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 December 31, 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 February 3, 1997
----- ----------------
Class A Common Stock 7,864,750
Class B Common Stock 7,102,774
<PAGE>
TABLE OF CONTENTS
Part I Financial Information Page #
------
Item 1. Financial Statements
Consolidated Balance Sheets - As of
December 31, 1996 and June 30, 1996.......................... 3
Consolidated Statements of Income -
Six and three month periods ended
December 31, 1996 and December 31, 1995...................... 4
Consolidated Statement of Shareholders'
Equity - Six month period ended
December 31, 1996 ........................................... 5
Consolidated Statements of Cash Flows -
Six month periods ended
December 31, 1996 and December 31, 1995...................... 6
Notes to Consolidated Financial Statements................... 8
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations................................................... 10
Part II Other Information
Item 1. Legal Proceedings........................................... 32
Item 2. Changes in Securities....................................... 32
Item 3. Defaults Upon Senior Securities............................. 32
Item 4. Submission of Matters to
a Vote of Security Holders ................................. 32
Item 5. Other Information........................................... 33
Item 6. Exhibits and Reports on Form 8-K............................ 33
Signatures .......................................................... 34
Index of Exhibits ................................................... 35
Exhibits
2
<PAGE>
Part I - Financial Information
Item 1 - Financial Statements
Oxford Resources Corp.
and Subsidiaries
Consolidated Balance Sheets
================================================================================
<TABLE>
<CAPTION>
December 31, June 30,
1996 1996
(Unaudited)
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Cash and cash equivalents $ 52,847,650 $ 66,298,981
Available for sale securities 2,075,289 7,684,401
Net investment in automobile receivables 68,829,040 60,708,681
Inventories and other assets 47,693,240 26,007,423
Vehicles under operating leases - net 1,512,445,387 1,337,514,432
Property and equipment, less accumulated depreciation 16,301,869 10,702,456
Restricted funds on deposit with banks
(net of $34,165,467 and $33,529,951 of security deposits) 11,465,657 8,922,036
Receivables from related parties 2,796,254 2,824,147
--------------- ---------------
$ 1,714,454,386 $ 1,520,662,557
=============== ===============
Liabilities and Shareholders' Equity
Liabilities:
Accrued expenses and other liabilities $ 14,245,084 $ 16,150,730
Deferred income taxes 32,994,000 25,650,000
Notes payable and obligations under capital leases -
non-recourse 1,563,772,305 1,387,398,523
--------------- ---------------
Total liabilities 1,611,011,389 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 7,845,285 and 7,115,662 78,453 71,157
Class B, $.01 par value - shares authorized 8,000,000;
issued 7,102,774 and 7,724,000 71,028 77,240
Additional paid-in capital 64,062,510 61,258,667
Retained earnings 39,736,540 28,172,662
Unrealized gain(loss) on available for sale securities (505,534) 1,883,578
--------------- ---------------
Total shareholders' equity 103,442,997 91,463,304
--------------- ---------------
$ 1,714,454,386 $ 1,520,662,557
=============== ===============
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
Oxford Resources Corp.
and Subsidiaries
Consolidated Statements of Income
(Unaudited)
================================================================================
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
December 31, December 31,
1996 1995 1996 1995
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues:
Rental income $153,039,840 $129,108,335 $ 77,943,799 $ 65,853,457
Gain on sale of retail
installment contracts 5,565,841 4,457,606 2,965,557 2,427,895
Interest and other income 5,238,371 3,654,745 2,413,022 2,158,796
Gain on vehicle dispositions
and lease terminations 3,795,798 2,989,809 2,261,442 1,471,272
Servicing income 6,448,800 4,117,992 3,394,429 1,985,266
------------ ------------ ------------ ------------
Total revenues 174,088,650 144,328,487 88,978,249 73,896,686
------------ ------------ ------------ ------------
Expenses:
Selling, general and administrative 27,341,844 20,697,027 14,565,998 10,628,995
Depreciation and amortization 72,876,331 64,618,258 36,823,609 32,680,169
Interest 54,912,597 44,955,196 27,974,487 23,144,853
------------ ------------ ------------ ------------
Total expenses 155,130,772 130,270,481 79,364,094 66,454,017
------------ ------------ ------------ ------------
Income before taxes on income 18,957,878 14,058,006 9,614,155 7,442,669
Taxes on income 7,394,000 5,483,000 3,750,000 2,903,000
------------ ------------ ------------ ------------
Net income $ 11,563,878 $ 8,575,006 $ 5,864,155 $ 4,539,669
============ ============ ============ ============
Per share data:
Net income $ 0.77 $ 0.61 $ 0.39 $ 0.31
============ ============ ============ ============
Weighted average number of common
and common equivalent shares
outstanding 15,088,215 14,113,004 15,141,805 14,742,032
============ ============ ============ ============
</TABLE>
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
------------------ ------------------ Gain(Loss)
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
Issuance of common stock
for EVRI acquisition 107,897 1,079 -- -- 2,798,848 -- -- 2,799,927
Exercise of stock options 500 5 -- -- 4,995 -- -- 5,000
Conversion of common stock 621,226 6,212 (621,226) (6,212) -- -- -- --
Unrealized gain(loss) on
available for sale
securities -- -- -- -- -- -- (2,389,112) (2,389,112)
Net income -- -- -- -- -- 11,563,878 -- 11,563,878
---------------------------------------------------------------------------------------------
Balance, December 31, 1996 7,845,285 $78,453 7,102,774 $ 71,028 $64,062,510 $39,736,540 $ (505,534) $103,442,997
=============================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
Oxford Resources Corp.
and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
================================================================================
<TABLE>
<CAPTION>
Six Months Ended December 31, 1996 1995
- --------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 11,563,878 $ 8,575,006
------------- -------------
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization on vehicles under
operating leases 71,457,473 63,600,745
Depreciation and amortization on property and equipment 1,418,858 1,017,513
Provision for possible losses 2,689,456 3,359,171
Accrued interest on retail installment contracts sold (728,586) (782,426)
Deferred income taxes 7,344,000 5,432,915
Gain on vehicle dispositions and lease terminations (2,261,442) (2,989,809)
Gain on sale of retail installment contracts (5,565,841) (4,457,606)
Decrease (increase) in assets:
Purchase of treasury notes (172,883,556) (86,015,208)
Sale of treasury notes 172,158,685 85,644,956
Lease termination fees receivable (4,312,081) (2,512,151)
Inventories and other assets (21,650,408) (913,573)
Retail installment contracts:
Purchases (184,902,284) (106,127,686)
Sales 178,412,544 89,610,129
Commissions and expenses paid (8,895,979) (4,344,261)
Principal collections on contracts held for sale 8,136,340 3,352,586
Collections on retained subordinated investment in
contracts sold 5,004,218 1,538,342
Deposits to spread account (1,209,144) (2,365,921)
Withdrawls from spread account 722,059 1,188,367
Decrease in liabilities:
Accrued expenses and other liabilities (1,832,651) 1,757,394
------------- -------------
Total adjustments 43,101,661 45,993,477
------------- -------------
Net cash provided by operating activities 54,665,539 54,568,483
------------- -------------
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE>
Oxford Resources Corp.
and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
================================================================================
<TABLE>
<CAPTION>
Six Months Ended December 31, 1996 1995
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from investing activities:
Sale of available for sale securities 3,220,000 --
Purchase of vehicles under operating leases (363,303,433) (296,036,128)
Proceeds from dispositions of vehicles
under operating leases 121,834,768 83,631,705
Retained subordinated investments in
retail installment contracts sold -- (2,688,404)
Capital expenditures (4,218,344) (3,811,858)
Repayment of receivables from related parties 27,893 101,679
------------- -------------
Net cash used in investing activities (242,439,116) (218,803,006)
------------- -------------
Cash flows from financing activities:
Proceeds from notes payable and obligations under
capital leases - non-recourse 384,991,905 320,423,657
Principal payments on notes payable and obligations under
capital leases - non-recourse (208,618,123) (155,630,997)
Increase in restricted funds on deposit with banks (2,056,536) (398,768)
Proceeds from exercise of stock options 5,000 36,528,712
------------- -------------
Net cash provided by financing activities 174,322,246 200,922,604
------------- -------------
Net increase (decrease) in cash and cash equivalents (13,451,331) 36,688,081
Cash and cash equivalents, beginning of period 66,298,981 36,900,005
------------- -------------
Cash and cash equivalents, end of period $ 52,847,650 $ 73,588,086
============= =============
</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 of Oxford Resources Corp. ("Oxford") and its subsidiaries (the
"Company") 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.
3) Net investment in automobile receivables
The components of the net investment in automobile receivables are as
follows:
December 31, June 30,
1996 1996
------------ ------------
Retail installment contracts held
for sale $ 18,756,385 $ 20,672,495
Retained subordinated investments in
contracts sold 10,737,500 12,379,298
------------ ------------
29,493,885 33,051,793
Allowance for possible losses (1) (1,621,645) (1,368,839)
------------ ------------
27,872,240 31,682,954
Excess servicing receivable (2) 40,956,800 29,025,727
------------ ------------
Net investment in automobile
receivables $ 68,829,040 $ 60,708,681
============ ============
- ----------
(1) Allowance for possible losses are provided for retail installment contracts
held for sale of $844,037 and $760,062 and for retained subordinated
investments in contracts sold of $777,608 and $608,777 at December 31, 1996
and June 30, 1996, respectively.
(2) Excess servicing receivable is net of an allowance for possible losses of
$8,587,990 and $6,232,376 at December 31, 1996 and June 30, 1996,
respectively.
8
<PAGE>
Oxford Resources Corp.
and Subsidiaries
Notes to Consolidated Financial Statements
================================================================================
4) Shareholders' Equity
On November 22, 1996, the Company acquired 80% of the outstanding common
stock of Electronic Vehicle Remarketing, Inc. ("EVRI"), a provider of used
car sales, financing and auction technology over the Internet. EVRI was
purchased for $2,800,000 through the issuance of 107,897 shares of the
Company's Class A Common Stock. The acquisition has been accounted for as a
purchase. Accordingly, the excess purchase price over the estimated fair
value of the net tangible assets acquired has been allocated to goodwill.
Goodwill is amortized over seven years. As part of the purchase, the
Company has a contingent liability for the issuance of up to an additional
$2,800,000 of Class A Common Stock if certain pre-defined performance
milestones are achieved within five years of the date of acquisition. At
December 31, 1996, the minority interest was immaterial.
5) Subsequent Event
On January 14, 1997, the Company entered into a definitive Agreement and
Plan of Merger by and among Barnett Banks, Inc. ("Barnett"), Oxford and a
newly formed wholly-owned subsidiary of Barnett ("Merger Sub") pursuant to
which Merger Sub will be merged into Oxford and Oxford will become a
wholly-owned subsidiary of Barnett (the "Merger"). Based on the price of
Barnett shares at the close of business on January 13, 1997, the
transaction will be valued at approximately $570.0 million. The Company's
shareholders will obtain, subject to certain limitations and exceptions,
the right to receive .9085 shares of Barnett common stock for each share of
each class of the Company's common stock.
9
<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 other filings with the Securities and Exchange
Commission made by the Company (as hereinafter defined) from time to time. The
discussion of the Company's business and results of operations, including
forward-looking statements pertaining to such matters, does not take into
account the effects of any changes to the Company's business and results of
operation, including without limitation, the Company's securitization program
relating to its retail installment contract originations and the generation and
utilization of net operating loss carryforwards, primarily resulting from the
Company's lease obligations, which may result from the consummation of the
transactions contemplated by that certain Agreement and Plan of Merger dated
January 14, 1997 by and among Barnett Banks, Inc. ("Barnett"), Oxford Resources
Corp. ("Oxford") and a newly formed wholly-owned subsidiary of Barnett ("Merger
Sub") pursuant to which Merger Sub will be merged into Oxford and Oxford will
become a wholly-owned subsidiary of Barnett (the "Merger").
General
Oxford is a specialized automobile finance company engaged 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 21 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 19
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 Consolidated 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
10
<PAGE>
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 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 consolidated 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 December 31,
-----------------------------------
1996 1995
---- ----
(in thousands)
Notes payable and capital lease
obligations - non-recourse........ $ 1,563,772 $ 1,280,775
Receivables from Lenders and other (1) 16,826 13,322
Net book value of vehicles under
operating leases.................. (1,499,499) (1,217,787)
----------- -----------
Unearned premium..................... $ 81,099 $ 76,310
=========== ===========
- ----------
(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
11
<PAGE>
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 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:
Six Months Ended Three Months Ended
December 31, December 31,
---------------- ------------------
1996 1995 1996 1995
---- ---- ---- ----
(in thousands)
Gain on extinguishment of
non-recourse obligations $1,331 $ 830 $ 810 $ 361
Credit losses on lessee defaults
and physical losses....... 1,132 603 703 287
------ ----- ---- -----
Net gain.................... $ 199 $ 227 $ 107 $ 74
====== ===== ===== =====
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<PAGE>
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 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 transfer of risk. 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:
Six Months Ended December 31,
-----------------------------
1996 1995
---- ----
(in months)
Weighted average original lease term........ 34.4 35.0
The following table sets forth for the Company's lease
13
<PAGE>
portfolio, the lease delinquencies at December 31, 1996 and 1995 and credit
losses for the twelve months ended December 31, 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 by the Company
in the future, will be similar to or consistent with that set forth herein.
At December 31,
-----------------------------------
1996 1995
---- ----
Lease delinquencies (1).............. .99% .73%
Twelve Months Ended December 31,
-----------------------------------
1996 1995
---- ----
Lease credit losses (2).............. .16% .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.
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.
14
<PAGE>
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.
Three Months Ended December 31,
--------------------------------------
1996 1995
---- ----
Number Percent Number Percent
------ ------- ------ -------
Remarketing method
Vehicles sold or re-leased to
lessees or third parties referred
by lessees.......................... 2,257 58.5% 1,559 58.7%
Consignment/Retail (1)............... 415 10.8 220 8.3
Wholesale............................ 1,186 30.7 876 33.0
----- ----- ----- -----
Total................................ 3,858 100.0% 2,655 100.0%
===== ===== ===== =====
- ----------
(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.
Six Months Ended December 31,
--------------------------------------
1996 1995
---- ----
Number Percent Number Percent
------ ------- ------ -------
Remarketing method
Vehicles sold or re-leased to lessees
or third parties referred by
lessees............................. 4,763 58.4% 3,354 53.8%
Consignment/Retail (1)............... 761 9.3 507 8.2
Wholesale............................ 2,638 32.3 2,369 38.0
----- ----- ----- -----
Total................................ 8,162 100.0% 6,230 100.0%
======= ===== ===== =====
(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.
15
<PAGE>
The Company engages in indirect automobile lending by purchasing Contracts
from automobile dealers in 19 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.
The following table sets forth information regarding the Company's serviced
Contract portfolio:
Six Months Ended December 31,
------------------------------------------------
1996 1995
---- ----
Net Dollar Net Dollar
Amount(1) Number Amount(1) Number
--------- ------ --------- ------
(dollars in thousands)
Balance serviced,
beginning of period....... $305,376 24,766 $113,490 11,809
Originations.............. 184,902 11,459 106,127 6,952
Runoff.................... (65,019) (3,390) (28,532) (1,701)
-------- -------- -------- ------
Balance serviced,
end of period............. $425,259 32,835 $191,085 17,060
======== ======== ======== ======
Balance held for sale,
end of period(2).......... $ 18,756 1,211 $ 20,089 1,354
Retail installment contracts
sold in period:
Amount................... $178,413 11,188 $ 89,610 6,010
Weighted average
coupon (3)............. 13.3% 14.0%
Gain on sale as a percentage
of dollar amount of retail
installment contracts sold 3.1% 5.0%
- ----------
(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.
16
<PAGE>
Three Months Ended December 31,
----------------------------------------------
1996 1995
---- ----
Net Dollar Net Dollar
Amount(1) Number Amount(1) Number
--------- ------ --------- ------
(dollars in thousands)
Balance serviced,
beginning of period....... $363,594 28,728 $141,891 13,825
Originations.............. 95,293 5,788 64,887 4,133
Runoff.................... (33,628) (1,681) (15,693) (898)
-------- ------ -------- -----
Balance serviced,
end of period............. $425,259 32,835 $191,085 17,060
======== ====== ======== ======
Balance held for sale,
end of period(2).......... $ 18,756 1,211 $ 20,089 1,354
Retail installment contracts
sold in period:
Amount.................. $ 92,005 5,682 $ 52,010 3,376
Weighted average
Coupon (3)............ 13.2% 13.9%
Gain on sale as a percentage
of dollar amount of retail
installment contracts sold 3.2% 4.7%
- ----------
(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
17
<PAGE>
respect to Contracts originated by the Company in the future, will be similar to
or consistent with that set forth herein.
At December 31,
--------------------------------------------------------
1996 1995
---- ----
Balance Percent(1) Balance Percent(1)
------- ---------- ------- ----------
(dollars in thousands) (2)
Retail installment
contracts outstanding $ 425,259 100.0% $191,085 100.0%
========= ===== ======== =====
Delinquencies:
30-59 days.......... 4,387 1.03% 1,762 .92%
60-89 days.......... 1,327 .31 384 .20
90 days or more..... 1,073 .26 334 .18
------- ---- -------- ----
Total delinquencies... $ 6,787 1.60% $ 2,480 1.30%
======= ==== ======== ====
- ----------
(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., net of unearned interest).
Six Months Ended December 31,
-------------------------------
1996 1995
---- ----
(dollars in thousands) (1)
Net credit losses............................ $2,295 $ 740
As a percentage of average principal amount
of contract balances outstanding .......... 1.23% .97%
- ----------
(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
18
<PAGE>
whole-loan basis or in securitization 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. The
Company also utilized the owner trust structure for its securitization
transaction in the three month period ended December 31, 1996. 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 Consolidated 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 Consolidated 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.
19
<PAGE>
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.
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
Consolidated 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 by considering the actual prepayment
and credit loss experience of the underlying sold Contracts and making an
adjustment to reduce the carrying value of such receivable, 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
20
<PAGE>
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 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 (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
21
<PAGE>
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 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 December 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
22
<PAGE>
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 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 and six months ended December 31, 1996 and
1995.
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
December 31, December 31,
---------------- ------------------
1996 1995 1996 1995
---------------- ---------------- ---------------- ----------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Rental income ......... $153,040 87.9% $129,108 89.5% $ 77,944 87.6% $ 65,854 89.1%
Gain on sale of retail 5,566 3.2 4,458 3.1 2,966 3.3 2,428 3.3
installment contracts
Interest and other
income ............... 5,238 3.0 3,654 2.5 2,413 2.7 2,159 2.9
Gain on vehicle
dispositions and lease
terminations ......... 3,796 2.2 2,990 2.1 2,261 2.6 1,471 2.0
Servicing income ...... 6,449 3.7 4,118 2.8 3,394 3.8 1,985 2.7
-------- ----- -------- ----- -------- ----- -------- -----
Total revenues ..... $174,089 100.0% $144,328 100.0% $ 88,978 100.0% $ 73,897 100.0%
======== ====== ======= ====== ======== ===== ======== =====
</TABLE>
Three months ended December 31, 1996 compared to three months ended
December 31, 1995
Revenues for the three months ended December 31, 1996 increased to $89.0
million from $73.9 million for the three months ended December 31, 1995
representing an increase of 20.4%.
Rental income for the three months ended December 31, 1996 increased to
$77.9 million from $65.9 million for the same three month period in the prior
23
<PAGE>
fiscal year, representing an increase of 18.4%. The increase in rental income
was attributable to the increase in the Company's aggregate lease portfolio. At
December 31, 1996, the Company's lease portfolio increased to $1.5 billion
(95,965 leases) from $1.2 billion (77,612 leases) at December 31, 1995,
representing an increase of 23.2%. For the three months ended December 31, 1996,
the Company originated $176.l million of leases (9,148 leases), an increase of
31.7% over the $133.7 million of leases (7,862 leases) originated in the same
period in the prior fiscal year.
Gain on sale of retail installment contracts for the three months ended
December 31, 1996 increased to $3.0 million from $2.4 million for the three
months ended December 31, 1995, representing an increase of 22.2%. This increase
is attributable to the increase to $92.0 million in the dollar amount of
Contracts sold in the three months ended December 31, 1996 from $52.0 million in
Contracts sold in the three months ended December 31, 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 December 31, 1996
increased to $2.4 million from $2.2 million for the three months ended December
31, 1995, representing an increase of 11.8%. 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 December 31,
1996 from $751,000 for the same period of the prior fiscal year. 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 December 31, 1996 was $2.3 million compared with $1.5 million for the
three month period ended December 31, 1995, representing an increase of 53.7%.
The total number of vehicles remarketed (which includes off-lease, purchased and
repossessed vehicles) increased to 4,157 for the three months ended December 31,
1996 from 2,809 for the three months ended December 31, 1995, and direct vehicle
repair and marketing costs associated with such sales increased to $1.8 million
from $1.0 million, and are included in selling, general and administrative
expenses.
24
<PAGE>
Servicing income for the three months ended December 31, 1996 increased to
$3.4 million from $2.0 million for the three months ended December 31, 1995,
representing an increase of 71.0%. This increase was attributable to the
increase in the number of leases and Contracts serviced by the Company.
Total expenses for the three months ended December 31, 1996 increased to
$79.4 million from $66.5 million for the same period of the prior fiscal year,
representing an increase of 19.4%.
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 December 31, 1996, increased to
$36.1 million from $32.2 million for the same three month period in the prior
fiscal year, representing an increase of 12.2%. The increase in depreciation and
amortization expense was principally attributable to the increase in the
Company's aggregate lease portfolio from December 31, 1995 to December 31, 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 December 31, 1996, increased to $27.8 million from $23.1 million for the
three months ended December 31, 1995, representing an increase of 20.3%. The
increase in such interest expense was primarily due to the increased borrowings
attributable to the Company's aggregate lease portfolio. At December 31, 1996,
such aggregate non-recourse borrowings had increased to $1.6 billion from $1.3
billion at December 31, 1995, representing an increase of 22.1%.
Selling, general and administrative expenses for the three months ended
December 31, 1996 increased to $14.6 million from $10.6 million for the same
three month period of the prior fiscal year, representing an increase of 37.0%.
This increase was primarily due to the increased costs associated with the
increased lease and Contract originations for the three months ended December
31, 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
December 31, 1996 increased to $5.9 million from $4.5 million for the three
months ended December 31, 1995, representing an increase of 29.2%.
25
<PAGE>
Six months ended December 31, 1996 compared to six months ended December
31, 1995
Revenues for the six months ended December 31, 1996 increased to $174.1
million from $144.3 million for the six months ended December 31, 1995
representing an increase of 20.6%.
Rental income for the six months ended December 31, 1996 increased to
$153.0 million from $129.1 million for the same six month period in the prior
fiscal year, representing an increase of 18.5%. The increase in rental income
was attributable to the increase in the Company's aggregate lease portfolio. For
the six months ended December 31, 1996, the Company originated $363.3 million of
leases (20,115 leases), an increase of 22.7% over the $296.0 million of leases
(16,865 leases) originated in the same period in the prior fiscal year.
Gain on sale of retail installment contracts for the six months ended
December 31, 1996 increased to $5.6 million from $4.5 million for the six months
ended December 31, 1995, representing an increase of 24.9%. This increase is
attributable to the increase to $178.4 million in the dollar amount of Contracts
sold in the six months ended December 31, 1996 from $89.6 million in Contracts
sold in the six months ended December 31, 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 six months ended December 31, 1996
increased to $5.2 million from $3.7 million for the six months ended December
31, 1995, representing an increase of 43.3%. The increase in interest and other
income was primarily attributable to the increase in interest income on
Contracts held for sale to $2.5 million for the six months ended December 31,
1996 from $1.4 million for the same period of the prior fiscal year. 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 six months
ended December 31, 1996 increased to $3.8 million from $3.0 for the same six
month period in the prior fiscal year. The total number of vehicles remarketed
(which includes off- lease, purchased and repossessed vehicles) increased to
8,711 for the six months ended December 31, 1996 from 6,666 for the six months
26
<PAGE>
ended December 31, 1995, and direct vehicle repair and marketing costs
associated with such sales increased to $3.3 million from $2.3 million, and are
included in selling, general and administrative expenses.
Servicing income for the six months ended December 31, 1996 increased to
$6.4 million from $4.1 million for the six months ended December 31, 1995,
representing an increase of 56.6%. This increase was attributable to the
increase in the number of leases and Contracts serviced by the Company.
Total expenses for the six months ended December 31, 1996 increased to
$155.1 million from $130.3 million for the same period of the prior fiscal year,
representing an increase of 19.1%.
Depreciation and amortization expense directly associated with the
Company's leased vehicles, for the six months ended December 31, 1996, increased
to $71.5 million from $63.6 million for the same six month period in the prior
fiscal year, representing an increase of 12.4%. The increase in depreciation and
amortization expense was principally attributable to the increase in the
Company's aggregate lease portfolio from December 31, 1995 to December 31, 1996.
Interest expense directly associated with the Company's lease borrowings,
for the six months ended December 31, 1996, increased to $54.7 million from
$44.9 million for the six months ended December 31, 1995, representing an
increase of 21.7%. The increase in such interest expense was primarily due to
the increased borrowings attributable to the Company's aggregate lease
portfolio.
Selling, general and administrative expenses for the six months ended
December 31, 1996 increased to $27.3 million from $20.7 million for the same six
month period of the prior fiscal year, representing an increase of 32.1%. This
increase was primarily due to the increased costs associated with the increased
lease and Contract originations for the six months ended December 31, 1996 over
the same six 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 six months ended
December 31, 1996 increased to $11.6 million from $8.6 million for the six
months ended December 31, 1995, representing an increase of 34.9%.
27
<PAGE>
Liquidity and Capital Resources
The following table sets forth the major components of the increase in cash
and cash equivalents:
Six Months Ended December 31,
-----------------------------------
1996 1995
---- ----
(in thousands)
Net cash provided by operating activities $ 54,666 $ 54,568
Net cash used in investing activities.... (242,439) (218,803)
Net cash provided by financing activities 174,322 200,923
---------- ---------
Net increase (decrease) in cash and
cash equivalents...................... $ (13,451) $ 36,688
========== =========
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 $43.1 million and $46.0 million for the six months ended
December 31, 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
December 31, 1996, the Company's non-recourse borrowings associated with its
vehicles under operating leases aggregated $1.6 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.
28
<PAGE>
Six Months Ended December 31,
---------------------------------
1996 1995
---- ----
(in thousands)
Proceeds from notes payable and obligations
under capital leases - non-recourse.... $374,698 $319,498
Purchases of vehicles under operating
leases(1).............................. (348,327) (292,682)
-------- --------
Total net cash proceeds.................. $ 26,371 $ 26,816
======== ========
- ----------
(1) Excludes those leases which have been partially or not funded by a Lender
representing purchases of vehicles under operating leases of $15.0 million
and $10.3 million for the six months ended December 31, 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 six months ended December 31, 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 six months ended December 31, 1996 the
Company originated and sold an aggregate amount of $184.9 million and $178.4
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.
29
<PAGE>
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 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 six months ended
December 31, 1996, Dealer Commissions associated with the Company's Contract
originations were $7.9 million. With respect to Contracts sold in the six months
ended December 31, 1996, initial deposits to cash spread accounts in such
Contracts sold totalled $2.0 million. 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 six months ended
December 31, 1996, servicing cash flow and collections on retained subordinated
investments received by the Company from previously sold Contracts were, in the
aggregate, $3.0 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.
30
<PAGE>
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 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 December 31, 1996 was $32.4 million as
compared to $13.9 million at December 31, 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 December
31, 1996, the Company had an aggregate availability under the facility of $10.0
million. The Company also maintains an additional $2.0 million revolving credit
facility at an interest rate of prime plus 1.5% to finance automobile inventory.
At December 31, 1996, the Company had an aggregate availability under the
facility of $2.0 million.
The Company incurred capital expenditures of $4.2 million in the six months
ended December 31, 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
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.
31
<PAGE>
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.
Item 3. Defaults Upon Senior Securities - Not Applicable.
Item 4. Submission of Matters to a Vote of Security Holders -
On November 4, 1996, the Company held its 1996 annual meeting of
shareholders (the "Meeting"). In connection with the Meeting, the Company
solicited proxies from its shareholders pursuant to Regulation 14 of the
Securities Exchange Act of 1934 (Proxy Statement dated October 1, 1996,
Commission File Number 0-22830).
At the Meeting, the Company's shareholders re-elected Stephen V. Murphy,
Christopher S. Pascucci and Michael C. Pascucci as Class III Directors of the
Company. The Company's Class I Directors (Peter I. Cavallaro, Mark A. Freeman
and Gene M. Bernstein) and Class II Directors (John A. Danzi, Robert Ench and
Ralph P. Pascucci) continued in office after the Meeting.
In addition, the shareholders ratified the selection by the Board of
Directors of BDO Seidman, LLP as the Company's outside auditors for the fiscal
year ended June 30, 1997.
The following tables summarize the votes cast at the Meeting on the matters
brought before the shareholders:
1. Election of Class III Directors
Votes Votes Votes Broker
Nominee Name For Against Withheld Non-Voter
- ------------ --- ------- -------- ---------
Stephen V. Murphy 83,838,880 0 10,404 0
Christopher S. Pascucci 83,838,870 0 10,414 0
Michael C. Pascucci 83,838,830 0 10,454 0
2. Ratification of BDO Seidman, LLP as the Company's outside auditors for
the fiscal year ended June 30, 1997.
Votes Votes Votes Broker
For Against Withheld Non-Votes
- ----- ------- -------- ---------
83,833,519 4,901 0 0
32
<PAGE>
Item 5. Other Information
On January 17, 1997, the Company filed with the SEC a Current Report on
Form 8-K dated January 14, 1997 in connection with the Merger.
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 December 31, 1996 and none were filed during that period.
[Intentionally Left Blank]
33
<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: February 5, 1997 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
34
<PAGE>
INDEX OF EXHIBITS
Exhibit Number Description
- -------------- -----------
10.01 Sale and Servicing Agreement dated as of December 14,
1996 between Centrex Auto Trust 1996-B, 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 December 14, 1996 between Centrex
Auto Trust 1996-B and The Bank of New York, as Trustee.
10.03 Third Amendment to Loan Purchase Agreement dated as of
March 31, 1995 among Centrex Capital Automobile Assets
(Number Two), Inc., as Seller; Centrex Capital
Automobile Assets (Number Four), Inc., as Seller;
Oxford Resources Corp., as Servicer; The Bank of New
York, as Custodian and Stand-by Servicer; Clipper
Receivables Corporation, as Purchaser; State Street
Boston Capital Corporation; as Administrator; and State
Street Bank and Trust Company, as Relationship Bank.
11 Statement of Computation of Net Income Per Common Share
27 Financial Data Schedule
35
Execution Copy
- --------------------------------------------------------------------------------
SALE AND SERVICING
AGREEMENT
among
CENTREX AUTO TRUST 1996-B,
as Issuer,
CENTREX CAPITAL CORP.,
as Sponsor,
CENTREX CAPITAL AUTOMOBILE ASSETS (NUMBER THREE), INC.
as Depositor
and
OXFORD RESOURCES CORP.,
as Servicer
Dated as of December 14, 1996
- --------------------------------------------------------------------------------
<PAGE>
ARTICLE 1
Definitions
SECTION 1.1 Definitions.....................................................1
SECTION 1.2. Other Definitional Provisions..................................17
ARTICLE 2
Conveyance of Receivables
SECTION 2.1. Conveyance of Receivables......................................18
ARTICLE 3
The Receivables
SECTION 3.1. Representations and Warranties of Depositor....................19
SECTION 3.2. Repurchase upon Breach.........................................24
SECTION 3.2. Custody of Receivable Files....................................24
SECTION 3.3. Duties of Servicer as Custodian................................25
SECTION 3.5. Instructions; Authority To Act.................................25
SECTION 3.6. Custodian's Indemnification....................................26
SECTION 3.7. Effective Period and Termination...............................26
ARTICLE 4
Administration and Servicing of Receivables
SECTION 4.1. Duties of Servicer.............................................27
SECTION 4.2. Collection and Allocation of Receivable Payments...............27
SECTION 4.3. Realization upon Receivables...................................28
SECTION 4.4. Physical Damage Insurance; Other Insurance.....................28
SECTION 4.5. Maintenance of Security Interests in Financed Vehicles.........29
SECTION 4.6. Covenants of Servicer..........................................29
SECTION 4.7. Purchase of Receivables upon Breach............................29
SECTION 4.8. Servicing Fee..................................................30
SECTION 4.9. Servicer's Certificate.........................................30
SECTION 4.10. Annual Statement as to Compliance; Notice of Default...........30
SECTION 4.11. Annual Independent Certified Public Accountants' Report........31
SECTION 4.12. Access to Certain Documentation and Information Regarding
Receivables..................................................31
SECTION 4.13. Servicer Expenses..............................................32
SECTION 4.14. Appointment of Subservicer.....................................32
<PAGE>
ARTICLE 5
Distributions; Reserve Account; Statements to
Certificateholders and Noteholders
SECTION 5.1. Establishment of Trust Accounts................................32
SECTION 5.2. Collections....................................................35
SECTION 5.3. Application of Collections.....................................35
SECTION 5.4. Additional Deposits............................................36
SECTION 5.5. Distributions..................................................36
SECTION 5.6. Reserve Account................................................38
SECTION 5.7. Advances.......................................................38
SECTION 5.8. Statements to Certificateholders and Noteholders...............38
SECTION 5.9. Net Deposits...................................................39
SECTION 5.10. Rule 144A Information..........................................40
ARTICLE 6
The Depositor
SECTION 6.1. Representations of Depositor...................................40
SECTION 6.2. Corporate Existence............................................41
SECTION 6.3. Liability of Depositor; Indemnities............................42
SECTION 6.4. Merger or Consolidation of, or Assumption of the Obligations
of, Depositor................................................43
SECTION 6.5. Limitation on Liability of Depositor and Others................44
SECTION 6.6. Depositor May Own Certificates or Notes........................44
SECTION 6.7. Security Interest..............................................44
ARTICLE 7
The Servicer
SECTION 7.1. Representations of Servicer....................................44
SECTION 7.2. Indemnities of Servicer........................................46
SECTION 7.3. Merger or Consolidation of, or Assumption of the Obligations
of, Servicer.................................................47
SECTION 7.4. Limitation on Liability of Servicer and Others.................48
SECTION 7.5. Oxford Resources Corp. Not To Resign as Servicer...............48
SECTION 7.6. Corporate Existence............................................49
ARTICLE 7A The Sponsor....................................................49
SECTION 7.1A Representations of Sponsor.....................................50
SECTION 7.2A Merger or Consolidation of, or Assumption of the Obligations
of, Sponsor..................................................51
SECTION 7.3A Limitation on Liability of Sponsor and Others..................52
SECTION 7.4A Corporate Existence............................................52
SECTION 7.5A Demand Note....................................................53
-ii-
<PAGE>
ARTICLE 8
Default
SECTION 8.1. Servicer Default...............................................53
SECTION 8.2. Appointment of Successor.......................................54
SECTION 8.3. Payment of Servicing Fee; Repayment of Advances................55
SECTION 8.4. Notification to Noteholders and Certificateholders.............55
SECTION 8.5. Waiver of Past Defaults........................................55
ARTICLE 9
Termination
SECTION 9.1. Optional Purchase of All Receivables...........................55
SECTION 9.2. Mandatory Sale of all Contracts................................57
ARTICLE 10
Administrative Duties of the Servicer
SECTION 10.1. Administrative Duties..........................................59
SECTION 10.2. Records........................................................61
SECTION 10.3. Additional Information To Be Furnished to the Issuer...........61
ARTICLE 11
Miscellaneous Provisions
SECTION 11.1. Amendment......................................................61
SECTION 11.2. Protection of Title to Trust...................................62
SECTION 11.3. Notices........................................................64
SECTION 11.4. Assignment.....................................................64
SECTION 11.5. Limitations on Rights of Others................................64
SECTION 11.6. Severability...................................................65
SECTION 11.7. Separate Counterparts..........................................65
SECTION 11.8. Headings.......................................................65
SECTION 11.9. Governing Law..................................................65
SECTION 11.10. Assignment to Trustee..........................................65
SECTION 11.11. Nonpetition Covenant...........................................65
SECTION 11.12. Limitation of Liability of Owner Trustee and Trustee...........65
SECTION 11.13. Independence of the Servicer...................................66
SECTION 11.14. No Joint Venture...............................................66
-iii-
<PAGE>
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
<PAGE>
SALE AND SERVICING AGREEMENT dated
as of December 14, 1996, among CENTREX AUTO
TRUST 1996-B, a Delaware business trust (the
"Issuer"), CENTREX CAPITAL CORP. (the
"Sponsor"), CENTREX CAPITAL AUTOMOBILE
ASSETS (NUMBER THREE), INC. as Depositor
(the "Depositor") 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, certain of which
receivables were sold to the Conduit pursuant to the Conduit Agreement, all of
which recievables were acquired by the Depositor pursuant to the Loan Purchase
Agreement;
WHEREAS the Sponsor as of the date hereof has caused the Depositor to form
the Issuer;
WHEREAS the Depositor 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 1
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 Liquidated Receivables minus Liquidation Proceeds collected
during such Collection Period with respect to all Liquidated Receivables.
<PAGE>
"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 Depositor
or the Sponsor 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 Depositor or the Sponsor 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.
-2-
<PAGE>
"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, $4,605,002 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 6.60% 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 Certificateholders' 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
Certificate- holders' Interest Carryover Shortfall on such preceding
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
-3-
<PAGE>
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 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 Certificate-holders' 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 December 19, 1996.
"Collection Account" means the account designated as such, established and
maintained pursuant to Section 5.1.
-4-
<PAGE>
"Collection Period" means a calendar month, except with respect to the
first Collection Period, which shall be the period from the Cutoff Date to
December 31, 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.
"Conduit" means Centrex Capital Automobile Assets (Number Four), Inc.
"Conduit Agreement" means the Conduit Agreement dated as of December 4,
1996 between the Originators and the Conduit.
"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 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 December 14, 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.
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"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 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
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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 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" means Centrex Capital Automobile Assets (Number Three), Inc.,
as the depositor of the Receivables, and each successor to Centrex Capital
Automobile Assets (Number Three), Inc., (in the same capacity) to the extent
permitted hereunder.
"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 January 1997.
"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 Depositor or any
affiliate of the Depositor) 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
Depositor or any affiliate of the Depositor) 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 P-l 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 Depositor or any Affiliate of the
Depositor) 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
P-1;
(c) commercial paper (including commercial paper of the Depositor or
any Affiliate of the Depositor) 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 P-1;
(d) investments in money market funds (including funds for which the
Depositor, 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;
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(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 September 2004 Distribution Date and (ii) the Certificates, the September
2004 Distribution Date.
"Final Scheduled Maturity Date" means December 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 December 14, 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 $92,005,002.11.
"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 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.
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"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 Depositor or the Sponsor
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 Depositor or the
Sponsor 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 Account to be deposited into the Collection Account on such
Distribution Date pursuant to Section 5.1(b).
"Issuer" means Centrex Auto Trust 1996-B.
"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
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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
December 14, 1996 among the Sellers, and the Depositor.
"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 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).
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"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
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 Depositor, 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 Depositor pursuant to the Loan Purchase Agreement or to the Conduit
pursuant to the Conduit 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 Bankers Trust (Delaware), 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.
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"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.
"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
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 Depositor or the Sponsor, or purchased by
the
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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 Depositor or the Sponsor 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 Depositor, 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 Depositor, 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.
"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.
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"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 Depositor
pursuant to the Loan Purchase Agreement or the Conduit pursuant to the Conduit
Agreement.
"Related Receivable" means, with respect to any Originator, a Receivable
originated by such Originator who sold such Receivable to the Depositor pursuant
to the Loan Purchase Agreement or the Conduit pursuant to the Conduit Agreement
who then sold such Receivable to the Depositor 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 $1,150,063.
"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 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" means the Notes and the Certificates.
"Securities Act" means the Securities Act of 1933, as amended.
"Sellers" means the Conduit and the Originators.
"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.
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"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
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 July 1997 Distribution Date, 0.75%, (ii) in the case of any Distribution
Date on and after the July 1997 Distribution Date but prior to the January 1998
Distribution Date, 1.50%, (iii) in the case of any Distribution Date on and
after the January 1998 Distribution Date but prior to the July
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1998 Distribution Date, 2.25%, (iv) in the case of any Distribution Date on and
after the July 1998 Distribution Date but prior to the January 2000 Distribution
Date, 2.50% and (v) in the case of any Distribution Date on and after the
January 2000 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.
"Trust Agreement" means the Amended and Restated Trust Agreement dated as
of December 14, 1996, between the Depositor 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
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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.
(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 2
Conveyance of Receivables
SECTION 2.1. Conveyance of Receivables. In consideration of the Issuer's
delivery to or upon the order of the Depositor 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 Depositor in accordance with the
terms of this Agreement, the Depositor 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 Depositor 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 Depositor in the security
interests in the Financed Vehicles granted by Obligors pursuant to the
Receivables and any other interest of the Depositor in the Financed Vehicles;
(c) all right, title and interest of the Depositor 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 Depositor 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 Financed Vehicle and any
recourse to Dealers for any of the foregoing;
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(e) the interest of the Depositor 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 Depositor 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 Depositor that the transfer and assignment
contemplated by this Agreement shall constitute a sale of the Receivables and
other Trust Property from the Depositor to the Trust and the beneficial interest
in and title to the Receivables and such other Trust Property shall not be part
of the Depositor's estate in the event of the filing of a bankruptcy petition by
or against the Depositor under any bankruptcy law. In the event that,
notwithstanding the intent of the Depositor, 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 3
The Receivables
SECTION 3.1. Representations and Warranties of Depositor. The Sponsor and
the Depositor, 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.
(a) Title. (i) It is the intention of the Depositor that the
transfer and assignment contemplated by the Conduit Agreement constitute a sale
of the Related Receivables from the Related Originator to the Conduit 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 Conduit or the Depositor pursuant to the Loan Purchase Agreement.
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Immediately prior to the transfer and assignment contemplated by the Conduit
Agreement, such Related Originator had good and marketable title to each Related
Receivable conveyed by it to the Conduit, free and clear of all Liens and,
immediately upon the transfer thereof, the Conduit 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 Conduit has been perfected
under the UCC.
