateholders' Principal Distributable Amount.
CERTIFICATEHOLDERS' INTEREST CARRYOVER SHORTFALL: With respect to any
Distribution Date, the excess of the Certificateholders' Interest Distributable
Amount for the preceding Distribution Date over the amount in respect of
interest on the Certificates that was actually deposited in the Certificate
Distribution Account on such preceding Distribution Date, plus interest on such
excess, to the extent permitted by law, at the Certificate Rate from such
preceding Distribution Date to but excluding the current Distribution Date.
CERTIFICATEHOLDERS' INTEREST DISTRIBUTABLE AMOUNT: With respect to any
Distribution Date, the sum of the Certificateholders' Monthly Interest
Distributable Amount for such Distribution Date and the Certificateholders'
Interest Carryover Shortfall for such Distribution Date.
CERTIFICATEHOLDERS' MONTHLY INTEREST DISTRIBUTABLE AMOUNT: With respect to
any Distribution Date, for the related Interest Accrual Period, the sum of (i)
the sum of the interest accrued on each day during such Interest Accrual Period
on the Certificates at the Certificate Rate on the Certificate Balance as of the
close of business on the immediately preceding day and (ii) the Interest
Arrearage.
CERTIFICATEHOLDERS' MONTHLY PRINCIPAL DISTRIBUTABLE AMOUNT: With respect
to any Distribution Date, the Certificateholders' Percentage of the Principal
Distribution Amount plus, with respect to the Distribution Date on which the
outstanding principal balance of the Notes is reduced to zero, the remainder of
the Principal Distribution Amount on such Distribution Date.
CERTIFICATEHOLDERS' PERCENTAGE: With respect to any Determination Date
relating to a Distribution Date, 100% minus the Noteholders' Percentage as of
such Determination Date.
CERTIFICATEHOLDERS' PRINCIPAL CARRYOVER SHORTFALL: As of the close of any
Distribution Date, the excess of the sum of the Certificateholders' Principal
Distributable Amount over the amount in respect of principal that was actually
deposited in the Certificate Distribution Account on such Distribution Date.
CERTIFICATEHOLDERS' PRINCIPAL DISTRIBUTABLE AMOUNT: With respect to any
Distribution Date (other than the Final Scheduled Distribution Date), the sum of
the Certificateholders' Monthly Principal Distributable Amount for such
Distribution Date and any Certificateholders' Principal Carryover Shortfall as
of the close of the preceding Distribution Date; PROVIDED, HOWEVER, that the
Certificateholders' Principal Distributable Amount shall not exceed the
Certificate Balance. The "Certificateholders' Principal Distributable Amount"
on the Final Scheduled Distribution Date will equal the Certificate Balance as
of the Final Scheduled Distribution Date.
4
CERTIFICATES: The meaning assigned to such term in the Trust Agreement.
COLLATERAL INSURANCE: The meaning set forth in Section 3.4(a).
COLLECTED FUNDS: With respect to any Determination Date, the amount of
funds in the Collection Account representing collections on the Receivables
during the related Monthly Period, including all Liquidation Proceeds collected
during the related Monthly Period (but excluding any Monthly Advances and any
Purchase Amounts) and any payments under, or proceeds from, any Eligible
Interest Rate Cap Agreement maintained pursuant to Section 2.1(b)(1)(xiv).
COLLECTION ACCOUNT: The account designated as the Collection Account in,
and which is established and maintained pursuant to, Section 4.1(a).
COLLECTION RECORDS: All manually prepared or computer generated records
relating to collection efforts or payment histories with respect to the
Receivables.
COLLECTION SHORTFALL: As of any Determination Date, with respect to a
Receivable, if the amounts deposited into the Collection Account during a
Monthly Period in respect of such Receivable and allocable to interest
(determined in accordance with Section 4.3) is less than the interest accrued on
such Receivable (for the number of calendar days in such Monthly Period)
(calculated according to the method specified in the related retail installment
sale contract or promissory note at the APR on the Principal Balance of such
Receivable as of the Accounting Date for the immediately preceding Monthly
Period), the amount of such shortfall.
COMMERCIAL PAPER NOTES: The commercial paper notes issued from time to
time by DFC and related to the Notes.
CORPORATE TRUST OFFICE: With respect to the Owner Trustee, the principal
office of the Owner Trustee at which at any particular time its corporate trust
business shall be administered, which office on the Effectiveness Date is
located at Xxxxxx Square North, 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx
00000-0000, Attention: Corporate Trust Administration; the telecopy number for
the Corporate Trust Office of the Owner Trustee on the date of the execution of
this Agreement is (000) 000-0000; with respect to the Indenture Trustee, the
principal office of the Indenture Trustee at which at any particular time its
corporate trust business shall be administered, which office on the
Effectiveness Date is located at Xxxxx Xxxxxx xxx Xxxxxxxxx Xxxxxx, Xxxxxxxxxxx,
Xxxxxxxxx 00000-0000, Attention: Corporate Trust Services - Asset Backed
Administration; the telecopy number for the Corporate Trust Office of the
Indenture Trustee on the date of execution of this Agreement is (000) 000-0000.
CRAM DOWN LOSS: With respect to a Receivable or an Auto Receivable, as
applicable, if a court of appropriate jurisdiction in an insolvency proceeding
shall have issued an order reducing the amount owed on a Receivable or an Auto
Receivable or otherwise modifying or restructuring the Scheduled Payments to be
made on a Receivable
5
or an Auto Receivable, an amount equal to the excess of the principal balance of
such Receivable or Auto Receivable, as applicable, immediately prior to such
order over the principal balance of such Receivable or Auto Receivable, as
applicable, as so reduced or the net present value (using as the discount rate
the higher of the contract rate or the rate of interest, if any, specified by
the court in such order) of the scheduled payments as so modified or
restructured. A Cram Down Loss will be deemed to have occurred on the date of
issuance of such order.
CUSTODIAN: AFL and any other Person named from time to time as custodian
in any Custodian Agreement acting as agent for the Trust, which Person must be
acceptable to Xxxxxx.
CUSTODIAN AGREEMENT: Any Amended and Restated Custodian Agreement from
time to time in effect between the Custodian named therein and the Trust,
substantially in the form of Exhibit B hereto, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof, which Custodian Agreement and any amendments, supplements or
modifications thereto shall be acceptable to Xxxxxx.
CUTOFF DATE: With respect to any Receivables, the date specified in the
related Transfer Agreement, which may in no event be later than the related
Transfer Date.
DEALER: A seller of new or used automobiles or light trucks that
originated one or more of the Receivables and sold the respective Receivable,
directly or indirectly, to AFL under an agreement between such seller and AFL.
DEALER AGREEMENT: An agreement between AFL and a Dealer relating to the
sale of Auto Receivables to AFL and all documents and instruments relating
thereto.
DEALER ASSIGNMENT: With respect to an Auto Receivable, the executed
assignment executed by a Dealer conveying such Receivable to AFL.
DEFICIENCY CLAIM AMOUNT: The meaning set forth in Section 5.1.
DELINQUENCY RATIO: As of any Determination Date, a fraction, expressed as
a percentage, the numerator of which equals the aggregate of the principal
balances of all Auto Receivables that are Delinquent Receivables and the
denominator of which equals the Servicing Portfolio as of such Determination
Date.
DELINQUENT RECEIVABLE: With respect to any Determination Date, any
Receivable or Auto Receivable, as applicable, as to which all or a portion of a
Scheduled Payment is more than 31 days delinquent as of the related Accounting
Date.
DEPOSIT DATE: With respect to any Monthly Period, the Business Day
immediately preceding the related Distribution Date.
6
DETERMINATION DATE: With respect to any Monthly Period, the fifth Business
Day immediately preceding the related Distribution Date.
DFC: Delaware Funding Corporation, a Delaware corporation.
DFC ASSET PURCHASE AGREEMENT: The meaning assigned to such term in the
Note Purchase Agreement.
DISTRIBUTION AMOUNT: With respect to a Distribution Date, the sum of (i)
the Available Funds for such Distribution Date, and (ii) the Deficiency Claim
Amount, if any, received by the Indenture Trustee with respect to such
Distribution Date.
DISTRIBUTION DATE: The 15th day of each calendar month, or if such 15th
day is not a Business Day, the next succeeding Business Day, commencing February
15, 1996 to and including the Distribution Date on which all amounts due and
owing with respect to the Notes and the Certificates have been paid in full and
the Purchase Termination Date has occurred.
EFFECTIVENESS DATE: July 31, 1997.
ELECTRONIC LEDGER: The electronic master record of the retail installment
sales contracts or installment loans of AFL.
ELIGIBLE ACCOUNT: A segregated direct deposit account maintained with a
depository institution or trust company organized under the laws of the United
States of America, or any of the States thereof, or the District of Columbia,
having a certificate of deposit, short term deposit or commercial paper rating
of at least "A-1+" by Standard & Poor's and "P-1" by Moody's.
ELIGIBLE INTEREST RATE CAP AGREEMENT: An interest rate cap agreement that:
(i) is on a standard ISDA form; (ii) is an amortizing interest rate cap with a
maturity date that is no earlier than the final scheduled payment date with
respect to the last maturing Receivable in the Trust; (iii) is purchased in a
minimum notional amount of at least $100,000,000; (iv) is issued by a bank or
other financial institution whose short term unsecured debt obligations are
rated A-1+/P-1 by Standard & Poor's and Moody's, respectively or that it is
otherwise acceptable to Xxxxxx; (v) has a capped interest rate equal to a 30-day
LIBOR rate of 9.50% per annum; (vi) provides that any payments made by the
counterparty shall be made directly to the Collection Account; (vii) provides
that it may not be materially amended, terminated, waived or assigned by the
counterparty without the prior written consent of the Note Majority and the
Certificate Majority; (viii) provided that it may be sold by the Trust on any
Trust Property Liquidation Date on which not less than all of the Receivables in
the Trust are disposed pursuant to Section 9.1; and (ix) is otherwise in form
and substance reasonably satisfactory to Xxxxxx.
7
ELIGIBLE INVESTMENTS: Any one or more of the following types of
investments:
(a) (i) direct interest-bearing obligations of, and interest-bearing
obligations guaranteed as to timely payment of principal and interest by,
the United States or any agency or instrumentality of the United States,
the obligations of which are backed by the full faith and credit of the
United States; and (ii) direct interest-bearing obligations of, and
interest-bearing obligations guaranteed as to timely payment of principal
and interest by, the Federal National Mortgage Association or the Federal
Home Loan Mortgage Corporation, but only if, at the time of investment,
such obligations are assigned the highest credit rating by each Rating
Agency;
(b) demand or time deposits in, certificates of deposit of, or
bankers' acceptances issued by any depository institution or trust company
organized under the laws of the United States or any State and subject to
supervision and examination by federal and/or State banking authorities
(including, if applicable, the Indenture Trustee, the Owner Trustee or any
agent of either of them acting in their respective commercial capacities);
provided that the short-term unsecured debt obligations of such depository
institution or trust company at the time of such investment, or contractual
commitment providing for such investment, are assigned the highest credit
rating by each Rating Agency;
(c) repurchase obligations pursuant to a written agreement (i) with
respect to any obligation described in clause (a) above, where the
Indenture Trustee has taken actual or constructive delivery of such
obligation in accordance with Section 4.1, and (ii) entered into with the
corporate trust department of a depository institution or trust company
organized under the laws of the United States or any State thereof, the
deposits of which are insured by the Federal Deposit Insurance Corporation
and the short-term unsecured debt obligations of which are rated "A-1+" by
Standard & Poor's and "P-1" by Moody's (including, if applicable, the
Indenture Trustee, the Owner Trustee or any agent of either of them acting
in their respective commercial capacities);
(d) securities bearing interest or sold at a discount issued by any
corporation incorporated under the laws of the United States or any State
whose long-term unsecured debt obligations are assigned the highest credit
rating by each Rating Agency at the time of such investment or contractual
commitment providing for such investment; PROVIDED, HOWEVER, that
securities issued by any particular corporation will not be Eligible
Investments to the extent that an investment therein will cause the then
outstanding principal amount of securities issued by such corporation and
held in the Trust Accounts to exceed 10% of the Eligible Investments held
in the Trust Accounts (with Eligible Investments held in the Trust 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;
8
(f) units of money market funds rated in the highest credit rating
category by each Rating Agency; provided that all Eligible Investments
shall be held in the name of the Indenture Trustee; or
(g) any other demand or time deposit, obligation, security or
investment (including, without limitation, a hedging arrangement) as may be
acceptable to Xxxxxx and that satisfies the Rating Agency Condition;
Eligible Investments may be purchased by or through the Indenture Trustee or any
of its Affiliates.
ELIGIBLE SERVICER: AFL, the Backup Servicer or another Person which at the
time of its appointment as Servicer (i) is servicing a portfolio of motor
vehicle retail installment sales contracts and/or motor vehicle installment
loans, (ii) is legally qualified and has the capacity to service the
Receivables, (iii) has demonstrated the ability professionally and competently
to service a portfolio of motor vehicle retail installment sales contracts
and/or motor vehicle installment loans similar to the Receivables with
reasonable skill and care, and (iv) is qualified and entitled to use, pursuant
to a license or other written agreement, and agrees to maintain the
confidentiality of, the software which the Servicer uses in connection with
performing its duties and responsibilities under this Agreement or otherwise has
available software which is adequate to perform its duties and responsibilities
under this Agreement.
FACILITY BALANCE: As of any date, the sum of (i) the aggregate Outstanding
Amount of the Notes, plus (ii) the Certificate Balance.
FACILITY LIMIT: $272,727,300.
FINAL SCHEDULED DISTRIBUTION DATE: With respect to the Notes and the
Certificates, the earlier of (i) the Distribution Date that is 85 months from
the Purchase Termination Date and (ii) the date on which the Notes or the
Certificates are fully redeemed in accordance with the Indenture or the Trust
Agreement, as the case may be (or, if such day is not a Business Day, the next
succeeding Business Day).
FINANCED REPOSSESSIONS: Receivables with respect to loans financing the
purchase of Vehicles that were previously repossessed by or for the benefit of
the Servicer.
FINANCED VEHICLE: A new or used automobile or light truck, together with
all accessories thereto, securing or purporting to secure an Obligor's
indebtedness under a Receivable or an Auto Receivable, as applicable.
FORCE-PLACED INSURANCE: The meaning set forth in Section 3.4(b).
FUNDING PERIOD: The period from and including the Initial Closing Date to
but excluding the Purchase Termination Date.
9
GENERAL PARTNER: Seller in its capacity as general partner of the Trust,
and any successors thereto as permitted by the Trust Agreement.
INDENTURE: The Amended and Restated Indenture, dated as of July 31, 1997,
between the Trust and the Indenture Trustee, as the same may be amended and
supplemented from time to time.
INDENTURE COLLATERAL: The meaning assigned to such term in the Indenture.
INDENTURE TRUSTEE: The Person acting as Trustee under the Indenture, its
successors in interest and any successor Trustee under the Indenture.
INDEPENDENT ACCOUNTANTS: The meaning set forth in Section 3.11(a).
INDEPENDENT CERTIFICATE: The meaning assigned to such term in the
Indenture.
INELIGIBLE RECEIVABLES: With respect to a Securitized Offering, any
Receivables that do not meet the eligibility criteria as of the cutoff date for
such Securitized Offering.
INITIAL CLOSING DATE: December 28, 1995.
INSOLVENCY EVENT: With respect to a specified Person, (a) the commencement
of an involuntary case against such Person under the federal bankruptcy laws, as
now or hereinafter in effect, or another present or future federal or state
bankruptcy, insolvency or similar law, and such case is not dismissed within 60
days; or (b) the filing of a decree or entry of an order for relief by a court
having jurisdiction in the premises in respect of such Person or any substantial
part of its property in an involuntary case under any applicable Federal or
state bankruptcy, insolvency or other similar law now or hereafter in effect, or
appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official for such Person or for any substantial part of its property, or
ordering the winding-up or liquidation of such Person's affairs; or (c) the
commencement by such Person of a voluntary case under any applicable Federal or
state bankruptcy, insolvency or other similar law now or hereafter in effect, or
the consent by such Person to the entry of an order for relief in an involuntary
case under any such law, or the consent by such Person to the appointment of or
taking possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official for such Person or for any substantial part of
its property, or the making by such Person of any general assignment for the
benefit of creditors, or the failure by such Person generally to pay its debts
as such debts become due, or the taking of action by such Person in furtherance
of any of the foregoing.
INSOLVENCY PROCEEDS: The meaning set forth in Section 9.1(c).
INSURANCE ADD-ON AMOUNT: The premium charged to the Obligor in the event
that the Servicer obtains Force-Placed Insurance pursuant to Section 3.4.
10
INSURANCE POLICY: With respect to a Receivable, any insurance policy
benefiting the holder of the Receivable providing loss or physical damage,
credit life, credit disability, theft, mechanical breakdown or similar coverage
with respect to the Financed Vehicle or the Obligor.
INTEREST ACCRUAL PERIOD: The meaning set forth in the Note Purchase
Agreement or the Certificate Purchase Agreement, as applicable
INTEREST ARREARAGE: The meaning assigned to such term in the Certificate
Purchase Agreement.
INVESTOR GROUP: The group of investors committed to purchasing Investor
Certificates under the Certificate Purchase Agreement.
ISSUER: The meaning assigned to such term in the Indenture.
ISSUER ORDER: The meaning assigned to such term in the Indenture.
LIEN: Any security interest, lien, charge, pledge, preference, equity or
encumbrance of any kind, including tax liens, mechanics' liens and any liens
that attach by operation of law.
LIEN CERTIFICATE: With respect to a Financed Vehicle, an original
certificate of title, certificate of lien or other notification issued by the
Registrar of Titles of the applicable state to a secured party which indicates
that the lien of the secured party on the Financed Vehicle is recorded on the
original certificate of title. In any jurisdiction in which the original
certificate of title is required to be given to the Obligor, the term "Lien
Certificate" shall mean only a certificate or notification issued to a secured
party.
LIQUIDATED RECEIVABLE: With respect to any Monthly Period, a Receivable as
to which (i) 91 days have elapsed since the Servicer repossessed the related
Financed Vehicle, (ii) the Servicer has determined in good faith that all
amounts it expects to recover have been received, or (iii) all or any portion of
a Scheduled Payment shall have become more than 180 days delinquent.
LIQUIDATION PROCEEDS: With respect to a Liquidated Receivable, all amounts
realized with respect to such Receivable net of (i) reasonable expenses incurred
by the Servicer in connection with the collection of such Receivable and the
repossession and disposition of the Financed Vehicle and (ii) amounts that are
required to be refunded to the Obligor on such Receivable; PROVIDED, HOWEVER,
that the Liquidation Proceeds with respect to any Receivable shall in no event
be less than zero.
LOCKBOX ACCOUNT: The segregated account maintained on behalf of the Trust
by the Lockbox Bank in accordance with Section 3.2(d).
11
LOCKBOX AGREEMENT: The Agency Agreement, dated as of November 13, 1992 by
and among Xxxxxx Trust and Savings Bank, AFL, 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 December 18, 1995, among Xxxxxx Trust and Savings Bank,
AFL, the Trust and the Indenture Trustee, as such agreements may be amended from
time to time, unless the Indenture Trustee 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 Xxxxxx, among the Servicer, the Trust, the
Indenture Trustee and the Lockbox Bank.
LOCKBOX BANK: Xxxxxx Trust and Savings Bank or a depository institution
named by the Servicer and acceptable to Xxxxxx.
MATERIAL ADVERSE EFFECT: With respect to any event or circumstance, means
a material adverse effect on:
(i) the ability of AFL, the Seller or the Servicer to perform in all
material respects its obligations under this Agreement or any other Related
Document;
(ii) the validity or enforceability of this Agreement, any other
Related Document or the Receivables or the collectibility of the
Receivables; or
(iii) the status, existence, perfection, priority or
enforceability of the Trust's interest in the Receivables.
MAXIMUM CERTIFICATE BALANCE: $32,727,300.
MAXIMUM PRINCIPAL BALANCE: With respect to the Notes, $240,000,000
(excluding capitalized interest thereon).
MAXIMUM PROGRAM SIZE: The sum of (i) the Maximum Principal Balance PLUS
(ii) the Maximum Certificate Balance.
MONTHLY ADVANCE: The amount that the Servicer or the Seller, as the case
may be, is required to advance on any Receivables pursuant to Section 4.4(a) or
(b).
MONTHLY INTEREST COLLECTION SHORTFALL: As of any Determination Date, the
excess, if any, of (x) the amount necessary to make the payments required by
Sections 4.6(i), (ii), (iii), (iv) and (v) hereof over (y) the sum of (i) the
Collected Funds for such Determination Date, to the extent allocable to interest
on the related Receivables, (ii) all Purchase Amounts to be deposited in the
Collection Account on the related Deposit Date, to the extent allocable to
interest on the related Receivables, and (iii) all net income from investments
of funds in the Trust Accounts and the Certificate Distribution Account during
the related Monthly Period.
12
MONTHLY PERIOD: With respect to a Distribution Date or a Determination
Date, the calendar month preceding the month in which such Distribution Date or
Determination Date occurs (or, in the case of the first Distribution Date or
Determination Date, the portion of the calendar month preceding the month in
which such Distribution Date or Determination Date occurs, from and including
the initial Transfer Date to and including the last day of such calendar month)
(such calendar month (or portion thereof) being referred to as the "related"
Monthly Period with respect to such Distribution Date or Determination Date).
With respect to an Accounting Date, the calendar month in which such Accounting
Date occurs is referred to herein as the "related" Monthly Period to such
Accounting Date.
MONTHLY RECORDS: All records and data maintained by the Servicer with
respect to the Receivables, including the following with respect to each
Receivable: the account number; the identity of the originating Dealer; Obligor
name; Obligor address; Obligor home phone number; Obligor business phone number;
original Principal Balance; original term; Annual Percentage Rate; current
Principal Balance; current remaining term; origination date; first payment date;
final scheduled payment date; next payment due date; date of most recent
payment; new/used classification; collateral description; days currently
delinquent; number of contract extensions (months) to date; amount, if any, of
Force-Placed Insurance payable monthly; amount of the Scheduled Payment; current
Insurance Policy expiration date; and past due late charges, if any.
MONTHLY REPORTS: The meaning set forth in Section 3.19.
MOODY'S: Xxxxx'x Investors Service, Inc., or any successor thereto.
XXXXXX: Xxxxxx Guaranty Trust Company of New York, in its capacity as
Administrative Agent for DFC and the purchasers under the DFC Asset Purchase
Agreement and as agent for the banks under the Program Facility, or as agent for
the Investor Group.
NET ADVANCE AMOUNT: As of any Determination Date, an amount equal to the
lesser of (i) the Aggregate Monthly Advance Amount and (ii) the Monthly Interest
Collection Shortfall.
NET ADVANCE SHORTFALL: The meaning set forth in Section 4.4(a)(ii).
NET EXCESS SPREAD PERCENTAGE: As of any Determination Date, (i) the
weighted average APR of the Receivables (taking into account any Eligible
Interest Rate Cap Agreement maintained pursuant to Section 2.1(b)(xiv)) as of
the related Accounting Date, minus (ii) the weighted average of the Note
Interest Rate and the Certificate Rate for the immediately preceding Interest
Accrual Period, minus (iii) 1.00%, minus (iv) the Net Loss Rate for such
Determination Date.
