SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1996
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____ to ____
Commission File Number 0-22830
OXFORD RESOURCES CORP.
----------------------
(Exact name of registrant as specified in its charter)
NEW YORK 11-2344427
- --------------------------------------------------------------------------------
(State or other jurisdiction of incorporation) (IRS Employer ID)
270 South Service Road, Melville, NY 11747
- --------------------------------------------------------------------------------
(Address of principal executive offices) (zip code)
(516) 777-8000
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes |X| No |_|
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Outstanding at
Class November 1, 1996
----- ----------------
Class A Common Stock 7,115,662
Class B Common Stock 7,724,000
<PAGE>
TABLE OF CONTENTS
Part I Financial Information Page #
--------------------- ------
Item 1. Financial Statements
Consolidated Balance Sheets - As of
September 30, 1996 and June 30, 1996.................. 3
Consolidated Statements of Income -
Three month periods ended
September 30, 1996 and September 30, 1995............. 4
Consolidated Statement of Shareholders'
Equity - Three month period ended
September 30, 1996 ................................... 5
Consolidated Statements of Cash Flows -
Three month periods ended
September 30, 1996 and September 30, 1995............. 6
Notes to Consolidated Financial Statements............ 8
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations............................................ 9
Part II Other Information
-----------------
Item 1. Legal Proceedings..................................... 27
Item 2. Changes in Securities................................. 27
Item 3. Defaults upon Senior Securities....................... 28
Item 4. Submission of Matters to
a Vote of Security Holders ........................... 28
Item 5. Other Information..................................... 28
Item 6. Exhibits and Reports on Form 8-K...................... 28
Signatures..................................................... 29
Index of Exhibits ............................................. 30
Exhibits
2
<PAGE>
Part I - Financial Information
Item 1 - Financial Statements
Oxford Resources Corp.
and Subsidiaries
Consolidated Balance Sheets
<TABLE>
<CAPTION>
=============================================================================================
September 30, June 30,
1996 1996
(Unaudited)
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Cash and cash equivalents $ 58,731,050 $ 66,298,981
Available for sale securities 3,396,260 7,684,401
Net investment in automobile receivables 64,270,706 60,708,681
Inventories and other assets 30,093,357 26,007,423
Vehicles under operating leases - net 1,432,730,308 1,337,514,432
Property and equipment, less accumulated depreciation 12,491,146 10,702,456
Restricted funds on deposit with banks
(net of $34,244,482 and $33,529,951 of security deposits) 9,640,880 8,922,036
Receivables from related parties 2,810,322 2,824,147
-------------- --------------
$1,614,164,029 $1,520,662,557
============== ==============
Liabilities and Shareholders' Equity
Liabilities:
Accrued expenses and other liabilities $ 13,491,461 $ 16,150,730
Deferred income taxes 29,269,169 25,650,000
Notes payable and obligations under capital leases -
non-recourse 1,475,941,011 1,387,398,523
-------------- --------------
Total liabilities 1,518,701,641 1,429,199,253
-------------- --------------
Shareholders' equity
Preferred stock, $.01 par value - shares authorized
10,000,000; none issued -- --
Common stock:
Class A, $.01 par value - shares authorized 62,000,000;
issued 7,115,662 71,157 71,157
Class B, $.01 par value - shares authorized 8,000,000;
issued 7,724,000 77,240 77,240
Additional paid-in capital 61,258,667 61,258,667
Retained earnings 33,872,386 28,172,662
Unrealized appreciation on available for sale securities 182,938 1,883,578
-------------- --------------
Total shareholders' equity 95,462,388 91,463,304
-------------- --------------
$1,614,164,029 $1,520,662,557
============== ==============
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
Oxford Resources Corp.
and Subsidiaries
Consolidated Statements of Income
(Unaudited)
================================================================================
Three Months Ended September 30, 1996 1995
- --------------------------------------------------------------------------------
Revenues:
Rental income $75,096,042 $63,254,878
Gain on sale of retail installment contracts 2,600,284 2,029,711
Interest and other income 2,825,349 1,495,949
Gain on vehicle dispositions
and lease terminations 1,534,356 1,518,537
Servicing income 3,054,371 2,132,726
----------- -----------
Total revenues 85,110,402 70,431,801
----------- -----------
Expenses:
Selling, general and administrative 12,775,846 10,068,032
Depreciation and amortization 36,052,722 31,938,089
Interest 26,938,110 21,810,343
----------- -----------
Total expenses 75,766,678 63,816,464
----------- -----------
Income before taxes on income 9,343,724 6,615,337
Taxes on income 3,644,000 2,580,000
----------- -----------
Net income $ 5,699,724 $ 4,035,337
=========== ===========
Per share data:
Net income $ 0.38 $ 0.30
=========== ===========
Weighted average number of common
and common equivalent shares
outstanding 15,034,627 13,481,349
=========== ===========
See accompanying notes to consolidated financial statements.
4
<PAGE>
Oxford Resources Corp.
and Subsidiaries
Consolidated Statements of Shareholders' Equity
(Unaudited)
<TABLE>
<CAPTION>
====================================================================================================================================
Common Stock
------------------- -------------------
Class A Class B Unrealized
------------------- ------------------- Appreciation
Additional on Available Total
Paid-in Retained for Sale Shareholders'
Shares Amount Shares Amount Capital Earnings Securities Equity
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, July 1, 1996 7,115,662 $ 71,157 7,724,000 $ 77,240 $ 61,258,667 $ 28,172,662 $ 1,883,578 $ 91,463,304
Unrealized appreciation on
available for sale securities -- -- -- -- -- -- (1,700,640) (1,700,640)
Net income -- -- -- -- -- 5,699,724 -- 5,699,724
-----------------------------------------------------------------------------------------------------
Balance, September 30, 1996 7,115,662 $ 71,157 7,724,000 $ 77,240 $ 61,258,667 $ 33,872,386 $ 182,938 $ 95,462,388
=====================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
Oxford Resources Corp.
and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
============================================================================================
Three Months Ended September 30, 1996 1995
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 5,699,724 $ 4,035,337
------------- -------------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization on vehicles under
operating leases 35,370,436 31,434,340
Depreciation and amortization on property and equipment 682,286 503,749
Provision for possible losses 1,808,648 1,470,208
Accrued interest on retail installment contracts sold (391,187) (378,113)
Deferred income taxes 3,619,169 2,554,915
Gain on vehicle dispositions and lease terminations (1,534,356) (1,518,537)
Gain on sale of retail installment contracts (2,600,285) (2,029,711)
Decrease (increase) in assets:
Purchase of treasury notes (81,071,497) (30,318,310)
Sale of treasury notes 80,955,786 30,226,102
Lease termination fees receivable (1,924,869) (1,157,623)
Inventories and other assets (4,050,525) 2,944,029
Retail installment contracts:
Purchases (89,609,553) (41,240,305)
Sales 86,407,542 37,600,536
Commissions and expenses paid (4,202,265) (1,406,961)
Principal collections on contracts held for sale 4,424,969 1,523,620
Collections on retained subordinated investment in
contracts sold 1,848,531 717,168
Deposits to spread account (1,209,144) (1,057,498)
Withdrawls from spread account 722,059 586,361
Decrease in liabilities:
Accounts payable and accrued liabilities (2,702,268) (550,738)
------------- -------------
Total adjustments 26,543,477 29,903,232
------------- -------------
Net cash provided by operating activities 32,243,201 33,938,569
------------- -------------
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE>
Oxford Resources Corp.
and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
============================================================================================
Three Months Ended September 30, 1996 1995
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flow from investing activities:
Sale of available for sale securities 2,587,501 --
Purchase of vehicles under operating leases (187,204,860) (162,330,404)
Proceeds from dispositions of vehicles
under operating leases 58,952,649 43,887,448
Retained subordinated investments in
retail installment contracts sold -- (1,256,387)
Capital expenditures (2,470,976) (604,162)
Repayment of receivables from related parties 13,825 43,238
------------- -------------
Net cash used in investing activities (128,121,861) (120,260,267)
------------- -------------
Cash flows from financing activities:
Proceeds from notes payable and obligations under
capital leases - non-recourse 194,077,600 173,947,841
Principal payments on notes payable and obligations under
capital leases - non-recourse (105,535,112) (82,529,677)
Increase in restricted funds on deposit with banks (231,759) (197,239)
------------- -------------
Net cash provided by financing activities 88,310,729 91,220,925
------------- -------------
Net increase (decrease) in cash and cash equivalents (7,567,931) 4,899,227
Cash and cash equivalents, beginning of period 66,298,981 36,900,005
------------- -------------
Cash and cash equivalents, end of period $ 58,731,050 $ 41,799,232
============= =============
</TABLE>
See accompanying notes to consolidated financial statements.
7
<PAGE>
Oxford Resources Corp.
and Subsidiaries
Notes to Consolidated Financial Statements
================================================================================
1) Basis of presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles
for interim financial reporting. All intercompany accounts and
transactions have been eliminated in consolidation. In the opinion of
management all necessary adjustments (consisting only of normal
recurring accruals) have been included for the periods presented.
These consolidated financial statements should be read in conjunction
with the consolidated financial statements and the accompanying notes
to the consolidated financial statements contained in the Company's
Annual Report on Form 10-K on file with the Securities and Exchange
Commission ("SEC") for the year ended June 30, 1996.
2) Available for sale securities, at market value
The Company classifies and accounts for investments in marketable
securities as available- for-sale since it is not the Company's
objective to generate profits on short-term differences in price.
Unrealized holding gains and losses (determined by specific
identification) on investments are carried as a separate component of
shareholders' equity.
4) Net investment in automobile receivables
The components of the net investment in automobile receivables are as
follows:
<TABLE>
<CAPTION>
September 30, June 30,
1996 1996
------------ ------------
<S> <C> <C>
Retail installment contracts held for sale $ 19,272,784 $ 20,672,495
Retained subordinated investments in contracts sold 11,495,688 12,379,298
------------ ------------
30,768,472 33,051,793
Allowance for possible losses (1) (1,574,564) (1,368,839)
------------ ------------
29,193,908 31,682,954
Excess servicing receivable (2) 35,076,798 29,025,727
------------ ------------
Net investment in automobile receivables $ 64,270,706 $ 60,708,681
============ ============
</TABLE>
----------
(1) Allowance for possible losses are provided for retail installment
contracts held for sale of $904,084 and $760,062 and for retained
subordinated investments in contracts sold of $670,480 and $608,777 at
September 30, 1996 and June 30, 1996, respectively.
(2) Excess servicing receivable is net of an allowance for possible
losses of $7,416,486 and $6,232,376 at September 30, 1996 and June 30,
1996, respectively.
8
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Forward-looking Statements
The matters discussed in this Report contain certain forward-looking
statements and involve risks and uncertainties (including changing market
conditions, competitive and regulatory matters, etc.) detailed in the disclosure
contained in this Report and the Company's (as hereinafter defined) other
filings with the Securities and Exchange Commission.
General
Oxford Resources Corp. ("Oxford") is a specialized automobile finance
company engaged primarily in the leasing of automobiles (including passenger
cars, minivans, sport/utility vehicles and light trucks) to individuals,
servicing such leases during their term and remarketing the automobiles upon the
expiration of the leases. Oxford and its direct and indirect subsidiaries are
hereinafter referred to as the "Company." The Company currently enters into or
purchases (in either case, "originates") leases in 19 states through
approximately 1,200 automobile dealers, substantially all of which are
manufacturer-franchised. The Company also markets an indirect automobile lending
program through approximately 1,000 dealers in 18 states in which it originates
retail installment contracts ("Contracts") in connection with the sale of
vehicles by such dealers.
All of the leases which the Company originates are operating leases. At the
inception of a lease, no revenue is recognized and the leased vehicle, together
with the initial direct costs of originating the lease, which are capitalized,
appear on the Company's Balance Sheet under the caption "vehicles under
operating leases-net." Each vehicle is depreciated on a straight-line basis over
the lease term down to an amount equal to the Company's estimate at lease
inception of the projected value of the vehicle at the scheduled end of the
lease term (the "Residual"). Lease payments are recognized ratably as rent
income over the term of the lease.
The Company finances substantially all of its leases, on a lease-by-lease
basis, for the duration of the lease term at a fixed interest rate and enters
into a note in connection with each lease with a bank or other financial
institution financing such lease (a "Lender") for the amount financed. The
Lender financing a lease assumes all credit risk for the duration of the lease
term. Because the Company's borrowing cost is lower than the implicit rate it
builds into the lease payment stream, the Company earns a spread. The Company
receives the present value of the spread (the "premium") in cash from the Lender
at the time of financing by financing each lease for an amount greater than the
net lease
9
<PAGE>
asset. The amount financed by the Lender is calculated such that during the
lease term, the lessee's monthly payments are sufficient to (i) pay all interest
due at the Company's borrowing rate on the outstanding portion of the note and
(ii) amortize the note, so that at the end of the scheduled lease term, the
remaining principal balance of the note is equal to the Residual for the related
vehicle.
In the Company's financial statements, the premium (net of the associated
capitalized initial direct costs) is recognized as income over the term of the
lease in the form of the difference between (i) rent income and (ii)
depreciation of vehicles under operating leases and interest expense. The
premium, however, is not earned evenly over the lease term. In each subsequent
month during the lease term, a greater portion of the premium is recognized than
in the prior month. At any point in time, the difference between the unpaid note
balance and the net book value of the vehicle represents the premium which was
received in cash but has not yet been recognized as income. The following table
sets forth the aggregate amount of the non-recourse notes and capital lease
obligations, the net book value of vehicles under operating leases and the
resulting unearned premium associated with the existing lease portfolio.
At September 30,
-----------------------------
1996 1995
---- ----
(in thousands)
Notes payable and capital lease
obligations - non-recourse .................. $ 1,475,941 $ 1,207,400
Receivables from Lenders and other (1) ...... 27,317 20,514
Net book value of vehicles under
operating leases ............................ (1,421,642) (1,154,521)
----------- -----------
Unearned premium ............................. $ 81,616 $ 73,393
=========== ===========
- ----------
(1) "Receivables from Lenders and other" represents those leases which have
been submitted to the Lenders for funding in the ordinary course of
business, but for which the Company has not received the cash as of the
dates indicated and those leases which have been partially or not funded by
a Lender.
The aggregate premium to be recognized on the Company's existing lease
portfolio is determined for the remainder of the scheduled term of the existing
leases for a number of reasons. First, the rent income and the depreciation
expense in each lease and the interest rate on the note financing each lease are
all fixed for the duration of the scheduled lease term. Second, when a lease
terminates prior to its scheduled termination due to a lessee default as a
result of a repossession of, casualty to or theft of the vehicle, the Company's
lease premium is not impacted since the resulting credit loss is absorbed by the
applicable Lender due to the non-recourse nature of the note and capital lease
obligation. Third, a lease which terminates prior to its scheduled termination
as a result of the voluntary purchase of the vehicle by
10
<PAGE>
the lessee or the permitted voluntary early termination of a lease in accordance
with its terms only accelerates the recognition of the unearned premium. In such
case, the Company recognizes a gain on the disposal of the vehicle equal to the
disposition proceeds less the net book value of the vehicle and such gain will
equal the unearned lease premium.
For leases which terminate prior to their scheduled termination due to a
lessee default in connection with a repossession of, casualty to or theft of the
vehicle, the Company applies the sale or insurance proceeds and any other
recoveries realized with respect to the vehicle to extinguish the related
non-recourse obligation which financed such lease. The Company is contractually
permitted to do this on defaulted leases since its financings are non-recourse
during the lease term and the Company's only obligation is to remit the
resulting proceeds to the Lender, up to the outstanding balance of the
obligation. The Company records the difference between the disposition proceeds
and the net book value of the vehicle as a loss (or gain, on occasion) on the
defaulted lease and recognizes an offsetting gain from the early extinguishment
of the related non-recourse obligation at a discount to its principal balance.
Such gain equals the credit loss transferred to and incurred by the Lender on
the defaulted lease and will always exceed the loss to the Company by an amount
equal to the remaining unearned premium related to the lease (i.e., the amount
by which the related non-recourse obligation exceeds the net book value of the
vehicle). The excess of the gain over the loss is recorded in "gain on vehicle
dispositions and lease terminations" in the Company's Consolidated Statements of
Income.
The following table represents the total losses and associated offsetting
gains realized by the Company on defaulted leases for each of the periods
indicated:
Three Months Ended September 30,
--------------------------------
1996 1995
---- ----
(in thousands)
Gain on extinguishment of non-recourse
obligations ........................... $ 521 $ 470
Credit losses on lessee defaults and
physical losses ....................... (429) (318)
----- -----
Net gain ................................ $ 92 $ 152
===== =====
These gains from the early extinguishment of non-recourse borrowings are
equal to the credit losses incurred by the Lenders and therefore represent the
benefit the Company realized from effectively transferring the credit risk
associated with its
11
<PAGE>
leasing operations to the Lenders through the use of non-recourse borrowings.
The Company incurs a cost to derive this benefit from transferring credit risk
in the form of interest expense which is higher than that which would be
incurred if the Company used recourse borrowings.
The strict application of Statement of Financial Accounting Standards No. 4
("SFAS No. 4") would require that the gains on early extinguishment of
non-recourse obligations be presented as an extraordinary item, net of related
income taxes. The Company records the gain on debt extinguishment as part of
continuing operations because (i) such terminations occur frequently in the
ordinary course of the Company's business, (ii) each leased vehicle is pledged
individually and separately to a corresponding non-recourse obligation and,
therefore, the elimination of both the asset and the corresponding liability on
early termination is linked together, and (iii) such presentation more properly
matches the cost in the form of higher interest expense, which the Company
incurs to transfer credit risk to the Lenders, with the associated benefit of
such risk transfer. The Company believes that to reflect the gain on the debt
extinguishment as an extraordinary item, as prescribed by SFAS No. 4, would
result in a mismatched and misleading presentation insofar as it would not
properly portray the direct association between these gains and the other income
statement effects of these early terminations, as presented above. Accordingly,
these gains are included, together with other gains and losses from early
terminations and scheduled terminations, in income from continuing operations.
This presentation has no effect on net income or shareholders' equity.
The Company's leases generally have terms of 24, 36, 48 or 60 months. The
following table sets forth the weighted average original term of leases
originated by the Company for the periods indicated:
Three Months Ended September 30,
--------------------------------
1996 1995
---- ----
(in months)
Weighted average original lease term........ 34.0 34.1
The following table sets forth for the Company's lease portfolio the lease
delinquencies at September 30, 1996 and 1995 and credit losses for the nine
months ended September 30, 1996 and 1995. Delinquency and credit loss
performance may in the future be influenced by numerous factors, including
economic factors and there can be no assurance that the Company's future
delinquency or credit loss performance with respect to its existing lease
portfolio, nor such performance with respect to leases originated
12
<PAGE>
by the Company in the future, will be similar to or consistent with that set
forth herein.
At September 30,
----------------------------------
1996 1995
---- ----
Lease delinquencies (1).............. .90% .63%
Nine Months Ended September 30,
----------------------------------
1996 1995
---- ----
Lease credit losses (2).............. .14% .14%
- ----------
(1) Represents the number of leases which are contractually past due 30 days or
more, expressed as a percentage of the number of leases in the portfolio.
(2) Credit losses are borne by the Lenders under the Company's non-recourse
borrowing arrangements. Figures presented represent the total dollars of
net credit losses incurred by the Lenders (proceeds less unpaid principal
balance of notes payable and obligations under capital leases -
non-recourse) in proportion to the average aggregate unpaid principal
balance of non-recourse notes payable and obligations under capital leases
associated with such lease portfolio. Credit loss percentages have been
annualized.
At the end of the scheduled lease term, the Company is obligated to dispose
of the off-lease vehicle and pay to the applicable Lender the remaining note
balance which is equal to the Residual. If a lease terminates prior to its
scheduled term, under the terms of its agreements with the Lenders, the Company
has no obligation to pay the Residual or any other predetermined amount. The
Company recognizes a gain or loss on vehicle disposition if proceeds and/or
other recoveries are more or less than the net book value of the vehicle, which
equals the vehicle's Residual. Consequently, the Company's ability to dispose of
the off-lease vehicles is an important aspect of its operations. The Company
seeks to manage its Residual risk through a variety of strategies, including (i)
focusing on the leasing of vehicle models which the Company believes will have a
broad appeal in the used automobile market and (ii) utilizing multiple
remarketing channels including sales and re-leases to lessees and third parties
referred by lessees, sales through unaffiliated dealers on a consignment basis,
sales directly to dealers and wholesalers and sales through regional auctions.
From time to time, the Company has acquired selected used vehicles for re-sale.
The following table sets forth, for each of the periods indicated, the
number and percentage of vehicles which reached scheduled termination or which
were purchased by the Company for re-sale and were remarketed by the Company in
each of the Company's remarketing channels.
13
<PAGE>
Three Months Ended September 30,
--------------------------------
1996 1995
---- ----
Number Percent Number Percent
------ ------- ------ -------
Remarketing method
Vehicles sold or re-leased to lessees
or third parties referred by lessees ....... 2,054 53.3% 1,795 50.2%
Consignment/Retail (1) ..................... 346 9.0 287 8.0
Wholesale .................................. 1,452 37.7 1,493 41.8
----- ----- ----- -----
Total ...................................... 3,852 100.0% 3,575 100.0%
===== ===== ===== =====
- ----------
(1) Includes sales through its network of unaffiliated dealers on a consignment
basis and retail sales through the Company's own retail automobile sales
operations.
The number and percentage of vehicles sold or re-leased to lessees and
third parties referred by lessees and sold through the Company's other
remarketing channels relative to the total number of vehicles remarketed will
vary from quarter to quarter due to factors including changes in the used
automobile market in general and in the management of the Company's overall
vehicle inventory.
The Company engages in indirect automobile lending by purchasing Contracts
from automobile dealers in 18 states, which Contracts are originated in
connection with the sale of new and used motor vehicles by such dealers. The
Company began marketing its current indirect lending program to dealers in
fiscal 1994. The Company also originates Contracts in conjunction with the sale
of its own off-lease vehicles.
14
<PAGE>
The following table sets forth information regarding the Company's serviced
Contract portfolio:
<TABLE>
<CAPTION>
Three Months Ended September 30,
--------------------------------------------------
1996 1995
---- ----
Net Dollar Net Dollar
Amount(1) Number Amount(1) Number
--------- ------ --------- ------
(dollars in thousands)
<S> <C> <C> <C> <C>
Balance serviced,
beginning of period .......... $ 305,376 24,766 $ 113,490 11,809
Originations ................. 89,610 5,671 41,240 2,819
Runoff ....................... (31,392) (1,709) (12,839) (803)
--------- --------- --------- ---------
Balance serviced,
end of period ................ $ 363,594 28,728 $ 141,891 13,825
========= ========= ========= =========
Balance held for sale,
end of period(2) ............. $ 19,273 1,301 $ 9,100 692
Retail installment contracts
sold in period:
Amount ..................... $ 86,408 5,506 $ 37,601 2,634
Weighted average
coupon(3) ................ 13.4% 14.1%
Gain on sale as a percentage
of dollar amount of retail 3.0% 5.4%
</TABLE>
- ----------
(1) Includes retail installment contracts, net of unearned interest, serviced
by the Company, including those held for sale by the Company and those
which have been sold.
(2) Included in retail installment contracts serviced. See footnote (1).
(3) Weighted average coupon represents the weighted average, based on dollar
amount, of the annual percentage rates of the retail installment contracts
sold for the respective periods.
The following tables set forth certain information with respect to (i) the
delinquency of Contracts serviced by the Company, including those held by the
Company and those which have been sold for each of the categories of delinquency
and periods presented and (ii) the net credit loss experience of such portfolio
for the periods presented. Because the Company has only limited historical
experience with respect to its indirect automobile lending program, the
delinquency and net credit loss experience to date may not be indicative of
future performance. Delinquency and net credit loss performance in the future
with respect to the Company's indirect automobile lending program may be
influenced by numerous factors, including economic factors and there can be no
assurance that the Company's future delinquency or net credit loss performance
with respect to its existing Contract portfolio, nor such performance with
respect to Contracts originated by the Company in the future, will be similar to
or consistent with that
15
<PAGE>
set forth herein.
At September 30,
---------------------------------------------
1996 1995
---- ----
Balance Percent(1) Balance Percent(1)
------- ---------- ------- ----------
(dollars in thousands) (2)
Retail installment
contracts outstanding ........ $363,594 100.0% $141,891 100.0%
======== ====== ======== ======
Delinquencies:
30-59 days .................. $ 3,900 1.07% $ 1,096 .77%
60-89 days .................. 1,412 .39 320 .23
90 days or more ............. 1,078 .30 385 .27
-------- ------ -------- ------
Total delinquencies .......... $ 6,390 1.76% $ 1,801 1.27%
======== ====== ======== ======
- ----------
(1) Represents the balance (on a net basis) of retail installment contracts
serviced by the Company contractually past due, expressed as a percentage
of the balance (on a net basis) of the total serviced portfolio.
(2) Includes retail installment contracts serviced by the Company, including
those held for sale by the Company and those which have been sold. Balances
are presented on a net basis (i.e., do not include unearned interest).
Three Months Ended September 30,
--------------------------------
1996 1995
---- ----
(dollars in thousands)(1)
Net credit losses............................ $ 1,066 $ 367
As a percentage of average principal amount
of contract balances outstanding .......... 1.24% 1.11%
- ----------
(1) Includes retail installment contracts serviced by the Company, including
those held for sale by the Company and those which have been sold. Credit
loss percentages have been annualized.
In the ordinary course of its business, the Company has pooled and sold
substantially all of the Contracts that it has originated either on a private
whole-loan basis or in securitization
16
<PAGE>
transactions. The Company has utilized several structures in its securitization
transactions. The Company's first securitization transaction in June 1994
utilized a grantor trust structure whereby the Company sold a pool of Contracts
to a special purpose corporate subsidiary which in turn sold the Contracts to a
grantor trust established for purposes of the transaction. The Company received
a purchase price equal to 100% of the then outstanding principal balance of the
sold Contracts. The grantor trust sold certificates of beneficial interest,
representing 100% ownership in the grantor trust, for cash to third parties
unaffiliated with the Company, and used the proceeds from the sale of the
certificates to purchase the pool of Contracts. In September 1996, the Company
completed a securitization transaction using an owner trust structure whereby
the Company sold a pool of Contracts to a special purpose corporate subsidiary
for 100% of the then outstanding principal balance of the sold Contracts, which
in turn sold the Contracts to a business trust established for the purposes of
this transaction. The business trust sold notes in the amount of 95% of the then
outstanding principal balance of the Contracts sold and certificates of
beneficial interest in the amount of 5% of the outstanding balance of Contracts
sold. All of such notes and 99% of such certificates were sold to third parties
unaffiliated with the Company. Subsequent to the grantor trust transaction and
prior to the owner trust transaction, the Company, through a special purpose
corporate subsidiary, has sold pools of Contracts (on a fixed pass-through rate
basis) to an unaffiliated corporation which administers a multi-seller
commercial paper conduit. For each pool of Contracts sold in this structure, the
Company received a purchase price equal to 100% of the then outstanding
principal balance of the sold Contracts, 3% of which was deferred and which is
anticipated to be paid out of future cash flows from the pool of sold Contracts
(herein referred to as the "holdback amount"). Any holdback amount is included
on the Company's Balance Sheet as "retained subordinated investments in
contracts sold" under the caption "Net Investment in Automobile Receivables." At
the time that the Company sells a pool of its Contracts, in addition to any
holdback amount (as previously described), the Company may provide additional
credit enhancement through the establishment of a restricted cash spread account
("cash spread account") which is included on the Balance Sheet as "Restricted
Funds on Deposit with Banks").
Once the Company sells a pool of Contracts, recourse to the Company with
respect to such Contracts is limited to the associated excess servicing
receivable (as hereinafter defined), retained subordinated investments in
contracts sold, if any, any restricted cash spread account and liability on
certain contractual representations and warranties made by the Company regarding
the eligibility of the Contracts.
The Company retains the servicing rights and responsibilities for each pool
of sold Contracts and will receive as compensation normal servicing fees over
the life of the pool.
17
<PAGE>
The Company intends to continue to sell substantially all of the Contracts
which it originates, using these or similar securitization structures. The
foregoing statement is forward-looking, and there can be no assurance that the
Company will be able to sell its future Contract originations, or that the terms
of any such sale will be on terms as favorable as or similar to the terms of the
Company's past sale transactions.
All of the Company's Contract sale transactions are on a fixed pass-through
rate basis to the purchasers, which pass-through rate is determined on the sale
date. The Company recognizes gains and losses on the sale of Contracts at each
sale date based on a determination of the present value of the estimated future
amounts ("excess servicing cash flows") to be realized by the Company in
connection with such sale. These estimates consider all cash flows which are
estimated to be generated by the sold Contracts over their life less (i) normal
servicing fees, which are retained by the Company in its capacity as servicer
and are recognized over the life of the transaction, (ii) payments to investors
in the transaction, (iii) payments to the Company with respect to its retained
subordinated investments in contracts sold, if any, and (iv) credit enhancement
expenses, if any. Additionally, excess servicing cash flows are reduced by both
a credit loss provision, which is estimated to be adequate to cover credit
losses over the life of the sold Contracts, and the impact of estimated
prepayments. The gain on sale recognized is net of all transaction fees and
expenses, including any portion of excess interest generated on a Contract which
is paid to the dealer as a dealer commission (a "Dealer Commission") incurred in
connection with the origination of the sold Contracts and any gain or loss
realized on any Treasury note positions closed at the time of sale (as discussed
below).
The receivable related to the gain on sale is included on the Company's
Balance Sheet as "excess servicing receivable" under the caption "Net Investment
in Automobile Receivables." The Company evaluates the carrying value of its
excess servicing receivable for each discreet sale transaction that it has
consummated at each reporting period considering the actual prepayment and
credit loss experience of the underlying sold Contracts and makes adjustments to
reduce the carrying value of such asset, if appropriate. To date, the Company
has not been required to record any such adjustments, but there can be no
assurance that it will not be required to do so in the future. Any adjustment of
the Company's excess servicing receivable would be charged to servicing income.
As described above, the amount of gain on sale which the Company recognizes
upon the sale of its Contracts is based, in part, on estimates of the amount and
timing of future credit losses and prepayments over the life of such sold
Contracts. The rate of credit losses will be influenced by a variety of economic
and other factors, including general economic conditions and unemployment rates.
The rate of prepayments will also be influenced by a variety of economic and
other factors, including general levels of
18
<PAGE>
interest rates and the frequency with which consumers replace their automobiles.
Consequently, the Company's estimates may be incorrect and subject to change.
There can be no assurance that the actual rate of future credit losses or
prepayments on the Company's sold Contracts will not exceed the Company's
estimations or historical experience. The Company continually assesses its
methodology and previous estimates as additional information becomes available.
The carrying value of the Company's excess servicing receivable may be adjusted
periodically to reflect differences between previous estimates and actual credit
losses and prepayment rates at each balance sheet date using the same discount
factor used in the original determination of the receivable. If actual credit
losses or prepayments on sold Contracts were to exceed the previous estimates
used in calculating the related gain on sale and excess servicing receivable,
the Company would experience a loss and a corresponding write-down of the
carrying value of the Company's excess servicing receivable. While the Company
does not expect future changes in its methodology or future levels of actual
credit losses and prepayments to have a significantly adverse effect on the
carrying value of the excess servicing receivable, there can be no assurance
that such effect will not occur. Periodic comparison of actual experience to
previous estimates may, however, result in adjustments to the valuation of the
excess servicing receivable.
Due to the recognition of earnings from the gain on sale of its Contracts
resulting from the sale of its Contracts, the Company's reported earnings during
a particular period will be impacted by the amount and timing of additional
sales which the Company may consummate in such future periods. Variations to
quarterly earnings will result in relation to the amount and timing of the
completion of such Contract sale transactions and to the extent that the Company
cannot change the minimum interest rate that it will accept on Contracts (the
"Buy Rate") on Contract originations as quickly as market interest rates change.
For income tax purposes, the Company treats its leases, other than those
financed by three of the Lenders, as operating leases which, through
depreciation deductions, generate tax benefits for the Company by giving rise to
net operating losses ("NOL"). These tax benefits have historically allowed the
Company to defer the cash payment of a significant portion of its income tax
liability. The leases which are financed by the remaining three Lenders are
financed on a tax transfer basis and, therefore, the entire lease premium is
recognized immediately upon financing. Other than with respect to the treatment
of the leases for income tax purposes, the Company's financial arrangements with
such three Lenders are similar in substance to those financed with the other
Lenders. For financial reporting purposes, no material distinction is drawn
between the arrangements with such three Lenders and the Company's other
Lenders.
As a result of operating losses caused primarily by the tax treatment of
its leases, the Company had $123.4 million in NOL
19
<PAGE>
carryforwards for tax reporting purposes at June 30, 1996. Under Section 382 of
the Internal Revenue Code of 1986, as amended (the "Code"), the taxable income
of the Company available for offset by NOL carryforwards and certain built-in
tax losses will be subject to an annual limitation (the "382 Limitation") if an
"ownership change" occurs. An ownership change would occur if the total
percentage of stock of the Company owned by one or more "5-percent shareholders"
(taking into account certain aggregation and segregation rules) increases by
more than 50 percentage points during any three year period. If such an
ownership change were to occur, the 382 Limitation would equal the value of the
Company immediately before the ownership change, subject to certain adjustments,
multiplied by the long term tax-exempt rate (as defined in Section 382), which
for September 1996 was 5.80%. To the extent the 382 Limitation exceeded the
federal taxable income of the Company for a given year, the 382 Limitation for
the subsequent year would be increased by such excess. The Company's NOL
carryforwards, except to the extent of certain built-in tax gains, would be
disallowed entirely if the Company failed to satisfy the continuity of business
enterprise requirement for the two year period following such an ownership
change. Under the continuity of business enterprise requirement, the Company
must either continue its historical business or use a significant portion of its
pre-ownership change assets in a business.
Once financed or sold, the Company's leases and Contracts, respectively,
are not affected by future interest rate fluctuations. For leases, both the
implicit rate in each lease and the Company's cost of funds (i.e., the interest
rate on the note payable financing such lease) are fixed for the duration of the
lease term. For Contracts, both the interest rate reflected in any Contract (the
"Contract Rate") and the pass-through rate, which is determined at the time of
the sale, are fixed for the duration of the contract period.
For leases and Contracts, the Company is exposed to interest rate risk
during the holding period between the time that a lease or Contract is
originated and the time that it is financed or sold. The Company typically holds
leases prior to financing for less than a month. Any changes in the Company's
borrowing rates affect only new leases submitted for financing after the date of
change. In the case of Contracts, holding periods are generally for three months
and can be for up to six months (and longer in some cases). If market interest
rates were to increase in a period in which the Company was holding an inventory
of Contracts prior to their sale, the Company would recognize a reduction in the
amount of gain subsequently realized on the sale of such Contracts. From time to
time, the Company utilizes the short sale of Treasury notes which is intended to
decrease the impact of changes in market rates on the gains realized from the
sale of its Contracts. Such strategies will not consistently or completely
offset the effects of adverse interest rate movements during periods when the
Company holds Contracts prior to their sale. Except to the extent of recognizing
any unrealized gain or loss on open Treasury positions as of the
20
<PAGE>
end of each fiscal quarter, the Company will recognize any additional gain or
loss on such position at the time the related Contracts are sold and such
position is closed. Such gain or loss is included within the gain on sale on
such Contracts. In the event that the Company utilizes different financing
structures for its leases and Contracts in the future, the Company may hold such
leases and Contracts for a longer period prior to finance or sale.
Results of Operations
The following table sets forth information with respect to the Company's
sources of revenue for the three months ended September 30, 1996 and 1995.
Three Months Ended September 30,
--------------------------------
1996 1995
---- ----
(dollars in thousands)
Rental income ............................ $75,096 88.2% $63,255 89.8%
Gain on sale of retail installment
contracts ............................. 2,600 3.1 2,030 2.9
Interest and other income ................ 2,825 3.3 1,496 2.1
Gain on vehicle dispositions and
lease terminations .................... 1,534 1.8 1,518 2.2
Servicing income ......................... 3,055 3.6 2,133 3.0
------- ----- ------- -----
Total revenues ........................... $85,110 100.0% $70,432 100.0%
======= ===== ======= =====
Three months ended September 30, 1996 compared to three months ended
September 30, 1995
Revenues for the fiscal year ended September 30, 1996 increased to $85.1
million from $70.4 million for the three months ended September 30, 1995
representing an increase of 20.8%.
Rental income for the three months ended September 30, 1996 increased to
$75.1 million from $63.3 million for the same three month period in the prior
fiscal year, representing an increase of 18.7%. The increase in rental income
was attributable to the increase in the Company's aggregate lease portfolio. At
September 30, 1996, the Company's lease portfolio had increased to $1.4
21
<PAGE>
billion (91,902 leases) from $1.2 billion (72,969 leases) at September 30, 1995,
representing an increase of 23.0%. For the three months ended September 30,
1996, the Company originated $187.2 million of leases (10,967 leases), an
increase of 15.3% over the $162.3 million of leases (9,003 leases) originated in
the same period in the prior fiscal year.
Gain on sale of retail installment contracts for the three months ended
September 30, 1996 increased to $2.6 million from $2.0 million for the three
months ended September 30, 1995, representing an increase of 28.1%. This
increase is attributable to the increase to $86.4 million in the dollar amount
of Contracts sold in the three months ended September 30, 1996 from $37.6
million in Contracts sold in the three months ended September 30, 1995. Gain on
sale of retail installment contracts may vary from quarter to quarter due to the
timing and dollar amount of such sales and due to changes in the spread between
the Buy Rate on the sold Contracts and the pass through rate associated with
such sales.
Interest and other income for the three months ended September 30, 1996
increased to $2.8 million from $1.5 million for the three months ended September
30, 1995, representing an increase of 88.9%. The increase in interest and other
income was primarily attributable to the increase in interest income on
Contracts held for sale to $1.3 million for the three months ended September 30,
1996 from $608,000 for the same period of the prior fiscal year. The increase in
interest and other income was also attributable to the increase in interest
income on short term investments to $654,000 from $386,000 as a result of the
Company's increased balances of cash and cash equivalents. If the Company
continues to increase its originations of Contracts in the future, interest and
other income could continue to grow due to increases in interest income on
Contracts held for sale. The foregoing statement is forward-looking and actual
results may be materially different as a result of many factors, including,
without limitation, decreases in interest rates (due to market conditions,
competitive pressures or otherwise) or lack of growth in Contract originations
(due to general economic conditions, market changes or increased competition).
Gain on vehicle dispositions and lease terminations for the three months
ended September 30, 1996 and 1995 was $1.5 million. The total number of vehicles
remarketed (which includes off-lease, purchased and repossessed vehicles)
increased to 4,102 for the three months ended September 30, 1996 from 3,857 for
the three months ended September 30, 1995, and direct vehicle repair and
marketing costs associated with such sales increased to $1.5 million from $1.3
million, and are included in selling, general and administrative expenses.
Servicing income for the three months ended September 30, 1996 increased to
$3.1 million from $2.1 million for the three months ended September 30, 1995,
representing an increase of 43.2%. This increase was attributable to the
increase in the number of leases
22
<PAGE>
and Contracts serviced by the Company.
Total expenses for the three months ended September 30, 1996 increased to
$75.8 million from $63.8 million for the same period of the prior fiscal year,
representing an increase of 18.7%.
Substantially all of the Company's depreciation and amortization expense is
derived from the depreciation and amortization of the Company's vehicles under
operating leases and capitalized initial direct costs, respectively.
Depreciation and amortization expense directly associated with the Company's
leased vehicles, for the three months ended September 30, 1996, increased to
$35.4 million from $31.4 million for the same three month period in the prior
fiscal year, representing an increase of 12.5%. The increase in depreciation and
amortization expense was principally attributable to the increase in the
Company's aggregate lease portfolio from September 30, 1995 to September 30,
1996.
Substantially all of the Company's interest expense is the cost of the
borrowings attributable to the aggregate lease portfolio. Interest expense
directly associated with the Company's lease borrowings, for the three months
ended September 30, 1996, increased to $26.9 million from $21.8 million for the
three months ended September 30, 1995, representing an increase of 23.2%. The
increase in such interest expense was primarily due to the increased borrowings
attributable to the Company's aggregate lease portfolio. At September 30, 1996,
such aggregate non-recourse borrowings had increased to $1.5 billion from $1.2
billion at September 30, 1995, representing an increase of 22.2%.
Selling, general and administrative expenses for the three months ended
September 30, 1996 increased to $12.8 million from $10.1 million for the same
three month period of the prior fiscal year, representing an increase of 26.9%.
This increase was primarily due to the increased costs associated with the
increased lease and Contract originations for the three months ended September
30, 1996 over the same three month period of the prior fiscal year and from
servicing such lease and Contract portfolios.
As a result of the above factors, net income for the three months ended
September 30, 1996 increased to $5.7 million from $4.0 million for the three
months ended September 30, 1995, representing an increase of 41.2%.
Liquidity and Capital Resources
The following table sets forth the major components of the increase in cash
and cash equivalents:
23
<PAGE>
Three Months Ended September 30,
--------------------------------
1996 1995
---- ----
(in thousands)
Net cash provided by operating activities . $ 32,243 $ 33,938
Net cash used in investing activities ..... (128,122) (120,260)
Net cash provided by financing activities . 88,311 91,221
--------- ---------
Net increase (decrease) in cash and cash
equivalents ....................... $ (7,568) $ 4,899
========= =========
The Company's net cash provided by operating activities in the periods
indicated above has been significantly greater than its net income. Included in
the net cash provided by operating activities is net income plus non-cash
adjustments aggregating $26.5 million and $29.9 million for the three months
ended September 30, 1996 and 1995 respectively. Depreciation expense was the
major component of such non-cash adjustments in each period.
The Company's most significant uses of cash include the purchase of
vehicles subject to operating leases and the principal payments on "notes
payable - non-recourse." The cash used to purchase vehicles is generated by the
Company's financing such leases on a non-recourse basis with various Lenders. At
September 30, 1996, the Company's non-recourse borrowings associated with its
vehicles under operating leases aggregated $1.5 billion. The Company has no
binding commitments from any Lender to fund future leases nor has the Company
committed to provide lease receivables to any Lender.
Furthermore, the Company's ability to finance substantially all of its
leases at a premium to the respective vehicle costs provides a substantial
source of cash. The following table sets forth information regarding the net
excess cash derived from financing its lease originations during each period
indicated.
24
<PAGE>
Three Months Ended September 30,
--------------------------------
1996 1995
---- ----
(in thousands)
Proceeds from notes payable and obligations
under capital leases - non-recourse ........ $194,078 $173,948
Purchases of vehicles under operating
leases(1) .................................. 179,429 159,991
-------- --------
Total net cash proceeds ...................... $ 14,649 $ 13,957
======== ========
- ----------
(1) Excludes those leases which have been partially or not funded by a Lender
representing purchases of vehicles under operating leases of $7.8 million
and $2.3 million for the three months ended September 30, 1996 and 1995,
respectively.
The cash used for principal payments on notes payable - non-recourse is
principally generated from the pass-through of monthly lease payments which are
pledged as collateral to the notes and from the proceeds realized from the
disposal of vehicles. The Company is obligated to dispose of those vehicles
which reach scheduled lease termination and to pay their associated Residuals to
the appropriate Lenders. The Company expects to realize proceeds from the
remarketing of such corresponding vehicles in an amount sufficient to pay such
Residuals; however, this is a forward-looking statement and there can be no
assurances that the Company will be able to do so due to, among other factors,
general economic and market conditions.
During the three months ended September 30, 1996, the Company also used
cash to (i) purchase Contracts, including the payment of Dealer Commissions,
(ii) provide credit enhancement with respect to the sale of Contracts and (iii)
finance its inventory of off-lease automobiles.
In order to facilitate the purchase of Contracts, the Company has sold
substantially all of its Contracts in securitization transactions or on a
private whole-loan basis. During the three months ended September 30, 1996 the
Company purchased and sold an aggregate amount of $89.6 million and $86.4
million, respectively, of Contracts. The difference between the amount
originated and sold during such period is primarily due to the timing of
Contract sale transactions. The Company has never had any difficulty in selling
its Contracts on terms favorable to the Company, although there can be no
assurance that it will be able to continue to do so.
The Company expects to continue to sell, on a securitized basis,
substantially all of the Contracts it originates. The foregoing statement is a
forward-looking statement, and there can be no assurance that any such
transactions will be consummated. Whether or not any such transactions are
consummated in the future, and the timing and terms thereof, is dependent upon
numerous factors, including the new and used automobile sale market, the
25
<PAGE>
general interest rate environment, market competition, the performance of the
Company's sold Contracts, the condition of the asset-backed securitization
markets and the Company's ability to warehouse any Contracts originated by it.
The Company requires a substantial amount of cash to purchase Contracts and
to hold them prior to sale. Historically, the Company has funded such activity
with available cash and with short term warehousing facilities. As Contract
originations continue to grow, the Company expects that it will need to obtain
interim warehouse funding. No assurance can be made that such financing will be
obtainable on favorable terms, if at all.
The Company also utilizes cash both to fund Dealer Commissions in
connection with the origination of Contracts and to fund credit enhancement
associated with the sale of such Contracts either in the form of retained
subordinated investments and/or cash spread accounts. For the three months ended
September 30, 1996, Dealer Commissions associated with the Company's Contract
originations were $3.7 million. With respect to Contracts sold in the three
months ended September 30, 1996, initial deposits to cash spread accounts in
such Contracts sold totalled $864,000. The Company's indirect automobile lending
operations generate cash flow from collections on retained subordinated
investments and withdrawals from cash spread accounts (i.e., excess servicing
cash flow). Such cash flow is available to fund Dealer Commissions, retained
subordinated investments and cash spread accounts. For the three months ended
September 30, 1996, servicing cash flow and collections on retained subordinated
investments received by the Company from previously sold Contracts were, in the
aggregate, $1.8 million. Excess servicing cash flow and collections on retained
subordinated investments to be realized by the Company in the future from
Contracts previously sold are expected to enable the Company to recover the
excess servicing receivable, retained subordinated investments and cash spread
accounts associated with such sold Contracts. As Contract originations continue
to grow, the Company expects to fund Dealer Commissions and credit enhancement
from available cash, excess servicing cash flow and collections on retained
subordinated investments from Contracts previously sold. Although the Company
believes it will be able to obtain financing and achieve liquidity (including
through any required warehousing arrangements) adequate to support its current
and future indirect automobile lending operations, this is a forward-looking
statement and there can be no assurance that it will be able to do so.
The Company has utilized the short sale of Treasury notes in an attempt to
reduce its exposure to interest rate risk during the period that the Company
holds Contracts prior to their sale. By entering into such transactions, the
Company attempts to obtain an inverse relationship between the value of the
Contracts held for sale and the value of the shorted Treasury positions entered
into by the Company. There are certain risks created by the cash versus non-cash
relationship of the short sale of Treasury notes and the
26
<PAGE>
related sale of the Contracts in these transactions. This relationship arises
because the Treasury notes are settled with current cash payments while the gain
associated with the sale of the Contracts represents the present value of
estimated future excess servicing cash flows. In the event that losses result
from these transactions, the Company's liquidity would be adversely impacted.
