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INSURANCE AND INDEMNITY AGREEMENT
among
FINANCIAL SECURITY ASSURANCE INC.,
OLYMPIC AUTOMOBILE RECEIVABLES TRUST, 1997-A,
OLYMPIC FIRST GP INC.,
OLYMPIC SECOND GP INC.,
OLYMPIC RECEIVABLES FINANCE CORP.
and
OLYMPIC FINANCIAL LTD.
Dated as of March 20, 1997
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Olympic Automobile Receivables Trust, 1997-A
5.50% Class A-1 Automobile Receivables-Backed Notes
6.125% Class A-2 Automobile Receivables-Backed Notes
6.40% Class A-3 Automobile Receivables-Backed Notes
6.625% Class A-4 Automobile Receivables-Backed Notes
6.80% Class A-5 Automobile Receivables-Backed Notes
6.65% Automobile Receivables-Backed Certificates
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TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS
Section 1.01. Definitions. . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.01. Representations and Warranties of the Trust. . . . . . . . 9
Section 2.02. Affirmative Covenants of the Trust . . . . . . . . . . . . 12
Section 2.03. Negative Covenants of the Trust. . . . . . . . . . . . . . 17
Section 2.04. Representations and Warranties of OFL and of the Class GP
Certificateholders . . . . . . . . . . . . . . . . . . . . 18
Section 2.05. Affirmative Covenants of OFL and each Class GP
Certificateholder. . . . . . . . . . . . . . . . . . . . . 21
Section 2.06. Negative Covenants of OFL and each Class GP
Certificateholder. . . . . . . . . . . . . . . . . . . . . 25
Section 2.07. Representations and Warranties of OFL and the Seller . . . 27
Section 2.08. Affirmative Covenants of OFL and the Seller. . . . . . . . 32
Section 2.09. Negative Covenants of OFL and the Seller . . . . . . . . . 36
Section 2.10. Representations and Warranties of OFL. . . . . . . . . . . 38
Section 2.11. Affirmative Covenants of OFL . . . . . . . . . . . . . . . 40
Section 2.12. Negative Covenants of OFL. . . . . . . . . . . . . . . . . 44
ARTICLE III
THE POLICIES; REIMBURSEMENT; INDEMNIFICATION
Section 3.01. Conditions Precedent to Issuance of the Policies . . . . . 46
Section 3.02. Payment of Fees and Premium. . . . . . . . . . . . . . . . 51
Section 3.03. Reimbursement and Additional Payment Obligation. . . . . . 52
Section 3.04. Certain Obligations Not Recourse to OFL; Recourse to Trust
Property . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 3.05. Indemnification. . . . . . . . . . . . . . . . . . . . . . 53
Section 3.06. Payment Procedure. . . . . . . . . . . . . . . . . . . . . 55
Section 3.07. Subrogation. . . . . . . . . . . . . . . . . . . . . . . . 55
ARTICLE IV
FURTHER AGREEMENTS; MISCELLANEOUS
Section 4.01. Effective Date; Term of Agreement. . . . . . . . . . . . . 56
Section 4.02. Further Assurances and Corrective Instruments. . . . . . . 56
Section 4.03. Obligations Absolute . . . . . . . . . . . . . . . . . . . 56
Section 4.04. Assignments; Reinsurance; Third-Party Rights . . . . . . . 58
Section 4.05. Liability of Financial Security. . . . . . . . . . . . . . 58
ARTICLE V
Page
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EVENTS OF DEFAULT; REMEDIES
Section 5.01. Events of Default. . . . . . . . . . . . . . . . . . . . . 59
Section 5.02. Remedies; Waivers. . . . . . . . . . . . . . . . . . . . . 61
ARTICLE VI
MISCELLANEOUS
Section 6.01. Amendments, Etc. . . . . . . . . . . . . . . . . . . . . . 62
Section 6.02. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 6.03. Severability . . . . . . . . . . . . . . . . . . . . . . . 64
Section 6.04. Governing Law. . . . . . . . . . . . . . . . . . . . . . . 64
Section 6.05. Consent to Jurisdiction. . . . . . . . . . . . . . . . . . 64
Section 6.06. Consent of Financial Security. . . . . . . . . . . . . . . 65
Section 6.07. Counterparts . . . . . . . . . . . . . . . . . . . . . . . 65
Section 6.08. Headings . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 6.09. Trial by Jury Waived . . . . . . . . . . . . . . . . . . . 65
Section 6.10. Limited Liability. . . . . . . . . . . . . . . . . . . . . 65
Section 6.11. Limited Liability of Mellon Bank (DE), National
Association. . . . . . . . . . . . . . . . . . . . . . . . 66
Section 6.12. Entire Agreement . . . . . . . . . . . . . . . . . . . . . 66
Schedule I
ii
INSURANCE AND INDEMNITY AGREEMENT
INSURANCE AND INDEMNITY AGREEMENT dated as of March 20, 1997, among
FINANCIAL SECURITY ASSURANCE INC., a New York stock insurance company
("Financial Security"), OLYMPIC AUTOMOBILE RECEIVABLES TRUST, 1997-A, a
Delaware business trust (the "Trust"), OLYMPIC FIRST GP INC., a Delaware
corporation ("First Class GP Certificateholder"), OLYMPIC SECOND GP INC., a
Delaware corporation ("Second Class GP Certificateholder" and collectively
with First Class GP Certificateholder, the "Class GP Certificateholders"),
OLYMPIC RECEIVABLES FINANCE CORP., a Delaware corporation (the "Seller"), and
OLYMPIC FINANCIAL LTD., a Minnesota corporation (when referred to
individually hereunder, "OFL", when referred to as servicer under the Sale
and Servicing Agreement referred to below, the "Servicer").
INTRODUCTORY STATEMENTS
1. The Seller is the owner of the Receivables. The Seller
proposes to sell to the Trust all of its right, title and interest in and to
the Receivables and certain other property pursuant to the Sale and Servicing
Agreement. The Trust will issue Certificates pursuant to the Trust Agreement
and Notes pursuant to the Indenture.
2. Each Certificate will represent a fractional undivided
interest in the Trust. Each Note will be secured by the Indenture Property.
The Trust has requested that Financial Security issue two financial guaranty
insurance policies guarantying respectively certain distributions of interest
and principal on the Certificates and the Notes on each Distribution Date
(including any such distributions subsequently avoided as a preference under
applicable bankruptcy law) upon the terms, and subject to the conditions,
provided herein.
3. OFL and the Seller have previously entered into and may in the
future enter into one or more pooling and servicing agreements or sale and
servicing agreements with a trust and Seller has previously entered into a
Repurchase Agreement dated as of December 3, 1996 among the Seller and
Arcadia Receivables Conduit Corp., in each case, pursuant to which the Seller
sold or will sell all of its right, title and interest in and to receivables
and the other trust property and in connection therewith Financial Security
has and may in the future issue additional policies with respect to certain
guaranteed distributions on the corresponding certificates, the corresponding
notes or both.
4. The parties hereto desire to specify the conditions precedent
to the issuance of the Policies by Financial Security, the payment of premium
in respect of the Policies, the
indemnity and reimbursement to be provided to Financial Security in respect
of amounts paid by Financial Security under the Policies or otherwise and
certain other matters.
In consideration of the premises and of the agreements herein
contained, Financial Security, the Trust, the Class GP Certificateholders,
OFL, individually and as Servicer, and the Seller hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. DEFINITIONS. All words and phrases defined in the
Trust Agreement, the Sale and Servicing Agreement or in the Spread Account
Agreement shall have the same meanings in this Agreement. Unless otherwise
specified, if a word or phrase defined in the Trust Agreement, the Sale and
Servicing Agreement or in the Spread Account Agreement can be applied with
respect to one or more Series, such a word or phrase shall be used herein as
applied to Series 1997-A. In addition, the following words and phrases shall
have the following respective meanings:
"ACCUMULATED FUNDING DEFICIENCY" shall have the meaning provided in
Section 412 of the Code and Section 302 of ERISA, whether or not waived.
"AGREEMENT" means this Insurance and Indemnity Agreement, as the
same may be amended, modified or supplemented from time to time.
"AUTHORIZED OFFICER" means, with respect to a corporation, the
president, the chief financial officer or any vice president.
"CERTIFICATES" means the Certificates issued under the Trust
Agreement.
"CERTIFICATE POLICY" means the financial guaranty insurance policy,
including any endorsements thereto, issued by Financial Security with respect
to the Certificates, substantially in the form attached as Exhibit B hereto.
"CODE" means the Internal Revenue Code of 1986, including, unless
the context otherwise requires, the rules and regulations thereunder, as
amended from time to time.
"COMMISSION" means the Securities and Exchange Commission.
"COMMONLY CONTROLLED ENTITY" means with respect to the Trust, the
Seller or OFL, as the case may be, each entity, whether or not incorporated,
which is affiliated with the Trust, the Seller or OFL, as the case may be,
pursuant to Section 414(b), (c), (m) or (o) of the Code.
"DEFAULT" means any event which results, or which with the giving
of notice or the lapse of time or both would result, in an Event of Default.
2
"DEMAND NOTES" means the Series 1993-C Demand Notes, the Series
1993-D Demand Notes, the Series 1994-A Demand Notes, the Series 1994-B Demand
Notes, the Series 1995-B Demand Notes, Series 1995-C Demand Notes, the Series
1995-D Demand Notes, the Series 1995-E Demand Notes, the Series 1996-A Demand
Notes, the Series 1996-B Demand Notes, the Series 1996-C Demand Notes, the
Series 1996-D Demand Notes and the Series 1997-A Demand Notes.
"ERISA" means the Employee Retirement Income Security Act of 1974,
including, unless the context otherwise requires, the rules and regulations
thereunder, as amended from time to time.
"EVENT OF DEFAULT" means any event of default specified in Section
5.01 of this Agreement.
"EXPIRATION DATE" means, with respect to each Policy, the final
date of the Term of such Policy, as specified therein.
"FINANCIAL SECURITY" means Financial Security Assurance Inc., a New
York stock insurance company, its successors and assigns.
"FINANCIAL STATEMENTS" means with respect to OFL the audited
consolidated balance sheets as of December 31, 1995, December 31, 1994 and
December 31, 1993 and the related audited consolidated statements of income,
retained earnings and cash flows for the 12-month periods then ended and the
notes thereto and the unaudited balance sheets as of September 30, 1996 and
September 30, 1995 and the statements of income, retained earnings and cash
flows for the fiscal quarter then ended.
"FISCAL AGENT" means the Fiscal Agent, if any, designated pursuant
to the terms of the Policies.
"INDENTURE COLLATERAL AGENT" means initially, Norwest Bank
Minnesota, National Association, in its capacity as collateral agent on
behalf of Financial Security and the Indenture Trustee on behalf of the
Noteholders pursuant to the Indenture, its successor in interest and any
successor Indenture Collateral Agent under the Indenture.
"INDENTURE PROPERTY" means the property pledged to the Indenture
Collateral Agent on behalf of Financial Security and the Indenture Trustee on
behalf of the Noteholders pursuant to the Indenture.
"INSURANCE AGREEMENT INDENTURE CROSS DEFAULT" means an Event of
Default specified in clause (a), (f), (g), (h) or (i) of Section 5.01.
"INVESTMENT COMPANY ACT" means the Investment Company Act of 1940,
including, unless the context otherwise requires, the rules and regulations
thereunder, as amended from time to time.
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"IRS" means the Internal Revenue Service.
"LATE PAYMENT RATE" means the greater of (i) a per annum rate equal
to 3 percent in excess of Financial Security's cost of funds, determined on a
monthly basis, or (ii) a per annum rate equal to 3 percent in excess of the
arithmetic average of the prime or base lending rates publicly announced by
The Chase Manhattan Bank, N.A. (New York, New York) and Citibank, N.A. (New
York, New York), as in effect on the last day of the month for which interest
is being computed, but, in either case, in no event greater than the maximum
rate permitted by law.
"LIEN" means, as applied to the property or assets (or the income
or profits therefrom) of any Person, in each case whether the same is
consensual or nonconsensual or arises by contract, operation of law, legal
process or otherwise: (a) any mortgage, lien, pledge, attachment, charge,
lease, conditional sale or other title retention agreement, or other security
interest or encumbrance of any kind; or (b) any arrangement, express or
implied, under which such property or assets are transferred, sequestered or
otherwise identified for the purpose of subjecting or making available the
same for the payment of debt or performance of any other obligation in
priority to the payment of the general, unsecured creditors of such Person.
"MATERIAL ADVERSE CHANGE" means, in respect of any Person, a
material adverse change in (i) the business, financial condition, results of
operations, or properties of such Person and its Subsidiaries taken as a
whole, (ii) the ability of such Person to perform its obligations under any
of the Transaction Documents to which it is a party or (iii) the ability of
Financial Security or the Trust to realize the benefits or security afforded
under the Transaction Documents.
"MULTIEMPLOYER PLAN" means a multiemployer plan (within the meaning
of Section 4001(a)(3) of ERISA) in respect of which a Commonly Controlled
Entity makes contributions or has liability.
"NOTE POLICY" means the financial guaranty insurance policy,
including any endorsements thereto, issued by Financial Security with respect
to the Notes, substantially in the form attached as Exhibit A hereto.
"NOTICE OF CLAIM" means the Notice of Claim and Certificate in the
form attached as Exhibit A to Endorsement No. 1 to each Policy.
"OTHER TRUST PROPERTY" means the property conveyed by the Seller to
the Trust pursuant to the Sale and Servicing Agreement and any Subsequent
Transfer Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation or any
successor agency, corporation or instrumentality of the United States to
which the duties and powers of the Pension Benefit Guaranty Corporation are
transferred.
4
"PLAN" means any pension plan (other than a Multiemployer Plan)
covered by Title IV of ERISA, which is maintained by a Commonly Controlled
Entity or in respect of which a Commonly Controlled Entity has liability.
"POLICIES" means the Note Policy and the Certificate Policy.
"PORTFOLIO PERFORMANCE EVENT OF DEFAULT" means an Event of Default
specified in clause (j), (k), or (l) of Section 5.01.
"PREMIUM" means the premium payable in accordance with Section 3.02
of this Agreement.
"PREMIUM LETTER" means the side letter between Financial Security
and OFL dated the date hereof in respect of the premium payable by OFL in
consideration of the issuance of the Policies.
"PREMIUM SUPPLEMENT" means a non-refundable premium, in addition to
the premium payable in accordance with Section 3.02 of this Agreement,
payable by OFL to Financial Security in monthly installments commencing on
the first Distribution Date following the Premium Supplement Commencement
Date and on each Distribution Date thereafter, payable in accordance with the
terms of the Premium Letter.
"PREMIUM SUPPLEMENT COMMENCEMENT DATE" means the date of occurrence
of an Event of Default in respect of which the Premium Supplement shall have
been declared due and payable in accordance with Section 5.02 of this
Agreement.
"PREVIOUS SERIES TRANSACTION DOCUMENTS" means the transaction
documents as defined in each of the insurance and indemnity agreements
related to Olympic Automobile Receivables Trust, 1993-A, Olympic Automobile
Receivables Trust, 1993-B, Olympic Automobile Receivables Trust, 1993-C, and
Olympic Automobile Receivables Trust, 1993-D, Olympic Automobile Receivables
Trust, 1994-A, Olympic Automobile Receivables Trust, 1994-B, Olympic
Automobile Receivables Trust, 1995-A, Olympic Automobile Receivables Trust,
1995-B, Olympic Automobile Receivables Trust, 1995-C, Olympic Automobile
Receivables Trust, 1995-D, Olympic Automobile Receivables Trust, 1995-E,
Olympic Automobile Receivables Trust, 1996-A, Olympic Automobile Receivables
Trust, 1996-B, Olympic Automobile Receivables Trust, 1996-C, Olympic
Automobile Receivables Trust, 1996-D and the Warehousing Notes.
"PROSPECTUS" has the meaning set forth in Section 2.07(o) of this
Agreement.
"RELATED DOCUMENTS" means the Transaction Documents except for the
Sale and Servicing Agreement.
"REGISTRATION STATEMENT" has the meaning set forth in Section
2.07(o) of this Agreement.
5
"REPORTABLE EVENT" means any of the events set forth in Section
4043(b) of ERISA or the regulations thereunder.
"RESTRICTIONS ON TRANSFERABILITY" means, as applied to the property
or assets (or the income or profits therefrom) of any Person, in each case
whether the same is consensual or nonconsensual or arises by contract,
operation of law, legal process or otherwise, any material condition to, or
restriction on, the ability of such Person or any transferee therefrom to
sell, assign, transfer or otherwise liquidate such property or assets in a
commercially reasonable time and manner or which would otherwise materially
deprive such Person or any transferee therefrom of the benefits of ownership
of such property or assets.
"SALE AND SERVICING AGREEMENT" means the Sale and Servicing
Agreement dated as of March 1, 1997 among the Seller, OFL, in its individual
capacity and as Servicer, the Back-up Servicer and the Trust pursuant to
which the Initial Receivables are to be sold, serviced and administered, as
the same may be amended from time to time.
"SECURITIES ACT" means the Securities Act of 1933, including,
unless the context otherwise requires, the rules and regulations thereunder,
as amended from time to time.
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of
1934, including, unless the context otherwise requires, the rules and
regulations thereunder, as amended from time to time.
"SENIOR NOTE INDENTURE" means the Indenture dated as of April 28,
1995 between OFL and Norwest Bank Minnesota, National Association, as amended
or supplemented, relating to OFL's $145,000,000 13% Senior Notes due 2000.
"SERIES 1993-C DEMAND NOTES" means each of the Demand Notes, dated
August 17, 1993, issued by OFL to First Class GP Certificateholder and the
Demand Note, dated August 17, 1993, issued by OFL to Second Class GP
Certificateholder.
"SERIES 1993-D DEMAND NOTES" means each of the Demand Notes, dated
December 2, 1993, issued by OFL to First Class GP Certificateholder and the
Demand Note, dated December 2, 1993, issued by OFL to Second Class GP
Certificateholder.
"SERIES 1994-A DEMAND NOTES" means each of the Demand Notes, dated
April 5, 1994, issued by OFL to First Class GP Certificateholder and the
Demand Note, dated April 5, 1994, issued by OFL to Second Class GP
Certificateholder.
"SERIES 1994-B DEMAND NOTES" means each of the Demand Notes, dated
September 23, 1994, issued by OFL to Class B-GP Certificateholder and the
Demand Note, dated September 23, 1994, issued by OFL to Class I-GP
Certificateholder.
"SERIES 1995-B DEMAND NOTES" means each of the Demand Notes, dated
March 15, 1995, issued by OFL to the Class GP Certificateholders.
6
"SERIES 1995-C DEMAND NOTES" means each of the Demand Notes, dated
June 15, 1995, issued by OFL to the Class GP Certificateholders.
"SERIES 1995-D DEMAND NOTES" means each of the Demand Notes, dated
September 21, 1995, issued by OFL to the Class GP Certificateholders.
"SERIES 1995-E DEMAND NOTES" means each of the Demand Notes, dated
December 6, 1995, issued by OFL to the Class GP Certificateholders.
"SERIES 1996-A DEMAND NOTES" means each of the Demand Notes, dated
March 14, 1996, issued by OFL to the Class GP Certificateholders.
"SERIES 1996-B DEMAND NOTES" means each of the Demand Notes, dated
June 14, 1996, issued by OFL to the Class GP Certificateholders.
"SERIES 1996-C DEMAND NOTES" means each of the Demand Notes, dated
September 12, 1996, issued by OFL to the Class GP Certificateholders.
"SERIES 1996-D DEMAND NOTES" means each of the Demand Notes, dated
December 12, 1996, issued by OFL to the Class GP Certificateholders.
"SERIES 1997-A" means the Series of Certificates and Notes issued
on the date hereof pursuant to the Trust Agreement and the Indenture,
respectively.
"SERIES 1997-A DEMAND NOTES" means each of the Demand Notes, dated
March 20, 1997, issued by OFL to the Class GP Certificateholders.
"SERIES OF CERTIFICATES", "SERIES OF NOTES" or "SERIES" means
Series 1997-A or any, or as the context may require, all, additional series
of certificates or notes or both issued as described in paragraph 3 of the
Introductory Statements hereto.
"SERVICER TERMINATION SIDE LETTER" means the letter from Financial
Security to the Servicer dated as of March 20, 1997, with regard to the
renewal of the term of the Servicer.
"SPREAD ACCOUNT AGREEMENT" means the Spread Account Agreement,
dated as of March 25, 1993, as amended and restated as of March 1, 1997 as
supplemented in accordance with the terms thereof, among OFL, the Seller,
Financial Security, the Indenture Trustee and the Collateral Agent.
"STOCK PLEDGE AGREEMENT" means the Third Amended and Restated Stock
Pledge Agreement, as amended and restated, dated as of December 3, 1996,
among Financial Security, OFL, and the Collateral Agent, as the same may be
amended from time to time.
"SUBSIDIARY" means, with respect to any Person, any corporation of
which a majority of the outstanding shares of capital stock having ordinary
voting power for the election of directors is at the time owned by such
Person directly or through one or more Subsidiaries.
