EXECUTION COPY
SPREAD ACCOUNT AGREEMENT
dated as of March 25, 1993,
as amended and restated
as of November 19, 1998
among
ARCADIA FINANCIAL LTD.,
ARCADIA RECEIVABLES FINANCE CORP.,
FINANCIAL SECURITY ASSURANCE INC.
THE CHASE MANHATTAN BANK
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Section 1.02. Rules of Interpretation . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE II
CREDIT ENHANCEMENT FEE; SERIES SUPPLEMENTS; THE COLLATERAL
Section 2.01. Series 1993-A Credit Enhancement Fee. . . . . . . . . . . . . . . . 16
Section 2.02. Series Supplements. . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 2.03. Grant of Security Interest by Arcadia Financial and the
Seller. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 2.04. Priority. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 2.05. Seller and Arcadia Financial Remain Liable. . . . . . . . . . . . . 18
Section 2.06. Maintenance of Collateral.. . . . . . . . . . . . . . . . . . . . . 18
Section 2.07. Termination and Release of Rights.. . . . . . . . . . . . . . . . . 19
Section 2.08. Non-Recourse Obligations of Seller. . . . . . . . . . . . . . . . . 19
Section 2.09. Program Spread Account and Tag Accounts . . . . . . . . . . . . . . 20
ARTICLE III
SPREAD ACCOUNTS
Section 3.01. Establishment of Spread Accounts; Initial Deposits into
Spread Accounts.. . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 3.02. Investments.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 3.03. Distributions: Priority of Payments.. . . . . . . . . . . . . . . . 25
Section 3.04. General Provisions Regarding Spread Accounts. . . . . . . . . . . . 29
Section 3.05. Reports by the Collateral Agent . . . . . . . . . . . . . . . . . . 31
ARTICLE IV
THE COLLATERAL AGENT
Section 4.01. Appointment and Powers. . . . . . . . . . . . . . . . . . . . . . . 31
Section 4.02. Performance of Duties . . . . . . . . . . . . . . . . . . . . . . . 32
Section 4.03. Limitation on Liability . . . . . . . . . . . . . . . . . . . . . . 32
Section 4.04. Reliance upon Documents . . . . . . . . . . . . . . . . . . . . . . 32
Section 4.05. Successor Collateral Agent. . . . . . . . . . . . . . . . . . . . . 33
Section 4.06. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 4.07. Compensation and Reimbursement. . . . . . . . . . . . . . . . . . . 35
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Section 4.08. Representations and Warranties of the Collateral Agent. . . . . . . 35
Section 4.09. Waiver of Setoffs . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 4.10. Control by the Controlling Party. . . . . . . . . . . . . . . . . . 36
ARTICLE V
COVENANTS OF THE SELLER
Section 5.01. Preservation of Collateral. . . . . . . . . . . . . . . . . . . . . 36
Section 5.02. Opinions as to Collateral . . . . . . . . . . . . . . . . . . . . . 36
Section 5.03. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 5.04. Waiver of Stay or Extension Laws; Marshalling of Assets . . . . . . 37
Section 5.05. Noninterference, etc. . . . . . . . . . . . . . . . . . . . . . . . 37
Section 5.06. Seller Changes. . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE VI
CONTROLLING PARTY; INTERCREDITOR PROVISIONS
Section 6.01. Appointment of Controlling Party. . . . . . . . . . . . . . . . . . 38
Section 6.02. Controlling Party's Authority.. . . . . . . . . . . . . . . . . . . 39
Section 6.03. Rights of Secured Parties . . . . . . . . . . . . . . . . . . . . . 40
Section 6.04. Degree of Care. . . . . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE VII
REMEDIES UPON DEFAULT
Section 7.01. Remedies upon a Default . . . . . . . . . . . . . . . . . . . . . . 41
Section 7.02. Waiver of Default . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 7.03. Restoration of Rights and Remedies. . . . . . . . . . . . . . . . . 42
Section 7.04. No Remedy Exclusive . . . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE VIII
MISCELLANEOUS
Section 8.01. Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 8.02. Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 8.03. Amendments; Waivers . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 8.04. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 8.05. Nonpetition Covenant. . . . . . . . . . . . . . . . . . . . . . . . 43
Section 8.06. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 8.07. Term of this Agreement. . . . . . . . . . . . . . . . . . . . . . . 46
Section 8.08. Assignments: Third-Party Rights; Reinsurance.. . . . . . . . . . . 46
Section 8.09. Consent of Controlling Party. . . . . . . . . . . . . . . . . . . . 46
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Section 8.10. Trial by Jury Waived. . . . . . . . . . . . . . . . . . . . . . . . 47
Section 8.11. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 8.12. Consents to Jurisdiction. . . . . . . . . . . . . . . . . . . . . . 47
Section 8.13. Limitation of Liability . . . . . . . . . . . . . . . . . . . . . . 48
Section 8.14. Determination of Adverse Effect . . . . . . . . . . . . . . . . . . 48
Section 8.15. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 8.16. Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
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SPREAD ACCOUNT AGREEMENT, dated as of March 25, 1993, as amended and restated
as of July 21, 1998 (the "Agreement"), by and among ARCADIA FINANCIAL LTD.
(f/k/a Olympic Financial Ltd.), a Minnesota corporation ("Arcadia
Financial"), ARCADIA RECEIVABLES FINANCE CORP., a Delaware corporation (the
"Seller"), FINANCIAL SECURITY ASSURANCE INC., a New York stock insurance
company ("Financial Security"), NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
("Norwest"), a national banking association in its capacities as Trustee
under each Pooling and Servicing Agreement and/or as Trustee under each
Indenture with respect to those Series specified in the related Series
Supplement (as defined below), THE CHASE MANHATTAN BANK ("Chase"), as Trustee
under each Indenture with respect to those Series specified in the related
Series Supplement, each in such respective capacities as agent for the
Certificateholders and/or Noteholders with respect to the related Series
(Norwest or Chase, as Trustee as indicated in the related Sales and Servicing
Agreement or the related Series Supplement, as the case may be, the
"Trustee") and NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as Collateral
Agent (as defined below).
RECITALS
1. Olympic Automobile Receivables Trust, 1993-A (the
"Series 1993-A Trust") was formed pursuant to a Pooling and Servicing
Agreement, dated as of March 1, 1993 (the "Series 1993-A Pooling and
Servicing Agreement"), among Arcadia Financial, as Servicer, the Seller, the
Trustee and the Backup Servicer.
2. Pursuant to Pooling and Servicing Agreements or Sale and
Servicing Agreements, the Seller from time to time sells all of its right,
title and interest in and to Receivables and certain other Trust Property.
3. The Seller has requested that Financial Security issue
Policies to guarantee payment of the Guaranteed Distributions or Scheduled
Payments (as defined in the relevant Policy) on each Distribution Date in
respect of asset-backed securities backed by such Receivables and Other Trust
Property.
4. In partial consideration of the issuance of the
Policies, the Seller has agreed that Financial Security shall have certain
rights as Controlling Party, to the extent set forth herein.
5. The Seller is a wholly-owned special purpose subsidiary
of Arcadia Financial. Certain of the purchasers of Receivables and Other
Trust Property have agreed to pay a Credit Enhancement Fee to the Seller in
consideration of the obligations of the Seller and Arcadia Financial pursuant
hereto and in consideration of the obligations of Arcadia Financial pursuant
to the Insurance Agreements (such obligations forming part of the Insurer
Secured Obligations referred to herein). The Insurer Secured Obligations
form part of the consideration to Financial Security for its issuance of the
Policies.
6. In order to secure the performance of the Secured
Obligations, to further effect and enforce the subordination provisions to
which the Credit Enhancement Fee is subject, and in consideration of the
receipt of the Credit Enhancement Fee, Arcadia Financial and the Seller
agreed to pledge the Collateral as Collateral to the Collateral Agent for the
benefit of Financial Security and for the benefit of the Trustees on behalf
of the Trusts, upon the terms and conditions set forth herein.
7. In connection with the issuance of Policies subsequent
to the Policy issued with respect to the Series 1993-A Trust, it is
contemplated that Financial Security will obtain certain Controlling Party
rights with respect to the related Series, and that, in connection with each
such additional Series, the parties hereto have entered into or will enter
into a Series Supplement hereto pursuant to which the Seller has pledged or
will pledge additional Collateral pursuant to the terms hereof and such
Series Supplement.
8. The Seller has entered into a Amended and Restated Sale
and Servicing Agreement dated as of July 21, 1998 with Arcadia Automobile
Receivables Warehouse Trust., a Delaware business trust (the "Issuer"),
Arcadia Receivables Conduit Corp. (the "Original Issuer"), Arcadia Financial,
Bank of America National Trust and Savings Association, as Administrative
Agent and RCC Agent, Xxxxxx Guaranty Trust Company of New York, as DFC Agent
and Norwest Bank Minnesota, National Association, as Backup Servicer,
Collateral Agent and Indenture Trustee (the "Warehousing Series Sale and
Servicing Agreement") pursuant to which the Seller has sold or will sell all
of its right, title and interest in certain Receivables, and that the Issuer
will issue one or more classes or tranches of Warehousing Notes pursuant to
an Amended and Restated Indenture among the Original Issuer, the Issuer, the
Indenture Trustee and the Collateral Agent, and that Financial Security in
its discretion may issue one or more Policies with respect to certain
scheduled payments on the corresponding Notes.
9. The parties have previously executed, amended and
restated this Agreement, and now wish to further amend and restate this
Agreement to supplement certain provisions therein in order to reflect the
intent of the parties.
AGREEMENTS
In consideration of the premises, and for other good and
valuable consideration, the adequacy, receipt and sufficiency of which are
hereby acknowledged the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. DEFINITIONS. All terms defined in the document
entitled "OFL Grantor Trusts Standard Terms and Conditions of Agreement
Effective March 1,
2
1993" (the "Standard Terms and Conditions") shall have the same meaning with
respect to each Series in this Agreement. If the related Series was issued
pursuant to a Pooling and Servicing Agreement, all terms defined in Section
1.01 of such Pooling and Servicing Agreement shall have the same meaning with
respect to the related Series in this Agreement. If the related Series was
issued pursuant to a Trust Agreement, Sale and Servicing Agreement and
Indenture, all terms defined in the related Sale and Servicing Agreement
shall have the same meaning with respect to the related Series in this
Agreement. If the related Series was issued pursuant to an Indenture and the
related Receivables were sold to the Issuer pursuant to a Warehousing Series
Sale and Servicing Agreement, all terms defined in the Warehousing Series
Sale and Servicing Agreement shall have the same meaning with respect to the
related Series in this Agreement. If a term is defined herein with respect to
one or more Series, if applicable, such term shall be defined with respect to
any other Series in the Series Supplement related thereto. The following
terms shall have the following respective meanings:
"AUTHORIZED OFFICER" means, (i) with respect to Financial
Security, the Chairman of the Board, the President, the Executive Vice
President or any Managing Director of Financial Security, (ii) with respect
to the Trustee or the Collateral Agent, any Vice President or Trust Officer
thereof, (iii) with respect to Arcadia Financial, the President or any Vice
President thereof, and (iv) with respect to the Seller, the President or any
Vice President thereof.
"AVERAGE DELINQUENCY RATIO" means, with respect to any Series
(other than the Warehousing Series) and any Determination Date, the
arithmetic average of the Delinquency Ratios for such Determination Date and
the two immediately preceding Determination Dates.
"CAPTURE EVENT" means the occurrence of an "Event of Default,"
as defined in the Indenture dated as of March 12, 1997 between Arcadia
Financial and Norwest Bank Minnesota, National Association, as amended or
supplemented (including that First Supplemental Indenture dated as of March
12, 1997 and that Second Supplemental Indenture dated as of October 8, 1997),
relating to $375,000,000 principal amount of Arcadia Financial's currently
outstanding 11 1/2% Senior Notes due 2007, with respect to which a permanent
waiver has not been effected in accordance with the terms of such agreement.
"COLLATERAL" means the Series 1993-A Collateral, any property
pledged pursuant to Section 2.09(d), and, with respect to any Series, all
collateral delivered hereunder with respect to each of the Series, as
specified in the related Series Supplement.
"COLLATERAL AGENT" means, initially, Norwest Bank Minnesota,
National Association, in its capacity as collateral agent on behalf of the
Secured Parties, including its successors in interest, until a successor
Person shall have become the Collateral Agent pursuant to Section 4.05
hereof, and thereafter "Collateral Agent" shall mean such successor Person.
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"COLLECTION ACCOUNT SHORTFALL" means (A), with respect to any
Series created pursuant to a Pooling and Servicing Agreement, any
Distribution Date, and a time of determination, the excess, if any, of the
amount required to be distributed on such Distribution Date pursuant to
subsections (i) through (vi) of Section 4.6(a) of the Standard Terms and
Conditions over the amount on deposit in and available for distribution (or,
for the purposes of Section 3.03(a), calculated on a pro forma basis to be on
deposit in and available for distribution) on such Distribution Date from the
Collection Account related to such Series, and (B) with respect to any Series
created pursuant to a Trust Agreement, Sale and Servicing Agreement and
Indenture, or with respect to any Series issued by the Issuer, the meaning
assigned in the related Series Supplement.
"CONTROLLING PARTY" means with respect to a Series, at any
time, the Person designated as the Controlling Party at such time pursuant to
Section 6.01 hereof.
"CRAM DOWN LOSS" means, if a court of appropriate jurisdiction
in an insolvency proceeding shall have issued an order reducing the Principal
Balance of a Receivable, the amount of such reduction. A "Cram Down Loss"
shall be deemed to have occurred on the date of issuance of such order.
"CUMULATIVE DEFAULT RATE" means, with respect to any
Determination Date and any Series (other than the Warehousing Series), the
fraction, expressed as a percentage, the numerator of which is equal to the
sum of (a) the Principal Balance of all Receivables which became Spread
Account Liquidated Receivables since the Cutoff Date as of the related
Accounting Date plus (b) the Principal Balance of all Receivables with
respect to which all or any portion of a Scheduled Payment has become 91 or
more days delinquent as of the related Accounting Date (not including those
Receivables included in clause (a) above) and the denominator of which is
equal to the sum of (i) the original Aggregate Principal Balance as of the
Initial Cutoff Date plus (ii) the Prefunded Amount as of the Series Closing
Date.
"CUMULATIVE NET LOSS RATE" means, with respect to any
Determination Date and any Series (other than the Warehousing Series), the
fraction, expressed as a percentage, the numerator of which is equal to the
sum of (a) Net Losses for such Determination Date plus (b) with respect to
Series 1994-A, Series 1994-B, Series 1994-C, Series 1994-D, Series 1995-A,
Series 1995-B, Series 1995-C, Series 1995-D, Series 1996-A, Series 1996-B,
Series 1996-C, Series 1996-D, Series 1997-A, Series 1997-B, Series 1997-C,
Series 1997-D and Series 1998-A, 40%, and with respect to any other Series
(other than the Warehousing Series), 50%, of the Principal Balance of all
Receivables with respect to which all or any portion of a Scheduled Payment
has become 91 or more days delinquent (not including Receivables included
under the definition of Net Losses in clause (a) above) as of the related
Accounting Date and the denominator of which is equal to the sum of (i) the
original Aggregate Principal Balance as of the Initial Cutoff Date plus (ii)
the Prefunded Amount as of the Series Closing Date.
"DEEMED CURED" means, with respect to Series 1994-B, Series
1994-A, Series 1993-D, Series 1993-C, Series 1993-B or Series 1993-A and each
other Spread
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Account for which "Deemed Cured" is not defined in the related Series
Supplement, (a) with respect to the occurrence of the events specified in
clause (A)(i) or (ii) of the definition of Trigger Event, as of a
Determination Date that no such event specified in clause (A)(i) or clause
(A)(ii) with respect to such Series shall have occurred as of such
Determination Date or as of any of the two consecutively preceding
Determination Dates, and (b) with respect to the occurrence of the events
specified in clause (A)(iii) or clause (A)(iv) of the definition thereof, as
of the next Determination Date which occurs in a calendar month which is a
multiple of three months succeeding the Closing Date, that no such event
specified in clause (A)(iii) or clause (A)(iv) with respect to such Series
shall have occurred as of such Determination Date.