The Company's vehicle inventory at September 30, 1996 was $18.7 million as
compared to $12.0 million at September 30, 1995. Because the Company expects to
increase the number of vehicles sold in each of the next several years due to an
increasing number of vehicles reaching scheduled lease termination, vehicle
inventories are expected to increase. The Company expects to finance its vehicle
inventory with its revolving credit facilities and available cash; however, this
is a forward-looking statement and there can be no assurance that it will be
able to do so.
The Company maintains a $10.0 million line of credit facility at the prime
rate of interest to finance its automobile inventory held for sale. At September
30, 1996, the Company had an aggregate availability under the facility of $10.0
million. The Company also maintains an additional $3.0 million revolving credit
facility at an interest rate of prime plus 1.0% to finance automobile inventory.
At September 30, 1996, the Company had an aggregate availability under the
facility of $3.0 million.
The Company incurred capital expenditures of $2.5 million in the three
months ended September 30, 1996. The Company is continuing to review and upgrade
its current computer data processing and servicing systems and expects to
continue to invest capital to obtain new hardware and software for such systems.
The Company also expects to make certain additional capital improvements to its
new reconditioning and remarketing facility during the current fiscal year and
beyond. The Company has no other material commitments for capital expenditures.
The foregoing statements are forward-looking statements, and there can be no
assurance that such statements will prove to be true or accurate due, in part,
to the Company's need to remain flexible in its capital expenditures in order to
address needs as they arise.
The Company believes, based on its historical cash requirements and
anticipated uses of cash, that the cash derived from its operating and financing
activities will be sufficient to meet its cash requirements and implement its
business plan through the end of fiscal 1997.
Part II - OTHER INFORMATION
Item 1. Legal Proceedings - Not Applicable.
Item 2. Changes in Securities - Not Applicable.
27
<PAGE>
Item 3. Defaults Upon Senior Securities - Not Applicable.
Item 4. Submission of Matters to a Vote of Security Holders -
Not Applicable.
Item 5. Other Information - Not Applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Please see Index of Exhibits following the signature page of this Report.
(b) Reports on Form 8-K
The Company was not required to file a current report on Form 8-K during
the quarter ended September 30, 1996 and none were filed during that period.
[Intentionally left blank]
28
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
OXFORD RESOURCES CORP.
(Registrant)
Date: November 8, 1996 By /s/ Christopher S. Pascucci
----------------------------------
Christopher S. Pascucci
Executive Vice President &
Chief Financial Officer
Signing on behalf of the registrant
and as principal financial officer
29
<PAGE>
INDEX OF EXHIBITS
Exhibit Number Description
- -------------- -----------
10.01 Sale and Servicing Agreement dated
as of September 13, 1996 between
Centrex Auto Trust 1996-A, as
Issuer, Centrex Capital Corp., as
Sponsor, Centrex Capital Automobile
Assets (Number Three), Inc., as
Seller and Oxford Resources Corp.,
as Servicer.
10.02 Indenture dated as of September 13,
1996 between Centrex Auto Trust 1996-A
and the Bank of New York, as Trustee.
11 Statement of Computation of Net
Income Per Common Share
27 Financial Data Schedule
30
Exhibit 10.01
Execution Copy
- --------------------------------------------------------------------------------
SALE AND SERVICING
AGREEMENT
between
CENTREX AUTO TRUST 1996-A,
as Issuer,
CENTREX CAPITAL CORP.,
as Sponsor,
CENTREX CAPITAL AUTOMOBILE ASSETS (NUMBER THREE), INC.
as Seller
and
OXFORD RESOURCES CORP.,
as Servicer
Dated as of September 13, 1996
- --------------------------------------------------------------------------------
<PAGE>
Table of Contents
Page
----
ARTICLE I
Definitions
SECTION 1.1. Definitions ................................................. 1
SECTION 1.2. Other Definitional Provisions................................ 20
ARTICLE II
Conveyance of Receivables
SECTION 2.1. Conveyance of Receivables.................................... 21
ARTICLE III
The Receivables
SECTION 3.1. Representations and Warranties of Seller..................... 23
SECTION 3.2. Repurchase upon Breach....................................... 28
SECTION 3.3. Custody of Receivable Files.................................. 29
SECTION 3.4. Duties of Servicer as Custodian.............................. 29
SECTION 3.5. Instructions; Authority To Act............................... 30
SECTION 3.6. Custodian's Indemnification.................................. 30
SECTION 3.7. Effective Period and Termination............................. 31
ARTICLE IV
Administration and Servicing of Receivables
SECTION 4.1. Duties of Servicer .......................................... 32
SECTION 4.2. Collection and Allocation of Receivable Payments ............ 32
SECTION 4.3. Realization upon Receivables................................. 33
SECTION 4.4. Physical Damage Insurance; Other Insurance................... 34
SECTION 4.5. Maintenance of Security Interests
in Financed Vehicles....................................... 34
SECTION 4.6. Covenants of Servicer........................................ 35
SECTION 4.7. Purchase of Receivables upon Breach.......................... 35
SECTION 4.8. Servicing Fee ............................................... 36
SECTION 4.9. Servicer's Certificate....................................... 36
SECTION 4.10. Annual Statement as to Compliance; Notice of Default......... 36
SECTION 4.11. Annual Independent Certified Public Accountants' Report...... 37
SECTION 4.12. Access to Certain Documentation and Information Regarding
Receivables................................................ 37
SECTION 4.13. Servicer Expenses............................................ 38
SECTION 4.14. Appointment of Subservicer................................... 38
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ARTICLE V
Distributions; Reserve Account;
Statements to Certificateholders and Noteholders
SECTION 5.1. Establishment of Trust Accounts.............................. 38
SECTION 5.2. Collections ................................................. 41
SECTION 5.3. Application of Collections................................... 42
SECTION 5.4. Additional Deposits ......................................... 42
SECTION 5.5. Distributions ............................................... 43
SECTION 5.6. Reserve Account ............................................. 45
SECTION 5.7. Advances .................................................... 45
SECTION 5.8. Statements to Certificateholders and Noteholders............. 46
SECTION 5.9. Net Deposits ................................................ 47
SECTION 5.10. Rule 144A Information........................................ 47
ARTICLE VI
The Seller
SECTION 6.1. Representations of Seller.................................... 48
SECTION 6.2. Corporate Existence ......................................... 49
SECTION 6.3. Liability of Seller; Indemnities............................. 50
SECTION 6.4. Merger or Consolidation of, or Assumption of the
Obligations of, Seller..................................... 52
SECTION 6.5. Limitation on Liability of Seller and Others................. 53
SECTION 6.6. Seller May Own Certificates or Notes......................... 53
SECTION 6.7 Security Interest ........................................... 53
ARTICLE VII
The Servicer
SECTION 7.1. Representations of Servicer.................................. 53
SECTION 7.2. Indemnities of Servicer...................................... 55
SECTION 7.3. Merger or Consolidation of, or Assumption of the
Obligations of, Servicer................................... 57
SECTION 7.4. Limitation on Liability of Servicer and Others............... 58
SECTION 7.5. Oxford Resources Corp. Not To Resign as Servicer............. 58
SECTION 7.6. Corporate Existence.......................................... 58
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ARTICLE VII A
SECTION 7.1 A Representations of Sponsor .................................. 59
SECTION 7.2 A Merger or Consolidation of, or Assumption of the
Obligations of Sponsor .................................... 61
SECTION 7.3 A Limitation on Liability of Sponsor and others ............... 62
SECTION 7.4 A Corporate Existence ......................................... 63
SECTION 7.5 A Demand Note ................................................. 63
ARTICLE VIII
Default
SECTION 8.1. Servicer Default ............................................ 64
SECTION 8.2. Appointment of Successor..................................... 65
SECTION 8.3. Payment of Servicing Fee; Repayment of Advances.............. 66
SECTION 8.4. Notification to Noteholders and Certificateholders........... 66
SECTION 8.5. Waiver of Past Defaults...................................... 66
ARTICLE IX
Termination
SECTION 9.1. Optional Purchase of All Receivables......................... 67
SECTION 9.2. Mandatory Sale of All Receivables............................ 68
ARTICLE X
Administrative Duties of the Servicer
SECTION 10.1. Administrative Duties........................................ 70
SECTION 10.2. Records...................................................... 73
SECTION 10.3. Additional Information to be Furnished to the Issuer......... 73
ARTICLE XI
Miscellaneous Provisions
SECTION 11.1. Amendment.................................................... 73
SECTION 11.2. Protection of Title to Trust................................. 74
SECTION 11.3. Notices ..................................................... 77
SECTION 11.4. Assignment................................................... 77
SECTION 11.5. Limitations on Rights of Others.............................. 77
SECTION 11.6. Severability................................................. 77
SECTION 11.7. Separate Counterparts........................................ 78
SECTION 11.8. Headings..................................................... 78
SECTION 11.9. Governing Law................................................ 78
SECTION 11.10. Assignment to Trustee........................................ 78
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SECTION 11.11. Nonpetition Covenant......................................... 78
SECTION 11.12. Limitation of Liability of Owner Trustee and Trustee......... 78
SECTION 11.13. Independence of the Servicer................................. 79
SECTION 11.14. No Joint Venture............................................. 79
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SCHEDULES
Schedule A - Schedule of Receivables
Schedule B - Location of Receivables
EXHIBITS
Exhibit A - Form of Monthly Securityholder Statement
Exhibit B - Form of Servicer's Certificate
Exhibit C - Auction Procedures
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SALE AND SERVICING AGREEMENT dated as of
September 13, 1996, among CENTREX AUTO TRUST 1996-A, a
Delaware business trust (the "Issuer"), CENTREX
CAPITAL CORP. (the "Sponsor"), CENTREX CAPITAL
AUTOMOBILE ASSETS (NUMBER THREE), INC. as seller (the
"Seller") and OXFORD RESOURCES CORP., as servicer (the
"Servicer").
WHEREAS the Issuer desires to purchase a portfolio of receivables
arising in connection with motor vehicle retail installment sale contracts
generally purchased by the Originators from motor vehicle dealers and acquired
by the Seller pursuant to the Loan Purchase Agreement;
WHEREAS the Sponsor as of the date hereof has caused the Seller to
form the Issuer;
WHEREAS the Seller is willing to sell such receivables to the Issuer
and assign its rights but none of its obligations under the Loan Purchase
Agreement to the Issuer; and
WHEREAS the Servicer is willing to service such receivables.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.1. Definitions. Whenever used in this Agreement, the
following words and phrases shall have the following meanings:
"Adviser" has the meaning specified in Section 9.2.
"Actuarial Receivable" means any Receivable under which the portion
of a payment allocable to principal and the portion of a payment allocable to
interest is determined in accordance with the Scheduled Payment.
"Advance" means the amount, as of the close of business on the last
day of a Collection Period, which the Servicer is required to advance on the
related Actuarial Receivable pursuant to Section 5.7(a).
"Aggregate Net Losses" means, with respect to a Collection Period,
the aggregate principal balance of all Receivables newly designated during such
Collection Period as
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Liquidated Receivables minus Liquidation Proceeds collected during such
Collection Period with respect to all Liquidated Receivables.
"Agreement" means this Sale and Servicing Agreement, as the same may
be amended and supplemented from time to time.
"Amount Financed" with respect to a Receivable means the amount
advanced under the Receivable toward the purchase price of the Financed Vehicle
and any related costs.
"Annual Percentage Rate" or "APR" of a Receivable means the annual
rate of finance charges stated in the related Contract.
"Auction" has the meaning specified in Section 9.2.
"Auction Procedures" has the meaning specified in Section 9.2.
"Auction Property has the meaning specified in Section 9.2.
"Available Principal" means, with respect to any Distribution Date,
the sum of the following amounts without duplication: (a) that portion of all
collections on the Receivables allocable to principal in respect of the
preceding Collection Period using (x) in the case of a Simple Interest
Receivable, the Simple Interest Method and (y) in the case of an Actuarial
Receivable, the actuarial method (including, with respect to Actuarial
Receivables, amounts withdrawn from the Payahead Account and allocable to
principal and excluding amounts deposited into the Payahead Account and
allocable to principal, in each case, in respect of the preceding Collection
Period); (b) Liquidation Proceeds attributable to the principal amount of
Receivables which became Liquidated Receivables during the preceding Collection
Period in accordance with the Servicer's customary servicing procedures; (c) all
Advances made by the Servicer of principal due on the Actuarial Receivables in
respect of the preceding Collection Period; (d) to the extent attributable to
principal, the Purchase Amount of each Receivable repurchased by the Seller or
the Sponsor (or the related Originator) or purchased by the Servicer as of the
close of business on the last day of the preceding Collection Period; and (e)
partial prepayments on Receivables in respect of the preceding Collection Period
relating to refunds of extended warranty contract costs or of credit life or
disability insurance policy premiums, but only if such costs or premiums were
financed by the respective Obligor and only to the extent not included in clause
(a) above; provided, however, that in calculating the Available Principal all
payments and proceeds (including Liquidation Proceeds) of any Receivables (i)
repurchased by the Seller or the Sponsor (or the related
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Originator) or purchased by the Servicer the Purchase Amount of which has been
included in the Available Principal on a prior Distribution Date, and (ii)
distributed to the Servicer, with respect to such Distribution Date, as
reimbursement for Outstanding Advances in accordance with Section 5.7 shall all
be excluded.
"Balloon Loan" means a Receivable originated with a stated maturity
of less than the period of time of the corresponding amortization schedule.
"Balloon Payment" means the final payment required to be made under a
Balloon Loan.
"Basic Documents" means the Certificate of Trust, the Trust
Agreement, the Indenture, the Loan Purchase Agreement, the Depository Agreements
and other documents and certificates delivered in connection therewith.
"Certificate" means a Trust Certificate (as defined in the Trust
Agreement).
"Certificate Balance" equals, initially, $4,320,542 and, thereafter,
equals the initial Certificate Balance, reduced by all amounts allocable to
principal previously distributed to Certificateholders.
"Certificate Distribution Account" has the meaning assigned to such
term in the Trust Agreement.
"Certificate Pool Factor" as of the close of business on a
Distribution Date means a seven-digit decimal figure equal to the Certificate
Balance (after giving effect to distributions made on such date) divided by the
initial Certificate Balance. The Certificate Pool Factor will be 1.0000000 as of
the Cutoff Date; thereafter, the Certificate Pool Factor will decline to reflect
reductions in the Certificate Balance.
"Certificate Rate" means 7.20% per annum.
"Certificateholder" has the meaning assigned to such term in the
Trust Agreement.
"Certificateholders' Distributable Amount" means, with respect to any
Distribution Date, the sum of the Certificateholders' Interest Distributable
Amount and the Certificate holders' Principal Distributable Amount.
"Certificateholders' Interest Carryover Shortfall" means, with
respect to any Distribution Date, the excess of the Certificateholders' Monthly
Interest Distributable Amount for the preceding Distribution Date and any
outstanding Certificateholders' Interest Carryover Shortfall on such preceding
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Distribution Date, over the amount in respect of interest at the Certificate
Rate that is actually deposited in the Certificate Distribution Account on such
preceding Distribution Date, plus interest on such excess, to the extent
permitted by law, at the Certificate Rate from and including such preceding
Distribution Date to but excluding the current Distribution Date.
"Certificateholders' Interest Distributable Amount" means, with
respect to any Distribution Date, the sum of the Certificateholders' Monthly
Interest Distributable Amount for such Distribution Date and the
Certificateholders' Interest Carryover Shortfall for such Distribution Date.
Interest shall be computed on the basis of a 360-day year of twelve 30-day
months for purposes of this definition.
"Certificateholders' Monthly Interest Distributable Amount" means,
with respect to any Distribution Date, the product of (i) one-twelfth of the
Certificate Rate (or, in the case of the first Distribution Date, the
Certificate Rate multiplied by a fraction, the numerator of which is the number
of days elapsed from and including the Closing Date to but excluding such
Distribution Date and the denominator of which is 360) and (ii) the Certificate
Balance on the immediately preceding Distribution Date, after giving effect to
all payments of principal to the Certificateholders on or prior to such
Distribution Date (or, in the case of the first Distribution Date, the
Certificate Balance on the Closing Date).
"Certificateholders' Monthly Principal Distributable Amount" means,
with respect to any Distribution Date, the Certificateholders' Percentage of the
Principal Distribution Amount or, with respect to any Distribution Date on or
after the Distribution Date on which the outstanding principal balance of the
Notes is reduced to zero, 100% of the Principal Distribution Amount (less any
amount required on the first such Distribution Date to reduce the outstanding
principal balance of the Notes to zero, which shall be deposited into the Note
Distribution Account).
"Certificateholders' Percentage" means 100% minus the Noteholders'
Percentage.
"Certificateholders' Principal Carryover Shortfall" means, as of the
close of any Distribution Date, the excess of the Certificateholders' Monthly
Principal Distributable Amount and any outstanding Certificateholders' Principal
Carryover Shortfall from the preceding Distribution Date, over the amount in
respect of principal that is actually deposited in the Certificate Distribution
Account on such current Distribution Date.
"Certificateholders' Principal Distributable Amount" means, with
respect to any Distribution Date, the sum of the
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Certificateholders' Monthly Principal Distributable Amount for such Distribution
Date and the Certificateholders' Principal Carryover Shortfall as of the close
of the preceding Distribution Date; provided, however, that the
Certificateholders' Principal Distributable Amount shall not exceed the
Certificate Balance. In addition, on the Certificate Final Scheduled
Distribution Date, the principal required to be distributed to
Certificateholders will include the lesser of (a) any payments of principal due
and remaining unpaid on each Receivable in the Trust as of the last day of the
Collection Period preceding the Certificate Final Scheduled Distribution Date or
(b) the portion of the amount that is necessary (after giving effect to the
other amounts to be deposited in the Certificate Distribution Account on such
Distribution Date and allocable to principal) to reduce the Certificate Balance
to zero, in either case after giving effect to any required distribution of the
Noteholders' Principal Distributable Amount to the Note Distribution Account. In
addition, on any Distribution Date on which, after giving effect to all
distributions to the Servicer, the Noteholders and the Certificateholders on
such Distribution Date, (i) the outstanding principal balance of the Notes is
zero and (ii) the amount on deposit in the Reserve Account is equal to or
greater than the Certificate Balance, Certificateholders' Principal
Distributable Amount shall include an amount equal to such Certificate Balance.
"Closing Date" means September 24, 1996.
"Collection Account" means the account designated as such,
established and maintained pursuant to Section 5.1.
"Collection Period" means a calendar month, except with respect to
the first Collection Period, which shall be the period from the Cutoff Date to
September 30, 1996. Any amount stated "as of the close of business on the last
day of a Collection Period" shall give effect to the following calculations as
determined as of the end of the day on such last day: (1) all applications of
collections, (2) all current and previous Payaheads, (3) all applications of
Payahead Balances, (4) all Advances and reductions of Outstanding Advances and
(5) all distributions to be made on the immediately following Distribution Date.
"Computer Tape" means the computer tapes furnished to the Trustee
describing certain characteristics of the Receivables as of the Cutoff Date.
"Contract" means a motor vehicle retail installment sale contract.
"Cram Down Loss" means, with respect to a Receivable if a court of
appropriate jurisdiction in a bankruptcy or
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insolvency proceeding shall have issued an order reducing the amount owed on
such Receivable or otherwise modifying or restructuring the scheduled payments
to be made on such Receivable, an amount equal to (i) the excess of the
principal balance of such Receivable immediately prior to such order over the
principal balance of such Receivable as so reduced and/or (ii) if such court
shall have issued an order reducing the effective rate of interest on such
Receivable, the net present value (using as the discount rate the higher of the
APR on such Receivable or the rate of interest, if any, specified by the court
in such order) of the scheduled payments as so modified or restructured. A "Cram
Down Loss" shall be deemed to have occurred on the date of issuance of such
order.
"Cumulative Net Loss Ratio" means, with respect to any Distribution
Date, a fraction, expressed as a percentage, the numerator of which is an amount
equal to the excess of (i) the cumulative amount of Realized Losses and Cram
Down Losses from the Cutoff Date through the last day of the related Collection
Period over (ii) the cumulative amount of Recoveries from the Cutoff Date
through the last day of the related Collection Period and the denominator of
which is the Initial Pool Balance.
"Cutoff Date" means September 13, 1996.
"Dealer" means a motor vehicle dealer who sold a Financed Vehicle and
who originated and assigned the respective Receivable to an Originator under an
existing agreement between such Dealer and such Originator.
"Dealer Agreement" means any agreement between a Dealer and an
Originator relating to the acquisition of Receivables from a Dealer by such
Originator.
"Delinquency Percentage" means, with respect to a Collection Period,
the ratio of (a) the outstanding principal balance of all outstanding
Receivables 60 days or more delinquent (which amount shall include Receivables
in respect of Financed Vehicles that have been repossessed but not yet sold or
otherwise liquidated) as of the last day of such Collection Period, determined
in accordance with the Servicer's normal practices, divided by (b) the
outstanding principal balance of all Receivables on the last day of such
Collection Period.
"Delivery" when used with respect to Trust Account Property means:
(a) with respect to bankers' acceptances, commercial paper,
negotiable certificates of deposit and other obligations that constitute
"instruments" within the meaning of Section 9.105(1)(i) of the UCC and are
susceptible of physical delivery, transfer thereof to the Trustee or its nominee
or custodian by physical delivery to the Trustee or its nominee or
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custodian endorsed to, or registered in the name of, the Trustee or its nominee
or custodian or endorsed in blank, and, with respect to a certificated security
(as defined in Section 8-102 of the UCC) transfer thereof (i) by delivery of
such certificated security endorsed to, or registered in the name of, the
Trustee or its nominee or custodian or endorsed in blank to a financial
intermediary (as defined in Section 8-313 of the UCC) and the making by such
financial intermediary of entries on its books and records identifying such
certificated securities as belonging to the Trustee or its nominee or custodian
and the sending by such financial intermediary of a confirmation of the purchase
of such certificated security by the Trustee or its nominee or custodian, or
(ii) by delivery thereof to a "clearing corporation" (as defined in Section
8-102(3) of the UCC) and the making by such clearing corporation of appropriate
entries on its books reducing the appropriate securities account of the
transferor and increasing the appropriate securities account of a financial
intermediary by the amount of such certificated security, the identification by
the clearing corporation of the certificated securities for the sole and
exclusive account of the financial intermediary, the maintenance of such
certificated securities by such clearing corporation or a "custodian bank" (as
defined in Section 8-102(4) of the UCC) or the nominee of either subject to the
clearing corporation's exclusive control, the sending of a confirmation by the
financial intermediary of the purchase by the Trustee or its nominee or
custodian of such securities and the making by such financial intermediary of
entries on its books and records identifying such certificated securities as
belonging to the Trustee or its nominee or custodian (all of the foregoing,
"Physical Property"), and, in any event, any such Physical Property in
registered form shall be in the name of the Trustee or its nominee or custodian;
and such additional or alternative procedures as may hereafter become
appropriate to effect the complete transfer of ownership of any such Trust
Account Property to the Trustee or its nominee or custodian, consistent with
changes in applicable law or regulations or the interpretation thereof;
(b) with respect to any securities issued by the U.S. Treasury,
the Federal Home Loan Mortgage Corporation or by the Federal National Mortgage
Association that is a book-entry security held through the Federal Reserve
System pursuant to Federal book-entry regulations, the following procedures, all
in accordance with applicable law, including applicable Federal regulations and
Articles 8 and 9 of the UCC: book-entry registration of such Trust Account
Property to an appropriate book-entry account maintained with a Federal Reserve
Bank by a financial intermediary which is also a "depository" pursuant to
applicable Federal regulations and issuance by such financial intermediary of a
deposit advice or other written confirmation of such book-entry registration to
the Trustee or its nominee or custodian of the purchase by the Trustee or its
nominee or custodian of such book-entry securities; the making by such
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financial intermediary of entries in its books and records identifying such
book-entry security held through the Federal Reserve System pursuant to Federal
book-entry regulations as belonging to the Trustee or its nominee or custodian
and indicating that such custodian holds such Trust Account Property solely as
agent for the Trustee or its nominee or custodian; and such additional or
alternative procedures as may hereafter become appropriate to effect complete
transfer of ownership of any such Trust Account Property to the Trustee or its
nominee or custodian, consistent with changes in applicable law or regulations
or the interpretation thereof; and
(c) with respect to any item of Trust Account Property that is
an uncertificated security under Article 8 of the UCC and that is not governed
by clause (b) above, registration on the books and records of the issuer thereof
in the name of the financial intermediary, the sending of a confirmation by the
financial intermediary of the purchase by the Trustee or its nominee or
custodian of such uncertificated security, the making by such financial
intermediary of entries on its books and records identifying such uncertificated
certificates as belonging to the Trustee or its nominee or custodian.
"Depositor" shall mean the Seller in its capacity as Depositor under
the Trust Agreement.
"Depository Agreements" mean the Certificate Depository Agreement and
the Note Depository Agreement.
"Determination Date" means, with respect to any Distribution Date,
the earlier of the eighth Business Day of the month in which a Distribution Date
occurs and the fourth Business Day preceding such Distribution Date.
"Distribution Date" means, with respect to each Collection Period,
the fifteenth day of the following month, or if such day is not a Business Day,
the immediately following Business Day, commencing in October 1996.
"Eligible Deposit Account" means either (a) a segregated account with
an Eligible Institution or (b) a segregated trust account with the corporate
trust department of a depository institution (other than the Seller or any
affiliate of the Seller) organized under the laws of the United States of
America or any one of the states thereof or the District of Columbia (or any
domestic branch of a foreign bank), having corporate trust powers and acting as
trustee for funds deposited in such account, so long as any of the securities of
such depository institution have a credit rating from each Rating Agency in one
of its generic rating categories which signifies investment grade.
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"Eligible Institution" means a depository institution (other than the
Seller or any affiliate of the Seller) organized under the laws of the United
States of America or any one of the states thereof or the District of Columbia
(or any domestic branch of a foreign bank), which (i) has (A) either a long-term
senior unsecured debt rating of AAA or a short-term senior unsecured debt or
certificate of deposit rating of A-l+ or better by Standard & Poor's and (B)(1)
a long-term senior unsecured debt rating of Al or better and (2) a short-term
senior unsecured debt rating of Pl or better by Moody's, or any other long-term,
short-term or certificate of deposit rating acceptable to the Rating Agencies
and (ii) whose deposits are insured by the Federal Deposit Insurance
Corporation. If so qualified, the Owner Trustee or the Trustee may be considered
an Eligible Institution.
"Eligible Investments" mean book-entry securities, negotiable
instruments or securities represented by instruments in bearer or registered
form which evidence:
(a) direct obligations of, and obligations fully guaranteed as
to timely payment by, the United States of America;
(b) demand deposits, time deposits or certificates of deposit
of any depository institution (including the Seller or any Affiliate of the
Seller) or trust company incorporated under the laws of the United States of
America or any state thereof or the District of Columbia (or any domestic branch
of a foreign bank) and subject to supervision and examination by Federal or
state banking or depository institution authorities (including depository
receipts issued by any such institution or trust company as custodian with
respect to any obligation referred to in clause (a) above or portion of such
obligation for the benefit of the holders of such depository receipts);
provided, however, that at the time of the investment or contractual commitment
to invest therein (which shall be deemed to be made again each time funds are
reinvested following each Distribution Date), the commercial paper or other
short-term senior unsecured debt obligations (other than such obligations the
rating of which is based on the credit of a Person other than such depository
institution or trust company) of such depository institution or trust company
shall have a credit rating from Standard & Poor's of A-1+ and from Moody's of
P1;
(c) commercial paper (including commercial paper of the Seller
or any Affiliate of the Seller) having, at the time of the investment or
contractual commitment to invest therein, a rating from Standard & Poor's of
A-1+ and from Moody's of P1;
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(d) investments in money market funds (including funds for
which the Seller, the Trustee or the Owner Trustee or any of their respective
Affiliates is investment manager or advisor) having a rating from Standard &
Poor's of AAA-m or AAAm-G and from Moody's of Aaa;
(e) bankers' acceptances issued by any depository institution
or trust company referred to in clause (b) above;
(f) repurchase obligations with respect to any security that is
a direct obligation of, or fully guaranteed by, the United States of America or
any agency or instrumentality thereof the obligations of which are backed by the
full faith and credit of the United States of America, in either case entered
into with a depository institution or trust company (acting as principal)
referred to in clause (b) above; and
(g) any other investment which would not cause either Rating
Agency to downgrade or withdraw its then current rating of the Notes or the
Certificates.
"Final Scheduled Distribution Date" means with respect to (i) the
Notes, the October 2004 Distribution Date and (ii) the Certificates, the October
2004 Distribution Date.
"Final Scheduled Maturity Date" means October 31, 2003.
"Financed Vehicle" means a new or used automobile, (including
passenger car, minivan, sport/utility vehicle or light truck) together with all
accessions thereto, securing an Obligor's indebtedness under the respective
Receivable.
"GP Interest" means the 1% interest in the Trust held by the
Depositor pursuant to the Trust Agreement.
"Indenture" means the Indenture dated as of September 13, 1996,
between the Issuer and the Trustee, as the same may be amended and supplemented
from time to time.
"Initial Pool Balance" means the Pool Balance as of the Cutoff Date,
which is $86,407,542.08.
"Insolvency Event" means, with respect to a specified Person, (a) the
filing of a decree or order for relief by a court having jurisdiction in the
premises in respect of such Person or any substantial part of its property in an
involuntary case under any applicable Federal or state bankruptcy, insolvency or
other similar law now or hereafter in effect, or appointing a receiver
(including any receiver appointed under the Financial Institutions Reform,
Recovery and Enforcement Act of 1989, as amended), liquidator, assignee,
custodian, trustee, sequestrator or similar official for such Person or for any
substantial part of its property, or ordering the winding-up or
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liquidation of such Person's affairs, and such decree or order shall remain
unstayed and in effect for a period of 60 consecutive days; or (b) the
commencement by such Person of a voluntary case under any applicable Federal or
state bankruptcy, insolvency or other similar law now or hereafter in effect, or
the consent by such Person to the entry of an order for relief in an involuntary
case under any such law, or the consent by such Person to the appointment of or
taking possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official for such Person or for any substantial part of
its property, or the making by such Person of any general assignment for the
benefit of creditors, or the failure by such Person generally to pay its debts
as such debts become due, or the taking of action by such Person in furtherance
of any of the foregoing.
"Interest Distribution Amount" means, with respect to any
Distribution Date, the sum of the following amounts without duplication: (a)
that portion of all collections on the Receivables allocable to interest in
respect of the preceding Collection Period using (x) in the case of a Simple
Interest Receivable, the Simple Interest Method and (y) in the case of an
Actuarial Receivable, the actuarial method (including, with respect to Actuarial
Receivables, amounts withdrawn from the Payahead Account and allocable to
interest, and excluding amounts deposited into the Payahead Account and
allocable to interest, in each case in respect of the preceding Collection
Period); (b) Liquidation Proceeds attributable to interest on the Receivables
which became Liquidated Receivables during the preceding Collection Period in
accordance with the Servicer's customary servicing procedures; (c) all Advances
made by the Servicer of interest due on the Actuarial Receivables; (d) the
Purchase Amount of each Receivable repurchased by the Seller or the Sponsor (or
the related Originator) or purchased by the Servicer as of the close of business
on the last day of the preceding Collection Period to the extent attributable to
accrued interest on such Receivable; (e) Recoveries for such Collection Period
and (f) Investment Earnings for such Distribution Date; provided, however, that
in calculating the Interest Distribution Amount (i) all payments and proceeds
(including Liquidation Proceeds) of any Receivables repurchased by the Seller or
the Sponsor (or the related Originator) or purchased by the Servicer the
Purchaser Amount of which has been included in the Interest Distribution Amount
on a prior Distribution Date, and (ii) distributed to the servicer with respect
to such Distribution Date, as reimbursement for Outstanding Advances in
accordance with Section 5.7 shall all be excluded.
"Investment Earnings" means, with respect to any Distribution Date,
the investment earnings (net of losses and investment expenses) on amounts on
deposit in the Trust Accounts (except the Payahead Account) and the Certificate
Distribution
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Account to be deposited into the Collection Account on such Distribution Date
pursuant to Section 5.1(b).
"Issuer" means Centrex Auto Trust 1996-A.
"Lien" means a security interest, lien, charge, pledge or encumbrance
of any kind, other than tax liens, mechanics' liens and any liens which attach
to the respective Receivable by operation of law as a result of any act or
omission by the related Obligor.
"Liquidated Receivables" means, Receivables (i) which have been
liquidated by the Servicer through the sale of the related Financed Vehicle,
(ii) as to which all or a portion representing 10% or more of a scheduled
payment due is 150 or more days delinquent or (iii) with respect to which
proceeds have been received which, in the Servicer's judgment, constitute the
final amounts recoverable in respect of such Receivable.
"Liquidation Distribution Date" has the meaning specified in Section
9.2.
"Liquidation Proceeds" means, with respect to any Liquidated
Receivable, the moneys collected in respect thereof, from whatever source (other
than any proceeds from any Dealer commission) on a Liquidated Receivable during
the Collection Period in which such Receivable became a Liquidated Receivable,
net of the sum of any amounts expended by the Servicer in connection with such
liquidation and any amounts required by law to be remitted to the Obligor on
such Liquidated Receivable.
"Loan Purchase Agreement" means the Loan Purchase Agreement dated as
of September 13, 1996 among the Originators and the Seller.
"Moody's" means Moody's Investors Service, Inc., or its successor.
"Net Losses" means the sum of Realized Losses and Cram Down Losses
minus Recoveries for any Collection Period.
"Note Distribution Account" means the account designated as such,
established and maintained pursuant to Section 5.1.
"Note Pool Factor" for the Notes as of the close of business on a
Distribution Date means a seven-digit decimal figure equal to the outstanding
principal balance of Notes divided by the original outstanding principal balance
of the Notes. The Note Pool Factor for the Notes will be 1.0000000 as of the
Cutoff Date; thereafter, the Note Pool Factor for the
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Notes will decline to reflect reductions in the outstanding principal balance of
the Notes.
"Noteholders' Distributable Amount" means, with respect to any
Distribution Date, the sum of the Noteholders' Principal Distributable Amount
and the Noteholders' Interest Distributable Amount.
"Noteholders' Interest Carryover Shortfall" means, with respect to
any Distribution Date, the excess of the Noteholders' Monthly Interest
Distributable Amount for the preceding Distribution Date and any outstanding
Noteholders' Interest Carryover Shortfall on such preceding Distribution Date,
over the amount in respect of interest that is actually deposited in the Note
Distribution Account on such preceding Distribution Date, plus interest on the
amount of interest due but not paid to Noteholders on the preceding Distribution
Date, to the extent permitted by law, at the Interest Rate from such preceding
Distribution Date through the current Distribution Date.
"Noteholders' Interest Distributable Amount" means, with respect to
any Distribution Date, the sum of the Noteholders' Monthly Interest
Distributable Amount for such Distribution Date and the Noteholders' Interest
Carryover Shortfall for such Distribution Date. Interest shall be computed on
the basis of a 360 day year of twelve 30-day months.
"Noteholders' Monthly Interest Distributable Amount" means, with
respect to any Distribution Date, the product of (i) one-twelfth of the Interest
Rate (or, in the case of the first Distribution Date, the Interest Rate
multiplied by a fraction, the numerator of which is the number of days elapsed
from and including the Closing Date to but excluding such Distribution Date and
the denominator of which is 360) and (ii) the outstanding principal balance of
the Notes on the immediately preceding Distribution Date, after giving effect to
all distributions of principal to Noteholders on such Distribution Date (or, in
the case of the first Distribution Date, on the Closing Date).
"Noteholders' Monthly Principal Distributable Amount" means, with
respect to any Distribution Date, the Noteholders' Percentage of the Principal
Distribution Amount.
"Noteholders' Percentage" means 100% until the point in time at which
the Notes have been paid in full and zero thereafter.
"Noteholders' Principal Carryover Shortfall" means, as of the close
of any Distribution Date, the excess of the Noteholders' Monthly Principal
Distributable Amount and any outstanding Noteholders' Principal Carryover
Shortfall from the preceding Distribution Date over the amount in respect of
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principal that is actually deposited in the Note Distribution Account.
"Noteholders' Principal Distributable Amount" means, with respect to
any Distribution Date, the sum of the Noteholder's Monthly Principal
Distributable Amount for such Distribution Date and the Noteholders' Principal
Carryover Shortfall as of the close of the preceding Distribution Date;
provided, however, that the Noteholders' Principal Distributable Amount shall
not exceed the outstanding principal balance of the Notes. In addition, on the
Final Scheduled Distribution Date of the Notes, the principal required to be
deposited in the Note Distribution Account will include the amount necessary
(after giving effect to the other amounts to be deposited in the Note
Distribution Account on such Distribution Date and allocable to principal) to
reduce the Outstanding Amount of such Notes to zero.
"Obligor" on a Receivable means the purchaser or co-purchasers of the
Financed Vehicle and any other Person who owes payments under the Receivable.
"Officers' Certificate" means a certificate signed by (a) the
president, any senior vice president or any vice president and (b) a secretary
or assistant secretary of the Seller, the Sponsor or the Servicer, as
appropriate, provided that no one person may sign in a capacity fulfilling both
clause (a) and clause (b).
"Originators" means the subsidiaries of the Sponsor which sold
Receivables to the Seller pursuant to the Loan Purchase Agreement.
"Outstanding Advances" on the Actuarial Receivables means the sum, as
of the close of business on the last day of a Collection Period, of all Advances
as reduced as provided in Section 5.7(a).
"Owner Trust Estate" has the meaning assigned to such term in the
Trust Agreement.
"Owner Trustee" means Delaware Trust Capital Management, Inc., not in
its individual capacity but solely as Owner Trustee under the Trust Agreement,
its successors in interest or any successor Owner Trustee under the Trust
Agreement.
"Payahead" on an Actuarial Receivable means the amount, as of the
close of business on the last day of a Collection Period, computed in accordance
with Section 5.3 with respect to such Receivable.
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"Payahead Account" means the account designated as such, established
and maintained pursuant to Section 5.1.
"Payahead Balance" on an Actuarial Receivable means the sum, as of
the close of business on the last day of a Collection Period, of all Payaheads
made by or on behalf of the Obligor with respect to such Actuarial Receivable,
as reduced by applications of previous Payaheads with respect to such Actuarial
Receivable, pursuant to Sections 5.3 and 5.7.
"Person" means any individual, corporation, estate, partnership,
joint venture, association, joint stock company, trust (including any
beneficiary thereof), unincorporated organization or government or any agency or
political subdivision thereof.
"Physical Property" has the meaning assigned to such term in the
definition of "Delivery" above.
"Pool Balance" as of the close of business on the last day of a
Collection Period means the aggregate Principal Balance of the Receivables
(excluding Purchased Receivables and Liquidated Receivables).
"Principal Balance" of a Receivable, as of the close of business on
the last day of a Collection Period, means the Amount Financed minus the sum of
(i)(a) with respect to a Simple Interest Receivable, that portion of all
payments made by or on behalf of the related Obligor on or prior to such day and
allocable to principal using the Simple Interest Method and (b) in the case of
an Actuarial Receivable, that portion of all Scheduled Payments due on or prior
to such day allocable to principal using the actuarial method, (ii) any refunded
portion of extended warranty protection plan costs or of physical damage, theft,
credit life, credit accident or health insurance premiums included in the Amount
Financed, (iii) any payment of the Purchase Amount with respect to the
Receivable allocable to principal, (iv) any prepayment in full or any partial
prepayments applied to reduce the Principal Balance of the Receivable and (v)
Cram Down Losses in respect of such Receivable.
"Principal Distribution Amount" means, with respect to any
Distribution Date, the sum of (i) (a) with respect to Simple Interest
Receivables, that portion of all collections on the Receivable allocable to
principal in respect of the preceding Collection Period and (b) with respect to
Actuarial Receivables, the sum of (x) the amount of all Scheduled Payments
allocable to principal due during the preceding Collection Period and (y) the
portion of all prepayments in full allocable to principal received during the
preceding Collection Period, in the case of both (a) and (b), without regard to
any extensions or modifications thereof effected after the Cutoff Date, other
than
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with respect to any extensions or modifications required in connection with Cram
Down Losses during such Collection Period; (ii) the principal balance of each
Receivable that was repurchased by the Seller or the Sponsor (or the related
Originator), or purchased by the Servicer, in each case, as of the close of
business on the last day of the preceding Collection Period (except to the
extent included in (i) above; (iii) the principal balance of each Liquidated
Receivable which became such during the preceding Collection Period (except to
the extent included in (i) above); (iv) partial prepayments on Receivables in
respect of the preceding Collection Period relating to refunds of extended
service contracts, or of physical damage, credit life, credit accident or heath
insurance premium, disability insurance policy premiums, but only if such costs
or premiums were financed by the respective Obligor and only to the extent not
included in clause (i) above; and (v) the aggregate amount of Cram Down Losses
during such Collection Period.
"Purchase Amount" means the amount, as of the close of business on
the last day of a Collection Period, required to prepay in full the respective
Receivable under the terms thereof including interest at the APR to the end of
the month of purchase (without giving effect to Outstanding Advances).
"Purchased Receivable" means a Receivable purchased as of the close
of business on the last day of a Collection Period by (i) the Servicer pursuant
to Section 4.7 or (ii) repurchased by the Seller or the Sponsor (or the related
Originator) pursuant to Section 3.2.
"Rating Agency" means Moody's and/or Standard & Poor's. If no such
organization or successor is any longer in existence, "Rating Agency" shall be a
nationally recognized statistical rating organization or other comparable Person
designated by the Seller, notice of which designation shall be given to the
Trustee, the Owner Trustee and the Servicer.
"Rating Agency Condition" means, with respect to any action, that
each Rating Agency shall have been given 10 days' prior notice thereof (or such
shorter period as shall be acceptable to the Rating Agencies) and that neither
of the Rating Agencies shall have notified the Seller, the Servicer, the Owner
Trustee or the Trustee in writing that such action will, in and of itself,
result in a reduction or withdrawal of the then current rating of the Notes, or
the Certificates.
"Realized Losses" means the excess of the Principal Balance of any
Liquidated Receivable over Liquidation Proceeds to the extent allocable to
principal.
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"Receivable" means any Contract listed on Schedule A (which Schedule
may be in the form of microfiche) but excluding Liquidated Receivables and
Purchased Receivables.
"Receivable Files" means the documents specified in Section 3.3.
"Recoveries" means, with respect to any Liquidated Receivable, monies
collected in respect thereof, from whatever source (other than any proceeds from
any Dealer commission), during any Collection Period following the Collection
Period in which such Receivable became a Liquidated Receivable, net of the sum
of any amounts expended by the Servicer for the account of the Obligor and any
amounts required by law to be remitted to the Obligor.
"Related Financed Vehicle" means a Financed Vehicle securing the
Obligor's indebtedness under a Related Receivable.
"Related Originator" means, with respect to any Receivable, the
Originator who originated such Receivable and who sold such Receivable to the
Seller pursuant to the Loan Purchase Agreement.
"Related Receivable" means, with respect to any Originator, a
Receivable originated by such Originator who sold such Receivable to the Seller
pursuant to the Loan Purchase Agreement.
"Reserve Account" means the account designated as such, established
and maintained pursuant to Section 5.1.
"Reserve Account Initial Deposit" means an amount equal to
$864,075.42.
"Reserve Account Transfer Amount" means an amount equal to the lesser
of (i) the amount of cash or other immediately available funds on deposit in the
Reserve Account on such Distribution Date (before giving effect to any
withdrawals therefrom relating to such Distribution Date) or (ii) the amount, if
any, by which (x) the sum of the Total Servicing Fee, the Noteholders' Interest
Distributable Amount, the Certificateholders' Interest Distributable Amount, the
Noteholders' Principal Distributable Amount and the Certificateholders'
Principal Distributable Amount for such Distribution Date exceeds (y) the sum of
the Interest Distribution Amount and the Available Principal for such
Distribution Date.
"Scheduled Payment" on an Actuarial Receivable means that portion of
the payment required to be made by the Obligor during the respective Collection
Period sufficient to amortize the Principal Balance under the actuarial method
over the term
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of the Actuarial Receivable (except, in the case a Balloon Loan, to the extent
necessary to amortize the Principal Balance to the amount of the Balloon Payment
over the life of the Actuarial Receivable) and to provide interest at the APR.
"Securities Act" means the Securities Act of 1933, as amended.
"Seller" means Centrex Capital Automobile Assets (Number Three),
Inc., as the seller of the Receivables, and each successor to Centrex Capital
Automobile Assets (Number Three, Inc., (in the same capacity) to the extent
permitted hereunder.
"Servicer" means Oxford Resources Corp., the servicer of the
Receivables, and each successor to Oxford Resources Corp., (in the same
capacity) pursuant to Section 7.3 or 8.2.
"Servicer Default" means an event specified in Section 8.1.
"Servicer's Certificate" means an Officers' Certificate of the
Servicer delivered pursuant to Section 4.9, substantially in the form of Exhibit
B.
"Servicing Fee" has the meaning specified in Section 4.8.
"Servicing Fee Rate" means 1.00% per annum.
"Simple Interest Method" means the method of allocating a fixed level
payment to principal and interest, pursuant to which the portion of such payment
that is allocated to interest is equal to the product of the fixed rate of
interest multiplied by the unpaid principal balance multiplied by the period of
time elapsed since the preceding payment of interest was made and the remainder
of such payment is allocable to principal.
"Simple Interest Receivable" means any Receivable under which the
portion of a payment allocable to principal and the portion of a payment
allocable to interest is determined in accordance with the Simple Interest
Method.
"Specified Reserve Account Balance" means, with respect to any
Distribution Date the greater of (a) 4.25% of the sum of the aggregate
outstanding principal amount of Notes plus the outstanding Certificate Balance
on such Distribution Date (after giving effect to all payments on the Notes and
distributions with respect to the Certificates to be made on such Distribution
Date), except that, if on any Distribution Date (x) the Cumulative Net Loss
Ratio exceeds the Trigger Percentage for such Distribution Date or (y) the
average of the Delinquency Percentages for the three preceding Collection
Periods exceeds 1.75%, then the Specified Reserve Account Balance shall be an
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amount equal to 8.50% of the sum of the aggregate outstanding principal amount
of the Notes and the aggregate outstanding Certificate Balance on such
Distribution Date (after giving effect to all payments on the Notes and
distributions with respect to the Certificates to be made on such Distribution
Date); or (b) 2.00% of the sum of the aggregate initial principal balance of the
Notes plus the initial Certificate Balance.
"Sponsor" means Centrex Capital Corp., as the sponsor of the Issuer.
"Standard & Poor's" means Standard & Poor's Ratings Group, or its
successor.
"Total Distribution Amount" means, for each Distribution Date, the
sum of (i) the Interest Distribution Amount, (ii) the Available Principal and
(iii) the Reserve Account Transfer Amount, in each case in respect of such
Distribution Date.
"Total Servicing Fee" means with respect to each Distribution Date
the Servicing Fee for the related Collection Period and all accrued and unpaid
Servicing Fees for prior Collection Periods.
"Transfer Date" means, with respect to any Distribution Date, the
Business Day preceding such Distribution Date.
"Trigger Percentage" means (i) in the case of any Distribution Date
prior to the April 1997 Distribution Date, 0.75%, (ii) in the case of any
Distribution Date on and after the April 1997 Distribution Date but prior to the
October 1997 Distribution Date, 1.50%, (iii) in the case of any Distribution
Date on and after the October 1997 Distribution Date but prior to the April 1998
Distribution Date, 2.25%, (iv) in the case of any Distribution Date on and after
the April 1998 Distribution Date but prior to the October 1999 Distribution
Date, 2.50% and (v) in the case of any Distribution Date on and after the
October 1999 Distribution Date, 3.00%.
