<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended June 30, 1996 Commission file number 0-20526
OLYMPIC FINANCIAL LTD.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Minnesota 41-1664848
--------- ----------
(State or other jurisdiction (I.R.S. Employer Identification
of incorporation or organization) Number)
7825 Washington Avenue South, Minneapolis, MN 55439-2435
- --------------------------------------------------------------------------------
(Address of principal executive office)
Registrant's telephone number, including area code (612) 942-9880
--------------
Indicate by checkmark whether the Registrant (1) has filed all reports required
to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES X NO
-------- -------
The number of shares of the Common Stock of the registrant outstanding as of
August 8, 1996 was 32,811,681.
<PAGE>
FORM 10-Q INDEX
PART I FINANCIAL INFORMATION PAGE
- ------ ----
Item 1. Consolidated Financial Statements . . . . . . . . . . . . . . . 3
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations . . . . . . . . . . . . . . . . . . . 9
PART II OTHER INFORMATION
- -------
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . 19
Item 2. Changes in Securities . . . . . . . . . . . . . . . . . . . . . 19
Item 3. Defaults Upon Senior Securities . . . . . . . . . . . . . . . . 19
Item 4. Submission of Matters to a Vote of Security Holders . . . . . . 19
Item 5. Other Information . . . . . . . . . . . . . . . . . . . . . . . 20
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . 20
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
EXHIBIT INDEX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
The financial information for the interim periods is unaudited. In the
opinion of management, all adjustments necessary (which are of a normal
recurring nature) have been included for a fair presentation of the results
of operations. The results of operations for an interim period are not
necessarily indicative of the results that may be expected for a full year or
any other interim period.
SAFE HARBOR STATEMENT UNDER THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1996
This Form 10-Q for quarter ended June 30, 1996 contains certain forward-looking
statements as defined in the Private Securities Litigation Reform Act of 1995,
which may be identified by the use of forward-looking terminology such as "may,"
"will," "expect," "anticipate," "estimate," "goal," "continue," or comparable
terminology, that involve risks or uncertainties and that are qualified in their
entirety by the cautions and risk factors contained in the Company's Form 8-K
dated February 20, 1996 and other documents filed with the Securities and
Exchange Commission.
2
<PAGE>
OLYMPIC FINANCIAL LTD.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(UNAUDITED)
JUNE 30, DECEMBER 31,
1996 1995
----------- ------------
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<S> <C> <C>
ASSETS
Cash and cash equivalents. . . . . . . . . . . . . $ 22,575 $ 1,340
Due from securitization trust. . . . . . . . . . . 151,635 --
Auto loans held for sale . . . . . . . . . . . . . 52,300 118,556
Finance income receivable. . . . . . . . . . . . . 366,414 249,581
Furniture, fixtures and equipment. . . . . . . . . 11,191 6,346
Advances due to servicer . . . . . . . . . . . . . 10,722 9,046
Other assets . . . . . . . . . . . . . . . . . . . 15,822 12,925
-------- ---------
Total assets . . . . . . . . . . . . . . . . . $630,659 $397,794
-------- ---------
-------- ---------
LIABILITIES AND SHAREHOLDERS' EQUITY
Amounts due under warehouse facilities . . . . . . $ 17,837 $ 26,530
Senior term notes. . . . . . . . . . . . . . . . . 145,000 145,000
Subordinated notes . . . . . . . . . . . . . . . . 52,288 13,005
Capital lease obligations. . . . . . . . . . . . . 7,446 3,924
Deferred income taxes. . . . . . . . . . . . . . . 34,543 18,700
Accounts payable and accrued liabilities . . . . . 16,748 9,822
-------- ---------
Total liabilities . . . . . . . . . . . . . . 273,862 216,981
Commitments and contingencies
Shareholders' equity:
Capital stock, $.01 par value, 100,000,000 shares
authorized:
8% Cumulative Convertible Exchangeable
Preferred Stock, 726,378 and 1,071,036 shares
issued and outstanding, respectively . . . . . 7 11
Common stock 32,777,540 and 22,038,567 shares
issued and outstanding, respectively . . . . . 328 220
Additional paid-in capital . . . . . . . . . . . . 308,098 157,204
Retained earnings. . . . . . . . . . . . . . . . . 48,364 23,378
-------- ---------
Total shareholders' equity . . . . . . . . . . 356,797 180,813
-------- ---------
Total liabilities and shareholders' equity . . $630,659 $397,794
-------- ---------
-------- ---------
</TABLE>
SEE NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS.
3
<PAGE>
OLYMPIC FINANCIAL LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------ ------------------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) 1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
REVENUES:
Net interest margin. . . . . . . . . . . . . . . . . $ 15,085 $ 7,630 $ 27,385 $ 12,168
Gain on sale of loans. . . . . . . . . . . . . . . . 25,452 14,303 50,681 23,360
Servicing fee income . . . . . . . . . . . . . . . . 6,557 3,003 12,300 5,303
Other non-interest income. . . . . . . . . . . . . . 2,449 238 3,173 397
---------- ---------- ---------- ----------
Total revenues . . . . . . . . . . . . . . . . . 49,543 25,174 93,539 41,228
EXPENSES:
Salaries and benefits. . . . . . . . . . . . . . . . 8,813 4,627 17,910 8,572
Other operating expenses . . . . . . . . . . . . . . 11,124 4,973 22,043 9,468
---------- ---------- ---------- ----------
Total operating expenses . . . . . . . . . . . . 19,937 9,600 39,953 18,040
Long-term debt and other interest expense. . . . . . 6,433 4,574 11,949 6,419
---------- ---------- ---------- ----------
Total expenses . . . . . . . . . . . . . . . . . 26,370 14,174 51,902 24,459
---------- ---------- ---------- ----------
Operating income before income taxes and
extraordinary items. . . . . . . . . . . . . . . 23,173 11,000 41,637 16,769
Provision for income taxes . . . . . . . . . . . . . 8,458 4,384 15,844 6,691
---------- ---------- ---------- ----------
Income before extraordinary items. . . . . . . . . . 14,715 6,616 25,793 10,078
Extraordinary items. . . . . . . . . . . . . . . . . -- (512) -- (3,856)
---------- ---------- ---------- ----------
Net income . . . . . . . . . . . . . . . . . . . $ 14,715 $ 6,104 $ 25,793 $ 6,222
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
PRIMARY EARNINGS PER SHARE:
Net income per common share before
extraordinary items. . . . . . . . . . . . . . . $ 0.43 $ 0.29 $ 0.85 $ 0.54
Extraordinary items per common share . . . . . . . . -- (0.02) -- (0.23)
---------- ---------- ---------- ----------
Net income per common share. . . . . . . . . . . $ 0.43 $ 0.27 $ 0.85 $ 0.31
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
FULLY DILUTED EARNINGS PER SHARE:
Net income per share before extraordinary items. . . $ 0.40 $ 0.25 $ 0.76 $ 0.44
Extraordinary items per share. . . . . . . . . . . . -- (0.02) -- (0.17)
---------- ---------- ---------- ----------
Net income per share $ 0.40 $ 0.23 $ 0.76 $ 0.27
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Weighted average common and common
equivalent shares outstanding
Primary. . . . . . . . . . . . . . . . . . . . . . . 33,508,215 20,656,566 29,397,320 16,687,088
Fully diluted. . . . . . . . . . . . . . . . . . . . 37,205,287 26,661,621 33,981,805 23,118,324
</TABLE>
See notes to unaudited consolidated financial statements.
4
<PAGE>
OLYMPIC FINANCIAL LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
------------------------
1996 1995
----------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 25,793 $ 6,222
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization. . . . . . . . . . . . . . . . . . . 1,858 412
Loss on sale of furniture, fixtures and equipment. . . . . . . . . -- 153
(Increase) decrease in assets:
Automobile loans held for sale:
Purchases of automobile loans. . . . . . . . . . . . . . . . (1,291,389) (910,148)
Sales of automobile loans. . . . . . . . . . . . . . . . . . 1,330,262 862,160
Repayments of automobile loans . . . . . . . . . . . . . . . 27,383 10,055
Finance income receivable . . . . . . . . . . . . . . . . . . . (116,833) (74,457)
Due from securitization trusts. . . . . . . . . . . . . . . . . (151,635) 13,463
Advances due servicer . . . . . . . . . . . . . . . . . . . . . (1,676) (2,258)
Other assets. . . . . . . . . . . . . . . . . . . . . . . . . . (1,554) (56)
Increase (decrease) in liabilities:
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . 15,843 4,121
Accounts payable and accrued liabilities. . . . . . . . . . . . 6,927 5,302
----------- ---------
Total cash used in operating activities. . . . . . . . . . . (155,021) (85,031)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of furniture, fixtures and equipment . . . . . . . 3 37
Purchase of furniture, fixtures and equipment. . . . . . . . . . . . . (1,454) (434)
Purchase of subordinated certificates. . . . . . . . . . . . . . . . . (1,219) (795)
Collections on subordinated certificates . . . . . . . . . . . . . . . 539 169
----------- ---------
Total cash used in investing activities. . . . . . . . . . . (2,131) (1,023)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of Common Stock . . . . . . . . . . . . . . 150,500 90,387
Payment of dividends on 8% Convertible Preferred Stock . . . . . . . . (807) (1,123)
Proceeds from borrowings under warehouse facilities. . . . . . . . . . 952,596 775,162
Repayment of borrowings under warehouse facilities . . . . . . . . . . (961,289) (881,124)
Net Proceeds from issuance of subordinated notes . . . . . . . . . . . 39,283 4,400
Repayment of long-term debt. . . . . . . . . . . . . . . . . . . . . . -- (30,000)
Proceeds from issuance of Senior Notes . . . . . . . . . . . . . . . . -- 55,000
Repayment of Senior Notes. . . . . . . . . . . . . . . . . . . . . . . -- (55,000)
Proceeds from issuance of Senior Term Notes. . . . . . . . . . . . . . -- 145,000
Repayment of Senior Subordinated Notes . . . . . . . . . . . . . . . . -- (15,000)
Deferred debt issuance cost, net . . . . . . . . . . . . . . . . . . . (664) (2,970)
Reduction of capital lease obligations . . . . . . . . . . . . . . . . (1,232) (456)
----------- ---------
Total cash provided by financing activities. . . . . . . . . 178,387 84,276
----------- ---------
Net increase (decrease) in cash and cash equivalents . . . . . . . . . 21,235 (1,778)
Cash and cash equivalents at beginning of period . . . . . . . . . . . 1,340 16,617
----------- ---------
Cash and cash equivalents at end of period . . . . . . . . . . . . . . $ 22,575 $ 14,839
----------- ---------
----------- ---------
Supplemental disclosures of cash flow information:
Non cash activities:
Additions to capital leases. . . . . . . . . . . . . . . . . . . $ 4,754 $ 856
Cash paid for:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 16,417 $ 6,227
</TABLE>
See notes to unaudited consolidated financial statements.
5
<PAGE>
OLYMPIC FINANCIAL LTD.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED JUNE 30, 1996
---------------------------------------------------------------------------------------
NUMBER OF NUMBER OF ADDITIONAL
PREFERRED COMMON PREFERRED COMMON PAID IN RETAINED
SHARES SHARES VALUE PAR VALUE CAPITAL EARNINGS TOTAL
--------- ---------- --------- --------- ---------- -------- --------
(DOLLARS IN THOUSANDS, EXCEPT
SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1995 . . . . . 1,071,036 22,038,567 $ 11 $ 220 $ 157,204 $ 23,378 $180,813
Exercise of options and warrants . . -- 899,426 -- 9 4,020 -- 4,029
Issuance of Common Stock:
Public Offering. . . . . . . . . . -- 8,050,000 -- 81 145,925 -- 146,006
Benefit plans. . . . . . . . . . . -- 182,754 -- 2 463 -- 465
Amortization of deferred
compensation . . . . . . . . . . . -- -- -- -- 498 -- 498
Preferred Stock conversion to
Common Stock . . . . . . . . . . . (344,658) 1,606,793 (4) 16 (12) -- --
Payment of dividends on 8%
Convertible Preferred Stock . . . -- -- -- -- -- (807) (807)
Net income . . . . . . . . . . . . . -- -- -- -- -- 25,793 25,793
--------- ---------- --------- --------- ---------- -------- --------
BALANCE, JUNE 30, 1996 . . . . . . . 726,378 32,777,540 $ 7 $ 328 $ 308,098 $ 48,364 $356,797
--------- ---------- --------- --------- ---------- -------- --------
--------- ---------- --------- --------- ---------- -------- --------
</TABLE>
See notes to unaudited consolidated financial statements.
6
<PAGE>
OLYMPIC FINANCIAL LTD.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE QUARTER ENDED JUNE 30, 1996
1. BASIS OF PRESENTATION
The interim financial statements have been prepared by the Company pursuant
to the rules and regulations of the Securities and Exchange Commission
applicable to quarterly reports on Form 10-Q. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations, although management believes that the
disclosures are adequate to make the information presented not misleading.
These financial statements should be read in conjunction with the audited
consolidated financial statements and related notes and schedules included in
the Company's 1995 Annual Report filed on Form 10-K/A-2 dated March 18, 1996.
The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated.
Certain reclassifications have been made to the June 30, 1995 balances to
conform to current period presentation.
2. FINANCE INCOME RECEIVABLE
Finance income receivable includes the estimated present value of future
amounts permitted to be withdrawn from spread accounts established in connection
with securitization transactions.
AT JUNE 30, AT DECEMBER 31,
(DOLLARS IN THOUSANDS) 1996 1995
----------- ---------------
Estimated cash flows on loans sold, net of
estimated prepayments (1). . . . . . . $506,514 $349,097
Less:
Discount to present value. . . . . . . (24,904) (19,466)
Deferred servicing income. . . . . . . (47,738) (37,780)
Reserve for loan losses. . . . . . . . (67,458) (42,270)
-------- --------
$366,414 $249,581
-------- --------
-------- --------
(1) Included in estimated cash flows is the anticipated return to the
Company of restricted cash in required spread accounts. Actual
spread account balances were $101.9 million at June 30, 1996 and
$65.4 million at December 31, 1995.
7
<PAGE>
The following represents the roll-forward of the finance income receivable
balance:
(DOLLARS IN THOUSANDS)
BALANCE, DECEMBER 31, 1995 $249,581
Excess cash flows on loans sold, net of estimated prepayments. . 123,211
Return of excess cash flows (1). . . . . . . . . . . . . . . . . (14,331)
Recognition of present value effect of cash flows. . . . . . . . 7,953
--------
BALANCE, JUNE 30, 1996 $366,414
--------
--------
(1) Includes approximately $2.5 million of cash released to the Company from
remaining spread account balances associated with three securitization
transactions initiated in 1992 and closed out during the first six months
of 1996.
3. SUBORDINATED NOTES
AT JUNE 30, AT DECEMBER 31,
(DOLLARS IN THOUSANDS) 1996 1995
----------- ---------------
Senior subordinated notes, Series 1996-A . . . $30,000 $ --
Junior subordinated notes. . . . . . . . . . . 22,288 13,005
------- -------
$52,288 $13,005
------- -------
------- -------
In March 1996, the Company sold to the public $30.0 million aggregate
principal amount of its 10.125% Subordinated Notes , Series 1996-A due 2001
(the "Senior Subordinated Notes"). Interest on the Senior Subordinated Notes
is payable monthly beginning May 15, 1996. The Subordinated Notes may not be
redeemed prior to May 15, 1998. At any time on such date or thereafter, the
Company may at its option elect to redeem the Senior Subordinated Notes, in
whole or in part, at 101.5% of the principal amount of Senior Subordinated
Notes redeemed, or 100% thereof on or after May 15, 1999, plus accrued
interest to and including the redemption date. The Senior Subordinated Notes
are unsecured general obligations of the Company and are subordinated in
right of payment to all existing and future Senior Debt (as defined in the
indenture governing the Senior Subordinated Notes).
4. SHAREHOLDERS' EQUITY
On April 22, 1996, the Company completed a public offering of 8,050,000
shares of its Common Stock at $19.25 per share, including an over-allotment
option of 1,050,000 shares, and received net proceeds from the issuance of the
Common Stock of approximately $147.5 million.
RESTRICTED STOCK ELECTION PLAN
As disclosed in the Company's 1995 Annual Report filed on Form 10-K/A-2, in
December 1995 the Board of Directors of the Company adopted a Restricted Stock
Election Plan applicable to bonuses which may be earned by certain key
associates of the Company in the years 1998 through 2000 (the "1998 Stock
Election Plan") subject to approval by the Company's shareholders. The Stock
Election plan was approved by shareholders on May 16, 1996. As a result, the
Company recorded deferred compensation (contra equity) in the amount of $4.8
million during the second quarter of 1996. The deferred compensation will be
amortized and recognized as compensation expense ratably over the shorter of the
period in which management anticipates restrictions will be lifted or the
maximum vesting period. The purpose of the Stock Election Plan is to reward
management performance and to build each participant's equity interest in the
stock of the Company by providing long-term incentives and rewards to officers
and other key management associates of the Company and its subsidiaries.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
Substantially all of the Company's earnings are derived from the purchase,
securitization and servicing of consumer automobile loans originated primarily
by new car dealers affiliated with major foreign and domestic manufacturers. At
June 30, 1996, the Company had purchased loans from more than 6,400 dealers in
38 states, a substantial majority of which sell loans to the Company on a
regular basis. Loans are purchased through 16 regional buying centers,
supplemented by a network of dealer development representatives ("DDRs") serving
various markets, or "spokes", surrounding the buying center "hubs". DDRs
operating in these "spokes" generate loans in their assigned market, and all
administrative functions, including credit approval and loan processing, are
performed at the "hub" or at the Company's headquarters in Minneapolis,
Minnesota.
THREE AND SIX MONTHS ENDED JUNE 30, 1996 AND 1995
RESULTS OF OPERATIONS
NET INTEREST MARGIN. The components of net interest margin for each of the
three and six month periods ended June 30 were:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------ -----------------
1996 1995 1996 1995
------- ------ ------- -------
<S> <C> <C> <C> <C>
Interest income on loans, net of interest expense on
warehouse facilities . . . . . . . . . . . . . . . . . $ 7,434 $4,208 $12,640 $ 6,029
Interest income on short-term investments, spread
accounts and other cash accounts . . . . . . . . . . . 3,589 1,832 7,035 3,552
Recognition of present value discount. . . . . . . . . . 4,212 1,590 7,953 2,602
Provision for credit losses on loans held for sale . . . (150) -- (243) (15)
------- ------ ------- -------
Net interest margin . . . . . . . . . . . . . . . . $15,085 $7,630 $27,385 $12,168
------- ------ ------- -------
------- ------ ------- -------
</TABLE>
Net interest margin increased 98% and 125% during the three and six month
periods ended June 30, 1996, respectively, compared with the same periods in
1995. The rise in net interest margin is primarily due to growth in the average
balance of loans held for sale pending securitization, lower cost of funds and
increased volume of loans securitized, partially off-set by a decline in the
weighted average interest rate earned on loans purchased.
Since June 30, 1995, the Company has opened two additional regional buying
centers and has expanded its dealer network to more than 6,400 dealers at June
30, 1996, compared to 3,829 dealers at June 30, 1995. As a result, automobile
loan purchases increased during the three and six month periods ended June 30,
1996, 40% and 42%, respectively, compared with the same periods in 1995. Loan
purchases under the Company's Premier and Classic loan programs for each of the
three and six month periods ended June 30 were:
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------- ---------------------
1996 1995 1996 1995
-------- -------- ---------- --------
Premier . . . . . . . . . . $430,205 $398,487 $ 923,393 $769,596
Classic . . . . . . . . . . 227,678 72,068 367,996 140,552
-------- -------- ---------- --------
Total loans purchased . . $657,883 $470,555 $1,291,389 $910,148
-------- -------- ---------- --------
-------- -------- ---------- --------
9
<PAGE>
Increased loan purchasing volume and the timing of securitization
transactions during the three and six month periods ended June 30, 1996,
resulted in increases from the same periods a year ago of 47% and 77%,
respectively, in the average balance of loans held for sale pending
securitization, on which the Company earns interest income until such loans
are securitized. The positive effect on net interest margin of the higher
average balance of loans held for sale was partially off-set by a decline in
the annual percentage interest rate ("APR") paid by obligors on loans
purchased. During the three and six month periods ended June 30, 1996, the
weighted average APR on loans purchased was 14.34% and 14.10%, respectively,
compared with 14.44% and 14.53%, respectively, during the same periods in
1995. The decline in APR is principally due to general decreases in the
short-term consumer finance rates during most of 1995 and early 1996. The
Company has partially mitigated the effect of the lower APRs through an
increased penetration of its higher yielding Classic loans which grew from
15% of total loan purchases during both the three and six month periods ended
June 30, 1995, to 35% and 29%, respectively, during the same periods in 1996.
Net interest margin was further enhanced by lower cost of funds during
1996. During the three and six months ended June 30, 1996, the Company's
weighted average warehousing rate declined 162 basis points and 24 basis
points, respectively, compared with the same periods a year ago.
The rise in interest income on short-term investments, spread accounts
and other cash accounts and the increase in earnings from the recognition of
the present value discount associated with the gain on sale of loans is
attributable to growth in the Company's securitized loan portfolio which
increased to $3.0 billion at June 30, 1996 from $1.5 billion at June 30, 1995.
GAIN ON SALE OF LOANS. Gain on sale of loans provided net revenues of
$25.5 million and $50.7 million during the three and six months ended June
30, 1996, respectively, representing increases of 78% and 117%, respectively,
from the same periods a year ago. The increase in gain on sale of loans
primarily resulted from the growth in the volume of loans securitized which
rose to $674.4 million and $1.3 billion during the three and six months ended
June 30, 1996, respectively, compared with $403.8 million and $862.2 million,
respectively, during the same periods in 1995.
The gross interest rate spread earned on loans securitized and
utilized in the computation of gain on sale declined 44 basis points during
the three months ended June 30, 1996 compared with the same period in 1995
and increased 26 basis points during the first six months of 1996 compared
with the same period a year ago. The following table summarizes the
Company's gross interest rate spreads during the three an six months ended
June 30:
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------- ---------------------
1996 1995 1996 1995
-------- -------- ---------- --------
Weighted average APR of
loans securitized. . . . . . 14.40% 14.50% 14.11% 14.55%
Weighted average
securitization rate . . . . 6.54 6.20 6.19 6.89
-------- -------- ---------- --------
Gross interest rate spread (1) 7.86% 8.30% 7.92% 7.66%
-------- -------- ---------- --------
-------- -------- ---------- --------
- --------------------
(1) Before gains/losses on hedge transactions.
10
<PAGE>
A rise in the 2-year Treasury rate during the three months ended June 30,
1996, increased the Company's securitization rate and resulted in the decline
in the weighted average gross interest rate spread earned on loans
securitized when compared with the same period in 1995. The effect on gain on
sale from the decline in gross interest rate spread was partially off-set by
the Company's hedging activities. For the three months ended June 30, 1996,
the Company recognized gains on hedging transactions of $1.6 million compared
with losses of $4.0 million during the same period in 1995. The increase in
the gross interest rate spread during the first six months of 1996 is
principally due to lower securitization rates resulting from the favorable
2-year Treasury market during the first quarter of 1996. Gain on sale of
loans during the six months ended June 30, 1996, was increased by $3.5
million in realized gains on hedging transactions compared to realized losses
of $7.4 million in the same period in 1995. There were no realized losses on
hedging transactions during the first six months of 1996 and no realized
gains during the same period a year ago. In addition, gain on sale of loans
was favorably impacted by a decline in dealer participation rates. Due to
the increased penetration of Classic loans during the three and six months
ended June 30, 1996, the Company was able to reduce its weighted average
dealer participation rate 32 basis points and 28 basis points, respectively,
compared with the same periods in 1995.
SERVICING FEE INCOME. The Company's servicing fee income increased to
$6.6 million during the three months ended June 30, 1996 from $3.0 million in
the same three months in 1995. For the six months ended June 30, 1996,
servicing fee income was $12.3 million compared with $5.3 million for the
first half of 1995. The increase in servicing fee income was directly
related to an increase in the average servicing portfolio outstanding. The
following table reflects the growth in the Company's servicing portfolio from
June 30, 1995 to June 30, 1996.
(DOLLARS IN THOUSANDS, EXCEPT AS NOTED) AT JUNE 30,
-------------------------
1996 1995
---------- -----------
Principal balance of automobile loans
held for sale. . . . . . . . . . . . . . $ 51,313 $ 59,955
Principal balance of loans serviced
under securitizations. . . . . . . . . . 2,953,393 1,452,305
---------- ----------
Servicing portfolio. . . . . . . . . . . . $3,004,706 $1,512,260
---------- ----------
---------- ----------
Average unpaid principal balance
(actual dollars) . . . . . . . . . . . . $ 12,456 $ 11,868
Number of loans serviced . . . . . . . . . 241,230 127,425
OTHER NON-INTEREST INCOME. Other income rose to $2.4 million and $3.2
million during the three and six months ended June 30, 1996, respectively,
compared with $0.2 million and $0.4 million, respectively, during the same
periods in 1995. This increase is primarily due to the introduction of late
fee and insufficient fund charges to borrowers during late 1995.
OPERATING EXPENSES. During the three and six months ended June 30, 1996,
salaries and benefits expense increased to $8.8 million and $17.9 million,
respectively, up 90% and 109% from $4.6 million and $8.6 million during the
same periods in 1995, respectively. The increase in salaries and benefits is
primarily attributable to an increase in the number of employees to 891 at
June 30, 1996 from 464 at June 30, 1995. Increased staffing has been
necessary to accommodate the rise in loan purchasing volume and the
subsequent servicing of such loans.
11
<PAGE>
Other operating costs, including occupancy, depreciation and
amortization, servicing and collection expenses increased to $11.1 million
and $22.0 million during the three and six months ended June 30, 1996,
increases of 124% and 133%, respectively, compared with the same periods a
year ago. The increase in other operating costs reflect the continued growth
in the Company's facilities, loan purchasing and servicing portfolio.
Although the dollar amount of operating expenses has increased, total
annualized operating expenses as a percentage of average servicing portfolio
declined slightly to 2.84% during the three months ended June 30, 1996,
versus 2.88% in the same period in 1995.
INTEREST EXPENSE. Long-term debt and other interest expense increased to
$6.4 million from $4.6 million during the three months ended June 30, 1996
and 1995, respectively. For the six months ended June 30, 1996, long term
debt and other interest expense was $11.9 million compared to $6.4 million in
the same period of 1995. These increases are directly related to the
issuance of $145.0 million of 13% Senior Notes in April 1995 and $30.0
million of 10.125% Subordinated Notes in April 1996.
FINANCIAL CONDITION
AUTOMOBILE LOANS HELD FOR SALE. Prior to securitization, the Company
holds automobile loans for sale in its portfolio. The Company's portfolio of
loans held for sale decreased 56% to $52.3 million at June 30, 1996 from
$118.6 million at December 31, 1995 due to the timing in delivery of loans
associated with the Company's securitizations.
DUE FROM SECURITIZATION TRUST. At June 30, 1996, the Company had
delivered $151.6 million of loans into a securitization trust for which the
Company received cash from the trust for such loans concurrent with the legal
closing of the transaction in July of 1996. Changes in due from
securitization trust reflects the timing of delivery of loans into
securitizations.
FINANCE INCOME RECEIVABLE. Finance income receivable increased to $366.4
million as of June 30, 1996, from $249.6 million at December 31, 1995. This
47% increase is the result of an increase in loan securitization volume and
increased gain on sale of loans.
SUBORDINATED NOTES. See Liquidity - Principal Sources of Cash in
Operating Activities.
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES. Accounts payable and accrued
liabilities increased to $16.7 million at June 30, 1996 compared to $9.8
million at December 31, 1995. This increase is primarily due to accrued
securitization expenses associated with the Company's second quarter
securitization, 1996-B, as well as increased accruals for salary, occupancy
and various operating expenses reflecting the continued growth in the
Company's staffing, facilities, loan purchases and servicing portfolio.
12
<PAGE>
DELINQUENCY, LOAN LOSS AND REPOSSESSION EXPERIENCE
The following tables describe the Company's delinquencies, loan losses
and repossessions for the periods indicated. A delinquent loan may result in
the repossession and foreclosure of the collateral for the loan. Losses
resulting from repossession and foreclosure of loans are charged against
applicable allowances.
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
DELINQUENCY EXPERIENCE (1): 1996 1995
------------------------- -------------------------
NUMBER OF NUMBER OF
LOANS BALANCE LOANS BALANCE
--------- ---------- --------- ----------
<S> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)
Servicing portfolio at end of period 241,330 $3,004,706 185,241 $2,267,107
Delinquencies:
31-60 days . . . . . . . . . . . . . . . . . . 2,361 $ 28,630 1,536 $ 17,667
61-90 days . . . . . . . . . . . . . . . . . . 1,105 14,556 520 5,694
91 days or more . . . . . . . . . . . . . . . 1,173 15,492 614 6,881
--------- ---------- --------- ----------
Total automobile loans delinquent 31 or
more days. . . . . . . . . . . . . . . . . . . . 4,639 $ 58,678 2,670 $ 30,242
Delinquencies as a percentage of
number of loans and amount
outstanding at end of period (2) . . . . . . . . 1.92% 1.95% 1.44% 1.33%
Amount in repossession (3) . . . . . . . . . . . . 2,307 $ 30,973 1,489 $ 17,676
--------- ---------- --------- ----------
Total delinquencies and amount in
repossession (2) . . . . . . . . . . . . . . . . 6,946 $ 89,651 4,159 $ 47,918
--------- ---------- --------- ----------
--------- ---------- --------- ----------
Total delinquencies and amount in
repossession as a percentage of
servicing portfolio outstanding at end
of period. . . . . . . . . . . . . . . . . . . . 2.88% 2.98% 2.25% 2.11%
</TABLE>
- --------------------
(1) All amounts and percentages are based on the principal amount scheduled to
be paid on each loan. The information in the table includes previously
sold loans which the Company continues to service.
(2) Amounts shown do not include loans which are less than 31 days delinquent.
(3) Amount in repossession represents financed automobiles which have been
repossessed but not yet liquidated.
13
<PAGE>
<TABLE>
<CAPTION>
CREDIT LOSS/REPOSSESSION EXPERIENCE (1): THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------- -------------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Average servicing portfolio outstanding during the period. . . $2,812,596 $1,333,869 $2,635,759 $1,167,369
Average number of loans outstanding during the period. . . . . 217,245 113,498 203,846 100,297
Number of repossessions. . . . . . . . . . . . . . . . . . . . 3,285 717 6,262 1,167
Annualized repossessions as a percentage of average
number of loans outstanding. . . . . . . . . . . . . . . . . 6.05% 2.53% 6.14% 2.33%
Gross charge-offs (2). . . . . . . . . . . . . . . . . . . . . $ 9,011 $ 2,782 $ 15,484 $ 4,699
Recoveries (3) . . . . . . . . . . . . . . . . . . . . . . . . 2,915 821 4,528 1,231
---------- ---------- ---------- ---------
Net losses . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,096 $ 1,961 $ 10,956 $ 3,468
---------- ---------- ---------- ---------
---------- ---------- ---------- ---------
Annualized gross charge-offs as a percentage of average
servicing portfolio. . . . . . . . . . . . . . . . . . . . . 1.28% 0.83% 1.17% 0.81%
Annualized net losses as a percentage of average
servicing portfolio. . . . . . . . . . . . . . . . . . . . . 0.87% 0.59% 0.83% 0.59%
</TABLE>
(1) All amounts and percentages are based on the principal amount scheduled to
be paid on each loan. The information in the table includes previously
sold loans which the Company continues to service.
(2) Gross charge-offs represent principal amounts which management estimated to
be uncollectable after the consideration of anticipated proceeds from the
disposition of repossessed assets and selling expenses. When estimating
the value of repossessed inventory, management utilizes industry published
reports listing retail and wholesale values of used automobiles and
determines estimated proceeds within a range that management believes
reflects the then current market conditions and the Company's disposition
strategy for such inventory.
(3) Includes post-disposition amounts received on repossessed assets.
The Company believes the rise in delinquency, repossession rates and
annualized net losses reflected in the tables above are primarily due to the
introduction and expansion of the Company's Classic loan program and the
seasoning of the Company's servicing portfolio to include a greater proportion
of loans in the period of highest probability for defaults.
In February 1996, the Company elected to increase, over time depending on
market conditions, the percentage of the Company's aggregate loan purchases that
may be purchased through its Classic program up to a limit of 50% of
originations. Through the first six months of 1996, Classic loans represented
29% of total loan purchases compared with 15% during the same period in 1995.
The purposes of the Company's increased emphasis on the Classic program are to
provide the Company with the opportunity for greater interest rate spreads
relative to its previous loan mix which management believes more than offsets
any additional risks associated with the Classic loans and, as the Company
offers lower dealer participations on Classic loans, to reduce costs in
comparison to the Premier program. The Company has determined that the pricing
advantages and ability to expand the Company's prime lending market under the
Classic loan program offsets anticipated increases in delinquency and
repossession rates, which the Company expects to continue to increase as the
Classic loans purchased continue to season. To account for the anticipated
increase in delinquency and repossession rates, the Company has established
higher reserves following the introduction of the Classic program and has
increased these reserves as the proportion of Classic loans has increased in the
Company's total portfolio. The Company's total reserves at June 30, 1996 were
$67.5 million or 2.25% of the Company's servicing portfolio. Although the
introduction and expansion of the Classic program has contributed to the
increase in total portfolio delinquencies, repossession rates, and annualized
net loss rates, these increases have been anticipated and are within the
reserves established by the Company.
14
<PAGE>
LIQUIDITY
The Company's business requires substantial cash to support its operating
activities. The principal cash requirements include (i) amounts necessary to
purchase and finance automobile loans pending securitization, (ii) dealer
participations, (iii) cash held from time to time in restricted spread accounts
to support securitizations and other securitization expenses, (iv) interest
advances to securitization trusts and (v) interest expense. The Company also
uses significant amounts of cash for operating expenses. Cash is returned to
the Company principally from excess cash flow received from securitization
trusts and from fees earned through servicing of loans held by such trusts. The
Company has operated on a negative operating cash flow basis and expects to
continue to do so in the foreseeable future. The Company has historically
funded, and expects to continue to fund, these negative operating cash flows,
subject to limitations in various debt covenants, principally through borrowings
from financial institutions, sales of equity securities and sales of senior and
subordinated notes, among other resources, although there can be no assurance
that the Company will have access to capital markets in the future or that
financing will be available to satisfy the Company's operating and debt service
requirements or to fund its future growth. See "Capital Resources."
PRINCIPAL USES OF CASH IN OPERATING ACTIVITIES
PURCHASES AND FINANCING OF AUTOMOBILE LOANS. Automobile loan purchases
represent the Company's most significant cash flow requirement. The Company
funds the purchase price of loans through the use of warehouse facilities.
However, because advance rates under the warehouse facilities only provide funds
for 90% to 99.9% of the principal balance of the loans, the Company is required
to fund the remainder of all purchases with other available cash resources. The
Company purchased $1.3 billion of loans during the first six months of 1996
compared to $910.1 million during the same period in 1995.
DEALER PARTICIPATIONS. Consistent with industry practice, the Company pays
dealers participations for selling loans to the Company which typically require
the Company to advance an up-front amount to dealers. Participations paid by
the Company to dealers during the six months ended June 30, 1996 were $46.9
million, or approximately 3.63% of the principal balance of loans purchased,
compared with $37.3 million, or approximately 4.10% of loans purchased, during
the same period in 1995. The decrease in dealer participation as a percentage
of loans purchased reflects the growth in volume of Classic loans.
SECURITIZATION OF AUTOMOBILE LOANS. In connection with securitizations,
the Company is required to fund spread accounts related to each transaction.
The Company funds these spread accounts by foregoing receipt of excess cash flow
until these spread accounts exceed predetermined levels. The Company had $101.9
million of restricted cash in spread accounts at June 30, 1996, compared with
$65.4 million at December 31, 1995. Restricted cash is included as a component
of finance income receivable.
15
<PAGE>
The Company also incurs certain expenses in connection with
securitizations, including underwriting fees, credit enhancement fees, trustee
fees and other costs, which approximate 0.5% per annum of the principal amount
of the asset-backed securities sold into the securitizations.
NET INTEREST MARGIN. Although the Company records net interest margin as
earned, the interest income component is generally received in cash from excess
cash flow, while the interest expense component (primarily warehousing interest)
is paid prior to securitization.
ADVANCES DUE TO SERVICER. As the servicer of loans sold in
securitizations, the Company periodically makes interest advances to the
securitization trusts to provide for temporary delays in the receipt of required
interest payments by borrowers. In accordance with servicing agreements, the
Company makes advances only in the event it expects to recover them through the
ultimate payments from the obligor on the loan.
PRINCIPAL SOURCES OF CASH IN OPERATING ACTIVITIES
EXCESS CASH FLOW. The Company receives excess cash flow from
securitization trusts, including the realization of gain on sale, the recovery
of dealer participations, and the recovery of accrued interest receivable
earned, but not yet collected, on loans held for sale. Recovery of dealer
participations and accrued interest receivable, which occur throughout the life
of the securitization, result in a reduction of the finance income receivable
and, because they have been considered in the original determination of the gain
on sale of loans, have no effect on the Company's results of operations in the
year in which the participations and interest are recovered from the
securitization trust. During the first six months of 1996, the Company received
$11.8 million of excess cash flow, compared with $8.8 million during the same
six months in 1995. Included in excess cash flows during 1995, is approximately
$1.7 million of cash received from the sale of interest-only securities related
to securitization transactions. There were no interest-only securities issued
during the first six months on 1996. The Company received an additional $2.5
million of cash during the first half of 1996 which was released from spread
accounts associated with three securitization transactions closed-out during the
first quarter of 1996.
SERVICING FEES. The Company also receives servicing fee income with
respect to loans held by securitization trusts equal to 1% per annum of the
remaining principal balance. During the six months ended June 30, 1996 and
1995, the Company received cash for such servicing in the amount of $11.8
million and $4.7 million, respectively. Servicing fee income is reflected in
the Company's revenues as earned.
CAPITAL RESOURCES
The Company finances the acquisition of automobile loans primarily through
(i) warehouse facilities, pursuant to which loans are sold or financed generally
on a temporary basis and (ii) the securitization of loans, pursuant to which
loans are sold as asset-backed securities. Additional financing is required to
fund the Company's operations.
16
<PAGE>
WAREHOUSE FACILITIES. Automobile loans held for sale are funded primarily
through warehouse facilities. Currently, the Company has an aggregate capacity
in its warehouse facilities of $700.0 million, of which $682.2 million was
available at June 30, 1996.
SECURITIZATION PROGRAM. The most important capital resource for the
Company has been its ability to sell automobile loans in the secondary markets
through securitizations. The following table summarizes the Company's
securitization transactions for the six months ended June 30, 1996, all of which
were publicly issued and rated "AAA/Aaa".
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
REMAINING
REMAINING BALANCE AS
BALANCE AS A CURRENT WEIGHTED GROSS
OF PERCENTAGE WEIGHTED AVERAGE INTEREST
ORIGINAL JUNE 30, OF ORIGINAL AVERAGE SECURITIZATION RATE
DATE BALANCE 1996 BALANCE APR RATE SPREAD
- --------------- ---------- ---------- ----------- -------- -------------- --------
<S> <C> <C> <C> <C> <C> <C>
March 1996 $ 600,000 $ 536,411 89.40% 13.85% 5.81% 8.04%
June 1996 (1) 650,000 601,847 92.59% 14.32% 6.62% 7.70%
---------- ----------
$1,250,000 $1,138,258
---------- ----------
---------- ----------
</TABLE>
- --------------------
(1) As of June 30, 1996, the Company had delivered $610,402,830 to the
trust and $39,597,170 cash remained in the pre-funded portion of the
trust.
OTHER CAPITAL RESOURCES
Historically, the Company has utilized various debt and equity financings
to offset negative operating cash flows and support the continued growth in
loan volume, increased dealer participations, securitizations and general
operating expenses.
In April 1996, the Company sold to the public 8,050,000 shares of Common
Stock. Net proceeds received from the offering of Common Stock approximated
$147.5 million.
In March 1996, the Company sold to the public $30.0 million aggregate
principal amount of 10.125% Subordinated Notes Series 1996-A, due 2001 (the
"Senior Subordinated Notes"). Net proceeds received from the offering of
Senior Subordinated Notes approximated $29.0 million.
The terms of the Company's 13% Senior Term Note Indenture (the
"Indenture") limit the incurrence of additional indebtedness by the Company
and restrict certain payments, including dividends on common or preferred
stock (other than dividends on the Company's 8% Cumulative Convertible
Exchangeable Preferred Stock) subject to the Company's ability to meet
certain tests as set forth in the Indenture. If the Company's Fixed Charge
Coverage Ratio, as defined in the Indenture, is less than 2.0 to 1 for a four
quarter period, the Company is restricted from paying dividends on common and
preferred stock (other than dividends on its 8% Cumulative Convertible
Exchangeable Preferred Stock) and unable to incur additional indebtedness
(excluding indebtedness under warehouse facilities). The Fixed Charge
Coverage Ratio for the four-quarter period ended June 30, 1996 was:
17
<PAGE>
FOR THE FOUR
QUARTERS ENDED
JUNE 30, 1996
--------------
(IN THOUSANDS)
Operating Cash Receipts:
Excess cash flows received from securitization trusts. . . $ 26,623
Servicing fee income . . . . . . . . . . . . . . . . . . . 19,758
Other cash income. . . . . . . . . . . . . . . . . . . . . 4,031
---------
Total Operating Cash Receipts . . . . . . . . . . . . 50,412
Less Cash Expenses:
Payment of dealer participations . . . . . . . . . . . 95,967
Cash operating expenses . . . . . . . . . . . . . . . . 68,548
Interest paid on warehouse and other debt . . . . . . . 29,598
Preferred dividends . . . . . . . . . . . . . . . . . . 2,093
---------
Total Cash Expenses . . . . . . . . . . . . . . . . . 196,206
---------
Consolidated Cash Flow . . . . . . . . . . . . . . . . . . (145,794)
Fixed Charges included in Cash Expenses . . . . . . . . . 31,496
---------
Adjusted Consolidated Cash Flow . . . . . . . . . . . . $(114,298)
---------
---------
Fixed Charges:
Interest expense (accrued or paid). . . . . . . . . . . $ 32,947
Preferred dividends . . . . . . . . . . . . . . . . . . 2,093
---------
Total Fixed Charges . . . . . . . . . . . . . . . . . $ 35,040
---------
---------
The Company has had, and expects to continue to have, negative Consolidated
Cash Flow (as defined in the Indenture) and does not expect to be able to meet
the Fixed Charge Coverage Ratio test for the foreseeable future.
The Company may incur additional indebtedness under the terms of the
Indenture, without regard to the Fixed Charge Coverage Ratio, if total
indebtedness (excluding indebtedness under warehouse facilities) would not
exceed 200% of Consolidated Net Worth (as defined in the Indenture). As of June
30, 1996, the Company would be able to incur additional indebtedness under the
Consolidated Net Worth test, provided that such new indebtedness has a Weighted
Average Life to Maturity (as defined in the Indenture) equal to or longer than
the Senior Term Notes.
18
<PAGE>
PART II -- OTHER INFORMATION
- ----------------------------
Item 1. Legal Proceedings
The Company is party to litigation in the ordinary course of business,
generally involving actions against borrowers to collect amounts on
loans or recover vehicles. The Company does not expect any pending
proceedings to have a material adverse effect on the Company or its
results of operations.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
On May 16, 1996, the Company held its annual shareholders' meeting.
There were 23,633,706 shares of common stock outstanding and entitled
to vote, and a total of 21,420,697 shares (90.6%) were represented at
the meeting in person or by proxy. The following summarizes vote
results of proposals submitted to the Company's shareholders.
1. Proposal to elect nine directors, each for a one-year term.
FOR WITHHELD
------------ -----------
Jeffrey C. Mack 20,785,471 635,226
Scott H. Anderson 20,794,385 626,312
Lawrence H. Bistodeau 20,801,610 619,087
James L. Davis 21,050,435 370,262
A. Mark Berlin, Jr. 20,794,250 626,447
Robert J. Cresci 21,041,990 378,707
Warren Kantor 20,792,450 628,247
Richard A. Zona 20,789,160 631,537
Frederick W. Zuckerman 21,038,101 382,596
2. Proposal to approve an amendment to the Company's Employee
Stock Purchase Plan to (i) allow associates of the Company
to enroll in such plan on the first day of any calendar
month during which purchases may be made under such plan and
(ii) increase the number of authorized and reserved shares
from 200,000 to 500,000.
FOR AGAINST ABSTAIN BROKER NON-VOTE
---------- ------- ------- ---------------
20,808,171 535,207 77,319 --
3. Proposal to adopt the Company's Restricted 1998-2000 Stock
Election Plan.
FOR AGAINST ABSTAIN BROKER NON-VOTE
---------- ------- ------- ---------------
20,693,943 620,780 105,974 --
19
<PAGE>
4. Proposal to amend the Company's 1992 Director Stock Option Plan
to (i) extend the term of options granted thereunder commencing in
1996, from five years to ten years, (ii) increase the period during
which options granted under the plan commencing in 1996, may be
exercised after the director ceases to be an outside director from
six months to two years, (iii) reduce to 5,000 from 15,000 the
number of options to purchase the Company's Common Stock granted
automatically each year to each outside director commencing in 1996
and (iv) grant to the Board of Directors the authority to
accelerate the date on which an option is first exercisable to a
date prior to the first anniversary of the date the option was
granted.
FOR AGAINST ABSTAIN BROKER NON-VOTE
---------- --------- ------- ---------------
18,837,469 2,461,968 121,260 --
5. Proposal to ratify the appointment of Ernst & Young LLP as
independent auditors for the fiscal year ending December 31, 1996.
FOR AGAINST ABSTAIN BROKER NON-VOTE
---------- ------- ------- ---------------
21,328,793 55,320 36,584 --
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) EXHIBITS
The following exhibits are filed in response to Item 601 of Regulation S-K.
EXHIBIT NO. DESCRIPTION
- ----------- -----------
10.1 Series 1996-B Supplement, dated June 14, 1996, to
Spread Account Agreement, dated as of March 25,
1995, as amended and restated as of December 6,
1995, among the Company, Olympic Receivables
Finance Corp., Financial Security Assurance Inc.
and Norwest Bank Minnesota, National Association,
as Trustee and Collateral Agent.
