EXHIBIT 10.62
FIRST INVESTORS FINANCIAL SERVICES, INC.,
as Seller,
FIRST INVESTORS SERVICING CORPORATION,
as Servicer,
FIRST INVESTORS AUTO INVESTMENT CORP.
as Depositor,
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Indenture Trustee
and
FIRST INVESTORS AUTO OWNER TRUST 2000-A
----------------------------
SALE AND ALLOCATION AGREEMENT
Dated as of January 1, 2000
----------------------------
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions............................................1
SECTION 1.2. Other Definitional Provisions.........................17
ARTICLE II
TRUST PROPERTY
SECTION 2.1. Conveyance of Trust Property..........................18
SECTION 2.2. Representations and Warranties of
the Seller as to the Contracts..................20
SECTION 2.3. Repurchase by Seller upon Breach......................25
ARTICLE III
DISTRIBUTIONS; RESERVE ACCOUNT; STATEMENTS TO NOTEHOLDERS AND CERTIFICATEHOLDERS
SECTION 3.1. Accounts..............................................25
SECTION 3.2. Collections...........................................27
SECTION 3.3. Application of Collections............................28
SECTION 3.4. Additional Deposits...................................28
SECTION 3.5. Determination Date Calculations; Application of
Available Funds.......................................28
SECTION 3.6. Reserve Account.......................................33
SECTION 3.7. Statements to Noteholders.............................35
SECTION 3.8. Control of Securities Accounts........................36
SECTION 3.9. Policy Matters........................................37
ARTICLE IV
THE SELLER
SECTION 4.1. Representations and Warranties
of Seller.......................................37
SECTION 4.2. Liability of Seller; Indemnities......................39
SECTION 4.3. Merger or Consolidation of, or Assumption
of the Obligations of, Seller...................41
SECTION 4.4. Limitation on Liability of Seller
and Others......................................41
SECTION 4.5. Seller May Own Notes..................................42
ARTICLE V
MISCELLANEOUS PROVISIONS
SECTION 5.1. Amendment.............................................42
SECTION 5.2. Protection of Title to Trust..........................44
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SECTION 5.3. Governing Law.........................................46
SECTION 5.4. Notices...............................................47
SECTION 5.5. Severability of Provisions............................47
SECTION 5.6. Assignment............................................47
SECTION 5.7. Further Assurances....................................47
SECTION 5.8. No Waiver; Cumulative Remedies........................48
SECTION 5.9. Third-Party Beneficiaries.............................48
SECTION 5.10. Actions by Noteholders................................48
SECTION 5.11. Counterparts..........................................48
SECTION 5.12. Agent for Service.....................................48
SECTION 5.13. No Bankruptcy Petition................................49
SECTION 5.14. Limitation of Liability of Owner
Trustee and Indenture Trustee...................49
SECTION 5.15. Certain Rights of the Insurer.........................50
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SCHEDULES
SCHEDULE 1 Schedule of Initial Contracts
SCHEDULE 2 Location of Contract Files
EXHIBITS
EXHIBIT A Form of Monthly Servicer Report
EXHIBIT B Form of Statement to Noteholders
EXHIBIT C Credit and Collection Policy
EXHIBIT D Offering Memorandum
EXHIBIT E Form of Originator Agreement
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SALE AND ALLOCATION AGREEMENT, dated as of January 1, 2000 (as
amended, supplemented or otherwise modified and in effect from time to time,
this "AGREEMENT"), by and among FIRST INVESTORS AUTO OWNER TRUST 2000-A, a
Delaware business trust (the "TRUST"), FIRST INVESTORS FINANCIAL SERVICES, INC.,
a Texas corporation, as seller (the "SELLER"), FIRST INVESTORS AUTO INVESTMENT
CORP., as depositor (the "DEPOSITOR") NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Indenture Trustee, and FIRST INVESTORS SERVICING CORPORATION
("FISC"), a Georgia corporation, as Servicer (together with its successors and
assigns in such capacity, the "SERVICER").
WHEREAS, the Trust desires to purchase the Contracts purchased by
the Seller in the ordinary course of business;
WHEREAS, the Seller is willing to sell the Contracts to the Trust as
of the date hereof; and
WHEREAS, FISC is willing to service such Contracts on behalf of the
Trust;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1. DEFINITIONS. Whenever used in this Agreement, the following
words and phrases, unless the context otherwise requires, whenever capitalized
shall have the following meanings:
"ADDITIONAL NOTE INTEREST" shall mean, for any Payment Date, the sum
of (i) all accrued but unpaid Monthly Note Interest for previous Payment Dates
PLUS (ii) to the extent permitted by law, interest on such accrued but unpaid
Monthly Note Interest at the Note Rate.
"AFFILIATE" shall mean, with respect to any Person, any other Person
directly or indirectly controlling, controlled by or under direct or indirect
common control with such Person. For purposes of this definition, "CONTROL" when
used with respect to any Person shall mean 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.
"AMOUNT FINANCED" shall mean, with respect to any Contract, the
aggregate amount advanced to the related Obligor under such Contract toward the
purchase price of the Financed Vehicle and any related costs.
"APPLICABLE TAX STATE" shall mean, as of any date of
determination,(i) any state in which the Owner Trustee maintains the Corporate
Trust Office, (ii) any state in which the Owner Trustee maintains its principal
executive offices and (iii) any state in which the Servicer regularly conducts
servicing and collection activities(other than purely ministerial activities)
with respect to a material portion of the Contracts.
"APR" shall mean, with respect to any Contract, the annual
percentage rate of interest stated in such Contract.
"AVAILABLE FUNDS" shall mean, for any Payment Date, (i) all Obligor
payments received with respect to the Contracts during the preceding Collection
Period, (ii) all Liquidation Proceeds received with respect to the Contracts
during the preceding Collection Period, (iii) all interest earned on funds on
deposit in the Collection Account during the preceding Collection Period, (iv)
the Purchase Amount for all Contracts that became Purchased Contracts during the
preceding Collection Period and (v) all prepayments received with respect to the
Contracts during the preceding Collection Period attributable to any refunded
item included in the Amount Financed (including amounts received as a result of
rebates of extended warranty contract costs and insurance premiums and proceeds
received under physical damage, credit life and credit disability insurance
policies); PROVIDED, HOWEVER, that Available Funds for any Payment Date shall
not include any payments or other amounts (including Liquidation Proceeds)
received with respect to any Purchased Contract the Purchase Amount for which
was included in Available Funds for a previous Payment Date.
"BACK-UP SERVICER" shall mean Norwest Bank Minnesota, National
Association, a national banking association, in its capacity as back-up
servicer, and its successors and assigns in such capacity.
"BUSINESS DAY" shall mean any day other than a Saturday, a Sunday or
a day on which banking institutions or trust companies in New York, New York,
Wilmington, Delaware, Houston, Texas, Minneapolis, Minnesota or Atlanta, Georgia
are authorized or obligated by law, executive order or governmental decree to
remain closed.
"CLOSING DATE" shall mean January 24, 2000.
"COLLECTION ACCOUNT" shall mean the account established and
maintained as such pursuant to Section 3.1(a).
"COLLECTION PERIOD" shall mean each calendar month during the term
of this Agreement or, in the case of the initial Collection Period, the period
from but excluding the Cutoff Date to and including January 31, 2000.
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"CONTRACT" shall mean a retail installment sale contract or
promissory note and security agreement identified on the Contract Schedule (as
such contract may be amended, supplemented or otherwise modified and in effect
from time to time).
"CONTRACT FILE" shall mean, with respect to any Contract:
(i) the original, executed copy of such Contract; and
(ii) the original certificate of title for the related
Financed Vehicle or such other documents that the Servicer or the Seller
shall keep on file, in accordance with its customary practices and
procedures, and in accordance with applicable state title registration
agency procedures evidencing the security interest of the Seller in such
Financed Vehicle.
"CONTRACT SCHEDULE" shall mean the list identifying the Contracts
attached as Schedule 1 to this Agreement (which list may be in the form of
microfiche or compact disk).
"CORPORATE TRUST OFFICE" shall mean, as applicable, (i) the
principal office of the Indenture Trustee at which at any particular time its
corporate trust business shall be administered, which office at the date of the
execution of this Agreement is located at Sixth Street and Marquette Avenue, MAC
N9311-161, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Trust Services -
Asset-Backed Administration, or at such other address as the Indenture Trustee
may designate from time to time by notice to the Noteholders, the Owner Trustee
and the Seller, or the principal corporate trust office of any successor
Indenture Trustee at the address designated by such successor Indenture Trustee
by notice to the Noteholders, the Owner Trustee and the Seller or (ii) the
principal office of the Owner Trustee at which at any particular time its
corporate trust business shall be administered, which office at the date of the
execution of this Agreement is located at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: Corporate Trust, or at such other address
as the Owner Trustee may designate from time to time by notice to the Indenture
Trustee and the Seller, or the principal corporate trust office of any successor
Owner Trustee at the address designated by such successor Owner Trustee by
notice to the Indenture Trustee and the Seller.
"CREDIT AND COLLECTION POLICY" shall mean the credit and collection
policy of the Seller substantially in the form attached hereto as Exhibit C as
amended and restated from time to time with the consent of the Insurer and in
accordance with the Transaction Documents.
"CUMULATIVE NET LOSS RATE" means the ratio of (i) cumulative Net
Losses for the related Collection Period and all preceding Collection Periods to
(ii) the Pool Balance as of the Cutoff Date.
"CUSTODIAN" means Norwest Bank Minnesota, National Association, in
its capacity as custodian pursuant to the Indenture.
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"CUTOFF DATE" shall mean December 31, 1999.
"DEFAULTED CONTRACT" shall mean any Contract as to which the first
of any of the following has occurred (i) a scheduled payment, or any portion
thereof in excess of $10.00, is more than 120 days delinquent (or if the related
obligor is insolvent or has sought protection under the United States Bankruptcy
Code and such Contract is more than 180 days delinquent), (ii) 90 days have
elapsed since the Servicer repossessed the Financed Vehicle, (iii) the related
Financed Vehicle has been repossessed and sold, or (iv) consistent with the
Servicer's Credit and Collection Policy, has been or should be written off as
uncollectible.
"DELINQUENT CONTRACT" means the entire principal balance of any
Contract (other than a Defaulted Contract) as to which more than ten dollars of
any scheduled payment remains unpaid for more than 30 days from the date at
which it is contractually due and payable.
"DELINQUENCY RATIO" means, with respect to any date of
determination, the ratio (expressed as a percentage) of (i) the Principal
Balance of Contracts that were Delinquent Contracts at the end of the preceding
Collection Period to (ii) the Principal Balance of all Contracts at the end of
such preceding Collection Period.
"DEPOSITOR" shall have the meaning specified in the Trust Agreement.
"DEPOSITOR ACCOUNT" shall mean the account established and
maintained as such pursuant to Section 3.1(c).
"DETERMINATION DATE" shall mean the third Business Day preceding
each Payment Date commencing on February 10, 2000.
"ELIGIBLE INVESTMENTS" shall mean, on any date of determination,
book-entry securities, negotiable instruments or securities represented by
instruments in bearer or registered form with maturities not exceeding the next
Payment Date which evidence:
(1) direct obligations of, and obligations 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;
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(2) demand deposits, time deposits, bankers' acceptances 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 any domestic branch of a foreign bank) and subject to
supervision and examination by federal or state banking or depository
institution authorities; PROVIDED, HOWEVER, that, at the time of the
investment or contractual commitment to invest therein, the commercial
paper or other short-term unsecured debt obligations from each of the
Rating Agencies in the highest investment category granted thereby;
(3) 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) described in clause (ii) above;
(4) short-term corporate securities bearing interest or sold at a
discount issued by any corporation incorporated under the laws of the
United States of America or any state thereof; PROVIDED, HOWEVER, that, at
the time of the investment or contractual commitment to invest therein,
the short-term unsecured debt obligations thereof shall have a rating from
each of the Rating Agencies in the highest investment category granted
thereby;
(5) commercial paper having, at the time of the investment or
contractual commitment to invest therein, a rating from each of the Rating
Agencies in the highest investment category granted thereby;
(6) guaranteed investment contracts issued by an insurance company
or other corporation acceptable to the Rating Agencies and the Insurer
(provided that no Insurer Default shall have occurred and be continuing);
(7) investments in money market funds having a rating from each of
the Rating Agencies in the highest investment category granted thereby
(including funds for which the Indenture Trustee or the Owner Trustee or
any of their respective Affiliates is investment manager or advisor); and
(8) any other investment approved by the Insurer in writing
(provided that no Insurer Default shall have occurred and be continuing)
and with respect to which the Trust or the Servicer has received written
notification from the Rating Agencies that the acquisition of such
investment will not result in a withdrawal or downgrading of the ratings
on the Notes.