"Trust" means the Issuer.
"Trust Account Property" means the Trust Accounts, all amounts and
investments held from time to time in any Trust Account (whether in the form of
deposit accounts, Physical Property, book-entry securities, uncertificated
securities or otherwise), including the Reserve Account Initial Deposit, and all
proceeds of the foregoing.
"Trust Accounts" has the meaning assigned thereto in Section 5.1.
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"Trust Agreement" means the Trust Agreement dated as of September 13,
1996, between the Seller and the Owner Trustee, as the same may be amended and
supplemented from time to time.
"Trust Officer" means, (i) in the case of the Trustee, any Officer
within the Corporate Trust Office of the Trustee, including any Vice President,
Assistant Vice President, Assistant Treasurer, Assistant Secretary or any other
officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and also, with respect to a
particular matter, any other officer to whom such matter is referred because of
such officer's knowledge of and familiarity with the particular subject and (ii)
in the case of the Owner Trustee, any officer in the corporate trust office of
the Owner Trustee with direct responsibility for the administration of this
Agreement or any of the Basic Documents on behalf of the Owner Trustee.
"Trust Property" has the meaning assigned thereto in Section 2.1.
"Trustee" means the Person acting as Trustee under the Indenture, its
successors in interest and any successor trustee under the Indenture.
SECTION 1.2. Other Definitional Provisions.
(a) Capitalized terms used herein and not otherwise defined
herein have the meanings assigned to them in the Indenture, or, if not defined
therein, in the Trust Agreement.
(b) All terms defined in this Agreement shall have the defined
meanings when used in any instrument governed hereby and in any certificate or
other document made or delivered pursuant hereto unless otherwise defined
therein.
(c) As used in this Agreement, in any instrument governed
hereby and in any certificate or other document made or delivered pursuant
hereto or thereto, accounting terms not defined in this Agreement or in any such
instrument, certificate or other document, and accounting terms partly defined
in this Agreement or in any such instrument, certificate or other document to
the extent not defined, shall have the respective meanings given to them under
generally accepted accounting principles as in effect on the date of this
Agreement or any such instrument, certificate or other document, as applicable.
To the extent that the definitions of accounting terms in this Agreement or in
any such instrument, certificate or other document are inconsistent with the
meanings of such terms under generally accepted accounting principles, the
definitions contained in this Agreement or in any such instrument, certificate
or other document shall control.
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(d) The words "hereof," "herein," "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement; Section, Schedule
and Exhibit references contained in this Agreement are references to Sections,
Schedules and Exhibits in or to this Agreement unless otherwise specified; and
the term "including" shall mean "including without limitation."
(e) The definitions contained in this Agreement are applicable
to the singular as well as the plural forms of such terms and to the masculine
as well as to the feminine and neuter genders of such terms.
ARTICLE II
Conveyance of Receivables
SECTION 2.1. Conveyance of Receivables. In consideration of the
Issuer's delivery to or upon the order of the Seller on the Closing Date of the
net proceeds from the sale of the Notes and the Certificates and the other
amounts to be distributed from time to time to the Seller in accordance with the
terms of this Agreement, the Seller does hereby sell, transfer, assign, set over
and otherwise convey to the Issuer, without recourse (subject to the obligations
herein):
(a) all right, title and interest of the Seller in and to the
Receivables, and all moneys received thereon (other than any proceeds from any
Dealer commission), on or after the Cutoff Date and, with respect to Receivables
which are Actuarial Receivables, all monies received thereon prior to the Cutoff
Date that are due on or after the Cutoff Date;
(b) all right, title and interest of the Seller in the security
interests in the Financed Vehicles granted by Obligors pursuant to the
Receivables and any other interest of the Seller in the Financed Vehicles;
(c) all right, title and interest of the Seller in and to any
proceeds from claims on any physical damage, repossession, loss, skip, credit
life and credit accident, vendor's single interest and health insurance policies
or certificates relating to the Financed Vehicles or the Obligors;
(d) all right, title and interest of the Seller in and to
refunds for the costs of extended service contracts with respect to Financed
Vehicles, refunds of unearned premiums with respect to credit life and credit
accident and health insurance policies or certificates covering an Obligor or
Financed Vehicle or his or her obligations with respect to a
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Financed Vehicle and any recourse to Dealers for any of the foregoing;
(e) the interest of the Seller in any proceeds from any
Receivable repurchased by a Dealer, pursuant to a Dealer Agreement, as a result
of a breach of representation or warranty in the related Dealer Agreement or a
default by an Obligor resulting in the repossession of the Financed Vehicle
under such Dealer Agreement;
(f) all right, title and interest in all funds on deposit from
time to time in the Certificate Distribution Account, in the Trust Accounts,
including the Reserve Account Initial Deposit, and in all investments and
proceeds thereof (including all income thereon);
(g) all right, title and interest of the Seller under the Loan
Purchase Agreement; and
(h) the proceeds of any and all of the foregoing (the items
specified in clauses (a) through (h) is referred to herein as the "Trust
Property").
It is the intention of the Seller that the transfer and assignment
contemplated by this Agreement shall constitute a sale of the Receivables and
other Trust Property from the Seller to the Trust and the beneficial interest in
and title to the Receivables and such other Trust Property shall not be part of
the Seller's estate in the event of the filing of a bankruptcy petition by or
against the Seller under any bankruptcy law. In the event that, notwithstanding
the intent of the Seller, the transfer and assignment contemplated hereby is
held not to be a sale, this Agreement shall constitute a grant of a security
interest in the Trust Property for the benefit of the Securityholders.
ARTICLE III
The Receivables
SECTION 3.1. Representations and Warranties of Seller. The Sponsor
and the Seller, jointly and severally, make the following representations and
warranties as to the Receivables on which the Issuer is deemed to have relied in
acquiring the Receivables. Such representations and warranties speak as of the
execution and delivery of the Agreement, but shall survive the sale, transfer
and assignment of the Receivables to the Issuer and the pledge thereof to the
Trustee pursuant to the Indenture.
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(a) Title. (i) It is the intention of the Seller that the
transfer and assignment contemplated by the Loan Purchase Agreement constitute a
sale of the Related Receivables from the Related Originator to the Seller and
that the beneficial interest in and title to such Related Receivables not be
part of the debtor's estate in the event of the filing of a petition for
bankruptcy or insolvency by or against such Related Originator. No Related
Receivable has been sold, transferred, assigned or pledged by such Related
Originator to any Person other than the Seller. Immediately prior to the
transfer and assignment contemplated by the Loan Purchase Agreement, such
Related Originator had good and marketable title to each Related Receivable,
free and clear of all Liens and, immediately upon the transfer thereof, the
Seller shall have good and marketable title to each such Related Receivable,
free and clear of all Liens; and the transfer of the Related Receivables to the
Seller has been perfected under the UCC and (ii) it is the intention of the
Seller that the transfer and assignment herein contemplated constitute a sale of
the Receivables from the Seller to the Issuer and that the beneficial interest
in and title to such Receivables not be part of the debtor's estate in the event
of the filing of a petition for receivership by or against the Seller. No
Receivable has been sold, transferred, assigned or pledged by the Seller to any
Person other than the Issuer. Immediately prior to the transfer and assignment
herein contemplated, the Seller had good and marketable title to each
Receivable, free and clear of all Liens and, immediately upon the transfer
thereof, the Issuer shall have good and marketable title to each such
Receivable, free and clear of all Liens; and the transfer of the Receivables to
the Issuer has been perfected under the UCC.
(b) All Filings Made. All filings (including UCC filings)
necessary in any jurisdiction to give the Seller a first priority perfected
security interest in the Receivables, to give the Issuer a first priority
perfected ownership interest in the Receivables, and to give the Trustee a first
priority perfected security interest therein, shall have been presented to the
Trustee for filing in the appropriate filing offices. Upon such filing, the
Trustee will have a first priority perfected security interest in the Trust
Property.
(c) Characteristics of Receivables. Each Receivable (A) has
been either originated by a Dealer in the regular course of such Dealer's
business and purchased from such Dealer by an Originator in the ordinary course
of the Originator's business or otherwise originated by the Originator in the
ordinary course of the Originator's business, and each Obligor was approved in
accordance with the Related Originator's standard underwriting procedures in
effect at the time such Receivable was originated or purchased, (B) has created
or shall create a valid, subsisting and enforceable first priority security
interest in favor of the Related Originator in the
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Related Financed Vehicle, which security interest has been assigned by the
Related Originator to the Seller and which is assignable by the Seller to the
Issuer and by the Issuer to the Trustee, (C) contains customary and enforceable
provisions under the laws of the State governing such Receivable such that the
rights and remedies of the holder thereof are adequate for realization against
the collateral of the benefits of the security; and (D) provides for level
monthly payments that fully amortizes the Amount Financed by maturity (except
for the last payment, which may be different from the level payment and except,
with respect to a Balloon Loan, to the extent of the Balloon Payment).
(d) Schedule of Receivables. The information set forth in
Schedule A to this Agreement is true and correct in all material respects as of
the opening of business on the Cutoff Date and no selection procedures believed
by the Seller to be adverse to the Noteholders or the Certificateholders were
utilized in selecting the Receivables. The Computer Tape regarding the
Receivables is true and correct in all material respects as of the Cutoff Date.
(e) Compliance With Law. Each Receivable, the sale of the
Financed Vehicle and the sale of any physical damage and credit life and credit
accident and health insurance and any extended service contracts complied in all
material respects at the time it was originated or made and at the Closing Date
complies in all material respects with all requirements of applicable Federal,
state and local laws and regulations thereunder, including usury laws, the
Federal Truth-in-Lending Act, the Equal Credit Opportunity Act, the Fair Credit
Reporting Act, the Fair Debt Collection Practices Act, the Federal Trade
Commission Act, the Magnuson-Moss Warranty Act, the Federal Reserve Board's
Regulations B and Z, the Soldier's and Sailor's Civil Relief Act of 1940, state
adaptations of the National Consumer Act and the Uniform Consumer Credit Code,
and other consumer credit laws and equal credit opportunity and disclosure laws.
(f) Binding Obligation. Each Receivable represents the legal,
valid and binding payment obligation in writing of the Obligor thereunder,
enforceable by the holder thereof in accordance with its terms except as such
enforceability may be limited by applicable bankruptcy, insolvency, moratorium,
fraudulent conveyance, reorganization and similar laws now or hereafter in
effect related to or affecting creditors' rights generally and subject to
general principles of equity (whether applied in a proceeding at law or in
equity) and all parties to such Receivable had full legal capacity to execute
and deliver such Receivable and all other documents related thereto and to grant
the security interest purported to be granted thereby.
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(g) No Government Obligor. None of the Receivables is due from
the United States of America or any State or from any agency, department or
instrumentality of the United States of America or any State.
(h) Security Interest in Financed Vehicle. Immediately prior to
the sale, assignment, and transfer thereof under the Agreement, (i) each
Receivable shall be secured by a validly perfected first priority security
interest in the Financed Vehicle in favor of the Related Originator as secured
party or (ii) application has been made with the appropriate governmental
authority for a valid perfected first priority security interest in the Financed
Vehicle in favor of the Related Originator, and such security interest is or
shall be prior to all other Liens upon and security interests in such Financed
Vehicle which now exist or may hereafter arise or be created (except, as to
priority, for any tax liens or mechanics' liens which may arise after the
Closing Date).
(i) Receivables in Force. No Receivable has been satisfied,
subordinated or rescinded, nor has any Financed Vehicle been released from the
Lien granted by the related Receivable in whole or in part unless another
vehicle has been substituted as collateral securing the Receivable without any
other modification to such Receivable.
(j) No Waiver. No provision of a Receivable has been modified
or waived except as reflected in the Receivable File relating to such
Receivable.
(k) No Amendments. No Receivable has been amended, except as
permitted pursuant to Section 4.2.
(l) No Defenses. No right of rescission, setoff, counterclaim
or defense has been asserted or threatened with respect to any Receivable. The
operation of the terms of any Receivable or the exercise of any right thereunder
will not render such Receivable unenforceable in whole or in part or subject to
any such right of rescission, setoff, counterclaim, or defense.
(m) No Liens. As of the Cutoff Date, there are no Liens or
claims, including Liens for work, labor, materials or unpaid state or federal
taxes relating to any Financed Vehicle securing the related Receivable, that are
or may be prior to or equal to the Lien granted by such Receivable.
(n) No Default. Except for payment delinquencies continuing for
a period of not more than thirty days as of the Cutoff Date and, except as
permitted in this paragraph, no default, breach, violation or event (in any such
case) permitting acceleration under the terms of any Receivable has occurred;
and no continuing condition that with notice or the
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lapse of time would constitute a default, breach, violation or event (in any
such case) permitting acceleration under the terms of any Receivable has arisen;
and the Seller has not waived and shall not waive any of the foregoing.
(o) Maturity of Receivables. Each Receivable has an original
maturity of not more than 84 months; the weighted average original maturity of
the Receivables is 65.42 months as of the Cutoff Date; the remaining term of
each Receivable is 84 months or less as of the Cutoff Date; the weighted average
remaining term of the Receivables is 64.26 months as of the Cutoff Date; and the
latest scheduled maturity of any Receivable shall be no later than the Final
Scheduled Maturity Date.
(p) No Bankruptcies. No Obligor on any Receivable was noted in
the related Receivable File as having filed for bankruptcy in a proceeding which
remained undischarged as of the Cutoff Date.
(q) No Repossessions. As of the Cutoff Date, no Financed
Vehicle securing any Receivable is in repossession status.
(r) Chattel Paper. Each Receivable constitutes "chattel paper"
as defined in the UCC.
(s) APR. The weighted average Annual Percentage Rate of the
Receivables as of the Cutoff Date is approximately 13.35%.
(t) Principal Balance. Each Receivable has an outstanding
principal balance as of the Cutoff Date of not less than 1,500 or more than
$60,000. The average principal balance of the Receivables as of the Cutoff Date
is $15,693.34. The aggregate principal balance of the Receivables as of the
Cutoff Date is $86,407,542.08.
(u) Financing. Approximately 35.58% of the aggregate principal
balance of the Receivables, constituting approximately 29.70% of the number of
Receivables, as of the Cutoff Date, represents financing of new vehicles; the
remainder of the Receivables represents financing of used vehicles.
Approximately 24.00% of the aggregate principal balance of the Receivables,
constituting approximately 20.54% of the number of Receivables, as of the Cutoff
Date, represents financing of Balloon Loans. Approximately 62.15% of the
aggregate Principal Balance of the Receivables, constituting approximately
61.30% of the number of Receivables, as of the Cutoff Date, represents financing
of Simple Interest Receivables; the remainder of the Receivables represents
financing of Actuarial Receivables.
(v) Paid-Ahead. Approximately 9.16% of the aggregate Principal
Balance of the Receivables, constituting
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approximately 9.21% of the number of Receivables are paid-ahead for a period of
one to six months. No Receivable is paid-ahead more than eight months.
(w) Insurance; Other. The Servicer, in accordance with its
customary procedures, has confirmed (A) that each Obligor has obtained insurance
covering the Financed Vehicle as of the date of execution of the Related
Receivable insuring against loss and damage due to fire, theft, collision and
other risks generally covered by comprehensive and collision coverage and that
each Receivable requires the Obligor to maintain such insurance naming the
applicable Originator and its successors and assigns as a loss payee, (B) each
Receivable that finances the cost of premiums for credit life and credit
accident and health insurance is covered by an insurance policy or certificate
of insurance naming the applicable Originator as loss payee (lienholder) under
each such insurance policy and certificate of insurance and (C) as to each
Receivable that finances the cost of an extended service contract, the
respective Financed Vehicle which secures the Receivable is covered by an
extended service contract.
(x) Lawful Assignment. No Receivable has been originated in, or
as of the Closing Date is subject to the laws of, any jurisdiction under which
the sale, transfer and assignment of such Receivable or this Agreement or the
pledge of such Receivable to the Trustee under the Indenture (i) is unlawful,
void, voidable or unenforceable in accordance with its terms or (ii) would
render such Receivable void, voidable or unenforceable in accordance with its
terms. None of any Originator or the Seller has entered into any agreement with
any account debtor that prohibits, restricts or conditions the assignment of all
or any portion of the Receivable.
(y) No Insurance Premiums. As of the Cutoff Date, no portion of
the principal balance of any Receivable included amounts attributable to the
payment of any physical damage or theft insurance premium.
(z) One Original. There is only one manually executed original
copy of each Receivable.
(aa) Origination of Receivables. Based on the billing address
of the Obligors and the principal balance of Receivables as of the Cutoff Date,
approximately 20.75% of the Receivables were originated in South Carolina,
approximately 16.88% of the Receivables were originated in Georgia,
approximately 13.09% of the Receivables were originated in North Carolina
approximately and 10.51% of the Receivables were originated in New York, each
Obligor has been approved by the Originator based on the Originator's standard
underwriting procedures as in effect at the time the related Receivable was
entered into.
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(bb) Receivable Files. The Receivable Files are kept at the
Seller's office listed in Schedule B and are segregated from any other
Receivable Files. The Receivable Files have been marked to indicate the Seller's
ownership interest therein.
(cc) Computer Records. As of the Closing Date, the accounting
and computer records relating to the Receivables of the Seller and each
Originator have been marked to show the absolute ownership by the Owner Trustee
on behalf of the Trust of the Receivables.
SECTION 3.2. Repurchase upon Breach. The Sponsor, the Seller, the
Servicer or the Owner Trustee, as the case may be, shall inform the other
parties to this Agreement and the Trustee promptly, in writing, upon its
discovery of any breach of the Seller's and the Sponsor's representations and
warranties made pursuant to Section 3.1. Unless any such breach shall have been
cured by the last day of the first Collection Period following the discovery
thereof by the Owner Trustee or receipt by the Owner Trustee of written notice
from the Sponsor, the Seller or the Servicer of such breach, the Sponsor and the
Seller shall be jointly and severally obligated to repurchase any Receivable in
which the interests of the Noteholders or Certificateholders are materially and
adversely affected by any such breach as of the last day of such Collection
Period. In consideration of and simultaneously with the repurchase of the
Receivable, the Sponsor and/or the Seller shall remit to the Collection Account
the Purchase Amount in the manner specified in Section 5.4 and the Issuer shall
execute such assignments and other documents reasonably requested by the Sponsor
and/or the Seller in order to effect such repurchase. The sole remedy of the
Issuer, the Owner Trustee, the Trustee, the Noteholders or the
Certificateholders with respect to a breach of representations and warranties
pursuant to Section 3.1 and the agreement contained in this Section shall be to
require the Sponsor and/or the Seller to repurchase Receivables pursuant to this
Section, subject to the conditions contained herein. Neither the Owner Trustee
nor the Trustee shall have a duty to conduct any affirmative investigation as to
the occurrence of any conditions requiring the repurchase of any Receivable
pursuant to this Section.
SECTION 3.3. Custody of Receivable Files. To assure uniform quality
in servicing the Receivables and to reduce administrative costs, the Issuer and
the Trustee hereby revocably appoints the Servicer, and the Servicer hereby
accepts such appointment, to act as the agent of the Issuer and the Trustee as
custodian of the following documents or instruments which are hereby
constructively delivered to the Trustee, as pledgee of the Issuer with respect
to each Receivable:
(a) the original of the Receivable;
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(b) a record of the information supplied by the Obligor in the
original credit application;
(c) the original certificate of title or such documents that
the Servicer shall keep on file, in accordance with its customary procedures,
evidencing the security interest of the Seller in the Financed Vehicle (it being
understood that the original certificates of title generally are not delivered
to the Servicer for 90 days but that promptly upon delivery they shall be
delivered to the Servicer as custodian hereunder); and
(d) any and all other documents that the Servicer shall keep on
file, in accordance with its customary procedures, relating to a Receivable, an
Obligor or a Financed Vehicle.
SECTION 3.4.Duties of Servicer as Custodian. (a) Safekeeping. The
Servicer shall hold the Receivable Files on behalf of the Issuer and the Trustee
and maintain such accurate and complete accounts, records and computer systems
pertaining to each Receivable File as shall enable the Issuer to comply with
this Agreement. In performing its duties as custodian the Servicer shall act
with reasonable care, using that degree of skill and attention that the Servicer
exercises with respect to the receivable files relating to all comparable
automotive receivables that the Servicer services for itself or others. The
Servicer shall conduct, or cause to be conducted, periodic audits of the
Receivable Files held by it under this Agreement and of the related accounts,
records and computer systems, in such a manner as shall enable the Issuer or the
Trustee to verify the accuracy of the Servicer's record keeping. The Servicer
shall promptly report to the Issuer and the Trustee any failure on its part to
hold the Receivable Files and maintain its accounts, records and computer
systems as herein provided and promptly take appropriate action to remedy any
such failure.
(b) Maintenance of and Access to Records. The Servicer shall
maintain each Receivable File at one of its offices specified in Schedule B to
this Agreement or at such other office as shall be specified to the Issuer and
the Trustee by written notice not later than 90 days after any change in
location. Upon reasonable prior notice, the Servicer shall make available to the
Issuer and the Trustee or their respective duly authorized representatives,
attorneys or auditors a list of locations of the Receivable Files and records
and computer systems maintained by the Servicer at such times during normal
business hours as the Issuer or the Trustee shall instruct.
(c) Release of Documents. Upon written instruction from the
Trustee, the Servicer shall release any Receivable File to the Trustee, the
Trustee's agent, or the Trustee's designee, as the case may be, at such place or
places as the Trustee may designate, as soon as practicable and upon the release
and delivery of any such document in accordance with
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the instructions of the Trustee, the Servicer shall be released from any further
liability and responsibilities under this Section 3.4 with respect to such
documents unless and until such time as such document may be returned to the
Servicer.
SECTION 3.5. Instructions; Authority To Act. The Servicer shall be
deemed to have received proper instructions with respect to the Receivable Files
upon its receipt of written instructions signed by a Trust Officer of the
Trustee.
SECTION 3.6. Custodian's Indemnification. The Servicer as custodian
shall indemnify and hold harmless the Trust, the Owner Trustee and the Trustee
and each of their officers, directors, employees and agents for any and all
liabilities, obligations, losses, compensatory damages, payments, costs or
expenses (including reasonable attorneys' fees and expenses) that may be imposed
on, incurred by or asserted against the Trust, the Owner Trustee or the Trustee
or any of their officers, directors, employees and agents as the result of any
improper act or omission in any way relating to the maintenance and custody by
the Servicer as custodian of the Receivable Files where the final determination
that any such improper act or omission by the Servicer resulted in such
liability, obligation, loss, damage, payment, cost or expense is established by
a court of law, by an arbitrator or by way of settlement agreed to by the
Servicer; provided, however, that the Servicer shall not be liable to the Trust
or the Owner Trustee for any portion of any such amount resulting from the
willful misfeasance, bad faith or negligence of the Owner Trustee and the
Servicer shall not be liable to the Trustee for any portion of any such amount
resulting from the willful misfeasance, bad faith or negligence of the Trustee.
This provision shall not be considered to limit the Servicer's or any other
party's rights, obligations, liabilities, claims or defenses which arise as a
matter of law or pursuant to any other provision of this Agreement.
SECTION 3.7. Effective Period and Termination. The Servicer's
appointment as custodian shall become effective as of the Cutoff Date and shall
continue in full force and effect until terminated pursuant to this Section. If
Oxford Resources Corp. shall resign as Servicer in accordance with the
provisions of this Agreement or if all of the rights and obligations of any
Servicer shall have been terminated under Section 8.1, the appointment of such
Servicer as custodian shall be terminated by the Trustee or by the Holders of
Notes evidencing not less than 25% of the Outstanding Amount of the Notes or,
with the consent of Holders of the Notes evidencing not less than 25% of the
Outstanding Amount of the Notes, by the Owner Trustee or by Certificateholders
evidencing not less than 25% of the Certificate Balance, in the same manner as
the Trustee or such Holders may terminate the rights and obligations of the
Servicer under Section 8.1. The Trustee or, with the consent of the
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Trustee, the Owner Trustee, may terminate the Servicer's appointment as
custodian, with cause, at any time upon written notification to the Servicer,
and without cause upon 30 days' prior written notification to the Servicer and
the Rating Agencies. As soon as practicable after any termination of such
appointment, the Servicer shall deliver the Receivable Files to the Trustee or
the Trustee's agent at such place or places as the Trustee may reasonably
designate in writing. If the Servicer shall be terminated as custodian hereunder
for any reason but shall continue to serve as Servicer, the Trustee shall, or
shall cause its agent to, make the Receivable Files available to the Servicer
during normal business hours upon reasonable notice so as to permit the Servicer
to perform its obligations as Servicer hereunder.
ARTICLE IV
Administration and Servicing of Receivables
SECTION 4.1. Duties of Servicer. The Servicer, as agent for the
Issuer (to the extent provided herein), shall manage, service, administer and
make collections on the Receivables (other than Purchased Receivables) with
reasonable care, using that degree of skill and attention that the Servicer
exercises with respect to all comparable automotive receivables that it services
for itself or others. The Servicer's duties shall include collection and posting
of all payments, responding to inquiries of Obligors on such Receivables,
investigating delinquencies, sending payment coupons or periodic statements or
invoices to Obligors, reporting any tax information to Obligors, accounting for
collections and furnishing monthly and annual statements to the Owner Trustee
and the Trustee with respect to distributions and making Advances pursuant to
Section 5.7. Subject to the provisions of Section 4.2, the Servicer shall follow
its customary standards, policies and procedures in performing its duties as
Servicer. Without limiting the generality of the foregoing, the Servicer is
authorized and empowered to execute and deliver, on behalf of itself, the
Issuer, the Owner Trustee, the Trustee, the Certificateholders and the
Noteholders or any of them, any and all instruments of satisfaction or
cancellation, or partial or full release or discharge, and all other comparable
instruments, with respect to such Receivables or to the Financed Vehicles
securing such Receivables. If the Servicer shall commence a legal proceeding to
enforce a Receivable, the Issuer (in the case of a Receivable other than a
Purchased Receivable) shall thereupon be deemed to have automatically assigned,
solely for the purpose of collection, such Receivable to the Servicer. If in any
enforcement suit or legal proceeding it shall be held that the Servicer may not
enforce a Receivable on the ground that it shall not be a real party in interest
or a holder entitled to enforce such Receivable the Owner Trustee shall, at the
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Servicer's expense and direction, take steps to enforce such Receivable,
including bringing suit in its name or the name of the Owner Trustee, the
Trustee, the Certificateholders or the Noteholders. The Owner Trustee shall upon
the written request of the Servicer furnish the Servicer with any powers of
attorney and other documents reasonably necessary or appropriate (as certified
to the Owner Trustee by the Servicer) to enable the Servicer to carry out its
servicing and administrative duties hereunder.
SECTION 4.2. Collection and Allocation of Receivable Payments. (a)
The Servicer shall make reasonable efforts to collect all payments called for
under the terms and provisions of the Receivables as and when the same shall
become due and shall follow such collection procedures as it follows with
respect to all comparable automotive receivables that it services for itself or
others. The Servicer shall allocate collections between principal and interest
in accordance with the customary servicing procedures it follows with respect to
all comparable automotive receivables that it services for itself or others.
(b) The Servicer may not grant extensions or modify the
original due dates of a Receivable; provided, however, that the Servicer may (i)
grant one extension with respect to a Receivable of one month in any rolling
twelve month period and may change the original due date once during the term of
a Receivable to a new due date within 20 days of the original scheduled due date
of such Receivable and (ii) grant extensions or modify the original due dates of
a Receivable with respect to a Receivable for which a court of appropriate
jurisdiction in a bankruptcy or insolvency proceeding shall have issued an order
reducing the amount owed on such Receivable or otherwise modifying or
restructuring the scheduled payments or other terms on such Receivable;
provided, however, that the Servicer may not extend the date for final payment
by the Obligor of any Receivable beyond the last day of the Collection Period
preceding the Certificate Final Scheduled Distribution Date. The Servicer may in
its discretion waive any late payment charge or any other fees that may be
collected in the ordinary course of servicing a Receivable. The Servicer shall
not voluntarily agree to any reduction of (i) the original interest rate, (ii)
the amount of any Scheduled Payment on a Precomputed Receivable or the original
regular scheduled payment on a Simple Interest Receivable, or (iii) the
Principal Balance of any Receivable.
SECTION 4.3. Realization upon Receivables. On behalf of the Issuer,
the Servicer shall use all reasonable efforts, consistent with its customary
servicing procedures, to repossess or otherwise convert the ownership of the
Financed Vehicle securing any Receivable as to which the Servicer shall have
determined eventual payment in full is unlikely. From time to time, as
appropriate for servicing or foreclosing upon any
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Receivable, the Owner Trustee shall, upon written request of the Servicer,
execute such documents as shall be necessary to prosecute any such proceedings.
The Servicer shall follow such customary and usual practices and procedures as
it shall deem necessary or advisable in its servicing of automotive receivables,
which may include reasonable efforts to realize proceeds from Receivables
repurchased by a Dealer, pursuant to a Dealer Agreement, as a result of a breach
of representation or warranty in the related Dealer Agreement or a default by an
Obligor resulting in the repossession of the Financed Vehicle under such Dealer
Agreement. The foregoing shall be subject to the provision that, in any case in
which the Financed Vehicle shall have suffered damage, the Servicer shall not
expend funds in connection with the repair or the repossession of such Financed
Vehicle unless it shall determine in its reasonable discretion that such repair
and/or repossession will increase the Liquidation Proceeds by an amount greater
than the amount of such expenses.
SECTION 4.4. Physical Damage Insurance; Other Insurance. (a) The
Servicer shall, in accordance with its customary servicing procedures, verify
(i) that each Obligor shall have obtained insurance covering the Financed
Vehicle, as of the date of the execution of the Receivable, insuring against
loss and damage due to fire, theft, collision and other risks generally covered
by comprehensive and collision coverage and that each Receivable requires the
Obligor to maintain such physical loss and damage insurance naming the Related
Originator and its successors and assigns as a loss payee, (ii) that each
Receivable that finances the cost of premiums for credit life and credit
accident and health insurance is covered by an insurance policy or certificate
naming the Originator as policyholder (creditor) and (iii) as to each Receivable
that finances the cost of an extended service contract, the respective Financed
Vehicle which secures the Receivable is covered by an extended service contract.
(b) To the extent applicable, the Servicer shall not take any
action which would result in noncoverage under any of the insurance policies
referred to in Section 4.4(a) which, but for the actions of the Servicer, would
have been covered thereunder. The Servicer, on behalf of the Trustee shall take
such reasonable action as shall be necessary to permit recovery under any of the
foregoing insurance policies. Any amounts collected by the Servicer under any of
the foregoing insurance policies, shall be deposited in the Collection Account
pursuant to Section 5.2. The parties hereto acknowledge that the Servicer shall
not be required to force place any insurance coverage referred to in Section
4.4(a)(i) above, or any other insurance coverage.
SECTION 4.5. Maintenance of Security Interests in Financed Vehicles.
The Servicer shall, in accordance with its
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customary servicing procedures, take such steps as are necessary to maintain
perfection of (i) the security interest created by each Receivable in the
related Financed Vehicle and (ii) the interest of the Trust in the Receivables
created by this Agreement, including but not limited to obtaining the execution
by the Obligors and the recording, registering, filing, rerecording,
re-registering and refiling of all security agreements, financing statements and
continuation statements or instruments as are necessary to maintain the security
interest granted by Obligors under the respective Receivables, the Originators
under the Loan Purchase Agreement, the Seller hereunder and the Issuer under the
Indenture. The Servicer is hereby authorized to take such steps as are necessary
to re-perfect such security interest on behalf of the Issuer and the Trustee in
the event of the relocation of a Financed Vehicle or for any other reason.
SECTION 4.6. Covenants of Servicer. The Servicer shall not release
the Financed Vehicle securing any Receivable from the security interest granted
by such Receivable in whole or in part except in the event of payment in full by
the Obligor thereunder or repossession or except as may be required by an
insurer in order to receive proceeds from insurance covering such Financed
Vehicle, nor shall the Servicer impair the rights of the Issuer, the Trustee,
the Certificateholders or the Noteholders in such Receivables (it being
understood that no action of the Servicer taken in compliance with the terms of
this Agreement shall be deemed to impair such rights), nor shall the Servicer
increase the number of scheduled payments due under a Receivable.
Notwithstanding the foregoing, the Servicer may grant extensions or modify the
original due dates of a Receivable or make such other changes with respect to a
Receivable for which a court of appropriate jurisdiction in a bankruptcy or
insolvency proceeding shall have issued an order reducing the amount owed on
such Receivable or otherwise modifying or restructuring the scheduled payments
on such Receivable; provided, however, that the Servicer may not extend the date
for final payment by the Obligor of any Receivable beyond the last day of the
Collection Period preceding the Certificate Final Scheduled Distribution Date.
SECTION 4.7. Purchase of Receivables upon Breach. The Servicer or the
Owner Trustee shall inform the other party and the Trustee and the Seller
promptly, in writing, upon the discovery of any breach pursuant to Section
4.2(b), 4.5 or 4.6. Unless the breach shall have been cured by the last day of
the second Collection Period following such discovery thereof by the Owner
Trustee or the receipt by the Owner Trustee of notice of such breach, the
Servicer shall be obligated to purchase any Receivable in which the interests of
the Noteholders or the Certificateholders are materially and adversely affected
by such breach as of the last day of such second Collection Period (or, at the
Servicer's option, the last day of the first Collection
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Period following the discovery). In consideration of the purchase of any such
Receivable pursuant to the preceding sentence, the Servicer shall remit the
Purchase Amount in the manner specified in Section 5.4. The sole remedy of the
Issuer, the Owner Trustee, the Trustee, the Certificateholders or the
Noteholders with respect to a breach of Section 4.2(b), 4.5 or 4.6 shall be to
require the Servicer to purchase Receivables pursuant to this Section. Neither
the Trustee nor the Owner Trustee shall have any duty to conduct any affirmative
investigation as to the occurrence of any condition requiring the purchase of
any Receivable pursuant to this Section.
SECTION 4.8. Servicing Fee. The servicing fee for (a) the October
1996 Distribution Date shall equal $43,203.77 and (b) for each Distribution Date
thereafter shall equal the product of (i) one-twelfth, (ii) the Servicing Fee
Rate and (iii) the Pool Balance as of the first day of the related Collection
Period (the "Servicing Fee"). In addition, the "Servicing Fee" described in (a)
and (b) above shall include late fees, prepayment charges and other similar
charges allowed by applicable law with respect to Receivables collected (from
whatever source) on the Receivables.
SECTION 4.9. Servicer's Certificate. Not later than 11:00 a.m. (New
York time) on each Determination Date, the Servicer shall deliver to the Owner
Trustee, the Trustee and the Seller, with a copy to the Rating Agencies, a
Servicer's Certificate containing all information necessary to make the
distributions pursuant to Sections 5.5 and 5.6 (including, if required,
withdrawals from or deposits to the Payahead Account and Advances by the
Servicer pursuant to Section 5.7) for the Collection Period preceding the date
of such Servicer's Certificate. Receivables to be purchased by the Servicer or
to be repurchased by the Seller (or the Originators or the Sponsor) shall be
identified by the Servicer by account number with respect to such Receivable (as
specified in Schedule A).
SECTION 4.10. Annual Statement as to Compliance; Notice of Default.
(a) The Servicer shall deliver to the Owner Trustee and the Trustee, on or
before October 31 of each year beginning October 31, 1997, an Officers'
Certificate, dated as of June 30 of the preceding 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 report, during the period from the Closing
Date to June 30, 1997) and of its performance under this Agreement has been made
under such officers' supervision and (ii) to the best of such officers'
knowledge, based on such review, the Servicer has fulfilled all its obligations
under this Agreement throughout such year (or, in the case of the first such
certificate, such longer period) or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officers and the nature and status thereof. The Trustee shall send a
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copy of such certificate and the report referred to in Section 4.11 to the
Rating Agencies. A copy of such certificate and the report referred to in
Section 4.11 may be obtained by any Certificateholder by a request in writing to
the Owner Trustee addressed to the Corporate Trust Office (as defined in the
Trust Agreement) or by any Noteholder by a request in writing to the Trustee
addressed to the Corporate Trust Office. Upon the telephone request of the Owner
Trustee, the Trustee will promptly furnish the Owner Trustee a list of
Noteholders as of the date specified by the Owner Trustee.
(b) The Servicer shall deliver to the Owner Trustee, the
Trustee and the Rating Agencies, promptly after having obtained knowledge
thereof, but in no event later than five (5) Business Days thereafter, written
notice in an Officers' Certificate of any event which with the giving of notice
or lapse of time, or both, would become a Servicer Default under Section 8.1(a)
or (b).
SECTION 4.11. Annual Independent Certified Public Accountants'
Report. The Servicer shall cause a firm of independent certified public
accountants, which may also render other services to the Servicer or the Seller,
to deliver to the Seller, the Owner Trustee and the Trustee on or before October
31 of each year as of June 30th of the preceding fiscal year, beginning October
31, 1997, (1) a report addressed to the Board of Directors of the Servicer, to
the effect that such firm has examined the financial statements of the Servicer
and issued its report and therefor and that such examination was made in
accordance with generally accepted auditing standards (except as otherwise noted
therein), and accordingly included such tests of the accounting records and such
other auditing procedures as such firm considered necessary in the
circumstances; and (2) a report on description of lease and loan servicing
operations and tests of operating effectiveness in form and substance as is
currently prepared on an annual basis with respect to Servicer. The Servicer
shall also concurrently cause the accountants to deliver a report addressed to
the Servicer, the Trustee and the Owner Trustee to the effect that (1) a review
in accordance with agreed upon procedures was made of three randomly selected
Servicer Certificates; (2) except as disclosed in the report, no exceptions or
errors in the Servicer Certificates were found; and (3) the delinquencies and
loss information, relating to the Receivables contained in the Servicer
Certificates were found to be accurate.
Such report will also indicate that the firm is independent of the
Servicer within the meaning of the Code of Professional Ethics of the American
Institute of Certified
Public Accountants.
SECTION 4.12. Access to Certain Documentation and Information
Regarding Receivables. The Servicer shall provide
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to the Certificateholders and Noteholders access to the Receivable Files in such
cases where the Certificateholders or the Noteholders shall be required by
applicable statutes or regulations to review such documentation as demonstrated
by evidence satisfactory to the Servicer in its reasonable judgment. Access
shall be afforded without charge, but only upon reasonable request (not less
than seventy-two hours) and during the normal business hours at the respective
offices of the Servicer. Nothing in this Section shall affect the obligation of
the Servicer to observe any applicable law prohibiting disclosure of information
regarding the Obligors and the failure of the Servicer to provide access to
information as a result of such obligation shall not constitute a breach of this
Section.
SECTION 4.13. Servicer Expenses. The Servicer shall be required to
pay all expenses incurred by it in connection with its activities hereunder,
including fees and disbursements of independent accountants, taxes imposed on
the Servicer and expenses incurred in connection with distributions and reports
to Certificateholders and Noteholders.
SECTION 4.14. Appointment of Subservicer. The Servicer may at any
time appoint a subservicer to perform all or any portion of its obligations as
Servicer hereunder; provided, however, that the Rating Agency Condition shall
have been satisfied in connection therewith; provided further that the Servicer
shall remain obligated and be liable to the Issuer, the Owner Trustee, the
Trustee, the Certificateholders and the Noteholders for the servicing and
administering of the Receivables in accordance with the provisions hereof
without diminution of such obligation and liability by virtue of the appointment
of such subservicer and to the same extent and under the same terms and
conditions as if the Servicer alone were servicing and administering the
Receivables. The fees and expenses of the subservicer shall be as agreed between
the Servicer and its subservicer from time to time and none of the Issuer, the
Owner Trustee, the Trustee, the Certificateholders or the Noteholders shall have
any responsibility therefor.
ARTICLE V
Distributions; Reserve Account;
Statements to Certificateholders and Noteholders
SECTION 5.1. Establishment of Trust Accounts. (a) (i) The Servicer,
for the benefit of the Noteholders and the Certificateholders, shall establish
and maintain in the name of the Trustee an Eligible Deposit Account (the
"Collection Account"), bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the
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Noteholders and the Certificateholders. The Collection Account shall initially
be established with the Trustee.
(ii) The Servicer, for the benefit of the Noteholders, shall establish
and maintain in the name of the Trustee an Eligible Deposit Account (the
"Note Distribution Account"), bearing a designation clearly indicating that
the funds deposited therein are held for the benefit of the Noteholders.
The Note Distribution Account shall initially be established with the
Trustee.
(iii) The Servicer, for the benefit of the Noteholders and the
Certificateholders, shall establish and maintain in the name of the Trustee
an Eligible Deposit Account (the "Reserve Account"), bearing a designation
clearly indicating that the funds deposited therein are held for the
benefit of the Noteholders and the Certificateholders. The Reserve Account
shall be maintained with the Trustee as long as the Trustee is an Eligible
Institution.
(b) Funds on deposit in the Collection Account, the Note
Distribution Account, the Payahead Account and the Reserve Account (collectively
the "Trust Accounts") and the Certificate Distribution Account shall be invested
by the Trustee with respect to Trust Accounts and by the Owner Trustee with
respect to the Certificate Distribution Account (or any custodian with respect
to funds on deposit in any such account) in Eligible Investments selected in
writing by the Servicer (pursuant to standing instructions delivered to a Trust
Officer of the Trustee and a Trust Officer of the Owner Trustee or other written
notice so delivered); provided, however, it is understood and agreed that
neither the Trustee nor the Owner Trustee shall be liable for any loss arising
from such investment in Eligible Investments. All such Eligible Investments
shall be held by or on behalf of the Trustee or the Owner Trustee, as
applicable, for the benefit of the Noteholders or the Certificateholders, as
applicable; on each Distribution Date all interest and other investment income
(net of losses and investment expenses) on funds on deposit therein shall be
deposited into the Collection Account and shall be deemed to constitute a
portion of the Interest Distribution Amount. Other than as permitted by the
Rating Agencies, funds on deposit in the Collection Account, the Note
Distribution Account, the Certificate Distribution Account, the Payahead Account
and the Reserve Account shall be invested in Eligible Investments that will
mature so that such funds will be available at the close of business on the
Transfer Date preceding the following Distribution Date. Funds deposited in a
Trust Account or the Certificate Distribution Account on a Transfer Date which
immediately precedes a Distribution Date upon the maturity of any Eligible
Investments are not required to be invested overnight.
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(c) (i) The Trustee shall possess all right, title and interest
in all funds on deposit from time to time in the Trust Accounts and in all
proceeds thereof (including all income thereon) and all such funds,
investments, proceeds and income shall be part of the Owner Trust Estate.
Except as otherwise provided herein, the Trust Accounts shall be under the
sole dominion and control of the Trustee for the benefit of the Noteholders
and the Certificateholders, or the Noteholders, as the case may be. If, at
any time, any of the Trust Accounts or the Certificate Distribution Account
ceases to be an Eligible Deposit Account, the Trustee (or the Servicer on
its behalf) or the Owner Trustee, as applicable, shall within 10 Business
Days (or such longer period as to which each Rating Agency may consent)
establish a new Trust Account or new Certificate Distribution Account, as
applicable, as an Eligible Deposit Account and shall transfer any cash
and/or any investments to such new Trust Account or a new Certificate
Distribution Account, as applicable. In connection with the foregoing, the
Servicer agrees that,in the event that (A) any of the Trust Accounts (other
than the Certificate Distribution Account) are not accounts with the
Trustee or (B) the Certificate Distribution Account is not an account with
the Owner Trustee, the Servicer shall notify the Trustee or the Owner
Trustee, as applicable, in writing promptly upon any of such Trust Accounts
ceasing to be an Eligible Deposit Account.
(ii) With respect to the Trust Account Property, the Trustee, and with
respect to the Certificate Distribution Account, the Owner Trustee, agrees,
by its respective acceptance hereof, that:
(A) any Trust Account Property or any property in the
Certificate Distribution Account that is held in deposit accounts
shall be held solely in Eligible Deposit Accounts subject to the
penultimate sentence of Section 5.1(c)(i); and, except as otherwise
provided herein, each such Eligible Deposit Account shall be subject
to the exclusive custody and control of the Trustee with respect to
the Trust Accounts and the Owner Trustee with respect to the
Certificate Distribution Account, and the Trustee or the Owner
Trustee, as applicable, shall have sole signature authority with
respect thereto;
(B) any Trust Account Property that constitutes Physical
Property shall be delivered to the Trustee in accordance with
paragraph (a) of the definition of "Delivery" and shall be held,
pending maturity or disposition, solely by the Trustee or a financial
intermediary (as such term is defined in Section 8-313(4) of the UCC)
acting solely for the Trustee;
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(C) any Trust Account Property that is a book-entry security
held through the Federal Reserve System pursuant to Federal
book-entry regulations shall be delivered in accordance with
paragraph (b) of the definition of "Delivery" and shall be maintained
by the Trustee, pending maturity or disposition, through continued
book-entry registration of such Trust Account Property as described
in such paragraph; and
(D) any Trust Account Property that is an "uncertificated
security" under Article 8 of the UCC and that is not governed by
clause (C) above shall be delivered to the Trustee in accordance with
paragraph (c) of the definition of "Delivery" and shall be maintained
by the Trustee, pending maturity or disposition, through continued
registration of the Trustee's (or its nominee's) ownership of such
security.
(iii) The Servicer shall have the power, revocable by the Trustee or by
the Owner Trustee with the consent of the Trustee, to instruct the Trustee
to make withdrawals and payments from the Trust Accounts for the purpose of
permitting the Servicer or the Owner Trustee to carry out its respective
duties hereunder or permitting the Trustee to carry out its duties under
the Indenture.
(d) (i) The Servicer shall establish and maintain with the Trustee an
Eligible Deposit Account (the "Payahead Account"). On the Closing Date, the
Seller shall cause to be deposited $48,323.01 in the Payahead Account
representing all collected funds received in connection with the Actuarial
Receivables prior to the Cutoff Date that are due on or after the Cutoff Date,
consisting of all or a portion of the Scheduled Payments due on the Actuarial
Receivables in any Collection Period following the first Collection Period.
(ii) The Servicer shall on or prior to each Distribution Date (and
prior to deposits to the Note Distribution Account or the Certificate
Distribution Account) transfer from the Collection Account to the Payahead
Account all Payaheads as described in Section 5.3 received by the Servicer
during the Collection Period. Notwithstanding the foregoing and the first
sentence of Section 5.2, for so long as the Servicer is permitted to make
monthly remittances to the Collection Account pursuant to Section 5.2, Payaheads
need not be remitted to and deposited in the Payahead Account but instead may be
remitted to and held by the Servicer. So long as such condition is met, the
Servicer shall not be required to segregate or otherwise hold separate any
Payaheads remitted to the Servicer as aforesaid but shall be required to remit
Payaheads to the Collection Account in accordance with Section 5.5(a).
