EXHIBIT 10.60
SERVICING AGREEMENT
by and among
First Investors Auto Receivables Corporation
as Debtor
Norwest Bank Minnesota, National Association
as Back-up Servicer and Collateral Agent
and
Auto Lenders Acceptance Corporation
as Servicer
Dated as of
March 31, 1999
Article I
DEFINITIONS
Section 1.01. Defined Terms...............................................
Article II
ADMINISTRATION AND SERVICING OF RECEIVABLES
Section 2.01. Appointment and Duties of the Back-up Servicer and
the Servicer................................................
Section 2.02. Collection of Receivable Payments; Defaulted
Receivables; Reporting Obligations..........................
Section 2.03. Realization Upon Receivables................................
Section 2.04. Physical Damage Insurance...................................
Section 2.05. Maintenance of Security Interests in Financed
Vehicles and Receivables....................................
Section 2.06. Covenants of Servicer; Notices..............................
Section 2.07. Repurchase of Receivables Upon Breach.......................
Section 2.08. Servicing Fee; Back-up Servicing Fee........................
Section 2.09. Annual Statement as to Compliance...........................
Section 2.10. Financial Statements; Annual Servicing Review...............
Section 2.11. Costs and Expenses..........................................
Section 2.12. Responsibility for Insurance Policies; Processing
of Claims Under Insurance Policies; Daily Records
and Reports.................................................
Section 2.13. Delivery of Documents to Collateral Agent...................
Section 2.14. Conveyance of Copies of Documents to the Servicer;
Indication of Debtor Ownership..............................
Section 2.15. Possession of Servicer Files................................
Section 2.16. Processing of Information...................................
Section 2.17. Warranties and Representations With Respect to
Compliance with Law and Enforcement.........................
Section 2.18. Standard of Care............................................
Section 2.19. Records.....................................................
Section 2.20. Inspection..................................................
Section 2.21. Enforcement.................................................
Section 2.22. Payment in Full on Receivable...............................
Section 2.23. Duties of Back-up Servicer..................................
Section 2.24. Assumption of Duties by Back-up Servicer....................
Section 2.25. Fidelity Bond...............................................
Section 2.26. Responsibilities of Back-up Servicer and Servicer
Section 2.27. Re-▇▇▇▇▇▇▇..................................................
Article III
ACCOUNTS; COLLECTIONS
Section 3.01. Accounts....................................................
Section 3.02. Collections.................................................
Section 3.03. Collection Account and Acknowledgement Letter...............
Article IV
REPRESENTATIONS AND WARRANTIES
Section 4.01. Representations and Warranties of the Servicer..............
Section 4.02. Representations and Warranties of the Back-up
Servicer....................................................
Section 4.03. Representations and Warranties of the Debtor................
Section 4.04. Survival of Representations and Warranties..................
Section 4.05. Merger or Consolidation of, or Assumption of the
Obligations of, or Resignation of Servicer..................
Article V
DEFAULT, REMEDIES AND INDEMNITY
Section 5.01. Termination Event...........................................
Section 5.02. Remedies....................................................
Section 5.03. Indemnity by the Servicer...................................
Section 5.04. Liability of the Back-up Servicer...........................
Section 5.05. Notification to Noteholder..................................
Section 5.06. Waiver of Termination Events................................
Section 5.07. Survival....................................................
Section 5.08. Servicer and Back-up Servicer Not to Resign.................
Article VI
TERMINATION OF AGREEMENT
Section 6.01. Term........................................................
Section 6.02. Effect of Termination.......................................
Section 6.03. Transfer of Servicing.......................................
Article VII
MISCELLANEOUS PROVISIONS
Section 7.01. Amendment...................................................
Section 7.02. Waivers.....................................................
Section 7.03. Notices.....................................................
Section 7.04. Severability of Provisions..................................
Section 7.05. Rights Cumulative...........................................
Section 7.06. No Offset...................................................
Section 7.07. Inspection and Audit Rights.................................
Section 7.08. Powers of Attorney..........................................
Section 7.09. Assignment and Binding Effect...............................
Section 7.10. Captions....................................................
Section 7.11. Counterparts................................................
Section 7.12. Governing Law...............................................
Section 7.13. Parties.....................................................
Section 7.14. Relationship of the Parties.................................
Section 7.15. No Bankruptcy Petition Against the Debtor...................
Section 7.16. Third Party Beneficiaries...................................
Section 7.17. Other Agreements............................................
Section 7.18. Procedure for Indemnification...............................
Section 7.19. Reports to Holders..........................................
Section 7.20. Purchase and Subsequent Pledge..............................
EXHIBIT A-1 Monthly Servicer Report
EXHIBIT A-2 Officer's Certificate
EXHIBIT B Monthly Back-up Servicer Report
EXHIBIT C Forms of Late Notices Sent to Obligors Re: Delinquencies
EXHIBIT D Request for Release of Receivables File
EXHIBIT E [ ]'s Credit Policy
EXHIBIT F [ ]'s Collection Policy
SERVICING AGREEMENT
This Servicing Agreement ("Servicing Agreement") is made as of the 31st
day of March, 1999, by and among First Investors Auto Receivables Corporation, a
Delaware corporation, as debtor (the "Debtor"), Norwest Bank Minnesota, National
Association, a national banking association, as back-up servicer (the "Back-up
Servicer") and as collateral agent (the "Collateral Agent"), and Auto Lenders
Acceptance Corporation, a Delaware corporation, as servicer ("the Servicer").
Capitalized terms used herein and not otherwise defined shall have the meanings
ascribed thereto in that certain Security Agreement dated as of October 22, 1996
among the Debtor, Enterprise Funding Corporation ("the Company"), the Collateral
Agent, NationsBank, N.A., as Reserve Account Agent, MBIA Insurance Corporation
(the "Surety Bond Provider"), and First Investors Financial Services, Inc. (the
"Seller"), and as amended by that certain Amendment Number 1 to the Security
Agreement dated as of August 25, 1997 and that certain Amendment Number 2 to the
Security Agreement dated as of March 31, 1999 (hereafter as such agreement may
have been, or may from time to time be, amended, supplemented or otherwise
modified, the "Security Agreement").
PRELIMINARY STATEMENT
WHEREAS, pursuant to the Security Agreement and the Note Purchase
Agreement, the Debtor has issued the Note to the Company; and
WHEREAS, the Surety Bond Provider has issued its Surety Bond to provide
for the full and timely payment of all amounts of interest due on and principal
of the Note; and
WHEREAS, the Seller has acquired and will acquire certain Receivables
secured by security interests in Financed Vehicles; and
WHEREAS, pursuant to the Purchase Agreement, the Seller has absolutely
assigned and will absolutely assign Receivables to the Debtor from time to time;
and
WHEREAS, pursuant to the Security Agreement, the Debtor has pledged and
will pledge, among other things, the Receivables to the Collateral Agent for the
benefit of the Noteholder and the Surety Bond Provider; and
WHEREAS, pursuant to the terms of the Security Agreement, the Seller is
obligated to deliver or cause to be delivered to the Collateral Agent, the
documents to be included in the Custodian
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Files, which are to be held by the Collateral Agent in its capacity as custodian
pursuant to the terms of the Security Agreement; and
WHEREAS, the Debtor, the Collateral Agent, the Back-up Servicer and the
Servicer desire to enter into this Servicing Agreement pursuant to which the
Servicer and the Back-up Servicer will perform the duties as described herein.
NOW THEREFORE, in consideration of the covenants and conditions contained
in this Servicing Agreement, the parties, intending to be legally bound, hereby
agree as follows:
ARTICLE I.
DEFINITIONS
1.01. DEFINED TERMS. Capitalized and defined terms used but not defined in
this Servicing Agreement shall have the respective meanings assigned to them in
the Security Agreement, unless the context otherwise requires, and the
definitions of such terms are equally applicable both to the singular and plural
forms of such terms and to the masculine, feminine and neuter genders of such
terms.
"BACK-UP SERVICING FEE" shall have the meaning set forth in Section
2.08(a) hereof.
"COLLECTION ACCOUNT DEPOSITORY" shall mean the depository for the
Collection Account established pursuant to Section 4.1 of the Security
Agreement.
"COLLECTION POLICY" shall mean the Servicer's statement of policies
and procedures for the collection of Receivables in form and substance
acceptable to the Surety Bond Provider.
"CUSTODIAN" shall mean the Collateral Agent in its capacity
as custodian of the Custodian Files.
"CUSTODIAN FILES" shall have the meaning set forth in Section
2.13 hereof.
"ELIGIBLE SERVICER" shall mean the Servicer, the Back-up Servicer or
any entity which, at the time of its appointment as Servicer, (a) is legally
qualified and has the capacity to service the Receivables, (b) has demonstrated
(except that, with respect to the Back-up Servicer, the demonstration required
by this clause
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shall not apply) the ability to professionally and competently service a
portfolio of motor vehicle retail installment obligations in accordance with
high standards of skill and care and (c) is approved in writing by the Surety
Bond Provider. The determination of the qualifications specified in subsections
(a) and (b) of this definition shall be made by the Collateral Agent with the
prior written approval of the Surety Bond Provider.
"EXTENSION" shall have the meaning set forth in Section
2.02(a) hereof.
"FIFSGI" shall mean First Investors Financial Services
Group, Inc., a Texas corporation.
"GECC" and "GECC AGREEMENT" shall have the meanings set forth in
Section 2.01(g) hereof.
"INSURANCE POLICIES" means insurance policies covering the Financed
Vehicles or the Obligors, including VSI Insurance.
"MONTHLY SERVICER REPORT" shall mean the monthly report provided by
the Servicer as contemplated by Section 2.02(c) hereof.
"MOODY'S" shall mean ▇▇▇▇▇'▇ Investors Service, Inc.
"RATING AGENCIES" shall mean Moody's and S&P.
"S&P" shall mean Standard & Poor's Ratings Services, a division of
▇▇▇▇▇▇-▇▇▇▇ Companies.
"SERVICING FEE" shall have the meaning set forth in Section
2.08(a) hereof.
"SERVICER FILES" shall have the meaning set forth in Section
2.15 hereof.
"SERVICER TERMINATION EVENT" shall have the meaning set forth in
Section 5.01 hereof.
"SUBSERVICER" shall have the meaning set forth in Section
2.01(g) hereof.
"SUBSERVICING AGREEMENT" shall have the meaning set forth in
Section 2.01(g) hereof.
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"SUCCESSOR SERVICER" shall mean the Back-up Servicer or any other
Eligible Servicer who succeeds to the authority, power, obligations and
responsibilities of the Servicer hereunder in accordance with the provisions of
Article V hereof.
"SUCCESSOR BACK-UP SERVICER" shall mean any Eligible Servicer who
succeeds to the authority, power, obligations and responsibilities of the
Back-up Servicer hereunder in accordance with the provisions of Article V
hereof.
"SURETY DEFAULT" shall have the meaning ascribed to it in the
Insurance Agreement.
"TRANSACTION DOCUMENTS" shall mean this Servicing Agreement,
the Security Agreement, the Purchase Agreement, the Note Purchase
Agreement, the Note and the Insurance Agreement.
ARTICLE II.
ADMINISTRATION AND SERVICING OF RECEIVABLES
2.01. APPOINTMENT AND DUTIES OF THE BACK-UP SERVICER AND THE SERVICER.
(a) The Debtor hereby appoints Norwest Bank Minnesota, National
Association as Back-up Servicer and Auto Lenders Acceptance Corporation as
Servicer. The Back-up Servicer and the Servicer shall perform the services
required of each pursuant to the terms of this Servicing Agreement. In
performing their respective duties hereunder, the Back-up Servicer and Servicer
shall have full power and authority to do or cause to be done any and all things
in connection with such servicing and administration which either may deem
necessary or desirable, within the terms of this Servicing Agreement.
(b) As of the date of this Servicing Agreement, each of the Back-up
Servicer and the Servicer is, and shall remain, for so long as it is acting as
Back-up Servicer or Servicer, an Eligible Servicer.
Compensation and expense reimbursement payable to the Back-up
Servicer and Servicer under this Servicing Agreement shall be payable from the
Collections as defined in the Security Agreement pursuant to the priority of
payment set forth in Section 5.1 of the Security Agreement, and except as
provided herein or in the Security Agreement, none of the Debtor, the Surety
Bond
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Provider, the Collateral Agent or the Noteholder will have any liability to the
Back-up Servicer or the Servicer with respect thereto; provided, however, that
the Debtor shall remain liable to the extent of funds available pursuant to
Section 5.1(xi) of the Security Agreement (and not from any other source) for
any fees, expenses and indemnities due and payable to the Servicer and any fees,
expenses and indemnities due and payable to the Back-up Servicer which have not
been paid from the Collections.
(c) The Surety Bond Provider, or if a Surety Default has occurred
and is continuing, the Collateral Agent at the direction of the Noteholder,
shall be entitled to terminate the services of the Servicer or the Back-up
Servicer under this Servicing Agreement, upon the occurrence of a Servicer
Termination Event, in each case in accordance with the terms and conditions
hereof; provided, however, that in the event of termination of the Servicer, the
Back-up Servicer shall act directly as Servicer unless a different Successor
Servicer is appointed in accordance herewith and, with prior written notice to
the Rating Agencies, the Surety Bond Provider shall direct the Debtor to enter
into a servicing agreement with such Successor Servicer (that shall be an
Eligible Servicer) acceptable to the Rating Agencies and the Surety Bond
Provider and which will be bound by the terms of such servicing agreement. In
the event of termination of the Back-up Servicer or the Successor Servicer, the
Surety Bond Provider, or if a Surety Default has occurred and is continuing, the
Collateral Agent at the direction of the Noteholder shall appoint a Successor
Servicer or a Successor Back-up Servicer, as the case may be, and shall direct
the Debtor to enter into a servicing agreement with a Successor Back-up Servicer
(that shall be an Eligible Servicer) or Servicer (that shall be an Eligible
Servicer), as the case may be, which will be bound by the terms of such
servicing agreement.