7
"TERM OF THE POLICY" means, with respect to each Policy, the
meaning provided therein.
"TERM OF THIS AGREEMENT" shall be determined as provided in Section
4.01 of this Agreement.
"TRANSACTION" means the transactions contemplated by the
Transaction Documents, including the transactions described in the
Registration Statement.
"TRANSACTION DOCUMENTS" means this Agreement, the Sale and
Servicing Agreement, the Trust Agreement, the Certificate of Trust, the
Indenture, the Underwriting Agreement, the Purchase Agreement, the Premium
Letter, the Stock Pledge Agreement, the Lockbox Agreement, the Depository
Agreements, the Custodian Agreement, the Servicer Termination Side Letter,
the Spread Account Agreement and the Administration Agreement.
"TRUST AGREEMENT" means the Trust Agreement, dated as of March 1,
1997, among the Seller, the Class GP Certificateholders, Financial Security
and Mellon Bank (DE), National Association, as Owner Trustee.
"TRUST INDENTURE ACT" means the Trust Indenture Act of 1939,
including, unless the context otherwise requires, the rules and regulations
thereunder, as amended from time to time.
"UNDERFUNDED PLAN" means any Plan that has an Underfunding.
"UNDERFUNDING" means, with respect to any Plan, the excess, if any, of
(a) the present value of all benefits under the Plan (based on the assumptions
used to fund the Plan pursuant to Section 412 of the Code) as of the most recent
valuation date over (b) the fair market value of the assets of such Plan as of
such valuation date.
"UNDERWRITERS" means Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities
Corporation, X.X. Xxxxxx Securities Inc. and BancAmerica Securities, Inc.
"UNDERWRITING AGREEMENT" means the Pricing Agreement, dated March 13,
1997, among OFL and the Seller and the Underwriters.
"WAREHOUSING NOTES" means the Notes issued pursuant to the Warehousing
Series Indenture dated as of December 3, 1996 between Arcadia Receivables
Conduit Corp., as the issuer, and Norwest Bank Minnesota, National Association,
as trustee.
8
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.01. REPRESENTATIONS AND WARRANTIES OF THE TRUST. The Trust
represents, warrants and covenants, as of the date hereof and as of the Closing
Date, as follows:
(a) DUE ORGANIZATION AND QUALIFICATION. The Trust is duly formed
and validly existing as a Delaware statutory business trust and is in good
standing under the laws of the State of Delaware, with power and authority to
own its properties and to conduct its business. The Trust is duly qualified
to do business, is in good standing and has obtained all necessary licenses,
permits, charters, registrations and approvals (together, "approvals")
necessary for the conduct of its business as described in the Prospectus and
the performance of its obligations under the Transaction Documents, in each
jurisdiction in which the failure to be so qualified or to obtain such
approvals would render the Receivables in such jurisdiction or any
Transaction Document unenforceable in any respect or would otherwise have a
material adverse effect upon the Transaction.
(b) POWER AND AUTHORITY. The Trust has all necessary trust power and
authority to conduct its business as described in the Prospectus, to execute,
deliver and perform its obligations under this Agreement and each other
Transaction Document to which the Trust is a party and to carry out the terms
of each such agreement, and has full power and authority to issue the Notes and
the Certificates and pledge and assign its assets pursuant to the Indenture and
has duly authorized the issuance of the Notes and Certificates and the
assignment of its assets by all necessary trust proceedings.
(c) DUE AUTHORIZATION. The execution, delivery and performance of
this Agreement and each other Transaction Document to which the Trust is a party
has been duly authorized by all necessary action on the part of the Trust and
does not require any additional approvals or consents or other action by or any
notice to or filing with any Person by or on behalf of the Trust, including,
without limitation, any governmental entity.
(d) NONCONTRAVENTION. Neither the execution and delivery of this
Agreement and each other Transaction Document to which the Trust is a party, the
consummation of the Transaction nor the satisfaction of the terms and conditions
of this Agreement and each other Transaction Document to which the Trust is a
party,
(i) conflicts with or results in any breach or violation of any
provision of the Certificate of Trust or the Trust Agreement or any law,
rule, regulation, order, writ, judgment, injunction, decree, determination
or award currently in effect having applicability to the Trust or any of
its properties, including regulations issued by an administrative agency or
other governmental authority having supervisory powers over the Trust,
(ii) constitutes a default by the Trust under or a breach of any
provision of any loan agreement, mortgage, indenture or other agreement or
instrument to which
9
the Trust is a party or by which it or any of its properties is or may be
bound or affected, or
(iii) results in or requires the creation of any Lien upon or in
respect of any of the Trust's assets except as otherwise expressly
contemplated by the Transaction Documents.
(e) PENDING LITIGATION OR OTHER PROCEEDING. There is no action,
proceeding or investigation pending, or, to the Trust's best knowledge,
threatened, before any court, regulatory body, administrative agency, arbitrator
or governmental agency or instrumentality having jurisdiction over the Trust or
its properties: (A) asserting the invalidity of this Agreement or any other
Transaction Document to which the Trust is a party, (B) seeking to prevent the
issuance of the Certificates, the Notes or the consummation of the Transaction,
(C) seeking any determination or ruling that might materially and adversely
affect the validity or enforceability of this Agreement or any other Transaction
Document to which the Trust is a party, (D) which might result in a Material
Adverse Change with respect to the Trust or (E) which might adversely affect the
federal or state tax attributes of the Certificates, the Notes or the Trust.
(f) VALID AND BINDING OBLIGATIONS. Each of the Transaction Documents
to which the Trust is a party, when executed and delivered by the Trust, and
assuming due authorization, execution and delivery by the other parties thereto,
will constitute the legal, valid and binding obligation of the Trust enforceable
in accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and general equitable principles. The
Certificates, when executed, authenticated and delivered in accordance with the
Trust Agreement, will be validly issued and outstanding and entitled to the
benefits of the Trust Agreement and will evidence the entire beneficial
ownership interest in the Trust. The Notes, when executed, authenticated and
delivered in accordance with the Indenture, will be entitled to the benefits of
the Indenture and will constitute legal, valid and binding obligations of the
Trust, enforceable in accordance with their terms.
(g) NO CONSENTS. No consent, license, approval or authorization
from, or registration, filing or declaration with, any regulatory body,
administrative agency, or other governmental instrumentality, nor any consent,
approval, waiver or notification of any creditor, lessor or other
non-governmental person, is required in connection with the execution, delivery
and performance by the Trust of this Agreement or of any other Transaction
Document to which the Trust is a party, except (in each case) such as have been
obtained and are in full force and effect.
(h) COMPLIANCE WITH LAW, ETC. No practice, procedure or policy
employed or proposed to be employed by the Trust in the conduct of its business
violates any law, regulation, judgment, agreement, order or decree applicable to
the Trust which, if enforced, would result in a Material Adverse Change with
respect to the Trust.
10
(i) ERISA. The Trust does not maintain or contribute to, or have any
obligation to maintain or contribute to, any Plan. The Trust is not subject to
any of the provisions of ERISA.
(j) COLLATERAL. On the Closing Date, and on each Subsequent Transfer
Date, the Trust will have good and marketable title to each item of Other Trust
Property conveyed on such date and will own each such item free and clear of any
Lien (other than Liens contemplated under the Indenture) or any equity or
participation interest of any other Person.
(k) PERFECTION OF LIENS AND SECURITY INTEREST. On the Closing Date,
the Lien and security interest in favor of the Indenture Collateral Agent with
respect to Indenture Property will be perfected by the filing of financing
statements on Form UCC-1 in each jurisdiction where such recording or filing is
necessary for the perfection thereof, the delivery of the Receivable Files for
the Receivables to the Custodian, and the establishment of the Collection
Account, the Subcollection Account, the Lockbox Account, the Pre-Funding
Account, the Reserve Account and the Note Distribution Account in accordance
with the provisions of the Transaction Documents, and no other filings in any
jurisdiction or any other actions (except as expressly provided herein) are
necessary to perfect the Collateral Agent's Lien on and security interest in the
Collateral as against any third parties.
(l) SECURITY INTEREST IN FUNDS AND INVESTMENTS. Assuming the
retention of funds in the Accounts (other than the Certificate Distribution
Account) and the acquisition of Eligible Investments in accordance with the
Transaction Documents, such funds and Eligible Investments will be subject to a
valid and perfected, first priority security interest in favor of the Collateral
Agent on behalf of the Indenture Trustee (on behalf of the Noteholders) and
Financial Security.
(m) COMPLIANCE WITH INVESTMENT COMPANY ACT. The Trust is not
required to be registered as an "investment company" under the Investment
Company Act.
(n) INCORPORATION OF CERTAIN REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Trust set forth in each Transaction
Document are (in each case) true and correct as if set forth herein.
(o) SPECIAL PURPOSE ENTITY.
(i) The capital of the Trust is adequate for the business and
undertakings of the Trust.
(ii) Except as contemplated by the Transaction Documents, the
Trust is not engaged in any business transactions with OFL, the Seller or
any Affiliate of either of them.
(iii) The Trust's funds and assets are not, and will not be,
commingled with the funds of any other Person, except as provided in the
Transaction Documents.
11
(p) SOLVENCY; FRAUDULENT CONVEYANCE. The Trust is solvent and will
not be rendered insolvent by the Transaction or by the performance of its
obligations under the Transaction Documents and, after giving effect to such
Transaction, the Trust will not be left with an unreasonably small amount of
capital with which to engage in its business. The Trust does not intend to
incur, or believe that it has incurred, debts beyond its ability to pay such
debts as they mature. The Trust does not contemplate the commencement of
insolvency, bankruptcy, liquidation or consolidation proceedings or the
appointment of a receiver, liquidator, conservator, trustee or similar official
in respect of the Trust or any of its assets.
Section 2.02. AFFIRMATIVE COVENANTS OF THE TRUST. The Trust hereby
agrees that during the Term of the Agreement, unless Financial Security shall
otherwise expressly consent in writing:
(a) COMPLIANCE WITH AGREEMENTS AND APPLICABLE LAWS. The Trust will
comply with all terms and conditions of this Agreement and each other
Transaction Document to which it is a party and with all material requirements
of any law, rule or regulation applicable to it. The Trust will not cause or
permit to become effective any amendment to or modification of any of the
Transaction Documents to which it is a party unless (i) (so long as no Insurer
Default shall have occurred and be continuing) Financial Security shall have
previously approved in writing the form of such amendment or modification or
(ii) if an Insurer Default shall have occurred and be continuing, such amendment
would not adversely affect the interests of Financial Security. The Trust shall
not take any action or fail to take any action that would interfere with the
enforcement of any rights under this Agreement or the other Transaction
Documents.
(b) FINANCIAL STATEMENTS; ACCOUNTANTS' REPORTS; OTHER INFORMATION.
The Trust shall keep or cause to be kept in reasonable detail books and records
of account of the Trust's assets and business, which shall be furnished to
Financial Security upon request. The Trust shall furnish to Financial Security,
simultaneously with the delivery of such documents to the Indenture Trustee, the
Noteholders or the Certificateholders, as the case may be, copies of all
reports, certificates, statements, financial statements or notices furnished to
the Indenture Trustee, the Noteholders or the Certificateholders, as the case
may be, pursuant to the Transaction Documents.
(i) ANNUAL FINANCIAL STATEMENTS. As soon as available, and in
any event within 90 days after the close of each fiscal year of the Trust,
the audited balance sheets of the Trust as of the end of such fiscal year
and the audited statements of income, changes in equityowners' equity and
cash flows of the Trust for such fiscal year, all in reasonable detail and
stating in comparative form the respective figures for the corresponding
date and period in the preceding fiscal year, prepared in accordance with
generally accepted accounting principles, consistently applied, and
accompanied by the certificate of the Trust's independent accountants (who
shall be acceptable to Financial Security) and by the certificate specified
in Section 2.02(c) hereof.
(ii) QUARTERLY FINANCIAL STATEMENTS. As soon as available, and
in any event within 45 days after the close of each of the first three
quarters of each fiscal year
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of the Trust, the unaudited balance sheets of the Trust as of the end of
such quarter and the unaudited statements of income, changes in
equityowners' equity and cash flows of the Trust for the portion of the
fiscal year then ended, all in reasonable detail and stating in
comparative form the respective figures for the corresponding date and
period in the preceding fiscal year, prepared in accordance with generally
accepted accounting principles consistently applied (subject to normal
year-end adjustments), and accompanied by the certificate specified in
Section 2.02(c) hereof.
(iii) ACCOUNTANTS' REPORTS. Promptly upon receipt thereof, copies
of any reports or comment letters submitted to the Trust by its independent
accountants in connection with any examination of the financial statements
of the Trust.
(iv) CERTAIN INFORMATION. Not less than ten days prior to the
date of filing with the IRS of any tax return or amendment thereto, copies
of the proposed form of such return or amendment and, promptly after the
filing or sending thereof, (i) copies of each tax return and amendment
thereto that the Trust files with the IRS and (ii) copies of all financial
statements, reports, and registration statements which the Trust files
with, or delivers to, any federal government agency, authority or body
which supervises the issuance of securities by the Trust.
(v) OTHER INFORMATION. Promptly upon the request of Financial
Security, copies of all schedules, financial statements or other similar
reports delivered to or by the Trust pursuant to the terms of this
Agreement and the other Transaction Documents and such other data as
Financial Security may reasonably request.
(c) COMPLIANCE CERTIFICATE. The Trust shall deliver to Financial
Security and, upon request, any Noteholder or Certificateholder, concurrently
with the delivery of the financial statements required pursuant to Section 2.02
(b)(i) and (ii) hereof, a certificate signed by an Authorized Officer of the
Administrator stating that:
(i) a review of the Trust's performance under the Transaction
Documents during such period has been made under such officer's
supervision;
(ii) to the best of such individual's knowledge following
reasonable inquiry, no Default or Event of Default has occurred and is
continuing or, if a Default or Event of Default has occurred and is
continuing, specifying the nature thereof and, if the Trust has a right to
cure pursuant to Section 5.01, stating in reasonable detail the steps, if
any, being taken by the Trust to cure such Default or Event of Default or
to otherwise comply with the terms of the agreement or agreements to which
such Default or Event of Default relates; and
(iii) the financial reports submitted in accordance with Section
2.02(b)(i) or (ii) hereof, as applicable, are complete and correct in all
material respects and present fairly the financial condition and results of
operations of the Trust as of the dates and for the periods indicated, in
accordance with generally accepted accounting principles consistently
applied (subject as to interim statements to normal year-end adjustments).
13
(d) ACCESS TO RECORDS; DISCUSSIONS WITH OFFICERS AND ACCOUNTANTS.
The Trust shall, upon the request of Financial Security, permit Financial
Security or its authorized agents (i) to inspect the books and records of the
Trust as they may relate to the Notes, the Certificates, the Receivables and the
Other Trust Property, the obligations of the Trust under the Transaction
Documents, the Trust's business and the Transaction and (ii) to discuss the
affairs, finances and accounts of the Trust with any of its personnel and
representatives, including its Independent Accountants. Such inspections and
discussions shall be conducted during normal business hours and shall not
unreasonably disrupt the business of the Trust. The books and records of the
Trust will be maintained at the address of the Trust designated herein for
receipt of notices, unless the Trust shall otherwise advise the parties hereto
in writing.
(e) NOTICE OF MATERIAL EVENTS. The Trust shall promptly inform
Financial Security in writing of the occurrence of any of the following:
(i) the submission of any claim or the initiation of any legal
process, litigation or administrative or judicial investigation against the
Trust involving potential damages or penalties in an uninsured amount in
excess of $100,000 in any one instance or $500,000 in the aggregate;
(ii) any change in the location of Trust's principal office or
any change in the location of the Trust's books and records;
(iii) the occurrence of any Default or Event of Default;
(iv) the commencement or threat of any rule making or
disciplinary proceedings or any proceedings instituted by or against the
Trust in any federal, state or local court or before any governmental body
or agency, or before any arbitration board, or the promulgation of any
proceeding or any proposed or final rule which, if adversely determined,
would result in a Material Adverse Change with respect to the Trust;
(v) the commencement of any proceedings by or against the Trust
under any applicable bankruptcy, reorganization, liquidation,
rehabilitation, insolvency or other similar law now or hereafter in effect
or of any proceeding in which a receiver, liquidator, conservator, trustee
or similar official shall have been, or may be, appointed or requested for
the Trust or any of its assets;
(vi) the receipt of notice that (A) the Trust is being placed
under regulatory supervision, (B) any license, permit, charter,
registration or approval necessary for the conduct of the Trust's business
is to be, or may be, suspended or revoked, or (C) the Trust is to cease and
desist any practice, procedure or policy employed by the Trust in the
conduct of its business, and such cessation may result in a Material
Adverse Change with respect to the Trust; or
(vii) any other event, circumstance or condition that has
resulted, or has a material possibility of resulting, in a Material Adverse
Change in respect of the Trust.
14
(f) FURTHER ASSURANCES. The Trust will file all necessary financing
statements, assignments or other instruments, and any amendments or continuation
statements relating thereto, necessary to be kept and filed in such manner and
in such places as may be required by law to preserve and protect fully the Lien
and security interest in, and all rights of the Indenture Collateral Agent with
respect to the Indenture Property, under the Indenture. In addition, the Trust
shall, upon the request of Financial Security (so long as no Insurer Default has
occurred and is continuing), from time to time, execute, acknowledge and deliver
and, if necessary, file such further instruments and take such further action as
may be reasonably necessary to effectuate the intention, performance and
provisions of the Transaction Documents to which the Trust is a party or to
protect the interest of the Indenture Collateral Agent in the Indenture Property
under the Indenture. The Trust agrees to cooperate with the Rating Agencies in
connection with any review of the Transaction which may be undertaken by the
Rating Agencies after the date hereof.
(g) MAINTENANCE OF LICENSES. The Trust shall maintain all licenses,
permits, charters and registrations which are material to the performance by the
Trust of its obligations under this Agreement and each other Transaction
Document to which the Trust is a party or by which the Trust is bound.
(h) RETIREMENT OF NOTES AND CERTIFICATES. The Trust shall, upon
retirement of the Certificates and upon retirement of the Notes furnish to
Financial Security a notice of such retirement, and, upon such retirement and
the expiration of the term of the applicable Policy, surrender the applicable
Policy to Financial Security for cancellation.
(i) DISCLOSURE DOCUMENT. Each Prospectus delivered with respect to
the Notes and the Certificates shall clearly disclose that the Policies are not
covered by the property/casualty insurance security fund specified in Article 76
of the New York Insurance Law. In addition, each Prospectus delivered with
respect to the Notes and the Certificates which include financial statements of
Financial Security prepared in accordance with generally accepted accounting
principles (other than a Prospectus that only incorporates such financial
statements by reference) shall include the following statement immediately
preceding such financial statements:
The New York State Insurance Department recognizes only
statutory accounting practices for determining and reporting
the financial condition and results of operations of an
insurance company, for determining its solvency under the
New York Insurance Law, and for determining whether its
financial condition warrants the payment of a dividend to
its stockholders. No consideration is given by the New York
State Insurance Department to financial statements prepared
in accordance with generally accepted accounting principles
in making such determinations.
15
(j) SPECIAL PURPOSE ENTITY.
(i) The Trust shall conduct its business solely in its own name
through its duly authorized officers or agents so as not to mislead
others as to the identity of the entity with which those others are
concerned, and particularly will use its best efforts to avoid the
appearance of conducting business on behalf of OFL, the Seller, or any
other Affiliates thereof or that the assets of the Trust are available
to pay the creditors of OFL, the Seller, or any other Affiliates
thereof. Without limiting the generality of the foregoing, all oral
and written communications, including, without limitation, letters,
invoices, purchase orders, contracts, statements and loan
applications, will be made solely in the name of the Trust.
(ii) The Trust shall maintain trust records and books of account
separate from those of OFL, the Seller, each Class GP
Certificateholder and Affiliates of any of them.
(iii) The Trust shall obtain proper authorization from its
equity owners of all trust action requiring such authorization, and
copies of each such authorization and the minutes or other written
summary of each such meeting shall be delivered to Financial Security
within two weeks of such authorization or meeting as the case may be.
(iv) Although the organizational expenses of the Trust have been
paid by OFL, operating expenses and liabilities of the Trust shall be
paid from its own funds.
(v) The annual financial statements of the Trust shall disclose
the effects of the Trust's transactions in accordance with generally
accepted accounting principles and shall disclose that the assets of
the Trust are not available to pay creditors of OFL, the Seller,
either Class GP Certificateholder or any Affiliate of any of them.
(vi) The resolutions, agreements and other instruments of the
Trust underlying the transactions described in this Agreement and in
the other Transaction Documents shall be continuously maintained by
the Trust as official records of the Trust separately identified and
held apart from the records of OFL, the Seller, each Class GP
Certificateholder and each Affiliate of any of them.
(vii) The Trust shall maintain an arm's-length relationship with
OFL, the Seller, each Class GP Certificateholder and each Affiliate of
any of them and will not hold itself out as being liable for the debts
of any such Person.