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SECTION 5.2. Collections. On the Closing Date, the Seller shall cause
to be deposited $930,963.01 in the Collection Account representing all collected
funds received on the Receivables after the Cutoff Date and prior to the Closing
Date. The Servicer shall remit within two Business Days of receipt thereof to
the Collection Account all collected funds received from payments by or on
behalf of the Obligors with respect to the Receivables, and all Liquidation
Proceeds, both as collected during the Collection Period. Notwithstanding the
foregoing, for so long as (i) the Servicer is Oxford Resources Corp., (ii) no
Servicer Default shall have occurred and be continuing, (iii) if the Servicer
does not have a short term debt rating or deposit rating as applicable, of at
least A-1 from Standard & Poor's and P-1 from Moody's, a guaranty, letter of
credit, surety bond or other similar instrument is issued covering collections,
any amounts referred to in clause (e) of the definition of Available Principal
and Liquidation Proceeds held by Oxford Resources Corp., which is acceptable to
the Rating Agencies and issued by an entity, which has a short-term debt or
deposit rating, as applicable, of at least A-1 from Standard & Poor's and P-1
from Moody's; and (iv) the Rating Agency Condition shall have been satisfied
(and any conditions or limitations imposed by the Rating Agencies in connection
therewith are complied with), the Servicer shall remit such collections to the
Collection Account on the related Transfer Date. For purposes of this Article V
the phrase "payments by or on behalf of Obligors" shall mean payments made with
respect to the Receivables by Persons other than the Servicer, the Sponsor or
the Seller.
SECTION 5.3. Application of Collections. (a) All collections for the
Collection Period shall be applied by the Servicer as follows:
With respect to each Actuarial Receivable (other than a Purchased
Receivable), payments by or on behalf of the Obligor shall be applied first to
reduce Outstanding Advances as described in Section 5.7(a). Next, any excess
shall be applied, in the case of Actuarial Receivables, to the Scheduled Payment
and, shall be applied in the case of Simple Interest Receivables, to interest
and principal in accordance with the Simple Interest Method. With respect to
Actuarial Receivables, any remaining excess shall be added to the Payahead
Balance, and shall be applied to prepay the Actuarial Receivable, but only if
the sum of such excess and the previous Payahead Balance shall be sufficient to
prepay the Actuarial Receivable in full. Otherwise, any such remaining excess
payments shall constitute a Payahead and shall increase the Payahead Balance.
(b) All Liquidation Proceeds shall be applied to the related
Receivable in accordance with the Servicer's customary servicing procedures.
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SECTION 5.4. Additional Deposits. The Servicer shall deposit in the
Collection Account the aggregate Advances pursuant to Section 5.7. The Servicer,
the Sponsor and the Seller shall deposit or cause to be deposited in the
Collection Account the aggregate Purchase Amount with respect to any Purchased
Receivables and the Seller shall deposit therein any amounts to be paid under
Section 9.1. The Servicer will deposit or cause to be deposited the aggregate
Purchase Amount with respect to Purchased Receivables within two Business Days
after such obligations become due, unless the Servicer shall not be required to
make deposits within two Business Days of receipt pursuant to Section 5.2 (in
which case such deposit will be made by the related Transfer Date). All such
other deposits shall be made on the Transfer Date following the end of the
related Collection Period.
SECTION 5.5. Distributions. (a) On each Distribution Date, the
Trustee shall cause to be transferred from the Payahead Account, or from the
Servicer in the event the provisions of Section 5.1(d)(ii) are applicable, to
the Collection Account, in immediately available funds, the aggregate previous
Payaheads to be applied to Scheduled Payments on Actuarial Receivables for the
related Collection Period or prepayments for the related Collection Period,
pursuant to Sections 5.3 and 5.7, in the amounts set forth in the Servicer's
Certificate for such Distribution Date and (ii) to the Seller, in immediately
available funds, the investment earnings, net of losses on the Payaheads for the
related Collection Period. A single, net transfer may be made.
(b) On each Determination Date, the Servicer shall calculate all
amounts required to determine the amounts to be deposited from the Reserve
Account into the Collection Account and from the Collection Account into the
Note Distribution Account and the Certificate Distribution Account.
(c) On or before each Distribution Date, the Servicer shall
instruct the Trustee (based on the information contained in the Servicer's
Certificate delivered on the related Determination Date pursuant to Section 4.9)
to withdraw from the Reserve Account and deposit in the Collection Account and
the Trustee shall so withdraw and deposit the Reserve Account Transfer Amount
for such Distribution Date.
(d) The Servicer shall instruct the Trustee (based on the
information contained in the Servicer's Certificate delivered on the related
Determination Date pursuant to Section 4.9) to make, and the Trustee shall make,
a distribution from the Collection Account to the Servicer by 11:00 a.m. (New
York time), amounts in respect of Outstanding Advances to the extent that the
Servicer is entitled to reimbursement in respect thereof in accordance with
Section 5.7. Subject to the last paragraph of this Section 5.5(d), on each
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Distribution Date, the Servicer shall instruct the Trustee (based on the
information contained in the Servicer's Certificate delivered on the related
Determination Date pursuant to Section 4.9) to make, and the Trustee shall make,
the following deposits and distributions from the Collection Account for deposit
in the applicable Account by 11:00 a.m. (New York time), to the extent of the
Total Distribution Amount, in the following order of priority:
(i) to the Servicer, from the Total Distribution Amount, the Total
Servicing Fee;
(ii) to the Note Distribution Account, from the Total Distribution
Amount remaining after the application of clause (i), the Noteholders'
Interest Distributable Amount;
(iii) to the Owner Trustee for deposit in the Certificate Distribution
Account, from the Total Distribution Amount remaining after the application
of clause (i) and clause (ii), the Certificateholders' Interest
Distributable Amount;
(iv) to the Note Distribution Account, from the Total Distribution
Amount remaining after the application of clauses (i) through (iii), the
Noteholders' Principal Distributable Amount;
(v) to the Owner Trustee for deposit in the Certificate Distribution
Account, from the Total Distribution Amount remaining after the application
of clauses (i) through (iv), the Certificateholders' Principal
Distributable Amount; and
(vi) to the Trustee for deposit in the Reserve Account, from the Total
Distribution Amount, the amounts remaining after the application of clauses
(i) through (v) above.
provided, however, that following the occurrence of an Event of Default pursuant
to Section 5.1(i), 5.1(ii), 5.1(iv) or 5.1(v) of the Indenture, an acceleration
of the Notes pursuant to Section 5.2 of the Indenture or an Insolvency Event
with respect to the holder of the GP Interest, amounts on deposit in the
Collection Account will be deposited in the Note Distribution Account to the
extent necessary to pay accrued and unpaid interest on the Notes and then, to
the extent funds are available therefore, principal on the Notes until the
principal balance of the Notes has been reduced to zero, before any amounts are
deposited in the Certificate Distribution Account. Following the payment in full
of the Notes, amounts on deposit in the Collection Account will be deposited in
the Certificate Distribution Account to the extent necessary to pay accrued and
unpaid interest on the Certificates and then, to the extent
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funds are available therefore, principal on the Certificates until the principal
balance thereof has been reduced to zero.
In the event that the Collection Account is maintained with an
institution other than the Trustee, the Servicer shall instruct and cause such
institution to make all deposits and distributions pursuant to this Section
5.5(d) on the related Transfer Date.
SECTION 5.6. Reserve Account. (a) On the Closing Date, the Seller
shall deposit the Reserve Account Initial Deposit into the Reserve Account. In
no circumstances will the Seller be required to deposit from its own funds any
amounts in the Reserve Account other than the Reserve Account Initial Deposit to
be made on the Closing Date.
(b) If the amount on deposit in the Reserve Account on any
Distribution Date (after giving effect to any all deposits and withdrawals
therefrom on such Distribution Date) is greater than the Specified Reserve
Account Balance for such Distribution Date, the Servicer shall instruct the
Trustee to distribute, and the Trustee shall distribute, the amount of the
excess to the Seller. Amounts properly distributed to the Seller pursuant to
Section 5.6(b) shall be deemed released from the Trust and the security interest
therein granted to the Trustee and the Seller shall in no event thereafter be
required to refund any such distributed amounts.
SECTION 5.7. Advances. (a) As of the close of business on the last
day of each Collection Period, if the payments by or on behalf of the Obligor on
an Actuarial Receivable (other than a Purchased Receivable) shall be less than
the Scheduled Payment, the Payahead Balance shall be applied by the Servicer to
the extent of the shortfall and such Payahead Balance shall be reduced
accordingly. Next, the Servicer shall advance any remaining shortfall (such
amount an "Advance"), to the extent that the Servicer, at its sole discretion,
shall determine that the Advance shall be recoverable from the Obligor, the
Purchase Amount, Liquidation Proceeds or proceeds of any other Actuarial
Receivables. With respect to each Actuarial Receivable, the Advance shall
increase Outstanding Advances. Outstanding Advances shall be reduced by
subsequent payments by or on behalf of the Obligor, collections of Liquidation
Proceeds in respect of the related Receivable or payments of the Purchase Amount
of the related Receivable.
If the Servicer shall determine that an Outstanding Advance with
respect to any Actuarial Receivable shall not be recoverable as aforesaid, the
Servicer shall be reimbursed from any collections (including Liquidation
Proceeds) on other Actuarial Receivables in the Trust and Outstanding Advances
with respect to such Actuarial Receivables shall be reduced accordingly.
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(b) The Servicer shall not make any advance with respect to interest
on or principal of Simple Interest Receivables.
SECTION 5.8. Statements to Certificateholders and Noteholders. On
each Determination Date, the Servicer shall provide to the Trustee (with a copy
to the Rating Agencies) for the Trustee to forward to each Noteholder of record,
to each Paying Agent, if any, and to the Owner Trustee for the Owner Trustee to
forward to each Certificateholder of record, a statement substantially in the
form of Exhibit A, setting forth at least the following information as to the
Notes and the Certificates to the extent applicable:
(i) the amount of such distribution allocable to principal of the
Notes and to the Certificate Balance of the Certificates;
(ii) the amount of such distribution allocable to interest on or with
respect to the Notes and to the Certificates;
(iii) the Pool Balance as of the close of business on the last day of
the preceding Collection Period, after giving effect to payments allocated
to principal reported under (i) above;
(iv) the aggregate outstanding principal balance of the Notes, the
Note Pool Factor for the Notes, the Certificate Balance and the Certificate
Pool Factor after giving effect to payments allocated to principal reported
under (i) above;
(v) the amount of the Total Servicing Fee paid to the Servicer with
respect to the related Collection Period;
(vi) the amount of the aggregate Realized Losses, net of Recoveries,
if any, for such Collection Period;
(vii) the Reserve Account Transfer Amount, if any, for such Distribution
Date, the average of the Charge-off Rates and the Delinquency Percentages
for the three preceding Collection Periods, the Specified Reserve Account
Balance for such Distribution Date, the amount distributed to the Seller
from the Reserve Account on such Distribution Date, and the balance of the
Reserve Account (if any) on such Distribution Date, after giving effect to
changes therein on such Distribution Date;
(viii) the Noteholders' Interest Carryover Shortfall, the
Certificateholders' Interest Carryover Shortfall, the Noteholders'
Principal Carryover Shortfall, and the Certificateholders' Principal
Carryover Shortfall;
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(ix) the aggregate Purchase Amount paid by the Sponsor, the Seller (or
the related Originator) or the Servicer with respect to the related
Collection Period; and
(x) the aggregate Payahead Balance.
Each amount set forth pursuant to paragraph (i), (ii), (v) or (viii) above shall
be expressed as a dollar amount per $1,000 of the initial principal balance of
the Notes or the initial Certificate Balance, as applicable.
SECTION 5.9. Net Deposits. As an administrative convenience, if the
Servicer is not required to remit collected funds within two Business Days of
receipt thereof, the Servicer will be permitted to make the deposit of such
funds, aggregate Advances and Purchase Amounts for or with respect to the
Collection Period net of distributions to be made to the Servicer with respect
to the Collection Period. Similarly, the Servicer may cause to be made a single,
net transfer, from the Collection Account to the Payahead Account, or vice
versa. The Servicer, however, will account to the Owner Trustee, the Trustee,
the Noteholders and the Certificateholders as if all deposits, distributions and
transfers were made individually.
SECTION 5.10. Rule 144A Information. For so long as any of the
Securities are "restricted securities" within the meaning of Rule 144(A)(3)
under the Securities Act, the Seller and the Trustee agree to cooperate with the
Servicer to provide to any Securityholder and to any prospective purchaser of
Securities who is a "Qualified Institutional Buyer" (as defined in Rule 144A
under the Securities Act) designated by such Securityholder, upon the request of
such Securityholder or such prospective purchaser, any information required to
be provided to such Securityholder or such prospective purchaser to satisfy the
condition set forth in Rule 144A(d)(4) under the Securities Act.
ARTICLE VI
The Seller
SECTION 6.1. Representations of Seller. The Seller makes the
following representations on which the Issuer is deemed to have relied in
acquiring the Receivables. The representations speak as of the execution and
delivery of this Agreement and shall survive the sale of the Receivables to the
Issuer and the pledge thereof to the Trustee pursuant to the Indenture.
(a) Organization and Good Standing. The Seller is duly
organized and validly existing as a corporation in good standing under the laws
of the State of New York with the
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corporate power and authority to own its properties and to conduct its business
as such properties are currently owned and such business is presently conducted,
and had at all relevant times, and has, the power, authority and legal right to
acquire and own the Receivables.
(b) Due Qualification. The Seller is duly qualified to do
business as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals in all jurisdictions in which the ownership or
lease of property or the conduct of its business shall require such
qualifications.
(c) Power and Authority of the Seller. The Seller has the
corporate power and authority to execute and deliver this Agreement and to
perform its obligations under each of the Basic Documents to which the Seller is
a party; the Seller has full corporate power and authority to sell and assign
the property to be sold and assigned to and deposited with the Issuer and the
Seller has duly authorized such sale and assignment to the Issuer by all
necessary corporate action; and the execution, delivery and performance of each
of the Basic Documents to which the Seller is a party has been duly authorized
by the Seller by all necessary corporate action.
(d) Binding Obligation. This Agreement and each of the Basic
Documents to which the Seller is a party constitute legal, valid and binding
obligations of the Seller, enforceable in accordance with their respective
terms, subject to applicable bankruptcy, insolvency, moratorium, fraudulent
conveyance, reorganization and similar laws now or hereafter in effect relating
to creditors' rights generally and subject to general principles of equity
(whether applied in a proceeding at law or in equity).
(e) No Violation. The consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms hereof do not
result in any breach of any of the terms and provisions of, nor constitute (with
or without notice or lapse of time or both) a default under, the articles of
association or by-laws of the Seller, or any material indenture, agreement or
other instrument to which the Seller is a party or by which it shall be bound;
nor result in the creation or imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture, agreement or other instrument
(other than pursuant to the Basic Documents); nor violate any law or, to the
best of its knowledge, any order, rule or regulation applicable to the Seller of
any court or of any Federal or state regulatory body, administrative agency or
other governmental instrumentality having jurisdiction over the Seller or its
properties.
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(f) No Proceedings. There are no proceedings or investigations
pending against the Seller or, to its best knowledge, threatened against the
Seller, before any court, regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Seller or its
properties: (i) asserting the invalidity of this Agreement or any of the Basic
Documents, the Notes or the Certificates, (ii) seeking to prevent the issuance
of the Notes or the Certificates or the consummation of any of the transactions
contemplated by this Agreement or any of the Basic Documents, (iii) seeking any
determination or ruling that could reasonably be expected to have a material and
adverse effect on the performance by the Seller of its obligations under, or the
validity or enforceability of the Basic Documents, the Notes or the Certificates
or (iv) seeking to affect adversely the Federal or state income tax or ERISA
attributes of the Issuer, the Notes or the Certificates.
(g) All Consents. All authorizations, licenses, consents,
orders or approvals of or registrations or declarations with any court,
regulatory body, administrative agency or other government instrumentality
required to be obtained, effected or given by the Seller in connection with the
execution and delivery by the Seller of this Agreement or any of the Basic
Documents to which it is a party and the performance by the Seller of the
transactions contemplated by this Agreement or any of the Basic Documents to
which it is a party, have been duly obtained, effected or given and are in full
force and effect, except where failure to obtain the same would not have a
material adverse effect upon the rights of the Issuer, the Noteholders or the
Certificateholders.
SECTION 6.2. Corporate Existence. (a) During the term of this
Agreement, subject to Section 6.4, the Seller will keep in full force and effect
its existence, rights and franchises as a corporation under the laws of the
jurisdiction of its incorporation and will obtain and preserve its qualification
to do business in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of this Agreement, the
Basic Documents and each other instrument or agreement necessary or appropriate
to the proper administration of this Agreement and the transactions contemplated
hereby.
(b) During the term of this Agreement, the Seller shall observe the
applicable legal requirements for the recognition of the Seller as a legal
entity separate and apart from its affiliates, including as follows:
(i) the Seller shall maintain corporate records and books of account
separate from those of its affiliates;
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(ii) except as otherwise provided in this Agreement, the Seller shall
not commingle its assets and funds with those of its affiliates;
(iii) the Seller shall hold such appropriate meetings of its Board of
Directors as are necessary to authorize all the Seller's corporate actions
required by law to be authorized by the Board of Directors, shall keep
minutes of such meetings and of meetings of its stockholder(s) and observe
all other customary corporate formalities (and any successor Seller not a
corporation shall observe similar procedures in accordance with its
governing documents and applicable law);
(iv) the Seller shall at all times hold itself out to the public under
the Seller's own name as a legal entity separate and distinct from its
affiliates; and
(v) all transactions and dealings between the Seller and its
affiliates will be conducted on an arm's-length basis
SECTION 6.3. Liability of Seller; Indemnities. The Seller shall be
liable in accordance herewith only to the extent of the obligations specifically
undertaken by the Seller under this Agreement and the representations made by
the Seller in this Agreement.
(a) The Seller shall indemnify, defend and hold harmless the
Issuer, the Owner Trustee and the Trustee and their respective officers,
directors, employees and agents from and against any taxes that may at any time
be asserted against any such Person with respect to the transactions
contemplated in this Agreement and any of the Basic Documents (except any income
taxes arising out of fees paid to the Owner Trustee or the Trustee and except
any taxes to which the Owner Trustee or the Trustee may otherwise be subject
to), including any sales, gross receipts, general corporation, tangible personal
property, privilege or license taxes (but, in the case of the Issuer, not
including any taxes asserted with respect to, and as of the date of, the sale of
the Receivables to the Issuer or the issuance and original sale of the
Certificates and the Notes, or asserted with respect to ownership of the
Receivables or Federal or other income taxes arising out of distributions on the
Certificates and the Notes) and reasonable costs and expenses in defending
against the same or in connection with any application relating to the Notes or
Certificates under any state securities laws.
(b) The Seller shall indemnify, defend and hold harmless the
Issuer, the Owner Trustee, the Trustee, the Certificateholders and the
Noteholders and the officers, directors, employees and agents of the Issuer, the
Owner Trustee and the Trustee from and against any and all costs, expenses,
losses, claims, damages and liabilities to the extent arising
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out of, or imposed upon such Person through (i) the Seller's willful
misfeasance, bad faith or gross negligence in the performance of its duties
under this Agreement, or by reason of reckless disregard of its obligations and
duties under this Agreement and (ii) the Seller's or the Issuer's violation of
Federal or state securities laws in connection with the offering and sale of the
Notes and the Certificates or in connection with any application relating to the
Notes or Certificates under any state securities laws.
(c) The Seller shall be liable as primary obligor for, and
shall indemnify, defend and hold harmless the Owner Trustee and its officers,
directors, employees and agents from and against any and all losses, claims,
damages and liabilities and reasonable costs and expenses arising out of, or
incurred in connection with, this Agreement or any of the Basic Documents, the
Owner Trust Estate, the acceptance or performance of the trusts and duties set
forth herein and in the Trust Agreement or the action or the inaction of the
Owner Trustee hereunder and under the Trust Agreement, except to the extent that
such cost, expense, loss, claim, damage or liability: (i) shall be due to the
willful misfeasance, bad faith or negligence of the Owner Trustee, (ii) shall
arise from any breach by the Owner Trustee of its covenants under this Agreement
or any of the Basic Documents; or (iii) shall arise from the breach by the Owner
Trustee of any of its representations or warranties set forth in Section 7.3 of
the Trust Agreement. Such liability and indemnification shall survive the
termination of the Trust. In the event of any claim, action or proceeding for
which indemnity will be sought pursuant to this paragraph, the Owner Trustee's
choice of legal counsel shall be subject to the approval of the Seller, which
approval shall not be unreasonably withheld.
(d) The Seller shall pay any and all taxes levied or assessed
upon all or any part of the Trust Estate (other than those taxes expressly
excluded from the Seller's responsibilities pursuant to the parentheticals in
paragraph (a) above).
Indemnification under this Section shall survive the resignation or
removal of the Owner Trustee or the Trustee and the termination of this
Agreement or the Indenture or the Trust Agreement, as applicable, and shall
include reasonable fees and expenses of counsel and other reasonable expenses of
litigation. If the Seller shall have made any indemnity payments pursuant to
this Section and the Person to or on behalf of whom such payments are made
thereafter shall collect any of such amounts from others, such Person shall
promptly repay such amounts to the Seller, without interest.
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SECTION 6.4. Merger or Consolidation of, or Assumption of the
Obligations of, Seller. Any Person (a) into which the Seller may be merged or
consolidated, (b) which may result from any merger or consolidation to which the
Seller shall be a party or (c) which may succeed to the properties and assets of
the Seller substantially as a whole, shall be the successor to the Seller
without the execution or filing of any document or any further act by any of the
parties to this Agreement; provided, however, that the Seller hereby covenants
that it will not consummate any of the foregoing transactions except upon
satisfaction of the following: (i) the surviving Seller if other than Centrex
Capital Automobile Assets (Number Three), Inc. executes an agreement of
assumption to perform every obligation of the Seller under this Agreement, (ii)
immediately after giving effect to such transaction, no representation or
warranty made pursuant to Section 3.1 or 6.1 shall have been breached and no
Event of Default, and no event that, after notice or lapse of time, or both,
would become an Event of Default shall have happened and be continuing, (iii)
the Seller shall have delivered to the Owner Trustee and the Trustee an
Officers' Certificate and an Opinion of Counsel each stating that such
consolidation, merger or succession and such agreement of assumption comply with
this Section and that all conditions precedent, if any, provided for in this
Agreement relating to such transaction have been complied with, and that the
Rating Agency Condition shall have been satisfied with respect to such
transaction, (iv) the surviving Seller shall have a consolidated net worth at
least equal to that of the predecessor Seller, (v) such transaction will not
result in a material adverse federal or state tax consequence to the Issuer, the
Noteholders or the Certificateholders and (vi) unless Centrex Capital Automobile
Assets (Number Three), Inc., is the surviving entity, the Seller shall have
delivered to the Owner Trustee and the Trustee an Opinion of Counsel either (A)
stating that, in the opinion of such counsel, all financing statements and
continuation statements and amendments thereto have been executed and filed that
are necessary fully to preserve and protect the interest of the Owner Trustee
and Trustee, respectively, in the Receivables and reciting the details of such
filings, or (B) stating that, in the opinion of such counsel, no such action
shall be necessary to preserve and protect such interests.
SECTION 6.5. Limitation on Liability of Seller and Others. The Seller
and any director or officer or employee or agent of the Seller may rely in good
faith on the advice of counsel or on any document of any kind, prima facie
properly executed and submitted by any Person respecting any matters arising
under any Basic Document (provided that such reliance shall not limit in any way
the Seller's obligations under Section 3.2). The Seller shall not be under any
obligation to appear in, prosecute or defend any legal action that shall not
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be incidental to its obligations under this Agreement, and that in its opinion
may involve it in any expense or liability.
SECTION 6.6. Seller May Own Certificates or Notes. The Seller and any
Affiliate thereof may in its individual or any other capacity become the owner
or pledgee of Certificates or Notes with the same rights as it would have if it
were not the Seller or an Affiliate thereof, except as expressly provided herein
or in any Basic Document.
SECTION 6.7. Security Interest. During the term of this Agreement,
the Seller will not take any action to assign the security interest in any
Financed Vehicles other than pursuant to the Basic Documents.
ARTICLE VII
The Servicer
SECTION 7.1. Representations of Servicer. The Servicer makes the
following representations on which the Issuer is deemed to have relied in
acquiring the Receivables. The representations speak as of the execution and
delivery of the Agreement and shall survive the sale of the Receivables to the
Issuer and the pledge thereof to the Trustee pursuant to the Indenture.
(a) Organization and Good Standing. The Servicer is duly
organized and validly existing as a corporation in good standing under the laws
of the State of New York with the corporate power and authority to own its
properties and to conduct its business as such properties are currently owned
and such business is presently conducted, and had at all relevant times, and
has, the power, authority and legal right to service the Receivables.
(b) Due Qualification. The Servicer is duly qualified to do
business and has obtained all necessary licenses and approvals in all
jurisdictions in which the ownership or lease of property or the conduct of its
business (including the servicing of the Receivables as required by this
Agreement) shall require such qualifications.
(c) Power and Authority of the Servicer. The Servicer has the
corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder, and the execution, delivery and performance
of this Agreement have been duly authorized by the Servicer by all necessary
corporate action. All authorizations, consents, orders or approvals of or
registrations or declarations with any court, regulatory body, administrative
agency or other government instrumentality required to be obtained, effected or
given by
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the Servicer in connection with the execution and delivery by the Servicer of
this Agreement or any of the Basic Documents to which it is a party and the
performance by the Servicer of the transactions contemplated by this Agreement
or any of the Basic Documents to which it is a party, have been duly obtained,
effected or given and are in full force and effect, except where failure to
obtain the same would not have a material adverse effect upon the rights of the
Issuer, the Noteholders or the Certificateholders.
(d) Binding Obligation. This Agreement constitutes a legal,
valid and binding obligation of the Servicer, enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency, moratorium, fraudulent
conveyance, reorganization and similar laws now or hereafter in effect relating
to creditors' rights generally and subject to general principles of equity
(whether applied in a proceeding of law or in equity).
(e) No Violation. The consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms hereof do not
result in any breach of any of the terms and provisions of, nor constitute (with
or without notice or lapse of time or both) a default under the articles of
association or by-laws of the Servicer, or any material indenture, agreement or
other instrument to which the Servicer is a party or by which it shall be bound;
nor result in the creation or imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture, agreement or other instrument
(other than pursuant to the Basic Documents); nor violate any law or, to the
best of its knowledge, any order, rule or regulation applicable to the Servicer
of any court or of any federal or state regulatory body, administrative agency
or other governmental instrumentality having jurisdiction over the Servicer or
its properties.
(f) No Proceedings. There are no proceedings or investigations
pending against the Servicer, or, to its best knowledge, threatened against the
Servicer, before any court, regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Servicer or its
properties: (i) asserting the invalidity of this Agreement or any of the Basic
Documents, the Notes or the Certificates, (ii) seeking to prevent the issuance
of the Notes or the Certificates or the consummation of any of the transactions
contemplated by this Agreement or any of the Basic Documents, (iii) seeking any
determination or ruling that could reasonably be expected to have a material and
adverse effect on the performance by the Servicer of its obligations under, or
the validity or enforceability of this Agreement or any of the Basic Documents,
the Notes or the Certificates or (iv) seeking to affect adversely the Federal or
state income tax or ERISA attributes of the Issuer, the Notes or the
Certificates.
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(g) No Amendment or Waiver. No provision of any Receivable has
been waived, altered or modified in any respect, except pursuant to a document,
instrument or writing included in the relevant Receivable File, and no such
amendment, waiver, alteration or modification causes such Receivable not to
conform to the other warranties contained in this Section or those of the Seller
and the Sponsor contained in Section 3.1.
(h) Approvals. All approvals, licenses, authorizations,
consents, orders or other actions of any person, corporation or other
organization, or of any court, governmental agency or body or official, required
in connection with the execution and delivery of this Agreement have been or
will be taken or obtained on or prior to the Closing Date.
(i) Location of Receivable Files. The Receivable Files are kept
in the offices of the Servicer, specified in Schedule B, or at such other office
specified in accordance with Section 3.4(b).
SECTION 7.2. Indemnities of Servicer. The Servicer shall be liable in
accordance herewith only to the extent of the obligations specifically
undertaken by the Servicer under this Agreement.
The Servicer shall indemnify, defend and hold harmless the Issuer,
the Owner Trustee, the Trustee, the Seller, the Certificateholders and the
Noteholders and any of the officers, directors, employees and agents of the
Issuer, the Owner Trustee, the Trustee or the Seller from any and all losses,
claims, damages, liabilities and reasonable costs and expenses (including
reasonable attorneys' fees and expenses) to the extent arising out of, or
imposed upon any such Person through, the gross negligence, willful misfeasance
or bad faith of the Servicer in the performance of its obligations and duties
under this Agreement or in the performance of the obligations and duties of any
subservicer under any subservicing agreement or by reason of the reckless
disregard of its obligations and duties under this Agreement or by reason of the
reckless disregard of the obligations of any subservicer under any subservicing
agreement, where the final determination that any such cost, expense, loss,
claim, damage or liability arose out of, or was imposed upon any such Person
through, any such gross negligence, willful misfeasance, bad faith or
recklessness on the part of the Servicer or any subservicer, is established by a
court of law, by an arbitrator or by way of settlement agreed to by the
Servicer. Notwithstanding the foregoing, if the Servicer is rendered unable, in
whole or in part, by virtue of an act of God, act of war, fires, earthquake or
other natural disasters, to satisfy its obligations under this Agreement, the
Servicer shall not be deemed to have breached any such obligation upon the
sending of written notice of such event to the other parties hereto, for so long
as the Servicer remains unable to perform
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such obligation as a result of such event. This provision shall not be construed
to limit the Servicer's or any other party's rights, obligations, liabilities,
claims or defenses which arise as a matter of law or pursuant to any other
provision of this Agreement.
The Servicer shall indemnify, defend and hold harmless the Issuer,
the Owner Trustee, the Trustee, the Seller, the Certificateholders and the
Noteholders or any of the officers, directors, employees and agents of the
Issuer, the Owner Trustee, the Trustee or the Seller from any and all losses,
claims, damages, liabilities and reasonable costs and expenses (including
reasonable attorneys' fees and expenses) to the extent arising out of or imposed
upon any such Person as a result of any compensation payable to any subcustodian
or subservicer (including any fees payable in connection with the release of any
Receivable File from the custody of such subservicer or in connection with the
termination of the servicing activities of such subservicer with respect to any
Receivable) whether pursuant to the terms of any subservicing agreement or
otherwise.
The Servicer shall indemnify, defend and hold harmless the Trustee,
the Owner Trustee, the Trust, the Seller, the Certificateholders and the
Noteholders from and against any taxes that may at any time be asserted against
the Trustee, the Trust, the Owner Trustee, the Certificateholders, the
Noteholders or the Seller (other than any taxes based upon the income of any
such person), with respect to the transactions contemplated herein including,
without limitation, any sales, gross receipts, general corporation, tangible
personal property, privilege, or license taxes and costs and expenses in
defending against the same.
The Servicer shall indemnify, defend, and hold harmless the Owner
Trustee and Trustee from and against all reasonable costs and expenses, losses,
claims, damages, and liabilities arising out of or incurrred in connection with
the acceptance or performance of the trusts and duties herein contained, if any,
except to the extent that such reasonable cost or expense, reasonable loss,
claim, damage or liability: (a) shall be due to the willful misfeasance, bad
faith, or gross negligence (except for errors in judgment) of the Owner Trustee
or Trustee; (b) relates to any tax other than the taxes with respect to which
the Serrvicer shall be required to indemnify the Owner Trustee or Trustee; or
(c) shall arise from the Owner Trustee's or Trustee's breach of any of its
representations or warranties set forth in the Trust Agreement or the Indenture,
as applicable.
Indemnification under this section shall survive the resignation and
removal of the Trustee and the Owner Trustee or the termination of this
Agreement.
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SECTION 7.3. Merger or Consolidation of, or Assumption of the
Obligations of, Servicer. Any Person (a) into which the Servicer may be merged
or consolidated, (b) which may result from any merger or consolidation to which
the Servicer shall be a party or (c) which may succeed to the properties and
assets of the Servicer, substantially as a whole, shall be the successor to the
Servicer without the execution or filing of any document or any further act by
any of the parties to this Agreement; provided, however, that the Servicer
hereby covenants that it will not consummate any of the foregoing transactions
except upon satisfaction of the following: (i) the surviving Servicer if other
than Oxford Resources Corp., executes an agreement of assumption to perform
every obligation of the Servicer under this Agreement, (ii) immediately after
giving effect to such transaction, no representation or warranty made pursuant
to Section 7.1 shall have been breached and no Servicer Default, and no event
that, after notice or lapse of time, or both, would become a Servicer Default
shall have occurred and be continuing, (iii) the Servicer shall have delivered
to the Owner Trustee and the Trustee an Officers' Certificate and an Opinion of
Counsel each stating that such consolidation, merger or succession and such
agreement of assumption comply with this Section and that all conditions
precedent, if any, provided for in this Agreement relating to such transaction
have been complied with, and that the Rating Agency Condition shall have been
satisfied with respect to such transaction, (iv) the surviving Servicer shall
have a consolidated net worth at least equal to that of the predecessor
Servicer, and (v) such transaction will not result in a material adverse Federal
or state tax consequence to the Issuer, the Noteholders or the
Certificateholders.
SECTION 7.4. Limitation on Liability of Servicer and Others. Neither
the Servicer nor any of its directors, officers, employees or agents shall be
under any liability to the Issuer, the Noteholders or the Certificateholders,
except as provided under this Agreement, for any action taken or for refraining
from the taking of any action by the Servicer or any subservicer pursuant to
this Agreement or for errors in judgment; provided, however, that this provision
shall not protect the Servicer or any such person against any liability that
would otherwise be imposed by reason of willful misfeasance, bad faith or gross
negligence in the performance of duties or by reason of reckless disregard of
obligations and duties under this Agreement. The Servicer or any subservicer and
any of their respective directors, officers, employees or agents may rely in
good faith on any document of any kind prima facie properly executed and
submitted by any Person respecting any matters arising under this Agreement.
Except as provided in this Agreement the Servicer shall not be under
any obligation to appear in, prosecute or defend any legal action that shall be
incidental to its duties to service the Receivables in accordance with this
Agreement, and
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that in its opinion may involve it in any expense or liability; provided,
however, that the Servicer, may (but shall not be required to) undertake any
reasonable action that it may deem necessary or desirable in respect of the
Basic Documents to protect the interests of the Certificateholders under this
Agreement and the Noteholders under the Indenture.
SECTION 7.5. Oxford Resources Corp. Not To Resign as Servicer.
Subject to the provisions of Section 7.3, Oxford Resources Corp., hereby agrees
not to resign from the obligations and duties hereby imposed on it as Servicer
under this Agreement except upon determination that the performance of its
duties hereunder shall no longer be permissible under applicable law or if such
resignation is required by regulatory authorities. Notice of any such
determination permitting the resignation of Oxford Resources Corp., as Servicer
shall be communicated to the Owner Trustee and the Trustee at the earliest
practicable time (and, if such communication is not in writing, shall be
confirmed in writing at the earliest practicable time) and any such
determination shall be evidenced by an Opinion of Counsel to such effect
delivered to the Owner Trustee and the Trustee concurrently with or promptly
after such notice. No such resignation shall become effective until the earlier
of the Trustee or a Successor Servicer having assumed the responsibilities and
obligations of the resigning Servicer in accordance with Section 8.2 or the date
upon which any regulatory authority requires such resignation.
SECTION 7.6. Corporate Existence. (a) During the term of this
Agreement, subject to Section 6.4, the Servicer will keep in full force and
effect its existence, rights and franchises as a corporation under the laws of
the jurisdiction of its incorporation and will obtain and preserve its
qualification to do business in each jurisdiction in which such qualification is
or shall be necessary to protect the validity and enforceability of this
Agreement, the Basic Documents and each other instrument or agreement necessary
or appropriate to the proper administration of this Agreement and the
transactions contemplated hereby.
(b) During the term of this Agreement, the Servicer shall observe the
applicable legal requirements for the recognition of the Servicer as a legal
entity separate and apart from its affiliates, including as follows:
(i) the Servicer shall maintain corporate records and books of
account separate from those of its affiliates;
(ii) except as otherwise provided in this Agreement, the Servicer
shall not commingle its assets and funds with those of its affiliates;
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(iii) the Servicer shall hold such appropriate meetings of its Board of
Directors as are necessary to authorize all the Servicer's corporate
actions required by law to be authorized by the Board of Directors, shall
keep minutes of such meetings and of meetings of its stockholder(s) and
observe all other customary corporate formalities (and any successor
Servicer not a corporation shall observe similar procedures in accordance
with its governing documents and applicable law);
(iv) the Servicer shall at all times hold itself out to the public
under the Servicer's own name as a legal entity separate and distinct from
its affiliates; and
(v) all transactions and dealings between the Servicer and its
affiliates will be conducted on an arm's-length basis.
ARTICLE VIIA
The Sponsor
SECTION 7.1A Representations of Sponsor. The Sponsor makes the
following representations on which the Issuer is deemed to have relied in
acquiring the Receivables. The representations speak as of the execution and
delivery of the Agreement and shall survive the sale of the Receivables to the
Issuer and the pledge thereof to the Trustee pursuant to the Indenture.
(a) Organization and Good Standing. The Sponsor is duly
organized and validly existing as a corporation in good standing under the laws
of the State of New York with the corporate power and authority to own its
properties and to conduct its business as such properties are currently owned
and such business is presently conducted, and had at all relevant times, and
has, the power, authority and legal right to service the Receivables.
(b) Due Qualification. The Sponsor is duly qualified to do
business and has obtained all necessary licenses and approvals in all
jurisdictions in which the ownership or lease of property or the conduct of its
business shall require such qualifications.
(c) Power and Authority of the Sponsor. The Sponsor has the
corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder, and the execution, delivery and performance
of this Agreement have been duly authorized by the Sponsor by all necessary
corporate action. All authorizations, consents, orders or approvals of or
registrations or declarations with any court,
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regulatory body, administrative agency or other government instrumentality
required to be obtained, effected or given by the Sponsor in connection with the
execution and delivery by the Sponsor of this Agreement or any of the Basic
Documents to which it is a party and the performance by the Sponsor of the
transactions contemplated by this Agreement or any of the Basic Documents to
which it is a party, have been duly obtained, effected or given and are in full
force and effect, except where failure to obtain the same would not have a
material adverse effect upon the rights of the Issuer, the Noteholders or the
Certificateholders.
(d) Binding Obligation. This Agreement constitutes a legal,
valid and binding obligation of the Sponsor, enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency, moratorium, fraudulent
conveyance, reorganization and similar laws now or hereafter in effect relating
to creditors' rights generally and subject to general principles of equity
(whether applied in a proceeding of law or in equity).
(e) No Violation. The consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms hereof do not
result in any breach of any of the terms and provisions of, nor constitute (with
or without notice or lapse of time or both) a default under the articles of
association or by-laws of the Sponsor, or any material indenture, agreement or
other instrument to which the Sponsor is a party or by which it shall be bound;
nor result in the creation or imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture, agreement or other instrument
(other than pursuant to the Basic Documents); nor violate any law or, to the
best of its knowledge, any order, rule or regulation applicable to the Sponsor
of any court or of any federal or state regulatory body, administrative agency
or other governmental instrumentality having jurisdiction over the Sponsor or
its properties.
(f) No Proceedings. There are no proceedings or investigations
pending against the Sponsor, or, to its best knowledge, threatened against the
Sponsor, before any court, regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Sponsor or its
properties: (i) asserting the invalidity of this Agreement or any of the Basic
Documents, the Notes or the Certificates, (ii) seeking to prevent the issuance
of the Notes or the Certificates or the consummation of any of the transactions
contemplated by this Agreement or any of the Basic Documents, (iii) seeking any
determination or ruling that could reasonably be expected to have a material and
adverse effect on the performance by the Sponsor of its obligations under, or
the validity or enforceability of this Agreement or any of the Basic Documents,
the Notes or the Certificates or (iv) seeking to
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affect adversely the Federal or state income tax or ERISA attributes of the
Issuer, the Notes or the Certificates.
(g) No Amendment or Waiver. No provision of any Receivable has
been waived, altered or modified in any respect, except pursuant to a document,
instrument or writing included in the relevant Receivable File, and no such
amendment, waiver, alteration or modification causes such Receivable not to
conform to the other warranties contained in this Section or those of the Seller
and the Sponsor contained in Section 3.1.
(h) Approvals. All approvals, licenses, authorizations,
consents, orders or other actions of any person, corporation or other
organization, or of any court, governmental agency or body or official, required
in connection with the execution and delivery of this Agreement have been or
will be taken or obtained on or prior to the Closing Date.
(i) Location of Receivable Files. The Receivable Files are kept
in the offices of the Seller, specified in Schedule B, or at such other office
specified in accordance with Section 3.4(b).
(j) The Sponsor has contributed the Demand Note (as defined in
the Trust Agreement) to the Seller on or before the Closing Date.
SECTION 7.2A Merger or Consolidation of, or Assumption of the
Obligations of, Sponsor. Any Person (a) into which the Sponsor may be merged or
consolidated, (b) which may result from any merger or consolidation to which the
Sponsor shall be a party or (c) which may succeed to the properties and assets
of the Sponsor, substantially as a whole, shall be the successor to the Sponsor
without the execution or filing of any document or any further act by any of the
parties to this Agreement; provided, however, that the Sponsor hereby covenants
that it will not consummate any of the foregoing transactions except upon
satisfaction of the following: (i) the surviving Sponsor if other than Oxford
Resources Corp., executes an agreement of assumption to perform every obligation
of the Sponsor under this Agreement, (ii) immediately after giving effect to
such transaction, no representation or warranty made pursuant to Section 7.1
shall have been breached and no Sponsor Default, and no event that, after notice
or lapse of time, or both, would become a Sponsor Default shall have occurred
and be continuing, (iii) the Sponsor shall have delivered to the Owner Trustee
and the Trustee an Officers' Certificate and an Opinion of Counsel each stating
that such consolidation, merger or succession and such agreement of assumption
comply with this Section and that all conditions precedent, if any, provided for
in this Agreement relating to such transaction have been complied with, and that
the Rating Agency Condition shall have been satisfied with respect to such
transaction, (iv) the surviving Sponsor shall
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have a consolidated net worth at least equal to that of the predecessor Sponsor,
and (v) such transaction will not result in a material adverse Federal or state
tax consequence to the Issuer, the Noteholders or the Certificateholders.
SECTION 7.3A Limitation on Liability of Sponsor and Others. Neither
the Sponsor nor any of its directors, officers, employees or agents shall be
under any liability to the Issuer, the Noteholders or the Certificateholders,
except as provided under this Agreement, for any action taken or for refraining
from the taking of any action by the Sponsor or any subservicer pursuant to this
Agreement or for errors in judgment; provided, however, that this provision
shall not protect the Sponsor or any such person against any liability that
would otherwise be imposed by reason of willful misfeasance, bad faith or gross
negligence in the performance of duties or by reason of reckless disregard of
obligations and duties under this Agreement. The Sponsor or any subservicer and
any of their respective directors, officers, employees or agents may rely in
good faith on any document of any kind prima facie properly executed and
submitted by any Person respecting any matters arising under this Agreement.
Except as provided in this Agreement the Sponsor shall not be under
any obligation to appear in, prosecute or defend any legal action that shall be
incidental to its duties to service the Receivables in accordance with this
Agreement, and that in its opinion may involve it in any expense or liability;
provided, however, that the Sponsor, may (but shall not be required to)
undertake any reasonable action that it may deem necessary or desirable in
respect of the Basic Documents to protect the interests of the
Certificateholders under this Agreement and the Noteholders under the Indenture.
SECTION 7.4A Corporate Existence. (a) During the term of this
Agreement, subject to Section 6.4, the Sponsor will keep in full force and
effect its existence, rights and franchises as a corporation under the laws of
the jurisdiction of its incorporation and will obtain and preserve its
qualification to do business in each jurisdiction in which such qualification is
or shall be necessary to protect the validity and enforceability of this
Agreement, the Basic Documents and each other instrument or agreement necessary
or appropriate to the proper administration of this Agreement and the
transactions contemplated hereby.
(b) During the term of this Agreement, the Sponsor shall observe the
applicable legal requirements for the recognition of the Sponsor as a legal
entity separate and apart from its affiliates, including as follows:
(i) the Sponsor shall maintain corporate records and books of account
separate from those of its affiliates;
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(ii) except as otherwise provided in this Agreement, the Sponsor shall
not commingle its assets and funds with those of its affiliates;
(iii) the Sponsor shall hold such appropriate meetings of its Board of
Directors as are necessary to authorize all the Sponsor's corporate actions
required by law to be authorized by the Board of Directors, shall keep
minutes of such meetings and of meetings of its stockholder(s) and observe
all other customary corporate formalities (and any successor Sponsor not a
corporation shall observe similar procedures in accordance with its
governing documents and applicable law);
(iv) the Sponsor shall at all times hold itself out to the public
under the Sponsor's own name as a legal entity separate and distinct from
its affiliates; and
(v) all transactions and dealings between the Sponsor and its
affiliates will be conducted on an arm's-length basis.
SECTION 7.5A Demand Note. (a) During the term of this Agreement, the
Sponsor will keep the Demand Note (as defined in the Trust Agreement) issued to
the Seller in full force and effect and will not cancel, waive or terminate such
Demand Note.
ARTICLE VIII
Default
SECTION 8.1. Servicer Default. If any one of the following events (a
"Servicer Default") shall occur and be continuing:
(a) any failure by the Servicer to deliver to the Trustee for
deposit in any of the Trust Accounts or the Certificate Distribution Account any
required payment or to direct the Trustee to make any required distributions
therefrom that shall continue unremedied for a period of five Business Days
after written notice of such failure is received by the Servicer from the Owner
Trustee or the Trustee or after discovery of such failure by an Authorized
Officer of the Servicer; or
(b) failure on the part of the Servicer duly to observe or to
perform in any material respect any other covenants or agreements of the
Servicer set forth in this Agreement or any other Basic Document, which failure
shall (i)
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materially and adversely affect the rights of either the Certificateholders or
Noteholders and (ii) continue unremedied for a period of 60 days after the date
on which written notice of such failure, requiring the same to be remedied,
shall have been given (A) to the Servicer by the Owner Trustee or the Trustee or
(B) to the Servicer and to the Owner Trustee and the Trustee by the Holders of
Notes evidencing not less than 25% of the Outstanding Amount of the Notes or
Holders of Certificates evidencing not less than 25% of the outstanding
Certificate Balance, as applicable (or for such longer period, not in excess of
120 days, as may be reasonably necessary to remedy such default; provided that
such default is capable of remedy within 120 days and the Servicer delivers an
Officers' Certificate to the Owner Trustee and the Trustee to such effect and to
the effect that the Servicer has commenced or will promptly commence, and will
diligently pursue, all reasonable efforts to remedy such default); or
(c) an Insolvency Event occurs with respect to the Servicer or
any successor;
then, and in each and every case, so long as the Servicer Default shall not have
been remedied, either the Trustee, or the Holders of Notes evidencing not less
than 25% of the Outstanding Amount of the Notes, by notice then given in writing
to the Servicer and the Owner Trustee (and to the Trustee if given by the
Noteholders) may terminate all the rights and obligations (other than the
obligations set forth in Section 7.2) of the Servicer under this Agreement. On
or after the receipt by the Servicer of such written notice, all authority and
power of the Servicer under this Agreement, whether with respect to the Notes,
the Certificates or the Receivables or otherwise, shall, without further action,
pass to and be vested in the Trustee or such successor Servicer as may be
appointed under Section 8.2; and, without limitation, the Trustee and the Owner
Trustee are hereby authorized and empowered to execute and deliver, on behalf of
the predecessor Servicer, as attorney-in-fact or otherwise, any and all
documents and other instruments, and to do or accomplish all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement of the Receivables
and related documents, or otherwise. The predecessor Servicer shall cooperate
with the successor Servicer, the Trustee and the Owner Trustee in effecting the
termination of the responsibilities and rights of the predecessor Servicer under
this Agreement, including the transfer to the successor Servicer for
administration by it of all cash amounts that shall at the time be held by the
predecessor Servicer for deposit, or shall thereafter be received by it with
respect to a Receivable. All reasonable costs and expenses (including reasonable
attorneys' fees) incurred in connection with transferring the Receivable Files
to the successor Servicer and amending this Agreement to reflect
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such succession as Servicer pursuant to this Section shall be paid by the
predecessor Servicer upon presentation of reasonable documentation of such costs
and expenses. Upon receipt of notice of the occurrence of a Servicer Default,
the Owner Trustee shall give notice thereof to the Rating Agencies.
