Exhibit 99.1
SALE AND SERVICING
AGREEMENT
among
NATIONSFINANCIAL AUTO OWNER TRUST 1996-1
Issuer,
NATIONSFINANCIAL FUNDING CORPORATION
Seller, and
SUNSTAR ACCEPTANCE CORPORATION
Servicer
Dated as of November 30, 1996
Table of Contents
Page
ARTICLE I
Definitions
SECTION 1.1. Definitions and Usage...................1
ARTICLE II
Conveyance of Receivables
SECTION 2.1. Conveyance of Receivables...............1
ARTICLE III
The Receivables
SECTION 3.1. Representations and Warranties of
Seller..................................3
SECTION 3.1-A. Warranties as to the Receivables in
the Aggregate and Actions of the
Seller..................................8
SECTION 3.2. Repurchase upon Breach..................9
SECTION 3.3. Custody of Receivable Files........... 10
SECTION 3.4. Duties of Servicer as Custodian....... 11
SECTION 3.5. Instructions; Authority To Act........ 12
SECTION 3.6. Custodian's Indemnification........... 12
SECTION 3.7. Effective Period and Termination...... 13
ARTICLE IV
Administration and Servicing of Receivables
SECTION 4.1. Duties of Servicer.................... 14
SECTION 4.2. Collection and Allocation of
Receivable Payments................... 14
SECTION 4.3. Realization upon Receivables.......... 15
SECTION 4.4. Physical Damage Insurance............. 16
SECTION 4.5. Maintenance of Security Interests
in Financed Vehicles.................. 16
SECTION 4.6. Covenants of Servicer................. 17
SECTION 4.7. Purchase of Receivables upon Breach... 17
SECTION 4.8. Servicing Fee......................... 18
SECTION 4.9. Servicer's Certificate................ 18
SECTION 4.10. Annual Statement as to Compliance;
Notice of Default..................... 19
SECTION 4.11. Annual Independent Certified Public
Accountants' Report................... 20
SECTION 4.12. Access to Certain Documentation and
Information Regarding Receivables..... 20
SECTION 4.13. Servicer Expenses..................... 20
SECTION 4.14. Appointment of Subservicer............ 21
SECTION 4.15. Obligations under Basic Documents..... 21
ARTICLE V
Distributions; Spread Account;
Statements to Certificateholders and Noteholders
SECTION 5.1. Establishment of Trust Accounts....... 21
SECTION 5.2. Collections........................... 24
SECTION 5.3. Application of Collections............ 25
SECTION 5.4. Withdrawals from Spread Account....... 26
SECTION 5.5. Additional Deposits................... 26
SECTION 5.6. Distributions......................... 26
SECTION 5.7. Statements to Certificateholders
and Noteholders....................... 28
SECTION 5.8. Net Deposits.......................... 29
SECTION 5.9. Optional Deposits by the Insurer...... 29
ARTICLE VA
The Certificate Policy
SECTION 5A.1. Claims Under Policy................... 30
SECTION 5A.2. Preference Claims; Direction of
Proceedings........................... 31
SECTION 5A.3. Surrender of Policy................... 32
ARTICLE VI
The Seller
SECTION 6.1. Representations of the Seller......... 32
SECTION 6.2. Corporate Existence................... 34
SECTION 6.3. Liability of Seller; Indemnities.......35
SECTION 6.4. Merger or Consolidation of, or
Assumption of the Obligations of,
Seller.................................37
SECTION 6.5. Limitation on Liability of Seller
and Others.............................37
SECTION 6.6. Seller May Own Certificates or Notes...38
ARTICLE VII
The Servicer
SECTION 7.1. Representations of Servicer............38
SECTION 7.2. Indemnities of Servicer................40
SECTION 7.3. Merger or Consolidation of, or
Assumption of the Obligations of,
Servicer...............................41
SECTION 7.4. Limitation on Liability of Servicer
and Others............................ 42
SECTION 7.5. Servicer Not To Resign................ 42
ARTICLE VIII
Default
SECTION 8.1. Servicer Default...................... 43
SECTION 8.2. Appointment of Successor.............. 45
SECTION 8.3. [RESERVED]............................ 45
SECTION 8.4. Notification to Noteholders and
Certificateholders.................... 45
SECTION 8.5. Waiver of Past Defaults............... 46
ARTICLE IX
Termination
SECTION 9.1. Optional Purchase of All Receivables... 46
ARTICLE X
Administrative Duties of the Servicer
SECTION 10.1. Administrative Duties.................. 48
SECTION 10.2. Records................................ 51
SECTION 10.3. Additional Information to be
Furnished to the Issuer................ 51
ARTICLE XI
Miscellaneous Provisions
SECTION 11.1. Amendment............................. 51
SECTION 11.2. Protection of Title to Trust.......... 52
SECTION 11.3. Notices............................... 55
SECTION 11.4. Assignment............................ 56
SECTION 11.5. Limitations on Rights of Others....... 56
SECTION 11.6. Severability.......................... 57
SECTION 11.7. Separate Counterparts................. 57
SECTION 11.8. Headings.............................. 57
SECTION 11.9. Governing Law......................... 57
SECTION 11.10. Assignment to Indenture Trustee....... 57
SECTION 11.11. Nonpetition Covenants................. 57
SECTION 11.12. Limitation of Liability of Owner
Trustee and Indenture Trustee......... 58
SECTION 11.13. Independence of the Servicer.......... 58
SECTION 11.14. No Joint Venture...................... 59
SECTION 11.15. Third-Party Beneficiaries............. 59
SECTION 11.16. Disclaimer by Insurer................. 59
SCHEDULES
Schedule A - Schedule of Receivables
Schedule B - Location of Receivables
EXHIBITS
Exhibit A - Definitions and Usage
Exhibit B - Form of Monthly Certificateholder Statement
Exhibit C - Form of Monthly Noteholder Statement
Exhibit D - Form of Servicer's Certificate
Exhibit E - Form of Accountants Letter
SALE AND SERVICING AGREEMENT (the
"Agreement") dated as of November 30, 1996, among
NATIONSFINANCIAL AUTO OWNER TRUST 1996-1, a
Delaware business trust (the "Issuer"),
NATIONSFINANCIAL FUNDING CORPORATION, a Delaware
corporation (the "Seller"), and SUNSTAR ACCEPTANCE
CORPORATION, a Delaware corporation (the
"Servicer").
WHEREAS the Issuer desires to purchase a portfolio of receivables arising
in connection with retail motor vehicle installment sale contracts acquired by
SunStar Acceptance Corporation from an Affiliate or from motor vehicle dealers;
WHEREAS the Seller has purchased such receivables from SunStar Acceptance
Corporation and is willing to sell such receivables to the Issuer;
WHEREAS the Servicer is willing to service all such receivables;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.1. Definitions and Usage. For all purposes of this Agreement,
capitalized terms used herein, unless the context otherwise requires, shall have
the meanings specified in Exhibit A hereto, which also contains rules as to
usage and construction that shall be applicable herein.
ARTICLE II
Conveyance of Receivables
SECTION 2.1. Conveyance of Receivables. In consideration of the Issuer's
delivery to or upon the order of the Seller on the Closing Date of the net
proceeds from the sale of the Notes and the Certificates and the other amounts
to be distributed from time to time to the Seller in accordance with the terms
of this Agreement, the Seller does hereby sell, transfer, assign, set over and
otherwise convey to the Issuer, without recourse (subject to the obligations set
forth herein), all right, title and interest of the Seller in and to:
(a) the Receivables, and all moneys received thereon after the
Cutoff Date and, in the case of Precomputed Receivables, certain
moneys received on or prior to the Cutoff Date that relate to
Scheduled Payments due after the Cutoff Date to be deposited with the
Trust pursuant to Section 5.2;
(b) the security interests in the Financed Vehicles granted by
Obligors pursuant to the Receivables and any other interest of the
Seller in such Financed Vehicles;
(c) any proceeds with respect to the Receivables from claims on
any physical damage, credit life or disability insurance policies
covering Financed Vehicles or Obligors and any proceeds from the
liquidation of the Receivables;
(d) any proceeds from any Receivable repurchased by a Dealer,
pursuant to a Dealer Agreement, as a result of a breach of
representation or warranty in the related Dealer Agreement;
(e) all rights under any Service Contracts on the related
Financed Vehicles;
(f) the related Receivable Files;
(g) all of the Seller's rights and benefits, but none of its
obligations or burdens, under the Purchase Agreement, including the
Seller's rights under the Purchase Agreement, and the delivery
requirements, the representations and warranties and the cure and
repurchase obligations of SunStar Acceptance Corporation under the
Purchase Agreement; and
(h) the proceeds of any and all of the foregoing (the items
specified in clauses (a) through (h) are referred to herein as the
"Trust Property").
It is the intention of the Seller that the transfer and assignment
contemplated by this Agreement shall constitute a sale of the Receivables and
other Trust Property from the Seller to the Trust and the beneficial interest in
and title to the Receivables and the other Trust Property shall not be part of
the Seller's estate in the event of the filing of a bankruptcy petition by or
against the Seller under any bankruptcy law. In the event that, notwithstanding
the intent of the Seller, the transfer and assignment contemplated hereby is
held not to be a sale, this Agreement shall constitute a grant of a security
interest in the property referred to in this Section 2.1 for the benefit of the
Noteholders and the Certificateholders.
ARTICLE III
The Receivables
SECTION 3.1. Representations and Warranties of Seller. The Seller makes the
following representations and warranties as to each Receivable on which the
Issuer is deemed to have relied in acquiring the Receivables and upon which the
Insurer shall be deemed to rely in issuing the Policies. Such representations
and warranties speak as of the execution and delivery of this Agreement and as
of the Closing Date, but shall survive the sale, transfer and assignment of the
Receivables to the Issuer and the pledge thereof to the Indenture Trustee
pursuant to the Indenture.
(a) Characteristics of Receivables. The Receivable has been fully
and properly executed by the parties thereto and (i) has been
originated by a Dealer in connection with the retail sale of a
Financed Vehicle in the ordinary course of such Dealer's business, and
has been purchased by the Seller from SunStar Acceptance Corporation,
which in turn, shall have purchased such Receivable from such Dealer
or from an Affiliate which purchased it from such a Dealer in the
ordinary course of SunStar Acceptance Corporation's (or its
Affiliate's) business and in accordance with its underwriting
standards in effect at such time and shall have been validly assigned
by SunStar Acceptance Corporation to the Seller, (ii) is secured by a
valid, subsisting and enforceable first priority security interest in
favor of SunStar Acceptance Corporation (or its Affiliate) in the
Financed Vehicle (subject to administrative delays and clerical errors
on the part of applicable government agencies and to any statutory or
other lien arising by operation of law which is prior to such security
interest and subject to the effect of bankruptcy, insolvency,
moratorium, conservatorship, receivership, reorganization, fraudulent
conveyance and similar laws relating to or affecting creditors' rights
generally and court decisions with respect thereto), which security
interest has been assigned by SunStar Acceptance Corporation to the
Seller, is assignable together with such Receivable, and has been so
assigned by the Seller to the Trust, (iii) contains or is accompanied
by a security agreement which contains customary and enforceable
provisions such that the rights and remedies of the secured party are
adequate for realization of the benefits of the security interest in
the subject collateral (subject to the effect of bankruptcy,
insolvency, moratorium, conservatorship, receivership, reorganization,
fraudulent conveyance and similar laws relating to or affecting
creditors' rights generally and court decisions with respect thereto),
(iv) provided at origination for level monthly payments (provided,
that the last payment may be different from the level monthly
payment), which fully amortize the Amount Financed over the original
term, (v) in the case of a Precomputed Receivable, shall provide for,
in the event that such Contract is prepaid, a prepayment that fully
pays the Principal Balance and includes, if such prepayment is made
after the fifteenth day of the applicable monthly payment period, a
full month's interest for such payment period at the Annual Percentage
Rate, and (vi) provides for interest at the related APR.
(b) Schedule of Receivables. The information set forth in the
Schedule of Receivables with respect to such Receivable has been
produced from the Computer Tape and was true and correct as of the
close of business of the Servicer on the Cutoff Date; and the
Principal Balance of the Receivable as of the Cutoff Date has been
accurately and correctly calculated.
(c) Compliance with Laws. To the knowledge of the Seller, the
Receivable, and the sale of the related Financed Vehicle, complied at
the time it was originated or made, and will comply as of the Closing
Date, in all material respects with all requirements of applicable
federal, state, and local laws, and regulations thereunder, including,
to the extent applicable, usury laws, the Federal Truth-in-Lending
Act, the Equal Credit Opportunity Act, the Fair Credit Billing Act,
the Fair Credit Reporting Act, the Fair Debt Collection Practices Act,
Federal Reserve Board Regulations B and Z, and any other applicable
consumer credit, equal opportunity, and disclosure laws; provided,
however, that if, notwithstanding the knowledge of the Seller, any
Receivable, or the sale of the related Financed Vehicle, fails to
comply with applicable law in the manner and to the extent set forth
herein, the Seller shall repurchase such Receivable in accordance with
the terms and conditions set forth in Section 3.2, but such failure to
comply with such laws shall not constitute a breach of this warranty
except for purposes of Section 3.2.
(d) Binding Obligation. The Receivable constitutes the genuine,
legal, valid, and binding payment obligation in writing of the
Obligor, enforceable in all material respects by the holder thereof in
accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium, conservatorship, receivership, liquidation and other
similar laws affecting creditors' rights in general, equitable
principles and laws and judicial decisions relating to consumers'
rights or creditors' actions, which laws and decisions, however, will
not prevent such Receivable from being adequate for the realization of
the benefits intended to be conferred thereby.
(e) No Government Obligor. The Obligor on the Receivable is not
the United States of America or any state thereof or any local
government, or any agency, department, political subdivision or
instrumentality of the United States of America or any state thereof
or any local government.
(f) Receivables in Force. The Receivable has not been satisfied,
subordinated, or rescinded and the related Financed Vehicle has not
been released from the lien granted by the Receivable in whole or in
part.
(g) No Amendment or Waiver. No material provision of the
Receivable has been amended, waived, altered or modified in any
respect, except as reflected in the Receivable File or in SunStar
Acceptance Corporation's data processing system or records, and no
such amendment, waiver, alteration or modification causes such
Receivable not to conform to the other warranties contained in this
Section.
(h) No Defenses. The Receivable is not subject to any right of
rescission, setoff, counterclaim or defense, including the defense of
usury, and the operation of any of the material terms of the
Receivable, or the exercise of any material right thereunder, will not
render the Receivable unenforceable in whole or in part or subject to
any right of rescission, setoff, counterclaim or defense, including
the defense of usury, and the Seller has not received written notice
of the assertion of any such right of rescission, setoff, counterclaim
or defense asserted with respect thereto.
(i) No Liens. The Seller has not received written notice of any
Liens or claims, including Liens for work, labor, materials or unpaid
state or federal taxes relating to the Financed Vehicle, that are or
may be Liens prior to, or equal in priority to or coordinate with, the
Lien granted by the Receivable.
(j) No Default. Except for payment delinquencies continuing for a
period of not more than thirty (30) days as of the Cutoff Date, to the
knowledge of the Seller (i) no default, breach, violation, or event
permitting acceleration under the terms of any Receivable exists; and
(ii) no continuing condition, that with notice or lapse of time, or
both, would constitute a default, breach, violation, or event
permitting acceleration under the terms of any Receivable has arisen;
and the Seller has not waived any of the foregoing; provided, however,
that if, notwithstanding the knowledge of the Seller, any of the
events specified in (i) or (ii) above exists or has arisen with
respect to a Receivable, the Seller shall repurchase such Receivable
in accordance with the terms and conditions of Section 3.2, with the
existence of such events not constituting a breach of this warranty,
except for purposes of Section 3.2. Notwithstanding the foregoing, if
an event specified in (i) or (ii) above exists or has arisen with
respect to an Obligor's obligation to maintain insurance on the
related Financed Vehicle, and in such case the Servicer intends to
place CPI within 45 days of notice of such failure to maintain
insurance, such event shall not constitute a breach of this warranty.
(k) Insurance. The Financed Vehicle securing such Receivable is
required by the Receivable to be insured against theft or damage under
an Insurance Policy.
(l) Good Title. Immediately prior to the transfer and assignment
herein contemplated, the Receivable had not been sold, assigned,
pledged or otherwise conveyed by the Seller to any Person, and the
Seller had good and marketable title to the Receivable free and clear
of any encumbrance, equity, lien, pledge, charge, claim, security
interest or other right or interest of any other Person, was the sole
owner thereof and had full right and power to transfer and assign the
Receivable to the Trust. Immediately upon the transfer and assignment
of the Receivable to the Trust, the Trust shall have good and
marketable title to the Receivable, free and clear of any encumbrance,
equity, lien, pledge, charge, claim, security interest or other right
or interest of any other Person; and all filings and actions required
by the UCC with respect to the transfer to the Trust of Receivables
associated with the sale of the same have been accomplished for the
purpose of complying with the UCC provisions governing the relative
priority of interests of parties in the Receivables.
(m) Lawful Assignment. The Receivable has not been originated in,
and is not subject to the laws of, any jurisdiction under which the
sale, transfer or assignment of such Receivable hereunder or pursuant
to transfers of the Notes or Certificates are unlawful, void, or
voidable.
(n) All Filings Made. All filings have been made, including
filings under the UCC, which are necessary in any jurisdiction to
cause the ownership and title interests of the Issuer in the
Receivables to be afforded priority over competing claims of the
holders of security interests or other claims against whom such
filings can assure priority.
(o) Valid Security Interest. On the Closing Date, there will
exist a valid, subsisting and enforceable first priority perfected
security interest in the Financed Vehicle securing the Receivable
(subject to administrative delays and clerical errors on the part of
the applicable government agencies and to any statutory or other lien
arising by operation of law which is prior to such security interest).
With respect to the foregoing, the Seller hereby covenants to take all
action necessary such that, at such time as enforcement of such
security interest is sought, there shall exist a valid, subsisting and
enforceable first priority perfected security interest in the Financed
Vehicle for the benefit of the Issuer (subject to administrative
delays and clerical errors on the part of applicable government
agencies and any statutory or other lien arising by operation of law
which is prior to such interest).
(p) Capacity of Parties. To the knowledge of the Seller, all
parties to the Receivable had capacity to execute the Receivable;
provided, however, that if, notwithstanding the knowledge of the
Seller, all parties to any Receivable did not have the capacity to
execute such Receivable, the Seller shall repurchase such Receivable
in accordance with the terms and conditions of Section 3.2, with the
existence of such lack of capacity not constituting a breach of this
warranty, except for purposes of Section 3.2.
(q) One Original. Only one original of each Receivable was
executed.
(r) Obligations; No Impairment. The Seller has duly fulfilled all
obligations on its part to be fulfilled under, or in connection with,
the Receivable and has done nothing to impair the rights of the
Issuer, the Noteholders or the Certificateholders in the Receivable or
the proceeds thereof.
(s) No Fraud or Misrepresentation. To the knowledge of the
Seller, the Receivable was originated by a Dealer and sold by such
Dealer to the Seller without any conduct constituting fraud or
misrepresentation against the Obligor on the part of such Dealer;
provided, however, that if, notwithstanding the knowledge of the
Seller, any Receivable was originated and sold under conduct
constituting fraud or misrepresentation against the Obligor on the
part of such Dealer, the Seller shall repurchase such Receivable in
accordance with the terms and conditions of Section 3.2, with the
existence of such conduct not constituting a breach of this warranty,
except for purposes of Section 3.2.
(t) Possession. Immediately prior to the Closing Date, the Seller
(or an Affiliate) will have possession of the Receivable File, and
there are and there will be no custodial agreements in effect
materially and adversely affecting the right or ability of the Seller
to make, or cause to be made, any delivery required hereunder.
(u) Bulk Transfer Laws. The transfer, assignment and conveyance
of the Receivable and Receivable Files by the Seller pursuant to this
Agreement is not subject to bulk transfer laws or any similar
statutory provisions in effect in any applicable jurisdiction.
(v) No Bankruptcies. No Obligor on any Receivable is currently,
or was following the execution of the related Contract, the subject of
a bankruptcy proceeding except with respect to Obligors for whom a
plan of reorganization has been confirmed by a bankruptcy court.
(w) Chattel Paper. Each Receivable constitutes "chattel paper" as
defined in the UCC.
SECTION 3.1-A. Warranties as to the Receivables in the Aggregate and
Actions of the Seller. The Seller hereby makes the following warranties as to
the Receivables on which the Issuer and the Insurer shall be deemed to have
relied in acquiring the Receivables. Unless otherwise indicated, such warranties
shall speak as of the execution and delivery of this Agreement, but shall
survive the sale, transfer, and assignment of the Receivables to the Issuer and
the pledge thereof to the Indenture Trustee pursuant to the Indenture.
(a) Amounts. The Aggregate Principal Balance, as of the Cutoff
Date, of the Receivables is equal to the Original Pool Balance.
(b) Individual Characteristics. The Receivables have the
following individual characteristics as of the close of business of
the Servicer on the Cutoff Date: (i) the obligations of the Obligors
on the Receivables are secured by security interests in the respective
new or used automobiles, vans or light trucks which were purchased
thereunder; (ii) each Receivable has an APR of at least 15% and not
more than 30%; (iii) each Receivable had a remaining maturity of not
less than 3 months and not more than 59 months; (iv) each Receivable
had, as of the Cutoff Date, a remaining principal balance of not more
than $30,000; (v) no Financed Vehicle had been repossessed as of the
Cutoff Date under the related Contract; (vi) no Receivable is a
Liquidated Receivable as of the Cutoff Date; (vii) each Receivable is
a retail motor vehicle installment sales contract; (viii) each
Receivable, at origination, provided for allocation of payments
between principal and interest by the Simple Interest Method, the Rule
of 78s Method or the Actuarial Method; (ix) each Receivable, at
origination, had an original term to maturity of less than or equal to
60 months; (x) no Receivable was acquired as part of a bulk transfer
or bulk acquisition other than from SunStar Acceptance Corporation
(California); and (xi) at least one payment has been made by an
Obligor with respect to each Receivable.
(c) Aggregate Characteristics. The Receivables had the following
characteristics in the aggregate as of the Cutoff Date: (i)
approximately _____% of the Original Pool Balance was attributable to
loans for purchases of new Financed Vehicles, and approximately _____%
of the Original Pool Balance was attributable to loans for purchases
of used Financed Vehicles; (ii) the weighted average APR of the
Receivables was approximately _____%; (iii) there were _______
Receivables; (iv) the average Principal Balance of the Receivables was
approximately $______; (v) the weighted average original term and
weighted average remaining term of the Receivables were approximately
____ months and ____ months, respectively.
(d) Computer Tape. The Computer Tape was complete and accurate as
of the Cutoff Date and included a description of the same Receivables
that are described in the Schedule of Receivables.
(e) Marking Records. On or before the Closing Date, the Seller
will have caused the portions of the Computer Tape relating to the
Receivables to be clearly and unambiguously marked to show that such
Receivables constitute part of the Owner Trust Estate.
(f) No Assignment. As of the Closing Date, the Seller shall not
have taken any action to convey any right to any Person that would
result in such Person having a right to payments received under the
Policies, the Dealer Agreements (insofar as they relate to the
Receivables) or payments due under the Receivables that is senior to,
or equal with, that of the Trust.
(g) Location of Receivable Files. The Receivable Files shall be
kept at one or more of the locations listed in Schedule B hereto.
(h) Adverse Selection. No selection procedures adverse to the
Noteholders or the Certificateholders were utilized in selecting the
Receivables from those owned by the Servicer which met the selection
criteria contained in this Agreement.
SECTION 3.2. Repurchase upon Breach. (a) The Seller, the Servicer, the
Insurer or the Owner Trustee, as the case may be, shall inform the other parties
to this Agreement and the Indenture Trustee promptly, in writing, upon the
discovery of any breach of the Seller's representations and warranties made
pursuant to Sections 3.1 and 3.1-A. As of the last day of the second (or, if the
Seller so elects, the first) month following the discovery by the Seller or
receipt by the Seller of notice from any of the Seller, the Servicer, the
Insurer or the Owner Trustee of such breach, unless such breach is cured by such
date, the Seller shall have an obligation to repurchase any Receivable in which
the interests of the Noteholders or the Certificateholders or the Insurer are
materially and adversely affected by any such breach as of such date. The
"second month" shall mean the month following the month in which discovery
occurs or notice is given, and the "first month" shall mean the month in which
discovery occurs or notice is given. In consideration of and simultaneously with
the repurchase of the Receivable, the Seller shall remit, or cause SunStar
Acceptance Corporation or an Affiliate to remit, to the Collection Account the
Purchase Amount in the manner specified in Section 5.5 and the Issuer shall
execute such assignments and other documents reasonably requested by such person
in order to effect such repurchase. The sole remedy of the Issuer, the Owner
Trustee, the Indenture Trustee, the Noteholders or the Certificateholders with
respect to a breach of representations and warranties pursuant to Sections 3.1
and 3.1-A and the agreement contained in this Section shall be the repurchase of
Receivables pursuant to this Section, subject to the conditions contained
herein, or to enforce the obligation of SunStar Acceptance Corporation to the
Seller to repurchase such Receivables pursuant to the Purchase Agreement.
Neither the Owner Trustee nor the Indenture Trustee shall have a duty to conduct
any affirmative investigation as to the occurrence of any conditions requiring
the repurchase of any Receivable pursuant to this Section.
(b) Pursuant to Section 2.1 of this Agreement, the Seller
conveyed to the Trust all of the Seller's right, title and interest in
its rights and benefits, but none of its obligations or burdens, under
the Purchase Agreement including the Seller's rights under the
Purchase Agreement and the delivery requirements, the representations
and warranties and the cure or repurchase obligations of SunStar
Acceptance Corporation thereunder. The Seller hereby represents and
warrants to the Trust that such assignment is valid, enforceable and
effective to permit the Trust to enforce such obligations of SunStar
Acceptance Corporation under the Purchase Agreement.