(viii) The Trust shall keep its assets and its liabilities
wholly separate from those of all other entities, including, but not
limited to, OFL, the Seller, each Class GP Certificateholder and each
Affiliate of any of them except, in each case, as contemplated by the
Transaction Documents.
16
(k) CLOSING DOCUMENTS. The Trust shall provide or cause to be
provided to Financial Security an executed original copy of each document
executed in connection with the Transaction within 10 days after the Closing
Date, except that the Seller shall cause a copy of the Trust Agreement, the Sale
and Servicing Agreement, the Series 1997-A Supplement, the Indenture, the
Administration Agreement and each Transaction Document to which Financial
Security is a party to be provided to Financial Security on the Closing Date.
(l) TAX MATTERS. The Trust will take all actions necessary to ensure
that the Trust is taxable as a partnership for federal and state income tax
purposes and not as an association (or publicly traded partnership), taxable as
a corporation.
(m) SECURITIES LAWS. The Trust shall comply in all material respects
with all applicable provisions of state and federal securities laws, including
blue sky laws and the Securities Act, the Exchange Act and the Investment
Company Act and all rules and regulations promulgated thereunder for which non-
compliance would result in a Material Adverse Change with respect to the Trust.
(n) INCORPORATION OF COVENANTS. The Trust agrees to comply with each
of the covenants of the Trust set forth in the Transaction Documents and hereby
incorporates such covenants by reference as if each were set forth herein.
Section 2.03. NEGATIVE COVENANTS OF THE TRUST. The Trust hereby
agrees that during the Term of this Agreement, unless Financial Security shall
otherwise give its prior express written consent:
(a) WAIVER, AMENDMENTS, ETC. The Trust shall not waive, modify,
amend, supplement or consent to any waiver, modification, amendment of or
supplement to, any of the provisions of the Certificate of Trust, the Trust
Agreement or any of the other Transaction Documents unless, if no Insurer
Default shall have occurred and be continuing, Financial Security shall have
consented thereto in writing.
(b) CREATION OF INDEBTEDNESS; GUARANTEES. The Trust shall not
create, incur, assume or suffer to exist any indebtedness or assume, guarantee,
endorse or otherwise be or become directly or contingently liable for the
obligations of any Person by, among other things, agreeing to purchase any
obligation of another Person, agreeing to advance funds to such Person or
causing or assisting such Person to maintain any amount of capital, except as
contemplated by the Transaction Documents.
(c) SUBSIDIARIES. The Trust shall not form, or cause to be formed,
any Subsidiaries.
(d) NO LIENS. The Trust shall not, except as contemplated by the
Transaction Documents create, incur, assume or suffer to exist any Lien of any
nature upon or with respect to any of its properties or assets, now owned or
hereafter acquired, or sign or file under the Uniform Commercial Code of any
jurisdiction any financing statement that names the Trust as
17
debtor, or sign any security agreement authorizing any secured party
thereunder to file such a financing statement.
(e) IMPAIRMENT OF RIGHTS. The Trust shall not take any action, or
fail to take any action, if such action or failure to take action may interfere
with the enforcement of any rights under the Transaction Documents that are
material to the rights, benefits or obligations of the Indenture Trustee, the
Noteholders, the Certificateholders or Financial Security.
(f) NO MERGERS. The Trust shall not consolidate with or merge into
any Person or transfer all or any material amount of its assets to any Person
(except as contemplated by the Transaction Documents) or liquidate or dissolve.
(g) ERISA. The Trust shall not contribute or incur any obligation to
contribute to, or incur any liability in respect of, any Plan or Multiemployer
Plan.
(h) OTHER ACTIVITIES. The Trust shall not:
(i) sell, pledge, transfer, exchange or otherwise dispose of any
of its assets except as permitted under the Transaction Documents; or
(ii) engage in any business or activity except as contemplated
by the Transaction Documents and as permitted by its Certificate of
Trust.
(i) INSOLVENCY. The Trust shall not commence any case, proceeding or
other action (A) under any existing or future law of any jurisdiction, domestic
or foreign, relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking to have an order for relief entered with respect to it, or
seeking reorganization, arrangement, adjustment, winding-up, liquidation,
dissolution, consolidation or other relief with respect to it or (B) seeking
appointment of a receiver, trustee, custodian or other similar official for it
or for all or any substantial part of its assets or make a general assignment
for the benefit of its creditors. The Trust shall not take any action in
furtherance of, or indicating the consent to, approval of, or acquiescence in
any of the acts set forth above. The Trust shall not admit in writing its
inability to pay its debts.
(j) SUCCESSOR PARTIES. The Trust will not remove or replace, or
cause to be removed or replaced, the Servicer, the Indenture Trustee, the Owner
Trustee or the Administrator.
Section 2.04. REPRESENTATIONS AND WARRANTIES OF OFL AND OF THE CLASS
GP CERTIFICATEHOLDERS. Each of OFL and each Class GP Certificateholder (with
respect to) represents and warrants as of the date hereof and as of the Closing
Date, as follows:
(a) DUE ORGANIZATION AND QUALIFICATION. Each Class GP
Certificateholder is a corporation duly organized and validly existing and in
good standing under the laws of the State of Delaware, with power and authority
to own its properties and to conduct its business. Each Class GP
Certificateholder is duly qualified to do business, is in good standing and has
18
obtained all necessary licenses, permits, charters, registrations and approvals
(together, "approvals") necessary for the conduct of its business as described
in the Transaction Documents and the performance of its obligations under the
Transaction Documents.
(b) POWER AND AUTHORITY. Each Class GP Certificateholder has all
necessary corporate power and authority to conduct its business as described in
the Transaction Documents, to execute, deliver and perform its obligations under
this Agreement and each other Transaction Document to which it is a party and to
carry out the terms of each such agreement.
(c) DUE AUTHORIZATION. The execution, delivery and performance of
this Agreement and each other Transaction Document to which each Class GP
Certificateholder is a party has been duly authorized by all necessary corporate
action on the part of such Class GP Certificateholder and does not require any
additional approvals or consents or other action by or any notice to or filing
with any Person by or on behalf of such Class GP Certificateholder, including,
without limitation, any governmental entity or such Class GP Certificateholder's
stockholder.
(d) NONCONTRAVENTION. Neither the execution and delivery of this
Agreement and each other Transaction Document to which each Class GP
Certificateholder is a party, the consummation of the Transaction nor the
satisfaction of the terms and conditions of this Agreement and each other
Transaction Document to which it is a party,
(i) conflicts with or results in any breach or violation of any
provision of the charter or bylaws of such Class GP Certificateholder
or any law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award currently in effect having
applicability to such Class GP Certificateholder or any of its
properties, including regulations issued by an administrative agency
or other governmental authority having supervisory powers over it,
(ii) constitutes a default by such Class GP Certificateholder
under or a breach of any provision of any loan agreement, mortgage,
indenture or other agreement or instrument to which such Class GP
Certificateholder is a party or by which it or any of its or their
properties is or may be bound or affected, or
(iii) results in or requires the creation of any Lien upon or in
respect of any of such Class GP Certificateholder's assets except as
otherwise expressly contemplated by the Transaction Documents.
(e) PENDING LITIGATION OR OTHER PROCEEDING. There is no action,
proceeding or investigation pending, or, to OFL's or either Class GP
Certificateholder's best knowledge, threatened, before any court, regulatory
body, administrative agency, arbitrator or governmental agency or
instrumentality having jurisdiction over either Class GP Certificateholder or
its properties: (A) asserting the invalidity of this Agreement or any other
Transaction Document to which either Class GP Certificateholder is a party,
(B) seeking to prevent the issuance of the Certificates or the Notes, or the
consummation of the Transaction, (C) seeking any determination or ruling that
might materially and adversely affect the validity or enforceability of this
19
Agreement or any other Transaction Document to which either Class GP
Certificateholder is a party, (D) which might result in a Material Adverse
Change with respect to such Class GP Certificateholder or (E) which might
adversely affect the federal or state tax attributes of the Notes, the
Certificates or of the Trust.
(f) VALID AND BINDING OBLIGATIONS. Each of the Transaction Documents
to which each Class GP Certificateholder is a party, when executed and delivered
by such Class GP Certificateholder, and assuming due authorization, execution
and delivery by the other parties thereto, will constitute the legal, valid and
binding obligation of such Class GP Certificateholder enforceable in accordance
with its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally and general equitable principles.
(g) NO CONSENTS. No consent, license, approval or authorization
from, or registration, filing or declaration with, any regulatory body,
administrative agency, or other governmental instrumentality, nor any consent,
approval, waiver or notification of any creditor, lessor or other
non-governmental person, is required in connection with the execution, delivery
and performance by each Class GP Certificateholder of this Agreement or of any
other Transaction Document to which either Class GP Certificateholder is a
party, except (in each case) such as have been obtained and are in full force
and effect.
(h) COMPLIANCE WITH LAW, ETC. No practice, procedure or policy
employed or proposed to be employed by either Class GP Certificateholder in the
conduct of its business violates any law, regulation, judgment, agreement, order
or decree applicable to such Class GP Certificateholder which, if enforced,
would result in a Material Adverse Change with respect to such Class GP
Certificateholder.
(i) SPECIAL PURPOSE ENTITY.
(i) The capital of each Class GP Certificateholder is adequate
for the business and undertakings of such Class GP Certificateholder.
(ii) Other than with respect to the ownership by OFL of the
stock of each Class GP Certificateholder, the issuance of the Demand
Notes by OFL to each Class GP Certificateholder, and except for its
ownership of the Series 1993-C Class B Certificates, the Series 1993-D
Class B Certificates, the Series 1994-A Class B Certificates, the
Series 1994-B Class B-GP and Class I-GP Certificates, the Series 1995-
B Class GP Certificates, the Series 1995-C Class GP Certificates, the
Series 1995-D Class B-GP and Class I-GP Certificates, the Series 1995-
E Class GP Certificates, the Series 1996-A Class GP Certificates, the
Series 1996-B Class GP Certificates, the Series 1996-C Class GP
Certificates, the Series 1996-D GP Certificates and the Series 1997-A
Class GP Certificates, it is not engaged in any business transactions
with OFL or any Affiliate of OFL.
(iii) At least one executive officer and one director of each
Class GP Certificateholder shall be a person who is not, and will not
be, a director, officer,
20
employee or holder of any equity securities of OFL, the Seller, or
any Affiliate of either of them.
(iv) Each Class GP Certificateholder's funds and assets are not,
and will not be, commingled with the funds of any other Person.
(v) The by-laws of each Class GP Certificateholder require it to
maintain (A) correct and complete minute books and records of account,
and (B) minutes of the meetings and other proceedings of its
shareholders and board of directors.
(j) SOLVENCY; FRAUDULENT CONVEYANCE. Each Class GP Certificateholder
is solvent and will not be rendered insolvent by the Transaction and, after
giving effect to such Transaction, such Class GP Certificateholder will not be
left with an unreasonably small amount of capital with which to engage in its
business. Neither Class GP Certificateholder intends to incur, or believes that
it has incurred, debts beyond its ability to pay such debts as they mature.
Neither Class GP Certificateholder contemplates the commencement of insolvency,
bankruptcy, liquidation or consolidation proceedings or the appointment of a
receiver, liquidator, conservator, trustee or similar official in respect of
such Class GP Certificateholder or any of its assets.
(k) CAPITAL STRUCTURE. The shares of stock of each Class GP
Certificateholder which have been pledged pursuant to the Stock Pledge Agreement
constitute all of the issued and outstanding shares of such Class GP
Certificateholder. All of the outstanding equity securities of the Trust in
which each Class GP Certificateholder owns an interest are owned by such Class
GP Certificateholder free and clear of any Lien.
(l) ERISA. Each Class GP Certificateholder is in compliance with
ERISA and has not incurred and does not reasonable expect to incur any liability
to any Plan or to PBGC in connection with any Plan or to contribute now or in
the future in respect of any Plan.
(m) SECURITIES LAWS COMPLIANCE. Neither Class GP Certificateholder
is required to be registered as an "investment company" under the Investment
Company Act of 1940. Neither Class GP Certificateholder is subject to the
information reporting requirements of the Exchange Act.
(n) TRANSACTION DOCUMENTS. All of the representations and warranties
made by each Class GP Certificateholder in the Transaction Documents are
incorporated by reference herein as if set forth herein and each such
representation and warranty is true and correct as of the Closing Date.
Section 2.05. AFFIRMATIVE COVENANTS OF OFL AND EACH CLASS GP
CERTIFICATEHOLDER. OFL and each Class GP Certificateholder (with respect to
itself) hereby agrees that during the Term of the Agreement, unless Financial
Security shall otherwise expressly consent in writing:
(a) COMPLIANCE WITH AGREEMENTS AND APPLICABLE LAWS. Such Class GP
Certificateholder will comply with all terms and conditions of this Agreement
and each other
21
Transaction Document to which it is a party and with all material
requirements of any law, rule or regulation applicable to it. Each Class GP
Certificateholder will not cause or permit to become effective any amendment
to or modification of any of the Transaction Documents to which it is a party
unless (i) (so long as no Insurer Default shall have occurred and be
continuing) Financial Security shall have previously approved in writing the
form of such amendment or modification or (ii) if an Insurer Default shall
have occurred and be continuing, such amendment would not adversely affect
the interests of Financial Security. Each Class GP Certificateholder shall
not take any action or fail to take any action that would interfere with the
enforcement of any rights under this Agreement or the other Transaction
Documents.
(b) CORPORATE EXISTENCE. Each Class GP Certificateholder shall
maintain its corporate existence and shall at all times continue to be duly
organized under the laws of Delaware and duly qualified and duly authorized (as
described in Sections 2.04(a), (b) and (c) hereof) and shall conduct its
business in accordance with the terms of its corporate charter and bylaws.
(c) FINANCIAL STATEMENTS; ACCOUNTANTS' REPORTS; OTHER INFORMATION.
Each Class GP Certificateholder shall keep or cause to be kept in reasonable
detail books and records of account of such Class GP Certificateholder's assets
and business. Each Class GP Certificateholder shall furnish to Financial
Security as soon as available, and in any event within 90 days after the close
of each fiscal year of such Class GP Certificateholder, the unaudited balance
sheet of such Class GP Certificateholder as of the end of such fiscal year and
the unaudited statements of income, changes in shareholders' equity and cash
flows of such Class GP Certificateholder for such fiscal year, all in reasonable
detail and stating in comparative form the respective figures for the preceding
fiscal year, prepared in accordance with generally accepted accounting
principles, consistently applied.
(d) COMPLIANCE CERTIFICATE. Each Class GP Certificateholder shall
deliver to Financial Security, within 90 days after the close of each fiscal
year of such Class GP Certificateholder, a certificate signed by an Authorized
Officer of such Class GP Certificateholder stating that (i) a review of such
Class GP Certificateholder's performance under the Transaction Documents during
such period has been made under such officer's supervision; (ii) to the best of
such individual's knowledge following reasonable inquiry, no Default or Event of
Default has occurred, or if a Default or Event of Default has occurred,
specifying the nature thereof and, if such Class GP Certificateholder has or had
a right to cure pursuant to Section 5.01, stating in reasonable detail the
steps, if any, taken or being taken by such Class GP Certificateholder to cure
such Default or Event of Default or to otherwise comply with the terms of the
Transaction Document to which such Default or Event of Default relates; and
(iii) the financial statements submitted in accordance with Section 2.05(c)
hereof, as applicable, are complete and correct in all material respects and
present fairly the financial condition and results of operations of such Class
GP Certificateholder as of the dates and for the periods indicated, in
accordance with generally accepted accounting principles consistently applied.
(e) ACCESS TO RECORDS; DISCUSSIONS WITH OFFICERS AND ACCOUNTANTS.
Each Class GP Certificateholder shall, upon the request of Financial Security,
permit Financial Security or its authorized agents (i) to inspect the books and
records of such Class GP Certificateholder as
22
they may relate to the obligations of such Class GP Certificateholder under
the Transaction Documents, such Class GP Certificateholder's business and the
Transaction and (ii) to discuss the affairs, finances and accounts of such
Class GP Certificateholder with any of its officers, directors and
representatives, including its Independent Accountants. Each inspections and
discussions shall be conducted during normal business hours and shall not
unreasonably disrupt the business of such Class GP Certificateholder. The
books and records of each Class GP Certificateholder will be maintained at
the address designated herein for receipt of notices, unless such Class GP
Certificateholder shall otherwise advise the parties hereto in writing.
(f) NOTICE OF MATERIAL EVENTS. OFL and each Class GP
Certificateholder shall promptly inform Financial Security in writing of the
occurrence of any of the following:
(i) the submission of any claim or the initiation of any legal
process, litigation or administrative or judicial investigation
against such Class GP Certificateholder involving potential damages or
penalties in an uninsured amount in excess of $5,000 in any one
instance or $25,000 in the aggregate;
(ii) any change in the location of such Class GP
Certificateholder's principal office or any change in the location of
such Class GP Certificateholder's books and records;
(iii) the occurrence of any Default or Event of Default;
(iv) the commencement or threat of any rule making or
disciplinary proceedings or any proceedings instituted by or against
such Class GP Certificateholder in any federal, state or local court
or before any governmental body or agency, or before any arbitration
board, or the promulgation of any proceeding or any proposed or final
rule which, if adversely determined, would result in a Material
Adverse Change with respect to such Class GP Certificateholder or the
Trust;
(v) the commencement of any proceedings by or against such Class
GP Certificateholder under any applicable bankruptcy, reorganization,
liquidation, rehabilitation, insolvency or other similar law now or
hereafter in effect or of any proceeding in which a receiver,
liquidator, conservator, trustee or similar official shall have been,
or may be, appointed or requested for such Class GP Certificateholder
or any of its assets;
(vi) the receipt of notice that (A) such Class GP
Certificateholder is being placed under regulatory supervision, (B)
any license, permit, charter, registration or approval necessary for
the conduct of such Class GP Certificateholder's business is to be, or
may be, suspended or revoked, or (C) such Class GP Certificateholder
is to cease and desist any practice, procedure or policy employed by
such Class GP Certificateholder in the conduct of its business, and
such cessation may result in a Material Adverse Change with respect to
such Class GP Certificateholder or the Trust; or
23
(vii) any other event, circumstance or condition that has
resulted, or has a material possibility of resulting, in a Material
Adverse Change in respect of such Class GP Certificateholder or the
Trust.
(g) MAINTENANCE OF LICENSES. Such Class GP Certificateholder shall
maintain all licenses, permits, charters and registrations which are material to
the performance by such Class GP Certificateholder of its obligations under this
Agreement and each other Transaction Document to which the Seller is a party or
by which such Class GP Certificateholder is bound.
(h) SPECIAL PURPOSE ENTITY.
(i) Such Class GP Certificateholder shall conduct its business
solely in its own name through its duly authorized officers or agents
so as not to mislead others as to the identity of the entity with
which those others are concerned, and particularly will use its best
efforts to avoid the appearance of conducting business on behalf of
the Trust, OFL, the Seller or any other Affiliate of any of them or
that, except as expressly provided in the Transaction Documents, the
assets of such Class GP Certificateholder are available to pay the
creditors of OFL, the Seller or any Affiliate of any of them. Without
limiting the generality of the foregoing, all oral and written
communications, including, without limitation, letters, invoices,
purchase orders, contracts, statements and loan applications, will be
made solely in the name of such Class GP Certificateholder.
(ii) Such Class GP Certificateholder shall maintain corporate
records and books of account separate from those of OFL, the Trust,
the Seller and any Affiliate of any of them.
(iii) Such Class GP Certificateholder shall obtain proper
authorization from its board of directors of all corporate action
requiring such authorization, meetings of the board of directors of
such Class GP Certificateholder shall be held not less frequently than
three times per annum and copies of the minutes of each such board
meeting shall be delivered to Financial Security within two weeks of
such meeting.
(iv) Such Class GP Certificateholder shall obtain proper
authorization from its shareholders of all corporate action requiring
shareholder approval, meetings of the shareholders of such Class GP
Certificateholder shall be held not less frequently than one time per
annum and copies of each such authorization and the minutes of each
such shareholder meeting shall be delivered to Financial Security
within two weeks of such authorization or meeting, as the case may be.
(v) Although the organizational expenses of such Class GP
Certificateholder have been paid by OFL, operating expenses and
liabilities of such Class GP Certificateholder shall be paid from its
own funds.
24
(vi) The annual financial statements of such Class GP
Certificateholder shall disclose the effects of such Class GP
Certificateholder's transactions in accordance with generally accepted
accounting principles and shall disclose that the assets of such Class
GP Certificateholder are not available except as expressly provided in
the Transaction Agreements to pay creditors of OFL, the Seller or any
Affiliate of either of them.
(vii) The resolutions, agreements and other instruments of such
Class GP Certificateholder underlying the transactions described in
this Agreement and in the other Transaction Documents shall be
continuously maintained by such Class GP Certificateholder as official
records of such Class GP Certificateholder separately identified and
held apart from the records of OFL, the Seller, the Trust and any
Affiliate of any of them.
(viii) Except as expressly provided in the Transaction Documents
such Class GP Certificateholder shall maintain an arm's-length
relationship with OFL, the Seller and any Affiliate of either of them
and will not hold itself out as being liable for the debts of OFL, the
Seller or any Affiliate of either of them.