(ii) It is the intention of the Depositor that the transfer and assignment
contemplated by the Loan Purchase Agreement constitute a sale of the Related
Receivables from the Sellers to the Depositor pursuant to the Loan Purchase
Agreement 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 Seller. No Related
Receivable has been sold, transferred, assigned or pledged by such Seller to any
Person other than the Depositor (or with respect to any Related Receivable
conveyed by such Seller to the Conduit and by the Conduit to the Deposit, except
the Conduit). Immediately prior to the transfer and assignment contemplated by
the Loan Purchase Agreement, such Seller had good and marketable title to each
Related Receivable conveyed by it to the Depositor, free and clear of all Liens
and, immediately upon the transfer thereof, the Depositor 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 Depositor has been perfected
under the UCC. It is the intention of the Depositor that the transfer and
assignment herein contemplated constitute a sale of the Receivables from the
Depositor 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 Depositor. No Receivable has been
sold, transferred, assigned or pledged by the Depositor to any Person other than
the Issuer. Immediately prior to the transfer and assignment herein
contemplated, the Depositor 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 Depositor 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) was conveyed by the
Related Originator to the Depositor or was conveyed by the Related Originator to
the Conduit pursuant to the Conduit Agreement and was conveyed by the Conduit to
the
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Depositor, (C) has created or shall create a valid, subsisting and enforceable
first priority security interest in favor of the Related Originator in the
Related Financed Vehicle, which security interest has been assigned by the
Related Originator to (i) the Depositor or (ii) the Conduit and by the Conduit
to the Depositor and which is assignable by the Depositor to the Issuer and by
the Issuer to the Trustee, (D) 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 (E) 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
Depositor 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 (after
giving effect to the transactions contemplated by the Basic Documents) 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.
(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
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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 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 Depositor 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 66.30 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 65.30 months as of the Cutoff Date; and the
latest scheduled maturity of any Receivable shall be no later than the Final
Scheduled Maturity Date.
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(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 13.15%.
(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
$16,192.36. The aggregate principal balance of the Receivables as of the Cutoff
Date is $92,005,002.11.
(u) Financing. Approximately 37.77% of the aggregate principal
balance of the Receivables, constituting approximately 31.75% 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 25.34% of the aggregate principal balance of the Receivables,
constituting approximately 21.81% of the number of Receivables, as of the Cutoff
Date, represents financing of Balloon Loans. Approximately 62.34% of the
aggregate Principal Balance of the Receivables, constituting approximately
60.47% 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 10.55% of the aggregate Principal
Balance of the Receivables, constituting approximately 10.74% 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.
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(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 Seller or the Depositor 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 18.94% of the Receivables were originated in South Carolina,
approximately 18.03% of the Receivables were originated in Georgia and
approximately 13.29% of the Receivables were originated in North Carolina, 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. Based on the billing address of the Obligors and the principal
balance of the Receivables as of the Cutoff Date, not more than 10% of the
Receivables were originated in any one state other than South Carolina, Georgia
and North Carolina.
(bb) Receivable Files. The Receivable Files are kept at the
Depositor's office listed in Schedule B and are segregated from any other
Receivable Files. The Receivable Files have been marked to indicate the
Depositor's ownership interest therein.
(cc) Computer Records. As of the Closing Date, the accounting and
computer records relating to the Receivables of the Depositor and each Seller
have been marked to show the absolute ownership by the Owner Trustee on behalf
of the Trust of the Receivables.
(dd) Conduit Receivables. The only Receivables sold to the Depositor
by the Conduit pursuant to the Loan Purchase Agreement were Receivables
originated by Centrex Capital Corp. of Georgia.
SECTION 3.2. Repurchase upon Breach. The Sponsor, the Depositor, 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 Depositor'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 Depositor or the Servicer of such breach, the Sponsor and
the Depositor shall be
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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 Depositor 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
Depositor 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 Depositor 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 3.2. 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;
(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 Depositor 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 3.3. 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
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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 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.
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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 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 4
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
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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 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 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
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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 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, re-recording, 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 Conduit Agreement, the Sellers
under the Loan Purchase Agreement, the Depositor 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
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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 Depositor
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 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 January 1997
Distribution Date shall equal $43,446.81 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 Depositor, 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 Depositor
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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 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 Depositor, to deliver to
the Depositor, the Owner Trustee and the Trustee on or before October 31 of each
year as of June 30 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.
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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 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 5
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 Noteholders and the Certificateholders.
The Collection Account shall initially be established with the Trustee.
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(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.
(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
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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;
(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.
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(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
Depositor shall cause to be deposited $27,629.53 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).
SECTION 5.2. Collections. On the Closing Date, the Depositor shall cause
to be deposited $276,654.50 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
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"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 Depositor.
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.
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 Depositor shall deposit or cause to be deposited in the
Collection Account the aggregate Purchase Amount with respect to any Purchased
Receivables and the Depositor 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, (i) 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 Depositor, 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.
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(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), no later than
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 make, and the Trustee shall make,
the following deposits and distributions from the Collection Account for deposit
in the applicable Account by 10:00 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
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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 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 Depositor shall
deposit the Reserve Account Initial Deposit into the Reserve Account. In no
circumstances will the Depositor 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 and 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 Depositor. Amounts properly distributed to the Depositor pursuant
to Section 5.6(b) shall be deemed released from the Trust and the security
interest therein granted to the Trustee and the Depositor 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
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Trust and Outstanding Advances with respect to such Actuarial Receivables shall
be reduced accordingly.
(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 Depositor 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
Depositor 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 Depositor 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 6
The Depositor
SECTION 6.1. Representations of Depositor. The Depositor 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 Depositor 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 acquire and own the Receivables.
(b) Due Qualification. The Depositor is duly qualified to do
business as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals in
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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 Depositor. The Depositor 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 Depositor
is a party; the Depositor 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 Depositor 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 Depositor is a party has been duly
authorized by the Depositor by all necessary corporate action.
(d) Binding Obligation. This Agreement and each of the Basic
Documents to which the Depositor is a party constitute legal, valid and binding
obligations of the Depositor, 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 Depositor, or any material indenture, agreement or other
instrument to which the Depositor 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 Depositor
of any court or of any Federal or state regulatory body, administrative agency
or other governmental instrumentality having jurisdiction over the Depositor or
its properties.
(f) No Proceedings. There are no proceedings or investigations
pending against the Depositor or, to its best knowledge, threatened against the
Depositor, before any court, regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Depositor 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 Depositor 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
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other government instrumentality required to be obtained, effected or given by
the Depositor in connection with the execution and delivery by the Depositor of
this Agreement or any of the Basic Documents to which it is a party and the
performance by the Depositor 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 Depositor 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 Depositor shall observe
the applicable legal requirements for the recognition of the Depositor as a
legal entity separate and apart from its affiliates, including as follows:
(i) the Depositor shall maintain corporate records and books
of account separate from those of its affiliates;
(ii) except as otherwise provided in this Agreement, the
Depositor shall not commingle its assets and funds with those of its
affiliates;
(iii) the Depositor shall hold such appropriate meetings of
its Board of Directors as are necessary to authorize all the
Depositor'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 Depositor not a corporation
shall observe similar procedures in accordance with its governing
documents and applicable law);
(iv) the Depositor shall at all times hold itself out to the
public under the Depositor's own name as a legal entity separate and
distinct from its affiliates; and
(v) all transactions and dealings between the Depositor and
its affiliates will be conducted on an arm's-length basis
SECTION 6.3. Liability of Depositor; Indemnities. The Depositor shall be
liable in accordance herewith only to the extent of the obligations specifically
undertaken by the Depositor under this Agreement and the representations made by
the Depositor in this Agreement.
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(a) The Depositor 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 Depositor 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 out of, or imposed
upon such Person through (i) the Depositor'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 Depositor'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 Depositor 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, or (ii) 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 Depositor, which approval shall not be unreasonably withheld.
(d) The Depositor 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 Depositor's responsibilities pursuant to the parentheticals in
paragraph (a) above).
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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 Depositor 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 Depositor, without interest.
SECTION 6.4. Merger or Consolidation of, or Assumption of the Obligations
of, Depositor. Any Person (a) into which the Depositor may be merged or
consolidated, (b) which may result from any merger or consolidation to which the
Depositor shall be a party or (c) which may succeed to the properties and assets
of the Depositor substantially as a whole, shall be the successor to the
Depositor without the execution or filing of any document or any further act by
any of the parties to this Agreement; provided, however, that the Depositor
hereby covenants that it will not consummate any of the foregoing transactions
except upon satisfaction of the following: (i) the surviving Depositor if other
than Centrex Capital Automobile Assets (Number Three), Inc. executes an
agreement of assumption to perform every obligation of the Depositor 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 Depositor 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 Depositor shall have a consolidated net worth at
least equal to that of the predecessor Depositor, (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 Depositor 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 Depositor and Others. The
Depositor and any director or officer or employee or agent of the Depositor 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 Depositor's obligations under Section 3.2). The Depositor shall not
be under any obligation to appear in, prosecute or defend any legal action
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that shall not be incidental to its obligations under this Agreement, and that
in its opinion may involve it in any expense or liability.
SECTION 6.6. Depositor May Own Certificates or Notes. The Depositor 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 Depositor 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
Depositor will not take any action to assign the security interest in any
Financed Vehicles other than pursuant to the Basic Documents.
ARTICLE 7
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 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.
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(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.
(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
Depositor 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).
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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 Depositor, the Certificateholders and the
Noteholders and any of the officers, directors, employees and agents of the
Issuer, the Owner Trustee, the Trustee or the Depositor 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 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 Depositor, the Certificateholders and the
Noteholders or any of the officers, directors, employees and agents of the
Issuer, the Owner Trustee, the Trustee or the Depositor 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 Depositor, 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 Depositor (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.
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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 incurred 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 Servicer 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.
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
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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 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 7A
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, 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,
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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 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
Depositor 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.
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(i) Location of Receivable Files. The Receivable Files are kept in
the offices of the Depositor, specified in Schedule B, or at such other office
specified in accordance with Section 3.4(b).
(j) Demand Note. The Sponsor has contributed the Demand Note (as
defined in the Trust Agreement) to the Depositor 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 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
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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;
(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 Depositor in full force and effect and will not cancel, waive or terminate
such Demand Note.
ARTICLE 8
Default
SECTION 8.1. Servicer Default. If any one of the following events (a
"Servicer Default") shall occur and be continuing:
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(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) 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 such
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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)
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.
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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 9
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
Depositor 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 Depositor 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 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
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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.
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 Depositor 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 Depositor, the Sponsor,
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;
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(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 the Depositor, 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 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
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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.
ARTICLE 10
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
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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.
(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
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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;
(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 11
Miscellaneous Provisions
SECTION 11.1. Amendment. This Agreement may be amended by the Sponsor, the
Depositor, 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
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eliminating any of the provisions in this Agreement or of modifying in any
manner the rights of the 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
Depositor, 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 Rating Agency, 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.
SECTION 11.2. Protection of Title to Trust. (a) The Depositor 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 Depositor shall deliver (or cause to be delivered) to the Owner
Trustee
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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 Depositor nor the Servicer shall (nor shall the
Servicer permit a Seller 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 ' 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 Depositor 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 Seller 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 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 Depositor or the Sponsor or purchased by the Servicer.
(f) If at any time the Sponsor, the Depositor 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.
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(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 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 Depositor, the Servicer, the Owner Trustee, the Trustee or the Rating
Agencies under this
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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 Depositor, 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: ABS Monitoring Department 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 Depositor or the Servicer.
SECTION 11.5. Limitations on Rights of Others. The provisions of this
Agreement are solely for the benefit of the Depositor, 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 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,
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RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE
WITH SUCH LAWS.
SECTION 11.10. Assignment to Trustee. The Depositor 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 Depositor 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.
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 Bankers Trust (Delaware), not in its individual capacity
but solely in its capacity as Owner Trustee of the Issuer and in no event
Bankers Trust (Delaware), 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.
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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.
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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-B
By: BANKERS TRUST (DELAWARE)
not in its individual capacity but
solely as Owner Trustee on behalf of
the Trust,
By:____________________________________
Name:
Title:
CENTREX CAPITAL CORP.,
Sponsor,
By:____________________________________
Name: Robert B. Kay
Title: Vice President
CENTREX CAPITAL AUTOMOBILE ASSETS
(NUMBER THREE), INC.
Depositor,
By:____________________________________
Name: Robert B. Kay
Title: Vice President
OXFORD RESOURCES CORP.
Servicer,
By:____________________________________
Name: Robert B. Kay
Title: Senior Vice President
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Acknowledged and Accepted:
THE BANK OF NEW YORK, not
in its individual capacity
but solely as Trustee,
By:___________________________
Name:
Title:
Acknowledged and Accepted:
BANKERS TRUST (DELAWARE)
not in its individual capacity
but solely as Owner Trustee,
By:___________________________
Name:
Title:
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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-B
6.15% Asset Backed Notes
6.60% Asset Backed Certificates
Distribution Date:
Collection Period:
Under the Sale and Servicing Agreement dated as of December 14, 1996 among
Oxford Resources Corp., as servicer, Centrex Capital Assets (Number Three),
Inc., as Depositor (the "Servicer"), Centrex Auto Trust 1996-B, 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.............................$________
(c) The amount of the distribution set
<PAGE>
forth in paragraph A.1.(a) above in
respect of principal of the Notes............................$________
(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
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.....................$________
(d) The amount of the distributions set
forth in paragraph A.2(a) payable
out of amounts withdrawn from the Reserve
Account with respect to the Certificates.....................$________
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(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.......................$________
(b) The Note Balance after
giving effect to payments allocated to
principal as set forth in Paragraph A.1(c)..................$________
(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)...................................$________
(f) The aggregate Purchase Amount for
all Receivables that were repurchased
in the preceding Collection Period..........................$________
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(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 $________
3. Payment Shortfalls.
(a) The amount of the Noteholders'
Interest Carryover Shortfall after
giving effect to the payments set forth
in paragraph A.1(b) above...................................$________
(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
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(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
Account on such Distribution Date...........................$________
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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 December 14, 1996 (the "Agreement"), among
Oxford, Centrex Capital Automobile Assets (Number Three), Inc., Centrex Auto
Trust 1996-B 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 December 14, 1996 among
Centrex Auto Trust 1996-B (the "Trust"), Centrex Capital Corp. (the "Sponsor"),
Centrex Capital Automobile Assets (Number Three), Inc. (the "Depositor") 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 December 14, 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
December 10, 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.
<PAGE>
(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 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
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<PAGE>
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.
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Execution Copy
================================================================================
CENTREX AUTO TRUST 1996-B
6.15% Asset Backed Notes
--------------------------------
INDENTURE
Dated as of December 14, 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
- ----------
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>
(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(2)
(b) ..................................................... 3.3
318 (a) ..................................................... 11.7
- ----------
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........... 8
SECTION 1.3 Rules of Construction....................................... 9
ARTICLE II
The Notes
SECTION 2.1 Form........................................................ 9
SECTION 2.2 Execution, Authentication and Delivery...................... 9
SECTION 2.3 Temporary Notes............................................. 10
SECTION 2.4 Registration; Registration of Transfer and Exchange......... 10
SECTION 2.5 Mutilated, Destroyed, Lost or Stolen Notes.................. 12
SECTION 2.6 Persons Deemed Owner........................................ 12
SECTION 2.7 Payment of Principal and Interest; Defaulted Interest....... 13
SECTION 2.8 Cancellation................................................ 13
SECTION 2.9 Release of Collateral....................................... 14
SECTION 2.10 Book-Entry Notes............................................ 14
SECTION 2.11 Notices to Clearing Agency.................................. 15
SECTION 2.12 Definitive Notes............................................ 15
SECTION 2.13 Restrictions on Transferability............................. 15
ARTICLE III
Covenants
SECTION 3.1 Payment of Principal and Interest........................... 16
SECTION 3.2 Maintenance of Office or Agency............................. 17
SECTION 3.3 Money for Payments To Be Held in Trust...................... 17
SECTION 3.4 Existence................................................... 18
SECTION 3.5 Protection of Trust Estate.................................. 19
SECTION 3.6 Opinions as to Trust Estate................................. 19
SECTION 3.7 Performance of Obligations; Servicing of Receivables........ 20
SECTION 3.8 Negative Covenants.......................................... 22
SECTION 3.9 Annual Statement as to Compliance........................... 22
SECTION 3.10 Issuer May Consolidate, Etc. Only on Certain Terms.......... 23
(i)
<PAGE>
SECTION 3.11 Successor or Transferee..................................... 24
SECTION 3.12 No Other Business........................................... 25
SECTION 3.13 No Borrowing................................................ 25
SECTION 3.14 Servicer's Obligations...................................... 25
SECTION 3.15 Guarantees, Loans, Advances and Other Liabilities........... 25
SECTION 3.16 Capital Expenditures........................................ 25
SECTION 3.17 [Reserved].................................................. 25
SECTION 3.18 Restricted Payments......................................... 25
SECTION 3.19 Notice of Events of Default................................. 25
SECTION 3.20 Further Instruments and Acts................................ 26
ARTICLE IV
Satisfaction and Discharge
SECTION 4.1 Satisfaction and Discharge of Indenture..................... 26
SECTION 4.2 Application of Trust Money.................................. 27
SECTION 4.3 Repayment of Moneys Held by Paying Agent.................... 27
SECTION 4.4 Notice...................................................... 27
ARTICLE V
Remedies
SECTION 5.1 Events of Default........................................... 27
SECTION 5.2 Acceleration of Maturity; Rescission and.................... 29
SECTION 5.3 Collection of Indebtedness and Suits for Enforcement by
Trustee................................................... 29
SECTION 5.4 Remedies; Priorities........................................ 31
SECTION 5.5 Optional Preservation of the Receivables.................... 33
SECTION 5.6 Limitation of Suits......................................... 33
SECTION 5.7 Unconditional Rights of Noteholders To Receive Principal
and Interest.............................................. 34
SECTION 5.8 Restoration of Rights and Remedies.......................... 34
SECTION 5.9 Rights and Remedies Cumulative.............................. 34
SECTION 5.10 Delay or Omission Not a Waiver.............................. 34
SECTION 5.11 Control by Noteholders...................................... 34
SECTION 5.12 Waiver of Past Defaults..................................... 35
SECTION 5.13 Undertaking for Costs....................................... 35
SECTION 5.14 Waiver of Stay or Extension Laws............................ 36
SECTION 5.15 Action on Notes............................................. 36
SECTION 5.16 Performance and Enforcement of Certain Obligations.......... 36
(ii)
<PAGE>
ARTICLE VI
The Trustee
SECTION 6.1 Duties of Trustee........................................... 37
SECTION 6.2 Rights of Trustee........................................... 38
SECTION 6.3 Individual Rights of Trustee................................ 38
SECTION 6.4 Trustee's Disclaimer........................................ 38
SECTION 6.5 Notice of Defaults.......................................... 38
SECTION 6.6 Reports by Trustee to Holders............................... 39
SECTION 6.7 Compensation and Indemnity.................................. 39
SECTION 6.8 Replacement of Trustee...................................... 39
SECTION 6.9 Successor Trustee by Merger................................. 40
SECTION 6.10 Appointment of Co-Trustee or Separate Trustee............... 41
SECTION 6.11 Eligibility; Disqualification............................... 42
SECTION 6.12 Preferential Collection of Claims Against Issuer............ 42
ARTICLE VII
Noteholders' Lists and Reports
SECTION 7.1 Issuer To Furnish Trustee Names and Addresses of Noteholders 42
SECTION 7.2 Preservation of Information; Communications to Noteholders.. 42
SECTION 7.3 [Reserved (for public deal)................................. 43
SECTION 7.4 Reports by Trustee.......................................... 43
ARTICLE VIII
Accounts, Disbursements and Releases
SECTION 8.1 Collection of Money......................................... 43
SECTION 8.2 Trust Accounts.............................................. 43
SECTION 8.3 General Provisions Regarding Accounts....................... 44
SECTION 8.4 Release of Trust Estate..................................... 45
SECTION 8.5 Opinion of Counsel.......................................... 45
ARTICLE IX
Supplemental Indentures
SECTION 9.1 Supplemental Indentures Without Consent of Noteholders...... 46
SECTION 9.2 Supplemental Indentures with Consent of Noteholders......... 47
SECTION 9.3 Execution of Supplemental Indentures........................ 48
SECTION 9.4 Effect of Supplemental Indenture............................ 49
SECTION 9.5 Conformity With Trust Indenture Act......................... 49
SECTION 9.6 Reference in Notes to Supplemental Indentures............... 49
(iii)
<PAGE>
ARTICLE X
Redemption of Notes
SECTION 10.1 Redemption.................................................. 49
SECTION 10.2 Form of Redemption Notice................................... 50
SECTION 10.3 Notes Payable on Redemption Date............................ 50
ARTICLE XI
Miscellaneous
SECTION 11.1 Compliance Certificates and Opinions, etc................... 51
SECTION 11.2 Form of Documents Delivered to Trustee...................... 52
SECTION 11.3 Acts of Noteholders......................................... 53
SECTION 11.4 Notices, etc., to Trustee, Issuer and Rating Agencies....... 54
SECTION 11.5 Notices to Noteholders; Waiver.............................. 54
SECTION 11.6 Alternate Payment and Notice Provisions..................... 55
SECTION 11.7 Conflict with Trust Indenture Act........................... 55
SECTION 11.8 Effect of Headings and Table of Contents.................... 55
SECTION 11.9 Successors and Assigns...................................... 55
SECTION 11.10 Separability................................................ 56
SECTION 11.11 Benefits of Indenture....................................... 56
SECTION 11.12 Legal Holidays.............................................. 56
SECTION 11.13 GOVERNING LAW............................................... 56
SECTION 11.14 Counterparts................................................ 56
SECTION 11.15 Recording of Indenture...................................... 56
SECTION 11.16 Trust Obligation............................................ 56
SECTION 11.17 No Petition................................................. 57
SECTION 11.18 Inspection.................................................. 57
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
(iv)
<PAGE>
INDENTURE dated as of December 14, 1996, between
CENTREX AUTO TRUST 1996-B, 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 6.15% 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.
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.
<PAGE>
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 or agent acting under a power of attorney 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.
"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.
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<PAGE>
"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 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.
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<PAGE>
"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 Depositor 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 Depositor or any Affiliate
of any of the foregoing Persons and (c) is not connected with the Issuer, any
such other obligor, the Depositor 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 6.15% 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.
"Notes" means the 6.15% 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.
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<PAGE>
"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;
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 Depositor 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 Depositor 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.
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<PAGE>
"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.
"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 December 14, 1996, among the Issuer, the Depositor, 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).
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"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.
(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
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
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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
Servicer..................................................... Section 1.1
Servicer Default............................................. Section 1.1
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.
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SECTION 1.3 Rules of Construction. Unless the context otherwise
requires:
(i) a term has the meaning assigned to it;
(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.
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The Trustee shall upon Issuer Order authenticate and deliver Notes for
original issue in an aggregate principal amount of $87,400,000. 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 $25,000 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 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
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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
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.
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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 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.
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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.
(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
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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.
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. 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
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(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 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
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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
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;
(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;
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(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
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
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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 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
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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
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
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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 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 Depositor
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
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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.
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 other-wise 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
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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.
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 supplement 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 supplement
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
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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, (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-B will be
released from every covenant 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-B is to be so released.
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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 personality).
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 owner-ship 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 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 Depositor
of its obligations under the Sale and Servicing Agreement of which an Authorized
Officer of the Issuer acquires actual knowledge.
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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
(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
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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 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.
SECTION 4.4 Notice. Upon the satisfaction and discharge of this
Indenture with respect to the Notes, the Trustee shall notify each Rating Agency
of such satisfaction and discharge.
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):
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(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
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
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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
(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
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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.
(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;
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(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 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
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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
(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 other-wise 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
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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.
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 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;
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(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 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
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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
Depositor, 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 default
on the part of the Depositor or the Servicer thereunder and the institution of
legal or administrative actions or proceedings to compel or secure performance
by the Depositor 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 Depositor 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
Depositor 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.
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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 willful
misconduct, except that:
(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
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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.
(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
willful 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
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Responsible Officer of the Trustee, the Trustee shall mail to each Noteholder
and the Owner Trustee 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
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 willful 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;
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(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 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;
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and in case at that time any of the Notes shall not have been authenticated, any
successor to the Trustee may authenticate such 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.
(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
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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- by Standard & Poors and Baa3 by Moody's 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 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
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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 December 1, beginning with December 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 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
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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 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
Depositor, 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
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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 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. 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.
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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 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.
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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 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;
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(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;
(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,
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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 supplemental indenture that affects the
Trustee's own rights, duties, liabilities or immunities under this Indenture or
otherwise. The Trustee shall provide copies of each such supplemental indenture
to each of the Rating Agencies.
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 Depositor pursuant to
Section 9.1(a) of the Sale and Servicing Agreement, on any Distribution Date on
which the Depositor 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
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pursuant to this Section 10.1(a) (i) or (ii), the Servicer shall furnish notice
to the Trustee not later 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.
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.
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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
(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
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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 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
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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 Depositor or the Issuer, stating that the information with
respect to such factual matters is in the possession of the Servicer, the
Depositor 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 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.
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(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 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-B, 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, Attention:
ABS Monitoring Department 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.
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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.
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. 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.
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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 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 Depositor, 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 Depositor, 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
Depositor, 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 Depositor, the Servicer, the holder of the GP Interest, the Owner
Trustee or the Trustee or of any successor or assign of the Depositor, 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
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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 Depositor, the holder of
the GP Interest or the Trust, or join in any institution against the Depositor,
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]
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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-B,
By: BANKERS TRUST (DELAWARE), not in its
individual capacity but solely as
Owner Trustee,
By:______________________________________
Name:
Title:
THE BANK OF NEW YORK,
not in its individual capacity
but solely as Trustee,
By:______________________________________
Name:
Title:
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[Form of Note] EXHIBIT D
REGISTERED $
No. R
SEE REVERSE FOR CERTAIN DEFINITIONS
CUSIP NO. 156394 AC2
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-B
6.15% ASSET BACKED NOTES
Centrex Auto Trust 1996-B, 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 $87,400,000 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 September 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 January 1997 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
December 19, 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-B,
By: BANKERS TRUST (DELAWARE), 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 6.15% Asset Backed Notes of Centrex Auto Trust
1996-B 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 6.15% Asset Backed Notes (herein called the "Notes"), all
issued under an Indenture dated as of December 14, 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 January 1997.
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 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
D-4
<PAGE>
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 Depositor, 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 Depositor 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 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 Depositor, 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 Depositor, the Servicer, the holder
of the GP Interest, the Trustee or the Owner Trustee in its
D-5
<PAGE>
individual capacity, any holder of a beneficial interest in the Issuer, the
Depositor, the Servicer, the holder of the GP Interest, the Owner Trustee or the
Trustee or of any successor or assign of the Depositor, 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 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.
D-6
<PAGE>
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, Bankers Trust (Delaware) 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 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-7
<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: ___________ _________________________________(3)
Signature Guaranteed:
_______________1
- ----------
3 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-8
Exhibit 10.03
THIRD AMENDMENT TO LOAN PURCHASE AGREEMENT
This THIRD AMENDMENT TO LOAN PURCHASE AGREEMENT (this "Amendment") is
dated as of December 4, 1996 and is entered into by and among CENTREX CAPITAL
AUTOMOBILE ASSETS (NUMBER TWO), INC., a Delaware corporation, as seller
("Centrex Two"), CENTREX CAPITAL AUTOMOBILE ASSETS (NUMBER FOUR), INC., a
Delaware corporation, as seller ("Centrex Four"; Centrex Two and Centrex Four,
each a "Seller", and together, the "Sellers"), OXFORD RESOURCES CORP., a New
York corporation ("Oxford"), as servicer, THE BANK OF NEW YORK, a New York
banking corporation ("BONY"), as custodian and standby servicer, CLIPPER
RECEIVABLES CORPORATION, a Delaware corporation, as purchaser (the "Purchaser"),
STATE STREET BOSTON CAPITAL CORPORATION, a Massachusetts corporation ("State
Street Capital"), as administrator for the Purchaser (the "Administrator"), and
STATE STREET BANK AND TRUST COMPANY, a bank organized under the laws of the
Commonwealth of Massachusetts ("State Street Bank"), as relationship bank for
the Purchaser.
W I T N E S S E T H:
WHEREAS, the parties hereto (other than Centrex Four) have entered into a
certain Loan Purchase Agreement, dated as of March 31, 1995 and amended as of
December 14, 1995 and March 21, 1996 (the "Loan Purchase Agreement"), pursuant
to which, among other things, subject to the terms and conditions set forth
therein, the Purchaser has agreed to purchase from Centrex Two certain
receivables and related assets; and
WHEREAS, the parties desire to amend the Loan Purchase Agreement to add
Centrex Four as a Seller thereunder and provide for the making of warehouse
loans by the Purchaser to Centrex Four and otherwise as hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
contained herein and in the Loan Purchase Agreement as amended hereby and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. Terms. All capitalized terms used and not otherwise defined herein shall have
the meanings given to such terms in the Loan Purchase Agreement.
<PAGE>
2. Amendments to Loan Purchase Agreement. Effective as of the date the
conditions set forth in Section 4 hereof are met, the Loan Purchase Agreement is
hereby amended as follows:
(a) The Loan Purchase Agreement (including any exhibits thereto) is
amended to incorporate the changes shown on the marked pages of the Loan
Purchase Agreement (conformed as amended) attached hereto as Exhibit A.
3. Representations and Warranties. Each Seller and Oxford each represents and
warrants that the representations and warranties of such party contained in
Sections 7.1 and 8.1 of the Loan Purchase Agreement (before and after giving
effect to the amendments made by Section 2 of this Amendment) are correct in all
material respects on and as of the effective date hereof as though made on and
as of the date hereof and each Seller and Oxford hereby reaffirm such
representations and warranties.
4. Conditions Precedent. The effectiveness of Sections 2 and 6.3 of this
Amendment shall be subject to the satisfaction of the following conditions
precedent:
4.1 This Amendment. The Administrator shall have received an original
counterpart (or counterparts) of this Amendment executed and delivered by
a duly authorized officer of each of the parties hereto, or other evidence
satisfactory to the Administrator of the execution and delivery of this
Amendment by such parties.
4.2 Loan Purchase Agreement. After giving effect to all changes in the
Loan Purchase Agreement made by this Amendment, all conditions precedent
in the Loan Purchase Agreement are satisfied.
4.3 First Tier Loan Purchase Agreement. The Administrator shall have
received an original counterpart of the First Tier Loan Purchase Agreement
executed and delivered by a duly authorized officer of each of the parties
thereto.
4.4 Liquidity Bank Consent. The Administrator shall have received an
original counterpart of the Fourth Amendment to Liquidity Agreement
containing, among other things, the written acknowledgment of and consent
to this Amendment from each of the Liquidity Banks.
4.5 Credit Bank Approval. The Administrator shall have received written
approval of this Amendment from State Street Bank, as Credit Bank under
the Credit Agreement.
4.6 Representations and Warranties. The representations and warranties set
forth in Section 3 above shall be true
-2-
<PAGE>
and correct in all material respects (and each Seller and Oxford, as
applicable, in the absence of notice to the Administrator to the contrary,
shall be deemed to so certify).
4.7 Confirmation of Rating. The Administrator shall have received written
confirmation from each of the Rating Agencies to the effect that the
execution and delivery of this Amendment will not cause the ratings of the
Commercial Paper Notes to be reduced or withdrawn.
4.8 Other Documents. The Administrator shall have received such opinions
of counsel to the Seller Parties, such certificates of officers of the
Seller Parties and other documents as it may reasonably request.
5. Consent to First Tier Loan Purchase Agreement. The Purchaser, the
Administrator and the Relationship Bank, by their signatures hereto, hereby
acknowledge and consent to the execution and delivery by Centrex Four and the
Originators of the First Tier Loan Purchase Agreement.
6. Miscellaneous.
6.1 Effectiveness of the Loan Purchase Agreement. The Loan Purchase
Agreement, as amended hereby, is hereby ratified, approved and confirmed
in all respects, and shall remain in full force and effect.
6.2 Governing Law. This Amendment, including the rights and duties of the
parties hereto, shall be governed by, and construed in accordance with,
the internal laws of the State of New York without reference to principles
of conflicts of law.
6.3 Reference to and Effect on Loan Purchase Agreement. Upon the
effectiveness of this Amendment in accordance with Section 4 hereof, (i)
this Amendment shall be part of the Loan Purchase Agreement, (ii) each
reference in the Loan Purchase Agreement to "this Agreement", "hereunder",
"hereof", "herein", or words of like import shall mean and be a reference
to the Loan Purchase Agreement, as amended by this Amendment, and (iii)
each reference to the Loan Purchase Agreement in any other document,
instrument or agreement executed and/or delivered in connection with the
Loan Purchase Agreement shall mean and be a reference to the Loan Purchase
Agreement, as amended by this Amendment.
6.4 Headings. The Section headings in this Amendment are inserted for
convenience of reference only and shall not
-3-
<PAGE>
affect the meaning or interpretation of this Amendment or any provisions
hereof.
6.5 Counterparts. This Amendment may be executed in any number of
counterparts, and by the different parties on separate counterparts, each
of which shall constitute an original and all of which when taken together
shall constitute one and the same agreement.
-4-
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed
by their respective officers thereunto duly authorized, as of the date first
above written.
CENTREX CAPITAL AUTOMOBILE
ASSETS (NUMBER TWO), INC.,
as Seller
By: /s/ Robert B. Kay
--------------------------
Name: Robert B. Kay
Title: Vice President
CENTREX CAPITAL AUTOMOBILE
ASSETS (NUMBER FOUR), INC.,
as Seller
By: /s/ Peter I. Cavallaro
--------------------------
Name: Peter I. Cavallaro
Title: Vice President
OXFORD RESOURCES CORP.,
as Servicer
By: /s/ Peter I. Cavallaro
--------------------------
Name: Peter I. Cavallaro
Title: Senior Vice President
THE BANK OF NEW YORK,
as Custodian and Standby
Servicer
By: /s/ Reyne A. Macadaeg
--------------------------
Name: Reyne A. Macadaeg
Title: Assistant Vice President
<PAGE>
CLIPPER RECEIVABLES CORPORATION
as Purchaser
By: /s/ Tiffany Percival
--------------------------
Name: Tiffany Percival
Title: Vice President
STATE STREET BOSTON CAPITAL
CORPORATION, As Administrator
By: /s/ Paulina Girsen
--------------------------
Name: Paulina Girsen
Title: Associate
STATE STREET BANK AND TRUST
COMPANY, as Relationship Bank
By: /s/ Frederick M. Ramos II
--------------------------
Name: Frederick M. Ramos II
Title: Vice President
By: /s/ Nelson Russell
--------------------------
Name: Nelson Russell
Title: Vice President
<PAGE>
[EXHIBIT A to Third Amendment
to Loan Purchase Agreement]
CONFORMED COPY*
CENTREX CAPITAL AUTOMOBILE ASSETS (NUMBER TWO), INC.
Seller
and
CENTREX CAPITAL AUTOMOBILE ASSETS (NUMBER FOUR), INC.
Seller
and
OXFORD RESOURCES CORP.
Servicer
and
THE BANK OF NEW YORK
Custodian and Standby Servicer
and
CLIPPER RECEIVABLES CORPORATION
Purchaser
and
STATE STREET BOSTON CAPITAL CORPORATION
Administrator
and
STATE STREET BANK AND TRUST COMPANY
Relationship Bank
LOAN PURCHASE AGREEMENT
Dated as of March 31, 1995
- ----------
* Conformed as executed and as amended by the First Amendment dated as of
December 14, 1995, the Second Amendment dated as of March 21, 1996 and the
Third Amendment dated as of December 4, 1996.
<PAGE>
TABLE OF CONTENTS
Section Page
- ------- ----
ARTICLE I
Definitions
1.1. Definitions....................................................1
1.2. Usage of Terms................................................28
1.3. Section References............................................29
1.4. Parties.......................................................29
ARTICLE II
Transfers of Purchased Assets
2.1. Purchases of Receivables......................................29
2.2. Conveyance of Receivables.....................................30
2.3. Transfer Intended as Sale; Precautionary Security
Interest....................................................31
2.4. Acceptance by Purchaser.......................................32
2.5. Conveyance of Subsequent Receivables..........................32
2.6. Representations and Warranties of Sellers.....................33
2.7. Repurchase Upon Breach........................................40
2.8. Delivery of Receivable Files; Appointment of
Receivable Bailee...........................................40
2.9. Acceptance and Custody of Receivable Files....................41
2.10. Access to Receivable Files....................................43
2.11. Purchase Termination Date.....................................43
2.12. Tax Treatment.................................................45
2.13. Purchaser's Certificate.......................................45
ARTICLE IIA
Warehouse Facility
2A.1 Warehouse Fundings............................................45
2A.2 Warehoused Receivables........................................46
2A.3 Interest......................................................46
2A.4 Repayment of Principal........................................47
2A.5 Warehouse Note................................................47
2A.6 Grant of Security Interest....................................48
2A.7 Remedies......................................................49
2A.8 Applicability of Other Provisions.............................50
2A.9 Warehouse Take-Outs...........................................50
2A.10 Release of Warehoused Receivables.............................51
2A.11 Purchase or Interest Swap Upon Nonpayment.....................52
ARTICLE III
Administration and Servicing of Receivables
3.1. Duties of Servicer............................................53
3.2. Collection and Allocation of Receivable Payments..............54
i
<PAGE>
Section Page
- ------- ----
3.3. Realization Upon Receivables..................................55
3.4. Physical Damage Insurance; Other Insurance....................55
3.5. Maintenance of Security Interests in Financed
Vehicles....................................................56
3.6. Additional Covenants of Servicer..............................56
3.7. Purchase of Receivables Upon Breach...........................57
3.8. Servicing Fee.................................................57
3.9. Servicer's Certificate........................................57
3.10. Annual Statement as to Compliance; Notice of
Default.....................................................57
3.11. Annual Independent Certified Public Accountant's
Report......................................................58
3.12. Receivable Bailee.............................................58
3.13. Servicer Expenses.............................................58
3.14. Retention and Termination of Servicer.........................58
3.15. Access to Certain Documentation and Information
Regarding Receivables.......................................59
3.16. Data Report...................................................59
3.17. Employee Dishonesty Policy....................................60
3.18. Sub-Servicer..................................................60
ARTICLE IV
Distributions
4.1. Accounts......................................................60
4.2. Collections...................................................61
4.3. Application of Collections....................................63
4.4. Payaheads; Advances...........................................63
4.5. Additional Deposits...........................................64
4.6. Distributions.................................................64
4.7. Cash Collateral Account.......................................67
4.8. Reliance on Information from the Servicer.....................68
ARTICLE V
Fees and Yield Protection
5.1. Fees..........................................................68
5.2. Overdue Interest..............................................69
5.3. Yield Protection..............................................69
5.4. Costs, Expenses and Taxes.....................................71
5.5. Funding Losses................................................72
6.1. Conditions Precedent to Initial Purchase......................72
6.2. Conditions Precedent to All Purchases.........................75
6.3. Conditions Precedent to Initial
Warehouse Funding...........................................77
6.4. Conditions Precedent to All Warehouse Fundings................78
ii
<PAGE>
Section Page
- ------- ----
ARTICLE VII
The Sellers
7.1. Representations of Sellers....................................80
7.2. Indemnity by Sellers..........................................83
ARTICLE VIII
The Servicer
8.1. Representations of Servicer...................................85
8.2. Indemnities of Servicer.......................................87
8.3. Merger or Consolidation of, or Assumption of the
Obligations of, Servicer or Standby Servicer................88
8.4. Limitation on Liability of Servicer and Others................89
8.5. Servicer and Standby Servicer Not to Resign...................90
ARTICLE IX
General Covenants of Sellers and Servicer
9.1. Affirmative Covenants of Sellers and Servicer.................90
9.2. Reporting Requirements of Sellers.............................93
9.3. Negative Covenants of Sellers and Servicer....................92
9.4. Separate Existence............................................95
ARTICLE X
Default
10.1. Events of Default.............................................97
10.2. Remedies.....................................................100
10.3. Termination of Servicer......................................100
10.4. Appointment of Successor Servicer............................100
10.5. Repayment of Advances........................................102
10.6. Action Upon Certain Failures of the Servicer.................103
10.7. Waiver of Past Defaults......................................103
ARTICLE XI
The Custodian
11.1. Duties of Custodian..........................................103
11.2. [Reserved]...................................................105
11.3. Certain Matters Affecting Custodian..........................105
11.4. Custodian Not Liable for Agreement or Receivables............107
11.5. Other Transactions...........................................107
11.6. Indemnity of Custodian.......................................108
11.7. Eligibility Requirements for Custodian.......................108
11.8. Resignation or Removal of Custodian..........................109
11.9. Successor Custodian..........................................109
11.10. Merger or Consolidation of Custodian.........................110
11.11. Co-Custodian.................................................110
iii
<PAGE>
Section Page
- ------- ----
11.12. Representations and Warranties of Custodian..................112
11.13. No Bankruptcy Petition.......................................112
ARTICLE XII
The Administrator; Relationship Bank
12.1. Authorization and Action.....................................112
12.2. Administrator's and Relationship Bank's Reliance,
Etc........................................................113
12.3. State Street Capital and State Street Bank and
Affiliates.................................................113
ARTICLE XIII
Assignment Of Purchaser's Interest
13.1. Restrictions on Assignments..................................114
13.2. Rights of Assignee...........................................115
13.3. Evidence of Assignment.......................................115
13.4. Rights of Program Collateral Agent...........................115
ARTICLE XIV
Termination
14.1. Termination..................................................115
14.2. Optional Purchase of Receivables.............................115
ARTICLE XV
Miscellaneous Provisions
15.1. Amendment, Etc...............................................116
15.2. Protection of Title to Purchased Assets......................116
15.3. Execution in Counterparts....................................118
15.4. Governing Law................................................118
15.5. Notices......................................................118
15.6. Severability of Provisions...................................119
15.7. Assignment...................................................119
15.8. Nonpetition Covenants........................................119
15.9. Third Party Beneficiaries....................................119
15.10. Agent for Service............................................120
15.11. Seller Obligations Joint and Several; Agreement
Binding on Either Seller Individually......................120
15.12. Confidentiality of Seller Information........................120
15.13. Confidentiality of Program Information.......................122
15.14. Waiver Of Jury Trial.........................................124
15.15. Consent To Jurisdiction; Waiver Of Immunities................124
15.16. No Recourse Against Other Parties............................125
iv
<PAGE>
EXHIBITS
Exhibit A Form of Seller Assignment
Exhibit B-1 Form of Purchaser's Certificate to Originator
Exhibit B-2 Form of Purchaser's Certificate to Servicer
Exhibit C Form of Servicer's Certificate
Exhibit D-1 Form of Trust Receipt
Exhibit D-2 Form of Servicing Officer's Certificate
Exhibit E Form of Warehouse Note
v
<PAGE>
LOAN PURCHASE AGREEMENT dated as of March 31, 1995 (this "Agreement")
among CENTREX CAPITAL AUTOMOBILE ASSETS (NUMBER TWO), INC., a Delaware
corporation, as seller ("Centrex Two"), CENTREX CAPITAL AUTOMOBILE ASSETS
(NUMBER FOUR), INC., a Delaware corporation, as seller ("Centrex Four"; Centrex
Two and Centrex Four each a "Seller", and together, the "Sellers"), OXFORD
RESOURCES CORP., a New York corporation ("Oxford"), as servicer (the
"Servicer"), THE BANK OF NEW YORK, a New York banking corporation ("BONY"), as
custodian and standby servicer (the "Custodian" and "Standby Servicer",
respectively), CLIPPER RECEIVABLES CORPORATION, a Delaware corporation, as
purchaser (the "Purchaser"), STATE STREET BOSTON CAPITAL CORPORATION, a
Massachusetts corporation ("State Street Capital"), as administrator for the
Purchaser (the "Administrator"), and STATE STREET BANK AND TRUST COMPANY, a bank
organized under the laws of the Commonwealth of Massachusetts ("State Street
Bank"), as relationship bank for the Purchaser (the "Relationship Bank").