NET LOSS RATE: As of any Determination Date, a fraction expressed as a
percentage, the numerator of which is equal to the annualized total of the
difference between (i) the
13
sum of (a) the aggregate of the Principal Balances as of the related Accounting
Date of all Receivables that became Liquidated Receivables during the related
Monthly Period and (b) the amount of any Cram Down Losses MINUS (ii) the
Liquidation Proceeds received by the Trust during the related Monthly Period,
and the denominator of which is equal to the average of the Aggregate Principal
Balance as of the related Accounting Date and the Aggregate Principal Balance as
of the next preceding Accounting Date.
NET PORTFOLIO LOSSES: With respect to any Monthly Period, the aggregate
amount of gross charge-offs of Auto Receivables serviced by AFL or any of its
Affiliates during such Monthly Period net of all recoveries with respect to any
such Auto Receivables (including post-disposition amounts received on previously
charged-off Auto Receivables), calculated in a manner consistent with the
calculation of net losses in AFL's Annual Report on Form 10-K for the year ended
December 31, 1996.
NON-CALLABLE NOTES: The meaning assigned to such term in the Indenture.
NOTE DISTRIBUTION ACCOUNT: The account designated as such, established and
maintained pursuant to Section 4.1(b).
NOTE INTEREST ARREARAGE: The meaning assigned to such term in the Note
Purchase Agreement.
NOTE INTEREST RATE: The meaning assigned to such term in the Note Purchase
Agreement.
NOTE MAJORITY: Holders of Notes representing a majority of the Outstanding
principal balance of Notes or if no Notes are Outstanding but the Purchase
Termination Date has not occurred, holders of commitments to purchase a majority
of the Maximum Principal Balance of Notes; PROVIDED, HOWEVER, any Notes held by
AFL or any affiliate thereof shall be excluded when calculating a Note Majority.
NOTE PURCHASE AGREEMENT: The Amended and Restated Note Purchase Agreement,
dated as of July 31, 1997, among the Trust, AFL, the owners named therein and
Xxxxxx Guaranty Trust Company of New York, as agent for those owners, as the
same may be amended and supplemented from time to time.
NOTE PURCHASE TERMINATION EVENT: Any event or occurrence designated as
such in the Note Purchase Agreement.
NOTEHOLDERS' DISTRIBUTABLE AMOUNT: With respect to any Distribution Date,
the sum of the Noteholders' Interest Distributable Amount and the Noteholders'
Principal Distributable Amount.
NOTEHOLDERS' INTEREST CARRYOVER SHORTFALL: With respect to any
Distribution Date, the excess of the Noteholders' Interest Distributable Amount
for the preceding Distribution Date over the amount in respect of interest on
the Notes that was actually
14
deposited in the Note Distribution Account on such preceding Distribution Date,
plus interest on the amount of interest due but not paid to Noteholders on the
preceding Distribution Date, to the extent permitted by law, at the Note
Interest Rate from such preceding Distribution Date to but excluding the current
Distribution Date.
NOTEHOLDERS' INTEREST DISTRIBUTABLE AMOUNT: With respect to any
Distribution Date, the sum of the Noteholders' Monthly Interest Distributable
Amount for such Distribution Date and the Noteholders' Interest Carryover
Shortfall for such Distribution Date.
NOTEHOLDERS' MONTHLY INTEREST DISTRIBUTABLE AMOUNT: With respect to any
Distribution Date, for the related Interest Accrual Period, the sum of (i) the
sum of the interest accrued on each day during such Interest Accrual Period on
the Notes at the Note Interest Rate on the outstanding principal balance of the
Notes as of the close of business on the immediately preceding day and (ii) the
Note Interest Arrearage.
NOTEHOLDERS' PERCENTAGE: (i) with respect to any Determination Date
relating to a Distribution Date prior to the Distribution Date on which the
principal balance of the Notes is reduced to zero, 100%, (ii) with respect to
the Determination Date relating to the Distribution Date on which the principal
balance of the Notes is reduced to zero, 100% with respect to that portion of
the Principal Distribution Amount equal to the unpaid principal balance of the
Notes, and with respect to the remaining portion of the Principal Distribution
Amount, zero, and (iii) with respect to any Determination Date relating to a
Distribution Date thereafter (if any), zero.
NOTEHOLDERS' PRINCIPAL DISTRIBUTABLE AMOUNT: With respect to any
Distribution Date (other than the Final Scheduled Distribution Date with respect
to the Notes), the Noteholders' Percentage of the Principal Distribution Amount
for such Distribution Date. The Noteholders' Principal Distributable Amount on
the Final Scheduled Distribution Date will equal the sum of (i) the Noteholders'
Percentage of the Principal Distribution Amount for such Distribution Date, and
(ii) the excess of the outstanding principal balance of the Notes, if any, over
the amounts in clause (i). In no event may the Noteholders' Principal
Distributable Amount for any Distribution Date exceed the outstanding principal
balance of the Notes immediately prior to such Distribution Date.
NOTES: The meaning assigned to such term in the Indenture.
OBLIGOR: The purchaser or the co-purchasers of the Financed Vehicle and
any other Person or Persons who are primarily or secondarily obligated to make
payments under a Receivable or an Auto Receivable, as applicable.
OFFICER'S CERTIFICATE: The meaning assigned to such term in the Indenture.
OPINION OF COUNSEL: A written opinion of counsel acceptable in form and
substance and from counsel acceptable to the Owner Trustee and, if such opinion
or a copy
15
thereof is required to be delivered to the Indenture Trustee or Xxxxxx, to the
Indenture Trustee or Xxxxxx, as applicable.
ORIGINAL CUSTODIAN AGREEMENT: The Custodian Agreement (as amended and
supplemented) dated as of December 28, 1995, by and among AFL, Norwest Bank
Minnesota, National Association, as indenture trustee, and the Issuer.
ORIGINAL SALE AND SERVICING AGREEMENT: The Sale and Servicing Agreement
(as amended and supplemented) dated as of December 28, 1995 by and among the
Issuer, ARFC II, AFL and the Backup Servicer.
OTHER CONVEYED PROPERTY: The meaning assigned to such term in the Purchase
Agreement.
OUTSTANDING: The meaning assigned to such term in the Indenture.
OUTSTANDING AMOUNT: The meaning assigned to such term in the Indenture.
OUTSTANDING MONTHLY ADVANCES: With respect to a Receivable and a
Determination Date, the sum of all Monthly Advances made on any Determination
Date pursuant to Section 4.4(b) prior to such Determination Date relating to
that Receivable which have not been reimbursed pursuant to Section 4.6(i) or
Section 4.8.
OWNER TRUSTEE: Wilmington Trust Company, acting not individually but
solely as trustee, or its successor in interest, and any successor Owner Trustee
appointed as provided in the Trust Agreement.
PAYING AGENT: The meaning assigned to such term in the Indenture.
PERSON: Any legal person, including any individual, corporation,
partnership, joint venture, estate, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof, or any other entity.
PORTFOLIO LOSS RATIO: As of any Determination Date, a fraction, expressed
as a percentage, the numerator of which equals the product of 2.0 times the Net
Portfolio Losses for the six preceding Monthly Periods and the denominator of
which equals the Average Servicing Portfolio as of such Determination Date;
PROVIDED, HOWEVER, the Net Portfolio Loss for the March 1997 Monthly Period
shall, for purposes of calculating the Portfolio Loss Ratio, be deemed to be
$8,942,416.
PRINCIPAL BALANCE: With respect to any Receivable, as of any date, the
Amount Financed minus (i) that portion of all amounts received on or prior to
such date and allocable to principal in accordance with the terms of the
Receivable, and (ii) any Cram Down Loss in respect of such Receivable.
16
PRINCIPAL DISTRIBUTION AMOUNT: With respect to any Distribution Date, the
amount equal to the sum of the following amounts with respect to the related
Monthly Period, in each case computed with respect to each Receivable in
accordance with the method specified in the related retail installment sale
contract or promissory note: (i) that portion of all collections on Receivables
(other than Liquidated Receivables and Purchased Receivables) allocable to
principal, including all full and partial principal prepayments, (ii) the
Principal Balance (as of the related Accounting Date) of all Receivables that
became Liquidated Receivables during the related Monthly Period (other than
Purchased Receivables), (iii) the Principal Balance of all Receivables that
became Purchased Receivables as of the related Accounting Date, and (iv) the
aggregate amount of Cram Down Losses that shall have occurred during the related
Monthly Period.
PRINCIPAL FUNDING ACCOUNT: The account designated as the Principal Funding
Account in, and which is established and maintained pursuant to, Section 4.1(d).
PRINCIPAL FUNDING EXCESS AMOUNT: The meaning specified in Section 4.2(b).
PROGRAM FACILITY: The meaning assigned to such term in the Note Purchase
Agreement.
PURCHASE AGREEMENT: (i) The Amended and Restated Receivables Purchase
Agreement and Assignment, dated as of July 31, 1997, between AFL and the Seller
and (ii) one or more Assignment Agreements pursuant thereto, pursuant to which,
together, AFL transfers the Receivables and Other Conveyed Property to the
Seller.
PURCHASE AMOUNT: With respect to a Receivable, the Principal Balance and
all accrued and unpaid interest on the Receivable (without regard to any Monthly
Advances that may have been made with respect to the Receivable) as of the
Accounting Date on which the obligation to purchase such Receivable arises.
PURCHASE PRICE: With respect to any Receivables, Other Conveyed Property
and other property conveyed to the Trust by the Seller on any Transfer Date, an
amount equal to the sum of the Principal Balances of all such Receivables
conveyed as of the applicable Cutoff Date.
PURCHASED RECEIVABLE: As of any Accounting Date, any Receivable (including
any Liquidated Receivable) that became a Warranty Receivable or Administrative
Receivable as of such Accounting Date (or which AFL or the Servicer has elected
to purchase as of an earlier Accounting Date, as permitted by Section 2.6 or
3.7), and as to which the Purchase Amount has been deposited in the Collection
Account by the Seller, AFL or the Servicer, as applicable, on or before the
related Deposit Date.
PURCHASE TERMINATION DATE: The meaning set forth in Section 2.1(c)(1).
PURCHASE TERMINATION EVENT: The meaning set forth in Section 2.1(c)(2).
17
RATING AGENCY: Each of Moody's and Standard & Poor's, so long as such
Persons maintain a rating on the Commercial Paper Notes; and if either
Moody's or Standard & Poor's no longer maintains a rating on the Commercial
Paper Notes, such other nationally recognized statistical rating organization
selected by Xxxxxx.
RATING AGENCY CONDITION: With respect to any action, that each Rating
Agency shall have been given 10 days' prior notice thereof and that each of the
Rating Agencies shall have notified Xxxxxx in writing that such action will not
result in a reduction or withdrawal of the then current rating of the Commercial
Paper Notes.
RECAPITALIZATION: A recapitalization of the Trust in which (a) the Trust
issues Non-Callable Notes under the Indenture, the proceeds of which are used to
redeem, in full or in part, the Notes Outstanding prior to that recapitalization
and (b) the Seller waives its rights under Section 9.1(b) to purchase the Trust
Property.
RECEIVABLE: An Auto Receivable that is included in the Schedule of
Receivables, and all rights and obligations under such a contract, but not
including (i) any Liquidated Receivable (other than for purposes of calculating
Certificateholders' Distributable Amounts and Noteholders' Distributable Amounts
hereunder and for the purpose of determining the obligations pursuant to Section
2.6 and 3.7 to purchase Receivables), or (ii) any Purchased Receivable on or
after the Accounting Date immediately preceding the Deposit Date on which
payment of the Purchase Amount is made in connection therewith pursuant to
Section 4.5.
RECEIVABLE FILE: The documents, electronic entries, instruments and
writings listed in Section 2.2(a) pertaining to a particular Receivable.
REGISTRAR OF TITLES: With respect to any state, the governmental agency or
body responsible for the registration of, and the issuance of certificates of
title relating to, motor vehicles and liens thereon.
RELATED DOCUMENTS: The Trust Agreement, the Indenture, the Certificates,
the Notes, the Purchase Agreement, each Transfer Agreement, the Custodian
Agreement, the Lockbox Agreement, the Certificate Purchase Agreement and the
Note Purchase Agreement. The Related Documents executed by any party are
referred to herein as "such party's Related Documents," "its Related Documents"
or by a similar expression.
REQUISITE AMOUNT: As of any Determination Date, (i) if no Trigger Event
shall have occurred, 7.0% of the sum (a) of the Note Balance on such
Determination Date and (b) the Certificate Balance on such Determination Date;
and (ii) if a Trigger Event shall have occurred, an unlimited amount.
RESPONSIBLE OFFICER: When used with respect to the Owner Trustee, any
officer of the Owner Trustee assigned by the Owner Trustee to administer its
corporate trust affairs relating to the Trust. When used with respect to any
other Person that is not an
18
individual, the President, any Vice-President or Assistant Vice-President or the
Controller of such Person, or any other officer or employee having similar
functions.
SCHEDULED PAYMENT: With respect to any Monthly Period for any Receivable
or Auto Receivable, as applicable, the amount set forth in such Receivable or
Auto Receivable, as applicable, as required to be paid by the Obligor in such
Monthly Period. If after the Initial Closing Date or the related Cutoff Date,
the Obligor's obligation under a Receivable or Auto Receivable with respect to a
Monthly Period has been modified so as to differ from the amount specified in
such Receivable or Auto Receivable, as applicable, as a result of (i) the order
of a court in an insolvency proceeding involving the Obligor, (ii) pursuant to
the Soldiers' and Sailors' Civil Relief Act of 1940 or (iii) modifications or
extensions of the Receivable permitted by Section 3.2(b), the Scheduled Payment
with respect to such Monthly Period shall refer to the Obligor's payment
obligation with respect to such Monthly Period as so modified.
SCHEDULE OF RECEIVABLES: The schedule of all automobile retail installment
loan contracts and promissory notes sold and transferred pursuant to each
Transfer Agreement which is attached hereto as Schedule A, as such Schedule
shall be supplemented from time to time (i) by each Schedule of Receivables with
respect to each Transfer Agreement, which Schedules of Receivables shall be
deemed incorporated and made a part of Schedule A hereto and (ii) by the
Servicer from time to time to reflect removal from the Trust of (a) Purchased
Receivables and (b) Receivables purchased from the Trust pursuant to Section
9.1, such comprehensive schedule to be maintained by the Indenture Trustee.
With respect to a Transfer Agreement, "Schedule of Receivables" shall mean the
Schedule attached to such Transfer Agreement as Exhibit A thereto.
SCHEDULE OF REPRESENTATIONS: The Schedule of Representations and
Warranties attached hereto as Schedule B.
SECURED OBLIGATIONS: The meaning assigned to such term in the Indenture.
SECURITIZED OFFERING: An offering of certificates and notes of this Trust,
the proceeds of which are used to redeem, in full, the Certificates issued under
the Trust Agreement and the Notes issued under the Indenture.
SELLER: Arcadia Receivables Finance Corp. II, a Delaware corporation, or
its successor in interest pursuant to Section 6.2.
SERVICER: Arcadia Financial Ltd., its successor in interest pursuant to
Section 8.2 or, after any termination of the Servicer upon a Servicer
Termination Event, the Backup Servicer or any other successor Servicer.
SERVICER FEE THRESHOLD: The meaning specified in Section 4.6(ii).
SERVICER TERMINATION EVENT: An event described in Section 8.1.
19
SERVICER'S CERTIFICATE: With respect to each Determination Date, a
certificate, completed by and executed on behalf of the Servicer, in accordance
with Section 3.9, substantially in the form attached hereto as Exhibit E.
SERVICING PORTFOLIO: As of any date, the aggregate principal balance of
all Auto Receivables (whether or not thereafter sold or disposed of) which are
serviced by AFL or any of its Affiliates at such time, calculated in a manner
consistent with the calculation of the components of Average Servicing Portfolio
in AFL'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 AFL's Annual Report on Form 10-K for the year ended December 31,
1996, as amended.
SPREAD ACCOUNT: The account designated as the Spread Account in, and which
is established and maintained pursuant to, Section 4.1(c).
STANDARD & POOR'S: Standard & Poor's Ratings Services, a division of
XxXxxx-Xxxx, Inc., or any successor thereto.
SUBCOLLECTION ACCOUNT: The account designated as the Subcollection Account
in, and which is established and maintained pursuant to Section 4.2(a).
SUPPLEMENTAL SERVICING FEE: With respect to any Monthly Period, all
administrative fees, expenses and charges paid by or on behalf of Obligors,
including late fees, collected on the Receivables during such Monthly Period.
TOTAL SERVICING FEE: The sum of the Basic Servicing Fee and the
Supplemental Servicing Fee.
TRANSFER AGREEMENT: With respect to any Receivables, the transfer
agreement between the Seller and the Trust pursuant to which the Seller sells
and assigns Receivables, Other Conveyed Property and other property to the
Trust, the form of which is attached hereto as Exhibit F.
TRANSFER DATE: Any date during the Funding Period on which Receivables are
transferred to the Trust pursuant to Section 2.1.
TRIGGER EVENT: As of any Determination Date, if (i) the Delinquency Ratio
exceeds 3.125%; (ii) the Portfolio Loss Ratio exceeds 3.125%; (iii) the
Warehousing Loss Ratio exceeds 0.75%; or (iv) the Net Excess Spread Percentage
is less than 3.0%.
TRUST: Olympic Automobile Receivables Warehouse Trust.
TRUST ACCOUNTS: The meaning specified in 4.1(e).
20
TRUST AGREEMENT: The Amended and Restated Trust Agreement, dated as of
July 31, 1997, between the Seller and the Owner Trustee, as the same may be
amended and supplemented from time to time.
TRUST ESTATE: The meaning assigned to such term in the Indenture.
TRUST PROPERTY: The meaning specified in the Trust Agreement.
TRUST PROPERTY LIQUIDATION DATE: The date specified in the notice issued
pursuant to Section 9.1(b) as the date on which proceeds from a sale of the
Trust Property will be distributed to Noteholders and Certificateholders.
UCC: The Uniform Commercial Code as in effect in the relevant
jurisdiction.
WAREHOUSING LOSS RATIO: With respect to any Determination Date, a
fraction, expressed as a percentage, calculated as of the related Accounting
Date, the numerator of which is equal to the excess of (A) the sum of (i) the
aggregate of the Principal Balances of Receivables conveyed to the Trust since
the immediately preceding Trust Property Liquidation Date, or, if no Trust
Property Liquidation Date has occurred, since the Initial Closing Date (plus
accrued and unpaid interest to the end of the relevant Monthly Period, at the
applicable APR) of all Receivables that became Liquidated Receivables since the
immediately preceding Trust Property Liquidation Date, or, if no Trust Property
Liquidation Date has occurred, since the Initial Closing Date, plus (ii) the
aggregate of the Principal Balances of all Receivables that became Purchased
Receivables since the immediately preceding Trust Property Liquidation Date, or,
if no Trust Property Liquidation Date has occurred, since the Initial Closing
Date and that were delinquent with respect to all or a portion of a Scheduled
Payment more than 31 days as of the related Accounting Date, plus (iii) the
aggregate of all Cram Down Losses that occurred since the immediately preceding
Trust Property Liquidation Date, or, if no Trust Property Liquidation Date has
occurred, since the Initial Closing Date, over (B) the Liquidation Proceeds
received by the Trust since the immediately preceding Trust Property Liquidation
Date, or, if no Trust Property Liquidation Date has occurred, since the Initial
Closing Date and the denominator of which is equal to the Aggregate Principal
Balance as of the related Accounting Date.
WAREHOUSING PERIOD: (i) The period beginning upon the first sale of
Receivables to the Trust and ending on the day immediately preceding a Trust
Property Liquidation Date on which all of the Receivables in the Trust are
purchased and (ii) thereafter, any period beginning upon the first sale of
Receivables to the Trust immediately following a Trust Property Liquidation Date
on which all of the Receivables in the Trust are purchased and ending on the day
immediately preceding a Trust Property Liquidation Date on which all of the
Receivables in the Trust are purchased.
WARRANTY RECEIVABLE: With respect to any Monthly Period, a Receivable
which AFL has become obligated to repurchase pursuant to Section 2.6.
21
Section I.2. USAGE OF TERMS. (a) With respect to all terms used in this
Agreement, the singular includes the plural and the plural the singular; words
importing any gender include the other gender; references to "writing" include
printing, typing, lithography, and other means of reproducing words in a visible
form; references to agreements and other contractual instruments include all
subsequent amendments thereto or changes therein entered into in accordance with
their respective terms and not prohibited by this Agreement; references to
Persons include their permitted successors and assigns; and the terms "include"
or "including" mean "include without limitation" or "including without
limitation."
(b) The references to the documents entered into in connection with this
Agreement, namely, the Certificate Purchase Agreement, the Indenture, the Note
Purchase Agreement, the Purchase Agreement and the Trust Agreement shall be read
to include, where appropriate, the original (as amended and supplemented)
agreement related to each such amended and restated document.
Section 1.3. CALCULATIONS. (a) All calculations of the amount of
interest accrued on the Certificates and the Notes shall be made on the basis of
the actual number of days elapsed in either a 360-day or a 365-day year, as
specified in the Note Purchase Agreement or Certificate Purchase Agreement, as
the case may be; and (b) all calculations of the amount of the Basic Servicing
Fee shall be made on the basis of a 360-day year consisting of twelve 30-day
months. All references to the Principal Balance of a Receivable as of an
Accounting Date shall refer to the close of business on such day.
Section 1.4. SECTION REFERENCES. All references to Articles, Sections,
paragraphs, subsections, exhibits and schedules shall be to such portions of
this Agreement unless otherwise specified.
Section 1.5. NO RECOURSE. Subject to the provisions of Section 6.5 with
respect to the Seller, no recourse may be taken, directly or indirectly, under
this Agreement or any certificate or other writing delivered in connection
herewith or therewith, against any stockholder, officer, or director, as such,
of the Seller, AFL, the Servicer, the Indenture Trustee, the Backup Servicer or
the Owner Trustee or of any predecessor or successor of the Seller, AFL, the
Servicer, the Indenture Trustee, the Backup Servicer or the Owner Trustee.
Section 1.6. CONDITION TO EFFECTIVENESS OF AGREEMENTS. This Agreement and
the Related Documents shall not be effective until such time as this Agreement,
the Related Documents and any and all certificates, opinions and other documents
required hereby and thereby have been executed and delivered to the satisfaction
of Xxxxxx, in its sole discretion.