"DEFAULT" means, with respect to any Series, at any time, (i)
if Financial Security is then the Controlling Party with respect to such
Series, any Insurance Agreement Event of Default with respect to such Series,
and (ii) if the Trustee is then the Controlling Party with respect to such
Series, any Servicer Termination Event with respect to such Series.
"DELINQUENCY RATIO" means, with respect to any Determination
Date and any Series (other than the Warehousing Series), the fraction,
expressed as a percentage, the numerator of which is equal to the sum of the
Principal Balances (as of the related Accounting Date) of all Receivables
that were delinquent with respect to all or any portion of a Scheduled
Payment more than 30 days as of the related Accounting Date or that became a
Purchased Receivable as of the related Accounting Date and that were
delinquent with respect to all or any portion of a Scheduled Payment more
than 30 days as of such Accounting Date and the denominator of which is equal
to the Aggregate Principal Balance as of the related Accounting Date.
"DELIVERY" means, when used with respect to Spread Account
Eligible Investments, the actions to be taken with respect to the delivery
thereof to the Collateral Agent and the holding thereof by the Collateral
Agent as follows:
(a) with respect to bankers' acceptances, commercial paper,
negotiable certificates of deposit and other obligations that constitute
"instruments" within the meaning of Section 9-105(1)(i) of the UCC (other
than certificated securities) and are susceptible of physical delivery,
transfer thereof to the Collateral Agent by physical delivery to the
Collateral Agent, indorsed to, or registered in the name of, the Collateral
Agent or its nominee or indorsed in blank and such additional or alternative
procedures as may hereafter become appropriate to effect the complete
transfer of ownership of any such Eligible Investment to the Collateral Agent
free and clear of any adverse claims, consistent with changes in applicable
law or regulations or the interpretation thereof;
(b) with respect to a "certificated security" (as defined in
Section 8-102(a)(4) of the UCC), transfer thereof:
1. by physical delivery of such certificated security to the
Collateral Agent, provided that if the certificated security is in
registered form, it shall
5
be indorsed to, or registered in the name of, the Collateral Agent or
indorsed in blank;
2. by physical delivery of such certificated security in
registered form to a "securities intermediary" (as defined in Section
8-102(a)(14) of the UCC) acting on behalf of the Collateral Agent, if the
certificated security has been specially endorsed to the Collateral Agent
by an effective endorsement.
(c) with respect to any security issued by the U.S.
Treasury, the Federal Home Loan Mortgage Corporation or by the Federal
National Mortgage Association that is a book-entry security held through the
Federal Reserve System pursuant to Federal book-entry regulations, the
following procedures, all in accordance with applicable law, including
applicable federal regulations and Articles 8 and 9 of the UCC: book-entry
registration of such property to an appropriate book-entry account maintained
with a Federal Reserve Bank by a securities intermediary which is also a
"depositary" pursuant to applicable federal regulations and issuance by such
securities intermediary of a deposit advice or other written confirmation of
such book-entry registration to the Collateral Agent of the purchase by the
securities intermediary on behalf of the Collateral Agent of such book-entry
security; the making by such securities intermediary of entries in its books
and records identifying such book-entry security held through the Federal
Reserve System pursuant to Federal book-entry regulations as belonging to the
Collateral Agent and indicating that such securities intermediary holds such
book-entry security solely as agent for the Collateral Agent; and such
additional or alternative procedures as may hereafter become appropriate to
effect complete transfer of ownership of any such Eligible Investments to the
Collateral Agent free of any adverse claims, consistent with changes in
applicable law or regulations or the interpretation thereof;
(d) with respect to an "uncertificated security" (as defined
in Section 8-102(a)(18) of the UCC) and that is not governed by clause (c)
above, transfer thereof:
1. (A) by registration to the Collateral Agent as the
registered owner thereof, on the books and records of the issuer thereof.
(B) another Person (not a securities intermediary)
either becomes the registered owner of the uncertificated security on behalf
of the Collateral Agent, or having become the registered owner acknowledges
that it holds for the Collateral Agent.
2. the issuer thereof has agreed that it will comply with
instructions originated by the Collateral Agent without further consent of
the registered owner thereof.
(e) with respect to a "security entitlement" (as defined in
Section 8-102(a)(17) of the UCC) if a securities intermediary (A) indicates
by book-entry that a "financial asset" (as defined in Section 8-102(a)(9) of
the UCC) has been credited to the Collateral Agent's "securities account" (as
defined in Section 8-501(a) of the UCC), (B) receives a financial asset (as
so defined) from the Collateral Agent or acquires a financial
6
asset for the Collateral Agent, and in either case, accepts it for credit to
the Collateral Agent's securities account (as so defined), (C) becomes
obligated under other law, regulation or rule to credit a financial asset to
the Collateral Agent's securities account, or (D) has agreed that it will
comply with "entitlement orders" (as defined in Section 8-102(a)(8) of the
UCC) originated by the Collateral Agent without further consent by the
"entitlement holder" (as defined in Section 8-102(a)(7) of the UCC), of a
confirmation of the purchase and the making by such securities intermediary
of entries on its books and records identifying as belonging to the
Collateral Agent of (I) a specific certificated security in the securities
intermediary's possession, (II) a quantity of securities that constitute or
are part of a fungible bulk of certificated securities in the securities
intermediary's possession, or (III) a quantity of securities that constitute
or are part of a fungible bulk of securities shown on the account of the
securities intermediary on the books of another securities intermediary.
(f) in each case of delivery contemplated herein, the
Collateral Agent shall make appropriate notations on its records, and shall
cause the same to be made of the records of its nominees, indicating that
securities are held in trust pursuant to and as provided in this Agreement.
"ELIGIBLE ACCOUNT" means a segregated trust account that (i) is
either (x) maintained with a depository institution or trust company the
long-term unsecured debt obligations of which are rated "AA" or higher by
Standard & Poor's and "Aa2" or higher by Moody's, or (y) maintained with a
depository institution or trust company the commercial paper or other
short-term unsecured debt obligations of which are rated "A-1+" by Standard &
Poor's and "P-1" by Moody's and (ii) in either case, such depository
institution or trust company shall have been specifically approved by the
Controlling Party, acting in its discretion, by written notice to the
Collateral Agent.
"FINAL TERMINATION DATE" means, with respect to a Series, the
date that is the later of (i) the Insurer Termination Date with respect to
such Series and (ii) the Trustee Termination Date with respect to such Series.
"FINANCIAL SECURITY DEFAULT" means, with respect to any Series,
any one of the following events shall have occurred and be continuing:
(a) Financial Security shall have failed to make a payment
required under a related Policy;
(b) Financial Security shall have (i) filed a petition or
commenced any case or proceeding under any provision or chapter of the
United States Bankruptcy Code, the New York State Insurance Law or any
other similar federal or state law relating to insolvency, bankruptcy,
rehabilitation, liquidation or reorganization, (ii) made a general
assignment for the benefit of its creditors, or (iii) had an order for
relief entered against it under the United States Bankruptcy Code, the
New York State Insurance Law, or any other similar federal or state law
relating to
7
insolvency, bankruptcy, rehabilitation, liquidation or reorganization
which is final and nonappealable; or
(c) a court of competent jurisdiction, the New York Department
of Insurance or other competent regulatory authority shall have entered a
final and nonappealable order, judgment or decree (i) appointing a
custodian, trustee, agent or receiver for Financial Security or for all
or any material portion of its property or (ii) authorizing the taking of
possession by a custodian, trustee, agent or receiver of Financial
Security (or the taking of possession of all or any material portion of
the property of Financial Security).
"INITIAL PRINCIPAL AMOUNT" means $59,222,640.38 with respect to
Series 1993-A.
"INITIAL SPREAD ACCOUNT DEPOSIT" means $2,368,906 for Series
1993-A.
"INITIAL SPREAD ACCOUNT MAXIMUM AMOUNT" means, with respect to
Series 1993-A and any Distribution Date, an amount equal to the greater of
(i) 7% of the Certificate Balance as of such Distribution Date (after giving
effect to the distribution in respect of principal made on such Distribution
Date) and (ii) the Spread Account Minimum Amount as of such Distribution Date.
"INSURANCE AGREEMENT" means, with respect to any Series, the
Insurance and Indemnity Agreement among Financial Security, the Seller,
Arcadia Financial and such other parties as may be named therein.
"INSURER SECURED OBLIGATIONS" means, with respect to a Series,
all amounts and obligations which Arcadia Financial, the Seller and such
other parties as may be named therein may at any time owe or be required to
perform to or on behalf of Financial Security (or any agents, accountants or
attorneys for Financial Security) under the Insurance Agreement related to
such Series or under any Transaction Document in respect of such Series,
regardless of whether such amounts are owed or performance is due now or in
the future, whether liquidated or unliquidated, contingent or non-contingent.
"INSURER TERMINATION DATE" means, with respect to any Series,
the date which is the latest of (i) the date of the expiration of all
Policies issued in respect of such Series, (ii) the date on which Financial
Security shall have received payment and performance in full of all Insurer
Secured Obligations with respect to such Series and (iii) the latest date on
which any payment referred to above could be avoided as a preference or
otherwise under the United States Bankruptcy Code or any other similar
federal or state law relating to insolvency, bankruptcy, rehabilitation,
liquidation or reorganization, as specified in an Opinion of Counsel
delivered to the Collateral Agent and the Trustee.
"ISSUER" means Arcadia Automobile Receivables Warehouse Trust.,
a Delaware business trust.
8
"LIEN" means, as applied to the property or assets (or the
income, proceeds, products, rents or profits therefrom) of any Person, in
each case whether the same is consensual or nonconsensual or arises by
contract, operation of law, legal process or otherwise: (a) any mortgage,
lien, pledge, attachment, charge, lease, conditional sale or other title
retention agreement, or other security interest or encumbrance of any kind;
or (b) any arrangement, express or implied, under which such property or
assets (and/or such income, proceeds, products, rents or profits) are
transferred, sequestered or otherwise identified for the purpose of
subjecting or making available the same for payment of debt or performance of
any other obligation in priority to the payment of the general, unsecured
creditors of such Person.
"NET LOSSES" means, with respect to any Determination Date and
any Series (other than the Warehousing Series), the positive difference of
(A) the sum of (i) the aggregate of the Principal Balances as of the related
Accounting Date (plus accrued and unpaid interest to the end of the related
Monthly Period, at the applicable APR) of all Receivables that became Spread
Account Liquidated Receivables since the Cutoff Date, plus (ii) the Purchase
Amount of all Receivables that became Purchased Receivables as of the related
Accounting Date and that were delinquent with respect to all or any portion
of a Scheduled Payment more than 30 days as of such Accounting Date, plus
(iii) the aggregate of all Cram Down Losses as of the related Accounting Date
that occurred since the Cutoff Date, over (B) the Liquidation Proceeds
received by the Trust as of the related Accounting Date since the Cutoff Date.
"NON-CONTROLLING PARTY" means, with respect to a Series, at any
time, the Secured Party that is not the Controlling Party at such time.
"OBLIGOR" means, with respect to any Receivable, 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.
"OPINION OF COUNSEL" means a written opinion of counsel
acceptable, as to form, substance and issuing counsel, to the Controlling
Party.
"PAYMENT PRIORITIES" means the priority of PRO RATA
distributions described in clause (iii) of priority THIRD of Section 3.03(a).
"POLICY" means the Series 1993-A Policy and any insurance
policy subsequently issued by Financial Security with respect to a Series.
"POOLING AND SERVICING AGREEMENT" means, with respect to Series
1993-A, the Series 1993-A Pooling and Servicing Agreement and, for each other
Series created pursuant to a Pooling and Servicing Agreement, the Pooling and
Servicing Agreement related to such Series.
"PROGRAM SPREAD ACCOUNT" has the meaning specified in Section
2.09(a) hereof.
9
"SECURED OBLIGATIONS" means, with respect to each Series, the
Insurer Secured Obligations with respect to such Series and the Trustee
Secured Obligations with respect to such Series.
"SECURED PARTIES" means, with respect to a Series and the
related Collateral, each of the Trustee, in respect of the Trustee Secured
Obligations with respect to such Series, and Financial Security, in respect
of the Insurer Secured Obligations with respect to such Series.
"SECURITY INTERESTS" means, with respect to Series 1993-A
Certificates, the security interests and Liens in the Series 1993-A
Collateral granted pursuant to Section 2.03 hereof, and, with respect to any
other Series, the security interests and Liens in the related Collateral
granted pursuant to the related Series Supplement.
"SERIES 1993-A CERTIFICATES" means the Series of Certificates
issued on the date hereof pursuant to the Series 1993-A Pooling and Servicing
Agreement.
"SERIES 1993-A COLLATERAL" has the meaning specified in Section
2.03(a) hereof.
"SERIES 1993-A CREDIT ENHANCEMENT FEE" means the amount
distributable on each Distribution Date pursuant to Section 4.6(a)(vi) and
(vii) of the Standard Terms and Conditions as incorporated by reference in
the Series 1993-A Pooling and Servicing Agreement.
"SERIES 1993-A POOLING AND SERVICING AGREEMENT" means the
Pooling and Servicing Agreement, dated as of the date hereof, among Arcadia
Financial, in its individual capacity and as Servicer, the Seller, the
Trustee and the Backup Servicer, as such agreement may be supplemented,
amended or modified from time to time.
"SERIES 1993-A RECEIVABLE" means each Receivable referenced on
the Schedule of Receivables attached to the Series 1993-A Pooling and
Servicing Agreement.
"SERIES OF SECURITIES" or "SERIES" means the Series 1993-A
Certificates or, as the context may require, any other series of Certificates
and/or Notes issued as described in Section 2.02 hereof, or collectively, all
such series; PROVIDED, HOWEVER, Series, as used collectively shall not
include any Series of Warehousing Notes when such term is used in, or with
respect to, the definitions "Cumulative Default Rate," "Average Delinquency
Ratio," "Cumulative Net Loss Rate," "Deemed Cured," "Delinquency Ratio," "Net
Losses," "Spread Account Shortfall" and "Spread Account Default Level."
"SERIES SUPPLEMENT" means a supplement hereto executed by the
parties hereto in accordance with Section 2.02 hereof.
"SPREAD ACCOUNT" has the meaning specified in Section 3.01(a)
hereof.
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"SPREAD ACCOUNT ADDITIONAL DEPOSIT" with respect to any Series
created pursuant to a Trust Agreement, Sale and Servicing Agreement and
Indenture, has the meaning assigned in the related Series Supplement.
"SPREAD ACCOUNT LIQUIDATED RECEIVABLE" means, 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 past due.
"SPREAD ACCOUNT MAXIMUM AMOUNT" means, with respect to Series
1993-A and any Distribution Date:
(i) if no Insurance Agreement Event of Default with respect to
such Series has occurred and is continuing as of the related
Determination Date, no Capture Event has occurred and is continuing as of
the related Determination Date, no Trigger Event has occurred as of the
related Determination Date, and any Trigger Event with respect to such
Series is Deemed Cured as of the related Determination Date, then the
Initial Spread Account Maximum Amount with respect to such Series and
such Distribution Date;
(ii) if (A) a Trigger Event with respect to Series 1993-A has
occurred as of the Determination Date or (B) a Trigger Event with respect
to Series 1993-A has occurred as of a prior Distribution Date and is not
Deemed Cured as of the related Determination Date, and no Insurance
Agreement Event of Default with respect to Series 1993-A has occurred and
is continuing and no Capture Event has occurred and is continuing, the
Spread Account Maximum Amount shall be equal to the greater of (i) 10% of
the Series 1993-A Balance as of the close of business on such
Distribution Date and (ii) the Spread Account Minimum Amount as of the
close of business on such Distribution Date; or
(iii) if (A) an Insurance Agreement Event of Default with respect
to such Series has occurred and is continuing or (B) a Capture Event has
occurred and is continuing as of the related Determination Date, the
Spread Account Maximum Amount shall be equal to the greater of (i) 25% of
the Series 1993-A Balance as of the close of business on such
Distribution Date and (ii) the Spread Account Minimum Amount as of the
close of business on such Distribution Date.