In consideration of the mutual agreements herein contained, and other good
and valuable consideration, the receipt of which is hereby acknowledged, the
parties hereto, intending to be legally bound, agree as follows:
ARTICLE I
Definitions
SECTION 1.1. Definitions. Whenever used in this Agreement, the following
words and phrases, unless the context otherwise requires, whenever capitalized
shall have the following meanings:
"Actuarial Method" means the method of allocating a fixed level payment
between principal and interest, pursuant to which the portion of such payment
that is allocated to interest is the product of the fixed rate of interest
multiplied by the scheduled unpaid principal balance multiplied by the fixed
period of time (expressed as a fraction of a year) between scheduled payments.
"Actuarial Receivable" means a Receivable which provides for the
allocation of payments to interest and principal based on the Actuarial Method.
"Addition Notice" means, with respect to any transfer of Subsequent
Receivables to the Purchaser pursuant to Section 2.5, a notice, which shall be
given not later than five Business Days prior to the related Subsequent Transfer
Date, of a Seller's designation of Subsequent Receivables to be transferred to
the Purchaser, the aggregate Principal Balance of such Subsequent Receivables
and the applicable Subsequent Cutoff Date and
<PAGE>
requested Subsequent Transfer Date with respect to such Subsequent Receivables.
"Administrator" has the meaning set forth in the preamble.
"Administrator's Office" means the office of the Administrator at 225
Franklin Street, Boston, Massachusetts 02110, Attention: Clipper Funds, or such
other address as shall be designated by the Administrator in writing to each
Seller and
the Servicer.
"Advance" means the amount which the Servicer is required to advance on
the respective Receivables pursuant to Section 4.4.
"Affected Party" means each of the Purchaser, each Liquidity Bank, any
assignee or participant of the Purchaser or any Liquidity Bank, the Credit Bank,
any assignee or participant of the Credit Bank, State Street Capital, any
successor to State Street Capital as Administrator, State Street Bank, any
successor to State Street Bank as Relationship Bank, any sub-agent of the
Administrator, the Program Collateral Agent, any successor of First Chicago as
Program Collateral Agent and any co-agent or sub-agent of the Program Collateral
Agent.
"Affiliate" of any Person means any Person who directly or indirectly
controls, is controlled by or is under common control with such person. For
purposes of this definition of "Affiliate", the term "control" (including the
terms "controlling", "controlled by" and "under common control with") means the
possession, directly or indirectly, of the power to direct or cause a direction
of the management and policies of a Person, whether through the ownership of
voting securities, by contract or otherwise.
"Agreement" means this Loan Purchase Agreement, as the same may be amended
and supplemented from time to time.
"Allocation Trigger" means (a) with respect to all Loan Tranches, an Event
of Default of the type described in clause (i), (v), (viii), (ix), (xii), (xiii)
or (xvi) of Section 10.1, or (b) with respect to any Loan Tranche, (i) the
average of the Delinquency Rates with respect to such Loan Tranche for the three
most recent Collection Periods shall exceed 3.0%, (ii) the average of the Net
Loss Rates with respect to such Loan Tranche for the three most recent
Collection Periods shall exceed 4.5%, or (iii) the average of the Excess Yield
Percentages for the three most recent Collection Periods shall be less than
zero.
"Alternate Base Rate" means, on any date, a fluctuating rate of interest
per annum equal to the higher of
-2-
<PAGE>
(a) the rate of interest most recently announced by State Street
Bank in Boston, Massachusetts, as its base rate; and
(b) the Federal Funds Rate most recently determined by State Street
Bank plus 1.0% per annum.
The Alternate Base Rate is not necessarily intended to be the lowest rate of
interest determined by State Street Bank in connection with extensions of
credit.
"Amount Financed" with respect to a Receivable means the amount advanced
under and stated in 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 Receivable.
"Assignment" means an Originator Assignment or a Seller Assignment.
"Assumption Date" has the meaning set forth in Section 10.4.
"Bank Funded Portion" means, for any Yield Period (or portion thereof),
that portion of the Purchaser's Tranche Investment of the Warehouse Loan Tranche
which has been funded pursuant to the Liquidity Agreement or the Credit
Agreement (and not by the issuance of Commercial Paper Notes) during such Yield
Period (or such portion).
"Bank Rate" means (i) for any Yield Period on or prior to the first day of
which Clipper, any Liquidity Bank or the Credit Bank shall have notified the
Administrator that (A) the introduction of or any change in or in the
interpretation of any law or regulation makes it unlawful, or any central bank
or other governmental authority asserts that it is unlawful, for such Person to
fund the Bank Funded Portion at the Eurodollar Rate (Reserve Adjusted), or (B)
due to market conditions affecting the London interbank market, funds are not
reasonably available to such Person in such market in order to enable it to fund
the Bank Funded Portion at the Eurodollar Rate (Reserve Adjusted) (and in the
case of subclause (A) or (B), such Person shall not have subsequently notified
the Administrator that such circumstances no longer exist); or (ii) for any
Yield Period as to which the Administrator does not receive notice or determine,
by no later than 12:00 noon (New York City time) on the third Business Day
preceding the first day of such Yield Period, that the Bank Funded Portion will
be funded pursuant to the Liquidity Agreement or the Credit Agreement and not by
the issuance of Commercial Paper Notes, the Domestic CD Rate (Adjusted) for such
Yield
-3-
<PAGE>
Period; and (iii) in the cases of any other Yield Period, the Eurodollar Rate
(Reserve Adjusted) for such Yield Period.
"BONY" has the meaning set forth in the preamble.
"Business Day" means any day other than a Saturday, a Sunday or a day on
which banking institutions in New York, New York, the State in which the
Custodian's Office is located, the State in which the executive offices of the
Servicer are located, the State in which the corporate trust office of the
Program Collateral Agent is located or the State in which the principal place of
business of the Administrator is located shall be authorized or obligated by
law, executive order, or governmental decree to be closed.
"Cash Collateral Account" means the account designated as such,
established and maintained pursuant to Section 4.1.
"Cash Collateral Shortfall" means, for any Distribution Date, the excess,
if any, of the Required Cash Collateral Amount over the amount on deposit in the
Cash Collateral Account, calculated on the related Determination Date as of the
end of the preceding Collection Period but after giving effect to any
withdrawals to be made from the Cash Collateral Account on such Distribution
Date pursuant to Section 4.7(b).
"Cash Collateral Surplus" means, for any Distribution Date, the excess, if
any, of the amount on deposit in the Cash Collateral Account over the Required
Cash Collateral Amount, calculated on the related Determination Date after
giving effect to any deposits to and transfers and withdrawals from the Cash
Collateral Account to be made on such Distribution Date other than pursuant to
Section 4.7(c).
"Cash Purchase Price" has the meaning set forth in Section 2.1.
"Centrex Four" has the meaning set forth in the preamble.
"Centrex Two" has the meaning set forth in the preamble.
"Change in Control" means any of the following:
(a) the acquisition, by any Person or two or more Persons acting in
concert, of beneficial ownership (within the meaning of Sections 13(d) and
14(d)(2) of the Securities and Exchange Act of 1934, as amended), of a
portion of the issued and outstanding shares of the capital stock of
Oxford having more than 50% of the ordinary voting power for the election
of directors; or
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(b) the failure of Oxford to own, directly or indirectly, free and
clear of all Liens, 100% of the issued and outstanding capital stock of
each Originator; or
(c) the failure of Oxford and the Originators collectively to own
directly, free and clear of all Liens, 100% of the issued and outstanding
shares of capital stock of each Seller;
in each case, on a fully diluted basis, including all warrants, options,
conversion rights, and other rights to purchase or convert into such capital
stock.
"Clipper Parties" means, collectively, each of the Purchaser, the
Administrator, the Relationship Bank, each other Affected Party and each other
Indemnified Party.
"Closing Date" means March 31, 1995.
"Collateral" has the meaning set forth in Section 2A.6.
"Collection Account" means the account designated as such, established and
maintained pursuant to Section 4.1.
"Collection Period" means a calendar month. Any amount stated "as of the
close of business on the last day of a Collection Period" or "as of the end 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 made by the Servicer and reductions of Outstanding Advances and
5) all distributions.
"Collection Policy" means the collection policies and practices of the
Servicer and the Originators delivered by Oxford to the Administrator prior to
the date hereof, as modified without violating this Agreement, the Contribution
Agreement or the First Tier Loan Purchase Agreement.
"Collections" means the Principal Collections and Interest Collections.
"Commercial Paper Notes" means short-term promissory notes issued or to be
issued by Purchaser to fund its investments in accounts receivable or other
financial assets.
"Commercial Paper Rate" means for any Yield Period, a per annum interest
rate calculated by Administrator equal to the sum of (i) the rate or, if more
than one rate, the weighted average of the rates determined by converting to an
interest-bearing
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equivalent rate per annum the discount rate (or rates) at which Commercial Paper
Notes have been sold on each day during that Yield Period plus (ii) the
commissions and charges charged by the commercial paper placement agents with
respect to such Commercial Paper Notes, expressed as a percentage of the face
amount of Commercial Paper Notes to which such commission and charges relate and
converted to an interest-bearing equivalent rate per annum.
"Contribution Agreement" means the Contribution Agreement dated as of
March 31, 1995 by and between Centrex Two and the Originators, relating to the
contribution of the Receivables by the Originators to Centrex Two, as amended by
the First Amendment thereto dated as of December 14, 1995, and the Second
Amendment thereto dated as of March 21, 1996.
"CP-Funded Portion" means for any Yield Period (or portion thereof), that
portion of the Purchaser's Tranche Investment of the Warehouse Loan Tranche
which have been funded by the issuance of Commercial Paper Notes (and not
pursuant to the Liquidity Agreement or the Credit Agreement) during such Yield
Period (or such portion).
"Credit Agreement" means and includes (a) the Credit Agreement, dated as
of September 24, 1992, among Purchaser, the Administrator and the Credit Bank
and (b) any other agreement (other than the Liquidity Agreement and any other
liquidity agreement entered into by Purchaser in connection with its other
acquisitions of financial assets) hereafter entered into by the Purchaser
providing for the issuance of one or more letters of credit for the account of
the Purchaser, the making of loans to the Purchaser or any other extensions of
credit to or for the account of the Purchaser to support all or any part of the
Purchaser's payment obligations under its Commercial Paper Notes or to provide
an alternate means of funding the Purchaser's investments in accounts receivable
or other financial assets, in each case as amended, supplemented or otherwise
modified from time to time.
"Credit Policy" means the credit origination policies of the Originators
delivered by Oxford to the Administrator prior to the date hereof, as modified
without violating this Agreement, the Contribution Agreement or the First Tier
Loan Purchase Agreement.
"Credit Bank" means and includes State Street Bank, as lender to Purchaser
and as issuer of a letter of credit for Purchaser's account under the Credit
Agreement, and any other or additional bank or other financial institution now
or hereafter extending credit or having a commitment to extend credit to or for
the account of Purchaser under the Credit Agreement.
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"Custodian" means, initially BONY, in its capacity as custodian on behalf
of the Purchaser, until a successor Person shall have become Custodian pursuant
hereto, and thereafter Custodian shall mean such successor Person.
"Custodian Fee" means the compensation payable to the Custodian for
services rendered in such capacity hereunder.
"Custodian Officer" means the president, any vice president, any assistant
vice president, any assistant secretary, any assistant treasurer, any trust
officer, or any other officer of the Custodian customarily performing functions
similar to those performed by any of the above designated officers and also
means, with respect to a particular corporate trust matter, any other officer to
whom such matter is referred because of his knowledge of and familiarity with
the particular subject.
"Custodian's Office" means the office of the Custodian at which its
corporate trust business shall be administered, which office at the date of this
Agreement is located at 101 Barclay Street, New York, New York, 10286.
"Cutoff Date" means, in relation to the Initial Receivables, the Initial
Cutoff Date, in relation to any Subsequent Receivables, the relevant Subsequent
Cutoff Date and, in relation to Receivables from time to time included in the
Warehouse Loan Tranche, the relevant Warehouse Cutoff Date.
"Data Report" has the meaning set forth in Section 3.16.
"Dealer" means the dealer who financed and sold a Financed Vehicle and
with respect to which an Originator purchased the respective Receivable and
contributed or sold it to a Seller.
"Default" means any event which, with the giving of notice or lapse of
time, or both, would (unless cured or waived) become an Event of Default.
"Defaulted Receivable" means any Receivable (without
duplication) as to which either of the following has occurred: (a) all or any
portion of a payment under the contract becoming 120 days or more delinquent, or
(b) repossession (and expiration of any redemption or reinstatement period) of
the vehicle securing the Receivable.
"Deferred Purchase Price" has the meaning set forth in Section 2.1.
"Delinquency Rate" means, with respect to a Collection Period commencing
in or after March 1995, the fraction, expressed as a percentage, equal to (a)
the sum of the aggregate Principal
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Balance of Receivables (or, for purposes of clause (b) of the definition of
"Allocation Trigger", with respect to any Loan Tranche, Receivables included in
such Loan Tranche) with part or all of one or more payments past due as of the
end of such Collection Period for 60 days or more divided by (b) the Pool
Balance (or, for purposes of clause (b) of the definition of "Allocation
Trigger", with respect to any Loan Tranche, the Loan Tranche Balance) as of the
end of such Collection Period.
"Determination Date" means the tenth calendar day of each calendar month
or, if such day is not a Business Day, the next following Business Day,
commencing April 10, 1995.
"Distribution Date" means, for each Collection Period, the fifteenth
calendar day of the following month, or if such day is not a Business Day, the
next following Business Day, commencing April 17, 1995.
"Distribution Period" means (a) the period commencing on, and including,
the Closing Date and ending on, but excluding, the next following Distribution
Date, and (b) each subsequent period commencing on, and including, a
Distribution Date and ending on, but excluding, the next following Distribution
Date.
"Dollars" means dollars in lawful money of the United States of America.
"Domestic CD Rate (Adjusted)" means, with respect to any Yield Period, a
rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%),
equal to the sum of (a) the quotient of (i) the Domestic CD Rate for such Yield
Period, divided by (ii) one minus the Reserve Requirement for such Yield Period,
plus (b) the Assessment Rate for such Yield Period; where: "Domestic CD Rate"
means, with respect to any Yield Period, a rate of interest equal to the average
of the secondary market morning offering rates in the United States for time
certificates of deposit of major United States money market banks for a period
approximately equal to such Yield Period in an amount substantially equal to the
Bank Funded Portion, as such offering rate is quoted to the Administrator by the
Federal Reserve Bank of Boston during the morning of the first day of such Yield
Period; provided, however, that if the Administrator shall not receive any such
quote by the Federal Reserve Bank of Boston by 11:00 a.m., New York City time,
on the morning of the first day of any Yield Period, then "Domestic CD Rate"
shall mean, with respect to such Yield Period, the rate of interest determined
by the Administrator to be the average (rounded upwards, if necessary, to the
nearest 1/100 of 1%) of the bid rates quoted to the Administrator in the
secondary market at approximately 11:00 a.m., New York City time (or as soon
thereafter as practicable), on the first day of such Yield Period by two
certificate of deposit dealers in New York or
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Boston of recognized standing selected by the Administrator in its sole
discretion for the purchase from the Administrator at face value of certificates
of deposit issued by the Administrator in an amount approximately equal or
comparable to the amount of the Bank Funded Portion and having a maturity equal
to such Yield Period; "Assessment Rate" for any Yield Period means the annual
assessment rate per annum (rounded upwards, if necessary, to the nearest 1/100
of 1%) applicable to the Administrator on its insured deposits, on the Business
Day immediately preceding the first day of such Yield Period, under the Federal
Deposit Insurance Act, determined by annualizing the most recent assessment
levied on the Administrator by the Federal Deposit Insurance Corporation (or any
successor) with respect to such deposits; and "Reserve Requirement" means, with
respect to any Yield Period, a percentage (expressed as a decimal) equal to the
daily average during such Yield Period of the aggregate reserve requirement
(including all basic, supplemental, marginal and other reserves and taking into
account any transitional adjustments or other scheduled changes in reserve
requirements during such period) specified under Regulation D, as applicable to
the class of banks of which the Administrator is a member, on deposits of the
types used as a reference in determining the Domestic CD Rate and having a
maturity approximately equal to such Yield Period.
"Downgraded Liquidity Bank" means a Liquidity Bank which has been the
subject of a Downgrading Event.
"Downgrading Event" with respect to any Person means that the short-term
securities of such Person shall have been assigned a rating lower than the
Required Short-Term Ratings or shall no longer be rated by either of the Rating
Agencies.
"Earned Discount" means, for any Distribution Date and with respect to any
Loan Tranche included in the Purchased Assets during the Distribution Period
then ending, an amount equal to the sum of
(a) the product of (i) the weighted daily average of the Purchaser's
Tranche Investment of such Loan Tranche during such Distribution Period
(or, if applicable, during the shorter period described in clause (iii)
below), times (ii) the Swap Rate for such Loan Tranche, times (iii) in the
case of the first Distribution Period when such Loan Tranche was included
in the Purchased Assets, a fraction the numerator of which is the actual
number of days in the period from the Closing Date or the Subsequent
Transfer Date, as applicable, on which such Loan Tranche was purchased
until the last day of such Distribution Period and the denominator of
which is 360, and in the case of each subsequent Distribution Period, one
twelfth; plus
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(b) the Program Fee for such Distribution Period with respect to
such Loan Tranche;
provided, however, in the case of the Warehouse Loan Tranche, "Earned Discount"
for any Distribution Date shall mean the sum of (A) accrued and unpaid interest
on all Warehouse Fundings as of such Distribution Date, calculated in accordance
with Section 2A.3, plus (B) the accrued and unpaid Warehouse Fee for such
Distribution Period, calculated in accordance with Section 5.1(a)(ii).
"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
the full and timely payment by, the United States of America;
(b) demand deposits, time deposits or certificates of deposit of any
depository institution or trust company incorporated under the laws of the
United States of America or any State thereof (or any domestic branch of a
foreign bank) and subject to supervision and examination by Federal or
State banking or depository institution authorities; provided, however,
that at the time of the investment or contractual commitment to invest
therein, the commercial paper or other short-term unsecured debt
obligations (other than such obligations the rating of which is based on
the credit of a Person other than such depository institution or trust
company) thereof shall have the Required Short-Term Ratings;
(c) commercial paper having, at the time of the investment or
contractual commitment to invest therein, the Required Short-Term Ratings;
(d) bankers' acceptances issued by any depository institution or
trust company referred to in clause (b) above;
(e) repurchase obligations with respect to any security that is a
direct obligation of, or fully guaranteed as to the full and timely
payment 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 (i) a
depository institution or trust company (acting as principal) described in
clause (b) above or (ii) a depository institution or trust company whose
commercial
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paper or other short term and long term unsecured debt obligations have
the Required Short-Term Ratings;
(f) freely redeemable shares in money market mutual funds registered
under the Investment Company Act of 1940, as amended, which invest only in
obligations of the types described in clauses (a) through (e) above
(without regard to any limitations on the maturity of such obligations but
including any limitation on the credit ratings and other qualifications of
the issuers of such obligations); and
(g) any other investment as may be acceptable to the Administrator,
as evidenced by a writing to that effect, as may from time to time be
confirmed in writing to the Servicer and the Custodian by the
Administrator.
Any Eligible Investments may be purchased by or through the Custodian or
any of its Affiliates.
"ERISA" means the U.S. Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Eurodollar Rate (Reserve Adjusted)" means, with respect to any Yield
Period, a rate per annum (rounded upwards, if necessary, to the nearest 1/100 of
1%) equal to (a) the Eurodollar Rate for such Yield Period divided by (b) one
minus the Eurodollar Reserve Percentage for such Yield Period; where:
"Eurodollar Rate" means, with respect to any Yield Period, the rate per annum at
which Dollar deposits in immediately available funds are offered to the
Eurodollar Office of the Administrator two Eurodollar Business Days prior to the
beginning of such period by prime banks in the interbank eurodollar market at or
about 11:00 a.m., New York City time, for delivery on the first day of such
Yield Period, for the number of days comprised therein and in an amount equal or
comparable to the Bank Funded Portion for such Yield Period; "Eurodollar
Business Day" means a day of the year on which dealings are carried on in the
London interbank market and banks are open for business in London and are not
required or authorized to close in New York City or Boston; and "Eurodollar
Reserve Percentage" means, with respect to any Yield Period, the then-applicable
percentage (expressed as a decimal) prescribed by the Federal Reserve Board for
determining reserve requirements applicable to "Eurocurrency Liabilities"
pursuant to Regulation D.
"Event of Bankruptcy" shall be deemed to have occurred with respect to a
Person if either:
(a) a case or other proceeding shall be commenced, without the
application or consent of such Person, in any court, seeking the
liquidation, reorganization, debt
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arrangement, dissolution, winding up, or composition or readjustment of
debts of such Person, the appointment of a trustee, receiver, custodian,
liquidator, assignee, sequestrator or the like for such Person or all or
substantially all of its assets, or any similar action with respect to
such Person under any law relating to bankruptcy, insolvency,
reorganization, winding up or composition or adjustment of debts, and such
case or proceeding shall continue undismissed, or unstayed and in effect,
for a period of 45 consecutive days; or an order for relief in respect of
such Person shall be entered in an involuntary case under the federal
bankruptcy laws or other similar laws now or hereafter in effect; or
(b) such Person shall commence a voluntary case or other proceeding
under any applicable bankruptcy, insolvency, reorganization, debt
arrangement, dissolution or other similar law now or hereafter in effect,
or shall consent to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator (or other similar
official) for, such Person or for any substantial part of its property, or
shall make any general assignment for the benefit of creditors, or shall
fail to, or admit in writing its inability to, pay its debts generally as
they become due, or, if a corporation or similar entity, its board of
directors shall vote to implement any of the foregoing.
"Event of Default" means an event specified in Section 10.1.
"Excess Yield Percentage" means, for any Determination Date, the quotient,
expressed as a percentage rate per annum, equal to (a)(i) that portion of all
collections on Receivables (or, for purposes of clause (b) of the definition of
"Allocation Trigger", with respect to any Loan Tranche, Receivables included in
such Loan Tranche) allocable to interest for the preceding Collection Period,
minus (ii) the sum of the amounts distributable on the following Distribution
Date (without regard to the amount of Interest Collections available for
distribution) in respect of Servicer's Fee, Earned Discount and Net Liquidation
Losses under clauses first, second and third of Section 4.6(b) with respect to
all Loan Tranches (or, for purposes of clause (b) of the definition of
"Allocation Trigger", with respect to the relevant Loan Tranche) divided by (b)
the Pool Balance (or, for purposes of clause (b) of the definition of
"Allocation Trigger", with respect to any Loan Tranche, the Loan Tranche
Balance) as of the opening of business on the first day of such Collection
Period, times (c) twelve. Notwithstanding any other provision of this Agreement,
the calculation of the Excess Yield Percentage will not include amounts
described above with respect to any Loan Tranche (and for purposes of clause (b)
of the definition of
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"Allocation Trigger", no Excess Yield Percentage shall be calculated or included
in the calculation of any average Excess Yield Percentage with respect to such
Loan Tranche) for any Collection Period beginning before the date of the
purchase of such Loan Tranche hereunder.
"Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum equal (for each day during such period) to
(a) the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by
federal funds brokers, as published for such day (or, if such day is not a
Business Day, for the next preceding Business Day) by the Federal Reserve
Bank of Boston; or
(b) if such rate is not so published for any day which is a Business
Day, the average of the quotations for such day on such transactions
received by State Street Bank from three federal funds brokers of
recognized standing selected by it.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System, or any successor thereto or to the functions thereof.
"Fee Letter" means the letter dated February 13, 1995 from the
Administrator to Oxford.
"Final Payout Date" means the date following the Purchase Termination Date
on which Purchaser's Investment shall have been reduced to zero and all
Obligations shall have been paid in full.
"Final Scheduled Distribution Date" means the Distribution Date falling on
or next following the seventh anniversary of the Purchase Termination Date.
"Financed Vehicle" means a new or used automobile, light duty truck, van
or minivan, together with all accessions thereto, securing an Obligor's
indebtedness under the respective Receivable.
"First Chicago" means The First National Bank of Chicago, a
national banking association.
"First Tier Loan Purchase Agreement" means the First Tier Loan Purchase
Agreement dated as of the date hereof by and between Centrex Four and the
Originators, as amended, modified or supplemented from time to time, relating to
the purchase and sale of the Receivables by the Originators to Centrex Four.
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"Funding Period" means the period from and including the Closing Date to
but excluding the Purchase Termination Date.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board, or in such other statements by the
accounting profession, which are applicable to the circumstances as of the date
of determination.
"Hedging Agreement" means that certain ISDA Interest Rate and Currency
Exchange Agreement, dated as of March 31, 1995, between the Purchaser and State
Street Bank, as supplemented by each interest rate swap confirmation from time
to time executed thereunder in connection with this Agreement.
"Indemnified Amounts" has the meaning set forth in Section 7.2.
"Indemnified Party" has the meaning set forth in Section 7.2.
"Independent Director has the meaning set forth in Section 9.4.
"Initial Cutoff Date" means March 15, 1995.
"Initial Receivables" means the Receivables transferred on the Closing
Date.
"Insufficiency Amount" has the meaning set forth in Section 4.7(b).
"Interest Collections" means, for any Distribution Date, the sum of the
following amounts with respect to the preceding Collection Period: (i) that
portion of all collections on Receivables (including amounts withdrawn from the
Payahead Account but excluding amounts deposited into the Payahead Account)
allocable to interest; (ii) Liquidation Proceeds with respect to the Receivables
to the extent allocable to interest due thereon in accordance with the
Servicer's customary servicing procedures; (iii) all Advances made by the
Servicer of interest due on Receivables; (iv) all Recoveries received during the
Collection Period; and (v) the Repurchase Amount of each Receivable that became
a Repurchased Receivables during the related Collection Period to the extent
attributable to accrued interest on such Receivable; provided, however, that in
calculating the Interest Collections the portions of the following allocable to
interest will be excluded: (i) collections received on Receivables and the
Repurchase Amount in respect of
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Receivables to the extent that the Servicer has previously made an unreimbursed
Advance of interest with respect to such Receivable; (ii) Liquidation Proceeds
and Recoveries with respect to a particular Receivable to the extent of any
unreimbursed Advances of interest with respect to such Receivable; and (iii) all
payments and proceeds (including Liquidation Proceeds and Recoveries) of any
Repurchased Receivables the principal portion of the Repurchase Amount of which
has been included in the Principal Collections in a prior Collection Period.
With respect to any Loan Tranche, "Interest Collections" means, for any
Distribution Date, that portion of Interest Collections (as defined above)
attributable to Receivables which were included in such Loan Tranche at any time
during the relevant Collection Period.
"Lien" means a security interest, lien, charge, pledge, equity, or
encumbrance of any kind.
"Liquidity Agent" means State Street Bank, as agent for the Liquidity
Banks under the Liquidity Agreement, or any successor to State Street Bank in
such capacity.
"Liquidity Agreement" means and includes (a) the Liquidity Agreement dated
as of the date hereof among the Purchaser, as borrower, State Street Capital, as
Program Administrator, State Street Bank, as Liquidity Agent, and certain other
financial institutions, and (b) any other agreement hereafter entered into by
Purchaser providing for the making of loans or other extensions of credit to the
Purchaser secured by a direct or indirect security interest in the Purchased
Assets (or any portion thereof), to support all or part of the Purchaser's
payment obligations under the Commercial Paper Notes or to provide an alternate
means of funding the Purchaser's investments in accounts receivable or other
financial assets, and under which the amount available from such extensions of
credit is limited to an amount calculated by reference to the value or eligible
unpaid balance of such accounts receivable or other financial assets or any
portion thereof and/or the level of transaction-specific credit enhancement
available with respect thereto, as such Liquidity Agreement or other agreement
may be amended, supplemented, restated or otherwise modified from time to time.
"Liquidity Bank" means any one of, and "Liquidity Banks" means all of,
State Street Bank and the other commercial lending institutions that are at any
time parties to the Liquidity Agreement.
"Loan Tranche" means a group of Receivables consisting of (a) the Initial
Receivables purchased hereunder on the Closing Date, taken together, or (b) the
Subsequent Receivables purchased hereunder on any one Subsequent Transfer Date,
taken
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together, or (c) at any time, the Receivables then included in the Warehouse
Loan Tranche, taken together.
"Loan Tranche Balance" as of the close of business on the last day of a
Collection Period means the aggregate Principal Balance of the Receivables
(excluding Repurchased Receivables and Defaulted Receivables) in such Loan
Tranche.
"Lock-Box Account" has the meaning set forth in Section 4.2(b).
"Lock-Box Agreement" has the meaning set forth in Section 4.2(b).
"Lock-Box Bank" has the meaning set forth in Section 4.2(b).
"Material Adverse Effect" with respect to any event or circumstance, means
a material adverse effect on:
(i) the business, assets, financial condition, operations or
prospects of any Seller Party;
(ii) the ability of any Seller Party to perform in all material
respects its obligations under this Agreement or any other Related
Document;
(iii) the validity or enforceability of this Agreement, any other
Related Document or the Receivables or the collectibility of the
Receivables;
(iv) the status, existence, perfection, priority or enforceability
of the Purchaser's interest in the Receivables; or
(v) so long as the Warehouse Facility is in effect or any Warehouse
Fundings are outstanding, the ability of Oxford, the Originators or
Centrex Four to effect a Warehouse Take-Out.
"Moody's" means Moody's Investors Service, Inc. or any successor.
"Net Funding Yield" with respect to the Warehouse Loan Tranche means a
percentage equal to (a) the weighted average Annual Percentage Rate of
Receivables included in the Warehouse Loan Tranche (weighted according to the
respective outstanding Principal Balances of the Receivables included in the
Warehouse Loan Tranche), minus (b) the sum of (i) the then current Swap Rate
with respect to the Warehouse Loan Tranche, plus (ii) the Warehouse Fee Rate,
plus (iii) the Servicing Fee Rate.
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"Net Liquidation Losses" means, for any Collection Period, the aggregate
outstanding Principal Balance plus accrued interest (through the end of the
Collection Period) of all Receivables which became Defaulted Receivables in that
Collection Period, less the Recoveries received in that Collection Period with
respect to Defaulted Receivables.
"Net Loss Rate" means, with respect to a Collection Period commencing
March 1995, (a) twelve times (b) the quotient of (i) the Net Liquidation Losses
for such Collection Period with respect to all Loan Tranches (or, for purposes
of clause (b) of the definition of "Allocation Trigger", with respect to the
relevant Loan Tranche), divided by (ii) the ending Pool Balance (or, for
purposes of clause (b) of the definition of "Allocation Trigger", with respect
to any Loan Tranche, the Loan Tranche Balance).
"Notice of Release" has the meaning set forth in Section 2A.10.
"Obligations" means all obligations of the Sellers, the Servicer and the
Originators to any of the Clipper Parties under the Related Documents, excluding
the Purchaser's right to receive distributions in respect of Purchaser's
Investment and Earned Discount in respect of any Loan Tranche other than the
Warehouse Loan Tranche, and including without limitation (i) all obligations of
the Sellers to pay the principal amount of and accrued interest on Warehouse
Fundings and (ii) all obligations of the Sellers, the Servicer and the
Originators in respect of fees, expenses and indemnification.
"Obligor" on a Receivable means the purchaser or co-purchasers of the
Financed Vehicle, and guarantor(s) or any other Person who owes payments under
the Receivable.
"Officer's Certificate" means a certificate signed by the chairman of the
board, the president, any vice chairman of the board, any vice president, the
treasurer, the controller or any assistant vice president, any assistant
treasurer or any assistant controller of Oxford, Centrex Two, Centrex Four, or
the Servicer, as appropriate.
"Opinion of Counsel" means a written opinion of counsel, which counsel may
but need not be counsel to the Sellers or Servicer, and shall be acceptable to
the Custodian and the Administrator, and which opinion shall be acceptable to
the Custodian and the Administrator in form and substance.
"Originator Assignment" means an instrument of assignment executed by any
one or more of the Originators pursuant to the Contribution Agreement or the
First Tier Loan Purchase Agreement.
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"Originators" means Oxford and, at any time, each other Person that at
that time is a party to the Contribution Agreement or the First Tier Loan
Purchase Agreement as an Originator.
"Outstanding Advances" on a Receivable means the sum, as of the close of
business on the last day of a Collection Period, of all Advances made by Oxford
as Servicer (or by any successor Servicer that has agreed to make Advances) with
respect to such Receivable as reduced by payments made by or on behalf of the
Obligor pursuant to Section 4.4 with respect to such Receivable.
"Oxford" has the meaning set forth in the preamble.
"Payahead" on a Receivable means the amount, as of the close of business
on the last day of a Collection Period, determined in accordance with Section
4.3 with respect to such Receivable.
"Payahead Account" means the account designated as such, established and
maintained pursuant to Section 4.1.
"Payahead Balance" on a 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 Receivable, as reduced by
applications of previous Payaheads with respect to such Receivable, pursuant to
Sections 4.3 and 4.4.
"Payments Account" shall have the meaning specified in Section 4.2 hereof.
"Payments Account Bank" has the meaning specified in Section 4.2 hereof.
"Permitted Vehicle Lien" means any tax lien or mechanics' lien on a
Financed Vehicle provided the same does not extend to the related Receivable.
"Person" means any individual, corporation, estate, partnership, joint
venture, association, joint stock company, trust, unincorporated organization,
or government or any agency or political subdivision thereof.
"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
Repurchased Receivables and Defaulted 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)
in the case of an Actuarial Receivable, that portion of all Scheduled Payments
due on or
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prior to such day allocable to principal using the actuarial method, and in the
case of a Simple Interest Receivable, that portion of all Scheduled Payments due
on or prior to such day in respect of principal; (ii) any refunded portion of
extended warranty protection plan costs, or of physical damage, credit life,
credit accident or health insurance premiums included in the Amount Financed;
(iii) any payment of the Repurchase Amount with respect to the Receivable
allocable to principal; and (iv) any prepayment in full or any partial
prepayments applied to reduce the Principal Balance of the Receivable.
"Principal Collections" means, for any Distribution Date, the sum of the
following amounts received with respect to the preceding Collection Period: (i)
that portion of all collections on Receivables (including amounts withdrawn from
the Payahead Account but excluding amounts deposited into the Payahead Account)
allocable to principal; (ii) Liquidation Proceeds attributable to the principal
amount of Receivables which became Defaulted Receivables during the Collection
Period in accordance with the Servicer's customary servicing procedures; (iii)
all Advances made by the Servicer of principal due on the Receivables; (iv) to
the extent attributable to principal, the Repurchase Amount of each Receivable
that became a Repurchased Receivable during the related Collection Period; (v)
partial prepayments on Receivables relating to refunds of extended service
contracts, or of physical damage, credit life, credit accident or health
insurance policy premiums, but only if such contracts or premiums were financed
by the respective Obligor as of the date of the original contract and only to
the extent not properly included under clause (i) or (ii) above or clause (iv)
of the definition of Interest Collections; and (vi) on the Final Scheduled
Distribution Date, the amount of any Advances on such Final Scheduled
Distribution Date with respect to principal on the Receivables; provided,
however, that in calculating the Principal Collections portions of the following
allocable to principal will be excluded: (i) collections received on Receivables
and the Repurchase Amount in respect of Receivables to the extent that the
Servicer has previously made an unreimbursed Advance of principal with respect
to such Receivable; (ii) Liquidation Proceeds with respect to a particular
Receivable to the extent of any unreimbursed Advances of principal with respect
to such Receivable; and (iii) all payments and proceeds (including Liquidation
Proceeds and Recoveries) of any Repurchased Receivables the principal portion of
the Repurchase Amount of which has been included in the Principal Collections in
a prior Collection Period. With respect to any Loan Tranche, "Principal
Collections" means, for any Distribution Date, that portion of Principal
Collections (as defined above) attributable to Receivables which were included
in such Loan Tranche at any time during the relevant Collection Period.
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"Program Collateral Agent" means First Chicago in its capacity as
collateral agent for certain secured creditors of the Purchaser, or any
successor to First Chicago in such capacity.
"Program Fee" has the meaning set forth in Section 5.1(a).
"Program Information" has the meaning set forth in Section 15.13.
"Purchase" has the meaning set forth in Section 2.1.
"Purchase Price" has the meaning set forth in Section 2.1.
"Purchase Termination Date" has the meaning set forth in Section 2.11.
"Purchased Assets" means the property in which an undivided interest is
transferred to Clipper (or, in the case of the Warehouse Loan Tranche, in which
a security interest is granted to Clipper) pursuant to this Agreement, which
shall consist of the Receivables (other than Repurchased Receivables) and all
monies paid thereon, and all monies due or to become due thereon and all amounts
received by the Sellers with respect thereto, after the Initial Cutoff Date;
security interests in the Financed Vehicles granted by Obligors pursuant to the
Receivables and any other interest of the Sellers in the Financed Vehicles,
including, without limitation, the certificates of title with respect to the
Financed Vehicles; the documents contained in the Receivable Files; funds
deposited in the Collection Account and the Cash Collateral Account and proceeds
thereof; the Contribution Agreement and the First Tier Loan Purchase Agreement,
including the right of the Sellers to cause any of the Originators to repurchase
Receivables under certain circumstances; any property (including the right to
receive future Liquidation Proceeds) that shall have secured a Receivable and
that shall have been acquired by or on behalf of the Purchaser; 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; refunds for the costs of
extended service contracts with respect to Financed Vehicles and refunds of
unearned premiums with respect to credit life and credit accident and health
insurance policies or certificates covering an Obligor or a Financed Vehicle or
his or her obligations with respect to a Financed Vehicle and any recourse to
Dealers relating to Receivables; and the income and proceeds of any and all of
the foregoing.
"Purchaser" has the meaning set forth in the preamble.
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"Purchaser's Certificate" means a certificate completed and executed by
the Purchaser pursuant to Section 2.13, substantially in the form of, in the
case of an assignment to an Originator, Exhibit B-1, and in the case of an
assignment to the Servicer, Exhibit B-2.
"Purchaser's Investment" means at any time an amount equal to the sum of
the Purchaser's Tranche Investments of all Loan Tranches at such time.
"Purchaser's Tranche Investment" means, at any time and with respect to
any Loan Tranche, an amount equal to (a) the amount theretofore paid to the
Sellers or deposited in the Cash Collateral Account on account of the Cash
Purchase Price of Receivables included in such Loan Tranche pursuant to Section
2.1, less (b) the aggregate amount theretofore distributed to the Purchaser in
reduction of such Purchaser's Tranche Investment pursuant to Section 4.6;
provided, however, in the case of the Warehouse Loan Tranche the Purchaser's
Tranche Investment shall mean at any time the then outstanding principal amount
of all Warehouse Fundings; and provided, further, the Purchaser's Tranche
Investment shall not be considered to have been reduced by any distribution if
at any time such distribution is rescinded or must otherwise be returned for any
reason.
"Qualifying Liquidity Bank" means a Liquidity Bank having the Required
Short-Term Ratings.
"Rate Determination Date" for any Loan Tranche means (a) in the case of
any Loan Tranche other than the Warehouse Loan Tranche (and in the case of the
Warehouse Loan Tranche in the event of the purchase thereof under Section
2A.11), the Business Day next preceding the date of purchase of such Loan
Tranche hereunder, and (b) in the case of the Warehouse Loan Tranche, the
Business Day next preceding the Warehouse Interest Swap Date.
"Rating Agency" means each of S&P and Moody's. If either such organization
(or its successor) is no longer in existence, "Rating Agency" shall be such
nationally recognized statistical rating organization or other comparable Person
designated by the Administrator, notice of which designation shall be given to
the Custodian and the Servicer.
"Receivable" means any motor vehicle retail installment sale contract
which shall appear on any Schedule of Receivables, other than any such contract
which shall have been repurchased by a Seller or an Originator in accordance
with Section 2.7, purchased by the Servicer in accordance with Section 3.7 or
transferred in connection with a Warehouse Take-Out in accordance with Section
2A.9.
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"Receivable Bailee" means (a) initially, the Servicer, and (b) after any
direction given by the Administrator pursuant to Section 2.9(c), or at any time
when the Servicer shall have been terminated pursuant to Article X, the
Custodian, in each case, in its capacity as custodian and bailee of the
Receivable Files on behalf of the Purchaser.
"Receivable Files" means the documents specified in Section 2.8.
"Recoveries" means the monies collected from whatever source, after the
respective Collection Period in which a Receivable became a Liquidated
Receivable, on a Liquidated Receivable, net of (a) the reasonable costs of
liquidation (including repossession and disposition costs and expenses, and (b)
any amounts required by law to be remitted to the Obligor.