Each of the Eligible Investments may be purchased by or through the
Indenture Trustee or an Affiliate thereof.
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"ELIGIBLE INSTITUTION" shall mean the corporate trust department of
the Indenture Trustee or the corporate trust department of any other depository
institution organized under the laws of the United States of America or any
state thereof or the District of Columbia or incorporated under the laws of a
foreign jurisdiction with a branch or agency located in the United States of
America or any state thereof or the District of Columbia qualified to take
deposits and subject to supervision and examination by federal or state banking
authorities which at all times has either a long-term unsecured debt rating of
at least Baa3 from Moody's or a long-term unsecured debt rating, a short-term
unsecured debt rating or a certificate of deposit rating acceptable to the
Rating Agencies and the Insurer (provided that no Insurer Default shall have
occurred and be continuing) and whose deposits are insured by the Federal
Deposit Insurance Corporation.
"ELIGIBLE SERVICER" shall mean First Investors Servicing
Corporation, as initial Servicer, and any other Person which, at the time of its
appointment as Servicer, (i) is approved in writing by the Insurer, (provided
that no Insurer Default shall have occurred and be continuing) (ii) has a net
worth of not less than $50,000,000, (iii) is servicing a portfolio of motor
vehicle retail installment sale contracts and/or motor vehicle loans, (iv) is
legally qualified, and has the capacity, to service the Contracts, (v) has
demonstrated the ability to service a portfolio of motor vehicle retail
installment sale contracts and/or motor vehicle loans similar to the Contracts
professionally and competently in accordance with standards of skill and care
that are consistent with prudent industry standards and (vi) is qualified and
entitled to use pursuant to a license or other written agreement, and agrees to
maintain the confidentiality of, the software which the Servicer uses in
connection with performing its duties and responsibilities under this Agreement
or obtains rights to use, or develops at its own expense, software which is
adequate to perform its duties and responsibilities under this Agreement.
"EVENT OF DEFAULT" shall have the meaning assigned thereto in the
Indenture.
"EVENT OF SERVICING TERMINATION" shall have the meaning assigned
thereto in Section 5.01 of the Servicing Agreement.
"FINAL ORDER" shall mean a final, non-appealable order of a court
exercising jurisdiction in a proceeding relating to an Insolvency Event with
respect to the Seller, the Servicer or the Depositor to the effect that all or
any portion of any payment made to the Noteholders must be returned prior to the
end of the Term of the Insurance Agreement (as defined in the Insurance
Agreement) as a voidable preference under the United States Bankruptcy Code (11
U.S.C.), as amended from time to time.
"FINAL NOTE PAYMENT DATE" shall mean February 15, 2006.
"FINANCED VEHICLE" shall mean a new or used automobile or light-duty
truck, together with all accessions thereto, securing an Obligor's indebtedness
under a Contract.
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"FISC" shall mean First Investors Servicing Corporation.
"FISCAL AGENT" shall have the meaning specified in the Policy.
"HOLDER" shall mean a Noteholder.
"INDENTURE" shall mean the Indenture, dated as of January 1, 2000,
between the Trust, the Indenture Trustee, and the Seller as the same may be
amended, supplemented or otherwise modified and in effect from time to time.
"INDENTURE TRUSTEE" shall mean Norwest Bank Minnesota, National
Association, not in its individual capacity but solely as Indenture Trustee
under the Indenture, its successors in interest and any successor trustee under
the Indenture.
"INITIAL NOTE BALANCE" shall mean, as the context may require, (i)
with respect to all of the Notes, $167,969,000, or (ii) with respect to any
Note, an amount equal to the initial denomination of such Note.
"INITIAL RESERVE ACCOUNT DEPOSIT" shall mean $3,499,372.83.
"INSOLVENCY EVENT" shall mean, with respect to any Person, (i) the
making by such Person of a general assignment for the benefit of creditors, (ii)
the filing by such Person of a voluntary petition in bankruptcy, (iii) such
Person being adjudged a bankrupt or insolvent, or having had entered against
such Person an order for relief in any bankruptcy or insolvency proceeding, (iv)
the filing by such Person of a petition or answer seeking reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any statute, law or regulation, (v) the filing by such Person of an
answer or other pleading admitting or failing to contest the material
allegations of a petition filed against such Person in any proceeding specified
in clause (vii) below, (vi) seeking, consenting to or acquiescing in the
appointment of a trustee, receiver or liquidator of such Person or of all or any
substantial part of the assets of such Person or (vii) the failure to obtain
dismissal within 60 days of the commencement of any proceeding against such
Person seeking reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any statute, law or regulation,
or the entry of any order appointing a trustee, liquidator or receiver of such
Person of all or any substantial portion of the assets of such Person.
"INSURANCE AGREEMENT" shall mean the Insurance Agreement, dated as
of January 1, 2000 by and among the Seller, the Servicer, the Administrator, the
Depositor, the Issuer, the Backup Servicer, the Owner Trustee, the Insurer and
the Indenture Trustee as the same may be amended, supplemented or otherwise
modified and in effect from time to time.
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"INSURER" shall mean MBIA Insurance Corporation, a stock insurance
corporation incorporated under the laws of the State of New York.
"INSURER DEFAULT" shall mean the failure of the Insurer to make any
required payment under the Policy or an Insolvency Event with respect to the
Insurer.
"LIEN" shall mean a security interest, lien, charge, pledge, equity
or encumbrance of any kind, other than tax liens, mechanics' or materialmen's
liens, judicial liens and any liens that may attach to a Financed Vehicle by
operation of law.
"LIQUIDATION PROCEEDS" shall mean all amounts received by the
Servicer with respect to any Defaulted Contract, net of the sum of (i) any
reasonable expenses incurred by the Servicer in connection with collection of
such Contract and the disposition of the related Financed Vehicle (to the extent
determinable by the Servicer and not previously reimbursed) PLUS (ii) any
amounts required by law to be remitted to the related Obligor.
"MONTHLY NOTE INTEREST" shall mean (i) for the initial Payment Date,
$702,922.27, and (ii) for any Payment Date thereafter, one-twelfth of the
product of (A) the Note Rate and (B) the outstanding principal balance of the
Notes as of the preceding Payment Date (after giving effect to all payments of
principal made to the Holders of the Notes on or before such preceding Payment
Date).
"MONTHLY NOTE PRINCIPAL" shall mean, for any Payment Date, the
lesser of (i) the Note Balance as of the day preceding such Payment Date and
(ii) the amount necessary to reduce the Note Balance as of the day preceding
such Payment Date to the product of (a) 96% and (b) Pool Balance as of the last
day of the related Collection Period; PROVIDED, HOWEVER, that the Monthly Note
Principal for the Final Note Payment Date for the Notes shall equal the amount
necessary to reduce the Note Balance to zero.
"MONTHLY SERVICER REPORT" shall have the meaning specified in the
Servicing Agreement.
"MONTHLY SERVICING FEE" shall mean, for any Collection Period, the
fee payable to the Servicer for services rendered during such Collection Period
as determined pursuant to Section 2.08 of the Servicing Agreement.
"MOODY'S" shall mean ▇▇▇▇▇'▇ Investors Service, Inc., and its
successors.
"NET LOSSES" shall mean, with respect to any Collection Period, the
excess, if any, of (i) the aggregate Principal Balance of all Contracts that
became Defaulted Contracts during such Collection Period over (ii) the aggregate
Liquidation Proceeds received by the Servicer during such Collection Period.
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"NOTE BALANCE" shall mean, at any time, as the context may require,
(i) with respect to all of the Notes, an amount equal to, initially, the Initial
Note Balance and, thereafter, an amount equal to the Initial Note Balance as
reduced from time to time by all amounts allocable to principal previously
distributed to the Noteholders or (ii) with respect to any Note, an amount equal
to, initially, the initial denomination of such Note and, thereafter, an amount
equal to such initial denomination as reduced from time to time by all amounts
allocable to principal previously distributed in respect of such Note; PROVIDED,
HOWEVER, that in determining whether the Holders of Notes evidencing the
requisite percentage of the Note Balance have given any request, demand,
authorization, direction, notice, consent or waiver hereunder or under any other
Transaction Document, Notes owned by the Trust, any other obligor upon the
Notes, the Seller, the Servicer or any Affiliate of any of the foregoing Persons
shall be disregarded and deemed to be excluded from the Note Balance (unless
such Persons own 100% of the Note Balance), except that, in determining whether
the Indenture Trustee or the Owner Trustee shall be protected in relying on any
such request, demand, authorization, direction, notice, consent or waiver, only
Notes that a Responsible Officer of the Indenture Trustee or the Owner Trustee,
as applicable, actually knows to be so owned shall be so disregarded; and,
PROVIDED FURTHER, that Notes that, to the actual knowledge of a Responsible
Officer of the Indenture Trustee or the Owner Trustee, as applicable, have been
pledged in good faith may be regarded as included in the Note Balance if the
pledgee establishes to the satisfaction of the Indenture Trustee or the Owner
Trustee, as applicable, the pledgee's right so to act with respect to such Notes
and that the pledgee is not the Trust, any other obligor upon the Notes, the
Seller, the Servicer or any Affiliate of any of the foregoing Persons.
"NOTE PAYMENT ACCOUNT" shall mean the account established and
maintained as such pursuant to Section 3.1(b).
"NOTE POOL FACTOR" shall mean, with respect to the Notes, (i) as of
the Closing Date, 1.0000000 and (ii) as of the close of business on the last day
of any Collection Period ending after the Closing Date, a seven-digit decimal
figure equal to Note Balance as of such last day (after giving effect to any
reductions of the Note Balance to be made on the following Payment Date) divided
by the Initial Note Balance.
"NOTEHOLDER" shall mean a Person in whose name a Note is registered
on the Note Register.
"NOTE RATE" shall mean 7.174% per annum.
"NOTES" shall mean the 7.174% Asset-Backed Notes issued by the Trust
pursuant to the Indenture in the initial aggregate principal amount of
$167,969,000.
"OBLIGOR" shall mean the purchaser or co-purchasers of a new or used
automobile or light-duty truck purchased in whole or in part by the execution
and delivery of a Contract or any other Person who owes or may be liable for
payments under a Contract.
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"OFFERING MEMORANDUM" shall mean that certain Offering Memorandum
dated as of January 12, 2000, attached hereto as Exhibit D.
"OFFICER'S CERTIFICATE" shall mean a certificate signed by the
chairman, the president, any executive vice president, senior vice president,
vice president or the treasurer of the Seller or the Servicer, as the case may
be, and delivered to the Owner Trustee and the Indenture Trustee.
"OPINION OF COUNSEL" shall mean one or more written opinions of
counsel who may, except as otherwise expressly provided in this Agreement, be
outside counsel to, the Seller or the Servicer and who shall be acceptable to
the Indenture Trustee, the Insurer the Owner Trustee or the Rating Agencies, as
applicable.
"ORIGINATOR" shall mean each Person from whom the Seller has
acquired a Contract.
"ORIGINATOR AGREEMENT" shall mean an agreement substantially in the
form of Exhibit E hereto.
"OUTSTANDING" shall have the meaning specified in the Indenture.
"OWNER TRUST ESTATE" shall have the meaning specified in the Trust
Agreement.
"OWNER TRUSTEE" shall mean Bankers Trust (Delaware) not in its
individual capacity but solely as Owner Trustee under the Trust Agreement, its
successors in interest and any successor trustee under the Trust Agreement.
"PAYMENT DATE" shall mean the 15th day of each month or, if such
15th day is not a Business Day, the following Business Day, commencing on
February 15, 2000.
"PERSON" shall mean a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, limited liability partnership, trust,
unincorporated organization, or government or any agency or political
subdivision thereof, or any other entity of whatever nature.
"POLICY" shall mean that certain insurance policy, dated as of
January 24, 2000, issued by MBIA Insurance Corporation in favor of the Indenture
Trustee for the benefit of the Noteholders.
"POLICY CLAIM AMOUNT" shall have the meaning specified in Section
3.5(c).
"POOL BALANCE" shall mean, as of the last day of any Collection
Period, the aggregate Principal Balance of the Contracts as of such last day.
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"PRINCIPAL BALANCE" shall mean, with respect to any Contract as of
any date, the Amount Financed under such Contract minus the sum of (i) that
portion of all Scheduled Payments actually received on or prior to such date
allocable to principal (to the extent collected) PLUS (ii) any rebates of
extended warranty contract costs or physical damage, credit life or credit
disability insurance premiums included in the Amount Financed PLUS (iii) any
full or partial prepayment applied to reduce the unpaid principal balance of
such Contract; PROVIDED, HOWEVER, that (i) the Principal Balance of a Defaulted
Contract shall be zero as of the last day of the Collection Period during which
it became a Defaulted Contract,(ii) the Principal Balance of a Purchased
Contract shall be zero as of the date on which the related Purchase Amount is
remitted by the Seller or the Servicer, and (iii) the Principal Balance of a
Contract that has been foreclosed upon by the Indenture Trustee at the direction
of the Insurer pursuant to Section 5.4(a) of the Indenture shall be zero as of
the date of such foreclosure.