(d) Other than as set forth in Section 7.16 below, this Servicing
Agreement shall be deemed to be among the Back-up Servicer, the Collateral
Agent, the Servicer and the Debtor; the Surety Bond Provider and the Noteholder
shall not be deemed parties hereto and neither the Surety Bond Provider, the
Collateral Agent nor the Noteholder shall have any obligations, duties or
liabilities with respect to the Back-up Servicer or the Servicer except as set
forth herein and in the Security Agreement. In the Security Agreement, the
Debtor has agreed that the Collateral Agent, in its name or (to the extent
required by law) in the name of the Debtor, may (but is not required to) enforce
all rights of the Debtor and all obligations of the Servicer and the Back-up
Servicer under, and shall be entitled to all benefits of, this Servicing
Agreement for and on behalf of the Noteholder and the Surety Bond Provider,
whether or not the Debtor is in default
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thereunder. The Servicer, in making collections of Receivable payments pursuant
to Section 2.02 hereof, shall be acting as agent for the Collateral Agent, and
shall be deemed to be holding such funds in trust on behalf of, and as agent
for, the Collateral Agent.
(e) In the event the Back-up Servicer shall for any reason no longer
be acting as such (including by reason of a Servicer Termination Event as
specified in Section 5.01 hereof), the Successor Back-up Servicer shall
thereupon assume all of the rights and obligations of the outgoing Back-up
Servicer under this Servicing Agreement. In such event, the Successor Back-up
Servicer shall be deemed to have assumed all of the outgoing Back-up Servicer's
interest herein and to have replaced the outgoing Back-up Servicer as a party to
this Servicing Agreement to the same extent as if this Servicing Agreement had
been assigned to the Successor Back-up Servicer, except that the outgoing
Back-up Servicer shall not thereby be relieved of any liability or obligations
on its part under this Servicing Agreement arising prior to such replacement.
The outgoing Back-up Servicer shall, at the reasonable expense of the Debtor
pursuant to the priority of payment set forth in Section 5.1 of the Security
Agreement, deliver to the Successor Back-up Servicer all documents and records
relating to this Servicing Agreement and the Receivables then being serviced
hereunder and an accounting of amounts collected and held by it and otherwise
use its best efforts to effect the orderly and efficient transfer of this
Servicing Agreement to the Successor Back-up Servicer. Compensation and expense
reimbursement of the outgoing Back-up Servicer shall be payable through the date
that the outgoing Back-up Servicer ceases to render services.
(f) The Debtor shall, at its own expense, duly and punctually
perform and observe its obligations to the Back-up Servicer and the Servicer
under this Servicing Agreement in accordance with the terms hereof. In addition,
promptly following a request from the Collateral Agent to do so and at the
Debtor's own expense, the Debtor shall take all such lawful action as the
Collateral Agent (which shall so request if directed by the Noteholder, with the
consent of the Surety Bond Provider, to do so) may request to compel or secure
the performance and observance by the Back-up Servicer and the Servicer of each
of its respective obligations to the Debtor under or in connection with this
Servicing Agreement, in accordance with the terms hereof, and in effecting such
request shall exercise any and all rights, remedies, powers and privileges
lawfully available to the Debtor under or in connection with this Servicing
Agreement to the extent and in the manner directed by the Collateral Agent,
including, without limitation, the transmission of notices of default on the
part of
7
the Back-up Servicer or the Servicer hereunder and the institution of legal or
administrative actions or proceedings to compel or secure performance by the
Back-up Servicer or the Servicer of its respective obligations under this
Servicing Agreement.
(g) The Servicer or the Back-up Servicer, if applicable, may enter
into one or more subservicing agreements (each, a "Subservicing Agreement") with
one or more Subservicers (each, a "Subservicer") for the servicing and
administration of certain of the Receivables; provided that, unless the Surety
Bond Provider otherwise agrees in writing, the only servicing functions that may
be performed by Subservicers of the initial Servicer are (i) sending "welcome
letters" to new Obligors, (ii) sending payment coupons to each Obligor on a
monthly basis, (iii) receipt and posting of all payments received with respect
to the Receivables, (iv) tracking of Obligor compliance with physical damage
insurance, (v) repossessing Financed Vehicles, (vi) preparing Financed Vehicles
for sale and representing the Servicer throughout the related vehicle auction
process and (vii) other functions pursuant to any other Subservicing Agreement
approved in writing by the Surety Bond Provider. References in this Servicing
Agreement to actions taken or to be taken by the Servicer in servicing the
Receivables include actions taken or to be taken by a Subservicer on behalf of
the Servicer. Each Subservicing Agreement will be upon such terms and conditions
as are not inconsistent with this Servicing Agreement and as the Servicer and
the Subservicer have agreed. The Servicer and a Subservicer may enter into
amendments thereto; provided, however, that any such amendments shall be
consistent with and not violate the provisions of this Servicing Agreement. As
of the date hereof, it is acknowledged that Receivables heretofore pledged by
the Debtor pursuant to the Security Agreement (as well as any Additional
Receivables pledged hereafter pursuant to the Security Agreement at any time
prior to the Servicing Transfer, as defined below) (the "Prior Receivables") are
being serviced or may hereafter be serviced by General Electric Capital
Corporation ("GECC") pursuant to that certain Servicing Agreement dated as of
October 22, 1996 between the Debtor and GECC, as amended (the "GECC Agreement").
Accordingly, the parties hereto agree that, any other provision hereof to the
contrary notwithstanding, (i) such arrangement shall continue until the
servicing of such Receivables is transferred to the Servicer in connection with
the termination of the GECC Agreement (the "Servicing Transfer"), (ii) Auto
Lenders Acceptance Corporation shall not service any Receivables hereunder until
such Servicing Transfer, (iii) no such Servicing Transfer shall occur unless the
prior written consent of the Surety Bond Provider has been obtained, and (iv)
only until such Servicing Transfer, any other provision hereof to the contrary
notwithstanding and only with
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respect to the Prior Receivables, the GECC Agreement shall be deemed a
Subservicing Agreement and GECC shall be deemed a Subservicer for all purposes
of this Servicing Agreement.
(h) The Back-up Servicer may be removed by the Surety Bond Provider
or, if a Surety Default has occurred and is continuing, by the Collateral Agent
at the direction of the Noteholder, with or without cause upon thirty days'
written notice to the Back-up Servicer; provided, however, that (A) such removal
may be made immediately and shall not require notice if: (i) the Back-up
Servicer shall consent to the appointment of a conservator, receiver or
liquidator in any insolvency, readjustment of debt, marshalling of assets and
liabilities, or similar proceedings of or relating to the Back-up Servicer or
relating to all or substantially all of its property; or (ii) a decree or order
of a court or agency or supervisory authority having jurisdiction in the
premises for the appointment of a conservator or receiver or liquidator in any
insolvency, readjustment of debt, marshalling of assets and liabilities, or
similar proceedings, or for the winding up or liquidation of its affairs shall
have been entered against the Back-up Servicer, and such decree or order shall
have remained in force undischarged or unstayed for a period of 60 days; or
(iii) the Back-up Servicer shall become insolvent or admit in writing its
inability to pay its debts generally as they become due, file a petition to take
advantage of any applicable debtor relief laws, make an assignment for the
benefit of its creditors or voluntarily suspend payment of its obligations; or
(iv) a petition is filed against the Back-up Servicer seeking relief under any
applicable debtor relief laws of the United States or any state or other
competent jurisdiction, and such petition, order, judgment or decree shall have
remained in force undischarged or unstayed for a period of 60 days after its
entry; and (B) such removal shall not be effective unless and until a Successor
Back-up Servicer is appointed by the Surety Bond Provider or, if a Surety
Default has occurred and is continuing, by the Collateral Agent at the direction
of the Noteholder; provided, that the Back-up Servicer may petition a court of
competent jurisdiction to appoint a Successor Back-up Servicer if one is not
chosen within 60 days.
2.02. COLLECTION OF RECEIVABLE PAYMENTS; DEFAULTED RECEIVABLES; REPORTING
OBLIGATIONS.
(a) The Servicer shall be responsible for collection of payments
called for under the terms and provisions of the Receivables, as and when the
same shall become due. The Servicer, consistent with the standard of care set
forth in Section 2.18, shall service, manage, administer and make collections on
the Receivables on behalf of the Debtor and shall have full power and
9
authority, acting alone and/or through Subservicers as provided in Section
2.01(g), to do any and all things which it may deem necessary or desirable in
connection therewith which are consistent with this Servicing Agreement. The
Servicer may extend the then-current maturity date of any Receivable by one
month (an "Extension"); provided however, that (i) no Extension may be granted
with respect to any Receivable unless at least six scheduled payments have been
received with respect to such Receivable; (ii) Extensions may be granted in the
aggregate for no more than one month for each twelve months of the original term
of a Receivable, and (iii) Extensions may be granted no more than twice for
periods of one month each during the preceding twelve calendar months. The
Servicer may in its discretion waive any late payment charge or any other fees
that may be collected in the ordinary course of servicing a Receivable. In no
event shall the principal balance of a Receivable be reduced, except in
connection with a settlement in the event the Receivable becomes a Defaulted
Receivable. The Servicer shall also enforce all rights of the Debtor under the
Originator Agreements including, but not limited to, the right to require an
Originator to repurchase Receivables for breaches of representations and
warranties made by the respective Originators.
(b) If the full amount of a scheduled payment due under a Receivable
is not timely received, the Servicer shall make reasonable and customary efforts
to collect such Receivable in accordance with this Servicing Agreement and the
procedures set forth in the Collection Policy. The Servicer shall use its best
efforts, consistent with the standard of care set forth in Section 2.18 hereof,
to collect funds on a Defaulted Receivable; such collections shall be deposited
into the Collection Account by the close of business on the Business Day
following receipt thereof.
(c) The Servicer shall (i) subsequent to the Servicing Transfer,
provide monthly reports substantially in the form of Exhibit A-1 hereto, each
under a certificate substantially in the form of Exhibit A-2 hereto, to the
Collateral Agent, and (ii) prior to the Servicing Transfer and with respect to
the Prior Receivables, provide, or cause to be provided, to the Collateral Agent
the monthly reports described in Section 4.09 of the GECC Agreement.Subsequent
to the Servicing Transfer, the Servicer shall also provide, by mail and
facsimile transmission, copies of such reports and certificates to the Back-up
Servicer, the Surety Bond Provider, the Noteholder, the Rating Agencies and any
other Persons identified on a list provided to the Servicer, as such list may be
amended from time to time, regarding (i) payments received from or on behalf of
the Obligors and deposited to the Collection Account (identified in Section 3.03
hereof) representing collections with
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respect to the Receivables, (ii) other amounts received with respect to the
Receivables, including Liquidation Proceeds or the proceeds of repurchases under
the Purchase Agreement, (iii) other matters relating to the Receivables
including delinquencies, repossessions and filing and payment of claims under
Insurance Policies, (iv) financial information used to calculate whether certain
Termination Events or Amortization Events have occurred, (v) certain items
relating to any outstanding Interest Rate Cap, and (vi) other items reflected on
Exhibit A-1. Such reports shall be delivered to the parties specified above no
later than the fifteenth calendar day after the end of each Collection Period.
(d) The Back-up Servicer shall provide monthly reports to the
Collateral Agent, and the Collateral Agent shall provide copies of such reports
to the Rating Agencies, the Surety Bond Provider, the Noteholder, the Debtor and
any other Persons identified on a list provided to the Back-up Servicer, as such
list may be amended from time to time, substantially in the form of Exhibit B
hereto. Such report shall be dated as of the Determination Date for each
Remittance Date and delivered to the Collateral Agent on or before the close of
business on the fourth Business Day preceding such Remittance Date.
(e) The Servicer shall, upon request, promptly, but no later than
two Business Days after receipt of such request provide, or cause to be
provided, to the Back-up Servicer and the Surety Bond Provider copies of all
monthly bank statements, notices, reports or other documents received from the
Collateral Agent and from the Collection Account Depository regarding funds held
in or transferred to or from all applicable accounts.
(f) Within ten calendar days following the last day of each
Collection Period, the Servicer shall forward to the Back-up Servicer, via
reputable overnight courier or electronic transmission, a computer diskette in a
format mutually acceptable to the Servicer and the Back-up Servicer, of its
computerized records reflecting (i) all collections received during such
Collection Period with respect to the Receivables, (ii) the Principal Balance of
the Receivables as of the last day of the Collection Period, (iii) information
as of the last day of such Collection Period regarding the number of Defaulted
Receivables, (iv) the number of repossessed Financed Vehicles and the number of
sales of repossessed Financed Vehicles as of the last day of such Collection
Period and (v) all other information necessary for the Back-up Servicer to
perform its duties under Section 2.23. Promptly upon discovery by the Back-up
Servicer or receipt by the Back-up Servicer of notice of a Servicer Termination
Event with respect to the Servicer, the Back-up Servicer shall input such
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information onto its computer system so that such information is immediately
available to the Back-up Servicer.
2.03. REALIZATION UPON RECEIVABLES.
(a) Unless otherwise contemplated by the Collection Policy, in the
event a Receivable becomes or is reasonably anticipated to become a Defaulted
Receivable, the Servicer, itself or through the use of independent contractors
or agents shall, consistent with the standard of care set forth in Section 2.18,
repossess or otherwise convert the ownership of the Financed Vehicle securing
such Receivable. In accordance with the priority of payment set forth in Section
5.1 of the Security Agreement, all costs and expenses incurred by the Servicer
in connection with the repossession of the Financed Vehicles securing such
Receivables shall be reimbursed to the Servicer from the Collection Account on
the Remittance Date relating to the Collection Period in which the Servicer
delivered to the Collateral Agent an itemized statement of such costs and
expenses. Notwithstanding the foregoing and consistent with the terms of this
Servicing Agreement, the Servicer shall not be obligated to repossess or take
any action with respect to a Defaulted Receivable if, in its reasonable judgment
consistent with the servicing standards specified in Section 2.18, the
Liquidation Proceeds are expected to be less than the costs and expenses of such
repossession or action.
