[CONFORMED COPY]
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SERVICING AGREEMENT
between
CSC LOGIC/MSA L.L.P.,
doing business as "Loan Servicing Enterprise",
as Servicer
and
AUTOBOND ACCEPTANCE CORPORATION,
Individually and as Collection Agent
Dated as of January 29, 1997
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS; RULES OF INTERPRETATION..................... 1
SECTION 1.01. Defined Terms...................................................... 1
SECTION 1.02. Rules of Interpretation............................................ 8
ARTICLE II
SERVICING OF TRUST ASSETS................................ 9
SECTION 2.01. Appointment of Servicer............................................ 9
SECTION 2.02. Subservicing Agreements Between
Servicer and Subservicer........................................... 9
SECTION 2.03. Representations and Warranties of
the Servicer....................................................... 11
SECTION 2.04. Duties and Responsibilities of the
Servicer........................................................... 13
SECTION 2.05. Fidelity Bond, Errors and Omissions
Insurance; Contingent Disaster
Relief Protection.................................................. 15
SECTION 2.06. Inspection......................................................... 16
SECTION 2.07. Possession and Payment of
Receivables........................................................ 17
SECTION 2.08. Monthly Servicing Fee; Servicing
Expenses........................................................... 17
SECTION 2.09. Collection Agent To Maintain
Computer Link...................................................... 18
SECTION 2.10. Resignation or Termination of
Servicer........................................................... 18
SECTION 2.11. [Reserved]......................................................... 19
SECTION 2.12. Events of Termination.............................................. 19
SECTION 2.13. Appointment of the Successor
Servicer........................................................... 21
SECTION 2.14. Effect of Service Transfer......................................... 22
SECTION 2.15. Annual Reports; Statements as to
Compliance......................................................... 22
SECTION 2.16. [Reserved.......................................................... 22
SECTION 2.17. Servicer Reports................................................... 22
SECTION 2.18. Confidentiality.................................................... 23
SECTION 2.19. [Reserved.......................................................... 24
SECTION 2.20. Standard of Care................................................... 24
ARTICLE III
COLLECTION AGENT......................................... 24
SECTION 3.01. AutoBond as Collection Agent....................................... 24
SECTION 3.02. Representations and Warranties of
AutoBond........................................................... 25
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SECTION 3.03. Duties and Responsibilities of the
Collection Agent................................................... 27
SECTION 3.04. [Reserved]......................................................... 27
SECTION 3.05. [Reserved]......................................................... 28
SECTION 3.06. [Reserved]......................................................... 28
SECTION 3.07. [Reserved]......................................................... 28
SECTION 3.08. Repossession and Disposal.......................................... 28
SECTION 3.09. Standard of Care................................................... 29
ARTICLE IV
LIMITATION ON LIABILITY; INDEMNITIES.................... 29
SECTION 4.01. Liabilities of Obligors............................................ 29
SECTION 4.02. Limitation on Liability of the
Servicer........................................................... 29
SECTION 4.03. Indemnities of the Servicer and the
Collection Agent................................................... 30
ARTICLE V
MISCELLANEOUS.......................................... 31
SECTION 5.01. Beneficiaries...................................................... 31
SECTION 5.02. Amendment.......................................................... 31
SECTION 5.03. Notices............................................................ 31
SECTION 5.04. Severability of Provisions......................................... 32
SECTION 5.05. GOVERNING LAW; CONSENT TO
JURISDICTION; WAIVER OF JURY TRIAL................................. 32
SECTION 5.06. Counterparts....................................................... 33
SECTION 5.07. [Reserved]......................................................... 33
SCHEDULE - DESIGNATED AUTO LOANS
EXHIBITS
EXHIBIT A - FORM OF TRUST RECEIPT
EXHIBIT B - FORM OF MONTHLY SERVICER REPORT
EXHIBIT C - AUTOBOND PROGRAM MANUAL
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SERVICING AGREEMENT, dated as of January 29, 1997 (this "Agreement"),
between CSC LOGIC/MSA L.L.P., a Texas limited liability partnership doing
business as "Loan Servicing Enterprise," in its capacity as servicer (the
"Servicer") and AUTOBOND ACCEPTANCE CORPORATION, a Texas corporation,
individually ("AutoBond") and as collection agent (the "Collection Agent).
W I T N E S S E T H:
WHEREAS, AutoBond and its Affiliates have from time to time acquired
and will acquire, or will act as Collection Agent in respect of, certain Auto
Loans (as defined herein);
WHEREAS, AutoBond desires that a servicer be appointed to perform
certain servicing and insurance tracking functions in respect of the Auto Loans;
WHEREAS, CSC Logic/MSA L.L.P. has been requested and is
willing to act as the Servicer hereunder;
WHEREAS, AutoBond and the Servicer desire that AutoBond act as
Collection Agent hereunder and AutoBond has agreed to so act; and
NOW, THEREFORE, in consideration of the mutual covenants set forth
herein, and for other valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto covenant and agree as follows:
ARTICLE I
DEFINITIONS; RULES OF INTERPRETATION
SECTION 1.01. Defined Terms. As used herein, the following terms
shall have the following meanings:
"Adverse Claim" means any claim of ownership or any lien, security
interest, title retention, trust or other charge or encumbrance, or
other type of preferential arrangement having the effect or purpose of
creating a lien or security interest.
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or
indirect common control with such specified Person. For the purposes of
this definition, "control" when used with respect to any specified
Person means the power to direct the management and policies of such
Person, directly or
indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled"
have meanings correlative to the foregoing.
"Agreement" means this Servicing Agreement, as amended or supplemented
from time to time in accordance with the terms hereof, including all
exhibits and schedules hereto.
"AutoBond" means AutoBond Acceptance Corporation, a Texas corporation.
"AutoBond Program Manual" means the AutoBond Program Manual (including
the Credit and Collection Policies) attached hereto as Exhibit C, as
modified from time to time.
"Auto Loan" means a fixed-rate, closed-end consumer installment
automobile loan which finances the purchase of a new or used
automobile, light-duty truck or van, which loan is secured by a lien
and security interest in such financed vehicle in favor of the loan
holder, and listed on Schedule I hereto, as supplemented from time to
time by AutoBond.
"Business Day" means any day other than a Saturday or a Sunday, or
another day on which banks in Texas (or such other cities or states in
which the principal administrative offices of AutoBond or the principal
offices of the Servicer or AutoBond are subsequently located, as
specified in writing by AutoBond to the other parties hereto) are
required, or authorized by law, to close.
"Closing Date" means January 29, 1997.
"Collection Account" means each of the accounts in the name of, and
controlled by, AutoBond or its designee and designated by AutoBond to
the Servicer.
"Collection Agent" means AutoBond, in its capacity as
Collection Agent hereunder.
"Credit Endorsement" means the deficiency balance endorsement issued
under the VSI Policy.
"Cut-Off Date" means January 29, 1997, with respect to the Auto Loans
designated on the Closing Date, and with respect to subsequent Auto
Loans designated hereunder, the later to occur of (a) last Business Day
of the calendar month preceding such Transfer Date and (b) the
origination date of such Auto Loans.
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"Dealer" means each automobile dealer with whom AutoBond or an
Originator has entered into a Dealer Agreement.
"Dealer Agreement" means each agreement between a Dealer and either
AutoBond or an Originator which provides for, among other things,
acquisition of the Auto Loans.
"Debt" means for any Person, (a) indebtedness of such Person for
borrowed money or credit extended, (b) obligations of such Person
evidenced by bonds, debentures, notes or other similar instruments, (c)
obligations of such Person to pay the deferred purchase price of
property or services, (d) obligations of such Person as lessee under
leases which have been or should be, in accordance with GAAP, recorded
as capital leases, (e) obligations secured by any lien or other charge
upon property or assets owned by such Person, even though such Person
has not assumed or become liable for the payment of such obligations,
(f) obligations of such Person under direct or indirect guaranties in
respect of, and obligations (contingent or otherwise) to purchase or
otherwise acquire, or otherwise to assure a creditor against loss in
respect of, indebtedness or obligations of others of the kinds referred
to in clauses (a) through (e) above, and (g) liabilities in respect of
unfunded vested benefits under plans covered by ERISA. For the purposes
hereof, the term "guarantee" shall include any agreement, whether such
agreement is on a contingency or otherwise, to purchase, repurchase or
otherwise acquire Debt of any other Person, or to purchase, sell or
lease, as lessee or lessor, property or services, in any such case
primarily for the purpose of enabling another Person to make payment of
Debt, or to make any payment (whether as an advance, capital
contribution, purchase of an equity interest or otherwise) to assure a
minimum equity, asset base, working capital or other balance sheet or
financial condition, in connection with the Debt of another Person, or
to supply funds to or in any manner invest in another Person in
connection with Debt of such Person.
