Exhibit 10.23
EXECUTION
SERVICING AND CUSTODIAN AGREEMENT
AMONG
E-LOAN AUTO FUND ONE, LLC
AND
SYSTEMS & SERVICES TECHNOLOGIES, INC.
AND
E-LOAN, INC.
(AS ADMINISTRATOR)
DATED AS OF JUNE 1, 2002
*SCHEDULES AND EXHIBITS OMITTED AS NON-MATERIAL AND WILL BE PROVIDED
IN ACCORDANCE WITH ITEM 601 OF REGULATION S-K.
SYSTEMS & SERVICES TECHNOLOGIES, INC.
SERVICING AND CUSTODIAN AGREEMENT
This Servicing and Custodian Agreement (the "AGREEMENT") is entered
into as of the 1st day of June, 2002 between Systems & Services Technologies,
Inc., a corporation organized under the laws of the State of Delaware, its
permitted successors and assigns (hereinafter referred to as "SST"), as servicer
and custodian (in such capacities, the "SERVICER" and the "CUSTODIAN",
respectively), and E-Loan Auto Fund One, LLC, a Delaware limited liability
company, its permitted successors and assigns (hereinafter referred to as the
"COMPANY"). E-LOAN, Inc., a corporation organized under the laws of the State of
Delaware, joins in this Agreement as administrator for the Company (in such
capacity, the "ADMINISTRATOR") and in its individual capacity (in such capacity,
the "ORIGINATOR") for purposes of Article X hereof.
R E C I T A L S:
WHEREAS, the Servicer provides portfolio management services, including
loan administration, payment collection and processing, insurance claim
processing, custodial services and financial reporting to financial institutions
in connection with Serviced Assets (as hereinafter defined);
WHEREAS, the Company will, from time to time, purchase, inter alia,
Serviced Assets from the Originator pursuant to a Contribution and Sale
Agreement between the Company and the Originator dated as of June 1, 2002 (the
"CONTRIBUTION AND SALE AGREEMENT") and the Company pledges, inter alia, such
Serviced Assets to the Secured Party pursuant to that certain Security
Agreement, dated as of June 1, 2002 (the "SECURITY AGREEMENT"), between the
Company and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Bank USA (the "SECURED PARTY");
WHEREAS, in contemplation of the Company's purchase of the Serviced
Assets, the Company desires to appoint the Servicer (on behalf of itself and the
Secured Party) to service the Serviced Assets on the terms provided herein until
the Receivables are paid in full or otherwise terminated, or until the Company
relinquishes its ownership interest in such Serviced Assets; and
WHEREAS, the Company has assigned this Agreement to the Secured Party
under the Security Agreement, and the Secured Party is intended to be a
third-party beneficiary of this Agreement with the right to exercise all rights
and remedies of the Company under this Agreement;
NOW THEREFORE, in consideration of the foregoing, other good and
valuable consideration, and the mutual terms and covenants contained herein, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
In this Agreement, unless the context otherwise requires, capitalized
terms used and not otherwise defined herein shall have the respective meanings
attributed to such terms in APPENDIX A hereto or, if not defined herein, in the
Credit Agreement.
ARTICLE II
NATURE AND SCOPE OF RELATIONSHIP
SST agrees to assume the duties of the servicer, acting for the benefit
of the Company and the Secured Party (as assignee and pledgee of the Company),
and custodian, on behalf of the Secured Party, as described in this Agreement
and the attached EXHIBIT A in connection with the Receivables, the other Sold
Assets and the Receivables Files (collectively, the "Serviced Assets")
designated by the Administrator (on behalf of the Company) to be serviced by the
Servicer (including, without limitation, managing, servicing, administering and
collecting on the Receivables and other Sold Assets). In performing its duties
under this Agreement, the Servicer shall report to such officers, employees or
agents of the Company and the Secured Party as they may designate from time to
time.
The Servicer, for the benefit of the Company and its assignees or
pledgees (including the Secured Party), shall: (i) act prudently in accordance
with customary and usual servicing procedures for institutions which service
receivables similar to the Serviced Assets; (ii) comply with all applicable
federal, state and local laws and regulations governing the Servicer and the
Serviced Assets; (iii) to the extent more exacting, use and exercise that degree
of skill and attention that the Servicer exercises from time to time with
respect to all comparable motor vehicle receivables that it services for itself
or others and (iv) and otherwise act with respect to the Serviced Assets in such
manner as will maximize the amount to be received by the Company with respect
thereto (the "SERVICING STANDARD").
The Servicer's duties shall include, without limitation, collecting and
posting of all payments, responding to inquiries of Obligors on the Receivables,
investigating delinquencies, sending payment invoices to Obligors, reporting any
required tax information to Obligors, monitoring the Serviced Assets, accounting
for Collections and furnishing monthly and annual statements to the Company
(with a copy to the Secured Party) with respect to distributions and performing
the other duties specified herein (including, without limitation, the duties set
forth on EXHIBIT A).
The Servicer shall receive the fees as outlined in SCHEDULE 1 as full
compensation for its services hereunder. The Administrator (on behalf of the
Company), with the prior written consent of the Secured Party, may reasonably
request the Servicer to modify or supplement the Servicer's duties or methods of
performing those duties provided that the Company shall compensate the Servicer
at a reasonable fee for any increase in expense experienced by the Servicer due
to such requests. Any such modification or supplement must be agreed to in
writing by the Servicer and the Company and acknowledged and consented to by the
Originator and the Secured Party.
2
Notwithstanding the foregoing and for the avoidance of doubt, the
Servicer shall not be required to service any Inactive Receivables under this
Agreement. The only obligation that the Servicer shall have with respect to the
Inactive Receivables shall be to post payments received from Obligors in
connection with deficiency account balances.
ARTICLE III
ERRORS AND OMISSIONS AND BLANKET CRIME INSURANCE
The Servicer shall maintain, at its own expense, (i) an errors and
omissions insurance policy and (ii) a blanket crime policy, in each case in
accordance with industry standards for receivables similar to the Receivables
and with broad coverage with established insurance companies, covering all
officers, employees or other persons acting on behalf of the Servicer in any
capacity with regard to the Serviced Assets to handle funds, money, documents
and papers relating to the Serviced Assets. The Servicer shall provide to the
Company and the Secured Party from time to time a copy of such policies upon
their request therefor. Any such insurance shall protect and insure the Servicer
against losses, including forgery, theft, embezzlement, fraud, errors and
omissions and negligent acts of such persons and shall be maintained in a form
and amount that would meet the requirements of prudent loan servicing companies
servicing automobile receivables.
No provision of this Article III requiring such insurance shall
diminish or relieve the Servicer from its duties and obligations as set forth in
this Agreement. The Servicer shall cause each and every one of its third party
vendors engaged as permitted under this Agreement (including EXHIBIT A hereto),
if any, to maintain a policy of insurance covering errors and omissions which
would meet the above stated requirements. Upon the request of the Company or the
Secured Party, the Servicer shall cause to be delivered to such person a
certificate evidencing coverage under such errors and omissions and/or blanket
crime policies. Notwithstanding the foregoing, the Servicer will give prompt
written notice to the Company and the Secured Party if the insurance coverage
maintained by the Servicer pursuant to this Section is modified or amended in
any way that would be adverse to the Company or the Secured Party.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
A. REPRESENTATIONS AND WARRANTIES OF SERVICER
1. The Servicer is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and
is duly qualified to do business, and is in good standing in
every jurisdiction in which the nature of its business requires
it to be so qualified; it is or will be in compliance with the
laws of each state to the extent necessary to perform its
obligations under this Agreement. The Servicer has full power and
authority to enter into this Agreement and to carry out the
provisions of this Agreement.
2. This Agreement and all other instruments or documents to be
delivered hereunder or pursuant hereto, and the transactions
contemplated hereby, have been duly authorized by all necessary
corporate proceedings of the Servicer. This
3
Agreement has been duly and validly executed and delivered by the
Servicer and is a valid and legally binding agreement of the
Servicer enforceable in accordance with its terms.
3. The execution and delivery of this Agreement by the Servicer
hereunder and the compliance by the Servicer with all provisions
of this Agreement do not conflict with or violate any applicable
law, regulation or order and do not conflict with or result in a
breach of or default under any of the terms or provisions of any
contract or agreement to which the Servicer is subject or by
which it or its property is bound, nor does such execution,
delivery or compliance violate the Certificate of Incorporation
or By-laws of the Servicer.
4. This Agreement constitutes a legal, valid and binding obligation
of the Servicer enforceable in accordance with its terms, except
as enforceability may be limited by bankruptcy, insolvency,
reorganization, or other similar laws affecting the enforcement
of creditors' rights generally and by equitable limitations on
the availability of specific remedies, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
5. There are no proceedings or investigations pending or, to the
Servicer's knowledge, threatened against the Servicer, before any
court, regulatory body, administrative agency or other tribunal
or governmental instrumentality having jurisdiction over the
Servicer or its properties (A) asserting the invalidity of this
Agreement or any of the Credit Documents, (B) seeking to prevent
the consummation of any of the transactions contemplated by this
Agreement or any of the Credit Documents, or (C) seeking any
determination or ruling that might materially and adversely
affect the performance by the Servicer of its obligations under,
or the validity or enforceability of, this Agreement or any of
the Credit Documents or (D) that could have a material adverse
effect on the Serviced Assets.
6. The Servicer is not required to obtain the consent of any other
party or any consent, license, approval or authorization, or
registration or declaration with, any governmental authority,
bureau or agency in connection with the execution, delivery,
performance, validity or enforceability of this Agreement which
has not already been obtained.
7. The Servicer has in place the errors and omissions and/or blanket
crime policies required to be maintained pursuant to Article III.
B. REPRESENTATIONS AND WARRANTIES OF COMPANY AND ADMINISTRATOR
1. The Company is a limited liability company duly organized,
validly existing and in good standing under the laws of the State
of Delaware. The Company has full power and authority to enter
into this Agreement and to carry out the provisions of this
Agreement.