SECTION 8.2. Appointment of Successor. (a) Upon the Servicer's
receipt of notice of termination, pursuant to Section 8.1 or the Servicer's
resignation in accordance with the terms of this Agreement, the predecessor
Servicer shall continue to perform its functions as Servicer under this
Agreement, in the case of termination, only until the date specified in such
termination notice or, if no such date is specified in a notice of termination,
until receipt of such notice and, in the case of resignation, until the earlier
of (x) the date 45 days from the delivery to the Owner Trustee and the Trustee
of written notice of such resignation (or written confirmation of such notice)
in accordance with the terms of this Agreement and (y) the date upon which the
predecessor Servicer shall become unable to act as Servicer, as specified in the
notice of resignation and accompanying Opinion of Counsel. In the event of the
Servicer's termination hereunder, the Trustee shall appoint a successor
Servicer, and the successor Servicer shall accept its appointment by a written
assumption in form acceptable to the Owner Trustee and the Trustee. In the event
that a successor Servicer has not been appointed at the time when the
predecessor Servicer has ceased to act as Servicer in accordance with this
Section, the Trustee without further action shall automatically be appointed the
successor Servicer and the Trustee shall be entitled to the Servicing Fee.
Notwithstanding the above, the Trustee shall, if it shall be unwilling or unable
so to act, appoint or petition a court of competent jurisdiction to appoint, any
established institution, having a net worth of not less than $50,000,000 and
whose regular business shall include the servicing of automotive receivables, as
the successor to the Servicer under this Agreement.
(b) Upon appointment, the successor Servicer (including the
Trustee acting as successor Servicer) shall be the successor in all respects to
the predecessor Servicer and shall be subject to all the responsibilities,
duties and liabilities arising thereafter relating thereto placed on the
predecessor Servicer and shall be entitled to the Servicing Fee and all the
rights granted to the predecessor Servicer by the terms and provisions of this
Agreement. No successor Servicer shall be liable for any acts or omissions of
any predecessor Servicer.
SECTION 8.3. Payment of Servicing Fee; Repayment of Advances. If the
Servicer shall change, the predecessor Servicer shall be entitled to (i) receive
any accrued and unpaid Servicing Fees through the date of the successor
Servicer's acceptance hereunder in accordance with Section 4.8. and (ii)
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reimbursement for Outstanding Advances pursuant to Sections 5.3 and 5.7 with
respect to all Advances made by the predecessor Servicer.
SECTION 8.4. Notification to Noteholders and Certificateholders. Upon
the receipt by a Trust Officer of the Owner Trustee of written notice of any
termination of, or appointment of a successor to, the Servicer pursuant to this
Article VIII, the Owner Trustee shall give prompt written notice thereof to
Certificateholders and the Trustee shall give prompt written notice thereof to
Noteholders subject to the Rating Agency Condition.
SECTION 8.5. Waiver of Past Defaults. The Holders of Notes evidencing
not less than a majority of the Outstanding Amount of the Notes (or the Holders
(as defined in the Trust Agreement) of Certificates evidencing not less than a
majority of the outstanding Certificate Balance, as applicable, in the case of
any default which does not adversely affect the Trustee or the Noteholders) may,
on behalf of all Noteholders and Certificateholders, waive in writing any
default by the Servicer in the performance of its obligations hereunder and its
consequences, except a default in making any required deposits to or payments
from any of the Trust Accounts in accordance with this Agreement. Upon any such
waiver of a past default, such default shall cease to exist, and any Servicer
Default arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereto.
ARTICLE IX
Termination
SECTION 9.1. Optional Purchase of All Receivables. (a) On the last
day of any Collection Period immediately preceding a Determination Date as of
which the then outstanding Pool Balance is 10% or less of the Initial Pool
Balance, the Seller shall have the option to purchase the Owner Trust Estate,
other than the Trust Accounts and the Certificate Distribution Account. To
exercise such option, the Seller shall deposit pursuant to Section 5.4 in the
Collection Account an amount which, when added to the amounts on deposit in the
Collection Account for such Distribution Date, equals the sum of (a) the unpaid
principal amount of the then outstanding Notes, plus accrued and unpaid interest
thereon, plus (b) the Certificate Balance plus accrued and unpaid interest
thereon. The Notes and the Certificates will be redeemed concurrently therewith.
(b) Upon any sale of the assets of the Trust pursuant to
Section 9.2 of the Trust Agreement, the Servicer
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shall instruct the Trustee to deposit the proceeds from such sale after all
payments and reserves therefrom (including the expenses of such sale) have been
made (the "Insolvency Proceeds") in the Collection Account. On the Distribution
Date on which the Insolvency Proceeds are deposited in the Collection Account
(or, if such proceeds are not so deposited on a Distribution Date, on the
Distribution Date immediately following such deposit), the Servicer shall
instruct the Trustee to make, and the Trustee shall make, the following deposits
and distributions (after the application on such Distribution Date of the Total
Distribution Amount pursuant to Section 5.5) from the Insolvency Proceeds and
any funds remaining on deposit in the Reserve Account (including the proceeds of
any sale of investments therein):
(i) to the Note Distribution Account, any portion of the Noteholders'
Interest Distributable Amount not otherwise deposited into the Note
Distribution Account on such
Distribution Date;
(ii) to the Note Distribution Account, the outstanding principal
balance of the Notes (after giving effect to the reduction in the
outstanding principal balance of the Notes to result from the deposits made
in the Note Distribution Account on such Distribution Date);
(iii) to the Owner Trustee for deposit in the Certificate Distribution
Account, any portion of the Certificateholders' Interest Distributable
Amount not otherwise deposited into the Certificate Distribution Account on
such Distribution Date; and
(iv) to the Owner Trustee for deposit in the Certificate Distribution
Account, the Certificate Balance and any Certificateholders' Principal
Carryover Shortfall Amount (after giving effect to the reduction in the
Certificate Balance to result from the deposits made in the Certificate
Distribution Account on such Distribution Date).
Any Insolvency Proceeds remaining after the deposits described above shall be
paid to the holder of the GP Interest.
(c) Notice of any termination of the Trust shall be given by
the Servicer to the Owner Trustee, the Trustee and the Rating Agencies as soon
as practicable after the Servicer has received notice thereof.
(d) Following the satisfaction and discharge of the Indenture
and the payment in full of the principal of and interest on the Notes, the
Certificateholders will succeed to the rights of the Noteholders hereunder and
the Owner Trustee will succeed to the rights of, and assume the obligations of,
the Trustee pursuant to this Agreement.
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SECTION 9.2. Mandatory Sale of all Contracts. In accordance with the
procedures and schedule set forth in Exhibit C hereto (the "Auction
Procedures"), the Trustee (or, if the Notes have been paid in full and the
Indenture shall have been discharged in accordance with its terms, the Owner
Trustee) shall conduct or shall cause to be conducted an auction (the "Auction")
of the Receivables remaining in the Trust (such Receivables hereinafter referred
to as the "Auction Property") in order to effect a termination of the Trust
pursuant to Section 9.1 of the Trust Agreement on the second Distribution Date
succeeding the Record Date on which the Pool Balance is 5% or less of the
Initial Pool Balance and at such time as the Seller shall have not exercised its
option contained in Section 9.1. Such Auction shall be conducted within 10 days
following the Distribution Date following the Record Date on which the Pool
Balance is 5% or less of the Initial Pool Balance. The Seller, the Sponsor, an
Originator or the Servicer may, but shall not be required to, bid at the
Auction. Such Trustee shall sell or shall cause the sale and transfer of the
Auction Property to the highest bidder therefor at the Auction provided that;
(i) the Auction has been conducted in accordance with the Auction
Procedures;
(ii) such Trustee has received good faith bids for the Auction Property
from two prospective purchasers that are considered by such Trustee, in its
sole discretion, to be competitive participants in the market for motor
vehicle retail installment sale contracts;
(iii) a financial advisor, as advisor to such Trustee (in such capacity,
the "Advisor"), shall have advised such Trustee in writing that at least
two of such bidders (including the winning bidder) are participants in the
market for motor vehicle retail installment sale contracts willing and able
to purchase the Auction Property;
(iv) the highest bid in respect of the Auction Property is not less
than the aggregate fair market value of the Auction Property (as determined
by such Trustee in its sole discretion);
(v) any bid submitted by an Originator, the Seller, the Sponsor, the
Servicer or any affiliate of any of them shall reasonably represent the
fair market value of the Auction Property, as independently verified and
represented in writing by a qualified independent third party evaluator
(which may include the Advisor or an investment bank firm) selected by such
Trustee; and
(vi) the highest bid would result in proceeds from the sale of the
Auction Property which will be at least equal to
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the sum of (A) the greater of (1) the aggregate Purchase Price for the
Receivables (including defaulted Receivables), plus the appraised value of
any other property held by the Trust (less liquidation expenses) or (2) an
amount that, when added to amounts on deposit in the Collection Account and
available for distribution to Securityholders on the second Distribution
Date following the consummation of such sale (the "Liquidation Distribution
Date"), would result in proceeds sufficient to distribute to
Securityholders the amounts of interest due to the Securityholders for such
Distribution Date and any unpaid interest payable to the Securityholders
with respect to one or more prior Distribution Dates and the outstanding
principal amount of the Notes and the Certificate Balance, and (B) the
Total Servicing Fee payable on such second Distribution Date.
Provided that all of the conditions set forth in clauses (i) through
(vi) have been met, such Trustee shall sell and transfer the Auction Property,
without representation, warranty or recourse, to such highest bidder in
accordance with and upon completion of the Auction Procedures. Such Trustee
shall deposit the purchase price for the Auction Property in the Collection
Account at least one Business Day prior to such second succeeding Distribution
Date. In addition, the Auction must stipulate that the Servicer be retained to
service the Receivables on terms substantially similar to those in the
Agreement. In the event that any of such conditions are not met or such highest
bidder fails or refuses to comply with any of the Auction Procedures, such
Trustee shall decline to consummate such sale and transfer. In the event such
sale and transfer is not consummated in accordance with the foregoing, however,
such Trustee may from time to time in the future, but shall not be under any
further obligation to, solicit bids for sale of the assets of the Trust upon the
same terms and conditions as set forth above.
If any of the foregoing conditions are not met, such Trustee shall
decline to consummate such sale and shall not be under any obligation to solicit
any further bids or otherwise negotiate any further sale of Receivables
remaining in the Trust. In such event, however, such Trustee may from time to
time solicit bids in the future for the purchase of such Receivables pursuant to
this Section 9.2.
If applicable, the Indenture Trustee shall provide notice to the
Owner Trustee of the termination of the Trust pursuant to this Section 9.2 as
soon as practicable upon the consummation of the mandatory sale of the
Receivables pursuant to this Section 9.2.
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ARTICLE X
Administrative Duties of the Servicer
SECTION 10.1. Administrative Duties. (a) Duties with Respect to the
Indenture and Depository Agreements. The Servicer shall perform all its duties
and the duties of the Issuer under the Depository Agreements. In addition, the
Servicer shall consult with the Owner Trustee as the Servicer deems appropriate
regarding the duties of the Issuer under the Indenture and the Depository
Agreements. The Servicer shall monitor the performance of the Issuer and shall
provide notice to the Owner Trustee when action is necessary to comply with the
Issuer's duties under the Indenture and the Depository Agreements. The Servicer
shall prepare for execution by the Issuer or shall cause the preparation by
other appropriate Persons of all such documents, reports, filings, instruments,
certificates and opinions as it shall be the duty of the Issuer to prepare, file
or deliver pursuant to the Indenture and the Depository Agreements. In
furtherance of the foregoing, the Servicer shall take all appropriate action
that is the duty of the Issuer to take pursuant to the Indenture.
(b) Duties with Respect to the Issuer. (i) In addition to the
duties of the Servicer set forth in this Agreement or any of the Basic
Documents, the Servicer shall perform such calculations and shall prepare
for execution by the Issuer or the Owner Trustee or shall cause the
preparation by other appropriate Persons of all such documents, reports,
filings, instruments, certificates and opinions as it shall be the duty of
the Issuer or the Owner Trustee to prepare, file or deliver pursuant to
this Agreement or any of the Basic Documents, and at the request of the
Owner Trustee shall take all appropriate action that it is the duty of the
Issuer to take pursuant to this Agreement or any of the Basic Documents.
Subject to Section 10.4, and in accordance with the directions of the Owner
Trustee, the Servicer shall administer, perform or supervise the
performance of such other activities in connection with the Collateral
(including the Basic Documents) as are not covered by any of the foregoing
provisions and as are expressly requested by the Owner Trustee and are
reasonably within the capability of the Servicer.
(ii) Notwithstanding anything in this Agreement or any of the Basic
Documents to the contrary, the Servicer shall be responsible for promptly
notifying the Owner Trustee in the event that any withholding tax is
imposed on the Issuer's payments (or allocations of income) to an Owner (as
defined in the Trust Agreement) as contemplated in Section 5.2(c) of the
Trust Agreement. Any such notice shall specify the amount of any
withholding tax required to be withheld by the Owner Trustee pursuant to
such provision.
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(iii) Notwithstanding anything in this Agreement or the Basic Documents
to the contrary, the Servicer shall be responsible for performance of the
duties of the Owner Trustee and the holder of the GP Interest set forth in
Section 5.6(a), (b), (c) and (d) of the Trust Agreement with respect to,
among other things, accounting and reports to Owners (as defined in the
Trust Agreement); provided, however, that the Owner Trustee shall retain
responsibility for the distribution to Certificateholders of the Schedule
K-1s furnished to the Owner Trustee by the Servicer which are necessary to
enable each Certificateholder to prepare its federal and state income tax
returns.
(iv) The Servicer shall perform the duties of the Servicer specified in
Section 10.2 of the Trust Agreement required to be performed in connection
with the resignation or removal of the Owner Trustee, and any other duties
expressly required to be performed by the Servicer under this Agreement or
any of the Basic Documents.
(v) In carrying out the foregoing duties or any of its other
obligations under this Agreement, the Servicer may enter into transactions
with or otherwise deal with any of its Affiliates; provided, however, that
the terms of any such transactions or dealings shall be in accordance with
any directions received from the Issuer and shall be, in the Servicer's
opinion, no less favorable to the Issuer in any material respect.
(c) Tax Matters. The Servicer shall prepare and file, on behalf
of the holder of the GP Interest, all tax returns, tax elections, financial
statements and such annual or other reports of the Issuer as are necessary for
preparation of tax reports as provided in Article V of the Trust Agreement,
including without limitation forms 1099 and 1066. All tax returns will be signed
by the holder of the GP Interest.
(d) Non-Ministerial Matters. With respect to matters that in
the reasonable judgment of the Servicer are non-ministerial, the Servicer shall
not take any action pursuant to this Article X unless within a reasonable time
before the taking of such action, the Servicer shall have notified the Owner
Trustee and the Trustee of the proposed action and the Owner Trustee and, with
respect to items (A), (B), (C) and (D) below, the Trustee shall not have
withheld consent or provided an alternative direction. For the purpose of the
preceding sentence, "non-ministerial matters" shall include:
(A) the amendment of or any supplement to the Indenture;
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(B) the initiation of any claim or lawsuit by the Issuer and
the compromise of any action, claim or lawsuit brought by or against
the Issuer (other than in connection with the collection of the
Receivables);
(C) the amendment, change or modification of this Agreement or
any of the Basic Documents;
(D) the appointment of successor Note Registrars, successor
Paying Agents and successor Trustees pursuant to the Indenture or the
appointment of Successor Servicers or the consent to the assignment
by the Note Registrar, Paying Agent or Trustee of its obligations
under the Indenture; and
(E) the removal of the Trustee.
(e) Exceptions. Notwithstanding anything to the contrary in
this Agreement, except as expressly provided herein or in the other Basic
Documents, the Servicer, in its capacity hereunder, shall not be obligated to,
and shall not, (1) make any payments to the Noteholders or Certificateholders
under the Basic Documents, (2) sell the Indenture Trust Estate pursuant to
Section 5.4 of the Indenture, (3) take any other action that the Issuer directs
the Servicer not to take on its behalf or (4) in connection with its duties
hereunder assume any indemnification obligation of any other Person.
SECTION 10.2. Records. The Servicer shall maintain appropriate books
of account and records relating to services performed under this Agreement,
which books of account and records shall be accessible for inspection by the
Issuer at any time during normal business hours.
SECTION 10.3. Additional Information To Be Furnished to the Issuer.
The Servicer shall furnish to the Issuer from time to time such additional
information regarding the Collateral as the Issuer shall reasonably request.
ARTICLE XI
Miscellaneous Provisions
SECTION 11.1. Amendment. This Agreement may be amended by the
Sponsor, the Seller, the Servicer and the Owner Trustee, with the consent of the
Trustee (which consent may not be unreasonably withheld), but without the
consent of any of the Noteholders or the Certificateholders, to cure any
ambiguity or defect, to correct or supplement any provisions in this Agreement
or for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions in this Agreement or of modifying in any
manner the rights of the
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Noteholders or the Certificateholders; provided, however, that such action shall
not, as evidenced by an Opinion of Counsel delivered to the Owner Trustee and
the Trustee, adversely affect in any material respect the interests of any
Noteholder or Certificateholder.
This Agreement may also be amended from time to time by the Sponsor,
the Seller, the Servicer and the Owner Trustee, with the consent of the Trustee,
the consent of the Holders of Notes evidencing not less than a majority of the
Outstanding Amount of the Notes and the consent of the Holders (as defined in
the Trust Agreement) of Certificates evidencing not less than a majority of the
Certificate Balance for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Noteholders or the Certificateholders;
provided, however, that no such amendment shall (a) increase or reduce in any
manner the amount of, or accelerate or delay the timing of, collections of
payments on Receivables or distributions that shall be required to be made for
the benefit of the Noteholders or the Certificateholders or (b) reduce the
aforesaid percentage of the Outstanding Amount of the Notes and the Certificate
Balance, the Holders of which are required to consent to any such amendment,
without the consent of the Holders of all the outstanding Notes and the Holders
(as defined in the Trust Agreement) of all the outstanding Certificates affected
thereby.
Prior to its execution of any such amendment or consent, the Owner
Trustee shall furnish written notification of the substance of such amendment or
consent to the Rating Agencies. Promptly after its execution of any such
amendment or consent, the Owner Trustee shall furnish written notification of
the substance of such amendment or consent to each Certificateholder and the
Trustee.
It shall not be necessary for the consent of Certificateholders or
Noteholders pursuant to this Section to approve the particular form of any
proposed amendment or consent, but it shall be sufficient if such consent shall
approve the substance thereof.
Prior to the execution of any amendment to this Agreement, the Owner
Trustee and the Trustee shall be entitled to receive and rely upon an Opinion of
Counsel stating that the execution of such amendment is authorized or permitted
by this Agreement and that all conditions precedent to the execution and
delivery of such amendment have been satisfied and the Opinion of Counsel
referred to in Section 11.2(i)(1) has been delivered. The Owner Trustee and the
Trustee may, but shall not be obligated to, enter into any such amendment which
affects the Owner Trustee's or the Trustee's, as applicable, own rights, duties
or immunities under this Agreement or otherwise.
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SECTION 11.2. Protection of Title to Trust. (a) The Seller shall
execute and file such financing statements and cause to be executed and filed
such continuation statements, all in such manner and in such places as may be
required by law fully to preserve, maintain and protect the interest of the
Issuer and the interests of the Trustee in the Receivables and in the proceeds
thereof. The Seller shall deliver (or cause to be delivered) to the Owner
Trustee and the Trustee file-stamped copies of, or filing receipts for, any
document filed as provided above, as soon as available following such filing.
(b) Neither the Seller nor the Servicer shall (nor shall the
Servicer permit an Originator to) change its name, identity or corporate
structure in any manner that would, could or might make any financing statement
or continuation statement filed in accordance with paragraph (a) above seriously
misleading within the meaning of ss. 9-402(7) of the UCC, unless it shall have
given the Owner Trustee and the Trustee at least five days' prior written notice
thereof and shall have promptly filed appropriate amendments to all previously
filed financing statements or continuation statements.
(c) Each of the Seller and the Servicer shall have an
obligation to give the Owner Trustee and the Trustee at least 60 days' prior
written notice of any relocation of its principal executive office if, as a
result of such relocation, the applicable provisions of the UCC would require
the filing of any amendment of any previously filed financing or continuation
statement or of any new financing statement and shall promptly file any such
amendment. The Servicer shall at all times maintain each office from which it
shall service Receivables, and its principal executive office, within the United
States of America.
(d) The Servicer shall (and shall cause each Originator with
respect to the Related Receivables to) maintain accounts and records as to each
Receivable accurately and in sufficient detail to permit (i) the reader thereof
to know at any time the status of such Receivable, including payments and
recoveries made and payments owing (and the nature of each) and (ii)
reconciliation between payments or recoveries on (or with respect to) each
Receivable and the amounts from time to time deposited in the Collection Account
and Payahead Account in respect of such Receivable.
(e) The Servicer shall maintain its computer systems so that,
from and after the time of sale under this Agreement of the Receivables, the
Servicer's master computer records (including any backup archives) that refer to
a Receivable shall indicate clearly the interest of the Issuer and the Trustee
in such Receivable and that such Receivable is owned by the Issuer and has been
pledged to the Trustee. Indication of the Issuer's and the Trustee's interest in
a Receivable shall
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be deleted from or modified on the Servicer's computer systems when, and only
when, the related Receivable shall have been paid in full or repurchased by the
Seller or the Sponsor (or the related Originator) or purchased by the Servicer.
(f) If at any time the Sponsor, the Seller or the Servicer
shall propose to sell, grant a security interest in or otherwise transfer any
interest in automotive receivables to any prospective purchaser, lender or other
transferee, the Servicer shall give to such prospective purchaser, lender or
other transferee computer tapes, records or printouts (including any restored
from backup archives) that, if they shall refer in any manner whatsoever to any
Receivable, shall indicate clearly that such Receivable has been sold and is
owned by the Issuer and has been pledged to the Trustee.
(g) The Servicer shall permit the Trustee and its agents at any
time during normal business hours to inspect, audit and make copies of and
abstracts from the Servicer's records regarding any Receivable.
(h) Upon request at any time the Owner Trustee or the Trustee
shall have reasonable grounds to believe that such request is necessary in
connection with the performance of its duties under this Agreement or any of the
Basic Documents, the Servicer shall furnish to the Owner Trustee or to the
Trustee, within five Business Days, a list of all Receivables (by contract
number and name of Obligor) then held as part of the Trust, together with a
reconciliation of such list to the Schedule of Receivables and to each of the
Servicer's Certificates furnished before such request indicating removal of
Receivables from the Trust.
(i) The Servicer shall deliver to the Owner Trustee and the
Trustee:
(1) promptly after the execution and delivery of this Agreement
and of each amendment thereto, an Opinion of Counsel either (A) stating
that, in the opinion of such counsel, all financing statements and
continuation statements have been executed and filed that are necessary
fully to preserve and protect the interest of the Owner Trustee and the
Trustee in the Receivables, and reciting the details of such filings or
referring to prior Opinions of Counsel in which such details are given, or
(B) stating that, in the opinion of such counsel, no such action shall be
necessary to preserve and protect such interest; and
(2) within 120 days after the beginning of each calendar year
beginning with the first calendar year beginning more than three months
after the Cutoff Date, an Opinion of Counsel, dated as of a date during
such 120-day period, either (A) stating that, in the opinion of such
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counsel, all financing statements and continuation statements have been
executed and filed that are necessary fully to preserve and protect the
interest of the Owner Trustee and the Trustee in the Receivables, and
reciting the details of such filings or referring to prior Opinions of
Counsel in which such details are given, or (B) stating that, in the
opinion of such counsel, no such action shall be necessary to preserve and
protect such interest.
Each Opinion of Counsel referred to in clause (l) or (2) above
shall specify any action necessary (as of the date of such opinion) to be taken
in the following year to preserve and protect such interest.
(j) [Reserved (public deal)]
SECTION 11.3. Notices. All demands, notices and communications upon
or to the Seller, the Servicer, the Owner Trustee, the Trustee or the Rating
Agencies under this Agreement shall be in writing, personally delivered, sent by
overnight courier or mailed by certified mail, return receipt requested, and
shall be deemed to have been duly given upon receipt (a) in the case of the
Seller, to Centrex Capital Automobile Assets (Number Three), Inc., 270 South
Service Road, P.O. Box 888, Melville, New York 11747, Attention: General
Counsel, (b) in the case of the Sponsor, to Centrex Capital Corp., 270 South
Service Road, P.O. Box 888, Melville, New York 11747, Attention: General
Counsel, (c) in the case of the servicer, to Oxford Resources Corp., 270 South
Service Road, P.O. Box 888, Melville, New York 11747, Attention: General
Counsel, (d) in the case of the Issuer or the Owner Trustee, at the Corporate
Trust Office (as defined in the Trust Agreement), (e) in the case of the
Trustee, at the Corporate Trust Office, (f) in the case of Moody's, to Moody's
Investors Service, Inc., to 99 Church Street, New York, New York 10004,
Attention of Asset Backed Securities Group, and (e) in the case of Standard &
Poor's, to Standard & Poor's Corporation, 26 Broadway (15th Floor), New York,
New York 10004, Attention of Asset Backed Surveillance Department.
SECTION 11.4. Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Sections 6.4 and 7.3 and as provided in
the provisions of this Agreement concerning the resignation of the Servicer,
this Agreement may not be assigned by the Seller or the Servicer.
SECTION 11.5. Limitations on Rights of Others. The provisions of this
Agreement are solely for the benefit of the Seller, the Servicer, the Issuer,
the Owner Trustee and for the benefit of the Certificateholders (including the
holder of the GP Interest), the Trustee and the Noteholders, as third-party
beneficiaries, and nothing in this Agreement, whether express or implied, shall
be construed to give to any other Person any
-75-
<PAGE>
legal or equitable right, remedy or claim in the Owner Trust Estate or under or
in respect of this Agreement or any covenants, conditions or provisions
contained herein.
SECTION 11.6. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 11.7. Separate Counterparts. This Agreement may be executed
by the parties hereto in separate counterparts, each of which when so executed
and delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 11.8. Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
SECTION 11.9. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.10. Assignment to Trustee. The Seller hereby acknowledges
and consents to any mortgage, pledge, assignment and grant of a security
interest by the Issuer to the Trustee pursuant to the Indenture for the benefit
of the Noteholders of all right, title and interest of the Issuer in, to and
under the Receivables and/or the assignment of any or all of the Issuer's rights
and obligations hereunder to the Trustee.
SECTION 11.11. Nonpetition Covenant. Notwithstanding any prior
termination of this Agreement, the Servicer and the Seller shall not, prior to
the date which is one year and one day after the termination of this Agreement
with respect to the Issuer, acquiesce, petition or otherwise invoke or cause the
Issuer to invoke the process of any court or government authority for the
purpose of commencing or sustaining a case against the Issuer under any Federal
or state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Issuer or any substantial part of its property, or ordering the winding
up or liquidation of the affairs of the Issuer.
-76-
<PAGE>
SECTION 11.12. Limitation of Liability of Owner Trustee and Trustee.
(a) Notwithstanding anything contained herein to the contrary, this Agreement
has been countersigned by Delaware Trust Capital Management, Inc., not in its
individual capacity but solely in its capacity as Owner Trustee of the Issuer
and in no event shall Delaware Trust Capital Management, Inc., in its individual
capacity or, except as expressly provided in the Trust Agreement, as Owner
Trustee have any liability for the representations, warranties, covenants,
agreements or other obligations of the Issuer hereunder or under any of the
certificates, notices or agreements delivered pursuant hereto, as to all of
which recourse shall be had solely to the assets of the Issuer. For all purposes
of this Agreement, in the performance of its duties or obligations hereunder or
in the performance of any duties or obligations of the Issuer hereunder, the
Owner Trustee shall be subject to, and entitled to the benefits of, the terms
and provisions of Articles VI, VII and VIII of the Trust Agreement.
(b) Notwithstanding anything contained herein to the contrary,
this Agreement has been accepted by The Bank of New York not in its individual
capacity but solely as Trustee and in no event shall The Bank of New York have
any liability for the representations, warranties, covenants, agreements or
other obligations of the Issuer hereunder or in any of the certificates, notices
or agreements delivered pursuant hereto, as to all of which recourse shall be
had solely to the assets of the Issuer.
SECTION 11.13. Independence of the Servicer. For all purposes of this
Agreement, the Servicer shall be an independent contractor and shall not be
subject to the supervision of the Issuer or the Owner Trustee with respect to
the manner in which it accomplishes the performance of its obligations
hereunder. Unless expressly authorized by the Issuer, the Servicer shall have no
authority to act for or represent the Issuer or the Owner Trustee in any way and
shall not otherwise be deemed an agent of the Issuer or the Owner Trustee.
SECTION 11.14. No Joint Venture. Nothing contained in this Agreement
(i) shall constitute the Servicer and either of the Issuer or the Owner Trustee
as members of any partnership, joint venture, association, syndicate,
unincorporated business or other separate entity, (ii) shall be construed to
impose any liability as such on any of them or (iii) shall be deemed to confer
on any of them any express, implied or apparent authority to incur any
obligation or liability on behalf of the others.
-77-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their respective duly authorized officers as
of the day and year first above written.
CENTREX AUTO TRUST 1996-A
By: DELAWARE TRUST CAPITAL
MANAGEMENT, INC.
not in its individual capacity but
solely as Owner Trustee on behalf
of the Trust,
By: /S/ Richard N. Smith
-------------------------
Name: Richard N. Smith
Title: Vice President
CENTREX CAPITAL CORP.,
Sponsor,
By: /S/ Robert B. Kay
-------------------------
Name: Robert B. Kay
Title: Vice President
CENTREX CAPITAL AUTOMOBILE ASSETS
(NUMBER THREE), INC.
Seller,
By: /S/ Robert B. Kay
-------------------------
Name: Robert B. Kay
Title: Vice President
OXFORD RESOURCES CORP.
Servicer,
By: /S/ Robert B. Kay
-------------------------
Name: Robert B. Kay
Title: Senior Vice President
-78-
<PAGE>
Acknowledged and Accepted:
THE BANK OF NEW YORK, not
in its individual capacity
but solely as Trustee,
By: /S/ Reyne A. Macadaeg
----------------------------------
Name: Reyne A. Macadaeg
Title: Assistant Vice President
Acknowledged and Accepted:
DELAWARE TRUST CAPITAL MANAGEMENT, INC.
not in its individual capacity
but solely as Owner Trustee,
By: /S/ Richard N. Smith
-----------------------------------
Name: Richard N. Smith
Title: Vice President
-79-
<PAGE>
SCHEDULE A
Schedule of Receivables
Delivered to the Owner Trustee and the Trustee at Closing
<PAGE>
SCHEDULE B
Location of Receivables
Oxford Resources Corp.
270 South Service Road
Melville, New York 11747
<PAGE>
EXHIBIT A
FORM OF MONTHLY SECURITYHOLDER STATEMENT
CENTREX AUTO TRUST 1996-A
6.75% Asset Backed Notes
7.20% Asset Backed Certificates
Distribution Date:
Collection Period:
Under the Sale and Servicing Agreement dated as of September 13, 1996 among
Oxford Resources Corp., as servicer, Centrex Capital Assets (Number Three),
Inc., as seller (the "Servicer"), Centrex Auto Trust 1996-A, as issuer (the
"Trust"), and Centrex Capital Corp., as sponsor, the Servicer is required to
prepare certain information each month regarding current distributions to
Noteholders and Certificateholders and the performance of the Trust during the
previous month. The information that is required to be prepared with respect to
the Distribution Date and Collection Period listed above is set forth below.
Certain of the information is presented on the basis of an original principal
amount of $1,000 per Note or Certificate, and certain other information is
presented based upon the aggregate amounts for the Trust as a whole.
A. Information Regarding the Current Monthly Distribution.
1. Notes.
(a) The aggregate amount of the
distribution with respect to the
Notes.................................................... $________
(b) The amount of the distribution set
forth in paragraph A.1.(a) above in
respect of interest on the Notes......................... $________
(c) The amount of the distribution set
forth in paragraph A.1.(a) above in
respect of principal of the Notes........................ $________
(d) The amount of the distributions set
forth in paragraph A.1(a) payable
out of amounts withdrawn from the Reserve
Account with respect to the Notes........................ $________
(e) The amount of the distribution set
forth in paragraph A.1.(a) above
per $1,000 interest in the Notes......................... $________
(f) The amount of the distribution set
<PAGE>
forth in paragraph A.1.(b) above
per $1,000 interest in the Notes......................... $________
(g) The amount of the distribution set
forth in paragraph A.1.(c) above
per $1,000 interest in the Notes......................... $________
(h) The amount of the distribution set
forth in paragraph A.1.(d) above
per $1,000 interest in the Notes......................... $________
2. Certificates.
(a) The aggregate amount of the
distribution with respect to the
Certificates............................................. $________
(b) The amount of the distribution set
forth in paragraph A.2.(a) above in
respect of interest on the Certificates.................. $________
(c) The amount of the distribution set
forth in paragraph A.2.(a) above in
respect of principal of the Certificates................. $________
(d) The amount of the distributions set
forth in paragraph A.2(a) payable
out of amounts withdrawn from the Reserve
Account with respect to the Certificates................. $________
(e) The amount of the distribution set
forth in paragraph A.2.(a) above
per $1,000 interest in the Certificates.................. $________
(f) The amount of the distribution set
forth in paragraph A.2.(b) above
per $1,000 interest in the Certificates.................. $________
(g) The amount of the distribution set
forth in paragraph A.2.(c) above
per $1,000 interest in the Certificates.................. $________
(h) The amount of the distribution set
forth in paragraph A.2.(d) above
per $1,000 interest in the Certificates.................. $________
B. Information Regarding the Performance of the Trust.
1. Pool Balance, Note Principal Balance and Certificate Principal
Balance.
(a) The Pool Balance at the close of business on
the last day of the Collection Period.................... $________
<PAGE>
(b) The Note Balance after giving effect to payments
allocated to principal as set forth in Paragraph A.1(c).. $________
(c) The Note Pool Factor after
giving affect to the payments set
forth in paragraph A.1(c)................................ $________
(d) The Certificate Balance after
giving effect to payments allocated to
principal as set forth in Paragraph A.2(c)............... $________
(e) The Certificate Pool Factor after
giving affect to the payments set
forth in paragraph A.2(c)................................ $________
(f) The aggregate Purchase Amount for
all Receivables that were repurchased
in the preceding Collection Period....................... $________
(g) The aggregate Payahead Balance on
such Distribution Date................................... $________
(h) The change in the Payahead Balance
from the preceding Distribution Date..................... $________
(i) The amount of Outstanding Advances on such
Distribution Date........................................ $________
(j) The change in Outstanding Advances
from the preceding Distribution Date..................... $________
2. Servicing Fee.
The aggregate amount of the Servicing
Fee paid to the Servicer with respect
to the preceding Collection Period....................... $________
3. Payment Shortfalls.
(a) The amount of the Noteholders' Interest Carryover
Shortfall after giving effect to the payments set
forth in paragraph A.1(b) above.......................... $________
<PAGE>
(b) The amount of the Noteholders' Interest Carryover
Shortfall set forth in paragraph B.3.(a) above per
$1,000 interest with respect to the Notes:............... $________
(c) The amount of the Certificateholders' Interest
Carryover Shortfall after giving effect to the
payments set forth in paragraph A.2(b) above............. $________
(d) The amount of the Certificateholders' Interest
Carryover Shortfall set forth in paragraph B.3.(c)
above per $1,000 interest with respect to
the Certificates:........................................ $________
4. Losses and Delinquencies
(a) The change in the aggregate amount
of Cumulative Net Losses from the preceding
Distribution Date........................................ $________
(b) The aggregate amount of Cumulative Net Losses
on the Distribution Date set forth above for
the related Collection Period............................ $________
(c) The Cumulative Net Loss Ratio on the
Distribution Date set forth above........................ $________
(d) The aggregate amount scheduled to
be paid, including unearned finance
and other charges, for which Obligors
are delinquent 60 days or more........................... $________
(e) The Delinquency Percentage on the
Distribution Date set forth above........................ $________
5. Reserve Account
(a) The Reserve Account balance as of
the last day of the preceding
Collection Period, including earnings.................... $________
(b) Earnings included in above balance....................... $________
(c) Transfer to Reserve Account from
Collection Account on Distribution
Date..................................................... $________
(d) The Reserve Account balance as of
the Distribution Date set forth above
after giving effect to the Collection
<PAGE>
Account on such Distribution Date........................ $________
<PAGE>
EXHIBIT B
Form of Servicer's Certificate
OXFORD RESOURCES CORP.
CERTIFICATE OF SERVICING OFFICER
The undersigned certifies that he is the [title], of Oxford Resources
Corp., a corporation organized under the laws of the State of New York
("Oxford") and that as such he is duly authorized to execute and deliver this
certificate on behalf of Oxford pursuant to Section 4.9 of the Sale and
Servicing Agreement, dated as of September 13, 1996 (the "Agreement"), among
Oxford, Centrex Capital Automobile Assets (Number Three), Inc., Centrex Auto
Trust 1996-A and Centrex Capital Corp., (all capitalized terms used herein
without definition having the respective meanings specified in the Agreement),
and further certifies that:
1. The Monthly Securityholder Statement for the period from
______________ to _________________ attached to this certificate is complete and
accurate in accordance with the requirements of Section 4.9 of the Agreement;
and
2. As of the date hereof, no Servicer Default or event that with
notice or lapse of time or both would become a Servicer Default has occurred.
[If a Servicer Default has occurred, such Servicer Default shall be specified
and its current status reported.]
IN WITNESS WHEREOF, we have affixed hereunto our signatures this
_____ day of __________________, ____.
OXFORD RESOURCES CORP.
By:_______________________________
Name:
Title:
<PAGE>
EXHIBIT C
TERMINATION - AUCTION PROCEDURES
The following sets forth the
auction procedures to be followed in connection with a sale effected pursuant to
Section 9.2 of the Sale and Servicing Agreement (the "Agreement"), dated as of
September 13, 1996 among Centrex Auto Trust 1996-A (the "Trust"), Centrex
Capital Corp. (the "Sponsor"), Centrex Capital Automobile Assets (Number Three),
Inc. (the "Seller") and Oxford Resources Corp. (the "Servicer"). Capitalized
terms used herein that are not otherwise defined shall have the meanings
ascribed thereto in the Agreement. All references herein to "Trustee" shall be
references to The Bank of New York, as Indenture Trustee, pursuant to an
Indenture, dated as of September 13, 1996, between the Trust and the Indenture
Trustee. However, if the Notes have been paid in full, and the Indenture has
been discharged in accordance with its terms, all references herein to "Trustee"
shall be references to the Owner Trustee.
I. Pre-Auction Process
(a) Upon receiving notice of the Auction, the Advisor will initiate its
general Auction procedures consisting of the following: (i) with the
assistance of the Servicer, prepare a general solicitation package
along with a confidentiality agreement; (ii) derive a list of
qualified bidders, in a commercially reasonable manner; (iii) initiate
contact with all qualified bidders; (iv) send a confidentiality
agreement to all qualified bidders; (v) upon receipt of a signed
confidentiality agreement, send solicitation packages to all
interested bidders on behalf of the applicable Trustee; and (vi)
notify the Servicer of all potential bidders and anticipated
timetable.
(b) The general solicitation package will include: (i) the prospectus from
the public offering of the Notes and Certificates; (ii) a copy of all
monthly servicing reports or a copy of all annual servicing reports
and the prior year's monthly servicing reports; (iii) a form of a
Purchase Agreement and Sale and Servicing Agreement; (iv) a
description of the minimum purchase price required to cause the
Trustee to sell the Auction Property as set forth in Section 9.2 of
the Agreement; (v) a formal bidsheet; (vi) a detailed timetable; and
(vii) a preliminary data tape of the Pool Balance as of the related
Distribution Date reflecting the same data attributes used to create
the Cutoff Date tables for the Private Placement Memorandum dated
September 18,
<PAGE>
1996 relating to the placement of the Notes and Certificates.
(c) The applicable Trustee, with the assistance of the Servicer and the
Advisor, will maintain an auction package beginning at the time of
closing of the transaction, which will contain terms (i)-(iii) listed
in the preceding paragraph. If the Advisor is unable to perform its
role as advisor to the applicable Trustee, the Servicer acting in its
capacity under the Agreement will select a successor Advisor and
inform the applicable Trustee of its actions.
(d) The Advisor will send solicitation packages to all bidders at least 15
business days before the date of the Auction. Bidders will be required
to submit any due diligence questions in writing to the Advisor for
determination of their relevancy, no later than 10 business days
before the date of the Auction. The Servicer and the Advisor will be
required to satisfy all relevant questions at least five Business Days
prior to the date of the Auction and distribute the questions and
answers to all bidders.
II. Auction Process
(a) _______________________, in its role as Advisor to the applicable
Trustee, will be allowed to bid in the Auction, but will not be
required to do so.
(b) The Servicer will also be allowed to bid in the Auction if it deems
appropriate, but will not be required to do so.
(c) On the date of the Auction, all bids will be due by facsimile to the
offices of the applicable Trustee by 1:00 p.m. New York City time,
with the winning bidder to be notified by 2:00 p.m. New York City
time. All acceptable bids (as described in Section 9.2 of the
Agreement) will be due on a conforming basis on the bid sheet
contained in the solicitation package.
(d) If the applicable Trustee receives fewer than two market value bids
from participants in the market for motor vehicle retail installment
sale contracts willing and able to purchase the Auction Property, the
applicable Trustee shall decline to consummate the sale.
(e) Upon notification to the winning bidder, a good faith deposit equal to
one percent (1%) of the Pool Balance will be required to be wired to
the applicable Trustee upon acceptance of the bid. This deposit, along
with any interest income attributable to it, will be
<PAGE>
credited to the purchase price but will not be refundable. The
applicable Trustee will establish a separate account for the
acceptance of the good faith deposit, until such time as the account
is fully funded and all monies are transferred into the Collection
Account, such time not to exceed one Business Day before the related
Distribution Date (as described above).
(f) The winning bidder will receive on the date of the Auction a copy of
the draft Purchase Agreement, Sale and Servicing Agreement and
Servicer's Representations and Warranties (which shall be
substantially identical to the representations and warranties set
forth in Section ______ of the Agreement).
(g) ______________, in its capacity as Advisor to the applicable Trustee,
will provide to the applicable Trustee a letter concluding whether or
not the winning bid is a fair market value bid. __________________
will also provide such letter if it is the winning bidder. In the case
where _____________ or the Servicer is the winning bidder it will in
its letter provide for market comparable valuations.
(h) The Auction will stipulate that the Servicer be retained to service
the Receivables sold pursuant to the terms of the Purchase and Sale
Agreement and Servicing Agreement.
Exhibit 10.02
Execution Copy
================================================================================
CENTREX AUTO TRUST 1996-A
6.75% Asset Backed Notes
--------------------------------
INDENTURE
Dated as of September 13, 1996
--------------------------------
THE BANK OF NEW YORK
Trustee
================================================================================
<PAGE>
CROSS REFERENCE TABLE(1)
TIA Indenture
Section Section
310 (a) (1) ................................................ 6.11
(a) (2) ................................................ 6.11
(a) (3) ................................................ 6.10
(a) (4) ................................................ N.A.(2)
(a) (5) ................................................ 6.11
(b) ................................................ 6.8; 6.11
(c) ................................................ N.A.
311 (a) ................................................ 6.12
(b) ................................................ 6.12
(c) ................................................ N.A.
312 (a) ................................................ 7.1
(b) ................................................ 7.2
(c) ................................................ 7.2
(d) ................................................ 7.4
313 (a) ................................................ 7.4
(b) (1) ................................................ 7.4
(b) (2) ................................................ 11.5
(c) ................................................ 7.4
(d) ................................................ 7.3
314 (a) ................................................ 3.9; 11.15
(b) ................................................ 11.1
(c) (1) ................................................ 11.1
(c) (2) ................................................ 11.1
(c) (3) ................................................ 11.1
(d) ................................................ 11.1
(e) ................................................ 11.1
(f) ................................................ 11.1
315 (a) ................................................ 6.1
(b) ................................................ 6.5; 11.5
(c) ................................................ 6.1
(d) ................................................ 6.1
(e) ................................................ 5.13
316 (a) (last sentence)...................................... 2.7
(a) (1) (A).............................................. 5.11
(a) (1) (B).............................................. 5.12
(a) (2) ................................................ N.A.
(b) ................................................ 5.7
(c) ................................................ N.A
317 (a) (1) ................................................ 5.3
(a) (2) ................................................ 5.3
(b) ................................................ 3.3
318 (a) ................................................ 11.7
- --------
(1) Note: This Cross Reference Table shall not, for any
purpose, be deemed to be part of this Indenture.
(2) N.A. means Not Applicable.
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.1 Definitions.......................................... 2
SECTION 1.2 Incorporation by Reference of
Trust Indenture Act............................... 9
SECTION 1.3 Rules of Construction................................ 9
ARTICLE II
The Notes
SECTION 2.1 Form................................................. 10
SECTION 2.2 Execution, Authentication and
Delivery.......................................... 10
SECTION 2.3 Temporary Notes...................................... 11
SECTION 2.4 Registration; Registration of
Transfer and Exchange............................. 11
SECTION 2.5 Mutilated, Destroyed, Lost or
Stolen Notes...................................... 13
SECTION 2.6 Persons Deemed Owner................................. 14
SECTION 2.7 Payment of Principal and Interest;
Defaulted Interest................................ 14
SECTION 2.8 Cancellation......................................... 15
SECTION 2.9 Release of Collateral................................ 15
SECTION 2.10 Book-Entry Notes..................................... 16
SECTION 2.11 Notices to Clearing Agency........................... 17
SECTION 2.12 Definitive Notes..................................... 17
SECTION 2.13 Restrictions on Transferability..................... 17
ARTICLE III
Covenants
SECTION 3.1 Payment of Principal and Interest.................... 18
SECTION 3.2 Maintenance of Office or Agency...................... 19
SECTION 3.3 Money for Payments To Be Held in Trust............... 19
SECTION 3.4 Existence............................................ 21
SECTION 3.5 Protection of Trust Estate........................... 21
SECTION 3.6 Opinions as to Trust Estate.......................... 21
SECTION 3.7 Performance of Obligations;
Servicing of Receivables.......................... 22
SECTION 3.8 Negative Covenants................................... 25
SECTION 3.9 Annual Statement as to Compliance.................... 25
(i)
<PAGE>
Page
----
SECTION 3.10 Issuer May Consolidate, Etc.