10.2 Insurance and Indemnity Agreement, dated as of
June 14, 1996, among the Company, Financial
Security Assurance Inc., Olympic Automobile
Receivables Trust, 1996-B, Olympic First GP, Inc.
Olympic Second GP, Inc. and Olympic Receivables
Finance Corp.
20
<PAGE>
10.3 Amendment dated as of May 31, 1996, among Olympic
Financial Ltd., Olympic Receivables Finance Corp.,
Financial Security Assurance Inc., and Norwest
Bank Minnesota, National Association, as
Collateral Agent, to Series 1996-A Supplement
dated as of March 14, 19996, Series 1995-E
Supplement dated as of December 6, 1995, Series
1995-D Supplement dated as of September 21, 1995,
as amended by that certain Amendment to Series
Supplements to Spread Account Agreement dated as
of December 6, 1995, Series 1995-C Supplement
dated as of June 15, 1995, as amended by that
certain Amendment to Series Supplements to Spread
Account Agreement dated as of September 21, 1995,
and as further amended by the December 1995
Amendment, Series 1995-B Supplement dated as of
March 15, 1995, as amended by that certain
Amendment to Series Supplements to Spread Account
Agreement dated as of June 15, 1995, as further
amended by the September 1995 Amendment, and as
further amended by the December 1995 Amendment and
the Series 1995-A Supplement dated aas of February
9, 1995, as amended by the June 1995 Amendment, as
further amended the September 1995 Amendment and
as further amended by the December 1995 Amendment
to the Spread Account Agreement, dated as of March
25, 1993, as amended and restated as of December
6, 1994, among OFL, the Seller, Financial Security
and Norwest Bank Minnesota, National Association
as Trustee and as Collateral Agent.
10.4 Amendment to Insurance and Indemnity Agreement
dated as of March 14, 1996, Insurance and
Indemnity Agreement dated as of December 5, 1995,
Insurance and Indemnity Agreement dated as of
September 21, 1995, as amended by that certain
Amendment No. 2 to Insurance and Indemnity
Agreements dated as of December 6, 1995, Insurance
and Indemnity Agreement dated as of June 15, 1995,
as amended by Amendment No. 2, Insurance and
Indemnity Agreement dated as of March 15, 1995, as
amended by that certain Amendment No. 1 to
Insurance and Indemnity Agreements dated as of
June 15, 1996, and as further amended by Amendment
No. 2, Insurance and Indemnity Agreement dated as
of February 9, 1995, as amended by Amendment No.
2, and as further amended by Amendment No. 2,
dated as of May 31, 1996, among Financial Security
Assurance Inc., Olympic Automobile Receivables
Trust, 1996-A, Olympic Automobile Receivables
Trust, 1995-E, Olympic Automobile Receivables
Trust, 1995-D, Olympic Automobile Receivables
Trust, 1995-C, Olympic Automobile Receivables
Trust, 1995-B, Olympic Automobile Receivables
Trust, 1995-A, Olympic First GP Inc., Olympic
Second GP Inc. Olympic Receivables Finance Corp.,
and Olympic Financial Ltd., in each case with
respect to each Insurance and Indemnity Agreement
with respect to which such person is a party.
21
<PAGE>
11.1 Computation of Earnings Per Share
12.1 Computation of Ratio Earnings to Fixed Charges
12.2 Computation of Ratio Earnings to Fixed Charges and
Preferred Stock Dividends
(b) Reports on Form 8-K
-------------------
None
22
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
OLYMPIC FINANCIAL LTD.
SIGNATURE TITLE DATE
- ------------------------------ ----------------------------- ---------------
/s/ Jeffrey C. Mack
- ------------------------------
Jeffrey C. Mack President, Chief Executive August 12, 1996
Officer, and Director
/s/ John A. Witham
- ------------------------------
John A. Witham Executive Vice President August 12, 1996
and Chief Financial Officer
(Principal Financial Officer)
/s/ Brian S. Anderson
- ------------------------------
Brian S. Anderson Senior Vice President, August 12, 1996
Corporate Controller and
Assistant Secretary
(Principal Accounting Officer)
23
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -----------
10.1 Series 1996-B Supplement, dated June 14, 1996, to
Spread Account Agreement, dated as of March 25, 1995,
as amended and restated as of December 6, 1995, among
the Company, Olympic Receivables Finance Corp.,
Financial Security Assurance Inc. and Norwest Bank
Minnesota, National Association, as Trustee and
Collateral Agent.
10.2 Insurance and Indemnity Agreement, dated as of June 14,
1996, among the Company, Financial Security Assurance
Inc., Olympic Automobile Receivables Trust, 1996-B,
Olympic First GP, Inc. Olympic Second GP, Inc. and
Olympic Receivables Finance Corp.
10.3 Amendment dated as of May 31, 1996, among Olympic
Financial Ltd., Olympic Receivables Finance Corp.,
Financial Security Assurance Inc., and Norwest Bank
Minnesota, National Association, as Collateral Agent,
to Series 1996-A Supplement dated as of March 14,
19996, Series 1995-E Supplement dated as of December 6,
1995, Series 1995-D Supplement dated as of September
21, 1995, as amended by that certain Amendment to
Series Supplements to Spread Account Agreement dated
as of December 6, 1995, Series 1995-C Supplement dated
as of June 15, 1995, as amended by that certain
Amendment to Series Supplements to Spread Account
Agreement dated as of September 21, 1995, and as
further amended by the December 1995 Amendment, Series
1995-B Supplement dated as of March 15, 1995, as
amended by that certain Amendment to Series Supplements
to Spread Account Agreement dated as of June 15, 1995,
as further amended by the September 1995 Amendment, and
as further amended by the December 1995 Amendment and
the Series 1995-A Supplement dated aa s of February 9,
1995, as amended by the June 1995 Amendment, as further
amended the September 1995 Amendment and as further
amended by the December 1995 Amendment to the Spread
Account Agreement, dated as of March 25, 1993, as
amended and restated as of December 6, 1994, among OFL,
the Seller, Financial Security and Norwest Bank
Minnesota, National Association as Trustee and as
Collateral Agent.
10.4 Amendment to Insurance and Indemnity Agreement dated as
of March 14, 1996, Insurance and Indemnity Agreement
dated as of December 5, 1995, Insurance and Indemnity
Agreement dated as of September 21, 1995, as amended by
that certain Amendment No. 2 to Insurance and Indemnity
Agreements dated as of December 6, 1995, Insurance and
Indemnity Agreement dated as of June 15, 1995, as
amended by Amendment No. 2, Insurance and Indemnity
Agreement dated as of March 15, 1995, as amended by
that certain Amendment No. 1 to Insurance and Indemnity
Agreements dated as of June 15, 1996, and as
24
<PAGE>
further amended by Amendment No. 2, Insurance and
Indemnity Agreement dated as of February 9, 1995, as
amended by Amendment No. 2, and as further amended by
Amendment No. 2, dated as of May 31, 1996, among
Financial Security Assurance Inc., Olympic Automobile
Receivables Trust, 1996-A, Olympic Automobile
Receivables Trust, 1995-E, Olympic Automobile
Receivables Trust, 1995-D, Olympic Automobile
Receivables Trust, 1995-C, Olympic Automobile
Receivables Trust, 1995-B, Olympic Automobile
Receivables Trust, 1995-A, Olympic First GP Inc.,
Olympic Second GP Inc. Olympic Receivables Finance
Corp., and Olympic Financial Ltd., in each case with
respect to each Insurance and Indemnity Agreement with
respect to which such person is a party.
11.1 Computation of Earnings Per Share
12.1 Computation of Ratio Earnings to Fixed Charges
12.2 Computation of Ratio Earnings to Fixed Charges and
Preferred Stock Dividends
25
<PAGE>
SERIES 1996-B SUPPLEMENT
SERIES 1996-B SUPPLEMENT, dated as of June 14, 1996 (the "Series 1996-B
Supplement"), by and among OLYMPIC FINANCIAL LTD., a Minnesota corporation
("OFL"), OLYMPIC RECEIVABLES FINANCE CORP., a Delaware corporation (the
"Seller"), FINANCIAL SECURITY ASSURANCE INC., a New York stock insurance
company ("Financial Security"), and NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, a national banking association, in its capacities as Trustee
under each Pooling and Servicing Agreement and as Indenture Trustee under
each Indenture referred to in the Spread Account Agreement (as defined
below), in such capacity as agent for the Noteholders and Certificateholders
with respect to the related Series (in each of such capacities, the
"Trustee") and as Collateral Agent hereunder.
RECITALS
1. The parties hereto have previously entered into a Spread Account
Agreement, dated as of March 25, 1993, as amended and restated as of December 6,
1995 (the "Spread Account Agreement"), and, as contemplated by Section
2.02 of the Spread Account Agreement, this Series 1996-B Supplement
constitutes a Series Supplement to the Spread Account Agreement so that
hereafter this Series 1996-B Supplement shall form a part of the Spread
Account Agreement for all purposes thereof, and all references herein and
hereafter to the Spread Account Agreement shall mean the Spread Account
Agreement, as supplemented hereby.
2. Olympic Automobile Receivables Trust, 1996-B (the "Series 1996-B
Trust") is being formed contemporaneously herewith pursuant to the Series
1996-B Trust Agreement (as defined herein).
3. Pursuant to the Series 1996-B Sale and Servicing Agreement, the
Seller is selling to the Series 1996-B Trust all of its right, title and
interest in and to the Initial Receivables (as defined in the Series 1996-B
Sale and Servicing Agreement) and certain other Trust Property (as defined in
the Series 1996-B Trust Agreement).
4. Pursuant to the Series 1996-B Trust Agreement, the Series 1996-B
Trust is issuing the Series 1996-B Certificates (as defined herein).
Pursuant to the Series 1996-B Indenture, the Series 1996-B Trust is issuing
the Series 1996-B Notes (as defined herein).
5. The Seller has requested that Financial Security issue the Series
1996-B Note Policy to the Trustee to guarantee payment of the Scheduled
Payments (as defined in such Policy) on each Payment Date in respect of the
Series 1996-B Notes, and has requested that Financial Security issue the
Series 1996-B Certificate Policy to Mellon Bank (DE), National Association, as
<PAGE>
Owner Trustee under the Series 1996-B Trust Agreement, to guarantee payment
of the Guaranteed Distributions (as defined in such Policy) on each
Distribution Date in respect of the Series 1996-B Certificates.
6. In partial consideration of the issuance of the Series 1996-B Note
Policy and the Series 1996-B Certificate Policy, the Seller has agreed that
Financial Security shall have certain rights as Controlling Party, to the
extent set forth in the Spread Account Agreement and the Series 1996-B
Indenture.
7. The Seller is a wholly owned special purpose subsidiary of OFL.
The Series 1996-B Trust has agreed to pay the Series 1996-B Credit
Enhancement Fee to the Seller in consideration of the obligations of the
Seller and OFL pursuant hereto and in consideration of the obligations of OFL
pursuant to the Series 1996-B Insurance Agreement (such obligations forming
part of the Series 1996-B Insurer Secured Obligations as referred to herein).
The Series 1996-B Insurer Secured Obligations form part of the consideration
to Financial Security for its issuance of the Series 1996-B Policies.
8. In order to secure the performance of the Series 1996-B Secured
Obligations, to further effect and enforce the subordination provisions to
which the Series 1996-B Credit Enhancement Fee is subject, and in
consideration of the receipt of the Series 1996-B Credit Enhancement Fee, OFL
and the Seller have agreed to pledge the Series 1996-B Collateral as
Collateral to the Collateral Agent for the benefit of Financial Security and
for the benefit of the Trustee on behalf of the Trust, upon the terms and
conditions set forth herein.
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 1.1 DEFINITIONS. All terms defined in Section 1.1 of the
Series 1996-B Sale and Servicing Agreement shall have the same meaning with
respect to this Series 1996-B Supplement. The following terms shall have the
following meanings:
"COLLECTION ACCOUNT SHORTFALL" means, with respect to Series 1996-B and
any Distribution Date, the Deficiency Claim Amount, as
<PAGE>
defined in the Series 1996-B Sale and Servicing Agreement, with respect to
such Distribution Date.
"DEEMED CURED" means, (a) with respect to a Trigger Event that has
occurred pursuant to clause (i) or (ii) of the definition thereof, as of a
Determination Date with respect to Series 1996-B, that no such clause (i) or
clause (ii) Trigger Event with respect to such Series shall have occurred as
of such Determination Date or as of any of the five consecutively preceding
Determination Dates, and (b) with respect to a Trigger Event that has
occurred pursuant to clause (iii) or clause (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 Series 1996-B Closing Date, that no
such clause (iii) or clause (iv) Trigger Event with respect to such Series
shall have occurred as of such Determination Date.
"INITIAL PRINCIPAL AMOUNT" means $650,000,000 with respect to Series
1996-B.
"INITIAL SPREAD ACCOUNT DEPOSIT" means $0 for Series 1996-B.
"INITIAL SPREAD ACCOUNT MAXIMUM AMOUNT" means, with respect to Series
1996-B and any Distribution Date, an amount equal to the greater of (i) 6% of
the Series 1996-B 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.
"SERIES 1996-B BALANCE" means, with respect to Series 1996-B and any
Distribution Date, the sum of the aggregate principal amount of the Series
1996-B Notes and the Certificate Balance with respect to Series 1996-B
Certificates as of such Distribution Date (after giving effect to the
distributions in respect of principal on the Notes and on the Certificates
made on such Distribution Date).
"SERIES 1996-B CERTIFICATE POLICY" means the financial guaranty
insurance policy issued by Financial Security with respect to the Series
1996-B Certificates.
"SERIES 1996-B CERTIFICATES" means the Certificates issued on the date
hereof pursuant to the Series 1996-B Trust Agreement.
"SERIES 1996-B COLLATERAL" has the meaning specified in Section 2.3(a)
hereof.
"SERIES 1996-B CREDIT ENHANCEMENT FEE" means the amount distributable on
each Distribution Date pursuant to Section 4.6(viii) and (ix) of the Series
1996-B Sale and Servicing Agreement.
<PAGE>
"SERIES 1996-B INDENTURE" means the Indenture, dated as of June 1, 1996,
among the Series 1996-B Trust, the Trustee and the Indenture Collateral Agent.
"SERIES 1996-B NOTE POLICY" means the financial guaranty insurance
policy issued by Financial Security with respect to the Series 1996-B Notes.
"SERIES 1996-B NOTES" means the Class A-1, Class A-2, Class A-3, Class
A-4 and Class A-5 Notes issued pursuant to the Series 1996-B Indenture.
"SERIES 1996-B OWNER TRUSTEE" means Mellon Bank (DE), National
Association, not in its individual capacity but solely as Owner Trustee, or
its successor in interest, and any successor Owner Trustee appointed as
provided in the Series 1996-B Trust Agreement.
"SERIES 1996-B RECEIVABLE" means each Receivable referenced on the
Schedule of Receivables attached to the Series 1996-B Sale and Servicing
Agreement, as supplemented from time to time during the Funding Period by one
or more Subsequent Transfer Agreements.
"SERIES 1996-B RESERVE ACCOUNT" means the Reserve Account established
pursuant to Section 4.1(d) of the Series 1996-B Sale and Servicing Agreement.
"SERIES 1996-B SALE AND SERVICING AGREEMENT" means the Sale and
Servicing Agreement, dated as of June 1, 1996, and attached hereto as Exhibit
A, among the Series 1996-B Trust, OFL, in its individual capacity and as
Servicer, the Seller and the Backup Servicer, as such agreement may be
supplemented, amended or modified from time to time.
"SERIES 1996-B SECURED OBLIGATIONS" means the Insurer Secured
Obligations and the Trustee Secured Obligations with respect to Series 1996-B.
"SERIES 1996-B SECURITIES" means the Series 1996-B Notes and the Series
1996-B Certificates, collectively.
"SERIES 1996-B SPREAD ACCOUNT" means the Spread Account established
pursuant to Section 3.1(a) hereof.
"SERIES 1996-B SUPPLEMENT" means this Series 1996-B Supplement which
constitutes a Series Supplement to the Spread Account Agreement.
"SERIES 1996-B TRUST AGREEMENT" means the Trust Agreement, dated as of
June 1, 1996, among the Seller, Olympic First GP Inc., Olympic Second GP
Inc., Financial Security and the Series 1996-B Owner Trustee.
<PAGE>
"SPREAD ACCOUNT ADDITIONAL DEPOSIT" means, with respect to Series 1996-B
and any Subsequent Transfer Date, an amount equal to 0.00% of the aggregate
Principal Balance (as of the related Subsequent Cutoff Date) of the
Subsequent Receivables being transferred to the Series 1996-B Trust on such
Subsequent Transfer Date or such greater amount as required by the Rating
Agencies to confirm that the rating assigned to the Series 1996-B Notes and
the Series 1996-B Certificates will be in the highest category by such Rating
Agencies.
"SPREAD ACCOUNT MAXIMUM AMOUNT" means, with respect to Series 1996-B and
any Distribution Date:
(i) if no Insurance Agreement Event of Default with
respect to Series 1996-B has occurred and is continuing, no Capture Event
has occurred and is continuing, no Trigger Event has occurred on the
related Determination Date, and if any Trigger Event with respect to Series
1996-B has occurred as of a prior Determination Date, such Trigger Event is
Deemed Cured as of the related Determination Date, the Initial Spread
Account Maximum Amount with respect to Series 1996-B and such Distribution
Date;
(ii) if (A) a Trigger Event with respect to Series 1996-B has
occurred as of the Determination Date or (B) a Trigger Event with respect
to Series 1996-B 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 1996-B 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 1996-B 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
Series 1996-B 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 1996-B 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 1996-B and
any Distribution Date, an amount equal to the greater of:
(i) $100,000, and
(ii) the lesser of:
<PAGE>
(A) 1% of the Initial Principal Amount of Series 1996-B, and
(B) the Series 1996-B Balance.
"SPREAD ACCOUNT WITHDRAWAL FLOOR" means, with respect to Series 1996-B
and any Determination Date, an amount equal to the greater of:
(i) the Spread Account Minimum Amount, and
(ii) 3% of the Series 1996-B Balance.
"TRIGGER EVENT" means, with respect to Series 1996-B and as of a
Determination Date, the occurrence of any of the following events:
(i) the Delinquency Ratio for such Determination Date shall be
equal to or greater than 5%;
(ii) the Average Delinquency Ratio for such Determination Date
shall be equal to or greater than 4%;
(iii) the Cumulative Default Rate shall be equal to or greater than
(A) 2.60%, with respect to any Determination Date occurring
prior to or during the third calendar month succeeding the
Series 1996-B Closing Date, (B) 4.71%, with respect to any
Determination Date occurring after the third, and prior to or
during the 6th, calendar month succeeding the Series 1996-B
Closing Date, (C) 6.55%, with respect to any Determination
Date occurring after the 6th, and prior to or during the 9th,
calendar month succeeding the Series 1996-B Closing Date, (D)
8.03%, with respect to any Determination Date occurring after
the 9th, and prior to or during the 12th, calendar month
succeeding the Series 1996-B Closing Date, (E) 8.73%, with
respect to any Determination Date occurring after the 12th,
and prior to or during the 15th, calendar month succeeding the
Series 1996-B Closing Date, (F) 9.63%, with respect to any
Determination Date occurring after the 15th, and prior to or
during the 18th, calendar month succeeding the Series 1996-B
Closing Date, (G) 10.45%, with respect to any Determination
Date occurring after the 18th, and prior to or during the
21st, calendar month succeeding the Series 1996-B Closing
Date, (H) 11.10%, with respect to any Determination Date
occurring after the 21st, and prior to or during the 24th,
calendar month
<PAGE>
succeeding the Series 1996-B Closing Date, (I) 11.68%, with
respect to any Determination Date occurring after the 24th,
and prior to or during the 27th, calendar month succeeding
the Series 1996-B Closing Date, (J) 12.18%, with respect to any
Determination Date occurring after the 27th, and prior to or
during the 30th, calendar month succeeding the Series 1996-B
Closing Date, (K) 12.54%, with respect to any Determination
Date occurring after the 30th, and prior to or during the
33rd, calendar month succeeding the Series 1996-B Closing
Date, (L) 12.82%, with respect to any Determination Date
occurring after the 33rd, and prior to or during the 36th,
calendar month succeeding the Series 1996-B Closing Date,
(M) 13.04%, with respect to any Determination Date occurring
after the 36th, and prior to or during the 39th, calendar
month succeeding the Series 1996-B Closing Date, (N) 13.19%,
with respect to any Determination Date occurring after the
39th, and prior to or during the 42nd, calendar month
succeeding the Series 1996-B Closing Date, (O) 13.33%, with
respect to any Determination Date occurring after the 42nd,
and prior to or during the 45th calendar month succeeding the
Series 1996-B Closing Date, (P) 13.44%, with respect to any
Determination Date occurring after the 45th, and prior to or
during the 48th, calendar month succeeding the Series 1996-B
Closing Date, (Q) 13.50%, with respect to any Determination
Date occurring after the 48th, and prior to or during the
51st, calendar month succeeding the Series 1996-B Closing
Date, (R) 13.56%, with respect to any Determination Date
occurring after the 51st, and prior to or during the 54th,
calendar month succeeding the Series 1996-B Closing Date, (S)
13.60%, with respect to any Determination Date occurring
after the 54th, and prior to or during the 57th, calendar
month succeeding the Series 1996-B Closing Date, (T) 13.64%,
with respect to any Determination Date occurring after the
57th, and prior to or during the 60th, calendar month
succeeding the Series 1996-B Closing Date, (U) 13.65%, with
respect to any Determination Date occurring after the 60th,
and prior to or during the 63rd, calendar month succeeding
the Series 1996-B Closing Date, (V) 13.67%, with respect to
any Determination Date occurring after the 63rd, and prior to
or during the 66th, calendar month succeeding the Series
1996-B Closing Date, (W) 13.69%, with respect to any
Determination Date occurring after the 66th, and prior to or
during the 69th, calendar month succeeding the Series
<PAGE>
1996-B Closing Date, or (X) 13.71%, with respect to any
Determination Date occurring after the 69th calendar month
succeeding the Series 1996-B Closing Date; or
(iv) the Cumulative Net Loss Rate shall be equal to or
greater than (A) 1.31%, with respect to any Determination
Date occurring prior to or during the third calendar month
succeeding the Series 1996-B Closing Date, (B) 2.28%, with
respect to any Determination Date occurring after the third,
and prior to or during the 6th, calendar month succeeding the
Series 1996-B Closing Date, (C) 3.08%, with respect to any
Determination Date occurring after the 6th, and prior to or
during the 9th, calendar month succeeding the Series 1996-B
Closing Date, (D) 3.66%, with respect to any Determination
Date occurring after the 9th, and prior to or during the
12th, calendar month succeeding the Series 1996-B Closing
Date, (E) 3.98%, with respect to any Determination Date
occurring after the 12th, and prior to or during the 15th,
calendar month succeeding the Series 1996-B Closing Date, (F)
4.29%, with respect to any Determination Date occurring after
the 15th, and prior to or during the 18th, calendar month
succeeding the Series 1996-B Closing Date, (G) 4.54%, with
respect to any Determination Date occurring after the 18th,
and prior to or during the 21st, calendar month succeeding
the Series 1996-B Closing Date, (H) 4.75%, with respect to
any Determination Date occurring after the 21st, and prior to
or during the 24th, calendar month succeeding the Series
1996-B Closing Date, (I) 4.92%, with respect to any
Determination Date occurring after the 24th, and prior to or
during the 27th, calendar month succeeding the Series 1996-B
Closing Date, (J) 5.08%, with respect to any Determination
Date occurring after the 27th, and prior to or during the
30th, calendar month succeeding the Series 1996-B Closing
Date, (K) 5.18%, with respect to any Determination Date
occurring after the 30th, and prior to or during the 33rd,
calendar month succeeding the Series 1996-B Closing Date, (L)
5.28%, with respect to any Determination Date occurring after
the 33rd, and prior to or during the 36th, calendar month
succeeding the Series 1996-B Closing Date, (M) 5.35%, with
respect to any Determination Date occurring after the 36th,
and prior to or during the 39th, calendar month succeeding the
Series 1996-B Closing Date, (N) 5.42%, with respect to any
Determination Date occurring after the 39th, and
<PAGE>
prior to or during the 42nd, calendar month succeeding the
Series 1996-B Closing Date, (O) 5.48%, with respect to any
Determination Date occurring after the 42nd, and prior to or
during the 45th calendar month succeeding the Series 1996-B
Closing Date, (P) 5.52%, with respect to any Determination
Date occurring after the 45th, and prior to or during the
48th, calendar month succeeding the Series 1996-B Closing
Date, (Q) 5.55%, with respect to any Determination Date
occurring after the 48th, and prior to or during the 51st,
calendar month succeeding the Series 1996-B Closing Date, (R)
5.58%, with respect to any Determination Date occurring after
the 51st, and prior to or during the 54th, calendar month
succeeding the Series 1996-B Closing Date, (S) 5.61%, with
respect to any Determination Date occurring after the 54th,
and prior to or during the 57th, calendar month succeeding the
Series 1996-B Closing Date, (T) 5.63%, with respect to any
Determination Date occurring after the 57th, and prior to or
during the 60th, calendar month succeeding the Series 1996-B
Closing Date, (U) 5.64%, with respect to any Determination
Date occurring after the 60th, and prior to or during the
63rd, calendar month succeeding the Series 1996-B Closing
Date, (V) 5.66%, with respect to any Determination Date
occurring after the 63rd, and prior to or during the 66th,
calendar month succeeding the Series 1996-B Closing Date, (W)
5.67%, with respect to any Determination Date occurring after
the 66th, and prior to or during the 69th, calendar month
succeeding the Series 1996-B Closing Date, or (X) 5.69%, with
respect to any Determination Date occurring after the 69th
calendar month succeeding the Series 1996-B Closing Date.
Section 1.2 RULES OF INTERPRETATION. The terms "hereof," "herein,"
"hereto" or "hereunder," unless otherwise modified by more specific
reference, shall refer to this Series 1996-B Supplement. Unless otherwise
indicated in context, the terms "Article," "Section" or "Exhibit" shall refer
to an Article or Section of, or Exhibit to, this Series 1996-B Supplement.
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.
<PAGE>
ARTICLE II
CREDIT ENHANCEMENT FEE; SERIES SUPPLEMENTS; THE COLLATERAL
Section 2.1 SERIES 1996-B CREDIT ENHANCEMENT FEE. The Series 1996-B
Sale and Servicing Agreement provides for the payment to the Seller of the
Series 1996-B 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 OFL hereby agree
that payment of the Series 1996-B Credit Enhancement Fee in the manner and
subject to the conditions set forth herein and in the Series 1996-B Sale and
Servicing Agreement is adequate consideration and the exclusive consideration
to be received by the Seller or OFL for the obligations of the Seller
pursuant hereto and the obligations of OFL pursuant hereto (including,
without limitation, the transfer by the Seller to the Collateral Agent of the
Initial Spread Account Deposit with respect to Series 1996-B) and pursuant to
the Series 1996-B Insurance Agreement. The Seller and OFL hereby agree with
the Trustee and with Financial Security that payment of the Series 1996-B
Credit Enhancement Fee to the Seller is expressly conditioned on
subordination of the Series 1996-B Credit Enhancement Fee to payments on the
Notes (if any) and Certificates 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 or
Section 4.6 of the related Sale and Servicing Agreement, as applicable, and
Section 3.03 of the Spread Account Agreement, and the Security Interest of
the Secured Parties in the Series 1996-B Collateral is intended to effect and
enforce such subordination and to provide security for the Series 1996-B
Secured Obligations and subject to the terms hereof the Secured Obligations
with respect to other Series.
Section 2.2 SERIES SUPPLEMENTS. As provided in and subject to the
conditions specified in Section 2.02 of the Spread Account Agreement, the
parties hereto are entering into this Series 1996-B Supplement with respect
to the Series 1996-B Securities.
Section 2.3 GRANT OF SECURITY INTEREST BY OFL AND THE SELLER.
(a) In order to secure the performance of the Secured Obligations with
respect to each Series, the Seller (and OFL, 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, a lien on and security interest in (which
lien and security interest is intended to be prior to all other liens,
security interests or other encumbrances), all of its right, title and
interest in and to the following (all being
<PAGE>
collectively referred to herein as the "Series 1996-B Collateral"):
(i) the Series 1996-B Credit Enhancement Fee and all rights and
remedies that the Seller may have to enforce payment of the Series 1996-B
Credit Enhancement Fee whether under the Series 1996-B Sale and Servicing
Agreement or otherwise;
(ii) the Series 1996-B Spread Account established pursuant to
Section 3.1 of this Series 1996-B Supplement and Section 3.01 of the Spread
Account Agreement, 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 1996-B
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 Series
1996-B Supplement, 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 Series 1996-B Supplement, executed and filed
an appropriate Uniform Commercial Code financing statement in Minnesota
sufficient to ensure that the Collateral Agent, as agent for the Secured
Parties, has a first priority perfected security interest in all Series
1996-B Collateral which can be perfected by the filing of a financing
statement.
ARTICLE III
SPREAD ACCOUNT
Section 3.1 ESTABLISHMENT OF SERIES 1996-B SPREAD ACCOUNT; INITIAL
DEPOSIT INTO SERIES 1996-B SPREAD ACCOUNT.
(a) On or prior to the Closing Date relating to the Series 1996-B
Certificates, the Collateral Agent shall establish with respect to Series
1996-B, at its office or at another depository institution or trust company,
an Eligible Account, designated "Spread Account Series 1996-B Norwest Bank
Minnesota, National Association, as Collateral Agent for Financial Security
Assurance Inc. and another Secured Party" (the "Series 1996-B Spread
Account").
<PAGE>
(b) On the Closing Date relating to the Series 1996-B, the Collateral
Agent shall deposit the Initial Spread Account Deposit with respect to Series
1996-B received from the Seller into the Series 1996-B Spread Account.
Section 3.2 SPREAD ACCOUNT ADDITIONAL DEPOSITS. On each Subsequent
Transfer Date, the Series 1996-B Trust will, pursuant to Section 2.4 of the
Series 1996-B Sale and Servicing Agreement, deliver on behalf of the Seller
the Spread Account Additional Deposit for such Subsequent Transfer Date to
the Collateral Agent. The Collateral Agent shall deposit each such Spread
Account Additional Deposit received from the Series 1996-B Trust into the
Series 1996-B Spread Account.
ARTICLE IV
MISCELLANEOUS
Section 4.1 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 Series 1996-B Supplement or to confirm or perfect any transaction
described or contemplated herein.
Section 4.2 GOVERNING LAW. This Series 1996-B Supplement 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 4.3 COUNTERPARTS. This Series 1996-B Supplement 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 4.4 HEADINGS. The headings of sections and paragraphs and
the Table of Contents contained in this Series 1996-B Supplement are provided
for convenience only. They form no part of this Series 1996-B Supplement and
shall not affect its construction or interpretation.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Series 1996-B
Supplement as of the date set forth on the first page hereof.
OLYMPIC FINANCIAL LTD.
By
Name: John A. Witham
Title: Executive Vice President and
Chief Financial Officer
OLYMPIC RECEIVABLES FINANCE CORP.
By
Name: John A. Witham
Title: Senior Vice President and
Chief Financial Officer
FINANCIAL SECURITY ASSURANCE INC.
By
Name:
Title:
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Trustee
By
Name:
Title:
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Collateral Agent
By
Name:
Title:
<PAGE>
SERIES 1996-B SUPPLEMENT
dated as of June 14, 1996
to
SPREAD ACCOUNT AGREEMENT
dated as of March 25, 1993,
as amended and restated
as of December 6, 1995
among
OLYMPIC FINANCIAL LTD.
OLYMPIC RECEIVABLES FINANCE CORP.
FINANCIAL SECURITY ASSURANCE INC.
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee and as Collateral Agent
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. . . . . . . . . . . . . . . . 2
Section 1.2 Rules of Interpretation. . . . . . . . . . 8
ARTICLE II
CREDIT ENHANCEMENT FEE; SERIES SUPPLEMENTS; THE COLLATERAL
Section 2.1 Series 1996-B Credit Enhancement Fee . . . 8
Section 2.2 Series Supplements . . . . . . . . . . . . 9
Section 2.3 Grant of Security Interest by OFL and
the Seller . . . . . . . . . . . . . . . 9
ARTICLE III
SPREAD ACCOUNT
Section 3.1 Establishment of Series 1996-B Spread
Account; Initial Deposit into Series
1996-B Spread Account. . . . . . . . . . . 10
Section 3.2 Spread Account Additional Deposits . . . . 10
ARTICLE IV
MISCELLANEOUS
Section 4.1 Further Assurances . . . . . . . . . . . . 10
Section 4.2 Governing Law. . . . . . . . . . . . . . . 10
Section 4.3 Counterparts . . . . . . . . . . . . . . . 10
Section 4.4 Headings . . . . . . . . . . . . . . . . . 11
<PAGE>
INSURANCE AND INDEMNITY AGREEMENT
INSURANCE AND INDEMNITY AGREEMENT dated as of June 14, 1996, among
FINANCIAL SECURITY ASSURANCE INC., a New York stock insurance company
("Financial Security"), OLYMPIC AUTOMOBILE RECEIVABLES TRUST, 1996-B, a Delaware
business trust (the "Trust"), OLYMPIC FIRST GP INC., a Delaware corporation
("First Class GP Certificateholder"), OLYMPIC SECOND GP INC., a Delaware
corporation ("Second Class GP Certificateholder" and collectively with First
Class GP Certificateholder, the "Class GP Certificateholders"), OLYMPIC
RECEIVABLES FINANCE CORP., a Delaware corporation (the "Seller"), and OLYMPIC
FINANCIAL LTD., a Minnesota corporation (when referred to individually
hereunder, "OFL", when referred to as servicer under the Sale and Servicing
Agreement referred to below, the "Servicer").
INTRODUCTORY STATEMENTS
1. The Seller is the owner of the Receivables. The Seller proposes
to sell to the Trust all of its right, title and interest in and to the
Receivables and certain other property pursuant to the Sale and Servicing
Agreement. The Trust will issue Certificates pursuant to the Trust Agreement
and Notes pursuant to the Indenture.
2. Each Certificate will represent a fractional undivided interest
in the Trust. Each Note will be secured by the Indenture Property. The Trust
has requested that Financial Security issue two financial guaranty insurance
policies guarantying respectively certain distributions of interest and
principal on the Certificates and the Notes on each Distribution Date (including
any such distributions subsequently avoided as a preference under applicable
bankruptcy law) upon the terms, and subject to the conditions, provided herein.
3. OFL and the Seller have previously entered into and may in the
future enter into one or more pooling and servicing agreements or sale and
servicing agreements with a trust and Seller has previously entered into a
Repurchase Agreement dated as of August 1, 1994 among the Seller and Telluride
Funding Corp., in each case, pursuant to which the Seller sold or will sell all
of its right, title and interest in and to receivables and the other trust
property and in connection therewith Financial Security has and may in the
future issue additional policies with respect to
<PAGE>
certain guaranteed distributions on the corresponding certificates, the
corresponding notes or both.
4. The parties hereto desire to specify the conditions precedent to
the issuance of the Policies by Financial Security, the payment of premium in
respect of the Policies, the indemnity and reimbursement to be provided to
Financial Security in respect of amounts paid by Financial Security under the
Policies or otherwise and certain other matters.
In consideration of the premises and of the agreements herein
contained, Financial Security, the Trust, the Class GP Certificateholders, OFL,
individually and as Servicer, and the Seller hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. DEFINITIONS. All words and phrases defined in the
Trust Agreement, the Sale and Servicing Agreement or in the Spread Account
Agreement shall have the same meanings in this Agreement. Unless otherwise
specified, if a word or phrase defined in the Trust Agreement, the Sale and
Servicing Agreement or in the Spread Account Agreement can be applied with
respect to one or more Series, such a word or phrase shall be used herein as
applied to Series 1996-B. In addition, the following words and phrases shall
have the following respective meanings:
"ACCUMULATED FUNDING DEFICIENCY" shall have the meaning provided in
Section 412 of the Code and Section 302 of ERISA, whether or not waived.
"AGREEMENT" means this Insurance and Indemnity Agreement, as the same
may be amended, modified or supplemented from time to time.
"AUTHORIZED OFFICER" means, with respect to a corporation, the
president, the chief financial officer or any vice president.
"CERTIFICATES" means the Certificates issued under the Trust
Agreement.
"CERTIFICATE POLICY" means the financial guaranty insurance policy,
including any endorsements thereto, issued by Financial Security with respect to
the Certificates, substantially in the form attached as Exhibit B hereto.
"CODE" means the Internal Revenue Code of 1986, including, unless the
context otherwise requires, the rules and regulations thereunder, as amended
from time to time.
<PAGE>
"COMMISSION" means the Securities and Exchange Commission.
"COMMONLY CONTROLLED ENTITY" means with respect to the Trust, the
Seller or OFL, as the case may be, each entity, whether or not incorporated,
which is affiliated with the Trust, the Seller or OFL, as the case may be,
pursuant to Section 414(b), (c), (m) or (o) of the Code.
"DEFAULT" means any event which results, or which with the giving of
notice or the lapse of time or both would result, in an Event of Default.
"DEMAND NOTES" means the Series 1993-C Demand Notes, the Series 1993-D
Demand Notes, the Series 1994-A Demand Notes, the Series 1994-B Demand Notes,
the Series 1995-B Demand Notes, Series 1995-C Demand Notes, the Series 1995-D
Demand Notes, the Series 1995-E Demand Notes, the Series 1996-A Demand Notes and
the Series 1996-B Demand Notes.
"ERISA" means the Employee Retirement Income Security Act of 1974,
including, unless the context otherwise requires, the rules and regulations
thereunder, as amended from time to time.
"EVENT OF DEFAULT" means any event of default specified in Section
5.01 of this Agreement.
"EXPIRATION DATE" means, with respect to each Policy, the final date
of the Term of such Policy, as specified therein.
"FINANCIAL SECURITY" means Financial Security Assurance Inc., a New
York stock insurance company, its successors and assigns.
"FINANCIAL STATEMENTS" means with respect to OFL the audited
consolidated balance sheets as of December 31, 1995, December 31, 1994 and
December 31, 1993 and the related audited consolidated statements of income,
retained earnings and cash flows for the 12-month periods then ended and the
notes thereto and the unaudited balance sheets as of March 31, 1996 and March
31, 1995 and the statements of income, retained earnings and cash flows for the
fiscal quarter then ended.
"FISCAL AGENT" means the Fiscal Agent, if any, designated pursuant to
the terms of the Policies.
"INDENTURE COLLATERAL AGENT" means initially, Norwest Bank Minnesota,
National Association, in its capacity as collateral agent on behalf of Financial
Security and the Indenture Trustee on behalf of the Noteholders pursuant to the
Indenture, its successor in interest and any successor Indenture Collateral
Agent under the Indenture.
<PAGE>
"INDENTURE PROPERTY" means the property pledged to the Indenture
Collateral Agent on behalf of Financial Security and the Indenture Trustee on
behalf of the Noteholders pursuant to the Indenture.
"INSURANCE AGREEMENT INDENTURE CROSS DEFAULT" means an Event of
Default specified in clause (a), (f), (g), (h) or (i) of Section 5.01.
"INVESTMENT COMPANY ACT" means the Investment Company Act of 1940,
including, unless the context otherwise requires, the rules and regulations
thereunder, as amended from time to time.
"IRS" means the Internal Revenue Service.
"LATE PAYMENT RATE" means the greater of (i) a per annum rate equal to
3 percent in excess of Financial Security's cost of funds, determined on a
monthly basis, or (ii) a per annum rate equal to 3 percent in excess of the
arithmetic average of the prime or base lending rates publicly announced by The
Chase Manhattan Bank, N.A. (New York, New York) and Citibank, N.A. (New York,
New York), as in effect on the last day of the month for which interest is being
computed, but, in either case, in no event greater than the maximum rate
permitted by law.
"LIEN" means, as applied to the property or assets (or the income 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 are transferred, sequestered or otherwise
identified for the purpose of subjecting or making available the same for the
payment of debt or performance of any other obligation in priority to the
payment of the general, unsecured creditors of such Person.
"MATERIAL ADVERSE CHANGE" means, in respect of any Person, a material
adverse change in (i) the business, financial condition, results of operations,
or properties of such Person and its Subsidiaries taken as a whole, (ii) the
ability of such Person to perform its obligations under any of the Transaction
Documents to which it is a party or (iii) the ability of Financial Security or
the Trust to realize the benefits or security afforded under the Transaction
Documents.
"MULTIEMPLOYER PLAN" means a multiemployer plan (within the meaning of
Section 4001(a)(3) of ERISA) in respect of which a Commonly Controlled Entity
makes contributions or has liability.
"NOTE POLICY" means the financial guaranty insurance policy, including
any endorsements thereto, issued by Financial
<PAGE>
Security with respect to the Notes, substantially in the form attached as
Exhibit A hereto.
"NOTICE OF CLAIM" means the Notice of Claim and Certificate in the
form attached as Exhibit A to Endorsement No. 1 to each Policy.
"OTHER TRUST PROPERTY" means the property conveyed by the Seller to
the Trust pursuant to the Sale and Servicing Agreement and any Subsequent
Transfer Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
agency, corporation or instrumentality of the United States to which the duties
and powers of the Pension Benefit Guaranty Corporation are transferred.
"PLAN" means any pension plan (other than a Multiemployer Plan)
covered by Title IV of ERISA, which is maintained by a Commonly Controlled
Entity or in respect of which a Commonly Controlled Entity has liability.
"POLICIES" means the Note Policy and the Certificate Policy.
"PORTFOLIO PERFORMANCE EVENT OF DEFAULT" means an Event of Default
specified in clause (j), (k), (l) or (m) of Section 5.01.
"PREMIUM" means the premium payable in accordance with Section 3.02 of
this Agreement.
"PREMIUM LETTER" means the side letter between Financial Security and
OFL dated the date hereof in respect of the premium payable by OFL in
consideration of the issuance of the Policies.
"PREMIUM SUPPLEMENT" means a non-refundable premium, in addition to
the premium payable in accordance with Section 3.02 of this Agreement, payable
by OFL to Financial Security in monthly installments commencing on the first
Distribution Date following the Premium Supplement Commencement Date and on each
Distribution Date thereafter, payable in accordance with the terms of the
Premium Letter.
"PREMIUM SUPPLEMENT COMMENCEMENT DATE" means the date of occurrence of
an Event of Default in respect of which the Premium Supplement shall have been
declared due and payable in accordance with Section 5.02 of this Agreement.
"PREVIOUS SERIES TRANSACTION DOCUMENTS" means the transaction
documents as defined in each of the insurance and indemnity agreements related
to Olympic Automobile Receivables Trust, 1993-A, Olympic Automobile Receivables
Trust, 1993-B, Olympic Automobile Receivables Trust, 1993-C, and Olympic
<PAGE>
Automobile Receivables Trust, 1993-D, Olympic Automobile Receivables Trust,
1994-A, Olympic Automobile Receivables Trust, 1994-B, Olympic Automobile
Receivables Trust, 1995-A, Olympic Automobile Receivables Trust, 1995-B, Olympic
Automobile Receivables Trust, 1995-C, Olympic Automobile Receivables Trust,
1995-D, Olympic Automobile Receivables Trust, 1995-E, Olympic Automobile
Receivables Trust, 1996-A, and the Warehousing Notes.
"PROSPECTUS" has the meaning set forth in Section 2.07(o) of this
Agreement.
"RELATED DOCUMENTS" means the Transaction Documents except for the
Sale and Servicing Agreement.
"REGISTRATION STATEMENT" has the meaning set forth in Section 2.07(o)
of this Agreement.
"REPORTABLE EVENT" means any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder.
"RESTRICTIONS ON TRANSFERABILITY" means, as applied to the property or
assets (or the income 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, any material condition to, or restriction on, the
ability of such Person or any transferee therefrom to sell, assign, transfer or
otherwise liquidate such property or assets in a commercially reasonable time
and manner or which would otherwise materially deprive such Person or any
transferee therefrom of the benefits of ownership of such property or assets.
"SALE AND SERVICING AGREEMENT" means the Sale and Servicing Agreement
dated as of June 1, 1996 among the Seller, OFL, in its individual capacity and
as Servicer, the Back-up Servicer and the Trust pursuant to which the Initial
Receivables are to be sold, serviced and administered, as the same may be
amended from time to time.
"SECURITIES ACT" means the Securities Act of 1933, including, unless
the context otherwise requires, the rules and regulations thereunder, as amended
from time to time.
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of 1934,
including, unless the context otherwise requires, the rules and regulations
thereunder, as amended from time to time.
"SENIOR NOTE INDENTURE" means the Indenture dated as of April 28, 1995
between OFL and Norwest Bank Minnesota, National Association, as amended or
supplemented, relating to OFL's $145,000,000 13% Senior Notes due 2000.
"SERIES 1993-C DEMAND NOTES" means each of the Demand Notes, dated
August 17, 1993, issued by OFL to First Class GP
<PAGE>
Certificateholder and the Demand Note, dated August 17, 1993, issued by OFL
to Second Class GP Certificateholder.
"SERIES 1993-D DEMAND NOTES" means each of the Demand Notes, dated
December 2, 1993, issued by OFL to First Class GP Certificateholder and the
Demand Note, dated December 2, 1993, issued by OFL to Second Class GP
Certificateholder.
"SERIES 1994-A DEMAND NOTES" means each of the Demand Notes, dated
April 5, 1994, issued by OFL to First Class GP Certificateholder and the Demand
Note, dated April 5, 1994, issued by OFL to Second Class GP Certificateholder.
"SERIES 1994-B DEMAND NOTES" means each of the Demand Notes, dated
September 23, 1994, issued by OFL to Class B-GP Certificateholder and the Demand
Note, dated September 23, 1994, issued by OFL to Class I-GP Certificateholder.
"SERIES 1995-B DEMAND NOTES" means each of the Demand Notes, dated
March 15, 1995, issued by OFL to the Class GP Certificateholders.
"SERIES 1995-C DEMAND NOTES" means each of the Demand Notes, dated
June 15, 1995, issued by OFL to the Class GP Certificateholders.
"SERIES 1995-D DEMAND NOTES" means each of the Demand Notes, dated
September 21, 1995, issued by OFL to the Class GP Certificateholders.