"SPREAD ACCOUNT MINIMUM AMOUNT" means, with respect to Series
1993-A and any Distribution Date, an amount equal to the greater of:
(i) $100,000, and
(ii) the lesser of:
(A) 1% of the Initial Principal Amount of such Series,
but in no event less than $500,000, and
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(B) the Certificate Balance as of such Distribution Date
(after giving effect to the distribution in respect
of principal made on such Distribution Date).
"SPREAD ACCOUNT RECOURSE MAXIMUM ADJUSTMENT AMOUNT" means, with
respect to a Distribution Date and any Spread Account in which amounts on
deposit include a Spread Account Recourse Reduction Amount, the maximum
amount by which such Spread Account Recourse Reduction Amount is permitted to
decrease, as reported to the Collateral Agent in the Servicer's Certificate
delivered with respect to the related Determination Date, so long as
Financial Security does not deliver a written objection to such amount prior
to such Distribution Date.
"SPREAD ACCOUNT RECOURSE REDUCTION AMOUNT" means, with respect
to a Spread Account and Distribution Date, the specified amount deemed to be
on deposit in such Spread Account which is not cash, which amount is
specified in the Servicer's Certificate delivered with respect to the related
Determination Date, so long as Financial Security does not deliver a written
objection to such amount prior to such Distribution Date, and which amount
shall be treated fungibly with all other amounts on deposit in such Spread
Account, EXCEPT that such amount shall not be treated as a deposit in the
related Tag Account, and EXCEPT FURTHER, as provided in Section 3.03(b) and
3.04(e).
"SPREAD ACCOUNT SHORTFALL" means, with respect to any
Distribution Date and any Series (other than the Warehousing Series) with
respect to which an Insurance Agreement Event of Default has occurred and is
continuing, or a Capture Event has occurred and is continuing, the excess, if
any, of the Spread Account Maximum Amount for such Series and such
Distribution Date and the amount on deposit in such Spread Account as of such
Distribution Date after giving effect to distributions made on such
Distribution Date pursuant to priority SECOND of Section 3.03(b).
"STOCK PLEDGE AGREEMENT" means the Third Amended and Restated
Stock Pledge Agreement, dated as of December 3, 1996, between Arcadia
Financial, Financial Security and the Collateral Agent, as amended from time
to time.
"TAG ACCOUNT" has the meaning specified in Section 2.09(c).
"TRANSACTION DOCUMENTS" means, with respect to a Series, this
Agreement, each of the Pooling and Servicing Agreement or Trust Agreement,
Sale and Servicing Agreement and Indenture, or Warehousing Series Sale and
Servicing Agreement, Indenture and Security Agreement, as applicable, the
Insurance Agreement, the Custodian Agreement, the Purchase Agreement, any
Subsequent Purchase Agreements and Subsequent Transfer Agreements, any
Underwriting Agreement, the Lockbox Agreement, and the Stock Pledge Agreement
related to such Series.
"TRIGGER EVENT" means, with respect to Series 1993-A and as of
a Determination Date, the occurrence of any of the events specified in clause
(A) together with the occurrence of the event specified in clause (B):
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(A) (i) [reserved];
(ii) the Average Delinquency Ratio for such Determination
Date shall be equal to or greater than 5.00%;
(iii) the Cumulative Default Rate shall be equal to or
greater than (A) 3.15%, with respect to any
Determination Date occurring prior to or during the
sixth calendar month succeeding the Series 1993-A
Closing Date, (B) 5.50%, with respect to any
Determination Date occurring after the sixth, and
prior to or during the 12th, calendar month
succeeding the Series 1993-A Closing Date, (C) 7.0%,
with respect to any Determination Date occurring
after the 12th, and prior to or during the 18th,
calendar month succeeding the Series 1993-A Closing
Date, (D) 7.5%, with respect to any Determination
Date occurring after the 18th, and prior to or
during the 24th, calendar month succeeding the
Series 1993-A Closing Date, (E) 8.15%, with respect
to any Determination Date occurring after the 24th,
and prior to or during the 30th, calendar month
succeeding the Series 1993-A Closing Date, (F)
8.75%, with respect to any Determination Date
occurring after the 30th, and prior to or during the
36th, calendar month succeeding the Series 1993-A
Closing Date, (G) 3 9.0%, with respect to any
Determination Date occurring after the 36th, and
prior to or during the 42nd, calendar month
succeeding the Series 1993-A Closing Date, (H)
9.25%, with respect to any Determination Date
occurring after the 42nd, and prior to or during the
48th, calendar month succeeding the Series 1993-A
Closing Date, (I) 9.50%, with respect to any
Determination Date occurring after the 48th, and
prior to or during the 54th, calendar month
succeeding the Series 1993-A Closing Date, (J)
9.75%, with respect to any Determination Date
occurring after the 54th, and prior to or during the
60th calendar month succeeding the Series 1993-A
Closing Date, (K) 9.9%, with respect to any
Determination Date occurring after the 60th, and
prior to or during the 66th, calendar month
succeeding the Series 1993-A Closing Date, or (L)
10.0%, with respect to any Determination Date
occurring after the 66th, and prior to or during the
72nd, calendar month succeeding the Series 1993-A
Closing Date; or
(iv) the Cumulative Net Loss Rate shall be equal to or
greater than (A) 1.25%, with respect to any
Determination Date occurring prior to or during the
sixth calendar month
13
succeeding the Series 1993-A Closing Date,
(B) 2.0%, with respect to any
Determination Date occurring after the
sixth, and prior to or during the 12th,
calendar month succeeding the Series
1993-A Closing Date, (C) 2.75%, with
respect to any Determination Date
occurring after the 12th, and prior to or
during the 18th, calendar month succeeding
the Series 1993-A Closing Date, (D) 3.0%,
with respect to any Determination Date
occurring after the 18th, and prior to or
during the 24th, calendar month succeeding
the Series 1993-A Closing Date, (E) 3.25%,
with respect to any Determination Date
occurring after the 24th, and prior to or
during the 30th, calendar month succeeding
the Series 1993-A Closing Date, (F) 3.5%,
with respect to any Determination Date
occurring after the 30th, and prior to or
during the 36th, calendar month succeeding
the Series 1993-A Closing Date, (G) 3.6%,
with respect to any Determination Date
occurring after the 36th, and prior to or
during the 42nd, calendar month succeeding
the Series 1993-A Closing Date, (H) 3.7%,
with respect to any Determination Date
occurring after the 42nd, and prior to or
during the 48th, calendar month succeeding
the Series 1993-A Closing Date, (I) 3.8%,
with respect to any Determination Date
occurring after the 48th, and prior to or
during the 54th, calendar month succeeding
the Series 1993-A Closing Date, (J) 3.9%,
with respect to any Determination Date
occurring after the 54th, and prior to or
during the 60th, calendar month succeeding
the Series 1993-A Closing Date, (K) 3.95%,
with respect to any Determination Date
occurring after the 60th, and prior to or
during the 66th, calendar month succeeding
the Series 1993-A Closing Date, or (L)
4.0%, with respect to any Determination
Date occurring after the 66th, and prior
to or during the 72nd, calendar month
succeeding the Series 1993-A Closing Date.
(B) The amount specified with respect to such Series in the
last sentence of Section 2.09(f) hereof is positive on such
Determination Date, and such amount has not been deposited
in the related Tag Account on such Determination Date.
"TRUST" means a trust formed pursuant to a Pooling and Servicing
Agreement or a Trust Agreement, as the case may be.
"TRUST PROPERTY," with respect to any Series (other than the
Warehousing Series), has the meaning specified in the related Pooling and
Servicing Agreement or Trust Agreement, as the case may be, and with respect to
the Warehousing Series, means
14
the Seller Conveyed Property (as defined in the Warehousing Series Sale and
Servicing Agreement).
"TRUSTEE" means (A) with respect to any Series created pursuant
to a Pooling and Servicing Agreement, the Trustee named in such Pooling and
Servicing Agreement, or (B) with respect to any Series issued pursuant to an
Indenture, the Trustee named in such Indenture in its capacity as agent for
the Noteholders and, if applicable, the Certificateholders.
"TRUSTEE SECURED OBLIGATIONS" means, with respect to a Series,
all amounts and obligations which Arcadia Financial or the Seller may at any
time owe or be required to perform to or on behalf of (i) the Trustee, the
Trust or the Certificateholders under the Pooling and Servicing Agreement
with respect to such Series, (ii) the Trustee, the Owner Trustee, the Trust,
the Certificateholders or the Noteholders under the Trust Agreement, the Sale
and Servicing Agreement or the Indenture with respect to such Series or (iii)
the Trustee and the Noteholders under the Indenture with respect to the
Warehousing Series.
"TRUSTEE TERMINATION DATE" means, with respect to any Series,
the date which is the later of (i) the date on which the Trustee shall have
received, as Trustee for the holders of the Certificates of such Series, or
as Indenture Trustee on behalf of (and as agent for) the Noteholders and/or
Certificateholders of such Series, payment and performance in full of all
Trustee Secured Obligations arising out of or relating to such Series or (ii)
except with respect to the Warehousing Series, the date on which all payments
in respect of the Certificates shall have been made and the related Trust
shall have been terminated pursuant to the terms of the related Pooling and
Servicing Agreement or Trust Agreement.
"UNDERWRITING AGREEMENT" means, with respect to any Series
(other than the Warehousing Series), the Underwriting Agreement among Arcadia
Financial, the Seller and the Underwriters named therein.
"UNIFORM COMMERCIAL CODE" or "UCC" means the Uniform Commercial
Code in effect in the relevant jurisdiction, as the same may be amended from
time to time.
"WAREHOUSING SERIES" means all notes issued by the Issuer.
Section 1.02. RULES OF INTERPRETATION. The terms "hereof,"
"herein" or "hereunder, " unless otherwise modified by more specific
reference, shall refer to this Agreement in its entirety. Unless otherwise
indicated in context, the terms "Article," "Section," "Appendix," "Exhibit"
or "Annex" shall refer to an Article or Section of, or Appendix, Exhibit or
Annex to, this agreement. The definition of a term shall include the
singular, the plural, the past, the present, the future, the active and the
passive forms of such term. A term defined herein and used herein preceded
by a Series designation, shall mean such term as it relates to the Series
designated.
15
ARTICLE II
CREDIT ENHANCEMENT FEE; SERIES SUPPLEMENTS; THE COLLATERAL
Section 2.01. SERIES 1993-A CREDIT ENHANCEMENT FEE. The Series
1993-A Pooling and Servicing Agreement provides for the payment to the Seller
of a Series 1993-A Credit Enhancement Fee, to be paid to the Seller by
distribution of such amounts to the Collateral Agent for deposit and
distribution pursuant to this Agreement. The Seller and Arcadia Financial
hereby agree that payment of the Series 1993-A Credit Enhancement Fee in the
manner and subject to the conditions set forth herein and in the Series
1993-A Pooling and Servicing Agreement is adequate consideration and the
exclusive consideration to be received by the Seller or Arcadia Financial for
the obligations of the Seller pursuant hereto and the obligations of Arcadia
Financial pursuant hereto (including, without limitation, the transfer by the
Seller to the Collateral Agent of the Initial Spread Account Deposit) and
pursuant to the Series 1993-A Insurance Agreement. The Seller and Arcadia
Financial hereby agree with the Trustee and with Financial Security that
payment of the Series 1993-A Credit Enhancement Fee to the seller is
expressly conditioned on subordination of the Series 1993-A Credit
Enhancement Fee to payments on the Certificates of any Series, payments on
the Notes of any Series, payments of amounts due to Financial Security and
the other obligations of the Trusts, in each case to the extent provided in
Section 4.6 of the Standard Terms and Conditions and Section 3.03 hereof; and
the Security Interest of the Secured Parties in the Series 1993-A Collateral
is intended to effect and enforce such subordination and to provide security
for the Series 1993-A Secured Obligations and the Secured Obligations with
respect to each other Series.
Section 2.02. SERIES SUPPLEMENTS. The parties hereto intend to
enter into a Series Supplement hereto with respect to any Series other than
the Series 1993-A Certificates. The parties will enter into a Series
Supplement only if the following conditions shall have been satisfied:
(i) The Seller shall have sold or will sell Receivables to a
Trust or to a corporation pursuant to (A) a Pooling and Servicing
Agreement under which the Trustee shall act as Trustee, (B) a sale and
Servicing Agreement in form and substance satisfactory to Financial
Security, with respect to which the Trustee shall act as Indenture
Trustee, and which sale and Servicing Agreement may provide for the sale
of Subsequent Receivables to the related Trust or (C) a Warehousing
Series Sale and Servicing Agreement in form and substance satisfactory to
Financial Security, with respect to which the Trustee shall act as
Indenture Trustee with respect to the related Notes;
(ii) Financial Security shall have issued (A) one or more
Policies in respect of the Guaranteed Distributions on Certificates
issued pursuant to the related Pooling and Servicing Agreement or Trust
Agreement, and/or (B) one or more Note Policies in respect of the
Scheduled Payments on the Notes issued pursuant to the related Indenture;
and
16
(iii) Pursuant to the related Series Supplement any and all
right, title and interest of the Seller, Arcadia Financial or any
affiliate of either of them in the Collateral specified herein shall be
pledged to the Secured Parties substantially on the terms set forth in
Section 2.03 hereof.
Section 2.03. GRANT OF SECURITY INTEREST BY ARCADIA FINANCIAL
AND THE SELLER. (a) In order to secure the performance of the Secured
Obligations with respect to each Series, the Seller (and Arcadia Financial,
to the extent it may have any rights therein) hereby pledges, assigns,
grants, transfers and conveys to the Collateral Agent, on behalf of and for
the benefit of the Secured Parties to secure the Secured Obligations with
respect to each Series, a lien on and security interest in (which lien and
security interest is intended to be prior to all other liens, security
interest or other encumbrances), all of its right, title and interest in and
to the following (all being collectively referred to herein as the "Series
1993-A Collateral"):
(i) the Series 1993-A Credit Enhancement Fee and all rights and
remedies that the Seller may have to enforce payment of the Series 1993-A
Credit Enhancement Fee whether under the Series 1993-A Pooling and
Servicing Agreement or otherwise;
(ii) the Series 1993-A Spread Account established pursuant to
Section 3.01 hereof, and each other account owned by the Seller and
maintained by the Collateral Agent (including, without limitation, all
monies, checks, securities, investments and other documents from time to
time held in or evidencing any such accounts);
(iii) all of the Seller's right, title and interest in and to
investments made with proceeds of the property described in clauses (i)
and (ii) above, or made with amounts on deposit in the Series 1993-A
Spread Account; and
(iv) all distributions, revenues, products, substitutions,
benefits, profits and proceeds, in whatever form, of any of the
foregoing.
(b) In order to effectuate the provisions and purposes of
this Agreement, including for the purpose of perfecting the security
interests granted hereunder, the Seller represents and warrants that it has,
prior to the execution of this Agreement, executed and filed an appropriate
Uniform Commercial Code financing statement in Minnesota sufficient to assure
that the Collateral Agent, as agent for the Secured Parties, has a first
priority perfected security interest in all Series 1993-A Collateral which
can be perfected by the filing of a financing statement.