SECTION 3.3. Custody of Receivable Files. To assure uniform quality in
servicing the Receivables and to reduce administrative costs, the Issuer hereby
revocably appoints the Servicer and, with respect to Receivable Files located in
California, the Subservicer, and the Servicer and, with respect to Receivable
Files located in California, the Subservicer, hereby accept such appointment, to
act as the respective agent of the Issuer and the Indenture Trustee as custodian
of the following documents or instruments which are hereby constructively
delivered to the Indenture Trustee, as of the Cutoff Date, as pledgee of the
Issuer with respect to each Receivable:
(a) the original Receivable;
(b) a record of the information supplied by the Obligor in the
original credit application;
(c) the original certificate of title or such documents that the
Servicer or the Subservicer, as the case may be, shall keep on file,
in accordance with its customary procedures, evidencing the security
interest of SunStar Acceptance Corporation or SunStar Acceptance
Corporation (California) in the Financed Vehicle (it being understood
that the original certificates of title generally are not delivered to
the Seller for 120 days but that promptly upon delivery they shall be
delivered to the Servicer as custodian hereunder); and
(d) any and all other documents that the Servicer or the
Subservicer, as the case may be, shall keep on file, in accordance
with its customary procedures, relating to a Receivable, an Obligor or
a Financed Vehicle.
SECTION 3.4. Duties of Servicer as Custodian. (a) Safekeeping. The Servicer
shall hold the Receivable Files on behalf of the Issuer and the Indenture
Trustee and maintain such accurate and complete accounts, records and computer
systems pertaining to each Receivable File as shall enable the Issuer to comply
with this Agreement. In performing its duties as custodian the Servicer shall
act with reasonable care, using that degree of skill and attention that the
Servicer exercises with respect to the receivable files relating to all
comparable automotive receivables that the Servicer services for itself or
others, and in any event with no less degree of skill and care than would be
exercised by a prudent servicer or custodian of non-prime retail motor vehicle
installment sales contracts. The Servicer shall conduct, or cause to be
conducted, periodic audits of the Receivable Files held by it under this
Agreement and of the related accounts, records and computer systems, in such a
manner as shall enable the Owner Trustee, the Insurer or the Indenture Trustee
to verify the accuracy of the Servicer's record keeping. The Servicer shall
promptly report to the Issuer, the Insurer and the Indenture Trustee any
material failure on its part to hold the Receivable Files and maintain its
accounts, records and computer systems as herein provided and promptly take
appropriate action to remedy any such failure.
(b) Maintenance of Records. The Servicer, shall maintain each
Receivable File at its or the Subservicer's office or the office
of any Affiliate, specified in Schedule B to this Agreement or at
such other office or offices as shall be specified to the Issuer, the
Indenture Trustee, the Owner Trustee and the Insurer by written notice
not later than 10 days after a change in location to a location not
specified in Schedule B.
(c) Access to Records. The Servicer will provide, on the Closing
Date, an Officer's Certificate stating that the Receivable Files
contain all materials which are required to be kept therein by Section
3.3(a), (b), (c) and (d).
Upon reasonable prior notice, the Servicer shall make available to the
Issuer, the Indenture Trustee, the Insurer, or any duly authorized
representatives, attorneys or auditors of any of the foregoing, a list of
locations of, and access to, the Receivable Files and records and computer
systems maintained by the Servicer at such times during normal business hours as
the Issuer, the Indenture Trustee or the Insurer shall instruct.
(d) Release of Documents. Upon written instruction from the
Indenture Trustee or the Insurer, at any time following a Servicer
Default or termination of the Servicer's appointment pursuant to
Section 3.7, the Servicer shall as soon as practicable release any
Receivable File to the Indenture Trustee, the Indenture Trustee's
agent, or the Indenture Trustee's designee, as the case may be, or the
Insurer, as the case may be, at such place or places as the Indenture
Trustee or the Insurer, as the case may be, may designate.
SECTION 3.5. Instructions; Authority To Act. The Servicer shall be deemed
to have received proper instructions with respect to the Receivable Files upon
its receipt of written instructions signed by a Trust Officer of the Indenture
Trustee. A copy of such instructions shall be furnished by the Indenture Trustee
to the Insurer. The Indenture Trustee shall not have any duty or obligation to
provide the Servicer with any such instructions with respect to the Receivable
Files.
SECTION 3.6. Custodian's Indemnification. The Servicer as custodian shall
indemnify and hold harmless the Trust, the Insurer, the Owner Trustee and the
Indenture Trustee and each of their officers, directors, employees and agents
for any and all liabilities, obligations, losses, compensatory damages,
payments, costs or expenses (including reasonable attorneys' fees and expenses)
that may be imposed on, incurred by or asserted against the Trust, the Owner
Trustee or the Indenture Trustee or any of their officers, directors, employees
and agents as the result of any improper act or omission in any way relating to
the maintenance and custody by the Servicer as custodian of the Receivable
Files; provided, however, that the Servicer shall not be liable to the Trust,
the Owner Trustee, the Indenture Trustee or the Insurer, as the case may be, for
any portion of any such amount resulting from the willful misfeasance, bad faith
or negligence of the Owner Trustee, the Indenture Trustee or the Insurer, as the
case may be. If a claim is made against any indemnitee which could give rise to
indemnification hereunder, such indemnitee, upon receiving such claim, shall
give notice thereof to the Servicer; provided, however, that failure to give or
delay in giving such notice shall not release the Servicer from any of its
indemnification obligations hereunder unless and only to the extent that the
Servicer can demonstrate it was harmed thereby. The Servicer shall be entitled
to defend any such claim through counsel selected by it (so long as such counsel
is reasonably acceptable to the indemnitee) and each indemnitee will extend
reasonable cooperation to the Servicer and such counsel in connection with such
defense. This provision shall not be considered to limit the Servicer's or any
other party's rights, obligations, liabilities, claims or defenses which arise
as a matter of law or pursuant to any other provision of this Agreement.
SECTION 3.7. Effective Period and Termination. The Servicer's appointment
as custodian shall become effective as of the Cutoff Date and shall continue in
full force and effect until terminated pursuant to this Section 3.7. If SunStar
Acceptance Corporation shall resign as Servicer in accordance with the
provisions of this Agreement or if all of the rights and obligations of any
Servicer shall have been terminated under Section 8.1, the appointment of such
Servicer as custodian shall be terminated, in the same manner as the Servicer
may be terminated under Section 8.1. The Indenture Trustee or, with the consent
of the Indenture Trustee, the Owner Trustee may, in each case, with the consent
of the Insurer, and the Insurer may, terminate the Servicer's appointment as
custodian (so long as no Insurer Default shall have occurred and be continuing)
upon the occurrence of an Insurance Agreement Event of Default, upon written
notification to the Servicer and the Indenture Trustee or Insurer, as the case
may be. As soon as practicable after any termination of such appointment, the
Servicer shall deliver the Receivable Files to the Indenture Trustee or the
Indenture Trustee's agent at such place or places as the Indenture Trustee, with
the consent of the Insurer, or the Insurer may reasonably designate in writing.
If the Servicer shall be terminated as custodian hereunder for any reason but
shall continue to serve as Servicer, the Indenture Trustee shall, or shall cause
its agent to, make the Receivable Files available to the Servicer during normal
business hours upon reasonable notice so as to permit the Servicer to perform
its obligations as Servicer hereunder.
ARTICLE IV
Administration and Servicing of Receivables
SECTION 4.1. Duties of Servicer. The Servicer, as agent for the Issuer and
the Insurer (to the extent provided herein), shall manage, service, administer
and make collections on the Receivables (other than Purchased Receivables) with
reasonable care, using that degree of skill and attention that the Servicer
exercises with respect to all comparable automotive receivables that it services
for itself or others, and in any event with no less degree of skill and care
than would be exercised by a prudent servicer of non-prime retail motor vehicle
installment sales contracts. The Servicer's duties shall include collection and
posting of all payments, responding to inquiries of Obligors on such
Receivables, investigating delinquencies, sending payment statements to
Obligors, accounting for collections and furnishing monthly and annual
statements to the Owner Trustee, the Indenture Trustee and the Insurer with
respect to distributions. Subject to the provisions of Section 4.2, the Servicer
shall follow its customary standards, policies and procedures in performing its
duties as Servicer. Without limiting the generality of the foregoing, the
Servicer is authorized and empowered to execute and deliver, on behalf of
itself, the Issuer, the Owner Trustee, the Indenture Trustee, the Insurer, the
Certificateholders and the Noteholders or any of them, any and all instruments
of satisfaction or cancellation, or partial or full release or discharge, and
all other comparable instruments, with respect to such Receivables or to the
Financed Vehicles securing such Receivables. If the Servicer shall commence a
legal proceeding to enforce a Receivable, the Issuer (in the case of a
Receivable other than a Purchased Receivable) shall thereupon be deemed to have
automatically assigned, solely for the purpose of collection, such Receivable to
the Servicer. If in any enforcement suit or legal proceeding it shall be held
that the Servicer may not enforce a Receivable on the ground that it shall not
be a real party in interest or a holder entitled to enforce such Receivable, the
Owner Trustee shall, at the Servicer's expense and direction, take steps to
enforce such Receivable, including bringing suit in its name or the name of the
Trust, the Indenture Trustee, the Certificateholders or the Noteholders. The
Owner Trustee and the Insurer shall upon the written request of the Servicer
furnish the Servicer with any powers of attorney and other documents reasonably
necessary or appropriate (as certified to the Owner Trustee and/or the Insurer
by the Servicer) to enable the Servicer to carry out its servicing and
administrative duties hereunder.
SECTION 4.2. Collection and Allocation of Receivable Payments. (a) The
Servicer shall make reasonable efforts to collect all payments called for under
the terms and provisions of the Receivables as and when the same shall become
due and shall follow such collection procedures as it follows with respect to
all comparable automotive receivables that it services for itself or others, and
in any event with no less degree of skill and care than would be exercised by a
prudent servicer of non-prime retail motor vehicle installment sales contracts.
The Servicer shall allocate collections between principal and interest in
accordance with its customary servicing procedures.
(b) The Servicer may not grant deferments or modify the original due
dates of a Receivable (other than a Liquidated Receivable);
provided, however, that the Servicer may (i) grant one deferral
with respect to a Receivable of one month for each year of the
term
of the Contract with a maximum of five deferrals over
the life of the Contract, provided that such deferrals need not
be granted in each year but may aggregated over the life of the
Contract, (ii) change the original due date once during the term
of a Receivable to a new due date within
20 days of the original scheduled due date of such Receivable
and (iii) grant deferments or modify the original due dates of a
Receivable with respect to a Receivable for which a court of
appropriate jurisdiction in a bankruptcy or
insolvency proceeding shall have issued an order reducing the
amount owed on such Receivable or otherwise modifying or
restructuring the scheduled payments or other terms on such
Receivable; provided, however, that the Servicer may not
defer the date for final payment by the Obligor of any Receivable
beyond the last day of the Monthly Period preceding the Final
Scheduled Maturity Date. The Servicer may in its discretion waive
any late payment charge or any other fees
that may be collected in the ordinary course of servicing a
Receivable. The Servicer shall not other than pursuant to a court
order agree to any reduction of (i) the original APR, (ii) the
amount of any Scheduled Payment on a Precomputed Receivable or the
original regular Scheduled Payment on a Simple
Interest Receivable, or (iii) the Principal Balance of any
Receivable.
SECTION 4.3. Realization upon Receivables. On behalf of the Issuer and the
Insurer, the Servicer shall use its best efforts, consistent with its customary
servicing procedures, to repossess or otherwise convert the ownership of the
Financed Vehicle securing any Receivable as to which the Servicer shall have
determined eventual payment in full is unlikely. From time to time, as
appropriate for servicing or foreclosing upon any Receivable, the Owner Trustee
shall, upon written request of the Servicer, execute such documents as shall be
reasonably necessary to prosecute any such proceedings. The Servicer shall
follow such customary and usual practices and procedures as it shall deem
necessary or advisable in its servicing of automotive receivables, which may
include reasonable efforts to realize proceeds from Receivables required to be
repurchased by a Dealer, pursuant to a Dealer Agreement, as a result of a breach
of representation or warranty in the related Dealer Agreement. The foregoing
shall be subject to the provision that, in any case in which the Financed
Vehicle shall have suffered damage, the Servicer shall not expend funds in
connection with the repair or the repossession of such Financed Vehicle unless
it shall determine in its reasonable discretion that such repair and/or
repossession will increase the Net Liquidation Proceeds.
SECTION 4.4. Physical Damage Insurance. (a) The Servicer shall, in
accordance with its customary servicing procedures, determine whether to require
that each Obligor shall have obtained and shall maintain fire, theft and
collision insurance or comprehensive and collision insurance covering the
Financed Vehicle as of the execution of the Receivable. If an Obligor fails to
maintain such insurance, the Servicer shall take such action (if any) with
respect to the provisions in each Receivable requiring that physical damage and
theft insurance be maintained on the applicable Financed Vehicle as the Servicer
takes with respect to such provisions in similar retail motor vehicle
installment sales contracts it services for its own account. Accordingly, by way
of example, in the event of a breach of such provisions in any Receivable, the
Servicer may, among other things, seek (a) to enforce such provisions, (b)
advance funds itself to obtain such insurance, or (c) take no action, in each
case so long as its response is the same in the case of similar contracts it
services for its own account. Such insurance and any commissions or finance
charges collected by the Servicer in connection therewith shall be in an amount
permitted by applicable law, and the Servicer shall disclose to the related
Obligor all information with respect to such insurance, expense reimbursements
and finance charges as required by applicable law.
(b) The Servicer, or any affiliate of the Servicer, may, to the
extent permitted by law (i) enter into agreements with one or more
insurers or other Persons pursuant to which the Servicer or such
affiliate will earn fees, and be reimbursed for expenses, in
connection with any insurance policy purchased by an Obligor
including, without limitation, any hazard insurance policy (whether or
not such hazard insurance policy is purchased on behalf of an Obligor
pursuant to the provisions of any Contract), or any other insurance
policy whatsoever and (ii) in connection with the foregoing, to
solicit, or permit and assist any insurer or any agent thereof to
solicit (including, without limitation, providing such insurer or
agent a list of Obligors including name, address or other information)
any Obligor.
SECTION 4.5. Maintenance of Security Interests in Financed Vehicles. (a)
The Servicer shall, in accordance with its customary servicing procedures, take
such steps as are necessary to maintain perfection of the security interest
created by each Receivable in the related Financed Vehicle in favor of the
Originator. The Servicer is hereby authorized to take such steps as are
necessary to reperfect such security interest in favor of the applicable
Originator on behalf of the Issuer and the Indenture Collateral Agent in the
event of the relocation of a Financed Vehicle or for any other reason.
(b) Upon the occurrence of a Servicer Default, and subject to the
other provisions of this Agreement, the Insurer may (so long as an
Insurer Default shall not have occurred and be continuing) instruct
the Owner Trustee and the Servicer to take or cause to be taken, or,
if an Insurer Default shall have occurred, the Owner Trustee and the
Servicer shall take or cause to be taken, such action as may, in the
opinion of counsel to the Insurer (or, if an Insurer Default shall
have occurred and be continuing, counsel to the Owner Trustee), be
necessary to perfect or reperfect the security interests in the
Financed Vehicles securing the Receivables in the name of the Trust by
amending the title documents of such Financed Vehicles or by such
other reasonable means as may, in the opinion of counsel to the
Insurer or the Owner Trustee (as applicable), be necessary or prudent.
The Servicer hereby agrees to pay all expenses related to such
perfection or reperfection and to take all action necessary therefor.
SECTION 4.6. Covenants of Servicer. The Servicer shall not release the
Financed Vehicle securing any Receivable from the security interest granted by
such Receivable in whole or in part except in the event of payment in full by
the Obligor thereunder or payment in full less a deficiency which the Servicer
would not attempt to collect in accordance with its customary procedures or in
connection with repossession or except as may be required by an insurer in order
to receive proceeds from insurance covering such Financed Vehicle, nor shall the
Servicer impair the rights of the Issuer, the Indenture Trustee, the Indenture
Collateral Agent, the Insurer, the Certificateholders or the Noteholders in such
Receivables (it being understood that no action of the Servicer taken in
compliance with the terms of this Agreement shall be deemed to impair such
rights).
SECTION 4.7. Purchase of Receivables upon Breach. The Seller, the Servicer,
the Insurer or the Owner Trustee shall inform the other parties and the
Indenture Trustee promptly, in writing, upon the discovery of any breach of the
Servicer's covenants pursuant to Section 4.2(b), 4.4, 4.5 or 4.6, or of any
breach of the Servicer's representations and warranties made pursuant to Section
7.1(b). As of the last day of the second (or, if the Servicer so elects, the
first) month following the discovery by the Servicer or receipt by the Servicer
of notice from any of the Seller, the Servicer, the Insurer, the Owner Trustee
or the Indenture Trustee of such breach, unless such breach is cured by such
date, the Servicer shall be obligated to purchase any Receivable in which the
interests of the Noteholders or the Certificateholders are materially and
adversely affected by such breach as of such date. The "second month" shall mean
the month following the month in which discovery occurs or notice is given, and
the "first month" shall mean the month in which discovery occurs or notice is
given. In consideration of the purchase of any such Receivable pursuant to the
preceding sentence, the Servicer shall remit the Purchase Amount in the manner
specified in Section 5.5. The sole remedy of the Issuer, the Indenture Trustee,
the Insurer, the Noteholders or the Certificateholders with respect to a breach
pursuant to Section 4.2(b), 4.4, 4.5 or 4.6, or to a breach of representations
and warranties pursuant to Section 7.1(b), shall be limited to the purchase of
Receivables in accordance with this Section 4.7. The Indenture Trustee and the
Owner Trustee shall have no duty to conduct any affirmative investigation as to
the occurrence of any condition requiring the purchase of any Receivable
pursuant to this Section 4.7.
SECTION 4.8. Servicing Fee. The Servicing Fee for a Distribution Date shall
equal the sum of the Base Servicing Fee, the Supplemental Servicing Fee, all
Investment Earnings on the Collection Account plus any reimbursement pursuant to
Section 7.2. The Servicer also shall be entitled to retain from collections the
Base Servicing Fee and the Supplemental Servicing Fee, as provided herein. The
Servicer, in its discretion at its election, may defer receipt of all or any
portion of the Servicing Fee for any Monthly Period to and until a later Monthly
Period for any reason, including in order to avoid a shortfall in any payments
due on any Notes or Certificates. Any such deferred amount shall be payable to
(or may be retained from subsequent collections by) the Servicer on demand.
SECTION 4.9. Servicer's Certificate. (a) No later than 12:00 noon New York
City time on each Determination Date, the Servicer shall deliver to the Owner
Trustee, the Indenture Trustee, the Insurer, the Collateral Agent and each
Rating Agency a Servicer's Certificate containing, among other things, (i) all
information necessary to enable the Indenture Trustee to make any withdrawal and
deposit required by Section 5.6(b), 5.6(c) and 5.6(d), to give any notice
required by Section 5.4 or 5A.1 and to make the distributions required by
Section 5.6 and 5.7, (ii) all information necessary to enable the Indenture
Trustee to send the statements required by Section 5.7 to the Owner Trustee, the
Noteholders, each Rating Agency and the Insurer, (iii) a listing of all
Receivables purchased during the related Monthly Period, identifying the
Receivables so purchased, and (iv) all information necessary to enable the
Indenture Trustee to reconcile all deposits to, and withdrawals from, the
Collection Account for the related Monthly Period and Distribution Date,
including the accounting required by Section 5.8. In addition, with respect to
the Servicer's Certificate furnished to the Indenture Trustee and the Owner
Trustee, Receivables purchased by the Servicer or the Seller or which were paid
in full during the related Monthly Period shall be identified by account number
(as set forth in the Schedule of Receivables). The Indenture Trustee shall not
be under any obligation to confirm or reconcile the information provided
pursuant to Section 4.9(a)(iv).
(b) In addition to the information required by Section 4.9(a),
the Servicer shall include in the copy of the Servicer's Certificate
delivered to the Insurer (i) the Delinquency Ratio, Average
Delinquency Ratio, Net Loss Rate and Average Net Loss Rate for such
Determination Date, (ii) whether any Trigger Event has occurred as of
such Determination Date, (iii) whether any Trigger Event that may have
occurred as of a prior Determination Date is Deemed Cured as of such
Determination Date, and (iv) whether to the knowledge of the Servicer
an Insurance Agreement Event of Default has occurred.
(c) If the Servicer's Certificate contains a manifest error, the
Insurer's written notice to the Servicer, the Owner Trustee and the
Indenture Trustee containing the corrected information shall be deemed
to amend such Servicer's Certificate.
SECTION 4.10. Annual Statement as to Compliance; Notice of Default. (a) The
Servicer shall deliver to the Owner Trustee, the Indenture Trustee and the
Insurer, on or before April 30 of each year beginning April 30, 1998, an
Officer's Certificate, dated as of the preceding December 31, stating that (i) a
review of the activities of the Servicer during the preceding 12-month period
(or, in the case of the first such report, during the period from the Closing
Date to December 31, 1997) and of its performance under this Agreement has been
made under such officer's supervision and (ii) to the best of such officer's
knowledge, based on such review, the Servicer has fulfilled all its obligations
under this Agreement throughout such year or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officers and the nature and status thereof. The Indenture Trustee shall send a
copy of such certificate and the report referred to in Section 4.11 to the
Rating Agencies. A copy of such certificate and the report referred to in
Section 4.11 may be obtained by any Certificateholder by a request in writing to
the Owner Trustee addressed to the Corporate Trust Office or by any Noteholder
by a request in writing to the Indenture Trustee addressed to the Corporate
Trust Office. Upon the telephone request of the Owner Trustee, the Indenture
Trustee will promptly furnish the Owner Trustee a list of Noteholders as of the
date specified by the Owner Trustee. Each Noteholder, by its acceptance of a
Note, shall be deemed to agree that the Indenture Trustee shall be under no
liability for providing the list of Noteholders to the Owner Trustee as
described in the immediately preceding sentence.
(b) The Servicer shall deliver to the Owner Trustee, the
Indenture Trustee, the Insurer and the Rating Agencies, promptly after
having obtained knowledge thereof, but in no event later than five (5)
Business Days thereafter, written notice in an Officer's Certificate
of any event which with the giving of notice or lapse of time, or
both, would become a Servicer Default under Section 8.1(a), (b) or
(c).
SECTION 4.11. Annual Independent Certified Public Accountants' Report. The
Servicer shall cause a firm of independent certified public accountants(who may
also render other services to the Servicer and the Seller and their Affiliates)
to deliver to the Seller, the Owner Trustee, the Indenture Trustee and the
Insurer on or before April 30 of each year commencing April 30, 1998, a report
summarizing the results of applying certain agreed upon procedures to the
monthly Servicer's Certificates and to management's assertions relating to its
compliance with the provisions of this Agreement in accordance with the
attestation standards established by the American Institute of Certified Public
Accountants. Such firm shall apply the agreed-upon procedures to the sections of
the monthly Servicer's Certificates and sections of this Agreement with which
independent public accountants generally possess adequate professional knowledge
and which are reasonably subject to positive assurance by them, except for such
exceptions as they believe to be immaterial and such other exceptions as shall
be set forth in such report.
SECTION 4.12. Access to Certain Documentation and Information Regarding
Receivables. The Servicer shall provide to representatives of the Indenture
Trustee, the Owner Trustee, the Certificateholders and the Insurer reasonable
access to the Receivable Files in such cases where the Indenture Trustee or the
Certificateholders shall be required by applicable statutes or regulations to
review such documentation as demonstrated by evidence satisfactory to the
Servicer in its reasonable judgment. Access shall be afforded without charge,
but only upon reasonable request (not less than 72 hours prior notice) and
during the normal business hours at the respective offices of the Servicer.
Nothing in this Section shall affect the obligation of the Servicer to observe
any applicable law prohibiting disclosure of information regarding the Obligors
and the failure of the Servicer to provide access to information as a result of
such obligation shall not constitute a breach of this Section. Any
Certificateholder, by its acceptance of a Certificate, shall be deemed to have
agreed to keep any information obtained by it pursuant to this Section 4.12
confidential, except as may be required by law.
SECTION 4.13. Servicer Expenses. The Servicer shall be required to pay all
expenses incurred by it in connection with its activities hereunder and under
any of the Basic Documents, including fees and disbursements of independent
accountants, taxes imposed on the Servicer and expenses incurred in connection
with distributions and reports to Certificateholders and Noteholders.
SECTION 4.14. Appointment of Subservicer. The Servicer may at any time
appoint a subservicer, including SunStar Acceptance Corporation (California)
which is hereby so appointed, to perform all or any portion of its obligations
as Servicer or custodian hereunder; provided, however, that the Rating Agency
Condition shall have been satisfied in connection therewith other than with
respect to SunStar Acceptance Corporation (California); provided further that
the Servicer shall remain obligated and be liable to the Issuer, the Owner
Trustee, the Indenture Trustee, the Insurer, the Certificateholders and the
Noteholders for the servicing and administering of the Receivables in accordance
with the provisions hereof without diminution of such obligation and liability
by virtue of the appointment of such subservicer and to the same extent and
under the same terms and conditions as if the Servicer alone were servicing and
administering the Receivables. The fees and expenses of the subservicer shall be
as agreed between the Servicer and its subservicer from time to time and none of
the Issuer, the Owner Trustee, the Indenture Trustee, the Insurer, the
Certificateholders or the Noteholders shall have any responsibility therefor.
Any such subservicer shall perform its duties with the same standard of care
applicable to the Servicer pursuant to Section 4.1 of this Agreement.
SECTION 4.15. Obligations under Basic Documents. The Servicer shall perform
all of its obligations under the Basic Documents.
ARTICLE V
Distributions; Spread Account;
Statements to Certificateholders and Noteholders
SECTION 5.1. Establishment of Trust Accounts. (a)
(i) The Servicer, for the benefit of the Indenture Trustee on
behalf of the Noteholders, the Owner Trustee on behalf of the
Certificateholders, and the Insurer, shall establish and maintain in
the name of the Indenture Collateral Agent an Eligible Deposit Account
(the "Collection Account"), bearing a designation clearly indicating
that the funds deposited therein are held for the benefit of the
Indenture Trustee on behalf of the Noteholders, the Owner Trustee on
behalf of the Certificateholders and the Insurer. The Collection
Account shall initially be established with the Indenture Trustee.
Investment Earnings on funds in the Collection Account shall be paid
to the Servicer.
(ii) The Servicer, for the benefit of the Indenture Trustee on
behalf of the Noteholders, shall establish and maintain in the name of
the Indenture Collateral Agent an Eligible Deposit Account (the "Note
Distribution Account"), bearing a designation clearly indicating that
the funds deposited therein are held for the benefit of the Indenture
Trustee on behalf of the Noteholders and the Insurer. The Note
Distribution Account shall initially be established with the Indenture
Trustee.