"SERIES 1995-E DEMAND NOTES" means each of the Demand Notes, dated
December 6, 1995, issued by OFL to the Class GP Certificateholders.
"SERIES 1996-A DEMAND NOTES" means each of the Demand Notes, dated
March 14, 1996, issued by OFL to the Class GP Certificateholders.
"SERIES 1996-B" means the Series of Certificates and Notes issued on
the date hereof pursuant to the Trust Agreement and the Indenture, respectively.
"SERIES 1996-B DEMAND NOTES" means each of the Demand Notes, dated
June 14, 1996, issued by OFL to the Class GP Certificateholders.
"SERIES OF CERTIFICATES", "SERIES OF NOTES" or "SERIES" means Series
1996-B or any, or as the context may require, all, additional series of
certificates or notes or both issued as described in paragraph 3 of the
Introductory Statements hereto.
<PAGE>
"SERVICER TERMINATION SIDE LETTER" means the letter from Financial
Security to the Servicer dated as of June 14, 1996, with regard to the renewal
of the term of the Servicer.
"SPREAD ACCOUNT AGREEMENT" means the Spread Account Agreement, dated
as of March 25, 1993, as amended and restated as of December 6, 1995 as
supplemented in accordance with the terms thereof, among OFL, the Seller,
Financial Security, the Indenture Trustee and the Collateral Agent.
"STOCK PLEDGE AGREEMENT" means the Second Amended and Restated Stock
Pledge Agreement, as amended and restated, dated as of August 26, 1994, among
Financial Security, OFL, and the Collateral Agent, as the same may be amended
from time to time.
"SUBSIDIARY" means, with respect to any Person, any corporation of
which a majority of the outstanding shares of capital stock having ordinary
voting power for the election of directors is at the time owned by such Person
directly or through one or more Subsidiaries.
"TERM OF THE POLICY" means, with respect to each Policy, the meaning
provided therein.
"TERM OF THIS AGREEMENT" shall be determined as provided in Section
4.01 of this Agreement.
"TRANSACTION" means the transactions contemplated by the Transaction
Documents, including the transactions described in the Registration Statement.
"TRANSACTION DOCUMENTS" means this Agreement, the Sale and Servicing
Agreement, the Trust Agreement, the Certificate of Trust, the Indenture, the
Underwriting Agreement, the Purchase Agreement, the Premium Letter, the Stock
Pledge Agreement, the Lockbox Agreement, the Depository Agreements, the
Custodian Agreement, the Servicer Termination Side Letter, the Spread Account
Agreement and the Administration Agreement.
"TRUST AGREEMENT" means the Trust Agreement, dated as of June 1, 1996,
among the Seller, the Class GP Certificateholders, Financial Security and Mellon
Bank (DE), National Association, as Owner Trustee.
"TRUST INDENTURE ACT" means the Trust Indenture Act of 1939,
including, unless the context otherwise requires, the rules and regulations
thereunder, as amended from time to time.
"UNDERFUNDED PLAN" means any Plan that has an Underfunding.
"UNDERFUNDING" means, with respect to any Plan, the excess, if any, of
(a) the present value of all benefits under the Plan (based on the assumptions
used to fund the Plan pursuant to
<PAGE>
Section 412 of the Code) as of the most recent valuation date over (b) the
fair market value of the assets of such Plan as of such valuation date.
"UNDERWRITERS" means Donaldson, Lufkin & Jenrette Securities
Corporation, Bear Stearns & Co., Inc. and J.P. Morgan Securities Inc.
"UNDERWRITING AGREEMENT" means the Pricing Agreement, dated June 5,
1996, among OFL and the Seller and the Underwriters.
"WAREHOUSING NOTES" means the Notes issued pursuant to the Warehousing
Series Indenture dated as of August 1, 1994 between Telluride Funding Corp., as
the issuer, and Norwest Bank Minnesota, National Association, as trustee.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.01. REPRESENTATIONS AND WARRANTIES OF THE TRUST. The Trust
represents, warrants and covenants, as of the date hereof and as of the Closing
Date, as follows:
(a) DUE ORGANIZATION AND QUALIFICATION. The Trust is duly formed
and validly existing as a Delaware statutory business trust and is in good
standing under the laws of the State of Delaware, with power and authority to
own its properties and to conduct its business. The Trust is duly qualified
to do business, is in good standing and has obtained all necessary licenses,
permits, charters, registrations and approvals (together, "approvals")
necessary for the conduct of its business as described in the Prospectus and
the performance of its obligations under the Transaction Documents, in each
jurisdiction in which the failure to be so qualified or to obtain such
approvals would render the Receivables in such jurisdiction or any
Transaction Document unenforceable in any respect or would otherwise have a
material adverse effect upon the Transaction.
(b) POWER AND AUTHORITY. The Trust has all necessary trust power
and authority to conduct its business as described in the Prospectus, to
execute, deliver and perform its obligations under this Agreement and each
other Transaction Document to which the Trust is a party and to carry out the
terms of each such agreement, and has full power and authority to issue the
Notes and the Certificates and pledge and assign its assets pursuant to the
Indenture and has duly authorized the issuance of the Notes and Certificates
and the assignment of its assets by all necessary trust proceedings.
(c) DUE AUTHORIZATION. The execution, delivery and performance of
this Agreement and each other Transaction Document
<PAGE>
to which the Trust is a party has been duly authorized by all necessary
action on the part of the Trust and does not require any additional approvals
or consents or other action by or any notice to or filing with any Person by
or on behalf of the Trust, including, without limitation, any governmental
entity.
(d) NONCONTRAVENTION. Neither the execution and delivery of this
Agreement and each other Transaction Document to which the Trust is a party, the
consummation of the Transaction nor the satisfaction of the terms and conditions
of this Agreement and each other Transaction Document to which the Trust is a
party,
(i) conflicts with or results in any breach or violation of any
provision of the Certificate of Trust or the Trust Agreement or any law,
rule, regulation, order, writ, judgment, injunction, decree, determination
or award currently in effect having applicability to the Trust or any of
its properties, including regulations issued by an administrative agency or
other governmental authority having supervisory powers over the Trust,
(ii) constitutes a default by the Trust under or a breach of any
provision of any loan agreement, mortgage, indenture or other agreement or
instrument to which the Trust is a party or by which it or any of its
properties is or may be bound or affected, or
(iii) results in or requires the creation of any Lien upon or in
respect of any of the Trust's assets except as otherwise expressly
contemplated by the Transaction Documents.
(e) PENDING LITIGATION OR OTHER PROCEEDING. There is no action,
proceeding or investigation pending, or, to the Trust's best knowledge,
threatened, before any court, regulatory body, administrative agency, arbitrator
or governmental agency or instrumentality having jurisdiction over the Trust or
its properties: (A) asserting the invalidity of this Agreement or any other
Transaction Document to which the Trust is a party, (B) seeking to prevent the
issuance of the Certificates, the Notes or the consummation of the Transaction,
(C) seeking any determination or ruling that might materially and adversely
affect the validity or enforceability of this Agreement or any other Transaction
Document to which the Trust is a party, (D) which might result in a Material
Adverse Change with respect to the Trust or (E) which might adversely affect the
federal or state tax attributes of the Certificates, the Notes or the Trust.
(f) VALID AND BINDING OBLIGATIONS. Each of the Transaction Documents
to which the Trust is a party, when executed and delivered by the Trust, and
assuming due authorization, execution and delivery by the other parties thereto,
will constitute the legal, valid and binding obligation of the Trust
<PAGE>
enforceable in accordance with its terms, except as such enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally and general equitable
principles. The Certificates, when executed, authenticated and delivered in
accordance with the Trust Agreement, will be validly issued and outstanding
and entitled to the benefits of the Trust Agreement and will evidence the
entire beneficial ownership interest in the Trust. The Notes, when executed,
authenticated and delivered in accordance with the Indenture, will be
entitled to the benefits of the Indenture and will constitute legal, valid
and binding obligations of the Trust, enforceable in accordance with their
terms.
(g) NO CONSENTS. No consent, license, approval or authorization
from, or registration, filing or declaration with, any regulatory body,
administrative agency, or other governmental instrumentality, nor any consent,
approval, waiver or notification of any creditor, lessor or other
non-governmental person, is required in connection with the execution, delivery
and performance by the Trust of this Agreement or of any other Transaction
Document to which the Trust is a party, except (in each case) such as have been
obtained and are in full force and effect.
(h) COMPLIANCE WITH LAW, ETC. No practice, procedure or policy
employed or proposed to be employed by the Trust in the conduct of its business
violates any law, regulation, judgment, agreement, order or decree applicable to
the Trust which, if enforced, would result in a Material Adverse Change with
respect to the Trust.
(i) ERISA. The Trust does not maintain or contribute to, or have any
obligation to maintain or contribute to, any Plan. The Trust is not subject to
any of the provisions of ERISA.
(j) COLLATERAL. On the Closing Date, and on each Subsequent Transfer
Date, the Trust will have good and marketable title to each item of Other Trust
Property conveyed on such date and will own each such item free and clear of any
Lien (other than Liens contemplated under the Indenture) or any equity or
participation interest of any other Person.
(k) PERFECTION OF LIENS AND SECURITY INTEREST. On the Closing Date,
the Lien and security interest in favor of the Indenture Collateral Agent with
respect to Indenture Property will be perfected by the filing of financing
statements on Form UCC-1 in each jurisdiction where such recording or filing is
necessary for the perfection thereof, the delivery of the Receivable Files for
the Receivables to the Custodian, and the establishment of the Collection
Account, the Subcollection Account, the Lockbox Account, the Pre-Funding
Account, the Reserve Account and the Note Distribution Account in accordance
with the provisions of the
<PAGE>
Transaction Documents, and no other filings in any jurisdiction or any other
actions (except as expressly provided herein) are necessary to perfect the
Collateral Agent's Lien on and security interest in the Collateral as against
any third parties.
(l) SECURITY INTEREST IN FUNDS AND INVESTMENTS. Assuming the
retention of funds in the Accounts (other than the Certificate Distribution
Account) and the acquisition of Eligible Investments in accordance with the
Transaction Documents, such funds and Eligible Investments will be subject to a
valid and perfected, first priority security interest in favor of the Collateral
Agent on behalf of the Indenture Trustee (on behalf of the Noteholders) and
Financial Security.
(m) COMPLIANCE WITH INVESTMENT COMPANY ACT. The Trust is not
required to be registered as an "investment company" under the Investment
Company Act.
(n) INCORPORATION OF CERTAIN REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Trust set forth in each Transaction
Document are (in each case) true and correct as if set forth herein.
(o) SPECIAL PURPOSE ENTITY.
(i) The capital of the Trust is adequate for the business and
undertakings of the Trust.
(ii) Except as contemplated by the Transaction Documents, the
Trust is not engaged in any business transactions with OFL, the Seller or
any Affiliate of either of them.
(iii) The Trust's funds and assets are not, and will not be,
commingled with the funds of any other Person, except as provided in the
Transaction Documents.
(p) SOLVENCY; FRAUDULENT CONVEYANCE. The Trust is solvent and will
not be rendered insolvent by the Transaction or by the performance of its
obligations under the Transaction Documents and, after giving effect to such
Transaction, the Trust will not be left with an unreasonably small amount of
capital with which to engage in its business. The Trust does not intend to
incur, or believe that it has incurred, debts beyond its ability to pay such
debts as they mature. The Trust does not contemplate the commencement of
insolvency, bankruptcy, liquidation or consolidation proceedings or the
appointment of a receiver, liquidator, conservator, trustee or similar official
in respect of the Trust or any of its assets.
Section 2.02. AFFIRMATIVE COVENANTS OF THE TRUST. The Trust hereby
agrees that during the Term of the Agreement, unless Financial Security shall
otherwise expressly consent in writing:
<PAGE>
(a) COMPLIANCE WITH AGREEMENTS AND APPLICABLE LAWS. The Trust will
comply with all terms and conditions of this Agreement and each other
Transaction Document to which it is a party and with all material requirements
of any law, rule or regulation applicable to it. The Trust will not cause or
permit to become effective any amendment to or modification of any of the
Transaction Documents to which it is a party unless (i) (so long as no Insurer
Default shall have occurred and be continuing) Financial Security shall have
previously approved in writing the form of such amendment or modification or
(ii) if an Insurer Default shall have occurred and be continuing, such amendment
would not adversely affect the interests of Financial Security. The Trust shall
not take any action or fail to take any action that would interfere with the
enforcement of any rights under this Agreement or the other Transaction
Documents.
(b) FINANCIAL STATEMENTS; ACCOUNTANTS' REPORTS; OTHER INFORMATION.
The Trust shall keep or cause to be kept in reasonable detail books and records
of account of the Trust's assets and business, which shall be furnished to
Financial Security upon request. The Trust shall furnish to Financial Security,
simultaneously with the delivery of such documents to the Indenture Trustee, the
Noteholders or the Certificateholders, as the case may be, copies of all
reports, certificates, statements, financial statements or notices furnished to
the Indenture Trustee, the Noteholders or the Certificateholders, as the case
may be, pursuant to the Transaction Documents.
(i) ANNUAL FINANCIAL STATEMENTS. As soon as available, and in
any event within 90 days after the close of each fiscal year of the Trust,
the audited balance sheets of the Trust as of the end of such fiscal year
and the audited statements of income, changes in equityowners' equity and
cash flows of the Trust for such fiscal year, all in reasonable detail and
stating in comparative form the respective figures for the corresponding
date and period in the preceding fiscal year, prepared in accordance with
generally accepted accounting principles, consistently applied, and
accompanied by the certificate of the Trust's independent accountants (who
shall be acceptable to Financial Security) and by the certificate specified
in Section 2.02(c) hereof.
(ii) QUARTERLY FINANCIAL STATEMENTS. As soon as available, and
in any event within 45 days after the close of each of the first three
quarters of each fiscal year of the Trust, the unaudited balance sheets of
the Trust as of the end of such quarter and the unaudited statements of
income, changes in equityowners' equity and cash flows of the Trust for the
portion of the fiscal year then ended, all in reasonable detail and stating
in comparative form the respective figures for the corresponding date and
period in
<PAGE>
the preceding fiscal year, prepared in accordance with generally
accepted accounting principles consistently applied (subject to normal
year-end adjustments), and accompanied by the certificate specified in
Section 2.02(c) hereof.
(iii) ACCOUNTANTS' REPORTS. Promptly upon receipt thereof, copies
of any reports or comment letters submitted to the Trust by its independent
accountants in connection with any examination of the financial statements
of the Trust.
(iv) CERTAIN INFORMATION. Not less than ten days prior to the
date of filing with the IRS of any tax return or amendment thereto, copies
of the proposed form of such return or amendment and, promptly after the
filing or sending thereof, (i) copies of each tax return and amendment
thereto that the Trust files with the IRS and (ii) copies of all financial
statements, reports, and registration statements which the Trust files
with, or delivers to, any federal government agency, authority or body
which supervises the issuance of securities by the Trust.
(v) OTHER INFORMATION. Promptly upon the request of Financial
Security, copies of all schedules, financial statements or other similar
reports delivered to or by the Trust pursuant to the terms of this
Agreement and the other Transaction Documents and such other data as
Financial Security may reasonably request.
(c) COMPLIANCE CERTIFICATE. The Trust shall deliver to Financial
Security and, upon request, any Noteholder or Certificateholder, concurrently
with the delivery of the financial statements required pursuant to Section 2.02
(b)(i) and (ii) hereof, a certificate signed by an Authorized Officer of the
Administrator stating that:
(i) a review of the Trust's performance under the Transaction
Documents during such period has been made under such officer's
supervision;
(ii) to the best of such individual's knowledge following
reasonable inquiry, no Default or Event of Default has occurred and is
continuing or, if a Default or Event of Default has occurred and is
continuing, specifying the nature thereof and, if the Trust has a right to
cure pursuant to Section 5.01, stating in reasonable detail the steps, if
any, being taken by the Trust to cure such Default or Event of Default or
to otherwise comply with the terms of the agreement or agreements to which
such Default or Event of Default relates; and
(iii) the financial reports submitted in accordance with Section
2.02(b)(i) or (ii) hereof, as applicable, are
<PAGE>
complete and correct in all material respects and present fairly the
financial condition and results of operations of the Trust as of the
dates and for the periods indicated, in accordance with generally
accepted accounting principles consistently applied (subject as to
interim statements to normal year-end adjustments).
(d) ACCESS TO RECORDS; DISCUSSIONS WITH OFFICERS AND ACCOUNTANTS.
The Trust shall, upon the request of Financial Security, permit Financial
Security or its authorized agents (i) to inspect the books and records of the
Trust as they may relate to the Notes, the Certificates, the Receivables and the
Other Trust Property, the obligations of the Trust under the Transaction
Documents, the Trust's business and the Transaction and (ii) to discuss the
affairs, finances and accounts of the Trust with any of its personnel and
representatives, including its Independent Accountants. Such inspections and
discussions shall be conducted during normal business hours and shall not
unreasonably disrupt the business of the Trust. The books and records of the
Trust will be maintained at the address of the Trust designated herein for
receipt of notices, unless the Trust shall otherwise advise the parties hereto
in writing.
(e) NOTICE OF MATERIAL EVENTS. The Trust shall promptly inform
Financial Security in writing of the occurrence of any of the following:
(i) the submission of any claim or the initiation of any legal
process, litigation or administrative or judicial investigation against the
Trust involving potential damages or penalties in an uninsured amount in
excess of $100,000 in any one instance or $500,000 in the aggregate;
(ii) any change in the location of Trust's principal office or
any change in the location of the Trust's books and records;
(iii) the occurrence of any Default or Event of Default;
(iv) the commencement or threat of any rule making or
disciplinary proceedings or any proceedings instituted by or against the
Trust in any federal, state or local court or before any governmental body
or agency, or before any arbitration board, or the promulgation of any
proceeding or any proposed or final rule which, if adversely determined,
would result in a Material Adverse Change with respect to the Trust;
(v) the commencement of any proceedings by or against the Trust
under any applicable bankruptcy, reorganization, liquidation,
rehabilitation, insolvency or other similar law now or hereafter in effect
or of any
<PAGE>
proceeding in which a receiver, liquidator, conservator, trustee
or similar official shall have been, or may be, appointed or requested for
the Trust or any of its assets;
(vi) the receipt of notice that (A) the Trust is being placed
under regulatory supervision, (B) any license, permit, charter,
registration or approval necessary for the conduct of the Trust's business
is to be, or may be, suspended or revoked, or (C) the Trust is to cease and
desist any practice, procedure or policy employed by the Trust in the
conduct of its business, and such cessation may result in a Material
Adverse Change with respect to the Trust; or
(vii) any other event, circumstance or condition that has
resulted, or has a material possibility of resulting, in a Material Adverse
Change in respect of the Trust.
(f) FURTHER ASSURANCES. The Trust will file all necessary financing
statements, assignments or other instruments, and any amendments or continuation
statements relating thereto, necessary to be kept and filed in such manner and
in such places as may be required by law to preserve and protect fully the Lien
and security interest in, and all rights of the Indenture Collateral Agent with
respect to the Indenture Property, under the Indenture. In addition, the Trust
shall, upon the request of Financial Security (so long as no Insurer Default has
occurred and is continuing), from time to time, execute, acknowledge and deliver
and, if necessary, file such further instruments and take such further action as
may be reasonably necessary to effectuate the intention, performance and
provisions of the Transaction Documents to which the Trust is a party or to
protect the interest of the Indenture Collateral Agent in the Indenture Property
under the Indenture. The Trust agrees to cooperate with the Rating Agencies in
connection with any review of the Transaction which may be undertaken by the
Rating Agencies after the date hereof.
(g) MAINTENANCE OF LICENSES. The Trust shall maintain all licenses,
permits, charters and registrations which are material to the performance by the
Trust of its obligations under this Agreement and each other Transaction
Document to which the Trust is a party or by which the Trust is bound.
(h) RETIREMENT OF NOTES AND CERTIFICATES. The Trust shall, upon
retirement of the Certificates and upon retirement of the Notes furnish to
Financial Security a notice of such retirement, and, upon such retirement and
the expiration of the term of the applicable Policy, surrender the applicable
Policy to Financial Security for cancellation.
(i) DISCLOSURE DOCUMENT. Each Prospectus delivered with respect to
the Notes and the Certificates shall clearly disclose that the Policies are not
covered by the
<PAGE>
property/casualty insurance security fund specified in Article 76 of the New
York Insurance Law. In addition, each Prospectus delivered with respect to
the Notes and the Certificates which include financial statements of
Financial Security prepared in accordance with generally accepted accounting
principles (other than a Prospectus that only incorporates such financial
statements by reference) shall include the following statement immediately
preceding such financial statements:
The New York State Insurance Department recognizes only
statutory accounting practices for determining and reporting
the financial condition and results of operations of an
insurance company, for determining its solvency under the
New York Insurance Law, and for determining whether its
financial condition warrants the payment of a dividend to
its stockholders. No consideration is given by the New York
State Insurance Department to financial statements prepared
in accordance with generally accepted accounting principles
in making such determinations.
(j) SPECIAL PURPOSE ENTITY.
(i) The Trust shall conduct its business solely in its own name
through its duly authorized officers or agents so as not to mislead
others as to the identity of the entity with which those others are
concerned, and particularly will use its best efforts to avoid the
appearance of conducting business on behalf of OFL, the Seller, or any
other Affiliates thereof or that the assets of the Trust are available
to pay the creditors of OFL, the Seller, or any other Affiliates
thereof. Without limiting the generality of the foregoing, all oral
and written communications, including, without limitation, letters,
invoices, purchase orders, contracts, statements and loan
applications, will be made solely in the name of the Trust.
(ii) The Trust shall maintain trust records and books of account
separate from those of OFL, the Seller, each Class GP
Certificateholder and Affiliates of any of them.
(iii) The Trust shall obtain proper authorization from its
equity owners of all trust action requiring such authorization, and
copies of each such authorization and the minutes or other written
summary of each such meeting shall be delivered to Financial Security
within two weeks of such authorization or meeting as the case may be.
<PAGE>
(iv) Although the organizational expenses of the Trust have been
paid by OFL, operating expenses and liabilities of the Trust shall be
paid from its own funds.
(v) The annual financial statements of the Trust shall disclose
the effects of the Trust's transactions in accordance with generally
accepted accounting principles and shall disclose that the assets of
the Trust are not available to pay creditors of OFL, the Seller,
either Class GP Certificateholder or any Affiliate of any of them.
(vi) The resolutions, agreements and other instruments of the
Trust underlying the transactions described in this Agreement and in
the other Transaction Documents shall be continuously maintained by
the Trust as official records of the Trust separately identified and
held apart from the records of OFL, the Seller, each Class GP
Certificateholder and each Affiliate of any of them.
(vii) The Trust shall maintain an arm's-length relationship with
OFL, the Seller, each Class GP Certificateholder and each Affiliate of
any of them and will not hold itself out as being liable for the debts
of any such Person.
(viii) The Trust shall keep its assets and its liabilities
wholly separate from those of all other entities, including, but not
limited to, OFL, the Seller, each Class GP Certificateholder and each
Affiliate of any of them except, in each case, as contemplated by the
Transaction Documents.
(k) CLOSING DOCUMENTS. The Trust shall provide or cause to be
provided to Financial Security an executed original copy of each document
executed in connection with the Transaction within 10 days after the Closing
Date, except that the Seller shall cause a copy of the Trust Agreement, the Sale
and Servicing Agreement, the Series 1996-B Supplement, the Indenture, the
Administration Agreement and each Transaction Document to which Financial
Security is a party to be provided to Financial Security on the Closing Date.
(l) TAX MATTERS. The Trust will take all actions necessary to ensure
that the Trust is taxable as a partnership for federal and state income tax
purposes and not as an association (or publicly traded partnership), taxable as
a corporation.
(m) SECURITIES LAWS. The Trust shall comply in all material respects
with all applicable provisions of state and federal securities laws, including
blue sky laws and the
<PAGE>
Securities Act, the Exchange Act and the Investment Company Act and all rules
and regulations promulgated thereunder for which non-compliance would result
in a Material Adverse Change with respect to the Trust.
(n) INCORPORATION OF COVENANTS. The Trust agrees to comply with each
of the covenants of the Trust set forth in the Transaction Documents and hereby
incorporates such covenants by reference as if each were set forth herein.
Section 2.03. NEGATIVE COVENANTS OF THE TRUST. The Trust hereby
agrees that during the Term of this Agreement, unless Financial Security shall
otherwise give its prior express written consent:
(a) WAIVER, AMENDMENTS, ETC. The Trust shall not waive, modify,
amend, supplement or consent to any waiver, modification, amendment of or
supplement to, any of the provisions of the Certificate of Trust, the Trust
Agreement or any of the other Transaction Documents unless, if no Insurer
Default shall have occurred and be continuing, Financial Security shall have
consented thereto in writing.
(b) CREATION OF INDEBTEDNESS; GUARANTEES. The Trust shall not
create, incur, assume or suffer to exist any indebtedness or assume, guarantee,
endorse or otherwise be or become directly or contingently liable for the
obligations of any Person by, among other things, agreeing to purchase any
obligation of another Person, agreeing to advance funds to such Person or
causing or assisting such Person to maintain any amount of capital, except as
contemplated by the Transaction Documents.
(c) SUBSIDIARIES. The Trust shall not form, or cause to be formed,
any Subsidiaries.
(d) NO LIENS. The Trust shall not, except as contemplated by the
Transaction Documents create, incur, assume or suffer to exist any Lien of any
nature upon or with respect to any of its properties or assets, now owned or
hereafter acquired, or sign or file under the Uniform Commercial Code of any
jurisdiction any financing statement that names the Trust as debtor, or sign any
security agreement authorizing any secured party thereunder to file such a
financing statement.
(e) IMPAIRMENT OF RIGHTS. The Trust shall not take any action, or
fail to take any action, if such action or failure to take action may interfere
with the enforcement of any rights under the Transaction Documents that are
material to the rights, benefits or obligations of the Indenture Trustee, the
Noteholders, the Certificateholders or Financial Security.
(f) NO MERGERS. The Trust shall not consolidate with or merge into
any Person or transfer all or any material amount of
<PAGE>
its assets to any Person (except as contemplated by the Transaction
Documents) or liquidate or dissolve.
(g) ERISA. The Trust shall not contribute or incur any obligation to
contribute to, or incur any liability in respect of, any Plan or Multiemployer
Plan.
(h) OTHER ACTIVITIES. The Trust shall not:
(i) sell, pledge, transfer, exchange or otherwise dispose of any
of its assets except as permitted under the Transaction Documents; or
(ii) engage in any business or activity except as contemplated
by the Transaction Documents and as permitted by its Certificate of
Trust.
(i) INSOLVENCY. The Trust shall not commence any case, proceeding or
other action (A) under any existing or future law of any jurisdiction, domestic
or foreign, relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking to have an order for relief entered with respect to it, or
seeking reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, consolidation or other relief with respect to it or (B) seeking
appointment of a receiver, trustee, custodian or other similar official for it
or for all or any substantial part of its assets or make a general assignment
for the benefit of its creditors. The Trust shall not take any action in
furtherance of, or indicating the consent to, approval of, or acquiescence in
any of the acts set forth above. The Trust shall not admit in writing its
inability to pay its debts.
(j) SUCCESSOR PARTIES. The Trust will not remove or replace, or
cause to be removed or replaced, the Servicer, the Indenture Trustee, the Owner
Trustee or the Administrator.
Section 2.04. REPRESENTATIONS AND WARRANTIES OF OFL AND OF THE CLASS
GP CERTIFICATEHOLDERS. Each of OFL and each Class GP Certificateholder (with
respect to) represents and warrants as of the date hereof and as of the Closing
Date, as follows:
(a) DUE ORGANIZATION AND QUALIFICATION. Each Class GP
Certificateholder is a corporation duly organized and validly existing and in
good standing under the laws of the State of Delaware, with power and authority
to own its properties and to conduct its business. Each Class GP
Certificateholder is duly qualified to do business, is in good standing and has
obtained all necessary licenses, permits, charters, registrations and approvals
(together, "approvals") necessary for the conduct of its business as described
in the Transaction Documents and the performance of its obligations under the
Transaction Documents.
(b) POWER AND AUTHORITY. Each Class GP Certificateholder has all
necessary corporate power and authority
<PAGE>
to conduct its business as described in the Transaction Documents, to
execute, deliver and perform its obligations under this Agreement and each
other Transaction Document to which it is a party and to carry out the terms
of each such agreement.
(c) DUE AUTHORIZATION. The execution, delivery and performance of
this Agreement and each other Transaction Document to which each Class GP
Certificateholder is a party has been duly authorized by all necessary corporate
action on the part of such Class GP Certificateholder and does not require any
additional approvals or consents or other action by or any notice to or filing
with any Person by or on behalf of such Class GP Certificateholder, including,
without limitation, any governmental entity or such Class GP Certificateholder's
stockholder.
(d) NONCONTRAVENTION. Neither the execution and delivery of this
Agreement and each other Transaction Document to which each Class GP
Certificateholder is a party, the consummation of the Transaction nor the
satisfaction of the terms and conditions of this Agreement and each other
Transaction Document to which it is a party,
(i) conflicts with or results in any breach or violation of any
provision of the charter or bylaws of such Class GP Certificateholder
or any law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award currently in effect having
applicability to such Class GP Certificateholder or any of its
properties, including regulations issued by an administrative agency
or other governmental authority having supervisory powers over it,
(ii) constitutes a default by such Class GP Certificateholder
under or a breach of any provision of any loan agreement, mortgage,
indenture or other agreement or instrument to which such Class GP
Certificateholder is a party or by which it or any of its or their
properties is or may be bound or affected, or
(iii) results in or requires the creation of any Lien upon or in
respect of any of such Class GP Certificateholder's assets except as
otherwise expressly contemplated by the Transaction Documents.
(e) PENDING LITIGATION OR OTHER PROCEEDING. There is no action,
proceeding or investigation pending, or, to OFL's or either Class GP
Certificateholder's best knowledge, threatened, before any court, regulatory
body, administrative agency, arbitrator or governmental agency or
instrumentality having jurisdiction over either Class GP Certificateholder or
its properties: (A) asserting the invalidity of this Agreement or any other
Transaction Document to which either Class GP
<PAGE>
Certificateholder is a party, (B) seeking to prevent the issuance of the
Certificates or the Notes, or the consummation of the Transaction, (C)
seeking any determination or ruling that might materially and adversely
affect the validity or enforceability of this Agreement or any other
Transaction Document to which either Class GP Certificateholder is a party,
(D) which might result in a Material Adverse Change with respect to such
Class GP Certificateholder or (E) which might adversely affect the federal or
state tax attributes of the Notes, the Certificates or of the Trust.
(f) VALID AND BINDING OBLIGATIONS. Each of the Transaction Documents
to which each Class GP Certificateholder is a party, when executed and delivered
by such Class GP Certificateholder, and assuming due authorization, execution
and delivery by the other parties thereto, will constitute the legal, valid and
binding obligation of such Class GP Certificateholder enforceable in accordance
with its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally and general equitable principles.
(g) NO CONSENTS. No consent, license, approval or authorization
from, or registration, filing or declaration with, any regulatory body,
administrative agency, or other governmental instrumentality, nor any consent,
approval, waiver or notification of any creditor, lessor or other
non-governmental person, is required in connection with the execution, delivery
and performance by each Class GP Certificateholder of this Agreement or of any
other Transaction Document to which either Class GP Certificateholder is a
party, except (in each case) such as have been obtained and are in full force
and effect.
(h) COMPLIANCE WITH LAW, ETC. No practice, procedure or policy
employed or proposed to be employed by either Class GP Certificateholder in the
conduct of its business violates any law, regulation, judgment, agreement, order
or decree applicable to such Class GP Certificateholder which, if enforced,
would result in a Material Adverse Change with respect to such Class GP
Certificateholder.
(i) SPECIAL PURPOSE ENTITY.
(i) The capital of each Class GP Certificateholder is adequate
for the business and undertakings of such Class GP Certificateholder.
(ii) Other than with respect to the ownership by OFL of the
stock of each Class GP Certificateholder, the issuance of the Demand
Notes by OFL to each Class GP Certificateholder, and except for its
ownership of the Series 1993-C Class B Certificates, the Series 1993-D
Class B Certificates, the Series 1994-A Class B
<PAGE>
Certificates, the Series 1994-B Class B-GP and Class I-GP
Certificates, the Series 1995-B Class GP Certificates, the Series
1995-C Class GP Certificates, the Series 1995-D Class B-GP and Class
I-GP Certificates, the Series 1995-E Class GP Certificates, the
Series 1996-A Class GP Certificates and the Series 1996-B Class
GP Certificates, it is not engaged in any business transactions with
OFL or any Affiliate of OFL.
(iii) At least one executive officer and one director of each
Class GP Certificateholder shall be a person who is not, and will not
be, a director, officer, employee or holder of any equity securities
of OFL, the Seller, or any Affiliate of either of them.
(iv) Each Class GP Certificateholder's funds and assets are not,
and will not be, commingled with the funds of any other Person.
(v) The by-laws of each Class GP Certificateholder require it to
maintain (A) correct and complete minute books and records of account,
and (B) minutes of the meetings and other proceedings of its
shareholders and board of directors.
(j) SOLVENCY; FRAUDULENT CONVEYANCE. Each Class GP Certificateholder
is solvent and will not be rendered insolvent by the Transaction and, after
giving effect to such Transaction, such Class GP Certificateholder will not be
left with an unreasonably small amount of capital with which to engage in its
business. Neither Class GP Certificateholder intends to incur, or believes that
it has incurred, debts beyond its ability to pay such debts as they mature.
Neither Class GP Certificateholder contemplates the commencement of insolvency,
bankruptcy, liquidation or consolidation proceedings or the appointment of a
receiver, liquidator, conservator, trustee or similar official in respect of
such Class GP Certificateholder or any of its assets.
(k) CAPITAL STRUCTURE. The shares of stock of each Class GP
Certificateholder which have been pledged pursuant to the Stock Pledge Agreement
constitute all of the issued and outstanding shares of such Class GP
Certificateholder. All of the outstanding equity securities of the Trust in
which each Class GP Certificateholder owns an interest are owned by such Class
GP Certificateholder free and clear of any Lien.
(l) ERISA. Each Class GP Certificateholder is in compliance with
ERISA and has not incurred and does not reasonable expect to incur any liability
to any Plan or to PBGC in connection with any Plan or to contribute now or in
the future in respect of any Plan.
<PAGE>
(m) SECURITIES LAWS COMPLIANCE. Neither Class GP Certificateholder
is required to be registered as an "investment company" under the Investment
Company Act of 1940. Neither Class GP Certificateholder is subject to the
information reporting requirements of the Exchange Act.
(n) TRANSACTION DOCUMENTS. All of the representations and warranties
made by each Class GP Certificateholder in the Transaction Documents are
incorporated by reference herein as if set forth herein and each such
representation and warranty is true and correct as of the Closing Date.
Section 2.05. AFFIRMATIVE COVENANTS OF OFL AND EACH CLASS GP
CERTIFICATEHOLDER. OFL and each Class GP Certificateholder (with respect to
itself) hereby agrees that during the Term of the Agreement, unless Financial
Security shall otherwise expressly consent in writing:
(a) COMPLIANCE WITH AGREEMENTS AND APPLICABLE LAWS. Such Class GP
Certificateholder will comply with all terms and conditions of this Agreement
and each other Transaction Document to which it is a party and with all material
requirements of any law, rule or regulation applicable to it. Each Class GP
Certificateholder will not cause or permit to become effective any amendment to
or modification of any of the Transaction Documents to which it is a party
unless (i) (so long as no Insurer Default shall have occurred and be continuing)
Financial Security shall have previously approved in writing the form of such
amendment or modification or (ii) if an Insurer Default shall have occurred and
be continuing, such amendment would not adversely affect the interests of
Financial Security. Each Class GP Certificateholder shall not take any action
or fail to take any action that would interfere with the enforcement of any
rights under this Agreement or the other Transaction Documents.
(b) CORPORATE EXISTENCE. Each Class GP Certificateholder shall
maintain its corporate existence and shall at all times continue to be duly
organized under the laws of Delaware and duly qualified and duly authorized (as
described in Sections 2.04(a), (b) and (c) hereof) and shall conduct its
business in accordance with the terms of its corporate charter and bylaws.
(c) FINANCIAL STATEMENTS; ACCOUNTANTS' REPORTS; OTHER INFORMATION.
Each Class GP Certificateholder shall keep or cause to be kept in reasonable
detail books and records of account of such Class GP Certificateholder's assets
and business. Each Class GP Certificateholder shall furnish to Financial
Security as soon as available, and in any event within 90 days after the close
of each fiscal year of such Class GP Certificateholder, the unaudited balance
sheet of such Class GP Certificateholder as of the end of such fiscal year and
the unaudited statements of income, changes in shareholders' equity and cash
flows of such Class GP
<PAGE>
Certificateholder for such fiscal year, all in reasonable detail and stating
in comparative form the respective figures for the preceding fiscal year,
prepared in accordance with generally accepted accounting principles,
consistently applied.
(d) COMPLIANCE CERTIFICATE. Each Class GP Certificateholder shall
deliver to Financial Security, within 90 days after the close of each fiscal
year of such Class GP Certificateholder, a certificate signed by an Authorized
Officer of such Class GP Certificateholder stating that (i) a review of such
Class GP Certificateholder's performance under the Transaction Documents during
such period has been made under such officer's supervision; (ii) to the best of
such individual's knowledge following reasonable inquiry, no Default or Event of
Default has occurred, or if a Default or Event of Default has occurred,
specifying the nature thereof and, if such Class GP Certificateholder has or had
a right to cure pursuant to Section 5.01, stating in reasonable detail the
steps, if any, taken or being taken by such Class GP Certificateholder to cure
such Default or Event of Default or to otherwise comply with the terms of the
Transaction Document to which such Default or Event of Default relates; and
(iii) the financial statements submitted in accordance with Section 2.05(c)
hereof, as applicable, are complete and correct in all material respects and
present fairly the financial condition and results of operations of such Class
GP Certificateholder as of the dates and for the periods indicated, in
accordance with generally accepted accounting principles consistently applied.
(e) ACCESS TO RECORDS; DISCUSSIONS WITH OFFICERS AND ACCOUNTANTS.
Each Class GP Certificateholder shall, upon the request of Financial Security,
permit Financial Security or its authorized agents (i) to inspect the books and
records of such Class GP Certificateholder as they may relate to the obligations
of such Class GP Certificateholder under the Transaction Documents, such Class
GP Certificateholder's business and the Transaction and (ii) to discuss the
affairs, finances and accounts of such Class GP Certificateholder with any of
its officers, directors and representatives, including its Independent
Accountants. Each inspections and discussions shall be conducted during normal
business hours and shall not unreasonably disrupt the business of such Class GP
Certificateholder. The books and records of each Class GP Certificateholder
will be maintained at the address designated herein for receipt of notices,
unless such Class GP Certificateholder shall otherwise advise the parties hereto
in writing.
(f) NOTICE OF MATERIAL EVENTS. OFL and each Class GP
Certificateholder shall promptly inform Financial Security in writing of the
occurrence of any of the following:
(i) the submission of any claim or the initiation of any legal
process, litigation or administrative or
<PAGE>
judicial investigation against such Class GP Certificateholder
involving potential damages or penalties in an uninsured amount in
excess of $5,000 in any one instance or $25,000 in the aggregate;
(ii) any change in the location of such Class GP
Certificateholder's principal office or any change in the location of
such Class GP Certificateholder's books and records;
(iii) the occurrence of any Default or Event of Default;
(iv) the commencement or threat of any rule making or
disciplinary proceedings or any proceedings instituted by or against
such Class GP Certificateholder in any federal, state or local court
or before any governmental body or agency, or before any arbitration
board, or the promulgation of any proceeding or any proposed or final
rule which, if adversely determined, would result in a Material
Adverse Change with respect to such Class GP Certificateholder or the
Trust;
(v) the commencement of any proceedings by or against such Class
GP Certificateholder under any applicable bankruptcy, reorganization,
liquidation, rehabilitation, insolvency or other similar law now or
hereafter in effect or of any proceeding in which a receiver,
liquidator, conservator, trustee or similar official shall have been,
or may be, appointed or requested for such Class GP Certificateholder
or any of its assets;
(vi) the receipt of notice that (A) such Class GP
Certificateholder is being placed under regulatory supervision, (B)
any license, permit, charter, registration or approval necessary for
the conduct of such Class GP Certificateholder's business is to be, or
may be, suspended or revoked, or (C) such Class GP Certificateholder
is to cease and desist any practice, procedure or policy employed by
such Class GP Certificateholder in the conduct of its business, and
such cessation may result in a Material Adverse Change with respect to
such Class GP Certificateholder or the Trust; or
(vii) any other event, circumstance or condition that has
resulted, or has a material possibility of resulting, in a Material
Adverse Change in respect of such Class GP Certificateholder or the
Trust.
(g) MAINTENANCE OF LICENSES. Such Class GP Certificateholder shall
maintain all licenses, permits, charters and registrations which are material to
the performance by such
<PAGE>
Class GP Certificateholder of its obligations under this Agreement and each
other Transaction Document to which the Seller is a party or by which such
Class GP Certificateholder is bound.
(h) SPECIAL PURPOSE ENTITY.
(i) Such Class GP Certificateholder shall conduct its business
solely in its own name through its duly authorized officers or agents
so as not to mislead others as to the identity of the entity with
which those others are concerned, and particularly will use its best
efforts to avoid the appearance of conducting business on behalf of
the Trust, OFL, the Seller or any other Affiliate of any of them or
that, except as expressly provided in the Transaction Documents, the
assets of such Class GP Certificateholder are available to pay the
creditors of OFL, the Seller or any Affiliate of any of them. Without
limiting the generality of the foregoing, all oral and written
communications, including, without limitation, letters, invoices,
purchase orders, contracts, statements and loan applications, will be
made solely in the name of such Class GP Certificateholder.
(ii) Such Class GP Certificateholder shall maintain corporate
records and books of account separate from those of OFL, the Trust,
the Seller and any Affiliate of any of them.
(iii) Such Class GP Certificateholder shall obtain proper
authorization from its board of directors of all corporate action
requiring such authorization, meetings of the board of directors of
such Class GP Certificateholder shall be held not less frequently than
three times per annum and copies of the minutes of each such board
meeting shall be delivered to Financial Security within two weeks of
such meeting.
(iv) Such Class GP Certificateholder shall obtain proper
authorization from its shareholders of all corporate action requiring
shareholder approval, meetings of the shareholders of such Class GP
Certificateholder shall be held not less frequently than one time per
annum and copies of each such authorization and the minutes of each
such shareholder meeting shall be delivered to Financial Security
within two weeks of such authorization or meeting, as the case may be.
(v) Although the organizational expenses of such Class GP
Certificateholder have been paid by OFL, operating expenses and
liabilities of such Class GP Certificateholder shall be paid from its
own funds.
<PAGE>
(vi) The annual financial statements of such Class GP
Certificateholder shall disclose the effects of such Class GP
Certificateholder's transactions in accordance with generally accepted
accounting principles and shall disclose that the assets of such Class
GP Certificateholder are not available except as expressly provided in
the Transaction Agreements to pay creditors of OFL, the Seller or any
Affiliate of either of them.
(vii) The resolutions, agreements and other instruments of such
Class GP Certificateholder underlying the transactions described in
this Agreement and in the other Transaction Documents shall be
continuously maintained by such Class GP Certificateholder as official
records of such Class GP Certificateholder separately identified and
held apart from the records of OFL, the Seller, the Trust and any
Affiliate of any of them.
(viii) Except as expressly provided in the Transaction Documents
such Class GP Certificateholder shall maintain an arm's-length
relationship with OFL, the Seller and any Affiliate of either of them
and will not hold itself out as being liable for the debts of OFL, the
Seller or any Affiliate of either of them.
(xi) Such Class GP Certificateholder shall keep its assets and
its liabilities wholly separate from those of all other entities,
including, but not limited to, OFL, the Seller and any Affiliate of
either of them except, in each case, as contemplated by the
Transaction Documents.
(i) RETIREMENT OF NOTES AND CERTIFICATES. Such Class GP
Certificateholder shall cause the Trust, upon retirement of the Notes or
Certificates, to furnish to Financial Security a notice of such retirement, and,
upon such retirement and the expiration of the term of the Note Policy or
Certificate Policy, to surrender such Note Policy or Certificate Policy, as
applicable, to Financial Security for cancellation.
(j) INCORPORATION OF COVENANTS. Each Class GP Certificateholder
agrees to comply with each of the covenants of such Class GP Certificateholder
set forth in the Transaction Documents and hereby incorporates such covenants by
reference as if each were set forth herein.
(k) TAX MATTERS. As of the Closing Date, the Trust is, and shall
remain during the Term of this Agreement, taxable as a partnership for federal
and state income tax purposes and not as an association (or publicly traded
partnership) taxable as a corporation.
<PAGE>
Section 2.06. NEGATIVE COVENANTS OF OFL AND EACH CLASS GP
CERTIFICATEHOLDER. Each of OFL and each Class GP Certificateholder (with
respect to itself) hereby agrees that during the Term of this Agreement, unless
Financial Security shall otherwise give its prior express written consent:
(a) WAIVER, AMENDMENTS, ETC. Each Class GP Certificateholder shall
not waive, modify, amend, supplement or consent to any waiver, modification,
amendment of or supplement to, any of the provisions of any of the Transaction
Documents or of its certificate of incorporation or by-laws (i) unless, if no
Insurer Default shall have occurred and be continuing, Financial Security shall
have consented thereto in writing or (ii) if an Insurer Default shall have
occurred and be continuing, which would adversely affect the interests of
Financial Security.
(b) CREATION OF INDEBTEDNESS; GUARANTEES. Neither Class GP
Certificateholder shall create, incur, assume or suffer to exist any
indebtedness or assume, guarantee, endorse or otherwise be or become directly or
contingently liable for the obligations of any Person by, among other things,
agreeing to purchase any obligation of another Person, agreeing to advance funds
to such Person or causing or assisting such Person to maintain any amount of
capital, except as contemplated by the Transaction Documents or, with the prior
written consent of Financial Security, as permitted by its certificate of
incorporation.
(c) SUBSIDIARIES. Neither Class GP Certificateholder shall form, or
cause to be formed, any Subsidiaries.