4
2. This Agreement and all other instruments or documents to be
delivered hereunder or pursuant hereto, and the transactions
contemplated hereby, have been duly authorized by all necessary
limited liability company proceedings of the Company. This
Agreement has been duly and validly executed and delivered by the
Company and assuming due authorization, execution and delivery by
the Company, this Agreement is a valid and legally binding
agreement of the Company enforceable in accordance with its
terms.
3. The execution and delivery of this Agreement by the Company
hereunder and the compliance by the Company with all provisions
of this Agreement do not conflict with or violate any applicable
law, regulation or order and do not conflict with or result in a
breach of or default under any of the terms or provisions of any
contract or agreement (including, without limitation, the
Administration Agreement) to which the Company is subject or by
which it or its property is bound, nor does such execution,
delivery or compliance violate the Limited Liability Company
Agreement or the Certificate of Formation of the Company.
4. With respect to each Receivable designated to the Servicer for
servicing pursuant to this Agreement, the Originator represents
and warrants that such Receivable:
a) complies with all federal and state laws and legal
requirements applicable to the Receivables; and
b) was originated in connection with the sale of a Vehicle to a
person or the refinancing of such a Vehicle; and
c) represents a bona fide obligation of the related Obligor;
and
d) was originated, or purchased from a person, in the regular
course of business; and
e) represents a debt that has not been satisfied, and the
Obligor has not been released from liability on all or any
portion of the Receivable; and
f) is secured by a valid and perfected first priority security
interest in a Vehicle titled or registered in a State of the
United States or the District of Columbia; and
g) has not been discharged in bankruptcy, and is not otherwise
legally non-collectable; and
h) is one as to which (i) the property which is the subject
thereof is owned by and in the possession of the related
Obligor, (ii) there are no defenses, counterclaims or
set-offs on the part of such Obligor against the amounts
payable, and (iii) there have been no representations or
warranties made to such Obligor not contained in the
documents evidencing or related to the Receivable.
5
5. With respect to each Receivable designated to the Servicer for
servicing pursuant to this Agreement on any Transfer Date, the
Originator represents and warrants that (a) such Receivable will
not cause the then outstanding aggregate principal balance of the
Contracts to be serviced by the Servicer under this Agreement
that have a FICO score between 640 and 679 to exceed 15% of the
then outstanding aggregate principal balance of all Contracts to
be serviced by the Servicer under this Agreement and (b) the FICO
score related to such Receivable is equal to or greater than 640.
The representations and warranties contained in this Article IV shall
survive the execution of this Agreement
ARTICLE V
SERVICER EVENTS OF DEFAULT
If any one of the following events (each, a "SERVICER EVENT OF
DEFAULT") shall occur and be continuing:
A. Any failure by the Servicer to deposit into the Collection Account any
proceeds or payment required to be so delivered under the terms of this
Agreement within one (1) Business Day after the Servicer receives
written notice of such failure;
B. Failure on the part of the Servicer to observe or to perform in any
material respect any other covenants or agreements set forth in this
Agreement, which failure shall adversely affect the rights of the
Company and continue unremedied for a period of thirty (30) days after
the date on which written notice of such failure shall have been
received by the Servicer;
C. (1) The Servicer or its parent shall commence a voluntary case
concerning itself under Title 11 of the United States Code entitled
"Bankruptcy" as now or hereafter in effect, or any successor thereto
(the "BANKRUPTCY CODE"), (2) a custodian is appointed for, or takes
charge of, all or any substantial part of the property of the Servicer
or its parent, (3) the Servicer or its parent commences any other
proceeding under any reorganization, arrangement, adjustment of debt,
relief of debtors, dissolution, insolvency or liquidation or similar
law of any jurisdiction whether now or hereafter in effect relating to
the Servicer or its parent, (4) the Servicer or its parent is
adjudicated insolvent or bankrupt, (5) the Servicer or its parent makes
a general assignment for the benefit of creditors, (6) the Servicer or
its parent shall fail to pay, or shall state that it is unable to pay,
or shall be unable to pay, its debts generally as they become due, (7)
the Servicer or its parent shall call a meeting of its creditors with a
view to arranging a composition or adjustment of its debts, or (8) the
Servicer or its parent shall by any act or failure to act indicate its
consent to, approval of or acquiescence in any of the foregoing;
D. An involuntary case under the Bankruptcy Code is commenced against the
Servicer or its parent and is not dismissed within sixty (60) days
after commencement of the case or there is commenced against the
Servicer or its parent any other proceeding under any reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency
6
or liquidation or similar law of any jurisdiction whether now or
hereafter in effect relating to the Servicer or its parent which
remains undismissed for a period of sixty (60) days;
E. Any breach by the Servicer of any representation or warranty as set
forth in Article IV(A) and such breach shall not be cured in all
material respects within thirty (30) consecutive days after the earlier
of (i) receipt of written notice from the Company or the Secured Party
to the Servicer or (ii) upon discovery by the Servicer;
F. Any representation, warranty, certification or statement made by the
Servicer in this Agreement or in any certificate or report delivered by
it pursuant to this Agreement shall prove to have been incorrect in any
material respect when made or deemed made and such error shall not be
cured in all material respects within thirty (30) consecutive days
after the earlier of (i) receipt of written notice from the Company or
the Secured Party to the Servicer or (ii) upon discovery by the
Servicer;
G. The Servicer shall materially modify the Credit and Collection Policy,
unless it has given the Secured Party prompt notification of such
modification and the Company has determined in its reasonable
discretion that such modification is not materially adverse to the
Company or the Secured Party, PROVIDED that no "Servicer Event of
Default" shall have occurred and be continuing if the Servicer reverses
any modifications to the Credit and Collection Policy determined by the
Company or the Secured Party to be materially adverse;
H. There shall have occurred a Material Adverse Change with respect to the
Servicer since the end of the last fiscal year ending prior to the date
of its appointment as the Servicer hereunder or any other event shall
have occurred which, in the commercially reasonable judgment of the
Secured Party, materially and adversely affects the Servicer's ability
to either collect the Receivables or to perform under this Agreement
and such Material Adverse Change shall not be cured in all material
respects within thirty (30) consecutive days after the earlier of (i)
receipt of written notice from the Company or the Secured Party to the
Servicer or (ii) upon discovery by the Servicer;
I. Failure of the Servicer or any Subsidiary of the Servicer to pay when
due any amounts due under any agreement to which any such person is a
party and under which any Debt greater than $5,000,000 is governed; or
the default by the Servicer or any Subsidiary of the Servicer in the
performance of any term, provision or condition contained in any
agreement to which any such person is a party and under which any Debt
owing by the Servicer or any Subsidiary of the Servicer greater than
such respective amounts was created or is governed, regardless of
whether such event is an "event of default" or "default" under any such
agreement; or any Debt owing by the Servicer or any Subsidiary of the
Servicer greater than such respective amounts shall be declared to be
due and payable or required to be prepaid (other than by a regularly
scheduled payment) prior to the date of maturity thereof;
J. Any failure by the Servicer to deliver any monthly or annual
certification or statement required to be delivered pursuant to the
terms of this Agreement within three (3) Business Days after the
earlier of (i) receipt of written notice from the Company or the
Secured
7
Party to the Servicer or (ii) upon discovery by the Servicer that such
certification or statement has not been delivered, but in no event
later than the next Payment Date following the date on which such
certification or statement was required to have been delivered; and
K. Any merger or consolidation of the Servicer (including, without
limitation, any conveyance, transfer or lease of substantially all of
its assets to another person) that has not been consented to by the
Company or if JPMorgan Chase Bank or one of its affiliates no longer
owns the Servicer and such change in control has not been consented to
by the Company and the Secured Party.
then, and in each and every case and so long as a Servicer Event of Default
described above shall not have been remedied, the Secured Party (and upon
satisfaction and discharge of the Company's obligations under the Credit
Documents, including, without limitation, due discharge of the security interest
of the Secured Party in, to and under the collateral pledged by the Company to
the Secured Party under the Security Agreement, the Company) may, by written
notice to the Servicer (except in the event of a Servicer Event of Default under
paragraphs C and D of this Article V, whereupon no notice will be necessary and
notice will be deemed given immediately before the occurrence of any such
Servicer Event of Default), terminate all of the rights of the Servicer under
this Agreement; PROVIDED, HOWEVER, that the obligations of the Servicer
hereunder shall continue until the appointment of a successor Servicer.
On or after the receipt by the Servicer of such written notice or upon
termination of the term of the Servicer and appointment of a successor Servicer,
all authority, power, obligations and responsibilities of the Servicer under
this Agreement, whether with respect to the Receivables or the other Serviced
Assets or otherwise, automatically shall pass to, be vested in and become
obligations and responsibilities of a successor Servicer appointed by the
Company; 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 of a third party 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 notice of termination. 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 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 Receivable Files,
records, documents and instruments related to the Receivables, the other
Serviced Assets and a computer tape in readable form as of the most recent
Business Day containing all information necessary to enable the successor
Servicer or a successor Servicer to service the Receivables and the other
Serviced Assets. The successor Servicer shall, at the direction of the Secured
Party, direct the Obligors to make all payments under the Receivables or other
Serviced Assets directly to the Collection Account or to the successor Servicer
(in which event the successor Servicer shall process such payments in accordance
with the terms and
8
conditions of this Agreement), or to a lockbox account established by the
successor Servicer at the successor Servicer's expense. The terminated Servicer
shall grant the Secured Party and the successor Servicer reasonable access to
the terminated Servicer's premises at the terminated Servicer's expense if such
Servicer was terminated in connection with a Servicer Event of Default; provided
that if the Servicer was terminated and no Servicer Event of Default shall have
occurred or be continuing, the Company shall pay such expenses.
On and after the time the Servicer receives a notice of termination
pursuant to this Article V, or upon the resignation of the Servicer, the Company
shall appoint an alternate successor Servicer who 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 Agreement except as otherwise stated herein. The Company and such
successor shall take such action, consistent with this Agreement, as shall be
necessary to effectuate any such succession. If a successor Servicer is acting
as the Servicer hereunder, it shall be subject to termination under this Article
V upon the occurrence of any Servicer Event of Default applicable to it as the
Servicer.