"Determination Date" means the 10th day of each month (or the preceding
Business Day, if such day is not a Business Day).
"Due Period" means each calendar month.
"Electronic Ledger" means the electronic master record of the
Receivables maintained by the Servicer.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
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"Event of Termination" has the meaning specified in Section 2.12
hereunder.
"Financed Vehicle" means a new or used automobile, van or light-duty
truck, the purchase of which the Obligor financed with an Auto Loan.
"Governmental Authority" means the United States of America, any state,
local or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative
functions thereof or pertaining thereto.
"Independent Public Accountant" means any of (a) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co.,
(b) Deloitte & Touche, (c) Coopers & ▇▇▇▇▇▇▇, (d) Ernst & Young, (e)
KPMG Peat Marwick and (f) Price Waterhouse (and any successors
thereof); provided, that such firm is independent with respect to
AutoBond, the Servicer or any Subservicer, as the case may be, within
the meaning of the Securities Act of 1933, as amended.
"Loan Documents" means, with respect to an Auto Loan (a) a copy of the
retail installment loan contract and security agreement evidencing such
Auto Loan, (b) a copy of the credit application, and (c) a copy of an
executed agreement to provide insurance signed by the Obligor, or a
binder in respect thereof or a copy of the original confirmation of
payment of premiums required under the VSI Policy.
"Loan File" means, with respect to any Auto Loan, the original retail
installment loan contract and security agreement evidencing the Auto
Loan and originals or copies of such other documents and instruments
relating to such Auto Loan and the security interest on the selected
Financed Vehicle as specified in the AutoBond Credit and Collection
Policies.
"Lockbox" means the Lockbox established and maintained pursuant to the
Lockbox Agreement.
"Lockbox Account" means the account in the name of the Servicer, as
custodian for AutoBond, established in respect of the Auto Loans at the
Lockbox Bank and maintained pursuant to the Lockbox Agreement.
"Lockbox Agreement" means the Lockbox Operations Agreement, dated as of
September 30, 1996 between the Servicer, as custodian for AutoBond, and
the Lockbox Bank.
"Lockbox Bank" means Banc One, Texas, N.A.
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"Monthly Servicing Fee" means, as of any Payment Date, the sum of (a)
unless previously boarded under a servicing agreement with the
Servicer, an initial booking fee equal to the product of (i) $10 and
(ii) the number of Auto Loans added under this Agreement during the
previous Due Period, and (b) the servicing fee, payable monthly
hereunder, equal to the product of (i) $8.00 and (ii) the total number
of Auto Loans subject to this Agreement at any time during such Due
Period.
"Net Payoff Balance" means, in respect of any Precomputed Receivables,
the net payoff less any accrued but unpaid late charges.
"Net Principal Balance" means, with respect to any Precomputed
Receivable, the Net Payoff Balance as of the due date of the last full
Scheduled Payment or, if more recent, the due date of the last periodic
payment of principal thereon.
"Net Unrealized Amount" means, (a) with respect to any Liquidated
Receivables, the Unpaid Principal Balance of such Auto Loan minus the
sum of (i) any repossession proceeds allocable to principal actually
received on such Auto Loan, (ii) any insurance proceeds allocable to
principal actually received from a claim with respect to such Auto Loan
and (iii) refunds received from the cancellation of any insurance
policies or service contracts with respect to such Auto Loan, and (b)
with respect to any Auto Loan where the related Obligor is in
bankruptcy, the amount of losses allocable to principal incurred
thereon.
"Obligor" means, with respect to any Receivable, the Person primarily
obligated to make payments in respect thereto.
"Officer's Certificate" means, with respect to any Person, a
certificate signed by the Chairman of the Board, Vice Chairman of the
Board, the President, a Vice President, the Treasurer, the Secretary,
an Assistant Secretary, or the manager of such Person.
"Opinion of Counsel" means a written opinion of counsel (who may be
counsel to AutoBond or the Servicer), which opinion is acceptable to
AutoBond.
"Original Principal Balance" means the Net Principal Balance of a
Precomputed Receivable and otherwise the outstanding Principal Balance
of a Receivable, in each case as of the related Cut-Off Date.
"Originator" means any Person, other than AutoBond, that acquires Auto
Loans directly from a Dealer.
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"Payment Date" means, initially, February 15, 1997 and thereafter the
15th day (or if such day is not a Business Day, the next succeeding
Business Day) of each month.
"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, limited liability company, trust,
association, joint venture, Governmental Authority or any other entity
of whatever nature.
"Post-Sale Adjustment" has the meaning specified in
Section 3.08(c).
"Precomputed Receivable" means any Auto Loan under which earned
interest (which may be referred to in the Auto Loan as the add-on
finance charge) and principal is determined according to the sum of
periodic balances or the sum of monthly balances or the sum of the
digits or any equivalent method commonly referred to as the "Rule of
78s".
"Receivable" means a fixed rate fully amortizing closed-end consumer
installment Auto Loan (upon which interest is calculated based upon
either a simple interest basis or the Rule of 78s) arising from the
sale of a Financed Vehicle, and includes, without limitation, (a) the
related Assignment, (b) all security interests or liens and property
subject thereto from time to time purporting to secure payment by the
Obligor thereunder, including, without limitation, the Financed
Vehicle, AutoBond's or an Originator's rights under the related Dealer
Agreement, (b) all guarantees, indemnities and warranties, proceeds of
insurance policies (including the VSI Policy), certificates of title or
other title documentation and other agreements or arrangements of
whatever character from time to time supporting or securing payment of
such Auto Loan, (c) all collections and all related Loan Documents,
Loan Files and records with respect to the foregoing, and (d) all
proceeds of any of the foregoing.
"Records" means all documents, books, records and other information
(including, without limitation, computer programs, tapes, disks, punch
cards, data processing software and related property and rights)
prepared and maintained by the Collection Agent, the Servicer or by or
on behalf of AutoBond with respect to Receivables and the related
Obligors.
"Responsible Officer" means, with respect to any Person, the Person,
any Vice President, any Assistant Vice President, any Assistant
Secretary, any Assistant Treasurer or any other officer of such Person
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customarily performing functions similar to those performed by any of
the above-designated officers and also, with respect to a particular
matter, any other officer to whom such matter is referred because of
such officer's knowledge of and familiarity with the particular
subject.
"Scheduled Payment" means a payment due on an Auto Loan in accordance
with its terms.
"Service Transfer" has the meaning specified in Section 2.12.
"Servicer" means CSC Logic/MSA L.L.P., a Texas limited liability
partnership doing business as "Loan Servicing Enterprises," in its
capacity as servicer under the Servicing Agreement and any successor
thereto in accordance hereunder.
"Servicer Duties" has the meaning specified in Section 2.04(a).
"Servicer Report" has the meaning specified in Section 2.17.
"Servicing Officer" means any officer or employee of the Servicer
involved in, or responsible for, the administration and servicing of
Receivables whose name appears on a list of servicing officers attached
to Officer's Certificates furnished to AutoBond by the Servicer, as
such list may be amended from time to time by the party furnishing any
such Officer's Certificate.
"Subservicer" means any Person with whom the Servicer enters into a
Subservicing Agreement.
"Subservicing Agreement" means any written contract between the
Servicer and any Subservicer, relating to servicing and collection of
Receivables, in such form as has been approved by AutoBond hereunder.
"Successor Servicer" has the meaning specified in Section 2.13(a)
hereunder.
"Transfer Date" means the Closing Date and any Business Day upon which
AutoBond designates an Auto Loan as subject to this Agreement.
"UCC" means the Uniform Commercial Code as in effect in the relevant
state.
"Unpaid Principal Balance" means, with respect to any Auto Loan as of
any Determination Date, (a) for an Auto Loan bearing interest
calculable on a simple interest basis, the unpaid principal amount for
such Auto Loan
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or (b) for a Precomputed Receivable, the Net Principal Balance, in each
case as of the end of the most recent Due Period; provided that, for
any Auto Loan where the Net Unrealized Amount equals the Unpaid
Principal Balance, such Unpaid Principal Balance shall thereafter equal
zero.
"VSI Policy" means the Vendor's Single Interest Insurance Policy,
including the Credit Endorsement, issued by Interstate, insuring
against risk of physical damage or other losses on the Financed
Vehicles, or any successor or replacement policies thereto.
