<PAGE>
FILED PURSUANT TO RULE 424(b)(5)
FILE NO. 33-97608
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED MARCH 7, 1996)
OLYMPIC AUTOMOBILE RECEIVABLES TRUST, 1996-B
$68,900,000 5.39% CLASS A-1 MONEY MARKET AUTOMOBILE RECEIVABLES-BACKED NOTES
$223,430,000 6.00% CLASS A-2 AUTOMOBILE RECEIVABLES-BACKED NOTES
$126,960,000 6.50% CLASS A-3 AUTOMOBILE RECEIVABLES-BACKED NOTES
$116,790,000 6.70% CLASS A-4 AUTOMOBILE RECEIVABLES-BACKED NOTES
$55,420,000 6.90% CLASS A-5 AUTOMOBILE RECEIVABLES-BACKED NOTES
$58,500,000 6.90% AUTOMOBILE RECEIVABLES-BACKED CERTIFICATES
OLYMPIC RECEIVABLES FINANCE CORP.
(SELLER)
[LOGO]
(SERVICER)
Olympic Automobile Receivables Trust, 1996-B (the "Trust") will be formed
pursuant to a Trust Agreement, to be dated as of June 1, 1996, among Olympic
Receivables Finance Corp. (the "Seller"), a wholly owned subsidiary of Olympic
Financial Ltd. ("Olympic Financial"), Olympic First GP Inc., a wholly owned
subsidiary of Olympic Financial, Olympic Second GP Inc., a wholly owned
subsidiary of Olympic Financial, Financial Security Assurance Inc. ("Financial
Security") and Mellon Bank (DE), National Association, as Owner Trustee. The
Trust will issue $68,900,000 aggregate principal amount of 5.39% Class A-1 Money
Market Automobile Receivables-Backed Notes (the "Class A-1 Notes"), $223,430,000
aggregate principal amount of 6.00% Class A-2 Automobile Receivables-Backed
Notes (the "Class A-2 Notes"), $126,960,000 aggregate principal amount of 6.50%
Class A-3 Automobile Receivables-Backed Notes (the "Class A-3 Notes"),
$116,790,000 aggregate principal amount of 6.70% Class A-4 Automobile
Receivables-Backed Notes (the "Class A-4 Notes") and $55,420,000 aggregate
principal amount of 6.90% Class A-5 Automobile Receivables-Backed Notes (the
"Class A-5 Notes" and, together with the Class A-1 Notes, the Class A-2 Notes,
the Class A-3 Notes and the Class A-4 Notes, the "Notes"), pursuant to an
Indenture, to be dated as of June 1, 1996 (the "Indenture"), among the Trust and
Norwest Bank Minnesota, National Association, as Indenture Trustee and Indenture
Collateral Agent. The Trust will also issue $58,500,000 aggregate principal
amount of 6.90% Automobile Receivables-Backed Certificates (the "Certificates").
The Certificates and the Notes are referred to herein collectively as the
"Securities." The assets of the Trust will include a pool of retail installment
sales contracts and promissory notes (the "Receivables") purchased by Olympic
Financial from motor vehicle dealers and secured by new and used automobiles and
light trucks, certain monies paid or payable thereunder after June 6, 1996 (the
"Initial Cutoff Date"), an assignment of Olympic Financial's security interests
in vehicles financed thereby, monies on deposit in a trust account (the
"Pre-Funding Account") to be established with the Indenture Trustee, and certain
other property, as more fully described herein. The aggregate principal balance
of the Receivables on the Initial Cutoff Date is expected to be approximately
$455,000,000. Additional retail installment sales contracts and promissory notes
(the "Subsequent Receivables") will be purchased by the Trust from the Seller
from time to time on or before the August 1996 Distribution Date, from the
Pre-Funded Amount (as defined herein) then on deposit in the Pre-Funding
Account. The Notes will be secured by the assets of the Trust pursuant to the
Indenture.
(CONTINUED ON FOLLOWING PAGE)
FULL AND TIMELY PAYMENT OF THE NOTEHOLDERS' DISTRIBUTABLE AMOUNT AND THE
CERTIFICATEHOLDERS' DISTRIBUTABLE AMOUNT ON
EACH DISTRIBUTION DATE IS UNCONDITIONALLY AND IRREVOCABLY GUARANTEED PURSUANT TO
FINANCIAL
GUARANTY INSURANCE POLICIES ISSUED BY
[LOGO]
FOR A DISCUSSION OF CERTAIN FACTORS WHICH SHOULD BE CONSIDERED BY PROSPECTIVE
PURCHASERS OF THE SECURITIES, SEE "RISK FACTORS" AT PAGE S-17 HEREIN AND AT
PAGE 10 IN THE ACCOMPANYING PROSPECTUS.
THE NOTES REPRESENT OBLIGATIONS OF, AND THE CERTIFICATES REPRESENT INTERESTS IN,
THE TRUST ONLY AND DO NOT REPRESENT OBLIGATIONS OF OR INTERESTS IN OLYMPIC
FINANCIAL,
THE SELLER OR ANY AFFILIATE OF EITHER.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
PRICE TO THE UNDERWRITING DISCOUNTS PROCEEDS TO THE
PUBLIC (1) AND COMMISSIONS COMPANY (1)(2)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Class A-1 Note.................................................... 100.000000% 0.150000% 99.850000%
Per Class A-2 Note.................................................... 99.953604% 0.180000% 99.773604%
Per Class A-3 Note.................................................... 99.931733% 0.230000% 99.701733%
Per Class A-4 Note.................................................... 99.957930% 0.260000% 99.697930%
Per Class A-5 Note.................................................... 99.963821% 0.290000% 99.673821%
Per Certificate....................................................... 99.852122% 0.400000% 99.452122%
Total................................................................. $649,653,973.05 $1,495,904.00 $648,158,069.05
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) PLUS ACCRUED INTEREST, IF ANY, FROM AND INCLUDING JUNE 14, 1996.
(2) BEFORE DEDUCTING ESTIMATED EXPENSES OF $725,000 PAYABLE BY THE SELLER.
THE NOTES AND THE CERTIFICATES ARE BEING OFFERED BY THE UNDERWRITERS WHEN,
AS AND IF DELIVERED TO AND ACCEPTED BY THE UNDERWRITERS AND SUBJECT TO VARIOUS
CONDITIONS, INCLUDING THEIR RIGHT TO REJECT ORDERS IN WHOLE OR IN PART. IT IS
EXPECTED THAT THE NOTES AND THE CERTIFICATES WILL BE READY FOR DELIVERY THROUGH
THE SAME DAY FUNDS SETTLEMENT SYSTEM OF THE DEPOSITORY TRUST COMPANY ON OR ABOUT
JUNE 14, 1996.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
BEAR, STEARNS & CO. INC.
J.P. MORGAN & CO.
THE DATE OF THIS PROSPECTUS SUPPLEMENT IS JUNE 5, 1996.
<PAGE>
(CONTINUED FROM PREVIOUS PAGE)
Interest on each class of Notes will accrue at the per annum interest rates
specified above. Interest on the Notes will be payable on the fifteenth day of
each month (or, if the fifteenth day is not a Business Day, the next following
Business Day) (each, a "Distribution Date"), commencing July 15, 1996. Principal
of the Notes will be payable on each Distribution Date to the extent described
herein, except that no principal will be paid on the Class A-2 Notes until the
Class A-1 Notes have been paid in full, no principal will be payable on the
Class A-3 Notes until the Class A-2 Notes have been paid in full, no principal
will be payable on the Class A-4 Notes until the Class A-3 Notes have been paid
in full and no principal will be payable on the Class A-5 Notes until the Class
A-4 Notes have been paid in full. It is a condition of issuance that the Class
A-1 Notes be rated A-1+ by Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc. ("S&P"), and P-1 by Moody's Investors Service, Inc.
("Moody's" and, together with S&P, the "Rating Agencies"), and that the Class
A-2 Notes, the Class A-3 Notes, the Class A-4 Notes and the Class A-5 Notes be
rated AAA by S&P and Aaa by Moody's. The ratings by S&P of the Notes will be
issued without regard to the benefit afforded by a financial guaranty insurance
policy (the "Note Policy") issued by Financial Security. The rating by Moody's
of the Class A-1 Notes will be substantially based on the issuance of the Note
Policy by Financial Security, and the rating by Moody's of the Class A-2 Notes,
the Class A-3 Notes, the Class A-4 Notes and the Class A-5 Notes will be based
on the issuance of the Note Policy by Financial Security.
The Certificates offered hereby represent fractional undivided interests in
the Trust. Interest at one-twelfth of the Pass-Through Rate of 6.90% per annum
will be distributed to the holders of the Certificates on each Distribution
Date. Principal, to the extent described herein, will be distributed to the
Certificateholders on each Distribution Date on or after the date on which the
Class A-3 Notes have been paid in full. Distributions of interest and principal
on the Certificates will be subordinated in priority to payments of interest and
principal on the Notes, as described herein. It is a condition of issuance that
the Certificates be rated AAA by S&P and Aaa by Moody's on the basis of the
issuance by Financial Security of a financial guaranty insurance policy (the
"Certificate Policy" and, together with the Note Policy, the "Policies").
The final scheduled distribution date for the Class A-1 Notes will be the
June 1997 Distribution Date (the "Class A-1 Final Scheduled Distribution Date"),
the final scheduled distribution date for the Class A-2 Notes will be the
November 1999 Distribution Date (the "Class A-2 Final Scheduled Distribution
Date"), the final scheduled distribution date for the Class A-3 Notes will be
the December 2000 Distribution Date (the "Class A-3 Final Scheduled Distribution
Date"), the final scheduled distribution date for the Class A-4 Notes will be
the March 2002 Distribution Date (the "Class A-4 Final Scheduled Distribution
Date"), the final scheduled distribution date for the Class A-5 Notes will be
the February 2004 Distribution Date (the "Class A-5 Final Scheduled Distribution
Date"), and the final scheduled distribution date for the Certificates will be
the February 2004 Distribution Date (the "Final Scheduled Distribution Date").
However, payment in full of the Notes or of the Certificates could occur earlier
than such dates as described herein. In addition, the Class A-5 Notes, to the
extent still outstanding, may be subject to redemption in whole, but not in
part, and the Certificates will be subject to prepayment in whole, but not in
part, on any Distribution Date on which the Seller or the Servicer exercises its
option to purchase the Receivables. The Seller or the Servicer may purchase the
Receivables when the aggregate principal balance of the Receivables has declined
to 10% or less of the Original Pool Balance (as defined herein). The Notes will
be subject to partial mandatory redemption and the Certificates will be subject
to partial mandatory prepayment, at premiums described herein, in the event that
any portion of the Pre-Funded Amount remains on deposit in the Pre-Funding
Account at the end of the Funding Period (as defined herein). The ratings
assigned to the Notes and the Certificates by the Rating Agencies do not address
the likelihood that the premiums will be paid by the Seller in the event of a
partial mandatory redemption or prepayment.
The Securities initially will be represented by notes and certificates
registered in the name of Cede & Co., the nominee of The Depository Trust
Company ("DTC"). The interests of beneficial owners of the Securities will be
represented by book entries on the records of the participating members of DTC.
Definitive Securities will be available only under the limited circumstances
described herein.
S-2
<PAGE>
There currently is no secondary market for the Securities. Donaldson, Lufkin
& Jenrette Securities Corporation, Bear, Stearns & Co. Inc. and J.P. Morgan
Securities Inc. (the "Underwriters") expect, but are not obligated, to make a
market in the Securities. There is no assurance that any such market will
develop or continue.
THIS PROSPECTUS SUPPLEMENT DOES NOT CONTAIN COMPLETE INFORMATION ABOUT THE
OFFERING OF THE SECURITIES. ADDITIONAL INFORMATION IS CONTAINED IN THE
PROSPECTUS, AND PROSPECTIVE INVESTORS ARE URGED TO READ BOTH THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS IN FULL. SALES OF THE SECURITIES MAY NOT BE
CONSUMMATED UNLESS THE PURCHASER HAS RECEIVED BOTH THIS PROSPECTUS SUPPLEMENT
AND THE PROSPECTUS. TO THE EXTENT ANY STATEMENTS IN THIS PROSPECTUS SUPPLEMENT
CONFLICT WITH STATEMENTS IN THE PROSPECTUS, THE STATEMENTS IN THIS PROSPECTUS
SUPPLEMENT SHALL CONTROL.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
REPORTS TO SECURITYHOLDERS
Unless and until Definitive Notes or Definitive Certificates are issued,
unaudited monthly and annual reports, containing information concerning the
Trust and prepared by the Servicer, will be sent on behalf of the Trust to
Norwest Bank Minnesota, National Association, as Indenture Trustee for the
Noteholders, and Mellon Bank (DE), National Association as Owner Trustee for the
Certificateholders, and Cede & Co., as registered holder of the Notes and the
Certificates and the nominee of DTC. See "Description of the Purchase Agreements
and the Trust Documents -- Statements to Securityholders" herein and "Certain
Information Regarding the Securities -- Book-Entry Registration" and "--
Statements to Securityholders" in the accompanying Prospectus. Note Owners and
Certificate Owners may receive such reports, upon written request, together with
(i) a certification that they are Note Owners or Certificate Owners, as
appropriate, and (ii) payment of any expenses associated with the distribution
of such reports, from the Indenture Trustee at Norwest Center, Sixth Street and
Marquette Avenue, Minneapolis, Minnesota 55479-0069, Attention: Corporate Trust
Department. Such reports will not constitute financial statements prepared in
accordance with generally accepted accounting principles. Neither the Seller,
Olympic Financial nor Financial Security intends to send any of their respective
financial reports to Securityholders (as defined herein). The Trust will file
with the Securities and Exchange Commission (the "Commission") periodic reports
concerning the Trust to the extent required under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and the rules and regulations of the
Commission thereunder.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
In addition to the documents described in the accompanying Prospectus under
"Incorporation of Certain Documents by Reference," the financial statements of
Financial Security included in, or as exhibits to, the following documents which
have been filed with the Commission by Financial Security Assurance Holdings
Ltd. ("Holdings"), are hereby incorporated by reference in the Registration
Statement of which this Prospectus and Prospectus Supplement form a part:
(a) Annual Report on Form 10-K for the year ended December 31, 1995, and
(b) Quarterly Report on Form 10-Q for the three month period ended March 31,
1996.
All financial statements of Financial Security included in documents filed
by Holdings pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of this Prospectus Supplement and prior to the
termination of the offering of the Securities shall be deemed to be incorporated
by reference into this Prospectus Supplement and to be a part hereof from the
respective dates of filing of such documents.
S-3
<PAGE>
The Seller will provide without charge to any person to whom this Prospectus
Supplement is delivered, upon the oral or written request of such person, a copy
of any or all of the foregoing financial statements incorporated herein by
reference. Requests for such copies should be directed to Olympic Receivables
Finance Corp., 7825 Washington Avenue South, Minneapolis, Minnesota 55439-2435,
Attention: Secretary.
The Seller on behalf of the Trust hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Trust's annual report pursuant to Section 13(a) or Section 15(d) of the Exchange
Act and each filing of the financial statements of Financial Security included
in or as an exhibit to the annual report of Holdings filed pursuant to Section
13(a) or Section 15(d) of the Exchange Act that is incorporated by reference in
the Registration Statement (as defined in the accompanying Prospectus) shall be
deemed to be a new registration statement relating to the Securities offered
hereby, and the offering of such Securities at that time shall be deemed to be
the initial bona fide offering thereof.
S-4
<PAGE>
SUMMARY OF THE TERMS OF THE SECURITIES
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
DETAILED INFORMATION APPEARING ELSEWHERE IN THIS PROSPECTUS SUPPLEMENT AND IN
THE ACCOMPANYING PROSPECTUS. CAPITALIZED TERMS USED HEREIN AND NOT OTHERWISE
DEFINED HEREIN SHALL HAVE THE RESPECTIVE MEANINGS ASCRIBED TO SUCH TERMS
ELSEWHERE IN THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS.
<TABLE>
<S> <C>
Issuer............................ Olympic Automobile Receivables Trust, 1996-B (the
"Trust" or the "Issuer"), a Delaware business trust to
be formed on or about June 14, 1996 (the "Closing
Date"), by Olympic Receivables Finance Corp. (the
"Seller") pursuant to a Trust Agreement, dated as of
June 1, 1996 (the "Trust Agreement"), among Olympic
First GP Inc., Olympic Second GP Inc. (together, the
"General Partners"), the Seller, Financial Security and
Mellon Bank (DE), National Association, as Owner Trustee
(the "Owner Trustee").
Seller............................ Olympic Receivables Finance Corp., a wholly owned
subsidiary of Olympic Financial. See "The Seller" in the
accompanying Prospectus.
Servicer.......................... Olympic Financial Ltd. ("Olympic Financial" or the
"Servicer"). See "Olympic Financial Ltd." in the
accompanying Prospectus.
Indenture Trustee................. Norwest Bank Minnesota, National Association (the
"Indenture Trustee"). See "The Notes -- The Indenture
Trustee" in the accompanying Prospectus.
Owner Trustee..................... Mellon Bank (DE), National Association, as Owner Trustee
under the Trust Agreement. See "Description of the
Purchase Agreements and the Trust Documents -- The Owner
Trustee" in the accompanying Prospectus.
Backup Servicer................... Norwest Bank Minnesota, National Association (the
"Backup Servicer"). Olympic Financial may be terminated
as Servicer under certain circumstances, at which time
the Backup Servicer will automatically become the
Servicer. See "Description of the Purchase Agreements
and the Trust Documents -- Servicer Termination Events"
and "-- The Backup Servicer" in the accompanying
Prospectus.
The Notes......................... The Trust will issue 5.39% Class A-1 Money Market
Automobile Receivables-Backed Notes (the "Class A-1
Notes") in the aggregate principal amount of
$68,900,000, 6.00% Class A-2 Automobile
Receivables-Backed Notes (the "Class A-2 Notes") in the
aggregate principal amount of $223,430,000, 6.50% Class
A-3 Automobile Receivables-Backed Notes (the "Class A-3
Notes") in the aggregate principal amount of
$126,960,000, 6.70% Class A-4 Automobile
Receivables-Backed Notes (the "Class A-4 Notes") in the
aggregate principal amount of $116,790,000 and 6.90%
Class A-5 Automobile Receivables-Backed Notes (the
"Class A-5 Notes" and, together with the Class A-1
Notes, the Class A-2 Notes, the Class A-3 Notes and the
Class A-4 Notes, the "Notes") in the aggregate principal
amount of $55,420,000. The Notes will be issued pursuant
to an Indenture, dated as of June 1, 1996, among the
Issuer, the Indenture Trustee and Norwest Bank
Minnesota, National Association, as Indenture Collateral
Agent (the "Indenture
</TABLE>
S-5
<PAGE>
<TABLE>
<S> <C>
Collateral Agent") for the benefit of Financial Security
and the Indenture Trustee on behalf of the holders of
Notes. The Notes will be offered for purchase in
denominations of $1,000 and integral multiples thereof
in book-entry form only. See "Certain Information
Regarding the Securities -- Book-Entry Registration" in
the accompanying Prospectus.
The Notes will be secured by the assets of the Trust
pursuant to the Indenture.
The Certificates.................. The Trust will issue 6.90% Automobile Receivables-Backed
Certificates (the "Certificates") with an aggregate
initial Certificate Balance (as defined herein) of
$58,500,000. The Certificates will represent fractional
undivided interests in the Trust. The Certificates will
be issued pursuant to the Trust Agreement. The
Certificates will be offered for purchase in
denominations of $1,000 and integral multiples thereof
in book-entry form only (other than the Certificates
sold to the General Partners, as described in "The Trust
-- General"). See "Certain Information Regarding the
Securities -- Book-Entry Registration" in the
accompanying Prospectus.
The Receivables................... The Receivables will consist of retail installment sales
contracts and promissory notes purchased from motor
vehicle dealers ("Dealers") by Olympic Financial in the
ordinary course of business and secured by new and used
automobiles and light trucks (the "Financed Vehicles").
On the Closing Date, the Trust will purchase Receivables
(the "Initial Receivables") that are expected to have an
aggregate principal balance of approximately
$455,000,000 as of June 6, 1996 (the "Initial Cutoff
Date"), from the Seller pursuant to a Sale and Servicing
Agreement, dated as of June 1, 1996 (the "Sale and
Servicing Agreement"), among the Trust, the Seller,
Olympic Financial, in its individual capacity and as
Servicer, and the Backup Servicer. Following the Closing
Date, pursuant to the Sale and Servicing Agreement, the
Seller will be obligated, subject only to the
availability thereof, to sell, and the Trust will be
obligated to purchase, subject to the satisfaction of
certain conditions set forth therein, additional
Receivables (the "Subsequent Receivables") from time to
time during the Funding Period (as defined below) having
an aggregate principal balance equal to approximately
$195,000,000 (such amount, as reduced from time to time
by the aggregate principal balance of all Subsequent
Receivables purchased by the Trust, being hereafter
referred to as the "Pre-Funded Amount"). With respect to
each sale of Subsequent Receivables to the Trust, the
Seller will designate as a cutoff date (each, a
"Subsequent Cutoff Date") the date as of which such
Subsequent Receivables are sold to the Trust. Subsequent
Receivables will be conveyed to the Trust on
approximately a monthly basis on dates specified by the
Seller (each date on which Subsequent Receivables are
conveyed being referred to as a "Subsequent Transfer
Date") occurring during
</TABLE>
S-6
<PAGE>
<TABLE>
<S> <C>
the Funding Period. See "Description of the Purchase
Agreements and the Trust Documents -- Sale and
Assignment of Receivables; Subsequent Receivables"
herein.
The Initial Receivables and the Subsequent Receivables
will be selected from retail installment sales contracts
and promissory notes in Olympic Financial's portfolio
based on the criteria specified in the Sale and
Servicing Agreement and described herein and in the
accompanying Prospectus. As of May 28, 1996 (the
"Preliminary Cutoff Date"), the weighted average annual
percentage rate (the "APR") of the portion of the
Initial Receivables originated by Olympic Financial on
or before the Preliminary Cutoff Date (the "Preliminary
Initial Receivables") was approximately 14.27%, the
weighted average remaining maturity of the Preliminary
Initial Receivables was approximately 65.4 months and
the weighted average original maturity of the
Preliminary Initial Receivables was approximately 66.0
months. No Receivable will have a scheduled maturity
later than September 30, 2003 (the "Final Scheduled
Maturity Date"). The Receivables generally are or will
be prepayable at any time without penalty to the
purchaser or co-purchasers of the Financed Vehicle or
any other person who is or persons who are obligated to
make payments thereunder (each, an "Obligor"). See "The
Receivables Pool" herein and "The Receivables" in the
accompanying Prospectus.
Subsequent Receivables may be originated using credit
criteria different from the criteria applied with
respect to the Initial Receivables and may be of a
different credit quality and seasoning. In addition,
following the transfer of Subsequent Receivables to the
Trust, the characteristics of the entire pool of
Receivables included in the Trust may vary from those of
the Preliminary Initial Receivables. See "Risk Factors
-- The Receivables and the Pre-Funding Account" and "The
Receivables Pool" herein.
The "Aggregate Principal Balance" of the Receivables as
of any Determination Date means the aggregate principal
balance of the Receivables at the end of the preceding
calendar month (a "Monthly Period") (other than (i) any
Receivable that became a Liquidated Receivable during
such Monthly Period and (ii) any Receivable that the
Seller, Olympic Financial or the Servicer has
repurchased with respect to the next Distribution Date),
after giving effect to all payments received from
Obligors for such Monthly Period as of the end of such
Monthly Period.
Trust Property.................... Each Note will represent an obligation of, and each
Certificate will represent a fractional undivided
interest in, the Trust. The Trust's assets (the "Trust
Property") will include, among other things, a pool of
Receivables (the "Receivables Pool") consisting of the
Initial Receivables and the Subsequent Receivables, cer-
tain monies paid or payable under the Initial
Receivables after the Initial Cutoff Date, certain
monies paid or payable under the Subsequent Receivables
after the respective Subsequent Cutoff Dates, an
assignment of Olympic Financial's security interests in
</TABLE>
S-7
<PAGE>
<TABLE>
<S> <C>
the Financed Vehicles and of the right to receive
proceeds from claims on certain insurance policies
covering the Financed Vehicles or the Obligors, an
assignment of certain rights of Olympic Financial
against the Dealers originating such Receivables, the
Collection Account, the Pre-Funding Account and certain
other accounts (including all investments therein, all
income from the investment of funds therein and all
proceeds thereof), and certain other rights under the
Trust Documents. The Initial Receivables will be
purchased by the Seller from Olympic Financial pursuant
to one or more purchase agreements (the "Purchase Agree-
ments") between the Seller and Olympic Financial on or
prior to the date of issuance of the Securities, and the
Subsequent Receivables will be purchased by the Seller
from Olympic Financial pursuant to one or more purchase
agreements (each, a "Subsequent Purchase Agreement") on
or prior to the applicable Subsequent Transfer Dates.
The Trust Property will also include an assignment of
the Seller's rights under the Purchase Agreements and
the Subsequent Purchase Agreements, including rights
against Olympic Financial upon the occurrence of certain
breaches of representations and warranties thereunder (a
"Repurchase Event"). See "The Trust" and "The Trust
Property" herein. Pursuant to the Indenture, the Trust
Property (other than the Certificate Policy) will be
pledged to the Indenture Collateral Agent for the
benefit of Financial Security and the Indenture Trustee
on behalf of the holders of the Notes.
Terms of the Notes................ The principal terms of the Notes will be as described
below:
A. Distribution Dates............ Payments of interest and principal on the Notes will be
made on the fifteenth day of each month or, if the
fifteenth day is not a Business Day, on the next
following Business Day (each, a "Distribution Date")
commencing July 15, 1996. Each reference to a "Payment
Date" in the accompanying Prospectus shall refer to a
Distribution Date. Payments will be made to holders of
record of the Notes (the "Noteholders") as of the
Business Day immediately preceding such Distribution
Date (a "Record Date"). A "Business Day" is a day other
than a Saturday, Sunday or other day on which commercial
banks located in Minneapolis, Minnesota or New York, New
York are authorized or obligated to be closed.
B. Interest Rates................ The Class A-1 Notes will bear interest at the rate of
5.39% per annum (the "Class A-1 Rate"), the Class A-2
Notes will bear interest at the rate of 6.00% per annum
(the "Class A-2 Rate"), the Class A-3 Notes will bear
interest at the rate of 6.50% per annum (the "Class A-3
Rate"), the Class A-4 Notes will bear interest at the
rate of 6.70% per annum (the "Class A-4 Rate"), and the
Class A-5 Notes will bear interest at the rate of 6.90%
per annum (the "Class A-5 Rate" and, together with the
Class A-1 Rate, the Class A-2 Rate, the Class A-3 Rate
and the Class A-4 Rate, the "Interest Rates"). Interest
on the Notes will be calculated on the basis of a
360-day year consisting of twelve 30-day months.
C. Interest...................... Interest on the outstanding principal amount of the
Notes of each class will accrue at the applicable
Interest Rate from June 14,
</TABLE>
S-8
<PAGE>
<TABLE>
<S> <C>
1996 (in the case of the first Distribution Date) or
from the most recent Distribution Date on which interest
has been paid to but excluding July 15, 1996 (in the
case of the first Distribution Date) or to but excluding
the following Distribution Date (each, an "Interest
Period"). Interest on the Notes for any Distribution
Date due but not paid on such Distribution Date will be
due on the next Distribution Date together with interest
on such amount at the applicable Interest Rate. The
amount of interest distributable on the Notes on each
Distribution Date will equal 30 days' interest (or, in
the case of the first Distribution Date, interest
accrued from and including June 14, 1996 to but
excluding July 15, 1996). See "Description of the Notes
-- Payments of Interest" herein.
D. Principal..................... Principal of the Notes will be payable on each
Distribution Date in an amount equal to the Noteholders'
Principal Distributable Amount for the Monthly Period
preceding such Distribution Date. The Noteholders'
Principal Distributable Amount will equal the
Noteholders' Percentage of an amount equal to the sum of
the following amounts with respect to the related
Monthly Period: (i) that portion of all collections on
Receivables (other than Liquidated Receivables and
Purchased Receivables) allocable to principal, including
full and partial principal prepayments, received during
such Monthly Period, (ii) the principal balance of each
Receivable that became a Liquidated Receivable during
such Monthly Period, (iii) the principal balance of each
Receivable that was repurchased by Olympic Financial or
the Servicer as of the last day of such Monthly Period,
and, at the option of Financial Security, the principal
balance of each Receivable that was required to be, but
was not, so repurchased, (iv) the aggregate amount of
any reduction of the principal balance of a Receivable
as a result of a court order in an insolvency proceeding
and (v) any unpaid portion of the amounts included in
clauses (i), (ii), (iii) and (iv) above with respect to
a prior Distribution Date. See "Description of the
Purchase Agreements and the Trust Documents --
Distributions" herein.
Payments of principal on the Notes will be paid to the
holders of Class A-1 Notes until the principal balance
of the Class A-1 Notes has been reduced to zero, then to
the holders of Class A-2 Notes until the principal
balance of the Class A-2 Notes has been reduced to zero,
then to the holders of Class A-3 Notes until the
principal balance of the Class A-3 Notes has been
reduced to zero, then to the holders of Class A-4 Notes
until the principal balance of the Class A-4 Notes has
been reduced to zero and then to the holders of Class
A-5 Notes until the principal balance of the Class A-5
Notes has been reduced to zero. See "Description of the
Notes -- Payments of Principal."
The outstanding principal amount of the Notes of any
class, to the extent not previously paid, will be
payable on the Final Scheduled Distribution Date for
such class specified on page S-2.
E. Optional Redemption........... The Class A-5 Notes, to the extent still outstanding,
may be redeemed in whole, but not in part, on any
Distribution Date on
</TABLE>
S-9
<PAGE>
<TABLE>
<S> <C>
which the Seller or the Servicer exercises its option to
purchase the Receivables, which, subject to certain
provisions in the Sale and Servicing Agreement, can
occur after the Aggregate Principal Balance declines to
10% or less of the Original Pool Balance, at a
redemption price equal to the unpaid principal amount of
the Notes of each such class plus accrued and unpaid
interest thereon. See "Description of the Notes --
Optional Redemption" herein. The "Original Pool Balance"
will equal the sum of (i) the Aggregate Principal
Balance as of the Initial Cutoff Date plus (ii) the
aggregate principal balances of all Subsequent Receiv-
ables added to the Trust as of their respective
Subsequent Cutoff Dates.
F. Mandatory Redemption.......... Each class of Notes will be redeemed in part on the
Distribution Date on or immediately following the last
day of the Funding Period in the event that any portion
of the Pre-Funded Amount remains on deposit in the
Pre-Funding Account after giving effect to the purchase
of all Subsequent Receivables, including any such
purchase on such date (a "Mandatory Redemption"). The
aggregate principal amount of each class of Notes to be
redeemed will be an amount equal to such class's pro
rata share (based on the respective current principal
balance of each class of Notes and the Certificate
Balance) of the Pre-Funded Amount on such date (such
class's "Note Prepayment Amount").
A limited recourse mandatory prepayment premium (the
"Note Prepayment Premium") will be payable by the Trust
to the Noteholders if the Pre-Funded Amount at the end
of the Funding Period exceeds $100,000. The Note
Prepayment Premium for each class of Notes will equal
the excess, if any, discounted as described below, of
(i) the amount of interest that would have accrued on
such class's Note Prepayment Amount at the applicable
Interest Rate during the period commencing on and
including the Distribution Date on which such Note
Prepayment Amount is required to be distributed to
Noteholders of such class to but excluding September 12,
1996, in the case of the Class A-1 Notes, May 29, 1997,
in the case of the Class A-2 Notes, May 31, 1998, in the
case of the Class A-3 Notes, May 31, 1999, in the case
of the Class A-4 Notes and August 31, 2000, in the case
of the Class A-5 Notes, over (ii) the amount of interest
that would have accrued on the applicable Note
Prepayment Amount over the same period at a per annum
rate of interest equal to the bond equivalent yield to
maturity on the Determination Date preceding such
Distribution Date on the United States Treasury Bill due
September 12, 1996, in the case of the Class A-1 Notes,
the United States Treasury Bill due May 29, 1997, in the
case of the Class A-2 Notes, the 6.00% United States
Treasury Note due May 31, 1998, in the case of the Class
A-3 Notes, the 6.375% United States Treasury Note due
May 31, 1999, in the case of the Class A-4 Notes and the
6.25% United States Treasury Note due August 31, 2000,
in the case of the Class A-5 Notes. Such excess shall be
discounted to present value to such Distribution Date at
the applicable yield described in clause (ii) above. The
Trust's obligation to pay the Note Prepayment Premium
shall be limited
</TABLE>
S-10
<PAGE>
<TABLE>
<S> <C>
to funds which are received from the Seller under the
Sale and Servicing Agreement as liquidated damages for
the failure to deliver Subsequent Receivables. No other
assets of the Trust will be available for the purpose of
making such payment. The Note Policy does not guarantee
payment of the Note Prepayment Amounts or the Note
Prepayment Premiums. In addition, the ratings assigned
to the Notes by the Rating Agencies do not address the
likelihood that the Note Prepayment Amounts or the Note
Prepayment Premiums will be paid.
The Notes may be accelerated and subject to immediate
payment at par upon the occurrence of an Event of
Default under the Indenture. So long as no Insurer
Default shall have occurred and be continuing, an Event
of Default under the Indenture will occur only upon
delivery by Financial Security to the Indenture Trustee
of notice of the occurrence of certain events of default
under the Insurance and Indemnity Agreement, dated as of
June 14, 1996 (the "Insurance Agreement"), among
Financial Security, the Trust, the General Partners, the
Seller and Olympic Financial. In the case of such an
Event of Default, the Notes will automatically be
accelerated and subject to immediate payment at par. See
"Description of the Notes -- Events of Default" herein.
The Note Policy does not guarantee payment of any
amounts that become due on an accelerated basis, unless
Financial Security elects, in its sole discretion, to
pay such amounts in whole or in part. See "The Policies
-- The Note Policy" herein.
Terms of the Certificates......... The principal terms of the Certificates will be as
described below:
A. Distribution Dates............ Distributions with respect to the Certificates will be
made on each Distribution Date, commencing July 15,
1996. Distributions will be made to holders of record of
the Certificates (the "Certificateholders" and, together
with the Noteholders, the "Securityholders") as of the
related Record Date.
B. Pass-Through Rate............. 6.90% per annum (the "Pass-Through Rate") payable
monthly at one-twelfth of the annual rate, calculated on
the basis of a 360-day year consisting of twelve 30-day
months.
C. Subordination of
Certificates.................. The Certificates will not receive any distribution with
respect to a Distribution Date until the full amount of
the Noteholders' Distributable Amount with respect to
such Distribution Date has been deposited in the Note
Distribution Account.
D. Interest...................... On each Distribution Date, the Owner Trustee will
distribute to Certificateholders of each class their pro
rata share of interest distributable with respect to
such class of Certificates. Interest in respect of a
Distribution Date will accrue from June 14, 1996 (in the
case of the first Distribution Date) or from the most
recent Distribution Date on which interest has been
distributed to but excluding July 15, 1996 (in the case
of the first Distribution Date) or to but excluding such
Distribution Date. Interest on the Certificates for any
Distribution Date due but not paid on such Distribution
Date will be due on the next Distribution Date together
with interest on such amount at one-twelfth of the
Pass-Through Rate. The amount of interest distributable
on the Certificates on each Distribution Date will equal
30 days' interest (or in the case
</TABLE>
S-11
<PAGE>
<TABLE>
<S> <C>
of the first Distribution Date, interest accrued from
and including June 14, 1996 to but excluding July 15,
1996) at the Pass-Through Rate on the Certificate
Balance as of the last day of the preceding calendar
month. Distributions of interest on the Certificates are
subordinate to payments of interest and principal on the
Notes, as described above under "Subordination of
Certificates." See "Description of the Certificates --
Distributions of Interest Income" herein.
E. Principal..................... On each Distribution Date on or after the date on which
the Class A-3 Notes have been paid in full, principal of
the Certificates will be payable in an amount equal to
the Certificateholders' Principal Distributable Amount
for the Monthly Period preceding such Distribution Date.
The Certificateholders' Principal Distributable Amount
will equal the Certificateholders' Percentage of an
amount equal to the sum of the following amounts with
respect to the related Monthly Period: (i) that portion
of all collections on Receivables (other than Liquidated
Receivables and Purchased Receivables) allocable to
principal, including full and partial principal
prepayments, received during such Monthly Period, (ii)
the principal balance of each Receivable that became a
Liquidated Receivable during such Monthly Period, (iii)
the principal balance of each Receivable that was
repurchased by Olympic Financial or the Servicer as of
the last day of such Monthly Period, and, at the option
of Financial Security, the principal balance of each
Receivable that was required to be, but was not, so
repurchased, (iv) the aggregate amount of any reduction
of the principal balance of a Receivable as a result of
a court order in an insolvency proceeding and (v) any
unpaid portion of the amounts included in clauses (i),
(ii), (iii) and (iv) above with respect to a prior
Distribution Date. See "Description of the Purchase
Agreements and Trust Documents -- Distributions" herein.
The remaining Certificate Balance, if any, will be
payable in full on the Final Scheduled Distribution
Date.
F. Optional Prepayment........... If the Seller or Servicer exercises its option to
purchase the Receivables, which, subject to certain
provisions in the Sale and Servicing Agreement, can
occur after the Aggregate Principal Balance declines to
10% or less of the Original Pool Balance, the
Certificateholders will receive an amount in respect of
the Certificates equal to the remaining Certificate
Balance together with accrued interest at the
Pass-Through Rate, and the Certificates will be retired.
G. Mandatory Prepayment.......... The Certificates will be prepaid in part, on a pro rata
basis, on the Distribution Date on or immediately
following the last day of the Funding Period in the
event that any portion of the Pre-Funded Amount remains
on deposit in the Pre-Funding Account after giving
effect to the purchase of all Subsequent Receivables,
including any such purchase on such date (a "Mandatory
Prepayment"). The aggregate principal amount of
Certificates to be prepaid will be an amount equal to
the Certificateholders' pro
</TABLE>
S-12
<PAGE>
<TABLE>
<S> <C>
rata share (based on the respective current principal
balance of each class of Notes and the Certificate
Balance) of the Pre-Funded Amount (the "Certificate
Prepayment Amount").
A limited recourse mandatory prepayment premium (the
"Certificate Prepayment Premium") will be payable by the
Trust to the Certificateholders if the Pre-Funded Amount
at the end of the Funding Period exceeds $100,000. The
Certificate Prepayment Premium will equal the excess, if
any, discounted as described below, of (i) the amount of
interest that would have accrued on the Certificate
Prepayment Amount at the Pass-Through Rate during the
period commencing on and including the Distribution Date
on which such Certificate Prepayment Amount is required
to be distributed to Certificateholders to but excluding
November 30, 1999 over (ii) the amount of interest that
would have accrued on such Certificate Prepayment Amount
over the same period at a per annum rate of interest
equal to the bond equivalent yield to maturity on the
Determination Date preceding such Distribution Date on
the 7.875% United States Treasury Note due November 30,
1999. Such excess shall be discounted to present value
to such Distribution Date at the yield described in
clause (ii) above. The Trust's obligation to pay the
Certificate Prepayment Premium shall be limited to funds
which are received from the Seller under the Sale and
Servicing Agreement as liquidated damages for the
failure to deliver Subsequent Receivables. No other
assets of the Trust will be available for the purpose of
making such payment. The Certificate Policy does not
guarantee payment of the Certificate Prepayment Amount
or the Certificate Prepayment Premium. In addition, the
ratings assigned to the Certificates by the Rating
Agencies do not address the likelihood that the
Certificate Prepayment Amount or the Certificate
Prepayment Premium will be paid.
Pre-Funding Account............... During the period (the "Funding Period") from and
including the Closing Date until the earliest of (i) the
Determination Date on which (a) the Pre-Funded Amount is
less than $100,000, (b) an Event of Default has occurred
under the Indenture or a Servicer Termination Event has
occurred under the Sale and Servicing Agreement, (c)
certain events of insolvency have occurred with respect
to the Seller or the Servicer or (ii) the close of
business on the August 1996 Distribution Date, the
Pre-Funded Amount will be maintained as an account in
the name of the Indenture Trustee (the "Pre-Funding
Account"). The Pre-Funded Amount is expected to
initially equal approximately $195,000,000 and, during
the Funding Period, will be reduced by the principal
balance of Subsequent Receivables purchased by the Trust
from time to time in accordance with the Sale and
Servicing Agreement. The Seller expects that the
Pre-Funded Amount will be reduced to less than $100,000
by the August 1996 Distribution Date. Any Pre-Funded
Amount remaining at the end of the Funding Period will
be payable to the Noteholders and Certificateholders pro
rata in proportion to the respective principal balances
of each class of Notes and the Certificates.
</TABLE>
S-13
<PAGE>
<TABLE>
<S> <C>
Reserve Account................... During the Funding Period, funds will be held in a
Reserve Account to cover any shortfalls due to
investment earnings on funds in the Pre-Funding Account
being less than the interest due on the Notes and the
Certificates. See "Description of the Purchase
Agreements and the Trust Documents -- Accounts."
The Policies...................... On the Closing Date, Financial Security will issue the
Note Policy to the Indenture Trustee and the Certificate
Policy to the Owner Trustee pursuant to the Insurance
Agreement. Pursuant to the Note Policy, Financial
Security will unconditionally and irrevocably guarantee
to the Noteholders payment of the Noteholders'
Distributable Amount for each Distribution Date.
Pursuant to the Certificate Policy, Financial Security
will unconditionally and irrevocably guarantee to the
Certificateholders payment of the Guaranteed
Distributions (as defined herein). See "The Policies"
and "Description of the Purchase Agreements and the
Trust Documents -- Distributions" herein.
Collection Account................ Except under certain conditions described herein, the
Servicer will establish one or more accounts in the name
of the Indenture Trustee (the "Collection Account") for
the benefit of Noteholders and Certificateholders. All
payments from Obligors that are received by the Lockbox
Bank on behalf of the Trust will be deposited in the
Collection Account no later than two Business Days after
receipt thereof. Pursuant to the Sale and Servicing
Agreement, the Indenture Trustee will, on each
Distribution Date, withdraw the Available Funds with
respect to such Distribution Date from the Collection
Account and apply such funds to the following (in the
priority indicated):
(i) to the Servicer, the amount the Servicer is entitled
to be reimbursed for prior Monthly Advances,
(ii) to the Owner Trustee and the Indenture Trustee, any
accrued and unpaid trustee fees and any accrued and
unpaid fees of the separate Lockbox Bank, Custodian,
Backup Servicer, Collateral Agent, Indenture Collateral
Agent or Administrator (in each case, to the extent such
fees have not been previously paid by the Servicer or
Olympic Financial),
(iii) to the Servicer, the Servicing Fee for the related
Monthly Period and any overdue Servicing Fees,
(iv) into the Note Distribution Account, the
Noteholders' Interest Distributable Amount,
(v) into the Note Distribution Account, the Noteholders'
Principal Distributable Amount,
(vi) into the Certificate Distribution Account, the
Certificateholders' Interest Distributable Amount and,
after the Class A-3 Notes have been paid in full, the
Certificateholders' Principal Distributable Amount,
(vii) to Financial Security, amounts owing and not paid
to Financial Security under the Insurance Agreement and
(viii) the remaining balance, if any, to the Collateral
Agent on behalf of Financial Security, the Indenture
Trustee (on behalf of
</TABLE>
S-14
<PAGE>
<TABLE>
<S> <C>
the Noteholders and the Certificateholders) and the
trustees for other trusts and warehousing facilities
established and to be established by the Seller.
See "Description of the Purchase Agreements and the
Trust Documents -- Distributions" herein and
"Description of the Purchase Agreements and Trust
Documents -- Collections" in the accompanying
Prospectus.
Tax Status........................ In the opinion of counsel to Olympic Financial, for
federal income tax purposes, the Notes will be
characterized as debt, and the Trust will not be
characterized as an association (or a publicly traded
partnership) taxable as a corporation. Each Noteholder,
by the acceptance of a Note, will agree to treat the
Notes as debt. Each Certificateholder, by the acceptance
of a Certificate, will agree to treat the Trust as a
partnership in which the Certificateholders are partners
for federal income tax purposes. Alternative
characterizations of the Trust and the Certificates are
possible, but would not result in materially adverse tax
consequences to Certificateholders. See "Certain Federal
Income Tax Consequences" herein.
