TRUST AGREEMENT
Dated as of September 1, 1998
among
ARCADIA RECEIVABLES FINANCE CORP.,
FINANCIAL SECURITY ASSURANCE INC.
and
WILMINGTON TRUST COMPANY
Owner Trustee
ARCADIA AUTOMOBILE RECEIVABLES TRUST, 1998-C
TABLE OF CONTENTS
PAGE
INTRODUCTION 1
ARTICLE I - DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2. Usage of Terms. . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 1.3. Section References. . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 1.4. Material Adverse Effect . . . . . . . . . . . . . . . . . . . . 3
ARTICLE II - CREATION OF TRUST . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.1. Creation of Trust . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.2. Office. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.3. Purposes and Powers . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.4. Appointment of Owner Trustee. . . . . . . . . . . . . . . . . . 5
SECTION 2.5. Initial Capital Contribution of Trust Estate. . . . . . . . . . 5
SECTION 2.6. Declaration of Trust. . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.7. Liability of the Depositor. . . . . . . . . . . . . . . . . . . 5
SECTION 2.8. Title to Trust Property . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.9. Situs of Trust. . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.10. Representations and Warranties of the
Depositor. . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.11. Federal Income Tax Treatment . . . . . . . . . . . . . . . . . 7
SECTION 2.12. Covenants of the Depositor . . . . . . . . . . . . . . . . . . 8
SECTION 2.13. Ownership of Trust . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.14. Maintenance of Office or Agency. . . . . . . . . . . . . . . . 8
ARTICLE III - ACTIONS BY OWNER TRUSTEE . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 3.1. Action by the Security Insurer with Respect to
Bankruptcy. . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 3.2. Rights of Security Insurer. . . . . . . . . . . . . . . . . . . 9
ARTICLE IV - CERTAIN DUTIES OF TRUST . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 4.1. Accounting; Reports; Tax Returns. . . . . . . . . . . . . . . . 9
ARTICLE V - AUTHORITY AND DUTIES OF OWNER TRUSTEE. . . . . . . . . . . . . . . . . 10
SECTION 5.1. General Authority . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 5.2. General Duties. . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 5.3. Action upon Instruction . . . . . . . . . . . . . . . . . . . . 11
SECTION 5.4. No Duties Except as Specified in this Agreement
or in Instructions . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 5.5. No Action Except under Specified Documents or
Instructions . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 5.6. Restrictions. . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 5.7. Administration Agreement. . . . . . . . . . . . . . . . . . . . 12
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ARTICLE VI - CONCERNING THE OWNER TRUSTEE. . . . . . . . . . . . . . . . . . . . . 13
SECTION 6.1. Acceptance of Trustee and Duties. . . . . . . . . . . . . . . . 13
SECTION 6.2. Representations and Warranties. . . . . . . . . . . . . . . . . 14
SECTION 6.3. Reliance; Advice of Counsel . . . . . . . . . . . . . . . . . . 15
SECTION 6.4. Not Acting in Individual Capacity . . . . . . . . . . . . . . . 15
SECTION 6.5. Owner Trustee Not Liable for Notes or
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 6.6. Owner Trustee May Own Notes . . . . . . . . . . . . . . . . . . 16
ARTICLE VII - COMPENSATION OF OWNER TRUSTEE. . . . . . . . . . . . . . . . . . . . 16
SECTION 7.1. Owner Trustee's Fees and Expenses . . . . . . . . . . . . . . . 16
SECTION 7.2. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 7.3. Non-recourse Obligations. . . . . . . . . . . . . . . . . . . . 17
ARTICLE XIII - TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 8.1. Termination of the Trust. . . . . . . . . . . . . . . . . . . . 17
SECTION 8.2. Dissolution Events with respect to the
Depositor . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE IX - SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES. . . . . . . . 18
SECTION 9.1. Eligibility Requirements for Owner Trustee. . . . . . . . . . . 18
SECTION 9.2. Resignation or Removal of Owner Trustee . . . . . . . . . . . . 18
SECTION 9.3. Successor Owner Trustee . . . . . . . . . . . . . . . . . . . . 19
SECTION 9.4. Merger or Consolidation of Owner Trustee. . . . . . . . . . . . 20
SECTION 9.5. Appointment of Co-Trustee or Separate Trustee . . . . . . . . . 20
ARTICLE X - MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 10.1. Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 10.2. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 10.3. Severability of Provisions . . . . . . . . . . . . . . . . . . 22
SECTION 10.4. Third-Party Beneficiaries. . . . . . . . . . . . . . . . . . . 22
SECTION 10.5. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 10.6. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
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EXHIBITS
Exhibit A -- Form of Certificate of Trust
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THIS TRUST AGREEMENT, dated as of September 1, 1998, is made among
Arcadia Receivables Finance Corp., a Delaware corporation (the "Seller"),
Financial Security Assurance Inc. ("Financial Security") and Wilmington Trust
Company, a Delaware banking corporation, as Owner Trustee (in such capacity,
the "Owner Trustee").
In consideration of the mutual agreements herein contained, and of
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITIONS. All terms defined in the Spread Account
Agreement or the Sale and Servicing Agreement (each as defined below) shall
have the same meaning in this Agreement. Whenever capitalized and used in
this Agreement, the following words and phrases, unless otherwise specified,
shall have the following meanings:
ADMINISTRATION AGREEMENT: The Administration Agreement, dated as
of September 22, 1998, between the Administrator and the Trust, as the same
may be amended and supplemented from time to time.
ADMINISTRATOR: Wilmington Trust Company, a Delaware banking
corporation, or any successor Administrator under the Administration
Agreement.
AFL: Arcadia Financial Ltd., a Minnesota corporation, and its
successors in interest.
AGREEMENT OR "THIS AGREEMENT": This Trust Agreement, all
amendments and supplements thereto and all exhibits and schedules to any of
the foregoing.
AUTHENTICATION AGENT: Wilmington Trust Company, or its successor
in interest, and any successor authentication agent appointed as provided in
this Agreement.
BUSINESS TRUST STATUTE: Chapter 38 of Title 12 of the Delaware
Code, 12 Del. Code Section 3801 et seq., as the same may be amended from
time to time.
CERTIFICATE OF TRUST: The Certificate of Trust in the form of
Exhibit A hereto filed for the Trust pursuant to Section 3810(a) of the
Business Trust Statute.
CODE: The Internal Revenue Code of 1986, as amended.
CORPORATE TRUST OFFICE: The principal office of the Owner Trustee
at which at any particular time its corporate trust business shall be
administered, which office at the Closing Date is located at Xxxxxx Square
North, 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000,
Attention: Corporate Trust Administration; the telecopy number for such
office on the date of the execution of this Agreement is (000) 000-0000.
DEPOSITOR: The Seller in its capacity as depositor hereunder.
DISSOLUTION EVENT: With respect to the Depositor, means the
termination or dissolution of such Person, or the occurrence of an Insolvency
Event with respect to such Person.
EXPENSES: The meaning assigned to such term in Section 7.2.
INDEMNIFIED PARTIES: The meaning assigned to such term in Section
7.2.
INDEMNIFIED PARTIES: The meaning assigned to such term in Section
7.2.
INSTRUCTING PARTY: The meaning assigned to such term in Section
5.3(a).
OWNER TRUSTEE: Wilmington Trust Company, or its successor in
interest, acting not individually but solely as trustee, and any successor
trustee appointed as provided in this Agreement.
RECORD DATE: With respect to any Distribution Date, the close of
business on the last Business Day immediately preceding such Distribution
Date.
RELATED DOCUMENTS: The Sale and Servicing Agreement, the
Indenture, the Notes, the Purchase Agreements, each Subsequent Transfer
Agreement, each Subsequent Purchase Agreement, the Custodian Agreement, the
Note Policy, the Spread Account Agreement, the Stock Pledge Agreement, the
Insurance Agreement, the Administration Agreement, the Lockbox Agreement, the
Depository Agreement, and the Underwriting Agreement between AFL and the
Seller and the underwriters of the Notes. The Related Documents executed by
any party are referred to herein as "such party's Related Documents," "its
Related Documents" or by a similar expression.