(b) Funds on deposit in the Collection Account and the Note
Distribution Account (collectively, the "Trust Accounts") and the
Certificate Distribution Account shall be invested by the Indenture
Collateral Agent with respect to Trust Accounts and by the Owner
Trustee with respect to the Certificate Distribution Account (or any
custodian with respect to funds on deposit in any such account) in
Eligible Investments selected in writing by the Servicer (pursuant to
standing instructions or otherwise); provided, however, it is
understood and agreed that neither the Indenture Collateral Agent nor
the Owner Trustee shall be liable for any loss arising from such
investment in Eligible Investments. All such Eligible Investments
shall be held by or on behalf of the Indenture Collateral Agent or the
Owner Trustee, as applicable, for the benefit of the Noteholders
and/or the Certificateholders, as applicable. Other than as permitted
by the Rating Agencies and the Insurer, funds on deposit in the
Collection Account, the Note Distribution Account and the Certificate
Distribution Account shall be invested in Eligible Investments that
will mature so that such funds will be available at the close of
business on the Business Day immediately preceding the following
Distribution Date or, if the Class A-1 Notes have not been paid in
full prior to such date, at the close of business on the Business Day
prior to the Class A-1 Final Scheduled Distribution Date.
(c) (i) The Indenture Collateral Agent shall possess all right,
title and interest in all funds on deposit from time to time in the
Trust Accounts and in all proceeds thereof (excluding all Investment
Earnings on the Collection Account) and all such funds, investments,
proceeds and income shall be part of the Owner Trust Estate. Except as
otherwise provided herein, the Trust Accounts shall be under the sole
dominion and control of the Indenture Collateral Agent for the benefit
of the Noteholders and the Certificateholders, or the Noteholders, as
the case may be, and the Insurer. If, at any time, any of the Trust
Accounts or the Certificate Distribution Account ceases to be an
Eligible Deposit Account, the Indenture Collateral Agent (or the
Servicer on its behalf) or the Owner Trustee, as applicable, shall
within 10 Business Days (or such longer period as to which each Rating
Agency and the Insurer may consent) establish a new Trust Account or a
new Certificate Distribution Account, as applicable, as an Eligible
Deposit Account and shall transfer any cash and/or any investments to
such new Trust Account or a new Certificate Distribution Account, as
applicable. In connection with the foregoing, the Servicer agrees
that, in the event that any of the Trust Accounts are not accounts
with the Indenture Trustee, the Servicer shall notify the Indenture
Trustee in writing promptly upon any of such Trust Accounts ceasing to
be an Eligible Deposit Account.
(ii) With respect to the Trust Account Property, the Indenture
Collateral Agent, and with respect to the Certificate Distribution
Account, the Owner Trustee, agrees, by its respective acceptance
hereof, that:
(A) any Trust Account Property or any property in the
Certificate Distribution Account that is held in deposit accounts
shall be held solely in the Eligible Deposit Accounts subject to
the penultimate sentence of Section 5.1(c)(i); and, except as
otherwise provided herein, each such Eligible Deposit Account
shall be subject to the exclusive custody and control of the
Indenture Collateral Agent with respect to the Trust Accounts and
the Owner Trustee with respect to the Certificate Distribution
Account, and the Indenture Collateral Agent or the Owner Trustee,
as applicable, shall have sole signature authority with respect
thereto;
(B) any Trust Account Property that constitutes Physical
Property shall be delivered to the Indenture Collateral Agent in
accordance with paragraph (a) of the definition of "Delivery" and
shall be held, pending maturity or disposition, solely by the
Indenture Collateral Agent or a financial intermediary (as such
term is defined in Section 8-313(4) of the UCC) acting solely for
the Indenture Collateral Agent;
(C) any Trust Account Property that is a book-entry security
held through the Federal Reserve System pursuant to Federal
book-entry regulations shall be delivered in accordance with
paragraph (b) of the definition of "Delivery" and shall be
maintained by the Indenture Collateral Agent, pending maturity or
disposition, through continued book-entry registration of such
Trust Account Property as described in such paragraph; and
(D) any Trust Account Property that is an "uncertificated
security" under Article 8 of the UCC and that is not governed by
clause (C) above shall be delivered to the Indenture Collateral
Agent in accordance with paragraph (c) of the definition of
"Delivery" and shall be maintained by the Indenture Collateral
Agent, pending maturity or disposition, through continued
registration of the Indenture Collateral Agent's (or its
nominee's) ownership of such security.
(d) The Servicer shall have the power, revocable by the
Insurer or, with the consent of the Insurer, by the Indenture
Trustee or by the Owner Trustee with the consent of the Indenture
Trustee, to instruct the Indenture Collateral Agent to make
withdrawals and payments from the Trust Accounts for the purpose
of permitting the Servicer or the Owner Trustee to carry out its
respective duties hereunder or permitting the Indenture Trustee
to carry out its duties under the Indenture.
SECTION 5.2. Collections. (a) The Servicer shall remit within two Business
Days of receipt thereof to the Collection Account all payments by or on behalf
of the Obligors with respect to the Receivables (other than Purchased
Receivables) and all Liquidation Proceeds, both as collected during the Monthly
Period less any payments owed thereon to the Servicer or the Subservicer.
Notwithstanding the foregoing, for so long as SunStar Acceptance Corporation is
acting as the Servicer, the Servicer shall be permitted to make remittances of
such collections and any other proceeds of the Receivables with respect to the
preceding calendar month to the Collection Account in next-day funds or
immediately available funds by 12:30 p.m. New York City time on the Business Day
immediately preceding the applicable Distribution Date if the specific terms and
conditions set forth below are satisfied and only for so long as such terms and
conditions are satisfied:
(i) the Servicer shall be SunStar Acceptance
Corporation or any other successor Servicer
pursuant to Section 8.2;
(ii) there exists no Servicer Default;
(iii) if the Servicer does not have a short term debt
rating or deposit rating, as applicable, of at
least A-1 from Standard & Poor's and P-1 from
Moody's, a guaranty, letter of credit, surety bond
or other similar instrument is issued
covering all payments by or on behalf of the
Obligors with respect to the Receivables (other
than Purchased Receivables) and all Liquidation
Proceeds held by SunStar Acceptance Corporation or
its successor, which is acceptable to the Rating
Agencies and the Insurer and issued by an entity
which has a short-term debt or deposit rating, as
applicable, of at least A-1 from Standard & Poor's
and P-1 from Moody's; and
(iv) the Servicer, the Indenture Trustee, the Seller and
the Insurer shall not have received any notice from
either of the Rating Agencies that failure to
deposit such funds more frequently will result in a
reduction or withdrawal of the then current rating
on the Notes or the Certificates by either of the
Rating Agencies.
The Indenture Trustee shall not be deemed to have knowledge of any event or
circumstance under clause (ii) above that would require remittance by the
Servicer of all payments by or on behalf of the Obligors with respect to the
Receivables (other than Purchased Receivables) and all Liquidation Proceeds to
the Collection Account two Business Days after receipt thereof unless the
Indenture Trustee has received notice of such event or circumstances from the
Seller, the Servicer or the Insurer in an Officer's Certificate or from Holders
of Notes evidencing not less than 25% of the outstanding principal amount of the
Notes or Holders of Certificates evidencing not less than 25% of the outstanding
Certificate Balance, as applicable. For purposes of this Article V, the phrase
"payments by or on behalf of Obligors" shall mean payments made with respect to
the Receivables by Persons other than the Servicer or the Seller.
(b) The Servicer will be entitled to be reimbursed from amounts on
deposit in the Collection Account with respect to a Monthly Period for
amounts previously deposited in the Collection Account but later determined
by the Servicer to have resulted from mistaken deposits or postings or
checks returned for insufficient funds. The amount to be reimbursed
hereunder shall be paid to the Servicer on the related Distribution Date
pursuant to Section 5.6(b)(ii) upon certification by the Servicer of such
amounts and the provision of such information to the Indenture Trustee and
the Insurer as may be necessary in the opinion of the Insurer to verify the
accuracy of such certification.
(c) The Servicer may, but shall not be required to, deposit CPI Funds
in the Collection Account.
SECTION 5.3. Application of Collections. All collections for the Monthly
Period shall be applied by the Servicer as follows:
With respect to each Receivable (other than a Purchased Receivable),
payments by or on behalf of the Obligor, (other than Supplemental Servicing Fees
with respect to such Receivable, to the extent collected) shall be applied
first, in the case of Precomputed Receivables, to the Scheduled Payment and, in
the case of Simple Interest Receivables, to the extent of the related Scheduled
Payment, to interest and principal in accordance with the Simple Interest
Method. In each case, any excess shall be released to the Servicer to the extent
any amount is owed to it or an Affiliate relating to Collateral Protection
Insurance, and any amount remaining thereafter shall be applied to reduce the
principal balance of the related Receivable. No portion of any payment by or on
behalf of an Obligor will be applied to the satisfaction of any amounts owing as
a result of Collateral Protection Insurance having been placed for an Obligor
until such Obligor's Scheduled Payment shall have been satisfied.
All amounts collected that are payable to the Servicer as Supplemental
Servicing Fees hereunder shall, other than as provided in Section 5.8, be
deposited in the Collection Account and paid to the Servicer in accordance with
Section 5.6(b)(ii).
SECTION 5.4. Withdrawals from Spread Account. (a) In the event that the
Servicer's Certificate with respect to any Determination Date shall state that
the amount of the Available Funds with respect to such Determination Date is
less than the sum of the amounts payable on the related Distribution Date
pursuant to clauses (i) through (vi) of Section 5.6(b) or on the Class A-1 Final
Scheduled Distribution Date pursuant to clauses (i) and (ii) of Section 5.6(c)
(such deficiency being a "Deficiency Claim Amount") then on the Deficiency Claim
Date immediately preceding such Distribution Date or Class A-1 Final Scheduled
Distribution Date, as applicable, the Indenture Trustee shall deliver to the
Collateral Agent, the Insurer and the Servicer, by hand delivery, telex or
facsimile transmission, a written notice (a "Deficiency Notice") specifying the
Deficiency Claim Amount for such Distribution Date, the Note Policy Claim
Amount, if any, and the Certificate Policy Claim Amount, if any. Such Deficiency
Notice shall direct the Collateral Agent to remit such Deficiency Claim Amount
(to the extent of the funds available to be distributed pursuant to the Spread
Account Agreement) to the Indenture Trustee for deposit in the Collection
Account on the related Distribution Date or Class A-1 Final Scheduled
Distribution Date, as applicable.
(b) Any Deficiency Notice shall be delivered by 10:00 a.m., New York
City time, on the fourth Business Day preceding such Distribution Date or
Class A-1 Final Scheduled Distribution Date, as applicable. The amounts
distributed by the Collateral Agent to the Indenture Trustee pursuant to a
Deficiency Notice shall be deposited by the Indenture Trustee into the
Collection Account pursuant to Section 5.5.
SECTION 5.5. Additional Deposits. The Servicer and the Seller, and SunStar
Acceptance Corporation, as applicable, shall deposit or cause to be deposited in
the Collection Account on the fourth Business Day after the Determination Date
following the date on which such obligations are due the aggregate Purchase
Amount with respect to Purchased Receivables. On or before each Draw Date, the
Indenture Trustee shall remit to the Collection Account any amounts delivered to
the Indenture Trustee by the Collateral Agent.
SECTION 5.6. Distributions. (a) [RESERVED]
(b) On each Distribution Date other than the Distribution Date on
which Insolvency Proceeds are to be distributed, the Indenture Trustee
shall (based solely on the information contained in the Servicer's
Certificate delivered with respect to the related Determination Date)
distribute the following amounts and in the following order of priority:
(i) from the Distribution Amount, to each of the Indenture
Trustee and the Owner Trustee, their respective accrued and unpaid
trustees' fees and expenses and any accrued and unpaid fees and
expenses of the Indenture Collateral Agent (in each case, to the
extent such fees have not been previously paid by the Servicer);
(ii) from the Distribution Amount, to the Servicer, the Base
Servicing Fee for the related Monthly Period, any Supplemental
Servicing Fees for the related Monthly Period, and any amounts
specified in Section 5.2(b), to the extent the Servicer has not
reimbursed itself in respect of such amounts pursuant to Section 5.9
and to the extent not retained by the Servicer;
(iii) from the Distribution Amount, to the Note Distribution
Account, the Noteholders' Interest Distributable Amount;
(iv) from the Distribution Amount, to the Note Distribution
Account, the Noteholders' Principal Distributable Amount;
(v) from the Distribution Amount, to the Owner Trustee for
deposit in the Certificate Distribution Account, the
Certificateholders' Interest Distributable Amount;
(vi) from the Distribution Amount, to the Owner Trustee for
deposit in the Certificate Distribution Account, the
Certificateholders' Principal Distributable Amount;
(vii) from the Available Funds, to the Insurer, to the extent of
any amounts owing to the Insurer under the Insurance Agreement and not
paid;
(viii) from Available Funds, to the Collateral Agent, amounts for
deposit in the Spread Account up to the Specified Spread Account
Requirement; and
(ix) from Available Funds, to the Seller, 99% of the remaining
funds and, to the General Partner, 1% of the remaining funds;
provided, however, that, (A) following an acceleration of the Notes or, (B) if
an Insurer Default shall have occurred and be continuing, following the
occurrence of an Event of Default pursuant to Section 5.1(i), 5.1(ii), 5.1(iii),
5.1(v) or 5.1(vi) of the Indenture, or (C) following the receipt of Insolvency
Proceeds pursuant to Section 9.1(b), amounts deposited in the Note Distribution
Account and the Certificate Distribution Account (including any Insolvency
Proceeds) shall be paid to the Noteholders and the Certificateholders in
accordance with the provisions of Section 5.6 of the Indenture.
(c) On the Class A-1 Final Scheduled Distribution Date, the
Indenture Trustee shall (based solely on the information contained in
the Servicer's Certificate delivered with respect to the related
Determination Date) distribute the following amounts and in the
following order of priority:
(i) from the Class A-1 Distribution Amount, to the Note
Distribution Account, the sum of (x) the Noteholders' Monthly Interest
Distributable Amount for the Class A-1 Notes (calculated as if the
Class A-1 Final Scheduled Distribution Date were a Distribution Date)
and (y) the Noteholders' Interest Carryover Shortfall for the Class
A-1 Notes (calculated as if the Class A-1 Final Scheduled Distribution
Date were a Distribution Date); and
(ii) from the Class A-1 Distribution Amount, to the Note
Distribution Account, the Noteholders' Principal Distributable Amount
for the Class A-1 Notes.
(d) In the event that the Collection Account is maintained with an
institution other than the Indenture Collateral Agent, the Servicer shall
instruct and cause such institution to make all deposits and distributions
pursuant to Section 5.6(b) and Section 5.6(c) on the related Distribution Date
or Class A-1 Final Scheduled Distribution Date, as applicable.
SECTION 5.7. Statements to Certificateholders and Noteholders. On or prior
to each Determination Date, the Servicer shall provide to the Indenture Trustee
(with a copy to the Insurer and the Rating Agencies) for the Indenture Trustee
to forward to each Noteholder of record, to each Paying Agent, if any, and to
the Owner Trustee for the Owner Trustee to forward to each Certificateholder of
record, a statement substantially in the form of Exhibit B and Exhibit C,
respectively, setting forth at least the following information with respect to
distributions on the related Distribution Date as to the Notes and the
Certificates to the extent applicable:
(i) the amount of such distribution allocable to
principal of each Class of Notes and to the Certificate
Balance of the Certificates;
(ii) the amount of such distribution allocable to
interest on or with respect to each Class of Notes and to
the Certificates;
(iii) the amount of such distribution payable out of amounts
withdrawn from the Spread Account or pursuant to a claim on the Note
Policy or the Certificate Policy;
(iv) the Pool Balance as of the close of business on
the last day of the preceding Monthly Period;
(v) the aggregate outstanding principal amount of each Class of
the Notes, the Note Pool Factor for each such Class, the Certificate
Balance and the Certificate Pool Factor after giving effect to
payments allocated to principal reported under (i) above;
(vi) the amount of the Servicing Fee paid to the Servicer with
respect to the related Monthly Period and/or due but unpaid with
respect to such Monthly Period or prior Monthly Periods, as the case
may be;
(vii) the Noteholders' Interest Carryover Shortfall,
the Certificateholders' Interest Carryover Shortfall, the
Noteholders' Principal Carryover Shortfall, and the
Certificateholders' Principal Carryover Shortfall;
(viii) the amount of the aggregate Realized Losses,
if any, for the second preceding Monthly Period; and
(ix) the aggregate Purchase Amounts for Receivables, if any,
that were repurchased in such period.
Each amount set forth pursuant to paragraph (i), (ii), (iii), (vi) and (vii)
above shall be expressed as a dollar amount per $1,000 of the initial principal
balance of the Notes (or Class thereof) or the initial Certificate Balance, as
applicable.
SECTION 5.8. Net Deposits. As an administrative convenience, unless the
Servicer is required to remit collections within two Business Days of receipt
thereof, the Servicer will be permitted to make the deposit of collections on
the Receivables and Purchase Amounts for or with respect to each Monthly Period
net of distributions to be made to the Servicer with respect to such Monthly
Period. The Servicer, however, will account to the Owner Trustee, the Indenture
Trustee, the Indenture Collateral Agent, the Noteholders and the
Certificateholders as if all deposits, distributions and transfers were made
individually.
SECTION 5.9. Optional Deposits by the Insurer. The Insurer shall at any
time, and from time to time, with respect to a Distribution Date, have the
option (but shall not be required, except in accordance with the terms of a
Policy) to deliver amounts to the Indenture Collateral Agent for deposit into
the Collection Account for any of the following purposes: (i) to provide funds
in respect of the payment of fees or expenses of any provider of services to the
Trust with respect to such Distribution Date, or (ii) to include such amount to
the extent that without such amount a draw would be required to be made on the
Note Policy or the Certificate Policy.
ARTICLE VA
The Certificate Policy
SECTION 5A.1. Claims Under Policy. (a) In the event that the Indenture
Trustee has delivered a Deficiency Notice with respect to any Determination
Date, if the Certificate Policy Claim Amount for the related Distribution Date
is greater than zero, the Owner Trustee shall furnish to the Insurer (with a
copy to the Servicer) no later than 12:00 noon New York City time on the related
Draw Date a completed Notice of Claim in the amount of the Certificate Policy
Claim Amount. Amounts paid by the Insurer under the Certificate Policy shall be
deposited by the Owner Trustee into the Certificate Distribution Account for
payment to Certificateholders on the related Distribution Date (or promptly
following payment on a later date as set forth in the Certificate Policy). The
"Certificate Policy Claim Amount" for any Distribution Date shall equal the
lesser of (i) the sum of the Certificateholders' Interest Distributable Amount
and the Certificateholders' Principal Distributable Amount (in each case, less
the amount thereof distributable to the General Partner) for such Distribution
Date and (ii) the excess, if any, of the amount required to be distributed
pursuant to clauses (i) - (vi) of Section 5.6(b) over the Distribution Amount
and any Note Policy Claim Amounts for such Distribution Date.
(b) Any notice delivered by the Owner Trustee to the Insurer
pursuant to subsection 5A.1(a) shall specify the Certificate Policy
Claim Amount claimed under the Certificate Policy and shall constitute
a "Notice of Claim" under the Certificate Policy. In accordance with
the provisions of the Certificate Policy, the Insurer is required to
pay to the Owner Trustee the Certificate Policy Claim Amount properly
claimed thereunder by 12:00 noon, New York City time, on the earlier
of (i) the third Business Day following receipt on a Business Day of
the Notice of Claim, and (ii) the applicable Distribution Date. Any
payment made by the Insurer under the Certificate Policy shall be
applied solely to the payment of the Certificates, and for no other
purpose.
(c) The Owner Trustee shall (i) receive as attorney-in-fact of
each Certificateholder any Certificate Policy Claim Amount from the
Insurer and (ii) deposit the same in the Certificate Distribution
Account for disbursement to the Certificateholders as set forth in the
Trust Agreement. Any and all Certificate Policy Claim Amounts
disbursed by the Owner Trustee from claims made under the Certificate
Policy shall not be considered payment by the Trust or from the Spread
Account with respect to such Certificates, and shall not discharge the
obligations of the Trust with respect thereto. The Insurer shall, to
the extent it makes any payment with respect to the Certificates,
become subrogated to the rights of the recipients of such payments to
the extent of such payments. Subject to and conditioned upon any
payment with respect to the Certificates by or on behalf of the
Insurer, the Owner Trustee shall assign to the Insurer all rights to
the payment of interest or principal with respect to the Certificates
which are then due for payment to the extent of all payments made by
the Insurer and the Insurer may exercise any option, vote, right,
power or the like with respect to the Certificates to the extent that
it has made payment pursuant to the Certificate Policy. To evidence
such subrogation, the Certificate Registrar shall note the Insurer's
rights as subrogee upon the register of Certificateholders upon
receipt from the Insurer of proof of payment by the Insurer of any
Certificateholders' Interest Distributable Amount or
Certificateholders' Principal Distributable Amount.
(d) The Owner Trustee shall be entitled to enforce on behalf of
the Certificateholders the obligations of the Insurer under the
Certificate Policy. Notwithstanding any other provision of this
Agreement, the Certificateholders are not entitled to make a claim
directly under the Certificate Policy or institute proceedings
directly against the Insurer.
SECTION 5A.2. Preference Claims; Direction of Proceedings. (a) In the event
that the Owner Trustee has received a certified copy of an order of the
appropriate court that any Certificateholders' Interest Distributable Amount or
Certificateholders' Principal Distributable Amount paid on a Certificate has
been avoided in whole or in part as a preference payment under applicable
bankruptcy law, the Owner Trustee shall so notify the Insurer, shall comply with
the provisions of the Certificate Policy to obtain payment by the Insurer of
such avoided payment, and shall, at the time it provides notice to the Insurer,
notify Holders of the Certificates by mail that, in the event that any
Certificateholder's payment is so recoverable, such Certificateholder will be
entitled to payment pursuant to the terms of the Certificate Policy. Pursuant to
the terms of the Certificate Policy, the Insurer will make such payment on
behalf of the Certificateholder to the receiver, conservator,
debtor-in-possession or trustee in bankruptcy named in the Order (as defined in
the Certificate Policy) and not to the Owner Trustee or any Certificateholder
directly (unless a Certificateholder has previously paid such payment to the
receiver, conservator, debtor-in-possession or trustee in bankruptcy, in which
case the Insurer will make such payment to the Owner Trustee for distribution to
such Certificateholder upon proof of such payment reasonably satisfactory to the
Insurer).
(b) The Owner Trustee shall promptly notify the Insurer of any
proceeding or the institution of any action (of which a responsible
officer of the Owner Trustee has actual knowledge) seeking the
avoidance as a preferential transfer under applicable bankruptcy,
insolvency, receivership, rehabilitation or similar law (a "Preference
Claim") of any distribution made with respect to the Certificates.
Each Holder, by its purchase of Certificates, and the Owner Trustee
hereby agree that so long as an Insurer Default shall not have
occurred and be continuing, the Insurer may at any time during the
continuation of any proceeding relating to a Preference Claim direct
all matters relating to such Preference Claim including, without
limitation, (i) the direction of any appeal of any order relating to
any Preference Claim and (ii) the posting of any surety, supersedeas
or performance bond pending any such appeal at the expense of the
Insurer, but subject to reimbursement as provided in the Insurance
Agreement. In addition, and without limitation of the foregoing, as
set forth in Section 5A.1(c), the Insurer shall be subrogated to, and
each Certificateholder and the Owner Trustee hereby delegate and
assign, to the fullest extent permitted by law, the rights of the
Owner Trustee and each Certificateholder in the conduct of any
proceeding with respect to a Preference Claim, including, without
limitation, all rights of any party to an adversary proceeding action
with respect to any court order issued in connection with any such
Preference Claim.
SECTION 5A.3. Surrender of Policy. The Owner Trustee shall surrender the
Certificate Policy to the Insurer for cancellation upon the expiration of such
policy in accordance with the terms thereof.
ARTICLE VI
The Seller
SECTION 6.1. Representations of the Seller. The Seller makes the following
representations on which the Insurer shall be deemed to have relied in executing
and delivering the Policies and on which the Issuer is deemed to have relied in
acquiring the Receivables. The representations speak as of the execution and
delivery of this Agreement and as of the Closing Date, and shall survive the
sale of the Receivables to the Issuer and the pledge thereof to the Indenture
Trustee pursuant to the Indenture.
(a) Organization and Good Standing. The Seller is duly organized and
validly existing as a corporation in good standing under the laws of the
State of Delaware with the corporate power and authority to own its
properties and to conduct its business as such properties are currently
owned and such business is now conducted, and had at all relevant times,
and has, the power, authority and legal right to acquire and own the
Receivables.
(b) Due Qualification. The Seller is duly qualified to do business as
a foreign corporation in good standing, and has obtained all necessary
licenses and approvals in all jurisdictions in which the ownership or lease
of property, including the Receivables, or the conduct of its business
shall require such qualifications, except where failure to obtain the same
would not have a material adverse effect upon the rights of the Issuer, the
Noteholders or the Certificateholders.
(c) Power and Authority of the Seller. The Seller has the corporate
power and authority to execute and deliver this Agreement and to perform
its obligations under each of the Basic Documents to which the Seller is a
party; the Seller has full corporate power and authority to sell and assign
the property to be sold and assigned to and deposited with the Issuer and
the Seller has duly authorized such sale and assignment to the Issuer by
all necessary corporate action; and the execution, delivery and performance
of each of the Basic Documents to which the Seller is a party has been duly
authorized by the Seller by all necessary corporate action.
(d) Binding Obligation. This Agreement and each of the Basic Documents
to which the Seller is a party constitute legal, valid and binding
obligations of the Seller, enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, moratorium, fraudulent
conveyance, reorganization and similar laws now or hereafter in effect
relating to creditors' rights generally and subject to general principles
of equity (whether applied in a proceeding at law or in equity).
(e) No Violation. The consummation of the transactions contemplated by
this Agreement and the fulfillment of the terms hereof do not result in any
breach of any of the terms and provisions of, nor constitute (with or
without notice or lapse of time or both) a default under, the certificate
of incorporation or by-laws of the Seller, or any material indenture,
agreement or other instrument to which the Seller is a party or by which it
is bound; nor result in the creation or imposition of any Lien upon any of
its properties pursuant to the terms of any such indenture, agreement or
other instrument (other than pursuant to the Basic Documents); nor, to the
best of its knowledge, violate any law, order, rule or regulation
applicable to the Seller of any court or of any federal or state regulatory
body, administrative agency or other governmental instrumentality having
jurisdiction over the Seller or its properties.