(b) The Servicer, itself or through the use of independent
contractors or agents to the extent allowed by Section 2.01(g), shall follow
practices consistent with the standard of care set forth in Section 2.18,
including the Collection Policy, in its servicing of automotive receivables,
which may include selling the Financed Vehicle, or requesting a Subservicer to
sell the Financed Vehicle, at public or private sale; provided, however, that
the Servicer, itself or through the use of independent contractors or agents to
the extent allowed by Section 2.01(g), shall, in accordance with its Collection
Policy, maximize the sales proceeds for each repossessed Financed Vehicle. The
foregoing shall be subject to the provision that, in any case in which the
Financed Vehicle shall have suffered damage, the Servicer shall not expend funds
for the repair or the repossession of such Financed Vehicle unless the Servicer
shall determine in its discretion that such repair or repossession should
increase the Liquidation Proceeds by an amount greater than the amount of such
expenses.
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2.04. PHYSICAL DAMAGE INSURANCE.
(a) The Servicer, itself or through the use of independent
contractors or agents to the extent allowed by Section 2.01(g), in accordance
with the standard of care set forth in Section 2.18, shall, upon receipt of
notice that an Obligor's physical damage insurance covering the Financed Vehicle
has lapsed or is otherwise not in force, send written notice to such Obligor
stating that such Obligor is required to maintain physical damage insurance
covering the Financed Vehicle throughout the term of the Receivable.
(b) In the event of any physical loss or damage to a Financed
Vehicle from any cause, whether through accidental means or otherwise, the
Servicer shall have no obligation to cause the affected Financed Vehicle to be
restored or repaired. However, the Servicer shall comply with the provisions of
any insurance policy or policies directly or indirectly related to any physical
loss or damage to a Financed Vehicle.
(c) The Servicer will administer the filing of claims under the
Insurance Policies as described under Section 2.12 hereof.
2.05. MAINTENANCE OF SECURITY INTERESTS IN FINANCED VEHICLES AND
RECEIVABLES.
(a) The Debtor hereby directs the Servicer to (i) take or cause to
be taken such steps as are necessary, in accordance with the standard of care
set forth in Section 2.18, to maintain perfection of the security interest
created by any Receivable covering a Financed Vehicle which has been relocated
in such a manner as to require such steps, and (ii) within two Business Days of
its receipt thereof forward to the Collateral Agent, on behalf of the Debtor,
via reputable overnight courier, any certificate of title to a Financed Vehicle
received by the Servicer for any reason with respect to a Financed Vehicle
relating to a Receivable serviced hereunder.
(b) The Servicer shall, at the direction of the Debtor, the Surety
Bond Provider or the Collateral Agent (which shall so direct if directed by the
Noteholder to do so), take any action necessary to preserve and protect the
security interests of the Debtor and the Collateral Agent in the Receivables,
including any action specified in any opinion of counsel delivered to the
Servicer.
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2.06. COVENANTS OF SERVICER; NOTICES.
(a) The Servicer shall (i) not release any Financed Vehicle securing
any Receivable from the security interest granted therein by such Receivable in
whole or in part except in the event of payment in full by the Obligor
thereunder or upon transfer of the Financed Vehicle to a successor purchaser
following repossession by the Servicer or a Subservicer, (ii) not impair the
rights of the Debtor, the Noteholder, the Surety Bond Provider or the Collateral
Agent in the Receivables, (iii) not increase the number of scheduled payments
due under a Receivable except as permitted herein, (iv) prior to the payment in
full, not sell, pledge, assign, or transfer to any other Person, or grant,
create, incur, assume, or suffer to exist any Lien on any Receivable pledged to
the Collateral Agent or any interest therein, (v) immediately notify the Debtor,
the Back-up Servicer, the Surety Bond Provider and the Collateral Agent of the
existence of any Lien on any Receivable (other than the Lien of the Collateral
Agent) if the Servicer has actual knowledge thereof, (vi) defend the right,
title, and interest of the Debtor, the Noteholder, the Surety Bond Provider and
the Collateral Agent in, to and under the Receivables pledged to the Collateral
Agent, against all claims of third parties claiming through or under the
Servicer, (vii) deposit into the Collection Account all payments received by the
Servicer with respect to the Receivables in accordance with this Servicing
Agreement, (viii) comply in all respects with the terms and conditions of this
Servicing Agreement relating to the obligation of the Debtor to remove
Receivables from the Collateral pursuant to the Security Agreement, and the
obligation of the Seller to reacquire the Receivables from the Debtor pursuant
to the Purchase Agreement, (ix) promptly notify the Debtor, the Back-up
Servicer, the Surety Bond Provider and the Collateral Agent of the occurrence of
any Servicer Termination Event and any breach by the Servicer of any of its
covenants or representations and warranties contained herein, (x) promptly
notify the Debtor, the Surety Bond Provider, the Back-up Servicer and the
Collateral Agent of the occurrence of any event which, to the knowledge of the
Servicer, would require that the Debtor make or cause to be made any filings,
reports, notices, or applications or seek any consents or authorizations from
any and all government agencies, tribunals, or authorities in accordance with
the UCC and any state vehicle license or registration authority as may be
necessary or advisable to create, maintain, and protect a first-priority
security interest of the Collateral Agent in, to, and on the Financed Vehicles
and a first-priority security interest of the Collateral Agent in, to, and on
the Receivables pledged to the Collateral Agent, (xi) take all reasonable action
necessary to maximize the returns pursuant to the Insurance Policies, (xii)
deliver or cause to be delivered to
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the Debtor the Receivable Schedule no later than two Business Days preceding any
Addition Date, and (xiii) deliver or cause to be delivered to the Collateral
Agent within two Business Days preceding any Addition Date, the documents to be
included in the Custodian Files with respect to the Receivables pledged on such
Addition Date.
(b) The Servicer shall, within three Business Days of its receipt
thereof, respond to reasonable written directions or written requests for
information that the Debtor, the Collateral Agent, the Noteholder or the Surety
Bond Provider might have with respect to the administration of the Receivables.
(c) The Servicer will promptly advise the Debtor, the Surety Bond
Provider, the Back-up Servicer and the Collateral Agent of any inquiry received
from an Obligor which requires the consent of the Debtor or the Collateral
Agent. Inquiries requiring consent of the Debtor or the Collateral Agent may
include, but are not limited to, inquiries about settlement of any unasserted
claim or defense, or compromise of any amount an Obligor owes.
(d) The Servicer will not make any material change to the Collection
Policy with respect to the Receivables without the consent of the Surety Bond
Provider, which consent shall not be unreasonably withheld.
2.07. REPURCHASE OF RECEIVABLES UPON BREACH. The Servicer shall inform the
Debtor, the Surety Bond Provider, the Collateral Agent, the Noteholder and the
Back-up Servicer promptly, in writing, upon the discovery of the occurrence of
any Repurchase Event (as defined in Section 6.2 of the Purchase Agreement);
provided, however, that the Servicer shall have no duty to investigate or
determine the existence of any breach except as specified herein. Unless waived
by the Surety Bond Provider, the Servicer shall deliver to the Debtor a written
demand to cause the Seller to reacquire the affected Receivable as provided in
the Purchase Agreement. The sole remedy of the Debtor, the Collateral Agent, the
Surety Bond Provider (except as otherwise provided in the Insurance Agreement),
or the Noteholder against the Seller with respect to any receivable shall be the
repurchase thereof as provided in the Purchase Agreement.
2.08. SERVICING FEE; BACK-UP SERVICING FEE.
(a) Pursuant to the Security Agreement, the Debtor has agreed to
cause the Collateral Agent to pay out of monthly collections with respect to the
Receivables to the Back-up Servicer and the Servicer each a monthly servicing
fee ("Back-up Servicing
15
Fee" and "Servicing Fee," respectively) with respect to each Receivable serviced
under this Servicing Agreement; provided, however, that the Debtor hereby agrees
not to amend or consent to any amendment of any provision of the Security
Agreement relating to compensation of the Back-up Servicer or the Servicer
without the prior written consent of such Person and the Surety Bond Provider.
(b) The Back-up Servicing Fee with respect to each Collection Period
shall be equal to the quotient obtained by dividing (i) 0.03% of the aggregate
Principal Balance of all Receivables being serviced hereunder as of the
beginning of such Collection Period, by (ii) 12. The Back-Up Servicer shall also
be entitled to reimbursement of its conversion costs and other transition
expenses associated herewith (not to exceed $50,000 in the aggregate). The
Back-up Servicing Fee with respect to a Collection Period shall be due on the
succeeding Remittance Date. In the event the initial Back-up Servicer becomes a
Successor Servicer pursuant to this Servicing Agreement, the Back-up Servicer
shall be paid a fee not to exceed the greater of (i) the Servicing Fee or (ii)
the current market rate at the time for servicing receivables similar in nature
to the Receivables. Such current market rate shall be determined by taking the
lowest of three servicing bids obtained by the Back-up Servicer from third party
servicers selected by the Back-up Servicer and approved by the Surety Bond
Provider.
(c) The Servicing Fee with respect to each Collection Period shall
be equal to the quotient obtained by dividing (i) 2-1/2% of the aggregate
Principal Balance of all Receivables being serviced hereunder as of the
beginning of such Collection Period, by (ii) 12. The Servicing Fee with respect
to a Collection Period shall be due on the succeeding Remittance Date. In the
event this Servicing Agreement is terminated on a date other than the last day
of a Collection Period or a Receivable is designated to be no longer outstanding
for purposes of this Servicing Agreement, then the Servicing Fee for such period
or with respect to such Receivable, as the case may be, shall be determined on a
pro rata basis.
2.09. ANNUAL STATEMENT AS TO COMPLIANCE. The Servicer shall deliver to the
Collateral Agent, and the Collateral Agent shall deliver to the Debtor, the
Back-up Servicer, the Noteholder, the Surety Bond Provider, the Rating Agencies
and any Persons identified on a list provided to the Servicer, as such list may
be amended from time to time, on or before July 31 of each year beginning July
31, 2000, an Officer's Certificate, dated effective as of the preceding April
30, stating that (i) a review of the activities of the Servicer during the
preceding 12-month period (or
16
such shorter period, as is applicable) and of its performance under this
Servicing Agreement during such period has been made under such officer's
supervision, (ii) based on such review, the Servicer has fulfilled all its
obligations under this Servicing Agreement throughout such period, or, if there
has been a default in the fulfillment of any such obligation, specifying each
such default known to such officer and the nature and status thereof and the
remedies therefor being pursued; and (iii) to the best of such officer's
knowledge, each Subservicer has fulfilled its obligations under its Subservicing
Agreement in all material respects, or if there has been a material default in
the fulfillment of such obligations, specifying such default known to such
officers and the nature and status thereof. This Section shall not apply to the
Back-up Servicer acting as Servicer.
2.10. FINANCIAL STATEMENTS; ANNUAL SERVICING REVIEW.
(a) The Servicer, shall deliver, in duplicate, to the Rating
Agencies, the Noteholder, the Surety Bond Provider, the Back-up Servicer, the
Collateral Agent and any other Persons identified on a list provided to the
Servicer, as such list may be amended from time to time:
(i) as soon as available, but in no event later than 45 days
after the end of each fiscal quarter of FIFSGI (commencing with the quarter
ending July 31, 1999), an unaudited consolidated balance sheet and income
statement (prepared in accordance with generally accepted accounting principles
applied on a consistent basis, and subject to year end adjustments) for FIFSGI
covering the preceding quarter, in each case certified by the chief financial
officer of FIFSGI to be true, accurate and complete copies of such financial
statements; and
(ii) on or before ninety (90) days after the end of each
fiscal year of FIFSGI (commencing with the fiscal year ending April 30, 1999)
the consolidated financial statements of FIFSGI containing a report of a firm of
independent public accountants selected by FIFSGI to the effect that such firm
has examined the books and records of FIFSGI and that, on the basis of such
examination conducted in compliance with generally accepted audit standards,
such financial statements accurately reflect the financial condition of FIFSGI,
in each case certified by the chief financial officer of FIFSGI, to be true,
accurate and complete copies of such financial statements.
(b) The Servicer will cause the same firm of independent public
accountants which prepared the audited financial statements pursuant to
paragraph (a)(ii) of this Section to deliver to the
17
Rating Agencies, the Noteholder, the Surety Bond Provider, the Back-up Servicer,
the Collateral Agent and any Persons identified on a list provided to the
Servicer, as such list may be amended from time to time, upon receipt of such
covenants and representations from such Persons as the independent public
accountants may require, and as soon as practicable, but in any event within 120
days after the end of each fiscal year, an annual review of the Servicer's
procedures and operations in form and substance reasonably satisfactory to the
Surety Bond Provider, prepared by such firm of independent public accountants,
dated as of April 30 of each year beginning April 30, 2000 and substantially
stating to the effect that (i) such accountants have examined the accounts and
records of the Servicer relating to the Collateral and the conveyed property in
all similar asset-based financing transactions sponsored by the Debtor or an
affiliate thereof (which records shall be described in one or more schedules to
such statement), (ii) such firm has compared the information contained in
certain Monthly Servicer Reports (and similar reports for other similar
asset-based financing transactions sponsored by the Debtor or an affiliate
thereof) delivered in the relevant period with information contained in the
accounts and records or other relevant source documents for such period, and
(iii) on the basis of the procedures performed, whether the information examined
and contained in such Monthly Servicer Reports (and similar reports for such
other similar asset-based financing transactions) delivered on the relevant
period reconciles and agrees with the information contained in the accounts and
records or other relevant source documents except for such exceptions as such
independent public accountants believe to be immaterial and such other
exceptions as shall be set forth in such statement.
2.11. COSTS AND EXPENSES.
(a) Except as set forth in Section 2.11(b) below, all costs and
expenses incurred by the Servicer in carrying out its duties hereunder, fees and
expenses of independent public accountants with respect to preparation of the
financial statements and reports described in Section 2.10(b) and (c) and all
other fees and expenses (including all fees and expenses arising as a result of
the occurrence of a Re-▇▇▇▇▇▇▇ Trigger) not expressly permitted pursuant to the
priorities of Section 5.1 of the Security Agreement to be for the account of the
Debtor, shall be paid or caused to be paid by the Servicer out of the
compensation to be paid to the Servicer pursuant to Section 2.08.
