EXECUTION COPY
SECOND AMENDMENT
TO THE
SERVICING AGREEMENT
THIS SECOND AMENDMENT TO THE SERVICING AGREEMENT, dated as of November
14, 1997 (this "Amendment"), among ARCADIA RECEIVABLES CONDUIT CORP. (the
"Issuer"), ARCADIA RECEIVABLES FINANCE CORP. (formerly known as Olympic
Receivables Finance Corp.), as Seller (the "Seller"), ARCADIA FINANCIAL LTD.
(formerly known as Olympic Financial Ltd.), in its individual capacity and as
Servicer (in its individual capacity, "AFL", in its capacity as Servicer, the
"Servicer"), and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a
national banking association, in its capacity as Agent (in such capacity as
administrator for Receivables Capital Corporation and as agent for certain
liquidity purchasers, the "Agent").
WHEREAS, the parties hereto wish to amend the Servicing Agreement,
dated as of December 3, 1996, as amended by the First Amendment to the Servicing
Agreement, dated as of August 4, 1997 (as amended and in effect from time to
time, the "Servicing Agreement"), each among the Issuer, the Agent, the Seller,
AFL, the Servicer and the Backup Servicer as provided herein;
NOW, THEREFORE, in consideration of the premises and the agreements
contained herein, the parties hereto agree as follows:
SECTION 1. AMENDMENT OF SECTION 1.1.
a. Section 1.1 of the Servicing Agreement shall be amended by deleting the
current definition of "Basic Servicing Fee Rate" and substituting in its place
the following:
BASIC SERVICING FEE RATE: 1.32% per annum, payable monthly at
one-twelfth of the annual rate.
b. Section 1.1 of the Servicing Agreement shall be amended by deleting
clause (i) of the definition of "Collateral Test" and substituting in its place
the following:
(i) (a) the amount on deposit in the Collection Account less the WAC
Deficiency Deposit, if any, plus (b) without duplication of amounts on deposit
in the Collection Account, the amount representing collections on the
Receivables deposited in the Lockbox Account on such Accounting Date or on the
Business Day immediately preceding such Accounting ▇▇▇▇,
▇. Section 1.1 of the Servicing Agreement shall be amended by deleting the
current definition of "Notes" and substituting in its place the following:
NOTE: The Floating Rate Variable Funding Automobile
Receivables-Backed Note issued by the Issuer pursuant to the First Supplemental
Indenture to the Indenture, dated as of the Effective Date, between Arcadia
Receivables Conduit Corp. and Norwest Bank Minnesota, National Association.
d. Section 1.1 of the Servicing Agreement shall be amended by deleting in
its entirety the definition of "Other Fee Percent."
e. Section 1.1 of the Servicing Agreement shall be amended by deleting the
current definition of "Qualifying Receivable" and substituting in its place the
following:
QUALIFYING RECEIVABLE: With respect to any Monthly Period, a
Receivable as to which (i) no portion of a Scheduled Payment shall have become
more than 30 days delinquent, (ii) the Servicer in good faith has not determined
that the Obligor thereon is unlikely to continue making Scheduled Payments, and
(iii) all of the representations and warranties under the Purchase Agreement and
Repurchase Agreement are true and correct; PROVIDED, that the aggregate
Principal Balance of Classic Receivables that are Financed Repossessions in
excess of 5% of the aggregate outstanding Principal Balance of Qualifying
Receivables shall be excluded from the Principal Balance of Qualifying
Receivables for all purposes hereunder and the aggregate Principal Balance of
Classic Receivables (including Classic Receivables that are Financed
Repossessions) in excess of 65% of the aggregate outstanding Principal Balance
of Qualifying Receivables shall be excluded from the Principal Balance of
Qualifying Receivables for all purposes hereunder, including, in each case, the
denominator of the aforesaid calculations and the calculation of the Collateral
Test.