(f) No Proceedings. There are no proceedings or investigations pending
against the Seller or, to its best knowledge, threatened against the
Seller, before any court, regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Seller or its
properties: (i) asserting the invalidity of this Agreement or any of the
Basic Documents, the Notes or the Certificates, (ii) seeking to prevent the
issuance of the Notes or the Certificates or the consummation of any of the
transactions contemplated by this Agreement or any of the Basic Documents,
(iii) seeking any determination or ruling that could reasonably be expected
to have a material and adverse effect on the performance by the Seller of
its obligations under, or the validity or enforceability of the Basic
Documents, the Notes or the Certificates or (iv) that might adversely
affect the federal income tax attributes of the Issuer, the Notes or the
Certificates.
(g) All Consents. All authorizations, consents, orders or approvals of
or registrations or declarations with any court, regulatory body,
administrative agency or other government instrumentality required to be
obtained, effected or given by the Seller in connection with the execution
and delivery by the Seller of this Agreement or any of the Basic Documents
to which it is a party and the performance by the Seller of the
transactions contemplated by this Agreement or any of the Basic Documents
to which it is a party, have been duly obtained, effected or given and are
in full force and effect, except where failure to obtain the same would not
have a material adverse effect upon the rights of the Issuer, the
Noteholders or the Certificateholders.
(h) Chief Executive Office. The chief executive office of the Seller
is at 225 East ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Freeway, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
SECTION 6.2. Corporate Existence. (a) During the term of this Agreement,
the Seller will keep in full force and effect its existence, rights and
franchises as a corporation under the laws of the jurisdiction of its
incorporation and will obtain and preserve its qualification to do business in
each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of this Agreement, the Basic Documents
and each other instrument or agreement necessary or appropriate to the proper
administration of this Agreement and the transactions contemplated hereby.
(b) During the term of this Agreement, the Seller shall observe the
applicable legal requirements for the recognition of the Seller as a legal
entity separate and apart from its Affiliates, including as follows:
(i) the Seller shall maintain corporate records and books of
account separate from those of its Affiliates;
(ii) except as otherwise provided in this Agreement, the Seller
shall not commingle its assets and funds with those of its Affiliates;
(iii) the Seller shall hold such appropriate meetings of its
Board of Directors (or obtain appropriate director's consents) as are
necessary to authorize all the Seller's corporate actions required by
law to be authorized by the Board of Directors, shall keep minutes of
such meetings and of meetings of its stockholder(s) and observe all
other customary corporate formalities (and any successor Seller not a
corporation shall observe similar procedures in accordance with its
governing documents and applicable law);
(iv) the Seller shall at all times hold itself out to the public
under the Seller's own name as a legal entity separate and distinct
from its Affiliates; and
(v) all transactions and dealings between the Seller and its
Affiliates will be conducted on an arm's-length basis.
SECTION 6.3. Liability of Seller; Indemnities. The Seller shall be liable
in accordance herewith only to the extent of the obligations specifically
undertaken by the Seller under this Agreement.
(a) The Seller shall indemnify, defend and hold harmless the Issuer,
the Owner Trustee, the Trust, the Insurer, the Indenture Trustee and the
Indenture Collateral Agent from and against any taxes that may at any time
be asserted against any such Person with respect to the transactions
contemplated in this Agreement and any of the Basic Documents (except any
income taxes arising out of fees paid to the Owner Trustee or the Indenture
Trustee and except any taxes to which the Owner Trustee or the Indenture
Trustee may otherwise be subject to), including any sales, gross receipts,
general corporation, tangible personal property, privilege or license taxes
(but, in the case of the Issuer, not including any taxes asserted with
respect to, federal or other income taxes arising out of distributions on
the Certificates and the Notes) and costs and expenses in defending against
the same.
(b) The Servicer shall indemnify, defend and hold harmless the Issuer,
the Owner Trustee and the Indenture Trustee from and against any taxes that
may at any time be asserted against any of the foregoing with respect to
the transactions contemplated herein or in the other Basic Documents, if
any, including, without limitation, any sales, gross receipts, general
corporation, tangible personal property, privilege, or license taxes (but
not including any taxes asserted with respect to, and as of the date of,
the sale, transfer and assignment of the Owner Trust Estate to the Trust or
the issuance and original sale of the Notes and the Certificates, or
asserted with respect to ownership of the Receivables or the other Owner
Trust Estate, or federal or other applicable state income taxes arising out
of the transactions contemplated by this Agreement and the other Basic
Documents) and costs and expenses in defending against the same.
(c) The Seller shall indemnify, defend and hold harmless the Issuer,
the Owner Trustee, the Indenture Trustee, and the Indenture Collateral
Agent, the Insurer, the Certificateholders and the Noteholders from and
against any loss, liability or expense incurred by reason of (i) the
Seller's willful misfeasance, bad faith or negligence in the performance of
its duties under this Agreement, or by reason of reckless disregard of its
obligations and duties under this Agreement and (ii) the Seller's or the
Issuer's violation of federal or state securities laws in connection with
the offering and sale of the Notes and the Certificates, except to the
extent such violation results from information contained in the offering
materials used in connection with the offering and distribution of the
Securities that was expressly provided in writing by the indemnified party
for use in such offering materials.
(d) The Seller shall indemnify, defend and hold harmless the Owner
Trustee and its officers, directors, employees and agents from and against
any and all costs, expenses, losses, claims, damages and liabilities
arising out of, or incurred in connection with the acceptance or
performance of the trusts and duties set forth herein and in the Basic
Documents except to the extent that such cost, expense, loss, claim, damage
or liability shall be due to the willful misfeasance, bad faith or
negligence (except for errors in judgment) of the Owner Trustee.
(e) If a claim is made against an indemnitee which could give rise to
indemnification pursuant to this Section 6.3, the indemnitee upon receiving
such claim, shall give notice thereof to the Seller; provided, however,
that failure to give or delay in giving such notice shall not release the
Seller from any of its indemnification obligations hereunder unless and
only to the extent that the Seller can demonstrate it was harmed thereby.
The Seller shall be entitled to defend any such claim through counsel
selected by it (so long as such counsel is reasonably acceptable to the
indemnitee) and the indemnitee will extend reasonable cooperation to the
Seller and such counsel in connection with such defense.
Indemnification under this Section shall survive the resignation or removal
of the Owner Trustee, the Indenture Trustee or the Indenture Collateral Agent
and the termination of this Agreement or the Indenture or the Trust Agreement,
as applicable, and shall include reasonable fees and expenses of counsel and
other expenses of litigation. If the Seller shall have made any indemnity
payments pursuant to this Section and the Person to or on behalf of whom such
payments are made thereafter shall collect any of such amounts from others, such
Person shall promptly repay such amounts to the Seller, without interest.
SECTION 6.4. Merger or Consolidation of, or Assumption of the Obligations
of, Seller. Any Person (a) into which the Seller may be merged or consolidated,
(b) which may result from any merger or consolidation to which the Seller shall
be a party, or (c) which may succeed to the properties and assets of the Seller
substantially as a whole, which Person in any of the foregoing cases executes an
agreement of assumption to perform every obligation of the Seller under this
Agreement, shall be the successor to the Seller hereunder without the execution
or filing of any document or any further act by any of the parties to this
Agreement; provided, however, that (i) immediately after giving effect to such
transaction, no representation or warranty made pursuant to Section 3.1 shall
have been breached and no Servicer Default, and no event which, after notice or
lapse of time, or both, would become a Servicer Default, shall have happened and
be continuing, (ii) the Seller shall have delivered to the Owner Trustee, and
the Indenture Trustee and the Insurer an Officers' Certificate and an Opinion of
Counsel each stating that such consolidation, merger or succession and such
agreement of assumption comply with this Section and (iii) the Seller shall have
delivered to the Owner Trustee and the Indenture Trustee an Opinion of Counsel
stating that, in the opinion of such counsel, either (A) all financing
statements and continuation statements and amendments thereto have been executed
and filed that are necessary fully to preserve and protect the interest of the
Owner Trustee and the Indenture Trustee, respectively, in the Receivables and
reciting the details of such filings or (B) no such action shall be necessary to
preserve and protect such interest. The Seller shall provide notice of any
merger, consolidation or succession pursuant to this Section to each Rating
Agency and the Insurer. Notwithstanding anything herein to the contrary, the
execution of the foregoing agreement of assumption and compliance with clauses
(i), (ii) and (iii) above shall be conditions to the consummation of the
transactions referred to in clauses (a), (b) or (c) above.
SECTION 6.5. Limitation on Liability of Seller and Others. The Seller and
any director or officer or employee or agent of the Seller may rely in good
faith on the advice of counsel or on any document of any kind, prima facie
properly executed and submitted by any Person respecting any matters arising
under any Basic Document. The Seller shall not be under any obligation to appear
in, prosecute or defend any legal action that shall not be incidental to its
obligations under this Agreement, and that in its opinion may involve it in any
expense or liability.
SECTION 6.6. Seller May Own Certificates or Notes. The Seller and any
Affiliate thereof may in its individual or any other capacity become the owner
or pledgee of Certificates or Notes with the same rights as it would have if it
were not the Seller or an Affiliate thereof, except as expressly provided herein
or in any Basic Document. Notes or Certificates so owned by the Seller or such
Affiliate shall have an equal and proportionate benefit under the provisions of
the Basic Documents, without preference, priority, or distinction as among all
of the Notes or Certificates, provided, however, that any Notes or Certificates
owned by the Seller or any Affiliate thereof, during the time such Notes or
Certificates are owned by them, will not be entitled to the benefits of the
Policies. The Seller shall notify the Owner Trustee, the Indenture Trustee and
the Insurer promptly after it or any of its Affiliates become the owner of a
Certificate or a Note.
ARTICLE VII
The Servicer
SECTION 7.1. Representations of Servicer. The Servicer makes the following
representations on which the Insurer shall be deemed to have relied in executing
and delivering the Policies and on which the Issuer is deemed to have relied in
acquiring the Receivables. The representations speak as of the execution and
delivery of this Agreement and as of the Closing Date, and shall survive the
sale of the Receivables to the Issuer and the pledge thereof to the Indenture
Trustee pursuant to the Indenture.
(a) Organization and Good Standing. The Servicer is duly organized and
validly existing as a corporation in good standing under the laws of the
state of its incorporation, with the corporate power and authority to own
its properties and to conduct its business as such properties are currently
owned and such business is now conducted, and had at all relevant times,
and has, the power, authority and legal right to acquire, own, sell and
service the Receivables and to hold the Receivable Files as custodian.
(b) Due Qualification. The Servicer is duly qualified to do business
and has obtained all necessary licenses and approvals in all jurisdictions
in which the ownership or lease of property or the conduct of its business
(including the servicing of the Receivables as required by this Agreement)
shall require such qualifications, and was duly qualified and had all
licenses in all relevant jurisdictions required for the origination of the
Receivables, except where failure to obtain the same would not have a
material adverse effect upon the rights of the Issuer, the Noteholders or
the Certificateholders.
(c) Power and Authority of the Servicer. The Servicer has the
corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder, and the execution, delivery and
performance of this Agreement have been duly authorized by the Servicer by
all necessary corporate action. All authorizations, consents, orders or
approvals of or registrations or declarations with any court, regulatory
body, administrative agency or other government instrumentality required to
be obtained, effected or given by the Servicer in connection with the
execution and delivery by the Servicer of this Agreement or any of the
Basic Documents to which it is a party and the performance by the Servicer
of the transactions contemplated by this Agreement or any of the Basic
Documents to which it is a party, have been duly obtained, effected or
given and are in full force and effect, except where failure to obtain the
same would not have a material adverse effect upon the rights of the
Issuer, the Noteholders or the Certificateholders.
(d) Binding Obligation. This Agreement constitutes a legal, valid and
binding obligation of the Servicer, enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency, moratorium, fraudulent
conveyance, reorganization and similar laws now or hereafter in effect
relating to creditors' rights generally, and subject to general principles
of equity (whether applied in a proceeding at law or in equity).
(e) No Violation. The consummation of the transactions contemplated by
this Agreement and the fulfillment of the terms hereof do not result in any
breach of any of the terms and provisions of, or constitute (with or
without notice or lapse of time) a default under the certificate of
incorporation or by-laws of the Servicer, or any material indenture,
agreement or other instrument to which the Servicer is a party or by which
it shall be bound; or result in the creation or imposition of any Lien upon
any of its properties pursuant to the terms of any such indenture,
agreement or other instrument (other than pursuant to the Basic Documents);
or, to the best of the Servicer's knowledge, violate any law, order, rule
or regulation applicable to the Servicer of any court or of any federal or
state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Servicer or its properties.
(f) No Proceedings. There are no proceedings or investigations pending
against the Servicer, or, to its best knowledge, threatened against the
Servicer, before any court, regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Servicer or its
properties: (i) asserting the invalidity of this Agreement or any of the
Basic Documents, the Notes or the Certificates, (ii) seeking to prevent the
issuance of the Notes or the Certificates or the consummation of any of the
transactions contemplated by this Agreement or any of the Basic Documents,
(iii) seeking any determination or ruling that might materially and
adversely affect the performance by the Servicer of its obligations under,
or the validity or enforceability of this Agreement or any of the Basic
Documents, the Notes or the Certificates or (iv) relating to the Servicer
and which might adversely affect the federal income tax or ERISA attributes
of the Issuer, the Notes or the Certificates.
SECTION 7.2. Indemnities of Servicer. (a) The Servicer shall be liable in
accordance herewith only to the extent of the obligations specifically
undertaken by the Servicer under this Agreement and the representations made by
the Servicer herein.
(b) The Servicer shall defend, indemnify and hold harmless the Owner
Trustee, the Indenture Trustee, the Trust, the Indenture Collateral Agent,
the Insurer, the Noteholders, the Certificateholders and the Seller from
and against any and all costs, expenses, losses, damages, claims, and
liabilities, arising out of or resulting from the use, ownership or
operation by the Servicer or any Affiliate thereof of a Financed Vehicle.
(c) The Servicer shall indemnify, defend and hold harmless the Owner
Trustee, the Indenture Trustee, the Seller, the Trust, the Indenture
Collateral Agent, the Insurer, their respective officers, directors, agents
and employees and the Noteholders and the Certificateholders from and
against any and all costs, expenses, losses, claims, damages, and
liabilities to the extent that such cost, expense, loss, claim, damage, or
liability arose out of, or was imposed upon any such Person through, the
negligence, willful misfeasance or bad faith of the Servicer in the
performance of its duties under this Agreement or by reason of reckless
disregard of its obligations and duties under this Agreement.
If a claim is made against any indemnitee which could give rise to
indemnification under this Section, such indemnitee, upon receiving such claim,
shall give notice thereof to the Servicer; provided, however, that failure to
give or delay in giving such notice shall not release the Servicer from any of
its indemnification obligations hereunder unless and only to the extent that the
Servicer can demonstrate it was harmed thereby. The Servicer shall be entitled
to defend any such claim through counsel selected by it (so long as such counsel
is reasonably acceptable to the indemnitee) and each indemnitee will extend
reasonable cooperation to the Servicer and such counsel in connection with such
defense.
For purposes of this Section, in the event of the termination of the rights
and obligations of SunStar Acceptance Corporation (or any successor thereto
pursuant to Section 7.3) as Servicer pursuant to Section 8.1, or a resignation
by such Servicer pursuant to this Agreement, such Servicer shall be deemed to be
the Servicer pending appointment of a successor Servicer (other than the
Indenture Trustee) pursuant to Section 8.2.
Indemnification under this Section shall survive the resignation or removal
of the Owner Trustee or the Indenture Trustee or the termination of this
Agreement, the Indenture or the Trust Agreement, as applicable, and shall
include reasonable fees and expenses of counsel and expenses of litigation. If
the Servicer shall have made any indemnity payments pursuant to this Section and
the recipient thereafter collects any of such amounts from others, such Person
shall promptly repay such amounts to the Servicer, without interest.
SECTION 7.3. Merger or Consolidation of, or Assumption of the Obligations
of, Servicer. Any Person (a) into which the Servicer may be merged or
consolidated, (b) which may result from any merger or consolidation to which the
Servicer shall be a party or (c) which may succeed to the properties and assets
of the Servicer, substantially as a whole, or any Person, more than 50% of the
voting stock of which is owned, directly or indirectly, by NationsBank
Corporation or its successor, which Person executed an agreement of assumption
to perform every obligation of the Servicer hereunder, shall be the successor to
the Servicer under this Agreement without further act on the part of any of the
parties to this Agreement; provided, however, that (i) immediately after giving
effect to such transaction, no Servicer Default and no event which, after notice
or lapse of time, or both, would become a Servicer Default shall have happened
and be continuing, (ii) the Servicer shall have delivered to the Owner Trustee
and the Indenture Trustee an Officers' Certificate and an Opinion of Counsel
each stating that such consolidation, merger or succession and such agreement of
assumption comply with this Section and (iii) the Servicer shall have delivered
to the Owner Trustee and the Indenture Trustee an Opinion of Counsel stating
that, in the opinion of such counsel, either (A) all financing statements and
continuation statements and amendments thereto have been executed and filed that
are necessary fully to preserve and protect the interest of the Owner Trustee
and the Indenture Trustee in the Receivables and reciting the details of such
filings, or (B) no such action shall be necessary to preserve and protect such
interest. The Servicer shall provide notice of any merger, consolidation or
succession pursuant to this Section to each Rating Agency and the Insurer.
Notwithstanding anything herein to the contrary, the execution of the foregoing
agreement of assumption and compliance with clauses (i), (ii) and (iii) above
shall be conditions to the consummation of the transactions referred to in
clauses (a), (b) or (c) above.
SECTION 7.4. Limitation on Liability of Servicer and Others. Neither the
Servicer nor any of its directors, officers, employees or agents shall be under
any liability to the Issuer, the Noteholders or the Certificateholders, except
as provided under this Agreement, for any action taken or for refraining from
the taking of any action pursuant to this Agreement or for errors in judgment;
provided, however, that this provision shall not protect the Servicer or any
such person against any liability that would otherwise be imposed by reason of
willful misfeasance, bad faith or negligence in the performance of duties or by
reason of reckless disregard of obligations and duties under this Agreement. The
Servicer or any subservicer and any of their respective directors, officers,
employees or agents may rely in good faith on any document of any kind prima
facie properly executed and submitted by any Person respecting any matters
arising under this Agreement.
Except as provided in this Agreement the Servicer shall not be under any
obligation to appear in, prosecute or defend any legal action that shall not be
incidental to its duties to service the Receivables in accordance with this
Agreement, and that in its opinion may involve it in any expense or liability;
provided, however, that the Servicer, may (but shall not be required to)
undertake any reasonable action that it may deem necessary or desirable to
protect the interests of the Certificateholders under the Trust Agreement and
the Noteholders under the Indenture.
SECTION 7.5. Servicer Not To Resign. Subject to the provisions of Section
7.3, the Servicer may not resign from the obligations and duties hereby imposed
on it as Servicer under this Agreement except upon determination that by reason
of a change in law the performance of its duties under this Agreement would
cause it to be in violation of law and the Insurer does not elect to waive the
obligations of the Servicer to perform the duties which render it legally unable
to act or does not elect to delegate those duties to another Person. Notice of
any such determination permitting the resignation of the Servicer shall be
communicated to the Owner Trustee, the Indenture Trustee and the Insurer at the
earliest practicable time (and, if such communication is not in writing, shall
be confirmed in writing at the earliest practicable time) and any such
determination shall be evidenced by an Opinion of Counsel to such effect
delivered to and satisfactory to the Owner Trustee, the Indenture Trustee and
the Insurer concurrently with or promptly after such notice. No such resignation
of the Servicer shall become effective until the Indenture Trustee or a
successor servicer shall have assumed the responsibilities and obligations of
SunStar Acceptance Corporation in accordance with Section 8.2 of this Agreement.
ARTICLE VIII
Default
SECTION 8.1. Servicer Default. If any one of the following events (a
"Servicer Default") shall occur and be continuing:
(a) Any failure by the Servicer to deliver to the Owner Trustee or
Indenture Trustee for deposit in any of the Trust Accounts or the
Certificate Distribution Account any payment required to be so delivered
under the terms of the Notes, the Certificates or this Agreement that shall
continue unremedied for a period of five Business Days after written notice
of such failure is received by the Servicer from the Insurer, the Owner
Trustee or the Indenture Trustee or after discovery of such failure by an
Officer of the Servicer; or
(b) Failure by the Servicer duly to observe or to perform in any
material respect any other covenants or agreements of the Servicer or the
Seller (as the case may be) set forth in the Notes, the Certificates, this
Agreement or any other Basic Document, which failure shall (i) materially
and adversely affect the rights of either the Certificateholders or
Noteholders and (ii) continue unremedied for a period of 60 days after the
date on which written notice of such failure, requiring the same to be
remedied, shall have been given (A) to the Servicer by the Insurer, the
Owner Trustee or the Indenture Trustee or (B) to the Servicer and to the
Owner Trustee and the Indenture Trustee by the Holders of Notes evidencing
not less than 25% of the outstanding principal amount of the Notes or
Holders of Certificates evidencing not less than 25% of the outstanding
Certificate Balance, as applicable (or for such longer period, not in
excess of 120 days, as may be reasonably necessary to remedy such default;
provided that such default is capable of remedy within 120 days and the
Servicer delivers an Officers' Certificate to the Insurer, to the Owner
Trustee and the Indenture Trustee to such effect and to the effect that the
Servicer has commenced or will promptly commence, and will diligently
pursue, all reasonable efforts to remedy such default); or
(c) An Insolvency Event occurs with respect to the Servicer; or
(d) So long as an Insurer Default shall not have occurred and be
continuing, an Insurance Agreement Event of Default described in Section
5.01 of the Insurance Agreement shall have occurred;
then, and in each and every case, (i) so long as no Insurer Default shall have
occurred and be continuing, the Insurer, subject to subsection (b) of this
Section 8.1, except in the case of an event arising under Section 5.01(c) of the
Insurance Agreement or (ii) if an Insurer Default shall have occurred and be
continuing, any of the Indenture Trustee or the Holders of Notes evidencing not
less than a majority of the principal amount of the Notes then outstanding, or
the Holders (as defined in the Trust Agreement) of Certificates evidencing not
less than a majority of the outstanding Certificate Balance, as applicable, in
the case of any default which does not adversely affect the Indenture Trustee or
the Noteholders, in any case by notice given in writing to the Servicer (and to
the Indenture Trustee if given by the Insurer or, as applicable, the Noteholders
or the Certificateholders) may terminate all of the rights and obligations of
the Servicer under this Agreement. For purposes of this Section 8.1(d), any
determination of an adverse effect on the interest of the Certificateholders or
the Noteholders pursuant to Section 8.1(b) shall be made without consideration
of the availability of funds under the Policies. On or after the
receipt by the Servicer of such written notice, all authority, power,
obligations and responsibilities of the Servicer under this Agreement, whether
with respect to the Notes, the Certificates or the Receivables or otherwise,
automatically shall pass to, be vested in and become obligations and
responsibilities of the Indenture Trustee provided that the Indenture Trustee is
not unwilling or unable to act; provided, however, that the Indenture Trustee
shall have no liability with respect to any obligation which was required to be
performed by the prior Servicer prior to the date that the Indenture Trustee
becomes the Servicer or any claim of a third party based on any alleged action
or inaction of the prior Servicer. The Indenture Trustee is authorized and
empowered by this Agreement, as successor Servicer to execute and deliver, on
behalf of the prior Servicer, as attorney-in-fact or otherwise, any and all
documents and other instruments and to do or accomplish all other acts or things
necessary or appropriate to effect the purposes of such notice of termination,
whether to complete the transfer and endorsement of the Receivables and the
other Trust Property and related documents to show the Owner Trustee as
lienholder or secured party on the related Lien Certificates, or otherwise. The
prior Servicer agrees to cooperate with the successor Servicer in effecting the
termination of the responsibilities and rights of the prior Servicer under this
Agreement, including, the transfer to the successor Servicer for administration
by it of all cash amounts that shall at the time be held by the prior Servicer
for deposit, or have been deposited by the prior Servicer, in the Collection
Account or thereafter received with respect to the
Receivables and the delivery to the successor Servicer of all Receivables Files,
records and a computer tape in readable form containing all information
necessary to enable the successor Servicer to service the Receivables and the
other Trust Property. The terminated Servicer shall grant the Indenture Trustee
(in its capacity as Indenture Trustee and/or successor Servicer), the Owner
Trustee and the Insurer reasonable access to the terminated Servicer's premises
at the Servicer's expense.
SECTION 8.2. Appointment of Successor. (a) Upon the Servicer's receipt of
notice of termination, pursuant to Section 8.1 or the Servicer's resignation in
accordance with the terms of this Agreement, the predecessor Servicer shall
continue to perform its functions as Servicer under this Agreement, in the case
of termination, only until the date specified in such termination notice or, if
no such date is specified in a notice of termination, until receipt of such
notice and, in the case of resignation, until the earlier of (x) the date 45
days from the delivery to the Owner Trustee and the Indenture Trustee of written
notice of such resignation (or written confirmation of such notice) in
accordance with the terms of this Agreement and (y) the date upon which the
predecessor Servicer shall become unable to act as Servicer, as specified in the
notice of resignation and accompanying Opinion of Counsel. In the event of the
Servicer's termination or resignation hereunder, the Indenture Trustee shall,
provided it is not unwilling or unable to act, assume the obligations of
Servicer hereunder, and shall accept its appointment by a written assumption in
form acceptable to the Insurer. Notwithstanding the above, the Indenture
Trustee, with the prior written consent of the Insurer, or the Insurer shall, if
the Indenture Trustee shall be unwilling or legally unable so to act, appoint,
or petition a court of competent jurisdiction to appoint, any established
institution having a net worth of not less than $50,000,000 and whose regular
business shall include the servicing of automotive receivables as the successor
to the Servicer under this Agreement.
(b) Upon appointment, the successor Servicer (including the Indenture
Trustee acting as successor Servicer) shall be the successor in all
respects to the predecessor Servicer and shall be subject to all the
responsibilities, duties and liabilities arising thereafter relating
thereto placed on the predecessor Servicer, subject to the exceptions set
forth in Section 8.2(a) hereof, and shall be entitled to the Servicing Fee
and all the subsequently accruing rights granted to the predecessor
Servicer by the terms and provisions of this Agreement.