ERISA Considerations.............. If the Notes are considered to be indebtedness without
substantial equity features under a regulation issued by
the United States Department of Labor, the acquisition
or holding of Notes by or on behalf of a Benefit Plan
will not cause the assets of the Trust to become plan
assets, thereby generally preventing the application of
certain prohibited transaction rules of the Employment
Retirement Income Security Act of 1974, as amended, and
the Internal Revenue Code of 1986, as amended, that
otherwise could possibly be applicable. The Seller
believes that the Notes should be treated as
indebtedness without substantial equity features for
purposes of such regulation.
The Certificates may not be acquired by any employee
benefit plan, individual retirement account or Keogh
Plan subject to either Title I of the Employee
Retirement Income Security Act of 1974, as amended, or
the Internal Revenue Code of 1986, as amended. See
"ERISA Considerations" herein and in the accompanying
Prospectus.
Legal Investment.................. The Class A-1 Notes will be eligible securities for
purchase by money market funds under Rule 2a-7 under the
Investment Company Act of 1940, as amended.
Ratings........................... It is a condition of issuance that the Class A-1 Notes
be rated A-1+ by Standard & Poor's Ratings Services, a
division of The McGraw-Hill Companies, Inc. ("S&P") and
P-1 by Moody's Investors Service, Inc. ("Moody's" and,
together with S&P, the "Rating Agencies"), and the Class
A-2 Notes, the Class A-3 Notes, the Class A-4 Notes, the
Class A-5 Notes and the Certificates each be rated AAA
by S&P and Aaa by Moody's. The ratings by S&P of the
Notes will be issued without regard to the benefit
afforded by the Note Policy. The rating by Moody's of
the Class A-1 Notes will be substantially based on the
issuance of the Note Policy by Financial Security, and
the rating by Moody's of the Class A-2 Notes, the Class
A-3 Notes, the Class A-4 Notes and
</TABLE>
S-15
<PAGE>
<TABLE>
<S> <C>
the Class A-5 Notes will be based on the issuance of the
Note Policy by Financial Security. The ratings by each
Rating Agency of the Certificates will be based on the
issuance of the Certificate Policy by Financial
Security. The Rating Agencies do not evaluate, and the
ratings do not address, the likelihood that the Note
Prepayment Amounts, the Note Prepayment Premiums, the
Certificate Prepayment Amount or the Certificate
Prepayment Premium will be paid. There is no assurance
that the ratings initially assigned to the Notes and the
Certificates will not subsequently be lowered or
withdrawn by the Rating Agencies. See "Risk Factors --
Ratings on Securities" herein.
</TABLE>
S-16
<PAGE>
RISK FACTORS
Prospective Noteholders and Certificateholders should consider, in addition
to the factors described under "Risk Factors" in the accompanying Prospectus,
the following factors in connection with the purchase of the Notes or the
Certificates:
THE RECEIVABLES AND THE PRE-FUNDING ACCOUNT
On the Closing Date, approximately $455,000,000 of Initial Receivables will
be transferred to the Trust by the Seller and the approximately $195,000,000
Pre-Funded Amount will be deposited by the Trust in the Pre-Funding Account. If
the principal amount of eligible Receivables originated by Olympic Financial
during the Funding Period is less than the Pre-Funded Amount, the Seller will
have insufficient Receivables to sell to the Trust on the Subsequent Transfer
Dates, thereby resulting in a prepayment of principal to the Noteholders and the
Certificateholders as described in the following paragraph. See "-- Trust's
Relationship to the Seller and Olympic Financial" below. In addition, any
conveyance of Subsequent Receivables is subject to the satisfaction, on or
before the related Subsequent Transfer Date, of the following conditions, among
others: (i) each such Subsequent Receivable satisfies the eligibility criteria
specified in the Sale and Servicing Agreement; (ii) Financial Security (so long
as no Insurer Default shall have occurred and be continuing) shall in its sole
and absolute discretion have approved the transfer of such Subsequent
Receivables to the Trust; (iii) as of the applicable Subsequent Cutoff Date, the
Receivables in the Trust, together with the Subsequent Receivables to be
conveyed by the Seller as of such Subsequent Cutoff Date, meet the following
criteria (computed based on the characteristics of the Initial Receivables on
the Initial Cutoff Date and any Subsequent Receivables as of the related
Subsequent Cutoff Date): (a) the weighted average APR of such Receivables will
not be less than one percent less than the weighted average APR of the
Preliminary Initial Receivables on the Preliminary Cutoff Date, (b) the weighted
average remaining term of such Receivables will not be greater than 67 months
nor less than 63 months, (c) not more than 80% of the principal balances of such
Receivables will represent used Financed Vehicles, (d) not more than 37% of the
Aggregate Principal Balance of such Receivables will represent Receivables
originated under Olympic Financial's "Classic" program and (e) not more than 2%
of the principal balances of such Receivables will have an APR in excess of 21%,
and the Trust, the Indenture Trustee, the Owner Trustee and Financial Security
shall have received written confirmation from a firm of certified independent
public accountants as to the satisfaction of the criteria in clauses (a) through
(e) above; (iv) the Seller shall have executed and delivered to the Trust (with
a copy to the Indenture Trustee) a written assignment (a "Subsequent Transfer
Agreement") conveying such Subsequent Receivables to the Trust (including a
schedule identifying such Subsequent Receivables); (v) the Seller shall have
delivered certain opinions of counsel to the Indenture Trustee, the Owner
Trustee, Financial Security and the Rating Agencies with respect to the validity
of the conveyance of all such Subsequent Receivables; and (vi) the Rating
Agencies shall have notified the Seller, the Owner Trustee, the Indenture
Trustee and Financial Security in writing that, following the addition of such
Subsequent Receivables, the Class A-1 Notes will be rated A-1+ by S&P and P-1 by
Moody's, and the Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes, the
Class A-5 Notes and the Certificates will each be rated AAA by S&P and Aaa by
Moody's. Such confirmation of the ratings of the Notes and the Certificates may
depend on factors other than the characteristics of the Subsequent Receivables,
including the delinquency, repossession and net loss experience on the
Receivables in the Receivables Pool.
To the extent that the Pre-Funded Amount has not been fully applied to the
purchase of Subsequent Receivables by the Trust during the Funding Period, the
Noteholders and the Certificateholders will receive, on the Distribution Date on
or immediately following the last day of the Funding Period, a prepayment of
principal in an amount equal to their pro rata share (based on the current
principal balance of each class of Notes and the Certificate Balance) of any
remaining Pre-Funded Amount following the purchase of any Subsequent Receivables
on such Distribution Date. It is anticipated that the principal amount of
Subsequent Receivables sold to the Trust will not be exactly equal to the
original Pre-Funded Amount and that therefore there will be at least a nominal
amount of principal prepaid to the Noteholders and to the Certificateholders.
Each Subsequent Receivable must satisfy the eligibility criteria specified
in the Sale and Servicing Agreement. However, Subsequent Receivables may have
been originated using credit criteria different from the criteria applied with
respect to the Initial Receivables and may be of a different credit quality and
seasoning. See "The Receivables Pool" herein.
S-17
<PAGE>
TRUST'S RELATIONSHIP TO THE SELLER AND OLYMPIC FINANCIAL
Neither the Seller nor Olympic Financial is generally obligated to make any
payments in respect of the Notes, the Certificates or the Receivables. However,
the ability of the Seller to convey Subsequent Receivables on Subsequent
Transfer Dates is completely dependent upon the generation of additional
receivables by Olympic Financial. If, during the Funding Period, Olympic
Financial is unable to generate or does not transfer sufficient Receivables to
the Seller, the ability of the Seller to sell Subsequent Receivables to the
Trust would be adversely affected. There can be no assurance that Olympic
Financial will continue to generate receivables that satisfy the criteria set
forth in the Sale and Servicing Agreement at the same rate as in recent months
or that Financial Security, in its sole and absolute discretion, will approve
any such transfer of Subsequent Receivables. The Trust's obligation to pay
prepayment premiums on the Notes and Certificates, if required at the end of the
Funding Period, is limited to amounts received from the Seller for that purpose,
and the Seller's obligation to pay such amounts is limited to amounts received
from Olympic Financial as liquidated damages under the Purchase Agreement.
In connection with each sale of Receivables by Olympic Financial to the
Seller and by the Seller to the Trust, each of Olympic Financial and the Seller
will make representations and warranties with respect to the characteristics of
such Receivables. In certain circumstances, Olympic Financial is required to
repurchase Receivables with respect to which such representations or warranties
are not true as of the date made. Neither Olympic Financial nor the Seller is
otherwise obligated with respect to the Notes or the Certificates. See
"Description of the Purchase Agreements and the Trust Documents -- Sale and
Assignment of the Receivables" in the accompanying Prospectus.
SUBORDINATION OF CERTIFICATES; LIMITED ASSETS
Distributions of interest and principal on the Certificates will be
subordinated in priority of payment to interest and principal due on the Notes.
Consequently, the Certificateholders will not receive any distributions with
respect to a Monthly Period until the full amount of interest and principal
payable on the Notes on such Distribution Date has been deposited in the Note
Distribution Account. The Certificateholders will not receive any distributions
of principal before the Distribution Date on which the Class A-3 Notes have been
paid in full.
If the Notes are accelerated following an Event of Default under the
Indenture, the Notes must be paid in full prior to the distribution of any
amounts on the Certificates.
The Trust will not have, nor is it permitted or expected to have, any
significant assets or sources of funds other than the Receivables, the
Pre-Funding Account, the Reserve Account and the Policies. Holders of the Notes
and the Certificates must rely for repayment upon payments on the Receivables
and, if and to the extent available, amounts on deposit in the Pre-Funding
Account and the Reserve Account (as defined herein) and payments of claims made
under the Policies. The Pre-Funding Account and the Reserve Account will only be
maintained until the Distribution Date on or immediately following the last day
of the Funding Period. The Pre-Funded Amount on deposit in the Pre-Funding
Account will be used solely to purchase Subsequent Receivables and is not
available to cover losses on the Receivables. The Reserve Account is designed to
cover obligations of the Trust relating to that portion of its assets not
invested in Receivables and is not designed to provide substantial protection
against losses on the Receivables. Similarly, although the Policies will be
available on each Distribution Date to cover shortfalls in distributions of the
Noteholders' Distributable Amount and the Certificateholders' Distributable
Amount on such Distribution Date, if Financial Security defaults in its
obligations under the applicable Policy, the Trust will depend on current
distributions on the Receivables to make payments on the Notes and the
Certificates. See "Financial Security Assurance Inc." and "The Policies" herein.
RATINGS ON SECURITIES
It is a condition to the issuance of the Notes and the Certificates that the
Class A-1 Notes 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 each be rated AAA by S&P and Aaa by Moody's. A rating is not a
recommendation to purchase, hold or sell Notes or Certificates. The ratings of
the Notes and Certificates address the likelihood of the payment of principal
and interest on the Securities pursuant to their terms. However, the Rating
Agencies do not evaluate, and the ratings of the Notes and Certificates do not
address,
S-18
<PAGE>
the likelihood that the Note Prepayment Amounts, the Note Prepayment Premiums,
the Certificate Prepayment Amount or the Certificate Prepayment Premium will be
paid. There is no assurance that a rating will remain in effect for any given
period of time or that a rating will not be lowered or withdrawn entirely by a
Rating Agency if in its judgment circumstances in the future so warrant. In the
event that any ratings initially assigned to the Notes and the Certificates were
subsequently lowered or withdrawn for any reason, including by reason of a
downgrading of Financial Security's claims-paying ability, no person or entity
will be obligated to provide any additional credit enhancement with respect to
the Notes or the Certificates. Any reduction or withdrawal of a rating may have
an adverse effect on the liquidity and market price of the Notes and the
Certificates.
EVENTS OF DEFAULT UNDER THE INDENTURE
So long as no Insurer Default shall have occurred and be continuing, neither
the Indenture Trustee nor the Noteholders may declare an Event of Default under
the Indenture. So long as an Insurer Default shall not have occurred and be
continuing, an Event of Default will occur only upon delivery by Financial
Security to the Indenture Trustee of notice of the occurrence of certain events
of default under the Insurance Agreement. Upon the occurrence of an Event of
Default under the Indenture (so long as an Insurer Default shall not have
occurred and be continuing), Financial Security will have the right, but not the
obligation, to cause the liquidation, in whole or in part, of the Trust
Property, which will result in redemption, in whole or in part, of the Notes,
and prepayment, in whole or in part, of the Certificates. Following the
occurrence of an Event of Default, the Indenture Trustee and the Owner Trustee
will continue to submit claims under the Policies as necessary to enable the
Trust to continue to make payments of the Noteholders' Distributable Amount and
the Certificateholders' Distributable Amount on each Distribution Date. However,
following the occurrence of an Event of Default, Financial Security may elect to
pay all or any portion of the outstanding amount of the Notes, plus accrued
interest thereon, and may elect to cause the prepayment, in whole or in part, of
the Certificates.
YIELD AND PREPAYMENT CONSIDERATIONS
The Trust Agreement provides that, in the event that (i) one of the General
Partners becomes insolvent, withdraws or is expelled as a General Partner of the
Trust or is terminated or dissolved (a "Dissolution Event") and the Owner
Trustee is unable to obtain an opinion of counsel satisfactory to Financial
Security to the effect that the Trust will not thereafter be an association (or
publicly traded partnership) taxable as a corporation for federal income tax
purposes, or (ii) a Dissolution Event occurs with respect to both General
Partners, the Trust will terminate in 90 days and effect redemption of the Notes
and prepayment of the Certificates following the winding-up of the affairs of
the Trust, unless within such 90 days the remaining General Partner (if any) and
the Owners of a majority of the remaining principal balance of the Certificates
agree in writing to continue the business of the Trust and to the appointment of
a successor to the General Partners, and the Owner Trustee is able to obtain the
opinion of counsel described above. See "Description of the Purchase Agreements
and the Trust Documents -- Termination" in the accompanying Prospectus.
WEIGHTED AVERAGE LIVES OF THE NOTES AND THE CERTIFICATES
The weighted average lives of the Notes and the Certificates will be
influenced by, among other things, the rate at which principal is paid on the
Receivables. In general, the weighted average lives of the Notes and the
Certificates will be shortened if the level of prepayments of principal of the
Receivables increases. The weighted average lives will also depend upon a
variety of other factors, including the timing of any changes in the rate of
principal prepayments on the Receivables. Accordingly, no assurance can be given
as to the weighted average life of any class of Notes or the Certificates.
Further, to the extent the prices of the Notes or the Certificates represent
discounts or premiums to their respective original principal balances,
variability in the weighted average lives of such class of Notes or the
Certificates could result in variability in the related yields to maturity.
FINAL SCHEDULED DISTRIBUTION DATES OF THE NOTES AND THE CERTIFICATES
The Final Scheduled Distribution Date for each class of Notes and the
Certificates, which is specified at page S-2 herein, is the date by which the
principal thereof is required to be fully paid. The Final Scheduled Distribution
Date for each class of Notes and the Certificates has been determined so that
distributions on the underlying Receivables will be sufficient to retire each
such class on or before its respective Final Scheduled Distribution Date without
the necessity of a claim on the applicable Policy. However, because
S-19
<PAGE>
(i) some prepayments of the Receivables are likely and (ii) certain of the
Receivables have terms to maturity that are shorter than the term to maturity
assumed in calculating each class's Final Scheduled Distribution Date, the
actual payment of any class of Notes or the Certificates likely will occur
earlier, and could occur significantly earlier, than such class's Final
Scheduled Distribution Date. Nevertheless, there can be no assurance that the
final distribution of principal of any or all classes of Notes or the
Certificates will be earlier than such class's Final Scheduled Distribution
Date.
USE OF PROCEEDS
The net proceeds to be received by the Seller from the sale of the
Securities will be used to pay to Olympic Financial or a warehouse facility the
purchase price for the Receivables, to make the deposits of the Pre-Funded
Amount into the Pre-Funding Account and to make the deposit of the Requisite
Reserve Amount into the Reserve Account. The net proceeds to be received by
Olympic Financial will be used to pay certain warehouse loans, and any
additional proceeds will be added to Olympic Financial's general funds and used
for its general corporate purposes. See "Olympic Financial Ltd." in the
accompanying Prospectus.
THE TRUST
The following information supplements and, to the extent inconsistent
therewith, supersedes the information contained in the accompanying Prospectus.
Prospective Securityholders should consider, in addition to the information
below, the information under "The Trusts" in the accompanying Prospectus.
GENERAL
The Issuer, Olympic Automobile Receivables Trust, 1996-B, is a business
trust formed under the laws of the State of Delaware pursuant to the Trust
Agreement for the transactions described in this Prospectus Supplement. After
its formation, the Trust will not engage in any activity other than (i)
acquiring, holding and managing the Receivables and the other assets of the
Trust and proceeds therefrom, (ii) issuing the Notes and the Certificates, (iii)
making payments on the Notes and the Certificates and (iv) engaging in other
activities that are necessary, suitable or convenient to accomplish the
foregoing or are incidental thereto or connected therewith.
The Trust will initially be capitalized with equity equal to $58,500,000.
Certificates with an aggregate original Certificate Balance of $585,000 will be
sold to the General Partners, and Certificates representing the remainder of the
Certificate Balance will be sold to third party investors that are expected to
be unaffiliated with the General Partners, the Seller, the Servicer or their
affiliates. The equity of the Trust, together with the proceeds of the initial
sale of the Notes, will be used by the Trust to purchase the Initial Receivables
from the Seller pursuant to the Sale and Servicing Agreement and to fund the
deposits in the Pre-Funding Account and the Reserve Account (described under
"Description of the Purchase Agreements and the Trust Documents -- Accounts"
herein).
The Trust's principal offices are in Wilmington, Delaware, in care of Mellon
Bank (DE), National Association, as Owner Trustee, at the address listed below
under "-- The Owner Trustee."
CAPITALIZATION OF THE TRUST
The following table illustrates the capitalization of the Trust as of the
Initial Cutoff Date, as if the issuance and sale of the Notes and Certificates
had taken place on such date:
<TABLE>
<S> <C>
Class A-1 Notes....................................... $68,900,000
Class A-2 Notes....................................... $223,430,000
Class A-3 Notes....................................... $126,960,000
Class A-4 Notes....................................... $116,790,000
Class A-5 Notes....................................... $55,420,000
Certificates.......................................... $58,500,000
-----------
Total............................................. $650,000,000
-----------
-----------
</TABLE>
S-20
<PAGE>
THE OWNER TRUSTEE
Mellon Bank (DE), National Association is the Owner Trustee under the Trust
Agreement. Mellon Bank (DE), National Association is a Delaware banking
corporation and its principal offices are located at 919 North Market Street,
2nd Floor, Wilmington, Delaware 19801. The Seller and its affiliates may
maintain commercial banking relations with the Owner Trustee and its affiliates.
The Owner Trustee will perform limited administrative functions under the Trust
Agreement, including making distributions from the Certificate Distribution
Account. The Owner Trustee's liability in connection with the issuance and sale
of the Certificates and the Notes is limited solely to the express obligations
of the Owner Trustee set forth in the Trust Agreement and the Sale and Servicing
Agreement.
THE TRUST PROPERTY
The Trust Property will include, among other things, (i) the Receivables
Pool consisting of the Initial Receivables and the Subsequent Receivables; (ii)
all monies paid or payable under the Initial Receivables after the Initial
Cutoff Date and under the Subsequent Receivables after the respective Subsequent
Cutoff Dates; (iii) the Certificate Policy for the benefit of
Certificateholders; (iv) such amounts as from time to time may be held in the
Lockbox Account, the Collection Account and certain other accounts established
and maintained by the Servicer pursuant to the Sale and Servicing Agreement, as
described below (including all investments in the Collection Account and such
other accounts and all income from the investment of funds therein and all
proceeds thereof); (v) monies on deposit in the Pre-Funding Account and the
Reserve Account (as defined herein) (including all investments in such accounts
and all income from the investment of the funds therein and all proceeds
thereof); (vi) an assignment of the security interests of Olympic Financial in
the Financed Vehicles; (vii) an assignment of the right to receive proceeds from
the exercise of rights against Dealers under agreements between Olympic
Financial and such Dealers (the "Dealer Agreements") and the assignment of
rights in respect of each Receivable from the applicable Dealer to Olympic
Financial (the "Dealer Assignments"); (viii) an assignment of the right to
receive proceeds from claims on certain insurance policies covering the Financed
Vehicles or the Obligors; (ix) an assignment of the rights of the Seller under
the Purchase Agreements and any Subsequent Purchase Agreement; and (x) certain
other rights under the Trust Documents. See "The Receivables" and "Description
of the Purchase Agreements and the Trust Documents -- Collections" in the
accompanying Prospectus.
Each Certificate will represent a fractional undivided interest in the Trust
Property. Pursuant to the Indenture the Trust will grant a security interest in
the Trust Property (other than the Certificate Policy) in favor of the
Collateral Agent for the benefit of the Indenture Trustee on behalf of the
Noteholders and for the benefit of Financial Security in support of the
obligations owing to it under the Insurance Agreement. Any proceeds of such
security interest in the Trust Property would be distributed according to the
Indenture, as described below under "Description of the Purchase Agreements and
the Trust Documents -- Distributions." Financial Security would be entitled to
such distributions only after payment of amounts owing to, among others, holders
of the Notes and Certificates.
Olympic Financial, as custodian, will hold the original installment sales
contract or promissory note as well as copies of documents and instruments
relating to each Receivable and evidencing the security interest in the Financed
Vehicle securing each Receivable (the "Receivable Files"). In order to protect
the Trust's ownership interest in the Receivables, Olympic Financial and the
Seller will each file a UCC-1 financing statement in Minnesota to give notice of
the Trust's ownership of the Receivables and the related Trust Property.
THE RECEIVABLES POOL
GENERAL
The Receivables Pool will include the Initial Receivables and all amounts
due thereunder after the Initial Cutoff Date, and any Subsequent Receivables and
all amounts due thereunder after the applicable Subsequent Cutoff Date (the
Initial Cutoff Date or any Subsequent Cutoff Date being individually referred to
herein as a "Cutoff Date"). Certain information with respect to the Receivables
is set forth under the heading "The Receivables" in the accompanying Prospectus.
S-21
<PAGE>
All of the Receivables are or will be retail installment sales contracts or
promissory notes purchased in the ordinary course of business by Olympic
Financial from Dealers who regularly originate and sell such contracts or notes
to Olympic Financial. Retail installment sales contracts and promissory notes
are hereinafter referred to individually as a "Loan" or collectively as "Loans."
The Initial Receivables and the Subsequent Receivables were or will be selected
from Olympic Financial's portfolio for inclusion in the Receivables Pool in
compliance with several criteria, some of which are set forth below under "--
Selection Criteria." No selection procedures believed by Olympic Financial or by
the Seller to be adverse to Securityholders were used or will be used in
selecting the Receivables.
The obligation of the Trust to purchase the Subsequent Receivables on a
Subsequent Transfer Date will be subject to the Receivables in the Trust,
together with the Subsequent Receivables to be conveyed to the Trust on such
Subsequent Transfer Date, meeting the following criteria (computed based on the
characteristics of the Initial Receivables on the Initial Cutoff Date and any
Subsequent Receivables as of the related Subsequent Cutoff Date): (i) the
weighted average APR of such Receivables will not be less than one percent less
than the weighted average APR of the Preliminary Initial Receivables on the
Preliminary Cutoff Date; (ii) the weighted average remaining term of such
Receivables will not be greater than 67 months nor less than 63 months; (iii)
not more than 80% of the principal balances of such Receivables will be
attributable to Loans for the purchase of used Financed Vehicles, (iv) not more
than 37% of the Aggregate Principal Balance of such Receivables will represent
Receivables originated under Olympic Financial's "Classic" program and (v) not
more than 2% of the principal balances of such Receivables will have an APR in
excess of 21%.
The aggregate principal balance of the Initial Receivables is expected to be
equal to approximately 70% of the aggregate initial principal balance of the
Notes and Certificates. However, except for the criteria described in the
preceding paragraphs, there will be no required characteristics of the
Subsequent Receivables and the Receivables included in the Initial Receivables
originated after the Preliminary Cutoff Date. Therefore, following the transfer
of Subsequent Receivables to the Trust, the aggregate characteristics of the
entire Receivables Pool, including the composition of the Receivables, the
distribution by APR and the geographic distribution described in the following
tables, may vary from those of the Preliminary Initial Receivables.
DELINQUENCY, CREDIT LOSS AND REPOSSESSION INFORMATION
The following tables set forth information relating to Olympic Financial's
delinquency, credit loss and repossession experience for each period indicated
with respect to all Loans it has purchased and continues to service. This
information includes the experience with respect to all Loans in Olympic
Financial's portfolio of Loans serviced during each such period, including Loans
which do not meet the criteria for selection as a Receivable. At the Preliminary
Cutoff Date, the Preliminary Initial Receivables represented approximately
13.24%, by principal balance, of Olympic Financial's portfolio of Loans
serviced.
S-22
<PAGE>
DELINQUENCY EXPERIENCE (1)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
AT DECEMBER 31,
-----------------------------------------------------------------------
1993 1994 1995 AT MARCH 31, 1996
---------------------- ---------------------- ----------------------- -----------------------
NUMBER NUMBER NUMBER NUMBER
OF OF OF OF
LOANS BALANCES LOANS BALANCES LOANS BALANCES LOANS BALANCES
---------- ---------- ---------- ---------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Servicing Portfolio at End of
Period........................... 31,928 $ 316,933 74,267 $ 837,095 185,241 $2,267,107 213,193 $2,645,140
Delinquencies
31-60 days...................... 168 $ 1,580 393 $ 4,142 1,536 17,667 1,767 22,763
61-90 days...................... 49 518 129 1,557 520 5,694 854 11,412
91 days or more................. 104 938 113 1,197 614 6,881 839 10,409
---------- ---------- ---------- ---------- ---------- ----------- ---------- -----------
Total Automobile Loans Delinquent
31 or More Days.................. 321 $ 3,036 635 $ 6,896 2,670 $ 30,242 3,460 $ 44,584
Delinquencies as a Percentage of
Number of Loans and Servicing
Portfolio at End of Period (2)... 1.01% 0.96% 0.86% 0.82% 1.44% 1.33% 1.62% 1.69%
Amount in Repossession (3)........ 27 $ 137 102 $ 570 1,489 $ 17,676 2,079 $ 23,683
---------- ---------- ---------- ---------- ---------- ----------- ---------- -----------
Total Delinquencies and Amount in
Repossession (2)................. 348 $ 3,173 737 $ 7,466 4,159 $ 47,918 5,539 $ 68,267
---------- ---------- ---------- ---------- ---------- ----------- ---------- -----------
---------- ---------- ---------- ---------- ---------- ----------- ---------- -----------
Total Delinquencies and Amount in
Repossession as a Percentage of
Servicing Portfolio at End of
Period........................... 1.09% 1.00% 0.99% 0.89% 2.25% 2.11% 2.60% 2.58%
</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 Olympic Financial continues to service.
(2) Amounts shown do not include Loans which are less than 31 days delinquent.
(3) Amount in Repossession represents Financed Vehicles which have been
repossessed but not yet liquidated.
Olympic Financial's credit loss and repossession statistics are presented
below under a dual format. The first table labeled "Industry Method" has been
provided to conform the gross charge-off presentation format adopted by Olympic
Financial as of January 1, 1996, which Olympic Financial believes is the
predominant presentation format within the auto finance industry. This format,
which nets anticipated recoveries against loan principal balances remaining at
the time of charge-off, will be the basis for future delinquency, loan loss and
repossession disclosures by Olympic Financial.
S-23
<PAGE>
CREDIT LOSS AND REPOSSESSION EXPERIENCE (1)
(DOLLARS IN THOUSANDS)
INDUSTRY METHOD
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, FOR THREE
----------------------------------- MONTHS ENDED
1993 1994 1995 MARCH 31, 1996(4)
---------- ---------- ----------- -----------------
<S> <C> <C> <C> <C>
Average Servicing Portfolio Outstanding During the
Period................................................... $ 198,018 $ 528,577 $1,534,720 $ 2,461,267
Average Number of Loans Outstanding During the Period..... 20,813 49,566 128,783 199,596
Number of Repossessions................................... 267 1,005 5,020 2,755
Repossessions as a Percentage of Average Number of Loans
Outstanding.............................................. 1.28% 2.03% 3.90% 5.52%
Gross Charge-Offs (2)..................................... $ 2,556 $ 4,446 $ 12,933 $ 4,965
Recoveries (3)............................................ 1,523 974 2,597 105
---------- ---------- ----------- -----------------
Net Losses................................................ $ 1,033 $ 3,472 $ 10,336 $ 4,860
---------- ---------- ----------- -----------------
---------- ---------- ----------- -----------------
Gross Charge-Offs as a Percentage of Average Servicing
Portfolio................................................ 1.29% 0.84% 0.84% 0.81%
Net Losses as a Percentage of Average Servicing
Portfolio................................................ 0.52% 0.66% 0.67% 0.79%
</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 Olympic Financial 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. When estimating the value of repossessed
inventory, Olympic Financial utilizes industry published reports listing
retail and wholesale values of used automobiles and determines estimated
proceeds within a range that Olympic Financial believes reflects the then
current market conditions and Olympic Financial's disposition strategy for
such inventory.
(3) Includes post-disposition amounts received on previously charged off Loans.
(4) Percentage calculations for the three months ended March 31, 1996 are
annualized.
HISTORICAL METHOD
<TABLE>
<CAPTION>
FOR YEAR ENDED DECEMBER 31, FOR THREE
------------------------------------------------------- MONTHS ENDED
1993 1994 1995 MARCH 31, 1996(4)
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Average Servicing Portfolio
Outstanding During the Period........ $ 198,018 $ 528,577 $ 1,534,720 $ 2,461,267
Average Number of Loans Outstanding
During the Period.................... 20,813 49,566 128,783 199,596
Number of Repossessions............... 267 1,005 5,020 2,755
Repossessions as a Percentage of
Average Number of Loans
Outstanding.......................... 1.28% 2.03% 3.90% 5.52%
Gross Charge-Offs (2)................. $ 2,617 $ 10,794 $ 64,517 $ 34,899
Recoveries (3)........................ 1,584 7,322 54,181 30,839
-------- -------- ----------------- -----------------
Net Losses............................ $ 1,033 $ 3,472 $ 10,336 $ 4,860
-------- -------- ----------------- -----------------
-------- -------- ----------------- -----------------
Gross Charge-Offs as a Percentage of
Average Servicing Portfolio.......... 1.32% 2.04% 4.20% 5.67%
Net Losses as a Percentage of Average
Servicing Portfolio.................. 0.52% 0.66% 0.67% 0.79%
</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 Olympic Financial continues to service.
(2) Amount charged off includes the remaining principal balance, but not
accrued and unpaid interest.
(3) Includes post-disposition amounts received on previously charged off Loans.
(4) Percentage calculations for the three months ended March 31, 1996 are
annualized.
Olympic Financial believes the rise in delinquency, repossession and net
loss rates reflected in the tables above is primarily due to the introduction
and expansion of Olympic Financial's Classic Loan program and the seasoning of
Olympic Financial's servicing portfolio to include a greater proportion of Loans
in the period of highest probability for defaults.
In February 1996, Olympic Financial elected to increase, over time depending
on market conditions, the percentage of its aggregate Loan purchases that may be
purchased through the Olympic Financial Classic
S-24
<PAGE>
program up to a limit of 50% of originations. The purposes of Olympic
Financial's increased emphasis on the Classic program are to provide it with the
opportunity for greater interest rate spreads relative to its previous Loan mix
and, as it offers lower dealer participations on Classic Loans, to reduce costs
in comparison to its Premier program. Olympic Financial has determined that the
pricing advantages and ability to expand its prime lending market under the
Classic Loan program offset anticipated increases in delinquency and
repossession rates, which Olympic Financial expects to continue to increase as
the Classic Loans purchased in 1995 continue to season in 1996. The Classic
program includes applicants who, although otherwise qualified as a prime loan
candidate, have experienced certain adverse credit events or have a limited
credit history. Although the introduction and expansion of the Classic program
has contributed to an increase in total portfolio delinquencies and repossession
and net loss rates, these increases have been anticipated by Olympic Financial
and fall within its expectations.
Olympic Financial has prepared analyses, based on its own credit experience
and available industry data, to identify the relationship between loan
delinquency and repossession rates at various stages of a Loan repayment term.
The results of these analyses suggest that the probability of a Loan becoming
delinquent or going into default is highest during the six to fourteen month
period from the date of origination (the "seasoning period"). As expected,
therefore, the effect of significant growth in Loan purchasing volume during
late 1994 and early 1995 resulted in an increase in delinquencies and
repossessions during the last three quarters and is expected to continue to
increase in 1996.
Olympic Financial does not have the depth of historical Loan performance
data for its Classic program comparable to its Premier program. To estimate
future delinquency, repossession and loss experience related to the Classic
Loans, Olympic Financial uses a combination of factors, including actual Loan
performance on Premier Loans, adjusted for the effects of less favorable credit
characteristics, and industry experience on Loans with similar credit
characteristics. However, there can be no assurance that the Classic Loans will
perform under varying economic conditions in the manner currently estimated by
Olympic Financial. Any increase in delinquency, repossession and loss rates
related to Classic Loans above the rates estimated by Olympic Financial could
have a material adverse effect on the performance of Olympic Financial's overall
loan portfolio, in particular, and the performance of the Receivables.
Furthermore, because loan repossession and delinquency rates tend to increase
during the six to fourteen month period from Loan origination, the full impact
of the Classic program on Olympic Financial's overall delinquency, repossession
and loss rates will not be realized until the amount of Classic Loans which have
entered the seasoning period is proportionate to the amount of Classic Loans
being purchased by Olympic Financial relative to Premier Loans.
The Loans in Olympic Financial's servicing portfolio include Loans other
than the Receivables, including Loans which do not meet the criteria for
selection as a Receivable. There can be no assurance that the delinquency, loan
loss or repossession experience of the Trust with respect to the Receivables
will be better than, worse than or comparable to the experience set forth above.
SELECTION CRITERIA
The Preliminary Initial Receivables represent substantially all Loans in
Olympic Financial's portfolio, owned and not serviced for others, that (i) were
not more than 30 days past due as of the Preliminary Cutoff Date, (ii) did not
have a remaining principal balance as of the Preliminary Cutoff Date less than
$500.00, (iii) did not have a final scheduled payment date prior to November 1,
1996, and (iv) were otherwise eligible under criteria established by Olympic
Financial and Financial Security.
CERTAIN OTHER CHARACTERISTICS
The Preliminary Initial Receivables (i) had a remaining maturity, as of the
Preliminary Cutoff Date, of at least 3 months, but not more than 84 months, (ii)
had an original maturity of at least 6 months, but not more than 84 months,
(iii) had an original principal balance of at least $500.00 and not more than
$63,783.50, (iv) had a remaining principal balance, as of the Preliminary Cutoff
Date, of at least $500.00 and not more than $62,927.38 and (v) had an APR of at
least 7.2% and not more than 27.3%. Approximately 24.8% of the Aggregate
Principal Balance of the Preliminary Initial Receivables, as of the Preliminary
Cutoff Date, was attributable to Loans for the purchase of new Financed
Vehicles, and approximately 75.2% of the Aggregate Principal Balance was
attributable to loans for the purchase of used Financed Vehicles. The
Preliminary Initial Receivables were purchased from more than 3,310 Dealers. Not
more than 2.4% of the Aggregate
S-25
<PAGE>
Principal Balance of the Preliminary Initial Receivables as of the Preliminary
Cutoff Date was originated by any single Dealer. The ten most significant
Dealers, each of whom individually accounted for at least 0.5% of the Aggregate
Principal Balance as of the Preliminary Cutoff Date, in the aggregate,
originated approximately 7.7% of the Aggregate Principal Balance as of the
Preliminary Cutoff Date. Approximately 98.3% of the Preliminary Initial
Receivables, by principal balance, are simple interest obligations, and interest
on the remaining 1.7% of the Preliminary Initial Receivables is computed on an
actuarial basis, with prepayment rebates computed according to the Rule of 78's.
Neither the Seller, Olympic Financial nor the Servicer may substitute other
Loans for the Receivables at any time during the term of the Sale and Servicing
Agreement.
The composition and distribution by APR and geographic concentration of the
Receivables Pool as of the Preliminary Cutoff Date are set forth in the
following tables:
COMPOSITION OF THE PRELIMINARY INITIAL RECEIVABLES
AS OF THE PRELIMINARY CUTOFF DATE
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE AGGREGATE NUMBER OF AVERAGE WEIGHTED AVERAGE
APR OF PRINCIPAL RECEIVABLES PRINCIPAL WEIGHTED AVERAGE ORIGINAL SCHEDULED
RECEIVABLES BALANCE IN POOL BALANCE REMAINING TERM (1) TERM (1)
- ------------- ----------------- ------------- ------------ ------------------ ------------------
<S> <C> <C> <C> <C> <C>
14.27% $ 376,209,005.77 25,993 $ 14,473.47 65.4 months 66.0 months
</TABLE>
- ------------------------
(1) Based on Scheduled Payments due after the Preliminary Cutoff Date (in the
case of the Weighted Average Remaining Term) and assuming no prepayments on
the Preliminary Initial Receivables.
DISTRIBUTION BY APR OF THE PRELIMINARY INITIAL RECEIVABLES
AS OF THE PRELIMINARY CUTOFF DATE
<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF AGGREGATE
APR RANGE (%) RECEIVABLES PRINCIPAL BALANCE PRINCIPAL BALANCE
- ------------------------------------------------- ----------- ----------------- -------------------
<S> <C> <C> <C>
7.00 to 7.99................................... 83 $ 1,073,081.60 0.29%
8.00 to 8.99................................... 198 3,349,328.89 0.89%
9.00 to 9.99................................... 699 12,473,012.26 3.32%
10.00 to 10.99................................... 2,003 35,041,693.72 9.31%
11.00 to 11.99................................... 3,004 51,177,695.83 13.60%
12.00 to 12.99................................... 3,933 64,515,321.64 17.15%
13.00 to 13.99................................... 2,994 45,987,712.59 12.22%
14.00 to 14.99................................... 2,034 28,828,978.30 7.66%
15.00 to 15.99................................... 1,307 16,603,686.27 4.41%
16.00 to 16.99................................... 1,243 16,351,454.36 4.35%
17.00 to 17.99................................... 2,117 28,883,225.27 7.68%
18.00 to 18.99................................... 2,640 35,749,036.16 9.50%
19.00 to 19.99................................... 2,086 21,584,465.33 5.74%
20.00 to 20.99................................... 982 9,254,915.11 2.46%
21.00 to 21.99................................... 510 3,909,731.34 1.04%
22.00 to 28.00................................... 160 1,425,667.10 0.38%
----------- ----------------- ------
25,993 $ 376,209,005.77 100.00%
----------- ----------------- ------
----------- ----------------- ------
</TABLE>
S-26
<PAGE>
GEOGRAPHIC CONCENTRATION OF THE PRELIMINARY INITIAL RECEIVABLES
AS OF THE PRELIMINARY CUTOFF DATE
<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF AGGREGATE
STATE RECEIVABLES PRINCIPAL BALANCE PRINCIPAL BALANCE
- ------------------------------------------------- ----------- ----------------- -------------------
<S> <C> <C> <C>
Texas............................................ 4,041 $ 66,534,415.96 17.69%
Georgia.......................................... 3,190 47,060,499.07 12.51%
Florida.......................................... 1,530 21,679,230.66 5.76%
Tennessee........................................ 1,475 21,479,949.06 5.71%
California....................................... 1,431 21,149,732.54 5.62%
Arizona.......................................... 1,230 18,866,009.43 5.01%
Oklahoma......................................... 1,261 17,814,106.62 4.74%
Missouri......................................... 1,057 14,696,841.53 3.91%
Washington....................................... 1,095 14,304,441.32 3.80%
Colorado......................................... 982 12,725,471.38 3.38%
Oregon........................................... 979 12,666,870.06 3.37%
North Carolina................................... 774 10,941,298.17 2.91%
South Carolina................................... 767 10,662,409.12 2.83%
Massachusetts.................................... 763 10,003,287.90 2.66%
Nevada........................................... 672 9,798,581.66 2.60%
Minnesota........................................ 665 8,623,853.67 2.29%
New Mexico....................................... 445 7,200,639.83 1.91%
Wisconsin........................................ 518 6,689,232.27 1.78%
Connecticut...................................... 382 5,162,145.16 1.37%
Kentucky......................................... 328 4,554,603.88 1.21%
Illinois......................................... 308 4,275,610.68 1.14%
All other states................................. 2,100 29,319,775.80 7.80%
----------- ----------------- ------
25,993 $ 376,209,005.77 100.00%
----------- ----------------- ------
----------- ----------------- ------
</TABLE>
OLYMPIC FINANCIAL LTD.
Olympic Financial acquired Loans totalling approximately $39.7 million,
$97.9 million, $305.8 million, $743.3 million and $2,052.4 million for the
calendar years ended December 31, 1991, 1992, 1993, 1994 and 1995, respectively,
and $633.5 for the three months ended March 31, 1996, and maintained, as of
March 31, 1996, a servicing portfolio of approximately $2,645 million,
consisting of approximately $81.6 million of Loans owned and held for sale and
approximately $2,563.5 million of Loans serviced in connection with
securitization transactions. As of March 31, 1996, approximately 66% of Olympic
Financial's servicing portfolio consisted of Loans secured by used vehicles, of
which approximately 41% were current model year at the time of origination. As
of March 31, 1996, Olympic Financial had total assets of approximately $565.7
million and shareholders' equity of approximately $192.6 million.
FINANCIAL SECURITY ASSURANCE INC.
The following information has been obtained from Financial Security and has
not been verified by the Seller, Olympic Financial or the Underwriters. No
representation or warranty is made by the Seller, Olympic Financial or the
Underwriters with respect thereto.
GENERAL
Financial Security is a monoline insurance company incorporated in 1984
under the laws of the State of New York. Financial Security is licensed to
engage in the financial guaranty insurance business in all 50 states, the
District of Columbia and Puerto Rico.
Financial Security and its subsidiaries are engaged in the business of
writing financial guaranty insurance, principally in respect of securities
offered in domestic and foreign markets. In general, financial guaranty
insurance consists of the issuance of a guaranty of scheduled payments of an
issuer's securities -- thereby enhancing the credit rating of those securities
- -- in consideration for the payment of a premium to
S-27
<PAGE>
the insurer. Financial Security and its subsidiaries principally insure
asset-backed, collateralized and municipal securities. Asset-backed securities
are generally supported by residential mortgage loans, consumer or trade
receivables, securities or other assets having an ascertainable cash flow or
market value. Collateralized securities include public utility first mortgage
bonds and sale/leaseback obligation bonds. Municipal securities consist largely
of general obligation bonds, special revenue bonds and other special obligations
of state and local governments. Financial Security insures both newly issued
securities sold in the primary market and outstanding securities sold in the
secondary market that satisfy Financial Security's underwriting criteria.
Financial Security is a wholly owned subsidiary of Financial Security
Assurance Holdings Ltd. ("Holdings"), a New York Stock Exchange listed company.
Major shareholders of Holdings include Fund American Enterprises Holdings, Inc.,
U S WEST Capital Corporation and The Tokio Marine and Fire Insurance Co., Ltd.
No shareholder of Holdings is obligated to pay any debt of Financial Security or
any claim under any insurance policy issued by Financial Security or to make any
additional contribution to the capital of Financial Security.
The principal executive offices of Financial Security are located at 350
Park Avenue, New York, New York 10022, and its telephone number at that location
is (212) 826-0100.
REINSURANCE
Pursuant to an intercompany agreement, liabilities on financial guaranty
insurance written or reinsured from third parties by Financial Security or any
of its domestic operating insurance company subsidiaries are reinsured among
such companies on an agreed-upon percentage substantially proportional to their
respective capital, surplus and reserves, subject to applicable statutory risk
limitations. In addition, Financial Security reinsures a portion of its
liabilities under certain of its financial guaranty insurance policies with
other reinsurers under various quota share treaties and on a
transaction-by-transaction basis. Such reinsurance is utilized by Financial
Security as a risk management device and to comply with certain statutory and
rating agency requirements; it does not alter or limit Financial Security's
obligations under any financial guaranty insurance policy.