(ix) Such Class GP Certificateholder shall keep its assets and
its liabilities wholly separate from those of all other entities,
including, but not limited to, OFL, the Seller and any Affiliate of
either of them except, in each case, as contemplated by the
Transaction Documents.
(i) RETIREMENT OF NOTES AND CERTIFICATES. Such Class GP
Certificateholder shall cause the Trust, upon retirement of the Notes or
Certificates, to furnish to Financial Security a notice of such retirement, and,
upon such retirement and the expiration of the term of the Note Policy or
Certificate Policy, to surrender such Note Policy or Certificate Policy, as
applicable, to Financial Security for cancellation.
(j) INCORPORATION OF COVENANTS. Each Class GP Certificateholder
agrees to comply with each of the covenants of such Class GP Certificateholder
set forth in the Transaction Documents and hereby incorporates such covenants by
reference as if each were set forth herein.
(k) TAX MATTERS. As of the Closing Date, the Trust is, and shall
remain during the Term of this Agreement, taxable as a partnership for federal
and state income tax purposes and not as an association (or publicly traded
partnership) taxable as a corporation.
Section 2.06. NEGATIVE COVENANTS OF OFL AND EACH CLASS GP
CERTIFICATEHOLDER. Each of OFL and each Class GP Certificateholder (with
respect to itself) hereby agrees that during the Term of this Agreement, unless
Financial Security shall otherwise give its prior express written consent:
(a) WAIVER, AMENDMENTS, ETC. Each Class GP Certificateholder shall
not waive, modify, amend, supplement or consent to any waiver, modification,
amendment of or
25
supplement to, any of the provisions of any of the Transaction Documents or
of its certificate of incorporation or by-laws (i) unless, if no Insurer
Default shall have occurred and be continuing, Financial Security shall have
consented thereto in writing or (ii) if an Insurer Default shall have
occurred and be continuing, which would adversely affect the interests of
Financial Security.
(b) CREATION OF INDEBTEDNESS; GUARANTEES. Neither Class GP
Certificateholder shall create, incur, assume or suffer to exist any
indebtedness or assume, guarantee, endorse or otherwise be or become directly or
contingently liable for the obligations of any Person by, among other things,
agreeing to purchase any obligation of another Person, agreeing to advance funds
to such Person or causing or assisting such Person to maintain any amount of
capital, except as contemplated by the Transaction Documents or, with the prior
written consent of Financial Security, as permitted by its certificate of
incorporation.
(c) SUBSIDIARIES. Neither Class GP Certificateholder shall form, or
cause to be formed, any Subsidiaries.
(d) NO LIENS. Neither Class GP Certificateholder shall, except as
contemplated by the Transaction Documents, create, incur, assume or suffer to
exist any Lien of any nature upon or with respect to any of its properties or
assets, now owned or hereafter acquired, or sign or file under the Uniform
Commercial Code of any jurisdiction any financing statement that names such
Class GP Certificateholder as debtor, or sign any security agreement authorizing
any secured party thereunder to file such a financing statement.
(e) ISSUANCE OF STOCK. Neither Class GP Certificateholder shall
issue any shares of capital stock or rights, warrants or options in respect of
its capital stock or securities convertible into or exchangeable for its capital
stock, other than the shares of common stock which have been pledged to
Financial Security under the Stock Pledge Agreement.
(f) IMPAIRMENT OF RIGHTS. Neither Class GP Certificateholder shall
take any action, or fail to take any action, if such action or failure to take
action may interfere with the enforcement of any rights under the Transaction
Documents that are material to the rights, benefits or obligations of the Trust,
the Indenture Trustee, the Certificateholders, the Noteholders or Financial
Security.
(g) NO MERGERS. Neither Class GP Certificateholder shall consolidate
with or merge into any Person or transfer all or any material amount of its
assets to any Person (except as contemplated by the Transaction Documents) or
liquidate or dissolve.
(h) ERISA. Neither Class GP Certificateholder shall contribute or
incur any obligation to contribute to, or incur any liability in respect of, any
Plan or Multiemployer Plan.
(i) OTHER ACTIVITIES. Neither Class GP Certificateholder shall:
(i) sell, pledge, transfer, exchange or otherwise dispose of any
of its assets except as permitted under the Transaction Documents;
26
(ii) engage in any business or activity except as contemplated
by the Transaction Documents and as permitted by its certificate of
incorporation; or
(iii) declare or make payment of (a) any divided or other
distribution on any shares of its capital stock or (b) any payment on
account of the purchase, redemption, retirement or acquisition of (1)
any shares of its capital stock or (2) any option, warrant or other
right to acquire shares of its capital stock unless (in each case) at
the time of such declaration or payment (and after giving effect
thereto) the aggregate net worth of the two Class GP
Certificateholders would be greater than the Minimum Net Worth.
(j) INSOLVENCY. Neither Class GP Certificateholder shall commence
any case, proceeding or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief entered
with respect to it, or seeking reorganization, arrangement, adjustment, winding-
up, liquidation, dissolution, consolidation or other relief with respect to it
or the Trust or (B) seeking appointment of a receiver, trustee, custodian or
other similar official for it or for the Trust or for all or any substantial
part of its assets or make a general assignment for the benefit of its
creditors. Neither Class GP Certificateholder shall take any action in
furtherance of, or indicating the consent to, approval of, or acquiescence in
any of the acts set forth above. Neither Class GP Certificateholder shall admit
in writing its inability to pay its debts.
Section 2.07. REPRESENTATIONS AND WARRANTIES OF OFL AND THE SELLER.
Each of OFL and the Seller represent and warrant as of the date hereof and as of
the Closing Date, as follows:
(a) DUE ORGANIZATION AND QUALIFICATION. The Seller is a corporation
duly organized and validly existing and in good standing under the laws of the
State of Delaware, with power and authority to own its properties and to conduct
its business. The Seller is duly qualified to do business, is in good standing
and has obtained all necessary licenses, permits, charters, registrations and
approvals (together, "approvals") necessary for the conduct of its business as
currently conducted and as described in the Prospectus and the performance of
its obligations under the Transaction Documents, in each jurisdiction in which
the failure to be so qualified or to obtain such approvals would render the
Receivables in such jurisdiction or any Transaction Document unenforceable in
any respect or would otherwise have a material adverse effect upon the
Transaction.
(b) POWER AND AUTHORITY. The Seller has all necessary corporate
power and authority to conduct its business as currently conducted and as
described in the Prospectus, to execute, deliver and perform its obligations
under this Agreement and each other Transaction Document to which the Seller is
a party and to carry out the terms of each such agreement, and has full power
and authority to sell and assign the Receivables and the Other Trust Property to
the Trust and has duly authorized such sale and assignment to the Trust by all
necessary corporate action.
27
(c) DUE AUTHORIZATION. The execution, delivery and performance of this
Agreement and each other Transaction Document to which the Seller is a party
has been duly authorized by all necessary corporate action on the part of the
Seller and does not require any additional approvals or consents or other
action by or any notice to or filing with any Person by or on behalf of the
Seller, including, without limitation, any governmental entity or the
Seller's stockholder.
(d) NONCONTRAVENTION. Neither the execution and delivery of this
Agreement and each other Transaction Document to which the Seller is a party,
the consummation of the Transaction nor the satisfaction of the terms and
conditions of this Agreement and each other Transaction Document to which the
Seller is a party,
(i) conflicts with or results in any breach or violation of any
provision of the charter or bylaws of the Seller or any law, rule,
regulation, order, writ, judgment, injunction, decree, determination or
award currently in effect having applicability to the Seller or any of its
properties, including regulations issued by an administrative agency or
other governmental authority having supervisory powers over the Seller,
(ii) constitutes a default by the Seller under or a breach of any
provision of any loan agreement, mortgage, indenture or other agreement or
instrument to which the Seller is a party or by which it or any of its
properties is or may be bound or affected, or
(iii) results in or requires the creation of any Lien upon or in
respect of any of the Seller's assets except as otherwise expressly
contemplated by the Transaction Documents.
(e) PENDING LITIGATION OR OTHER PROCEEDING. There is no action,
proceeding or investigation pending, or, to the Seller's or OFL's best
knowledge, threatened, before any court, regulatory body, administrative
agency, arbitrator or governmental agency or instrumentality having
jurisdiction over the Seller or its properties: (A) asserting the invalidity
of this Agreement or any other Transaction Document to which the Seller is a
party, (B) seeking to prevent the issuance of the Notes or the Certificates
or the consummation of the Transaction, (C) seeking any determination or
ruling that might materially and adversely affect the validity or
enforceability of this Agreement or any other Transaction Document to which
the Seller is a party, (D) which might result in a Material Adverse Change
with respect to the Seller or (E) which might adversely affect the federal or
state tax attributes of the Notes, the Certificates or the Trust.
(f) VALID AND BINDING OBLIGATIONS. Each of the Transaction Documents
to which the Seller is a party, when executed and delivered by the Seller,
and assuming due authorization, execution and delivery by the other parties
thereto, will constitute the legal, valid and binding obligation of the
Seller enforceable in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally and
general equitable principles. The Certificates, when executed, authenticated
and delivered in accordance with the Trust
28
Agreement, will be validly issued and outstanding and entitled to the
benefits of the Trust Agreement and will evidence the entire beneficial
ownership interest in the Trust. The Notes, when executed, authenticated and
delivered in accordance with the Indenture, will be entitled to the benefits
of the Indenture and will constitute legal, valid and binding obligations of
the Trust, enforceable in accordance with their terms.
(g) NO CONSENTS. No consent, license, approval or authorization from,
or registration, filing or declaration with, any regulatory body,
administrative agency, or other governmental instrumentality, nor any
consent, approval, waiver or notification of any creditor, lessor or other
non-governmental person, is required in connection with the execution,
delivery and performance by the Seller of this Agreement or of any other
Transaction Document to which the Seller is a party, except (in each case)
such as have been obtained and are in full force and effect.
(h) COMPLIANCE WITH LAW, ETC. No practice, procedure or policy
employed or proposed to be employed by the Seller in the conduct of its
business violates any law, regulation, judgment, agreement, order or decree
applicable to the Seller which, if enforced, would result in a Material
Adverse Change with respect to the Seller.
(i) GOOD TITLE; VALID TRANSFER; ABSENCE OF LIENS; SECURITY INTEREST.
Immediately prior to the sale of the Initial Receivables and related Other
Trust Property to the Trust pursuant to the Sale and Servicing Agreement, the
Seller was the owner of, and had good and marketable title to, such property
free and clear of all Liens and Restrictions on Transferability, and had full
right, corporate power and lawful authority to assign, transfer and pledge
the Initial Receivables and the related Other Trust Property. The Sale and
Servicing Agreement constitutes a valid sale, transfer and assignment of the
Other Trust Property to the Trust enforceable against creditors of and
purchasers of the Seller. In the event that, in contravention of the
intention of the parties, the transfer of the Other Trust Property by the
Seller to the Trust is characterized as other than a sale, such transfer
shall be characterized as a secured financing, and the Trust shall have a
valid and perfected first priority security interest in the Other Trust
Property free and clear of all Liens and Restrictions on Transferability.
(j) ACCURACY OF INFORMATION. Neither the Transaction Documents nor any
documents, agreements, instruments, schedules, certificates, statements, cash
flow schedules, number runs or other writings or data (collectively, the
"Documents") furnished to Financial Security by the Seller or OFL with
respect to either of them, their Subsidiaries, the Receivables or the
Transaction contain any statement of a material fact which was untrue or
misleading in any material respect when made (except insofar as any Document
was corrected or superseded by a subsequent Document and Financial Security
has not detrimentally relied on the original Document). There is no fact
known to the Seller or OFL which has a material possibility of causing a
Material Adverse Change with respect to the Seller or OFL, or which has a
material possibility of impairing the value or marketability of the
Receivables, taken as a whole, or decreasing the probability that amounts due
in respect of the Receivables will be collected as due. Since the furnishing
of the Transaction Documents, there has been no change or any development or
event involving a prospective change known to the Seller or OFL which would
29
render any representation or warranty or other statement made by either of
them in any of the Transaction Documents untrue or misleading in a material
respect.
(k) COMPLIANCE WITH INVESTMENT COMPANY ACT. The Seller is not required
to be registered as an "investment company" under the Investment Company Act.
(l) INCORPORATION OF CERTAIN REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Seller set forth in the Transaction
Documents are (in each case) true and correct as if set forth herein.
(m) SPECIAL PURPOSE ENTITY.
(i) The capital of the Seller is adequate for the business and
undertakings of the Seller.
(ii) Other than with respect to the ownership by OFL of the stock
of the Seller and as provided in the Previous Series Transaction Documents,
the Purchase Agreement, the Sale and Servicing Agreement, and the Spread
Account Agreement, the Seller is not engaged in any business transactions
with OFL or any Affiliate of OFL.
(iii) At least one director of the Seller shall be a person who is
not, and will not be, a director, officer, employee or holder of any equity
securities of OFL or any of its Affiliates or Subsidiaries.
(iv) The Seller's funds and assets are not, and will not be,
commingled with the funds of any other Person, except as provided in the
Transaction Documents.
(v) The by-laws of the Seller require it to maintain (A) correct
and complete minute books and records of account, and (B) minutes of the
meetings and other proceedings of its shareholders and board of directors.
(n) SOLVENCY; FRAUDULENT CONVEYANCE. The Seller is solvent and will
not be rendered insolvent by the Transaction and, after giving effect to such
Transaction, the Seller will not be left with an unreasonably small amount of
capital with which to engage in its business. The Seller does not intend to
incur, or believe that it has incurred, debts beyond its ability to pay such
debts as they mature. The Seller does not contemplate the commencement of
insolvency, bankruptcy, liquidation or consolidation proceedings or the
appointment of a receiver, liquidator, conservator, trustee or similar
official in respect of the Seller or any of its assets. The amount of
consideration being received by the Seller upon the sale of the Initial
Receivables and related Other Trust Property and contemplated to be received
upon the Sale of the Subsequent Receivables and related Other Trust Property
constitutes reasonably equivalent value and fair consideration for interest
in such Receivables and such Other Trust Property. The Seller is not
transferring the Other Trust Property to the Trust, or selling the
Certificates, as provided in the Transaction Documents, with any intent to
hinder, delay or defraud any of the Seller's creditors.
30
(o) REGISTRATION STATEMENTS; PROSPECTUS. The Seller has filed with the
Securities and Exchange Commission (the "Commission") registration statements
on Form S-3 (Nos. 33-97608 and 333-14983), including a preliminary prospectus
and prospectus supplement for the registration of the Certificates and the
Notes under the Securities Act, has filed such amendments thereto, and such
amended preliminary prospectuses and prospectus supplements as may have been
required to the date hereof, and will file such additional amendments thereto
and such amended prospectuses and prospectus supplements as may hereafter be
required. Such registration statements (as amended, if applicable) and the
prospectus, together with the prospectus supplement relating to the
Certificates and the Notes, constituting a part thereof (including in each
case all documents, if any, incorporated by reference therein and the
information, if any, deemed to be part thereof pursuant to the rules and
regulations of the Commission under the Securities Act (the "Rules and
Regulations"), as from time to time amended or supplemented pursuant to the
Securities Act or otherwise, are hereinafter referred to as the "Registration
Statements" and the "Prospectus," respectively, except that if any revised
prospectus or prospectus supplement shall be provided by the Seller for use
in connection with the offering of the Certificates and the Notes which
differs from the Prospectus filed with the Commission pursuant to Rule 424 of
the Rules and Regulations (whether or not such revised prospectus is required
to be filed by the Seller pursuant to Rule 424 of the Rules and Regulations),
the term "Prospectus" shall refer to such revised prospectus and prospectus
supplement from and after the time it is first provided to the Underwriter
for such use. The Registration Statements at the time they became effective
complied, and at each time that the Prospectus is provided to the
Underwriters for use in connection with the offering or sale of any
Certificate or Note will comply, in all material respects with the
requirements of the Securities Act and the Rules and Regulations. The
Registration Statements and the Prospectus at the time the Registration
Statements became effective did not and on the date hereof does not, contain
an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading and the Prospectus at the time it was first provided to the
Underwriters for use in connection with the offering of the Certificates and
the Notes did not, and on the date hereof does not, contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements therein in light of the circumstances under which they
were made not misleading, except that the representations and warranties in
this subparagraph shall not apply to statements in or omissions from the
Registration Statements or the Prospectus or any preliminary prospectus made
in reliance upon information furnished to the Seller in writing by Financial
Security expressly for use therein or the financial statements (including the
related notes thereto) of Financial Security.
(p) ERISA. The Seller is in compliance with ERISA and has not incurred
and does not reasonably expect to incur any liabilities to the PBGC under
ERISA in connection with any Plan or Multiemployer Plan or to contribute now
or in the future in respect of any Plan or Multiemployer Plan.
(q) PLEDGE OF SHARES. The shares of stock of the Seller which have
been pledged pursuant to the Stock Pledge Agreement constitute all of the
issued and outstanding shares of the Seller.
31
(r) PERFECTION OF LIENS AND SECURITY INTEREST. On the Closing Date,
the Lien and security interest in favor of the Indenture Collateral Agent
with respect to Indenture Property will be perfected by the filing of
financing statements on Form UCC-1 in each jurisdiction where such recording
or filing is necessary for the perfection thereof, the delivery of the
Receivable Files for the Receivables to the Custodian, and the establishment
of the Collection Account, the Subcollection Account, the Lockbox Account,
the Pre-Funding Account, the Reserve Account and the Note Distribution
Account in accordance with the provisions of the Transaction Documents, and
no other filings in any jurisdiction or any other actions (except as
expressly provided herein) are necessary to perfect the Collateral Agent's
Lien on and security interest in the Collateral as against any third parties.
(s) SECURITY INTEREST IN FUNDS AND INVESTMENTS. Assuming the retention
of funds in the Accounts (other than the Certificate Account) and the
acquisition of Eligible Investments in accordance with the Transaction
Documents, such funds and Eligible Investments will be subject to a valid and
perfected, first priority security interest in favor of the Collateral Agent
on behalf of the Indenture Trustee (on behalf of the Noteholders) and
Financial Security.
Section 2.08. AFFIRMATIVE COVENANTS OF OFL AND THE SELLER. Each of OFL
and the Seller hereby agree that during the Term of the Agreement, unless
Financial Security shall otherwise expressly consent in writing:
(a) COMPLIANCE WITH AGREEMENTS AND APPLICABLE LAWS. The Seller will
comply with all terms and conditions of this Agreement and each other
Transaction Document to which it is a party and with all material
requirements of any law, rule or regulation applicable to it. The Seller
will not cause or permit to become effective any amendment to or modification
of any of the Transaction Documents to which it is a party unless (i) (so
long as no Insurer Default shall have occurred and be continuing) Financial
Security shall have previously approved in writing the form of such amendment
or modification or (ii) if an Insurer Default shall have occurred and be
continuing, such amendment would not adversely affect the interests of
Financial Security. The Seller shall not take any action or fail to take any
action that would interfere with the enforcement of any rights under this
Agreement or the other Transaction Documents.
(b) CORPORATE EXISTENCE. The Seller shall maintain its corporate
existence and shall at all times continue to be duly organized under the laws
of Delaware and duly qualified and duly authorized (as described in Sections
2.07(a), (b) and (c) hereof) and shall conduct its business in accordance
with the terms of its corporate charter and bylaws.
(c) FINANCIAL STATEMENTS; ACCOUNTANTS' REPORTS; OTHER INFORMATION. The
Seller shall keep or cause to be kept in reasonable detail books and records
of account of the Seller's assets and business, and shall clearly reflect
therein the transfer of the Receivables and the Other Trust Property to the
Trust and the sale of the Receivables as a sale to the Trust of the Seller's
interest in the Receivables and the Other Trust Property. The Seller shall
furnish to Financial Security, simultaneously with the delivery of such
documents to the Trustee, the Noteholders or the
32
Certificateholders, as the case may be, copies of all reports, certificates,
statements, financial statements or notices furnished to the Trustee, the
Noteholders or the Certificateholders, as the case may be, pursuant to the
Transaction Documents. The Seller shall furnish to Financial Security as soon
as available, and in any event within 90 days after the close of each fiscal
year of the Seller, the unaudited balance sheet of the Seller as of the end
of such fiscal year and the unaudited statements of income, changes in
shareholders' equity and cash flows of the Seller for such fiscal year, all
in reasonable detail and stating in comparative form the respective figures
for the preceding fiscal year, prepared in accordance with generally accepted
accounting principles, consistently applied.
(d) COMPLIANCE CERTIFICATE. The Seller shall deliver to Financial
Security, within 90 days after the close of each fiscal year of the Seller, a
certificate signed by an Authorized Officer of the Seller stating that:
(i) a review of the Seller's performance under the Transaction
Documents during such period has been made under such officer's
supervision; and
(ii) to the best of such individual's knowledge following
reasonable inquiry, no Default or Event of Default has occurred, or if a
Default or Event of Default has occurred, specifying the nature thereof
and, if the Seller has or had a right to cure pursuant to Section 5.01,
stating in reasonable detail the steps, if any, taken or being taken by the
Seller to cure such Default or Event of Default or to otherwise comply with
the terms of the Transaction Document to which such Default or Event of
Default relates.