SALE AND SERVICING AGREEMENT: The Sale and Servicing Agreement,
dated as of September 1, 1998 among the Trust, the Seller, AFL, in its
individual capacity and as Servicer, and Norwest Bank Minnesota, National
Association, as Backup Servicer, as the same may be amended and supplemented
from time to time.
SECRETARY OF STATE: The Secretary of State of the State of
Delaware.
SECURITY INSURER: Financial Security Assurance Inc., or its
successor in interest.
SELLER: Arcadia Receivables Finance Corp., a Delaware corporation,
or its successor in interest.
SPREAD ACCOUNT: The Series 1998-C Spread Account established and
maintained pursuant to the Spread Account Agreement.
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SPREAD ACCOUNT AGREEMENT: The Spread Account Agreement, dated as
of March 25, 1993, as thereafter amended and restated, among the Seller, AFL,
the Security Insurer, the Collateral Agent and the Indenture Trustee, as the
same may be amended, supplemented or otherwise modified in accordance with
the terms thereof.
STOCK PLEDGE AGREEMENT: The Second Amended and Restated Stock
Pledge Agreement, dated as of March 25, 1993, as amended and restated as of
December 3, 1996, among the Security Insurer, AFL and the Collateral Agent,
relating to the stock of each of Arcadia First GP Inc., Arcadia Second GP
Inc. and the Seller, as the same may be amended from time to time.
TRUST: The trust created by this Agreement, the estate of which
consists of the Trust Property.
TRUST ACCOUNTS: The Collection Account, the Subcollection Account,
the Lockbox Account, the Pre-Funding Account, the Reserve Account and the
Note Distribution Account.
TRUST PROPERTY: The property and proceeds of every description
conveyed pursuant to Section 2.5 hereof and Sections 2.1 and 2.4 of the Sale
and Servicing Agreement, together with the Trust Accounts (including all
Eligible Investments therein and all proceeds therefrom).
SECTION 1.2. USAGE OF TERMS. With respect to all terms used in
this Agreement, the singular includes the plural and the plural the singular;
words importing any gender include the other genders; references to "writing"
include printing, typing, lithography, and other means of reproducing words
in a visible form; references to agreements and other contractual instruments
include all subsequent amendments thereto or changes therein entered into in
accordance with their respective terms and not prohibited by this Agreement;
references to Persons include their permitted successors and assigns; and the
terms "include" or "including" mean "include without limitation" or
"including without limitation." To the extent that definitions are contained
in this Agreement, or in any such certificate or other document, such
definitions shall control.
SECTION 1.3. SECTION REFERENCES. All references to Articles,
Sections, paragraphs, subsections, exhibits and schedules shall be to such
portions of this Agreement unless otherwise specified.
SECTION 1.4. MATERIAL ADVERSE EFFECT. Whenever a determination is
to be made under this Agreement as to whether a given event, action, course
of conduct or set of facts or circumstances could or would have a material
adverse effect on the Trust (or any similar or analogous determination), such
determination shall be made without taking into account the insurance
provided by the Note Policy.
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ARTICLE II
CREATION OF TRUST
SECTION 2.1. CREATION OF TRUST. There is hereby formed a trust to
be known as "Arcadia Automobile Receivables Trust, 1998-C," in which name the
Trust may conduct business, make and execute contracts and other instruments
and xxx and be sued.
SECTION 2.2. OFFICE. The office of the Trust shall be in care of the
Owner Trustee at the Corporate Trust Office or at such other address in Delaware
as the Owner Trustee may designate by written notice to the Security Insurer and
the Depositor.
SECTION 2.3. PURPOSES AND POWERS. The purpose of the Trust is, and
the Trust shall have the power and authority, to engage in the following
activities:
(i) to issue the Notes pursuant to the Indenture and to sell
the Notes;
(ii) with the proceeds of the sale of the Notes, to fund the
Pre-Funding Account and the Reserve Account, to pay the organizational,
start-up and transactional expenses of the Trust and to pay the balance to
the Seller pursuant to the Sale and Servicing Agreement;
(iii) to assign, grant, transfer, pledge, mortgage and convey
the Trust Property to the Indenture Collateral Agent pursuant to the
Indenture for the benefit of the Security Insurer and the Indenture Trustee
on behalf of the Noteholders and to hold, manage and distribute to the
Depositor pursuant to the terms of the Sale and Servicing Agreement any
portion of the Trust Property released from the Lien of, and remitted to
the Trust pursuant to, the Indenture;
(iv) to enter into and perform its obligations under the
Related Documents to which it is to be a party;
(v) to engage in those activities, including entering into
agreements, that are necessary, suitable or convenient to accomplish the
foregoing or are incidental thereto or connected therewith; and
(vi) subject to compliance with the Related Documents, to
engage in such other activities as may be required in connection with
conservation of the Trust Property and the making of distributions to the
Noteholders.
The Trust is hereby authorized to engage in the foregoing activities. The
Trust shall not engage in any activity other than in connection with the
foregoing or other than as required or expressly authorized by the terms of
this Agreement or the Related Documents.
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SECTION 2.4. APPOINTMENT OF OWNER TRUSTEE. The Depositor hereby
appoints the Owner Trustee as trustee of the Trust effective as of the date
hereof, to have all the rights, powers and duties set forth herein, and the
Owner Trustee hereby accepts such appointment.
SECTION 2.5. INITIAL CAPITAL CONTRIBUTION OF TRUST ESTATE. The
Depositor hereby sells, assigns, transfers, conveys and sets over to the Owner
Trustee, as of the date hereof, the sum of $10. The Owner Trustee hereby
acknowledges receipt in trust from the Depositor, as of the date hereof, of the
foregoing contribution, which shall constitute the initial Trust Property. The
Depositor shall pay organizational expenses of the Trust as they may arise or
shall, upon the request of the Owner Trustee, promptly reimburse the Owner
Trustee for any such expenses paid by the Owner Trustee.
SECTION 2.6. DECLARATION OF TRUST. The Owner Trustee hereby declares
that it will hold the Trust Property in trust upon and subject to the conditions
set forth herein, subject to the interests and rights in the Trust Property
granted to other Persons by the Related Documents. It is the intention and
agreement of the parties hereto that the Trust constitute a business trust under
the Business Trust Statute and that this Agreement constitute the governing
instrument of such business trust. None of the parties hereto shall make the
election provided in Treasury Regulation Section 301.7701-3(c) to have the
Trust classified as an association taxable as a corporation. On the date
hereof, the Owner Trustee shall file the Certificate of Trust required by
Section 3810(a) of the Business Trust Statute in the Office of the Secretary of
State. Effective as of the date hereof, the Owner Trustee shall have all
rights, powers and duties set forth herein and in the Business Trust Statute
with respect to accomplishing the purposes of the Trust.
SECTION 2.7. LIABILITY OF THE DEPOSITOR. The Depositor shall be
liable directly to indemnify each injured party for all losses, claims, damages,
liabilities and expenses of the Trust, to the extent not paid out of the Trust
Property, to the extent provided in, and subject to the terms and conditions
contained in, the Spread Account Agreement; PROVIDED, FURTHER, that the
Depositor shall not be liable to indemnify any injured party if such party has
agreed that its recourse against the Trust for any obligation or liability of
the Trust to such party shall be limited to the assets of the Trust. In
addition, any third party creditors of the Trust (other than in connection with
the obligations described in the provisos to the preceding sentence for which
the Depositor shall not be liable) shall be deemed third party beneficiaries of
this paragraph.
SECTION 2.8. TITLE TO TRUST PROPERTY. Legal title to all the Trust
Property shall be vested at all times in the Trust as a separate legal entity
except where applicable law in any jurisdiction requires title to any part of
the Trust Property to be vested in a trustee or trustees, in which case title
shall be deemed to be vested in the Owner Trustee, a co-trustee and/or a
separate trustee, as the case may be.
SECTION 2.9. SITUS OF TRUST. The Trust will be located and
administered in the State of Delaware. All bank accounts maintained by the
Owner Trustee on behalf of the Trust shall be located in the State of
Delaware. The Trust shall not have any employees in any state other than
Delaware; PROVIDED, HOWEVER, that nothing herein shall restrict or prohibit
the Owner Trustee, the Servicer or any agent of the Trust from having
employees within or without the State of Delaware. Payments will be received
by the Trust only in Delaware, and payments will be
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made by the Trust only from Delaware. The only office of the Trust will be
at the Corporate Trust Office in Delaware.