Any successor Servicer shall be entitled to such compensation (whether
payable out of the Collection Account or otherwise) as the Servicer would have
been entitled to under this Agreement if the Servicer had not resigned or been
terminated hereunder. The Company and such successor Servicer may agree on
additional compensation to be paid to such successor Servicer. In addition, any
successor Servicer shall be entitled to reasonable transition expenses incurred
in acting as successor Servicer.
The Company may waive any default by the Servicer in the performance of
its obligations hereunder and its consequences. Upon any such waiver of a past
default, such default shall cease to exist, and any Servicer Event of Default
arising therefrom shall be deemed to have been remedied for every purpose of
this Agreement. No such waiver shall extend to any subsequent or other default
or impair any right consequent thereto.
ARTICLE VI
REMEDIES
In addition to the indemnification rights contained in Article X and
the right to terminate contained in Article XI, the Servicer agrees that upon
the happening of any Servicer Event of Default, as defined in this Agreement,
the Company and the Secured Party may avail itself of any other relief to which
such person may be legally or equitably entitled.
ARTICLE VII
RESPONSIBILITY AND AUTHORITY OF SERVICER
A. Subject to the Servicing Standard, and consistent with the duties and
obligations imposed upon the Servicer by this Agreement, the Servicer
shall have the full power and authority acting alone and without the
consent of the Company, to do any and all things in connection with the
servicing of any Receivable or other Serviced Asset that it may deem
reasonably necessary or desirable, including, but not limited to, the
right to subcontract any of its duties hereunder (in accordance with
the terms and conditions hereof).
9
Notwithstanding anything herein to the contrary, the Servicer shall
cooperate fully with the Secured Party and the Company and promptly
inform the Secured Party and the Company of any and all changes or
developments of which the Servicer becomes aware that may affect the
Receivables or the other Serviced Assets.
B. The Company authorizes the Servicer to communicate with third parties
and the Obligors in the name of the Company as necessary and proper to
perform the services anticipated by this Agreement. The Servicer shall
enforce and administer all servicing related rights of the Company and
the Secured Party and related responsibilities of the Company with
respect to the Receivables and the other Serviced Assets (including,
without limitation, maintaining possession of the Receivable Files).
Without limiting the generality of the foregoing, the Servicer is
hereby authorized and empowered by the Company to execute and deliver,
on behalf of the Company, any and all instruments of satisfaction or
cancellation, or of partial or full release or discharge, and all other
comparable instruments, with respect to the Receivables and with
respect to the Financed Vehicles; PROVIDED, HOWEVER, that
notwithstanding the foregoing, the Servicer shall not, except pursuant
to a final order from a court of competent jurisdiction, release an
Obligor from payment of any unpaid amount under any Receivable or waive
the right to collect the unpaid balance of any Receivable from the
Obligor.
C. The Servicer shall have the right to commence or participate in a legal
proceeding (including, without limitation, a bankruptcy proceeding) on
behalf of the Company to enforce a Receivable (and the related Serviced
Assets), provided that the Secured Party shall have the right to direct
the Servicer to not commence any such proceeding or to terminate any
such proceeding. As reasonably requested by the Servicer, the Company
shall furnish the Servicer with any necessary and appropriate powers of
attorney (in the form of EXHIBIT B hereto or as otherwise appropriate)
and other documents needed in order to enable the Servicer to carry out
such proceeding and with respect to its servicing and administrative
duties hereunder. The Servicer acknowledges and agrees that any and all
such powers of attorney are limited in all respects by the terms and
conditions of this Agreement and the other Credit Documents and are
revocable at the will of the Secured Party. Upon the termination of the
Servicer, the Servicer shall assist with the empowerment of any
successor Servicer in, to or under such powers of attorney or
replacement or termination of powers of attorney.
D. Consistent with the standards, policies and procedures required by this
Agreement and Exhibit A hereto, the Servicer shall use its best efforts
to repossess (or otherwise comparably convert the ownership of) and
liquidate any Financed Vehicle securing a Receivable with respect to
which the Servicer has determined that payments thereunder are not
likely to be resumed, as soon as is practicable after default on such
Receivable but in no event later than the date on which all or any
portion of a scheduled payment has become sixty-one (61) days
delinquent; provided, however, that the Servicer may elect not to
repossess a Financed Vehicle within such time period if in its good
faith judgment it determines that the proceeds ultimately recoverable
with respect to such Receivable would be increased by forbearance. The
Servicer is authorized to follow such customary practices and
procedures as it shall deem necessary or advisable, consistent with the
Servicing Standard, which practices and procedures may include the sale
of the related
10
Financed Vehicle at public or private sale, the submission of claims
under an insurance policy and other actions by the Servicer in order to
realize upon such a Receivable. The foregoing is subject to the
provision that, in any case in which the Financed Vehicle shall have
suffered damage, the Servicer shall not expend funds in connection with
any repair or towards the repossession of such Financed Vehicle unless
it shall determine in its reasonable discretion that such repair and/or
repossession shall increase the proceeds of liquidation of the related
Receivable by an amount greater than the amount of such expenses. All
amounts received upon liquidation of a Financed Vehicle shall be
transferred by the Servicer from the Trust Account to the Collection
Account as soon as practicable, but in no event later than within the
applicable time period set forth in Article VIII. The Servicer shall be
entitled to recover all reasonable expenses incurred by it in the
course of repossessing and liquidating a Financed Vehicle into cash
proceeds, but only in accordance with Schedule 1 hereto. The Servicer
shall pay on behalf of (and at the expense of) the Company any personal
property taxes assessed on repossessed Financed Vehicles.
E. If the Servicer elects to commence a legal proceeding to enforce a
Contract, the act of commencement shall be deemed to be an automatic
assignment from the Company to the Servicer of the rights under such
Contract, as appropriate, for purposes of collection only. If, however,
in any enforcement suit or legal proceeding it is held that the
Servicer may not enforce any such Contract on the grounds that it is
not a real party in interest or a person entitled to enforce such
Contract, the Company, at the Company's expense, shall take such steps
as the Servicer deems reasonably necessary to enforce the related
Contract, including bringing suit in its name or the name of the
Company and/or the Originator (as the case may be). All amounts
recovered in any legal proceeding shall be transferred by the Servicer
from the Trust Account to the Collection Account as soon as practicable
(but in no event later than within the applicable time period set forth
in Article VIII). Notwithstanding anything to the contrary contained
herein (i) prior to the occurrence of an Event of Default under the
Credit Agreement, the Administrator (on behalf of the Company) may
(provided that after the occurrence of an Event of Default, only the
Secured Party may), in its reasonable discretion, direct the Servicer
to commence or settle any legal action to enforce collection of any
Receivable (or the Serviced Assets related thereto) or to foreclose
upon or repossess any related security and (ii) the Servicer shall not
make the Secured Party, any Hedge Counterparty or any Lender a party to
any litigation relating to a Receivable (or the Serviced Assets related
thereto) without the prior written consent of such person.
F. Each Receivable requires the Obligor to maintain such physical loss and
damage insurance, naming the Originator and its successors and assigns
as additional insureds, and permits the holder of such Receivable to
obtain physical loss and damage insurance at the expense of the Obligor
if the Obligor fails to maintain such insurance. If the Servicer shall
determine that an Obligor has failed to obtain or maintain a physical
loss and damage insurance policy covering the related Financed Vehicle
(including, without limitation, during the repossession of such
Financed Vehicle) the Servicer shall deliver notice of any such failure
to obtain or maintain any such insurance policy to the Obligor and may
(but is not required to) enforce the rights of the holder of the
Receivable under the Receivable to require the Obligor to obtain such
physical loss and damage insurance
11
in accordance with the Servicing Standard; provided, that the Servicer
is not required hereunder to actively track or monitor insurance. The
Servicer may ▇▇▇ to enforce or collect upon the insurance policies, in
its own name, if possible, or as agent of the Company. If the Servicer
elects to commence a legal proceeding to enforce an insurance policy,
the act of commencement shall be deemed to be an automatic assignment
of the rights of the Company under such insurance policy 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 an insurance policy on the grounds that it is not a real
party in interest or a holder entitled to enforce the insurance policy,
the Company, at the Company's expense, shall take such steps as the
Servicer deems necessary to enforce such insurance policy, including
bringing suit in its name or the name of the Company or the Originator.
G. Consistent with the policies and procedures required by this Agreement,
at the expense of the Company, the Servicer shall take such steps on
behalf of the Secured Party and the Company as are necessary to
maintain perfection of the security interest created by each Contract
in the related Financed Vehicle with respect to each Receivable,
including, but not limited to, obtaining the execution by the Obligors
and the recording, registering, filing, re-recording, re-filing, and
re-registering of all security agreements, financing statements and
continuation statements as are necessary to maintain the security
interest granted by the Obligors under the respective Contracts;
PROVIDED, HOWEVER, that the Servicer shall not be required to take any
steps to initially obtain a perfected security interest in the related
Financed Vehicle, as long as a third party has been retained by the
Originator to obtain the security interest granted by each Obligor. The
Secured Party hereby authorizes the Servicer, and the Servicer agrees,
to take any and all steps necessary to re-perfect such security
interest on behalf of the Company as necessary because of the
relocation of a Financed Vehicle or for any other reason.
H. The Servicer may at any time perform through sub-contractors the
specific duty of repossession of Financed Vehicles without the consent
of the Company and may perform other specific duties through such
sub-contractors in accordance with the Servicing Standard; PROVIDED,
HOWEVER, that no such delegation or sub-contracting duties by the
Servicer shall relieve the Servicer of its primary responsibility with
respect to such duties; PROVIDED FURTHER, that the Servicer may
delegate any of its duties under this Agreement that are not generally
delegated by the Servicer in accordance with the Servicing Standard
with the prior written consent of the Secured Party. No person acting
as the Servicer hereunder shall appoint any subservicer hereunder
without the prior written consent of the Secured Party.
I. The Servicer shall perform the obligations of the Custodian as set
forth in Article XV hereto.