RATING OF CLAIMS-PAYING ABILITY
Financial Security's claims-paying ability is rated Aaa by Moody's and AAA
by S&P, Nippon Investors Service Inc. and Standard & Poor's (Australia) Pty.
Ltd. Such ratings reflect only the views of the respective rating agencies, are
not recommendations to buy, sell or hold securities and are subject to revision
or withdrawal at any time by such rating agencies. See "Risk Factors -- Ratings
on Securities" herein.
CAPITALIZATION
The following table sets forth the capitalization of Financial Security and
its wholly owned subsidiaries on the basis of generally accepted accounting
principles as of March 31, 1996 (in thousands):
<TABLE>
<CAPTION>
MARCH 31, 1996
------------------
(UNAUDITED)
<S> <C>
Unearned Premium Reserve
(net of prepaid reinsurance premiums)............................................ $ 340,226
------------------
Shareholder's Equity:
Common Stock.................................................................... 15,000
Additional Paid-In Capital...................................................... 681,470
Unrealized Loss on Investments (net of deferred income taxes)................... (737)
Accumulated Earnings............................................................ 83,444
------------------
Total Shareholder's Equity........................................................ 779,177
------------------
Total Unearned Premium Reserve
and Shareholder's Equity......................................................... $ 1,119,403
------------------
------------------
</TABLE>
For further information concerning Financial Security, see the Consolidated
Financial Statements of Financial Security and Subsidiaries, and the notes
thereto, incorporated by reference herein. 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
S-28
<PAGE>
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. Copies of the statutory quarterly and annual statements
filed with the State of New York Insurance Department by Financial Security are
available upon request to the State of New York Insurance Department.
INSURANCE REGULATION
Financial Security is licensed and subject to regulation as a financial
guaranty insurance corporation under the laws of the State of New York, its
state of domicile. In addition, Financial Security and its insurance
subsidiaries are subject to regulation by insurance laws of the various other
jurisdictions in which they are licensed to do business. As a financial guaranty
insurance corporation licensed to do business in the State of New York,
Financial Security is subject to Article 69 of the New York Insurance Law which,
among other things, limits the business of each such insurer to financial
guaranty insurance and related lines, requires that each such insurer maintain a
minimum surplus to policyholders, establishes contingency, loss and unearned
premium reserve requirements for each such insurer, and limits the size of
individual transactions ("single risks") and the volume of transactions
("aggregate risks") that may be underwritten by each such insurer. Other
provisions of the New York Insurance Law, applicable to non-life insurance
companies such as Financial Security, regulate, among other things, permitted
investments, payment of dividends, transactions with affiliates, mergers,
consolidations, acquisitions or sales of assets and incurrence of liability for
borrowings.
The Policies are not covered by the Property/Casualty Insurance Security
Fund specified in Article 76 of the New York Insurance Law.
S-29
<PAGE>
DESCRIPTION OF THE NOTES
GENERAL
The Notes will be issued pursuant to the terms of the Indenture, a form of
which has been filed as an exhibit to the Registration Statement. A copy of the
Indenture will be filed with the Commission following the issuance of the
Securities. The following summary describes certain terms of the Notes and the
Indenture. The summary does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, all the provisions of the Notes and
the Indenture. The following summary supplements, and to the extent inconsistent
therewith replaces, the description of the general terms and provisions of the
Notes of any given series and the related Indenture set forth in the
accompanying Prospectus, to which description reference is hereby made. Norwest
Bank Minnesota, National Association, a national banking association
headquartered in Minneapolis, Minnesota, will be the Indenture Trustee.
PAYMENTS OF INTEREST
Interest on the principal balance of each class of Notes will accrue at the
applicable Interest Rate and will be payable to the Noteholders of such class
monthly on each Distribution Date, commencing July 15, 1996. Interest will
accrue from and including June 14, 1996 (in the case of the first Distribution
Date) or from and including the most recent Distribution Date on which interest
has been paid to but excluding July 15, 1996 (in the case of the first
Distribution Date) or to but excluding the following Distribution Date (each, an
"Interest Period"). Interest on the Notes will be calculated on the basis of a
360-day year consisting of twelve 30-day months. Interest accrued as of any
Distribution Date but not paid on such Distribution Date will be due on the next
Distribution Date, together with interest on such amount at the applicable
Interest Rate (to the extent lawful). Interest payments on the Notes will be
made from Available Funds (as defined herein) after reimbursement of the
Servicer for prior Monthly Advances, payment of accrued and unpaid trustees'
fees and other administrative fees of the Trust and payment of the Servicing
Fee. See "Description of the Purchase Agreements and the Trust Documents --
Distributions" herein.
PAYMENTS OF PRINCIPAL
Principal payments will be made to the Noteholders on each Distribution Date
in an amount equal to the Noteholders' Percentage of an amount equal to the sum
of the following amounts with respect to the related Monthly Period: (i) that
portion of all collections on Receivables (other than Liquidated Receivables and
Purchased Receivables) allocable to principal, including full and partial
principal prepayments, received during such Monthly Period, (ii) the principal
balance of each Receivable that became a Liquidated Receivable during such
Monthly Period, (iii) the principal balance of each Receivable that was
repurchased by Olympic Financial or the Servicer as of the last day of such
Monthly Period, and, at the option of Financial Security, the principal balance
of each Receivable that was required to be, but was not, so repurchased, (iv)
the aggregate amount of any reduction of the principal balance of a Receivable
as a result of a court order in an insolvency proceeding and (v) any unpaid
portion of the amounts included in clauses (i), (ii), (iii) and (iv) above with
respect to a prior Distribution Date. Principal payments on the Notes will be
made from Available Funds after reimbursement of the Servicer for prior Monthly
Advances, payment of accrued and unpaid trustees' fees and other administrative
fees of the Trust, payment of the Servicing Fee and after distribution of the
Noteholders' Interest Distributable Amount. See "Description of the Purchase
Agreements and the Trust Documents -- Distributions" herein.
Principal payments on the Notes will be applied on each Distribution Date,
first, to the principal balance of the Class A-1 Notes until such principal
balance is reduced to zero, then to the principal balance of the Class A-2 Notes
until such principal balance is reduced to zero, then to the principal balance
of the Class A-3 Notes until such principal balance is reduced to zero, then to
the principal balance of the Class A-4 Notes until such principal balance is
reduced to zero and then to the principal balance of the Class A-5 Notes until
such principal balance is reduced to zero. The principal balance of the Class
A-1 Notes, to the extent not previously paid, will be due on the Class A-1 Final
Scheduled Distribution Date, the principal balance of the Class A-2 Notes, to
the extent not previously paid, will be due on the Class A-2 Final Scheduled
Distribution Date, the principal balance of the Class A-3 Notes, to the extent
not previously paid, will be due on the Class A-3 Final Scheduled Distribution
Date, the principal balance of the Class A-4 Notes, to the extent not previously
paid, will be due on the Class A-4 Final Scheduled Distribution Date and the
principal
S-30
<PAGE>
balance of the Class A-5 Notes, to the extent not previously paid, will be due
on the Class A-5 Final Scheduled Distribution Date. The actual date on which the
aggregate outstanding principal amount of any class of Notes is paid may be
earlier than the Final Scheduled Distribution Date for such class, depending on
a variety of factors.
MANDATORY REDEMPTION
Each class of Notes will be redeemed in part on the Distribution Date on or
immediately following the last day of the Funding Period in the event that any
portion of the Pre-Funded Amount remains on deposit in the Pre-Funding Account
after giving effect to the purchase of all Subsequent Receivables, including any
such purchase on such date (a "Mandatory Redemption"). The aggregate principal
amount of each class of Notes to be redeemed will be an amount equal to such
class's pro rata share (based on the respective current principal balance of
each class of Notes and the Certificate Balance) of the remaining Pre-Funded
Amount on such date (such class's "Note Prepayment Amount").
A Note Prepayment Premium will be payable by the Trust to the Noteholders of
each class if the Pre-Funded Amount at the end of the Funding Period exceeds
$100,000. The Note Prepayment Premium for a class of Notes will equal the
excess, if any, discounted as described below, of (i) the amount of interest
that would have accrued on such class's Note Prepayment Amount at the Interest
Rate borne by such class of Notes during the period commencing on and including
the Distribution Date on which such class's Note Prepayment Amount is required
to be distributed to the Noteholders of such class to but excluding September
12, 1996, in the case of the Class A-1 Notes, May 29, 1997, in the case of the
Class A-2 Notes, May 31, 1998, in the case of the Class A-3 Notes, May 31, 1999,
in the case of the Class A-4 Notes, and August 31, 2000, in the case of the
Class A-5 Notes, over (ii) the amount of interest that would have accrued on
such class's Note Prepayment Amount over the same period at a per annum rate of
interest equal to the bond equivalent yield to maturity on the Determination
Date preceding such Distribution Date on the United States Treasury Bill due
September 12, 1996, in the case of the Class A-1 Notes, the United States
Treasury Bill due May 29, 1997, in the case of the Class A-2 Notes, the 6.00%
United States Treasury Note due May 31, 1998 in the case of the Class A-3 Notes,
the 6.375% United States Treasury Note due May 31, 1999, in the case of the
Class A-4 Notes, and the 6.25% United States Treasury Note due August 31, 2000,
in the case of the Class A-5 Notes. Such excess shall be discounted to present
value to such Distribution Date at the applicable yield described in clause (ii)
above. The Trust's obligation to pay the Note Prepayment Premiums shall be
limited to funds which are received from the Seller under the Sale and Servicing
Agreement as liquidated damages for the failure to deliver Subsequent
Receivables. No other assets of the Trust will be available for the purpose of
making such payment. The Note Policy does not guarantee payment of the Note
Prepayment Premiums or the Note Prepayment Amounts, although the Note Policy
does guarantee payment of the Noteholders' Interest Distributable Amount and the
Noteholders' Principal Distributable Amount with respect to each class of Notes
on its respective Final Scheduled Distribution Date. In addition, the ratings
assigned to the Notes by the Rating Agencies do not address the likelihood that
the Note Prepayment Amounts or the Note Prepayment Premiums will be paid.
OPTIONAL REDEMPTION
The Class A-5 Notes, to the extent still outstanding, may be redeemed in
whole, but not in part, on any Distribution Date on which the Seller or the
Servicer exercises its option to purchase the Receivables. The Seller or the
Servicer may purchase the Receivables when the Aggregate Principal Balance has
declined to 10% or less of the Original Pool Balance, as described in the
accompanying Prospectus under "Description of the Purchase Agreements and the
Trust Documents -- Termination." Such redemption will effect early retirement of
the Notes of each such class. The redemption price will be equal to the unpaid
principal amount of the Notes of each such class, plus accrued and unpaid
interest thereon (the "Redemption Price").
EVENTS OF DEFAULT
Unless an Insurer Default shall have occurred and be continuing, "Events of
Default" under the Indenture will consist of those events defined in the
Insurance Agreement as Insurance Agreement Indenture Cross Defaults, and will
constitute an Event of Default under the Indenture only if Financial Security
shall have delivered to the Trust and the Indenture Trustee, and not rescinded,
a written notice specifying
S-31
<PAGE>
that any such Insurance Agreement Indenture Cross Default constitutes an Event
of Default under the Indenture. "Insurance Agreement Indenture Cross Defaults"
consist of: (i) a demand for payment being made under either of the Policies;
(ii) certain events of bankruptcy, insolvency, receivership or liquidation of
the Trust; (iii) the Trust becoming taxable as an association (or publicly
traded partnership) taxable as a corporation for federal or state income tax
purposes; (iv) on any Distribution Date, the sum of the Available Funds with
respect to such Distribution Date plus the amount (if any) on deposit in the
Reserve Account and certain funds held by the Collateral Agent being less than
the sum of the amounts described in clauses 1-8 under "Description of the
Purchase Agreements and the Trust Documents -- Distributions" herein; and (v)
any failure to observe or perform in any material respect any other covenants or
agreements in the Indenture, 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 when made, and such failure continuing or not being cured, or
the circumstance or condition in respect of which such misrepresentation or
warranty was incorrect not having been eliminated or otherwise cured, for 30
days after the giving of written notice of such failure or incorrect
representation or warranty to the Trust and the Indenture Trustee by Financial
Security.
Upon the occurrence of an Event of Default, so long as an Insurer Default
shall not have occurred and be continuing, Financial Security shall have the
right, but not the obligation, to cause the Indenture Collateral Agent to
liquidate the Trust Property in whole or in part, on any date or dates following
the acceleration of the Notes due to such Event of Default as Financial
Security, in its sole discretion, shall elect, and to deliver the proceeds of
such liquidation to the Indenture Trustee for distribution in accordance with
the terms of the Indenture. Financial Security may not, however, cause the
Indenture Collateral Agent to liquidate the Trust Property in whole or in part
if the proceeds of such liquidation would not be sufficient to pay all
outstanding principal of and accrued interest on the Notes, unless such Event of
Default arose from a claim being made on the Note Policy or from certain events
of bankruptcy, insolvency, receivership or liquidation of the Trust. Following
the occurrence of any Event of Default, the Indenture Trustee and the Owner
Trustee will continue to submit claims under the Policies for any shortfalls in
the Scheduled Payments on the Notes and the Guaranteed Distributions on the
Certificates. Following any Event of Default under the Indenture, Financial
Security may elect to pay all or any portion of the outstanding amount of the
Notes, plus accrued interest thereon. See "The Policies" herein.
If an Insurer Default has occurred and is continuing, "Events of Default"
under the Indenture will consist of the Events of Default described in the
accompanying Prospectus under "The Notes -- The Indenture," and the Indenture
Trustee will have the rights under the Indenture described therein.
DESCRIPTION OF THE CERTIFICATES
GENERAL
The Certificates will be issued pursuant to the terms of the Trust
Agreement, a form of which has been filed as an exhibit to the Registration
Statement. A copy of the Trust Agreement will be filed with the Commission
following the issuance of the Securities. The following summary describes
certain terms of the Certificates and the Trust Agreement. The summary does not
purport to be complete and is subject to, and qualified in its entirety by
reference to, all the provisions of the Certificates and the Trust Agreement.
The following summary supplements, and to the extent inconsistent therewith
replaces, the description of the general terms and provisions of the
Certificates of any given series and the related Trust Agreement set forth in
the Prospectus, to which description reference is hereby made.
DISTRIBUTIONS OF INTEREST INCOME
On each Distribution Date, commencing July 15, 1996, the Certificateholders
will be entitled to distributions in an amount equal to the amount of interest
accrued on the Certificate Balance at the Pass-Through Rate. Interest
distributable on a Distribution Date will accrue from and including June 14,
1996 (in the case of the first Distribution Date) or from the most recent
Distribution Date on which interest distributions have been made to but
excluding July 15, 1996 (in the case of the first Distribution Date) or to but
excluding such Distribution Date and will be calculated on the basis of a
360-day year consisting of twelve
S-32
<PAGE>
30-day months. Interest distributions due for any Distribution Date but not
distributed on such Distribution Date will be due on the next Distribution Date
together with interest on such amount at the Pass-Through Rate (to the extent
lawful). Interest distributions with respect to the Certificates will be made
from Available Funds after the reimbursement of the Servicer for prior Monthly
Advances, the payment of accrued and unpaid trustees' fees and other
administrative fees of the Trust, the payment of the Servicing Fee and the
distribution of the Noteholders' Distributable Amount. See "Description of the
Purchase Agreements and the Trust Documents -- Distributions" herein.
DISTRIBUTIONS OF PRINCIPAL PAYMENTS
Certificateholders will be entitled to distributions of principal on each
Distribution Date on or after the date on which the Class A-3 Notes have been
paid in full in an amount equal to the Certificateholders' Percentage of an
amount equal to the sum of the following amounts with respect to the related
Monthly Period: (i) that portion of all collections on Receivables (other than
Liquidated Receivables and Purchased Receivables) allocable to principal,
including full and partial principal prepayments, received during such Monthly
Period, (ii) the principal balance of each Receivable that became a Liquidated
Receivable during such Monthly Period, (iii) the principal balance of each
Receivable that was repurchased by Olympic Financial or the Servicer as of the
last day of such Monthly Period, and, at the option of Financial Security, the
principal balance of each Receivable that was required to be, but was not, so
repurchased, (iv) the aggregate amount of any reduction of the principal balance
of a Receivable as a result of a court order in an insolvency proceeding and (v)
any unpaid portion of the amounts included in clauses (i), (ii), (iii) and (iv)
above with respect to a prior Distribution Date. Distributions with respect to
principal payments will be made from Available Funds after reimbursement of the
Servicer for prior Monthly Advances, payment of accrued and unpaid trustees'
fees and other administrative fees of the Trust, payment of the Servicing Fee
and the distribution of the Noteholders' Distributable Amount and the
Certificateholders' Interest Distributable Amount. See "Description of the
Purchase Agreements and the Trust Documents -- Distributions" herein.
MANDATORY PREPAYMENT
The Certificates will be prepaid in part, on a pro rata basis, on the
Distribution Date on or immediately following the last day of the Funding Period
in the event that any portion of the Pre-Funded Amount remains on deposit in the
Pre-Funding Account after giving effect to the purchase of all Subsequent
Receivables, including any purchase on such date (a "Mandatory Prepayment"). The
aggregate principal amount of the Certificates to be prepaid will be an amount
equal to the Certificateholders' pro rata share (based on the respective current
principal balance of each class of Notes and the Certificate Balance) of the
remaining Pre-Funded Amount (the "Certificate Prepayment Amount").
The Certificate Prepayment Premium will be payable by the Trust to the
Certificateholders if the Pre-Funded Amount at the end of the Funding Period
exceeds $100,000. The Certificate Prepayment Premium will equal the excess, if
any, discounted as described below, of (i) the amount of interest that would
have accrued on the Certificate Prepayment Amount at the Pass-Through Rate
during the period commencing on and including the Distribution Date on which
such Certificate Prepayment Amount is required to be distributed to
Certificateholders to but excluding November 30, 1999, over (ii) the amount of
interest that would have accrued on such Certificate Prepayment Amount over the
same period at a per annum rate of interest equal to the bond equivalent yield
to maturity on the Determination Date preceding such Distribution Date on the
7.875% United States Treasury Note due November 30, 1999. Such excess shall be
discounted to present value to such Distribution Date at the yield described in
clause (ii) above. The Trust's obligation to pay the Certificate Prepayment
Premium shall be limited to funds which are received from the Seller under the
Sale and Servicing Agreement as liquidated damages for the failure to deliver
Subsequent Receivables. No other assets of the Trust will be available for the
purpose of making such payment. The Certificate Policy does not guarantee
payment of the Certificate Prepayment Amount or the Certificate Prepayment
Premium, although the Certificate Policy does guarantee payment of the
Certificateholders' Interest Distributable Amount and the Certificateholders'
Principal Distributable Amount on the Final
S-33
<PAGE>
Scheduled Distribution Date. In addition, the ratings assigned to the
Certificates by the Rating Agencies do not address the likelihood that the
Certificate Prepayment Amount or the Certificate Prepayment Premium will be
paid.
Upon the occurrence of an Event of Default under the Indenture (so long as
an Insurer Default shall not have occurred and be continuing), Financial
Security will have the right, but not the obligation, to cause the liquidation
of the Trust Property in whole or in part, on any date or dates as Financial
Security, in its sole discretion, shall elect, as described under "Description
of the Notes -- Events of Default." Any such liquidation, in whole or in part,
may cause a full or partial prepayment of the Certificates.
OPTIONAL PREPAYMENT
If the Seller or the Servicer exercises its option to purchase the
Receivables when the Aggregate Principal Balance declines to 10% or less of the
Original Pool Balance, Certificateholders will receive an amount in respect of
the Certificates equal to the outstanding Certificate Balance together with
accrued interest at the Pass-Through Rate, which distribution will effect early
retirement of the Certificates. See "Description of the Purchase Agreements and
the Trust Documents -- Termination" in the accompanying Prospectus.
TRANSFERS OF CERTIFICATES
Certificateholders, other than individuals or entities holding Certificates
through a broker who reports sales of securities on Form 1099-B, are required
under the Trust Agreement to notify the Owner Trustee of any transfer of their
Certificates in a taxable sale or exchange within 30 days of such transfer.
DESCRIPTION OF THE PURCHASE AGREEMENTS AND THE TRUST DOCUMENTS
The following summary describes certain terms of the Purchase Agreements and
any Subsequent Purchase Agreement (together, the "Purchase Agreements"), and the
Sale and Servicing Agreement, any Subsequent Transfer Agreement and the Trust
Agreement (together, the "Trust Documents"). Forms of the Purchase Agreements
and the Trust Documents have been filed as exhibits to the Registration
Statement. A copy of the Purchase Agreements and the Trust Documents will be
filed with the Commission following the issuance of the Securities. The summary
does not purport to be complete and is subject to, and qualified in its entirety
by reference to, all the provisions of the Purchase Agreements and the Trust
Documents. The following summary supplements, and to the extent inconsistent
therewith replaces, the description of the general terms and provisions of
Purchase Agreements and the Trust Documents (as such terms are used in the
accompanying Prospectus) set forth in the accompanying Prospectus, to which
description reference is hereby made.
The Sale and Servicing Agreement will not permit modifications of
Receivables to avoid prepayments by Obligors. See "Description of the Purchase
Agreements and the Trust Documents -- Servicing Procedures" in the accompanying
Prospectus.
SALE AND ASSIGNMENT OF RECEIVABLES; SUBSEQUENT RECEIVABLES
Certain information with respect to the sale of the Initial Receivables by
Olympic Financial to the Seller pursuant to the Purchase Agreements and the
conveyance of the Initial Receivables from the Seller to the Trust on the
Closing Date pursuant to the Sale and Servicing Agreement is set forth under
"Description of the Purchase Agreements and the Trust Documents -- Sale and
Assignment of Receivables" in the accompanying Prospectus. In addition, during
the Funding Period, pursuant to the Sale and Servicing Agreement, the Seller
will be obligated to sell to the Trust Subsequent Receivables having an
aggregate principal balance equal to approximately $195,000,000 (such amount
being equal to the initial Pre-Funded Amount) to the extent that such Subsequent
Receivables are available.
During the Funding Period, on each Subsequent Transfer Date, subject to the
conditions described below, the Seller will sell and assign to the Trust,
without recourse, the Seller's entire interest in the Subsequent Receivables
designated by the Seller as of the related Subsequent Cutoff Date and identified
in a schedule attached to a Subsequent Transfer Agreement relating to such
Subsequent Receivables executed on such date by the Seller. Upon the conveyance
of Subsequent Receivables to the Trust on a Subsequent
S-34
<PAGE>
Transfer Date, (i) the Aggregate Principal Balance will increase in an amount
equal to the aggregate principal balances of the Subsequent Receivables, (ii)
the Class A-1 Holdback Amount (described under "-- Accounts" below), if any, for
such Subsequent Transfer Date will be withdrawn from the Pre-Funding Account and
deposited in the Class A-1 Holdback Subaccount (described under "-- Accounts"
below), and (iii) an amount equal to the aggregate principal balances of such
Subsequent Receivables less the Class A-1 Holdback Amount will be withdrawn from
the Pre-Funding Account and paid to or upon the order of the Seller.
Any conveyance of Subsequent Receivables is subject to the satisfaction, on
or before the related Subsequent Transfer Date, of the following conditions,
among others: (i) each such Subsequent Receivable satisfies the eligibility
criteria specified in the Sale and Servicing Agreement; (ii) Financial Security
(so long as no Insurer Default shall have occurred and be continuing) shall in
its absolute and sole discretion have approved the transfer of such Subsequent
Receivables to the Trust; (iii) as of each applicable Subsequent Cutoff Date,
the Receivables in the Trust together with the Subsequent Receivables to be
conveyed by the Seller as of such Subsequent Cutoff Date, meet the following
criteria (computed based on the characteristics of the Initial Receivables on
the Initial Cutoff Date and any Subsequent Receivables on the related Subsequent
Cutoff Date): (a) the weighted average APR of such Receivables will not be less
than one percent less than the weighted average APR of the Preliminary Initial
Receivables on the Preliminary Cutoff Date, (b) the weighted average remaining
term of such Receivables will not be greater than 67 months nor less than 63
months, (c) not more than 80% of the principal balances of such Receivables will
be attributable to Loans for the purchase of used Financed Vehicles, (d) not
more than 37% of the Aggregate Principal Balance of such Receivables will
represent Receivables originated under Olympic Financial's "Classic" program and
(e) not more than 2% of the principal balances of such Receivables will have an
APR in excess of 21%, and the Trust, the Indenture Trustee, the Owner Trustee
and Financial Security shall have received written confirmation from a firm of
certified independent public accountants as to the satisfaction of the criteria
in clauses (a) through (e) above; (iv) the Seller shall have executed and
delivered to the Trust (with a copy to the Indenture Trustee) a Subsequent
Transfer Agreement conveying such Subsequent Receivables to the Trust (including
a schedule identifying such Subsequent Receivables); (v) the Class A-1 Holdback
Amount, if any, shall have been deposited in the Class A-1 Holdback Subaccount
(described under "-- Accounts" below); (vi) the Seller shall have delivered
certain opinions of counsel to the Indenture Trustee, the Owner Trustee,
Financial Security and the Rating Agencies with respect to the validity of the
conveyance of such Subsequent Receivables; and (vii) the Rating Agencies shall
have each notified the Seller, the Owner Trustee, the Indenture Trustee and
Financial Security in writing that, following the addition of all such
Subsequent Receivables, the Class A-1 Notes will be rated A-1+ by S&P and P-1 by
Moody's, and the Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes, the
Class A-5 Notes and the Certificates will be rated AAA by S&P and Aaa by
Moody's.
Subsequent Receivables may have been originated by Olympic Financial at a
later date using credit criteria different from the criteria applied with
respect to the Initial Receivables. See "Risk Factors -- The Receivables and the
Pre-Funding Account" and "The Receivables Pool" herein.
ACCOUNTS
The Servicer will establish and maintain one or more accounts, in the name
of the Indenture Trustee on behalf of the Noteholders and the
Certificateholders, into which all payments made on or with respect to the
Receivables will be deposited (the "Collection Account"). The Servicer will also
establish and maintain an account, in the name of the Indenture Trustee on
behalf of the Noteholders, in which amounts released from the Collection Amount
for distribution to Noteholders will be deposited and from which all
distributions to Noteholders will be made (the "Note Distribution Account"). The
Owner Trustee will establish and maintain an account, in the name of the Owner
Trustee on behalf of the Certificateholders, in which amounts released from the
Collection Account for distribution to Certificateholders will be deposited and
from which all distributions to Certificateholders will be made (the
"Certificate Distribution Account"). The Collection Account, the Note
Distribution Account and the Certificate Distribution Account are collectively
referred to herein as the "Designated Accounts." See "Description of the
Purchase Agreements and the Trust Documents -- Collections" in the accompanying
Prospectus.
S-35
<PAGE>
In addition to the Designated Accounts, the Servicer will also establish and
will maintain the Pre-Funding Account in the name of the Indenture Trustee on
behalf of the Noteholders and the Certificateholders.
The Servicer will also establish and maintain an account (the "Reserve
Account") in the name of the Indenture Trustee on behalf of the Noteholders and
Certificateholders. On the Closing Date, the Seller will deposit an amount equal
to the Requisite Reserve Amount (as described below) as of the Closing Date in
the Reserve Account. On each Draw Date (as described below) during the Funding
Period, if the Available Funds are insufficient to distribute the amounts
described in clauses 1-8 under "-- Distributions" below, the Indenture Trustee
will withdraw from the Reserve Account the amount of such shortfall (but in no
event more than the difference between (i) the amount on deposit in the Reserve
Account and (ii) the Requisite Reserve Amount for the related Distribution
Date), and deposit such amount in the Collection Account. On each Subsequent
Transfer Date, the Servicer will recalculate the Requisite Reserve Amount, and
any funds in the Reserve Account in excess of such amount will be distributed to
the General Partners. If the amount in the Reserve Account on such Subsequent
Transfer Date is less than the Requisite Reserve Amount, such amount will be
transferred to the Reserve Account from the funds that would otherwise be paid
to the Seller from the Pre-Funding Account.
The "Requisite Reserve Amount" as of any date during the Funding Period will
equal the product of (i) the difference between (A) the weighted average of the
Interest Rates for each class of Notes and the Pass-Through Rate (based on the
outstanding principal amount of each class of Notes and the Certificate Balance
on such date) and (B) the assumed yield (2.5% per annum) of investments of funds
in the Pre-Funding Account, divided by 360, (ii) the Pre-Funded Amount on such
date and (iii) the number of days remaining until the Distribution Date in
August 1996.
In addition, on any Subsequent Transfer Date a "Class A-1 Holdback Amount"
(as defined in the Sale and Servicing Agreement, and determined by the amount,
if any, by which the actual Principal Balance of Subsequent Receivables
transferred to the Trust on or prior to such date is less than the amount set
forth in a schedule of assumed amounts), if any, will be withheld from funds in
the Pre-Funding Account that would otherwise be paid to the Seller on such
Subsequent Transfer Date and will be deposited into a subaccount (the "Class A-1
Holdback Subaccount") of the Reserve Account. The Class A-1 Holdback Subaccount
is intended to ensure that, notwithstanding a slower than expected delivery of
Subsequent Receivables by the Seller during the Funding Period, sufficient funds
will be available to retire the Class A-1 Notes on the Class A-1 Final Scheduled
Distribution Date. Any funds in the Class A-1 Holdback Subaccount (less the
amount, if any, required to be applied to reduce the principal balance of the
Class A-1 Notes to zero on the Class A-1 Final Scheduled Distribution Date) will
be released to the General Partners on the Distribution Date on which the Class
A-1 Notes are paid in full, and funds in the Class A-1 Holdback Subaccount will
not be available for any other purpose.
Funds in the Designated Accounts, the Pre-Funding Account and the Reserve
Account will be invested in Eligible Investments, and investment earnings will
be added to Available Funds on each Distribution Date.
DISTRIBUTIONS
On or before the sixth Business Day prior to each Distribution Date (each
such date, a "Determination Date"), the Servicer will deliver to the Indenture
Trustee, the Owner Trustee, Financial Security and each Rating Agency a
certificate (the "Servicer's Certificate") setting forth, among other things,
the following amounts with respect to the preceding Monthly Period and the
related Distribution Date: (i) the amount of funds in the Collection Account
allocable to collections on the Receivables in the preceding Monthly Period
(excluding any Monthly Advances and any Purchase Amounts) (the "Collected
Funds"); (ii) the Purchase Amount of all Receivables repurchased by Olympic
Financial or the Servicer as of the related Deposit Date; (iii) the Monthly
Advances made by the Servicer and the amounts which the Servicer is entitled to
be reimbursed for prior Monthly Advances; (iv) the amount of Available Funds;
(v) the Noteholders' Interest
S-36
<PAGE>
Distributable Amount; (vi) the Noteholders' Principal Distributable Amount;
(vii) the Certificateholders' Interest Distributable Amount and the
Certificateholders' Principal Distributable Amount; and (viii) the Servicing
Fee.
On each Distribution Date, the Servicer shall instruct the Indenture Trustee
to distribute the Available Funds in the following order of priority:
1. To the Servicer, the amount the Servicer is entitled to be
reimbursed for prior Monthly Advances.
2. To the Indenture Trustee and the Owner Trustee, any accrued and
unpaid trustees' fees and any accrued and unpaid fees of the separate
Lockbox Bank, Custodian, Backup Servicer, Indenture Collateral Agent,
Administrator or Collateral Agent (described below) (in each case, to the
extent such fees have not been previously paid by the Servicer or Olympic
Financial).
3. To the Servicer, the Servicing Fee for the related Monthly Period.
4. To the Note Distribution Account, the Noteholders' Interest
Distributable Amount.
5. To the Note Distribution Account, the Noteholders' Principal
Distributable Amount, to be distributed first to the Class A-1 Noteholders
in reduction of principal until the principal balance of the Class A-1 Notes
has been reduced to zero, then to the Class A-2 Noteholders in reduction of
principal until the principal balance of the Class A-2 Notes has been
reduced to zero, then to the Class A-3 Noteholders in reduction of principal
until the principal balance of the Class A-3 Notes has been reduced to zero,
then to the Class A-4 Noteholders in reduction of principal until the
principal balance of the Class A-4 Notes has been reduced to zero and then
to the Class A-5 Noteholders in reduction of principal until the principal
balance of the Class A-5 Notes has been reduced to zero.
6. To the Certificate Distribution Account, the Certificateholders'
Interest Distributable Amount.
7. To the Certificate Distribution Account, the Certificateholders'
Principal Distributable Amount.
8. To Financial Security, any amounts owing to Financial Security under
the Insurance Agreement and not paid.
9. Any Available Funds remaining in the Collection Account after
distributing the amounts described above will be payable to the Seller as
compensation for obtaining the Policies, paying the premiums thereon and
maintaining all necessary related arrangements for the benefit of Financial
Security (such compensation, including amounts paid to Financial Security
described above, being hereinafter referred to as the "Credit Enhancement
Fee"), but shall be transferred to a financial institution acting as
collateral agent (the "Collateral Agent") on behalf of Financial Security,
the Indenture Trustee and the Owner Trustee and the trustees for other
trusts and warehousing facilities established and to be established by the
Seller. Unless an Insurer Default has occurred and is continuing, Financial
Security will control the disposition of any funds held by the Collateral
Agent.
If the Notes are accelerated following an Event of Default under the
Indenture, amounts collected will be distributed in the order described above.
The following sets forth an example of the application of the foregoing to a
hypothetical monthly distribution:
<TABLE>
<S> <C>
June 1 - June 30.......... MONTHLY PERIOD. Scheduled Payments and any prepayments and
other collections on the Receivables are received and
deposited into the Collection Account.
July 3.................... DEPOSIT DATE. On or before this date, Olympic Financial and
the Servicer will make required payments of Purchase Amounts
to the Collection Account.
</TABLE>
S-37
<PAGE>
<TABLE>
<S> <C>
July 5.................... DETERMINATION DATE. On or before this date the Servicer will
deposit all Monthly Advances and notify the Indenture
Trustee of, among other things, the amounts available in the
Collection Account and the amounts required to be
distributed on the Distribution Date.
July 10................... DRAW DATE. On this date, the Indenture Trustee will withdraw
funds, if necessary, from the Reserve Account (during the
Funding Period and subject to the limitation described under
"-- Accounts") and deposit such funds in the Collection
Account. In addition, the Indenture Trustee will make any
required claims under the Note Policy if the funds in the
Note Distribution Account (plus any amounts deposited
therein by the Collateral Agent) are insufficient to pay in
full the Noteholders' Distributable Amount. Similarly, the
Owner Trustee will make any required claims under the
Certificate Policy if the funds in the Certificate
Distribution Account (plus any amounts deposited therein by
the Collateral Agent) are insufficient to pay in full the
Certificateholders' Distributable Amount.
July 12................... RECORD DATE. Distributions on the Distribution Date will be
made to Noteholders and Certificateholders of record at the
close of business on this date.
July 15................... DISTRIBUTION DATE. The Indenture Trustee will reimburse the
Servicer for prior Monthly Advances, pay all accrued and
unpaid trustees' fees and other administrative fees of the
Trust, pay the Servicing Fee and distribute to Noteholders
all amounts in the Note Distribution Account. The Owner
Trustee will distribute all amounts in the Certificate
Distribution Account to the Certificateholders. The
Indenture Trustee will pay any amounts owing to Financial
Security and will transfer the Credit Enhancement Fee to the
Collateral Agent.
</TABLE>
For the purposes hereof, the following terms shall have the following
meanings:
"AVAILABLE FUNDS" means, with respect to any Distribution Date, the sum of
the Collected Funds, any Purchase Amounts, all Monthly Advances and all earnings
from the investment of funds in the Collection Account, the Pre-Funding Account
and the Reserve Account during the Monthly Period.
"CERTIFICATE BALANCE" equals, initially, $58,500,000 and, thereafter, equals
the initial Certificate Balance, reduced by all amounts allocable to principal
previously distributed to Certificateholders.
"CERTIFICATEHOLDERS' DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date, the sum of the Certificateholders' Principal Distributable
Amount and the Certificateholders' Interest Distributable Amount.
"CERTIFICATEHOLDERS' INTEREST CARRYOVER SHORTFALL" means, with respect to
any Distribution Date, the excess of the Certificateholders' Interest
Distributable Amount for the preceding Distribution Date, over the amount in
respect of interest on the Certificates that was actually deposited in the
Certificate Distribution Account on such preceding Distribution Date, plus
interest on such excess, to the extent permitted by law, at the Pass-Through
Rate from such preceding Distribution Date to but excluding the current
Distribution Date.
CERTIFICATEHOLDERS' INTEREST DISTRIBUTABLE AMOUNT" means, with respect to
any Distribution Date, the sum of the Certificateholders' Monthly Interest
Distributable Amount for such Distribution Date and the Certificateholders'
Interest Carryover Shortfall for such Distribution Date.
"CERTIFICATEHOLDERS' MONTHLY INTEREST DISTRIBUTABLE AMOUNT" means, with
respect to any Distribution Date, 30 days' interest (or, in the case of the
first Distribution Date, interest accrued from and including June 14,
S-38
<PAGE>
1996 to but excluding July 15, 1996) at the Pass-Through Rate on the Certificate
Balance as of the last day of the Monthly Period immediately preceding such
Distribution Date (or, in the case of the first Distribution Date, on the
initial Certificate Balance).
"CERTIFICATEHOLDERS' MONTHLY PRINCIPAL DISTRIBUTABLE AMOUNT" means, with
respect to any Distribution Date, the Certificateholders' Percentage of the
Principal Distribution Amount.
"CERTIFICATEHOLDERS' PERCENTAGE" means (i) for each Distribution Date prior
to and including the Distribution Date on which the principal balance of the
Class A-3 Notes is reduced to zero, zero, and (ii) for each Distribution Date
thereafter to and including the Distribution Date on which the Certificate
Balance is reduced to zero, a percentage equal to 100% minus the Noteholders'
Percentage for such Distribution Date.
"CERTIFICATEHOLDERS' PRINCIPAL CARRYOVER SHORTFALL" means, as of the close
of any Distribution Date, the excess of the Certificateholders' Principal
Distributable Amount for the preceding Distribution Date, over the amount in
respect of principal that was actually deposited in the Certificate Distribution
Account on such Distribution Date.
"CERTIFICATEHOLDERS' PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to
any Distribution Date (other than the Final Scheduled Distribution Date), the
sum of the Certificateholders' Monthly Principal Distributable Amount for such
Distribution Date and the Certificateholders' Principal Carryover Shortfall as
of the close of the preceding Distribution Date; PROVIDED, HOWEVER, that the
Certificateholders' Principal Distributable Amount shall not exceed the
Certificate Balance. In addition, on the Final Scheduled Distribution Date, the
Certificateholders' Principal Distributable Amount will equal the Certificate
Balance on such Distribution Date.
"LIQUIDATED RECEIVABLE" means a Receivable as to which (i) the Servicer has
repossessed the related Financed Vehicle and all applicable redemption periods
have expired, (ii) the Servicer has determined in good faith that all amounts it
expects to recover have been received or (iii) all or some portion of a
Scheduled Payment has become more than 180 days delinquent.
"NOTEHOLDERS' DISTRIBUTABLE AMOUNT" means, with respect to any Distribution
Date, the sum of the Noteholders' Principal Distributable Amount and the
Noteholders' Interest Distributable Amount.
"NOTEHOLDERS' INTEREST CARRYOVER SHORTFALL" means, with respect to any
Distribution Date and a class of Notes, the excess of the Noteholders' Interest
Distributable Amount for such class for the preceding Distribution Date, over
the amount in respect of interest that was actually deposited in the Note
Distribution Account with respect to such class on such preceding Distribution
Date, plus interest on the amount of interest due but not paid to Noteholders of
such class on the preceding Distribution Date, to the extent permitted by law,
at the Interest Rate borne by such class of Notes from such preceding
Distribution Date to but excluding the current Distribution Date.
"NOTEHOLDERS' INTEREST DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date, the sum of the Noteholders' Monthly Interest Distributable
Amount for each class of Notes for such Distribution Date and the Noteholders'
Interest Carryover Shortfall for each class of Notes for such Distribution Date.
"NOTEHOLDERS' MONTHLY INTEREST DISTRIBUTABLE AMOUNT" means, with respect to
any Distribution Date and any class of Notes, 30 days' interest (or, in the case
of the first Distribution Date, interest accrued from and including June 14,
1996 to but excluding July 15, 1996) at the Interest Rate borne by such class of
Notes on the outstanding principal balance of such class on the immediately
preceding Distribution Date, after giving effect to all payments of principal to
Noteholders of such class on or prior to such Distribution Date (or, in the case
of the first Distribution Date, the initial principal balance of such class of
Notes).
"NOTEHOLDERS' MONTHLY PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to
any Distribution Date, the Noteholders' Percentage of the Principal Distribution
Amount.
"NOTEHOLDERS' PERCENTAGE" means (i) for each Distribution Date to and
including the Distribution Date on which the principal balance of the Class A-3
Notes is reduced to zero, 100%, (ii) for each Distribution Date thereafter to
and including the Distribution Date on which the principal balance of the Class
A-5 Notes
S-39
<PAGE>
is reduced to zero, a percentage, expressed as a fraction, the numerator of
which is the aggregate outstanding principal balance of the Notes of all classes
on the last day of the related Monthly Period and the denominator of which is
the Aggregate Principal Balance (plus any remaining Pre-Funded Amount) as of the
last day of the related Monthly Period and (iii) zero for any Distribution Date
thereafter.
"NOTEHOLDERS' PRINCIPAL CARRYOVER SHORTFALL" means, as of the close of any
Distribution Date, the excess of the Noteholders' Principal Distributable Amount
for the preceding Distribution Date over the amount in respect of principal that
was actually deposited in the Note Distribution Account on such Distribution
Date.
"NOTEHOLDERS' PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date (other than the Final Scheduled Distribution Date for any
class of Notes), the sum of the Noteholders' Monthly Principal Distributable
Amount for such Distribution Date and the Noteholders' Principal Carryover
Shortfall as of the close of the preceding Distribution Date. The Noteholders'
Principal Distributable Amount on the Final Scheduled Distribution Date for any
class of Notes will equal the sum of (i) the Noteholders' Monthly Principal
Distributable Amount for such Distribution Date, (ii) the Noteholders' Principal
Carryover Shortfall as of the close of the preceding Distribution Date, and
(iii) the excess of the outstanding principal balance of such class of Notes, if
any, over the amounts described in clauses (i) and (ii).
"PRINCIPAL DISTRIBUTION AMOUNT" means, with respect to any Distribution
Date, the amount equal to the sum of the following amounts with respect to the
related Monthly Period: (i) that portion of all collections on Receivables
(other than Liquidated Receivables and Purchased Receivables) allocable to
principal, including all full and partial prepayments received during such
Monthly Period, (ii) the aggregate unpaid principal balance of all Receivables
(other than the Purchased Receivables) that became Liquidated Receivables during
the Monthly Period, (iii) the aggregate principal balances of all Receivables
that became Purchased Receivables as of the last day of the prior Monthly
Period, and, at the option of Financial Security, the principal balance of each
Receivable that was required to be, but was not, so repurchased and (iv) the
aggregate amount of any reductions in the principal balance of Receivables as a
result of a court order in an insolvency proceeding.
"PURCHASED RECEIVABLE" means a Receivable (i)(A) that Olympic Financial or
the Seller has become obligated to repurchase (or, under certain circumstances,
has elected to repurchase) as a result of an uncured breach by Olympic Financial
or the Seller of a representation or warranty made by Olympic Financial or the
Seller with respect to such Receivable or (B) that the Servicer has become
obligated to repurchase (or, under certain circumstances, has elected to
repurchase) as a result of an uncured breach of the covenants made by it with
respect to such Receivable and (ii) as to which the related Purchase Amount has
been deposited in the Collection Account by Olympic Financial, the Seller or the
Servicer, as the case may be, on or before the related Deposit Date.