SECTION 1.02. Rules of Interpretation. The following rules apply to
this Agreement:
(a) the singular includes the plural and the
plural includes the singular;
(b) "or" is not exclusive and "include" and
"including" are not limiting;
(c) a reference to any agreement or other
contract includes permitted supplements and amendments;
(d) a reference to a law includes any amendment
or modification to such law and any rules or regulations issued
thereunder or any law enacted in substitution or replacement therefor;
(e) a reference to a person includes its
permitted successors and assigns;
(f) a reference to an Article, a Section, an
Exhibit or a Schedule without further reference is to the relevant
Article, Section, Exhibit or Schedule of this Agreement;
(g) any right may be exercised at any time and
from time to time;
(h) the headings of the Articles and the
Sections are for convenience and shall not affect the meaning of this
Agreement; and
(i) words such as "hereunder", "hereto", "hereof" and
"herein" and other words of like import shall, unless the context
clearly indicates to the contrary, refer to the whole of this Agreement
and not to any particular Article, Section, subsection or clause
hereof.
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ARTICLE II
SERVICING OF TRUST ASSETS
SECTION 2.01. Appointment of Servicer. AutoBond hereby appoints the
Servicer, and the Servicer accepts such appointment, to perform its obligations
pursuant to this Agreement on behalf of and for the benefit of AutoBond and any
applicable Affiliates in accordance with the terms of this Agreement, the
respective Receivables, the VSI Policy and applicable law and, to the extent
consistent with such terms, in the same manner in which, and with the same care,
skill, prudence and diligence with which, it services and administers
Receivables of similar credit quality for other portfolios, if any, giving due
consideration to customary and usual standards of practice of prudent
institutional automobile loan servicers and, in each case, taking into account
its other obligations hereunder, but without regard to:
(i) any relationship that the Servicer, any
Subservicer or any Affiliate of the Servicer or any
Subservicer may have with the related Obligor; or
(ii) the ownership, or servicing for others, by
the Servicer or any Subservicer, of any other automobile loans or
property.
In the event that the Servicer believes that it is unable to comply with the
requirements of this Section 2.01 with respect to any particular Receivable as a
result of one or more of the factors described in clauses (i) and (ii) of this
Section 2.01, it may enter into a Subservicing Agreement pursuant to Section
2.02 pursuant to which a Subservicer shall perform its duties with respect to
any such Receivable. In such event, so long as such Subservicer performs such
duties on behalf of the Servicer in accordance with the requirements of this
Agreement, including this Section 2.01, then the Servicer shall be deemed to be
in compliance therewith. Notwithstanding the above, the Servicer must obtain the
written consent of AutoBond which consent shall not be unreasonably withheld
prior to any such Subservicing Agreement. In the event that AutoBond does not
consent to such a Subservicing Agreement proposed by the Servicer, AutoBond
shall have the right to remove the Servicer as the servicer hereunder with
respect to such Auto Loans and to appoint a Successor Servicer with respect to
such Auto Loans pursuant to Section 2.13.
SECTION 2.02. Subservicing Agreements Between Servicer and Subservicer.
(a) Upon the prior written consent of AutoBond (which consent shall not
be unreasonably withheld), the Servicer may enter into Subservicing Agreements
with a Subservicer
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for the performance of all or a part of the Servicer Duties with respect to any
Receivable. References in this Agreement to actions taken or to be taken by the
Servicer in performance of the Servicer Duties include actions taken or to be
taken by a Subservicer on behalf of the Servicer. Each Subservicing Agreement
will be upon such terms and conditions as are not inconsistent with this
Agreement. The Servicer shall provide written notice to AutoBond promptly upon
the appointment of any Subservicer. For purposes of this Agreement, the receipt
by a Subservicer of any amount with respect to a Receivable (other than amounts
representing servicing compensation) shall be treated as the receipt by the
Servicer of such amount.
(b) Upon the prior written consent of AutoBond (which consent shall not
be unreasonably withheld), the Servicer shall be entitled to terminate any
Subservicing Agreement that may exist in accordance with the terms and
conditions of such Subservicing Agreement and without any limitation by virtue
of this Agreement.
(c) Notwithstanding any Subservicing Agreement, any of the provisions
of this Agreement relating to agreements or arrangements between the Servicer or
a Subservicer or reference to actions taken through a Subservicer or otherwise,
the Servicer shall remain directly obligated and directly liable to AutoBond for
the servicing and administering of the Receivables in accordance with the
provisions of this Agreement without diminution of such obligation or liability
(including its indemnity obligations under Section 4.03) by virtue of such
Subservicing Agreements or arrangements or by virtue of indemnification from the
Subservicer or the Servicer and to the same extent and under the same terms and
conditions as if the Servicer alone were servicing and administering the
Receivables. The Servicer shall be entitled to enter into any agreement with a
Subservicer for indemnification of the Servicer and nothing contained in this
Agreement shall be deemed to limit or modify such indemnification.
(d) Any Subservicing Agreement that may be entered into pursuant to
this Agreement and any other transaction or services relating to the Receivables
involving a Subservicer in its capacity as such that is consented to by AutoBond
shall be deemed to be between the Subservicer and the Servicer alone and
AutoBond shall not be deemed party thereto and shall have no claims, rights,
obligations, duties or liabilities with respect to the Subservicer.
(e) If the Servicer shall for any reason no longer be the Servicer
hereunder (including by reason of any Event of Termination), the Servicer, upon
prior written consent of AutoBond, shall thereupon terminate each Subservicing
Agreement that may have been entered into, and neither AutoBond nor the
Successor Servicer shall be deemed to have
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assumed any liability or obligation thereunder, the Servicer's interest therein
or to have replaced the Servicer as a party to any such Subservicing Agreement.
SECTION 2.03. Representations and Warranties of the Servicer. The
Servicer represents and warrants to AutoBond as follows, as of the date hereof
(which representations and warranties shall be deemed repeated on each Transfer
Date and on each date on which a Servicer Report is due to be delivered
hereunder as though made on and as of such date):
(a) It is a limited liability partnership duly
organized, validly existing and in good standing under the laws of the
State of Texas 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 or a Subservicer is or will be in
compliance with the laws of each state to the extent necessary to
perform its obligations under this Agreement; and it or a Subservicer
has obtained all necessary licenses with respect to it or such
Subservicer required by law to enable it to perform its duties herein;
(b) It has the power and authority to execute, deliver
and perform this Agreement and the transactions contemplated hereby;
(c) The execution and delivery by it and the
performance by it or a Subservicer of this Agreement, and the execution
and delivery by it and the performance by it or a Subservicer of all
other agreements, instruments and documents which may be delivered by
it pursuant hereto, and the transactions contemplated hereby, (i) have
been duly authorized by all necessary partnership or other action, on
the part of it, (ii) do not contravene or cause it to be in default
under (A) its organizational documents, (B) any contractual restriction
with respect to any Debt of it or contained in any indenture, loan or
credit agreement, lease, mortgage, security agreement, bond, note, or
other material agreement or instrument binding it or its property or
(C) any law, rule, regulation, order, writ, judgment, award, injunction
or decree applicable to or binding it or its property, and (iii) do not
result in or require the creation of any Adverse Claim upon or with
respect to any of its properties;
(d) This Agreement has been duly executed and
delivered on behalf of it;
(e) No consent of, or other action by, and no notice to
or filing with, any Governmental Authority or any other party is
required for the due execution, delivery and performance by it (either
directly or
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through a Subservicer) of this Agreement or any other agreement,
document or instrument to be delivered by it hereunder;
(f) This Agreement is its legal, valid and binding
obligation enforceable against it in accordance with its terms;
(g) There is no pending or threatened action, suit or
proceeding, nor any injunction, writ, restraining order or other order
of a material nature against or affecting it, its officers or
directors, or its property, in any court or tribunal, or before any
arbitrator of any kind or before or by any Governmental Authority (i)
asserting the invalidity of this Agreement or any document to be
delivered by it hereunder or (ii) seeking any determination or ruling
that would reasonably be expected to materially and adversely affect
(A) the performance by it of its obligations under this Agreement, or
(B) the validity or enforceability of this Agreement or any document to
be delivered by it hereunder or (iii) which is inconsistent with the
due consummation by it of the transactions contemplated by this
Agreement;
(h) Its facilities, plant, personnel, records and
products are adequate for the performance of its duties hereunder;
(i) The Servicer is not in default with respect to any
order or decree of any court or any order, regulation or demand of any
federal, state, municipal or governmental agency, which would
reasonably be expected to have consequences that would materially and
adversely affect the condition (financial or otherwise) or operations
of the Servicer or its properties or would reasonably be expected to
have consequences that would materially and adversely affect its
performance hereunder;
(j) No certificate of an officer, statement furnished
in writing, report or electronic medium delivered pursuant to the terms
hereof by the Servicer contains any untrue statement of a material fact
or omits to state any material fact to make the certificate, statement
or report not misleading;
(k) The transactions contemplated by this Agreement
are in the ordinary course of business of the Servicer; and
(l) The Financed Vehicle securing each Receivable shall
not be released by the Servicer or a Subservicer in whole or in part
from the security
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interest granted by the Obligor, except as contemplated
herein.