(b) During the term of this Servicing Agreement, the Servicer shall
be reimbursed pursuant to Section 5.1 of the Security Agreement for actual
out-of-pocket costs and expenses
18
incurred in connection with the sale or other disposal of a Financed Vehicle or
collection of amounts due with respect to a Receivable including, but not
limited to, the following (to the extent such cost or expense relates to the
sale or other disposal or collection of amounts due with respect to a Receivable
or a Financed Vehicle):
(i) Any compensation paid to outside legal counsel retained to
protect the interests of the Debtor, the Collateral Agent, the Surety Bond
Provider or the Noteholder in the assets administered under this Servicing
Agreement as the Servicer deems necessary in accordance with its normal
procedures, provided that any such compensation paid under this clause (i) shall
not exceed $10,000 per annum, with any such compensation in excess of such
limitation being paid pursuant to Section 5.1(xi) of the Security Agreement;
(ii) Any compensation paid to independent repossessors,
auctioneers or appraisers and any direct out of pocket expenses arising from or
related to realization of the Receivables administered under this Servicing
Agreement;
(iii) Any sales, franchise, income, excise, personal property
or other taxes arising from or related to any Receivables administered under
this Servicing Agreement;
(iv) Any parking or other fees, insurance, title or similar
fees arising from or related to any Receivables administered under this
Servicing Agreement;
(v) Any expenses for special forms and materials, freight,
tapes, communications, lock-box and other bank service charges, and other
expenses approved by the Debtor; and
(vi) Any expenses and fees paid to outside accountants in
connection with the procedures required to be performed pursuant to Section
2.10(b) hereof, provided that any such fees and expenses paid under this clause
(vi) shall not exceed $10,000 per annum, with any such fees and expenses in
excess of such limitation being paid pursuant to Section 5.1(xi) of the Security
Agreement.
2.12. RESPONSIBILITY FOR INSURANCE POLICIES; PROCESSING OF CLAIMS UNDER
INSURANCE POLICIES; DAILY RECORDS AND REPORTS.
(a) The Servicer, on behalf of the Debtor, will
administer and enforce all rights and responsibilities of the
19
holder of the Receivables provided for in the Insurance Policies
relating to the Receivables.
(b) The Servicer will administer the filings of claims under the
Insurance Policies by filing the appropriate notices related to claims,
including initial notices of loss, as well as claims with the respective
carriers or their authorized agents all in accordance with the terms of the
Insurance Policies. The Servicer shall use reasonable efforts to file such
claims on a timely basis after obtaining knowledge of the events giving rise to
such claims, subject to the servicing standard set forth in Section 2.18 hereof.
The Servicer will utilize such notices, claim forms and claim procedures as are
required by the respective insurance carriers.
The Servicer shall not be required to pay any premiums or, other
than administering the filing of claims and performing reporting requirements
specified in the Insurance Policies in connection with filing such claims,
perform any obligations of the named insured under such Insurance Policies. The
Servicer shall not be responsible to the Debtor, the Surety Bond Provider, the
Noteholder or the Collateral Agent (i) for any act or omission to act done in
order to comply with the requirements or satisfy any provisions of the Insurance
Policies or (ii) for any act, absent willful misconduct or negligence, or
omission to act done in compliance with this Servicing Agreement. In the case of
any inconsistency between this Servicing Agreement and the terms of any
Insurance Policy, the Servicer shall comply with the latter. A copy of any claim
shall be furnished to the Surety Bond Provider upon the Surety Bond Provider's
request.
2.13. DELIVERY OF DOCUMENTS TO COLLATERAL AGENT. The Servicer shall
deliver or cause to be delivered all of the following documents with respect to
the Receivables in its possession to the Collateral Agent via reputable
overnight courier service for receipt by the Collateral Agent within two (2)
Business Days preceding the applicable Addition Date:
(a) the sole original counterpart of the retail installment contract
or promissory note and security agreement evidencing each such Receivable and
any and all amendments thereto; and
(b) (i) the original certificate of title or copies of
correspondence to the appropriate State title registration agency, and all
enclosures thereto, for issuance of the original certificate of title or (ii) if
the appropriate State title registration agency issues a letter or other form of
evidence of
20
lien in lieu of a certificate of title, the original lien entry letter or form
or copies of correspondence to such State title registration agency, and all
enclosures thereto, for issuance of the original lien entry letter or form (the
items in (a) - (b) are collectively referred to as the "Custodian Files").
While in its possession, the Servicer shall hold the Custodian Files
in trust on behalf of the Collateral Agent and shall only check out the
Custodian Files with a Request for Release of Receivable File in the form of
Exhibit C hereto.
2.14. MAINTENANCE OF COPIES OF DOCUMENTS BY THE SERVICER.
(a) The Servicer shall maintain legible copies (in electronic or
hard-copy form, in the discretion of the Servicer) or originals of the following
documents in its files with respect to each Receivable and the Financed Vehicle
related thereto:
(i) application of the Obligor for credit;
(ii) a copy (but not the original) of the retail installment
contract or promissory note and security agreement and any amendments thereto,
provided, however, that the Servicer shall deliver any original amendments to
the retail installment contract or promissory note and security agreement to the
Collateral Agent immediately following execution thereof;
(iii) a copy (but not the original) of a certificate of title
with a lien notation or an application therefor;
(iv) a certificate of insurance or application therefor with
respect to the Financed Vehicle securing the Receivable;
(v) a copy of the proof of income and references, credit
report and approval sheet utilized by the Seller in the underwriting of the
Receivable;
(vi) the invoice for the Financed Vehicle (in the case of a
new vehicle) or the ▇▇▇▇▇▇▇ sheet (in the case of a used vehicle);
(vii) Obligor's order for the Financed Vehicle, together with
proof (if any) of downpayment;
(viii) a copy of the service contract, if any, on the Financed
Vehicle;
21
(ix) a copy of the credit life insurance policy, if any, and
the credit disability insurance policy, if any, on the Obligor relating to the
Financed Vehicle; and
(x) such other documents as the Servicer may reasonably
request in order to accomplish its duties under this Servicing Agreement.
(b) The Servicer shall keep books and records, satisfactory to the
Surety Bond Provider, pertaining to each Receivable and shall make periodic
reports in accordance with this Servicing Agreement. Such records may not be
destroyed or otherwise disposed of except as provided herein and as allowed by
applicable laws, regulations or decrees. All documents, whether developed or
originated by the Servicer or not, reasonably required to document or to
properly administer any loan shall remain at all times the property of the
Debtor and shall be held in trust by the Servicer. The Servicer shall not
acquire any property rights with respect to such records, and shall not have the
right to possession of them except as subject to the conditions stated in this
Servicing Agreement. The Servicer shall bear the entire cost of restoration in
the event any Servicer Files (as defined below) shall become damaged, lost or
destroyed while in the Servicer's possession or control.
2.15. POSSESSION OF SERVICER FILES. Unless otherwise specified herein, the
Servicer shall maintain physical possession of the instruments and documents
listed in paragraph 2.14(a) above; such other instruments or documents that
modify or supplement the terms or conditions of any of the foregoing; and, all
other instruments, documents, correspondence and memoranda generated by or
coming into the possession of the Servicer (including, but not limited to,
insurance premium receipts, ledger sheets, payment records, insurance claim
files, correspondence and current and historical computerized data files) that
are required to document or service any Receivable. Collectively, all of the
documents described in this Section 2.15 with respect to a Receivable are
referred to as the "Servicer Files". The Servicer hereby agrees that the
computer files and other physical records of the Receivables maintained by the
Servicer will bear an indication reflecting that the Receivables are owned by
the Debtor and pledged to the Collateral Agent for the benefit of the Noteholder
and the Surety Bond Provider and that all Servicer Files shall remain the
property of the Debtor and shall be held in trust by the Servicer. The Servicer
shall respond to all third party inquiries concerning ownership of the
Receivables by indicating that the Receivables have been assigned by the Seller
to Debtor and pledged to the
22
Collateral Agent for the benefit of the Noteholder and the Surety Bond Provider.
2.16. PROCESSING OF INFORMATION. Information with respect to each
Receivable is to be recorded into the Servicer's loan management and accounting
system.
2.17. WARRANTIES AND REPRESENTATIONS WITH RESPECT TO COMPLIANCE WITH LAW
AND ENFORCEMENT.
(a) The Debtor hereby represents to the Servicer, based on certain
representations the Seller has made to the Debtor concerning the Receivables in
the Purchase Agreement, and on which representations the Debtor has relied in
acquiring the Receivables and with respect to the pledge of the Receivables to
the Collateral Agent, that each Receivable and the sale of the related Financed
Vehicle complied at the time it was originated or made and on the applicable
Addition Date, as the case may be, does comply in all material respects with all
requirements of applicable federal, state and local laws, and regulations
thereunder.
(b) The Servicer warrants, represents and covenants that in the
event that the Servicer realizes upon any Receivable, the methods utilized by
the Servicer to realize upon such Receivable or otherwise enforce any provisions
of the Receivable, will not subject the Servicer, the Debtor, the Noteholder,
the Surety Bond Provider or the Collateral Agent to liability under any federal,
state or local law, and that such enforcement by the Servicer will be conducted
in accordance with the provisions of this Servicing Agreement and the standard
of care set forth in Section 2.18 hereof including the Collection Policy.
2.18. STANDARD OF CARE. In performing its duties and obligations hereunder
and in administering and enforcing the Insurance Policies relating to the
Receivables pursuant to this Servicing Agreement, the Servicer will comply with
all applicable state and federal laws and shall service and administer the
Receivables by employing such procedures (including collection procedures) and
degree of care, in each case consistent with prudent industry standards, as are
customarily employed by the Servicer in servicing and administering motor
vehicle retail installment sales contracts and notes owned or serviced by the
Servicer comparable to the Receivables. In performing such duties, so long as
Auto Lenders Acceptance Corporation is the Servicer (i) it shall comply with the
Collection Policy, and (ii) it shall not make any material amendment to such
Collection Policy without the prior written consent of the Surety Bond Provider
which consent shall not be unreasonably withheld; provided, however, that
23
notwithstanding the foregoing, the Servicer shall not, except pursuant to a
judicial order from a court of competent jurisdiction, or as otherwise required
by applicable law or regulation, release or waive the right to collect the
unpaid balance on any Receivable. In performing its duties and obligations
hereunder, the Servicer shall comply with all applicable federal and state laws
and regulations, shall maintain all state and federal licenses and franchises
necessary for it to perform its servicing responsibilities hereunder, and shall
not impair the rights of the Debtor, the Surety Bond Provider or the Collateral
Agent on behalf of the Noteholder in the Collateral.
2.19. RECORDS. The Servicer shall maintain or cause to be maintained such
books of account and other records as will enable the Debtor and the Surety Bond
Provider to determine the status of each Receivable and any Insurance Policy
relating thereto.
2.20. INSPECTION.
(a) At all times during the term hereof, the Servicer shall afford
the Debtor, the Surety Bond Provider, the Noteholder, the Back-up Servicer and
the Collateral Agent and their authorized agents, upon three Business Days'
prior written notice, reasonable access during normal business hours to the
Servicer's records and files relating to the Receivables and the Collateral and
will cause its personnel to assist in any examination of such records by the
Debtor, the Surety Bond Provider, the Noteholder, the Back-up Servicer or the
Collateral Agent, and will permit such parties to discuss the affairs, finances
and accounts of the Servicer with the chief operating officer and chief
financial officer of the Servicer. The examination referred to in this Section
2.20 will be conducted in a manner which does not unreasonably interfere with
the Servicer's normal operations or customer or employee relations. Without
otherwise limiting the scope of the examination the Debtor, the Surety Bond
Provider, the Noteholder, the Back-up Servicer or the Collateral Agent may,
using generally accepted audit procedures, verify the status of each Receivable
and review the Servicer Files and records relating thereto for conformity to
Monthly Servicer Reports prepared pursuant to Section 2.02(c) and compliance
with the standards represented to exist as to each Receivable in this Servicing
Agreement. Nothing herein shall require the Debtor, the Surety Bond Provider,
the Noteholder, the Back-up Servicer or the Collateral Agent to conduct any
inspection pursuant to this Section. Such parties may, with the Servicer's
consent, which shall not be unreasonably withheld or delayed, discuss the
affairs, finances and accounts of the Servicer with the Servicer's independent
accountants, provided that an officer of the
24
Servicer shall have the right to be present during such discussions.
(b) At all times during the term hereof, the initial Servicer shall
keep available at its office located at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇ (or such other location as to which it shall give written notice to the
Collateral Agent, the Noteholder and the Surety Bond Provider), for inspection
by the Debtor, the Surety Bond Provider, the Back-up Servicer, the Collateral
Agent and Noteholder a copy of the Receivables Schedule, as amended.
(c) All information obtained by the Debtor, the Surety Bond
Provider, the Back-up Servicer or the Collateral Agent regarding the Obligors
and the Receivables, whether upon exercise of its rights under this Section 2.20
or otherwise, shall be maintained by the Debtor, the Surety Bond Provider, the
Back-up Servicer or the Collateral Agent in confidence and shall not be
disclosed to any other person, except as otherwise required by applicable law or
regulation.
(d) The Servicer will, at the Debtor's, the Noteholder's or the
Surety Bond Provider's request, provide the Debtor, the Noteholder or the Surety
Bond Provider with a data extract disk of portfolio information.