"Regulation D" means Regulation D of the Federal Reserve Board, or any
other regulation of the Federal Reserve Board that prescribes reserve
requirements applicable to nonpersonal time deposits or "Eurocurrency
Liabilities" as presently defined in Regulation D, as in effect from time to
time.
"Regulatory Change" means, relative to any Affected Party
(a) any change in (or the adoption, implementation, change in
phase-in or commencement of effectiveness of) any
(i) United States federal or state law or foreign law
applicable to such Affected Party;
(ii) regulation, interpretation, directive, requirement or
request (whether or not having the force of law) applicable to such
Affected Party of (A) any court, government authority charged with
the interpretation or administration of any law referred to in
clause (a)(i) or of (B) any fiscal, monetary or other authority
having jurisdiction over such Affected Party; or
(iii) generally accepted accounting principles or regulatory
accounting principles applicable to such Affected Party and
affecting the application to such Affected Party of any law,
regulation, interpretation, directive, requirement or request
referred to in clause (a)(i) or (a)(ii) above; or
(b) any change in the application to such Affected Party of any
existing law, regulation, interpretation, directive, requirement, request
or accounting principles referred to in clause (a)(i), (a)(ii) or (a)(iii)
above.
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"Related Documents" means this Agreement, the Contribution Agreement, the
First Tier Loan Purchase Agreement, the Originator Assignments, the Seller
Assignments, the Servicing Assumption Agreement, the Hedging Agreement, the
Lock-Box Agreements (if any), any Warehouse Note, and the other agreements,
instruments and other documents executed and delivered from time to time in
connection herewith and therewith and all amendments thereto and modifications
thereof.
"Relationship Bank" has the meaning set forth in the preamble.
"Repurchase Amount" with respect to any Receivable means the amount, as of
the close of business on the last day of a Collection Period, required to prepay
in full such Receivable under the terms thereof including interest accrual to
the end of the month of purchase.
"Repurchased Receivables" means a Receivable purchased as of the close of
business on the last day of a Collection Period by the Servicer pursuant to
Section 3.7 or by an Originator pursuant to Section 2.7 or Section 2.9.
"Required Cash Collateral Amount" means, for any Distribution Date, an
amount equal to the greatest of (x) two percent of the aggregate Principal
Balance of Receivables, other than Warehoused Receivables, calculated on the
most recent Determination Date as of the end of the related Collection Period,
(y) in the case of any Loan Tranche purchased before December 31, 1995, 0.375%,
and in the case of any Loan Tranche purchased on or after December 31, 1995,
1.25% of the aggregate Principal Balance, as of the applicable Cut-Off Dates, of
all Receivables purchased hereunder on or prior to such Distribution Date, and
(z) on the occurrence and during the continuance of an Event of Default, the
Required Cash Collateral Amount in effect immediately before the occurrence of
such Event of Default; provided, however, that the Required Cash Collateral
Amount shall not exceed the sum of the Purchaser's Investment, accrued and
unpaid Earned Discount and accrued and unpaid Servicing Fee.
"Required Short-Term Ratings" means commercial paper ratings or short term
deposit ratings of at least A-1 and P-1 by S&P and Moody's, respectively.
"Required Warehouse Swap" has the meaning set forth in Section 2A.11(b).
"S&P" means Standard & Poor's Ratings Service, a division of the McGraw
Hill Companies, Inc., or any successor.
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"Schedule of Receivables" means (a) the Schedule of Receivables attached
to the initial Seller Assignment as Schedule A, as supplemented by each Schedule
of Receivables attached as Schedule A to each subsequent Seller Assignment, and
(b) the Schedule of Receivables attached as Schedule A to the initial Warehouse
Funding Request, as supplemented by the Schedule of Receivables attached as
Schedule A to each subsequent Warehouse Funding Request.
"Scheduled Payment" on a Receivable means (a) in the case of an Actuarial
Receivable, 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 of the Receivable and to
provide interest at the APR, and (b) in the case of a Simple Interest
Receivable, the amount of the payment required to be made by the Obligor during
the respective Collection Period in respect of principal and accrued interest.
"Seller" has the meaning set forth in the preamble.
"Seller Assignment" means an instrument of assignment executed by a Seller
substantially in the form attached hereto as Exhibit A.
"Seller Information" has the meaning set forth in Section 15.12.
"Seller Party" means each of Oxford (individually and as Servicer), the
Sellers and the Originators.
"Servicer" means Oxford as the servicer of the Receivables which were
contributed to or purchased by the Sellers, and each successor to Oxford (in the
same capacity) pursuant to the terms of this Agreement.
"Servicer Default" has the meaning set forth in Section 10.2(a).
"Servicer's Certificate" means a certificate completed and executed by a
Servicing Officer pursuant to Section 3.9, substantially in the form of Exhibit
C.
"Servicer's Office" means the office of Oxford where it keeps its
documents and records relating to Receivables, which office as of March 31, 1995
is located at the address indicated below its signature hereto.
"Servicing Assumption Agreement" means the Servicing Assumption Agreement,
dated as of March 31, 1995, among Oxford,
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the Standby Servicer and the Custodian, as the same may be amended or
supplemented in accordance with its terms.
"Servicing Fee" means the fee payable to the Servicer for services
rendered during the respective Collection Period, determined pursuant to Section
3.8.
"Servicing Officer" means any person whose name appears on a list of
Servicing Officers delivered to the Custodian and the Administrator, as the same
may be amended from time to time.
"Servicing Rate" means 1.00% per annum.
"Simple Interest Receivable" means a Receivable that provides for payments
based on the Simple Interest Method.
"Simple Interest Method" means the method of allocating a fixed level
payment between principal and interest, pursuant to which the portion of such
payment that is allocated to interest is the product of a fixed rate of interest
multiplied by the unpaid principal balance multiplied by the period of time
(expressed as a fraction of a year) between (a) the date such payment is
received and (b) the date the prior scheduled payment was received, or in the
case of the first payment, the date of the contract or evidencing such
Receivable.
"Standby Fee" means the compensation payable to the Standby Servicer by
the Servicer pursuant to the Servicing Assumption Agreement.
"Standby Servicer" means BONY or another financial institution acceptable
to the Administrator, in its capacity as Standby Servicer pursuant to the terms
of the Servicing Assumption Agreement or such Person as shall have been
appointed Standby Servicer pursuant to the terms of this Agreement.
"State" means any State of the United States of America, or the District
of Columbia.
"State Street Bank" has the meaning set forth in the preamble.
"State Street Capital" has the meaning set forth in the preamble.
"Subsequent Cutoff Date" means, with respect to each sale of Subsequent
Receivables to the Purchaser, the date designated by the Seller(s) as the cutoff
date in the applicable Addition Notice.
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"Subsequent Receivables" means additional Receivables to be transferred to
the Purchaser hereunder after the Closing Date.
"Subsequent Transfer Date" means, with respect to each sale of Subsequent
Receivables to the Purchaser, the date as of which such Subsequent Receivables
are sold to the Purchaser hereunder.
"Subsidiary" means a corporation of which Oxford and/or its other
Subsidiaries own, directly or indirectly, such number of outstanding shares as
have more than 50% of the ordinary voting power for the election of directors.
"Swap Rate" for any Loan Tranche means the rate, determined by the
Administrator, (a) in the case of each Loan Tranche other than the Warehouse
Loan Tranche, and in the case of the Warehouse Loan Tranche on and after the
Warehouse Interest Swap Date, as of the Rate Determination Date for such Loan
Tranche, and (b) in the case of the Warehouse Loan Tranche, unless the Warehouse
Interest Swap Date shall have occurred, for each Distribution Period, as of the
Determination Date next preceding the first day of such Distribution Period,
equal to the interpolated offered yield, based on the rates set forth on
Telerate page 19915 (Datasource: Tullett) on the Dow Jones Telerate Service (or
such other page as may replace that page on that service, or such other service
as may be nominated as the information vendor, for the purpose of displaying
quotations of fixed rates for U.S. dollar LIBOR interest rate swaps), for a
LIBOR-based to fixed rate interest rate swap contract with an average life
equivalent to the weighted average life of the Receivables included in such Loan
Tranche, assuming a prepayment speed of 1.5 ABS.
"Target Purchaser's Tranche Investment" means for any Distribution Date
and with respect to any Loan Tranche, an amount equal to (i) 90% (in the case of
any Loan Tranche purchased before December 31, 1995) and (ii) 89% (in the case
of any Loan Tranche purchased on or after December 31, 1995) of the Loan Tranche
Balance with respect to such Loan Tranche, calculated on the most recent
Determination Date as of the end of the related Collection Period; provided,
however, with respect to the Warehouse Loan Tranche, "Target Purchaser's Tranche
Investment" shall mean for any Distribution Date an amount equal to 88% of the
Loan Tranche Balance with respect to the Warehouse Loan Tranche, after excluding
from such Loan Tranche Balance the aggregate unpaid balance of any Warehoused
Receivables which have been included in the Warehouse Loan Tranche Balance for
more than 120 days, calculated on the most recent Determination Date as of the
end of the related Collection Period.
"Trust Receipt" has the meaning set forth in Section 2.10.
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"UCC" means the Uniform Commercial Code as in effect in the relevant
jurisdiction.
"Warehouse Cutoff Date" means, with respect to each Warehouse Funding, the
date designated by Centrex Four as the Cutoff Date in the applicable Warehouse
Funding Notice.
"Warehouse Facility" means the agreement of the Purchaser to make
Warehouse Fundings available to Centrex Four in accordance with Section 2A.1.
"Warehouse Fee" means the portion of the Program Fee calculated pursuant
to clause (ii) of Section 5.1(a).
"Warehouse Fee Rate" means the rate agreed upon in writing among Centrex
Four, Oxford, Clipper and the Administrator as the rate used to calculate the
program fee with respect to the Warehouse Facility.
"Warehouse Funding" means a loan made or to be made by the Purchaser to
Centrex Four pursuant to Section 2A.1.
"Warehouse Funding Date" means, in relation to any Warehoused Receivable,
the date of the first Warehouse Funding on which such Warehoused Receivable was
included in the Warehouse Loan Tranche.
"Warehouse Funding Notice" means, with respect to any Warehouse Funding
pursuant to Section 2A.1, a notice, which shall be given not less than five
Business Days prior to the related Warehouse Funding Date, of the Receivables to
be included in the Warehouse Loan Tranche on such Warehouse Funding Date, the
aggregate Principal Balance of such new Warehoused Receivables and the
applicable Warehouse Cutoff Date and requested Warehouse Funding Date with
respect to such Warehouse Funding.
"Warehouse Funding Maturity Date" has the meaning set forth in Section
2A.4.
"Warehouse Interest Rate" means, for any Yield Period, for any portion of
the Purchaser's Tranche Investment of the Warehouse Loan Tranche which is funded
by the issuance of Commercial Paper Notes, the Commercial Paper Rate for such
Yield Period, and for any portion of such Purchaser's Tranche Investment which
is funded under the Liquidity Agreement or the Credit Agreement, the Bank Rate
for such Yield Period; provided, however, on and after the Warehouse Interest
Swap Date, the Warehouse Interest Rate shall equal the Swap Rate then in effect
with respect to the Warehouse Loan Tranche.
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"Warehouse Interest Swap Date" means the effective date of any interest
rate swap transaction entered into in relation to the Warehouse Loan Tranche
pursuant to Section 2A.11.
"Warehouse Loan Tranche" has the meaning set forth in Section 2A.2.
"Warehouse Note" means a promissory note substantially in the form of
Exhibit E hereto, executed or to be executed by Centrex Four in accordance with
Section 2A.5.
"Warehouse Period" means the period from and including the first date on
which the conditions precedent to the initial Warehouse Funding are met to but
excluding the Purchase Termination Date.
"Warehouse Swap Rate" means, at any time, a per annum rate equal to (a)
the weighted average APR of all Warehoused Receivables at such time, minus (b)
the rate used to calculate the Program Fee under Section 5.1 with respect to the
Warehouse Loan Tranche, minus (c) the Servicing Rate, minus (d) three and
one-half percent (3.5%).
"Warehouse Take-Out" has the meaning set forth in Section 2A.9.
"Warehoused Receivable" has the meaning set forth in Section 2A.2.
"Yield Period" means, for purposes of calculating interest on the
Purchaser's Tranche Investment of the Warehouse Loan Tranche, (a) each period
(i) commencing on and including (A) in relation to the CP-Funded Portion, the
date of any increase in the CP-Funded Portion, and (B) in relation to any Bank
Funded Portion, the date of any drawing under the Liquidity Agreement or the
Credit Agreement, as applicable, and (ii) ending on, but excluding, the next
following Distribution Date, and (b) each subsequent Distribution Period.
SECTION 1.2. Usage of Terms. With respect to all terms in this Agreement,
the singular includes the plural and the plural the singular; words importing
any gender include the other genders; references to "writing" include printing,
typing, lithography, and other means of reproducing words in a visible form;
references to agreements and other contractual instruments include all
subsequent amendments thereto or changes therein entered into in accordance with
their respective terms and not prohibited by this Agreement; references to
Persons include their permitted successors and assigns; and the term "including"
means "including without limitation."
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SECTION 1.3. Section References. All section references shall be to
Sections in this Agreement unless otherwise indicated.
SECTION 1.4. Parties. Each reference to any Person in any capacity shall
include any successor or permitted assignee of such Person and any successor to
such Person in such capacity as permitted hereunder and under the Related
Documents.
ARTICLE II
Transfers of Purchased Assets
SECTION 2.1. Purchases of Receivables. (a) Subject to the terms and
conditions set forth herein, including without limitation Article VI, each
Seller agrees to sell, assign and transfer to the Purchaser, and the Purchaser
agrees to purchase from such Seller, on the Closing Date and on each Subsequent
Transfer Date during the Funding Period, the Receivables and related Purchased
Assets to be conveyed as described in Sections 2.2 and 2.5, for the Purchase
Price described in Section 2.1(b). Each such purchase is herein called a
"Purchase".
(b) In consideration for the Receivables and related Purchased Assets
conveyed by each Seller to the Purchaser on the Closing Date or any Subsequent
Transfer Date, the Purchaser shall pay to such Seller:
(i) an amount equal to 97% of the aggregate Principal Balance of
such Receivables (the "Cash Purchase Price"), which shall be payable to
such Seller in same day funds on the Closing Date or such Subsequent
Transfer Date, as applicable, provided that a portion of the Cash Purchase
Price equal to 2% of the aggregate Principal Balance of such Receivables
shall be deposited in the Cash Collateral Account; plus
(ii) an amount equal to the sum of (x) the remaining aggregate
Principal Balance of such Receivables plus (y) the amount of interest
accrued on such Receivables as of the Closing Date or Subsequent Transfer
Date, as applicable, plus (z) the amount of interest to accrue on such
Receivables, to the extent collections thereof are available for
distribution to such Seller hereunder from time to time (the "Deferred
Purchase Price"), which shall be payable by the Purchaser without recourse
solely out of Collections on such Receivables to the extent such
Collections are available for distribution to such Seller from time to
time in accordance with Article IV.
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The Cash Purchase Price and the Deferred Purchase Price together are herein
called the "Purchase Price".
(c) Each Seller and the Servicer shall use reasonable efforts from time to
time to make a good faith estimate of the aggregate Principal Balance of
Receivables to be sold hereunder during the next sixty days and shall
communicate such estimate to the Administrator not less than monthly.
(d) Notwithstanding any provision contained in this Agreement to the
contrary, Clipper shall not, and shall not be obligated to, pay any amount to
the Sellers in respect of Deferred Purchase Price of Receivables except to the
extent of amounts available for distribution to the Sellers in respect thereof
under Article IV. Any amount which the Purchaser does not pay pursuant to the
operation of the preceding sentence shall not constitute a claim (as defined in
ss.101 of the Bankruptcy Code) against or corporate obligation of the Purchaser
for any such insufficiency unless and until such amount becomes available for
distribution to the Sellers under Article IV.
(e) Notwithstanding any else to the contrary herein or any other Related
Document, Centrex Four shall not sell, assign or transfer to the Purchaser any
Receivables or related Purchased Assets, other than in connection with Warehouse
Fundings.
SECTION 2.2. Conveyance of Receivables. (a) In consideration of the
payment by the Purchaser to Centrex Two of the Cash Purchase Price and the
Purchaser's undertaking to pay the Deferred Purchase Price as provided herein,
Centrex Two does hereby sell, transfer, assign, set over and otherwise convey to
the Purchaser without recourse, except as provided in Sections 2.6, 2.7 and 2.9
(subject to the obligations herein):
(i) all right, title and interest of Centrex Two in and to the
Receivables listed in Schedule A to the initial Seller Assignment and all
monies due or to become due thereon after the Initial Cutoff Date
(including Scheduled Payments due after the Initial Cutoff Date (including
principal prepayments relating to such Scheduled Payments) but received by
Centrex Two or the Originators before the Initial Cutoff Date) and all
Liquidation Proceeds and Recoveries received with respect to such
Receivables;
(ii) all right, title and interest of Centrex Two in and to the
security interests in the Financed Vehicles granted by Obligors pursuant
to the Receivables and any other interest of Centrex Two in the Financed
Vehicles, including, without limitation, the certificates of title with
respect to Financed Vehicles;
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(iii) all right, title and interest of Centrex Two 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;
(iv) all right, title and interest of Centrex Two in and to the
Contribution Agreement and any Originator Assignment, including a direct
right to cause the Originators to purchase Receivables from the Purchaser
under certain circumstances;
(v) all right, title and interest of Centrex Two 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
Financed Vehicle and any recourse to Dealers for any of the foregoing;
(vi) the Receivable File related to each Receivable;
(vii) all amounts and property from time to time held in or credited
to the Collection Account, the Payahead Account and the Cash Collateral
Account (except for the Seller's right to receive distributions from such
accounts in accordance with this Agreement); and
(viii) the income and proceeds of any and all of the foregoing.
(b) Centrex Two shall sell, assign and transfer to the Purchaser and the
Purchaser shall purchase and accept the Initial Receivables and the other
property and rights described in paragraph (a) above only upon the satisfaction
of each of the conditions set forth in Section 6.1 on or prior to the Closing
Date.
SECTION 2.3. Transfer Intended as Sale; Precautionary Security Interest.
It is intention of the parties hereto that each sale, assignment and transfer of
the Receivables and Purchased Assets under Section 2.2 above and Section 2.5
below constitute a sale for all purposes except as described in Section 2.12 and
that the beneficial interest in and title to the Receivables and Purchased
Assets not be part of the debtor's estate in the event of the filing of a
bankruptcy petition by or against a Seller under any bankruptcy law. In the
event, however, that notwithstanding the intent of the Originators and the
parties hereto, the transfer under this Agreement is held not
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to be a sale, this Agreement shall constitute a grant of a security interest in
the property described in Section 2.2 above and 2.5 below, for the benefit of
the Purchaser.
SECTION 2.4. Acceptance by Purchaser. The Purchaser does hereby accept all
consideration conveyed by each Seller pursuant to Sections 2.2 and 2.5, subject
to the terms and provisions of this Agreement.
Section 2.5. Conveyance of Subsequent Receivables.
(a) Subject to the conditions set forth in Section 6.2, each Seller,
pursuant to the mutually agreed upon terms contained herein and pursuant to one
or more subsequent Seller Assignments, shall, in consideration of the payment by
the Purchaser to the Sellers the Cash Purchase Price and the Purchaser's
undertaking to pay the Deferred Purchase Price (as provided herein), sell,
transfer, assign, set over and otherwise convey to the Purchaser, (before
December 1, 1996 in the case of Centrex Two and on or after December 1, 1996 in
the case of Centrex Four) without recourse, except as provided in Sections 2.6,
2.7 and 2.9 (subject to the obligations herein):
(i) all right, title and interest of such Seller in and to the
Subsequent Receivables listed in Schedule A to such subsequent Seller
Assignment and all monies due or to become due thereon after the
Subsequent Cutoff Date (including Scheduled Payments due after the
Subsequent Cutoff Date (including principal prepayments relating to such
Scheduled Payments) but received by such Seller or the Originators before
the Subsequent Cutoff Date) and all Liquidation Proceeds and Recoveries
received with respect to such Subsequent Receivables;
(ii) all right, title and interest of such Seller in and to the
security interests in the Financed Vehicles granted by Obligors pursuant
to the Subsequent Receivables and any other interest of such Seller in the
Financed Vehicles, including, without limitation, the certificates of
title with respect to Financed Vehicles;
(iii) all right, title and interest of such Seller in and to any
proceeds from claims on any physical damage, repossession loss, skip,
credit life, credit accident, vendor's single interest and health
insurance policies or certificates relating to the Financed Vehicles or
the Obligors;
(iv) all right, title and interest of such Seller in and to the
Contribution Agreement (in the case of Centrex Two) and the First Tier
Loan Purchase Agreement (in the case
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of Centrex Four) and any Originator Assignment, including a direct right
to cause the Originators to purchase Subsequent Receivables from the
Purchaser under certain circumstances;
(v) all right, title and interest of such 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
Financed Vehicle and any recourse to Dealers for any of the foregoing;
(vi) the Receivable File related to each Subsequent Receivable;
(vii) all amounts and property from time to time held in or credited
to the Collection Account, the Payahead Account and the Cash Collateral
Account (except for such Seller's right to secure distributions from such
accounts in accordance with this Agreement); and
(viii) the income and proceeds of any and all of the foregoing.
(b) Each Seller shall sell, assign and transfer to the Purchaser and the
Purchaser shall purchase and accept the Subsequent Receivables and the other
property and rights related thereto described in paragraph (a) above only upon
the satisfaction of each of the conditions set forth in Section 6.2 on or prior
to the related Subsequent Transfer Date.
SECTION 2.6. Representations and Warranties of Sellers. Each Seller makes
the following representations and warranties as to the Receivables sold by it to
the Purchaser and to the Administrator, on which the Purchaser relies in paying
the Cash Purchase Price and accepting the Receivables and related Purchased
Assets transferred to it hereunder and in making Warehouse Fundings hereunder
and the Administrator relies in causing such actions to be taken on behalf of
the Purchaser. Such representations and warranties speak as of the Closing Date
(with respect to the Initial Receivables) and as of the Subsequent Transfer Date
(with respect to Subsequent Receivables), but shall survive the sale, transfer,
and assignment of the Receivables or, as applicable, the grant of a security
interest in the Receivables to the Purchaser.
(i) Characteristics of Receivables. Each Receivable (1) has been
originated in the United States of America by an Originator or a Dealer
for the retail sale of a Financed Vehicle in the ordinary course of such
Originator's or
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Dealer's business, (2) is evidenced by a retail installment sales contract
which has been fully and properly executed by the parties thereto, and has
been purchased or otherwise originated by each Originator in connection
with the sale of Financed Vehicles by such Originator or the Dealer, (3)
has created a valid, perfected, subsisting, and enforceable first priority
security interest in favor of the Originator (as original lien holder or
assignee) with respect to such Receivable in the Financed Vehicle, which
security interest has been assigned by such Originator to such Seller,
which in turn has assigned such security interest to the Purchaser, (4)
contains customary and enforceable provisions such that the rights and
remedies of the holder or assignee thereof shall be adequate for
realization against the collateral of the benefits of the security, (5)
provides for level monthly payments (except for the last payment, which
may be different from the level payment) which fully amortize the Amount
Financed over the original term and yield interest at the Annual
Percentage Rate, (6) is denominated and payable only in Dollars in the
United States of America, and (7) provides for, in the event that such
contract is prepaid, a prepayment that fully pays the Principal Balance
and (x) in the case of an Actuarial Receivable, to the extent permitted by
applicable law, includes a full month's interest, in the month of
prepayment, at the Annual Percentage Rate and (y) in the case of a Simple
Interest Receivable, or in the case of an Actuarial Receivable to the
extent applicable law does not permit collection of a full month's
interest, includes interest accrued to the date of prepayment at the
Annual Percentage Rate.
(ii) Schedule of Receivables. The information with respect to the
Receivables set forth in the Schedule of Receivables is true and correct
in all material respects as of the close of business on each applicable
Cutoff Date, and the Receivables satisfy the eligibility criteria
specified herein and in the Contribution Agreement (in the case of
Receivables sold hereunder by Centrex Two) and the First Tier Loan
Purchase Agreement (in the case of Receivables sold hereunder by Centrex
Four).
(iii) Compliance with Law. Each Receivable, the sale of the Financed
Vehicle and the sale of any physical damage, credit life and credit
accident and health insurance and any extended service contracts complies
with all requirements of applicable Federal, State, and local laws, and
regulations thereunder including, without limitation, usury laws, the
Federal Truth-in-Lending Act, the Equal Credit Opportunity Act, the Fair
Credit Reporting Act, the Fair Debt Collection Practices Act, the Federal
Trade Commission Act, the
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Magnuson-Moss Warranty Act, the Federal Reserve Board's Regulations B and
Z, the Soldiers' and Sailors' Civil Relief Act of 1940, State adaptations
of the National Consumer Act and of the Uniform Consumer Credit Code, and
other consumer credit laws and equal credit opportunity and disclosure
laws and, to the best of such Seller's knowledge, no party to the contract
evidencing such Receivable is in violation of any such law, rule or
regulation in any material respect if such violation would impair the
collectibility of such Receivable.
(iv) Binding Obligation. Each Receivable represents the genuine,
legal, valid and binding payment obligation in writing of the Obligor,
enforceable by the holder or assignee thereof in accordance with its
terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium, or other similar laws affecting
the enforceability of creditors' rights generally, and general equitable
principles. To the best of such Seller's knowledge, all parties to the
contract evidencing such Receivable had full legal capacity to execute and
deliver such contract and all other documents related thereto and to grant
the security interest purported to be granted thereby.
(v) No Government Obligor. None of the Receivables are 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.
(vi) Security Interest in Financed Vehicle. Immediately prior to the
sale, assignment, and transfer thereof or, as applicable, the grant of a
security interest therein under this Agreement, (i) each Receivable shall
be secured by a validly perfected first security interest in the Financed
Vehicle in favor of the applicable Originator (as original lien holder or
assignee) 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 applicable
Originator (as original lien holder or assignee), 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 Permitted Vehicle Liens
which may arise after the Closing Date or the Subsequent Transfer Date, as
applicable).
(vii) Receivables in Force. No Receivable has been satisfied,
subordinated or rescinded, nor has any Financed
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Vehicle been released from the lien granted by the related Receivable in
whole or in part.
(viii) No Waiver. No provision of a Receivable has been waived.
(ix) No Amendments. No Receivable has been amended.
(x) No Defenses. As of the Closing Date, the Subsequent Transfer
Date or the relevant Warehouse Funding Date, as applicable, no right of
rescission, setoff, counterclaim or defense exists or 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.
(xi) No Liens. As of the relevant Cutoff Date, there are no Liens or
claims existing or which have been filed for work, labor, storage or
materials relating to a Financed Vehicle that shall be Liens prior to, or
equal or coordinate with, the security interest in the Financed Vehicle
granted by the Receivable.
(xii) No Default; Repossession. Except for payment delinquencies
continuing for a period of not more than thirty days as of the applicable
Cutoff Date, (A) no default, breach, violation or event permitting
acceleration under the terms of any Receivable has occurred, and (B) no
continuing condition that with notice or the lapse of time would
constitute a default, breach, violation or event permitting acceleration
under the terms of any Receivable has arisen; and such Seller shall not
waive and has not waived any of the foregoing; and no Financed Vehicle
shall have been repossessed as of the applicable Cutoff Date.
(xiii) Insurance; Other. The Servicer, in accordance with its
customary procedures, has confirmed that (A) each Obligor has obtained
insurance covering the Financed Vehicle as of the Closing Date 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 is covered by a vendors single interest policy acceptable
to the Administrator on which the Administrator on behalf of the Purchaser
is named as an additional insured, (C) each Receivable that finances the
cost of premiums for credit life and credit accident and health insurance
is covered by
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an insurance policy or certificate of insurance naming the applicable
Dealer as policyholder (creditor) under each such insurance policy and
certificate of insurance and (D) 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.
(xiv) Title. Each sale, assignment and transfer of Receivables and
related Purchased Assets and each pledge of and grant of a security
interest in Receivables and related Purchased Assets pursuant to this
Agreement constitutes a valid transfer to the Purchaser of all such
Seller's right, title and interest in and to such Receivables and
Purchased Assets, free and clear of all Liens, and constitutes either (A)
except in the case of Warehoused Receivables and related Purchased Assets,
an absolute transfer of ownership of such property to the Purchaser and,
as such, the grant of a first priority perfected security interest in such
Receivables to the Purchaser as a buyer of chattel paper, or (B) in the
case of Warehoused Receivables and related Purchased Assets, and in the
case of any other Receivables and related Purchased Assets if such sale,
assignment and transfer is held not to constitute a sale, the grant of a
first priority perfected security interest in such property to secure
payment of all amounts payable or distributable to the Clipper Parties
hereunder. No Receivable has been sold, transferred, assigned, or pledged
by such Seller to any Person other than the Purchaser. Each Receivable has
been contributed or sold by the relevant Originator to Centrex Two
pursuant to the Contribution Agreement or to Centrex Four pursuant to the
First Tier Loan Purchase Agreement. Immediately prior to the sale,
assignment and transfer or the pledge and grant of a security interest
herein contemplated, such Seller had good and marketable title to each
Receivable, and was the sole owner thereof, free and clear of all Liens,
claims, encumbrances, security interests, and rights of others and,
immediately upon such sale, assignment and transfer or such pledge and
grant of a security interest, as applicable, in the case of each Initial
Receivable and each Subsequent Receivable, the Purchaser shall have good
and marketable title to each such Receivable, and will be the sole owner
thereof, and in the case of each Warehoused Receivable, the Purchaser
shall have a valid security interest in such Receivable, in each case free
and clear of all Liens, encumbrances, security interests and rights of
others, and such sale, assignment and transfer or such pledge and grant of
a security interest has been perfected under the UCC.
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(xv) Lawful Assignment. No Receivable has been originated in, or is
subject to the laws of, any jurisdiction under which the sale, transfer
and assignment of such Receivable or, as applicable, the pledge and grant
of a security interest in such Receivable under this Agreement or in
accordance with Article XIII hereof, or in the case of any Warehouse
Receivable, any Warehouse TakeOut, shall be unlawful, void, or voidable.
Such Seller has not entered into any agreement with any account debtor
that prohibits, restricts or conditions the assignment of any portion of
the Receivables.
(xvi) All Filings Made. All filings (including, without limitation,
UCC filings) necessary in any jurisdiction to perfect the Purchaser's
interest in the Receivables have been presented for filing to the
appropriate filing office.
(xvii) Receivable File; One Original. Oxford has delivered to the
Receivable Bailee a complete Receivable File with respect to each
Receivable. There is only one manually executed original of each
Receivable.
(xviii) Chattel Paper. Each Receivable constitutes "chattel paper"
under the UCC.
(xix) APR. (1) The APR of each Receivable is not less than the sum
of (a) the Swap Rate for the relevant Loan Tranche, plus (b) the rate used
to calculate the Program Fee under Section 5.1 with respect to the
relevant Loan Tranche, plus (c) the Servicing Rate; and (2) the weighted
average APR of such Receivable and the other Receivables included in the
same Loan Tranche exceeds the sum referred to in subclause (1) above by
not less than three and one-half percent (3.5%).
(xx) Tax Liens. As of the applicable Cutoff Date, there is no Lien
against the related Financed Vehicle for delinquent taxes.
(xxi) Characteristics of Obligors. As of the applicable Cutoff Date,
no Obligor on any Receivable was noted in the related records of the
Servicer or the applicable Dealer as (a) being currently delinquent on any
mortgage, auto loan or other installment debt as of the date of the
origination of the Contract by the applicable Dealer or Originator, as the
case may be, or (b) having been the subject of any bankruptcy or
insolvency proceeding within two years prior to the applicable Cutoff
Date. In addition, as of the applicable Cutoff Date, no Obligor on any
Receivable was noted in the related records of the Servicer as being
currently the subject of a bankruptcy proceeding. Each
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Obligor is a resident of the United States of America and is not an
Affiliate of any of the parties hereto.
(xxii) Maturity. Each Receivable has a final scheduled payment date
which is not later than 84 months after the Closing Date (in the case of
Initial Receivables) or the relevant Subsequent Transfer Date (in the case
of Subsequent Receivables) or the relevant Warehouse Funding Date (in the
case of Warehoused Receivables).
(xxiii) Principal Balance. Each Receivable has an outstanding
principal balance as of the applicable Cutoff Date of not more than
$50,000.
(xxiv) Origination of Receivables. The Obligor of each Receivable
has been approved by the Originator based on the Credit Policy, and such
Receivable satisfies all applicable requirements of the Credit Policy,
with such occasional exceptions as may be customary in the industry and in
the ordinary course in the Originator's business.
(xxv) Transfer of Payments. The Servicer will be responsible for
identifying payments received from the Obligors and transferring collected
funds from those payments to the Collection Account within two Business
Days of receipt of such collected funds, subject to Section 4.2(c).
(xxvi) Location of Receivable Files. A complete Receivable File with
respect to each Receivable has been or prior to the Closing Date will be
delivered to the Receivable Bailee at the Servicer's Office or the
Custodian's Office, as applicable.
(xxvii) Concentration Limits. After giving effect to the transfer of
such Receivables to the Purchaser, the aggregate Principal Balance of all
Receivables included in the Purchased Assets (other than Repurchased
Receivables and Defaulted Receivables) (A) owed by Obligors resident in
any one state would not exceed 40% of the Pool Balance, (B) classified as
"Tier 4" or "Tier 5" in accordance with the Credit Policy would not exceed
15% of the Pool Balance, (C) arising from sales of Financed Vehicles
previously leased by an Originator would not exceed 20% of the Pool
Balance, (D) having a final scheduled payment date later than 66 months
after the Closing Date or Subsequent Transfer Date, as applicable, would
not exceed 45% of the Pool Balance, or (E) owed by Obligors under the
Originators' balloon note financing program would not exceed 25% of the
Pool Balance.
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SECTION 2.7. Repurchase Upon Breach. Each Seller, the Servicer, the
Administrator or the Custodian, as the case may be, shall inform the other
parties to this Agreement promptly, in writing, upon the discovery of any
material breach of such Seller's (or the other Seller's) representations and
warranties made pursuant to Section 2.6 (without regard to any limitation
therein as to such Seller's knowledge). Unless the breach shall have been cured
by the last day of the first Collection Period commencing after the discovery
thereof by the Custodian or the Administrator or receipt by the Custodian and
the Administrator of notice from a Seller or the Servicer of such breach, the
applicable Seller shall cause the applicable Originator to purchase any
Receivable materially and adversely affected by the breach as of the last day of
such first Collection Period pursuant to the Contribution Agreement or the First
Tier Loan Purchase Agreement, as applicable. In consideration of the purchase of
the Receivable, the applicable Seller shall cause the applicable Originator to
remit the Repurchase Amount, in the manner specified in Section 4.5. The sole
remedy of the Custodian, the Purchaser or the Administrator with respect to a
breach of representations and warranties pursuant to Section 2.6 shall be to
enforce the applicable Originator's obligation to purchase such Receivables
pursuant to the Contribution Agreement or the First Tier Loan Purchase
Agreement, as the case may be; provided, however, that the applicable Seller
shall cause each Originator to indemnify the Custodian, the Administrator and
the Purchaser against all reasonable costs, reasonable expenses, losses,
damages, claims and liabilities, including reasonable fees and expenses of
counsel, which may be asserted against or incurred by any of them as a result of
third party claims arising out of the events or facts giving rise to such breach
by such Originator. Upon receipt of the Repurchase Amount and written
instructions from the Servicer, the Purchaser (or the Administrator on its
behalf) shall direct the Receivable Bailee to and the Receivable Bailee upon
receipt of such direction shall release to the applicable Originator or its
designee the related Receivables File, and the Purchaser (or the Administrator
on its behalf) shall execute and deliver all reasonable instruments of transfer
or assignment, without recourse (except for a representation and warranty by the
Purchaser that upon such transfer or assignment such Receivable is free of any
Lien created by the Purchaser), as are prepared by the applicable Seller and
delivered to the Administrator and necessary to vest in the applicable
Originator or such designee title to the Receivable and related collateral.
SECTION 2.8. Delivery of Receivable Files; Appointment of Receivable
Bailee. (a) On or prior to the Closing Date or the relevant Subsequent Transfer
Date or Warehouse Funding Date, as appropriate, each Seller shall transfer and
deliver to the Receivable Bailee at the Servicer's Office or the Custodian's
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Office, as applicable, with respect to each Receivable sold by such Seller
hereunder, the following:
(i) The only manually executed original of the Receivable.
(ii) The original credit application executed by the Obligor.
(iii) The original certificate of title or such other documents that
Oxford shall keep on file, in accordance with its customary procedures,
evidencing the security interest or application therefor of the applicable
Originator in the Financed Vehicle.
(iv) Any and all other documents that the Servicer or such Seller
shall keep on file, in accordance with its customary procedures, relating
to a Receivable, an Obligor, or a Financed Vehicle.
(b) The Purchaser and the Administrator, as agent for the Purchaser,
each hereby appoints the Receivable Bailee as agent, bailee and custodian
for the Purchaser for the purpose of accepting, holding and delivering
Receivables Files for and on behalf of the Purchaser pursuant to this
Agreement. The Receivable Bailee hereby accepts such appointment.
SECTION 2.9. Acceptance and Custody of Receivable Files. (a) The
Receivable Bailee acknowledges receipt for the benefit of the Purchaser and the
Administrator of files which the applicable Seller or the applicable Originator
has represented are the Receivable Files. The Receivable Bailee declares that it
holds and will continue to hold such files and any amendments, replacements or
supplements thereto and all other Purchased Assets in trust for the use and
benefit of the Purchaser. The Receivable Bailee agrees to review each file
delivered to it no later than 45 days after the Closing Date on the relevant
Subsequent Transfer Date, as applicable, to ascertain whether it has received a
file for each Receivable identified in Schedule A to the relevant Seller
Assignment AND, EXCEPT TO THE EXTENT THAT THE RECEIVABLE BAILEE HAS INFORMED
OXFORD AND THE ADMINISTRATOR WITHIN SUCH 45-DAY PERIOD THE RECEIVABLE BAILEE
SHALL BE DEEMED TO HAVE CERTIFIED FOR THE BENEFIT OF THE PURCHASER AND THE
ADMINISTRATOR THAT IT HAS RECEIVED EACH OF THE DOCUMENTS LISTED IN SECTION
2.8(i), (ii) AND (iii) WITH RESPECT TO EACH RECEIVABLE IDENTIFIED IN SUCH
SCHEDULE A. If the Receivable Bailee has found or finds that a file for a
Receivable has not been received, or that a file is unrelated to the Receivables
identified in Schedule A to the relevant Seller Assignment or that any of the
documents referred to in Section 2.8(i), (ii) or
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(iii) are not contained in a Receivable File, the Receivable Bailee shall inform
Oxford and the other parties to this Agreement promptly, in writing, of the
failure to receive a file with respect to such Receivable (or of the failure of
any of the aforementioned documents to be included in the Receivable File) or
shall return to Oxford as the applicable Seller's designee any file unrelated to
a Receivable identified in Schedule A to the relevant Assignment (it being
understood that the Receivable Bailee's obligation to review the contents of any
Receivable File shall be limited as set forth in the preceding sentence). Unless
a file with respect to such Receivable shall have been cured by the last day of
the first Collection Period commencing after discovery thereof by the Receivable
Bailee, the applicable Seller shall cause the applicable Originator to purchase
any such Receivable as of such last day. In consideration of the purchase of the
Receivable, the applicable Seller shall cause the applicable Originator to remit
the Repurchase Amount, in the manner specified in Section 4.5. The sole remedy
of the Receivable Bailee, the Administrator, or the Purchaser with respect to a
breach pursuant to this Section 2.9 shall be to require the applicable
Originator to purchase the Receivables pursuant to this Section 2.9. Upon
receipt of the Repurchase Amount and written instructions from the Servicer, the
Purchaser (or the Administrator on its behalf) shall direct the Receivable
Bailee to and the Receivable Bailee upon receipt of such direction shall release
to the applicable Originator or its designee the related Receivables File and
the Purchaser (or the Administrator on its behalf) shall execute and deliver all
reasonable instruments of transfer or assignment, without recourse (except for a
representation and warranty by the Purchaser that upon such transfer or
assignment such Receivable is free of any Lien created by the Purchaser), as are
prepared by the applicable Originator and delivered to the Administrator and are
necessary to vest in the applicable Originator or such designee title to the
Receivable and the related collateral.
(b) The Receivable Bailee shall keep all Receivables Files delivered
hereunder in locked, fireproof cabinets, in which no other documents belonging
to the Servicer, the Sellers, the Originator or any other Person shall be
deposited or kept, which cabinets shall each bear a conspicuous legend, in form
satisfactory to the Administrator, to the effect that the contents thereof have
been sold and assigned to the Purchaser pursuant to this Agreement. Promptly
upon receipt of each Receivable File from the applicable Seller or the
applicable Originator, the Receivable Bailee shall cause the executed original
of each Receivable, the original credit application and all other documents
included in the Receivable File (other than certificates of title and
applications therefor) to be marked with a conspicuous legend, in form
satisfactory to the
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Administrator, to the effect that such Receivable and all related documents have
been sold and assigned to the Purchaser hereunder.
(c) Upon the occurrence and during the continuance of any Event of
Default, the Administrator upon behalf of the Purchaser may direct the Servicer
(and each Seller and each Originator then or thereafter in possession of any
Receivable Files) to deliver all Receivables Files to the Custodian. Upon the
substitution of the Standby Servicer or any other Person as Servicer in place of
Oxford pursuant to Article X, such direction shall be deemed to have been given
automatically without any further action by the Administrator or any other
Person. Upon and to the extent that the Servicer shall have delivered the
Receivables Files to the Custodian pursuant to this paragraph (c), the
appointment of the Servicer as Receivable Bailee shall be terminated and the
Custodian shall thereafter be the Receivable Bailee for purposes hereof, without
any further action by any Person.