"PRINCIPAL DEFICIT" means, as of any Payment Date, the excess, if
any, of (i) the Note Balance as of such Payment Date (after giving effect to all
amounts distributable to the Noteholders on such date by the Trust on such date
in reduction of the Note Balance)over (ii) the Pool Balance as of the last day
of the related Collection Period.
"PURCHASE AMOUNT" shall mean, with respect to any Payment Date and
any Contract to be repurchased by the Seller or purchased by the Servicer on
such Payment Date, an amount equal to the sum of (i) the Principal Balance of
such Contract PLUS (ii) the amount of accrued but unpaid interest on such
Principal Balance at the related APR to but excluding such Payment Date.
"PURCHASE PRICE" shall mean $174,968,641.29.
"PURCHASED CONTRACT" shall mean a Contract as to which payment of
the Purchase Amount has been made by the Seller pursuant to Section 2.3 hereof
or by the Servicer pursuant to Section 2.28 of the Servicing Agreement.
"RATING AGENCIES" shall mean Moody's and Standard & Poor's and their
respective successors; PROVIDED, HOWEVER, that if no such organization or
successor is any longer in existence, Rating Agency shall mean a nationally
recognized statistical rating organization or other comparable Person designated
by the Trust and acceptable to the Insurer (provided that no Insurer Default
shall have occurred and is continuing), notice of which designation shall have
been given to the Indenture Trustee, the Owner Trustee and the Servicer.
"RATING AGENCY CONDITION" shall mean, with respect to any action,
that each Rating Agency shall have been given prior notice thereof and shall
have notified the Seller, the Insurer, the Servicer, the Owner Trustee and the
Indenture Trustee that such action will not result in a reduction or withdrawal
of the then current rating of the Notes, without regard to the Policy.
11
"RECORD DATE" shall mean, with respect to any Payment Date, the
close of business on the Business Day preceding such Payment Date; PROVIDED,
HOWEVER, that if Definitive Notes have been issued, Record Date shall mean, with
respect to any Payment Date, the last day of the calendar month preceding such
Payment Date.
"RELEVANT UCC" shall mean the Uniform Commercial Code as in effect
from time to time in any relevant jurisdiction.
"REQUIRED PAYMENT AMOUNT" shall have, for any Payment Date, the
meaning specified for such Payment Date in Section 3.5(a).
"REQUIRED RATING" shall mean a short-term unsecured debt rating of
P-1 by Moody's and A-1+ by Standard & Poor's.
"REQUIRED RESERVE ACCOUNT AMOUNT" shall mean, for any Payment Date,
(i) if a Reserve Account Increase Event has not occurred or is not continuing,
the Initial Reserve Account Deposit or (ii) if a Reserve Account Increase Event
has occurred and is continuing, the greater of (i) the Initial Reserve Account
Deposit, and (ii) 6% of the Pool Balance as of the last day of the related
Collection Period.
"RESERVE ACCOUNT" shall mean the account established and maintained
as such pursuant to Section 3.6(a).
"RESERVE ACCOUNT AMOUNT" shall mean, for any Payment Date, the
amount on deposit in and available for withdrawal from the Reserve Account on
such Payment Date (after giving effect to all deposits to and withdrawals from
the Reserve Account on the preceding Payment Date, or, in the case of the first
Payment Date, the Closing Date), including, without limitation, all interest and
other income (net of losses and investment expenses) earned on such amount
during the preceding Collection Period.
"RESERVE ACCOUNT DEFICIENCY" shall have, for any Payment Date, the
meaning specified for such Payment Date in Section 3.5(b).
"RESERVE ACCOUNT DRAW AMOUNT" shall have the meaning specified in
Section 3.5(b).
"RESERVE ACCOUNT INCREASE EVENT" shall mean the occurrence of either
of the following:
(1) the average Delinquency Ratio for any three Collection Periods
exceeds 6% during months one through twelve after the Closing
Date and the Delinquency Ratio exceeds 7.5% thereafter; or
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(2) the Cumulative Net Loss Rate at any month indicated in the
following table (measured as from the Closing Date), exceeds
the percentage corresponding thereto:
---------------- ----------
MONTHS
---------------- ----------
0-3 0.20%
---------------- ----------
4-6 1.50%
---------------- ----------
7-9 2.50%
---------------- ----------
10-12 3.60%
---------------- ----------
13-15 4.60%
---------------- ----------
16-18 5.50%
---------------- ----------
19-21 6.10%
---------------- ----------
22-24 6.70%
---------------- ----------
25-27 7.30%
---------------- ----------
28-30 7.80%
---------------- ----------
31-33 8.20%
---------------- ----------
34-36 8.50%
---------------- ----------
37-39 8.80%
---------------- ----------
40-42 9.00%
---------------- ----------
43 and
there-
after 9.10%
---------------- ----------
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"RESERVE ACCOUNT PROPERTY" shall mean all amounts, securities,
investments, financial assets and other property deposited in or credited to the
Reserve Account from time to time.
"RESPONSIBLE OFFICER" shall mean (i) in the case of the Indenture
Trustee, any officer within the Corporate Trust Department of the Indenture
Trustee with direct responsibility for the administration of the Indenture and
also, with respect to a particular matter, any other officer of the Indenture
Trustee to whom such matter is referred because of such officer's knowledge of
and familiarity with such matter or other similar matters and (ii) in the case
of the Owner Trustee, any officer within the Corporate Trust Office of the Owner
Trustee with direct responsibility for the administration of the Trust Agreement
or this Agreement and also, with respect to a particular matter, any other
officer of the Owner Trustee to whom such matter is referred because of such
officer's knowledge of and familiarity with such matter or other similar
matters.
"SCHEDULED PAYMENT" shall mean, for any Contract, each payment
required to be made by the related Obligor in accordance with the terms of such
Contract (after giving effect to any deferral of payments pursuant to the
Servicing Agreement or any rescheduling of payments as a result of any
Insolvency Event with respect to such Obligor).
"SELLER" shall mean First Investors Financial Services, Inc., a
Texas corporation, in its capacity as seller of the Contracts under this
Agreement, and its successors and assigns in such capacity.
"SERVICER" shall mean FISC, in its capacity as servicer of the
Contracts under this Agreement, and its successors and assigns (including, if
applicable, the Back-Up Servicer) in such capacity.
"SERVICING AGREEMENT" shall mean that certain Servicing Agreement,
dated as of January 1, 2000, between FISC, the Back-Up Servicer, the Indenture
Trustee, the Servicer and the Trust.
"SERVICING FEE" shall mean the amount paid to the Servicer on each
Payment Date for the preceding Collection Period equal to the product of the
Servicing Rate and the Pool Balance as of the close of business on the first day
of the related Collection Period.
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"SERVICING OFFICER" shall mean any officer of the Servicer involved
in, or responsible for, the administration and servicing of the Contracts whose
name appears on a list of servicing officers attached to an Officer's
Certificate furnished on the Closing Date to the Owner Trustee and the Indenture
Trustee by the Servicer, as such list may be amended from time to time by the
Servicer in writing.
"SERVICING RATE" shall mean 2.5% per annum or such other rate as
determined in the Servicing Agreement; PROVIDED, HOWEVER, that if the Back-Up
Servicer becomes the Successor Servicer, the Servicing Rate shall be equal to
the greater of (a) 2.5% per annum and (b) the lowest of three bids obtained by
the Back-Up Servicer from third-party servicers, who are qualified to act as
servicers, selected by the Back-Up Servicer and approved by the Insurer pursuant
to Section 2.08 of the Servicing Agreement.
"STANDARD & POOR'S" shall mean Standard & Poor's Ratings
Services, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., and its successors.
"TOTAL AVAILABLE FUNDS" shall mean, for any Payment Date, the sum of
(i) the Available Funds for such Payment Date PLUS (ii) the Reserve Account Draw
Amount, if any, for such Payment Date.
"TOTAL NOTE INTEREST" shall mean, for any Payment Date, the sum of
(i) the Monthly Note Interest for such Payment Date PLUS (ii) the Additional
Note Interest for such Payment Date.
"TOTAL SERVICING FEE" shall mean, for any Collection Period, the sum
of (i) the Monthly Servicing Fee for such Collection Period PLUS (ii) all
accrued but unpaid Monthly Servicing Fees for previous Collection Periods.
"TRANSACTION DOCUMENTS" shall have the meaning assigned thereto in
the Indenture.
"TRUST" shall mean the First Investors Auto Owner Trust 2000-A, a
Delaware business trust.
"TRUST AGREEMENT" shall mean the Trust Agreement, dated as of
January 12, 2000, between the Depositor and the Owner Trustee, as amended by the
Amended and Restated Trust Agreement, dated as of January 24, 2000, between the
Depositor and the Owner Trustee, as the same may be further amended,
supplemented or otherwise modified and in effect from time to time.
"TRUST OFFICER" shall mean (i) in the case of the Indenture Trustee,
any officer within the Corporate Trust Department of the Indenture Trustee with
direct responsibility for the administration of the Indenture and also, with
respect to a particular matter, any other officer of the Indenture Trustee to
whom such matter is referred because of such officer's knowledge of and
familiarity with such matter or other similar matters and (ii) in the case of
the Owner Trustee, any
15
officer within the Corporate Trust Office of the Owner Trustee with direct
responsibility for the administration of the Trust Agreement and this Agreement
and also, with respect to a particular matter, any other officer of the Owner
Trustee to whom such matter is referred because of such officer's knowledge of
and familiarity with such matter or other similar matters
"TRUST PROPERTY" shall mean, as of any date of determination, (i)
the Contracts and other related property sold, transferred, assigned and
otherwise conveyed by the Seller to the Trust pursuant to Section 2.1(a), and
(ii) all monies deposited from time to time in the Collection Account, the Note
Payment Account, the Depositor Account and the Reserve Account.
1.2 OTHER DEFINITIONAL PROVISIONS
(1) Capitalized terms used herein and not otherwise defined herein
have the meanings assigned to them in the Indenture or the Servicing Agreement.
(2) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(3) As used in this Agreement and in any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms not
defined in this Agreement or in any such certificate or other document, and
accounting terms partly defined in this Agreement or in any such certificate or
other document to the extent not defined, shall have the respective meanings
assigned to them under generally accepted accounting principles. To the extent
that the definitions of accounting terms in this Agreement or in any such
certificate or other document are inconsistent with the meanings of such terms
under generally accepted accounting principles, the definitions contained in
this Agreement or in any such certificate or other document shall control.
(4) The words "hereof," "herein," and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement. Article, Section,
Schedule and Exhibit references contained in this Agreement are references to
Articles, Sections, Schedules and Exhibits in or to this Agreement unless
otherwise specified. The term "including" shall mean "including without
limitation."
(5) The definitions contained in this Agreement 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.
(6) Any agreement, instrument or statute defined or referred to
herein or in any instrument or certificate delivered in connection herewith
means such agreement, instrument or statute 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.
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ARTICLE II
TRUST PROPERTY
2.1 CONVEYANCE OF TRUST PROPERTY.
(1) In consideration of the Trust's delivery to the Seller of the
Purchase Price, the Seller hereby irrevocably sells, transfers, assigns and
otherwise conveys to the Trust, without recourse (subject to the obligations
herein), all right, title and interest of the Seller, whether now owned or
hereafter acquired, in, to and under the following:
(1) the Contracts;
(2) all amounts received on or in respect of the Contracts after the
Cutoff Date (except that interest accrued on the Contracts prior to the
Cutoff Date and received after the Cutoff Date will be remitted by the
Trust to the Seller);
(3) the Collection Account, the Reserve Account and the Note Payment
Account and all amounts, securities, financial assets, investments and
other property deposited in or credited to any of the foregoing and all
proceeds thereof;
(4) the security interests in the Financed Vehicles;
(5) any proceeds from claims on or refunds of premiums with respect
to extended warranties or physical damage, theft, credit life and credit
disability insurance policies relating to the Financed Vehicles or the
related Obligors;
(6) any Liquidation Proceeds;
(7) the Contract Files;
(8) rights under the Servicing Agreement to cause the Servicer to
purchase Contracts affected materially and adversely by breaches of the
representations and warranties of the Servicer made in the Servicing
Agreement; and
(9) all present and future claims, demands, causes of action and
choses in action in respect of any or all of the foregoing and all
payments on or under and all proceeds of every kind and nature whatsoever
in respect of any or all of the foregoing, including all proceeds of the
conversion thereof, voluntary or involuntary, into cash or other liquid
property, all cash proceeds, accounts, accounts receivable, notes, drafts,
acceptances, chattel paper, checks, deposit accounts, insurance proceeds,
condemnation
17
awards, rights to payment of any and every kind and other forms of
obligations and receivables, instruments and other property which at any
time constitute all or part of or are included in the proceeds of any of
the foregoing.