(e) The Servicer and the Secured Parties and their agents and
representatives shall at all times have full and free access during normal
business hours to all computer tapes, books, correspondence and records of the
Back-up Servicer insofar as they relate to the Receivables and the Surety Bond
Provider and its agents and representatives may examine the same, take extracts
therefrom and make photocopies thereof, and the Back-up Servicer agrees to
render to the Servicer, the Surety Bond Provider or its agents and
representatives at the Back-up Servicer's cost and expense such clerical and
other assistance as may be reasonably requested with regard thereto. The Secured
Parties each agree that all such information, practices, books, correspondence
and records are to be regarded as confidential information and that (a) it shall
retain in strict confidence and shall use its best efforts to ensure that its
representatives retain in strict confidence and will not disclose without the
prior written consent of the Back-up Servicer any or all of such information
practices, books, correspondence and records furnished to it and (b) it will
not, and it will use its best efforts (in the case of the Surety Bond Provider,
consistent with Section 2.02 of the Insurance Agreement) to ensure that its
agents and representatives will not, make any use whatsoever (other than for
purposes contemplated by this
25
Agreement) of any of such information practices, computer tapes books,
correspondence and records without the prior written consent of the Back-up
Servicer, unless such information (i) is generally available to the public, (ii)
is required by law, regulation, or court order to be disclosed or is requested
by any governmental authority having authority over the Secured Parties, or is
necessary to preserve any of the Secured Parties' rights under or to enforce any
provision of the Security Agreement, or (iii) is required by the Rating Agencies
in connection with their rating of the related Commercial Paper or the implied
rating of the facility.
2.21. ENFORCEMENT.
(a) The Servicer will, consistent with the standard of care required
by Section 2.18 hereof, act with respect to the Receivables and the Insurance
Policies in such manner as will, in the reasonable judgment of the Servicer,
maximize the amount to be received by the Collateral Agent with respect thereto.
(b) The Servicer shall to the extent consistent with the servicing
standards set forth in Section 2.18, including the Collection Policy, or at the
written direction of the Surety Bond Provider ▇▇▇ to enforce or collect upon the
Receivables and the Insurance Policies (including unpaid claims), in its own
name, if possible, or as agent for the Debtor or the Collateral Agent. If the
Servicer commences a legal proceeding to enforce a Receivable or an Insurance
Policy, the act of commencement shall be deemed to be an automatic assignment of
the Receivable and the related rights under the Insurance Policies by the Debtor
to the Servicer for purposes of collection only. If, however, in any enforcement
suit or legal proceeding it is held that the Servicer may not enforce a
Receivable or an Insurance Policy on the grounds that it is not a real party in
interest or a holder entitled to enforce the Receivable or the Insurance Policy,
the Debtor shall, at the Servicer's request, assign the Receivable or the
Insurance Policy to the Servicer to the limited extent necessary to enforce the
Receivable or the Insurance Policy, or take such steps as the Debtor deems
necessary to enforce the Receivable or the Insurance Policy, including bringing
suit in its name.
(c) The Servicer shall exercise any rights of recourse against third
persons that exist with respect to any Receivable in accordance with the
standard of care required by Section 2.18 hereof. In exercising such recourse
rights, the Servicer is hereby authorized on the Debtor's behalf to reassign the
Receivable and to deliver the certificate of title to the Financed Vehicle to
the person against whom recourse exists at the price set forth in the document
creating the recourse.
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(d) The Servicer may grant to the Obligor on any Receivable that has
been repaid in full any rebate, refund or adjustment that the Servicer in good
faith believes is required because of prepayment in full of the Receivable, and
may deduct the amount of any such rebate, refund or adjustment from the amount
otherwise payable by the Servicer into the Collection Account. The Servicer may
not permit any rescission or cancellation of any Receivable nor may it take any
action with respect to any Receivable or Insurance Policy which would materially
impair the rights of the Collateral Agent, the Surety Bond Provider or the
Noteholder therein or in the proceeds thereof.
2.22. PAYMENT IN FULL ON RECEIVABLE. Upon payment in full on any
Receivable, the Servicer shall notify the Collateral Agent prior to the next
succeeding Determination Date by a certificate and Request for Release of
Receivable File substantially in the form of Exhibit C hereto (which certificate
shall include a statement of an officer of the Servicer to the effect that all
amounts received in connection with such payment in full which are required to
be deposited in the Collection Account pursuant to Sections 3.02 and 3.03 hereof
have been so deposited).
2.23. DUTIES OF BACK-UP SERVICER.
(a) The Back-up Servicer will perform the services set forth in this
Section 2.23 which shall not be delegated to the Servicer. The Back-up Servicer
shall, unless it is prohibited as a matter of law, as evidenced by an opinion of
counsel provided for in Section 5.08 and unless a different Successor Servicer
is appointed by the Surety Bond Provider, service the Receivables upon receipt
of written notice of a Servicer Termination Event by the Servicer under this
Servicing Agreement. The Back-up Servicer will, on a periodic basis, perform the
functions specified in this Section 2.23, provided that the Back-up Servicer
shall be entitled to request of and receive from the Collateral Agent and the
Servicer, as appropriate, all information necessary to conduct tests or make
reports in a timely manner as specified below and, except as otherwise specified
herein, the Back-up Servicer shall be entitled to assume for all purposes that
the information received by it is true, correct and complete, and the Back-up
Servicer shall be fully protected in relying upon such information without any
independent investigation or audit to prove the facts stated therein. The
Back-up Servicer shall utilize such methods as it deems reasonable and necessary
to reconcile information provided by the Servicer with the cash balances held by
the Collateral Agent.
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(b) Prior to each Remittance Date, the Back-up Servicer shall review
the Monthly Servicer Report related thereto and shall:
(i) determine that such Monthly Servicer Report is
complete on its face;
(ii) review the amounts on deposit in the Collection Account
against the monthly distribution amounts set forth in such Monthly Servicer
Report and reasonably determine whether the amount on deposit is sufficient to
pay such distribution amounts; and
(iii) determine the amount on deposit in the Reserve Account.
(c) The Back-up Servicer shall, within 30 days of the receipt
thereof, load the computer tape or diskette received from the Servicer pursuant
to Section 2.02(f) hereof, and confirm that such computer tape or diskette is in
readable form and calculate and confirm the aggregate Principal Balance of
Receivables as of the most recent Remittance Date.
In addition, the Back-up Servicer shall confirm that the Delinquency
Ratio, Average Delinquency Ratio and Net Default Ratio as set forth in the
Monthly Servicer Report, are accurate based solely on a comparison to the
computer tape referred to above.
(d) In the event of any discrepancy between the information set
forth in subparagraphs (b) and (c), as calculated by the Servicer, from that
determined or calculated by the Back-up Servicer, the Back-up Servicer shall
promptly notify the Servicer, the Collateral Agent, the Noteholder and the
Surety Bond Provider of such discrepancy. If within ten days of such notice
being provided to the Servicer, the Back-up Servicer and the Servicer are unable
to resolve such discrepancy, the Back-up Servicer shall promptly notify the
Rating Agencies, the Surety Bond Provider, the Collateral Agent, the Noteholder
and any other Persons identified on a list provided to the Back-up Servicer, as
such list may be amended from time to time, of such discrepancy.
(e) Other than as specifically set forth elsewhere in this Servicing
Agreement, the Back-up Servicer shall have no obligation to supervise, verify,
monitor or administer the performance of the Servicer and shall have no
liability for any action taken or omitted by the Servicer.
(f) The Back-up Servicer shall consult fully with the Servicer as
may be necessary from time to time to perform or carry out the Back-up
Servicer's obligations hereunder, including the
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obligation, if requested by the Surety Bond Provider, to succeed at any time to
the duties and obligations of the Servicer as servicer under Section 5.02
hereof.
2.24. ASSUMPTION OF DUTIES BY BACK-UP SERVICER. At any time following the
assumption of duties of the Servicer by the Back-up Servicer or the designation
of a Successor Servicer pursuant to section 2.01(c), the Servicer shall, at the
Collateral Agent's or the Surety Bond Provider's request, (A) assemble all of
the records relating to the Collateral including all Receivable Files, and shall
make the same available to the Collateral Agent and the Surety Bond Provider at
a place selected by the Collateral Agent and the Surety Bond Provider or its
designee, and (B) segregate all cash, checks and other instruments received by
it from time to time constituting collections of Collateral in a manner
acceptable to the Collateral Agent and the Surety Bond Provider and shall
promptly upon receipt but no later than one Business Day after receipt, remit
all such cash, checks and instruments, duly endorsed or with duly executed
instruments of transfer, to the Collection Account Depository or its designee.
2.25. ERRORS AND OMISSIONS INSURANCE. The Servicer has obtained, and shall
continue to maintain in full force and effect, errors and omissions insurance
and employee theft insurance of a type and in such amount as is customary for
servicers engaged in the business of servicing automobile receivables. The scope
of such insurance coverage shall include the acts and omissions of Subservicers
or, if that is not the case with respect to any Subservicer, the Servicer shall
require such Subservicer to maintain such insurance or a bond substantially
equivalent thereto. Annually and more frequently upon request of the Debtor, the
Surety Bond Provider, the Collateral Agent or the Back-up Servicer, the Servicer
shall cause to be delivered to the Collateral Agent a certification evidencing
coverage under such insurance. Any such insurance shall not be canceled or
modified in a materially adverse manner without thirty days' prior written
notice to the Debtor, the Surety Bond Provider, the Collateral Agent, the
Noteholder and the Rating Agencies. No provision of this Section 2.25 requiring
the maintenance of insurance shall diminish or relieve the Servicer from its
duties and obligations as set forth in this Servicing Agreement.
2.26. RESPONSIBILITIES OF BACK-UP SERVICER AND SERVICER. Neither the
Back-up Servicer nor the Servicer shall have any duties, obligations or
responsibilities other than those specifically expressed and set forth herein
and no implied obligations of the Back-up Servicer or the Servicer shall be read
into this Servicing Agreement. Neither the Back-up Servicer nor
29
the Servicer nor any of their respective directors, officers, agents or
employees shall be liable to any person, including, without limitation, the
Servicer or the Back-up Servicer, as the case may be, or the Debtor, the Surety
Bond Provider, the Collateral Agent or the Noteholder in connection with this
Servicing Agreement, except for the breach of any of its representations and
warranties or obligations under this Servicing Agreement or for the negligence,
bad faith or willful misconduct of the Back-up Servicer or the Servicer, as the
case may be, or any of their respective officers, directors, agents or
employees. The Back-up Servicer may rely on and shall be protected in acting
upon, or in refraining from acting in accordance with, any resolution, officer's
certificate, certificate of auditors or any other certificate, instrument,
opinion, report, notice, request, consent, order, appraisal, bond or other paper
or document reasonably believed by it to be genuine and correct and to have been
signed or presented by the proper person or persons. Without limiting the
foregoing, the Back-up Servicer (i) may consult, at its expense, with legal
counsel (including the Collateral Agent's or the Back-up Servicer's),
independent public accountants and other experts selected by it with reasonable
care and shall not be liable for any action reasonably taken or omitted to be
taken by it in accordance with the advice of such counsel, accountants or
experts, (ii) shall not be responsible to the Debtor, the Surety Bond Provider,
the Servicer, the Collateral Agent or any other person for any recitals,
statements, warranties or representations made in or in connection with this
Servicing Agreement, the Transaction Documents or any other agreement, document
or instrument executed in connection therewith by any other person, (iii) shall
not be responsible for the actions or omissions of any other person, including,
without limitation, the Servicer, the Seller, the Debtor, the Surety Bond
Provider, the Collateral Agent and the Noteholder unless such act or omission
was caused by an act or omission of the Back-up Servicer, (iv) except as
provided in this Servicing Agreement or any Transaction Document, shall not have
any duty to ascertain or to inquire as to the performance or observance of any
of the terms, covenants or conditions of the Security Agreement or any other
Transaction Document on the part of any person, or to inspect the property
(including the books and records) of the Seller, the Surety Bond Provider, the
Debtor or the Servicer, (v) except as otherwise provided herein, shall not be
charged with the knowledge of any breach of representation or warranty by any
other Person, or the failure of any other Person to comply with its obligations,
hereunder or under any other Transaction Document, or of the occurrence of any
Servicer Termination Event unless a responsible officer of the Back-up Servicer
has received written notice of the same from the Servicer, the Surety Bond
Provider or the Collateral Agent, as the case may
30
be, or otherwise has actual knowledge of such breach or Servicer Termination
Event, (vi) shall not be responsible to any Person for the due execution,
legality, validity and enforceability against the other parties of this
Servicing Agreement, and (vii) shall incur no liability under or in respect of
this Servicing Agreement by acting upon any notice (including notice by
telephone), consent, certificate or other instrument or writing (which may be
telex or telecopy) reasonably believed by it to be genuine and signed, sent or
communicated by the proper party or parties.
It is agreed and understood that the Back-up Servicer is responsible
for providing the services described in Section 2.23 only in accordance with the
information as shall have been timely supplied to it by the Servicer, the
Collateral Agent or the Collection Account Depository, as the case may be. The
Back-up Servicer shall incur no liability for any failure by the Servicer, the
Collateral Agent or the Collection Account Depository to furnish information
required of it, nor shall the Back-up Servicer be responsible for the content or
accuracy of any information provided to it by any such Person, unless required
by the Transaction Documents to do so. Except as may be expressly provided
herein or in the Security Agreement, the Back-up Servicer shall have no duty to
supervise, investigate or audit any records or activities of the Servicer with
respect to the servicing of the Collateral. The Back-up Servicer shall have no
responsibility or liability for any acts or omissions of the Servicer with
respect to the Collateral.
The Back-up Servicer shall not be required to expend or risk its own
funds or otherwise incur financial liability in the performance of any of its
duties hereunder, or in the exercise of any of its rights or powers, if the
repayment of such funds or adequate written indemnity against such risk or
liability is not reasonably assured to it in writing prior to the expenditure or
risk of such funds or incurrence of financial liability.