Section 2.04. PRIORITY. The Seller (and Arcadia Financial, to
the extent it may have any rights in the Collateral) intends the security
interests in favor of the Secured Parties to be prior to all other Liens in
respect of the Collateral, and Arcadia Financial and the Seller shall take
all actions necessary to obtain and maintain, in favor of the Collateral
Agent, for the benefit of the Secured Parties, a first lien on and a first
priority, perfected
17
security interest in the Collateral. Subject to the provisions hereof
specifying the rights and powers of the Controlling Party from time to time
to control certain specified matters relating to the Collateral, each Secured
Party shall have all of the rights, remedies and recourse with respect to the
Collateral afforded a secured party under the Uniform Commercial Code of the
State of New York and all other applicable law in addition to, and not in
limitation of, the other rights, remedies and recourse granted to such
Secured Parties by this Agreement or any other law relating to the creation
and perfection of liens on, and security interests in, the Collateral.
Section 2.05. SELLER AND ARCADIA FINANCIAL REMAIN LIABLE The
Security Interests are granted as security only and shall not (i) transfer or
in any way affect or modify, or relieve either the Seller or Arcadia
Financial from, any obligation to perform or satisfy, any term, covenant,
condition or agreement to be performed or satisfied by the Seller or Arcadia
Financial under or in connection with this Agreement, the Insurance Agreement
or any other Transaction Document to which it is a party or (ii) impose any
obligation on any of the Secured Parties or the Collateral Agent to perform
or observe any such term, covenant, condition or agreement or impose any
liability on any of the Secured Parties or the Collateral Agent for any act
or omission on its part relative thereto or for any breach of any
representation or warranty on its part contained therein or made in
connection therewith, except, in each case, to the extent provided herein and
in the other transaction documents.
Section 2.06. MAINTENANCE OF COLLATERAL.
(a) SAFEKEEPING. The Collateral Agent agrees to maintain
the Collateral received by it (or evidence thereof, in the case of book-entry
securities in the name of the Collateral Agent) and all records and documents
relating thereto at the office of the Collateral Agent specified in Section
8.06 hereof or such other address within the State of Minnesota (unless all
filings have been made to continue the perfection of the security interest in
the Collateral to the extent such security interest can be perfected by
filing a financing statement, as evidenced by an Opinion of Counsel delivered
to the Controlling Party), as may be approved by the Controlling Party. The
Collateral Agent shall keep all Collateral and related documentation in its
possession separate and apart from all other property that it is holding in
its possession and from its own general assets and shall maintain accurate
records pertaining to the Eligible Investments and Spread Accounts included
in the Collateral in such a manner as shall enable the Collateral Agent and
the Secured Parties to verify the accuracy of such record-keeping. The
Collateral Agent's books and records shall at all times show that the
Collateral is held by the Collateral Agent as agent of the Secured Parties
and is not the property of the Collateral Agent. The Collateral Agent will
promptly report to each Secured Party and the Seller any failure on its part
to hold the Collateral as provided in this Section 2.06(a) and will promptly
take appropriate action to remedy any such failure.
(b) ACCESS. The Collateral Agent shall permit each of the
Secured Parties, or their respective duly authorized representatives,
attorneys, auditors or designees, to inspect the Collateral in the possession
of or otherwise under the control of
18
the Collateral Agent pursuant hereto at such reasonable times during normal
business hours as any such Secured Party may reasonably request upon not less
than one Business Day's prior written notice.
Section 2.07. TERMINATION AND RELEASE OF RIGHTS.
(a) On the Insurer Termination Date relating to a Series,
the rights, remedies, powers, duties, authority and obligations conferred
upon Financial Security pursuant to this Agreement in respect of the
Collateral related to such Series shall terminate and be of no further force
and effect and all rights, remedies, powers, duties, authority and
obligations of Financial Security with respect to such Collateral shall be
automatically released; PROVIDED that any indemnity provided to or by
Financial Security herein shall survive such Insurer Termination Date. If
Financial Security is acting as Controlling Party with respect to a Series on
the related Insurer Termination Date, Financial Security agrees, at the
expense of the Seller, to execute and deliver such instruments as the
successor Controlling Party may reasonably request to effectuate such
release, and any such instruments so executed and delivered shall be fully
binding on Financial Security and any Person claiming by, through or under
Financial Security.
(b) On the Trustee Termination Date related to a Series, the
rights, remedies, powers, duties, authority and obligations, if any,
conferred upon the Trustee pursuant to this Agreement in respect of the
Collateral related to such Series shall terminate and be of no further force
and effect and all such rights, remedies, powers, duties, authority and
obligations of the Trustee with respect to such Collateral shall be
automatically released; PROVIDED that any indemnity provided to the Trustee
herein shall survive such Trustee Termination Date. If the Trustee is acting
as Controlling Party with respect to a Series on the related Trustee
Termination Date, the Trustee agrees, at the expense of the Seller, to
execute and deliver such instruments as the Seller may reasonably request to
effectuate such release, and any such instruments so executed and delivered
shall be fully binding on the Trustee.
(c) On the Final Termination Date with respect to a Series,
the rights, remedies, powers, duties, authority and obligations conferred
upon the Collateral Agent and each Secured Party pursuant to this Agreement
with respect to such Series shall terminate and be of no further force and
effect and all rights, remedies, powers, duties, authority and obligations of
the Collateral Agent and each Secured Party with respect to the Collateral
related to such Series shall be automatically released. On the Final
Termination Date with respect to a Series, the Collateral Agent agrees, and
each Secured Party agrees, at the expense of the Seller, to execute such
instruments of release, in recordable form if necessary, in favor of the
Seller as the Seller may reasonably request, to deliver any Collateral in its
possession to the Seller, and to otherwise release the lien of this Agreement
and release and deliver to the Seller the Collateral related to such Series.
Section 2.08. NON-RECOURSE OBLIGATIONS OF SELLER. Notwithstanding
anything herein or in the other Transaction Documents to the contrary, the
parties hereto agree that the obligations of the Seller hereunder (without
limiting the obligation to apply
19
distributions of the respective Credit Enhancement Fees in accordance with
section 3.03(b)) shall be recourse only to the extent of amounts released to
the seller pursuant to priority EIGHTH of Section 3.03(b) and retained by the
Seller in accordance with the next sentence. The Seller agrees that it shall
not declare or make payment of (i) any dividend or other distribution on or
in respect of any shares of its capital stock or (ii) any payment on account
of the purchase, redemption, retirement or acquisition of (x) any shares of
its capital stock or (y) any option, warrant or other right to acquire shares
of its capital stock, or (iii) any payment of any loan made by Arcadia
Financial to the Seller, or of any deferred portion of the purchase price
payable by the Seller to Arcadia Financial with respect to any Receivable
unless (in each case) at the time of such declaration or payment (and after
giving effect thereto) no amount payable by seller under any Transaction
Document is then due and owing but unpaid. Nothing contained herein shall be
deemed to limit the rights of the Certificateholders (or Certificate Owners)
or Noteholders (or Note Owners) under any other Transaction Document.
Section 2.09. PROGRAM SPREAD ACCOUNT AND TAG ACCOUNTS. (a) On
or prior to the date of any transfer of cash by the Seller pursuant to
Section 2.09(b)(i), the Collateral Agent at the direction of the Seller shall
establish at an institution at which one or more Spread Accounts established
hereunder are then maintained an Eligible Account, designated "Program Spread
Account--Norwest Bank Minnesota, National Association" (the "Program Spread
Account"). The Program Spread Account shall continuously be maintained at an
institution at which one or more Spread Accounts are established hereunder.
(b) The Collateral Agent shall hold, for the benefit of the
Seller, the following property in the Program Spread Account:
(i) all cash amounts from time to time on deposit in the
Program Spread Account which at the Seller's election it has delivered to
the Collateral Agent from (x) the proceeds of the sale of securities of a
Series or (y) amounts released to the Seller from the Lien of this
Agreement; and
(ii) investments made with the proceeds of the property
described in clause (i) above, or made with amounts on deposit in the
Program Spread Account.
Notwithstanding anything herein or in any Series Supplement to the
contrary, the property held by the Collateral Agent under this Section 2.09(b)
shall not constitute Collateral hereunder.
(c) With respect to each Series for which the Seller has
made an election pursuant to Section 2.09(f) in connection with such Series,
on or prior to the date of any transfer of cash from the Program Spread
Account in connection with such election, the Collateral Agent at the
direction of the Seller shall establish at the same institution at which the
related Spread Account established hereunder is then maintained an Eligible
Account, designated "Tag Account Series [series designation] - Norwest Bank
20
Minnesota, National Association, as Collateral Agent for Financial Security
Assurance Inc. and another Secured Party" (each such account, a "Tag
Account"). Each Tag Account shall continue to be maintained at the same
institution as the related Spread Account established hereunder.
(d) In order to secure the performance of the Secured
Obligations with respect to each Series, the Seller hereby pledges, assigns,
grants, transfers and conveys to the Collateral Agent, on behalf of and for
the benefit of the Secured Parties, a lien on and a security interest on
(which lien and security interest is intended to be prior to all other liens,
security interests and other encumbrances), all of its right, title and
interest in and to the following:
(i) each Tag Account established pursuant to Section 2.09(c)
hereof, (including, without limitation, all monies, checks, securities,
investments and other documents held in or evidencing any such accounts);
(ii) all of the Seller's right, title and interest in and to
investments made with proceeds of the property described in clause (i)
above; and
(iii) all distributions, revenues, products, substitutions,
benefits, profits and proceeds, in whatever form, of any of the
foregoing.
In order to effectuate the provisions and purposes of this
Agreement, including for the purpose of perfecting the security interests
granted hereunder, the Seller represents and warrants that it shall, prior to
the deposit of amounts in any Tag Account, execute and file an appropriate
Uniform Commercial Code financing statement in Minnesota sufficient to assure
that the Collateral Agent, as agent for the Secured Parties, has a first
priority perfected security interest on the Collateral pledged or to be
pledged pursuant to Section 2.09(d) which can be perfected by the filing of a
financing statement.
(e) The Program Spread Account and each Tag Account shall be
separate from each respective Trust or Issuer and amounts on deposit therein
will not constitute a part of the Trust Property of any Trust or the assets
of any Issuer. Except as specifically provided herein, the Program Spread
Account and each Tag Account shall be maintained by the Collateral Agent at
all times separate and apart from any other account of the Seller, Arcadia
Financial, the Servicer, the Trust or the Issuer. All income or loss on
investments of funds in the Program Spread Account and any Tag Account shall
be reported by the Seller as taxable income or loss of the Seller.
(f) Upon the occurrence of an event specified in clause (A)
of the definition of Trigger Event with respect to a Series and until such
event is Deemed Cured, at the election of the Seller amounts on deposit in
the Program Spread Account may be withdrawn on the related Determination Date
by the Collateral Agent from the Program Spread Account and irrevocably
deposited into one or more Tag Accounts for each Series with respect to which
an event specified in such clause (A) shall have occurred (and which event is
not Deemed Cured) and with respect to which the Seller has made such
21
election. In the event of such election, the Collateral Agent shall deposit
from the Program Spread Account into the related Tag Account, on such related
Determination Date, an amount equal to the excess, if any, of amounts on
deposit in the Spread Account (excluding from the calculation of the amount
on deposit in such Spread Account any amount in any related Tag Account, and
taking into account any deposits thereto to be made pursuant to the first
paragraph of Section 3.03(b) and taking into account any withdrawals
therefrom to be made pursuant to priority FIRST of Section 3.03(b) on the
related Distribution Date, but not taking into account any other changes in
the amount on deposit in such account pursuant to Section 3.03(b)) over the
amount specified in clause (i) of the definition of Spread Account Maximum
Amount with respect to such Series (taking into account the decline in the
related Series Balance to be effected on the related Distribution Date).
(g) Amounts on deposit in the Program Spread Account shall
be released from such account at any time upon the request of the Seller.
Funds in the Program Spread Account shall not be commingled with funds in any
Spread Account, any Tag Account or with any other moneys. Amounts on deposit
in a Spread Account and released from the Lien of this Agreement pursuant to
Section 3.03(b) shall, at the direction of the Seller, be deposited into
either the Program Spread Account or the related Tag Account.
(h) Upon deposit pursuant to Section 2.09(f) of amounts into
a Tag Account for a Series such amounts shall be treated fungibly with all
amounts on deposit in the Spread Account with respect to the same Series,
except that, amounts deposited into a Spread Account pursuant to Section
3.03(b) shall be deemed to be deposited into the Spread Account, and amounts
withdrawn from a Spread Account pursuant to Section 3.03(b) shall be
withdrawn first from the related Tag Account and second from the Spread
Account. Except as otherwise explicitly specified, all references herein to
a Series Spread Account hereunder shall be deemed to include reference to any
Tag Account created with respect to such Series, and all references herein to
amounts on deposit in a Series Spread Account shall be deemed to include
reference to amounts on deposit in the related Tag Account, if any, created
with respect to such Series.
ARTICLE III
SPREAD ACCOUNTS
Section 3.01. ESTABLISHMENT OF SPREAD ACCOUNTS; INITIAL DEPOSITS
INTO SPREAD ACCOUNTS.
(a) On or prior to the Closing Date relating to a Series,
the Collateral Agent shall establish with respect to such Series, at its
office or at another depository institution or trust company an Eligible
Account, designated, "Spread Account--Series [insert Series designation]
--Norwest Bank Minnesota, National Association, as Collateral Agent for
Financial Security Assurance Inc. and another Secured Party" (the
22
"Spread Account"). The Spread Accounts established under this Agreement may
be maintained at one or more depository institutions (which depository
institutions may be changed from time to time in accordance with this
Agreement). If any Spread Account established with respect to a Series
ceases to be an Eligible Account, the Collateral Agent shall, within five
Business Days, establish a new Eligible Account for such Series.
(b) No withdrawals may be made of funds in any Spread
Account except as provided in Section 3.03 of this Agreement and in the
Warehousing Series Supplement. Except as specifically provided in this
Agreement, funds in a Spread Account established with respect to a Series
shall not be commingled with funds in a Spread Account established with
respect to another Series or with any other moneys. All moneys deposited
from time to time in such Spread Account and all investments made with such
moneys shall be held by the Collateral Agent as part of the Collateral with
respect to such Series.
(c) On the Closing Date with respect to a Series (other than
the Warehousing Series), the Collateral Agent shall deposit the Initial
Spread Account Deposit with respect to such Series, if any, received from the
Seller into the related Spread Account. On each Subsequent Transfer Date (if
any) with respect to a Series (other than the Warehousing Series), the
Collateral Agent shall deposit the Spread Account Additional Deposit
delivered by the related Trust on behalf of the Seller into the related
Spread Account.
(d) Each Spread Account shall be separate from each
respective Trust and amounts on deposit therein will not constitute a part of
the Trust Property of any Trust. Except as specifically provided herein,
each Spread Account shall be maintained by the Collateral Agent at all times
separate and apart from any other account of the Seller, Arcadia Financial,
the Servicer or the Trust or the Issuer, as the case may be. All income or
loss on investments of funds in any Spread Account shall be reported by the
Seller as taxable income or loss of the Seller.
Section 3.02. INVESTMENTS.
(a) Funds which may at any time be held in the Spread
Account established with respect to a Series or in the Program Spread Account
shall be invested and reinvested by the Collateral Agent, at the written
direction (which may include, subject to the provisions hereof, general
standing instructions) of the Seller (unless a Default shall have occurred
and be continuing, in which case at the written direction of the Controlling
Party) or its designee received by the Collateral Agent by 1:00 P.M. New York
City time on the Business Day prior to the date on which such investment
shall be made, in one or more Eligible Investments in the manner specified in
Section 3.02(c). If no written direction with respect to any portion of such
Spread Account or the Program Spread Account is received by the Collateral
Agent, the Collateral Agent shall invest such funds overnight in such
Eligible Investments as the Collateral Agent may select, provided that the
Collateral Agent shall not be liable for any loss or absence of income
resulting from such investments.