Only on Certain Terms............................. 26
SECTION 3.11 Successor or Transferee.............................. 28
SECTION 3.12 No Other Business.................................... 28
SECTION 3.13 No Borrowing......................................... 28
SECTION 3.14 Servicer's Obligations............................... 28
SECTION 3.15 Guarantees, Loans, Advances and
Other Liabilities................................. 28
SECTION 3.16 Capital Expenditures................................. 28
SECTION 3.17 [Reserved]........................................... 28
SECTION 3.18 Restricted Payments.................................. 28
SECTION 3.19 Notice of Events of Default.......................... 29
SECTION 3.20 Further Instruments and Acts......................... 29
ARTICLE IV
Satisfaction and Discharge
SECTION 4.1 Satisfaction and Discharge of Indenture.............. 29
SECTION 4.2 Application of Trust Money........................... 30
SECTION 4.3 Repayment of Moneys Held by
Paying Agent...................................... 31
ARTICLE V
Remedies
SECTION 5.1 Events of Default.................................... 31
SECTION 5.2 Acceleration of Maturity;
Rescission and Annulment.......................... 32
SECTION 5.3 Collection of Indebtedness and Suits
for Enforcement by Trustee........................ 33
SECTION 5.4 Remedies; Priorities................................. 36
SECTION 5.5 Optional Preservation of
the Receivables................................... 37
SECTION 5.6 Limitation of Suits.................................. 37
SECTION 5.7 Unconditional Rights of Noteholders
To Receive Principal and Interest................. 38
SECTION 5.8 Restoration of Rights and Remedies................... 38
SECTION 5.9 Rights and Remedies Cumulative....................... 39
SECTION 5.10 Delay or Omission Not a Waiver....................... 39
SECTION 5.11 Control by Noteholders............................... 39
SECTION 5.12 Waiver of Past Defaults.............................. 39
SECTION 5.13 Undertaking for Costs................................ 40
SECTION 5.14 Waiver of Stay or Extension Laws..................... 40
SECTION 5.15 Action on Notes...................................... 41
(ii)
<PAGE>
Page
----
SECTION 5.16 Performance and Enforcement of
Certain Obligations................................. 41
ARTICLE VI
The Trustee
SECTION 6.1 Duties of Trustee.................................... 41
SECTION 6.2 Rights of Trustee.................................... 43
SECTION 6.3 Individual Rights of Trustee......................... 43
SECTION 6.4 Trustee's Disclaimer................................. 43
SECTION 6.5 Notice of Defaults................................... 44
SECTION 6.6 Reports by Trustee to Holders........................ 44
SECTION 6.7 Compensation and Indemnity........................... 44
SECTION 6.8 Replacement of Trustee............................... 45
SECTION 6.9 Successor Trustee by Merger.......................... 46
SECTION 6.10 Appointment of Co-Trustee or
Separate Trustee.................................. 46
SECTION 6.11 Eligibility; Disqualification........................ 48
SECTION 6.12 Preferential Collection of Claims
Against Issuer.................................... 48
ARTICLE VII
Noteholders' Lists and Reports
SECTION 7.1 Issuer To Furnish Trustee Names and
Addresses of Noteholders.......................... 48
SECTION 7.2 Preservation of Information;
Communications to Noteholders..................... 48
SECTION 7.3 [Reserved]........................................... 49
SECTION 7.4 Reports by Trustee................................... 49
ARTICLE VIII
Accounts, Disbursements and Releases
SECTION 8.1 Collection of Money.................................. 49
SECTION 8.2 Trust Accounts....................................... 49
SECTION 8.3 General Provisions Regarding Accounts................ 50
SECTION 8.4 Release of Trust Estate.............................. 51
SECTION 8.5 Opinion of Counsel................................... 52
(iii)
<PAGE>
Page
----
ARTICLE IX
Supplemental Indentures
SECTION 9.1 Supplemental Indentures Without
Consent of Noteholders............................ 52
SECTION 9.2 Supplemental Indentures with
Consent of Noteholders............................ 53
SECTION 9.3 Execution of Supplemental Indentures................. 55
SECTION 9.4 Effect of Supplemental Indenture..................... 55
SECTION 9.5 Conformity with Trust Indenture Act.................. 56
SECTION 9.6 Reference in Notes to Supplemental
Indentures........................................ 56
ARTICLE X
Redemption of Notes
SECTION 10.1 Redemption........................................... 56
SECTION 10.2 Form of Redemption Notice............................ 57
SECTION 10.3 Notes Payable on Redemption Date..................... 57
ARTICLE XI
Miscellaneous
SECTION 11.1 Compliance Certificates and
Opinions, etc..................................... 58
SECTION 11.2 Form of Documents Delivered to
Trustee........................................... 60
SECTION 11.3 Acts of Noteholders.................................. 61
SECTION 11.4 Notices, etc., to Trustee, Issuer
and Rating Agencies............................... 61
SECTION 11.5 Notices to Noteholders; Waiver....................... 62
SECTION 11.6 Alternate Payment and Notice
Provisions........................................ 63
SECTION 11.7 Conflict with Trust Indenture Act.................... 63
SECTION 11.8 Effect of Headings and Table
of Contents....................................... 63
SECTION 11.9 Successors and Assigns............................... 63
SECTION 11.10 Separability......................................... 63
SECTION 11.11 Benefits of Indenture................................ 64
SECTION 11.12 Legal Holidays....................................... 64
SECTION 11.13 Governing Law........................................ 64
SECTION 11.14 Counterparts......................................... 64
SECTION 11.15 Recording of Indenture............................... 64
SECTION 11.16 Trust Obligation..................................... 64
SECTION 11.17 No Petition.......................................... 65
(iv)
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Page
----
SECTION 11.18 Inspection........................................... 65
Testimonium, Signatures and Seals......................................
Exhibit A Schedule of Receivables
Exhibit B Form of Sale and Servicing Agreement
Exhibit C Form of Note Depository Agreement
Exhibit D Form of Note
(v)
<PAGE>
INDENTURE dated as of September 13, 1996, between
CENTREX AUTO TRUST 1996-A, a Delaware business trust (the
"Issuer"), and THE BANK OF NEW YORK, a New York banking
corporation, as trustee and not in its individual capacity (the
"Trustee").
Each party agrees as follows for the benefit of the other party and
for the equal and ratable benefit of the Holders of the Issuer's 6.75% Asset
Backed Notes (the "Notes"):
GRANTING CLAUSE
The Issuer hereby Grants to the Trustee at the Closing Date, as
Trustee for the benefit of the Holders of the Notes, a security in and to all of
the Issuer's right, title and interest in and to (a) the Receivables, and all
moneys received thereon (other than any proceeds from any Dealer commission), on
or after the Cutoff Date and, with respect to Receivables which are Actuarial
Receivables, all monies received thereon prior to the Cutoff Date that are due
on or after the Cutoff Date; (b) the security interests in the Financed Vehicles
granted by Obligors pursuant to the Receivables and any other interest of the
Issuer in the Financed Vehicles; (c) any proceeds with respect to claims or any
physical damage, repossession, loss, skip, credit life and credit accident,
vendor's single interest and health insurance policies or certificates relating
to the Financed Vehicles or the Obligors; (d) any refunds for the costs of
extended service contracts with respect to Financed Vehicles, refunds of
unearned premiums with respect to credit life and credit accident and health
insurance policies covering Financed Vehicles or Obligors; (e) any proceeds with
respect to any Receivable repurchased by a Dealer, pursuant to a Dealer
Agreement, as a result of a breach of representation or warranty in the related
Dealer Agreement or a default by an Obligor resulting in the repossession of the
Financed Vehicle under such Dealer Agreement; (f) all funds on deposit from time
to time in the Trust Accounts, including the Reserve Account Initial Deposit,
and in all investments and proceeds thereof (including all income thereon); (g)
the Sale and Servicing Agreement and the Loan Purchase Agreement; and (h) the
proceeds of any and all of the foregoing (collectively, the "Collateral").
The foregoing Grant is made in trust to secure the payment of
principal of and interest on, and any other amounts owing in respect of, the
Notes, equally and ratably without prejudice, priority or distinction except as
set forth herein, and to secure compliance with the provisions of this
Indenture, all as provided in this Indenture.
<PAGE>
The Trustee, as Trustee on behalf of the Holders of the Notes,
acknowledges such Grant, accepts the trusts under this Indenture in accordance
with the provisions of this Indenture and agrees to perform its duties required
in this Indenture to the best of its ability to the end that the interests of
the Holders of the Notes may be adequately and effectively protected.
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.1 Definitions. Except as otherwise specified herein, the
following terms have the respective meanings set forth below for all purposes of
this Indenture.
"Act" has the meaning specified in Section 11.3(a).
"Affiliate" means, with respect to any specified Person, any other
Person controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" when used with respect to
any specified Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Authorized Officer" means, with respect to the Issuer and the
Servicer, any officer of the Owner Trustee or the Servicer, as applicable, who
is authorized to act for the Owner Trustee or the Servicer, as applicable, in
matters relating to the Issuer and who is identified on the list of Authorized
Officers delivered by each of the Owner Trustee and the Servicer to the Trustee
on the Closing Date (as such list may be modified or supplemented from time to
time thereafter).
"Basic Documents" means the Certificate of Trust, the Trust
Agreement, the Sale and Servicing Agreement, the Depository Agreements and other
documents and certificates delivered in connection therewith.
"Book Entry Notes" means a beneficial interest in the Notes,
ownership and transfers of which shall be made through book entries by a
Clearing Agency as described in Section 2.10.
"Business Day" means any day other than a Saturday, a Sunday or a day
on which banking institutions or trust companies in the City of New York or
Wilmington, Delaware are authorized or obligated by law, regulation or executive
order to remain closed.
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"Certificate of Trust" means the certificate of trust of the Issuer
substantially in the form of Exhibit B to the Trust Agreement.
"Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, and Treasury Regulations promulgated thereunder.
"Collateral" has the meaning specified in the Granting Clause of this
Indenture.
"Corporate Trust Office" means the principal office of the Trustee at
which at any particular time its corporate trust business shall be principally
administered which office at date of the execution of this Agreement is located
at 101 Barclay Street, Floor 12 East, New York, New York 10286, Attention:
Corporate Trust Asset Backed Unit (Telephone: (212) 815-7156; Facsimile: (212)
815-5544) or at such other address as the Trustee may designate from time to
time by notice to the Noteholders, the Servicer and the Issuer, or the principal
corporate trust office of any successor Trustee (the address of which the
successor Trustee will notify the Noteholders and the Issuer).
"Default" means any occurrence that is, or with notice or the lapse
of time or both would become, an Event of Default.
"Definitive Notes" has the meaning specified in Section 2.10.
"Event of Default" has the meaning specified in Section 5.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Executive Officer" means, with respect to any corporation, the
President, Executive Vice President, any Vice President, the Secretary or the
Treasurer of such corporation; and with respect to any partnership, any general
partner thereof.
"Grant" means mortgage, pledge, bargain, sell, warrant, alienate,
remise, release, convey, assign, transfer, create, grant a lien upon and a
security interest in and right of set-off against, deposit, set over and confirm
pursuant to this
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<PAGE>
Indenture. A Grant of the Collateral or of any other agreement or instrument
shall include all rights, powers and options (but none of the obligations) of
the Granting party thereunder, including the immediate and continuing right to
claim for, collect, receive and give receipt for principal and interest payments
in respect of the Collateral and all other moneys payable thereunder, to give
and receive notices and other communications, to make waivers or other
agreements, to exercise all rights and options, to bring proceedings in the name
of the Granting party or otherwise and generally to do and receive anything that
the Granting party is or may be entitled to do or receive thereunder or with
respect thereto.
"Holder" or "Noteholder" means the Person in whose name a Note is
registered on the Note Register.
"Indenture" means this Indenture as amended and supplemented from
time to time.
"Independent" means, when used with respect to any specified Person,
that the person (a) is in fact independent of the Issuer, any other obligor upon
the Notes, the Seller and any Affiliate of any of the foregoing persons, (b)
does not have any direct financial interest or any material indirect financial
interest in the Issuer, any such other obligor, the Seller or any Affiliate of
any of the foregoing Persons and (c) is not connected with the Issuer, any such
other obligor, the Seller or any Affiliate of any of the foregoing Persons as an
officer, employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions.
"Independent Certificate" means a certificate or opinion to be
delivered to the Trustee under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.1, made by an
Independent appraiser or other expert appointed by an Issuer Order and approved
by the Trustee in the exercise of reasonable care, and such opinion or
certificate shall state that the signer has read the definition of "Independent"
in this Indenture and that the signer is Independent within the meaning thereof.
"Interest Rate" means 6.75% per annum (computed on the basis of a
360-day year of twelve 30-day months).
"Issuer" means the party named as such in this Indenture until a
successor replaces it and, thereafter, means the successor and, for purposes of
any provision contained herein and required by the TIA, each other obligor on
the Notes.
"Issuer Order" and "Issuer Request" means a written order or request
signed in the name of the Issuer by any one of its Authorized Officers and
delivered to the Trustee.
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<PAGE>
"Notes" means the 6.75% Asset Backed Notes, substantially in the form
of Exhibit D.
"Note Depository Agreement" means the agreement among the Issuer, the
Trustee, the Servicer and The Depository Trust Company, as the initial Clearing
Agency, dated one Business Day prior to Closing Date, substantially in the form
of Exhibit C.
"Note Owner" means, with respect to a Book-Entry Note, the person who
is the owner of such Book-Entry Note, as reflected on the books of the Clearing
Agency, or on the books of a Person maintaining an account with such Clearing
Agency (directly as a Clearing Agency Participant or as an indirect participant,
in each case in accordance with the rules of such Clearing Agency).
"Note Register" and "Note Registrar" have the respective meanings
specified in Section 2.4.
"Officer's Certificate" means a certificate signed by any Authorized
Officer of the Issuer, under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.1 and TIA ss. 314, and
delivered to the Trustee. Unless otherwise specified, any reference in this
Indenture to an Officer's Certificate shall be to an Officer's Certificate of
any Authorized Officer of the Issuer.
"Opinion of Counsel" means one or more written opinions of counsel
who may, except as otherwise expressly provided in this Indenture, be employees
of or counsel to the Issuer and who shall be satisfactory to the Trustee, and
which opinion or opinions shall be addressed to the Trustee as Trustee, shall
comply with any applicable requirements of Section 11.1, and shall be in form
and substance satisfactory to the Trustee.
"Outstanding" means, as of the date of determination, all Notes
theretofore authenticated and delivered under this Indenture except:
(i) Notes theretofore canceled by the Note Registrar or delivered to
the Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which money in the
necessary amount has been theretofore deposited with the Trustee or any
Paying Agent in trust for the Holders of such Notes (provided, however,
that if such Notes are to be redeemed, notice of such redemption has been
duly given pursuant to this Indenture or provision therefor, satisfactory
to the Trustee); and
(iii) Notes in exchange for or in lieu of other Notes which have been
authenticated and delivered pursuant to this Indenture unless proof
satisfactory to the Trustee is presented that any such Notes are held by a
bona fide purchaser;
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<PAGE>
provided that in determining whether the Holders of the requisite Outstanding
Amount of the Notes have given any request, demand, authorization, direction,
notice, consent or waiver hereunder or under any Basic Document, Notes owned by
the Issuer, any other obligor upon the Notes, the Seller or any Affiliate of any
of the foregoing Persons shall be disregarded and deemed not to be Outstanding,
except that, in determining whether the Trustee shall be protected in relying
upon any such request, demand, authorization, direction, notice, consent or
waiver, only Notes that a Responsible Officer of the Trustee either actually
knows to be so owned or has received written notice thereof shall be so
disregarded. Notes so owned that have been pledged in good faith may be regarded
as Outstanding if the pledgee establishes to the satisfaction of the Trustee the
pledgee's right so to act with respect to such Notes and that the pledgee is not
the Issuer, any other obligor upon the Notes, the Seller or any Affiliate of any
of the foregoing Persons.
"Outstanding Amount" means the aggregate principal amount of all
Notes Outstanding at the date of determination.
"Paying Agent" means the Trustee or any other Person that meets the
eligibility standards for the Trustee specified in Section 6.11 and is
authorized by the Issuer to make the payments to and distributions from the
Collection Account and the Note Distribution Account, including payment of
principal of or interest on the Notes on behalf of the Issuer.
"Payment Date" means a Distribution Date.
"Predecessor Note" means, with respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under Section 2.5 in lieu of a mutilated, lost,
destroyed or stolen Note shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Note.
"Proceeding" means any suit in equity, action at law or other
judicial or administrative proceeding.
"Record Date" means, with respect to a Distribution Date or
Redemption Date the day immediately preceding the related Distribution Date or
Redemption Date or, in the event Definitive Securities have been issued, the
last day of the month immediately preceding the month in which such Distribution
Date occurs.
"Redemption Date" means (a) in the case of a redemption of the Notes
pursuant to Section 10.1(a) or a payment to Noteholders pursuant to Section
10.1(b), the Distribution Date specified by the Servicer or the Issuer pursuant
to Section 10.1(a) or (b) as applicable.
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<PAGE>
"Redemption Price" means (a) in the case of a redemption of the Notes
pursuant to Section 10.1(a), an amount equal to the unpaid principal amount of
the then outstanding Notes plus accrued and unpaid interest thereon to but
excluding the Redemption Date, or (b) in the case of a payment made to
Noteholders pursuant to Section 10.1(b), the amount on deposit in the Note
Distribution Account, but not in excess of the amount specified in clause (a)
above.
"Responsible Officer" means, with respect to the Trustee, any officer
within the Corporate Trust Office of the Trustee, including any Vice President,
Assistant Vice President, Assistant Treasurer, Assistant Secretary, or any other
officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and also, with respect to a
particular matter, any other officer to whom such matter is referred because of
such officer's knowledge of and familiarity with the particular subject.
"Sale and Servicing Agreement" means the Sale and Servicing Agreement
dated as of September 13, 1996, among the Issuer, the Seller, the Sponsor and
the Servicer, substantially in the form of Exhibit B as the same may be amended
or supplemented from time to time.
"Schedule of Receivables" means the listing of the Receivables set
forth in Exhibit A (which Exhibit may be in the form of microfiche).
"State" means any one of the 50 states of the United States of
America or the District of Columbia.
"Successor Servicer" has the meaning specified in Section 3.7(e).
"Trust Estate" means all money, instruments, rights and other
property that are subject or intended to be subject to the lien and security
interest of this Indenture for the benefit of the Noteholders (including all
property and interests Granted to the Trustee), including all proceeds thereof.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939
as in force on the date hereof, unless otherwise specifically provided.
"Trustee" means The Bank of New York, a New York banking corporation,
not in its individual capacity but as trustee under this Indenture, or any
successor trustee under this Indenture.
"UCC" means, unless the context otherwise requires, the Uniform
Commercial Code, as in effect in the relevant jurisdiction, as amended from time
to time.
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<PAGE>
(a) Except as otherwise specified herein, the following terms have
the respective meanings set forth in the Sale and Servicing Agreement as in
effect on the Closing Date for all purposes of this Indenture, and the
definitions of such terms are equally applicable both to the singular and plural
forms of such terms:
Section of Sale and
Term Servicing Agreement
---- -------------------
Annual Percentage Rate or APR........................ Section 1.1
Certificateholders................................... Section 1.1
Closing Date ........................................ Section 1.1
Collection Account................................... Section 1.1
Collection Period.................................... Section 1.1
Contract............................................. Section 1.1
Depositor............................................ Section 1.1
Depository Agreements................................ Section 1.1
Distribution Date.................................... Section 1.1
Eligible Deposit Account............................. Section 1.1
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Eligible Investments................................. Section 1.1
Final Scheduled Distribution Date ................... Section 1.1
Final Scheduled Maturity Date ....................... Section 1.1
Financed Vehicle..................................... Section 1.1
Initial Pool Balance................................. Section 1.1
Note Distribution Account............................ Section 1.1
Noteholders' Distributable Amount.................... Section 1.1
Noteholders' Percentage.............................. Section 1.1
Obligor.............................................. Section 1.1
Owner Trustee........................................ Section 1.1
Person .............................................. Section 1.1
Pool Balance......................................... Section 1.1
Purchased Receivable................................. Section 1.1
Rating Agency ....................................... Section 1.1
Rating Agency Condition ............................. Section 1.1
Receivable........................................... Section 1.1
Reserve Account ..................................... Section 1.1
Seller............................................... Section 1.1
Servicer............................................. Section 1.1
Servicer Default..................................... Section 1.1
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<PAGE>
Specified Reserve Account Balance.................... Section 1.1
Total Distribution Amount ........................... Section 1.1
Trust Accounts....................................... Section 1.1
Trust Agreement...................................... Section 1.1
(b) Capitalized terms used herein and not otherwise defined herein or
in the Sale and Servicing Agreement have the meanings assigned to them in the
Trust Agreement.
SECTION 1.2 Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Issuer and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by Commission rule
have the meaning assigned to them by such definitions.
SECTION 1.3 Rules of Construction. Unless the context otherwise
requires:
(i) a term has the meaning assigned to it;
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(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting principles
as in effect from time to time;
(iii) "or" is not exclusive;
(iv) "including" means including without limitation; and
(v) words in the singular include the plural and words in the plural
include the singular.
ARTICLE II
The Notes
SECTION 2.1 Form. The Notes, together with the Trustee's certificate
of authentication, shall be in substantially the form set forth in Exhibit D,
with such appropriate insertions, omissions, substitutions and other variations
as are required or permitted by this Indenture and may have such letters,
numbers or other marks of identification and such legends or endorsements placed
thereon as may, consistently herewith, be determined by the officers executing
such Notes, as evidenced by their execution of the Notes. Any portion of the
text of any Note may be set forth on the reverse thereof, with an appropriate
reference thereto on the face of the Note.
The Definitive Notes shall be typewritten, printed, lithographed or
engraved or produced by any combination of these methods (with or without steel
engraved borders), all as determined by the officers executing such Notes, as
evidenced by their execution of such Notes.
Each Note shall be dated the date of its authentication. The terms of
the Notes set forth in Exhibit D are part of the terms of this Indenture.
SECTION 2.2 Execution, Authentication and Delivery. The Notes shall
be executed on behalf of the Issuer by any of its Authorized Officers. The
signature of any such Authorized Officer on the Notes may be manual or
facsimile.
Notes bearing the manual or facsimile signature of individuals who
were at any time Authorized Officers of the Issuer shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
The Trustee shall upon Issuer Order authenticate and deliver Notes
for original issue in an aggregate principal amount
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<PAGE>
of $82,087,000. The aggregate principal amount of Notes outstanding at any time
may not exceed such amounts except as provided in Section 2.5.
Each Note shall be dated the date of its authentication. The Notes
shall be issuable as registered Notes in the minimum denomination of $250,000
and in integral multiples of $1,000 in excess thereof (except for one Note which
may be issued in a denomination other than an integral multiple of $1,000).
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by the manual signature of one of its authorized
signatories, and such certificate upon any Note shall be conclusive evidence,
and the only evidence, that such Note has been duly authenticated and delivered
hereunder.
SECTION 2.3 Temporary Notes. Pending the preparation of Definitive
Notes, the Issuer may execute, and upon receipt of an Issuer Order the Trustee
shall authenticate and deliver, temporary Notes which are printed, lithographed,
typewritten, mimeographed or otherwise produced, of the tenor of the Definitive
Notes in lieu of which they are issued and with such variations not inconsistent
with the terms of this Indenture as the officers executing such Notes may
determine, as evidenced by their execution of such Notes.
If temporary Notes are issued, the Issuer will cause Definitive Notes
to be prepared without unreasonable delay. After the preparation of Definitive
Notes, the temporary Notes shall be exchangeable for Definitive Notes upon
surrender of the temporary Notes at the office or agency of the Issuer to be
maintained as provided in Section 3.2, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Notes, the Issuer shall
execute and the Trustee shall authenticate and deliver in exchange therefor a
like principal amount of Definitive Notes of authorized denominations. Until so
exchanged, the temporary Notes shall in all respects be entitled to the same
benefits under this Indenture as Definitive Notes.
SECTION 2.4 Registration; Registration of Transfer and Exchange. The
Issuer shall cause to be kept a register (the "Note Register") in which, subject
to such reasonable regulations as it may prescribe, the Issuer shall provide for
the registration of Notes and the registration of transfers of Notes. The
Trustee shall be "Note Registrar" for the purpose of registering Notes and
transfers of Notes as herein provided. The Note Registrar may resign as such
only upon written notice delivered to an Authorized Officer of the Issuer, and
upon any resignation of any Note Registrar, the Issuer shall promptly
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appoint a successor or, if it elects not to make such an appointment, assume the
duties of Note Registrar.
If a Person other than the Trustee is appointed by the Issuer as Note
Registrar, the Issuer will give the Trustee prompt written notice of the
appointment of such Note Registrar and of the location, and, upon one of its
Authorized Officers receiving written notice thereof, any change in the
location, of the Note Register, and the Trustee shall have the right to inspect
the Note Register at all reasonable times and to obtain copies thereof, and the
Trustee shall have the right to rely upon a certificate executed on behalf of
the Note Registrar by an Executive Officer thereof as to the names and addresses
of the Holders of the Notes and the principal amounts and number of such Notes.
Upon surrender for registration of transfer of any Note at the office
or agency of the Issuer to be maintained as provided in Section 3.2, if the
requirements of Section 8-401(1) of the UCC are met the Issuer shall execute and
upon its request the Trustee shall authenticate and the Noteholder shall obtain
from the Trustee, in the name of the designated transferee or transferees, one
or more new Notes, in any authorized denominations, of the same class and a like
aggregate principal amount.
At the option of the Holder, Notes may be exchanged for other Notes
in any authorized denominations, of the same class and a like aggregate
principal amount, upon surrender of the Notes to be exchanged at such office or
agency. Whenever any Notes are so surrendered for exchange, if the requirements
of Section 8-401(1) of the UCC are met the Issuer shall execute and upon its
request the Trustee shall authenticate and the Noteholder shall obtain from the
Trustee, the Notes which the Noteholder making the exchange is entitled to
receive.
All Notes issued upon any registration of transfer or exchange of
Notes shall be the valid obligations of the Issuer, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or
exchange shall be (i) duly endorsed by, or be accompanied by a written
instrument of transfer in form satisfactory to the Trustee duly executed by, the
Holder thereof or such Holder's attorney duly authorized in writing, with such
signature guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar which requirements include membership or
participation in Securities Transfer Agents Medallion Program ("Stamp") or such
other "signature guarantee program" as may be determined by the Note Registrar
in addition to, or in substitution for, Stamp, all in accordance with the
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<PAGE>
Exchange Act, and (ii) accompanied by such other documents as the Trustee may
require.
No service charge shall be made to a Holder for any registration of
transfer or exchange of Notes, but the Issuer may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of Notes, other than
exchanges pursuant to Section 2.3 or 9.6 not involving any transfer.
The preceding provisions of this section notwithstanding, the Issuer
shall not be required to make and the Note Registrar need not register transfers
or exchanges of Notes selected for redemption or of any Note for a period of 15
days preceding the due date for any payment with respect to the Note.
SECTION 2.5 Mutilated, Destroyed, Lost or Stolen Notes. If (i) any
mutilated Note is surrendered to the Trustee, or the Trustee receives evidence
to its satisfaction of the destruction, loss or theft of any Note, and (ii)
there is delivered to the Trustee such security or indemnity as may be required
by it to hold the Issuer and the Trustee harmless, then, in the absence of
notice to the Issuer, the Note Registrar or the Trustee that such Note has been
acquired by a bona fide purchaser, and provided that the requirements of Section
8-405 of the UCC are met, the Issuer shall execute and upon its request the
Trustee shall authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Note, a replacement Note; provided,
however, that if any such destroyed, lost or stolen Note, but not a mutilated
Note, shall have become or within seven days shall be due and payable, or shall
have been called for redemption, instead of issuing a replacement Note, the
Issuer may pay such destroyed, lost or stolen Note when so due or payable or
upon the Redemption Date without surrender thereof. If, after the delivery of
such replacement Note or payment of a destroyed, lost or stolen Note pursuant to
the proviso to the preceding sentence, a bona fide purchaser of the original
Note in lieu of which such replacement Note was issued presents for payment such
original Note, the Issuer and the Trustee shall be entitled to recover such
replacement Note (or such payment) from the Person to whom it was delivered or
any Person taking such replacement Note from such Person to whom such
replacement Note was delivered or any assignee of such Person, except a bona
fide purchaser, and shall be entitled to recover upon the security or indemnity
provided therefor to the extent of any loss, damage, cost or expense incurred by
the Issuer or the Trustee in connection therewith.
Upon the issuance of any replacement Note under this Section, the
Issuer may require the payment by the Holder of such Note of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other
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reasonable expenses (including the fees and expenses of the Trustee) connected
therewith.
Every replacement Note issued pursuant to this Section in replacement
of any mutilated, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Issuer, whether or not the mutilated,
destroyed, lost or stolen Note shall be at any time enforceable by anyone, and
shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Notes.
SECTION 2.6 Persons Deemed Owner. Prior to due presentment for
registration of transfer of any Note, the Issuer, the Trustee and any agent of
the Issuer or the Trustee may treat the Person in whose name any Note is
registered (as of the day of determination) as the owner of such Note for the
purpose of receiving payments of principal of and interest, if any, on such Note
and for all other purposes whatsoever, whether or not such Note be overdue, and
neither the Issuer, the Trustee nor any agent of the Issuer or the Trustee shall
be affected by notice to the contrary.
SECTION 2.7 Payment of Principal and Interest; Defaulted Interest.
(a) The Notes shall accrue interest as provided in the form of the Notes, set
forth in Exhibit D, and such interest shall be payable on each Distribution Date
as specified therein. Any installment of interest or principal, if any, payable
on any Note which is punctually paid or duly provided for by the Issuer on the
applicable Distribution Date shall be paid to the Person in whose name such Note
(or one or more Predecessor Notes) is registered on the Record Date, by check
mailed first-class, postage prepaid, to such Person's address as it appears on
the Note Register on such Record Date, except that, unless Definitive Notes have
been issued pursuant to Section 2.12, with respect to Notes registered on the
Record Date in the name of the nominee of the Clearing Agency (initially, such
nominee to be Cede & Co.), payment will be made by wire transfer in immediately
available funds to the account designated by such nominee and except for the
final installment of principal payable with respect to such Note on a
Distribution Date or on the Final Scheduled Distribution Date (and except for
the Redemption Price for any Note called for redemption pursuant to Section
10.1(a)) which shall be payable as provided below. The funds represented by any
such checks returned undelivered shall be held in accordance with Section 3.3.
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(b) The principal of each Note shall be payable in installments on
each Distribution Date as provided in the form of the Notes, set forth in
Exhibit D. Notwithstanding the foregoing, the entire unpaid principal amount of
the Notes shall be due and payable, if not previously paid, on the date on which
an Event of Default shall have occurred and be continuing, if the Trustee or the
Holders of the Notes representing not less than a majority of the Outstanding
Amount of the Notes have declared the Notes to be immediately due and payable in
the manner provided in Section 5.2. All principal payments on the Notes shall be
made pro rata to the Noteholders. The Trustee shall notify the Person in whose
name a Note is registered at the close of business on the Record Date preceding
the Distribution Date on which the Issuer expects that the final installment of
principal of and interest on such Note will be paid. Such notice shall be mailed
or transmitted by facsimile prior to such final Distribution Date and shall
specify that such final installment will be payable only upon presentation and
surrender of such Note and shall specify the place where such Note may be
presented and surrendered for payment of such installment. Notices in connection
with redemptions of Notes shall be mailed to Noteholders as provided in Section
10.2.
(c) If the Issuer defaults in a payment of interest on the Notes, the
Issuer shall pay defaulted interest (plus interest on such defaulted interest to
the extent lawful) at the Interest Rate in any lawful manner. The Issuer may pay
such defaulted interest to the Persons who are Noteholders on a subsequent
special record date, which date shall be at least five Business Days prior to
the payment date. The Issuer shall fix or cause to be fixed any such special
record date and payment date, and, at least 15 days before any such special
record date, the Issuer shall mail to each Noteholder and the Trustee a notice
that states the special record date, the payment date and the amount of
defaulted interest to be paid.
SECTION 2.8 Cancellation. All Notes surrendered for payment,
registration of transfer, exchange or redemption shall, if surrendered to any
Person other than the Trustee, be delivered to the Trustee and shall be promptly
canceled by the Trustee. The Issuer may at any time deliver to the Trustee for
cancellation any Notes previously authenticated and delivered hereunder which
the Issuer may have acquired in any manner whatsoever, and all Notes so
delivered shall be promptly canceled by the Trustee. No Notes shall be
authenticated in lieu of or in exchange for any Notes canceled as provided in
this Section, except as expressly permitted by this Indenture. All canceled
Notes may be held or disposed of by the Trustee in accordance with its standard
retention or disposal policy as in effect at the time unless the Issuer shall
direct by an Issuer Order that they be returned to it; provided that such Issuer
Order is timely and the Notes have not been previously disposed of by the
Trustee.
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SECTION 2.9 Release of Collateral. Subject to Section 11.1, the
Trustee shall release property from the lien of this Indenture only upon receipt
of an Issuer Request accompanied by an Officer's Certificate, an Opinion of
Counsel and Independent Certificates in accordance with TIA ss.ss. 314(c) and
314(d)(l) or an Opinion of Counsel in lieu of such Independent Certificates to
the effect that the TIA does not require any such Independent Certificates.
SECTION 2.10 Book-Entry Notes. The Notes, upon original issuance,
will be issued in the form of typewritten Notes representing the Book-Entry
Notes, to be delivered to The Bank of New York, as agent for The Depository
Trust Company, the initial Clearing Agency, by, or on behalf of, the Issuer.
Such Notes shall initially be registered on the Note Register in the name of
Cede & Co., the nominee of the initial Clearing Agency, and no Note Owner will
receive a Definitive Note representing such Note Owner's interest in such Note,
except as provided in Section 2.12. Unless and until definitive, fully
registered Notes (the "Definitive Notes") have been issued to Note Owners
pursuant to Section 2.12:
(i) the provisions of this Section shall be in full force and effect;
(ii) the Note Registrar and the Trustee shall be entitled to deal
with the Clearing Agency for all purposes of this Indenture (including the
payment of principal of and interest on the Notes and the giving of
instructions or directions hereunder) as the sole Holder of the Notes, and
shall have no obligation to the Note Owners;
(iii) to the extent that the provisions of this Section conflict with
any other provisions of this Indenture, the provisions of this Section
shall control;
(iv) the rights of Note Owners shall be exercised only through the
Clearing Agency and shall be limited to those established by law and
agreements between such Note Owners and the Clearing Agency and/or the
Clearing Agency Participants. Pursuant to the Note Depository Agreement,
unless and until Definitive Notes are issued pursuant to Section 2.12, the
initial Clearing Agency will make book-entry transfers among the Clearing
Agency Participants and receive and transmit payments of principal of and
interest on the Notes to such Clearing Agency Participants; and
(v) whenever this Indenture requires or permits actions to be taken
based upon instructions or directions of Holders of Notes evidencing a
specified percentage of the Outstanding Amount of the Notes, the Clearing
Agency shall be deemed to represent such percentage only to the extent
that it has received instructions to such effect from Note
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Owners and/or Clearing Agency Participants owning or representing,
respectively, such required percentage of the beneficial interest in the
Notes and has delivered such instructions to the Trustee.
SECTION 2.11 Notices to Clearing Agency. Whenever a notice or other
communication to the Noteholders is required under this Indenture, unless and
until Definitive Notes shall have been issued to Note Owners pursuant to Section
2.12, the Trustee shall give all such notices and communications specified
herein to be given to Holders of the Notes to the Clearing Agency, and shall
have no obligation to the Note Owners.
SECTION 2.12 Definitive Notes. If (i) the Servicer advises the
Trustee in writing that the Clearing Agency is no longer willing or able to
properly discharge its responsibilities with respect to the Notes, and the
Servicer is unable to locate a qualified successor, (ii) the Servicer at its
option advises the Trustee in writing that it elects to terminate the book-entry
system through the Clearing Agency or (iii) after the occurrence of an Event of
Default, Note Owners representing beneficial interests aggregating at least a
majority of the Outstanding Amount of the Notes advise the Trustee through the
Clearing Agency in writing that the continuation of a book entry system through
the Clearing Agency is no longer in the best interests of the Note Owners, then
the Clearing Agency shall notify all Note Owners and the Trustee of the
occurrence of any such event and of the availability of Definitive Notes to Note
Owners requesting the same. Upon surrender to the Trustee of the typewritten
Note or Notes representing the Book-Entry Notes by the Clearing Agency,
accompanied by registration instructions, the Issuer shall execute and the
Trustee shall authenticate the Definitive Notes in accordance with the
instructions of the Clearing Agency. None of the Issuer, the Note Registrar or
the Trustee shall be liable for any delay in delivery of such instructions and
may conclusively rely on, and shall be protected in relying on, such
instructions. Upon the issuance of Definitive Notes, the Trustee shall recognize
the Holders of the Definitive Notes as Noteholders.
SECTION 2.13 Restrictions on Transferability. The Notes may not be
offered or sold except to Qualified Institutional Buyers in reliance on the
exemption from the registration requirements of the Securities Act provided by
Rule 144A thereunder.
Each purchaser of the Notes will be deemed to have represented and
agreed as follows:
(i) It is a Qualified Institutional Buyer as defined in Rule
144A promulgated under the Securities Act and is acquiring the Notes for its own
institutional account or for the account of a Qualified Institutional Buyer.
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(ii) It understands that the Notes will be offered in a
transaction not involving any public offering within the meaning of the
Securities Act, and that, if in the future it decides to resell, pledge or
otherwise transfer any Notes, such Notes may be resold, pledged or transferred
only (a) to the Issuer (upon redemption thereof or otherwise), (b) to a person
who the seller reasonably believes is a Qualified Institutional Buyer that
purchases for its own account or for the account of a Qualified Institutional
Buyer to whom notice is given that the resale, pledge or transfer is being made
in reliance on Rule 144A or (c) pursuant to an effective registration statement
under the Securities Act.
(iii) It understands that the Notes will bear a legend
substantially to the following effect:
THE NOTES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES OR "BLUE
SKY" LAWS. THE HOLDER HEREOF, BY PURCHASING ANY NOTE, AGREES FOR THE
BENEFIT OF THE ISSUER THAT SUCH NOTE IS BEING ACQUIRED FOR ITS OWN
ACCOUNT AND NOT WITH A VIEW TO DISTRIBUTION AND MAY BE RESOLD,
PLEDGED OR TRANSFERRED ONLY (1) TO THE ISSUER (UPON REDEMPTION
THEREOF OR OTHERWISE), (2) TO A PERSON THE TRANSFEROR REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS
OF RULE 144A, PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE
144A, OR (3) IN A TRANSACTION COMPLYING WITH THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY
OTHER JURISDICTION.
Neither the Issuer, the Trustee nor the Registrar shall have any
responsibility to monitor compliance with the transfer restrictions set forth on
the face of the Notes and in Section 2.13(iii).
ARTICLE III
Covenants
SECTION 3.1 Payment of Principal and Interest. The Issuer will duly
and punctually pay the principal of and interest on the Notes in accordance with
the terms of the Notes and this Indenture. Without limiting the foregoing,
subject to Section 8.2(c), the Issuer will cause to be distributed all amounts
on deposit in the Note Distribution Account on a Distribution Date deposited
therein pursuant to the Sale and Servicing Agreement for the benefit of the
Notes, to the Noteholders. Amounts
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properly withheld under the Code by any Person from a payment to any Noteholder
of interest and/or principal shall be considered as having been paid by the
Issuer to such Noteholder for all purposes of this Indenture.
SECTION 3.2 Maintenance of Office or Agency. The Issuer will maintain
in the Borough of Manhattan, The City of New York, an office or agency where
Notes may be surrendered for registration of transfer or exchange, and where
notices and demands to or upon the Issuer in respect of the Notes and this
Indenture may be served. The Issuer hereby initially appoints the Trustee to
serve as its agent for the foregoing purposes. The Issuer will give prompt
written notice to the Trustee of the location, and of any change in the
location, of any such office or agency. If at any time the Issuer shall fail to
maintain any such office or agency or shall fail to furnish the Trustee with the
address thereof, such surrenders, notices and demands may be made or served at
the Corporate Trust Office, and the Issuer hereby appoints the Trustee as its
agent to receive all such surrenders, notices and demands.
SECTION 3.3 Money for Payments To Be Held in Trust. As provided in
Sections 8.2(a) and (b), all payments of amounts due and payable with respect to
any Notes that are to be made from amounts withdrawn from the Collection Account
and the Note Distribution Account pursuant to Section 8.2(c) shall be made on
behalf of the Issuer by the Trustee or by another Paying Agent, and no amounts
so withdrawn from the Collection Account and the Note Distribution Account for
payments of Notes shall be paid over to the Issuer except as provided in this
Section.
At least one Business Day prior to each Distribution Date and
Redemption Date, the Issuer shall deposit or cause to be deposited in the Note
Distribution Account an aggregate sum sufficient to pay the amounts then
becoming due under the Notes, such sum to be held in trust for the benefit of
the Persons entitled thereto and (unless the Paying Agent is the Trustee) shall
promptly notify the Trustee of its action or failure so to act.
The Issuer will cause each Paying Agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee (and if the Trustee acts as Paying Agent, it hereby
so agrees), subject to the provisions of this Section, that such Paying Agent
will:
(i) hold all sums held by it for the payment of amounts due with
respect to the Notes in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise
disposed of as herein provided and pay such sums to such Persons as herein
provided;
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(ii) give the Trustee notice of any default by the Issuer of which it
has actual knowledge (or any other obligor upon the Notes) in the making
of any payment required to be made with respect to the Notes;
(iii) at any time during the continuance of any such default, upon
the written request of the Trustee, forthwith pay to the Trustee all sums
so held in trust by such Paying Agent;
(iv) immediately resign as a Paying Agent and forthwith pay to the
Trustee all sums held by it in trust for the payment of Notes if at any
time it ceases to meet the standards required to be met by a Paying Agent
at the time of its appointment; and
(v) comply with all requirements of the Code with respect to the
withholding from any payments made by it on any Notes of any applicable
withholding taxes imposed thereon and with respect to any applicable
reporting requirements in connection therewith.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by Issuer
Order direct any Paying Agent to pay to the Trustee all sums held in trust by
such Paying Agent, such sums to be held by the Trustee upon the same trusts as
those upon which the sums were held by such Paying Agent; and upon such a
payment by any Paying Agent to the Trustee, such Paying Agent shall be released
from all further liability with respect to such money.
Subject to applicable laws with respect to the escheat of funds, any
money held by the Trustee or any Paying Agent in trust for the payment of any
amount due with respect to any Note and remaining unclaimed for two years after
such amount has become due and payable shall be discharged from such trust and
be paid to the Issuer on Issuer Request; and the Holder of such Note shall
thereafter, as an unsecured general creditor, look only to the Issuer for
payment thereof (but only to the extent of the amounts so paid to the Issuer),
and all liability of the Trustee or such Paying Agent with respect to such trust
money shall thereupon cease; provided, however, that the Trustee or such Paying
Agent, before being required to make any such repayment, shall at the expense of
the Issuer cause to be published once, in a newspaper published in the English
language, customarily published on each Business Day and of general circulation
in The City of New York, notice that such money remains unclaimed and that,
after a date specified therein, which shall not be less than 30 days from the
date of such publication, any unclaimed balance of such money then remaining
will be repaid to the Issuer. The Trustee shall also adopt and employ, at the
expense of the Issuer, any other reasonable means of notification of such
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repayment (including, but not limited to, mailing notice of such repayment to
Holders whose Notes have been called but have not been surrendered for
redemption or whose right to or interest in moneys due and payable but not
claimed is determinable from the records of the Trustee or of any Paying Agent,
at the last address of record for each such Holder).
SECTION 3.4 Existence. Except as otherwise permitted by the
provisions of Section 3.10, the Issuer will keep in full effect its existence,
rights and franchises as a business trust under the laws of the State of
Delaware (unless it becomes, or any successor Issuer hereunder is or becomes,
organized under the laws of any other state or of the United States of America,
in which case the Issuer will keep in full effect its existence, rights and
franchises under the laws of such other jurisdiction) and will obtain and
preserve its qualification to do business in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Indenture, the Notes, the Collateral and each other
instrument or agreement included in the Trust Estate.
SECTION 3.5 Protection of Trust Estate. The Issuer will from time to
time prepare (or shall cause to be prepared), execute and deliver all such
supplements and amendments hereto and all such financing statements,
continuation statements, instruments of further assurance and other instruments,
and will take such other action necessary or advisable to:
(i) maintain or preserve the lien and security interest (and the
priority thereof) of this Indenture or carry out more effectively the
purposes hereof;
(ii) perfect, publish notice of or protect the validity of any Grant
made or to be made by this Indenture;
(iii) enforce any of the Collateral; or
(iv) preserve and defend title to the Trust Estate and the rights of
the Trustee and the Noteholders in such Trust Estate against the claims of
all persons and parties.
The Issuer hereby designates the Trustee its agent and attorney-in-fact to
execute any financing statement, continuation statement or other instrument
required to be executed pursuant to this Section; it being understood that the
Trustee has no duty to determine whether any filing or recording is necessary
hereunder.
SECTION 3.6 Opinions as to Trust Estate. (a) On the Closing Date, the
Issuer shall furnish to the Trustee an Opinion of Counsel either stating that,
in the opinion of such counsel, such action has been taken with respect to the
recording and filing of this Indenture, any indentures supplemental hereto, and
any other requisite documents, and with respect to the execution
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and filing of any financing statements and continuation statements, as are
necessary to perfect and make effective the lien and security interest of this
Indenture and reciting the details of such action, or stating that, in the
opinion of such counsel, no such action is necessary to make such lien and
security interest effective.
(b) Within 120 days after the beginning of each calendar year,
beginning with the first calendar year beginning more than three months after
the Cutoff Date, the Issuer shall furnish to the Trustee an Opinion of Counsel
either stating that, in the opinion of such counsel, such action has been taken
with respect to the recording, filing, re-recording and refiling of this
Indenture, any indentures supplemental hereto and any other requisite documents
and with respect to the execution and filing of any financing statements and
continuation statements as are necessary to maintain the lien and security
interest created by this Indenture and reciting the details of such action or
stating that in the opinion of such counsel no such action is necessary to
maintain such lien and security interest. Such Opinion of Counsel shall also
describe the recording, filing, re-recording and refiling of this Indenture, any
indentures supplemental hereto and any other requisite documents and the
execution and filing of any financing statements and continuation statements
that will, in the opinion of such counsel, be required to maintain the lien and
security interest of this Indenture until January 30 in the following calendar
year.
SECTION 3.7 Performance of Obligations; Servicing of Receivables. (a)
The Issuer will not take any action and will use its best efforts not to permit
any action to be taken by others that would release any Person from any of such
Person's material covenants or obligations under any instrument or agreement
included in the Trust Estate or that would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any such instrument or agreement, except as
ordered by any bankruptcy or other court or as expressly provided in this
Indenture, the Basic Documents or such other instrument or agreement.
(b) The Issuer may contract with other Persons to assist it in
performing its duties under this Indenture, and any performance of such duties
by a Person identified to the Trustee in an Officer's Certificate of the Issuer
shall be deemed to be action taken by the Issuer. Initially, the Issuer has
contracted with the Servicer to assist the Issuer in performing its duties under
this Indenture.