SECTION 2.10. Access to Receivable Files. The Receivable Bailee shall
permit the Servicer and the Administrator access to the Receivable Files at all
reasonable times during the Receivable Bailee's normal business hours. The
Receivable Bailee shall, at the request of the Servicer or the Administrator,
execute such documents and instruments as are prepared by the Servicer or the
Administrator and delivered to the Receivable Bailee, as the Servicer or the
Administrator deems necessary to permit the Servicer, in accordance with its
customary servicing procedures, to enforce the Receivable on behalf of the
Purchaser and any related insurance policies covering the Obligor, the
Receivable or Financed Vehicle so long as such execution in the Receivable
Bailee's sole discretion does not conflict with this Agreement and will not
cause it undue risk or liability. The Receivable Bailee shall not release any
document from any Receivable File unless it receives a trust receipt signed by a
Servicing Officer in the form of Exhibit D-1 hereto (the "Trust Receipt"). Such
Trust Receipt shall obligate the Servicer to return such document(s) to the
Receivable Bailee when the need therefor no longer exists unless the Receivable
shall be liquidated, in which case, upon receipt of a certificate of a Servicing
Officer substantially in the form of Exhibit D-2 hereto to the effect that all
amounts required to be deposited in the Collection Account with respect to such
Receivable have been so deposited, the Trust Receipt shall be released by the
Receivable Bailee to the Servicer.
SECTION 2.11. Purchase Termination Date. The Purchaser's commitment to
purchase Receivables hereunder and to make Warehouse Fundings hereunder shall
terminate upon the earliest to occur of the following (the "Purchase Termination
Date"):
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(a) March 31, 1998; provided, however, that if on any Determination
Date the difference between the Swap Rate and the interpolated yield on a
U.S. Treasury note with an average life equivalent to the average life of
the Receivables included in such Loan Tranche (as determined by the
Administrator on such Determination Date) exceeds 0.65% per annum then
such scheduled termination date shall be extended by one month to the last
day of the next following month, provided, further, the total number of
such one-month extensions shall not exceed twelve.
(b) a date upon which an Event of Default has occurred and is
continuing and (i) the Administrator declares a Purchase Termination Date
in a notice to the Sellers in accordance with the terms of Section 10, or
(ii) becomes a Purchase Termination Date automatically in accordance with
the terms of Section 10;
(c) the date of termination (whether by scheduled expiration,
termination on default or otherwise) of either the Liquidity Banks'
commitments under the Liquidity Agreement or the Credit Bank's commitment
under the Credit Agreement;
(d) the Purchaser fails to obtain a Liquidity Agreement in
substitution for the then existing Liquidity Agreement on or before 30
days prior to the expiration of the commitments of the Liquidity Banks
thereunder or early termination of the Liquidity Agreement due to a
default by the Purchaser or a change in applicable law;
(e) (i) a Downgrading Event with respect to a Liquidity Bank shall
have occurred and been continuing for not less than 45 days, (ii) the
Downgraded Liquidity Bank shall not have been replaced by a Qualifying
Liquidity Bank pursuant to a Liquidity Agreement in form and substance
acceptable to Purchaser and the Administrator, and (iii) the commitment of
such Downgraded Liquidity Bank under the Liquidity Agreement shall not
have been funded or collateralized in such a manner that such Downgrading
Event will not result in a reduction or withdrawal of the credit rating
applied to the Commercial Paper Notes by any of the rating agencies then
rating the Commercial Paper Notes; and
(f) the Purchaser shall become an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
In the event a Purchase Termination Date is caused by the occurrence of an
event described in any of clauses (c) through
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(f) above, the volume guarantees set forth in the Fee Letter shall cease to
apply.
SECTION 2.12. Tax Treatment. It is the intent of the Purchaser and each
Seller that, for federal, state and local income and franchise tax purposes
only, the Purchaser's interest in the Purchased Assets will be treated as
indebtedness of such Seller secured by the Purchased Assets. Each of each Seller
and the Purchaser, by entering into this Agreement, agrees to treat the
Purchaser's interest in the Purchased Assets for federal, state and local income
and franchise tax purposes as indebtedness of such Seller.
SECTION 2.13. Purchaser's Certificate. On or as soon as practicable after
each Distribution Date on which Receivables shall be assigned to the Originators
or the Servicer, as applicable, pursuant to this Agreement, based on amounts
deposited to the Collection Account, notices received pursuant to this Agreement
and the information contained in the Servicer's Certificate for the related
Collection Period, identifying the Receivables purchased by the Originators
pursuant to Section 2.7 or 2.9 or purchased by the Servicer pursuant to Section
3.7, the Purchaser (or the Administrator on its behalf) and, in the case of a
Warehoused Receivable, Centrex Four, shall execute a Purchaser's Certificate (in
the form of Exhibit B-1 or B-2, as applicable, with such changes as may be
appropriate in the case of a Warehoused Receivable), and shall deliver such
Purchaser's Certificate, accompanied by a copy of the Servicer's Certificate for
such Collection Period, to the applicable Originator or the Servicer, as the
case may be, with a copy to the Custodian. The Purchaser's Certificate submitted
with respect to such Distribution Date shall operate, as of such Distribution
Date, as an assignment, without recourse, representation or warranty (except for
a representation and warranty by the Purchaser that upon such assignment such
Repurchased Receivable is free of any Lien created by the Purchaser), to the
applicable Originator or the Servicer, as the case may be, of all the
Purchaser's right, title, and interest in and to such Repurchased Receivable,
and all security and documents relating thereto, such assignment being an
assignment outright and not for security.
ARTICLE IIA
Warehouse Facility
SECTION 2A.1 Warehouse Fundings. (a) Subject to the terms and conditions
set forth herein, including without limitation Article VI, the Purchaser agrees,
from time to time on any Business Day during the Warehouse Period, to make loans
to Centrex Four, in amounts as provided in subsection (b), which
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loans, together with interest and Warehouse Fee thereon and all other
Obligations hereunder, shall be secured by Warehoused Receivables and related
Purchased Assets and other Collateral in accordance with Section 2A.6. Each such
loan is herein called a "Warehouse Funding".
(b) The principal amount of each Warehouse Funding shall be an amount
equal to the least of:
(i) the amount requested by Centrex Four in the relevant Warehouse
Funding Notice;
(ii) 88% of the aggregate Principal Balance of the Receivables to be
included in the Warehouse Loan Tranche in connection with such Warehouse
Funding; and
(iii) the excess of $50,000,000 over the Purchaser's Tranche
Investment of the Warehouse Loan Tranche (before giving effect to such
Warehouse Funding);
provided, however, no Warehouse Funding shall be made if the initial principal
amount thereof would be less than $5,000,000.
SECTION 2A.2 Warehoused Receivables. Warehouse Fundings shall be used by
Centrex Four to fund the acquisition of, and the assumption and payment (in
whole or part) by Centrex Four of indebtedness relating to, Receivables sold by
the Originators to Centrex Four from time to time pursuant to the First Tier
Loan Purchase Agreement but not sold to the Purchaser as Initial Receivables or
Subsequent Receivables hereunder simultaneously with the acquisition thereof by
Centrex Four. Each such Receivable is herein called a "Warehoused Receivable",
and all the Warehoused Receivables at any time, taken together, are herein
called the "Warehouse Loan Tranche". Together with each Warehouse Funding
Notice, the Servicer or Centrex Four shall deliver to the Administrator a
Schedule of Receivables identifying all Receivables to be included in the
Warehouse Loan Tranche in connection with the related Warehouse Funding.
SECTION 2A.3 Interest. Centrex Four shall pay interest on the outstanding
principal amount of all Warehouse Fundings at a rate per annum equal to the
Warehouse Interest Rate, calculated on the basis of a year of 360 days for the
actual number of days elapsed, except that from and after the first Distribution
Date following the Warehouse Interest Swap Date, such interest shall be
calculated for each Distribution Period on the basis of a year of twelve 30-day
months. Such interest shall be payable on each Distribution Date, for the
Distribution Period then ending, and on the Purchase Termination Date and each
other date when the principal amount of any Warehouse Funding is payable under
Section 2A.4, in each case, out of Collections distributed on
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such date under Section 4.6 to the extent available and otherwise out of other
funds of Centrex Four.
SECTION 2A.4 Repayments of Warehouse Fundings. (a) Each Warehouse Funding
shall mature and become due and payable in full on the date 120 days after the
related Warehouse Funding Date (unless such date is not a Business Day, in which
case, the preceding Business Day) (the "Warehouse Funding Maturity Date").
Centrex Four shall repay each Warehouse Funding on the related Warehouse Funding
Maturity Date, together with interest thereon accrued to such Warehouse Funding
Maturity Date and all other amounts in respect thereof.
(b) Centrex Four shall otherwise repay Warehouse Fundings, without
duplication, as follows:
(i) on the date of any distribution of Collections allocated to
reduction of the Purchaser's Tranche Investment of the Warehouse Loan
Tranche in accordance with Section 4.6, in the amount of such
distribution;
(ii) (A) on the date of any Warehouse Take-Out, the Warehouse
Fundings (or portion thereof) subject to such Warehouse Take-Out, together
with interest thereon accrued to such date and all other amounts in
respect thereof and (B) on any Business Day after the date the
Administrator notifies Centrex Four that the Administrator has determined
(in its sole discretion) that (x) the rate that would be necessary to
induce a swap counterparty to enter into a Required Warehouse Swap with
the Purchaser exceeds the Warehouse Swap Rate or (y) the Commercial Paper
Rate exceeds the Warehouse Swap Rate, in an amount equal to the
outstanding principal amount of all Warehouse Fundings on such date,
together with interest thereon accrued to the date of payment and all
other amounts in respect thereof; and
(iii) on the Purchase Termination Date, in an amount equal to the
outstanding principal amount of all Warehouse Fundings, together with
interest thereon accrued to the date of payment and all other amounts in
respect thereof.
(c) Centrex Four may prepay any Warehouse Fundings on any Distribution
Date, together with interest thereon accrued to the date of prepayment and all
other amounts in respect thereof, upon not less than five (5) Business Days'
prior written notice to the Administrator, which notice shall be irrevocable.
SECTION 2A.5 Warehouse Note. Centrex Four's obligations to pay the
principal amount of and interest on the Warehouse
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Fundings shall be evidenced by the Warehouse Note payable to the order of the
Purchaser. Centrex Four hereby irrevocably authorizes the Administrator to make
(or cause to be made) appropriate notations on the grid attached to the
Warehouse Note (or on a continuation of such grid attached to the Warehouse Note
and made a part thereof), or (at the Administrator's option) in the records of
the Administrator, which notations shall evidence, inter alia, the date and the
original principal amount of each Warehouse Funding, the amount of each payment
made on account of such principal amount and the principal amount of each such
Warehouse Funding remaining outstanding. The notations on such grid (and on each
such continuation) or in such records, as the case may be, indicating the
outstanding principal amount of the Warehouse Fundings shall, in the absence of
manifest error, be conclusive evidence of the outstanding principal amount
thereof, but the failure to record any such amount on such grid (or on such
continuation) or in such records shall not limit or otherwise affect the
obligations of Centrex Four hereunder or under the Warehouse Note to make
payment of the principal amount of or interest on the Warehouse Fundings in
accordance herewith or to take any other action with respect thereto in
accordance with this Agreement.
SECTION 2A.6 Grant of Security Interest. (a) In consideration of the
Purchaser's agreement to provide the Warehouse Facility and its making of the
Warehouse Loans hereunder, and as collateral security for the prompt and
complete payment when due of the principal of and interest on the Warehouse
Loans, the Warehouse Fee and all other Obligations from time to time
outstanding, Centrex Four does hereby pledge, assign, transfer, set over and
otherwise convey to the Purchaser, and hereby grants to the Purchaser a security
interest in, all of the following types or items of property, whether existing
at the time of any Warehouse Funding or thereafter arising or acquired (the
"Collateral"):
(i) all right, title and interest of Centrex Four in and to the
Warehoused Receivables and all monies due or to become due thereon after
the relevant Warehouse Cutoff Date (including Scheduled Payments due after
the Warehouse Cutoff Date (including principal prepayments relating to
such Scheduled Payments) but received by Centrex Four or the Originators
before the Warehouse Cutoff Date) and all Liquidation Proceeds and
Recoveries received with respect to such Warehoused Receivables;
(ii) all right, title and interest of Centrex Four in and to the
security interests in the Financed Vehicles granted by Obligors pursuant
to the Warehoused Receivables and any other interest of Centrex Four in
such Financed
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Vehicles, including, without limitation, the certificates of title with
respect to such Financed Vehicles;
(iii) all right, title and interest of Centrex Four 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 such Financed Vehicles or
the related Obligors;
(iv) all right, title and interest of Centrex Four in and to the
First Tier Loan Purchase Agreement and any Originator Assignment covering
Warehoused Receivables, including a direct right to cause the Originators
to purchase Warehoused Receivables from the Purchaser under certain
circumstances;
(v) all right, title and interest of Centrex Four in and to refunds
for the costs of extended service contracts with respect to such 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
Financed Vehicle and any recourse to Dealers for any of the foregoing;
(vi) the Receivable File related to each Warehoused Receivable;
(vii) all amounts and property from time to time held in or credited
to the Collection Account and the Payahead Account and attributable to the
Warehoused Receivables (except for Centrex Four's right to receive
distributions from such accounts in accordance with this Agreement);
(viii) all other personal property of Centrex Four, including,
without limitation, Centrex Four's right, title and interest, if any, in
and to any Receivables other than Warehoused Receivables and all related
Purchased Assets in respect of such other Receivables, and all Deferred
Purchase Price paid or payable to Centrex Four hereunder in respect of any
such other Receivables; and
(ix) the income and proceeds of any and all of the foregoing.
SECTION 2A.7 Remedies. When any Event of Default shall have occurred and
be continuing:
(a) The Purchaser, or the Administrator on its behalf, may exercise,
in respect of the Collateral, in addition to
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other rights and remedies provided for herein or otherwise available to
it, all the rights and remedies of a secured party on default under the
UCC (whether or not the UCC applies to the affected Collateral);
(b) The Administrator may notify the Obligors with respect to the
Warehoused Receivables, or any of them, of the Purchaser's security
interest in the Collateral; and
(c) All Collections and other cash proceeds received by the
Purchaser or the Administrator in respect of any sale of, collections
from, or other realization upon all or any part of the Collateral shall be
held by the Administrator as collateral for, and applied against, all or
any part of the Obligations and otherwise in the manner and in the order
of priority provided in Section 4.6 in relation to Collections on the
Warehouse Loan Tranche. Any surplus of such cash or cash proceeds held by
the Purchaser or the Administrator and remaining after the Final Payout
Date shall be released to the Sellers.
SECTION 2A.8 Applicability of Other Provisions. Without limiting the
application of any other provision of this Agreement or the other Related
Documents to the Warehoused Receivables in accordance with their terms, it is
expressly understood and agreed that the provisions of Sections 2.6 through 2.13
hereof shall apply to all Warehoused Receivables, in accordance with the terms
of such provisions, as well as to Receivables sold to the Purchaser hereunder.
SECTION 2A.9 Warehouse Take-Outs. From time to time on any Distribution
Date prior to the Purchase Termination Date, Centrex Four may, upon not less
than five Business Days' prior written notice to the Administrator, sell and
assign to the Originators, or any one or more of them, all or any portion of the
Warehoused Receivables and related Purchased Assets then owned by Centrex Four,
without recourse, representation or warranty or any indemnity (other than a
representation and warranty that such Warehoused Receivables and related
Purchased Assets are free and clear of all Liens created by Centrex Four or the
Purchaser), for a net purchase price (after deducting all expenses incurred by
Centrex Four in connection with such sale) not less than the aggregate unpaid
principal amount of Warehouse Fundings, accrued interest and Warehouse Fee with
respect thereto and all other amounts (including, if applicable, interest swap
breakage costs under Section 2A.11) owed by Centrex Four hereunder in respect of
the Warehouse Loan Tranche or portion thereof with respect to which such
Warehouse Take-Out applies; provided, however, that Centrex Four applies the net
proceeds from such sale to the payment on the date of such sale of such
principal, interest and other amounts in accordance with this Agreement; and,
provided,
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further, that (i) both before and after giving effect to such transaction, (A)
there shall not exist any Event of Default or Unmatured Event of Default; and
(ii) prior to the completion of such transaction, an authorized officer of
Centrex Four certifies to the Purchaser and the Administrator that such
transaction complies with the applicable requirements set forth in this Section
2A.9. Each such transaction is herein called a "Warehouse Take-Out".
SECTION 2A.10 Release of Warehoused Receivables. (a) Partial Release. From
time to time, Centrex Four may request the release of all or any portion of the
Warehoused Receivables and related Purchased Assets then owned by Centrex Four
by delivering to the Administrator and the Purchaser a notice (a "Notice of
Release"), which Notice of Release shall state that Centrex Four plans to sell
such Warehoused Receivables and related Purchased Assets in connection with a
Warehouse Take-Out and that such sale or other disposition is permitted by the
terms of this Agreement. Concurrently with the consummation of such Warehouse
Take-Out and repayment of the related Warehouse Funding(s) in accordance with
Section 2A.9, the Administrator and the Purchaser shall execute and deliver to
Centrex Four such documents, if any, as shall be necessary to release such
Warehoused Receivables and related Purchased Assets from the liens or security
interest evidenced by this Agreement, which documents shall be prepared by
Centrex Four or at Centrex Four's expense but shall be in form and substance
reasonably satisfactory to the Administrator.
(b) Full Release. Subject to subsection (a), the Purchaser's right, title
and interest in all the Warehoused Receivables and related Purchased Assets and
other Collateral shall be released effective on the Final Payout Date. Upon such
release and, upon the request of Centrex Four, its successors and assigns, and
at the cost and expense of Centrex Four, its successors or assigns, the
Purchaser and the Administrator shall execute such UCC-3 financing statements or
such other instruments (if any) as are necessary or desirable to terminate and
remove of record any documents constituting public notice of the security
interest granted under this Article 2A, and shall assign and transfer, or cause
to be assigned and transferred, and shall deliver or cause to be delivered to
Centrex Four, all property, including all moneys, instruments and securities, of
Centrex Four then held by the Purchaser or the Administrator.
(c) Effect of Release. When the release of any of the Warehoused
Receivables and related Purchased Assets is effective in accordance with
subsection (a) or (b), all right, title and interest of the Purchaser in, to and
under such Warehoused Receivables and related Purchased Assets, and in the case
of subsection (b) in all other Collateral, shall terminate and shall revert to
Centrex Four, its successors and assigns, and the
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right, title and interest of the Purchaser therein shall thereupon cease,
terminate and become void.
SECTION 2A.11 Purchase or Interest Swap Upon Nonpayment. In the event that
Centrex Four fails to pay the principal amount of all Warehouse Fundings when
due under Section 2A.4(a) or (b), together with all accrued interest and
Warehouse Fee thereon and other amounts payable on such date in respect of the
Warehouse Loan Tranche:
(a) The Administrator may, at its option, by notice to Centrex Four
and the Purchaser, elect to require Centrex Four to sell to the Purchaser
hereunder all the Receivables and related Purchased Assets included in the
Warehouse Loan Tranche, subject to the applicable conditions precedent set
forth in Section 6.2 (other than the delivery of an Addition Notice), and
Centrex Four and the Servicer hereby agree to execute and deliver all
documents and take all other actions required hereunder in connection with
such Purchase. The Cash Purchase Price for such Purchase shall not be paid
to Centrex Four, but shall be applied by the Administrator to repayment of
the principal amount of all outstanding Warehouse Fundings, interest
thereon and other amounts referred to above; and after any such amounts
owing in respect of all Warehouse Fundings have been paid in full, to
Centrex Four. Upon the effectiveness of such Purchase, for all purposes
hereof, the Receivables and related Purchased Assets theretofore included
in the Warehouse Loan Tranche shall be treated as a Loan Tranche other
than the Warehouse Loan Tranche.
(b) If the Administrator does not elect to require a Purchase under
subsection (a), or if such Purchase is not consummated for any reason, the
Administrator shall arrange for the Purchaser to enter into an interest
rate swap transaction under the Hedging Agreement with respect to the
Warehouse Loan Tranche (which interest rate swap transaction shall be (x)
in a notional amount equal to the Purchaser's Tranche Investment in all
Warehouse Fundings required to be repaid and (y) with a rate thereon
payable to the swap counterparty equal to the Warehouse Swap Rate)
("Required Warehouse Swap") such that the Warehouse Interest Swap Date in
respect thereof occurs no later than the fifth day after Centrex Four
fails to make payment as described in the first paragraph of this Section
2A.11. At the request of the Administrator, the Relationship Bank shall
enter into such interest rate swap transaction as the swap counterparty.
The Administrator shall give prompt written notice to Centrex Four and the
Servicer of the execution of such interest rate swap transaction, the
Warehouse Interest Swap Date thereunder and the Swap Rate with respect to
the
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Warehouse Loan Tranche. Centrex Four hereby agrees to pay to the
Administrator on demand, for the account of the Purchaser and the
Administrator as their interests appear, all reasonable fees, costs and
expenses incurred by the Purchaser or the Administrator in connection with
the execution of such interest rate swap transaction. In the event that,
after the execution of such interest rate swap transaction, Centrex Four
repays the Warehouse Fundings pursuant to clause (ii) or (iii) of Section
2A.4(a), Centrex Four shall pay to the Administrator, on the date of such
repayment, all costs (including any early termination payments under the
Hedging Agreement) incurred by the Purchaser or the Administrator in
connection with the early termination of such interest rate swap
transaction.
ARTICLE III
Administration and Servicing of Receivables
SECTION 3.1. Duties of Servicer. The Servicer (on behalf of Centrex Four
(in the case of Warehoused Receivables), the Purchaser and the Administrator (to
the extent provided herein)) shall manage, service, administer and make
collections on the Receivables with reasonable care, using that degree of skill
and attention that the Servicer exercises with respect to all comparable
automobile 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 to Obligors, reporting tax information to Obligors, accounting
for collections, furnishing monthly and annual statements to the Purchaser with
respect to distributions, making Advances pursuant to Section 4.4. The Servicer
shall follow its currently employed standards, policies and procedures or such
other standards, policies and procedures as the Servicer employs in the future
consistent with the business practice of other servicers in the industry
servicing similar receivables, in performing its duties as Servicer. Without
limiting the generality of the foregoing, and subject to the servicing standards
set forth in this Agreement, the Servicer is authorized and empowered by the
Purchaser and the Administrator to execute and deliver, on behalf of itself, the
Purchaser and the Administrator 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 and/or the certificates of title
with respect to such Financed Vehicles. If the Servicer shall commence a legal
proceeding to enforce a Receivable, the Purchaser and the Administrator (or in
the case of a Warehoused Receivable, Centrex
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Four) 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, unless the Purchaser (or the
Administrator on its behalf) shall waive the enforcement of such Receivable by
the Servicer, then the Purchaser (or, in the case of a Warehoused Receivable,
Centrex Four) shall, at the Servicer's expense and direction, and subject to
obtaining such indemnity as the Purchaser or the Administrator (or Centrex Four,
as applicable) may reasonably require, take steps to enforce such Receivable,
including bringing suit in its own name. The Servicer shall prepare and furnish
and the Purchaser (or, in the case of a Warehoused Receivable, Centrex Four)
shall execute, any powers of attorney and other documents reasonably necessary
or appropriate from time to time to enable the Servicer to carry out its
servicing and administrative duties hereunder.
SECTION 3.2. Collection and Allocation of Receivable Payments. 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 automobile receivables that it services for itself or others. The
Servicer will be responsible for identifying payments received from the Obligors
and transferring these payments to the Collection Account within two Business
Days of receipt into the Payments Account held by Citibank or into any Lock-Box
Account of collected funds as described in Section 4.2. The Servicer shall
allocate collections between principal and interest in accordance with
applicable law and the customary servicing procedures it follows with respect to
all comparable automobile receivables that it services for itself or others. The
Servicer, for so long as Oxford is the Servicer, may grant extensions on a
Receivable; provided, however, that the Servicer may not grant more than one
extension per calendar year with respect to a Receivable or grant an extension
with respect to a Receivable for more than one calendar month (including for
purposes of the foregoing, extensions granted prior to the Cutoff Date), without
the prior written consent of the Administrator and provided, further, that if
the Servicer extends the date for final payment by the Obligor of any Receivable
beyond the last day of the Collection Period preceding the Final Scheduled
Distribution Date, it shall promptly purchase the Receivable from the Purchaser
in accordance with the terms of Section 3.7 hereof (and for purposes thereof,
the Receivable shall be deemed to be materially and adversely affected). If the
Servicer is not Oxford, the Servicer may not make any extension on a Receivable
without the prior written consent of the Administrator. The Servicer may in its
discretion waive any late payment charge or
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any other fees that may be collected in the ordinary course of servicing a
Receivable. The Servicer shall not agree to any alteration of the interest rate
on any Receivable or of the amount of any Scheduled Payment on Receivables.
SECTION 3.3. Realization Upon Receivables. The Servicer (on behalf of
Centrex Four (in the case of Warehoused Receivables), the Purchaser and the
Administrator (to the extent provided herein)) 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.
The Servicer shall commence efforts to repossess or otherwise convert the
ownership of a Financed Vehicle on or prior to the date that all or a portion of
a Scheduled Payment thereon representing 10% or more of the amount of such
Scheduled Payment is 120 days or more past due; provided, however, that the
Servicer may elect not to commence such efforts within such time period if in
its good faith judgment it determines either that it would be impracticable to
do so or that the proceeds ultimately recoverable with respect to such
Receivable would be increased by forbearance. The Servicer shall follow such
customary and usual practices and procedures as it shall deem necessary or
advisable in its servicing of automobile receivables, which may include
reasonable efforts to realize upon any recourse to Dealers and selling the
Financed Vehicle at public or private sale. 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 discretion that such repair and/or repossession will increase the proceeds
ultimately recoverable with respect to such Receivable by an amount greater than
the amount of such expenses. In addition, the Servicer agrees to purchase with
its own funds all Financed Vehicles repossessed under this Section which are not
resold by the end of the fourth (4th) month after such repossession at the
wholesale fair market value of such Financed Vehicle (as reflected in a
nationally recognized wholesale used vehicle guide), and to deposit such
purchase price in the Collection Account in payment (in whole or in part) of the
related Receivable.
SECTION 3.4. Physical Damage Insurance; Other Insurance. (a) The Servicer,
in accordance with its customary servicing procedures, shall verify that (i)
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 Originator and its successors
and
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assigns as a loss payee, (ii) each Receivable is covered by a vendors single
interest policy acceptable to the Administrator on which the Administrator on
behalf of the Purchaser is named as an additional insured, (iii) 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
Dealer as policyholder (creditor) and (iv) 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 3.4(a) which, but for the actions of the Servicer, would have been
covered thereunder. The Servicer, on behalf of the Purchaser, 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 4.2. The parties hereto acknowledge that the Servicer shall
not be required to force place any insurance coverage referred to in Section
3.4(a)(i) above, or any other insurance coverage.
SECTION 3.5. Maintenance of Security Interests in Financed Vehicles. The
Servicer shall take such steps as are required by applicable law to maintain
perfection of (i) the security interest created by each Receivable in the
related Financed Vehicle and (ii) the interest of the Purchaser in the
Receivables created by this Agreement, including but not limited to obtaining
the execution by the Obligors and the recording, registering, filing,
re-recording, 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 Contribution Agreement or the First Tier
Loan Purchase Agreement, as the case may be, and the Sellers hereunder. The
Purchaser and the Administrator (and, in the case of Warehoused Receivables,
Centrex Four) hereby authorize the Servicer to take such steps as are necessary
to re-perfect or continue the perfection of such security interest on behalf of
the Purchaser in the event of the relocation of a Financed Vehicle or any
Originator or for any other reason.
SECTION 3.6. Additional Covenants of Servicer. The Servicer shall not
release the Financed Vehicle securing each 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, nor shall the Servicer impair
the rights of the Purchaser in such Receivables, nor shall the
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Servicer amend a Receivable, except that extensions may be granted in accordance
with Section 3.2.
SECTION 3.7. Purchase of Receivables Upon Breach. The Servicer or the
Custodian shall inform the other such party and the Administrator promptly, in
writing, upon the discovery of any breach pursuant to Section 3.4, 3.5 or 3.6 or
the fourth sentence of Section 3.2. Unless the breach shall have been cured by
the last day of the first Collection Period commencing after such discovery (or,
at the Servicer's election, the last day of the current Collection Period), the
Servicer shall purchase any Receivable materially and adversely affected by such
breach. In consideration of the purchase of such Receivable, the Servicer shall
remit the Repurchase Amount in the manner specified in Section 4.5. For purposes
of this Section 3.7, the Repurchase Amount with respect to a Receivable shall
consist in part of a release by the Servicer of all rights of reimbursement with
respect to Outstanding Advances on the Receivable. The sole remedy of the
Custodian, the Administrator or the Purchaser with respect to a breach pursuant
to Section 3.4, 3.5 or 3.6 or the fourth sentence of Section 3.2 shall be to
require the Servicer to repurchase Receivables pursuant to this Section 3.7.
SECTION 3.8. Servicing Fee. The Servicing Fee for the initial Distribution
Date with respect to any Loan Tranche shall equal the product of (a) one-twelfth
of the Servicing Rate and (b) the Loan Tranche Balance as of the close of
business on the applicable Cutoff Date. Thereafter, the Servicing Fee for a
Distribution Date with respect to any Loan Tranche shall equal the product of
(i) one-twelfth of the Servicing Rate and (ii) the Loan Tranche Balance as of
the opening of business on the first day of the related Collection Period. The
Servicing Fee with respect to any Loan Tranche shall also include all late fees,
prepayment charges and other administrative fees or similar charges allowed by
applicable law with respect to Receivables in such Loan Tranche, collected (from
whatever source) on the Receivables in such Loan Tranche.
SECTION 3.9. Servicer's Certificate. On each Determination Date, the
Servicer shall deliver to the Custodian, the Administrator and each Seller a
Servicer's Certificate containing all information necessary to make the
distributions pursuant to Section 4.6 (including, if required, withdrawals from
or deposits to the Payahead Account and Cash Collateral Account and Advances for
the Collection Period preceding the date of such Servicer's Certificate) and the
other information specified in Exhibit C. Receivables to be purchased by the
Servicer or to be purchased by the applicable Originators shall be identified by
the Servicer by account number with respect to such Receivable (as specified in
Schedule A to the relevant Seller Assignment).
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SECTION 3.10. Annual Statement as to Compliance; Notice of Default. (a)
The Servicer shall deliver to the Custodian and the Administrator, on or before
October 31 of each year beginning October 31, 1995, an Officer's Certificate,
dated as of June 30 of the preceding fiscal year, stating that (i) a review of
the activities of the Servicer during the preceding 12-month period (or, in the
case of the first such certificate, the period from the Initial Cutoff Date to
June 30, 1995) and of its performance under this Agreement has been made under
such officer's supervision and (ii) to the best of such officer's knowledge,
based on such review, the Servicer has fulfilled all its obligations under this
Agreement in all material respects throughout such year (or, in the case of the
first such certificate, such shorter period), or, if there has been a default in
the fulfillment of any such obligation, specifying each such default known to
such officer and the nature and status thereof.
(b) The Servicer shall deliver to the Custodian and the Administrator,
promptly after having obtained knowledge thereof, but in no event later than 5
Business Days after obtaining such knowledge, written notice in an Officer's
Certificate of any event which with the giving of notice or lapse of time, or
both, would become an Event of Default under Section 9.1.
SECTION 3.11. Annual Independent Certified Public Accountant's Report. The
Servicer shall cause a firm of independent certified public accountants, who may
also render other services to the Servicer or to the Sellers, to deliver to the
Custodian and the Administrator on or before October 31 of each year as of June
30th of the preceding fiscal year, beginning October 31, 1995, (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
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 the reports described in Section 9.2(g).
The 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 3.12. Receivable Bailee. The provisions of this Article III with
regard to the rights, duties and
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responsibilities of the Servicer shall apply to the Servicer in its capacity as
Receivable Bailee.
SECTION 3.13. 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, the Custodian and the Standby
Servicer, taxes imposed on the Servicer, and expenses incurred in connection
with distributions and reports to the Administrator and the Purchaser.
SECTION 3.14. Retention and Termination of Servicer. The Servicer hereby
covenants and agrees to act as such under this Agreement until the Final Payout
Date unless terminated as specified in a writing delivered by the Administrator
prior to the expiration of such term to the Servicer and the Custodian upon the
occurrence or during the continuance of a Servicer Default.
SECTION 3.15. Access to Certain Documentation and Information Regarding
Receivables. The Servicer shall provide to representatives of the Custodian and
the Administrator reasonable access to documentation and computer systems and
information regarding the Receivables. In each case, such access shall be
afforded without charge but only upon reasonable request and during normal
business hours. Nothing in this Section 3.15 shall derogate from 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 as provided in this Section 3.15 as a result of such obligation shall not
constitute a breach of this Section 3.15.
SECTION 3.16. Data Report. On or before the tenth calendar day of each
month, the Servicer will transmit or deliver to the Administrator, the Standby
Servicer and the Custodian a data report in the form of magnetic tape or
diskette or computer modem transmission, in a format acceptable to the
Administrator, the Standby Servicer, and the Custodian, containing such
information as the Administrator or the Standby Servicer may reasonably require
with respect to the Receivables as of the close of business on the last day of
the preceding Collection Period, including without limitation the information
necessary for preparation of the Servicer's Certificate (a "Data Report"). The
Servicer shall also transmit to the Administrator and the Custodian a Data
Report concurrently with the delivery of any Addition Notice, containing
information with respect to the Receivables to be sold to the Purchaser on the
relevant Subsequent Transfer Date and the Receivables included in the Purchased
Assets after giving effect to such sale. The Servicer shall also transmit to the
Administrator and the Custodian a Data Report concurrently with the delivery of
any Warehouse Funding
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Notice, containing information with respect to any new Receivables to be added
to the Warehouse Loan Tranche on or before the Warehouse Funding Date and the
Receivables included in the Warehouse Loan Tranche after giving effect to such
Warehouse Funding. The Standby Servicer shall use each such monthly Data Report
to verify the Servicer's Certificate delivered by the Servicer for the same
Collection Period, and the Standby Servicer shall notify the Servicer and the
Administrator of any discrepancies on or before the second Business Day
following the Determination Date. In the event that the Standby Servicer reports
any discrepancies, the Servicer and the Standby Servicer shall attempt to
reconcile such discrepancies prior to the third Business Day prior to the
related Distribution Date, but in the absence of a reconciliation, the
Servicer's Certificate shall control for the purpose of calculations and
distributions with respect to the related Distribution Date. In the event that
the Standby Servicer and the Servicer are unable to reconcile discrepancies with
respect to a Servicer's Certificate by the related Distribution Date, the
Servicer shall cause a firm of independent certified public accountants, at the
Servicer's expense, to audit the Servicer's Certificate and, prior to the fifth
calendar day of the following month, reconcile the discrepancies. The effect, if
any, of such reconciliation shall be reflected in the Servicer's Certificate for
such next succeeding Determination Date. Other than the duties specifically set
forth in this Agreement, the Standby Servicer shall have no obligations
hereunder, including, without limitation, to supervise, verify, monitor or
administer the performance of the Servicer. The Standby Servicer shall have no
liability for any actions taken or omitted by the Servicer.
SECTION 3.17. Employee Dishonesty Policy. The Servicer shall maintain such
insurance against employee dishonesty that it currently keeps.
SECTION 3.18. Sub-Servicer. The Servicer may appoint any of its Affiliates
as sub-servicer with respect to all or part of the Purchased Assets, provided
that the Servicer shall remain responsible for the performance of the Servicer's
duties hereunder.
ARTICLE IV
Distributions
SECTION 4.1. Accounts. (a) The Servicer shall establish the Collection
Account, the Payahead Account and the Cash Collateral Account in the name of the
Custodian for the benefit of the Purchaser and the Administrator. The Collection
Account, the Payahead Account and the Cash Collateral Account shall be
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segregated trust accounts held with the corporate trust department of the
Custodian.
(b) All amounts held in the Collection Account, the Payahead Account and
the Cash Collateral Account shall be invested by the Custodian at the written
direction of the Servicer in Eligible Investments in the name of the Custodian
and shall mature no later than the next Business Day immediately preceding the
Distribution Date next succeeding the date of such investment. Such written
direction shall certify that any such investment is authorized by this Section.
No investment may be sold prior to its maturity unless consented to by the
Administrator. Earnings on investments of funds in the Collection Account shall
be paid to the Servicer monthly as additional servicing fees so long as no
Servicer Default is continuing. Earnings on investments of funds in the Cash
Collateral Account shall be retained in the Cash Collateral Account except to
the extent they give rise to a Cash Collateral Surplus, in which case they shall
be distributed to the Sellers in accordance with Section 4.7(c). The Servicer
shall promptly notify the Custodian and the Administrator of any change in the
location of any of the aforementioned accounts.
(c) The Servicer shall on or prior to each Distribution Date (and prior to
the transfers from the Collection Account described in Section 4.6.(a)) transfer
from the Collection Account to the Payahead Account all Payaheads as described
in Section 4.3 received by the Servicer during the Collection Period.
SECTION 4.2. Collections. (a) The Servicer shall cause the post office box
to which the Obligors are instructed to mail payments on the Receivables to be
put into the name of the Custodian on behalf of the Purchaser and the
Administrator. The Custodian hereby authorizes the Servicer to cause such
payments to be deposited in the Payments Accounts (as defined below). The
Servicer shall remit all payments by or on behalf of the Obligors, which are
received in such post office box or otherwise received by the Servicer with
respect to the Receivables (other than Repurchased Receivables) including all
Liquidation Proceeds and Recoveries, no later than the Business Day following
receipt thereof in such post office box or otherwise by the Servicer directly to
one or more trust accounts (the "Payments Account(s)") held at Citibank, N.A. or
another bank or other financial institution reasonably acceptable to the
Administrator (the "Payments Account Bank") in the name of the Custodian, into
which payments on the retail installment sales contracts for which Oxford acts
as servicer will be deposited. Within two Business Days after deposit in the
Payments Account, the Servicer will identify the funds attributable to payments
on the Receivables and instruct the Payments Account Bank to transfer
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such collected funds into the Collection Account. The Custodian, each Seller,
the Administrator and the Purchaser each hereby authorizes the Servicer to
direct the Payments Account Bank to transfer such other funds not attributable
to payments on the Receivables to such accounts or other persons as it may deem
necessary in accordance with its other servicing responsibilities.
(b) The parties acknowledge that after the date hereof the Servicer may
enter into arrangements with one or more banks or other financial institutions
reasonably acceptable to the Administrator (each a "Lock-Box Bank") for the
receipt and processing by the Lock-Box Banks of payments on Receivables sent by
Obligors to post office boxes controlled by the Lock-Box Banks. The Servicer and
the Sellers shall give the Administrator and the Custodian reasonable prior
written notice of the effectiveness of any such arrangement, the names and
addresses of the Lock-Box Banks and the account number of each account
maintained by such Lock-Box Bank and into which collections on Receivables will
be deposited (each a "Lock-Box Account"), and shall provide the Administrator
and the Custodian with copies of any agreements relating to the Lock-Box
Accounts (which agreements shall be in form and substance reasonably acceptable
to the Administrator and the Custodian) and such other information as they may
reasonably request with respect to such arrangements. Unless each Lock-Box
Account and the related lock-box is in the name of and under the control of the
Custodian pursuant to arrangements reasonably satisfactory to the Administrator,
the Sellers and the Servicer shall execute and deliver and shall require each
Lock-Box Bank to execute and deliver, before any collections on Receivables are
deposited in any Lock-Box Account maintained by such Lock-Box Bank, an agreement
among such parties, the Custodian, the Purchaser and the Administrator in form
and substance reasonably satisfactory to the Administrator (each a "Lock-Box
Agreement"), covering each such Lock-Box Account. Each Lock-Box Agreement shall
include a provision pursuant to which the Servicer will irrevocably instruct the
Lock-Box Bank that, upon and after notice by the Administrator to the Lock-Box
Bank to the effect that an Event of Default has occurred and is continuing, the
Lock-Box Bank will not withdraw or transfer any funds from such Lock-Box Account
unless and until, prior thereto or concurrently therewith, the Custodian shall
have identified the portion of the funds in such Lock-Box Account which
constitute Purchased Assets and such portion shall have been transferred to the
Collection Account. The Administrator agrees to give such notice only during the
continuance of an Event of Default. Within two Business Days after deposit of
any funds in any Lock-Box Account, the Servicer will identify the funds
attributable to payments on the Receivables and instruct the Lock-Box Bank to
transfer such collected funds into the Collection Account. The Administrator
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and the Purchaser each hereby authorizes the Servicer to direct the Lock-Box
Bank to transfer any other funds not attributable to payments on the Receivables
to such accounts or other persons as it may deem necessary in accordance with
its other servicing responsibilities.
(c) Upon the occurrence and during the continuance of an Event of Default,
the Administrator may direct or require the Servicer to direct the Obligors to
make all payments on Receivables to an account designated by the Administrator.
SECTION 4.3. Application of Collections. All collections on Receivables
for each Collection Period shall be applied by the Servicer as follows: With
respect to each Receivable (other than a Repurchased Receivable), payments by or
on behalf of the Obligor shall be first applied to reduce Outstanding Advances
in respect of such Receivable as described in Section 4.4 below. Next, any
excess shall be applied to the Scheduled Payment and any excess remaining
thereafter shall be applied to prepay the Receivable, but only if the sum of
such excess and the previous Payahead Balance shall be sufficient to prepay the
Receivable in full. Otherwise, any such remaining excess payments shall
constitute a Payahead, and shall increase the Payahead Balance and shall be
applied to future Scheduled Payments on such Receivable in the order of their
scheduled maturities.
SECTION 4.4. Payaheads; Advances. If the payments by or on behalf of the
Obligor on a Receivable (other than a Repurchased Receivables) on the payment
due date for such Receivable in any Collection Period are less than the
Scheduled Payment, the Payahead Balance, if any, in respect of such Receivable
shall be applied by the Servicer and deposited into the Collection Account to
the extent of the shortfall and such Payahead Balance shall be reduced
accordingly. Next, the Servicer shall advance any remaining shortfall, in the
case of an Actuarial Receivable, or the amount of overdue interest, in the case
of a Simple Interest Receivable (such amount an "Advance"), to the extent that
the Servicer, in its sole discretion, shall determine that the Advance shall be
recoverable from the Obligor, the Repurchase Amount, Liquidation Proceeds or
proceeds of any other Receivables. Each Advance with respect to a Receivable
shall increase Outstanding Advances. Outstanding Advances with respect to a
Receivable shall be reimbursed from subsequent payments by or on behalf of the
related Obligor, collections of Liquidation Proceeds in respect of the related
Receivable, or payments of the Repurchase Amount of the related Receivable.