(iii) the financial reports submitted in accordance with
Section 2.08(c) hereof, are complete and correct in all material respects
and present fairly the financial condition and results of operations of the
Seller as of the dates and for the periods indicated, in accordance with
generally accepted accounting principles consistently applied.
(e) ACCESS TO RECORDS; DISCUSSIONS WITH OFFICERS AND ACCOUNTANTS. The
Seller shall, upon the request of Financial Security, permit Financial
Security or its authorized agents (i) to inspect the books and records of the
Seller as they may relate to the Notes, the Certificates, the Receivables and
the Other Trust Property, the obligations of the Seller under the Transaction
Documents, the Seller's business and the Transaction and (ii) to discuss the
affairs, finances and accounts of the Seller with any of its officers,
directors and representatives, including its Independent Accountants. Such
inspections and discussions shall be conducted during normal business hours
and shall not unreasonably disrupt the business of the Seller. The books and
records of the Seller will be maintained at the address of the Seller
designated herein for receipt of notices, unless the Seller shall otherwise
advise the parties hereto in writing.
(f) NOTICE OF MATERIAL EVENTS. The Seller shall promptly inform
Financial Security in writing of the occurrence of any of the following:
(i) the submission of any claim or the initiation of any legal
process, litigation or administrative or judicial investigation against the
Seller involving potential damages or penalties in an uninsured amount in
excess of $5,000 in any one instance or $25,000 in the aggregate;
33
(ii) any change in the location of Seller's principal office or
any change in the location of the Seller's books and records;
(iii) the occurrence of any Default or Event of Default;
(iv) the commencement or threat of any rule making or
disciplinary proceedings or any proceedings instituted by or against the
Seller in any federal, state or local court or before any governmental body
or agency, or before any arbitration board, or the promulgation of any
proceeding or any proposed or final rule which, if adversely determined,
would result in a Material Adverse Change with respect to the Seller or the
Trust;
(v) the commencement of any proceedings by or against the Seller
under any applicable bankruptcy, reorganization, liquidation,
rehabilitation, insolvency or other similar law now or hereafter in effect
or of any proceeding in which a receiver, liquidator, conservator, trustee
or similar official shall have been, or may be, appointed or requested for
the Seller or any of its assets;
(vi) the receipt of notice that (A) the Seller is being placed
under regulatory supervision, (B) any license, permit, charter,
registration or approval necessary for the conduct of the Seller's business
is to be, or may be, suspended or revoked, or (C) the Seller is to cease
and desist any practice, procedure or policy employed by the Seller in the
conduct of its business, and such cessation may result in a Material
Adverse Change with respect to the Seller or the Trust; or
(vii) any other event, circumstance or condition that has
resulted, or has a material possibility of resulting, in a Material Adverse
Change in respect of the Seller or the Trust.
(g) FURTHER ASSURANCES. The Seller will file all necessary financing
statements, assignments or other instruments, and any amendments or
continuation statements relating thereto, necessary to be kept and filed in
such manner and in such places as may be required by law to preserve and
protect fully the Lien and security interest in, and all rights of the Trust
with respect to Other Trust Property, under the Sale and Servicing Agreement.
In addition, the Seller shall, upon the request of Financial Security (so
long as no Insurer Default has occurred and is continuing), from time to
time, execute, acknowledge and deliver and, if necessary, file such further
instruments and take such further action as may be reasonably necessary to
effectuate the intention, performance and provisions of the Transaction
Documents to which the Seller is a party or to protect the interest of the
Trust in the Receivables under the Sale and Servicing Agreement. The Seller
agrees to cooperate with the Rating Agencies in connection with any review of
the Transaction which may be undertaken by the Rating Agencies after the date
hereof.
(h) MAINTENANCE OF LICENSES. The Seller shall maintain all licenses,
permits, charters and registrations which are material to the performance by the
Seller of its obligations
34
under this Agreement and each other Transaction Document to which the Seller
is a party or by which the Seller is bound.
(i) DISCLOSURE DOCUMENT. Each Prospectus delivered with respect to
the Notes and Certificates shall clearly disclose that the Policies are not
covered by the property/casualty insurance security fund specified in Article 76
of the New York Insurance Law. In addition, each Prospectus delivered with
respect to the Notes and Certificates which includes financial statements of
Financial Security prepared in accordance with generally accepted accounting
principles (other than a Prospectus that only incorporates such financial
statements by reference) shall include the following statement immediately
preceding such financial statements:
The New York State Insurance Department recognizes only
statutory accounting practices for determining and reporting
the financial condition and results of operations of an
insurance company, for determining its solvency under the
New York Insurance Law, and for determining whether its
financial condition warrants the payment of a dividend to
its stockholders. No consideration is given by the New York
State Insurance Department to financial statements prepared
in accordance with generally accepted accounting principles
in making such determinations.
(j) SPECIAL PURPOSE ENTITY.
(i) The Seller shall conduct its business solely in its own name
through its duly authorized officers or agents so as not to mislead others
as to the identity of the entity with which those others are concerned, and
particularly will use its best efforts to avoid the appearance of
conducting business on behalf of OFL or any other Affiliate thereof or that
the assets of the Seller are available to pay the creditors of OFL or any
Affiliate thereof. Without limiting the generality of the foregoing, all
oral and written communications, including, without limitation, letters,
invoices, purchase orders, contracts, statements and loan applications,
will be made solely in the name of the Seller.
(ii) The Seller shall maintain corporate records and books of
account separate from those of OFL and the other Affiliates thereof.
(iii) The Seller shall obtain proper authorization from its board
of directors of all corporate action requiring such authorization, meetings
of the board of directors of the Seller shall be held not less frequently
than three times per annum and copies of the minutes of each such board
meeting shall be delivered to Financial Security within two weeks of such
meeting.
(iv) The Seller shall obtain proper authorization from its
shareholders of all corporate action requiring shareholder approval,
meetings of the shareholders of the Seller shall be held not less
frequently than one time per annum and copies of each such authorization
and the minutes of each such shareholder meeting shall be delivered
35
to Financial Security within two weeks of such authorization or meeting,
as the case may be.
(v) Although the organizational expenses of the Seller have been
paid by OFL, operating expenses and liabilities of the Seller shall be paid
from its own funds.
(vi) The annual financial statements of the Seller shall disclose
the effects of the Seller's transactions in accordance with generally
accepted accounting principles and shall disclose that the assets of the
Seller are not available to pay creditors of OFL or any other Affiliate
thereof.
(vii) The resolutions, agreements and other instruments of the
Seller underlying the transactions described in this Agreement and in the
other Transaction Documents shall be continuously maintained by the Seller
as official records of the Seller separately identified and held apart from
the records of OFL and each other Affiliate thereof.
(viii) The Seller shall maintain an arm's-length relationship with
OFL and the other Affiliates thereof and will not hold itself out as being
liable for the debts of OFL or any Affiliate thereof.
(ix) The Seller shall keep its assets and its liabilities wholly
separate from those of all other entities, including, but not limited to
OFL and the other Affiliates thereof except, in each case, as contemplated
by the Transaction Documents.
(k) CLOSING DOCUMENTS. The Seller shall provide or cause to be
provided to Financial Security an executed original copy of each document
executed in connection with the Transaction within 10 days after the Closing
Date, except that the Seller shall cause a copy of the Trust Agreement, the
Sale and Servicing Agreement, the Series 1997-A Supplement, the Indenture,
the Administration Agreement and each Transaction Document to which Financial
Security is a party to be provided to Financial Security on the Closing Date.
(l) SUBSEQUENT RECEIVABLES: GOOD TITLE; VALID TRANSFER; ABSENCE OF
LIENS; SECURITY INTEREST. Immediately prior to the sale to the Trust
pursuant to a Subsequent Transfer Agreement, the Seller will be the owner of,
and shall have good and marketable title to, the Subsequent Receivables
transferred thereby and the related Other Trust Property free and clear of
all Liens and Restrictions on Transferability, and shall have full right,
corporate power and lawful authority to assign, transfer and pledge such
property.
(m) INCORPORATION OF COVENANTS. The Seller agrees to comply with each
of the Seller's covenants set forth in the Transaction Documents and hereby
incorporates such covenants by reference as if each were set forth herein.
Section 2.09. NEGATIVE COVENANTS OF OFL AND THE SELLER. Each of OFL
and the Seller hereby agrees that during the Term of this Agreement, unless
Financial Security shall otherwise give its prior express written consent:
36
(a) WAIVER, AMENDMENTS, ETC. The Seller shall not waive, modify,
amend, supplement or consent to any waiver, modification, amendment of or
supplement to, any of the provisions of any of the Transaction Documents or
Previous Series Transaction Documents or of its certificate of incorporation
or by-laws (i) unless, if no Insurer Default shall have occurred and be
continuing, Financial Security shall have consented thereto in writing or
(ii) if an Insurer Default shall have occurred and be continuing, which would
adversely affect the interests of Financial Security.
(b) CREATION OF INDEBTEDNESS; GUARANTEES. The Seller shall not create,
incur, assume or suffer to exist any indebtedness or assume, guarantee,
endorse or otherwise be or become directly or contingently liable for the
obligations of any Person by, among other things, agreeing to purchase any
obligation of another Person, agreeing to advance funds to such Person or
causing or assisting such Person to maintain any amount of capital, except as
contemplated by the Transaction Documents or as contemplated by the documents
relating to a Series of Certificates or Notes.
(c) SUBSIDIARIES. The Seller shall not form, or cause to be formed,
any Subsidiaries.
(d) NO LIENS. The Seller shall not, except as contemplated by the
Transaction Documents or as contemplated by the documents relating to a
Series of Certificates or Notes, create, incur, assume or suffer to exist any
Lien of any nature upon or with respect to any of its properties or assets,
now owned or hereafter acquired, or sign or file under the Uniform Commercial
Code of any jurisdiction any financing statement that names the Seller as
debtor, or sign any security agreement authorizing any secured party
thereunder to file such a financing statement.
(e) ISSUANCE OF STOCK. The Seller shall not issue any shares of
capital stock or rights, warrants or options in respect of its capital stock
or securities convertible into or exchangeable for its capital stock, other
than the shares of common stock which have been pledged to Financial Security
under the Seller Stock Pledge Agreement.
(f) IMPAIRMENT OF RIGHTS. The Seller shall not take any action, or
fail to take any action, if such action or failure to take action may
interfere with the enforcement of any rights under the Transaction Documents
that are material to the rights, benefits or obligations of the Trust, the
Indenture Trustee, the Certificateholders, the Noteholders or Financial
Security.
(g) NO MERGERS. The Seller shall not consolidate with or merge into
any Person or transfer all or any material amount of its assets to any Person
(except as contemplated by the Transaction Documents or the documents
relating to a Series of Certificates or Notes).
(h) ERISA. The Seller shall not contribute or incur any obligation to
contribute to, or incur any liability in respect of, any Plan or
Multiemployer Plan.
37
(i) OTHER ACTIVITIES. The Seller shall not:
(i) sell, pledge, transfer, exchange or otherwise dispose of
any of its assets except as permitted under the Transaction Documents
or the documents relating to a Series of Certificates or Notes; or
(ii) engage in any business or activity except as contemplated
by the Transaction Documents or as contemplated by the documents
relating to a Series of Certificates or Notes and as permitted by its
certificate of incorporation.
(j) INSOLVENCY. The Seller shall not commence any case,
proceeding or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief
entered with respect to it, or seeking reorganization, arrangement,
adjustment, winding-up, liquidation, dissolution, consolidation or other
relief with respect to it or the Trust or (B) seeking appointment of a
receiver, trustee, custodian or other similar official for it or for the
Trust or for all or any substantial part of its assets or the Collateral
related to any or all Series, or make a general assignment for the benefit of
its creditors. The Seller shall not take any action in furtherance of, or
indicating the consent to, approval of, or acquiescence in any of the acts
set forth above. The Seller shall not admit in writing its inability to pay
its debts.
(k) DIVIDENDS. The Seller shall not declare or make payment of
(i) any dividend or other distribution on any shares of its capital stock, or
(ii) any payment on account of the purchase, redemption, retirement or
acquisition of any option, warrant or other right to acquire shares of its
capital stock, unless (in each case) at the time of such declaration or
payment (and after giving effect thereto) no amount payable by the Seller
under any Transaction Document with respect to any Series is then due and
owing but unpaid.
Section 2.10. REPRESENTATIONS AND WARRANTIES OF OFL. OFL
represents and warrants, as of the date hereof and as of the Closing Date, as
follows:
(a) DUE ORGANIZATION AND QUALIFICATION. OFL and each of its
Subsidiaries is a corporation, duly organized, validly existing and in good
standing under the laws of the State of its respective incorporation with
power and authority to own its properties and conduct its business. OFL and
each of its Subsidiaries is duly qualified to do business and is in good
standing in each jurisdiction in which the failure to be so qualified would
render any of the Receivables unenforceable in any respect or would otherwise
have a material adverse effect upon the Transaction. OFL and each of its
Subsidiaries has obtained all licenses, permits, charters, registrations and
approvals necessary for the conduct of its business as currently conducted
and as described in the Prospectus and for the performance of its obligations
under the Transaction Documents.
(b) POWER AND AUTHORITY. OFL has all necessary corporate power
and authority to conduct its business as currently conducted and as described
in the Prospectus, to execute, deliver and perform its obligations under this
Agreement and each other Transaction Document to which it is a party and to
carry out the terms of each such agreement.
38
(c) DUE AUTHORIZATION. The execution, delivery and performance of
this Agreement and each other Transaction Document to which OFL is a party
has been duly authorized by all necessary corporate action and does not
require any additional approvals or consents or other action by or any notice
to or filing with any Person, including, without limitation, any governmental
entity or OFL's stockholders.
(d) NONCONTRAVENTION. Neither the execution and delivery of this
Agreement and each other Transaction Document to which OFL is a party, the
consummation of the Transaction, nor the satisfaction of the terms and
conditions of this Agreement and each other Transaction Document to which OFL
is a party,
(i) conflicts with or results in any breach or violation of any
provision of the corporate charter or bylaws of OFL or any law, rule,
regulation, order, writ, judgment, injunction, decree, determination
or award currently in effect having applicability to OFL or any of its
properties, including regulations issued by an administrative agency
or other governmental authority having supervisory powers over OFL,
(ii) constitutes a default by OFL under or a breach of any
provision of any loan agreement, mortgage, indenture or other
agreement or instrument to which OFL or any of its Subsidiaries is a
party or by which it or any of its or their properties is or may be
bound or affected, or
(iii) results in or requires the creation of any Lien upon or in
respect of any of OFL's assets, except as otherwise expressly
contemplated by the Transaction Documents.
(e) PENDING LITIGATION OR OTHER PROCEEDING. There is no action,
proceeding or investigation pending, or, to OFL's best knowledge, threatened,
before any court, regulatory body, administrative agency, or other
governmental instrumentality having jurisdiction over OFL or its properties:
(A) asserting the invalidity of this Agreement or any other Transaction
Document to which OFL is a party, (B) seeking to prevent the issuance of the
Notes, the Certificates or the consummation of the Transaction, (C) seeking
any determination or ruling that might materially and adversely affect the
validity or enforceability of, this Agreement or any other Transaction
Document to which OFL is a party, (D) which might result in a Material
Adverse Change with respect to OFL or (E) which might adversely affect the
federal or state tax attributes of the Notes, the Certificates or the Trust.
(f) VALID AND BINDING OBLIGATIONS. The Purchase Agreement
constitutes a valid sale, transfer, and assignment of the Receivables and
Other Trust Property to the Seller, enforceable against creditors of and
purchasers from OFL. Each of the other Transaction Documents to which OFL is
a party when executed and delivered by OFL, and assuming the due
authorization, execution and delivery by the other parties thereto, will
constitute the legal, valid and binding obligation of OFL enforceable in
accordance with its respective terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally and general equitable
principles.
39
(g) NO CONSENTS. No consent, license, approval or authorization
from, or registration, filing or declaration with, any regulatory body,
administrative agency, or other governmental instrumentality, nor any
consent, approval, waiver or notification of any creditor, lessor or other
non-governmental person, is required in connection with the execution,
delivery and performance by OFL of this Agreement or of any other Transaction
Document to which OFL is a party, except (in each case) such as have been
obtained and are in full force and effect.
(h) FINANCIAL STATEMENTS. The Financial Statements of OFL, copies
of which have been furnished to Financial Security, (i) are, as of the dates
and for the periods referred to therein, complete and correct in all material
respects, (ii) present fairly the financial condition and results of
operations of OFL as of the dates and for the periods indicated and (iii)
have been prepared in accordance with generally accepted accounting
principles consistently applied, except as noted therein (subject as to
interim statements to normal year-end adjustments and the absence of notes).
Since the date of the most recent Financial Statements, there has been no
material adverse change in such financial condition or results of operations.
Except as disclosed in the Financial Statements, OFL is not subject to any
contingent liabilities or commitments that, individually or in the aggregate,
have a reasonable likelihood of causing a Material Adverse Change in respect
of OFL.
(i) COMPLIANCE WITH LAW, ETC. No practice, procedure or policy
employed or proposed to be employed by OFL in the conduct of its business
violates any law, regulation, judgment, agreement, order or decree applicable
to OFL which, if enforced, would result in a Material Adverse Change with
respect to OFL.
(j) TAXES. OFL has, and each of its Subsidiaries have, filed all
federal and state tax returns and paid all taxes to the extent that such
taxes have become due. Any taxes, fees and other governmental charges
payable by OFL in connection with the Transaction, the execution and delivery
of the Transaction Documents and the issuance of the Notes and Certificates
have been paid or shall have been paid at or prior to the Closing Date.
(k) ERISA. OFL is in compliance with ERISA and has not incurred
and does not reasonably expect to incur any liabilities to the PBGC under
ERISA in connection with any Plan or Multiemployer Plan or to contribute now
or in the future in respect of any Plan or Multiemployer Plan except in
accordance with the provisions of Section 2.12(e) hereof.
(l) INCORPORATION OF CERTAIN REPRESENTATIONS AND WARRANTIES. OFL
represents and warrants to Financial Security that the representations and
warranties of OFL set forth in the Transaction Documents are (in each case)
true and correct as if set forth herein.
Section 2.11. AFFIRMATIVE COVENANTS OF OFL. OFL hereby agrees
that during the Term of the Agreement, unless Financial Security shall
otherwise expressly consent in writing:
(a) COMPLIANCE WITH AGREEMENTS AND APPLICABLE LAWS. OFL will
comply with all terms and conditions of this Agreement and each other
Transaction Document to which it is a party and all material requirements of
any law, rule or regulation applicable to it. OFL will not cause or permit
to become effective any amendment to or modification of any
40
Transaction Document to which it is a party (i) unless, so long as no Insurer
Default shall have occurred and be continuing, Financial Security shall have
previously approved in writing the form of such amendment or modification or
(ii) if an Insurer Default shall have occurred and be continuing, such
amendment would not adversely affect the interests of Financial Security.
OFL shall not take any action or fail to take any action that would interfere
with the enforcement of any rights under this Agreement or the other
Transaction Documents.
(b) CORPORATE EXISTENCE. OFL shall maintain its corporate
existence and shall at all times continue to be duly organized under the laws
of Minnesota and duly qualified and duly authorized (as described in Sections
2.10(a), (b) and (c) hereof) and shall conduct its business in accordance
with the terms of its corporate charter and bylaws.
(c) FINANCIAL STATEMENTS; ACCOUNTANTS' REPORTS; OTHER INFORMATION.
OFL shall keep or cause to be kept in reasonable detail books and records of
account of OFL's assets and business. OFL, so long as it shall be the
Servicer, shall furnish to Financial Security, simultaneously with the
delivery of such documents to the Owner Trustee, Indenture Trustee, the
Noteholders or the Certificateholders, as the case may be, copies of all
reports, certificates, statements or notices furnished to the Owner Trustee,
Indenture Trustee, the Noteholders or the Certificateholders, as the case
may be, pursuant to the Transaction Documents. OFL shall also furnish or
cause to be furnished to Financial Security:
(i) ANNUAL FINANCIAL STATEMENTS. As soon as available, and in
any event within 90 days after the close of each fiscal year of OFL,
the audited balance sheets of OFL and its subsidiaries as of the end
of such fiscal year and the audited consolidated statements of income,
changes in shareholders' equity and cash flows of OFL for such fiscal
year, all in reasonable detail and stating in comparative form the
respective figures for the corresponding date and period in the
preceding fiscal year, prepared in accordance with generally accepted
accounting principles, consistently applied, and accompanied by the
certificate of OFL's independent accountants (which, so long as no
Insurer Default shall have occurred and be continuing, shall be
acceptable to Financial Security) and by the certificate specified in
Section 2.11(d) hereof.