(c) The Issuer will punctually perform and observe all of its
obligations and agreements contained in this Indenture, the Basic Documents and
in the instruments and agreements included in the Trust Estate, including but
not limited to preparing (or causing to prepared) and filing (or causing to be
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filed) all UCC financing statements and continuation statements required to be
filed by the terms of this Indenture and the Sale and Servicing Agreement in
accordance with and within the time periods provided for herein and therein.
Except as otherwise expressly provided therein, the Issuer shall not waive,
amend, modify, supplement or terminate any Basic Document or any provision
thereof without the consent of the Trustee or the Holders of at least a majority
of the Outstanding Amount of the Notes.
(d) If the Issuer shall have knowledge of the occurrence of a
Servicer Default under the Sale and Servicing Agreement, the Issuer shall
promptly notify the Trustee and the Rating Agencies thereof in accordance with
Section 11.4, and shall specify in such notice the action, if any, the Issuer is
taking in respect of such default. If a Servicer Default of which the Issuer has
knowledge shall arise from the failure of the Servicer to perform any of its
duties or obligations under the Sale and Servicing Agreement with respect to the
Receivables, the Issuer shall take all reasonable steps available to it to
remedy such failure.
(e) As promptly as possible after the giving of notice of termination
to the Servicer of the Servicer's rights and powers pursuant to Section 8.1 of
the Sale and Servicing Agreement, the Issuer shall appoint a successor servicer
(the "Successor Servicer"), and such Successor Servicer shall accept its
appointment by a written assumption in a form acceptable to the Trustee. In the
event that a Successor Servicer has not been appointed and accepted its
appointment at the time when the Servicer ceases to act as Servicer, the Trustee
without further action shall automatically be appointed the Successor Servicer.
The Trustee may resign as the Servicer by giving written notice of such
resignation to the Issuer and in such event will be released from such duties
and obligations, such release not to be effective until the date a new servicer
enters into a servicing agreement with the Issuer as provided below. Upon
delivery of any such notice to the Issuer, the Issuer shall obtain a new
servicer as the Successor Servicer under the Sale and Servicing Agreement. Any
Successor Servicer other than the Trustee shall (i) be an established financial
institution having a net worth of not less than $50,000,000 and whose regular
business includes the servicing of Contracts and (ii) enter into a servicing
agreement with the Issuer having substantially the same provisions as the
provisions of the Sale and Servicing Agreement applicable to the Servicer. If
within 30 days after the delivery of the notice referred to above, the Issuer
shall not have obtained such a new servicer, the Trustee may appoint, or may
petition a court of competent jurisdiction to appoint, a Successor Servicer. In
connection with any such appointment, the Trustee may make such arrangements for
the compensation of such successor as it and such successor shall agree, subject
to the limitations set forth below and in the Sale and Servicing Agreement, and
in accordance
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with Section 8.2 of the Sale and Servicing Agreement, the Issuer shall enter
into an agreement with such successor for the servicing of the Receivables (such
agreement to be in form and substance satisfactory to the Trustee). If the
Trustee shall succeed to the Servicer's duties as servicer of the Receivables as
provided herein, it shall do so in its individual capacity and not in its
capacity as Trustee and, accordingly, the provisions of Article VI hereof shall
be inapplicable to the Trustee in its duties as the successor to the Servicer
and the servicing of the Receivables. In case the Trustee shall become successor
to the Servicer under the Sale and Servicing Agreement, the Trustee shall be
entitled to appoint as Servicer any one of its Affiliates, or delegate any of
its responsibilities as Servicer to agents, subject to the terms of the Sale and
Servicing Agreement, provided that such appointment or delegation shall not
affect or alter in any way the liability of the Trustee as a successor for the
performance of the duties and obligations of the Servicer in accordance with the
terms hereof.
(f) Upon an Authorized Officer of the Issuer acquiring actual
knowledge of any termination of the Servicer's rights and powers pursuant to the
Sale and Servicing Agreement, the Issuer shall promptly notify the Trustee. As
soon as a Successor Servicer (other than the Trustee) is appointed, the Issuer
shall notify the Trustee of such appointment, specifying in such notice the name
and address of such Successor Servicer.
(g) Without derogating from the absolute nature of the assignment
granted to the Trustee under this Indenture or the rights of the Trustee
hereunder, the Issuer agrees that, unless such action is specifically permitted
hereunder or under the Basic Documents, it will not, without the prior written
consent of the Trustee or the Holders of at least a majority in Outstanding
Amount of the Notes, amend, modify, waive, supplement, terminate or surrender,
or agree to any amendment, modification, supplement, termination, waiver or
surrender of, the terms of any Collateral or the Basic Documents, or waive
timely performance or observance by the Servicer, the Sponsor or the Seller
under the Sale and Servicing Agreement; provided, however, that no such
amendment shall (i) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, distributions that are required to be made
for the benefit of the Noteholders, or (ii) reduce the aforesaid percentage of
the Notes which are required to consent to any such amendment, without the
consent of the Holders of all the Outstanding Notes. If any such amendment,
modification, supplement or waiver shall be so consented to by the Trustee or
such Holders, the Issuer agrees, promptly following a request by the Trustee to
do so, to execute and deliver, in its own name and at its own expense, such
agreements, instruments, consents and other documents as the Trustee may deem
necessary or appropriate in the circumstances.
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SECTION 3.8 Negative Covenants. So long as any Notes are Outstanding,
the Issuer shall not:
(i) except as expressly permitted by this Indenture or the Basic
Documents, sell, transfer, exchange or otherwise dispose of any of the
properties or assets of the Issuer, including those included in the Trust
Estate, unless directed to do so by the Trustee;
(ii) claim any credit on, or make any deduction from the principal or
interest payable in respect of, the Notes (other than amounts properly
withheld from such payments under the Code) or assert any claim against
any present or former Noteholder by reason of the payment of the taxes
levied or assessed upon any part of the Trust Estate; or
(iii) (A) permit the validity or effectiveness of this Indenture to
be impaired, or permit the lien of this Indenture to be amended,
hypothecated, subordinated, terminated or discharged, or permit any Person
to be released from any covenants or obligations with respect to the Notes
under this Indenture except as may be expressly permitted hereby, (B)
permit any lien, charge, excise, claim, security interest, mortgage or
other encumbrance (other than the lien of this Indenture) to be created on
or extend to or otherwise arise upon or burden the Trust Estate or any
part thereof or any interest therein or the proceeds thereof (other than
tax liens, mechanics' liens and other liens that arise by operation of
law, in each case on a Financed Vehicle and arising solely as a result of
an action or omission of the related Obligor) or (C) permit the lien of
this Indenture not to constitute a valid first priority (other than with
respect to any such tax, mechanics' or other lien) security interest in
the Trust Estate.
SECTION 3.9 Annual Statement as to Compliance. The Issuer will
deliver to the Trustee, within 120 days after the end of each fiscal year of the
Issuer (commencing with the fiscal year 1997), and otherwise in compliance with
the requirements of TIA Section 314(a)(4) an Officer's Certificate stating, as
to the Authorized Officer signing such Officer's Certificate, that
(i) a review of the activities of the Issuer during such year and of
performance under this Indenture has been made under such Authorized
Officer's supervision; and
(ii) to the best of such Authorized Officer's knowledge, based on
such review, the Issuer has complied with all conditions and covenants
under this Indenture throughout such year, or, if there has been a default
in the compliance of any such condition or covenant, specifying each such
default known to such Authorized Officer and the nature and status
thereof.
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SECTION 3.10 Issuer May Consolidate, Etc. Only on Certain Terms. (a)
The Issuer shall not consolidate or merge with or into any other Person, unless
(i) the Person (if other than the Issuer) formed by or surviving such
consolidation or merger shall be a Person organized and existing under the
laws of the United States of America or any state and shall expressly
assume, by an indenture supplemental hereto, executed and delivered to the
Trustee, in form satisfactory to the Trustee, the due and punctual payment
of the principal of and interest on all Notes and the performance or
observance of every agreement and covenant of this Indenture on the part
of the Issuer to be performed or observed, all as provided herein;
(ii) immediately after giving effect to such transaction, no Default
or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied with
respect to such transaction;
(iv) the Issuer shall have received an Opinion of Counsel (and shall
have delivered copies thereof to the Trustee) to the effect that such
transaction will not have any material adverse tax consequence to the
Trust, any Noteholder or any Certificateholder;
(v) any action as is necessary to maintain the lien and security
interest created by this Indenture shall have been taken; and
(vi) the Issuer shall have delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel each stating that such consolidation
or merger and such supplemental indenture comply with this Article III and
that all conditions precedent herein provided for relating to such
transaction have been complied with (including any filing required by the
Exchange Act).
(b) The Issuer shall not convey or transfer all or substantially all
of its properties or assets, including those included in the Trust Estate, to
any Person, unless
(i) the Person that acquires by conveyance or transfer the properties
and assets of the Issuer the conveyance or transfer of which is hereby
restricted shall (A) be a United States citizen or a Person organized and
existing under the laws of the United States of America or any state, (B)
expressly assume, by an indenture supplemental hereto, executed and
delivered to the Trustee, in form satisfactory to the Trustee, the due and
punctual payment of the principal of and interest on all Notes and the
performance
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or observance of every agreement and covenant of this Indenture on the
part of the Issuer to be performed or observed, all as provided herein,
(C) expressly agree by means of such supplemental indenture that all
right, title and interest so conveyed or transferred shall be subject and
subordinate to the rights of Holders of the Notes, (D) unless otherwise
provided in such supplemental indenture, expressly agree to indemnify,
defend and hold harmless the Issuer against and from any loss, liability
or expense arising under or related to this Indenture and the Notes and
(E) expressly agree by means of such supplemental indenture that such
Person (or if a group of persons, then one specified Person) shall prepare
(or cause to be prepared) and make all filings with the Commission (and
any other appropriate Person) required by the Exchange Act in connection
with the Notes;
(ii) immediately after giving effect to such transaction, no Default
or Event of Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied with
respect to such transaction;
(iv) the Issuer shall have received an Opinion of Counsel (and shall
have delivered copies thereof to the Trustee) to the effect that such
transaction will not have any material adverse tax consequence to the
Trust, any Noteholder or any Certificateholder;
(v) any action as is necessary to maintain the lien and security
interest created by this Indenture shall have been taken; and
(vi) the Issuer shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel each stating that such conveyance or
transfer and such supplemental indenture comply with this Article III and
that all conditions precedent herein provided for relating to such
transaction have been complied with (including any filing required by the
Exchange Act).
SECTION 3.11 Successor or Transferee. (a) Upon any consolidation or
merger of the Issuer in accordance with Section 3.10(a), the Person formed by or
surviving such consolidation or merger (if other than the Issuer) shall succeed
to, and be substituted for, and may exercise every right and power of, the
Issuer under this Indenture with the same effect as if such Person had been
named as the Issuer herein.
(b) Upon a conveyance or transfer of all the assets and properties of
the Issuer pursuant to Section 3.10 (b), Centrex Auto Trust 1996-A will be
released from every covenant
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and agreement of this Indenture to be observed or performed on the part of the
Issuer with respect to the Notes immediately upon the delivery of written notice
to the Trustee stating that Centrex Auto Trust 1996-A is to be so released.
SECTION 3.12 No Other Business. The Issuer shall not engage in any
business other than financing, purchasing, owning, selling and managing the
Receivables in the manner contemplated by this Indenture and the Basic Documents
and activities incidental thereto.
SECTION 3.13 No Borrowing. The Issuer shall not issue, incur, assume,
guarantee or otherwise become liable, directly or indirectly, for any
indebtedness except for the Notes.
SECTION 3.14 Servicer's Obligations. The Issuer shall cause the
Servicer to comply with Sections 4.9, 4.10, 4.11 and 5.8 of the Sale and
Servicing Agreement.
SECTION 3.15 Guarantees, Loans, Advances and Other Liabilities.
Except as contemplated by the Sale and Servicing Agreement or this Indenture,
the Issuer shall not make any loan or advance or credit to, or guarantee
(directly or indirectly or by an instrument having the effect of assuring
another's payment or performance on any obligation or capability of so doing or
otherwise), endorse or otherwise become contingently liable, directly or
indirectly, in connection with the obligations, stocks or dividends of, or own,
purchase, repurchase or acquire (or agree contingently to do so) any stock,
obligations, assets or securities of, or any other interest in, or make any
capital contribution to, any other Person.
SECTION 3.16 Capital Expenditures. The Issuer shall not make any
expenditure (by long-term or operating lease or otherwise) for capital assets
(either realty or personalty).
SECTION 3.17 [Reserved]
SECTION 3.18 Restricted Payments. The Issuer shall not, directly or
indirectly, (i) pay any dividend or make any distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a combination
thereof, to the Owner Trustee or any owner of a beneficial interest in the
Issuer or otherwise with respect to any ownership or equity interest or security
in or of the Issuer or to the Servicer, (ii) redeem, purchase, retire or
otherwise acquire for value any such ownership or equity interest or security or
(iii) set aside or otherwise segregate any amounts for any such purpose;
provided, however, that the Issuer may make, or cause to be made, distributions
to the Servicer, the Owner Trustee, the Trustee and the Certificateholders as
permitted by, and to the extent funds are available for such purpose under, the
Sale and Servicing
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Agreement or Trust Agreement. The Issuer will not, directly or indirectly, make
payments to or distributions from the Collection Account except in accordance
with this Indenture and the Basic Documents.
SECTION 3.19 Notice of Events of Default. The Issuer agrees to give
the Trustee and the Rating Agencies prompt written notice of each Event of
Default hereunder and each default on the part of the Servicer or the Seller of
its obligations under the Sale and Servicing Agreement of which an Authorized
Officer of the Issuer acquires actual knowledge.
SECTION 3.20 Further Instruments and Acts. Upon request of the
Trustee, the Issuer will execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
ARTICLE IV
Satisfaction and Discharge
SECTION 4.1 Satisfaction and Discharge of Indenture. This Indenture
shall cease to be of further effect with respect to the Notes except as to (i)
rights of registration of transfer and exchange, (ii) substitution of mutilated,
destroyed, lost or stolen Notes, (iii) rights of Noteholders to receive payments
of principal thereof and interest thereon, (iv) Sections 3.3, 3.4, 3.5, 3.8,
3.10, 3.12 and 3.13, (v) the rights, obligations and immunities of the Trustee
hereunder (including the rights of the Trustee under Section 6.7 and the
obligations of the Trustee under Section 4.2) and (vi) the rights of Noteholders
as beneficiaries hereof with respect to the property so deposited with the
Trustee payable to all or any of them, and the Trustee, on demand of and at the
expense of the Issuer, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture with respect to the Notes, when
(A) either
(1) all Notes theretofore authenticated and delivered (other
than (i) Notes that have been destroyed, lost or stolen and that
have been replaced or paid as provided in Section 2.5 and (ii) Notes
for whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Issuer and thereafter repaid to
the Issuer or discharged from such trust, as provided in Section
3.3) have been delivered to the Trustee for cancellation; or
(2) all Notes not theretofore delivered to the Trustee for
cancellation
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(i) have become due and payable,
(ii) will become due and payable at the Final Scheduled
Distribution Date within one year, or
(iii) are to be called for redemption within one year
under arrangements satisfactory to the Trustee for the giving
of notice of redemption by the Trustee in the name, and at the
expense, of the Issuer,
and the Issuer, in the case of (i), (ii) or (iii) above, has
irrevocably deposited or caused to be irrevocably deposited with the
Trustee cash or direct obligations of or obligations guaranteed by
the United States of America (which will mature prior to the date
such amounts are payable), in trust for such purpose, in an amount
sufficient to pay and discharge the entire indebtedness on such
Notes not theretofore delivered to the Trustee for cancellation when
due to the Final Scheduled Distribution Date or Redemption Date (if
Notes shall have been called for redemption pursuant to Section
10.1(a)), as the case may be;
(B) the Issuer has paid or caused to be paid all other sums payable
hereunder by the Issuer; and
(C) the Issuer has delivered to the Trustee an Officer's
Certificate, an Opinion of Counsel and (if required by the TIA or the
Trustee) an Independent Certificate from a firm of certified public
accountants, each meeting the applicable requirements of Section 11.1(a)
and each stating that all conditions precedent herein provided for
relating to the satisfaction and discharge of this Indenture have been
complied with.
SECTION 4.2 Application of Trust Money. All moneys deposited with the
Trustee pursuant to Section 4.1 hereof shall be held in trust and applied by it,
in accordance with the provisions of the Notes and this Indenture, to the
payment, either directly or through any Paying Agent, as the Trustee may
determine, to the Holders of the particular Notes for the payment or redemption
of which such moneys have been deposited with the Trustee, of all sums due and
to become due thereon for principal and interest; but such moneys need not be
segregated from other funds except to the extent required herein or in the Sale
and Servicing Agreement or required by law.
SECTION 4.3 Repayment of Moneys Held by Paying Agent. In connection
with the satisfaction and discharge of this Indenture with respect to the Notes,
all moneys then held by any Paying Agent other than the Trustee under the
provisions of this Indenture with respect to such Notes shall, upon demand of
the
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Issuer, be paid to the Trustee to be held and applied according to Section 3.3
and thereupon such Paying Agent shall be released from all further liability
with respect to such moneys.
ARTICLE V
Remedies
SECTION 5.1 Events of Default. "Event of Default," wherever used
herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(i) default in the payment of any interest on any Note when the same
becomes due and payable, and such default shall continue for a period of
five days; or
(ii) default in the payment of the principal of or any installment
of the principal of any Note when the same becomes due and payable; or
(iii) default in the observance or performance of any covenant or
agreement of the Issuer made in this Indenture (other than a covenant or
agreement, a default in the observance or performance of which is
elsewhere in this Section specifically dealt with), or any representation
or warranty of the Issuer made in this Indenture or in any certificate or
other writing delivered pursuant hereto or in connection herewith proving
to have been incorrect in any material respect as of the time when the
same shall have been made, and such default shall continue or not be
cured, or the circumstance or condition in respect of which such
misrepresentation or warranty was incorrect shall not have been eliminated
or otherwise cured, for a period of 30 days after there shall have been
given, by registered or certified mail, to the Issuer by the Trustee or to
the Issuer and the Trustee by the Holders of at least 25% of the
Outstanding Amount of the Notes, a written notice specifying such default
or incorrect representation or warranty and requiring it to be remedied
and stating that such notice is a "Notice of Default" hereunder; or
(iv) the filing of a decree or order for relief by a court having
jurisdiction in the premises in respect of the Issuer or any substantial
part of the Trust Estate in an involuntary case under any applicable
Federal or state bankruptcy, insolvency or other similar law now or
hereafter in effect, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of the
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Issuer or for any substantial part of the Trust Estate, or ordering the
winding-up or liquidation of the Issuer's affairs, and such decree or
order shall remain unstayed and in effect for a period of 30 consecutive
days; or
(v) the commencement by the Issuer of a voluntary case under any
applicable Federal or state bankruptcy, insolvency or other similar law
now or hereafter in effect, or the consent by the Issuer to the entry of
an order for relief in an involuntary case under any such law, or the
consent by the Issuer to the appointment or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official of the Issuer or for any substantial part of the Trust
Estate, or the making by the Issuer of any general assignment for the
benefit of creditors, or the failure by the Issuer generally to pay its
debts as such debts become due, or the taking of action by the Issuer in
furtherance of any of the foregoing.
The Issuer shall deliver to the Trustee, within five days after the
occurrence thereof, written notice in the form of an Officer's Certificate of
any event of which an Authorized Officer of the Issuer has acquired actual
knowledge which with the giving of notice and the lapse of time would become an
Event of Default under clause (iii), its status and what action the Issuer is
taking or proposes to take with respect thereto.
SECTION 5.2 Acceleration of Maturity; Rescission and Annulment. If an
Event of Default should occur and be continuing, then and in every such case the
Trustee or the Holders of Notes representing not less than a majority of the
Outstanding Amount of the Notes may declare all the Notes to be immediately due
and payable, by a notice in writing to the Issuer (and to the Trustee if given
by Noteholders), and upon any such declaration the unpaid principal amount of
such Notes, together with accrued and unpaid interest thereon through the date
of acceleration, shall become immediately due and payable.
At any time after such declaration of acceleration of maturity has
been made and before a judgment or decree for payment of the money due has been
obtained by the Trustee as hereinafter in this Article V provided, the Holders
of Notes representing a majority of the Outstanding Amount of the Notes, by
written notice to the Issuer and the Trustee, may rescind and annul such
declaration and its consequences if:
(i) the Issuer has paid or deposited with the Trustee a sum
sufficient to pay
(A) all payments of principal of and interest on all Notes and
all other amounts that would then be due hereunder or upon such
Notes if the Event of Default giving rise to such acceleration had
not occurred; and
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(B) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee and its agents and counsel; and
(ii) all Events of Default, other than the nonpayment of the
principal of the Notes that has become due solely by such acceleration,
have been cured or waived as provided in Section 5.12.
No such rescission shall affect any subsequent default or impair any
right consequent thereto.
SECTION 5.3 Collection of Indebtedness and Suits for Enforcement by
Trustee. (a) The Issuer covenants that if (i) default is made in the payment of
any interest on any Note when the same becomes due and payable, and such default
continues for a period of five days, or (ii) default is made in the payment of
the principal of or any installment of the principal of any Note when the same
becomes due and payable, the Issuer will, upon demand of the Trustee, pay to it,
for the benefit of the Holders of the Notes, the whole amount then due and
payable on such Notes for principal and interest, with interest upon the overdue
principal, and, to the extent payment at such rate of interest shall be legally
enforceable, upon overdue installments of interest, at the rate borne by the
Notes and in addition thereto such further amount as shall be sufficient to
cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Trustee and its agents
and counsel.
(b) In case the Issuer shall fail forthwith to pay such amounts upon
such demand, the Trustee, in its own name and as trustee of an express trust,
may institute a proceeding for the collection of the sums so due and unpaid, and
may prosecute such proceeding to judgment or final decree, and may enforce the
same against the Issuer or other obligor upon such Notes and collect in the
manner provided by law out of the property of the Issuer or other obligor upon
such Notes, wherever situated, the moneys adjudged or decreed to be payable.
(c) If an Event of Default occurs and is continuing, the Trustee may,
as more particularly provided in Section 5.4, in its discretion, proceed to
protect and enforce its rights and the rights of the Noteholders, by such
appropriate proceedings as the Trustee shall deem most effective to protect and
enforce any such rights, whether for the specific enforcement of any covenant or
agreement in this Indenture or in aid of the exercise of any power granted
herein, or to enforce any other proper remedy or legal or equitable right vested
in the Trustee by this Indenture or by law.
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(d) In case there shall be pending, relative to the Issuer or any
other obligor upon the Notes or any Person having or claiming an ownership
interest in the Trust Estate, proceedings under Title 11 of the United States
Code or any other applicable Federal or state bankruptcy, insolvency or other
similar law, or in case a receiver, assignee or trustee in bankruptcy or
reorganization, liquidator, sequestrator or similar official shall have been
appointed for or taken possession of the Issuer or its property or such other
obligor or Person, or in case of any other comparable judicial proceedings
relative to the Issuer or other obligor upon the Notes, or to the creditors or
property of the Issuer or such other obligor, the Trustee, irrespective of
whether the principal of any Notes shall then be due and payable as therein
expressed or by declaration or otherwise and irrespective of whether the Trustee
shall have made any demand pursuant to the provisions of this Section, shall be
entitled and empowered, by intervention in such proceedings or otherwise:
(i) to file and prove a claim or claims for the whole amount of
principal and interest owing and unpaid in respect of the Notes and to
file such other papers or documents as may be necessary or advisable in
order to have the claims of the Trustee (including any claim for
reasonable compensation to the Trustee and each predecessor Trustee, and
their respective agents, attorneys and counsel, and for reimbursement of
all expenses and liabilities incurred, and all advances made, by the
Trustee and each predecessor Trustee, except as a result of negligence,
bad faith or willful misconduct) and of the Noteholders allowed in such
proceedings;
(ii) unless prohibited by applicable law and regulations, to vote on
behalf of the Holders of Notes in any election of a trustee, a standby
trustee or person performing similar functions in any such proceedings;
(iii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute all amounts received with
respect to the claims of the Noteholders and of the Trustee on their
behalf; and
(iv) to file such proofs of claim and other papers or documents as
may be necessary or advisable in order to have the claims of the Trustee
or the Holders of Notes allowed in any judicial proceedings relative to
the Issuer, its creditors and its property;
and any trustee, receiver, liquidator, custodian or other similar official in
any such proceeding is hereby authorized by each of such Noteholders to make
payments to the Trustee, and, in the event that the Trustee shall consent to the
making of payments directly to such Noteholders, to pay to the Trustee such
amounts
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as shall be sufficient to cover reasonable compensation to the Trustee, each
predecessor Trustee and their respective agents, attorneys and counsel, and all
other expenses and liabilitieS incurred, and all advances made, by the Trustee
and each predecessor Trustee except as a result of negligence or bad faith.
(e) Nothing herein contained shall be deemed to authorize the Trustee
to authorize or consent to or vote for or accept or adopt on behalf of any
Noteholder any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Holder thereof or to authorize the
Trustee to vote in respect of the claim of any Noteholder in any such proceeding
except, as aforesaid, to vote for the election of a trustee in bankruptcy or
similar person.
(f) All rights of action and of asserting claims under this
Indenture, or under any of the Notes, may be enforced by the Trustee without the
possession of any of the Notes or the production thereof in any trial or other
proceedings relative thereto, and any such action or proceedings instituted by
the Trustee shall be brought in its own name as trustee of an express trust, and
any recovery of judgment, subject to the payment of the expenses, disbursements
and compensation of the Trustee, each predecessor Trustee and their respective
agents and attorneys, shall be for the ratable benefit of the Holders of the
Notes.
(g) In any proceedings brought by the Trustee (and also any
proceedings involving the interpretation of any provision of this Indenture to
which the Trustee shall be a party), the Trustee shall be held to represent all
the Holders of the Notes, and it shall not be necessary to make any Noteholder a
party to any such proceedings.
SECTION 5.4 Remedies; Priorities. (a) If an Event of Default shall
have occurred and be continuing, the Trustee may do one or more of the following
(subject to Section 5.5):
(i) institute proceedings in its own name and as trustee of an
express trust for the collection of all amounts then payable on the Notes
or under this Indenture with respect thereto, whether by declaration or
otherwise, enforce any judgment obtained, and collect from the Issuer and
any other obligor upon such Notes moneys adjudged due;
(ii) institute proceedings from time to time for the complete or
partial foreclosure of this Indenture with respect to the Trust Estate;
(iii) exercise any remedies of a secured party under the UCC and take
any other appropriate action to protect and enforce the rights and
remedies of the Trustee and the Holders of the Notes; and
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(iv) sell the Trust Estate or any portion thereof or rights or
interest therein, at one or more public or private sales called and
conducted in any manner permitted by law;
provided, however, that the Trustee may not sell or otherwise liquidate
the Trust Estate following an Event of Default, other than an Event of
Default described in Section 5.1(i) or (ii), unless (A) the Holders of
100% of the Outstanding Amount of the Notes consent thereto, (B) the
proceeds of such sale or liquidation distributable to the Noteholders are
sufficient to discharge in full all amounts then due and unpaid upon such
Notes for principal and interest or (C) the Trustee determines that the
Trust Estate will not continue to provide sufficient funds for the payment
of principal of and interest on the Notes as they would have become due if
the Notes had not been declared due and payable, and the Trustee obtains
the consent of Holders of 66-2/3% of the Outstanding Amount of the Notes.
In determining such sufficiency or insufficiency with respect to clause
(B) and (C), the Trustee may, but need not, obtain and rely upon an
opinion of an Independent investment banking or accounting firm of
national reputation as to the feasibility of such proposed action and as
to the sufficiency of the Trust Estate for such purpose.
(b) If the Trustee collects any money or property pursuant to this
Article V, it shall pay out such money or property (and other amounts including
amounts held on deposit in the Reserve Account) held as Collateral for the
benefit of the Noteholders in the following order:
FIRST: to the Trustee for amounts due under Section 6.7;
SECOND: to Noteholders for amounts due and unpaid on the Notes for
interest, ratably, without preference or priority of any kind, according
to the amounts due and payable on the Notes for interest;
THIRD: to Noteholders for amounts due and unpaid on the Notes for
principal, ratably, without preference or priority of any kind, according
to the amounts due and payable on the Notes for principal; and
FOURTH: to the Issuer for distribution to the Certificateholders.
The Trustee may fix a record date and payment date for any payment to
Noteholders pursuant to this Section. At least 15 days before such record date,
the Issuer shall mail to each Noteholder and the Trustee a notice that states
the record date, the payment date and the amount to be paid.
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SECTION 5.5 Optional Preservation of the Receivables. If the Notes
have been declared to be due and payable under Section 5.2 following an Event of
Default and such declaration and its consequences have not been rescinded and
annulled, the Trustee may, but need not, elect to maintain possession of the
Trust Estate. It is the desire of the parties hereto and the Noteholders that
there be at all times sufficient funds for the payment of principal of and
interest on the Notes, and the Trustee shall take such desire into account when
determining whether or not to maintain possession of the Trust Estate. In
determining whether to maintain possession of the Trust Estate, the Trustee may,
but need not, obtain and rely upon an opinion of an Independent investment
banking or accounting firm of national reputation as to the feasibility of such
proposed action and as to the sufficiency of the Trust Estate for such purpose.
SECTION 5.6 Limitation of Suits. No Holder of any Note shall have any
right to institute any proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless:
(i) such Holder has previously given written notice to the Trustee of
a continuing Event of Default;
(ii) the Holders of not less than 25% of the Outstanding Amount of
the Notes have made written request to the Trustee to institute such
proceeding in respect of such Event of Default in its own name as Trustee
hereunder;
(iii) such Holder or Holders have offered to the Trustee indemnity
reasonably satisfactory to it against the costs, expenses and liabilities
to be incurred in complying with such request;
(iv) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute such proceedings;
and
(v) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a
majority of the Outstanding Amount of the Notes;
it being understood and intended that no one or more Holders of Notes shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other
Holders of Notes or to obtain or to seek to obtain priority or preference over
any other Holders or to enforce any right under this Indenture, except in the
manner herein provided.
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In the event the Trustee shall receive conflicting or inconsistent
requests and indemnity from two or more groups of Holders of Notes, each
representing less than a majority of the Outstanding Amount of the Notes, the
Trustee in its sole discretion may determine what action, if any, shall be
taken, notwithstanding any other provisions of this Indenture.
SECTION 5.7 Unconditional Rights of Noteholders To Receive Principal
and Interest. Notwithstanding any other provisions in this Indenture, the Holder
of any Note shall have the right, which is absolute and unconditional, to
receive payment of the principal of and interest, if any, on such Note on or
after the respective due dates thereof expressed in such Note or in this
Indenture (or, in the case of redemption, on or after the Redemption Date) and
to institute suit for the enforcement of any such payment, and such right shall
not be impaired without the consent of such Holder.
SECTION 5.8 Restoration of Rights and Remedies. If the Trustee or any
Noteholder has instituted any proceeding to enforce any right or remedy under
this Indenture and such proceeding has been discontinued or abandoned for any
reason or has been determined adversely to the Trustee or to such Noteholder,
then and in every such case the Issuer, the Trustee and the Noteholders shall,
subject to any determination in such Proceeding, be restored severally and
respectively to their former positions hereunder, and thereafter all rights and
remedies of the Trustee and the Noteholders shall continue as though no such
proceeding had been instituted.
SECTION 5.9 Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Trustee or to the Noteholders is intended to
be exclusive of any other right or remedy, and every right and remedy shall, to
the extent permitted by law, be cumulative and in addition to every other right
and remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
SECTION 5.10 Delay or Omission Not a Waiver. No delay or omission of
the Trustee or any Holder of any Note to exercise any right or remedy accruing
upon any Default or Event of Default shall impair any such right or remedy or
constitute a waiver of any such Default or Event of Default or an acquiescence
therein. Every right and remedy given by this Article V or by law to the Trustee
or to the Noteholders may be exercised from time to time, and as often as may be
deemed expedient, by the Trustee or by the Noteholders, as the case may be.
SECTION 5.11 Control by Noteholders. The Holders of a majority of the
Outstanding Amount of the Notes shall have the right to direct the time, method
and place of conducting any
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proceeding for any remedy available to the Trustee with respect to the Notes or
exercising any trust or power conferred on the Trustee; provided that
(i) such direction shall not be in conflict with any rule of law or
with this Indenture;
(ii) subject to the express terms of Section 5.4, any direction to
the Trustee to sell or liquidate the Trust Estate shall be by the Holders
of Notes representing not less than 100% of the Outstanding Amount of the
Notes;
(iii) if the conditions set forth in Section 5.5 have been satisfied
and the Trustee elects to retain the Trust Estate pursuant to such
Section, then any direction to the trustee by Holders of Notes
representing less than 100% of the Outstanding Amount of the Notes to sell
or liquidate the Trust Estate shall be of no force and effect; and
(iv) the Trustee may take any other action deemed proper by the
Trustee that is not inconsistent with such direction;
provided, however, that, subject to Section 6.1, the Trustee need not take any
action that it determines might involve it in liability or might materially
adversely affect the rights of any Noteholders not consenting to such action.
Section 5.12 Waiver of Past Defaults. Prior to the declaration of the
acceleration of the maturity of the Notes as provided in Section 5.2, the
Holders of Notes of not less than a majority of the Outstanding Amount of the
Notes may waive any past Default or Event of Default and its consequences except
a Default (a) in payment of principal of or interest on any of the Notes or (b)
in respect of a covenant or provision hereof which cannot be modified or amended
without the consent of the Holder of each Note. In the case of any such waiver,
the Issuer, the Trustee and the Holders of the Notes shall be restored to their
former positions and rights hereunder, respectively; but no such waiver shall
extend to any subsequent or other Default or impair any right consequent
thereto.
Upon any such waiver, such Default shall cease to exist and be deemed
to have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured and not to have occurred, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereto.
SECTION 5.13 Undertaking for Costs. All parties to this Indenture
agree, and each Holder of any Note by such Holder's acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any suit
for the
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enforcement of any right or remedy under this Indenture, or in any suit against
the Trustee for any action taken, suffered or omitted by it as Trustee, the
filing by any party litigant in such suit of an undertaking to pay the costs of
such suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or defenses made by
such party litigant; but the provisions of this Section shall not apply to (a)
any suit instituted by the Trustee, (b) any suit instituted by any Noteholder,
or group of Noteholders, in each case holding in the aggregate more than 10% of
the Outstanding Amount of the Notes or (c) any suit instituted by any Noteholder
for the enforcement of the payment of principal of or interest on any Note on or
after the respective due dates expressed in such Note and in this Indenture (or,
in the case of redemption, on or after the Redemption Date).
SECTION 5.14 Waiver of Stay or Extension Laws. The Issuer covenants
(to the extent that it may lawfully do so) that it will not at any time insist
upon, or plead or in any manner whatsoever, claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or at any time
hereafter in force, that may affect the covenants or the performance of this
Indenture; and the Issuer (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the Trustee, but will suffer and permit the execution of every such power as
though no such law had been enacted.
SECTION 5.15 Action on Notes. The Trustee's right to seek and recover
judgment on the Notes or under this Indenture shall not be affected by the
seeking, obtaining or application of any other relief under or with respect to
this Indenture. Neither the lien of this Indenture nor any rights or remedies of
the Trustee or the Noteholders shall be impaired by the recovery of any judgment
by the Trustee against the Issuer or by the levy of any execution under such
judgment upon any portion of the Trust Estate or upon any of the assets of the
Issuer.
SECTION 5.16 Performance and Enforcement of Certain Obligations. (a)
Promptly following a written request from the Trustee to do so and at the
Servicer's expense, the Issuer agrees to take all such lawful action as the
Trustee may request to compel or secure the performance and observance by the
Seller, the Sponsor and the Servicer, as applicable, of each of their
obligations to the Issuer under or in connection with the Sale and Servicing
Agreement in accordance with the terms thereof, and to exercise any and all
rights, remedies, powers and privileges lawfully available to the Issuer under
or in connection with the Sale and Servicing Agreement to the extent and in the
manner directed by the Trustee, including the transmission of notices of
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default on the part of the Seller or the Servicer thereunder and the institution
of legal or administrative actions or proceedings to compel or secure
performance by the Seller or the Servicer of each of their obligations under the
Sale and Servicing Agreement.
(b) If an Event of Default has occurred and is continuing, the
Trustee may, and, at the direction (which direction shall be in writing or by
telephone (confirmed in writing promptly thereafter)) of the Holders of 66-2/3%
of the Outstanding Amount of the Notes shall, exercise all rights, remedies,
powers, privileges and claims of the Issuer against the Seller or the Servicer
under or in connection with the Sale and Servicing Agreement, including the
right or power to take any action to compel or secure performance or observance
by the Seller or the Servicer of each of their obligations to the Issuer
thereunder and to give any consent, request, notice, direction, approval,
extension or waiver under the Sale and Servicing Agreement, and any right of the
Issuer to take such action shall be suspended.
ARTICLE VI
The Trustee
SECTION 6.1 Duties of Trustee. (a) If an Event of Default has
occurred and is continuing, the Trustee shall exercise the rights and powers
vested in it by this Indenture and use the same degree of care and skill in
their exercise as a prudent person would exercise or use under the circumstances
in the conduct of such person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions furnished
to the Trustee and conforming to the requirements of this Indenture;
however, the Trustee shall examine the certificates and opinions to
determine whether or not they conform to the requirements of this
Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own wilful misconduct,
except that:
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(i) this paragraph does not limit the effect of paragraph (b) of this
Section;
(ii) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 5.11.
(d) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Issuer.
(e) Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law or the terms of this Indenture
or the Sale and Servicing Agreement.
(f) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers, if it shall have reasonable grounds to believe that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(g) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
SECTION 6.2 Rights of Trustee. (a) The Trustee may rely on any
document believed by it to be genuine and to have been signed or presented by
the proper person. The Trustee need not investigate any fact or matter stated in
the document.
(b) Before the Trustee acts or refrains from acting, it may require
an Officer's Certificate or an Opinion of Counsel. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on the
Officer's Certificate or Opinion of Counsel.
(c) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys or a custodian or nominee, and the Trustee shall not be responsible
for any misconduct or negligence on the part of, or for the supervision of, any
such agent, attorney, custodian or nominee appointed with due care by it
hereunder.
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(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its rights or
powers; provided, however, that the Trustee's conduct does not constitute wilful
misconduct, negligence or bad faith.
(e) The Trustee may consult with counsel of its selection, and the
advice or opinion of counsel with respect to legal matters relating to this
Indenture and the Notes shall be full and complete authorization and protection
from liability in respect to any action taken, omitted or suffered by it
hereunder in good faith and in accordance with the advice or opinion of such
counsel.
SECTION 6.3 Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Notes and
may otherwise deal with the Issuer or its Affiliates with the same rights it
would have if it were not Trustee. Any Paying Agent, Note Registrar,
co-registrar or co-paying agent may do the same with like rights. However, the
Trustee must comply with Sections 6.11 and 6.12.
SECTION 6.4 Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Notes, it shall not be accountable for the Issuer's use of
the proceeds from the Notes, and it shall not be responsible for any statement
of the Issuer in the Indenture or in any document issued in connection with the
sale of the Notes or in the Notes other than the Trustee's certificate of
authentication.
SECTION 6.5 Notice of Defaults. If a Default occurs and is continuing
and if it is either actually known or written notice of the existence thereof
has been delivered to a Responsible Officer of the Trustee, the Trustee shall
mail to each Noteholder notice of the Default within 90 days after such
knowledge or notice occurs. Except in the case of a Default in payment of
principal of or interest on any Note (including payments pursuant to the
mandatory redemption provisions of such Note), the Trustee may withhold the
notice if and so long as a committee of its Responsible Officers in good faith
determines that withholding the notice is in the interests of Noteholders.
SECTION 6.6 Reports by Trustee to Holders. The Trustee shall deliver
to each Noteholder such information as may be reasonably required to enable such
Holder to prepare its Federal and state income tax returns.
SECTION 6.7 Compensation and Indemnity. The Issuer shall or shall
cause the Servicer to pay to the Trustee from time to time compensation for its
services in accordance with a separate agreement between the Servicer and the
Trustee. The Trustee's compensation shall not be limited by any law on
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compensation of a trustee of an express trust. The Issuer shall or shall cause
the Servicer to reimburse the Trustee for all reasonable out-of-pocket expenses
incurred or made by it, including costs of collection, in addition to the
compensation for its services. Such expenses shall include the reasonable
compensation and expenses, disbursements and advances of the Trustee's agents,
counsel, accountants and experts. The Issuer shall or shall cause the Servicer
to indemnify the Trustee and its officers, directors, employees and agents
against any and all loss, liability or expense (including attorneys' fees and
expenses) incurred by it in connection with the acceptance or the administration
of this trust and the performance of its duties hereunder. The Trustee shall
notify the Issuer and the Servicer promptly of any claim for which it may seek
indemnity. Failure by the Trustee to so notify the Issuer and the Servicer shall
not relieve the Issuer of its obligations hereunder or the Servicer of its
obligations under Article X of the Sale and Servicing Agreement. The Issuer
shall or shall cause the Servicer to defend the claim and the Trustee may have
separate counsel and the Issuer shall or shall cause the Servicer to pay the
fees and expenses of such counsel. Neither the Issuer nor the Servicer need
reimburse any expense or indemnify against any loss, liability or expense
incurred by the Trustee through the Trustee's own wilful misconduct, negligence
or bad faith.
The Issuer's payment obligations to the Trustee pursuant to this
Section shall survive the discharge of this Indenture and the resignation or
removal of the Trustee subject to a satisfaction of the Rating Agency Condition.
When the Trustee incurs expenses after the occurrence of a Default specified in
Section 5.1(iv) or (v) with respect to the Issuer, the expenses are intended to
constitute expenses of administration under Title 11 of the United States Code
or any other applicable Federal or state bankruptcy, insolvency or similar law.
SECTION 6.8 Replacement of Trustee. The Trustee may resign at any
time by so notifying the Issuer. The Holders of a majority in Outstanding Amount
of the Notes may remove the Trustee by so notifying the Trustee and may appoint
a successor Trustee. The Issuer shall remove the Trustee if:
(i) the Trustee fails to comply with Section 6.11;
(ii) the Trustee is adjudged a bankrupt or insolvent;
(iii) a receiver or other public officer takes charge of the Trustee
or its property; or
(iv) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason (the Trustee in
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such event being referred to herein as the retiring Trustee), the Issuer shall
promptly appoint a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Issuer. Thereupon the resignation
or removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture subject to satisfaction of the Rating Agency Condition. The successor
Trustee shall mail a notice of its succession to Noteholders. The retiring
Trustee shall promptly transfer all property held by it as Trustee to the
successor Trustee.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Issuer or the
Holders of a majority in Outstanding Amount of the Notes may petition any court
of competent jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 6.11, any Noteholder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section shall not
become effective until acceptance of appointment by the successor Trustee
pursuant to Section 6.8 and payment of all fees and expenses owed to the
outgoing Trustee.
Notwithstanding the replacement of the Trustee pursuant to this Section, the
Issuer's and the Servicer's obligations under Section 6.7 shall continue for the
benefit of the retiring Trustee.
SECTION 6.9 Successor Trustee by Merger. If the Trustee consolidates
with, merges or converts into, or transfers all or substantially all its
corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee. The Trustee shall provide the Rating
Agencies prior written notice of any such transaction.
In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts created
by this Indenture any of the Notes shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Notes so
authenticated; and in case at that time any of the Notes shall not have been
authenticated, any successor to the Trustee may authenticate such
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Notes either in the name of any predecessor hereunder or in the name of the
successor to the Trustee; and in all such cases such certificates shall have the
full force which it is anywhere in the Notes or in this Indenture provided that
the certificate of the Trustee shall have.
SECTION 6.10 Appointment of Co-Trustee or Separate Trustee. (a)
Notwithstanding any other provisions of this Indenture, at any time, for the
purpose of meeting any legal requirement of any jurisdiction in which any part
of the Trust may at the time be located, the Trustee shall have the power and
may execute and deliver all instruments to appoint one or more Persons to act as
a co-trustee or co-trustees, or separate trustee or separate trustees, of all or
any part of the Trust, and to vest in such Person or Persons, in such capacity
and for the benefit of the Noteholders, such title to the Trust, or any part
hereof, and, subject to the other provisions of this Section, such powers,
duties, obligations, rights and trusts as the Trustee may consider necessary or
desirable. No co-trustee or separate trustee hereunder shall be required to meet
the terms of eligibility as a successor trustee under Section 6.11 and no notice
to Noteholders of the appointment of any co-trustee or separate trustee shall be
required under Section 6.8 hereof.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred or imposed
upon the Trustee shall be conferred or imposed upon and exercised or
performed by the Trustee and such separate trustee or co-trustee jointly
(it being understood that such separate trustee or co-trustee is not
authorized to act separately without the Trustee joining in such act),
except to the extent that under any law of any jurisdiction in which any
particular act or acts are to be performed the Trustee shall be
incompetent or unqualified to perform such act or acts, in which event
such rights, powers, duties and obligations (including the holding of
title to the Trust or any portion thereof in any such jurisdiction) shall
be exercised and performed singly by such separate trustee or co-trustee,
but solely at the direction of the Trustee;
(ii) no trustee hereunder shall be personally liable by reason of any
act or omission of any other trustee hereunder, including acts or
omissions of predecessor or successor trustees; and
(iii) the Trustee may at any time accept the resignation of or remove
any separate trustee or co-trustee.
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(c) Any notice, request or other writing given to the Trustee shall
be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article VI. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Trustee or separately, as may be provided therein, subject to all the provisions
of this Indenture, specifically including every provision of this Indenture
relating to the conduct of, affecting the liability of, or affording protection
to, the Trustee. Every such instrument shall be filed with the Trustee.
(d) Any separate trustee or co-trustee may at any time constitute the
Trustee, its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall invest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
SECTION 6.11 Eligibility; Disqualification. The Trustee shall at all
times satisfy the requirements of TIA ss. 310(a). The Trustee shall have a
combined capital and surplus of at least $50,000,000 as set forth in its most
recent published annual report of condition and it shall have a long term debt
rating of BBB- or better by the Rating Agencies. The Trustee shall comply with
TIA ss. 310 (b), including the optional provision permitted by the second
sentence of TIA ss. 310(b)(9); provided, however, that there shall be excluded
from the operation of TIA ss. 310(b)(1) any indenture or indentures under which
other securities of the Issuer are outstanding if the requirements for such
exclusion set forth in TIA ss. 310(b)(1) are met.
SECTION 6.12 Preferential Collection of Claims Against Issuer. The
Trustee shall comply with TIA ss. 311(a), excluding any creditor relationship
listed in TIA ss. 311(b). A Trustee who has resigned or been removed shall be
subject to TIA ss. 311(a) to the extent indicated.
ARTICLE VII
Noteholders' Lists and Reports
SECTION 7.1 Issuer To Furnish Trustee Names and Addresses of
Noteholders. The Issuer will furnish or cause to be furnished to the Trustee
(a) not more than five days after the
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earlier of (i) each Record Date and (ii) three months after the last Record
Date, a list, in such form as the Trustee may reasonably require, of the names
and addresses of the Holders as of such Record Date, (b) at such other times as
the Trustee may request in writing, within 30 days after receipt by the Issuer
of any such request, a list of similar form and content as of a date not more
than 10 days prior to the time such list is furnished; provided, however, that
so long as the Trustee is the Note Registrar, no such list shall be required to
be furnished.