SECTION 2.10. REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR. By
execution of this Agreement, the Depositor makes the following
representations and warranties with respect to itself on which the Owner
Trustee relies in accepting the Trust Property in trust and upon which the
Security Insurer relies in issuing the Note Policy.
(a) ORGANIZATION AND GOOD STANDING. It has been duly organized
and is validly existing as a corporation in good standing under the laws of
the State of Delaware, with power and authority to own its properties and to
conduct its business as such properties are currently owned and as such
business is currently conducted and is proposed to be conducted pursuant to
this Agreement and the Related Documents.
(b) DUE QUALIFICATION. It is duly qualified to do business as a
foreign corporation in good standing, and has obtained all necessary licenses
and approvals, in all jurisdictions in which the ownership or lease of its
property, the conduct of its business and the performance of its obligations
under this Agreement and the Related Documents requires such qualification.
(c) POWER AND AUTHORITY. It has the power and authority to
execute and deliver this Agreement and its Related Documents and to perform
its obligations pursuant thereto; and the execution, delivery and performance
of this Agreement and its Related Documents have been duly authorized by all
necessary corporate action.
(d) NO CONSENT REQUIRED. No consent, license, approval or
authorization or registration or declaration with, any Person or with any
governmental authority, bureau or agency is required in connection with the
execution, delivery or performance of this Agreement and the Related
Documents, except for such as have been obtained, effected or made.
(e) NO VIOLATION. The consummation of the transactions
contemplated by this Agreement and its Related Documents and the fulfillment
of its obligations under this Agreement and its Related Documents shall not
conflict with, result in any breach of any of the terms and provisions of or
constitute (with or without notice, lapse of time or both) a default under,
its certificate of incorporation or by-laws, or any indenture, agreement,
mortgage, deed of trust or other instrument to which it is a party or by
which it is bound, or result in the creation or imposition of any Lien upon
any of its properties pursuant to the terms of any such indenture, agreement,
mortgage, deed of trust or other instrument, or violate any law, order, rule
or regulation applicable to it of any court or of any federal or state
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over it or any of its properties.
(f) NO PROCEEDINGS. There are no proceedings or investigations
pending or, to its knowledge threatened against it before any court,
regulatory body, administrative agency or other tribunal or governmental
instrumentality having jurisdiction over it or its properties (A) asserting
the invalidity of this Agreement or any of the Related Documents, (B) seeking
to prevent the issuance of the Notes or the consummation of any of the
transactions contemplated
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by this Agreement or any of the Related Documents, or (C) seeking any
determination or ruling that might materially and adversely affect its
performance of its obligations under, or the validity or enforceability of,
this Agreement or any of the Related Documents.
SECTION 2.11. FEDERAL INCOME TAX TREATMENT. The Depositor, the
Servicer, the Owner Trustee and each Noteholder agree to treat, and to take
no action inconsistent with the treatment of, the Notes as indebtedness for
purposes of federal, state, local and foreign income or franchise taxes and
any other tax imposed on or measured by income. Each Noteholder, by
acceptance of its Note, agrees to be bound by the provisions of this Section
2.11. Each Noteholder agrees that it will cause any Note Owner acquiring an
interest in a Note through it to comply with this Agreement as to the
treatment of the Notes as indebtedness under applicable tax law, as described
in this Section 2.11. Furthermore, subject to Section 4.1, the Depositor and
the Trustee shall treat the Trust as a security device only, and shall not
file tax returns or obtain an employer identification number on behalf of the
Trust.
In the event that any class of Notes is deemed for federal income tax
purposes to represent an equity interest in the Trust, the Trust shall be
treated for federal income tax purposes as a partnership among the Holders of
such Notes and the Depositor. In the event such a partnership is deemed to
exist, the net income of the Trust for any month as determined for Federal
income tax purposes (and each item of income, gain, loss and deduction entering
into the computation thereof) shall be allocated:
(a) among the Noteholders as of the first Record Date following the
end of such month, in proportion to their ownership of principal amount of
Notes on such date, an amount of net income up to the sum of
(i) Noteholders' Interest Distributable Amount for such month, (ii) the
portion of the market discount on the Receivables accrued during such month
that is allocable to the excess of the initial aggregate principal amount
of the Notes over their initial aggregate issue price, and (iii) any Note
Prepayment Premium distributable to the Noteholders with respect to such
month; and
(b) next, to the Depositor to the extent of any remaining net income.
If the net income of the Trust for any month is insufficient for the
allocations described in clause (a) above, subsequent net income shall first
be allocated to make up such shortfall before being allocated as provided in
clause (b). Net losses of the Trust, if any, for any month as determined for
Federal income tax purposes (and each item of income, gain, loss and
deduction entering into the computation thereof) shall be allocated to the
Depositor to the extent the Depositor is reasonably expected to bear the
economic burden of such net losses, then net losses shall be allocated among
the Noteholders as of the first Record Date following the end of such month
in proportion to their ownership of principal amount of the Notes on such
Record Date. The Depositor is authorized to modify the allocation in this
paragraph if necessary or appropriate, in its sole discretion, for the
allocations to reflect fairly the economic income, gain or loss to the
Noteholders to comply with the provisions of the Code and the accompanying
Treasury Regulations.
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SECTION 2.12. COVENANTS OF THE DEPOSITOR. The Depositor agrees
and covenants for the benefit of the Security Insurer and the Owner Trustee,
during the term of this Agreement, and to the fullest extent permitted by
applicable law, that:
(a) it shall not sell, assign, transfer, give or encumber, by
operation of law or otherwise, in whole or in part, its interest in the
Trust;
(b) it shall not create, incur or suffer to exist any
indebtedness or engage in any business, except, in each case, as permitted
by its certificate of incorporation and the Related Documents;
(c) it shall not, for any reason, institute proceedings for
the Trust to be adjudicated a bankrupt or insolvent, or consent to the
institution of bankruptcy or insolvency proceedings against the Trust, or
file a petition seeking or consenting to reorganization or relief under any
applicable federal or state law relating to the bankruptcy of the Trust, or
consent to the appointment of a receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of the Trust or a substantial part
of the property of the Trust or cause or permit the Trust to make any
assignment for the benefit of creditors, or admit in writing the inability
of the Trust to pay its debts generally as they become due, or declare or
effect a moratorium on the debt of the Trust or take any action in
furtherance of any such action;
(d) it shall obtain from each counterparty to each Related
Document to which it or the Trust is a party and each other agreement
entered into on or after the date hereof to which it or the Trust is a
party, an agreement by each such counterparty that prior to the occurrence
of the event specified in Section 8.1(c) such counterparty shall not
institute against, or join any other Person in instituting against, it or
the Trust, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings or other similar proceedings under the laws of the
United States or any state of the United States;
(e) it shall not, for any reason, withdraw or attempt to
withdraw from this Agreement, dissolve, institute proceedings for it to be
adjudicated a bankrupt or insolvent, or consent to the institution of
bankruptcy or insolvency proceedings against it, or file a petition seeking
or consenting to reorganization or relief under any applicable federal or
state law relating to bankruptcy, or consent to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of it or a substantial part of its property, or make any
assignment for the benefit of creditors, or admit in writing its inability
to pay its debts generally as they become due, or declare or effect a
moratorium on its debt or take any action in furtherance of any such
action.
SECTION 2.13. OWNERSHIP OF TRUST. Upon the formation of the Trust
by the contribution by the Depositor pursuant to Section 2.5, the Depositor
shall be the sole beneficiary of the Trust.
SECTION 2.14. MAINTENANCE OF OFFICE OR AGENCY. The Owner Trustee
shall maintain in Wilmington, Delaware, an office or offices or agency or
agencies where notices and
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demands to or upon the Owner Trustee in respect of the Related Documents may
be served. The Owner Trustee initially designates Wilmington Trust Company,
Xxxxxx Square North, 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000 as
its principal corporate trust office for such purposes. The Owner Trustee
shall give prompt written notice to the Depositor and the Security Insurer of
any change in the location of any such office or agency.