It is understood and agreed that the representations and warranties set forth in
this Section 2.03 shall survive the execution of this Agreement. Upon discovery
by either AutoBond or the Servicer of a breach of any of the foregoing
representations and warranties, the party discovering such breach shall give
proper written notice to the other parties hereto.
SECTION 2.04. Duties and Responsibilities of the
Servicer.
(a) The Servicer shall manage, administer, monitor and service the Auto
Loans, including providing data management, payment processing and customer
service; provided that the Servicer will not act as Collection Agent. In
performing its duties hereunder, the Servicer shall have full power and
authority to do or cause to be done any and all things in connection with such
servicing and administration which it may deem necessary or desirable, within
the terms of this Agreement (the "Servicer Duties"). The Servicer will provide
the following services (together with other activities not inconsistent with the
description below and implicitly necessary to accomplish the usual and customary
activities, other than collections, of an automobile loan servicer):
(i) Boarding Functions:
(1) Review for receipt of copies of Loan Documents;
(2) Input of new Receivable information into loan
accounting system; and
(3) Preparation and mailing of welcome letters.
(ii) File Maintenance/Document Control Functions:
(1) Retention of copies of the Loan Documents;
(2) Tracking of customer collision insurance on
Financed Vehicles and reporting to Collection
Agent exposed Financed Vehicles; and
(3) Determination of Receivables being satisfied
in full.
(iii) Customer Service Functions:
(1) Preparation and transmittal of monthly billing
statements to Obligors;
(2) Response to Obligor inquiries;
(3) Research regarding billing statements and Obligor
inquiries;
(4) Maintenance of Obligor information; and
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(5) Preparation and mailing of delinquency notices.
(iv) Payment Processing Functions:
(1) Coordination of lockbox procedures;
(2) Recording of loan payment information; and
(3) Referral to Collection Agent of instances of
non-sufficient funds.
(v) Reporting Functions:
(1) Preparation and delivery of Servicer's Report.
(vi) Data Processing Functions:
(1) Entry of data;
(2) Operation of data center;
(3) Operation of telecommunications; and
(4) Operation and maintenance of collection system.
Notwithstanding the foregoing, to the extent that any of the duties set
forth above are assigned to the Collection Agent pursuant to Article III hereof,
the Servicer shall have no liability for such duty so long as the Collection
Agent continues to act in such capacity hereunder.
(b) The Servicer may not ▇▇▇ to enforce or collect upon a Receivable in
its own name, or as agent for AutoBond or its Affiliates without the prior
written consent of Autobond.
(c) In accordance with the standard of care in Section 2.01 the
Servicer may agree to grant to the Obligor on any Receivable any rebate, refund
or adjustment that the Servicer in good faith believes is required under the
Receivable or applicable law in connection with a prepayment in full of the
Receivable, and, the Servicer, AutoBond may remit the amount of any such rebate,
refund or adjustment to the applicable Obligors. The Servicer may not permit any
rescission or cancellation of any Receivable nor may it take any action with
respect to any Receivable which would invalidate the coverage afforded by the
VSI Policy to such Receivable or the related Financed Vehicle, or would impair
the rights of AutoBond therein or in the proceeds thereof. The Servicer shall
not extend or otherwise amend the terms of any Receivable, except in accordance
herewith.
(d) The Servicer shall hold in trust for the benefit of AutoBond and
shall forward to the Collection Account, or the Lockbox Account, as applicable,
no later than the next Business Day following receipt thereof any payment or
deposit with respect to any Receivable received by the
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Servicer. The Servicer shall not assert any right of setoff or any lien with
respect to such payment or deposit.
(e) The Servicer agrees to monitor and track each Financed Vehicle for
maintenance of required physical damage insurance in the manner required by the
VSI Policy and to notify the Collection Agent and AutoBond, as soon as
practicable but not later than 30 days after becoming initially aware, of
circumstances that would lead a reasonable person to believe that the insurance
on any Financed Vehicle is not being or will not be maintained in accordance
with applicable law and the terms of the applicable retail installment sales
contract; provided that if the VSI Policy is amended in writing, Servicer is not
obligated to comply with any different provision until such time as the Servicer
has been notified of such change, and has expressly agreed in writing to the
extent such modification would materially alter the obligations of the Servicer.
(f) Except as expressly provided herein, the Servicer shall not sell,
assign (by operation of law or otherwise) or otherwise dispose of, or create any
Adverse Claim upon or with respect to, any Receivable (or any right to income in
respect thereof), or any account in which any payments with respect to any
Receivable are deposited, or assign any right to receive income in respect of
any Receivable.
(g) The Servicer shall each instruct each Obligor by written notice
that all payments on Receivables shall be mailed to the Lockbox, and, that such
payments shall be made payable to the order of "AutoBond Acceptance
Corporation".
SECTION 2.05. Fidelity Bond, Errors and Omissions Insurance; Contingent
Disaster Relief Protection.
(a) The Servicer shall maintain, at its own expense, a blanket fidelity
bond and an errors and omissions insurance policy, with broad coverage with
responsible companies on all officers, employees or other Persons acting on
behalf of the Servicer in any capacity with regard to the Receivables to handle
funds, money, documents and papers relating to the Receivables. Any such
fidelity bond and errors and omissions 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 that would meet the requirements of prudent institutional auto loan
servicers and, in the case of the fidelity coverage in the amount of $100,000
and in the amount of $1,000,000 in the case of errors and omissions coverage. No
provision of this Section 2.05(a) requiring such fidelity bond and errors and
omissions insurance shall diminish or relieve the Servicer from its duties and
obligations as set forth in this Agreement. The Servicer shall be deemed to have
complied
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with this provision with respect to itself if one of its respective Affiliates
has such fidelity bond and errors and omissions policy coverage and, by the
terms of such fidelity bond and errors and omissions policy, the coverage
afforded thereunder extends to the Servicer. The Servicer shall cause each and
every Subservicer for it to maintain a policy of insurance covering errors and
omissions and a fidelity bond which would meet such requirements. Upon request
of AutoBond, the Servicer shall cause to be delivered to AutoBond a
certification evidencing coverage under such fidelity bond and insurance policy.
Any such fidelity bond or insurance policy shall (i) not be cancelled without
the Servicer giving prior written notice to AutoBond immediately following the
giving or receipt of such notice as is required or allowed under the terms of
such fidelity bond or insurance policy, as the case may be and (ii) not be
modified in a materially adverse manner without ten days' prior written notice
by the Servicer to AutoBond.
(b) The Servicer currently maintains, at its own expense, a computer
disaster recovery plan and computer disaster recovery procedures in forms
consistent with industry standards of prudent institutional receivables
servicers and shall continue to maintain, at its own expense, such a plan and
such procedures as are consistent with such standards and shall not modify amend
or revoke such procedures without giving prior written notice thereof to
AutoBond. No provision of this Section 2.05(b) requiring such a plan and such
procedures shall diminish or relieve the Servicer from its duties and
obligations as set forth in this Agreement. The Servicer shall be deemed to have
complied with this provision if one of its respective Affiliates has such a plan
and such procedures which also affords protection to the Servicer. Upon request
of AutoBond, the Servicer shall cause to be delivered to AutoBond a
certification as to the existence of such a plan and such procedures.
SECTION 2.06. Inspection.