f. Section 1.1 of the Servicing Agreement shall be amended by deleting the
current definition of "Total Expense Percent" and substituting in it place the
following:
TOTAL EXPENSE PERCENT: 1.6%
g. Section 1.1 of the Servicing Agreement shall be amended by deleting the
current definition of "Two Year Treasury Yield" and substituting in its place
the following:
TWO YEAR TREASURY YIELD: As of any date of determination, the per
annum rate equal to the yield for two year United States Treasury notes that
appears as the "ask" price as reported by Bloomberg's Financial Reporting
Markets (or the Telerate Page, or such replacement system or page as is then
customarily used to quote yields on United States Treasury notes) at the close
of business on the date prior to such date of determination; PROVIDED, HOWEVER,
following the occurrence of an Amortization Event, the Two Year Treasury Yield
shall be the yield for two year United States Treasury notes appearing as the
"ask" price as reported by Bloomberg's Financial Reporting Markets (or the
Telerate Page, or such replacement system or page as is then customarily used to
quote yields on United States Treasury notes) at the close of business, New York
City time, on the date of the occurrence of such Amortization Event.
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h. Section 1.1 of the Servicing Agreement shall be amended by adding the
following definitions in alphabetical order:
AFL: Arcadia Financial Ltd., a Minnesota corporation.
EFFECTIVE DATE: The date all conditions precedent to the
effectiveness of the First Supplemental Indenture are satisfied or waived, and
the Note is issued thereunder.
FIRST SUPPLEMENTAL INDENTURE: The First Supplemental Indenture, dated
November 14, 1997, between the Issuer and the Indenture Trustee.
ORIGINAL NOTES: The notes issued under the Indenture from and after
the Closing Date up to but excluding the Effective Date, and remaining
outstanding as of the opening of business on the Effective Date.
SECTION 2. NEW SECTION 1.7. A new section 1.7 is added to the
Servicing Agreement as follows:
Section 1.7. INTERPRETATION. From and after the Effective Date
(a)(i) the defined term "Notes" when used in this Servicing Agreement shall
refer to the Floating Rate Variable Funding Automobile Receivables-Backed Note
issued under the First Supplemental Indenture, (hereinafter referred to as the
"Note"), (ii) the terms "Noteholder," "Noteholders," "Holder" or "Holders"
shall mean the holder or holders of such Note, (iii) the words "purchase,"
"funding," or "carrying" when used with respect to the Notes shall refer to such
Note, (b) all references to (i) Olympic Financial Ltd. or OFL and (ii) Olympic
Receivables Finance Corp. herein shall refer to Arcadia Financial Ltd.
("Arcadia") and Arcadia Receivables Finance Corp. ("ARFC"), respectively, and
(c) all provisions of this Servicing Agreement shall be interpreted consistently
with (a) and (b) above.
SECTION 3. AMENDMENT OF SECTION 2.1. The third sentence of Section
2.1 is deleted in its entirety and replaced as follows:
In performing such duties, so long as AFL is the Servicer, it shall
comply with the policies and procedures attached hereto as Exhibit A and will
not change the manner in which it services the Receivables if such change could
have a material adverse effect on the Receivables.
SECTION 4. AMENDMENT OF SECTION 2.18. Section 2.18 of the Servicing
Agreement is deleted in its entirety and replaced as follows:
Section 2.18. ACCOUNTANTS' REVIEW OF RECEIVABLE FILES. For every
group of approximately $60,000,000 (or such other amount as the Controlling
Party may determine in its sole and absolute discretion from time to time by
prior written notice to the Seller, the Servicer, the Issuer, the Trustee, the
Agent, the Collateral Agent and the Security Insurer) in aggregate Principal
Balance of Receivables transferred by the Seller to the Issuer pursuant to the
Repurchase Agreement, the Servicer (or AFL, if AFL is not the Servicer) at its
own expense shall cause Independent Accountants acceptable to the Security
Insurer to conduct a physical
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inventory and limited review of the related Receivable Files, commencing within
three Business Days immediately succeeding the day the last Receivable of such
group of Receivables is transferred to the Issuer pursuant to the Repurchase
Agreement. The Independent Accountants shall within such three Business Days
complete such physical inspection and limited review and execute and deliver to
the Secured Parties an Independent Accountant's Report with respect to such
review substantially in the form of Exhibit D hereto. If such review reveals,
in the Controlling Party's opinion, an unsatisfactory number of exceptions, the
Controlling Party, in its sole and absolute discretion, may require a full
review of every Receivable File by the Independent Accountants at the expense of
the Servicer (or AFL, if AFL is not the Servicer).