(d) NO LIENS. Neither Class GP Certificateholder shall, except as
contemplated by the Transaction Documents, create, incur, assume or suffer to
exist any Lien of any nature upon or with respect to any of its properties or
assets, now owned or hereafter acquired, or sign or file under the Uniform
Commercial Code of any jurisdiction any financing statement that names such
Class GP Certificateholder as debtor, or sign any security agreement authorizing
any secured party thereunder to file such a financing statement.
(e) ISSUANCE OF STOCK. Neither Class GP Certificateholder shall
issue any shares of capital stock or rights, warrants or options in respect of
its capital stock or securities convertible into or exchangeable for its capital
stock, other than the shares of common stock which have been pledged to
Financial Security under the Stock Pledge Agreement.
(f) IMPAIRMENT OF RIGHTS. Neither Class GP Certificateholder shall
take any action, or fail to take any action, if such action or failure to take
action may interfere with the enforcement of any rights under the Transaction
Documents that are material to the rights, benefits or obligations of the
<PAGE>
Trust, the Indenture Trustee, the Certificateholders, the Noteholders or
Financial Security.
(g) NO MERGERS. Neither Class GP Certificateholder shall consolidate
with or merge into any Person or transfer all or any material amount of its
assets to any Person (except as contemplated by the Transaction Documents) or
liquidate or dissolve.
(h) ERISA. Neither Class GP Certificateholder shall contribute or
incur any obligation to contribute to, or incur any liability in respect of, any
Plan or Multiemployer Plan.
(i) OTHER ACTIVITIES. Neither Class GP Certificateholder shall:
(i) sell, pledge, transfer, exchange or otherwise dispose of
any of its assets except as permitted under the Transaction
Documents;
(ii) engage in any business or activity except as contemplated
by the Transaction Documents and as permitted by its certificate of
incorporation; or
(iii) declare or make payment of (a) any divided or other
distribution on any shares of its capital stock or (b) any payment on
account of the purchase, redemption, retirement or acquisition of (1)
any shares of its capital stock or (2) any option, warrant or other
right to acquire shares of its capital stock unless (in each case) at
the time of such declaration or payment (and after giving effect
thereto) the aggregate net worth of the two Class GP
Certificateholders would be greater than the Minimum Net Worth.
(j) INSOLVENCY. Neither Class GP Certificateholder shall commence
any case, proceeding or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief entered
with respect to it, or seeking reorganization, arrangement, adjustment, winding-
up, liquidation, dissolution, consolidation or other relief with respect to it
or the Trust or (B) seeking appointment of a receiver, trustee, custodian or
other similar official for it or for the Trust or for all or any substantial
part of its assets or make a general assignment for the benefit of its
creditors. Neither Class GP Certificateholder shall take any action in
furtherance of, or indicating the consent to, approval of, or acquiescence in
any of the acts set forth above. Neither Class GP Certificateholder shall admit
in writing its inability to pay its debts.
<PAGE>
Section 2.07. REPRESENTATIONS AND WARRANTIES OF OFL AND THE
SELLER. Each of OFL and the Seller represent and warrant as of the date
hereof and as of the Closing Date, as follows:
(a) DUE ORGANIZATION AND QUALIFICATION. The Seller is a corporation
duly organized and validly existing and in good standing under the laws of the
State of Delaware, with power and authority to own its properties and to conduct
its business. The Seller is duly qualified to do business, is in good standing
and has obtained all necessary licenses, permits, charters, registrations and
approvals (together, "approvals") necessary for the conduct of its business as
currently conducted and as described in the Prospectus and the performance of
its obligations under the Transaction Documents, in each jurisdiction in which
the failure to be so qualified or to obtain such approvals would render the
Receivables in such jurisdiction or any Transaction Document unenforceable in
any respect or would otherwise have a material adverse effect upon the
Transaction.
(b) POWER AND AUTHORITY. The Seller has all necessary corporate
power and authority to conduct its business as currently conducted and as
described in the Prospectus, to execute, deliver and perform its obligations
under this Agreement and each other Transaction Document to which the Seller is
a party and to carry out the terms of each such agreement, and has full power
and authority to sell and assign the Receivables and the Other Trust Property to
the Trust and has duly authorized such sale and assignment to the Trust by all
necessary corporate action.
(c) DUE AUTHORIZATION. The execution, delivery and performance of
this Agreement and each other Transaction Document to which the Seller is a
party has been duly authorized by all necessary corporate action on the part of
the Seller and does not require any additional approvals or consents or other
action by or any notice to or filing with any Person by or on behalf of the
Seller, including, without limitation, any governmental entity or the Seller's
stockholder.
(d) NONCONTRAVENTION. Neither the execution and delivery of this
Agreement and each other Transaction Document to which the Seller is a party,
the consummation of the Transaction nor the satisfaction of the terms and
conditions of this Agreement and each other Transaction Document to which the
Seller is a party,
(i) conflicts with or results in any breach or violation of any
provision of the charter or bylaws of the Seller or any law, rule,
regulation, order, writ, judgment, injunction, decree, determination or
award currently in effect having applicability to the Seller or any of its
properties, including regulations issued by an administrative agency or
other governmental authority having supervisory powers over the Seller,
<PAGE>
(ii) constitutes a default by the Seller under or a breach of any
provision of any loan agreement, mortgage, indenture or other agreement or
instrument to which the Seller is a party or by which it or any of its
properties is or may be bound or affected, or
(iii) results in or requires the creation of any Lien upon or in
respect of any of the Seller's assets except as otherwise expressly
contemplated by the Transaction Documents.
(e) PENDING LITIGATION OR OTHER PROCEEDING. There is no action,
proceeding or investigation pending, or, to the Seller's or OFL's best
knowledge, threatened, before any court, regulatory body, administrative agency,
arbitrator or governmental agency or instrumentality having jurisdiction over
the Seller or its properties: (A) asserting the invalidity of this Agreement or
any other Transaction Document to which the Seller is a party, (B) seeking to
prevent the issuance of the Notes or the Certificates or the consummation of the
Transaction, (C) seeking any determination or ruling that might materially and
adversely affect the validity or enforceability of this Agreement or any other
Transaction Document to which the Seller is a party, (D) which might result in a
Material Adverse Change with respect to the Seller or (E) which might adversely
affect the federal or state tax attributes of the Notes, the Certificates or the
Trust.
(f) VALID AND BINDING OBLIGATIONS. Each of the Transaction Documents
to which the Seller is a party, when executed and delivered by the Seller, and
assuming due authorization, execution and delivery by the other parties thereto,
will constitute the legal, valid and binding obligation of the Seller
enforceable in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and general equitable principles.
The Certificates, when executed, authenticated and delivered in accordance with
the Trust Agreement, will be validly issued and outstanding and entitled to the
benefits of the Trust Agreement and will evidence the entire beneficial
ownership interest in the Trust. The Notes, when executed, authenticated and
delivered in accordance with the Indenture, will be entitled to the benefits of
the Indenture and will constitute legal, valid and binding obligations of the
Trust, enforceable in accordance with their terms.
(g) NO CONSENTS. No consent, license, approval or authorization
from, or registration, filing or declaration with, any regulatory body,
administrative agency, or other governmental instrumentality, nor any consent,
approval, waiver or notification of any creditor, lessor or other
non-governmental person, is required in connection with the execution, delivery
and
<PAGE>
performance by the Seller of this Agreement or of any other Transaction
Document to which the Seller is a party, except (in each case) such as have
been obtained and are in full force and effect.
(h) COMPLIANCE WITH LAW, ETC. No practice, procedure or policy
employed or proposed to be employed by the Seller in the conduct of its business
violates any law, regulation, judgment, agreement, order or decree applicable to
the Seller which, if enforced, would result in a Material Adverse Change with
respect to the Seller.
(i) GOOD TITLE; VALID TRANSFER; ABSENCE OF LIENS; SECURITY INTEREST.
Immediately prior to the sale of the Initial Receivables and related Other Trust
Property to the Trust pursuant to the Sale and Servicing Agreement, the Seller
was the owner of, and had good and marketable title to, such property free and
clear of all Liens and Restrictions on Transferability, and had full right,
corporate power and lawful authority to assign, transfer and pledge the Initial
Receivables and the related Other Trust Property. The Sale and Servicing
Agreement constitutes a valid sale, transfer and assignment of the Other Trust
Property to the Trust enforceable against creditors of and purchasers of the
Seller. In the event that, in contravention of the intention of the parties,
the transfer of the Other Trust Property by the Seller to the Trust is
characterized as other than a sale, such transfer shall be characterized as a
secured financing, and the Trust shall have a valid and perfected first priority
security interest in the Other Trust Property free and clear of all Liens and
Restrictions on Transferability.
(j) ACCURACY OF INFORMATION. Neither the Transaction Documents nor
any documents, agreements, instruments, schedules, certificates, statements,
cash flow schedules, number runs or other writings or data (collectively, the
"Documents") furnished to Financial Security by the Seller or OFL with respect
to either of them, their Subsidiaries, the Receivables or the Transaction
contain any statement of a material fact which was untrue or misleading in any
material respect when made (except insofar as any Document was corrected or
superseded by a subsequent Document and Financial Security has not detrimentally
relied on the original Document). There is no fact known to the Seller or OFL
which has a material possibility of causing a Material Adverse Change with
respect to the Seller or OFL, or which has a material possibility of impairing
the value or marketability of the Receivables, taken as a whole, or decreasing
the probability that amounts due in respect of the Receivables will be collected
as due. Since the furnishing of the Transaction Documents, there has been no
change or any development or event involving a prospective change known to the
Seller or OFL which would render any representation or warranty or other
statement made by either of them in any of the Transaction Documents untrue or
misleading in a material respect.
<PAGE>
(k) COMPLIANCE WITH INVESTMENT COMPANY ACT. The Seller is not
required to be registered as an "investment company" under the Investment
Company Act.
(l) INCORPORATION OF CERTAIN REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Seller set forth in the Transaction
Documents are (in each case) true and correct as if set forth herein.
(m) SPECIAL PURPOSE ENTITY.
(i) The capital of the Seller is adequate for the business and
undertakings of the Seller.
(ii) Other than with respect to the ownership by OFL of the stock
of the Seller and as provided in the Previous Series Transaction Documents,
the Purchase Agreement, the Sale and Servicing Agreement, and the Spread
Account Agreement, the Seller is not engaged in any business transactions
with OFL or any Affiliate of OFL.
(iii) At least one director of the Seller shall be a person who is
not, and will not be, a director, officer, employee or holder of any equity
securities of OFL or any of its Affiliates or Subsidiaries.
(iv) The Seller's funds and assets are not, and will not be,
commingled with the funds of any other Person, except as provided in the
Transaction Documents.
(v) The by-laws of the Seller require it to maintain (A) correct
and complete minute books and records of account, and (B) minutes of the
meetings and other proceedings of its shareholders and board of directors.
(n) SOLVENCY; FRAUDULENT CONVEYANCE. The Seller is solvent and will
not be rendered insolvent by the Transaction and, after giving effect to such
Transaction, the Seller will not be left with an unreasonably small amount of
capital with which to engage in its business. The Seller does not intend to
incur, or believe that it has incurred, debts beyond its ability to pay such
debts as they mature. The Seller does not contemplate the commencement of
insolvency, bankruptcy, liquidation or consolidation proceedings or the
appointment of a receiver, liquidator, conservator, trustee or similar official
in respect of the Seller or any of its assets. The amount of consideration
being received by the Seller upon the sale of the Initial Receivables and
related Other Trust Property and contemplated to be received upon the Sale of
the Subsequent Receivables and related Other Trust Property constitutes
reasonably equivalent value and fair consideration for interest in such
Receivables and such Other Trust Property. The Seller is not transferring the
<PAGE>
Other Trust Property to the Trust, or selling the Certificates, as provided in
the Transaction Documents, with any intent to hinder, delay or defraud any of
the Seller's creditors.
(o) REGISTRATION STATEMENT; PROSPECTUS. The Seller has filed with
the Securities and Exchange Commission (the "Commission") a registration
statement on Form S-3 (No. 33-97608), including a preliminary prospectus and
prospectus supplement for the registration of the Certificates and the Notes
under the Securities Act, has filed such amendments thereto, and such amended
preliminary prospectuses and prospectus supplements as may have been required to
the date hereof, and will file such additional amendments thereto and such
amended prospectuses and prospectus supplements as may hereafter be required.
Such registration statement (as amended, if applicable) and the prospectus,
together with the prospectus supplement relating to the Certificates and the
Notes, constituting a part thereof (including in each case all documents, if
any, incorporated by reference therein and the information, if any, deemed to be
part thereof pursuant to the rules and regulations of the Commission under the
Securities Act (the "Rules and Regulations"), as from time to time amended or
supplemented pursuant to the Securities Act or otherwise, are hereinafter
referred to as the "Registration Statement" and the "Prospectus," respectively,
except that if any revised prospectus or prospectus supplement shall be provided
by the Seller for use in connection with the offering of the Certificates and
the Notes which differs from the Prospectus filed with the Commission pursuant
to Rule 424 of the Rules and Regulations (whether or not such revised prospectus
is required to be filed by the Seller pursuant to Rule 424 of the Rules and
Regulations), the term "Prospectus" shall refer to such revised prospectus and
prospectus supplement from and after the time it is first provided to the
Underwriter for such use. The Registration Statement at the time it became
effective complied, and at each time that the Prospectus is provided to the
Underwriters for use in connection with the offering or sale of any Certificate
or Note will comply, in all material respects with the requirements of the
Securities Act and the Rules and Regulations. The Registration Statement and
the Prospectus at the time the Registration Statement became effective did not
and on the date hereof does not, contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading and the Prospectus at the time it was
first provided to the Underwriters for use in connection with the offering of
the Certificates and the Notes did not, and on the date hereof does not, contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein in light of the circumstances under
which they were made not misleading, except that the representations and
warranties in this subparagraph shall not apply to statements in or omissions
from the Registration Statement or the Prospectus or any preliminary prospectus
made in reliance upon information furnished to the Seller in writing by
<PAGE>
Financial Security expressly for use therein or the financial statements
(including the related notes thereto) of Financial Security.
(p) ERISA. The Seller is in compliance with ERISA and has not
incurred and does not reasonably expect to incur any liabilities to the PBGC
under ERISA in connection with any Plan or Multiemployer Plan or to contribute
now or in the future in respect of any Plan or Multiemployer Plan.
(q) PLEDGE OF SHARES. The shares of stock of the Seller which have
been pledged pursuant to the Stock Pledge Agreement constitute all of the issued
and outstanding shares of the Seller.
(r) PERFECTION OF LIENS AND SECURITY INTEREST. On the Closing Date,
the Lien and security interest in favor of the Indenture Collateral Agent with
respect to Indenture Property will be perfected by the filing of financing
statements on Form UCC-1 in each jurisdiction where such recording or filing is
necessary for the perfection thereof, the delivery of the Receivable Files for
the Receivables to the Custodian, and the establishment of the Collection
Account, the Subcollection Account, the Lockbox Account, the Pre-Funding
Account, the Reserve Account and the Note Distribution Account in accordance
with the provisions of the Transaction Documents, and no other filings in any
jurisdiction or any other actions (except as expressly provided herein) are
necessary to perfect the Collateral Agent's Lien on and security interest in the
Collateral as against any third parties.
(s) SECURITY INTEREST IN FUNDS AND INVESTMENTS. Assuming the
retention of funds in the Accounts (other than the Certificate Account) and the
acquisition of Eligible Investments in accordance with the Transaction
Documents, such funds and Eligible Investments will be subject to a valid and
perfected, first priority security interest in favor of the Collateral Agent on
behalf of the Indenture Trustee (on behalf of the Noteholders) and Financial
Security.
Section 2.08. AFFIRMATIVE COVENANTS OF OFL AND THE SELLER. Each of
OFL and the Seller hereby agree that during the Term of the Agreement, unless
Financial Security shall otherwise expressly consent in writing:
(a) COMPLIANCE WITH AGREEMENTS AND APPLICABLE LAWS. The Seller will
comply with all terms and conditions of this Agreement and each other
Transaction Document to which it is a party and with all material requirements
of any law, rule or regulation applicable to it. The Seller will not cause or
permit to become effective any amendment to or modification of any of the
Transaction Documents to which it is a party unless (i) (so long as no Insurer
Default shall have occurred and be continuing) Financial Security shall have
previously approved in writing the
<PAGE>
form of such amendment or modification or (ii) if an Insurer Default shall
have occurred and be continuing, such amendment would not adversely affect
the interests of Financial Security. The Seller shall not take any action or
fail to take any action that would interfere with the enforcement of any
rights under this Agreement or the other Transaction Documents.
(b) CORPORATE EXISTENCE. The Seller shall maintain its corporate
existence and shall at all times continue to be duly organized under the laws of
Delaware and duly qualified and duly authorized (as described in Sections
2.07(a), (b) and (c) hereof) and shall conduct its business in accordance with
the terms of its corporate charter and bylaws.
(c) FINANCIAL STATEMENTS; ACCOUNTANTS' REPORTS; OTHER INFORMATION.
The Seller shall keep or cause to be kept in reasonable detail books and records
of account of the Seller's assets and business, and shall clearly reflect
therein the transfer of the Receivables and the Other Trust Property to the
Trust and the sale of the Receivables as a sale to the Trust of the Seller's
interest in the Receivables and the Other Trust Property. The Seller shall
furnish to Financial Security, simultaneously with the delivery of such
documents to the Trustee, the Noteholders or the Certificateholders, as the
case may be, copies of all reports, certificates, statements, financial
statements or notices furnished to the Trustee, the Noteholders or the
Certificateholders, as the case may be, pursuant to the Transaction Documents.
The Seller shall furnish to Financial Security as soon as available, and in any
event within 90 days after the close of each fiscal year of the Seller, the
unaudited balance sheet of the Seller as of the end of such fiscal year and the
unaudited statements of income, changes in shareholders' equity and cash flows
of the Seller for such fiscal year, all in reasonable detail and stating in
comparative form the respective figures for the preceding fiscal year, prepared
in accordance with generally accepted accounting principles, consistently
applied.
(d) COMPLIANCE CERTIFICATE. The Seller shall deliver to Financial
Security, within 90 days after the close of each fiscal year of the Seller, a
certificate signed by an Authorized Officer of the Seller stating that:
(i) a review of the Seller's performance under the Transaction
Documents during such period has been made under such officer's
supervision; and
(ii) to the best of such individual's knowledge following
reasonable inquiry, no Default or Event of Default has occurred, or if a
Default or Event of Default has occurred, specifying the nature thereof
and, if the Seller has or had a right to cure pursuant to Section 5.01,
stating in reasonable detail the steps, if any, taken or being taken by the
Seller to cure such Default or Event of Default or to
<PAGE>
otherwise comply with the terms of the Transaction Document to which such
Default or Event of Default relates.
(iii) the financial reports submitted in accordance with Section
2.08(c) hereof, are complete and correct in all material respects and
present fairly the financial condition and results of operations of the
Seller as of the dates and for the periods indicated, in accordance with
generally accepted accounting principles consistently applied.
(e) ACCESS TO RECORDS; DISCUSSIONS WITH OFFICERS AND ACCOUNTANTS.
The Seller shall, upon the request of Financial Security, permit Financial
Security or its authorized agents (i) to inspect the books and records of the
Seller as they may relate to the Notes, the Certificates, the Receivables and
the Other Trust Property, the obligations of the Seller under the Transaction
Documents, the Seller's business and the Transaction and (ii) to discuss the
affairs, finances and accounts of the Seller with any of its officers, directors
and representatives, including its Independent Accountants. Such inspections
and discussions shall be conducted during normal business hours and shall not
unreasonably disrupt the business of the Seller. The books and records of the
Seller will be maintained at the address of the Seller designated herein for
receipt of notices, unless the Seller shall otherwise advise the parties hereto
in writing.
(f) NOTICE OF MATERIAL EVENTS. The Seller shall promptly inform
Financial Security in writing of the occurrence of any of the following:
(i) the submission of any claim or the initiation of any legal
process, litigation or administrative or judicial investigation against the
Seller involving potential damages or penalties in an uninsured amount in
excess of $5,000 in any one instance or $25,000 in the aggregate;
(ii) any change in the location of Seller's principal office or
any change in the location of the Seller's books and records;
(iii) the occurrence of any Default or Event of Default;
(iv) the commencement or threat of any rule making or
disciplinary proceedings or any proceedings instituted by or against the
Seller in any federal, state or local court or before any governmental body
or agency, or before any arbitration board, or the promulgation of any
proceeding or any proposed or final rule which, if adversely determined,
would result in a Material Adverse Change with respect to the Seller or the
Trust;
<PAGE>
(v) the commencement of any proceedings by or against the Seller
under any applicable bankruptcy, reorganization, liquidation,
rehabilitation, insolvency or other similar law now or hereafter in effect
or of any proceeding in which a receiver, liquidator, conservator, trustee
or similar official shall have been, or may be, appointed or requested for
the Seller or any of its assets;
(vi) the receipt of notice that (A) the Seller is being placed
under regulatory supervision, (B) any license, permit, charter,
registration or approval necessary for the conduct of the Seller's business
is to be, or may be, suspended or revoked, or (C) the Seller is to cease
and desist any practice, procedure or policy employed by the Seller in the
conduct of its business, and such cessation may result in a Material
Adverse Change with respect to the Seller or the Trust; or
(vii) any other event, circumstance or condition that has
resulted, or has a material possibility of resulting, in a Material Adverse
Change in respect of the Seller or the Trust.
(g) FURTHER ASSURANCES. The Seller will file all necessary financing
statements, assignments or other instruments, and any amendments or continuation
statements relating thereto, necessary to be kept and filed in such manner and
in such places as may be required by law to preserve and protect fully the Lien
and security interest in, and all rights of the Trust with respect to Other
Trust Property, under the Sale and Servicing Agreement. In addition, the Seller
shall, upon the request of Financial Security (so long as no Insurer Default has
occurred and is continuing), from time to time, execute, acknowledge and deliver
and, if necessary, file such further instruments and take such further action as
may be reasonably necessary to effectuate the intention, performance and
provisions of the Transaction Documents to which the Seller is a party or to
protect the interest of the Trust in the Receivables under the Sale and
Servicing Agreement. The Seller agrees to cooperate with the Rating Agencies in
connection with any review of the Transaction which may be undertaken by the
Rating Agencies after the date hereof.
(h) MAINTENANCE OF LICENSES. The Seller shall maintain all licenses,
permits, charters and registrations which are material to the performance by the
Seller of its obligations under this Agreement and each other Transaction
Document to which the Seller is a party or by which the Seller is bound.
(i) DISCLOSURE DOCUMENT. Each Prospectus delivered with respect to
the Notes and Certificates shall clearly disclose that the Policies are not
covered by the property/casualty insurance security fund specified in Article 76
of the New York Insurance Law. In addition, each Prospectus delivered with
respect to the Notes and Certificates which includes financial
<PAGE>
statements of Financial Security prepared in accordance with generally
accepted accounting principles (other than a Prospectus that only
incorporates such financial statements by reference) shall include the
following statement immediately preceding such financial statements:
The New York State Insurance Department recognizes only
statutory accounting practices for determining and reporting
the financial condition and results of operations of an
insurance company, for determining its solvency under the
New York Insurance Law, and for determining whether its
financial condition warrants the payment of a dividend to
its stockholders. No consideration is given by the New York
State Insurance Department to financial statements prepared
in accordance with generally accepted accounting principles
in making such determinations.
(j) SPECIAL PURPOSE ENTITY.
(i) The Seller shall conduct its business solely in its own name
through its duly authorized officers or agents so as not to mislead others
as to the identity of the entity with which those others are concerned, and
particularly will use its best efforts to avoid the appearance of
conducting business on behalf of OFL or any other Affiliate thereof or that
the assets of the Seller are available to pay the creditors of OFL or any
Affiliate thereof. Without limiting the generality of the foregoing, all
oral and written communications, including, without limitation, letters,
invoices, purchase orders, contracts, statements and loan applications,
will be made solely in the name of the Seller.
(ii) The Seller shall maintain corporate records and books of
account separate from those of OFL and the other Affiliates thereof.
(iii) The Seller shall obtain proper authorization from its board
of directors of all corporate action requiring such authorization, meetings
of the board of directors of the Seller shall be held not less frequently
than three times per annum and copies of the minutes of each such board
meeting shall be delivered to Financial Security within two weeks of such
meeting.
(iv) The Seller shall obtain proper authorization from its
shareholders of all corporate action requiring shareholder approval,
meetings of the shareholders of the Seller shall be held not less
frequently than one time per annum and copies of each such authorization
and the minutes
<PAGE>
of each such shareholder meeting shall be delivered to Financial Security
within two weeks of such authorization or meeting, as the case may be.
(v) Although the organizational expenses of the Seller have been
paid by OFL, operating expenses and liabilities of the Seller shall be paid
from its own funds.
(vi) The annual financial statements of the Seller shall disclose
the effects of the Seller's transactions in accordance with generally
accepted accounting principles and shall disclose that the assets of the
Seller are not available to pay creditors of OFL or any other Affiliate
thereof.
(vii) The resolutions, agreements and other instruments of the
Seller underlying the transactions described in this Agreement and in the
other Transaction Documents shall be continuously maintained by the Seller
as official records of the Seller separately identified and held apart from
the records of OFL and each other Affiliate thereof.
(viii) The Seller shall maintain an arm's-length relationship with
OFL and the other Affiliates thereof and will not hold itself out as being
liable for the debts of OFL or any Affiliate thereof.
(ix) The Seller shall keep its assets and its liabilities wholly
separate from those of all other entities, including, but not limited to
OFL and the other Affiliates thereof except, in each case, as contemplated
by the Transaction Documents.
(k) CLOSING DOCUMENTS. The Seller shall provide or cause to be
provided to Financial Security an executed original copy of each document
executed in connection with the Transaction within 10 days after the Closing
Date, except that the Seller shall cause a copy of the Trust Agreement, the Sale
and Servicing Agreement, the Series 1996-B Supplement, the Indenture, the
Administration Agreement and each Transaction Document to which Financial
Security is a party to be provided to Financial Security on the Closing Date.
(l) SUBSEQUENT RECEIVABLES: GOOD TITLE; VALID TRANSFER; ABSENCE OF
LIENS; SECURITY INTEREST. Immediately prior to the sale to the Trust pursuant
to a Subsequent Transfer Agreement, the Seller will be the owner of, and shall
have good and marketable title to, the Subsequent Receivables transferred
thereby and the related Other Trust Property free and clear of all Liens and
Restrictions on Transferability, and shall have full right, corporate power and
lawful authority to assign, transfer and pledge such property.
<PAGE>
(m) INCORPORATION OF COVENANTS. The Seller agrees to comply with
each of the Seller's covenants set forth in the Transaction Documents and hereby
incorporates such covenants by reference as if each were set forth herein.
Section 2.09. NEGATIVE COVENANTS OF OFL AND THE SELLER. Each of OFL
and the Seller hereby agrees that during the Term of this Agreement, unless
Financial Security shall otherwise give its prior express written consent:
(a) WAIVER, AMENDMENTS, ETC. The Seller shall not waive, modify,
amend, supplement or consent to any waiver, modification, amendment of or
supplement to, any of the provisions of any of the Transaction Documents or
Previous Series Transaction Documents or of its certificate of incorporation or
by-laws (i) unless, if no Insurer Default shall have occurred and be continuing,
Financial Security shall have consented thereto in writing or (ii) if an Insurer
Default shall have occurred and be continuing, which would adversely affect the
interests of Financial Security.
(b) CREATION OF INDEBTEDNESS; GUARANTEES. The Seller shall not
create, incur, assume or suffer to exist any indebtedness or assume, guarantee,
endorse or otherwise be or become directly or contingently liable for the
obligations of any Person by, among other things, agreeing to purchase any
obligation of another Person, agreeing to advance funds to such Person or
causing or assisting such Person to maintain any amount of capital, except as
contemplated by the Transaction Documents or as contemplated by the documents
relating to a Series of Certificates or Notes.
(c) SUBSIDIARIES. The Seller shall not form, or cause to be formed,
any Subsidiaries.
(d) NO LIENS. The Seller shall not, except as contemplated by the
Transaction Documents or as contemplated by the documents relating to a Series
of Certificates or Notes, create, incur, assume or suffer to exist any Lien of
any nature upon or with respect to any of its properties or assets, now owned or
hereafter acquired, or sign or file under the Uniform Commercial Code of any
jurisdiction any financing statement that names the Seller as debtor, or sign
any security agreement authorizing any secured party thereunder to file such a
financing statement.
(e) ISSUANCE OF STOCK. The Seller shall not issue any shares of
capital stock or rights, warrants or options in respect of its capital stock or
securities convertible into or exchangeable for its capital stock, other than
the shares of common stock which have been pledged to Financial Security under
the Seller Stock Pledge Agreement.
<PAGE>
(f) IMPAIRMENT OF RIGHTS. The Seller shall not take any action, or
fail to take any action, if such action or failure to take action may interfere
with the enforcement of any rights under the Transaction Documents that are
material to the rights, benefits or obligations of the Trust, the Indenture
Trustee, the Certificateholders, the Noteholders or Financial Security.
(g) NO MERGERS. The Seller shall not consolidate with or merge into
any Person or transfer all or any material amount of its assets to any Person
(except as contemplated by the Transaction Documents or the documents relating
to a Series of Certificates or Notes).
(h) ERISA. The Seller shall not contribute or incur any obligation
to contribute to, or incur any liability in respect of, any Plan or
Multiemployer Plan.
(i) OTHER ACTIVITIES. The Seller shall not:
(i) sell, pledge, transfer, exchange or otherwise dispose of any
of its assets except as permitted under the Transaction Documents or the
documents relating to a Series of Certificates or Notes; or
(ii) engage in any business or activity except as contemplated by
the Transaction Documents or as contemplated by the documents relating to a
Series of Certificates or Notes and as permitted by its certificate of
incorporation.
(j) INSOLVENCY. The Seller shall not commence any case, proceeding
or other action (A) under any existing or future law of any jurisdiction,
domestic or foreign, relating to bankruptcy, insolvency, reorganization or
relief of debtors, seeking to have an order for relief entered with respect to
it, or seeking reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, consolidation or other relief with respect to it or the Trust or
(B) seeking appointment of a receiver, trustee, custodian or other similar
official for it or for the Trust or for all or any substantial part of its
assets or the Collateral related to any or all Series, or make a general
assignment for the benefit of its creditors. The Seller shall not take any
action in furtherance of, or indicating the consent to, approval of, or
acquiescence in any of the acts set forth above. The Seller shall not admit in
writing its inability to pay its debts.
(k) DIVIDENDS. The Seller shall not declare or make payment of
(i) any dividend or other distribution on any shares of its capital stock, or
(ii) any payment on account of the purchase, redemption, retirement or
acquisition of any option, warrant or other right to acquire shares of its
capital stock, unless (in each case) at the time of such declaration or payment
(and after
<PAGE>
giving effect thereto) no amount payable by the Seller under any Transaction
Document with respect to any Series is then due and owing but unpaid.
Section 2.10. REPRESENTATIONS AND WARRANTIES OF OFL. OFL represents
and warrants, as of the date hereof and as of the Closing Date, as follows:
(a) DUE ORGANIZATION AND QUALIFICATION. OFL and each of its
Subsidiaries is a corporation, duly organized, validly existing and in good
standing under the laws of the State of its respective incorporation with power
and authority to own its properties and conduct its business. OFL and each of
its Subsidiaries is duly qualified to do business and is in good standing in
each jurisdiction in which the failure to be so qualified would render any of
the Receivables unenforceable in any respect or would otherwise have a material
adverse effect upon the Transaction. OFL and each of its Subsidiaries has
obtained all licenses, permits, charters, registrations and approvals necessary
for the conduct of its business as currently conducted and as described in the
Prospectus and for the performance of its obligations under the Transaction
Documents.
(b) POWER AND AUTHORITY. OFL has all necessary corporate power and
authority to conduct its business as currently conducted and as described in the
Prospectus, to execute, deliver and perform its obligations under this Agreement
and each other Transaction Document to which it is a party and to carry out the
terms of each such agreement.
(c) DUE AUTHORIZATION. The execution, delivery and performance of
this Agreement and each other Transaction Document to which OFL is a party has
been duly authorized by all necessary corporate action and does not require any
additional approvals or consents or other action by or any notice to or filing
with any Person, including, without limitation, any governmental entity or OFL's
stockholders.
(d) NONCONTRAVENTION. Neither the execution and delivery of this
Agreement and each other Transaction Document to which OFL is a party, the
consummation of the Transaction, nor the satisfaction of the terms and
conditions of this Agreement and each other Transaction Document to which OFL is
a party,
(i) conflicts with or results in any breach or violation of any
provision of the corporate charter or bylaws of OFL or any law, rule,
regulation, order, writ, judgment, injunction, decree, determination or
award currently in effect having applicability to OFL or any of its
properties, including regulations issued by an administrative agency or
other governmental authority having supervisory powers over OFL,
<PAGE>
(ii) constitutes a default by OFL under or a breach of any
provision of any loan agreement, mortgage, indenture or other agreement or
instrument to which OFL or any of its Subsidiaries is a party or by which
it or any of its or their properties is or may be bound or affected, or
(iii) results in or requires the creation of any Lien upon or in
respect of any of OFL's assets, except as otherwise expressly contemplated
by the Transaction Documents.
(e) PENDING LITIGATION OR OTHER PROCEEDING. There is no action,
proceeding or investigation pending, or, to OFL's best knowledge, threatened,
before any court, regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over OFL or its properties: (A) asserting
the invalidity of this Agreement or any other Transaction Document to which OFL
is a party, (B) seeking to prevent the issuance of the Notes, the Certificates
or the consummation of the Transaction, (C) seeking any determination or ruling
that might materially and adversely affect the validity or enforceability of,
this Agreement or any other Transaction Document to which OFL is a party, (D)
which might result in a Material Adverse Change with respect to OFL or (E) which
might adversely affect the federal or state tax attributes of the Notes, the
Certificates or the Trust.
(f) VALID AND BINDING OBLIGATIONS. The Purchase Agreement
constitutes a valid sale, transfer, and assignment of the Receivables and Other
Trust Property to the Seller, enforceable against creditors of and purchasers
from OFL. Each of the other Transaction Documents to which OFL is a party when
executed and delivered by OFL, and assuming the due authorization, execution and
delivery by the other parties thereto, will constitute the legal, valid and
binding obligation of OFL enforceable in accordance with its respective terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally and general equitable principles.
(g) NO CONSENTS. No consent, license, approval or authorization
from, or registration, filing or declaration with, any regulatory body,
administrative agency, or other governmental instrumentality, nor any consent,
approval, waiver or notification of any creditor, lessor or other
non-governmental person, is required in connection with the execution, delivery
and performance by OFL of this Agreement or of any other Transaction Document to
which OFL is a party, except (in each case) such as have been obtained and are
in full force and effect.
(h) FINANCIAL STATEMENTS. The Financial Statements of OFL, copies of
which have been furnished to Financial Security, (i) are, as of the dates and
for the periods referred to therein, complete and correct in all material
respects, (ii) present fairly
<PAGE>
the financial condition and results of operations of OFL as of the dates and
for the periods indicated and (iii) have been prepared in accordance with
generally accepted accounting principles consistently applied, except as
noted therein (subject as to interim statements to normal year-end
adjustments and the absence of notes). Since the date of the most recent
Financial Statements, there has been no material adverse change in such
financial condition or results of operations. Except as disclosed in the
Financial Statements, OFL is not subject to any contingent liabilities or
commitments that, individually or in the aggregate, have a reasonable
likelihood of causing a Material Adverse Change in respect of OFL.
(i) COMPLIANCE WITH LAW, ETC. No practice, procedure or policy
employed or proposed to be employed by OFL in the conduct of its business
violates any law, regulation, judgment, agreement, order or decree applicable to
OFL which, if enforced, would result in a Material Adverse Change with respect
to OFL.
(j) TAXES. OFL has, and each of its Subsidiaries have, filed all
federal and state tax returns and paid all taxes to the extent that such taxes
have become due. Any taxes, fees and other governmental charges payable by OFL
in connection with the Transaction, the execution and delivery of the
Transaction Documents and the issuance of the Notes and Certificates have been
paid or shall have been paid at or prior to the Closing Date.
(k) ERISA. OFL is in compliance with ERISA and has not incurred and
does not reasonably expect to incur any liabilities to the PBGC under ERISA in
connection with any Plan or Multiemployer Plan or to contribute now or in the
future in respect of any Plan or Multiemployer Plan except in accordance with
the provisions of Section 2.12(e) hereof.
(l) INCORPORATION OF CERTAIN REPRESENTATIONS AND WARRANTIES. OFL
represents and warrants to Financial Security that the representations and
warranties of OFL set forth in the Transaction Documents are (in each case) true
and correct as if set forth herein.
Section 2.11. AFFIRMATIVE COVENANTS OF OFL. OFL hereby agrees that
during the Term of the Agreement, unless Financial Security shall otherwise
expressly consent in writing:
(a) COMPLIANCE WITH AGREEMENTS AND APPLICABLE LAWS. OFL will comply
with all terms and conditions of this Agreement and each other Transaction
Document to which it is a party and all material requirements of any law, rule
or regulation applicable to it. OFL will not cause or permit to become
effective any amendment to or modification of any Transaction Document to which
it is a party (i) unless, so long as no Insurer Default shall have occurred and
be continuing, Financial Security shall have previously approved in writing the
form of such amendment or
<PAGE>
modification or (ii) if an Insurer Default shall have occurred and be
continuing, such amendment would not adversely affect the interests of
Financial Security. OFL shall not take any action or fail to take any action
that would interfere with the enforcement of any rights under this Agreement
or the other Transaction Documents.
(b) CORPORATE EXISTENCE. OFL shall maintain its corporate existence
and shall at all times continue to be duly organized under the laws of Minnesota
and duly qualified and duly authorized (as described in Sections 2.10(a), (b)
and (c) hereof) and shall conduct its business in accordance with the terms of
its corporate charter and bylaws.
(c) FINANCIAL STATEMENTS; ACCOUNTANTS' REPORTS; OTHER INFORMATION.
OFL shall keep or cause to be kept in reasonable detail books and records of
account of OFL's assets and business. OFL, so long as it shall be the Servicer,
shall furnish to Financial Security, simultaneously with the delivery of such
documents to the Owner Trustee, Indenture Trustee, the Noteholders or the
Certificateholders, as the case may be, copies of all reports, certificates,
statements or notices furnished to the Owner Trustee, Indenture Trustee, the
Noteholders or the Certificateholders, as the case may be, pursuant to the
Transaction Documents. OFL shall also furnish or cause to be furnished to
Financial Security:
(i) ANNUAL FINANCIAL STATEMENTS. As soon as available, and in
any event within 90 days after the close of each fiscal year of OFL, the
audited balance sheets of OFL and its subsidiaries as of the end of such
fiscal year and the audited consolidated statements of income, changes in
shareholders' equity and cash flows of OFL for such fiscal year, all in
reasonable detail and stating in comparative form the respective figures
for the corresponding date and period in the preceding fiscal year,
prepared in accordance with generally accepted accounting principles,
consistently applied, and accompanied by the certificate of OFL's
independent accountants (which, so long as no Insurer Default shall have
occurred and be continuing, shall be acceptable to Financial Security) and
by the certificate specified in Section 2.11(d) hereof.
(ii) QUARTERLY FINANCIAL STATEMENTS. As soon as available, and
in any event within 45 days after the close of each of the first three
quarters of each fiscal year of OFL, the unaudited consolidated balance
sheets of OFL as of the end of such quarter and the unaudited consolidated
statements of income, changes in shareholders' equity and cash flows of OFL
for the portion of the fiscal year then ended, all in reasonable detail and
stating in comparative form the respective figures for the corresponding
date and period in the preceding fiscal year, prepared in accordance with
<PAGE>
generally accepted accounting principles consistently applied (subject to
normal year-end adjustments), and accompanied by the certificate specified
in Section 2.11(d) hereof.
(iii) ACCOUNTANTS' REPORTS. Promptly upon receipt thereof, copies
of any reports submitted to OFL by its independent accountants in
connection with any examination of the financial statements of OFL.
(iv) CERTAIN INFORMATION. Promptly after the filing or sending
thereof, copies of all proxy statements, financial statements, reports and
registration statements which OFL files, or delivers to, the IRS, the
Commission, or any other federal government agency, authority or body which
supervises the issuance of securities by OFL or any national securities
exchange.
(d) COMPLIANCE CERTIFICATE. OFL shall deliver to Financial Security
within 90 days after the close of each fiscal year of OFL, a certificate signed
by an Authorized Officer of OFL stating that:
(i) a review of OFL's performance under the Transaction
Documents during such period has been made under such officer's
supervision;
(ii) to the best of such individual's knowledge following
reasonable inquiry, no Default or Event of Default has occurred, or if a
Default or Event of Default has occurred, specifying the nature thereof
and, if OFL has or had a right to cure pursuant to Section 5.01, stating in
reasonable detail the steps, if any, taken or being taken by OFL to cure
such Default or Event of Default or to otherwise comply with the terms of
the Transaction Document to which such Default or Event of Default relates;
and
(iii) the financial statements submitted in accordance with
Section 2.11(c) hereof, as applicable, are complete and correct in all
material respects and present fairly the financial condition and results of
operations of OFL as of the dates and for the periods indicated, in
accordance with generally accepted accounting principles consistently
applied (subject as to interim statements to normal year-end adjustments
and the absence of notes).
(e) ACCESS TO RECORDS; DISCUSSIONS WITH OFFICERS AND ACCOUNTANTS.
OFL shall, upon the request of Financial Security, permit Financial Security or
its authorized agents (i) to inspect the books and records of OFL as they may
relate to the Notes, the Certificates, the Receivables, the obligations of OFL
as Servicer under the Transaction Documents, its business and the Transaction
and (ii) to discuss the affairs, finances and accounts of OFL with any of its
officers, directors and representatives, including its
<PAGE>
Independent Accountants. Such inspections and discussions shall be conducted
during normal business hours and shall not unreasonably disrupt the business
of OFL. The books and records of OFL will be maintained at the address of
OFL designated herein for receipt of notices, unless OFL shall otherwise
advise the parties hereto in writing.
(f) NOTICE OF MATERIAL EVENTS. OFL shall promptly inform Financial
Security in writing of the occurrence of any of the following:
(i) the submission of any claim or the initiation of any legal
process, litigation or administrative or judicial investigation against OFL
involving potential damages or penalties in an uninsured amount in excess
of $10,000 in any one instance or $25,000 in the aggregate;
(ii) any change in the location of OFL's principal office or any
change in the location of the OFL's books and records;
(iii) the occurrence of any Default or Event of Default;
(iv) the commencement or threat of any rule making or
disciplinary proceedings or any proceedings instituted by or against OFL in
any federal, state or local court or before any governmental body or
agency, or before any arbitration board, or the promulgation of any
proceeding or any proposed or final rule which, if adversely determined,
would result in a Material Adverse Change with respect to OFL;
(v) the commencement of any proceedings by or against OFL under
any applicable bankruptcy, reorganization, liquidation, rehabilitation,
insolvency or other similar law now or hereafter in effect or of any
proceeding in which a receiver, liquidator, conservator, trustee or similar
official shall have been, or may be, appointed or requested for OFL or any
of its assets;
(vi) the receipt of notice that (A) OFL is being placed under
regulatory supervision, (B) any license, permit, charter, registration or
approval necessary for the conduct of OFL's business is to be, or may be,
suspended or revoked, or (C) OFL is to cease and desist any practice,
procedure or policy employed by OFL in the conduct of its business, and
such cessation may result in a Material Adverse Change with respect to OFL;
or
(vii) any other event, circumstance or condition that has
resulted, or has a material possibility of resulting, in a Material Adverse
Change in respect of OFL.
<PAGE>
(g) MAINTENANCE OF LICENSES. OFL shall maintain all licenses,
permits, charters and registrations which are material to the performance by
OFL of its obligations under this Agreement and each other Transaction
Document to which OFL is a party or by which OFL is bound.
(h) ERISA. OFL shall give Financial Security prompt notice of each
of the following events (but in no event more than 30 days after the occurrence
of the event): (i) an Accumulated Funding Deficiency, (ii) the failure to make
a required contribution to a Plan or Multiemployer Plan, (iii) a Reportable
Event, (iv) any action by a Commonly Controlled Entity to terminate any Plan or
withdraw from any Multiemployer Plan, (v) any action by the PBGC to terminate or
appoint a trustee to administer a Plan, (vi) the reorganization or insolvency of
any Multiemployer Plan and (vii) an aggregate Underfunding for all Underfunded
Plans in excess of $100,000. In addition, OFL shall promptly (but in no case
more than 30 days following issuance or receipt by the Commonly Controlled
Entity) provide to Financial Security a copy of all correspondence between a
Commonly Controlled Entity and the PBGC, IRS, Department of Labor or the
administrators of a Multiemployer Plan relating to any of the events described
in the preceding sentence or the underfunded status, termination or possible
termination of a Plan or a Multiemployer Plan.
(i) THIRD-PARTY BENEFICIARY. OFL agrees that Financial Security
shall have all rights of a third-party beneficiary in respect of the Sale and
Servicing Agreement, it being understood that the remedies of Financial Security
with respect to the representations and warranties set forth in Section 2.4(b)
and the covenants set forth in Section 3.6(a) shall be limited to the remedies
set forth in the Sale and Servicing Agreement.
(j) INCORPORATION OF COVENANTS. OFL agrees to comply with each of
OFL's covenants set forth in the Transaction Documents and hereby incorporates
such covenants by reference as if each were set forth herein.
Section 2.12. NEGATIVE COVENANTS OF OFL. OFL hereby agrees that
during the Term of this Agreement, unless Financial Security shall otherwise
give its express written consent:
(a) RESTRICTIONS ON LIENS. OFL shall not create, incur or suffer to
exist, or agree to create, incur or suffer to exist, or consent to cause or
permit in the future (upon the happening of a contingency or otherwise) the
creation, incurrence or existence of any Lien or Restriction on Transferability
on the Receivables and the Other Trust Property except for the Liens in favor of
the Seller, the Trust and the Indenture Collateral Agent for the benefit of the
Indenture Trustee and Financial Security contemplated by the Transaction
Documents and the Restrictions on
<PAGE>
Transferability imposed by the Purchase Agreement and the Sale and Servicing
Agreement.
(b) IMPAIRMENT OF RIGHTS. OFL shall not take any action, or fail to
take any action, if such action or failure to take action may interfere with the
enforcement of any rights under the Transaction Documents that are material to
the rights, benefits or obligations of the Seller, the Trust, the Indenture
Trustee, the Noteholders, the Certificateholders or Financial Security.