22
ARTICLE II
CONVEYANCE OF RECEIVABLES
Section 2.1. CONVEYANCE OF RECEIVABLES. (a) Subject to the terms and
conditions of this Agreement, including the conditions set forth in paragraph
(b) below, the Seller, pursuant to the mutually agreed upon terms contained
herein and pursuant to one or more Transfer Agreements, shall sell, transfer,
assign, and otherwise convey to the Trust, without recourse (but without
limitation of its obligations in this Agreement), all of the right, title and
interest of the Seller, whether then existing or thereafter acquired, in and to
the Receivables and the Other Conveyed Property, an assignment of the rights of
the Seller under the Purchase Agreement, all funds on deposit from time to time
in the Trust Accounts and all investments therein and proceeds thereof, and all
proceeds of the foregoing. It is the intention of the Seller that the transfer
and assignment contemplated by this Agreement and each Transfer Agreement shall
constitute a sale of the Receivables and other Trust Property from the Seller to
the Trust and the beneficial interest in and title to the Receivables and the
other Trust Property shall not be part of the Seller's estate in the event of
the filing of a bankruptcy petition by or against the Seller under any
bankruptcy law. In the event that, notwithstanding the intent of the Seller,
the transfer and assignment contemplated hereby and each Transfer Agreement is
held not to be a sale, this Agreement and each Transfer Agreement shall
constitute a grant of a security interest to the Trust in the property referred
to in this Section 2.1 or transferred to the Trust pursuant to the related
Transfer Agreement.
(b) (1) The Seller shall transfer to the Trust the Receivables and the
other property and rights related thereto described in paragraph (a) above only
upon the satisfaction of each of the following conditions on or prior to the
related Transfer Date:
(i) the Funding Period shall not have terminated;
(ii) the Seller shall have provided the Owner Trustee, the Indenture
Trustee and the Rating Agencies with any information reasonably requested
by any of the foregoing with respect to the Receivables;
(iii) the Seller shall have delivered to the Owner Trustee and the
Indenture Trustee a duly executed Transfer Agreement, which shall include a
Schedule of Receivables listing the Receivables being transferred on such
Transfer Date;
(iv) AFL shall have delivered to the Seller, the Owner Trustee and
the Indenture Trustee a duly executed Assignment Agreement, which shall
include a Schedule of Receivables listing the Receivables being transferred
on such Transfer Date;
(v) the Seller shall, to the extent required by Section 4.1, have
deposited in the Collection Account collections in respect of the
Receivables;
23
(vi) the Seller shall have taken any action necessary or advisable to
maintain the first perfected ownership interest of the Trust in the Trust
Property and the first perfected security interest of the Indenture Trustee
in the Indenture Collateral;
(vii) the aggregate Principal Balances of Receivables in the Trust,
including the Receivables to be conveyed to the Trust on each Transfer
Date, that were owed by any single Obligor or its Affiliates shall not
exceed $250,000;
(viii) after giving effect to the conveyance of Receivables on such
Transfer Date, the aggregate of the Principal Balances of Receivables with
original maturities ranging from 73 to 84 months shall not exceed 7.5% of
the aggregate of the Principal Balances of all Receivables on such Transfer
Date;
(ix) each of the representations and warranties made by the Seller
pursuant to Section 2.5 shall be true and correct as of the related
Transfer Date, and the Seller shall have performed all obligations to be
performed by it hereunder on or prior to such Transfer Date;
(x) the Seller shall, at its own expense, on or prior to the Transfer
Date indicate in its computer files that the Receivables identified in the
Transfer Agreement have been sold to the Trust pursuant to this Agreement
and the related Transfer Agreement;
(xi) no event has occurred and is continuing, or would result from
the conveyance on such Transfer Date, that constitutes a Purchase
Termination Event or Servicer Termination Event;
(xii) after giving effect to the conveyance of Receivables on such
Transfer Date, the Facility Balance shall not exceed the Facility Limit;
(xiii) the Seller shall have provided the Indenture Trustee, the
Owner Trustee and Xxxxxx a statement listing (A) the aggregate of the
Principal Balances of such Receivables so transferred, (B) the related
Purchase Price, (C) the Facility Balance after giving effect to the
transfers on such date and (D) any other information reasonably requested
by any of the foregoing with respect to such Receivables;
(xiv) (A) on any Transfer Date, AFL shall have established, in
accordance with Section 2.2(b)(1)(ix) of the Receivables Purchase
Agreement, in the name of the Trustee for the benefit of the Noteholders
and the Certificateholders, an Eligible Interest Rate Cap Agreement in a
notional amount equal to or greater than the sum of the Note Balance PLUS
the Certificate Balance on such Transfer Date (after taking into account
the transfer of Receivables to the Trust on such date);
(xv) after giving effect to the conveyance of Receivables on such
Transfer Date, the aggregate of the Principal Balances of Receivables
attributable to loans
24
originated under AFL's "Classic" program shall not exceed 60% of the
aggregate of the Principal Balances of all Receivables on such Transfer
Date;
(xvi) after giving effect to the conveyance of Receivables on such
Transfer Date, the aggregate of the Principal Balances of Receivables
attributable to loans classified as Financed Repossessions shall not exceed
3.0% of the aggregate of the Principal Balances of all Receivables on such
Transfer Date;
(xvii) the Seller shall have deposited into the Spread Account an
amount at least equal to 6.0% of the aggregate of the Principal Balances of
the Receivables sold to the Trust on such Transfer Date.
(xviii) the condition to effectiveness set forth in Section 1.6 shall
have been satisfied; and
(xix) the Seller shall have delivered to the Owner Trustee and the
Indenture Trustee an Officer's Certificate confirming the satisfaction of
each condition precedent specified in this paragraph (b)(1).
(2) On each such Transfer Date, if all the conditions specified in
paragraph (b)(1) above have been satisfied, the Trust shall accept the transfer
of such Receivables and shall pay or cause to be paid to the Seller an amount
equal to the Purchase Price. The Purchase Price shall be paid FIRST, from
amounts, if any, on deposit in the Principal Funding Account, and SECOND, from
amounts, if any, received by the Trust in connection with the issuance and sale
of Notes or Certificates (or additional principal amounts thereof), as
applicable.
(c) (1) PURCHASE TERMINATION DATE. The Trust's commitment to purchase
Receivables and other property hereunder and under any Transfer Agreement shall
terminate upon the earliest to occur of the following (the "Purchase Termination
Date"):
(i) The date that is 364 days from the Effectiveness Date; PROVIDED,
HOWEVER, the parties to this Agreement (with the consent of Xxxxxx) may
mutually agree in writing to the extension of such date to a date no later
than 364 days following the date of such extension;
(ii) A date upon which a Purchase Termination Event has occurred and
is continuing and (A) Xxxxxx declares a Purchase Termination Date in a
notice in accordance with the terms of subsection 2 below, or (B) such date
becomes a Purchase Termination Date automatically in accordance with the
terms of subsection 2 below;
(iii) The initial cutoff date with respect to a Securitized Offering,
as specified in the preliminary offering document with respect to the
securities to be issued in connection with such Securitized Offering;
25
(iv) A date on which a Note Purchase Termination Event has occurred
and is continuing; or
(v) A date on which a Certificate Purchase Termination Event has
occurred and is continuing.
(2) PURCHASE TERMINATION EVENTS. If any of the following events
(each, a "Purchase Termination Event") shall have occurred and be continuing,
then (a) in the case of a Purchase Termination Event other than a Purchase
Termination Event described in subsection (ii) below, Xxxxxx shall, at the
written request of, or may with the consent of, a Note Majority or a Certificate
Majority, by notice (which notice shall be in writing) to the Seller, the
Indenture Trustee and the Owner Trustee declare the Purchase Termination Date to
have occurred, and (b) in the case of a Purchase Termination Event described in
subsection (ii) below, the Purchase Termination Date shall occur automatically:
(i) Any event or occurrence that constitutes a Servicer Termination
Event pursuant to Section 8.1 (other than an event described in Section
8.1(d));
(ii) Any event or occurrence that constitutes a Servicer Termination
Event pursuant to Section 8.1(d);
(iii) There shall exist any event or occurrence that has a Material
Adverse Effect;
(iv) The Seller, for any reason, shall fail to grant to the Trust and
to maintain in favor of the Trust a valid and perfected ownership interest
(or, if not an ownership interest, a valid and perfected first priority
security interest) in any material portion of the Receivables and other
Trust Property;
(v) 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 Seller or AFL, or the Pension Benefit Guaranty Corporation
shall file notice of a lien pursuant to Section 4068 of the Employee
Retirement Income Security Act of 1974 with regard to any of the assets of
the Seller or AFL, and in either such case such lien shall secure a
liability in excess of $1,000,000 and shall not have been released within
40 days;
(vi) A default shall have occurred and be continuing (x) under any
instrument or agreement evidencing, securing or providing for the issuance
of indebtedness for borrowed money in excess of $10,000,000 of, or
guaranteed by, AFL, the Seller or the Servicer which default (A) is a
default in payment of any principal or interest on such indebtedness when
due or within any applicable grace period, or (B) such default shall have
resulted in acceleration of the maturity of such indebtedness; or (y) under
any agreement providing for the sales of Receivables by AFL, the Seller or
the Servicer with an aggregate purchase price outstanding over $10,000,000,
resulting in the early amortization of the purchasers' or investors'
26
interest in such Receivables, or the replacement of the Servicer as
servicer thereunder; unless, in the case of each of CLAUSES (x) and (y)
above, (1) AFL, the Seller or the Servicer, as the case may be, is
contesting in good faith, by appropriate proceedings, that such
indebtedness is due and payable or that such acceleration or early
amortization is rightful, and (2) no final judgment adverse to AFL, the
Seller or the Servicer, as the case may be, shall have been entered on such
proceedings;
(vii) (A) Any litigation (including, without limitation, derivative
actions), arbitration proceedings or governmental proceedings not disclosed
in writing by AFL, the Seller or the Servicer, as the case may be, prior to
the date of execution and delivery of this Agreement is pending against
AFL, the Seller or the Servicer, as the case may be, or any Affiliate
thereof, which, in the reasonable opinion of Xxxxxx, if adversely
determined, would have a Material Adverse Effect, or (B) any material
development not so disclosed has occurred in any litigation (including,
without limitation, derivative actions), arbitration proceedings or
governmental proceedings so disclosed, which, in the reasonable opinion of
Xxxxxx, would have a reasonable probability of causing a Material Adverse
Effect; or
(viii) AFL (if it is the Servicer) shall make any material adverse
change in the Servicing Policy and Procedures without the prior written
consent of Xxxxxx (which consent shall not be unreasonably withheld);
(ix) On any Determination Date after the first Transfer Date but
prior to the Purchase Termination Date, (A) the Delinquency Ratio shall
exceed 3.50%; (B) the Portfolio Loss Ratio shall exceed 3.50%; (C) the
Warehousing Loss Ratio shall exceed 1.0%; or (D) the Average Net Excess
Spread Percentage shall be less than 4.0%;
(x) The notional amount of the Eligible Interest Rate Cap Agreement
required pursuant to Section 2.1(b)(1)(xiv) shall on any date be less than
the sum of the Note Balance PLUS the Certificate Balance on such date
(after taking into account the transfer of Receivables to the Trust, if
any, on such date) and such notional amount shortfall remains unremedied
for a period of three Business Days after the date of such determination;
or
(xi) Any Warehousing Period exceeds 120 days.
(xii) Material noncompliance with Sections 3.9(c) or 3.19 and such
noncompliance is not remedied within five (5) Business Days thereof.
Section 2.2. CUSTODY OF RECEIVABLES FILES. (a) In connection with the
sale, transfer and assignment of the Receivables and the other Trust Property to
the Trust pursuant to the Original Sale and Servicing Agreement and each
Transfer Agreement before the Effectiveness Date, the Trust entered into the
Original Custodian Agreement with the Custodian, pursuant to which the Custodian
accepted such appointment to act as the agent of the Trust as Custodian of the
documents set forth below; and in connection with the
27
sale, transfer and assignment of the Receivables and other Trust Property to the
Trust pursuant to this Agreement and each Transfer Agreement from and after the
Effectiveness Date, the Trust shall enter into the Custodian Agreement with the
Custodian, pursuant to which the Custodian shall continue to act as the agent of
the Trust as Custodian of the documents set forth below. Pursuant to the terms
of the Purchase Agreement, AFL has agreed to use its best efforts to deliver to
the Custodian as agent of the Trust within three Business Days after each
Transfer Date, but in any event AFL shall deliver to the Custodian no later than
ten Business Days after such Transfer Date, the following documents:
(i) The fully executed original of the Receivable (together with any
agreements modifying the Receivable, including without limitation any
extension agreements);
(ii) A certificate of insurance, application form 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 an Insurance
Policy, or a documented verbal confirmation by the insurance agent for the
Obligor of a policy number for an Insurance Policy or any other documents
evidencing or related to any Insurance Policy, or copies thereof;
(iii) The original credit application, or a copy thereof, of each
Obligor, fully executed by each such Obligor on AFL's customary form, or on
a form approved by AFL, for such application; and
(iv) The original certificate of title (when received) and otherwise
such documents, if any, that AFL 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 AFL as first lienholder or secured
party (including any Lien Certificate received by AFL), or, if such
original certificate of title has not yet been received, a copy of the
application therefor, showing AFL as secured party or a letter from the
applicable Dealer agreeing unconditionally to repurchase the related
Receivable if the certificate of title is not received by AFL within 180
days.
In connection with the grant of the security interest in the Trust Estate
to the Indenture Trustee in respect of the Secured Obligations pursuant to the
Indenture, the Trust agrees that from and after the Initial Closing Date through
the date of release of such security interest pursuant to the terms of the
Indenture, the Custodian shall not be acting as agent of the Trust, but rather
shall be acting as agent of the Indenture Trustee in respect of the Secured
Obligations.
The Indenture Trustee may act as the Custodian, in which case the Indenture
Trustee shall be deemed to have assumed the obligations of the Custodian
specified in the Custodian Agreement, and the terms of Exhibit B shall be deemed
incorporated by reference herein.
28
(b) Upon payment in full on any Receivable, the Servicer will notify the
Custodian by certification of an officer of the Servicer (which certification
shall include a statement to the effect that all amounts received in connection
with such payments which are required to be deposited in the Collection Account
pursuant to Section 3.1 have been so deposited) and shall request delivery of
the Receivable and Receivable File to the Servicer. From time to time as
appropriate for servicing and enforcing any Receivable, the Custodian shall,
upon written request of an officer of the Servicer and delivery to the Custodian
of a receipt signed by such officer, cause the original Receivable and the
related Receivable File to be released to the Servicer. The Servicer's receipt
of a Receivable and/or Receivable File shall obligate the Servicer to return the
original Receivable and the related Receivable File to the Custodian when its
need by the Servicer has ceased unless the Receivable shall be repurchased as
described in Section 2.6 or 3.7.
Section 2.3. CONDITIONS TO ACCEPTANCE BY OWNER TRUSTEE. As conditions to
the Owner Trustee's execution and delivery of the Notes on behalf of the Trust
and execution, authentication and delivery of the Certificates on behalf of the
Trust on the Initial Closing Date, the Owner Trustee shall have received the
following on or before the Initial Closing Date:
(a) Copies of resolutions of the Board of Directors of the Seller
approving the execution, delivery and performance of this Agreement, the
Related Documents and the transactions contemplated hereby and thereby,
certified by a Secretary or an Assistant Secretary of the Seller;
(b) Copies of resolutions of the Board of Directors of AFL approving
the execution, delivery and performance of this Agreement, the Related
Documents and the transactions contemplated hereby and thereby, certified
by a Secretary or an Assistant Secretary of AFL; and
(c) Evidence that 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 Owner Trustee a
first priority perfected lien on, or ownership interest in, the Receivables
and the other Trust Property have been made, taken or performed.
Section 2.4. DEEMED ACCEPTANCE BY OWNER TRUSTEE AND INDENTURE TRUSTEE. By
its execution or acceptance, as the case may be, of this Agreement, each of the
Owner Trustee and the Indenture Trustee, on each Transfer Date, subject to the
satisfaction of the conditions to conveyance set forth in Section 2.1(b), shall
be deemed to have accepted the conveyance of the Receivables and other property
conveyed to the Trust under the related Transfer Agreement and assigned to the
Indenture Trustee pursuant to the Indenture without any further act on their
behalf.
Section 2.5. REPRESENTATIONS AND WARRANTIES OF SELLER. By its execution
of this Agreement and each Transfer Agreement, the Seller makes the following
representations and warranties on which the Trust relies in accepting the
Receivables and the other Trust
29
Property in trust and on which the Owner Trustee relies in issuing, on behalf of
the Trust, the Certificates and Notes. Unless otherwise specified, such
representations and warranties speak as of the Initial Closing Date, the
Effectiveness Date and each Transfer Date, as appropriate, but shall survive the
sale, transfer, and assignment of the Receivables to the Trust.
(a) SCHEDULE OF REPRESENTATIONS. The representations and warranties
set forth on the Schedule of Representations are true and correct.
(b) ORGANIZATION AND GOOD STANDING. The Seller 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, and had at all relevant
times, and now has, power, authority and legal right to acquire, own and
sell the Receivables and the other property transferred to the Trust.
(c) DUE QUALIFICATION. The Seller is duly qualified to do business
as a foreign corporation in good standing, and has obtained all necessary
licenses and approvals, in all jurisdictions in which the ownership or
lease of its property or the conduct of its business requires such
qualification.
(d) POWER AND AUTHORITY. The Seller has the power and authority to
execute and deliver this Agreement and its Related Documents and to carry
out its terms and their terms, respectively; the Seller has full power and
authority to sell and assign the Trust Property to be sold and assigned to
and deposited with the Trust by it and has duly authorized such sale and
assignment to the Trust by all necessary corporate action; and the
execution, delivery and performance of this Agreement and the Seller's
Related Documents have been duly authorized by the Seller by all necessary
corporate action.
(e) VALID SALE; BINDING OBLIGATIONS. This Agreement and each
Transfer Agreement effects a valid sale, transfer and assignment of the
Receivables and the other Trust Property, enforceable against the Seller
and creditors of and purchasers from the Seller; and this Agreement and
each Transfer Agreement and the Seller's Related Documents, when duly
executed and delivered, shall constitute legal, valid and binding
obligations of the Seller enforceable in accordance with their respective
terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of
creditors' rights generally and by equitable limitations on the
availability of specific remedies, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
(f) NO VIOLATION. The consummation of the transactions contemplated
by this Agreement and each Transfer Agreement and the Related Documents and
the fulfillment of the terms of this Agreement and each Transfer Agreement
and the
30
Related Documents shall not conflict with, result in any breach of any of
the terms and provisions of or constitute (with or without notice, lapse of
time or both) a default under the certificate of incorporation or by-laws
of the Seller, or any indenture, agreement, mortgage, deed of trust or
other instrument to which the Seller is a party or by which it is bound, or
result in the creation or imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture, agreement, mortgage, deed of
trust or other instrument, other than this Agreement, or violate any law,
order, rule or regulation applicable to the Seller of any court or of any
federal or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Seller or any of
its properties. Notwithstanding the foregoing, it is understood that no
representation or warranty is expressed herein with respect to the legality
of the use of word "Olympic" by the Seller or its Affiliates.
(g) NO PROCEEDINGS. There are no proceedings or investigations
pending or, to the Seller's knowledge, threatened against the Seller or
AFL, before any court, regulatory body, administrative agency or other
tribunal or governmental instrumentality having jurisdiction over the
Seller or its properties (A) asserting the invalidity of this Agreement,
any Transfer Agreement or any of the Related Documents, (B) seeking to
prevent the issuance of the Certificates or the Notes or the consummation
of any of the transactions contemplated by this Agreement, any Transfer
Agreement or any of the Related Documents, (C) seeking any determination or
ruling that might materially and adversely affect the performance by the
Seller of its obligations under, or the validity or enforceability of, this
Agreement, any Transfer Agreement or any of the Related Documents, or (D)
seeking to adversely affect the federal income tax or other federal, state
or local tax attributes of the Certificates or the Notes.
(h) NO TERMINATION EVENTS. To the Seller's knowledge, no Purchase
Termination Event or Servicer Termination Event shall have occurred and be
continuing.
(i) CHIEF EXECUTIVE OFFICE. The chief executive office of the Seller
is at 0000 Xxxxxxxxxx Xxxxxx Xxxxx, Xxxxx 000, Xxxxxxxxxxx, XX 00000-0000.
(j) SEPARATE CORPORATE EXISTENCE. The Seller shall:
(1) Maintain in full effect its existence, rights and franchises
as a corporation under the laws of the state of its incorporation and
will obtain and preserve its qualification to do business in each
jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of this Agreement and its
Related Documents and each other instrument or agreement necessary or
appropriate to proper administration hereof and permit and effectuate
the transactions contemplated hereby.
31
(2) Maintain its own deposit account or accounts, separate from
those of any Affiliate of the Seller, with commercial banking
institutions. The funds of the Seller will not be diverted to any
other Person or for other than the corporate use of the Seller
(including the payment of duly declared dividends to the Seller's
stockholders), and, except as may be expressly permitted by this
Agreement or the Related Documents, the funds of the Seller shall not
be commingled with those of any Affiliate of the Seller.
(3) Ensure that, to the extent that it shares the same officers
or other employees as any of its stockholders or Affiliates, the
salaries of and the expenses related to providing benefits to such
officers and other employees shall be fairly allocated among such
entities, and each such entity shall bear its fair share of the salary
and benefit costs associated with all such common officers and
employees.
(4) 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 each such
entity shall bear its fair share of such costs. To the extent that
the Seller 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 each such entity shall bear its fair
share of such costs. All material transactions between the Seller and
any of its Affiliates shall be only on an arm's-length basis and shall
receive the approval of the Seller's Board of Directors including at
least one Independent Director (as defined below).
(5) Maintain a principal executive and administrative office
through which its business is conducted separate from those of its
stockholders and Affiliates. To the extent that the Seller and any of
its stockholders or Affiliates have offices in contiguous space, there
shall be fair and appropriate allocation of overhead costs among them,
and each such entity shall bear its fair share of such expenses.
(6) Conduct its affairs strictly in accordance with its
Certificate of Incorporation and observe all necessary, appropriate
and customary corporate formalities, including, but not limited to,
holding all regular and special stockholders' and directors' meetings
appropriate to authorize all corporate action, keeping separate and
accurate minutes of such meetings, passing all resolutions or consents
necessary to authorize actions taken or to be taken, and maintaining
accurate and separate books, records and accounts, including, but not
limited to, payroll and intercompany transaction accounts. Regular
stockholders' and directors' meetings shall be held at least annually.
32
(7) Ensure that its Board of Directors shall be elected
independently from the Boards of Directors of its Affiliates and shall
at all times after January 15, 1995 include at least one Independent
Director (for purposes hereof, "INDEPENDENT DIRECTOR" shall mean any
member of the Board of Directors of the Seller that is not and has not
at any time been (x) a director, officer, employee or shareholder of
any Affiliate of the Seller or (y) a member of the immediate family of
any of the foregoing).
(8) Ensure that decisions with respect to its business and daily
operations shall be independently made by the Seller (although the
officer making any particular decision may also be an officer or
director of an Affiliate of the Seller) and shall not be dictated by
an Affiliate of the Seller.
(9) Act solely in its own corporate name and through its own
authorized officers and agents, and no Affiliate of the Seller shall
be appointed to act as agent of the Seller, except as expressly
contemplated by this Agreement or the Related Documents;
(10) Ensure that no Affiliate of the Seller shall advance funds
to the Seller, other than capital contributions made to enable the
Seller to pay the purchase price of Receivables or to otherwise
conduct its business as contemplated by this Agreement and the Related
Documents, and no Affiliate of the Seller will otherwise supply funds
to, or guaranty debts of, the Seller.
(11) Not enter into any guaranty, or otherwise become liable,
with respect to any obligation of any Affiliate of the Seller other
than as expressly contemplated by this Agreement or the Related
Documents.