ARTICLE III
ACTIONS BY OWNER TRUSTEE
SECTION 3.1. ACTION BY THE SECURITY INSURER WITH RESPECT TO
BANKRUPTCY. The Owner Trustee shall not have the power to commence a
voluntary proceeding in bankruptcy relating to the Trust without the prior
written consent of the Security Insurer.
SECTION 3.2. RIGHTS OF SECURITY INSURER. Notwithstanding anything
to the contrary in the Related Documents, without the prior written consent
of the Security Insurer (so long as no Insurer Default shall have occurred
and be continuing), the Owner Trustee shall not (i) remove the Administrator,
the Servicer or the Backup Servicer, (ii) initiate any claim, suit or
proceeding by the Trust or compromise any claim, suit or proceeding brought
by or against the Trust, (iii) authorize the merger or consolidation of the
Trust with or into any other business trust or other entity (other than in
accordance with Section 3.10 of the Indenture) or (iv) amend the Certificate
of Trust.
ARTICLE IV
CERTAIN DUTIES OF TRUST
SECTION 4.1. ACCOUNTING; REPORTS; TAX RETURNS.
(a) The Administrator has agreed pursuant to the Administration
Agreement that the Administrator shall (i) maintain (or cause to be
maintained) the books of the Trust on a calendar year basis on the accrual
method of accounting, and (ii) file or cause to be filed all documents
required to be filed by the Trust with the Securities and Exchange Commission
and otherwise take or cause to be taken all such actions as are notified by
the Servicer in writing to the Administrator as being required for the
Trust's compliance with all applicable provisions of state and federal
securities laws.
(b) Consistent with Section 2.11, the Depositor, the Owner Trustee
and the Administrator shall not file any federal income tax returns on behalf
of the Trust; provided, however, that if any class of Notes is treated as an
equity interest in the Trust, the Administrator shall file or cause to be
filed such tax returns relating to the Trust (including a partnership
information return, Form 1065), and direct the Owner Trustee to make such
elections as may from time to time be required or appropriate under any
applicable state or Federal statute or rule or regulation thereunder so as to
maintain the Trust's characterization as a partnership for Federal income tax
purposes. If the Trust is treated as a partnership for federal income tax
purposes, the Depositor shall be the "tax matters partner" of the Trust
pursuant to the Code.
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(c) The Owner Trustee shall make all elections pursuant to this
Section 4.1 only as directed in writing by the Depositor, with the consent of
the Security Insurer. The Depositor hereby directs the Owner Trustee to
elect under Section 1278 of the Code to include in income currently any
market discount that accrues with respect to the Receivables.
(d) Upon the direction of the Depositor, the Owner Trustee shall
sign on behalf of the Trust the tax returns of the Trust, if any, unless
applicable law requires the Depositor to sign such documents, in which case
such documents shall be signed by the Depositor. In signing any tax return
of the Trust, the Owner Trustee shall rely entirely upon, and shall have no
liability for, information or calculations provided by the Depositor.
(e) None of the parties hereto shall make the election provided in
Treasury Regulation Section 301.7701-3(c) to have the Trust classified as an
association taxable as a corporation.
ARTICLE V
AUTHORITY AND DUTIES OF OWNER TRUSTEE
SECTION 5.1. GENERAL AUTHORITY. The Owner Trustee is authorized
and directed to execute and deliver the Related Documents to which the Trust
is to be a party and each certificate or other document attached as an
exhibit to or contemplated by the Related Documents to which the Trust is to
be a party and any amendment thereto, and on behalf of the Trust, to direct
the Indenture Trustee to authenticate and deliver the Class A-1 Notes in the
aggregate principal amount of $66,000,000, the Class A-2 Notes in the
aggregate principal amount of $194,000,000 and the Class A-3 Notes in the
aggregate principal amount of $340,000,000. In addition to the foregoing,
the Owner Trustee is authorized, but shall not be obligated, to take all
actions required of the Trust pursuant to the Related Documents. The Owner
Trustee is further authorized, on behalf of the Trust, to enter into the
Administration Agreement, to appoint, with the consent of the Security
Insurer, a successor Administrator and to take from time to time such action
as the Instructing Party recommends with respect to the Related Documents so
long as such actions are consistent with the terms of the Related Documents.
SECTION 5.2. GENERAL DUTIES. It shall be the duty of the Owner
Trustee to discharge (or cause to be discharged through the Administrator or
such agents as shall be appointed with the consent of the Security Insurer)
all of its responsibilities pursuant to the terms of this Agreement and the
Related Documents subject to the Related Documents and in accordance with the
provisions of this Agreement. Notwithstanding the foregoing, the Owner
Trustee shall be deemed to have discharged its duties and responsibilities
hereunder and under the Related Documents to the extent the Administrator has
agreed in the Administration Agreement to perform any act or to discharge any
duty of the Owner Trustee hereunder or under any Related Document, and the
Owner Trustee shall not be liable for the default or failure of the
Administrator to carry out its obligations under the Administration
Agreement. Notwithstanding anything herein or in any Related Document to the
contrary, the Owner Trustee shall discharge its obligations pursuant to
Section 5.3 and Section 5.4 of the Sale and Servicing Agreement directly and
not through the Administrator or any agent.
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SECTION 5.3. ACTION UPON INSTRUCTION.
(a) Subject to Article IV and the terms of the Spread Account
Agreement, the Security Insurer (so long as an Insurer Default shall not have
occurred and be continuing) or the Depositor (if an Insurer Default shall
have occurred and be continuing) (the "Instructing Party") shall have the
exclusive right to direct the actions of the Owner Trustee in the management
of the Trust, so long as such instructions are not inconsistent with the
express terms set forth herein or in any Related Document. The Instructing
Party shall not instruct the Owner Trustee in a manner inconsistent with this
Agreement or the Related Documents.
(b) The Owner Trustee shall not be required to take any action
hereunder or under any Related Document if the Owner Trustee shall have
reasonably determined, or shall have been advised by counsel, that such
action is contrary to the terms hereof or of any Related Document or is
otherwise contrary to law.
(c) Whenever the Owner Trustee is unable to decide between
alternative courses of action permitted or required by the terms of this
Agreement or any Related Document, the Owner Trustee shall promptly give
notice (in such form as shall be appropriate under the circumstances) to the
Instructing Party requesting instruction as to the course of action to be
adopted, and to the extent the Owner Trustee acts in good faith in accordance
with any written instruction received from the Instructing Party, the Owner
Trustee shall not be liable on account of such action to any Person. If the
Owner Trustee shall not have received appropriate instruction within ten days
of such notice (or within such shorter period of time as reasonably may be
specified in such notice or may be necessary under the circumstances) it may,
but shall be under no duty to, take or refrain from taking such action, not
inconsistent with this Agreement or the Related Documents, and shall have no
liability to any Person for such action or inaction.
(d) In the event that the Owner Trustee is unsure as to the
application of any provision of this Agreement or any Related Document or any
such provision is ambiguous as to its application, or is, or appears to be,
in conflict with any other applicable provision, or in the event that this
Agreement permits any determination by the Owner Trustee or is silent or is
incomplete as to the course of action that the Owner Trustee is required to
take with respect to a particular set of facts, the Owner Trustee may give
notice (in such form as shall be appropriate under the circumstances) to the
Instructing Party requesting instruction and, to the extent that the Owner
Trustee acts or refrains from acting in good faith in accordance with any
such instruction received, the Owner Trustee shall not be liable, on account
of such action or inaction, to any Person. If the Owner Trustee shall not
have received appropriate instruction within 10 days of such notice (or
within such shorter period of time as reasonably may be specified in such
notice or may be necessary under the circumstances) it may, but shall be
under no duty to, take or refrain from taking such action, not inconsistent
with this Agreement or the Related Documents, as it shall deem to be in the
best interests of the Owners, and shall have no liability to any Person for
such action or inaction.