(ii) QUARTERLY FINANCIAL STATEMENTS. As soon as available, and
in any event within 45 days after the close of each of the first three
quarters of each fiscal year of OFL, the unaudited consolidated
balance sheets of OFL as of the end of such quarter and the unaudited
consolidated statements of income, changes in shareholders' equity and
cash flows of OFL for the portion of the fiscal year then ended, all
in reasonable detail and stating in comparative form the respective
figures for the corresponding date and period in the preceding fiscal
year, prepared in accordance with generally accepted accounting
principles consistently applied (subject to normal year-end
adjustments), and accompanied by the certificate specified in Section
2.11(d) hereof.
(iii) ACCOUNTANTS' REPORTS. Promptly upon receipt thereof, copies
of any reports submitted to OFL by its independent accountants in
connection with any examination of the financial statements of OFL.
41
(iv) CERTAIN INFORMATION. Promptly after the filing or sending
thereof, copies of all proxy statements, financial statements, reports
and registration statements which OFL files, or delivers to, the IRS,
the Commission, or any other federal government agency, authority or
body which supervises the issuance of securities by OFL or any
national securities exchange.
(d) COMPLIANCE CERTIFICATE. OFL shall deliver to Financial
Security within 90 days after the close of each fiscal year of OFL, a
certificate signed by an Authorized Officer of OFL stating that:
(i) a review of OFL's performance under the Transaction
Documents during such period has been made under such officer's
supervision;
(ii) to the best of such individual's knowledge following
reasonable inquiry, no Default or Event of Default has occurred, or if a
Default or Event of Default has occurred, specifying the nature thereof
and, if OFL has or had a right to cure pursuant to Section 5.01, stating in
reasonable detail the steps, if any, taken or being taken by OFL to cure
such Default or Event of Default or to otherwise comply with the terms of
the Transaction Document to which such Default or Event of Default relates;
and
(iii) the financial statements submitted in accordance with
Section 2.11(c) hereof, as applicable, are complete and correct in all
material respects and present fairly the financial condition and results of
operations of OFL as of the dates and for the periods indicated, in
accordance with generally accepted accounting principles consistently
applied (subject as to interim statements to normal year-end adjustments
and the absence of notes).
(e) ACCESS TO RECORDS; DISCUSSIONS WITH OFFICERS AND ACCOUNTANTS.
OFL shall, upon the request of Financial Security, permit Financial Security
or its authorized agents (i) to inspect the books and records of OFL as they
may relate to the Notes, the Certificates, the Receivables, the obligations
of OFL as Servicer under the Transaction Documents, its business and the
Transaction and (ii) to discuss the affairs, finances and accounts of OFL
with any of its officers, directors and representatives, including its
Independent Accountants. Such inspections and discussions shall be conducted
during normal business hours and shall not unreasonably disrupt the business
of OFL. The books and records of OFL will be maintained at the address of
OFL designated herein for receipt of notices, unless OFL shall otherwise
advise the parties hereto in writing.
(f) NOTICE OF MATERIAL EVENTS. OFL shall promptly inform
Financial Security in writing of the occurrence of any of the following:
(i) the submission of any claim or the initiation of any legal
process, litigation or administrative or judicial investigation against OFL
involving potential damages or penalties in an uninsured amount in excess
of $10,000 in any one instance or $25,000 in the aggregate;
42
(ii) any change in the location of OFL's principal office or any
change in the location of the OFL's books and records;
(iii) the occurrence of any Default or Event of Default;
(iv) the commencement or threat of any rule making or
disciplinary proceedings or any proceedings instituted by or against OFL in
any federal, state or local court or before any governmental body or
agency, or before any arbitration board, or the promulgation of any
proceeding or any proposed or final rule which, if adversely determined,
would result in a Material Adverse Change with respect to OFL;
(v) the commencement of any proceedings by or against OFL under
any applicable bankruptcy, reorganization, liquidation, rehabilitation,
insolvency or other similar law now or hereafter in effect or of any
proceeding in which a receiver, liquidator, conservator, trustee or similar
official shall have been, or may be, appointed or requested for OFL or any
of its assets;
(vi) the receipt of notice that (A) OFL is being placed under
regulatory supervision, (B) any license, permit, charter, registration or
approval necessary for the conduct of OFL's business is to be, or may be,
suspended or revoked, or (C) OFL is to cease and desist any practice,
procedure or policy employed by OFL in the conduct of its business, and
such cessation may result in a Material Adverse Change with respect to OFL;
or
(vii) any other event, circumstance or condition that has
resulted, or has a material possibility of resulting, in a Material Adverse
Change in respect of OFL.
(g) MAINTENANCE OF LICENSES. OFL shall maintain all licenses,
permits, charters and registrations which are material to the performance by
OFL of its obligations under this Agreement and each other Transaction
Document to which OFL is a party or by which OFL is bound.
(h) ERISA. OFL shall give Financial Security prompt notice of
each of the following events (but in no event more than 30 days after the
occurrence of the event): (i) an Accumulated Funding Deficiency, (ii) the
failure to make a required contribution to a Plan or Multiemployer Plan,
(iii) a Reportable Event, (iv) any action by a Commonly Controlled Entity to
terminate any Plan or withdraw from any Multiemployer Plan, (v) any action by
the PBGC to terminate or appoint a trustee to administer a Plan, (vi) the
reorganization or insolvency of any Multiemployer Plan and (vii) an aggregate
Underfunding for all Underfunded Plans in excess of $100,000. In addition,
OFL shall promptly (but in no case more than 30 days following issuance or
receipt by the Commonly Controlled Entity) provide to Financial Security a
copy of all correspondence between a Commonly Controlled Entity and the PBGC,
IRS, Department of Labor or the administrators of a Multiemployer Plan
relating to any of the events described in the preceding sentence or the
underfunded status, termination or possible termination of a Plan or a
Multiemployer Plan.
43
(i) THIRD-PARTY BENEFICIARY. OFL agrees that Financial Security
shall have all rights of a third-party beneficiary in respect of the Sale and
Servicing Agreement, it being understood that the remedies of Financial
Security with respect to the representations and warranties set forth in
Section 2.4(b) and the covenants set forth in Section 3.6(a) shall be limited
to the remedies set forth in the Sale and Servicing Agreement.
(j) INCORPORATION OF COVENANTS. OFL agrees to comply with each of
OFL's covenants set forth in the Transaction Documents and hereby
incorporates such covenants by reference as if each were set forth herein.
Section 2.12. NEGATIVE COVENANTS OF OFL. OFL hereby agrees that
during the Term of this Agreement, unless Financial Security shall otherwise
give its express written consent:
(a) RESTRICTIONS ON LIENS. OFL shall not create, incur or suffer
to exist, or agree to create, incur or suffer to exist, or consent to cause
or permit in the future (upon the happening of a contingency or otherwise)
the creation, incurrence or existence of any Lien or Restriction on
Transferability on the Receivables and the Other Trust Property except for
the Liens in favor of the Seller, the Trust and the Indenture Collateral
Agent for the benefit of the Indenture Trustee and Financial Security
contemplated by the Transaction Documents and the Restrictions on
Transferability imposed by the Purchase Agreement and the Sale and Servicing
Agreement.
(b) IMPAIRMENT OF RIGHTS. OFL shall not take any action, or fail
to take any action, if such action or failure to take action may interfere
with the enforcement of any rights under the Transaction Documents that are
material to the rights, benefits or obligations of the Seller, the Trust, the
Indenture Trustee, the Noteholders, the Certificateholders or Financial
Security.
(c) LIMITATION ON MERGERS. OFL shall not consolidate with or
merge with or into any Person or transfer all or any material part of its
assets to any Person (except as contemplated by the Transaction Documents) or
liquidate or dissolve, provided that OFL may consolidate with, merge with or
into, or transfer all or a material part of its assets to, another
corporation if (i) the acquiror of its assets, or the corporation surviving
such merger or consolidation, shall be organized and existing under the laws
of any state and shall be qualified to transact business in each jurisdiction
in which failure to qualify would render any Transaction Document
unenforceable or would result in a Material Adverse Change in respect of OFL
or the Trust Property; (ii) after giving effect to such consolidation, merger
or transfer of assets, no Default or Event of Default shall have occurred or
be continuing; (iii) such acquiring or surviving entity can lawfully perform
the obligations of OFL under the Transaction Documents and shall expressly
assume in writing all of the obligations of OFL, including, without
limitation, its obligations under the Transaction Documents; and (iv) such
acquiring or surviving entity and the consolidated group of which it is a
part shall each have a net worth immediately subsequent to such
consolidation, merger or transfer of assets at least equal to the net worth
of OFL immediately prior to such consolidation, merger or transfer of assets;
and OFL shall give Financial Security written notice of any such
consolidation, merger or transfer of assets on the
44
earlier of: (A) the date upon which any publicly available filing or release
is made with respect to such action or (B) 10 Business Days prior to the date
of consummation of such action. OFL shall furnish to Financial Security all
information requested by it that is reasonably necessary to determine
compliance with this paragraph.
(d) WAIVER, AMENDMENTS, ETC. OFL shall not waive, modify, amend,
supplement or consent to any waiver, modification, amendment of or supplement
to, any of the provisions of any of the Transaction Documents without the
prior written consent of Financial Security (i) unless, so long as no Insurer
Default shall have occurred and be continuing, Financial Security shall have
consented thereto in writing or (ii) if an Insurer Default shall have
occurred and be continuing, which would adversely affect the interests of
Financial Security.
(e) ERISA. OFL shall not contribute or incur any obligation to
contribute to, or incur any liability in respect of, any Plan or
Multiemployer Plan, except that OFL may make such a contribution or incur
such a liability provided that neither OFL nor any Commonly Controlled Entity
will:
(i) terminate any Plan so as to incur any material liability to
the PBGC;
(ii) knowingly participate in any "prohibited transaction" (as
defined in ERISA) involving any Plan or Multiemployer Plan or any
trust created thereunder which would subject any of them to a material
tax or penalty on prohibited transactions imposed under Section 4975
of the Code or ERISA;
(iii) fail to pay to any Plan or Multiemployer Plan any
contribution which it is obligated to pay under the terms of such Plan
or Multiemployer Plan, if such failure would cause such Plan to have
any material Accumulated Funding Deficiency, whether or not waived; or
(iv) allow or suffer to exist any occurrence of a Reportable
Event, or any other event or condition, which presents a material risk
of termination by the PBGC of any Plan or Multiemployer Plan, to the
extent that the occurrence or nonoccurrence of such Reportable Event
or other event or condition is within the control of it or any
Commonly Controlled Entity.
(f) INSOLVENCY. OFL shall not commence any case, proceeding or
other action (A) under any existing or future law of any jurisdiction,
domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution,
consolidation or other relief with respect to the Seller or either
Class GP Certificateholder or (B) seeking appointment of a receiver,
trustee, custodian or other similar official for the Seller or for
either Class GP Certificateholder. OFL shall not take any action in
furtherance of, or indicating the consent to, approval of, or
acquiescence in any of the acts set forth above.
45
ARTICLE III
THE POLICIES; REIMBURSEMENT; INDEMNIFICATION
Section 3.01. CONDITIONS PRECEDENT TO ISSUANCE OF THE POLICIES.
Financial Security agrees to issue the Policies subject to satisfaction of
the conditions set forth below.
(a) The obligation of Financial Security to issue the Policies is
subject to the following having occurred or being true (as the case may be):
(i) Financial Security shall have received evidence satisfactory to it that
the Seller shall have assigned, conveyed and transferred, or caused to be
assigned, conveyed and transferred, the Initial Receivables to the Trust,
(ii) the Seller shall have created a valid security interest in, and Lien on,
the Receivables in favor of the Trust, (iii) the Trust shall have created a
valid security interest in, and Lien on, the Indenture Property in favor of
the Indenture Collateral Agent on behalf of the Indenture Trustee (on behalf
of the Noteholders) and Financial Security (iv) the initial Premium shall
have been paid in accordance with Section 3.02 hereof, (v) the
representations and warranties of the Trust, the Class GP Certificateholders,
the Seller and of OFL and the Servicer set forth or incorporated by reference
in this Agreement shall be true and correct on and as of the Closing Date,
and (vi) each Transaction Document shall be in full force and effect and no
Default thereunder shall have occurred and be continuing.
(b) The obligation of Financial Security to issue the Policies is
further subject to the condition precedent that Financial Security shall have
received on the Closing Date, or, in its sole and absolute discretion,
received the opportunity to review prior to and on the Closing Date, the
following, each dated the Closing Date and in full force and effect on such
date, except as otherwise provided herein, in form and substance satisfactory
to Financial Security and its counsel:
(i) a certificate of an Authorized Officer of each of the Seller
and OFL stating that nothing has come to the attention of such entity
to indicate that the Registration Statement or the Prospectus, on the
date the Registration Statement became effective, contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading, or that the Prospectus on any date on which
it was forwarded to the Underwriter for use in connection with the
offering of the Notes and the Certificates contained, or on the
Closing Date contains, any untrue statement of a material fact or
omits to state a material fact necessary in order to make the
statements made therein, in light of the circumstances under which
they were made, not misleading;
(ii) copies, certified to be true copies by an Authorized Officer
of the Owner Trustee, of (i) the resolutions of the board of directors
of the Owner Trustee authorizing the execution, delivery and
performance by the Owner Trustee of this Agreement and each other
Transaction Document to which the Owner Trustee is a party and all
transactions and documents contemplated hereby and thereby, and of all
other documents evidencing any other necessary action of the Owner
Trustee (which certification shall state that such resolutions have
not been modified, are in full force and
46
effect and constitute the only resolutions adopted by the Owner
Trustee's board of directors or any committee thereof with respect
thereto and (ii) the Certificate of Trust, certified by the Secretary
of State or other appropriate official of the State of Delaware;
(iii) with respect to each Class GP Certificateholder, copies,
certified to be true copies by an Authorized Officer of such Class GP
Certificateholder, of (i) the resolutions of the board of directors
of such Class GP Certificateholder authorizing the execution, delivery
and performance of this Agreement and each other Transaction Document
to which such Class GP Certificateholder is a party and all other
transactions and documents evidencing any other necessary action of
such Class GP Certificateholder (which certification shall state that
such resolutions have not been modified, are in full force and effect
and constitute the only resolutions adopted by such Class GP
Certificateholder's board of directors or any committee thereof with
respect thereto), (ii) the corporate charter, as amended, of such
Class GP Certificateholder and (iii) the by-laws, as amended, of such
Class GP Certificateholder.
(iv) copies, certified to be true copies by an Authorized Officer
of the Seller, of (i) the resolutions of the board of directors of the
Seller authorizing the execution, delivery and performance of this
Agreement and each other Transaction Document to which the Seller is a
party and all transactions and documents contemplated hereby and
thereby, and of all other documents evidencing any other necessary
action of the Seller (which certification shall state that such
resolutions have not been modified, are in full force and effect and
constitute the only resolutions adopted by the Seller's board of
directors or any committee thereof with respect thereto), (ii) the
corporate charter of the Seller and (iii) the by-laws, as amended, of
the Seller;
(v) copies, certified to be true copies by an Authorized Officer
of OFL, of (i) the resolutions of the board of directors of OFL
authorizing the execution, delivery and performance of this Agreement
and each other Transaction Document to which OFL is a party and all
other transactions and documents contemplated hereby and thereby, and
of all documents evidencing any other necessary action of OFL (which
certification shall state that such resolutions have not been
modified, are in full force and effect and constitute the only
resolutions adopted by OFL's board of directors or any committee
thereof with respect thereto), (ii) the corporate charter of OFL
and (iii) the by-laws, as amended, of OFL;
(vi) a certificate of an Authorized Officer of the Owner Trustee
stating that (i) all consents, licenses and approvals necessary for
the Owner Trustee to execute, deliver and perform this Agreement, the
other Transaction Documents to which the Owner Trustee is a party and
all other documents and instruments on the part of the Owner Trustee
to be delivered pursuant hereto or thereto have been obtained, and
(ii) all such consents, licenses and approvals are in full force and
effect, the Owner Trustee has not received any notice of any
proceeding for the revocation of any such license, charter, permit or
approval, and, to the Owner Trustee's knowledge, there is no
threatened action or proceeding or any basis therefor;
47
(vii) with respect to each Class GP Certificateholder, a
certificate of an Authorized Officer of such Class GP Certificateholder
stating that (i) all consents, licenses and approvals necessary for such
Class GP Certificateholder to execute, deliver and perform this Agreement,
the other Transaction Documents to which such Class GP Certificateholder is
a party and all other documents and instruments on the part of such Class
GP Certificateholder to be delivered pursuant hereto or thereto have been
obtained, and (ii) all such consents, licenses and approvals are in full
force and effect, such Class GP Certificateholder has not received any
notice of any proceeding for the revocation of any such license, charter,
permit or approval, and, to such Class GP Certificateholder's knowledge,
there is no threatened action or proceeding or any basis therefor;
(viii) a certificate of an Authorized Officer of the Seller stating
that (i) all consents, licenses and approvals necessary for the Seller to
execute, deliver and perform this Agreement, the other Transaction
Documents to which the Seller is a party and all other documents and
instruments on the part of the Seller to be delivered pursuant hereto or
thereto have been obtained, and (ii) all such consents, licenses and
approvals are in full force and effect, the Seller has not received any
notice of any proceeding for the revocation of any such license, charter,
permit or approval, and, to the Seller's knowledge, there is no threatened
action or proceeding or any basis therefor;
(ix) a certificate of an Authorized Officer of OFL stating that
(i) all consents, licenses and approvals necessary for OFL to execute,
deliver and perform this Agreement, the other Transaction Documents to
which OFL is a party and all other documents and instruments on the part of
OFL to be delivered pursuant hereto or thereto have been obtained, and
(ii) all such consents, licenses and approvals are in full force and
effect, OFL has not received any notice of any proceeding for the
revocation of any such license, charter, permit or approval, and, to OFL'S
knowledge, there is no threatened action or proceeding or any basis
therefor;
(x) a certificate of an Authorized Officer of the Owner Trustee
certifying (i) the names and true signatures of the officers of the Owner
Trustee executing and delivering this Agreement, the other Transaction
Documents to which the Owner Trustee is a party and the other documents to
be executed and delivered by the Owner Trustee hereunder and thereunder,
(ii) that approval by the Owner Trustee's equity holders of the execution
and delivery of this Agreement, the other Transaction Documents and all
other such documents to be executed and delivered, by the Owner Trustee
hereunder, has been obtained or is not required, and (iii) that no action
for the dissolution of the Owner Trustee has been adopted or contemplated
and that no such proceedings have been commenced or are contemplated;
(xi) with respect to each Class GP Certificateholder, a
certificate of an Authorized Officer of such Class GP Certificateholder
certifying (i) the names and true signatures of the officers of such Class
GP Certificateholder executing and delivering this Agreement, the other
Transaction Documents to which such Class GP Certificateholder is party and
the other documents to be executed and delivered by such Class GP
Certificateholder hereunder and thereunder, (ii) that approval of such
Class GP
48
Certificateholder stockholders of the execution and delivery of
this Agreement, the other Transaction Documents and all other such
documents to be executed and delivered, by such Class GP Certificateholder
hereunder, has been obtained or is not required, and (iii) that no
resolution for the dissolution of such Class GP Certificateholder has been
adopted or contemplated and that no such proceedings have been commenced or
are contemplated;
(xii) a certificate of an Authorized Officer of the Seller
certifying (i) the names and true signatures of the officers of the Seller
executing and delivering this Agreement, the other Transaction Documents to
which the Seller is a party and the other documents to be executed and
delivered by the Seller hereunder and thereunder, (ii) that approval by the
Seller's stockholder of the execution and delivery of this Agreement, the
other Transaction Documents and all other such documents to be executed and
delivered, by the Seller hereunder, has been obtained or is not required,
and (iii) that no resolution for the dissolution of the Seller has been
adopted or contemplated and that no such proceedings have been commenced or
are contemplated;
(xiii) a certificate of an Authorized Officer of OFL certifying (i)
the names and true signatures of the officers of OFL executing and
delivering this Agreement, the other Transaction Documents to which OFL is
a party and the other documents to be executed and delivered by OFL
hereunder and thereunder, (ii) that approval by OFL's stockholders of the
execution and delivery of this Agreement, the other Transaction Documents
and all other such documents to be executed and delivered, by OFL
hereunder, has been obtained or is not required, and (iii) that no
resolution for the dissolution of OFL has been adopted or contemplated and
that no such proceedings have been commenced or are contemplated;
(xiv) a certificate of an Authorized Officer of the Trust to the
effect that (x) the representations and warranties of the Trust set forth
or incorporated by reference in this Agreement are true and correct on and
as of the Closing Date and (y) confirming that the conditions precedent set
forth herein with respect to the Trust are satisfied;
(xv) with respect to each Class GP Certificateholder, a
certificate of an Authorized Officer of such Class GP Certificateholder to
the effect that (x) the representations and warranties of such Class GP
Certificateholder set forth or incorporated by reference in this Agreement
are true and correct on and as of the Closing Date, and (y) confirming that
the conditions precedent set forth herein with respect to such Class GP
Certificateholder are satisfied;
(xvi) a certificate of an Authorized Officer of the Seller to the
effect that (x) the representations and warranties of the Seller set forth
or incorporated by reference in this Agreement are true and correct on and
as of the Closing Date and (y) confirming that the conditions precedent set
forth herein with respect to the Seller are satisfied;
(xvii) a certificate of an Authorized Officer of OFL to the effect
that (x) the representations and warranties of OFL set forth or
incorporated by reference in this
49
Agreement are true and correct on and as of the Closing Date, and (y)
confirming that the conditions precedent set forth herein with respect to
OFL are satisfied;
(xviii) favorable opinions of counsel and special Texas counsel to
the Seller and OFL in form and substance satisfactory to Financial Security
and its counsel;
(xix) a favorable opinion of counsel to each of the Trust, the
Class GP Certificateholders, the Owner Trustee, the Indenture Trustee and
the Collateral Agent and the Indenture Collateral Agent, in form and
substance satisfactory to Financial Security and its counsel;
(xx) evidence that amounts due and payable Financial Security
under Section 3.02 of this Agreement have been paid or that acceptable
provisions therefor have been made;
(xxi) a fully executed copy of each of the Transaction Documents;
(xxii) evidence that all actions necessary or, in the opinion of
Financial Security, desirable to perfect and protect the interests
transferred by the Sale and Servicing Agreement, the liens and security
interests created with respect to the Spread Account, the Liens and
security interest created in favor of the Indenture Collateral Agent with
respect to the Indenture Property pursuant to the Indenture, including,
without limitation, the filing of any financing statements required by
Financial Security or its counsel, have been taken;
(xxiii) a certificate or opinion of Independent Accountants
addressed to Financial Security in form and substance satisfactory to
Financial Security;
(xxiv) evidence that the Seller shall have deposited, or caused to
have been deposited, the deposits required under the Sale and Servicing
Agreement and the Spread Account Agreement, and any other deposits required
to be made on the Closing Date under the Transaction Documents to which the
Seller is a party; and
(xxv) such other documents, instruments, approvals (and, if
requested by Financial Security, certified duplicates of executed copies
thereof) or opinions as Financial Security may reasonably request.