2.27. RE-▇▇▇▇▇▇▇. Upon the occurrence of a Re-▇▇▇▇▇▇▇ Trigger, the Surety
Bond Provider may instruct the Collateral Agent and the Servicer to take or
cause to be taken such actions as may, in the judgment of the Surety Bond
Provider or its counsel, be necessary to perfect or re-perfect the security
interests in the Financed Vehicles in the name of the Collateral Agent by
amending the title documents relating to such Financed Vehicles or by such other
reasonable means as may, in the judgment of the Surety Bond Provider or its
counsel, be necessary or prudent. The Collateral Agent and the Servicer shall
take or cause to be taken such actions. The Servicer hereby agrees to pay for
all Re-▇▇▇▇▇▇▇ Expenses related to such perfection or re-perfection and to take
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all action necessary therefor, including the preparation, execution and delivery
of all such documents as may be requested by the Collateral Agent or the
Servicer in connection therewith. The Servicer shall on the date hereof grant to
the Collateral Agent an irrevocable power of attorney, pursuant to which the
Servicer shall appoint the Collateral Agent as its attorney-in-fact, such
appointment being coupled with an interest, to take any and all steps required
to be performed by it pursuant to this Section 2.27 including execution of
certificates of title or any other documents in the name and stead of the
Servicer. If at any time a Person other than Auto Lenders Acceptance Corporation
becomes the Servicer, Auto Lenders Acceptance Corporation shall grant to such
Successor Servicer, promptly after its appointment as such, a power of attorney
as described in the preceding sentence.
ARTICLE III.
ACCOUNTS; COLLECTIONS
3.01. ACCOUNTS. There has been established pursuant to the Security
Agreement the Collection Account in the name of the Collateral Agent for the
benefit of the Noteholder and the Surety Bond Provider.
3.02. COLLECTIONS.
(a) The Servicer shall remit or cause a Subservicer to remit first,
to a lockbox account maintained with the Collection Account Depository and
second, to the Collection Account described in Section 3.03 hereof, and to no
other account, as soon as practicable, but in no event later than the Collection
Account Depository's close of business on the Business Day after receipt thereof
in the lockbox, all Collections received during the Collection Period, in
respect of a Receivable being serviced by the Servicer, and all payments or
other amounts, if any, made by or on behalf of an Obligor or received by the
Servicer with respect to any Receivable.
(b) With respect to checks or drafts (i) issued by an insurer for
payment of loss on Receivables, (ii) made payable to the named insured, the
Collateral Agent or any other Person, and (iii) received by the Servicer, the
Servicer shall take all necessary action to document the receipt of each such
draft on the day of receipt thereof and forward the original draft by reputable
overnight courier to the Collateral Agent at the address set forth in Section
7.03 hereof for receipt by the Collateral Agent on the following Business Day
for immediate endorsement and return to the Servicer via overnight courier.
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3.03. COLLECTION ACCOUNT AND ACKNOWLEDGEMENT LETTER.
(a) The trust department of the Collateral Agent is hereby
designated as the initial Collection Account Depository with respect to the
Receivables serviced under this Servicing Agreement. The Debtor shall provide
thirty days' notice to the Servicer, the Collateral Agent, the Surety Bond
Provider and the Back-up Servicer of its appointment of a successor Collection
Account Depository which shall be acceptable to the Rating Agencies, the Surety
Bond Provider and the Collateral Agent and which shall hold the Collection
Account under the terms and conditions outlined herein and in the Security
Agreement.
(b) Except as otherwise provided herein, the Servicer shall deposit
or cause to be deposited into the Collection Account all amounts (including late
payments) remitted by Obligors to the Servicer under the terms of the
Receivables within one Business Day after receipt thereof by the lockbox;
provided, however, that the Servicer shall be entitled to reimbursement of all
amounts remitted by or on behalf of the Obligors to the Servicer under the terms
of, or with respect to, the Receivables, which amounts represent late fees or
prepayment charges, including administrative fees or similar charges allowed by
applicable law.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
4.01. REPRESENTATIONS AND WARRANTIES OF THE SERVICER. The initial Servicer
hereby represents, warrants and covenants to the Back-up Servicer, the Debtor,
the Surety Bond Provider, the Noteholder and the Collateral Agent that as of the
date of this Servicing Agreement and, for so long as the initial Servicer shall
continue to act as Servicer hereunder:
(a) The Servicer is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware;
(b) All necessary corporate, regulatory or other similar action has
been taken to authorize and empower the Servicer and the officers or
representatives acting on the Servicer's behalf, and the Servicer has full power
and authority to execute, deliver and perform this Servicing Agreement;
(c) This Servicing Agreement has been duly authorized, executed and
delivered by the Servicer and the performance and compliance with the terms of
this Servicing Agreement will not
33
violate the Servicer's certificate of incorporation or bylaws or constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, or result in the breach of, any Transaction
Document or any other contract, loan, lease, credit agreement or any other
agreement or instrument to which the Servicer is a party or which may be
applicable to the Servicer or any of its assets;
(d) The Servicer is duly licensed and qualified to perform the
functions specified herein and this Servicing Agreement constitutes a valid,
legal and binding obligation of the Servicer, enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
and other laws affecting the enforcement of creditors' rights generally and to
general principles of equity;
(e) The Servicer is not in violation of, and the execution, delivery
and performance of this Servicing Agreement by the Servicer will not constitute
a violation with respect to any order or decree of any court or any order,
regulation or demand of any federal, state, municipal or governmental agency,
which violation might have consequences that would materially and adversely
affect the condition (financial or other) or operations of the Servicer or its
properties or might have consequences that would affect the performance of its
duties hereunder;
(f) No proceeding of any kind, including but not limited to
litigation, arbitration, judicial or administrative, is pending or threatened
against or contemplated by the Servicer which would under any circumstance have
an adverse effect on the execution, delivery, performance or enforceability of
this Servicing Agreement;
(g) No information, officer's certificate or statement furnished in
writing or report delivered to the Collateral Agent, the Debtor, the Surety Bond
Provider, the Back-up Servicer or the Noteholder by the Servicer required under
this Servicing Agreement contains any untrue statement of a material fact or
omits a material fact necessary to make the information, certificate, statement
or report not misleading; provided, that the Servicer makes no representation or
warranty with respect to any information incorporated into or forming the basis
of any officer's certificate, information, statement or report provided by the
Servicer that is provided to the Servicer by any other Person;
(h) The Servicer has the knowledge, the experience and the systems,
financial and operational capacity available to timely perform each of its
obligations hereunder; and
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(i) The Servicer has, with respect to the Receivables, complied in
all material respects with the Collection Policy.
4.02. REPRESENTATIONS AND WARRANTIES OF THE BACK-UP SERVICER. The Back-up
Servicer hereby represents, warrants and covenants to the Debtor, the Surety
Bond Provider, the Noteholder, the Servicer and the Collateral Agent that as of
the date hereof or as of such date specifically provided herein:
(a) The Back-up Servicer is a national banking association duly
organized, validly existing and authorized to engage in a banking business under
the federal laws of the United States of America;
(b) All necessary corporate, regulatory or other action has been
taken to authorize and empower the Back-up Servicer and the officers or
representatives acting on the Back-up Servicer's behalf to perform and comply
with the Back-up Servicer's obligations under this Servicing Agreement, and the
Back-up Servicer has full power and authority, to execute, deliver and perform
this Servicing Agreement;
(c) The execution and delivery of this Servicing Agreement by the
Back-up Servicer and its performance and compliance with the terms of this
Servicing Agreement will not violate the Back-up Servicer's articles of
association or bylaws or constitute a default (or an event which, with notice or
lapse of time, or both, would constitute a default) under, or result in the
breach of, any material contract, security agreement, loan, credit agreement or
any other agreement or instrument to which the Back-up Servicer is a party or
which may be applicable to the Back-up Servicer or any of its assets;
(d) This Servicing Agreement constitutes a legal, valid and binding
obligation of the Back-up Servicer, enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium and
other similar laws affecting the enforcement of creditors' rights generally and
to general principles of equity;
(e) The Back-up Servicer is not in violation of, and the execution,
delivery and performance of this Servicing Agreement by the Back-up Servicer
will not constitute a violation with respect to, any applicable order or decree
of any court or any order, regulation or demand of any federal, state, municipal
or governmental agency, which violation might have consequences that would
materially and adversely affect the condition (financial or other) or operations
of the Back-up Servicer or its properties or
35
might have consequences that would materially adversely affect the performance
of its duties hereunder;
(f) No proceeding of any kind, including but not limited to
litigation, arbitration, judicial or administrative, is pending or, to the
knowledge of the Back-up Servicer, contemplated or threatened against the
Back-up Servicer which would under any circumstance have an adverse effect on
the execution, delivery, performance or enforceability of this Servicing
Agreement by or against the Back-up Servicer; and
(g) No certificate of an officer of the Back-up Servicer, statement
of the Back-up Servicer furnished in writing or report of the Back-up Servicer
delivered to the Debtor, the Surety Bond Provider, the Collateral Agent, the
Servicer or any Noteholder by the Back-up Servicer required under this Servicing
Agreement contains any untrue statement of a material fact or omits a material
fact necessary to make the officer's certificate, statement or report not
misleading; provided, that the Back-up Servicer makes no representation or
warranty with respect to any information incorporated into or forming the basis
of any certificate, statement or report that is provided to the Back-up Servicer
by any other Person.
4.03. REPRESENTATIONS AND WARRANTIES OF THE DEBTOR. The Debtor hereby
represents, warrants and covenants to the Back-up Servicer, the Servicer, the
Noteholder, the Surety Bond Provider and the Collateral Agent that as of the
date of this Servicing Agreement or as of such date specifically provided
herein:
(a) The Debtor is a corporation duly organized and validly existing
under the laws of the State of Delaware and has full power and authority to
execute and deliver this Servicing Agreement and to perform the terms and
provisions hereof;
(b) The execution, delivery and performance by the Debtor of this
Servicing Agreement have been duly authorized by all necessary action by the
Debtor, do not require any approval or consent of any Person, do not and will
not conflict with any material provision of the certificate of incorporation of
bylaws of the Debtor, and do not and will not conflict with or result in a
breach which would constitute a material default under any agreement binding
upon or applicable to it or such of its property which is material to it, or any
law or governmental regulation or court decree applicable to it or such material
property, and this Servicing Agreement is the legal, valid and binding
obligation of the Debtor enforceable in accordance with its terms except as the
same may be limited by insolvency, bankruptcy, reorganization or
36
other laws relating to or affecting the enforcement of creditors' rights or by
general equity principles; and
(c) No litigation or administrative proceeding of or before any
court, tribunal or governmental body is presently pending, or to the knowledge
of the Debtor threatened, against the Debtor or its properties or with respect
to this Servicing Agreement, which, if adversely determined would, in the
opinion of the Debtor, have a material adverse effect on the transactions
contemplated by this Servicing Agreement.
4.04. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties set forth in this Article IV are continuous and shall survive the
date of this Servicing Agreement. Upon discovery by any of the Debtor, the
Collateral Agent, the Back-up Servicer or the Servicer of a breach of any of the
foregoing representations and warranties, the party discovering such breach
shall give prompt written notice to the other parties hereto, including the
Surety Bond Provider and the Collateral Agent.
4.05. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE OBLIGATIONS OF, OR
RESIGNATION OF SERVICER. Any Person (a) into which the Servicer may be merged or
consolidated, (b) which may result from any merger or consolidation to which the
Servicer shall be a party, (c) which may succeed to the properties and assets of
the Servicer substantially as a whole, or (d) which may succeed to the duties
and obligations of the Servicer under this Servicing Agreement following the
resignation of the Servicer subject to Section 2.01 hereof, which Person
executes an agreement of assumption to perform every obligation of the Servicer
hereunder, shall, with the prior written consent of the Surety Bond Provider, be
the successor to the Servicer under this Servicing Agreement without further act
on the part of any of the parties to this Servicing Agreement; provided,
however, that (i) prior written notice of such merger, consolidation or
assumption of liabilities shall be delivered by the Servicer to the Surety Bond
Provider and the Noteholder, (ii) immediately after giving effect to such
transaction, no Servicer Termination Event (as defined in Section 5.01), and no
event which, after notice or lapse of time, or both, would become a Servicer
Termination Event shall have occurred or be continuing, (iii) no Termination
Event, Wind-Down Event, Amortization Event or Re-▇▇▇▇▇▇▇ Trigger would occur as
a result of such merger, consolidation or assumption of liability, (iv) the
Servicer shall have delivered to the Debtor, the Surety Bond Provider, the
Back-up Servicer, the Noteholder and the Collateral Agent an officer's
certificate and an opinion of counsel each stating that such consolidation,
merger, succession or resignation
37
and such agreement of assumption comply with this Section 4.05 and that all
conditions precedent provided for in this Servicing Agreement relating to such
transaction have been complied with and (v) the Servicer shall have delivered to
the Debtor, the Surety Bond Provider, the Back-up Servicer and the Collateral
Agent an opinion of counsel either (A) stating that, in the opinion of such
counsel, all financing statements, continuation statements and amendments and
notations on certificates of title thereto have been executed and filed that are
necessary fully to preserve and protect the interest of the Debtor, the
Noteholder, the Surety Bond Provider and the Collateral Agent in the Receivables
and the Financed Vehicles, and reciting the details of such filings, or (B)
stating that, in the opinion of such counsel, no such action shall be necessary
to preserve and protect such interest.
ARTICLE V.