(12) Ensure that any financial reports required of the Seller
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.
(13) Maintain capitalization adequate for the conduct of its
business.
Section 2.6. REPURCHASE OF RECEIVABLES UPON BREACH OF WARRANTY.
Concurrently with the execution and delivery of this Agreement and each Transfer
Agreement, respectively, AFL and the Seller have entered into the Purchase
Agreement and an Assignment Agreement, the rights of the Seller under which have
been assigned by the Seller to the Trust. Under the Purchase Agreement and each
Assignment Agreement AFL has made the same representations and warranties to the
Seller with respect to the Receivables as those made by Seller pursuant to the
Schedule of Representations, upon which the Owner Trustee has relied in
accepting the Trust Property in trust and executing the Certificates and Notes
and upon which the Indenture Trustee has relied in authenticating the Notes.
Upon discovery by any of AFL, the Seller, the Servicer, the
33
Indenture Trustee or the Owner Trustee of a breach of any of the representations
and warranties contained in Section 2.5 that materially and adversely affects
the interests of the Noteholders, the Certificateholders or the Trust in any
Receivable (including any Liquidated Receivable), the party discovering such
breach shall give prompt written notice to the others; PROVIDED, HOWEVER, that
the failure to give any such notice shall not affect any obligation of AFL or
the Seller. As of the second Accounting Date (or, at AFL's election, the first
Accounting Date) following its discovery or its receipt of notice of any breach
of the representations and warranties set forth on the Schedule of
Representations that materially and adversely affects the interests of the
Noteholders, the Certificateholders or the Trust in any Receivable (including
any Liquidated Receivable) AFL shall, unless such breach shall have been cured
in all material respects, purchase such Receivable from the Trust and, on or
before the related Deposit Date, AFL shall pay the Purchase Amount to the Owner
Trustee pursuant to Section 4.5. The obligations of the Seller with respect to
any such breach of representations and warranties shall be limited to taking any
and all actions necessary to enable the Owner Trustee to enforce directly the
obligations of AFL under the Purchase Agreement and any Assignment Agreement, as
applicable. It is understood and agreed that, except as set forth in this
Section 2.6, the obligation of AFL to repurchase any Receivable as to which a
breach has occurred and is continuing shall, if such obligation is fulfilled,
constitute the sole remedy against AFL or the Seller for such breach available
to the Indenture Trustee on behalf of the Noteholders or the Owner Trustee on
behalf of Certificateholders.
In addition to the foregoing and notwithstanding whether the related
Receivable shall have been purchased by the Seller or AFL, AFL shall indemnify
the Owner Trustee, the Indenture Trustee, the Backup Servicer, the Trust, the
Noteholders and the Certificateholders against all reasonable costs, expenses,
losses, damages, claims and liabilities, including reasonable fees and expenses
of counsel, which may be asserted against or incurred by any of them as a result
of third party claims arising out of the events or facts giving rise to such
breach.
Section 2.7. NONPETITION COVENANT. Until the date that is one year and
one day following the termination of the Trust pursuant to the terms of the
Trust Agreement, none of the Seller, the Servicer, the Owner Trustee (in its
individual capacity or on behalf of the Trust), the Backup Servicer nor AFL
shall petition or otherwise invoke the process of any court or government
authority for the purpose of commencing or sustaining a case against the Trust
or the General Partner under any federal or state bankruptcy, insolvency or
similar law or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Trust or any substantial part of
its property, or ordering the winding up or liquidation of the affairs of the
Trust.
Section 2.8. COLLECTING LIEN CERTIFICATES NOT DELIVERED ON THE INITIAL
CLOSING DATE OR TRANSFER DATE. In the case of any Receivable in respect of
which written evidence from the Dealer selling the related Financed Vehicle that
the Lien Certificate for such Financed Vehicle showing AFL as first lienholder
has been applied for from the Registrar of Titles was delivered to the Custodian
on the Initial Closing Date or Transfer Date, as appropriate, in lieu of a Lien
Certificate, the Servicer shall use its best efforts to collect
34
such Lien Certificate from the Registrar of Titles as promptly as practicable.
If such Lien Certificate showing AFL as first lienholder is not received by the
Custodian within 180 days after the Initial Closing Date or Transfer Date, as
appropriate, then the representation and warranty in paragraph 5 of the Schedule
of Representations in respect of such Receivable shall be deemed to have been
incorrect in a manner that materially and adversely affects the
Certificateholders, the Noteholders and the Trust.
Section 2.9. TRUST'S ASSIGNMENT OF ADMINISTRATIVE RECEIVABLES AND WARRANTY
RECEIVABLES. With respect to all Administrative Receivables and all Warranty
Receivables purchased by the Servicer, the Seller or AFL, the Owner Trustee and
the Indenture Trustee shall take any and all actions reasonably requested by the
Seller, AFL or Servicer, at the expense of the requesting party, to assign,
without recourse, representation or warranty, to the Seller, AFL or the
Servicer, as applicable, all of the Indenture Trustee's and the Trust's right,
title and interest in and to such purchased Receivable, all monies due thereon,
the security interests in the related Financed Vehicles, proceeds from any
Insurance Policies, proceeds from recourse against Dealers on such Receivables
and the interests of the Trust in certain rebates of premiums and other amounts
relating to the Insurance Policies and any documents relating thereto, such
assignment being an assignment outright and not for security; and the Seller,
AFL or the Servicer, as applicable, shall thereupon own such Receivable, and all
such security and documents, free of any further obligation to the Owner
Trustee, the Trust, the Indenture Trustee, the Certificateholders or the
Noteholders with respect thereto.
ARTICLE III
ADMINISTRATION AND SERVICING OF RECEIVABLES
Section 3.1. DUTIES OF THE SERVICER. The Servicer is hereby authorized to
act as agent for the Trust and in such capacity shall manage, service,
administer and make collections on the Receivables, and perform the other
actions required by the Servicer under this Agreement. The Servicer agrees that
its servicing of the Receivables shall be carried out in accordance with
customary and usual procedures of institutions which service motor vehicle
retail installment sales contracts and, to the extent more exacting, the degree
of skill and attention that the Servicer exercises from time to time with
respect to all comparable motor vehicle receivables that it services for itself
or others. In performing such duties, so long as AFL is the Servicer, it shall
comply with the policies and procedures attached hereto as Schedule C. The
Servicer's duties shall include, without limitation, collection and posting of
all payments, responding to inquiries of Obligors on the Receivables,
investigating delinquencies, sending payment coupons to Obligors, reporting any
required tax information to Obligors, policing the collateral, complying with
the terms of the Lockbox Agreement, accounting for collections and furnishing
monthly and annual statements to the Owner Trustee, the Indenture Trustee and
Xxxxxx with respect to distributions, monitoring the status of Insurance
Policies with respect to the Financed Vehicles and performing the other duties
specified herein. The Servicer shall also administer and enforce all rights and
responsibilities of the holder of the Receivables provided for in the Dealer
Agreements (and shall maintain possession of the Dealer
35
Agreements, to the extent it is necessary to do so), the Dealer Assignments and
the Insurance Policies, to the extent that such Dealer Agreements, Dealer
Assignments and Insurance Policies relate to the Receivables, the Financed
Vehicles or the Obligors. To the extent consistent with the standards, policies
and procedures otherwise required hereby, the Servicer shall follow its
customary standards, policies, an procedures and shall have full power and
authority, acting alone, to do any and all things in connection with such
managing, servicing, administration and collection that it may deem necessary or
desirable. Without limiting the generality of the foregoing, the Servicer is
hereby authorized and empowered by the Owner Trustee and the Indenture Trustee
to execute and deliver, on behalf of the Certificateholders and the Trust 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 Receivables and with respect to the Financed Vehicles; PROVIDED, HOWEVER,
that notwithstanding the foregoing, the Servicer shall not, except pursuant to
an order from a court of competent jurisdiction, release an Obligor from payment
of any unpaid amount under any Receivable or waive the right to collect the
unpaid balance of any Receivable from the Obligor, except that the Servicer may
forego collection efforts if the amount subject to collection is DE MINIMIS and
if it would forego collection in accordance with its customary procedures. The
Servicer is hereby authorized to commence, in its own name or in the name of the
Trust (provided the Servicer has obtained the Owner Trustee's consent, which
consent shall not be unreasonably withheld), a legal proceeding to enforce a
Receivable pursuant to Section 3.3 or to commence or participate in any other
legal proceeding (including, without limitation, a bankruptcy proceeding)
relating to or involving a Receivable, an Obligor or a Financed Vehicle. If the
Servicer commences or participates in such a legal proceeding in its own name,
the Trust shall thereupon be deemed to have automatically assigned such
Receivable to the Servicer solely for purposes of commencing or participating in
any such proceeding as a party or claimant, and the Servicer is authorized and
empowered by the Owner Trustee 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 Owner Trustee shall
furnish the Servicer with any powers of attorney and other documents which the
Servicer may reasonably request and which the Servicer deems necessary or
appropriate and take any other steps which the Servicer may deem necessary or
appropriate to enable the Servicer to carry out its servicing and administrative
duties under this Agreement.
Section 3.2. COLLECTION OF RECEIVABLE PAYMENTS; MODIFICATIONS OF
RECEIVABLES; LOCKBOX AGREEMENTS. (a) Consistent with the standards, policies
and procedures required by this Agreement, the Servicer shall make reasonable
efforts to collect all payments called for under the terms and provisions of the
Receivables as and when the same shall become due, and shall follow such
collection procedures as it follows with respect to all comparable automobile
receivables that it services for itself or others and otherwise act with respect
to the Receivables, the Dealer Agreements, the Dealer Assignments, the Insurance
Policies and the other Trust Property in such manner as will, in the reasonable
judgment of the Servicer, maximize the amount to be received by the Trust with
respect thereto. The Servicer is authorized in its discretion to waive any
prepayment charge, late payment
36
charge or any other similar fees that may be collected in the ordinary course of
servicing any Receivable.
(b) The Servicer may at any time agree to a modification or amendment of a
Receivable in order to (i) change the Obligor's regular due date to a date
within the Monthly Period in which such due date occurs or (ii) re-amortize the
scheduled payments on the Receivable following a partial prepayment of
principal.
(c) The Servicer may grant payment extensions on, or other modifications
or amendments to, a Receivable (in addition to those modifications permitted by
Section 3.2(b)) in accordance with its customary procedures if the Servicer
believes in good faith that such extension, modification or amendment is
necessary to avoid a default on such Receivable, will maximize the amount to be
received by the Trust with respect to such Receivable, and is otherwise in the
best interests of the Trust; PROVIDED, HOWEVER, that:
(i) The aggregate period of all extensions on a Receivable shall not
exceed three months;
(ii) In no event may a Receivable be extended beyond the Monthly
Period immediately preceding the Final Scheduled Distribution Date;
(iii) The aggregate Principal Balances of the Receivables which have
been extended during any calendar quarter (computed as of the Accounting
Date immediately prior to the first day of such calendar quarter) shall not
exceed 1.5% of the average of the Aggregate Principal Balances as of the
Accounting Date immediately prior to the first day of such Calendar Quarter
and the three immediately succeeding Accounting Dates; and
(iv) No such extension, modification or amendment shall be granted
more than 90 days after the Initial Closing Date or the related Transfer
Date if such action would have the effect of causing such Receivable to be
deemed to have been exchanged for another Receivable within the meaning of
Section 1001 of the Internal Revenue Code of 1986, as amended, or any
proposed, temporary or final Treasury Regulations issued thereunder.
(d) The Servicer shall use its best efforts to cause Obligors to make all
payments on the Receivables, whether by check or by direct debit of the
Obligor's bank account, to be made directly to one or more Lockbox Banks, acting
as agent for the Trust pursuant to a Lockbox Agreement. Amounts received by a
Lockbox Bank in respect of the Receivables may initially be deposited into a
demand deposit account maintained by the Lockbox Bank as agent for the Trust 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
37
account held by the Lockbox Bank, or an Eligible Account satisfying clause (i)
of the definition thereof.
Prior to the Initial Closing Date and any Transfer Date the Servicer shall
have notified each Obligor that makes its payments on the 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 Xxxxxx, the Servicer shall request each Obligor that makes payment
on the Receivables by direct debit of such Obligor's bank account, to execute a
new authorization for automatic payment which in the judgment of Xxxxxx is
sufficient to authorize direct debit by the Lockbox Bank on behalf of the Trust.
If at any time the Lockbox Bank is unable to directly debit an Obligor's bank
account that makes payment on the Receivables by direct debit and if such
inability is not cured within 15 days or cannot be cured by execution by the
Obligor of a new authorization for automatic payment, the Servicer shall notify
such Obligor that it cannot make payment by direct debit and must thereafter
make payment by check.
Notwithstanding any Lockbox Agreement, or any of the provisions of this
Agreement relating to the Lockbox Agreement, the Servicer shall remain obligated
and liable to the Owner Trustee, Indenture Trustee, Certificateholders and
Noteholders for servicing and administering the Receivables and the other Trust
Property in accordance with the provisions of this Agreement without diminution
of such obligation or liability by virtue thereof.
In the event the Servicer shall for any reason no longer be acting as such,
the successor Servicer shall thereupon assume all of the rights and obligations
of the outgoing Servicer under the Lockbox Agreement. In such event, the
successor Servicer shall be deemed to have assumed all of the outgoing
Servicer's interest therein and to have replaced the outgoing Servicer as a
party to each such Lockbox Agreement to the same extent as if such Lockbox
Agreement had been assigned to the successor Servicer, except that the outgoing
Servicer shall not thereby be relieved of any liability or obligations on the
part of the outgoing Servicer to the Lockbox Bank under such Lockbox Agreement.
The outgoing Servicer shall, upon request of the Owner Trustee 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
38
of any Lockbox Agreement to the successor Servicer. In the event that Xxxxxx
elects to change the identity of the Lockbox Bank, the outgoing Servicer, at its
expense, shall cause the Lockbox Bank to deliver, at the direction of Xxxxxx to
the Owner Trustee or a successor Lockbox Bank, all documents and records
relating to the Receivables and all amounts held (or thereafter received) by the
Lockbox Bank (together with an accounting of such amounts) and shall otherwise
use its best efforts to effect the orderly and efficient transfer of the lockbox
arrangements and the Servicer shall notify the Obligors to make payments to the
Lockbox established by the successor.
(e) The Servicer shall remit all payments by or on behalf of the Obligors
received directly by the Servicer to the Subcollection 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 later than the
Business Day after receipt thereof.
Section 3.3. REALIZATION UPON RECEIVABLES. (a) Consistent with the
standards, policies and procedures required by this Agreement, the Servicer
shall use its best efforts to repossess (or otherwise comparably convert the
ownership of) and liquidate any Financed Vehicle securing a Receivable with
respect to which the Servicer has determined that payments thereunder are not
likely to be resumed, as soon as is practicable after default on such Receivable
but in no event later than the date on which all or any portion of a Scheduled
Payment has become 91 days delinquent. The Servicer is authorized to follow
such customary practices and procedures as it shall deem necessary or advisable,
consistent with the standard of care required by Section 3.1, which practices
and procedures may include reasonable efforts to realize upon any recourse to
Dealers, the sale of the related Financed Vehicle at public or private sale, the
submission of claims under an Insurance Policy and other actions by the Servicer
in order to realize upon such a Receivable. The foregoing is subject to the
provision that, in any case in which the Financed Vehicle shall have suffered
damage, the Servicer shall not expend funds in connection with any repair or
towards the repossession of such Financed Vehicle unless it shall determine in
its discretion that such repair and/or repossession shall increase the proceeds
of liquidation of the related Receivable by an amount greater than the amount of
such expenses. All amounts received upon liquidation of a Financed Vehicle
shall be remitted directly by the Servicer to the Subcollection Account without
deposit into any intervening account as soon as practicable, but in no event
later than the Business Day after receipt thereof. The Servicer shall be
entitled to recover all reasonable expenses incurred by it in the course of
repossessing and liquidating a Financed Vehicle into cash proceeds, but only out
of the cash proceeds of such Financed Vehicle, any deficiency obtained from the
Obligor or any amounts received from the related Dealer, which amonts may be
retained by the Servicer (and shall not be required to be deposited as provided
in Section 3.2(e)) to the extent of such expenses. The Servicer shall pay on
behalf of the Trust any personal property taxes assessed on repossessed Financed
Vehicles; the Servicer shall be entitled to reimbursement of any such tax from
Liquidation Proceeds with respect to such Receivable.
(b) If the Servicer elects to commence a legal proceeding to enforce a
Dealer Agreement or Dealer Assignment, the act of commencement shall be deemed
to be an automatic assignment from the Trust and the Indenture Trustee 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
39
Agreement or Dealer Assignment, the Owner Trustee, at the Servicer's expense, or
the Seller, at the Seller's expense, shall take such steps as the Servicer deems
necessary to enforce the Dealer Agreement or Dealer Assignment, including
bringing suit in its name or the name of the Seller or of the Owner Trustee for
the benefit of the Certificateholders and the Indenture Trustee in respect of
the Secured Obligations. All amounts recovered shall be remitted directly by
the Servicer as provided in Section 3.2(e).
Section 3.4. INSURANCE. (a) The Servicer shall require that each
Financed Vehicle be insured by the Insurance Policies referred to in Paragraph
24 of the Schedule of Representations (the "Collateral Insurance") and shall
monitor the status of such physical loss and damage insurance coverage
thereafter, in accordance with its customary servicing procedures. Each
Receivable requires the Obligor to maintain such physical loss and damage
insurance, naming AFL and its successors and assigns as additional insureds, and
permits the holder of such Receivable to obtain physical loss and damage
insurance at the expense of the Obligor if the Obligor fails to maintain such
insurance. If the Servicer shall determine that an Obligor has failed to obtain
or maintain a physical loss and damage Insurance Policy covering the related
Financed Vehicle which satisfies the conditions set forth in clause (i)(a) of
such Paragraph 24 (including, without limitation, during the repossession of
such Financed Vehicle) the Servicer shall enforce the rights of the holder of
the Receivable under the Receivable to require the Obligor to obtain such
physical loss and damage insurance.
(b) 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 Owner Trustee. Any cost incurred by the Servicer in maintaining such
Force-Placed Insurance shall only be recoverable out of premiums paid by the
Obligors or Liquidation Proceeds with respect to the Receivable, as provided in
Section 3.4(c).
(c) 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 for distribution on the Notes or the Certificates. The Servicer shall
retain and separately administer the right to receive payments from Obligors
with respect to Insurance Add-On Amounts or rebates of Forced-Placed Insurance
premiums. If an Obligor makes a payment with respect to a Receivable having
Force-Placed Insurance, but 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. Liquidation Proceeds on any Receivable will be used
first to pay the Principal Balance and accrued interest on such Receivable and
then to pay the related Insurance Add-On Amount. If an Obligor under a
40
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 Trust for the Purchase Amount on any subsequent Deposit
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.
(d) The Servicer may xxx to enforce or collect upon the Insurance
Policies, in its own name, if possible, or as agent of the Trust. 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 Trust 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 Owner Trustee, on behalf of the Trust, at the Servicer's expense, or
the Seller, at the Seller's expense, shall take such steps as the Servicer deems
necessary to enforce such Insurance Policy, including bringing suit in its name
or the name of the Owner Trustee for the benefit of the Certificateholders and
the Indenture Trustee in respect of the Secured Obligations.
(e) Subject to the fourth sentence of this subsection (e), 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 Owner Trustee to be named a loss payee under all such policies. The
Servicer may, with the consent of Xxxxxx, elect not to maintain such insurance
policy but in such event will be obligated to indemnify the Trust against any
losses arising from an Obligor's failure to maintain physical loss and damage
insurance with respect to the related Financed Vehicle.
Section 3.5. MAINTENANCE OF SECURITY INTERESTS IN VEHICLES. (a)
Consistent with the policies and procedures required by this Agreement, the
Servicer shall take such steps as are necessary to maintain perfection of the
security interest created by each Receivable in the related Financed Vehicle on
behalf of the Trust, including but not limited to obtaining the execution by the
Obligors and the recording, registering, filing, re-recording, re-filing, and
re-registering of all security agreements, financing statements and continuation
statements as are necessary to maintain the security interest granted by the
Obligors under the respective Receivables. The Owner Trustee hereby authorizes
the Servicer, and the Servicer agrees, to take any and all steps necessary to
re-perfect such security interest on behalf of the Trust as necessary because of
the relocation of a Financed Vehicle or for any other reason. In the event that
the assignment of a Receivable to the Owner Trustee on behalf of the Trust is
insufficient, without a notation on the related Financed Vehicle's certificate
of title, or
41
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 Trust, the Servicer
hereby agrees that the Servicer's designation as the secured party on the
certificate of title is in its capacity as agent of the Trust.
(b) Upon the occurrence of a Servicer Termination Event, the Owner Trustee
and the Servicer shall take or cause to be taken such action as may, in the
opinion of counsel to the Owner Trustee, be necessary to perfect or re-perfect
the security interests in the Financed Vehicles securing the Receivables in the
name of the Trust by amending the title documents of such Financed Vehicles or
by such other reasonable means as may, in the opinion of counsel to the Owner
Trustee, be necessary or prudent. AFL hereby agrees to pay all expenses related
to such perfection or re-perfection and to take all action necessary therefor.
Section 3.6. COVENANTS, REPRESENTATIONS, AND WARRANTIES OF SERVICER. By
its execution and delivery of this Agreement, the Servicer makes the following
representations, warranties and covenants on which the Owner Trustee relies in
accepting the Receivables in trust and issuing the Certificates and the Notes on
behalf of the Trust and on which the Indenture Trustee relies in authenticating
the Notes.
(a) The Servicer covenants as follows:
(i) LIENS IN FORCE. The Financed Vehicle securing each Receivable
shall not be released in whole or in part from the security interest
granted by the Receivable, except upon payment in full of the Receivable or
as otherwise contemplated herein;
(ii) NO IMPAIRMENT. The Servicer shall do nothing to impair the
rights of the Trust, the Certificateholders or the Noteholders in the
Receivables, the Dealer Agreements, the Dealer Assignments, the Insurance
Policies or the other Trust Property; and
(iii) NO AMENDMENTS. The Servicer shall not extend or otherwise
amend the terms of any Receivable, except in accordance with Section 3.2.