23
(b) Each investment made pursuant to this Section 3.02 on
any date shall mature not later than the Business Day immediately preceding
the Distribution Date next succeeding the day such investment is made, except
that any investment made on the day preceding a Distribution Date shall
mature on such Distribution Date; PROVIDED that any investment of funds in
any Account maintained with the Collateral Agent in any investment as to
which the Collateral Agent is the obligor, if otherwise qualified as an
Eligible Investment (including any repurchase agreement on which the
Collateral Agent in its commercial capacity is liable as principal), may
mature on the Distribution Date next succeeding the date of such investment.
(c) Subject to the other provisions hereof, the Collateral
Agent shall have sole control over each such investment and the income
thereon, and any certificate or other instrument evidencing any such
investment, if any, shall be delivered directly to the Collateral Agent or
its agent, together with each document of transfer, if any, necessary to
transfer title to such investment to the Collateral Agent in a manner which
complies with Section 2.06 and this subsection.
(d) If amounts on deposit in any Spread Account are at any
time invested in an Eligible Investment payable on demand, the Collateral
Agent shall (i) consistent with any notice required to be given thereunder,
demand that payment thereon be made on the last day such Eligible Investment
is permitted to mature under the provisions hereof and (ii) demand payment of
all amounts due thereunder promptly upon receipt of written notice from the
Controlling Party to the effect that such investment does not constitute an
Eligible Investment.
(e) All moneys on deposit in a Spread Account together with
any deposits or securities in which such moneys may be invested or
reinvested, and any gains from such investments, shall constitute Collateral
hereunder with respect to the related Series, subject to the Security
Interests of the Secured Parties.
(f) Subject to Section 4.03 hereof, the Collateral Agent
shall not be liable by reason of any insufficiency in any Spread Account
resulting from any loss on any Eligible Investment included therein except
for losses attributable to the Collateral Agent's failure to make payments on
Eligible Investments as to which the Collateral Agent, in its commercial
capacity, is obligated.
(g) With respect to Spread Account Eligible Investments, the
Collateral Agent agrees that:
(1) any Spread Account Eligible Investment that is a
bankers acceptance or is commercial paper, negotiable certificates of
deposit or another obligation that constitutes "instruments" within the
meaning of Section 9-105(1)(i) of the UCC or that is a "certificated
security" as defined in Section 8-102 of the UCC shall be delivered to
the Collateral Agent in accordance with paragraph (a) or (b), as
applicable, of the definition of "Delivery" and shall be
24
held, pending maturity or disposition, solely by the Collateral Agent or
its securities intermediary as described in such paragraphs (a) and (b);
(2) any Spread Account Eligible Investment that is a
book-entry security held through the Federal Reserve System pursuant to
Federal book-entry regulations shall be delivered in accordance with
paragraph (c), as applicable, of the definition of "Delivery" and shall
be maintained by the Collateral Agent, pending maturity or disposition,
through continued book-entry registration of such Spread Account Eligible
Investment as described in such paragraph; and
(3) any Eligible Investment that is an uncertificated
security as defined in Section 8-102(1)(b) of the UCC and that is not
governed by clause (2) above shall be delivered to the Collateral Agent
in accordance with paragraph (d) of the definition of "Delivery" and
shall be maintained by the Collateral Agent, pending maturity or
disposition, through continued registration of the Collateral Agent's (or
its nominee's) ownership of such security.
Section 3.03. DISTRIBUTIONS: PRIORITY OF PAYMENTS.
(a) On or before each Deficiency Claim Date, the Collateral
Agent will make the following calculations on the basis of information
(including, without limitation, the amount of any Collection Account
Shortfall with respect to any Series) received pursuant to (x) Section 3.9 of
the Standard Terms and Conditions, Section 5.03 of the Pooling and Servicing
Agreements, or (y) Section 3.9 of the Sale and Servicing Agreements, or (z)
Section 3.11 of the Servicing Agreement, as applicable, with respect to each
Series; provided, however, that if the Collateral Agent receives notice from
Financial Security of the occurrence of an Insurance Agreement Event of
Default with respect to any Series, or of the occurrence of a Capture Event,
such notice shall be determinative for the purposes of determining the Spread
Account Default Level and Spread Account Maximum Amount for such Series:
FIRST, determine the amounts to be on deposit in the respective
Spread Accounts (taking into account amounts in respect of the respective
Credit Enhancement Fees to be deposited into the related Spread Accounts)
on the next succeeding Distribution Date which will be available to
satisfy any Collection Account Shortfall and any Warehousing Shortfall;
SECOND, determine (i) the amounts, if any, to be distributed from
each Spread Account related to each Series with respect to which there
exists a Collection Account Shortfall and (ii) whether, following
distribution from the related Spread Accounts to the respective Trustees
for deposit into the respective Collection Accounts with respect to which
there exist Collection Account Shortfalls, a Collection Account Shortfall
will continue to exist with respect to one or more Series;
25
THIRD, (i) if a Collection Account Shortfall will continue to
exist with respect to one or more Series following the distributions from
the related Spread Accounts contemplated by paragraph SECOND above,
determine the amount, if any, to be distributed to the Trustee with
respect to each Series from unrelated Spread Accounts in respect of such
Collection Account Shortfall(s). This determination shall be made as
follows: (i) of the aggregate of the amounts to be on deposit in the
respective Spread Accounts for such Distribution Date (as determined
pursuant to paragraph FIRST above, after making the withdrawals pursuant
to paragraph SECOND above), up to the aggregate of the Collection Account
Shortfalls for such Distribution Date, (ii) drawn from each Spread
Account PRO RATA in accordance with amounts on deposit therein, and (iii)
distributed to the respective Trustees in the following order of priority
and PRO RATA within each priority (1) in the same priority as amounts are
to be distributed pursuant to Section 4.6 of the Standard Terms and
Conditions included in the respective Pooling and Servicing Agreements
and pursuant to Section 4.6 of the respective Sale and Servicing
Agreements, and pursuant to Section 3.6(a) or 3.6(b) of the Servicing
Agreement, as applicable, so that any shortfalls with respect to priority
(i) of each such Section are to be covered first, any shortfalls with
respect to priority (ii) of each such Section are to be covered second,
and so forth, until priority (v) of such Section, so that priority (v) of
Section 4.6 of the Standard Terms and Conditions and of the Sale and
Servicing Agreement and priority (v) of Section 3.6(a) or priority (v) of
Section 3.6(b) of the Servicing Agreement are to be covered fifth, (2) if
Section 4.6 of one or more Sale and Servicing Agreements provides for
distribution in respect of interest or principal on Notes or Certificates
with priorities numerically greater than (v), in the same priority as
amounts are to be distributed pursuant to each such Section 4.6, so that
any shortfalls with respect to priority (vi) of each such Section 4.6 are
covered first, and so forth through all priorities relating to interest
or principal on Notes or Certificates and (3) amounts to be distributed
to the Security Insurer;
On such Deficiency Claim Date, the Collateral Agent shall
deliver a certificate to each Trustee in respect of which the Collateral
Agent has received notice pursuant to (i) Section 3.9 of the Standard Terms
and Conditions of a Collection Account Shortfall or (ii) Section 3.9 of the
Sale and Servicing Agreement of a Collection Account Shortfall or (iii)
Section 3.11 of the Servicing Agreement of a Collection Account Shortfall or
Warehousing Shortfall stating the amount (which, in the case of (i) and (ii)
above, shall be the sum of the amount, if any, to be withdrawn from the
related Spread Account, as calculated pursuant to paragraph SECOND of this
Section 3.03(a), plus, the amount, if any, to be withdrawn from unrelated
Spread Accounts, as calculated pursuant to paragraph THIRD of this Section
3.03(a), and which, in the case of a Collection Account Shortfall or
Warehousing Shortfall referred to in clause (iii) shall be the respective
amounts, if any, withdrawn from unrelated Spread Accounts, as calculated
pursuant to paragraph THIRD of this Section 3.03(a) or calculated to be
available pursuant to priority SEVENTH of Section 3.03(b)), if any, to be
distributed to such
26
Trustee on the next Distribution Date in respect of such Collection Account
Shortfall or Warehousing Shortfall, as the case may be.
(b) On each Distribution Date, following delivery by the
Trustee of the respective Credit Enhancement Fees for deposit into the
respective Spread Accounts pursuant to Section 4.6 of the Standard Terms and
Conditions included in the respective Pooling and Servicing Agreements or
Section 4.6 of the respective Sale and Servicing Agreements, or the amount
deposited into the Spread Account for the Warehousing Series pursuant to
Section 4.6 or Section 4.10 of the Warehousing Series Sale and Servicing
Agreement, as applicable, and upon receipt of a Deficiency Notice with
respect to one or more such Series, or with respect to priorities FIFTH and
SIXTH to the extent the amounts referred to therein are due and owing, the
Collateral Agent shall make the following distributions in the following
order of priority. References herein to a Spread Account shall include
references to the related Tag Account and such amounts shall be treated
fungibly, except that amounts deposited into a Spread Account pursuant to
Section 3.03(b) shall be deemed to be deposited into a Spread Account, and
amounts withdrawn from a Spread Account pursuant to Section 3.03(b) shall be
withdrawn first from the related Tag Account and second from the Spread
Account.
FIRST, if with respect to any Series there exists a Collection
Account Shortfall from the Spread Account related to such Series, to the
Trustee for deposit in the related Collection Account the amount of such
Collection Account Shortfall (subject, in the case of withdrawals from a
Spread Account containing Spread Account Recourse Reduction Amounts, to
Section 3.04(e)(i));
SECOND, if with respect to any Series there exists a Collection
Account Shortfall after deposit into the Collection Account of amounts
distributed pursuant to priority FIRST, from each Spread Account, PRO RATA in
accordance with amounts on deposit therein (but in no event shall a
withdrawal from a Spread Account pursuant to this priority SECOND cause the
cash amount on deposit in such Spread Account to be below the Spread Account
Withdrawal Floor for such Spread Account if a Spread Account Withdrawal Floor
is specified in the Series Supplement establishing such Spread Account
PROVIDED, that such limitation shall not apply with respect to any Spread
Account related to a Series for which the Final Termination Date shall have
occurred), an amount up to the aggregate of the Collection Account Shortfalls
for all Series, to the respective Trustees in accordance with the Payment
Priorities for deposit in the respective Collection Accounts with respect to
which there exist Collection Account Shortfalls, (subject, in the case of
withdrawals from a Spread Account containing Spread Account Recourse
Reduction Amounts, to Section 3.04(e));
THIRD, if with respect to one or more Series (excluding the
Warehousing Series) there exists a Spread Account Shortfall, from amounts, if
any, on deposit in each Spread Account (excluding the Warehousing Series) in
excess of the related Spread Account Maximum Amount (after making any
withdrawals therefrom required by priority FIRST or SECOND of this Section
3.03(b) and only from cash amounts and not from
27
amounts representing a Spread Account Recourse Reduction Amount), an amount
in the aggregate up to the aggregate of the Spread Account Shortfalls for all
Series for deposit into each Spread Account PRO RATA in accordance with their
respective Spread Account Shortfalls;
FOURTH, if with respect to one or more Series, amounts have
been withdrawn from the related Spread Account pursuant to priority FIRST or
SECOND of this Section 3.03(b) on such Distribution Date and/or on prior
Distribution Dates and such amounts have not been redeposited in full into
such Spread Account pursuant to this priority FOURTH (such amounts in the
aggregate for a Series "Unreimbursed Amounts"), from amounts, if any, on
deposit in each Spread Account in excess of the related Spread Account
Maximum Amount (after making any withdrawals therefrom required by priority
FIRST, SECOND or THIRD of this Section 3.03(b) and only from cash amounts and
not from amounts representing a Spread Account Recourse Reduction Amount), an
amount up to the aggregate of the Unreimbursed Amounts for all such Series
for deposit into each Spread Account with respect to which there exist
Unreimbursed Amounts PRO RATA in accordance with the excess of the Spread
Account Maximum Amount of each such Spread Account over the amount on deposit
in such Spread Account;
FIFTH, if any amounts are owed to a successor Servicer pursuant
to Section 9.3(c) of the Standard Terms and Conditions included in a Pooling
and Servicing Agreement or Section 8.3(c) of a Sale and Servicing Agreement
and such amounts are not payable pursuant to Section 4.6(a)(i) of the
Standard Terms and Conditions included in such Pooling and Servicing
Agreement or Section 4.6(i) of such Sale and Servicing Agreement, as
applicable, from amounts on deposit in the related Spread Account (but only
from cash amounts and not from amounts representing a Spread Account Recourse
Reduction Amount), an amount up to the amount so owed, to such Servicer;
SIXTH, if any amounts are owed by Arcadia Financial or the
Seller to a Trustee, Indenture Trustee, Owner Trustee, Lockbox Bank,
Custodian, Backup Servicer, Administrator, Collateral Agent, the Indenture
Collateral Agent or other service provider to either the Trust or the Issuer
for expenses that have not been reimbursed by Arcadia Financial or the
Seller, from amounts on deposit in the related Spread Account (but only from
cash amounts and not from amounts representing a Spread Account Recourse
Reduction Amount), an amount up to the amount so owed, to such Person;
SEVENTH, if with respect to the Warehousing Series there exists
a Warehousing Shortfall, from the aggregate of all amounts on deposit in the
Warehousing Series Spread Account and from the aggregate of all amounts in
unrelated Spread Accounts in excess of the related Spread Account Maximum
Amount (except that such limitation shall not exist with respect to a Spread
Account Maximum Amount which is unlimited), an amount up to the amount of
such Warehousing Shortfall (to the extent not distributed on such
Distribution Date pursuant to a prior priority of this Section 3.03(b) and
only from cash amounts and not from amounts representing a Spread Account
Recourse Reduction Amount), to the Trustee for the Warehousing Series for
deposit in the Warehousing Series Collection Account; and
28
EIGHTH, to the extent there are any funds in a Spread Account
in excess of the applicable Spread Account Maximum Amount and any funds in a
Spread Account with respect to a Series for which the Final Termination Date
shall have occurred, such amount shall be distributed in the following order
of priority: FIRST, for deposit into each Spread Account containing Spread
Account Recourse Reduction Amounts, an amount up to the related Spread
Account Recourse Maximum Adjustment Amount, if any, PRO RATA on the basis of
the respective Spread Account Recourse Reduction Amounts, and SECOND, any
remaining funds to the Seller.
Section 3.04. GENERAL PROVISIONS REGARDING SPREAD ACCOUNTS.
(a) Promptly upon the establishment (initially or upon any
relocation) of a Spread Account hereunder, the Collateral Agent shall advise
the Seller and each Secured Party in writing of the name and address of the
depository institution or trust company where such Spread Account has been
established (if not Norwest Bank Minnesota, National Association or any
successor Collateral Agent in its commercial banking capacity), the name of
the officer of the depository institution who is responsible for overseeing
such Spread Account, the account number and the individuals whose names
appear on the signature cards for such Spread Account. The Seller shall
cause each such depository institution or trust company to execute a written
agreement, in form and substance satisfactory to the Controlling Party,
waiving, and the Collateral Agent by its execution of this Agreement hereby
waives (except to the extent expressly provided herein), in each case to the
extent permitted under applicable law, (i) any banker's or other statutory or
similar Lien, and (ii) any right of set-off or other similar right under
applicable law with respect to such Spread Account and any other Spread
Account and agreeing, and the Collateral Agent by its execution of this
Agreement hereby agrees, to notify the Seller, the Collateral Agent, and each
Secured Party of any charge or claim against or with respect to such Spread
Account. The Collateral Agent shall give the Seller and each Secured Party
at least ten Business Days' prior written notice of any change in the
location of such Spread Account or in any related account information. If
the Collateral Agent changes the location of any Spread Account, it shall
change the location of the other Spread Accounts, so that all Spread Accounts
shall at all times be located at the same depository institution. Anything
herein to the contrary notwithstanding, unless otherwise consented to by the
Controlling Party in writing, the Collateral Agent shall have no right to
change the location of any Spread Account.
