EXECUTION COPY
SECOND AMENDMENT
TO THE
INSURANCE AND INDEMNITY AGREEMENT
THIS SECOND AMENDMENT TO THE INSURANCE AND INDEMNITY AGREEMENT dated as of
November ___, 1997 (this "AMENDMENT"), among FINANCIAL SECURITY ASSURANCE INC.
("FSA"), ARCADIA RECEIVABLES CONDUIT CORP. (the "ISSUER"), ARCADIA RECEIVABLES
FINANCE CORP. (formerly known as Olympic Receivables Finance Corp.), as Seller
(the "SELLER" or "ARFC") and, ARCADIA FINANCIAL LTD. (formerly known as Olympic
Financial Ltd.), ("AFL"). From and hereafter the date hereof references in the
Insurance and Indemnity Agreement to (i) Olympic Financial Ltd. or AFL and (ii)
Olympic Receivables Finance Corp. shall be deemed to be references to AFL and
ARFC, respectively.
WHEREAS, the parties hereto wish to amend the Insurance and Indemnity
Agreement, dated as of December 3, 1996 and amended as of August 1, 1997 (as
amended and in effect from time to time, the "INSURANCE AND INDEMNITY
AGREEMENT"), among FSA, the Issuer, the Seller and the Servicer herein;
NOW, THEREFORE, in consideration of the premises and the agreements
contained herein, the parties hereto agree as follows:
SECTION 1.
(a) AMENDMENT TO APPENDIX I. The following definition shall be deleted
in its entirety and replaced as follows:
"SECURITIES" means the Issuer's Floating Rate Variable Funding
Automobile Receivables-Backed Note issued under the Supplemental Indenture to
the Indenture, dated as of even date herewith, between the Issuer and the
Trustee, in an aggregate principal amount at any one time outstanding not
exceeding $400 million.
(b) Section 2.01(k) shall be amended to read in its entirety as follows:
(k) FINANCIAL STATEMENTS. The Financial Statements of AFL, 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 such Person 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). Since
the date of the most recent Financial
Statements with respect to such Person, there has been no material adverse
change in such financial condition or results of operations of such
Person. Except as disclosed in the Financial Statements, AFL is not
subject to any contingent liabilities or commitments that, individually or
in the aggregate, have a material possibility of causing a Material
Adverse Change in respect of AFL.
(c) Subsections (b)(i) and (b)(ii) of Section 2.02 shall be amended to
read in their respective entireties as follows:
(b) FINANCIAL STATEMENTS; ACCOUNTANTS' REPORTS; OTHER INFORMATION.
Each of AFL and ARFC shall keep or cause to be kept in reasonable detail
books and records of account of its assets and business. Each of AFL and
ARFC shall 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 AFL,
the audited balance sheets of AFL, as of the end of such fiscal year
and the audited statements of income, changes in shareholders' equity
and cash flows of AFL, 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
independent accountants (which shall be a nationally recognized firm
or otherwise acceptable to Financial Security) for AFL, and by the
certificate specified in Section 2.02(c) hereof.
(ii) QUARTERLY FINANCIAL STATEMENTS. As soon as available, and
in any event within 45 days after the close of each of the first three
quarters of each fiscal year of AFL, the unaudited balance sheets of
AFL as of the end of such quarter and the unaudited statements of
income, changes in shareholders' equity and cash flows of AFL 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 if
such certificate is required to be provided pursuant to such Section.
(d) Section 2.02(c) shall be amended to read in its entirety as follows:
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(c) COMPLIANCE CERTIFICATE. AFL shall deliver to Financial Security
concurrently with the delivery of the financial statements required
pursuant to Section 2.02(b)(i) hereof (and concurrently with the delivery
of the financial statements required pursuant to Section 2.02(b)(ii)
hereof, if a Special Event specified in clauses (a) or (d) of the
definition thereof or clause (b) or (c) of the definition thereof with
respect to AFL or ARFC has occurred), a certificate signed by its Chief
Financial Officer stating that:
(i) a review of such Person's performance under the Transaction
Documents during such period has been made under such officer's
supervision;
(ii) to the best of such officer's knowledge following reasonable
inquiry, no Special Event, Default or Event of Default has occurred
with respect to such Person, or if a Special Event, Default or Event
of Default has occurred with respect to such Person, specifying the
nature thereof and, if such Person has a right to cure any such
Default or Event of Default pursuant to Section 5.01, stating in
reasonable detail the steps, if any, being taken by such Person to
cure such Default or Event of Default or to otherwise comply with the
terms of the agreement to which such Default or Event of Default
relates; and
(iii) the attached 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 AFL 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).