STATEMENTS TO SECURITYHOLDERS
On or prior to each Distribution Date, the Servicer will prepare and provide
to the Indenture Trustee a statement to be delivered to the Noteholders and to
the Owner Trustee a statement to be delivered to the Certificateholders on such
Distribution Date. Such statements will be based on the information in the
related Servicer's Certificate setting forth certain information required under
the Trust Documents. Each such statement to be delivered to Noteholders will
include the following information as to the Notes, and each such statement to be
delivered to Certificateholders will include the following information as to the
Certificates, with respect to such Distribution Date or the period since the
previous Distribution Date, as applicable:
(i) the amount of the distribution allocable to interest on or with
respect to the Notes and the Certificates;
(ii) the amount of the distribution allocable to principal on or with
respect to the Notes and the Certificates;
(iii) the amount of the distribution payable pursuant to a claim on the
Note Policy or the Certificate Policy, as the case may be, or out of amounts
on deposit with the Collateral Agent;
S-40
<PAGE>
(iv) the aggregate outstanding principal balance and the Note Pool
Factor for each class of Notes, the Certificate Balance and the Certificate
Pool Factor for the Certificates after giving effect to all payments
reported under (ii) above on such date;
(v) the Noteholders' Interest Carryover Shortfall, the Noteholders'
Principal Carryover Shortfall, the Certificateholders' Interest Carryover
Shortfall and the Certificateholders' Principal Carryover Shortfall, if any,
and the change in such amounts from the preceding statement;
(vi) the amount of the Servicing Fee paid to the Servicer with respect
to the related Monthly Period or Periods, as the case may be;
(vii) for each such date during the Funding Period, the remaining
Pre-Funded Amount, the amount in the Pre-Funding Account and the amount
remaining in the Reserve Account (including funds in the Class A-1 Holdback
Subaccount, if any), and all investment earnings on such funds; and
(viii) for the first such date that is on or immediately following the end
of the Funding Period, the amount of any remaining Pre-Funded Amount that
has not been used to fund the purchase of Subsequent Receivables and is
being passed through as payments of principal on the Notes and Certificates.
Each amount set forth pursuant to subclauses (i) through (vi) with respect
to Certificates or Notes will be expressed as a dollar amount per $1,000 of the
initial principal amount of the Notes or initial Certificate Balance, as
applicable.
Unless and until Definitive Notes or Definitive Certificates are issued,
such reports will be sent on behalf of the Trust to Cede & Co., as registered
holder of the Notes and the Certificates and the nominee of DTC. Note Owners and
Certificate Owners may receive copies of such reports upon written request,
together with a certification that they are Note Owners or Certificate Owners,
as the case may be, and payment of any expenses associated with the distribution
of such reports, from the Indenture Trustee or Owner Trustee. See "Reports to
Securityholders" herein and "Reports to Securityholders" and "Certain
Information Regarding the Securities" in the accompanying Prospectus.
Within the required period of time after the end of each calendar year, the
Indenture Trustee and the Owner Trustee, as applicable, will furnish to each
person who at any time during such calendar year was a Noteholder or
Certificateholder, a statement as to the aggregate amounts of interest and
principal paid to such Noteholder or Certificateholder, information regarding
the amount of servicing compensation received by the Servicer and such other
information as the Seller deems necessary to enable such Noteholder or
Certificateholder to prepare its tax returns. See "Certain Federal Income Tax
Consequences" herein.
THE POLICIES
NOTE POLICY
The following paragraphs summarize the material terms of the Note Policy.
This summary is qualified by reference to the provisions of the Note Policy, a
form of which has been filed as an exhibit to the Registration Statement of
which this Prospectus Supplement is a part.
Simultaneously with the issuance of the Notes, Financial Security will
deliver the Note Policy to the Indenture Trustee for the benefit of each
Noteholder. Under the Note Policy, Financial Security will unconditionally and
irrevocably guarantee to the Indenture Trustee for the benefit of each
Noteholder the full and complete payment of (i) Scheduled Payments (as defined
below) on the Notes and (ii) the amount of any Scheduled Payment which
subsequently is avoided in whole or in part as a preference payment under
applicable law. In the event the Indenture Trustee fails to make a claim under
the Note Policy, Noteholders do not have the right to make a claim directly
under the Note Policy, but may sue to compel the Indenture Trustee to do so.
"Scheduled Payments" means payments which are scheduled to be made on the
Notes during the term of the Note Policy in accordance with the original terms
of the Notes when issued and without regard to any subsequent amendment or
modification of the Notes or the Indenture that has not been consented to by
Financial Security, which payments are (i) the Noteholders' Interest
Distributable Amount and (ii) the
S-41
<PAGE>
Noteholders' Principal Distributable Amount; Scheduled Payments do not include
payments which become due on an accelerated basis as a result of (a) a default
by the Issuer, (b) an election by the Issuer to pay principal on an accelerated
basis, (c) the occurrence of an Event of Default under the Indenture or (d) any
other cause, unless Financial Security elects, in its sole discretion, to pay in
whole or in part such principal due upon acceleration, together with any accrued
interest to the date of acceleration. In the event Financial Security does not
so elect, the Note Policy will continue to guarantee Scheduled Payments due on
the Notes in accordance with their original terms. Scheduled Payments shall not
include (x) any portion of a Noteholders' Interest Distributable Amount due to
Noteholders because the appropriate notice and certificate for payment in proper
form was not timely Received (as defined below) by Financial Security, (y) any
portion of a Noteholders' Interest Distributable Amount due to Noteholders
representing interest on any Noteholders' Interest Carryover Shortfall accrued
from and including the date of payment of the amount of such Noteholders'
Interest Carryover Shortfall pursuant to the Note Policy, or (z) any Note
Prepayment Amounts or any Note Prepayment Premiums, unless, in each case,
Financial Security elects, in its sole discretion, to pay such amount in whole
or in part.
Payment of claims on the Note Policy made in respect of Scheduled Payments
will be made by Financial Security following Receipt by Financial Security of
the appropriate notice for payment on the later to occur of (i) 12:00 noon, New
York City time, on the third Business Day following Receipt of such notice for
payment, and (ii) 12:00 noon, New York City time, on the date on which such
payment was due on the Notes.
If payment of any amount avoided as a preference under applicable
bankruptcy, insolvency, receivership or similar law is required to be made under
the Note Policy, Financial Security shall cause such payment to be made no
earlier than the first to occur of (a) the fourth Business Day following Receipt
by Financial Security from the Indenture Trustee of (i) a certified copy of the
order (the "Order") of the court or other governmental body which exercised
jurisdiction to the effect that the Noteholder is required to return principal
or interest paid on the Notes during the term of the Note Policy because such
payments were avoidable as preference payments under applicable bankruptcy law,
(ii) a certificate of the Noteholder that the Order has been entered and is not
subject to any stay and (iii) an assignment duly executed and delivered by the
Noteholder, in such form as is reasonably required by Financial Security and
provided to the Noteholder by Financial Security, irrevocably assigning to
Financial Security all rights and claims of the Noteholder relating to or
arising under the Notes against the Trust or otherwise with respect to such
preference payment, or (b) the date of Receipt (as defined below) by Financial
Security from the Indenture Trustee of the items referred to in clauses (i),
(ii) and (iii) above if, at least four Business Days prior to such date of
Receipt, Financial Security shall have received written notice from the
Indenture Trustee that such items were to be delivered on such date and such
date was specified in such notice. Such payment shall be disbursed to the
receiver, conservator, debtor-in-possession or trustee in bankruptcy named in
the Order and not to the Indenture Trustee or any Noteholder directly (unless a
Noteholder has previously paid such amount to the receiver, conservator,
debtor-in-possession or trustee in bankruptcy named in the Order, in which case
such payment shall be disbursed to the Indenture Trustee for distribution to
such Noteholder upon proof of such payment reasonably satisfactory to Financial
Security). In connection with the foregoing, Financial Security shall have the
rights provided in the Indenture.
CERTIFICATE POLICY
The following paragraphs summarize the material terms of the Certificate
Policy. The summary is qualified by reference to the provisions of the
Certificate Policy, a form of which has been filed as an exhibit to the
Registration Statement of which this Prospectus Supplement is a part.
Simultaneously with the issuance of the Certificates, Financial Security
will deliver the Certificate Policy to the Owner Trustee for the benefit of each
Certificateholder. Under the Certificate Policy, Financial Security will
unconditionally and irrevocably guarantee to the Owner Trustee for the benefit
of each Certificateholder the full and complete payment of (i) Guaranteed
Distributions (as defined below) with respect to the Certificates and (ii) the
amount of any Guaranteed Distribution which subsequently is avoided in whole or
in part as a preference payment under applicable law. In the event that the
Owner Trustee fails to make a claim under the Certificate Policy,
Certificateholders do not have the right to make a claim directly under the
Certificate Policy but may sue to compel the Owner Trustee to do so.
S-42
<PAGE>
"Guaranteed Distributions" means the distributions to be made on the
Certificates with respect to a Distribution Date during the term of the
Certificate Policy in accordance with the original terms of the Certificates
when issued and without regard to any subsequent amendment or modification of
the Certificates or the Trust Agreement which has not been consented to by
Financial Security, which distributions are equal to (i) the Certificateholders'
Interest Distributable Amount with respect to such Distribution Date and (ii)
the Certificateholders' Principal Distributable Amount with respect to such
Distribution Date, provided, however, that Guaranteed Distributions shall not
include (x) any portion of a Certificateholders' Interest Distributable Amount
due to Certificateholders because the appropriate notice and certificate for
payment in proper form was not timely Received (as defined below) by Financial
Security, (y) any portion of a Certificateholders' Interest Distributable Amount
due to Certificateholders representing interest on any Certificateholders'
Interest Carryover Shortfall accrued from and including the date of payment of
the amount of such Certificateholders' Interest Carryover Shortfall pursuant to
the Certificate Policy, or (z) any Certificate Prepayment Amount or any
Certificate Prepayment Premium, unless, in each case, Financial Security elects,
in its sole discretion, to pay such amount in whole or in part.
Payment of claims on the Certificate Policy made in respect of Guaranteed
Distributions will be made by Financial Security following Receipt by Financial
Security of the appropriate notice for payment on the later to occur of (i)
12:00 noon New York City time, on the third Business Day following Receipt (as
defined below) of such notice for payment, or (ii) 12:00 noon, New York City
time, on the date on which such payment was due on the Certificates.
If payment of any amount avoided as a preference under applicable
bankruptcy, insolvency, receivership or similar law is required to be made under
the Certificate Policy, Financial Security shall cause such payment to be made
no earlier than the first to occur of (a) the fourth Business Day following
Receipt by Financial Security from the Owner Trustee of (i) a certified copy of
the order (the "Order") of the court or other governmental body which exercised
jurisdiction to the effect that the Certificateholder is required to return the
amount of any Guaranteed Distributions distributed with respect to the
Certificates during the term of the Certificate Policy because such
distributions were avoidable as preference payments under applicable bankruptcy
law, (ii) a certificate of the Certificateholder that the Order has been entered
and is not subject to any stay and (iii) an assignment duly executed and
delivered by the Certificateholder, in such form as is reasonably required by
Financial Security and provided to the Certificateholder by Financial Security,
irrevocably assigning to Financial Security all rights and claims of the
Certificateholder relating to or arising under the Certificates against the
debtor which made such preference payment or otherwise with respect to such
preference payment, or (b) the date of Receipt by Financial Security from the
Owner Trustee of the items referred to in clauses (i), (ii) and (iii) above if,
at least four Business Days prior to such date of Receipt, Financial Security
shall have Received written notice from the Owner Trustee that such items were
to be delivered on such date and such date was specified in such notice. Such
payment shall be disbursed to the receiver, conservator, debtor-in-possession or
trustee in bankruptcy named in the Order and not to the Owner Trustee or any
Certificateholder directly (unless a Certificateholder has previously paid such
amount to the receiver, conservator, debtor-in-possession or trustee in
bankruptcy named in the Order in which case such payment shall be disbursed to
the Owner Trustee for distribution to such Certificateholder upon proof of such
payment reasonably satisfactory to Financial Security). In connection with the
foregoing, Financial Security shall have the rights provided in the Sale and
Servicing Agreement.
OTHER PROVISIONS OF THE POLICIES
The terms "Receipt" and "Received," with respect to a Policy, shall mean
actual delivery to Financial Security and to its fiscal agent, if any, prior to
12:00 noon, New York City time, on a Business Day; delivery either on a day that
is not a Business Day or after 12:00 noon, New York City time, shall be deemed
to be Received on the next succeeding Business Day. If any notice or certificate
given under a Policy by the Indenture Trustee or the Owner Trustee, as the case
may be, is not in proper form or is not properly completed, executed or
delivered, it shall be deemed not to have been Received, and Financial Security
or its fiscal agent shall promptly so advise the Indenture Trustee or the Owner
Trustee and the Indenture Trustee or the Owner Trustee may submit an amended
notice.
S-43
<PAGE>
Under the Policies, "Business Day" means any day other than a Saturday,
Sunday, legal holiday or other day on which commercial banking institutions in
the City of New York or Minneapolis, Minnesota or any other location of any
successor Servicer, successor Owner Trustee or successor Collateral Agent are
authorized or obligated by law, executive order or governmental decree to be
closed.
Financial Security's obligations under the respective Policies in respect of
Scheduled Payments and Guaranteed Distributions shall be discharged to the
extent funds are transferred to the Indenture Trustee or the Owner Trustee as
provided in the related Policy whether or not such funds are properly applied by
the Indenture Trustee or the Owner Trustee.
Financial Security shall be subrogated to the rights of each Noteholder or
Certificateholder to receive payments of principal and interest to the extent of
any payment by Financial Security under the related Policy.
Claims under the Policies constitute direct, unsecured and unsubordinated
obligations of Financial Security ranking not less than PARI PASSU with other
unsecured and unsubordinated indebtedness of Financial Security for borrowed
money. Claims against Financial Security under each other financial guaranty
insurance policy issued thereby constitute PARI PASSU claims against the general
assets of Financial Security. The terms of the Policies cannot be modified or
altered by any other agreement or instrument, or by the merger, consolidation or
dissolution of the Trust. The Note Policy may not be canceled or revoked prior
to distribution in full of all Scheduled Payments, and the Certificate Policy
may not be canceled or revoked prior to distribution in full of all Guaranteed
Distributions. THE POLICIES ARE NOT COVERED BY THE PROPERTY/ CASUALTY INSURANCE
SECURITY FUND SPECIFIED IN ARTICLE 76 OF THE NEW YORK INSURANCE LAW. The
Policies are governed by the laws of the State of New York.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a general discussion of certain federal income tax
consequences relating to the purchase, ownership, and disposition of the Notes
and the Certificates. The discussion is based upon the current provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), the Treasury regulations
promulgated thereunder and judicial or ruling authority, all of which are
subject to change, which change may be retroactive. The discussion does not
purport to deal with federal income tax consequences applicable to all
categories of investors, some of which may be subject to special rules.
Moreover, there are no cases or Internal Revenue Service (the "Service") rulings
on similar transactions involving a trust issuing both debt and equity interests
with terms similar to those of the Notes and the Certificates. As a result, the
Service may disagree with all or a part of the discussion below. Investors
should consult their own tax advisors to determine the federal, state, local,
and any other tax consequences of the purchase, ownership, and disposition of
the Notes and the Certificates.
The Trust will be provided with an opinion of Dorsey & Whitney LLP, counsel
to the Seller, regarding certain federal income tax matters discussed below.
Such an opinion, however, is not binding on the Service or the courts. No ruling
on any of the issues discussed below will be sought from the Service.
TAX CHARACTERIZATION OF THE TRUST
Dorsey & Whitney LLP will deliver its opinion that the Trust will not be an
association (or publicly traded partnership) taxable as a corporation for
federal income tax purposes, with the result that the Trust itself will not be
subject to federal income tax but, instead, each Certificateholder will be
required to take into account its distributive share of items of income and
deduction (including deductions for distributions of interest to the
Noteholders) of the Trust as though such items had been realized directly by the
Certificateholder. This opinion will be based on the assumption that the terms
of the Trust Agreement and related documents will be complied with, and on
counsel's conclusions that (1) the Trust will not have certain characteristics
necessary for a business trust to be classified as an association taxable as a
corporation and (2) the nature of the income of the Trust will exempt it from
the rule that certain publicly traded partnerships are taxable as corporations.
S-44
<PAGE>
If the Trust were taxable as a corporation for federal income tax purposes,
the Trust would be subject to corporate income tax on its taxable income. The
Trust's taxable income would include all its income on the Receivables, possibly
reduced by its interest expense on the Notes. Any such corporate income tax
could materially reduce cash available to make payments on the Notes and
distributions on the Certificates.
TAX CONSEQUENCES TO NOTEHOLDERS
TREATMENT OF THE NOTES AS INDEBTEDNESS. The Owner Trustee, on behalf of the
Trust, will agree, and the Noteholders will agree by their purchase of Notes, to
treat the Notes as debt for federal income tax purposes. Dorsey & Whitney LLP
will deliver its opinion that the Notes will be classified as debt for federal
income tax purposes. The discussion below assumes this characterization of the
Notes is correct.
INTEREST INCOME ON THE NOTES. As a general rule, interest paid or accrued
on the Notes, as well as market discount and original issue discount, if any,
will be treated as ordinary income to the Noteholders. A Noteholder using the
accrual method of accounting for federal income tax purposes is required to
include interest paid or accrued on the Notes in ordinary income as such
interest accrues, while a Noteholder using the cash receipts and disbursements
method of accounting for federal income tax purposes must include such interest
in ordinary income when payments are received (or made available for receipt) by
such Noteholder. It is anticipated that the Notes will not be issued with
"original issue discount" ("OID") within the meaning of Section 1273 of the
Code, and that the Trust will not take any OID deduction with respect to the
Notes.
MARKET DISCOUNT. The Notes, whether or not issued with original issue
discount, will be subject to the "market discount rules" of Section 1276 of the
Code. In general, these rules provide that if a Noteholder purchases the Note at
a market discount (i.e., a discount from its original issue price plus any
accrued original issue discount) that exceeds a de minimis amount specified in
the Code, and thereafter recognizes gain upon a disposition, the lesser of (i)
such gain or (ii) the accrued market discount will be taxed as ordinary interest
income. Generally, the accrued market discount will be the total market discount
on the Note multiplied by a fraction, the numerator of which is the number of
days the Noteholder held the Note and the denominator of which is the number of
days after the date the Noteholder acquired the Note until and including its
maturity date. The Noteholder may elect, however, to determine accrued market
discount under the constant-yield method, which election shall not be revoked
without the consent of the Service.
Limitations imposed by the Code which are intended to match deductions with
the taxation of income may defer deductions for interest on indebtedness
incurred or continued, or short-sale expenses incurred, to purchase or carry a
Note with accrued market discount. A Noteholder may elect to include market
discount in gross income as it accrues and, if such Noteholder makes such an
election, is exempt from this rule. The adjusted basis of a Note subject to such
election will be increased to reflect market discount included in gross income,
thereby reducing any gain or increasing any loss on a sale or taxable
disposition. Any such election to include market discount in gross income as it
accrues shall apply to all debt instruments held by the Noteholder at the
beginning of the first taxable year to which the election applies or thereafter
acquired and is irrevocable without the consent of the Service.
AMORTIZABLE BOND PREMIUM. In general, if a Noteholder purchases a Note at a
premium (i.e., an amount in excess of the amount payable upon the maturity
thereof), such Noteholder will be considered to have purchased such Note with
"amortizable bond premium" equal to the amount of such excess. Such Noteholder
may elect to deduct the amortizable bond premium as it accrues under a
constant-yield method over the remaining term of the Note. Such Noteholder's tax
basis in the Note will be reduced by the amount of the amortizable bond premium
deducted. Any such election shall apply to all debt instruments (other than
instruments the interest on which is excludible from gross income) held by the
Noteholder at the beginning of the first taxable year to which the election
applies or thereafter acquired and is irrevocable without the consent of the
Service. Bond premium on a Note held by a Noteholder who does not elect to
deduct the premium will decrease the gain or increase the loss otherwise
recognized on the disposition of the Note.
SALE OR OTHER DISPOSITION. If a Noteholder sells a Note, the Noteholder
will recognize gain or loss in an amount equal to the difference between the
amount realized on the sale and the Noteholder's adjusted tax
S-45
<PAGE>
basis in the Note. The adjusted tax basis of a Note to a particular Noteholder
generally will equal the Noteholder's cost for the Note, increased by any market
discount, OID and gain previously included by such Noteholder in income with
respect to the Note and decreased by principal payments previously received by
such Noteholder and the amount of bond premium previously amortized with respect
to the Note. Any such gain or loss will be capital gain or loss if the Note was
held as a capital asset, except for gain representing accrued interest and
accrued market discount not previously included in income, and will be long-term
capital gain or loss if the Note was held for more than one year. Capital losses
generally may be used only to offset capital gains.
FOREIGN HOLDERS. Generally, interest paid to a Noteholder who is a
nonresident alien individual or a foreign corporation and who does not hold the
Note in connection with a United States trade or business will be treated as
"portfolio interest" and therefore will be exempt from the 30% withholding tax.
Such a Noteholder will be entitled to receive interest payments on the Notes
free of United States federal income tax provided that such Noteholder
periodically provides the Indenture Trustee (or other person who would otherwise
be required to withhold tax) with a statement certifying under penalty of
perjury that such Noteholder is not a United States person and providing the
name and address of such Noteholder and will not be subject to federal income
tax on gain from the disposition of a Note unless the Noteholder is an
individual who is present in the United States for 183 days or more during the
taxable year in which the disposition takes place and certain other requirements
are met.
TAX ADMINISTRATION AND REPORTING. The Indenture Trustee will furnish to
each Noteholder with each distribution a statement setting forth the amount of
such distribution allocable to principal and to interest. Reports will be made
annually to the Service and to holders of record that are not excepted from the
reporting requirements regarding such information as may be required with
respect to interest and original issue discount, if any, with respect to the
Notes.
BACKUP WITHHOLDING. Under certain circumstances, a Noteholder may be
subject to "backup withholding" at a 31% rate. Backup withholding may apply to a
Noteholder who is a United States person if the holder, among other
circumstances, fails to furnish his Social Security number or other taxpayer
identification number to the Indenture Trustee. Backup withholding may apply,
under certain circumstances, to a Noteholder who is a foreign person if the
Noteholder fails to provide the Indenture Trustee or the Noteholder's securities
broker with the statement necessary to establish the exemption from federal
income and withholding tax on interest on the Note. Backup withholding, however,
does not apply to payments on a Note made to certain exempt recipients, such as
corporations and tax-exempt organizations, and to certain foreign persons.
Noteholders should consult their tax advisors for additional information
concerning the potential application of backup withholding to payments received
by them with respect to a Note.
POSSIBLE ALTERNATIVE TREATMENT OF THE NOTES. If, contrary to the opinion of
Dorsey & Whitney LLP, the Service successfully asserted that the Notes did not
represent debt for federal income tax purposes, the Notes might be treated as
equity interests in the Trust. If so treated, the Trust might be taxable as a
corporation with the adverse consequences described above (and the taxable
corporation would not be able to reduce its taxable income by deductions for
interest expense on Notes recharacterized as equity). Alternatively, and most
likely in the view of Dorsey & Whitney LLP, the Trust might be treated as a
publicly traded partnership that would not be taxable as a corporation because
it would meet certain qualifying income tests. Nonetheless, treatment of the
Notes as equity interests in such a partnership could have adverse tax
consequences to certain holders. For example, income to foreign holders
generally would be subject to federal tax and federal tax return filing and
withholding requirements, and individual holders might be subject to certain
limitations on their ability to deduct their share of Trust expenses.
TAX CONSEQUENCES TO HOLDERS OF THE CERTIFICATES
TREATMENT OF THE TRUST AS A PARTNERSHIP. The Seller, the General Partners
and the Owner Trustee will agree, and the Certificateholders will agree by their
purchase of Certificates, to treat the Trust as a partnership for purposes of
federal and state income tax, franchise tax and any other tax measured in whole
or in part by income, with the assets of the partnership being the assets held
by the Trust, the partners of the
S-46
<PAGE>
partnership being the Certificateholders and the General Partners, and the Notes
being debt of the partnership. The proper characterization of the arrangement
involving the Trust, the Certificates, the Notes, the General Partners, the
Seller and the Servicer, however, is not certain because there is no authority
on transactions closely comparable to that contemplated herein.
A variety of alternative characterizations are possible. For example,
because the Certificates have certain features characteristic of debt, the
Certificates might be considered debt of the Trust. Any such characterization
would not result in materially adverse tax consequences to Certificateholders as
compared to the consequences from treatment of the Certificates as equity in a
partnership, described below. The following discussion assumes that the
Certificates represent equity interests in a partnership.
PARTNERSHIP TAXATION. As a partnership, the Trust will not be subject to
federal income tax. Rather, each Certificateholder will be required to
separately take into account such holder's allocated share of income, gains,
losses, deductions and credits of the Trust. The Trust's income will consist
primarily of interest and finance charges earned on the Receivables (including
appropriate adjustments for market discount, OID and bond premium) and any gain
upon collection or disposition of Receivables. The Trust's deductions will
consist primarily of interest accruing with respect to the Notes, servicing and
other fees, and losses or deductions upon collection or disposition of
Receivables.
The tax items of a partnership are allocable to the partners in accordance
with the Code, Treasury regulations and the partnership agreement (here, the
Trust Agreement and related documents). The Trust Agreement will provide, in
general, that the Certificateholders will be allocated taxable income of the
Trust for each month equal to the sum of (i) the interest that accrues on the
Certificates in accordance with their terms for such month, including interest
accruing at the Pass-Through Rate for such month and interest on amounts
previously due on the Certificates but not yet distributed; (ii) any Trust
income attributable to discount on the Receivables that corresponds to any
excess of the principal amount of the Certificates over their initial issue
price; (iii) Certificate Prepayment Premium payable to the Certificateholders
for such month; and (iv) any other amounts of income payable to the
Certificateholders for such month. Although it is not anticipated that the
Certificates will be issued at a price which exceeds their principal amount,
such allocations of Trust income to the Certificateholders will be reduced by
any amortization by the Trust of premium on Receivables that corresponds to any
such excess of the issue price of Certificates over their principal amount. All
remaining taxable income of the Trust will be allocated to the General Partners.
Based on the economic arrangement of the parties, this approach for allocating
Trust income should be permissible under applicable Treasury regulations,
although no assurance can be given that the Service would not require a greater
amount of income to be allocated to Certificateholders. Moreover, even under the
foregoing method of allocation, Certificateholders may be allocated income equal
to the entire Pass-Through Rate plus the other items described above even though
the Trust might not have sufficient cash to make current cash distributions of
such amount. Thus, cash basis holders will in effect be required to report
income from the Certificates on the accrual basis, and Certificateholders may
become liable for taxes on Trust income even if they have not received cash from
the Trust to pay such taxes. In addition, because tax allocations and tax
reporting will be done on a uniform basis for all Certificateholders but
Certificateholders may be purchasing Certificates at different times and at
different prices, Certificateholders may be required to report on their tax
returns taxable income that is greater or less than the amount reported to them
by the Trust.
A Certificateholder's share of expenses of the Trust (including fees to the
Servicer but not interest expense) will be miscellaneous itemized deductions. An
individual, an estate, or a trust that holds a Certificate either directly or
through a pass-through entity will be allowed to deduct such expenses under
Section 212 of the Code only to the extent that, in the aggregate and combined
with certain other itemized deductions, they exceed 2% of the adjusted gross
income of the Certificateholder. In addition, Section 68 of the Code provides
that the amount of itemized deductions (including those provided for in Section
212 of the Code) otherwise allowable for the taxable year for an individual
whose adjusted gross income exceeds a threshold amount determined under the Code
($117,950 in 1996, in the case of a joint return) will be reduced by the lesser
of (i) 3% of the excess of adjusted gross income over the specified threshold
amount or (ii) 80% of the amount of itemized deductions otherwise allowable for
such taxable year. To the extent that a
S-47
<PAGE>
Certificateholder is not permitted to deduct servicing fees allocable to a
Certificate, the taxable income of the Certificateholder attributable to that
Certificate will exceed the net cash distributions related to such income.
Certificateholders may deduct any loss on disposition of the Receivables to the
extent permitted under the Code.
DISCOUNT AND PREMIUM. It is believed that the Receivables were not issued
with OID, and, therefore, the Trust should not have OID income. The purchase
price paid by the Trust for the Receivables may exceed the remaining principal
balance of the Receivables at the time of purchase. If the Trust is deemed to
acquire the Receivables at such a premium or at a market discount, the Trust
will elect to offset any such premium against interest income on the Receivables
or to include any such discount in income currently as it accrues over the life
of the Receivables. The Trust will make this premium or market discount
calculation on an aggregate basis but may be required to recompute it on a
Receivable-by-Receivable basis. As indicated above, a portion of such premium
deduction or market discount income may be allocated to Certificateholders.
DISTRIBUTIONS TO CERTIFICATEHOLDERS. Certificateholders generally will not
recognize gain or loss with respect to distributions from the Trust. A
Certificateholder will recognize gain, however, to the extent that any money
distributed exceeds the Certificateholder's adjusted basis in its Certificates
(as described below under "Disposition of Certificates") immediately before the
distribution. A Certificateholder will recognize loss upon termination of the
Trust or termination of any Certificateholder's interest in the Trust if the
Trust only distributes money to the Certificateholder and the amount distributed
is less than the Certificateholder's adjusted basis in the Certificates. Any
such gain or loss generally will be capital gain or loss if the Certificates are
held as capital assets and will be long-term gain or loss if the holding period
of the Certificates is more than one year.
SECTION 708 TERMINATION. Under Section 708 of the Code, the Trust will be
deemed to terminate for federal income tax purposes if 50% or more of the
capital and profits interests in the Trust are sold or exchanged within a
12-month period. If such a termination occurs, the Trust will be considered to
distribute its assets to the partners, who would then be treated as
recontributing those assets to the Trust, as a new partnership. Such deemed
distribution and recontribution should not result in material adverse tax
consequences to Certificateholders (although it may accelerate the recognition
of income from the Trust for Certificateholders whose taxable year is different
than that of the Trust). Because the Trust may not have the necessary data, the
Trust will not comply with certain technical requirements that may apply when
such a constructive termination occurs. As a result, the Trust may be subject to
certain tax penalties and may incur additional expenses if it is required to
comply with those requirements.
DISPOSITION OF CERTIFICATES. If a Certificateholder sells a Certificate,
the Certificateholder generally will recognize capital gain or loss in an amount
equal to the difference between the amount realized on the sale and the seller's
tax basis in the Certificate. A Certificateholder's tax basis in a Certificate
generally will equal the Certificateholder's cost increased by the
Certificateholder's share of Trust income and decreased by any distributions
received with respect to such Certificate. In addition, both the tax basis in
the Certificate and the amount realized on a sale of a Certificate would include
the Certificateholder's share of the Notes and other liabilities of the Trust. A
Certificateholder acquiring Certificates at different prices may be required to
maintain a single aggregate adjusted tax basis in such Certificates, and, upon
sale or other disposition of some of the Certificates, allocate a portion of
such aggregate tax basis to the Certificates sold (rather than maintain a
separate tax basis in each Certificate for purposes of computing gain or loss on
a sale of that Certificate).
Any gain on the sale of a Certificate attributable to the
Certificateholder's share of unrecognized accrued market discount on the
Receivables would generally be treated as ordinary income to the
Certificateholder and would give rise to special tax reporting requirements. The
Trust does not expect to have any other assets that would give rise to such
special reporting requirements. Thus, to avoid those special reporting
requirements, the Trust will elect to include market discount in income as it
accrues.
S-48
<PAGE>
If a Certificateholder is required to recognize an aggregate amount of
income (not including income attributable to disallowed itemized deductions
described above) over the life of the Certificates that exceeds the aggregate
cash distributions with respect thereto, such excess generally will give rise to
a capital loss upon the retirement of the Certificates.
ALLOCATIONS BETWEEN TRANSFERORS AND TRANSFEREES. In general, the Trust's
taxable income and losses will be determined monthly, and the tax items for a
particular calendar month will be apportioned among the Certificateholders in
proportion to the principal amount of Certificates owned by them as of the close
of the related Record Date. As a result, a Certificateholder purchasing a
Certificate may be allocated tax items (which will affect the
Certificateholder's tax liability and tax basis) attributable to periods before
the Certificateholder actually owns the Certificate. The use of such a
convention may not be permitted by existing regulations. If a monthly convention
is not permitted (or only applies to transfers of less than all of the
Certificateholder's interest), taxable income or losses of the Trust may be
reallocated among the Certificateholders. The General Partners are authorized to
revise the Trust's method of allocation between transferors and transferees to
conform to a method permitted by future regulations.
SECTION 754 ELECTION. In the event that a Certificateholder sells a
Certificate at a profit or loss, the purchasing Certificateholder will have a
higher or lower basis in the Certificate than the selling Certificateholder had.
The tax basis of the Trust's assets will not be adjusted to reflect that higher
or lower basis unless the Trust files an election under Section 754 of the Code.
In order to avoid the administrative complexities that would be involved in
keeping accurate accounting records, as well as potentially onerous information
reporting requirements, the Trust will not make such election. As a result,
Certificateholders may be allocated a greater or lesser amount of Trust income
than would be appropriate based on their own purchase price for Certificates.
ADMINISTRATIVE MATTERS. Pursuant to an administration agreement (the
"Administration Agreement"), Mellon Bank (DE), National Association will monitor
the performance of the following responsibilities of the Trust by other service
providers. The Trust is required to keep or have kept complete and accurate
books of the Trust. Such books will be maintained for financial reporting and
tax purposes on an accrual basis and the fiscal year of the Trust will be the
calendar year. The Trust will file a partnership information return (IRS Form
1065) with the Service for each taxable year of the Trust and will report each
Certificateholder's allocable share of items of Trust income and expense to
Certificateholders and the Service on Schedule K-1. The Trust will provide the
Schedule K-1 information to nominees that fail to provide the Trust with certain
required information statements relating to identification of beneficial owners
of Certificates and such nominees will be required to forward such information
to such beneficial owners. Generally, Certificateholders must file tax returns
that are consistent with the information return filed by the Trust or be subject
to penalties unless the Certificateholder notifies the Service of all such
inconsistencies.
Olympic First GP Inc. will be designated as the tax matters partner in the
Trust Agreement and, as such, will be responsible for representing the
Certificateholders in any dispute with the Service. The Code provides for
administrative examination of a partnership as if the partnership were a
separate and distinct taxpayer. Generally, the statute of limitations for
partnership items does not expire before three years after the date on which the
partnership information return is filed. Any adverse determination following an
audit of the return of the Trust by the appropriate taxing authorities could
result in an adjustment of the returns of the Certificateholders, and, under
certain circumstances, a Certificateholder may be precluded from separately
litigating a proposed adjustment to the items of the Trust. An adjustment could
also result in an audit of a Certificateholder's returns and adjustments of
items not related to the income and losses of the Trust.
TAX CONSEQUENCES TO FOREIGN CERTIFICATEHOLDERS. It is not clear whether the
Trust will be considered to be engaged in a trade or business in the United
States for purposes of federal withholding taxes with respect to non-U.S.
persons because there is no clear authority dealing with that issue under facts
substantially similar to those described herein. Although it is not expected
that the Trust will be engaged in a trade or business in the United States for
such purposes, the Trust will withhold as if it were so engaged in order to
protect the Trust from possible adverse consequences of a failure to withhold.
It is expected that the Trust will withhold on the portion of its taxable income
that is allocable to foreign Certificateholders pursuant to Section 1446 of
S-49
<PAGE>
the Code, as if such income were effectively connected to a U.S. trade or
business, at a rate of 35% for foreign holders that are taxable as corporations
and 39.6% for all other foreign Certificateholders. Subsequent adoption of
Treasury regulations or the issuance of other administrative pronouncements may
require the Trust to change its withholding procedures. In determining a
Certificateholder's nonforeign status, the Trust may rely on Form W-8, Form W-9
or the Certificateholder's certification of nonforeign status signed under
penalties of perjury.
Each foreign Certificateholder might be required to file a U.S. individual
or corporate income tax return (including, in the case of a corporation, the
branch profits tax) on its share of the Trust's income. Each foreign
Certificateholder must obtain a taxpayer identification number from the Service
and submit that number to the Trust on Form W-8 in order to assure appropriate
crediting of the taxes withheld. A foreign Certificateholder generally will be
entitled to file with the Service a claim for refund with respect to taxes
withheld by the Trust, taking the position that no taxes are due because the
Trust is not engaged in a U.S. trade or business. However, the Service may
assert that additional taxes are due, and no assurance can be given as to the
appropriate amount of tax liability.
BACKUP WITHHOLDING. Under certain circumstances, a Certificateholder may be
subject to "backup withholding" at a 31% rate. Backup withholding may apply to a
Certificateholder who is a United States person if the holder, among other
circumstances, fails to furnish his Social Security number or other taxpayer
identification number to the Trustee. Backup withholding, however, does not
apply to payments on a Certificate made to certain exempt recipients, such as
corporations and tax-exempt organizations. Certificateholders should consult
their tax advisors for additional information concerning the potential
application of backup withholding to payments received by them with respect to a
Certificate.
PROPOSED TAX LEGISLATION. Legislation previously introduced in Congress
would apply special rules to "large partnerships," defined as partnerships with
at least 250 partners during a taxable year (counting towards such total each
owner during the year of a partnership interest that is transferred during the
year). Under the legislation, certain computations are made at the partnership
level rather than the partner level. In particular, taxable income is calculated
at the partnership level and is calculated generally in the same manner as for
an individual, except that 70% of miscellaneous itemized deductions (such as
expenses for the production of nonbusiness income) are disallowed. As a result,
all partners in a large partnership (including corporations) might have a
portion of their share of partnership deductions disallowed. Moreover, large
partnerships would become subject to new audit procedures; among other things,
an adjustment to taxable income of the partnership for a prior year would flow
through to current partners in the year the audit was settled, and the
partnership itself (rather than the partners) would be subject to any applicable
interest or penalties. Under the previous proposal, these rules would apply to
partnership taxable years ending on or after December 31, 1994. No prediction
can be made whether such legislation will be enacted, the form in which it might
be enacted, or the ultimate effective date of such legislation.
THE FEDERAL TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A NOTEHOLDER'S OR
CERTIFICATEHOLDER'S PARTICULAR TAX SITUATION. PROSPECTIVE PURCHASERS SHOULD
CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE
PURCHASE, OWNERSHIP AND DISPOSITION OF NOTES AND CERTIFICATES, INCLUDING THE TAX
CONSEQUENCES UNDER STATE, LOCAL, FOREIGN, AND OTHER TAX LAWS AND THE POSSIBLE
EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX LAWS.
ERISA CONSIDERATIONS
Section 406 of ERISA, and/or Section 4975 of the Code, prohibits a pension,
profit-sharing or other employee benefit plan, as well as individual retirement
accounts and certain types of Keogh Plans (each a "Benefit Plan") from engaging
in certain transactions with persons that are "parties in interest" under ERISA
or "disqualified persons" under the Code with respect to such Benefit Plan. A
violation of these "prohibited transaction" rules may result in an excise tax or
other penalties and liabilities under ERISA and
S-50
<PAGE>
the Code for such persons. Title I of ERISA also requires that fiduciaries of a
Benefit Plan subject to ERISA make investments that are prudent, diversified
(except if prudent not to do so) and in accordance with governing plan
documents.
Certain transactions involving the purchase, holding or transfer of the
Securities might be deemed to constitute prohibited transactions under ERISA and
the Code if assets of the Trust were deemed to be assets of a Benefit Plan.
Under a regulation issued by the United States Department of Labor (the "Plan
Assets Regulation"), the assets of the Trust would be treated as plan assets of
a Benefit Plan for the purposes of ERISA and the Code only if the Benefit Plan
acquires an "Equity Interest" in the Trust and none of the exceptions contained
in the Plan Assets Regulation is applicable. An equity interest is defined under
the Plan Assets Regulation as an interest other than an instrument which is
treated as indebtedness under applicable local law and which has no substantial
equity features. The Seller believes that the Notes should be treated as
indebtedness without substantial equity features for purposes of the Plan Assets
Regulation. However, without regard to whether the Notes are treated as an
Equity Interest for such purposes, the acquisition or holding of Notes by or on
behalf of a Benefit Plan could be considered to give rise to a prohibited
transaction if the Trust, the Owner Trustee or the Indenture Trustee, the owner
of collateral, or any of their respective affiliates is or becomes a party in
interest or a disqualified person with respect to such Benefit Plan. In such
case, certain exemptions from the prohibited transaction rules could be
applicable depending on the type and circumstances of the plan fiduciary making
the decision to acquire a Note. Included among these exemptions are: Prohibited
Transaction Class Exemption ("PTCE") 90-1, regarding investments by insurance
company pooled separate accounts; PTCE 95-60 regarding investments by insurance
company general accounts; PTCE 91-38 regarding investments by bank collective
investment funds; and PTCE 84-14, regarding transactions effected by "qualified
professional asset managers."
The Certificates may not be acquired by (a) an employee benefit plan (as
defined in Section 3(3) of ERISA) that is subject to the provisions of Title I
of ERISA, (b) a plan described in Section 4975(e)(1) of the Code or (c) any
entity whose underlying assets include plan assets by reason of a plan's
investment in the entity. By its acceptance of a Certificate, each
Certificateholder will be deemed to have represented and warranted that it is
not subject to the foregoing limitation. For additional information regarding
treatment of the Certificates under ERISA, see "ERISA Considerations" in the
accompanying Prospectus.
Employee benefit plans that are governmental plans (as defined in Section
3(32) of ERISA) and certain church plans (as defined in Section 3(33) of ERISA)
are not subject to ERISA requirements.
A plan fiduciary considering the purchase of Notes should consult its tax
and/or legal advisors regarding whether the assets of the Trust would be
considered plan assets, the possibility of exemptive relief from the prohibited
transaction rules and other issues and their potential consequences.
S-51
<PAGE>
UNDERWRITING
The Underwriters named below have agreed, severally and not jointly, and
subject to the terms and conditions set forth in the Underwriting Agreement
among the Seller, Olympic Financial and the Underwriters, to purchase from the
Trust the respective principal amounts of the Notes and the Certificates set
forth opposite their names below:
CLASS A-1, A-2 AND A-3 NOTES
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT PRINCIPAL AMOUNT PRINCIPAL AMOUNT
OF CLASS A-1 OF CLASS A-2 OF CLASS A-3
NOTES NOTES NOTES
----------------- ----------------- -----------------
<S> <C> <C> <C>
Donaldson, Lufkin & Jenrette Securities Corporation...... $ 48,548,000 $ 157,430,000 $ 89,460,000
Bear, Stearns & Co. Inc.................................. 10,176,000 33,000,000 18,750,000
J.P. Morgan Securities Inc............................... 10,176,000 33,000,000 18,750,000
----------------- ----------------- -----------------
Total................................................ $ 68,900,000 $ 223,430,000 $ 126,960,000
----------------- ----------------- -----------------
----------------- ----------------- -----------------
</TABLE>
CLASS A-4 AND A-5 NOTES AND CERTIFICATES
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT PRINCIPAL AMOUNT
OF CLASS A-4 OF CLASS A-5 PRINCIPAL AMOUNT
NOTES NOTES OF CERTIFICATES
----------------- ----------------- --------------------
<S> <C> <C> <C>
Donaldson, Lufkin & Jenrette Securities
Corporation......................................... $ 82,290,000 $ 39,052,000 $ 41,220,000
Bear, Stearns & Co. Inc.............................. 17,250,000 8,184,000 8,640,000
J.P. Morgan Securities Inc........................... 17,250,000 8,184,000 8,640,000
----------------- ----------------- --------------------
Total............................................ $ 116,790,000 $ 55,420,000 $ 58,500,000
----------------- ----------------- --------------------
----------------- ----------------- --------------------
</TABLE>
The Underwriters have advised the Seller that the Underwriters propose
initially to offer the Notes to the public at the respective public offering
prices set forth on the cover page of this Prospectus Supplement and to certain
dealers at such prices less a concession not in excess of 0.0750% per Class A-1
Note, 0.0900% per Class A-2 Note, 0.1150% per Class A-3 Note, 0.1300% per Class
A-4 Note and 0.1450 % per Class A-5 Note. The Underwriters may allow, and such
dealers may reallow, a discount not in excess of 0.0375% per Class A-1 Note,
0.0450% per Class A-2 Note, 0.0575% per Class A-3 Note, 0.0650% per Class A-4
Note and 0.0725% per Class A-5 Note to certain other dealers. After the initial
public offering, the public offering prices of the Notes and such concessions
and discounts may be changed.