If the Servicer shall determine that an Outstanding Advance with respect
to any Receivable shall not be recoverable as aforesaid, the Servicer shall be
reimbursed in accordance with Section 4.6(a)(i) from any collections made on
unrelated
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Receivables included in the Purchased Assets, and Outstanding Advances with
respect to such Receivable shall be reduced accordingly.
SECTION 4.5. Additional Deposits. The Servicer shall deposit in the
Collection Account the aggregate Advances pursuant to Section 4.4. The Servicer
or the applicable Originator, as the case may be, shall deposit or cause to be
deposited in the Collection Account the aggregate Repurchase Amount with respect
to Repurchased Receivables, and the Servicer shall deposit therein all amounts
to be paid under Section 14.2. All such deposits shall be made, in immediately
available funds, on the Business Day preceding the Distribution Date.
SECTION 4.6. Distributions. (a) On each Distribution Date, the Custodian
shall cause the following transfers and distributions to be made, in immediately
available funds, based solely on the amounts set forth in the Servicer's
Certificate for the related Determination Date:
(i) From the Collection Account to the Servicer, amounts in respect
of Outstanding Advances to the extent that the Servicer is entitled to
reimbursement in respect thereof in accordance with Section 4.4.
(ii) From the Payahead Account, to the Collection Account, in
immediately available funds, the aggregate previous Payaheads to be
applied to Scheduled Payments on Receivables for the related Collection
Period or prepayments for the related Collection Period, pursuant to
Sections 4.3 and 4.4.
(iii) From the Collection Account to the Persons and accounts
specified in paragraphs (b) and (c) below those funds that were deposited
in the Collection Account for the Collection Period related to such
Distribution Date (after payments to the Servicer pursuant to clause (i)
above).
In addition, on the next Business Day prior to each Distribution Date, the
Servicer shall cause the Custodian to transfer the amount, if any, withdrawn
from the Cash Collateral Account with respect to any Insufficiency Amount for
such Distribution Date to the Collection Account in accordance with Section 4.7
hereof.
(b) On each Distribution Date, with respect to each Loan Tranche, an
amount equal to the Interest Collections for such Distribution Date with respect
to such Loan Tranche shall be distributed by the Custodian (based solely on the
amounts set forth in the Servicer's Certificate for the related Determination
Date) in the following order of priority:
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first, to the Servicer in payment of the Servicing Fee with respect
to such Loan Tranche for the related Collection Period, but only so long
as no Servicer Default has occurred and is continuing; provided, however,
that the Custodian shall also pay to the Standby Servicer an amount equal
to the Standby Fee to the extent due and not theretofore paid by the
Servicer;
second, to the Purchaser in payment of Earned Discount with respect
to such Loan Tranche, in an amount equal to the sum of (x) the accrued and
unpaid Earned Discount with respect to such Loan Tranche for such
Distribution Date; plus (y) any Earned Discount accrued with respect to
such Loan Tranche as of any previous Distribution Date and not yet paid;
third, to the Purchaser, in reduction of the Purchaser's Tranche
Investment with respect to such Loan Tranche, in an amount equal to the
sum of the Net Liquidation Losses with respect to such Loan Tranche for
the preceding Collection Period, plus (y) the excess, if any, of the total
Net Liquidation Losses with respect to such Loan Tranche for earlier
Collection Periods over the amounts previously distributed under this
clause third in respect thereof;
fourth, except in the case of the Warehouse Loan Tranche, to deposit
in the Cash Collateral Account, in an aggregate amount with respect to all
then outstanding Loan Tranches equal to the Cash Collateral Shortfall
before giving effect to such distribution;
fifth, to the Purchaser in reduction of the Purchaser's Tranche
Investment of such Loan Tranche, in an amount equal to the excess of the
Purchaser's Tranche Investment with respect to such Loan Tranche over the
Target Purchaser's Tranche Investment with respect to such Loan Tranche
before giving effect to such distribution;
sixth, to the Servicer, in an amount equal to the Servicing Fee, if
any, with respect to such Loan Tranche which was not paid pursuant to
clause first above;
seventh, if any Allocation Trigger described in clause (a) of the
definition thereof or any Allocation Trigger described in clause (b) of
the definition thereof with respect to such Loan Tranche has occurred and
is continuing, to the Purchaser in reduction of the Purchaser's Tranche
Investment of such Loan Tranche until reduced to zero;
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eighth, if any Allocation Trigger described in clause (a) of the
definition thereof has occurred and is continuing, to the Purchaser in
reduction of the Purchaser's Tranche Investment of each other Loan Tranche
(pro rata according to the respective Purchaser's Tranche Investments
thereof) until reduced to zero;
ninth, to the Administrator for the account of the Clipper Parties
as their interests appear, in the amount of any Obligations not
theretofore paid by the Sellers, the Servicer or the Originators; and
tenth, to each Seller in payment of the Deferred Purchase Price of
Receivables sold hereunder by such Seller (other than Warehoused
Receivables) or, in the case of Centrex Four, in respect of its residual
interest in Warehoused Receivables, as applicable.
(c) On each Distribution Date an amount equal to the Principal Collections
for such Distribution Date with respect to each Loan Tranche shall be
distributed by the Custodian (based solely on the amounts set forth in the
Servicer's Certificate for the related Determination Date) in the following
order of priority:
first, except in the case of the Warehouse Loan Tranche, to deposit
in the Cash Collateral Account in an amount equal to the product of (A) an
amount equal to (x) the Cash Collateral Shortfall, if any, before giving
effect to such deposit, less (y) the amount, if any, deposited in the Cash
Collateral Account on such Distribution Date pursuant to clause fourth of
paragraph (b) above, times (B) a fraction, the numerator of which is the
Purchaser's Tranche Investment of such Loan Tranche and the denominator of
which is the Purchaser's Investment;
second, to the Purchaser in reduction of the Purchaser's Tranche
Investment of such Loan Tranche, in an amount equal to (x) the excess, if
any, of the Purchaser's Tranche Investment of such Loan Tranche over the
Target Purchaser's Tranche Investment with respect to such Loan Tranche,
less (y) the amount, if any, distributed on such Distribution Date with
respect to such Loan Tranche pursuant to clause fifth of paragraph (b)
above;
third, so long as no Allocation Trigger described in clause (a) of
the definition thereof and no Allocation Trigger described in clause (b)
of the definition thereof with respect to such Loan Tranche has occurred
and is continuing, (i) in the case of each Loan Tranche other than the
Warehouse Loan Tranche, to the applicable Seller in
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payment of the Deferred Purchase Price of Receivables included in such
Loan Tranche, in an amount equal to ten percent (in the case of any Loan
Tranche purchased before December 31, 1995) and eleven percent (in the
case of any Loan Tranche purchased on or after December 31, 1995) of the
Principal Collections with respect to such Loan Tranche remaining after
giving effect to the distributions pursuant to the foregoing clauses first
and second, and (ii) in the case of the Warehouse Loan Tranche, to Centrex
Four in respect of its ownership interest in Warehoused Receivables, in an
amount equal to twelve percent of the Principal Collections with respect
to the Warehouse Loan Tranche remaining after giving effect to the
distributions pursuant to the foregoing clauses first and second;
fourth, to the Purchaser in reduction of the Purchaser's Tranche
Investment of such Loan Tranche until reduced to zero;
fifth, if any Allocation Trigger described in clause (a) of the
definition thereof has occurred and is continuing, to the Purchaser in
reduction of the Purchaser's Tranche Investment of each other Loan
Tranche, pro rata according to the respective Purchaser's Tranche
Investments thereof, until reduced to zero; provided, that subsequent
distributions in respect of such other Loan Tranches are used to pay back
amounts allocated under this clause fifth after all other distributions
are made in respect of such other Loan Tranches;
sixth, to the Administrator for the account of the Clipper Parties
as their interests appear, in payment of any Obligations not theretofore
paid by the Sellers, the Servicer or the Originators and not paid on such
Distribution Date pursuant to clause ninth of paragraph (b) above; and
seventh, to each Seller in payment of the Deferred Purchase Price of
Receivables sold hereunder by such Seller (other than Warehoused
Receivables) or, in the case of Centrex Four, in respect of its residual
interest in Warehoused Receivables, as applicable.
SECTION 4.7. Cash Collateral Account. (a) On the Closing Date and each
Subsequent Transfer Date, the Purchaser shall deposit funds in the Cash
Collateral Account in an amount equal to two percent of the aggregate Principal
Balance of Receivables purchased on such date, as a portion of the Cash Purchase
Price for such Receivables. On each Distribution Date, the Custodian shall
deposit funds in the Cash Collateral Account to the extent provided in Section
4.6.
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(b) By 11:00 a.m., New York City time, on the next Business Day prior to a
Distribution Date the Custodian shall determine (based on the information
contained in the Servicer's Certificate delivered on the related Determination
Date pursuant to Section 3.9) whether the sum of the accrued and unpaid Earned
Discount, Servicing Fee and Net Liquidation Losses with respect to any Loan
Tranche would exceed the amount available for distribution with respect to such
Loan Tranche pursuant to Section 4.6(a) on such Distribution Date before giving
effect to this Section 4.7(b) (the amount of any such excess being an
"Insufficiency Amount"). The Custodian shall withdraw from the Cash Collateral
Account an amount equal to the lesser of such Insufficiency Amount and the
amount on deposit in the Cash Collateral Account and shall deposit such amount
in the Collection Account for application as Interest Collections with respect
to such Loan Tranche on such Distribution Date.
(c) On each Distribution Date, if after giving effect to all other
transfers and distributions to take place on such date there is a Cash
Collateral Surplus, then the Custodian shall withdraw funds from the Cash
Collateral Account in the amount of such Cash Collateral Surplus and distribute
such funds to the Sellers ratably in accordance with portion of outstanding
Receivables sold by it hereunder (unless otherwise indicated to the Custodian in
writing by both Sellers).
SECTION 4.8. Reliance on Information from the Servicer. Notwithstanding
anything to the contrary contained in this Agreement, all distributions from any
of the accounts described in this Article IV and any transfer of amounts between
such accounts shall be made by the Custodian in reliance on information provided
to the Custodian by the Servicer in writing, whether by way of a Servicer's
Certificate or otherwise.
ARTICLE V
Fees and Yield Protection
SECTION 5.1. Fees.
(a) Program Fee. From the Closing Date until the Final Payout Date, on
each Distribution Date, with respect to each Loan Tranche included in the
Purchased Assets during the Distribution Period then ending, the Seller of such
Loan Tranche shall pay to the Purchaser a program fee (the "Program Fee") equal
to (i) in the case of each Loan Tranche other than the Warehouse Loan Tranche,
the product of (x) the weighted daily average of the Purchaser's Tranche
Investment of such Loan Tranche during such Distribution Period (or, if
applicable, during the shorter period described in clause (z) below), times (y)
the rate set forth in
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the Fee Letter, times (z) in the case of the first Distribution Period when such
Loan Tranche was included in the Purchased Assets, a fraction the numerator of
which is the actual number of days in the period from the Closing Date or the
Subsequent Transfer Date, as applicable, on which such Loan Tranche was
purchased until the last day of such Distribution Period and the denominator of
which is 360, and in the case of each subsequent Distribution Period, one
twelfth; plus (ii) the product of (x) the weighted daily average of the
Purchaser's Tranche Investment of the Warehouse Loan Tranche during such
Distribution Period (or, if applicable, during the shorter period described in
clause (z) below), times (y) the Warehouse Fee Rate, times (z) in the case of
each Distribution Period commencing prior to the Warehouse Interest Swap Date, a
fraction the numerator of which is the actual number of days in such
Distribution Period and the denominator of which is 360, and in the case of each
Distribution Period (if any) commencing on or after the Warehouse Interest Swap
Date, one twelfth; provided, however, in the case of either or both of clauses
(i) and (ii) above, the rate set forth in clause (y) may, in the discretion of
the Administrator and the Relationship Bank, be adjusted from time to time to
reflect any changes in the rates used to calculate certain facility fees payable
under the Liquidity Agreement and the Credit Agreement as determined by the
Administrator and the Relationship Bank in their sole discretion. Such Program
Fee with respect to each Loan Tranche shall be paid in arrears on each
Distribution Date, out of funds distributable under Section 4.6 to the extent
available for such payment, and otherwise out of other funds of the applicable
Seller. For the avoidance of doubt, the Program Fee with respect to each Loan
Tranche is included in, and not in addition to, Earned Discount with respect to
such Loan Tranche.
(b) Structuring Fee. Oxford shall pay to the Administrator on the Closing
Date a structuring fee in the amount set forth in the Fee Letter.
SECTION 5.2. Overdue Interest. If a Seller or the Servicer fails to pay or
deposit any amount hereunder when due, then such Seller or the Servicer, as
applicable, shall pay to the Administrator for the account of the Purchaser, to
the extent permitted by applicable law, interest on such overdue amount, from
the date when due until paid or deposited, at a rate per annum equal to the
Alternate Base Rate plus 2%, calculated on the basis of a year of 360 days and
the actual number of days elapsed.
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SECTION 5.3. Yield Protection.
(a) If (i) Regulation D or (ii) any Regulatory Change occurring after the
date hereof
(A) shall subject an Affected Party to any tax, duty or other charge
with respect to any Purchased Assets owned by or funded by it, or any
obligations or right to make Purchases or to provide funding therefor, or
shall change the basis of taxation of payments to the Affected Party of
any Purchaser's Investments or Earned Discount owned by, owed to or funded
in whole or in part by it or any other amounts due under this Agreement in
respect of the Purchased Assets owned by or funded by it or its
obligations or rights, if any, to make Purchases or to provide funding
therefor (except for changes in the rate of tax on the overall net income
of such Affected Party imposed by the United States of America, by the
jurisdiction in which such Affected Party's principal executive office is
located and, if such Affected Party's principal executive office is not in
the United States of America, by the jurisdiction where such Affected
Party's principal office in the United States is located); or
(B) shall impose, modify or deem applicable any reserve (including,
without limitation, any reserve imposed by the Federal Reserve Board, but
excluding any reserve included in the determination of Earned Discount),
special deposit or similar requirement against assets of any Affected
Party, deposits or obligations with or for the account of any Affected
Party or with or for the account of any affiliate (or entity deemed by the
Federal Reserve Board to be an affiliate) of any Affected Party, or credit
extended by any Affected Party; or
(C) shall change the amount of capital maintained or required or
requested or directed to be maintained by any Affected Party;
(D) shall impose any other condition affecting any Purchased Assets
owned or funded in whole or in part by any Affected Party, or its
obligations or rights, if any, to make Purchases or to provide funding
therefor; or
(E) shall change the rate for, or the manner in which the Federal
Deposit Insurance Corporation (or a successor thereto) assesses, deposit
insurance premiums or similar charges;
and the result of any of the foregoing is or would be
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(x) to increase the cost to or to impose a cost on (I) an Affected
Party funding or making or maintaining any Purchases, any purchases,
reinvestments, or loans or other extensions of credit under the Liquidity
Agreement, or any Credit Draw, or any commitment of such Affected Party
with respect to any of the foregoing, or (II) the Administrator for
continuing its or either Seller's relationship with Purchaser,
(y) to reduce the amount of any sum received or receivable by an
Affected Party under this Agreement, or under the Liquidity Agreement or
the Credit Agreement with respect thereto, or
(z) in the sole determination of such Affected Party, to reduce the
rate of return on the capital of an Affected Party as a consequence of its
obligations hereunder or arising in connection herewith to a level below
that which such Affected Party could otherwise have achieved,
then within thirty days after demand by such Affected Party (which demand shall
be accompanied by a statement setting forth the basis of such demand), each
Seller shall pay to the Administrator for the account of such Affected Party its
ratable portion (based on the portion of then outstanding Receivables sold by it
hereunder) of such additional amount or amounts as will compensate such Affected
Party for such additional or increased cost or such reduction.
(b) Each Affected Party will promptly notify the Sellers and the
Administrator of any event of which it has knowledge which will entitle such
Affected Party to compensation pursuant to this Section 5.2; provided, however,
no failure to give or delay in giving such notification shall adversely affect
the rights of any Affected Party to such compensation.
(c) In determining any amount provided for or referred to in this Section
5.2, an Affected Party may use any reasonable averaging and attribution methods
that it (in its sole discretion) shall deem applicable. Any Affected Party when
making a claim under this Section 5.2 shall submit to the Sellers a statement as
to such increased cost or reduced return (including a calculation thereof in
reasonable detail), which statement shall, in the absence of demonstrable error,
be conclusive and binding upon the Sellers.
SECTION 5.4. Costs, Expenses and Taxes. In addition to its obligations
under Section 7.2, each Seller agrees, jointly and severally with the other
Seller, to pay on demand:
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(a) all reasonable costs and expenses (including reasonable
attorneys' fees and expenses incurred at or before any trial or on appeal
or otherwise) incurred by the Administrator, the Relationship Bank, the
Liquidity Agent, the Credit Bank, the Program Collateral Agent and the
Purchaser and their respective Affiliates in connection with (1) any
actual or proposed amendment or waiver of, or consent under, this
Agreement or any Related Document, whether or not consummated, (2) any
actual or proposed assignment of, sale of participation interests on, or
increase in the amount of, the commitments of the Liquidity Banks under
the Liquidity Agreement, whether or not consummated, or (3) the
enforcement of, or any actual or claimed breach of, this Agreement and the
other Related Documents, including, without limitation (i) the reasonable
fees and expenses of counsel to any of such Persons incurred (A) in
connection with any of the foregoing or (B) in advising such Persons as to
their respective rights and remedies under any of the Related Documents,
and (ii) all reasonable out-of-pocket expenses (including reasonable fees
and expenses of independent accountants), incurred in connection with any
review of either Seller's book and records in connection with the
enforcement of, or any actual or claimed breach of, this Agreement or the
other Related Documents; and
(b) all stamp and other taxes and fees payable or determined to be
payable in connection with any filing and recording of this Agreement or
the other Related Documents which after the Closing Date is determined to
be necessary or advisable, and agrees to indemnify each Indemnified Party
against any liabilities with respect to or resulting from any delay in
paying or omission to pay such taxes and fees.
SECTION 5.5. Funding Losses. In the event that any Liquidity Bank or the
Credit Bank shall incur any loss or expense (including any loss or expense
incurred by reason of the liquidation or reemployment of deposits or other funds
acquired by such Liquidity Bank to make or maintain any loan, advance or
disbursement under the Liquidity Agreement or the Credit Agreement) as a result
of (i) any distribution with respect to the Purchaser's Investment not being
made when required hereunder or being made on any day other than a Distribution
Date, or (ii) any Purchase not being made in accordance with a request therefor
by a Seller, then, upon written notice from the Administrator to the Sellers and
the Servicer, the Sellers shall pay to the Servicer, and the Servicer shall pay
to the Administrator for the account of such Liquidity Bank, the amount of such
loss or expense. Such written notice (which shall include calculations in
reasonable detail) shall, in the absence of manifest error, be conclusive and
binding upon the Sellers and the Servicer.
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ARTICLE VI
Conditions Precedent to Purchases
and Warehouse Fundings
SECTION 6.1. Conditions Precedent to Initial Purchase. The initial
Purchase hereunder is subject to the condition precedent that the Administrator
shall have received, on or before the date of such Purchase, the following, each
(unless otherwise indicated) dated such date and in form and substance
satisfactory to the Administrator:
(a) This Agreement, duly executed by each of the parties hereto;
(b) The Contribution Agreement, duly executed by each Originator and
Centrex Two, together with each of the closing documents required to be
delivered thereunder;
(c) A copy of the resolutions of the Boards of Directors of each
Seller Party approving this Agreement and the other Related Documents to
be delivered by it hereunder and the transactions contemplated hereby,
certified by its Secretary or Assistant Secretary;
(d) Good standing certificates for each Seller Party as of a recent
date acceptable to the Administrator issued by the Secretaries of State of
each State where each such Seller Party does business.
(e) A certificate of the Secretary or Assistant Secretary of each
Seller Party certifying the names and true signatures of the officers
authorized on its behalf to sign this Agreement and the other Related
Documents to be delivered by it hereunder (on which certificate the
Administrator and Purchaser may conclusively rely until such time as the
Administrator shall receive from such Seller Party a revised certificate
meeting the requirements of this subsection (e));
(f) The Articles or Certificate of Incorporation of each Seller
Party, duly certified by the Secretary of State of the State in which each
such Seller Party is incorporated, as of a recent date acceptable to the
Administrator, together with a copy of the by-laws of each Seller Party,
duly certified by the Secretary or an Assistant Secretary of such Seller
Party;
(g) Acknowledgement copies or file-stamped copies of, or other
evidence reasonably satisfactory to the
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Administrator of the filing of, (i) proper financing statements (Form
UCC-1), filed on or prior to the date of the initial Purchase in such
jurisdictions as the Administrator may reasonably request, (A) naming each
Originator as the debtor and transferor of Receivables and related
Purchased Assets, Centrex Two as the secured party and transferee and the
Purchaser as assignee, and (B) naming Centrex Two as the debtor and seller
of Receivables and related Purchased Assets sold by it hereunder and the
Purchaser as the secured party and purchaser, and (ii) such other, similar
instruments or documents, if any, as may be necessary or, in the opinion
of the Administrator, desirable under the UCC or any comparable law of all
appropriate jurisdictions to perfect the Purchaser's interests in the
Receivables and related Purchased Assets;
(h) Search reports provided in writing to the Administrator by LEXIS
Document Services, listing all effective financing statements that name
any Originator or Centrex Two as debtor and that are filed in the
jurisdictions in which filings are required to be made pursuant to
subsection (g) above and in such other jurisdictions that Administrator
shall reasonably request, together with copies of such financing
statements (none of which shall cover any Receivables or related Purchased
Assets);
(i) Such documentation relating to the bank accounts referred to in
this Agreement as the Administrator may reasonably request, including
without limitation (A) a copy of each account agreement relating to the
Payments Accounts, and (B) evidence of establishment of the Cash
Collateral Account, the Payahead Account and the Collection Account;
(j) A favorable opinion of internal counsel for the Seller Parties
as to such matters as the Administrator or the Relationship Bank may
reasonably request;
(k) An opinion or opinions of Roseman & Colin LLP, as special
counsel for the Seller Parties, with respect to certain bankruptcy matters
and as to such other matters as the Administrator or the Relationship Bank
may reasonably request;
(l) An opinion of counsel to the Custodian as to such matters as the
Administrator or the Relationship Bank may reasonably request;
(m) A notice of the initial transfer hereunder, substantially in the
form of an Addition Notice, with appropriate changes;
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(n) A Data Report, prepared in respect of the proposed initial
Purchase, as of the Initial Cutoff Date, together with a certificate of
the Servicer as to the information (or certain information, satisfactory
to the Administrator) set forth in such Data Report;
(o) A Liquidity Agreement providing for commitments in amounts
sufficient to support the Purchaser's funding of its acquisition of the
Initial Receivables in accordance with the terms of this Agreement;
(p) Written approval by the Credit Bank of this Agreement and the
transactions contemplated hereby;
(q) Letters from the rating agencies then rating the Commercial
Paper Notes, confirming in effect that the existing ratings of the
Commercial Paper Notes will remain in effect after giving effect to the
transactions contemplated hereby; and
(r) Such other agreements, instruments, certificates, opinions and
other documents as the Administrator may reasonably request.
SECTION 6.2. Conditions Precedent to All Purchases. Each Purchase
(including the initial Purchase) of any Loan Tranche hereunder shall be subject
to the further conditions precedent that on the date of such Purchase the
following statements shall be true (and each Seller by accepting the Cash
Purchase Price with respect to such Purchase shall be deemed to have certified
that):
(a) the representations and warranties contained in Section 2.6 and
Articles VII and VIII (including without limitation all representations
and warranties concerning the Receivables included in such Loan Tranche)
are correct in all material respects on and as of such day as though made
on and as of such day and shall be deemed to have been made on such day;
(b) no event has occurred and is continuing, or would result from
such Purchase, that constitutes a Default or Event of Default;
(c) after giving effect to such proposed Purchase, the Purchaser's
Investment will not exceed $250,000,000;
(d) the Purchase Termination Date shall not have occurred;
(e) [intentionally omitted]
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(f) the applicable Seller shall have provided the Administrator with
(i) a timely Addition Notice, (ii) a Data Report containing information
with respect to the Receivables included in such Loan Tranche and as to
the Receivables included in the Purchased Assets after giving effect to
the proposed Purchases and (iii) any other information reasonably
requested by the Administrator with respect to the Receivables included in
such Loan Tranche;
(g) in the case of any purchase of Subsequent Receivables, the
Administrator shall have notified the Sellers that the Purchaser has
obtained additional commitments from the Liquidity Banks and, if
necessary, the Credit Bank, sufficient to support the funding of such
purchase, and, without limiting the foregoing, that the aggregate
commitments of the Liquidity Banks under the Liquidity Agreement are not
less than 102% of the Purchaser's Investment hereunder after giving effect
to such Purchase;
(h) the Purchaser and State Street Bank shall have entered into an
appropriate interest rate swap confirmation under the Hedging Agreement in
respect of the proposed Purchase;
(i) the applicable Seller shall have delivered to the Custodian and
the Purchaser a duly executed Seller Assignment in substantially the form
of Exhibit A, and an Originator Assignment from each relevant Originator
in substantially the form of Exhibit A to the First Tier Loan Purchase
Agreement, each of which shall include a schedule listing the Receivables
(or, in the case of each such Originator Assignment, the Receivables of
the relevant Originator) included in such Loan Tranche;
(j) the applicable Seller shall have delivered to the Receivable
Bailee the Receivable Files relating to the Receivables included in such
Loan Tranche and the Receivable Bailee shall have delivered to such Seller
and the Administrator an acknowledgement of receipt of such Receivable
Files;
(k) the applicable Seller shall have deposited in the Collection
Account all collections received since the relevant Cut-Off Date in
respect of the Receivables included in such Loan Tranche;
(l) neither any of the Originators nor the applicable Seller was
insolvent nor will any of them have been made insolvent by such transfer
nor is any of them aware of any pending insolvency;
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(m) the applicable Seller and the Servicer shall have delivered to
the Administrator an Officers' Certificate confirming the satisfaction of
each applicable condition precedent specified in this Article VI;
(n) the applicable Seller, the Servicer and the Originators shall
have taken any action necessary, or, if requested by the Administrator,
advisable to maintain the first perfected ownership interest of the
Purchaser in the Receivables, including, without limitation, the filing of
additional UCC financing statements identifying the Receivables included
in such Loan Tranche;
(o) no selection procedures believed by the applicable Seller or the
Servicer to be adverse to the interests of the Purchaser shall have been
utilized in selecting the Receivables; and
(p) the excess of (x) the weighted average APR of the Receivables to
be purchased on such date minus (y) the sum of the Swap Rate for the Loan
Tranche comprising such Receivables, the rate used to calculate the
Program Fee pursuant to Section 5.1 and the Servicing Rate, shall not be
less than two times the estimated net credit losses expected to be
incurred on such Receivables, expressed as a percentage of the aggregate
Principal Balance of such Receivables.
SECTION 6.3. Conditions Precedent to Initial Warehouse Funding. The
initial Warehouse Funding hereunder is subject to the condition precedent that
the Administrator shall have received, on or before the date of such initial
Warehouse Funding, the following, each (unless otherwise indicated) dated such
date (or another recent date acceptable to the Administrator) and in form and
substance satisfactory to the Administrator:
(a) The Administrator shall have received everything required under
paragraphs (c), (d), (e), (j) and (k) of Section 6.1 with respect to
Centrex Four;
(b) Acknowledgement copies or file-stamped copies of, or other
evidence reasonably satisfactory to the Administrator of the filing of,
(i) proper financing statements (Form UCC-1) (and/or amendments (Form
UCC-3) to financing statements previously filed pursuant hereto) with
respect to the Warehoused Receivables to be included in the initial
Warehouse Funding, filed no later than the day of the initial Warehouse
Funding in such jurisdictions as the Administrator may reasonably request,
(A) naming each Originator transfering Warehoused Receivables included in
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the initial Warehouse Funding as the debtor and transferor of Receivables
and related Purchased Assets from time to time included in such Warehoused
Receivables, Centrex Four as the secured party and transferee and the
Purchaser as assignee, and (B) naming Centrex Four as the debtor and the
Purchaser as the secured party with respect to the Collateral, and (ii)
such other, similar instruments or documents, if any, as may be necessary
or, in the opinion of the Administrator, desirable under the UCC or any
comparable law of all appropriate jurisdictions to perfect the Purchaser's
interests in the Warehoused Receivables and related Purchased Assets and
other Collateral;
(c) Search reports provided in writing to the Administrator by LEXIS
Document Services, listing all effective financing statements that name
any Originator transferring Warehoused Receivables included in the initial
Warehouse Funding or Centrex Four as debtor and that, since the effective
dates of such search reports, no financing statements have been filed
which cover any Warehoused Receivables or related Purchased Assets in the
intial Warehouse Funding;
(d) Such other agreements, instruments, certificates, opinions and
other documents as the Administrator may reasonably request.
SECTION 6.4. Conditions Precedent to All Warehouse Fundings. Each
Warehouse Funding (including the initial Warehouse Funding) hereunder shall be
subject to the further conditions precedent that on the date of such Warehouse
Funding the following statements shall be true (and Centrex Four by accepting
the proceeds of such Warehouse Funding shall be deemed to have certified that):
(a) except in the case of the initial Warehouse Funding, the
Administrator shall have received, on or before the date of such Warehouse
Funding, in form and substance satisfactory to the Administrator,
acknowledgement copies or file-stamped copies of, or other evidence
reasonably satisfactory to the Administrator of the filing of, (i) proper
financing statements (Form UCC-1), and/or amendments (Form UCC-3) to
financing statements previously filed pursuant hereto, filed on or prior
to the date of the Warehouse Funding in such jurisdictions as the
Administrator may reasonably request (including, without limitation the
Secretary of State of New York, Suffolk County, New York, and each other
jurisdiction where any Originator's principal place of business is
located) (A) naming each Originator as the debtor and transferor of
Receivables and related Purchased Assets from time to time included in the
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Warehoused Receivables, Centrex Four as the secured party and transferee
and the Purchaser as assignee, and (B) naming Centrex Four as the debtor
and the Purchaser as the secured party with respect to the Collateral, and
(ii) such other, similar instruments or documents, if any, as may be
necessary or, in the opinion of the Administrator, desirable under the UCC
or any comparable law of all appropriate jurisdictions to perfect the
Purchaser's interests in the Warehoused Receivables and related Purchased
Assets and other Collateral;
(b) except in the case of the initial Warehouse Funding, the
Administrator shall have received, on or before the date of such Warehouse
Funding, in form and substance satisfactory to the Administrator, Search
reports provided in writing to the Administrator by LEXIS Document
Services, listing all effective financing statements that name any
Originator or Centrex Four as debtor and that, since the effective dates
of such search reports, no financing statements have been filed which
cover any Warehoused Receivables or related Purchased Assets;
(c) the representations and warranties contained in Section 2.6 and
Articles VII and VIII (including without limitation all representations
and warranties concerning the Receivables included in the Warehouse Loan
Tranche on the date of such Warehouse Funding) are correct in all material
respects on and as of such day as though made on and as of such day and
shall be deemed to have been made on such day;
(d) no event has occurred and is continuing, or would result from
the Warehouse Funding, that constitutes a Default or Event of Default;
(e) (i) after giving effect to such proposed Warehouse Funding, (A)
the Purchaser's Investment will not exceed $250,000,000, (B) the Warehouse
Loan Tranche will not exceed $50,000,000, and (C) the Warehouse Loan
Tranche will not exceed 88% of the Loan Tranche Balance of the Warehouse
Loan Tranche, and (ii) the initial principal amount of such Warehouse
Funding is not less than $5,000,000;
(f) the Purchase Termination Date shall not have occurred;
(g) Centrex Four shall have provided the Administrator with (i) a
timely Warehouse Funding Notice, (ii) a Data Report containing information
with respect to the Receivables being added to the Warehouse Loan Tranche
and as to the Receivables included in the Warehouse Loan Tranche and in
the Purchased Assets after giving effect to the
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proposed Warehouse Funding and (iii) any other information reasonably
requested by the Administrator with respect to the Receivables included in
the Warehouse Loan Tranche;
(h) the aggregate commitments of the Liquidity Banks under the
Liquidity Agreement are not less than 102% of the Purchaser's Investment
hereunder after giving effect to such Warehouse Funding;
(i) Centrex Four shall have delivered to the Custodian and the
Purchaser a duly executed Originator Assignment from each relevant
Originator in substantially the form of Exhibit A to the First Tier Loan
Purchase Agreement, which shall include a schedule listing the Receivables
(or, in the case of each such Originator Assignment, the Receivables of
the relevant Originator) being added to the Warehouse Loan Tranche;
(j) Centrex Four shall have delivered to the Receivable Bailee the
Receivable Files relating to the Receivables being added to the Warehouse
Loan Tranche and the Receivable Bailee shall have delivered to Centrex
Four and the Administrator an acknowledgement of receipt of such
Receivable Files;
(k) Centrex Four shall have deposited in the Collection Account all
collections received since the relevant Cut-Off Date in respect of the
Receivables being added to the Warehouse Loan Tranche;
(l) neither any of the Originators nor Centrex Four was insolvent
nor will any of them have been made insolvent by such Warehouse Funding or
the related sales under the First Tier Loan Purchase Agreement nor is any
of them aware of any pending insolvency;
(m) Centrex Four and the Servicer shall have delivered to the
Administrator an Officers' Certificate confirming the satisfaction of each
applicable condition precedent specified in this Article VI;
(n) no selection procedures believed by Centrex Four or the Servicer
to be adverse to the interests of the Purchaser shall have been utilized
in selecting the Receivables; and
(o) (i) the excess of (x) the weighted average APR of the
Receivables to be purchased or pledged on such date minus (y) the sum of
(1) the Swap Rate for the Warehouse Loan Tranche, calculated as of the
most recent Distribution Date, (2) the Warehouse Fee Rate and (3) the
Servicing Rate
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shall not be less than (ii) two times the estimated net credit losses
expected to be incurred on such Receivables, expressed as a percentage of
the aggregate Principal Balance of such Receivables.
ARTICLE VII
The Sellers
SECTION 7.1. Representations of Sellers. Each Seller makes the following
representations to the Purchaser, the Administrator, the Relationship Bank and
the Custodian, on which the Purchaser relies in paying the Cash Purchase Price
and accepting the Receivables, and the Administrator relies in causing such
actions to be taken on behalf of the Purchaser. The representations speak as of
the execution and delivery of this Agreement, the Closing Date and the date of
each Subsequent Transfer and shall survive the sale of the Receivables to the
Purchaser.
(i) Organization and Good Standing. Such Seller has been duly
organized and is validly existing as a corporation in good standing under
the laws of the State of Delaware, with power and authority to own its
properties and to conduct its business as such properties shall be
currently owned and such business is presently conducted, and had at all
relevant times, and shall have, power, authority, and legal right to
acquire and own the Receivables.
(ii) Due Qualification. Such 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.
(iii) Power and Authority. Such Seller has the power and authority to
execute and deliver this Agreement and the other Related Documents to
which it is a party and to carry out their respective terms; such Seller
has full power and authority to sell and assign the property sold and
assigned to the Purchaser and deposited with the Receivable Bailee or the
Custodian on behalf of the Purchaser and has duly authorized such sale and
assignment and such deposit by all necessary corporate action; and the
execution, delivery and performance of this Agreement and the other
Related Documents to which it is a party have been duly authorized by such
Seller by all necessary corporate action.
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(iv) Valid Sale; Binding Obligation. This Agreement effects a valid
sale, transfer and assignment of the Receivables and the other property
conveyed to the Purchaser pursuant to Section 2.2 and Section 2.5,
enforceable against creditors of and purchasers from such Seller; and this
Agreement shall constitute legal, valid and binding obligations of such
Seller enforceable in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforceability of
creditors' rights generally, and general equitable principals.
(v) No Violation. The execution, delivery and performance by such
Seller of this Agreement and the other Related Documents and the
consummation of the transactions contemplated hereby and thereby and the
fulfillment of the terms hereof and thereof do not (A) conflict with,
result in any breach of any of the terms and provisions of, or constitute
(with or without notice or lapse of time) a default under, the articles of
incorporation or by-laws of such Seller, or any indenture, agreement,
mortgage, deed of trust, or other instrument to which such Seller is a
party or by which it is bound or any of its properties are subject; (B)
result in the creation or imposition of any Lien upon any of its
properties pursuant to the terms of any such indenture, agreement,
mortgage, deed of trust, or other instrument (other than this Agreement);
or (C) violate any law, order, rule, or regulation applicable to such
Seller of any court or of any Federal or State regulatory body,
administrative agency, or other governmental instrumentality having
jurisdiction over such Seller or its properties.
(vi) No Proceedings. There are no proceedings or investigations
pending, or to such Seller's best knowledge, threatened, before any court,
regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over such Seller or its properties:
(A) asserting the invalidity of this Agreement or the other Related
Documents, (B) seeking to prevent the consummation of any of the
transactions contemplated by this Agreement or the other Related
Documents, (C) seeking any determination or ruling that might materially
and adversely affect the performance by such Seller of its obligations
under, or the validity or enforceability of, this Agreement, or the other
Related Documents, or (D) which, if adversely determined, would be
reasonably likely to have a Material Adverse Effect.
(vii) Approvals. All approvals, authorizations, consents, orders or
other actions of any person, corporation or other organization, or of any
court,
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governmental agency or body or official, required in connection with the
execution and delivery of this Agreement and the other Related Documents
have been or will be taken or obtained on or prior to the Closing Date.
(viii) Accurate Reports. No Servicer's Certificate or other
information, exhibit, financial statement, document, book, record or
report furnished or to be furnished, in each case in writing, by or on
behalf of Seller to the Administrator, the Purchaser or the Relationship
Bank in connection with this Agreement, in each case as of the date it was
or will be dated or certified, was or will be inaccurate in any material
respect, or contained or will contain any material misstatement of fact or
omitted or will omit to state any fact necessary to make the statements
contained therein, in the context in which they are made, not materially
misleading.
(ix) Ownership. On and after the date of the initial Purchase
hereunder, all the issued and outstanding capital stock (including all
warrants, options, conversion rights, and other rights to purchase or
convert into such stock) of such Seller are owned directly by Oxford and
the other Originators, collectively, free and clear of all Liens.
(x) Margin Regulations. The use of all funds obtained by Seller
under this Agreement will not conflict with or contravene any of
Regulations G, T, U and X promulgated by the Board of Governors of the
Federal Reserve System from time to time.
(xi) Offices. The principal place of business and chief executive
office of such Seller is located at the address set forth below its
signature hereto. Such Seller's books and records evidencing or relating
to the Receivables and other Purchased Assets and the contracts evidencing
the Receivables are in the possession of the Receivable Bailee at the
Servicer's Office or the Custodian's Office, as applicable.
(xii) Legal Names. Since January 1, 1994, (i) such Seller and each
Originator has not (i) been known by any legal name other than its
corporate name as of the date hereof, or (ii) has been the subject of any
merger or other corporate reorganization that resulted in a change of
name, identity or corporate structure. Such Seller and each Originator
uses no trade names other than its respective actual corporate names.
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(xiii) Investment Company Act. Such Seller is not, and is not
controlled by, an "investment company" registered or required to be
registered under the Investment Company Act of 1940, as amended.
(xiv) Insolvency. Such Seller is not insolvent, will not be made
insolvent after giving effect to the transactions contemplated by this
Agreement, and is not aware of any pending insolvency.
(xv) Servicing Programs. No license or approval is required for such
Seller's use of any program used by the Servicer in the servicing of the
Receivables, other than those which have been obtained and are in full
force and effect.
(xvi) Taxes. Such Seller has filed all tax returns and reports
required by law to have been filed by it and has paid all taxes and
governmental charges thereby shown to be owing, except any such taxes or
charges that are being diligently contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP have
been set aside on its books.
SECTION 7.2. Indemnity by Sellers.
(a) General Indemnity. Without limiting any other rights which any such
Person may have hereunder, under any Related Document or under applicable law,
each Seller hereby agrees, jointly and severally with the other Seller, to
indemnify each of the Administrator, Purchaser, the Liquidity Banks, the Credit
Bank, the Relationship Bank, the Liquidity Agent, each of their respective
Affiliates, and all successors, transferees, participants and assigns and all
officers, directors, shareholders, controlling persons, employees and agents of
any of the foregoing (each an "Indemnified Party"), forthwith on demand, from
and against any and all damages, losses, claims, liabilities and related costs
and expenses, including reasonable attorneys' fees and disbursements (all of the
foregoing being collectively referred to as "Indemnified Amounts") awarded
against or incurred by any of them arising out of or relating to the Related
Documents or the ownership or funding of the Purchased Assets or in respect of
any Receivable or any Contract, excluding, however, (a) Indemnified Amounts to
the extent determined by a court of competent jurisdiction to have resulted from
gross negligence or willful misconduct on the part of such Indemnified Party or
(b) recourse for Defaulted Receivables. Without limiting the foregoing, each
Seller shall indemnify each Indemnified Party for Indemnified Amounts arising
out of or relating to:
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(i) the transfer by either Seller of any interest in any Receivable
other than the transfer of Purchased Assets to the Purchaser pursuant to
this Agreement, the resale of Receivables to the Originators pursuant to
the terms hereof and the transfer of Warehoused Receivables as permitted
hereby;
(ii) any representation or warranty made by either Seller (or any of
its officers or Affiliates) under or in connection with any Related
Document, any Servicer's Certificate or Data Report or any other
information or report delivered by or on behalf of either Seller pursuant
hereto, which shall have been false, incorrect or misleading in any
material respect when made or deemed made;
(iii) the failure by either Seller to comply with any applicable law,
rule or regulation with respect to any Receivable or the related Purchased
Assets, or the nonconformity of any Receivable or the related Purchased
Assets with any such applicable law, rule or regulation;
(iv) the failure to vest and maintain vested in the Purchaser an
ownership interest or security interest, as applicable, in the Receivables
and other Purchased Assets, free and clear of any Lien, other than any
Permitted Vehicle Lien and any Lien arising solely as a result of an act
of Purchaser, the Administrator or the Relationship Bank, whether existing
at the time of any Purchase of or Warehouse Funding with respect to such
Purchased Assets or at any time thereafter;
(v) the failure to file, or any delay in filing, financing
statements or other similar instruments or documents under the UCC of any
applicable jurisdiction or other applicable laws with respect to any
Receivables, whether at the time of any Purchase or at any time
thereafter;
(vi) any dispute, claim, offset or defense (other than discharge in
bankruptcy) of an Obligor to the payment of any Receivable (including,
without limitation, a defense based on such Receivable's not being a
legal, valid and binding obligation of such Obligor enforceable against it
in accordance with its terms), or any other claim resulting from the sale
of the merchandise or services related to such Receivable or the
furnishing or failure to furnish such merchandise or services;
(vii) any failure of either Seller, to perform its duties or
obligations in accordance with this Agreement;
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(viii) any products liability claim arising out of or in connection
with any Financed Vehicle;
(ix) any litigation, proceedings or investigation against any Seller
Party; or
(x) any tax or governmental fee or charge (but not including taxes
upon or measured by net income), all interest and penalties thereon or
with respect thereto, and all out-of-pocket costs and expenses, including
the reasonable fees and expenses of counsel in defending against the same,
which may arise by reason of the purchase or ownership of or security
interest in any Purchased Assets, or any other interest in the Receivables
or in any goods which secure any such Receivables.