DEFAULT, REMEDIES AND INDEMNITY
5.01. SERVICER TERMINATION EVENTS. Any of the following acts or
occurrences shall constitute a "Servicer Termination Event" under this Servicing
Agreement:
(a) any failure by the Servicer to make any payment, transfer or
deposit to the Collateral Agent on the date such payment, transfer or deposit is
required to be made;
(b) any failure by the Servicer or Back-up Servicer to provide any
notices to the Collateral Agent and the Surety Bond Provider pursuant to this
Servicing Agreement relating to the transfer or calculation of funds;
(c) failure on the part of the Servicer or Back-up Servicer to duly
observe or perform in any material respect any other covenants or agreements of
the Servicer or Back-up Servicer, respectively, set forth in this Servicing
Agreement; or the Servicer or the Back-up Servicer shall assign its respective
duties hereunder (except as expressly permitted herein);
(d) any representation, warranty or certification made by the
Servicer or Back-up Servicer or any successor to either in this Servicing
Agreement, or any certificate delivered pursuant to this Servicing Agreement,
shall prove to have been incorrect when made, which has a material adverse
effect on the Noteholder or the Surety Bond Provider;
(e) the Servicer or Back-up Servicer shall consent to the
appointment of a conservator or receiver or liquidator in any
38
insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceedings of or relating to the Servicer or Back-up Servicer,
respectively, or of or relating to all or substantially all of their respective
properties; or a decree or order of a court or agency or supervisory authority
having jurisdiction in the premises for the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt, marshalling of
assets and liabilities or similar proceedings, or for the winding-up or
liquidation of its affairs, shall have been entered against the Servicer or
Back-up Servicer or Successor Servicer or Successor Back-up Servicer and such
decree or order shall have remained in force undischarged or unstayed for a
period of 60 days; or the Servicer or Back-up Servicer or any successor to
either shall admit in writing its inability to pay its debts generally as they
become due, file or have filed against it a petition or commence an action to
take advantage of any applicable insolvency or reorganization statute, make any
assignment for the benefit of its creditors or voluntarily suspend payment of
its obligations;
(f) the Servicer or the Back-up Servicer or any successor to either
shall fail to be an Eligible Servicer as determined by the Surety Bond Provider;
(g) the Servicer makes any material changes to its Collection Policy
with respect to the Receivables without the consent of the Surety Bond Provider,
which consent shall not be unreasonably withheld; or
(h) a Termination Event (as defined in the Security Agreement)
occurs which has not been waived by the Surety Bond Provider or, if a Surety
Default has occurred and is continuing, the Noteholder.
5.02. REMEDIES.
(a) If a Servicer Termination Event shall occur and be continuing,
the Surety Bond Provider (or, if a Surety Default shall have occurred and be
continuing, either the Collateral Agent (to the extent an officer of the
Collateral Agent has actual knowledge thereof), the Debtor, or Noteholder), by
notice given in writing to the Servicer or the Back-up Servicer, as the case may
be ("Termination Notice") (with copies to the Collateral Agent and the Debtor if
given by the Surety Bond Provider or Noteholder), may terminate all of the
rights and obligations of the Servicer or the Back-up Servicer, as the case may
be, under this Servicing Agreement (except as set forth in Section 5.03). On or
after the receipt by the Servicer of such Termination Notice, all authority,
39
power, obligations and responsibilities of the Servicer under this Servicing
Agreement, whether with respect to the Receivables, or otherwise, automatically
shall pass to, be vested in and become obligations and responsibilities of the
Back-up Servicer (or such other Successor Servicer appointed in accordance
herewith); provided, however, that the Successor Servicer shall have no
liability with respect to any obligation which was required to be performed by
the terminated Servicer prior to the date that the Successor Servicer becomes
the Servicer or any claim based on any alleged action or inaction of the
terminated Servicer. The Successor Servicer is authorized and empowered by this
Agreement to execute and deliver, on behalf of the terminated Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments and
to do or accomplish all other acts or things necessary or appropriate to effect
the purposes of such Termination Notice, whether to complete the transfer and
endorsement of the Receivables and related documents to show the Debtor or the
Collateral Agent as lienholder or secured party on the related title documents,
or otherwise. The terminated Servicer agrees to cooperate with the Successor
Servicer in effecting the termination of the responsibilities and rights of the
terminated Servicer under this Servicing Agreement, including, without
limitation, the transfer to the Successor Servicer for administration by it of
all cash amounts that shall at the time be held by the terminated Servicer for
deposit, or have been deposited by the terminated Servicer, in the Collection
Account or thereafter received with respect to the Receivables and the delivery
to the Successor Servicer of all Servicer Files, collection records and a
computer tape in readable form as of the most recent Business Day containing all
information necessary to enable the Back-up Servicer or other Successor
Servicer, as the case may be, to service the Receivables. If requested by the
Surety Bond Provider, the Successor Servicer shall direct the Obligors then
making payments directly to the Servicer to make all payments under the
Receivables directly to the Successor Servicer (in which event the Successor
Servicer shall process all such payments in accordance with Section 3.03(b)), or
to a lockbox established by the Successor Servicer at the direction of the
Surety Bond Provider. The terminated Servicer shall grant the Debtor, the
Collateral Agent, the Noteholder, the Successor Servicer and the Surety Bond
Provider reasonable access to the terminated Servicer's premises at the
terminated Servicer's expense. Subject to Section 2.08(b), the Successor
Servicer shall be entitled to be reimbursed pursuant to Section 5.1(xi) of the
Security Agreement for reasonable costs incurred by it in connection with a
transfer of servicing from the Servicer to such Successor Servicer.
40
(b) On and after the time the Servicer receives a Termination Notice
pursuant to Section 5.02(a), the Back-up Servicer (unless the Surety Bond
Provider shall have exercised its option pursuant to the following paragraph to
appoint an alternate Successor Servicer) shall be the successor in all respects
to the Servicer in its capacity as servicer under this Servicing Agreement and
the transactions set forth or provided for in this Servicing Agreement, and
shall be subject to all the rights, responsibilities, restrictions, duties,
liabilities and termination provisions relating thereto placed on the Servicer
by the terms and provisions of this Servicing Agreement except as otherwise
stated herein. The Debtor and such successor shall take such action, consistent
with this Servicing Agreement, as shall be necessary to effectuate any such
succession. If a Successor Servicer is acting as Servicer hereunder, it shall
only be subject to termination under Section 5.02 upon the occurrence of any
Servicer Termination Event with respect to such Successor Servicer.
(c) On and after the receipt by the terminated Servicer of a
Termination Notice pursuant to this Section 5.02, the terminated Servicer shall
continue to perform all servicing functions under this Servicing Agreement until
the date specified in the Termination Notice. The Surety Bond Provider may
exercise at any time its right to appoint as Successor Back-up Servicer or as
Successor Servicer a Person other than the Person serving as Collateral Agent or
Back-up Servicer, as the case may be, at the time, and (without limiting the
Surety Bond Provider's obligations under the Surety Bond with respect to the
Note) shall have no liability to the Debtor, the Collateral Agent, the Person
then serving as Back-up Servicer, any Noteholder or any other Person if it does
so. If a Successor Servicer is not chosen within 90 calendar days after the
receipt by the Servicer of the Termination Notice, the Back-up Servicer shall
act as Successor Servicer unless it is legally unable to do so, in which event
the outgoing Servicer shall continue to act as Servicer until a successor has
been appointed and accepted such appointment. If the Back-up Servicer shall be
legally unable to act as Servicer, and a Surety Default shall have occurred and
be continuing, the Back-up Servicer, the Collateral Agent, the Noteholder or the
Debtor may petition a court of competent jurisdiction to appoint an Eligible
Servicer as the Successor Servicer. Notwithstanding the above, no provision of
this Servicing Agreement shall be construed as relieving the Back-up Servicer of
its obligation to succeed as Successor Servicer upon the termination of the
Servicer pursuant to this Section 5.02 or the resignation of the Servicer
pursuant to Section 5.08. If, upon the termination of the Servicer pursuant to
this Section 5.02 or the resignation of the Servicer pursuant to Section 5.08,
the Surety Bond Provider appoints a Successor Servicer other than the
41
Back-up Servicer, the Back-up Servicer shall not be relieved of its duties as
Back-up Servicer hereunder. Within 30 days of termination of the Servicer, if
such termination causes a change in the address to which Obligor payments are to
be sent, the Successor Servicer shall send, or cause to be sent, to each
Obligor, a written notice of the name and mailing address of the Successor
Servicer to which payments on the Receivables are to be made.
(d) The Surety Bond Provider or, if a Surety Default has occurred
and is continuing, the Collateral Agent with approval of the Noteholder shall as
promptly as possible appoint a Successor Back-up Servicer following delivery of
a Termination Notice with respect to the Back-up Servicer. If the Surety Bond
Provider shall fail to approve a Successor Back-up Servicer within 30 days of
the date of a Termination Notice, the Collateral Agent may petition a court of
competent jurisdiction for the appointment of a Successor Back-up Servicer.
Notwithstanding the above, the Collateral Agent shall, if it is legally unable
so to act, petition a court of competent jurisdiction to appoint any Eligible
Servicer as the Successor Back-up Servicer hereunder.
(e) Upon its appointment, the Successor Servicer or Successor
Back-up Servicer, as the case may be, shall be the successor in all respects to
the terminated Servicer or Back-up Servicer, as the case may be, with respect to
servicing functions under this Servicing Agreement and shall be subject to all
the responsibilities, duties and liabilities (arising on and after the time of
such appointment except for liability arising from the condition of the
Servicer's records at the time the servicing duties are transferred to the
Back-up Servicer or other Successor Servicer or for actions or omissions of
other Persons) relating thereto placed on the Servicer or Back-up Servicer,
respectively, by the terms and provisions hereof (except as otherwise provided
in this Servicing Agreement with respect to the Back-up Servicer acting as
Servicer), and all references in this Servicing Agreement to the Servicer or
Back-up Servicer shall be deemed to refer to the Successor Servicer or Successor
Back-up Servicer unless the context otherwise requires.
(f) In connection with such appointment and assumption, the Back-up
Servicer may make such arrangements for the compensation of itself and the
Successor Servicer out of collections of Receivable payments, as it and such
Successor Servicer shall agree; provided, however, that no such compensation
shall be in excess of the Back-up Servicing Fees and Servicing Fees permitted to
the Back-up Servicer and the Servicer, respectively, pursuant to this Servicing
Agreement without the approval of the
42
Surety Bond Provider or, if a Surety Default has occurred and is continuing, the
Noteholder.
5.03. INDEMNITY BY THE SERVICER. The Servicer shall be liable to the
Debtor, the Surety Bond Provider, the Collateral Agent, the Noteholder and the
Back-up Servicer (collectively, the "Indemnified Parties") to the extent of the
following:
(a) The Servicer shall indemnify, defend and hold harmless the
Indemnified Parties and any of the officers, directors, employees and agents of
the Indemnified Parties from and against any and all costs, expenses, losses,
damages, claims and liabilities, including reasonable fees and expenses of
counsel and expenses of litigation, arising out of or resulting from the use,
ownership or operation by the Servicer or any affiliate thereof of a Financed
Vehicle.
(b) The Servicer shall indemnify, defend and hold harmless the
Indemnified Parties and any of the officers, directors, employees and agents of
the Indemnified Parties from and against any and all costs, expenses, losses,
claims, damages and liabilities to the extent that such cost, expense, loss,
claim, damage or liability arose out of, or was imposed upon any such Person
through the breach of this Servicing Agreement by the Servicer, the negligence,
misfeasance or bad faith of the Servicer in the performance of its duties under
this Servicing Agreement or by reason of reckless disregard of its obligations
and duties under this Servicing Agreement.
(c) The Servicer shall be strictly accountable for all payments
actually received on the Receivables.
THE FOREGOING INDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH
SECTION 5.03 LIABILITIES AND COSTS ARE IN ANY WAY OR TO ANY EXTENT OWED, IN
WHOLE OR IN PART, UNDER ANY CLAIM OR THEORY OF STRICT LIABILITY, OR ARE CAUSED,
IN WHOLE OR IN PART BY ANY NEGLIGENT ACT OR OMISSION OF ANY KIND BY ANY
INDEMNIFIED PARTY.
5.04. LIABILITY OF THE BACK-UP SERVICER. The Back-up Servicer shall not be
liable to the Servicer, the Debtor, the Surety Bond Provider, the Collateral
Agent or the Noteholder (i) by reason of any act, contract or transaction
performed in good faith by the Back-up Servicer pursuant to this Servicing
Agreement nor shall it be liable for any loss resulting therefrom or for any
lost profit derived therefrom or any errors in judgment, so long as such act,
contract or transaction shall, at the time at which it was performed or entered
into, have been reasonable and prudent under the circumstances and shall have
conformed in all material respects
43
to the express provisions of this Servicing Agreement or (ii) for any action
taken or for errors in judgment committed directly resulting from fraud,
negligence or willful misconduct of the Seller, the Debtor, the Servicer, the
Surety Bond Provider, the Collateral Agent or the Noteholder.
5.05. NOTIFICATION TO NOTEHOLDER. Upon discovery of the occurrence of any
Servicer Termination Event, after the expiration of any applicable grace period,
the Servicer or the Back-up Servicer shall give written notice of the occurrence
of a Servicer Termination Event to the Surety Bond Provider or, if a Surety
Default has occurred and is continuing, to the Noteholder, and unless the Surety
Bond Provider or, if a Surety Default has occurred and is continuing, the
Noteholder, gives written notice to the Servicer or the Back-up Servicer, as the
case may be, within seven Business days of receipt of such notice from the
Servicer or the Back-up Servicer that the Surety Bond Provider or the
Noteholder, as the case may be, have waived such Servicer Termination Event, the
Servicer or the Back-up Servicer, as the case may be, shall then give notice in
writing to the Collateral Agent, the Surety Bond Provider, the Rating Agencies,
the Debtor and any other Persons identified on a list provided to the Servicer
or the Back-up Servicer, as the case may be, as such list may be amended from
time to time, and the Collateral Agent shall give notice to the Noteholder. Upon
any termination or appointment of a Successor Servicer or Successor Back-up
Servicer pursuant to this Article V, the Collateral Agent shall give prompt
written notice thereof to the Noteholder at its address as provided in the Note
Purchase Agreement.
5.06. WAIVER OF TERMINATION EVENTS. The Surety Bond Provider or, if a
Surety Default has occurred and is continuing, the Noteholder may, waive any
Servicer Termination Event. Upon any such waiver of a Servicer Termination
Event, such default shall cease to exist, and any default arising therefrom
shall be deemed to have been remedied for every purpose of this Servicing
Agreement. No such waiver shall extend to any subsequent or other default or
impair any right consequent thereon except to the extent expressly so waived.
5.07. SURVIVAL. The agreements in Section 5.03 shall survive the
termination of the Security Agreement and the payment in full of the Note.