(2) The Seller and the Trust intend that the transfer of the Trust
Property contemplated by Section 2.1(a) constitute a sale of the Trust Property,
conveying good title to the Trust Property, from the Seller to the Trust. In
addition, without prejudicing the parties' intent that the transfer of the Trust
Property constitute a sale, in case that such transfer is deemed by a court of
competent jurisdiction to be a pledge to secure the payment of the Notes, or for
any other reason the Trust is not the owner thereof the Seller hereby grants to
the Trust a "security interest" in all of the Seller's right, title and interest
in, to and under the Trust Property, and all proceeds thereof, to secure the
payment of the Notes. In either event, it is understood by the parties hereto
that the transfer of the Trust Property shall constitute the grant of a
"security interest" in favor of the Trust under the Relevant UCC, it being
understood that "security interest" under the Relevant UCC includes any interest
of a buyer of "accounts" or "chattel paper".
(3) The sale, transfer, assignment and conveyance of the Trust
Property made under Section 2.1(a) shall not constitute and is not intended to
result in an assumption by the Trust of any obligation of the Seller to the
Obligors or any other Person in connection with the Contracts and the other
Trust Property or any agreement, document or instrument related thereto.
(4) Upon the transfer of the Trust Property pursuant to clause (a)
of this Section 2.1, the Seller shall clearly ▇▇▇▇ its files, documents, books
and any other records (including computer records) in the Seller's control
pertaining to the Trust Property, in order to indicate that the Trust Property
has been transferred to the Trust.
(5) It is explicitly agreed by the Seller, the Depositor and the
Trust that the Purchase Price delivered to the Seller by the Trust pursuant to
clause (a) of this Section 2.1 shall consist of the net proceeds from the sale
of the Notes (minus the Initial Reserve Account Deposit) and that the remaining
portion of the Purchase Price shall be deemed to constitute a capital
contribution by the Seller to the Depositor (it being understood that the Seller
has a 100% ownership interest in the Depositor and that the Depositor has a 100%
ownership interest in the Trust).
2.2 REPRESENTATIONS AND WARRANTIES OF THE SELLER AS TO THE
CONTRACTS. The Seller makes the following representations and warranties as to
the Contracts on which the Trust shall be deemed to have relied in accepting the
Contracts. The representations and warranties speak as of the execution and
delivery of this Agreement, except to the extent otherwise provided, but shall
survive the sale, transfer, assignment and conveyance of the Contracts to the
Trust pursuant to this Agreement and the pledge of the Contracts to the
Indenture Trustee pursuant to the Indenture.
18
(1) CHARACTERISTICS OF CONTRACTS. Each Contract (i) has been
purchased in a bona fide sale by the Seller from a dealer, bank, finance company
or similar entity in the ordinary course of the Seller's business and was
originated by such Person in connection with an advance made for the sale or
re-financing of a new or used automobile or light-duty truck and has been fully
and properly executed by the parties thereto,(ii) has created a valid, binding
and enforceable security interest in favor of the Seller in the related Financed
Vehicle, which security interest has been validly assigned by the Seller to the
Trust, and by the Trust to the Indenture Trustee, (iii) contains customary and
enforceable provisions such that the rights and remedies of the holder thereof
are adequate for realization against the collateral of the benefits of the
security, (iv) provides for level monthly payments that fully amortize the
Amount Financed by maturity (except that the period between the date of such
Contract and the date of the first Scheduled Payment may be less than or greater
than one month and the amount of the first and last Scheduled Payments may be
less than or greater than the level payments) and yield interest at the related
APR, (v) provides for, in the event that such Contract is prepaid, a prepayment
that fully pays the Principal Balance of such Contract with interest at the
related APR through the date of payment, (vi) is secured by a new or used
automobile or light-duty truck, (vii) relates to an Obligor who has made a down
payment under such Contract as of the Cutoff Date, (viii) satisfies in all
material respects the requirements under the Credit and Collection Policy, and
(ix) requires the Obligor thereunder to obtain and maintain physical damage
insurance covering the related Financed Vehicle in accordance with the Seller's
normal requirements.
(2) CONTRACT SCHEDULE. The information set forth in the Contract
Schedule was true and correct in all material respects as of the opening of
business on the Cutoff Date, and no selection procedures believed to be adverse
to the Trust or the Noteholders were utilized in selecting the Contracts from
those retail installment sale contracts or security agreements and promissory
notes which met the criteria contained herein. The information set forth in the
compact disk or other listing regarding the Contracts made available to the
Trust and its assigns (which compact disk or other listing is required to be
delivered as specified herein) is true and correct in all material respects.
(3) COMPLIANCE WITH LAW. Each Contract and the sale of the related
Financed Vehicle complied, at the time such Contract was originated and
complies, as of the Closing Date, in all material respects with all requirements
of applicable federal, state and local laws, and regulations thereunder,
including, without limitation, usury laws, the Federal Truth-in-Lending Act, the
Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Fair Credit
Billing Act, the Fair Debt Collection Practices Act, the Federal Trade
Commission Act, the ▇▇▇▇▇▇▇▇-▇▇▇▇ Warranty Act, the Federal Reserve Board's
Regulations B, M and Z, the Soldiers' and Sailors' Civil Relief Act of 1940 and
state adaptations of the Uniform Consumer Credit Code.
(4) BINDING OBLIGATION. Each Contract represents the genuine, legal,
valid and binding payment obligation in writing of the related Obligor,
enforceable by the holder thereof in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency,
19
reorganization or other similar laws affecting the enforcement of creditors'
rights generally and by general principles of equity.
(5) NO GOVERNMENT OR INCORPORATED OBLIGOR. No Contract is due from
the United States of America or any state thereof or from any agency, department
or instrumentality of the United States of America or any state thereof or from
any incorporated entity.
(6) SECURITY INTEREST IN FINANCED VEHICLES. Immediately prior to the
transfer of the Contracts by the Seller to the Trust, each Contract was secured
by a valid, binding and enforceable first priority perfected security interest
in favor of the Seller in the related Financed Vehicle and, at such time as
enforcement of such security interest is sought, there shall exist a valid,
binding and enforceable first priority perfected security interest in such
Financed Vehicle for the benefit of the Seller and the Trust, respectively,
which is subject to regulatory registration with a clear legal right of
repossession in favor of the Seller and the Trust.
(7) CONTRACTS IN FORCE. No Contract has been satisfied, subordinated
or rescinded, nor has any Financed Vehicle been released in whole or in part
from the Lien granted by the related Contract.
(8) NO WAIVER. No provision of a Contract has been waived in such a
manner that such Contract fails to meet all of the representations and
warranties made by the Seller in this Section 2.2 with respect thereto and no
provision of any Contract has been waived except as noted in the Contract Files.
(9) NO DEFENSES. No Contract is subject to any right of rescission,
setoff, counterclaim or defense, including the defense of usury, and the
operation of any of the terms of any Contract, or the exercise of any right
thereunder, will not render such Contract 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.
(10) NO LIENS. No liens or claims exist or have been filed for work,
labor or materials or unpaid state or federal taxes relating to any Financed
Vehicle that are prior to, or equal or coordinate with, the security interest in
such Financed Vehicle created by the related Contract.
(11) NO DEFAULT; REPOSSESSION. No default, breach, violation or
event permitting acceleration under the terms of any Contract has occurred
(other than payments that are not more than 30 days past due), no continuing
condition that with notice or the lapse of time or both would constitute a
default, breach, violation or event permitting acceleration under the terms of
any Contract has arisen and no Financed Vehicle has been repossessed as of the
Cutoff Date.
20
(12) TITLE. The Seller intends that the transfer of the Contracts
contemplated by Section 2.1(a) constitute a sale of the Contracts from the
Seller to the Trust and that the beneficial interest in, and title to, the
Contracts 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. The
Seller has not sold, transferred, assigned or pledged any Contract to any Person
other than the Trust and such Contract has not been released. Immediately prior
to the transfer of the Contracts contemplated by Section 2.1(a), the Seller had
good and marketable title to the Contracts free and clear of all Liens,
encumbrances, security interests and rights of others and, immediately upon such
transfer, the Trust shall have good and marketable title to the Contracts, free
and clear of all Liens, encumbrances, security interests and rights of others.
The transfer of the Contracts contemplated by Section 2.1(a) has been perfected
by all necessary action under the Relevant UCC.
(13) VALID ASSIGNMENT. No Contract has been originated in, or is
subject to the laws of, any jurisdiction under which the sale, transfer,
assignment and conveyance of such Contract under this Agreement or the pledge of
such Contract under the Indenture is unlawful, void or voidable. No Contract is
subject to any agreement with any account debtor that prohibits, restricts or
conditions the assignment of the Contracts.
(14) ALL FILINGS MADE. All filings (including, without limitation,
filings under the Relevant UCC) necessary in any jurisdiction to give the Trust
a first priority perfected security interest in the Contracts and to give the
Indenture Trustee a first priority perfected security interest in the Contracts
have been made or will be made on or prior to the Closing Date.
(15) CHATTEL PAPER. Each Contract constitutes "chattel paper" as
defined in the Relevant UCC.
(16) ONE ORIGINAL. There is only one original executed copy of each
Contract.
(17) PRINCIPAL BALANCE. Each Contract had a Principal Balance as of
the Cutoff Date of not more than $40,000.
(18) NO BANKRUPT OBLIGORS. As of the Cutoff Date, no Contract was
due from an Obligor that was the subject of a proceeding under the Bankruptcy
Code of the United States or was bankrupt.
(19) TERM TO MATURITY. Each Contract had an original term to
maturity of not more than 60 months.
(20) ANNUAL PERCENTAGE RATE. Each Contract has an APR of at least
13.00%.
(21) LOCATION OF CONTRACT FILES. The Contract Files have been
delivered to the Custodian and are maintained at the location listed in Schedule
2 to this Agreement.
21
(22) NO DELINQUENT CONTRACTS. As of the Cutoff Date, no Contract was
a Delinquent Contract or a Defaulted Contract.
(23) OFFERING MEMORANDUM DATA. The tabular and numerical data
contained in the Offering Memorandum relating to the characteristics of the
Contracts is true and correct in all material respects.
(24) NO DEFAULTS. No Contract is due from an Obligor that has
previously defaulted on a retail installment sales contract or promissory note
and security agreement purchased by the Seller.
(25) FINAL SCHEDULED PAYMENT DATE. The final scheduled payment date
for each Contract is on or before January 31, 2005.
(26) ORIGINATOR AGREEMENT. Each Contract is subject to an Originator
Agreement with the Seller and which if acquired by the Seller pursuant to a
"bulk purchase" from another Originator has been approved by the Insurer.
(27) LOCKBOX. The Obligor with respect to each contract has been
instructed to make payments under the Contract to a Lockbox which is under the
control of the Servicer.
(28) UNITED STATES OBLIGOR. Each Contract is due from an Obligor
which has provided as its most recent billing address an address located in the
United States of America.
(29) U.S. DOLLARS. Each Contract is payable in the lawful money of
the United States of America.
(30) NO WAIVER OR MODIFICATION. No Contract has been waived or
modified as of the Closing Date except as permitted by the Servicing Agreement.
(31) SCHEDULED PAYMENTS. Each contract relates to an Obligor who has
made at least one Scheduled Payment; PROVIDED, that $5,000,000 of the initial
aggregate Principal Balance of the Contracts are exempt from this requirement.
2.3. REPURCHASE BY SELLER UPON BREACH. The Seller, the Insurer, the
Depositor, the Servicer or the Trust, 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 or failure to be true of the representations and
warranties made by the Seller pursuant to Section 2.2. If such breach or failure
shall not have been cured by the close of business on the last day of the
Collection Period which includes the thirtieth (30th) day after the date on
which the Seller becomes aware of, or receives written notice from the Servicer,
the Depositor, the Insurer or the Trust of, such breach or failure, and such
breach or failure materially and adversely affects the interest of the Trust in
a Contract, the Seller shall repurchase such Contract from the Trust on the
Business Day next
22
preceding the Payment Date immediately following such Collection Period. In
consideration of the repurchase of a Contract hereunder, the Seller shall remit
the Purchase Amount of such Contract in the manner specified in Section 3.4. The
sole remedy of the Trust, the Owner Trustee, the Indenture Trustee and the
Noteholders with respect to a breach or failure to be true of the
representations and warranties made by the Seller pursuant to Section 2.2 shall
be to require the Seller to repurchase Contracts pursuant to this Section 2.3.