(b) The Servicer represents, warrants and covenants as of the Initial
Closing Date and the Effectiveness Date as to itself:
(i) ORGANIZATION AND GOOD STANDING. The Servicer has been duly
organized and is validly existing and in good standing under the laws of
its jurisdiction of organization, with power, authority and legal right to
own its properties and to conduct its business as such properties are
currently owned and such business is currently conducted, and had at all
relevant times, and now has, power, authority and legal right to enter into
and perform its obligations under this Agreement;
(ii) DUE QUALIFICATION. The Servicer is duly qualified to do
business as a foreign corporation in good standing, and has obtained all
necessary licenses and
42
approvals, in all jurisdictions in which the ownership or lease of property
or the conduct of its business (including the servicing of the Receivables
as required by this Agreement) requires or shall require such
qualification;
(iii) POWER AND AUTHORITY. The Servicer has the power and authority
to execute and deliver this Agreement and its Related Documents and to
carry out its terms and their terms, respectively, and the execution,
delivery and performance of this Agreement and the Servicer's Related
Documents have been duly authorized by the Servicer by all necessary
corporate action;
(iv) BINDING OBLIGATION. This Agreement and the Servicer's Related
Documents shall constitute legal, valid and binding obligations of the
Servicer enforceable in accordance with their respective terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization, or
other similar laws affecting the enforcement of creditors' rights generally
and by equitable limitations on the availability of specific remedies,
regardless of whether such enforceability is considered in a proceeding in
equity or at law;
(v) NO VIOLATION. The consummation of the transactions contemplated
by this Agreement and the Servicer's Related Documents, and the fulfillment
of the terms of this Agreement and the Servicer's Related Documents, shall
not conflict with, result in any breach of any of the terms and provisions
of, or constitute (with or without notice or lapse of time) a default
under, the articles of incorporation or bylaws of the Servicer, or any
indenture, agreement, mortgage, deed of trust or other instrument to which
the Servicer is a party or by which it is bound, or result in the creation
or imposition of any Lien upon any of its properties pursuant to the terms
of any such indenture, agreement, mortgage, deed of trust or other
instrument, other than this Agreement, or violate any law, order, rule or
regulation applicable to the Servicer of any court or of any federal or
state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Servicer or any of its
properties. Notwithstanding the foregoing, it is understood that no
representation or warranty is expressed herein with respect to the legality
of the use of the word "Olympic" by the Servicer;
(vi) NO PROCEEDINGS. There are no proceedings or investigations
pending or, to the Servicer's knowledge, threatened against the Servicer,
before any court, regulatory body, administrative agency or other tribunal
or governmental instrumentality having jurisdiction over the Servicer or
its properties (A) asserting the invalidity of this Agreement or any of the
Related Documents, (B) seeking to prevent the issuance of the Certificates
or the Notes or the consummation of any of the transactions contemplated by
this Agreement or any of the Related Documents, or (C) seeking any
determination or ruling that might materially and adversely affect the
performance by the Servicer of its obligations under, or the validity or
enforceability of, this Agreement or any of the Related Documents or (D)
seeking to adversely affect the federal income tax or other federal, state
or local tax attributes of the Certificates or the Notes;
43
(vii) NO CONSENTS. The Servicer is not required to obtain the
consent of any other party or any consent, license, approval or
authorization, or registration or declaration with, any governmental
authority, bureau or agency in connection with the execution, delivery,
performance, validity or enforceability of this Agreement;
(viii) COLLATERAL INSURANCE. The Collateral Insurance is in full
force and effect.
Section 3.7. PURCHASE OF RECEIVABLES UPON BREACH OF COVENANT. Upon
discovery by any of the Servicer, the Owner Trustee or the Indenture Trustee of
a breach of any of the covenants set forth in Sections 3.5(a) or 3.6(a), the
party discovering such breach shall give prompt written notice to the others;
PROVIDED, HOWEVER, that the failure to give any such notice shall not affect any
obligation of the Servicer. As of the second Accounting Date following its
discovery or receipt of notice of any breach of any covenant set forth in
Sections 3.5(a) or 3.6(a) which materially and adversely affects the interests
of the Certificateholders, the Noteholders or the Trust in any Receivable
(including any Liquidated Receivable) (or, at the Servicer's election, the first
Accounting Date so following), the Servicer shall, unless it shall have cured
such breach in all material respects, purchase from the Trust the Receivable
affected by such breach and, on the related Deposit Date, the Servicer shall pay
the related Purchase Amount. It is understood and agreed that the obligation of
the Servicer to purchase any Receivable (including any Liquidated Receivable)
with respect to which such a breach has occurred and is continuing shall, if
such obligation is fulfilled, constitute the sole remedy against the Servicer
for such breach available to the Certificateholders, the Noteholders, the Owner
Trustee on behalf of Certificateholders or the Indenture Trustee on behalf of
Noteholders; PROVIDED, HOWEVER, that the Servicer shall indemnify the Owner
Trustee, the Backup Servicer, the Trust, the Indenture Trustee, the Noteholders
and the Certificateholders against all costs, expenses, losses, damages, claims
and liabilities, including reasonable fees and expenses of counsel, which may be
asserted against or incurred by any of them as a result of third party claims
arising out of the events or facts giving rise to such breach.
Section 3.8. TOTAL SERVICING FEE; PAYMENT OF CERTAIN EXPENSES BY SERVICER.
On each Distribution Date, the Servicer shall be entitled to receive out of the
Collection Account the Basic Servicing Fee and any Supplemental Servicing Fee
for the related Monthly Period pursuant to Section 4.6. The Servicer shall be
required to pay all expenses incurred by it in connection with its activities
under this Agreement (including taxes imposed on the Servicer), expenses
incurred in connection with distributions and reports to Certificateholders and
Noteholders and all other fees and expenses of the Trust, including taxes levied
or assessed against the Trust, and claims against the Trust in respect of
indemnification, unless such fees, expenses or claims in respect of
indemnification are expressly stated to be for the account of AFL or not to be
for the account of the Servicer. The Servicer shall be liable for the fees and
expenses of the Owner Trustee, the Administrator, the Indenture Trustee, the
Custodian, the Backup Servicer, the Lockbox Bank (and any fees under the Lockbox
Agreement) and the Independent Accountants. Notwithstanding the foregoing, if
the Servicer shall not be AFL, a successor to AFL as Servicer permitted by
Section 7.2 or an Affiliate of any of the foregoing, such Servicer shall
44
not be liable for taxes levied or assessed against the Trust or claims against
the Trust in respect of indemnification.
Section 3.9. SERVICER'S CERTIFICATE. (a) No later than 10:00 a.m. New
York City time on each Determination Date, the Servicer shall deliver to the
Owner Trustee, the Indenture Trustee, the Backup Servicer, Xxxxxx and each
Rating Agency a Servicer's Certificate executed by a Responsible Officer of
the Servicer containing, among other things, (i) all information necessary to
enable the Indenture Trustee to make the distributions required by Section
4.6 and to determine the amount to which the Servicer is entitled to be
reimbursed or has been reimbursed during the related Monthly Period for
Monthly Advances pursuant to Section 4.4(d), (ii) all information necessary
to enable the Indenture Trustee to send the statements to Noteholders,
Certificateholders and Xxxxxx required by Section 4.9, (iii) a listing of all
Warranty Receivables and Administrative Receivables purchased as of the
related Deposit Date, identifying the Receivables so purchased and (iv) all
information necessary to enable the Indenture Trustee to reconcile all
deposits to, and withdrawals from, the Collection Account for the related
Monthly Period and Distribution Date, including the accounting required by
Section 4.8. Receivables purchased by the Servicer or by the Seller or AFL
on the related Deposit Date and each Receivable which became a Liquidated
Receivable or which was paid in full during the related Monthly Period shall
be identified by account number (as set forth in the Schedule of
Receivables). A copy of such certificate may be obtained by any
Certificateholder or Noteholder (or by a Certificate Owner or Note Owner,
upon certification that such Person is a Certificate Owner or Note Owner and
payment of any expenses associated with the distribution thereof) by a
request in writing to the Indenture Trustee addressed to the Corporate Trust
Office. In addition to the information set forth in the preceding sentence,
the Servicer's Certificate delivered to the Indenture Trustee and Xxxxxx on
the Determination Date shall also contain the following information: (A) the
Delinquency Ratio, Portfolio Loss Ratio, Warehousing Loss Ratio and Average
Net Excess Spread Percentage for such Determination Date; (B) whether any
Trigger Event has occurred as of such Determination Date; (C) whether to the
knowledge of the Servicer a Purchase Termination Event or Servicer
Termination Event has occurred; and (D) such other information as Xxxxxx
requests from time to time.
(b) No later than 10:00 a.m. New York City time on the date that is five
Business Days prior to a Trust Property Liquidation Date, the Servicer shall
deliver to the Owner Trustee, the Indenture Trustee, the Backup Servicer,
Xxxxxx and each Rating Agency, a Servicer's Certificate executed by a
Responsible Officer of the Servicer containing, among other things, (i) all
information necessary for the distributions in Section 4.7, (ii) a listing of
all purchasers of Receivables identifying the Receivables being purchased by
each purchaser, (iii) for Receivables being purchased by the Seller
specifying the specific source of funds for payment of the Seller's portion
of the purchase price, (iv) the aggregate purchase price, and (v) whether the
purchase of Trust Property will be in connection with a final liquidation and
termination of the Trust.
(c) On or before October 31 and April 30 of each year, beginning on
October 31, 1997, the Servicer shall cause a firm of Independent Accountants
to review, in accordance
45
with procedures agreed upon by the Servicer, Xxxxxx, and such Independent
Accountants, two randomly selected Servicer's Certificates prepared for the
Trust within the immediately preceding six calendar months and to issue
promptly, but in no event any later than 30 days after such review, its report
in connection with such review to Xxxxxx. If Xxxxxx does not receive such
reports in accordance with the preceding sentence, Xxxxxx shall provide written
notice of non-delivery thereof to the Servicer.
Section 3.10. ANNUAL STATEMENT AS TO COMPLIANCE; NOTICE OF SERVICER
TERMINATION EVENT. (a) The Servicer shall deliver to the Owner Trustee, the
Indenture Trustee, the Backup Servicer, Xxxxxx and each Rating Agency, on or
before March 31 (or 90 days after the end of the Servicer's fiscal year, if
other than December 31) of each year, beginning on March 31, 1997, an officer's
certificate signed by any Responsible Officer of the Servicer, dated as of
December 31 (or other applicable date) of the immediately preceding 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 Initial
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.
(b) The Servicer shall deliver to the Owner Trustee, the Indenture
Trustee, the Backup Servicer, Xxxxxx and each Rating Agency, promptly after
having obtained knowledge thereof, but in no event later than 2 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 8.1(a). The Seller or the Servicer shall
deliver to the Owner Trustee, the Indenture Trustee, the Backup Servicer,
Xxxxxx, the Servicer or the Seller (as applicable) and each Rating Agency
promptly after having obtained knowledge thereof, but in no event later than 2
Business Days thereafter, written notice in an officer's certificate of any
event which with the giving of notice or lapse of time, or both, would become a
Servicer Termination Event under any other clause of Section 8.1.
Section 3.11. ANNUAL INDEPENDENT ACCOUNTANTS' REPORT. (a) The Servicer
shall cause a firm of nationally recognized independent certified public
accountants (the "Independent Accountants"), who may also render other services
to the Servicer or to the Seller, to deliver to the Owner Trustee, the Indenture
Trustee, the Backup Servicer, Xxxxxx and each Rating Agency, on or before March
31 (or 90 days after the end of the Servicer's fiscal year, if other than
December 31) of each year, beginning on March 31, 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 Initial Closing Date
to the date of such certificate), a statement (the "Accountant's Report")
addressed to the Board of Directors of the Servicer, to the Owner Trustee, the
Indenture Trustee, the Backup Servicer and to Xxxxxx to the effect that such
firm has audited the financial statements of the Servicer and issued its report
thereon and that such audit was made in
46
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 including procedures as
determined by the Independent Accountants related to (1) the documents and
records concerning the servicing of automobile installment sales contracts under
pooling and servicing agreements and sale and servicing agreements substantially
similar one to another (such statement to have attached thereto a schedule
setting forth the pooling and servicing agreements and sale and servicing
agreements covered thereby, including this Agreement); and (2) the delinquency
and loss statistics relating to the Servicer's portfolio of automobile
installment sales contracts; and except as described in the statement, disclosed
no exceptions or errors in the records relating to automobile and light truck
loans serviced for others that, in the firm's opinion, generally accepted
auditing standards requires such firm to report. The Accoutants' Report shall
further state that (1) a review in accordance with agreed upon procedures was
made of three randomly selected Servicer's Certificates for each Trust and (2)
except as disclosed in the Report, no exceptions or errors in the Servicer's
Certificates so examined were found.
(b) The Accountants' Report shall also indicate that the firm is
independent of the Seller and the Servicer within the meaning of the Code of
Professional Ethics of the American Institute of Certified Public Accountants.
(c) A copy of the Accountants' Report may be obtained by any
Certificateholder or Noteholder by a request in writing to the Indenture Trustee
addressed to the Corporate Trust Office.
Section 3.12. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING
RECEIVABLES. The Servicer shall provide to representatives of the Owner
Trustee, Indenture Trustee, the Backup Servicer and Xxxxxx reasonable access to
the documentation regarding the Receivables. The Servicer shall provide such
access to any Certificateholder or Noteholder only after the occurrence of a
Certificate Purchase Termination Event or a Note Purchase Termination Event, as
the case may be, or in such cases where the Servicer is required by applicable
statutes or regulations (whether applicable to the Servicer or to such
Certificateholder or Noteholder) to permit such Certificateholder or Noteholder
to review such documentation. In each case, such access shall be afforded
without charge but only upon reasonable request and during normal business
hours. Nothing in this Section shall derogate from the obligation of the
Servicer to observe any applicable law prohibiting disclosure of information
regarding the Obligors, and the failure of the Servicer to provide access as
provided in this Section as a result of such obligation shall not constitute a
breach of this Section. Any Certificateholder or Noteholder, by its acceptance
of a Certificate or Note (or by acquisition of its beneficial interest therein),
as applicable, shall be deemed to have agreed to keep confidential and not to
use for its own benefit any information obtained by it pursuant to this Section,
except as may be required by applicable law or requested or required in court
proceedings or by regulatory authority.
Section 3.13. 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 Indenture
47
Trustee and the Backup Servicer a computer tape and a diskette (or any other
electronic transmission acceptable to the Indenture Trustee and the Backup
Servicer) in a format acceptable to the Indenture Trustee and the Backup
Servicer containing the information with respect to the Receivables as of the
preceding Accounting Date necessary for preparation of the Servicer's
Certificate relating to the immediately succeeding Determination Date and
necessary to determine the application of collections as provided in Section
4.3. The Backup Servicer shall use such tape or diskette (or other electronic
transmission acceptable to the Indenture Trustee and the Backup Servicer) to
verify the Servicer's Certificate delivered by the Servicer, and the Backup
Servicer shall certify to Xxxxxx that it has verified the Servicer's Certificate
in accordance with this Section 3.13 and shall notify the Servicer and Xxxxxx of
any discrepancies, in each case, on or before the second Business Day following
the Determination Date. In the event that the Backup Servicer reports any
discrepancies, the Servicer and the Backup Servicer shall attempt to reconcile
such discrepancies prior to the fourth Business Day prior to the related
Distribution Date, but in the absence of a reconciliation, the Servicer's
Certificate shall control for the purpose of calculations and distributions with
respect to the related Distribution Date. In the event that the Backup Servicer
and the Servicer are unable to reconcile discrepancies with respect to a
Servicer's Certificate by the related Distribution Date, the Servicer shall
cause the Independent Accountants, at the Servicer's expense, to audit the
Servicer's Certificate and, prior to the third Business Day, but in no event
later than the fifth calendar day, of the following month, reconcile the
discrepancies. The effect, if any, of such reconciliation shallbe reflected in
the Servicer's Certificate for such next succeeding Determination Date. In
addition, the Servicer shall, if so requested by the Backup Servicer deliver to
the Backup Servicer its Collection Records and its Monthly Records within one
Business Day of demand therefor and a computer tape containing as of the close
of business on the date of demand all of the data maintained by the Servicer in
computer format in connection with servicing the Receivables. Other than the
duties specifically set forth in this Agreement, the Backup Servicer shall have
no obligations hereunder, including, without limitation, to supervise, verify,
monitor or administer the performance of the Servicer. The Backup Servicer
shall have no liability for any actions taken or omitted by the Servicer. The
duties and obligations of the Backup Servicer shall be determined solely by the
express provisions of this Agreement, and no implied covenants or obligations
shall be read into this Agreement against the Backup Servicer.
Section 3.14. RETENTION OF SERVICER. The Servicer hereby covenants and
agrees to act as such under this Agreement until the termination of the Trust,
subject to and in accordance with the terms and conditions of this Agreement.
Section 3.15. FIDELITY BOND. The Servicer shall maintain a fidelity bond
in such form and amount as is customary for entities acting as custodian of
funds and documents in respect of consumer contracts on behalf of institutional
investors.
Section 3.16. DUTIES OF THE SERVICER UNDER THE INDENTURE. The Servicer
shall, and hereby agrees that it will, perform on behalf of the Trust and the
Owner Trustee the following duties of the Trust or the Owner Trustee, as
applicable, under the Indenture (references are to the applicable Sections in
the Indenture):
48
(a) the direction to the Paying Agents, if any, to deposit moneys
with the Indenture Trustee (Section 3.03);
(b) the obtaining and preservation of the Issuer's qualification to
do business in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of the Indenture, the
Notes, the Indenture Collateral and each other instrument and agreement
included in the Trust Estate (Section 3.04);
(c) the preparation of all supplements, amendments, financing
statements, continuation statements, instruments of further assurance and
other instruments, in accordance with Section 3.05 of the Indenture,
necessary to protect the Trust Estate (Section 3.05);
(d) the delivery of the Opinion of Counsel on the Initial Closing
Date, the Effectiveness Date and the annual delivery of Opinions of
Counsel, in accordance with Section 3.06 of the Indenture, as to the Trust
Estate, and the annual delivery of the Officer's Certificate and certain
other statements, in accordance with Section 3.09 of the Indenture, as to
compliance with the Indenture (Sections 3.06 and 3.09);
(e) the preparation and obtaining of documents and instruments
required for the release of the Issuer from its obligations under the
Indenture (Section 3.10(b));
(f) the monitoring of the Issuer's obligations as to the satisfaction
and discharge of the Indenture and the preparation of an Officer's
Certificate and the obtaining of the Opinion of Counsel and the Independent
Certificate relating thereto (Section 4.01);
(g) the preparation of any written instruments required to confirm
more fully the authority of any co-trustee or separate trustee and any
written instruments necessary in connection with the resignation or removal
of any co-trustee or separate trustee (Sections 6.08 and 6.10);
(h) the opening of one or more accounts in the Trust's name, the
preparation of Issuer Orders, Officer's Certificates and Opinions of
Counsel and all other actions necessary with respect to investment and
reinvestment of funds in the Trust Accounts (Sections 8.02 and 8.03);
(i) the preparation of Trust Orders and the obtaining of Opinions of
Counsel with respect to the execution of supplemental indentures (Sections
9.01, 9.02 and 9.03);
(j) the preparation of all Officer's Certificates, Opinions of
Counsel and Independent Certificates with respect to any requests by the
Issuer to the Indenture Trustee to take any action under the Indenture
(Section 11.01(a));
49
(k) the preparation and delivery of Officer's Certificates and the
obtaining of Independent Certificates, if necessary, for the release of
property from the lien of the Indenture (Section 11.01(b)); and
(l) the recording of the Indenture, if applicable (Section 11.15).
In addition to the duties of the Servicer set forth above, the Servicer shall,
and hereby agrees that it will, prepare, distribute and file any reports
required by Section 313(b) of the Trust Indenture Act of 1939 as a result of any
transfer of Receivables. Such distribution and filing is to be effected by the
Servicer's distribution and filing of the Servicer's Certificate.
Section 3.17. DAILY REPORT. The Servicer shall provide to the Indenture
Trustee, the Owner Trustee and Xxxxxx a daily report setting forth the principal
collections with respect to the Receivables for the previous day.
Section 3.18. CERTAIN DUTIES OF THE SERVICER UNDER THE TRUST AGREEMENT.
The Servicer shall, and hereby agrees that it will, monitor the Trust's
compliance with all applicable provisions of state and federal securities laws,
notify the Trust and the Administrator of any actions to be taken by the Trust
necessary for compliance with such laws and prepare on behalf of the Trust and
the Administrator all notices, filings or other documents or instruments
required to be filed under such laws.
Section 3.19. MONTHLY REPORTS. The Servicer (if AFL is the Servicer)
shall deliver to Xxxxxx on or prior to the 20th of each month (or if the
twentieth is not a Business Day, the next succeeding Business Day), the
"Internal Static Pool Analysis" with respect to the Receivables and AFL's
"Credit Administration" report (together, the "MONTHLY REPORTS"), in each case
with respect to the immediately preceding Monthly Period. If Xxxxxx does not
receive the Monthly Reports in accordance with the preceding sentence, Xxxxxx
shall provide written notice of non-delivery thereof to the Servicer.
ARTICLE IV
DISTRIBUTIONS; STATEMENTS TO
CERTIFICATEHOLDERS AND NOTEHOLDERS
Section 4.1. TRUST ACCOUNTS. (a) The Servicer shall establish the
Collection Account in the name of the Indenture Trustee for the benefit of the
Certificateholders and in respect of the Secured Obligations. The Collection
Account shall be an Eligible Account and initially shall be a segregated trust
account established with the Indenture Trustee and maintained with the Indenture
Trustee.
(b) The Servicer shall establish the Note Distribution Account in the name
of the Indenture Trustee in respect of the Secured Obligations. The Note
Distribution Account shall be an Eligible Account and initially shall be a
segregated trust account established with the Indenture Trustee and maintained
with the Indenture Trustee.
50
(c) The Servicer shall establish the Spread Account in the name of the
Indenture Trustee for the benefit of the Certificateholders and in respect of
the Secured Obligations. The Spread Account shall be an Eligible Account and
initially shall be a segregated trust account established with the Indenture
Trustee and maintained with the Indenture Trustee.
(d) The Servicer shall establish the Principal Funding Account in the name
of the Indenture Trustee for the benefit of the Certificateholders and in
respect of the Secured Obligations. The Principal Funding Account shall be an
Eligible Account and initially shall be a segregated trust account established
with the Indenture Trustee and maintained with the Indenture Trustee.
(e) All amounts held in the Collection Account, the Note Distribution
Account, the Spread Account and the Principal Funding Account (collectively,
together with the Certificate Distribution Account and the Subcollection
Account, the "Trust Accounts") shall, to the extent permitted by applicable
laws, rules and regulations, be invested, as directed by the Servicer, in
Eligible Investments that mature not later than one Business Day prior to the
Distribution Date for the Monthly Period to which such amounts relate. Any such
written direction shall certify that any such investment is authorized by this
Section 4.1. Any investment of funds in the Trust Accounts (other than the
Certificate Distribution Account) shall be made in Eligible Investments held by
a financial institution in accordance with the following requirements: (a) all
Eligible Investments shall be held in an account with such financial institution
in the name of the Indenture Trustee, (b) with respect to securities held in
such account, such securities shall be (i) certificated securities (as such term
is used in N.Y. UCC Section 8-313(d)(i)), securities deemed to be certificated
securities under applicable regulations of the United States government, or
uncertificated securities issued by an issuer organized under the laws of the
State of New York or the State of Delaware, (ii) either (A) in the possession of
such institution, (B) in the possession of a clearing corporation (as such term
is used in Minn. Stat. Section 336.8-313(g)) in the State of New York,
registered in the name of such clearing corporation or its nominee, not endorsed
for collection or surrender or any other purpose not involving transfer, not
containing any evidence of a right or interest inconsistent with the Indenture
Trustee's security interest therein, and held by such clearing corporation in an
account of such institution, (C), held in an account of such institution with
the Federal Reserve Bank of New York or the Federal Reserve Bank of Minneapolis,
or (D) in the case of uncertificated securities, issued in the name of such
institution, and (iii) identified, by book entry or otherwise, as held for the
account of, or pledged to, the Indenture Trustee on the records of such
institution, and such institution shall have sent the Indenture Trustee a
confirmation thereof, (c) with respect to repurchase obligations held in such
account, such repurchase obligations shall be identified by such institution, by
book entry or otherwise, as held for the account of, or pledged to, the
Indenture Trustee on the records of such institution, and the related securities
shall be held in accordance with the requirements of clause (b) above, and (d)
with respect to other Eligible Investments other than securities and repurchase
agreements, such Eligible Investments shall be held in a manner acceptable to
the Indenture Trustee. Subject to the other provisions hereof, the Indenture
Trustee shall have sole control over each such investment and the income
thereon, and any certificate or other instrument evidencing any such investment,
if any, shall be delivered directly to the Indenture Trustee
51
or its agent, together with each document of transfer, if any, necessary to
transfer title to such investment to the Indenture Trustee in a manner which
complies with this Section 4.1. All interest, dividends, gains upon sale and
other income from, or earnings on, investments of funds in the Trust Accounts
(other than the Spread Account) shall be deposited in the Collection Account an
distributed on the next Distribution Date pursuant to Section 4.6. All
interest, dividends, gains upon sale and other income from, or earnings on,
investments of funds in the Spread Account shall remain in the Spread Account.