(b) Upon the written request of the Controlling Party or the
Seller and at the expense of the Seller, the Collateral Agent shall cause, at
the expense of the Seller, the depository institution at which any Spread
Account is located to forward to the requesting party copies of all monthly
account statements for such Spread Account.
(c) If at any time any Spread Account ceases to be an
Eligible Account, the Collateral Agent shall notify the Controlling Party of
such fact and shall establish within 5 Business Days of such determination,
in accordance with paragraph (a) of this Section, a successor Spread Account
thereto, which shall be an Eligible Account, at another depository
institution acceptable to the Controlling Party and shall establish
29
successor Spread Accounts with respect to all other Spread Accounts, each of
which shall be an Eligible Account at the same depository institution.
(d) No passbook, certificate of deposit or other similar
instrument evidencing a Spread Account shall be issued, and all contracts,
receipts and other papers, if any, governing or evidencing a Spread Account
shall be held by the Collateral Agent.
(e) A Spread Account Recourse Reduction Amount with respect
to a Spread Account shall be treated fungibly with all other amounts on
deposit in such Spread Account, EXCEPT THAT:
(i) if with respect to any Series, there exists a Collection
Account Shortfall and cash amounts available pursuant to priority FIRST
of Section 3.03(b) are not sufficient to satisfy such Collection Account
Shortfall, the Collateral Agent shall next withdraw cash amounts
available pursuant to priority SECOND of Section 3.03(b) up to the amount
of any remaining Collection Account Shortfall; if such amounts are not
sufficient to satisfy such Collection Account Shortfall, Spread Account
Recourse Reduction Amounts, if any, shall be deemed to be made available
pursuant to priority FIRST of Section 3.03(b) up to the amount of any
remaining Collection Account Shortfalls, and if such amounts are not
sufficient to satisfy such Collection Account Shortfall, all other Spread
Account Recourse Reduction Amounts, if any, shall be deemed to be made
available pursuant to priority SECOND of Section 3.03(b);
(ii) if amounts are to be made available from two or more Spread
Accounts pursuant to priority SECOND of Section 3.03(b), such amounts
shall, FIRST, be withdrawn PRO RATA from cash amounts on deposit therein
and, if such amounts are exhausted, SECOND, shall be deemed to be made
available PRO RATA from Spread Account Recourse Reduction Amounts, if any
(after taking into account amounts deemed to be made available from
Spread Account Recourse Reduction Amounts pursuant to clause (i) above);
(iii) if amounts are to be made available from a Spread Account
pursuant to priority FIRST or SECOND of Section 3.03(b) and any portion
or all of such amounts represent Spread Account Recourse Reduction
Amounts, the Collateral Agent shall notify the Trustee with respect to
the Series receiving the benefit of such Spread Account Recourse
Reduction Amounts of the amount so to be made available which is
represented by Spread Account Recourse Reduction Amounts;
(iv) if amounts are to be made available from a Spread Account
pursuant to priority THIRD, FOURTH, FIFTH, SIXTH, SEVENTH or EIGHTH of
Section 3.03(b), such amounts shall be withdrawn pro rata from cash
amounts on deposit therein and not from Spread Account Recourse Reduction
Amounts;
(v) any Spread Account Withdrawal Floor requirement for any
Series
30
must be satisfied with cash amounts in the related Spread Account
and not with amounts representing a Spread Account Recourse Reduction
Amount; and
(vi) all references to investments in Eligible Investments in
this Agreement shall apply only to cash amounts in the respective Spread
Accounts and not to amounts representing a Spread Account Recourse
Reduction Amount.
Section 3.05. REPORTS BY THE COLLATERAL AGENT. The Collateral
Agent shall report to the Seller, Financial Security, the Trustee and the
Servicer on a monthly basis no later than each Distribution Date with respect
to the amount on deposit in each Spread Account and the identity of the
investments included therein as of the last day of the related Monthly
Period, and shall provide accountings of deposits into and withdrawals from
the Spread Accounts, and of the investments made therein, to the independent
accountants upon their request for purposes of their reports pursuant to
Section 3.11 of the Pooling and Servicing Agreements and Section 3.11 of the
Sale and Servicing Agreements.
ARTICLE IV
THE COLLATERAL AGENT
Section 4.01. APPOINTMENT AND POWERS. Subject to the terms and
conditions hereof, each of the Secured Parties hereby appoints Norwest Bank
Minnesota, National Association as the Collateral Agent with respect to the
Series 1993-A Collateral and the related Collateral subsequently specified in a
Series Supplement, and Norwest Bank Minnesota, National Association hereby
accepts such appointment and agrees to act as Collateral Agent with respect to
the Series 1993-A Collateral, and upon execution of any Series Supplement, shall
be deemed to accept such appointment, and agree to act as Collateral Agent with
respect to such Collateral, in each case, for the Secured Parties, to maintain
custody and possession of such Collateral (except as otherwise provided
hereunder) and to perform the other duties of the Collateral Agent in accordance
with the provisions of this Agreement. Each Secured Party hereby authorizes the
Collateral Agent to take such action on its behalf, and to exercise such rights,
remedies, powers and privileges hereunder, as the Controlling Party may direct
and as are specifically authorized to be exercised by the Collateral Agent by
the terms hereof, together with such actions, rights, remedies, powers and
privileges as are reasonably incidental thereto. The Collateral Agent shall act
upon and in compliance with the written instructions of the Controlling Party
delivered pursuant to this Agreement promptly following receipt of such written
instructions; provided that the Collateral Agent shall not act in accordance
with any instructions (i) which are not authorized by, or in violation of the
provisions of, this Agreement, (ii) which are in violation of any applicable
law, rule or regulation or (iii) for which the Collateral Agent has not received
reasonable indemnity. Receipt of such instructions shall not be a condition to
the exercise by the Collateral Agent of its express duties hereunder, except
where this Agreement provides that the Collateral Agent is permitted to act only
following and in accordance with such instructions.
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Section 4.02. PERFORMANCE OF DUTIES. The Collateral Agent shall
have no duties or responsibilities except those expressly set forth in this
Agreement and the other Transaction Documents to which the Collateral Agent is a
party or as directed by the Controlling Party in accordance with this Agreement.
The Collateral Agent shall not be required to take any discretionary actions
hereunder except at the written direction and with the indemnification of the
Controlling Party.
Section 4.03. LIMITATION ON LIABILITY. Neither the Collateral
Agent nor any of its directors, officers or employees, shall be liable for any
action taken or omitted to be taken by it or them hereunder, or in connection
herewith, except that the Collateral Agent shall be liable for its negligence,
bad faith or willful misconduct; nor shall the Collateral Agent be responsible
for the validity, effectiveness, value, sufficiency or enforceability against
the Seller or Arcadia Financial of this Agreement or any of the Collateral (or
any part thereof). Notwithstanding any term or provision of this Agreement, the
Collateral Agent shall incur no liability to the Seller, Arcadia Financial or
the Secured Parties for any action taken or omitted by the Collateral Agent in
connection with the Collateral, except for the negligence or willful misconduct
on the part of the Collateral Agent, and, further, shall incur no liability to
the Secured Parties except for negligence or willful misconduct in carrying out
its duties to the Secured Parties. Subject to Section 4.04, the Collateral
Agent shall be protected and shall incur no liability to any such party in
relying upon the accuracy, acting in reliance upon the contents, and assuming
the genuineness of any notice, demand, certificate, signature, instrument or
other document reasonably believed by the Collateral Agent to be genuine and to
have been duly executed by the appropriate signatory, and (absent actual
knowledge to the contrary) the Collateral Agent shall not be required to make
any independent investigation with respect thereto. The Collateral Agent shall
at all times be free independently to establish to its reasonable satisfaction,
but shall have no duty to independently verify, the existence or nonexistence of
facts that are a condition to the exercise or enforcement of any right or remedy
hereunder or under any of the Transaction Documents. The Collateral Agent may
consult with counsel, and shall not be liable for any action taken or omitted to
be taken by it hereunder in good faith and in accordane with the written advice
of such counsel. The Collateral Agent shall not be under any obligation to
exercise any of the remedial rights or powers vested in it by this Agreement or
to follow any direction from the Controlling Party unless it shall have received
reasonable security or indemnity satisfactory to the Collateral Agent against
the costs, expenses and liabilities which might be incurred by it.
Section 4.04. RELIANCE UPON DOCUMENTS. In the absence of bad faith
or negligence on its part, the Collateral Agent shall be entitled to rely on any
communication, instrument, paper or other document reasonably believed by it to
be genuine and correct and to have been signed or sent by the proper Person or
Persons and shall have no liability in acting, or omitting to act, where such
action or omission to act is in reasonable reliance upon any statement or
opinion contained in any such document or instrument.
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Section 4.05. SUCCESSOR COLLATERAL AGENT.
(a) MERGER. Any Person into which the Collateral Agent may be
converted or merged, or with which it may be consolidated, or to which it may
sell or transfer its trust business and assets as a whole or substantially as a
whole, or any Person resulting from any such conversion, merger, consolidation,
sale or transfer to which the Collateral Agent is a party, shall (provided it is
otherwise qualified to serve as the Collateral Agent hereunder) be and become a
successor Collateral Agent hereunder and be vested with all of the title to and
interest in the Collateral and all of the trusts, powers, discretions,
immunities, privileges and other matters as was its predecessor without the
execution or filing of any instrument or any further act, deed or conveyance on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding, except to the extent, if any, that any such action is necessary
to perfect, or continue the perfection of, the security interest of the Secured
Parties in the Collateral.
(b) RESIGNATION. The Collateral Agent and any successor
Collateral Agent may resign only (i) upon a determination that by reason of a
change in legal requirements the performance of its duties under this Agreement
would cause it to be in violation of such legal requirements in a manner which
would result in a material adverse effect on the Collateral Agent, and the
Controlling Party does not elect to waive the Collateral Agent's obligation to
perform those duties which render it legally unable to act or elect to delegate
those duties to another Person, or (ii) with the prior written consent of the
Controlling Party. The Collateral Agent shall give not less than 60 days' prior
written notice of any such permitted resignation by registered or certified mail
to the other Secured Party and the Seller; provided, that such resignation shall
take effect only upon the date which is the latest of (i) the effective date of
the appointment of a successor Collateral Agent and the acceptance in writing by
such successor Collateral Agent of such appointment and of its obligation to
perform its duties hereunder in accordance with the provisions hereof, (ii)
delivery of the Collateral to such successor to be held in accordance with the
procedures specified in Article II hereof, and (iii) receipt by the Controlling
Party of an Opinion of Counsel to the effect described in Section 5.02.
Notwithstanding the preceding sentence, if by the contemplated date of
resignation specified in the written notice of resignation delivered as
described above no successor Collateral Agent or temporary successor Collateral
Agent has been appointed Collateral Agent or becomes the Collateral Agent
pursuant to subsection (d) hereof, the resigning Collateral Agent may petition a
court of competent jurisdiction in New York, New York for the appointment of a
successor.
(c) REMOVAL. The Collateral Agent may be removed by the
Controlling Party at any time, with or without cause, by an instrument or
concurrent instruments in writing delivered to the Collateral Agent, the other
Secured Party and the Seller. A temporary successor may be removed at any time
to allow a successor Collateral Agent to be appointed pursuant to subsection (d)
below. Any removal pursuant to the provisions of this subsection (c) shall take
effect only upon the date which is the latest of (i) the effective date of the
appointment of a successor Collateral Agent and the acceptance in writing by
such successor Collateral Agent of such appointment and of its
33
obligation to perform its duties hereunder in accordance with the provisions
hereof, (ii) delivery of the Collateral to such successor to be held in
accordance with the procedures specified in Article II hereof and (iii)
receipt by the Controlling Party of an Opinion of Counsel to the effect
described in Section 5.02.
(d) ACCEPTANCE BY SUCCESSOR. The Controlling Party shall
have the sole right to appoint each successor Collateral Agent. Every
temporary or permanent successor Collateral Agent appointed hereunder shall
execute, acknowledge and deliver to its predecessor and to each Secured Party
and the Seller an instrument in writing accepting such appointment hereunder
and the relevant predecessor shall execute, acknowledge and deliver such
other documents and instruments as will effectuate the delivery of all
Collateral to the successor Collateral Agent to be held in accordance with
the procedures specified in Article II hereof, whereupon such successor,
without any further act, deed or conveyance, shall become fully vested with
all the estates, properties, rights, powers, duties and obligations of its
predecessor. Such predecessor shall, nevertheless, on the written request of
either Secured Party or the Seller, execute and deliver an instrument
transferring to such successor all the estates, properties, rights and powers
of such predecessor hereunder. In the event that any instrument in writing
from the Seller or a Secured Party is reasonably required by a successor
Collateral Agent to more fully and certainly vest in such successor the
estates, properties, rights, powers, duties and obligations vested or
intended to be vested hereunder in the Collateral Agent, any and all such
written instruments shall, at the request of the temporary or permanent
successor Collateral Agent, be forthwith executed, acknowledged and delivered
by the Seller. The designation of any successor Collateral Agent and the
instrument or instruments removing any Collateral Agent and appointing a
successor hereunder, together with all other instruments provided for herein,
shall be maintained with the records relating to the Collateral and, to the
extent required by applicable law, filed or recorded by the successor
Collateral Agent in each place where such filing or recording is necessary to
effect the transfer of the Collateral to the successor Collateral Agent or to
protct or continue the perfection of the security interests granted hereunder.
(e) Any resignation or removal of a Collateral Agent and
appointment of a successor Collateral Agent shall be effected with respect to
this Agreement and all Series Supplements simultaneously, so that at no time
is there more than one Collateral Agent acting hereunder and under all Series
Supplements.
Section 4.06. INDEMNIFICATION. The Seller and Arcadia Financial
shall indemnify the Collateral Agent, its directors, officers, employees and
agents for, and hold the Collateral Agent, its directors, officers, employees
and agents harmless against, any loss, liability or expense (including the
costs and expenses of defending against any claim of liability) arising out
of or in connection with the Collateral Agent's acting as Collateral Agent
hereunder, except such loss, liability or expense as shall result from the
negligence, bad faith or willful misconduct of the Collateral Agent or its
officers or agents. The obligation of the Seller and Arcadia Financial under
this Section shall survive the termination of this Agreement and the
resignation or removal of the Collateral Agent. The Collateral Agent
covenants and agrees that the obligations of the Seller hereunder
34
and under Section 4.07 shall be limited to the extent provided in Section
2.08, and further covenants not to take any action to enforce its rights to
indemnification hereunder with respect to the Seller and to payment under
Section 4.07 except in accordance with the provisions of Section 8.05, or
otherwise to assert any Lien or take any other action in respect of the
Collateral or the Trust Property of a Series until the applicable Final
Termination Date.
Section 4.07. COMPENSATION AND REIMBURSEMENT. The Seller agrees
for the benefit of the Secured Parties and as part of the Secured Obligations
(a) to pay to the Collateral Agent, from time to time, reasonable compensation
for all services rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a collateral
trustee); and (b) to reimburse the Collateral Agent upon its request for all
reasonable expenses, disbursements and advances incurred or made by the
Collateral Agent in accordance with any provision of, or carrying out its duties
and obligations under, this Agreement (including the reasonable compensation and
fees and the expenses and disbursements of its agents, any independent certified
public accountants and independent counsel), except any expense, disbursement or
advances as may be attributable to negligence, bad faith or willful misconduct
on the part of the Collateral Agent.
Section 4.08. REPRESENTATIONS AND WARRANTIES OF THE COLLATERAL
AGENT. The Collateral Agent represents and warrants to the Seller and to each
Secured Party as follows:
(a) DUE ORGANIZATION. The Collateral Agent is a national
banking association, duly organized, validly existing and in good standing
under the laws of the United States and is duly authorized and licensed under
applicable law to conduct its business as presently conducted.