SECTION 8.3. [RESERVED]
SECTION 8.4. Notification to Noteholders and Certificateholders. Upon any
termination of, or appointment of a successor to, the Servicer pursuant to this
Article VIII, the Owner Trustee shall give prompt written notice thereof to
Certificateholders and the Indenture Trustee shall give prompt written notice
thereof to Noteholders and to the Rating Agencies.
SECTION 8.5. Waiver of Past Defaults. So long as no Insurer Default shall
have occurred and be continuing, the Insurer (or, if an Insurer Default shall
have occurred and be continuing, the Holders of Notes evidencing not less than a
majority of the outstanding principal amount of the Notes, or the Holders (as
defined in the Trust Agreement) of Certificates evidencing not less than a
majority of the outstanding Certificate Balance, as applicable, in the case of
any default which does not adversely affect the Indenture Trustee or the
Noteholders) may, on behalf of all Noteholders and Certificateholders, waive any
default by the Servicer in the performance of its obligations hereunder and its
consequences, except a continuing default in making any required deposits to or
payments from any of the Trust Accounts in accordance with this Agreement. Upon
any such waiver of a past default, such default shall cease to exist, and any
Servicer Default arising therefrom shall be deemed to have been remedied for
every purpose of this Agreement. No such waiver shall extend to any subsequent
or other default or impair any right consequent thereto.
ARTICLE IX
Termination
SECTION 9.1. Optional Purchase of All Receivables. (a) On the last day of
any Monthly Period as of which the Pool Balance shall be less than or equal to
5% of the Original Pool Balance, the Servicer shall have the option to purchase
the Owner Trust Estate, other than the Trust Accounts and the Certificate
Distribution Account (with the consent of the Insurer if such purchase would
result in a claim on either Policy or would result in any amount owing to the
Insurer under the Insurance Agreement remaining unpaid); provided, however, that
the amount to be paid for such purchase (as set forth in the following sentence)
shall be sufficient to pay the full amount of principal and interest then due
and payable on the Notes and the Certificates. To exercise such option, the
Servicer shall deposit pursuant to Section 5.5 in the Collection Account an
amount equal to the aggregate Purchase Amount for the Receivables (including
Receivables which are then in default), plus the fair market value of any other
property held by the Trust, and shall succeed to all interests in and to the
Trust.
(b) Upon any sale of the assets of the Trust pursuant to Section 9.2
of the Trust Agreement, the Servicer shall instruct the Indenture Trustee
to deposit the proceeds from such sale after all payments and reserves
therefrom (including the expenses of such sale) have been made (the
"Insolvency Proceeds") in the Collection Account. On the Distribution Date
on which the Insolvency Proceeds are deposited in the Collection Account
(or, if such proceeds are not so deposited on a Distribution Date, on the
Distribution Date immediately following such deposit), the Servicer shall
instruct the Indenture Trustee to make, and the Indenture Trustee shall
make, the following deposits and distributions from the Insolvency Proceeds
and the Distribution Amount for such Distribution Date:
(i) from the Distribution Amount, to each of the Indenture
Trustee and the Owner Trustee, their respective accrued and unpaid
trustees' fees and expenses and any accrued and unpaid fees and
expenses of the Indenture Collateral Agent (in each case, to the
extent such fees have not been previously paid by the Servicer);
(ii) from the Distribution Amount, to the Servicer, the Base
Servicing Fee for the related Monthly Period, any Supplemental
Servicing Fees for the related Monthly Period, and any amounts
specified in Section 5.2(b), to the extent the Servicer has not
reimbursed itself in respect of such amounts pursuant to Section 5.9
and to the extent not retained by the Servicer;
(iii) to the Note Distribution Account, any portion of the
Noteholders' Interest Distributable Amount not otherwise deposited
into the Note Distribution Account on such Distribution Date;
(iv) to the Note Distribution Account, the outstanding principal
amount of the Notes (after giving effect to the reduction in the
outstanding principal amount of the Notes to result from the deposits
made in the Note Distribution Account on such Distribution Date);
(v) to the Owner Trustee for deposit in the Certificate
Distribution Account, any portion of the Certificateholders' Interest
Distributable Amount not otherwise deposited into the Certificate
Distribution Account on such Distribution Date; and
(vi) to the Owner Trustee for deposit in the Certificate
Distribution Account, the Certificate Balance (after giving effect to
the reduction in the Certificate Balance to result from the deposits
made in the Certificate Distribution Account on such Distribution
Date).
Any Insolvency Proceeds remaining after the deposits described above shall be
paid first to the Insurer to the extent of any amounts owing to the Insurer
under the Insurance Agreement and not paid, and second, to the extent of any
remaining funds, to the General Partner.
(c) Notice of any termination of the Trust shall be given by the
Servicer to the Owner Trustee, the Indenture Trustee, the Insurer and
the Rating Agencies as soon as practicable after the Servicer has
received notice thereof.
(d) Following the satisfaction and discharge of the Indenture and
the payment in full of the principal of and interest on the Notes, the
Certificateholders will succeed to the rights of the Noteholders
hereunder and the Owner Trustee will succeed to the rights of, and
assume the obligations of, the Indenture Trustee pursuant to this
Agreement.
ARTICLE X
Administrative Duties of the Servicer
SECTION 10.1. Administrative Duties. (a) Duties with Respect to the
Indenture and Depository Agreements. The Servicer shall perform all its duties
and the duties of the Issuer under the Indenture and the Depository Agreements.
In addition, the Servicer shall consult with the Owner Trustee as the Servicer
deems appropriate regarding the duties of the Issuer under the Indenture and the
Depository Agreements. The Servicer shall monitor the performance of the Issuer
and shall advise the Owner Trustee when action is necessary to comply with the
Issuer's duties under the Indenture and the Depository Agreements. The Servicer
shall prepare for execution by the Issuer or shall cause the preparation by
other appropriate Persons of all such documents, reports, filings, instruments,
certificates and opinions as it shall be the duty of the Issuer to prepare, file
or deliver pursuant to the Indenture and the Depository Agreements. In
furtherance of the foregoing, the Servicer shall take all necessary action that
is the duty of the Issuer to take pursuant to the Indenture and the Depository
Agreements, including, pursuant to Sections 2.7, 3.5, 3.6, 3.7, 3.9, 7.2, 7.3,
11.1 and 11.15 of the Indenture.
(b) Duties with Respect to the Issuer.
(i) In addition to the duties of the Servicer set forth in
this Agreement or any of the Basic Documents, the Servicer shall
perform such calculations and shall prepare for execution by the
Issuer or the Owner Trustee or shall cause the preparation by other
appropriate Persons of all such documents, reports, filings,
instruments, certificates and opinions as it shall be the duty of the
Issuer or the Owner Trustee to prepare, file or deliver pursuant to
this Agreement or any of the Basic Documents, and at the request of
the Owner Trustee shall take all appropriate action that it is the
duty of the Issuer to take pursuant to this Agreement or any of the
Basic Documents, including, pursuant to Sections 2.6 and 2.12 of the
Trust Agreement. In accordance with the reasonable directions of the
Issuer or the Owner Trustee, the Servicer shall administer, perform
or supervise the performance of such other activities in connection
with the Collateral (including the Basic Documents) as are not
covered by any of the foregoing provisions and as are expressly
requested by the Issuer or the Owner Trustee and are reasonably
within the capability of the Servicer.
(ii) Notwithstanding anything in this Agreement or any of
the Basic Documents to the contrary, the Servicer shall be
responsible for promptly notifying the Owner Trustee in the event
that any withholding tax is imposed on
the Issuer's payments (or allocations of income) to an Owner (as
defined in the Trust Agreement) as contemplated in Section 5.2(f) of
the Trust Agreement. Any such notice shall be in writing and specify
the amount of any withholding tax required to be withheld by the
Owner Trustee pursuant to such provision.
(iii) Notwithstanding anything in this Agreement or the
Basic Documents to the contrary, the Servicer shall be responsible
for performance of the duties of the Issuer or the Owner Trustee and
the General Partner set forth in Section 5.6(a), (b), (c) and (d) of
the Trust Agreement with respect to, among other things, accounting
and reports to Owners (as defined in the Trust Agreement); provided,
however, that once prepared by the Servicer the Owner Trustee shall
retain responsibility for the distribution of the Schedule K-1s
necessary to enable each Certificateholder to prepare its federal and
state income tax returns.
(iv) The Servicer shall perform the duties of the Servicer
specified in Section 10.2 and 10.3 of the Trust Agreement required to
be performed in connection with the resignation or removal of the
Owner Trustee, and any other duties expressly required to be
performed by the Servicer under this Agreement or any of the Basic
Documents.
(v) In carrying out the foregoing duties or any of its other
obligations under this Agreement, the Servicer may enter into
transactions with or otherwise deal with any of its Affiliates;
provided, however, that the terms of any such transactions or
dealings shall be in accordance with any directions received from the
Issuer and shall be, in the Servicer's opinion, no less favorable to
the Issuer in any material respect.
(c) Tax Matters. The Servicer shall prepare and file, on behalf
of the General Partner, all tax returns, tax elections, financial
statements and such annual or other reports of the Issuer as are
necessary for preparation of tax reports as provided in Article V of
the Trust Agreement, including forms 1099 and 1066. All tax returns
will be signed by the General Partner.
(d) Non-Ministerial Matters. With respect to matters that in the
reasonable judgment of the Servicer are non-ministerial, the Servicer
shall not take any action pursuant to this Article X unless within a
reasonable time before the taking of such action, the Servicer shall
have notified the Owner Trustee and the Indenture Trustee of the
proposed action and the Owner Trustee and, with respect to items (A),
(B), (C) and (D) below, the Indenture Trustee shall not have withheld
consent or provided an alternative direction. For the purpose of the
preceding sentence, "non-ministerial matters" shall include:
NEW ONE
(A) the amendment of or any supplement to the
Indenture;
(B) the initiation of any claim or lawsuit by the
Issuer and the compromise of any action, claim or lawsuit
brought by or against the Issuer (other than in connection
with or as a counterclaim in the collection of the
Receivables);
(C) the amendment, change or modification of
this Agreement or any of the Basic Documents;
(D) the appointment of successor Note Registrars,
successor Paying Agents and successor Trustees pursuant to
the Indenture or the appointment of Successor Servicers or
the consent to the assignment by the Note Registrar, Paying
Agent or Indenture Trustee of its obligations under the
Indenture; and
(E) the removal of the Indenture Trustee.
(e) Exceptions. Notwithstanding anything to the contrary in this
Agreement, except as expressly provided herein or in the other Basic
Documents, the Servicer, in its capacity hereunder, shall not be obligated
to, and shall not, (1) make any payments to the Noteholders or
Certificateholders under the Basic Documents, (2) sell the Owner Trust
Estate pursuant to Section 5.5 of the Indenture, (3) take any other action
that the Issuer directs the Servicer not to take on its behalf or (4) in
connection with its duties hereunder assume any indemnification obligation
of any other Person.
SECTION 10.2. Records. The Servicer shall maintain appropriate books of
account and records relating to services performed under this Agreement, which
books of account and records shall be accessible for inspection by the Issuer at
any time during normal business hours.
SECTION 10.3. Additional Information to be Furnished to the Issuer. The
Servicer shall furnish to the Issuer from time to time such additional
information regarding the Collateral as is reasonably available to the Servicer
and as the Issuer shall reasonably request.
ARTICLE XI
Miscellaneous Provisions
SECTION 11.1. Amendment. (a) This Agreement may be amended from time to
time by the Seller, the Servicer and the Owner Trustee, with the consent of the
Indenture Trustee (which consent may not be unreasonably withheld or delayed),
with the prior written consent of the Insurer (so long as no Insurer Default has
occurred and is continuing) but without the consent of any of the Noteholders or
the Certificateholders, to cure any ambiguity, to correct or supplement any
provisions in this Agreement, to comply with any changes in the Code, or to make
any other provisions with respect to matters or questions arising under this
Agreement which shall not be inconsistent with the provisions of this Agreement
or the Insurance Agreement; provided, however, that such action shall not, as
evidenced by an Opinion of Counsel delivered to Owner Trustee and the Indenture
Trustee, adversely affect in any material respect the interests of any
Noteholder or Certificateholder; provided further that if an Insurer Default has
occurred and is continuing, such action shall not materially and adversely
affect the interests of the Insurer in the Trust.
This Agreement may also be amended from time to time by the Seller, the
Servicer and the Owner Trustee, with the consent of the Insurer, the consent of
the Indenture Trustee, the consent of the Holders of Notes evidencing not less
than a majority of the outstanding principal amount of the Notes and the consent
of the Holders (as defined in the Trust Agreement) of Certificates evidencing
not less than a majority of the Certificate Balance for the purpose of adding
any provisions to or changing in any manner or eliminating any of the provisions
of this Agreement or of modifying in any manner the rights of the Noteholders or
the Certificateholders; provided, however, that no such amendment shall (a)
increase or reduce in any manner the amount of, or materially accelerate or
delay the timing of, collections of payments on Receivables or distributions
that shall be required to be made for the benefit of the Noteholders or the
Certificateholders or (b) reduce the aforesaid percentage of the outstanding
principal amount of the Notes and the Certificate Balance, the Holders of which
are required to consent to any such amendment, without the consent of the
Holders of all the outstanding Notes and the Holders (as defined in the Trust
Agreement) of all the outstanding Certificates, of each class affected thereby;
provided further, that if an Insurer Default has not occurred and is continuing,
such action shall not materially and adversely affect the interest of the
Insurer.
Promptly after the execution of any such amendment or consent, the Owner
Trustee shall furnish written notification of the substance of such amendment or
consent to each Certificateholder and the Rating Agencies.
It shall not be necessary for the consent of Certificateholders or
Noteholders pursuant to this Section to approve the particular form of any
proposed amendment or consent, but it shall be sufficient if such consent shall
approve the substance thereof. The manner of obtaining such consents (and any
other consents of Noteholders or Certificateholders provided for in this
Agreement) and of evidencing the authorization of any action by Noteholders or
Certificateholders shall be subject to such reasonable requirements as the
Indenture Trustee or the Owner Trustee, as applicable, may prescribe.
Prior to the execution of any amendment to this Agreement, the Owner
Trustee and the Indenture Trustee shall be entitled to receive and rely upon an
Opinion of Counsel stating that the execution of such amendment is authorized or
permitted by this Agreement and the Opinion of Counsel referred to in Section
11.2(i)(1) has been delivered. The Owner Trustee and the Indenture Trustee may,
but shall not be obligated to, enter into any such amendment which affects the
Issuer's, the Owner Trustee's or the Indenture Trustee's, as applicable, own
rights, duties or immunities under this Agreement or otherwise.
(b) Notwithstanding anything to the contrary contained in subsection
11.1(a) above, the provisions of this Agreement relating to (i) the Spread
Account Agreement, the Spread Account, the Specified Spread Account
Requirement, a Trigger Event or any component definition of a Trigger Event
and (ii) any additional sources of funds which may be added to the Spread
Account or uses of funds on deposit in the Spread Account may be amended in
any respect by the Seller, the Servicer, the Insurer and the Collateral
Agent (the consent of which shall not be withheld or delayed with respect
to any amendment that does not adversely affect the Collateral Agent)
without the consent of, or notice to, the Noteholders or the
Certificateholders.
SECTION 11.2. Protection of Title to Trust. (a) The Seller shall execute
and file such financing statements and cause to be executed and filed such
continuation statements, all in such manner and in such places as may be
required by law fully to preserve, maintain and protect the interest of the
Issuer and the interests of the Indenture Collateral Agent in the Receivables
and in the proceeds thereof. The Seller shall deliver (or cause to be delivered)
to the Insurer, the Owner Trustee and the Indenture Collateral Agent
file-stamped copies of, or filing receipts for, any document filed as provided
above, as soon as available following such filing.
(b) Neither the Seller nor the Servicer shall change its name,
identity or corporate structure in any manner that would, could or might
make any financing statement or continuation statement filed in accordance
with paragraph (a) above seriously misleading within the meaning of ss.
9-402(7) of the UCC, unless it shall have given the Insurer, the Owner
Trustee and the Indenture Trustee at least five days' prior written notice
thereof and shall have promptly filed appropriate amendments to all
previously filed financing statements or continuation statements. Promptly
upon such filing, the Seller or the Servicer, as the case may be, shall
deliver an Opinion of Counsel in form and substance reasonably satisfactory
to the Insurer, stating either (A) all financing statements and
continuation statements have been executed and filed that are necessary
fully to preserve and protect the interest of the Trust and the Indenture
Trustee in the Receivables, and reciting the details of such filings or
referring to prior Opinions of Counsel in which such details are given, or
(B) no such action shall be necessary to preserve and protect such
interest.
(c) Each of the Seller and the Servicer shall have an obligation to
give the Insurer, the Owner Trustee and the Indenture Trustee at least 30
days' prior written notice of any relocation of its principal executive
office if, as a result of such relocation, the applicable provisions of the
UCC would require the filing of any amendment of any previously filed
financing or continuation statement or of any new financing statement and
shall promptly file any such amendment. The Servicer shall at all times
maintain each office from which it shall service Receivables, and its
principal executive office, within the United States of America.
(d) The Servicer shall maintain accounts and records as to each
Receivable accurately and in sufficient detail to permit (i) the reader
thereof to know at any time the status of such Receivable, including
payments and recoveries made and payments owing (and the nature of each)
and (ii) reconciliation between payments or recoveries on (or with respect
to) each Receivable and the amounts from time to time deposited in the
Collection Account in respect of such Receivable.
(e) The Servicer shall maintain its computer systems so that, from and
after the time of sale under this Agreement of the Receivables to the
Issuer, the Servicer's master computer records (including any backup
archives) that refer to a Receivable shall indicate clearly the interest of
the Issuer and the Indenture Trustee in such Receivable and that such
Receivable is owned by the Issuer and has been pledged to the Indenture
Trustee. Indication of the Issuer's and the Indenture Trustee's interest in
a Receivable shall be deleted from or modified on the Servicer's computer
systems when, and only when, the related Receivable shall have been paid in
full or repurchased.
(f) If at any time the Seller or the Servicer shall propose to sell,
grant a security interest in or otherwise transfer any interest in
automotive receivables to any prospective purchaser, lender or other
transferee, the Servicer shall give to such prospective purchaser, lender
or other transferee computer tapes, records or printouts (including any
restored from backup archives) that, if they shall refer in any manner
whatsoever to any Receivable, shall indicate clearly that such Receivable
has been sold and is owned by the Issuer and has been pledged to the
Indenture Trustee.
(g) The Servicer shall permit the Indenture Trustee and the Insurer
and their respective agents at any time during normal business hours to
inspect, audit and make copies of and abstracts from the Servicer's records
regarding any Receivable or any other portion of the Trust Property. The
preceding sentence shall not create any duty or obligation on the part of
the Indenture Trustee to perform any such acts.
(h) Upon request, the Servicer shall furnish to the Insurer, the Owner
Trustee or to the Indenture Trustee, within five Business Days, a list of
all Receivables (by contract number and name of Obligor) then held as part
of the Trust, together with a reconciliation of such list to the Schedule
of Receivables and to each of the Servicer's Certificates furnished before
such request indicating removal of Receivables from the Trust.
(i) The Servicer shall deliver to the Insurer, the Owner Trustee and
the Indenture Trustee:
(1) promptly after the execution and delivery of this Agreement
and, if required pursuant to Section 11.1, of each amendment, an
Opinion of Counsel stating that, in the opinion of such Counsel, in
form and substance reasonably satisfactory to the Insurer, either (A)
all financing statements and continuation statements have been
executed and filed that are necessary fully to preserve and protect
the interest of the Trust and the Indenture Trustee in the
Receivables, and reciting the details of such filings or referring to
prior Opinions of Counsel in which such details are given, or (B) no
such action shall be necessary to preserve and protect such interest;
and
(2) within 90 days after the beginning of each calendar year
beginning with the first calendar year beginning more than three
months after the Cutoff Date, an Opinion of Counsel, dated as of a
date during such 90-day period, stating that, in the opinion of such
counsel, either (A) all financing statements and continuation
statements have been executed and filed that are necessary fully to
preserve and protect the interest of the Trust and the Indenture
Trustee in the Receivables, and reciting the details of such filings
or referring to prior Opinions of Counsel in which such details are
given, or (B) no such action shall be necessary to preserve and
protect such interest.
Each Opinion of Counsel referred to in clause (l) or (2) above shall
specify any action necessary (as of the date of such opinion) to be taken in the
following year to preserve and protect such interest.
(j) The Seller shall, to the extent required by applicable law,
cause the Certificates and the Notes to be registered with the
Commission pursuant to Section 12(b) or Section 12(g) of the Exchange
Act within the time periods specified in such sections.
SECTION 11.3. Notices. All demands, notices and communications upon or to
the Seller, the Servicer, the Owner Trustee, the Indenture Trustee or the Rating
Agencies under this Agreement shall be in writing, personally delivered, sent by
overnight courier or mailed by certified mail, return receipt requested, and
shall be deemed to have been duly given upon receipt (a) in the case of the
Seller to NationsFinancial Funding Corporation, 225 East ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Freeway, 7th Floor, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention: ________________ with a copy
to: (i) NationsBank Corporate Center, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Attention: _________________, and (ii) NationsCredit Commercial
Corporation, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
General Counsel (b) in the case of the Servicer to SunStar Acceptance
Corporation, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: _________, with a copy to: NationsCredit Commercial Corporation, ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: General Counsel, (c)
in the case of the Issuer or the Owner Trustee, at the Corporate Trust Office of
the Owner Trustee, with a copy to ___________, (d) in the case of the Indenture
Trustee the Indenture Collateral Agent or the Collateral Agent, at the Corporate
Trust Office, (e) in the case of the Insurer, to Financial Security Assurance
Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇; Attention: Senior Vice
President, Surveillance (in each case in which notice or other communication to
the Insurer refers to a Servicer Default, a claim on the Certificate Policy, a
Deficiency Notice pursuant to Section 5.4 of this Agreement or with respect to
which failure on the part of the Insurer to respond shall be deemed to
constitute consent or acceptance, then a copy of such notice or other
communication should also be sent to the attention of the General Counsel and
the Head -- Financial Guaranty Group and shall be marked to indicate "URGENT
MATERIAL ENCLOSED"); (f) in the case of Moody's, to ▇▇▇▇▇'▇ Investors Service,
Inc., ABS Monitoring Department, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇; and
(g) in the case of Standard & Poor's, to Standard & Poor's Ratings Group, ▇▇
▇▇▇▇▇▇▇▇ - ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Asset Backed
Surveillance Department. Any notice required or permitted to be mailed to a
Noteholder or Certificateholder shall be given by first class mail, postage
prepaid, at the address of such Holder as shown in the Certificate Register or
Note Register, as applicable. Any notice so mailed within the time prescribed in
this Agreement shall be conclusively presumed to have been duly given, whether
or not the Certificateholder or Noteholder shall receive such notice.
SECTION 11.4. Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Sections 6.4 and 7.3 and as provided in
the provisions of this Agreement concerning the resignation of the Servicer,
this Agreement may not be assigned by the Seller or the Servicer without the
prior written consent of the Owner Trustee, the Indenture Trustee and the
Insurer (or if an Insurer Default shall have occurred and be continuing the
Holders of Notes evidencing not less than 66% of the principal amount of the
outstanding Notes and the Holders of Certificates evidencing not less than 66%
of the Certificate Balance).
SECTION 11.5. Limitations on Rights of Others. The provisions of this
Agreement are solely for the benefit of the Seller, the Servicer, the Issuer,
the Owner Trustee and for the benefit of the Certificateholders (including the
General Partner), the Indenture Trustee and the Noteholders, as third- party
beneficiaries. The Insurer and its successors and assigns shall be a third-party
beneficiary to the provisions of this Agreement, and shall be entitled to rely
upon and directly enforce such provisions of this Agreement so long as no
Insurer Default shall have occurred and be continuing. Except as expressly
stated otherwise herein, any right of the Insurer to direct, appoint, consent
to, approve of, or take any action under this Agreement, shall be a right
exercised by the Insurer in its sole and absolute discretion. The Insurer may
disclaim any of its rights and powers under this Agreement (but not its duties
and obligations under the Note Policy or the Certificate Policy) upon delivery
of a written notice to the Owner Trustee. Nothing in this Agreement, whether
express or implied, shall be construed to give to any other Person any legal or
equitable right, remedy or claim in the Owner Trust Estate or under or in
respect of this Agreement or any covenants, conditions or provisions contained
herein.
SECTION 11.6. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 11.7. Separate Counterparts. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 11.8. Headings. The headings of the various Articles and Sections
herein are for convenience of reference only and shall not define or limit any
of the terms or provisions hereof.
SECTION 11.9. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.10. Assignment to Indenture Trustee. The Seller hereby
acknowledges and consents to any mortgage, pledge, assignment and grant of a
security interest by the Issuer to the Indenture Trustee pursuant to the
Indenture for the benefit of the Noteholders of all right, title and interest of
the Issuer in, to and under the Receivables and/or the assignment of any or all
of the Issuer's rights and obligations hereunder to the Indenture Trustee.
SECTION 11.11. Nonpetition Covenants. (a) Notwithstanding any prior
termination of this Agreement, the Servicer and the Seller shall not, prior to
the date which is one year and one day after the termination of this Agreement
with respect to the Issuer, acquiesce, petition or otherwise invoke or cause the
Issuer to invoke the process of any court or government authority for the
purpose of commencing or sustaining a case against the Issuer under any federal
or state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Issuer or any substantial part of its property, or ordering the winding
up or liquidation of the affairs of the Issuer.
(b) Notwithstanding any prior termination of this Agreement, the
Servicer shall not, prior to the date that is one year and one day
after the termination of this Agreement with respect to the Seller,
acquiesce to, petition or otherwise invoke or cause the Seller to
invoke the process of any court or government authority for the
purpose of commencing or sustaining a case against the Seller under
any federal or state bankruptcy, insolvency or similar law, appointing
a receiver, liquidator, assignee, trustee, custodian, sequestrator, or
other similar official of the Seller or any substantial part of its
property, or ordering the winding up or liquidation of the affairs of
the Seller.