(c) ISSUANCE OF RATINGS. Financial Security shall have received
confirmation that the risk secured by the Policies constitutes an investment
grade risk by Standard and Poor's Corporation ("S&P") and an insurable risk by
Xxxxx'x Investors Service, Inc. ("Xxxxx'x") and that the Class A-1 Notes, when
issued, will be rated "A-1+" by S&P and "P-1" by Moody's, and that the Class A-2
Notes, the Class A-3 Notes, the Class A-4 Notes, the Class A-5 Notes and the
Certificates, when issued, will be rated "AAA" by S&P and "Aaa" by Moody's.
50
(d) DELIVERY OF DOCUMENTS. Financial Security shall have received
evidence satisfactory to it that delivery has been made to the Trust or to a
Custodian of the Receivable Files required to be so delivered pursuant to
Section 2.2 of the Sale and Servicing Agreement.
(e) NO DEFAULT. No Default or Event of Default shall have occurred
and be continuing.
(f) NO LITIGATION, ETC. No suit, action or other proceeding,
investigation, or injunction or final judgment relating thereto, shall be
pending or threatened before any court or governmental agency in which it is
sought to restrain or prohibit or to obtain damages or other relief in
connection with any of the Transaction Documents or the consummation of the
Transaction.
(g) LEGALITY. No statute, rule, regulation or order shall have been
enacted, entered or deemed applicable by any government or governmental or
administrative agency or court which would make the transactions contemplated by
any of the Transaction Documents illegal or otherwise prevent the consummation
thereof.
(h) SATISFACTION OF CONDITIONS OF UNDERWRITING AGREEMENT. All
conditions in the Underwriting Agreement to the Underwriter's obligation to
purchase the Notes and Certificates (other than the issuance of the Policies)
shall have been concurrently satisfied.
Section 3.02. PAYMENT OF FEES AND PREMIUM.
(a) LEGAL FEES. On the Closing Date, OFL shall pay or cause to be
paid legal fees and disbursements incurred by Financial Security in connection
with the issuance of the Policies up to an amount not to exceed $20,000.00, plus
disbursements.
(b) RATING AGENCY FEES. The initial fees of S&P and Moody's with
respect to the Notes and Certificates and the Transaction shall be paid by OFL
in full on the Closing Date. All periodic and subsequent fees of S&P or Moody's
with respect to, and directly allocable to, the Notes and Certificates shall be
for the account of, shall be billed to, and shall be paid by OFL. The fees for
any other rating agency shall be paid by the party requesting such other
agency's rating, unless such other agency is a substitute for S&P or Moody's in
the event that S&P or Xxxxx'x is no longer rating the Notes or Certificates, in
which case the cost for such agency shall be paid by OFL.
(c) AUDITORS' FEES. In the event that Financial Security's auditors
are required to provide information or any consent in connection with the
Registration Statement fees therefor shall be paid by OFL. Any additional fees
incurred by Financial Security after the Closing Date in respect of any
additional consents shall be paid by OFL on demand.
(d) PREMIUM. In consideration of the issuance by Financial Security
of the Policies, OFL shall pay Financial Security the Premium and Premium
Supplement, if any, as and when due in accordance with the terms of the Premium
Letter. The Premium and Premium Supplement, if any, paid hereunder or under the
Sale and Servicing Agreement shall be
51
nonrefundable without regard to whether Financial Security makes any payment
under the Policies or any other circumstances relating to the Notes or the
Certificates or provision being made for payment of the Notes or the
Certificates prior to maturity. Although the Premium is fully earned by
Financial Security as of the Closing Date, the Premium shall be payable in
periodic installments as provided in the Premium Letter. Anything herein or
in any of the Transaction Documents notwithstanding, upon the occurrence of
an Event of Default, the entire outstanding balance of further installments
of the Premium and Premium Supplement shall be immediately due and payable.
All payments of Premium and Premium Supplement, if any, shall be made by wire
transfer to an account designated from time to time by Financial Security by
written notice to the Seller and OFL.
Section 3.03. REIMBURSEMENT AND ADDITIONAL PAYMENT OBLIGATION. Each
of OFL and the Trust agrees to pay to Financial Security as follows:
(a) a sum equal to the total of all amounts paid by Financial
Security under the Policies;
(b) any and all charges, fees, costs and expenses which Financial
Security may reasonably pay or incur, including, but not limited to, attorneys'
and accountants' fees and expenses, in connection with (i) any accounts
established to facilitate payments under the Policies to the extent Financial
Security has not been immediately reimbursed on the date that any amount is paid
by Financial Security under the Policies, (ii) the administration, enforcement,
defense or preservation of any rights in respect of any of the Transaction
Documents, including defending, monitoring or participating in any litigation,
proceeding (including any insolvency or bankruptcy proceeding in respect of any
Transaction participant or any Affiliate thereof), restructuring or engaging in
any protective measures or monitoring activities relating to any of the
Transaction Documents, any party to any of the Transaction Documents or the
Transaction, (iii) the foreclosure against, sale or other disposition of any
collateral securing any obligations under any of the Transaction Documents or
otherwise in the discretion of Financial Security, or pursuit of any other
remedies under any of the Transaction Documents, to the extent such costs and
expenses are not recovered from such foreclosure, sale or other disposition
(iv) any amendment, waiver or other action with respect to, or related to, any
Transaction Document whether or not executed or completed, (v) preparation of
bound volumes of the Transaction Documents, (vi) any review or investigation
made by Financial Security in those circumstances where its approval or consent
is sought under any of the Transaction Documents; (vii) any federal, state or
local tax (other than taxes payable in respect of the gross income of Financial
Security) or other governmental charge imposed in connection with the issuance
of the Policies; and (viii) Financial Security reserves the right to charge a
reasonable fee as a condition to executing any amendment, waiver or consent
proposed in respect of any of the Transaction Documents (for the purpose of this
paragraph (b), costs and expenses shall include a reasonable allocation of
compensation and overhead attributable to time of employees of Financial
Security spent in connection with the actions described in the foregoing clauses
(ii) and (iii));
(c) interest on any and all amounts described in this Section 3.03
from the date payable to or paid by Financial Security until payment thereof in
full, and interest on any and
52
all amounts described in Section 3.02, in each case payable to Financial
Security at the Late Payment Rate per annum; and
(d) any payments made by Financial Security on behalf of, or advanced
to, the Seller, OFL, the Indenture Trustee, the Owner Trustee or the Trust
including, without limitation, any amounts payable by OFL in its capacity as
Servicer or by the Trust, in respect of the Notes or the Certificates and any
other amounts owed pursuant to any Transaction Documents; and any payments made
by Financial Security as, or in lieu of, any servicing, administration,
management, trustee, custodial, collateral agency or administrative fees
payable, in the sole discretion of Financial Security to third parties in
connection with the Transaction.
All such amounts are to be immediately due and payable without demand.
Financial Security shall notify OFL of amounts due hereunder.
Section 3.04. CERTAIN OBLIGATIONS NOT RECOURSE TO OFL; RECOURSE TO
TRUST PROPERTY.
(a) Notwithstanding any provision of Section 3.03 to the contrary,
the payment obligations provided in Section 3.03(a), b(iii) and (d) (to the
extent of advances to the Trust in respect of distributions on the Certificates
or to the Indenture Trustee in respect of payments on the Notes), in each case,
to the extent that such payment obligations do not arise from any failure or
default in the performance by OFL or the Seller of any of its obligations under
the Transaction Documents, and any interest on the foregoing in accordance with
Section 3.03(c), shall not be recourse to OFL, but shall be payable in the
manner and in accordance with priorities provided in the Sale and Servicing
Agreement.
(b) Financial Security covenants and agrees that it shall not be
entitled to any payment from the Trust Property with respect to amounts owed
under this Agreement other than as set forth in Section 4.6 and Section 9.1 of
the Sale and Servicing Agreement and Section 5.06 of the Indenture.
Section 3.05. INDEMNIFICATION.
(a) INDEMNIFICATION BY OFL. In addition to any and all rights of
reimbursement, indemnification, subrogation and any other rights pursuant hereto
or under law or in equity, OFL agrees to pay, and to protect, indemnify and save
harmless, Financial Security and its officers, directors, shareholders,
employees, agents and each Person, if any, who controls Financial Security
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act from and against any and all claims, losses, liabilities
(including penalties), actions, suits, judgments, demands, damages, costs or
expenses (including, without limitation, fees and expenses of attorneys,
consultants and auditors and reasonable costs of investigations) of any nature
arising out of or relating to the Transaction by reason of:
(i) any statement, omission or action (other than of or by
Financial Security) in connection with the offering, issuance, sale or
delivery of the Notes or the Certificates;
53
(ii) the negligence, bad faith, willful misconduct, misfeasance,
malfeasance or theft committed by any director, officer, employee or agent
of the Trust, either Class GP Certificateholder, the Seller or OFL in
connection with the Transaction;
(iii) the violation by the Trust, either Class GP
Certificateholder, the Seller or OFL of any federal, state or foreign law,
rule or regulation, or any judgment, order or decree applicable to it;
(iv) the breach by the Trust, either Class GP Certificateholder,
the Seller or OFL of any representation, warranty or covenant under any of
the Transaction Documents or the occurrence, in respect of the Trust,
either Class GP Certificateholder, the Seller or OFL, under any of the
Transaction Documents of any event of default or any event which, with the
giving of notice or the lapse of time or both, would constitute any event
of default; or
(v) any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statements or the Prospectus or
in any amendment or supplement thereto or any omission or alleged omission
to state therein a material fact required to be stated therein or necessary
to make the statements therein not misleading, except insofar as such
claims arise out of or are based upon any untrue statement or omission
(A) included in the Registration Statements or the Prospectus and furnished
by Financial Security in writing expressly for use therein (all such
information so furnished being referred to herein as "Financial Security
Information"), it being understood that the Financial Security Information
is limited to the information included under the caption "Financial
Security Assurance Inc.," and the financial statements of Financial
Security included in the Registration Statements or the Prospectus or (B)
included in the information set forth under the caption "Underwriting" in
the Prospectus.
(b) CONDUCT OF ACTIONS OR PROCEEDINGS. If any action or proceeding
(including any governmental investigation) shall be brought or asserted against
Financial Security, any officer, director, shareholder, employee or agent of
Financial Security or any Person controlling Financial Security (individually,
an "Indemnified Party" and, collectively, the "Indemnified Parties") in respect
of which indemnity may be sought from OFL hereunder, Financial Security shall
promptly notify OFL in writing, and OFL shall assume the defense thereof,
including the employment of counsel satisfactory to Financial Security and the
payment of all expenses. The Indemnified Party shall have the right to employ
separate counsel in any such action and to participate in the defense thereof at
the expense of the Indemnified Party; PROVIDED, HOWEVER, that the fees and
expenses of such separate counsel shall be at the expense of OFL if (i) OFL has
agreed to pay such fees and expenses, (ii) OFL shall have failed to assume the
defense of such action or proceeding and employ counsel satisfactory to
Financial Security in any such action or proceeding or (iii) the named parties
to any such action or proceeding (including any impleaded parties) include both
the Indemnified Party and the Trust, the Class GP Certificateholders, the Seller
or OFL, and the Indemnified Party shall have been advised by counsel that there
may be one or more legal defenses available to it which are different from or
additional to those available to the Trust, either Class GP Certificateholder,
the Seller or OFL (in which case, if the Indemnified Party notifies OFL in
writing that it elects to employ separate
54
counsel at the expense of OFL, OFL shall not have the right to assume the
defense of such action or proceeding on behalf of such Indemnified Party, it
being understood, however, that OFL shall not, in connection with any one
such action or proceeding or separate but substantially similar or related
actions or proceedings in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys at any time for the
Indemnified Parties, which firm shall be designated in writing by Financial
Security). OFL shall not be liable for any settlement of any such action or
proceeding effected without its written consent to the extent that any such
settlement shall be prejudicial to it, but, if settled with its written
consent, or if there be a final judgment for the plaintiff in any such action
or proceeding with respect to which OFL shall have received notice in
accordance with this subsection (c) OFL agrees to indemnify and hold the
Indemnified Parties harmless from and against any loss or liability by reason
of such settlement or judgment.
(c) CONTRIBUTION. To provide for just and equitable contribution if
the indemnification provided by OFL is determined to be unavailable for any
Indemnified Party (other than due to application of this Section), OFL shall
contribute to the losses incurred by the Indemnified Party on the basis of the
relative fault of OFL, on the one hand, and the Indemnified Party, on the other
hand.
Section 3.06. PAYMENT PROCEDURE. In the event of the incurrence by
Financial Security of any cost or expense or any payment by Financial Security
for which it is entitled to be reimbursed or indemnified as provided above OFL
agrees to accept the voucher or other evidence of payment as prima facie
evidence of the propriety thereof and the liability therefor to Financial
Security. All payments to be made to Financial Security under this Agreement
shall be made to Financial Security in lawful currency of the United States of
America in immediately available funds to the account number provided in the
Premium Letter before 1:00 p.m. (New York, New York time) on the date when due
or as Financial Security shall otherwise direct by written notice to OFL. In
the event that the date of any payment to Financial Security or the expiration
of any time period hereunder occurs on a day which is not a Business Day, then
such payment or expiration of time period shall be made or occur on the next
succeeding Business Day with the same force and effect as if such payment was
made or time period expired on the scheduled date of payment or expiration date.
Payments to be made to Financial Security under this Agreement shall bear
interest at the Late Payment Rate from the date when due to the date paid.
Section 3.07. SUBROGATION. Subject only to the priority of payment
provisions of the Sale and Servicing Agreement, each of the Trust, the Indenture
Trustee, the Seller and OFL acknowledges that, to the extent of any payment made
by Financial Security pursuant to the Policies, Financial Security is to be
fully subrogated to the extent of such payment and any additional interest due
on any late payment, to the rights of the Noteholders and the Certificateholders
to any moneys paid or payable in respect of the Notes or the Certificates
respectively under the Transaction Documents or otherwise. Each of the Trust,
the Indenture Trustee, the Seller and OFL agrees to such subrogation and,
further, agrees to execute such instruments and to take such actions as, in the
sole judgment of Financial Security, are necessary to evidence such subrogation
and to perfect the rights of Financial Security to receive any such
55
moneys paid or payable in respect of the Notes or the Certificates under the
Transaction Documents or otherwise.
ARTICLE IV
FURTHER AGREEMENTS; MISCELLANEOUS
Section 4.01. EFFECTIVE DATE; TERM OF AGREEMENT. This Agreement
shall take effect on the Closing Date and shall remain in effect until the later
of (a) such time as Financial Security is no longer subject to a claim under the
Policies and the Policies shall have been surrendered to Financial Security for
cancellation and (b) all amounts payable to Financial Security, the Noteholders,
and the Certificateholders under the Transaction Documents and under the Notes
and the Certificates have been paid in full; PROVIDED, HOWEVER, that the
provisions of Sections 3.02, 3.03, 3.04, 3.05, 3.06 and 4.03 hereof shall
survive any termination of this Agreement.
Section 4.02. FURTHER ASSURANCES AND CORRECTIVE INSTRUMENTS. To the
extent permitted by law, each of the Trust, each Class GP Certificateholder, the
Seller and OFL agree that it will, from time to time, execute, acknowledge and
deliver, or cause to be executed, acknowledged and delivered, such supplements
hereto and such further instruments as Financial Security may request and as may
be required in Financial Security's judgment to effectuate the intention of or
facilitate the performance of this Agreement.
Section 4.03. OBLIGATIONS ABSOLUTE.
(a) The obligations of the Trust, each Class GP Certificateholder,
the Seller and OFL hereunder shall be absolute and unconditional, and shall be
paid or performed strictly in accordance with this Agreement under all
circumstances irrespective of:
(i) any lack of validity or enforceability of, or any amendment
or other modifications of, or waiver with respect to any of the Transaction
Documents, the Notes, the Certificates or the Policies; PROVIDED, that
Financial Security shall not have consented to any such amendment,
modification or waiver;
(ii) any exchange or release of any other obligations hereunder;
(iii) the existence of any claim, setoff, defense, reduction,
abatement or other right which the Trust, either Class GP
Certificateholder, the Seller or OFL may have at any time against Financial
Security or any other Person;
(iv) any document presented in connection with the Policies
proving to be forged, fraudulent, invalid or insufficient in any respect or
any statement therein being untrue or inaccurate in any respect;
56
(v) any payment by Financial Security under the Policies against
presentation of a certificate or other document which does not strictly
comply with terms of the Policies;
(vi) any failure of the Seller or the Trust to receive the
proceeds from the Sale of the Notes to receive the proceeds from the sale
of the Certificates;
(vii) any breach by the Trust, the Class GP Certificateholders,
the Seller or OFL of any representation, warranty or covenant contained in
any of the Transaction Documents; or
(viii) any other circumstances, other than payment in full, which
might otherwise constitute a defense available to, or discharge of, the
Trust, either Class GP Certificateholder, the Seller or OFL in respect of
any Transaction Document.
(b) The Trust, each Class GP Certificateholder, the Seller and OFL
and any and all others who are now or may become liable for all or part of the
obligations of any of them under this Agreement agree to be bound by this
Agreement and (i) to the extent permitted by law, waive and renounce any and all
redemption and exemption rights and the benefit of all valuation and
appraisement privileges against the indebtedness and obligations evidenced by
any Transaction Document or by any extension or renewal thereof; (ii) waive
presentment and demand for payment, notices of nonpayment and of dishonor,
protest of dishonor and notice of protest; (iii) waive all notices in connection
with the delivery and acceptance hereof and all other notices in connection with
the performance, default or enforcement of any payment hereunder except as
required by the Transaction Documents other than this Agreement; (iv) waive all
rights of abatement, diminution, postponement or deduction, or to any defense
other than payment, or to any right of setoff or recoupment arising out of any
breach under any of the Transaction Documents, by any party thereto or any
beneficiary thereof, or out of any obligation at any time owing to the Trust,
either Class GP Certificateholder, the Seller or OFL; (v) agree that its
liabilities hereunder shall, except as otherwise expressly provided in this
Section 4.03, be unconditional and without regard to any setoff, counterclaim or
the liability of any other Person for the payment hereof; (vi) agree that any
consent, waiver or forbearance hereunder with respect to an event shall operate
only for such event and not for any subsequent event; (vii) consent to any and
all extensions of time that may be granted by Financial Security with respect to
any payment hereunder or other provisions hereof and to the release of any
security at any time given for any payment hereunder, or any part thereof, with
or without substitution, and to the release of any Person or entity liable for
any such payment; and (viii) consent to the addition of any and all other
makers, endorsers, guarantors and other obligors for any payment hereunder, and
to the acceptance of any and all other security for any payment hereunder, and
agree that the addition of any such obligors or security shall not affect the
liability of the parties hereto for any payment hereunder.
(c) Nothing herein shall be construed as prohibiting the Trust,
either Class GP Certificateholder, Seller or OFL from pursuing any rights or
remedies it may have against any other Person in a separate legal proceeding.
57
Section 4.04. ASSIGNMENTS; REINSURANCE; THIRD-PARTY RIGHTS.