(b) Contest of Tax Claim; After-Tax Basis. If any Indemnified Party shall
have notice of any attempt to impose or collect any tax or governmental fee or
charge for which indemnification will be sought from either or both Sellers
under Section 7.2(a)(x), such Indemnified Party shall give prompt and timely
notice of such attempt to the applicable Seller and such Seller shall have the
right, at its expense, to participate in any proceedings resisting or objecting
to the imposition or collection of any such tax, governmental fee or charge.
Indemnification hereunder shall be in an amount necessary to make the
Indemnified Party whole after taking into account any tax consequences to the
Indemnified Party of the payment of any of the aforesaid taxes and the receipt
of the indemnity provided hereunder or of any refund of any such tax previously
indemnified hereunder, including the effect of such tax or refund on the amount
of tax measured by net income or profits which is or was payable by the
Indemnified Party.
ARTICLE VIII
The Servicer
SECTION 8.1. Representations of Servicer. The Servicer makes the following
representations to the Purchaser, the Administrator, the Relationship Bank and
the Custodian, on which the Purchaser relies in paying the Cash Purchase Price
and accepting the Receivables and the Administrator relies in causing such
actions to be taken on behalf of the Purchaser. The representations speak as of
the execution and delivery of this Agreement, the Closing Date and each
Subsequent Transfer Date and shall survive the sale of the Receivables to the
Purchaser.
(i) Organization and Good Standing. The Servicer has been duly
organized and is validly existing as a corporation
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in good standing under the laws of the State of New York, with power and
authority to own its properties and to conduct its business as such
properties shall be currently owned and such business is presently
conducted, and had at all relevant times, and shall have, power,
authority, and legal right to service the Receivables as provided herein.
(ii) Due Qualification. The Servicer 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 (including
the servicing of the Receivables as required by this Agreement) shall
require such qualifications.
(iii) Power and Authority. The Servicer has the power and authority
to execute and deliver this Agreement and to carry out its terms; and the
execution, delivery, and performance of this Agreement has been duly
authorized by the Servicer by all necessary corporate action.
(iv) Binding Obligation. This Agreement constitutes a legal, valid
and binding obligation of the Servicer enforceable in accordance with its
terms except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforceability of creditors' rights generally, and general equitable
principal.
(v) No Violation. The execution, delivery and performance by the
Servicer of this Agreement and the consummation of the transactions
contemplated hereby and the fulfillment of the terms hereof do not (A)
conflict with, result in any material breach of any of the terms and
provisions of, nor constitute (with or without notice or lapse of time) a
default under, the articles of incorporation or by-laws of the Servicer,
or any indenture, agreement, mortgage, deed of trust, or other instrument
to which the Servicer is a party or by which it is bound or any of its
properties are subject; (B) nor result in the creation or imposition of
any Lien upon any of its properties pursuant to the terms of any
indenture, agreement, mortgage, deed of trust, or other instrument (other
than this Agreement); (C) violate any law, 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.
(vi) No Proceedings. There are no proceedings or investigations
pending, or to the Servicer's best knowledge,
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threatened, before any court, regulatory body, administrative agency, or
other governmental instrumentality having jurisdiction over the Servicer
or its properties: (A) asserting the invalidity of this Agreement or the
other Related Documents, (B) seeking to prevent the consummation of any of
the transactions contemplated by this Agreement or the other Related
Documents, (C) seeking any determination or ruling that might materially
and adversely affect the performance by the Servicer of its obligations
under, or the validity or enforceability of, this Agreement or the other
Related Documents, or (D) which, if adversely determined, would be
reasonably likely to have a Material Adverse Effect.
(vii) Approvals. All approvals, 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.
SECTION 8.2. Indemnities of Servicer.
(a) General Indemnity. Without limiting any other rights which any
such Person may have hereunder or under applicable law, the Servicer
hereby agrees to indemnify each Indemnified Party, forthwith on demand,
from and against any and all Indemnified Amounts awarded against or
incurred by any of them arising out of or resulting from (i) any
representation or warranty made by Oxford under or in connection with any
Related Document, any Servicer's Certificate or Data Report or any other
information or report delivered by or on behalf of the Servicer pursuant
hereto, which shall have been false, incorrect or misleading in any
material respect when made or deemed made or (ii) the failure by the
Servicer to comply with any applicable law, rule or regulation with
respect to any Receivables or the related Purchased Assets, or (iii) the
failure of the Servicer to perform its duties or obligations in accordance
with this Agreement, excluding, however, (a) Indemnified Amounts to the
extent determined by a court of competent jurisdiction to have resulted
from gross negligence or willful misconduct on the part of such
Indemnified Party or (b) recourse for Defaulted Receivables.
(b) Financed Vehicles. The Servicer shall defend, indemnify, and
hold harmless the Custodian, the Standby Servicer, either Seller, the
Purchaser and the other Indemnified Parties, from and against any and all
reasonable costs, reasonable expenses, losses, damages, claims, and
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liabilities, arising out of or resulting from the use, ownership, or
operation by the Servicer or any affiliate thereof of a Financed Vehicle.
(c) Custodian. The Servicer shall indemnify, defend, and hold
harmless the Custodian from and against all reasonable costs, reasonable
expenses, losses, claims, damages, and liabilities arising out of or
incurred in connection with the acceptance or performance of its duties
contained in this Agreement and the other Related Documents except to the
extent that such loss, liability, fee, disbursement, or expense shall have
been incurred by reason of the Custodian's willful misfeasance or gross
negligence.
(d) Termination of Servicer. For purposes of this Section, in the
event of the termination of the rights and obligations of a Servicer (or
any successor thereto pursuant to Section 8.3) as Servicer pursuant to
Section 3.4 or Section 10.1, or a resignation by such Servicer pursuant to
this Agreement, such Servicer shall be deemed to be the Servicer pending
appointment of a successor Servicer pursuant to Section 10.2. The
provisions of this Section 8.2(d) shall in no way affect the survival
pursuant to Section 8.2(e) of the indemnification by the Servicer provided
under this Section 8.2.
(e) Survival. Indemnification under this Section 8.2 shall survive
the termination of this Agreement and the other Related Documents and
shall include reasonable fees and expenses of counsel and expenses of
litigation.
SECTION 8.3. Merger or Consolidation of, or Assumption of the Obligations
of, Servicer or Standby Servicer. (a) The Servicer shall not merge or
consolidate with or into, or (except for transfers of receivables and related
assets in the ordinary course of its business), in one transaction or a series
of transactions, sell, assign or otherwise transfer all or substantially all of
its assets to, any other Person, unless (i) either (A) such transaction is a
merger or consolidation and the Servicer is the surviving corporation or (B) on
or prior to the effectiveness of such transaction the surviving corporation or
transferee shall execute an agreement of assumption to perform every obligation
of the Servicer hereunder, (ii) immediately after giving effect to such
transaction, no Default or Event of Default shall have happened and be
continuing or would reasonably be expected to occur as a result of such
transaction, (iii) the Servicer shall have delivered to the Purchaser and the
Administrator an Officer's Certificate and an Opinion of Counsel each stating
that such consolidation, merger or succession and such agreement of assumption
comply with this Section 8.3 and that all conditions precedent provided for in
this Agreement
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relating to such transaction have been complied with, and (iv) the Servicer
shall have delivered to the Purchaser and the Administrator 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 and all other actions have been taken which are necessary fully to
preserve and continue the validity, perfection and priority of the Purchaser's
interest in the Receivables and other Purchased Assets and reciting the details
of such filings and other actions, or (B) stating that, in the opinion of such
counsel, no such filing or other action shall be necessary to preserve and
continue the validity, perfection and priority of such interest. Nothing in this
Section 8.3 shall be deemed to release the Servicer from any of its obligations
as such.
(b) Any Person (a) into which the Standby Servicer may be merged or
consolidated, (b) which may result from any merger or consolidation to which the
Standby Servicer shall be a party, or (c) which may succeed to the properties
and assets of the Standby Servicer substantially as a whole, shall execute an
agreement of assumption to perform every obligation of the Servicer hereunder,
and whether or not such assumption agreement is executed, shall be the successor
to the Standby Servicer under this Agreement without further act on the part of
any of the parties to this Agreement; provided, however, that nothing herein
shall be deemed to release the Standby Servicer from any obligation.
SECTION 8.4. Limitation on Liability of Servicer and Others. The Servicer
shall be liable in accordance herewith only to the extent of the obligations
specifically undertaken by the Servicer under this Agreement (including, without
limitation, the indemnity obligations set forth in Sections 8.2 and 11.6) and
the representations made by the Servicer herein. Neither the Servicer nor any of
the directors or officers or employees or agents of the Servicer shall be under
any liability to the Purchaser, except as provided under this Agreement, for any
action taken or for refraining from the taking of any action pursuant to this
Agreement; 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 a breach of this Agreement or willful misfeasance, bad faith, or
negligence in the performance of duties or by reason of reckless disregard of
obligations and duties under this Agreement. The Servicer and any director or
officer or employee or agent of the Servicer 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.
SECTION 8.5. Servicer and Standby Servicer Not to Resign. Subject to the
provisions of Section 8.3, neither the Servicer nor the Standby Servicer may
resign from the obligations and
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duties hereby imposed on it as Servicer or Standby Servicer, as the case may be,
under this Agreement except upon determination that by reason of a change in
legal requirements the performance of its duties under this Agreement would
cause it to be in violation of such legal requirements in a manner which would
result in a material adverse effect on the Servicer or the Standby Servicer, as
the case may be, and the Administrator does not elect to waive the obligations
of the Servicer or the Standby Servicer, as the case may be, to perform the
duties which render it legally unable to act or does not elect to delegate those
duties to another Person. Notice of any such determination permitting the
resignation of the Servicer or the Standby Servicer, as the case may be, shall
be communicated to the Custodian and the Administrator 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 and satisfactory to the Custodian and the Administrator
concurrently with or promptly after such notice. No such resignation of the
Servicer shall become effective until a successor servicer shall have assumed
the responsibilities and obligations of such Servicer in accordance with Section
10.2 and the Servicing Assumption Agreement, if applicable. No such resignation
of the Standby Servicer shall become effective until an entity acceptable to the
Administrator shall have assumed the responsibilities and obligations of the
Standby Servicer; provided, however, that if no such entity shall have assumed
such responsibilities and obligations of the Standby Servicer within 30 days of
the resignation of the Standby Servicer, the Standby Servicer may petition a
court of competent jurisdiction for the appointment of a successor to the
Standby Servicer.
ARTICLE IX
General Covenants of Sellers and Servicer
SECTION 9.1. Affirmative Covenants of Sellers and Servicer. From the date
hereof until the Final Payout Date, each Seller and Servicer each severally
agrees that it will, unless the Administrator shall otherwise consent in
writing:
(a) Compliance with Laws, Etc. Comply in all material respects with all
applicable laws, rules, regulations and orders with respect to the Receivables
and related Purchased Assets.
(b) Preservation of Corporate Existence. Preserve and maintain its
corporate existence, rights, franchises and privileges in the jurisdiction of
its incorporation, and qualify and remain qualified in good standing as a
foreign corporation in each jurisdiction where the failure to preserve and
maintain such
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existence, rights, franchises, privileges and qualification might have a
Material Adverse Effect.
(c) Audits. (i) At any time and from time to time during regular business
hours, upon at least two (2) Business Days prior written notice, permit the
Administrator or any of its agents or representatives, at their own cost and
expense, (A) to examine and make copies of and abstracts from all books, records
and documents (including, without limitation, computer tapes and disks) in the
possession or under the control of such party relating to the Receivables and
other Purchased Assets, and (B) to visit the offices and properties of such
party for the purpose of examining such materials described in clause (i)(A)
next above, and to discuss matters relating to Receivables or any such party's
performance hereunder with any of the officers or employees of such party having
knowledge of such matters; and (ii) without limiting the provisions of clause
(i) next above, from time to time on request of the Administrator, permit
certified public accountants or other auditors acceptable to the Administrator
to conduct, at such party's expense, a review of such party's books and records
with respect to the Receivables and other Purchased Assets.
(d) Performance and Compliance with Receivables and Contracts. At its
expense timely and fully perform and comply with all material provisions,
covenants and other promises, if any, required to be observed by it under the
Receivables.
SECTION 9.2. Reporting Requirements of Sellers. From the date hereof until
the Final Payout Date, each Seller and the Servicer will furnish to the
Administrator and the Relationship Bank:
(a) Quarterly Financial Statements. In the case of the Servicer, as soon
as available and in any event within 60 days after the end of each of the first
three quarters of each fiscal year of the Servicer, (i) copies of the Servicer's
quarterly financial reports, on Form 10-Q, as filed with the Securities and
Exchange Commission (or if the Servicer is no longer required to file such Form
10-Q, the Servicer shall furnish such financial statements similar to those
typically found on Form 10-Q), and (ii) a calculation of the financial tests set
forth in Sections 10.1(xiv) and (xv) demonstrating that there is no breach of
such Sections, all certified by the chief financial officer or chief accounting
officer of the Servicer;
(b) Annual Financial Statements of Servicer. In the case of the Servicer,
as soon as available and in any event within 120 days after the end of each
fiscal year of the Servicer, a copy of the Servicer's Annual Report, on Form
10-K, as filed with the Securities and Exchange Commission (or if Servicer is no
longer
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required to file such Form 10-K, the Servicer shall furnish financial statements
similar to those typically found on Form 10-K) and as reported on by nationally
recognized independent certified public accountants;
(c) Annual Financial Statements of Sellers. In the case of either such
Seller, as soon as available and in any event within 120 days after the end of
each fiscal year of such Seller, copies of the unaudited financial statements of
such Seller, duly certified by the chief financial officer of such Seller;
(d) ERISA. Promptly after the filing or receiving thereof, copies of all
reports and notices with respect to any Reportable Event defined in Article IV
of ERISA which such Seller files under ERISA with the Internal Revenue Service,
the Pension Benefit Guaranty Corporation or the U.S. Department of Labor or
which Seller receives from the Pension Benefit Guaranty Corporation;
(e) Liquidation Events. As soon as possible and in any event within five
days after obtaining knowledge of the occurrence of each Default and each Event
of Default, a written statement of the chief financial officer or chief
accounting officer of the Sellers and the Servicer setting forth details of such
event and the action that the Sellers or the Servicer propose to take with
respect thereto;
(f) Litigation. As soon as possible and in any event within three Business
Days of such Seller's or the Servicer's knowledge thereof, notice of (i) any
litigation, investigation or proceeding which may exist at any time which could
have a Material Adverse Effect and (ii) any material adverse development in
previously disclosed litigation;
(g) Audit of Pool Receivables. As soon as available and in any event
within 120 days after the end of each fiscal year of such Seller, a report,
prepared by nationally recognized independent certified public accountants, as
to (i) a review of the Receivables, as at the end of the fiscal year of such
Seller in accordance with agreed-on procedures reasonably acceptable to the
Administrator and (ii) the ability of the Servicer to perform and observe its
obligations hereunder as Servicer; provided that the report (or the portion of
the report) described in this clause (ii) shall be substantially in the form of
the reports as to such matter most recently prepared on behalf of the Servicer
in connection with other securitization transactions to which the Servicer is a
party on the date hereof; and
(h) Other. Promptly, from time to time, such other information, documents,
records or reports respecting the Receivables or the condition or operations,
financial or
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otherwise, of such Seller as the Administrator may from time to time reasonably
request in order to protect the interests of the Administrator or the Purchaser
under or as contemplated by this Agreement.
SECTION 9.3. Negative Covenants of Sellers and Servicer. From the date
hereof until the Final Payout Date, each Seller, and the Servicer, each agrees
that it will not, without the prior written consent of the Administrator:
(a) Sales, Liens, Etc. (i) In the case of such Seller, except pursuant
hereto or in accordance with Section 2.7, 3.7 or 2A.9, sell, assign (by
operation of law or otherwise) or otherwise dispose of, or create or suffer to
exist any Lien (other than Permitted Vehicle Liens) upon or with respect to, any
Receivable or related Purchased Assets, or any interest therein, or any right to
receive income or proceeds from or in respect of any of the foregoing, and (ii)
in the case of the Servicer, assert any interest in the Receivables, except as
Servicer.
(b) Extension or Amendment of Receivables. Except as otherwise permitted
hereunder, extend, amend or otherwise modify the terms of any Receivable, except
for not more than one extension of the due date for any Scheduled Payment on
such Receivable for a period of not more than one month.
(c) Change in Business or Credit and Collection Policy. Make any change in
the character of its business if such change would be reasonably likely to have
a Material Adverse Effect, or make any material adverse change in the Collection
Policy.
(d) Mergers, Acquisitions, Sales, etc. In the case of such Seller, be a
party to any merger or consolidation, or purchase or otherwise acquire all or
substantially all of the assets or any stock of any class of, or any partnership
or joint venture interest in, any other Person, or, except in the ordinary
course of its business, sell, transfer, convey or lease all or any substantial
part of its assets, or sell or assign with or without recourse any Receivables
or any interest therein (other than pursuant hereto or in accordance with
Section 2.7. 3.7 or 2A.9), or permit any Subsidiary of such Seller to do any of
the foregoing.
(e) Restricted Payments. In the case of such Seller, (i) purchase or
permit any Subsidiary of such Seller to purchase any shares of the capital stock
of such Seller, (ii) prepay, purchase or redeem, or permit any Subsidiary of
such Seller to purchase, any subordinated indebtedness of such Seller, except
for payments on the Subordinated Notes in accordance with the provisions thereof
and of the Contribution Agreement and payments pursuant to the First Tier Loan
Purchase Agreement, (iii) declare or pay
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any dividends or make any other distributions on its capital stock except out of
its earnings and profits and otherwise in accordance with applicable law, or
(iv) issue or transfer any of such Seller's capital stock to any Person other
than, with respect to Centrex Two, to the Originators in accordance with the
Contribution Agreement.
(f) Incurrence of Indebtedness. In the case of such Seller, incur or
permit to exist, or permit any Subsidiary of such Seller to incur or permit to
exist, any indebtedness or liability on account of deposits or advances or for
borrowed money or for the deferred purchase price of any property or services,
except (i) indebtedness of the Originators to Oxford assumed by Centrex Two
pursuant to the Contribution Agreement, (ii) current accounts payable arising
under the Related Documents and not overdue, and (iii) other current accounts
payable arising in the ordinary course of such Seller's business.
(g) Investments, etc. In the case of such Seller, except, in the case of
Centrex Two, as contemplated in the Contribution Agreement in connection with
the Seller's receipt of contributions of Receivables and Purchased Assets from
the Originators, (i) make, incur or suffer to exist an investment in or equity
contribution to, any Person; (ii) make any loan or advance to any Person; or
(iii) create any direct or indirect Subsidiary or otherwise acquire direct or
indirect ownership of any equity interests in any other Person.
(h) Amendment of Certificate of Incorporation; Change in Seller's
Business. In the case of such Seller, amend its certificate of incorporation or
bylaws, or engage in any business other than as contemplated by the Related
Documents.
(i) Negative Pledges. Enter into or assume any agreement (other than this
Agreement and the other Related Documents) prohibiting the creation or
assumption of any Lien upon any Receivables or Purchased Assets, whether now
owned or hereafter acquired by such Seller, as contemplated by the Related
Documents, or otherwise prohibiting or restricting any transaction contemplated
hereby or by the other Related Documents.
(j) Changes to Certain Documents. Enter into any amendment or modification
of or supplement to any of the other Related Documents to which it is a party.
SECTION 9.4. Separate Existence. Each of each Seller and Oxford hereby
acknowledges that the Purchaser, the Administrator and the Relationship Bank,
are entering into the transactions contemplated by this Agreement and the other
Related Documents in reliance upon such Seller's identity as a legal entity
separate
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from Oxford, each Originator and their Affiliates. Therefore, from and after the
date hereof, each of each Seller and Oxford shall take all steps specifically
required by this Agreement or by the Purchaser or Administrator to continue such
Seller's identity as a separate legal entity and to make it apparent to third
Persons that such Seller is an entity with assets and liabilities distinct from
those of each of the other Seller, Oxford, the other Originators and any other
Person, and is not a division of the other Seller, Oxford, the other Originators
or any other Person. Without limiting the generality of the foregoing and in
addition to and consistent with the other covenants set forth herein, each of
each Seller and Oxford shall take such actions as shall be required in order
that:
(a) Each Seller will be a limited purpose corporation whose primary
activities are restricted to purchasing or otherwise acquiring from the
Originators, owning, holding, granting security interests, or selling interests,
in Receivables, entering into agreements for the selling and servicing of the
Receivables, and conducting such other activities as it deems necessary or
appropriate to carry out its primary activities;
(b) Not less than one member of each Seller's Board of Directors (the
"Independent Director") shall be an individual who is not a direct, indirect or
beneficial stockholder, officer, director, employee, affiliate, associate or
supplier of Oxford or any of its Affiliates (other than the other Seller). The
certificate of incorporation of each Seller shall provide that (i) such Seller's
Board of Directors shall not approve, or take any other action to cause the
filing of, a voluntary bankruptcy petition with respect to such Seller unless
the Independent Director shall approve the taking of such action in writing
prior to the taking of such action and (ii) such provision cannot be amended
without the prior written consent of the Independent Director;
(c) The Independent Director shall not at any time serve as a trustee in
bankruptcy for either Seller, Oxford or any Affiliate thereof;
(d) Any employee, consultant or agent of each Seller will be compensated
from such Seller's funds for services provided to such Seller. Each Seller will
not engage any agents other than its attorneys, auditors and other
professionals, and a servicer and any other agent contemplated by the Related
Documents for the Receivables, which servicer will be fully compensated for its
services by payment of the Servicing Fee;
(e) Each Seller will contract with the Servicer to perform for such Seller
all operations required on a daily basis to service the Receivables. Each Seller
will pay the Servicer the
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Servicing Fee pursuant hereto. To the extent, if any, that a Seller (or any
other Affiliate thereof) shares items of expenses not reflected in the Servicing
Fee, such as legal, auditing and other professional services and insurance, such
expenses will be allocated to the extent practical on the basis of actual use or
the value of services rendered, and otherwise on a basis reasonably related to
the actual use or the value of services rendered; it being understood, however,
that certain organizational expenses of the Sellers and certain fees and
expenses relating to the preparation, negotiation, execution and delivery of the
Related Documents may be paid by Oxford;
(f) Each Seller's operating expenses will not be paid by Oxford or any
other Affiliate thereof;
(g) Each Seller's books and records will be maintained separately from
those of Oxford and any other Affiliate thereof;
(h) All financial statements of Oxford or any Affiliate thereof that are
consolidated to include the Sellers will contain notations clearly noting (i)
the separate corporate existence of the Sellers and (ii) that the assets of the
Sellers will be available first and foremost to satisfy the claims of its
creditors;
(i) Each Seller's assets will be maintained in a manner that facilitates
their identification and segregation from those of Oxford or any Affiliate
thereof;
(j) Each Seller will strictly observe corporate and partnership
formalities in its dealings with Oxford or any Affiliate thereof, and funds or
other assets of each Seller will not be commingled with those of Oxford or any
Affiliate thereof. Each Seller shall not maintain joint bank accounts or other
depository accounts to which Oxford or any Affiliate thereof (other than Oxford
in its capacity as Servicer) has independent access. Each Seller will pay to the
appropriate affiliate the marginal increase or, in the absence of such increase,
the market amount of its portion of the premium payable with respect to any
insurance policy that covers Seller and such affiliate; and
(k) Each Seller will maintain arm's-length relationships with Oxford (and
any Affiliate thereof). Any Person that renders or otherwise furnishes services
to a Seller will be compensated by such Seller at market rates for such services
it renders or otherwise furnishes to such Seller. Except as contemplated in the
Related Documents each Seller and Oxford will not be nor will hold itself out to
be responsible for the debts of the other or the decisions or actions respecting
the daily business and affairs of the other. Oxford and each Seller will
immediately correct any known misrepresentation with respect to the
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foregoing, and they will not operate or purport to operate as an integrated
single economic unit with respect to each other or in their dealing with any
other entity.
ARTICLE X
Default
SECTION 10.1. Events of Default. Each of the following events shall
constitute an "Event of Default" hereunder:
(i) Any failure by the Servicer or either Seller to deliver to the
Custodian for distribution to the Purchasers or deposit in the Cash
Collateral Account or the Collection Account any proceeds or payment
required to be so delivered under the terms of this Agreement, or any
failure by any Seller Party to pay any Obligations when due and payable by
it hereunder or under any other Related Document, that shall continue
unremedied for a period of three Business Days after notice from the
Administrator to the Sellers and the Servicer of such failure; or any
certificate required by Section 3.9, any statement required by Section
3.10, or any report required by Section 3.11 or 3.16 shall not have been
delivered within three (3) Business Days after the date such certificates
or statements or reports, as the case may be, are required to be
delivered; or
(ii) Failure on the part of any Seller Party duly to observe or to
perform in all material respects any other covenant or agreement of such
Seller Party (as the case may be) set forth in this Agreement, which
failure shall continue unremedied for a period of 30 days after the
earlier of (A) the date on which written notice of such failure, requiring
the same to be remedied, shall have been given such Seller Party by the
Administrator, the Relationship Bank or the Purchaser, or (B) the date on
which an officer of such Seller Party has actual knowledge of such
failure; or
(iii) Failure of any representation or warranty made or deemed made
by any Seller Party in this Agreement or any Related Document (other than
any breach of a representation and warranty as to Receivables set forth in
Section 2.6 or in Section 3.2(b) of the Contribution Agreement or in
Section 3.2(b) of the First Tier Loan Purchase Agreement, as applicable,
for which the sole remedy is repurchase of such Receivable) to be true and
correct in all material respects when made or deemed made, which failure
(if in the reasonable judgment of the Administrator such failure is
capable of being cured) shall continue unremedied for a
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period of 30 days after the earlier of (x) the date on which written
notice of such failure, requiring the same to be remedied, shall have been
given such Seller Party by the Administrator, the Relationship Bank or the
Purchaser, or (y) the date on which an officer of such Seller Party has
actual knowledge of such failure; or
(iv) A default shall have occurred and be continuing (x) under any
instrument or agreement evidencing, securing or providing for the issuance
of indebtedness for borrowed money in excess of $10,000,000 of, or
guaranteed by, any Seller Party which default (A) is a default in payment
of any principal or interest on such indebtedness when due or within any
applicable grace period, or (B) such default shall have resulted in
acceleration of the maturity of such indebtedness; or (y) under any
agreement providing for the sales of Receivables by a Seller Party with an
aggregate purchase price outstanding over $10,000,000, resulting in the
early amortization of the purchasers' or investors' interest in such
Receivables, or the replacement of the Servicer as servicer thereunder;
unless, in the case of each of clauses (x) and (y) above, (1) such Seller
Party is contesting in good faith, by appropriate proceedings, that such
indebtedness is due and payable or that such acceleration or early
amortization is rightful, and (2) no final judgment adverse to such Seller
Party shall have been entered on such proceedings; or
(v) An Event of Bankruptcy shall have occurred and remain
continuing with respect to any Seller Party; or any event described in
clause (a) of the definition of Event of Bankruptcy (without giving effect
to any cure period) shall have occurred and be continuing with respect to
either Seller; or
(vi) (A) Any litigation (including, without limitation, derivative
actions), arbitration proceedings or governmental proceedings not
disclosed in writing by the Seller Parties to the Administrator and
Purchaser prior to the date of execution and delivery of this Agreement is
pending against any Seller Party or any Affiliate thereof, which, in the
reasonable opinion of the Administrator, if adversely determined, would
have a Material Adverse Effect, or (B) any material development not so
disclosed has occurred in any litigation (including, without limitation,
derivative actions), arbitration proceedings or governmental proceedings
so disclosed, which, in the reasonable opinion of the Administrator, would
have a reasonable probability of causing a Material Adverse Effect; or
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(vii) (A) Any Originator shall make any material adverse change in
its Credit Policy or (B) the Servicer shall make any material adverse
change in the Collection Policy, in each case, without the prior written
consent of the Administrator and the Relationship Bank; or
(viii) There shall exist any event or occurrence that has a Material
Adverse Effect; or
(ix) Either Seller, for any reason, shall fail to grant to the
Purchaser and to maintain in favor of the Purchaser a valid and perfected
ownership interest (or, if not an ownership interest, a valid and
perfected first priority security interest) in any material portion of the
Receivables and other Purchased Assets sold by it hereunder; or
(x) A Change in Control shall occur; or
(xi) The Internal Revenue Service shall file notice of a lien
pursuant to Section 6323 of the Internal Revenue Code with regard to any
of the assets of the Seller Parties, or the Pension Benefit Guaranty
Corporation shall file notice of a lien pursuant to Section 4068 of the
Employee Retirement Income Security Act of 1974 with regard to any of the
assets of the Seller Parties, and in either such case such lien shall
secure a liability in excess of $1,000,000 and shall not have been
released within 40 days; or
(xii) On any Determination Date after the first Subsequent Transfer
Date but prior to the Purchase Termination Date, (A) the average of the
Delinquency Rates for the three most recent Collection Periods shall
exceed 2.5%; (B) the average of the Net Loss Rates for the three most
recent Collection Periods shall exceed 3.5%; or (C) the average of the
Excess Yield Percentages for the three most recent Collection Periods
shall be less than zero; or
(xiii) On any Determination Date after the Purchase Termination Date,
(A) the average of the Delinquency Rates for the three most recent
Collection Periods shall exceed 3.0%; (B) the average of the Net Loss
Rates for the three most recent Collection Periods shall exceed 4.5%; or
(C) the average of the Excess Yield Percentages for the three most recent
Collection Periods shall be less than zero; or
(xiv) Oxford's shareholders' equity (as determined in accordance with
GAAP) shall be less than $55,000,000 at the end of any fiscal quarter and
shall remain less than $55,000,000 for more than 30 days after the end of
such fiscal quarter; or
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(xv) At the end of any fiscal quarter, Oxford's consolidated net
income, determined in accordance with GAAP, for the period of four fiscal
quarters then ending shall be less than zero; or
(xvi) On any Determination Date, (A) the Excess Yield Percentage for
the most recent Collection Period shall be less than negative 4.0%; or (B)
after giving effect to the transfers and distributions to take place on
the following Distribution Date, (x) the Purchaser's Investment minus the
amount on deposit in the Cash Collateral Account would exceed (y) 95.5% of
the Pool Balance.
SECTION 10.2. Remedies. If any Event of Default shall have occurred and be
continuing, then (a) in the case of any Event of Default described in any of
clauses (i) through (vi), (vii)(B), (x), (xii), (xiii), (xiv) or (xv) with
respect to the Servicer (each a "Servicer Default"), the Administrator on behalf
of the Purchaser, by notice given in writing to the Servicer (a copy of which
notice shall be given to the Custodian and the Standby Servicer) may terminate
all of the rights and obligations of the Servicer under this Agreement, (b) in
the case of an Event of Default other than an Event of Default described in
clause (v) of Section 10.1), the Administrator shall, at the request, or may
with the consent, of the Purchaser, by notice to the Sellers declare the
Purchase Termination Date to have occurred, (c) in the case of an Event of
Default described in clause (v) of Section 10.1, the Purchase Termination Date
shall occur automatically, and (d) in the case of any Event of Default, the
Administrator, the Purchaser and the Relationship Bank shall be entitled to
exercise all other rights and remedies provided under this Agreement and the
other Related Documents, as well as all other rights and remedies provided under
the UCC of each applicable jurisdiction and other applicable laws, which rights
shall be cumulative.
SECTION 10.3. Termination of Servicer. A Servicer terminated in accordance
with the terms hereof shall be entitled to its pro rata share of the Servicing
Fee for the number of days in the Collection Period prior to the effective date
of its termination. 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 Receivables or otherwise, shall, without further action,
pass to and be vested in (i) the Standby Servicer or (ii) such successor
Servicer as may be appointed under Section 8.2; provided, however, that the
successor Servicer shall have no liability with respect to any obligation which
was required to be performed by the predecessor Servicer prior to the date the
successor Servicer becomes the Servicer or any claim of a third party based on
any alleged action or inaction of the predecessor Servicer; and, without
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limitation, the Purchaser (or the Administrator on its behalf) is 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 Purchaser, the Administrator and the Custodian 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 or
should have been held by the predecessor Servicer for deposit, or shall
thereafter be received with respect to a Receivable and the delivery to the
successor Servicer of all files and records concerning the Receivables and a
computer tape in readable form containing all information necessary to enable
the successor Servicer to service the Receivables and the other property of the
Purchaser. All reasonable costs and expenses (including attorneys' fees)
incurred in connection with transferring the Receivable Files to the successor
Servicer and amending this Agreement to reflect such succession as Servicer
pursuant to this Section 10.1 shall be paid by the predecessor Servicer upon
presentation of reasonable documentation of such costs and expenses. In
addition, any successor Servicer shall be entitled to payment from the immediate
predecessor Servicer for reasonable transition expenses incurred in connection
with acting as successor Servicer, and to the extent not so paid, such payment
shall be made pursuant to Section 4.6 hereof. The predecessor Servicer shall
grant the Custodian, the Standby Servicer, the Purchaser and the Administrator
reasonable access to the predecessor Servicer's premises at the predecessor
Servicer's expense. The Standby Servicer or successor Servicer shall direct the
Obligors to make all payments under the Receivables directly to the Servicer at
the predecessor Servicer's expense (in which event the successor Servicer shall
process such payments directly).
SECTION 10.4. Appointment of Successor Servicer. (a) Upon the Servicer's
receipt of notice of termination pursuant to Section 10.2(a), 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 later of
(x) the date 45 days from the delivery to the Administrator and the Custodian of
written notice of such resignation (or written confirmation of such notice) in
accordance with the terms of this
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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 termination of the Servicer,
BONY, as Standby Servicer, shall assume the obligations of Servicer hereunder on
the date specified in such written notice (the "Assumption Date") pursuant to
the Servicing Assumption Agreement or, in the event that the Administrator shall
have determined that a Person other than the Standby Servicer shall be the
successor Servicer, on the date of the execution of a written assumption
agreement by such Person to serve as successor Servicer. Notwithstanding the
Standby Servicer's assumption of, and its agreement to perform and observe, all
duties, responsibilities and obligations of Oxford as Servicer under this
Agreement arising on and after the Assumption Date, the Standby Servicer shall
not be deemed to have assumed or to become liable for, or otherwise have any
liability for, any duties, responsibilities, obligations or liabilities of
Oxford or any predecessor Servicer arising on or before the Assumption Date,
whether provided for by the terms of this Agreement, arising by operation of law
or otherwise, including, without limitation, any liability for, any duties,
responsibilities, obligations or liabilities of Oxford or any predecessor
Servicer arising on or before the Assumption Date under Sections 3.7, 4.4 or 8.2
of this Agreement.
(b) Upon appointment, the 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 of the rights granted to the predecessor Servicer, by the terms and
provisions of this Agreement.
(c) The Administrator may exercise at any time its right to appoint as
Standby Servicer or as successor Servicer a Person other than the Person serving
as Standby Servicer at the time, and shall have no liability to the Custodian,
Oxford, the Sellers, the Person then serving as Standby Servicer, or any other
Person if it does so. Subject to Section 8.5, no provision of this Agreement
shall be construed as relieving the Standby Servicer of its obligation to
succeed as successor Servicer upon the termination of the Servicer pursuant to
Section 10.1 or resignation of the Servicer pursuant to Section 8.5. If upon any
such resignation or termination, the Administrator appoints a successor Servicer
other than the Standby Servicer, the Standby Servicer shall be relieved of its
duties as Standby Servicer hereunder.
SECTION 10.5. Repayment of Advances. If Oxford shall no longer be the
Servicer, Oxford shall be entitled to receive
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reimbursement for Outstanding Advances pursuant to Sections 4.3 and 4.4 with
respect to all Advances made by it.
SECTION 10.6. Action Upon Certain Failures of the Servicer. In the event
that the Custodian shall have knowledge of any Servicer Default or event which,
with notice or lapse of time or both, would, unless cured or waived, become a
Servicer Default, the Custodian shall give notice thereof to the Servicer and
the Administrator. For all purposes of this Agreement, in the absence of actual
knowledge by a Custodian Officer, the Custodian shall not be deemed to have
knowledge of any such Servicer Default or other event unless notified thereof in
writing by the Servicer, the Administrator, the Relationship Bank or the
Purchaser. The Custodian shall be under no duty or obligation to investigate or
inquire as to any potential Servicer Default.
SECTION 10.7. Waiver of Past Defaults. The Administrator may, subject to
any contrary direction by the Purchaser but otherwise in its sole discretion,
waive any Default or Event of Default hereunder and its consequences. Upon any
such waiver of a past default, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereon except to the extent
expressly waived.
ARTICLE XI
The Custodian
SECTION 11.1. Duties of Custodian. The Custodian shall undertake to
perform such duties and only such duties as are specifically set forth in this
Agreement. The Custodian is specifically authorized to (i) establish and
maintain one or more bank accounts in a financial institution for the deposit of
payments, (ii) designate persons authorized to sign with respect to such
accounts, (iii) negotiate and deposit into such accounts checks made payable to
the Originators, and (iv) act as Receivable Bailee on and after any transfer of
duties of Receivable Bailee to the Custodian pursuant to Section 2.9(c).
The Custodian, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Custodian that shall be specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement. All the provisions of this
Article XI with regard to the Custodian shall apply equally to the Custodian in
its capacity as the Receivable Bailee.
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Upon and after the transfer of duties of the Receivable Bailee to the
Custodian pursuant to Section 2.9(c), the Custodian shall take and maintain
custody of the Receivable Files (except as otherwise provided herein) and the
Schedule of Receivables included as an exhibit to each Originator Assignment and
Seller Assignment and Warehouse Funding Notice and shall retain copies of all
Servicer's Certificates prepared hereunder.
No provision of this Agreement shall be construed to relieve the Custodian
from liability for its own negligent action, its own negligent failure to act,
or its own bad faith; provided, however, that:
(i) The duties and obligations of the Custodian shall be determined
solely by the express provisions of this Agreement, the Custodian shall
not be liable except for the performance of such duties and obligations as
shall be specifically set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the Custodian and,
in the absence of bad faith on the part of the Custodian, the Custodian
may conclusively rely on the truth of the statements and the correctness
of the opinions expressed in any certificates or opinions furnished to the
Custodian and conforming to the requirements of this Agreement;
(ii) The Custodian shall not be liable for an error of judgment made
in good faith by a Custodian Officer, unless it shall be proved that the
Custodian shall have been negligent in ascertaining the pertinent facts;
(iii) The Custodian shall not be liable with respect to any action
taken, suffered, or omitted to be taken in good faith in accordance with
this Agreement or at the direction of the Administrator, the Relationship
Bank or the Purchaser in performing any of its duties under this
Agreement;
(iv) The Custodian shall not be charged with knowledge of any Event
of Default, unless a Custodian Officer assigned to the Custodian's Office
receives written notice of such Event of Default from the Servicer, either
Seller, any Originator, the Administrator, the Relationship Bank or the
Purchaser (which notice shall constitute actual knowledge of an Event of
Default by the Custodian); and
(v) The Custodian shall not be liable for any action taken,
suffered or omitted by it in good faith and reasonably believed by it to
be authorized or within the rights or duties conferred upon it by this
Agreement.
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The Custodian shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder if there shall be reasonable grounds for believing that the repayment
of such funds or adequate indemnity against such risk or liability shall not be
reasonably assured to it, and none of the provisions contained in this Agreement
shall in any event require the Custodian to perform, or be responsible for the
manner of performance of, any of the obligations of any of the Seller Parties
under this Agreement or any other Related Documents except during such time, if
any, as the Custodian shall be the successor to, and be vested with the rights,
duties, powers, and privileges of, the Servicer in accordance with the terms of
this Agreement, and then only to the extent of such rights, duties, powers and
privileges of the Servicer.
Except for actions expressly authorized by this Agreement, the Custodian
shall take no action reasonably likely to impair the security interests created
or existing under any Receivable or Financed Vehicle or to impair the value of
any Receivable or Financed Vehicle.
All information obtained by the Custodian regarding the Obligors and the
Receivables, whether upon the exercise of its rights under this Agreement or
otherwise, shall be maintained by the Custodian in confidence and shall not be
disclosed to any other Person, unless such disclosure is required by this
Agreement or any applicable law or regulation.
SECTION 11.2. [Reserved].
SECTION 11.3. Certain Matters Affecting Custodian. Except as otherwise
provided in Section 11.1:
(i) The Custodian may rely and shall be protected in acting or
refraining from acting upon any resolution, Officer's Certificate,
Servicer's Certificate, Data Report, certificate of auditors, or any other
certificate, statement, instrument, opinion, report, notice, request,
consent, order, appraisal, bond, or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party or
parties.
(ii) The Custodian may consult with counsel and any Opinion of
Counsel shall be full and complete authorization and protection in respect
of any action taken or suffered or omitted by it under this Agreement in
good faith and in accordance with such Opinion of Counsel.
(iii) The Custodian shall be under no obligation to exercise any of
the rights or powers vested in it by this
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Agreement, or to institute, conduct, or defend any litigation under this
Agreement or in relation to this Agreement, at the request, order or
direction of the Purchaser, the Relationship Bank or the Administrator
pursuant to the provisions of this Agreement, unless the Purchaser, the
Relationship Bank or the Administrator shall have offered to the Custodian
reasonable security or indemnity against the costs, expenses, and
liabilities that may be incurred therein or thereby.