(c) LIMITATION ON MERGERS. OFL shall not consolidate with or
merge with or into any Person or transfer all or any material part of its
assets to any Person (except as contemplated by the Transaction Documents) or
liquidate or dissolve, provided that OFL may consolidate with, merge with or
into, or transfer all or a material part of its assets to, another
corporation if (i) the acquiror of its assets, or the corporation surviving
such merger or consolidation, shall be organized and existing under the laws
of any state and shall be qualified to transact business in each jurisdiction
in which failure to qualify would render any Transaction Document
unenforceable or would result in a Material Adverse Change in respect of OFL
or the Trust Property; (ii) after giving effect to such consolidation, merger
or transfer of assets, no Default or Event of Default shall have occurred or
be continuing; (iii) such acquiring or surviving entity can lawfully perform
the obligations of OFL under the Transaction Documents and shall expressly
assume in writing all of the obligations of OFL, including, without
limitation, its obligations under the Transaction Documents; and (iv) such
acquiring or surviving entity and the consolidated group of which it is a
part shall each have a net worth immediately subsequent to such
consolidation, merger or transfer of assets at least equal to the net worth
of OFL immediately prior to such consolidation, merger or transfer of assets;
and OFL shall give Financial Security written notice of any such
consolidation, merger or transfer of assets on the earlier of: (A) the date
upon which any publicly available filing or release is made with respect to
such action or (B) 10 Business Days prior to the date of consummation of such
action. OFL shall furnish to Financial Security all information requested by
it that is reasonably necessary to determine compliance with this paragraph.
(d) WAIVER, AMENDMENTS, ETC. OFL shall not waive, modify, amend,
supplement or consent to any waiver, modification, amendment of or supplement
to, any of the provisions of any of the Transaction Documents without the prior
written consent of Financial Security (i) unless, so long as no Insurer Default
shall have occurred and be continuing, Financial Security shall have consented
thereto in writing or (ii) if an Insurer Default shall have occurred and be
continuing, which would adversely affect the interests of Financial Security.
<PAGE>
(e) ERISA. OFL shall not contribute or incur any obligation to
contribute to, or incur any liability in respect of, any Plan or Multiemployer
Plan, except that OFL may make such a contribution or incur such a liability
provided that neither OFL nor any Commonly Controlled Entity will:
(i) terminate any Plan so as to incur any material liability to
the PBGC;
(ii) knowingly participate in any "prohibited transaction" (as
defined in ERISA) involving any Plan or Multiemployer Plan or any trust
created thereunder which would subject any of them to a material tax or
penalty on prohibited transactions imposed under Section 4975 of the Code
or ERISA;
(iii) fail to pay to any Plan or Multiemployer Plan any
contribution which it is obligated to pay under the terms of such Plan or
Multiemployer Plan, if such failure would cause such Plan to have any
material Accumulated Funding Deficiency, whether or not waived; or
(iv) allow or suffer to exist any occurrence of a Reportable
Event, or any other event or condition, which presents a material risk of
termination by the PBGC of any Plan or Multiemployer Plan, to the extent
that the occurrence or nonoccurrence of such Reportable Event or other
event or condition is within the control of it or any Commonly Controlled
Entity.
(f) INSOLVENCY. OFL shall not commence any case, proceeding or other
action (A) under any existing or future law of any jurisdiction, domestic or
foreign, relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, consolidation or other relief with respect to the
Seller or either Class GP Certificateholder or (B) seeking appointment of a
receiver, trustee, custodian or other similar official for the Seller or for
either Class GP Certificateholder. OFL shall not take any action in furtherance
of, or indicating the consent to, approval of, or acquiescence in any of the
acts set forth above.
ARTICLE III
THE POLICIES; REIMBURSEMENT; INDEMNIFICATION
Section 3.01. CONDITIONS PRECEDENT TO ISSUANCE OF THE POLICIES.
Financial Security agrees to issue the Policies subject to satisfaction of the
conditions set forth below.
(a) The obligation of Financial Security to issue the Policies is
subject to the following having occurred or being true
<PAGE>
(as the case may be): (i) Financial Security shall have received evidence
satisfactory to it that the Seller shall have assigned, conveyed and
transferred, or caused to be assigned, conveyed and transferred, the Initial
Receivables to the Trust, (ii) the Seller shall have created a valid security
interest in, and Lien on, the Receivables in favor of the Trust, (iii) the
Trust shall have created a valid security interest in, and Lien on, the
Indenture Property in favor of the Indenture Collateral Agent on behalf of
the Indenture Trustee (on behalf of the Noteholders) and Financial Security
(iv) the initial Premium shall have been paid in accordance with Section 3.02
hereof, (v) the representations and warranties of the Trust, the Class GP
Certificateholders, the Seller and of OFL and the Servicer set forth or
incorporated by reference in this Agreement shall be true and correct on and
as of the Closing Date, and (vi) each Transaction Document shall be in full
force and effect and no Default thereunder shall have occurred and be
continuing.
(b) The obligation of Financial Security to issue the Policies is
further subject to the condition precedent that Financial Security shall have
received on the Closing Date, or, in its sole and absolute discretion, received
the opportunity to review prior to and on the Closing Date, the following, each
dated the Closing Date and in full force and effect on such date, except as
otherwise provided herein, in form and substance satisfactory to Financial
Security and its counsel:
(i) a certificate of an Authorized Officer of each of the Seller
and OFL stating that nothing has come to the attention of such entity to
indicate that the Registration Statement or the Prospectus, on the date the
Registration Statement became effective, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, or that
the Prospectus on any date on which it was forwarded to the Underwriter for
use in connection with the offering of the Notes and the Certificates
contained, or on the Closing Date contains, any untrue statement of a
material fact or omits to state a material fact necessary in order to make
the statements made therein, in light of the circumstances under which they
were made, not misleading;
(ii) copies, certified to be true copies by an Authorized Officer
of the Owner Trustee, of (i) the resolutions of the board of directors of
the Owner Trustee authorizing the execution, delivery and performance by
the Owner Trustee of this Agreement and each other Transaction Document to
which the Owner Trustee is a party and all transactions and documents
contemplated hereby and thereby, and of all other documents evidencing any
other necessary action of the Owner Trustee (which certification shall
state that such resolutions have not been modified, are in full
<PAGE>
force and effect and constitute the only resolutions adopted by the Owner
Trustee's board of directors or any committee thereof with respect thereto
and (ii) the Certificate of Trust, certified by the Secretary of State or
other appropriate official of the State of Delaware;
(iii) with respect to each Class GP Certificateholder, copies,
certified to be true copies by an Authorized Officer of such Class GP
Certificateholder, of (i) the resolutions of the board of directors of such
Class GP Certificateholder authorizing the execution, delivery and
performance of this Agreement and each other Transaction Document to which
such Class GP Certificateholder is a party and all other transactions and
documents evidencing any other necessary action of such Class GP
Certificateholder (which certification shall state that such resolutions
have not been modified, are in full force and effect and constitute the
only resolutions adopted by such Class GP Certificateholder's board of
directors or any committee thereof with respect thereto), (ii) the
corporate charter of such Class GP Certificateholder and (iii) the by-laws,
as amended, of such Class GP Certificateholder.
(iv) copies, certified to be true copies by an Authorized Officer
of the Seller, of (i) the resolutions of the board of directors of the
Seller authorizing the execution, delivery and performance of this
Agreement and each other Transaction Document to which the Seller is a
party and all transactions and documents contemplated hereby and thereby,
and of all other documents evidencing any other necessary action of the
Seller (which certification shall state that such resolutions have not been
modified, are in full force and effect and constitute the only resolutions
adopted by the Seller's board of directors or any committee thereof with
respect thereto), (ii) the corporate charter of the Seller and (iii) the
by-laws, as amended, of the Seller;
(v) copies, certified to be true copies by an Authorized Officer
of OFL, of (i) the resolutions of the board of directors of OFL authorizing
the execution, delivery and performance of this Agreement and each other
Transaction Document to which OFL is a party and all other transactions and
documents contemplated hereby and thereby, and of all documents evidencing
any other necessary action of OFL (which certification shall state that
such resolutions have not been modified, are in full force and effect and
constitute the only resolutions adopted by OFL's board of directors or any
committee thereof with respect thereto), (ii) the corporate charter of OFL
and (iii) the by-laws, as amended, of OFL;
(vi) a certificate of an Authorized Officer of the Owner Trustee
stating that (i) all consents, licenses and approvals necessary for the
Owner Trustee to execute, deliver
<PAGE>
and perform this Agreement, the other Transaction Documents to
which the Owner Trustee is a party and all other documents and
instruments on the part of the Owner Trustee to be delivered pursuant
hereto or thereto have been obtained, and (ii) all such consents,
licenses and approvals are in full force and effect, the Owner Trustee
has not received any notice of any proceeding for the revocation of any
such license, charter, permit or approval, and, to the Owner Trustee's
knowledge, there is no threatened action or proceeding or any basis
therefor;
(vii) with respect to each Class GP Certificateholder, a
certificate of an Authorized Officer of such Class GP Certificateholder
stating that (i) all consents, licenses and approvals necessary for such
Class GP Certificateholder to execute, deliver and perform this Agreement,
the other Transaction Documents to which such Class GP Certificateholder is
a party and all other documents and instruments on the part of such Class
GP Certificateholder to be delivered pursuant hereto or thereto have been
obtained, and (ii) all such consents, licenses and approvals are in full
force and effect, such Class GP Certificateholder has not received any
notice of any proceeding for the revocation of any such license, charter,
permit or approval, and, to such Class GP Certificateholder's knowledge,
there is no threatened action or proceeding or any basis therefor;
(viii) a certificate of an Authorized Officer of the Seller stating
that (i) all consents, licenses and approvals necessary for the Seller to
execute, deliver and perform this Agreement, the other Transaction
Documents to which the Seller is a party and all other documents and
instruments on the part of the Seller to be delivered pursuant hereto or
thereto have been obtained, and (ii) all such consents, licenses and
approvals are in full force and effect, the Seller has not received any
notice of any proceeding for the revocation of any such license, charter,
permit or approval, and, to the Seller's knowledge, there is no threatened
action or proceeding or any basis therefor;
(ix) a certificate of an Authorized Officer of OFL stating that
(i) all consents, licenses and approvals necessary for OFL to execute,
deliver and perform this Agreement, the other Transaction Documents to
which OFL is a party and all other documents and instruments on the part of
OFL to be delivered pursuant hereto or thereto have been obtained, and
(ii) all such consents, licenses and approvals are in full force and
effect, OFL has not received any notice of any proceeding for the
revocation of any such license, charter, permit or approval, and, to OFL'S
knowledge, there is no threatened action or proceeding or any basis
therefor;
<PAGE>
(x) a certificate of an Authorized Officer of the Owner Trustee
certifying (i) the names and true signatures of the officers of the Owner
Trustee executing and delivering this Agreement, the other Transaction
Documents to which the Owner Trustee is a party and the other documents to
be executed and delivered by the Owner Trustee hereunder and thereunder,
(ii) that approval by the Owner Trustee's equity holders of the execution
and delivery of this Agreement, the other Transaction Documents and all
other such documents to be executed and delivered, by the Owner Trustee
hereunder, has been obtained or is not required, and (iii) that no action
for the dissolution of the Owner Trustee has been adopted or contemplated
and that no such proceedings have been commenced or are contemplated;
(xi) with respect to each Class GP Certificateholder, a
certificate of an Authorized Officer of such Class GP Certificateholder
certifying (i) the names and true signatures of the officers of such Class
GP Certificateholder executing and delivering this Agreement, the other
Transaction Documents to which such Class GP Certificateholder is party and
the other documents to be executed and delivered by such Class GP
Certificateholder hereunder and thereunder, (ii) that approval of such
Class GP Certificateholder stockholders of the execution and delivery of
this Agreement, the other Transaction Documents and all other such
documents to be executed and delivered, by such Class GP Certificateholder
hereunder, has been obtained or is not required, and (iii) that no
resolution for the dissolution of such Class GP Certificateholder has been
adopted or contemplated and that no such proceedings have been commenced or
are contemplated;
(xii) a certificate of an Authorized Officer of the Seller
certifying (i) the names and true signatures of the officers of the Seller
executing and delivering this Agreement, the other Transaction Documents to
which the Seller is a party and the other documents to be executed and
delivered by the Seller hereunder and thereunder, (ii) that approval by the
Seller's stockholder of the execution and delivery of this Agreement, the
other Transaction Documents and all other such documents to be executed and
delivered, by the Seller hereunder, has been obtained or is not required,
and (iii) that no resolution for the dissolution of the Seller has been
adopted or contemplated and that no such proceedings have been commenced or
are contemplated;
(xiii) a certificate of an Authorized Officer of OFL certifying (i)
the names and true signatures of the officers of OFL executing and
delivering this Agreement, the other Transaction Documents to which OFL is
a party and the other documents to be executed and delivered by OFL
hereunder and thereunder, (ii) that approval by OFL's stockholders of
<PAGE>
the execution and delivery of this Agreement, the other Transaction
Documents and all other such documents to be executed and delivered, by
OFL hereunder, has been obtained or is not required, and (iii) that no
resolution for the dissolution of OFL has been adopted or contemplated and
that no such proceedings have been commenced or are contemplated;
(xiv) a certificate of an Authorized Officer of the Trust to the
effect that (x) the representations and warranties of the Trust set forth
or incorporated by reference in this Agreement are true and correct on and
as of the Closing Date and (y) confirming that the conditions precedent set
forth herein with respect to the Trust are satisfied;
(xv) with respect to each Class GP Certificateholder, a
certificate of an Authorized Officer of such Class GP Certificateholder to
the effect that (x) the representations and warranties of such Class GP
Certificateholder set forth or incorporated by reference int his Agreement
are true and correct on and as of the Closing Date, and (y) confirming that
the conditions precedent set forth herein with respect to such Class GP
Certificateholder are satisfied;
(xvi) a certificate of an Authorized Officer of the Seller to the
effect that (x) the representations and warranties of the Seller set forth
or incorporated by reference in this Agreement are true and correct on and
as of the Closing Date and (y) confirming that the conditions precedent set
forth herein with respect to the Seller are satisfied;
(xvii) a certificate of an Authorized Officer of OFL to the effect
that (x) the representations and warranties of OFL set forth or
incorporated by reference in this Agreement are true and correct on and as
of the Closing Date, and (y) confirming that the conditions precedent set
forth herein with respect to OFL are satisfied;
(xviii) favorable opinions of counsel and special Texas counsel to
the Seller and OFL in form and substance satisfactory to Financial Security
and its counsel;
(xix) a favorable opinion of counsel to each of the Trust, the
Class GP Certificateholders, the Owner Trustee, the Indenture Trustee and
the Collateral Agent and the Indenture Collateral Agent, in form and
substance satisfactory to Financial Security and its counsel;
(xx) evidence that amounts due and payable Financial Security
under Section 3.02 of this Agreement have
<PAGE>
been paid or that acceptable provisions therefor have been made;
(xxi) a fully executed copy of each of the Transaction Documents;
(xxii) evidence that all actions necessary or, in the opinion of
Financial Security, desirable to perfect and protect the interests
transferred by the Sale and Servicing Agreement, the liens and security
interests created with respect to the Spread Account, the Liens and
security interest created in favor of the Indenture Collateral Agent with
respect to the Indenture Property pursuant to the Indenture, including,
without limitation, the filing of any financing statements required by
Financial Security or its counsel, have been taken;
(xxiii) a certificate or opinion of Independent Accountants
addressed to Financial Security in form and substance satisfactory to
Financial Security;
(xxiv) evidence that the Seller shall have deposited, or caused to
have been deposited, the deposits required under the Sale and Servicing
Agreement and the Spread Account Agreement, and any other deposits required
to be made on the Closing Date under the Transaction Documents to which the
Seller is a party; and
(xxv) such other documents, instruments, approvals (and, if
requested by Financial Security, certified duplicates of executed copies
thereof) or opinions as Financial Security may reasonably request.
(c) ISSUANCE OF RATINGS. Financial Security shall have received
confirmation that the risk secured by the Policies constitutes an investment
grade risk by Standard and Poor's Corporation ("S&P") and an insurable risk by
Moody's Investors Service, Inc. ("Moody's") and that the Class A-1 Notes, when
issued, will be rated "A-1+" by S&P and "P-1" by Moody's, and that the Class A-2
Notes, the Class A-3 Notes, the Class A-4 Notes, the Class A-5 Notes and the
Certificates, when issued, will be rated "AAA" by S&P and "Aaa" by Moody's.
(d) DELIVERY OF DOCUMENTS. Financial Security shall have received
evidence satisfactory to it that delivery has been made to the Trust or to a
Custodian of the Receivable Files required to be so delivered pursuant to
Section 2.2 of the Sale and Servicing Agreement.
(e) NO DEFAULT. No Default or Event of Default shall have occurred
and be continuing.
<PAGE>
(f) NO LITIGATION, ETC. No suit, action or other proceeding,
investigation, or injunction or final judgment relating thereto, shall be
pending or threatened before any court or governmental agency in which it is
sought to restrain or prohibit or to obtain damages or other relief in
connection with any of the Transaction Documents or the consummation of the
Transaction.
(g) LEGALITY. No statute, rule, regulation or order shall have been
enacted, entered or deemed applicable by any government or governmental or
administrative agency or court which would make the transactions contemplated by
any of the Transaction Documents illegal or otherwise prevent the consummation
thereof.
(h) SATISFACTION OF CONDITIONS OF UNDERWRITING AGREEMENT. All
conditions in the Underwriting Agreement to the Underwriter's obligation to
purchase the Notes and Certificates (other than the issuance of the Policies)
shall have been concurrently satisfied.
Section 3.02. PAYMENT OF FEES AND PREMIUM.
(a) LEGAL FEES. On the Closing Date, OFL shall pay or cause to be
paid legal fees and disbursements incurred by Financial Security in connection
with the issuance of the Policies up to an amount not to exceed $20,000.00, plus
disbursements.
(b) RATING AGENCY FEES. The initial fees of S&P and Moody's with
respect to the Notes and Certificates and the Transaction shall be paid by OFL
in full on the Closing Date. All periodic and subsequent fees of S&P or Moody's
with respect to, and directly allocable to, the Notes and Certificates shall be
for the account of, shall be billed to, and shall be paid by OFL. The fees for
any other rating agency shall be paid by the party requesting such other
agency's rating, unless such other agency is a substitute for S&P or Moody's in
the event that S&P or Moody's is no longer rating the Notes or Certificates, in
which case the cost for such agency shall be paid by OFL.
(c) AUDITORS' FEES. In the event that Financial Security's auditors
are required to provide information or any consent in connection with the
Registration Statement fees therefor shall be paid by OFL. Any additional fees
incurred by Financial Security after the Closing Date in respect of any
additional consents shall be paid by OFL on demand.
(d) PREMIUM. In consideration of the issuance by Financial Security
of the Policies, OFL shall pay Financial Security the Premium and Premium
Supplement, if any, as and when due in accordance with the terms of the Premium
Letter. The Premium and Premium Supplement, if any, paid hereunder or under the
Sale and Servicing Agreement shall be nonrefundable without regard to whether
Financial Security makes any payment under the
<PAGE>
Policies or any other circumstances relating to the Notes or the Certificates
or provision being made for payment of the Notes or the Certificates prior to
maturity. Although the Premium is fully earned by Financial Security as of
the Closing Date, the Premium shall be payable in periodic installments as
provided in the Premium Letter. Anything herein or in any of the Transaction
Documents notwithstanding, upon the occurrence of an Event of Default, the
entire outstanding balance of further installments of the Premium and Premium
Supplement shall be immediately due and payable. All payments of Premium and
Premium Supplement, if any, shall be made by wire transfer to an account
designated from time to time by Financial Security by written notice to the
Seller and OFL.
Section 3.03. REIMBURSEMENT AND ADDITIONAL PAYMENT OBLIGATION. Each
of OFL and the Trust agrees to pay to Financial Security as follows:
(a) a sum equal to the total of all amounts paid by Financial
Security under the Policies;
(b) any and all charges, fees, costs and expenses which Financial
Security may reasonably pay or incur, including, but not limited to, attorneys'
and accountants' fees and expenses, in connection with (i) any accounts
established to facilitate payments under the Policies to the extent Financial
Security has not been immediately reimbursed on the date that any amount is paid
by Financial Security under the Policies, (ii) the administration, enforcement,
defense or preservation of any rights in respect of any of the Transaction
Documents, including defending, monitoring or participating in any litigation,
proceeding (including any insolvency or bankruptcy proceeding in respect of any
Transaction participant or any Affiliate thereof), restructuring or engaging in
any protective measures or monitoring activities relating to any of the
Transaction Documents, any party to any of the Transaction Documents or the
Transaction, (iii) the foreclosure against, sale or other disposition of any
collateral securing any obligations under any of the Transaction Documents or
otherwise in the discretion of Financial Security, or pursuit of any other
remedies under any of the Transaction Documents, to the extent such costs and
expenses are not recovered from such foreclosure, sale or other disposition
(iv) any amendment, waiver or other action with respect to, or related to, any
Transaction Document whether or not executed or completed, (v) preparation of
bound volumes of the Transaction Documents, (vi) any review or investigation
made by Financial Security in those circumstances where its approval or consent
is sought under any of the Transaction Documents; (vii) any federal, state or
local tax (other than taxes payable in respect of the gross income of Financial
Security) or other governmental charge imposed in connection with the issuance
of the Policies; and (viii) Financial Security reserves the right to charge a
reasonable fee as a condition to executing any amendment, waiver or consent
proposed
<PAGE>
in respect of any of the Transaction Documents (for the purpose of this
paragraph (b), costs and expenses shall include a reasonable allocation of
compensation and overhead attributable to time of employees of Financial
Security spent in connection with the actions described in the foregoing clauses
(ii) and (iii));
(c) interest on any and all amounts described in this Section 3.03
from the date payable to or paid by Financial Security until payment thereof in
full, and interest on any and all amounts described in Section 3.02, in each
case payable to Financial Security at the Late Payment Rate per annum; and
(d) any payments made by Financial Security on behalf of, or
advanced to, the Seller, OFL, the Indenture Trustee, the Owner Trustee or the
Trust including, without limitation, any amounts payable by OFL in its
capacity as Servicer or by the Trust, in respect of the Notes or the
Certificates and any other amounts owed pursuant to any Transaction
Documents; and any payments made by Financial Security as, or in lieu of, any
servicing, administration, management, trustee, custodial, collateral agency
or administrative fees payable, in the sole discretion of Financial Security
to third parties in connection with the Transaction.
All such amounts are to be immediately due and payable without
demand. Financial Security shall notify OFL of amounts due hereunder.
Section 3.04. CERTAIN OBLIGATIONS NOT RECOURSE TO OFL; RECOURSE TO
TRUST PROPERTY.
(a) Notwithstanding any provision of Section 3.03 to the contrary,
the payment obligations provided in Section 3.03(a), b(iii) and (d) (to the
extent of advances to the Trust in respect of distributions on the Certificates
or to the Indenture Trustee in respect of payments on the Notes), in each case,
to the extent that such payment obligations do not arise from any failure or
default in the performance by OFL or the Seller of any of its obligations under
the Transaction Documents, and any interest on the foregoing in accordance with
Section 3.03(c), shall not be recourse to OFL, but shall be payable in the
manner and in accordance with priorities provided in the Sale and Servicing
Agreement.
(b) Financial Security covenants and agrees that it shall not be
entitled to any payment from the Trust Property with respect to amounts owed
under this Agreement other than as set forth in Section 4.6 and Section 9.1 of
the Sale and Servicing Agreement and Section 5.06 of the Indenture.
Section 3.05. INDEMNIFICATION.
<PAGE>
(a) INDEMNIFICATION BY OFL. In addition to any and all rights of
reimbursement, indemnification, subrogation and any other rights pursuant hereto
or under law or in equity, OFL agrees to pay, and to protect, indemnify and save
harmless, Financial Security and its officers, directors, shareholders,
employees, agents and each Person, if any, who controls Financial Security
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act from and against any and all claims, losses, liabilities
(including penalties), actions, suits, judgments, demands, damages, costs or
expenses (including, without limitation, fees and expenses of attorneys,
consultants and auditors and reasonable costs of investigations) of any nature
arising out of or relating to the Transaction by reason of:
(i) any statement, omission or action (other than of or by
Financial Security) in connection with the offering, issuance, sale or
delivery of the Notes or the Certificates;
(ii) the negligence, bad faith, willful misconduct, misfeasance,
malfeasance or theft committed by any director, officer, employee or agent
of the Trust, either Class GP Certificateholder, the Seller or OFL in
connection with the Transaction;
(iii) the violation by the Trust, either Class GP
Certificateholder, the Seller or OFL of any federal, state or foreign law,
rule or regulation, or any judgment, order or decree applicable to it;
(iv) the breach by the Trust, either Class GP Certificateholder,
the Seller or OFL of any representation, warranty or covenant under any of
the Transaction Documents or the occurrence, in respect of the Trust,
either Class GP Certificateholder, the Seller or OFL, under any of the
Transaction Documents of any event of default or any event which, with the
giving of notice or the lapse of time or both, would constitute any event
of default; or
(v) any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or the Prospectus or
in any amendment or supplement thereto or any omission or alleged omission
to state therein a material fact required to be stated therein or necessary
to make the statements therein not misleading, except insofar as such
claims arise out of or are based upon any untrue statement or omission
(A) included in the Registration Statement or the Prospectus and furnished
by Financial Security in writing expressly for use therein (all such
information so furnished being referred to herein as "Financial Security
Information"), it being understood that the Financial Security Information
is limited to the information included under the caption "Financial
Security Assurance Inc.," and the financial statements of Financial
<PAGE>
Security included in the Registration Statement or the Prospectus or (B)
included in the information set forth under the caption "Underwriting" in
the Prospectus.
(b) CONDUCT OF ACTIONS OR PROCEEDINGS. If any action or proceeding
(including any governmental investigation) shall be brought or asserted against
Financial Security, any officer, director, shareholder, employee or agent of
Financial Security or any Person controlling Financial Security (individually,
an "Indemnified Party" and, collectively, the "Indemnified Parties") in respect
of which indemnity may be sought from OFL hereunder, Financial Security shall
promptly notify OFL in writing, and OFL shall assume the defense thereof,
including the employment of counsel satisfactory to Financial Security and the
payment of all expenses. The Indemnified Party shall have the right to employ
separate counsel in any such action and to participate in the defense thereof at
the expense of the Indemnified Party; PROVIDED, HOWEVER, that the fees and
expenses of such separate counsel shall be at the expense of OFL if (i) OFL has
agreed to pay such fees and expenses, (ii) OFL shall have failed to assume the
defense of such action or proceeding and employ counsel satisfactory to
Financial Security in any such action or proceeding or (iii) the named parties
to any such action or proceeding (including any impleaded parties) include both
the Indemnified Party and the Trust, the Class GP Certificateholders, the Seller
or OFL, and the Indemnified Party shall have been advised by counsel that there
may be one or more legal defenses available to it which are different from or
additional to those available to the Trust, either Class GP Certificateholder,
the Seller or OFL (in which case, if the Indemnified Party notifies OFL in
writing that it elects to employ separate counsel at the expense of OFL, OFL
shall not have the right to assume the defense of such action or proceeding on
behalf of such Indemnified Party, it being understood, however, that OFL shall
not, in connection with any one such action or proceeding or separate but
substantially similar or related actions or proceedings in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys at any
time for the Indemnified Parties, which firm shall be designated in writing by
Financial Security). OFL shall not be liable for any settlement of any such
action or proceeding effected without its written consent to the extent that any
such settlement shall be prejudicial to it, but, if settled with its written
consent, or if there be a final judgment for the plaintiff in any such action or
proceeding with respect to which OFL shall have received notice in accordance
with this subsection (c) OFL agrees to indemnify and hold the Indemnified
Parties harmless from and against any loss or liability by reason of such
settlement or judgment.
(c) CONTRIBUTION. To provide for just and equitable contribution if
the indemnification provided by OFL is determined to be unavailable for any
Indemnified Party (other than due to
<PAGE>
application of this Section), OFL shall contribute to the losses incurred by
the Indemnified Party on the basis of the relative fault of OFL, on the one
hand, and the Indemnified Party, on the other hand.
Section 3.06. PAYMENT PROCEDURE. In the event of the incurrence by
Financial Security of any cost or expense or any payment by Financial
Security for which it is entitled to be reimbursed or indemnified as provided
above OFL agrees to accept the voucher or other evidence of payment as prima
facie evidence of the propriety thereof and the liability therefor to
Financial Security. All payments to be made to Financial Security under this
Agreement shall be made to Financial Security in lawful currency of the
United States of America in immediately available funds to the account number
provided in the Premium Letter before 1:00 p.m. (New York, New York time) on
the date when due or as Financial Security shall otherwise direct by written
notice to OFL. In the event that the date of any payment to Financial
Security or the expiration of any time period hereunder occurs on a day which
is not a Business Day, then such payment or expiration of time period shall
be made or occur on the next succeeding Business Day with the same force and
effect as if such payment was made or time period expired on the scheduled
date of payment or expiration date. Payments to be made to Financial Security
under this Agreement shall bear interest at the Late Payment Rate from the
date when due to the date paid.
Section 3.07. SUBROGATION. Subject only to the priority of payment
provisions of the Sale and Servicing Agreement, each of the Trust, the Indenture
Trustee, the Seller and OFL acknowledges that, to the extent of any payment made
by Financial Security pursuant to the Policies, Financial Security is to be
fully subrogated to the extent of such payment and any additional interest due
on any late payment, to the rights of the Noteholders and the Certificateholders
to any moneys paid or payable in respect of the Notes or the Certificates
respectively under the Transaction Documents or otherwise. Each of the Trust,
the Indenture Trustee, the Seller and OFL agrees to such subrogation and,
further, agrees to execute such instruments and to take such actions as, in the
sole judgment of Financial Security, are necessary to evidence such subrogation
and to perfect the rights of Financial Security to receive any such moneys paid
or payable in respect of the Notes or the Certificates under the Transaction
Documents or otherwise.
ARTICLE IV
FURTHER AGREEMENTS; MISCELLANEOUS
Section 4.01. EFFECTIVE DATE; TERM OF AGREEMENT. This Agreement
shall take effect on the Closing Date and shall remain in effect until the later
of (a) such time as Financial Security is no longer subject to a claim under the
Policies and the
<PAGE>
Policies shall have been surrendered to Financial Security for cancellation
and (b) all amounts payable to Financial Security, the Noteholders, and the
Certificateholders under the Transaction Documents and under the Notes and
the Certificates have been paid in full; PROVIDED, HOWEVER, that the
provisions of Sections 3.02, 3.03, 3.04, 3.05, 3.06 and 4.03 hereof shall
survive any termination of this Agreement.
Section 4.02. FURTHER ASSURANCES AND CORRECTIVE INSTRUMENTS. To the
extent permitted by law, each of the Trust, each Class GP Certificateholder, the
Seller and OFL agree that it will, from time to time, execute, acknowledge and
deliver, or cause to be executed, acknowledged and delivered, such supplements
hereto and such further instruments as Financial Security may request and as may
be required in Financial Security's judgment to effectuate the intention of or
facilitate the performance of this Agreement.
Section 4.03. OBLIGATIONS ABSOLUTE.
(a) The obligations of the Trust, each Class GP Certificateholder,
the Seller and OFL hereunder shall be absolute and unconditional, and shall be
paid or performed strictly in accordance with this Agreement under all
circumstances irrespective of:
(i) any lack of validity or enforceability of, or any amendment
or other modifications of, or waiver with respect to any of the Transaction
Documents, the Notes, the Certificates or the Policies; PROVIDED, that
Financial Security shall not have consented to any such amendment,
modification or waiver;
(ii) any exchange or release of any other obligations hereunder;
(iii) the existence of any claim, setoff, defense, reduction,
abatement or other right which the Trust, either Class GP
Certificateholder, the Seller or OFL may have at any time against Financial
Security or any other Person;
(iv) any document presented in connection with the Policies
proving to be forged, fraudulent, invalid or insufficient in any respect or
any statement therein being untrue or inaccurate in any respect;
(v) any payment by Financial Security under the Policies against
presentation of a certificate or other document which does not strictly
comply with terms of the Policies;
<PAGE>
(vi) any failure of the Seller or the Trust to receive the
proceeds from the Sale of the Notes to receive the proceeds from the sale
of the Certificates;
(vii) any breach by the Trust, the Class GP Certificateholders,
the Seller or OFL of any representation, warranty or covenant contained in
any of the Transaction Documents; or
(viii) any other circumstances, other than payment in full, which
might otherwise constitute a defense available to, or discharge of, the
Trust, either Class GP Certificateholder, the Seller or OFL in respect of
any Transaction Document.
(b) The Trust, each Class GP Certificateholder, Seller and OFL and
any and all others who are now or may become liable for all or part of the
obligations of any of them under this Agreement agree to be bound by this
Agreement and (i) to the extent permitted by law, waive and renounce any and all
redemption and exemption rights and the benefit of all valuation and
appraisement privileges against the indebtedness and obligations evidenced by
any Transaction Document or by any extension or renewal thereof; (ii) waive
presentment and demand for payment, notices of nonpayment and of dishonor,
protest of dishonor and notice of protest; (iii) waive all notices in connection
with the delivery and acceptance hereof and all other notices in connection with
the performance, default or enforcement of any payment hereunder except as
required by the Transaction Documents other than this Agreement; (iv) waive all
rights of abatement, diminution, postponement or deduction, or to any defense
other than payment, or to any right of setoff or recoupment arising out of any
breach under any of the Transaction Documents, by any party thereto or any
beneficiary thereof, or out of any obligation at any time owing to the Trust,
either Class GP Certificateholder, the Seller or OFL; (v) agree that its
liabilities hereunder shall, except as otherwise expressly provided in this
Section 4.03, be unconditional and without regard to any setoff, counterclaim or
the liability of any other Person for the payment hereof; (vi) agree that any
consent, waiver or forbearance hereunder with respect to an event shall operate
only for such event and not for any subsequent event; (vii) consent to any and
all extensions of time that may be granted by Financial Security with respect to
any payment hereunder or other provisions hereof and to the release of any
security at any time given for any payment hereunder, or any part thereof, with
or without substitution, and to the release of any Person or entity liable for
any such payment; and (viii) consent to the addition of any and all other
makers, endorsers, guarantors and other obligors for any payment hereunder, and
to the acceptance of any and all other security for any payment hereunder, and
agree that the addition of any such obligors or security shall not affect the
liability of the parties hereto for any payment hereunder.
<PAGE>
(c) Nothing herein shall be construed as prohibiting the Trust,
either Class GP Certificateholder, Seller or OFL from pursuing any rights or
remedies it may have against any other Person in a separate legal proceeding.
Section 4.04. ASSIGNMENTS; REINSURANCE; THIRD-PARTY RIGHTS.
(a) This Agreement shall be a continuing obligation of the parties
hereto and shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns. Neither the Trust, First
Class GP Certificateholder, Second Class GP Certificateholder, the Seller nor
OFL may assign its rights under this Agreement, or delegate any of its duties
hereunder, without the prior written consent of Financial Security. Any
assignment made in violation of this Agreement shall be null and void.
(b) Financial Security shall have the right to give participations in
its rights under this Agreement and to enter into contracts of reinsurance with
respect to the Policies upon such terms and conditions as Financial Security may
in its discretion determine; PROVIDED, HOWEVER, that no such participation or
reinsurance agreement or arrangement shall relieve Financial Security of any of
its obligations hereunder or under the Policies.
(c) In addition, Financial Security shall be entitled to assign or
pledge to any bank or other lender providing liquidity or credit with respect to
the Transaction or the obligations of Financial Security in connection therewith
any rights of Financial Security under the Transaction Documents or with respect
to any real or personal property or other interests pledged to Financial
Security, or in which Financial Security has a security interest, in connection
with the Transaction.
(d) Except as provided herein with respect to participants and
reinsurers, nothing in this Agreement shall confer any right, remedy or claim,
express or implied, upon any Person, including, particularly, any Noteholder or
Certificateholder (except to the extent provided herein and without limitation
of their rights to receive payments with respect to the Trust Property,
including without limitation payments under the respective Policies), other than
Financial Security, against the Trust, either Class GP Certificateholder, the
Seller, OFL or the Servicer, and all the terms, covenants, conditions, promises
and agreements contained herein shall be for the sole and exclusive benefit of
the parties hereto and their successors and permitted assigns. Neither the
Trustee, the Owner Trustee nor any Noteholder or Certificateholder shall have
any right to payment from any premiums paid or payable hereunder or from any
other amounts paid by the Seller or OFL pursuant to
<PAGE>
Section 3.02, 3.03 or 3.04 hereof (without limitation to the rights of the
Noteholders and the Certificateholders to receive payments with respect to
the Trust Property, as provided in the Indenture and the Trust Agreement).
Section 4.05. LIABILITY OF FINANCIAL SECURITY. Neither Financial
Security nor any of its officers, directors or employees shall be liable or
responsible for: (a) the use which may be made of the Policies by the Owner
Trustee or the Indenture Trustee or for any acts or omissions of the Owner
Trustee or the Indenture Trustee in connection therewith; or (b) the validity,
sufficiency, accuracy or genuineness of documents delivered to Financial
Security (or its Fiscal Agent) in connection with any claim under the Policies,
or of any signatures thereon, even if such documents or signatures should in
fact prove to be in any or all respects invalid, insufficient, fraudulent or
forged (unless Financial Security shall have actual knowledge thereof). In
furtherance and not in limitation of the foregoing, Financial Security (or its
Fiscal Agent) may accept documents that appear on their face to be in order,
without responsibility for further investigation.
ARTICLE V
EVENTS OF DEFAULT; REMEDIES
Section 5.01. EVENTS OF DEFAULT. The occurrence of any of the
following events shall constitute an Event of Default hereunder:
(a) any demand for payment shall be made under either of the
Policies;
(b) any representation or warranty made by the Trust, either of the
Class GP Certificateholders, the Seller, OFL or the Servicer under any of the
Related Documents, or in any certificate or report furnished under any of the
Related Documents, shall prove to be untrue or incorrect in any material
respect;
(c) (i) the Trust, either Class GP Certificateholder, the Seller, OFL
or the Servicer shall fail to pay when due any amount payable by the Seller, OFL
or the Servicer under any of the Related Documents (other than payments of
principal and interest on the Notes and the Certificates); (ii) the Trust,
either Class GP Certificateholder, the Seller, OFL or the Servicer shall have
asserted that any of the Transaction Documents to which it is a party is not
valid and binding on the parties thereto; or (iii) any court, governmental
authority or agency having jurisdiction over any of the parties to any of the
Transaction Documents or property thereof shall find or rule that any material
provision of any of the Transaction Documents is not valid and binding on the
parties thereto.
(d) the Trust, either Class GP Certificateholder, the Seller, OFL or
the Servicer shall fail to perform or observe any
<PAGE>
other covenant or agreement contained in any of the Related Documents (except
for the obligations described under clause (b) or (c) above) and such failure
shall continue for a period of 30 days after written notice given to the
Trust, either Class GP Certificateholder, the Seller, OFL or the Servicer (as
applicable); PROVIDED that, if such failure shall be of a nature that it
cannot be cured within 30 days, such failure shall not constitute an Event of
Default hereunder if within such 30-day period such party shall have given
notice to Financial Security of corrective action it proposes to take, which
corrective action is agreed in writing by Financial Security to be
satisfactory and such party shall thereafter pursue such corrective action
diligently until such default is cured;
(e) there shall have occurred an "Event of Default" as specified in
Section 6.01(i) or 6.01(ii) of the Senior Note Indenture or the unpaid principal
amount of, premium, if any, and accrued and unpaid interest on the Securities
(as defined in the Senior Note Indenture) shall have, upon the declaration of
the holders of the Securities, as specified in Section 6.02 of the Senior Note
Indenture, become immediately due and payable;
(f) the Trust shall adopt a voluntary plan of liquidation or shall
fail to pay its debts generally as they come due, or shall admit in writing its
inability to pay its debts generally, or shall make a general assignment for the
benefit of creditors, or shall institute any proceeding seeking to adjudicate
the Trust insolvent or seeking a liquidation, or shall take advantage of any
insolvency act, or shall commence a case or other proceeding naming the Trust as
debtor under the United States Bankruptcy Code or similar law, domestic or
foreign, or a case or other proceeding shall be commenced against the Trust
under the United States Bankruptcy Code or similar law, domestic or foreign, or
any proceeding shall be instituted against the Trust seeking liquidation of its
assets and the Trust shall fail to take appropriate action resulting in the
withdrawal or dismissal of such proceeding within 30 days or there shall be
appointed or the Trust consent to, or acquiesce in, the appointment of a
receiver, liquidator, conservator, trustee or similar official in respect of the
Trust or the whole or any substantial part of its properties or assets, or the
Trust shall take any corporate action in furtherance of any of the foregoing or
the Trust terminates pursuant to Section 9.2 of the Trust Agreement;
(g) the Trust becomes taxable as an association (or publicly traded
partnership) taxable as a corporation for federal or state income tax purposes;
(h) on any Distribution Date, the sum of Available Funds with respect
to such Distribution Date and the amounts available in the Series 1996-B Spread
Account (prior to any deposits into such Spread Account from Spread Accounts
related to any other Series) and the amount that may be withdrawn from the
<PAGE>
Reserve Account pursuant to Section 5.1 of the Sale and Servicing Agreement is
less than the sum of the amounts payable on such Distribution Date pursuant to
clauses (i) through (viii) of Section 4.6 of the Sale and Servicing Agreement;
(i) any default in the observance or performance of any covenant or
agreement of the Trust made in the Indenture (other than a default in the
payment of the interest or principal on any Note when due) or any representation
or warranty of the Trust made in the Indenture or in any certificate or other
writing delivered pursuant thereto or in connection therewith proving to have
been incorrect in any material respect as of the time when the same shall have
been made, and such default shall continue or not be cured, or the circumstance
or condition in respect of which such misrepresentation or warranty was
incorrect shall not have been eliminated or otherwise cured, for a period of 30
days after there shall have been given, by registered or certified mail, to the
Trust and the Indenture Trustee by Financial Security, a written notice
specifying such default or incorrect representation or warranty and requiring it
to be remedied;
(j) the Delinquency Ratio with respect to any Determination Date
shall have been equal to or greater than 7%;
(k) the Average Delinquency Ratio with respect to any Determination
Date shall have been equal to or greater than 5%;
(l) the Cumulative Default Rate shall be equal to or greater than (A)
3.69%, with respect to any Determination Date occurring prior to or during the
third calendar month succeeding the Series 1996-B Closing Date, (B) 7.06%, with
respect to any Determination Date occurring after the third, and prior to or
during the 6th, calendar month succeeding the Series 1996-B Closing Date, (C)
9.82%, with respect to any Determination Date occurring after the 6th, and prior
to or during the 9th, calendar month succeeding the Series 1996-B Closing Date,
(D) 12.04%, with respect to any Determination Date occurring after the 9th, and
prior to or during the 12th, calendar month succeeding the Series 1996-B Closing
Date, (E) 13.10%, with respect to any Determination Date occurring after the
12th, and prior to or during the 15th, calendar month succeeding the Series
1996-B Closing Date, (F) 14.44%, with respect to any Determination Date
occurring after the 15th, and prior to or during the 18th, calendar month
succeeding the Series 1996-B Closing Date, (G) 15.68%, with respect to any
Determination Date occurring after the 18th, and prior to or during the 21st,
calendar month succeeding the Series 1996-B Closing Date, (H) 16.65%, with
respect to any Determination Date occurring after the 21st, and prior to or
during the 24th, calendar month succeeding the Series 1996-B Closing Date, (I)
17.52%, with respect to any Determination Date occurring after the 24th, and
prior to or during the 27th, calendar month succeeding the Series 1996-B Closing
Date, (J) 18.27%, with respect to any Determination Date occurring after the
27th, and prior to or
<PAGE>
during the 30th, calendar month succeeding the Series 1996-B Closing Date,
(K) 18.81%, with respect to any Determination Date occurring after the 30th,
and prior to or during the 33rd, calendar month succeeding the Series 1996-B
Closing Date, (L) 19.23%, with respect to any Determination Date occurring
after the 33rd, and prior to or during the 36th, calendar month succeeding
the Series 1996-B Closing Date, (M) 19.57%, with respect to any Determination
Date occurring after the 36th, and prior to or during the 39th, calendar
month succeeding the Series 1996-B Closing Date, (N) 19.78%, with respect to
any Determination Date occurring after the 39th, and prior to or during the
42nd, calendar month succeeding the Series 1996-B Closing Date, (O) 20.00%,
with respect to any Determination Date occurring after the 42nd, and prior to
or during the 45th calendar month succeeding the Series 1996-B Closing Date,
(P) 20.16%, with respect to any Determination Date occurring after the 45th,
and prior to or during the 48th, calendar month succeeding the Series 1996-B
Closing Date, (Q) 20.25%, with respect to any Determination Date occurring
after the 48th, and prior to or during the 51st, calendar month succeeding
the Series 1996-B Closing Date, (R) 20.34%, with respect to any Determination
Date occurring after the 51st, and prior to or during the 54th, calendar
month succeeding the Series 1996-B Closing Date, (S) 20.39%, with respect to
any Determination Date occurring after the 54th, and prior to or during the
57th, calendar month succeeding the Series 1996-B Closing Date, (T) 20.43%,
with respect to any Determination Date occurring after the 57th, and prior to
or during the 60th, calendar month succeeding the Series 1996-B Closing Date,
(U) 20.46%, with respect to any Determination Date occurring after the 60th,
and prior to or during the 63rd, calendar month succeeding the Series 1996-B
Closing Date, (V) 20.48%, with respect to any Determination Date occurring
after the 63rd, and prior to or during the 66th, calendar month succeeding
the Series 1996-B Closing Date, (W) 20.50%, with respect to any Determination
Date occurring after the 66th, and prior to or during the 69th, calendar
month succeeding the Series 1996-B Closing Date, or (X) 20.53%, with respect
to any Determination Date occurring after the 69th calendar month succeeding
the Series 1996-B Closing Date;
(m) the Cumulative Net Loss Rate shall be equal to or greater than
(A) 1.83%, with respect to any Determination Date occurring prior to or during
the third calendar month succeeding the Series 1996-B Closing Date, (B) 3.36%,
with respect to any Determination Date occurring after the third, and prior to
or during the 6th, calendar month succeeding the Series 1996-B Closing Date, (C)
4.62%, with respect to any Determination Date occurring after the 6th, and prior
to or during the 9th, calendar month succeeding the Series 1996-B Closing Date,
(D) 5.49%, with respect to any Determination Date occurring after the 9th, and
prior to or during the 12th, calendar month succeeding the Series 1996-B Closing
Date, (E) 5.97%, with respect to any Determination Date occurring after the
12th, and prior to or during the 15th, calendar month succeeding the Series
1996-B Closing Date, (F)
<PAGE>
6.43%, with respect to any Determination Date occurring after the 15th, and
prior to or during the 18th, calendar month succeeding the Series 1996-B
Closing Date, (G) 6.80%, with respect to any Determination Date occurring
after the 18th, and prior to or during the 21st, calendar month succeeding
the Series 1996-B Closing Date, (H) 7.13%, with respect to any Determination
Date occurring after the 21st, and prior to or during the 24th, calendar
month succeeding the Series 1996-B Closing Date, (I) 7.37%, with respect to
any Determination Date occurring after the 24th, and prior to or during the
27th, calendar month succeeding the Series 1996-B Closing Date, (J) 7.62%,
with respect to any Determination Date occurring after the 27th, and prior to
or during the 30th, calendar month succeeding the Series 1996-B Closing Date,
(K) 7.77%, with respect to any Determination Date occurring after the 30th,
and prior to or during the 33rd, calendar month succeeding the Series 1996-B
Closing Date, (L) 7.92%, with respect to any Determination Date occurring
after the 33rd, and prior to or during the 36th, calendar month succeeding
the Series 1996-B Closing Date, (M) 8.02%, with respect to any Determination
Date occurring after the 36th, and prior to or during the 39th, calendar
month succeeding the Series 1996-B Closing Date, (N) 8.12%, with respect to
any Determination Date occurring after the 39th, and prior to or during the
42nd, calendar month succeeding the Series 1996-B Closing Date, (O) 8.22%,
with respect to any Determination Date occurring after the 42nd, and prior to
or during the 45th calendar month succeeding the Series 1996-B Closing Date,
(P) 8.28%, with respect to any Determination Date occurring after the 45th,
and prior to or during the 48th, calendar month succeeding the Series 1996-B
Closing Date, (Q) 8.33%, with respect to any Determination Date occurring
after the 48th, and prior to or during the 51st, calendar month succeeding
the Series 1996-B Closing Date, (R) 8.37%, with respect to any Determination
Date occurring after the 51st, and prior to or during the 54th, calendar
month succeeding the Series 1996-B Closing Date, (S) 8.41%, with respect to
any Determination Date occurring after the 54th, and prior to or during the
57th, calendar month succeeding the Series 1996-B Closing Date, (T) 8.43%,
with respect to any Determination Date occurring after the 57th, and prior to
or during the 60th, calendar month succeeding the Series 1996-B Closing Date,
(U) 8.46%, with respect to any Determination Date occurring after the 60th,
and prior to or during the 63rd, calendar month succeeding the Series 1996-B
Closing Date, (V) 8.47%, with respect to any Determination Date occurring
after the 63rd, and prior to or during the 66th, calendar month succeeding
the Series 1996-B Closing Date, (W) 8.49%, with respect to any Determination
Date occurring after the 66th, and prior to or during the 69th, calendar
month succeeding the Series 1996-B Closing Date, or (X) 8.51%, with respect
to any Determination Date occurring after the 69th calendar month succeeding
the Series 1996-B Closing Date;
(n) the occurrence of an Event of Servicing Termination under the
Sale and Servicing Agreement; or
<PAGE>
(o) the occurrence of an "Event of Default" under and as defined in
any Insurance and Indemnity Agreement among Financial Security, OFL, the Seller
and any other parties thereto, which "Event of Default" is not defined as a
"Portfolio Performance Event of Default" in such Insurance and Indemnity
Agreement.