Neither the Owner Trustee nor the Indenture Trustee shall have any duty to
conduct an affirmative investigation as to the occurrence of any condition
requiring the repurchase of any Contract pursuant to this Section 2.3 or the
eligibility of any Contract for purposes of this Agreement.
ARTICLE III
DISTRIBUTIONS; RESERVE ACCOUNT;
STATEMENTS TO NOTEHOLDERS AND CERTIFICATEHOLDERS
3.1. ACCOUNTS.
(1) The Servicer shall establish, on or before the Closing Date, and
maintain in the name of the Indenture Trustee at an Eligible Institution (which
shall initially be the Indenture Trustee) a segregated trust account designated
as the Collection Account (the "COLLECTION ACCOUNT"). The Collection Account
shall be held in trust for the benefit of the Insurer, the Noteholders. The
Collection Account shall be under the sole dominion and control of the Indenture
Trustee; PROVIDED, HOWEVER, that the Servicer may make deposits to and direct
the Indenture Trustee in writing to make withdrawals from the Collection Account
in accordance with this Agreement and the Indenture. All monies deposited from
time to time in the Collection Account pursuant to this Agreement shall be held
by the Indenture Trustee as part of the Trust Property and shall be applied as
provided in this Agreement. All deposits to and withdrawals from the Collection
Account shall be made only upon the terms and conditions of the Transaction
Documents.
If the Servicer is required to remit collections within two Business
Days pursuant to the first sentence of Section 3.2, all amounts held in the
Collection Account shall, to the extent permitted by applicable law, rules and
regulations, be invested, as directed in writing by the Servicer, by the bank or
trust company then maintaining the Collection Account in Eligible Investments
that mature not later than the Business Day preceding the Payment Date following
the Collection Period to which such amounts relate. All such Eligible
Investments shall be held to maturity. If the Collection Account is no longer to
be maintained at the Indenture Trustee, the Servicer shall, with the Indenture
Trustee's assistance as necessary, cause the Collection Account to be moved to
an Eligible Institution within ten (10) Business Days (or such longer period not
to exceed thirty (30) calendar days as to which each Rating Agency and the
Insurer (provided that no Insurer Default shall have occurred and is continuing)
may consent). The Servicer shall
23
promptly notify the Indenture Trustee, the Insurer (provided that no Insurer
Default shall have occurred and is continuing) and the Owner Trustee of any
change in the account number or location of the Collection Account.
(2) The Servicer shall establish, on or before the Closing Date, and
maintain in the name of the Indenture Trustee at an Eligible Institution (which
shall initially be the Indenture Trustee) a segregated trust account designated
as the Note Payment Account (the "NOTE PAYMENT ACCOUNT"). The Note Payment
Account shall be held in trust for the benefit of the Noteholders and the
Insurer. The Note Payment Account shall be under the sole dominion and control
of the Indenture Trustee; PROVIDED, HOWEVER, that the Servicer may make deposits
to and direct the Indenture Trustee in writing to make withdrawals from the Note
Payment Account in accordance with this Agreement and the Indenture. All monies
deposited from time to time in the Note Payment Account pursuant to this
Agreement and the Indenture shall be held by the Indenture Trustee as part of
the Trust Property and shall be applied as provided in this Agreement and the
Indenture. The amounts on deposit in the Note Payment Account shall not be
invested. If the Note Payment Account is no longer to be maintained at the
Indenture Trustee, the Servicer shall, with the Indenture Trustee's assistance
as necessary, cause the Note Payment Account to be moved to an Eligible
Institution within ten (10) Business Days (or such longer period not to exceed
thirty (30) calendar days as to which each Rating Agency and the Insurer
(provided that no Insurer Default shall have occurred and is continuing) may
consent). The Servicer shall promptly notify the Indenture Trustee, the Insurer
and the Owner Trustee of any change in the account number or location of the
Note Payment Account.
(3) The Servicer shall establish, on or before the Closing Date, and
maintain in the name of the Trust at an Eligible Institution (which shall
initially be the Owner Trustee) a segregated trust account designated as the
Depositor Account (the "DEPOSITOR ACCOUNT"). The Depositor Account shall be held
in trust for the benefit of the Depositor. The Depositor Account shall be under
the sole dominion and control of the Trust; PROVIDED, HOWEVER, that the Servicer
may direct the Indenture Trustee in writing to make deposits to the Depositor
Account in accordance with this Agreement and the Indenture and may direct the
Owner Trustee in writing to make withdrawals from the Depositor Account in
accordance with this Agreement and the Trust Agreement. All monies deposited
from time to time in the Depositor Account pursuant to this Agreement and the
Indenture shall be held by the Trust as part of the Trust Property and shall be
applied as provided in this Agreement and the Trust Agreement. The amounts on
deposit in the Depositor Account shall not be invested. If the Depositor Account
is no longer to be maintained at the Owner Trustee, the Servicer shall, with the
Owner Trustee's assistance as necessary, cause the Depositor Account to be moved
to an Eligible Institution within ten (10) Business Days (or such longer period
not to exceed thirty (30) calendar days as to which each Rating Agency and the
Insurer (provided that no Insurer Default shall have occurred and is continuing)
may consent). The Servicer shall promptly notify the Indenture Trustee, the
Insurer (provided that no Insurer Default shall have occurred and is continuing)
and the Owner Trustee of any change in the account number or location of the
Depositor Account.
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3.2. COLLECTIONS. The Servicer shall remit to the Collection Account
all amounts received by the Servicer on or in respect of the Contracts
(excluding payments with respect to Purchased Contracts) as soon as practicable
and in no event after the close of business on the second Business Day after
such receipt; PROVIDED, HOWEVER, that for so long as (i) FISC is the Servicer,
(ii) no Event of Servicing Termination shall have occurred and be continuing and
(iii) (A) the short-term unsecured debt of FISC (for so long as it is Servicer)
shall be rated at least P-1 by Moody's and at least A-1 by Standard & Poor's or
(B) the Rating Agency Condition shall have been satisfied and the written
consent of the Insurer shall have been obtained (each, a "MONTHLY REMITTANCE
CONDITION"), the Servicer may remit any such amounts received during any
Collection Period to the Collection Account in immediately available funds on
the Business Day preceding the Payment Date following such Collection Period.
The Owner Trustee and the Indenture Trustee shall not be deemed to have
knowledge of any event or circumstance under clause (ii) or (iii) of the
definition of Monthly Remittance Condition that would require daily remittance
by the Servicer to the Collection Account (and shall be entitled to presume and
be fully protected in presuming that no such event or circumstance has occurred
or exists)unless the Owner Trustee or the Indenture Trustee, as applicable, has
received written notice of such event or circumstance from the Seller or the
Servicer in an Officer's Certificate or written notice from the Insurer (if no
Insurer Default shall have occurred and be continuing), the Holders of Notes
evidencing not less than 25% of the Note Balance or a Responsible Officer of the
Owner Trustee or the Indenture Trustee, as applicable, has actual knowledge of
such event or circumstance.
3.3. APPLICATION OF COLLECTIONS. For purposes of this Agreement, all
amounts received on or in respect of a Contract during any Collection Period
(excluding payments with respect to Purchased Contracts) shall be applied by the
Servicer, on the date received, to interest and principal on such Contract in
accordance with the terms of such Contract.
3.4. ADDITIONAL DEPOSITS. The Seller and the Servicer shall deposit
or cause to be deposited in the Collection Account the aggregate Purchase Amount
with respect to Purchased Contracts pursuant to Section 2.3 hereof. All such
deposits with respect to a Collection Period shall be made in immediately
available funds no later than 5:00 p.m., New York City time, on the Business Day
preceding the Payment Date following such Collection Period.
3.5. DETERMINATION DATE CALCULATIONS; APPLICATION OF AVAILABLE
FUNDS.
(1) On each Determination Date, the Servicer shall calculate the
following amounts:
(1) the Available Funds for the following Payment Date;
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(2) the Total Servicing Fee for the preceding Collection Period;
(3) the Total Note Interest for the following Payment Date;
(4) the Monthly Note Principal for the following Payment Date;
(5) the Insurance Premium for the following Payment Date plus any
overdue Insurance Premiums for previous Payment Dates;
(6) the aggregate amount of any unreimbursed payments under the
Policy to the extent payable to the Insurer under the Insurance Agreement
PLUS accrued interest on any unreimbursed payments under the Policy at the
rate provided in the Insurance Agreement PLUS any other amounts due the
Insurer under the Insurance Agreement and the Policy;
(7) the sum of the amounts described in clauses (ii), (iii) and (iv)
above (the "REQUIRED PAYMENT AMOUNT");
(8) the sum of the amounts described in clauses (v) and (vi) above
(the "INSURANCE PAYMENT AMOUNT"); and
(9) any unpaid or unreimbursed fees and expenses (including but not
limited to, attorneys' fees and transition expenses) due to the Back-Up
Servicer, the Indenture Trustee and the Owner Trustee.
(2) On each Determination Date, the Servicer shall calculate the
following amounts:
(1) the lesser of (A) the amount, if any, by which the sum of the
Required Payment Amount PLUS the Insurance Payment Amount for the
following Payment Date exceeds the Available Funds for such Payment Date
and (B) the Reserve Account Amount for such Payment Date (before giving
effect to any deposits to or withdrawals from the Reserve Account on such
Payment Date) (such lesser amount, the "RESERVE ACCOUNT DRAW Amount");
(2) the Policy Claim Amount;
(3) the Reserve Account Amount for the following Payment Date (after
giving effect to the withdrawal of the Reserve Account Draw Amount for
such Payment Date); and
(4) the amount, if any, by which the Required Reserve Account Amount
for the following Payment Date exceeds the Reserve Account Amount for such
Payment
26
Date (after giving effect to the withdrawal of the Reserve Account Draw
Amount for such Payment Date) (such excess, the "RESERVE ACCOUNT
DEFICIENCY").
On each Payment Date, the Servicer shall instruct the Indenture
Trustee to withdraw, and the Indenture Trustee upon receipt of such instructions
shall withdraw, the Reserve Account Draw Amount, if any, for such Payment Date
from the Reserve Account and apply such amount in accordance with paragraph (e)
of this Section 3.5.
(3) If the Servicer determines on any Determination Date that the
Available Funds for the following Payment Date PLUS the Reserve Account Draw
Amount (excluding that portion attributable to clause (ii) of Section 3.5(a))
for such Payment Date will be insufficient to pay in full the Required Payment
Amount (excluding that portion attributable to clause (ii) of Section 3.5(a))
for such Payment Date, the Servicer shall deliver to the Indenture Trustee, with
a copy to the Insurer, the Owner Trustee and the Fiscal Agent, no later than
2:00 p.m., New York City time, on such Determination Date, a written notice
specifying the Policy Claim Amount for such Payment Date. The Indenture Trustee
shall, no later than 12:00 p.m., New York City time, on the second Business Day
prior to such Payment Date, make a claim under the Policy for such Policy Claim
Amount by delivering to the Insurer and the Fiscal Agent, with a copy to the
Servicer, a Notice (as defined in the Policy) for such Policy Claim Amount. In
making any such claim, the Indenture Trustee shall comply with all the terms and
conditions of the Policy. The "POLICY CLAIM AMOUNT" with respect to a Payment
Date shall equal the sum of the following amounts:
(1) the excess, if any, of (a) the Total Note Interest for such
Payment Date over (b) the portion of Total Available Funds for such
Payment Date applied to the payment thereof pursuant to Sections 3.5(d)
and (e); and
(2) the Principal Deficit; and
(3) the Note Balance outstanding on the Final Note Payment Date,
after giving effect to all other distributions to the Noteholders to be
made on such Final Note Payment Date.
The Servicer shall instruct the Indenture Trustee to deposit, and
the Indenture Trustee upon receipt of such instructions shall deposit, the
proceeds of any drawing under the Policy in respect of clauses (i), (ii) and
(iii) above to the Note Payment Account.
It is understood that this Section 3.5(c) shall have no effect upon
the Insurer's obligations under the Policy, which are governed solely by the
Policy.