(a) At all times during the term hereof, the Servicer shall afford
AutoBond, together with each of their authorized agents (including auditors),
upon reasonable notice, reasonable access (subject to the security rules and
regulations of the Servicer) during normal business hours to its records
relating to the Receivables and will cause its personnel to assist in any
examination of such records by any of such Persons; provided, that the foregoing
shall not require any of such Persons to conduct any inspection. The examination
referred to in this Section 2.06(a) will be conducted in a manner which does not
unreasonably interfere with the Servicer's normal operations or customer or
employee relations or require the Servicer to disclose or expose confidential
information related to its services hereunder or to its other clients. Without
otherwise
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limiting the scope of the examination, AutoBond may, using generally accepted
auditing standards, verify the status of each Receivable and review the copies
of the Loan Documents, Electronic Ledger and records relating thereto for
conformity to reports prepared pursuant to Section 2.17 and compliance with the
standards represented or required to exist as to each Receivable in this
Agreement. Nothing in this section shall affect the obligation of the Servicer
to observe any applicable law prohibiting disclosure of information regarding
the obligors, and failure of the Servicer to provide access to information a
result of such obligation shall not constitute a breach of this Section 2.06.
(b) All information obtained by AutoBond or its respective agents
regarding the Obligors and the Receivables, whether upon exercise of their
respective rights under this Section 2.06 or otherwise, shall be maintained by
AutoBond and its respective agents in confidence and shall not be disclosed to
any other Person, except as otherwise required by applicable law or regulation.
SECTION 2.07. Possession and Payment of Receivables. The Servicer shall
determine when a Receivable has been paid in full. The Servicer shall notify
AutoBond in writing within five (5) Business Days as to each Receivable in
connection with which such a determination has been made. If the Servicer
requires possession of any Loan File or any documents related thereto in order
to perform its duties or obligations hereunder, prior to taking possession of
any such Receivable or documents, the Servicer shall deliver to AutoBond a trust
receipt substantially in the form attached hereto as Exhibit A. The Servicer
agrees to promptly return any such Receivable and documents, possession of which
the Servicer takes in accordance with this Section 2.07, after its need for
possession thereof ceases.
SECTION 2.08. Monthly Servicing Fee; Servicing Expenses.
(a) On each Payment Date the Servicer shall be entitled to receive by
wire transfer of immediately available funds to an account designated in writing
by the Servicer to AutoBond an amount equal to the Monthly Servicing Fee as of
such Payment Date.
(b) The Servicer shall be required to pay for all expenses incurred by
it in connection with its activities hereunder (including any payments to
accountants, counsel, Subservicers, or any other Person) out of the compensation
retained by or paid to it pursuant to Section 2.08(a) above, and shall not be
entitled to any extra payment or reimbursement therefor; provided, however, that
the Servicer
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shall be entitled to reimbursement by wire transfer of immediately available
funds to an account designated in writing by the Servicer to AutoBond for the
amount of any (i) applicable lockbox charges, freight, communication charges and
refunds for overpayments, and (ii) other expenses incurred with the prior
written consent of AutoBond. No later than five Business Days prior to each
Payment Date, the Servicer shall provide AutoBond and the Collection Agent with
a list of items eligible for reimbursement pursuant to the immediately preceding
sentence, which items may include, with respect to the Servicer, expenses for
special forms and materials, freight, tapes, communications, lock-box charges
and other expenses approved by AutoBond, in such reasonable detail as AutoBond
may request, together with its certification by a Servicing Officer that all
such items are eligible for reimbursement hereunder.
SECTION 2.09. Collection Agent To Maintain Computer Link. Without
limitation of its obligations in respect of the other provisions of this
Agreement, and in addition to the duties of the Servicer, the Collection Agent
has supported and will continue to support non-dedicated dial-up capability with
the Servicer. Notwithstanding any provision of the Agreement to the contrary,
the Collection Agent shall have no duty or obligation with respect to the
information provided via the computer link described in the preceding sentence.
SECTION 2.10. Resignation or Termination of Servicer.
(a) The Servicer may resign immediately from the obligations and duties
hereby imposed on it upon its determination that (i) the performance of its
duties hereunder has become impermissible under applicable law and (ii) there is
no reasonable action which the Servicer could take to make the performance of
its duties hereunder permissible under applicable law. Any such determination
permitting the resignation of the Servicer shall be evidenced as to clause (i)
above by an Opinion of Counsel to such effect delivered to AutoBond before any
such resignation and as to clause (ii) by an Officer's Certificate to such
effect delivered to AutoBond before any such resignation. The action referred to
in clause (ii) of this Section 2.10(a) will not be considered reasonable if it
requires the payment of extraordinary fees or costs for which the Servicer is
not eligible for reimbursement under Section 2.08.
(b) AutoBond may, upon 30 days' prior written notice to the Servicer,
terminate CSC LOGIC/MSA, L.L.P. as Servicer hereunder provided, that if such
termination is without cause, CSC LOGIC/MSA L.L.P. shall receive the termination
fee payable pursuant to Section 2.13(c).
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(c) In addition to its rights under Section 2.10(a), so long as the
Servicer is CSC LOGIC/MSA, L.L.P., the Servicer may resign as Servicer
hereunder, effective upon 30 days' notice to AutoBond; provided, however that
such resignation may be effective earlier if a Successor Servicer is appointed
in accordance with Section 2.13 prior to the expiration of such 30 day period.
SECTION 2.11. [Reserved]
SECTION 2.12. Events of Termination. If any of the following events
(each, an "Event of Termination") shall occur and be continuing:
(a) Any failure by the Servicer to forward to the Collection
Account or the Lockbox Account, as applicable, any payment or partial
payment or deposit identified with respect to any Receivable received
by the Servicer and the continuance of such failure for a period of two
Business Days after the date upon which such payment or deposit is
received by the Servicer; or
(b) Failure on the part of either party to observe or perform
any term, covenant or agreement in this Agreement, (other than the
agreement to deliver the Servicer Report pursuant to Section 2.17),
which failure continues unremedied for 10 Business Days after discovery
by the or the date on which written notice of such failure, requiring
the same to be remedied, shall have been given to such party by the
other party; or
(c) Any proceeding shall be instituted against the Servicer or
AutoBond (or, if the Servicer or AutoBond is actively contesting the
merits thereof, such proceeding is not dismissed within 60 days)
seeking to adjudicate it a bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of it or any of its Debts under any
law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment
of a receiver, trustee, custodian or other similar official for it or
for any substantial part of its property, or any of the actions sought
in such proceeding (including, without limitation, the entry of an
order for relief against, or the appointment of a receiver, trustee,
custodian or other similar official for, it or for any substantial part
of its property) shall occur; or
(d) The commencement by the Servicer or AutoBond of a
voluntary case or proceeding under any applicable federal or state
bankruptcy, insolvency, reorganization or other similar law or of any
other case or proceeding to be adjudicated a bankrupt or
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insolvent, or the consent by it to the entry of a decree or order for
relief in respect of the Servicer or AutoBond in an involuntary case or
proceeding under any applicable federal or state bankruptcy,
insolvency, reorganization or other similar law or to the commencement
of any bankruptcy or insolvency case or proceeding against it, or the
filing by it of a petition or answer or consent seeking reorganization
or relief under any applicable federal or state law, or the consent by
it to the filing of such petition or to the appointment of or taking
possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or similar official of the Servicer or AutoBond or of any
substantial part of its property, or the making by it of an assignment
for the benefit of creditors, or the admission by it in writing of its
inability to pay its Debts generally as they become due, or the taking
of corporate action by the Servicer in furtherance of any such action;
or
(e) The Servicer shall fail to deliver a report at the time,
in the form and containing the information expressly required by this
Agreement, and the continuance of such failure for a period of 5
Business Days after the date upon which written notice of such failure
shall have been given to the Servicer by AutoBond; or
(f) There is a breach of any of the representations and
warranties of a party set forth herein which breach shall be in the
opinion of the other party reasonably expected to have a material
adverse effect on such party or the Auto Loans and such breach shall
not have been cured within 10 Business Days;
then, and in any such event, the aggrieved party may, by delivery to the other
party of a written notice specifying the occurrence of any of the foregoing
events, terminate this Agreement without demand, protest or further notice of
any kind, all of which are hereby waived (such termination of the Servicer
pursuant to this Section or Section 2.10 is hereby called a "Service Transfer");
provided, that in the event any of the events described in subsections (c) or
(d) of this Section 2.12 shall have occurred, termination of the duties and
responsibilities of the affected party shall automatically occur, without,
demand, protest, or further notice of any kind, all of which are expressly
waived by such party.
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SECTION 2.13. Appointment of the Successor Servicer.