Section 5.02. REMEDIES; WAIVERS.
(a) Upon the occurrence of an Event of Default, Financial Security
may exercise any one or more of the rights and remedies set forth below:
(i) declare the Premium Supplement to be immediately due and
payable, and the same shall thereupon be immediately due and payable,
whether or not Financial Security shall have declared an "Event of Default"
or shall have exercised, or be entitled to exercise, any other rights or
remedies hereunder;
(ii) exercise any rights and remedies available under the
Transaction Documents in its own capacity or in its capacity as the Person
entitled to exercise the rights of Controlling Party under the Transaction
Documents; or
(iii) take whatever action at law or in equity as may appear
necessary or desirable in its judgment to enforce performance of any
obligation of the Trust, each Class GP Certificateholder, the Seller or OFL
under the Transaction Documents; PROVIDED, HOWEVER, that Financial Security
shall not be entitled hereunder to file any petition with respect to the
Trust or the Trust Property under any bankruptcy or insolvency law.
(b) Unless otherwise expressly provided, no remedy herein conferred
upon or reserved is intended to be exclusive of any other available remedy, but
each remedy shall be cumulative and shall be in addition to other remedies given
under the Transaction Documents or existing at law or in equity. No delay or
failure to exercise any right or power accruing under any Transaction Document
upon the occurrence of any Event of Default or otherwise shall impair any such
right or power or shall be construed to be a waiver thereof, but any such right
and power may be exercised from time to time and as often as may be deemed
expedient. In order to entitle Financial Security to exercise any remedy
reserved to Financial Security in this Article, it shall not be necessary to
give any notice.
(c) If any proceeding has been commenced 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 Financial
Security, then and in every such case the
<PAGE>
parties hereto shall, subject to any determination in such proceeding, be
restored to their respective former positions hereunder, and, thereafter, all
rights and remedies of Financial Security shall continue as though no such
proceeding had been instituted.
(d) Financial Security shall have the right, to be exercised in its
complete discretion, to waive any covenant, Default or Event of Default by a
writing setting forth the terms, conditions and extent of such waiver signed by
Financial Security and delivered to the Seller and OFL. Any such waiver may
only be effected in writing duly executed by Financial Security, and no other
course of conduct shall constitute a waiver of any provision hereof. Unless
such writing expressly provides to the contrary, any waiver so granted shall
extend only to the specific event or occurrence so waived and not to any other
similar event or occurrence which occurs subsequent to the date of such waiver.
ARTICLE VI
MISCELLANEOUS
Section 6.01. AMENDMENTS, ETC. This Agreement may be amended,
modified or terminated only by written instrument or written instruments signed
by the parties hereto. No act or course of dealing shall be deemed to
constitute an amendment, modification or termination hereof.
Section 6.02. NOTICES. All demands, notices and other communications
to be given hereunder shall be in writing (except as otherwise specifically
provided herein) and shall be mailed by registered mail or overnight carrier,
personally delivered or telecopied (with confirmation by registered mail) to the
recipient as follows:
(a) To Financial Security:
Financial Security Assurance Inc.
350 Park Avenue
New York, New York 10022
Attention: Surveillance Department
Confirmation: (212) 826-0100
Telecopy Nos.: (212) 339-3518
(212) 339-3529
(in each case in which notice or other communication to Financial
Security refers to an Event of Default, a claim on either Policy
or with respect to which failure on the part of Financial
Security to respond shall be deemed to constitute consent or
acceptance, then a copy of such notice or other communication
should also be sent to the attention of each of the General
Counsel and the
<PAGE>
Head--Financial Guaranty Group and shall be
marked to indicate "URGENT MATERIAL ENCLOSED.")
(b) To the Seller:
Olympic Receivables Finance Corp.
7825 Washington Avenue South, Suite 410
Minneapolis, Minnesota 55439-2435
Telephone: (612) 942-9888
Telecopier: (612) 942-6730
(c) To OFL:
Olympic Financial Ltd.
7825 Washington Avenue South
Minneapolis, Minnesota 55439-2435
Telephone: (612) 942-9880
Telecopier: (612) 942-6730
(d) To First Class GP Certificateholder:
Olympic First GP Inc.
7825 Washington Avenue South
Minneapolis, Minnesota 55439-2435
Telephone: (612) 942-9880
Telecopier: (612) 942-6730
(e) To Second Class GP Certificateholder:
Olympic Second GP Inc.
7825 Washington Avenue South
Minneapolis, Minnesota 55439-2435
Telephone: (612) 942-9880
Telecopier: (612) 942-6730
(f) To the Trust:
Olympic Automobile Receivables Trust, 1996-B
c/o Mellon Bank (DE), National Association,
as Owner Trustee
919 North Market Street, Second Floor
Wilmington, Delaware 19801
Attention: Robert H. Bell
Telephone: (302) 421-2283
Telecopier: (302) 421-2323
with a copy to:
Mellon Bank, National Association
Two Mellon Bank Center
Room 325
Pittsburgh, Pennsylvania 15259
<PAGE>
Attention: Kent Christman
Telephone: (412) 234-5737
Telecopier: (412) 234-9196
A party may specify an additional or different address or addresses by
writing mailed or delivered to the other party as aforesaid. All such notices
and other communications shall be effective upon receipt.
Section 6.03. SEVERABILITY. In the event that any provision of this
Agreement shall be held invalid or unenforceable by any court of competent
jurisdiction, the parties hereto agree that such holding shall not invalidate or
render unenforceable any other provision hereof. The parties hereto further
agree that the holding by any court of competent jurisdiction that any remedy
pursued by any party hereto is unavailable or unenforceable shall not affect in
any way the ability of such party to pursue any other remedy available to it.
Section 6.04. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
Section 6.05. CONSENT TO JURISDICTION.
(a) TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE PARTIES
THERETO HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND 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 TO OR
IN CONNECTION WITH ANY OF THE TRANSACTION DOCUMENTS OR THE TRANSACTION OR FOR
RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND THE PARTIES HERETO HEREBY
IRREVOCABLY AND UNCONDITIONALLY AGREE THAT ALL CLAIMS IN RESPECT OF ANY SUCH
ACTION OR PROCEEDING MAY BE HEARD OR DETERMINED IN SUCH NEW YORK STATE COURT OR
IN SUCH FEDERAL COURT. THE PARTIES HERETO AGREE 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, THE PARTIES HERETO HEREBY WAIVE AND
AGREE 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 THE RELATED DOCUMENTS OR THE SUBJECT MATTER THEREOF MAY NOT BE
LITIGATED IN OR BY SUCH COURTS.
(b) To the extent permitted by applicable law, the parties hereto
shall not seek and hereby waive the right to any review of the judgment of any
such court by any court of any other
<PAGE>
nation or jurisdiction which may be called upon to grant an enforcement of
such judgment.
(c) Each of the Class GP Certificateholders, OFL and the Seller
hereby irrevocably appoints and designates CT Corporation System, whose address
is 1633 Broadway, New York, New York 10019, as its true and lawful attorney and
duly authorized agent for acceptance of service of legal process. Each of the
Class GP Certificateholders, the Seller and OFL agrees that service of such
process upon such Person shall constitute personal service of such process upon
it.
(d) Nothing contained in the Agreement shall limit or affect
Financial Security's right to serve process in any other manner permitted by law
or to start legal proceedings relating to any of the Transaction Documents
against the Seller or OFL or its property in the courts of any jurisdiction.
Section 6.06. CONSENT OF FINANCIAL SECURITY. In the event that
Financial Security's consent is required under any of the Transaction Documents,
the determination whether to grant or withhold such consent shall be made by
Financial Security in its sole discretion without any implied duty towards any
other Person, except as otherwise expressly provided therein.
Section 6.07. COUNTERPARTS. This Agreement may be executed in
counterparts by the parties hereto, and all such counterparts shall constitute
one and the same instrument.
Section 6.08. HEADINGS. The headings of articles and sections 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. Unless otherwise indicated, all references to articles and
sections in this Agreement refer to the corresponding articles and sections of
this Agreement.
Section 6.09. TRIAL BY JURY WAIVED. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION ARISING DIRECTLY OR INDIRECTLY OUT OF, UNDER OR IN CONNECTION
WITH ANY OF THE TRANSACTION DOCUMENTS OR THE TRANSACTION. EACH PARTY HERETO (A)
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY PARTY HERETO HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT IT WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
HAS BEEN INDUCED TO ENTER INTO THE TRANSACTION DOCUMENTS TO WHICH IT IS A PARTY
BY, AMONG OTHER THINGS, THIS WAIVER.
Section 6.10. LIMITED LIABILITY. No recourse under any Transaction
Document shall be had against, and no personal liability shall attach to, any
officer, employee, director, affiliate or shareholder of any party hereto, as
such, by the
<PAGE>
enforcement of any assessment or by any legal or equitable proceeding, by
virtue of any statute or otherwise in respect of any of the Transaction
Documents, the Notes, the Certificates or the Policies, it being expressly
agreed and understood that each Transaction Document is solely a corporate
obligation of each party hereto, and that any and all personal liability,
either at common law or in equity, or by statute or constitution, of every
such officer, employee, director, affiliate or shareholder for breaches by
any party hereto of any obligations under any Transaction Document is hereby
expressly waived as a condition of and in consideration for the execution and
delivery of this Agreement.
Section 6.11. LIMITED LIABILITY OF MELLON BANK (DE), NATIONAL
ASSOCIATION. It is expressly understood and agreed by the parties hereto that
(a) this Agreement is executed and delivered by Mellon Bank (DE), National
Association, not individually or personally but solely as Owner Trustee on
behalf of the Trust, (b) each of the representations, undertakings and
agreements herein made on the part of the Trust is made and intended not as
personal representations, undertakings and agreements by Mellon Bank (DE),
National Association, but are made and intended for the purpose of binding only
the Trust Estate, (c) nothing herein contained shall be construed as creating
any liability on Mellon Bank (DE), National Association, individually or
personally, to perform any covenant of the Trust either expressed or implied
contained herein, all such liability, if any, being expressly waived by the
parties hereto and by any person claiming by, through or under such parties and
(d) under no circumstances shall Mellon Bank (DE), National Association be
personally liable for the payment of any indebtedness or expenses of the Trust
or be liable for the breach or failure of any obligation, representation,
warranty or covenant made or undertaken by the Trust under this Agreement.
Section 6.12. ENTIRE AGREEMENT. This Agreement and the Policies set
forth the entire agreement between the parties with respect to the subject
matter thereof, and this Agreement supersedes and replaces any agreement or
understanding that may have existed between the parties prior to the date hereof
in respect of such subject matter.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Insurance and Indemnity Agreement, all as of the day and year
first above written.
FINANCIAL SECURITY ASSURANCE INC.
By:
Name:
Title: Authorized Officer
OLYMPIC AUTOMOBILE RECEIVABLES
TRUST, 1996-B
By: Mellon Bank (DE), National Association,
not in its individual capacity, but solely in
its capacity as Owner Trustee under the Trust
Agreement
By:
Name: E.D. Renn
Title: Vice President
OLYMPIC FIRST GP INC.
By:
Name: John A. Witham
Title: Vice President and Chief
Financial Officer
OLYMPIC SECOND GP INC.
By:
Name: John A. Witham
Title: Vice President and Chief
Financial Officer
OLYMPIC FINANCIAL LTD.
By:
Name: John A. Witham
Title: Executive Vice President and
Chief Financial Officer
OLYMPIC RECEIVABLES FINANCE CORP.
By:
Name: John A. Witham
Title: Senior Vice President and
Chief Financial Officer
<PAGE>
INSURANCE AND INDEMNITY AGREEMENT
among
FINANCIAL SECURITY ASSURANCE INC.,
OLYMPIC AUTOMOBILE RECEIVABLES TRUST, 1996-B,
OLYMPIC FIRST GP INC.,
OLYMPIC SECOND GP INC.,
OLYMPIC RECEIVABLES FINANCE CORP.
and
OLYMPIC FINANCIAL LTD.
Dated as of June 14, 1996
Olympic Automobile Receivables Trust, 1996-B
5.39% Class A-1 Money Market Automobile Receivables-Backed Notes
6.00% Class A-2 Automobile Receivables-Backed Notes
6.50% Class A-3 Automobile Receivables-Backed Notes
6.70% Class A-4 Automobile Receivables-Backed Notes
6.90% Class A-5 Automobile Receivables-Backed Notes
6.90% Automobile Receivables-Backed Certificates
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.01. Representations and Warranties of the Trust. . . . . . . . . 8
Section 2.02. Affirmative Covenants of the Trust . . . . . . . . . . . . . 11
Section 2.03. Negative Covenants of the Trust. . . . . . . . . . . . . . . 17
Section 2.04. Representations and Warranties of OFL and of the Class GP
Certificateholders . . . . . . . . . . . . . . . . . . . . . 18
Section 2.05. Affirmative Covenants of OFL and each Class GP
Certificateholder. . . . . . . . . . . . . . . . . . . . . . 21
Section 2.06. Negative Covenants of OFL and each Class GP . . . . . . . . 25
Certificateholder
Section 2.07. Representations and Warranties of OFL and the Seller . . . . 27
Section 2.08. Affirmative Covenants of OFL and the Seller. . . . . . . . . 31
Section 2.09. Negative Covenants of OFL and the Seller . . . . . . . . . . 36
Section 2.10. Representations and Warranties of OFL. . . . . . . . . . . . 38
Section 2.11. Affirmative Covenants of OFL . . . . . . . . . . . . . . . . 40
Section 2.12. Negative Covenants of OFL. . . . . . . . . . . . . . . . . . 43
ARTICLE III
THE POLICIES; REIMBURSEMENT; INDEMNIFICATION
Section 3.01. Conditions Precedent to Issuance of the Policies . . . . . . 45
Section 3.02. Payment of Fees and Premium. . . . . . . . . . . . . . . . . 51
Section 3.03. Reimbursement and Additional Payment Obligation. . . . . . . 51
Section 3.04. Certain Obligations Not Recourse to OFL; Recourse to
Trust Property . . . . . . . . . . . . . . . . . . . . . . . 52
Section 3.05. Indemnification. . . . . . . . . . . . . . . . . . . . . . . 53
Section 3.06. Payment Procedure. . . . . . . . . . . . . . . . . . . . . . 54
Section 3.07. Subrogation. . . . . . . . . . . . . . . . . . . . . . . . . 55
ARTICLE IV
FURTHER AGREEMENTS; MISCELLANEOUS
Section 4.01. Effective Date; Term of Agreement. . . . . . . . . . . . . . 55
<PAGE>
Page
Section 4.02. Further Assurances and Corrective Instruments. . . . . . . . 55
Section 4.03. Obligations Absolute . . . . . . . . . . . . . . . . . . . . 56
Section 4.04. Assignments; Reinsurance; Third-Party Rights . . . . . . . . 57
Section 4.05. Liability of Financial Security. . . . . . . . . . . . . . . 58
ARTICLE V
EVENTS OF DEFAULT; REMEDIES
Section 5.01. Events of Default. . . . . . . . . . . . . . . . . . . . . . 58
Section 5.02. Remedies; Waivers. . . . . . . . . . . . . . . . . . . . . . 62
ARTICLE VI
MISCELLANEOUS
Section 6.01. Amendments, Etc. . . . . . . . . . . . . . . . . . . . . . . 63
Section 6.02. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 6.03. Severability . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 6.04. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . 65
Section 6.05. Consent to Jurisdiction. . . . . . . . . . . . . . . . . . . 65
Section 6.06. Consent of Financial Security. . . . . . . . . . . . . . . . 66
Section 6.07. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 6.08. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 6.09. Trial by Jury Waived . . . . . . . . . . . . . . . . . . . . 67
Section 6.10. Limited Liability. . . . . . . . . . . . . . . . . . . . . . 67
Section 6.11. Limited Liability of Mellon Bank (DE), National Association. 67
Section 6.12. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . 67
<PAGE>
AMENDMENT
dated as of May 31, 1996
among
OLYMPIC FINANCIAL LTD.
OLYMPIC RECEIVABLES FINANCE CORP.
FINANCIAL SECURITY ASSURANCE INC.
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Collateral Agent
to
Series 1996-A Supplement dated as of March 14, 1996
Series 1995-E Supplement dated as of December 6, 1995
Series 1995-D Supplement dated as of September 21, 1995
Series 1995-C Supplement dated as of June 15, 1995
Series 1995-B Supplement dated as of March 15, 1995
Series 1995-A Supplement dated as of February 9, 1995
to
Spread Account Agreement
dated as of March 25, 1993
as amended and restated as of December 6, 1995
<PAGE>
Amendment dated as of May 31, 1996, among OLYMPIC FINANCIAL LTD., a
Minnesota corporation ("OFL"), OLYMPIC RECEIVABLES FINANCE CORP., a Delaware
corporation (the "Seller"), FINANCIAL SECURITY ASSURANCE INC., a New York
stock insurance company ("Financial Security") and NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, as Collateral Agent, to Series 1996-A Supplement dated
as of March 14, 1996 (the "Series 1996-A Supplement"), Series 1995-E
Supplement dated as of December 6, 1995 (the "Series 1995-E Supplement"),
Series 1995-D Supplement dated as of September 21, 1995, as amended by that
certain Amendment to Series Supplements (the "December 1995 Amendment") to
Spread Account Agreement dated as of December 6, 1995 (as amended, the
"Series 1995-D Supplement"), Series 1995-C Supplement dated as of June 15,
1995, as amended by that certain Amendment to Series Supplements (the
"September 1995 Amendment") to Spread Account Agreement dated as of September
21, 1995, and as further amended by the December 1995 Amendment (as amended,
the "Series 1995-C Supplement"), Series 1995-B Supplement dated as of March
15, 1995, as amended by that certain Amendment to Series Supplements (the
"June 1995 Amendment") to Spread Account Agreement dated as of June 15, 1995,
as further amended by the September 1995 Amendment, and as further amended by
the December 1995 Amendment (as amended, the "Series 1995-B Supplement") and
the Series 1995-A Supplement dated as of February 9, 1995, as amended by the
June 1995 Amendment, as further amended by the September 1995 Amendment and
as further amended by the December 1995 Amendment (as amended, the "Series
1995-A Supplement") (collectively, the "Series Supplements") to the Spread
Account Agreement, dated as of March 25, 1993, as amended and restated as of
December 6, 1995, among OFL, the Seller, Financial Security and Norwest Bank
Minnesota National Association as Trustee and as Collateral Agent (the
"Spread Account Agreement").
WHEREAS, Section 8.03 of the Spread Account Agreement permits amendment
of the Spread Account Agreement upon the terms and conditions specified
therein.
WHEREAS, parties to the Spread Account Agreement (the "Parties") have
heretofore executed the Series Supplements;
WHEREAS, the Parties wish to amend the Series Supplements.
NOW, THEREFORE, the Parties agree that the Series Supplements are hereby
amended effective as of the date hereof as follows:
Section 1. DEFINITIONS. Each term used but not defined herein shall
have the meaning assigned to such term in the Spread Account Agreement or in
the relevant Series Supplement thereto, and when used herein with respect to
a particular Series shall have the meaning assigned to such term of such
Series.
Section 2. AMENDMENT OF CERTAIN TERMS OF THE SERIES SUPPLEMENTS.
<PAGE>
(a) Section 1.1 of the Series 1996-A Supplement is amended as follows:
(1) The following definition of "Deemed Cured" is added:
"DEEMED CURED" means, (a) with respect to a Trigger Event that
has occurred pursuant to clause (i) or (ii) of the definition thereof,
as of a Determination Date with respect to Series 1996-A, that no such
clause (i) or clause (ii) Trigger Event with respect to such Series
shall have occurred as of such Determination Date or as of any of the
five consecutively preceding Determination Dates, and (b) with respect
to a Trigger Event that has occurred pursuant to clause (iii) or
clause (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 Series 1996-A Closing Date, that no such clause
(iii) or clause (iv) Trigger Event with respect to such Series shall
have occurred as of such Determination Date.
(2) Paragraphs (iii) and (iv) of the definition of "Trigger Event"
in the Series 1996-A Supplement are amended to read in their entirety as
follows:
(iii) the Cumulative Default Rate shall be equal to or
greater than (A) 2.60%, with respect to any Determination
Date occurring prior to or during the third calendar
month succeeding the Series 1996-A Closing Date, (B) 4.66%,
with respect to any Determination Date occurring after the
third, and prior to or during the 6th, calendar month
succeeding the Series 1996-A Closing Date, (C) 6.42%,
with respect to any Determination Date occurring after
the 6th, and prior to or during the 9th, calendar month
succeeding the Series 1996-A Closing Date, (D) 7.81%,
with respect to any Determination Date occurring after
the 9th, and prior to or during the 12th, calendar month
succeeding the Series 1996-A Closing Date, (E) 8.46%, with
respect to any Determination Date occurring after the 12th,
and prior to or during the 15th, calendar month succeeding
the Series 1996-A Closing Date, (F) 9.24%, with respect
to any Determination Date occurring after the 15th, and
prior to or during the 18th, calendar month succeeding
the Series 1996-A Closing Date, (G) 9.97%, with respect
to any Determination Date occurring after the 18th,
<PAGE>
and prior to or during the 21st, calendar month succeeding
the Series 1996-A Closing Date, (H) 10.59%, with
respect to any Determination Date occurring after the
21st, and prior to or during the 24th, calendar month
succeeding the Series 1996-A Closing Date, (I) 11.12%,
with respect to any Determination Date occurring after
the 24th, and prior to or during the 27th, calendar
month succeeding the Series 1996-A Closing Date, (J)
11.60%, with respect to any Determination Date
occurring after the 27th, and prior to or during the
30th, calendar month succeeding the Series 1996-A
Closing Date, (K) 11.91%, with respect to any
Determination Date occurring after the 30th, and prior
to or during the 33rd, calendar month succeeding the
Series 1996-A Closing Date, (L) 12.17%, with respect to
any Determination Date occurring after the 33rd, and
prior to or during the 36th, calendar month succeeding
the Series 1996-A Closing Date, (M) 12.36%, with
respect to any Determination Date occurring after the
36th, and prior to or during the 39th, calendar month
succeeding the Series 1996-A Closing Date, (N) 12.49%,
with respect to any Determination Date occurring after
the 39th, and prior to or during the 42nd, calendar
month succeeding the Series 1996-A Closing Date, (O)
12.62%, with respect to any Determination Date
occurring after the 42nd, and prior to or during the
45th calendar month succeeding the Series 1996-A
Closing Date, (P) 12.71%, with respect to any
Determination Date occurring after the 45th, and prior
to or during the 48th, calendar month succeeding the
Series 1996-A Closing Date, (Q) 12.77%, with respect to
any Determination Date occurring after the 48th, and
prior to or during the 51st, calendar month succeeding
the Series 1996-A Closing Date, (R) 12.82%, with
respect to any Determination Date occurring after the
51st, and prior to or during the 54th, calendar month
succeeding the Series 1996-A Closing Date, (S) 12.86%,
with respect to any Determination Date occurring after
the 54th, and prior to or during the 57th, calendar
month succeeding the Series 1996-A Closing Date, (T)
12.90%, with respect to any Determination Date
occurring after the 57th, and prior to or during the
60th, calendar month succeeding the Series 1996-A Closing
<PAGE>
Date, (U) 12.92%, with respect to any Determination Date
occurring after the 60th, and prior to or during the 63rd,
calendar month succeeding the Series 1996-A Closing Date,
(V) 12.94%, with respect to any Determination Date occurring
after the 63rd, and prior to or during the 66th, calendar
month succeeding the Series 1996-A Closing Date, (W) 12.96%,
with respect to any Determination Date occurring after the
66th, and prior to or during the 69th, calendar month
succeeding the Series 1996-A Closing Date, or (X)
12.98%, with respect to any Determination Date
occurring after the 69th calendar month succeeding the
Series 1996-A Closing Date; or
(iv) the Cumulative Net Loss Rate shall be equal to or greater
than (A) 1.27%, with respect to any Determination Date
occurring prior to or during the third calendar month
succeeding the Series 1996-A Closing Date, (B) 2.22%, with
respect to any Determination Date occurring after the third,
and prior to or during the 6th, calendar month succeeding
the Series 1996-A Closing Date, (C) 3.00%, with respect to
any Determination Date occurring after the 6th, and prior to
or during the 9th, calendar month succeeding the Series
1996-A Closing Date, (D) 3.58%, with respect to any
Determination Date occurring after the 9th, and prior to or
during the 12th, calendar month succeeding the Series 1996-A
Closing Date, (E) 3.88%, with respect to any Determination
Date occurring after the 12th, and prior to or during the
15th, calendar month succeeding the Series 1996-A Closing
Date, (F) 4.16%, with respect to any Determination Date
occurring after the 15th, and prior to or during the 18th,
calendar month succeeding the Series 1996-A Closing Date,
(G) 4.41%, with respect to any Determination Date occurring
after the 18th, and prior to or during the 21st, calendar
month succeeding the Series 1996-A Closing Date, (H) 4.64%,
with respect to any Determination Date occurring after the
21st, and prior to or during the 24th, calendar month
succeeding the Series 1996-A Closing Date, (I) 4.81%, with
respect to any Determination Date occurring after the 24th,
and prior to or during the 27th, calendar month succeeding
the Series 1996-A Closing
<PAGE>
Date, (J) 4.99%, with respect to any Determination Date
occurring after the 27th, and prior to or during the 30th,
calendar month succeeding the Series 1996-A Closing Date,
(K) 5.09%, with respect to any Determination Date occurring
after the 30th, and prior to or during the 33rd, calendar
month succeeding the Series 1996-A Closing Date, (L) 5.19%,
with respect to any Determination Date occurring after
the 33rd, and prior to or during the 36th, calendar month
succeeding the Series 1996-A Closing Date, (M) 5.25%, with
respect to any Determination Date occurring after the 36th,
and prior to or during the 39th, calendar month succeeding
the Series 1996-A Closing Date, (N) 5.31%, with respect to
any Determination Date occurring after the 39th, and prior
to or during the 42nd, calendar month succeeding the
Series 1996-A Closing Date, (O) 5.38%, with respect to any
Determination Date occurring after the 42nd, and prior to
or during the 45th calendar month succeeding the
Series 1996-A Closing Date, (P) 5.41%, with respect to any
Determination Date occurring after the 45th, and prior to
or during the 48th, calendar month succeeding the
Series 1996-A Closing Date, (Q) 5.44%, with respect to
any Determination Date occurring after the 48th, and prior
to or during the 51st, calendar month succeeding the Series
1996-A Closing Date, (R) 5.46%, with respect to any
Determination Date occurring after the 51st, and prior to or
during the 54th, calendar month succeeding the Series 1996-A
Closing Date, (S) 5.49%, with respect to any Determination
Date occurring after the 54th, and prior to or during the
57th, calendar month succeeding the Series 1996-A Closing
Date, (T) 5.51%, with respect to any Determination Date
occurring after the 57th, and prior to or during the 60th,
calendar month succeeding the Series 1996-A Closing Date,
(U) 5.52%, with respect to any Determination Date occurring
after the 60th, and prior to or during the 63rd, calendar
month succeeding the Series 1996-A Closing Date, (V) 5.54%,
with respect to any Determination Date occurring after the
63rd, and prior to or during the 66th, calendar month
succeeding the Series 1996-A Closing Date, (W) 5.55%, with
respect to any Determination Date occurring after the 66th,
<PAGE>
and prior to or during the 69th, calendar month succeeding
the Series 1996-A Closing Date, or (X) 5.56%, with respect
to any Determination Date occurring after the 69th calendar
month succeeding the Series 1996-A Closing Date.
(b) Section 1.1 of the Series 1995-E Supplement is amended as
follows:
(1) The following definition of "Deemed Cured" is added:
"DEEMED CURED" means, (a) with respect to a Trigger Event that
has occurred pursuant to clause (i) or (ii) of the definition thereof,
as of a Determination Date with respect to Series 1995-E, that no such
clause (i) or clause (ii) Trigger Event with respect to such Series
shall have occurred as of such Determination Date or as of any of the
five consecutively preceding Determination Dates, and (b) with respect
to a Trigger Event that has occurred pursuant to clause (iii) or
clause (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 Series 1995-E Closing Date, that no such clause
(iii) or clause (iv) Trigger Event with respect to such Series shall
have occurred as of such Determination Date.
(2) Paragraphs (iii) and (iv) of the definition of "Trigger Event" in
the Series 1995-E Supplement are amended to read in their entirety as follows:
(iii)the Cumulative Default Rate shall be equal to or
greater than (A) 2.60%, with respect to any
Determination Date occurring prior to or during the
third calendar month succeeding the Series 1995-E
Closing Date, (B) 4.64%, with respect to any
Determination Date occurring after the third, and prior
to or during the 6th, calendar month succeeding the
Series 1995-E Closing Date, (C) 6.37%, with respect to
any Determination Date occurring after the 6th, and
prior to or during the 9th, calendar month succeeding
the Series 1995-E Closing Date, (D) 7.72%, with respect
to any Determination Date occurring after the 9th, and
prior to or during the 12th, calendar month succeeding
the Series 1995-E Closing Date, (E) 8.35%, with respect
to any Determination Date occurring after the 12th, and
prior to or during the 15th, calendar month succeeding
the Series 1995-E Closing
<PAGE>
Date, (F) 9.09%, with respect to any Determination Date
occurring after the 15th, and prior to or during the 18th,
calendar month succeeding the Series 1995-E Closing Date,
(G) 9.78%, with respect to any Determination Date occurring
after the 18th, and prior to or during the 21st, calendar
month succeeding the Series 1995-E Closing Date, (H) 10.38%,
with respect to any Determination Date occurring after the
21st, and prior to or during the 24th, calendar month
succeeding the Series 1995-E Closing Date, (I) 10.89%,
with respect to any Determination Date occurring after
the 24th, and prior to or during the 27th, calendar
month succeeding the Series 1995-E Closing Date, (J)
11.37%, with respect to any Determination Date
occurring after the 27th, and prior to or during the
30th, calendar month succeeding the Series 1995-E
Closing Date, (K) 11.66%, with respect to any
Determination Date occurring after the 30th, and prior
to or during the 33rd, calendar month succeeding the
Series 1995-E Closing Date, (L) 11.91%, with respect to
any Determination Date occurring after the 33rd, and
prior to or during the 36th, calendar month succeeding
the Series 1995-E Closing Date, (M) 12.08%, with
respect to any Determination Date occurring after the
36th, and prior to or during the 39th, calendar month
succeeding the Series 1995-E Closing Date, (N) 12.21%,
with respect to any Determination Date occurring after
the 39th, and prior to or during the 42nd, calendar
month succeeding the Series 1995-E Closing Date, (O)
12.34%, with respect to any Determination Date
occurring after the 42nd, nd prior to or during the
45th calendar month succeeding the Series 1995-E
Closing Date, (P) 12.43%, with respect to any
Determination Date occurring after the 45th, and prior
to or during the 48th, calendar month succeeding the
Series 1995-E Closing Date, (Q) 12.48%, with respect to
any Determination Date occurring after the 48th, and
prior to or during the 51st, calendar month succeeding
the Series 1995-E Closing Date, (R) 12.53%, with
respect to any Determination Date occurring after the
51st, and prior to or during the 54th, calendar month
succeeding the Series 1995-E Closing Date, (S) 12.57%,
with respect to any Determination Date occurring after
the 54th,
<PAGE>
and prior to or during the 57th, calendar month succeeding
the Series 1995-E Closing Date, (T) 12.61%, with respect to
any Determination Date occurring after the 57th, and prior
to or during the 60th, calendar month succeeding the
Series 1995-E Closing Date, (U) 12.63%, with respect to any
Determination Date occurring after the 60th, and prior
to or during the 63rd, calendar month succeeding the
Series 1995-E Closing Date, (V) 12.65%, with respect to
any Determination Date occurring after the 63rd, and
prior to or during the 66th, calendar month succeeding
the Series 1995-E Closing Date, (W) 12.67%, with
respect to any Determination Date occurring after the
66th, and prior to or during the 69th, calendar month
succeeding the Series 1995-E Closing Date, or (X)
12.69%, with respect to any Determination Date
occurring after the 69th calendar month succeeding the
Series 1995-E Closing Date; or
(iv) the Cumulative Net Loss Rate shall be equal to or greater
than (A) 1.26%, with respect to any Determination Date
occurring prior to or during the third calendar month
succeeding the Series 1995-E Closing Date, (B) 2.20%, with
respect to any Determination Date occurring after the third,
and prior to or during the 6th, calendar month succeeding
the Series 1995-E Closing Date, (C) 2.97%, with respect to
any Determination Date occurring after the 6th, and prior to
or during the 9th, calendar month succeeding the Series
1995-E Closing Date, (D) 3.54%, with respect to any
Determination Date occurring after the 9th, and prior to or
during the 12th, calendar month succeeding the Series 1995-E
Closing Date, (E) 3.83%, with respect to any Determination
Date occurring after the 12th, and prior to or during the
15th, calendar month succeeding the Series 1995-E Closing
Date, (F) 4.11%, with respect to any Determination Date
occurring after the 15th, and prior to or during the 18th,
calendar month succeeding the Series 1995-E Closing Date,
(G) 4.36%, with respect to any Determination Date occurring
after the 18th, and prior to or during the 21st, calendar
month succeeding the Series 1995-E Closing Date, (H) 4.59%,
with respect to any Determination Date occurring after the
21st, and prior to or during the 24th, calendar
<PAGE>
month succeeding the Series 1995-E Closing Date, (I) 4.77%,
with respect to any Determination Date occurring after the
24th, and prior to or during the 27th, calendar month
succeeding the Series 1995-E Closing Date, (J) 4.95%, with
respect to any Determination Date occurring after the 27th,
and prior to or during the 30th, calendar month succeeding
the Series 1995-E Closing Date, (K) 5.05%, with respect to
any Determination Date occurring after the 30th, and prior
to or during the 33rd, calendar month succeeding the
Series 1995-E Closing Date, (L) 5.15%, with respect to any
Determination Date occurring after the 33rd, and prior to or
during the 36th, calendar month succeeding the Series 1995-E
Closing Date, (M) 5.21%, with respect to any Determination
Date occurring after the 36th, and prior to or during the
39th, calendar month succeeding the Series 1995-E Closing
Date, (N) 5.27%, with respect to any Determination Date
occurring after the 39th, and prior to or during the 42nd,
calendar month succeeding the Series 1995-E Closing Date,
(O) 5.33%, with respect to any Determination Date occurring
after the 42nd, and prior to or during the 45th calendar
month succeeding the Series 1995-E Closing Date, (P) 5.37%,
with respect to any Determination Date occurring after the
45th, and prior to or during the 48th, calendar month
succeeding the Series 1995-E Closing Date, (Q) 5.39%, with
respect to any Determination Date occurring after the 48th,
and prior to or during the 51st, calendar month succeeding
the Series 1995-E Closing Date, (R) 5.42%, with respect to
any Determination Date occurring after the 51st, and prior
to or during the 54th, calendar month succeeding the
Series 1995-E Closing Date, (S) 5.44%, with respect to any
Determination Date occurring after the 54th, and prior to or
during the 57th, calendar month succeeding the Series 1995-E
Closing Date, (T) 5.46%, with respect to any Determination
Date occurring after the 57th, and prior to or during the
60th, calendar month succeeding the Series 1995-E Closing
Date, (U) 5.48%, with respect to any Determination Date
occurring after the 60th, and prior to or during the 63rd,
calendar month succeeding the Series 1995-E Closing Date,
(V) 5.49%, with respect to any
<PAGE>
Determination Date occurring after the 63rd, and prior to
or during the 66th, calendar month succeeding the
Series 1995-E Closing Date, (W) 5.50%, with respect to any
Determination Date occurring after the 66th, and prior to
or during the 69th, calendar month succeeding the
Series 1995-E Closing Date, or (X) 5.51%, with respect
to any Determination Date occurring after the 69th calendar
month succeeding the Series 1995-E Closing Date.
(c) Section 1.1 of the Series 1995-D Supplement is amended as follows:
(1) The following definition of "Deemed Cured" is added:
"DEEMED CURED" means, (a) with respect to a Trigger Event that
has occurred pursuant to clause (i) or (ii) of the definition thereof,
as of a Determination Date with respect to Series 1995-D, that no such
clause (i) or clause (ii) Trigger Event with respect to such Series
shall have occurred as of such Determination Date or as of any of the
five consecutively preceding Determination Dates, and (b) with respect
to a Trigger Event that has occurred pursuant to clause (iii) or
clause (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 Series 1995-D Closing Date, that no such clause
(iii) or clause (iv) Trigger Event with respect to such Series shall
have occurred as of such Determination Date.
(2) Paragraphs (iii) and (iv) of the definition of "Trigger Event" in
the Series 1995-D Supplement are amended to read in their entirety as follows:
(iii)the Cumulative Default Rate shall be equal to or
greater than (A) 2.60%, with respect to any
Determination Date occurring prior to or during the
third calendar month succeeding the Series 1995-D
Closing Date, (B) 4.62%, with respect to any
Determination Date occurring after the third, and prior
to or during the 6th, calendar month succeeding the
Series 1995-D Closing Date, (C) 6.34%, with respect to
any Determination Date occurring after the 6th, and
prior to or during the 9th, calendar month succeeding
the Series 1995-D Closing Date, (D) 7.66%, with respect
to any Determination Date occurring after the 9th, and
prior to or during the 12th, calendar
<PAGE>
month succeeding the Series 1995-D Closing Date, (E) 8.28%,
with respect to any Determination Date occurring after the
12th, and prior to or during the 15th, calendar month
succeeding the Series 1995-D Closing Date, (F) 8.98%, with
respect to any Determination Date occurring after the 15th,
and prior to or during the 18th, calendar month succeeding
the Series 1995-D Closing Date, (G) 9.65%, with respect
to any Determination Date occurring after the 18th, and
prior to or during the 21st, calendar month succeeding
the Series 1995-D Closing Date, (H) 10.24%, with
respect to any Determination Date occurring after the
21st, and prior to or during the 24th, calendar month
succeeding the Series 1995-D Closing Date, (I) 10.74%,
with respect to any Determination Date occurring after
the 24th, and prior to or during the 27th, calendar
month succeeding the Series 1995-D Closing Date, (J)
11.21%, with respect to any Determination Date
occurring after the 27th, and prior to or during the
30th, calendar month succeeding the Series 1995-D
Closing Date, (K) 11.49%, with respect to any
Determination Date occurring after the 30th, and prior
to or during the 33rd, calendar month succeeding the
Series 1995-D Closing Date, (L) 11.73%, with respect to
any Determination Date occurring after the 33rd, and
prior to or during the 36th, calendar month succeeding
the Series 1995-D Closing Date, (M) 11.90%, with
respect to any Determination Date occurring after the
36th, and prior to or during the 39th, calendar month
succeeding the Series 1995-D Closing Date, (N) 12.02%,
with respect to any Determination Date occurring after
the 39th, and prior to or during the 42nd, calendar
month succeeding the Series 1995-D Closing Date, (O)
12.15%, with respect to any Determination Date
occurring after the 42nd, and prior to or during the
45th calendar month succeeding the Series 1995-D
Closing Date, (P) 12.23%, with respect to any
Determination Date occurring after the 45th, and prior
to or during the 48th, calendar month succeeding the
Series 1995-D Closing Date, (Q) 12.28%, with respect to
any Determination Date occurring after the 48th, and
prior to or during the 51st, calendar month succeeding
the Series 1995-D Closing Date, (R) 12.33%, with respect
<PAGE>
to any Determination Date occurring after the 51st,
and prior to or during the 54th, calendar month
succeeding the Series 1995-D Closing Date, (S) 12.37%,
with respect to any Determination Date occurring after
the 54th, and prior to or during the 57th, calendar
month succeeding the Series 1995-D Closing Date, (T)
12.41%, with respect to any Determination Date
occurring after the 57th, and prior to or during the
60th, calendar month succeeding the Series 1995-D
Closing Date, (U) 12.43%, with respect to any
Determination Date occurring after the 60th, and prior
to or during the 63rd, calendar month succeeding the
Series 1995-D Closing Date, (V) 12.45%, with respect to
any Determination Date occurring after the 63rd, and
prior to or during the 66th, calendar month succeeding
the Series 1995-D Closing Date, (W) 12.47%, with
respect to any Determination Date occurring after the
66th, and prior to or during the 69th, calendar month
succeeding the Series 1995-D Closing Date, or (X)
12.50%, with respect to any Determination Date
occurring after the 69th calendar month succeeding the
Series 1995-D 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 third calendar month
succeeding the Series 1995-D Closing Date, (B) 2.18%, with
respect to any Determination Date occurring after the third,
and prior to or during the 6th, calendar month succeeding
the Series 1995-D Closing Date, (C) 2.96%, with respect to
any Determination Date occurring after the 6th, and prior to
or during the 9th, calendar month succeeding the Series
1995-D Closing Date, (D) 3.52%, with respect to any
Determination Date occurring after the 9th, and prior to or
during the 12th, calendar month succeeding the Series 1995-D
Closing Date, (E) 3.80%, with respect to any Determination
Date occurring after the 12th, and prior to or during the
15th, calendar month succeeding the Series 1995-D Closing
Date, (F) 4.08%, with respect to any Determination Date
occurring after the 15th, and prior to or during the 18th,
calendar month succeeding the Series 1995-D Closing Date,
(G) 4.33%, with respect to any
<PAGE>
Determination Date occurring after the 18th, and prior to
or during the 21st, calendar month succeeding the
Series 1995-D Closing Date, (H) 4.56%, with respect to any
Determination Date occurring after the 21st, and prior to or
during the 24th, calendar month succeeding the Series 1995-D
Closing Date, (I) 4.75%, with respect to any Determination
Date occurring after the 24th, and prior to or during the
27th, calendar month succeeding the Series 1995-D Closing
Date, (J) 4.93%, with respect to any Determination Date
occurring after the 27th, and prior to or during the 30th,
calendar month succeeding the Series 1995-D Closing Date,
(K) 5.03%, with respect to any Determination Date occurring
after the 30th, and prior to or during the 33rd, calendar
month succeeding the Series 1995-D Closing Date, (L) 5.13%,
with respect to any Determination Date occurring after the
33rd, and prior to or during the 36th, calendar month
succeeding the Series 1995-D Closing Date, (M) 5.19%, with
respect to any Determination Date occurring after the 36th,
and prior to or during the 39th, calendar month succeeding
the Series 1995-D Closing Date, (N) 5.25%, with respect to
any Determination Date occurring after the 39th, and prior
to or during the 42nd, calendar month succeeding the
Series 1995-D Closing Date, (O) 5.30%, with respect to any
Determination Date occurring after the 42nd, and prior to or
during the 45th calendar month succeeding the Series 1995-D
Closing Date, (P) 5.34%, with respect to any Determination
Date occurring after the 45th, and prior to or during the
48th, calendar month succeeding the Series 1995-D Closing
Date, (Q) 5.36%, with respect to any Determination Date
occurring after the 48th, and prior to or during the 51st,
calendar month succeeding the Series 1995-D Closing Date,
(R) 5.39%, with respect to any Determination Date occurring
after the 51st, and prior to or during the 54th, calendar
month succeeding the Series 1995-D Closing Date, (S) 5.41%,
with respect to any Determination Date occurring after the
54th, and prior to or during the 57th, calendar month
succeeding the Series 1995-D Closing Date, (T) 5.43%, with
respect to any Determination Date occurring after the 57th,
and prior to or during the 60th, calendar
<PAGE>
month succeeding the Series 1995-D Closing Date, (U) 5.44%,
with respect to any Determination Date occurring
after the 60th, and prior to or during the 63rd, calendar
month succeeding the Series 1995-D Closing Date, (V) 5.45%,
with respect to any Determination Date occurring after the
63rd, and prior to or during the 66th, calendar month
succeeding the Series 1995-D Closing Date, (W) 5.47%, with
respect to any Determination Date occurring after the 66th,
and prior to or during the 69th, calendar month succeeding
the Series 1995-D Closing Date, or (X) 5.48%, with respect
to any Determination Date occurring after the 69th calendar
month succeeding the Series 1995-D Closing Date.