(4) On each Payment Date, the Servicer shall instruct the Indenture
Trustee to apply the Available Funds for such Payment Date to make the following
payments and deposits in the following order of priority:
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(1) to the Back-Up Servicer, Indenture Trustee, Custodian and Owner
Trustee in its individual capacity, respectively, any unpaid or
unreimbursed fees and expenses (including, but not limited to, attorneys'
fees and transition expenses); PROVIDED that any such expenses shall not
exceed $50,000 in the aggregate per year and (A) prior to an Event of
Servicing Termination, $100,000 in the total aggregate or (B) after an
Event of Servicing Termination, $200,000 in the total aggregate so long as
the Notes shall remain outstanding and the Policy has not been cancelled;
(2) to the Servicer, the Total Servicing Fee for the preceding
Collection Period;
(3) to the Note Payment Account, the Total Note Interest for such
Payment Date;
(4) to the Note Payment Account, the Monthly Note Principal for such
Payment Date;
(5) unless an Insurer Default has occurred and is continuing, to the
Insurer, the Insurance Premium for such Payment Date plus any overdue
Insurance Premiums for previous Payment Dates;
(6) to the Insurer, the aggregate amount of any unreimbursed
payments under the Policy to the extent payable to the Insurer under the
Insurance Agreement PLUS accrued interest on any unreimbursed payments
under the Policy at the rate provided in the Insurance Agreement PLUS any
other amounts due the Insurer under the Insurance Agreement and the
Policy;
(7) if the Notes have been declared immediately due and payable
following the occurrence of an Event of Default, to the Note Payment
Account, the lesser of (a) the amount of Available Funds available after
payment of items (i) through (vi) above and (b) the Note Balance;
(8) to the Reserve Account, the Reserve Account Deficiency, if any,
for such Payment Date;
(9) other amounts, if any, due the Owner Trustee in its individual
capacity, the Indenture Trustee, the Custodian, the Back-Up Servicer, the
Servicer and the Insurer, respectively, pursuant to the Transaction
Documents; and
(10) to the Depositor Account, any remaining amount of Available
Funds.
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On each Payment Date, the Servicer shall instruct the Indenture Trustee to
make the payments described in Section 2.8 of the Indenture, as applicable, from
the Note Payment Account.
(5) On each Payment Date, the Servicer shall instruct the Indenture
Trustee to apply, and the Indenture Trustee shall apply, the amount withdrawn
from the Reserve Account in respect of the Reserve Account Draw Amount in
accordance with paragraph (b) of this Section 3.5 to make the following payments
in the following order of priority:
(1) to the Servicer, the Total Servicing Fee for the preceding
Collection Period;
(2) to the Note Payment Account, the Total Note Interest for such
Payment Date;
(3) to the Note Payment Account, the Monthly Note Principal for such
Payment Date;
(4) unless an Insurer Default has occurred and is continuing, to the
Insurer, the Insurance Premium for such Payment Date plus any overdue
Insurance Premiums for previous Payment Dates; and
(5) to the Insurer, the aggregate amount of any unreimbursed
payments under the Policy to the extent payable to the Insurer under the
Insurance Agreement PLUS accrued interest on any unreimbursed payments
under the Policy at the rate provided in the Insurance Agreement PLUS any
other amounts due the Insurer under the Insurance Agreement and the
Policy.
(6) On any Payment Date on or after which the Notes have become due
and payable, the Servicer may, with the prior written consent (a copy of which
written consent shall be forwarded by the Servicer to the Indenture Trustee) of
the Insurer, and shall, at the written direction (a copy of which written
direction shall be forwarded by the Servicer to the Indenture Trustee) of the
Insurer (provided that no Insurer Default shall have occurred and be
continuing), instruct the Indenture Trustee to withdraw from the Reserve
Account, and the Indenture Trustee upon receipt of such instructions shall
withdraw from the Reserve Account, an amount equal to the remainder of the Note
Balance after the application of all other amounts distributable to the
Noteholders on such Payment Date pursuant to the Transaction Documents. The
Servicer may, with the prior written consent (a copy of which written consent
shall be forwarded
29
by the Servicer to the Indenture Trustee) of the Insurer (provided that no
Insurer Default shall have occurred and be continuing), and shall, at the
written direction (a copy of which written direction shall be forwarded by the
Servicer to the Indenture Trustee) of the Insurer, instruct the Indenture
Trustee to apply, and the Indenture Trustee shall apply, such amount to the
payment of the Note Balance until the Note Balance has been reduced zero.
3.6. RESERVE ACCOUNT.
(1) The Servicer shall establish, on or before the Closing Date, and
maintain in the name of the Indenture Trustee at an Eligible Institution (which
shall initially be the Indenture Trustee) a segregated trust account designated
as the Reserve Account (the "RESERVE ACCOUNT"). The Reserve Account shall be
held in trust for the benefit of the Noteholders, the Servicer and the Insurer.
The Reserve Account shall be under the sole dominion and control of the
Indenture Trustee; PROVIDED, HOWEVER, that the Servicer may make deposits to and
direct the Indenture Trustee in writing to make withdrawals from the Reserve
Account in accordance with this Agreement and the Indenture. On the Closing
Date, the Trust shall deposit the Initial Reserve Account Deposit into the
Reserve Account from the net proceeds of the sale of the Notes. Pursuant to the
Indenture, the Trust will pledge all of its right, title and interest in, to and
under the Reserve Account and the Reserve Account Property and to the Indenture
Trustee on behalf of the Noteholders and the Insurer to secure its obligations
under the Notes and the Indenture.
(2) The Reserve Account Property shall, to the extent permitted by
applicable law, rules and regulations, be invested, as directed in writing by
the Servicer, by the bank or trust company then maintaining the Reserve Account
in Eligible Investments that mature not later than the Business Day preceding
the next Payment Date. All such Eligible Investments shall be held to maturity.
All interest and other income (net of losses and investment expenses) on funds
on deposit in the Reserve Account shall, at the written direction of the
Servicer, be paid to the Trust on any Payment Date to the extent that funds on
deposit therein, as certified by the Servicer, exceed the Required Reserve
Account Amount. If the Reserve Account is no longer to be maintained at the
Indenture Trustee, the Servicer shall, with the Indenture Trustee's assistance
as necessary, cause the Reserve Account to be moved to an Eligible Institution
within ten (10) Business Days (or such longer period not to exceed thirty (30)
calendar days as to which each Rating Agency and the Insurer (provided that no
Insurer Default shall have occurred and is continuing) may consent). The
Servicer shall promptly notify the Insurer (provided that no Insurer Default
shall have occurred and is continuing) and the Indenture Trustee of any change
in the account number or location of the Reserve Account.
(3) With respect to any Reserve Account Property:
(1) any Reserve Account Property that is a "financial asset" as
defined in Section 8-102(a)(9) of the UCC shall be physically delivered
to, or credited to an account in the name of, the Eligible Institution
maintaining the Reserve Account, in accordance with such institution's
customary procedures such that such institution establishes a "securities
entitlement" in favor of the Indenture Trustee with respect thereto;
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(2) any Reserve Account Property that is held in deposit accounts
shall be held solely in the name of the Indenture Trustee at one or more
depository institutions having the Required Rating and each such deposit
account shall be subject to the exclusive custody and control of the
Indenture Trustee and the Indenture Trustee shall have sole signature
authority with respect thereto; and
(3) except for any deposit accounts specified in clause (ii) above,
the Reserve Account shall only be invested in securities or in other
assets which the Eligible Institution maintaining the Reserve Account
agrees to treat as "financial assets" as defined in Section 8-102(a)(9) of
the UCC.
(4) If the Reserve Account Amount for any Payment Date (after giving
effect to the withdrawal of the Reserve Account Draw Amount for such Payment
Date) exceeds the Required Reserve Account Amount for such Payment Date, the
Servicer shall, unless an Event of Default has occurred and is continuing,
instruct the Indenture Trustee in writing to distribute, and the Indenture
Trustee upon receipt of such instructions shall distribute, the amount of such
excess to the Paying Agent under the Trust Agreement for the benefit of the
Depositor. The Indenture Trustee hereby releases, on each Payment Date, its
security interest in, to and under Reserve Account Property distributed to the
Depositor pursuant to this Section 3.6. If an Event of Default has occurred and
is continuing, the Servicer shall instruct the Indenture Trustee to apply, and
the Indenture Trustee upon receipt of such instructions shall apply, the amount
of such excess to the Collection Account for application to the Available Funds
pursuant to 3.5(d).
(5) If the Note Balance and all other amounts owing or to be
distributed hereunder or under the Indenture to the Noteholders and the Insurer
have been paid in full and the Trust has been terminated, any remaining Reserve
Account Property shall be distributed to the Depositor.
3.7. STATEMENTS TO NOTEHOLDERS. On or prior to each Determination
Date, the Servicer shall provide to the Indenture Trustee (with copies to the
Rating Agencies and each Paying Agent) for the Indenture Trustee to forward to
each Noteholder of record as of the most recent Record Date upon a written
request from any such Noteholder, a statement in substantially the form of
Exhibit B to this Agreement. Each such statement shall set forth at least the
following information as to the Notes (to the extent applicable) with respect to
the distribution to be made on such Payment Date:
(1) the amount of such distribution allocable to principal for the
Notes;
(2) the amount of such distribution allocable to interest for the
Notes;
(3) the Total Servicing Fee for the preceding Collection Period;
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(4) the Note Balance and the Note Pool Factor, in each case as of
the close of business on the last day of the preceding Collection Period
(after giving effect to payments allocated to principal reported under
clause (i) above);
(5) the Pool Balance as of the close of business on the last day of
the preceding Collection Period;
(6) the Reserve Account Amount on such Payment Date (after giving
effect to all deposits to or withdrawals from the Reserve Account on such
Payment Date);
(7) the aggregate Purchase Amount of Purchased Contracts, if any,
with respect to the preceding Collection Period;
(8) the number and aggregate Principal Balance of Contracts that
were 31-60 days, 61-90 days or 91 days or more delinquent as of the last
day of the preceding Collection Period; and
(9) Cumulative Net Loss Rate information with respect to the
preceding Collection Periods.
3.8. CONTROL OF SECURITIES ACCOUNTS.
(1) Notwithstanding anything else contained herein, the Servicer,
the Depositor and the Trust agrees that each of the Collection Account, the Note
Payment Account and the Reserve Account will only be established at an Eligible
Institution that agrees substantially as follows: (i) it will comply with
"entitlement orders" (as defined in Section 8-102(a)(8) of the UCC) relating to
such accounts issued by the Indenture Trustee without further consent by the
Trust, the Servicer or the Depositor; (ii) until the termination of the
Indenture, it will not enter into any other agreement relating to any such
account pursuant to which it agrees to comply with entitlement orders of any
Person other than the Indenture Trustee; (iii) all assets delivered or credited
to it in connection with such accounts and all investments thereof will be
promptly credited to such accounts; and (iv) that all property credited to such
accounts are "financial assets" as defined in Section 8-102(9) of the Relevant
UCC.
(2) Notwithstanding anything else contained herein, the Servicer,
the Depositor and the Trust agree that the Depositor Account will only be
established at an Eligible Institution that agrees substantially as follows: (i)
it will comply with "entitlement orders" (as defined in Section 8-102(a)(8) of
the UCC) relating to such accounts issued by the Trust without further consent
by the Depositor or the Servicer; (ii) until the termination of the Trust
Agreement, it will not enter into any other agreement relating to any such
account pursuant to which it agrees to comply with entitlement orders of any
Person other than the Trust; (iii) all assets delivered or credited to it in
connection with such accounts and all investments thereof will be promptly
32
credited to such account; and (iv) that all property credited to such account
are "financial assets" as defined in Section 8-102(9) of the Relevant UCC.
3.9. POLICY MATTERS.
(1) The Indenture Trustee hereby agrees on behalf of the Noteholders
(and each Noteholder, by its acceptance of its Notes, hereby agrees) for the
benefit of the Insurer that the Indenture Trustee shall recognize that to the
extent the Insurer makes a payment under the Policy, either directly or
indirectly (as by paying through the Indenture Trustee), to the Noteholders, the
Insurer will be entitled to be subrogated to the rights of the Noteholders to
the extent of such payment made under the Policy. Any rights of subrogation
acquired by the Insurer as a result of any payment made under the Policy shall,
in all respects, be subordinate and junior in right of payment to the prior
indefeasible payment in full of all amounts due under the Notes.
(2) The Indenture Trustee, for itself and on behalf of the
Noteholders, hereby agrees that the Insurer may at any time during the
continuation of any proceeding relating to a Final Order, provided that no
Insurer Default shall have occurred and be continuing, direct all matters
relating to such Final Order, including, without limitation, the direction of
any appeal of any order relating to such Final Order and the posting of any
surety, supersedeas or performance bond pending any such appeal. In addition and
without limitation of the foregoing, the Insurer shall be subrogated, to the
extent of any payments made under the Policy relating to a Final Order, to the
rights of the Depositor, the Servicer, the Seller, the Trust, the Indenture
Trustee and the Noteholders in the conduct of any preference claim relating to a
Final Order, including, without limitation, all rights of any party to any
adversarial proceeding or action with respect to any court order issued in
connection with any such preference claim; PROVIDED, that such subrogation
rights shall remain subject to the last sentence of paragraph (a) of this
Section 3.9.