The Servicer shall deposit in the applicable Trust Account an amount equal to
any net loss on such investments immediately as realized.
(f) On each Transfer Date, the Servicer shall deposit in the Collection
Account (i) all Scheduled Payments and prepayments of Receivables received by
the Servicer after the Cutoff Date and on or prior to the Business Day
immediately preceding the applicable Transfer Date or received by the Lockbox
Bank after the Cutoff Date and on or prior to the second Business Day
immediately preceding the applicable Transfer Date and (ii) all Liquidation
Proceeds and proceeds of Insurance Policies realized in respect of a Financed
Vehicle and applied by the Servicer after the Cutoff Date.
Section 4.2. COLLECTIONS. (a) The Servicer shall establish the
Subcollection Account in the name of the Indenture Trustee for the benefit of
the Certificateholders and the Noteholders. The Subcollection Account shall be
an Eligible Account and shall initially be established with the Indenture
Trustee. The Servicer shall remit directly to the Subcollection Account without
deposit into any intervening account all payments by or on behalf of the
Obligors on the Receivables and all Liquidation Proceeds received by the
Servicer, in each case, as soon as practicable, but in no event later than the
Business Day after receipt thereof. Within two days of deposit of payments into
the Subcollection Account, the Indenture Trustee shall transfer all amounts
credited to the Subcollection Account on account of such payments to the
Collection Account. Amounts in the Subcollection Account shall not be invested.
(b) On each Deposit Date related to a Distribution Date (i) prior to the
Purchase Termination Date and (ii) so long as the Facility Balance is less than
or equal to the Facility Limit, all amounts on deposit in the Collection Account
allocable to the Noteholders' Principal Distributable Amount and the
Certificateholders' Principal Distributable Amount shall be deposited into the
Principal Funding Account. On each Deposit Date preceding a Distribution Date
on or after the occurrence of the Purchase Termination Date, amounts on deposit
in the Principal Funding Account shall be deposited into the Note Distribution
Account or the Certificate Distribution Account, as Collections and applied in
accordance with Section 4.6 hereof. On each Deposit Date preceding a
Distribution Date on which the Facility Balance would exceed the Facility Limit
(after giving effect to a reduction thereof requested by the Seller) (provided
that a Purchase Termination Date shall not have been declared pursuant to
Section 2.1(c)(2)), amounts on deposit in the Principal Funding Account equal to
such excess shall be deposited into the Note Distribution Account as Collections
and applied in accordance with Section 4.6 hereof. Notwithstanding the
foregoing, if on any Determination Date the amount on deposit in the Principal
Funding Account exceeds the aggregate Purchase Price with respect
52
to Receivables to be purchased during the remainder of the Monthly Period during
which such Determination Date occurs, as determined by the Servicer in its sole
discretion (the amount of such excess, the "Principal Funding Excess Amount"),
an amount equal to the Principal Funding Excess Amount shall be deposited into
the Note Distribution Account and the Certificate Distribution Account, as
applicable, and applied in accordance with Section 4.6 hereof.
(c) Notwithstanding the provisions of subsection (a) hereof, the Servicer
will be entitled to be reimbursed from amounts on deposit in the Collection
Account with respect to a Monthly Period for amounts previously deposited in the
Collection Account but later determined by the Servicer or the Lockbox Bank to
have resulted from mistaken deposits or postings or checks returned for
insufficient funds. The amount to be reimbursed hereunder shall be paid to the
Servicer on the related Distribution Date pursuant to Section 4.6(iii) upon
certification by the Servicer of such amounts and the provision of such
information to the Indenture Trustee as may be necessary in the opinion of the
Indenture Trustee to verify the accuracy of such certification.
Section 4.3. APPLICATION OF COLLECTIONS. For the purposes of this
Agreement, all collections for a Monthly Period shall be applied by the Servicer
as follows:
(a) With respect to each Receivable, payments by or on behalf of the
Obligor thereof (other than of Supplemental Servicing Fees with respect to such
Receivable, to the extent collected) shall be applied to interest and principal
with respect to such Receivable in accordance with the terms of such Receivable.
With respect to each Liquidated Receivable, Liquidation Proceeds shall be
applied to interest and principal with respect to such Receivable in accordance
with the terms of such Receivable, and then to any Insurance Add-On Amount due
and payable with respect to such Receivable. The Servicer shall not be entitled
to any Supplemental Servicing Fees with respect to a Liquidated Receivable.
(b) With respect to each Receivable that has become a Purchased Receivable
on any Deposit Date, the Purchase Amount shall be applied, for purposes of this
Agreement only, to interest and principal on the Receivable in accordance with
the terms of the Receivable as if the Purchase Amount had been paid by the
Obligor on the Accounting Date. The Servicer shall not be entitled to any
Supplemental Servicing Fees with respect to such a Receivable. Nothing
contained herein shall relieve any Obligor of any obligation relating to any
Receivable.
(c) All amounts collected that are payable to the Servicer as Supplemental
Servicing Fees hereunder shall be deposited in the Collection Account and paid
to the Servicer in accordance with Section 4.6(iii).
(d) All payments by or on behalf of an Obligor received with respect to
any Purchased Receivable after the Accounting Date immediately preceding the
Deposit Date on which the Purchase Amount was paid by the Seller, AFL or the
Servicer shall be paid
53
to the Seller, AFL or the Servicer, respectively, and shall not be included in
the Available Funds.
Section 4.4. MONTHLY ADVANCES. (a) As of any Determination Date as of
which no Trigger Event has occurred, (i) the Servicer shall be obligated to make
a Monthly Advance on the related Deposit Date in an amount equal to the lesser
of (x) the aggregate Collection Shortfall with respect to Receivables for which
a Scheduled Payment was due during such Monthly Period and (y) the Net Advance
Amount; and (ii) to the extent the amount the Servicer is obligated to advance
pursuant to sub-clause (i) above is less than the Net Advance Amount (such
amount, the "Net Advance Shortfall"), the Seller shall be obligated to make a
Monthly Advance on the related Deposit Date in an amount equal to the lesser of
(x) the aggregate Collection Shortfall with respect to Receivables for which no
Scheduled Payment was due during such Monthly Period and (y) the Net Advance
Shortfall; PROVIDED, HOWEVER, that neither the Servicer nor the Seller shall be
required to make a Monthly Advance with respect to a Receivable extended
pursuant to Section 3.2(b) for any Monthly Period during which no Scheduled
Payment is due according to the terms of such extension.
(b) As of any Determination Date as of which a Trigger Event has occurred,
the Servicer and the Seller, as specified below, shall be required to make
Monthly Advances as follows: if there are Collection Shortfalls with respect to
any Receivables, the Servicer, with respect to Receivables for which a Scheduled
Payment was due during such Monthly Period, or the Seller, with respect to
Receivables for which no Scheduled Payment was due during such Monthly Period,
shall make a Monthly Advance equal to the amount of such Collection Shortfall;
PROVIDED, HOWEVER, that neither the Servicer nor the Seller shall be required to
make a Monthly Advance for a Collection Shortfall with respect to a Receivable
extended pursuant to Section 3.2(b) for any Monthly Period during which no
Scheduled Payment is due according to the terms of such extension.
(c) On or before each Deposit Date, the Servicer and the Seller, as
applicable, shall deposit in the Collection Account the aggregate amount of
Monthly Advances required for the related Monthly Period in immediately
available funds (subject to Section 4.8).
(d) The Servicer shall be entitled to be reimbursed for Outstanding
Monthly Advances made in accordance with Section 4.4(a)(i) or Section 4.4(b)
pursuant to Section 4.6(i), Section 4.7(i) or Section 4.8 with respect to any
Receivable with respect to which a Collection Shortfall existed from the
following sources received on any day subsequent to the Distribution Date in
respect of which such Monthly Advance was made: (i) subsequent payments by or
on behalf of the Obligor with respect to such Receivable, (ii) collections of
Liquidation Proceeds with respect to such Receivable if such Receivable becomes
a Liquidated Receivable and (iii) payment of any Purchase Amount with respect to
such Receivable if such Receivable becomes a Purchased Receivable. If any
Receivable shall become a Liquidated Receivable and the Servicer shall not have
been fully reimbursed for Outstanding Monthly Advances with respect to such
Receivable from the sources of funds previously described in this paragraph, the
Servicer shall be entitled to reimbursement from
54
collections on Receivables other than the Receivable in respect of which such
Outstanding Monthly Advance shall have been made.
Section 4.5. ADDITIONAL DEPOSITS. On or before each Deposit Date, the
Servicer or AFL shall deposit in the Collection Account the aggregate Purchase
Amounts with respect to Administrative Receivables and Warranty Receivables,
respectively. All such deposits of Purchase Amounts shall be made in
immediately available funds.
Section 4.6. DISTRIBUTIONS. On each Distribution Date (except as
otherwise provided in priorities (v) and (vii) below), the Indenture Trustee
shall (based on the information contained in the Servicer's Certificate
delivered on the related Determination Date) distribute the following amounts
and in the order of priority specified below. Within each order of priority
(other than priority (viii) or (ix)), amounts shall be deemed withdrawn first
from Available Funds and second from any Deficiency Claim Amount.
(i) first, from the Distribution Amount, (A) to the Trust for payment
of any taxes due and unpaid with respect to the Trust, to the extent such
taxes have not been previously paid by AFL or by the Servicer pursuant to
Section 3.8, and (B) then to the Servicer, the amount of Outstanding
Monthly Advances for which the Servicer is entitled to be reimbursed
pursuant to Section 4.4(d) and for which the Servicer has not previously
been reimbursed pursuant to Section 4.8;
(ii) second, from the Distribution Amount, to the Owner Trustee, any
accrued and unpaid fees of the Owner Trustee in accordance with the Trust
Agreement and including amounts with respect to which the Administrator is
entitled to be reimbursed pursuant to the Administration Agreement; to the
Indenture Trustee, any accrued and unpaid fees of the Indenture Trustee in
accordance with the Indenture; to any Lockbox Bank, Custodian, Backup
Servicer or Administrator (including the Owner Trustee or Indenture Trustee
if acting in any such additional capacity), any accrued and unpaid fees (in
each case, to the extent such Person has not previously received such
amount from the Servicer or AFL), to the Backup Servicer, any transition
expenses (not to exceed $50,000) in accordance with Section 8.3; PROVIDED,
HOWEVER, if the accrued and unpaid fees of the Owner Trustee, the Indenture
Trustee, the Backup Servicer and the Administrator to be distributed
pursuant to this clause (ii) are in excess of the amount (the "Servicer Fee
Threshold") obtained by dividing (x) .20% of the Aggregate Principal
Balance by (y) twelve, any accrued and unpaid fees in excess of the
Servicer Fee Threshold remaining to be distributed pursuant to this clause
(ii) shall not be distributed pursuant to this clause (ii) but shall be
distributed after the distributions to be made pursuant to clause (v) below
but before the distributions to be made pursuant to clause (vi) below;
(iii) third, from the Distribution Amount, to the Servicer, the Basic
Servicing Fee for the related Monthly Period, any Supplemental Servicing
Fees for the related Monthly Period, and any amounts specified in Section
4.2(b), to the
55
extent the Servicer has not reimbursed itself in respect of such amounts
pursuant to Section 4.8;
(iv) fourth, from the Distribution Amount, to the Note Distribution
Account, an amount equal to the Noteholders' Interest Distributable Amount
for such Distribution Date;
(v) fifth, from the Distribution Amount, to the Certificate
Distribution Account, an amount equal to the Certificateholders' Interest
Distributable Amount for such Distribution Date;
(vi) sixth, to the Note Distribution Account, (w) on each
Distribution Date, an amount equal to the Noteholders' Percentage of any
Principal Funding Excess Amount, (x) on each Distribution Date prior to the
Purchase Termination Date on which the Facility Balance exceeds the
Facility Limit, an amount equal to the excess of (1) the Facility Balance
over (2) the Facility Limit and (y) on each Distribution Date on or after
the Purchase Termination Date, from the Distribution Amount, an amount
equal to the Noteholders' Principal Distributable Amount for such
Distribution Date;
(vii) seventh, to the Certificate Distribution Account, (x) on each
Distribution Date, an amount equal to the Certificateholders' Percentage of
any Principal Funding Excess Amount and (y) (a) on each Distribution Date
on or after the Purchase Termination Date but prior to the Distribution
Date on which the outstanding principal balance of the Notes is reduced to
zero, from the Distribution Amount, an amount equal to the
Certificateholders' Principal Distributable Amount for such Distribution
Date, and (b) on each Distribution Date thereafter, from the Distribution
Amount, an amount equal to the outstanding principal balance of the
Certificates on such Distribution Date; and
(viii) eighth, FIRST, an amount equal to the lesser of (x) all
remaining Available Funds and (y) the excess, if any, of the Requisite
Amount as of the immediately preceding Determination Date over the amount
on deposit in the Spread Account as of such date (after taking into account
all withdrawals from the Spread Account on such Distribution Date), shall
be deposited into the Spread Account; SECOND, from Available Funds, if any
amounts are due and owing to any Indemnified Party (as such term is used in
the Note Purchase Agreement) under Section 11.01, Section 11.04 or Section
11.05 of the Note Purchase Agreement, such amount shall be deposited into
the Note Distribution Account for distribution to such Indemnified Parties,
THIRD, from Available Funds, if any amounts are due and owing to any
Indemnified Party (as such term is used in the Certificate Purchase
Agreement) under Section 11.01, Section 11.04 or Section 11.05 of the
Certificate Purchase Agreement, such amount shall be deposited into the
Certificate Distribution Account for distribution to such Indemnified
Parties, and FOURTH, any remaining Available Funds shall be released to the
Seller.
56
Section 4.7. DISTRIBUTIONS ON TRUST PROPERTY LIQUIDATION. On any Trust
Property Liquidation Date, the Indenture Trustee shall (based on the information
contained in the Servicer's Certificate delivered pursuant to Section 3.9(b))
distribute the following amounts and in the order of priority specified below.
Within each order of priority amounts shall be withdrawn first from Available
Funds and second from any Deficiency Claim Amount.
(i) first, from the Distribution Amount and, without duplication,
from amounts deposited into the Collection Account pursuant to Section
9.1(b), (A) to the Trust for payment of any taxes due and unpaid with
respect to the Trust, to the extent such taxes have not been previously
paid by AFL or by the Servicer pursuant to Section 3.8, and (B) then to the
Servicer, the amount of Outstanding Monthly Advances for which the Servicer
is entitled to be reimbursed pursuant to Section 4.4(d) and for which the
Servicer has not previously been reimbursed pursuant to Section 4.8;
(ii) second, from the Distribution Amount and, without duplication,
from amounts deposited into the Collection Account pursuant to Section
9.1(b), to the Owner Trustee, any accrued and unpaid fees of the Owner
Trustee in accordance with the Trust Agreement and including amounts with
respect to which the Administrator is entitled to be reimbursed pursuant to
the Administration Agreement; to the Indenture Trustee, any accrued and
unpaid fees of the Indenture Trustee in accordance with the Indenture; to
any Lockbox Bank, Custodian, Backup Servicer or Administrator (including
the Owner Trustee or Indenture Trustee if acting in any such additional
capacity), any accrued and unpaid fees (in each case, to the extent such
Person has not previously received such amount from the Servicer or AFL),
to the Backup Servicer, any transition expenses (not to exceed $50,000) in
accordance with Section 8.3; PROVIDED, HOWEVER, if the accrued and unpaid
fees of the Owner Trustee, the Indenture Trustee, the Backup Servicer and
the Administrator to be distributed pursuant to this clause (ii) are in
excess of the Servicer Fee Threshold, any accrued and unpaid fees in excess
of the Servicer Fee Threshold remaining to be distributed pursuant to this
clause (ii) shall not be distributed pursuant to this clause (ii) but shall
be distributed after the distributions to be made pursuant to clause (v)
below but before the distributions to be made pursuant to clause (vi)
below;
(iii) third, from the Distribution Amount and, without duplication,
from amounts deposited into the Collection Account pursuant to Section
9.1(b), to the Servicer, the Basic Servicing Fee, any Supplemental
Servicing Fees that have accrued and remain unpaid and any amounts
specified in Section 4.2(b), to the extent the Servicer has not reimbursed
itself in respect of such amounts pursuant to Section 4.8;
(iv) fourth, from the Distribution Amount and, without duplication,
from amounts deposited into the Collection Account pursuant to Section
9.1(b), to the Note Distribution Account, an amount equal to all accrued
and unpaid interest on the Notes to and including the Trust Property
Liquidation Date, plus all breakage
57
payments on the Notes specified in the Note Purchase Agreement (together
with any amounts required to fund the Commercial Paper Funding Account
pursuant to the Note Purchase Agreement);
(v) fifth, from the Distribution Amount and, without duplication,
from amounts deposited into the Collection Account pursuant to Section
9.1(b), to the Certificate Distribution Account, an amount equal to all
accrued and unpaid interest on the Certificates to and including the Trust
Property Liquidation Date plus all breakage payments on the Certificates as
specified in the Certificate Purchase Agreement;
(vi) sixth, from the Distribution Amount and, without duplication,
from amounts deposited into the Collection Account pursuant to Section
9.1(b), to the Note Distribution Account, an amount equal to the
Outstanding principal amount of Notes;
(vii) seventh, from the Distribution Amount and, without duplication,
from amounts deposited into the Collection Account pursuant to Section
9.1(b), to the Certificate Distribution Account, an amount equal to the
Certificate Balance; and
(viii) eighth, from Available Funds and, without duplication, from
amounts deposited into the Collection Account pursuant to Section 9.1(b),
FIRST, if any amounts are due and owing to any Indemnified Party (as such
term is used in the Note Purchase Agreement) under Section 11.01, Section
11.04 or Section 11.05 of the Note Purchase Agreement, such amount shall be
deposited into the Note Distribution Account for distribution to such
Indemnified Parties, SECOND, from Available Funds and, without duplication,
from amounts deposited into the Collection Account pursuant to Section
9.1(b), if any amounts are due and owing to any Indemnified Party (as such
term is used in the Certificate Purchase Agreement) under Section 11.01,
Section 11.04 or Section 11.05 of the Certificate Purchase Agreement, such
amount shall be deposited into the Certificate Distribution Account for
distribution to such Indemnified Parties, and THIRD, any remaining
Available Funds shall be released to the Seller.
Section 4.8. NET DEPOSITS. Subject to payment by the Servicer of amounts
otherwise payable pursuant to Section 4.6(ii) and provided that no Servicer
Termination Event shall have occurred and be continuing with respect to such
Servicer, the Servicer may make the remittances to be made by it pursuant to
Sections 4.2, 4.4 and 4.5 net of amounts (which amounts may be netted prior to
any such remittance for a Monthly Period) to be distributed to it pursuant to
Sections 3.8, 4.2(b) and 4.6(i); PROVIDED, HOWEVER, that the Servicer shall
account for all of such amounts in the related Servicer's Certificate as if such
amounts were deposited and distributed separately; and, PROVIDED, FURTHER, that
if an error is made by the Servicer in calculating the amount to be deposited or
retained by it, with the result that an amount less than required is deposited
in the Collection Account, the Servicer shall make a payment of the deficiency
to the Collection Account,
58
immediately upon becoming aware, or receiving notice from the Indenture Trustee,
of such error.
Section 4.9. STATEMENTS TO CERTIFICATEHOLDERS AND NOTEHOLDERS. (a) On
each Distribution Date, the Owner Trustee shall deliver to each
Certificateholder (other than the General Partner) and Xxxxxx, a statement based
on information in the Servicer's Certificate delivered on the related
Determination Date pursuant to Section 3.9, setting forth for the Monthly Period
or Interest Accrual Period, as applicable, relating to such Distribution Date
the following information:
(i) the amount of such distribution allocable to principal;
(ii) the amount of such distribution allocable to interest;
(iii) the amount of such distribution payable out of amounts
withdrawn from the Spread Account;
(iv) the Certificate Balance and the remaining balance of the Notes
(after giving effect to distributions made on such Distribution Date);
(v) the Noteholders' Interest Carryover Shortfall, the
Certificateholders' Interest Carryover Shortfall and the
Certificateholders' Principal Carryover Shortfall, if any, and the change
in such amounts from the preceding statement; and
(vi) the amount of fees paid by the Trust with respect to such
Monthly Period.
Each amount set forth pursuant to subclauses (i) through (iv) above may be
expressed as a dollar amount per $1,000 of original principal balance of a
Certificate.
(b) On each Payment Date, the Indenture Trustee shall deliver to each
Noteholder and Xxxxxx, a statement based on information in the Servicer's
Certificate delivered on the related Determination Date pursuant to Section 3.9,
setting forth for the Monthly Period or Interest Accrual Period, as applicable,
relating to such Payment Date the following information with respect to the
Notes:
(i) the amount of such distribution allocable to principal;
(ii) the amount of such distribution allocable to interest;
(iii) the amount of such distribution payable out of amounts
withdrawn from the Spread Account;
(iv) the outstanding principal balance of the Notes and the remaining
Certificate Balance (after giving effect to distributions made on such
Payment Date);
59
(v) the Noteholders' Interest Carryover Shortfall, the
Certificateholders' Interest Carryover Shortfall and the
Certificateholders' Principal Carryover Shortfall, if any, and the change
in such amounts from the preceding statement; and
(vi) the amount of fees paid by the Trust with respect to such
Monthly Period.
Each amount set forth pursuant to subclauses (i) through (iv) above may be
expressed as a dollar amount per $1,000 of original principal balance of a Note.
Section 4.10. INDENTURE TRUSTEE AS AGENT. The Indenture Trustee, in
holding all funds in the Trust Accounts and in making distributions as provided
in this Agreement, shall act solely on behalf of and as agent for the
Certificateholders and the Noteholders.
Section 4.11. ELIGIBLE ACCOUNTS. Any account which is required to be
established as an Eligible Account pursuant to this Agreement and which ceases
to be an Eligible Account shall within 5 Business Days (or such longer period,
not to exceed 30 days, as to which each Rating Agency may consent) be
established as a new account which shall be an Eligible Account and any cash
and/or any investments shall be transferred to such new account.