SECTION 11.12. Limitation of Liability of Owner Trustee and Indenture
Trustee. (a) Notwithstanding anything contained herein to the contrary, this
Agreement has been countersigned by ________________________ not in its
individual capacity but solely in its capacity as Owner Trustee of the Issuer
and in no event shall ________________________ in its individual capacity or,
except as expressly provided in the Trust Agreement, as Owner Trustee have any
liability for the representations, warranties, covenants, agreements or other
obligations of the Issuer hereunder or in any of the certificates, notices or
agreements delivered pursuant hereto, as to all of which recourse shall be had
solely to the assets of the Issuer. For all purposes of this Agreement, in the
performance of its duties or obligations hereunder or in the performance of any
duties or obligations of the Issuer hereunder, the Owner Trustee shall be
subject to, and entitled to the benefits of, the terms and provisions of
Articles VI, VII and VIII of the Trust Agreement.
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been accepted by ____________
_______________________________, not in its individual capacity but solely
as Indenture Trustee and in no event shall ____________
_______________________________, have any liability for the
representations, warranties, covenants, agreements or other obligations of
the Issuer hereunder or in any of the certificates, notices or agreements
delivered pursuant hereto, as to all of which recourse shall be had solely
to the assets of the Issuer.
SECTION 11.13. Independence of the Servicer. For all purposes of this
Agreement, the Servicer shall be an independent contractor and shall not be
subject to the supervision of the Issuer or the Owner Trustee with respect to
the manner in which it accomplishes the performance of its obligations
hereunder. Unless expressly authorized by the Issuer, the Servicer shall have no
authority to act for or represent the Issuer or the Owner Trustee in any way and
shall not otherwise be deemed an agent of the Issuer or the Owner Trustee.
SECTION 11.14. No Joint Venture. Nothing contained in this Agreement (i)
shall constitute the Servicer and either of the Issuer or the Owner Trustee as
members of any partnership, joint venture, association, syndicate,
unincorporated business or other separate entity, (ii) shall be construed to
impose any liability as such on any of them or (iii) shall be deemed to confer
on any of them any express, implied or apparent authority to incur any
obligation or liability on behalf of the others.
SECTION 11.15. Third-Party Beneficiaries. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. The Insurer and its successors and assigns
shall be a third-party beneficiary to the provisions of this Agreement, and
shall be entitled to rely upon and directly to enforce such provisions of this
Agreement so long as no Insurer Default shall have occurred and be continuing.
Nothing in this Agreement, express or implied, shall give to any Person, other
than express third-party beneficiaries, the parties hereto and their successors
hereunder, any benefit or any legal or equitable right, remedy or claim under
this Agreement. Except as expressly stated otherwise herein or in the Related
Documents, any right of the Insurer to direct, appoint, consent to, approve of,
or take any action under this Agreement, shall be a right exercised by the
Insurer in its sole and absolute discretion.
SECTION 11.16. Disclaimer by Insurer. The Insurer may disclaim any of its
rights and powers under this Agreement (but not its duties and obligations under
the Policies) upon delivery of a written notice to the Owner Trustee and the
Indenture Trustee.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their respective duly authorized
officers as of the day and year first above written.
NATIONSFINANCIAL AUTO OWNER
TRUST 1996-1
By ____________________
not in its individual capacity but
solely as Owner Trustee on behalf
of the Trust,
By_____________________________________
Name:
Title:
NATIONSFINANCIAL FUNDING CORPORATION,
Seller,
By_____________________________________
Name:
Title:
SUNSTAR ACCEPTANCE CORPORATION,
Servicer,
By_____________________________________
Name:
Title:
ACCEPTANCE AND ACKNOWLEDGEMENT
OF SUBSERVICER
SUNSTAR ACCEPTANCE CORPORATION
(CALIFORNIA)
By:___________________________
Name:
Title:
Acknowledged and Accepted:
--------------------------,
not in its individual capacity
but solely as Indenture Trustee,
By___________________________
Name:
Title:
Acknowledged and Accepted:
--------------------------,
not in its individual capacity
but solely as Owner Trustee,
By____________________________
Name:
Title:
Acknowledged and Accepted:
------------------------,
not in its individual capacity
but solely as Collateral Agent
and Indenture Collateral Agent
By____________________________
Name:
Title:
SCHEDULE A
SCHEDULE OF RECEIVABLES
Exhibit A
DEFINITIONS AND USAGE
The following rules of construction and usage shall be applicable to any
instrument that is governed by this Exhibit:
(a) All terms defined in this Exhibit shall have the defined meanings
when used in any instrument governed hereby and in any certificate or other
document made or delivered pursuant hereto unless otherwise defined
therein.
(b) As used herein, in any instrument governed hereby and in any
certificate or other document made or delivered pursuant thereto,
accounting terms not defined in this Exhibit or in any such instrument,
certificate or other document, and accounting terms partly defined in this
Exhibit or in any such instrument, certificate or other document to the
extent not defined, shall have the respective meanings given to them under
generally accepted accounting principles as in effect on the date of any
such instrument, certificate or other document, as applicable. To the
extent that the definitions of accounting terms in this Exhibit or in any
such instrument, certificate or other document are inconsistent with the
meanings of such terms under generally accepted accounting principles, the
definitions contained in this Exhibit or in any such instrument,
certificate or other document shall control.
(c) The words "hereof," "herein," "hereunder" and words of similar
import when used in an instrument and in any certificate or other document
made or delivered pursuant thereto shall refer to such instrument,
certificate or document as a whole and not to any particular provision or
subdivision thereof; Section, Schedule and Exhibit references contained in
an instrument are references to Sections, Schedules and Exhibits in or to
such instrument unless otherwise specified; and the term "including" shall
mean "including without limitation."
(d) The definitions contained in this Exhibit are applicable to the
singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such terms.
(e) Any agreement, instrument, statute or regulation defined or
referred to below or in any instrument or certificate that is governed by
this Exhibit means such agreement, instrument, statute or regulation as
from time to time amended, modified or supplemented and includes (in the
case of agreements or instruments) references to all attachments thereto
and instruments incorporated therein; references to a Person are also to
its permitted successors and assigns.
(f) For purposes of computing the number of days that a receivable is
delinquent under each of the Basic Documents, a payment delinquency with
respect to a Receivable is considered to have commenced on the last day of
the end of the month in which a Scheduled Payment has not been made.
DEFINITIONS
Whenever used in any instrument that is governed by this Exhibit, the
following words and phrases shall have the following meanings:
"Act" has the meaning specified in Section 11.3(a) of the Indenture.
"Actuarial Method" means the method of allocating a fixed level payment to
principal and interest, pursuant to which the portion of such payment that is
allocated to interest is equal to one-twelfth of the product of the fixed rate
of interest multiplied by the unpaid principal balance and the remainder of such
payment is allocable to principal.
"Affiliate" means, with respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing. A Person shall not be
deemed to be an Affiliate of any person solely because such other Person has the
contractual right or obligation to manage such Person unless such other Person
controls such Person through equity ownership or otherwise.
"Affiliated Purchaser" means _____________, a Delaware corporation.
"Aggregate Principal Balance" means, with respect to any date of
determination, the sum of the Principal Balances for all Receivables (other than
(i) any Receivable that became a Liquidated Receivable during the related
Monthly Period and (ii) any Receivable that was purchased or repurchased by any
Person pursuant to the Sale and Servicing Agreement during the related Monthly
Period) as of the date of determination.
"Amount Financed" means, with respect to a Receivable, the aggregate amount
advanced or credited under such Receivable by the applicable Dealer toward the
purchase price of the Financed Vehicle and any related costs, including amounts
advanced or credited in respect of accessories, insurance premiums, service, car
club and warranty contracts, other items customarily financed as part of retail
automobile installment sales contracts or promissory notes, and related costs.
"Annual Percentage Rate" or "APR" of a Receivable means the annual
percentage rate of finance charges or service charges, as stated in the related
Contract.
"Authorized Officer" means, with respect to the Issuer and the Servicer,
any officer of the Owner Trustee or the Servicer, as applicable, who is
authorized to act for the Owner Trustee or the Servicer, as applicable, in
matters relating to the Issuer or the Servicer and who is identified on the list
of Authorized Officers delivered by each of the Owner Trustee and the Servicer
to the Indenture Trustee on the Closing Date (as such list may be modified or
supplemented from time to time thereafter).
"Available Funds" means, with respect to any Determination Date, the sum of
(i) the Collected Funds for such Determination Date, (ii) all Purchase Amounts
deposited in the Collection Account for the related Monthly Period, (iii)
following the acceleration of the Notes pursuant to Section 5.2 of the
Indenture, the amount of money or property collected pursuant to Section 5.4 of
the Indenture since the preceding Determination Date by the Indenture Trustee or
Controlling Party for distribution pursuant to Section 5.6 of the Indenture, and
(iv) any Insolvency Proceeds received pursuant to Section 9.1(b) of the Sale and
Servicing Agreement. For purposes of determining Available Funds for the
Distribution Date following the Class A-1 Final Scheduled Distribution Date, the
amount thereof, if any, applied on the Class A-1 Final Scheduled Distribution
Date will reduce the amount of Available Funds dollar-for-dollar for such
Distribution Date.
"Average Delinquency Ratio" means, with respect to any Distribution Date,
the arithmetic average of the Delinquency Ratio for such Distribution Date and
the Delinquency Ratios for the two immediately preceding Distribution Dates.
"Average Net Loss Rate" with respect to any Distribution Date, the
arithmetic average of the Net Loss Rates for the three immediately preceding
Monthly Periods.
"Base Servicing Fee" means, with respect to any Monthly Period, the fee
payable to the Servicer for services rendered during such Monthly Period, which
shall be equal to one-twelfth of the Servicing Fee Rate multiplied by the Pool
Balance as of the first day of such Monthly Period.
"Basic Documents" means the Certificate of Trust, the Trust Agreement, the
Sale and Servicing Agreement, the Indenture, the Spread Account Agreement, the
Insurance Agreement, the Depository Agreements and other documents and
certificates delivered in connection therewith.
"Benefit Plan" shall have the meaning assigned to such term in Section 3.13
of the Trust Agreement.
"Book Entry Notes" means a beneficial interest in the Notes, ownership and
transfers of which shall be made through book entries by a Clearing Agency as
described in Section 2.10 of the Indenture.
"Book Entry Trust Certificates" means a beneficial interest in the Trust
Certificates, ownership and transfers of which shall be made through book
entries by a Clearing Agency as described in Section 3.14 of the Trust
Agreement.
"Business Day" means (i) with respect to the Note Policy, any day other
than a Saturday, Sunday, legal holiday or other day on which commercial banking
institutions in Wilmington, Delaware, the City of New York or any other location
of any successor Servicer, successor Owner Trustee or successor Indenture
Collateral Agent are authorized or obligated by law, executive order or
governmental decree to be closed and (ii) otherwise, a day other than a
Saturday, a Sunday or other day on which commercial banks located in the states
of Texas, Delaware or New York are authorized or obligated to be closed.
"Business Trust Statute" shall mean Chapter 38 of Title 12 of the Delaware
Code, 12 Del. Code ss. 3801 et seq.
"Certificate" means a Trust Certificate evidencing the beneficial interest
of a Certificateholder in the Trust, substantially in the form of Exhibit A to
the Trust Agreement.
"Certificate Balance" equals, initially, $_________ and thereafter equals
the initial Certificate Balance, reduced by all amounts allocable to principal
previously distributed to Certificateholders.
"Certificate Depository Agreement" shall mean the agreement among the
Trust, the Owner Trustee, the Servicer and The Depository Trust Company, as the
initial Clearing Agency, dated as of the Closing Date, relating to the Trust
Certificates, in the form of Exhibit C to the Trust Agreement.
"Certificate Distribution Account" shall have the meaning assigned to such
term in Section 5.1(a) of the Trust Agreement.
"Certificate of Trust" shall mean the Certificate of Trust in the form of
Exhibit B to the Trust Agreement to be filed for the Trust pursuant to Section
3810(a) of the Business Trust Statute.
"Certificate Paying Agent" shall mean any paying agent or co-paying agent
appointed pursuant to Section 3.9 of the Trust Agreement and shall initially be
the ________________.
"Certificate Policy" means the financial guaranty insurance policy issued
by the Insurer to the Owner Trustee for the benefit of the Certificateholders
with respect to the Certificates, including any endorsements thereto.
"Certificate Policy Claim Amount" shall have the meaning set forth in
Section 5A.1(a) of the Sale and Servicing Agreement.
"Certificate Pool Factor" as of the close of business on a Distribution
Date means a seven-digit decimal figure equal to the Certificate Balance as of
such Distribution Date after giving effect to principal distributions on such
date divided by the initial Certificate Balance.
"Certificate Rate" means ____% per annum.
"Certificate Register" and "Certificate Registrar" shall mean the register
mentioned and the registrar appointed pursuant to Section 3.4 of the Trust
Agreement.
"Certificateholder" shall mean the Person in whose name a Trust Certificate
is registered on the Certificate Register.
"Certificateholders' Distributable Amount" means, with respect to any
Distribution Date, the sum of the Certificateholders' Interest Distributable
Amount and the Certificateholders' Principal Distributable Amount.
"Certificateholders' Interest Carryover Shortfall" means, with respect to
any Distribution Date, the excess of the Certificateholders' Interest
Distributable Amount for the preceding Distribution Date over the amount in
respect of interest at the Certificate Rate that was actually deposited in the
Certificate Distribution Account on such preceding Distribution Date, plus
interest on such excess, to the extent permitted by law, at the Certificate Rate
from and including such preceding Distribution Date to but excluding the current
Distribution Date.
"Certificateholders' Interest Distributable Amount" means, with respect to
any Distribution Date, the sum of the Certificateholders' Monthly Interest
Distributable Amount for such Distribution Date and the Certificateholders'
Interest Carryover Shortfall for such Distribution Date.
"Certificateholders' Monthly Interest Distributable Amount" means, with
respect to any Distribution Date, interest accrued during the related Interest
Period at the Certificate Rate on the Certificate Balance immediately preceding
such Distribution Date. Interest shall be computed on the basis of a 360-day
year of twelve 30-day months for purposes of this definition.
"Certificateholders' Monthly Principal Distributable Amount" means, with
respect to any Distribution Date, the Certificateholders' Percentage of the
Principal Distributable Amount.
"Certificateholders' Percentage" means 100% minus the Noteholders'
Percentage.
"Certificateholders' Principal Carryover Shortfall" means, with respect to
any Distribution Date, the excess of the Certificateholders' Principal
Distributable Amount for the preceding Distribution Date, over the amount in
respect of principal that was actually deposited in the Certificate Distribution
Account on such preceding Distribution Date.
"Certificateholders' Principal Distributable Amount" means, with respect to
any Distribution Date, the sum of the Certificateholders' Monthly Principal
Distributable Amount for such Distribution Date and the Certificateholders'
Principal Carryover Shortfall for such Distribution Date; provided, however,
that the Certificateholders' Principal Distributable Amount (i) shall not exceed
the Certificate Balance and (ii) shall equal the Certificate Balance on the
Final Scheduled Distribution Date for the Certificates.
"Class" means the Class A-1 Notes, the Class A-2 Notes or the Class A-3
Notes, as the context requires.
"Class A-1 Deficiency Claim Amount" means, with respect to the
Determination Date relating to the Class A-1 Final Scheduled Distribution Date,
the excess, if any, of (i) the sum of the amounts payable on the Class A-1 Final
Scheduled Distribution Date pursuant to clauses (i) and (ii) of Section 5.6(c)
of the Sale and Servicing Agreement over (ii) the Available Funds for such
Determination Date.
"Class A-1 Distribution Amount" means, with respect to the Class A-1 Final
Scheduled Distribution Date, the sum of (i) the Available Funds for the
immediately preceding Determination Date plus (ii) the Class A-1 Deficiency
Claim Amount, if any, received and deposited in the Collection Account (from an
Insurer Optional Deposit or the Spread Account or otherwise other than from
draws under the Policies).
"Class A-1 Final Scheduled Distribution Date" means ____ __, 1997.
"Class A-1 Interest Rate" means ______% per annum (computed on the basis of
the actual number of days elapsed in a 360-day year).
"Class A-1 Notes" means the Class A-1 ______% Asset Backed Notes,
substantially in the form of Exhibit D-1 to the Indenture.
"Class A-2 Interest Rate" means, with respect to any Interest Period, LIBOR
plus ____%, subject to a maximum rate equal to __% (computed on the basis of the
actual number of days elapsed in a 360-day year).
"Class A-2 Notes" means the Class A-2 Floating Rate Asset Backed Notes,
substantially in the form of Exhibit D-2 to the Indenture.
"Class A-3 Interest Rate" means ____% per annum (computed on the basis of a
360-day year of twelve 30-day months).
"Class A-3 Notes" means the Class A-3 ____% Asset Backed Notes,
substantially in the form of Exhibit D-3 to the Indenture.
"Clearing Agency" means an organization registered as a "clearing agency"
pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant" means a broker, dealer, bank, other financial
institution or other Person for whom from time to time a Clearing Agency effects
book-entry transfers and pledges of securities deposited with the Clearing
Agency.
"Closing Date" means December __, 1996.
"Code" means the Internal Revenue Code of 1986 and Treasury Regulations
promulgated thereunder.
"Collateral Agent" means the Person serving in such capacity under the
Spread Account Agreement.
"Collateral" has the meaning specified in the Granting Clause of the
Indenture.
"Collateral Protection Insurance" or "CPI" means the physical damage and
theft insurance described in Section 4.04(a) of the Sale and Servicing Agreement
which may be obtained by the Servicer if the applicable Obligor fails to do so.
"Collateral Protection Insurance Premium" means any premium for CPI
covering a Financed Vehicle.
"Collected Funds" means, with respect to any Determination Date, the amount
of funds in the Collection Account representing collections on the Receivables,
net of CPI Funds, during the related Monthly Period, including all Net
Liquidation Proceeds collected during the related Monthly Period (but excluding
any Purchase Amounts).
"Collection Account" means the account designated as such, established and
maintained pursuant to Section 5.1(a)(i) of the Sale and Servicing Agreement.
"Computer Tape" means the computer tapes or other electronic media
furnished by SunStar Acceptance Corporation to the Issuer and its assigns
describing certain characteristics of the Receivables as of the Cutoff Date.
"Contract" means a retail motor vehicle installment sale contract.
"Controlling Party" means the Insurer, so long as no Insurer Default shall
have occurred and is continuing, and the Indenture Trustee, for so long as an
Insurer Default shall have occurred and is continuing.
"Corporate Trust Office" means (i) with respect to the Owner Trustee, the
principal corporate trust office of the Owner Trustee, which at the time of
execution of the Trust Agreement is ___________________________________________
Attention: ________, , or at such other address as the Owner Trustee may
designate by notice to the Certificateholders and the Depositor, or the
principal corporate trust office of any successor Owner Trustee (the address of
which the successor owner trustee will notify the Certificateholders and the
Depositor), and (ii) with respect to the Indenture Trustee, the Indenture
Collateral Agent and the Collateral Agent, the principal corporate trust office
of the Indenture Trustee, at which at any particular time its corporate trust
business shall be administered, which at the time of execution of the Indenture
is _______________________, Attention: ________, or at such other address as the
Indenture Trustee may designate from time to time by notice to the Noteholders,
the Insurer, the Servicer and the Issuer, or the principal corporate trust
office of any successor Indenture Trustee (the address of which the successor
Indenture Trustee will notify the Noteholders and the Issuer).
"CPI Funds" means amounts (including interest) owing under a Contract on
account of Collateral Protection Insurance placed on a Financed Vehicle prior to
or on or after the Cutoff Date.
"Cutoff Date" means, as to any Receivable, [November 30, 1996.]
"Dealer Agreement" means any agreement between a Dealer and SunStar
Acceptance Corporation or SunStar Acceptance Corporation (California) insofar as
such agreement relates to the acquisition of Receivables from a Dealer by,
respectively, SunStar Acceptance Corporation or SunStar Acceptance Corporation
(California).
"Dealer" means a dealer who sold a Financed Vehicle and who originated and
assigned the respective Receivable to SunStar Acceptance Corporation or SunStar
Acceptance Corporation (California).
"Deemed Cured" means, as of a Determination Date, with respect to a Trigger
Event that has occurred, that no Trigger Event shall have occurred as of such
Determination Date or as of any of the three consecutively preceding Monthly
Periods.
"Default" means any occurrence that is, or with notice or the lapse of time
or both would become, an Event of Default.
"Deficiency Claim Amount" shall have the meaning set forth in Section
5.4(a) of the Sale and Servicing Agreement.
"Deficiency Claim Date" means, with respect to any Distribution Date, the
Business Day immediately preceding such Distribution Date.
"Deficiency Notice" shall have the meaning set forth in Section 5.4(a) of
the Sale and Servicing Agreement.
"Definitive Notes" has the meaning specified in Section 2.10 of the
Indenture.
"Definitive Trust Certificates" shall mean either or both (as the context
requires) of (i) Trust Certificates issued in certificated, fully registered
form as provided in Section 3.14 of the Trust Agreement and (ii) Trust
Certificates issued in certificated, fully registered form as provided in
Section 3.16 of the Trust Agreement.
"Delinquency Ratio" means, with respect to any Distribution Date, a
fraction, expressed as a percentage, (a) the numerator of which is equal to the
aggregate Principal Balance of all Receivables other than those for which the
related Financed Vehicle has been repossessed (and any applicable redemption
period has expired) or that were [ ] or more days delinquent with respect to a
Scheduled Payment less no more than $0.99 of such Scheduled Payment as of the
last day of the related Monthly Period and (b) the denominator of which is equal
to the Aggregate Principal Balance of the Receivables as of the first day of the
related Monthly Period.
"Delivery" when used with respect to Trust Account Property means:
(a) with respect to bankers' acceptances, commercial paper,
negotiable certificates of deposit and other obligations that
constitute "instruments" within the meaning of Section 9-105(1)(i) of
the UCC and are susceptible of physical delivery, transfer thereof to
the Indenture Trustee or its nominee or custodian by physical delivery
to the Indenture Trustee or its nominee or custodian endorsed to, or
registered in the name of, the Indenture Trustee or its nominee or
custodian or endorsed in blank, and, with respect to a certificated
security (as defined in Section 8-102 of the UCC), transfer thereof
(i) by delivery of such certificated security endorsed to, or
registered in the name of, the Indenture Trustee or its nominee or
custodian or endorsed in blank to a financial intermediary (as defined
in Section 8-313 of the UCC) and the making by such financial
intermediary of entries on its books and records identifying such
certificated securities as belonging to the Indenture Trustee or its
nominee or custodian and the sending by such financial intermediary of
a confirmation of the purchase of such certificated security by the
Indenture Trustee or its nominee or custodian, or (ii) by delivery
thereof to a "clearing corporation" (as defined in Section 8-102(3) of
the UCC) and the making by such clearing corporation of appropriate
entries on its books reducing the appropriate securities account of
the transferor and increasing the appropriate securities account of a
financial intermediary by the amount of such certificated security,
the identification by the clearing corporation of the certificated
securities for the sole and exclusive account of the financial
intermediary, the maintenance of such certificated securities by such
clearing corporation or a "custodian bank" (as defined in Section
8-102(4) of the UCC) or the nominee of either subject to the clearing
corporation's exclusive control, the sending of a confirmation by the
financial intermediary of the purchase by the Indenture Trustee or its
nominee or custodian of such securities and the making by such
financial intermediary of entries on its books and records identifying
such certificated securities as belonging to the Indenture Trustee or
its nominee or custodian (all of the foregoing, "Physical Property"),
and, in any event, any such Physical Property in registered form shall
be in the name of the Indenture Trustee or its nominee or custodian;
and such additional or alternative procedures as may hereafter become
appropriate to effect the complete transfer of ownership of any such
Trust Account Property to the Indenture Trustee or its nominee or
custodian, consistent with changes in applicable law or regulations or
the interpretation thereof;
(b) with respect to any security issued by the U.S.
Treasury, the Federal Home Loan Mortgage Corporation or by the
Federal National Mortgage Association that is a book-entry security
held through the Federal Reserve System pursuant to Federal
book-entry regulations, the following procedures, all in accordance
with applicable law, including applicable Federal regulations and
Articles 8 and 9 of the UCC: book-entry registration of such Trust
Account Property to an appropriate book-entry account maintained with
a Federal Reserve Bank by a financial intermediary which is also a
"depository" pursuant to applicable Federal regulations and issuance
by such financial intermediary of a deposit advice or other written
confirmation of such book-entry registration to the Indenture Trustee
or its nominee or custodian of the purchase by the Indenture Trustee
or its nominee or custodian of such book-entry securities; the making
by such financial intermediary of entries in its books and records
identifying such book-entry security held through the Federal Reserve
System pursuant to Federal book-entry regulations as belonging to the
Indenture Trustee or its nominee or custodian and indicating that
such custodian holds such Trust Account Property solely as agent for
the Indenture Trustee or its nominee or custodian; and such
additional or alternative procedures as may hereafter become
appropriate to effect complete transfer of ownership of any such
Trust Account Property to the Indenture Trustee or its nominee or
custodian, consistent with changes in applicable law or
regulations or the interpretation thereof; and
(c) with respect to any item of Trust Account Property that
is an uncertificated security under Article 8 of the UCC and that is
not governed by clause (b) above, registration on the books and
records of the issuer thereof in the name of the financial
intermediary, the sending of a confirmation by the financial
intermediary of the purchase by the Indenture Trustee or its nominee
or custodian of such uncertificated security, the making by such
financial intermediary of entries on its books and records
identifying such uncertificated certificates as belonging to the
Indenture Trustee or its nominee or custodian.
"Demand Note" shall have the meaning assigned to such term in Section
2.11(g) of the Trust Agreement.
"Depositor" shall mean the Seller in its capacity as Depositor under the
Trust Agreement.
"Depository Agreements" mean the Certificate Depository Agreement and the
Note Depository Agreement.
"Determination Date" means, with respect to any Distribution Date, the
fifth Business Day prior to the related Distribution Date or, in the case of the
Class A-1 Final Scheduled Distribution Date and the succeeding Distribution Date
if any distributions are required to be made on the Class A-1 Final Scheduled
Distribution Date, the fifth Business Day prior to such Class A-1 Scheduled
Distribution Date.
"Distribution Amount" means, with respect to a Distribution Date, the sum
of (i) the Available Funds for the immediately preceding Determination Date,
plus (ii) the Deficiency Claim Amount, if any, received (from an Insurer
Optional Deposit or the Spread Account or otherwise other than from draws under
the Policies) by the Indenture Trustee with respect to such Distribution Date.
"Distribution Date" means, with respect to each Monthly Period, the
fifteenth day of the following calendar month, or if such day is not a Business
Day, the immediately following Business Day, commencing on January __, 1997.