SECTION 5.4. NO DUTIES EXCEPT AS SPECIFIED IN THIS AGREEMENT OR IN
INSTRUCTIONS. The Owner Trustee shall not have any duty or obligation to
manage, make any payment with respect to, register, record, sell, dispose of,
or otherwise deal with the Trust
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Property, or to otherwise take or refrain from taking any action under, or in
connection with, any document contemplated hereby to which the Trust is a
party, except as expressly provided by the terms of this Agreement (including
as provided in Section 5.2) or in any written instruction received by the
Owner Trustee pursuant to Section 5.3; and no implied duties or obligations
shall be read into this Agreement or any Related Document against the Owner
Trustee. The Owner Trustee shall have no responsibility for preparing,
monitoring or filing any financing or continuation statements in any public
office at any time or otherwise to perfect or maintain the perfection of any
security interest or lien granted to it hereunder or to record this Agreement
or any Related Document; however, the Owner Trustee will from time to time
execute and deliver such financing or continuation statements as are prepared
by the Servicer and delivered to the Owner Trustee for its execution on
behalf of the Trust for the purpose of perfecting or maintaining the
perfection of such a security interest or lien or effecting such a recording.
The Owner Trustee nevertheless agrees that it will, at its own cost and
expense (and not at the expense of the Trust), promptly take all action as
may be necessary to discharge any liens on any part of the Trust Property
that are attributable to claims against the Owner Trustee in its individual
capacity that are not related to the ownership or the administration of the
Trust Property.
SECTION 5.5. NO ACTION EXCEPT UNDER SPECIFIED DOCUMENTS OR
INSTRUCTIONS. The Owner Trustee shall not manage, control, use, sell,
dispose of or otherwise deal with any part of, the Trust Property except (i)
in accordance with the powers granted to and the authority conferred upon the
Owner Trustee pursuant to this Agreement, (ii) in accordance with the Related
Documents and (iii) in accordance with any document or instruction delivered
to the Owner Trustee pursuant to Section 5.3.
SECTION 5.6. RESTRICTIONS. The Owner Trustee shall not take any
action (a) that is inconsistent with the purposes of the Trust set forth in
Section 2.3 or (b) that, to the actual knowledge of the Owner Trustee, would
result in the Trust's becoming taxable as a corporation for Federal income
tax purposes.
SECTION 5.7. ADMINISTRATION AGREEMENT.
(a) The Administrator is authorized to execute on behalf of the
Trust all documents, reports, filings, instruments, certificates and opinions
as it shall be the duty of the Trust to prepare, file or deliver pursuant to
the Related Documents. Upon written request, the Owner Trustee shall execute
and deliver to the Administrator a power of attorney appointing the
Administrator its agent and attorney-in-fact to execute all such documents,
reports, filings, instruments, certificates and opinions.
(b) If the Administrator shall resign or be removed pursuant to
the terms of the Administration Agreement, the Owner Trustee may, and is
hereby authorized and empowered to, subject to obtaining the prior written
consent of the Security Insurer, appoint or consent to the appointment of a
successor Administrator pursuant to the Administration Agreement.
(c) If the Administration Agreement is terminated, the Owner
Trustee may, and is hereby authorized and empowered to, subject to obtaining
the prior written consent of the
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Security Insurer, appoint or consent to the appointment of a Person to
perform substantially the same duties as are assigned to the Administrator in
the Administration Agreement pursuant to an agreement containing
substantially the same provisions as are contained in the Administration
Agreement.
(d) The Owner Trustee shall promptly notify the Security Insurer
of any default by or misconduct of the Administrator under the Administration
Agreement of which the Owner Trustee has received written notice or of which
a Responsible Officer has actual knowledge.
ARTICLE VI
CONCERNING THE OWNER TRUSTEE
SECTION 6.1. ACCEPTANCE OF TRUSTEE AND DUTIES. The Owner Trustee
accepts the trusts hereby created and agrees to perform its duties hereunder
with respect to such trusts but only upon the terms of this Agreement. The
Owner Trustee also agrees to disburse all monies actually received by it
constituting part of the Trust Property upon the terms of the Related
Documents and this Agreement. The Owner Trustee shall not be answerable or
accountable hereunder or under any Related Document under any circumstances,
except (i) for its own willful misconduct or gross negligence, (ii) in the
case of the inaccuracy of any representation or warranty contained in Section
6.2, (iii) for liabilities arising from the failure of the Owner Trustee to
perform obligations expressly undertaken by it in the last sentence of
Section 5.4 hereof, (iv) for any investments issued by the Owner Trustee or
any branch or affiliate thereof in its commercial capacity or (v) for taxes,
fees or other charges on, based on or measured by, any fees, commissions or
compensation received by the Owner Trustee. In particular, but not by way of
limitation (and subject to the exceptions set forth in the preceding
sentence):
(a) the Owner Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Owner Trustee;
(b) the Owner Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with
the instructions of the Instructing Party;
(c) no provision of this Agreement or any Related Document
shall require the Owner Trustee to expend or risk funds or otherwise incur
any financial liability in the performance of any of its rights or powers
hereunder or under any Related Document if the Owner Trustee shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured or
provided to it;
(d) under no circumstances shall the Owner Trustee be liable
for indebtedness evidenced by or arising under this Agreement or any of the
Related Documents, including the principal of and interest on the Notes;
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(e) the Owner Trustee shall not be responsible for or in
respect of the validity or sufficiency of this Agreement or for the due
execution hereof by the Depositor or the Security Insurer or for the form,
character, genuineness, sufficiency, value or validity of any of the Trust
Property or for or in respect of the validity or sufficiency of the Related
Documents and the Owner Trustee shall in no event assume or incur any
liability, duty, or obligation to the Security Insurer, the Custodian, the
Indenture Trustee or to any Noteholder, other than as expressly provided
for herein and in the Related Documents;
(f) the Owner Trustee shall not be liable for the default or
misconduct of the Administrator, the Security Insurer, the Custodian, the
Indenture Trustee or the Servicer under any of the Related Documents or
otherwise and the Owner Trustee shall have no obligation or liability to
perform the obligations of the Trust under this Agreement or the Related
Documents that are required to be performed by the Administrator under the
Administration Agreement, the Security Insurer under the Note Policy, the
Custodian under the Custodian Agreement, the Indenture Trustee under the
Indenture or the Servicer under the Sale and Servicing Agreement; and
(g) the Owner Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Agreement, or to
institute, conduct or defend any litigation under this Agreement or
otherwise or in relation to this Agreement or any Related Document, at the
request, order or direction of the Instructing Party, unless such
Instructing Party has offered to the Owner Trustee security or indemnity
satisfactory to it against the costs, expenses and liabilities that may be
incurred by the Owner Trustee therein or thereby. The right of the Owner
Trustee to perform any discretionary act enumerated in this Agreement or in
any Related Document shall not be construed as a duty, and the Owner
Trustee shall not be answerable for other than its gross negligence or
willful misconduct in the performance of any such act.
SECTION 6.2. REPRESENTATIONS AND WARRANTIES. The Owner Trustee
hereby represents and warrants to the Depositor and the Security Insurer
(which shall have relied on such representations and warranties in issuing
the Note Policy) that:
(a) It is a banking corporation duly organized and validly
existing in good standing under the laws of the State of Delaware. It has
all requisite corporate power and authority and all franchises, grants,
authorizations, consents, orders and approvals from all governmental
authorities necessary to execute, deliver and perform its obligations under
this Agreement and each Related Document to which the Trust is a party.
(b) It has taken all corporate action necessary to authorize
the execution and delivery by it of this Agreement and each Related
Document to which the Trust is a party, and this Agreement and each Related
Document will be executed and delivered by one of its officers who is duly
authorized to execute and deliver this Agreement on its behalf.
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(c) Neither the execution nor the delivery by it of this
Agreement, nor the consummation by it of the transactions contemplated
hereby nor compliance by it with any of the terms or provisions hereof will
contravene any Federal or Delaware law, governmental rule or regulation
governing the banking or trust powers of the Owner Trustee or any judgment
or order binding on it, or constitute any default under its charter
documents or by-laws or any indenture, mortgage, contract, agreement or
instrument to which it is a party or by which any of its properties may be
bound or result in the creation or imposition of any lien, charge or
encumbrance on the Trust Property resulting from actions by or claims
against the Owner Trustee individually which are unrelated to this
Agreement or the Related Documents.
SECTION 6.3. RELIANCE; ADVICE OF COUNSEL.
(a) The Owner Trustee shall incur no liability to anyone in acting
upon any signature, instrument, notice, resolution, request, consent, order,
certificate, report, opinion, bond, or other document or paper believed by it
to be genuine and believed by it to be signed by the proper party or parties.