ARTICLE V
THE SPREAD ACCOUNT
Section 5.1. WITHDRAWALS FROM SPREAD ACCOUNT. (a) In the event that the
Servicer's Certificate with respect to any Determination Date shall state that
the Deficiency Claim Amount (as defined below) with respect to the related
Distribution Date is greater than zero, then the Indenture Trustee shall, on the
Deposit Date, withdraw from the Spread Account an amount equal to the lesser of
(x) the Deficiency Claim Amount and (y) the amount on deposit in the Spread
Account, and deposit such amount into the Collection Account. The "Deficiency
Claim Amount" with respect to any Distribution Date shall equal the excess, if
any, of
(i) the amount required to be distributed pursuant to clauses (i) -
(vii) of Section 4.6, or clauses (i) - (vii) of Section 4.7, as applicable,
over
(ii) the Available Funds with respect to such Distribution Date.
(b) All amounts, if any, remaining on deposit in the Spread Account
immediately following the distribution of the amounts required by clauses (i) -
(vii) of Section 4.7 in connection with a sale of not less than all of the
Receivables in the Trust pursuant to Section 9.1(b) hereof shall be distributed
to the Seller.
60
ARTICLE VI
THE SELLER
Section 6.1. LIABILITY OF SELLER. The Seller shall be liable hereunder
only to the extent of the obligations in this Agreement specifically undertaken
by the Seller and the representations made by the Seller.
Section 6.2. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE OBLIGATIONS
OF, SELLER; AMENDMENT OF CERTIFICATE OF INCORPORATION. (a) The Seller shall
not merge or consolidate with any other Person or permit any other Person to
become the successor to the Seller's business without the prior written consent
of Xxxxxx. The certificate of incorporation of any corporation (i) into which
the Seller may be merged or consolidated, (ii) resulting from any merger or
consolidation to which the Seller shall be a party, or (iii) succeeding to the
business of Seller, shall contain provisions relating to limitations on business
and other matters substantively identical to those contained in the Seller's
certificate of incorporation. Any such successor corporation shall execute an
agreement of assumption of every obligation of the Seller under this Agreement
and each Related Document and, whether or not such assumption agreement is
executed, shall be the successor to the Seller under this Agreement without the
execution or filing of any document or any further act on the part of any of the
parties to this Agreement. The Seller shall provide prompt, written notice of
any merger, consolidation or succession pursuant to this Section 6.2 to the
Owner Trustee, the Indenture Trustee, Xxxxxx and the Rating Agencies.
Notwithstanding the foregoing, the Seller shall not merge or consolidate with
any other Person or permit any other Person to become a successor to the
Seller's business, unless (x) immediately after giving effect to such
transaction, no representation or warranty made pursuant to Section 2.5 shall
have been breached (for purposes hereof, such representations and warranties
shall speak as of the date of the consummation of such transaction) and no event
that, after notice or lapse of time, or both, would become a Servicer
Termination Event shall have occurred and be continuing, (y) the Seller shall
have delivered to the Owner Trustee, the Indenture Trustee and Xxxxxx an
officer's certificate and an Opinion of Counsel each stating that such
consolidation, merger or succession and such agreement of assumption comply with
this Section 6.2 and that allconditions precedent, if any, provided for in this
Agreement relating to such transaction have been complied with, and (z) the
Seller shall have delivered to the Owner Trustee, the Indenture Trustee and
Xxxxxx an Opinion of Counsel, stating, in the opinion of such counsel, either
(A) all financing statements and continuation statements and amendments thereto
have been executed and filed that are necessary to preserve and protect the
interest of the Trust in the Trust Property and reciting the details of the
filings or (B) no such action shall be necessary to preserve and protect such
interest.
(b) The Seller hereby agrees that it shall not (i) take any action
prohibited by Article XVI of its certificate of incorporation or (ii) without
the prior written consent of the Owner Trustee, the Indenture Trustee and
Xxxxxx, amend Article III, Article IX, Article XIV or Article XVI of its
certificate of incorporation.
61
Section 6.3. LIMITATION ON LIABILITY OF SELLER AND OTHERS. The Seller and
any director or officer or employee or agent of the Seller may rely in good
faith on the advice of counsel or on any document of any kind prima facie
properly executed and submitted by any Person respecting any matters arising
under this Agreement. The Seller shall not be under any obligation to appear
in, prosecute or defend any legal action that is not incidental to its
obligations as Seller of the Receivables under this Agreement and that in its
opinion may involve it in any expense or liability.
Section 6.4. SELLER MAY OWN CERTIFICATES OR NOTES. Each of the Seller and
any Affiliate of the Seller may in its individual or any other capacity become
the owner or pledgee of Certificates or Notes with the same rights as it would
have if it were not the Seller or an Affiliate thereof except as otherwise
specifically provided herein or in the Related Documents. Certificates or Notes
so owned by or pledged to the Seller or such Affiliate shall have an equal and
proportionate benefit under the provisions of this Agreement or any Related
Document, without preference, priority, or distinction as among all of the
Certificates or Notes, provided that any Certificates or Notes owned by the
Seller or any Affiliate thereof, during the time such Certificates or Notes are
owned by them, shall be without voting rights for any purpose set forth in this
Agreement or any Related Document. The Seller shall notify the Owner Trustee,
the Indenture Trustee and Xxxxxx promptly after it or any of its Affiliates
become the owner or pledgee of a Certificate or Note.
Section 6.5. LIMITED RECOURSE UPON SECURITIZED OFFERING. As a condition
precedent to the optional redemption of the Notes under Section 10.01(b) of the
Indenture in connection with a Securitized Offering, the Seller shall be
obligated to purchase from the Trust, on or prior to the date on which such
redemption of Notes occurs, all Ineligible Receivables for a purchase price
equal to the Purchase Amount for such Ineligible Receivables.
ARTICLE VII
THE SERVICER
Section 7.1. LIABILITY OF SERVICER; INDEMNITIES. (a) The Servicer (in
its capacity as such and, in the case of AFL, without limitation of its
obligations under the Purchase Agreement) 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.
(b) The Servicer shall defend, indemnify and hold harmless the Trust, the
Owner Trustee, the Indenture Trustee, the Backup Servicer, Xxxxxx, their
respective officers, directors, agents and employees, the Certificateholders and
the Noteholders from and against any and all costs, expenses, losses, damages,
claims and liabilities, including reasonable fees and expenses of counsel and
expenses of litigation arising out of or resulting from the use, ownership or
operation by the Servicer or any Affiliate thereof of any Financed Vehicle.
62
(c) The Servicer shall indemnify, defend and hold harmless the Trust, the
Owner Trustee, the Indenture Trustee, the Backup Servicer, Xxxxxx, their
respective officers, directors, agents and employees, the Certificateholders and
the Noteholders from and against any taxes that may at any time be asserted
against the Trust, the Owner Trustee, the Indenture Trustee, the Backup
Servicer, Xxxxxx, the Certificateholders or the Noteholders with respect to the
transactions contemplated in this Agreement, including, without limitation, any
sales, gross receipts, general corporation, tangible personal property,
privilege or license taxes (but not including any taxes asserted with respect
to, and as of the date of, the sale of the Receivables and the other Trust
Property to the Trust or the issuance and original sale of the Certificates and
the Notes, or federal or other income taxes arising out of distributions on the
Certificates) and costs and expenses in defending against the same.
(d) The Servicer shall indemnify, defend and hold harmless the Trust, the
Owner Trustee, the Indenture Trustee, the Backup Servicer, Xxxxxx, their
respective officers, directors, agents and employees, the Certificateholders and
the Noteholders from and against any and all costs, expenses, losses, claims,
damages, and liabilities to the extent that such cost, expense, loss, claim,
damage, or liability arose out of, or was imposed upon the Trust, the Owner
Trustee, the Indenture Trustee, the Backup Servicer, Xxxxxx, the
Certificateholders or the Noteholders through the breach of this Agreement, the
negligence, willful misfeasance, or bad faith of the Servicer in the performance
of its duties under this Agreement or by reason of reckless disregard of its
obligations and duties under this Agreement.
(e) The Servicer shall indemnify, defend, and hold harmless the Owner
Trustee, in its individual capacity, its officers, directors, agents and
employees, from and against all costs, taxes (other than income taxes on fees
and expenses payable to the Owner Trustee), expenses, losses, claims, damages
and liabilities arising out of or incurred in connection with the acceptance or
performance of the trusts and duties contained in the Trust Agreement and the
Related Documents, except to the extent that such cost, taxes (other than income
taxes), expense, loss, claim, damage or liability (A) is due to the willful
misfeasance or gross negligence of the Owner Trustee, or (B) arises from the
Owner Trustee's breach of any of its representations or warranties set forth in
Section 7.3 of the Trust Agreement; PROVIDED, HOWEVER, that amounts payable
under this paragraph shall be increased by the amount of income taxes actually
paid by the Owner Trustee in respect of any indemnity payment unless the Owner
Trustee received or can reasonably be expected to receive a tax deduction for
the related loss or cost.
(f) Indemnification under this Article shall include, without limitation,
reasonable fees and expenses of counsel and expenses of litigation. If the
Servicer has made any indemnity payments pursuant to this Article and the
recipient thereafter collects any of such amounts from others, the recipient
shall promptly repay such amounts collected to the Servicer, without interest.
63
(g) AFL, in its individual capacity, hereby acknowledges that the
indemnification provisions in the Purchase Agreement benefiting the Trust, the
Owner Trustee, the Indenture Trustee, the Backup Servicer and Xxxxxx are
enforceable by each hereunder.
Section 7.2. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE OBLIGATIONS
OF, THE SERVICER OR BACKUP SERVICER. (a) The Servicer shall not merge or
consolidate with any other person, convey, transfer or lease substantially all
its assets as an entirety to another Person, or permit any other Person to
become the successor to the Servicer's business unless, after the merger,
consolidation, conveyance, transfer, lease or succession, the successor or
surviving entity shall be an Eligible Servicer and shall be capable of
fulfilling the duties of the Servicer contained in this Agreement. Any
corporation (i) into which the Servicer may be merged or consolidated, (ii)
resulting from any merger or consolidation to which the Servicer shall be a
party, (iii) which acquires by conveyance, transfer, or lease substantially all
of the assets of the Servicer, or (iv) succeeding to the business of the
Servicer, in any of the foregoing cases shall execute an agreement of assumption
to perform every obligation of the Servicer under this Agreement and, whether or
not such assumption agreement is executed, shall be the successor to the
Servicer under this Agreement without the execution or filing of any paper or
any further act on the part of any of the parties to this Agreement, anything in
this Agreement to the contrary notwithstanding; PROVIDED, HOWEVER, that nothing
contained herein shall be deemed to release the Servicer from any obligation.
The Servicer shall provide notice of any merger, consolidation or succession
pursuant to this Section 7.2(a) to the Owner Trustee, the Indenture Trustee, the
Backup Servicer, Xxxxxx and each Rating Agency. Notwithstanding the foregoing,
the Servicer shall not merge or consolidate with any other Person or permit any
other Person to become a successor to the Servicer's business, unless (x)
immediately after giving effect to such transaction, no representation or
warranty made pursuant to Section 3.6 shall have been breached (for purposes
hereof, such representations and warranties shall speak as of the date of the
consummation of such transaction) and no event that, after notice or lapse of
time, or both, would become a Servicer Termination Event shall have occurred and
be continuing, (y) the Servicer shall have delivered to the Owner Trustee, the
Indenture Trustee and Xxxxxx 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 7.2(a) and that all conditions precedent, if
any, provided for in this Agreement relating to such transaction have been
complied with, and (z) the Servicer shall have delivered to the Owner Trustee,
the Indenture Trustee and Xxxxxx an Opinion of Counsel, stating that, in the
opinion of such counsel, either (A) all financing statements and continuation
statements and amendments thereto have been executed and filed that are
necessary to preserve and protect the interest of the Owner Trustee and the
Indenture Trustee in the Trust Property and reciting the details of the filings
or (B) no such action shall be necessary to preserve and protect such interest.
(b) Any corporation (i) into which the Backup Servicer may be merged or
consolidated, (ii) resulting from any merger or consolidation to which the
Backup Servicer shall be a party, (iii) which acquires by conveyance, transfer
or lease substantially all of the assets of the Backup Servicer, or (iv)
succeeding to the business of the Backup Servicer, in any of the foregoing cases
shall execute an agreement of assumption to perform every
64
obligation of the Backup Servicer under this Agreement and, whether or not such
assumption agreement is executed, shall be the successor to the Backup Servicer
under this Agreement without the execution or filing of any paper or any further
act on the part of any of the parties to this Agreement, anything in this
Agreement to the contrary notwithstanding; PROVIDED, HOWEVER, that nothing
contained herein shall be deemed to release the Backup Servicer from any
obligation.
Section 7.3. LIMITATION ON LIABILITY OF SERVICER, BACKUP SERVICER AND
OTHERS. (a) Neither the Servicer, the Backup Servicer nor any of the directors
or officers or employees or agents of the Servicer or Backup Servicer shall be
under any liability to the Trust, the Certificateholders or the Noteholders,
except as provided in this Agreement, for any action taken or for refraining
from the taking of any action pursuant to this Agreement; PROVIDED, HOWEVER,
that this provision shall not protect the Servicer, the Backup Servicer or any
such person against any liability that would otherwise be imposed by reason of a
breach of this Agreement or willful misfeasance, bad faith or negligence
(excluding errors in judgment) in the performance of duties, by reason of
reckless disregard of obligations and duties under this Agreement or any
violation of law by the Servicer, Backup Servicer or such person, as the case
may be; PROVIDED FURTHER, that this provision shall not affect any liability to
indemnify the Owner Trustee and the Indenture Trustee for costs, taxes,
expenses, claims, liabilities, losses or damages paid by the Owner Trustee or
the Indenture Trustee, each in its individual capacity. The Servicer, the
Backup Servicer and any director, officer, employee or agent of the Servicer or
Backup Servicer may rely in good faith on the advice of counsel or on any
document of any kind PRIMA FACIE properly executed and submitted by any Person
respecting any matters arising under this Agreement.
(b) The Backup Servicer shall not be liable for any obligation of the
Servicer contained in this Agreement, and the Owner Trustee, the Indenture
Trustee, the Seller, Xxxxxx, the Noteholders and the Certificateholders shall
look only to the Servicer to perform such obligations.
Section 7.4. DELEGATION OF DUTIES. The Servicer may delegate duties under
this Agreement to an Affiliate of AFL with the prior written consent of Xxxxxx,
the Indenture Trustee, the Owner Trustee and the Backup Servicer (which consent
shall not be unreasonably withheld). Neither AFL nor any party acting as
Servicer hereunder shall appoint any subservicer hereunder without the prior
written consent of Xxxxxx, the Indenture Trustee, the Owner Trustee and the
Backup Servicer (which consent shall not be unreasonably withheld).
Notwithstanding the foregoing, the Servicer also may at any time and in its sole
discretion perform the specific duty of repossession of Financed Vehicles
through sub-contractors who are in the business of servicing automotive
receivables, PROVIDED, HOWEVER, that no such delegation or sub-contracting of
duties by the Servicer shall relieve the Servicer of its responsibility with
respect to such duties.
Section 7.5. SERVICER AND BACKUP SERVICER NOT TO RESIGN. Subject to the
provisions of Section 7.2, 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
65
performance of its duties under this Agreement would cause it to be in violation
of such legal requirements in a manner which would have a material adverse
effect on the Servicer or the Backup Servicer, as the case may be, and Xxxxxx
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 Xxxxxx, the
Owner Trustee and the Indenture Trustee. No resignation of the Servicer shall
become effective until the Backup Servicer or a successor Servicer that is an
Eligible Servicer shall have assumed the responsibilities and obligations of the
Servicer. No resignation of the Backup Servicer shall become effective until a
Person that is an Eligible Servicer shall have assumed the responsibilities and
obligations of the Backup Servicer; PROVIDED, HOWEVER, that in the event a
successor Backup Servicer is not appointed within 60 days after the Backup
Servicer has given notice of its resignation and has provided the Opinion of
Counsel required by this Section 7.5, the Backup Servicer may petition a court
for its removal.
ARTICLE VIII
SERVICER TERMINATION EVENTS
Section 8.1. SERVICER TERMINATION EVENT. For purposes of this Agreement,
each of the following shall constitute a "Servicer Termination Event":
(a) Any failure by the Servicer to deliver to the Indenture Trustee
for distribution to Certificateholders or Noteholders any proceeds or
payment required to be so delivered under the terms of this Agreement (or,
if AFL is the Servicer, the Purchase Agreement);
(b) Failure by the Servicer to deliver to the Indenture Trustee, the
Owner Trustee and Xxxxxx the Servicer's Certificate by the third Business
Day prior to the Distribution Date, or failure on the part of the Servicer
to observe its covenants and agreements set forth in Section 7.2(a);
(c) Failure on the part of the Servicer or the Seller duly to observe
or perform in any material respect any other covenants or agreements of the
Servicer or the Seller set forth in this Agreement (or, if AFL is the
Servicer, the Purchase Agreement), which failure (i) materially and
adversely affects the rights of Certificateholders or Noteholders and (ii)
continues unremedied for a period of 30 days after the date on which
written notice of such failure, requiring the same to be remedied, shall
have been given to the Servicer or the Seller by the Owner Trustee, the
Indenture Trustee or any Certificateholder or Noteholder;
(d) The occurrence of an Insolvency Event with respect to the Seller
or the Servicer;
66
(e) Any representation, warranty or statement of the Servicer or the
Seller made in this Agreement or any certificate, report or other writing
delivered pursuant hereto shall prove to be incorrect in any material
respect as of the time when the same shall have been made (excluding,
however, any representation or warranty set forth in Section 2.5(a)), and
the incorrectness of such representation, warranty or statement has a
material adverse effect on the Trust and, within 30 days after written
notice thereof shall have been given to the Servicer or the Seller by the
Owner Trustee, the Indenture Trustee or a Certificateholder or Noteholder,
the circumstances or condition in respect of which such representation,
warranty or statement was incorrect shall not have been eliminated or
otherwise cured; or
(f) An Event of Default under the Indenture shall have occurred.
Section 8.2. CONSEQUENCES OF A SERVICER TERMINATION EVENT. If a Servicer
Termination Event shall occur and be continuing, either the Indenture Trustee,
the Owner Trustee, Xxxxxx, by notice given in writing to the Servicer (and to
the Indenture Trustee and the Owner Trustee if given by Xxxxxx) may terminate
all of the rights and obligations of the Servicer under this Agreement. On or
after the receipt by the Servicer of such written notice, all authority, power,
obligations and responsibilities of the Servicer under this Agreement, whether
with respect to the Certificates, the Notes or the Trust Property or otherwise,
shall be terminated and automatically shall pass to, be vested in and become
obligations and responsibilities of the Backup Servicer (or such other successor
Servicer appointed pursuant to Section 8.3(b)); PROVIDED, HOWEVER, that the
successor Servicer shall have no liability with respect to any obligation which
was required to be performed by the terminated Servicer prior to the date that
the successor Servicer becomes the Servicer or any claim of a third party based
on any alleged action or inaction of the terminated Servicer. The successor
Servicer is authorized and empowered by this Agreement to execute and deliver,
on behalf of the terminated Servicer, as attorney-in-fact or otherwise, any and
all documents and other instruments and to do or accomplish all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement of the Receivables
and the other Trust Property and related documents to show the Owner Trustee as
lienholder or secured party on the related Lien Certificates, or otherwise. The
terminated Servicer agrees to cooperate with the successor Servicer in effecting
the termination of the responsibilities and rights of the terminated Servicer
under this Agreement, including, without limitation, the transfer to the
successor Servicer for administration by it of all cash amounts that shall at
the time be held by the terminated Servicer for deposit, or have been deposited
by the terminated Servicer, in the Collection Account or thereafter received
with respect to the Receivables and the delivery to the successor Servicer of
all Receivables Files, Monthly Records and Collection Records and a computer
tape in readable form as of the most recent Business Day containing all
information necessary to enable the successor Servicer or a successor Servicer
to service the Receivables and the other Trust Property. If requested by
Xxxxxx, the successor Servicer shall terminate the Lockbox Agreement and direct
the Obligors to make all payments under the Receivables directly to the
successor Servicer (in which event the successor Servicer shall process such
payments in accordance with Section 3.2(e)), or to a lockbox established by the
successor Servicer at the direction of Xxxxxx, at the successor
67
Servicer's expense. In addition to any other amounts that are then payable to
the terminated Servicer under this Agreement, the terminated Servicer shall then
be entitled to receive out of Available Funds reimbursements for any Outstanding
Monthly Advances (in accordance with Section 4.4(d)) made during the period
prior to the notice pursuant to this Section 8.2 which terminates the obligation
and rightsof the terminated Servicer under this Agreement. The Owner Trustee,
the Indenture Trustee and the successor Servicer may set off and deduct any
amounts owed by the terminated Servicer from any amounts payable to the
terminated Servicer pursuant to the preceding sentence. The terminated Servicer
shall grant the Owner Trustee, the Indenture Trustee, Xxxxxx and the successor
Servicer reasonable access to the terminated Servicer's premises at the
terminated Servicer's expense.
Section 8.3. APPOINTMENT OF SUCCESSOR. (a) On and after (i) the time the
Servicer receives a notice of termination pursuant to Section 8.2 or (ii) the
resignation of the Servicer pursuant to Section 7.5, the Backup Servicer (unless
pursuant to Section 8.3(b) an alternate successor Servicer has been appointed)
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. The Owner Trustee 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
8.2 upon the occurrence of any Servicer Termination Event applicable to it as
Servicer and shall serve from term to term as provided in Section 3.14.
(b) If the Backup Servicer shall be legally unable or unwilling to act as
Servicer, the Backup Servicer, the Indenture Trustee, Xxxxxx or the Owner
Trustee may petition a court of competent jurisdiction to appoint any Eligible
Servicer as the successor to the Servicer. Pending appointment pursuant to the
preceding sentence, the Backup Servicer shall act as successor Servicer unless
it is legally unable to do so, in which event the outgoing Servicer shall
continue to act as Servicer until a successor has been appointed and accepted
such appointment. Subject to Section 7.5, 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 8.2
or the resignation of the Servicer pursuant to Section 7.5.
(c) Any successor Servicer shall be entitled to such compensation (whether
payable out of the Collection Account or otherwise) as the Servicer would have
been entitled to under the Agreement if the Servicer had not resigned or been
terminated hereunder. If any successor Servicer is appointed as a result of the
Backup Servicer's refusal (in contravention of the terms of this Agreement) to
act as Servicer although it is legally able to do so, Xxxxxx and such successor
Servicer may agree on reasonable additional compensation to be paid to such
successor Servicer by the Backup Servicer, which additional compensation shall
be paid by the Backup Servicer in its individual capacity and solely out of its
own funds. If any successor Servicer is appointed for any reason other than the
Backup Servicer's refusal to act as Servicer although legally able to do so,
Xxxxxx and such successor Servicer may agree on additional compensation to be
paid to such successor Servicer, which
68
additional compensation shall be payable from Available Funds. If the Backup
Servicer is the successor Servicer, the Backup Servicer shall be entitled to
reimbursement, pursuant to Section 4.6(ii), of reasonable transition expenses,
not in excess of $50,000, incurred in acting as successor Servicer. In
addition, any successor Servicer shall be entitled to reimbursement from
Available Funds of reasonable transition expenses incurred in acting as
successor Servicer.