(a) Upon the effectiveness of termination of the Servicer's
responsibilities under this Agreement pursuant to Section 2.10 or Section 2.12,
AutoBond shall immediately succeed to the duties of the Servicer as a successor
Servicer (the "Successor Servicer"), unless and until another Successor Servicer
has been appointed by AutoBond. Such Successor Servicer shall succeed to all
rights and assume all of the responsibilities, duties and liabilities of the
Servicer under this Agreement; provided, that such Successor Servicer shall have
no responsibility for any actions of the Servicer prior to the date of the
appointment of such Successor Servicer as Servicer. Such Successor Servicer
shall be authorized and empowered to execute and deliver, on behalf of the
Servicer, as attorney-in-fact or otherwise, any and all documents and other
instruments, and to do any and all acts or things necessary or appropriate to
effect the purposes of such notice of termination and to perform the duties of
the Servicer hereunder.
(b) Any Successor Servicer appointed by AutoBond hereunder shall be
entitled to the compensation (including the estimated termination costs of such
servicing and a reasonable profit) agreed to with AutoBond.
(c) The outgoing Servicer, AutoBond and the Successor Servicer shall
take such action, consistent with this Agreement, that shall be reasonably
necessary to effectuate any such succession, including, without limitation, (i)
the express assumption by such Successor Servicer of the duties and obligations
of the outgoing Servicer hereunder, (ii) notifying Obligors in writing of the
existence of the Successor Servicer, and (iii) providing such Successor Servicer
with all Records maintained or held by the outgoing servicer as Servicer
hereunder, including all paper files and all electronic files, and the Servicer
shall be reimbursed for related expenses in accordance with Section 2.08(b). In
the event that CSC Logic/MSA L.L.P. is terminated as Servicer without cause
pursuant to Section 2.10(b), it shall be entitled to receive an additional
one-time termination fee of $6.50/loan.
(d) Upon appointment, any Successor Servicer shall be successor in all
respects to the outgoing Servicer under this Agreement and the transactions set
forth or provided for herein and shall be subject to all responsibilities,
duties and liabilities relating thereto placed upon the Servicer by the terms
and provisions hereof.
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SECTION 2.14. Effect of Service Transfer.
(a) Prior to any Service Transfer, the outgoing Servicer shall notify
(or, to the extent that the Servicer provided such notice pursuant to Section
2.13(c), confirm the notice to) Obligors of the existence of the Successor
Servicer. The Servicer shall be entitled to receive from AutoBond, as extra
compensation for such Services, a fee equal to $.60 for each such notice given.
(b) After any Service Transfer, the outgoing Servicer shall have no
further obligations with respect to the management, servicing, custody or
monitoring of the collection of the Receivables and the Successor Servicer shall
have all of such obligations.
(c) A Service Transfer shall not affect the rights and duties of the
parties hereunder (including, but not limited to, the obligations and
indemnities of the outgoing Servicer pursuant to Article IV) other than those
relating to the management, servicing, custody or monitoring of the collection
of the Receivables by the Successor Servicer.
SECTION 2.15. Annual Reports; Statements as to Compliance.
(a) On or before ninety (90) days after the end of each fiscal
year of the Servicer, the Servicer shall deliver to AutoBond a copy of the
financial statements of Computer Sciences Corporation and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ &
Associates, Inc. (or the Successor Servicer) containing a report of a firm of
Independent Public Accountants to the effect that such firm has examined certain
books and records of Computer Sciences Corporation and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ &
Associates, Inc. (or the Successor Servicer) and that, on the basis of such
examination conducted substantially in compliance with generally accepted audit
standards such financial statements accurately reflect the financial condition
of Computer Sciences Corporation and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates, Inc. (or the
Successor Servicer).
(b) The Servicer shall promptly (but in any event within five Business
Days) notify AutoBond upon receiving actual knowledge of any event which
constitutes an Event of Servicing Termination or would constitute an Event of
Servicing Termination but for the requirement that notice be given or time
elapse or both.
SECTION 2.16. [Reserved].
SECTION 2.17. Servicer Reports.
(a) The Servicer shall furnish by close of business on each
Determination Date (or the next succeeding Business Day if such day is not a
Business Day), to AutoBond, an
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Officer's Certificate, substantially in the form attached hereto as Exhibit B
(the "Servicer Report"), or in such other form as is mutually acceptable to the
Servicer and AutoBond. To the extent such information is not currently provided
in the form of Servicer Report, then the Servicer shall develop and provide such
information at its customary hourly rate and cost, which shall be paid to
Servicer as part of its compensation hereunder.
(b) The Servicer Report shall include a certification (i) that the
information contained in such certificate is accurate, (ii) that no Event of
Termination, or event that with notice or lapse of time or both would become an
Event of Termination, has occurred, or if an Event of Termination or such event
has occurred and is continuing, specifying the Event of Termination or such
event and its status and (iii) that the representations and warranties of the
Servicer contained in Section 2.03 of this Agreement are true and correct as
though made on and as of the date of such certificate.
SECTION 2.18. Confidentiality. AutoBond acknowledges the proprietary
nature of certain of the software, software procedures, software development
tools, know-how, methodologies, processes and technologies of the Servicer
("Confidential Material") and agrees (i) that it shall use the same means as it
uses to protect its own confidential information, but in no event less than
reasonable means, to avoid disclosure, by it or its agents or employees, to any
third party of any confidential or proprietary information of the Servicer
identified as such by the Servicer to it, except to the extent that any such
person may be required to disclose any such information (x) by law or any legal
process or proceeding, including, without limitation, in connection with an
examination or audit by any governmental regulatory agency, in which case such
person shall give notice of such event to the Servicer or (y) in connection with
its duties and obligations hereunder and under the other transaction documents,
and (ii) that all such confidential or proprietary software, software
procedures, software development tools, know-how, methodologies, process and
technologies that are based upon trade secrets or proprietary information of the
Servicer identified as such by the Servicer to it shall be and remain the
property of the Servicer and that AutoBond will have no ownership interest
therein or ownership claim thereto. AutoBond shall confine the knowledge and use
of the Confidential Material only to its employees who require such knowledge
and use in the ordinary course and scope of their employment.
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SECTION 2.19. [Reserved].
SECTION 2.20. Standard of Care. In performing its duties and
obligations hereunder and in administering, tracking and enforcing the insurance
policies maintained by obligors relating to the Receivables pursuant to this
Servicing Agreement, the Servicer will comply with all applicable state and
federal laws and will exercise that degree of skill and care consistent with the
degree of skill and care that the Servicer exercises with respect to similar
motor vehicle retail installment sales contracts or loans owned and/or serviced
by the Servicer, and will apply in performing such duties and obligations, those
standards, policies and procedures consistent with the customary standards,
policies and procedures the Servicer applies with respect to similar motor
vehicle retail installment contracts or loans owned or serviced by it; provided,
however, that notwithstanding the foregoing, the Servicer shall not, except
pursuant to a judicial order from a court of competent jurisdiction, or as
otherwise required by applicable law or regulation, release or waive the
right to collect the unpaid balance on any Receivable. In performing its duties
and obligations hereunder, the Servicer shall comply with the VSI Policy (solely
with respect to insurance tracking as specified in the Servicer's duties as set
forth in Section 2.04(a)) and all applicable federal and state laws and
regulations, shall maintain all state and federal licenses and franchises
necessary for it to perform its servicing responsibilities hereunder, and shall
not impair the rights of AutoBond in the Receivables.
ARTICLE III
COLLECTION AGENT
SECTION 3.01. AutoBond as Collection Agent. (a) AutoBond agrees to act
as the Collection Agent under this Agreement so long as the Servicer is acting
as Servicer hereunder.
(b) The Collection Agent shall perform its obligations pursuant to this
Agreement on behalf of and for the benefit of AutoBond in accordance with the
terms of this Agreement, the respective Receivables, the VSI Policy and
applicable law and, to the extent consistent with such terms, in the same manner
in which, and at least with the same care, skill, prudence and diligence with
which, it services and administers Receivables of similar credit quality for
other portfolios, if any, giving due consideration to customary and usual
standards of practice of prudent institutional automobile loan collection agents
and, in each case, taking into account its other obligations hereunder, but
without regard to:
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(i) any relationship that the Collection Agent or any
Affiliate of the Collection Agent may have with the related Obligor;
(ii) the Collection Agent's right to receive
compensation for its services hereunder or with respect to any
particular transaction; or
(iii) the ownership, or servicing for others, by the
Collection Agent, of any other automobile loans or property.
In furtherance of the servicing standard set forth above in this Section
3.01(b), and in accordance with the provisions of the AutoBond Program Manual
and subject to any express limitations set forth in this Agreement (and the
subrogation rights of any insurance company issuing the VSI Policy), the
Collection Agent shall also seek to maximize the timely and complete recovery of
principal and interest on Receivables; provided, however, that nothing herein
contained shall be construed as an express or implied guarantee by the
Collection Agent of the collectibility of the Receivables.