The Owner Trustee may accept a certified copy of a resolution of the board
of directors or other governing body of any corporate party as conclusive
evidence that such resolution has been duly adopted by such body and that the
same is in full force and effect. As to any fact or matter the method of the
determination of which is not specifically prescribed herein, the Owner
Trustee may for all purposes hereof rely on a certificate, signed by the
president or any vice president or by the treasurer or other authorized
officers of the relevant party, as to such fact or matter, and such
certificate shall constitute full protection to the Owner Trustee for any
action taken or omitted to be taken by it in good faith in reliance thereon.
(b) In the exercise or administration of the trusts hereunder and
in the performance of its duties and obligations under this Agreement or the
Related Documents, the Owner Trustee (i) may act directly or through its
agents or attorneys pursuant to agreements entered into with any of them, and
the Owner Trustee shall not be liable for the conduct or misconduct of such
agents or attorneys if such agents or attorneys shall have been selected by
the Owner Trustee with reasonable care, and (ii) may consult with counsel,
accountants and other skilled persons to be selected with reasonable care and
employed by it. The Owner Trustee shall not be liable for anything done,
suffered or omitted in good faith by it in accordance with the written
opinion or advice of any such counsel, accountants or other such persons and
not contrary to this Agreement or any Related Document.
SECTION 6.4. NOT ACTING IN INDIVIDUAL CAPACITY. Except as
provided in this Article VI, in accepting the trusts hereby created
Wilmington Trust Company acts solely as Owner Trustee hereunder and not in
its individual capacity and all Persons having any claim against the Owner
Trustee by reason of the transactions contemplated by this Agreement or any
Related Document shall look only to the Trust Property for payment or
satisfaction thereof.
SECTION 6.5. OWNER TRUSTEE NOT LIABLE FOR NOTES OR RECEIVABLES.
The recitals contained herein shall be taken as the statements of the
Depositor (other than the signature or counter-signature of the Owner Trustee
on the Notes), and the Owner Trustee assumes no responsibility for the
correctness thereof. The Owner Trustee makes no representations as to the
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validity or sufficiency of this Agreement or of any Related Document or the
Notes (other than the signature or counter-signature of the Owner Trustee on
the Notes), or of any Receivable or related documents. The Owner Trustee
shall at no time have any responsibility or liability for or with respect to
the legality, validity and enforceability of any Receivable, or the
perfection and priority of any security interest created by any Receivable in
any Financed Vehicle or the maintenance of any such perfection and priority
of any security interest created by any Receivable in any Financed Vehicle or
the maintenance of any such perfection and priority, or for or with respect
to the sufficiency of the Trust Property or its ability to generate the
payments to be distributed to the Noteholders under the Indenture, including,
without limitation: the existence, condition and ownership of any Financed
Vehicle; the existence and enforceability of any insurance thereon; the
existence and contents of any Receivable or any computer or other record
thereof; the validity of the assignment of any Receivable to the Trust or of
any intervening assignment; the validity or sufficiency of the Note Policy;
the completeness of any Receivable; the performance or enforcement of any
Receivable; the compliance by the Seller or the Servicer with any warranty or
representation made under any Related Document or in any related document or
the accuracy of any such warranty or representation or any action of the
Indenture Trustee, the Custodian or the Servicer taken in the name of the
Owner Trustee.
SECTION 6.6. OWNER TRUSTEE MAY OWN NOTES. The Owner Trustee in
its individual or any other capacity may become the owner or pledgee of Notes
and may deal with the Depositor, the Seller, the Indenture Trustee and the
Servicer in banking or other transactions with the same rights as it would
have if it were not Owner Trustee.
ARTICLE VII
COMPENSATION OF OWNER TRUSTEE
SECTION 7.1. OWNER TRUSTEE'S FEES AND EXPENSES. The Owner Trustee
shall receive as compensation for its services hereunder such fees as have
been separately agreed upon before the date hereof between AFL and the Owner
Trustee, and the Owner Trustee shall be entitled to be reimbursed by AFL for
its other reasonable expenses hereunder, including the reasonable
compensation, expenses and disbursements of such agents, representatives,
experts and counsel as the Owner Trustee may employ in connection with the
exercise and performance of its rights and its duties hereunder; PROVIDED,
HOWEVER, that the Owner Trustee shall only be entitled to reimbursement for
expenses hereunder to the extent such expenses (i) are fees of outside
counsel engaged by the Owner Trustee in respect of the performance of its
obligations hereunder or (ii) relate to the performance of its obligations
pursuant to Section 4.1 hereof.
SECTION 7.2. INDEMNIFICATION. AFL shall be liable as primary
obligor for, and shall indemnify the Owner Trustee in its individual capacity
and its successors, assigns, agents and servants, and any co-trustee
(including Xxxxxxx X. Xxxx) (collectively, the "Indemnified Parties") from
and against, any and all liabilities, obligations, losses, damages, taxes,
claims, actions and suits, and any and all reasonable costs, expenses and
disbursements (including reasonable legal fees and expenses) of any kind and
nature whatsoever (collectively, "Expenses") which may at any time be imposed
on, incurred by, or asserted against the Owner Trustee or any
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Indemnified Party in any way relating to or arising out of this Agreement,
the Related Documents, the Trust Property, the administration of the Trust
Property or the action or inaction of the Owner Trustee hereunder, except
only that AFL shall not be liable for or required to indemnify the Owner
Trustee from and against Expenses arising or resulting from any of the
matters described in the third sentence of Section 6.1. The indemnities
contained in this Section shall survive the resignation or termination of the
Owner Trustee or the termination of this Agreement.
SECTION 7.3. NON-RECOURSE OBLIGATIONS. Notwithstanding anything
in this Agreement or any Related Document, the Owner Trustee agrees in its
individual capacity and in its capacity as Owner Trustee for the Trust that
all obligations of the Trust to the Owner Trustee individually or as Owner
Trustee for the Trust shall be recourse to the Trust Property only.
ARTICLE XIII
TERMINATION
SECTION 8.1. TERMINATION OF THE TRUST.
(a) The respective obligations and responsibilities of the
Depositor and the Owner Trustee created by this Agreement and the Trust
created by this Agreement shall terminate upon the latest of (i) the maturity
or other liquidation of the last Receivable (including the purchase as of any
Accounting Date by the Seller or the Servicer at its option of the corpus of
the Trust as described in Section 9.1 of the Sale and Servicing Agreement)
and the subsequent distribution of amounts in respect of such Receivables as
provided in the Related Documents, (ii) the payment to the Security Insurer
of all amounts payable or reimbursable to it pursuant to the Sale and
Servicing Agreement or (iii) at the time provided in Section 8.2. In any
case, there shall be delivered to the Owner Trustee, the Indenture Trustee
and the Rating Agencies 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 pursuant to clause (ii);
PROVIDED, HOWEVER, that in no event shall the trust created by this Agreement
continue beyond the expiration of 21 years from the death of the last
survivor of the descendants living on the date of this Agreement of Xxxx
Xxxxxxx of the Commonwealth of Massachusetts; and PROVIDED, FURTHER, that the
rights to indemnification under Section 7.2 shall survive the termination of
the Trust. The Servicer shall promptly notify the Owner Trustee and the
Security Insurer of any prospective termination pursuant to this Section 8.1.
(b) Except as provided in Section 8.1(a), the Depositor shall not
be entitled to revoke or terminate the Trust.
(c) Upon the winding up of the Trust and its termination, the
Owner Trustee shall cause the Certificate of Trust to be canceled by filing a
certificate of cancellation with the Secretary of State in accordance with
the provisions of Section 3810 of the Business Trust Statute.