The Underwriters have advised the Seller that the Underwriters propose
initially to offer the Certificates (other than the Certificates to be sold to
the General Partners as described under "The Trust -- General" herein) to the
public at the public offering price set forth on the cover page of this
Prospectus Supplement and to certain dealers at such price less a concession not
in excess of 0.2000% per Certificate. The Underwriters may allow, and such
dealers may reallow, a discount not in excess of 0.1000% per Certificate to
certain other dealers. After the initial public offering, the public offering
price of the Certificates and such concessions and discounts may be changed.
The Underwriting Agreement provides that the Underwriters' obligations
thereunder are subject to approval of certain legal matters by counsel and to
various other conditions. The nature of the Underwriters' obligation is such
that the Underwriters are committed to purchase and pay for all of the
Securities if any Securities are purchased.
Olympic Financial and the Seller have agreed to indemnify the Underwriters
against certain liabilities, including liabilities under applicable securities
laws, or to contribute to payments the Underwriters may be required to make in
respect thereof.
Donaldson, Lufkin & Jenrette Securities Corporation provides hedging
arrangements to Olympic Financial and performs other customary investment
banking services.
S-52
<PAGE>
LEGAL MATTERS
Certain matters with respect to the validity of the Notes and the
Certificates and with respect to the federal income tax matters discussed under
"Certain Federal Income Tax Consequences" herein will be passed upon for the
Seller by Dorsey & Whitney LLP, Minneapolis, Minnesota. The validity of the
Notes and the Certificates will be passed upon for the Underwriters by Mayer,
Brown & Platt, New York, New York. Certain legal matters relating to the
Policies will be passed upon for Financial Security by Bruce E. Stern, General
Counsel, Financial Security. Financial Security is represented by Rogers &
Wells, New York, New York.
EXPERTS
The consolidated balance sheets of Financial Security and Subsidiaries as of
December 31, 1995 and 1994 and the related consolidated statements of income,
changes in shareholders' equity and cash flows for each of the three years in
the period ended December 31, 1995, incorporated by reference herein, have been
incorporated herein in reliance on the report of Coopers & Lybrand L.L.P.,
independent accountants, given on the authority of that firm as experts in
accounting and auditing.
S-53
<PAGE>
INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
TERM PAGE
- ----------------------------------------- -----------
<S> <C>
Administration Agreement................. S-49
Aggregate Principal Balance.............. S-7
APR...................................... S-7
Available Funds.......................... S-38
Backup Servicer.......................... S-5
Benefit Plan............................. S-51
Business Day............................. S-8, S-44
Certificate Balance...................... S-38
Certificate Distribution Account......... S-35
Certificate Policy....................... S-2
Certificate Prepayment Amount............ S-12, S-33
Certificate Prepayment Premium........... S-13
Certificateholders....................... S-11
Certificateholders' Distributable
Amount.................................. S-38
Certificateholders' Interest Carryover
Shortfall............................... S-38
Certificateholders' Interest
Distributable Amount.................... S-38
Certificateholders' Monthly Interest
Distributable Amount.................... S-38
Certificateholders' Monthly Principal
Distributable Amount.................... S-39
Certificateholders' Percentage........... S-39
Certificateholders' Principal Carryover
Shortfall............................... S-39
Certificateholders' Principal
Distributable Amount.................... S-39
Certificates............................. S-1, S-6
Class A-1 Final Scheduled Distribution
Date.................................... S-2
Class A-1 Holdback Amount................ S-36
Class A-1 Holdback Subaccount............ S-36
Class A-1 Notes.......................... S-1, S-5
Class A-1 Rate........................... S-8
Class A-2 Final Scheduled Distribution
Date.................................... S-2
Class A-2 Notes.......................... S-1, S-5
Class A-2 Rate........................... S-8
Class A-3 Final Scheduled Distribution
Date.................................... S-2
Class A-3 Notes.......................... S-1, S-5
Class A-3 Rate........................... S-8
Class A-4 Final Scheduled Distribution
Date.................................... S-2
Class A-4 Notes.......................... S-1, S-5
<CAPTION>
TERM PAGE
- ----------------------------------------- -----------
<S> <C>
Class A-4 Rate........................... S-8
Class A-5 Final Scheduled Distribution
Date.................................... S-2
Class A-5 Notes.......................... S-1, S-5
Class A-5 Rate........................... S-8
Closing Date............................. S-5
Code..................................... S-44
Collateral Agent......................... S-37
Collected Funds.......................... S-36
Collection Account....................... S-14, S-35
Commission............................... S-3
Credit Enhancement Fee................... S-37
Cutoff Date.............................. S-21
Dealer Agreements........................ S-21
Dealer Assignments....................... S-21
Dealers.................................. S-6
Designated Accounts...................... S-35
Determination Date....................... S-36
Dissolution Event........................ S-19
Distribution Date........................ S-2, S-8
DTC...................................... S-2
Events of Default........................ S-31
Exchange Act............................. S-3
Final Scheduled Distribution Date........ S-2
Final Scheduled Maturity Date............ S-7
Financed Vehicles........................ S-6
Financial Security....................... S-1
Funding Period........................... S-13
General Partners......................... S-5
Guaranteed Distributions................. S-43
Holdings................................. S-3, S-28
Indenture................................ S-1
Indenture Collateral Agent............... S-5
Indenture Trustee........................ S-5
Initial Cutoff Date...................... S-1, S-6
Initial Receivables...................... S-6
Insurance Agreement...................... S-11
Insurance Agreement Indenture Cross
Defaults................................ S-32
Interest Period.......................... S-9, S-30
Interest Rates........................... S-8
Issuer................................... S-5
Liquidated Receivable.................... S-39
Loan..................................... S-22
Mandatory Prepayment..................... S-12, S-33
</TABLE>
S-54
<PAGE>
<TABLE>
<CAPTION>
TERM PAGE
- ----------------------------------------- -----------
Mandatory Redemption..................... S-10, S-31
<S> <C>
Monthly Period........................... S-7
Moody's.................................. S-2, S-15
Note Distribution Account................ S-35
Note Policy.............................. S-2
Note Prepayment Amount................... S-10, S-31
Note Prepayment Premium.................. S-10
Noteholders.............................. S-8
Noteholders' Distributable Amount........ S-39
Noteholders' Interest Carryover
Shortfall............................... S-39
Noteholders' Interest Distributable
Amount.................................. S-39
Noteholders' Monthly Interest
Distributable Amount.................... S-39
Noteholders' Monthly Principal
Distributable Amount.................... S-39
Noteholders' Percentage.................. S-39
Noteholders' Principal Carryover
Shortfall............................... S-40
Noteholders' Principal Distributable
Amount.................................. S-40
Notes.................................... S-1, S-5
Obligor.................................. S-7
OID...................................... S-45
Olympic Financial........................ S-1, S-5
Order.................................... S-42, S-43
Original Pool Balance.................... S-10
Owner Trustee............................ S-5
Pass-Through Rate........................ S-11
Payment Date............................. S-8
Plan Assets Regulation................... S-51
Policies................................. S-2
Pre-Funded Amount........................ S-6
Pre-Funding Account...................... S-1, S-13
Preliminary Cutoff Date.................. S-7
Preliminary Initial Receivables.......... S-7
<CAPTION>
TERM PAGE
- ----------------------------------------- -----------
<S> <C>
Principal Distribution Amount............ S-40
PTCE..................................... S-51
Purchase Agreements...................... S-8, S-34
Purchased Receivable..................... S-40
Rating Agencies.......................... S-2, S-15
Receipt.................................. S-43
Receivable Files......................... S-21
Receivables.............................. S-1
Receivables Pool......................... S-7
Received................................. S-43
Record Date.............................. S-8
Redemption Price......................... S-31
Repurchase Event......................... S-8
Requisite Reserve Amount................. S-36
Reserve Account.......................... S-36
S&P...................................... S-2, S-15
Sale and Servicing Agreement............. S-6
Scheduled Payments....................... S-41
Securities............................... S-1
Securityholders.......................... S-11
Seller................................... S-1, S-5
Service.................................. S-44
Servicer................................. S-5
Servicer's Certificate................... S-36
Subsequent Cutoff Date................... S-6
Subsequent Purchase Agreement............ S-8
Subsequent Receivables................... S-1, S-6
Subsequent Transfer Agreement............ S-17
Subsequent Transfer Date................. S-6
Trust.................................... S-1, S-5
Trust Agreement.......................... S-5
Trust Documents.......................... S-34
Trust Property........................... S-7
Underwriters............................. S-3
</TABLE>
S-55
<PAGE>
PROSPECTUS
OLYMPIC AUTOMOBILE RECEIVABLES TRUSTS
AUTOMOBILE RECEIVABLES-BACKED CERTIFICATES
AUTOMOBILE RECEIVABLES-BACKED NOTES
---------------------
OLYMPIC RECEIVABLES FINANCE CORP.
(SELLER)
---------------------
OLYMPIC FINANCIAL LTD.
(SERVICER)
---------------------
The Automobile Receivables-Backed Certificates (the "Certificates") and the
Automobile Receivables-Backed Notes (the "Notes" and, collectively with the
Certificates, the "Securities") described herein may be sold from time to time
in one or more series, in amounts, at prices and on the terms to be determined
at the time of sale and to be set forth in a supplement to this Prospectus (a
"Prospectus Supplement"). Each series of Securities will include either one or
more classes of Certificates or, if Notes are issued as part of a series, one or
more classes of Notes and one or more classes of Certificates, as set forth in
the related Prospectus Supplement.
The Certificates and the Notes, if any, of any series of Securities will be
issued by a trust (a "Trust") to be formed with respect to such series by
Olympic Receivables Finance Corp. (the "Seller"), a wholly owned subsidiary of
Olympic Financial Ltd. ("Olympic Financial"). The assets of each Trust (the
"Trust Property") will include a pool of retail installment sales contracts and
promissory notes (the "Receivables") purchased by Olympic Financial from motor
vehicle dealers and secured by new and used automobiles and light trucks,
certain monies paid or payable thereunder after the Cutoff Date set forth in the
related Prospectus Supplement (the "Cutoff Date"), an assignment of Olympic
Financial's security interests in the vehicles financed thereby, and certain
other property, as more fully described herein and in the related Prospectus
Supplement. In addition, if so specified in the related Prospectus Supplement,
the Trust Property will include monies on deposit in one or more trust accounts
to be established with an Indenture Trustee, which may include a Pre-Funding
Account which would be used to purchase additional Receivables (the "Subsequent
Receivables") from the Seller from time to time during the Pre-Funding Period
specified in the related Prospectus Supplement.
Each Trust will be formed pursuant to either (i) a Pooling and Servicing
Agreement (the "Pooling and Servicing Agreement") to be entered into among the
Seller, Olympic Financial, in its individual capacity and as Servicer, and the
Owner Trustee specified in the related Prospectus Supplement (the "Owner
Trustee") or (ii) a Trust Agreement (the "Trust Agreement") to be entered into
among the Seller, the Owner Trustee and certain other parties as specified in
the related Prospectus Supplement. If the Trust is formed pursuant to a Trust
Agreement, a Sale and Servicing Agreement (the "Sale and Servicing Agreement")
will be entered into among the Seller, Olympic Financial, in its individual
capacity and as Servicer, the Trust and the Backup Servicer (as defined herein).
In either case, the Pooling and Servicing Agreement or the Trust Agreement and
the Sale and Servicing Agreement are collectively referred to herein as the
"Trust Documents." The Notes, if any, of a series will be issued and secured
pursuant to an Indenture (the "Indenture") between the Trust and the Indenture
Trustee specified in the related Prospectus Supplement (the "Indenture
Trustee").
Except as otherwise provided in the related Prospectus Supplement, each
class of Securities of any series will represent the right to receive a
specified amount of payments of principal and interest on the related
Receivables in the manner described herein and in the related Prospectus
Supplement. The right of each class of Securities to receive payments may be
senior or subordinate to the rights of one or more of the other classes of such
series. A series may include two or more classes of Certificates or Notes which
differ as to the timing and priority of payment, interest rate or amount of
distributions in respect of principal or interest or both. A series may include
one or more classes of Certificates or Notes entitled to distributions in
respect of principal, with disproportionate, nominal or no interest
distributions, or to interest distributions, with disproportionate, nominal or
no distributions in respect of principal. Distributions on Certificates of any
series will be subordinated in priority to payments due on the related Notes, if
any, to the extent described herein and in the related Prospectus Supplement.
The Certificates will represent fractional undivided interests in the related
Trust.
Each class of Securities will represent the right to receive distributions
or payments in the amounts, at the rates, and on the dates set forth in the
related Prospectus Supplement. The rate of distributions in respect of principal
on Certificates and payment in respect of principal on Notes, if any, of any
class will depend on the priority of payment of such class and the rate and
timing of payments (including prepayments, liquidations and repurchases of
Receivables) on the related Receivables.
Unless otherwise provided in the related Prospectus Supplement, the
Certificates and the Notes, if any, of any series initially will be represented
by certificates and notes registered in the name of Cede & Co., the nominee of
The Depository Trust Company ("DTC"). The interests of beneficial owners of the
Securities will be represented by book entries on the records of the
participating members of DTC. Definitive Securities will be available only under
limited circumstances.
There currently is no secondary market for the Securities. There can be no
assurance that any such market will develop or, if it does develop, that it will
continue. The Securities will not be listed on any securities exchange.
FOR A DISCUSSION OF CERTAIN FACTORS WHICH SHOULD BE CONSIDERED BY PROSPECTIVE
PURCHASERS OF THE SECURITIES, SEE "RISK FACTORS" AT PAGE 10 HEREIN AND AT
PAGE S-17 IN THE RELATED PROSPECTUS
SUPPLEMENT.
---------------------
THE CERTIFICATES REPRESENT INTERESTS IN AND THE NOTES REPRESENT OBLIGATIONS OF
THE RELATED TRUST AND DO NOT REPRESENT INTERESTS IN OR OBLIGATIONS OF
OLYMPIC FINANCIAL, THE SELLER OR ANY
AFFILIATE OF EITHER.
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
---------------------
Retain this Prospectus for future reference. This Prospectus may not be used
to consummate sales of securities offered hereby unless accompanied by a
Prospectus Supplement.
THE DATE OF THIS PROSPECTUS IS MARCH 7, 1996.
<PAGE>
AVAILABLE INFORMATION
The Seller, as originator of each Trust, has filed with the Securities and
Exchange Commission (the "Commission") a Registration Statement (together with
all amendments and exhibits thereto, referred to herein as the "Registration
Statement") under the Securities Act of 1933, as amended, with respect to the
Securities offered pursuant to this Prospectus. For further information,
reference is made to the Registration Statement which is available for
inspection without charge at the office of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the regional offices of the Commission at
Seven World Trade Center, Suite 1300, New York, New York 10048 and at
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511, and copies of which may be obtained from the Commission at
prescribed rates.
REPORTS TO SECURITYHOLDERS
Unless otherwise provided in the related Prospectus Supplement, unless and
until Definitive Certificates or Definitive Notes are issued, unaudited monthly
and annual reports, containing information concerning each Trust and prepared by
the Servicer, will be sent on behalf of the Trust to the Owner Trustee for the
Certificateholders, the Indenture Trustee for the Noteholders and Cede & Co., as
registered holder of the Certificates and the Notes and the nominee of DTC. See
"Certain Information Regarding the Securities -- Statements to Securityholders"
and "-- Book-Entry Registration." Certificateholders and Noteholders are
collectively referred to herein as the "Securityholders." Certificate Owners or
Note Owners may receive such reports, upon written request, together with a
certification that they are Certificate Owners or Note Owners and payment of any
expenses associated with the distribution of such reports, from the Owner
Trustee, with respect to Certificate Owners, or the Indenture Trustee, with
respect to Note Owners, at the addresses specified in the related Prospectus
Supplement. Such reports will not constitute financial statements prepared in
accordance with generally accepted accounting principles. Neither the Seller or
Olympic Financial intends to send any of its financial reports to
Securityholders. The Servicer, on behalf of each Trust, will file with the
Commission periodic reports concerning each Trust to the extent required under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
rules and regulations of the Commission thereunder.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
All documents filed by the Servicer on behalf of each Trust pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of
this Prospectus and prior to the termination of the offering of the related
Securities shall be deemed to be incorporated by reference into this Prospectus
and the related Prospectus Supplement and to be a part hereof and thereof from
the respective dates of filing of such documents. Any statement contained herein
or in a document all or any portion of which is deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus and the related Prospectus Supplement to the extent that a
statement contained herein or in any other subsequently filed document which
also is deemed to be incorporated by reference herein modifies or supersedes
such statement. Any statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus or
the related Prospectus Supplement.
The Servicer will provide without charge to any person to whom this
Prospectus is delivered, upon the written or oral request of such person, a copy
of any or all of the foregoing documents incorporated herein by reference (other
than certain exhibits to such documents). Requests for such copies should be
directed to Investor Relations, Olympic Financial Ltd., 7825 Washington Avenue
South, Minneapolis, Minnesota 55439-2435, telephone number (612) 942-9880.
2
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE
DETAILED INFORMATION APPEARING ELSEWHERE IN THIS PROSPECTUS AND BY REFERENCE TO
THE INFORMATION WITH RESPECT TO THE SECURITIES CONTAINED IN THE RELATED
PROSPECTUS SUPPLEMENT TO BE PREPARED AND DELIVERED IN CONNECTION WITH THE
OFFERING OF EACH SERIES OF SECURITIES. CERTAIN CAPITALIZED TERMS USED IN THIS
PROSPECTUS SUMMARY ARE DEFINED ELSEWHERE IN THIS PROSPECTUS AND IN THE RELATED
PROSPECTUS SUPPLEMENT. A LISTING OF THE PAGES ON WHICH SOME OF SUCH TERMS ARE
DEFINED IS FOUND IN THE "INDEX OF DEFINED TERMS."
<TABLE>
<S> <C>
Issuer............................ With respect to each series of Securities, a trust (the
"Trust") will be formed by Olympic Receivables Finance
Corp. (the "Seller") pursuant to either a Pooling and
Servicing Agreement among the Seller, Olympic Financial,
in its individual capacity and as Servicer (in such
capacity referred to herein as the "Servicer"), and the
Owner Trustee specified in the related Prospectus
Supplement, or a Trust Agreement between the Seller, the
Owner Trustee specified in the related Prospectus
Supplement and certain other parties as specified in the
related Prospectus Supplement.
Seller............................ Olympic Receivables Finance Corp., a wholly owned
subsidiary of Olympic Financial. See "The Seller."
Servicer.......................... Olympic Financial Ltd. See "Olympic Financial Ltd."
Owner Trustee..................... The Owner Trustee specified in the related Prospectus
Supplement (the "Owner Trustee"). See "Description of
the Purchase Agreements and the Trust Documents --
Servicer Termination Events" and "-- The Owner Trustee".
Backup Servicer................... Olympic Financial may be terminated as Servicer under
certain circumstances, at which time the Backup Servicer
specified in the related Prospectus Supplement (the
"Backup Servicer") will automatically become the
Servicer. See "Description of the Purchase Agreements
and the Trust Documents -- Servicer Termination Events"
and "-- The Backup Servicer."
Indenture Trustee................. With respect to any Series of Securities including one
or more classes of Notes, the Indenture Trustee
specified in the related Prospectus Supplement (the
"Indenture Trustee").
The Certificates.................. Each series of Securities will include one or more
classes of Certificates which will be issued pursuant to
the related Trust Documents.
Unless otherwise specified in the related Prospectus
Supplement, Certificates will be available for purchase
in denominations of $1,000 and in integral multiples
thereof and will be available in book-entry form only.
Unless otherwise specified in the related Prospectus
Supplement, holders of Certificates
("Certificateholders") will be able to receive
Definitive Certificates only in the limited
circumstances described herein or in the related
Prospectus Supplement. See "Certain Information
Regarding the Securities -- Book-Entry Registration."
Unless otherwise specified in the related Prospectus
Supplement, each class of Certificates will have a
stated Certificate Balance (as defined in the related
Prospectus Supplement) and will accrue interest on such
Certificate Balance at a specified rate (with respect to
each class of Certificates, the "Pass-Through Rate").
</TABLE>
3
<PAGE>
<TABLE>
<S> <C>
Each class of Certificates may have a different
Pass-Through Rate, which may be a fixed, variable or
adjustable Pass-Through Rate, or any combination of the
foregoing. The related Prospectus Supplement will
specify the Pass-Through Rate for each class of
Certificates, or the initial Pass-Through Rate and the
method for determining subsequent changes to the
Pass-Through Rate.
A series may include two or more classes of Certificates
which differ as to timing of distributions, sequential
order, priority of payment, seniority, allocation of
loss, Pass-Through Rate or amount of distributions in
respect of principal or interest, or as to which
distributions in respect of principal or interest on any
class may or may not be made upon the occurrence of
specified events or on the basis of collections from
designated portions of the Receivables Pool. In
addition, a series may include one or more classes of
Certificates ("Strip Certificates") entitled to (i)
distributions in respect of principal with
disproportionate, nominal or no interest distributions,
or (ii) interest distributions, with disproportionate,
nominal or no distributions in respect of principal.
With respect to any series of Securities including one
or more classes of Notes, distributions in respect of
the Certificates may be subordinated in priority of
payment to payments on the Notes, to the extent
specified in the related Prospectus Supplement.
If the Seller or Servicer exercises its option to
purchase the Receivables of a Trust on the terms and
conditions described below under "Description of the
Purchase Agreements and the Trust Documents --
Termination," Certificateholders will receive an amount
in respect of the Certificates as specified in the
related Prospectus Supplement. In addition, if the
related Prospectus Supplement provides that the property
of a Trust will include a Pre-Funding Account (as such
term is defined in the related Prospectus Supplement,
the "Pre-Funding Account"), Certificateholders will
receive a distribution in respect of principal on or
immediately following the end of the funding period
specified in the related Prospectus Supplement (the
"Pre-Funding Period") in an amount and manner specified
in the related Prospectus Supplement.
The Notes......................... With respect to any series of Securities including one
or more classes of Notes, such Notes will be issued
pursuant to an Indenture.
Unless otherwise specified in the related Prospectus
Supplement, Notes will be available for purchase in
denominations of $1,000 and integral multiples thereof,
and will be available in book-entry form only. Unless
otherwise specified in the related Prospectus
Supplement, holders of Notes ("Noteholders") will be
able to receive Definitive Notes only in the limited
circumstances described herein or in the related
Prospectus Supplement. See "Certain Information
Regarding the Securities -- Book-Entry Registration."
</TABLE>
4
<PAGE>
<TABLE>
<S> <C>
Unless otherwise specified in the related Prospectus
Supplement, each class of Notes will have a stated
principal amount and will bear interest at a specified
rate or rates (with respect to each class of Notes, the
"Interest Rate"). Each class of Notes may have a
different Interest Rate, which may be a fixed, variable
or adjustable Interest Rate, or any combination of the
foregoing. The related Prospectus Supplement will
specify the Interest Rate and the method for determining
subsequent changes to the Interest Rate.
A series may include two or more classes of Notes which
differ as to the timing and priority of payment,
seniority, allocations of loss, Interest Rate or amount
of payments of principal or interest, or as to which
payments of principal or interest may or may not be made
upon the occurrence of specified events or on the basis
of collections from designated portions of the
Receivables Pool. In addition, a series may include one
or more classes of Notes ("Strip Notes") entitled to (i)
principal payments with disproportionate, nominal or no
interest payments or (ii) interest payments with
disproportionate, nominal or no principal payments.
If the Seller or the Servicer exercises its option to
purchase the Receivables of a Trust on the terms and
conditions described below under "Description of the
Purchase Agreements and the Trust Documents --
Termination," the outstanding Notes, if any, of such
series will be redeemed as set forth in the related
Prospectus Supplement. In addition, if the related
Prospectus Supplement provides that the property of a
Trust will include a Pre-Funding Account, the
outstanding Notes, if any, of such series will be
subject to partial redemption on or immediately
following the end of the Pre-Funding Period in an amount
and manner specified in the related Prospectus
Supplement. In the event of such partial redemption, the
Noteholders may be entitled to receive a prepayment
premium from the Trust, in the amount and to the extent
provided in the related Prospectus Supplement.
Trust Property.................... Each Certificate will represent a fractional undivided
interest in, and each Note, if any, will represent an
obligation of, the related Trust. The assets of each
Trust (the "Trust Property") will include, among other
things, a pool (the "Receivables Pool") of retail
installment sales contracts and promissory notes (the
"Receivables") purchased or to be purchased from motor
vehicle dealers ("Dealers") by Olympic Financial and
secured by new and used automobiles and light trucks
(the "Financed Vehicles"), certain monies paid or
payable thereunder after the Cutoff Date (as specified
in the related Prospectus Supplement), an assignment of
Olympic Financial's security interests in the Financed
Vehicles and of the right to receive proceeds from
claims on certain insurance policies covering the
Financed Vehicles or the Obligors, the assignment of
certain rights of Olympic Financial against the Dealers
originating such Receivables, the Collection Account,
including all investments therein, all income from the
investment of funds therein and all
</TABLE>
5
<PAGE>
<TABLE>
<S> <C>
proceeds thereof, certain other accounts and the
proceeds thereof and certain other rights under the
Trust Documents. In addition, if so specified in the
related Prospectus Supplement, the Trust Property will
include monies on deposit in a Pre-Funding Account to be
established with the Indenture Trustee or the Owner
Trustee, which will be used to purchase Subsequent
Receivables (as defined below) from the Seller from time
to time during the Pre-Funding Period specified in the
related Prospectus Supplement, as well as any Subsequent
Receivables so purchased. See "The Trusts."
The Receivables of each Trust (except for Subsequent
Receivables) will be purchased by the Seller from
Olympic Financial pursuant to a purchase agreement (the
"Purchase Agreement") between the Seller and Olympic
Financial on or prior to the date of issuance of the
Securities. If and to the extent provided in the related
Prospectus Supplement, the Seller will be obligated
(subject only to the availability thereof) to purchase
from Olympic Financial and to sell to the related Trust,
and the related Trust will be obligated to purchase from
the Seller (subject to the satisfaction of certain
conditions described in the applicable Purchase
Agreement), additional Receivables (the "Subsequent
Receivables") from time to time (as frequently as daily)
during the Pre-Funding Period specified in the related
Prospectus Supplement having an aggregate principal
balance approximately equal to the amount on deposit in
the Pre-Funding Account (the "Pre-Funded Amount") on
such Closing Date.
The Trust Property of each Trust will also include an
assignment of the Seller's rights under the related
Purchase Agreement, including rights against Olympic
Financial upon the occurrence of certain breaches of
representations and warranties thereunder (a "Repurchase
Event"). See "Description of the Purchase Agreements and
Trust Documents -- Sale and Assignment of the
Receivables" and "-- Servicing Procedures."
Credit Enhancement................ If and to the extent specified in the related Prospectus
Supplement, credit enhancement with respect to a Trust
or any class of Securities may include any one or more
of the following: a financial guaranty insurance policy
(a "Policy") issued by an insurer specified in the
related Prospectus Supplement (a "Security Insurer"),
subordination of one or more other classes of
Securities, a reserve account, overcollateralization,
letters of credit, credit or liquidity facilities,
repurchase obligations, third party payments or other
support, cash deposits or other arrangements. Unless
otherwise specified in the related Prospectus
Supplement, any form of credit enhancement will have
certain limitations and exclusions from coverage
thereunder, which will be described in the related
Prospectus Supplement. "Description of the Purchase
Agreements and the Trust Documents -- Credit
Enhancement."
Servicing......................... The Servicer will be responsible for managing,
administering, servicing and making collections on the
Receivables held by each Trust. Unless otherwise
specified in the related Prospectus Supplement, with
respect to each series of Securities
</TABLE>
6
<PAGE>
<TABLE>
<S> <C>
compensation to the Servicer will include a monthly fee
(the "Servicing Fee") which will be payable from the
related Trust to the Servicer on each Distribution Date,
in an amount equal to the product of one-twelfth of
1.00% per annum multiplied by the aggregate principal
balance of the Receivables (the "Aggregate Principal
Balance") as of the first day of the prior calendar
month, plus any late fees and other administrative fees
and expenses or similar charges collected with respect
to the Receivables during such Monthly Period. See
"Description of the Purchase Agreements and the Trust
Documents -- Servicing Compensation."
Monthly Advances.................. Unless otherwise specified in the related Prospectus
Supplement, if the amount paid on a Receivable held by a
particular Trust in any Monthly Period is less than the
full amount of the interest accrued on such Receivable
for the number of calendar days in such Monthly Period,
the Servicer will advance to such Trust the amount of
such shortfall (a "Monthly Advance"). The Servicer will
be entitled to reimbursement of a Monthly Advance from
subsequent payments and collections on or with respect
to the related Receivable or, if such payments or
collections are insufficient to reimburse the Servicer,
from collections on other Receivables if that Receivable
becomes a Liquidated Receivable. Unless otherwise
specified in the related Prospectus Supplement, the
Servicer will not make any Monthly Advance with respect
to the principal portion of any Scheduled Payment. See
"Description of the Purchase Agreements and the Trust
Documents -- Monthly Advances."
Receivables....................... The Receivables forming part of the Trust Property of
each Trust were or will have been originated by Dealers
and sold by the Dealers to Olympic Financial in the
ordinary course of business. The Receivables will
generally be prepayable at any time without penalty to
the purchaser or co-purchasers of the Financed Vehicle
or other person or persons who are obligated to make
payments thereunder (each, an "Obligor"). See "The
Receivables." Information with respect to each
Receivables Pool, including the weighted average annual
percentage rate and the weighted average remaining
maturity, will be set forth in the related Prospectus
Supplement.
Collection Account................ With respect to each series of Securities, the Servicer
will establish and maintain one or more separate
accounts (the "Collection Account") in the name of the
Owner Trustee or, in the case of any series including
one or more classes of Notes, in the name of the
Indenture Trustee for the benefit of the
Certificateholders and the Noteholders, if any. All
payments from Obligors that are received by the Lockbox
Bank (as defined below) on behalf of each Trust will be
deposited in the related Collection Account no later
than two Business Days after receipt thereof. Unless
otherwise specified in the related Prospectus
Supplement, all payments from Obligors and all proceeds
(net of reasonable expenses of collection) with respect
to Liquidated Receivables ("Liquidation Proceeds") that
are received directly by the Servicer will be deposited
in the related Collection
</TABLE>
7
<PAGE>
<TABLE>
<S> <C>
Account no later than one Business Day after receipt
thereof. Unless otherwise specified in the related
Prospectus Supplement, the Servicer will be permitted to
use any alternative remittance schedule acceptable to
the Rating Agencies (as defined below) and to the
Security Insurer, if any (unless the Security Insurer
shall be in continuing default on its obligations under
the Policy or certain bankruptcy events shall have
occurred with respect to the Security Insurer (an
"Insurer Default")). See "Description of the Purchase
Agreements and the Trust Documents -- Collections."
Mandatory Purchase of Certain
Receivables...................... With respect to each series of Securities, Olympic
Financial will make certain representations and
warranties relating to the Receivables held by the
related Trust to the Seller in the related Purchase
Agreement, the Seller will assign the right to enforce
such representations and warranties to the Owner Trustee
for the benefit of the related Trust and the Security
Insurer, if any, and if such series of Securities
includes one or more classes of Notes, the Owner Trustee
will assign its right to enforce such representations
and warranties to the related Indenture Trustee as
collateral for the Notes. The Owner Trustee and the
Indenture Trustee, if any, as assignees of the
obligations of Olympic Financial to the Seller under the
Purchase Agreement, will be entitled to require that
Olympic Financial repurchase any Receivable if the
interests of the Certificateholders, the Noteholders, if
any, or the related Trust therein are materially and
adversely affected by a breach of any such
representation or warranty (a "Repurchase Event"). See
"Description of the Purchase Agreements and the Trust
Documents -- Sale and Assignment of the Receivables."
Optional Purchase of
Receivables...................... Unless otherwise specified in the related Prospectus
Supplement, with respect to each series of Securities,
the Seller or the Servicer may purchase all the
Receivables held by the related Trust on any
Distribution Date following the first Monthly Period as
of which the Aggregate Principal Balance has declined to
10% or less (or such other percentage as may be
specified in the related Prospectus Supplement) of the
Cutoff Date Principal Balance, subject to certain
provisions in the related Trust Documents. See
"Description of the Purchase Agreements and the Trust
Documents -- Termination."
Tax Status........................ The anticipated federal income tax consequences of the
purchase, ownership and disposition of Securities issued
by a Trust will be discussed in the related Prospectus
Supplement. See "Certain Federal Income Tax
Consequences" herein and in the related Prospectus
Supplement.
ERISA Considerations.............. Subject to the considerations discussed under "ERISA
Considerations" herein and in the related Prospectus
Supplement, and unless otherwise specified in the
related Prospectus Supplement, the Notes will be
eligible for purchase by employee benefit plans. The
related Prospectus Supplement will provide further
information with respect to the eligibility of a
</TABLE>
8
<PAGE>
<TABLE>
<S> <C>
class of Certificates for purchase by employee benefit
plans. See "ERISA Considerations" herein and in the
related Prospectus Supplement.
Rating............................ Unless otherwise provided in the related Prospectus
Supplement, as a condition of issuance, the Securities
of each series will be rated in one of the four highest
rating categories by at least one nationally recognized
rating agency (a "Rating Agency"). There is no assurance
that the ratings initially assigned to such Securities
will not be subsequently lowered or withdrawn by the
Rating Agencies. In the event the rating initially
assigned to any Securities is subsequently lowered for
any reason, no person or entity will be obligated to
provide any credit enhancement in addition to the credit
enhancement, if any, specified in the related Prospectus
Supplement.
Registration of Certificates...... Unless otherwise specified in the related Prospectus
Supplement, the Certificates and the Notes, if any, of
each series will be registered in the name of Cede &
Co., as the nominee of DTC, and will be available for
purchase only in book-entry form on the records of DTC
and participating members thereof. Certificates and
Notes will be issued in definitive form only under the
limited circumstances described herein. All references
herein to "Holders" or "Certificateholders" or
"Noteholders" shall reflect the rights of beneficial
owners of Certificates (the "Certificate Owners") or of
Notes ("Note Owners"), as the case may be, as they may
indirectly exercise such rights through DTC and
participating members thereof, except as otherwise
specified herein or in the related Prospectus
Supplement. See "Description of the Purchase Agreements
and the Trust Documents -- Book-Entry Registration."
</TABLE>
9
<PAGE>
RISK FACTORS
CERTAIN LEGAL ASPECTS
With respect to each series of Securities, the transfer of the Receivables
to the related Trust will be subject to the requirements of the Uniform
Commercial Code (the "UCC") as in effect in Minnesota and New York. The Seller
will take or cause to be taken such action as is required to perfect the Trust's
rights in the Receivables. Although a Custodian (as specified in the related
Prospectus Supplement) may initially hold the Receivable Files (as defined
below), the Owner Trustee may subsequently appoint Olympic Financial, with the
consent of the Security Insurer, if any (prior to an Insurer Default) and
subject to the conditions, if any, specified in the related Prospectus
Supplement or the related Trust Documents, as custodian to hold the Receivable
Files for the Trust. In any event, the Receivable Files will not be stamped or
otherwise marked to indicate their sale to the Trust. Accordingly, there exists
a risk that, through fraud or negligence, a purchaser could acquire an interest
in the Receivables superior to the interest of the Trust or that the Trust's
security interest in the Receivables could be released.
Due to the administrative burden and expense, the certificates of title for
the Financed Vehicles will not be amended to reflect the assignment of the
security interests in the Financed Vehicles by Olympic Financial to the Seller,
or by the Seller to the Owner Trustee. In the absence of such an amendment, the
Owner Trustee may not have a perfected security interest in the Financed
Vehicles. Moreover, statutory liens for repairs or unpaid taxes may have
priority even over perfected security interests in the Financed Vehicles. See
"Description of the Purchase Agreements and the Trust Documents -- Sale and
Assignment of the Receivables" and "Certain Legal Aspects of the Receivables."
INSOLVENCY RISKS
Olympic Financial intends that any transfer of Receivables to the Seller
will constitute a sale, rather than a pledge of the Receivables to secure
indebtedness of Olympic Financial. However, if Olympic Financial were to become
a debtor under the federal bankruptcy code or similar applicable state laws
(collectively, "Insolvency Laws"), a creditor or trustee in bankruptcy of
Olympic Financial or Olympic Financial as debtor-in-possession might argue that
such sale of Receivables by Olympic Financial was a pledge of the Receivables
rather than a sale. This position, if presented to or accepted by a court, could
cause, among other things, the related Trust to experience a delay in or
reduction of collections on the Receivables.
In addition, if Olympic Financial were to become a debtor under any
Insolvency Law, a creditor or trustee in bankruptcy of Olympic Financial or
Olympic Financial as debtor-in-possession might argue that the assets and
liabilities of the Seller should be consolidated with the assets and liabilities
of Olympic Financial. The Seller has taken and will take steps in structuring
the transactions contemplated hereby and by the related Prospectus Supplement
that are intended to make it unlikely that any such attempt to consolidate the
Seller and Olympic Financial would succeed. See "The Seller." In addition, the
Seller intends that any transfer of Receivables to a Trust will constitute a
sale, rather than a pledge of the Receivables to secure indebtedness of the
Seller. Nevertheless, if these positions -- that the assets and liabilities of
the Seller should be consolidated with those of Olympic Financial, and that the
Seller's transfer of the Receivables was a pledge rather than a sale -- were
presented to or accepted by a court, a Trust could experience, among other
things, a delay in or reduction of collections on the Receivables.
A case recently decided by the United States Court of Appeals for the Tenth
Circuit contains language to the effect that accounts sold by an entity that
subsequently became bankrupt remained property of the debtor's bankruptcy
estate. Although the Receivables constitute chattel paper rather than accounts
under the UCC, sales of chattel paper, like sales of accounts, are governed by
Article 9 of the UCC. If Olympic Financial were to become a debtor under any
Insolvency Law and a court were to follow the reasoning of the Tenth Circuit
Court of Appeals and apply such reasoning to chattel paper, a Trust could
experience a delay in or reduction of collections on the Receivables.
SUBORDINATION; LIMITED ASSETS
To the extent specified in the related Prospectus Supplement, distributions
of interest and principal on some or all classes of Certificates of such series
may be subordinated in priority of payment to interest and
10
<PAGE>
principal due on the Notes (if any) of such series and/or to distributions of
interest and principal on other classes of Certificates of such series. In
addition, holders of certain classes of Securities of any series may have the
right to take actions that are detrimental to the interests of the holders of
Securities of certain other classes of Securities of such series. Moreover, no
Trust will have any significant assets or sources of funds other than the
Receivables and, to the extent provided in the related Prospectus Supplement, a
Pre-Funding Account and any credit enhancement specified in the related
Prospectus Supplement. The Notes, if any, of any series will represent
obligations solely of, and the Certificates of such series will represent
interests solely in, the related Trust, and neither the Notes nor the
Certificates of any such series will be insured or guaranteed by the Seller, the
Servicer, the applicable Owner Trustee, the applicable Indenture Trustee or,
except as specified in the related Prospectus Supplement, any other person or
entity. Consequently, holders of the Securities of any series must rely for
payment upon payments on the related Receivables and, if and to the extent
available, amounts on deposit in the Pre-Funding Account, if any, and any credit
enhancement, if any, as specified in the related Prospectus Supplement.
YIELD AND PREPAYMENT CONSIDERATIONS
The weighted average life of the Securities will be reduced by full or
partial prepayments on the Receivables. The Receivables will generally be
prepayable at any time without penalty. Prepayments (or, for this purpose,
equivalent payments to the related Trust) may result from payments by Obligors,
liquidations due to default, the receipt of proceeds from physical damage or
credit insurance, repurchases by Olympic Financial as a result of certain
uncured breaches of the warranties made by it with respect to the Receivables
("Warranty Receivables"), purchases by the Servicer as a result of certain
uncured breaches of the covenants made by it with respect to the Receivables
("Administrative Receivables") in the related Agreement, or either of the Seller
or the Servicer exercising its option to purchase all of the remaining
Receivables.
Unless otherwise specified in the related Prospectus Supplement, the amounts
paid to Securityholders in respect of principal on any Distribution Date or
Payment Date will include all prepayments on the Receivables during the
corresponding Monthly Periods. The Certificateholders and the Noteholders will
bear all reinvestment risk resulting from the timing of payments of principal on
the Securities.
LIMITED LIQUIDITY
There is currently no market for the Securities of any series. There can be
no assurance that any such market will develop or, if it does develop, that it
will provide Securityholders with liquidity of investment or will continue for
the life of the Securities. The Securities will not be listed on any securities
exchange.
Unless otherwise specified in the related Prospectus Supplement, the
Securities will be issued in book-entry, rather than physical, form and, as a
result, in certain circumstances, the liquidity of the Securities in the
secondary market and the ability of the Certificate Owners and Note Owners to
pledge them may be adversely affected. See "Plan of Distribution" and "Certain
Information Regarding the Securities -- Book-Entry Registration."
THE TRUSTS
With respect to each series of Securities, the Seller will establish a Trust
pursuant to the related Trust Documents. Prior to the sale and assignment of the
related Receivables pursuant to the related Trust Documents, the Trust will have
no assets or obligations. The Trust will not engage in any business activity
other than acquiring and holding the Trust Property, issuing the Certificates
and the Notes, if any, of such series and distributing payments thereon.
Each Certificate will represent a fractional undivided interest in, and each
Note, if any, will represent an obligation of, the related Trust. The Trust
Property of each Trust will include, among other things, (i) a Receivables Pool;
(ii) all monies paid or payable thereon after the Cutoff Date (as specified in
the related Prospectus Supplement); (iii) such amounts as from time to time may
be held in the Lockbox Account (as defined herein), the Collection Account
(including all investments in the Collection Account and all income from the
investment of funds therein and all proceeds thereof) and certain other accounts
(including the proceeds thereof); (iv) an assignment of the security interests
of Olympic Financial in the Financed Vehicles securing the related Receivables;
(v) an assignment of the right to receive proceeds from the exercise of
11
<PAGE>
rights against Dealers under agreements between Olympic Financial and such
Dealers (the "Dealer Agreements") and the assignment of rights in respect of
each related Receivable from the applicable Dealer to Olympic Financial (the
"Dealer Assignments"); (vi) an assignment of the right to receive proceeds from
claims on certain insurance policies covering the related Financed Vehicles or
Obligors; (vii) an assignment of the rights of the Seller under the related
Purchase Agreement, and (viii) certain other rights under the related Trust
Documents. See "The Receivables" and "Description of the Purchase Agreements and
the Trust Documents -- Collections." The Trust Property will also include, if so
specified in the related Prospectus Supplement, monies on deposit in a
Pre-Funding Account to be established with the Indenture Trustee or the Owner
Trustee, which will be used to purchase Subsequent Receivables from the Seller
from time to time (and as frequently as daily) during the Pre-Funding Period
specified in the related Prospectus Supplement. Any Subsequent Receivables so
purchased will be included in the related Receivables Pool forming part of the
Trust Property, subject to the prior rights of the related Indenture Trustee and
the Noteholders therein. In addition, to the extent specified in the related
Prospectus Supplement, a financial guaranty insurance policy or some other form
of credit enhancement may be issued to or held by the Owner Trustee or the
Indenture Trustee for the benefit of holders of one or more classes of
Securities.
The Servicer will service the Receivables held by each Trust and will
receive fees for such services. See "Description of the Purchase Agreements and
the Trust Documents -- Servicing Compensation." Unless otherwise specified in
the related Prospectus Supplement, Olympic Financial, on behalf of each Trust,
will hold the original installment sales contract or promissory note as well as
copies of documents and instruments relating to each Receivable and evidencing
the security interest in the Financed Vehicle securing each Receivable (the
"Receivable Files"). In order to protect the Trust's ownership interest in the
Receivables, Olympic Financial and the Seller will each file a UCC-1 financing
statement in Minnesota to give notice of such Trust's ownership of the related
Receivables and the related Trust Property.