(b) CORPORATE POWER. The Collateral Agent has all requisite
right, power and authority to execute and deliver this Agreement and to
perform all of its duties as Collateral Agent hereunder.
(c) DUE AUTHORIZATION. The execution and delivery by the
Collateral Agent of this Agreement and the other Transaction Documents to
which it is a party, and the performance by the Collateral Agent of its
duties hereunder and thereunder, have been duly authorized by all necessary
corporate proceedings and no further approvals or filings, including any
governmental approvals, are required for the valid execution and delivery by
the Collateral Agent, or the performance by the Collateral Agent, of this
Agreement and such other Transaction Documents.
(d) VALID AND BINDING AGREEMENT. The Collateral Agent has
duly executed and delivered this Agreement and each other Transaction
Document to which it is a party, and each of this Agreement and each such
other Transaction Document constitutes the legal, valid and binding
obligation of the Collateral Agent, enforceable against the Collateral Agent
in accordance with its terms, except as (i) such enforceability
35
may be limited by bankruptcy, insolvency, reorganization and similar laws
relating to or affecting the enforcement of creditors' rights generally and
(ii) the availability of equitable remedies may be limited by equitable
principles of general applicability.
Section 4.09. WAIVER OF SETOFFS. The Collateral Agent hereby
expressly waives any and all rights of setoff that the Collateral Agent may
otherwise at any time have under applicable law with respect to any Spread
Account and agrees that amounts in the Spread Accounts shall at all times be
held and applied solely in accordance with the provisions hereof.
Section 4.10. CONTROL BY THE CONTROLLING PARTY. The Collateral
Agent shall comply with notices and instructions given by the Seller only if
accompanied by the written consent of the Controlling Party, except that if
any Default shall have occurred and be continuing, the Collateral Agent shall
act upon and comply with notices and instructions given by the Controlling
Party alone in the place and stead of the Seller.
ARTICLE V
COVENANTS OF THE SELLER
Section 5.01. PRESERVATION OF COLLATERAL. Subject to the
rights, powers and authorities granted to the Collateral Agent and the
Controlling Party in this Agreement, the Seller shall take such action as is
necessary and proper with respect to the Collateral in order to preserve and
maintain such Collateral and to cause (subject to the rights of the Secured
Parties) the Collateral Agent to perform its obligations with respect to such
Collateral as provided herein. The Seller will do, execute, acknowledge and
deliver, or cause to be done, executed, acknowledged and delivered, such
instruments of transfer or take such other steps or actions as may be
necessary, or required by the Controlling Party, to perfect the Security
Interests granted hereunder in the Collateral, to ensure that such Security
Interests rank prior to all other Liens and to preserve the priority of such
Security Interests and the validity and enforceability thereof. Upon any
delivery or substitution of Collateral, the Seller shall be obligated to
execute such documents and perform such actions as are necessary to create in
the Collateral Agent for the benefit of the Secured Parties a valid first
Lien on, and valid and perfected, first priority security interest in, the
Collateral so delivered and to deliver such Collateral to the Collateral
Agent, free and clear of any other Lien, together with satisfactory
assurances thereof, and to pay any reasonable costs incurred by any of the
Secured Parties or the Collateral Agent (including its agents) or otherwise
in connection with such delivery.
Section 5.02. OPINIONS AS TO COLLATERAL. Not more than 90 days
nor less than 30 days prior to (i) each anniversary of the date hereof during
the term of this Agreement and (ii) each date on which the Seller proposes to
take any action contemplated by Section 5.06, the Seller shall, at its own
cost and expense, furnish to each Secured Party and the Collateral Agent an
Opinion of Counsel with respect to each Series either (a) stating that, in
the opinion of such counsel, such action has been taken
36
with respect to the execution and filing of any financing statements and
continuation statements and other actions as are necessary to perfect,
maintain and protect the lien and security interest of the Collateral Agent
(and the priority thereof), on behalf of the Secured Parties, with respect to
such Collateral against all creditors of and purchasers from the Seller or
Arcadia Financial and reciting the details of such action, or (b) stating
that, in the opinion of such counsel, no such action is necessary to maintain
such perfected lien and security interest. Such Opinion of Counsel shall
further describe each execution and filing of any financing statements and
continuation statements and such other actions as will, in the opinion of
such counsel, be required to perfect, maintain and protect the lien and
security interest of the Collateral Agent, on behalf of the Secured Parties,
with respect to such Collateral against all creditors of and purchasers from
the Seller or Arcadia Financial for a period, specified in such Opinion,
continuing until a date not earlier than eighteen months from the date of
such Opinion.
Section 5.03. NOTICES. In the event that Arcadia Financial or
the Seller acquires knowledge of the occurrence and continuance of any
Insurance Agreement Event of Default or Servicer Termination Event or of any
event of default or like event, howsoever described or called, under any of
the Transaction Documents, the Seller shall immediately give notice thereof
to the Collateral Agent and each Secured Party.
Section 5.04. WAIVER OF STAY OR EXTENSION LAWS; MARSHALLING OF
ASSETS. The Seller covenants, to the fullest extent permitted by applicable
law, that it will not at any time insist upon, plead, or in any manner
whatsoever claim or take the benefit or advantage of, any appraisement,
valuation, stay, extension or redemption law wherever enacted, now or at any
time hereafter in force, in order to prevent or hinder the enforcement of
this Agreement or any absolute sale of the Collateral or any part thereof, or
the possession thereof by any purchaser at any sale under Article VII of this
Agreement; and the Seller, to the fullest extent permitted by applicable law,
for itself and all who may claim under it, hereby waives the benefit of all
such laws, and covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Collateral Agent, but will
suffer and permit the execution of every such power as though no such law had
been enacted. The Seller, for itself and all who may claim under it, waives,
to the fullest extent permitted by applicable law, all right to have the
Collateral marshalled upon any foreclosure or other disposition thereof.
Section 5.05. NONINTERFERENCE, ETC. The Seller shall not (i)
waive or alter any of its rights under the Collateral (or any agreement or
instrument relating thereto) without the prior written consent of the
Controlling Party; or (ii) fail to pay any tax, assessment, charge or fee
levied or assessed against the Collateral, or to defend any action, if such
failure to pay or defend may adversely affect the priority or enforceability
of the Seller's right, title or interest in and to the Collateral or the
Collateral Agent's lien on, and security interest in, the Collateral for the
benefit of the Secured Parties; or (iii) take any action, or fail to take any
action, if such action or failure 'to take action will interfere with the
enforcement of any rights under the Transaction Documents.
37
Section 5.06. SELLER CHANGES.
(a) CHANGE IN NAME, STRUCTURE, ETC. The Seller shall not
change its name, identity or corporate structure unless it shall have given
each Secured Party and the Collateral Agent at least 60 days' prior written
notice thereof, shall have effected any necessary or appropriate assignments
or amendments thereto and filings of financing statements or amendments
thereto, and shall have delivered to the Collateral Agent and each Secured
Party an Opinion of Counsel of the type described in Section 5.02.
(b) RELOCATION OF THE SELLER. Neither Arcadia Financial nor
the Seller shall change its principal executive office unless it gives each
Secured Party and the Collateral Agent at least 90 days' prior written notice
of any relocation of its principal executive office. If the Seller relocates
its principal executive office or principal place of business from Minnesota,
the Seller shall give prior notice thereof to the Controlling Party and the
Collateral Agent and shall effect whatever appropriate recordations and
filings are necessary and shall provide an Opinion of Counsel to the
Controlling Party and the Collateral Agent, to the effect that, upon the
recording of any necessary assignments or amendments to previously-recorded
assignments and filing of any necessary amendments to the previously filed
financing or continuation statements or upon the filing of one or more
specified new financing statements, and the taking of such other actions as
may be specified in such opinion, the security interests in the Collateral
shall remain, after such relocation, valid and perfected.
ARTICLE VI
CONTROLLING PARTY; INTERCREDITOR PROVISIONS
Section 6.01. APPOINTMENT OF CONTROLLING PARTY. From and after
the Closing Date of a Series until the Insurer Termination Date related to
such Series, Financial Security shall be the Controlling Party with respect
to such Series and shall be entitled to exercise all the rights given the
Controlling Party hereunder with respect to such Series. From and after the
Insurer Termination Date related to such Series until the Trustee Termination
Date related to such Series, the Trustee shall be the Controlling Party with
respect to such Series. Notwithstanding the foregoing, in the event that a
Financial Security Default shall have occurred and be continuing, the Trustee
shall be the Controlling Party with respect to such Series until the
applicable Trustee Termination Date. If prior to an Insurer Termination Date
the Trustee shall have become the Controlling Party with respect to a Series
as a result of the occurrence of a Financial Security Default and either such
Financial Security Default is cured or for any other reason ceases to exist
or the Trustee Termination Date with respect to a Series occurs, then upon
such cure or other cessation or on such Trustee Termination Date, as the case
may be, Financial Security shall, upon notice thereof being duly given to the
Collateral Agent, again be the Controlling Party with respect to such Series.
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Section 6.02. CONTROLLING PARTY'S AUTHORITY.
(a) Each of Arcadia Financial and the Seller hereby
irrevocably appoint the Controlling Party, and any successor to the
Controlling Party appointed pursuant to Section 6.01, its true and lawful
attorney, with full power of substitution, in the name of Arcadia Financial,
the Seller, the Secured Parties or otherwise, but (subject to Section 2.08)
at the expense of the Seller, to the extent permitted by law to exercise, at
any time and from time to time while any Insurance Agreement Event of Default
has occurred and is continuing, any or all of the following powers with
respect to all or any of the Collateral related to the relevant Series: (i)
to demand, xxx for, collect, receive and give acquittance for any and all
monies due or to become due upon or by virtue thereof, (ii) to settle,
compromise, compound, prosecute or defend any action or proceeding with
respect thereto, (iii) to sell, transfer, assign or otherwise deal with the
same or the proceeds thereof as fully and effectively as if the Collateral
Agent were the absolute owner thereof, and (iv) to extend the time of payment
of any or all thereof and to make any allowance or other adjustments with
respect thereto; PROVIDED that the foregoing powers and rights shall be
exercised in accordance with the provisions of Article VII hereof.
(b) With respect to each Series of Certificates and the
related Collateral, each Secured Party hereby irrevocably and unconditionally
constitutes and appoints the Controlling Party with respect to such Series,
and any successor to such Controlling Party appointed pursuant to Section
6.01 from time to time, as the true and lawful attorney-in-fact of such
Secured Party for so long as such Secured Party is the Non-Controlling Party,
with full power of substitution, to execute, acknowledge and deliver any
notice, document, certificate, paper, pleading or instrument and to do in the
name of the Controlling Party as well as in the name, place and stead of such
Secured Party such acts, things and deeds for and on behalf of and in the
name of such Secured Party under this Agreement with respect to such Series
which such Secured Party could or might do or which may be necessary,
desirable or convenient in such Controlling Party's sole discretion to effect
the purposes contemplated hereunder and, without limitation, exercise full
right, power and authority to take, or defer from taking, any and all acts
with respect to the administration of the Collateral related to such Series,
and the enforcement of the rights of the Secured Parties hereunder with
respect to such Series, on behalf of and for the benefit of such Controlling
Party and such Non-Controlling Party, as their interests may appear.
(c) So long as Financial Security shall be the Controlling
Party with respect to a Series (other than the Warehousing Series), the
Trustee hereby agrees, that if there exists an Insurance Agreement Event of
Default with respect to such Series:
(i) Financial Security shall have the exclusive right to direct
the Trustee as to any and all actions to be taken under the related
Transaction Documents, including, without limitation, all actions with
respect to the giving of directions to the Servicer and any subservicer
with respect to the servicing of the Receivables of such Series;
enforcement of any rights of the Trustee under such
39
Transaction Documents; and the giving or withholding of any other
consents, requests, notices, directions, approvals, extensions or
waivers under or in respect of any such Transaction Documents; and
(ii) Financial Security shall have the right to control the
time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred upon
the Trustee under the related Pooling and Servicing Agreement or under
any other Transaction Document, including the remedies provided in
Article VII;
PROVIDED, HOWEVER, that the Trustee may decline to follow any of the above
directions from Financial Security, if the Trustee, in accordance with an
opinion of counsel to the Trustee, that is independent of the Trustee,
determines that the action or proceeding so directed may not lawfully be
taken or if the Trustee in good faith determines that the action or
proceeding so directed would involve it in personal liability for which
adequate indemnity is not reasonably assured to it or, in the case of actions
or directions not specifically permitted to be taken by Financial Security so
long as no Financial Security Default has occurred and is continuing, would
adversely affect the interests of the Certificateholders in any material
respect.
(d) So long as Financial Security shall be the Controlling
Party with respect to a Series (other than the Warehousing Series), the
Trustee shall not, without the prior written consent of Financial Security:
(i) appoint new independent accountants with respect to the
Series;
(ii) consent to the amendment of or supplement to any of the
Transaction Documents related to the Series; or
(iii) waive a Servicer Termination Event under the related
Pooling and Servicing Agreement or Sale and Servicing Agreement, as
applicable.
(e) So long as Financial Security shall be the Controlling
Party with respect to a Series:
(i) Financial Security shall have the rights provided in
Section 5.3 of each Pooling and Servicing Agreement, Section 5.4 of each
Sale and Servicing Agreement and Section 5.19 of each Indenture in
respect of the direction of insolvency proceedings.
(ii) Financial Security shall have the right to direct the
Trustee as to any and all actions to be taken in the event of the
occurrence of a Servicer Termination Event under the related Pooling and
Servicing Agreement and shall have such other rights in respect of the
appointment of a successor servicer as are provided in such Pooling and
Servicing Agreement.
Section 6.03. RIGHTS OF SECURED PARTIES. With respect to each
Series of
40
Certificates and the related Collateral, the Non-Controlling Party at any
time expressly agrees that it shall not assert any rights that it may
otherwise have, as a Secured Party with respect to the Collateral, to direct
the maintenance, sale or other disposition of the Collateral or any portion
thereof, notwithstanding the occurrence and continuance of any Default with
respect to such Series or any non-performance by Arcadia Financial or the
Seller of any obligation owed to such Secured Party hereunder or under any
other Transaction Document, and each party hereto agrees that the Controlling
Party shall be the only Person entitled to assert and exercise such rights.
Section 6.04. DEGREE OF CARE.
(a) CONTROLLING PARTY. Notwithstanding any term or
provision of this Agreement, the Controlling Party shall incur no liability
to Arcadia Financial or the Seller for any action taken or omitted by the
Controlling Party in connection with the Collateral, except for any gross
negligence, bad faith or willful misconduct on the part of the Controlling
Party and, further, shall incur no liability to the Non-Controlling Party
except for a breach of the terms of this Agreement or for gross negligence,
bad faith or willful misconduct in carrying out its duties, if any, to the
Non-Controlling Party. The Controlling Party shall be protected and shall
incur no liability to any such party in relying upon the accuracy, acting in
reliance upon the contents and assuming the genuineness of any notice,
demand, certificate, signature, instrument or other document believed by the
Controlling Party to be genuine and to have been duly executed by the
appropriate signatory, and (absent manifest error or actual knowledge to the
contrary) the Controlling Party shall not be required to make any independent
investigation with respect thereto. The Controlling Party shall, at all
times, be free independently to establish to its reasonable satisfaction the
existence or nonexistence, as the case may be, of any fact the existence or
nonexistence of which shall be a condition to the exercise or enforcement of
any right or remedy under this Agreement or any of the Transaction Documents.
(b) THE NON-CONTROLLING PARTY. The Non-Controlling Party
shall not be liable to the Seller for any action or failure to act by the
Controlling Party or the Collateral Agent in exercising, or failing to
exercise, any rights or remedies hereunder.