5.08. SERVICER AND BACK-UP SERVICER NOT TO RESIGN. Subject to the
provisions of Section 5.02, neither the Servicer nor the Back-up Servicer shall
resign from the obligations and duties imposed on it by this Servicing Agreement
as Servicer or Back-up
44
Servicer except upon a determination that by reason of a change in legal
requirements the performance of its duties under this Servicing Agreement would
cause it to be in violation of such legal requirements in a manner which would
have a material adverse effect on the Servicer or the Back-up Servicer, as the
case may be, and the Surety Bond Provider does not elect to waive the
obligations of the Servicer or the Back-up Servicer, as the case may be, to
perform the duties which render it legally unable to act or to delegate those
duties to another Person. Any such determination permitting the resignation of
the Servicer or Back-up Servicer shall be evidenced by an opinion of counsel to
such effect delivered and acceptable to the Debtor, the Collateral Agent, and
the Surety Bond Provider. No resignation of the Servicer shall become effective
until the Back-up Servicer or an entity acceptable to the Surety Bond Provider
shall have assumed the responsibilities and obligations of the Servicer. No
resignation of the Back-up Servicer shall become effective until an entity
acceptable to the Surety Bond Provider shall have assumed the responsibilities
and obligations of the Back-up Servicer; provided, however, that in the event a
successor Back-up Servicer is not appointed within 60 days after the Back-up
Servicer has given notice of its resignation and has provided the opinion of
counsel required by this Section 5.08, the Back-up Servicer may petition a court
of competent jurisdiction for its removal.
ARTICLE VI.
TERMINATION OF AGREEMENT
6.01. TERM. This Servicing Agreement shall remain in effect until
termination of the Security Agreement.
6.02. EFFECT OF TERMINATION. Upon termination of this Servicing Agreement,
the Servicer shall, at the direction of the Debtor, promptly return all Servicer
Files and any related files and correspondence in its possession as are related
to the management of the Receivables and the services provided hereunder.
6.03. TRANSFER OF SERVICING. Upon termination of this Servicing Agreement,
the Servicer shall cooperate in the transfer of the Servicer Files. Any matters
pending at the effective termination date will continue to be processed in an
orderly and timely fashion; it being intended, however, that responsibility for
the Receivables shall transfer as quickly as practicable and in any event within
thirty days after the termination date.
45
ARTICLE VII.
MISCELLANEOUS PROVISIONS
7.01. AMENDMENT. This Servicing Agreement may only be amended by mutual
written consent of the parties hereto and with the prior written consent of the
Surety Bond Provider and the Noteholder. No amendment made to the Purchase
Agreement or the Security Agreement, without the Back-up Servicer's or the
Servicer's written consent, shall be effective as to the Back-up Servicer or the
Servicer, respectively, to the extent such amendment is disadvantageous in any
respect to the Back-up Servicer or the Servicer, respectively. The Rating
Agencies and any other Persons identified on a list provided to the Debtor, as
such list may be amended from time to time, shall be given by the Debtor prior
notice of any proposed amendment to the Servicing Agreement, the Purchase
Agreement or the Security Agreement and, upon any such amendment, shall promptly
be provided by the Debtor a copy of any such amendment.
7.02. WAIVERS. The provisions of this Servicing Agreement may only be
waived by written consent of the Surety Bond Provider or, if a Surety Default
has occurred and is continuing, the Noteholder, and the parties hereto. The
failure of any party at any time to require performance by the other of any
provision of this Servicing Agreement shall in no way affect that party's right
to enforce such provision, nor shall the waiver by any party of any breach of
any provision of this Servicing Agreement be taken or held to be a waiver of any
further breach of the same provision or any other provision.
7.03. NOTICES. All notices, requests, consents and other communications
hereunder shall be in writing and shall be delivered personally or mailed by
first-class registered or certified mail, postage prepaid, or by telephonic
facsimile transmission and overnight delivery service, postage prepaid, in any
case addressed as follows:
To the Servicer:
Auto Lenders Acceptance Corporation
c/o First Investors Financial Services, Inc.
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. Duck
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
46
To the Collateral Agent/Back-up Servicer:
Norwest Bank Minnesota, National Association
Norwest Center
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Corporate Trust Services
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
To the Debtor:
First Investors Auto Receivables Corporation
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
To the Rating Agencies:
▇▇▇▇▇'▇ Investors Service, Inc.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Standard & Poor's
▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
To the Surety Bond Provider:
MBIA Insurance Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Insured Portfolio Management-
Structured Finance (IPM-SF)
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
47
To the Noteholder:
Enterprise Funding Corporation
c/o Global Securitization Services, LLC
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Such notice, request, consent or other communication shall be deemed given when
so delivered, or if mailed, two days after deposit with the U.S. Postal Service.
7.04. SEVERABILITY OF PROVISIONS. If one or more of the provisions of this
Servicing Agreement shall be held invalid for any reason, such provisions shall
be deemed severable from the remaining provisions of this Servicing Agreement
and shall in no way affect the validity or enforceability of such remaining
provisions. To the extent permitted by law, the parties hereto hereby waive any
law which renders any provision of this Servicing Agreement prohibited or
unenforceable.
7.05. RIGHTS CUMULATIVE. All rights and remedies under this Servicing
Agreement are cumulative, and none is intended to be exclusive of another. No
delay or omission in insisting upon the strict observance or performance of any
provision of this Servicing Agreement, or in exercising any right or remedy,
shall be construed as a waiver or relinquishment of such provision, nor shall it
impair such right or remedy. Every right and remedy may be exercised from time
to time and as often as deemed expedient.
7.06. NO OFFSET. Prior to the termination of this Servicing Agreement, the
obligations of the Back-up Servicer and the Servicer under this Servicing
Agreement shall not be subject to any defense, counterclaim or right of offset
which the Back-up Servicer or the Servicer may have against the other or against
the Debtor, the Seller, the Surety Bond Provider, any Noteholder or the
Collateral Agent, whether in respect of this Servicing Agreement, any Receivable
or otherwise.
7.07. INSPECTION AND AUDIT RIGHTS. The Servicer agrees that, upon prior
written notice, it will permit the Debtor, the Surety Bond Provider, the
Noteholder or the Collateral Agent and their respective representatives, during
the Servicer's normal business hours, to examine the Servicer Files, all the
books of account, records, reports and other papers of the Servicer relating to
the Receivables, to make copies and extracts therefrom, to cause
48
such books to be audited by independent public accountants selected by the
Debtor, and to discuss its affairs, finances and accounts relating to the
Receivables with its officers, employees and independent certified public
accountants, all at such reasonable times and as often as may be reasonably
requested. Any expense incident to the exercise by the Debtor, the Surety Bond
Provider or the Collateral Agent of any right under this paragraph 7.07 shall be
borne by the Servicer. The Servicer shall allow such examination within two
Business Days of receipt of the required notice if so requested by the
requesting party.
7.08. POWERS OF ATTORNEY. The Debtor shall, from time to time, provide to
the employees of the Servicer and the Collateral Agent limited, revocable powers
of attorney or other such written authorizations as may be appropriate to enable
the Servicer and the Collateral Agent to perform its respective obligations
under this Servicing Agreement and the Security Agreement; provided however,
that the Debtor shall not be required to provide such powers with respect to any
matter for which the Debtor does not have authority to perform itself.
7.09. ASSIGNMENT AND BINDING EFFECT. Except with respect to the pledge of
its rights under this Servicing Agreement by the Debtor to the Collateral Agent
pursuant to the Security Agreement and as expressly provided herein, this
Servicing Agreement may be assigned only with the written consent of the parties
hereto and the Surety Bond Provider or, if a Surety Bond Provider Default has
occurred and is continuing, the Noteholder; however, in the event of an
assignment, all provisions of this Servicing Agreement shall be binding upon and
inure to the benefit of the respective successors and assigns of the parties
hereto.
7.10. CAPTIONS. The article, paragraph and other headings contained in
this Servicing Agreement are for reference purposes only, and shall not limit or
otherwise affect the meaning hereof.
7.11. COUNTERPARTS. This Servicing Agreement may be executed in any number
of counterparts, each of which counterparts shall be deemed to be an original,
and such counterparts shall constitute but one and the same instrument.
7.12. GOVERNING LAW. This Servicing Agreement shall be deemed entered into
under and shall be governed by and interpreted in accordance with the laws of
the State of New York, except to the extent that it is mandatory that the laws
of some other jurisdiction apply.
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7.13. PARTIES. Except as set forth in Section 7.16 hereof, this Servicing
Agreement shall inure solely to the benefit of and shall be binding upon the
parties hereto, and their respective successors, legal representatives and
assigns, and no other person shall have or be construed to have any equitable
right, remedy or claim under or in respect of or by virtue of this Servicing
Agreement or any provision contained herein.
7.14. RELATIONSHIP OF THE PARTIES. The relationship of the parties to this
Servicing Agreement is that of independent contractors. Neither this Servicing
Agreement nor any of the activities contemplated hereby shall be deemed to
create any partnership, joint venture, agency or employer/employee relationship
among the Back-up Servicer, the Servicer and the Debtor.
7.15. NO BANKRUPTCY PETITION AGAINST THE DEBTOR. The Back-up Servicer, the
Servicer and the Collateral Agent agree that, prior to the date that is one year
and one day after the payment in full of the Note, none of them will institute
against the Debtor, or join any other Person in instituting against the Debtor
or the Company, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings or other proceedings under the laws of the United States
or any state of the United States. This Section 7.15 shall survive the
termination of this Servicing Agreement.
7.16. THIRD PARTY BENEFICIARIES. This Servicing Agreement shall inure to
the benefit of the Noteholder and the Surety Bond Provider and their respective
successors and assigns. Without limiting the generality of the foregoing, all
covenants and agreements in this Servicing Agreement which expressly confer
rights upon the Surety Bond Provider or the Noteholder shall be for the benefit
of and run directly to them, and each shall be entitled to rely on and enforce
such covenants to the same extent as if it were a party hereto. Notwithstanding
the foregoing, the Noteholder shall have no rights to enforce the provisions of
this Servicing Agreement so long as there is no Surety Default that is
continuing.
7.17. OTHER AGREEMENTS. The Servicer and the Back-up Servicer will not be
obligated or bound by any provision or term of any other agreement, including
the Security Agreement and the Purchase Agreement, except to the extent, and
only to the extent, expressly stated herein or therein.
7.18. PROCEDURE FOR INDEMNIFICATION. Notwithstanding
anything to the contrary in this Servicing Agreement, in the event
that a Person is entitled to indemnification pursuant to the terms
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of this Servicing Agreement, such Person (hereinafter called the "Indemnified
Party") shall promptly notify the person against whom such indemnity may be
sought (hereinafter called the "Indemnifying Party") in writing and the
Indemnifying Party, upon request of the Indemnified Party, shall retain counsel
reasonably satisfactory to the Indemnified Party or, at the Indemnified Party's
option, such Indemnified Party may select its own counsel with the consent of
the Indemnifying Party, which consent shall not be unreasonably withheld or
delayed, to represent the Indemnified Party and any others the Indemnified Party
may designate in such proceeding and shall pay the reasonable fees and
disbursements of such counsel related to such proceeding. It is understood that
the Indemnifying Party shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the reasonable fees and
expenses of more than one separate firm at any one time (in addition to any
local counsel) for all such Indemnified Parties (unless necessary because of
conflicts of interest), and all such fees and expenses shall be reimbursed as
they are incurred. Such firm shall be designated in writing by the Indemnified
Party. The Indemnifying Party shall not be liable for any settlement of any
proceeding effected without its written consent, which consent shall not be
unreasonably withheld or delayed, but if settled with such consent or if there
be an adverse final judgment, the Indemnifying Party agrees to indemnify the
Indemnified Party from and against any loss or liability by reason of such
settlement or judgment.
7.19. REPORTS TO NOTEHOLDER. Any report, notice or financial statement
delivered pursuant to this Servicing Agreement by the Servicer or the Back-up
Servicer to the Noteholder shall be provided by such Persons to the Noteholder
at the address last provided to the Servicer or the Back-up Servicer by the
Collateral Agent or such Noteholder.
7.20. PURCHASE AND SUBSEQUENT PLEDGE. The Servicer hereby acknowledges
that the Debtor will acquire the Receivables and the other items included in the
Collateral pursuant to the Purchase Agreement and will pledge the Receivables
and the other items included in the Collateral along with certain of the
Debtor's rights under this Servicing Agreement and the Purchase Agreement to the
Collateral Agent for the benefit of the Secured Parties pursuant to the terms of
the Security Agreement, and that the representations and warranties contained in
the Purchase Agreement, this Servicing Agreement and the Security Agreement and
the rights of the Debtor under the Security Agreement, this Servicing Agreement
and the Purchase Agreement are intended to benefit the Noteholder and the Surety
Bond Provider.
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7.21. EXERCISE OF RIGHTS BY SURETY BOND PROVIDER. All rights granted to
the Surety Bond Provider pursuant to this Servicing Agreement shall terminate
during the pendency of a payment default by the Surety Bond Provider under the
Surety Bond or during the pendency of a Surety Insolvency (as defined in the
Insurance Agreement as in effect on the date hereof) and during such time the
Surety Bond Provider's rights may be exercised by the Noteholder, PROVIDED,
HOWEVER, the Surety Bond Provider's rights shall be reinstated in full,
immediately upon the cure of such default or insolvency.
IN WITNESS WHEREOF, the Debtor, the Back-up Servicer, the Servicer and the
Collateral Agent have caused this Servicing Agreement to be duly executed by
their respective authorized officers as of the date and year first above
written.
First Investors Auto Receivables
Corporation, as Debtor
By: ________________________________
▇▇▇▇▇▇ ▇. Duck, Vice President
Norwest Bank Minnesota, National
Association, as Back-up Servicer
By: ________________________________
Printed Name:_______________________
Title: _____________________________
Norwest Bank Minnesota, National
Association, as Collateral Agent
By: ________________________________
Printed Name:_______________________
Title: _____________________________
Auto Lenders Acceptance Corporation,
as Servicer
By: ________________________________
▇▇▇▇▇▇ ▇. Duck, Vice President
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