(d) Section 1.1 of the Series 1995-C Supplement is amended as follows:
(1) The following definition of "Deemed Cured" is added:
"DEEMED CURED" means, (a) with respect to a Trigger Event that
has occurred pursuant to clause (i) or (ii) of the definition thereof,
as of a Determination Date with respect to Series 1995-C, that no such
clause (i) or clause (ii) Trigger Event with respect to such Series
shall have occurred as of such Determination Date or as of any of the
five consecutively preceding Determination Dates, and (b) with respect
to a Trigger Event that has occurred pursuant to clause (iii) or
clause (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 Series 1995-C Closing Date, that no such clause
(iii) or clause (iv) Trigger Event with respect to such Series shall
have occurred as of such Determination Date.
(2) Paragraphs (iii) and (iv) of the definition of "Trigger Event" in
the Series 1995-C Supplement are amended to read in their entirety as follows:
(iii)the Cumulative Default Rate shall be equal to or
greater than (A) 2.60%, with respect to any
Determination Date occurring prior to or during the
third calendar month succeeding the Series 1995-C
Closing Date, (B) 4.62%, with respect to any
Determination Date occurring after the third, and prior
to or during the 6th, calendar month succeeding the
Series 1995-C Closing Date, (C) 6.33%, with respect to
any Determination Date occurring after the
<PAGE>
6th, and prior to or during the 9th, calendar month
succeeding the Series 1995-C Closing Date, (D) 7.64%,
with respect to any Determination Date occurring after the
9th, and prior to or during the 12th, calendar month
succeeding the Series 1995-C Closing Date, (E) 8.26%, with
respect to any Determination Date occurring after the 12th,
and prior to or during the 15th, calendar month succeeding
the Series 1995-C Closing Date, (F) 8.95%, with respect
to any Determination Date occurring after the 15th, and
prior to or during the 18th, calendar month succeeding
the Series 1995-C Closing Date, (G) 9.62%, with respect
to any Determination Date occurring after the 18th, and
prior to or during the 21st, calendar month succeeding
the Series 1995-C Closing Date, (H) 10.21%, with
respect to any Determination Date occurring after the
21st, and prior to or during the 24th, calendar month
succeeding the Series 1995-C Closing Date, (I) 10.70%,
with respect to any Determination Date occurring after
the 24th, and prior to or during the 27th, calendar
month succeeding the Series 1995-C Closing Date, (J)
11.17%, with respect to any Determination Date
occurring after the 27th, and prior to or during the
30th, calendar month succeeding the Series 1995-C
Closing Date, (K) 11.44%, with respect to any
Determination Date occurring after the 30th, and prior
to or during the 33rd, calendar month succeeding the
Series 1995-C Closing Date, (L) 11.69%, with respect to
any Determination Date occurring after the 33rd, and
prior to or during the 36th, calendar month succeeding
the Series 1995-C Closing Date, (M) 11.85%, with
respect to any Determination Date occurring after the
36th, and prior to or during the 39th, calendar month
succeeding the Series 1995-C Closing Date, (N) 11.97%,
with respect to any Determination Date occurring after
the 39th, and prior to or during the 42nd, calendar
month succeeding the Series 1995-C Closing Date, (O)
12.10%, with respect to any Determination Date
occurring after the 42nd, and prior to or during the
45th calendar month succeeding the Series 1995-C
Closing Date, (P) 12.18%, with respect to any
Determination Date occurring after the 45th, and prior
to or during the 48th, calendar month succeeding the
<PAGE>
Series 1995-C Closing Date, (Q) 12.23%, with respect to
any Determination Date occurring after the 48th, and
prior to or during the 51st, calendar month succeeding
the Series 1995-C Closing Date, (R) 12.28%, with
respect to any Determination Date occurring after the
51st, and prior to or during the 54th, calendar month
succeeding the Series 1995-C Closing Date, (S) 12.32%,
with respect to any Determination Date occurring after
the 54th, and prior to or during the 57th, calendar
month succeeding the Series 1995-C Closing Date, (T)
12.36%, with respect to any Determination Date
occurring after the 57th, and prior to or during the
60th, calendar month succeeding the Series 1995-C
Closing Date, (U) 12.38%, with respect to any
Determination Date occurring after the 60th, and prior
to or during the 63rd, calendar month succeeding the
Series 1995-C Closing Date, (V) 12.40%, with respect to
any Determination Date occurring after the 63rd, and
prior to or during the 66th, calendar month succeeding
the Series 1995-C Closing Date, (W) 12.42%, with
respect to any Determination Date occurring after the
66th, and prior to or during the 69th, calendar month
succeeding the Series 1995-C Closing Date, or (X)
12.44%, with respect to any Determination Date
occurring after the 69th calendar month succeeding the
Series 1995-C 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 third calendar month
succeeding the Series 1995-C Closing Date, (B) 2.18%, with
respect to any Determination Date occurring after the third,
and prior to or during the 6th, calendar month succeeding
the Series 1995-C Closing Date, (C) 2.95%, with respect to
any Determination Date occurring after the 6th, and prior to
or during the 9th, calendar month succeeding the Series
1995-C Closing Date, (D) 3.51%, with respect to any
Determination Date occurring after the 9th, and prior to or
during the 12th, calendar month succeeding the Series 1995-C
Closing Date, (E) 3.80%, with respect to any Determination
Date occurring after the 12th, and prior to or during the
15th, calendar month succeeding the Series 1995-C Closing
<PAGE>
Date, (F) 4.07%, with respect to any Determination Date
occurring after the 15th, and prior to or during the 18th,
calendar month succeeding the Series 1995-C Closing Date,
(G) 4.32%, with respect to any Determination Date occurring
after the 18th, and prior to or during the 21st, calendar
month succeeding the Series 1995-C Closing Date, (H) 4.55%,
with respect to any Determination Date occurring after the
21st, and prior to or during the 24th, calendar month
succeeding the Series 1995-C Closing Date, (I) 4.74%, with
respect to any Determination Date occurring after the 24th,
and prior to or during the 27th, calendar month succeeding
the Series 1995-C Closing Date, (J) 4.92%, with respect to
any Determination Date occurring after the 27th, and prior
to or during the 30th, calendar month succeeding the Series
1995-C Closing Date, (K) 5.02%, with respect to any
Determination Date occurring after the 30th, and prior to or
during the 33rd, calendar month succeeding the Series 1995-C
Closing Date, (L) 5.12%, with respect to any Determination
Date occurring after the 33rd, and prior to or during the
36th, calendar month succeeding the Series 1995-C Closing
Date, (M) 5.18%, with respect to any Determination Date
occurring after the 36th, and prior to or during the 39th,
calendar month succeeding the Series 1995-C Closing Date,
(N) 5.24%, with respect to any Determination Date occurring
after the 39th, and prior to or during the 42nd, calendar
month succeeding the Series 1995-C Closing Date, (O) 5.30%,
with respect to any Determination Date occurring after the
42nd, and prior to or during the 45th calendar month
succeeding the Series 1995-C Closing Date, (P) 5.33%, with
respect to any Determination Date occurring after the 45th,
and prior to or during the 48th, calendar month succeeding
the Series 1995-C Closing Date, (Q) 5.35%, with respect to
any Determination Date occurring after the 48th, and prior
to or during the 51st, calendar month succeeding the Series
1995-C Closing Date, (R) 5.38%, with respect to any
Determination Date occurring after the 51st, and prior to or
during the 54th, calendar month succeeding the Series 1995-C
Closing Date, (S) 5.40%, with respect to any Determination
Date occurring after the 54th,
<PAGE>
and prior to or during the 57th, calendar month succeeding
the Series 1995-C Closing Date, (T) 5.42%, with respect to
any Determination Date occurring after the 57th, and prior
to or during the 60th, calendar month succeeding the
Series 1995-C Closing Date, (U) 5.43%, with respect to any
Determination Date occurring after the 60th, and prior to
or during the 63rd, calendar month succeeding the
Series 1995-C Closing Date, (V) 5.45%, with respect to any
Determination Date occurring after the 63rd, and prior to or
during the 66th, calendar month succeeding the Series 1995-C
Closing Date, (W) 5.46%, with respect to any Determination
Date occurring after the 66th, and prior to or during the
69th, calendar month succeeding the Series 1995-C Closing
Date, or (X) 5.47%, with respect to any Determination Date
occurring after the 69th calendar month succeeding the
Series 1995-C Closing Date.
(e) Section 1.1 of the Series 1995-B Supplement is amended as follows:
(1) The following definition of "Deemed Cured" is added:
"DEEMED CURED" means, (a) with respect to a Trigger Event that
has occurred pursuant to clause (i) or (ii) of the definition thereof,
as of a Determination Date with respect to Series 1995-B, that no such
clause (i) or clause (ii) Trigger Event with respect to such Series
shall have occurred as of such Determination Date or as of any of the
five consecutively preceding Determination Dates, and (b) with respect
to a Trigger Event that has occurred pursuant to clause (iii) or
clause (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 Series 1995-B Closing Date, that no such clause
(iii) or clause (iv) Trigger Event with respect to such Series shall
have occurred as of such Determination Date.
(2) Paragraphs (iii) and (iv) of the definition of "Trigger Event" in
the Series 1995-B Supplement are amended to read in their entirety as follows:
(iii)the Cumulative Default Rate shall be equal to or
greater than (A) 2.60%, with respect to any
Determination Date occurring prior to or during the
third calendar month succeeding the
<PAGE>
Series 1995-B Closing Date, (B) 4.63%, with respect to any
Determination Date occurring after the third, and prior
to or during the 6th, calendar month succeeding the
Series 1995-B Closing Date, (C) 6.35%, with respect to
any Determination Date occurring after the 6th, and
prior to or during the 9th, calendar month succeeding
the Series 1995-B Closing Date, (D) 7.67%, with respect
to any Determination Date occurring after the 9th, and
prior to or during the 12th, calendar month succeeding
the Series 1995-B Closing Date, (E) 8.29%, with respect
to any Determination Date occurring after the 12th, and
prior to or during the 15th, calendar month succeeding
the Series 1995-B Closing Date, (F) 9.01%, with respect
to any Determination Date occurring after the 15th, and
prior to or during the 18th, calendar month succeeding
the Series 1995-B Closing Date, (G) 9.68%, with respect
to any Determination Date occurring after the 18th, and
prior to or during the 21st, calendar month succeeding
the Series 1995-B Closing Date, (H) 10.28%, with
respect to any Determination Date occurring after the
21st, and prior to or during the 24th, calendar month
succeeding the Series 1995-B Closing Date, (I) 10.78%,
with respect to any Determination Date occurring after
the 24th, and prior to or during the 27th, calendar
month succeeding the Series 1995-B Closing Date, (J)
11.24%, with respect to any Determination Date
occurring after the 27th, and prior to or during the
30th, calendar month succeeding the Series 1995-B
Closing Date, (K) 11.53%, with respect to any
Determination Date occurring after the 30th, and prior
to or during the 33rd, calendar month succeeding the
Series 1995-B Closing Date, (L) 11.77%, with respect to
any Determination Date occurring after the 33rd, and
prior to or during the 36th, calendar month succeeding
the Series 1995-B Closing Date, (M) 11.94%, with
respect to any Determination Date occurring after the
36th, and prior to or during the 39th, calendar month
succeeding the Series 1995-B Closing Date, (N) 12.07%,
with respect to any Determination Date occurring after
the 39th, and prior to or during the 42nd, calendar
month succeeding the Series 1995-B Closing Date,
(O) 12.19%, with respect to any
<PAGE>
Determination Date occurring after the 42nd, and
prior to or during the 45th calendar month succeeding
the Series 1995-B Closing Date, (P) 12.27%, with respect to
any Determination Date occurring after the 45th, and prior
to or during the 48th, calendar month succeeding the
Series 1995-B Closing Date, (Q) 12.33%, with respect to
any Determination Date occurring after the 48th, and
prior to or during the 51st, calendar month succeeding
the Series 1995-B Closing Date, (R) 12.38%, with
respect to any Determination Date occurring after the
51st, and prior to or during the 54th, calendar month
succeeding the Series 1995-B Closing Date, (S) 12.42%,
with respect to any Determination Date occurring after
the 54th, and prior to or during the 57th, calendar
month succeeding the Series 1995-B Closing Date, (T)
12.46%, with respect to any Determination Date
occurring after the 57th, and prior to or during the
60th, calendar month succeeding the Series 1995-B
Closing Date, (U) 12.48%, with respect to any
Determination Date occurring after the 60th, and prior
to or during the 63rd, calendar month succeeding the
Series 1995-B Closing Date, (V) 12.50%, with respect to
any Determination Date occurring after the 63rd, and
prior to or during the 66th, calendar month succeeding
the Series 1995-B Closing Date, (W) 12.52%, with
respect to any Determination Date occurring after the
66th, and prior to or during the 69th, calendar month
succeeding the Series 1995-B Closing Date, or (X)
12.54%, with respect to any Determination Date
occurring after the 69th calendar month succeeding the
Series 1995-B 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 third calendar month
succeeding the Series 1995-B Closing Date, (B) 2.19%, with
respect to any Determination Date occurring after the third,
and prior to or during the 6th, calendar month succeeding
the Series 1995-B Closing Date, (C) 2.96%, with respect to
any Determination Date occurring after the 6th, and prior to
or during the 9th, calendar month succeeding the Series
1995-B Closing Date, (D) 3.53%, with respect to any
Determination Date occurring after the 9th,
<PAGE>
and prior to or during the 12th, calendar month succeeding
the Series 1995-B Closing Date, (E) 3.81%, with respect to
any Determination Date occurring after the 12th, and prior
to or during the 15th, calendar month succeeding the
Series 1995-B Closing Date, (F) 4.09%, with respect to any
Determination Date occurring after the 15th, and prior to or
during the 18th, calendar month succeeding the Series 1995-B
Closing Date, (G) 4.34%, with respect to any Determination
Date occurring after the 18th, and prior to or during the
21st, calendar month succeeding the Series 1995-B Closing
Date, (H) 4.57%, with respect to any Determination Date
occurring after the 21st, and prior to or during the 24th,
calendar month succeeding the Series 1995-B Closing Date,
(I) 4.75%, with respect to any Determination Date occurring
after the 24th, and prior to or during the 27th, calendar
month succeeding the Series 1995-B Closing Date, (J) 4.93%,
with respect to any Determination Date occurring after the
27th, and prior to or during the 30th, calendar month
succeeding the Series 1995-B Closing Date, (K) 5.03%, with
respect to any Determination Date occurring after the 30th,
and prior to or during the 33rd, calendar month succeeding
the Series 1995-B Closing Date, (L) 5.13%, with respect to
any Determination Date occurring after the 33rd, and prior
to or during the 36th, calendar month succeeding the
Series 1995-B Closing Date, (M) 5.19%, with respect to any
Determination Date occurring after the 36th, and prior to
or during the 39th, calendar month succeeding the
Series 1995-B Closing Date, (N) 5.25%, with respect to any
Determination Date occurring after the 39th, and prior to
or during the 42nd, calendar month succeeding the
Series 1995-B Closing Date, (O) 5.31%, with respect to any
Determination Date occurring after the 42nd, and prior to
or during the 45th calendar month succeeding the
Series 1995-B Closing Date, (P) 5.34%, with respect to any
Determination Date occurring after the 45th, and prior to or
during the 48th, calendar month succeeding the Series 1995-B
Closing Date, (Q) 5.37%, with respect to any Determination
Date occurring after the 48th, and prior to or during the
51st, calendar month succeeding the Series
<PAGE>
1995-B Closing Date, (R) 5.39%, with respect to any
Determination Date occurring after the 51st, and prior to or
during the 54th, calendar month succeeding the Series 1995-B
Closing Date, (S) 5.42%, with respect to any Determination
Date occurring after the 54th, and prior to or during the
57th, calendar month succeeding the Series 1995-B Closing
Date, (T) 5.44%, with respect to any Determination Date
occurring after the 57th, and prior to or during the 60th,
calendar month succeeding the Series 1995-B Closing Date,
(U) 5.45%, with respect to any Determination Date occurring
after the 60th, and prior to or during the 63rd, calendar
month succeeding the Series 1995-B Closing Date, (V) 5.46%,
with respect to any Determination Date occurring after the
63rd, and prior to or during the 66th, calendar month
succeeding the Series 1995-B Closing Date, (W) 5.47%, with
respect to any Determination Date occurring after the 66th,
and prior to or during the 69th, calendar month succeeding
the Series 1995-B Closing Date, or (X) 5.49%, with respect
to any Determination Date occurring after the 69th calendar
month succeeding the Series 1995-B Closing Date.
(f) Section 1.1 of the Series 1995-A Supplement is amended as follows:
(1) The following definition of "Deemed Cured" is added:
"DEEMED CURED" means, (a) with respect to a Trigger Event that
has occurred pursuant to clause (i) or (ii) of the definition thereof,
as of a Determination Date with respect to Series 1995-A, that no such
clause (i) or clause (ii) Trigger Event with respect to such Series
shall have occurred as of such Determination Date or as of any of the
five consecutively preceding Determination Dates, and (b) with respect
to a Trigger Event that has occurred pursuant to clause (iii) or
clause (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 Series 1995-A Closing Date, that no such clause
(iii) or clause (iv) Trigger Event with respect to such Series shall
have occurred as of such Determination Date.
<PAGE>
(2) Paragraphs (iii) and (iv) of the definition of "Trigger Event" in
the Series 1995-A Supplement are amended to read in their entirety as follows:
(iii) the Cumulative Default Rate shall be equal to or
greater than (A) 2.60%, with respect to any
Determination Date occurring prior to or during the
third calendar month succeeding the Series 1995-A
Closing Date, (B) 4.61%, with respect to any
Determination Date occurring after the third, and prior
to or during the 6th, calendar month succeeding the
Series 1995-A Closing Date, (C) 6.30%, with respect to
any Determination Date occurring after the 6th, and
prior to or during the 9th, calendar month succeeding
the Series 1995-A Closing Date, (D) 7.60%, with respect
to any Determination Date occurring after the 9th, and
prior to or during the 12th, calendar month succeeding
the Series 1995-A Closing Date, (E) 8.20%, with respect
to any Determination Date occurring after the 12th, and
prior to or during the 15th, calendar month succeeding
the Series 1995-A Closing Date, (F) 8.87%, with respect
to any Determination Date occurring after the 15th, and
prior to or during the 18th, calendar month succeeding
the Series 1995-A Closing Date, (G) 9.52%, with respect
to any Determination Date occurring after the 18th, and
prior to or during the 21st, calendar month succeeding
the Series 1995-A Closing Date, (H) 10.10%, with
respect to any Determination Date occurring after the
21st, and prior to or during the 24th, calendar month
succeeding the Series 1995-A Closing Date, (I) 10.58%,
with respect to any Determination Date occurring after
the 24th, and prior to or during the 27th, calendar
month succeeding the Series 1995-A Closing Date, (J)
11.04%, with respect to any Determination Date
occurring after the 27th, and prior to or during the
30th, calendar month succeeding the Series 1995-A
Closing Date, (K) 11.31%, with respect to any
Determination Date occurring after the 30th, and prior
to or during the 33rd, calendar month succeeding the
Series 1995-A Closing Date, (L) 11.55%, with respect to
any Determination Date occurring after the 33rd, and
prior to or during the 36th, calendar month succeeding
the Series 1995-A Closing Date, (M) 11.70%, with
respect to any
<PAGE>
Determination Date occurring after the 36th, and prior to
or during the 39th, calendar month succeeding the
Series 1995-A Closing Date, (N) 11.82%, with respect to
any Determination Date occurring after the 39th, and
prior to or during the 42nd, calendar month
succeeding the Series 1995-A Closing Date, (O)
11.95%, with respect to any Determination Date
occurring after the 42nd, and prior to or during the
45th calendar month succeeding the Series 1995-A
Closing Date, (P) 12.03%, with respect to any
Determination Date occurring after the 45th, and prior
to or during the 48th, calendar month succeeding the
Series 1995-A Closing Date, (Q) 12.08%, with respect to
any Determination Date occurring after the 48th, and
prior to or during the 51st, calendar month succeeding
the Series 1995-A Closing Date, (R) 12.13%, with
respect to any Determination Date occurring after the
51st, and prior to or during the 54th, calendar month
succeeding the Series 1995-A Closing Date, (S) 12.17%,
with respect to any Determination Date occurring after
the 54th, and prior to or during the 57th, calendar
month succeeding the Series 1995-A Closing Date, (T)
12.21%, with respect to any Determination Date
occurring after the 57th, and prior to or during the
60th, calendar month succeeding the Series 1995-A
Closing Date, (U) 12.23%, with respect to any
Determination Date occurring after the 60th, and prior
to or during the 63rd, calendar month succeeding the
Series 1995-A Closing Date, (V) 12.25%, with respect to
any Determination Date occurring after the 63rd, and
prior to or during the 66th, calendar month succeeding
the Series 1995-A Closing Date, (W) 12.27%, with
respect to any Determination Date occurring after the
66th, and prior to or during the 69th, calendar month
succeeding the Series 1995-A Closing Date, or (X)
12.29%, with respect to any Determination Date
occurring after the 69th calendar month succeeding the
Series 1995-A Closing Date; or
(iv) the Cumulative Net Loss Rate shall be equal to or greater
than (A) 1.24%, with respect to any Determination Date
occurring prior to or during the third calendar month
succeeding the Series 1995-A Closing Date, (B) 2.17%, with
respect to any Determination Date occurring
<PAGE>
after the third, and prior to or during the 6th, calendar
month succeeding the Series 1995-A Closing Date, (C) 2.93%,
with respect to any Determination Date occurring after the
6th, and prior to or during the 9th, calendar month
succeeding the Series 1995-A Closing Date, (D) 3.50%, with
respect to any Determination Date occurring after the 9th,
and prior to or during the 12th, calendar month succeeding
the Series 1995-A Closing Date, (E) 3.77%, with respect to
any Determination Date occurring after the 12th, and prior
to or during the 15th, calendar month succeeding the
Series 1995-A Closing Date, (F) 4.04%, with respect to any
Determination Date occurring after the 15th, and prior to or
during the 18th, calendar month succeeding the
Series 1995-A Closing Date, (G) 4.29%, with respect to any
Determination Date occurring after the 18th, and prior to or
during the 21st, calendar month succeeding the Series 1995-A
Closing Date, (H) 4.53%, with respect to any Determination
Date occurring after the 21st, and prior to or during the
24th, calendar month succeeding the Series 1995-A Closing
Date, (I) 4.72%, with respect to any Determination Date
occurring after the 24th, and prior to or during the 27th,
calendar month succeeding the Series 1995-A Closing Date,
(J) 4.90%, with respect to any Determination Date occurring
after the 27th, and prior to or during the 30th, calendar
month succeeding the Series 1995-A Closing Date, (K) 5.00%,
with respect to any Determination Date occurring after the
30th, and prior to or during the 33rd, calendar month
succeeding the Series 1995-A Closing Date, (L) 5.10%, with
respect to any Determination Date occurring after the 33rd,
and prior to or during the 36th, calendar month succeeding
the Series 1995-A Closing Date, (M) 5.16%, with respect to
any Determination Date occurring after the 36th, and prior
to or during the 39th, calendar month succeeding the
Series 1995-A Closing Date, (N) 5.22%, with respect to any
Determination Date occurring after the 39th, and prior to or
during the 42nd, calendar month succeeding the Series 1995-A
Closing Date, (O) 5.27%, with respect to any Determination
Date occurring after the 42nd, and prior to or during the
45th calendar month
<PAGE>
succeeding the Series 1995-A Closing Date, (P) 5.31%, with
respect to any Determination Date occurring after the 45th,
and prior to or during the 48th, calendar month succeeding
the Series 1995-A Closing Date, (Q) 5.33%, with respect to
any Determination Date occurring after the 48th, and prior
to or during the 51st, calendar month succeeding the Series
1995-A Closing Date, (R) 5.35%, with respect to any
Determination Date occurring after the 51st, and prior to or
during the 54th, calendar month succeeding the Series 1995-A
Closing Date, (S) 5.38%, with respect to any Determination
Date occurring after the 54th, and prior to or during the
57th, calendar month succeeding the Series 1995-A Closing
Date, (T) 5.40%, with respect to any Determination Date
occurring after the 57th, and prior to or during the 60th,
calendar month succeeding the Series 1995-A Closing Date,
(U) 5.41%, with respect to any Determination Date occurring
after the 60th, and prior to or during the 63rd, calendar
month succeeding the Series 1995-A Closing Date, (V) 5.42%,
with respect to any Determination Date occurring after the
63rd, and prior to or during the 66th, calendar month
succeeding the Series 1995-A Closing Date, (W) 5.43%, with
respect to any Determination Date occurring after the 66th,
and prior to or during the 69th, calendar month succeeding
the Series 1995-A Closing Date, or (X) 5.44%, with respect
to any Determination Date occurring after the 69th calendar
month succeeding the Series 1995-A Closing Date.
Section 3. COUNTERPARTS.
This Amendment to the Series Supplements may be executed in several
counterparts, each of which shall be deemed an original hereof and all of which,
when taken together, shall constitute one and the same Amendment to the Series
Supplements.
Section 4. RATIFICATION OF SPREAD ACCOUNT AGREEMENT.
Except as provided herein, all provisions, terms and conditions of the
Spread Account Agreement, including each Series Supplements, shall remain in
full force and effect. As amended hereby, the Spread Account Agreement,
including each Series Supplements is ratified and confirmed in all respects.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date set forth on the first page hereof.
OLYMPIC FINANCIAL LTD.
By
----------------------------------
Name:
Title:
OLYMPIC RECEIVABLES FINANCE CORP.
By
----------------------------------
Name:
Title:
FINANCIAL SECURITY ASSURANCE INC.
By
----------------------------------
Name:
Title:
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Collateral
Agent
By
----------------------------------
Name:
Title:
<PAGE>
It is hereby acknowledged that the
Parties are effecting this Amendment
and hereby confirmed that the
respective ratings of rated
securities with respect to Series
1996-A, Series 1995-E, Series
1995-D, Series 1995-C, Series 1995-B
and Series 1995-A will not be
reduced or withdrawn as a result of
the effectiveness of this Amendment.
STANDARD & POOR'S RATINGS GROUP
By:
-------------------------------------
Name: Mark Golombeck
Title:
<PAGE>
AMENDMENT
dated as of May 31, 1996
to
Insurance and Indemnity Agreement dated as of March 14, 1996
among
Financial Security Assurance Inc.
Olympic Automobile Receivables Trust, 1996-A
Olympic First GP Inc.
Olympic Second GP Inc.
Olympic Receivables Finance Corp.
and
Olympic Financial Ltd.
Insurance and Indemnity Agreement dated as of December 6, 1995
among
Financial Security Assurance Inc.
Olympic Automobile Receivables Trust, 1995-E
Olympic First GP Inc.
Olympic Second GP Inc.
Olympic Receivables Finance Corp.
and
Olympic Financial Ltd.
Insurance and Indemnity Agreement dated as of September 21, 1995
among
Financial Security Assurance Inc.
Olympic Automobile Receivables Trust, 1995-D
Olympic First GP Inc.
Olympic Second GP Inc.
Olympic Receivables Finance Corp.
and
Olympic Financial Ltd.
Insurance and Indemnity Agreement dated as of June 15, 1995
among
Financial Security Assurance Inc.
Olympic Automobile Receivables Trust, 1995-C
Olympic First GP Inc.
Olympic Second GP Inc.
Olympic Receivables Finance Corp.
and
Olympic Financial Ltd.
Insurance and Indemnity Agreement dated as of March 15, 1995
among
<PAGE>
Financial Security Assurance Inc.
Olympic Automobile Receivables Trust, 1995-B
Olympic First GP Inc.
Olympic Second GP Inc.
Olympic Receivables Finance Corp.
and
Olympic Financial Ltd.
Insurance and Indemnity Agreement dated as of February 9, 1995
among
Financial Security Assurance Inc.
Olympic Automobile Receivables Trust, 1995-A
Olympic Receivables Finance Corp.
and
Olympic Financial Ltd.
<PAGE>
Amendment
to
Insurance and Indemnity Agreements
Amendment to Insurance and Indemnity Agreement dated as of March 14,
1996, (the "Series 1996-A Insurance and Indemnity Agreement"), Insurance and
Indemnity Agreement dated as of December 6, 1995 (the "Series 1995-E Insurance
and Indemnity Agreement"), Insurance and Indemnity Agreement dated as of
September 21, 1995, as amended by that certain Amendment No. 2 ("Amendment No.
2") to Insurance and Indemnity Agreements dated as of December 6, 1995 (as
amended, the "Series 1995-D Insurance and Indemnity Agreement"), Insurance and
Indemnity Agreement dated as of June 15, 1995, as amended by Amendment No. 2 (as
amended, the "Series 1995-C Insurance and Indemnity Agreement"), Insurance and
Indemnity Agreement dated as of March 15, 1995, as amended by that certain
Amendment No. 1 to Insurance and Indemnity Agreements ("Amendment No. 1") dated
as of June 15, 1996, and as further amended by Amendment No. 2 (as amended, the
"Series 1995-B Insurance and Indemnity Agreement"), Insurance and Indemnity
Agreement dated as of February 9, 1995, as amended by Amendment No. 1, and as
further amended by Amendment No. 2 (as amended, the "Series 1995-A Insurance and
Indemnity Agreement"), (each, an "Insurance and Indemnity Agreement," and
collectively, the "Insurance and Indemnity Agreements"), dated as of May 31,
1996 ("Amendment to the Insurance and Indemnity Agreements"), among Financial
Security Assurance Inc., Olympic Automobile Receivables Trust, 1996-A, Olympic
Automobile Receivables Trust, 1995-E, Olympic Automobile Receivables Trust,
1995-D, Olympic Automobile Receivables Trust, 1995-C, Olympic Automobile
Receivables Trust, 1995-B, Olympic Automobile Receivables Trust, 1995-A, Olympic
First GP Inc., Olympic Second GP Inc., Olympic Receivables Finance Corp., and
Olympic Financial Ltd, in each case with respect to each Insurance and Indemnity
Agreement with respect to which such person is a party.
WHEREAS, the respective parties to each Insurance and Indemnity
Agreement (the "Respective Parties") have heretofore executed such Insurance and
Indemnity Agreement;
WHEREAS, the Respective Parties to each Insurance and Indemnity
Agreement wish to amend such Agreement.
NOW, THEREFORE, the Respective Parties to each Insurance and Indemnity
Agreement agree that such Agreement is hereby amended as follows:
Section 1. AMENDMENT TO SERIES 1996-A INSURANCE AND INDEMNITY
AGREEMENT.
<PAGE>
(a) Paragraph (l) of Section 5.01 in the Series 1996-A Insurance and
Indemnity Agreement is amended to read in its entirety as follows:
(l) the Cumulative Default Rate shall be equal to or greater than
(A) 3.65%, with respect to any Determination Date occurring prior to
or during the third calendar month succeeding the Series 1996-A
Closing Date, (B) 6.98%, with respect to any Determination Date
occurring after the third, and prior to or during the 6th, calendar
month succeeding the Series 1996-A Closing Date, (C) 9.64%, with
respect to any Determination Date occurring after the 6th, and prior
to or during the 9th, calendar month succeeding the Series 1996-A
Closing Date, (D) 11.71%, with respect to any Determination Date
occurring after the 9th, and prior to or during the 12th, calendar
month succeeding the Series 1996-A Closing Date, (E) 12.69%, with
respect to any Determination Date occurring after the 12th, and prior
to or during the 15th, calendar month succeeding the Series 1996-A
Closing Date, (F) 13.86%, with respect to any Determination Date
occurring after the 15th, and prior to or during the 18th, calendar
month succeeding the Series 1996-A Closing Date, (G) 14.96%, with
respect to any Determination Date occurring after the 18th, and prior
to or during the 21st, calendar month succeeding the Series 1996-A
Closing Date, (H) 15.89%, with respect to any Determination Date
occurring after the 21st, and prior to or during the 24th, calendar
month succeeding the Series 1996-A Closing Date, (I) 16.68%, with
respect to any Determination Date occurring after the 24th, and prior
to or during the 27th, calendar month succeeding the Series 1996-A
Closing Date, (J) 17.40%, with respect to any Determination Date
occurring after the 27th, and prior to or during the 30th, calendar
month succeeding the Series 1996-A Closing Date, (K) 17.87%, with
respect to any Determination Date occurring after the 30th, and prior
to or during the 33rd, calendar month succeeding the Series 1996-A
Closing Date, (L) 18.26%, with respect to any Determination Date
occurring after the 33rd, and prior to or during the 36th, calendar
month succeeding the Series 1996-A Closing Date, (M) 18.54%, with
respect to any Determination Date occurring after the 36th, and prior
to or during the 39th, calendar month succeeding the Series 1996-A
Closing Date, (N) 18.74%, with respect to any Determination Date
occurring after the 39th, and prior to or during the 42nd, calendar
month succeeding the Series 1996-A Closing Date, (O) 18.94%, with
respect to any Determination Date occurring after the 42nd, and prior
to or during the 45th calendar month succeeding the Series 1996-A
Closing Date, (P) 19.07%, with respect to any Determination Date
occurring after the 45th, and prior to or during the 48th, calendar
month succeeding
<PAGE>
the Series 1996-A Closing Date, (Q) 19.16%, with respect
to any Determination Date occurring after the 48th, and prior to or
during the 51st, calendar month succeeding the Series 1996-A
Closing Date, (R) 19.24%, with respect to any Determination Date
occurring after the 51st, and prior to or during the 54th, calendar
month succeeding the Series 1996-A Closing Date, (S) 19.28%, with
respect to any Determination Date occurring after the 54th, and
prior to or during the 57th, calendar month succeeding the Series
1996-A Closing Date, (T) 19.33%, with respect to any Determination
Date occurring after the 57th, and prior to or during the 60th,
calendar month succeeding the Series 1996-A Closing Date, (U)
19.36%, with respect to any Determination Date occurring after the
60th, and prior to or during the 63rd, calendar month succeeding
the Series 1996-A Closing Date, (V) 19.38%, with respect to any
Determination Date occurring after the 63rd, and prior to or during
the 66th, calendar month succeeding the Series 1996-A Closing Date,
(W) 19.40%, with respect to any Determination Date occurring after
the 66th, and prior to or during the 69th, calendar month
succeeding the Series 1996-A Closing Date, or (X) 19.43%, with
respect to any Determination Date occurring after the 69th calendar
month succeeding the Series 1996-A Closing Date.
(b) Paragraph (m) of Section 5.01 in the Series 1996-A Insurance and
Indemnity Agreement is amended to read in its entirety as follows:
(m) the Cumulative Net Loss Rate shall be equal to or greater
than (A) 1.77%, with respect to any Determination Date occurring prior
to or during the third calendar month succeeding the Series 1996-A
Closing Date, (B) 3.29%, with respect to any Determination Date
occurring after the third, and prior to or during the 6th, calendar
month succeeding the Series 1996-A Closing Date, (C) 4.51%, with
respect to any Determination Date occurring after the 6th, and prior
to or during the 9th, calendar month succeeding the Series 1996-A
Closing Date, (D) 5.37%, with respect to any Determination Date
occurring after the 9th, and prior to or during the 12th, calendar
month succeeding the Series 1996-A Closing Date, (E) 5.81%, with
respect to any Determination Date occurring after the 12th, and prior
to or during the 15th, calendar month succeeding the Series 1996-A
Closing Date, (F) 6.24%, with respect to any Determination Date
occurring after the 15th, and prior to or during the 18th, calendar
month succeeding the Series 1996-A Closing Date, (G) 6.62%, with
respect to any Determination Date occurring after the 18th, and prior
to or during the 21st, calendar month succeeding the Series 1996-A
Closing Date, (H) 6.96%, with respect
<PAGE>
to any Determination Date occurring after the 21st, and prior to or
during the 24th, calendar month succeeding the Series 1996-A
Closing Date, (I) 7.22%, with respect to any Determination Date
occurring after the 24th, and prior to or during the 27th, calendar
month succeeding the Series 1996-A Closing Date, (J) 7.48%, with
respect to any Determination Date occurring after the 27th, and
prior to or during the 30th, calendar month succeeding the Series
1996-A Closing Date, (K) 7.63%, with respect to any Determination
Date occurring after the 30th, and prior to or during the 33rd,
calendar month succeeding the Series 1996-A Closing Date, (L)
7.78%, with respect to any Determination Date occurring after the
33rd, and prior to or during the 36th, calendar month succeeding
the Series 1996-A Closing Date, (M) 7.88%, with respect to any
Determination Date occurring after the 36th, and prior to or during
the 39th, calendar month succeeding the Series 1996-A Closing Date,
(N) 7.97%, with respect to any Determination Date occurring after
the 39th, and prior to or during the 42nd, calendar month
succeeding the Series 1996-A Closing Date, (O) 8.06%, with respect
to any Determination Date occurring after the 42nd, and prior to or
during the 45th calendar month succeeding the Series 1996-A Closing
Date, (P) 8.12%, with respect to any Determination Date occurring
after the 45th, and prior to or during the 48th, calendar month
succeeding the Series 1996-A Closing Date, (Q) 8.16%, with respect
to any Determination Date occurring after the 48th, and prior to or
during the 51st, calendar month succeeding the Series 1996-A
Closing Date, (R) 8.20%, with respect to any Determination Date
occurring after the 51st, and prior to or during the 54th, calendar
month succeeding the Series 1996-A Closing Date, (S) 8.23%, with
respect to any Determination Date occurring after the 54th, and
prior to or during the 57th, calendar month succeeding the Series
1996-A Closing Date, (T) 8.25%, with respect to any Determination
Date occurring after the 57th, and prior to or during the 60th,
calendar month succeeding the Series 1996-A Closing Date, (U)
8.27%, with respect to any Determination Date occurring after the
60th, and prior to or during the 63rd, calendar month succeeding
the Series 1996-A Closing Date, (V) 8.29%, with respect to any
Determination Date occurring after the 63rd, and prior to or during
the 66th, calendar month succeeding the Series 1996-A Closing Date,
(W) 8.30%, with respect to any Determination Date occurring after
the 66th, and prior to or during the 69th, calendar month
succeeding the Series 1996-A Closing Date, or (X) 8.32%, with
respect to any Determination Date occurring after the 69th calendar
month succeeding the Series 1996-A Closing Date.
<PAGE>
Section 2. AMENDMENT TO SERIES 1995-E INSURANCE AND INDEMNITY
AGREEMENT.
(a) Paragraph (l) of Section 5.01 in the Series 1995-E Insurance and
Indemnity Agreement is amended to read in its entirety as follows:
(l) the Cumulative Default Rate shall be equal to or greater than
(A) 3.63%, with respect to any Determination Date occurring prior to
or during the third calendar month succeeding the Series 1995-E
Closing Date, (B) 6.95%, with respect to any Determination Date
occurring after the third, and prior to or during the 6th, calendar
month succeeding the Series 1995-E Closing Date, (C) 9.56%, with
respect to any Determination Date occurring after the 6th, and prior
to or during the 9th, calendar month succeeding the Series 1995-E
Closing Date, (D) 11.58%, with respect to any Determination Date
occurring after the 9th, and prior to or during the 12th, calendar
month succeeding the Series 1995-E Closing Date, (E) 12.53%, with
respect to any Determination Date occurring after the 12th, and prior
to or during the 15th, calendar month succeeding the Series 1995-E
Closing Date, (F) 13.63%, with respect to any Determination Date
occurring after the 15th, and prior to or during the 18th, calendar
month succeeding the Series 1995-E Closing Date, (G) 14.68%, with
respect to any Determination Date occurring after the 18th, and prior
to or during the 21st, calendar month succeeding the Series 1995-E
Closing Date, (H) 15.58%, with respect to any Determination Date
occurring after the 21st, and prior to or during the 24th, calendar
month succeeding the Series 1995-E Closing Date, (I) 16.34%, with
respect to any Determination Date occurring after the 24th, and prior
to or during the 27th, calendar month succeeding the Series 1995-E
Closing Date, (J) 17.05%, with respect to any Determination Date
occurring after the 27th, and prior to or during the 30th, calendar
month succeeding the Series 1995-E Closing Date, (K) 17.49%, with
respect to any Determination Date occurring after the 30th, and prior
to or during the 33rd, calendar month succeeding the Series 1995-E
Closing Date, (L) 17.87%, with respect to any Determination Date
occurring after the 33rd, and prior to or during the 36th, calendar
month succeeding the Series 1995-E Closing Date, (M) 18.13%, with
respect to any Determination Date occurring after the 36th, and prior
to or during the 39th, calendar month succeeding the Series 1995-E
Closing Date, (N) 18.32%, with respect to any Determination Date
occurring after the 39th, and prior to or during the 42nd, calendar
month succeeding the Series 1995-E Closing Date, (O) 18.51%, with
respect to any Determination Date occurring after the 42nd, and prior
to or during the 45th calendar month succeeding
<PAGE>
the Series 1995-E Closing Date, (P) 18.64%, with respect to any
Determination Date occurring after the 45th, and prior to or during
the 48th, calendar month succeeding the Series 1995-E Closing Date,
(Q) 18.72%, with respect to any Determination Date occurring after
the 48th, and prior to or during the 51st, calendar month
succeeding the Series 1995-E Closing Date, (R) 18.80%, with respect
to any Determination Date occurring after the 51st, and prior to or
during the 54th, calendar month succeeding the Series 1995-E
Closing Date, (S) 18.84%, with respect to any Determination Date
occurring after the 54th, and prior to or during the 57th, calendar
month succeeding the Series 1995-E Closing Date, (T) 18.89%, with
respect to any Determination Date occurring after the 57th, and
prior to or during the 60th, calendar month succeeding the Series
1995-E Closing Date, (U) 18.93%, with respect to any Determination
Date occurring after the 60th, and prior to or during the 63rd,
calendar month succeeding the Series 1995-E Closing Date, (V)
18.95%, with respect to any Determination Date occurring after the
63rd, and prior to or during the 66th, calendar month succeeding
the Series 1995-E Closing Date, (W) 18.97%, with respect to any
Determination Date occurring after the 66th, and prior to or during
the 69th, calendar month succeeding the Series 1995-E Closing Date,
or (X) 18.99%, with respect to any Determination Date occurring
after the 69th calendar month succeeding the Series 1995-E Closing
Date.
(b) Paragraph (m) of Section 5.01 in the Series 1995-E Insurance and
Indemnity Agreement is amended to read in its entirety as follows:
(m) the Cumulative Net Loss Rate shall be equal to or greater
than (A) 1.75%, with respect to any Determination Date occurring prior
to or during the third calendar month succeeding the Series 1995-E
Closing Date, (B) 3.27%, with respect to any Determination Date
occurring after the third, and prior to or during the 6th, calendar
month succeeding the Series 1995-E Closing Date, (C) 4.46%, with
respect to any Determination Date occurring after the 6th, and prior
to or during the 9th, calendar month succeeding the Series 1995-E
Closing Date, (D) 5.32%, with respect to any Determination Date
occurring after the 9th, and prior to or during the 12th, calendar
month succeeding the Series 1995-E Closing Date, (E) 5.75%, with
respect to any Determination Date occurring after the 12th, and prior
to or during the 15th, calendar month succeeding the Series 1995-E
Closing Date, (F) 6.17%, with respect to any Determination Date
occurring after the 15th, and prior to or during the 18th, calendar
month succeeding the Series 1995-E Closing Date, (G) 6.54%, with
respect
<PAGE>
to any Determination Date occurring after the 18th, and prior
to or during the 21st, calendar month succeeding the Series 1995-E
Closing Date, (H) 6.89%, with respect to any Determination Date
occurring after the 21st, and prior to or during the 24th, calendar
month succeeding the Series 1995-E Closing Date, (I) 7.16%, with
respect to any Determination Date occurring after the 24th, and prior
to or during the 27th, calendar month succeeding the Series 1995-E
Closing Date, (J) 7.43%, with respect to any Determination Date
occurring after the 27th, and prior to or during the 30th, calendar
month succeeding the Series 1995-E Closing Date, (K) 7.58%, with
respect to any Determination Date occurring after the 30th, and prior
to or during the 33rd, calendar month succeeding the Series 1995-E
Closing Date, (L) 7.73%, with respect to any Determination Date
occurring after the 33rd, and prior to or during the 36th, calendar
month succeeding the Series 1995-E Closing Date, (M) 7.82%, with
respect to any Determination Date occurring after the 36th, and prior
to or during the 39th, calendar month succeeding the Series 1995-E
Closing Date, (N) 7.91%, with respect to any Determination Date
occurring after the 39th, and prior to or during the 42nd, calendar
month succeeding the Series 1995-E Closing Date, (O) 8.00%, with
respect to any Determination Date occurring after the 42nd, and prior
to or during the 45th calendar month succeeding the Series 1995-E
Closing Date, (P) 8.05%, with respect to any Determination Date
occurring after the 45th, and prior to or during the 48th, calendar
month succeeding the Series 1995-E Closing Date, (Q) 8.09%, with
respect to any Determination Date occurring after the 48th, and prior
to or during the 51st, calendar month succeeding the Series 1995-E
Closing Date, (R) 8.13%, with respect to any Determination Date
occurring after the 51st, and prior to or during the 54th, calendar
month succeeding the Series 1995-E Closing Date, (S) 8.16%, with
respect to any Determination Date occurring after the 54th, and prior
to or during the 57th, calendar month succeeding the Series 1995-E
Closing Date, (T) 8.18%, with respect to any Determination Date
occurring after the 57th, and prior to or during the 60th, calendar
month succeeding the Series 1995-E Closing Date, (U) 8.20%, with
respect to any Determination Date occurring after the 60th, and prior
to or during the 63rd, calendar month succeeding the Series 1995-E
Closing Date, (V) 8.22%, with respect to any Determination Date
occurring after the 63rd, and prior to or during the 66th, calendar
month succeeding the Series 1995-E Closing Date, (W) 8.23%, with
respect to any Determination Date occurring after the 66th, and prior
to or during the 69th, calendar month succeeding the Series 1995-E
Closing Date, or (X) 8.24%, with respect to any Determination Date
occurring after the
<PAGE>
69th calendar month succeeding the Series 1995-E Closing Date.