J. The Servicer covenants as follows:
1. LIENS IN FORCE. The Financed Vehicle securing each Receivable
shall not be released in whole or in part by the Servicer from
the security interest granted by
12
the related Contract, except upon payment in full of the
Receivable or as otherwise contemplated herein;
2. NO IMPAIRMENT. The Servicer shall do nothing to impair the rights
of the Company, the Lenders or the Secured Party in the
Receivables, the Contracts, the insurance policies or the related
security or the other Serviced Assets except as otherwise
expressly provided herein;
3. NO AMENDMENTS. The Servicer shall not extend or otherwise amend
the terms of any Receivable or the other Serviced Assets, except
in accordance with Exhibit A; and
4. RESTRICTIONS ON LIENS. The Servicer shall not (i) create or incur
or agree to create or incur, or consent to cause or consent to
permit in the future (upon the happening of a contingency or
otherwise) the creation, incurrence or existence of any lien or
restriction on transferability of the Receivables or the other
Serviced Assets except for the lien in favor of the Secured Party
for the benefit of the Lender and the Hedge Counterparties and
the restrictions on transferability imposed by the Credit
Documents or (ii) sign or file under the Uniform Commercial Code
of any jurisdiction any financing statement which names the
Company, the Originator or the Servicer as a debtor, or sign any
security agreement authorizing any secured party thereunder to
file such financing statement, with respect to the Receivables or
the other Serviced Assets, except in each case any such
instrument solely securing the rights and preserving the lien of
the Secured Party, for the benefit of the Lender.
K. For the avoidance of doubt, the Servicer shall have no responsibility
for servicing Inactive Receivables under this Agreement. Any servicing
responsibilities to be assumed by the Servicer with respect to an
Inactive Receivable shall be agreed to in writing between the Company
and the Servicer.
ARTICLE VIII
BANK ACCOUNTS
The Servicer shall maintain and control a bank account separate from
its general corporate bank accounts (the "TRUST ACCOUNT"), where the Servicer
shall collect and hold in trust (for the benefit of the Company and the Secured
Party) all Collections received from Obligors or other sources. All Collections
deposited to such designated accounts shall be swept by the Servicer to the
Collection Account (a) for Collections that are sent by ACH or wire, by the
Business Day after receipt in the Trust Account and (b) for all other
Collections, no later than the third Business Day after receipt in the Trust
Account.
ARTICLE IX
REPORTS ACCESS AND INSPECTION
The Servicer shall provide the Company, the Secured Party and their
respective designee(s) access to the Servicer's facility, but, as long as no
Servicer Event of Default shall have occurred, only upon reasonable request and
during normal business hours of the Servicer
13
and to the extent that such access would not significantly disrupt the orderly
conduct of business at such facility. The Servicer shall also provide to
representatives of the Secured Party reasonable access to the documentation
regarding the Serviced Assets.
The Servicer shall deliver to the Secured Party, the Lender and the
Company, (a) on or before September 30 (or 90 days after the end of the
Servicer's fiscal year, if other than June 30) of each year, beginning on
December 31, 2002, an officer's certificate signed by any authorized officer of
the Servicer, dated as of June 30 (or such other date of fiscal year end) of
such year, stating that (i) a review of the activities of the Servicer during
the preceding 12-month period (or, in the case of the first such certificate,
the period as shall have elapsed from the Closing Date to the date of the first
such certificate) and of its performance under this Agreement has been made
under such officer's supervision, and (ii) to such officer's knowledge, based on
such review, the Servicer has materially fulfilled all its obligations under
this 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 (b) within 90 days after the end
of the Servicer's fiscal year, audited financial statements for the Servicer as
of the end of such fiscal year, prepared in accordance with GAAP consistently
applied.
The Servicer shall deliver to the Secured Party, the Lenders and the
Company, promptly after having obtained knowledge thereof, but in no event later
than two (2) Business Days thereafter, written notice in an officer's
certificate of any event which with the giving of notice or lapse of time, or
both, would become a Servicer Event of Default hereunder. The Servicer shall
deliver to the Secured Party and the Servicer promptly after having obtained
knowledge thereof, but in no event later than two (2) Business Days thereafter,
written notice in an officer's certificate of any event which with the giving of
notice or lapse of time, or both, would become a Servicer Event of Default
hereunder.
On or before the eleventh (11th) calendar day of each month or, if such
day is not a Business Day, the immediately following Business Day, the Servicer
will deliver to the Company and the Secured Party (with a copy to the
Administrator) a Monthly Tape and a diskette (or any other electronic
transmission acceptable to such parties) in a format acceptable to such parties
containing the information set forth in the attached EXHIBIT G with respect to
the Receivables and the other Serviced Assets. Upon the reasonable request of
either the Administrator or the Secured Party, the Servicer shall make available
to such person all data in its possession concerning the Receivables and the
other Serviced Assets.
ARTICLE X
INDEMNIFICATION
A. The Servicer agrees to indemnify (on an after tax basis) and hold the
Company, the Administrator, the Originator, the Secured Party, the
Hedge Counterparties and the Lenders and their respective officers,
employees and agents (each a "SERVICER INDEMNIFIED PERSON" and
collectively the "SERVICER INDEMNIFIED PERSONS") harmless against any
and all claims, damages, losses, penalties, fines, forfeitures, legal
fees and related costs, judgments and any other costs, fees and
expenses (including reasonable legal fees and expenses) that such
Servicer Indemnified Party may sustain in any way related to the
negligence or misconduct of the Servicer (or any party hired by the
Servicer) in its performance under the terms of this Agreement, or
arising from any breach of the representations and warranties of the
Servicer (or any party hired by the
14
Servicer). The Servicer shall immediately notify the Servicer
Indemnified Person if a claim is made by a third party with respect to
this Agreement or any of the Receivables or any of the other Serviced
Assets. This right to indemnification shall survive the termination of
this Agreement and the termination of any Servicer.
B. The Originator agrees to indemnify (on an after tax basis) and hold the
Servicer and its officers, employees and agents (each an "ORIGINATOR
INDEMNIFIED PERSON" and collectively the "ORIGINATOR INDEMNIFIED
PERSONS") harmless against any and all claims, damages, losses,
penalties, fines, forfeitures, legal fees and related costs, judgments
and any other costs, fees and expenses (including reasonable legal fees
and expenses) that such Originator Indemnified Party may sustain in any
way related to this Agreement or the Receivables or any of the other
Serviced Assets, other than amounts the Originator Indemnified Persons
sustained to the extent resulting from the negligence or misconduct of
the Servicer or any party hired by the Servicer or ensuing from any
breach of the representations and warranties of the Servicer or any
party hired by the Servicer. The Originator shall immediately notify
the Originator Indemnified Person if a claim is made by a third party
with respect to this Agreement or any of the Receivables or any of the
other Serviced Assets. This right to indemnification shall survive the
termination of this Agreement. For the avoidance of doubt, neither the
Secured Party nor the Originator shall indemnify the Servicer for any
servicing fees or reimbursement of expenses and costs of any kind owed
by the Company to the Servicer under this Agreement.
C. The Servicer may accept and reasonably rely on all accounting and
servicing records and other documentation provided to the Servicer by
or at the direction of the Company or the Originator or from third
parties retained by the Company or the Originator, including documents
prepared or maintained by any originator, or previous servicer, or any
party providing services related to the Receivables or any of the other
Serviced Assets (collectively "COMPANY THIRD PARTY"). The Originator
agrees to indemnify and hold the Servicer, its respective officers,
employees and agents harmless against any and all claims, losses,
penalties, fines, forfeitures, legal fees and related costs, judgments,
and any other costs, fees and expenses that the Servicer may sustain in
any way related to errors in such accounting and servicing records and
other documentation provided to the Servicer by the Company or any
Company Third Party with respect to the Receivables or the other
Serviced Assets; PROVIDED, HOWEVER, that the Originator shall not be
required to indemnify Servicer, its respective officers, employees or
agents harmless against any claims, losses, penalties, fines,
forfeitures, legal fees and related costs, judgments, or any other
costs, fees and expenses that the Servicer may sustain in any way
related to errors in such accounting and servicing records and other
documentation provided to the Servicer by any person retained by the
Servicer in accordance with Article VII(H). The Servicer shall have no
duty, responsibility, obligation or liability (collectively
"LIABILITY") for the acts or omissions of the Company or any Company
Third Party. If any error, inaccuracy or omission (collectively
"ERROR") exists in any information provided to the Servicer by any
Company Third Party and such errors cause or materially contribute to
the Servicer making or continuing any error (collectively "CONTINUING
ERRORS"), the Servicer shall have no liability for such continuing
errors; PROVIDED, HOWEVER, that this
15
provision shall not protect the Servicer against any liability which
would otherwise be imposed by reason of willful misconduct, bad faith
or gross negligence in discovering or correcting any error or in the
performance of its duties contemplated herein.
In the event the Servicer becomes aware of errors and/or continued
errors, which in the opinion of the Servicer impairs its ability to perform its
services hereunder, the Servicer shall immediately notify the Secured Party and
the Company of such errors and/or continuing errors; and further, the Servicer
may undertake such data or records reconstruction as it deems appropriate to
correct such errors and/or continuing errors and to prevent future continuing
errors. The Servicer shall be entitled to recover its reasonable costs thereby
expended.
ARTICLE XI
TERM AND TERMINATION
A. The term of this Agreement shall be for two (2) years from the date
first written above and will automatically renew for additional
successive one (1) year terms unless the Company or the Servicer shall
upon ninety (90) days written notice elect not to renew the Agreement.
B. The Secured Party or the Company (with the prior written consent of the
Secured Party) shall have the right to terminate this Agreement during
any term upon not less than sixty (60) days written notice delivered by
overnight mail to the Servicer. In the event of any such termination,
the Company shall pay to the Servicer a termination fee equal to the
greater of (i) $10,000 or (ii) the servicing fee for each Receivable so
transferred for one (1) month preceding the notice of termination. The
Servicer shall not, however, be entitled to receive any such
termination fee if the Servicer is terminated due to a Servicer Event
of Default under this Agreement.