"Draw Date" means, with respect to any Distribution Date, and the Class A-1
Final Scheduled Distribution Date, the Business Day immediately preceding such
Distribution Date or the Class A-1 Final Scheduled Distribution Date, as
applicable.
"Eligible Deposit Account" means either (a) a segregated account with an
Eligible Institution or (b) a segregated trust account with the corporate trust
department of a depository institution organized under the laws of the United
States of America or any one of the states thereof or the District of Columbia
(or any domestic branch of a foreign bank), having corporate trust powers and
acting as trustee for funds deposited in such account, so long as any of the
securities of such depository institution have a credit rating from each Rating
Agency in one of its generic rating categories which signifies investment grade.
"Eligible Institution" means (a) the corporate trust department of the
Indenture Trustee or any other entity specified in the Sale and Servicing
Agreement or (b) a depository institution organized under the laws of the United
States of America or any one of the states thereof or the District of Columbia
(or any domestic branch of a foreign bank), which (i) has either (A) a long-term
unsecured debt rating of AAA or better by Standard & Poor's and Aaa or better by
Moody's or (B) a certificate of deposit rating of A-1+ by Standard & Poor's and
P-1 or better by Moody's or any other short-term or certificate of deposit
rating acceptable to the Rating Agencies and to the Insurer and (ii) whose
deposits are insured by the FDIC. If so qualified under clause (b) above, the
Owner Trustee or the Indenture Trustee may be considered an Eligible
Institution.
"Eligible Investments" mean book-entry securities, negotiable instruments
or securities represented by instruments in bearer or registered form which
evidence:
(a) direct obligations of, and obligations fully
guaranteed as to timely payment by, the United States of
America;
(b) demand deposits, time deposits or certificates of
deposit of any depository institution or trust company incorporated
under the laws of the United States of America or any state thereof
or the District of Columbia (or any domestic branch of a foreign
bank) and subject to supervision and examination by Federal or state
banking or depository institution authorities (including depository
receipts issued by any such institution or trust company as custodian
with respect to any obligation referred to in clause (a) above or
portion of such obligation for the benefit of the holders of such
depository receipts); provided, however, that at the time of the
investment or contractual commitment to invest therein (which shall
be deemed to be made again each time funds are reinvested following
each Distribution Date), the commercial paper or other short-term
senior unsecured debt obligations (other than such obligations the
rating of which is based on the credit of a Person other than such
depository institution or trust company) of such depository
institution or trust company shall have a credit rating from Standard
& Poor's of A-1+ and from Moody's of P-1;
(c) commercial paper having, at the time of the investment
or contractual commitment to invest therein, a rating from Standard &
Poor's of A-1+ and from Moody's of P-1;
(d) investments in money market funds (including funds for
which the Indenture Trustee or the Owner Trustee or any of their
respective Affiliates is investment manager or advisor) having a
rating from Standard & Poor's of AAA-m or AAAm-G and from Moody's of
Aaa and having been approved by the Insurer;
(e) bankers' acceptances issued by any depository
institution or trust company referred to in clause (b)
above;
(f) repurchase obligations with respect to any security that
is a direct obligation of, or fully guaranteed by, the United States
of America or any agency or instrumentality thereof the obligations
of which are backed by the full faith and credit of the United States
of America, in either case entered into with a depository institution
or trust company (acting as principal) referred to in clause (b)
above; and
(g) any other investment which would satisfy the Rating
Agency Condition and is consistent with the ratings of the Securities
and which, so long as no Insurer Default shall have occurred and be
continuing, has been approved by the Insurer.
Any of the foregoing Eligible Investments may be purchased
by or through the Owner Trustee or the Indenture Trustee or any of its
Affiliates.
"ERISA" shall have the meaning assigned to such term in Section 3.13 of the
Trust Agreement.
"Event of Default" has the meaning specified in Section 5.1 of the
Indenture.
"Exchange Act" means the Securities Exchange Act of 1934.
"Executive Officer" means, with respect to any corporation, the Chief
Executive Officer, Chief Operating Officer, Chief Financial Officer, President,
Executive Vice President, any Vice President, the Secretary or the Treasurer of
such corporation; and with respect to any partnership, any general partner
thereof.
"Expenses" shall have the meaning assigned to such term in Section 8.2 of
the Trust Agreement.
"FDIC" means the Federal Deposit Insurance Corporation.
"Final Scheduled Distribution Date" means with respect to (i) the Class A-1
Notes, the ---------------- Distribution Date, (ii) the Class A-2 Notes, the
-----------Distribution Date, (iii) the Class A-3 Notes, the --------------
Distribution Date, and (iv) the Certificates, the --------------------
Distribution Date.
"Final Scheduled Maturity Date" means ________ __, ----.
"Financed Vehicle" means an automobile or light-duty truck, van or minivan,
together with all accessions thereto, securing an Obligor's indebtedness under
the respective Receivable.
"Floor Amount" means, as of any Distribution Date, the lesser of (i) [__%]
of the sum of (x) the initial Principal Balance of each Class of Notes and (y)
the initial Certificate Balance and (ii) the greater of (a) the outstanding
Certificate Balance and (b) $100,000.
"General Partner" means the Certificateholder obligated to pay the expenses
of the Issuer pursuant to Section 2.7 of the Trust Agreement.
"Grant" means mortgage, pledge, bargain, sell, warrant, alienate, remise,
release, convey, assign, transfer, create, ▇▇▇▇▇ ▇ ▇▇▇▇ upon or a security
interest in or right of set-off against, deposit, or set over and confirm
pursuant to the Indenture. A Grant of the Collateral or of any other agreement
or instrument shall (subject to any specified exclusions) include all rights,
powers and options (but none of the obligations) of the Granting party
thereunder, including (to the extent the Granting party had the same) the
immediate and continuing right to claim for, collect, receive and give receipt
for principal and interest payments in respect of the Collateral and all other
moneys payable thereunder, to give and receive notices and other communications,
to make waivers or other agreements, to exercise all rights and options, to
bring proceedings in the name of the Granting party or otherwise and generally
to do and receive anything that the Granting party is or may be entitled to do
or receive thereunder or with respect thereto.
"Guaranteed Certificate Distribution" has the meaning assigned to such term
in the Certificate Policy.
"Guaranteed Note Distribution" has the meaning assigned to such term in the
Note Policy.
"Holder" means, with respect to the Trust Agreement, a Certificateholder
and, with respect to the Indenture, a Noteholder.
"Indebtedness" means, with respect to any Person at any time, (a)
indebtedness or liability of such Person for borrowed money whether or not
evidenced by bonds, debentures, notes or other instruments, or for the deferred
purchase price of property or services (including trade obligations); (b)
obligations of such Person as lessee under leases which should have been or
should be, in accordance with generally accepted accounting principles, recorded
as capital leases; (c) current liabilities of such Person in respect of unfunded
vested benefits under plans covered by Title IV of ERISA; (d) obligations issued
for or liabilities incurred on the account of such Person; (e) obligations or
liabilities of such Person arising under acceptance facilities; (f) obligations
of such Person under any guarantees, endorsements (other than for collection or
deposit in the ordinary course of business) and other contingent obligations to
purchase, to provide funds for payment, to supply funds to invest in any Person
or otherwise to assure a creditor against loss; (g) obligations of such Person
secured by any lien on property or assets of such Person, whether or not the
obligations have been assumed by such Person; or (h) obligations of such Person
under any interest rate or currency exchange agreement.
"Indemnitees" shall have the meaning assigned to such term in Section 8.2
of the Trust Agreement.
"Indenture" means the Indenture dated as of October 31, 1996, among the
Issuer, the Indenture Collateral Agent and the Indenture Trustee.
"Indenture Collateral Agent" means the Person acting as Indenture
Collateral Agent under the Indenture.
"Indenture Trustee" means the Person acting as Trustee under the Indenture.
"Independent" means, when used with respect to any specified Person, that
the person (a) is in fact independent of the Issuer, any other obligor upon the
Notes, the Seller and any Affiliate of any of the foregoing persons, (b) does
not have any direct financial interest or any material indirect financial
interest in the Issuer, any such other obligor, the Seller or any Affiliate of
any of the foregoing Persons and (c) is not connected with the Issuer, any such
other obligor, the Seller or any Affiliate of any of the foregoing Persons as an
officer, employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions.
"Independent Certificate" means a certificate or opinion to be delivered to
the Indenture Collateral Agent under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 11.1 of the
Indenture, prepared by an Independent appraiser or other expert appointed by an
Issuer Order and approved by the Indenture Collateral Agent in the exercise of
reasonable care, and such opinion or certificate shall state that the signer has
read the definition of "Independent" herein and that the signer is Independent
within the meaning thereof.
"Insolvency Event" means, with respect to a specified Person, (a) the
filing of a petition against such Person or the entry of a decree or order for
relief by a court having jurisdiction in the premises in respect of such Person
or any substantial part of its property in an involuntary case under any
applicable federal or state bankruptcy, insolvency or other similar law now or
hereafter in effect, or appointing a receiver, liquidator, assignee, custodian,
trustee, sequestrator, or similar official for such Person or for any
substantial part of its property, or ordering the winding-up or liquidation or
such Person's affairs, and such petition, decree or order shall remain unstayed
and in effect for a period of 60 consecutive days; or (b) the commencement by
such Person of a voluntary case under any applicable federal or state
bankruptcy, insolvency or other similar law now or hereafter in effect, or the
consent by such Person to the entry of an order for relief in an involuntary
case under any such law, or the consent by such Person to the appointment of or
taking possession by, a receiver, liquidator, assignee, custodian, trustee,
sequestrator, or similar official for such Person or for any substantial part of
its property, or the making by such Person of any general assignment for the
benefit of creditors, or the failure by such Person generally to pay its debts
as such debts become due, or the taking of action by such Person in furtherance
of any of the foregoing.
"Insolvency Proceeds" has the meaning specified in Section 9.1(b) of the
Sale and Servicing Agreement.
"Insurance Agreement" means the Insurance and Indemnity Agreement, dated as
of October 31, 1996, among the Insurer, the Trust, the Seller and SunStar
Acceptance Corporation.
"Insurance Agreement Event of Default" means an "Event of Default" as
defined in the Insurance Agreement.
"Insurance Agreement Indenture Cross Default" has the meaning specified
therefor in the Insurance Agreement.
"Insurance Policy" means, with respect to a Receivable, any insurance
policy (including the insurance policies described in Section 4.4 of the Sale
and Servicing Agreement) benefiting the holder of the Receivable providing loss
or physical damage, credit life, credit disability, theft, mechanical breakdown
or similar coverage with respect to the Financed Vehicle or the Obligor.
"Insurer" means Financial Security Assurance Inc., a monoline insurance
company incorporated under the laws of the State of New York, or any successor
thereto, as issuer of the Policies.
"Insurer Default" means the occurrence and continuance of any of the
following events:
(a) the Insurer shall have failed to make a payment required
under the Note Policy or the Certificate Policy in accordance with
its respective terms;
(b) The Insurer shall have (i) filed a petition or commenced
any case or proceeding under any provision or chapter of the United
States Bankruptcy Code or any other similar federal or state law
relating to insolvency, bankruptcy, rehabilitation, liquidation or
reorganization, (ii) made a general assignment for the benefit of its
creditors, or (iii) had an order for relief entered against it under
the United States Bankruptcy Code or any other similar federal or
state law relating to insolvency, bankruptcy, rehabilitation,
liquidation or reorganization which is final and nonappealable; or
(c) a court of competent jurisdiction, the New York
Department of Insurance or other competent regulatory authority shall
have entered a final and nonappealable order, judgment or decree (i)
appointing a custodian, trustee, agent or receiver for the Insurer or
for all or any material portion of its property or (ii) authorizing
the taking of possession by a custodian, trustee, agent or receiver
of the Insurer (or the taking of possession of all or any material
portion of the property of the Insurer).
"Insurer Issuer Secured Obligations" means all amounts and obligations
which the Issuer may at any time owe to or on behalf of the Insurer under the
Indenture, the Insurance Agreement or any other Basic Document.
"Insurer Optional Deposit" means, with respect to any Distribution Date, an
amount delivered by the Insurer pursuant to Section 5.9 of the Sale and
Servicing Agreement, at its sole option, to the Indenture Collateral Agent for
deposit into the Collection Account for any of the following purposes: (i) to
provide funds in respect of the payment of fees or expenses of any provider of
services to the Trust with respect to such Distribution Date; or (ii) to include
such amount as part of the Distribution Amount or Class A-1 Final Scheduled
Distribution Amount for such Distribution Date or Class A-1 Final Scheduled
Distribution Date to the extent that without such amount a draw would be
required to be made on a Policy.
"Insurer Secured Obligations" means, with respect to the Securities, all
amounts and obligations which the Servicer, the Seller and such other parties as
may be named therein may at any time owe or be required to perform to or on
behalf of the Insurer (or any agents, accountants or attorneys for the Insurer)
under the Insurance Agreement or under any other Basic Document, regardless of
whether such amounts are owed or performance is due now or in the future,
whether liquidated or unliquidated, contingent or non-contingent.
"Interest Period" means, with respect to any Distribution Date, the period
from and including the Closing Date (in the case of the first Distribution Date)
or from and including the preceding Distribution Date to but excluding such
Distribution Date.
"Interest Rate" means, with respect to the (i) Class A-1 Notes, the Class
A-1 Interest Rate, (ii) Class A-2 Notes, the Class A-2 Interest Rate, and (iii)
Class A-3 Notes, the Class A-3 Interest Rate.
"Investment Earnings" means, with respect to any Distribution Date, the
investment earnings (net of losses and investment expenses) on amounts on
deposit in the Trust Accounts and the Certificate Distribution Account.
"Issuer" means NationsFinancial Auto Owner Trust 1996-1, until a successor
replaces it and, thereafter means the successor, and, for purposes of any
provision contained herein and required by the TIA, each other obligor on the
Notes.
"Issuer Order" and "Issuer Request" means a written order or request signed
in the name of the Issuer by any one of its Authorized Officers and delivered to
the Indenture Trustee.
"Issuer Secured Obligations" means the Insurer Issuer Secured Obligations
and the Trustee Issuer Secured Obligations.
"Issuer Secured Parties" means each of the Indenture Trustee in respect of
the Trustee Issuer Secured Obligations and the Insurer in respect of the Insurer
Issuer Secured Obligations.
"LIBOR" means, with respect to any Interest Period, the London interbank
offered rate for deposits in U.S. dollars having a maturity of one month
commencing on the related LIBOR Determination Date (the "Index Maturity") which
appears on Telerate Page 3750 as of 11:00 a.m., London time, on such LIBOR
Determination Date. If such rate does not appear on Telerate Page 3750, the rate
for that day will be determined on the basis of the rates at which deposits in
U.S. dollars, having the Index Maturity and in a principal amount of not less
than U.S. $1,000,000, are offered at approximately 11:00 a.m., London time, on
such LIBOR Determination Date to prime banks in the London interbank market by
the Reference Banks. The Indenture Trustee will request the principal London
office of each of such Reference Banks to provide a quotation of its rate. If at
least two such quotations are provided, the rate for that day will be the
arithmetic mean, rounded upward, if necessary to the nearest 1/100,000 of 1%
(.0000001), with five one-millionths of a percentage point rounded upward, of
all such quotations. If fewer than two such quotations are provided, the rate
for that day will be the arithmetic mean, rounded upward, if necessary to the
nearest 1/100,000 of % (.0000001), with five one-millionths of a percentage
point rounded upward, of the offered per annum rates one or more leading banks
in New York City, selected by the Indenture Trustee, are quoting as of
approximately 11:00 a.m., New York City time, on such LIBOR Determination Date
to leading European banks for United States dollar deposits for the Index
Maturity; provided that if the banks selected as aforesaid are not quoting as
mentioned in this sentence, LIBOR in effect for the applicable Interest Period
will be LIBOR in effect for the previous Interest Period.
"LIBOR Determination Date" means, with respect to any Interest Period, the
day that is the second London Business Day prior to the commencement of such
Interest Period (or, in the case of the first Interest Period, with respect to
the period from December __, 1996 to but excluding January __, 1997, on the
second business day prior to December __, 1996.)
"Lien" means a security interest, lien, charge, pledge, equity, or
encumbrance of any kind, other than tax liens, mechanics' liens and any liens
that attach to the respective Receivable by operation of law as a result of any
act or omission by the related Obligor.
"Lien Certificate" means, with respect to a Financed Vehicle, an original
certificate of title, certificate of lien or other notification issued by the
Registrar of Titles of the applicable state to a secured party which indicates
that the lien of the secured party on the Financed Vehicle is recorded on the
original certificate of title. In any jurisdiction in which the original
certificate of title is required to be given to the Obligor, the term "Lien
Certificate" shall mean only a certificate or notification issued to a secured
party.
"Liquidated Receivable" means, with respect to any Determination Date, a
Receivable as to which, as of the last day of the related Monthly Period, (i)
the Servicer has determined in good faith that all amounts it expects to recover
have been received, (ii) such Receivable shall have become 180 or more days
delinquent on a recency basis, (iii) the Financed Vehicle has been sold and the
proceeds received, or (iv) a court of appropriate jurisdiction in an insolvency
proceeding shall have issued an order reducing the amount owed on such
Receivable or otherwise modifying or restructuring the scheduled payments to be
made on such Receivable.
"London Business Day" means a Business Day and a day on which banking
institutions in the City of London, England are not required or authorized by
law to be closed.
"Minimum Net Worth" means at any time of determination, and with respect to
the General Partner, net worth equal to 10% of the Certificate Balance. For the
purpose of the determination of Minimum Net Worth: (i) the Demand Note issued to
the General Partner shall be valued at par, (ii) assets subject to a lien shall
be valued at zero, (iii) Certificates or any other interests in any entity
taxable as a partnership for federal income tax purposes shall be valued at
zero, (iv) investments shall be valued at their respective purchase prices plus
accrued interest, and (v) demand notes of NationsBank Corporation issued as
contributions to the General Partner in connection with its status as a general
partner of any other partnership formed pursuant to trust agreements
substantially similar to the Trust Agreement shall be valued at an amount equal
to the excess, if any, of (a) the aggregate current amount of all such demand
notes over (b) 10% of the aggregate Certificate Balance (as such terms are
defined in the related trust agreement) of all certificates issued by such
partnerships, as of such date of determination.
"Monthly Period" means with respect to each Distribution Date and the Class
A-1 Final Scheduled Distribution Date, the calendar month preceding the month in
which such Distribution Date or Class A-1 Final Scheduled Distribution Date
occurs.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc., or its successor.
"Net Liquidation Proceeds" means, with respect to Liquidated Receivables,
(i) proceeds from the disposition of the vehicles securing the Liquidated
Receivables, less reasonable Servicer out-of-pocket costs, including repair,
repossession and resale expenses not already deducted from such proceeds, and
any amounts required by law to be remitted to the Obligor, (ii) any insurance
proceeds, or (iii) other monies received from the Obligor or otherwise.
"Net Loss Rate" means for any Monthly Period, the product, expressed as a
percentage, of twelve multiplied by a fraction, the numerator of which is equal
to (i) the aggregate Principal Balance of all Receivables that became Liquidated
Receivables during such Monthly Period less (ii) the Net Liquidation Proceeds
received by the Trust with respect to Receivables which became Liquidated
Receivables in such Monthly Period and any prior Monthly Periods, and the
denominator of which is equal to the Aggregate Principal Balance of the
Receivables as of the first day of such Monthly Period.
"Note" means a Class A-1 Note, a Class A-2 Note and a Class A-3 Note.
"Note Depository Agreement" shall mean the agreement among the Trust, the
Servicer and The Depository Trust Company, as the initial Clearing Agency,
substantially in the form of Exhibit C to the Indenture, relating to the Notes.
"Note Distribution Account" means the account designated as such,
established and maintained pursuant to Section 5.1 (a)(ii) of the Sale and
Servicing Agreement.
"Noteholder" means the Person in whose name a Note is registered on the
Note Register.
"Noteholder Secured Obligations" means, with respect to the Securities, all
amounts and obligations which the Servicer or the Seller may at any time owe or
be required to perform to or on behalf of the Trustee or the Noteholders under
the Indenture or any other Basic Document, regardless of whether such amounts
are owed or performance is due now or in the future, whether liquidated or
unliquidated, contingent or non-contingent.
"Noteholders' Distributable Amount" means, with respect to any Distribution
Date, the sum of the Noteholders' Principal Distributable Amount and the
Noteholders' Interest Distributable Amount.
"Noteholders' Interest Carryover Shortfall" means, with respect to any
Distribution Date and a Class of Notes, the excess of the Noteholders' Interest
Distributable Amount for such Class for the preceding Distribution Date, over
the amount in respect of interest that was actually deposited in the Note
Distribution Account with respect to such Class on such preceding Distribution
Date, plus interest on the amount of interest due but not paid to Noteholders of
such Class on the preceding Distribution Date, to the extent permitted by law,
at the Interest Rate borne by such Class of Notes from such preceding
Distribution Date to but excluding the current Distribution Date.
"Noteholders' Interest Distributable Amount" means, with respect to any
Distribution Date, the sum of the Noteholders' Monthly Interest Distributable
Amount for such Distribution Date and the Noteholders' Interest Carryover
Shortfall for such Distribution Date. Interest shall be computed on the basis of
(i) the actual number of days elapsed in a 360-day year in the case of the Class
A-1 Notes and the Class A-2 Notes and (ii) a 360-day year of twelve 30-day
months in the case of the Class A-3 Notes.
"Noteholders' Monthly Interest Distributable Amount" means, (A) with
respect to any Distribution Date, the product of (i)(x) in the case of the Class
A-1 Notes and the Class A-2 Notes, the product of the Interest Rate for such
Class and a fraction, the numerator of which is the number of days elapsed from
and including the prior Distribution Date (or, in the case of the first
Distribution Date, from and including the Closing Date) to but excluding such
Distribution Date and the denominator of which is 360 and (y) in the case of the
Class A-3 Notes, one-twelfth of the Interest Rate for such Class (or, in the
case of the first Distribution Date, the Interest Rate for such Class multiplied
by a fraction, the numerator of which is the number of days elapsed from and
including the Closing Date to but excluding such Distribution Date and the
denominator of which is 360) and (ii) the outstanding principal amount of the
Notes of such Class immediately preceding such Distribution Date and (B) with
respect to the Class A-1 Notes and the Class A-1 Final Scheduled Distribution
Date, the product of (i) the Interest Rate for the Class A-1 Notes and a
fraction, the numerator of which is the actual number of days elapsed from and
including the preceding Distribution Date to but excluding the Class A-1 Final
Scheduled Distribution Date and the denominator of which is 360 and (ii) the
outstanding principal amount of the Class A-1 Notes immediately preceding the
Class A-1 Final Scheduled Distribution Date.
"Noteholders' Monthly Principal Distributable Amount" means, with respect
to any Distribution Date, the Noteholders' Percentage of the Principal
Distributable Amount.
"Noteholders' Percentage" means with respect to any Determination Date (i)
relating to a Distribution Date prior to the Distribution Date on which the
principal amount of the Class A-3 Notes is reduced to zero, 100%; (ii) relating
to the Distribution Date on which the principal amount of the Class A-3 Notes is
reduced to zero, the percentage equivalent of a fraction, the numerator of which
is the principal amount of the Class A-3 Notes immediately prior to such
Distribution Date, and the denominator of which is the Principal Distributable
Amount; and (iii) relating to any other Distribution Date, 0%.
"Noteholders' Principal Carryover Shortfall" means, as of the close of any
Distribution Date, the excess of the Noteholders' Principal Distributable Amount
for the preceding Distribution Date over the amount in respect of principal that
was actually deposited in the Note Distribution Account on such preceding
Distribution Date.
"Noteholders' Principal Distributable Amount" means, with respect to any
Distribution Date (other than the Final Scheduled Distribution Date for any
Class of Notes), the sum of the Noteholders' Monthly Principal Distributable
Amount for such Distribution Date and the Noteholders' Principal Carryover
Shortfall for such Distribution Date. The Noteholders' Principal Distributable
Amount on the Final Scheduled Distribution Date for any Class of Notes will
equal the sum of (i) the Noteholders' Monthly Principal Distributable Amount for
such Distribution Date, (ii) the Noteholders' Principal Carryover Shortfall for
such Distribution Date, and (iii) the excess of the outstanding principal amount
of such Class of Notes, if any, over the amounts described in clauses (i) and
(ii).
"Note Owner" means, with respect to a Book-Entry Note, the person who is
the owner of such Book-Entry Note, as reflected on the books of the Clearing
Agency, or on the books of a Person maintaining an account with such Clearing
Agency (directly as a Clearing Agency Participant or as an indirect participant,
in each case in accordance with the rules of such Clearing Agency).
"Note Policy" means the financial guaranty insurance policy issued by the
Insurer to the Indenture Trustee for the benefit of the Noteholders with respect
to the Notes, including any endorsements thereto, in the form of Exhibit E to
the Indenture.
"Note Policy Claim Amount" has the meaning specified in Section 5.18(a) of
the Indenture.
"Note Pool Factor" for each Class of Notes as of the close of business on a
Distribution Date means a seven-digit decimal figure equal to the outstanding
principal amount of such Class of Notes as of such Distribution Date after
giving effect to principal distributions on such date divided by the original
outstanding principal amount of such Class of Notes.
"Note Register" and "Note Registrar" have the respective meanings specified
in Section 2.4 of the Indenture.
"Notice of Claim" has the meaning, with respect to the Note Policy,
specified in Section 5.18(b) of the Indenture, and with respect to the
Certificate Policy, specified in Section 5A.1(b) of the Sale and Servicing
Agreement.
"Obligor" on a Receivable means the purchaser or co-purchasers of the
Financed Vehicle and any other Person who owes payments under the Receivable.
"Officer's Certificate" means (i) with respect to the Indenture, a
certificate signed by any Authorized Officer of the Owner Trustee, under the
circumstances described in, and otherwise complying with, the applicable
requirements of Section 11.1 of the Indenture and TIA ss. 314, and delivered to
the Indenture Trustee, and (ii) otherwise, a certificate signed by the (a)
chairman of the board, the president, any executive vice president or any vice
president and (b) any treasurer, assistant treasurer, secretary or assistant
secretary of the Seller or the Servicer, as appropriate. Unless otherwise
specified, any reference in the Indenture to an Officer's Certificate shall be
to an Officer's Certificate of any Authorized Officer of the Issuer.