(e) Section 2.05 shall be amended to read in its entirety as follows:
Section 2.05 BOOKS AND RECORDS; OTHER INFORMATION. The Issuer shall keep
or cause to be kept in reasonable detail books and records of account of its
assets and business. The Issuer shall furnish or cause to be furnished to
Financial Security promptly upon receipt thereof, copies of all reports,
statements, certifications, schedules, or other similar items delivered to or by
the Issuer pursuant to the terms of the Transaction Documents and, promptly upon
request, such other data as Financial Security may reasonably request; PROVIDED,
HOWEVER, that the Issuer shall not be required to deliver any such items if
provision by some other party to Financial Security is required under the
Transaction Documents unless such other party wrongfully fails to deliver such
item. The Issuer shall, upon the request of Financial Security, permit
Financial Security or its authorized agents (A) to inspect its books and records
as they may relate to the Securities, the Receivables, the
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obligations of the Issuer under the Transaction Documents, the Transaction;
(B) to discuss the affairs, finances and accounts of the Issuer with its
officers upon Financial Security's reasonable request; and (C) upon the
occurrence of a Special Event, to discuss the affairs, finances and accounts
of the Issuer with its independent accountants, PROVIDED that an officer of
the Issuer shall have the right to be present during such discussions. Such
inspections and discussions shall be conducted during normal business hours
and shall not unreasonably disrupt the business of such Person. The books
and records of the Issuer will be maintained at the National Servicing
Center, 00000 Xxxx 00xx Xxxxxx, Xxxx Xxxxxxx, Xxxxxxxxx, unless such Person
shall otherwise advise the parties hereto in writing.
SECTION 2. REPRESENTATIONS AND WARRANTIES. Each of FSA, the Issuer,
the Seller and the Servicer represents and warrants that as of the effective
date of this Amendment, no Event of Default has occurred under the Repurchase
Agreement, no Servicer Termination Event has occurred under the Servicing
Agreement, no Event of Default has occurred under the Insurance and Indemnity
Agreement and to the best of each of FSA, the Issuer, the Seller, and the
Service's knowledge there is no set of circumstances existing that with the
passage of time or the giving of notice, would constitute any such event.
SECTION 3. EFFECTIVENESS. The amendments provided for by this
Amendment shall become effective upon (i) the due execution and delivery of this
Amendment duly executed by each of the parties hereto, (ii) the effectiveness of
the Amendments dated the date hereof to the Servicing Agreement and the
Repurchase Agreement in form and substance satisfactory to FSA and (iii) an
opinion of counsel to Arcadia, dated the date hereof, addressed to the Agent and
the Security Insurer, covering such matters as the Agent and the Security
Insurer may reasonably request.
SECTION 4. INSURANCE AND INDEMNITY AGREEMENT IN FULL FORCE AND EFFECT
AS AMENDED. Except as specifically amended hereby, all of the terms and
conditions of the Insurance and Indemnity Agreement shall remain in full force
and effect and, except as expressly provided herein, the effectiveness of this
Amendment shall not operate as, or constitute a waiver or modification of, any
right, power or remedy of any party to the Insurance and Indemnity Agreement.
All references to the Insurance and Indemnity Agreement in any other document or
instrument shall be deemed to mean the Insurance and Indemnity Agreement as
amended by this Amendment. This Amendment shall not constitute a novation of
the Insurance and Indemnity Agreement, but shall constitute an amendment
thereof.
SECTION 5. COUNTERPARTS. This Amendment may be executed in any number
of counterparts and by separate parties hereto on separate counterparts, each of
which when executed shall be deemed an original, but all such counterparts taken
together shall constitute one and the same instrument.
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SECTION 6. GOVERNING LAW. THIS AMENDMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 7. DEFINED TERMS. Capitalized terms used herein and not
otherwise defined shall have the meaning assigned to such terms in the Insurance
and Indemnity Agreement.
IN WITNESS WHEREOF, FSA, the Issuer, the Seller and the Servicer have
caused this Amendment to the Insurance and Indemnity Agreement to be duly
executed by their respective officers as of the day and year first above
written.
FINANCIAL SECURITY ASSURANCE INC.
By:
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Name:
Title:
ARCADIA RECEIVABLES CONDUIT CORP.
By:
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Name:
Title:
ARCADIA RECEIVABLES FINANCE CORP.
By:
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Name:
Title:
ARCADIA FINANCIAL LTD., in its
individual capacity and as Servicer
By:
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Name:
Title:
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