C. The Servicer shall have the right to resign under this Agreement by
giving sixty (60) days prior written notice to the Company and the
Secured Party; provided, however, that in no event shall any such
resignation be effective unless the Servicer shall have provided the
Company and the Secured Party with a successor which is acceptable to
the Secured Party in its sole discretion and such successor shall
agree, by written instrument delivered to the Company and the Secured
Party, to be bound by all of the terms and conditions of this
Agreement.
D. If any one of the following events (each, a "COMPANY EVENT OF
DEFAULT") shall occur and be continuing:
1. Failure on the part of the Company to pay the Servicer the Base
Servicing Fee on any Payment Date, including amounts set forth in
Schedule 1 hereto, which shall not be cured by the Company within
fifteen (15) days after the date on which written notice of such
failure shall have been received by the Company and the Secured
Party; or
2. Other than as set forth in the preceding clause (1), failure on
the part of the Company to observe or to perform in any material
respect any covenants or agreements set forth in this Agreement,
which failure shall adversely affect the
16
rights of the Servicer and continue unremedied for a period of
thirty (30) days after the date on which written notice of such
failure shall have been received by the Company and the Secured
Party; or
3. Any breach by the Company of any representation or warranty as
set forth in Article IV(B) and such breach shall not be cured in
all material respects within thirty (30) consecutive days after
the earlier of (i) receipt of written notice from the Servicer to
the Company or (ii) upon discovery by the Company.
4. Failure on the part of the Originator to pay any Servicer
Indemnified Person any indemnity owed such person by the
Originator in accordance with Article X B., which shall not be
cured by the Originator within thirty (30) days after the date on
which written notice of such failure shall have been received by
the Originator, the Company and the Secured Party.
then, notwithstanding CLAUSE C above, the Servicer shall have the right to
terminate this Agreement (x) upon a Company Event of Default set forth in
SUBCLAUSE 2 or 3 above, by delivering not less than 120 days' written notice to
the Company, with a copy to the Secured Party and (y) upon a Company Event of
Default set forth in SUBCLAUSE 1 above, by delivering written notice to the
Company, with a copy to the Secured Party, stating that this Agreement will
terminate on the first Payment Date following receipt of such notice. In the
event of any default of this Agreement by the Company, the Company likewise
acknowledges the Servicer's remedies contained in Articles X and XI and that the
Servicer may avail itself of any other relief to which the Servicer may be
legally or equitably entitled.
Notwithstanding the provisions set forth in Article V and this Article
XI requiring the Servicer to continue servicing the portfolio after its
termination or resignation, the Servicer shall have no obligation to continue
its servicing duties hereunder after the earlier of (a) the appointment of a
successor Servicer hereunder and (b) 120 days after notice of termination (under
Article V or paragraph D of Article XI) or notice of resignation (under
paragraph C of Article XI) has been delivered.
ARTICLE XII
WAIVERS
No failure or delay on the part of the Servicer or the Company or the
Secured Party in exercising any power, right or remedy under this Agreement
shall operate as a waiver thereof nor shall any single or partial exercise of
any such power, right or remedy preclude any other or further exercise thereof
or the exercise of any other power, right or remedy except by a written
instrument signed by the party to be charged or as otherwise expressly provided
herein.
ARTICLE XIII
NOTICES
Except as otherwise provided herein, all notices, requests, consents,
demands and other formal communications given hereunder shall be in writing. All
notices of whatever kind shall be either personally delivered or sent by
telecopy or other form of rapid transmission and
17
confirmed by United States mail, properly addressed and with full postage
prepaid to the following:
To the Servicer: Systems & Services Technologies, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇. ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇
Telecopy No: (▇▇▇) ▇▇▇-▇▇▇▇
To the Company: E-Loan Auto Fund One, LLC
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Telecopy No: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
General Counsel at the same address,
facsimile no. (▇▇▇) ▇▇▇-▇▇▇▇.
To the Secured Party
or the Lender: ▇▇▇▇▇▇▇ ▇▇▇▇▇ Bank USA
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇
Telecopy No: (▇▇▇) ▇▇▇-▇▇▇▇
WITH COPIES TO:
▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Capital Inc.
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇
Telecopy No: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ Mortgage Capital Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇
Telecopy No: (▇▇▇) ▇▇▇-▇▇▇▇
18
To the Originator
or the Administrator: E-LOAN, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇, Treasurer
Telecopy No: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
General Counsel at the same address,
facsimile no. (▇▇▇) ▇▇▇-▇▇▇▇.
or to such other person(s) or address as such party shall have specified in
writing in the manner set forth above.
ARTICLE XIV
FURTHER ASSURANCES
Each party agrees, if reasonably requested by the other party, to
execute and deliver such additional documents or instruments and take such
further actions as may be reasonably necessary to effect the transactions
contemplated by this Agreement.
ARTICLE XV
THE CUSTODIAN
A. APPOINTMENT OF CUSTODIAN; ACKNOWLEDGMENT OF RECEIPT. Subject to the
terms and conditions hereof, the Company hereby revocably appoints
(provided that such appointment may only be revoked by the Secured
Party as long as there remain any obligations outstanding under the
Credit Documents or the Credit Agreement, the Security Agreement and
the other Credit Documents have not been duly terminated by or on
behalf of the Secured Party) the Custodian and the Custodian hereby
accepts such appointment, as custodian and bailee on behalf of the
Secured Party (for the benefit of the Lenders and the Hedge
Counterparties) to maintain exclusive custody of the Receivable Files
relating to the Receivables and the other Serviced Assets; PROVIDED,
HOWEVER, that none of the Lenders, the Hedge Counterparties and the
Secured Party shall be responsible for the acts or omissions of the
Custodian. In performing its duties hereunder, the Custodian agrees to
act with that degree of care, skill and attention that a person acting
in the capacity of a custodian would exercise with respect to files
relating to comparable automotive or other receivables that it services
or holds for itself or others, and, in any event, to exercise at least
that degree of care, skill and attention that it exercises with respect
to its own assets. The Custodian, as of each Transfer Date with respect
to the Receivables sold on such date, hereby acknowledges receipt of
the Receivable File for each Receivable listed in the related Schedules
of Contracts, subject to any exceptions noted on the applicable
Acknowledgment of Custodian. As evidence of its acknowledgement of such
receipt of such Receivables Files, the Custodian shall execute and
deliver to the Lender and the Secured Party on each Transfer Date with
respect to the Receivables sold on such date, the Acknowledgement of
the Custodian attached as EXHIBIT C hereto.
19
B MAINTENANCE OF RECORDS AT OFFICE. The Custodian agrees to maintain the
Receivable Files at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, or at such
other office as shall from time to time (in advance of any move) be
identified to the Company and the Secured Party, and the Custodian will
hold the Receivable Files in such office on behalf of the Secured Party
(for the benefit of the Lenders and the Hedge Counterparties), clearly
identified on its records as being separate from any other instruments
and files, including other instruments and files held by the Custodian,
and in compliance with this Agreement and the other Credit Documents.
C. DUTIES OF CUSTODIAN.
1. SAFEKEEPING. The Custodian shall hold the Receivable Files on
behalf of the Secured Party (for the benefit of the Lenders and
the Hedge Counterparties) clearly identified on its records as
being separate from all other files or records maintained by the
Custodian, whether at the same or any other location, and shall
maintain such accurate and complete accounts, records or computer
systems pertaining to each Receivable File. The Custodian shall
segregate the Receivable Files from its other assets or those
held on behalf of any other Person other than the Secured Party,
assign each Receivable File an identifying number, and the books,
records and computer systems for the Custodian shall contain the
identifying number for all such Receivable Files and shall
indicate that such Receivable Files are held by the Custodian on
behalf of the Secured Party. Each Receivable (and the related
Serviced Assets) shall be identified on the books and records of
the Custodian in a manner that (i) is consistent with the
practices of a person acting in the capacity of custodian with
respect to similar receivables, (ii) indicates that the
Receivables (and the related Serviced Assets) are held by the
Custodian on behalf of the Secured Party and (iii) is otherwise
necessary, as reasonably determined by the Custodian, to comply
with the terms of this Agreement. The Custodian shall conduct, or
cause to be conducted, periodic physical inspections of the
Receivable Files held by it under this Agreement, and of the
related accounts, records and computer systems, in such a manner
as shall enable the Secured Party and the Custodian to verify the
accuracy of the Custodian's inventory and recordkeeping. Such
inspections shall be conducted at such times, in such manner and
by such persons, including, without limitation, independent
accountants, as the Secured Party may request in accordance with
Article IX. The Custodian shall promptly report to the Secured
Party any failure on the Custodian's part to hold the Receivable
Files and maintain its accounts, records and computer systems as
herein provided and the Custodian shall promptly take appropriate
action to remedy any such failure. Notwithstanding the above,
upon a Servicer Termination Event, on or prior to each Transfer
Date, with respect to the Receivables sold on such dates, the
Custodian shall make copies or other electronic file records
(e.g., diskettes, CD's, etc.) (the "Copies") of the Receivable
Files and shall deliver such Copies to the Secured Party. The
Custodian shall at all times maintain the original of the fully
executed original Contract and of the related certificate of
title or application therefore, if no such certificate of title
has yet been issued, relating to each Receivable in a fire proof
vault.
20
2. ACCESS TO RECORDS. The Custodian shall, subject only to the
Custodian's security requirements applicable to its own employees
having access to similar records held by the Custodian, which
requirements shall be consistent with the practices of a person
acting in the capacity of custodian with respect to similar files
or records, and at such times as may be reasonably imposed by the
Custodian, permit only the Secured Party, the Lenders or their
duly authorized representatives, attorneys or auditors to inspect
the Receivable Files and the related accounts, records, and
computer systems maintained by the Custodian pursuant hereto at
such times as any of the Secured Party or the Lenders may
reasonably request.