SECTION 3.02. Representations and Warranties of AutoBond. AutoBond
represents and warrants to the Servicer as follows, as of the date hereof (which
representations and warranties shall be deemed repeated on each Transfer Date
and on each date during the term hereof as though made on and as of such date):
(a) It is a corporation duly organized, validly
existing and in good standing under the laws of the State of Texas 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 will be in compliance with the laws of each state to the
extent necessary to perform its obligations under this Agreement; and
it has obtained all necessary licenses with respect to it required by
law to enable it to perform its duties herein;
(b) It has the corporate power and authority to
execute, deliver and perform this Agreement and the transactions
contemplated hereby;
(c) The execution and delivery by it and the
performance by it of this Agreement, and the execution and delivery by
it and the performance by it of all other agreements, instruments and
documents which may be delivered by it pursuant hereto and thereto, and
the transactions contemplated hereby and thereby, (i) have been duly
authorized by all necessary corporate or other action, on the part of
it, (ii) do not contravene or cause it to be in default under (A) its
articles of incorporation, (B) any contractual restriction with
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respect to any Debt of it or contained in any indenture, loan or credit
agreement, lease, mortgage, security agreement, bond, note, or other
material agreement or instrument binding it or its property or (C) any
law, rule, regulation, order, writ, judgment, award, injunction or
decree applicable to or binding it or its property, and (iii) do not
result in or require the creation of any Adverse Claim upon or with
respect to any of its properties;
(d) This Agreement has been duly executed and
delivered on behalf of it;
(e) No consent of, or other action by, and no notice to
or filing with, any Governmental Authority or any other party is
required for the due execution, delivery and performance by it of this
Agreement or any other agreement, document or instrument to be
delivered by it hereunder;
(f) This Agreement is its legal, valid and binding
obligation, enforceable against it in accordance with its terms;
(g) There is no pending or threatened action, suit or
proceeding, nor any injunction, writ, restraining order or other order
of a material nature against or affecting it, its officers or
directors, or its property, in any court or tribunal, or before any
arbitrator of any kind or before or by any Governmental Authority (A)
asserting the invalidity of this Agreement, or any document to be
delivered by it hereunder or (B) seeking any determination or ruling
that would reasonably be expected to materially and adversely affect
(I) the performance by it of its obligations under this Agreement, or
(II) the validity or enforceability of this Agreement, or any document
to be delivered by it hereunder or thereunder (C) which is inconsistent
with the due consummation by it of the transactions contemplated by
this Agreement;
(h) Its facilities, plant, personnel, records and
products are adequate for the performance of its duties hereunder;
(i) AutoBond is not in default with respect to any
order or decree of any court or any order, regulation or demand of any
federal, state, municipal or governmental agency, and there exists no
other event or circumstance, which default, event or circumstance would
reasonably be expected to have consequences that would materially and
adversely affect the condition (financial or otherwise) or operations
of AutoBond or its properties or would reasonably be expected to have
- 26 -
consequences that would materially and adversely affect its performance
hereunder;
(j) Each certificate and each statement furnished in
writing, report or electronic medium delivered pursuant to the terms
hereof by AutoBond is accurate and complete with respect to the
information purported to be set forth therein; and
(k) The practices used by the AutoBond to monitor
collections with respect to the Receivables and repossess and dispose
of the Financed Vehicles related to the Receivables have been, and will
be, in all material respects, legal, proper and in conformity with the
requirements of the VSI Policy procedures (if applicable) and as set
forth with respect to the Collection Agent in the AutoBond Program
Manual.
It is understood and agreed that the representations and warranties set forth in
this Section 3.02 shall survive the execution of this Agreement.
SECTION 3.03. Duties and Responsibilities of the Collection Agent.
(a) AutoBond, as Collection Agent, shall remain the prior lienholder of
record with respect to each Financed Vehicle relating to the Auto Loans.
(b) The duties and responsibilities of the Collection Agent shall
consist of (i) receiving and administering collections on the Receivables, (ii)
arranging for and administering repossessions of the Financed Vehicles related
to the Receivables, (iii) disposing of each Financed Vehicle related to a
Receivable whether following repossession or otherwise and (iv) filing of
insurance claims and performing the duties of the named insured under the VSI
Policy (if applicable) with respect to each Receivable affected by a
repossession or otherwise. The Collection Agent, on behalf of AutoBond (and any
named insured under the VSI Policy), shall take such reasonable action as shall
be necessary to permit recovery on each Receivable under the VSI Policy, if
applicable.
(c) The Collection Agent shall forward to the Lockbox or the Lockbox
Account within two (2) Business Days following receipt thereof any payment or
partial payment or deposit with respect to any Receivable received by the
Collection Agent.
SECTION 3.04. [Reserved]
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SECTION 3.05. [Reserved]
SECTION 3.06. [Reserved]
SECTION 3.07. [Reserved]
SECTION 3.08. Repossession and Disposal.
(a) The Collection Agent is empowered to execute and deliver any and
all instruments of satisfaction or cancellation, or partial or full release or
discharge, and all other comparable instruments, with respect to the Financed
Vehicles related to the Receivables, all in accordance with the standard of care
set forth in Section 3.09. Without limiting the generality of the foregoing, the
Servicer shall upon the receipt of a written request of the Collection Agent,
execute and deliver to the Collection Agent any limited powers of attorney and
other documents prepared by the Collection Agent and reasonably necessary or
appropriate (as certified in such written request) to enable the Collection
Agent to carry out its duties hereunder (including, without limitation, matters
relating to the certificates of title with respect to the Financed Vehicles),
and the Servicer shall not be held responsible for any negligence by the
Collection Agent in its use of such limited powers of attorney.
(b) The Collection Agent shall forward the proceeds of any disposition
of a Financed Vehicle related to a Receivable upon receipt thereof to the
Lockbox or the Lockbox Account. If subsequent to the disposal of a Financed
Vehicle related to a Receivable in accordance herewith and, as required by this
Agreement, with the AutoBond Program Manual, the transaction disposing of such
Financed Vehicle is rescinded or adjusted, through arbitration or otherwise, due
to any condition affecting such Financed Vehicle, then any amount which the
Collection Agent pays in connection with such rescission or adjustment shall be
the "Post-Sale Adjustment". The Collection Agent shall notify the Servicer of
the amount of any Post-Sale Adjustment.
(c) The Collection Agent represents and warrants to the Servicer and
shall be deemed to continuously represent and warrant to the Servicer with
respect to each Financed Vehicle assigned to the Collection Agent pursuant
hereto and, as required by this Agreement, to the AutoBond Program Manual, that
the Collection Agent will comply in all material respects with the VSI Policy
(if applicable), and all applicable federal, state and local regulations
pertaining to its services hereunder, including disclosure requirements,
required to be complied with in conjunction with such services. The Collection
Agent shall defend, indemnify and hold the Servicer harmless from and against
any claim, suit, loss, cost or liability, direct or
- 28 -
indirect, including reasonable attorney's fees, arising out of any breach of any
representation or warranty made by the Collection Agent in the immediately
preceding sentence.
SECTION 3.09. Standard of Care. In performing its duties and
obligations hereunder and in administering and enforcing the VSI Policy relating
to the Receivables pursuant to this Servicing Agreement, the Collection Agent
(if other than AutoBond) will comply with all applicable state and federal laws
and will exercise that degree of skill and care consistent with the degree of
skill and care that the Collection Agent exercises with respect to similar motor
vehicle retail installment sales contracts or loans owned and/or serviced by the
Collection Agent and will apply in performing such duties and obligations, those
standards, policies and procedures consistent with the customary standards,
policies and procedures the Collection Agent applies with respect to similar
motor vehicle retail installment contracts or loans owned or serviced by it. In
performing its duties and obligations hereunder, the Collection Agent shall
comply with the VSI Policy (if applicable) all applicable federal and state laws
and regulations and shall maintain all state and federal licenses and franchises
necessary for it to perform its servicing responsibilities hereunder.
ARTICLE IV
LIMITATION ON LIABILITY; INDEMNITIES
SECTION 4.01. Liabilities of Obligors. No obligation or liability of
any Obligor under any of the Receivables is intended to be assumed by the
Servicer or AutoBond under or as a result of this Agreement and the transactions
contemplated hereby and, to the maximum extent permitted and valid under
mandatory provisions of law, the Servicer, the Collection Agent and AutoBond
expressly disclaim such assumption.
SECTION 4.02. Limitation on Liability of the Servicer.