Section 8.4. NOTIFICATION TO CERTIFICATEHOLDERS AND NOTEHOLDERS. Upon any
termination of, or appointment of a successor to, the Servicer pursuant to this
Article VIII, the Owner Trustee shall give prompt written notice thereof to
Certificateholders at their respective addresses appearing in the Certificate
Register and to each Rating Agency, and the Indenture Trustee shall give prompt
written notice thereof to Noteholders at their respective addresses appearing in
the Note Register.
Section 8.5. WAIVER OF PAST DEFAULTS. A Note Majority together with a
Certificate Majority may, on behalf of all Holders of Notes and Certificates,
waive any default by the Servicer in the performance of its obligations
hereunder and its consequences. Upon any such waiver of a past default, such
default shall cease to exist, and any Servicer Termination Event arising
therefrom shall be deemed to have been remedied for every purpose of this
Agreement. No such waiver shall extend to any subsequent or other default or
impair any right consequent thereon.
ARTICLE IX
TERMINATION
Section 9.1. OPTIONAL PURCHASE OF RECEIVABLES; LIQUIDATION OF TRUST
ESTATE. (a) On each Determination Date with respect to a Distribution Date
following the Distribution Date as of which the Aggregate Principal Balance is
less than 10% of the Facility Limit, the Servicer and the Seller each shall have
the option to purchase the corpus of the Trust; PROVIDED, HOWEVER, that the
amount to be paid for such purchase (as set forth in the following sentence)
shall be sufficient to pay the full amount of principal, premium, if any, and
interest then due and payable on the Notes and the Certificates, together with
any breakage payments (including amounts needed to fund the Commercial Paper
Funding Account pursuant to the Note Purchase Agreement). To exercise such
option, the Servicer or the Seller, as the case may be, shall pay the aggregate
Purchase Amounts for the Receivables, plus the appraised value of any other
property (including the right to receive any future recoveries) held as part of
the Trust, such appraisal to be conducted by an appraiser acceptable to the
Servicer and the Seller, and shall succeed to all interests in and to the Trust
Property. The fees and expenses related to such appraisal shall be paid by the
party exercising the option to purchase. The party exercising such option to
repurchase shall deposit the aggregate Purchase Amounts for the Receivables and
the amount of the appraised value of any other property held as part of the
Trust into the Collection Account, and the Indenture Trustee shall distribute
the amounts so deposited in accordance with Section 4.6.
69
(b) Prior to a Recapitalization, the Seller may purchase the Trust
Property and apply the proceeds of such purchase or purchases to redeem or pay
in full Outstanding Notes and Certificates; PROVIDED, THAT,
(1) the Seller shall have provided a written notice to the
Servicer, the Indenture Trustee, the Owner Trustee, the Backup
Servicer, Xxxxxx and the Rating Agencies setting forth the Trust
Property Liquidation Date at least 3 days prior to such proposed Trust
Property Liquidation Date and stating whether such liquidation will be
a final termination of the Trust;
(2) the Seller shall pay no later than 3:00 P.M. (New York time)
on the Trust Property Liquidation Date the aggregate Purchase Amounts
for the Receivables, plus the appraised value of any other property
(including the right to receive any future recoveries) held as part of
the Trust, plus all breakage payments (including amounts needed to
fund the Commercial Paper Funding Account pursuant to the Note
Purchase Agreement) provided in the Note Purchase Agreement and the
Certificate Purchase Agreement, and the Seller shall succeed to all
interests in and to the Trust Property. Any such appraisal shall be
conducted by an appraiser acceptable to the Seller and Xxxxxx and the
fees and expenses related thereto shall be paid by the Seller;
(3) the source of funds for the purchase of Trust Property
specified in clause (2) above shall be fully disclosed to Xxxxxx and
shall be acceptable to Xxxxxx;
(4) each of the Seller and AFL shall provide an Officer's
Certificate executed by its Chief Financial Officer or Treasurer
stating that the Seller or AFL, as applicable, is not insolvent
(within the meaning of the Bankruptcy Code) prior to and will not be
insolvent (within the meaning of the Bankruptcy Code) subsequent to
the purchase of Trust Property;
(5) each of the Seller and AFL shall provide to Xxxxxx such
Opinions of Counsel as Xxxxxx shall xxxx necessary and advisable in
connection with the purchase of Trust Property; and
(6) the proceeds from the purchase are sufficient to pay all the
obligations required to be paid in clauses (i) through (vii) of
Section 4.7.
All proceeds from a sale of the Trust Property pursuant to this
Section 9.1(b) shall be deposited in the Collection Account for
distribution by the Indenture Trustee pursuant to Section 4.7 hereof.
(c) Upon any sale of the assets of the Trust pursuant to Section 9.2 of
the Trust Agreement, the Owner Trustee shall instruct the Indenture Trustee to
deposit the proceeds from such sale after all payments and reserves therefrom
have been made (the "Insolvency Proceeds") in the Collection Account. On the
Distribution Date on which the Insolvency
70
Proceeds are deposited in the Collection Account (or, if such proceeds are not
so deposited on a Distribution Date, on the Distribution Date immediately
following such deposit), the Owner Trustee shall instruct the Indenture Trustee
to make the following deposits (after the application on such Distribution Date
of the Available Funds) from the Insolvency Proceeds:
(i) (A) to the Trust for payment of any taxes due and unpaid with
respect to the Trust, to the extent such taxes have not been previously
paid by AFL or by the Servicer pursuant to Section 3.8; (B) to the
Servicer, the amount of Outstanding Monthly Advances for which the Servicer
is entitled to be reimbursed pursuant to Section 4.4(d) and for which the
Servicer has not previously been reimbursed pursuant to Section 4.8; (C) to
the Owner Trustee, any accrued and unpaid fees of the Owner Trustee in
accordance with the Trust Agreement and including amounts with respect to
which the Administrator is entitled to be reimbursed pursuant to the
Administration Agreement; (D) to the Indenture Trustee, any accrued and
unpaid fees of the Indenture Trustee in accordance with the Indenture; (E)
to any Lockbox Bank, Custodian, Backup Servicer or Administrator (including
the Owner Trustee or Indenture Trustee if acting in any such additional
capacity), any accrued and unpaid fees (in each case, to the extent such
Person has not previously received such amount from the Servicer or AFL);
and (F) to the Servicer, the Basic Servicing Fee for the related Monthly
Period, any Supplemental Servicing Fees for the related Monthly Period, and
any amounts specified in Section 4.2(b), to the extent the Servicer has not
reimbursed itself in respect of such amounts pursuant to Section 4.8;
(ii) to the Note Distribution Account, any portion of the
Noteholders' Interest Distributable Amount not otherwise deposited into the
Note Distribution Account on such Distribution Date plus any breakage
payments specified in the Note Purchase Agreement;
(iii) to the Certificate Distribution Account, any portion of the
Certificateholders' Interest Distributable Amount not otherwise deposited
into the Certificate Distribution Account on such Distribution Date plus
any breakage payments specified in the Certificate Purchase Agreement;
(iv) to the Note Distribution Account, the outstanding principal
balance of the Notes (after giving effect to the reduction in the
outstanding principal balance of the Notes to result from the deposits
otherwise made in the Note Distribution Account on such Distribution Date);
(v) to the Certificate Distribution Account, the Certificate Balance
(after giving effect to the reduction in the Certificate Balance to result
from the deposits otherwise made in the Certificate Distribution Account on
such Distribution Date); and
71
any Insolvency Proceeds remaining after the deposits described above shall be
paid to the Seller.
(d) Notice of any termination of the Trust shall be given by the Servicer
to the Owner Trustee and the Indenture Trustee as soon as practicable after the
Servicer has received notice thereof.
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.1. AMENDMENT. (a) This Agreement may be amended by the
Seller, the Servicer and the Trust, with the prior written consent of the
Indenture Trustee and Xxxxxx (which consent shall not be unreasonably withheld)
but without the consent of any of the Noteholders or Certificateholders, (i) to
cure any ambiguity, (ii) to correct or supplement any provisions in this
Agreement or (iii) for the purpose of adding any provision to or changing in any
manner or eliminating any provision of this Agreement or of modifying in any
manner the rights of the Noteholders or the Certificateholders; PROVIDED,
HOWEVER, that such action shall not, as evidenced by an Opinion of Counsel,
adversely affect in any material respect the interests of the Noteholders or
Certificateholders.
(b) This Agreement may also be amended from time to time by the Seller,
the Servicer and the Trust with the prior written consent of the Indenture
Trustee and the Backup Servicer (which consent shall not be unreasonably
withheld) and with the consent of a Certificate Majority and a Note Majority
(which consent of any Holder of a Certificate or Note given pursuant to this
Section or pursuant to any other provision of this Agreement shall be conclusive
and binding on such Holder and on all future Holders of such Certificate or Note
and of any Certificate or Note issued upon the transfer thereof or in exchange
thereof or in lieu thereof whether or not notation of such consent is made upon
the Certificate or Note) for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of this Agreement, or of
modifying in any manner the rights of the Holders of Certificates or Notes;
PROVIDED, HOWEVER, that, subject to the provisions of Section 5.04 of the
Indenture, no such amendment shall directly or indirectly (a) increase or reduce
in any manner the amount of, or accelerate or delay the timing of, collections
of payments on Receivables or distributions required to be made on any
Certificate or Note or the Certificate Rate or Note Interest Rate, (b) amend any
provisions of Section 4.6 or Section 4.7 in such a manner as to affect the
priority of payment of interest, principal or premium to Noteholders or
Certificateholders, or (c) reduce the aforesaid percentage required to consent
to any such amendment or any waiver hereunder, without the consent of the
Holders of all Certificates or Notes then outstanding.
(c) Prior to the execution of any such amendment or consent, the Owner
Trustee shall furnish written notification of the substance of such amendment or
consent to each Rating Agency.
72
(d) Promptly after the execution of any such amendment or consent, the
Owner Trustee shall furnish written notification of the substance of such
amendment or consent to each Certificateholder and the Indenture Trustee.
(e) It shall not be necessary for the consent of Certificateholders or
Noteholders pursuant to Section 10.1(b) to approve the particular form of any
proposed amendment or consent, but it shall be sufficient if such consent shall
approve the substance thereof. The manner of obtaining such consents (and any
other consents of Certificateholders and Noteholders provided for in this
Agreement) and of evidencing the authorization of the execution thereof by
Certificateholders or Noteholders shall be subject to such reasonable
requirements as the Owner Trustee or Indenture Trustee, as applicable, may
prescribe, including the establishment of record dates.
(f) Prior to the execution of any amendment to this Agreement, the Owner
Trustee and the Backup Servicer shall be entitled to receive and rely upon an
Opinion of Counsel stating that the execution of such amendment is authorized or
permitted by this Agreement, in addition to the Opinion of Counsel referred to
in Section 10.2(i). The Owner Trustee and the Backup Servicer may, but shall
not be obligated to, enter into any such amendment which affects the Owner
Trustee's and the Backup Servicer's own rights, duties or immunities under this
Agreement or otherwise.
Section 10.2. PROTECTION OF TITLE TO TRUST PROPERTY. (a) The Servicer
shall execute and file such financing statements and cause to be executed and
filed such continuation and other statements, all in such manner and in such
places as may be required by law fully to preserve, maintain and protect the
interest of the Trust, the Owner Trustee and the Indenture Trustee in the Trust
Property and in the proceeds thereof. The Servicer shall deliver (or cause to
be delivered) to the Owner Trustee, the Indenture Trustee and Xxxxxx
file-stamped copies of, or filing receipts for, any document filed as provided
above, as soon as available following such filing.
(b) Neither the Seller, the Servicer nor the Trust shall change its name,
identity or corporate structure in any manner that would, could or might make
any financing statement or continuation statement filed by the Seller in
accordance with paragraph (a) above seriously misleading within the meaning of
Section 9-402(7) of the UCC, unless it shall have given the Owner Trustee, the
Indenture Trustee and Xxxxxx at least 60 days' prior written notice thereof, and
shall promptly file appropriate amendments to all previously filed financing
statements and continuation statements.
(c) Each of the Seller, the Servicer and the Trust shall give the Owner
Trustee, the Indenture Trustee and Xxxxxx at least 60 days' prior written notice
of any relocation of its principal executive office if, as a result of such
relocation, the applicable provisions of the UCC would require the filing of any
amendment of any previously filed financing or continuation statement or of any
new financing statement. The Servicer shall at all times maintain each office
from which it services Receivables and its principal executive office within the
United States of America.
73
(d) The Servicer shall maintain accounts and records as to each Receivable
accurately and in sufficient detail to permit (i) the reader thereof to know at
any time the status of such Receivable, including payments and recoveries made
and payments owing (and the nature of each) and (ii) reconciliation between
payments or recoveries on (or with respect to) each Receivable and the amounts
from time to time deposited in the Collection Account in respect of such
Receivable.
(e) The Servicer shall maintain its computer systems so that, from and
after the time of sale under this Agreement of the Receivables to the Trust, the
Servicer's master computer records (including any backup archives) that refer to
any Receivable indicate clearly (with reference to the particular trust) that
the Receivable is owned by the Trust. Indication of the Trust's ownership of a
Receivable shall be deleted from or modified on the Servicer's computer systems
when, and only when, the Receivable has been paid in full or repurchased by the
Seller or Servicer.
(f) If at any time the Seller or the Servicer proposes to sell, grant a
security interest in, or otherwise transfer any interest in automotive
receivables to any prospective purchaser, 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 backup
archives) that, if they refer in any manner whatsoever to any Receivable,
indicate clearly that such Receivable has been sold and is owned by the Trust
unless such Receivable has been paid in full or repurchased by the Seller or
Servicer.
(g) The Servicer shall permit the Owner Trustee, the Indenture Trustee,
the Backup Servicer, Xxxxxx and their respective agents, at any time to inspect,
audit and make copies of and abstracts from the Servicer's records regarding any
Receivables or any other portion of the Trust Property.
(h) The Servicer shall furnish to the Owner Trustee, the Indenture
Trustee, the Backup Servicer and Xxxxxx at any time upon request a list of all
Receivables then held as part of the Trust, together with a reconciliation of
such list to the Schedule of Receivables and to each of the Servicer's
Certificates furnished before such request indicating removal of Receivables
from the Trust. Upon request, the Servicer shall furnish a copy of any list to
the Seller. The Owner Trustee shall hold any such list and Schedule of
Receivables for examination by interested parties during normal business hours
at the Corporate Trust Office upon reasonable notice by such Persons of their
desire to conduct an examination.
(i) The Seller and the Servicer shall deliver to the Owner Trustee, the
Indenture Trustee and Xxxxxx simultaneously with the execution and delivery of
this Agreement and of each amendment thereto and upon the occurrence of the
events giving rise to an obligation to give notice pursuant to Section 10.2(b)
or (c), an Opinion of Counsel either (a) stating that, in the opinion of such
Counsel, all financing statements and continuation statements have been executed
and filed that are necessary fully to preserve and protect the interest of the
Owner Trustee and the Indenture Trustee in the Receivables and the other Trust
Property, and reciting the details of such filings or referring to prior
Opinions of
74
Counsel in which such details are given, or (b) stating that, in the opinion of
such counsel, no such action is necessary to preserve and protect such interest.
(j) The Servicer shall deliver to the Owner Trustee, the Indenture Trustee
and Xxxxxx, within 90 days after the beginning of each calendar year beginning
with the first calendar year beginning more than three months after the Initial
Closing Date, an Opinion of Counsel, either (a) stating that, in the opinion of
such counsel, all financing statements and continuation statements have been
executed and filed that are necessary fully to preserve and protect the interest
of the Trust and the Indenture Trustee in the Receivables, and reciting the
details of such filings or referring to prior Opinions of Counsel in which such
details are given, or (b) stating that, in the opinion of such counsel, no
action shall be necessary to preserve and protect such interest.
Section 10.3. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without regard to
the principles of conflicts of laws thereof and the obligations, rights and
remedies of the parties under this Agreement shall be determined in accordance
with such laws.
Section 10.4. SEVERABILITY OF PROVISIONS. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates
or the Notes or the respective rights of the Holders thereof.
Section 10.5. ASSIGNMENT. Notwithstanding anything to the contrary
contained in this Agreement, except as provided in Section 7.2 or Section 8.2
(and as provided in the provisions of the Agreement concerning the resignation
of the Servicer and the Backup Servicer), this Agreement may not be assigned by
the Seller or the Servicer without the prior written consent of the Owner
Trustee, the Indenture Trustee, the Backup Servicer, Xxxxxx and a Certificate
Majority (which consent, in the case of the Owner Trustee or the Indenture
Trustee, shall not be unreasonably withheld).
Section 10.6. THIRD-PARTY BENEFICIARIES. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Each of Xxxxxx and the Certificateholders and
their successors and assigns shall be a third-party beneficiary to the
provisions of this Agreement, and shall be entitled to rely upon and directly to
enforce such provisions of this Agreement. Nothing in this Agreement, express
or implied, shall give to any Person, other than the parties hereto and their
successors hereunder, any benefit or any legal or equitable right, remedy or
claim under this Agreement.
Section 10.7. [RESERVED].
Section 10.8. COUNTERPARTS. For the purpose of facilitating its execution
and for other purposes, this Agreement may be executed simultaneously in any
number of
75
counterparts, each of which counterparts shall be deemed to be an original, and
all of which counterparts shall constitute but one and the same instrument.
Section 10.9. INTENTION OF PARTIES. (a) The execution and delivery of
this Agreement and each Transfer Agreement shall constitute an acknowledgement
by the Seller, that it is intended that the assignment and transfer contemplated
herein and therein constitute a sale and assignment outright, and not for
security, of the Receivables and the other Trust Property, conveying good title
thereto free and clear of any Liens, from the Seller to the Trust, and that the
Receivables and the other Trust Property shall not be a part of the Seller's
estate in the event of the insolvency, receivership, conservatorship or the
occurrence of another similar event, of, or with respect to, the Seller. In the
event that any such conveyance is determined to be made as security for a loan
made by the Trust or the Certificateholders to the Seller, the Seller intends
that it shall have granted to the Owner Trustee a first priority security
interest in all of the Seller's right, title and interest in and to the Trust
Property conveyed to the Trust pursuant to Section 2.1 of this Agreement, and
that this Agreement shall constitute a security agreement under applicable law.
(b) The execution and delivery of this Agreement shall constitute an
acknowledgement by the Seller and the Owner Trustee on behalf of the
Certificateholders that they intend that the Certificates will qualify as
indebtedness, and that the Trust will be treated as a security device, for
federal income tax purposes. The Seller and the Owner Trustee on behalf of the
Certificateholders further acknowledge that they intend, in the event that the
Certificates are deemed for federal income tax purposes to represent equity
interests in the Trust, that the Trust will be treated for federal income tax
purposes as a partnership, rather than an association taxable as a corporation.
The powers granted and obligations undertaken in this Agreement shall be
construed so as to further such intent.
Section 10.10. NOTICES. All demands, notices and communications under
this Agreement shall be in writing, personally delivered or mailed by certified
mail-return receipt requested, and shall be deemed to have been duly given upon
receipt (a) in the case of AFL, the Seller or the Servicer, at the following
address: Arcadia Receivables Finance Corp. II, 0000 Xxxxxxxxxx Xxxxxx Xxxxx,
Xxxxx 000, Xxxxxxxxxxx, Xxxxxxxxx 00000-0000, with copies to: Arcadia
Financial Ltd., 0000 Xxxxxxxxxx Xxxxxx Xxxxx, Xxxxxxxxxxx, Xxxxxxxxx
00000-0000, Attention: Xxxx X. Xxxxxx, (b) in the case of the Owner Trustee, at
the Corporate Trust Office, (c) in the case of the Indenture Trustee and, for so
long as the Indenture Trustee is the Backup Servicer, at Xxxxx Xxxxxx xxx
Xxxxxxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000-0000, Attention: Corporate
Trust Services - Asset Backed Administration, (d) in the case of each Rating
Agency, 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (for Xxxxx'x) and 00
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (for Standard & Poor's), Attention:
Asset-Backed Surveillance, (e) in the case of Xxxxxx, Xxxxxx Guaranty Trust
Company of New York, 000 Xxxxxxx Xxxxxxxxxx Xxxx, Xxxxxx, Xxxxxxxx 00000-0000,
Attention: Asset Finance Group, and (f) any notice required or permitted to be
mailed to a Certificateholder or a Noteholder shall be given by first class
mail, postage prepaid, at the address of such Holder as shown in the Certificate
Register or the Note Register (as the case may be), and any notice so mailed
within the time prescribed in this
76
Agreement shall be conclusively presumed to have been duly given, whether or not
the Certificateholder or the Noteholder receives such notice.
Section 10.11. LIMITATION OF LIABILITY. It is expressly understood and
agreed by the parties hereto that (a) this Agreement is executed and delivered
by Wilmington Trust Company, not individually or personally but solely as Owner
Trustee of the Trust under the Trust Agreement, in the exercise of the powers
and authority conferred and vested in it, (b) each of the representations,
undertakings and agreements herein made on the part of the Trust is made and
intended not as personal representations, undertakings and agreements by
Wilmington Trust Company but is made and intended for the purpose for binding
only the Trust, (c) nothing herein contained shall be construed as creating any
liability on Wilmington Trust Company, individually or personally, to perform
any covenant either expressed or implied contained herein, all such liability,
if any, being expressly waived by the parties to this Agreement and by any
person claiming by, through or under them and (d) under no circumstances shall
Wilmington Trust Company be personally liable for the payment of any
indebtedness or expenses of the Trust or be liable for the breach or failure of
any obligation, representation, warranty or covenant made or undertaken by the
Trust under this Agreement or any related documents.
77
IN WITNESS WHEREOF, the Issuer, the Seller, AFL, the Servicer and the
Backup Servicer have caused this Amended and Restated Sale and Servicing
Agreement to be duly executed by their respective officers as of the day and
year first above written.
ISSUER:
OLYMPIC AUTOMOBILE RECEIVABLES
WAREHOUSE TRUST
By WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as Owner Trustee
By /s/ X. Xxxxx
----------------------------------
Name: Xxxxxx X. Xxxxx
Title: Financial Services Officer
SELLER:
ARCADIA RECEIVABLES FINANCE
CORP. II
By /s/ Xxxx X. Xxxxxx
----------------------------------
Name: Xxxx X. Xxxxxx
Title: Senior Vice President/
Chief Financial Officer
ARCADIA FINANCIAL LTD.,
in its individual capacity and as
Servicer
By /s/ Xxxx X. Xxxxxx
----------------------------------
Name: Xxxx X. Xxxxxx
Title: Senior Vice President and
Chief Financial Officer
[Signature page to Amended and Restated Sale and Servicing Agreement]
BACKUP SERVICER:
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
By /s/ Xxxxxx X. Xxxxxxxxx
----------------------------------
Name:
Title:
Acknowledged and Accepted:
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
not in its individual capacity but as
Indenture Trustee
By /s/ Xxxxxx X. Xxxxxxxxx
-----------------------------------
Name:
Title:
[Signature page to Amended and Restated Sale and Servicing Agreement]