THE OWNER TRUSTEE
The Owner Trustee for each Trust will be specified in the related Prospectus
Supplement. The Owner Trustee's liability in connection with the issuance and
sale of the Securities of such series will be limited solely to the express
obligations of such Owner Trustee set forth in the related Trust Documents. An
Owner Trustee may resign at any time, in which event the General Partner, if
any, specified in the related Prospectus Supplement, or if no such General
Partner is specified, the Servicer or its successor, will be obligated to
appoint a successor trustee acceptable to the Security Insurer. The General
Partner, if any, specified in the related Prospectus Supplement, or if no such
General Partner is specified, the Servicer, with the consent of the Security
Insurer, if any (prior to an Insurer Default), may also remove the Owner Trustee
if the Owner Trustee ceases to be eligible to continue as Owner Trustee under
the related Trust Documents or if the Owner Trustee becomes insolvent. In such
circumstances, the General Partner, if any, specified in the related Prospectus
Supplement, or if no such General Partner is specified, the Servicer will be
obligated to appoint a successor trustee acceptable to the Security Insurer. Any
resignation or removal of an Owner Trustee and appointment of a successor
trustee will be subject to any conditions or approvals specified in the related
Prospectus Supplement and will not become effective until acceptance of the
appointment by the successor trustee.
THE RECEIVABLES
GENERAL
Olympic Financial purchases retail installment sales contracts and
promissory notes secured by new and used motor vehicles from Dealers who
regularly originate and sell such contracts and notes to Olympic Financial.
Olympic Financial generally acquires each such contract or note (a "Loan") under
a Dealer Agreement and a Dealer Assignment which obligate the Dealer to
repurchase the Loan in the event of a breach by the Dealer of certain
representations and warranties made therein. These representations and
warranties typically relate to the origination of the Loan and the security
interest in the related Financed Vehicle. The Dealers' representations and
warranties do not relate to the creditworthiness of the Obligor under the Loan
or the collectibility of the Loan and, accordingly, Olympic Financial does not
have recourse to Dealers for credit losses on any Loans.
12
<PAGE>
UNDERWRITING
Olympic Financial purchases each loan in accordance with its underwriting
guidelines and procedures, which focus on buyer qualifications and collateral
value. Olympic Financial's underwriting guidelines do not distinguish between
new or used vehicles. These underwriting guidelines are intended to assess the
applicant's ability to repay the amounts due on the loan and the adequacy of the
financed vehicle as collateral. Beginning in October 1994, Olympic Financial
introduced its Classic loan program to supplement its traditional Premier
program. The Classic program was established primarily for borrowers within the
"prime" loan segment who, due to limited credit experience or certain adverse
credit events, do not meet all of the underwriting criteria established for
Premier loans. As loans purchased under the Classic program generally have
higher risk characteristics than those purchased under the Premier program,
Classic loans are offered at higher interest rates and generally have additional
conditions including higher down payment minimums and co-applicant requirements.
The Company considers both its Premier and Classic programs to be in the "prime"
loan category.
Each applicant for a loan is required to complete and sign an application
which lists the applicant's assets, liabilities, income, credit and employment
history and other personal information. Upon receipt of the completed loan
application, Olympic Financial's administrative personnel order a credit bureau
report on the applicant to document the applicant's credit history.
The credit report presents a history of the applicant's credit performance
and, if applicable, contains information on such matters as past-due credit,
previous repossessions, prior loans charged-off by other lenders, real estate
liens, wage attachments and bankruptcy. The application and the credit bureau
report are given to one of Olympic Financial's credit specialists for analysis
under Olympic Financial's proprietary credit scoring system. Olympic Financial's
credit scoring system evaluates the credit applicant with an emphasis on cash
flow as a principal indicator of repayment capability and provides credit scores
which are utilized by Olympic Financial as a basis to determine if the applicant
initially falls within the parameters of Olympic Financial's underwriting
criteria for either its Premier or Classic loan program. Assuming that the
applicant qualifies under the credit scoring system, Olympic Financial will
expand its credit review by preparing an analysis of the applicant's
debt-to-income and payment-to-income ratios, and purchasing from a credit bureau
an additional credit score which attempts to assess the likelihood of borrower
bankruptcies. If the applicant meets Olympic Financial's scoring standards,
required debt-to-income ratios, payment-to-income ratios and likelihood of
bankruptcy test, Olympic Financial generally will approve the application
subject to further investigation. This investigation typically consists of
direct telephone verifications, when feasible, of the applicant's employment and
banking references. Further investigation may also include direct credit
references from banks and financial institutions noted on the application.
Once scoring and verifications have been completed, one of Olympic
Financial's credit specialists reviews the application to ensure that it meets
the credit scoring requirements of Olympic Financial's internal system, and also
reviews the various banking and employment verifications obtained. In the final
review, the credit specialist considers the amount of money to be financed in
relation to the purchase price and value of the automobile. If the vehicle is
used, Olympic Financial determines value based upon the Kelly Blue Book value or
the National Automobile Dealers Association's ("NADA") Guide on Retail and
Wholesale Values. Consistent with industry standards, this assessment does not
include inspection of the automobile. Olympic Financial does not reject an
applicant solely because of the age of the automobile.
These systems are intended to provide guidelines for lending decisions, but
are not entirely a substitute for the credit judgment of Olympic Financial's
credit specialists. Olympic Financial allows some flexibility in applying its
underwriting guidelines, but a greater level of management scrutiny is involved
in approving loans which deviate from these guidelines.
Upon completion of the credit analysis, Olympic Financial will decide
whether to approve the application as stated, or decline or condition the
approval of the loan. Conditioning approval of the application involves amending
the proposed terms of the loan in order to qualify the application according to
Olympic Financial's guidelines. Typical conditions include, but are not limited
to, requiring a co-applicant, amending the length of the proposed term,
requiring additional down payment, substantiation of certain credit
13
<PAGE>
information, and requiring proof of resolution of certain credit deficiencies as
noted on the applicant's credit history. Approved, declined or conditioned
application decisions are promptly communicated to the dealer by phone and
facsimile. Additionally, the applicant is informed by Olympic Financial of any
credit denial or other adverse action by mail, in compliance with applicable
statutory requirements.
Olympic Financial regularly reviews the quality of the loans it purchases
and conducts internal reviews on a monthly basis in an effort to ensure
compliance with its established policies and procedures.
SERVICING
Olympic Financial, as the initial Servicer, will be responsible for
managing, administering, servicing and making collections on the Receivables
held by each Trust. Olympic Financial considers a Loan delinquent when the
Obligor fails to make a contractual payment by the due date. Olympic Financial
generally utilizes an automatic dialing system (the "autodialer") initially to
contact delinquent Obligors. Based on parameters established by Olympic
Financial for each of its loan programs, the autodialer will phone the Obligor
within five to ten days after the past due date. Once the call is answered, the
autodialer will immediately transfer the call to an available customer service
representative located in Minneapolis, Minnesota and automatically displays the
Obligor's loan information on the representative's computer screen. The
autodialer will continue to follow up with Obligors at various times throughout
the first 20 days after the past due date (typically every third day) if
previous efforts do not result in the account deficiency being cured. In
addition to phone inquiries, Olympic Financial's loan system generates past due
notices which are mailed to the Obligor at various intervals during the first 30
days after the past due date. The first such correspondence is generally sent
approximately 13 days after the past due date.
If the collection effort during the first 20 days after the past due date
does not result in a satisfactory resolution of the delinquent account, then the
account is forwarded to collection specialists located in the regional buying
center where the Loan was originally purchased. These collection specialists
will typically send a final demand letter to the delinquent Obligor allowing the
Obligor a specified number of days to bring the account current. During this
period, the collection specialist generally will make a recommendation as to
whether the Financed Vehicle should be repossessed or if other action, such as a
contract extension, should be taken.
Olympic Financial follows specific procedures with respect to contract
extensions. Generally, an extension requires special circumstances, is based on
a re-evaluation of the Obligor's creditworthiness, and requires approval by a
collection department manager. Under the Trust Documents, unless otherwise
specified in the related Prospectus Supplement, the Servicer will not be
permitted to extend the monthly payments of a Receivable more than a maximum of
three months in the aggregate, and in no event later than the month preceding
the Final Scheduled Distribution Date (as specified in the related Prospectus
Supplement). Subject to certain limited exceptions set forth in the related
Prospectus Supplement, the Servicer cannot, without the consent of the Security
Insurer, if any (prior to an Insurer Default), unless otherwise specified in the
related Prospectus Supplement, otherwise agree to amend or modify any
Receivable. If an Insurer Default occurs, subject to certain limited exceptions,
amendments and modifications of the Receivables will not be permitted. See
"Description of the Purchase Agreements and the Trust Documents -- Servicing
Procedures."
Olympic Financial uses unaffiliated independent contractors to perform
repossessions. Once a Financed Vehicle is repossessed, a letter is sent giving
the Obligor a specified number of days to pay the entire Loan balance in order
to redeem the Financed Vehicle. At the expiration of the time period, Olympic
Financial will determine the method of sale and will repair (if necessary) and
prepare the Financed Vehicle for sale. Olympic Financial has historically sold
repossessed Financed Vehicles through wholesale auto auctions and retail
consignment lots. During the last several months of 1995, Olympic Financial
predominantly utilized retail consignment lots to sell its repossessed
inventory, pursuant to which Olympic Financial retains ownership of the Financed
Vehicles until resold through various dealers. Olympic Financial has generally
been able to obtain greater proceeds and incur lower losses by "retailing" its
inventory. Any surplus proceeds received from the sale of the Financed Vehicle
(net of all collection, repossession and disposition expenses) over the balance
of the Loan will be remitted to the Obligor.
14
<PAGE>
The present policy of Olympic Financial is to charge off a Loan on the
earlier of the date on which (i) the Loan becomes 90 days delinquent or (ii) the
related Financed Vehicle is repossessed and sold. Notwithstanding this policy,
Olympic Financial may elect not to charge off a Loan that is 90 days delinquent
if Olympic Financial determines that it is likely to recover on a later date all
or a portion of the outstanding Loan balance upon repossession and sale, in
which case the Loan will be charged off when the related Financed Vehicle has
been repossessed and sold. Unless otherwise specified in the related Prospectus
Supplement, the related Trust Documents will define a "Liquidated Receivable" as
a Receivable as to which (i) the Servicer has repossessed the Financed Vehicle
and all applicable redemption periods have expired, (ii) the Servicer has
determined in good faith that all amounts it expects to recover have been
received or (iii) any scheduled payment thereon (a "Scheduled Payment") or any
portion thereof has become more than 180 days past due.
INSURANCE
Olympic Financial requires each Obligor to obtain a physical damage
insurance policy naming Olympic Financial as loss payee with respect to the
Financed Vehicle. If any Obligor is in default in the payment of a premium on
such an insurance policy, Olympic Financial may obtain a replacement policy,
paying the premium out of its own funds, and may require the Obligor to pay such
premium pursuant to an obligation separate from the contract or note evidencing
the related Loan. Unless otherwise agreed by the Security Insurer, Olympic
Financial, as Servicer, will be obligated to maintain vendor's single interest
insurance coverage to cover any situations in which the Obligor has not obtained
a physical damage insurance policy. The proceeds payable under such policies, if
any, to the extent they relate to any Receivable, will constitute part of the
related Trust Property.
DELINQUENCY, LOAN LOSS AND REPOSSESSION INFORMATION
Certain information relating to Olympic Financial's delinquency, loan loss
and repossession experience with respect to all Loans it has purchased and
continues to service will be set forth in each Prospectus Supplement. This
information will include the experience with respect to all Loans in Olympic
Financial's portfolio of Loans serviced, including Loans which do not meet the
criteria for selection as a Receivable for any particular Receivables Pool.
There can be no assurance that the delinquency, loan loss and repossession
experience on any Receivables Pool will be comparable to prior experience.
SELECTION CRITERIA AND CERTAIN OTHER CHARACTERISTICS
Information with respect to each Receivables Pool will be set forth in the
related Prospectus Supplement, including, to the extent appropriate, the
criteria used to select the related Receivables and the composition,
distribution by annual percentage rate ("APR") and geographic concentration of
such Receivables.
YIELD AND PREPAYMENT CONSIDERATIONS
Unless otherwise specified in the related Prospectus Supplement, the
Receivables will be simple interest retail installment sales contracts and
promissory notes. Payments on simple interest obligations are applied first to
interest accrued through the payment date, and the remainder is applied to
reduce the unpaid principal balance. Accordingly, if an Obligor pays an
installment before its due date, the portion of the payment allocable to
interest for the period will be less than if the payment had been made on the
due date, the portion of the payment applied to reduce the principal balance
will be correspondingly greater, and the principal balance will be amortized
more rapidly than scheduled. Conversely, if an Obligor pays an installment after
its due date, the portion of the payment allocable to interest will be greater
than if the payment had been made on the due date, the portion of the payment
applied to reduce the principal balance will be correspondingly less, and the
principal balance will be amortized slower than scheduled, in which case a
larger portion of the principal balance may be due on the final scheduled
payment date. Any interest shortfalls resulting from early payment or prepayment
of a Receivable will be funded by collections on other Receivables or, to the
extent collections are insufficient, by payments under the Policy, if any, or
other applicable form of credit enhancement, if any, described in the related
Prospectus Supplement.
15
<PAGE>
A substantial portion of the Receivables will be prepayable, without premium
or penalty, by Obligors at any time. Prepayments (or, for this purpose,
equivalent payments to a Trust) also may result from liquidations due to
default, receipt of proceeds from insurance policies, repurchases by Olympic
Financial of Warranty Receivables, purchases by the Servicer of Administrative
Receivables or as a result of the Seller or the Servicer exercising its option
to purchase the Receivables Pool. See "Description of the Purchase Agreements
and the Trust Documents." The rate of prepayments on the Receivables may be
influenced by a variety of economic, social and other factors. While Olympic
Financial does not maintain specific records for this purpose, it estimates
that, based on its experience over the past four years, the monthly prepayment
rate on the outstanding principal amount of the motor vehicle installment sales
contracts it has originated and serviced, for itself and others, has been
approximately 1.5%. However, no assurance can be given that the Receivables
included in any Receivables Pool will experience this rate of prepayment or any
greater or lesser rate. No assurance can be given that prepayments on the
Receivables will conform to any estimated or actual historical experience, and
no prediction can be made as to the actual prepayment rates which will be
experienced on the Receivables. Certificateholders and Noteholders will bear all
reinvestment risk resulting from the timing of payments of principal on the
Certificates or the Notes, as the case may be.
If so specified in the related Prospectus Supplement, certain of the
Receivables included in a Receivables Pool may provide for level monthly
payments during the scheduled term of the Receivable but a substantially larger
final payment at the scheduled maturity of the Receivable (each a "Balloon
Payment Receivable"). Although it is likely that the inclusion of such Balloon
Payment Receivables in a Receivables Pool would affect the weighted average
lives of the related Securities, no prediction can be made as to the nature or
magnitude of such effect.
POOL FACTOR
The "Certificate Pool Factor" for each class of Certificates will be an
eight-digit decimal which the Servicer will compute indicating the Certificate
Balance with respect to such Certificates as of each Distribution Date (after
giving effect to all distributions of principal made on such Distribution Date),
as a fraction of the Cutoff Date Certificate Principal Balance. The "Note Pool
Factor" for each class of Notes, if any, will be an eight-digit decimal which
the Servicer will compute indicating the remaining outstanding principal balance
with respect to such Notes as of each Payment Date (after giving effect to all
distributions of principal on such Payment Date) as a fraction of the initial
outstanding principal balance of such class of Notes. Each Certificate Pool
Factor and each Note Pool Factor will initially be 1.00000000; thereafter, the
Certificate Pool Factor and the Note Pool Factor will decline to reflect
reductions in the Certificate Balance of the applicable class of Certificates or
reductions in the outstanding principal balance of the applicable class of
Notes, as the case may be. The amount of a Certificateholder's pro rata share of
the Certificate Balance for the related class of Certificates can be determined
by multiplying the original denomination of the Certificateholder's Certificate
by the then applicable Certificate Pool Factor. The amount of a Noteholder's pro
rata share of the aggregate outstanding principal balance of the applicable
class of Notes can be determined by multiplying the original denomination of
such Noteholder's Note by the then applicable Note Pool Factor.
With respect to each Trust and pursuant to the related Trust Documents, on
each Distribution Date or Payment Date, as the case may be, the
Certificateholders and the Noteholders will receive periodic reports from the
Owner Trustee stating the Certificate Pool Factor or the Note Pool Factor, as
the case may be, and containing various other items of information. Unless and
until Definitive Certificates or Definitive Notes are issued, such reports will
be sent on behalf of the Trust to the Owner Trustee and the Indenture Trustee
and Cede & Co., as registered holder of the Certificates and the Notes and the
nominee of DTC. Certificate Owners and Note Owners may receive such reports,
upon written request, together with a certification that they are Certificate
Owners or Note Owners and payment of any expenses associated with the
distribution of such reports, from the Owner Trustee and the Indenture Trustee
at the addresses specified in the related Prospectus Supplement. See "Certain
Information Regarding the Securities -- Statements to Securityholders."
16
<PAGE>
USE OF PROCEEDS
Unless otherwise specified in the related Prospectus Supplement, the net
proceeds to be received by the Seller from the sale of each series of Securities
will be used to pay to Olympic Financial the purchase price for the Receivables
and to make the deposit of the Pre-Funded Amount into the Pre-Funding Account,
if any, to repay warehouse lenders and/or to provide for other forms of credit
enhancement specified in the related Prospectus Supplement. The net proceeds to
be received by Olympic Financial will be used to pay its warehouse loans, and
any additional proceeds will be added to Olympic Financial's general funds and
used for its general corporate purposes. See "Olympic Financial Ltd."
THE SELLER
The Seller, a wholly owned subsidiary of Olympic Financial Ltd., was
incorporated in the State of Delaware on February 3, 1993. The Seller has been
organized for the limited purposes of purchasing receivables from Olympic
Financial Ltd. and transferring such receivables to trusts such as the Trusts
described herein and any activities incidental to and necessary or convenient
for the accomplishment of such purposes. The principal executive offices of the
Seller are located at 7825 Washington Avenue South, Suite 410, Minneapolis,
Minnesota 55439-2435, and its telephone number is (612) 942-9880.
The Seller has taken and will take steps in structuring the transactions
contemplated hereby and in the related Prospectus Supplement that are intended
to make it unlikely that a voluntary or involuntary application for relief by
Olympic Financial under any Insolvency Law will result in consolidation of the
assets and liabilities of the Seller with those of Olympic Financial. These
steps include the creation of the Seller as a separate, limited-purpose
subsidiary pursuant to a Certificate of Incorporation containing certain
limitations (including restrictions on the nature of the Seller's business and a
restriction on the Seller's ability to commence a voluntary case or proceeding
under any Insolvency Law without the unanimous affirmative vote of all of its
directors and the holders of at least 66 2/3% of its outstanding common stock).
The Seller's Certificate of Incorporation includes a provision that requires the
Seller to have at least one director who qualifies under the Certificate of
Incorporation as an "Independent Director." The Seller has no intention of
filing a voluntary petition under Insolvency Laws unless its own financial
affairs merit such action.
OLYMPIC FINANCIAL LTD.
Olympic Financial purchases, securitizes and services consumer automobile
loans originated primarily by new car dealers affiliated with major foreign and
domestic manufacturers. Olympic Financial provides an alternative and
independent source of financing to automobile dealers for their customers'
purchases of new and used automobiles. Olympic Financial attempts to meet the
needs of dealers through consistent underwriting and loan purchasing practices,
extended operating hours, competitive interest rates, a dedicated customer
service staff, fast turn-around of loan applications, promotions and systems
designed to expedite processing of loan applications.
Since the Company's inception in March 1990, the Company has established 16
regional buying centers and expanded its dealer network to include more than
5,100 dealers in 37 states. The Company's regional buying centers are located in
Minneapolis, Minnesota; Denver, Colorado; Dallas, Texas; Seattle, Washington;
Houston, Texas; Phoenix, Arizona; Orlando, Florida; Atlanta, Georgia;
Sacramento, California; Boston, Massachusetts; St. Louis, Missouri; Nashville,
Tennessee; Cincinnati, Ohio; Charlotte, North Carolina; San Diego, California
and Buffalo, New York.
Olympic Financial purchases a Loan from a dealer only after Olympic
Financial has reviewed and approved a customer's credit application in
accordance with Olympic Financial's underwriting policies and procedures. See
"The Receivables -- Underwriting." Olympic Financial accumulates the automobile
loans it purchases and then sells them to a trust, which in turn sells
asset-backed securities to investors (a "securitization"). Prior to each
securitization, Olympic Financial funds the acquisition of loans primarily
through warehouse facilities with financial institutions and institutional
lenders.
Olympic Financial is a Minnesota corporation. Olympic Financial's principal
executive offices are located at Olympic Financial Center, 7825 Washington
Avenue South, Minneapolis, Minnesota 55439-2435, and its telephone number is
(612) 942-9880.
17
<PAGE>
THE CERTIFICATES
GENERAL
With respect to each Trust, one or more classes of Certificates of a given
series will be issued pursuant to Trust Documents to be entered into between the
Seller, Olympic Financial and the Owner Trustee, forms of which have been filed
as exhibits to the Registration Statement of which this Prospectus forms a part.
The following summary does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, all of the material provisions of the
Trust Documents. Where particular provisions of or terms used in the Trust
Documents are referred to, the actual provisions (including definitions of
terms) are incorporated by reference as part of this summary.
Unless otherwise specified in the related Prospectus Supplement, each class
of Certificates will initially be represented by a single Certificate registered
in the name of the nominee of DTC (together with any successor depository
selected by the Seller, the "Depository"). See "Certain Information Regarding
the Securities -- Book-Entry Registration." Unless otherwise specified in the
related Prospectus Supplement, the Certificates evidencing interests in a Trust
will be available for purchase in denominations of $1,000 initial principal
amount and integral multiples thereof, except that one Certificate evidencing an
interest in such Trust may be issued in a denomination that is less than $1,000
initial principal amount. Certificates may be transferred or exchanged without
the payment of any service charge other than any tax or governmental charge
payable in connection with such transfer or exchange. Unless otherwise specified
in the related Prospectus Supplement, the Owner Trustee will initially be
designated as the registrar for the Certificates.
DISTRIBUTIONS OF INTEREST AND PRINCIPAL
The timing and priority of distributions, seniority, allocations of loss,
Pass-Through Rate and amount of or method of determining distributions with
respect to principal and interest (or, where applicable, with respect to
principal only or interest only) on the Certificates of any series will be
described in the related Prospectus Supplement. Distributions of interest on the
Certificates will be made on the dates specified in the related Prospectus
Supplement (each, a "Distribution Date") and, unless otherwise specified in the
related Prospectus Supplement, will be made prior to distributions with respect
to principal. A series may include one or more classes of Strip Certificates
entitled to (i) distributions in respect of principal with disproportionate,
nominal or no interest distribution, or (ii) interest distributions, with
disproportionate, nominal or no distributions in respect of principal. Each
class of Certificates may have a different Pass-Through Rate, which may be a
fixed, variable or adjustable Pass-Through Rate (and which may be zero for
certain classes of Strip Certificates), or any combination of the foregoing. The
related Prospectus Supplement will specify the Pass-Through Rate for each class
of Certificate, or the initial Pass-Through Rate and the method for determining
the Pass-Through Rate. Unless otherwise specified in the related Prospectus
Supplement, interest on the Certificates will be calculated on the basis of a
360-day year consisting of twelve 30-day months. Unless otherwise specified in
the related Prospectus Supplement, distributions in respect of the Certificates
will be subordinate to payments in respect of the Notes, if any, as more fully
described in the related Prospectus Supplement. Distributions in respect of
principal of any class of Certificates will be made on a pro rata basis among
all of the Certificateholders of such class.
In the case of a series of Certificates which includes two or more classes
of Certificates, the timing, sequential order, priority of payment or amount of
distributions in respect of principal, and any schedule or formula or other
provisions applicable to the determination thereof, of each such class shall be
as set forth in the related Prospectus Supplement.
18
<PAGE>
THE NOTES
GENERAL
A series of Securities may include one or more classes of Notes issued
pursuant to the terms of an Indenture, a form of which has been filed as an
exhibit to the Registration Statement of which this Prospectus forms a part.
Unless otherwise specified in the related Prospectus Supplement, no Notes will
be issued as a part of any series. The following summary does not purport to be
complete and is subject to, and is qualified in its entirety by reference to,
all of the provisions of the Notes and the Indenture, and the following summary
may be supplemented or superseded in whole or in part by the related Prospectus
Supplement. Where particular provisions of or terms used in the Indenture are
referred to, the actual provisions (including definition of terms) are
incorporated by reference as part of this summary.
Unless otherwise specified in the related Prospectus Supplement, each class
of Notes will initially be represented by a single Note registered in the name
of the nominee of the Depository. See "Certain Information Regarding the
Securities -- Book-Entry Registration." Unless otherwise specified in the
related Prospectus Supplement, Notes will be available for purchase in
denominations of $1,000 and integral multiples thereof. Notes may be transferred
or exchanged without the payment of any service charge other than any tax or
governmental charge payable in connection with such transfer or exchange. Unless
otherwise provided in the related Prospectus Supplement, the Indenture Trustee
will initially be designated as the registrar for the Notes.
PRINCIPAL AND INTEREST ON THE NOTES
The timing and priority of payment, seniority, allocations of loss, Interest
Rate and amount of or method of determining payments of principal and interest
on the Notes will be described in the related Prospectus Supplement. The right
of holders of any class of Notes to receive payments of principal and interest
may be senior or subordinate to the rights of holders of any class or classes of
Notes of such series, or any class of Certificates, as described in the related
Prospectus Supplement. Unless otherwise provided in the related Prospectus
Supplement, payments of interest on the Notes will be made prior to payments of
principal thereon. A series may include one or more classes of Strip Notes
entitled to (i) principal payments with disproportionate, nominal or no interest
payment, or (ii) interest payments with disproportionate, nominal or no
principal payments. Each class of Notes may have a different Interest Rate,
which may be a fixed, variable or adjustable Interest Rate (and which may be
zero for certain classes of Strip Notes), or any combination of the foregoing.
The related Prospectus Supplement will specify the Interest Rate for each class
of Notes, or the initial Interest Rate and the method for determining the
Interest Rate. One or more classes of Notes of a series may be redeemable under
the circumstances specified in the related Prospectus Supplement.
Unless otherwise specified in the related Prospectus Supplement, payments in
respect of interest to Noteholders of all classes within a series will have the
same priority. Under certain circumstances, the amount available for such
payments could be less than the amount of interest payable on the Notes on any
of the dates specified for payments in the related Prospectus Supplement (each,
a "Payment Date"), in which case each class of Noteholders will receive their
ratable share (based upon the aggregate amount of interest due to such class of
Noteholders) of the aggregate amount available to be distributed in respect of
interest on the Notes.
In the case of a series of Securities which includes two or more classes of
Notes, the sequential order and priority of payment in respect of principal and
interest, and any schedule or formula or other provisions applicable to the
determination thereof, of each such class will be set forth in the related
Prospectus Supplement. Unless otherwise specified in the related Prospectus
Supplement, payments in respect of principal and interest of any class of Notes
will be made on a pro rata basis among all of the Notes of such class.
19
<PAGE>
THE INDENTURE
A form of Indenture has been filed as an exhibit to the Registration
Statement of which this Prospectus forms a part. The Seller will provide a copy
of the applicable Indenture (without exhibits) upon request to a holder of Notes
issued thereunder.
MODIFICATION OF INDENTURE WITHOUT NOTEHOLDER CONSENT. Each Trust and
related Indenture Trustee (on behalf of such Trust) may, with the consent of the
Security Insurer, if any (prior to an Insurer Default), but without consent of
the related Noteholders, enter into one or more supplemental indentures for any
of the following purposes: (i) to correct or amplify the description of the
collateral or add additional collateral; (ii) to provide for the assumption of
the Note and the Indenture obligations by a permitted successor to the Trust;
(iii) to add additional covenants for the benefit of the related Noteholders, or
to surrender any rights or power conferred upon the Trust; (iv) to convey,
transfer, assign, mortgage or pledge any property to or with the Indenture
Trustee; (v) to cure any ambiguity or correct or supplement any provision in the
Indenture or in any supplemental indenture; (vi) to provide for the acceptance
of the appointment of a successor Indenture Trustee or to add to or change any
of the provisions of the Indenture or in any supplemental indenture which may be
inconsistent with any other provision of the Indenture as shall be necessary and
permitted to facilitate the administration by more than one trustee; (vii) to
modify, eliminate or add to the provisions of the Indenture in order to comply
with the Trust Indenture Act of 1939, as amended; and (viii) to add any
provisions to, change in any manner, or eliminate any of the provisions of, the
Indenture or modify in any manner the rights of Noteholders under such
Indenture; provided that any action specified in this clause (viii) shall not,
as evidenced by an opinion of counsel, adversely affect in any material respect
the interests of any related Noteholder unless Noteholder consent is otherwise
obtained as described below.
MODIFICATIONS OF INDENTURE WITH NOTEHOLDER CONSENT. With respect to each
Trust, with the consent of the Security Insurer, if any (prior to an Insurer
Default), and the holders representing a majority of the principal balance of
the outstanding related Notes (a "Note Majority"), the Owner Trustee and the
Indenture Trustee may execute a supplemental indenture to add provisions to
change in any manner or eliminate any provisions of, the related Indenture, or
modify in any manner the rights of the related Noteholders.
Without the consent of the Security Insurer, if any (prior to an Insurer
Default), and the holder of each outstanding related Note affected thereby,
however, no supplemental indenture may: (i) change the due date of any
installment of principal of or interest on any Note or reduce the principal
amount thereof, the interest rate specified thereon or the redemption price with
respect thereto or change the manner of calculating any such payment or any
place of payment where the coin or currency in which any Note or any interest
thereon is payable; (ii) impair the right to institute suit for the enforcement
of certain provisions of the Indenture regarding payment; (iii) reduce the
percentage of the aggregate amount of the outstanding Notes the consent of the
holders of which is required for any such supplemental indenture or the consent
of the holders of which is required for any waiver of compliance with certain
provisions of the Indenture or of certain defaults thereunder and their
consequences as provided for in the Indenture; (iv) modify or alter the
provisions of the Indenture regarding the voting of Notes held by the related
Trust, any other obligor on the Notes, the Seller or an affiliate of any of
them; (v) reduce the percentage of the aggregate outstanding amount of the Notes
the consent of the holders of which is required to direct the Indenture Trustee
to sell or liquidate the Receivables if the proceeds of such sale would be
insufficient to pay the principal amount and accrued but unpaid interest on the
outstanding Notes; (vi) decrease the percentage of the aggregate principal
amount of the Notes required to amend the sections of the Indenture which
specify the applicable percentage of aggregate principal amount of the Notes
necessary to amend the Indenture or certain other related agreements; or (vii)
permit the creation of any lien ranking prior to or on a parity with the lien of
the Indenture with respect to any of the collateral for the Notes or, except as
otherwise permitted or contemplated in the Indenture, terminate the lien of the
Indenture on any such collateral or deprive the holder of any Note of the
security afforded by the lien of the Indenture.
EVENTS OF DEFAULT; RIGHTS UPON EVENT OF DEFAULT. With respect to each
Trust, unless otherwise specified in the related Prospectus Supplement, "Events
of Default" under the Indenture will consist of: (i) a default
20
<PAGE>
for five days or more in the payment of any interest on any Note; (ii) a default
in the payment of the principal of or any installment of the principal of any
Note when the same becomes due and payable; (iii) a default in the observance or
performance in any material respect of any covenant or agreement of the Trust
made in the Indenture, or any representation or warranty made by the Trust in
the Indenture or in any certificate delivered pursuant thereto or in connection
therewith having been incorrect as of the time made, and the continuation of any
such default or the failure to cure such breach of a representation or warranty
for a period of 30 days after notice thereof is given to the Trust by the
Indenture Trustee or to the Trust and the Indenture Trustee by the holders of at
least 25% in principal amount of the Notes then outstanding; or (iv) certain
events of bankruptcy, insolvency, receivership or liquidation of the Trust.
However, the amount of principal due and payable on any class of Notes on any
Payment Date (prior to the Final Scheduled Payment Date, if any, for such class)
will generally be determined by amounts available to be deposited in the Note
Distribution Account for such Payment Date. Therefore, unless otherwise
specified in the related Prospectus Supplement, the failure to pay principal on
a class of Notes generally will not result in the occurrence of an Event of
Default unless such class of Notes has a Final Scheduled Payment Date, and then
not until such Final Scheduled Payment Date for such class of Notes.
Unless otherwise specified in the related Prospectus Supplement, if an Event
of Default should occur and be continuing with respect to the Notes of any
series, the related Indenture Trustee or a Note Majority may declare the
principal of the Notes to be immediately due and payable. Such declaration may,
under certain circumstances, be rescinded by a Note Majority.
Unless otherwise specified in the related Prospectus Supplement, if the
Notes of any series have been declared due and payable following an Event of
Default with respect thereto, the related Indenture Trustee may institute
proceedings to collect amounts due or foreclose on Trust Property, exercise
remedies as a secured party, sell the related Receivables or elect to have the
Trust maintain possession of such Receivables and continue to apply collections
on such Receivables as if there had been no declaration of acceleration. Unless
otherwise specified in the related Prospectus Supplement, the Indenture Trustee,
however, will be prohibited from selling the related Receivables following an
Event of Default, unless (i) the holders of all the outstanding related Notes
consent to such sale; (ii) the proceeds of such sale are sufficient to pay in
full the principal of and the accrued interest on such outstanding Notes at the
date of such sale; or (iii) the Indenture Trustee determines that the proceeds
of the Receivables would not be sufficient on an ongoing basis to make all
payments on the Notes as such payments would have become due if such obligations
had not been declared due and payable, and the Indenture Trustee obtains the
consent of the holders of 66% of the aggregate outstanding amount of the Notes.
Unless otherwise specified in the related Prospectus Supplement, following a
declaration upon an Event of Default that the Notes are immediately due and
payable, (i) Noteholders will be entitled to ratable repayment of principal on
the basis of their respective unpaid principal balances and (ii) repayment in
full of the accrued interest on and unpaid principal balances of the Notes will
be made prior to any further payment of interest or principal on the
Certificates.
Subject to the provisions of the Indenture relating to the duties of the
Indenture Trustee, if an Event of Default occurs and is continuing with respect
to a series of Notes, the Indenture Trustee will be under no obligation to
exercise any of the rights or powers under the Indenture at the request or
direction of any of the holders of such Notes, if the Indenture Trustee
reasonably believes it will not be adequately indemnified against the costs,
expenses and liabilities which might be incurred by it in complying with such
request. Subject to the provisions for indemnification and certain limitations
contained in the Indenture, a Note Majority in a series will have the right to
direct the time, method and place of conducting any proceeding or any remedy
available to the Indenture Trustee, and a Note Majority may, in certain cases,
waive any default with respect thereto, except a default in the payment of
principal or interest or a default in respect of a covenant or provision of the
Indenture that cannot be modified without the waiver or consent of all of the
holders of such outstanding Notes.
No holder of a Note of any series will have the right to institute any
proceeding with respect to the related Indenture, unless (i) such holder
previously has given to the Indenture Trustee written notice of a continuing
Event of Default, (ii) the holders of not less than 25% in principal amount of
the outstanding Notes of such series have made written request of the Indenture
Trustee to institute such proceeding in its
21
<PAGE>
own name as Indenture Trustee, (iii) such holder or holders have offered the
Indenture Trustee reasonable indemnity, (iv) the Indenture Trustee has for 60
days failed to institute such proceeding, (v) no direction inconsistent with
such written request has been given to the Indenture Trustee during such 60-day
period by the holders of a majority in principal amount of such outstanding
Notes, and (vi) in the case of a series of Securities with respect to which a
Policy is issued, an Insurer Default shall have occurred and be continuing.
If an Event of Default occurs and is continuing and if it is known to the
Indenture Trustee, the Indenture Trustee will mail to each Noteholder notice of
the Event of Default within 90 days after it occurs. Except in the case of a
failure to pay principal of or interest on any Note, the Indenture Trustee may
withhold the notice if and so long as it determines in good faith that
withholding the notice is in the interests of the Noteholders.
In addition, each Indenture Trustee and the related Noteholders, by
accepting the related Notes, will covenant that they will not at any time
institute against the Seller or the related Trust any bankruptcy, reorganization
or other proceeding under any federal or state bankruptcy or similar law.
Neither the Indenture Trustee nor the Owner Trustee in its individual
capacity, nor any holder of a Certificate including, without limitation, the
Seller, nor any of their respective owners, beneficiaries, agents, officers,
directors, employees, affiliates, successors or assigns will, in the absence of
an express agreement to the contrary, be personally liable for the payment of
the related Notes or for any agreement or covenant of the related Trust
contained in the Indenture.
CERTAIN COVENANTS. Each Indenture will provide that the related Trust may
not consolidate with or merge into any other entity, unless (i) the entity
formed by or surviving such consolidation or merger is organized under the laws
of the United States or any state, (ii) such entity expressly assumes the
Trust's obligation to make due and punctual payments upon the Notes and the
performance or observance of every agreement and covenant of the Trust under the
Indenture, (iii) no Event of Default shall have occurred and be continuing
immediately after such merger or consolidation, (iv) the Owner Trustee has been
advised that the then current rating of the related Notes or Certificates then
in effect would not be reduced or withdrawn by the Rating Agencies as a result
of such merger or consolidation, (v) the Security Insurer, if any (prior to an
Insurer Default), has consented to such merger or consolidation, and (vi) the
Owner Trustee has received an opinion of counsel to the effect that such
consolidation or merger would have no material adverse tax consequence to the
Trust or to any related Noteholder or Certificateholder.
Each Trust will not, among other things, (i) except as expressly permitted
by the Indenture, the Purchase Agreement, the Trust Documents or certain related
documents for such Trust (collectively, the "Related Documents"), sell,
transfer, exchange or otherwise dispose of any of the assets of the Trust, (ii)
claim any credit on or make any deduction from the principal and interest
payable in respect of the related Notes (other than amounts withheld under the
Code or applicable state law) or assert any claim against any present or former
holder of such Notes because of the payment of taxes levied or assessed upon the
Trust, (iii) dissolve or liquidate in whole or in part, (iv) permit the validity
or effectiveness of the related Indenture to be impaired or permit any person to
be released from any covenants or obligations with respect to the related Notes
under such Indenture except as may be expressly permitted thereby, or (v) except
as expressly permitted by the Related Documents, permit any lien, charge,
excise, claim, security interest, mortgage or other encumbrance to be created on
or extend to or otherwise arise upon or burden the assets of the Trust or any
part thereof, or any interest therein or proceeds thereof.
No Trust may engage in any activity other than as specified under the
section of the related Prospectus Supplement entitled "The Trust." No Trust will
incur, assume or guarantee any indebtedness other than indebtedness incurred
pursuant to the related Notes and the related Indenture or otherwise in
accordance with the Related Documents.
ANNUAL COMPLIANCE STATEMENT. Each Trust will be required to file annually
with the related Indenture Trustee a written statement as to the fulfillment of
its obligations under the Indenture.
22
<PAGE>
INDENTURE TRUSTEE'S ANNUAL REPORT. The Indenture Trustee will be required
to mail each year to all related Noteholders a brief report relating to its
eligibility and qualification to continue as Indenture Trustee under the related
Indenture, any amounts advanced by it under the Indenture, the amount, interest
rate and maturity date of certain indebtedness owing by the Trust to the
Indenture Trustee in its individual capacity, the property and funds physically
held by the Indenture Trustee as such and any action taken by it that materially
affects the Notes and that has not been previously reported.
SATISFACTION AND DISCHARGE OF INDENTURE. The Indenture will be discharged
with respect to the collateral securing the related Notes upon the delivery to
the related Indenture Trustee for cancellation of all such Notes or, with
certain limitations, upon deposit with the Indenture Trustee of funds sufficient
for the payment in full of all of such Notes.
THE INDENTURE TRUSTEE
The Indenture Trustee for a series of Notes will be specified in the related
Prospectus Supplement. The Indenture Trustee may resign at any time, in which
event the Seller will be obligated to appoint a successor trustee acceptable to
the Security Insurer, if any (prior to an Insurer Default). The Seller may also
remove the Indenture Trustee, with the consent of the Security Insurer, if any
(prior to an Insurer Default), if the Indenture Trustee ceases to be eligible to
continue as such under the Indenture or if the Indenture Trustee becomes
insolvent. In such circumstances, the Seller will be obligated to appoint a
successor trustee acceptable to the Security Insurer, if any (prior to an
Insurer Default). Any resignation or removal of the Indenture Trustee and
appointment of a successor trustee will be subject to any conditions or
approvals, if any, specified in the related Prospectus Supplement and will not
become effective until acceptance of the appointment by a successor trustee.
CERTAIN INFORMATION REGARDING THE SECURITIES
BOOK-ENTRY REGISTRATION
Unless otherwise provided in the related Prospectus Supplement, the
Securities of each series will be registered in the name of Cede & Co., the
nominee of DTC. DTC is a limited-purpose trust company organized under the laws
of the State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code, and a
"clearing agency" registered pursuant to the provisions of Section 17A of the
Exchange Act. DTC accepts securities for deposit from its participating
organizations ("Participants") and facilitates the clearance and settlement of
securities transactions between Participants in such securities through
electronic book-entry changes in accounts of Participants, thereby eliminating
the need for physical movement of certificates. Participants include securities
brokers and dealers, banks and trust companies and clearing corporations and may
include certain other organizations. Indirect access to the DTC system is also
available to others such as banks, brokers, dealers and trust companies that
clear through or maintain a custodial relationship with a Participant, either
directly or indirectly ("indirect participants").
Certificate Owners and Note Owners who are not Participants but desire to
purchase, sell or otherwise transfer ownership of Securities may do so only
through Participants (unless and until Definitive Certificates or Definitive
Notes, each as defined below, are issued). In addition, Certificate Owners and
Note Owners will receive all distributions of principal of, and interest on, the
Securities from the Owner Trustee or the Indenture Trustee, as applicable,
through DTC and Participants. Certificate Owners and Note Owners will not
receive or be entitled to receive certificates representing their respective
interests in the Securities, except under the limited circumstances described
below and such other circumstances, if any, as may be specified in the related
Prospectus Supplement.
Unless and until Definitive Securities are issued, it is anticipated that
the only Certificateholder of the Certificates and the only Noteholder of the
Notes, if any, will be Cede & Co., as nominee of DTC. Certificate Owners and
Note Owners will not be recognized by the Owner Trustee as Certificateholders or
by the Indenture Trustee as Noteholders as those terms are used in the related
Trust Documents or Indenture. Certificate Owners and Note Owners will be
permitted to exercise the rights of Certificateholders or Noteholders, as the
case may be, only indirectly through Participants and DTC.
23
<PAGE>
With respect to any series of Securities, while the Securities are
outstanding (except under the circumstances described below), under the rules,
regulations and procedures creating and affecting DTC and its operations (the
"Rules"), DTC is required to make book-entry transfers among Participants on
whose behalf it acts with respect to the Securities and is required to receive
and transmit distributions of principal of, and interest on, the Securities.
Participants with whom Certificate Owners or Note Owners have accounts with
respect to Securities are similarly required to make book-entry transfers and
receive and transmit such distributions on behalf of their respective
Certificate Owners and Note Owners. Accordingly, although Certificate Owners and
Note Owners will not possess Securities, the Rules provide a mechanism by which
Certificate Owners and Note Owners will receive distributions and will be able
to transfer their interests.
With respect to any series of Securities, unless otherwise specified in the
related Prospectus Supplement, Certificates and Notes (if any) will be issued in
registered form to Certificate Owners and Note Owners, or their nominees, rather
than to DTC (such Certificates and Notes being referred to herein as "Definitive
Certificates" and "Definitive Notes," respectively), only if (i) DTC, the Seller
or the Servicer advises the Owner Trustee or the Indenture Trustee, as the case
may be, in writing that DTC is no longer willing or able to discharge properly
its responsibilities as nominee and depository with respect to the Certificates
or the Notes, and the Seller, the Servicer, the Owner Trustee or the Indenture
Trustee, as the case may be, is unable to locate a qualified successor, (ii) the
Seller or the Administrator (if any) at its sole option has advised the Owner
Trustee or the Indenture Trustee, as the case may be, in writing that it elects
to terminate the book-entry system through DTC and (iii) after the occurrence of
a Servicer Termination Event, the holders representing a majority of the
Certificate Balance (a "Certificate Majority") or a Note Majority advises the
Owner Trustee or the Indenture Trustee, as the case may be, through DTC, that
continuation of a book-entry system is no longer in their best interests. Upon
issuance of Definitive Certificates or Definitive Notes to Certificate Owners or
Note Owners, such Certificates or Notes will be transferable directly (and not
exclusively on a book-entry basis) and registered holders will deal directly
with the Owner Trustee or the Indenture Trustee, as the case may be, with
respect to transfers, notices and distributions.