(a) The Servicer shall have no liability in connection with this
Agreement except to the extent of the obligations specifically imposed by this
Agreement, it being understood that no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or shall otherwise exist against the Servicer.
(b) Neither the Servicer nor any of the directors, officers, employees
or agents thereof shall be under any liability to AutoBond or to any other
Person for any action taken, or for refraining from the taking of any action, in
good faith pursuant to this Agreement, or for errors in judgment; provided,
however, that this provision shall not
- 29 -
protect the Servicer or any such Person against any breach of warranties or
representations made herein or against any liability which would otherwise be
imposed by reason of willful misfeasance, bad faith or negligence in the
performance of duties or by reason of reckless disregard of obligations or
duties hereunder. The Servicer and any director, officer, employee or agent
thereof may rely in good faith on any document of any kind which, prima facie,
is properly executed and submitted by any appropriate Person respecting any
matters arising hereunder.
(c) Except to the extent resulting from the Servicer's willful
misfeasance, bad faith or negligence in the performance of its duties or by
reason of reckless disregard of its obligation or duties hereunder, the Servicer
shall not be liable to any party indemnified under this Agreement, for any
liability, cost, expenses or financial loss which may arise as a result of the
economic performance of the Receivables.
SECTION 4.03. Indemnities of the Servicer and the Collection Agent.
(a) The Servicer agrees to indemnify AutoBond and any of its directors,
officers, employees or agents from, and hold each of them harmless against, any
and all losses, liabilities, damages (other than incidental or indirect
damages), claims or expenses (including reasonable attorneys' fees and expenses)
proximately caused by the Servicer's acts or omissions in violation of this
Agreement, except to the extent AutoBond's, the Collection Agent's or the
directors, officers, employees or agents thereof, as the case may be, own bad
faith, willful misconduct or negligence contributes to the loss, liability,
damage, claim or expense. Except to the extent, otherwise constituting bad
faith, willful misconduct or negligence the Servicer shall not be liable to any
person for any action taken or for refraining from the taking of any action in
good faith pursuant to this Servicing Agreement or for errors in judgment.
(b) The Servicer agrees to indemnify AutoBond and any of its respective
directors, officers, employees or agents from, and hold each of them harmless
against, any and all losses, liabilities, damages, claims or expenses (including
reasonable attorneys' fees and expenses) arising as a result of the use,
ownership or operation by the Servicer or any agent thereof of any Financed
Vehicle.
(c) The Collection Agent agrees to indemnify the Servicer, and any of
its respective directors, officers, employees or agents from, and hold each of
them harmless against, any and all losses, liabilities, damages, claims or
expenses (including reasonable attorneys' fees and expenses) arising as a result
of the Collection Agent's acts or
- 30 -
omissions in violation of this Agreement, or arising as a result of or incurred
in connection with, the acceptance or performance by such parties of the duties
contained in this Agreement, except to the extent the Servicer's or the
directors, officers, employees or agents thereof, as the case may be, own bad
faith, willful misconduct or negligence contributes to the loss, liability,
damage, claim or expense.
(d) Each of the Servicer and AutoBond agrees to promptly notify the
indemnifying party hereunder in writing of the commencement of any action with
respect to which indemnification may be owed to it pursuant to this Section 4.03
promptly after receipt by such party of notice of commencement thereof, but the
omission so to notify such indemnifying party hereunder will not relieve the
indemnifying party from any liability which it may have hereunder except to the
extent the indemnifying party is prejudiced thereby.
(e) This Section 4.03 shall survive the termination of this Agreement
and the resignation or removal of the Servicer.
ARTICLE V
MISCELLANEOUS
SECTION 5.01. Beneficiaries. This Agreement will inure to the benefit
of and be binding upon the parties hereto and their respective successors and
permitted assigns. No other Person will have any right or obligation hereunder.
Neither the Servicer nor AutoBond may assign any of its respective rights and
obligations hereunder or any interest herein.
SECTION 5.02. Amendment. This Agreement may be amended from time to
time by the parties hereto only by a written instrument executed by all such
parties.
SECTION 5.03. Notices. Unless otherwise expressly specified or
permitted by the terms hereof, notices and other communications required or
permitted to be given or made under the terms hereof shall be in writing. Any
such communication or notice shall be deemed to have been duly made or given (i)
when delivered personally, (ii) in the case of mail delivery, upon receipt,
refusal of delivery or return for failure of the intended recipient to retrieve
such communication or (iii) in the case of transmission by facsimile, upon
telephone and return facsimile confirmation and, in each case, if addressed to
the intended recipient as follows (subject to the next sentence of this Section
5.03):
- 31 -
If to the Servicer:
Loan Servicing Enterprise
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Managing Partner
Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
If to AutoBond:
AutoBond Acceptance Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone Number: (▇▇▇) ▇▇▇-▇▇▇▇
Each party hereto may from time to time designate by notice in writing to the
other parties hereto a different address for communications and notices.
SECTION 5.04. Severability of Provisions. If any one or more of the
covenants, provisions or terms of this Agreement shall be for any reason
whatsoever held invalid, then such covenants, provisions or terms shall be
deemed severable from the remaining covenants, provisions or terms of this
Agreement, and shall in no way affect the validity or enforceability of the
other provisions of this Agreement.
SECTION 5.05. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER OF JURY
TRIAL.
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS (AS OPPOSED TO CONFLICT OF LAWS PROVISIONS) OF THE STATE
OF TEXAS.
(b) THE SERVICER AND AUTOBOND HEREBY SUBMIT TO THE NON-EXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF TEXAS AND THE UNITED STATES DISTRICT
COURT LOCATED IN THE CENTRAL DISTRICT OF TEXAS. NOTHING IN THIS SECTION SHALL
AFFECT THE RIGHT OF THE PARTIES HERETO TO SERVE LEGAL PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF ANY OF THEN TO BRING ANY ACTION
OR PROCEEDING IN THE COURTS OF ANY OTHER JURISDICTION.
(c) THE SERVICER AND AUTOBOND EACH HEREBY WAIVES ANY RIGHT TO HAVE A
JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT,
OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO, OR IN CONNECTION WITH
THIS
- 32 -
Agreement. INSTEAD, ANY DISPUTE RESOLVED IN COURT WILL BE RESOLVED IN A BENCH
TRIAL WITHOUT A JURY.
SECTION 5.06. Counterparts. This Agreement may be executed in
counterparts each of which shall be an original, but all of which together shall
constitute one and the same instrument.
SECTION 5.07. [Reserved].
IN WITNESS WHEREOF, the parties hereto have caused this Servicing
Agreement to be executed by their respective officers thereunto duly authorized.
CSC LOGIC/MSA L.L.P., as Servicer
By:/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Managing Partner
AUTOBOND ACCEPTANCE CORPORATION,
individually and as Collection Agent
By:/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Secretary
- 33 -
SCHEDULE I
Designated Auto Loans
[List]
AUTOBOND ACCEPTANCE
CORPORATION
By_______________________________________
Dated:______________, 199__
EXHIBIT A
TRUST RECEIPT
[DATE]
AutoBond Acceptance Corporation
Re: Servicing Agreement, dated as of January ___,
1997 (the "Servicing Agreement"), between
AutoBond Acceptance Corporation and CSC
Logic/MSA L.L.P.
Ladies and Gentlemen:
In accordance with Section 2.07 of the Servicing Agreement,
the undersigned hereby certifies that it has taken possession of the items set
forth on Annex I hereto with respect to the Receivables identified below. The
undersigned (i) confirms that it holds such items in trust for the benefit of
AutoBond Acceptance Corporation and (ii) agrees to promptly return such items to
you after its need for possession of them ceases, except for title and security
instruments which the undersigned is required under applicable law to otherwise
deal with in furtherance of its duties under the Servicing Agreement.
Receivables:
CSC LOGIC/MSA L.L.P.
By:
---------------------------------
Name:
Title:
-1-
EXHIBIT B
FORM OF MONTHLY STATEMENT
PAYMENT DATE: ________________,1997
DUE PERIOD: __________ - ___________, 1997
Under the Servicing Agreement dated as of January ____, 1997 between
AutoBond Acceptance Corporation and CSC Logic/MSA L.L.P., as Servicer ("LSE"),
the Servicer is required to prepare certain information each month regarding the
Auto Loans during the previous month. The information which is required to be
prepared with respect to the Payment Date and Due Period listed above is set
forth below.
[to be provided]
Dated: __________ __, 199_ CSC LOGIC/MSA, LLP
By:____________________________
Name:
Title:
B-1