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SECTION 8.2. DISSOLUTION EVENTS WITH RESPECT TO THE DEPOSITOR. In
the event that a Dissolution Event shall occur with respect to the Depositor,
the Owner Trustee promptly upon obtaining knowledge of such occurrence shall
request an opinion of counsel from counsel acceptable to the Security Insurer
to the effect that a failure to terminate the Trust upon the occurrence of
such Dissolution Event (and the transfer, if any, of the interest in the
Trust held by the Depositor) will not cause the Trust to be treated as an
association (or publicly traded partnership) taxable as a corporation for
federal income tax purposes. In the event that the Owner Trustee is unable
to obtain such an opinion the Trust will terminate within 90 days after the
occurrence of the Dissolution Event with respect to the Depositor. Promptly
after the occurrence of the event referred to above, (i) the Depositor shall
give the Indenture Trustee, the Owner Trustee and the Security Insurer
written notice of the occurrence of such event, (ii) the Owner Trustee shall,
upon the receipt of such written notice, give prompt written notice to the
Indenture Trustee of the occurrence of such event and (iii) the Indenture
Trustee shall, upon receipt of written notice of the occurrence of such event
from the Owner Trustee or the Seller, give prompt written notice to the
Noteholders of the occurrence of such event; PROVIDED, HOWEVER, that any
failure to give a notice required by this sentence shall not prevent or
delay, in any manner, a termination of the Trust pursuant to the first
sentence of this Section 8.2. Upon a termination pursuant to this Section,
the Owner Trustee shall direct the Indenture Trustee to sell the assets of
the Trust (other than the Trust Accounts) at one or more private or public
sales conducted in any manner permitted by law. The proceeds of such a sale
of the assets of the Trust shall be distributed as provided in Section 9.1(b)
of the Sale and Servicing Agreement.
ARTICLE IX
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
SECTION 9.1. ELIGIBILITY REQUIREMENTS FOR OWNER TRUSTEE. The
Owner Trustee shall at all times be a corporation (i) satisfying the
provisions of Section 3807(a) of the Business Trust Statute; (ii) authorized
to exercise corporate trust powers; (iii) having a combined capital and
surplus of at least $50,000,000 and subject to supervision or examination by
Federal or State authorities; (iv) having (or having a parent which has) a
rating of at least Baa3 by Moody's or A-1 by Standard & Poor's; and (v)
acceptable to the Security Insurer in its sole discretion, so long as an
Insurer Default shall not have occurred and be continuing. If such
corporation shall publish reports of condition at least annually, pursuant to
law or to the requirements of the aforesaid supervising or examining
authority, then for the purpose of this Section, the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Owner Trustee shall cease to be eligible in accordance
with the provisions of this Section, the Owner Trustee shall resign
immediately in the manner and with the effect specified in Section 9.2.
SECTION 9.2. RESIGNATION OR REMOVAL OF OWNER TRUSTEE. The Owner
Trustee may at any time resign and be discharged from the trusts hereby
created by giving written notice thereof to the Depositor, the Security
Insurer and the Servicer at least 30 days before the date specified in such
instrument. Upon receiving such notice of resignation, the Depositor shall
promptly appoint a successor Owner Trustee meeting the qualifications set
forth in Section 9.1
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by written instrument, in duplicate, one copy of which instrument shall be
delivered to the resigning Owner Trustee and one copy to the successor Owner
Trustee, provided that the Depositor shall have received written confirmation
from each of the Rating Agencies that the proposed appointment will not
result in an increased capital charge to the Security Insurer by either of
the Rating Agencies. If no successor Owner Trustee shall have been so
appointed and have accepted appointment within 30 days after the giving of
such notice of resignation, the resigning Owner Trustee or the Security
Insurer may petition any court of competent jurisdiction for the appointment
of a successor Owner Trustee.
If at any time the Owner Trustee shall cease to be eligible in
accordance with the provisions of Section 9.1 and shall fail to resign after
written request therefor by the Depositor or if at any time the Owner Trustee
shall be legally unable to act, or shall be adjudged bankrupt or insolvent,
or a receiver of the Owner Trustee or of its property shall be appointed, or
any public officer shall take charge or control of the Owner Trustee or of
its property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Depositor, with the consent of the Security Insurer (so
long as an Insurer Default shall not have occurred and be continuing) may
remove the Owner Trustee. If the Depositor shall remove the Owner Trustee
under the authority of the immediately preceding sentence, the Depositor
shall promptly appoint a successor Owner Trustee meeting the qualification
requirements of Section 9.1 by written instrument, in triplicate, one copy of
which instrument shall be delivered to the outgoing Owner Trustee so removed,
one copy to the Security Insurer and one copy to the successor Owner Trustee
and payment of all fees owed to the outgoing Owner Trustee.
Any resignation or removal of the Owner Trustee and appointment of
a successor Owner Trustee pursuant to any of the provisions of this Section
shall not become effective until all fees and expenses, including any
indemnity payments, due to the outgoing Owner Trustee have been paid and
until acceptance of appointment by the successor Owner Trustee pursuant to
Section 9.3. The Depositor shall provide notice of such resignation or
removal of the Owner Trustee to each of the Rating Agencies.
SECTION 9.3. SUCCESSOR OWNER TRUSTEE. Any successor Owner Trustee
appointed pursuant to Section 9.2 shall execute, acknowledge and deliver to
the Depositor, the Security Insurer and to its predecessor Owner Trustee an
instrument accepting such appointment under this Agreement, and thereupon the
resignation or removal of the predecessor Owner Trustee shall become
effective and such successor Owner Trustee, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties,
and obligations of its predecessor under this Agreement, with like effect as
if originally named as Owner Trustee. The predecessor Owner Trustee shall
deliver to the successor Owner Trustee all documents and statements and
monies held by it under this Agreement; and the Depositor and the predecessor
Owner Trustee shall execute and deliver such instruments and do such other
things as may reasonably be required for fully and certainly vesting and
confirming in the successor Owner Trustee all such rights, powers, duties,
and obligations.
No successor Owner Trustee shall accept appointment as provided in
this Section unless at the time of such acceptance such successor Owner
Trustee shall be eligible pursuant to Section 9.1.
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Upon acceptance of appointment by a successor Owner Trustee
pursuant to this Section, the Depositor shall mail notice of the successor of
such Owner Trustee to the Indenture Trustee, the Noteholders and the Rating
Agencies. If the Depositor shall fail to mail such notice within 10 days
after acceptance of appointment by the successor Owner Trustee, the successor
Owner Trustee shall cause such notice to be mailed at the expense of the
Depositor.
SECTION 9.4. MERGER OR CONSOLIDATION OF OWNER TRUSTEE. Any
corporation into which the Owner Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Owner Trustee shall be a party, or
any corporation succeeding to all or substantially all of the corporate trust
business of the Owner Trustee, shall be the successor of the Owner Trustee
hereunder, provided such corporation shall be eligible pursuant to Section
9.1, without the execution or filing of any instrument or any further act on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding, and provided further that the Owner Trustee shall mail
notice of such merger or consolidation to the Rating Agencies.
SECTION 9.5. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any
part of the Trust Property or any Financed Vehicle may at the time be
located, the Administrator and the Owner Trustee acting jointly shall have
the power and shall execute and deliver all instruments to appoint one or
more Persons approved by the Owner Trustee and the Security Insurer to act as
co-trustee, jointly with the Owner Trustee, or separate trustee or separate
trustees, of all or any part of the Trust Property, and to vest in such
Person, in such capacity, such title to the Trust, or any part thereof, and,
subject to the other provisions of this Section, such powers, duties,
obligations, rights and trusts as the Administrator and the Owner Trustee may
consider necessary or desirable. If the Administrator shall not have joined
in such appointment within 15 days after the receipt by it of a request so to
do, the Owner Trustee, subject to the approval of the Security Insurer, shall
have the power to make such appointment. No co-trustee or separate trustee
under this Agreement shall be required to meet the terms of eligibility as a
successor trustee pursuant to Section 9.1 and no notice of the appointment of
any co-trustee or separate trustee shall be required pursuant to Section 9.2.
Each separate trustee and co-trustee shall, to the extent permitted
by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties, and obligations conferred or
imposed upon the Owner Trustee shall be conferred upon and exercised or
performed by the Owner Trustee and such separate trustee or co-trustee
jointly (it being understood that such separate trustee or co-trustee is
not authorized to act separately without the Owner Trustee joining in such
act), except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed the Owner Trustee shall be
incompetent or unqualified to perform such act or acts, in which event such
rights, powers, duties, and obligations (including the holding of title to
the Trust Property or any portion thereof in any such jurisdiction) shall
be exercised and performed singly by such separate trustee or co-trustee,
but solely at the direction of the Owner Trustee;
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(ii) no trustee under this Agreement shall be personally liable
by reason of any act or omission of any other trustee under this Agreement;
and
(iii) the Administrator and the Owner Trustee acting jointly may
at any time accept the resignation of or remove any separate trustee or
co-trustee.