3. RELEASE OF DOCUMENTS. The Custodian shall release such Receivable
Files to the (1) Company, upon payment in full of such Receivable
and release of such Receivable from the lien of the Secured Party
under the Security Agreement, (2) Servicer, as required from time
to time as appropriate for servicing and enforcing any Receivable
or the other Serviced Assets or (3) related Obligor, as required
by applicable law.
4. ADMINISTRATION; REPORTS. The Custodian shall, in general, attend
to all ministerial matters in connection with maintaining custody
of the Receivable Files on behalf of the Secured Party. In
addition, the Custodian shall assist the Secured Party or the
Servicer, as the case may be, in the preparation of any routine
reports to the Secured Party or to regulatory bodies, to the
extent necessitated by the Custodian's custody of the Receivable
Files.
5. REVIEW OF CERTIFICATES OF TITLE. On or before the eleventh (11th)
calendar day of each month or, if such day is not a Business Day,
the immediately following Business Day, the Custodian shall
deliver to the Company and the Secured Party a listing of all
Receivables boarded by the Servicer 120 or more days prior to the
date of such list with respect to which a certificate of title,
showing the Originator as secured party, was not included in the
related Receivable File.
D. INSTRUCTIONS; AUTHORITY TO ACT. The Custodian shall be deemed to have
received proper instructions with respect to the Receivable Files upon
its receipt of written instructions signed by an authorized officer of
the Secured Party. Such instructions may be general or specific in
terms.
E. CUSTODIAN FEE. If the Custodian is not the same person as the Servicer,
then for the custodian services under this Agreement, the Custodian
shall be entitled to reasonable compensation to be paid by the Company,
provided that any such compensation has been approved by the Secured
Party in advance of any agreement to pay for such services.
F. INDEMNIFICATION BY THE CUSTODIAN. The Custodian agrees to indemnify (on
an after tax basis) the Secured Party, the Lenders and the Company for
any and all liabilities, obligations, losses, damage, payments, costs
or expenses of any kind whatsoever (including the fees and expenses of
counsel) that may be imposed on, incurred or asserted against any of
the Secured Party, the Lenders and/or the Company as the result of any
act or omission in any way relating to the maintenance and custody by
the Custodian of the
21
Receivable Files or any default by the Custodian of its obligations
hereunder; PROVIDED, HOWEVER, that the Custodian shall not be liable to
any party indemnified hereunder for any portion of any such
liabilities, obligations, losses, damages, payments or costs or
expenses as are due to the willful misfeasance, bad faith, negligence
or breach of contract of such indemnified party.
G. ADVICE OF COUNSEL. The Custodian shall be entitled to rely and act upon
advice of counsel with respect to its performance hereunder as
custodian and shall be without liability for any action reasonably
taken in good faith pursuant to such advice, provided that such action
is not in violation of applicable federal or state law.
H. EFFECTIVE PERIOD, TERMINATION, AND AMENDMENT; INTERPRETIVE AND
ADDITIONAL PROVISIONS. This Agreement shall become effective as of the
date hereof and shall continue in full force and effect until
terminated as hereinafter provided. This Agreement may be amended at
any time by agreement of the Secured Party, the Custodian and Lenders
and may be terminated by either the Secured Party or the Custodian by
giving written notice to the other parties, such termination to take
effect no sooner than thirty (30) days after the date of such notice in
the case of a termination by the Secured Party (which 30 day period may
be shorter as set forth in the notice of termination in the case of a
Servicer Event of Default) or ninety (90) days after the date of such
notice in the case of a termination by the Custodian; PROVIDED the
Custodian shall not resign from the obligations and duties imposed on
it by this Agreement unless the Custodian shall have provided the
Secured Party with a successor which is acceptable to the Secured Party
in its sole discretion. Any termination of SST (and its successors and
assigns) as the Servicer shall terminate SST (and its successors and
assigns) as Custodian under this Agreement. Immediately after receipt
of notice of termination of this Agreement, the Custodian shall deliver
the Receivable Files at the expenses of the Company (other than as set
forth below) to the Secured Party on behalf of the Lenders and the
Hedge Counterparties, at such place or places as the Secured Party may
designate, and the Secured Party, or its agent, as the case may be,
shall act as custodian for such records on behalf of the Secured Party
until such times as a successor custodian has been appointed by the
Secured Party; PROVIDED that if a Servicer Event of Default shall have
occurred and been continuing, such delivery shall be at the expense of
the Custodian. (For the avoidance of doubt, during any such period, the
Secured Party shall be acting in its capacity as Secured Party,
including the standard of care and liability in such capacity, and not
as a successor "CUSTODIAN" hereunder.) If, within two (2) Business Days
after the termination of this Agreement, the Custodian has not
delivered the Receivable Files in accordance with the preceding
sentence, the Secured Party may enter the premises of the Custodian and
remove the Receivable Files from such premises. In connection with the
administration of this Agreement, the parties may agree from time to
time upon the interpretation of the provisions of this Agreement as may
in their joint opinion be consistent with the general tenor and
purposes of this Agreement, any such interpretation to be signed by all
parties and annexed hereto.
I. REPRESENTATIONS, WARRANTIES AND COVENANTS OF CUSTODIAN. The Custodian
hereby represents and warrants to, and covenants with, the Secured
Party that as of the date hereof and as of each Transfer Date:
22
1. The Custodian is duly organized, validly existing and in good
standing under the laws of the state of its incorporation;
2. The Custodian has the full power and authority to hold each
Receivable File on behalf of the Secured Party, and to execute,
deliver and perform, and to enter into and consummate all
transactions contemplated by this Agreement, has duly authorized
the execution, delivery and performance of this Agreement, has
duly executed and delivered this Agreement, and this Agreement
constitutes a legal, valid and binding obligation of the
Custodian, enforceable against it in accordance with its terms,
except as enforcement of such terms may be limited by bankruptcy,
insolvency or similar laws affecting the enforcement of
creditors' rights generally and by the availability of equitable
remedies;
3. The consummation of the transactions contemplated by this
Agreement, and the fulfillment of the terms of this Agreement,
shall not conflict with, result in any breach of any of the terms
and provisions of, or constitute (with or without notice or lapse
of time) a default under, the articles of incorporation or bylaws
of the Custodian, or any indenture, agreement, mortgage, deed of
the Custodian or other instrument to which the Custodian is a
party or by which it is bound, or result in the creation or
imposition of any lien upon any of its properties pursuant to the
terms of any such indenture, agreement, mortgage, deed of the
Custodian or other instrument, other than this Agreement, or
violate any law, order, rule or regulation applicable to the
Custodian of any court or of any federal or state regulatory
body, administrative agency or other governmental instrumentality
having jurisdiction over the Custodian or any of its properties
and do not require any action by or require the consent of or the
filing of any notice with any governmental authority or other
person;
4. There is no litigation pending or, to the Custodian's knowledge,
threatened, which if determined adversely to the Custodian, would
adversely affect the execution, delivery or enforceability of
this Agreement, or any of the duties or obligations of the
Custodian thereunder, or which would have a material adverse
effect on the financial condition of the Custodian;
5. No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution,
delivery and performance by the Custodian of or compliance by the
Custodian with this Agreement or the consummation of the
transactions contemplated hereby or thereby;
6. Without limiting paragraph H. of Article XV, upon written request
of the Secured Party, the Custodian shall take such steps as
reasonably requested by the Secured Party to protect or maintain
any security interest the Secured Party has in any Receivable and
the other Serviced Assets, provided that, as long as the Servicer
and the Custodian are the same person, any extraordinary fees and
expenses incurred by the Custodian and, upon the request of the
Company or the Secured Party to retitle or otherwise act to
protect or maintain any security interest in all or substantially
all of the Receivables and the other Serviced Assets, a
reasonable fee
23
to compensate the Custodian for such services will be paid from
Collections pursuant to Section 8.1(e) of the Credit Agreement;
provided that if a Servicer Event of Default shall have occurred
and been continuing, such retitling or other actions shall be at
the expense of the Custodian;
7. The Custodian has not been notified by any party other than the
Secured Party that such third party claims an interest in the
Receivables or the other Serviced Assets or is requesting the
Custodian to act as a bailee with respect to the Receivable Files
or the other Serviced Assets; and
8. The Custodian covenants and warrants to the Secured Party that as
of the date of each Acknowledgment of Custodian: (i) it holds no
adverse interest, by way of security or otherwise, in any
Receivable or the other Serviced Assets; and (ii) the execution
of this Agreement and the creation of the custodial relationship
hereunder does not create any interest, by way of security or
otherwise, of the Custodian in or to any Receivable or the other
Serviced Assets, other than the Custodian's rights as custodian
hereunder.
ARTICLE XVI
ENTIRE AGREEMENT; COUNTERPARTS; AMENDMENTS
This Agreement, including the Exhibits and Schedules attached hereto
and the documents referred to herein, contains the entire agreement between the
parties hereto with respect to the transactions contemplated hereby and
supersedes all prior understandings, negotiations, commitments and writings with
respect hereto. This Agreement may not be assigned, modified, changed or
supplemented except upon the express written consent of all parties hereto and
the Secured Party.
This Agreement may be executed in counterparts, each of which shall be
deemed an original but all of which taken together shall constitute but one and
the same document.
ARTICLE XVII
GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York (without regard to its conflict of law
principles except for Sections 5-1401 and 5-1402 of the New York General
Obligations Law). The choice of law is not a designation of jurisdiction or
venue. Any legal proceedings relating to this Agreement shall be tried by the
court and not by a jury and the parties HEREBY WAIVE ALL RIGHT TO TRIAL BY JURY.
The prevailing party in any legal proceeding relating to this Agreement shall be
entitled to an award for all reasonable attorneys fees and costs incurred in the
proceeding.
ARTICLE XVIII
BINDING EFFECT
This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and assigns. In addition, the
Lenders and the Hedge Counterparties shall be third party beneficiaries hereof.
Concurrently with the appointment of a
24
successor Secured Party under the Security Agreement and notification to the
parties to this Agreement of such appointment, such successor shall, without any
further action by any party, become the successor to the Secured Party
hereunder.