SECTION 7.2 Preservation of Information; Communications to
Noteholders. (a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of the Holders contained in the
most recent list furnished to the Trustee as provided in Section 7.1 and the
names and addresses of Holders received by the Trustee in its capacity as Note
Registrar. The Trustee may destroy any list furnished to it as provided in such
Section 7.1 upon receipt of a new list so furnished.
(b) Noteholders may communicate pursuant to TIA ss. 312(b) with other
Noteholders with respect to their rights under this Indenture or under the
Notes.
(c) The Issuer, the Trustee and the Note Registrar shall have the
protection of TIA ss. 312(c).
SECTION 7.3 [Reserved (for public deal).
(a) Unless the Issuer otherwise determines, the fiscal year of the
Issuer shall end on December 31 of each year.
SECTION 7.4 Reports by Trustee. If required by TIA ss. 313(a), within
60 days after each September 1, beginning with September 1, 1997, the Trustee
shall mail to each Noteholder as required by TIA ss. 313(c) a brief report dated
as of such date that complies with TIA ss. 313(a). The Trustee also shall comply
with TIA ss. 313(b).
A copy of each report at the time of its mailing to Noteholders shall
be filed by the Trustee with the Commission, if required by the Exchange Act,
and each stock exchange, if any, on which the Notes are listed. The Issuer shall
notify the Trustee if and when the Notes are listed on any stock exchange.
ARTICLE VIII
Accounts, Disbursements and Releases
SECTION 8.1 Collection of Money. Except as otherwise expressly
provided herein, the Trustee may demand payment or delivery of, and shall
receive and collect, directly and without
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intervention or assistance of any fiscal agent or other intermediary, all money
and other property payable to or receivable by the Trustee pursuant to this
Indenture. The Trustee shall apply all such money received by it as provided in
this Indenture. Except as otherwise expressly provided in this Indenture, if any
default occurs in the making of any payment or performance under any agreement
or instrument that is part of the Trust Estate, the Trustee may take such action
as may be appropriate to enforce such payment or performance, including the
institution and prosecution of appropriate proceedings. Any such action shall be
without prejudice to any right to claim a Default or Event of Default under this
Indenture and any right to proceed thereafter as provided in Article V.
SECTION 8.2 Trust Accounts. (a) On or prior to the Closing Date, the
Issuer shall cause the Servicer to establish and maintain, in the name of the
Trustee, for the benefit of the Noteholders and the Certificateholders, the
Trust Accounts as provided in Section 5.1 of the Sale and Servicing Agreement.
(b) On or before each Distribution Date, the Total Distribution
Amount with respect to the preceding Collection Period will be deposited in the
Collection Account as provided in Section 5.2 of the Sale and Servicing
Agreement. On or before each Distribution Date, the Noteholders' Distributable
Amount with respect to the preceding Collection Period will be transferred from
the Collection Account and/or the Reserve Account to the Note Distribution
Account as provided in Sections 5.5 and 5.6 of the Sale and Servicing Agreement.
(c) On each Distribution Date and Redemption Date, the Trustee shall
distribute all amounts on deposit in the Note Distribution Account to
Noteholders in respect of the Notes to the extent of amounts due and unpaid on
the Notes for principal and interest in the following amounts and in the
following order of priority (except as otherwise provided in Section 5.4(b)):
(i) accrued and unpaid interest on the Notes; provided that if there
are not sufficient funds in the Note Distribution Account to pay the
entire amount of accrued and unpaid interest then due on the Notes, the
amount in the Note Distribution Account shall be applied to the payment of
such interest on the Notes pro rata on the basis of the total such
interest due on the Notes; and
(ii) to the Holders of the Notes on account of principal until the
Outstanding Amount of the Notes is reduced to zero.
SECTION 8.3 General Provisions Regarding Accounts. (a) So long as no
Default or Event of Default shall have occurred and be continuing, all or a
portion of the funds in the Trust Accounts shall be invested in Eligible
Investments and
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reinvested by the Trustee upon Issuer Order, subject to the provisions of
Section 5.1(b) of the Sale and Servicing Agreement. All income or other gain
from investments of moneys deposited in the Trust Accounts (other than the
Payahead Account) shall be deposited (or caused to be deposited) by the Trustee
in the Collection Account, and any loss resulting from such investments shall be
charged to such account. All income or other gain from investments of monies
deposited in the Payahead Account shall be released by the Trustee to the
Seller, net of any loss resulting from such investments charged to the Payahead
Account. The Issuer will not direct the Trustee to make any investment of any
funds or to sell any investment held in any of the Trust Accounts unless the
security interest Granted and perfected in such account will continue to be
perfected in such investment or the proceeds of such sale, in either case
without any further action by any Person, and, in connection with any direction
to the Trustee to make any such investment or sale, if requested by the Trustee,
the Issuer shall deliver to the Trustee an Opinion of Counsel, acceptable to the
Trustee, to such effect.
(b) [Reserved]
(c) Subject to Section 6.1(c), the Trustee shall not in any way be
held liable by reason of any insufficiency in any of the Trust Accounts
resulting from any loss on any Eligible Investment included therein except for
losses attributable to the Trustee's failure to make payments on such Eligible
Investments issued by the Trustee, in its commercial capacity as principal
obligor and not as trustee, in accordance with their terms.
(d) If (i) the Issuer shall have failed to give investment directions
for any funds on deposit in the Trust Accounts to the Trustee by 11:00 a.m.
Eastern Time (or such other time as may be agreed by the Issuer and Trustee) on
any Business Day; or (ii) a Default or Event of Default shall have occurred and
be continuing with respect to the Notes but the Notes shall not have been
declared due and payable pursuant to Section 5.2, or, (iii) if such Notes shall
have been declared due and payable following an Event of Default but amounts
collected or receivable from the Trust Estate are being applied in accordance
with Section 5.5 as if there had not been such a declaration; then the Trustee
shall, to the fullest extent practicable, invest and reinvest funds in the Trust
Accounts in one or more Eligible Investments.
SECTION 8.4 Release of Trust Estate. (a) Subject to Article VI
hereunder, the Trustee may, and when required by the provisions of this
Indenture shall, execute instruments to release property from the lien of this
Indenture, or convey the Trustee's interest in the same, in a manner and under
circumstances that are not inconsistent with the provisions of this Indenture.
No party relying upon an instrument executed by the Trustee as provided in this
Article VIII shall be bound to
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ascertain the Trustee's authority, inquire into the satisfaction of any
conditions precedent or see to the application of any moneys.
(b) The Trustee shall, at such time as there are no Notes outstanding
and all sums due the Trustee pursuant to Section 6.7 have been paid, release any
remaining portion of the Trust Estate that secured the Notes from the lien of
this Indenture and release to the Issuer or any other Person entitled thereto
any funds then on deposit in the Trust Accounts. The Trustee shall release
property from the lien of this Indenture pursuant to this Section 8.4(b) only
upon receipt of an Issuer Request accompanied by an Officer's Certificate, an
Opinion of Counsel and (if required by the TIA) Independent Certificates in
accordance with TIA ss.ss. 314(c) and 314(d)(1) meeting the applicable
requirements of Section 11.1.
SECTION 8.5 Opinion of Counsel. The Trustee shall receive at least
seven days' notice when requested by the Issuer to take any action pursuant to
Section 8.4(a), accompanied by copies of any instruments involved, and the
Trustee shall also require as a condition to such action, an Opinion of Counsel,
in form and substance satisfactory to the Trustee, stating the legal effect of
any such action, outlining the steps required to complete the same, and
concluding that all conditions precedent to the taking of such action have been
complied with and such action will not materially and adversely impair the
security for the Notes or the rights of the Noteholders in contravention of the
provisions of this Indenture; provided, however, that such Opinion of Counsel
shall not be required to express an opinion as to the fair value of the Trust
Estate. Counsel rendering any such opinion may rely, without independent
investigation, on the accuracy and validity of any certificate or other
instrument delivered to the Trustee in connection with any such action.
ARTICLE IX
Supplemental Indentures
SECTION 9.1 Supplemental Indentures Without Consent of Noteholders.
(a) Without the consent of the Holders of any Notes but with prior notice to the
Rating Agencies by the Issuer, as evidenced to the Trustee, the Issuer and the
Trustee, when authorized by an Issuer Order, at any time and from time to time,
may enter into one or more indentures supplemental hereto (which shall conform
to the provisions of the Trust Indenture Act as in force at the date of the
execution thereof), in form satisfactory to the Trustee, for any of the
following purposes:
(i) to correct or amplify the description of any property at any time
subject to the lien of this Indenture, or better to assure, convey and
confirm unto the Trustee any
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property subject or required to be subjected to the lien of this
Indenture, or to subject to the lien of this Indenture additional
property;
(ii) to evidence the succession, in compliance with the applicable
provisions hereof, of another person to the Issuer, and the assumption by
any such successor of the covenants of the Issuer herein and in the Notes
contained;
(iii) to add to the covenants of the Issuer, for the benefit of the
Holders of the Notes, or to surrender any right or power herein conferred
upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any property to
or with the Trustee;
(v) to cure any ambiguity, to correct or supplement any provision
herein or in any supplemental indenture which may be inconsistent with any
other provision herein or in any supplemental indenture or to make any
other provisions with respect to matters or questions arising under this
Indenture or in any supplemental indenture; provided that such action
shall not adversely affect the interests of the Holders of the Notes;
(vi) to evidence and provide for the acceptance of the appointment
hereunder by a successor trustee with respect to the Notes and to add to
or change any of the provisions of this Indenture as shall be necessary to
facilitate the administration of the trusts hereunder by more than one
trustee, pursuant to the requirements of Article VI; or
(vii) to modify, eliminate or add to the provisions of this Indenture
to such extent as shall be necessary to effect the qualification of this
Indenture under the TIA or under any similar federal statute hereafter
enacted and to add to this Indenture such other provisions as may be
expressly required by the TIA.
The Trustee is hereby authorized to join in the execution of any such
supplemental indenture and to make any further appropriate agreements and
stipulations that may be therein contained.
(b) The Issuer and the Trustee, when authorized by an Issuer Order,
may, also without the consent of any of the Holders of the Notes but with prior
notice to the Rating Agencies by the Issuer, as evidenced to the Trustee, enter
into an indenture or indentures supplemental hereto for the purpose of adding
any provisions to, or changing in any manner or eliminating any of the
provisions of, this Indenture or of modifying in any manner the rights of the
Holders of the Notes under this Indenture; provided, however, that such action
shall not, as evidenced by an
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Opinion of Counsel, adversely affect in any material respect the interests of
any Noteholder; provided, further, that any amendment within the scope of
Section 9.2 (i)-(vii) shall be deemed to materially and adversely affect the
interests of the Noteholders, as evidenced by an Officer's Certificate of the
Servicer delivered to the Trustee.
SECTION 9.2 Supplemental Indentures with Consent of Noteholders. The
Issuer and the Trustee, when authorized by an Issuer Order, also may, with prior
notice to the Rating Agencies and with the consent of the Holders of not less
than a majority of the outstanding Amount of the Notes, by Act of such Holders
delivered to the Issuer and the Trustee, enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to, or changing in
any manner or eliminating any of the provisions of, this Indenture or of
modifying in any manner the rights of the Holders of the Notes under this
Indenture; provided, however, that no such supplemental indenture shall, without
the consent of the Holder of each Outstanding Note affected thereby:
(i) change the date of payment of any installment of principal of or
interest on any Note, or reduce the principal amount thereof, the interest
rate thereon or the Redemption Price with respect thereto, change the
provision of this Indenture relating to the application of collections on,
or the proceeds of the sale of, the Trust Estate to payment of principal
of or interest on the Notes, or change any place of payment where, or the
coin or currency in which, any Note or the interest thereon is payable, or
impair the right to institute suit for the enforcement of the provisions
of this Indenture requiring the application of funds available therefor,
as provided in Article V, to the payment of any such amount due on the
Notes on or after the respective due dates thereof (or, in the case of
redemption, on or after the Redemption Date);
(ii) reduce the percentage of the Outstanding Amount of the Notes,
the consent of the Holders of which is required for any such supplemental
indenture, or the consent of the Holders of which is required for any
waiver of compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences provided for in this Indenture;
(iii) modify or alter the provisions of the proviso to the definition
of the term "Outstanding";
(iv) reduce the percentage of the Outstanding Amount of the Notes
required to direct the Trustee to direct the Issuer to sell or liquidate
the Trust Estate pursuant to Section 5.4;
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(v) modify any provision of this Section except to increase any
percentage specified herein or to provide that certain additional
provisions of this Indenture or the Basic Documents cannot be modified or
waived without the consent of the Holder of each Outstanding Note affected
thereby;
(vi) modify any of the provisions of this Indenture in such manner as
to affect the calculation of the amount of any payment of interest or
principal due on any Note on any Distribution Date (including the
calculation of any of the individual components of such calculation) or to
affect the rights of the Holders of Notes to the benefit of any provisions
for the mandatory redemption of the Notes contained herein; or
(vii) permit the creation of any lien ranking prior to or on a parity
with the lien of this Indenture with respect to any part of the Trust
Estate or, except as otherwise permitted or contemplated herein or in the
Basic Documents, terminate the lien of this Indenture on any property at
any time subject hereto or deprive the Holder of any Note of the security
provided by the lien of this Indenture.
The Trustee may determine whether or not any Notes would be affected
by any supplemental indenture and any such determination shall be conclusive
upon the Holders of all Notes, whether theretofore or thereafter authenticated
and delivered hereunder. The Trustee shall not be liable for any such
determination made in good faith.
It shall not be necessary for any Act of Noteholders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Act shall approve the substance thereof.
Promptly after the execution by the Issuer and the Trustee of any
supplemental indenture pursuant to this Section, the Trustee shall mail to the
Holders of the Notes to which such amendment or supplemental indenture relates a
notice setting forth in general terms the substance of such supplemental
indenture. Any failure of the Trustee to mail such notice, or any defect
therein, shall not, however, in any way impair or affect the validity of any
such supplemental indenture.
SECTION 9.3 Execution of Supplemental Indentures. In executing, or
permitting the additional trusts created by, any supplemental indenture
permitted by this Article IX or the modifications thereby of the trusts created
by this Indenture, the Trustee shall be entitled to receive, and subject to
Sections 6.1 and 6.2, shall be fully protected in relying upon, an Opinion of
Counsel stating that the execution of such supplemental indenture is authorized
or permitted by this Indenture. The Trustee may, but shall not be obligated to,
enter into any such
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supplemental indenture that affects the Trustee's own rights, duties,
liabilities or immunities under this Indenture or otherwise.
SECTION 9.4 Effect of Supplemental Indenture. Upon the execution of
any supplemental indenture pursuant to the provisions hereof, this Indenture
shall be and be deemed to be modified and amended in accordance therewith with
respect to the Notes affected thereby, and the respective rights, limitations of
rights, obligations, duties, liabilities and immunities under this Indenture of
the Trustee, the Issuer and the Holders of the Notes shall thereafter be
determined, exercised and enforced hereunder subject in all respects to such
modifications and amendments, and all the terms and conditions of any such
supplemental indenture shall be and be deemed to be part of the terms and
conditions of this Indenture for any and all purposes.
SECTION 9.5 Conformity With Trust Indenture Act. Every amendment of
this Indenture and every supplemental indenture executed pursuant to this
Article IX shall conform to the requirements of the Trust Indenture Act as then
in effect so long as this Indenture shall then be qualified under the Trust
Indenture Act.
SECTION 9.6 Reference in Notes to Supplemental Indentures. Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article IX may, and if required by the Trustee shall, bear a
notation in form approved by the Trustee as to any matter provided for in such
supplemental indenture. If the Issuer or the Trustee shall so determine, new
Notes so modified as to conform, in the opinion of the Trustee and the Issuer,
to any such supplemental indenture may be prepared and executed by the Issuer
and authenticated and delivered by the Trustee in exchange for Outstanding
Notes.
ARTICLE X
Redemption of Notes
SECTION 10.1 Redemption. (a) The Notes are subject to redemption in
whole, but not in part, (i) at the direction of the Seller pursuant to Section
9.1(a) of the Sale and Servicing Agreement, on any Distribution Date on which
the Seller exercises its option to purchase the Trust Estate pursuant to said
Section 9.1(a) and (ii) upon the mandatory sale of the Receivables pursuant to
Section 9.2 of the Sale and Servicing Agreement. The purchase price for the
Notes shall be equal to the Redemption Price; provided, however, that the Issuer
has available funds sufficient to pay the Redemption Price. The Servicer shall
furnish the Rating Agencies notice of such redemption. If the Notes are to be
redeemed pursuant to this Section 10.1(a) (i) or (ii), the Servicer shall
furnish notice to the Trustee not later
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than 25 days prior to the Redemption Date and the Issuer shall deposit with the
Trustee in the Note Distribution Account, on or before the Redemption Date, the
Redemption Price of the Notes to be redeemed whereupon all such Notes shall be
due and payable on the Redemption Date upon the furnishing of a notice complying
with Section 10.2 to each Holder of the Notes.
(b) In the event that the assets of the Trust are sold pursuant to
Section 9.2 of the Trust Agreement, all amounts on deposit in the Note
Distribution Account shall be paid to the Noteholders up to the Outstanding
Amount of the Notes and all accrued and unpaid interest thereon. If amounts are
to be paid to Noteholders pursuant to this Section 10.1(b), the Servicer shall,
to the extent practicable, furnish notice of such event to the Trustee not later
than 25 days prior to the Redemption Date whereupon all such amounts shall be
payable on the Redemption Date.
SECTION 10.2 Form of Redemption Notice. (a) Notice of redemption
under Section 10.1(a) shall be given by the Trustee by facsimile or by
first-class mail, postage prepaid, transmitted or mailed not less than five days
in the case of Section 10.1(a)(i) and Section 10.1(a)(ii) prior to the
applicable Redemption Date to each Holder of Notes, as of the close of business
on the Record Date preceding the applicable Redemption Date, at such Holder's
address appearing in the Note Register.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) that the Record Date otherwise applicable to such Redemption
Date is not applicable and that payments shall be made only upon
presentation and surrender of such Notes and the place where such Notes
are to be surrendered for payment of the Redemption Price (which shall be
the office or agency of the Issuer to be maintained as provided in Section
3.2); and
(iv) that interest on the Notes shall cease to accrue on the
Redemption Date.
Notice of redemption of the Notes shall be given by the Trustee in
the name and at the expense of the Issuer. Failure to give notice of redemption,
or any defect therein, to any Holder of any Note shall not impair or affect the
validity of the redemption of any other Note.
(b) Prior notice of redemption under Sections 10.1(b) is not
required to be given to Noteholders.
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SECTION 10.3 Notes Payable on Redemption Date. The Notes to be
redeemed shall, following notice of redemption as required by Section 10.2 (in
the case of redemption pursuant to Section 10.1(a)), on the Redemption Date
become due and payable at the Redemption Price and (unless the Issuer shall
default in the payment of the Redemption Price) no interest shall accrue on the
Redemption Price for any period after the date to which accrued interest is
calculated for purposes of calculating the Redemption Price.
ARTICLE XI
Miscellaneous
SECTION 11.1 Compliance Certificates and Opinions, etc. (a) Upon any
application or request by the Issuer to the Trustee to take any action under any
provision of this Indenture, the Issuer shall furnish to the Trustee (i) an
Officer's Certificate stating that all conditions precedent, if any, provided
for in this Indenture relating to the proposed action have been complied with,
(ii) an Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with and (iii) (if required by
the TIA) an Independent Certificate from a firm of certified public accountants
meeting the applicable requirements of this Section, except that, in the case of
any such application or request as to which the furnishing of such documents is
specifically required by any provision of this Indenture, no additional
certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(i) a statement that each signatory of such certificate or opinion
has read or has caused to be read such covenant or condition and the
definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(iii) a statement that, in the opinion of each such signatory, such
signatory has made such examination or investigation as is necessary to
enable such signatory to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
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(iv) a statement as to whether, in the opinion of each such signatory
such condition or covenant has been complied with.
(b) (i) Prior to the deposit of any Collateral or other property or
securities with the Trustee that is to be made the basis for the release of any
property or securities subject to the lien of this Indenture, the Issuer shall,
in addition to any obligation imposed in Section 11.1(a) or elsewhere in this
Indenture, furnish to the Trustee an Officer's Certificate certifying or stating
the opinion of each person signing such certificate as to the fair value (within
90 days of such deposit) to the Issuer of the Collateral or other property or
securities to be so deposited.
(ii) Whenever the Issuer is required to furnish to the Trustee an
Officer's Certificate certifying or stating the opinion of any signer
thereof as to the matters described in clause (i) above, the Issuer shall
also deliver to the Trustee an Independent Certificate as to the same
matters, if the fair value to the Issuer of the securities to be so
deposited and of all other such securities made the basis of any such
withdrawal or release since the commencement of the then-current fiscal
year of the Issuer, as set forth in the certificates delivered pursuant to
clause (i) above and this clause (ii), is 10% or more of the Outstanding
Amount of the Notes, but such a certificate need not be furnished with
respect to any securities so deposited, if the fair value thereof to the
Issuer as set forth in the related Officer's Certificate is less than
$25,000 or less than one percent of the Outstanding Amount of the Notes.
(iii) Other than with respect to the release of any Purchased
Receivables or Liquidated Receivables, whenever any property or securities
are to be released from the lien of this Indenture, the Issuer shall also
furnish to the Trustee an Officer's Certificate certifying or stating the
opinion of each person signing such certificate as to the fair value
(within 90 days of such release) of the property or securities proposed to
be released and stating that in the opinion of such person the proposed
release will not impair the security under this Indenture in contravention
of the provisions hereof.
(iv) Whenever the Issuer is required to furnish to the Trustee an
Officer's Certificate certifying or stating the opinion of any signer
thereof as to the matters described in clause (iii) above, the Issuer
shall also furnish to the Trustee an Independent Certificate as to the
same matters if the fair value of the property or securities and of all
other property other than Purchased Receivables and Defaulted Receivables,
or securities released from the lien of this Indenture since the
commencement of the then current
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calendar year, as set forth in the certificates required by clause (iii)
above and this clause (iv), equals 10% or more of the Outstanding Amount
of the Notes, but such certificate need not be furnished in the case of
any release of property or securities if the fair value thereof as set
forth in the related Officer's Certificate is less than $25,000 or less
than one percent of the then Outstanding Amount of the Notes.
(v) Notwithstanding Section 2.9 or any other provision of this
Section, the Issuer may (A) collect, liquidate, sell or otherwise dispose
of Receivables as and to the extent permitted or required by the Basic
Documents and (B) make cash payments out of the Trust Accounts as and to
the extent permitted or required by the Basic Documents.
SECTION 11.2 Form of Documents Delivered to Trustee. In any case
where several matters are required to be certified by, or covered by an opinion
of, any specified Person, it is not necessary that all such matters be certified
by, or covered by the opinion of, only one such Person, or that they be so
certified or covered by only one document, but one such Person may certify or
give an opinion with respect to some matters and one or more other such Persons
as to other matters, and any such Person may certify or give an opinion as to
such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer may
be based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his or her certificate or
opinion is based are erroneous. Any such certificate of an Authorized Officer or
Opinion of Counsel may be based, insofar as it relates to factual matters, upon
a certificate or opinion of, or representations by, an officer or officers of
the Servicer, the Seller or the Issuer, stating that the information with
respect to such factual matters is in the possession of the Servicer, the Seller
or the Issuer, unless such counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Trustee, it is provided that the Issuer shall
deliver any document as a condition of the granting of such application, or as
evidence of
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the Issuer's compliance with any term hereof, it is intended that the truth and
accuracy, at the time of the granting of such application or at the effective
date of such certificate or report (as the case may be), of the facts and
opinions stated in such document shall in such case be conditions precedent to
the right of the Issuer to have such application granted or to the sufficiency
of such certificate or report. The foregoing shall not, however, be construed to
affect the Trustee's right to rely upon the truth and accuracy of any statement
or opinion contained in any such document as provided in Article VI.
SECTION 11.3 Acts of Noteholders. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Noteholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Noteholders in person or by agents duly appointed in writing; and except as
herein otherwise expressly provided such action shall become effective when such
instrument or instruments are delivered to the Trustee, and, where it is hereby
expressly required, to the Issuer. Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes referred to
as the "Act" of the Noteholders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Indenture and (subject to Section 6.1)
conclusive in favor of the Trustee and the Issuer, if made in the manner
provided in this Section.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any customary manner of the Trustee.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Notes shall bind the Holder of every
Note issued upon the registration thereof or in exchange therefor or in lieu
thereof, in respect of anything done, omitted or suffered to be done by the
Trustee or the Issuer in reliance thereon, whether or not notation of such
action is made upon such Note.
SECTION 11.4 Notices, etc., to Trustee, Issuer and Rating Agencies.
Any request, demand, authorization, direction, notice, consent, waiver or Act of
Noteholders or other documents provided or permitted by this Indenture to be
made upon, given or furnished to or filed with:
(a) The Trustee by any Noteholder or by the Issuer shall be
sufficient for every purpose hereunder if personally delivered, delivered
by overnight courier or
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mailed certified mail, return receipt requested and shall be deemed to
have been duly given upon receipt to the Trustee at its Corporate Trust
Office, or
(b) The Issuer by the Trustee or by any Noteholder shall be in
writing and sufficient for every purpose hereunder if personally
delivered, delivered by overnight courier or mailed certified mail, return
receipt requested and shall be deemed to have been duly given upon receipt
to the Issuer addressed to: Centrex Auto Trust 1996-A, in care of the
Owner Trustee, Attention: Corporate Trust Administration at the address of
the Owner Trustee's Corporate Trust Office set forth in the Trust
Agreement or at any other address previously furnished in writing to the
Trustee by Issuer. The Issuer shall promptly transmit any notice received
by it from the Noteholders to the Trustee.
Notices required to be given to the Rating Agencies by the Issuer, the
Trustee or the Owner Trustee shall be in writing, personally delivered,
delivered by overnight courier or mailed certified mail, return receipt
requested to (i) in the case of Moody's, at the following address: Moody's
Investors Service, Inc., 99 Church Street, New York, New York 10004 and (ii) in
the case of S&P, at the following address: Standard & Poor's Ratings Group, 26
Broadway (15th Floor), New York, New York 10004, Attention of Asset Backed
Surveillance Department; or as to each of the foregoing, at such other address
as shall be designated by written notice to the other parties.
SECTION 11.5 Notices to Noteholders; Waiver. Where this Indenture
provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected by such
event, at his address as it appears on the Note Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice. In any case where notice to Noteholders is given by mail,
neither the failure to mail such notice nor any defect in any notice so mailed
to any particular Noteholder shall affect the sufficiency of such notice with
respect to other Noteholders, and any notice that is mailed in the manner here
in provided shall conclusively be presumed to have been duly given.
Where this Indenture provides for notice in any manner, such notice
may be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed with the Trustee but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such a waiver.
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In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event to Noteholders when such notice is required to be
given pursuant to any provision of this Indenture, then any manner of giving
such notice as shall be satisfactory to the Trustee shall be deemed to be a
sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies,
failure to give such notice shall not affect any other rights or obligations
created hereunder, and shall not under any circumstance constitute a Default or
Event of Default.
SECTION 11.6 Alternate Payment and Notice Provisions. Notwithstanding
any provision of this Indenture or any of the Notes to the contrary, the Issuer
may enter into any agreement with any Holder of a Note providing for a method of
payment, or notice by the Trustee or any Paying Agent to such Holder, that is
different from the methods provided for in this Indenture for such payments or
notices, provided that such methods are reasonable and consented to by the
Trustee (which consent shall not be unreasonably withheld). The Issuer will
furnish to the Trustee a copy of each such agreement and the Trustee will cause
payments to be made and notices to be given in accordance with such agreements.
SECTION 11.7 Conflict with Trust Indenture Act. If any provision
hereof limits, qualifies or conflicts with another provision hereof that is
required to be included in this indenture by any of the provisions of the Trust
Indenture Act, such required provision shall control.
The provisions of TIA ss.ss. 310 through 317 that impose duties on
any person (including the provisions automatically deemed included herein unless
expressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.
SECTION 11.8 Effect of Headings and Table of Contents. The Article
and Section headings herein and the Table of Contents are for convenience only
and shall not affect the construction hereof.
SECTION 11.9 Successors and Assigns. All covenants and agreements in
this Indenture and the Notes by the Issuer shall bind its successors and
assigns, whether so expressed or not. All agreements of the Trustee in this
Indenture shall bind its successors.
SECTION 11.10 Separability. In case any provision in this Indenture
or in the Notes shall be invalid, illegal or unenforceable, the validity,
legality, and enforceability of the
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remaining provisions shall not in any way be affected or impaired thereby.
SECTION 11.11 Benefits of Indenture. Nothing in this Indenture or in
the Notes, express or implied, shall give to any Person, other than the parties
hereto and their successors hereunder, and the Noteholders, and any other party
secured hereunder, and any other person with an Ownership interest in any part
of the Trust Estate, any benefit or any legal or equitable right, remedy or
claim under this Indenture.
SECTION 11.12 Legal Holidays. In any case where the date on which any
payment is due shall not be a Business Day, then (notwithstanding any other
provision of the Notes or this Indenture) payment need not be made on such date,
but may be made on the next succeeding Business Day with the same force and
effect as if made on the date an which nominally due, and no interest shall
accrue for the period from and after any such nominal date.
SECTION 11.13 GOVERNING LAW. THIS INDENTURE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.14 Counterparts. This Indenture may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
SECTION 11.15 Recording of Indenture. If this Indenture is subject to
recording in any appropriate public recording offices, such recording is to be
effected by the Issuer and at its expense accompanied by an Opinion of Counsel
(which may be counsel to the Trustee or any other counsel reasonably acceptable
to the Trustee) to the effect that such recording is necessary either for the
protection of the Noteholders or any other person secured hereunder or for the
enforcement of any right or remedy granted to the Trustee under this Indenture.
SECTION 11.16 Trust Obligation. No recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer, the Seller, the
Servicer, the holder of the GP Interest, the Owner Trustee or the Trustee on the
Notes or under this Indenture or any certificate or other writing delivered in
connection herewith or therewith, against (i) the Seller, the Servicer, the
holder of the GP Interest, the Trustee or the Owner Trustee in its individual
capacity, (ii) any owner of a beneficial interest in the Issuer or (iii) any
partner, owner, beneficiary, agent, officer, director, employee or agent of the
Seller, the Servicer, the holder of the GP Interest, the Trustee or the Owner
Trustee in its individual capacity, any holder of a
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beneficial interest in the Issuer, the Seller, the Servicer, the holder of the
GP Interest, the Owner Trustee or the Trustee or of any successor or assign of
the Seller, the Servicer, the holder of the GP Interest, the Trustee or the
Owner Trustee in its individual capacity, except as any such Person may have
expressly agreed (it being understood that the Trustee and the Owner Trustee
have no such obligations in their individual capacity) and except that any such
partner, owner or beneficiary shall be fully liable, to the extent provided by
applicable law, for any unpaid consideration for stock, unpaid capital
contribution or failure to pay any installment or call owing to such entity. For
all purposes of this Indenture, in the performance of any duties or obligations
of the Issuer hereunder, the Owner Trustee shall be subject to, and entitled to
the benefits of, the terms and provisions of Article VI, VII and VIII of the
Trust Agreement.
SECTION 11.17 No Petition. The Trustee, by entering into this
Indenture, and each Noteholder, by accepting a Note, hereby covenant and agree
that they will not at any time institute against the Seller, the holder of the
GP Interest or the Trust, or join in any institution against the Seller, the
holder of the GP Interest or the Trust of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings under
any United States Federal or state bankruptcy or similar law in connection with
any obligations relating to the Notes, this Indenture or any of the Basic
Documents.
SECTION 11.18 Inspection. The Issuer agrees that, on reasonable prior
notice, it will permit any representative of the Trustee, during the Issuer's
normal business hours, to examine all the books of account, records, reports,
and other papers of the Issuer, to make copies and extracts therefrom, to cause
such books to be audited by Independent certified public accountants, and to
discuss the Issuer's affairs, finances and accounts with the Issuer's officers,
employees, and independent certified public accountants, all at such reasonable
times and as often as may be reasonably requested. The Trustee shall and shall
cause its representatives to hold in confidence all such information except to
the extent disclosure may be required by law (and all reasonable applications
for confidential treatment are unavailing) and except to the extent that the
Trustee may reasonably determine that such disclosure is consistent with its
Obligations hereunder.
[THIS SPACE LEFT INTENTIONALLY BLANK]
- 65 -
<PAGE>
IN WITNESS WHEREOF, the Issuer and the Trustee have caused this
Indenture to be duly executed by their respective officers, thereunto duly
authorized, all as of the day and year first above written.
CENTREX AUTO TRUST 1996-A,
By: DELAWARE TRUST CAPITAL MANAGEMENT,
INC., not in its individual
capacity but solely as Owner
Trustee,
By: /S/ Richard N. Smith
-------------------------------------
Name: Richard N. Smith
Title: Vice President
THE BANK OF NEW YORK, not in its
individual capacity but solely as
Trustee,
By: /S/ Reyne A. Macadaeg
-------------------------------------
Name: Reyne A. Macadaeg
Title: Assistant Vice President
- 66 -
<PAGE>
[Form of Note] EXHIBIT D
REGISTERED $_______________
No. R
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO. 156394 AB4
THE NOTES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES OR "BLUE SKY" LAWS.
THE HOLDER HEREOF, BY PURCHASING ANY NOTE, AGREES FOR THE BENEFIT OF THE ISSUER
THAT SUCH NOTE IS BEING ACQUIRED FOR ITS OWN ACCOUNT AND NOT WITH A VIEW TO
DISTRIBUTION AND MAY BE RESOLD, PLEDGED OR TRANSFERRED ONLY (1) TO THE ISSUER
(UPON REDEMPTION THEREOF OR OTHERWISE), (2) TO A PERSON THE TRANSFEROR
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A, PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, OR (3) IN A TRANSACTION
COMPLYING WITH THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES
OR ANY OTHER JURISDICTION.
[UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.]
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH
HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME
MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF.
D-1
<PAGE>
CENTREX AUTO TRUST 1996-A
6.75% ASSET BACKED NOTES
Centrex Auto Trust 1996-A, a business trust organized and existing
under the laws of the State of Delaware (herein referred to as the "Issuer"),
for value received, hereby promises to pay to CEDE & CO., or registered assigns,
the principal sum of [_____________] DOLLARS payable on each Distribution Date
in an amount equal to the result obtained by multiplying (i) a fraction the
numerator of which is $[INSERT INITIAL PRINCIPAL AMOUNT OF NOTE) and the
denominator of which is $___________ by (ii) the aggregate amount, if any,
payable from the Note Distribution Account in respect of principal on the Notes
pursuant to Section 3.1 of the Indenture; provided, however, that the entire
unpaid principal amount of this Note shall be due and payable on the earlier of
the October 2004 Distribution Date (the "Note Final Scheduled Distribution
Date") and the Redemption Date, if any, pursuant to Section 10.1(a) (i) or (ii)
or Section 10.1(b) of the Indenture. The Issuer will pay interest on this Note
at the rate per annum shown above on each Distribution Date commencing in
October 1996 until the principal of this Note is paid or made available for
payment, on the principal amount of this Note outstanding on the preceding
Distribution Date (after giving effect to all payments of principal made on the
preceding Distribution Date). Interest on this Note will accrue for each
Distribution Date from the most recent Distribution Date on which interest has
been paid to but excluding such Distribution Date or, if no interest has yet
been paid, from September 24, 1996. Interest will be computed on the basis of a
360-day year of twelve 30-day months. Such principal of and interest on this
Note shall be paid in the manner specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin
or currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on
the reverse hereof, which shall have the same effect as though fully set forth
on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Trustee whose name appears below by manual signature, this Note shall not be
entitled to any benefit under the Indenture referred to on the reverse hereof,
or be valid or obligatory for any purpose.
D-2
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be
signed, manually or in facsimile, by its Authorized Officer as of the date set
forth below.
Date: CENTREX AUTO TRUST 1996-A,
By: DELAWARE TRUST CAPITAL
MANAGEMENT, INC., not in its
individual capacity but solely
as Owner Trustee under the
Trust Agreement,
By: _________________________________
_________________________________
Authorized Signatory
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the 6.75% Asset Backed Notes of Centrex Auto Trust
1996-A designated above and referred to in the within-mentioned Indenture.
Date: THE BANK OF NEW YORK,
not in its individual capacity
but solely as Trustee,
By: _________________________________
Authorized Signatory
D-3
<PAGE>
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its 6.75% Asset Backed Notes (herein called the "Notes"), all
issued under an Indenture dated as of September 13, 1996 (such indenture, as
supplemented or amended, is herein called the "Indenture"), between the Issuer
and The Bank of New York, as trustee (the "Trustee", which term includes any
successor Trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights and obligations thereunder of the Issuer, the Trustee and the Holders of
the Notes. The Notes are subject to all terms of the Indenture. All terms used
in this Note that are defined in the Indenture, as supplemented or amended,
shall have the meanings assigned to them in or pursuant to the Indenture, as so
supplemented or amended.
The Notes are and will be equally and ratably secured by the
collateral pledged as security therefor as provided in the Indenture.
Principal of the Notes will be payable on each Distribution Date in
an amount described on the face hereof. "Distribution Date" means the fifteenth
day of each month, or, if any such date is not a Business Day, the next
succeeding Business Day, commencing October 1996.
As described above, the entire unpaid principal amount of this Note
shall be due and payable on the earlier of the Note Final Scheduled Distribution
Date and the Redemption Date, if any, pursuant to Section 10.1(a) (i) or (ii) or
Section 10.1(b) of the Indenture. Notwithstanding the foregoing, the entire
unpaid principal amount of the Notes shall be due and payable on the date on
which an Event of Default shall have occurred and be continuing and the Trustee
or the Holders of the Notes representing not less than a majority of the
Outstanding Amount of the Notes have declared the Notes to be immediately due
and payable in the manner provided in Section 5.2 of the Indenture. All
principal payments on the Notes shall be made pro rata to the Noteholders
entitled thereto.
Payments of interest on this Note due and payable on each
Distribution Date, together with the installment of principal, if any, to the
extent not in full payment of this Note, shall be made by check mailed to the
Person whose name appears as the Holder of this Note (or one or more Predecessor
Notes) on the Note Register as of the close of business on each Record Date,
except that with respect to Notes registered on the Record Date in the name of
the nominee of the Clearing Agency (initially, such nominee to be Cede & Co.),
payments will be made by wire transfer in immediately available funds to the
account designated by such nominee. Such checks shall be mailed to the
D-4
<PAGE>
Person entitled thereto at the address of such Person as it appears on the Note
Register as of the applicable Record Date without requiring that this Note be
submitted for notation of payment. Any reduction in the principal amount of this
Note (or any one or more Predecessor Notes) effected by any payments made on any
Distribution Date shall be binding upon all future Holders of this Note and of
any Note issued upon the registration of transfer hereof or in exchange hereof
or in lieu hereof, whether or not noted hereon. If funds are expected to be
available, as provided in the Indenture, for payment in full of the then
remaining unpaid principal amount of this Note on a Distribution Date, then the
Trustee, in the name of and on behalf of the Issuer, will notify the Person who
was the Holder hereof as of the Record Date preceding such Distribution Date by
notice mailed prior to such Distribution Date and the amount then due and
payable shall be payable only upon presentation and surrender of this Note at
the Trustee's principal Corporate Trust Office or at the office of the Trustee's
agent appointed for such purposes located in the City of New York.
The Issuer shall pay interest on overdue installments of interest at
the Interest Rate to the extent lawful.
As provided in the Indenture, the Notes may be redeemed in whole, but
not in part, (i) at the option of the Seller, on any Distribution Date on or
after the date on which the Pool Balance is less than ten percent of the Initial
Pool Balance or (ii) if the Seller has not exercised its rights in clause (i)
within ten days following a Distribution Date as of which the Pool Balance is 5%
or less of the Initial Pool Balance, an auction sale shall be conducted (as
described in the Sale and Servicing Agreement).
As provided in the Indenture and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, (i) duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Trustee duly executed by, the Holder hereof or his attorney duly authorized in
writing, with such signature guaranteed by an "eligible guarantor institution"
meeting the requirements of the Note Registrar which requirements include
membership or participation in Securities Transfer Agents Medallion Program
("Stamp") or such other "signature guarantee program" as may be determined by
the Note Registrar in addition to, or in substitution for, Stamp, all in
accordance with the Exchange Act, and (ii) accompanied by such other documents
as the Trustee may require, and thereupon one or more new Notes of authorized
denominations and in the same aggregate principal amount will be issued to the
designated transferee or transferees. No service charge will be charged for any
registration of transfer or exchange of this Note, but the
D-5
<PAGE>
transferor may be required to pay a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any such registration
of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in the
case of a Note Owner, a beneficial interest in a Note covenants and agrees that
no recourse may be taken, directly or indirectly, with respect to the
obligations of the Issuer, the Owner Trustee or the Trustee on the Notes or
under the Indenture or any certificate or other writing delivered in connection
therewith, against (i) the Seller, the Servicer, the holder of the GP Interest,
the Trustee or the Owner Trustee in its individual capacity, (ii) any owner of a
beneficial interest in the Issuer or (iii) any partner, owner, beneficiary,
agent, officer, director or employee of the Seller, the Servicer, the holder of
the GP Interest, the Trustee or the Owner Trustee in its individual capacity,
any holder of a beneficial interest in the Issuer, the Seller, the Servicer, the
holder of the GP Interest, the Owner Trustee or the Trustee or of any successor
or assign of the Seller, the Servicer, the holder of the GP Interest, the
Trustee or the Owner Trustee in its individual capacity, except as any such
Person may have expressly agreed (it being understood that the Trustee and the
Owner Trustee have no such obligations in their individual capacity) and except
that any such partner, owner or beneficiary shall be fully liable, to the extent
provided by applicable law, for any unpaid consideration for stock, unpaid
capital contribution or failure to pay any installment or call owing to such
entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in the
case of a Note Owner, a beneficial interest in a Note covenants and agrees that
by accepting the benefits of the Indenture that such Noteholder will not at any
time institute against the Depositor, the holder of the GP Interest or the
Issuer, or join in any institution against the Depositor, the holder of the GP
Interest or the Issuer of, any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or other proceedings, under any United
States Federal or state bankruptcy or similar law in connection with any
obligations relating to the Notes, the Indenture or the Basic Documents.
Prior to the due presentment for registration of transfer of this
Note, the Issuer, the Trustee and any agent of the Issuer or the Trustee may
treat the Person in whose name this Note (as of the day of determination or as
of such other date as may be specified in the Indenture) is registered as the
owner hereof for all purposes, whether or not this Note be overdue, and neither
the Issuer, the Trustee nor any such agent shall be affected by notice to the
contrary.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of
D-6
<PAGE>
the rights and obligations of the Issuer and the rights of the Holders of the
Notes under the Indenture at any time by the Issuer with the consent of the
Holders of Notes representing a majority of the Outstanding Amount of all Notes
at the time Outstanding. The Indenture also contains provisions permitting the
Holders of Notes representing specified percentages of the Outstanding Amount of
the Notes, on behalf of the Holders of all the Notes, to waive compliance by the
Issuer with certain provisions of the Indenture and certain past defaults under
the Indenture and their consequences. Any such consent or waiver by the Holder
of this Note (or any one of more Predecessor Notes) shall be conclusive and
binding upon such Holder and upon all future Holders of this Note and of any
Note issued upon the registration of transfer hereof or in exchange hereof or in
lieu hereof whether or not notation of such consent or waiver is made upon this
Note. The Indenture also permits the Trustee to amend or waive certain terms and
conditions set forth in the Indenture without the consent of Holders of the
Notes issued thereunder.
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain
circumstances, to merge or consolidate, subject to the rights of the Trustee and
the Holders of Notes under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be construed in accordance with the
laws of the State of New York, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
and thereunder shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place, and rate, and in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Indenture or the Basic Documents, neither The Bank of New York
in its individual capacity, Delaware Trust Capital Management, Inc. in its
individual capacity, any owner of a beneficial interest in the Issuer, nor any
of their respective partners, beneficiaries, agents, officers, directors,
employees or successors or assigns shall be personally liable for, nor shall
recourse be had to any of them for, the payment of principal of or interest on,
or performance of, or omission to perform, any of the covenants, obligations or
indemnifications contained in this Note or the Indenture, it being expressly
D-7
<PAGE>
understood that said covenants, obligations and indemnifications have been made
by the Owner Trustee for the sole purposes of binding the interests of the Owner
Trustee in the assets of the Issuer. The Holder of this Note by the acceptance
hereof agrees that except as expressly provided in the Indenture or the Basic
Documents, in the case of an Event of Default under the Indenture, the Holder
shall have no claim against any of the foregoing for any deficiency, loss or
claim therefrom; provided, however, that nothing contained herein shall be taken
to prevent recourse to, and enforcement against, the assets of the Issuer for
any and all liabilities, obligations and undertakings contained in the Indenture
or in this Note.
D-8
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of
assignee
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto ________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints _____________, attorney, to transfer said Note on the books kept
for registration thereof, with full power of substitution in the premises.
Dated: ___________ _______________________(2)
Signature Guaranteed:
________________________(1)
- ----------
(2) NOTE: The signature to this assignment must correspond with the name of
the registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatsoever.
D-9
Exhibit 11
Oxford Resources Corp.
and Subsidiaries
Statement of Computation of
Net Income Per Share
================================================================================
Three Months Ended September 30, 1996 1995
- --------------------------------------------------------------------------------
(In thousands except per share data)
Net income $ 5,700 $ 4,035
------- -------
Weighted average common shares
outstanding 14,840 13,268
Common stock equivalents 195 213
------- -------
Weighted average number of common
and common equivalent shares outstanding 15,035 13,481
======= =======
Primary earnings per share $ 0.38 $ 0.30
======= =======
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF OPERATIONS CONTAINED
IN THE COMPANY'S FORM 10-Q FOR THE YEAR-TO-DATE, AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 58,731,050
<SECURITIES> 3,396,260
<RECEIVABLES> 64,270,706 <F1>
<ALLOWANCES> 0
<INVENTORY> 30,093,357 <F2>
<CURRENT-ASSETS> 0
<PP&E> 12,491,146
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,614,164,029 <F3>
<CURRENT-LIABILITIES> 42,760,630
<BONDS> 1,475,941,011 <F4>
0
0
<COMMON> 148,397
<OTHER-SE> 95,313,991
<TOTAL-LIABILITY-AND-EQUITY> 1,614,164,029
<SALES> 0
<TOTAL-REVENUES> 85,110,402
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 48,828,568 <F5>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 26,938,110
<INCOME-PRETAX> 9,343,724
<INCOME-TAX> 3,644,000
<INCOME-CONTINUING> 5,699,724
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,699,724
<EPS-PRIMARY> .38
<EPS-DILUTED> .38
<FN>
<F1> Net investment in automobile receivables
<F2> Inventory and other assets
<F3> Includes vehicles under operating leases-net
<F4> Notes payable and obligations under capital leases-non-recourse
<F5> Selling, general and administrative and depreciation
</FN>
</TABLE>