SECTION 5. REPLACEMENT OF EXHIBIT B TO THE SERVICING AGREEMENT.
Schedule B to the Servicing Agreement, titled "SERVICING POLICIES AND
PROCEDURES," is replaced by new Schedule B, of the same title, and attached to
this Amendment as Exhibit A.
SECTION 6. NEW EXHIBIT D. A new Exhibit D to the Servicing Agreement
is attached to this Amendment as Exhibit D.
SECTION 7. REPRESENTATIONS AND WARRANTIES. Each of the Issuer, the
Seller, AFL and the Servicer represents and warrants that as of the Effective
Date no Event of Default has occurred under the Repurchase Agreement and no
Servicer Termination Event has occurred under the Servicing Agreement, and to
the best of each of the Issuer, the Seller, AFL and the Servicer's knowledge
there is no set of circumstances existing that with the passage of time, would
constitute such an Event of Default or Servicer Termination Event.
SECTION 8. EFFECTIVENESS. The amendments provided for by this
Amendment shall become effective as of the Effective Date (as that term is
defined in the Servicing Agreement), upon receipt by the Agent, in form and
substance satisfactory to the Agent, of (i) this Amendment duly executed and
delivered by each of the parties hereto and the Backup Servicer, the Indenture
Trustee, the Collateral Agent, the Security Insurer and the sole Noteholder,
(ii) an opinion of counsel to Arcadia, dated the date hereof, addressed to the
Agent, the Security Insurer and the Noteholder, covering such matters as the
Agent may reasonably request and (iii) the amendment to the Repurchase Agreement
duly executed and delivered by each of the parties thereto.
SECTION 9. SERVICING AGREEMENT IN FULL FORCE AND EFFECT AS AMENDED.
Except as specifically amended hereby, all of the terms and conditions of the
Servicing 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 Servicing Agreement. All references to the Servicing Agreement in
any other document or instrument shall be deemed to mean the Servicing Agreement
as amended by this Amendment. This Amendment shall not constitute a novation of
the Servicing Agreement, but shall constitute an amendment thereof.
SECTION 10. COUNTERPARTS. This Amendment may be executed in any
number of counterparts and by separate parties hereto on separate counterparts,
each of which when
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executed shall be deemed an original, but all such counterparts taken together
shall constitute one and the same instrument.
SECTION 11. GOVERNING LAW. THIS AMENDMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS.
SECTION 12. DEFINED TERMS. Capitalized terms used herein and not
otherwise defined shall have the meaning assigned to such terms in the Servicing
Agreement.
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IN WITNESS WHEREOF, the Issuer, the Agent, the Seller, AFL and the
Servicer have caused this Second Amendment to Servicing Agreement to be duly
executed by their respective officers as of the day and year first above
written.
ARCADIA RECEIVABLES CONDUIT CORP.,
as Issuer
By
----------------------------
Name:
Title:
ARCADIA RECEIVABLES FINANCE CORP.,
as Seller
By
----------------------------
Name:
Title:
ARCADIA FINANCIAL LTD.,
in its individual capacity and as Servicer
By
----------------------------
Name:
Title:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Agent
By
----------------------------
Name:
Title:
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Acknowledged and Accepted:
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
not in its individual capacity but as
Indenture Trustee, Backup Servicer and
Collateral Agent,
By
----------------------------
Name:
Title:
FINANCIAL SECURITY ASSURANCE INC.,
as Security Insurer
By:
-----------------------------
Name:
Title:
RECEIVABLES CAPITAL CORPORATION,
as sole Noteholder
By:
-----------------------------
Name:
Title:
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