Any notice, request or other writing given to the Owner Trustee
shall be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement
and the conditions of this Article. Each separate trustee and co-trustee,
upon its acceptance of the trusts conferred, shall be vested with the estates
or property specified in its instrument of appointment, either jointly with
the Owner Trustee or separately, as may be provided therein, subject to all
the provisions of this Agreement, specifically including every provision of
this Agreement relating to the conduct of, affecting the liability of, or
affording protection to, the Owner Trustee. Each such instrument shall be
filed with the Owner Trustee and a copy thereof given to the Administrator
and the Security Insurer.
Any separate trustee or co-trustee may at any time appoint the
Owner Trustee, its agent or attorney-in-fact with full power and authority,
to the extent not prohibited by law, to do any lawful act under or in respect
of this Agreement on its behalf and in its name. If any separate trustee or
co-trustee shall die, become incapable of acting, resign or be removed, all
of its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Owner Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1. AMENDMENT.
(a) This Agreement may be amended by the Depositor and the Owner
Trustee, with the prior written consent of the Security Insurer (so long as
an Insurer Default shall not have occurred and be continuing) but without the
consent of any of the Noteholders, (i) to cure any ambiguity, or (ii) to
correct, supplement or modify any provisions in this Agreement; PROVIDED,
HOWEVER, that such action shall not, as evidenced by an Opinion of Counsel,
adversely affect in any material respect the interests of any Noteholder.
(b) This Agreement may also be amended from time to time, with the
prior written consent of the Security Insurer (so long as an Insurer Default
shall not have occurred and be continuing), by the Depositor and the Owner
Trustee and, if such amendment materially and adversely affects the interests
of Noteholders, the consent of a Note Majority (which consent of any Holder
of a Note given pursuant to this Section or pursuant to any other provision
of this Agreement shall be conclusive and binding on such Holder and on all
future Holders of such Note and of any Note issued upon the transfer thereof
or in exchange thereof or in lieu thereof whether or not notation of such
consent is made upon the Note) for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this
Agreement,
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or of modifying in any manner the rights of the Holders of Notes; PROVIDED,
HOWEVER, that, subject to the express rights of the Security Insurer under
the Related Documents, including its rights to consent to certain
modifications of the Receivables pursuant to Section 3.2 of the Sale and
Servicing Agreement and its rights referred to in Section 5.02(c) of the
Indenture, no such amendment shall (a) increase or reduce in any manner the
amount of, or accelerate or delay the timing of, collections of payments on
Receivables or distributions that shall be required to be made on any Note or
the Class A-1 Interest Rate, the Class A-2 Interest Rate or the Class A-3
Interest Rate or (b) reduce the aforesaid percentage required to consent to
any such amendment or any waiver hereunder, without the consent of the
Holders of all Notes then outstanding.
(c) Prior to the execution of any such amendment or consent, the
Depositor shall furnish written notification of the substance of such
amendment or consent to each Rating Agency.
(d) Promptly after the execution of any such amendment or consent,
the Owner Trustee shall furnish written notification of the substance of such
amendment or consent to the Indenture Trustee unless such parties have
previously received such notification.
(e) It shall not be necessary for the consent of Noteholders
pursuant to Section 11.1(b) to approve the particular form of any proposed
amendment or consent, but it shall be sufficient if such consent shall
approve the substance thereof. The manner of obtaining such consents (and
any other consents of Noteholders provided for in this Agreement) shall be
subject to such reasonable requirements as the Owner Trustee may prescribe,
including the establishment of record dates.
(f) Prior to the execution of any amendment to this Agreement, the
Owner Trustee shall be entitled to receive and rely upon an Opinion of
Counsel stating that the execution of such amendment is authorized or
permitted by this Agreement and that all conditions precedent to the
execution and delivery of such amendment have been satisfied. The Owner
Trustee may, but shall not be obligated to, enter into any such amendment
which affects the Owner Trustee's own rights, duties or immunities under this
Agreement or otherwise.
SECTION 10.2. GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware without
regard to the principles of conflicts of laws thereof and the obligations,
rights and remedies of the parties under this Agreement shall be determined
in accordance with such laws.
SECTION 10.3. SEVERABILITY OF PROVISIONS. If any one or more of
the covenants, agreements, provisions or terms of this Agreement shall be for
any reason whatsoever held invalid, then such covenants, agreements,
provisions or terms shall be deemed severable from the remaining covenants,
agreements, provisions or terms of this Agreement and shall in no way affect
the validity or enforceability of the other provisions of this Agreement.
SECTION 10.4. THIRD-PARTY BENEFICIARIES. This Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns. Except as otherwise provided in
this Agreement, no other Person shall have any right or
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obligation hereunder. Without limiting the generality of the foregoing, all
covenants and agreements in this Agreement which expressly confer rights upon
the Security Insurer shall be for the benefit of and run directly to the
Security Insurer, and the Security Insurer shall be entitled to rely on and
enforce such covenants, subject, however, to the limitations on such rights
provided in this Agreement and the Related Documents. The Security Insurer
may disclaim any of its rights and powers under this Agreement (but not its
duties and obligations under the Note Policy) upon delivery of a written
notice to the Owner Trustee.
SECTION 10.5. COUNTERPARTS. For the purpose of facilitating its
execution and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts
shall be deemed to be an original, and all of which counterparts shall
constitute but one and the same instrument.
SECTION 10.6. NOTICES. All demands, notices and communications
under this Agreement shall be in writing, personally delivered or mailed by
certified mail-return receipt requested, and shall be deemed to have been
duly given upon receipt (a) in the case of the Depositor, at the following
address: 0000 Xxxxxxxxxx Xxxxxx Xxxxx, Xxxxxxxxxxx, Xxxxxxxxx 00000-0000,
with copies to: Arcadia Financial Ltd., 0000 Xxxxxxxxxx Xxxxxx Xxxxx,
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000, Attention: President, (b) in the case of
the Owner Trustee, at Xxxxxx Square North, 0000 Xxxxx Xxxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxx 00000, Attention: Corporate Trust Administration, (c)
in the case of each Rating Agency, 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
(for Moody's), and 00 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Asset-Backed Surveillance (for Standard & Poor's), and (d) in the case of the
Security Insurer, Financial Security Assurance Inc., 000 Xxxx Xxxxxx, Xxx
Xxxx, XX 00000, Attention: Surveillance Department, Telex No.: (212)
688-3101, Confirmation: (000) 000-0000, Telecopy Nos.: (000) 000-0000, (212)
339-3529 (in each case in which notice or other communication to Financial
Security refers to an Event of Default, a claim on the Note Policy or with
respect to which failure on the part of Financial Security to respond shall
be deemed to constitute consent or acceptance, then a copy of such notice or
other communication should also be sent to the attention of the General
Counsel and the Head--Financial Guaranty Group "URGENT MATERIAL ENCLOSED") or
at such other address as shall be designated by any such party in a written
notice to the other parties.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the Depositor, the Security Insurer and the
Owner Trustee have caused this Trust Agreement to be duly executed by their
respective officers as of the day and year first above written.
ARCADIA RECEIVABLES FINANCE CORP.
By /s/ Xxxx X. Xxxxxx
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Name: Xxxx X. Xxxxxx
Title: Senior Vice President and Chief Financial
Officer
ARCADIA RECEIVABLES FINANCE CORP.,
in its capacity as Depositor
By /s/ Xxxx X. Xxxxxx
---------------------------------------------------
Name: Xxxx X. Xxxxxx
Title: Senior Vice President and Chief Financial
Officer
FINANCIAL SECURITY ASSURANCE INC.
By /s/ Xxxxxxx Xxxxxxxxx
---------------------------------------------------
Authorized Officer
WILMINGTON TRUST COMPANY
By /s/ Xxxxxx X. Xxxxxx
---------------------------------------------------
Name: Xxxxxx X. Xxxxxx
----------------------------------------------
Title: Vice President
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