ARTICLE IV
THE SELLER
4.1. REPRESENTATIONS AND WARRANTIES OF SELLER. The Seller makes the
following representations and warranties on which the Trust shall be deemed to
have relied in accepting the Trust Property. The representations and warranties
speak as of the execution and delivery of this Agreement and shall survive the
sale, transfer, assignment and conveyance of the Trust Property to the Trust
pursuant to this Agreement and the pledge of the Trust Property to the Indenture
Trustee pursuant to the Indenture:
(1) ORGANIZATION AND GOOD STANDING. The Seller has been duly
organized and is validly existing as a corporation in good standing under the
laws of the State of Texas, has the power, authority and legal right to own its
properties and to conduct its business as such
33
properties are currently owned and such business is currently conducted, and has
the power, authority and legal right to acquire, own and sell the Contracts.
(2) 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 each jurisdiction in which the failure to so qualify
or to obtain such licenses and approvals would, in the reasonable judgment of
the Seller, materially and adversely affect the performance by the Seller of its
obligations under, or the validity or enforceability of, this Agreement, the
Indenture, the Trust Agreement, any of the other Transaction Documents, the
Contracts or the Notes.
(3) POWER AND AUTHORITY. The Seller has the power and authority to
execute, deliver and perform its obligations under this Agreement and the other
Transaction Documents to which it is a party. The Seller has the power and
authority to sell, assign, transfer and convey the property to be transferred to
and deposited with the Trust and has duly authorized such transfer and deposit
by all necessary corporate action, and the execution, delivery and performance
of this Agreement and the other Transaction Documents to which the Seller is a
party have been duly authorized by the Seller by all necessary corporate action.
(4) VALID TRANSFER; BINDING OBLIGATION. This Agreement effects a
valid sale, transfer, assignment and conveyance to the Trust of the Contracts
and the other Trust Property enforceable against creditors of and purchasers
from the Seller. This Agreement and the other Transaction Documents to which the
Seller is a party constitute legal, valid and binding obligations of the Seller,
enforceable against the Seller in accordance with their terms, subject, as to
enforceability, to applicable bankruptcy, insolvency, reorganization,
conservatorship, receivership, liquidation and other similar laws and to general
equitable principles.
(5) NO VIOLATION. The execution, delivery and performance by the
Seller of this Agreement and the other Transaction Documents to which the Seller
is a party, the consummation of the transactions contemplated hereby and thereby
and the fulfillment of the terms hereof and thereof will not conflict with,
result in a breach of any of the terms and provisions of or constitute (with or
without notice or lapse of time or both) a default under the articles of
organization or by-laws of the Seller or any material indenture, agreement,
mortgage, deed of trust or other instrument to which the Seller is a party or by
which the Seller is bound or to which any of its properties are subject, or
result in the creation or imposition of any lien upon any of its properties
pursuant to the terms of any such indenture, agreement, mortgage, deed of trust
or other instrument (other than pursuant to this Agreement), or violate any law,
order, rule or regulation applicable to the Seller or its properties of any
federal or state regulatory body, court, administrative agency or other
governmental instrumentality having jurisdiction over the Seller or any of its
properties.
(6) NO PROCEEDINGS. There are no proceedings or investigations
pending, or, to the knowledge of the Seller, threatened, against the Seller
before any court, regulatory body, administrative agency or other tribunal or
governmental instrumentality having jurisdiction over the Seller or its
properties (i) asserting the invalidity of this Agreement, the Indenture, the
Trust
34
Agreement, any of the other Transaction Documents or the Notes, (ii) seeking to
prevent the issuance of the Notes or the consummation of any of the transactions
contemplated by this Agreement, the Indenture, the Trust Agreement or any of the
other Transaction Documents, (iii) seeking any determination or ruling that, in
the reasonable judgment of the Seller, would materially and adversely affect the
performance by the Seller of its obligations under, or the validity or
enforceability of, this Agreement, the Indenture, the Trust Agreement, any of
the other Transaction Documents, the Contracts or the Notes, or (iv) that, in
the reasonable judgment of the Seller, would adversely affect the federal or
Applicable Tax State income, excise, franchise or similar tax attributes of the
Notes or the Trust.
4.2. LIABILITY OF SELLER; INDEMNITIES.
(1) The Seller shall be liable in accordance herewith only to the
extent of the obligations specifically undertaken by the Seller under this
Agreement.
(2) Notwithstanding any other provision in any Transaction Document,
the Seller shall indemnify, defend and hold harmless the Trust, the Owner
Trustee in its individual capacity, Bankers Trust Company, and the Indenture
Trustee from and against any taxes that may at any time be asserted against any
such Person with respect to, and as of the date of, the transfer of the
Contracts to the Trust or the issuance and original sale of the Notes, including
any sales, gross receipts, general corporation, tangible personal property,
privilege or license taxes (but, in the case of the Trust, not including any
taxes asserted with respect to ownership of the Contracts or federal or other
Applicable Tax State income taxes arising out of the transactions contemplated
by this Agreement and the other Transaction Documents), and all costs and
expenses in defending against such taxes.
(3) Notwithstanding any other provision in any Transaction Document,
the Seller shall indemnify, defend and hold harmless the Trust, the Owner
Trustee in its individual capacity, Bankers Trust Company, the Indenture Trustee
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 any other Transaction Document
to which it is a party or by reason of a reckless disregard of its obligations
and duties under this Agreement or any other Transaction Document to which it is
a party and (ii) the Seller's violation of federal or state securities laws in
connection with the registration or the sale of the Notes and (iii) any action
taken, or failed to be taken, by the Seller in respect of any portion of the
Trust Property.
(4) Notwithstanding any other provision in any Transaction Document,
the Seller shall indemnify, defend and hold harmless the Owner Trustee in its
individual capacity, Bankers Trust Company, and the Indenture Trustee and their
respective officers, directors, employees and agents from and against all costs,
expenses, unpaid fees, losses, claims, damages and liabilities arising out of or
incurred in connection with the acceptance or performance of the trusts and
35
duties contained herein and in the Trust Agreement, in the case of the Owner
Trustee, and in the Indenture, in the case of the Indenture Trustee, except to
the extent that such cost, expense, loss, claim, damage or liability (i) shall
be due to the willful misfeasance, bad faith or gross negligence (except for
errors in judgment) of the Owner Trustee or the Indenture Trustee, as
applicable, (ii) in the case of the Owner Trustee, shall arise from the breach
by the Owner Trustee of any of its representations or warranties in its
individual capacity set forth in the Trust Agreement, (iii) in the case of the
Indenture Trustee, shall arise from the breach by the Indenture Trustee of any
of its representations and warranties set forth in the Indenture or (iv) relates
to any tax other than the taxes with respect to which either the Seller or the
Servicer shall be required to indemnify the Owner Trustee or the Indenture
Trustee, as applicable.
(5) The Seller shall pay any and all taxes levied or assessed upon
all or any part of the Owner Trust Estate.
Indemnification under this Section 4.2 shall survive the resignation
or removal of the Owner Trustee or the Indenture Trustee and the termination of
this Agreement and shall include reasonable fees and expenses of counsel and
expenses of litigation. If the Seller shall have made any indemnity payments
pursuant to this Section 4.2 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.
4.3. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE OBLIGATIONS
OF, SELLER. Any Person (i) into which the Seller shall be merged or
consolidated, (ii) resulting from any merger, conversion or consolidation to
which the Seller shall be a party or (iii) that shall succeed by purchase and
assumption to all or substantially all of the business of the Seller, 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 under this Agreement without the execution or filing of
any other document or any further act on the part of any of the parties to this
Agreement; PROVIDED, HOWEVER, that (x) the Seller shall have delivered to the
Owner Trustee and the Indenture Trustee an Officer's Certificate and an Opinion
of Counsel each stating that such merger, conversion, consolidation or
succession and such agreement of assumption comply with this Section 4.3 and (y)
the Seller shall have delivered to the Owner Trustee and the Indenture Trustee
an Opinion of Counsel either (A) stating that, in the opinion of such counsel,
all financing statements and continuation statements and amendments thereto have
been executed and filed that are necessary to fully preserve and protect the
interest of the Trust and the Indenture Trustee, respectively, in the Contracts
and the other Trust Property, and reciting the details of such filings, or (B)
stating that, in the opinion of such counsel, no such action shall be necessary
to fully preserve and protect such interest. The Seller shall provide notice of
any merger, conversion, consolidation or succession pursuant to this Section 4.3
to the Rating Agencies. Notwithstanding anything herein to the contrary, the
execution of the foregoing agreement of assumption and compliance with
36
clauses (x) and (y) above shall be conditions to the consummation of the
transactions referred to in clauses (i), (ii) and (iii) above.
4.4. LIMITATION ON LIABILITY OF SELLER AND OTHERS.
(1) Neither the Seller nor any of the directors, officers, employees
or agents of the Seller shall be under any liability to the Trust or the
Noteholders 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 Seller or any such Person against any
liability that would otherwise be imposed by reason of willful misfeasance or
bad faith in the performance of duties or by reason of reckless disregard of
obligations and duties under this Agreement, or by reason of negligence in the
performance of duties under this Agreement (except for errors in judgment). The
Seller, and its directors, officers, employees and agents, 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 in respect of any matters arising
under this Agreement.
(2) 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.
4.5. SELLER MAY OWN NOTES. The Seller, and any Affiliate of the
Seller, may, in its individual or any other capacity, become the owner or
pledgee of Notes with the same rights as it would have if it were not the Seller
or an Affiliate of the Seller, except as otherwise expressly provided herein
(including in the definition of "Note Balance") or in the other Transaction
Documents. Except as otherwise expressly provided herein (including the
definition of "Note Balance") or in the other Transaction Documents, Notes so
owned by or pledged to the Seller or such Affiliate shall have an equal and
proportionate benefit under the provisions of this Agreement and the other
Transaction Documents, without preference, priority or distinction as among the
Notes.
ARTICLE V
MISCELLANEOUS PROVISIONS
5.1. AMENDMENT.
(1) This Agreement may be amended from time to time by the Seller,
the Servicer, the Depositor and the Trust, with the consent of the Indenture
Trustee and the Insurer (provided that no Insurer Default shall have occurred
and be continuing), but without the consent of any of the Noteholders, to cure
any ambiguity, to correct or supplement any provision in this Agreement that may
be inconsistent with any other provisions in this Agreement or any
37
offering document used in connection with the initial offer and sale of the
Notes or to add, change or eliminate any other provisions with respect to
matters or questions arising under this Agreement that are not inconsistent with
the provisions of this Agreement; PROVIDED, HOWEVER, that such amendment shall
not, as evidenced by an Opinion of Counsel delivered to the Owner Trustee, the
Indenture Trustee and the Insurer, materially and adversely affect the interests
of any Noteholder. Any such amendment shall be deemed not to materially and
adversely affect the interests of any Noteholder if the Rating Agency Condition
is satisfied or the Person requesting the amendment obtains an Opinion of
Counsel satisfactory to the Indenture Trustee and the Owner Trustee to that
effect.
(2) This Agreement may also be amended from time to time by the
Seller, the Servicer, the Depositor, the Trust and the Insurer (provided that no
Insurer Default shall have occurred and be continuing and if so, provided
further that such amendment shall not have a material adverse effect on the
Insurer), with the consent of the Indenture Trustee and the Holders of Notes
evidencing not less than 51% of the Note 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;
PROVIDED, HOWEVER, that no such amendment shall (i) increase or reduce in any
manner the amount of, or accelerate or delay the timing of, or change the
allocation or priority of, collections on or in respect of the Contracts or
distributions that are required to be made for the benefit of the Noteholders or
change the Note Rate, or the Required Reserve Account Amount, without the
consent of all adversely affected Noteholders (ii) reduce the percentage
required to consent to any such amendment, without the consent of all adversely
affected Noteholders or (iii) adversely affect the rating of the Notes by the
Rating Agencies without the consent of the Holders of Notes evidencing not less
than 66-2/3% of the Note Balance.
(3) Prior to the execution of any amendment or consent pursuant to
Section 5.1(b), the Servicer shall provide written notification of the substance
of such amendment or consent to each Rating Agency and the Insurer.
(4) Promptly after the execution of any amendment or consent
pursuant to Section 5.1(b), the Trust shall furnish written notification of the
substance of such amendment or consent to the Indenture Trustee and each of the
Rating Agencies. It shall not be necessary for the consent of the Noteholders
pursuant to Section 5.1(b) to approve the particular form of any proposed
amendment or consent, but it shall be sufficient if such consent shall approve
the substance thereof. The manner of obtaining such consents (and any other
consents of the Noteholders provided for in this Agreement) and of evidencing
the authorization of the execution thereof by the Noteholders shall be subject
to such reasonable requirements as the Owner Trustee and the Indenture Trustee
may prescribe.