ARTICLE XIX
SEVERABILITY
Any provision of this Agreement that is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
ARTICLE XX
NONPETITION COVENANT
The Servicer shall not petition or otherwise invoke the process of any
court or government authority for the purpose of commencing or sustaining a case
against the Company under any federal or state bankruptcy, insolvency or similar
law or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Company or any substantial part of
their respective property, or ordering the winding up or liquidation of the
affairs of the Company. This Article XX shall be continuing and shall survive
any termination of this Agreement.
ARTICLE XXI
THIRD PARTY BENEFICIARIES; ACKNOWLEDGMENT OF ASSIGNMENT
The Secured Party is an express third party beneficiary of the
obligations of the Servicer and the Custodian hereunder and may directly enforce
the performance by the Servicer and the Custodian of such obligations. Each of
the Servicer and the Custodian hereby acknowledges and consents to the mortgage,
pledge, assignment and grant of a security interest by the Company to the
Secured Party pursuant to the Security Agreement of all of the Company's rights
and obligations hereunder. IN ADDITION, EACH OF THE SERVICER AND THE CUSTODIAN
HEREBY ACKNOWLEDGES AND AGREES THAT FOR SO LONG AS ANY OBLIGATIONS OF THE
COMPANY ARE OUTSTANDING UNDER THE CREDIT DOCUMENTS, THE SECURED PARTY WILL HAVE
THE RIGHT TO EXERCISE ALL CONSENTS, WAIVERS, RIGHTS, REMEDIES, POWERS,
PRIVILEGES AND CLAIMS OF THE COMPANY UNDER THIS AGREEMENT.
25
ARTICLE XXII
ADMINISTRATOR
Each of the Servicer and the Custodian hereby acknowledges that it
understands that E-LOAN, Inc. has been retained by the Company to act as its
administrator (in such capacity, the "ADMINISTRATOR"), and that all
communications and directions from E-LOAN, Inc. to the Servicer and the
Custodian in connection with this Agreement (other than those communications and
directions with respect to the Originator's rights and responsibilities
hereunder) shall be deemed to be communications or directions from the
Administrator, on behalf of the Company.
[THE BALANCE OF THIS PAGE IS BLANK]
26
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first written above.
SERVICER AND CUSTODIAN:
SYSTEMS & SERVICES TECHNOLOGIES, INC.
By:
---------------------------------------------
Name:
-------------------------------------------
Its:
--------------------------------------------
COMPANY:
E-LOAN AUTO FUND ONE, LLC
By:
---------------------------------------------
Name:
-------------------------------------------
Its:
--------------------------------------------
ORIGINATOR AND ADMINISTRATOR:
E-LOAN, INC.
By:
---------------------------------------------
Name:
-------------------------------------------
Its:
--------------------------------------------
APPENDIX A
DEFINED TERMS
"ACKNOWLEDGED RECEIVABLE FILE" means, collectively, the following documents or
instruments:
(a) with respect to a Contract for the purchase of a Vehicle by the
related Obligor, collectively, the following documents or instruments:
(1) the original fully executed E-Fund Agreement or Note and
Security Agreement or other form of Contract;
(2) a copy (to the best of the Custodian's knowledge, true and
complete) of the application for the certificate of title of the
related Financed Vehicle, indicating the Originator, the Company or the
Secured Party as the sole lienholder or legal owner thereof;
(3) a copy (to the best of the Custodian's knowledge, true and
complete) of the credit application of the related Obligor;
(4) if the related Financed Vehicle is a used Vehicle, a copy (to
the best of the Custodian's knowledge, true and complete) of the duly
executed odometer statement (setting forth the elapsed number of miles
such Financed Vehicle has been driven at or about the time of the loan
by the Originator to the Obligor) with respect to such Financed
Vehicle, which statement may be included in the ▇▇▇▇ of sale;
(5) if there is a co-signer on the Contract, a copy (to the best
of the Custodian's knowledge, true and complete) of the duly executed
notice to co-signer delivered to the co-signer, which notice may be set
forth in the related E-Fund Agreement;
(6) if the related Financed Vehicle is a new Vehicle, a copy (to
the best of the Custodian's knowledge, true and complete) of the duly
executed ▇▇▇▇ of sale with respect to such Financed Vehicle;
(7) a copy (to the best of the Custodian's knowledge, true and
complete) of the duly executed service contract or warranty, if any, to
the extent provided by or on behalf of the Company;
(8) to the extent provided by or on behalf of the Company,
original fully executed promissory notes and copies (to the best of the
Custodian's knowledge, true and complete) of all letters of credit,
agreements, documents and instruments relating to, evidencing, securing
or guarantying the loan to the related Obligor; and
(9) any and all other documents, to the extent provided by or on
behalf of the Company, that the Originator or Company shall keep on
file, in accordance with its customary procedures, relating to the
Serviced Assets (including, without limitation, the Receivable and the
related Financed Vehicle) or the related Obligor.
A-1
(b) with respect to a Contract for the refinance of a Vehicle by the
related Obligor:
(1) the original fully executed Note and Security Agreement or
other form of Contract;
(2) a duly executed power of attorney by the Obligor (to the best
of the Custodian's knowledge, true and complete), authorizing the
Originator to register itself as the sole lienholder on the certificate
of title for the related Financed Vehicle;
(3) a copy (to the best of the Custodian's knowledge, true and
complete) of the credit application of the related Obligor;
(4) a copy (to the best of the Custodian's knowledge, true and
complete) of the duly executed odometer statement (setting forth the
elapsed number of miles such Financed Vehicle has been driven at or
about the time of the loan by the Originator to the Obligor) with
respect to such Financed Vehicle, which statement may be included in
the ▇▇▇▇ of sale;
(5) if there is a co-signer on the Contract, a copy (to the best
of the Custodian's knowledge, true and complete) of the duly executed
notice to co-signer delivered to the co-signer, which notice may be set
forth in the related Note and Security Agreement;
(6) to the extent provided by or on behalf of the Company,
original fully executed promissory notes and copies (to the extent of
the Custodian's knowledge, true and complete) of all letters of credit,
agreements, documents and instruments relating to, evidencing, securing
or guarantying the loan to the related Obligor; and
(7) any and all other documents, to the extent provided by or on
behalf of the Company, that the Originator or Company shall keep on
file, in accordance with its customary procedures, relating to the
Receivable, the related Obligor or the related Financed Vehicle,
including, without limitation, any record, in a format acceptable to
the Administrator and Secured Party (e.g., compact disc), of each draft
executed by a prior lender/lienholder setting forth the acknowledgement
by such lender/lienholder of the release of its lien.
"ACKNOWLEDGEMENT OF CUSTODIAN" means an acknowledgement of Custodian
substantially in the form of Exhibit C hereto.
"ACTIVE RECEIVABLE" means any Receivable other than: (i) Inactive
Receivables, (ii) prepaid, fully satisfied accounts, (iii) accounts where the
Vehicle has been liquidated and the Servicer has posted the liquidation proceeds
or any other anticipated proceeds including but not limited to credit
enhancement insurance and financed product rebates; and (iv) accounts where the
Servicer has completed all work in connection with processing, receiving and
depositing into the Collection Account all insurance payoffs.
"ADMINISTRATION AGREEMENT" means the Administration Agreement, dated as
of June 1, 2002, between the Company and E-LOAN, Inc., as administrator.
"BASE SERVICING FEE" shall mean, for any Payment Date, an amount equal
to the LESSER OF (a) 0.50% divided by 12, multiplied by the Aggregate
Outstanding Balance as of the related Payment Date of all Receivables being
serviced by the Servicer under this Agreement and (b) any amounts due the
Servicer in accordance with SCHEDULE 1 for such Payment Date.
A-2
"BUSINESS DAY" means any day other than (i) a Saturday or Sunday or
(ii) a day on which the New York Stock Exchange, the Federal Reserve Bank of New
York or banking institutions in New York (including New York City) or, to the
extent relevant, California or Missouri are authorized or obligated by law,
regulation or executive order to remain closed.
"CHARGED-OFF RECEIVABLE" means a Receivable (i) for which at least one
payment (or any portion thereof) is more than 120 days past due pursuant to the
terms thereof, (ii) with respect to which the related Financed Vehicle has been
liquidated or (iii) if such Receivable is subject to a first payment default,
when the Servicer is duly instructed by the Administrator (or, after the
occurrence of the Commitment Termination Date, the Secured Party) to charge off
the outstanding balance.
"COLLECTION ACCOUNT" means the segregated collection operations account
subject to the Securities Account Control Agreement and maintained by the
Company at Bank One, NA (account: E-LOAN Auto Fund One, LLC) having account
number 636101495 (ABA: ▇▇▇▇▇▇▇▇▇) for the purpose of depositing the Collections
forming part of the collateral under the Credit Agreement.
"COLLECTIONS" means the aggregate of all payments and proceeds
(including Insurance Proceeds and the proceeds of disposition of any Financed
Vehicle received as a result of the enforcement of the terms of the related
Contract) received by the Servicer or owed to the Company in respect of the
Receivables or the other Serviced Assets.
"CONTRACT" means an E-Fund Agreement, Note and Security Agreement and
each other agreement delivered in connection therewith or pursuant thereto
relating to a Vehicle (together with all amendments, supplements and other
modifications thereto), which was originated by the Originator and pursuant to
which the related Obligor is required to repay the related amount financed in
full during the term of such agreement or contract.
"CREDIT AGREEMENT" means the Credit Agreement, dated as of June 1,
2002, among the Originator, the Company and the Lender, as the same may be
supplemented, amended or otherwise modified from time to time in accordance with
its terms.
"CREDIT DOCUMENTS" means the Credit Agreement, the Security Agreement,
the Contribution and Sale Agreement, this Agreement, the Administration
Agreement, the Note, each Hedge Agreement, the Securities Account Control
Agreement, and all related documents and certificates delivered in connection
therewith.
"CREDIT AND COLLECTION POLICY" means the credit and collection policies
of the Servicer with respect to the servicing of assets similar to the
Receivables, as modified from time to time.