DTC has advised the Seller that, unless and until Definitive Certificates or
Definitive Notes are issued, DTC will take any action permitted to be taken by a
Certificateholder or a Noteholder under the related Trust Documents or Indenture
only at the direction of one or more Participants to whose DTC accounts the
Certificates or Notes are credited. DTC has advised the Seller that DTC will
take such action with respect to any fractional interest of the Certificates or
the Notes only at the direction of and on behalf of such Participants
beneficially owning a corresponding fractional interest of the Certificates or
the Notes. DTC may take actions, at the direction of the related Participants,
with respect to some Certificates or Notes which conflict with actions taken
with respect to other Certificates or Notes.
Issuance of Certificates and Notes in book-entry form rather than as
physical certificates or notes may adversely affect the liquidity of
Certificates or Notes in the secondary market and the ability of the Certificate
Owners or Note Owners to pledge them. In addition, since distributions on the
Certificates and the Notes will be made by the Owner Trustee or the Indenture
Trustee to DTC and DTC will credit such distributions to the accounts of its
Participants, with the Participants further crediting such distributions to the
accounts of indirect participants or Certificate Owners or Note Owners,
Certificate Owners and Note Owners may experience delays in the receipt of such
distributions.
STATEMENTS TO SECURITYHOLDERS
On or prior to each Distribution Date, the Servicer will prepare and provide
to the Owner Trustee a statement to be delivered to the related
Certificateholders on such Distribution Date. On or prior to each Payment Date,
the Servicer will prepare and provide to the Indenture Trustee a statement to be
delivered to the related Noteholders on such Payment Date. Such statements will
be based on the information in the related Servicer's Certificate setting forth
certain information required under the Trust Documents (the "Servicer's
Certificate"). Unless otherwise specified in the related Prospectus Supplement,
each such statement to be delivered to Certificateholders will include the
following information as to the Certificates
24
<PAGE>
with respect to such Distribution Date or the period since the previous
Distribution Date, as applicable, and each such statement to be delivered to
Noteholders will include the following information as to the Notes with respect
to such Payment Date or the period since the previous Payment Date, as
applicable:
(i) the amount of the distribution allocable to interest on or with
respect to each class of Securities;
(ii) the amount of the distribution allocable to principal on or with
respect to each class of Securities;
(iii) the Certificate Balance and the Certificate Pool Factor for each
class of Certificates and the aggregate outstanding principal balance and
the Note Pool Factor for each class of Notes, after giving effect to all
payments reported under (ii) above on such date;
(iv) the amount of the Servicing Fee paid to the Servicer with respect
to the related Monthly Period or Periods, as the case may be;
(v) the Pass-Through Rate or Interest Rate for the next period for any
class of Certificates or Notes with variable or adjustable rates;
(vi) the amount, if any, distributed to Certificateholders and
Noteholders applicable to payments under the related Policy or other form of
credit enhancement, if any; and
(vii) such other information as may be specified in the related
Prospectus Supplement.
Each amount set forth pursuant to subclauses (i), (ii), (iv), (vi) and (vii)
with respect to Certificates or Notes will be expressed as a dollar amount per
$1,000 of the initial Certificate Balance or the initial principal balance of
the Notes, as applicable.
Unless and until Definitive Certificates or Definitive Notes are issued,
such reports with respect to a series of Securities will be sent on behalf of
the related Trust to the Owner Trustee, the Indenture Trustee and Cede & Co., as
registered holder of the Certificates and the Notes and the nominee of DTC.
Certificate Owners and Note Owners may receive copies of such reports upon
written request, together with a certification that they are Certificate Owners
or Note Owners, as the case may be, and payment of any expenses associated with
the distribution of such reports, from the Owner Trustee or the Indenture
Trustee, as applicable. See "Reports to Securityholders" and "-- Book-Entry
Registration" above.
Within the prescribed period of time for tax reporting purposes after the
end of each calendar year during the term of a Trust, the Owner Trustee and the
Indenture Trustee, as applicable, will mail to each holder of a class of
Securities who at any time during such calendar year has been a Securityholder,
and received any payment thereon, a statement containing certain information for
the purposes of such Securityholder's preparation of federal income tax returns.
See "Certain Federal Income Tax Consequences."
LISTS OF SECURITYHOLDERS
Unless otherwise provided in the related Prospectus Supplement, with respect
to each series of Certificates, at such time, if any, as Definitive Certificates
have been issued, the Owner Trustee will, upon written request by three or more
Certificateholders or one or more holders of Certificates evidencing not less
than 25% of the Certificate Balance, within five Business Days after provision
to the Owner Trustee of a statement of the applicants' desire to communicate
with other Certificateholders about their rights under the related Trust
Documents or the Certificates and a copy of the communication that the
applicants propose to transmit, afford such Certificateholders access during
business hours to the current list of Certificateholders for purposes of
communicating with other Certificateholders with respect to their rights under
the Trust Documents. Unless otherwise specified in the related Prospectus
Supplement, the Trust Documents will not provide for holding any annual or other
meetings of Certificateholders.
Unless otherwise provided in the related Prospectus Supplement, with respect
to each series of Notes, if any, at such time, if any, as Definitive Notes have
been issued, the Indenture Trustee will, upon written request by three or more
Noteholders or one or more holders of Notes evidencing not less than 25% of the
25
<PAGE>
aggregate principal balance of the related Notes, within five Business Days
after provision to the Indenture Trustee of a statement of the applicants'
desire to communicate with other Noteholders about their rights under the
related Indenture or the Notes and a copy of the communication that the
applicants propose to transmit, afford such Noteholders access during business
hours to the current list of Noteholders for purposes of communicating with
other Noteholders with respect to their rights under the Indenture. Unless
otherwise specified in the related Prospectus Supplement, the Indenture will not
provide for holding any annual or other meetings of Noteholders.
DESCRIPTION OF THE PURCHASE AGREEMENTS AND THE
TRUST DOCUMENTS
Except as otherwise specified in the related Prospectus Supplement, the
following summary describes certain terms of the Purchase Agreements (each a
"Purchase Agreement") pursuant to which the Seller will purchase Receivables
from Olympic Financial, and certain terms of either (i) the Pooling and
Servicing Agreements or (ii) the Sale and Servicing Agreements and the Trust
Agreements (in either case collectively referred to as the "Trust Documents")
pursuant to which the Seller will sell and assign such Receivables to a Trust
and the Servicer will agree to service such Receivables on behalf of the Trust,
and pursuant to which such Trust will be created and Certificates will be
issued. Forms of the Purchase Agreement and the Trust Documents have been filed
as exhibits to the Registration Statement of which this Prospectus forms a part.
The Seller will provide a copy of such agreements (without exhibits) upon
request to a holder of Securities described therein. This summary does not
purport to be complete and is subject to, and qualified in its entirety by
reference to, all of the provisions of the Purchase Agreement and the Trust
Documents. Where particular provisions or terms used in the Purchase Agreement
and the Trust Documents are referred to, the actual provisions (including
definitions of terms) are incorporated by reference as part of such summary.
SALE AND ASSIGNMENT OF THE RECEIVABLES
On or prior to the Closing Date with respect to a series of Securities
specified in the related Prospectus Supplement, Olympic Financial will enter
into a Purchase Agreement with the Seller pursuant to which Olympic Financial
will, on or prior to such Closing Date, sell and assign to the Seller, without
recourse, its entire interest in and to the related Receivables, including its
security interest in the Financed Vehicles securing such Receivables and its
rights to receive all payments on, or proceeds with respect to, such Receivables
to the extent paid or payable after the applicable Cutoff Date. Pursuant to the
Purchase Agreement, Olympic Financial will agree that, upon the occurrence of a
Repurchase Event under the related Trust Documents with respect to any of the
Receivables of a Trust, the Owner Trustee on behalf of the Security Insurer (if
any) and the Certificateholders will be entitled to require Olympic Financial to
repurchase such Receivables from the Trust. Such rights of the Trust under the
Purchase Agreement will constitute part of the property of the Trust and may be
enforced directly by the Owner Trustee on behalf of the Security Insurer (if
any) and the Certificateholders. In addition, the Owner Trustee will pledge such
rights to the Indenture Trustee as collateral for the Notes, if any.
On the Closing Date, the Seller will sell and assign to the Owner Trustee,
without recourse, the Seller's entire interest in the related Receivables and
the proceeds thereof, including its security interests in the Financed Vehicles.
Each Receivable transferred by the Seller to the Trust will be identified in a
schedule appearing as an exhibit to the related Trust Documents (the "Schedule
of Receivables"). Concurrently with such sale and assignment, the Owner Trustee
will execute and deliver the related certificates representing the Certificates
to or upon the order of the Seller, and the Owner Trustee will execute and the
Indenture Trustee will authenticate and deliver the Notes, if any, to or upon
the order of the Seller.
Unless otherwise specified in the related Prospectus Supplement, in the
Purchase Agreement, Olympic Financial will warrant to the Seller and the Owner
Trustee, and in the Trust Documents, the Seller will warrant to the Owner
Trustee, among other things, that (except as otherwise specified in the related
Prospectus Supplement): (i) each Receivable (A) has created or will create a
valid, binding and enforceable first priority security interest in favor of
Olympic Financial in the Financed Vehicle (and, within 180 days after the
Closing Date, all title documents to the Financed Vehicles will show Olympic
Financial as first
26
<PAGE>
lienholder), which security interest has been validly assigned by Olympic
Financial to the Seller and by the Seller to the Owner Trustee, (B) was
originated by a Dealer for the retail sale of a Financed Vehicle in the ordinary
course of such Dealer's business, was fully and properly executed by the parties
thereto, was purchased by Olympic Financial from such Dealer under an existing
Dealer Agreement with Olympic Financial and was validly assigned by such Dealer
to Olympic Financial, (C) contains customary and enforceable provisions adequate
to enable realization against the collateral security and (D) except for any
Balloon Payment Receivables, is a fully amortizing simple interest receivable
which provides for level monthly payments (other than with respect to the first
and the final payments) which, if made when due, will fully amortize the amount
financed over the original term; (ii) no selection procedures adverse to the
Securityholders were utilized in selecting the Receivables from those
receivables owned by Olympic Financial which meet the selection criteria
contained in the Trust Documents; (iii) all requirements of applicable Federal,
state and local laws, and regulations thereunder, in respect of all of the
Receivables and each and every sale of the Financed Vehicles have been complied
with in all material respects; (iv) each Receivable represents the genuine,
legal, valid and binding payment obligation of the Obligor thereon, enforceable
in accordance with its terms, except as may be limited by laws affecting
creditors' rights generally or as may be modified by the application of the
Soldiers' and Sailors' Civil Relief Act of 1940, as amended (the "Relief Act");
(v) (A) immediately before the conveyance of each Receivable to the Trust, such
Receivable will be secured by an enforceable and validly perfected first
priority security interest in the Financed Vehicle in favor of the Seller as
secured party, (B) immediately after the conveyance of each Receivable to the
Trust, such Receivable will be secured by an enforceable and validly perfected
first priority security interest in the Financed Vehicle in favor of the Trust
as secured party or, in each case, all necessary and appropriate action has been
commenced and will be completed within 180 days that would result in such a
security interest and (C) as of the Cutoff Date there were no security
interests, liens, charges, pledges, preferences, equities or encumbrances of any
kind, claims or rights of others or claims for taxes, work, labor or materials
affecting a Financed Vehicle (each, a "Lien") which are or may be Liens prior or
equal to the Lien of the related Receivable; (vi) there has been no default,
breach, violation or event permitting acceleration under the terms of any
Receivable (other than payment delinquencies of not more than 30 days), and
there has been no waiver of any of the foregoing; and as of the Cutoff Date, no
Financed Vehicle had been repossessed; (vii) immediately prior to the conveyance
of the Receivables to the Seller, Olympic Financial had good and indefeasible
title thereto and was the sole owner thereof, free of any Lien; immediately
prior to the conveyance of the Receivables to the Trust, the Seller had good and
indefeasible title thereto and was the sole owner thereof, free of any Lien; and
upon conveyance of the Receivables by the Seller to the Trust pursuant to the
Trust Documents, the Trust will have good and indefeasible title to and will be
the sole owner of the Receivables, free of any Lien; (viii) no Dealer has a
participation in or other right to receive proceeds of any Receivable, and
neither Olympic Financial nor the Seller has taken any action to convey any
right to any person that would result in such person having a right to payments
received with respect to any Receivable; (ix) neither Olympic Financial nor the
Seller has done anything to convey any right to any person that would impair the
rights of the Trust, the Certificateholders or the Noteholders in any Receivable
or the proceeds thereof; (x) each Receivable was originated by a Dealer and was
sold by the Dealer to Olympic Financial without any fraud or misrepresentation
on the part of such Dealer; (xi) no Obligor is the United States of America or
any State or any agency, department, subdivision or instrumentality thereof;
(xii) no Receivable is assumable by another person in a manner that would
release the Obligor thereof from such Obligor's obligations to Olympic Financial
with respect to such Receivable; (xiii) no Receivable was originated in, or is
subject to the laws of, any jurisdiction the laws of which would make unlawful,
void or voidable the sale, transfer and assignment of such Receivable under the
Purchase Agreement or the Trust Documents or pursuant to transfers of the
Securities; (xiv) all filings and other actions required to be made, taken or
performed by any person in any jurisdiction to give the Trust a first priority
perfected lien or ownership interest in the Receivables will have been made,
taken or performed; (xv) there exists a Receivable File pertaining to each
Receivable, and such Receivable File contains (A) the fully executed original of
the Receivable, (B) a certificate of insurance or application form for insurance
signed by the Obligor, or copies thereof, (C) the original lien certificate or
application therefor and (D) a credit application signed by the Obligor, or a
copy thereof; each of such documents required to be signed by the Obligor has
been signed by the Obligor in the appropriate spaces, all blanks have been
properly filled in and each form has otherwise
27
<PAGE>
been correctly prepared; and the complete Receivable File for each Receivable is
in the possession of a custodian; (xvi) there is only one original executed copy
of each Receivable; (xvii) the Receivables constitute chattel paper within the
meaning of the UCC as in effect in the States of New York and Minnesota; (xviii)
each Receivable was entered into by an Obligor who at the Cutoff Date had not
been identified on the records of Olympic Financial as being the subject of a
current bankruptcy proceeding; (xix) the computer tape containing information
with respect to the Receivables that was made available by the Seller to the
Owner Trustee on the Closing Date and was used to select the Receivables (the
"Computer Tape") was complete and accurate as of the Cutoff Date and includes a
description of the same Receivables that are described in the Schedule of
Receivables; (xx) by the Closing Date, the portions of the electronic master
record of retail installment sale contracts and promissory notes of Olympic
Financial (the "Electronic Ledger") relating to the Receivables will have been
clearly and unambiguously marked to show that the Receivables constitute part of
the Trust Property and are owned by the Trust in accordance with the terms of
the Trust Documents; (xxi) the information set forth in the Schedule of
Receivables was produced from the Electronic Ledger and was true and correct in
all material respects as of the close of business on the Cutoff Date; (xxii) as
of the Closing Date, each Financed Vehicle was covered by a comprehensive and
collision insurance policy (A) in an amount at least equal to the lesser of (1)
its maximum insurable value or (2) the principal amount due from the Obligor
under the related Receivable, (B) naming Olympic Financial as loss payee and (C)
insuring against loss and damage due to fire, theft, transportation, collision
and other risks generally covered by comprehensive and collision insurance
coverage; and no Financed Vehicle was or had previously been insured under a
policy of force-placed insurance; (xxiii) no Receivable has been satisfied,
subordinated or rescinded; the Financed Vehicle securing each Receivable has not
been released from the lien of the related Receivable in whole or in part; and
no provision of a Receivable has been waived, altered or modified in any
respect, except by instruments or documents contained in the Receivable File;
(xxiv) no Receivable is subject to any right of rescission, set-off,
counterclaim or defense; (xxv) no Receivable was more than 30 days past due as
of the Cutoff Date and (xxvi) each Receivable had a remaining principal balance
as of the Cutoff Date equal to or greater than $500.00.
The warranties of Olympic Financial and the Seller will be made as of the
execution and delivery of each Purchase Agreement and the related Trust
Documents and will survive the sale, transfer and assignment of the related
Receivables and other Trust Property to the Trust but will speak only as of the
date made.
In the event of a breach by Olympic Financial of any representation or
warranty made by it in a Purchase Agreement with respect to a Receivable that
materially and adversely affects the interests of the Securityholders, the
Security Insurer (if any) or the Trust in that Receivable (any such breach by
Olympic Financial being a "Repurchase Event"), Olympic Financial, unless it
cures the breach by the second Accounting Date after the date on which Olympic
Financial becomes aware of or receives written notice from the Owner Trustee,
the Indenture Trustee, the Security Insurer, if any, or the Servicer of such
breach, will be obligated to repurchase the Receivable from the Trust. Any such
repurchase shall be made on the Deposit Date immediately following such second
Accounting Date at a price equal to the Purchase Amount as of such second
Accounting Date. The "Purchase Amount" of any Receivable means, with respect to
any Accounting Date, the outstanding principal balance of such Receivable as of
such Accounting Date, plus accrued and unpaid interest thereon. The "Deposit
Date" with respect to any Distribution Date is the Business Day immediately
preceding the Determination Date for such Distribution Date. An "Accounting
Date" is the last day (whether or not a Business Day) of any calendar month.
This repurchase obligation may be enforced by the Security Insurer (if any), or
by the Owner Trustee or the Indenture Trustee on behalf of the
Certificateholders and the Noteholders, respectively, and will constitute the
sole remedy available to the Certificateholders, the Noteholders, the Security
Insurer (if any), unless otherwise specified in the related Prospectus
Supplement, the Owner Trustee or the Indenture Trustee against Olympic Financial
or the Seller for any such uncured breach, except that pursuant to the Trust
Documents, Olympic Financial will indemnify the Owner Trustee, the Indenture
Trustee, the Trust, the Backup Servicer, the Collateral Agent, the Security
Insurer (if any), and the Certificateholders and Noteholders against losses,
damages, liabilities and claims which may be asserted against any of them as a
result of third-party claims arising out of the facts giving rise to such
breach.
28
<PAGE>
Upon the purchase by Olympic Financial of a Warranty Receivable, the Owner
Trustee will convey such Receivable and the related Trust Property to Olympic
Financial.
CUSTODY OF RECEIVABLE FILES
Unless otherwise specified in the related Prospectus Supplement, Olympic
Financial initially will be appointed to act as custodian for the Receivable
Files of each Trust. Prior to any such appointment, the Trust and Olympic
Financial or such other institution specified in the related Prospectus
Supplement, as the case may be, shall enter into a custodian agreement pursuant
to which Olympic Financial or such other institution will agree to hold the
Receivable Files on behalf of the related Trust. Any such custodian agreement
may be terminated by the Trust and, if Olympic Financial is custodian, by the
Security Insurer, on 30 days' notice to Olympic Financial or such other
institution or, in the case of termination by the Security Insurer of Olympic
Financial as custodian, immediately. If Olympic Financial resigns or is
terminated as the Servicer, any custodian agreement with Olympic Financial shall
terminate at the same time.
The Receivable Files, if held by Olympic Financial as custodian, will be
stamped or otherwise marked to indicate that such Receivables have been sold to
the related Trust. The Receivable Files will also be physically segregated.
Despite these precautions, if, through inadvertence or otherwise, any of the
Receivables were sold to another party (or a security interest therein were
granted to another party) that purchased (or took such security interest in) any
of such Receivables in the ordinary course of its business and took possession
of such Receivables, the purchaser (or secured party) would acquire an interest
in the Receivables superior to the interest of the related Trust if the
purchaser (or secured party) acquired (or took a security interest in) the
Receivables for new value and without actual knowledge of such Trust's interest.
See "Certain Legal Aspects of the Receivables -- Rights in the Receivables."
COLLECTIONS
With respect to each Trust, the Servicer will establish one or more
Collection Accounts in the name of the Owner Trustee or, in the case of any
series including one or more classes of Notes, in the name of the Indenture
Trustee for the benefit of the related Securityholders. If so specified in the
related Prospectus Supplement, the Owner Trustee will establish and maintain for
each series an account, in the name of the Owner Trustee on behalf of the
related Certificateholders, in which amounts released from the Collection
Account and any Pre-Funding Account and any amounts received from any source of
credit enhancement for distribution to such Certificateholders will be deposited
and from which all distributions to such Certificateholders will be made (the
"Certificate Distribution Account"). With respect to any series including one or
more classes of Notes, the Indenture Trustee will establish and maintain for
each series an account, in the name of the Indenture Trustee on behalf of the
related Noteholders, in which amounts released from the Collection Account and
any Pre-Funding Account and any amounts received from any source of credit
enhancement for payment to such Noteholders will be deposited and from which all
distributions to such Noteholders will be made (the "Note Distribution
Account"). The Collection Account, the Certificate Distribution Account (if
any), and the Note Distribution Account (if any), are referred to herein
collectively as the "Designated Accounts." Any other accounts to be established
with respect to a Trust will be described in the related Prospectus Supplement.
Each Designated Account will be an Eligible Account maintained with the
Owner Trustee, the Indenture Trustee and/or other depository institutions. An
"Eligible Account" is (i) a segregated trust account that is maintained with the
corporate trust department of a depository institution (acceptable to the
Security Insurer, if any, unless otherwise specified in the related Prospectus
Supplement) or (ii) a segregated demand deposit account maintained with a
depository institution or trust company organized under the laws of the United
States of America, or any of the states thereof, or the District of Columbia,
that has a certificate of deposit, short-term deposit or commercial paper rating
of at least A-1+ by S&P and P-1 by Moody's (the "Required Deposit Rating"), and
that is acceptable to the Security Insurer, if any (prior to an Insurer Default,
unless otherwise specified in the related Prospectus Supplement). On the Closing
Date specified in the related Prospectus Supplement, the Servicer will cause to
be deposited in the Collection Account all
29
<PAGE>
payments on the Receivables received by the Servicer after the Cutoff Date and
on or prior to the second Business Day preceding the Closing Date (plus amounts
on deposit in the Lockbox Account (as defined below) on such second Business
Day).
Unless otherwise specified in the related Prospectus Supplement, Olympic
Financial will take (or will have taken) steps to cause all payments by Obligors
on the Receivables held by any Trust to be made by check mailed to a bank
(initially Harris Trust and Savings Bank, unless otherwise provided in the
related Prospectus Supplement) acting as agent for the Owner Trustee and for
other owners of automobile receivables serviced by Olympic Financial (the
"Lockbox Bank"). Unless otherwise specified in the related Prospectus
Supplement, the identity of the Lockbox Bank may be changed at any time by the
Security Insurer, if any (prior to an Insurer Default). Unless otherwise
specified in the related Prospectus Supplement, all payments by check on the
Receivables and all payments made by automatic deduction from Obligors' checking
accounts will be deposited in a segregated account maintained by the Lockbox
Bank (the "Lockbox Account") and will be transferred by the Lockbox Bank into
the Collection Account within two Business Days of receipt. If the Servicer
continues to receive payments from any Obligor other than to the Lockbox
Account, the Servicer will take reasonable action to cause the Obligor to make
such payments to the Lockbox Account, including sending additional instruction
letters to such Obligor.
Unless otherwise specified in the related Prospectus Supplement, the
Servicer will deposit all payments on the Receivables held by any Trust received
directly by the Servicer from Obligors and all proceeds of Receivables collected
directly by the Servicer during each Monthly Period into the Collection Account
not later than the Business Day after receipt. Notwithstanding the foregoing and
unless otherwise provided in the related Prospectus Supplement, the Servicer may
utilize an alternative remittance schedule acceptable to the Servicer and the
Security Insurer, if any (prior to an Insurer Default), if the Servicer provides
to the Owner Trustee and the Indenture Trustee written confirmation from each
Rating Agency that such alternative remittance schedule will not result in the
downgrading or withdrawal by such Rating Agency of the rating(s) then assigned
to the Securities. Olympic Financial and the Servicer will also deposit into the
Collection Account on or before the Deposit Date the Purchase Amount of each
Warranty Receivable or Administrative Receivable to be purchased by it as of the
related Accounting Date.
For any series of Securities, funds in the Designated Accounts and any other
accounts identified in the related Prospectus Supplement will be invested, as
provided in the related Trust Documents, at the direction of the Servicer in
"Eligible Investments," consisting (unless otherwise specified in the related
Prospectus Supplement) of: interest-bearing obligations issued or guaranteed as
to principal and interest by the United States or any agency or instrumentality
of the United States, the obligations of which are backed by the full faith and
credit of the United States; interest-bearing obligations issued or guaranteed
by the Federal National Mortgage Association or the Federal Home Loan Mortgage
Corporation as long as such obligations are assigned the highest credit rating
by S&P and Moody's; demand or time deposits, certificates of deposit of and
certain other obligations of domestic depositary institutions with short-term
unsecured debt obligations assigned the highest credit rating by S&P and
Moody's; certain repurchase obligations with respect to the government
securities described above and entered into with a domestic depository
institution or trust company, the deposits of which are rated at least A-1+ by
S&P and P-1 by Moody's; certain corporate debt securities assigned the highest
credit rating by S&P and Moody's; certain commercial paper rated in the highest
credit rating category by S&P and Moody's; and certain other securities meeting
the criteria specified in the related Trust Documents. Eligible Investments
shall mature no later than the Business Day preceding the applicable
Distribution Date or Payment Date, as the case may be, for the Monthly Period to
which such amounts relate. Investments in Eligible Investments will be made in
the name of the Owner Trustee or the Indenture Trustee, as the case may be, and
such investments will not be sold or disposed of prior to their maturity.
Unless otherwise specified in the related Prospectus Supplement, collections
or recoveries on a Receivable (other than late fees or certain other similar
fees or charges) received during a Monthly Period and Purchase Amounts deposited
with the Owner Trustee prior to a Distribution Date will be applied first to any
outstanding Monthly Advances made by the Servicer with respect to such
Receivable, and then to interest and principal on the Receivable in accordance
with the terms of the Receivable.
30
<PAGE>
As an administrative convenience and subject to certain conditions specified
in the Trust Documents, the Servicer will be permitted to make deposits of
amounts actually collected by it in a Monthly Period net of distributions to be
made to it with respect to such Monthly Period, which amounts may be netted
prior to any such remittance for the Monthly Period. The Servicer will account,
however, to the Owner Trustee, the Indenture Trustee, the Security Insurer, if
any, the Certificateholders and the Noteholders as if all such deposits and
distributions were made individually. The Servicer will be entitled to withhold,
or to be reimbursed from amounts otherwise payable into, or on deposit in, the
Collection Account with respect to a Monthly Period, amounts previously
deposited in the Collection Account but later determined to have resulted from
mistaken deposits or postings or checks returned for insufficient funds.
SERVICING PROCEDURES
The Servicer will make reasonable efforts, consistent with the customary
servicing procedures employed by the Servicer with respect to Receivables owned
or serviced by it, to collect all payments due with respect to the Receivables
held by any Trust and, in a manner consistent with the Trust Documents, will
follow its customary collection procedures with respect to motor vehicle loans
that it services for itself and others.
Unless otherwise specified in the related Prospectus Supplement, the
Servicer will covenant in the related Trust Documents that it will not extend
the monthly payments under a Receivable more than a maximum of three months in
the aggregate and that the cumulative extensions with respect to any Receivable
will not cause the term of such Receivable to extend beyond the last day of the
Monthly Period immediately preceding the Final Scheduled Distribution Date
specified in the related Prospectus Supplement. Except for the extensions
described above and except for changes in the day of the month on which the due
date of a Receivable occurs or the reamortization of scheduled payments
following a partial principal prepayment, the Servicer cannot, without the
consent of the Security Insurer, if any (prior to an Insurer Default) and,
subject to the exceptions, if any, specified in the related Prospectus
Supplement, otherwise agree to amend or modify any Receivable. Unless otherwise
specified in the related Prospectus Supplement, the Servicer may, with the
consent of the Security Insurer, if any (prior to an Insurer Default) and
subject to certain other conditions, agree to modify a Receivable to avoid a
prepayment by the Obligor, provided that such modification may not cause the APR
on such Receivable to be below a rate equal to the highest Interest Rate or
Pass-Through Rate on the related Securities plus 1.5%, nor may such modification
cause the term of the modified Receivable to extend beyond the last day of the
Monthly Period immediately preceding the Final Scheduled Distribution Date
specified in the related Prospectus Supplement. Under current Proposed Treasury
Regulations, depending on the characterization of the related Trust for federal
income tax purposes, no such modification of a Receivable may change the APR by
more than .25%. The Servicer will also covenant that it will not release a
Financed Vehicle from the security interest granted by the Receivable except
when the Receivable has been paid in full or as otherwise contemplated by the
Trust Documents.
Except as otherwise provided in the related Prospectus Supplement, upon the
discovery by any of the Servicer, the Security Insurer, if any, the Owner
Trustee or the Indenture Trustee, or receipt of written notice by the Servicer
of any breach by the Servicer of certain of its covenants that materially and
adversely affects the interests of a Trust, the Security Insurer (if any) or the
related Securityholders in a Receivable (an "Administrative Receivable"), unless
such breach shall have been cured by the second Accounting Date following the
Servicer's discovery or receipt of written notice of such breach, the Servicer
will be required to purchase the related Receivable for the Purchase Amount on
the related Deposit Date. The purchase obligation will constitute the sole
remedy available to the Security Insurer (if any), the Certificateholders, the
Owner Trustee on behalf of Certificateholders, the Noteholders or the Indenture
Trustee on behalf of Noteholders against the Servicer for any such uncured
breach, except with respect to certain indemnities of the Servicer under the
Trust Documents.
Under the Trust Documents, the Servicer will be required to use its best
efforts to repossess or otherwise comparably convert the ownership of any
Financed Vehicle securing a Receivable with respect to which the Servicer has
determined that payments thereunder are not likely to be resumed as soon as
practicable after default on such Receivable, but in no event later than the day
on which any portion of a Scheduled Payment has become 91 days delinquent. The
Servicer is authorized to follow such of its normal
31
<PAGE>
collection practices and procedures as it deems necessary or advisable to
realize upon any Receivable. The Servicer may repossess and sell the Financed
Vehicle securing such Receivable at judicial sale, or take any other action
permitted by applicable law. See "Certain Legal Aspects of the Receivables." The
Servicer will be entitled to recover all reasonable expenses incurred by it in
connection therewith. The proceeds of such realization (net of such expenses)
will be deposited in the Collection Account at the time and in the manner
described above under "-- Collections."
The Trust Documents will provide that the Servicer will indemnify and defend
the Owner Trustee, the Indenture Trustee, the Backup Servicer, the Trust, the
Security Insurer (if any) and the Securityholders against, among other things,
any and all costs, expenses, losses, damages, claims and liabilities, including
reasonable fees and expenses of counsel and expenses of litigation, arising out
of or resulting from the use, ownership or operation by the Servicer or any
affiliate thereof of any Financed Vehicle or in respect of any action taken or
failed to be taken by the Servicer with respect to any portion of the Trust
Property in violation of the provisions of the Trust Documents. The Servicer's
obligations to indemnify the Owner Trustee, the Indenture Trustee, the Backup
Servicer, the Trust, the Security Insurer (if any) and the Securityholders for
the Servicer's actions or omissions will survive the removal of the Servicer but
will not apply to any action or omission of a successor Servicer.
SERVICING COMPENSATION
Unless otherwise specified in the related Prospectus Supplement, with
respect to each series of Securities, the Servicer will be entitled to receive
the Servicing Fee for each Monthly Period in an amount equal to the product of
one-twelfth of the Servicing Rate and the Aggregate Principal Balance as of the
first day of such Monthly Period. The Servicer also will be entitled to collect
and retain any late fees or other administrative fees or similar charges allowed
by the terms of the Receivables or applicable law. Unless otherwise provided in
the related Prospectus Supplement, the "Servicing Rate" will equal 1.00% per
annum calculated on the basis of a 360-day year consisting of twelve 30-day
months. The Servicing Fee and any additional servicing compensation will be paid
out of collections on or with respect to the Receivables prior to distributions
to Certificateholders and Noteholders. Unless otherwise specified in the related
Prospectus Supplement, a "Monthly Period" with respect to any Distribution Date
is the calendar month immediately preceding the month in which the Distribution
Date occurs.
Olympic Financial, as Servicer, will be required to pay all expenses
incurred by it in connection with its servicing activities (including fees,
expenses and disbursements of the Owner Trustee, the Indenture Trustee, the
Lockbox Bank, the Custodian and independent accountants, taxes imposed on the
Servicer and expenses incurred in connection with distributions and reports to
Certificateholders and Noteholders and the Security Insurer (if any)), except
certain expenses incurred in connection with realizing upon the Receivables.
MONTHLY ADVANCES
Unless otherwise provided in the related Prospectus Supplement, if the
amount deposited in the related Collection Account allocable to interest with
respect to any Receivable in any Monthly Period is less than the full amount of
interest accrued on such Receivable for the number of calendar days in such
Monthly Period (calculated according to the method specified in the related
retail installment sale contract or promissory note at the APR on the Principal
Balance of such Receivable as of the Accounting Date preceding such Distribution
Date), the Servicer will make a Monthly Advance equal to the amount of such
shortfall. The Servicer will be reimbursed for any Monthly Advances from
subsequent payments or collections relating to the Receivable or from the
Purchase Amount of such Receivable, or in the case of a Liquidated Receivable,
from Liquidation Proceeds of such Receivable. If such Receivable becomes a
Liquidated Receivable and such Liquidation Proceeds are insufficient fully to
reimburse the Servicer, the Servicer will be entitled to be reimbursed from
collections on other Receivables. If, by reason of reimbursement of the Servicer
for Monthly Advances, there is a deficiency in a Scheduled Payment, the Servicer
will be obligated to advance the deficiency, subject to the limitations
described above.
DISTRIBUTIONS
With respect to each Trust, beginning on the Distribution Date or Payment
Date, as applicable, specified in the related Prospectus Supplement,
distributions of principal and interest (or, where applicable,
32
<PAGE>
of principal or interest only) on each class of Securities entitled thereto will
be made by the Owner Trustee or the Indenture Trustee, as applicable, to the
Certificateholders and the Noteholders. The timing, calculation, allocation,
order, source, priorities of and requirements for all distributions to each
class of Certificateholders and all payments to each class of Noteholders will
be set forth in the related Prospectus Supplement.
CREDIT ENHANCEMENT
The amounts and types of credit enhancement arrangements and the provider
thereof, if applicable, with respect to each class of Securities will be set
forth in the related Prospectus Supplement. If and to the extent provided in the
related Prospectus Supplement, credit enhancement may be in the form of a
financial guaranty insurance policy, subordination of one or more classes of
Securities, reserve accounts, overcollateralization, letters of credit, credit
or liquidity facilities, repurchase obligations, third party payments or other
support, cash deposits or such other arrangements as may be described in the
related Prospectus Supplement or any combination of two or more of the
foregoing. If specified in the applicable Prospectus Supplement, credit
enhancement for a series of Securities may cover one or more other series of
Securities.
The presence of credit enhancement is intended to enhance the likelihood of
receipt by the Certificateholders and the Noteholders of the full amount of
principal and interest due thereon and to decrease the likelihood that the
Certificateholders and the Noteholders will experience losses. Unless otherwise
specified in the related Prospectus Supplement, the credit enhancement for a
class of Securities will not provide protection against all risks of loss and
will not guarantee repayment of the entire principal and interest thereon. If
losses occur which exceed the amount covered by any credit enhancement or which
are not covered by any credit enhancement, Securityholders will bear their
allocable share of deficiencies. In addition, if a form of credit enhancement
covers more than one series of Securities, Securityholders of any such series
will be subject to the risk that such credit enhancement will be exhausted by
the claims of Securityholders of other series.
EVIDENCE AS TO COMPLIANCE
The Trust Documents will require the Servicer to cause a firm of independent
certified public accountants to furnish to the Owner Trustee and the Indenture
Trustee, the Security Insurer, if any, and each Rating Agency, on or before
March 31 of each year (or, if the Servicer's fiscal year ends on a date other
than December 31, the date 90 days after the end of the Servicer's fiscal year),
beginning on the first March 31 after the Closing Date, with respect to the
twelve months ended the immediately preceding December 31 or other fiscal
year-end (or such other period as shall have elapsed from the Closing Date to
the date of such certificate), a statement addressed to the Board of Directors
of the Servicer, to the Owner Trustee, the Indenture Trustee, the Backup
Servicer and the Security Insurer, if any, as to compliance by the Servicer
during such period with certain standards relating to the servicing of the
Receivables set forth in the Trust Documents. A copy of such statement may be
obtained by any Certificate Owner or Note Owner upon compliance with the
requirements described above. See "Certain Information Regarding the Securities
- -- Statements to Securityholders" above.
The Trust Documents will also provide for delivery to the Owner Trustee, the
Indenture Trustee, the Security Insurer, if any, and each Rating Agency, if any,
and the Backup Servicer, on or before March 31 (or, if the Servicer's fiscal
year ends on a date other than December 31, the date 90 days after the end of
the Servicer's fiscal year) of each year, beginning on the first March 31
following the Closing Date, of an officers' certificate signed by any two of the
president, any vice-president or assistant vice president, or the controller of
the Servicer (each, a "Servicer Responsible Officer"), dated as of December 31
of such year (or such other date on which the Servicer's fiscal year ends),
stating that (i) a review of the activities of the Servicer during the preceding
12-month period (or such other period as shall have elapsed from the Closing
Date to the date of the first such certificate) and of its performance under the
Trust Documents has been made under such officer's supervision, and (ii) to such
officer's knowledge, based on such review, the Servicer has fulfilled all its
obligations under the Trust Documents throughout such period, or, if there has
been a default in the fulfillment of any such obligation, specifying each such
default known to such officer and the nature and status thereof. A copy of such
certificate may be obtained by any Certificate Owner or Note Owner upon
compliance with the requirements described above. See "Certain Information
Regarding the Securities -- Statements to Securityholders" above.
33
<PAGE>
CERTAIN MATTERS REGARDING THE SERVICER
Unless otherwise provided in the related Prospectus Supplement, if a Policy
has been issued with respect to a series of Securities, Olympic Financial's
appointment as Servicer under the related Trust Documents will run for
successive 90-day periods, subject to renewal by the Security Insurer, if any
(prior to an Insurer Default). It is expected that the Security Insurer (if any)
will renew Olympic Financial's appointment as Servicer until such time, if any,
as a Servicer Termination Event shall have occurred. Unless otherwise provided
in the related Prospectus Supplement, if an Insurer Default occurs or if no
Policy is issued with respect to a series, Olympic Financial's appointment as
Servicer under the related Trust Documents will continue until such time as it
resigns, is terminated as Servicer, or until such time, if any, as a Servicer
Termination Event shall have occurred under the related Trust Documents. The
related Trust Documents will provide that the Servicer may not resign from its
obligations and duties as Servicer thereunder, except upon a determination (as
evidenced by an opinion of independent counsel, delivered and acceptable to the
Owner Trustee, the Indenture Trustee and the Security Insurer, if any (prior to
an Insurer Default)), that by reason of a change in legal requirements its
performance of such duties would cause it to be in violation of such legal
requirements in a manner which would result in a material adverse effect on the
Servicer. No such resignation will become effective until the Backup Servicer or
other successor Servicer has assumed the servicing obligations and duties under
the related Trust Documents.
Unless otherwise provided in the related Prospectus Supplement, any
corporation or other entity into which the Servicer may be merged or
consolidated, resulting from any merger or consolidation to which the Servicer
is a party, which acquires by conveyance, transfer or lease substantially all of
the assets of the Servicer or succeeding to all or substantially all the
business of the Servicer, where the Servicer is not the surviving entity, which
corporation or other entity assumes every obligation of the Servicer under each
Trust Document, will be the successor to the Servicer under the related Trust
Documents; provided, however, that (i) such entity is an Eligible Servicer, (ii)
immediately after giving effect to such transaction, no Servicer Termination
Event, no event of default under the agreement (if any), providing for the
issuance of the Policy (the "Insurance Agreement") (prior to an Insurer Default)
and no event which, after notice or lapse of time, or both, would become a
Servicer Termination Event or an event of default under the related Insurance
Agreement, if any (prior to an Insurer Default), shall have occurred and be
continuing, (iii) the Servicer shall have delivered to the Owner Trustee, the
Indenture Trustee and the Security Insurer (if any) an officers' certificate and
an opinion of counsel each stating that such consolidation, merger or succession
and such agreement of assumption comply with the related Trust Documents and
that all conditions precedent provided for in the Trust Documents relating to
such transaction have been complied with, and (iv) the Servicer shall have
delivered an opinion of counsel either (A) stating that, in the opinion of such
counsel, all financing statements and continuation statements and amendments
thereto have been executed and filed that are necessary fully to preserve and
protect the interests of the Owner Trustee and the Indenture Trustee in the
Receivables and the other Trust Property and reciting the details of such
filings, or (B) stating that, in the opinion of such counsel, no such action
shall be necessary to preserve and protect such interest.
INDEMNIFICATION AND LIMITS ON LIABILITY
Unless otherwise specified in the related Prospectus Supplement, the Trust
Documents will provide that the Servicer will be liable only to the extent of
the obligations specifically undertaken by it under the Trust Documents and will
have no other obligations or liabilities thereunder. The Trust Documents will
further provide that neither the Servicer nor any of its directors, officers,
employees and agents will have any liability to the Trust, the
Certificateholders or the Noteholders or the Security Insurer, if any, except as
provided in the Trust Documents, for any action taken or for refraining from
taking any action pursuant to the Trust Documents, other than any liability that
would otherwise be imposed by reason of the Servicer's breach of the Trust
Documents or willful misfeasance, bad faith or negligence (including errors in
judgment) in the performance of its duties, or by reason of reckless disregard
of obligations and duties under the Trust Documents or any violation of law.
The Servicer may, with the prior consent of the Security Insurer, if any
(prior to an Insurer Default), the Owner Trustee, the Indenture Trustee, if any,
and the Backup Servicer, delegate duties under the related Trust Documents to
any of its affiliates. In addition, the Servicer may at any time perform the
specific duty of
34
<PAGE>
repossessing Financed Vehicles through subcontractors who are in the business of
servicing automotive receivables. The Servicer may also perform other specific
duties through subcontractors, with the prior consent of the Security Insurer,
if any (prior to an Insurer Default); provided, however, that no such delegation
of such duties by the Servicer shall relieve the Servicer of its responsibility
with respect thereto.
SERVICER TERMINATION EVENTS
Unless otherwise provided in the related Prospectus Supplement, "Servicer
Termination Events" under the Trust Documents will consist of (i) any failure by
the Servicer to deliver to the Owner Trustee for distribution to
Certificateholders or the Indenture Trustee for distribution to Noteholders any
proceeds or payment required to be so delivered under the terms of the
Certificates, the Trust Documents, the Notes or the Indenture (or, for so long
as Olympic Financial is the Servicer, the Purchase Agreement) that continues
unremedied for a period of two Business Days after written notice is received by
the Servicer from the Owner Trustee, the Indenture Trustee or the Security
Insurer (if any), or after discovery of such failure by a responsible officer of
the Servicer; (ii) any failure by the Servicer to deliver to the Owner Trustee
and the Indenture Trustee and the Security Insurer, if any (prior to an Insurer
Default), certain reports required by the Trust Documents by the fourth Business
Day prior to the related Distribution Date; (iii) failure on the part of the
Servicer duly to observe or perform in any material respect any other covenants
or agreements of the Servicer set forth in the Certificates, the Trust
Documents, the Notes or the Indenture (or, for so long as Olympic Financial is
the Servicer, the Purchase Agreement), which failure (A) materially and
adversely affects the rights of Securityholders (determined without regard to
the availability of funds under any Policy) or of the Security Insurer, if any
(prior to an Insurer Default), and (B) continues unremedied for a period of 30
days after the date on which written notice of such failure, requiring the same
to be remedied, shall have been given to the Servicer by the Owner Trustee, the
Indenture Trustee or the Security Insurer, if any (or, if an Insurer Default
shall have occurred and be continuing, any Securityholder); (iv)(A) the
commencement of an involuntary case under the federal bankruptcy laws, as now or
hereinafter in effect, or another present or future federal or state bankruptcy,
insolvency or similar law (the "Bankruptcy Laws"), and such case is not
dismissed within 60 days; or (B) the entry of a decree or order for relief by a
court or regulatory authority having jurisdiction in respect of the Servicer or
the Seller under the Bankruptcy Laws, or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of the
Servicer or the Seller or of any substantial part of their respective properties
or ordering the winding up or liquidation of the affairs of the Servicer or the
Seller; (v) the commencement by the Servicer or the Seller of a voluntary case
under any Bankruptcy Law, or the consent by the Servicer or the Seller to the
appointment of or taking possession by a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Servicer or
the Seller or of any substantial part of the Servicer's or the Seller's property
or the making by the Servicer or the Seller of an assignment for the benefit of
creditors or the failure by the Servicer or the Seller generally to pay its
debts as such debts become due or the taking of corporate action by the Servicer
or the Seller in furtherance of any of the foregoing; (vi) any representation,
warranty or statement of the Servicer made in the Trust Documents or any
certificate, report or other writing delivered pursuant thereto shall prove to
be incorrect in any material respect as of the time when the same shall have
been made, and the incorrectness of such representation, warranty or statement
has a material adverse effect (determined without regard to the availability of
funds under any Policy) on the Trust and, within 30 days after written notice
thereof shall have been given to the Servicer by the Owner Trustee, the
Indenture Trustee or the Security Insurer, if any (or, if an Insurer Default
shall have occurred and be continuing, any Securityholder), the circumstances or
condition in respect of which such representation, warranty or statement was
incorrect shall not have been eliminated or otherwise cured; or (vii) if
applicable, unless an Insurer Default shall have occurred and be continuing, the
occurrence of an event of default under the Insurance Agreement.