38
(5) Prior to the execution of any amendment pursuant to this Section
5.1, the Owner Trustee and the Indenture Trustee shall be entitled to receive
and rely upon (i) an Opinion of Counsel stating that the execution of such
amendment (A) is authorized or permitted by this Agreement, (B) will not
materially adversely affect the federal or any Applicable Tax State income or
franchise taxation of any Outstanding Note or any Holder thereof and (C) will
not cause the Trust to be taxable as a corporation for federal or any Applicable
Tax State income or franchise tax purposes and (ii) an Officer's Certificate of
the Servicer that all conditions precedent provided for in this Agreement to the
execution of such amendment have been complied with. The Owner Trustee or the
Indenture Trustee may, but shall not be obligated to, enter into any such
amendment which affects such Owner Trustee's or Indenture Trustee's own rights,
duties or immunities under this Agreement or otherwise.
5.2. PROTECTION OF TITLE TO TRUST.
(1) The Seller or the Servicer, or both, 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 Trust and the
Indenture Trustee for the benefit of the Noteholders and the Insurer in the
Contracts and the proceeds thereof. The Seller or the Servicer, or both, shall
deliver (or cause to be delivered) to the Owner Trustee and the Indenture
Trustee file-stamped copies of, or filing receipts for, any document filed as
provided above as soon as available following such filing.
(2) Neither the Seller nor the Servicer shall change its name,
identity or corporate structure in any manner that would make any financing
statement or continuation statement filed by the Seller or the Servicer in
accordance with Section 5.2(a) seriously misleading within the meaning of
Section 9-402(7) of the Relevant UCC, unless it shall have given the Owner
Trustee and the Indenture Trustee at least sixty (60) days' prior written notice
thereof and shall have promptly filed such amendments to previously filed
financing statements or continuation statements or such new financing statements
as may be necessary to continue the perfection of the interest of the Trust and
the Indenture Trustee for the benefit of the Noteholders and the Insurer in the
Contracts and the proceeds thereof.
(3) The Seller and the Servicer shall give the Owner Trustee and the
Indenture Trustee at least sixty (60) days' prior written notice of any
relocation of its principal executive office if, as a result of such relocation,
the applicable provisions of the Relevant UCC would require the filing of any
amendment to any previously filed financing statement or continuation statement
or of any new financing statement and shall promptly file any such amendment,
continuation statement or any new financing statement. The Servicer shall at all
times maintain each office from which it shall service Contracts, and its
principal executive office, within the United States of America.
39
(4) The Servicer shall maintain accounts and records as to each
Contract accurately and in sufficient detail to permit (i) the reader thereof to
know at any time the status of such Contract, 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 Contract and the amounts
from time to time deposited in the Collection Account and the Reserve Account in
respect of such Contract.
(5) The Servicer shall maintain its computer systems so that, from
and after the time of the transfer of the Contracts to the Trust pursuant to
this Agreement, the Servicer's master computer records (including any back-up
archives) that refer to a Contract shall indicate clearly the interest of the
Trust and the Indenture Trustee in such Contract and that such Contract is owned
by the Trust and has been pledged to the Indenture Trustee pursuant to the
Indenture. Indication of the Trust's and the Indenture Trustee's interest in a
Contract shall be deleted from or modified on the Servicer's computer systems
when, and only when, such Contract shall have been paid in full or repurchased
by the Seller or purchased by the Servicer.
(6) If at any time the Seller or the Servicer shall propose to sell,
grant a security interest in or otherwise transfer any interest in any motor
vehicle retail installment sale contract or security interest and promissory
note to any prospective purchaser, lender or other transferee, the Servicer
shall give to such prospective purchaser, lender or other transferee computer
tapes, compact disks, records or print-outs (including any restored from back-up
archives) that, if they shall refer in any manner whatsoever to any Contract,
shall indicate clearly that such Contract has been sold and is owned by the
Trust and has been pledged to the Indenture Trustee (unless such Contract has
been paid in full or repurchased by the Seller or purchased by the Servicer).
(7) The Servicer shall permit the Owner Trustee, the Indenture
Trustee 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 Contract.
(8) Upon request, the Servicer shall furnish to the Owner Trustee
and the Indenture Trustee, within ten (10) Business Days, a list of all
Contracts (by contract number and name of Obligor) then held as part of the
Trust, together with a reconciliation of such list to the Contract Schedule and
to each of the Monthly Servicer Reports furnished before such request indicating
removal of Contracts from the Trust.
(9) The Servicer shall deliver to the Owner Trustee and the
Indenture Trustee:
(1) promptly after the execution and delivery of each
amendment to any financing statement, an Opinion of Counsel either
(A) stating that, in the opinion of such Counsel, 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 Contracts, and reciting the
details of such filings or referring to prior Opinions of Counsel in
which such details are
40
given, or (B) stating that, in the opinion of such Counsel, no such
action shall be necessary to preserve and protect such interest; and
(2) within ninety (90) days after the beginning of each
calendar year (beginning with the year 2001), an Opinion of Counsel,
dated as of a date during such 90-day period, either (A) stating
that, in the opinion of such Counsel, 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 Contracts, and reciting the details
of such filings or referring to prior Opinions of Counsel in which
such details are given, or (B) stating that, in the opinion of such
Counsel, no such action shall be necessary to preserve and protect
such interest.
Each Opinion of Counsel referred to in clause (i)(1) or (i)(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.
5.3. GOVERNING LAW. This Agreement shall be construed in accordance
with the laws of the State of New York and the obligations, rights and remedies
of the parties under this Agreement shall be determined in accordance with such
laws.
5.4. NOTICES. All demands, notices and other communications under
this Agreement shall be in writing, personally delivered, sent by telecopier,
overnight courier or mailed by certified mail, return receipt requested, and
shall be deemed to have been duly given upon receipt (i) in the case of the
Seller, at the following address: ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇ Attention: ▇▇▇▇▇▇ Duck,(ii) in the case of the Servicer, at the following
address: ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇
Duck, (iii) in the case of the Owner Trustee, at the related Corporate Trust
Office, with a copy to Bankers Trust Company, ▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇, Attention: Structured Finance Group, (iv) in the case of
the Indenture Trustee, at the related Corporate Trust Office, (v) in the case of
Moody's, at the following address: ▇▇▇▇▇'▇ Investors Service, Inc., ABS
Monitoring Department, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, and (vi) in
the case of Standard & Poor's, at the following address: Standard & Poor's
Ratings Services, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Asset Backed Surveillance
Department, and (vi) in the case of the Insurer, at the following address: MBIA
Insurance Corporation, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
Insured Portfolio Management, Structured Finance.
5.5. SEVERABILITY OF PROVISIONS. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this
41
Agreement and shall in no way affect the validity or enforceability of the other
provisions of this Agreement, or of the Notes, or the rights of the Holders
thereof.
5.6. ASSIGNMENT. Notwithstanding anything to the contrary contained
herein this Agreement may not be assigned by the Seller or the Servicer without
the prior written consent of the Trust, the Indenture Trustee, the Holders of
Notes evidencing not less than 66-2/3% of the Note Balance.
5.7. FURTHER ASSURANCES. The Seller and the Servicer agree to do and
perform, from time to time, any and all acts and to execute any and all further
instruments required or reasonably requested by the Owner Trustee or the
Indenture Trustee more fully to effect the purposes of this Agreement,
including, without limitation, the execution of any financing statements or
continuation statements relating to the Contracts for filing under the
provisions of the Relevant UCC of any applicable jurisdiction.
5.8. NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and no
delay in exercising, on the part of the Owner Trustee, the Indenture Trustee,
the Insurer, the Noteholders, any right, remedy, power or privilege hereunder,
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges provided in this Agreement are
cumulative and not exhaustive of any rights, remedies, powers and privileges
provided by law.
5.9. THIRD-PARTY BENEFICIARIES. This Agreement shall inure to the
benefit of and be binding upon the parties hereto, the Noteholders, the Insurer
and their respective successors and permitted assigns. Except as otherwise
provided in Section 4.2 and this Article V, no other Person shall have any right
or obligation hereunder. The parties hereto hereby acknowledge and consent to
the pledge of this Agreement by the Trust to the Indenture Trustee for the
benefit of the Noteholders and the Insurer pursuant to the Indenture.
5.10. ACTIONS BY NOTEHOLDERS .
(1) Wherever in this Agreement a provision is made that an action
may be taken or a notice, demand or instruction given by the Noteholders, such
action, notice or instruction may be taken or given by any Noteholder, as
applicable, unless such provision requires a specific percentage of the
Noteholders.
(2) Any request, demand, authorization, direction, notice, consent,
waiver or other act by a Noteholder shall bind such Noteholder and every
subsequent Holder of such Note issued upon the registration of transfer thereof
or in exchange therefor or in lieu thereof in respect
42
of anything done or omitted to be done by the Owner Trustee, the Indenture
Trustee or the Servicer in reliance thereon, whether or not notation of such
action is made upon such Note.
5.11. COUNTERPARTS. For the purpose of facilitating the execution of
this Agreement and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and all of which counterparts shall constitute but
one and the same instrument. .1.
5.12. AGENT FOR SERVICE. The agent for service of the Seller and the
Servicer in respect of this Agreement shall be ▇▇▇▇▇▇ Duck, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
5.13. NO BANKRUPTCY PETITION. The Owner Trustee, the Indenture
Trustee, the Trust, the Depositor and the Servicer each covenants and agrees
that, prior to the date which is one year and one day after the payment in full
of all securities issued by the Trust, which securities were rated by any
nationally recognized statistical rating organization, it will not institute
against, or join any other Person in instituting against, or knowingly or
intentionally cooperate or encourage any other Person in instituting against,
the Depositor or the Trust any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings or other proceedings under any federal or
state bankruptcy or similar law. This Section 5.13 shall survive the resignation
or removal of the Owner Trustee under the Trust Agreement and the Indenture
Trustee under the Indenture and shall survive the termination of the Trust
Agreement and the Indenture.
5.14. LIMITATION OF LIABILITY OF OWNER TRUSTEE AND INDENTURE
TRUSTEE.
(1) Notwithstanding anything contained herein or contemplated hereby
to the contrary, this Agreement has been signed by the Owner Trustee not in its
individual capacity but solely in its capacity as Owner Trustee of the Trust,
and in no event shall the Owner Trustee in its individual capacity have any
liability for the representations, warranties, covenants, agreements or other
obligations of the Trust hereunder or in any of the certificates, notices or
agreements delivered pursuant hereto or contemplated hereby, as to all of which
recourse shall be had solely to the assets of the Trust. For all purposes of
this Agreement, the Owner Trustee (as such and in its individual capacity) shall
be subject to, and entitled to the benefits of, the terms and provisions of the
Trust Agreement.
(2) Notwithstanding anything contained herein to the contrary, this
Agreement has been accepted by the Indenture Trustee not in its individual
capacity but solely as Indenture Trustee, and in no event shall the Indenture
Trustee in its individual capacity have any liability for
43
the representations, warranties, covenants, agreements or other obligations of
the Trust 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 Trust.
5.15. CERTAIN RIGHTS OF THE INSURER.
So long as no Insurer Default shall have occurred and be continuing,
the Insurer shall have the right to exercise all rights, including voting
rights, which the Noteholders are entitled to exercise pursuant to this Sale and
Allocation Agreement, without any consent of such Noteholders; PROVIDED,
HOWEVER, that the foregoing shall not apply to the rights of the Noteholders set
forth in the proviso to paragraph (b) of Section 5.1 of this Agreement.
44
IN WITNESS WHEREOF, parties hereto have caused this Sale and
Allocation Agreement to be duly executed by their respective officers, thereunto
duly authorized, all as of the day and year first above written.
FIRST INVESTORS FINANCIAL SERVICES, INC., as
Seller
By: ______________________________
Name:
Title:
FIRST INVESTORS SERVICING CORPORATION,as
Servicer
By: ______________________________
Name:
Title:
FIRST INVESTORS AUTO OWNER TRUST 2000-A
By: BANKERS TRUST (DELAWARE),not in its
individual capacity butsolely as Owner
Trustee
By: ______________________________
Name:
Title:
FIRST INVESTORS AUTO INVESTMENT CORP.,
as Depositor
By: ______________________________
Name:
Title:
Accepted and agreed:
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
not in its individual capacity but
solely as Indenture Trustee
By: ______________________________
Name:
Title:
Schedule 1
CONTRACT SCHEDULE
47
Schedule 2
LOCATION OF CONTRACT FILES
Sixth Street and Marquette Avenue
MAC N9311-161
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
48
Exhibit A
FORM OF MONTHLY SERVICER REPORT
49
Exhibit B
FORM OF STATEMENT TO NOTEHOLDERS
50
Exhibit C
CREDIT AND COLLECTION POLICY
51
Exhibit D
OFFERING MEMORANDUM
52
Exhibit E
FORM OF ORIGINATOR AGREEMENT
53