Section 3. AMENDMENT TO SERIES 1995-D INSURANCE AND INDEMNITY
AGREEMENT.
(a) Paragraph (l) of Section 5.01 in the Series 1995-D Insurance and
Indemnity Agreement is amended to read in its entirety as follows:
(l) the Cumulative Default Rate shall be equal to or greater than
(A) 3.62%, with respect to any Determination Date occurring prior to
or during the third calendar month succeeding the Series 1995-D
Closing Date, (B) 6.92%, with respect to any Determination Date
occurring after the third, and prior to or during the 6th, calendar
month succeeding the Series 1995-D Closing Date, (C) 9.51%, with
respect to any Determination Date occurring after the 6th, and prior
to or during the 9th, calendar month succeeding the Series 1995-D
Closing Date, (D) 11.49%, with respect to any Determination Date
occurring after the 9th, and prior to or during the 12th, calendar
month succeeding the Series 1995-D Closing Date, (E) 12.42%, with
respect to any Determination Date occurring after the 12th, and prior
to or during the 15th, calendar month succeeding the Series 1995-D
Closing Date, (F) 13.47%, with respect to any Determination Date
occurring after the 15th, and prior to or during the 18th, calendar
month succeeding the Series 1995-D Closing Date, (G) 14.48%, with
respect to any Determination Date occurring after the 18th, and prior
to or during the 21st, calendar month succeeding the Series 1995-D
Closing Date, (H) 15.37%, with respect to any Determination Date
occurring after the 21st, and prior to or during the 24th, calendar
month succeeding the Series 1995-D Closing Date, (I) 16.12%, with
respect to any Determination Date occurring after the 24th, and prior
to or during the 27th, calendar month succeeding the Series 1995-D
Closing Date, (J) 16.82%, with respect to any Determination Date
occurring after the 27th, and prior to or during the 30th, calendar
month succeeding the Series 1995-D Closing Date, (K) 17.24%, with
respect to any Determination Date occurring after the 30th, and prior
to or during the 33rd, calendar month succeeding the Series 1995-D
Closing Date, (L) 17.60%, with respect to any Determination Date
occurring after the 33rd, and prior to or during the 36th, calendar
month succeeding the Series 1995-D Closing Date, (M) 17.85%, with
respect to any Determination Date occurring after the 36th, and prior
to or during the 39th, calendar month succeeding the Series 1995-D
Closing Date, (N) 18.04%, with respect to any Determination Date
occurring after the 39th, and prior to or during the 42nd, calendar
month succeeding
<PAGE>
the Series 1995-D Closing Date, (O) 18.22%, with respect to any
Determination Date occurring after the 42nd, and prior to or during
the 45th calendar month succeeding the Series 1995-D Closing Date,
(P) 18.35%, with respect to any Determination Date occurring after
the 45th, and prior to or during the 48th, calendar month
succeeding the Series 1995-D Closing Date, (Q) 18.43%, with respect
to any Determination Date occurring after the 48th, and prior to or
during the 51st, calendar month succeeding the Series 1995-D
Closing Date, (R) 18.50%, with respect to any Determination Date
occurring after the 51st, and prior to or during the 54th, calendar
month succeeding the Series 1995-D Closing Date, (S) 18.55%, with
respect to any Determination Date occurring after the 54th, and
prior to or during the 57th, calendar month succeeding the Series
1995-D Closing Date, (T) 18.59%, with respect to any Determination
Date occurring after the 57th, and prior to or during the 60th,
calendar month succeeding the Series 1995-D Closing Date, (U)
18.63%, with respect to any Determination Date occurring after the
60th, and prior to or during the 63rd, calendar month succeeding
the Series 1995-D Closing Date, (V) 18.65%, with respect to any
Determination Date occurring after the 63rd, and prior to or during
the 66th, calendar month succeeding the Series 1995-D Closing Date,
(W) 18.67%, with respect to any Determination Date occurring after
the 66th, and prior to or during the 69th, calendar month
succeeding the Series 1995-D Closing Date, or (X) 18.69%, with
respect to any Determination Date occurring after the 69th calendar
month succeeding the Series 1995-D Closing Date.
(b) Paragraph (m) of Section 5.01 in the Series 1995-D Insurance and
Indemnity Agreement is amended to read in its entirety as follows:
(m) the Cumulative Net Loss Rate shall be equal to or greater
than (A) 1.73%, with respect to any Determination Date occurring prior
to or during the third calendar month succeeding the Series 1995-D
Closing Date, (B) 3.25%, with respect to any Determination Date
occurring after the third, and prior to or during the 6th, calendar
month succeeding the Series 1995-D Closing Date, (C) 4.43%, with
respect to any Determination Date occurring after the 6th, and prior
to or during the 9th, calendar month succeeding the Series 1995-D
Closing Date, (D) 5.28%, with respect to any Determination Date
occurring after the 9th, and prior to or during the 12th, calendar
month succeeding the Series 1995-D Closing Date, (E) 5.71%, with
respect to any Determination Date occurring after the 12th, and prior
to or during the 15th, calendar month succeeding the Series 1995-D
Closing Date, (F) 6.12%, with respect
<PAGE>
to any Determination Date occurring after the 15th, and prior to or
during the 18th, calendar month succeeding the Series 1995-D
Closing Date, (G) 6.49%, with respect to any Determination Date
occurring after the 18th, and prior to or during the 21st, calendar
month succeeding the Series 1995-D Closing Date, (H) 6.84%, with
respect to any Determination Date occurring after the 21st, and
prior to or during the 24th, calendar month succeeding the Series
1995-D Closing Date, (I) 7.12%, with respect to any Determination
Date occurring after the 24th, and prior to or during the 27th,
calendar month succeeding the Series 1995-D Closing Date, (J)
7.39%, with respect to any Determination Date occurring after the
27th, and prior to or during the 30th, calendar month succeeding
the Series 1995-D Closing Date, (K) 7.54%, with respect to any
Determination Date occurring after the 30th, and prior to or during
the 33rd, calendar month succeeding the Series 1995-D Closing Date,
(L) 7.69%, with respect to any Determination Date occurring after
the 33rd, and prior to or during the 36th, calendar month
succeeding the Series 1995-D Closing Date, (M) 7.78%, with respect
to any Determination Date occurring after the 36th, and prior to or
during the 39th, calendar month succeeding the Series 1995-D
Closing Date, (N) 7.87%, with respect to any Determination Date
occurring after the 39th, and prior to or during the 42nd, calendar
month succeeding the Series 1995-D Closing Date, (O) 7.96%, with
respect to any Determination Date occurring after the 42nd, and
prior to or during the 45th calendar month succeeding the Series
1995-D Closing Date, (P) 8.01%, with respect to any Determination
Date occurring after the 45th, and prior to or during the 48th,
calendar month succeeding the Series 1995-D Closing Date, (Q)
8.04%, with respect to any Determination Date occurring after the
48th, and prior to or during the 51st, calendar month succeeding
the Series 1995-D Closing Date, (R) 8.08%, with respect to any
Determination Date occurring after the 51st, and prior to or during
the 54th, calendar month succeeding the Series 1995-D Closing Date,
(S) 8.11%, with respect to any Determination Date occurring after
the 54th, and prior to or during the 57th, calendar month
succeeding the Series 1995-D Closing Date, (T) 8.13%, with respect
to any Determination Date occurring after the 57th, and prior to or
during the 60th, calendar month succeeding the Series 1995-D
Closing Date, (U) 8.15%, with respect to any Determination Date
occurring after the 60th, and prior to or during the 63rd, calendar
month succeeding the Series 1995-D Closing Date, (V) 8.17%, with
respect to any Determination Date occurring after the 63rd, and
prior to or during the 66th, calendar month succeeding the Series
1995-D Closing Date, (W) 8.18%, with respect to any Determination
Date occurring after the 66th, and prior to or during the 69th,
calendar month succeeding
<PAGE>
the Series 1995-D Closing Date, or (X) 8.19%, with respect to any
Determination Date occurring after the 69th calendar month
succeeding the Series 1995-D Closing Date.
Section 4. AMENDMENT TO SERIES 1995-C INSURANCE AND INDEMNITY
AGREEMENT.
(a) Paragraph (l) of Section 5.01 in the Series 1995-C Insurance and
Indemnity Agreement is amended to read in its entirety as follows:
(l) the Cumulative Default Rate shall be equal to or greater than
(A) 3.62%, with respect to any Determination Date occurring prior to
or during the third calendar month succeeding the Series 1995-C
Closing Date, (B) 6.92%, with respect to any Determination Date
occurring after the third, and prior to or during the 6th, calendar
month succeeding the Series 1995-C Closing Date, (C) 9.50%, with
respect to any Determination Date occurring after the 6th, and prior
to or during the 9th, calendar month succeeding the Series 1995-C
Closing Date, (D) 11.47%, with respect to any Determination Date
occurring after the 9th, and prior to or during the 12th, calendar
month succeeding the Series 1995-C Closing Date, (E) 12.39%, with
respect to any Determination Date occurring after the 12th, and prior
to or during the 15th, calendar month succeeding the Series 1995-C
Closing Date, (F) 13.43%, with respect to any Determination Date
occurring after the 15th, and prior to or during the 18th, calendar
month succeeding the Series 1995-C Closing Date, (G) 14.43%, with
respect to any Determination Date occurring after the 18th, and prior
to or during the 21st, calendar month succeeding the Series 1995-C
Closing Date, (H) 15.31%, with respect to any Determination Date
occurring after the 21st, and prior to or during the 24th, calendar
month succeeding the Series 1995-C Closing Date, (I) 16.06%, with
respect to any Determination Date occurring after the 24th, and prior
to or during the 27th, calendar month succeeding the Series 1995-C
Closing Date, (J) 16.75%, with respect to any Determination Date
occurring after the 27th, and prior to or during the 30th, calendar
month succeeding the Series 1995-C Closing Date, (K) 17.17%, with
respect to any Determination Date occurring after the 30th, and prior
to or during the 33rd, calendar month succeeding the Series 1995-C
Closing Date, (L) 17.54%, with respect to any Determination Date
occurring after the 33rd, and prior to or during the 36th, calendar
month succeeding the Series 1995-C Closing Date, (M) 17.78%, with
respect to any Determination Date occurring after the 36th, and prior
to or during the 39th, calendar month succeeding the Series 1995-C
Closing Date, (N) 17.96%, with respect
<PAGE>
to any Determination Date occurring after the 39th, and prior to or
during the 42nd, calendar month succeeding the Series 1995-C
Closing Date, (O) 18.15%, with respect to any Determination Date
occurring after the 42nd, and prior to or during the 45th calendar
month succeeding the Series 1995-C Closing Date, (P) 18.27%, with
respect to any Determination Date occurring after the 45th, and
prior to or during the 48th, calendar month succeeding the Series
1995-C Closing Date, (Q) 18.35%, with respect to any Determination
Date occurring after the 48th, and prior to or during the 51st,
calendar month succeeding the Series 1995-C Closing Date, (R)
18.42%, with respect to any Determination Date occurring after the
51st, and prior to or during the 54th, calendar month succeeding
the Series 1995-C Closing Date, (S) 18.47%, with respect to any
Determination Date occurring after the 54th, and prior to or during
the 57th, calendar month succeeding the Series 1995-C Closing Date,
(T) 18.51%, with respect to any Determination Date occurring after
the 57th, and prior to or during the 60th, calendar month
succeeding the Series 1995-C Closing Date, (U) 18.55%, with respect
to any Determination Date occurring after the 60th, and prior to or
during the 63rd, calendar month succeeding the Series 1995-C
Closing Date, (V) 18.57%, with respect to any Determination Date
occurring after the 63rd, and prior to or during the 66th, calendar
month succeeding the Series 1995-C Closing Date, (W) 18.59%, with
respect to any Determination Date occurring after the 66th, and
prior to or during the 69th, calendar month succeeding the Series
1995-C Closing Date, or (X) 18.61%, with respect to any
Determination Date occurring after the 69th calendar month
succeeding the Series 1995-C Closing Date.
(b) Paragraph (m) of Section 5.01 in the Series 1995-C Insurance and
Indemnity Agreement is amended to read in its entirety as follows:
(m) the Cumulative Net Loss Rate shall be equal to or greater
than (A) 1.73%, with respect to any Determination Date occurring prior
to or during the third calendar month succeeding the Series 1995-C
Closing Date, (B) 3.24%, with respect to any Determination Date
occurring after the third, and prior to or during the 6th, calendar
month succeeding the Series 1995-C Closing Date, (C) 4.42%, with
respect to any Determination Date occurring after the 6th, and prior
to or during the 9th, calendar month succeeding the Series 1995-C
Closing Date, (D) 5.27%, with respect to any Determination Date
occurring after the 9th, and prior to or during the 12th, calendar
month succeeding the Series 1995-C Closing Date, (E) 5.69%, with
respect to any Determination Date occurring after the 12th, and
<PAGE>
prior to or during the 15th, calendar month succeeding the Series
1995-C Closing Date, (F) 6.10%, with respect to any Determination
Date occurring after the 15th, and prior to or during the 18th,
calendar month succeeding the Series 1995-C Closing Date, (G)
6.48%, with respect to any Determination Date occurring after the
18th, and prior to or during the 21st, calendar month succeeding
the Series 1995-C Closing Date, (H) 6.83%, with respect to any
Determination Date occurring after the 21st, and prior to or during
the 24th, calendar month succeeding the Series 1995-C Closing Date,
(I) 7.11%, with respect to any Determination Date occurring after
the 24th, and prior to or during the 27th, calendar month
succeeding the Series 1995-C Closing Date, (J) 7.38%, with respect
to any Determination Date occurring after the 27th, and prior to or
during the 30th, calendar month succeeding the Series 1995-C
Closing Date, (K) 7.53%, with respect to any Determination Date
occurring after the 30th, and prior to or during the 33rd, calendar
month succeeding the Series 1995-C Closing Date, (L) 7.68%, with
respect to any Determination Date occurring after the 33rd, and
prior to or during the 36th, calendar month succeeding the Series
1995-C Closing Date, (M) 7.77%, with respect to any Determination
Date occurring after the 36th, and prior to or during the 39th,
calendar month succeeding the Series 1995-C Closing Date, (N)
7.86%, with respect to any Determination Date occurring after the
39th, and prior to or during the 42nd, calendar month succeeding
the Series 1995-C Closing Date, (O) 7.94%, with respect to any
Determination Date occurring after the 42nd, and prior to or during
the 45th calendar month succeeding the Series 1995-C Closing Date,
(P) 7.99%, with respect to any Determination Date occurring after
the 45th, and prior to or during the 48th, calendar month
succeeding the Series 1995-C Closing Date, (Q) 8.03%, with respect
to any Determination Date occurring after the 48th, and prior to or
during the 51st, calendar month succeeding the Series 1995-C
Closing Date, (R) 8.07%, with respect to any Determination Date
occurring after the 51st, and prior to or during the 54th, calendar
month succeeding the Series 1995-C Closing Date, (S) 8.10%, with
respect to any Determination Date occurring after the 54th, and
prior to or during the 57th, calendar month succeeding the Series
1995-C Closing Date, (T) 8.12%, with respect to any Determination
Date occurring after the 57th, and prior to or during the 60th,
calendar month succeeding the Series 1995-C Closing Date, (U)
8.14%, with respect to any Determination Date occurring after the
60th, and prior to or during the 63rd, calendar month succeeding
the Series 1995-C Closing Date, (V) 8.15%, with respect to any
Determination Date occurring after the 63rd, and prior to or during
the 66th, calendar month succeeding the Series 1995-C Closing Date,
(W) 8.16%, with respect
<PAGE>
to any Determination Date occurring after the 66th, and prior to or
during the 69th, calendar month succeeding the Series 1995-C
Closing Date, or (X) 8.18%, with respect to any Determination Date
occurring after the 69th calendar month succeeding the Series
1995-C Closing Date.
Section 5. AMENDMENT OF SERIES 1995-B INSURANCE AND INDEMNITY
AGREEMENT.
(a) Paragraph (n) of Section 5.01 in the Series 1995-B Insurance and
Indemnity Agreement is amended to read in its entirety as follows:
(n) the Cumulative Default Rate shall be equal to or greater than
(A) 3.63%, with respect to any Determination Date occurring prior to
or during the third calendar month succeeding the Series 1995-B
Closing Date, (B) 6.93%, with respect to any Determination Date
occurring after the third, and prior to or during the 6th, calendar
month succeeding the Series 1995-B Closing Date, (C) 9.52%, with
respect to any Determination Date occurring after the 6th, and prior
to or during the 9th, calendar month succeeding the Series 1995-B
Closing Date, (D) 11.51%, with respect to any Determination Date
occurring after the 9th, and prior to or during the 12th, calendar
month succeeding the Series 1995-B Closing Date, (E) 12.45%, with
respect to any Determination Date occurring after the 12th, and prior
to or during the 15th, calendar month succeeding the Series 1995-B
Closing Date, (F) 13.51%, with respect to any Determination Date
occurring after the 15th, and prior to or during the 18th, calendar
month succeeding the Series 1995-B Closing Date, (G) 14.53%, with
respect to any Determination Date occurring after the 18th, and prior
to or during the 21st, calendar month succeeding the Series 1995-B
Closing Date, (H) 15.42%, with respect to any Determination Date
occurring after the 21st, and prior to or during the 24th, calendar
month succeeding the Series 1995-B Closing Date, (I) 16.17%, with
respect to any Determination Date occurring after the 24th, and prior
to or during the 27th, calendar month succeeding the Series 1995-B
Closing Date, (J) 16.87%, with respect to any Determination Date
occurring after the 27th, and prior to or during the 30th, calendar
month succeeding the Series 1995-B Closing Date, (K) 17.29%, with
respect to any Determination Date occurring after the 30th, and prior
to or during the 33rd, calendar month succeeding the Series 1995-B
Closing Date, (L) 17.67%, with respect to any Determination Date
occurring after the 33rd, and prior to or during the 36th, calendar
month succeeding the Series 1995-B Closing Date, (M) 17.91%, with
respect to any Determination Date occurring after the 36th, and
<PAGE>
prior to or during the 39th, calendar month succeeding the Series
1995-B Closing Date, (N) 18.10%, with respect to any Determination
Date occurring after the 39th, and prior to or during the 42nd,
calendar month succeeding the Series 1995-B Closing Date, (O)
18.29%, with respect to any Determination Date occurring after the
42nd, and prior to or during the 45th calendar month succeeding the
Series 1995-B Closing Date, (P) 18.42%, with respect to any
Determination Date occurring after the 45th, and prior to or during
the 48th, calendar month succeeding the Series 1995-B Closing Date,
(Q) 18.50%, with respect to any Determination Date occurring after
the 48th, and prior to or during the 51st, calendar month
succeeding the Series 1995-B Closing Date, (R) 18.57%, with respect
to any Determination Date occurring after the 51st, and prior to or
during the 54th, calendar month succeeding the Series 1995-B
Closing Date, (S) 18.62%, with respect to any Determination Date
occurring after the 54th, and prior to or during the 57th, calendar
month succeeding the Series 1995-B Closing Date, (T) 18.66%, with
respect to any Determination Date occurring after the 57th, and
prior to or during the 60th, calendar month succeeding the Series
1995-B Closing Date, (U) 18.70%, with respect to any Determination
Date occurring after the 60th, and prior to or during the 63rd,
calendar month succeeding the Series 1995-B Closing Date, (V)
18.72%, with respect to any Determination Date occurring after the
63rd, and prior to or during the 66th, calendar month succeeding
the Series 1995-B Closing Date, (W) 18.74%, with respect to any
Determination Date occurring after the 66th, and prior to or during
the 69th, calendar month succeeding the Series 1995-B Closing Date,
or (X) 18.76%, with respect to any Determination Date occurring
after the 69th calendar month succeeding the Series 1995-B Closing
Date.
(b) Paragraph (o) of Section 5.01 in the Series 1995-B Insurance and
Indemnity Agreement is amended to read in its entirety as follows:
(o) the Cumulative Net Loss Rate shall be equal to or greater
than (A) 1.73%, with respect to any Determination Date occurring prior
to or during the third calendar month succeeding the Series 1995-B
Closing Date, (B) 3.25%, with respect to any Determination Date
occurring after the third, and prior to or during the 6th, calendar
month succeeding the Series 1995-B Closing Date, (C) 4.44%, with
respect to any Determination Date occurring after the 6th, and prior
to or during the 9th, calendar month succeeding the Series 1995-B
Closing Date, (D) 5.29%, with respect to any Determination Date
occurring after the 9th, and prior to or during the 12th, calendar
month succeeding the Series 1995-B Closing Date, (E) 5.72%, with
respect
<PAGE>
to any Determination Date occurring after the 12th, and prior to or
during the 15th, calendar month succeeding the Series 1995-B
Closing Date, (F) 6.13%, with respect to any Determination Date
occurring after the 15th, and prior to or during the 18th, calendar
month succeeding the Series 1995-B Closing Date, (G) 6.50%, with
respect to any Determination Date occurring after the 18th, and
prior to or during the 21st, calendar month succeeding the Series
1995-B Closing Date, (H) 6.85%, with respect to any Determination
Date occurring after the 21st, and prior to or during the 24th,
calendar month succeeding the Series 1995-B Closing Date, (I)
7.13%, with respect to any Determination Date occurring after the
24th, and prior to or during the 27th, calendar month succeeding
the Series 1995-B Closing Date, (J) 7.40%, with respect to any
Determination Date occurring after the 27th, and prior to or during
the 30th, calendar month succeeding the Series 1995-B Closing Date,
(K) 7.55%, with respect to any Determination Date occurring after
the 30th, and prior to or during the 33rd, calendar month
succeeding the Series 1995-B Closing Date, (L) 7.70%, with respect
to any Determination Date occurring after the 33rd, and prior to or
during the 36th, calendar month succeeding the Series 1995-B
Closing Date, (M) 7.79%, with respect to any Determination Date
occurring after the 36th, and prior to or during the 39th, calendar
month succeeding the Series 1995-B Closing Date, (N) 7.88%, with
respect to any Determination Date occurring after the 39th, and
prior to or during the 42nd, calendar month succeeding the Series
1995-B Closing Date, (O) 7.97%, with respect to any Determination
Date occurring after the 42nd, and prior to or during the 45th
calendar month succeeding the Series 1995-B Closing Date, (P)
8.02%, with respect to any Determination Date occurring after the
45th, and prior to or during the 48th, calendar month succeeding
the Series 1995-B Closing Date, (Q) 8.05%, with respect to any
Determination Date occurring after the 48th, and prior to or during
the 51st, calendar month succeeding the Series 1995-B Closing Date,
(R) 8.09%, with respect to any Determination Date occurring after
the 51st, and prior to or during the 54th, calendar month
succeeding the Series 1995-B Closing Date, (S) 8.12%, with respect
to any Determination Date occurring after the 54th, and prior to or
during the 57th, calendar month succeeding the Series 1995-B
Closing Date, (T) 8.14%, with respect to any Determination Date
occurring after the 57th, and prior to or during the 60th, calendar
month succeeding the Series 1995-B Closing Date, (U) 8.16%, with
respect to any Determination Date occurring after the 60th, and
prior to or during the 63rd, calendar month succeeding the Series
1995-B Closing Date, (V) 8.18%, with respect to any Determination
Date occurring after the 63rd, and prior to or during the 66th,
calendar month succeeding
<PAGE>
the Series 1995-B Closing Date, (W) 8.19%, with respect to any
Determination Date occurring after the 66th, and prior to or during
the 69th, calendar month succeeding the Series 1995-B Closing Date,
or (X) 8.20%, with respect to any Determination Date occurring
after the 69th calendar month succeeding the Series 1995-B Closing
Date.
Section 6. AMENDMENT OF SERIES 1995-A INSURANCE AND INDEMNITY
AGREEMENT.
(a) Paragraph (l) of Section 5.01 in the Series 1995-A Insurance and
Indemnity Agreement is amended to read in its entirety as follows:
(l) the Cumulative Default Rate shall be equal to or greater than
(A) 3.61%, with respect to any Determination Date occurring prior to
or during the third calendar month succeeding the Series 1995-A
Closing Date, (B) 6.90%, with respect to any Determination Date
occurring after the third, and prior to or during the 6th, calendar
month succeeding the Series 1995-A Closing Date, (C) 9.46%, with
respect to any Determination Date occurring after the 6th, and prior
to or during the 9th, calendar month succeeding the Series 1995-A
Closing Date, (D) 11.40%, with respect to any Determination Date
occurring after the 9th, and prior to or during the 12th, calendar
month succeeding the Series 1995-A Closing Date, (E) 12.30%, with
respect to any Determination Date occurring after the 12th, and prior
to or during the 15th, calendar month succeeding the Series 1995-A
Closing Date, (F) 13.31%, with respect to any Determination Date
occurring after the 15th, and prior to or during the 18th, calendar
month succeeding the Series 1995-A Closing Date, (G) 14.28%, with
respect to any Determination Date occurring after the 18th, and prior
to or during the 21st, calendar month succeeding the Series 1995-A
Closing Date, (H) 15.15%, with respect to any Determination Date
occurring after the 21st, and prior to or during the 24th, calendar
month succeeding the Series 1995-A Closing Date, (I) 15.88%, with
respect to any Determination Date occurring after the 24th, and prior
to or during the 27th, calendar month succeeding the Series 1995-A
Closing Date, (J) 16.57%, with respect to any Determination Date
occurring after the 27th, and prior to or during the 30th, calendar
month succeeding the Series 1995-A Closing Date, (K) 16.97%, with
respect to any Determination Date occurring after the 30th, and prior
to or during the 33rd, calendar month succeeding the Series 1995-A
Closing Date, (L) 17.33%, with respect to any Determination Date
occurring after the 33rd, and prior to or during the 36th, calendar
month succeeding the Series 1995-A Closing Date, (M) 17.56%, with
respect
<PAGE>
to any Determination Date occurring after the 36th, and prior to or
during the 39th, calendar month succeeding the Series 1995-A
Closing Date, (N) 17.74%, with respect to any Determination Date
occurring after the 39th, and prior to or during the 42nd, calendar
month succeeding the Series 1995-A Closing Date, (O) 17.92%, with
respect to any Determination Date occurring after the 42nd, and
prior to or during the 45th calendar month succeeding the Series
1995-A Closing Date, (P) 18.04%, with respect to any Determination
Date occurring after the 45th, and prior to or during the 48th,
calendar month succeeding the Series 1995-A Closing Date, (Q)
18.12%, with respect to any Determination Date occurring after the
48th, and prior to or during the 51st, calendar month succeeding
the Series 1995-A Closing Date, (R) 18.19%, with respect to any
Determination Date occurring after the 51st, and prior to or during
the 54th, calendar month succeeding the Series 1995-A Closing Date,
(S) 18.24%, with respect to any Determination Date occurring after
the 54th, and prior to or during the 57th, calendar month
succeeding the Series 1995-A Closing Date, (T) 18.28%, with respect
to any Determination Date occurring after the 57th, and prior to or
during the 60th, calendar month succeeding the Series 1995-A
Closing Date, (U) 18.32%, with respect to any Determination Date
occurring after the 60th, and prior to or during the 63rd, calendar
month succeeding the Series 1995-A Closing Date, (V) 18.34%, with
respect to any Determination Date occurring after the 63rd, and
prior to or during the 66th, calendar month succeeding the Series
1995-A Closing Date, (W) 18.36%, with respect to any Determination
Date occurring after the 66th, and prior to or during the 69th,
calendar month succeeding the Series 1995-A Closing Date, or (X)
18.38%, with respect to any Determination Date occurring after the
69th calendar month succeeding the Series 1995-A Closing Date.
(b) Paragraph (m) of Section 5.01 in the Series 1995-A Insurance and
Indemnity Agreement is amended to read in its entirety as follows:
(m) the Cumulative Net Loss Rate shall be equal to or greater
than (A) 1.71%, with respect to any Determination Date occurring prior
to or during the third calendar month succeeding the Series 1995-A
Closing Date, (B) 3.23%, with respect to any Determination Date
occurring after the third, and prior to or during the 6th, calendar
month succeeding the Series 1995-A Closing Date, (C) 4.40%, with
respect to any Determination Date occurring after the 6th, and prior
to or during the 9th, calendar month succeeding the Series 1995-A
Closing Date, (D) 5.25%, with respect to any Determination Date
occurring after the 9th, and
<PAGE>
prior to or during the 12th, calendar month succeeding the Series
1995-A Closing Date, (E) 5.66%, with respect to any Determination
Date occurring after the 12th, and prior to or during the 15th,
calendar month succeeding the Series 1995-A Closing Date, (F)
6.06%, with respect to any Determination Date occurring after the
15th, and prior to or during the 18th, calendar month succeeding
the Series 1995-A Closing Date, (G) 6.44%, with respect to any
Determination Date occurring after the 18th, and prior to or during
the 21st, calendar month succeeding the Series 1995-A Closing Date,
(H) 6.79%, with respect to any Determination Date occurring after
the 21st, and prior to or during the 24th, calendar month
succeeding the Series 1995-A Closing Date, (I) 7.08%, with respect
to any Determination Date occurring after the 24th, and prior to or
during the 27th, calendar month succeeding the Series 1995-A
Closing Date, (J) 7.36%, with respect to any Determination Date
occurring after the 27th, and prior to or during the 30th, calendar
month succeeding the Series 1995-A Closing Date, (K) 7.51%, with
respect to any Determination Date occurring after the 30th, and
prior to or during the 33rd, calendar month succeeding the Series
1995-A Closing Date, (L) 7.66%, with respect to any Determination
Date occurring after the 33rd, and prior to or during the 36th,
calendar month succeeding the Series 1995-A Closing Date, (M)
7.74%, with respect to any Determination Date occurring after the
36th, and prior to or during the 39th, calendar month succeeding
the Series 1995-A Closing Date, (N) 7.83%, with respect to any
Determination Date occurring after the 39th, and prior to or during
the 42nd, calendar month succeeding the Series 1995-A Closing Date,
(O) 7.91%, with respect to any Determination Date occurring after
the 42nd, and prior to or during the 45th calendar month succeeding
the Series 1995-A Closing Date, (P) 7.96%, with respect to any
Determination Date occurring after the 45th, and prior to or during
the 48th, calendar month succeeding the Series 1995-A Closing Date,
(Q) 7.99%, with respect to any Determination Date occurring after
the 48th, and prior to or during the 51st, calendar month
succeeding the Series 1995-A Closing Date, (R) 8.03%, with respect
to any Determination Date occurring after the 51st, and prior to or
during the 54th, calendar month succeeding the Series 1995-A
Closing Date, (S) 8.06%, with respect to any Determination Date
occurring after the 54th, and prior to or during the 57th, calendar
month succeeding the Series 1995-A Closing Date, (T) 8.08%, with
respect to any Determination Date occurring after the 57th, and
prior to or during the 60th, calendar month succeeding the Series
1995-A Closing Date, (U) 8.10%, with respect to any Determination
Date occurring after the 60th, and prior to or during the 63rd,
calendar month succeeding the Series 1995-A Closing Date, (V)
8.11%, with respect
<PAGE>
to any Determination Date occurring after the 63rd, and prior to or
during the 66th, calendar month succeeding the Series 1995-A
Closing Date, (W) 8.13%, with respect to any Determination Date
occurring after the 66th, and prior to or during the 69th, calendar
month succeeding the Series 1995-A Closing Date, or (X) 8.14%, with
respect to any Determination Date occurring after the 69th calendar
month succeeding the Series 1995-A Closing Date.
Section 7. COUNTERPARTS.
This Amendment to the Insurance and Indemnity Agreements may be
executed in several counterparts, each of which shall be deemed an original
hereof and all of which, when taken together, shall constitute one and the same
Amendment to the Insurance and Indemnity Agreements.
Section 8. INSURANCE AND INDEMNITY AGREEMENTS.
Except as provided herein, all provisions, terms and conditions of
the Insurance and Indemnity Agreements shall remain in full force and effect.
As amended hereby, the Insurance and Indemnity Agreements are ratified and
confirmed in all respects.
Section 9. AUTHORIZATION. By its execution hereof, Financial
Security Assurance Inc. hereby instructs the Owner Trustee of each of Olympic
Automobile Receivables Trust 1996-A, Olympic Automobile Receivables Trust
1995-E, Olympic Automobile Receivables Trust 1995-D, Olympic Automobile
Receivables Trust 1995-C, Olympic Automobile Receivables Trust 1995-B and
Olympic Automobile Receivables Trust 1995-A, each in accordance with Section
6.3 of the respective Trust Agreements, to execute this Amendment.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment to
the respective Insurance and Indemnity Agreements specified below as of the
date set forth on the first page hereof.
With respect to each Insurance and
Indemnity Agreement:
FINANCIAL SECURITY ASSURANCE INC.
By:
Name:
Title: Authorized Officer
OLYMPIC RECEIVABLES FINANCE CORP.
By:
Name:
Title:
OLYMPIC FINANCIAL LTD.
By:
Name:
Title:
With respect to Series 1996-A Insurance and
Indemnity Agreement, Series 1995-E Insurance
and Indemnity Agreement, Series 1995-D
Insurance and Indemnity
<PAGE>
Agreement, Series 1995-C Insurance and
Indemnity Agreement, and Series 1995-B
Insurance and Indemnity Agreement:
OLYMPIC FIRST GP INC.
By:
Name:
Title:
OLYMPIC SECOND GP INC.
By:
Name:
Title:
With respect to Series 1996-A Insurance and
Indemnity Agreement only:
OLYMPIC AUTOMOBILE RECEIVABLES TRUST, 1996-A
By: Mellon Bank (DE), National Association,
not in its individual capacity, but solely in
its capacity as Owner Trustee under the Trust
Agreement
By:
Name:
Title:
<PAGE>
With respect to Series 1995-E Insurance and
Indemnity Agreement only:
OLYMPIC AUTOMOBILE RECEIVABLES TRUST, 1995-E
By: Wilmington Trust Company,
not in its individual capacity, but solely in
its capacity as Owner Trustee under the Trust
Agreement
By:
Name:
Title:
With respect to Series 1995-D Insurance and
Indemnity Agreement only:
OLYMPIC AUTOMOBILE RECEIVABLES TRUST, 1995-D
By: Wilmington Trust Company,
not in its individual capacity, but solely in
its capacity as Owner Trustee under the Trust
Agreement
By:
Name:
Title:
With respect to Series 1995-C Insurance and
Indemnity Agreement only:
OLYMPIC AUTOMOBILE RECEIVABLES
TRUST, 1995-C
By: Wilmington Trust Company,
not in its individual capacity, but solely in
its capacity as Owner Trustee under the
Trust Agreement
<PAGE>
By:
Name:
Title:
With respect to Series 1995-B Insurance and
Indemnity Agreement only:
OLYMPIC AUTOMOBILE RECEIVABLES
TRUST, 1995-B
By: Wilmington Trust Company,
not in its individual capacity, but solely in
its capacity as Owner Trustee under the Trust
Agreement
By:
Name:
Title:
With respect to Series 1995-A Insurance and
Indemnity Agreement only:
OLYMPIC AUTOMOBILE RECEIVABLES
TRUST, 1995-A
By: Wilmington Trust Company,
not in its individual capacity, but solely in
its capacity as Owner Trustee under the Trust
Agreement
By:
Name:
Title:
<PAGE>
EXHIBIT 11.1
OLYMPIC FINANCIAL LTD.
COMPUTATION OF EARNINGS PER SHARE
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------------- --------------------------
PRIMARY: 1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Income before extraordinary item and preferred dividends . . . $ 14,715 $ 6,616 $ 25,793 $ 10,078
Less preferred dividends . . . . . . . . . . . . . . . . . . . (363) (558) (807) (1,123)
----------- ----------- ----------- -----------
Net income before extraordinary item applicable to common
stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,352 6,058 24,986 8,955
Less extraordinary item. . . . . . . . . . . . . . . . . . . . -- (512) -- (3,856)
----------- ----------- ----------- -----------
Net income applicable to common stock. . . . . . . . . . . . $ 14,352 $ 5,546 $ 24,986 $ 5,099
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Weighted average number of commons shares outstanding. . . . . 31,019,492 17,102,068 27,078,748 13,564,945
Net effect of assumed exercise of stock options and warrants . 2,488,723 3,554,498 2,318,572 3,122,143
----------- ----------- ----------- -----------
Weighted average primary shares. . . . . . . . . . . . . . . 33,508,215 20,656,566 29,397,320 16,687,088
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Net income per common share before extraordinary item. . . . . $ 0.43 $ 0.29 $ 0.85 $ 0.54
Extraordinary item per common share. . . . . . . . . . . . . . -- (0.02) -- (0.23)
----------- ----------- ----------- -----------
Net income per common share. . . . . . . . . . . . . . . . . $ 0.43 $ 0.27 $ 0.85 $ 0.31
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
FULLY DILUTED:
Income before extraordinary item and preferred dividends. . . $ 14,715 $ 6,616 $ 25,793 $ 10,078
Less extraordinary item . . . . . . . . . . . . . . . . . . . -- (512) -- (3,856)
----------- ----------- ----------- -----------
Net income as adjusted. . . . . . . . . . . . . . . . . . . $ 14,715 $ 6,104 $ 25,793 $ 6,222
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Weighted average number of common shares outstanding . . . . 31,019,492 17,102,068 27,078,748 13,564,945
Net effect of assumed exercise of stock options and warrants 2,687,123 4,353,498 2,912,442 4,347,324
Net effect of assumed conversion of 8% Cumulative Convertible
Exchangeable Preferred stock . . . . . . . . . . . . . . . 3,498,672 5,206,055 3,990,615 5,206,055
----------- ----------- ----------- -----------
Weighted average fully diluted shares. . . . . . . . . . . 37,205,287 26,661,621 33,981,805 23,118,324
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Net income per share before extraordinary item . . . . . . . $ 0.40 $ 0.25 $ 0.76 $ 0.44
Extraordinary item per share . . . . . . . . . . . . . . . . -- (0.02) -- (0.17)
----------- ----------- ----------- -----------
Net income per share . . . . . . . . . . . . . . . . . . . $ 0.40 $ 0.23 $ 0.76 $ 0.27
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
26
<PAGE>
EXHIBIT 12.1
OLYMPIC FINANCIAL LTD.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PERIOD FROM
MARCH 8, 1990
SIX MONTHS ENDED SIX MONTHS (DATE OF
JUNE 30, YEAR ENDED DECEMBER 31, ENDED INCORPORATION)
------------------ -------------------------------------- DECEMBER 31, TO JUNE 30,
1996 1995 1995 1994 1993 1992 1991 1991
-------- -------- -------- -------- -------- -------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
COMPUTATION OF INCOME:
Income (loss) before income taxes and
extraordinary item . . . . . . . . . . $41,637 $16,769 $48,835 $ 6,030 $ 1,395 ($1,342) ($1,158) ($1,525)
Capitalized interest . . . . . . . . . . -- -- -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- ------------ --------------
Income before income taxes and
capitalized interest . . . . . . . . . 41,637 16,769 48,835 6,030 1,395 (1,342) (1,158) (1,525)
Fixed charges. . . . . . . . . . . . . . 12,507 6,682 17,789 5,670 1,946 896 96 191
-------- -------- -------- -------- -------- -------- ------------ --------------
Total income (loss) for computation . . $54,144 $23,451 $66,624 $ 11,700 $ 3,341 ($446) ($1,062) ($1,334)
-------- -------- -------- -------- -------- -------- ------------ --------------
-------- -------- -------- -------- -------- -------- ------------ --------------
COMPUTATION OF FIXED CHARGES:
Portion of rentals deemed
representative of interest (a) . . . . $ 558 $ 263 $ 614 $ 284 $ 129 $ 68 $ 24 $ 30
INTEREST:
Interest on long-term debt . . . . . . 10,209 5,966 15,529 5,254 1,734 740 -- --
Interest other than funding of purchase
of auto loans. . . . . . . . . . . . 1,169 285 945 112 63 70 70 58
Amortization of debt
placement. . . . . . . . . . . . . . 571 168 701 20 20 18 2 103
Capitalized interest . . . . . . . . . -- -- -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- ------------ --------------
Total fixed charges . . . . . . . . . $12,507 $ 6,682 $ 17,789 $ 5,670 $ 1,946 $ 896 $ 96 $ 191
-------- -------- -------- -------- -------- -------- ------------ --------------
-------- -------- -------- -------- -------- -------- ------------ --------------
Ratio of earnings to fixed
charges. . . . . . . . . . . . . . . 4.33x 3.51x 3.75x 2.06x 1.72x -- -- --
Deficiency in earnings to fixed
charges. . . . . . . . . . . . . . . -- -- -- -- -- ($1,342) ($1,158) ($1,525)
ADDITIONAL INFORMATION:
Net rental expense . . . . . . . . . . $ 1,675 $ 791 $ 1,842 $ 861 $ 391 $ 207 $ 73 $ 91
-------- -------- -------- -------- -------- -------- ------------ --------------
-------- -------- -------- -------- -------- -------- ------------ --------------
</TABLE>
(a) Portion of rental deemed representative of interest equals one third of
rental expense.
<PAGE>
EXHIBIT 12.2
OLYMPIC FINANCIAL LTD.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PERIOD FROM
MARCH 8, 1990
SIX MONTHS ENDED SIX MONTHS (DATE OF
MARCH 31, YEAR ENDED DECEMBER 31, ENDED INCORPORATION)
---------------- --------------------------------- DECEMBER 31, TO JUNE 30,
1996 1995 1995 1994 1993 1992 1991 1991
------- ------- ------- ------- ------ ------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
COMPUTATION OF INCOME:
Income (loss) before income taxes and
extraordinary item . . . . . . . . . . . . $41,637 $16,769 $48,835 $ 6,030 $1,395 ($1,342) ($1,158) ($1,525)
Capitalized interest . . . . . . . . . . . . -- -- -- -- -- -- -- --
------- ------- ------- ------- ------ ------- ------- -------
Income before income taxes and
capitalized interest . . . . . . . . . . . 41,637 16,769 48,835 6,030 1,395 (1,342) (1,158) (1,525)
Fixed charges. . . . . . . . . . . . . . . . 12,507 6,682 17,789 5,670 1,946 896 96 191
------- ------- ------- ------- ------ ------- ------- -------
Total income (loss) for computation . . . . $54,144 $23,451 $66,624 $11,700 $3,341 ($446) ($1,062) ($1,334)
------- ------- ------- ------- ------ ------- ------- -------
------- ------- ------- ------- ------ ------- ------- -------
COMPUTATION OF FIXED CHARGES:
Portion of rentals deemed representative
of interest (a). . . . . . . . . . . . . . $ 558 $ 263 $ 614 $ 284 $ 129 $ 68 $ 24 $ 30
INTEREST:
Interest on long-term debt . . . . . . . . . 10,209 5,966 15,529 5,254 1,734 740 -- --
Interest other than funding of purchase
of auto loans. . . . . . . . . . . . . . . 1,169 285 945 112 63 70 70 58
Amortization of debt placement . . . . . . . 571 168 701 20 20 18 2 103
Capitalized interest . . . . . . . . . . . . -- -- -- -- -- -- -- --
------- ------- ------- ------- ------ ------- ------- -------
Total fixed charges . . . . . . . . . . . . $12,507 $ 6,682 $17,789 $ 5,670 $1,946 $ 896 $ 96 $ 191
Preferred stock dividends in a pre-tax
basis. . . . . . . . . . . . . . . . . . . 1,346 1,871 3,688 3,286 192 -- -- --
------- ------- ------- ------- ------ ------- ------- -------
Total combined fixed charges and preferred
stock dividends. . . . . . . . . . . . . . $13,853 $ 8,553 $21,477 $ 8,956 $2,138 $ 896 $ 96 $ 191
------- ------- ------- ------- ------ ------- ------- -------
------- ------- ------- ------- ------ ------- ------- -------
Ratio of earnings to combined fixed charges
and preferred stock dividends. . . . . . . 3.91x 2.74x 3.10x 1.31x 1.56x -- -- --
Deficiency in earnings to combined fixed
charges and preferred stock dividends. . . -- -- -- -- -- ($1,342) ($1,158) ($1,525)
ADDITIONAL INFORMATION:
Net rental expense . . . . . . . . . . . . . $ 1,675 $ 791 $ 1,842 $ 861 $ 391 $ 207 $ 73 $ 91
------- ------- ------- ------- ------ ------- ------- -------
------- ------- ------- ------- ------ ------- ------- -------
</TABLE>
(a) Portion of rental deemed representative of interest equals one third of
rental expense.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 6/30/96
FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 22,575
<SECURITIES> 0
<RECEIVABLES> 570,349
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 26,544
<PP&E> 14,394
<DEPRECIATION> 3,203
<TOTAL-ASSETS> 630,659
<CURRENT-LIABILITIES> 69,128
<BONDS> 204,734
7
0
<COMMON> 328
<OTHER-SE> 356,462
<TOTAL-LIABILITY-AND-EQUITY> 630,659
<SALES> 0
<TOTAL-REVENUES> 93,539
<CGS> 0
<TOTAL-COSTS> 39,593
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11,949
<INCOME-PRETAX> 41,637
<INCOME-TAX> 15,844
<INCOME-CONTINUING> 25,793
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 25,793
<EPS-PRIMARY> 0.85
<EPS-DILUTED> 0.76
</TABLE>