ARTICLE VII
REMEDIES UPON DEFAULT
Section 7.01. REMEDIES UPON A DEFAULT. If a Default with
respect to a Series has occurred and is continuing, the Collateral Agent
shall, at the direction of the Controlling Party, take whatever action at law
or in equity as may appear necessary or desirable in the judgment of the
Controlling Party to collect and satisfy all Insurer Secured Obligations
(including, but not limited to, foreclosure upon the Collateral and all other
rights available to secured parties under applicable law) or to enforce
performance and observance of any obligation, agreement or covenant under any
of the Transaction
41
Documents related to such Series. Notwithstanding the foregoing, the
Collateral Agent shall not be entitled to take any action and the Controlling
Party shall not be entitled to give any direction with respect to the Trust
Property, except to the extent provided in the Transaction Documents and
Sections 6.02(a), (c), (d) and (e) hereof.
Section 7.02. WAIVER OF DEFAULT. The Controlling Party shall
have the sole right, to be exercised in its complete discretion, to waive any
Default by a writing setting forth the terms, conditions and extent of such
waiver signed by the Controlling Party and delivered to the Collateral Agent,
the other Secured Party and the Seller. Any such waiver shall be binding
upon the Non-Controlling Party and the Collateral Agent. Unless such writing
expressly provides to the contrary, any waiver so granted shall extend only
to the specific event or occurrence which gave rise to the Default so waived
and not to any other similar event or occurrence which occurs subsequent to
the date of such waiver.
Section 7.03. RESTORATION OF RIGHTS AND REMEDIES. If the
Collateral Agent has instituted any proceeding to enforce any right or remedy
under this Agreement, and such proceeding has been discontinued or abandoned
for any reason, or has been determined adversely to such Collateral Agent,
then and in every such case the Seller, the Collateral Agent and each of the
Secured Parties shall, subject to any determination in such proceeding, be
restored severally and respectively to their former positions hereunder, and
thereafter all rights and remedies of the Secured Parties shall continue as
though no such proceeding had been instituted.
Section 7.04. NO REMEDY EXCLUSIVE. No right or remedy herein
conferred upon or reserved to the Collateral Agent, the Controlling Party or
either of the Secured Parties is intended to be exclusive of any other right
or remedy, and every right or remedy shall, to the extent permitted by law,
be cumulative and in addition to every other right and remedy given hereunder
or now or hereafter existing at law, in equity or otherwise (but, in each
case, shall be subject to the provisions of this Agreement limiting such
remedies), and each and every right, power and remedy whether specifically
herein given or otherwise existing may be exercised from time to time and as
often and in such order as may be deemed expedient by the Controlling Party,
and the exercise of or the beginning of the exercise of any right or power or
remedy shall not be construed to be a waiver of the right to exercise at the
same time or thereafter any other right, power or remedy.
ARTICLE VIII
MISCELLANEOUS
Section 8.01. FURTHER ASSURANCES. Each party hereto shall take
such action and deliver such instruments to any other party hereto, in
addition to the actions and instruments specifically provided for herein, as
may be reasonably requested or required to effectuate the purpose or
provisions of this Agreement or to confirm or perfect
42
any transaction described or contemplated herein.
Section 8.02. WAIVER. Any waiver by any party of any provision
of this Agreement or any right, remedy or option hereunder shall only prevent
and estop such party from thereafter enforcing such provision, right, remedy
or option if such waiver is given in writing and only as to the specific
instance and for the specific purpose for which such waiver was given. The
failure or refusal of any party hereto to insist in any one or more
instances, or in a course of dealing, upon the strict performance of any of
the terms or provisions of this Agreement by any party hereto or the partial
exercise of any right, remedy or option hereunder shall not be construed as a
waiver or relinquishment of any such term or provision, but the same shall
continue in full force and effect.
Section 8.03. AMENDMENTS; WAIVERS. No amendment, modification,
waiver or supplement to this Agreement or any provision of this Agreement
shall in any event be effective unless the same shall have been made or
consented to in writing by each of the parties hereto and each Rating Agency
shall have confirmed in writing that such amendment will not cause a
reduction or withdrawal of a rating on any Series; PROVIDED, HOWEVER, that,
for so long as Financial Security shall be the Controlling Party with respect
to a Series, amendments, modifications, waivers or supplements hereto
relating to such Series, the related Collateral or Spread Account or any
requirement hereunder to deposit or retain any amounts in such Spread Account
or to distribute any amounts therein as provided in Section 3.03 shall be
effective if made or consented to in writing by Financial Security, the
Seller, Arcadia Financial and the Collateral Agent (the consent of which
shall not be withheld or delayed with respect to any amendment that does not
adversely affect the Collateral Agent) but shall in no circumstances require
the consent of the Trustee or the Certificateholders related to such Series
or any other Series.
Section 8.04. SEVERABILITY. In the event that any provision of
this Agreement or the application thereof to any party hereto or to any
circumstance or in any jurisdiction governing this Agreement shall, to any
extent, be invalid or unenforceable under any applicable statute, regulation
or rule of law, then such provision shall be deemed inoperative to the extent
that it is invalid or unenforceable and the remainder of this Agreement, and
the application of any such invalid or unenforceable provision to the
parties, jurisdictions or circumstances other than to whom or to which it is
held invalid or unenforceable, shall not be affected thereby nor shall the
same affect the validity or enforceability of any other provision of this
Agreement. The parties hereto further agree that the holding by any court of
competent jurisdiction that any remedy pursued by the Collateral Agent, or
any of the Secured Parties, hereunder is unavailable or unenforceable shall
not affect in any way the ability of the Collateral Agent or any of the
Secured Parties to pursue any other remedy available to it or them (subject,
however, to the provisions of this Agreement limiting such remedies).
Section 8.05. NONPETITION COVENANT. Notwithstanding any prior
termination of this Agreement, each of the parties hereto agrees that it
shall not, prior to one year and one day after the Final Scheduled
Distribution Date with respect to each Series, acquiesce, petition or
otherwise invoke or cause the Seller or Arcadia Financial to
43
invoke the process of the United States of America, any State or other
political subdivision thereof or any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government for the purpose of commencing or sustaining a case
by or against the Seller, Arcadia Financial or the Trust under a Federal or
state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar
official of the Seller, Arcadia Financial or the Trust or all or any part of
its property or assets or ordering the winding up or liquidation of the
affairs of the Seller, Arcadia Financial or the Trust. The parties agree
that damages will be an inadequate remedy for breach of this covenant and
that this covenant may be specifically enforced.
Section 8.06. NOTICES. All notices, demands, certificates,
requests and communications hereunder ("notices") shall be in writing and
shall be effective (a) upon receipt when sent through the U.S. mails,
registered or certified mail, return receipt requested, postage prepaid, with
such receipt to be effective the date of delivery indicated on the return
receipt, or (b) one Business Day after delivery to an overnight courier, or
(c) on the date personally delivered to an Authorized Officer of the party to
which sent, or (d) on the date transmitted by legible telecopier transmission
with a confirmation of receipt, in all cases addressed to the recipient as
follows:
(i) If to Arcadia Financial:
Arcadia Financial Ltd.
0000 Xxxxxxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Treasurer
Telecopier No.: (000) 000-0000
(ii) If to the Seller:
Arcadia Receivables Finance Corp.
0000 Xxxxxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Treasurer
Telecopier No.: (000) 000-0000
(iii) If to Financial Security:
Financial Security Assurance Inc.
000 Xxxx Xxxxxx - 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Surveillance Department
Telecopier No.: (000) 000-0000
(000) 000-0000
44
(in each case in which notice or other communication to
Financial Security refers to a Default or a claim on the
Policy or in which failure on the part of Financial
Security to respond shall be deemed to constitute consent
or acceptance, then with a copy to the attention of the
Senior Vice President Surveillance)
(iv) If to the Trustee:
The Chase Manhattan Bank
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Global Trust Services Group
(with respect to those Series for which Chase serves as
Trustee)
or
Norwest Bank Minnesota, National Association
0xx Xxxxxx xxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Corporate Trust Services - Asset Backed
Administration
Telecopier No.: (000) 000-0000
(with respect to those Series for which Norwest serves as
Trustee)
(v) If to the Collateral Agent:
Norwest Bank Minnesota, National Association
0xx Xxxxxx xxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Corporate Trust Services - Asset Backed
Administration
Telecopier No.: (000) 000-0000
(vi) If to Xxxxx'x:
Xxxxx'x Investor's Service, Inc.
00 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: (000) 000-0000
(vii) If to Standard & Poor's:
Standard & Poor's Ratings Group
00 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: (000) 000-0000
A copy of each notice given hereunder to any party hereto shall also be given to
(without duplication) Financial Security, the Seller, the Trustee and the
Collateral Agent. Each
45
party hereto may, by notice given in accordance herewith to each of the other
parties hereto, designate any further or different address to which
subsequent notices shall be sent.
Section 8.07. TERM OF THIS AGREEMENT. This Agreement shall
take effect on the Closing Date of the Series 1993-A Certificates and shall
continue in effect until the last Final Termination Date to occur with
respect to each Series. On such Final Termination Date, this Agreement shall
terminate, all obligations of the parties hereunder shall cease and terminate
and the Collateral, if any, held hereunder and not to be used or applied in
discharge of any obligations of the Seller or Arcadia Financial in respect of
the Secured Obligations or otherwise under this Agreement, shall be released
to and in favor of the Seller; PROVIDED that the provisions of Sections 4.06,
4.07 and 8.05 shall survive any termination of this Agreement and the release
of any Collateral upon such termination.
Section 8.08. ASSIGNMENTS: THIRD-PARTY RIGHTS; REINSURANCE.
(a) This Agreement shall be a continuing obligation of the
parties hereto and shall (i) be binding upon the parties and their respective
successors and assigns, and (ii) inure to the benefit of and be enforceable
by each Secured Party and the Collateral Agent, and by their respective
successors, transferees and assigns. Neither the Seller nor Arcadia
Financial may assign this Agreement, or delegate any of its duties hereunder,
without the prior written consent of the Controlling Party.
(b) Financial Security shall have the right (unless a
Financial Security Default shall have occurred and be continuing) to give
participations in its rights under this Agreement and to enter into contracts
of reinsurance with respect to any Policy issued in connection with a Series
of Certificates and each such participant or reinsurer shall be entitled to
the benefit of any representation, warranty, covenant and obligation of each
party (other than Financial Security) hereunder as if such participant or
reinsurer was a party hereto and, subject only to such agreement regarding
such reinsurance or participation, shall have the right to enforce the
obligations of each such other party directly hereunder; PROVIDED, HOWEVER,
that no such reinsurance or participation agreement or arrangement shall
relieve Financial Security of its obligations hereunder, under the
Transaction Documents to which it is a party or under any such Policy. In
addition, nothing contained herein shall restrict Financial Security from
assigning to any Person pursuant to any liquidity facility or credit facility
any rights of Financial Security under this Agreement or with respect to any
real or personal property or other interests pledged to Financial Security,
or in which Federal Security has a security interest, in connection with the
transactions contemplated hereby. The terms of any such assignment or
participation shall contain an express acknowledgment by such Person of the
condition of this Section and the limitations of the rights of Financial
Security hereunder.
Section 8.09. CONSENT OF CONTROLLING PARTY. In the event that
the Controlling Party's consent is required under the terms hereof or under
the terms of any Transaction Document, it is understood and agreed that,
except as otherwise provided
46
expressly herein, the determination whether to grant or withhold such consent
shall be made solely by the Controlling Party in its sole discretion.
Section 8.10. TRIAL BY JURY WAIVED. Each of the parties hereto
waives, to the fullest extent permitted by law, any right it may have to a
trial by jury in respect of any litigation arising directly or indirectly out
of, under or in connection with this Agreement, any of the other Transaction
Documents or any of the transactions contemplated hereunder or thereunder.
Each of the parties hereto (a) certifies that no representative, agent or
attorney of any other party has represented, expressly or otherwise, that
such other party would not, in the event of litigation, seek to enforce the
foregoing waiver and (b) acknowledges that it has been induced to enter into
this Agreement and the other Transaction Documents to which it is a party, by
among other things, this waiver.
Section 8.11. GOVERNING LAW. This Agreement shall be governed
by and construed, and the obligations, rights and remedies of the parties
hereunder shall be determined, in accordance with the laws of the State of
New York.
Section 8.12. CONSENTS TO JURISDICTION. Each of the parties
hereto irrevocably submits to the jurisdiction of the United States District
Court for the Southern District of New York, any court in the state of New
York located in the city and county of New York, and any appellate court from
any thereof, in any action, suit or proceeding brought against it and related
to or in connection with this Agreement, the other Transaction Documents or
the transactions contemplated hereunder or thereunder or for recognition or
enforcement of any judgment and each of the parties hereto irrevocably and
unconditionally agrees that all claims in respect of any such suit or action
or proceeding may be heard or determined in such New York State court or, to
the extent permitted by law, in such federal court. Each of the parties
hereto agrees that a final judgment in any such action, suit or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. To the extent permitted by
applicable law, each of the parties hereby waives and agrees not to assert by
way of motion, as a defense or otherwise in any such suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction
of such courts, that the suit, action or proceeding is brought in an
inconvenient forum, that the venue of the suit, action or proceeding is
improper or that this Agreement or any of the other Transaction Documents or
the subject matter hereof or thereof may not be litigated in or by such
courts. Each of Arcadia Financial and the Seller hereby irrevocably appoints
and designates CT Corporation System, whose address is 0000 Xxxxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, as its true and lawful attorney and duly authorized
agent for acceptance of service of legal process. Each of Arcadia Financial
and the Seller agrees that service of such process upon such Person shall
constitute personal service of such process upon it. Nothing contained in
this Agreement shall limit or affect the rights of any party hereto to serve
process in any other manner permitted by law or to start legal proceedings
relating to any of the Transaction Documents against Arcadia Financial or the
Seller or their respective property in the courts of any jurisdiction.
47
Section 8.13. LIMITATION OF LIABILITY. It is expressly
understood and agreed by the parties hereto that (a) Norwest Bank Minnesota,
National Association is executing this Agreement (i) not in its individual
capacity but in its capacity as trustee of the Trusts pursuant to the
Transaction Documents and (ii) as Collateral Agent hereunder (b) in no case
whatsoever shall Norwest Bank Minnesota, National Association in its capacity
as trustee of Trusts be personally liable on, or for any loss in respect of,
any of the statements, representations, warranties, covenants, agreements or
obligations of the Trust hereunder, all such liability, if any, being
expressly waived by the parties hereto.
Section 8.14. DETERMINATION OF ADVERSE EFFECT. Any
determination of an adverse effect on the interest of the Secured Parties or
the Certificateholders shall be made without consideration of the
availability of funds under the Policies.
Section 8.15. COUNTERPARTS. This Agreement may be executed in
two or more counterparts by the parties hereto, and each such counterpart
shall be considered an original and all such counterparts shall constitute
one and the same instrument.
Section 8.16. HEADINGS. The headings of sections and
paragraphs and the Table of Contents contained in this Agreement are provided
for convenience only. They form no part of this Agreement and shall not
affect its construction or interpretation.
48
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement, as amended and restated, as of the date set forth on the first page
hereof.
ARCADIA FINANCIAL LTD. ARCADIA RECEIVABLES FINANCE CORP.
By: /S/ XXXX X. XXXXXX By: /S/ XXXX X. XXXXXX
---------------------------- ------------------------------
Name: Xxxx X. Xxxxxx Name: Xxxx X. Xxxxxx
Title: Executive Vice Title: Senior Vice President
President and Chief and Chief Financial
Financial Officer Officer
FINANCIAL SECURITY ASSURANCE INC. NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Trustee
By: /S/ XXX XXXXXXX By: /S/ XXXX X. XXXXXXX
---------------------------- ------------------------------
Authorized Officer
NORWEST BANK MINNESOTA, NATIONAL THE CHASE MANHATTAN BANK, as Trustee
ASSOCIATION, as Collateral Agent
By: /S/ XXXX X. XXXXXXX By: /S/ XXXX XXXXXX
---------------------------- ------------------------------
Name: Xxxx Xxxxxx
Title: Vice President