Unless otherwise specified in the related Prospectus Supplement, if a
Servicer Termination Event occurs and is continuing, the Security Insurer, if
any (or, if no Policy was issued with respect to such series or an Insurer
Default shall have occurred and be continuing, the Owner Trustee, the Indenture
Trustee (if any), or a Certificate Majority or a Note Majority), by notice then
given in writing to the Servicer (and to the Owner Trustee and the Indenture
Trustee if given by the Security Insurer or the Securityholders) may terminate
all of the rights and obligations of the Servicer under the Trust Documents.
Immediately upon the
35
<PAGE>
giving of such notice, and, in the case of a successor Servicer other than the
Backup Servicer, the acceptance by such successor Servicer of its appointment,
all authority of the Servicer will pass to the Backup Servicer or other
successor Servicer. In addition to any other amounts that are then payable to
the outgoing Servicer under the related Trust Documents, the Servicer shall then
be entitled to receive reimbursements for any outstanding Monthly Advances. The
Owner Trustee, the Indenture Trustee and the successor Servicer may set off and
deduct any amounts owed by the Servicer from any amounts payable to the outgoing
Servicer.
On and after the time the Servicer receives a notice of termination, the
Backup Servicer or other successor Servicer will be the successor in all
respects to the Servicer and will be subject to all the responsibilities,
restrictions, duties and liabilities of the Servicer under the related Trust
Documents; provided, however, that the successor Servicer shall have no
liability with respect to any obligation which was required to be performed by
the prior Servicer prior to the date that the successor Servicer becomes the
Servicer or any claim of a third party (including a Securityholder) based on any
alleged action or inaction of the prior Servicer. Unless otherwise specified in
the related Prospectus Supplement, if a Policy has been issued with respect to
the series, the Security Insurer may (prior to an Insurer Default) exercise at
any time its right to appoint as Backup Servicer or as successor to the Servicer
a person other than the Backup Servicer named in the related Prospectus
Supplement. Notwithstanding the above, if the Backup Servicer shall be legally
unable or shall be unwilling to act as Servicer, and if an Insurer Default shall
have occurred or if no Policy was issued with respect to such series, the Owner
Trustee, the Indenture Trustee, a Certificate Majority or a Note Majority may
petition a court of competent jurisdiction to appoint any Eligible Servicer as
the successor to the Servicer. Pending any such appointment, the Backup Servicer
shall act as successor Servicer unless it is legally unable to do so, in which
event the outgoing Servicer shall continue to act as Servicer until a successor
has been appointed and accepted such appointment. "Eligible Servicer" means a
person which, at the time of its appointment as Servicer, (A) is servicing a
portfolio of motor vehicle retail installment sales contracts and/or motor
vehicle installment loans, (B) is legally qualified and has the capacity to
service the Receivables, (C) has demonstrated the ability to service
professionally and competently a portfolio of motor vehicle retail installment
sales contracts and/or motor vehicle installment loans similar to the
Receivables in accordance with high standards of skill and care, and (D) is
qualified and entitled to use, pursuant to a license or other written agreement,
and agrees to maintain the confidentiality of, the software which the Servicer
uses in connection with performing its duties and responsibilities under the
related Trust Documents or otherwise has available software which is adequate to
perform its duties and responsibilities under such Trust Documents.
Any successor Servicer shall be entitled to such compensation payable out of
the Collection Account as the outgoing Servicer would have been entitled to
under the Trust Documents if the outgoing Servicer had not resigned or been
terminated.
Upon any termination of, or appointment of a successor to, the Servicer, the
Owner Trustee and the Indenture Trustee (if any) will each give prompt written
notice thereof to Certificateholders and Noteholders, respectively, at their
respective addresses appearing in the Certificate Register or the Note Register,
to the Security Insurer, if any (prior to an Insurer Default) and to each Rating
Agency.
Unless otherwise specified in the related Prospectus Supplement, if a Policy
has been issued with respect to a series, the Security Insurer (or, if an
Insurer Default shall have occurred and be continuing, a Certificate Majority or
Note Majority) may waive any Servicer Termination Event.
AMENDMENT
Unless otherwise provided in the related Prospectus Supplement, the Trust
Documents may be amended by the Seller, the Servicer, the Owner Trustee and the
Indenture Trustee, if any, with the prior written consent of the Security
Insurer, if any (prior to an Insurer Default), but without the consent of any of
the Securityholders, to cure any ambiguity or to correct or supplement any
provision therein, provided that such action will not, in the opinion of counsel
(which may be internal counsel to the Seller, Olympic Financial or the Servicer)
reasonably satisfactory to the Owner Trustee and the Indenture Trustee,
materially and adversely affect the interests of the Securityholders. The Trust
Documents may also be amended by the Seller, the Servicer and the Owner Trustee
and the Indenture Trustee (if any), with the prior written consent
36
<PAGE>
of the Security Insurer, if any (prior to an Insurer Default), and a Certificate
Majority and a Note Majority (if applicable), for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
the Trust Documents or of modifying, in any manner, the rights of the
Certificateholders or the Noteholders. No such amendment may (i) increase or
reduce in any manner the amount of, or accelerate or delay the timing of,
collections of payments on the related Receivables or distributions that are
required to be made on any related Certificate or Note or the related
Pass-Through Rate or Interest Rate or (ii) reduce the percentage of the
Certificate Balance evidenced by Certificates or of the aggregate principal
amount of Notes then outstanding required to consent to any such amendment,
without the consent of the holders of all Certificates or all Notes, as the case
may be, then outstanding.
TERMINATION
Unless otherwise provided in the related Prospectus Supplement, with respect
to each Trust, the Trust and the respective obligations of the Seller, the
Servicer, the Security Insurer (if any), the Owner Trustee and the Indenture
Trustee pursuant to the related Trust Documents will terminate upon the later of
(i) the Distribution Date or Payment Date, as the case may be, immediately
following the maturity or other liquidation of the last Receivable (including
the Seller's or Servicer's purchase of the Receivables, as described below) or
(ii) payment to Certificateholders and Noteholders of all amounts required to be
paid to them pursuant to the related Trust Documents and the related Indenture
and the payment to the Security Insurer, if any, of all amounts payable or
reimbursable to it pursuant to the related Insurance Agreement, if any, and in
either case there shall be delivered to the Owner Trustee and the Indenture
Trustee an opinion of counsel that all applicable preference periods under
federal, state and local bankruptcy, insolvency and similar laws have expired
with respect to the payments made pursuant to clause (i) or (ii) above.
Unless otherwise provided in the related Prospectus Supplement, with respect
to each series of Securities, in order to avoid excessive administrative
expense, the Seller and Servicer each will be permitted, at its option (with the
consent of the Security Insurer, if any (prior to an Insurer Default), if such
purchase would result in a claim on the Policy or in an amount owing to the
Security Insurer under the Insurance Agreement remaining unpaid), to purchase
from the Trust, on any Distribution Date immediately following an Accounting
Date as of which the Aggregate Principal Balance is equal to or less than 10%
(or such other percentage as may be specified in the related Prospectus
Supplement) of the Cutoff Date Principal Balance, all remaining Receivables in
the related Trust and the other remaining Trust Property at a price equal to the
aggregate of the Purchase Amounts therefor and the appraised value of any other
remaining Trust Property. The exercise of this right will effect an early
retirement of the related Certificates and Notes.
If a General Partner is named in the related Prospectus Supplement, unless
otherwise specified in the related Prospectus Supplement, the Trust Agreement
will provide that, in the event that the sole remaining General Partner becomes
insolvent, withdraws or is expelled as a General Partner or is terminated or
dissolved, the Trust will terminate in 90 days and effect redemption of the
Notes (if any) and prepayment of the Certificates following the winding-up of
the affairs of the related Trust, unless within such 90 days holders of 100% of
the Certificates of such series agree in writing to the continuation of the
business of the Trust and to the appointment of a successor to the General
Partner, and the Owner Trustee is able to obtain an opinion of counsel
satisfactory to the Security Insurer (if any) to the effect that the Trust will
not thereafter be an association (or publicly traded partnership) taxable as a
corporation for federal income tax purposes.
Unless otherwise specified in the related Prospectus Supplement, with
respect to each series of Securities, the Owner Trustee will give written notice
of the final distribution with respect to the Certificates to each
Certificateholder of record and the Indenture Trustee will give written notice
of the final payment with respect to the Notes (if any), to each Noteholder of
record. The final distribution to any Certificateholder and the final payment to
any Noteholder will be made only upon surrender and cancellation of such
holder's Certificate or Note at the office or agency of the Owner Trustee, with
respect to Certificates, or of the Indenture Trustee, with respect to Notes,
specified in the notice of termination. Any funds remaining in the
37
<PAGE>
Trust, after the Owner Trustee or the Indenture Trustee has taken certain
measures to locate a Certificateholder or Noteholder, as the case may be, and
such measures have failed, will be distributed to The United Way, and the
Certificateholders and Noteholders, by acceptance of their Certificates and
Notes, will waive any rights with respect to such funds.
THE OWNER TRUSTEE
The Owner Trustee for each Trust will be specified in the related Prospectus
Supplement. The Owner Trustee, in its individual capacity or otherwise, and any
of its affiliates may hold Certificates or Notes in their own names or as
pledgee. In addition, for the purpose of meeting the legal requirements of
certain jurisdictions, the Owner Trustee, with the consent of the Servicer and
the Security Insurer, if any (so long as an Insurer Default shall not have
occurred and be continuing), shall have the power to appoint co-trustees or
separate trustees of all or any part of the related Trust. In the event of such
appointment, all rights, powers, duties and obligations conferred or imposed
upon the Owner Trustee by the related Trust Documents will be conferred or
imposed upon the Owner Trustee and such separate trustee or co-trustee jointly,
or, in any jurisdiction where the Owner Trustee is incompetent or unqualified to
perform certain acts, singly upon such separate trustee or co-trustee who shall
exercise and perform such rights, powers, duties and obligations solely at the
direction of the Owner Trustee.
The Owner Trustee of any Trust may resign at any time, in which event the
General Partner, if any, specified in the related Prospectus Supplement or, if
no such General Partner is specified, the Servicer or its successor will be
obligated to appoint a successor trustee, acceptable to the Security Insurer, if
any (prior to an Insurer Default). The General Partner, if any, specified in the
related Prospectus Supplement or, if no such General Partner is specified, the
Servicer may also remove the Owner Trustee, with the consent of the Security
Insurer, if any (prior to an Insurer Default), if the Owner Trustee ceases to be
eligible to serve, becomes legally unable to act, is adjudged insolvent or is
placed in receivership or similar proceedings. In such circumstances, the
General Partner, if any, specified in the related Prospectus Supplement or, if
no such General Partner is specified, the Servicer will be obligated to appoint
a successor trustee, acceptable to the Security Insurer, if any (prior to an
Insurer Default). Any resignation or removal of the Owner Trustee and
appointment of a successor trustee will not become effective until acceptance of
the appointment by the successor trustee.
DUTIES OF THE OWNER TRUSTEE
The Owner Trustee will make no representation as to the validity or
sufficiency of any Trust Document, the Certificates or the Notes (other than its
execution of the Certificates and the Notes), the Receivables, the Policy, if
any, or any related documents, and will not be accountable for the use or
application by the Servicer of any funds paid to the Servicer in respect of the
Certificates, the Notes or the Receivables prior to deposit in the related
Collection Account.
The Owner Trustee will be required to perform only those duties specifically
required of it under the Trust Documents. Generally, those duties will be
limited to the receipt of the various certificates, reports or other instruments
required to be furnished by the Servicer to the Owner Trustee under the Trust
Documents, in which case it will only be required to examine such certificates,
reports or instruments to determine whether they conform substantially to the
requirements of the Trust Documents.
The Owner Trustee will be under no obligation to exercise any of the rights
or powers vested in it by the Trust Documents or to institute, conduct, or
defend any litigation thereunder or in relation thereto at the request, order or
direction of any of the Certificateholders or Noteholders, unless such
Certificateholders or Noteholders have offered the Owner Trustee reasonable
security or indemnity against the costs, expenses and liabilities which may be
incurred therein or thereby. No Certificateholder nor any Noteholder will have
any right under the Trust Documents to institute any proceeding with respect to
such Trust Documents, unless such holder has given the Owner Trustee written
notice of default and unless the holders of Certificates evidencing not less
than 25% of the Certificate Balance or the holders of Notes evidencing not less
than 25% of the aggregate principal balance of the Notes then outstanding, as
the case may be, have made written request to the Owner Trustee to institute
such proceeding in its own name as Trustee thereunder and have offered to the
Owner Trustee reasonable indemnity, and the Owner Trustee for 30 days
38
<PAGE>
after the receipt of such notice, request and offer to indemnify has neglected
or refused to institute any such proceedings. Certificateholders and Noteholders
will not have the right to make a claim directly under any Policy issued with
respect to such series, but in the event that the Owner Trustee or the Indenture
Trustee fails to make such a claim, Certificateholders and Noteholders may
compel the Owner Trustee or the Indenture Trustee, as applicable, to do so.
THE BACKUP SERVICER
The Backup Servicer for each Trust will be specified in the related
Prospectus Supplement, although the Security Insurer, if any (prior to an
Insurer Default), may exercise its right at any time to appoint another Backup
Servicer. While Olympic Financial is the Servicer, the Backup Servicer will not
be liable or responsible for any obligation of the Servicer, and the
Certificateholders and Noteholders may look only to Olympic Financial to perform
such obligations. The Backup Servicer will be required to verify the monthly
Servicer's Certificate each month, to notify the Certificateholders, Noteholders
and the Security Insurer (if any) of any item that appears substantially out of
the ordinary, and to seek a written explanation thereof from the Servicer;
however, neither the Owner Trustee nor the Backup Servicer will be required to
otherwise monitor the Servicer. Upon the Servicer's receipt of a termination
notice after the occurrence of a Servicer Termination Event, the Backup Servicer
will automatically become the Servicer, unless the Security Insurer, if any
(prior to an Insurer Default), shall have appointed a different Backup Servicer
or successor Servicer. To facilitate the transfer of servicing responsibility,
the Servicer will deliver to the Owner Trustee and the Backup Servicer each
month a computer tape containing information with respect to the Receivables.
ADMINISTRATOR
If an Administrator is specified in the related Prospectus Supplement, such
Administrator will enter into an agreement (the "Administration Agreement")
pursuant to which such Administrator will agree, to the extent provided in such
Administration Agreement, to provide the notices and to perform other
administrative obligations required by the related Indenture and the Trust
Agreement.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
RIGHTS IN THE RECEIVABLES
The Receivables are "chattel paper" as defined in the UCC as in effect in
the States of Minnesota and New York. Pursuant to the UCC, an ownership interest
in chattel paper may be perfected by possession or by filing a UCC-1 financing
statement in the state where the seller's principal executive office is located.
Accordingly, financing statements covering the Receivables will be filed by
Olympic Financial and the Seller in Minnesota. In addition, the documents
evidencing the Receivables initially will be held by the Custodian specified in
the related Prospectus Supplement on behalf of the related Trust.
The Servicer will be obligated from time to time to take such actions as are
necessary to continue the perfection of each Trust's interest in the related
Receivables and the proceeds thereof. Olympic Financial will warrant in each
Purchase Agreement with respect to the Receivables held by the related Trust,
and in the related Trust Document the Seller will assign the right to enforce
such warranties to the Owner Trustee on behalf of such Trust and the Owner
Trustee will pledge such right to the Indenture Trustee as collateral for the
Notes, if any, that, as of the Closing Date, such Receivables have not been
sold, pledged or assigned by Olympic Financial or the Seller to any other
person, and that it has good and indefeasible title thereto and is the sole
owner thereof free of any Liens and that, immediately upon the transfer of the
Receivables to such Trust pursuant to the related Trust Document, the Trust will
have good and indefeasible title to and will be the sole owner of the
Receivables, free of any Liens. In the event of an uncured breach of any of such
warranties in a Purchase Agreement that materially and adversely affects the
related Trust's, Certificateholders' or Noteholders' interest in any Receivable
(a "Repurchase Event"), Olympic Financial will be obligated to repurchase such
Receivable.
Unless otherwise provided in the related Prospectus Supplement, Olympic
Financial will hold the Receivable Files on behalf of each Trust under a
custodian agreement with the Trust. The Receivable Files, if held by Olympic
Financial as custodian, will be stamped or otherwise marked to indicate that
such Receivables have been sold to the related Trust. The Receivable Files will
also be physically segregated. Despite
39
<PAGE>
these precautions, if, through inadvertence or otherwise, any of the Receivables
were sold to another party (or a security interest therein were granted to
another party) that purchased (or took such security interest in) any of such
Receivables in the ordinary course of its business and took possession of such
Receivables, the purchaser (or secured party) would acquire an interest in the
Receivables superior to the interest of the related Trust if the purchaser (or
secured party) acquired (or took a security interest in) the Receivables for new
value and without actual knowledge of such Trust's interest. See "Description of
the Purchase Agreements and the Trust Documents -- Custody of Receivable Files."
SECURITY INTERESTS IN THE FINANCED VEHICLES
Security interests in the Financed Vehicles must be perfected by notation of
the secured party's lien on the certificate of title or by such notation on or
actual possession of the certificate of title, depending on the law of the state
wherein the purchaser resides. The practice of Olympic Financial is to take such
action as is required to perfect its security interest under the laws of the
state in which the Financed Vehicle is registered. In the event of clerical
errors, administrative delays or otherwise, such actions may not have been taken
with respect to a Financed Vehicle and such security interest may be subordinate
to the interests of, among others, subsequent purchasers of the Financed
Vehicles, holders of perfected security interests in the Financed Vehicle, and
the trustee in bankruptcy of the Obligor. However, such failure would give rise
to a Repurchase Event and obligate Olympic Financial to repurchase the affected
Receivable if the interests of the related Certificateholders, Noteholders or
Trust were materially and adversely affected.
Pursuant to the related Trust Document, the Seller will assign the security
interests in the Financed Vehicles assigned to it by Olympic Financial under the
related Purchase Agreement to the Owner Trustee on behalf of the related Trust.
However, because of the administrative burden and expense that would be entailed
in doing so, none of Olympic Financial, the Seller, the Owner Trustee or the
Servicer will be required, except to the extent provided below, to amend the
certificates of title (or other lien certificates) to identify the Owner Trustee
(or the Seller) as the new secured party and, accordingly, Olympic Financial
will continue to be named as the secured party on the certificates of title (or
other lien certificate) relating to the Financed Vehicles. Further, the Servicer
will be required to note the interest of the related Trust on the certificates
of title for the Financed Vehicles only upon a Servicer Termination Event, or in
an event of default under the Insurance Agreement, if any (prior to an Insurer
Default), or (under certain circumstances and unless an Insurer Default shall
have occurred and be continuing) at the request of the Security Insurer, if any.
In most states, an assignment such as that under the related Trust Documents
should be an effective transfer of a security interest without amendment of any
lien noted on the related certificate of title, and the assignee should succeed
to the assignor's status as the secured party. In the absence of fraud or
forgery by the Obligor or administrative error by state recording officials, the
notation of the lien of Olympic Financial on the certificate of title should be
sufficient to protect the related Trust against the rights of subsequent
purchasers of a vehicle or subsequent lenders who take a security interest in
the related Financed Vehicle. However, in the absence of such an amendment, the
security interest of the related Trust in the related Financed Vehicles might be
defeated by, among others, the trustee in bankruptcy of Olympic Financial or the
Obligor. However, such failure would give rise to a Repurchase Event and
obligate Olympic Financial to repurchase the affected Receivable if the
interests of the related Certificateholders, Noteholders or Trust were
materially and adversely affected.
In most states, a perfected security interest in a motor vehicle continues
for four months after the vehicle is moved to a different state and thereafter
until the owner re-registers the motor vehicle in the new state, but in no event
beyond the surrender of the certificate of title. A majority of states require
surrender of a certificate of title to re-register a motor vehicle. Accordingly,
the secured party must surrender possession if it holds the certificate of title
to such vehicle. In the case of motor vehicles registered in states which
provide for notation of a lien but not possession of the certificate of title by
the holder of the security interest in the related motor vehicle, the secured
party should receive notice of surrender if the security interest in the vehicle
is noted on the certificate of title. Accordingly, the secured party should have
the opportunity to re-perfect its security interest in the vehicle in the state
of relocation. In states that do not require a certificate of title for
registration of a motor vehicle, re-registration could defeat perfection.
40
<PAGE>
In the ordinary course of servicing its receivables portfolio, it is the
practice of Olympic Financial to effect such re-perfection upon receipt of
notice of re-registration or information from the Obligor as to relocation.
Similarly, when an Obligor sells a Financed Vehicle, Olympic Financial must
surrender possession of the certificate of title or receive notice as a result
of its lien noted thereon and accordingly should have an opportunity to require
satisfaction of the related Receivable before release of the lien. Under the
related Trust Document, the Servicer will be obligated to take such steps, at
the Servicer's expense, as are necessary to maintain perfection of security
interest in such Financed Vehicle, and the failure to take such steps would
obligate the Servicer to purchase the related Receivable if such failure
materially and adversely affects the interests of the related
Certificateholders, Noteholders and Trust in such Receivables.
Under the laws of most states, liens for repairs performed on a motor
vehicle and liens for unpaid taxes take priority over even a perfected security
interest in a motor vehicle. The Seller in the related Trust Document (and
Olympic Financial in the related Purchase Agreement) will represent that,
immediately prior to the sale, assignment and transfer thereof to the related
Trust, each Receivable held by such Trust was secured by a valid, subsisting and
enforceable first priority perfected security interest in favor of the Seller
(or Olympic Financial), as secured party. However, liens for taxes, judicial
liens or liens arising by operation of law could arise at any time during the
term of a Receivable. In addition, the laws of certain states and federal law
permit the confiscation of motor vehicles by governmental authorities under
certain circumstances if used in unlawful activities, which may result in the
loss of a secured party's perfected security interest in the confiscated motor
vehicle. No notice will be given to the Owner Trustee, Indenture Trustee,
Certificateholders or Noteholders in the event such a lien or confiscation
arises, and if such lien arises or confiscation occurs after the date of
issuance of any series of Certificates and Notes, neither Olympic Financial nor
the Servicer will be required to repurchase or purchase the related Receivable.
REPOSSESSION
In the event of default by an Obligor, the owner of a retail installment
sales contract or installment loan has all the remedies of a secured party under
the UCC, except where specifically limited by other state laws. The remedies of
a secured party under the UCC include the right to repossession by self-help
means, unless such means would constitute a breach of the peace. Self-help
repossession is the method employed by Olympic Financial in most cases and is
accomplished simply by taking possession of the motor vehicle. In the event of
default by the Obligor, some jurisdictions require that the Obligor be notified
of the default and be given a time period within which he may cure the default
prior to repossession. In cases where the Obligor objects or raises a defense to
repossession, or if otherwise required by applicable state law, a court order
must be obtained from the appropriate state court, and the vehicle must then be
repossessed in accordance with that order. Other jurisdictions permit
repossession without notice, but only if the repossession can be accomplished
peacefully. If a breach of the peace cannot be avoided, judicial action is
required. A secured party may be held responsible for damages caused by a
wrongful repossession of a vehicle, including, in Florida, a wrongful
repossession conducted by an agent of the secured party. The Servicer will be
required to indemnify the related Trust for any liability imposed upon such
Trust as a result of a wrongful repossession. In Texas and many other states, a
vehicle may be repossessed without notice to the Obligor, but only if the
repossession can be accomplished without a breach of the peace.
NOTICE OF SALE; REDEMPTION RIGHTS
The UCC and various other state laws require a secured party who has
repossessed the collateral securing an obligation to provide an obligor with
reasonable notice of the date, time and place of any public sale and/or the date
after which any private sale of the collateral may be held. The obligor has the
right to redeem the collateral prior to actual sale by paying the secured party
the entire unpaid time balance of the obligation (less any unaccrued finance
charges) plus accrued default charges, reasonable expenses for repossessing,
holding and preparing the collateral for disposition and arranging for its sale,
plus, to the extent provided in the financing documents, reasonable attorneys'
fees, or in some states, by payment of delinquent installments or the unpaid
principal balance of the related obligation.
41
<PAGE>
DEFICIENCY JUDGMENTS AND EXCESS PROCEEDS
The proceeds of resale of Financed Vehicles generally will be applied first
to the expenses of repossession and resale and then to the satisfaction of the
related Receivables. While some states impose prohibitions or limitations on
deficiency judgments if the net proceeds from resale do not cover the full
amount of the indebtedness, a deficiency judgment can be sought in other states
that do not prohibit or limit such judgments, subject to satisfaction of
statutory procedural requirements by the holder of the obligation. However, any
deficiency judgment would be a personal judgment against the Obligor for the
shortfall, and a defaulting Obligor can be expected to have very little capital
or sources of income available following repossession. Therefore, in many cases,
it may not be useful to seek a deficiency judgment or, if one is obtained, it
may be settled at a significant discount or not paid at all. Olympic Financial
generally seeks to recover any deficiency existing after repossession and sale
of a Financed Vehicle.
Occasionally, after resale of a repossessed motor vehicle, and payment of
all expenses and indebtedness, there is a surplus of funds. In that case, the
law of most states requires the secured party to remit the surplus to any holder
of another lien with respect to the vehicle, if proper notification of demand
for proceeds is received prior to distribution, or, if no such lienholder
exists, to remit the surplus to the former owner of the motor vehicle.
SOLDIERS' AND SAILORS' CIVIL RELIEF ACT
The Relief Act imposes certain limitations upon the actions of creditors
with respect to persons serving in the Armed Forces of the United States and, to
a more limited extent, their dependents and guarantors and sureties of debt
incurred by such persons. An obligation incurred by a person prior to entering
military service cannot bear interest at a rate in excess of 6% during the
person's term of military service, unless the obligee petitions a court which
determines that the person's military service does not impair his or her ability
to pay interest at a higher rate. Further, a secured party may not repossess
during a person's military service a motor vehicle subject to an installment
sales contract or a promissory note entered into prior to the person's entering
military service, for a loan default which occurred prior to or during such
service, without court action. The Relief Act imposes penalties for knowingly
repossessing property in contravention of its provisions. Additionally,
dependents of military personnel are entitled to the protection of the Relief
Act, upon application to a court, if such court determines the obligation of
such dependent has been materially impaired by reason of the military service.
To the extent an obligation is unenforceable against the person in military
service or a dependent, any guarantor or surety of such obligation will not be
liable for performance.
CONSUMER PROTECTION LAWS
Numerous Federal and state consumer protection laws and related regulations
impose substantive and disclosure requirements upon lenders and servicers
involved in consumer finance. Some of the Federal laws and regulations include
the Truth-in-Lending Act, the Equal Credit Opportunity Act, the Federal Trade
Commission Act, the Fair Credit Reporting Act, the Fair Debt Collection
Practices Act, the Motor Vehicle Information and Cost Savings Act (the "Odometer
Act"), the Magnuson-Moss Warranty Act, and the Federal Reserve Board's
Regulations B and Z.
In addition to Federal law, state consumer protection statutes regulate,
among other things, the terms and conditions of the motor vehicle retail
installment contracts and promissory notes pursuant to which purchasers finance
the acquisition of motor vehicles. These laws place finance charge ceilings on
the amount that a creditor may charge in connection with financing the purchase
of an automobile. These laws also impose other restrictions on consumer
transactions and require contract disclosures in addition to those required
under federal law. These requirements impose specific statutory liabilities upon
creditors who fail to comply. In some cases, this liability could affect the
ability of an assignee, such as the Trustee, to enforce consumer finance
contracts such as the Receivables. The "Credit Practices" Rule of the Federal
Trade Commission (the "FTC") imposes additional restrictions on contract
provisions and credit practices.
The FTC's so-called holder-in-due-course rule has the effect of subjecting
persons that finance consumer credit transactions (and certain related lenders
and their assignees) to all claims and defenses which the purchaser could assert
against the seller of the goods and services. An assignee's affirmative
liability to pay money to such aggrieved purchaser in the event of a successful
claim is limited to amounts paid by the
42
<PAGE>
purchaser under the consumer credit contract. However, the assignee's ability to
collect any balance remaining due thereunder is subject to these claims and
defenses. Accordingly, each Trust, as assignee of the related Receivables, will
be subject to claims or defenses, if any, that the purchaser of the related
Financed Vehicle may assert against the seller of such vehicle. Under the motor
vehicle dealer licensing laws of most states, sellers of motor vehicles are
required to be licensed to sell motor vehicles at retail.
In addition, with respect to used vehicles, the FTC's Rule on Sale of Used
Vehicles requires that all sellers of used vehicles prepare, complete, and
display a "Buyer's Guide" which explains the warranty coverage for such
vehicles. Federal regulations promulgated under the Odometer Act require that
all sellers of used vehicles furnish a written statement signed by the seller
certifying the accuracy of the odometer readings. If a seller is not properly
licensed or if either a Buyer's Guide or odometer disclosure statement was not
provided to the purchaser of a Financed Vehicle, the purchaser may be able to
assert a defense as to a retail installment sales contract or promissory note
against the seller of the motor vehicle.
Under the Texas Credit Code ("TCC") non-bank retail installment sellers and
their assignees are required to register with the Office of Consumer Credit
Commissioner of Texas. The TCC, like the UCCC, imposes disclosure and
substantive requirements on the sellers and any subsequent holder of such
contracts and imposes monetary penalties for violations thereof.
Courts have applied general equitable principles to secured parties pursuing
repossession or litigation involving deficiency balances. These equitable
principles may have the effect of relieving an Obligor from some or all of the
legal consequences of a default.
The Seller will warrant in the related Trust Document (and Olympic Financial
will warrant in the related Purchase Agreement) that as of the date of
origination each Receivable held by the related Trust complied with all
requirements of applicable law in all material respects. Accordingly, if such
Trust's interest in a Receivable were materially and adversely affected by a
violation of any such law, such violation would constitute a Repurchase Event
and would obligate Olympic Financial to repurchase the Receivable unless the
breach were cured. Under each Purchase Agreement, Olympic Financial will be
required to indemnify the related Trust for any liability resulting from the
failure of a Receivable to be in compliance with all requirements of law. See
"Description of the Purchase Agreements and the Trust Documents -- Sale and
Assignment of the Receivables."
OTHER LIMITATIONS
In addition to the laws limiting or prohibiting deficiency judgments,
numerous other statutory provisions, including Federal bankruptcy laws and
related state laws, may interfere with or affect the ability of a lender to
realize upon collateral or enforce a deficiency judgment. For example, in a
proceeding under Chapter 13 of the U.S. Bankruptcy Code of 1978, as amended, a
court may prevent a lender from repossessing a motor vehicle, and, as part of
the rehabilitation plan, reduce the amount of the secured indebtedness to the
market value of the motor vehicle at the time of bankruptcy (as determined by
the court), leaving the party providing financing as a general unsecured
creditor for the remainder of the indebtedness. A bankruptcy court may also
reduce the monthly payments due under a contract, change the rate of interest
and time of repayment of the indebtedness or substitute collateral securing such
indebtedness.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The anticipated federal income tax consequences of the purchase, ownership
and disposition of each series of Securities will be discussed in the related
Prospectus Supplement. Such discussion will not deal with federal income tax
consequences applicable to all categories of investors, some of which may be
subject to special rules. Investors should consult their own tax advisors in
determining the federal, state, local and any other tax consequences to them of
the purchase, ownership and disposition of the Securities.
ERISA CONSIDERATIONS
Section 406 of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and Section 4975 of the Code prohibit a pension, profit
sharing or other employee benefit plan from engaging in certain transactions
involving "plan assets" with persons that are "parties in interest" under ERISA
or "disqualified persons" under the Code with respect to the plan. ERISA also
imposes certain duties and
43
<PAGE>
certain prohibitions on persons who are fiduciaries of plans subject to ERISA.
Under ERISA, generally any person who exercises any authority or control with
respect to the management or disposition of the assets of a plan is considered
to be a fiduciary of such plan. A violation of these "prohibited transaction"
rules may generate excise tax and other liabilities under ERISA and the Code for
such persons.
Certain transactions involving the related Trust might be deemed to
constitute prohibited transactions under ERISA and the Code with respect to a
Benefit Plan that purchased Securities if assets of the related Trust were
deemed to be assets of the Benefit Plan. Under a regulation issued by the United
States Department of Labor (the "Plan Assets Regulation"), the assets of a Trust
would be treated as plan assets of a Benefit Plan for the purposes of ERISA and
the Code only if the Benefit Plan acquired an "equity interest" in the Trust and
none of the exceptions contained in the Plan Assets Regulation was applicable.
An equity interest is defined under the Plan Assets Regulation as an interest
other than an instrument which is treated as indebtedness under applicable local
law and which has no substantial equity features. The likely treatment of Notes
and Certificates will be discussed in the related Prospectus Supplement.
Employee benefit plans that are governmental plans (as defined in Section
3(32) of ERISA) and certain church plans (as defined in Section 3(33) of ERISA)
are not subject to ERISA requirements.
A plan fiduciary considering the purchase of Securities should consult its
tax and/or legal advisors regarding whether the assets of the Trust would be
considered plan assets, the possibility of exemptive relief from the prohibited
transaction rules and other issues and their potential consequences.
PLAN OF DISTRIBUTION
On the terms and conditions set forth in an underwriting agreement (the
"Underwriting Agreement") with respect to each Trust, the Seller will agree to
sell to each of the underwriters named therein and in the related Prospectus
Supplement, and each of such underwriters will severally agree to purchase from
the Seller, the principal amount of each class of Securities of the related
series set forth therein and in the related Prospectus Supplement.
In each Underwriting Agreement, the several underwriters will agree, subject
to the terms and conditions set forth therein, to purchase all the Securities
described therein which are offered hereby and by the related Prospectus
Supplement if any of such Securities are purchased. In the event of a default by
any such underwriter, each Underwriting Agreement will provide that, in certain
circumstances, purchase commitments of the nondefaulting underwriters may be
increased, or the Underwriting Agreement may be terminated.
Each Prospectus Supplement will either (i) set forth the price at which each
class of Securities being offered thereby will be offered to the public and any
concessions that may be offered to certain dealers participating in the offering
of such Securities or (ii) specify that the related Securities are to be resold
by the underwriters in negotiated transactions at varying prices to be
determined at the time of such sale. After the initial public offering of any
Securities, the public offering price and such concessions may be changed.
Each Underwriting Agreement will provide that Olympic Financial and the
Seller will indemnify the underwriters against certain liabilities, including
liabilities under the Securities Act.
The Indenture Trustee, if any, may, from time to time, invest the funds in
the Designated Accounts in Eligible Investments acquired from the underwriters.
Under each Underwriting Agreement, the closing of the sale of any class of
Securities subject thereto will be conditioned on the closing of the sale of all
other such classes.
The place and time of delivery for the Securities in respect of which this
Prospectus is delivered will be set forth in the related Prospectus Supplement.
LEGAL MATTERS
Certain matters with respect to the validity of the Certificates and the
Notes will be passed upon for the Seller by Dorsey & Whitney LLP, Minneapolis,
Minnesota. The validity of the Certificates and the Notes will be passed upon
for the underwriters named in the related Prospectus Supplement by Mayer, Brown
& Platt, New York, New York.
44
<PAGE>
INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
TERM PAGE
- --------------------------------------- ---------------
<S> <C>
Accounting Date........................ 28
Administration Agreement............... 39
Administrative Receivables............. 11, 31
Aggregate Principal Balance............ 7
APR.................................... 15
Backup Servicer........................ 3
Balloon Payment Receivable............. 16
Bankruptcy Laws........................ 35
Certificateholders..................... 3
Certificate Distribution Account....... 29
Certificate Majority................... 24
Certificate Owners..................... 9
Certificate Pool Factor................ 16
Certificates........................... 1
Collection Account..................... 7
Commission............................. 2
Computer Tape.......................... 28
Cutoff Date............................ 1
Dealer Agreements...................... 12
Dealer Assignments..................... 12
Dealers................................ 5
Deposit Date........................... 28
Depository............................. 18
Definitive Certificates................ 24
Definitive Notes....................... 24
Designated Accounts.................... 29
Distribution Date...................... 18
DTC.................................... 1
Eligible Account....................... 29
Eligible Investments................... 30
Electronic Ledger...................... 28
Eligible Servicer...................... 36
Events of Default...................... 20
Exchange Act........................... 2
ERISA.................................. 43
Financed Vehicles...................... 5
FTC.................................... 42
Indenture.............................. 1
Indenture Trustee...................... 1, 3
Indirect participants.................. 23
Insolvency Laws........................ 10
Insurance Agreement.................... 34
Insurer Default........................ 8
Interest Rate.......................... 5
Lien................................... 27
Liquidated Receivable.................. 15
Liquidation Proceeds................... 7
Loan................................... 12
Lockbox Account........................ 30
Lockbox Bank........................... 30
Monthly Advance........................ 7
Monthly Period......................... 32
Notes.................................. 1
Note Distribution Account.............. 29
Note Majority.......................... 20
<CAPTION>
TERM PAGE
- --------------------------------------- ---------------
<S> <C>
Note Owners............................ 9
Note Pool Factor....................... 16
Noteholders............................ 4
Obligor................................ 7
Odometer Act........................... 42
Olympic Financial...................... 1
Owner Trustee.......................... 1, 3
Participants........................... 23
Pass-Through Rate...................... 3
Payment Date........................... 19
Plan Assets Regulation................. 44
Policy................................. 6
Pooling and Servicing Agreement........ 1
Pre-Funded Amount...................... 6
Pre-Funding Account.................... 4
Pre-Funding Period..................... 4
Prospectus Supplement.................. 1
Purchase Agreement..................... 6, 26
Purchase Amount........................ 28
Rating Agency.......................... 9
Receivable Files....................... 12
Receivables............................ 1, 5
Receivables Pool....................... 5
Registration Statement................. 2
Related Documents...................... 22
Relief Act............................. 27
Repurchase Event....................... 6, 8, 28, 39
Required Deposit Rating................ 29
Rules.................................. 24
Sale and Servicing Agreement........... 1
Scheduled Payment...................... 15
Schedule of Receivables................ 26
Securities............................. 1
Securitization......................... 17
Security Insurer....................... 6
Securityholders........................ 2
Seller................................. 1, 3
Servicer............................... 3
Servicer Responsible Officer........... 33
Servicer's Certificate................. 24
Servicer Termination Events............ 35
Servicing Fee.......................... 7
Servicing Rate......................... 32
Strip Certificates..................... 4
Strip Notes............................ 5
Subsequent Receivables................. 1, 6
TCC.................................... 43
Trust.................................. 1, 3
Trust Agreement........................ 1
Trust Documents........................ 1, 26
Trust Property......................... 1, 5
UCC.................................... 10
Underwriting Agreement................. 44
Warranty Receivables................... 11
</TABLE>
45
<PAGE>
- -------------------------------------------
-------------------------------------------
- -------------------------------------------
-------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS
SUPPLEMENT OR THE PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY OLYMPIC
FINANCIAL, THE SELLER OR THE UNDERWRITERS. THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER TO
BUY ANY SECURITIES OTHER THAN THE REGISTERED SECURITIES TO WHICH THIS PROSPECTUS
SUPPLEMENT RELATES OR AN OFFER TO ANY PERSON IN ANY JURISDICTION WHERE SUCH AN
OFFER WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT AND
THE PROSPECTUS NOR ANY SALES MADE HEREUNDER OR THEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
PROSPECTUS SUPPLEMENT
Reports to Securityholders..................... S-3
Incorporation of Certain Documents by
Reference..................................... S-3
Summary of the Terms of the Securities......... S-5
Risk Factors................................... S-17
Use of Proceeds................................ S-20
The Trust...................................... S-20
The Trust Property............................. S-21
The Receivables Pool........................... S-21
Olympic Financial Ltd.......................... S-27
Financial Security Assurance Inc............... S-27
Description of the Notes....................... S-30
Description of the Certificates................ S-32
Description of the Purchase Agreements and the
Trust Documents............................... S-34
The Policies................................... S-41
Certain Federal Income Tax Consequences........ S-44
ERISA Considerations........................... S-50
Underwriting................................... S-52
Legal Matters.................................. S-53
Experts........................................ S-53
Index of Defined Terms......................... S-54
PROSPECTUS
Available Information.......................... 2
Reports to Securityholders..................... 2
Incorporation of Certain Documents by
Reference..................................... 2
Prospectus Summary............................. 3
Risk Factors................................... 10
The Trusts..................................... 11
The Receivables................................ 12
Yield and Prepayment Considerations............ 15
Pool Factor.................................... 16
Use of Proceeds................................ 17
The Seller..................................... 17
Olympic Financial Ltd.......................... 17
The Certificates............................... 18
The Notes...................................... 19
Certain Information Regarding the Securities... 23
Description of the Purchase Agreements and the
Trust Documents............................... 26
Certain Legal Aspects of the Receivables....... 39
Certain Federal Income Tax Consequences........ 43
ERISA Considerations........................... 43
Plan of Distribution........................... 44
Legal Matters.................................. 44
Index of Defined Terms......................... 45
</TABLE>
-------------------
UNTIL SEPTEMBER 3, 1996 ALL DEALERS EFFECTING TRANSACTIONS IN THE NOTES OR
THE CERTIFICATES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE
REQUIRED TO DELIVER A PROSPECTUS SUPPLEMENT AND A PROSPECTUS. THIS IS IN
ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS SUPPLEMENT AND A
PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
OLYMPIC AUTOMOBILE
RECEIVABLES TRUST, 1996-B
$68,900,000
5.39% CLASS A-1 MONEY MARKET AUTOMOBILE RECEIVABLES-BACKED NOTES
$223,430,000
6.00% CLASS A-2
AUTOMOBILE RECEIVABLES-BACKED NOTES
$126,960,000
6.50% CLASS A-3
AUTOMOBILE RECEIVABLES-BACKED NOTES
$116,790,000
6.70% CLASS A-4
AUTOMOBILE RECEIVABLES-BACKED NOTES
$55,420,000
6.90% CLASS A-5
AUTOMOBILE RECEIVABLES-BACKED NOTES
$58,500,000
6.90% AUTOMOBILE RECEIVABLES-
BACKED CERTIFICATES
OLYMPIC RECEIVABLES
FINANCE CORP.
(SELLER)
[LOGO]
(SERVICER)
FULL AND TIMELY PAYMENT OF THE NOTEHOLDERS' DISTRIBUTABLE AMOUNT AND THE
CERTIFICATEHOLDERS' DISTRIBUTABLE AMOUNT ON EACH DISTRIBUTION DATE IS
UNCONDITIONALLY AND IRREVOCABLY GUARANTEED PURSUANT TO FINANCIAL GUARANTY
INSURANCE POLICIES ISSUED BY
[LOGO]
---------------------
PROSPECTUS SUPPLEMENT
---------------------
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
BEAR, STEARNS & CO. INC.
J.P. MORGAN & CO.
- -------------------------------------------
-------------------------------------------
- -------------------------------------------
-------------------------------------------
<PAGE>
(This page has been left blank intentionally.)