(a) This Agreement shall be a continuing obligation of the parties
hereto and shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns. Neither the Trust, First
Class GP Certificateholder, Second Class GP Certificateholder, the Seller nor
OFL may assign its rights under this Agreement, or delegate any of its duties
hereunder, without the prior written consent of Financial Security. Any
assignment made in violation of this Agreement shall be null and void.
(b) Financial Security shall have the right to give participations in
its rights under this Agreement and to enter into contracts of reinsurance with
respect to the Policies upon such terms and conditions as Financial Security may
in its discretion determine; PROVIDED, HOWEVER, that no such participation or
reinsurance agreement or arrangement shall relieve Financial Security of any of
its obligations hereunder or under the Policies.
(c) In addition, Financial Security shall be entitled to assign or
pledge to any bank or other lender providing liquidity or credit with respect to
the Transaction or the obligations of Financial Security in connection therewith
any rights of Financial Security under the Transaction Documents or with respect
to any real or personal property or other interests pledged to Financial
Security, or in which Financial Security has a security interest, in connection
with the Transaction.
(d) Except as provided herein with respect to participants and
reinsurers, nothing in this Agreement shall confer any right, remedy or claim,
express or implied, upon any Person, including, particularly, any Noteholder or
Certificateholder (except to the extent provided herein and without limitation
of their rights to receive payments with respect to the Trust Property,
including without limitation payments under the respective Policies), other than
Financial Security, against the Trust, either Class GP Certificateholder, the
Seller, OFL or the Servicer, and all the terms, covenants, conditions, promises
and agreements contained herein shall be for the sole and exclusive benefit of
the parties hereto and their successors and permitted assigns. Neither the
Trustee, the Owner Trustee nor any Noteholder or Certificateholder shall have
any right to payment from any premiums paid or payable hereunder or from any
other amounts paid by the Seller or OFL pursuant to Section 3.02, 3.03 or 3.04
hereof (without limitation to the rights of the Noteholders and the
Certificateholders to receive payments with respect to the Trust Property, as
provided in the Indenture and the Trust Agreement).
Section 4.05. LIABILITY OF FINANCIAL SECURITY. Neither Financial
Security nor any of its officers, directors or employees shall be liable or
responsible for: (a) the use which may be made of the Policies by the Owner
Trustee or the Indenture Trustee or for any acts or omissions of the Owner
Trustee or the Indenture Trustee in connection therewith; or (b) the validity,
sufficiency, accuracy or genuineness of documents delivered to Financial
Security (or its Fiscal Agent) in connection with any claim under the Policies,
or of any signatures thereon, even if such documents or signatures should in
fact prove to be in any or all respects invalid, insufficient, fraudulent or
forged (unless Financial Security shall have actual knowledge thereof). In
furtherance and not in limitation of the foregoing, Financial Security (or its
Fiscal Agent) may
58
accept documents that appear on their face to be in order, without
responsibility for further investigation.
ARTICLE V
EVENTS OF DEFAULT; REMEDIES
Section 5.01. EVENTS OF DEFAULT. The occurrence of any of the
following events shall constitute an Event of Default hereunder:
(a) any demand for payment shall be made under either of the
Policies;
(b) any representation or warranty made by the Trust, either of the
Class GP Certificateholders, the Seller, OFL or the Servicer under any of the
Related Documents, or in any certificate or report furnished under any of the
Related Documents, shall prove to be untrue or incorrect in any material
respect;
(c) (i) the Trust, either Class GP Certificateholder, the Seller, OFL
or the Servicer shall fail to pay when due any amount payable by the Seller, OFL
or the Servicer under any of the Related Documents (other than payments of
principal and interest on the Notes and the Certificates); (ii) the Trust,
either Class GP Certificateholder, the Seller, OFL or the Servicer shall have
asserted that any of the Transaction Documents to which it is a party is not
valid and binding on the parties thereto; or (iii) any court, governmental
authority or agency having jurisdiction over any of the parties to any of the
Transaction Documents or property thereof shall find or rule that any material
provision of any of the Transaction Documents is not valid and binding on the
parties thereto.
(d) the Trust, either Class GP Certificateholder, the Seller, OFL or
the Servicer shall fail to perform or observe any other covenant or agreement
contained in any of the Related Documents (except for the obligations described
under clause (b) or (c) above) and such failure shall continue for a period of
30 days after written notice given to the Trust, either Class GP
Certificateholder, the Seller, OFL or the Servicer (as applicable); PROVIDED
that, if such failure shall be of a nature that it cannot be cured within 30
days, such failure shall not constitute an Event of Default hereunder if within
such 30-day period such party shall have given notice to Financial Security of
corrective action it proposes to take, which corrective action is agreed in
writing by Financial Security to be satisfactory and such party shall thereafter
pursue such corrective action diligently until such default is cured;
(e) there shall have occurred an "Event of Default" as specified in
Section 6.01(i) or 6.01(ii) of the Senior Note Indenture or the unpaid principal
amount of, premium, if any, and accrued and unpaid interest on the Securities
(as defined in the Senior Note Indenture) shall have, upon the declaration of
the holders of the Securities, as specified in Section 6.02 of the Senior Note
Indenture, become immediately due and payable;
(f) the Trust shall adopt a voluntary plan of liquidation or shall
fail to pay its debts generally as they come due, or shall admit in writing its
inability to pay its debts
59
generally, or shall make a general assignment for the benefit of creditors,
or shall institute any proceeding seeking to adjudicate the Trust insolvent
or seeking a liquidation, or shall take advantage of any insolvency act, or
shall commence a case or other proceeding naming the Trust as debtor under
the United States Bankruptcy Code or similar law, domestic or foreign, or a
case or other proceeding shall be commenced against the Trust under the
United States Bankruptcy Code or similar law, domestic or foreign, or any
proceeding shall be instituted against the Trust seeking liquidation of its
assets and the Trust shall fail to take appropriate action resulting in the
withdrawal or dismissal of such proceeding within 30 days or there shall be
appointed or the Trust consent to, or acquiesce in, the appointment of a
receiver, liquidator, conservator, trustee or similar official in respect of
the Trust or the whole or any substantial part of its properties or assets,
or the Trust shall take any corporate action in furtherance of any of the
foregoing or the Trust terminates pursuant to Section 9.1 of the Trust
Agreement;
(g) the Trust becomes taxable as an association (or publicly traded
partnership) taxable as a corporation for federal or state income tax purposes;
(h) on any Distribution Date, the sum of Available Funds with respect
to such Distribution Date and the amounts available in the Series 1997-A Spread
Account (prior to any deposits into such Spread Account from Spread Accounts
related to any other Series) and the amount that may be withdrawn from the
Reserve Account pursuant to Section 5.1 of the Sale and Servicing Agreement is
less than the sum of the amounts payable on such Distribution Date pursuant to
clauses (i) through (viii) of Section 4.6 of the Sale and Servicing Agreement;
(i) any default in the observance or performance of any covenant or
agreement of the Trust made in the Indenture (other than a default in the
payment of the interest or principal on any Note when due) or any representation
or warranty of the Trust made in the Indenture or in any certificate or other
writing delivered pursuant thereto or in connection therewith proving to have
been incorrect in any material respect as of the time when the same shall have
been made, and such default shall continue or not be cured, or the circumstance
or condition in respect of which such misrepresentation or warranty was
incorrect shall not have been eliminated or otherwise cured, for a period of 30
days after there shall have been given, by registered or certified mail, to the
Trust and the Indenture Trustee by Financial Security, a written notice
specifying such default or incorrect representation or warranty and requiring it
to be remedied;
(j) the Average Delinquency Ratio with respect to any Determination
Date shall have been equal to or greater than 7.66%.
(k) with respect to any Determination Date, the Cumulative Default
Rate shall be equal to or greater than the percentage set forth in Column A of
Schedule I attached hereto corresponding to such Determination Date;
(l) with respect to any Determination Date, the Cumulative Net Loss
Rate shall be equal to or greater than the percentage set forth in Column B of
Schedule I attached hereto corresponding to such Determination Date;
60
(m) the occurrence of an Event of Servicing Termination under the
Sale and Servicing Agreement; or
(n) the occurrence of an "Event of Default" under and as defined in
any Insurance and Indemnity Agreement among Financial Security, OFL, the Seller
and any other parties thereto, which "Event of Default" is not defined as a
"Portfolio Performance Event of Default" in such Insurance and Indemnity
Agreement.
Section 5.02. REMEDIES; WAIVERS.
(a) Upon the occurrence of an Event of Default, Financial Security
may exercise any one or more of the rights and remedies set forth below:
(i) declare the Premium Supplement to be immediately due and
payable, and the same shall thereupon be immediately due and payable,
whether or not Financial Security shall have declared an "Event of Default"
or shall have exercised, or be entitled to exercise, any other rights or
remedies hereunder;
(ii) exercise any rights and remedies available under the
Transaction Documents in its own capacity or in its capacity as the Person
entitled to exercise the rights of Controlling Party under the Transaction
Documents; or
(iii) take whatever action at law or in equity as may appear
necessary or desirable in its judgment to enforce performance of any
obligation of the Trust, each Class GP Certificateholder, the Seller or OFL
under the Transaction Documents; PROVIDED, HOWEVER, that Financial Security
shall not be entitled hereunder to file any petition with respect to the
Trust or the Trust Property under any bankruptcy or insolvency law.
(b) Unless otherwise expressly provided, no remedy herein conferred
upon or reserved is intended to be exclusive of any other available remedy, but
each remedy shall be cumulative and shall be in addition to other remedies given
under the Transaction Documents or existing at law or in equity. No delay or
failure to exercise any right or power accruing under any Transaction Document
upon the occurrence of any Event of Default or otherwise shall impair any such
right or power or shall be construed to be a waiver thereof, but any such right
and power may be exercised from time to time and as often as may be deemed
expedient. In order to entitle Financial Security to exercise any remedy
reserved to Financial Security in this Article, it shall not be necessary to
give any notice.
(c) If any proceeding has been commenced to enforce any right or
remedy under this Agreement, and such proceeding has been discontinued or
abandoned for any reason, or has been determined adversely to Financial
Security, then and in every such case the parties hereto shall, subject to any
determination in such proceeding, be restored to their respective former
positions hereunder, and, thereafter, all rights and remedies of Financial
Security shall continue as though no such proceeding had been instituted.
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(d) Financial Security shall have the right, to be exercised in its
complete discretion, to waive any covenant, Default or Event of Default by a
writing setting forth the terms, conditions and extent of such waiver signed by
Financial Security and delivered to the Seller and OFL. Any such waiver may
only be effected in writing duly executed by Financial Security, and no other
course of conduct shall constitute a waiver of any provision hereof. Unless
such writing expressly provides to the contrary, any waiver so granted shall
extend only to the specific event or occurrence so waived and not to any other
similar event or occurrence which occurs subsequent to the date of such waiver.
ARTICLE VI
MISCELLANEOUS
Section 6.01. AMENDMENTS, ETC. This Agreement may be amended,
modified or terminated only by written instrument or written instruments signed
by the parties hereto. No act or course of dealing shall be deemed to
constitute an amendment, modification or termination hereof.
Section 6.02. NOTICES. All demands, notices and other communications
to be given hereunder shall be in writing (except as otherwise specifically
provided herein) and shall be mailed by registered mail or overnight carrier,
personally delivered or telecopied (with confirmation by registered mail) to the
recipient as follows:
(a) To Financial Security:
Financial Security Assurance Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Surveillance Department
Confirmation: (000) 000-0000
Telecopy Nos.: (000) 000-0000
(000) 000-0000
(in each case in which notice or other communication to Financial
Security refers to an Event of Default, a claim on either Policy
or with respect to which failure on the part of Financial
Security to respond shall be deemed to constitute consent or
acceptance, then a copy of such notice or other communication
should also be sent to the attention of each of the General
Counsel and the Head--Financial Guaranty Group and shall be
marked to indicate "URGENT MATERIAL ENCLOSED.")
(b) To the Seller:
Olympic Receivables Finance Corp.
0000 Xxxxxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
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Telephone: (000) 000-0000
Telecopier: (000) 000-0000
(c) To OFL:
Olympic Financial Ltd.
0000 Xxxxxxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
(d) To First Class GP Certificateholder:
Olympic First GP Inc.
0000 Xxxxxxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
(e) To Second Class GP Certificateholder:
Olympic Second GP Inc.
0000 Xxxxxxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
(f) To the Trust:
Olympic Automobile Receivables Trust, 0000-X
x/x Xxxxxx Xxxx (XX), National Association,
as Owner Trustee
000 Xxxxx Xxxxxx Xxxxxx, Xxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxx
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with a copy to:
Mellon Bank, National Association
Two Mellon Bank Center
Room 325
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxx Xxxxxxxxx
Telephone: (000) 000-0000
63
Telecopier: (000) 000-0000
A party may specify an additional or different address or addresses by
writing mailed or delivered to the other party as aforesaid. All such notices
and other communications shall be effective upon receipt.
Section 6.03. SEVERABILITY. In the event that any provision of this
Agreement shall be held invalid or unenforceable by any court of competent
jurisdiction, the parties hereto agree that such holding shall not invalidate or
render unenforceable any other provision hereof. The parties hereto further
agree that the holding by any court of competent jurisdiction that any remedy
pursued by any party hereto is unavailable or unenforceable shall not affect in
any way the ability of such party to pursue any other remedy available to it.
Section 6.04. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
Section 6.05. CONSENT TO JURISDICTION.
(a) TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE PARTIES
THERETO HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION OF THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND ANY COURT IN THE STATE
OF NEW YORK LOCATED IN THE CITY AND COUNTY OF NEW YORK, AND ANY APPELLATE COURT
FROM ANY THEREOF, IN ANY ACTION, SUIT OR PROCEEDING BROUGHT AGAINST IT AND TO OR
IN CONNECTION WITH ANY OF THE TRANSACTION DOCUMENTS OR THE TRANSACTION OR FOR
RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND THE PARTIES HERETO HEREBY
IRREVOCABLY AND UNCONDITIONALLY AGREE THAT ALL CLAIMS IN RESPECT OF ANY SUCH
ACTION OR PROCEEDING MAY BE HEARD OR DETERMINED IN SUCH NEW YORK STATE COURT OR
IN SUCH FEDERAL COURT. THE PARTIES HERETO AGREE THAT A FINAL JUDGMENT IN ANY
SUCH ACTION, SUIT OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE PARTIES HERETO HEREBY WAIVE AND
AGREE NOT TO ASSERT BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE IN ANY SUCH
SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE
JURISDICTION OF SUCH COURTS, THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN
AN INCONVENIENT FORUM, THAT THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS
IMPROPER OR THAT THE RELATED DOCUMENTS OR THE SUBJECT MATTER THEREOF MAY NOT BE
LITIGATED IN OR BY SUCH COURTS.
(b) To the extent permitted by applicable law, the parties hereto
shall not seek and hereby waive the right to any review of the judgment of any
such court by any court of any other nation or jurisdiction which may be called
upon to grant an enforcement of such judgment.
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(c) Each of the Class GP Certificateholders, OFL and the Seller
hereby irrevocably appoints and designates CT Corporation System, whose address
is 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, as its true and lawful attorney and
duly authorized agent for acceptance of service of legal process. Each of the
Class GP Certificateholders, the Seller and OFL agrees that service of such
process upon such Person shall constitute personal service of such process upon
it.
(d) Nothing contained in the Agreement shall limit or affect
Financial Security's right to serve process in any other manner permitted by law
or to start legal proceedings relating to any of the Transaction Documents
against the Seller or OFL or its property in the courts of any jurisdiction.
Section 6.06. CONSENT OF FINANCIAL SECURITY. In the event that
Financial Security's consent is required under any of the Transaction Documents,
the determination whether to grant or withhold such consent shall be made by
Financial Security in its sole discretion without any implied duty towards any
other Person, except as otherwise expressly provided therein.
Section 6.07. COUNTERPARTS. This Agreement may be executed in
counterparts by the parties hereto, and all such counterparts shall constitute
one and the same instrument.
Section 6.08. HEADINGS. The headings of articles and sections and
the table of contents contained in this Agreement are provided for convenience
only. They form no part of this Agreement and shall not affect its construction
or interpretation. Unless otherwise indicated, all references to articles and
sections in this Agreement refer to the corresponding articles and sections of
this Agreement.
Section 6.09. TRIAL BY JURY WAIVED. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION ARISING DIRECTLY OR INDIRECTLY OUT OF, UNDER OR IN CONNECTION
WITH ANY OF THE TRANSACTION DOCUMENTS OR THE TRANSACTION. EACH PARTY HERETO (A)
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY PARTY HERETO HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT IT WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
HAS BEEN INDUCED TO ENTER INTO THE TRANSACTION DOCUMENTS TO WHICH IT IS A PARTY
BY, AMONG OTHER THINGS, THIS WAIVER.
Section 6.10. LIMITED LIABILITY. No recourse under any Transaction
Document shall be had against, and no personal liability shall attach to, any
officer, employee, director, affiliate or shareholder of any party hereto, as
such, by the enforcement of any assessment or by any legal or equitable
proceeding, by virtue of any statute or otherwise in respect of any of the
Transaction Documents, the Notes, the Certificates or the Policies, it being
expressly agreed and understood that each Transaction Document is solely a
corporate obligation of each party hereto, and that any and all personal
liability, either at common law or in equity, or by statute or constitution, of
every such officer, employee, director, affiliate or shareholder for breaches
65
by any party hereto of any obligations under any Transaction Document is
hereby expressly waived as a condition of and in consideration for the
execution and delivery of this Agreement.
Section 6.11. LIMITED LIABILITY OF MELLON BANK (DE), NATIONAL
ASSOCIATION. It is expressly understood and agreed by the parties hereto that
(a) this Agreement is executed and delivered by Mellon Bank (DE), National
Association, not individually or personally but solely as Owner Trustee on
behalf of the Trust, (b) each of the representations, undertakings and
agreements herein made on the part of the Trust is made and intended not as
personal representations, undertakings and agreements by Mellon Bank (DE),
National Association, but are made and intended for the purpose of binding only
the Trust Estate, (c) nothing herein contained shall be construed as creating
any liability on Mellon Bank (DE), National Association, individually or
personally, to perform any covenant of the Trust either expressed or implied
contained herein, all such liability, if any, being expressly waived by the
parties hereto and by any person claiming by, through or under such parties and
(d) under no circumstances shall Mellon Bank (DE), National Association be
personally liable for the payment of any indebtedness or expenses of the Trust
or be liable for the breach or failure of any obligation, representation,
warranty or covenant made or undertaken by the Trust under this Agreement.
Section 6.12. ENTIRE AGREEMENT. This Agreement and the Policies set
forth the entire agreement between the parties with respect to the subject
matter thereof, and this Agreement supersedes and replaces any agreement or
understanding that may have existed between the parties prior to the date hereof
in respect of such subject matter.
66
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Insurance and Indemnity Agreement, all as of the day and year
first above written.
FINANCIAL SECURITY ASSURANCE INC.
By:
----------------------------------------------
Authorized Officer
OLYMPIC AUTOMOBILE RECEIVABLES
TRUST, 1997-A
By: Mellon Bank (DE), National Association,
not in its individual capacity, but solely in
its capacity as Owner Trustee under the Trust
Agreement
By:
-----------------------------------------
X.X. Xxxx
Vice President
OLYMPIC FIRST GP INC.
By:
----------------------------------------------
Xxxx X. Xxxxxx
Vice President and Chief Financial Officer
OLYMPIC SECOND GP INC.
By:
----------------------------------------------
Xxxx X. Xxxxxx
Vice President and Chief Financial Officer
OLYMPIC FINANCIAL LTD.
By:
----------------------------------------------
Xxxx X. Xxxxxx
Executive Vice President and
Chief Financial Officer
OLYMPIC RECEIVABLES FINANCE CORP.
By:
----------------------------------------------
Xxxx X. Xxxxxx
Senior Vice President and
Chief Financial Officer
SCHEDULE I
Determination Date* Cumulative Default Rate Cumulative Net Loss Rate
(month) (Column A) (Column B)
0 to 3 3.74% 1.90%
3 to 6 7.17% 3.45%
6 to 9 10.07% 4.76%
9 to 12 12.48% 5.66%
12 to 15 13.64% 6.19%
15 to 18 15.21% 6.68%
18 to 21 16.63% 7.05%
21 to 24 17.68% 7.35%
24 to 27 18.63% 7.58%
27 to 30 19.44% 7.80%
30 to 33 20.06% 7.95%
33 to 36 20.52% 8.10%
36 to 39 20.94% 8.21%
39 to 42 21.18% 8.33%
42 to 45 21.41% 8.44%
45 to 48 21.60% 8.50%
48 to 51 21.71% 8.55%
51 to 54 21.81% 8.60%
54 to 57 21.85% 8.65%
57 to 60 21.89% 8.68%
60 to 63 21.92% 8.70%
63 to 66 21.94% 8.72%
66 to 69 21.96% 8.74%
69 to 72 21.99% 8.76%
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* Such Determination Date occurring after the designated calendar months
succeeding the Series 1997-A Closing Date appearing first in the column below,
and prior to or during the designated calendar months succeeding the Series
1997-A Distribution Date appearing second in the column below.