(iv) The Custodian shall not be bound to make any investigation into
the facts of matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
bond, or other paper or document (other than for its duties pursuant to
Section 2.9), unless requested in writing to do so by the Administrator,
the Relationship Bank or the Purchaser; provided, however, that if the
payment within a reasonable time to the Custodian of the costs, expenses,
or liabilities likely to be incurred by it in the making of such
investigation shall be, in the opinion of the Custodian, not reasonably
assured to the Custodian by the security afforded to it by the terms of
this Agreement, the Custodian may require reasonable indemnity against
such cost, expense, or liability as a condition to so proceeding. The
reasonable expense of every such examination shall be paid by the Person
making such request or, if paid by the Custodian, shall be reimbursed by
the Person making such request upon demand. Nothing in this clause (iv)
shall affect the obligation of the Servicer to observe any applicable law
prohibiting disclosure of information regarding the Obligors.
(v) The Custodian may perform any duties under this Agreement
either directly or by or through agents or attorneys or a sub-custodian.
The Custodian shall not be responsible for any misconduct or negligence of
any such agent or sub-custodian appointed with due care by it hereunder or
of the Servicer in its capacity as Servicer or Receivable Bailee.
(vi) Except as may be required by Sections 2.9 and 11.1, subsequent
to the sale of the Receivables by either Seller to the Custodian, the
Custodian shall have no duty of independent inquiry and the Custodian may
rely upon the representations and warranties and covenants of the Sellers
and the Servicer contained in this Agreement with respect to the
Receivables and the Receivable Files.
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(vii) The Custodian may rely, as to factual matters relating to each
Seller or the Servicer, on an Officer's Certificate of such Seller or
Servicer, respectively.
(viii) The Custodian shall not be required to take any action or
refrain from taking any action under this Agreement or any Related
Documents, nor shall any provision of this Agreement or any Related
Document be deemed to impose a duty on the Custodian to take action, if
the Custodian shall have been advised by counsel in an Opinion of Counsel
that such action is contrary to (i) the terms of this Agreement, (ii) any
such Related Document or (iii) law.
SECTION 11.4. Custodian Not Liable for Agreement or Receivables. The
recitals contained herein shall be taken as the statements of each Seller or the
Servicer, as the case may be, and the Custodian assumes no responsibility for
the correctness thereof. The Custodian shall make no representations as to the
validity or sufficiency of this Agreement or of any Receivable or related
document. The Custodian shall at no time have any responsibility or liability
for or with respect to the legality, validity, and enforceability of any
security interest in any Financed Vehicle or any Receivable, or the perfection
and priority of such a security interest or the maintenance of any such
perfection and priority, or for or with respect to the efficacy of the Purchaser
or its ability to generate the payments to be distributed to the Purchaser under
this Agreement, including, without limitation: the existence, condition,
location, and ownership of any Financed Vehicle; the existence and
enforceability of any physical damage insurance thereon; except as required by
Section 2.9, the existence, contents and completeness of any Receivable or any
Receivable File or any computer or other record thereof; the validity of the
assignment of any Receivable to the Purchaser or of any intervening assignment;
except as required by Section 2.9, the performance or enforcement of any
Receivable; the compliance by either Seller or the Servicer with any warranty or
representation made under this Agreement or in any related document and the
accuracy of any such warranty or representation prior to the Custodian's receipt
of notice or other discovery of any noncompliance therewith or any breach
thereof; any investment of monies by or at the direction of the Servicer or the
Administrator or any loss resulting therefrom (it being understood that the
Custodian shall remain responsible for any Purchased Assets that it may hold);
the acts or omissions of either Seller, the Servicer, or any Obligor; any action
of the Servicer taken in the name of the Custodian; or any action by the
Custodian taken at the instruction of the Servicer; provided, however, that the
foregoing shall not relieve the Custodian of its obligation to perform its
duties under this Agreement. Except with respect to a claim based on the failure
of the Custodian to perform its duties under this Agreement or
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based on the Custodian's negligence or willful misconduct, no recourse shall be
had for any claim based on any provision of this Agreement, or any Receivable or
assignment thereof against the Custodian in its individual capacity, the
Custodian shall not have any personal obligation, liability, or duty whatsoever
to the Purchaser or any other Person with respect to any such claim, and any
such claim shall be asserted solely against any Seller or the Servicer or any
indemnitor who shall furnish indemnity as provided in this Agreement. The
Custodian shall not be accountable for the use or application by the Sellers or
the Servicer of any funds paid to the Sellers or the Servicer in respect of the
Receivables.
SECTION 11.5. Other Transactions. The Custodian in its individual or any
other capacity may deal with the Sellers and the Servicer in banking
transactions and other financial transactions with the same rights as it would
have if it were not Custodian.
SECTION 11.6. Indemnity of Custodian. The Servicer shall indemnify the
Custodian for, and hold it harmless against, any loss, liability, or expense
incurred without willful misfeasance, negligence, or bad faith on its part,
arising out of or resulting from the performance by the Custodian of its duties
hereunder, including the costs and expenses of defending itself against any
claim or liability in connection with the performance of any of its duties under
this Agreement. Additionally each Seller, pursuant to Section 7.2, shall
indemnify the Custodian with respect to certain matters, the Servicer, pursuant
to Section 8.2, shall indemnify the Custodian with respect to certain matters,
and the Purchaser, pursuant to Section 11.4 shall, upon the circumstances
therein set forth, indemnify the Custodian under certain circumstances. The
provisions of this Section 11.6 shall survive the termination of this Agreement.
SECTION 11.7. Eligibility Requirements for Custodian. The Custodian under
this Agreement shall at all times be organized and doing business under the laws
of the United States of America any State thereof or the District of Columbia;
authorized under such laws to exercise corporate trust powers; having a combined
capital and surplus of at least $50,000,000 and subject to supervision or
examination by Federal or State authorities; and having a rating, both with
respect to long-term and short-term unsecured obligations, of not less than
investment grade by the Rating Agencies. If such corporation shall publish
reports of condition at least annually, pursuant to law or to the requirements
of the aforesaid supervising or examining authority, then for the purpose of
this Section 11.7, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. In case at any time the
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Custodian shall cease to be eligible in accordance with the provisions of this
Section 11.7, the Custodian shall resign immediately in the manner and with the
effect specified in Section 11.8.
SECTION 11.8. Resignation or Removal of Custodian. The Custodian may at
any time resign and be discharged from the trusts hereby created by giving 30
days' prior written notice thereof to the Servicer. Upon receiving such notice
of resignation, with the prior written consent of the Administrator, the
Servicer shall promptly appoint a successor Custodian by written instrument, in
duplicate, one copy of which instrument shall be delivered to the resigning
Custodian and one copy to the successor Custodian. If no successor Custodian
shall have been so appointed and have accepted appointment within 30 days after
the giving of such notice of resignation, the resigning Custodian may petition
any court of competent jurisdiction for the appointment of a successor
Custodian.
If at any time the Custodian shall cease to be eligible in accordance with
the provisions of Section 11.7 and shall fail to resign after written request
therefor by the Servicer, or if at any time the Custodian shall be legally
unable to act, or shall be adjudged bankrupt or insolvent, or a receiver,
conservator or liquidator of the Custodian or of its property shall be
appointed, or any public officer shall take charge or control of the Custodian
or of its property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Administrator or the Servicer, with the consent of the
Administrator, may remove the Custodian. If the Administrator or the Servicer
shall remove the Custodian under the authority of the immediately preceding
sentence, the Servicer shall promptly appoint a successor Custodian by written
instrument, in duplicate, one copy of which instrument shall be delivered to the
Custodian so removed and one copy to the successor Custodian, and pay all fees
owed to the outgoing Custodian.
Any resignation or removal of the Custodian and appointment of a successor
Custodian pursuant to any of the provisions of this Section 11.8 shall not
become effective until acceptance of appointment by the successor Custodian
pursuant to Section 11.9 and payment of all fees and expenses owed to the
outgoing Custodian.
SECTION 11.9. Successor Custodian. Any successor Custodian appointed
pursuant to Section 11.8 shall execute, acknowledge, and deliver to the
Servicer, the Administrator and to its predecessor Custodian an instrument
accepting such appointment under this Agreement, and thereupon the resignation
or removal of the predecessor Custodian shall become effective and such
successor Custodian, without any further act, deed or conveyance,
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shall become fully vested with all the rights, duties, and obligations of its
predecessor under this Agreement, with like effect as if originally named as
Custodian. The predecessor Custodian shall upon payment of its fees and expenses
deliver to the successor Custodian all documents and statements and monies held
by it under this Agreement; and the Servicer and the predecessor Custodian shall
execute and deliver such instruments and do such other things as may reasonably
be required for fully and certainly vesting and confirming in the successor
Custodian all such rights, duties, and obligations.
No successor Custodian shall accept appointment as provided in this
Section 11.9 unless at the time of such acceptance such successor Custodian
shall be eligible pursuant to Section 11.7.
SECTION 11.10. Merger or Consolidation of Custodian. Any corporation into
which the Custodian may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Custodian shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Custodian, shall be the successor of the Custodian hereunder, provided such
corporation shall be eligible pursuant to Section 11.8, without the execution or
filing of any instrument or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding; provided further that
the Custodian shall mail notice of such merger or consolidation to the Rating
Agencies.
SECTION 11.11. Co-Custodian. Notwithstanding any other provisions of this
Agreement, at any time, for the purpose of meeting any legal requirements of any
jurisdiction in which any part of the Purchased Assets or any Financed Vehicle
may at the time be located, the Servicer, the Administrator and the Custodian
acting jointly shall execute and deliver all instruments to appoint one or more
persons approved by the Custodian to act as co-custodian, jointly with the
Custodian, or separate custodian, with respect to all or any part of the
Purchased Assets, and to vest in such Person, in such capacity and for the
benefit of the Purchaser and the Administrator, such rights, duties and
obligations, as the Servicer, the Administrator and the Custodian may consider
necessary or desirable. If the Servicer and the Administrator shall not have
joined in such appointment within 15 days after the receipt by it of a request
so to do, or in the case an Event of Default shall have occurred and be
continuing, the Custodian alone shall have the power to make such appointment.
No co-custodian or separate custodian under this Agreement shall be required to
meet the terms of eligibility as a successor trustee pursuant to Section 11.8,
except as to the rating requirements set forth therein.
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Each separate custodian and co-custodian shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) All rights, duties and obligations conferred or imposed upon
the Custodian shall be conferred upon and exercised or performed by the
Custodian and such separate custodian or co-custodian jointly (it being
understood that such separate custodian or co-custodian is not authorized
to act separately without the Custodian 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 (whether as Custodian under this Agreement
or as successor to the Servicer under this Agreement), the Custodian shall
be incompetent or unqualified to perform such act or acts, in which event
such rights, duties, and obligations shall be exercised and performed
singly by such separate custodian or co-custodian, but solely at the
direction of the Custodian;
(ii) No custodian under this Agreement shall be personally liable by
reason of any act or omission of any other custodian under this Agreement;
and
(iii) The Administrator and the Custodian acting jointly may, at any
time accept the resignation of or remove any separate custodian or
co-custodian.
Any notice, request or other writing given to the Custodian shall be
deemed to have been given to each of the other then separate custodians and
co-custodian, as effectively as if given to each of them. Every instrument
appointing any separate custodian or co-custodian shall refer to this Agreement
and the conditions of this Article XI. Each separate custodian and co-custodian,
upon its acceptance of the rights, duties and obligations specified in its
instrument of appointment, shall be vested with such rights, duties and
obligations, either jointly with the Custodian or separately, as may be provided
therein, subject to all the provisions of this Agreement, specifically including
every provision of this Agreement relating to the conduct of, affecting the
liability of, or affording protection to, the Custodian. Each such instrument
shall be filed with the Custodian and a copy thereof given to the Servicer.
Any separate custodian or co-custodian may at any time appoint the
Custodian 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 custodian or
co-custodian shall die, become incapable of acting, resign or be removed, all of
its rights, and duties shall vest in and be
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exercised by the Custodian, to the extent permitted by law, without the
appointment of a new or successor custodian.
SECTION 11.12. Representations and Warranties of Custodian. The Custodian
makes the following representations and warranties on which each Seller, the
Administrator and Purchaser shall rely:
(i) The Custodian is a banking corporation duly organized, validly
existing and in good standing under the laws of its place of
incorporation.
(ii) The Custodian has full corporate power, authority and legal
right to execute, deliver and perform this Agreement and has taken all
necessary action to authorize the execution, delivery and performance by
it of this Agreement.
(iii) This Agreement has been duly executed and delivered by the
Custodian and constitutes a legal, valid and binding obligation of the
Custodian in accordance with its terms.
SECTION 11.13. No Bankruptcy Petition. BONY covenants and agrees that
prior to the date which is one year and one day after the payment in full of all
securities issued by a Seller or by a trust for which such Seller was the
depositor it will not institute against, or join any other Person in instituting
against, such Seller or such trust any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or other proceedings under any Federal or
State bankruptcy or similar law.
ARTICLE XII
The Administrator; Relationship Bank
SECTION 12.1. Authorization and Action. Pursuant to separate agreements
with the Administrator and the Relationship Bank, Purchaser has appointed and
authorized the Administrator and the Relationship Bank (or their respective
designees) to take such actions as agent on its behalf and to exercise such
powers under this Agreement as are delegated to the Administrator or the
Relationship Bank by the terms hereof, together with such powers as are
reasonably incidental thereto.
SECTION 12.2. Administrator's and Relationship Bank's Reliance, Etc. The
Administrator, the Relationship Bank and their directors, officers, agents or
employees shall not be liable for any action taken or omitted to be taken by it
or them under or in connection with the Related Documents (including,
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without limitation, the servicing, administering or collecting Receivables as
Servicer pursuant to Section 8.1), except for its or their own gross negligence
or willful misconduct. Without limiting the generality of the foregoing, each of
the Administrator and the Relationship Bank: (a) may consult with legal counsel
(including counsel for Sellers), independent certified public accountants and
other experts selected by it and shall not be liable for any action taken or
omitted to be taken in good faith by it in accordance with the advice of such
counsel, accountants or experts; (b) makes no warranty or representation to
Purchaser or any other holder of any interest in Receivables and shall not be
responsible to Purchaser or any such other holder for any statements, warranties
or representations made by any Seller Party in or in connection with any Related
Document; (c) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of any
Related Document on the part of any Seller Party or to inspect the property
(including the books and records) of any Seller Party; (d) shall not be
responsible to Purchaser or any other holder of any interest in Receivables for
the due execution, legality, validity, enforceability, genuineness, sufficiency
or value of any Related Document; and (e) shall incur no liability under or in
respect of this Agreement by acting upon any notice (including notice by
telephone), consent, certificate or other instrument or writing (which may be by
facsimile or telex) believed by it to be genuine and signed or sent by the
proper party or parties.
SECTION 12.3. State Street Capital and State Street Bank and Affiliates.
State Street Capital and State Street Bank and any of their respective
Affiliates may generally engage in any kind of business with any Seller Party or
any Obligor, any of their respective Affiliates and any Person who may do
business with or own securities of any Seller Party or any Obligor or any of
their respective Affiliates, all as if State Street Capital and State Street
Bank were not the Administrator and the Relationship Bank, respectively, and
without any duty to account therefor to Purchaser or any other holder of an
interest in Receivables.
ARTICLE XIII
Assignment Of Purchaser's Interest
SECTION 13.1. Restrictions on Assignments.
(a) Each of each Seller, the Servicer (except as otherwise provided in
this Agreement) and State Street Bank, individually or as the Relationship Bank,
may not assign its rights, or delegate its duties hereunder or any interest
herein without the
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prior written consent of the Administrator. The Purchaser may not assign its
rights hereunder or the Purchased Assets (or any portion thereof) to any Person
without the prior written consent of each Seller, which consent shall not be
unreasonably withheld; provided, however, that
(i) The Purchaser may assign all of its rights and interests in the
Related Documents, together with all its interest in the Purchased Assets,
to State Street Capital or State Street Bank, or both, or any Affiliate of
either of them, or to any "bankruptcy remote" special purpose entity the
business of which is administered by State Street Capital or any Affiliate
of State Street Capital (which assignee shall then be subject to this
Article XIII); and
(ii) The Purchaser may assign and grant a security interest in all
of its rights in the Related Documents, together with all of its rights
and interest in the Purchased Assets, to the Program Collateral Agent, to
secure Purchaser's obligations under or in connection with the Commercial
Paper Notes, the Liquidity Agreement, the Credit Agreement and any letter
of credit issued thereunder, and certain other obligations of the
Purchaser incurred in connection with the funding of the Purchases
hereunder, which assignment and grant of a security interest (and any
subsequent assignment by the Program Collateral Agent) shall not be
considered an "assignment" for purposes of this Section 13.1 or, prior to
the enforcement of such security interest, for purposes of any other
provision of this Agreement.
(b) Each Seller agrees to advise the Administrator within five Business
Days after notice to such Seller of any proposed assignment by the Purchaser of
the Purchased Assets (or any portion thereof), not otherwise permitted under
subsection (a), of such Seller's consent or non-consent to such assignment, and
if it does not consent, the reasons therefor. If such Seller does not consent to
such assignment, Purchaser may immediately assign such Purchased Assets (or any
portion thereof) to State Street Capital, State Street Bank or any Affiliate of
State Street Capital or State Street Bank. All of the aforementioned assignments
shall be upon such terms and conditions as the Purchaser and the assignee may
mutually agree.
SECTION 13.2. Rights of Assignee. Upon any assignment by the Purchaser in
accordance with this Article XIII, the assignee receiving such assignment shall
have all of the rights of the Purchaser with respect to the Related Documents
and the Purchased Assets (or such portion thereof as has been assigned).
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SECTION 13.3. Evidence of Assignment. Any assignment of the Purchased
Assets (or any portion thereof) to any Person may be evidenced by such
instrument(s) or document(s) as may be satisfactory to the Purchaser, the
Administrator and the assignee.
SECTION 13.4. Rights of Program Collateral Agent. Each Seller hereby
agrees that, upon notice to such Seller, the Program Collateral Agent may
exercise all the rights of the Purchaser and the Administrator hereunder, with
respect to the Purchased Assets (or any portions thereof), and collections with
respect thereto, which are owned by the Purchaser, and all other rights and
interests of the Purchaser in, to or under this Agreement or any other Related
Document.
ARTICLE XIV
Termination
SECTION 14.1. Termination. The respective obligations and responsibilities
of each Seller, the Servicer, and the Custodian created hereby shall terminate
upon the payment to the Purchaser of all amounts required to be paid to it
pursuant to this Agreement (including all amounts required to reduce the
Purchaser's Investment to zero), payment in full of all Obligations, and the
expiration of the longest of any preference period related to any of the
foregoing. The Servicer shall promptly notify the Custodian and the
Administrator of any prospective termination pursuant to this Section 14.1.
SECTION 14.2. Optional Purchase of Receivables. On the last day of any
Collection Period as of which the Loan Tranche Balance of any Loan Tranche other
than the Warehouse Loan Tranche shall be less than or equal to 10% multiplied by
the Principal Balance included in such Loan Tranche as of the relevant Cut-Off
Date with respect thereto, the applicable Seller shall have the option to
purchase from the Purchaser, without recourse (except for a representation and
warranty by the Purchaser that upon such transfer such Receivables are free of
any Lien created by the Purchaser) the remaining Receivables in such Loan
Tranche, for a purchase price equal to the sum of the Purchaser's Tranche
Investment of such Loan Tranche, accrued and unpaid Earned Discount with respect
thereto, and all Obligations, if any, attributable or allocable to such Loan
Tranche as reasonably determined by the Administrator; provided, however, that
such Seller may not effect any such purchase unless the Purchaser, the
Relationship Bank and the Administrator shall have received an Opinion of
Counsel to the effect that such purchase would not constitute a fraudulent
conveyance. To exercise such option such Seller shall deposit pursuant to
Section 4.5 in the Collection
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Account an amount equal to the purchase price described above on the Business
Day next preceding the Distribution Date following such Collection Period.
ARTICLE XV
Miscellaneous Provisions
SECTION 15.1. Amendment, Etc. No amendment or waiver of any provision of
this Agreement nor consent to any departure by either Seller therefrom shall in
any event be effective unless the same shall be in writing and signed by (a) all
the parties hereto (with respect to any amendment), or (b) the party or parties
granting any waiver or consent or each Seller (with respect to a waiver or
consent by it), as the case may be, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given. The parties acknowledge that, before entering into such an amendment or
granting such a waiver or consent, the Purchaser may also be required to obtain
the approval of some or all of the Liquidity Banks or the Credit Bank or to
obtain confirmation from certain Rating Agencies that such amendment, waiver or
consent will not result in a withdrawal or reduction of the ratings of the
Commercial Paper Notes.
SECTION 15.2. Protection of Title to Purchased Assets. (a) The Sellers
and/or the Servicer 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 Purchaser and the Custodian in the Receivables and in the
proceeds thereof. The Sellers and/or the Servicer shall deliver (or cause to be
delivered) to the Administrator file-stamped copies of, or filing receipts for,
any document filed as provided above, as soon as available following such
filing. Each Seller shall cooperate fully with the Purchaser and the
Administrator in connection with the obligations set forth above and will
execute any and all documents reasonably required to fulfill the intent of this
Section 15.2.
(b) Each of each Seller and Servicer shall not change its name, identity,
or corporate structure unless it shall give the Administrator at least thirty
(30) days prior written notice of such change and shall promptly file
appropriate amendments to all previously filed financing statements or
continuation statements and take such actions as the Administrator may
reasonably require to maintain the perfection of the Purchaser's interests in
the Receivables and the other Purchased Assets.
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(c) Each of each Seller and Servicer shall not change the address of its
chief executive office unless it shall give the Administrator at least thirty
(30) days prior written notice thereof, and 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 or similar instrument, or the taking of any other action to
maintain the perfection of the Purchaser's interests in the Receivables and the
other Purchased Assets, then such Seller or Servicer, as applicable, shall,
before the effectiveness of such change, file any such amendment or new
financing statement or take such other action.
(d) The Servicer shall 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 to the Purchaser,
the Servicer's master computer records (including any back-up archives) that
refer to a Receivable shall indicate clearly the interest of Clipper Receivables
Corporation in such Receivable and that such Receivable is owned by the
Purchaser. Indication of the Purchaser's ownership of a Receivable shall be
deleted from or modified on the Servicer's computer systems when, and only when,
such Receivable shall have been paid in full or repurchased.
(f) If at any time either Seller or the Servicer shall propose to sell,
grant a security interest in, or otherwise transfer any interest in automobile
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 back-up
archives) that, if they shall refer in any manner whatsoever to any Receivable,
shall indicate clearly that such Receivable has been sold to and is owned by the
Custodian.
(g) The Servicer shall permit the Custodian and the Administrator and its
agents at their sole cost and expense, and 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 the Servicer shall furnish to the Custodian or to the
Administrator, within five Business Days, a
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list of all Receivables (by contract number and name of Obligor) then held as
part of the Purchaser, 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 Purchaser.
(i) The Servicer shall deliver to the Custodian and the Administrator,
annually after the execution and delivery of this Agreement, 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 Purchaser 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 (A) or (B) 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.
SECTION 15.3. Execution in Counterparts. For the purpose of facilitating
the execution of this Agreement and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and all of which counterparts
shall constitute but one and the same instrument.
SECTION 15.4. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS,
AND REMEDIES OF THE PARTIES UNDER THIS AGREEMENT SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
SECTION 15.5. Notices. All notices and other communications provided for
hereunder shall, unless otherwise stated herein, be in writing (including
facsimile communication) and shall be personally delivered or sent by express
mail or courier or by certified mail, postage prepaid, or by facsimile, to the
intended party at the address or facsimile number of such party set forth under
its name on the signature pages hereof or at such other address or facsimile
number as shall be designated by such party in a written notice to the other
parties hereto. All such notices and communications shall be effective, (a) if
personally delivered or sent by express mail or courier or if sent by certified
mail, when received, and (b) if transmitted by facsimile, when sent, receipt
confirmed by telephone or electronic means.
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SECTION 15.6. Severability of Provisions. If any one or more of the
covenants, agreements, provisions, or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions, or
terms shall be deemed severable from the remaining covenants, agreements,
provisions, or terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement.
SECTION 15.7. Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Sections 8.3 and 9.3 and as provided in
the provisions of this Agreement concerning the resignation of the Servicer,
this Agreement may not be assigned by either Seller or the Servicer without the
prior written consent of the Administrator, the Custodian and the Purchaser.
SECTION 15.8. Nonpetition Covenants. (a) Each of each Seller, Servicer,
Oxford and BONY shall not petition or otherwise invoke the process of any court
or government authority for the purpose of commencing or sustaining a case
against the Purchaser 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 Purchaser or any substantial part
of its property, or ordering the winding up or liquidation of the affairs of the
Purchaser, for at least one year and one day after the latest commercial paper
note issued by the Purchaser is paid.
(b) Oxford shall not, nor shall it cause or permit either Seller to,
petition or otherwise invoke the process of commencing or sustaining a case
against such Seller under any Federal or State bankruptcy, insolvency or similar
law or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of such Seller or any substantial part of
its property, or ordering the winding up or liquidation of the affairs of such
Seller, for at least one year and one day after the Final Payout Date.
SECTION 15.9. Third Party Beneficiaries. Except as otherwise specifically
provided herein with respect to Indemnified Parties and Affected Parties, the
parties to this Agreement hereby manifest their intent that no third party shall
be deemed a third party beneficiary of this Agreement, and specifically that the
Obligors are not third party beneficiaries of this Agreement.
SECTION 15.10. Agent for Service. Each Seller hereby designates CT
Corporation System, 1633 Broadway, New York, New York 10019 ((212)-644-1666) as
agent for service of process in all matters pertaining to such Seller in New
York.
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<PAGE>
SECTION 15.11. Seller Obligations Joint and Several; Agreement Binding on
Either Seller Individually. (a) Notwithstanding anything to the contrary herein
or in any other Related Document, all obligations of the Sellers hereunder shall
be a joint and several; provided, that any amount paid by one Seller on behalf
of the other Seller shall be repaid after all other amounts from time to time
owing under this Agreement and the Related Documents have been paid in full.
(b) Subject to applicable provisions herein (including, without limitation
Article X), if either the Contribution Agreement or the First Tier Loan Purchase
Agreement shall cease to exist, expire, or otherwise terminate, or if either
Seller shall cease to exist, expire or otherwise terminate its existence, this
Agreement shall continue to be in full force and effect and shall apply to such
other agreement and/or other Seller, as the case may be, and all other parties
hereto until such time as this Agreement terminates pursuant to its terms.
SECTION 15.12. Confidentiality of Seller Information.
(a) Confidential Seller Information. Each party hereto (other than the
Sellers) acknowledges that certain of the information provided to such party by
or on behalf of the Seller Parties in connection with this Agreement and the
transactions contemplated hereby is or may be confidential, and each such party
severally agrees that, unless the Sellers and the Servicer shall otherwise agree
in writing, and except as provided in subsection (b), such party will not
disclose to any other person or entity:
(i) any information regarding, or copies of, any non-public
financial statements, reports and other information furnished by any
Seller Party to the Purchaser, the Administrator, the Custodian or the
Relationship Bank pursuant hereto, or
(ii) any other information regarding any Seller Party which is
designated by either Seller or the Servicer to such party in writing or
otherwise as confidential
(the information referred to in clauses (i) and (ii) above, whether furnished by
any Seller Party or any attorney for or other representative of such Seller
Party, is collectively referred to as the "Seller Information"; provided,
however, "Seller Information" shall not include any information which is or
becomes generally available to the general public or to such party on a
nonconfidential basis from a source other than any Seller Party or its
representative, or which was known to such party on a nonconfidential basis
prior to its disclosure by any Seller Party or its representative.
-121-
<PAGE>
(b) Disclosure. Notwithstanding subsection (a), each party may disclose
any Seller Information:
(i) to any of such party's independent attorneys, consultants and
auditors, and to each Liquidity Bank, the Credit Bank, any dealer or
placement agent for the Purchaser's commercial paper, and any actual or
potential assignees of, or participants in, any of the rights or
obligations of the Purchaser, any Liquidity Bank, the Credit Bank, the
Administrator or the Relationship Bank under or in connection with this
Agreement, who (A) in the good faith belief of such party, have a need to
know such Seller Information, (B) are informed by such party of the
confidential nature of the Seller Information and the terms of this
Section 15.12, and (C) are subject to confidentiality restrictions
generally consistent with this Section 15.12,
(ii) to any rating agency that maintains a rating for the
Purchaser's commercial paper or is considering the issuance of such a
rating, for the purposes of reviewing the credit of the Purchaser in
connection with such rating,
(iii) to any other party to this Agreement, for the purposes
contemplated hereby,
(iv) in the case of information regarding the nature of this
Agreement and the Related Documents, the basic terms hereof and thereof
(including without limitation the amount and nature of the Purchaser's
commitment and Purchaser's Investment with respect to the Purchased Assets
and of the credit enhancement provided to the Purchaser hereunder), the
nature, amount and status of the Receivables, the current and/or
historical Delinquency Rates and Net Loss Rates or similar data with
respect to the Receivables, and such other information as may be required
to be disclosed, in the Administrator's reasonable judgement, under
securities laws applicable to the Purchaser, to any actual or prospective
purchasers or holders of commercial paper or other securities issued by
the Purchaser.
(v) as may be required by any municipal, state, federal or other
regulatory body having or claiming to have jurisdiction over such party,
in order to comply with any law, order, regulation, regulatory request or
ruling applicable to such party, or
(vi) subject to subsection (c), in the event such party is legally
compelled (by interrogatories, requests for information or copies,
subpoena, civil investigative demand or similar process) to disclose such
Seller Information.
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<PAGE>
(c) Legal Compulsion. In the event that any party hereto (other than the
Sellers or the Servicer) or any of its representatives is requested or becomes
legally compelled (by interrogatories, requests for information or documents,
subpoena, civil investigative demand or similar process) to disclose any of the
Seller Information, such party will (or will cause its representative to)
(i) provide each Seller and the Servicer with prompt written notice
so that (A) any Seller Party may seek a protective order or other
appropriate remedy, or (B) both Sellers and/or the Servicer may, if they
so choose, agree that such party (or its representatives) may disclose
such Seller Information pursuant to such request or legal compulsion; and
(ii) unless both Sellers or the Servicer agrees that such Seller
Information may be disclosed, make a timely objection to the request or
compulsion to provide such Seller Information on the basis that such
Seller Information is confidential and subject to the agreements contained
in this Section 15.12.
In the event such protective order or remedy is not obtained, or both Sellers or
the Servicer waives compliance with the provisions of this Section 15.12, such
party will furnish only that portion of the Seller Information which (in such
party's good faith judgment) is legally required to be furnished and will
exercise reasonable efforts to obtain reliable assurance that confidential
treatment will be afforded the Seller Information.
(d) This Section 15.12 shall survive termination of this Agreement.
SECTION 15.13. Confidentiality of Program Information.
(a) Confidential Information. Each party hereto acknowledges that State
Street Capital regards the structure of the transactions contemplated by this
Agreement to be proprietary, and each such party severally agrees that:
(i) it will not disclose without the prior consent of State Street
Capital (other than to the directors, employees, auditors, counsel or
affiliates (collectively, "representatives")) of such party, each of whom
shall be informed by such party of the confidential nature of the
Information (as defined below) and of the terms of this Section 15.13, (A)
any information regarding the pricing in, or copies of, this Agreement or
any Related Document or any transaction contemplated hereby or thereby,
(B) any information regarding the organization, business or
-123-
<PAGE>
operations of the Purchaser generally or the services performed by the
Administrator or the Relationship Bank for the Purchaser, or (C) any
information which is furnished by State Street Capital or State Street
Bank to such party and which is designated by State Street Capital or
State Street Bank to such party in writing or otherwise as confidential or
not otherwise available to the general public (the information referred to
in clauses (A), (B) and (C) is collectively referred to as the "Program
Information"); provided, however, that such party may disclose any such
Program Information (I) to any other party to this Agreement for the
purposes contemplated hereby or thereby, (II) as may be required by any
municipal, state, federal or other regulatory body having or claiming to
have jurisdiction over such party, (III) in order to comply with any law,
order, regulation, regulatory request or ruling applicable to such party,
or (IV) subject to subsection (c), in the event such party is legally
compelled (by interrogatories, requests for information or copies,
subpoena, civil investigative demand or similar process) to disclose any
such Program Information;
(ii) it will use the Program Information solely for the purposes of
evaluating, administering and enforcing the transactions contemplated by
this Agreement and making any necessary business judgments with respect
thereto; and
(iii) it will, upon demand, return (and cause each of its
representatives to return) to State Street Capital or State Street Bank,
all documents or other written material received from State Street Capital
or State Street Bank, as the case may be, in connection with (a)(i)(B) or
(C) above and all copies thereof made by such party which contain the
Program Information.
(b) Availability of Confidential Information. This Section 15.13 shall be
inoperative as to such portions of the Program Information which are or become
generally available to the public or such party on a nonconfidential basis from
a source other than State Street Capital or State Street Bank or were known to
such party on a nonconfidential basis prior to its disclosure by State Street
Capital or State Street Bank.
(c) Legal Compulsion to Disclose. In the event that any party or anyone to
whom such party or its representatives transmits the Program Information is
requested or becomes legally compelled (by interrogatories, requests for
information or documents, subpoena, civil investigative demand or similar
process) to disclose any of the Program Information, such party will
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<PAGE>
(i) provide State Street Capital with prompt written notice so that
State Street Capital or State Street Bank may seek a protective order or
other appropriate remedy and/or waive compliance with the provisions of
this Section 15.13; and
(ii) unless State Street Capital or State Street Bank waives
compliance by such party with the provisions of this Section 15.13, make a
timely objection to the request or confirmation to provide such Program
Information on the basis that such Program Information is confidential and
subject to the agreements contained in this Section 15.13.
In the event that such protective order or other remedy is not obtained, or
State Street Capital or State Street Bank waives compliance with the provisions
of this Section 15.13, such party will furnish only that portion of the Program
Information which (in such party's good faith judgment) is legally required to
be furnished and will exercise reasonable efforts to obtain reliable assurance
that confidential treatment will be accorded the Program Information.
(d) Survival. This Section 15.13 shall survive termination of this
Agreement.
SECTION 15.14. Waiver Of Jury Trial. EACH OF EACH SELLER AND OXFORD HEREBY
EXPRESSLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY OTHER RELATED DOCUMENTS
OR UNDER ANY AMENDMENT, INSTRUMENT OR DOCUMENT DELIVERED OR WHICH MAY BE IN THE
FUTURE BE DELIVERED IN CONNECTION HEREWITH OR ARISING FROM ANY BANKING OR OTHER
RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER RELATED
DOCUMENTS AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL NOT BE TRIED
BEFORE A JURY.
SECTION 15.15. Consent To Jurisdiction; Waiver Of Immunities. EACH OF EACH
SELLER AND OXFORD HEREBY ACKNOWLEDGES AND AGREES THAT:
(a) IT IRREVOCABLY (i) SUBMITS TO THE JURISDICTION, FIRST, OF ANY
UNITED STATES FEDERAL COURT, AND SECOND, IF FEDERAL JURISDICTION IS NOT
AVAILABLE, OF ANY NEW YORK STATE COURT, IN EITHER CASE SITTING IN NEW
YORK, NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT, (ii) AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED ONLY IN SUCH NEW YORK STATE OR
FEDERAL COURT AND NOT IN ANY OTHER COURT, AND (iii) WAIVES, TO THE FULLEST
EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO
THE MAINTENANCE OF SUCH ACTION OR PROCEEDING.
-125-
<PAGE>
(b) TO THE EXTENT THAT IT HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY
FROM THE JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER
THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID
TO EXECUTION, EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS
PROPERTY, IT HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS
OBLIGATIONS UNDER OR IN CONNECTION WITH THIS AGREEMENT.
SECTION 15.16. No Recourse Against Other Parties. No recourse under any
obligation, covenant or agreement of the Purchaser or any other party hereto
contained in this Agreement shall be had against any stockholder, employee,
officer, director, or incorporator of the Purchaser or such other party,
provided, however, that nothing in this Section 15.16 shall relieve any of the
foregoing Persons from any liability which such Person may otherwise have for
his/her or its gross negligence or willful misconduct.
-126-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Loan Purchase
Agreement to be duly executed by their respective officers as of the day and
year first above written.
CENTREX CAPITAL AUTOMOBILE
ASSETS (NUMBER TWO), INC.,
as Seller
By:_________________________
Name:
Title:
270 South Service Road
Melville, New York 11747
Facsimile No.: (516) 777-8440
Attention: President
CENTREX CAPITAL AUTOMOBILE
ASSETS (NUMBER FOUR), INC.,
as Seller
By:_________________________
Name:
Title:
270 South Service Road
Melville, New York 11747
Facsimile No.: (516) 777-8440
Attention: President
OXFORD RESOURCES CORP.,
as Servicer
By:____________________________
Name:
Title:
270 South Service Road
Melville, New York 11747
Facsimile No.: (516) 777-8440
Attention: President
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<PAGE>
THE BANK OF NEW YORK,
as Custodian
and Standby Servicer
By:_________________________
Name:
Title:
101 Barclay Street
New York, New York 10286
Facsimile No.: (212) 815-5999
Attention: Patricia M.F. Russo
CLIPPER RECEIVABLES CORPORATION,
as Purchaser
By:___________________________
Name:
Title:
P.O. Box 4024
Boston, Massachusetts 02101
Facsimile No.: (617) 951-7050
Attention: R. Douglas Donaldson
STATE STREET BOSTON CAPITAL
CORPORATION, as Administrator
By:____________________________
Name:
Title:
225 Franklin Street
Boston, Massachusetts 02110
Facsimile No.: (617) 350-4020
Attention: Clipper Funds
-128-
<PAGE>
STATE STREET BANK AND TRUST COMPANY
as Relationship Bank
By:____________________________
Name:
Title:
225 Franklin Street
Boston, Massachusetts 02110
Facsimile No.: (617) 695-9232
Attention: Clipper Funds
-129-
<PAGE>
EXHIBIT E
[FORM OF WAREHOUSE NOTE]
PROMISSORY NOTE
December 4, 1996
CENTREX CAPITAL AUTOMOBILE ASSETS (NUMBER
FOUR), INC., a Delaware corporation ("Centrex Four"), for value received, hereby
promises to pay to State Street Boston Capital Corporation, as Administrator for
Clipper Receivables Corporation, the aggregate outstanding amount of all
Warehouse Fundings made under the Loan Purchase Agreement dated as of March 31,
1995, as amended by the First Amendment thereto dated as of December 14, 1995,
the Second Amendment thereto dated as of March 21, 1996 and the Third Amendment
thereto dated as of December 4, 1996 (as amended, modified or supplemented from
time to time, the "Loan Purchase Agreement"), any Earned Discount thereon, and
any other amounts in respect thereof, as set forth in the Loan Purchase
Agreement. Terms not otherwise defined in this promissory note are defined in
the Loan Purchase Agreement.
The Administrator is authorized pursuant to
the Loan Purchase Agreement to make (or cause to be made) appropriate notations
on the grid attached hereto (or on a continuation of such grid attached hereto
and made a part hereof), or (at the Administrator's option) in the records of
the Administrator, which notations shall evidence, inter alia, the date and the
original principal amount of each Warehouse Funding, the amount of each payment
made on account of such principal amount and the principal amount of each such
Warehouse Funding remaining outstanding. The notations on the grid attached
hereto (and on each such continuation) or in such records, as the case may be,
indicating the outstanding principal amount thereof, of the Warehouse Fundings
shall, in the absence of manifest error, be conclusive evidence of the
outstanding principal amount thereof, but the failure to record any such amount
on the grid (or on such continuation) or in such records shall not limit or
otherwise affect the obligations of Centrex Four hereunder or under the Loan
Purchase Agreement to make payment of the principal of or interest on the
Warehouse Fundings in accordance with the Loan Purchase Agreement or to take any
other action with respect thereto in accordance herewith or with the Loan
Purchase Agreement.
This promissory note is subject to the
provisions of the Loan Purchase Agreement and any amendments, supplements or
modifications thereto from time to time.
<PAGE>
This promissory note shall be governed by,
and construed in accordance with, the laws of the State of New York, without
reference to its conflict of law provisions.
CENTREX CAPITAL AUTOMOBILE
ASSETS (NUMBER FOUR), INC.
By:___________________________
Name:
Title:
E-2-
<PAGE>
GRID
This promissory note evidences Warehouse
Fundings made under the within-described Loan Purchase Agreement, on the dates,
in the principal amounts and subject to the payments of principal as set forth
below.
================================================================================
Principal
Amount of Amount of Unpaid
Warehouse Principal Principal
Date Funding Payment Amount Notations
---- --------- --------- --------- ---------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
================================================================================
E-3-
Exhibit 11
Oxford Resources Corp.
and Subsidiaries
Statement of Computation of
Net Income Per Share
================================================================================
Six Months Ended Three Months Ended
December 31, December 31,
1996 1995 1996 1995
- --------------------------------------------------------------------------------
(In thousands except per share data)
Net income $11,564 $ 8,575 $ 5,864 $ 4,540
------- ------- ------- -------
Weighted average common shares
outstanding 14,863 13,881 14,887 14,494
Common stock equivalents 225 232 255 248
------- ------- ------- -------
Weighted average number of common
and common equivalent shares outstanding 15,088 14,113 15,142 14,742
======= ======= ======= =======
Primary earnings per share $ 0.77 $ 0.61 $ 0.39 $ 0.31
======= ======= ======= =======
<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> 6-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 52,847,650
<SECURITIES> 2,075,289
<RECEIVABLES> 68,829,040 <F1>
<ALLOWANCES> 0
<INVENTORY> 47,693,240 <F2>
<CURRENT-ASSETS> 0
<PP&E> 16,301,869
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,714,454,386 <F3>
<CURRENT-LIABILITIES> 14,245,084
<BONDS> 1,563,772,305 <F4>
0
0
<COMMON> 149,481
<OTHER-SE> 103,293,516
<TOTAL-LIABILITY-AND-EQUITY> 1,714,454,386
<SALES> 0
<TOTAL-REVENUES> 174,088,650
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 100,218,175 <F5>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 54,912,597
<INCOME-PRETAX> 18,957,878
<INCOME-TAX> 7,394,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,563,878
<EPS-PRIMARY> .77
<EPS-DILUTED> .77
<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>