"Opinion of Counsel" means (i) with respect to the Indenture, one or more
written opinions of counsel who may, except as otherwise expressly provided in
the Indenture, be employees of or counsel to the Issuer and who shall be
satisfactory to the Indenture Trustee and, if addressed to the Insurer,
satisfactory to the Insurer, and which shall comply with any applicable
requirements of Section 11.1 of the Indenture, and shall be in form and
substance satisfactory to the Indenture Trustee, and if addressed to the
Insurer, satisfactory to the Insurer, and (ii) otherwise, one or more written
opinions of counsel who may be an employee of or counsel to the Seller or the
Servicer or any Affiliate thereof, which counsel shall be acceptable to the
Indenture Trustee, the Owner Trustee, the Insurer or the Rating Agencies, as
applicable.
"Original Pool Balance" means the Pool Balance as of the Cutoff Date.
"Originator" means, with respect to any Receivable, either SunStar
Acceptance Corporation or SunStar Acceptance Corporation (California), as the
original purchaser of such Receivable from the applicable Dealer.
"Outstanding" means, as of the date of determination, all Notes theretofore
authenticated and delivered under the Indenture except:
(i) Notes theretofore canceled by the Note Registrar
or delivered to the Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which money
in the necessary amount has been theretofore deposited with the
Indenture Trustee or any Paying Agent in trust for the Holders of
such Notes (provided, however, that if such Notes are to be redeemed,
notice of such redemption has been duly given pursuant to this
Indenture or provision therefor, satisfactory to the Indenture
Trustee); and
(iii) Notes in exchange for or in lieu of other Notes which
have been authenticated and delivered pursuant to this Indenture
unless proof satisfactory to the Indenture Trustee is presented that
any such Notes are held by a bona fide purchaser.
provided, however, that Notes which have been paid with proceeds of the
Note Policy shall continue to remain Outstanding for purposes of the Indenture
until the Insurer has been paid as subrogee hereunder or reimbursed pursuant to
the Insurance Agreement as evidenced by a written notice from the Insurer
delivered to the Indenture Trustee, and the Insurer shall be deemed to be the
Holder thereof to the extent of any payments thereon made by the Insurer;
provided, further, that in determining whether the Holders of the requisite
Outstanding Amount of the Notes have given any request, demand, authorization,
direction, notice, consent or waiver hereunder or under any Basic Document,
Notes owned by the Issuer, any other obligor upon the Notes, the Seller or any
Affiliate of any of the foregoing Persons shall be disregarded and deemed not to
be Outstanding, except that, in determining whether the Indenture Trustee shall
be protected in relying upon any such request, demand, authorization, direction,
notice, consent or waiver, only Notes that a Responsible Officer of the
Indenture Trustee either actually knows to be so owned or has received written
notice thereof shall be so disregarded. Notes so owned that have been pledged in
good faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Indenture Trustee the pledgee's right so to act with respect
to such Notes and that the pledgee is not the Issuer, any other obligor upon the
Notes, the Seller or any Affiliate of any of the foregoing Persons.
"Outstanding Amount" means the aggregate principal amount of all Notes, or
class of Notes, as applicable, Outstanding at the date of determination.
"Owner" shall mean each Person who is the beneficial owner of a Book Entry
Certificate as reflected in the records of the Clearing Agency or if a Clearing
Agency Participant is not the Owner, then as reflected in records of a Person
maintaining an account with such Clearing Agency (directly or indirectly, in
accordance with the rules of such Clearing Agency).
"Owner Trustee" means ________________________, a ________ banking
corporation, not in its individual capacity but solely as Owner Trustee under
the Trust Agreement, and its successors in interest or any successor Owner
Trustee under the Trust Agreement.
"Owner Trust Estate" shall mean all right, title and interest of the Trust
in and to the property and rights assigned to the Trust pursuant to Article II
of the Sale and Servicing Agreement, all funds on deposit from time to time in
the Trust Accounts and the Certificate Distribution Account and all other
property of the Trust from time to time, including any rights of the Owner
Trustee and the Trust pursuant to the Sale and Servicing Agreement and the
Spread Account Agreement.
"Payment Date" means a Distribution Date.
"Paying Agent" means the Indenture Trustee or any other Person that meets
the eligibility standards for the Indenture Trustee specified in Section 6.11 of
the Indenture and is authorized by the Issuer to make the payments to and
distributions from the Collection Account and the Note Distribution Account,
including payment of principal of or interest on the Notes on behalf of the
Issuer.
"Person" means any individual, corporation, estate, partnership, joint
venture, association, joint stock company, trust (including any beneficiary
thereof), unincorporated organization or government or any agency or political
subdivision thereof.
"Physical Property" has the meaning assigned to such term in the definition
of "Delivery" above.
"Policies" means the Certificate Policy and the Note Policy.
"Pool Balance" means, as of any date of determination, the aggregate
Principal Balance of the Receivables (excluding Purchased Receivables and
Liquidated Receivables).
"Post Cutoff Date Insurance Add-Ons" means Collateral Protection Insurance
Premiums added to the Contracts on or after the Cutoff Date with regard to each
Contract.
"Precomputed Receivable" means any Receivable under which the portion of a
payment allocable to interest and the portion allocable to principal is
determined in accordance with the Rule of 78s Method or the Actuarial Method.
"Predecessor Note" means, with respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under Section 2.5 of the Indenture in lieu of a
mutilated, lost, destroyed or stolen Note shall be deemed to evidence the same
debt as the mutilated, lost, destroyed or stolen Note.
"Preference Claim" has the meaning, with respect to the Note Policy,
specified in Section 5.19(b) of the Indenture, and with respect to the
Certificate Policy, specified in Section 5A.2(b) of the Sale and Servicing
Agreement.
"Principal Balance" means, with respect to any Receivable, as of any date
(a) with respect to any Precomputed Receivable, the present value of all
Scheduled Payments for such Receivable remaining due and unpaid on such date
(calculated based on the assumption that each such Scheduled Payment is paid on
its due date), discounted monthly over the remaining term of the Receivable at
one-twelfth of the related APR and (b) with respect to any Simple Interest
Receivable, the Amount Financed minus that portion of all amounts received on or
prior to such date and allocable to principal in accordance with the Simple
Interest Method.
"Principal Carryover Shortfall" means, as of the close of business on any
Distribution Date, the excess of the Principal Distributable Amount plus any
outstanding Principal Carryover Shortfall from the preceding Distribution Date
over the amount of principal deposited in the Note Distribution Account and/or
the Certificate Distribution Account with respect to such current Distribution
Date.
"Principal Distributable Amount" means, with respect to any Distribution
Date, without duplication, the sum of (i) the principal portion (calculated in
the case of Precomputed Receivables on the basis of the Actuarial Method and in
the case of Simple Interest Receivables on the basis of the Simple Interest
Method) of all Collected Funds received during the immediately preceding Monthly
Period (other than Liquidated Receivables and Purchased Receivables), (ii) the
Principal Balance of all Receivables that became Liquidated Receivables during
the related Monthly Period (other than Purchased Receivables), (iii) the
principal portion of the Purchase Amounts received with respect to all
Receivables that became Purchased Receivables during the related Monthly Period,
and (iv) following the acceleration of the Notes pursuant to Section 5.2 of the
Indenture, the amount of money or property collected pursuant to Section 5.4 of
the Indenture since the preceding Determination Date by the Indenture Trustee or
Controlling Party for distribution pursuant to Section 5.6 of the Indenture.
"Proceeding" means any suit in equity, action at law or other judicial or
administrative proceeding.
"Purchase Agreement" means the Purchase Agreement between the Seller and
SunStar Acceptance Corporation, dated as of November 30, 1996, pursuant to which
the Seller acquired the Receivables.
"Purchase Amount" means, with respect to a Receivable, the Principal
Balance and all accrued and unpaid interest on the Principal Balance of such
Receivable (including one month's interest thereon, in the month of payment, at
the APR less, so long as SunStar Acceptance Corporation is the Servicer, the
Servicing Fee), after giving effect to the receipt of any moneys collected (from
whatever source) on such Receivable, if any.
"Purchased Receivable" means a Receivable purchased as of the close of
business on the last day of a Monthly Period by the Servicer pursuant to Section
4.7 of the Sale and Servicing Agreement or repurchased by the Seller or SunStar
Acceptance Corporation pursuant to Section 3.2(a) of the Sale and Servicing
Agreement.
"Rating Agency" means Moody's and Standard & Poor's. If no such
organization or successor maintains a rating on the Securities, "Rating Agency"
shall be a nationally recognized statistical rating organization or other
comparable Person designated by the Seller and acceptable to the Insurer (so
long as an Insurer Default shall not have occurred and be continuing), notice of
which designation shall be given to the Indenture Trustee, the Owner Trustee and
the Servicer.
"Rating Agency Condition" means, with respect to any action, that each
Rating Agency shall have been given at least 10 days' (or such shorter period as
shall be acceptable to each Rating Agency) prior notice thereof and that each of
the Rating Agencies shall have notified the Seller, the Servicer, the Insurer,
the Owner Trustee and the Indenture Trustee in writing that such action will not
result in a reduction or withdrawal of the then current rating of any Class of
Notes or the Certificates, as applicable.
"Realized Losses" means, with respect to any Receivable that becomes a
Liquidated Receivable, the excess of the Principal Balance of such Liquidated
Receivable over Net Liquidation Proceeds to the extent allocable to principal.
"Receivable" means any Contract listed on Schedule A to the Sale and
Servicing Agreement (which Schedule may be in the form of microfiche) conveyed
to the Trust on the Closing Date, as such Contract may be amended or modified;
provided, however, that no Receivable shall include any CPI Funds, all of which
shall remain the property of SunStar Acceptance Corporation or SunStar
Acceptance Corporation (California), as applicable, which rights to such funds
are not being transferred pursuant to the Basic Documents (regardless of whether
the related CPI was placed before, on or after the Closing Date) .
"Receivable Files" means the documents specified in Section 3.3 of the Sale
and Servicing Agreement.
"Record Date" means, with respect to a Distribution Date or Redemption
Date, the close of business on the last Business Day immediately preceding such
Distribution Date or Redemption Date, unless otherwise specified.
"Redemption Date" means (a) in the case of a redemption of the Notes
pursuant to Section 10.1(a) of the Indenture or a payment to Noteholders
pursuant to Section 10.1(b) of the Indenture, the Distribution Date specified by
the Servicer or the Issuer pursuant to Section 10.1(a) or (b) of the Indenture,
as applicable.
"Redemption Price" means (a) in the case of a redemption of the Notes
pursuant to Section 10.1(a) of the Indenture, an amount equal to the unpaid
principal amount of the then outstanding principal amount of each class of Notes
being redeemed plus accrued and unpaid interest thereon to but excluding the
Redemption Date, or (b) in the case of a payment made to Noteholders pursuant to
Section 10.1(b) of the Indenture, the amount on deposit in the Note Distribution
Account, but not in excess of the amount specified in clause (a) above.
"Reference Banks" means four major banks in the London interbank market
selected by the Indenture Trustee.
"Registrar of Titles" means, with respect to any state, the governmental
agency or body responsible for the registration of, and the issuance of
certificates of title relating to, motor vehicles and liens thereon.
"Responsible Officer" means, with respect to the Indenture Trustee, any
officer within the Corporate Trust Office of the Indenture Trustee, including
any Vice President, Assistant Vice President, Assistant Treasurer, Assistant
Secretary, or any other officer of the Indenture Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also, with respect to a particular matter, any other officer to whom such matter
is referred because of such officer's knowledge of and familiarity with the
particular subject.
"Rule of 78s Method" means the method under which a portion of a payment
allocated to earned interest and the portion allocable to principal is
determined according to the sum of the month's digits or any equivalent method
commonly referred to as the "Rule of 78s."
"Rule of 78s Receivable" means a Receivable which by its terms calculates
interest and principal with respect to each scheduled payment in accordance with
the Rule of 78s method.
"Sale and Servicing Agreement" shall mean the Sale and Servicing Agreement
among NationsFinancial Auto Owner Trust 1996- 1, NationsFinancial Funding
Corporation, and SunStar Acceptance Corporation, dated as of November 30, 1996.
"Scheduled Payment" means (i) with respect to any Receivable, the fixed
level payment (net of any portion of such payment attributable to any Collateral
Protection Insurance Premium) required to be made by the Obligor during the
respective Monthly Period sufficient to amortize the Principal Balance thereof
over the term of the Receivable and to provide interest at the APR with respect
to Precomputed Receivables, under the Actuarial Method and with respect to
Simple Interest Receivables, under the Simple Interest Method.
"Schedule of Receivables" means the listing of the Receivables set forth in
Schedule A to the Sale and Servicing Agreement.
"Secretary of State" shall mean the Secretary of State of the State of
Delaware.
"Secured Obligations" means Insurer Secured Obligations, Noteholder Secured
Obligations and Trust Secured Obligations.
"Securities" means the Notes and the Certificates.
"Seller" means NationsFinancial Funding Corporation, a Delaware corporation
and its successors in interest.
"Service Contract" means, with respect to a Financed Vehicle, the
agreement, if any, financed under the related Receivable that provides for the
repair of such Financed Vehicle.
"Servicer Default" means an event specified in Section 8.1 of the Sale and
Servicing Agreement.
"Servicer" means SunStar Acceptance Corporation, as the servicer of the
Receivables, and each successor Servicer pursuant to Section 7.3 or 8.2 of the
Sale and Servicing Agreement.
"Servicer's Certificate" means an Officers' Certificate of the Servicer
delivered pursuant to Section 4.9 of the Sale and Servicing Agreement,
substantially in the form of Exhibit D to the Sale and Servicing Agreement.
"Servicing Fee" has the meaning specified in Section 4.8 of the Sale and
Servicing Agreement.
"Servicing Fee Rate" means [2.5]% per annum.
"Simple Interest Method" means the method of allocating a fixed level
payment to principal and interest, pursuant to which the portion of such payment
that is allocated to interest is equal to the product of the fixed rate of
interest multiplied by the unpaid principal balance multiplied by the period of
time elapsed since the preceding payment of interest was made (in some states
assuming 30 day months), divided by the actual number of days in a year (360
days in states which assume 30 day months) and the remainder of such payment is
allocable to principal.
"Simple Interest Receivable" means any Receivable under which the portion
of a payment allocable to interest and the portion allocable to principal is
determined in accordance with the Simple Interest Method.
"Specified Spread Account Requirement" has the meaning specified in Section
3(b) of the Spread Account Agreement.
"Spread Account" means the account designated as such, established and
maintained pursuant to the Spread Account Agreement.
"Spread Account Agreement" means the Spread Account Agreement dated as of
November 30, 1996 among the Seller, the Servicer and the Collateral Agent.
"Spread Account Initial Deposit" means, with respect to the Closing Date,
an amount equal to ___% of the aggregate principal balance of the Receivables as
of the Cutoff Date (which is equal to $____________).
"Spread Account Property" has the meaning set forth in Section 3(a) of the
Spread Account Agreement.
"Standard & Poor's" means Standard & Poor's Ratings Services, or its
successor.
"State" means any one of the 50 states of the United States of America or
the District of Columbia.
"Subservicer" means SunStar Acceptance Corporation (California).
"Successor Servicer" has the meaning specified in Section 3.7(e) of the
Indenture.
"SunStar Acceptance Corporation" means SunStar Acceptance Corporation, a
Delaware corporation.
"Supplemental Servicing Fee" means charges collected (from whatever source)
on the Receivables during the related Monthly Period including, in the case of a
Precomputed Receivable that is prepaid in full, the difference between the
Principal Balance of such Receivable (plus accrued interest to the date of
prepayment) and the principal balance of such Receivable computed according to
the Rule of 78s, and other late fees, prepayment fees, administrative fees and
expenses or similar charges allowed by applicable law with respect to
Receivables, plus reinvestment proceeds on any payments received in respect of
Receivables during the related Monthly Period.
"Termination Date" means the latest of (i) the expiration of the Note
Policy and the return of the Note Policy to the Insurer for cancellation, (ii)
the date on which the Insurer shall have received payment and performance of all
Insurer Issuer Secured obligations and (iii) the date on which the Indenture
Trustee shall have received payment and performance of all Trustee Issuer
Secured Obligations.
"Treasury Regulations" shall mean regulations, including proposed or
temporary regulations, promulgated under the Code. References herein to specific
provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.
"Trigger Event" means that any of the following tests shall not be
satisfied:
(i) For any Distribution Date, the Average
Delinquency Ratio is less than __%; and
(ii) For any Distribution Date, the Average Net Loss Rate is
less than __%.
"Trust" shall mean the trust established by the Trust Agreement.
"Trust Account Property" means the Trust Accounts, all amounts and
investments held from time to time in any Trust Account (whether in the form of
deposit accounts, Physical Property, book-entry securities, uncertificated
securities or otherwise), and all proceeds of the foregoing.
"Trust Accounts" has the meaning assigned thereto in Section 5.1(b) of the
Sale and Servicing Agreement.
"Trust Agreement" means the Trust Agreement dated as of November 30, 1996,
between the Seller and the entity acting as Owner Trustee.
"Trust Certificate" shall mean a Certificate.
"Trustee Issuer Secured Obligations" means all amounts and obligations
which the Issuer may at any time owe to or on behalf of the Indenture Trustee
for the benefit of the Noteholders under the Indenture or the Notes.
"Trust Estate" means all money, instruments, rights and other property that
are subject or intended to be subject to the lien and security interest of the
Indenture for the benefit of the Noteholders (including all property and
interests Granted to the Indenture Collateral Agent), including all proceeds
thereof.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939 as in
force on the date hereof, unless otherwise specifically provided.
"Trust Property" has the meaning specified in Section 2.1 of the Sale and
Servicing Agreement.
"Trust Officer" means, (i) in the case of the Indenture Trustee, the
chairman or vice-chairman of the board of directors, the chairman or
vice-chairman of the executive committee of the board of directors, the
president, any vice president, the secretary, any assistant secretary, the
treasurer, any assistant treasurer, the cashier, any assistant cashier, any
trust officer or assistant trust officer, the controller and any assistant
controller or any other officer of the Indenture Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of such officer's knowledge of
and familiarity with the particular subject, and (ii) in the case of the Owner
Trustee, any officer in the corporate trust office of the entity acting as Owner
Trustee with direct responsibility for the administration of this Agreement or
any of the Basic Documents on behalf of the Owner Trustee.
"Trust Secured Obligations" means with respect to the Securities, all
amounts and obligations which the Servicer or the Seller may at any time owe or
be required to perform to or on behalf of the Owner Trustee or the
Certificateholders under the Trust Agreement or any other Basic Document,
regardless of whether such amounts are owed or performance is due now or in the
future, whether liquidated or unliquidated, contingent or non-contingent.
"UCC" means, unless the context otherwise requires, the Uniform Commercial
Code as in effect in the State of New York on the date of the Agreement.
EXHIBIT B
FORM OF MONTHLY CERTIFICATEHOLDER STATEMENT
NATIONSFINANCIAL AUTO OWNER TRUST 1996-1
_____% Asset Backed Certificates
Distribution Date:
Monthly Period:
Under the Sale and Servicing Agreement dated as of November 30, 1996
among Sunstar Acceptance Corporation, as Servicer, NationsFinancial Funding
Corporation, as Seller, NationsFinancial Auto Owner Trust 1996-1, as Issuer, the
Servicer is required to prepare certain information each month regarding current
distributions to Certificateholders and the performance of the Trust during the
previous month. The information that is required to be prepared with respect to
the Distribution Date and Monthly Period listed above is set forth below.
Certain of the information is presented on the basis of an original principal
amount of $1,000 per Certificate, and certain other information is presented
based upon the aggregate amounts for the Trust as a whole.
A. Information Regarding the Current Monthly Distribution.
1. Certificates.
(a) The aggregate amount of the
distribution to the Certificates
holders...........................................$________
(b) The amount of the distribution set
forth in paragraph A.1.(a) above in
respect of interest on the Certificates...........$________
(c) The amount of the distribution set
forth in paragraph A.1.(a) above in
respect of principal of the Certificates..........$________
(d) The amount of the distributions set
forth in paragraph A.1.(a) payable
out of amounts withdrawn from the Spread
Account with respect to the Certificates..........$________
(e) The amount of the distribution in
A.1.(a) payable pursuant to a claim
on the Certificate Policy.........................$________
(f) The amount of the distribution set
forth in paragraph A.1.(a) above
per $1,000 interest in the Certificates...........$________
(g) The amount of the distribution set
forth in paragraph A.1.(b) above
per $1,000 interest in the Certificates...........$________
(h) The amount of the distribution set
forth in paragraph A.1.(c) above
per $1,000 interest in the Certificates...........$________
(i) The amount of the distribution set
forth in paragraph A.1.(d) above
per $1,000 interest in the Certificates...........$________
(j) The amount of the distribution set
forth in paragraph A.1.(e) above per
$1,000 interest in the Certificate................$________
B. Information Regarding the Performance of the Trust.
1. Pool Balance and Certificate Principal Balance.
(a) The Pool Balance at the close of business on
the last day of the Monthly Period...............$________
(b) The Certificate Principal Balance after
giving effect to payments allocated to
principal as set forth in Paragraph A.1.(c
)................................................$________
(c) The Certificate Pool Factor after
giving affect to the payments set
forth in paragraph A.1.(c).......................$________
(d) the amount of aggregate Realized Losses for
the second preceding Monthly Period..............$________
(e) The aggregate Purchase Amount for
all Receivables that were repurchased
in the Monthly Period............................$________
2. Servicing Fee.
The aggregate amount of the Servicing
Fee paid to the Servicer with respect
to the preceding Monthly Period.................$________
3. Payment Shortfalls.
(a) The amount of the Certificates'
Interest Carryover Shortfall after
giving effect to the payments set forth
in paragraph A.1.(b) above......................$________
(b) The amount of the Certificateholders'
Interest Carryover Shortfalls set
forth in paragraph B.3.(a) above per
$1,000 interest with respect to
the Certificate:................................$________
EXHIBIT C
FORM OF MONTHLY NOTEHOLDER STATEMENT
NATIONSFINANCIAL AUTO OWNER TRUST 1996-1
Class A-1 _____% Asset Backed Notes
Class A-2 Floating Rate Asset Backed Notes
Class A-3 ____% Asset Backed Notes
Distribution Date:
Monthly Period:
Under the Sale and Servicing Agreement dated as of November 30, 1996
among Sunstar Acceptance Corporation, as Servicer, NationsFinancial Funding
Corporation, as Seller, NationsFinancial Auto Owner Trust 1996-1, as Issuer, the
Servicer is required to prepare certain information each month regarding current
distributions to Noteholders and the performance of the Trust during the
previous month. The information that is required to be prepared with respect to
the Distribution Date and Monthly Period listed above is set forth below.
Certain of the information is presented on the basis of an original principal
amount of $1,000 per Note, and certain other information is presented based upon
the aggregate amounts for the Trust as a whole.
A. Information Regarding the Current Monthly Distribution.
1. Notes.
(a) The aggregate amount of the
distribution with respect to:
the Class A-1 Notes....................$________
the Class A-2 Notes....................$________
the Class A-3 Notes....................$________
(b) The amount of the distribution set
forth in paragraph A.1.(a) above in
respect of interest on:
the Class A-1 Notes....................$________
the Class A-2 Notes....................$________
the Class A-3 Notes....................$________
(c) The amount of the distribution set
forth in paragraph A.1.(a) above in
respect of principal of:
the Class A-1 Notes....................$________
the Class A-2 Notes....................$________
the Class A-3 Notes....................$________
(d) The amount of the distributions set
forth in paragraph A.1.(a) payable out
of amounts withdrawn from the Spread
Account with respect to:
the Class A-1 Notes....................$________
the Class A-2 Notes....................$________
the Class A-3 Notes....................$________
(e) The amount of the distribution in
A.1.(a) payable pursuant to a claim
on the Note Policy with respect to:
the Class A-1 Notes....................$________
the Class A-2 Notes....................$________
the Class A-3 Notes....................$________
(f) The amount of the distribution set
forth in paragraph A.1.(a) above
per $1,000 interest in:
the Class A-1 Notes....................$________
the Class A-2 Notes....................$________
The Class A-3 Notes....................$________
(g) The amount of the distribution set
forth in paragraph A.1.(b) above
per $1,000 interest in:
the Class A-1 Notes....................$________
the Class A-2 Notes....................$________
the Class A-3 Notes....................$________
(h) The amount of the distribution set
forth in paragraph A.1.(c) above
per $1,000 interest in:
the Class A-1 Notes....................$________
the Class A-2 Notes....................$________
the Class A-3 Notes....................$________
(i) The amount of the distribution set
forth in paragraph A.1.(d) above
per $1,000 interest in:
the Class A-1 Notes....................$________
the Class A-2 Notes....................$________
the Class A-3 Notes....................$________
(j) The amount of the distribution set
forth in paragraph A.1.(e) above
per $1,000 interest in:
the Class A-1 Notes....................$________
the Class A-2 Notes....................$________
the Class A-3 Notes....................$________
B. Information Regarding the Performance of the Trust.
1. Pool Balance and Note Principal Balance.
(a) The Pool Balance at the close of business on
the last day of the Monthly Period..............$_____
(b) The Note Principal Balance after giving effect to payments
allocated to principal as set forth in Paragraph A.1.(c) above
with respect to:
the Class A-1 Notes....................$________
the Class A-2 Notes....................$________
the Class A-3 Notes....................$________
(c) The Note Pool Factor for each Class of Notes after giving affect
to the payments set forth in paragraph A.1.(c) with respect to:
the Class A-1 Notes.....................________
the Class A-2 Notes.....................________
the Class A-3 Notes.....................________
(d) The amount of aggregate Realized Losses for
the second preceding Monthly Period.... ........$________
(e) The aggregate Purchase Amount for
all Receivables that were repurchased
in the Monthly Period...........................$_____
2. Servicing Fee.
The aggregate amount of the Servicing
Fee paid to the Servicer with respect
to the preceding Monthly Period.................$_____
3. Payment Shortfalls.
(a) The amount of the Noteholders'
Interest Carryover Shortfall after
giving effect to the payments set forth
in paragraph A.1.(b) above with respect to:
the Class A-1 Notes.....................$________
the Class A-2 Notes.....................$________
The Class A-2 Notes.....................$________
(b) The amount of the Noteholders Interest Carryover Shortfalls set
forth in paragraph B.3.(a) above per $1,000 interest with
respect to:
the Class A-1 Notes.....................$________
the Class A-2 Notes.....................$________
The Class A-2 Notes.....................$________