"DEBT" means, at any time, with respect to any person, without
duplication and, except as provided in item (b) below, without regard to any
interest component thereof (whether actual or imputed) that is not due and
payable, the aggregate of the following amounts, each calculated at such time in
accordance with GAAP, but excluding, for greater certainty, capital stock,
whether or not preferred, which is not referred to in clause (k) below:
(a) money borrowed (including by way of overdraft) or
indebtedness represented by notes payable and drafts accepted
representing extensions of credit;
(b) the face amount of all bankers' acceptances and similar
instruments;
A-3
(c) the amount of any indemnity or reimbursement obligations
arising from or relating to letters of credit, letters of guarantee,
legally binding comfort letters, guarantees or security bonds issued on
behalf of such person;
(d) all obligations (whether or not with respect to the borrowing
of money) that are evidenced by bonds, debentures, notes or other
similar instruments, whether or not any such instruments are
convertible into capital, or that are not so evidenced, but that would
be considered by GAAP to be indebtedness for borrowed money;
(e) all obligations upon which interest charges are customarily
paid by that Person (including purchase money obligations);
(f) principal obligations as lessee under capital leases, all as
determined in accordance with GAAP;
(g) all obligations (contingent or otherwise) under any hedge
agreements (after deducting the market value at such time of any
collateral or credit support posted or transferred to the applicable
counterparty as security for such obligations);
(h) any deferred purchase price for property or services
purchased (including vendor financing in connection with any
investment, but excluding trade payables and other liabilities incurred
in the ordinary course of business);
(i) any transfer of property or assets which has been made with
recourse to the transferor or any obligation to repurchase any property
or assets or to purchase property or assets regardless of the delivery
or non-delivery thereof;
(j) any amount secured by an encumbrance on any property of such
person;
(k) any obligation to purchase, redeem or otherwise retire or
purchase for cancellation any shares of capital stock in such person at
the option of the holder thereof, including any obligation to so
purchase, redeem or otherwise retire or purchase for cancellation any
shares of capital stock issuable upon the exchange or conversion of
other shares; and
(l) any contingent obligation incurred for the purpose of or
having the effect of providing financial assistance to another entity,
including, any guarantee or indemnity (other than by endorsement of
negotiable instruments for collection or deposit in the ordinary course
of business) in any manner of any part or all of an obligation included
in items (a) through (k) above.
"E-FUND AGREEMENT" means an E-Fund Agreement originated by the
Originator to an Obligor for the purchase of a vehicle, substantially in the
form of EXHIBIT E hereto.
"FINANCED VEHICLE" means, in respect of a Contract and the related
Receivable, the Vehicle, together with all accessions thereto, securing the
related Obligor's indebtedness in connection with such Contract and the related
Receivable.
"GAAP" means, as of any date of determination, all applicable generally
accepted accounting principles of the Accounting Principles Board of the
American Institute of Certified Public Accountants and the Financial Accounting
Standards Board which are applicable as of such date.
A-4
"HEDGE COUNTERPARTY" means an interest rate swap or cap provider which
has entered into a hedge agreement with the Company.
"INACTIVE RECEIVABLE" means a Receivable with respect to which the
Servicer has made a good faith determination in accordance with the Servicing
Standard that the costs of servicing such Receivable are greater than the
expected recoveries with respect to such Receivable.
"INSURANCE PROCEEDS" means, with respect to any Contract and the
related Receivable, any proceeds collected by the Company, the Servicer or the
Originator or from claims on any physical damage insurance policies covering the
related Financed Vehicle.
"LENDER" means ▇▇▇▇▇▇▇ ▇▇▇▇▇ Bank USA, an industrial loan company
organized pursuant to the laws of the State of Utah, its successors and
permitted assigns.
"MATERIAL ADVERSE CHANGE" means, in respect of any Person, any change
having a material adverse effect on the business, assets, liabilities,
operations, results of operations, condition (financial or other), of such
Person, or the ability of such Person to carry on its business or a significant
part of its business, or which would reasonably be expected to result in, or has
resulted in, a material adverse effect on the ability of such person to perform
its obligations under the Servicing Agreement.
"MONTHLY SERVICER REPORT" means a report substantially in the form
attached hereto as EXHIBIT D.
"MONTHLY TAPE" means a report containing the fields set forth on
Exhibit G-1 (with respect to reports to be delivered to the Secured Party) or
Exhibit G-2 (with respect to reports to be delivered to the Administrator or the
Company).
"NOTE AND SECURITY AGREEMENT" means a Note and Security Agreement
originated by the Originator to an Obligor for the refinancing or purchase of a
vehicle, substantially in the form of EXHIBIT F hereto.
"OBLIGOR" means, with respect to a Contract and the related Receivable,
the consumer and any other person who owes payments under such Contract and the
related Receivable in respect of the purchase or refinancing of a Financed
Vehicle or such Contract and the related Receivable.
"PAYMENT DATE" means the fifteenth (15th) day of each calendar month
or, if such day is not a Business Day, the immediately following Business Day;
PROVIDED that the Payment Date in respect of the Interest Period which includes
the Termination Date shall occur on the Termination Date. The initial Payment
Date shall be August 15, 2002.
"RECEIVABLE" means any Contract listed on the Schedule of Contracts,
and in respect of any such Contract, all amounts payable by the related Obligor,
including, without limitation, all rights to payments on account of principal
and interest together with all payment obligations thereunder and all moneys
received thereon and the security interest in the related Financed Vehicle.
"RECEIVABLE FILE" means, collectively, the following documents or
instruments:
(a) with respect to a Contract for the purchase of a Vehicle by
the related Obligor, collectively, the following documents or
instruments:
A-5
(1) the original fully executed Contract (including, without
limitation, each E-Fund Agreement or Note and Security
Agreement);
(2) a true and complete copy of the application for the
certificate of title of the related Financed Vehicle, indicating
the Originator, the Company or the Secured Party as the sole
lienholder or legal owner thereof;
(3) a true and complete copy of the credit application of
the related Obligor;
(4) if the related Financed Vehicle is a used Vehicle, a
true and complete copy of the duly executed odometer statement
(setting forth the elapsed number of miles such Financed Vehicle
has been driven at or about the time of the loan by the
Originator to the Obligor) with respect to such Financed Vehicle,
which statement may be included in the ▇▇▇▇ of sale;
(5) if there is a co-signer on the Contract, a true and
complete copy of the duly executed notice to co-signer delivered
to the co-signer, which notice may be set forth in the related
E-Fund Agreement;
(6) a true and complete copy of the duly executed service
contract or warranty, if any, with respect to the related
Financed Vehicle;
(7) if the related Financed Vehicle is a new Vehicle, a true
and complete copy of the duly executed ▇▇▇▇ of sale with respect
to such Financed Vehicle;
(8) original fully executed promissory notes and true and
complete copies of all letters of credit, agreements, documents
and instruments relating to, evidencing, securing or guarantying
the loan to the related Obligor;
(9) within 240 days after the related Transfer Date of such
Contract, the original certificate of title for the related
Financed Vehicle, indicating the Originator, the Company, the
Borrower or the Secured Party as the sole lienholder or legal
owner thereof; and
(10) any and all other documents that the Originator shall
keep on file, in accordance with its customary procedures,
relating to the Serviced Assets (including without limitation,
the Receivable and the related Financed Vehicle) or the related
Obligor.
(b) with respect to a Contract for the refinance of a Vehicle by
the related Obligor:
(1) the original fully executed Note and Security Agreement
or other form of Contract, if applicable, together with any
modifications or amendments thereto, including, without
limitation, any extension agreements;
(2) a true and complete copy of a duly executed power of
attorney by the Obligor, authorizing the Originator to register
itself as the sole lienholder on the certificate of title for the
related Financed Vehicle;
(3) a true and complete copy of the credit application of
the related Obligor;
A-6
(4) a true and complete copy of the duly executed odometer
statement (setting forth the elapsed number of miles such
Financed Vehicle has been driven at or about the time of the loan
by the Originator to the Obligor) with respect to such Financed
Vehicle, which statement may be included in the ▇▇▇▇ of sale;
(5) if there is a co-signer on the Contract, a true and
complete copy of the duly executed notice to co-signer delivered
to the co-signer, which notice may be set forth in the related
Note and Security Agreement;
(6) original fully executed promissory notes and true and
complete copies of all letters of credit, agreements, documents
and instruments relating to, evidencing, securing or guarantying
the loan to the related Obligor;
(7) within 240 days after the related Transfer Date of such
Contract, the original certificate of title for the related
Financed Vehicle, indicating the Originator, the Company or the
Secured Party as the sole lienholder or legal owner thereof; and
(8) any and all other documents that the Originator shall
keep on file, in accordance with its customary procedures,
relating to the Receivable, the related Obligor or the related
Financed Vehicle, including, without limitation, any record, in a
format acceptable to the Secured Party (e.g., compact disc), of
each draft executed by a prior lender/lienholder setting forth
the acknowledgment by such lender/lienholder of the release of
its lien.
"SCHEDULE OF CONTRACTS" means a schedule of Contracts to be transferred
by the Originator to the Company on any Transfer Date, a copy of which has been
delivered by the Company or the Originator to the Servicer and Custodian.
"SERVICING STANDARD" has the meaning set forth in Article II.
"SUBSIDIARY" means, with respect to any person, any other person of
which at least a majority of the securities or other ownership interests having
by the terms thereof ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions of such corporation,
partnership or other entity (irrespective of whether or not at the time
securities or other ownership interests of any other class or classes of such
corporation, partnership or other entity shall have voting power by reason of
the happening of any contingency) is at the time directly or indirectly owned or
controlled by such person or one or more Subsidiaries of such person or by such
person and one or more Subsidiaries of such person.
"TRANSFER DATE" means any Business Day on which the Originator sells
Receivables and the related Serviced Assets to the Company pursuant to the
Contribution and Sale Agreement (including without limitation, the Closing
Date).
"TRUST ACCOUNT" has the meaning set forth in Article VIII.
"VEHICLE" means a new or used passenger automobile, sport utility
vehicle, light-duty truck, van or minivan which has been purchased or financed
by an Obligor pursuant to the provisions of a Contract.
A-7